G.R. No. 122846 January 20, 2009 constitutionality of the ordinance.
First, it held that the
WHITE LIGHT CORPORATION, TITANIUM CORPORATION and
STA. MESA TOURIST & DEVELOPMENT
CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR
ALFREDO S. LIM,Respondent.
Facts:
On December 3, 1992, City Mayor Alfredo S. Lim signed into
law Manila City Ordinance No. 7774 entitled “An Ordinance
Prohibiting Short-Time Admission, Short-Time Admission
Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns,
Lodging Houses, Pension Houses, and Similar Establishments
in the City of Manila” (the Ordinance).” The ordinance
sanctions any person or corporation who will allow the
admission and charging of room rates for less than 12 hours
or the renting of rooms more than twice a day.
The petitioners White Light Corporation (WLC), Titanium
Corporation (TC), and Sta. Mesa Tourist and Development
Corporation (STDC), who own and operate several hotels and
motels in Metro Manila, filed a motion to intervene and to
admit attached complaint-in-intervention on the ground that
the ordinance will affect their business interests as operators.
The respondents, in turn, alleged that the ordinance is a
legitimate exercise of police power.
RTC declared Ordinance No. 7774 null and void as it “strikes
at the personal liberty of the individual guaranteed and
jealously guarded by the Constitution.” Reference was made
to the provisions of the Constitution encouraging private
enterprises and the incentive to needed investment, as well
as the right to operate economic enterprises. Finally, from
the observation that the illicit relationships the Ordinance
sought to dissuade could nonetheless be consummated by
simply paying for a 12-hour stay,
When elevated to CA, the respondents asserted that the
ordinance is a valid exercise of police power pursuant to
Section 458 (4)(iv) of the Local Government Code which
confers on cities the power to regulate the establishment,
operation and maintenance of cafes, restaurants,
beerhouses, hotels, motels, inns, pension houses, lodging
houses and other similar establishments, including tourist
guides and transports. Also, they contended that under Art III
Sec 18 of Revised Manila Charter, they have the power to
enact all ordinances it may deem necessary and proper for
the sanitation and safety, the furtherance of the prosperity
and the promotion of the morality, peace, good order,
comfort, convenience and general welfare of the city and its
inhabitants and to fix penalties for the violation of
ordinances.
Petitioners argued that the ordinance is unconstitutional and
void since it violates the right to privacy and freedom of
movement; it is an invalid exercise of police power; and it is
unreasonable and oppressive interference in their business.
CA, in turn, reversed the decision of RTC and affirmed the
ordinance did not violate the right to privacy or the freedom
of movement, as it only penalizes the owners or operators of
establishments that admit individuals for short time stays.
Second, the virtually limitless reach of police power is only
constrained by having a lawful object obtained through a
lawful method. The lawful objective of the ordinance is
satisfied since it aims to curb immoral activities. There is a
lawful method since the establishments are still allowed to
operate. Third, the adverse effect on the establishments is
justified by the well-being of its constituents in general.
Hence, the petitioners appeared before the SC.
Issue:
Whether Ordinance No. 7774 is a valid exercise of police
power of the State.
Held:
No. Ordinance No. 7774 cannot be considered as a valid
exercise of police power, and as such, it is unconstitutional.
The facts of this case will recall to mind not only the recent
City of Manila v Laguio Jr ruling, but the 1967 decision in
Ermita-Malate Hotel and Motel Operations Association, Inc.,
v. Hon. City Mayor of Manila. The common thread that runs
through those decisions and the case at bar goes beyond the
singularity of the localities covered under the respective
ordinances. All three ordinances were enacted with a view of
regulating public morals including particular illicit activity in
transient lodging establishments. This could be described as
the middle case, wherein there is no wholesale ban on motels
and hotels but the services offered by these establishments
have been severely restricted. At its core, this is another case
about the extent to which the State can intrude into and
regulate the lives of its citizens
The test of a valid ordinance is well established. A long line of
decisions including City of Manila has held that for an
ordinance to be valid, it must not only be within the
corporate powers of the local government unit to enact and
pass according to the procedure prescribed by law, it must
also conform to the following substantive requirements: (1)
must not contravene the Constitution or any statute; (2) must
not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade;
(5) must be general and consistent with public policy; and (6)
must not be unreasonable.
The ordinance in this case prohibits two specific and distinct
business practices, namely wash rate admissions and renting
out a room more than twice a day. The ban is evidently
sought to be rooted in the police power as conferred on local
government units by the Local Government Code through
such implements as the general welfare clause.
Police power is based upon the concept of necessity of the
State and its corresponding right to protect itself and its
people. Police power has been used as justification for
numerous and varied actions by the State.
The apparent goal of the ordinance is to minimize if not
eliminate the use of the covered establishments for illicit sex,
prostitution, drug use and alike. These goals, by themselves,
are unimpeachable and certainly fall within the ambit of the
police power of the State. Yet the desirability of these ends
do not sanctify any and all means for their achievement.
Those means must align with the Constitution.
