NOTES ON DELEGATION OF POWERS

[1] Traditionally, the general rule is non-delegation. However, under modern political law, delegation
has slowly become the general rule.

[2] The principle of non-delegation of powers is usually cited with reference to legislative powers.

NON-DELEGATION OF POWERS
REINFORCES SEPARATION OF
POWERS

[3] The general principle of non-delegation of legislative power, which both flows from the reinforces
the more fundamental rule of the separation and allocation of powers among the three great
departments of government, must be applied with circumspection in respect of statutes which like the
Medical Act of 1959, deal with subjects as obviously complex and technical as medical education and
the practice of medicine in our present day world. (Tablarin v. Gutierrez, 152 SCRA 730, 1987)

[4] One thing, however, is apparent in the development of the principle of separation of powers and
that is that the maxim of delegatus non potest delegare or delegate potestas non potest delegare,
adopted this practice but which is also recognized in principle in the Roman Law (d. 17.18.3) has been
made to adapt itself to the complexities of modern government, giving rise to the adoption, within
certain limits of the principle of "subordinate legislation," not only in the United States and England
but in practically all modern governments. (People vs. Rosenthal and Osmena [68 Phil. 318, 1939].
(Tablarin v. Gutierrez, 152 SCRA 730, 1987)

THE GROWING COMPLEXITY OF

MODERN LIFE MAKES DELEGATION
THE BETTER RULE

[5] Accordingly, with the growing complexity of modern life, the multiplication of the subjects of
governmental regulation and the increased difficulty of administering the laws, there is a constantly
growing tendency toward the delegation of greater power by the legislature, and toward the approval
of the practice by the courts." (Tablarin v. Gutierrez, 152 SCRA 730, 1987)

LIMITS OF POWER DELEGATED

MUST BE EXPRESSLY OR IMPLIEDLY
SPELLED OUT

[6] The standard may be either expressed or implied. If the former, the non-delegation objection is
easily met. The standard though does not have to be spelled out specifically. It could be
implied from the policy and purpose of the act considered as a whole. In the Reflector Law, clearly the
legislative objective is public safety. What is sought to be attained as in Calalang v. Williams is "safe
transit upon the roads."

[7] In the Tablarin case, the Supreme Court held that that the necessary standards are set forth in
Section 1 of the 1959 Medical Act: "the standardization and regulation of medical education"
and in Section 5 (a) and 7 of the same Act, the body of the statute itself, and that these considered
together are sufficient compliance with the requirements of the non-delegation principle.

[8] In short, generally, the limits of the delegate's power must be spelled out expressly. The standards
must be sufficiently laid out. Nevertheless, certain general statements such "general welfare" have
been declared by the Court as basis for valid delegation.

EXAMPLE OF GENERAL STATEMENTS

DECLARED AS DETERMINATE AND
DETERMINABLE SUFFICIENT STANDARDS

[9]  In Tatad v. Secretary of Energy, 282 SCRA 337 (1997), the Supreme Court declared
unconstitutional Section 15 of R.A. No. 8180 which delegates to the President the power to implement
the full deregulation of the downstream oil industry NOT because of undue delegation but for other
reasons.

[10] In Tatad, the Supreme Court explained that Section 15 provides sufficient standards within which
the President and the Energy Secretary must operate in implementing the law. In fact, there is
theoretically no delegation here because what was merely given to them is the power to implement
the law in case certain factors arise. The law gives the following factors: (1) the time when the prices
of crude oil and petroleum products in the world market are declining, and (2) the time when the
exchange rate of the peso in relation to the US dollar is stable.

[11] Moreover, said section provides the Secretary of Energy and the President with the bases of (1)
"practicability", (2) "the decline of crude oil prices in the world market", and (3) "the stability of the
Peso exchange rate in relation to the US Dollar," in determining the effectivity of full deregulation.
These bases are determinate and determinable guidelines, when examined in the light of the tests for
permissible delegation.

TWO TESTS TO DETERMINE

VALID DELEGATION OF
POWERS

[12] The power of Congress to delegate the execution of laws has long been settled. As early as 1916
in Compania General de Tabacos de Filipinas vs. The Board of Public Utility Commissioners, the Court
held that "the true distinction is between the delegation of power to make the law, which necessarily
involves a discretion as to what it shall be, and conferring authority or discretion as to its execution, to
be exercised under and in pursuance of the law. The first cannot be done; to the latter no valid
objection can be made."

[13] Over the years, as the legal engineering of men's relationship became more difficult, Congress
has to rely more on the practice of delegating the execution of laws to the executive and other
administrative agencies.

[14] Two tests have been developed to determine whether the delegation of the power to execute
laws does not involve the abdication of the power to make law itself. There are two accepted tests to
determine whether or not there is a valid delegation of legislative power, viz: the completeness test
and the sufficient standard test.

[15] Under the first test (completeness test), the law must be complete in all its terms and
conditions when it leaves the legislative such that when it reaches the delegate the only thing he will
have to do is to enforce it. Under the sufficient standard test, there must be adequate guidelines or
limitations in the law to map out the boundaries of the delegate's authority and prevent the delegation
from running riot. Both tests are intended to prevent a total transference of legislative authority to
the delegate, who is not allowed to step into the shoes of the legislature and exercise a power
essentially legislative.

PERIOD OF IMPRISONMENT MUST

BE DETERMINATE OR DETERMINABLE;
OTHERWISE, UNDUE DELEGATION OF
POWERS TO THE COURT

[16] Anyone who violates RA 5670 shall, upon conviction, be punished by a fine of not less than one
hundred pesos nor more than one thousand pesos, or by imprisonment, in the discretion of the
court. The Supreme Court declared said law unconstitutional for violating the principle of non-
delegation.

[17] Although law can give discretion to courts, it must be a mere legal discretion which is exercised
in discerning the course prescribed by law and which, when discerned, it is the duty of the court to
follow. What valid delegation presupposes and sanctions is an exercise of discretion to fix the length of
service of a term of imprisonment which must be encompassed within specific or designated limits
provided by law, the absence of which designated limits well constitute such exercise as an undue
delegation, if not-an outright intrusion into or assumption, of legislative power.
[18] Section 32 of Republic Act No. 4670 provides for an indeterminable period of imprisonment, with
neither a minimum nor a maximum duration having been set by the legislative authority. The courts
are thus given a wide latitude of discretion to fix the term of imprisonment, without even the benefit
of any sufficient standard, such that the duration thereof may range, in the words of respondent
judge, from one minute to the life span of the accused. Irremissibly, this cannot be allowed. It vests in
the courts a power and a duty essentially legislative in nature and which, as applied to this case, does
violence to the rules on separation of powers as well as the non-delegability of legislative powers. This
time, the presumption of constitutionality has to yield. (People v. Dacuycuy, 173 SCRA 90, 1989)

THE POWER TO FIX RATES OF CHARGES

FOR SERVICES IS LEGISLATIVE IN CHARACTER;
NEVERTHELESS, THIS POWER CAN BE DELEGATED
TO ADMINISTRATIVE AGENCIES;
IF CONGRESS CHOOSES TO INTERFERE, SUCH ACT
DOES NOT AUTOMATICALLY MEAN WITHDRAWAL
OF POWER OF THE ADMINISTRATIVE AGENCY

[19] The power to fix rates of charges of services, such as pilotage service or the minimum wage, is
legislative in character.

[20] Nevertheless, this power can be delegated to administrative agencies if the two tests -
completeness and sufficient standards tests - are complied with. For example, law delegates to the
Philippine Ports Authority (PPA) the fixing of pilotages fees. Also, law delegates to the Regional
Tripartite Wage and Productivity Board (RTWPB) the fixing of minimum wages in every region in the
country.

[21] However, this does not mean that Congress cannot  intervene anytime despite the existence of
administrative agencies entrusted with wage-fixing powers, by virtue of the former's plenary power of
legislation. When Congress does so, the result is not the withdrawal of the powers delegated to the
Wage Boards but cooperative lawmaking in an area where initiative and expertise are required.

[22] In case of pilotage rates, the power of the PPA to fix said rates and its authority to regulate
pilotage still remain notwithstanding the fact that a schedule for pilotage fees has already been
prescribed by the questioned executive order. PPA is at liberty to fix new rates of pilotage subject only
to the limitation that such new rates should not go below the rates fixed under E.O. 1088. The
rationale behind the limitation is no different from what has been previously stated. Being a mere
administrative agency, PPA cannot validly issue orders or regulations that would have the effect of
rendering nugatory the provisions of the legislative issuance such as those of the executive order in
question. (Phil. Interisland Shipping Ass’n v. CA; G.R. No. 100481, Jan 22, 1997)

THE CONSTITUTION EXPRESSLY ALLOWS

CONGRESS TO DELEGATE TO THE PRESIDENT
THE POWER TO FIX TARIFF RATES, ETC.;
THIS IS AN EXCEPTION GRANT OF POWER TO
THE PRESIDENT

[23] Section 28(2), Article VI of the Constitution states: The Congress may, by law, authorize the
President to fix within specified limits, and subject to such limitations and restrictions as it may
impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or
imposts within the framework of the national development program of the Government.

[24] It is Congress which authorizes the President to impose tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts. Thus, the authority cannot come from the
Finance Department, the National Economic Development Authority, or the World Trade Organization,
no matter how insistent or persistent these bodies may be.

[25] The authorization granted to the President must be embodied in a law. In short, Section 28(2) of
Article VI is not self-executing. Hence, the justification cannot be supplied simply by inherent
executive powers. It cannot arise from administrative or executive orders promulgated by the
executive branch or from the wisdom or whim of the President.

[26] The authorization to the President can be exercised only within the specified limits set in the law
and is further subject to limitations and restrictions which Congress may impose. Consequently, if
Congress specifies that the tariff rates should not exceed a given amount, the President cannot impose
a tariff rate that exceeds such amount. If Congress stipulates that no duties may be imposed on the
importation of corn, the President cannot impose duties on corn, no matter how actively the local corn
producers lobby the President. Even the most picayune of limits or restrictions imposed by Congress
must be observed by the President.

[27] There is one fundamental principle that animates these constitutional postulates. These
impositions under Section 28(2), Article VI fall within the realm of the power of taxation, a power
which is within the sole province of the legislature under the Constitution.

[28] Without Section 28(2), Article VI, the executive branch has no authority to impose tariffs and
other similar tax levies involving the importation of foreign goods. Assuming that Section 28(2) Article
VI did not exist, the enactment of the SMA by Congress would be voided on the ground that it would
constitute an undue delegation of the legislative power to tax. The constitutional provision shields
such delegation from constitutional infirmity, and should be recognized as an exceptional grant of
legislative power to the President, rather than the affirmation of an inherent executive power.
(Southern Cross Cement Corporation v. Cement Manufacturers Association of the Philippines, 465
SCRA 532, 2005)

THE POWER TO CREATE POLITICAL

SUBDIVISIONS IS LEGISLATIVE IN
NATURe

[29] The power to create political subdivisions is a function of the legislature.

[30] If an Executive Order (EO) creates political subdivisions, this is null and void.

[31] In the Camid case, the Supreme Court said: "If there is truly a strong impulse calling for the
reconstitution of Andong (municipality created by an EO), the solution is through the legislature and
not judicial confirmation of void title. If indeed the residents of Andong have, all these years, been
governed not by their proper municipal governments but by a ragtag Interim Government, then an
expedient political and legislative solution is perhaps necessary. Yet we can hardly sanction the
retention of Andong's legal personality solely on the basis of collective amnesia that may have allowed
Andong to somehow pretend itself into existence despite its judicial dissolution. Maybe those who
insist Andong still exists prefer to remain unperturbed in their blissful ignorance, like the inhabitants of
the cave in Plato;s famed allegory. But the time has come for the light to seep in, and for the
petitioner and like-minded persons to awaken to legal reality." (Camid v. Office of the President, 448
SCRA 711, 2005)

[32] Note that this case is an offshoot of the Pelaez case where the Supreme Court held that the
President cannot create legislative districts.

A PROVINCE CANNOT BE CREATED

WITHOUT A LEGISLATIVE DISTRICT

[33] A province cannot be created without a legislative district because it will violate Section 5 (3),
Article VI of the Constitution as well as Section 3 of the Ordinance appended to the Constitution. For
the same reason, a city with a population of 250,000 or more cannot also be created without a
legislative district. Thus, the power to create a province, or a city with a population of 250,000 or
more, requires also the power to create a legislative district. Even the creation of a city with a
population of less than 250,000 involves the power to create a legislative district because once the
citys population reaches 250,000, the city automatically becomes entitled to one representative under
Section 5 (3), Article VI of the Constitution and Section 3 of the Ordinance appended to the
Constitution. Thus, the power to create a province or city inherently involves the power to create a
legislative district.

[33] For Congress to delegate validly the power to create a province or city, it must also validly
delegate at the same time the power to create a legislative district. In Sema vs. COMELEC, the
threshold issue then was, can Congress validly delegate to the ARMM Regional Assembly the power to
create legislative districts for the House of Representatives? The answer is in the negative. No,
Congress cannot do so.

[34] Nothing in Section 20, Article X of the Constitution authorizes autonomous regions, expressly or
impliedly, to create or reapportion legislative districts for Congress. (Sema v. Commission on
Elections, 558 SCRA 700, 2008)

POWER TO CREATE MUNICIPALITIES

AND BARANGAYS CAN BE DELEGATED;
HOWEVER, POWER TO CREATE PROVINCES
AND LEGISLATIVE DISTRICTS CANNOT BE

[35] There is no provision in the Constitution that conflicts with the delegation to regional legislative
bodies of the power to create municipalities and barangays, provided Section 10, Article X of the
Constitution is followed.

[36] However, the creation of provinces and cities is another matter. Section 5 (3), Article VI of the
Constitution provides, Each city with a population of at least two hundred fifty thousand, or each
province, shall have at least one representative in the House of Representatives. Similarly, Section 3
of the Ordinance appended to the Constitution provides, Any province that may hereafter be created,
or any city whose population may hereafter increase to more than two hundred fifty thousand shall be
entitled in the immediately following election to at least one Member x x x. (Sema v. Commission on
Elections, 558 SCRA 700, 2008)

WHAT POWER CAN OR

CANNOT BE DELEGATED?

[37] A ministerial act can be delegated but an act which involves discretion cannot be delegated.

[38] An officer to whom a discretion is entrusted cannot delegate it to another, the presumption
being that he was chosen because he was deemed fit and competent to exercise that judgment and
discretion, and unless the power to substitute another in his place has been given to him, he cannot
delegate his duties to another. In those cases in which the proper execution of the office requires, on
the part of the officer, the exercise of judgment or discretion, the presumption is that he was chosen
because he was deemed fit and competent to exercise that judgment and discretion, and, unless
power to substitute another in his place has been given to him, he cannot delegate his duties to
another. (NPC Drivers and Mechanics Association (NPC DAMA) v. National Power Corporation, 503
SCRA 138, 2006)

THE DELEGATE MUST MAKE

THE FINAL DECISION BUT HE
IS NOT PRECLUDED FROM
UTILIZING AIDS

[39] The delegate may exercise his authority through persons he appoints to assist him in his
functions, it must be stressed that the Court explicitly stated in the same case that said practice is
permissible only when the judgment and discretion finally exercised are those of the officer authorized
by law. According to the Court, the rule that requires an administrative officer to exercise his own
judgment and discretion does not preclude him from utilizing, as a matter of practical administrative
procedure, the aid of subordinates, so long as it is the legally authorized official who makes the final
decision through the use of his own personal judgment. (NPC Drivers and Mechanics Association (NPC
DAMA) v. National Power Corporation, 503 SCRA 138, 2006)
AN EXCEPTION TO NON-DELEGATION
OF DISCRETIONARY ACTS IS THE
ALTER EGO DOCTRINE

[40] The "alter ego" doctrine is also known as the doctrine of "qualified political agency."

[41] Under this doctrine, which recognizes the establishment of a single executive, all executive and
administrative organizations are adjuncts of the Executive Department, the heads of the various
executive departments are assistants and agents of the Chief Executive, and, except in cases where
the Chief Executive is required by the Constitution or law to act in person or the exigencies of the
situation demand that he act personally, the multifarious executive and administrative functions of the
Chief Executive are performed by and through the executive departments.

[42] The acts of the Secretaries of such departments, performed and promulgated in the regular
course of business, are, unless disapproved or reprobated by the Chief Executive presumptively the
acts of the Chief Executive. (G.R. No. 180771; April 21, 2015)
THE POWER TO DETERMINE
THE EXISTENCE OF PROBABLE
CAUSE CANNOT BE DELEGATED

[43] Prior to the amendment on October 3, 2005 of Rules 112 and 114 of the Rules of Court via A.M.
No. 05-8-26-SC, Re: Amendment of Rules 112 and 114 of the Revised Rules on Criminal Procedure by
Removing the Conduct of Preliminary Investigation from Judges of the First Level Courts, judges of
municipal trial courts were (not anymore) empowered to conduct preliminary investigations in which
they exercised discretion in determining whether there was probable cause to hale the respondent into
court. Such being the case, they could not delegate the discretion to another.

[44] An officer to whom a discretion is entrusted cannot delegate it to another, the presumption being
that he was chosen because he was deemed fit and competent to exercise that judgment and
discretion, and unless the power to substitute another in his place has been given to him, he cannot
delegate his duties to another.

[45] In those cases in which the proper execution of the office requires on the part of the officer, the
exercise of judgment or discretion, the presumption is that he was chosen because he was deemed fit
and competent to exercise that judgment and discretion, and, unless power to substitute another in
his place has been given to him, he cannot delegate his duties to another. (Mago v. Peñalosa-Fermo,
582 SCRA 1, 2009)

DELEGATION OF POWERS TO
ADMINISTRATIVE AGENCIES IS
A WELL-SETTLED EXCEPTION
TO THE DOCTRINE OF NON-
DELEGATION

[46] In Bureau of Customs Employees Association v. Teves, G.R. No. 181704, December 6, 2011, the
constitutionality of R.A. No. 9335 and its IRR were challenged for being an undue delegation of
legislative powers.

[47] The principle of separation of powers ordains that each of the three great branches of
government has exclusive cognizance of and is supreme in matters falling within its own
constitutionally allocated sphere. Necessarily imbedded in this doctrine is the principle of non-
delegation of powers, as expressed in the Latin maxim potestas delegata non delegari potest, which
means "what has been delegated, cannot be delegated." This doctrine is based on the ethical principle
that such delegated power constitutes not only a right but a duty to be performed by the delegate
through the instrumentality of his own judgment and not through the intervening mind of another.
However, this principle of non-delegation of powers admits of numerous exceptions, one of which is
the delegation of legislative power to various specialized administrative agencies like the Board in this
case.
[48] In the face of the increasing complexity of modern life, delegation of legislative power to various
specialized administrative agencies is allowed as an exception to this principle. Given the volume and
variety of interactions in today’s society, it is doubtful if the legislature can promulgate laws that will
deal adequately with and respond promptly to the minutiae of everyday life. Hence, the need to
delegate to administrative bodies — the principal agencies tasked to execute laws in their specialized
fields — the authority to promulgate rules and regulations to implement a given statute and effectuate
its policies. All that is required for the valid exercise of this power of subordinate legislation is that the
regulation be germane to the objects and purposes of the law and that the regulation be not in
contradiction to, but in conformity with, the standards prescribed by the law. These requirements are
denominated as the completeness test and the sufficient standard test.

[49] Two tests determine the validity of delegation of legislative power: (1) the completeness test and
(2) the sufficient standard test. A law is complete when it sets forth therein the policy to be executed,
carried out or implemented by the delegate. It lays down a sufficient standard when it provides
adequate guidelines or limitations in the law to map out the boundaries of the delegate’s authority and
prevent the delegation from running riot. To be sufficient, the standard must specify the limits of the
delegate’s authority, announce the legislative policy and identify the conditions under which it is to be
implemented.

[50] Section 4 of RA [No.] 9335 "canalized within banks that keep it from overflowing" the delegated
power to the President to fix revenue targets. In sum, the Court found that R.A. No. 9335, read and
appreciated in its entirety, is complete in all its essential terms and conditions, and that it contains
sufficient standards as to negate BOCEA’s supposition of undue delegation of legislative power to the
Board.

WELL-RECOGNIZED EXCEPTIONS
TO THE PRINCIPLE OF NON-DELEGATION

[51] The recognized exceptions to this principle are as follows:

[a] Delegation of tariff powers to the President under Section 28 (2) of Article VI of the Constitution;

[b] Delegation of emergency powers to the President under Section 23(2) of Article VI of the
Constitution;
[c] Delegation to the people at large;
[d] Delegation to local governments; and
[e] Delegation to administrative bodies. Abakada Guro Party List v. Ermita, id. at 117; Santiago v.
Comelec, 336 Phil. 848, 897-898 (1997), citing People v. Vera, 65 Phil. 56 (1937) and Isagani A.
Cruz, Philippine Political Law 87 (1996).

[52] The above are also called "permissible cases of delegation."

RA 9262 DOES NOT INVOLVE

UNDUE DELEGATION OF JUDICIAL
POWERS

[52] A husband went up to the Court assailing the constitutionality of R.A. 9262 as being violative of
the equal protection and due process clauses, and an undue delegation of judicial power to
barangay officials. (Garcia v. Drilon, G. R. No. 179267, June 25, 2013)

[53] RA 9262 gives barangay officlas the power to issue protective orders. Petitioner contended that
protection orders involve the exercise of judicial power which, under the Constitution, is placed upon
the "Supreme Court and such other lower courts as may be established by law" and, thus, protests the
delegation of power to barangay officials to issue protection orders.
[54] There is NO undue delegation of judicial power to barangay officials. The power to issue
protective orders is EXECUTIVE in nature, involving as it does the implementation of laws. Since the
Punong Barangay is the executive head of the barangay, he can issue protective orders.

[55] 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.112 On the other hand, executive power "is generally defined as
the power to enforce and administer the laws. It is the power of carrying the laws into practical
operation and enforcing their due observance."

[56] The Barangay Protection Orders (BPO) which is issued by the Punong Barangay or, in his
unavailability, by any available Barangay Kagawad, merely orders the perpetrator to desist from
(a) causing physical harm to the woman or her child; and (2) threatening to cause the woman or her
child physical harm. Such function of the Punong Barangay is, thus, purely executive in nature, in
pursuance of his duty under the Local Government Code to "enforce all laws and ordinances," and
to "maintain public order in the barangay."

[57] The mere fact that an officer is required by law to inquire into the existence of certain facts and
to apply the law thereto in order to determine what his official conduct shall be and the fact that these
acts may affect private rights do not constitute an exercise of judicial powers.

[58] In the same manner as the public prosecutor ascertains through a preliminary inquiry or
proceeding "whether there is reasonable ground to believe that an offense has been committed and
the accused is probably guilty thereof," the Punong Barangay must determine reasonable ground to
believe that an imminent danger of violence against the woman and her children exists or is about to
recur that would necessitate the issuance of a BPO. The preliminary investigation conducted by the
prosecutor is, concededly, an executive, not a judicial, function. The same holds true with the issuance
of a BPO.

THE BUDGET LAW MUST LAY DOWN

GUIDELINES IN THE PRESIDENT'S
EXERCISE OF RULE-MAKING POWERS

[59] While the designation of a determinate or determinable amount for a particular public purpose is
sufficient for a legal appropriation to exist, the appropriation law must contain adequate legislative
guidelines if the same law delegates rule-making authority to the Executive either for the purpose of
(a) filling up the details of the law for its enforcement, known as supplementary rule-making, or (b)
ascertaining facts to bring the law into actual operation, referred to as contingent rule-making. There
are two (2) fundamental tests to ensure that the legislative guidelines for delegated rule-making are
indeed adequate. The first test is called the "completeness test."

[60] Case law states that a law is complete when it sets forth therein the policy to be executed,
carried out, or implemented by the delegate. On the other hand, the second test is called the
"sufficient standard test." Jurisprudence holds that a law lays down a sufficient standard when it
provides adequate guidelines or limitations in the law to map out the boundaries of the delegate‘s
authority and prevent the delegation from running riot. To be sufficient, the standard must specify the
limits of the delegate‘s authority, announce the legislative policy, and identify the conditions under
which it is to be implemented.

[61] When the budget law appropriates an amount to a project or department "and for such other
purposes as may be hereafter directed by the President," there is UNDUE delegation of powers.

[62] As it reads, the said phrase gives the President wide latitude to use the Malampaya Funds for any
other purpose he may direct and, in effect, allows him to unilaterally appropriate public funds beyond
the purview of the law.
[62] Also, the phrase "to finance the priority infrastructure development projects" must be
stricken down as unconstitutional since it does not provide any sufficient standard of the delegating
law. (Belgica v. Executive Secretary, G.R. No. 208566, November 19, 2013)

THE POWER OF THE MONETARY BOARD

TO PLACE FINANCIALLY-TROUBLED BANKS
UNDER RECEIVERSHIP IS NOT AN UNDUE
DELEGATION OF POWERS

[63] In the case of Vivas v. The Monetary Board, G.R. No. 191424, August 7, 2013, petitioner
challenged the constitutionality of Section 30 of R.A. No. 7653, as the legislature granted the MB a
broad and unrestrained power to close and place a financially troubled bank under receivership. He
claims that the said provision was an undue delegation of legislative power.

