G.R. No. L-42571-72 July 25, 1983

VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO CORPUZ, TERESITA CALOT, ROSALIA FERNANDEZ, ELIZABETH VELASCO, NANETTE VILLANUEVA, HONORATO BUENAVENTURA, RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO ROMDINA, ANGELINA OBLIGACION, CONRADO GREGORIO, TEODORO REYES, LYDIA ATRACTIVO, NAPOLEON MENDOZA, PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA DURAN, SOCORRO BERNARDEZ, and PEDRO GABRIEL,petitioners, vs.THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the Municipal Mayor, MARIO MENDOZA as the Municipal Vice-Mayor, and THE MUNICIPAL COUNCIL OF BOCAUE, BULACAN, respondents.

Federico N. Alday for petitioners.

Dakila F. Castro for respondents.

 

FERNANDO, C.J.:

The crucial question posed by this certiorari proceeding is whether or not a municipal corporation, Bocaue, Bulacan, represented by respondents, 1 can, prohibit the exercise of a lawful trade, the operation of night clubs, and the pursuit of a lawful occupation, such clubs employing hostesses. It is contended that the ordinance assailed as invalid is tainted with nullity, the municipality being devoid of power to prohibit a lawful business, occupation or calling, petitioners at the same time alleging that their rights to due process and equal protection of the laws were violated as the licenses previously given to them was in effect withdrawn without judicial hearing. 2

The assailed ordinance 3 is worded as follows: "Section 1.— Title of Ordinance.— This Ordinance shall be known and may be cited as the [Prohibition and Closure Ordinance] of Bocaue, Bulacan. Section 2. — Definitions of Terms — (a) 'Night Club' shall include any place or establishment selling to the public food or drinks where customers are allowed to dance. (b) 'Cabaret' or 'Dance Hall' shall include any place or establishment where dancing is permitted to the public and where professional hostesses or hospitality girls and professional dancers are employed. (c) 'Professional hostesses' or 'hospitality girls' shall include any woman employed by any of the establishments herein defined to entertain guests and customers at their table or to dance with them. (d) 'Professional dancer' shall include any woman who dances at any of the establishments herein defined for a fee or remuneration paid directly or indirectly by the operator or by the persons she dances with. (e) 'Operator' shall include the owner, manager, administrator or any person who operates and is responsible for the operation of any night club, cabaret or dance hall. Section 3. — Prohibition in the Issuance and Renewal of Licenses, Permits. — Being the principal cause in the decadence of morality and because of their other adverse effects on this community as explained above, no operator of night clubs, cabarets or dance halls shall henceforth be issued permits/licenses to operate within the jurisdiction of the municipality and no license/permit shall be issued to any professional hostess, hospitality girls and professional dancer for employment in any of the aforementioned establishments. The prohibition in the issuance of licenses/permits to said persons and operators of said establishments shall include prohibition in the renewal thereof. Section 4.— Revocation of Permits and Licenses.— The licenses and permits issued to operators of night clubs, cabarets or dance halls which are now in operation including permits issued to professional hostesses, hospitality girls and professional dancers are hereby revoked upon the expiration of the thirty-day period given them as provided in Section 8 hereof and thenceforth, the operation of these establishments within the jurisdiction of the municipality shall be illegal. Section 5.— Penalty in case of violation. — Violation of any of the provisions of this Ordinance shall be punishable by imprisonment not exceeding three (3) months or a fine not exceeding

P200.00 or both at the discretion of the Court. If the offense is committed by a juridical entity, the person charged with the management and/or operation thereof shall be liable for the penalty provided herein. Section 6. — Separability Clause.— If, for any reason, any section or provision of this Ordinance is held unconstitutional or invalid, no other section or provision hereof shall be affected thereby. Section 7.—Repealing Clause.— All ordinance, resolutions, circulars, memoranda or parts thereof that are inconsistent with the provisions of this Ordinance are hereby repealed. Section 8.— Effectivity.— This Ordinance shall take effect immediately upon its approval; provided, however, that operators of night clubs, cabarets and dance halls now in operation including professional hostesses, hospitality girls and professional dancers are given a period of thirty days from the approval hereof within which to wind up their businesses and comply with the provisions of this Ordinance." 4

On November 5, 1975, two cases for prohibition with preliminary injunction were filed with the Court of First Instance of Bulacan. 5 The grounds alleged follow:

1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful business, occupation or calling.

2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal protection of the law, as the license previously given to petitioners was in effect withdrawn without judicial hearing. 3. That under Presidential Decree No. 189, as amended, by Presidential Decree No. 259, the power to license and regulate tourist-oriented businesses including night clubs, has been transferred to the Department of Tourism." 6 The cases were assigned to respondent Judge, now Associate Justice Paras of the Intermediate Appellate Court, who issued a restraining order on November 7, 1975. The answers were thereafter filed. It was therein alleged: " 1. That the Municipal Council is authorized by law not only to regulate but to prohibit the establishment, maintenance and operation of night clubs invoking Section 2243 of the RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84 is not violative of petitioners' right to due process and the equal protection of the law, since property rights are subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did not deprive Municipal Councils of their jurisdiction to regulate or prohibit night clubs." 7There was the admission of the following facts as having been established: "l. That petitioners Vicente de la Cruz, et al. in Civil Case No. 4755-M had been previously issued licenses by the Municipal Mayor of Bocaue-petitioner Jose Torres III, since 1958; petitioner Vicente de la Cruz, since 1960; petitioner Renato Alipio, since 1961 and petitioner Leoncio Corpuz, since 1972; 2. That petitioners had invested large sums of money in their businesses; 3. That the night clubs are well-lighted and have no partitions, the tables being near each other; 4. That the petitioners owners/operators of these clubs do not allow the hospitality girls therein to engage in immoral acts and to go out with customers; 5. That these hospitality girls are made to go through periodic medical check-ups and not one of them is suffering from any venereal disease and that those who fail to submit to a medical check-up or those who are found to be infected with venereal disease are not allowed to work; 6. That the crime rate there is better than in other parts of Bocaue or in other towns of Bulacan." 8 Then came on January 15, 1976 the decision upholding the constitutionality and validity of Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari by way of appeal.

In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its rationale is set forth in the opening paragraph thus: "Those who lust cannot last. This in essence is why the Municipality of Bocaue, Province of Bulacan, stigmatized as it has been by innuendos of sexual titillation and fearful of what the awesome future holds for it, had no alternative except to order thru its legislative machinery, and even at the risk of partial economic dislocation, the closure of its night clubs and/or cabarets. This in essence is also why this Court, obedient to the mandates of good government, and cognizant of the categorical imperatives of the current legal and social revolution, hereby [upholds] in the name of police power the validity and constitutionality of Ordinance No. 84, Series of 1975, of the Municipal Council of Bocaue, Bulacan. The restraining orders heretofore issued in these two cases are therefore hereby rifted, effective the first day of February, 1976, the purpose of the grace period being to enable the petitioners herein to apply to the proper appellate tribunals for any contemplated redress." 9 This Court is, however, unable to agree with such a

conclusion and for reasons herein set forth, holds that reliance on the police power is insufficient to justify the enactment of the assailed ordinance. It must be declared null and void.

1. Police power is granted to municipal corporations in general terms as follows: "General power of council to enact ordinances and make regulations. - The municipal council shall enact such ordinances and make such regulations, not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties conferred upon it by law and such as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and the inhabitants thereof, and for the protection of property therein." 10 It is practically a reproduction of the former Section 39 of Municipal Code. 11 An ordinance enacted by virtue thereof, according to Justice Moreland, speaking for the Court in the leading case of United States v. Abendan 12 "is valid, unless it contravenes the fundamental law of the Philippine Islands, or an Act of the Philippine Legislature, or unless it is against public policy, or is unreasonable, oppressive, partial, discriminating, or in derogation of common right. Where the power to legislate upon a given subject, and the mode of its exercise and the details of such legislation are not prescribed, the ordinance passed pursuant thereto must be a reasonable exercise of the power, or it will be pronounced invalid." 13 In another leading case, United States v. Salaveria, 14 the ponente this time being Justice Malcolm, where the present Administrative Code provision was applied, it was stated by this Court: "The general welfare clause has two branches: One branch attaches itself to the main trunk of municipal authority, and relates to such ordinances and regulations as may be necessary to carry into effect and discharge the powers and duties conferred upon the municipal council by law. With this class we are not here directly concerned. The second branch of the clause is much more independent of the specific functions of the council which are enumerated by law. It authorizes such ordinances as shall seem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort, and convenience of the municipality and the inhabitants thereof, and for the protection of property therein.' It is a general rule that ordinances passed by virtue of the implied power found in the general welfare clause must be reasonable, consonant with the general powersand purposes of the corporation, and not inconsistent with the laws or policy of the State." 15 If night clubs were merely then regulated and not prohibited, certainly the assailed ordinance would pass the test of validity. In the two leading cases above set forth, this Court had stressed reasonableness, consonant with the general powers and purposes of municipal corporations, as well as consistency with the laws or policy of the State. It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the term reasonable. The objective of fostering public morals, a worthy and desirable end can be attained by a measure that does not encompass too wide a field. Certainly the ordinance on its face is characterized by overbreadth. The purpose sought to be achieved could have been attained by reasonable restrictions rather than by an absolute prohibition. The admonition in Salaveria should be heeded: "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." 16 It is clear that in the guise of a police regulation, there was in this instance a clear invasion of personal or property rights, personal in the case of those individuals desirous of patronizing those night clubs and property in terms of the investments made and salaries to be earned by those therein employed.

2. The decision now under review refers to Republic Act No. 938 as amended. 17 It was originally enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL JURISDICTIONS.' 18 Its first section insofar as pertinent reads: "The municipal or city board or council of each chartered city shall have the power to regulate by ordinance the establishment, maintenance and operation of night clubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement within its territorial jurisdiction: ... " 19 Then on May 21, 1954, the first section was amended to include not merely "the power to regulate, but likewise "Prohibit ... " 20 The title, however, remained the same. It is worded exactly as Republic Act No. 938. It is to be admitted that as thus amended, if only the above portion of the Act were considered, a municipal council may go as far as to prohibit the operation of night clubs. If that were all, then the appealed decision is not devoid of support in law. That is not all, however. The title was not in any way altered. It

was not changed one whit. The exact wording was followed. The power granted remains that of regulation, notprohibition. There is thus support for the view advanced by petitioners that to construe Republic Act No. 938 as allowing the prohibition of the operation of night clubs would give rise to a constitutional question. The Constitution mandates: "Every bill shall embrace only one subject which shall be expressed in the title thereof. " 21 Since there is no dispute as the title limits the power to regulating, not prohibiting, it would result in the statute being invalid if, as was done by the Municipality of Bocaue, the operation of a night club was prohibited. There is a wide gap between the exercise of a regulatory power "to provide for the health and safety, promote the prosperity, improve the morals, 22 in the language of the Administrative Code, such competence extending to all "the great public needs, 23 to quote from Holmes, and to interdict any calling, occupation, or enterprise. In accordance with the well-settled principle of constitutional construction that between two possible interpretations by one of which it will be free from constitutional infirmity and by the other tainted by such grave defect, the former is to be preferred. A construction that would save rather than one that would affix the seal of doom certainly commends itself. We have done so before We do so again. 24

3. There is reinforcement to the conclusion reached by virtue of a specific provision of the recently-enacted Local Government Code. 25 The general welfare clause, a reiteration of the Administrative Code provision, is set forth in the first paragraph of Section 149 defining the powers and duties of the sangguniang bayan. It read as follows: "(a) Enact such ordinances and issue such regulations as may be necessary to carry out and discharge the responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health, safety, comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and general welfare of the municipality and the inhabitants thereof, and insure the protection of property therein; ..." 26 There are in addition provisions that may have a bearing on the question now before this Court. Thus the sangguniang bayan shall "(rr) Regulate cafes, restaurants, beer-houses, hotels, motels, inns, pension houses and lodging houses, except travel agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of international standards which shall remain under the licensing and regulatory power of the Ministry of Tourism which shall exercise such authority without infringing on the taxing or regulatory powers of the municipality; (ss) Regulate public dancing schools, public dance halls, and sauna baths or massage parlors; (tt) Regulate the establishment and operation of billiard pools, theatrical performances, circuses and other forms of entertainment; ..." 27It is clear that municipal corporations cannot prohibit the operation of night clubs. They may be regulated, but not prevented from carrying on their business. It would be, therefore, an exercise in futility if the decision under review were sustained. All that petitioners would have to do is to apply once more for licenses to operate night clubs. A refusal to grant licenses, because no such businesses could legally open, would be subject to judicial correction. That is to comply with the legislative will to allow the operation and continued existence of night clubs subject to appropriate regulations. In the meanwhile, to compel petitioners to close their establishments, the necessary result of an affirmance, would amount to no more than a temporary termination of their business. During such time, their employees would undergo a period of deprivation. Certainly, if such an undesirable outcome can be avoided, it should be. The law should not be susceptible to the reproach that it displays less than sympathetic concern for the plight of those who, under a mistaken appreciation of a municipal power, were thus left without employment. Such a deplorable consequence is to be avoided. If it were not thus, then the element of arbitrariness enters the picture. That is to pay less, very much less, than full deference to the due process clause with its mandate of fairness and reasonableness.

4. The conclusion reached by this Court is not to be interpreted as a retreat from its resolute stand sustaining police power legislation to promote public morals. The commitment to such an Ideal forbids such a backward step. Legislation of that character is deserving of the fullest sympathy from the judiciary. Accordingly, the judiciary has not been hesitant to lend the weight of its support to measures that can be characterized as falling within that aspect of the police power. Reference is made by respondents to Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila. 28 There is a misapprehension as to what was decided by this Court. That was a regulatory measure. Necessarily, there was no valid objection on due process or equal protection grounds. It did not prohibit motels. It merely regulated the mode in which it may conduct business in order precisely to put an end to practices which could encourage vice and immorality. This is an entirely different case. What was

involved is a measure not embraced within the regulatory power but an exercise of an assumed power to prohibit. Moreover, while it was pointed out in the aforesaid Ermita-Malate Hotel and Motel Operators Association, Inc. decision that there must be a factual foundation of invalidity, it was likewise made clear that there is no need to satisfy such a requirement if a statute were void on its face. That it certainly is if the power to enact such ordinance is at the most dubious and under the present Local Government Code non-existent.

WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated January 15, 1976 reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the Municipality of Bocaue is declared void and unconstitutional. The temporary restraining order issued by this Court is hereby made permanent. No costs.

G.R. No. 111097 July 20, 1994

MAYOR PABLO P. MAGTAJAS & THE CITY OF CAGAYAN DE ORO, petitioners, vs.PRYCE PROPERTIES CORPORATION, INC. & PHILIPPINE AMUSEMENT AND GAMING CORPORATION,respondents.

Aquilino G. Pimentel, Jr. and Associates for petitioners.

R.R. Torralba & Associates for private respondent.

 

CRUZ, J.:

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:

xxx xxx xxx

(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 allforms 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 "modifiedpro 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, 12which 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.

G.R. No. 115044 January 27, 1995

HON. ALFREDO S. LIM, in his capacity as Mayor of Manila, and the City of Manila, petitioners, vs.HON. FELIPE G. PACQUING, as Judge, branch 40, Regional Trial Court of Manila and ASSOCIATED CORPORATION, respondents.

G.R. No. 117263 January 27, 1995

TEOFISTO GUINGONA, JR. and DOMINADOR R. CEPEDA, petitioners, vs.HON. VETINO REYES and ASSOCIATED DEVELOPMENT CORPORATION, respondents.

 

PADILLA, J.:

These two (2) cases which are inter-related actually involve simple issues. if these issues have apparently become complicated, it is not by reason of their nature because of the events and dramatis personae involved.

The petition in G.R. No. 115044 was dismissed by the First Division of this Court on 01 September 1994 based on a finding that there was "no abuse of discretion, much less lack of or excess of jurisdiction, on the part of respondent judge [Pacquing]", in issuing the questioned orders. Judge Pacquing had earlier issued in Civil Case No. 88-45660, RTC of Manila, Branch 40, the following orders which were assailed by the Mayor of the City of Manila, Hon. Alfredo S. Lim, in said G.R. No. 115044:

a. order dated 28 March 1994 directing Manila mayor Alfredo S. Lim to issue the permit/license to operate the jai-alai in favor of Associated Development Corporation (ADC).

b. order dated 11 April 1994 directing mayor Lim to explain why he should not be cited for contempt for non-compliance with the order dated 28 March 1994.

c. order dated 20 April 1994 reiterating the previous order directing Mayor Lim to immediately issue the permit/license to Associated Development Corporation (ADC).

The order dated 28 march 1994 was in turn issued upon motion by ADC for execution of a final judgment rendered on 9 September 1988 which ordered the Manila Mayor to immediately issue to ADC the permit/licenseto operate the jai-alai in Manila, under Manila Ordinance No. 7065.

On 13 September 1994, petitioner Guingona (as executive secretary) issued a directive to then chairman of the Games and Amusements Board (GAB) Francisco R. Sumulong, jr. to hold in abeyance the grant of authority, or if any had been issued, to withdraw such grant of authority, to Associated Development Corporation to operate the jai-alai in the City of Manila, until the following legal questions are properly resolved:

1. Whether P.D. 771 which revoked all existing Jai-Alai franchisers issued by local governments as of 20 August 1975 is unconstitutional.

2. Assuming that the City of Manila had the power on 7 September 1971 to issue a Jai-Alai franchise to Associated Development Corporation, whether the franchise granted is valied considering that the franchise has no duration, and appears to be granted in perpetuity.

