1.

2.

Q. What is the scope of police power?

A. Police power rests upon public necessity and upon the right of the State and
of the public to self-protection. For this reason, its scope expands and
contracts with changing needs. Churchill v. Rafferty, 32 Phil. 580, 602-603
(1915).

CHURCHILL v. RAFFERTY [G.R. No. 10572]

Plaintiff-appellees: Francis A. Churchill and Stewart Tait
Defendant-appellant:James J. Rafferty as Collector of Internal Revenue
Ponente: Trent, J.
Date of Promulgation: December 21, 1915
Keywords: substantive due process, citizen’s property
Nature of the petition: APPEAL from a judgement of the Manila CFI
Dispositive Portion: REVERSED. Case DISMISSED.

FACTS Appellees, Francis A. Churchill and Stewart Tait are involved in the advertising business, particularly
in billboard advertising. Their billboards, located upon private lands in the Province of Rizal, were
removed upon complaints and by the orders of the defendant Collector of Internal Revenue by virtue of
the provisions of subsection (b) of section 100 of Act No. 2339. The plaintiffs proved by Mr. Churchill
that the “billboards were quite a distance from the road and that they were strongly built, not dangerous
to the safety of the people, and contained no advertising matter which is filthy, indecent, or deleterious
to the morals of the community."Appellees, in their supplementary complaint, challenge the power of
the of the Collector of Internal Revenue to remove any sign, signboard, or billboard upon the ground
that the same is offensive to the sight or is otherwise a nuisance and maintain that the billboards in
question “in no sense constitute a nuisance and are not deleterious to the health, morals, or general
welfare of the community, or of any persons.” Defendant Collector of Internal Revenue avers that after
due investigation made upon the complaints of the British and German Consuls, the defendant “decided
that the billboard complained of was and still offensive to the sight and is otherwise a
nuisance.” Counsel for the plaintiffs alleges that the Act is unconstitutional because it constitutes a
deprivation of property without due process of law.

The pertinent provisions of subsection (b) of section 100 of Act No. 2339 read: "If after due
investigation the Collector of Internal Revenue shall decide that any sign, signboard, or billboard
displayed or exposed to public view is offensive to the sight or is otherwise a nuisance, he may by
summary order direct the removal of such sign, signboard, or billboard, and if same is not removed
within ten days after he has issued such order he may himself cause its removal, and the sign,
signboard, or billboard shall thereupon be forfeited to the Government, and the owner thereof charged
with the expenses of the removal so effected. When the sign, signboard, or billboard ordered to be
removed as herein provided shall not comply with the provisions of the general regulations of the
Collector of Internal Revenue, no rebate or refund shall be allowed for any portion of a year for which
the taxes may have been paid. Otherwise, the Collector of Internal Revenue may in his discretion make
a proportionate refund of the tax for the portion of the year remaining for which the taxes were paid. An
appeal may be had from the order of the Collector of Internal Revenue to the Secretary of Finance and
Justice whose decision thereon shall be final."
ISSUES/ (1) WoN the court has the power to restrain by injunction the collection of tax complained of 
HELD NO
(2) WoN the provisions of subsection (b) of section 100 of Act No. 2339, conferring power upon
the Collector of Internal Revenue to remove any sign, signboard, or billboard upon the ground
that the same is offensive to the sight or is otherwise a nuisance, is valid and constitutional 
YES
  WoN there was a valid exercise of police power  YES

RATIO (1) The sections of Act No. 2339, which bear directly upon the subject, are 139 and 140. The two
sections involve the right of a dissatified taxpayer to use an exceptional remedy to test the
validity of any tax or to determine any other question connected therewith, and the question
whether the remedy by injunction is exceptional. The inhibition applies to all internal revenue
taxes imposed, or authorized to be imposed, by Act No. 2339. And, futhermore, the mere fact
that a tax is illegal, or that the law, by virtue of which it is imposed, is unconstitutional, does
not authorize a court of equity to restrain its collection by injunction. The courts invariably
give the most careful consideration to questions involving the interpretation and application of
the Constitution, and approach constitutional questions with great deliberation, exercising their
power in this respect with the greatest possible caution and even reluctance; and they should
never declare a statute void, unless its invalidity is, in their judgment, beyond reasonable
doubt. To justify a court in pronouncing a legislative act unconstitutional, or a provision of a
state constitution to be in contravention of the Constitution of the United States, the case must
be so clear as to be free from doubt, and the conflict of the statute with the constitution must
be irreconcilable, because it is but a decent respect to the wisdom, the integrity, and the
patriotism of the legislative body by which any law is passed to presume in favor of its validity
until the contrary is shown beyond reasonable doubt. Therefore, in no doubtful case will the
judiciary pronounce a legislative act to be contrary to the constitution. To doubt the
constitutionality of a law is to resolve the doubt in favor of its validity.

A citizen's property, both real and personal, may be taken, and usually is taken, by the
government in payment of its taxes without any judicial proceedings whatever. In this country,
as well as in the United States, the officer charged with the collection of taxes is authorized
to seize and sell the property of delinquent taxpayers without applying to the courts for
assistance, and the constitutionality of the law authorizing this procedure never has been
seriously questioned. It is upon taxation that the Government chiefly relies to obtain the
means to carry on its operations, and it is of the utmost importance that the modes adopted to
enforce the collection of the taxes levied should be summary and interfered with as little as
possible. No government could exist if every litigious man were permitted to delay the
collection of its taxes. The origin and history of these provisions are found in substance in the
Constitution of the United States and in that of every state in the Union.

In the internal revenue branch it has further prescribed that no such suit shall be brought until
the remedy by appeal has been tried; and, if brought after this, it must be within six months
after the decision on the appeal, We regard this as a condition on which alone the government
consents to litigate the lawfulness of the original tax.

(2) Offensive noises and smells have been for a long time considered susceptible of suppression in
thickly populated districts. Without entering into the realm of psychology, we think it quite
demonstrable that sight is as valuable to a human being as any of his other senses, and that the
proper ministration to this sense conduces as much to his contentment as the care bestowed
upon the senses of hearing or smell, and probably as much as both together. Objects may be
offensive to the eye as well as to the nose or ear. Man's esthetic feelings are constantly being
appealed to through his sense of sight. Large investments have been made in theaters and other
forms of amusement, in paintings and spectacular displays, the success of which depends in
great part upon the appeal made through the sense of sight. Moving picture shows could not be
possible without the sense of sight. Governments have spent millions on parks and 'boulevards
and other forms of civic beauty, the first aim of which is to appeal to the sense of sight. Why,
then, should the Government not interpose to protect from annoyance this most Valuable of
man's senses as readily as to protect him from offensive noises and smells?