[64] There is no violation of the non-delegation of legislative power. Under the two (completeness and
sufficient standards) tests, there was no undue delegation of legislative authority in the issuance of
R.A. No. 7653. To address the growing concerns in the banking industry, the legislature has
sufficiently empowered the MB to effectively monitor and supervise banks and financial institutions
and, if circumstances warrant, to forbid them to do business, to take over their management or to
place them under receivership. The legislature has clearly spelled out the reasonable parameters of
the power entrusted to the MB and assigned to it only the manner of enforcing said power. In other
words, the MB was given a wide discretion and latitude only as to how the law should be implemented
in order to attain its objective of protecting the interest of the public, the banking industry and the
economy.

IN THE RH LAW CASE, THE SC

DECLARED THERE IS NO UNDUE
DELEGATION OF POWERS TO THE
FDA TO DETERMINE WHETHER A
DRUG IS NON-ABORTIVE

[65] In Imbong v. Ochoa, G.R. No. 204819, April 11, 2014, petitioners argued that the RH Law is
unconstitutional because it goes against the principle of non-delegation of legislative authority. The
petitioners question the delegation by Congress to the FDA of the power to determine whether a
product is non-abortifacient and to be included in the Emergency Drugs List (EDL). THEY ARE
WRONG.

[66] The Court found nothing wrong with the delegation. The FDA does not only have the power but
also the competency to evaluate, register and cover health services and methods. It is
the only government entity empowered to render such services and highly proficient to do so. It
should be understood that health services and methods fall under the gamut of terms that are
associated with what is ordinarily understood as "health products."

[67] Moreover, the RH Law specifies the functions, powers and duties of the FDA to enable the agency
to carry out the mandates of the law.

[68] What Congress cannot (practically) do or is not willing to do, it can delegate as long as the two
tests are complied with.

ADMINISTRATIVE RULES AND

REGULATIONS MUST NOT GO
BEYOND THE LAW THEY SEEK
TO INTERPRET OR SUPPLEMENT

[69] An implementing rule that goes beyond the law which it seeks to interpret or supplement or
enforce is called "ultra vires" or "beyond one's power."

[70] It is well-settled that rules and regulations, which are the product of a delegated power to create
new and additional legal provisions that have the effect of law, should be within the scope of the
statutory authority granted by the legislature to the administrative agency. It is required that the
regulation be germane to the objects and purposes of the law; and that it be not in contradiction to,
but in conformity with, the standards prescribed by law.

[71] Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether
the rule is within the delegated authority of the administrative agency; (ii) whether it is reasonable;
and (iii) whether it was issued pursuant to proper procedure. But the court is not free to substitute its
judgment as to the desirability or wisdom of the rule for the legislative body, by its delegation of
administrative judgment, has committed those questions to administrative judgments and not to
judicial judgments. In the case of an interpretative rule, the inquiry is not into the validity but into the
correctness or propriety of the rule. As a matter of power a court, when confronted with an
interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and
substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the
interpretative rule. (Commissioner of Customs v. Hypermix Feeds Corporation, G.R. No. 179579,
February 1, 2012)

POWER OF SUBORDINATE LEGISLATION

MUST BE GRANTED BY LAW

[72] The power of subordinate legislation is that delegated power to create implementing rules and
regulations. It is also called quasi-legislative power.

[73] Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that
there be a law that gives rise to some specific rights under which adverse claims are made, and the
controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with authority to
determine the law and adjudicate the respective rights of the contending parties.17 In this case,
respondents did not act in any judicial, quasi-judicial, or ministerial capacity in their issuance of the
assailed joint circulars. In issuing and implementing the subject circulars, respondents were not called
upon to adjudicate the rights of contending parties to exercise, in any manner, discretion of a judicial
nature. The issuance and enforcement by the Secretaries of the DBM, CSC and DOH of the questioned
joint circulars were done in the exercise of their quasi-legislative and administrative functions. It was
in the nature of subordinate legislation, promulgated by them in their exercise of delegated power.
Quasi-legislative power is exercised by administrative agencies through the promulgation of rules and
regulations within the confines of the granting statute and the doctrine of non-delegation of powers
from the separation of the branches of the government.

[74] A Senate or House resolution or a joint resolution by Congress cannot be a valid source of
delegated power. Only a law can delegate powers. (Cawad v. Abad, G.R. No. 207145, July 28, 2015)

POWER DELEGATED ARE

LIMITED BY THE CONSTITUTION
OR THE LAWS OR BOTH

[75] An examination of these functions confirms that in sharp contrast to the BSP and the IC, nowhere
in the Housing and Land Use Regulatory Board’s (HLURB's) charter is it expressly or impliedly granted
the power to appoint the rehabilitation receivers of financially distressed corporations under its
supervision and regulation. An administrative agency’s powers are limited to those expressly conferred
on it or granted by necessary or fair implication in its enabling act. In our constitutional framework,
which mandates a limited government, its branches and administrative agencies exercise only those
powers delegated to them as "defined either in the Constitution or in legislation, or in both." Notably,
the powers granted to the HLURB are focused on its regulation of real estate companies to ensure that
the investing public is protected from fraudulent real estate practices. These powers do not touch
upon the HLURB’s authority to intervene in the general corporate acts, e.g. the rehabilitation, of those
under its supervision. (Lexber, Inc. v. Dalman, G.R. No. 183587, April 20, 2015)

[76] It is a basic principle in administrative law that an administrative rule must conform to and not
contradict the provision of an enabling law.
[77] As mandated by Article 7 of the Civil Code, an administrative rule or regulation cannot
contravene the law on which it is based. . . . The rules and regulations that administrative agencies
promulgate, which are the product of a delegated legislative power to create new and additional legal
provisions that have the effect of law, should be within the scope of the statutory authority granted by
the legislature to the objects and purposes of the law, and should not be in contradiction to, but in
conformity with, the standards prescribed by law.

[78] To be valid, an administrative rule or regulation must conform, not contradict, the provisions of
the enabling law. An implementing rule or regulation cannot modify, expand, or subtract from the law
it is intended to implement. Any rule that is not consistent with the statute itself is null and void.

[79] While administrative agencies . . . may issue regulations to implement statutes, they are without
authority to limit the scope of the statute to less than what it provides, or extend or expand the
statute beyond its terms, or in any way modify explicit provisions of the law. Indeed, a quasi-judicial
body or an administrative agency for that matter cannot amend an act of Congress. Hence, in case of
a discrepancy between the basic law and an interpretative or administrative ruling, the basic law
prevails. (Unduran v. Aberasturi, G.R. No. 181284, October 20 2015)

THE DECISION OF DUTERTE TO ALLOW

MARCOS TO BE INTERRED IN THE LNMB
IS A TRULY POLITICAL QUESTION

[80] The decision of President Duterte to allow President Marcos to be interred in the LNMB is beyond
the ambit of judicial review. (Ocampo v. Enriquez, G.R. No. 225973, November 8, 2016)

THE DECISION OF THE PRESIDENT TO

RECOGNIZE A FOREIGN GOVERNMENT
IS A POLITICAL QUESTION

[81] The courts cannot, for example, question the President's recognition of a foreign
government, no matter how premature or improvident such action may appear. Courts cannot set
aside a presidential pardon though it may appear to us that the beneficiary is totally undeserving of
the grant. Nor can courts amend the Constitution under the guise of resolving a dispute brought
before them because the power is reserved to the people.

AN EXAMPLE OF DELEGATION
TO THE PEOPLE AT LARGE IS
PEOPLE'S INITIATIVE UNDER
ARTICLE XVII

[82] Read your textbook.

TO COMPLETE YOUR STUDY

 [G.R. NO. 161414 : January 17, 2005]

SULTAN OSOP B. CAMID, Petitioner, v. THE OFFICE OF THE PRESIDENT, DEPARTMENT OF THE

INTERIOR AND LOCAL GOVERNMENT, AUTONOMOUS REGION IN MUSLIM MINDANAO,
DEPARTMENT of FINANCE, DEPARTMENT of BUDGET AND MANAGEMENT, COMMISSION ON
AUDIT, and the CONGRESS OF THE PHILIPPINES (HOUSE of REPRESENTATIVES AND
SENATE), Respondents.

DECISION

TINGA, J.:

This Petition for Certiorari presents this Court with the prospect of our own Brigadoon1 the municipality
of Andong, Lanao del Sur―which like its counterpart in filmdom, is a town that is not supposed to
exist yet is anyway insisted by some as actually alive and thriving. Yet unlike in the movies, there
is nothing mystical, ghostly or anything even remotely charming about the purported existence of
Andong. The creation of the putative municipality was declared void ab initio by this Court four
decades ago, but the present petition insists that in spite of this insurmountable obstacle Andong
thrives on, and hence, its legal personality should be given judicial affirmation. We disagree.

The factual antecedents derive from the promulgation of our ruling in Pelaez v. Auditor General2 in
1965. As discussed therein, then President Diosdado Macapagal issued several Executive
Orders3 creating thirty-three (33) municipalities in Mindanao. Among them was Andong in Lanao del
Sur which was created by virtue of Executive Order No. 107. 4

These executive orders were issued after legislative bills for the creation of municipalities involved in
that case had failed to pass Congress.5 President Diosdado Macapagal justified the creation of these
municipalities citing his powers under Section 68 of the Revised Administrative Code. Then Vice-
President Emmanuel Pelaez filed a special civil action for a writ of prohibition, alleging in main that the
Executive Orders were null and void, Section 68 having been repealed by Republic Act No. 2370, 6 and
said orders constituting an undue delegation of legislative power. 7

After due deliberation, the Court unanimously held that the challenged Executive Orders were null and
void. A majority of five justices, led by the ponente, Justice (later Chief Justice) Roberto Concepcion,
ruled that Section 68 of the Revised Administrative Code did not meet the well-settled requirements
for a valid delegation of legislative power to the executive branch, 8 while three justices opined that the
nullity of the issuances was the consequence of the enactment of the 1935 Constitution, which
reduced the power of the Chief Executive over local governments. 9 Pelaez was disposed in this wise:

WHEREFORE, the Executive Orders in question are declared null and void ab initio and the respondent
permanently restrained from passing in audit any expenditure of public funds in implementation of
said Executive Orders or any disbursement by the municipalities above referred to. It is so ordered. 10

Among the Executive Orders annulled was Executive Order No. 107 which created the Municipality of
Andong. Nevertheless, the core issue presented in the present petition is the continued efficacy of the
judicial annulment of the Municipality of Andong.

Petitioner Sultan Osop B. Camid (Camid) represents himself as a current resident of Andong, 11 suing
as a private citizen and taxpayer whose locus standi "is of public and paramount interest especially to
the people of the Municipality of Andong, Province of Lanao del Sur." 12 He alleges that Andong "has
metamorphosed into a full-blown municipality with a complete set of officials appointed to handle
essential services for the municipality and its constituents," 13 even though he concedes that since
1968, no person has been appointed, elected or qualified to serve any of the elective local government
positions of Andong.14 Nonetheless, the municipality of Andong has its own high school, Bureau of
Posts, a Department of Education, Culture and Sports office, and at least seventeen (17) "barangay
units" with their own respective chairmen. 15 From 1964 until 1972, according to Camid, the public
officials of Andong "have been serving their constituents through the minimal means and resources
with least (sic) honorarium and recognition from the Office of the then former President Diosdado
Macapagal." Since the time of Martial Law in 1972, Andong has allegedly been getting by despite the
absence of public funds, with the "Interim Officials" serving their constituents "in their own little ways
and means."16

In support of his claim that Andong remains in existence, Camid presents to this Court
a Certification issued by the Office of the Community Environment and Natural Resources (CENRO) of
the Department of Environment and Natural Resources (DENR) certifying the total land area of the
Municipality of Andong, "created under Executive Order No. 107 issued [last] October 1, 1964." 17 He
also submits a Certification issued by the Provincial Statistics Office of Marawi City concerning the
population of Andong, which is pegged at fourteen thousand fifty nine (14,059) strong. Camid also
enumerates a list of governmental agencies and private groups that allegedly recognize Andong, and
notes that other municipalities have recommended to the Speaker of the Regional Legislative
Assembly for the immediate implementation of the revival or re-establishment of Andong. 18
The petition assails a Certification dated 21 November 2003, issued by the Bureau of Local
Government Supervision of the Department of Interior and Local Government
(DILG).19 The Certification enumerates eighteen (18) municipalities certified as "existing," per DILG
records. Notably, these eighteen (18) municipalities are among the thirty-three (33), along with
Andong, whose creations were voided by this Court in Pelaez. These municipalities are Midaslip,
Pitogo, Naga, and Bayog in Zamboanga del Sur; Siayan and Pres. Manuel A. Roxas in Zamboanga del
Norte; Magsaysay, Sta. Maria and New Corella in Davao; Badiangan and Mina in Iloilo; Maguing in
Lanao del Sur; Gloria in Oriental Mindoro; Maasim in Sarangani; Kalilangan and Lantapan in Bukidnon;
and Maco in Compostela Valley.20

Camid imputes grave abuse of discretion on the part of the DILG "in not classifying [Andong] as a
regular existing municipality and in not including said municipality in its records and official database
as [an] existing regular municipality."21 He characterizes such non-classification as unequal treatment
to the detriment of Andong, especially in light of the current recognition given to the eighteen (18)
municipalities similarly annulled by reason of Pelaez. As appropriate relief, Camid prays that the Court
annul the DILG Certification dated 21 November 2003; direct the DILG to classify Andong as a
"regular existing municipality;" all public respondents, to extend full recognition and support to
Andong; the Department of Finance and the Department of Budget and Management, to immediately
release the internal revenue allotments of Andong; and the public respondents, particularly the DILG,
to recognize the "Interim Local Officials" of Andong. 22

Moreover, Camid insists on the continuing validity of Executive Order No. 107. He argues
that Pelaez has already been modified by supervening events consisting of subsequent laws and
jurisprudence. Particularly cited is our Decision in Municipality of San Narciso v. Hon.
Mendez,23 wherein the Court affirmed the unique status of the municipality of San Andres in Quezon as
a "de facto municipal corporation."24 Similar to Andong, the municipality of San Andres was created by
way of executive order, precisely the manner which the Court in Pelaez had declared as
unconstitutional. Moreover, San Narciso cited, as Camid does, Section 442(d) of the Local Government
Code of 1991 as basis for the current recognition of the impugned municipality. The provision reads:

Section 442. Requisites for Creation. - xxx

(d) Municipalities existing as of the date of the effectivity of this Code shall continue to exist and
operate as such. Existing municipal districts organized pursuant to presidential issuances or executive
orders and which have their respective sets of elective municipal officials holding office at the time of
the effectivity of (the) Code shall henceforth be considered as regular municipalities. 25

There are several reasons why the petition must be dismissed. These can be better discerned upon
examination of the proper scope and application of Section 442(d), which does not sanction the
recognition of just any municipality. This point shall be further explained further on.

Notably, as pointed out by the public respondents, through the Office of the Solicitor General (OSG),
the case is not a fit subject for the special civil actions of certiorari and mandamus, as it pertains to
the de novo appreciation of factual questions. There is indeed no way to confirm several of Camid's
astonishing factual allegations pertaining to the purported continuing operation of Andong in the
decades since it was annulled by this Court. No trial court has had the opportunity to ascertain the
validity of these factual claims, the appreciation of which is beyond the function of this Court since it is
not a trier of facts.

The importance of proper factual ascertainment cannot be gainsaid, especially in light of the legal
principles governing the recognition of de facto municipal corporations. It has been opined that
municipal corporations may exist by prescription where it is shown that the community has claimed
and exercised corporate functions, with the knowledge and acquiescence of the legislature, and
without interruption or objection for period long enough to afford title by prescription. 26 These
municipal corporations have exercised their powers for a long period without objection on the part of
the government that although no charter is in existence, it is presumed that they were duly
incorporated in the first place and that their charters had been lost. 27 They are especially common in
England, which, as well-worth noting, has existed as a state for over a thousand years. The reason for
the development of that rule in England is understandable, since that country was settled long before
the Roman conquest by nomadic Celtic tribes, which could have hardly been expected to obtain a
municipal charter in the absence of a national legal authority.

In the United States, municipal corporations by prescription are less common, but it has been held
that when no charter or act of incorporation of a town can be found, it may be shown to have claimed
and exercised the powers of a town with the knowledge and assent of the legislature, and without
objection or interruption for so long a period as to furnish evidence of a prescriptive right. 28

What is clearly essential is a factual demonstration of the continuous exercise by the municipal
corporation of its corporate powers, as well as the acquiescence thereto by the other instrumentalities
of the state. Camid does not have the opportunity to make an initial factual demonstration of those
circumstances before this Court. Indeed, the factual deficiencies aside, Camid's plaint should have
undergone the usual administrative gauntlet and, once that was done, should have been filed first with
the Court of Appeals, which at least would have had the power to make the necessary factual
determinations. Camid's seeming ignorance of the principles of exhaustion of administrative remedies
and hierarchy of courts, as well as the concomitant prematurity of the present petition, cannot be
countenanced.

It is also difficult to capture the sense and viability of Camid's present action. The assailed issuance is
the Certification issued by the DILG. But such Certification does not pretend to bear the authority to
create or revalidate a municipality. Certainly, the annulment of the Certification will really do nothing
to serve Camid's ultimate cause - the recognition of Andong. Neither does the Certification even
expressly refute the claim that Andong still exists, as there is nothing in the document that comments
on the present status of Andong. Perhaps the Certification is assailed before this Court if only to
present an actual issuance, rather than a long-standing habit or pattern of action that can be annulled
through the special civil action of certiorari . Still, the relation of the Certification to Camid's central
argument is forlornly strained.

These disquisitions aside, the central issue remains whether a municipality whose creation by
executive fiat was previously voided by this Court may attain recognition in the absence of any
curative or reimplementing statute. Apparently, the question has never been decided before, San
Narciso and its kindred cases pertaining as they did to municipalities whose bases of creation were
dubious yet were never judicially nullified. The effect of Section 442(d) of the Local Government Code
on municipalities such as Andong warrants explanation. Besides, the residents of Andong who belabor
under the impression that their town still exists, much less those who may comport themselves as the
municipality's "Interim Government," would be well served by a rude awakening.

The Court can employ a simplistic approach in resolving the substantive aspect of the petition, merely
by pointing out that the Municipality of Andong never existed. 29 Executive Order No. 107, which
established Andong, was declared "null and void ab initio" in 1965 by this Court in Pelaez, along with
thirty-three (33) other executive orders. The phrase "ab initio" means "from the beginning,"30 "at
first,"31 "from the inception."32 Pelaez was never reversed by this Court but rather it was expressly
affirmed in the cases of Municipality of San Joaquin v. Siva,33 Municipality of Malabang v. Benito,34 and
Municipality of Kapalong v. Moya.35 No subsequent ruling by this Court declared Pelaez as overturned
or inoperative. No subsequent legislation has been passed since 1965 creating a Municipality of
Andong. Given these facts, there is hardly any reason to elaborate why Andong does not exist as a
duly constituted municipality.

This ratiocination does not admit to patent legal errors and has the additional virtue of blessed
austerity. Still, its sweeping adoption may not be advisedly appropriate in light of Section 442(d) of
the Local Government Code and our ruling in Municipality of San Narciso, both of which admit to the
possibility of de facto municipal corporations.
To understand the applicability of Municipality of San Narciso and Section 442(b) of the Local
Government Code to the situation of Andong, it is necessary again to consider the ramifications of our
decision in Pelaez.

The eminent legal doctrine enunciated in Pelaez was that the President was then, and still is, not
empowered to create municipalities through executive issuances. The Court therein recognized "that
the President has, for many years, issued executive orders creating municipal corporations, and that
the same have been organized and in actual operation . . . ." 36 However, the Court ultimately nullified
only those thirty-three (33) municipalities, including Andong, created during the period from 4
September to 29 October 1964 whose existence petitioner Vice-President Pelaez had specifically
assailed before this Court. No pronouncement was made as to the other municipalities which had been
previously created by the President in the exercise of power the Court deemed unlawful.

Two years after Pelaez was decided, the issue again came to fore in Municipality of San Joaquin v.
Siva.37 The Municipality of Lawigan was created by virtue of Executive Order No. 436 in 1961. Lawigan
was not one of the municipalities ordered annulled in Pelaez. A petition for prohibition was filed
contesting the legality of the executive order, again on the ground that Section 68 of the Revised
Administrative Code was unconstitutional. The trial court dismissed the petition, but the Supreme
Court reversed the ruling and entered a new decision declaring Executive Order No. 436 void ab initio.
The Court reasoned without elaboration that the issue had already been squarely taken up and settled
in Pelaez which agreed with the argument posed by the challengers to Lawigan's validity. 38

In the 1969 case of Municipality of Malabang v. Benito,39 what was challenged is the validity of the
constitution of the Municipality of Balabagan in Lanao del Sur, also created by an executive
order,40 and which, similar to Lawigan, was not one of the municipalities annulled in Pelaez. This time,
the officials of Balabagan invoked de facto status as a municipal corporation in order to dissuade the
Court from nullifying action. They alleged that its status as a de facto corporation cannot be
collaterally attacked but should be inquired into directly in an action for quo warranto at the instance
of the State, and not by a private individual as it was in that case. In response, the Court conceded
that an inquiry into the legal existence of a municipality is reserved to the State in a proceeding
for quo warranto, but only if the municipal corporation is a de facto corporation.41

Ultimately, the Court refused to acknowledge Balabagan as a de facto corporation, even though it had
been organized prior to the Court's decision in Pelaez. The Court declared void the executive order
creating Balabagan and restrained its municipal officials from performing their official duties and
functions.42 It cited conflicting American authorities on whether a de facto corporation can exist where
the statute or charter creating it is unconstitutional. 43 But the Court's final conclusion was unequivocal
that Balabagan was not a de facto corporation.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

In the cases where a de facto municipal corporation was recognized as such despite the fact that the
statute creating it was later invalidated, the decisions could fairly be made to rest on the consideration
that there was some other valid law giving corporate vitality to the organization. Hence, in the case at
bar, the mere fact that Balabagan was organized at a time when the statute had not been invalidated
cannot conceivably make it a de facto corporation, as, independently of the Administrative Code
provision in question, there is no other valid statute to give color of authority to its creation. 44

The Court did clarify in Malabang that the previous acts done by the municipality in the exercise of its
corporate powers were not necessarily a nullity. 45 Camid devotes several pages of his petition in citing
this point,46 yet the relevance of the citation is unclear considering that Camid does not assert the
validity of any corporate act of Andong prior to its judicial dissolution. Notwithstanding, the Court
in Malabang retained an emphatic attitude as to the unconstitutionality of the power of the President
to create municipal corporations by way of presidential promulgations, as authorized under Section 68
of the Revised Administrative Code.

This principle was most recently affirmed in 1988, in Municipality of Kapalong v. Moya.47 The
municipality of Santo Tomas, created by President Carlos P. Garcia, filed a complaint against another
municipality, who challenged Santo Tomas's legal personality to institute suit. Again, Santo Tomas had
not been expressly nullified by prior judicial action, yet the Court refused to recognize its legal
existence. The blunt but simple ruling: "Now then, as ruled in the Pelaez case supra, the President has
no power to create a municipality. Since [Santo Tomas] has no legal personality, it can not be a party
to any civil action'. "48

Nevertheless, when the Court decided Municipality of San Narciso49 in 1995, it indicated a shift in the
jurisprudential treatment of municipalities created through presidential issuances. The questioned
municipality of San Andres, Quezon was created on 20 August 1959 by Executive Order No. 353
issued by President Carlos P. Garcia. Executive Order No. 353 was not one of the thirty-three
issuances annulled by Pelaez in 1965. The legal status of the Municipality of San Andres was first
challenged only in 1989, through a petition for quo warranto filed with the Regional Trial Court of
Gumaca, Quezon, which did cite Pelaez as authority.50 The RTC dismissed the petition for lack of cause
of action, and the petitioners therein elevated the matter to this Court.