3. Whether the City of Manila had the power to issue a Jai-Alai franchise to Associated Development Corporation on 7 September 1971 in view of executive Order No. 392 dated 1 January 1951 which transferred from local governments to the Games and Amusements Board the power to regulate Jai-Alai. 1

On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition for prohibition,mandamus, injunction and damages with prayer for temporary restraining order and/or writ of preliminary injunction in the Regional Trial Court of Manila against petitioner Guingona and then GAB chairman Sumulong, docketed as Civil Case No. 94-71656, seeking to prevent GAB from withdrawing the provisional authority that had earlier been granted to ADC. On the same day, the RTC of Manila, Branch 4, through presiding Judge Vetino Reyes, issued a temporary restraining order enjoining the GAB from withdrawing ADC's provisional authority. This temporary restraining order was converted into a writ of preliminary injunction upon ADC's posting of a bond in the amount of P2,000,000.00. 2

Subsequently, also in G.R. No. 115044, the Republic of the Philippines, through the Games and Amusements Board, filed a "Motion for Intervention; for Leave to File a Motion for reconsideration in Intervention; and to Refer the case to the Court En Banc" and later a "Motion for Leave to File Supplemental Motion for Reconsideration-in-Intervention and to Admit Attached Supplemental Motion for Reconsideration-in-Intervention".

In an En Banc Resolution dated 20 September 1994, this Court referred G.R. No. 115044 to the Court En Bancand required the respondents therein to comment on the aforementioned motions.

Meanwhile, Judge Reyes on 19 October 1994 issued another order, this time, granting ADC a writ of preliminarymandatory injunction against Guingona and GAB to compel them to issue in favor of ADC the authority to operate jai-alai.

Guingona, as executive secretary, and Dominador Cepeda, Jr. as the new GAB chairman, then filed the petition in G.R. No. 117263 assailing the abovementioned orders of respondent Judge Vetino Reyes.

On 25 October 1994, in G.R. No. 117263, this Court granted petitioner's motion for leave to file supplemental petition and to admit attached supplemental petition with urgent prayer for restraining order. The Court further required respondents to file their comment on the petition and supplemental petition with urgent prayer for restraining order. The Court likewise set the case and all incidents thereof for hearing on 10 November 1994.

At the hearing on 10 November 1994, the issues to be resolved were formulated by the Court as follows:

1. whether or not intervention by the Republic of the Philippines at this stage of the proceedings is proper;

2. assuming such intervention is proper, whether or not the Associated Development Corporation has a valid and subsisting franchise to maintain and operate the jai-alai;

3. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the aforementioned temporary restraining order (later writ of preliminary injunction); and

4. whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the aforementioned writ of preliminary mandatory injunction.

On the issue of the propriety of the intervention by the Republic of the Philippines, a question was raised during the hearing on 10 November 1994 as to whether intervention in G.R. No. 115044 was the proper remedy for the national government to take in questioning the existence of a valid ADC franchise to operate the jai-alai or whether a separate action for quo warranto under Section 2, Rule 66 of the Rules of Court was the proper remedy.

We need not belabor this issue since counsel for respondent ADC agreed to the suggestion that this Court once and for all settle all substantive issues raised by the parties in these cases. Moreover, this Court can consider the petition filed in G.R. No. 117263 as one for quo warranto which is within the original jurisdiction of the Court under section 5(1), Article VIII of the Constitution. 3

On the propriety of intervention by the Republic, however, it will be recalled that this Court in Director of Lands v. Court of Appeals (93 SCRA 238) allowed intervention even beyond the period prescribed in Section 2 Rule 12 of the Rules of Court. The Court ruled in said case that a denial of the motions for intervention would "lead the Court to commit an act of injustice to the movants, to their successor-in-interest and to all purchasers for value and in good faith and thereby open the door to fraud, falsehood and misrepresentation, should intervenors' claim be proven to be true."

In the present case, the resulting injustice and injury, should the national government's allegations be proven correct, are manifest, since the latter has squarely questioned the very existence of a valid franchise to maintain and operate the jai-alai (which is a gambling operation) in favor of ADC. As will be more extensively discussed later, the national government contends that Manila Ordinance No. 7065 which purported to grant to ADC a franchise to conduct jai-alai operations is void and ultra vires since Republic Act No. 954, approved on 20 June 1953, or very much earlier than said Ordinance No. 7065, the latter approved 7 September 1971, in Section 4 thereof, requires

a legislative franchise, not a municipal franchise, for the operation of jai-alai. Additionally, the national government argues that even assuming, arguendo, that the abovementioned ordinance is valid, ADC's franchise was nonetheless effectively revoked by Presidential decree No. 771, issued on 20 August 1975, Sec. 3 of which expressly revoked all existing franchises and permits to operate all forms of gambling facilities (including the jai-alai) issued by local governments.

On the other hand, ADC's position is that Ordinance No. 7065 was validly enacted by the City of Manila pursuant to its delegated powers under it charter, Republic Act No. 409. ADC also squarely assails the constitutionality of PD No. 771 as violative of the equal protection and non-impairment clauses of the Constitution. In this connection, counsel for ADC contends that this Court should really rule on the validity of PD No. 771 to be able to determine whether ADC continues to possess a valid franchise.

It will undoubtedly be a grave injustice to both parties in this case if this Court were to shirk from ruling on the issue of constitutionality of PD No. 771. Such issue has, in our view, become the very lis mota in resolving the present controversy, in view of ADC's insistence that it was granted a valid and legal franchise by Ordinance No. 7065 to operate the jai-alai.

The time-honored doctrine is that all laws (PD No. 771 included) are presumed valid and constitutional until or unless otherwise ruled by this Court. Not only this; Article XVIII Section 3 of the Constitution states:

Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed or revoked.

There is nothing on record to show or even suggest that PD No. 771 has been repealed, altered or amended by any subsequent law or presidential issuance (when the executive still exercised legislative powers).

Neither can it be tenably stated that the issue of the continued existence of ADC's franchise by reason of the unconstitutionality of PD No. 771 was settled in G.R. No. 115044, for the decision of the Court's First Division in said case, aside from not being final, cannot have the effect of nullifying PD No. 771 as unconstitutional, since only the Court En Banc has that power under Article VIII, Section 4(2) of the Constitution. 4

And on the question of whether or not the government is estopped from contesting ADC's possession of a valid franchise, the well-settled rule is that the State cannot be put in estoppel by the mistakes or errors, if any, of its officials or agents (Republic v. Intermediate Appellate Court, 209 SCRA 90)

Consequently, in the light of the foregoing expostulation, we conclude that the republic (in contra distinction to the City of Manila) may be allowed to intervene in G.R. No. 115044. The Republic is intervening in G.R. No. 115044 in the exercise, not of its business or proprietary functions, but in the exercise of its governmental functions to protect public morals and promote the general welfare.

II

Anent the question of whether ADC has a valid franchise to operate the Jai-Alai de Manila, a statement of the pertinent laws is in order.

1. The Charter of the City of Manila was enacted by Congress on 18 June 1949. Section 18 thereof provides:

Sec. 18. Legislative Powers. — The Municipal Board shall have the following legislative powers:

xxx xxx xxx

(jj) To tax, license, permit and regulate wagers or betting by the public on boxing, sipa, bowling, billiards, pools, horse and dog races, cockpits, jai-alai, roller or ice-skating on any sporting or athletic contests, as well as grant exclusive rights to establishments for this purpose, notwithstanding any existing law to the contrary.

2. On 1 January 1951, Executive Order No. 392 was issued transferring the authority to regulate jai-alais from local government to the Games and Amusements Board (GAB).

3. On 20 June 1953, Congress enacted Republic Act No. 954, entitled "An Act to Prohibit With Horse Races and Basque Pelota Games (Jai-Alai), And To Prescribe Penalties For Its Violation". The provisions of Republic Act No. 954 relating to jai-alai are as follows:

Sec. 4. No person, or group of persons other than the operator or maintainer of a fronton with legislative franchise to conduct basque pelota games (Jai-alai), shall offer, to take or arrange bets on any basque pelota game or event, or maintain or use a totalizator or other device, method or system to bet or gamble on any basque pelota game or event. (emphasis supplied).

Sec. 5. No person, operator or maintainer of a fronton with legislative franchise to conduct basque pelota games shall offer, take, or arrange bets on any basque pelota game or event, or maintain or use a totalizator or other device, method or system to bet or gamble on any basque pelota game or event outside the place, enclosure, or fronton where the basque pelota game is held. (emphasis supplied).

4. On 07 September 1971, however, the Municipal Board of Manila nonetheless passed Ordinance No. 7065 entitled "An Ordinance Authorizing the Mayor To Allow And Permit The Associated Development Corporation To Establish, Maintain And Operate A Jai-Alai In The City Of Manila, Under Certain Terms And Conditions And For Other Purposes."

5. On 20 August 1975, Presidential Decree No. 771 was issued by then President Marcos. The decree, entitled "Revoking All Powers and Authority of Local Government(s) To Grant Franchise, License or Permit And Regulate Wagers Or Betting By The Public On Horse And Dog Races, Jai-Alai Or Basque Pelota, And Other Forms Of Gambling", in Section 3 thereof, expressly revoked all existing franchises and permits issued by local governments.

6. On 16 October 1975, Presidential Decree No. 810, entitled "An Act granting The Philippine Jai-Alai And Amusement Corporation A Franchise To Operate, Construct And Maintain A Fronton For Basque Pelota And Similar Games of Skill In THE Greater Manila Area," was promulgated.

7 On 08 May 1987, then President Aquino, by virtue of Article XVIII, Section 6, of the Constitution, which allowed the incumbent legislative powers until the first Congress was convened, issued Executive Order No. 169 expressly repealing PD 810 and revoking and cancelling the franchise granted to the Philippine Jai-Alai and Amusement Corporation.

Petitioners in G.R. No. 117263 argue that Republic Act No. 954 effectively removed the power of the Municipal Board of Manila to grant franchises for gambling operations. It is argued that the term "legislative franchise" in Rep. Act No. 954 is used to refer to franchises issued by Congress.

On the other hand, ADC contends that Republic Act N. 409 (Manila Chapter) gives legislative powers to the Municipal Board to grant franchises, and since Republic Act No. 954 does not specifically qualify the word "legislative" as referring exclusively to Congress, then Rep. Act No. 954 did not remove the power of the Municipal Board under Section 18(jj) of Republic Act No. 409 and consequently it was within the power of the City of Manila to allow ADC to operate the jai-alai in the City of Manila.

On this point, the government counter-argues that the term "legislative powers" is used in Rep. Act No. 409 merely to distinguish the powers under Section 18 of the law from the other powers of the Municipal Board, but that the term "legislative franchise" in Rep. Act No. 954 refers to a franchise granted solely by Congress.

Further, the government argues that Executive Order No. 392 dated 01 January 1951 transferred even the power to regulate Jai-Alai from the local governments to the Games and Amusements Board (GAB), a national government agency.

It is worthy of note that neither of the authorities relied upon by ADC to support its alleged possession of a valid franchise, namely the Charter of the City of Manila (Rep. Act No. 409) and Manila Ordinance No. 7065 uses the word "franchise". Rep. Act No. 409 empowers the Municipal Board of Manila to "tax, license, permit and regulatewagers or betting" and to "grant exclusive rights to establishments", while Ordinance No. 7065 authorized the Manila City Mayor to "allow and permit" ADC to operate jai-alai facilities in the City of Manila.

It is clear from the foregoing that Congress did not delegate to the City of Manila the power "to franchise" wagers or betting, including the jai-alai, but retained for itself such power "to franchise". What Congress delegated to the City of Manila in Rep. Act No. 409, with respect to wagers or betting, was the power to "license, permit, or regulate" which therefore means that a license or permit issued by the City of Manila to operate a wager or betting activity, such as the jai-alai where bets are accepted, would not amount to something meaningful UNLESS the holder of the permit or license was also FRANCHISED by the national government to so operate. Moreover, even this power to license, permit, or regulate wagers or betting on jai-alai was removed from local governments, including the City of Manila, and transferred to the GAB on 1 January 1951 by Executive Order No. 392. The net result is that the authority to grant franchises for the operation of jai-alai frontons is in Congress, while the regulatory function is vested in the GAB.

In relation, therefore, to the facts of this case, since ADC has no franchise from Congress to operate the jai-alai, it may not so operate even if its has a license or permit from the City Mayor to operate the jai-alai in the City of Manila.

It cannot be overlooked, in this connection, that the Revised Penal Code punishes gambling and betting under Articles 195 to 199 thereof. Gambling is thus generally prohibited by law, unless another law is enacted byCongress expressly exempting or excluding certain forms of gambling from the reach of criminal law. Among these form the reach of criminal law. Among these forms of gambling allowed by special law are the horse races authorized by Republic Acts Nos. 309 and 983 and gambling casinos authorized under Presidential Decree No. 1869.

While jai-alai as a sport is not illegal per se, the accepting of bets or wagers on the results of jai-alai games is undoubtedly gambling and, therefore, a criminal offense punishable under Articles 195-199

of the Revised Penal Code, unless it is shown that a later or special law had been passed allowing it. ADC has not shown any such special law.

Republic Act No. 409 (the Revised Charter of the City of Manila) which was enacted by Congress on 18 June 1949 gave the Municipal Board certain delegated legislative powers under Section 18. A perusal of the powers enumerated under Section 18 shows that these powers are basically regulatory in nature. 5 The regulatory nature of these powers finds support not only in the plain words of the enumerations under Section 28 but also in this Court's ruling inPeople v. Vera (65 Phil. 56).

In Vera, this Court declared that a law which gives the Provincial Board the discretion to determine whether or not a law of general application (such as, the Probation law-Act No. 4221) would or would not be operative within the province, is unconstitutional for being an undue delegation of legislative power.

From the ruling in Vera, it would be logical to conclude that, if ADC's arguments were to prevail, this Court would likewise declare Section 18(jj) of the Revised Charter of Manila unconstitutional for the power it would delegate to the Municipal Board of Manila would give the latter the absolute and unlimited discretion to render the penal code provisions on gambling inapplicable or inoperative to persons or entities issued permits to operate gambling establishments in the City of Manila.

We need not go to this extent, however, since the rule is that laws must be presumed valid, constitutional and in harmony with other laws. Thus, the relevant provisions of Rep. Acts Nos. 409 and 954 and Ordinance No. 7065 should be taken together and it should then be clear that the legislative powers of the Municipal Board should be understood to be regulatory in nature and that Republic Act No. 954 should be understood to refer tocongressional franchises, as a necessity for the operation of jai-alai.

We need not, however, again belabor this issue further since the task at hand which will ultimately, and with finality, decide the issues in this case is to determine whether PD No. 771 validly revoked ADC's franchise to operate the jai-alai, assuming (without conceding) that it indeed possessed such franchise under Ordinance No. 7065.

ADC argues that PD No. 771 is unconstitutional for being violative of the equal protection and non-impairment provisions of the Constitution. On the other hand, the government contends that PD No. 771 is a valid exercise of the inherent police power of the State.

The police power has been described as the least limitable of the inherent powers of the State. It is based on the ancient doctrine — salus populi est suprema lex (the welfare of the people is the supreme law.) In the early case of Rubi v. Provincial Board of Mindoro (39 Phil. 660), this Court through Mr. Justice George A. Malcolm stated thus:

The police power of the State . . . is a power co-extensive with self-protection, and is not inaptly termed the "law of overruling necessity." It may be said to be that inherent and plenary power in the State which enables it to prohibit all things hurtful to the comfort, safety and welfare of society. Carried onward by the current of legislation, the judiciary rarely attempts to dam the onrushing power of legislative discretion, provided the purposes of the law do not go beyond the great principles that mean security for the public welfare or do not arbitrarily interfere with the right of the individual.

In the matter of PD No. 771, the purpose of the law is clearly stated in the "whereas clause" as follows:

WHEREAS, it has been reported that in spite of the current drive of our law enforcement agencies against vices and illegal gambling, these social ills are still prevalent in many areas of the country;

WHEREAS, there is need to consolidate all the efforts of the government to eradicate and minimize vices and other forms of social ills in pursuance of the social and economic development program under the new society;

WHEREAS, in order to effectively control and regulate wagers or betting by the public on horse and dog races, jai-alai and other forms of gambling there is a necessity to transfer the issuance of permit and/or franchise from local government to the National Government.

It cannot be argued that the control and regulation of gambling do not promote public morals and welfare. Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good, honest and hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must minimize (if not eradicate) in pursuit of social and economic development.

In Magtajas v. Pryce Properties Corporation (20 July 1994, G.R. No. 111097), this Court stated thru Mr. Justice Isagani A. Cruz:

In the exercise of its own discretion, the legislative power 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 wisdom, morality and practicability of statutes are not addressed to the judiciary but may be resolved only by the executive and legislative departments, to which the function belongs in our scheme of government. (Emphasis supplied)

Talks regarding the supposed vanishing line between right and privilege in American constitutional law has no relevance in the context of these cases since the reference there is to economic regulations. On the other hand, jai-alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and whether it should be permitted and, if so, under what conditions are questions primarily for the lawmaking authority to determine, talking into account national and local interests. Here, it is the police power of the State that is paramount.

ADC questions the motive for the issuance of PD Nos. 771. Clearly, however, this Court cannot look into allegations that PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, the first place, absolute lack of evidence to support ADC's allegation of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even laudable.

It should also be remembered that PD No. 771 provides that the national government can subsequently grant franchises "upon proper application and verification of the qualifications of the applicant." ADC has not alleged that it filed an application for a franchise with the national

government subsequent to the enactment of PD No. 771; thus, the allegations abovementioned (of preference to a select group) are based on conjectures, speculations and imagined biases which do not warrant the consideration of this Court.

On the other hand, it is noteworthy that while then president Aquino issued Executive Order No. 169 revoking PD No. 810 (which granted a franchise to a Marcos-crony to operate the jai-alai), she did not scrap or repeal PD No. 771 which had revoked all franchises to operate jai-alais issued by local governments, thereby re-affirming the government policy that franchises to operate jai-alais are for the national government (not local governments) to consider and approve.

