Case Brief: White Light Corporation v City of Manila

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.

Case Brief: Chevron Philippines Inc v Bases Conversion Development Authority

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.

Case Brief: Office of the Solicitor General v Ayala Land Incorporated

G.R. No. 177056  September 18, 2009
THE OFFICE OF THE SOLICITOR GENERAL, Petitioner,
vs.
AYALA LAND INCORPORATED, ROBINSON’S LAND CORPORATION, SHANGRI-LA PLAZA CORPORATION and SM PRIME HOLDINGS, INC., Respondents.

Facts:

This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, filed by petitioner seeking the reversal and setting aside of the decision of CA which affirmed the decision of RTC, which denied the Motion for Reconsideration of OSG. The RTC adjudged that respondents Ayala Land Incorporated (Ayala Land), Robinsons Land Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not be obliged to provide free parking spaces in their malls to their patrons and the general public.

The Senate Committee on Trade and Commerce found that the collection of parking fees by shopping malls is contrary to National Building Code and figuratively speaking, the Code has “expropriated” the land for parking. Also, Committee stated that the collection of parking fees would be against Article II of RA 9734 (Consumer Act of the Philippines) as to the State’s policy of protecting the interest of consumers. Moreover, Section 201 of the National Building Code gives the responsibility for the administration and enforcement of the provisions of the Code, including the imposition of penalties for administrative violations thereof to the Secretary of Public Works. This is not being strictly followed as the LGUs are tasked to discharge the regulatory powers of DPWH instead of DPWH instead.

As such, Senate Committee recommended that: 1) Office of Solicitor General should institute the action to enjoin the collction of parking fees and enforce the sanctions for violation of National Building Code; 2) DTI pursuant to RA 7394 should enforce the provisions of Code relative to parking; and 3) Congress should amend and update the National Building Code to prohibit the collection of parking fees and its waiver of liability.

Respondent SM Prime assailed the recommendation of the Committee and filed a Petition for Declaratory Relief under Rule 63 of the Revised Rules of Court against DPWH and local building officials, contending that: 1) Rule XIX of Implementing Rules and Regulations of National Building Code is unconstitutional and void; 2) respondent has the legal right to lease parking spaces; and 3) National Building Code IRR is ineffective as it was not published for 3 consecutive weeks in newspaper of general circulation as mandated by Section 211 of PD 1096.

OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary Restraining Order and Writ of Preliminary Injunction) to the RTC against respondents, prohibiting them from collecting parking fees and contending that their practice of charging parking fees is violative of National Building Code.

The RTC held that: 1) OSG has the capacity to institute the proceeding it being a controversy of public welfare; 2) a petition for declaratory relief is proper since all the requisites are present; 3) the Building Code with its IRR does not necessarily impose that parking spaces shall be free of charge and providing parking spaces for free can be considered as unlawful taking of property right without just compensation; and 4) there was no sufficient evidence to justify any award for damages. They deemed that the respondents are not obligated to provide parking spaces free of charge.

OSG appealed the decision to CA, saying that RTC erred in holding that the National Building Code did not intend the parking spaces to be free of charge. On the otherhand, respondent SM filed a separate appeal to the CA, contending that: 1) RTC erred in failing to declare Rule XIX of IRR as unconstitutional; 2) RTC erred in failing to declare IRR ineffective for not having been published as required by law; 3) RTC erred in dismissing the OSG’s petition for failure to exhaust administrative remedies; and 4) RTC erred in failing to declare that OSG has no legal standing as it is not a real party-in-interest.

CA denied the appeals of both petitioners and respondents on the following grounds: 1) OSG did not fail to exhaust administrative remedies and that an administrative review is not a condition precedent to judicial relief where the question in dispute is purely a legal one and nothing of an administrative nature is to be or can be done; 2) the validity of National Building Code IRR cannot be proceeded as it was not discussed in RTC and the controversy could be settled on other grounds without touching the issue of validity since the courts should refrain from passing upon the constitutionality of a law; and 3) Section 803 of National Building Code and Rule XIX of IRR are clear that they are only intended to control the occupancy of areas and structures, and in the absence of provision of law, respondents could not be obliged to provide parking spaces free of charge.