In dismissing the petition, the Court delved in the merits of the petition, if only to resolve further
doubt on the legal status of San Andres. It noted a circumstance which is not present in the case at
bar that San Andres was in existence for nearly thirty (30) years before its legality was challenged.
The Court did not declare the executive order creating San Andres null and void. Still, acting on the
premise that the said executive order was a complete nullity, the Court noted "peculiar circumstances"
that led to the conclusion that San Andres had attained the unique status of a "de facto municipal
corporation."51 It noted that Pelaez limited its nullificatory effect only to those executive orders
specifically challenged therein, despite the fact that the Court then could have very well extended the
decision to invalidate San Andres as well.52 This statement squarely contradicts Camid's reading of San
Narciso that the creation of San Andres, just like Andong, had been declared a complete nullity on the
same ground of unconstitutional delegation of legislative power found in Pelaez.53

The Court also considered the applicability of Section 442(d) 54 of the Local Government Code of 1991.
It clarified the implication of the provision as follows:

Equally significant is Section 442(d) of the Local Government Code to the effect that municipal
districts "organized pursuant to presidential issuances or executive orders and which have their
respective sets of elective municipal officials holding office at the time of the effectivity of (the) Code
shall henceforth be considered as regular municipalities." No pretension of unconstitutionality per se of
Section 442(d) of the Local Government Code is preferred. It is doubtful whether such a pretext, even
if made, would succeed. The power to create political subdivisions is a function of the
legislature. Congress did just that when it has incorporated Section 442(d) in the Code.
Curative laws, which in essence are retrospective, and aimed at giving "validity to acts done that
would have been invalid under existing laws, as if existing laws have been complied with," are validly
accepted in this jurisdiction, subject to the usual qualification against impairment of vested rights.
(Emphasis supplied)55

The holding in San Narciso was subsequently affirmed in Municipality of Candijay v. Court of
Appeals56 and Municipality of Jimenez v. Baz57 In Candijay, the juridical personality of the Municipality
of Alicia, created in a 1949 executive order, was attacked only beginning in 1984. Pelaez was again
invoked in support of the challenge, but the Court refused to invalidate the municipality, citing San
Narciso at length. The Court noted that the situation of the Municipality of Alicia was strikingly similar
to that in San Narciso; hence, the town should likewise "benefit from the effects of Section 442(d) of
the Local Government Code, and should [be] considered as a regular, de jure municipality." 58

The valid existence of Municipality of Sinacaban, created in a 1949 executive order, was among the
issues raised in Jimenez. The Court, through Justice Mendoza, provided an expert summation of the
evolution of the rule.

The principal basis for the view that Sinacaban was not validly created as a municipal corporation is
the ruling in Pelaez v. Auditor General that the creation of municipal corporations is essentially a
legislative matter and therefore the President was without power to create by executive order the
Municipality of Sinacaban. The ruling in this case has been reiterated in a number of cases later
decided. However, we have since held that where a municipality created as such by executive order is
later impliedly recognized and its acts are accorded legal validity, its creation can no longer be
questioned. In Municipality of San Narciso, Quezon v. Mendez, Sr., this Court considered the following
factors as having validated the creation of a municipal corporation, which, like the Municipality of
Sinacaban, was created by executive order of the President before the ruling in Pelaez v. Auditor
General: (1) the fact that for nearly 30 years the validity of the creation of the municipality had never
been challenged; (2) the fact that following the ruling in Pelaez no quo warranto suit was filed to
question the validity of the executive order creating such municipality; and (3) the fact that the
municipality was later classified as a fifth class municipality, organized as part of a municipal circuit
court and considered part of a legislative district in the Constitution apportioning the seats in the
House of Representatives. Above all, it was held that whatever doubt there might be as to
the de jure character of the municipality must be deemed to have been put to rest by the Local
Government Code of 1991 (R. A. No. 7160), '442(d) of which provides that "municipal districts
organized pursuant to presidential issuances or executive orders and which have their respective sets
of elective officials holding office at the time of the effectivity of this Code shall henceforth be
considered as regular municipalities."

Here, the same factors are present so as to confer on Sinacaban the status of at least a de facto
municipal corporation in the sense that its legal existence has been recognized and acquiesced publicly
and officially. Sinacaban had been in existence for sixteen years when Pelaez v. Auditor General was
decided on December 24, 1965. Yet the validity of E.O. No. 258 creating it had never been
questioned. Created in 1949, it was only 40 years later that its existence was questioned and only
because it had laid claim to an area that apparently is desired for its revenue. This fact must be
underscored because under Rule 66, '16 of the Rules of Court, a quo warranto suit against a
corporation for forfeiture of its charter must be commenced within five (5) years from the time the act
complained of was done or committed. On the contrary, the State and even the Municipality of
Jimenez itself have recognized Sinacaban's corporate existence. Under Administrative Order No. 33
dated June 13, 1978 of this Court, as reiterated by '31 of the Judiciary Reorganization Act of 1980 (B.
P. Blg. 129), Sinacaban is constituted part of a municipal circuit for purposes of the establishment of
Municipal Circuit Trial Courts in the country. For its part, Jimenez had earlier recognized Sinacaban in
1950 by entering into an agreement with it regarding their common boundary. The agreement was
embodied in Resolution No. 77 of the Provincial Board of Misamis Occidental.

Indeed Sinacaban has attained de jure status by virtue of the Ordinance appended to the 1987
Constitution, apportioning legislative districts throughout the country, which considered Sinacaban
part of the Second District of Misamis Occidental. Moreover, following the ruling in Municipality of San
Narciso, Quezon v. Mendez, Sr., 442(d) of the Local Government Code of 1991 must be deemed to
have cured any defect in the creation of Sinacaban'. 59 Ï‚ηαñrοblεš  Î½Î¹r†υαl  lαω
lιbrαrÿ

From this survey of relevant jurisprudence, we can gather the applicable rules. Pelaez and its offspring
cases ruled that the President has no power to create municipalities, yet limited its nullificatory effects
to the particular municipalities challenged in actual cases before this Court. However, with the
promulgation of the Local Government Code in 1991, the legal cloud was lifted over the municipalities
similarly created by executive order but not judicially annulled. The de facto status of such
municipalities as San Andres, Alicia and Sinacaban was recognized by this Court, and Section 442(b)
of the Local Government Code deemed curative whatever legal defects to title these municipalities had
labored under.

Is Andong similarly entitled to recognition as a de facto municipal corporation? It is not. There are
eminent differences between Andong and municipalities such as San Andres, Alicia and Sinacaban.
Most prominent is the fact that the executive order creating Andong was expressly annulled by order
of this Court in 1965. If we were to affirm Andong's de facto status by reason of its alleged continued
existence despite its nullification, we would in effect be condoning defiance of a valid order of this
Court.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

Court decisions cannot obviously lose their efficacy due to the sheer defiance by the parties aggrieved.
It bears noting that based on Camid's own admissions, Andong does not meet the requisites set forth
by Section 442(d) of the Local Government Code. Section 442(d) requires that in order that the
municipality created by executive order may receive recognition, they must "have their respective set
of elective municipal officials holding office at the time of the effectivity of [the Local Government]
Code." Camid admits that Andong has never elected its municipal officers at all. 60 This incapacity ties
in with the fact that Andong was judicially annulled in 1965. Out of obeisance to our ruling in Pelaez,
the national government ceased to recognize the existence of Andong, depriving it of its share of the
public funds, and refusing to conduct municipal elections for the void municipality.

The failure to appropriate funds for Andong and the absence of elections in the municipality in the last
four decades are eloquent indicia of the non-recognition by the State of the existence of the town. The
certifications relied upon by Camid, issued by the DENR-CENRO and the National Statistics Office, can
hardly serve the purpose of attesting to Andong's legal efficacy. In fact, both these certifications
qualify that they were issued upon the request of Camid, "to support the restoration or re-operation of
the Municipality of Andong, Lanao del Sur," 61 thus obviously conceding that the municipality is at
present inoperative.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

We may likewise pay attention to the Ordinance appended to the 1987 Constitution, which had also
been relied upon in Jimenez and San Narciso. This Ordinance, which apportioned the seats of the
House of Representatives to the different legislative districts in the Philippines, enumerates the various
municipalities that are encompassed by the various legislative districts. Andong is not listed therein as
among the municipalities of Lanao del Sur, or of any other province for that matter. 62 On the other
hand, the municipalities of San Andres, Alicia and Sinacaban are mentioned in the Ordinance as part
of Quezon,63 Bohol,64 and Misamis Occidental65 respectively.

How about the eighteen (18) municipalities similarly nullified in Pelaez but certified as existing in the
DILG Certification presented by Camid? The petition fails to mention that subsequent to the ruling
in Pelaez, legislation was enacted to reconstitute these municipalities. 66 It is thus not surprising that
the DILG certified the existence of these eighteen (18) municipalities, or that these towns are among
the municipalities enumerated in the Ordinance appended to the Constitution. Andong has not been
similarly reestablished through statute. Clearly then, the fact that there are valid organic statutes
passed by legislation recreating these eighteen (18) municipalities is sufficient legal basis to accord a
different legal treatment to Andong as against these eighteen (18) other municipalities.

We thus assert the proper purview to Section 442(d) of the Local Government Code that it does not
serve to affirm or reconstitute the judicially dissolved municipalities such as Andong, which had been
previously created by presidential issuances or executive orders. The provision affirms the legal
personalities only of those municipalities such as San Narciso, Alicia, and Sinacaban, which may have
been created using the same infirm legal basis, yet were fortunate enough not to have been judicially
annulled. On the other hand, the municipalities judicially dissolved in cases such as Pelaez, San
Joaquin, and Malabang, remain inexistent, unless recreated through specific legislative enactments, as
done with the eighteen (18) municipalities certified by the DILG. Those municipalities derive their legal
personality not from the presidential issuances or executive orders which originally created them or
from Section 442(d), but from the respective legislative statutes which were enacted to revive
them.ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

And what now of Andong and its residents? Certainly, neither Pelaez or this decision has obliterated
Andong into a hole on the ground. The legal effect of the nullification of Andong in Pelaez was to
revert the constituent barrios of the voided town back into their original municipalities, namely the
municipalities of Lumbatan, Butig and Tubaran. 67 These three municipalities subsist to this day as part
of Lanao del Sur,68 and presumably continue to exercise corporate powers over the barrios which once
belonged to Andong.

If there is truly a strong impulse calling for the reconstitution of Andong, the solution is through the
legislature and not judicial confirmation of void title. If indeed the residents of Andong have, all these
years, been governed not by their proper municipal governments but by a ragtag "Interim
Government," then an expedient political and legislative solution is perhaps necessary. Yet we can
hardly sanction the retention of Andong's legal personality solely on the basis of collective amnesia
that may have allowed Andong to somehow pretend itself into existence despite its judicial dissolution.
Maybe those who insist Andong still exists prefer to remain unperturbed in their blissful ignorance, like
the inhabitants of the cave in Plato's famed allegory. But the time has come for the light to seep in,
and for the petitioner and like-minded persons to awaken to legal reality.

WHEREFORE, the Petition is DISMISSED for lack of merit. Costs against petitioner.

PART V; FUNDAMENTAL/INHERENT POWERS OF THE STATE:

.a. Eminent Domain--- vs. Sec. 9 of Art. III, Sec. 18 of Art XII and Sec. 22 of Art. XVIII of
the 1987 Constitution

Cases: Inherent Definition/Concept :

- Republic vs. Vda de Castellvi, 58 SCRA 336, 350-352

Republic vs. Castelvi, 58 SCRA 336 (1974), G.R. No. L-20620, August 15, 1974

Republic vs. Castelvi, 58 SCRA 336 (1974)

Nature: Appeal from the decision of the Court of First Instance of Pampanga in its Civil Case No.
1623, an expropriation proceeding.
Keywords: expropriation proceedings; taking of property; lessor/lessee

Facts:
After the owner of a parcel of land that has been rented and occupied by the government in 1947
refused to extend the lease, the latter commenced expropriation proceedings in 1959. During the
assessment of just compensation, the government argued that it had taken the property when the
contract of lease commenced and not when the proceedings begun. The owner maintains that the
disputed land was not taken when the government commenced to occupy the said land as lessee
because the essential elements of the “taking” of property under the power of eminent domain,
namely (1) entrance and occupation by condemnor upon the private property for more than a
momentary 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, are not present.

Issue: Whether or not the taking of property has taken place when the condemnor has entered and
occupied the property as lesse.

Ratio: No, the property was deemed taken only when the expropriation proceedings commenced in
1959.

Ruling:
The essential elements of the taking are: (1) Expropriator must enter a private property,
(2) for more than a momentary period, (3) and under warrant of legal authority, (4)
devoting it to public use, or otherwise informally appropriating or injuriously affecting it in
such a way as (5) substantially to oust the owner and deprive him of all beneficial
enjoyment thereof.

In the case at bar, these elements were not present when the government entered and
occupied the property under a contract of lease.

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,

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.

————

No. L-20620
August 15, 1974
Facts:
Philippine Government filed an eminent domain case against the estate of Castellvi for a 760,000 sqm.
Parcel of land in Pampanga. Government alleged that the valuation should not be more than 2000
pesos per sqm or a total of 259000 peso and prayed that the provisional value should be set at that
price. Castellvi contended that it is actually worth 15 pesos per sqm or a total of 11,400,000.00. The
alleged taking started when the Government through the Philippine Air Force has been occupying the
lot under lease since 1947 but on 1956 Castellvi refused to renew lease contract and opted to have
the lot subdivided and sold to the public. Government opposed since they introduced improvements to
the lot worth 500,000 pesos.
The Government alleged that the “taking” should be counted from 1947 by virtue of the lease
agreement. Castellvi insists that it should start from the time the lease contract had expired on 1956.
They filed the case on June 1959.

Issue:
Is the Government’s position correct?

Held:
No. Castellvi is Correct.

Ratio:
First, the expropriator must enter the property, which is admitted in this case.

Second, the entrance must be more than a momentary period. In this case, the lease contract was
renewable annually. The entry on 1947 under lease was temporary and considered transitory. Even if
AFP constructed improvements, it does not alter the fact that the entry was not permanent, in that it
was meant to last only for a year. Lease contract contained express provision that Government would
return lot at the end of the agreement. Express contract provision prevails over “intent” to take.
Third, the public use must be in such a way to oust the owner and deprive him of all beneficial
enjoyment of the property. In this case, the entry of the AFP into the property did not oust Castellvi
and deprive her of all beneficial enjoyment of the property. Castellvi remained as owner during the
lease period.
Neither is the Government’s contention that the fact that the lease provision was year to year it had
the permanent right to occupy.
The determination of just compensation should be determined as of the date of the filing of the
complaint under Sec. 4, Rule 67. Government was placed in possession over the property only on
August 1959. The value should be based on June 1959, the date the case was filed.
On the issue of the value of the land, Government insists that the land is still agricultural land, hence
should be valued at around 20 centavos per sqm. However, the land has not been used for agriculture
since the occupation by the AFP. It was even declared under its Tax declaration to be a residential lot
of which they have been paying taxes. The court valued the lot at 5 pesos per sqm instead of the 10
pesos per sqm as declared by the Commissioners. SC decided this was the fair price.
On the issue of interest, 6% interest is imposed beginning August 10, 1959 or the time the lot’s
possession was given to the Government

This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of
Appeals (CA) Decision[1] dated July 31, 2007 in CA-G.R. CV No. 77997. The assailed decision affirmed
with modification the Regional Trial Court (RTC)[2] Decision[3] dated March 22, 2002 in Civil Case No.
208-M-95.

The case stemmed from the following factual and procedural antecedents:

Respondent spouses Heracleo and Ramona Tecson (respondents) are co-owners of a parcel of land
with an area of 7,268 square meters located in San Pablo, Malolos, Bulacan and covered by Transfer
Certificate of Title (TCT) No. T-43006[4] of the Register of Deeds of Bulacan. Said parcel of land was
among the properties taken by the government sometime in 1940 without the owners’ consent and
without the necessary expropriation proceedings and used for the construction of the MacArthur
Highway.[5]
In a letter[6] dated December 15, 1994, respondents demanded the payment of the fair market value
of the subject parcel of land. Petitioner Celestino R. Contreras (petitioner Contreras), then District
Engineer of the First Bulacan Engineering District of petitioner Department of Public Works and
Highways (DPWH), offered to pay the subject land at the rate of P0.70 per square meter per
Resolution of the Provincial Appraisal Committee (PAC) of Bulacan. [7] Unsatisfied with the offer,
respondents demanded for the return of their property or the payment of compensation at the current
fair market value.[8]

As their demand remained unheeded, respondents filed a Complaint [9] for recovery of possession with
damages against petitioners, praying that they be restored to the possession of the subject parcel of
land and that they be paid attorney’s fees.[10] Respondents claimed that the subject parcel of land was
assessed at P2,543,800.00. [11]

Instead of filing their Answer, petitioners moved for the dismissal of the complaint on the following
grounds: (1) that the suit is against the State which may not be sued without its consent; (2) that the
case has already prescribed; (3) that respondents have no cause of action for failure to exhaust
administrative remedies; and (4) if respondents are entitled to compensation, they should be paid
only the value of the property in 1940 or 1941. [12]

On June 28, 1995, the RTC issued an Order[13] granting respondents’ motion to dismiss based on the
doctrine of state immunity from suit. As respondents’ claim includes the recovery of damages, there is
no doubt that the suit is against the State for which prior waiver of immunity is required.

When elevated to the CA,[14] the appellate court did not agree with the RTC and found instead that the
doctrine of state immunity from suit is not applicable, because the recovery of compensation is the
only relief available to the landowner. To deny such relief would undeniably cause injustice to the
landowner. Besides, petitioner Contreras, in fact, had earlier offered the payment of compensation
although at a lower rate. Thus, the CA reversed and set aside the dismissal of the complaint and,
consequently, remanded the case to the trial court for the purpose of determining the just
compensation to which respondents are entitled to recover from the government. [15] With the finality
of the aforesaid decision, trial proceeded in the RTC.

The Branch Clerk of Court was initially appointed as the Commissioner and designated as the
Chairman of the Committee that would determine just compensation, [16] but the case was later
referred to the PAC for the submission of a recommendation report on the value of the subject
property.[17] In PAC Resolution No. 99-007,[18] the PAC recommended the amount of P1,500.00 per
square meter as the just compensation for the subject property.

On March 22, 2002, the RTC rendered a Decision, [19] the dispositive portion of which reads:

WHEREFORE, premises considered, the Department of Public Works and Highways or its duly assigned
agencies are hereby directed to pay said Complainants/Appellants the amount of One Thousand Five
Hundred Pesos (P1,500.00) per square meter for the lot subject matter of this case in accordance with
the Resolution of the Provincial Appraisal Committee dated December 19, 2001.

SO ORDERED.[20]

On appeal, the CA affirmed the above decision with the modification that the just compensation stated
above should earn interest of six percent (6%) per annum computed from the filing of the action on
March 17, 1995 until full payment.[21]

In its appeal before the CA, petitioners raised the issues of prescription and laches, which the CA
brushed aside on two grounds: first, that the issue had already been raised by petitioners when the
case was elevated before the CA in CA-G.R. CV No. 51454. Although it was not squarely ruled upon by
the appellate court as it did not find any reason to delve further on such issues, petitioners did not
assail said decision barring them now from raising exactly the same issues; and second, the issues
proper for resolution had been laid down in the pre-trial order which did not include the issues of
prescription and laches. Thus, the same can no longer be further considered. As to the propriety of the
property’s valuation as determined by the PAC and adopted by the RTC, while recognizing the rule
that the just compensation should be the reasonable value at the time of taking which is 1940, the CA
found it necessary to deviate from the general rule. It opined that it would be obviously unjust and
inequitable if respondents would be compensated based on the value of the property in 1940 which is
P0.70 per sq m, but the compensation would be paid only today. Thus, the appellate court found it
just to award compensation based on the value of the property at the time of payment. It, therefore,
adopted the RTC’s determination of just compensation of P1,500.00 per sq m as recommended by the
PAC. The CA further ordered the payment of interest at the rate of six percent (6%) per annum
reckoned from the time of taking, which is the filing of the complaint on March 17, 1995.

Aggrieved, petitioners come before the Court assailing the CA decision based on the following
grounds:

I.

THE COURT OF APPEALS GRAVELY ERRED IN GRANTING JUST COMPENSATION TO RESPONDENTS

CONSIDERING THE HIGHLY DUBIOUS AND QUESTIONABLE CIRCUMSTANCES OF THEIR ALLEGED
OWNERSHIP OF THE SUBJECT PROPERTY.

II.

THE COURT OF APPEALS GRAVELY ERRED IN AWARDING JUST COMPENSATION TO RESPONDENTS

BECAUSE THEIR COMPLAINT FOR RECOVERY OF POSSESSION AND DAMAGES IS ALREADY BARRED
BY PRESCRIPTION AND LACHES.

III.

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE TRIAL COURT’S DECISION ORDERING
THE PAYMENT OF JUST COMPENSATION BASED ON THE CURRENT MARKET VALUE OF THE ALLEGED
PROPERTY OF RESPONDENTS.[22]

Petitioners insist that the action is barred by prescription having been filed fifty-four (54) years after
the accrual of the action in 1940. They explain that the court can motu proprio dismiss the complaint
if it shows on its face that the action had already prescribed. Petitioners likewise aver that
respondents slept on their rights for more than fifty years; hence, they are guilty of laches. Lastly,
petitioners claim that the just compensation should be based on the value of the property at the time
of taking in 1940 and not at the time of payment.[23]

The petition is partly meritorious.

The instant case stemmed from an action for recovery of possession with damages filed by
respondents against petitioners. It, however, revolves around the taking of the subject lot by
petitioners for the construction of the MacArthur Highway. There is taking when the expropriator
enters private property not only for a momentary period but for a permanent duration, or for the
purpose of devoting the property to public use in such a manner as to oust the owner and deprive him
of all beneficial enjoyment thereof.[24]

It is undisputed that the subject property was taken by petitioners without the benefit of expropriation
proceedings for the construction of the MacArthur Highway. After the lapse of more than fifty years,
the property owners sought recovery of the possession of their property. Is the action barred by
prescription or laches? If not, are the property owners entitled to recover possession or just
compensation?

As aptly noted by the CA, the issues of prescription and laches are not proper issues for resolution as
they were not included in the pre-trial order. We quote with approval the CA’s ratiocination in this
wise:

Procedurally, too, prescription and laches are no longer proper issues in this appeal. In the pre-trial
order issued on May 17, 2001, the RTC summarized the issues raised by the defendants, to wit: (a)
whether or not the plaintiffs were entitled to just compensation; (b) whether or not the valuation
would be based on the corresponding value at the time of the taking or at the time of the filing of the
action; and (c) whether or not the plaintiffs were entitled to damages. Nowhere did the pre-trial order
indicate that prescription and laches were to be considered in the adjudication of the RTC. [25]

To be sure, the pre-trial order explicitly defines and limits the issues to be tried and controls the
subsequent course of the action unless modified before trial to prevent manifest injustice. [26]

Even if we squarely deal with the issues of laches and prescription, the same must still fail. Laches is
principally a doctrine of equity which is applied to avoid recognizing a right when to do so would result
in a clearly inequitable situation or in an injustice. [27] This doctrine finds no application in this case,
since there is nothing inequitable in giving due course to respondents’ claim. Both equity and the law
direct that a property owner should be compensated if his property is taken for public use. [28] Neither
shall prescription bar respondents’ claim following the long-standing rule “that where private property
is taken by the Government for public use without first acquiring title thereto either through
expropriation or negotiated sale, the owner’s action to recover the land or the value thereof does not
prescribe.”[29]

When a property is taken by the government for public use, jurisprudence clearly provides for the
remedies available to a landowner. The owner may recover his property if its return is feasible or, if it
is not, the aggrieved owner may demand payment of just compensation for the land taken. [30] For
failure of respondents to question the lack of expropriation proceedings for a long period of time, they
are deemed to have waived and are estopped from assailing the power of the government to
expropriate or the public use for which the power was exercised. What is left to respondents is the
right of compensation.[31] The trial and appellate courts found that respondents are entitled to
compensation. The only issue left for determination is the propriety of the amount awarded to
respondents.

Just compensation is “the fair value of the property as between one who receives, and one who
desires to sell, x x x fixed at the time of the actual taking by the government.” This rule holds
true when the property is taken before the filing of an expropriation suit, and even if it is the property
owner who brings the action for compensation. [32]

The issue in this case is not novel.

In Forfom Development Corporation [Forfom] v. Philippine National Railways [PNR], [33] PNR entered
the property of Forfom in January 1973 for public use, that is, for railroad tracks, facilities and
appurtenances for use of the Carmona Commuter Service without initiating expropriation proceedings.
[34]
 In 1990, Forfom filed a complaint for recovery of possession of real property and/or damages
against PNR. In Eusebio v. Luis,[35] respondent’s parcel of land was taken in 1980 by the City of Pasig
and used as a municipal road now known as A. Sandoval Avenue in Pasig City without the appropriate
expropriation proceedings. In 1994, respondent demanded payment of the value of the property, but
they could not agree on its valuation prompting respondent to file a complaint for reconveyance
and/or damages against the city government and the mayor. In Manila International Airport Authority
v. Rodriguez,[36] in the early 1970s, petitioner implemented expansion programs for its runway
necessitating the acquisition and occupation of some of the properties surrounding its premises. As to
respondent’s property, no expropriation proceedings were initiated. In 1997, respondent demanded
the payment of the value of the property, but the demand remained unheeded prompting him to
institute a case for accion reivindicatoria with damages against petitioner. In Republic v. Sarabia,
[37]
 sometime in 1956, the Air Transportation Office (ATO) took possession and control of a portion of a
lot situated in Aklan, registered in the name of respondent, without initiating expropriation
proceedings. Several structures were erected thereon including the control tower, the Kalibo crash fire
rescue station, the Kalibo airport terminal and the headquarters of the PNP Aviation Security Group. In
1995, several stores and restaurants were constructed on the remaining portion of the lot. In 1997,
respondent filed a complaint for recovery of possession with damages against the storeowners where
ATO intervened claiming that the storeowners were its lessees.