On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere privilege specially in matters which are within the government's power to regulate and even prohibit through the exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power for the public welfare.

In RCPI v. NTC (150 SCRA 450), we held that:

A franchise started out as a "royal privilege or (a) branch of the King's prerogative, subsisting in the hands of a subject." This definition was given by Finch, adopted by Blackstone, and accepted by every authority since . . . Today, a franchise being merely a privilege emanating from the sovereign power of the state and owing its existence to a grant, is subject to regulation by the state itself by virtue of its police power through its administrative agencies.

There is a stronger reason for holding ADC's permit to be a mere privilege because jai-alai, when played for bets, is pure and simple gambling. To analogize a gambling franchise for the operation of a public utility, such as public transportation company, is to trivialize the great historic origin of this branch of royal privilege.

As earlier noted, ADC has not alleged ever applying for a franchise under the provisions of PD No. 771. and yet, the purpose of PD No. 771 is quite clear from its provisions, i.e., to give to the national government the exclusive power to grant gambling franchises. Thus, all franchises then existing were revoked but were made subject to reissuance by the national government upon compliance by the applicant with government-set qualifications and requirements.

There was no violation by PD No. 771 of the equal protection clause since the decree revoked all franchises issued by local governments without qualification or exception. ADC cannot allege violation of the equal protection clause simply because it was the only one affected by the decree, for as correctly pointed out by the government, ADC was not singled out when all jai-alai franchises were revoked. Besides, it is too late in the day for ADC to seek redress for alleged violation of its constitutional rights for it could have raised these issues as early as 1975, almost twenty 920) years ago.

Finally, we do not agree that Section 3 of PD No. 771 and the requirement of a legislative franchise in Republic Act No. 954 are "riders" to the two 92) laws and are violative of the rule that laws should embrace one subject which shall be expressed in the title, as argued by ADC. In Cordero v. Cabatuando (6 SCRA 418), this Court ruled that the requirement under the constitution that all laws should embrace only one subject which shall be expressed in the title is sufficiently met if the title is comprehensive enough reasonably to include the general object which the statute seeks to effect, without expressing each and every end and means necessary or convenient for the accomplishing of the objective.

III

On the issue of whether or not there was grave abuse of discretion committed by respondent Judge Reyes in issuing the temporary restraining order (later converted to a writ of preliminary injunction) and the writ of preliminary mandatory injunction, we hold and rule there was.

Section 3, Rule 58 of the rules of Court provides for the grounds for the issuance of a preliminary injunction. While ADC could allege these grounds, respondent judge should have taken judicial notice of Republic Act No. 954 and PD 771, under Section 1 rule 129 of the Rules of court. These laws negate the existence of any legal right on the part of ADC to the reliefs it sought so as to justify the issuance of a writ of preliminary injunction. since PD No. 771 and Republic Act No. 954 are presumed valid and constitutional until ruled otherwise by the Supreme Court after due hearing, ADC was not entitled to the writs issued and consequently there was grave abuse of discretion in issuing them.

WHEREFORE, for the foregoing reasons, judgment is hereby rendered:

1. allowing the Republic of the Philippines to intervene in G.R. No. 115044.

2. declaring Presidential Decree No. 771 valid and constitutional.

3. declaring that respondent Associated Development corporation (ADC) does not possess the required congressional franchise to operate and conduct the jai-alai under Republic Act No. 954 and Presidential Decree No. 771.

4. setting aside the writs of preliminary injunction and preliminary mandatory injunction issued by respondent Judge Vetino Reyes in civil Case No. 94-71656.

SO ORDERED.

G.R. No. L-31249 August 19, 1986

SALVADOR VILLACORTA as City Engineer of Dagupan City, and JUAN S. CAGUIOA as Register of Deeds of Dagupan City, petitioners, vs.GREGORIO BERNARDO and HON. MACARIO OFILADA as Judge of the Court of First Instance of Pangasinan respondents.

Victor T. Llamas, Jr. for respondents.

 

CRUZ, J.:

This is a petition for certiorari against a decision of the Court of First Instance of Pangasinan annulling an ordinance adopted by the municipal board of Dagupan City.

The ordinance reads in full as follows:

ORDINANCE 22

AN ORDINANCE REGULATING SUBDIVISION PLANS OVER PARCELS OF LAND IN THE CITY OF DAGUPAN.

Be it ordained by the Municipal Board of Dagupan City in session assembled:

Section 1. Every proposed subdivision plan over any lot in the City of Dagupan, shalt before the same is submitted for approval and/or verification by the Bureau of Lands and/or the Land Registration Commission, be previously submitted to the City Engineer of the City who shall see to it that no encroachment is made on any portion of the public domain, that the zoning ordinance and all other pertinent rules and regulations are observed.

Section 2. As service fee thereof, an amount equivalent to P0.30 per square meter of every lot resulting or win result from such subdivision shall be charged by the City Engineer's Office.

Section 3. It shall be unlawful for the Register of Deeds of Dagupan City to allow the registration of a subdivision plan unless there is prior written certification issued by the City Engineer that such plan has already been submitted to his office and that the same is in order.

Section 4. Any violation of this ordinance shall be punished by a fine not exceeding two hundred (P200.00) pesos or imprisonment not exceeding six (6) months or both in the discretion of the judge.

Section 5. This ordinance shall take effect immediately upon approval.

In declaring the said ordinance null and void, the court a quo declared:

From the above-recited requirements, there is no showing that would justify the enactment of the questioned ordinance. Section 1 of said ordinance clearly conflicts with Section 44 of Act 496, because the latter law does not require subdivision plans to be submitted to the City Engineer before the same is submitted for approval to and verification by the General Land Registration Office or by the Director of Lands as provided for in Section 58 of said Act. Section 2 of the same ordinance also contravenes the provisions of Section 44 of Act 496, the latter being silent on a service fee of PO.03 per square meter of every lot subject of such subdivision application; Section 3 of the ordinance in question also conflicts with Section 44 of Act 496, because the latter law does not mention of a certification to be made by the City Engineer before the Register of Deeds allows registration of the subdivision plan; and the last section of said ordinance imposes a penalty for its violation, which Section 44 of Act 496 does not impose. In other words, Ordinance 22 of the City of Dagupan imposes upon a subdivision owner additional conditions.

xxx xxx xxx

The Court takes note of the laudable purpose of the ordinance in bringing to a halt the surreptitious registration of lands belonging to the government. But as already intimidated above, the powers of the board in enacting such a laudable ordinance cannot be held valid when it shall impede the exercise of rights granted in a general law and/or make a general law subordinated to a local ordinance.

We affirm.

To sustain the ordinance would be to open the floodgates to other ordinances amending and so violating national laws in the guise of implementing them. Thus, ordinances could be passed imposing additional requirements for the issuance of marriage licenses, to prevent bigamy; the registration of vehicles, to minimize carnaping; the execution of contracts, to forestall fraud; the validation of passports, to deter imposture; the exercise of freedom of speech, to reduce disorder; and so on. The list is endless, but the means, even if the end be valid, would beultra vires.

So many excesses are attempted in the name of the police power that it is time, we feel, for a brief admonition.

Regulation is a fact of life in any well-ordered community. As society becomes more and more complex, the police power becomes correspondingly ubiquitous. This has to be so for the individual must subordinate his interests to the common good, on the time honored justification of Salus populi est suprema lex.

In this prolix age, practically everything a person does and owns affects the public interest directly or at least vicariously, unavoidably drawing him within the embrace of the police power. Increasingly, he is hemmed in by all manner of statutory, administrative and municipal requirements and restrictions that he may find officious and even oppressive.

It is necessary to stress that unless the creeping interference of the government in essentially private matters is moderated, it is likely to destroy that prized and peculiar virtue of the free society: individualism.

Every member of society, while paying proper deference to the general welfare, must not be deprived of the right to be left alone or, in the Idiom of the day, "to do his thing." As long as he does not prejudice others, his freedom as an individual must not be unduly curtailed.

We therefore urge that proper care attend the exercise of the police power lest it deteriorate into an unreasonable intrusion into the purely private affairs of the individual. The so-called "general welfare" is too amorphous and convenient an excuse for official arbitrariness.

Let it always be remembered that in the truly democratic state, protecting the rights of the individual is as important as, if not more so than, protecting the rights of the public.

This advice is especially addressed to the local governments which exercise the police power only by virtue of a valid delegation from the national legislature under the general welfare clause. In the instant case, Ordinance No. 22 suffers from the additional defect of violating this authority for legislation in contravention of the national law by adding to its requirements.

WHEREFORE, the decision of the lower court annulling the challenged ordinance is AFFIRMED, without any pronouncement as to costs.

SO ORDERED.

G.R. No. L-34915 June 24, 1983

CITY GOVERNMENT OF QUEZON CITY and CITY COUNCIL OF QUEZON CITY, petitioners, vs.HON. JUDGE VICENTE G. ERICTA as Judge of the Court of First Instance of Rizal, Quezon City, Branch XVIII; HIMLAYANG PILIPINO, INC., respondents.

City Fiscal for petitioners.

Manuel Villaruel, Jr. and Feliciano Tumale for respondents.

 

GUTIERREZ, JR., J.:

This is a petition for review which seeks the reversal of the decision of the Court of First Instance of Rizal, Branch XVIII declaring Section 9 of Ordinance No. 6118, S-64, of the Quezon City Council null and void.

Section 9 of Ordinance No. 6118, S-64, entitled "ORDINANCE REGULATING THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:

Sec. 9. At least six (6) percent of the total area of the memorial park cemetery shall be set aside for charity burial of deceased persons who are paupers and have been residents of Quezon City for at least 5 years prior to their death, to be determined by competent City Authorities. The area so designated shall immediately be developed and should be open for operation not later than six months from the date of approval of the application.

For several years, the aforequoted section of the Ordinance was not enforced by city authorities but seven years after the enactment of the ordinance, the Quezon City Council passed the following resolution:

RESOLVED by the council of Quezon assembled, to request, as it does hereby request the City Engineer, Quezon City, to stop any further selling and/or transaction of memorial park lots in Quezon City where the owners thereof have failed to donate the required 6% space intended for paupers burial.

Pursuant to this petition, the Quezon City Engineer notified respondent Himlayang Pilipino, Inc. in writing that Section 9 of Ordinance No. 6118, S-64 would be enforced

Respondent Himlayang Pilipino reacted by filing with the Court of First Instance of Rizal Branch XVIII at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction (Sp. Proc. No. Q-16002) seeking to annul Section 9 of the Ordinance in question The respondent alleged that the same is contrary to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative Code.

There being no issue of fact and the questions raised being purely legal both petitioners and respondent agreed to the rendition of a judgment on the pleadings. The respondent court, therefore, rendered the decision declaring Section 9 of Ordinance No. 6118, S-64 null and void.

A motion for reconsideration having been denied, the City Government and City Council filed the instant petition.

Petitioners argue that the taking of the respondent's property is a valid and reasonable exercise of police power and that the land is taken for a public use as it is intended for the burial ground of paupers. They further argue that the Quezon City Council is authorized under its charter, in the exercise of local police power, " to make such further ordinances and resolutions not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this Act and such as it shall deem necessary and proper to provide for the health and safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein."

On the other hand, respondent Himlayang Pilipino, Inc. contends that the taking or confiscation of property is obvious because the questioned ordinance permanently restricts the use of the property such that it cannot be used for any reasonable purpose and deprives the owner of all beneficial use of his property.

The respondent also stresses that the general welfare clause is not available as a source of power for the taking of the property in this case because it refers to "the power of promoting the public welfare by restraining and regulating the use of liberty and property." The respondent points out that if an owner is deprived of his property outright under the State's police power, the property is generally not taken for public use but is urgently and summarily destroyed in order to promote the general welfare. The respondent cites the case of a nuisance per se or the destruction of a house to prevent the spread of a conflagration.

We find the stand of the private respondent as well as the decision of the respondent Judge to be well-founded. We quote with approval the lower court's ruling which declared null and void Section 9 of the questioned city ordinance:

The issue is: Is Section 9 of the ordinance in question a valid exercise of the police power?

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision that would justify the ordinance in question except the provision granting police power to the City. Section 9 cannot be justified under the power granted to Quezon City to tax, fix the license fee, and regulatesuch other business, trades, and occupation as may be established or practised in the City.' (Subsections 'C', Sec. 12, R.A. 537).

The power to regulate does not include the power to prohibit (People vs. Esguerra, 81 PhiL 33, Vega vs. Municipal Board of Iloilo, L-6765, May 12, 1954; 39 N.J. Law, 70, Mich. 396). A fortiori, the power to regulate does not include the power to confiscate. The ordinance in question not only confiscates but also prohibits the operation of a memorial park cemetery, because under Section 13 of said ordinance, 'Violation of the provision thereof is punishable with a fine and/or imprisonment and that upon conviction thereof the permit to operate and maintain a private cemetery shall be revoked or cancelled.' The confiscatory clause and the penal provision in effect deter one from operating a memorial park cemetery. Neither can the ordinance in question be justified under sub- section "t", Section 12 of Republic Act 537 which authorizes the City Council to-

'prohibit the burial of the dead within the center of population of the city and provide for their burial in such proper place and in such manner as the council may determine, subject to the provisions of the general law regulating burial grounds and cemeteries and governing funerals and disposal of the dead.' (Sub-sec. (t), Sec. 12, Rep. Act No. 537).

There is nothing in the above provision which authorizes confiscation or as euphemistically termed by the respondents, 'donation'

We now come to the question whether or not Section 9 of the ordinance in question is a valid exercise of police power. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537 which reads as follows:

(00) To make such further ordinance and regulations not repugnant to law as may be necessary to carry into effect and discharge the powers and duties conferred by this act and such as it shall deem necessary and proper to provide for the health and safety, promote, the prosperity, improve the morals, peace, good order, comfort and convenience of the city and the inhabitants thereof, and for the protection of property therein; and enforce obedience thereto with such lawful fines or penalties as the City Council may prescribe under the provisions of subsection (jj) of this section.

We start the discussion with a restatement of certain basic principles. Occupying the forefront in the bill of rights is the provision which states that 'no person shall be deprived of life, liberty or property without due process of law' (Art. Ill, Section 1 subparagraph 1, Constitution).

On the other hand, there are three inherent powers of government by which the state interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3) taxation. These are said to exist independently of the Constitution as necessary attributes of sovereignty.

Police power is defined by Freund as 'the power of promoting the public welfare by restraining and regulating the use of liberty and property' (Quoted in Political Law by Tanada and Carreon, V-11, p. 50). It is usually exerted in order to merely regulate the use and enjoyment of property of the owner. If he is deprived of his property outright, it is not taken for public use but rather to destroy in order to promote the general welfare. In police power, the owner does not recover from the government for injury sustained in consequence thereof (12 C.J. 623). It has been said that police power is the most essential of government powers, at times the most insistent, and always one of the least limitable of the powers of government (Ruby vs. Provincial Board, 39 PhiL 660; Ichong vs. Hernandez, 1,7995, May 31, 1957). This power embraces the whole system of public regulation (U.S. vs. Linsuya Fan, 10 PhiL 104). The Supreme Court has said that police power is so far-reaching in scope that it has almost become impossible to limit its sweep. As it derives its existence from the very existence of the state itself, it does not need to be expressed or defined in its scope. Being coextensive with self-preservation and survival itself, it is the most positive and active of all governmental processes, the most essential insistent and illimitable Especially it is so under the modern democratic framework where the demands of society and nations have multiplied to almost unimaginable proportions. The field and

scope of police power have become almost boundless, just as the fields of public interest and public welfare have become almost all embracing and have transcended human foresight. Since the Courts cannot foresee the needs and demands of public interest and welfare, they cannot delimit beforehand the extent or scope of the police power by which and through which the state seeks to attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).

The police power being the most active power of the government and the due process clause being the broadest station on governmental power, the conflict between this power of government and the due process clause of the Constitution is oftentimes inevitable.

It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the general welfare. It 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 the peace and order and of promoting the general welfare as for instance, the confiscation of an illegally possessed article, such as opium and firearms.

It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere police regulation but an outright confiscation. It deprives a person of his private property without due process of law, nay, even without compensation.

In sustaining the decision of the respondent court, we are not unmindful of the heavy burden shouldered by whoever challenges the validity of duly enacted legislation whether national or local As early as 1913, this Court ruled in Case v. Board of Health (24 PhiL 250) that the courts resolve every presumption in favor of validity and, more so, where the ma corporation asserts that the ordinance was enacted to promote the common good and general welfare.

In the leading case of Ermita-Malate Hotel and Motel Operators Association Inc. v. City Mayor of Manila (20 SCRA 849) the Court speaking through the then Associate Justice and now Chief Justice Enrique M. Fernando stated

Primarily what calls for a reversal of such a decision is the a of any evidence to offset the presumption of validity that attaches to a 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 lances 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. (U.S. v. Salaveria (1918], 39 Phil. 102, at p. 111. There was an affirmation of the presumption of validity of municipal ordinance as announced in the leading Salaveria decision in Ebona v. Daet, [1950]85 Phil. 369.)

We have likewise considered the principles earlier stated in Case v. Board of Health supra :

... Under the provisions of municipal charters which are known as the general welfare clauses, a city, by virtue of its police power, may adopt ordinances to the peace, safety, health, morals and the best and highest interests of the municipality. It is a well-settled principle, growing out of the nature of well-ordered and society, that every holder of property, however absolute and may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. An property in the state is held subject to its general regulations, which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations, established by law, as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient. The state, under the police power, is possessed with plenary power to deal with all matters relating to the general health, morals, and safety of the people, so long as it does not contravene any positive inhibition of the organic law and providing that such power is not exercised in such a manner as to justify the interference of the courts to prevent positive wrong and oppression.

but find them not applicable to the facts of this case.