The success of billboard advertising depends not so much upon the use of private property as it
does upon the use of the channels of travel used by the general public. Suppose that the owner
of private property, who so vigorously objects to the restriction of this form of advertising,
should require the advertiser to paste his posters upon the billboards so that they would f ace
the interior of the property instead of the exterior. Billboard advertising would die a natural
death if this were done, and its real dependency not upon the unrestricted use of private
property but upon the unrestricted use of the public highways is at once apparent. Ostensibly
located on private property, the real and sole value of the billboard is its proximity to the
public thoroughfares. Hence, we conceive that the regulation of billboards and their restriction
is not so much a regulation of private property as it is a regulation of the use of the streets and
other public thoroughfares. It has been urged against ministering to the sense of sight that
tastes are so diversified that there is no safe standard of legislation in this direction. A source
of annoyance and irritation to the public does not minister to the comfort and convenience of
the public. And we are of the opinion that the prevailing sentiment is manifestly against the
erection of billboards which are offensive to the sight.

 Sec. 100 of Act #2339 gives power to the CIR to remove offensive billboards, signs
and signboards after due investigation. An Act of the Legislature which is
obviously and undoubtedly foreign to any of the purposes of the police power
and interferes with the ordinary enjoyment of property would, without doubt, be
held to be invalid. But where the Act is reasonably within a proper consideration
of and care for the public health, safety, or comfort, it should not be disturbed
by the courts.Police power is reasonable insofar as it properly considers public
health, safety, comfort, etc. The basic idea of civil polity in US is that the government
should interfere with individual effort only to the extent necessary to preserve a
healthy social and economic condition of society. The State interferes with private
property through taxation, eminent domain, and police power. Only under the
last are the benefits derived from the maintenance of a healthy economic standard of
society.
 While the state may interfere wherever the public interests demand it, and in this
particular a large discretion is necessarily vested in the legislature to determine, not
only what the interests of the public require, but what measures are necessary for the
protection of such interests; yet, its determination in these matters is not final or
conclusive, but is subject to the supervision of the courts.
 "The police power of the State, so far, has not received a full and complete definition.
It may be said, however, to be the right of the State, or state functionary, to
prescribe regulations for the good order, peace, health, protection, comfort,
convenience and morals of the community, which do not ... violate any of the
provisions of the organic law." Courts have consistently and wisely declined to set
any fixed limitations upon subjects calling for the exercise of this power. It is elastic
and is exercised from time to time as varying social conditions demand correction.
 Those noises and smells, though ostensibly regulated for health reasons, are actually
regulated more for aesthetics reasons. Other courts in the US hold the view that police
power cannot interfere with private property rights for purely aesthetic purposes. But
this court is of the opinion that unsightly advertisements which are offensive to the
sight are not dissociated from the general welfare of the public.
 NOTES Decision on the Motion for a rehearing (January 24, 1916)  DENIED

 Counsel for the plaintiffs raised the case of Ex parte Young but the court disposed of this
claim by stating that the case is not applicable to the Act.
 It might be well to note that billboard legislation in the United States is attempting to eradicate
a business which has already been firmly established. This business was allowed to expand
unchecked until its very extent called attention to its objectionable features. In the Philippine
Islands such legislation has almost anticipated the business, which is not yet of such
proportions that it can be said to be fairly established.
 If the billboard industry is permitted without constraint or control to hide these historic sites
from the passerby, the country will be less attractive to the tourist and the people will suffer a
distinct economic loss.

3. Q. Who exercises police power?

A. The national government, through the legislative department, exercises
police power. But police power is also delegated, within limits, to local
governments.

Q. Does Metro Manila Development Authority (MMDA) possess

police power?
A. No. Not being a political subdivision but merely an executive
authority it has no police pow$r. Police power in Metro Manila is
exercised by the cities and municipalities. MMDA v. Bel-Air Village
Assoc., G.R. No. 135962, March 27,2000.

March 27, 2000

Puno, J.

FACTS

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.

Actions Filed:
1. BAVA – applied for injunction; trial court issued temporary restraining order but after due hearing, trial court
denied the issuance of a preliminary injunction.
2. BAVA – appealed to CA which issued preliminary injunction and later ruled that 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.
MMDA – filed motion for reconsideration but was denied by CA; hence the current recourse.

ISSUES
1. 1. Has the MMDA the mandate to open Neptune Street to public traffic pursuant to its regulatory and police
powers?
2. Is the passage of an ordinance a condition precedent before the MMDA may order the opening of subdivision
roads to public traffic?

HELD

The MMDA is, as termed in the charter itself, "development authority." All its functions are administrative in
nature.

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.

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.

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.

MMDA VS BEL-AIR (G.R. No. 135962. March 27, 2000)

FACTS: On December 30, 1995, respondent received from petitioner, through its Chairman, a notice
dated December 22, 1995 requesting respondent to open Neptune Street to public vehicular traffic
starting January 2, 1996.On the same day, respondent was apprised that the perimeter wall separating
the subdivision from the adjacent Kalayaan Avenue would be demolished. On January 2, 1996,
respondent filed a petition aainst MMDA before the Regional Trial Court OF MAKATI with a prayer 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. Neptune Street is owned by respondent BAVA and it is a private
road inside Bel-Air Village, a private residential subdivision in Makati City. It runs parallel to Kalayaan
Avenue, a national road open to the general public. 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 their claim is that 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.

ISSUE: Whether or not MMDA can exercise Police Power.

HELD: No,The MMDA is not a political unit of government. It was created to put some order in the
metropolitan transportation system but unfortunately the powers granted by its charter are limited. The
power delegated to the MMDA is that given to the Metro Manila Council to promulgate administrative
rules and regulations in the implementation of the MMDAs functions. There is no grant of authority to
enact ordinances and regulations for the general welfare of the inhabitants of the metropolis. There is
no syllable in R. A. No. 7924 that grants the MMDA police power, let alone legislative power. Unlike the
legislative bodies of the local government units, there is no provision in R. A. No. 7924 that empowers
the MMDA or its Council to "enact ordinances, approve resolutions and appropriate funds for the
general welfare" of the inhabitants of Metro Manila. The MMDA is, as termed in the charter itself, a
"development authority."It is an agency created for the purpose of laying down policies and
coordinating with the various national government agencies, peoples organizations, non-governmental
organizations and the private sector for the efficient and expeditious delivery of basic services in the
vast metropolitan area. 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. 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.