As such, OSG presented itself to SC for the instant Petition for Review.

Issues:

1. Whether the CA erred in affirming the ruling of RTC that respondents are not obliged to provide free parking spaces to their customers or the public.

2. Whether the petition of OSG for prohibiting the collection of parking fees is a valid exercise of the police power of State.

Held:

1. No. The CA was correct in affirming the ruling of RTC, and the respondents are not obliged to provide free parking spaces. SC found no merit in the OSG’s petition:

Sec 803 of National Building Code.

Percentage of Site Occupancy states that maximum site occupancy shall be governed by the use, type of construction, and height of the building and the use, area, nature, and location of the site; and subject to the provisions of the local zoning requirements and in accordance with the rules and regulations promulgated by the Secretary.

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site occupancy, the following provisions on parking and loading space requirements shall be observed:
1. The parking space ratings listed below are minimum off-street requirements for specific uses/occupancies for buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00 meters for perpendicular or diagonal parking, 2.00 meters by 6.00 meters for parallel parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60 meters by 12.00 meters. The parking slot shall be drawn to scale and the total number of which shall be indicated on the plans and specified whether or not parking accommodations, are attendant-managed. (See Section 2 for computation of parking requirements).
x x x x
1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area

 SECTION 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare, consistent with the principles of sound environmental management and control; and to this end, make it the purpose of this Code to provide for all buildings and structures, a framework of minimum standards and requirements to regulate and control their location, site, design, quality of materials, construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of safeguarding “life, health, property, and public welfare, consistent with the principles of sound environmental management and control.” Adequate parking spaces would contribute greatly to alleviating traffic congestion when complemented by quick and easy access thereto because of free-charge parking. Moreover, the power to regulate and control the use, occupancy, and maintenance of buildings and structures carries with it the power to impose fees and, conversely, to control — partially or, as in this case, absolutely — the imposition of such fees.

The explicit directive of the above is that respondents, as operators/lessors of neighborhood shopping centers, should provide parking and loading spaces with the minimum ratio of one slot per 100 square meters of shopping floor area. There is nothing therein pertaining to the collection (or non-collection) of parking fees by respondents. In fact, the term “parking fees” cannot even be found at all in the entire National Building Code and its IRR. One rule of statutory construction is that if a statute is clear and unequivocal, it must be given its literal meaning and applied without any attempt at interpretation. Since Section 803 of the National Building Code and Rule XIX of its IRR do not mention parking fees, then simply, said provisions do not regulate the collection of the same

The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section 803 of the same Code and Rule XIX of the IRR, so as to include the regulation of parking fees. The OSG limits its citation to the first part of Section 102 of the National Building Code declaring the policy of the State “to safeguard life, health, property, and public welfare, consistent with the principles of sound environmental management and control”; but totally ignores the second part of said provision, which reads, “and to this end, make it the purpose of this Code to provide for all buildings and structures, a framework of minimum standards and requirements to regulate and control their location, site, design, quality of materials, construction, use, occupancy, and maintenance.” While the first part of Section 102 of the National Building Code lays down the State policy, it is the second part thereof that explains how said policy shall be carried out in the Code. Section 102 of the National Building Code is not an all-encompassing grant of regulatory power to the DPWH Secretary and local building officials in the name of life, health, property, and public welfare. On the contrary, it limits the regulatory power of said officials to ensuring that the minimum standards and requirements for all buildings and structures, as set forth in the National Building Code, are complied with.

Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking spaces for buildings, Rule XIX of the IRR also mandates that such parking spaces be provided by building owners free of charge. If Rule XIX is not covered by the enabling law, then it cannot be added to or included in the implementing rules. The rule-making power of administrative agencies must be confined to details for regulating the mode or proceedings to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the statutory requirements or to embrace matters not covered by the statute. Administrative regulations must always be in harmony with the provisions of the law because any resulting discrepancy between the two will always be resolved in favor of the basic law.