SC contended that if they were to take the myopic view that
an ordinance should be analyzed strictly as to its effect only
on the petitioners at bar, then it would seem that the only
restraint imposed by the law that they were capacitated to
act upon is the injury to property sustained by the
petitioners. Yet, they also recognized the capacity of the
petitioners to invoke as well the constitutional rights of their
patrons – those persons who would be deprived of availing
short time access or wash-up rates to the lodging
establishments in question. The rights at stake herein fell
within the same fundamental rights to liberty. Liberty as
guaranteed by the Constitution was defined by Justice
Malcolm to include “the right to exist and the right to be free
from arbitrary restraint or servitude. The term cannot be
dwarfed into mere freedom from physical restraint of the
person of the citizen, but is deemed to embrace the right of
man to enjoy the facilities with which he has been endowed
by his Creator, subject only to such restraint as are necessary
for the common welfare,
Indeed, the right to privacy as a constitutional right must be
recognized and the invasion of it should be justified by a
compelling state interest. Jurisprudence accorded recognition
to the right to privacy independently of its identification with
liberty; in itself it is fully deserving of constitutional
protection. Governmental powers should stop short of
certain intrusions into the personal life of the citizen.
An ordinance which prevents the lawful uses of a wash rate
depriving patrons of a product and the petitioners of lucrative
business ties in with another constitutional requisite for the
legitimacy of the ordinance as a police power measure. It
must appear that the interests of the public generally, as
distinguished from those of a particular class, require an
interference with private rights and the means must be
reasonably necessary for the accomplishment of the purpose
and not unduly oppressive of private rights. It must also be
evident that no other alternative for the accomplishment of
the purpose less intrusive of private rights can work. More
importantly, a reasonable relation must exist between the
purposes of the measure and the means employed for its
accomplishment, for even under the guise of protecting the
public interest, personal rights and those pertaining to
private property will not be permitted to be arbitrarily
invaded.
Lacking a concurrence of these requisites, the police measure
shall be struck down as an arbitrary intrusion into private
rights.
The behavior which the ordinance seeks to curtail is in fact
already prohibited and could in fact be diminished simply by
applying existing laws. Less intrusive measures such as
curbing the proliferation of prostitutes and drug dealers
through active police work would be more effective in easing
the situation. So would the strict enforcement of existing laws
and regulations penalizing prostitution and drug use. These
measures would have minimal intrusion on the businesses of
the petitioners and other legitimate merchants. Further, it is
apparent that the ordinance can easily be circumvented by
merely paying the whole day rate without any hindrance to
those engaged in illicit activities. Moreover, drug dealers and
prostitutes can in fact collect “wash rates” from their
clientele by charging their customers a portion of the rent for
motel rooms and even apartments.
SC reiterated that individual rights may be adversely affected
only to the extent that may fairly be required by the
legitimate demands of public interest or public welfare. The
State is a leviathan that must be restrained from needlessly
intruding into the lives of its citizens. However well¬-
intentioned the ordinance may be, it is in effect an arbitrary
and whimsical intrusion into the rights of the establishments
as well as their patrons. The ordinance needlessly restrains
the operation of the businesses of the petitioners as well as
restricting the rights of their patrons without sufficient
justification. The ordinance rashly equates wash rates and
renting out a room more than twice a day with immorality
without accommodating innocuous intentions.
WHEREFORE, the Petition is GRANTED. The Decision of the
Court of Appeals is REVERSED, and the Decision of the
Regional Trial Court of Manila, Branch 9, is REINSTATED.
Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL.
No pronouncement as to costs.
 G.R. No. 177056 September 18, 2009
THE OFFICE OF THE SOLICITOR GENERAL, Petitioner,
vs.
AYALA LAND INCORPORATED, ROBINSON’S LAND
CORPORATION, SHANGRI-LA PLAZA CORPORATION and SM
PRIME HOLDINGS, INC., Respondents.
Facts:
This is a Petition for Review on Certiorari, under Rule 45 of
the Revised Rules of Court, filed by petitioner seeking the
reversal and setting aside of the decision of CA which
affirmed the decision of RTC, which denied the Motion for
Reconsideration of OSG. The RTC adjudged that respondents
Ayala Land Incorporated (Ayala Land), Robinsons Land
Corporation (Robinsons), Shangri-la Plaza Corporation
(Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could
not be obliged to provide free parking spaces in their malls to
their patrons and the general public.
The Senate Committee on Trade and Commerce found that
the collection of parking fees by shopping malls is contrary to
National Building Code and figuratively speaking, the Code
has “expropriated” the land for parking. Also, Committee
stated that the collection of parking fees would be against
Article II of RA 9734 (Consumer Act of the Philippines) as to
the State’s policy of protecting the interest of consumers.
Moreover, Section 201 of the National Building Code gives
the responsibility for the administration and enforcement of
the provisions of the Code, including the imposition of
penalties for administrative violations thereof to the
Secretary of Public Works. This is not being strictly followed
as the LGUs are tasked to discharge the regulatory powers of
DPWH instead of DPWH instead.
As such, Senate Committee recommended that: 1) Office of
Solicitor General should institute the action to enjoin the
collction of parking fees and enforce the sanctions for
violation of National Building Code; 2) DTI pursuant to RA
7394 should enforce the provisions of Code relative to
parking; and 3) Congress should amend and update the
National Building Code to prohibit the collection of parking
fees and its waiver of liability.