The Court in the above-mentioned cases was confronted with common factual circumstances where
the government took control and possession of the subject properties for public use without initiating
expropriation proceedings and without payment of just compensation, while the landowners failed for
a long period of time to question such government act and later instituted actions for recovery of
possession with damages. The Court thus determined the landowners’ right to the payment of just
compensation and, more importantly, the amount of just compensation. The Court has uniformly
ruled that just compensation is the value of the property at the time of taking that is
controlling for purposes of compensation. In Forfom, the payment of just compensation was
reckoned from the time of taking in 1973; in Eusebio, the Court fixed the just compensation by
determining the value of the property at the time of taking in 1980; in MIAA, the value of the lot at
the time of taking in 1972 served as basis for the award of compensation to the owner; and
in Republic, the Court was convinced that the taking occurred in 1956 and was thus the basis in fixing
just compensation. As in said cases, just compensation due respondents in this case should, therefore,
be fixed not as of the time of payment but at the time of taking, that is, in 1940.

The reason for the rule has been clearly explained in Republic v. Lara, et al.,[38] and repeatedly held by
the Court in recent cases, thus:

x x x “[T]he value of the property should be fixed as of the date when it was taken and not the date of
the filing of the proceedings.” For where property is taken ahead of the filing of the condemnation
proceedings, the value thereof may be enhanced by the public purpose for which it is taken; the entry
by the plaintiff upon the property may have depreciated its value thereby; or, there may have been a
natural increase in the value of the property from the time it is taken to the time the complaint is
filed, due to general economic conditions. The owner of private property should be compensated only
for what he actually loses; it is not intended that his compensation shall extend beyond his loss or
injury. And what he loses is only the actual value of his property at the time it is taken x x x. [39]

Both the RTC and the CA recognized that the fair market value of the subject property in 1940
was P0.70/sq m.[40] Hence, it should, therefore, be used in determining the amount due
respondents instead of the higher value which is P1,500.00. While disparity in the above
amounts is obvious and may appear inequitable to respondents as they would be receiving
such outdated valuation after a very long period, it is equally true that they too are remiss in
guarding against the cruel effects of belated claim. The concept of just compensation does not
imply fairness to the property owner alone.  Compensation must be just not only to the
property owner, but also to the public which ultimately bears the cost of expropriation. [41]

Clearly, petitioners had been occupying the subject property for more than fifty years without
the benefit of expropriation proceedings. In taking respondents’ property without the benefit
of expropriation proceedings and without payment of just compensation, petitioners clearly
acted in utter disregard of respondents’ proprietary rights which cannot be countenanced by
the Court.[42] For said illegal taking, respondents are entitled to adequate compensation in the
form of actual or compensatory damages which in this case should be the legal interest of six
percent (6%) per annum on the value of the land at the time of taking in 1940 until full
payment.[43] This is based on the principle that interest runs as a matter of law and follows
from the right of the landowner to be placed in as good position as money can accomplish, as
of the date of taking.[44]

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of

Appeals Decision dated July 31, 2007 in CA G.R. CV No. 77997 is MODIFIED, in that the
valuation of the subject property owned by respondents shall be P0.70 instead of Pl,SOO.OO
per square meter, with interest at six percent (6%) per annum from the date of taking in 1940
instead of March 17, 1995, until full paymen
 SEE ALSO CASES : (Supra)

-Republic v.Sandiganbayan, 484 SCRA 119 (’06)

FACTS:

Immediately after assuming power, President Corazon C. Aquino issued Executive Order 1,
creating the PCGG. She empowered the PCGG to recover all ill-gotten wealth allegedly
amassed by former President Ferdinand E. Marcos, his family, and close associates during his
20-year regime.

Acting on the authority given them, Attys. Ramirez and Abella issued a sequestration order
against the Marcoses Olot, Tolosa, Leyte property (Olot Resthouse), a 17-room affair sitting on
42 hectares of beachfront land, with a golf course, swimming pool, cottages, a pelota court,
and a pavilion.

Petitioner Republic of the Philippines, represented by the PCGG, filed a complaint for recovery
of ill-gotten wealth against President Marcos and his wife, respondent Mrs. Marcos, before the
Sandiganbayan.

Mrs. Marcos filed a motion to quash the March 18, 1986 sequestration order against the Olot
Resthouse, claiming that such order, issued only by Attys. Ramirez and Abella, was void for
failing to observe Sec. 3 of the PCGG Rules and Regulations. The rules required the signatures
of at least two PCGG Commissioners.

The Sandiganbayan issued the assailed Resolution, granting the motion to quash and ordering
the full restoration of the Olot Resthouse to Mrs. Marcos.

ISSUE: Whether or not sequestration order against the Olot Resthouse, issued by PCGG
agents before the enactment of the PCGG rules, was validly issued.

HELD: No. Sandiganbayan Decision Affirmed.

POLITICAL LAW- Under Section 26, Article XVIII of the Constitution, an order of sequestration
may only issue upon a showing "of a prima facie case" that the properties are ill-gotten wealth
under Executive Orders 1 and 2

In Bataan Shipyard & Engineering Co, Inc. v. PCGG, the Court held that a prima facie factual
foundation that the properties sequestered are "ill-gotten wealth" is required. The power to
determine the existence of a prima facie case has been vested in the PCGG as an incident to
its investigatory powers. The two-commissioner rule is obviously intended to assure a collegial
determination of such fact.

Here, it is clear that the PCGG did not make a prior determination of the existence of a prima
facie case that would warrant the sequestration of the Olot Resthouse. The Republic presented
no evidence before the Sandiganbayan that shows differently. Nor did the Republic
demonstrate that the two PCGG representatives were given the quasi-judicial authority to
receive and consider evidence that would warrant such a prima facie finding.

Parenthetically, the Republics supposed evidence does not show how the Marcoses acquired
the sequestered property, what makes it "ill-gotten wealth," and how former President Marcos
intervened in its acquisition. Taking the foregoing view, the resolution of the issue surrounding
the character of the property sequestered whether or not it could prima facie be considered ill-
gotten should be necessary.

Even assuming arguendo that Atty. Ramirez had been given prior authority by the PCGG to
place Dio Island Resort under sequestration, nevertheless, the sequestration order he issued is
still void since PCGG may not delegate its authority to sequester to its representatives and
subordinates, and any such delegation is invalid and ineffective.

The absence of a prior determination by the PCGG of a prima facie basis for the sequestration
order is, unavoidably, a fatal defect which rendered the sequestration of respondent
corporation and its properties void ab initio. Being void ab initio, it is deemed non-existent, as
though it had never been issued.

POLITICAL LAW- judicial or quasi-judicial powers may not be delegated

Although the two PCGG lawyers issued the sequestration order in this case on March 18, 1986,
before the passage of Sec. 3 of the PCGG Rules, such consideration is immaterial following our
above ruling.

In PCGG v. Judge Pe, the Court held that the powers, functions and duties of the PCGG
amount to the exercise of quasi-judicial functions, and the exercise of such functions cannot
be delegated by the Commission to its representatives or subordinates or task forces because
of the well-established principle that judicial or quasi-judicial powers may not be delegated.

DISMISSED.

Xxxxx

Before the Court is this petition for certiorari under Rule 65 of the Rules of Court to nullify and
set aside the March 28, 19951 and March 13, 19972 Resolutions of the Sandiganbayan,
Second Division, in Civil Case No. 0034, insofar as said resolutions ordered the Presidential
Commission on Good Government (PCGG) to pay private respondent Roberto S. Benedicto or
his corporations the value of 227 shares of stock of the Negros Occidental Golf and Country
Club, Inc. (NOGCCI) at P150,000.00 per share, registered in the name of said private
respondent or his corporations.

The facts:

Civil Case No. 0034 entitled Republic of the Philippines, plaintiff, v. Roberto S. Benedicto, et
al., defendants, is a complaint for reconveyance, reversion, accounting, reconstitution and
damages. The case is one of several suits involving ill-gotten or unexplained wealth that
petitioner Republic, through the PCGG, filed with the Sandiganbayan against private
respondent Roberto S. Benedicto and others pursuant to Executive Order (EO) No. 14,3 series
of 1986.

Pursuant to its mandate under EO No. 1,4 series of 1986, the PCGG issued writs placing under
sequestration all business enterprises, entities and other properties, real and personal, owned
or registered in the name of private respondent Benedicto, or of corporations in which he
appeared to have controlling or majority interest. Among the properties thus sequestered and
taken over by PCGG fiscal agents were the 227 shares in NOGCCI owned by private
respondent Benedicto and registered in his name or under the names of corporations he
owned or controlled.

Following the sequestration process, PCGG representatives sat as members of the Board of
Directors of NOGCCI, which passed, sometime in October 1986, a resolution effecting a
corporate policy change. The change consisted of assessing a monthly membership due of
P150.00 for each NOGCCI share. Prior to this resolution, an investor purchasing more than
one NOGCCI share was exempt from paying monthly membership due for the second and
subsequent shares that he/she owned.

Subsequently, on March 29, 1987, the NOGCCI Board passed another resolution, this time
increasing the monthly membership due from P150.00 to P250.00 for each share.

As sequestrator of the 227 shares of stock in question, PCGG did not pay the corresponding
monthly membership due thereon totaling P2,959,471.00. On account thereof, the 227
sequestered shares were declared delinquent to be disposed of in an auction sale.

Apprised of the above development and evidently to prevent the projected auction sale of the
same shares, PCGG filed a complaint for injunction with the Regional Trial Court (RTC) of
Bacolod City, thereat docketed as Civil Case No. 5348. The complaint, however, was
dismissed, paving the way for the auction sale for the delinquent 227 shares of stock. On
August 5, 1989, an auction sale was conducted.
On November 3, 1990, petitioner Republic and private respondent Benedicto entered into a
Compromise Agreement in Civil Case No. 0034. The agreement contained a general release
clause5 whereunder petitioner Republic agreed and bound itself to lift the sequestration on the
227 NOGCCI shares, among other Benedicto’s properties, petitioner Republic acknowledging
that it was within private respondent Benedicto’s capacity to acquire the same shares out of
his income from business and the exercise of his profession.6 Implied in this undertaking is
the recognition by petitioner Republic that the subject shares of stock could not have been ill-
gotten.

In a decision dated October 2, 1992, the Sandiganbayan approved the Compromise

Agreement and accordingly rendered judgment in accordance with its terms.

In the process of implementing the Compromise Agreement, either of the parties would, from
time to time, move for a ruling by the Sandiganbayan on the proper manner of implementing
or interpreting a specific provision therein.

On February 22, 1994, Benedicto filed in Civil Case No. 0034 a "Motion for Release from
Sequestration and Return of Sequestered Shares/Dividends" praying, inter alia, that his
NOGCCI shares of stock be specifically released from sequestration and returned, delivered or
paid to him as part of the parties’ Compromise Agreement in that case. In a Resolution7
promulgated on December 6, 1994, the Sandiganbayan granted Benedicto’s aforementioned
motion but placed the subject shares under the custody of its Clerk of Court, thus:

WHEREFORE, in the light of the foregoing, the said "Motion for Release From Sequestration
and Return of Sequestered Shares/Dividends" is hereby GRANTED and it is directed that said
shares/dividends be delivered/placed under the custody of the Clerk of Court, Sandiganbayan,
Manila subject to this Court’s disposition.

On March 28, 1995, the Sandiganbayan came out with the herein first assailed Resolution,8
which clarified its aforementioned December 6, 1994 Resolution and directed the immediate
implementation thereof by requiring PCGG, among other things:

(b) To deliver to the Clerk of Court the 227 sequestered shares of [NOGCCI] registered in the
name of nominees of ROBERTO S. BENEDICTO free from all liens and encumbrances, or in
default thereof, to pay their value at P150,000.00 per share which can be deducted from [the
Republic’s] cash share in the Compromise Agreement. [Words in bracket added] (Emphasis
Supplied).

Owing to PCGG’s failure to comply with the above directive, Benedicto filed in Civil Case No.
0034 a Motion for Compliance dated July 25, 1995, followed by an Ex-Parte Motion for Early
Resolution dated February 12, 1996. Acting thereon, the Sandiganbayan promulgated yet
another Resolution9 on February 23, 1996, dispositively reading:
WHEREFORE, finding merit in the instant motion for early resolution and considering that,
indeed, the PCGG has not shown any justifiable ground as to why it has not complied with its
obligation as set forth in the Order of December 6, 1994 up to this date and which Order was
issued pursuant to the Compromise Agreement and has already become final and executory,
accordingly, the Presidential Commission on Good Government is hereby given a final
extension of fifteen (15) days from receipt hereof within which to comply with the Order of
December 6, 1994 as stated hereinabove.

On April 1, 1996, PCGG filed a Manifestation with Motion for Reconsideration,10 praying for
the setting aside of the Resolution of February 23, 1996. On April 11, 1996, private
respondent Benedicto filed a Motion to Enforce Judgment Levy. Resolving these two motions,
the Sandiganbayan, in its second assailed Resolution11 dated March 13, 1997, denied that
portion of the PCGG’s Manifestation with Motion for Reconsideration concerning the subject
227 NOGCCI shares and granted Benedicto’s Motion to Enforce Judgment Levy.

Hence, the Republic’s present recourse on the sole issue of whether or not the public
respondent Sandiganbayan, Second Division, gravely abused its discretion in holding that the
PCGG is at fault for not paying the membership dues on the 227 sequestered NOGCCI shares
of stock, a failing which eventually led to the foreclosure sale thereof.

The petition lacks merit.

To begin with, PCGG itself does not dispute its being considered as a receiver insofar as the
sequestered 227 NOGCCI shares of stock are concerned.12 PCGG also acknowledges that as
such receiver, one of its functions is to pay outstanding debts pertaining to the sequestered
entity or property,13 in this case the 227 NOGCCI shares in question. It contends, however,
that membership dues owing to a golf club cannot be considered as an outstanding debt for
which PCGG, as receiver, must pay. It also claims to have exercised due diligence to prevent
the loss through delinquency sale of the subject NOGCCI shares, specifically inviting attention
to the injunctive suit, i.e., Civil Case No. 5348, it filed before the RTC of Bacolod City to enjoin
the foreclosure sale of the shares.

The filing of the injunction complaint adverted to, without more, cannot plausibly tilt the
balance in favor of PCGG. To the mind of the Court, such filing is a case of acting too little and
too late. It cannot be over-emphasized that it behooved the PCGG’s fiscal agents to preserve,
like a responsible father of the family, the value of the shares of stock under their
administration. But far from acting as such father, what the fiscal agents did under the
premises was to allow the element of delinquency to set in before acting by embarking on a
tedious process of going to court after the auction sale had been announced and scheduled.

The PCGG’s posture that to the owner of the sequestered shares rests the burden of paying
the membership dues is untenable. For one, it lost sight of the reality that such dues are
basically obligations attached to the shares, which, in the final analysis, shall be made liable,
thru delinquency sale in case of default in payment of the dues. For another, the PCGG as
sequestrator-receiver of such shares is, as stressed earlier, duty bound to preserve the value
of such shares. Needless to state, adopting timely measures to obviate the loss of those
shares forms part of such duty and due diligence.

The Sandiganbayan, to be sure, cannot plausibly be faulted for finding the PCGG liable for the
loss of the 227 NOGCCI shares. There can be no quibbling, as indeed the graft court so
declared in its assailed and related resolutions respecting the NOGCCI shares of stock, that
PCGG’s fiscal agents, while sitting in the NOGCCI Board of Directors agreed to the amendment
of the rule pertaining to membership dues. Hence, it is not amiss to state, as did the
Sandiganbayan, that the PCGG-designated fiscal agents, no less, had a direct hand in the loss
of the sequestered shares through delinquency and their eventual sale through public auction.
While perhaps anti-climactic to so mention it at this stage, the unfortunate loss of the shares
ought not to have come to pass had those fiscal agents prudently not agreed to the passage of
the NOGCCI board resolutions charging membership dues on shares without playing
representatives.

Given the circumstances leading to the auction sale of the subject NOGCCI shares, PCGG’s
lament about public respondent Sandiganbayan having erred or, worse still, having gravely
abused its discretion in its determination as to who is at fault for the loss of the shares in
question can hardly be given cogency.

For sure, even if the Sandiganbayan were wrong in its findings, which does not seem to be in
this case, it is a well-settled rule of jurisprudence that certiorari will issue only to correct
errors of jurisdiction, not errors of judgment. Corollarily, errors of procedure or mistakes in
the court’s findings and conclusions are beyond the corrective hand of certiorari.14 The
extraordinary writ of certiorari may be availed only upon a showing, in the minimum, that the
respondent tribunal 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.15

The term "grave abuse of discretion" connotes capricious and whimsical exercise of judgment
as is equivalent to excess, or a lack of jurisdiction.16 The abuse must be so patent and gross
as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by
law, or to act at all in contemplation of law as where the power is exercised in an arbitrary and
despotic manner by reason of passion or hostility.17 Sadly, this is completely absent in the
present case. For, at bottom, the assailed resolutions of the Sandiganbayan did no more than
to direct PCGG to comply with its part of the bargain under the compromise agreement it
freely entered into with private respondent Benedicto. Simply put, the assailed resolutions of
the Sandiganbayan have firm basis in fact and in law.

Lest it be overlooked, the issue of liability for the shares in question had, as both public and
private respondents asserted, long become final and executory. Petitioner’s narration of facts
in its present petition is even misleading as it conveniently fails to make reference to two (2)
resolutions issued by the Sandiganbayan. We refer to that court’s resolutions of December 6,
199418 and February 23, 199619 as well as several intervening pleadings which served as
basis for the decisions reached therein. As it were, the present petition questions only and
focuses on the March 28, 199520 and March 13, 199721 resolutions, which merely reiterated
and clarified the graft court’s underlying resolution of December 6, 1994. And to place matters
in the proper perspective, PCGG’s failure to comply with the December 6, 1994 resolution
prompted the issuance of the clarificatory and/or reiteratory resolutions aforementioned.
 In a last-ditch attempt to escape liability, petitioner Republic, through the PCGG, invokes state
immunity from suit.22 As argued, the order for it to pay the value of the delinquent shares
would fix monetary liability on a government agency, thus necessitating the appropriation of
public funds to satisfy the judgment claim.23 But, as private respondent Benedicto correctly
countered, the PCGG fails to take stock of one of the exceptions to the state immunity
principle, i.e., when the government itself is the suitor, as in Civil Case No. 0034. Where, as
here, the State itself is no less the plaintiff in the main case, immunity from suit cannot be
effectively invoked.24 For, as jurisprudence teaches, when the State, through its duly
authorized officers, takes the initiative in a suit against a private party, it thereby descends to
the level of a private individual and thus opens itself to whatever counterclaims or defenses
the latter may have against it.25 Petitioner Republic’s act of filing its complaint in Civil Case
No. 0034 constitutes a waiver of its immunity from suit. Being itself the plaintiff in that case,
petitioner Republic cannot set up its immunity against private respondent Benedicto’s prayers
in the same case.

In fact, by entering into a Compromise Agreement with private respondent Benedicto,

petitioner Republic thereby stripped itself of its immunity from suit and placed itself in the
same level of its adversary. When the State enters into contract, through its officers or
agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional
legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations
arise therefrom, the State may be sued even without its express consent, precisely because by
entering into a contract the sovereign descends to the level of the citizen. Its consent to be
sued is implied from the very act of entering into such contract,26 breach of which on its part
gives the corresponding right to the other party to the agreement.

Finally, it is apropos to stress that the Compromise Agreement in Civil Case No. 0034
envisaged the immediate recovery of alleged ill-gotten wealth without further litigation by the
government, and buying peace on the part of the aging Benedicto.27 Sadly, that stated
objective has come to naught as not only had the litigation continued to ensue, but, worse,
private respondent Benedicto passed away on May 15, 2000,28 with the trial of Civil Case No.
0034 still in swing, so much so that the late Benedicto had to be substituted by the
administratrix of his estate.29

WHEREFORE, the instant petition is hereby DISMISSED.

SO ORDERED

-Republic vs. Lim, 462 SCRA 215 (’05)see also Makati vs.

CA

Fact: On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action
for expropriation with the Court of First Instance (CFI) of Cebu, involving Lots of the Banilad Friar
Land Estate, Lahug, Cebu City, for the purpose of establishing a military reservation for the Philippine
Army. After depositing ₱9,500.00 with the Philippine National Bank, the Republic took possession of
the lots. Thereafter, the CFI rendered its Decision ordering the Republic to pay the Denzons the sum
of ₱4,062.10 as just compensation. In 1950, Jose Galeos, one of the heirs of the Denzons, filed with
the National Airports Corporation a claim for rentals for the two lots, but it “denied knowledge of the
matter.” Another heir, Nestor Belocura, brought the claim to the Office of then President Carlos Garcia
who wrote the Civil Aeronautics Administration and the Secretary of National Defense to expedite
action on said claim. in 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio,
holding that they are the owners and have retained their right as such over Lots 932 and 939 because
of the Republic’s failure to pay the amount of ₱4,062.10, adjudged in the expropriation proceedings.
In view of “the differences in money value from 1940 up to the present,” the court adjusted the
market value at ₱16,248.40, to be paid with 6% interest per annum from April 5, 1948, date of entry
in the expropriation proceedings, until full payment.

Meanwhile, in 1964, Valdehueza and Panerio mortgaged and foreclosed Lot 932 to Vicente Lim for
failure to pay. in 1992, respondent filed a complaint for quieting of title with the (RTC) seeking an
absolute and exclusive possession of the property. in 2001, the RTC rendered a decision in favor of
respondent. Petitioners elevated the case to the CA but the Ruling of the RTC was upheld and
affirmed.

Issue: Whether the owner of the expropriated land is entitled for the repossession of his property
when party condemning refuses to pay the compensation which has been assessed or agreed upon?

Held: Yes, while the prevailing doctrine is that “the non-payment of just compensation does not entitle
the private landowner to recover possession of the expropriated lots,26 however, in cases where the
government failed to pay just compensation within five (5) years from the finality of the judgment in
the expropriation proceedings, the owners concerned shall have the right to recover possession of
their property. This is in consonance with the principle that “the government cannot keep the property
and dishonor the judgment.” To be sure, the five-year period limitation will encourage the government
to pay just compensation punctually. This is in keeping with justice and equity. After all, it is the duty
of the government, whenever it takes property from private persons against their will, to facilitate the
payment of just compensation which the court defined as not only the correct determination of the
amount to be paid to the property owner but also the payment of the property within a reasonable
time. Without prompt payment, compensation cannot be considered “just.”

this petition for review on certiorari under Rule 45 of the Rules of Court stemmed from a petition for
correction of entries under Rule 108 of the Rules of Court filed by respondent Chule Y. Lim with the
Regional Trial Court of Lanao del Norte, Branch 4, docketed as Sp. Proc. No. 4933.

In her petition, respondent claimed that she was born on October 29, 1954 in Buru-an, Iligan City. Her
birth was registered in Kauswagan, Lanao del Norte but the Municipal Civil Registrar of Kauswagan
transferred her record of birth to Iligan City. She alleged that both her Kauswagan and Iligan City
records of birth have four erroneous entries, and prays that they be corrected.

The trial court then issued an Order,1 which reads:

WHEREFORE, finding the petition to be sufficient in form and substance, let the hearing of this case be
set on December 27, 1999 before this Court, Hall of Justice, Rosario Heights, Tubod, Iligan City at
8:30 o’clock in the afternoon at which date, place and time any interested person may appear and
show cause why the petition should not be granted.
Let this order be published in a newspaper of general circulation in the City of Iligan and the Province
of Lanao del Norte once a week for three (3) consecutive weeks at the expense of the petitioner.

Furnish copies of this order the Office of the Solicitor General at 134 Amorsolo St., Legaspi Vill.,
Makati City and the Office of the Local Civil Registrar of Iligan City at Quezon Ave., Pala-o, Iligan City.

SO ORDERED.

During the hearing, respondent testified thus:

First, she claims that her surname "Yu" was misspelled as "Yo". She has been using "Yu" in all her
school records and in her marriage certificate.2 She presented a clearance from the National Bureau of
Investigation (NBI)3 to further show the consistency in her use of the surname "Yu".

Second, she claims that her father’s name in her birth record was written as "Yo Diu To (Co Tian)"
when it should have been "Yu Dio To (Co Tian)."

Third, her nationality was entered as Chinese when it should have been Filipino considering that her
father and mother never got married. Only her deceased father was Chinese, while her mother is
Filipina. She claims that her being a registered voter attests to the fact that she is a Filipino citizen.

Finally, it was erroneously indicated in her birth certificate that she was a legitimate child when she
should have been described as illegitimate considering that her parents were never married.

Placida Anto, respondent’s mother, testified that she is a Filipino citizen as her parents were both
Filipinos from Camiguin. She added that she and her daughter’s father were never married because
the latter had a prior subsisting marriage contracted in China.

In this connection, respondent presented a certification attested by officials of the local civil registries
of Iligan City and Kauswagan, Lanao del Norte that there is no record of marriage between Placida
Anto and Yu Dio To from 1948 to the present.

The Republic, through the City Prosecutor of Iligan City, did not present any evidence although it
actively participated in the proceedings by attending hearings and cross-examining respondent and
her witnesses.