2. No. The petition of OSG to prohibit collection of parking fees is not a valid exercise of the police power of State.

It is not sufficient for the OSG to claim that “the power to regulate and control the use, occupancy, and maintenance of buildings and structures carries with it the power to impose fees and, conversely, to control, partially or, as in this case, absolutely, the imposition of such fees.” Firstly, the fees within the power of regulatory agencies to impose are regulatory fees. It has been settled law in this jurisdiction that this broad and all-compassing governmental competence to restrict rights of liberty and property carries with it the undeniable power to collect a regulatory fee. It looks to the enactment of specific measures that govern the relations not only as between individuals but also as between private parties and the political society. True, if the regulatory agencies have the power to impose regulatory fees, then conversely, they also have the power to remove the same. Even so, it is worthy to note that the present case does not involve the imposition by the DPWH Secretary and local building officials of regulatory fees upon respondents; but the collection by respondents of parking fees from persons who use the mall parking facilities. Secondly, assuming arguendo that the DPWH Secretary and local building officials do have regulatory powers over the collection of parking fees for the use of privately owned parking facilities, they cannot allow or prohibit such collection arbitrarily or whimsically. Whether allowing or prohibiting the collection of such parking fees, the action of the DPWH Secretary and local building officials must pass the test of classic reasonableness and propriety of the measures or means in the promotion of the ends sought to be accomplished.

Without using the term outright, the OSG is actually invoking police power to justify the regulation by the State, through the DPWH Secretary and local building officials, of privately owned parking facilities, including the collection by the owners/operators of such facilities of parking fees from the public for the use thereof. The Court finds, however, that in totally prohibiting respondents from collecting parking fees, the State would be acting beyond the bounds of police power.

Police power is the power of promoting the public welfare by restraining and regulating the use of liberty and property. It is usually exerted in order to merely regulate the use and enjoyment of the property of the owner. The power to regulate, however, does not include the power to prohibit. A fortiori, the power to regulate does not include the power to confiscate. Police power does not involve the taking or confiscation of property, with the exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the purpose of protecting peace and order and of promoting the general welfare; for instance, the confiscation of an illegally possessed article, such as opium and firearms.

When there is a taking or confiscation of private property for public use, the State is no longer exercising police power, but another of its inherent powers, namely, eminent domain. Eminent domain enables the State to forcibly acquire private lands intended for public use upon payment of just compensation to the owner.

Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of only to impose a burden upon the owner of condemned property, without loss of title and possession. It is a settled rule that neither acquisition of title nor total destruction of value is essential to taking. It is usually in cases where title remains with the private owner that inquiry should be made to determine whether the impairment of a property is merely regulated or amounts to a compensable taking. A regulation that deprives any person of the profitable use of his property constitutes a taking and entitles him to compensation, unless the invasion of rights is so slight as to permit the regulation to be justified under the police power. Similarly, a police regulation that unreasonably restricts the right to use business property for business purposes amounts to a taking of private property, and the owner may recover therefor.

Although in the present case, title to and/or possession of the parking facilities remain/s with respondents, the prohibition against their collection of parking fees from the public, for the use of said facilities, is already tantamount to a taking or confiscation of their properties. The State is not only requiring that respondents devote a portion of the latter’s properties for use as parking spaces, but is also mandating that they give the public access to said parking spaces for free. Such is already an excessive intrusion into the property rights of respondents. Not only are they being deprived of the right to use a portion of their properties as they wish, they are further prohibited from profiting from its use or even just recovering therefrom the expenses for the maintenance and operation of the required parking facilities.

In conclusion, the total prohibition against the collection by respondents of parking fees from persons who use the mall parking facilities has no basis in the National Building Code or its IRR. The State also cannot impose the same prohibition by generally invoking police power, since said prohibition amounts to a taking of respondents’ property without payment of just compensation.

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision dated 29 May 2002 of the Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are hereby AFFIRMED. No costs.

Case Brief: Ha Yuan Restaurant v NLRC

G.R. No. 147719  January 27, 2006
HA YUAN RESTAURANT, petitioner
vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVY SORIA, respondents.

Facts:

Respondent Juvy Soria worked as a cashier for the petitioner. On January 11, 1998, respondent assaulted her co-worker resulting in a scuffle between the two. They were brought to the SM Food Court Administration Office where the SM Food Court Manager banned the two from working within the SM Food Court premises.