Respondent SM Prime assailed the recommendation of the
Committee and filed a Petition for Declaratory Relief under
Rule 63 of the Revised Rules of Court against DPWH and local
building officials, contending that: 1) Rule XIX of
Implementing Rules and Regulations of National Building
Code is unconstitutional and void; 2) respondent has the legal
right to lease parking spaces; and 3) National Building Code
IRR is ineffective as it was not published for 3 consecutive
weeks in newspaper of general circulation as mandated by
Section 211 of PD 1096.
OSG then filed a Petition for Declaratory Relief and Injunction
(with Prayer for Temporary Restraining Order and Writ of
Preliminary Injunction) to the RTC against respondents,
prohibiting them from collecting parking fees and contending
that their practice of charging parking fees is violative of
National Building Code.
The RTC held that: 1) OSG has the capacity to institute the
proceeding it being a controversy of public welfare; 2) a
petition for declaratory relief is proper since all the requisites
are present; 3) the Building Code with its IRR does not
necessarily impose that parking spaces shall be free of charge
and providing parking spaces for free can be considered as
unlawful taking of property right without just compensation;
and 4) there was no sufficient evidence to justify any award
for damages. They deemed that the respondents are not
obligated to provide parking spaces free of charge.
OSG appealed the decision to CA, saying that RTC erred in
holding that the National Building Code did not intend the
parking spaces to be free of charge. On the otherhand,
respondent SM filed a separate appeal to the CA, contending
that: 1) RTC erred in failing to declare Rule XIX of IRR as
unconstitutional; 2) RTC erred in failing to declare IRR
ineffective for not having been published as required by law;
3) RTC erred in dismissing the OSG’s petition for failure to
exhaust administrative remedies; and 4) RTC erred in failing
to declare that OSG has no legal standing as it is not a real
party-in-interest.
CA denied the appeals of both petitioners and respondents
on the following grounds: 1) OSG did not fail to exhaust
administrative remedies and that an administrative review is
not a condition precedent to judicial relief where the
question in dispute is purely a legal one and nothing of an
administrative nature is to be or can be done; 2) the validity
of National Building Code IRR cannot be proceeded as it was
not discussed in RTC and the controversy could be settled on
other grounds without touching the issue of validity since the
courts should refrain from passing upon the constitutionality
of a law; and 3) Section 803 of National Building Code and
Rule XIX of IRR are clear that they are only intended to
control the occupancy of areas and structures, and in the
absence of provision of law, respondents could not be
obliged to provide parking spaces free of charge.
As such, OSG presented itself to SC for the instant Petition for
Review.
Issues:
1. Whether the CA erred in affirming the ruling of RTC that
respondents are not obliged to provide free parking spaces to
their customers or the public.
2. Whether the petition of OSG for prohibiting the collection
of parking fees is a valid exercise of the police power of State.
Held:
1. No. The CA was correct in affirming the ruling of RTC, and
the respondents are not obliged to provide free parking
spaces. SC found no merit in the OSG’s petition:
Sec 803 of National Building Code.
Percentage of Site Occupancy states that maximum site
occupancy shall be governed by the use, type of construction,
and height of the building and the use, area, nature, and
location of the site; and subject to the provisions of the local
zoning requirements and in accordance with the rules and
regulations promulgated by the Secretary.
RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS
Pursuant to Section 803 of the National Building Code (PD
1096) providing for maximum site occupancy, the following
provisions on parking and loading space requirements shall
be observed:
1. The parking space ratings listed below are minimum off-
street requirements for specific uses/occupancies for
buildings/structures:
1.1 The size of an average automobile parking slot shall be
computed as 2.4 meters by 5.00 meters for perpendicular or
diagonal parking, 2.00 meters by 6.00 meters for parallel
parking. A truck or bus parking/loading slot shall be
computed at a minimum of 3.60 meters by 12.00 meters. The
parking slot shall be drawn to scale and the total number of
which shall be indicated on the plans and specified whether
or not parking accommodations, are attendant-managed.
(See Section 2 for computation of parking requirements).
x x x x
1.7 Neighborhood shopping center – 1 slot/100 sq. m. of
shopping floor area
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard
life, health, property, and public welfare, consistent with the
principles of sound environmental management and control;
and to this end, make it the purpose of this Code to provide
for all buildings and structures, a framework of minimum
standards and requirements to regulate and control their
location, site, design, quality of materials, construction, use,
occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues,
greatly contributes to the aim of safeguarding “life, health,
property, and public welfare, consistent with the principles of
sound environmental management and control.” Adequate
parking spaces would contribute greatly to alleviating traffic
congestion when complemented by quick and easy access
thereto because of free-charge parking. Moreover, the power
to regulate and control the use, occupancy, and maintenance
of buildings and structures carries with it the power to
impose fees and, conversely, to control — partially or, as in
this case, absolutely — the imposition of such fees.
The explicit directive of the above is that respondents, as
operators/lessors of neighborhood shopping centers, should
provide parking and loading spaces with the minimum ratio
of one slot per 100 square meters of shopping floor area.