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 Piñas, Marikina, Parañaque 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 cralaw:red

"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.
 4. G.R. No. 122846 January 20, 2009
WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA
TOURIST & DEVELOPMENT CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM,
Respondent.

Facts:

On December 3, 1992, City Mayor Alfredo S. Lim signed into law Manila City Ordinance No.
7774 entitled “An Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates,
and Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses, and
Similar Establishments in the City of Manila” (the Ordinance).” The ordinance sanctions any
person or corporation who will allow the admission and charging of room rates for less than 12
hours or the renting of rooms more than twice a day.

The petitioners White Light Corporation (WLC), Titanium Corporation (TC), and Sta. Mesa
Tourist and Development Corporation (STDC), who own and operate several hotels and motels
in Metro Manila, filed a motion to intervene and to admit attached complaint-in-intervention on
the ground that the ordinance will affect their business interests as operators. The respondents, in
turn, alleged that the ordinance is a legitimate exercise of police power.

RTC declared Ordinance No. 7774 null and void as it “strikes at the personal liberty of the
individual guaranteed and jealously guarded by the Constitution.” Reference was made to the
provisions of the Constitution encouraging private enterprises and the incentive to needed
investment, as well as the right to operate economic enterprises. Finally, from the observation
that the illicit relationships the Ordinance sought to dissuade could nonetheless be consummated
by simply paying for a 12-hour stay,
When elevated to CA, the respondents asserted that the ordinance is a valid exercise of police
power pursuant to Section 458 (4)(iv) of the Local Government Code which confers on cities the
power to regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses,
hotels, motels, inns, pension houses, lodging houses and other similar establishments, including
tourist guides and transports. Also, they contended that under Art III Sec 18 of Revised Manila
Charter, they have the power to enact all ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of the prosperity and the promotion of the morality, peace,
good order, comfort, convenience and general welfare of the city and its inhabitants and to fix
penalties for the violation of ordinances.

Petitioners argued that the ordinance is unconstitutional and void since it violates the right to
privacy and freedom of movement; it is an invalid exercise of police power; and it is
unreasonable and oppressive interference in their business.
CA, in turn, reversed the decision of RTC and affirmed the constitutionality of the ordinance.
First, it held that the ordinance did not violate the right to privacy or the freedom of movement,
as it only penalizes the owners or operators of establishments that admit individuals for short
time stays. Second, the virtually limitless reach of police power is only constrained by having a
lawful object obtained through a lawful method. The lawful objective of the ordinance is
satisfied since it aims to curb immoral activities. There is a lawful method since the
establishments are still allowed to operate. Third, the adverse effect on the establishments is
justified by the well-being of its constituents in general.

Hence, the petitioners appeared before the SC.

Issue:

Whether Ordinance No. 7774 is a valid exercise of police power of the State.

Held:

No. Ordinance No. 7774 cannot be considered as a valid exercise of police power, and as such, it
is unconstitutional.

The facts of this case will recall to mind not only the recent City of Manila v Laguio Jr ruling,
but the 1967 decision in Ermita-Malate Hotel and Motel Operations Association, Inc., v. Hon.
City Mayor of Manila. The common thread that runs through those decisions and the case at bar
goes beyond the singularity of the localities covered under the respective ordinances. All three
ordinances were enacted with a view of regulating public morals including particular illicit
activity in transient lodging establishments. This could be described as the middle case, wherein
there is no wholesale ban on motels and hotels but the services offered by these establishments
have been severely restricted. At its core, this is another case about the extent to which the State
can intrude into and regulate the lives of its citizens

The test of a valid ordinance is well established. A long line of decisions including City of
Manila has held that for an ordinance to be valid, it must not only be within the corporate powers
of the local government unit to enact and pass according to the procedure prescribed by law, it
must also conform to the following substantive requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or
discriminatory; (4) must not prohibit but may regulate trade; (5) must be general and consistent
with public policy; and (6) must not be unreasonable.

The ordinance in this case prohibits two specific and distinct business practices, namely wash
rate admissions and renting out a room more than twice a day. The ban is evidently sought to be
rooted in the police power as conferred on local government units by the Local Government
Code through such implements as the general welfare clause.

Police power is based upon the concept of necessity of the State and its corresponding right to
protect itself and its people. Police power has been used as justification for numerous and varied
actions by the State.

The apparent goal of the ordinance is to minimize if not eliminate the use of the covered
establishments for illicit sex, prostitution, drug use and alike. These goals, by themselves, are
unimpeachable and certainly fall within the ambit of the police power of the State. Yet the
desirability of these ends do not sanctify any and all means for their achievement. Those means
must align with the Constitution.

SC contended that if they were to take the myopic view that an ordinance should be analyzed
strictly as to its effect only on the petitioners at bar, then it would seem that the only restraint
imposed by the law that they were capacitated to act upon is the injury to property sustained by
the petitioners. Yet, they also recognized the capacity of the petitioners to invoke as well the
constitutional rights of their patrons – those persons who would be deprived of availing short
time access or wash-up rates to the lodging establishments in question. The rights at stake herein
fell within the same fundamental rights to liberty. Liberty as guaranteed by the Constitution was
defined by Justice Malcolm to include “the right to exist and the right to be free from arbitrary
restraint or servitude. The term cannot be dwarfed into mere freedom from physical restraint of
the person of the citizen, but is deemed to embrace the right of man to enjoy the facilities with
which he has been endowed by his Creator, subject only to such restraint as are necessary for the
common welfare,

Indeed, the right to privacy as a constitutional right must be recognized and the invasion of it
should be justified by a compelling state interest. Jurisprudence accorded recognition to the right
to privacy independently of its identification with liberty; in itself it is fully deserving of
constitutional protection. Governmental powers should stop short of certain intrusions into the
personal life of the citizen.