Respondent filed with the Labor Arbiter a complaint for illegal dismissal, salary differentials, service incentive leave, separation pay, and damages. When appealed to National Labor Relations Commission (NLRC), the decision of Labor Arbiter in dismissing the case for lack of merit was affirmed plus a modification that the respondent was awarded separation pay equivalent to one (1) month salary per year of service, based on her last salary of P196/day and counted from December 10, 1984 until the finality of the decision.

Petitioner, in response, contended that the award of separation pay is only proper to an employee who is found to have been validly dismissed on the ground of serious misconduct, and it that it cannot be applied in the case at bar.

Issue:

Whether the respondent is entitled to an award of separation pay.

Held:

No.

In PLDT v NLRC, it was stated that separation pay shall only be allowed as a measure of social justice only in instances where an employee is validly dismissed for causes other than serious misconduct or those reflecting his moral character. The Court held that respondent’s cause of dismissal in this case amounts as a serious misconduct and as such, separation pay should not have been awarded to her. Thus, the petition should be granted.

Misconduct is improper or wrongful conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. To be a valid cause for termination, the misconduct must be serious.

While it is true that the Labor Arbiter did not tag her cause of dismissal as serious misconduct, nevertheless, it is its nature, not its label that characterizes the cause as serious misconduct.

The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision dated March 30, 2001 in CA-G.R. SP No. 58219 is MODIFIED to the effect that the NLRC Decision dated September 30, 1999 is AFFIRMED with MODIFICATION in that the award of separation pay in favor of respondent Juvy Soria is DELETED.

Hierarchy of Rights: Basic Concepts and Principles

The following is an excerpt from the case of Philippine Blooming Mills Employment Organization v Philippine Blooming Mills Co Inc, stating the basic concepts and principles of the Bill of Rights. 

(1) In a democracy, the preservation and enhancement of the dignity and worth of the human personality is the central core as well as the cardinal article of faith of our civilization. The inviolable character of man as an individual must be “protected to the largest possible extent in his thoughts and in his beliefs as the citadel of his person.” 

(2) The Bill of Rights is designed to preserve the ideals of liberty, equality and security “against the assaults of opportunism, the expediency of the passing hour, the erosion of small encroachments, and the scorn and derision of those who have no patience with general principles.” 

In the pithy language of Mr. Justice Robert Jackson, the purpose of the Bill of Rights is to withdraw “certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials, and to establish them as legal principles to be applied by the courts. One’s rights to life, liberty and property, to free speech, or free press, freedom of worship and assembly, and other fundamental rights may not be submitted to a vote; they depend on the outcome of no elections.” Laski proclaimed that “the happiness of the individual, not the well-being of the State, was the criterion by which its behaviour was to be judged. His interests, not its power, set the limits to the authority it was entitled to exercise.” 

(3) The freedoms of expression and of assembly as well as the right to petition are included among the immunities reserved by the sovereign people, in the rhetorical aphorism of Justice Holmes, to protect the ideas that we abhor or hate more than the ideas we cherish; or as Socrates insinuated, not only to protect the minority who want to talk, but also to benefit the majority who refuse to listen. And as Justice Douglas cogently stresses it, the liberties of one are the liberties of all; and the liberties of one are not safe unless the liberties of all are protected. 

(4) The rights of free expression, free assembly and petition, are not only civil rights but also political rights essential to man’s enjoyment of his life, to his happiness and to his full and complete fulfillment. Thru these freedoms the citizens can participate not merely in the periodic establishment of the government through their suffrage but also in the administration of public affairs as well as in the discipline of abusive public officers. The citizen is accorded these rights so that he can appeal to the appropriate governmental officers or agencies for redress and protection as well as for the imposition of the lawful sanctions on erring public officers and employees.

(5) While the Bill of Rights also protects property rights, the primacy of human rights over property rights is recognized. Because these freedoms are “delicate and vulnerable, as well as supremely precious in our society” and the “threat of sanctions may deter their exercise almost as potently as the actual application of sanctions,” they “need breathing space to survive,” permitting government regulation only “with narrow specificity.” 