On February 22, 2000, the trial court granted respondent’s petition and rendered judgment as follows:
WHEREFORE, the foregoing premises considered, to set the records of the petitioner straight and in
their proper perspective, the petition is granted and the Civil Registrar of Iligan City is directed to
make the following corrections in the birth records of the petitioner, to wit:

1. Her family name from "YO" to "YU";

2. Her father’s name from "YO DIU TO (CO TIAN)" to "YU DIOTO (CO TIAN)";

3. Her status from "legitimate" to "illegitimate" by changing "YES" to "NO" in answer to the
question "LEGITIMATE?"; and,

4. Her citizenship from "Chinese" to "Filipino".

SO ORDERED.4

The Republic of the Philippines appealed the decision to the Court of Appeals which affirmed
the trial court’s decision.5

Hence, this petition on the following assigned errors:

THE COURT OF APPEALS ERRED IN ORDERING THE CORRECTION OF THE CITIZENSHIP OF

RESPONDENT CHULE Y. LIM FROM "CHINESE" TO "FILIPINO" DESPITE THE FACT THAT
RESPONDENT NEVER DEMONSTRATED ANY COMPLIANCE WITH THE LEGAL REQUIREMENTS
FOR ELECTION OF CITIZENSHIP.

II

THE COURT OF APPEALS ERRED IN ALLOWING RESPONDENT TO CONTINUE USING HER

FATHER’S SURNAME DESPITE ITS FINDING THAT RESPONDENT IS AN ILLEGITIMATE CHILD.6

To digress, it is just as well that the Republic did not cite as error respondent’s recourse to
Rule 108 of the Rules of Court to effect what indisputably are substantial corrections and
changes in entries in the civil register. To clarify, Rule 108 of the Revised Rules of Court
provides the procedure for cancellation or correction of entries in the civil registry. The
proceedings under said rule may either be summary or adversary in nature. If the correction
sought to be made in the civil register is clerical, then the procedure to be adopted is
summary. If the rectification affects the civil status, citizenship or nationality of a party, it is
deemed substantial, and the procedure to be adopted is adversary. This is our ruling in
Republic v. Valencia7 where we held that even substantial errors in a civil registry may be
corrected and the true facts established under Rule 108 provided the parties aggrieved by the
error avail themselves of the appropriate adversary proceeding. An appropriate adversary suit
or proceeding is one where the trial court has conducted proceedings where all relevant facts
have been fully and properly developed, where opposing counsel have been given opportunity
to demolish the opposite party’s case, and where the evidence has been thoroughly weighed
and considered.8

As likewise observed by the Court of Appeals, we take it that the Republic’s failure to cite this
error amounts to a recognition that this case properly falls under Rule 108 of the Revised
Rules of Court considering that the proceeding can be appropriately classified as adversarial.

Instead, in its first assignment of error, the Republic avers that respondent did not comply
with the constitutional requirement of electing Filipino citizenship when she reached the age of
majority. It cites Article IV, Section 1(3) of the 1935 Constitution, which provides that the
citizenship of a legitimate child born of a Filipino mother and an alien father followed the
citizenship of the father, unless, upon reaching the age of majority, the child elected Philippine
citizenship.9 Likewise, the Republic invokes the provision in Section 1 of Commonwealth Act
No. 625, that legitimate children born of Filipino mothers may elect Philippine citizenship by
expressing such intention "in a statement to be signed and sworn to by the party concerned
before any officer authorized to administer oaths, and shall be filed with the nearest civil
registry. The said party shall accompany the aforesaid statement with the oath of allegiance to
the Constitution and the Government of the Philippines."10

Plainly, the above constitutional and statutory requirements of electing Filipino citizenship
apply only to legitimate children. These do not apply in the case of respondent who was
concededly an illegitimate child, considering that her Chinese father and Filipino mother were
never married. As such, she was not required to comply with said constitutional and statutory
requirements to become a Filipino citizen. By being an illegitimate child of a Filipino mother,
respondent automatically became a Filipino upon birth. Stated differently, she is a Filipino
since birth without having to elect Filipino citizenship when she reached the age of majority.

In Ching, Re: Application for Admission to the Bar,11 citing In re Florencio Mallare,12 we held:

Esteban Mallare, natural child of Ana Mallare, a Filipina, is therefore himself a Filipino, and no
other act would be necessary to confer on him all the rights and privileges attached to
Philippine citizenship (U.S. vs. Ong Tianse, 29 Phil. 332; Santos Co vs. Government of the
Philippine Islands, 42 Phil. 543; Serra vs. Republic, L-4223, May 12, 1952; Sy Quimsuan vs.
Republic, L-4693, Feb. 16, 1953; Pitallano vs. Republic, L-5111, June 28, 1954). Neither could
any act be taken on the erroneous belief that he is a non-Filipino divest him of the citizenship
privileges to which he is rightfully entitled.13

This notwithstanding, the records show that respondent elected Filipino citizenship when she
reached the age of majority. She registered as a voter in Misamis Oriental when she was 18
years old.14 The exercise of the right of suffrage and the participation in election exercises
constitute a positive act of election of Philippine citizenship.15

In its second assignment of error, the Republic assails the Court of Appeals’ decision in
allowing respondent to use her father’s surname despite its finding that she is illegitimate.

The Republic’s submission is misleading. The Court of Appeals did not allow respondent to use
her father’s surname. What it did allow was the correction of her father’s misspelled surname
which she has been using ever since she can remember. In this regard, respondent does not
need a court pronouncement for her to use her father’s surname.

We agree with the Court of Appeals when it held:

Firstly, Petitioner-appellee is now 47 years old. To bar her at this time from using her father’s
surname which she has used for four decades without any known objection from anybody,
would only sow confusion. Concededly, one of the reasons allowed for changing one’s name or
surname is to avoid confusion.

Secondly, under Sec. 1 of Commonwealth Act No. 142, the law regulating the use of aliases, a
person is allowed to use a name "by which he has been known since childhood."

Thirdly, the Supreme Court has already addressed the same issue. In Pabellar v. Rep. of the
Phils.,16 we held:

Section 1 of Commonwealth Act No. 142, which regulates the use of aliases, allows a person
to use a name "by which he has been known since childhood" (Lim Hok Albano v. Republic,
104 Phil. 795; People v. Uy Jui Pio, 102 Phil. 679; Republic v. Tañada, infra). Even legitimate
children cannot enjoin the illegitimate children of their father from using his surname (De
Valencia v. Rodriguez, 84 Phil. 222).17

While judicial authority is required for a change of name or surname,18 there is no such
requirement for the continued use of a surname which a person has already been using since
childhood.19

The doctrine that disallows such change of name as would give the false impression of family
relationship remains valid but only to the extent that the proposed change of name would in
great probability cause prejudice or future mischief to the family whose surname it is that is
involved or to the community in general.20 In this case, the Republic has not shown that the
Yu family in China would probably be prejudiced or be the object of future mischief. In
respondent’s case, the change in the surname that she has been using for 40 years would
even avoid confusion to her community in general.
 WHEREFORE, in view of the foregoing, the instant petition for review is DENIED. The decision
of the Court of Appeals in CA-G.R. CV No. 68893 dated May 29, 2002, is AFFIRMED.
Accordingly, the Civil Registrar of Iligan City is DIRECTED to make the following corrections in
the birth record of respondent Chule Y. Lim, to wit:

1. Her family name from "YO" to "YU";

2. Her father’s name from "YO DIU TO (CO TIAN)" to "YU DIOTO (CO TIAN)";

3. Her status from "legitimate" to "illegitimate" by changing "YES" to "NO" in answer to the
question "LEGITIMATE?"; and,

4. Her citizenship from "Chinese" to "Filipino".

SO ORDERED.

b. Police Power (meaning and concept)

Constitution

Cases: Definition/Concept:

- Ermita-Malate Hotel vs. Manila Mayor – L-24693,

7/31/’67

Facts: On June 13, 1963, the Municipal Board of Manila passed Ordinance No. 4760 with the
following provisions questioned for its violation of due process: refraining from entertaining
or accepting any guest or customer unless it fills out a prescribed form in the lobby in open
view; prohibiting admission o less than 18 years old;

usurious increase of license fee to P4,500 and 6,000 o 150% and 200% respectively (tax
issue also); making unlawful lease or rent more than twice every 24 hours; and cancellation
of license for subsequent violation. The lower court issued preliminary injunction and
petitioners raised the case to SC on certiorari.

Issue: Is the ordinance compliant with the due process requirement of the constitution?

Held: Ordinance is a valid exercise of police power to minimize certain practices hurtful to
public morals. There is no violation o constitutional due process for being reasonable and
the ordinance is enjoys the presumption of constitutionality absent any irregularity on its
face. .As such a limitation cannot be viewed as a transgression against the command of due
process. It is neither unreasonable nor arbitrary. Precisely it was intended to curb the
opportunity for the immoral or illegitimate use to which such premises could be, and,
according to the explanatory note, are being devoted. Taxation may be made to implement
a police power and the amount, object, and instance of taxation is dependent upon the local
legislative body. Judgment of lower court reversed and injunction lifted.

xxxx—xx

Facts:
The petition for prohibition against Ordinance No. 4760 was filed on July 5, 1963 by the petitioners,
Ermita-Malate Hotel and Motel Operators Association, one of its members, Hotel del Mar, Inc., and a
certain Go Chiu, who is "the president and general manager... of the second petitioner" against the
respondent Mayor of the City of Manila who was sued in his capacity as such "charged with the
general power and duty to enforce ordinances of the City of Manila and to give the necessary orders
for the faithful execution and enforcement of... such ordinances." (par. 1).  It was alleged that the
petitioner non-stock corporation is dedicated to the promotion and protection of the interest of its
eighteen (18) members "operating hotels and motels, characterized as legitimate businesses duly
licensed by... both national and city authorities regularly paying taxes, employing and giving livelihood
to not less than 2,500 persons and representing an investment of more than P3 million."[1] (par. 2). 
It was then alleged... that on June 13, 1963, the Municipal Board of the City of Manila enacted
Ordinance No. 4760, approved on June 14, 1963 by the then Vice-Mayor Herminio Astorga, who was
at the time acting as Mayor of the City of Manila.  (par. 3).
After which the alleged grievances against the ordinance were set forth in detail.  There was the
assertion of its being beyond the powers of the Municipal Board of the City of Manila to enact insofar
as it would regulate motels, on the ground that in the... revised charter of the City of Manila or in any
other law, no reference is made to motels; that Section 1 of the challenged ordinance is
unconstitutional and void for being unreasonable and violative of due process insofar as it would
impose P6,000.00 fee per annum... for first class motels and P4,500.00 for second class motels; that
the provision in the same section which would require the owner, manager, keeper or duly authorized
representative of a hotel, motel, or lodging house to refrain from entertaining or accepting any guest
or... customer or letting any room or other quarter to any person or persons without his filling up the
prescribed form
Section 2 of the challenged ordinance classifying motels into two classes and requiring the
maintenance... of certain minimum facilities in first class motels such as a telephone in each room, a
dining room or restaurant and laundry similarly offends against the due process clause for being
arbitrary,... the provision of Section 2 of the challenged ordinance prohibiting a person less than 18
years old from being accepted in such hotels, motels, lodging houses, tavern or common inn unless
accompanied by parents... or a lawful guardian and making it unlawful for the owner, manager,
keeper or duly authorized representative of such establishments to lease any room or portion thereof
more than twice every 24 hours,... in Section 4 of the challenged ordinance for a subsequent
conviction would cause the automatic cancellation of the license of the offended party, in effect
causing the destruction of... the business and loss of its investments, there is once again a
transgression of the due process clause.
There was a plea for the issuance of preliminary injunction and for a final judgment declaring the
above ordinance null and void and unenforceable.  The lower court on July 6, 1963 issued a writ of
preliminary injunction ordering respondent Mayor to refrain... from enforcing said Ordinance No. 4760
from and after July 8, 1963.
Issues:
How justify then the allegation of a denial of due process?
Ruling:
WHEREFORE, the judgment of the lower court is reversed and the injunction issued lifted forthwith. 
With costs
Principles:
It would appear from a recital in the petition itself that what seems to be the gravamen of the
alleged... grievance is that the provisions are too detailed and specific rather than vague or uncertain. 
Petitioners, however, point to the requirement that a guest should give the name, relationship, age
and sex of the companion or companions as indefinite and... uncertain in view of the necessity for
determining whether the companion or companions referred to are those arriving with the customer or
guest at the time of the registry or entering the room with him at about the same time or coming at
any indefinite time later to join him; a... proviso in one of its sections which cast doubt as to whether
the maintenance of a restaurant in a motel is dependent upon the discretion of its owners or
operators; another proviso which from their standpoint would require a guess as to whether the "full
rate of payment" to be... charged for every such lease thereof means a full day's or merely a half-
day's rate.  It may be asked, do these allegations suffice to render the ordinance void on its face for
alleged vagueness or uncertainty?  To ask the question is to... answer it.  From Connally v. General
Construction Co.[33] to Adderley v. Florida,[34] the principle has been consistently upheld that
what... makes a statute susceptible to such a charge is an enactment either forbidding or requiring the
doing of an act that men of common intelligence must necessarily guess at its meaning and differ as
to its application.  Is this the situation before... us?  A citation from Justice Holmes would prove
illuminating:  "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.

SYLLABUS

1. CONSTITUTIONAL LAW; MUNICIPAL ORDINANCES; VALIDITY, PRESUMPTION OF. — An ordinance,

having been enacted by councilors who must, in the very nature of things, be familiar with the
necessities of their particular municipality or city and with all the facts and circumstances which
surround the subject and necessitate action, must be presumed to be valid and should not be set
aside unless there is a clear invasion of personal property rights under the guise of police regulation.
Unless, therefore, the ordinance is void on its face, the necessity for evidence to rebut its validity is
unavoidable. In the case at bar, there being no factual foundation laid for overthrowing Ord. No. 4760
of Manila as void on its face, the presumption of constitutionality must prevail.

2. ID.; POLICE POWER; MANIFESTATION OF. — Ordinance No. 4760 of the City of Manila is a
manifestation of a police power measure specifically aimed to safeguard public morals. As such it is
immune from any imputation of nullity resting purely on conjecture and unsupported by anything of
substance. To hold otherwise would be to unduly restrict and narrow the scope of police power which
has been properly characterized as the most essential, insistent and the least limitable of powers
extending as it does "to all the great public needs."cralaw virtua1aw library

3. ID.; ID.; JUDICIAL INQUIRY. — On the legislative organs of the government, whether national or
local, primarily rests the exercise of the police power, which is the power to prescribe regulations to
promote the health, morals, peace, good order, safety and general welfare of the people. In view of
the requirements of certain constitutional guaranties, the exercise of such police power, however,
insofar as it may affect the life, liberty or property of any person, is subject to judicial inquiry. Where
such exercise of police power may be considered as either capricious, whimsical, unjust or
unreasonable, a denial of due process or a violation of any other applicable constitutional guaranty
may call for correction by the courts.

4. ID.; ID.; LICENSES INCIDENTAL TO. — Municipal license fees can be classified into those imposed
for regulating occupations or regular enterprises, for the regulation or restriction of non-useful
occupations or enterprises and for revenue purposes only. Licenses for non-useful occupations are
incidental to the police power, and the right to exact a fee may be implied from the power to license
and regulate, but in taking the amount of license fees the municipal corporations are allowed a wide
discretion in this class of cases. Aside from applying the well known legal principle that municipal
ordinances must not be unreasonable, oppressive, or tyrannical, courts have, as a general rule,
declined to interfere with such discretion. The desirability of imposing restraint upon the number of
persons who might otherwise engage in non-useful enterprises is, of course, generally an important
factor in the determination of the amount of this kind of license fee. (Cu Unjieng v. Patstone [1922],
42 Phil,, 818, 828).

5. ID.; ID.; EXERCISE OF. — Much discretion is given to municipal corporations in determining the
amount of license fees to be imposed for revenue. The mere fact that some individuals in the
community may be deprived of their present business or a particular mode of earning a living cannot
prevent the exercise of the police power. Persons licensed to pursue occupations which may in the
public need and interest be affected by the exercise of the police power embark in those occupations
subject to the disadvantages which may result from the exercise of that power.

6. ID.; DUE PROCESS; STANDARDS OF LEGAL INFIRMITY. — There is no controlling and precise
definition of due process. It furnishes though a standard to which governmental action should conform
in order that deprivation of life, liberty or property, in each appropriate case, be valid. The standard of
due process which must exist both as a procedural and as substantive requisite to free the challenged
ordinance, or any governmental action for that matter, from imputation of legal infirmity, is
responsiveness to the supremacy of reason, obedience to the dictates of justice. It would be an affront
to reason to stigmatize an ordinance enacted precisely to meet what a municipal lawmaking body
considers an evil of rather serious proportion an arbitrary and capricious exercise of authority. What
should be deemed unreasonable and what would amount to be an abdication of the power to govern is
inaction in the face of an admitted deterioration of the state of public morals.

7. ID.; ID.; MUNICIPAL ORDINANCES; PROHIBITIONS IN. — The provision in Ordinance No. 4760 of
the City of Manila making it unlawful for the owner, manager, keeper or duly authorized
representative of any hotel, motel, lodging house, tavern, common inn or the like, to lease or rent any
room or portion thereof more than twice every 24 hours, with a proviso that in all cases full payment
shall be charged, cannot be viewed as transgression against the command of due process. The
prohibition is neither unreasonable nor arbitrary, because there appears a correspondence between
the undeniable existence of an undesirable situation and the legislative attempt at correction.
Moreover, every regulation of conduct amounts to curtailment of liberty, which cannot be absolute.

8. ID.; ID.; PUBLIC INTEREST; GOVERNMENT INTERFERENCE. — The policy of laissez faire has to
some extent given way to the assumption by the government of the right of intervention even in
contractual relations affected with public interest.

9. ID.; ID.; ID.; ID.; SCOPE. — If the liberty invoked were freedom of the mind or the person, the
standard for the validity of governmental acts is much more rigorous and exacting, but where the
liberty curtailed affects at the most rights of property, the permissible scope of regulatory measures is
wider.

10. ID.; DUE PROCESS REQUIREMENT; AMBIGUITY OF STATUTES AS DENIAL OF DUE PROCESS. —
What makes a statute susceptible to a charge that it is void on its face for alleged vagueness or
uncertainty is an enactment either for bidding or requiring the doing of an act that men of common
intelligence must necessarily guess at its meaning and differ as to its application.

DECISION

FERNANDO, J.:

The principal question in this appeal from a judgment of the lower court in an action for prohibition is
whether Ordinance No. 4760 of the City of Manila is violative of the due process clause. The lower
court held that it is and adjudged it "unconstitutional, and, therefore, null and void." For reasons to be
more specifically set forth, such judgment must be reversed, there being a failure of the requisite
showing to sustain an attack against its validity.
The petition for prohibition against Ordinance No. 4760 was filed on July 5, 1963 by the petitioners,
Ermita-Malate Hotel and Motel Operators Association, one of its members, Hotel del Mar, Inc., and a
certain Go Chiu, who is "the president and general manager of the second petitioner" against the
respondent Mayor of the City of Manila who was sued in his capacity as such "charged with the
general power and duty to enforce ordinances of the City of Manila and to give the necessary orders
for the faithful execution and enforcement of such ordinances." (par. 1). It was alleged that the
petitioner non-stock corporation is dedicated to the promotion and protection of the interest of its
eighteen (18) members "operating hotels and motels, characterized as legitimate businesses duly
licensed by both national and city authorities regularly paying taxes, employing and giving livelihood
to not less than 2,500 persons and representing an investment of more than P3 million." 1 (par. 2). It
was then alleged that on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance
No. 4760, approved on June 14, 1963 by the then Vice-Mayor Herminio Astorga, who was at the time
acting Mayor of the City of Manila. (par. 3).

After which the alleged grievances against the ordinance were set forth in detail. There was the
assertion of its being beyond the powers of the Municipal Board of the City of Manila to enact insofar
as it would regulate motels, on the ground that in the revised charter of the City of Manila or in any
other law, no reference is made to motels; that Section 1 of the challenged ordinance is
unconstitutional and void for being unreasonable and violative of due process insofar as it would
impose P6,000.00 fee per annum for first class motels and P4,500.00 for second c]ass motels; that
the provision in the same section which would require the owner, manager, keeper or duly authorized
representative of a hotel, motel, or lodging house to refrain from entertaining or accepting any guest
or customer or letting any room or other quarter to any person or persons without his filling up the
prescribed form in a lobby open to public view at all times and in his presence, wherein the surname,
given name and middle name, the date of birth, the address, the occupation, the sex, the nationality,
the length of stay and the number of companions in the room, if any, with the name, relationship, age
and sex would be specified, with data furnished as to his residence certificate as well as his passport
number, if any, coupled with a certification that a person signing such form has personally filled it up
and affixed his signature in the presence of such owner, manager, keeper or duly authorized
representative, with such registration forms and records kept and bound together, it also being
provided that the premises and facilities of such hotels, motels and lodging houses would be open for
inspection either by the City Mayor, or the Chief of Police, or their duly authorized representatives is
unconstitutional and void again on due process grounds, not only for being arbitrary, unreasonable or
oppressive but also for being vague, indefinite and uncertain, and likewise for the alleged invasion of
the right to privacy and the guaranty against self-incrimination; that Section 2 of the challenged
ordinance classifying motels into two classes and requiring the maintenance of certain minimum
facilities in first class motels such as a telephone in each room, a dining room or restaurant and
laundry similarly offends against the due process clause for being arbitrary, unreasonable and
oppressive, a conclusion which applies to the portion of the ordinance requiring second class motels to
have a dining room; that the provision of Section 2 of the challenged ordinance prohibiting a person
less than 18 years old from being accepted in such hotels, motels, lodging houses, tavern or common
inn unless accompanied by parents or a lawful guardian and making it unlawful for the owner,
manager, keeper or duly authorized representative of such establishments to lease any room or
portion thereof more than twice every 24 hours, runs counter to the due process guaranty for lack of
certainty and for its unreasonable, arbitrary and oppressive character; and that insofar as the penalty
provided for in Section 4 of the challenged ordinance for a subsequent conviction would cause the
automatic cancellation of the license of the offended party, in effect causing the destruction of the
business and loss of its investments, there is once again a transgression of the due process clause.

There was a plea for the issuance of preliminary injunction and for a final judgment declaring the
above ordinance null and void and unenforceable. The lower court on July 6, 1963 issued a writ of
preliminary injunction ordering respondent Mayor to refrain from enforcing said Ordinance No. 4760
from and after July 8, 1963.

In the answer filed on August 3, 1963, there was an admission of the personal circumstances
regarding the respondent Mayor and of the fact that petitioners are licensed to engage in the hotel or
motel business in the City of Manila, of the provisions of the cited Ordinance but a denial of its alleged
nullity, whether on statutory or constitutional grounds. After setting forth that the petition did fail to
state a cause of action and that the challenged ordinance bears a reasonable relation to a proper
purpose, which is to curb immorality, a valid and proper exercise of the police power and that only the
guests or customers not before the court could complain of the alleged invasion of the right to privacy
and the guaranty against self- incrimination, with the assertion that the issuance of the preliminary
injunction ex parte was contrary to law, respondent Mayor prayed for its dissolution and the dismissal
of the petition.

Instead of evidence being offered by both parties, there was submitted a stipulation of facts dated
September 28, 1964, which reads:jgc:chanrobles.com.ph

"1. That the petitioners Ermita-Malate Hotel and Motel Operators Association, Inc. and Hotel del Mar,
Inc. are duly organized and existing under the laws of the Philippines, both with offices in the City of
Manila, while the petitioner Go Chiu is the president and general manager of Hotel del Mar, Inc., and
the intervenor Victor Alabanza is a resident of Baguio City, all having the capacity to sue and be sued;

"2. That the respondent Mayor is the duly elected and incumbent City Mayor and chief executive of the
City of Manila charged with the general power and duty to enforce ordinances of the City of Manila and
to give the necessary orders for the faithful execution and enforcement of such ordinances;

"3. That the petitioners are duly licensed to engage in the business of operating hotels and motels in
Malate and Ermita districts in Manila;

"4. That on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760,
which was approved on June 14, 1963, by Vice-Mayor Herminio Astorga, then the acting City Mayor of
Manila, in the absence of the respondent regular City Mayor, amending sections 661, 662, 668-a, 668-
b and 669 of the compilation of ordinances of the City of Manila besides inserting therein three new
sections. This ordinance is similar to the one vetoed by the respondent Mayor (Annex A) for the
reasons stated in his 4th Indorsement dated February 15, 1963 (Annex B);

"5. That the explanatory noted signed by then Councilor Herminio Astorga was submitted with the
proposed ordinance (now Ordinance 4760) to the Municipal Board, copy of which is attached hereto as
Annex C;

"6. That the City of Manila derived in 1963 an annual income of P101,904.05 from license fees paid by
the 105 hotels and motels (including herein petitioners) operating in the City of Manila."cralaw
virtua1aw library

Thereafter came a memorandum for respondent on January 22, 1965, wherein stress was laid on the
presumption of the validity of the challenged ordinance, the burden of showing its lack of conformity
to the Constitution resting on the party who assails it, citing not only U.S. v. Salaveria, but likewise
applicable American authorities. Such a memorandum likewise refuted point by point the arguments
advanced by petitioners against its validity. Then barely two weeks later, on February 4, 1965, the
memorandum for petitioners was filed reiterating in detail what was set forth in the petition, with
citations of what they considered to be applicable American authorities and praying for a judgment
declaring the challenged ordinance "null and void and unenforceable" and making permanent the writ
of preliminary injunction issued.