An ordinance which prevents the lawful uses of a wash rate depriving patrons of a product and
the petitioners of lucrative business ties in with another constitutional requisite for the legitimacy
of the ordinance as a police power measure. It must appear that the interests of the public
generally, as distinguished from those of a particular class, require an interference with private
rights and the means must be reasonably necessary for the accomplishment of the purpose and
not unduly oppressive of private rights. It must also be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. More importantly, a
reasonable relation must exist between the purposes of the measure and the means employed for
its accomplishment, for even under the guise of protecting the public interest, personal rights and
those pertaining to private property will not be permitted to be arbitrarily invaded.

Lacking a concurrence of these requisites, the police measure shall be struck down as an
arbitrary intrusion into private rights.
The behavior which the ordinance seeks to curtail is in fact already prohibited and could in fact
be diminished simply by applying existing laws. Less intrusive measures such as curbing the
proliferation of prostitutes and drug dealers through active police work would be more effective
in easing the situation. So would the strict enforcement of existing laws and regulations
penalizing prostitution and drug use. These measures would have minimal intrusion on the
businesses of the petitioners and other legitimate merchants. Further, it is apparent that the
ordinance can easily be circumvented by merely paying the whole day rate without any
hindrance to those engaged in illicit activities. Moreover, drug dealers and prostitutes can in fact
collect “wash rates” from their clientele by charging their customers a portion of the rent for
motel rooms and even apartments.
SC reiterated that individual rights may be adversely affected only to the extent that may fairly
be required by the legitimate demands of public interest or public welfare. The State is a
leviathan that must be restrained from needlessly intruding into the lives of its citizens. However
well¬-intentioned the ordinance may be, it is in effect an arbitrary and whimsical intrusion into
the rights of the establishments as well as their patrons. The ordinance needlessly restrains the
operation of the businesses of the petitioners as well as restricting the rights of their patrons
without sufficient justification. The ordinance rashly equates wash rates and renting out a room
more than twice a day with immorality without accommodating innocuous intentions.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED,
and the Decision of the Regional Trial Court of Manila, Branch 9, is REINSTATED. Ordinance
No. 7774 is hereby declared UNCONSTITUTIONAL. No pronouncement as to costs.

For an ordinance to be a legitimate exercise of police power,

(1) It must appear that the interests of the public generally, as distinguished
from those of a particular class, require an interference with private rights
and the means must be reasonably necessary for the accomplishment of the
purpose and not unduly oppressive of private rights.

(2) It must also be evident that no other alternative for the accomplishment
of the purpose less intrusive of private rights can work.

(3) A reasonable relation must exist between the purposes of the measure
and the means employed for its accomplishment.

Lacking a concurrence of these requisites, the police measure shall be struck

down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc,
the exercise of police power is subject to judicial review when life, liberty or
property is affected.

5. MAGTAJAS V. PRYCE PROPERTIES - CASE DIGEST - CONSTITUTIONAL LAW

MAGTAJAS V. PRYCE PROPERTIES G.R. No. 111097 July 20, 1994

FACTS:

PAGCOR is a corporation created directly by P.D. 1869 to help centralize and regulate all games of
chance, including casinos on land and sea within the territorial jurisdiction of the Philippines.
PAGCOR decided to expand its operations to Cagayan de Oro City. It leased a portion of a building
belonging to Pryce Properties Corporations, Inc., renovated & equipped the same, and prepared to
inaugurate its casino during the Christmas season.

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

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

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

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

Hence, this petition for review under Rule 45.

ISSUE:

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

HELD:

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

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

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.

Ponente: CRUZ

FACTS:

The Sangguniang Panlunsod enacted Ordinance No. 3353 prohibiting the operation of casino
followed by Ordinance No. 3375-93 providing penalty therefor. 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.

ISSUE:
Whether or not Ordinace No. 3355 and Ordinance No. 3375-93 as enacted by the Sangguniang
Panlunsod of Cagayan de Oro City are valid.

HELD:

NO. Petition was denied. Decision of respondent Court of Appeals was affirmed.

RATIO:

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.

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

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

2) It must not be unfair or oppressive.

3) It must not be partial or discriminatory.

4) It must not prohibit but may regulate trade.

5) It must be general and consistent with public policy.

6) It must not be unreasonable.

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.

SEPARATE OPINIONS:

PADILLA, concurring
[I]t is my considered view that the national government (through PAGCOR) should re-examine
and re-evaluate its decision of imposing the gambling casino on the residents of Cagayan de Oro
City; for it is abundantly clear that public opinion in the city is very much against it, and again
the question must be seriously deliberated: will the prospects of revenue to be realized from the
casino outweigh the further destruction of the Filipino sense of values?

DAVIDE, concurring

The nullification by the Court of Appeals of the challenged ordinances

as unconstitutional primarily because it is in contravention to P.D. No. 1869 is unwarranted. A
contravention of a law is not necessarily a contravention of the constitution. In any case, the
ordinances can still stand even if they be conceded as offending P.D. No. 1869. They can be
reconciled, which is not impossible to do. So reconciled, the ordinances should be construed as
not applying to PAGCOR.

6. LOZANO VS. MARTINEZ [146 SCRA 323; NO.L-63419; 18 DEC 1986]

Monday, February 09, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: A motion to quash the charge against the

petitioners for violation of the BP 22 was made, contending
that no offense was committed, as the statute is
unconstitutional. Such motion was denied by the RTC. The
petitioners thus elevate the case to the Supreme Court for
relief. The Solicitor General, commented that it was
premature for the accused to elevate to the Supreme Court
the orders denying their motions to quash. However, the
Supreme Court finds it justifiable to intervene for the
review of lower court's denial of a motion to quash.

Issue: Whether or not BP 22 is constitutional as it is a

proper exercise of police power of the State.
Held: The enactment of BP 22 a valid exercise of the
police power and is not repugnant to the constitutional
inhibition against imprisonment for debt.

The offense punished by BP 22 is the act of making and

issuing a worthless check or a check that is dishonored
upon its presentation for payment. It is not the non-
payment of an obligation which the law punishes. The law
is not intended or designed to coerce a debtor to pay his
debt.

The law punishes the act not as an offense against

property, but an offense against public order. The thrust of
the law is to prohibit, under pain of penal sanctions, the
making of worthless checks and putting them in circulation.
An act may not be considered by society as inherently
wrong, hence, not malum in se but because of the harm
that it inflicts on the community, it can be outlawed and
criminally punished as malum prohibitum. The state can do
this in the exercise of its police power.