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of an private cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the general welfare of the people. The ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city council to prohibit the burial of the dead within the center of population of the city and to provide for their burial in a proper place subject to the provisions of general law regulating burial grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177 (q) that a Sangguniang panlungsod may "provide for the burial of the dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes the city to provide its own city owned land or to buy or expropriate private properties to construct public cemeteries. This has been the law and practise in the past. It continues to the present. Expropriation, however, requires payment of just compensation. The questioned ordinance is different from laws and regulations requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from the land they sell to buyers of subdivision lots. The necessities of public safety, health, and convenience are very clear from said requirements which are intended to insure the development of communities with salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the subdivision developer when individual lots are sold to home-owners.

As a matter of fact, the petitioners rely solely on the general welfare clause or on implied powers of the municipal corporation, not on any express provision of law as statutory basis of their exercise of power. The clause has always received broad and liberal interpretation but we cannot stretch it to cover this particular taking. Moreover, the questioned ordinance was passed after Himlayang Pilipino, Inc. had incorporated. received necessary licenses and permits and commenced operating. The sequestration of six percent of the cemetery cannot even be considered as having been impliedly acknowledged by the private respondent when it accepted the permits to commence operations.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent court is affirmed.

SO ORDERED.

G.R. No. 135962             March 27, 2000

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs.BEL-AIR VILLAGE ASSOCIATION, INC., respondent.

PUNO, J.:

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?

V

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." 16The 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 thesangguniang 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 exerciseregulatory 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. 37The 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. 40Metropolitan 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.

SO ORDERED.

G.R. No. L-24670 December 14, 1979

ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff-appellant, vs.FEATI BANK AND TRUST CO., defendant-appellee.

Ramirez & Ortigas for appellant.

Tañada, Teehankee & Carreon for appellee.

 

SANTOS, J.:

An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co., Limited Partnership, from the decision of the Court of First Instance of Rizal, Branch VI, at Pasig, Hon. Andres Reyes presiding, which dismissed its complaint in Civil Case No. 7706, entitled, "Ortigas & Company, Limited Partnership, plaintiff, v. Feati Bank and Trust Company, defendant," for lack of merit.

The following facts — a reproduction of the lower court's findings, which, in turn, are based on a stipulation of facts entered into by the parties are not disputed. Plaintiff (formerly known as "Ortigas, Madrigal y Cia") is a limited partnership and defendant Feati Bank and Trust Co., is a corporation duly organized and existing in accordance with the laws of the Philippines. Plaintiff is engaged in real estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision along Epifanio de los Santos Avenue, Mandaluyong, Rizal.1

On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and Natividad Angeles, as vendees, entered into separate agreements of sale on installments over two parcels of land, known as Lots Nos. 5 and 6, Block 31, of the Highway Hills Subdivision, situated at Mandaluyong, Rizal. On July 19, 1962, the said vendees transferred their rights and interests over the aforesaid lots in favor of one Emma Chavez. Upon completion of payment of the purchase price, the plaintiff executed the corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of sale on installment) and the deeds of sale contained the stipulations or restrictions that:

1. The parcel of land subject of this deed of sale shall be used the Buyer exclusively for residential purposes, and she shall not be entitled to take or remove soil, stones or gravel from it or any other lots belonging to the Seller.

2. All buildings and other improvements (except the fence) which may be constructed at any time in said lot must be, (a) of strong materials and properly painted, (b) provided with modern sanitary installations connected either to the public sewer or to an approved septic tank, and (c) shall not be at a distance of less than two (2) meters from its boundary lines. 2

The above restrictions were later annotated in TCT Nos. 101509 and 101511 of the Register of Deeds of Rizal, covering the said lots and issued in the name of Emma Chavez. 3

Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos. 101613 and 106092 issued in its name, respectively and the building restrictions were also annotated therein. 4 Defendant-appellee bought Lot No. 5 directly from Emma Chavez, "free from all liens and encumbrances as stated in Annex 'D', 5 while Lot No. 6 was acquired from Republic Flour Mills through a "Deed of Exchange," Annex "E". 6 TCT No. 101719 in the name of Republic Flour Mills likewise contained the same restrictions, although defendant-appellee claims that Republic Flour Mills purchased the said Lot No. 6 "in good faith. free from all liens and encumbrances," as stated in the Deed of Sale, Annex "F" 7 between it and Emma Chavez.

Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509, 101511, 101719, 101613, and 106092 were imposed as part of its general building scheme designed for the beautification and development of the Highway Hills Subdivision which forms part of the big landed estate of plaintiff-appellant where commercial and industrial sites are also designated or established. 8

Defendant-appellee, upon the other hand, maintains that the area along the western part of Epifanio de los Santos Avenue (EDSA) from Shaw Boulevard to Pasig River, has been declared a commercial and industrial zone, per Resolution No. 27, dated February 4, 1960 of the Municipal Council of Mandaluyong, Rizal. 9 It alleges that plaintiff-appellant 'completely sold and transferred to third persons all lots in said subdivision facing Epifanio de los Santos Avenue" 10 and the subject lots thereunder were acquired by it "only on July 23, 1962 or more than two (2) years after the area ... had been declared a commercial and industrial zone ... 11

On or about May 5, 1963, defendant-appellee began laying the foundation and commenced the construction of a building on Lots Nos. 5 and 6, to be devoted to banking purposes, but which defendant-appellee claims could also be devoted to, and used exclusively for, residential purposes. The following day, plaintiff-appellant demanded in writing that defendant-appellee stop the construction of the commerical building on the said lots. The latter refused to comply with the demand, contending that the building was being constructed in accordance with the zoning regulations, defendant-appellee having filed building and planning permit applications with the Municipality of Mandaluyong, and it had accordingly obtained building and planning permits to proceed with the construction.12

On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted in the lower court for decision. The complaint sought, among other things, the issuance of "a writ of preliminary injunction ... restraining and enjoining defendant, its agents, assigns, and those acting on its or their behalf from continuing or completing the construction of a commercial bank building in the premises ... involved, with the view to commanding the defendant to observe and comply with the building restrictions annotated in the defendant's transfer certificate of title."

In deciding the said case, the trial court considered, as the fundamental issue, whether or not the resolution of the Municipal Council of Mandaluyong declaring Lots Nos. 5 and 6, among others, as part of the commercial and industrial zone of the municipality, prevailed over the building restrictions imposed by plaintiff-appellant on the lots in question. 13 The records do not show that a writ of preliminary injunction was issued.

The trial court upheld the defendant-appellee and dismissed the complaint, holding that the subject restrictions were subordinate to Municipal Resolution No. 27, supra. It predicated its conclusion on the exercise of police power of the said municipality, and stressed that private interest should "bow down to general interest and welfare. " In short, it upheld the classification by the Municipal Council of the area along Epifanio de los Santos Avenue as a commercial and industrial zone, and held that the same rendered "ineffective and unenforceable" the restrictions in question as against defendant-appellee. 14 The trial court decision further emphasized that it "assumes said resolution to be valid, considering that there is no issue raised by either of the parties as to whether the same is null and void. 15

On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the above decision, 16 which motion was opposed by defendant-appellee on March 17, 1965. 17 It averred, among others, in the motion for reconsideration that defendant- appellee "was duty bound to comply with the conditions of the contract of sale in its favor, which conditions were duly annotated in the Transfer Certificates of Title issued in her (Emma Chavez) favor." It also invited the trial court's attention to its claim that the Municipal Council had (no) power to nullify the contractual obligations assumed by the defendant corporation." 18

The trial court denied the motion for reconsideration in its order of March 26, 1965. 19

On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision dismissing the complaint and from the order of March 26, 1965 denying the motion for reconsideration, its record on appeal, and a cash appeal bond." 20 On April 14, the appeal was given due course 21 and the records of the case were elevated directly to this Court, since only questions of law are raised. 22

Plaintiff-appellant alleges in its brief that the trial court erred —

I. When it sustained the view that Resolution No. 27, series of 1960 of the Municipal Council of Mandaluyong, Rizal declaring Lots Nos. 5 and 6, among others, as part of the commercial and industrial zone, is valid because it did so in the exercise of its police power; and

II. When it failed to consider whether or not the Municipal Council had the power to nullify the contractual obligations assumed by defendant-appellee and when it did not make a finding that the building was erected along the property line, when it should have been erected two meters away from said property line. 23

The defendant-appellee submitted its counter-assignment of errors. In this connection, We already had occasion to hold in Relativo v. Castro 24 that "(I)t is not incumbent on the appellee, who occupies a purely defensive position, and is seeking no affirmative relief, to make assignments of error, "

The only issues to be resolved, therefore, are: (1) whether Resolution No. 27 s-1960 is a valid exercise of police power; and (2) whether the said Resolution can nullify or supersede the contractual obligations assumed by defendant-appellee.

1. The contention that the trial court erred in sustaining the validity of Resolution No. 27 as an exercise of police power is without merit. In the first place, the validity of the said resolution was never questioned before it. The rule is that the question of law or of fact which may be included in the appellant's assignment of errors must be those which have been raised in the court below, and are within the issues framed by the parties. 25 The object of requiring the parties to present all questions and issues to the lower court before they can be presented to the appellate court is to enable the lower court to pass thereon, so that the appellate court upon appeal may determine whether or not such ruling was erroneous. The requirement is in furtherance of justice in that the other party may not be taken by surprise.26 The rule against the practice of blowing "hot and cold" by assuming one position in the trial court and another on appeal will, in the words of Elliot, prevent deception. 27 For it is well-settled that issues or defenses not raised 28 or properly litigated 29 or pleaded 30 in the Court below cannot be raised or entertained on appeal.

In this particular case, the validity of the resolution was admitted at least impliedly, in the stipulation of facts below. when plaintiff-appellant did not dispute the same. The only controversy then as stated by the trial court was whether or not the resolution of the Municipal Council of Mandaluyong ... which declared lots Nos. 4 and 5 among others, as a part of the commercial and industrial zone of the municipality, prevails over the restrictions constituting as encumbrances on the lots in question. 31 Having admitted the validity of the subject resolution below, even if impliedly, plaintiff-appellant cannot now change its position on appeal.

But, assuming arguendo that it is not yet too late in the day for plaintiff-appellant to raise the issue of the invalidity of the municipal resolution in question, We are of the opinion that its posture is unsustainable. Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act," 32 empowers a Municipal Council "to adopt zoning and subdivision ordinances or regulations"; 33 for the municipality. Clearly, the law does not restrict the exercise of the power through an ordinance. Therefore, granting that Resolution No. 27 is not an ordinance, it certainly is a regulatory measure within the intendment or ambit of the word "regulation" under the provision. As a matter of fact the same section declares that the power exists "(A)ny provision of law to the contrary notwithstanding ... "

An examination of Section 12 of the same law 34 which prescribes the rules for its interpretation likewise reveals that the implied power of a municipality should be "liberally construed in its favor" and that "(A)ny fair and reasonable doubt as to the existence of the power should be interpreted in favor of the local

government and it shall be presumed to exist." The same section further mandates that the general welfare clause be liberally interpreted in case of doubt, so as to give more power to local governments in promoting the economic conditions, social welfare and material progress of the people in the community. The only exceptions under Section 12 are existing vested rights arising out of a contract between "a province, city or municipality on one hand and a third party on the other," in which case the original terms and provisions of the contract should govern. The exceptions, clearly, do not apply in the case at bar.

2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee – referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee – it should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people. 35 Invariably described as "the most essential, insistent, and illimitable of powers" 36 and "in a sense, the greatest and most powerful attribute of government, 37 the exercise of the power may be judicially inquired into and corrected only if it is capricious, 'whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. 38 As this Court held through Justice Jose P. Bengzon in Philippine Long Distance Company vs. City of Davao, et al. 39 police power "is elastic and must be responsive to various social conditions; it is not, confined within narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life." We were even more emphatic inVda. de Genuino vs. The Court of Agrarian Relations, et al., 40 when We declared: "We do not see why public welfare when clashing with the individual right to property should not be made to prevail through the state's exercise of its police power.

Resolution No. 27, s-1960 declaring the western part of highway 54, now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality, Judicial notice may be taken of the conditions prevailing in the area, especially where lots Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial complexes have flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong, through its Municipal 'council, was reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution.

The scope of police power keeps expanding as civilization advances, stressed this Court, speaking thru Justice Laurel in the leading case of Calalang v. Williams et al., 41 Thus-

As was said in the case of Dobbins v. Los Angeles (195 US 223, 238 49 L. ed. 169), 'the right to exercise the police power is a continuing one, and a business lawful today may in the future, because of changed situation, the growth of population or other causes, become a menace to the public health and welfare, and be required to yield to the public good.' And in People v. Pomar (46 Phil. 440), it was observed that 'advancing civilization is bringing within the scope of police power of the state today things which were not thought of as being with in such power yesterday. The development of civilization), the rapidly increasing population, the growth of public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the interests of the individuals of the state,

have brought within the police power many questions for regulation which formerly were not so considered. 42 (Emphasis, supplied.)

Thus, the state, in order to promote the general welfare, may interfere with personal liberty, with property, and with business and occupations. Persons may be subjected to all kinds of restraints and burdens, in order to secure the general comfort health and prosperity of the state 43 and to this fundamental aim of our Government, the rights of the individual are subordinated. 44

The need for reconciling the non-impairment clause of the Constitution and the valid exercise of police power may also be gleaned from Helvering v. Davis 45 wherein Mr. Justice Cardozo, speaking for the Court, resolved the conflict "between one welfare and another, between particular and general, thus —

Nor is the concept of the general welfare static. Needs that were narrow or parochial a century ago may be interwoven in our day with the well-being of the nation What is critical or urgent changes with the times. 46

The motives behind the passage of the questioned resolution being reasonable, and it being a " legitimate response to a felt public need," 47 not whimsical or oppressive, the non-impairment of contracts clause of the Constitution will not bar the municipality's proper exercise of the power. Now Chief Justice Fernando puts it aptly when he declared: "Police power legislation then is not likely to succumb to the challenge that thereby contractual rights are rendered nugatory." 48

Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor General 49 that laws and reservation of essential attributes of sovereign power are read into contracts agreed upon by the parties. Thus —

Not only are existing laws read into contracts in order to fix obligations as between the parties, butthe reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. The policy of protecting contracts against impairments presupposes the maintenance of a government by virtue of which contractual relations are worthwhile – a government which retains adequate authority to secure the peace and good order of society.

Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial Relations, 50 through Justice J.B.L. Reyes, that ... the law forms part of, and is read into, every contract, unless clearly excluded therefrom in those cases where such exclusion is allowed." The decision in Maritime Company of the Philippines v. Reparations Commission, 51 written for the Court by Justice Fernando, now Chief Justice, restates the rule.

One last observation. Appellant has placed unqualified reliance on American jurisprudence and authorities 52 to bolster its theory that the municipal resolution in question cannot nullify or supersede the agreement of the parties embodied in the sales contract, as that, it claims, would impair the obligation of contracts in violation of the Constitution. Such reliance is misplaced.

In the first place, the views set forth in American decisions and authorities are not per se controlling in the Philippines, the laws of which must necessarily be construed in accordance with the intention of its own lawmakers and such intent may be deduced from the language of each law and the context of other local legislation related thereto. 53 and Burgess, et al v. Magarian, et al., 55 two Of the cases cited by plaintiff-appellant, lend support to the conclusion reached by the trial court, i.e. that the municipal resolution supersedes/supervenes over the contractual undertaking between the parties. Dolan v. Brown, states that "Equity will not, as a rule, enforce a restriction upon the use of property by injunction where the property has so changed in character and environment as to make it unfit or

unprofitable for use should the restriction be enforced, but will, in such a case, leave the complainant to whatever remedy he may have at law. 56 (Emphasis supplied.) Hence, the remedy of injunction in Dolan vs. Brown was denied on the specific holding that "A grantor may lawfully insert in his deed conditions or restrictions which are not against public policy and do not materially impair the beneficial enjoyment of the estate. 57 Applying the principle just stated to the present controversy, We can say that since it is now unprofitable, nay a hazard to the health and comfort, to use Lots Nos. 5 and 6 for strictly residential purposes, defendants- appellees should be permitted, on the strength of the resolution promulgated under the police power of the municipality, to use the same for commercial purposes. In Burgess v. Magarian et al. it was, held that "restrictive covenants running with the land are binding on all subsequent purchasers ... " However, Section 23 of the zoning ordinance involved therein contained a proviso expressly declaring that the ordinance was not intended "to interfere with or abrogate or annul any easements, covenants or other agreement between parties." 58 In the case at bar, no such proviso is found in the subject resolution.

It is, therefore, clear that even if the subject building restrictions were assumed by the defendant-appellee as vendee of Lots Nos. 5 and 6, in the corresponding deeds of sale, and later, in Transfer Certificates of Title Nos. 101613 and 106092, the contractual obligations so assumed cannot prevail over Resolution No. 27, of the Municipality of Mandaluyong, which has validly exercised its police power through the said resolution. Accordingly, the building restrictions, which declare Lots Nos. 5 and 6 as residential, cannot be enforced.

IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the complaint, is hereby AFFIRMED. "without pronouncement as to costs.

SO ORDERED.

G.R. No. L-38429 June 30, 1988

CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants, vs.COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11, and the CITY OF BUTUAN, respondents-appellees.

Romeo B. Sanchez, Eduardo Deza Mercado and Wilfred D. Asis for petitioners.

The City Legal Officer for respondents-appeliees.