There is nothing therein pertaining to the collection (or non-
collection) of parking fees by respondents. In fact, the term
“parking fees” cannot even be found at all in the entire
National Building Code and its IRR. One rule of statutory
construction is that if a statute is clear and unequivocal, it
must be given its literal meaning and applied without any
attempt at interpretation. Since Section 803 of the National
Building Code and Rule XIX of its IRR do not mention parking
fees, then simply, said provisions do not regulate the
collection of the same
The OSG cannot rely on Section 102 of the National Building
Code to expand the coverage of Section 803 of the same
Code and Rule XIX of the IRR, so as to include the regulation
of parking fees. The OSG limits its citation to the first part of
Section 102 of the National Building Code declaring the policy
of the State “to safeguard life, health, property, and public
welfare, consistent with the principles of sound
environmental management and control”; but totally ignores
the second part of said provision, which reads, “and to this
end, make it the purpose of this Code to provide for all
buildings and structures, a framework of minimum standards
and requirements to regulate and control their location, site,
design, quality of materials, construction, use, occupancy,
and maintenance.” While the first part of Section 102 of the
National Building Code lays down the State policy, it is the
second part thereof that explains how said policy shall be
carried out in the Code. Section 102 of the National Building
Code is not an all-encompassing grant of regulatory power to
the DPWH Secretary and local building officials in the name of
life, health, property, and public welfare. On the contrary, it
limits the regulatory power of said officials to ensuring that
the minimum standards and requirements for all buildings
and structures, as set forth in the National Building Code, are
complied with.
Consequently, the OSG cannot claim that in addition to fixing
the minimum requirements for parking spaces for buildings,
Rule XIX of the IRR also mandates that such parking spaces be
provided by building owners free of charge. If Rule XIX is not
covered by the enabling law, then it cannot be added to or
included in the implementing rules. The rule-making power of
administrative agencies must be confined to details for
regulating the mode or proceedings to carry into effect the
law as it has been enacted, and it cannot be extended to
amend or expand the statutory requirements or to embrace
matters not covered by the statute. Administrative
regulations must always be in harmony with the provisions of
the law because any resulting discrepancy between the two
will always be resolved in favor of the basic law.
2. No. The petition of OSG to prohibit collection of parking
fees is not a valid exercise of the police power of State.
It is not sufficient for the OSG to claim that “the power to
regulate and control the use, occupancy, and maintenance of
buildings and structures carries with it the power to impose
fees and, conversely, to control, partially or, as in this case,
absolutely, the imposition of such fees.” Firstly, the fees
within the power of regulatory agencies to impose are
regulatory fees. It has been settled law in this jurisdiction that
this broad and all-compassing governmental competence to
restrict rights of liberty and property carries with it the
undeniable power to collect a regulatory fee. It looks to the
enactment of specific measures that govern the relations not
only as between individuals but also as between private
parties and the political society. True, if the regulatory
agencies have the power to impose regulatory fees, then
conversely, they also have the power to remove the same.
Even so, it is worthy to note that the present case does not
involve the imposition by the DPWH Secretary and local
building officials of regulatory fees upon respondents; but the
collection by respondents of parking fees from persons who
use the mall parking facilities. Secondly, assuming arguendo
that the DPWH Secretary and local building officials do have
regulatory powers over the collection of parking fees for the
use of privately owned parking facilities, they cannot allow or
prohibit such collection arbitrarily or whimsically. Whether
allowing or prohibiting the collection of such parking fees, the
action of the DPWH Secretary and local building officials must
pass the test of classic reasonableness and propriety of the
measures or means in the promotion of the ends sought to
be accomplished.
Without using the term outright, the OSG is actually invoking
police power to justify the regulation by the State, through
the DPWH Secretary and local building officials, of privately
owned parking facilities, including the collection by the
owners/operators of such facilities of parking fees from the
public for the use thereof. The Court finds, however, that in
totally prohibiting respondents from collecting parking fees,
the State would be acting beyond the bounds of police
power.
Police power is the power of promoting the public welfare by
restraining and regulating the use of liberty and property. It is
usually exerted in order to merely regulate the use and
enjoyment of the property of the owner. The power to
regulate, however, does not include the power to prohibit. A
fortiori, the power to regulate does not include the power to
confiscate. Police power does not involve the taking or
confiscation of property, with the exception of a few cases
where there is a necessity to confiscate private property in
order to destroy it for the purpose of protecting peace and
order and of promoting the general welfare; for instance, the
confiscation of an illegally possessed article, such as opium
and firearms.
When there is a taking or confiscation of private property for
public use, the State is no longer exercising police power, but
another of its inherent powers, namely, eminent domain.
Eminent domain enables the State to forcibly acquire private
lands intended for public use upon payment of just
compensation to the owner.
Normally, of course, the power of eminent domain results in
the taking or appropriation of title to, and possession of, the
expropriated property; but no cogent reason appears why the
said power may not be availed of only to impose a burden
upon the owner of condemned property, without loss of title
and possession. It is a settled rule that neither acquisition of
title nor total destruction of value is essential to taking. It is
usually in cases where title remains with the private owner
that inquiry should be made to determine whether the
impairment of a property is merely regulated or amounts to a
compensable taking. A regulation that deprives any person of
the profitable use of his property constitutes a taking and
entitles him to compensation, unless the invasion of rights is
so slight as to permit the regulation to be justified under the
police power. Similarly, a police regulation that unreasonably
restricts the right to use business property for business
purposes amounts to a taking of private property, and the
owner may recover therefor.