Lozano v. Martinez

G.R .No. L-63419; December 18, 1986

FACTS:

Petitioners assail the validity of BP 22, also known as the Bouncing Check Law. BP 22 punishes
a person “who makes or draws and issues any check on account for value, knowing at the time of
issue that he does not have sufficient funds in or credit with the drawee bank..”. It is aimed at
putting a stop to the practice of issuing checks that are worthless which causes injury to the
public interest. Contentions on the law are that: 1) it offends constitutional provision forbidding
imprisonment for debt; 2) it impairs freedom of contract; 3) it contravenes the equal protection
clause; 4) it unduly delegates legislative and executive powers; and 5) its enactment is flawed
because the Interim Batasan violated the prohibition on amendments in the Third Reading

ISSUE:

Whether or not BP 22 is a valid law (police power)

HELD:

The offense punished by BP 22 is the act of making and issuing a worthless check, not the non-
payment of an obligation which the law punishes. The effects of issuance of a worthless check
transcends the private interests of the parties directly involved in the transaction and touches the
interests of the community at large since putting valueless commercial papers in circulation can
pollute the channels of trade and commerce, injure the banking system and eventually hurt the
welfare of society and the public interest. Hence, the enactment of BP 22 is a valid exercise of
police power and is not in conflict with the constitutional inhibition against imprisonment for
debt.

There is no valid ground to sustain the contention the BP 22 impairs freedom of contract since
contracts which contravene public policy are not lawful. The statute does not deny the equal
protection clause since it only penalizes the drawer of the check and not the payee. Additonally,
BP 22 does not constitute an undue delegation of legislative powers. Contrary to the contention,
the power to define the offense and to prescribe the penalty are not delegated to the payee. On
the last contention, the Interim Batasan investigated the matter and reported that the clause in
question was an authorized amendment of the bill. With all the foregoing reasons, the
constitutionality of BP 22 is upheld.

Case Digest: Lozano v. Martinez

G.R. No. L-63419, December 18, 1986
FLORENTINA A. LOZANO, petitioner, vs. THE HONORABLE ANTONIO M. MARTINEZ, in his capacity as
Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch XX, Manila, and the
HONORABLE JOSE B. FLAMINIANO, in his capacity as City Fiscal of Manila, respondents.

YAP, J:
Petitioners, charged with Batas Pambansa Bilang 22 (BP 22 for short), popularly known as the Bouncing
Check Law, assail the law's constitutionality.
BP 22 punishes a person "who makes or draws and issues any check on account or for value, knowing at
the time of issue that he does not have sufficient funds in or credit with the drawee bank for the
payment of said check in full upon presentment, which check is subsequently dishonored by the drawee
bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the
drawer, without any valid reason, ordered the bank to stop payment." The penalty prescribed for the
offense is imprisonment of not less than 30 days nor more than one year or a fine or not less than the
amount of the check nor more than double said amount, but in no case to exceed P200,000.00, or both
such fine and imprisonment at the discretion of the court.

The statute likewise imposes the same penalty on "any person who, having sufficient funds in or credit
with the drawee bank when he makes or draws and issues a check, shall fail to keep sufficient funds or
to maintain a credit to cover the full amount of the check if presented within a period of ninety (90) days
from the date appearing thereon, for which reason it is dishonored by the drawee bank.

An essential element of the offense is "knowledge" on the part of the maker or drawer of the check of
the insufficiency of his funds in or credit with the bank to cover the check upon its presentment. Since
this involves a state of mind difficult to establish, the statute itself creates a prima facie presumption of
such knowledge where payment of the check "is refused by the drawee because of insufficient funds in
or credit with such bank when presented within ninety (90) days from the date of the check. To mitigate
the harshness of the law in its application, the statute provides that such presumption shall not arise if
within five (5) banking days from receipt of the notice of dishonor, the maker or drawer makes
arrangements for payment of the check by the bank or pays the holder the amount of the check.

Another provision of the statute, also in the nature of a rule of evidence, provides that the introduction
in evidence of the unpaid and dishonored check with the drawee bank's refusal to pay "stamped or
written thereon or attached thereto, giving the reason therefor, "shall constitute prima facie proof of
"the making or issuance of said check, and the due presentment to the drawee for payment and the
dishonor thereof ... for the reason written, stamped or attached by the drawee on such dishonored
check."

The presumptions being merely prima facie, it is open to the accused of course to present proof to the
contrary to overcome the said presumptions.

ISSUE: Whether or not (W/N) BP 22 violates the constitutional provision forbidding imprisonment for
debt.

HELD: No.
The gravamen of the offense punished by BP 22 is the act of making and issuing a worthless check or a
check that is dishonored upon its presentation for payment. It is not the non-payment of an obligation
which the law punishes. The law is not intended or designed to coerce a debtor to pay his debt. The
thrust of the law is to prohibit, under pain of penal sanctions, the making of worthless checks and
putting them in circulation. Because of its deleterious effects on the public interest, the practice is
proscribed by the law. The law punishes the act not as an offense against property, but an offense
against public order.

The effects of the issuance of a worthless check transcends the private interests of the parties directly
involved in the transaction and touches the interests of the community at large. The mischief it creates
is not only a wrong to the payee or holder, but also an injury to the public. The harmful practice of
putting valueless commercial papers in circulation, multiplied a thousand fold, can very wen pollute the
channels of trade and commerce, injure the banking system and eventually hurt the welfare of society
and the public interest.

The enactment of BP 22 is a declaration by the legislature that, as a matter of public policy, the making
and issuance of a worthless check is deemed public nuisance to be abated by the imposition of penal
sanctions.

ISSUE: W/N BP 22 impairs the freedom to contract.

HELD: No. The freedom of contract which is constitutionally protected is freedom to enter into "lawful"
contracts. Contracts which contravene public policy are not lawful. Besides, we must bear in mind that
checks can not be categorized as mere contracts. It is a commercial instrument which, in this modem
day and age, has become a convenient substitute for money; it forms part of the banking system and
therefore not entirely free from the regulatory power of the state.

ISSUE: W/N it violates the equal protection clause.

HELD: No. Petitioners contend that the payee is just as responsible for the crime as the drawer of the
check, since without the indispensable participation of the payee by his acceptance of the check there
would be no crime. This argument is tantamount to saying that, to give equal protection, the law should
punish both the swindler and the swindled. Moreover, the clause does not preclude classification of
individuals, who may be accorded different treatment under the law as long as the classification is no
unreasonable or arbitrary.