 

GANCAYCO, J.:

At issue in the petition for review before Us is the validity and constitutionality of Ordinance No. 640 passed by the Municipal Board of the City of Butuan on April 21, 1969, the title and text of which are reproduced below:

ORDINANCE--640

ORDINANCE PENALIZING ANY PERSON, GROUP OF PERSONS, ENTITY OR CORPORATION ENGAGED IN THE BUSINESS OF SELLING ADMISSION

TICKETS TO ANY MOVIE OR OTHER PUBLIC EXHIBITIONS, GAMES, CONTESTS OR OTHER PERFORMANCES TO REQUIRE CHILDREN BETWEEN SEVEN (7) AND TWELVE (12) YEARS OF AGE TO PAY FULL PAYMENT FOR TICKETS INTENDED FOR ADULTS BUT SHOULD CHARGE ONLY ONE-HALF OF THE SAID TICKET

xxx xxx xxx

Be it ordained by the Municipal Board of the City of Butuan in session assembled, that:

SECTION 1—It shall be unlawful for any person, group of persons, entity, or corporation engaged in the business of selling admission tickets to any movie or other public exhibitions, games, contests, or other performances to require children between seven (7) and twelve (12) years of age to pay full payment for admission tickets intended for adults but should charge only one-half of the value of the said tickets.

SECTION 2—Any person violating the provisions of this Ordinance shall upon conviction be punished by a fine of not less than TWO HUNDRED PESOS (P200.00) but not more than SIX HUNDRED PESOS (P600.00) or an imprisonment of not less than TWO (2) MONTHS or not more than SIX (6) MONTHS or both such firm and imprisonment in the discretion of the Court.

If the violator be a firm or corporation the penalty shall be imposed upon the Manager, Agent or Representative of such firm or corporation.

SECTION 3—This ordinance shall take effect upon its approval.

Petitioners are Carlos Balacuit Lamberto Tan, and Sergio Yu Carcel managers of the Maya and Dalisay Theaters, the Crown Theater, and the Diamond Theater, respectively. Aggrieved by the effect of Ordinance No. 640, they filed a complaint before the Court of First Instance of Agusan del Norte and Butuan City docketed as Special Civil Case No. 237 on June 30, 1969 praying, inter alia, that the subject ordinance be declared unconstitutional and, therefore, void and unenforceable. 1

Upon motion of the petitioners, 2 a temporary restraining order was issued on July 14, 1969 by the court a quo enjoining the respondent City of Butuan and its officials from enforcing Ordinance No. 640. 3 On July 29, 1969, respondents filed their answer sustaining the validity of the ordinance. 4

On January 30, 1973, the litigants filed their stipulation of facts. 5 On June 4, 1973, the respondent court rendered its decision, 6 the dispositive part of which reads:

IN THE LIGHT OF ALL THE FOREGOING, the Court hereby adjudges in favor of the respondents and against the petitioners, as follows:

1. Declaring Ordinance No. 640 of the City of Butuan constitutional and valid: Provided, however, that the fine for a single offense shall not exceed TWO HUNDRED PESOS, as prescribed in the aforequoted Section 15 (nn) of Rep. Act No. 523;

2. Dissolving the restraining order issued by this Court; and;

3. Dismissing the complaint, with costs against the petitioners.

4. SO ORDERED. 7

Petitioners filed their motion for reconsideration 8 of the decision of the court a quo which was denied in a resolution of the said court dated November 10, 1973. 9

Hence, this petition.

Petitioners attack the validity and constitutionality of Ordinance No. 640 on the grounds that it is ultra vires and an invalid exercise of police power.

Petitioners contend that Ordinance No. 640 is not within the power of' the Municipal Board to enact as provided for in Section 15(n) of Republic Act No. 523, the Charter of the City of Butuan, which states:

Sec. 15. General powers and duties of the Board — Except as otherwise provided by law, and subject to the conditions and limitations thereof, the Municipal Board shall have the following legislative powers:

xxx xxx xxx

(n) To regulate and fix the amount of the license fees for the following; . . . theaters, theatrical performances, cinematographs, public exhibitions and all other performances and places of amusements ...

xxx xxx xxx

Respondent City of Butuan, on the other hand, attempts to justify the enactment of the ordinance by invoking the general welfare clause embodied in Section 15 (nn) of the cited law, which provides:

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

We can see from the aforecited Section 15(n) that the power to regulate and fix the amount of license fees for theaters, theatrical performances, cinematographs, public exhibitions and other places of amusement has been expressly granted to the City of Butuan under its charter. But the question which needs to be resolved is this: does this power to regulate include the authority to interfere in the fixing of prices of admission to these places of exhibition and amusement whether under its general grant of power or under the general welfare clause as invoked by the City?

This is the first time this Court is confronted with the question of direct interference by the local government with the operation of theaters, cinematographs and the like to the extent of fixing the prices of admission to these places. Previous decisions of this Court involved the power to impose license fees upon businesses of this nature as a corollary to the power of the local government to regulate them. Ordinances which required moviehouses or theaters to increase the price of their

admission tickets supposedly to cover the license fees have been held to be invalid for these impositions were considered as not merely license fees but taxes for purposes of revenue and not regulation which the cities have no power to exact, 10 unless expressly granted by its charter. 11

Applying the ruling in Kwong Sing v. City of Manila, 12 where the word "regulate" was interpreted to include the power to control, to govern and to restrain, it would seem that under its power to regulate places of exhibitions and amusement, the Municipal Board of the City of Butuan could make proper police regulations as to the mode in which the business shall be exercised.

While in a New York case, 13 an ordinance which regulates the business of selling admission tickets to public exhibitions or performances by virtue of the power of cities under the General City Law "to maintain order, enforce the laws, protect property and preserve and care for the safety, health, comfort and general welfare of the inhabitants of the city and visitors thereto; and for any of said purposes, to regulate and license occupations" was considered not to be within the scope of any duty or power implied in the charter. It was held therein that the power of regulation of public exhibitions and places of amusement within the city granted by the charter does not carry with it any authority to interfere with the price of admission to such places or the resale of tickets or tokens of admission.

In this jurisdiction, it is already settled that the operation of theaters, cinematographs and other places of public exhibition are subject to regulation by the municipal council in the exercise of delegated police power by the local government. 14 Thus, in People v. Chan, 15 an ordinance of the City of Manila prohibiting first run cinematographs from selling tickets beyond their seating capacity was upheld as constitutional for being a valid exercise of police power. Still in another case, 16 the validity of an ordinance of the City of Bacolod prohibiting admission of two or more persons in moviehouses and other amusement places with the use of only one ticket was sustained as a valid regulatory police measure not only in the interest of preventing fraud in so far as municipal taxes are concerned but also in accordance with public health, public safety, and the general welfare.

The City of Butuan, apparently realizing that it has no authority to enact the ordinance in question under its power to regulate embodied in Section 15(n), now invokes the police power as delegated to it under the general welfare clause to justify the enactment of said ordinance.

To invoke the exercise of police power, not only must it appear that the interest of the public generally requires an interference with private rights, but the means adopted must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. 17 The legislature may not, under the guise of protecting the public interest, arbitrarily interfere with private business, or impose unusual and unnecessary restrictions upon lawful occupations. In other words, the determination as to what is a proper exercise of its police power is not final or conclusive, but is subject to the supervision of the courts. 18

Petitioners maintain that Ordinance No. 640 violates the due process clause of the Constitution for being oppressive, unfair, unjust, confiscatory, and an undue restraint of trade, and violative of the right of persons to enter into contracts, considering that the theater owners are bound under a contract with the film owners for just admission prices for general admission, balcony and lodge.

In Homeowners' Association of the Philippines, Inc. v. Municipal Board of the City of Manila, 19 this Court held:

The authority of municipal corporations to regulate is essentially police power, Inasmuch as the same generally entails a curtailment of the liberty, the rights and/or the property of persons, which are protected and even guaranteed by the Constitution, the exercise of police power is necessarily subject to a qualification, limitation or restriction demanded by the regard, the respect and the obedience due

to the prescriptions of the fundamental law, particularly those forming part of the Constitution of Liberty, otherwise known as the Bill of Rights — the police power measure must be reasonable. In other words, individual rights may be adversely affected by the exercise of police power to the extent only — and only to the extent--that may be fairly required by the legitimate demands of public interest or public welfare.

What is the reason behind the enactment of Ordinance No. 640?

A reading of the minutes of the regular session of the Municipal Board when the ordinance in question was passed shows that a certain Councilor Calo, the proponent of the measure, had taken into account the complaints of parents that for them to pay the full price of admission for their children is too financially burdensome.

The trial court advances the view that "even if the subject ordinance does not spell out its raison d'etre in all probability the respondents were impelled by the awareness that children are entitled to share in the joys of their elders, but that considering that, apart from size, children between the ages of seven and twelve cannot fully grasp the nuance of movies or other public exhibitions, games, contests or other performances, the admission prices with respect to them ought to be reduced. 19a

We must bear in mind that there must be public necessity which demands the adoption of proper measures to secure the ends sought to be attained by the enactment of the ordinance, and the large discretion is necessarily vested in the legislative authority to determine not only what the interests of the public require, but what measures are necessary for the protection of such interests. 20 The methods or means used to protect the public health, morals, safety or welfare, must have some relation to the end in view, for under the guise of the police power, personal rights and those pertaining to private property will not be permitted to be arbitralily invaded by the legislative department. 21

We agree with petitioners that the ordinance is not justified by any necessity for the public interest. The police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must exist between purposes and means. 22 The evident purpose of the ordinance is to help ease the burden of cost on the part of parents who have to shell out the same amount of money for the admission of their children, as they would for themselves, A reduction in the price of admission would mean corresponding savings for the parents; however, the petitioners are the ones made to bear the cost of these savings. The ordinance does not only make the petitioners suffer the loss of earnings but it likewise penalizes them for failure to comply with it. Furthermore, as petitioners point out, there will be difficulty in its implementation because as already experienced by petitioners since the effectivity of the ordinance, children over 12 years of age tried to pass off their age as below 12 years in order to avail of the benefit of the ordinance. The ordinance does not provide a safeguard against this undesirable practice and as such, the respondent City of Butuan now suggests that birth certificates be exhibited by movie house patrons to prove the age of children. This is, however, not at all practicable. We can see that the ordinance is clearly unreasonable if not unduly oppressive upon the business of petitioners. Moreover, there is no discernible relation between the ordinance and the promotion of public health, safety, morals and the general welfare.

Respondent City of Butuan claims that it was impelled to protect the youth from the pernicious practice of movie operators and other public exhibitions promoters or the like of demanding equal price for their admission tickets along with the adults. This practice is allegedly repugnant and unconscionable to the interest of the City in the furtherance of the prosperity, peace, good order, comfort, convenience and the general well-being of its inhabitants.

There is nothing pernicious in demanding equal price for both children and adults. The petitioners are merely conducting their legitimate businesses. The object of every business entrepreneur is to

make a profit out of his venture. There is nothing immoral or injurious in charging the same price for both children and adults. In fact, no person is under compulsion to purchase a ticket. It is a totally voluntary act on the part of the purchaser if he buys a ticket to such performances.

Respondent City of Butuan claims that Ordinance No. 640 is reasonable and necessary to lessen the economic burden of parents whose minor children are lured by the attractive nuisance being maintained by the petitioners. Respondent further alleges that by charging the full price, the children are being exploited by movie house operators. We fail to see how the children are exploited if they pay the full price of admission. They are treated with the same quality of entertainment as the adults. The supposition of the trial court that because of their age children cannot fully grasp the nuances of such entertainment as adults do fails to convince Us that the reduction in admission ticket price is justifiable. In fact, by the very claim of respondent that movies and the like are attractive nuisances, it is difficult to comprehend why the municipal board passed the subject ordinance. How can the municipal authorities consider the movies an attractive nuisance and yet encourage parents and children to patronize them by lowering the price of admission for children? Perhaps, there is some ,truth to the argument of petitioners that Ordinance No. 640 is detrimental to the public good and the general welfare of society for it encourages children of tender age to frequent the movies, rather than attend to their studies in school or be in their homes.

Moreover, as a logical consequence of the ordinance, movie house and theater operators will be discouraged from exhibiting wholesome movies for general patronage, much less children's pictures if only to avoid compliance with the ordinance and still earn profits for themselves. For after all, these movie house and theater operators cannot be compelled to exhibit any particular kind of film except those films which may be dictated by public demand and those which are restricted by censorship laws. So instead of children being able to share in the joys of their elders as envisioned by the trial court, there will be a dearth of wholesome and educational movies for them to enjoy.

There are a number of cases decided by the Supreme Court and the various state courts of the United States which upheld the right of the proprietor of a theater to fix the price of an admission ticket as against the right of the state to interfere in this regard and which We consider applicable to the case at bar.

A theater ticket has been described to be either a mere license, revocable at the will of the proprietor of the theater or it may be evidence of a contract whereby, for a valuable consideration, the purchaser has acquired the right to enter the theater and observe the performance on condition that he behaves properly. 23 Such ticket, therefore, represents a right, Positive or conditional, as the case may be, according to the terms of the original contract of sale. This right is clearly a right of property. The ticket which represents that right is also, necessarily, a species of property. As such, the owner thereof, in the absence of any condition to the contrary in the contract by which he obtained it, has the clear right to dispose of it, to sell it to whom he pleases and at such price as he can obtain. 24 So that an act prohibiting the sale of tickets to theaters or other places of amusement at more than the regular price was held invalid as conflicting with the state constitution securing the right of property. 25

In Collister vs. Hayman, 26 it was held:

The defendants were conducting a private business, which, even if clothed with a public interest, was without a franchise to accommodate the public, and they had the right to control it, the same as the proprietors of any other business, subject to such obligations as were placed upon them by statute. Unlike a carrier of passengers, for instance, with a franchise from the state, and hence under obligation to transport anyone who applies and to continue the business year in and year out, the proprietors of a theater can open and close their place at will, and no one can make

a lawful complaint. They can charge what they choose for admission to their theater. They can limit the number admitted. They can refuse to sell tickets and collect the price of admission at the door. They can preserve order and enforce quiet while the performance is going on. They can make it a part of the contract and condition of admission, by giving due notice and printing the condition in the ticket that no one shall be admitted under 21 years of age, or that men only or women only shall be admitted, or that a woman cannot enter unless she is accompanied by a male escort, and the like. The proprietors, in the control of their business, may regulate the terms of admission in any reasonable way. If those terms are not satisfactory, no one is obliged to buy a ticket or make the contract. If the terms are satisfactory, and the contract is made, the minds of the parties meet upon the condition, and the purchaser impliedly promises to perform it.

In Tyson and Bro. — United Theater Ticket Officers, Inc. vs. Banton, 27 the United States Supreme Court held:

... And certainly a place of entertainment is in no legal sense a public utility; and quite as certainly, its activities are not such that their enjoyment can be regarded under any conditions from the point of view of an emergency.

The interest of the public in theaters and other places of entertainment may be more nearly, and with better reason, assimilated to the like interest in provision stores and markets and in the rental of houses and apartments for residence purposes; although in importance it fails below such an interest in the proportion that food and shelter are of more moment than amusement or instruction. As we have shown there is no legislative power to fix the prices of provisions or clothing, or the rental charges for houses and apartments, in the absence of some controlling emergency; and we are unable to perceive any dissimilarities of such quality or degree as to justify a different rule in respect of amusements and entertainment ...

We are in consonance with the foregoing observations and conclusions of American courts. In this jurisdiction, legislation had been passed controlling the prices of goods commodities and drugs during periods of emergency,28 limiting the net profits of public utility 29 as well as regulating rentals of residential apartments for a limited period, 30 as a matter of national policy in the interest of public health and safety, economic security and the general welfare of the people. And these laws cannot be impugned as unconstitutional for being violative of the due process clause.

However, the same could not be said of theaters, cinematographs and other exhibitions. In no sense could these businesses be considered public utilities. The State has not found it appropriate as a national policy to interfere with the admission prices to these performances. This does not mean however, that theaters and exhibitions are not affected with public interest even to a certain degree. Motion pictures have been considered important both as a medium for the communication of Ideas and expression of the artistic impulse. Their effects on the perceptions by our people of issues and public officials or public figures as well as the prevailing cultural traits are considerable. 31 People of all ages flock to movie houses, games and other public exhibitions for recreation and relaxation. The government realizing their importance has seen it fit to enact censorship laws to regulate the movie industry.32 Their aesthetic entertainment and even educational values cannot be underestimated. Even police measures regulating the operation of these businesses have been upheld in order to safeguard public health and safety.

Nonetheless, as to the question of the subject ordinance being a valid exercise of police power, the same must be resolved in the negative. While it is true that a business may be regulated, it is equally true that such regulation must be within the bounds of reason, that is, the regulatory ordinance must

be reasonable, and its provisions cannot be oppressive amounting to an arbitrary interference with the business or calling subject of regulation. A lawful business or calling may not, under the guise of regulation, be unreasonably interfered with even by the exercise of police power. 33 A police measure for the regulation of the conduct, control and operation of a business should not encroach upon the legitimate and lawful exercise by the citizens of their property rights. 34 The right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself and, as such, within the protection of the due process clause."" Hence, the proprietors of a theater have a right to manage their property in their own way, to fix what prices of admission they think most for their own advantage, and that any person who did not approve could stay away. 36

Respondent City of Butuan argues that the presumption is always in favor of the validity of the ordinance. This maybe the rule but it has already been held that although the presumption is always in favor of the validity or reasonableness of the ordinance, such presumption must nevertheless be set aside when the invalidity or unreasonableness appears on the face of the ordinance itself or is established by proper evidence. 37 The exercise of police power by the local government is valid unless it contravenes the fundamental law of the land, or an act of the legislature, or unless it is against public policy or is unreasonable, oppressive, partial, discriminating or in derogation of a common right. 38

Ordinance No. 640 clearly invades the personal and property rights of petitioners for even if We could assume that, on its face, the interference was reasonable, from the foregoing considerations, it has been fully shown that it is an unwarranted and unlawful curtailment of the property and personal rights of citizens. For being unreasonable and an undue restraint of trade, it cannot, under the guise of exercising police power, be upheld as valid.