Although in the present case, title to and/or possession of the
parking facilities remain/s with respondents, the prohibition
against their collection of parking fees from the public, for the
use of said facilities, is already tantamount to a taking or
confiscation of their properties. The State is not only
requiring that respondents devote a portion of the latter’s
properties for use as parking spaces, but is also mandating
that they give the public access to said parking spaces for
free. Such is already an excessive intrusion into the property
rights of respondents. Not only are they being deprived of the
right to use a portion of their properties as they wish, they
are further prohibited from profiting from its use or even just
recovering therefrom the expenses for the maintenance and
operation of the required parking facilities.
In conclusion, the total prohibition against the collection by
respondents of parking fees from persons who use the mall
parking facilities has no basis in the National Building Code or
its IRR. The State also cannot impose the same prohibition by
generally invoking police power, since said prohibition
amounts to a taking of respondents’ property without
payment of just compensation.
WHEREFORE, the instant Petition for Review on Certiorari is
hereby DENIED. The Decision dated 25 January 2007 and
Resolution dated 14 March 2007 of the Court of Appeals in
CA-G.R. CV No. 76298, affirming in toto the Joint Decision
dated 29 May 2002 of the Regional Trial Court of Makati City,
Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are
hereby AFFIRMED. No costs.
 G.R. No. 173863 September 15, 2010
CHEVRON PHILIPPINES, INC. (Formerly CALTEX PHILIPPINES,
INC.), Petitioner,
vs.
BASES CONVERSION DEVELOPMENT AUTHORITY and CLARK
DEVELOPMENT CORPORATION, Respondents
Facts:
On June 28, 2002, the Board of Directors of respondent Clark
Development Corporation (CDC) issued and approved Policy
Guidelines on the Movement of Petroleum Fuel to and from
the Clark Special Economic Zone. In one of its provisions, it
levied royalty fees to suppliers delivering Coastal fuel from
outside sources for Php0.50 per liter for those delivering fuel
to CSEZ locators not sanctioned by CDC and Php1.00 per litter
for those bringing-in petroleum fuel from outside sources.
The policy guidelines were implemented effective July 27,
2002.
The petitioner Chevron Philippines Inc (formerly Caltex
Philippines Inc) who is a fuel supplier to Nanox Philippines, a
locator inside the CSEZ, received a Statement of Account
from CDC billing them to pay the royalty fees amounting to
Php115,000 for its fuel sales from Coastal depot to Nanox
Philippines from August 1 to September 21, 2002.
Petitioner, contending that nothing in the law authorizes CDC
to impose royalty fees based on a per unit measurement of
any commodity sold within the special economic zone,
protested against the CDC and Bases Conversion
Development Authority (BCDA). They alleged that the royalty
fees imposed had no reasonable relation to the probably
expenses of regulation and that the imposition on a per unit
measurement of fuel sales was for a revenue generating
purpose, thus, akin to a “tax”.
BCDA denied the protest. The Office of the President
dismissed the appeal as well for lack of merit.
Upon appeal, CA dismissed the case. CA held that in imposing
the royalty fees, CDC was exercising its right to regulate the
flow of fuel into CSEZ under the vested exclusive right to
distribute fuel within CSEZ pursuant to its Joint Venture
Agreement (JVA) with Subic Bay Metropolitan Authority
(SBMA) and Coastal Subic Bay Terminal, Inc. (CSBTI) dated
April 11, 1996. The appellate court also found that royalty
fees were assessed on fuel delivered, not on the sale, by
petitioner and that the basis of such imposition was
petitioner’s delivery receipts to Nanox Philippines. The fact
that revenue is incidentally also obtained does not make the
imposition a tax as long as the primary purpose of such
imposition is regulation.
When elevated in SC, petitioner argued that: 1) CDC has no
power to impose fees on sale of fuel inside CSEZ on the basis
of income generating functions and its right to market and
distribute goods inside the CSEZ as this would amount to tax
which they have no power to impose, and that the imposed
fee is not regulatory in nature but rather a revenue
generating measure; 2) even if the fees are regulatory in
nature, it is unreasonable and are grossly in excess of
regulation costs.
Respondents contended that the purpose of royalty fees is to
regulate the flow of fuel to and from the CSEZ and revenue (if
any) is just an incidental product. They viewed it as a valid
exercise of police power since it is aimed at promoting the
general welfare of public; that being the CSEZ administrator,
they are responsible for the safe distribution of fuel products
inside the CSEZ.
Issue:
Whether the act of CDC in imposing royalty fees can be
considered as valid exercise of the police power.
Held:
Yes. SC held that CDC was within the limits of the police
power of the State when it imposed royalty fees.
In distinguishing tax and regulation as a form of police power,
the determining factor is the purpose of the implemented
measure. If the purpose is primarily to raise revenue, then it
will be deemed a tax even though the measure results in
some form of regulation. On the other hand, if the purpose is
primarily to regulate, then it is deemed a regulation and an
exercise of the police power of the state, even though
incidentally, revenue is generated.