After referring to the motels and hotels, which are members of the petitioners association, and
referring to the alleged constitutional questions raised by the party the lower court observed: "The
only remaining issue here being purely a question of law, the parties, with the nod of the Court,
agreed to file memoranda and thereafter, to submit the case for decision of the Court." It does appear
obvious then that without any evidence submitted by the parties, the decision passed upon the alleged
infirmity on constitutional grounds of the challenged ordinance, dismissing as is undoubtedly right and
proper the untenable objection on the alleged lack of authority of the City of Manila to regulate
motels, and came to the conclusion that "the challenged Ordinance No. 4760 of the City of Manila,
would be unconstitutional and, therefore, null and void." It made permanent the preliminary injunction
issued against respondent Mayor and his agents "to restrain him from enforcing the ordinance in
question." Hence this appeal.

As noted at the outset, the judgment must be reversed. A decent regard for constitutional doctrines of
a fundamental character ought to have admonished the lower court against such a sweeping
condemnation of the challenged ordinance. Its decision cannot be allowed to stand, consistently with
what has hitherto been the accepted standards of constitutional adjudication, in both procedural and
substantive aspects.

Primarily what calls for a reversal of such a decision is the absence of any evidence to offset the
presumption of validity that attaches to a challenged statute or ordinance. As was expressed
categorically by Justice Malcolm: "The presumption is all in favor of validity . . . The action of the
elected representatives of the people cannot be lightly set aside. The councilors must, in the very
nature of things, be familiar with the necessities of their particular municipality and with all the facts
and circumstances which surround the subject and necessitate action. The local legislative body, by
enacting the ordinance, has in effect given notice that the regulations are essential to the well being of
the people . . . The Judiciary should not lightly set aside legislative action when there is not a clear
invasion of personal or property rights under the guise of police regulation." 2

It admits of no doubt therefore that there being a presumption of validity, the necessity for evidence
to rebut it is unavoidable, unless the statute or ordinance is void on its face, which is not the case
here. The principle has been nowhere better expressed than in the leading case of O’Gorman & Young
v. Hartford Fire Insurance Co., 3 where the American Supreme Court through Justice Brandeis tersely
and succinctly summed up the matter thus: "The statute here questioned deals with a subject clearly
within the scope of the police power. We are asked to declare it void on the ground that the specific
method of regulation prescribed is unreasonable and hence deprives the plaintiff of due process of
law. As underlying questions of fact may condition the constitutionality of legislation of this character,
the presumption of constitutionality must prevail in the absence of some factual foundation of record
for overthrowing the statute." No such factual foundation being laid in the present case, the lower
court deciding the matter on the pleadings and the stipulation of facts, the presumption of validity
must prevail and the judgment against the ordinance set aside.

Nor may petitioners assert with plausibility that on its face the ordinance is fatally defective as being
repugnant to the due process clause of the Constitution. The mantle of protection associated with the
due process guaranty does not cover petitioners. This particular manifestation of a police power
measure being specifically aimed to safeguard public morals is immune from such imputation of nullity
resting purely on conjecture and unsupported by anything of substance. To hold otherwise would be to
unduly restrict and narrow the scope of police power which has been properly characterized as the
most essential, insistent and the least limitable of powers, 4 extending as it does "to all the great
public needs." 5 It would be, to paraphrase another leading decision, to destroy the very purpose of
the state if it could be deprived or allowed itself to be deprived of its competence to promote public
health, public morals, public safety and the general welfare. 6 Negatively put, police power is "that
inherent and plenary power in the State which enables it to prohibit all that is hurtful to the comfort,
safety, and welfare of society." 7

There is no question but that the challenged ordinance was precisely enacted to minimize certain
practices hurtful to public morals. The explanatory note of the then Councilor Herminio Astorga
included as annex to the stipulation of facts speaks of the alarming increase in the rate of prostitution,
adultery and fornication in Manila traceable in great part to the existence of motels, which "provide a
necessary atmosphere for clandestine entry, presence and exit" and thus become the "ideal haven for
prostitutes and thrill seekers." The challenged ordinance then "proposes to check the clandestine
harboring of transients and guests of these establishments by requiring these transients and guests to
fill up a registration form, prepared for the purpose, in a lobby open to public view at all times, and by
introducing several other amendatory provisions calculated to shatter the privacy that characterizes
the registration of transients and guests." Moreover, the increase in the license fees was intended to
discourage "establishments of the kind from operating for purpose other than legal" and at the same
time, to increase "the income of the city government." It would appear therefore that the stipulation
of facts, far from sustaining any attack against the validity of the ordinance, argues eloquently for it.

It is a fact worth noting that this Court has invariably stamped with the seal of its approval,
ordinances punishing vagrancy and classifying a pimp or procurer as a vagrant; 8 providing a license
tax for and regulating the maintenance or operation of public dance hall; 9 prohibiting gambling; 10
prohibiting jueteng; 11 and monte; 12 prohibiting playing of panguingui on days other than Sundays
or legal holidays; 13 prohibiting the operation of pinball machines; 14 and prohibiting any person from
keeping, conducting or maintaining an opium joint or visiting a place where opium is smoked or
otherwise used, 15 all of which are intended to protect public morals.

On the legislative organs of the government, whether national of local, primarily rest the exercise of
the police power, which, it cannot be too often emphasized, is the power to prescribe regulations to
promote the health, morals, peace, good order, safety and general welfare of the people. In view of
the requirements of due process, equal protection and other applicable constitutional guaranties,
however, the exercise of such police power insofar as it may affect the life, liberty or property of any
person is subject to judicial inquiry. Where such exercise of police power may be considered as either
capricious, whimsical, unjust or unreasonable, a denial of due process or a violation of any other
applicable constitutional guaranty may call for correction by the courts.

We are thus led considering the insistent, almost shrill tone, in which the objection is raised to the
question of due process. 16 There is no controlling and precise definition of due process. It furnishes
though a standard to which governmental action should conform in order that deprivation of life,
liberty or property, in each appropriate case, be valid. What then is the standard of due process which
must exist both as a procedural and as substantive requisite to free the challenged ordinance, or any
government action for that matter, from the imputation of legal infirmity; sufficient to spell its doom?
It is responsiveness to the supremacy of reason, obedience to the dictates of justice. Negatively put,
arbitrariness is ruled out and unfairness avoided. To satisfy the due process requirement, official
action, to paraphrase Cardozo, must not outrun the bounds of reasons and result in sheer oppression.
Due process is thus hostile to any official action marred by lack of reasonableness. Correctly has it
been identified as freedom from arbitrariness. It is the embodiment of the sporting idea of fair play.
17 It exacts fealty "to those strivings for justice" and judges the act of officialdom of whatever branch"
in the light of reason drawn from considerations of fairness that reflect [democratic] traditions of legal
and political thought." 18 It is not a narrow or "technical conception with fixed content unrelated to
time, place and circumstances," 19 decisions based on such a clause requiring a "close and perceptive
inquiry into fundamental principles of our society." 20 Questions of due process are not to be treated
narrowly or pedantically in slavery to form or phrases. 21

It would thus be an affront to reason to stigmatize an ordinance enacted precisely to meet what a
municipal lawmaking body considers an evil of rather serious proportion an arbitrary and capricious
exercise of authority. It would seem that what should be deemed unreasonable and what would
amount to an abdication of the power to govern is inaction in the face of an admitted deterioration of
the state of public morals. To be more specific, the Municipal Board of the City of Manila felt the need
for a remedial measure. It provided it with the enactment of the challenged ordinance. A strong case
must be found in the records, and as has been set forth, none is even attempted here, to attach to an
ordinance of such character the taint of nullity for an alleged failure to meet the due process
requirement. Nor does it lend any semblance even of deceptive plausibility to petitioners’ indictment of
Ordinance No. 4760 on due process grounds to single out such features as the increased fees for
motels and hotels, the curtailment of the area of freedom to contract, and, in certain particulars, its
alleged vagueness.

Admittedly there was a decided increase of the annual license fees provided for by the challenged
ordinance for both hotels and motels, 150% for the former and over 200% for the latter, first-class
motels being required to pay a P6,000 annual fee and second-class motels, P4,500 yearly. It has been
the settled law however, as far back as 1922 that municipal license fees could be classified into those
imposed for regulating occupations or regular enterprises, for the regulation or restriction of non-
useful occupations or enterprise and for revenue purposes only. 22 As was explained more in detail in
the above Cu-Unjieng case:" (2) Licenses for non-useful occupations are also incidental to the police
power and the right to exact a fee may be implied from the power to license and regulate, but in fixing
amount of the license fees the municipal corporations are allowed a much wider discretion in this class
of cases than in the former, and aside from applying the well-known legal principle that municipal
ordinances must not be unreasonable, oppressive, or tyrannical, courts have, as a general rule,
declined to interfere with such discretion. The desirability of imposing restraint upon the number of
persons who might otherwise engage in non-useful enterprises is, of course, generally an important
factor in the determination of the amount of this kind of license fee. Hence license fees clearly in the
nature of privilege taxes for revenue have frequently been upheld, especially in cases of licenses for
the sale of liquors. In fact, in the latter cases the fees have rarely been declared unreasonable." 23

Moreover, in the equally leading case of Lutz V. Araneta 24 this Court affirmed the doctrine earlier
announced by the American Supreme Court that taxation may be made to implement the state’s
police power. Only the other day, this Court had occasion to affirm that the broad taxing authority
conferred by the Local Autonomy Act of 1959 to cities and municipalities is sufficiently plenary to
cover a wide range of subjects with the only limitation that the tax so levied is for public purpose, just
and uniform.25cralaw:red

As a matter of fact, even without reference to the wide latitude enjoyed by the City of Manila in
imposing licenses for revenue, it has been explicitly held in one case that "much discretion is given to
municipal corporations in determining the amount," here the license fee of the operator of a massage
clinic, even if it were viewed purely as a police power measure. 26 The discussion of this particular
matter may fitly close with this pertinent citation from another decision of significance: "It is urged on
behalf of the plaintiffs-appellees that the enforcement of the ordinance would deprive them of their
lawful occupation and means of livehood because they can not rent stalls in the public markets. But it
appears that plaintiffs are also dealers in refrigerated or cold storage meat, the sale of which outside
the city markets under certain conditions is permitted . . . And surely, the mere fact, that some
individuals in the community may be deprived of their present business or a particular mode of
earning a living cannot prevent the exercise of the police power. As was said in a case, persons
licensed to pursue occupations which may in the public need and interest be affected by the exercise
of the police power embark in those occupations subject to the disadvantages which may result from
the legal exercise of that power." 27

Nor does the restriction on the freedom to contract, insofar as the challenged ordinance makes it
unlawful for the owner, manager, keeper or duly authorized representative of any hotel, motel,
lodging house, tavern, common inn or the like, to lease or rent any room or portion thereof more than
twice every 24 hours, with a proviso that in all cases full payment shall be charged, call for a different
conclusion. Again, such a limitation cannot be viewed as a transgression against the command of due
process. It is neither unreasonable nor arbitrary. Precisely it was intended to curb the opportunity for
the immoral or illegitimate use to which such premises could be, and, according to the explanatory
note, are being devoted. How could it then be arbitrary or oppressive when there appears a
correspondence between the undeniable existence of an undesirable situation and the legislative
attempt at correction. Moreover, petitioners cannot be unaware that every regulation of conduct
amounts to curtailment of liberty, which as pointed out by Justice Malcolm cannot be absolute. Thus:
"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 . . . The liberty of the citizen 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." 28

A similar observation was made by Justice Laurel: "Public welfare, then, lies at the bottom of the
enactment of said law, and the state in order to promote the general welfare may interfere with
personal liberty, with property, and with business and occupations. Persons and property may be
subjected to all kinds of restraints and burdens, in order to secure the general comfort, health, and
prosperity of the state . . . To this fundamental aim of our Government the rights of the individual are
subordinated. Liberty is a blessing without which life is a misery, but liberty should not be made to
prevail over authority because then society will fall into anarchy. Neither should authority be made to
prevail over liberty because then the individual will fall into slavery. The citizen should achieve the
required balance of liberty and authority in his mind through education and personal discipline, so that
there may be established the resultant equilibrium, which means peace and order and happiness for
all." 29

It is noteworthy that the only decision of this Court nullifying legislation because of undue deprivation
of freedom to contract, People v. Pomar, 30 no longer "retains its virtuality as a living principle. The
policy of laissez faire has to some extent given way to the assumption by the government of the right
of intervention even in contractual relations affected with public interest." 31 What cannot be stressed
sufficiently is that if the liberty involved were freedom of the mind or the person, the standard for the
validity of governmental acts is much more rigorous and exacting, but where the liberty curtailed
affects at the most rights of property, the permissible scope of regulatory measures is wider. 32 How
justify then the allegation of a denial of due process?

Lastly, there is the attempt to impugn the ordinance on another due process ground by invoking the
principle of vagueness or uncertainty. It would appear from a recital in the petition itself that what
seems to be the gravamen of the alleged grievance is that the provisions are too detailed and specific
rather than vague or uncertain. Petitioners, however, point to the requirement that a guest should
give the name, relationship, age and sex of the companion or companions as indefinite and uncertain
in view of the necessity for determining whether the companion or companions referred to are those
arriving with the customer or guest at the time of the registry or entering the room with him at about
the same time or coming at any indefinite time later to join him; a proviso in one of its sections which
cast doubt as to whether the maintenance of a restaurant in a motel is dependent upon the discretion
of its owners or operators; another proviso which from their standpoint would require a guess as to
whether the "full rate of payment" to be charged for every such lease thereof means a full day’s or
merely a half-day’s rate. It may be asked, do these allegations suffice to render the ordinance void on
its face for alleged vagueness or uncertainty? To ask the question is to answer it. From Connally v.
General Construction Co. 33 to Adderley v. Florida, 34 the principle has been consistently upheld that
what makes a statute susceptible to such a charge is an enactment either forbidding or requiring the
doing of an act that men of common intelligence must necessarily guess at its meaning and differ as
to its application. Is this the situation before us? A citation from Justice Holmes would prove
illuminating: "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 constructing laws as saying what they obviously
mean." 35

That is all then that this case presents. As it stands, with all due allowance for the arguments pressed
with such vigor and determination, the attack against the validity of the challenged ordinance cannot
be considered a success. Far from it. Respect for constitutional law principles so uniformly held and so
uninterruptedly adhered to by this Court compels a reversal of the appealed decision.

Wherefore, the judgment of the lower court is reversed and the injunction issued lifted forthwith. With
costs.

- MMDA vs. Bel-Air Assoc. G.R. No. 135962, 3/27/ 2000

Facts: On December 30, 1995, respondent received from petitioner, through its Chairman, a notice
dated December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic
starting January 2, 1996.

On the same day, respondent was apprised that the perimeter wall separating the subdivision from
the adjacent Kalayaan Avenue would be demolished.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary injunction.
Respondent questioned the denial before the Court of Appeals which rendered a Decision on the
merits of the case finding that the MMDA has no authority to order the opening of Neptune Street, a
private subdivision road and cause the demolition of its perimeter walls. It held that the authority is
lodged in the City Council of Makati by ordinance.

Issue: Whether the MMDA has no authority to order the opening of Neptune Street, a private
subdivision road and cause the demolition of its perimeter walls?
Held: No, -It will be noted that the powers of the MMDA[4] 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.” [30] 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. 

The MMDA is not a political unit of government. The power delegated to the MMDA is that given to the
Metro Manila Council to promulgate administrative rules and regulations in the implementation of the
MMDAs functions. There is no grant of authority to enact ordinances and regulations for the general
welfare of the inhabitants of the metropolis.

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed
with legislative power. It is not even a “special metropolitan political subdivision” as contemplated in
Section 11, Article X of the Constitution. The creation of a “special metropolitan political subdivision”
requires the approval by a majority of the votes cast in a plebiscite in the political units directly
affected.[56] R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite. The
Chairman of the MMDA is not an official elected by the people, but appointed by the President with the
rank and privileges of a cabinet member. In fact, part of his function is to perform such other duties
as may be assigned to him by the President, [57] whereas in local government units, the President
merely exercises supervisory authority. This emphasizes the administrative character of the MMDA. 

It is the local government units, acting through their respective legislative councils, that possess
legislative power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City did
not pass any ordinance or resolution ordering the opening of Neptune Street, hence, its proposed
opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in so ruling. 

[1] Acting Governor-General Charles E. Yeater issued Executive Order No. 61 designating the
Philippine Constabulary (PC) as the government custodian of all firearms, ammunitions and
explosives. Executive Order No. 215, issued by President Diosdado Macapagal on December 3, 1965,
granted the Chief of the Constabulary, not only the authority to approve or disapprove applications for
personal, special and hunting license, but also the authority to revoke the same. With the foregoing
developments, it is accurate to say that the Chief of the Constabulary had exercised the authority for a
long time. In fact, subsequent issuances such as Sections 2 and 3 of the Implementing Rules and
Regulations of Presidential Decree No. 1866 perpetuate such authority of the Chief of the
Constabulary. Section 2 specifically provides that any person or entity desiring to possess any firearm
shall first secure the necessary permit/license/authority from the Chief of the Constabulary. With
regard to the issuance of PTCFOR, Section 3 imparts: The Chief of Constabulary may, in meritorious
cases as determined by him and under such conditions as he may impose, authorize lawful holders of
firearms to carry them outside of residence. These provisions are issued pursuant to the general
power granted by P.D. No. 1866 empowering him to promulgate rules and regulations for the effective
implementation of the decree.
[2] SECTION 9. Any person desiring to possess one or more firearms for personal protection, or for
use in hunting or other lawful purposes only, and ammunition therefor, shall make application for a
license to possess such firearm or firearms or ammunition as hereinafter provided. Upon making such
application, and before receiving the license, the applicant shall make a cash deposit in the postal
savings bank in the sum of one hundred pesos for each firearm for which the license is to be issued, or
in lieu thereof he may give a bond in such form as the Governor-General may prescribe, payable to
the Government of the Philippine Islands, in the sum of two hundred pesos for each such firearm:
PROVIDED, HOWEVER, That persons who are actually members of gun clubs, duly formed and
organized at the time of the passage of this Act, who at such time have a license to possess firearms,
shall not be required to make the deposit or give the bond prescribed by this section, and the bond
duly executed by such person in accordance with existing law shall continue to be security for the
safekeeping of such arms.

[3] In Mekin vs. Wolfe,[48] an ex post facto law has been defined as one (a) which makes an action
done before the passing of the law and which was innocent when done criminal, and punishes such
action; or (b) which aggravates a crime or makes it greater than it was when committed; or (c) which
changes the punishment and inflicts a greater punishment than the law annexed to the crime when it
was committed; or (d) which alters the legal rules of evidence and receives less or different testimony
than the law required at the time of the commission of the offense in order to convict the defendant.

[4] The scope of the MMDAs 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 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. C

xxxx—xxx

Not infrequently, the government is tempted to take legal shortcuts solve urgent problems of the
people. But even when government is armed with the best of intention, we cannot allow it to run
roughshod over the rule of law. Again, we let the hammer fall and fall hard on the illegal attempt of
the MMDA to open for public use a private road in a private subdivision. While we hold that the
general welfare should be promoted, we stress that it should not be achieved at the expense of the
rule of law.

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila.
Respondent Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose
members are homeowners in Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is
the registered owner of Neptune Street, a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated
December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic starting
January 2, 1996. The notice reads:

SUBJECT: NOTICE of the Opening of Neptune Street to Traffic.

Dear President Lindo,

 Please be informed that pursuant to the mandate of the MMDA law or Republic Act No. 7924
which requires the Authority to rationalize the use of roads and/or thoroughfares for the safe
and convenient movement of persons, Neptune Street shall be opened to vehicular traffic
effective January 2, 1996.

In view whereof, the undersigned requests you to voluntarily open the points of entry and exit
on said street.

Thank you for your cooperation and whatever assistance that may be extended by your
association to the MMDA personnel who will be directing traffic in the area.

Finally, we are furnishing you with a copy of the handwritten instruction of the President on
the matter.

Very truly yours,

PROSPERO I. ORETA

Chairman 1

On the same day, respondent was apprised that the perimeter wall separating the subdivision
from the adjacent Kalayaan Avenue would be demolished.

On January 2, 1996, respondent instituted against petitioner before the Regional Trial Court, Branch
136, Makati City, Civil Case No. 96-001 for injunction. Respondent prayed for the issuance of a
temporary restraining order and preliminary injunction enjoining the opening of Neptune Street and
prohibiting the demolition of the perimeter wall. The trial court issued a temporary restraining order
the following day.

On January 23, 1996, after due hearing, the trial court denied issuance of a preliminary
injunction. 2 Respondent questioned the denial before the Court of Appeals in CA-G.R. SP No. 39549.
The appellate court conducted an ocular inspection of Neptune Street 3 and on February 13, 1996, it
issued a writ of preliminary injunction enjoining the implementation of the MMDA's proposed action. 4

On January 28, 1997, the appellate court rendered a Decision on the merits of the case finding that
the MMDA has no authority to order the opening of Neptune Street, a private subdivision road and
cause the demolition of its perimeter walls. It held that the authority is lodged in the City Council of
Makati by ordinance. The decision disposed of as follows:

WHEREFORE, the Petition is GRANTED; the challenged Order dated January 23, 1995, in Civil
Case No. 96-001, is SET ASIDE and the Writ of Preliminary Injunction issued on February 13,
1996 is hereby made permanent.

For want of sustainable substantiation, the Motion to Cite Roberto L. del Rosario in contempt is
denied. 5

No pronouncement as to costs.

SO ORDERED. 6

The Motion for Reconsideration of the decision was denied on September 28, 1998. Hence, this
recourse.

Petitioner MMDA raises the following questions:

 I

HAS THE METROPOLITAN MANILA DEVELOPMENT AUTHORITY (MMDA) THE MANDATE TO

OPEN NEPTUNE STREET TO PUBLIC TRAFFIC PURSUANT TO ITS REGULATORY AND POLICE
POWERS?

II

IS THE PASSAGE OF AN ORDINANCE A CONDITION PRECEDENT BEFORE THE MMDA MAY

ORDER THE OPENING OF SUBDIVISION ROADS TO PUBLIC TRAFFIC?

III

IS RESPONDENT BEL-AIR VILLAGE ASSOCIATION, INC. ESTOPPED FROM DENYING OR

ASSAILING THE AUTHORITY OF THE MMDA TO OPEN THE SUBJECT STREET?

IV

WAS RESPONDENT DEPRIVED OF DUE PROCESS DESPITE THE SEVERAL MEETINGS HELD
BETWEEN MMDA AND THE AFFECTED EEL-AIR RESIDENTS AND BAVA OFFICERS?

HAS RESPONDENT COME TO COURT WITH UNCLEAN HANDS?7

Neptune Street is owned by respondent BAVA. It is a private road inside Bel-Air Village, a private
residential subdivision in the heart of the financial and commercial district of Makati City. It runs
parallel to Kalayaan Avenue, a national road open to the general public. Dividing the two (2) streets is
a concrete perimeter wall approximately fifteen (15) feet high. The western end of Neptune Street
intersects Nicanor Garcia, formerly Reposo Street, a subdivision road open to public vehicular traffic,
while its eastern end intersects Makati Avenue, a national road. Both ends of Neptune Street are
guarded by iron gates.