WHEREFORE, the decision of the trial court in Special Civil Case No. 237 is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered declaring Ordinance No. 640 unconstitutional and, therefore, null and void. This decision is immediately executory.

SO ORDERED.

G.R. No. 71169 December 22, 1988

JOSE D. SANGALANG and LUTGARDA D. SANGALANG, petitioners, FELIX C. GASTON and DOLORES R. GASTON, JOSE V. BRIONES and ALICIA R. BRIONES, and BEL-AIR VILLAGE ASSOCIATION, INC.,intervenors-petitioners, vs.INTERMEDIATE APPELLATE COURT, and AYALA CORPORATION, respondents.

G.R. No. 74376 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, vs.THE INTERMEDIATE APPELLATE COURT, ROSARIO DE JESUS TENORIO, and CECILIA GONZALVEZ,respondents.

G.R. No. 76394 December 22,1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, vs.THE COURT OF APPEALS, and EDUARDO and BUENA ROMUALDEZ respondents.

G.R. No. 78182 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC., petitioner, vs.COURT OF APPEALS, DOLORES FILLEY, and J. ROMERO & ASSOCIATES, respondents.

G.R. No. 82281 December 22, 1988

BEL-AIR VILLAGE ASSOCIATION, INC, petitioner, vs.COURT OF APPEALS, VIOLETA MONCAL, and MAJAL DEVELOPMENT CORPORATION, respondents.

Sangco, Anastacio, Castaneda & Duran Law Office for petitioners & private intervenors- petitioners.

Raul S. Sison Law Offices for intervenor-petitioner Bel-Air Village Association, Inc. Renato L. Dela Fuente for respondent Ayala Corporation.

G.R. No. L-74376:

Raul S. Sison Law Offices for petitioner.

Sergio L. Guadiz for private respondents.

G.R. No. L-76394:

Raul S. Sison Law Offices for petitioner.

Gruba, Tanlimco Lamso and Apuhin Law Offices for respondents.

G.R. No. L-78182:

Funk & Associates for petitioners.

Tee Tomas & Associates for respondents.

G.R. No. L-82281:

Funk & Associates for petitioner.

Castillo, Laman, Tan & Associates for private respondents.

 

SARMIENTO, J.:

Before the Court are five consolidated petitions, 1 docketed as G.R. Nos. 71169, 74376, 76394, 78182, and 82281 hereof, in the nature of appeals (by certiorari under Rule 45 of the Rules of Court) from five decisions of the Court of Appeals, denying specific performance and damages.

The proceedings were commenced at the first instance by Jose Sangalang, joined by his wife Lutgarda Sangalang, both residents of No. 110 Jupiter Street, Makati, Metro Manila (G.R. No. 71169) to enforce by specific performance restrictive easement upon property, specifically the Bel- Air Village subdivision in Makati, Metro Manila, pursuant to stipulations embodied in the deeds of sale covering the subdivision, and for damages. Later, the Sangalangs were joined by Felix Gaston, a resident of No. 64 Jupiter Street of the same municipality, and by Mr. and Mrs. Jose and Alicia Briones, both of No. 66 Jupiter Street. Pending further proceedings, the Bel-Air Village Association, Inc. (BAVA), an incorporated homeowners' association, entered its appearance as plaintiff-in-intervention.

BAVA itself had brought its own complaints, four in number, likewise for specific performance and damages to enforce the same 'deed restrictions.' (See G.R. Nos. 74376, 76394, 78182, and 82281.)

ANTECEDENTS FACTS

I. G.R. No. 71169

The facts are stated in the decision appealed from. We quote:

x x x x x x x x x

(1) Bel-Air Village is located north of Buendia Avenue extension (now Sen. Gil J. Puyat Ave.) across a stretch of commercial block from Reposo Street in the west up to Zodiac Street in the east, When Bel-Air Village was planned, this block between Reposo and Zodiac Streets adjoining Buendia Avenue in front of the village was designated as a commercial block. (Copuyoc TSN, p. 10, Feb. 12, 1982).

(2) Bel-Air Village was owned and developed into a residential subdivision in the 1950s by Makati Development Corporation (hereinafter referred to as MDC), which in 1968 was merged with appellant Ayala Corporation.

(3) Appellees-spouses Sangalang reside at No. 11O Jupiter Street between Makati Avenue and Reposo Street; appellees-spouses Gaston reside at No. 64 Jupiter Street between Makati Avenue and Zodiac Street; appellees-spouses Briones reside at No. 66 Jupiter Street also between Makati Avenue and Zodiac Street; while appellee Bel-Air Village Association, Inc. (hereinafter referred to as BAVA) is the homeowners' association in Bel-Air Village which takes care of the sanitation, security, traffic regulations and general welfare of the village.

(4) The lots which were acquired by appellees Sangalang and spouse Gaston and spouse and Briones and spouse in 1960, 1957 and 1958, respectively, were all sold by MDC subject to certain conditions and easements contained in Deed Restrictions which formed a part of each deed of sale. The pertinent provisions in said Deed Restrictions, which are common to all lot owners in Bel-Air Village, are as follows:

I-BEL-AIR ASSOCIATION

The owner of this lot/s or his successors in interest is required to be and is automatically a member of the Bel-Air Association and must abide by such rules and regulations laid down by the Association in the interest of the sanitation, security and the general welfare of the community.

The association will also provide for and collect assessments, which will constitute as a lien on the property junior only to liens of the government for taxes and to voluntary mortgages for sufficient consideration entered into in good faith.

II-USE OF LOTS

Subject to such amendments and additional restrictions, reservations, servitudes, etc., as the Bel- Air Association may from time to time adopt and prescribe, this lot is subject to the following restrictions:

a. This lot/s shall not be subdivided. However, three or more lots may be consolidated and subdivided into a lesser number of lots provided that none of the resulting lots be smaller in area than the smallest lot before the consolidation and that the consolidation and subdivision plan be duly approved by the governing body of the Bel-Air Association.

b. This lot/s shall only be used for residential purposes.

c. Only one single family house may be constructed on a single lot, although separate servants' quarters or garage may be built.

d. Commercial or advertising signs shall not be placed, constructed, or erected on this lot. Name plates and professional signs of homeowners are permitted so long as they do not exceed 80 x 40 centimeters in size.

e. No cattle, pigs, sheep, goats, ducks, geese, roosters or rabbits shall be maintained in the lot, except that pets may be maintained but must be controlled in accordance with the rulings of the Association. The term "pets' includes chickens not in commercial quantities.

f. The property is subject to an easement of two (2) meters within the lot and adjacent to the rear and sides thereof not fronting a street for the purpose of drainage, sewage, water and other public facilities as may be necessary and desirable; and the owner, lessee or his representative shall permit access thereto by authorized representatives of the Bel-Air Association or public utility entities for the purposes for which the easement is created.

g. This lot shall not be used for any immoral or illegal trade or activity.

h. The owner and/or lessee of this lot/s shall at all times keep the grass cut and trimmed to reduce the fire hazard of the property.

xxx xxx xxx

VI-TERM OF RESTRICTIONS

The foregoing restrictions shall remain in force for fifty years from January 15, 1957, unless sooner cancelled in its entirety by two thirds vote of members in good standing of the Bel-Air Association. However, the Association may, from time to time, add new ones, amend or abolish particular restrictions or parts thereof by majority rule.

VII--ENFORCEMENT OF RESTRICTIONS

The foregoing restrictions may be enjoined and/or enforced by court action by the Bel-Air Association, or by the Makati Development Corporation or its assigns, or by any registered owner of land within the boundaries of the Bel-Air Subdivision (Sub-division plan PSD-49226 and Lot 7-B, Psd-47848) or by any member in good standing of the Bel-Air association." (Exh. 1 -b; Exh. 22, Annex "B"). (Appellant's Brief, pp. 4- 6)

(5) When MDC sold the above-mentioned lots to appellees' predecessors-in-interest, the whole stretch of the commercial block between Buendia Avenue and Jupiter Street, from Reposo Street in the west to Zodiac Street in the east, was still undeveloped. Access, therefore, to Bel-Air Village was opened to all kinds of people and even animals. So in 1966, although it was not part of the original plan, MDC constructed a fence or wall on the commercial block along Jupiter Street. In 1970, the fence or wall was partly destroyed by typhoon "Yoling." The destroyed portions were subsequently rebuilt by the appellant. (Copuyoc TSN, pp. 31-34, Feb. 12, 1982). When Jupiter Street was widened in 1972 by 3.5 meters, the fence or wall had to be destroyed. Upon request of BAVA, the wall was rebuilt inside the boundary of the commercial block. (Copuyoc TSN, pp. 4447, Feb. 12,1982).

(6) When the appellant finally decided to subdivide and sell the lots in the commercial block between Buendia and Jupiter, BAVA wrote the appellant on May 9, 1972, requesting for confirmation on the use of the commercial lots. The appellant replied on May 16, 1972, informing BAVA of the restrictions intended to be imposed in the sale and use of the lots. Among these restrictions are: that the building shall have a set back of 19 meters; and that with respect to vehicular traffic along Buendia Avenue, entrance only will be allowed, and along Jupiter Street and side streets, both entrance and exit will be allowed.

(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the commercial lots bordering the north side of Buendia Avenue Extension from Reposo Street up to Zodiac Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall include the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the lot of one (1) parking slot for every seventy five (75) meters of office space in the building and the limitation of vehicular traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit through Jupiter Street and any side street.

In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's board of governors for decision.

(8) On September 25, 1972, appellant notified BAVA that, after a careful study, it was finally decided that the height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters. Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant informing the latter that the Association had assessed the appellant, as special member of the association, the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the membership dues to the commercial lot owners for the year 1973, and requested the appellant to remit the amount which its board of governors had already included in its current budget. In reply, appellant on January 31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were accepted by the Association as members was reduced to 76,726 square meters. Thus, the corresponding dues at P.50 per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by the appellant to BAVA. Since then, the latter has been collecting membership dues from the owners of the commercial lots as special members of the Association. As a matter of fact, the dues were increased several times. In 1980, the commercial lot owners were already being charged dues at the rate of P3.00 per square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the commercial lot owners amount to P230,178. 00 annually based on the total area of 76,726 square meters of the commercial lots.

(9) Meantime, on April 4, 1975, the municipal council of Makati enacted its ordinance No. 81, providing for the zonification of Makati (Exh. 18). Under this Ordinance, Bel-Air Village was classified as a Class A Residential Zone, with its boundary in the south extending to the center line of Jupiter Street (Exh. 18-A).

Thus, Chapter III, Article 1, Section 3.03, par. F. of the Ordinance provides:

F. Bel-Air Village area, as bounded on the N by Polaris and Mercedes streets and on the NE by Estrella Street; on the SE by Epifanio de los Santos Avenue and on the SW by the center line of Jupiter Street. Then bounded on the N by the abandoned MRR Pasig Line; on the E by Makati Avenue; on the S by the center line of Jupiter Street and on the W by the center line of Reposo Street." (Exh. 18-A)

Similarly, the Buendia Avenue Extension area was classified as Administrative Office Zone with its boundary in the North-North East Extending also up to the center line of Jupiter Street (Exh. 18b).

Thus, Chapter III, Article I, Section 3.05, par. C. of the Ordinance provides:

C. The Buendia Avenue Extension areas, as bounded on the N-NE by the center line of Jupiter Street, on the SE by Epifanio de los Santos Avenue; on the SW by Buendia Avenue and on the NW by the center line of Reposo Street, then on the NE by Malugay Street; on the SE by Buendia Avenue and on the W by Ayala Avenue Extension." (Exh. 18-B)

The Residential Zone and the Administrative Office Zone, therefore, have a common boundary along the center line of Jupiter Street.

The above zoning under Ordinance No. 81 of Makati was later followed under the Comprehensive Zoning Ordinance for the National Capital Region adopted by the

Metro Manila Commission as Ordinance 81 -01 on March 14, 1981 (Exh. 19). However, under this ordinance, Bel-Air Village is simply bounded in the South-Southeast by Jupiter Street-not anymore up to the center line of Jupiter Street (Exh. B). Likewise, the blockdeep strip along the northwest side of Buendia Avenue Extension from Reposo to EDSA was classified as a High Intensity Commercial Zone (Exh. 19-c).

Thus, the Zoning District Boundaries -Makati, in Annex B of the Ordinance provides:

R-I-Low Intensity Residential

x x x x x x x x x

4. Bel-Air 1, 3, 4

Bounded on the North -- J.P. Rizal and Amapola St.

South - Rockwell

Northwest - P. Burgos

Southeast - Jupiter

Southwest - Epifanio de los Santos Ave. (EDSA)

5. Bel-Air 2

Bounded on the Northwest - J.P. Rizal

Southwest - Makati Avenue

South --- Jupiter

Southeast -- Pasig Line

East - South Avenue" (Exh. 19-b)

x x x x x x x x x

C-3-High Intensity Commercial Zone

2. A block deep strip along the northwest side of Buendia Ave. Ext. from Reposo to EDSA." (Exh, 19-c)

Under the above zoning classifications, Jupiter Street, therefore, is a common boundary of Bel-Air Village and the commercial zone.

(10) Meanwhile, in 1972, BAVA had installed gates at strategic locations across Jupiter Street which were manned and operated by its own security guards who were employed to maintain, supervise and enforce traffic regulations in the roads and

streets of the village. (Villavicencio, TSN, pp, 22-25, Oct. 30, 1980; BAVA Petition, par. 11, Exh. 17).

Then, on January 17, 1977, the Office of the Mayor of Makati wrote BAVA directing that, in the interest of public welfare and for the purpose of easing traffic congestion, the following streets in Bel-Air Village should be opened for public use:

Amapola Street - from Estrella Street to Mercedes Street

Amapola Street -junction of Palma Street gate going to J. Villena Street

Mercedes Street -- from EDSA to Imelda Avenue and Amapola junction

Zodiac Street - from Mercedes Street to Buendia Avenue

Jupiter Street -- from Zodiac Street to Reposo Street connecting Metropolitan Avenue to Pasong Tamo and V. Cruz Extension intersection

Neptune Street - from Makati Avenue to Reposo Street Orbit Street - from F. Zobel-Candelaria intersection to Jupiter Street

Paseo de Roxas - from Mercedes Street to Buendia Avenue (Exh. 17, Annex A, BAVA Petition)

On February 10, 1977, BAVA wrote the Mayor of Makati, expressing the concern of the residents about the opening of the streets to the general public, and requesting specifically the indefinite postponement of the plan to open Jupiter Street to public vehicles. (Exh. 17, Annex B, BAVA Petition).

However, BAVA voluntarily opened to the public Amapola, Mercedes, Zodiac, Neptune and Paseo de Roxas streets. (Exh. 17-A, Answer of Makati par. 3-7).

Later, on June 17,1977, the Barangay Captain of Bel-Air Village was advised by the Office of the Mayor that, in accordance with the agreement entered into during the meeting on January 28, 1 977, the Municipal Engineer and the Station Commander of the Makati Police were ordered to open for public use Jupiter Street from Makati Avenue to Reposo Street. Accordingly, he was requested to advise the village residents of the necessity of the opening of the street in the interest of public welfare. (Exh. 17, Annex E, BAVA Petition).

Then, on June 10, 1977, the Municipal Engineer of Makati in a letter addressed to BAVA advised the latter to open for vehicular and pedestrian traffic the entire portion of Jupiter Street from Makati Avenue to Reposo Street (Exh. 17, BAVA Petition, par. 14).

Finally, on August 12, 1977, the municipal officials of Makati concerned allegedly opened, destroyed and removed the gates constructed/located at the corner of Reposo Street and Jupiter Street as well as the gates/fences located/constructed at Jupiter Street and Makati Avenue forcibly, and then opened the entire length of Jupiter Street to public traffic. (Exh. 17, BAVA Petition, pars. 16 and 17).

(11) Before the gates were-removed, there was no parking problem or traffic problem in Jupiter Street, because Jupiter Street was not allowed to be used by the general public (Villavicencio, TSN, pp. 24-25, Oct. 30, 1980). However, with the opening of Zodiac Street from Estrella Street to Jupiter Street and also the opening to the public of the entire length of Jupiter Street, there was a tremendous increase in the volume of traffic passing along Jupiter Street coming from EDSA to Estrella Street, then to Zodiac Street to Jupiter Street, and along the entire length of Jupiter Street to its other end at Reposo Street. (Villavicencio, TSN, pp. 30-32, Oct. 30, 1980).

In the meantime, the purchasers of the commercial lots between Jupiter Street and Buendia Avenue extension had started constructing their respective buildings in 1974-1975. They demolished the portions of the fence or wall standing within the boundary of their lots. Many of the owners constructed their own fences or walls in lieu of the wall and they employed their own security guards. (TSN, p. 83, Feb. 20,1981; TSN, pp. 53-54; 72-74, March 20,1981; TSN, pp. 54-55, July 23, 1981).

(12) Then, on January 27, 1978, appellant donated the entire Jupiter Street from Metropolitan Avenue to Zodiac Street to BAVA (Exh. 7)- However, even before 1978, the Makati Police and the security force of BAVA were already the ones regulating the traffic along Jupiter Street after the gates were opened in 1977. Sancianco TSN, pp. 26-30, Oct. 2,1981).

In October, 1979, the fence at the corner of Orbit and Neptune Streets was opened and removed (BAVA Petition, par. 22, Exh. 17). The opening of the whole stretch of Orbit Street from J.P. Rizal Avenue up to Imelda Avenue and later to Jupiter Street was agreed to at the conference attended by the President of BAVA in the office of the Station Commander of Makati, subject to certain conditions, to wit:

That, maintenance of Orbit St. up to Jupiter St. shall be shouldered by the Municipality of Makati.

That, street lights will be installed and maintenance of the same along Orbit St. from J.P. Rizal Ave. up to Jupiter St. shall be undertaken by the Municipality.