In this case, SC held that the subject royalty fee was imposed
for regulatory purposes and not for generation of income or
profits. The Policy Guidelines was issued to ensure the safety,
security, and good condition of the petroleum fuel industry
within the CSEZ. The questioned royalty fees form part of the
regulatory framework to ensure “free flow or movement” of
petroleum fuel to and from the CSEZ. The fact that
respondents have the exclusive right to distribute and market
petroleum products within CSEZ pursuant to its JVA with
SBMA and CSBTI does not diminish the regulatory purpose of
the royalty fee for fuel products supplied by petitioner to its
client at the CSEZ.
However, it was erroneous for petitioner to argue that such
exclusive right of respondent CDC to market and distribute
fuel inside CSEZ is the sole basis of the royalty fees imposed
under the Policy Guidelines. Being the administrator of CSEZ,
the responsibility of ensuring the safe, efficient and orderly
distribution of fuel products within the Zone falls on CDC.
Addressing specific concerns demanded by the nature of
goods or products involved is encompassed in the range of
services which respondent CDC is expected to provide under
Sec. 2 of E.O. No. 80, in pursuance of its general power of
supervision and control over the movement of all supplies
and equipment into the CSEZ.
There can be no doubt that the oil industry is greatly imbued
with public interest as it vitally affects the general welfare.
Fuel is a highly combustible product which, if left unchecked,
poses a serious threat to life and property. Also, the
reasonable relation between the royalty fees imposed on a
“per liter” basis and the regulation sought to be attained is
that the higher the volume of fuel entering CSEZ, the greater
the extent and frequency of supervision and inspection
required to ensure safety, security, and order within the
Zone.
Respondents submit that the increased administrative costs
were triggered by security risks that have recently emerged,
such as terrorist strikes. The need for regulation is more
evident in the light of 9/11 tragedy considering that what is
being moved from one location to another are highly
combustible fuel products that could cause loss of lives and
damage to properties.
As to the issue of reasonableness of the amount of the fees,
SC held that no evidence was adduced by the petitioner to
show that the fees imposed are unreasonable. Administrative
issuances have the force and effect of law. They benefit from
the same presumption of validity and constitutionality
enjoyed by statutes. These two precepts place a heavy
burden upon any party assailing governmental regulations.
Petitioner’s plain allegations are simply not enough to
overcome the presumption of validity and reasonableness of
the subject imposition.
WHEREFORE, the petition is DENIED for lack of merit and the
Decision of the Court of Appeals dated November 30, 2005 in
CA-G.R. SP No. 87117 is hereby AFFIRMED.
Espina vs. Zamora, Jr., 631 SCRA 17(2010)
Judicial Review; Locus Standi; Words and Phrases; Legal
standing or locus standi refers to the right of a party to come
to a court of justice and make such a challenge—more
particularly, it refers to his personal and substantial interest
in that he has suffered or will suffer direct injury as a result of
the passage of that law.— The long settled rule is that he who
challenges the validity of a law must have a standing to do so.
Legal standing or locus standi refers to the right of a party to
come to a court of justice and make such a challenge. More
particularly, standing refers to his personal and substantial
interest in that he has suffered or will suffer direct injury as a
result of the passage of that law. To put it another way, he
must show that he has been or is about to be denied some
right or privilege to which he is lawfully entitled or that he is
about to be subjected to some burdens or penalties by
reason of the law he complains of. Here, there is no clear
showing that the implementation of the Retail Trade
Liberalization Act prejudices petitioners or inflicts damages
on them, either as taxpayers or as legislators. Still the Court
will resolve the question they raise since the rule on standing
can be relaxed for nontraditional plaintiffs like ordinary
citizens, taxpayers, and legislators when as in this case the
public interest so requires or the matter is of transcendental
importance, of overarching significance to society, or of
paramount public interest.
National Economy and Patrimony; While Section 19, Article II
of the 1987 Constitution requires the development of a self-
reliant and independent national economy effectively
controlled by Filipino entrepreneurs, it does not impose a
policy of Filipino monopoly of the economic environment.—
As the Court explained in Tañada v. Angara, 272 SCRA 18
(1997), the provisions of Article II of the 1987 Constitution,
the declarations of principles and state policies, are not self-
executing. Legislative failure to pursue such policies cannot
give rise to a cause of action in the courts. The Court further
explained in Tañada that Article XII of the 1987 Constitution
lays down the ideals of economic nationalism: (1) by
expressing preference in favor of qualified Filipinos in the
grant of rights, privileges and concessions covering the
national economy and patrimony and in the use of Filipino
labor, domestic materials and locally-produced goods; (2) by
mandating the State to adopt measures that help make them
competitive; and (3) by requiring the State to develop a self-
reliant and independent national economy effectively
controlled by Filipinos. In other words, while Section 19,
Article II of the 1987 Constitutionrequires the development of
a self-reliant and independent national economy effectively
controlled by Filipino entrepreneurs, it does not impose a
policy of Filipino monopoly of the economic environment.