LOZANO VS. MARTINEZ

[146 SCRA 323; G.R. No. L-63419; 18 Dec 1986]

Facts:

A motion to quash the charge against the petitioners for violation of the BP 22 was made, contending that no offense was
committed, as the statute is unconstitutional. Such motion was denied by the RTC. The petitioners thus elevate the case to the
Supreme Court for relief. The Solicitor General, commented that it was premature for the accused to elevate to the Supreme Court
the orders denying their motions to quash. However, the Supreme Court finds it justifiable to intervene for the review of lower court's
denial of a motion to quash.
Issue:

Whether or not BP 22 is constitutional as it is a proper exercise of police power of the State.

Held:

The enactment of BP 22 a valid exercise of the police power and is not repugnant to the constitutional inhibition against
imprisonment for debt.

The offense punished by BP 22 is the act of making and issuing a worthless check or a check that is dishonored upon its
presentation for payment. It is not the non-payment of an obligation which the law punishes. The law is not intended or designed to
coerce a debtor to pay his debt.

The law punishes the act not as an offense against property, but an offense against public order. The thrust of the law is to prohibit,
under pain of penal sanctions, the making of worthless checks and putting them in circulation. An act may not be considered by
society as inherently wrong, hence, not malum in se but because of the harm that it inflicts on the community, it can be outlawed
and criminally punished as malum prohibitum. The state can do this in the exercise of its police power.

ANGELES UNIVERSITY FOUNDATION vs. CITY OF ANGELES et. al

G.R. No. 189999, June 27, 2012

Facts:

1. Petitioner is an educational institution and was converted into a non-stock, non-profit education
foundation under the provisions of R.A. 6055
2. Sometime in August 2005, petitioner filed with the Office of the City Building Official an
application for a building permit for the construction of an 11-storey building
3. Said office issued a Building Permit Fee Assessment in the amount of P126,839.20 and
P238,741.64 as Locational Clearance Fee.
4. Petitioner claimed that it is exempt from the payment of the building permit and locational
clearance fees, citing legal opinions rendered by the DOJ.
5. Petitioner also reminded the respondents that they have previously issued building permits
acknowledging such exemption from payment of building permit fees on the construction of
petitioner’s 4-storey AUF Information Technology Center building
6. Petitioner stresses that the tax exemption granted to educational stock corporations which have
converted into non-profit foundations was broadened to include any other charges imposed by
the Government as one of the incentives for such conversion.
Issues:

1. Whether petitioner is exempt from the payment of building permit and related fees imposed
under the National Building Code; and
2. Whether the parcel of land owned by petitioner which has been assessed for real property tax is
likewise exempt.

Ruling:

R.A. No. 6055 granted tax exemptions to educational institutions like petitioner which converted
to non-stock, non-profit educational foundations.

On February 19, 1977, P.D 1096 was issued adopting the National Building Code of the
Philippines. The said Code requires every person, firm or corporation, including any agency or
instrumentality of the government to obtain a building permit for any construction, alteration or
repair of any building or structure.

Exempted from the payment of building permit fees are:

 Public buildings and

 Traditional indigenous family dwellings.

Not being expressly included in the enumeration of structures to which the building permit fees
do not apply, petitioner’s claim for exemption rests solely on its interpretation of the term “other
charges imposed by the National Government” in the tax exemption clause of R.A. No. 6055.

A “charge” is broadly defined as the “price of, or rate for, something,” while the word “fee”
pertains to a “charge fixed by law for services of public officers or for use of a privilege under
control of government.” As used in the LGC, charges refers to pecuniary liability, as rents or
fees against persons or property, while fee means a charge fixed by law or ordinance for the
regulation or inspection of a business or activity.

Note that the “other charges” mentioned in Sec. 8 of R.A. No. 6055 is qualified by the words
“imposed by the Government on all property used exclusively for the educational activities of the
foundation.”

Building permit fees are not impositions on property but on the activity subject of government
regulation. While it may be argued that the fees relate to particular properties, i.e., buildings and
structures, they are actually imposed on certain activities the owner may conduct either to build
such structures or to repair, alter, renovate or demolish the same.

That a building permit fee is a regulatory imposition.

Thus, ancillary permits such as electrical permit, sanitary permit and zoning clearance must also
be secured and the corresponding fees paid before a building permit may be issued.

Since building permit fees are not charges on property, they are not impositions from which
petitioner is exempt.

As to petitioner’s argument that the building permit fees collected by respondents are in reality
taxes because the primary purpose is to raise revenues for the local government unit, the same
does not hold water.

A charge of a fixed sum which bears no relation at all to the cost of inspection and regulation
may be held to be a tax rather than an exercise of the police power. In this case, the Secretary of
Public Works and Highways who is mandated to prescribe and fix the amount of fees and other
charges that the Building Official shall collect in connection with the performance of regulatory
functions, has promulgated and issued the Implementing Rules and Regulations which provide
for the bases of assessment of such fees
Petitioner failed to demonstrate that the bases of assessment were arbitrarily determined or
unrelated to the activity being regulated. Neither has petitioner adduced evidence to show that
the rates of building permit fees imposed and collected by the respondents were unreasonable or
in excess of the cost of regulation and inspection.

In distinguishing tax and regulation as a form of police power, the determining factor is the
purpose of the implemented measure. If the purpose is primarily to raise revenue, then it will be
deemed a tax even though the measure results in some form of regulation. On the other hand, if
the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police
power of the state, even though incidentally, revenue is generated.

Concededly, in the case of building permit fees imposed by the National Government under the
National Building Code, revenue is incidentally generated for the benefit of local government
units.

Section 208: the Building Official is hereby authorized to retain not more than twenty percent of
his collection for the operating expenses of his office.

The remaining eighty percent shall be deposited with the provincial, city or municipal treasurer
and shall accrue to the General Fund of the province, city or municipality concerned.

Now, on petitioner’s claim that it is exempted from the payment of real property tax assessed
against its real property presently occupied by informal settlers.