Petitioner MMDA claims that it has the authority to open Neptune Street to public traffic because it is
an agent of the state endowed with police power in the delivery of basic services in Metro Manila. One
of these basic services is traffic management which involves the regulation of the use of thoroughfares
to insure the safety, convenience and welfare of the general public. It is alleged that the police power
of MMDA was affirmed by this Court in the consolidated cases of Sangalang v. Intermediate Appellate
Court. 8 From the premise that it has police power, it is now urged that there is no need for the City of
Makati to enact an ordinance opening Neptune street to the public. 9

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. 10 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. 11

It bears stressing that police power is lodged primarily in the National Legislature. 12 It cannot be
exercised by any group or body of individuals not possessing legislative power. 13 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. 14 Once delegated, the
agents can exercise only such legislative powers as are conferred on them by the national lawmaking
body. 15
A local government is a "political subdivision of a nation or state which is constituted by law and has
substantial control of local affairs." 16 The Local Government Code of 1991 defines a local government
unit as a "body politic and corporate." 17 — one endowed with powers as a political subdivision of the
National Government and as a corporate entity representing the inhabitants of its territory. 18 Local
government units are the provinces, cities, municipalities and barangays. 19 They are also the
territorial and political subdivisions of the state. 20

Our Congress delegated police power to the local government units in the Local Government Code of
1991. This delegation is found in Section 16 of the same Code, known as the general welfare
clause, viz:

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. 21

Local government units exercise police power through their respective legislative bodies. The
legislative body of the provincial government is the sangguniang panlalawigan, that of the city
government is the sangguniang panlungsod, that of the municipal government is the sangguniang
bayan, and that of the barangay is the sangguniang barangay. The Local Government Code of 1991
empowers the sangguniang panlalawigan, sangguniang panlungsod and sangguniang bayan to "enact
ordinances, approve resolutions and appropriate funds for the general welfare of the [province, city or
municipality, as the case may be], and its inhabitants pursuant to Section 16 of the Code and in the
proper exercise of the corporate powers of the [province, city municipality] provided under the
Code . . . " 22 The same Code gives the sangguniang barangay the power to "enact ordinances as may
be necessary to discharge the responsibilities conferred upon it by law or ordinance and to promote
the general welfare of the inhabitants thereon." 23

Metropolitan or Metro Manila is a body composed of several local government units — i.e., twelve (12)
cities and five (5) municipalities, namely, the cities of Caloocan, Manila, Mandaluyong, Makati, Pasay,
Pasig, Quezon, Muntinlupa, Las Pinas, Marikina, Paranaque and Valenzuela, and the municipalities of
Malabon, Navotas, Pateros, San Juan and Taguig. With the passage of Republic Act (R. A.)
No. 7924 24 in 1995, Metropolitan Manila was declared as a "special development and administrative
region" and the Administration of "metro-wide" basic services affecting the region placed under "a
development authority" referred to as the MMDA. 25

"Metro-wide services" are those "services which have metro-wide impact and transcend local political
boundaries or entail huge expenditures such that it would not be viable for said services to be
provided by the individual local government units comprising Metro Manila." 26 There are seven (7)
basic metro-wide services and the scope of these services cover the following: (1) development
planning; (2) transport and traffic management; (3) solid waste disposal and management; (4) flood
control and sewerage management; (5) urban renewal, zoning and land use planning, and shelter
services; (6) health and sanitation, urban protection and pollution control; and (7) public safety. The
basic service of transport and traffic management includes the following:

(b) Transport and traffic management which include the formulation, coordination, and

monitoring of policies, standards, programs and projects to rationalize the existing transport
operations, infrastructure requirements, the use of thoroughfares, and promotion of safe and
convenient movement of persons and goods; provision for the mass transport system and the
institution of a system to regulate road users; administration and implementation of all traffic
 enforcement operations, traffic engineering services and traffic education programs, including
the institution of a single ticketing system in Metropolitan Manila;" 27

In the delivery of the seven (7) basic services, the MMDA has the following powers and functions:

Sec. 5. Functions and powers of the Metro Manila Development Authority. — The MMDA shall:

(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.

The implementation of the MMDA's plans, programs and projects is undertaken by the local
government units, national government agencies, accredited people's organizations, non-
governmental organizations, and the private sector as well as by the MMDA itself. For this purpose,
the MMDA has the power to enter into contracts, memoranda of agreement and other arrangements
with these bodies for the delivery of the required services Metro Manila. 28

The governing board of the MMDA is the Metro Manila Council. The Council is composed of the mayors
of the component 12 cities and 5 municipalities, the president of the Metro Manila Vice-Mayors' League
and the president of the Metro Manila Councilors' League. 29 The Council is headed by Chairman who is
appointed by the President and vested with the rank of cabinet member. As the policy-making body of
the MMDA, the Metro Manila Council approves metro-wide plans, programs and projects, and issues
the necessary rules and regulations for the implementation of said plans; it approves the annual
budget of the MMDA and promulgate the rules and regulations for the delivery of basic services,
collection of service and regulatory fees, fines and penalties. These functions are particularly
enumerated as follows:

Sec. 6. Functions of the Metro Manila Council. —

(a) The Council shall be the policy-making body of the MMDA;

(b) It shall approve metro-wide plans, programs and projects and issue rules and regulations
deemed necessary by the MMDA to carry out the purposes of this Act;

(c) It may increase the rate of allowances and per diems of the members of the Council to be
effective during the term of the succeeding Council. It shall fix the compensation of the
officers and personnel of the MMDA, and approve the annual budget thereof for submission to
the Department of Budget and Management (DBM);

(d) It shall promulgate rules and regulations and set policies and standards for metro-wide
application governing the delivery of basic services, prescribe and collect service and
regulatory fees, and impose and collect fines and penalties.

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 the service, the MMDA is expressly authorized "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
appropriate funds for the general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed
in the charter itself, "development authority." 30 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. — . . . .

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. 31

Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court 32 where we
upheld a zoning ordinance issued by the Metro Manila Commission (MMC), the predecessor of the
MMDA, as an exercise of police power. The first Sangalang decision was on the merits of the
petition, 33 while the second decision denied reconsideration of the first case and in addition discussed
the case of Yabut v. Court of Appeals. 34

Sangalang v. IAC involved five (5) consolidated petitions filed by respondent BAVA and three residents
of Bel-Air Village against other residents of the Village and the Ayala Corporation, formerly the Makati
Development Corporation, as the developer of the subdivision. The petitioners sought to enforce
certain restrictive easements in the deeds of sale over their respective lots in the subdivision. These
were the prohibition on the setting up of commercial and advertising signs on the lots, and the
condition that the lots be used only for residential purposes. Petitioners alleged that respondents, who
were residents along Jupiter Street of the subdivision, converted their residences into commercial
establishments in violation of the "deed restrictions," and that respondent Ayala Corporation ushered
in the full commercialization" of Jupiter Street by tearing down the perimeter wall that separated the
commercial from the residential section of the village. 35

The petitions were dismissed based on Ordinance No. 81 of the Municipal Council of Makati and
Ordinance No. 81-01 of the Metro Manila Commission (MMC). Municipal Ordinance No. 81 classified
Bel-Air Village as a Class A Residential Zone, with its boundary in the south extending to the center
line of Jupiter Street. The Municipal Ordinance was adopted by the MMC under the Comprehensive
Zoning Ordinance for the National Capital Region and promulgated as MMC Ordinance No. 81-01. Bel-
Air Village was indicated therein as bounded by Jupiter Street and the block adjacent thereto was
classified as a High Intensity Commercial Zone. 36

We ruled that since both Ordinances recognized Jupiter Street as the boundary between Bel-Air Village
and the commercial district, Jupiter Street was not for the exclusive benefit of Bel-Air residents. We
also held that the perimeter wall on said street was constructed not to separate the residential from
the commercial blocks but simply for security reasons, hence, in tearing down said wall, Ayala
Corporation did not violate the "deed restrictions" in the deeds of sale.

We upheld the ordinances, specifically MMC Ordinance No. 81-01, as a legitimate exercise of police
power. 37 The power of the MMC and the Makati Municipal Council to enact zoning ordinances for the
general welfare prevailed over the "deed restrictions".

In the second Sangalang/Yabut decision, we held that the opening of Jupiter Street was warranted by
the demands of the common good in terms of "traffic decongestion and public convenience." Jupiter
was opened by the Municipal Mayor to alleviate traffic congestion along the public streets adjacent to
the Village. 38 The same reason was given for the opening to public vehicular traffic of Orbit Street, a
road inside the same village. The destruction of the gate in Orbit Street was also made under the
police power of the municipal government. The gate, like the perimeter wall along Jupiter, was a
public nuisance because it hindered and impaired the use of property, hence, its summary abatement
by the mayor was proper and legal. 39

Contrary to petitioner's claim, the two Sangalang cases do not apply to the case at bar. Firstly, both
involved zoning ordinances passed by the municipal council of Makati and the MMC. In the instant
case, the basis for the proposed opening of Neptune Street is contained in the notice of December 22,
1995 sent by petitioner to respondent BAVA, through its president. The notice does not cite any
ordinance or law, either by the Sangguniang Panlungsod of Makati City or by the MMDA, as the legal
basis for the proposed opening of Neptune Street. Petitioner MMDA simply relied on its authority under
its charter "to rationalize the use of roads and/or thoroughfares for the safe and convenient
movement of persons." Rationalizing the use of roads and thoroughfares is one of the acts that fall
within the scope of transport and traffic management. By no stretch of the imagination, however, can
this be interpreted as an express or implied grant of ordinance-making power, much less police power.

Secondly, the MMDA is not the same entity as the MMC in Sangalang. Although the MMC is the
forerunner of the present MMDA, an examination of Presidential Decree (P. D.) No. 824, the charter of
the MMC, shows that the latter possessed greater powers which were not bestowed on the present
MMDA.
Metropolitan Manila was first created in 1975 by Presidential Decree (P.D.) No. 824. It comprised the
Greater Manila Area composed of the contiguous four (4) cities of Manila, Quezon, Pasay and
Caloocan, and the thirteen (13) municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon,
Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and
Valenzuela in the province of Bulacan. 40 Metropolitan Manila was created as a response to the finding
that the rapid growth of population and the increase of social and economic requirements in these
areas demand a call for simultaneous and unified development; that the public services rendered by
the respective local governments could be administered more efficiently and economically if integrated
under a system of central planning; and this coordination, "especially in the maintenance of peace and
order and the eradication of social and economic ills that fanned the flames of rebellion and discontent
[were] part of reform measures under Martial Law essential to the safety and security of the State." 41

Metropolitan Manila was established as a "public corporation" with the following powers:

Sec. 1. Creation of the Metropolitan Manila. — There is hereby created a public corporation, to
be known as the Metropolitan Manila, vested with powers and attributes of a corporation
including the power to make contracts, sue and be
sued, acquire, purchase, expropriate, hold, transfer and dispose of property and such other
powers as are necessary to carry out its purposes. The Corporation shall be administered by a
Commission created under this Decree. 42

The administration of Metropolitan Manila was placed under the Metro Manila Commission (MMC)
vested with the following powers:

Sec. 4. Powers and Functions of the Commission. — The Commission shall have the following powers
and functions:

1. To act as a central government to establish and administer programs and provide services
common to the area;

2. To levy and collect taxes and special assessments, borrow and expend money and issue
bonds, revenue certificates, and other obligations of indebtedness. Existing tax measures
should, however, continue to be operative until otherwise modified or repealed by the
Commission;

3. To charge and collect fees for the use of public service facilities;

4. To appropriate money for the operation of the metropolitan government and review
appropriations for the city and municipal units within its jurisdiction with authority to
disapprove the same if found to be not in accordance with the established policies of the
Commission, without prejudice to any contractual obligation of the local government units
involved existing at the time of approval of this Decree;

5. To review, amend, revise or repeal all ordinances, resolutions and acts of cities and
municipalities within Metropolitan Manila;

6. To enact or approve ordinances, resolutions and to fix penalties for any violation thereof
which shall not exceed a fine of P10,000.00 or imprisonment of six years or both such fine and
imprisonment for a single offense;

7. To perform general administrative, executive and policy-making functions;

8. To establish a fire control operation center, which shall direct the fire services of the city
and municipal governments in the metropolitan area;
 9. To establish a garbage disposal operation center, which shall direct garbage collection and
disposal in the metropolitan area;

10. To establish and operate a transport and traffic center, which shall direct traffic activities;

11. To coordinate and monitor governmental and private activities pertaining to essential
services such as transportation, flood control and drainage, water supply and sewerage, social,
health and environmental services, housing, park development, and others;

12. To insure and monitor the undertaking of a comprehensive social, economic and physical
planning and development of the area;

13. To study the feasibility of increasing barangay participation in the affairs of their
respective local governments and to propose to the President of the Philippines definite
programs and policies for implementation;

14. To submit within thirty (30) days after the close of each fiscal year an annual report to the
President of the Philippines and to submit a periodic report whenever deemed necessary; and

15. To perform such other tasks as may be assigned or directed by the President of the
Philippines.

The MMC was the "central government" of Metro Manila for the purpose of establishing and
administering programs providing services common to the area. As a "central government" it had the
power to levy and collect taxes and special assessments, the power to charge and collect fees; the
power to appropriate money for its operation, and at the same time, review appropriations for the city
and municipal units within its jurisdiction. It was bestowed the power to enact or approve ordinances,
resolutions and fix penalties for violation of such ordinances and resolutions. It also had the power to
review, amend, revise or repeal all ordinances, resolutions and acts of any of the four (4) cities and
thirteen (13) municipalities comprising Metro Manila.

P.D. No. 824 further provided:

Sec. 9. Until otherwise provided, the governments of the four cities and thirteen municipalities
in the Metropolitan Manila shall continue to exist in their present form except as may be
inconsistent with this Decree. The members of the existing city and municipal councils in
Metropolitan Manila shall, upon promulgation of this Decree, and until December 31, 1975,
become members of the Sangguniang Bayan which is hereby created for every city and
municipality of Metropolitan Manila.

In addition, the Sangguniang Bayan shall be composed of as many barangay captains as may
be determined and chosen by the Commission, and such number of representatives from other
sectors of the society as may be appointed by the President upon recommendation of the
Commission.

x x x           x x x          x x x

The Sangguniang Bayan may recommend to the Commission ordinances, resolutions or such
measures as it may adopt; Provided, that no such ordinance, resolution or measure shall
become effective, until after its approval by the Commission; and Provided further, that the
power to impose taxes and other levies, the power to appropriate money and the power to
pass ordinances or resolutions with penal sanctions shall be vested exclusively in the
Commission.
The creation of the MMC also carried with it the creation of the Sangguniang Bayan. This was
composed of the members of the component city and municipal councils, barangay captains chosen by
the MMC and sectoral representatives appointed by the President. The Sangguniang Bayan had the
power to recommend to the MMC the adoption of ordinances, resolutions or measures. It was the MMC
itself, however, that possessed legislative powers. All ordinances, resolutions and measures
recommended by the Sangguniang Bayan were subject to the MMC's approval. Moreover, the power to
impose taxes and other levies, the power to appropriate money, and the power to pass ordinances or
resolutions with penal sanctions were vested exclusively in the MMC.

Thus, Metropolitan Manila had a "central government," i.e., the MMC which fully possessed legislative
police powers. Whatever legislative powers the component cities and municipalities had were all
subject to review and approval by the MMC.

After President Corazon Aquino assumed power, there was a clamor to restore the autonomy of the
local government units in Metro Manila. Hence, Sections 1 and 2 of Article X of the 1987 Constitution
provided:

Sec. 1. The territorial and political subdivisions of the Republic of the Philippines are the
provinces, cities, municipalities and barangays. There shall be autonomous regions in Muslim
Mindanao and the Cordilleras as herein provided.

Sec. 2. The territorial and political subdivisions shall enjoy local autonomy.

The Constitution, however, recognized the necessity of creating metropolitan regions not only in the
existing National Capital Region but also in potential equivalents in the Visayas and
Mindanao. 43 Section 11 of the same Article X thus provided:

Sec. 11. The Congress may, by law, create special metropolitan political subdivisions, subject
to a plebiscite as set forth in Section 10 hereof. The component cities and municipalities shall
retain their basic autonomy and shall be entitled to their own local executives and legislative
assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be
limited to basic services requiring coordination.

Constitution itself expressly provides that Congress may, by law, create "special metropolitan political
subdivisions" which shall be subject to approval by a majority of the votes cast in a plebiscite in the
political units directly affected; the jurisdiction of this subdivision shall be limited to basic services
requiring coordination; and the cities and municipalities comprising this subdivision shall retain their
basic services requiring coordination; and the cities and municipalities comprising this subdivision shall
retain their basic autonomy and their own local executive and legislative assemblies. 44 Pending
enactment of this law, the Transitory Provisions of the Constitution gave the President of the
Philippines the power to constitute the Metropolitan Authority, viz:

Sec. 8. Until otherwise provided by Congress, the President may constitute the Metropolitan
Authority to be composed of the heads of all local government units comprising the
Metropolitan Manila area. 45

In 1990, President Aquino issued Executive Order (E. O.) No. 392 and constituted the Metropolitan
Manila Authority (MMA). The powers and functions of the MMC were devolved to the MMA. 46 It ought
to be stressed, however, that not all powers and functions of the MMC were passed to the MMA. The
MMA's power was limited to the "delivery of basic urban services requiring coordination in Metropolitan
Manila." 47 The MMA's governing body, the Metropolitan Manila Council, although composed of the
mayors of the component cities and municipalities, was merely given power of: (1) formulation of
policies on the delivery of basic services requiring coordination and consolidation; and (2)
promulgation resolutions and other issuances, approval of a code of basic services and the exercise of
its rule-making power. 48
Under the 1987 Constitution, the local government units became primarily responsible for the
governance of their respective political subdivisions. The MMA's jurisdiction was limited to addressing
common problems involving basic services that transcended local boundaries. It did not have
legislative power. Its power was merely to provide the local government units technical assistance in
the preparation of local development plans. Any semblance of legislative power it had was confined to
a "review [of] legislation proposed by the local legislative assemblies to ensure consistency among
local governments and with the comprehensive development plan of Metro Manila," and to "advise the
local governments accordingly." 49

When R.A. No. 7924 took effect, Metropolitan Manila became a "special development and
administrative region" and the MMDA a "special development authority" whose functions were
"without prejudice to the autonomy of the affected local government units." The character of the
MMDA was clearly defined in the legislative debates enacting its charter.

R.A. No. 7924 originated as House Bill No. 14170/11116 and was introduced by several legislators led
by Dante Tinga, Roilo Golez and Feliciano Belmonte. It was presented to the House of Representatives
by the Committee on Local Governments chaired by Congressman Ciriaco R. Alfelor. The bill was a
product of Committee consultations with the local government units in the National Capital Region
(NCR), with former Chairmen of the MMC and MMA, 50 and career officials of said agencies. When the
bill was first taken up by the Committee on Local Governments, the following debate took place:

THE CHAIRMAN [Hon. Ciriaco Alfelor]: Okay, Let me explain. This has been debated a long
time ago, you know. It's a special . . . we can create a special metropolitan political
subdivision.

Actually, there are only six (6) political subdivisions provided for in the Constitution:
barangay, municipality, city, province, and we have the Autonomous Region of Mindanao and
we have the Cordillera. So we have 6. Now. . . . .

HON. [Elias] LOPEZ: May I interrupt, Mr. Chairman. In the case of the Autonomous Region,
that is also specifically mandated by the Constitution.

THE CHAIRMAN: That's correct. But it is considered to be a political subdivision. What is the
meaning of a political subdivision? Meaning to say, that it has its own government, it has its
own political personality, it has the power to tax, and all governmental powers: police power
and everything. All right. Authority is different; because it does not have its own government.
It is only a council, it is an organization of political subdivision, powers, "no, which is not
imbued with any political power.

If you go over Section 6, where the powers and functions of the Metro Manila Development
Authority, it is purely coordinative. And it provides here that the council is policy-making. All
right.

Under the Constitution is a Metropolitan Authority with coordinative power. Meaning to say, it
coordinates all of the different basic services which have to be delivered to the constituency.
All right.

There is now a problem. Each local government unit is given its respective . . . as a political
subdivision. Kalookan has its powers, as provided for and protected and guaranteed by the
Constitution. All right, the exercise. However, in the exercise of that power, it might be
deleterious and disadvantageous to other local government units. So, we are forming an
authority where all of these will be members and then set up a policy in order that the basic
services can be effectively coordinated. All right.

Of course, we cannot deny that the MMDA has to survive. We have to provide some funds,
resources. But it does not possess any political power. We do not elect the Governor. We do
 not have the power to tax. As a matter of fact, I was trying to intimate to the author that it
must have the power to sue and be sued because it coordinates. All right. It coordinates
practically all these basic services so that the flow and the distribution of the basic services will
be continuous. Like traffic, we cannot deny that. It's before our eyes. Sewerage, flood control,
water system, peace and order, we cannot deny these. It's right on our face. We have to look
for a solution. What would be the right solution? All right, we envision that there should be a
coordinating agency and it is called an authority. All right, if you do not want to call it an
authority, it's alright. We may call it a council or maybe a management agency.

x x x           x x x          x x x 51

Clearly, the MMDA is not a political unit of government. The power delegated to the MMDA is that
given to the Metro Manila Council to promulgate administrative rules and regulations in the
implementation of the MMDA's functions. There is no grant of authority to enact ordinances and
regulations for the general welfare of the inhabitants of the metropolis. This was explicitly stated in
the last Committee deliberations prior to the bill's presentation to Congress. Thus:

THE CHAIRMAN: Yeah, but we have to go over the suggested revision. I think this was already
approved before, but it was reconsidered in view of the proposals, set-up, to make the MMDA
stronger. Okay, so if there is no objection to paragraph "f". . . And then next is paragraph "b,"
under Section 6. "It shall approve metro-wide plans, programs and projects and issue
ordinances or resolutions deemed necessary by the MMDA to carry out the purposes of this
Act." Do you have the powers? Does the MMDA... because that takes the form of a local
government unit, a political subdivision.

HON. [Feliciano] BELMONTE: Yes, I believe so, your Honor. When we say that it has the
policies, it's very clear that those policies must be followed. Otherwise, what's the use of
empowering it to come out with policies. Now, the policies may be in the form of a resolution
or it may be in the form of a ordinance. The term "ordinance" in this case really gives it more
teeth, your honor. Otherwise, we are going to see a situation where you have the power to
adopt the policy but you cannot really make it stick as in the case now, and I think here is
Chairman Bunye. I think he will agree that that is the case now. You've got the power to set a
policy, the body wants to follow your policy, then we say let's call it an ordinance and see if
they will not follow it.

THE CHAIRMAN: That's very nice. I like that. However, there is a constitutional
impediment.1âwphi1 You are making this MMDA a political subdivision. The creation of the
MMDA would be subject to a plebiscite. That is what I'm trying to avoid. I've been trying to
avoid this kind of predicament. Under the Constitution it states: if it is a political subdivision,
once it is created it has to be subject to a plebiscite. I'm trying to make this as administrative.
That's why we place the Chairman as a cabinet rank.

HON. BELMONTE: All right, Mr. Chairman, okay, what you are saying there is . . . . .

THE CHAIRMAN: In setting up ordinances, it is a political exercise, Believe me.

HON. [Elias] LOPEZ: Mr. Chairman, it can be changed into issuances of rules and regulations.
That would be . . . it shall also be enforced.

HON. BELMONTE: Okay, I will . . . .

HON. LOPEZ: And you can also say that violation of such rule, you impose a sanction. But you
know, ordinance has a different legal connotation.

HON. BELMONTE: All right, I defer to that opinion, your Honor.

 THE CHAIRMAN: So instead of ordinances, say rules and regulations.

HON. BELMONTE: Or resolutions. Actually, they are actually considering resolutions now.

THE CHAIRMAN: Rules and resolutions.

HON. BELMONTE: Rules, regulations and resolutions. 52

The draft of H. B. No. 14170/11116 was presented by the Committee to the House of Representatives.
The explanatory note to the bill stated that the proposed MMDA is a "development authority" which is
a "national agency, not a political government unit." 53 The explanatory note was adopted as the
sponsorship speech of the Committee on Local Governments. No interpellations or debates were made
on the floor and no amendments introduced. The bill was approved on second reading on the same
day it was presented. 54

When the bill was forwarded to the Senate, several amendments were made.1âwphi1 These
amendments, however, did not affect the nature of the MMDA as originally conceived in the House of
Representatives. 55

It is thus beyond doubt that the MMDA is not a local government unit or a public corporation endowed
with legislative power. It is not even a "special metropolitan political subdivision" as contemplated in
Section 11, Article X of the Constitution. The creation of a "special metropolitan political subdivision"
requires the approval by a majority of the votes cast in a plebiscite in the political units directly
affected." 56 R. A. No. 7924 was not submitted to the inhabitants of Metro Manila in a plebiscite. The
Chairman of the MMDA is not an official elected by the people, but appointed by the President with the
rank and privileges of a cabinet member. In fact, part of his function is to perform such other duties
as may be assigned to him by the President, 57 whereas in local government units, the President
merely exercises supervisory authority. This emphasizes the administrative character of the MMDA.

Clearly then, the MMC under P.D. No. 824 is not the same entity as the MMDA under R.A. No. 7924.
Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community. It is
the local government units, acting through their respective legislative councils, that possess legislative
power and police power. In the case at bar, the Sangguniang Panlungsod of Makati City did not pass
any ordinance or resolution ordering the opening of Neptune Street, hence, its proposed opening by
petitioner MMDA is illegal and the respondent Court of Appeals did not err in so ruling. We desist from
ruling on the other issues as they are unnecessary.

We stress that this decision does not make light of the MMDA's noble efforts to solve the chaotic traffic
condition in Metro Manila. Everyday, traffic jams and traffic bottlenecks plague the metropolis. Even
our once sprawling boulevards and avenues are now crammed with cars while city streets are clogged
with motorists and pedestrians. Traffic has become a social malaise affecting our people's productivity
and the efficient delivery of goods and services in the country. The MMDA was created to put some
order in the metropolitan transportation system but unfortunately the powers granted by its charter
are limited. Its good intentions cannot justify the opening for public use of a private street in a private
subdivision without any legal warrant. The promotion of the general welfare is not antithetical to the
preservation of the rule of law.1âwphi1.nêt

IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals in CA-
G.R. SP No. 39549 are affirmed

- Magtajas vs. Pryce Properties, 234 SCRA 255

FACTS:

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines.

PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building
belonging to Pryce Properties Corporations, Inc., renovated & equipped the same, and prepared to
inaugurate its casino during the Christmas season.

Then Mayor Magtajas together with the city legislators and civil organizations of the City of Cagayan
de Oro denounced such project.

In reaction to this project, the Sangguniang Panlungsod of Cagayan de Oro City enacted two (2)
ordinances prohibiting the issuance of a business permit and canceling existing business permit to
establishment for the operation of casino (ORDINANCE NO. 3353) and an ordinance prohibiting the
operation of casino and providing penalty for its violation. (ORDINANCE NO. 3375-93).

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner.

Court of Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied against petitioners.

Hence, this petition for review under Rule 45.

ISSUE:

WON Ordinance No. 3353 and Ordinance No. 3375-93 are a valid exercise of police power.

HELD:

NO. The ordinances enacted are invalid. Ordinances should not contravene a statute. Municipal
governments are merely agents of the National Government. Local Councils exercise only delegated
powers conferred by Congress. The delegate cannot be superior to the principal powers higher than
those of the latter. PD 1869 authorized casino gambling. As a statute, it cannot be amended/nullified
by a mere ordinance.

As to petitioners attack on gambling as harmful and immoral, the Court stressed that the morality of
gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally considered
inimical to the interests of the people, there is nothing in the Constitution categorically proscribing or
penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress to deal with the
activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit gambling
altogether or allow it without limitation or it may prohibit some forms of gambling and allow others for
whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but permits
lotteries, cockfighting, and horse-racing. In making such choices, Congress has consulted its own
wisdom, which this Court has no authority to review, much less reverse. Well has it been said that
courts do not sit to resolve the merits of conflicting theories. That is the prerogative of the political
departments. It is settled that questions regarding the wisdom, morality, or practicability of statutes
are not addressed to the judiciary but may be resolved only by the legislative and executive
departments, to which the function belongs in our scheme of government. That function is exclusive.
Whichever way these branches decide, they are answerable only to their own conscience and the
constituents who will ultimately judge their acts, and not to the courts of justice.

Xxxxx
Facts: The Philippine Amusement and Gaming Corporation (PAGCOR) is a corporation created directly
by P.D. 1869 to help centralize and regulate all games of chance, including casinos on land and sea
within the territorial jurisdiction of the Philippines. In Basco v. Philippine Amusements and Gaming
Corporation, this Court sustained the constitutionality of the decree and even cited the benefits of the
entity to the national economy as the third highest revenue-earner in the government.

PAGCOR decided to expand its operations to Cagayan de Oro City by leasing a portion of a building
belonging to Pryce Properties Corporation Inc. for its casino.

On December 7, 1992, Sangguniang Panlungsod of CDO enacted ordinance 3353, prohibiting the
issuance of business permit and cancelling existing business permit to any establishment for the using
and allowing to be used its premises or portion thereof for the operation of a casino.

On January 4, 1993, it enacted Ordinance 3375-93, prohibiting the operation of casino and providing
penalty for violation therefore.

Pryce assailed the ordinances before the CA, where it was joined by PAGCOR as intervenor.

The Court found the ordinances invalid and issued the writ prayed for to prohibit their enforcement.
CDO City and its mayor filed a petition for review under Rules of Court with the Supreme Court.

Issue: WON the Sangguniang Panlungsod can prohibit the establishment of casino operated by
PAGCOR through an ordinance or resolution.

Held: No. Gambling is not illegal per se. While it is generally considered inimical to the interests of the
people, there is nothing in the Constitution categorically proscribing or penalizing gambling or, for that
matter, even mentioning it at all. In the exercise of its own discretion, the Congress may prohibit
gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow
others for whatever reasons it may consider sufficient.

Under Sec. 458 of the Local Government Code, local government units are authorized to prevent or
suppress, among others, “gambling and other prohibited games of chance.”

Ordinances should not contravene a statue as municipal governments are only agents of the national
government. Local councils exercise only delegated powers conferred on them by Congress as the
national lawmaking body. The delegate cannot be superior to the principal or exercise powers higher
than those of the latter.

The tests of a valid ordinance are well established. A long line of decisions has held that to be valid, an
ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute.

2) It must not be unfair or 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.

6) It must not be unreasonable.

xxx—xx

There was instant opposition when PAGCOR announced the opening of a casino in Cagayan de Oro
City. Civic organizations angrily denounced the project. The religious elements echoed the objection
and so did the women's groups and the youth. Demonstrations were led by the mayor and the city
legislators. The media trumpeted the protest, describing the casino as an affront to the welfare of the
city.

The trouble arose when in 1992, flush with its tremendous success in several cities, PAGCOR decided
to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building
belonging to Pryce Properties Corporation, Inc., one of the herein private respondents, renovated and
equipped the same, and prepared to inaugurate its casino there during the Christmas season.

The reaction of the Sangguniang Panlungsod of Cagayan de Oro City was swift and hostile. On
December 7, 1992, it enacted Ordinance No. 3353 reading as follows:

ORDINANCE NO. 3353

AN ORDINANCE PROHIBITING THE ISSUANCE OF BUSINESS PERMIT AND

CANCELLING EXISTING BUSINESS PERMIT TO ANY ESTABLISHMENT FOR THE USING
AND ALLOWING TO BE USED ITS PREMISES OR PORTION THEREOF FOR THE
OPERATION OF CASINO.

BE IT ORDAINED by the Sangguniang Panlungsod of the City of Cagayan de Oro, in

session assembled that:

Sec. 1. — That pursuant to the policy of the city banning the operation of casino within
its territorial jurisdiction, no business permit shall be issued to any person, partnership
or corporation for the operation of casino within the city limits.

Sec. 2. — That it shall be a violation of existing business permit by any persons,

partnership or corporation to use its business establishment or portion thereof, or
allow the use thereof by others for casino operation and other gambling activities.

Sec. 3. — PENALTIES. — Any violation of such existing business permit as defined in

the preceding section shall suffer the following penalties, to wit:
 a) Suspension of the business permit for sixty (60)
days for the first offense and a fine of P1,000.00/day

b) Suspension of the business permit for Six (6)

months for the second offense, and a fine of
P3,000.00/day

c) Permanent revocation of the business permit and

imprisonment of One (1) year, for the third and
subsequent offenses.

Sec. 4. — This Ordinance shall take effect ten (10) days from publication thereof.

Nor was this all. On January 4, 1993, it adopted a sterner Ordinance No. 3375-93 reading as follows:

ORDINANCE NO. 3375-93

AN ORDINANCE PROHIBITING THE OPERATION OF CASINO AND PROVIDING PENALTY

FOR VIOLATION THEREFOR.

WHEREAS, the City Council established a policy as early as 1990 against CASINO
under its Resolution No. 2295;

WHEREAS, on October 14, 1992, the City Council passed another Resolution No. 2673,
reiterating its policy against the establishment of CASINO;

WHEREAS, subsequently, thereafter, it likewise passed Ordinance No. 3353,

prohibiting the issuance of Business Permit and to cancel existing Business Permit to
any establishment for the using and allowing to be used its premises or portion thereof
for the operation of CASINO;

WHEREAS, under Art. 3, section 458, No. (4), sub paragraph VI of the Local
Government Code of 1991 (Rep. Act 7160) and under Art. 99, No. (4), Paragraph VI of
the implementing rules of the Local Government Code, the City Council as the
Legislative Body shall enact measure to suppress any activity inimical to public morals
and general welfare of the people and/or regulate or prohibit such activity pertaining
to amusement or entertainment in order to protect social and moral welfare of the
community;

NOW THEREFORE,

BE IT ORDAINED by the City Council in session duly assembled that:

Sec. 1. — The operation of gambling CASINO in the City of Cagayan de Oro is hereby
prohibited.

Sec. 2. — Any violation of this Ordinance shall be subject to the following penalties:

a) Administrative fine of P5,000.00 shall be imposed against the proprietor,

partnership or corporation undertaking the operation, conduct, maintenance of
gambling CASINO in the City and closure thereof;

b) Imprisonment of not less than six (6) months nor more than one (1) year or a fine
in the amount of P5,000.00 or both at the discretion of the court against the manager,
 supervisor, and/or any person responsible in the establishment, conduct and
maintenance of gambling CASINO.

Sec. 3. — This Ordinance shall take effect ten (10) days after its publication in a local
newspaper of general circulation.

Pryce assailed the ordinances before the Court of Appeals, where it was joined by PAGCOR as
intervenor and supplemental petitioner. Their challenge succeeded. On March 31, 1993, the Court of
Appeals declared the ordinances invalid and issued the writ prayed for to prohibit their
enforcement. 1 Reconsideration of this decision was denied on July 13, 1993. 2

Cagayan de Oro City and its mayor are now before us in this petition for review under Rule 45 of the
Rules of Court. 3 They aver that the respondent Court of Appeals erred in holding that:

1. Under existing laws, the Sangguniang Panlungsod of the City of Cagayan de Oro
does not have the power and authority to prohibit the establishment and operation of
a PAGCOR gambling casino within the City's territorial limits.

2. The phrase "gambling and other prohibited games of chance" found in Sec. 458,
par. (a), sub-par. (1) — (v) of R.A. 7160 could only mean "illegal gambling."

3. The questioned Ordinances in effect annul P.D. 1869 and are therefore invalid on
that point.

4. The questioned Ordinances are discriminatory to casino and partial to cockfighting

and are therefore invalid on that point.

5. The questioned Ordinances are not reasonable, not consonant with the general
powers and purposes of the instrumentality concerned and inconsistent with the laws
or policy of the State.

6. It had no option but to follow the ruling in the case of Basco, et al. v. PAGCOR, G.R.
No. 91649, May 14, 1991, 197 SCRA 53 in disposing of the issues presented in this
present case.

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines. In Basco
v. Philippine Amusements and Gaming Corporation, 4 this Court sustained the constitutionality of the
decree and even cited the benefits of the entity to the national economy as the third highest revenue-
earner in the government, next only to the BIR and the Bureau of Customs.

Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the
purposes indicated in the Local Government Code. It is expressly vested with the police power under
what is known as the General Welfare Clause now embodied in Section 16 as follows:

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.

In addition, Section 458 of the said Code specifically declares that:

Sec. 458. — Powers, Duties, Functions and Compensation. — (a) The Sangguniang
Panlungsod, as the legislative body of the city, shall enact ordinances, approve
resolutions and appropriate funds for the general welfare of the city and its inhabitants
pursuant to Section 16 of this Code and in the proper exercise of the corporate powers
of the city as provided for under Section 22 of this Code, and shall:

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

x x x           x x x          x x x

(v) Enact ordinances intended to prevent, suppress

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

This section also authorizes the local government units to regulate properties and businesses within
their territorial limits in the interest of the general welfare. 5

The petitioners argue that by virtue of these provisions, the Sangguniang Panlungsod may prohibit the
operation of casinos because they involve games of chance, which are detrimental to the people.
Gambling is not allowed by general law and even by the Constitution itself. The legislative power
conferred upon local government units may be exercised over all kinds of gambling and not only over
"illegal gambling" as the respondents erroneously argue. Even if the operation of casinos may have
been permitted under P.D. 1869, the government of Cagayan de Oro City has the authority to prohibit
them within its territory pursuant to the authority entrusted to it by the Local Government Code.

It is submitted that this interpretation is consonant with the policy of local autonomy as mandated in
Article II, Section 25, and Article X of the Constitution, as well as various other provisions therein
seeking to strengthen the character of the nation. In giving the local government units the power to
prevent or suppress gambling and other social problems, the Local Government Code has recognized
the competence of such communities to determine and adopt the measures best expected to promote
the general welfare of their inhabitants in line with the policies of the State.

The petitioners also stress that when the Code expressly authorized the local government units to
prevent and suppress gambling and other prohibited games of chance, like craps, baccarat, blackjack
and roulette, it meant all forms of gambling without distinction. Ubi lex non distinguit, nec nos
distinguere debemos. 6 Otherwise, it would have expressly excluded from the scope of their power
casinos and other forms of gambling authorized by special law, as it could have easily done. The fact
that it did not do so simply means that the local government units are permitted to prohibit all kinds
of gambling within their territories, including the operation of casinos.
The adoption of the Local Government Code, it is pointed out, had the effect of modifying the charter
of the PAGCOR. The Code is not only a later enactment than P.D. 1869 and so is deemed to prevail in
case of inconsistencies between them. More than this, the powers of the PAGCOR under the decree
are expressly discontinued by the Code insofar as they do not conform to its philosophy and
provisions, pursuant to Par. (f) of its repealing clause reading as follows:

(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.

It is also maintained that assuming there is doubt regarding the effect of the Local Government Code
on P.D. 1869, the doubt must be resolved in favor of the petitioners, in accordance with the direction
in the Code calling for its liberal interpretation in favor of the local government units. Section 5 of the
Code specifically provides:

Sec. 5. Rules of Interpretation. — In the interpretation of the provisions of this Code,

the following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted in

its favor, and in case of doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower local government unit. Any fair and reasonable
doubt as to the existence of the power shall be interpreted in favor of the local
government unit concerned;

xxx xxx xxx

(c) 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; . . . (Emphasis
supplied.)

Finally, the petitioners also attack gambling as intrinsically harmful and cite various provisions of the
Constitution and several decisions of this Court expressive of the general and official disapprobation of
the vice. They invoke the State policies on the family and the proper upbringing of the youth and, as
might be expected, call attention to the old case of U.S. v. Salaveria,7 which sustained a municipal
ordinance prohibiting the playing of panguingue. The petitioners decry the immorality of gambling.
They also impugn the wisdom of P.D. 1869 (which they describe as "a martial law instrument") in
creating PAGCOR and authorizing it to operate casinos "on land and sea within the territorial
jurisdiction of the Philippines."

This is the opportune time to stress an important point.

The morality of gambling is not a justiciable issue. Gambling is not illegal per se. While it is generally
considered inimical to the interests of the people, there is nothing in the Constitution categorically
proscribing or penalizing gambling or, for that matter, even mentioning it at all. It is left to Congress
to deal with the activity as it sees fit. In the exercise of its own discretion, the legislature may prohibit
gambling altogether or allow it without limitation or it may prohibit some forms of gambling and allow
others for whatever reasons it may consider sufficient. Thus, it has prohibited jueteng and monte but
permits lotteries, cockfighting and horse-racing. In making such choices, Congress has consulted its
own wisdom, which this Court has no authority to review, much less reverse. Well has it been said
that courts do not sit to resolve the merits of conflicting theories. 8 That is the prerogative of the
political departments. It is settled that questions regarding the wisdom, morality, or practicibility of
statutes are not addressed to the judiciary but may be resolved only by the legislative and executive
departments, to which the function belongs in our scheme of government. That function is exclusive.
Whichever way these branches decide, they are answerable only to their own conscience and the
constituents who will ultimately judge their acts, and not to the courts of justice.

The only question we can and shall resolve in this petition is the validity of Ordinance No. 3355 and
Ordinance No. 3375-93 as enacted by the Sangguniang Panlungsod of Cagayan de Oro City. And we
shall do so only by the criteria laid down by law and not by our own convictions on the propriety of
gambling.

The tests of a valid ordinance are well established. A long line of decisions 9 has held that to be valid,
an ordinance must conform to the following substantive requirements:

1) It must not contravene the constitution or any statute.

2) It must not be unfair or 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.

6) It must not be unreasonable.

We begin by observing that under Sec. 458 of the Local Government Code, local government units are
authorized to prevent or suppress, among others, "gambling and other prohibited games of chance."
Obviously, this provision excludes games of chance which are not prohibited but are in fact permitted
by law. The petitioners are less than accurate in claiming that the Code could have excluded such
games of chance but did not. In fact it does. The language of the section is clear and unmistakable.
Under the rule of noscitur a sociis, a word or phrase should be interpreted in relation to, or given the
same meaning of, words with which it is associated. Accordingly, we conclude that since the word
"gambling" is associated with "and other prohibited games of chance," the word should be read as
referring to only illegal gambling which, like the other prohibited games of chance, must be prevented
or suppressed.

We could stop here as this interpretation should settle the problem quite conclusively. But we will not.
The vigorous efforts of the petitioners on behalf of the inhabitants of Cagayan de Oro City, and the
earnestness of their advocacy, deserve more than short shrift from this Court.

The apparent flaw in the ordinances in question is that they contravene P.D. 1869 and the public
policy embodied therein insofar as they prevent PAGCOR from exercising the power conferred on it to
operate a casino in Cagayan de Oro City. The petitioners have an ingenious answer to this misgiving.
They deny that it is the ordinances that have changed P.D. 1869 for an ordinance admittedly cannot
prevail against a statute. Their theory is that the change has been made by the Local Government
Code itself, which was also enacted by the national lawmaking authority. In their view, the decree has
been, not really repealed by the Code, but merely "modified pro tanto" in the sense that PAGCOR
cannot now operate a casino over the objection of the local government unit concerned. This
modification of P.D. 1869 by the Local Government Code is permissible because one law can change
or repeal another law.

It seems to us that the petitioners are playing with words. While insisting that the decree has only
been "modified pro tanto," they are actually arguing that it is already dead, repealed and useless for
all intents and purposes because the Code has shorn PAGCOR of all power to centralize and regulate
casinos. Strictly speaking, its operations may now be not only prohibited by the local government unit;
in fact, the prohibition is not only discretionary but mandated by Section 458 of the Code if the word
"shall" as used therein is to be given its accepted meaning. Local government units have now no
choice but to prevent and suppress gambling, which in the petitioners' view includes both legal and
illegal gambling. Under this construction, PAGCOR will have no more games of chance to regulate or
centralize as they must all be prohibited by the local government units pursuant to the mandatory
duty imposed upon them by the Code. In this situation, PAGCOR cannot continue to exist except only
as a toothless tiger or a white elephant and will no longer be able to exercise its powers as a prime
source of government revenue through the operation of casinos.

It is noteworthy that the petitioners have cited only Par. (f) of the repealing clause, conveniently
discarding the rest of the provision which painstakingly mentions the specific laws or the parts thereof
which are repealed (or modified) by the Code. Significantly, P.D. 1869 is not one of them. A reading of
the entire repealing clause, which is reproduced below, will disclose the omission:

Sec. 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the
"Local Government Code," Executive Order No. 112 (1987), and Executive Order No.
319 (1988) are hereby repealed.

(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders,
instructions, memoranda and issuances related to or concerning the barangay are
hereby repealed.

(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital
fund; Section 3, a (3) and b (2) of Republic Act. No. 5447 regarding the Special
Education Fund; Presidential Decree No. 144 as amended by Presidential Decree Nos.
559 and 1741; Presidential Decree No. 231 as amended; Presidential Decree No. 436
as amended by Presidential Decree No. 558; and Presidential Decree Nos. 381, 436,
464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and
effect.

(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-
funded projects.

(e) The following provisions are hereby repealed or amended insofar as they are
inconsistent with the provisions of this Code: Sections 2, 16, and 29 of Presidential
Decree No. 704; Sections 12 of Presidential Decree No. 87, as amended; Sections 52,
53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of Presidential Decree No. 463, as
amended; and Section 16 of Presidential Decree No. 972, as amended, and

(f) All general and special laws, acts, city charters, decrees, executive orders,
proclamations and administrative regulations, or part or parts thereof which are
inconsistent with any of the provisions of this Code are hereby repealed or modified
accordingly.

Furthermore, it is a familiar rule that implied repeals are not lightly presumed in the absence of a clear
and unmistakable showing of such intention. In Lichauco & Co. v. Apostol, 10 this Court explained:

The cases relating to the subject of repeal by implication all proceed on the
assumption that if the act of later date clearly reveals an intention on the part of the
lawmaking power to abrogate the prior law, this intention must be given effect; but
there must always be a sufficient revelation of this intention, and it has become an
unbending rule of statutory construction that the intention to repeal a former law will
not be imputed to the Legislature when it appears that the two statutes, or provisions,
with reference to which the question arises bear to each other the relation of general
to special.

There is no sufficient indication of an implied repeal of P.D. 1869. On the contrary, as the private
respondent points out, PAGCOR is mentioned as the source of funding in two later enactments of
Congress, to wit, R.A. 7309, creating a Board of Claims under the Department of Justice for the
benefit of victims of unjust punishment or detention or of violent crimes, and R.A. 7648, providing for
measures for the solution of the power crisis. PAGCOR revenues are tapped by these two statutes.
This would show that the PAGCOR charter has not been repealed by the Local Government Code but
has in fact been improved as it were to make the entity more responsive to the fiscal problems of the
government.

It is a canon of legal hermeneutics that instead of pitting one statute against another in an inevitably
destructive confrontation, courts must exert every effort to reconcile them, remembering that both
laws deserve a becoming respect as the handiwork of a coordinate branch of the government. On the
assumption of a conflict between P.D. 1869 and the Code, the proper action is not to uphold one and
annul the other but to give effect to both by harmonizing them if possible. This is possible in the case
before us. The proper resolution of the problem at hand is to hold that under the Local Government
Code, local government units may (and indeed must) prevent and suppress all kinds of gambling
within their territories except only those allowed by statutes like P.D. 1869. The exception reserved in
such laws must be read into the Code, to make both the Code and such laws equally effective and
mutually complementary.

This approach would also affirm that there are indeed two kinds of gambling, to wit, the illegal and
those authorized by law. Legalized gambling is not a modern concept; it is probably as old as illegal
gambling, if not indeed more so. The petitioners' suggestion that the Code authorizes them to prohibit
all kinds of gambling would erase the distinction between these two forms of gambling without a clear
indication that this is the will of the legislature. Plausibly, following this theory, the City of Manila
could, by mere ordinance, prohibit the Philippine Charity Sweepstakes Office from conducting a lottery
as authorized by R.A. 1169 and B.P. 42 or stop the races at the San Lazaro Hippodrome as authorized
by R.A. 309 and R.A. 983.

In light of all the above considerations, we see no way of arriving at the conclusion urged on us by the
petitioners that the ordinances in question are valid. On the contrary, we find that the ordinances
violate P.D. 1869, which has the character and force of a statute, as well as the public policy
expressed in the decree allowing the playing of certain games of chance despite the prohibition of
gambling in general.

The rationale of the requirement that the ordinances should not contravene a statute is obvious.
Municipal governments are only agents of the national government. Local councils exercise only
delegated legislative powers conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that the local government units can undo the acts of Congress, from which they
have derived their power in the first place, and negate by mere ordinance the mandate of the statute.

Municipal corporations owe their origin to, and derive their powers and rights wholly
from the legislature. It breathes into them the breath of life, without which they
cannot exist. As it creates, so it may destroy. As it may destroy, it may abridge and
control. Unless there is some constitutional limitation on the right, the legislature
might, by a single act, and if we can suppose it capable of so great a folly and so great
a wrong, sweep from existence all of the municipal corporations in the State, and the
corporation could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it, the mere tenants at
will of the legislature. 11

This basic relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy.
Without meaning to detract from that policy, we here confirm that Congress retains control of the local
government units although in significantly reduced degree now than under our previous Constitutions.
The power to create still includes the power to destroy. The power to grant still includes the power to
withhold or recall. True, there are certain notable innovations in the Constitution, like the direct
conferment on the local government units of the power to tax, 12 which cannot now be withdrawn by
mere statute. By and large, however, the national legislature is still the principal of the local
government units, which cannot defy its will or modify or violate it.

The Court understands and admires the concern of the petitioners for the welfare of their constituents
and their apprehensions that the welfare of Cagayan de Oro City will be endangered by the opening of
the casino. We share the view that "the hope of large or easy gain, obtained without special effort,
turns the head of the workman" 13 and that "habitual gambling is a cause of laziness and
ruin." 14 In People v. Gorostiza, 15 we declared: "The social scourge of gambling must be stamped out.
The laws against gambling must be enforced to the limit." George Washington called gambling "the
child of avarice, the brother of iniquity and the father of mischief." Nevertheless, we must recognize
the power of the legislature to decide, in its own wisdom, to legalize certain forms of gambling, as was
done in P.D. 1869 and impliedly affirmed in the Local Government Code. That decision can be revoked
by this Court only if it contravenes the Constitution as the touchstone of all official acts. We do not
find such contravention here.

We hold that the power of PAGCOR to centralize and regulate all games of chance, including casinos
on land and sea within the territorial jurisdiction of the Philippines, remains unimpaired. P.D. 1869 has
not been modified by the Local Government Code, which empowers the local government units to
prevent or suppress only those forms of gambling prohibited by law.

Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be
amended or nullified by a mere ordinance. Hence, it was not competent for the Sangguniang
Panlungsod of Cagayan de Oro City to enact Ordinance No. 3353 prohibiting the use of buildings for
the operation of a casino and Ordinance No. 3375-93 prohibiting the operation of casinos. For all their
praiseworthy motives, these ordinances are contrary to P.D. 1869 and the public policy announced
therein and are therefore ultra vires and void.

WHEREFORE, the petition is DENIED and the challenged decision of the respondent Court of Appeals is
AFFIRMED, with costs against the petitioners. It is so ordered.

c. Power of Taxation