The objective is simply to prohibit foreign powers or interests
from maneuvering our economic policies and ensure that
Filipinos are given preference in all areas of development
Same; While the Constitution mandates a bias in favor of
Filipino goods, services, labor and enterprises, it also
recognizes the need for business exchange with the rest of lessens the restraint on the foreigners’ right to property or to
the world on the bases of equality and reciprocity and limits engage in an ordinarily lawful business, it cannot be said that
protection of Filipino enterprises only against foreign the law amounts to a denial of the Filipinos’ right to property
competition and trade practices that are unfair.—Indeed, the and to due process of law. Filipinos continue to have the right
1987 Constitution takes into account the realities of the to engage in the kinds of retail business to which the law in
outside world as it requires the pursuit of a trade policy that question has permitted the entry of foreign investors.
serves the general welfare and utilizes all forms and
arrangements of exchange on the basis of equality and Same; Same; Police Power; It is not within the province of
reciprocity; and speaks of industries which are competitive in the Court to inquire into the wisdom of Republic Act (R.A.)
both domestic and foreign markets as well as of the No. 8762 save when it blatantly violates the Constitution.—It
protection of Filipino enterprises against unfair foreign is not within the province of the Court to inquire into the
competition and trade practices. Thus, while the Constitution wisdom of R.A. 8762 save when it blatantly violates the
mandates a bias in favor of Filipino goods, services, labor and Constitution. But as the Court has said, there is no showing
enterprises, it also recognizes the need for business exchange that the law has contravened any constitutional mandate.
with the rest of the world on the bases of equality and The Court is not convinced that the implementation of R.A.
reciprocity and limits protection of Filipino enterprises only 8762 would eventually lead to alien control of the retail trade
against foreign competition and trade practices that are business. Petitioners have not mustered any concrete and
unfair. strong argument to support its thesis. The law itself has
provided strict safeguards on foreign participation in that
Same; Trade and Industry; Police Power; Section 10, Article business.
XII of the 1987 Constitution gives Congress the discretion to
reserve to Filipinos certain areas of investments upon the
recommendation of the National Economic and Development
Authority (NEDA) and when the national interest requires.—
Section 10, Article XII of the 1987 Constitution gives Congress
the discretion to reserve to Filipinos certain areas of
investments upon the recommendation of the NEDA and
when the national interest requires. Thus, Congress can
determine what policy to pass and when to pass it depending
on the economic exigencies. It can enact laws allowing the
entry of foreigners into certain industries not reserved by the
Constitution to Filipino citizens. In this case, Congress has
decided to open certain areas of the retail trade business to
foreign investments instead of reserving them exclusively to
Filipino citizens. The NEDA has not opposed such policy.

Same; Same; Retail Trade Liberalization Act (R.A. 8762);

Police Power; The control and regulation of trade in the
interest of the public welfare is of course an exercise of the
police power of the State; To the extent that Republic Act
(R.A.) No. 8762, the Retail Trade Liberalization Act, lessens
the restraint on the foreigners’ right to property or to engage
in an ordinarily lawful business, it cannot be said that the law
amounts to a denial of the Filipinos’ right to property and to
due process of law.—The control and regulation of trade in
the interest of the public welfare is of course an exercise of
the police power of the State. A person’s right to property,
whether he is a Filipino citizen or foreign national, cannot be
taken from him without due process of law. In 1954, Congress
enacted the Retail Trade Nationalization Act or R.A. 1180 that
restricts the retail business to Filipino citizens. In denying the
petition assailing the validity of such Act for violation of the
foreigner’s right to substantive due process of law, the
Supreme Court held that the law constituted a valid exercise
of police power. The State had an interest in preventing alien
control of the retail trade and R.A. 1180 was reasonably
related to that purpose. That law is not arbitrary. Here, to the
extent that R.A. 8762, the Retail Trade Liberalization Act,
BRAHAM RIMANDO, PETITIONER, VS. NAGUILIAN EMISSION
TESTING CENTER, INC., REPRESENTED BY ITS PRESIDENT,
ROSEMARIE LLARENAS AND HON. COURT OF APPEALS,
RESPONDENTS.GR NO. 198860July 23, 2012FACTS OF THE
CASE:
Naguillian Emission Testing Center Inc., filed a petition for
mandamus and damages against Abraham Rimando
(petitioner), the municipal mayor of Naguilian, La Union. In its
complaint, the company alleged that from 2005 to 2007 its
business is located on a land formerly belonging to the
national government which was later certified as an alienable
and disposable land of the public domain by the DENR. On
January 18, 2008, it applied for a renewal of its business
permit and paid the corresponding fees, but the petitioner
refused to issue a business permit, until such time that the
company executes a contract of lease with the municipality;
the respondent is amenable to signing the contract but with
some revisions, which the petitioner did not accept; no
common ground was reached among the parties, hence the
company filed the petition.
The RTC ruled in favour of the petitioner; ratiocinating that:
(a) the Municipality of Naguiian is the declared owner of the
subject parcel of land by virtue of Tax Declaration No. 002-
01197;
(b) under Section 6A.01 of the Revenue Code of the
Municipality of Naguilian, the municipality has the right to
require the petitioner to sign a contract of lease because its
business operation is being conducted on a real property
owned by the municipality; and
(c) a mayors duty to issue business permits is discretionary in
nature which may not be enforced by a mandamus writ.