Petitioner failed to discharge its burden to prove that its real property is actually, directly and
exclusively used for educational purposes. While there is no allegation or proof that petitioner
leases the land to its present occupants, still there is no compliance with the constitutional and
statutory requirement that said real property is actually, directly and exclusively used for
educational purposes. The respondents correctly assessed the land for real property taxes for the
taxable period during which the land is not being devoted solely to petitioner’s educational
activities.
 8. G.R. No. 173863 September 15, 2010
CHEVRON PHILIPPINES, INC. (Formerly CALTEX PHILIPPINES, INC.), Petitioner,
vs.
BASES CONVERSION DEVELOPMENT AUTHORITY and CLARK DEVELOPMENT
CORPORATION, Respondents

Facts:

On June 28, 2002, the Board of Directors of respondent Clark Development Corporation (CDC)
issued and approved Policy Guidelines on the Movement of Petroleum Fuel to and from the
Clark Special Economic Zone. In one of its provisions, it levied royalty fees to suppliers
delivering Coastal fuel from outside sources for Php0.50 per liter for those delivering fuel to
CSEZ locators not sanctioned by CDC and Php1.00 per litter for those bringing-in petroleum
fuel from outside sources. The policy guidelines were implemented effective July 27, 2002.

The petitioner Chevron Philippines Inc (formerly Caltex Philippines Inc) who is a fuel supplier
to Nanox Philippines, a locator inside the CSEZ, received a Statement of Account from CDC
billing them to pay the royalty fees amounting to Php115,000 for its fuel sales from Coastal
depot to Nanox Philippines from August 1 to September 21, 2002.

Petitioner, contending that nothing in the law authorizes CDC to impose royalty fees based on a
per unit measurement of any commodity sold within the special economic zone, protested against
the CDC and Bases Conversion Development Authority (BCDA). They alleged that the royalty
fees imposed had no reasonable relation to the probably expenses of regulation and that the
imposition on a per unit measurement of fuel sales was for a revenue generating purpose, thus,
akin to a “tax”.

BCDA denied the protest. The Office of the President dismissed the appeal as well for lack of
merit.

Upon appeal, CA dismissed the case. CA held that in imposing the royalty fees, CDC was
exercising its right to regulate the flow of fuel into CSEZ under the vested exclusive right to
distribute fuel within CSEZ pursuant to its Joint Venture Agreement (JVA) with Subic Bay
Metropolitan Authority (SBMA) and Coastal Subic Bay Terminal, Inc. (CSBTI) dated April 11,
1996. The appellate court also found that royalty fees were assessed on fuel delivered, not on the
sale, by petitioner and that the basis of such imposition was petitioner’s delivery receipts to
Nanox Philippines. The fact that revenue is incidentally also obtained does not make the
imposition a tax as long as the primary purpose of such imposition is regulation.

When elevated in SC, petitioner argued that: 1) CDC has no power to impose fees on sale of fuel
inside CSEZ on the basis of income generating functions and its right to market and distribute
goods inside the CSEZ as this would amount to tax which they have no power to impose, and
that the imposed fee is not regulatory in nature but rather a revenue generating measure; 2) even
if the fees are regulatory in nature, it is unreasonable and are grossly in excess of regulation
costs.
Respondents contended that the purpose of royalty fees is to regulate the flow of fuel to and from
the CSEZ and revenue (if any) is just an incidental product. They viewed it as a valid exercise of
police power since it is aimed at promoting the general welfare of public; that being the CSEZ
administrator, they are responsible for the safe distribution of fuel products inside the CSEZ.

Issue:
Whether the act of CDC in imposing royalty fees can be considered as valid exercise of the
police power.

Held:
Yes. SC held that CDC was within the limits of the police power of the State when it imposed
royalty fees.

In distinguishing tax and regulation as a form of police power, the determining factor is the
purpose of the implemented measure. If the purpose is primarily to raise revenue, then it will be
deemed a tax even though the measure results in some form of regulation. On the other hand, if
the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police
power of the state, even though incidentally, revenue is generated.

In this case, SC held that the subject royalty fee was imposed for regulatory purposes and not for
generation of income or profits. The Policy Guidelines was issued to ensure the safety, security,
and good condition of the petroleum fuel industry within the CSEZ. The questioned royalty fees
form part of the regulatory framework to ensure “free flow or movement” of petroleum fuel to
and from the CSEZ. The fact that respondents have the exclusive right to distribute and market
petroleum products within CSEZ pursuant to its JVA with SBMA and CSBTI does not diminish
the regulatory purpose of the royalty fee for fuel products supplied by petitioner to its client at
the CSEZ.

However, it was erroneous for petitioner to argue that such exclusive right of respondent CDC to
market and distribute fuel inside CSEZ is the sole basis of the royalty fees imposed under the
Policy Guidelines. Being the administrator of CSEZ, the responsibility of ensuring the safe,
efficient and orderly distribution of fuel products within the Zone falls on CDC. Addressing
specific concerns demanded by the nature of goods or products involved is encompassed in the
range of services which respondent CDC is expected to provide under Sec. 2 of E.O. No. 80, in
pursuance of its general power of supervision and control over the movement of all supplies and
equipment into the CSEZ.

There can be no doubt that the oil industry is greatly imbued with public interest as it vitally
affects the general welfare. Fuel is a highly combustible product which, if left unchecked, poses
a serious threat to life and property. Also, the reasonable relation between the royalty fees
imposed on a “per liter” basis and the regulation sought to be attained is that the higher the
volume of fuel entering CSEZ, the greater the extent and frequency of supervision and inspection
required to ensure safety, security, and order within the Zone.

Respondents submit that the increased administrative costs were triggered by security risks that
have recently emerged, such as terrorist strikes. The need for regulation is more evident in the
light of 9/11 tragedy considering that what is being moved from one location to another are
highly combustible fuel products that could cause loss of lives and damage to properties.

As to the issue of reasonableness of the amount of the fees, SC held that no evidence was
adduced by the petitioner to show that the fees imposed are unreasonable. Administrative
issuances have the force and effect of law. They benefit from the same presumption of validity
and constitutionality enjoyed by statutes. These two precepts place a heavy burden upon any
party assailing governmental regulations. Petitioner’s plain allegations are simply not enough to
overcome the presumption of validity and reasonableness of the subject imposition.

WHEREFORE, the petition is DENIED for lack of merit and the Decision of the Court of
Appeals dated November 30, 2005 in CA-G.R. SP No. 87117 is hereby AFFIRMED.