That for the security of the residents of San Miguel Village and Bel-Air Village, as a result of the opening of Orbit Street, police outposts shall be constructed by the Municipality of Makati to be headed by personnel of Station No. 4, in close coordination with the Security Guards of San Miguel Village and Bel-Air Village." (CF. Exh. 3 to Counter-Affidavit, of Station Commander, Ruperto Acle p. 253, records)" (Order, Civil Case No. 34948, Exh. 17-c).

(13) Thus, with the opening of the entire length of Jupiter Street to public traffic, the different residential lots located in the northern side of Jupiter Street ceased to be used for purely residential purposes. They became, for all purposes, commercial in character.

(14) Subsequently, on October 29, 1979, the plaintiffs-appellees Jose D. Sangalang and Lutgarda D. Sangalang brought the present action for damages against the defendant-appellant Ayala Corporation predicated on both breach of contract and on tort or quasi-delict A supplemental complaint was later filed by said appellees seeking to augment the reliefs prayed for in the original complaint because of alleged supervening events which occurred during the trial of the case. Claiming to be

similarly situated as the plaintiffs-appellees, the spouses Felix C. Gaston and Dolores R. Gaston, Jose V. Briones and Alicia R. Briones, and the homeowners' association (BAVA) intervened in the case.

(15) After trial on the merits, the then Court of First Instance of Rizal, Pasig, Metro Manila, rendered a decision in favor of the appellees the dispositive portion of which is as follows:

WHEREFORE, judgment is hereby accordingly rendered as follows:

ON PLAINTIFFS' COMPLAINT:

Defendant is ordered to pay to the plaintiffs-spouses Sangalang the following damages:

1. The sum of P500,000.00 as actual and consequential damages;

2. The sum of P2,000,000.00 as moral damages;

3. The sum of P500,000.00 as exemplary damages;

4. The sum of P100,000.00 as attorney's fees; and

5. The costs of suit.

ON INTERVENORS FELIX and DOLORES GASTON'S COMPLAINT:

Defendant is ordered to pay to the spouses Felix and Dolores Gaston, the following damages:

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;

3 The sum of P500,000.00 as exemplary damages:

4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENORS JOSE and ALICIA BRIONES' COMPLAINT:

Defendant is ordered to pay to the spouses Jose and Alicia Briones, the following damages:

1 . The sum of P400,000.00 as consequential damages;

2 The sum of P500,000.00 as moral damages;

3 The sum of P500,000.00 as exemplary damages;

4 The sum of P50,000.00 as attorney's fees; and

5 The costs of suit.

ON INTERVENOR BAVA'S COMPLAINT:

Defendant is ordered to pay intervenor BAVA, the following damages:

1. The sum of P400,000.00 as consequential damages;

2. The sum of P500,000.00 as exemplary damages;

3. The sum of P50,000.00 as attorney's fees; and

4. The costs of suit.

The above damages awarded to the plaintiffs and intervenors shall bear legal interest from the filing of the complaint.

Defendant is further ordered to restore/reconstruct the perimeter wall at its original position in 1966 from Reposo Street in the west to Zodiac Street in the east, at its own expense, within SIX (6) MONTHS from finality of judgment.

SO ORDERED.

(Record on Appeal, pp. 400-401) 2

x x x x x x x x x

On appeal, the Court of Appeals 3 rendered a reversal, and disposed as follows:

ACCORDINGLY, finding the decision appealed from as not supported by the facts and the law on the matter, the same is hereby SET ASIDE and another one entered dismissing the case for lack of a cause of action. Without pronouncement as to costs.

SO ORDERED. 4

II. G.R. No. 74376

This petition was similarly brought by BAVA to enforce the aforesaid restrictions stipulated in the deeds of sale executed by the Ayala Corporation. The petitioner originally brought the complaint in the Regional Trial Court of Makati, 5 principally for specific performance, plaintiff [now, petitioner] alleging that the defendant [now, private respondent] Tenorio allowed defendant [Tenorio's co-private respondent] Gonzalves to occupy and convert the house at 50 Jupiter Street, Bel-Air Village, Makati, Metro Manila, into a restaurant, without its knowledge and consent, and in violation of the deed restrictions which provide that the lot and building thereon must be used only for residential purposes upon which the prayed for main relief was for 'the defendants to permanently refrain from using the premises as commercial and to comply with the terms of the Deed Restrictions." 6 The trial court dismissed the complaint on a procedural ground, i.e., pendency of an Identical action, Civil Case No. 32346, entitled "Bel-Air Village Association, Inc. v. Jesus Tenorio." The Court of Appeals7 affirmed, and held, in addition, that Jupiter Street "is classified as High density commercial (C-3) zone as per

Comprehensive Zoning Ordinance No. 81-01 for National Capital Region," 8 following its own ruling in AC-G.R. No. 66649, entitled "Bel-Air Village Association, Inc. vs. Hy-Land Realty & Development Corporation, et al."

III. G.R. No. 76394

x x x x x x x x x

Defendants-spouses Eduardo V. Romualdez, Jr. and Buena Tioseco are the owners of a house and lot located at 108 Jupiter St., Makati, Metro Manila as evidenced by Transfer Certificate of Title No. 332394 of the Registry of Deeds of Rizal. The fact is undisputed that at the time the defendants acquired the subject house and lot, several restrictions were already annotated on the reverse side of their title; however, for purposes of this appeal we shall quote hereunder only the pertinent ones, to wit:

(b,) This lot/shall be used only for residential purposes.

x x x x x x x x x

IV. Term of Restriction

The foregoing restriction(s) shall remain in force for fifty years from January 15, 1957, unless sooner cancelled in its entirety by two-thirds vote of the members in good standing of the Bel-Air Association. However, the Association may from time to time, add new ones, amend or abolish particular restrictions or parts thereof by majority rule.

During the early part of 1979, plaintiff noted that certain renovations and constructions were being made by the defendants on the subject premises, for which reason the defendants were advised to inform the plaintiff of the kind of construction that was going on. Because the defendants failed to comply with the request of the plaintiff, the latter's chief security officer visited the subject premises on March 23, 1979 and found out that the defendants were putting up a bake and coffee shop, which fact was confirmed by defendant Mrs. Romualdez herself. Thereafter, the plaintiff reminded defendants that they were violating the deed restriction. Despite said reminder, the defendants proceeded with the construction of the bake shop. Consequently, plaintiff sent defendants a letter dated April 30, 1979 warning them that if they will not desist from using the premises in question for commercial purposes, they will be sued for violations of the deed restrictions.

Despite the warning, the defendants proceeded with the construction of their bake shop. 9

x x x x x x x x x

The trial court 10 adjudged in favor of BAVA. On appeal, the Court of Appeals 11 reversed, on the strength of its holding in AC-G.R. No. 66649 earlier referred to.

BAVA then elevated the matter to the Court by a petition for review on certiorari. The Court 12 initially denied the petition "for lack of merit, it appearing that the conclusions of the respondent Court of Appeals that private respondents' bake and coffee shop lies within a commercial zone and that said private respondents are released from their obligations to maintain the lot known as 108 Jupiter Street for

residential purposes by virtue of Ordinance No. 81 of the Municipality of Makati and Comprehensive Zoning Ordinance No. 81-01 of the Metropolitan Manila Commission, are in accord with law and jurisprudence," 13 for which BAVA sought a reconsideration. Pending resolution, the case was referred to the Second Division of this Court, 14 and thereafter, to the Court En Banc en consulta. 15 Per our Resolution, dated April 29, 1988, we consolidated this case with G.R. Nos. 74376 and 82281. 16

IV. G.R. No. 78182.

x x x x x x x x x

The case stemmed from the leasing by defendant Dolores Filley of her building and lot situated at No. 205 Reposo Street, Bel-Air Village Makati, Metro Manila to her co-defendant, the advertising firm J. Romero and Associates, in alleged violation of deed restrictions which stipulated that Filley's lot could only be used for residential purposes. Plaintiff sought judgment from the lower court ordering the defendants to "permanently refrain" from using the premises in question "as commercial" and to comply with the terms of the deed restrictions.

After the proper proceedings, the court granted the plaintiff the sought for relief with the additional imposition of exemplary damages of P50,000.00 and attorney's fees of P10,000.00. The trial court gave emphasis to the restrictive clauses contained in Filley's deed of sale from the plaintiff, which made the conversion of the building into a commercial one a violation.

Defendants now seek review and reversal on three (3) assignments of errors, namely:

I.

THE TRIAL COURT ERRED IN NOT FINDING THAT THE REGULATIONS PROMULGATED BY THE MUNICIPAL AUTHORITIES IN MAKATI AND THE MINISTRY OF HUMAN SETTLEMENT'S CHANGING THE CHARACTER OF THE AREAS IN QUESTION HAD RENDERED THE RESTRICTIVE EASEMENT ON THE TITLE OF THE APPELLANTS VACATED.

II.

THE COURT ERRED IN NOT RULING THAT BECAUSE THE APPELLEE(S) HAD ALLOWED THE USE OF THE PROPERTY WITHIN THE VILLAGE FOR NON- RESIDENTIAL PURPOSES, IT IS NOW ESTOPPED FROM ENFORCING THE RESTRICTIVE PROHIBITIONS SUBJECT MATTER OF THIS CASE.

III.

THE COURT ERRED IN NOT FINDING THAT THERE EXISTED A BILATERAL CONTRACT BETWEEN THE PARTIES AND THAT SINCE APPELLEE HAD NOT PERFORMED ITS OBLIGATIONS UNDER THIS ARRANGEMENT THE APPELLANT IN TURN WAS UNDER NO OBLIGATION TO ANNOTATE THE RESTRICTIVE PROHIBITIONS ON THE BACK OF THE TITLE.

Appellants anchor their appeal on the proposition that the Bel-Air Village area, contrary to plaintiff- appellee's pretension of being a strictly residential zone, is in fact

commercial and characterize the restrictions contained in appellant Filley's deed of sale from the appellee as completely outmoded, which have lost all relevance to the present-day realities in Makati, now the premier business hub of the nation, where there is a proliferation of numerous commercial enterprises established through the years, in fact even within the heart of so-called "residential" villages. Thus, it may be said that appellants base their position on the inexorable march of progress which has rendered at naught the continued efficacy of the restrictions. Appellant on the other hand, relies on a rigid interpretation of the contractual stipulations agreed upon with appellant Filley, in effect arguing that the restrictions are valid ad infinitum.

The lower court quite properly found that other commercial establishments exist in the same area (in fact, on the same street) but ignored it just the same and said-

The fact that defendants were able to prove the existence of several commercial establishments inside the village does not exempt them from liability for violating some of the restrictions evidently choosing to accord primacy to contractual stipulation. 17

x x x x x x x x x

The Court of Appeals 18 overturned the lower court, 19 likewise based on AC-G.R. No. 66649. The respondent Court observed also that J. Romero & Associates had been given authority to open a commercial office by the Human Settlements Regulatory Commission.

V. G.R. No. 82281

The facts of this case have been based on stipulation. We quote:

COMES NOW, the Parties, assisted by their respective counsel and to this Honorable Court, respectfully enter into the following stipulations of facts, to wit:

1. The parties admit the personal circumstances of each other as well as their capacities to sue and be sued.

2. The parties admit that plaintiff BAVA for short) is the legally constituted homeowners' association in Bel-Air Subdivision, Makati, Metro Manila.

3. The parties admit that defendant Violets Moncal is the registered owner of a parcel of land with a residential house constructed thereon situated at No. 104 Jupiter Street, Bel-Air Village, Makati, Metro Manila; that as such lot owner, she is a member of the plaintiff association.

4. The parties admit that defendant Majal Development Corporation (Majal for short) is the lessee of defendant Moncal's house and lot located at No. 104 Jupiter Street.

5. The parties admit that a deed restrictions is annotated on the title of defendant Moncal, which provides, among others, that the lot in question must be used only for residential purposes;' that at time Moncal purchased her aforesaid lot in 1959 said deed restrictions was already annotated in the said title.

6. The parties admit that when Moncal leased her subject property to Majal, she did not secure the consent of BAVA to lease the said house and lot to the present lessee.

7. The parties admit that along Jupiter Street and on the same side where Moncal's property is located, there are restaurants, clinics placement or employment agencies and other commercial or business establishments. These establishments, however, were sued by BAVA in the proper court.

8. The parties admit that at the time Moncal purchased the subject property from the Makati Development Corporation, there was a perimeter wall, running along Jupiter Street, which wall was constructed by the subdivision owner; that at that time the gates of the entrances to Jupiter Street were closed to public traffic. In short, the entire length of Jupiter which was inside the perimeter wall was not then open to public traffic

9. The parties admit that subsequent thereto, Ayala tore down the perimeter wall to give way to the commercial building fronting Buendia Avenue (now Gil J. Puyat Avenue).

10. The parties admit that on August 12, 1977, the Mayor of Makati forcibly opened and removed the street gates constructed on Jupiter Street and Reposo Street, thereby opening said streets to the public.

11. The parties admit plaintiffs letters of October 10, 23 and 31, 1984; as well as defendants' letters-reply dated October 17 and 29, 1984. 20

x x x x x x x x x

The trial court 21 dismissed the petitioner's complaint, a dismissal affirmed on appeal, 22 According to the appellate court, the opening of Jupiter Street to human and vehicular traffic, and the commercialization of the Municipality of Makati in general, were circumstances that had made compliance by Moncal with the aforesaid "deed restrictions" "extremely difficult and unreasonable," 23 a development that had excused compliance altogether under Article 1267 of the Civil Code.

VI. The cases before the Court; the Court's decision.

In brief, G.R. Nos. 74376, 76394, 78182, and 82281 are efforts to enforce the "deed restrictions" in question against specific residents (private respondents in the petitions) of Jupiter Street and with respect to G.R. No. 78182, Reposo Street. The private respondents are alleged to have converted their residences into commercial establishments (a restaurant in G.R. No. 74376, a bakery and coffee shop in G.R. No. 76394, an advertising firm in G.R. No. 78182; and a construction company, apparently, in G.R. No. 82281) in violation of the said restrictions. 24

Their mother case, G. R. No. 71169 is, on the other hand, a petition to hold the vendor itself, Ayala Corporation (formerly Makati Development Corporation), liable for tearing down the perimeter wall along Jupiter Street that had therefore closed its commercial section from the residences of Bel-Air Village and ushering in, as a consequence, the full "commercialization" of Jupiter Street, in violation of the very restrictions it had authored.

As We indicated, the Court of Appeals dismissed all five appeals on the basis primarily of its ruling in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-Land Realty Development Corporation, et al.," in

which the appellate court explicitly rejected claims under the same 'deed restrictions" as a result of Ordinance No. 81 enacted by the Government of the Municipality of Makati, as well as Comprehensive Zoning Ordinance No. 8101 promulgated by the Metropolitan Manila Commission, which two ordinances allegedly allowed the use of Jupiter Street both for residential and commercial purposes. It was likewise held that these twin measures were valid as a legitimate exercise of police power.

The Court of Appeals' reliance on Ordinance Nos. 81. and 8101 is now assailed in these petitions, particularly the Sangalang, et al. petition.

Aside from this fundamental issue, the petitioners likewise raise procedural questions. G.R. No. 71169, the mother case, begins with one.

1. G.R. No. 71169

In this petition, the following questions are specifically put to the Court:

May the Honorable Intermediate Appellate Court reverse the decision of the trial court on issues which were neither raised by AYALA in its Answers either to the Complaint or Supplemental Complaint nor specifically assigned as one of the alleged errors on appeal? 25

May the Honorable Intermediate Appellate Court arbitrarily ignore the decisive findings of fact of the trial court, even if uncontradicted and/or documented, and premised mainly on its own unsupported conclusions totally reverse the trial court's decision? 26

May the Honorable Intermediate Appellate Court disregard the trial court's documented findings that respondent Ayala for its own self-interest and commercial purposes contrived in bad faith to do away with the Jupiter Street perimeter wall it put up three times which wall was really intended to separate the residential from the commercial areas and thereby insure the privacy and security of Bel Air Village pursuant to respondent Ayala's express continuing representation and/or covenant to do so?27

a.

The first question represents an attack on the appellate court's reliance on Ordinances Nos. 81 and 81-01, a matter not supposedly taken up at the trial or assigned as an error on appeal. As a rule, the Court of Appeals (then the Intermediate Appellate Court) may determine only such questions as have been properly raised to it, yet, this is not an inflexible rule of procedure. In Hernandez v. Andal, 28 it was stated that "an unassigned error closely related to an error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error." 29

In Baquiran v. Court of Appeals, 30 we referred to the " modern trend of procedure . . . according] the courts broad discretionary power" 31 and in which we allowed consideration of matters "having some bearing on the issue submitted which the parties failed to raise or the lower court ignore[d]. 32 And in Vda. de Javellana v. Court of Appeals, 33 we permitted the consideration of a 'patent error' of the trial court by the Court of Appeals under Section 7, of Rule 51, of the Rules of Court, 34 although such an error had not been raised in the brief. But what we note is the fact that the Ayala Corporation did raise the zoning measures as affirmative defenses, first in its answers 35 and second, in its brief, 36 and submitted at the

trial as exhibits. 37 There is accordingly no cause for complaint on the part of the petitioners for Ayala's violation of the Rules. But while there was reason for the consideration, on appeal, of the said zoning ordinances in question, this Court nevertheless finds as inaccurate the Court of Appeals' holding that such measures, had "in effect, [made] Jupiter Street ... a street which could be used not only for residential purposes," 38 and that "[It lost its character as a street for the exclusive benefit of those residing in Bel-Air Village completely." 39

Among other things, there is a recognition under both Ordinances Nos. 81 and 8 1-01 that Jupiter Street lies as the boundary between Bel-Air Village and Ayala Corporation's commercial section. And since 1957, it had been considered as a boundary not as a part of either the residential or commercial zones of Ayala Corporation's real estate development projects. Thus, the Bel-Air Village Association's articles of incorporation state that Bel-Air Village is 'bounded on the NE., from Amapola St., to de los Santos Ave., by Estrella St., on the SE from Extrella St., to Pedestrian Lane by E. De los Santos Ave., on the SW., from Pedestrian Lane to Reposo St., by Jupiter Street

. . . . 40 Hence, it cannot be said to have been "for the exclusive benefit" of Bel-Air Village residents.