On appeal, the CA proceeded to discuss the merits of the case
even though the petition itself is dismissible on the ground of
mootness. It held that the factual milieu of the case justifies
issuance of the writ; the tax declaration in the name of the
municipality was insufficient basis to require the execution of
a contract of lease as a condition sine qua non for the
renewal of a business permit. The CA further observed that
Sangguniang Bayan Resolution No. 2007-81, upon which the
municipality anchored its imposition of rental fees, was void
because it failed to comply with the requirements of the
Local Government Code and its Implementing Rules and
Regulations. It held the mayor not liable for damages since he
acted in the performance of his duties which are legally
protected by the presumption of regularity in the
performance of official duty; the case against the mayor also
was moot and academic since his term as mayor expired.
Nevertheless, the CA reversed and set aside the RTC
decision.The petitioner elevated the matter to the Supreme
Court.
ISSUE:
Whether or not the issue had become moot and academic;
Whether or not the issuance of a business permit maybe
compelled thru a petition for mandamus.
RULING OF THE COURT:
The court agrees with the CA that the petition for mandamus
has already become moot and academic owing to the
expiration of the period intended to be covered by the
business permit. An issue or a case becomes moot and
academic when it ceases to present a justiciable controversy
so that a determination thereof would be without practical
use and value1 or in the nature of things, cannot be enforced.
2 In such cases, there is no actual substantial relief to which
the applicant would be entitled to and which would be
negated by the dismissal of the petition.
3 As a rule, courts decline jurisdiction over such case, or
dismiss it on ground of mootness.
4 The objective of the petition for mandamus to compel the
petitioner to grant a business permit in favor of respondent
corporation for the period 2008 to 2009 has already been
superseded by the passage of time and the expiration of the
petitioners term as mayor.
Verily then, the issue as to whether or not the petitioner, in
his capacity as mayor, may be compelled by a writ of
mandamus to release the respondents business permit
ceased to present a justiciable controversy such that any
ruling thereon would serve no practical value. Should the writ
be issued, the petitioner can no longer abide thereby; also,
the effectivity date of the business permit no longer subsists.
While the CA is not precluded from proceeding to resolve the
otherwise moot appeal of the respondent, we find that the
decretal portion of its decision was erroneously couched.The
CAs conclusions on the issue of ownership over the subject
land and the invalidity of Sangguniang Bayan Resolution No.
2007-81, aside from being unsubstantiated by convincing
evidence, can no longer be practically utilized in favor of the
petitioner. Thus, the overriding and decisive factor in the final
disposition of the appeal was its mootness and the CA should
have dismissed the same along with the petition for
mandamus that spawned it.
More importantly, a mayor cannot be compelled by issued, pursuant to law or ordinance. x x xx x x xSection
mandamus to issue a business permit since the exercise of 444(b)(3)(iv) of the Local Government Code of 1991, whereby
the same is a delegated police power hence, discretionary in the power of the respondent mayor to issue license and
nature. This was the pronouncement of this Court in Roble permits is circumscribed, is a manifestation of the delegated
Arrastre, Inc. v. Hon. Villaflor5 where a determination was police power of a municipal corporation. Necessarily, the
made on the nature of the power of a mayor to grant exercise thereof cannot be deemed ministerial. As to the
business permits under the Local Government Code6, question of whether the power is validly exercised, the
viz:Central to the resolution of the case at bar is a reading of matter is within the province of a writ of certiorari, but
Section 444(b)(3)(iv) of the Local Government Code of 1991, certainly, not of mandamus.7 (Citations omitted)Indeed, as
which provides, thus: correctly ruled by the RTC, the petition for mandamus filed by
the respondent is incompetent to compel the exercise of a
SEC. 444. The Chief Executive: Powers, Duties, Functions and mayors discretionary duty to issue business permits.
Compensation.(b) For efficient, effective and economical
governance the purpose of which is the general welfare of WHEREFORE, premises considered, the Decision dated March
the municipality and its inhabitants pursuant to Section 16 of 30, 2011 of the Court of Appeals in CA-G.R. SP No. 112152 is
this Code, the municipal mayor shall: x x x x3) Initiate and hereby SET ASIDE. The Decision dated May 26, 2009 of the
maximize the generation of resources and revenues, and Regional Trial Court of Bauang, La Union is REINSTATED.
apply the same to the implementation of development plans,
program objectives and priorities as provided for under
Section 18 of this Code, particularly those resources and
revenues programmed for agroindustrial development and
country-wide growth and progress, and relative thereto,
shall:x x x x(iv) Issue licenses and permits and suspend or
revoke the same for any violation of the conditions upon
which said licenses or permits had been issued, pursuant to
law or ordinance.As Section 444(b)(3)(iv) so states, the power
of the municipal mayor to issue licenses is pursuant to
Section 16 of the Local Government Code of 1991, which
declares:SEC. 16. General Welfare. Every local government
unit shall exercise the powers expressly granted, those
necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion
of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and
support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance
the right of the people to a balanced ecology, encourage and
support the development of appropriate and self-reliant
scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice,
promote full employment among their residents, maintain
peace and order, and preserve the comfort and convenience
of their inhabitants.Section 16, known as the general welfare
clause, encapsulates the delegated police power to local
governments. Local government units exercise police power
through their respective legislative bodies. Evidently, the
Local Government Code of 1991 is unequivocal that the
municipal mayor has the power to issue licenses and permits
and suspend or revoke the same for any violation of the
conditions upon which said licenses or permits had been