Chevron Philippines, Inc. vs. Bases conversion Development Authority and Clark
Development Corporation, G.R. No. 173863, September 15, 2010

Facts:
On June 28, 2002, the Board of Directors of respondent Clark Development Corporation
(CDC) issued and approved Policy Guidelines on the Movement of Petroleum Fuel to and from
the Clark Special Economic Zone. In one of its provisions, it levied royalty fees to suppliers
delivering Coastal fuel from outside sources for Php0.50 per liter for those delivering fuel to
Clark Special Economic Zone (CSEZ) locators not sanctioned by CDC and Php1.00 per litter for
those bringing-in petroleum fuel from outside sources. The policy guidelines were implemented
effective July 27, 2002.
The petitioner Chevron Philippines Inc (formerly Caltex Philippines Inc) received a
Statement of Account from CDC billing them to pay the royalty fees amounting to Php115,000
for its fuel sales from Coastal depot to Nanox Philippines from August 1 to September 21, 2002.
Petitioner, contending that nothing in the law authorizes CDC to impose royalty fees
based on a per unit measurement of any commodity sold within the special economic zone,
protested against the CDC and Bases Conversion Development Authority (BCDA). They alleged
that the royalty fees imposed had no reasonable relation to the probably expenses of regulation
and that the imposition on a per unit measurement of fuel sales was for a revenue generating
purpose, thus, akin to a “tax”.
Upon appeal, CA dismissed the case. CA held that in imposing the royalty fees, CDC was
exercising its right to regulate the flow of fuel into CSEZ under the vested exclusive right to
distribute fuel within CSEZ pursuant to its Joint Venture Agreement (JVA) with Subic Bay
Metropolitan Authority (SBMA) and Coastal Subic Bay Terminal, Inc. (CSBTI) dated April 11,
1996. The fact that revenue is incidentally also obtained does not make the imposition a tax as
long as the primary purpose of such imposition is regulation. Respondents contended that the
purpose of royalty fees is to regulate the flow of fuel to and from the CSEZ and revenue (if any)
is just an incidental product. They viewed it as a valid exercise of police power since it is aimed
at promoting the general welfare of public.
Issue:
Whether the act of CDC in imposing royalty fees can be considered as valid exercise of
the police power.
Ruling:
Yes. SC held that CDC was within the limits of the police power of the State when it
imposed royalty fees.
In distinguishing tax and regulation as a form of police power, the determining factor is
the purpose of the implemented measure. If the purpose is primarily to raise revenue, then
it will be deemed a tax even though the measure results in some form of regulation. On
the other hand, if the purpose is primarily to regulate, then it is deemed a regulation and
an exercise of the police power of the state, even though incidentally, revenue is
generated.
In this case, SC held that the subject royalty fee was imposed for regulatory purposes and not for
generation of income or profits. The Policy Guidelines was issued to ensure the safety, security,
and good condition of the petroleum fuel industry within the CSEZ. The questioned royalty fees
form part of the regulatory framework to ensure “free flow or movement” of petroleum fuel to
and from the CSEZ. The fact that respondents have the exclusive right to distribute and market
petroleum products within CSEZ pursuant to its JVA with SBMA and CSBTI does not diminish
the regulatory purpose of the royalty fee for fuel products supplied by petitioner to its client at
the CSEZ.

9. SOUTHERN LUZON DRUG CORPORATION, Petitioner, vs. THE DEPARTMENT OF

SOCIAL WELFARE AND DEVELOPMENT, et al. Respondents

G.R. No. 199669

April 25, 2017

FACTS:

The case at bar is a Petition for Review on Certiorari assailing the Decision of the Court of
Appeals which dismissed the petition for prohibition filed by Southern Luzon Drug Corporation
(petitioner) against the Department of Social Welfare and Development , the National Council
for the Welfare of Disabled Persons (now National Council on Disability Affairs or NCDA), the
Department of Finance and the Bureau of Internal Revenue (collectively, the respondents),
which sought to prohibit the implementation of Section 4(a) of Republic Act (R.A.) No. 9257,
otherwise known as the "Expanded Senior Citizens Act of 2003" and Section 32 of R.A. No.
9442, which amends the "Magna Carta for Disabled Persons," particularly the granting of 20%
discount on the purchase of medicines by senior citizens and persons with disability (PWD),
respectively, and treating them as tax deduction. which dismissed the petition for prohibition
filed by Southern Luzon Drug Corporation (petitioner) against the Department of Social Welfare
and Development , the National Council for the Welfare of Disabled Persons (now National
Council on Disability Affairs or NCDA), the Department of Finance and the Bureau of: Internal
Revenue (collectively, the respondents), which sought to prohibit the implementation of Section
4(a) of Republic Act (R.A.) No. 9257, otherwise known as the "Expanded Senior Citizens Act of
2003" and Section 32 of R.A. No. 9442, which amends the "Magna Carta for Disabled Persons,"
particularly the granting of 20% discount on the purchase of medicines by senior citizens and
persons with disability (PWD),: respectively, and treating them as tax deduction due to the
reason that claiming it affects the profitability of their business.
The petitioner is a domestic corporation engaged in the business of drugstore operation in the
Philippines while the respondents are government' agencies, office and bureau tasked to
monitor compliance with R.A. Nos. 9257 and 9442, promulgate implementing rules and
regulations for their effective implementation, as well as prosecute and revoke licenses of erring
establishments.

ISSUES:
1. Whether or not the Petition for Prohibition may be filed to question the constitutionality of a
law;

2. Whether or not the case constitute stare decisis

3. Whether or not the 20% Sales Discount for Senior Citizens PWDs does not violate the
petitioner’s right to equal
protection of the law

4. Whether or not the definitions of Disabilities and PWDs are vague and violates the petitioners
right to due process of law

RULING:

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

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

3. Yes. The subject laws do not violate the equal protection clause. The equal protection clause
is not infringed by legislation which applies only to those persons falling within a specified class.
If the groupings are characterized by substantial distinctions that make real differences, one class
may be treated and regulated differently from another." For a classification to be valid, (1) it
must be based upon substantial distinctions, (2) it must be germane to the purposes of the law,
(3) it must not be limited to existing conditions only, and (4) it must apply equally to all
members of the same class.

4. No. The definitions of "disabilities" and "PWDs" are clear and unequivocal. Section 4(a) of
R.A. No. 7277, the precursor of R.A. No. 94421 defines "disabled persons" as follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being[.]

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

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

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