We come to the perimeter wall then standing on the commercial side of Jupiter Street the destruction of which opened the street to the public. The petitioners contend that the opening of the thoroughfare had opened, in turn, the floodgates to the commercialization of Bel-Air Village. The wall, so they allege, was designed precisely to protect the peace and privacy of Bel-Air Village residents from the din and uproar of mercantile pursuits, and that the Ayala Corporation had committed itself to maintain it. It was the opinion of the Court of Appeals, as we said, that Ayala's liability therefor, if one existed, had been overtaken by the passage of Ordinances Nos. 81 and 82-01, opening Jupiter Street to commerce.

It is our ruling, we reiterate, that Jupiter Street lies as a mere boundary, a fact acknowledged by the authorities of Makati and the National Government and, as a scrutiny of the records themselves reveals, by the petitioners themselves, as the articles of incorporation of Bel-Air Village Association itself would confirm. As a consequence, Jupiter Street was intended for the use by both -the commercial and residential blocks. It was not originally constructed, therefore, for the exclusive use of either block, least of all the residents of Bel-Air Village, but, we repeat, in favor of both, as distinguished from the general public.

When the wall was erected in 1966 and rebuilt twice, in 1970 and 1972, it was not for the purpose of physically separating the two blocks. According to Ayala Corporation, it was put up to enable the Bel-Air Village Association "better control of the security in the area, 41 and as the Ayala Corporation's "show of goodwill " 42 a view we find acceptable in the premises. For it cannot be denied that at that time, the commercial area was vacant, "open for [sic] animals and people to have access to Bel-Air Village." 43 There was hence a necessity for a wall.

In any case, we find the petitioners' theory, that maintaining the wall was a matter of a contractual obligation on the part of Ayala, to be pure conjecture. The records do not establish the existence of such a purported commitment. For one, the subdivision plans submitted did not mention anything about it. For another, there is nothing in the "deed restrictions" that would point to any covenant regarding the construction of a wall. There is no representation or promise whatsoever therein to that effect.

With the construction of the commercial buildings in 1974, the reason for which the wall was built- to secure Bel-Air Village from interlopers had naturally ceased to exist. The buildings themselves had provided formidable curtains of security for the residents. It should be noted that the commercial lot

buyers themselves were forced to demolish parts of the wall to gain access to Jupiter Street, which they had after all equal right to use.

In fine, we cannot hold the Ayala Corporation liable for damages for a commitment it did not make, much less for alleged resort to machinations in evading it. The records, on the contrary, will show that the Bel-Air Village Association had been informed, at the very outset, about the impending use of Jupiter Street by commercial lot buyers. We quote:

x x x x x x x x x

1. Exh. I of appellee, the memorandum of Mr. Carmelo Caluag, President of BAVA, dated May 10, 1972, informing the BAVA Board of Governors and Barrio Council members about the future use of Jupiter Street by the lot owners fronting Buendia Avenue. The use of Jupiter Street by the owners of the commercial lots would necessarily require the demolition of the wall along the commercial block adjoining Jupiter Street.

2. Exh. J of appellee, the minutes of the joint meeting of BAVA Board of Governors and the Bel-Air Barrio Council where the matter that "Buendia lot owners will have equal rights to use Jupiter Street," and that Ayala's "plans about the sale of lots and use of Jupiter Street" were precisely taken up. This confirms that from the start BAVA was informed that the commercial lot owners will use Jupiter Street and that necessarily the wall along Jupiter Street would be demolished.

3. Exh. 10, the letter of Mr. Demetrio Copuyoc to the President of BAVA, dated May 16, 1972, expressly stating that vehicular entrance and exit to the commercial lots would be allowed along Jupiter and side streets.

4. Exhs. 27, 27-A, 27-B, the letter of Atty. Salvador J. Lorayes dated June 30, 1972, with enclosed copy of proposed restriction for the commercial lots to BAVA. He proposed restriction again expressly stated that "Vehicular entrances and exits are allowed thru Jupiter and any side streets."

5. Exh. L of appellee, the minutes of the meeting of the members of BAVA, dated August 26, 1972, where it is stated "Recently, Ayala Corporation informed the Board that the lots fronting Buendia Avenue will soon be offered for sale, and that future lot owners will be given equal rights to use Jupiter Street as well as members of the Association."

6. Exh. 25, the letter of Atty. Lorayes dated September 25, 1972, informing BAVA of the widening of Jupiter Street by 3.5 meters to improve traffic flow in said street to benefit both the residents of Bel-Air and the future owners of the commercial lots. 44

The petitioners cannot successfully rely on the alleged promise by Demetrio Copuyoc, Ayala's manager, to build a "[f]ence along Jupiter with gate for entrance and/or exit 45 as evidence of Ayala's alleged continuing obligation to maintain a wall between the residential and commercial sections. It should be observed that the fence referred to included a "gate for entrance and or exit" which would have defeated the purpose of a wall, in the sense the petitioners would put in one, that is to say, an impenetrable barrier. But as Ayala would point out subsequently, the proposed fence was not constructed because it had become unnecessary when the commercial lot owners commenced constructions thereon.

Be that as it may, the Court cannot visualize any purported obligation by Ayala Corporation to keep the wall on the strength of this supposed promise alone. If truly Ayala promised anything assuming that Capuyoc was authorized to bind the corporation with a promise it would have been with respect to the fence. It would not have established the pre-existing obligation alleged with respect to the wall.

Obligations arise, among other things, from contract. 46 If Ayala, then, were bound by an obligation, it would have been pursuant to a contract. A contract, however, is characterized by a "meeting of minds between two persons . 47 As a consensual relation, it must be shown to exist as a fact, clearly and convincingly. But it cannot be inferred from a mishmash of circumstances alone disclosing some kind of an "understanding," when especially, those disparate circumstances are not themselves incompatible with contentions that no accord had existed or had been reached. 48

The petitioners cannot simply assume that the wall was there for the purpose with which they now give it, by the bare coincidence that it had divided the residential block from the commercial section of Bel-Air. The burden of proof rests with them to show that it had indeed been built precisely for that objective, a proof that must satisfy the requirements of our rules of evidence. It cannot be made to stand on the strength of plain inferences.

b.

This likewise answers the petitioners' second query, whether or not the Court of Appeals had "arbitrarily ignore(d) the decisive findings of the trial court." 49 i.e., findings pointing to alleged acts performed by the Ayala Corporation proving its commitment to maintain the wall abovesaid. Specifically, the petitioners refer to, among other things: (1) Ayala's alleged announcement to Bel- Air Village Association members that "[the perimeter wall along Jupiter Street will not be demolished," 50 (2) Ayala's alleged commitment "during the pendency of the case in the trial court" to restore the wall; (3) alleged assurances by Copuyoc that the wall will not be removed; (4) alleged contrivances by the corporation to make the association admit as members the commercial lot buyers which provided them equal access to Jupiter Street; and (5) Ayala's donation to the association of Jupiter Street for "private use" of Bel-Air residents. 51

682 (1903), where it was held that "whether the plaintiffs services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of services." (At 686.) In that case, the defendant had enormously benefitted from the services that entitled the plaintiff to compensation on the theory that no one may unjustly enrich himself at the expense of another (Solutio indebiti) The facts of this case differ.

As we stated, the Ayala Corporation's alleged conduct prior to or during the proceedings below are not necessarily at war with claims that no commitment had been in fact made.

With respect to Ayala's alleged announcement before the association, the Court does not agree that Ayala had categorically assumed as an obligation to maintain the wall "perpetually," i.e., until the year 2007 (the expiration date under the "deed restrictions.") There is nothing in its statement that would bare any commitment. In connection with the conference between the parties "during the pendency" of the trial, it is to be noted that the Ayala Corporation denies having warranted the restoration of the said wall therein. What, on the other hand, appears in the records is the fact that Ayala did make that promise, but provided that the Mayor allowed it. It turned out, however, that the Mayor balked at the Idea. 52 But assuming that Ayala did promise to rebuild the wall (in that conference), it does not seem to us that it did consequently promise to maintain it in perpetuity.

It is unfair to say, as the trial court did, that the Ayala had "contrived to make future commercial lot owners special members of BAVA and thereby acquire equal right with the regular members thereof to use Jupiter Street 53since, as we stated, the commercial lot buyers have the right, in any event, to make use of Jupiter Street, whether or not they are members of the association. It is not their memberships that give them the right to use it. They share that right with Bel-Air residents from the outset.

The objective of making the commercial lot owners special members of the Bel-Air Village Association was not to accord them equal access to Jupiter Street and inferentially, to give them the right to knock down the perimeter wall. It was, rather, to regulate the use of the street owing precisely to the "planned" nature of Ayala's development project, and real estate development in general, and this could best be done by placing the commercial lot owners under the association's jurisdiction.

Moreover, Ayala's overtures with the association concerning the membership of commercial lot buyers therein have been shown to be neither perfidious nor unethical nor devious (paraphrasing the lower court). We quote anew:

x x x x x x x x x

(7) On June 30, 1972, appellant informed BAVA that in a few months it shall subdivide and sell the commercial lots bordering the north side of Buendia Avenue Extension from Reposo Street up to Zodiac Street. Appellant also informed BAVA that it had taken all precautions and will impose upon the commercial lot owners deed restrictions which will harmonize and blend with the development and welfare of Bel-Air Village. Appellant further applied for special membership in BAVA of the commercial lot owners. A copy of the deed restrictions for the commercial lots was also enclosed. The proposed deed restrictions shall include the 19 meter set back of buildings from Jupiter Street, the requirement for parking space within the lot of one (1) parking slot for every seventy five (75) meters of office space in the building and the limitation of vehicular traffic along Buendia to entrance only, but allowing both vehicular entrance and vehicular exit through Jupiter Street and any side street.

In its letter of July 10, 1972, BAVA acknowledged the above letter of appellant and informed the latter that the application for special membership of the commercial lot owners in BAVA would be submitted to BAVA's board of governors for decision.

(8) On September 25,1972, appellant notified BAVA that, after a careful study, it was finally decided that the height limitation of buildings on the commercial lots shall be increased from 12.5 meters to 15 meters. Appellant further informed BAVA that Jupiter Street shall be widened by 3.5 meters to improve traffic flow in said street. BAVA did not reply to said letter, but on January 22, 1973, BAVA wrote a letter to the appellant informing the latter that the Association had assessed the appellant, as special member of the association, the amount of P40,795.00 (based on 81,590 square meters at P.50 per square meter) representing the membership dues of the commercial lot owners for the year 1973, and requested the appellant to remit the amount which its board of governors had already included in its current budget. In reply, appellant on January 31, 1973 informed BAVA that due to the widening of Jupiter Street, the area of the lots which were accepted by the Association as members was reduced to 76,726 square meters. Thus, the corresponding due at P.50 per square meter should be reduced to P38,363.00. This amount, therefore, was remitted by the appellant to BAVA. Since then, the latter has been collecting

membership dues from the owners of the commercial lots as special members of the Association. As a matter of fact, the dues were increased several times. In 1980, the commercial lot owners were already being charged dues at the rate of P3.00 per square meter. (Domingo, TSN, p. 36, March 19, 1980). At this rate, the total membership dues of the commercial lot owners amount to P230,178.00 annually based on the total area of 76,726 square meters of the commercial lots. 54

x x x x x x x x x

The alleged undertaking, finally, by Ayala in the deed of donation (over Jupiter Street) to leave Jupiter Street for the private use of Bel-Air residents is belied by the very provisions of the deed. We quote:

x x x x x x x x x

IV. That the offer made by the DONOR had been accepted by the DONEE subject to the condition that the property will be used as a street for the use of the members of the DONEE, their families, personnel, guests, domestic help and, under certain reasonable conditions and restrictions, by the general public, and in the event that said lots or parts thereof cease to be used as such, ownership thereof shall automatically revert to the DONOR. The DONEE shall always have Reposo Street, Makati Avenue, and Paseo de Roxas open for the use of the general public. It is also understood that the DONOR shall continue the maintenance of the street at its expense for a period of three years from date hereof." (Deed of Donation, p. 6, Exh. 7) 55

x x x x x x x x x

The donation, on the contrary, gave the general public equal right to it.

The Court cannot then say, accepting the veracity of the petitioners' facts" enumerated above, that the Ayala Corporation may be held liable for specific performance of a demandable obligation, let alone damages.

The Court adds that Ayala can hardly be held responsible for the alleged deterioration of "living and environmental conditions" 56 of the Bel-Air area, as a consequence of "Ayala's authorized demolition of the Jupiter perimeter wall in 1974-1975. " 57 We agree with Ayala that until 1976, "there was peace and quiet" at Jupiter Street, as the petitioners' (Sangalang, Gaston, and Briones) complaints admit. Hence, the degeneration of peace and order in Bel-Air cannot be ascribed to the destruction of the wall in 1974 and 1975.

What Ayala submits as the real cause was the opening of Jupiter Street to vehicular traffic in 1977., 58 But this was upon orders of the Mayor, and for which the homeowners' association had precisely filed suit (Civil Case No. 34998) 59 to contest the act of the Mayor.

c.

This likewise disposes of the third question presented. The petitioners' reliance on Ayala's alleged conduct (proving its alleged commitment), so we have ruled, is not well-taken. Ayala's alleged acts do not, by themselves, reflect a commitment to maintain the wall in dispute. It cannot be therefore said that the Court of Appeals "arbitrarily ignore(d]" 60 the lower court's findings. Precisely, it is the duty of the appellate court to review the findings of the trial judge, be they of fact or law. 61 It is not bound by

the conclusions of the judge, for which reason it makes its own findings and arrives at its own conclusions. Unless a grave abuse of discretion may be imputed to it, it may accept or reject the lower tribunal's determinations and rely solely on the records.

Accordingly, the Court affirms the Court of Appeals' holding that the Ayala Corporation, in its dealings with the petitioners, the Bel-Air Village Association in particular, had "acted with justice, gave the appellees [petitioners] their due and observed honesty and good faith." 62 "Therefore, under both Articles 19 and 21 of the Civil Code, the appellant [Ayala] cannot be held liable for damages." 63

2. G.R. Nos. 74376, 76394, 78182, & 82281

Our decision also resolves, quite anticlimactically, these companion cases. But we do so for various other reasons. In the Sangalang case, we absolve the Ayala Corporation primarily owing to our finding that it is not liable for the opening of Jupiter Street to the general public. Insofar as these petitions are concerned, we likewise exculpate the private respondents, not only because of the fact that Jupiter Street is not covered by the restrictive easements based on the "deed restrictions" but chiefly because the National Government itself, through the Metro Manila Commission (MMC), had reclassified Jupiter Street into high density commercial (C-3) zone, 64 pursuant to its Ordinance No. 81-01. Hence, the petitioners have no cause of action on the strength alone of the said "deed restrictions.

In view thereof, we find no need in resolving the questions raised as to procedure, since this disposition is sufficient to resolve these cases.

It is not that we are saying that restrictive easements, especially the easements herein in question, are invalid or ineffective. As far as the Bel-Air subdivision itself is concerned, certainly, they are valid and enforceable. But they are, like all contracts, subject to the overriding demands, needs, and interests of the greater number as the State may determine in the legitimate exercise of police power. Our jurisdiction guarantees sanctity of contract and is said to be the "law between the contracting parties, 65 but while it is so, it cannot contravene 'law, morals, good customs, public order, or public policy. 66 Above all, it cannot be raised as a deterrent to police power, designed precisely to promote health, safety, peace, and enhance the common good, at the expense of contractual rights, whenever necessary. In Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co., 67 we are told:

x x x x x x x x x

2. With regard to the contention that said resolution cannot nullify the contractual obligations assumed by the defendant-appellee referring to the restrictions incorporated in the deeds of sale and later in the corresponding Transfer Certificates of Title issued to defendant-appellee it should be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people.' Invariably described as "the most essential, insistent, and illimitable of powers" and "in a sense, the greatest and most powerful attribute of government," the exercise of the power may be judicially inquired into and corrected only if it is capricious, whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any other applicable constitutional guarantee. As this Court held through Justice Jose P. Bengson in Philippine Long Distance Company vs. City of Davao, et al. police power 'is elastic and must be responsive to various social conditions; it is not confined within narrow circumscriptions of precedents resting on past conditions; it must follow the legal progress of a democratic way of life.' We were even more emphatic in Vda. de

Genuino vs. The Court of agrarian Relations, et al., when We declared: "We do not see why public welfare when clashing with the individual right to property should not be made to prevail through the state's exercise of its police power."

Resolution No. 27, 1960 declaring the western part of High way 54, now E. de los Santos Avenue (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to safeguard or promote the health, safety, peace, good order and general welfare of the people in the locality. Judicial notice may be taken of the conditions prevailing in the area, especially where Lots Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial complexes have flourished about the place. EDSA, a main traffic artery which runs through several cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the residents in its route. Having been expressly granted the power to adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong, through its Municipal Council, was reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution. 68

x x x x x x x x x

Undoubtedly, the MMC Ordinance represents a legitimate exercise of police power. The petitioners have not shown why we should hold otherwise other than for the supposed "non-impairment" guaranty of the Constitution, which, as we have declared, is secondary to the more compelling interests of general welfare. The Ordinance has not been shown to be capricious or arbitrary or unreasonable to warrant the reversal of the judgments so appealed. In that connection, we find no reversible error to have been committed by the Court of Appeals.

WHEREFORE, premises considered, these petitions are DENIED No pronouncement as to costs.

IT IS SO ORDERED.