Property and property rights can be lost thru prescription; but human rights are imprescriptible. If human rights are extinguished by the passage of time, then the Bill of Rights is a useless attempt to limit the power of government and ceases to be an efficacious shield against the tyranny of officials, of majorities, of the influential and powerful, and of oligarchs — political, economic or otherwise.

In the hierarchy of civil liberties, the rights of free expression and of assembly occupy a preferred position as they are essential to the preservation and vitality of our civil and political institutions;  and such priority “gives these liberties the sanctity and the sanction not permitting dubious intrusions.”

The superiority of these freedoms over property rights is underscored by the fact that a mere reasonable or rational relation between the means employed by the law and its object or purpose — that the law is neither arbitrary nor discriminatory nor oppressive — would suffice to validate a law which restricts or impairs property rights.  On the other hand, a constitutional or valid infringement of human rights requires a more stringent criterion, namely existence of a grave and immediate danger of a substantive evil which the State has the right to prevent. So it has been stressed in the main opinion of Mr. Justice Fernando in Gonzales vs. Comelec and reiterated by the writer of the opinion in Imbong vs. Ferrer It should be added that Mr. Justice Barredo inGonzales vs. Comelecsupra, like Justices Douglas, Black and Goldberg in N.Y. Times Co. vs. Sullivan,  believes that the freedoms of speech and of the press as well as of peaceful assembly and of petition for redress of grievances are absolute when directed against public officials or “when exercised in relation to our right to choose the men and women by whom we shall be governed,” even as Mr. Justice Castro relies on the balancing-of-interests test. Chief Justice Vinson is partial to the improbable danger rule formulated by Chief Judge Learned Hand, viz. — whether the gravity of the evil, discounted by its improbability, justifies such invasion of free expression as is necessary to avoid the danger.

Case Brief: PMBEO v PMB

G.R. No. L-31195 June 5, 1973

PHILIPPINE BLOOMING MILLS EMPLOYMENT ORGANIZATION, NICANOR TOLENTINO, FLORENCIO, PADRIGANO RUFINO, ROXAS MARIANO DE LEON, ASENCION PACIENTE, BONIFACIO VACUNA, BENJAMIN PAGCU and RODULFO MUNSOD, petitioners,

vs.

PHILIPPINE BLOOMING MILLS CO., INC. and COURT OF INDUSTRIAL RELATIONS, respondents.

Facts:

The petitioner Philippine Blooming Mills Employees Organization (PBMEO) is a legitimate labor union composed of the employees of the respondent Philippine Blooming Mills Co., Inc., with the officers and members of the petitioner Uuion.

Petitioners claim that on March 1, 1969, they decided to stage a mass demonstration at Malacañang on March 4, 1969, in protest against alleged abuses of the Pasig police, to be participated in by the workers in the first shift (from 6 A.M. to 2 P.M.) as well as those in the regular second and third shifts (from 7 A.M. to 4 P.M. and from 8 A.M. to 5 P.M., respectively); and that they informed the respondent Company of their proposed demonstration.

The parties stipulated that the company, after learning the mass demonstration, informed the union panel that they even if the demonstration is an inalienable right granted by the Constitution, it should not unduly prejudice the normal operation of the company.  As such, they warned the PBMEO representatives that workers who belong to the first and regular shifts, who without previous leave of absence approved by the Company, particularly , the officers present who are the organizers of the demonstration, who shall fail to report for work the following morning (March 4, 1969) shall be dismissed, because such failure is a violation of the existing CBA (collective bargaining agreement which fixes the working shifts of the employees) particularly Article XXIV: NO LOCKOUT — NO STRIKE’; and, therefore, would be amounting to an illegal strike.

Because the petitioners and their members proceeded with the demonstration despite the pleas of the respondent Company that the first shift workers should not be required to participate in the demonstration and that the workers in the second and third shifts should be utilized for the demonstration, respondent Company charged the petitioners with a “violation of Section 4(a)-6 in relation to Sections 13 and 14, as well as Section 15, all of Republic Act No. 875, and of the CBA providing for ‘No Strike and No Lockout.’ ”

In their answer, petitioners claim that they did not violate the existing CBA because they gave the respondent Company prior notice of the mass demonstration on March 4, 1969; that the said mass demonstration was a valid exercise of their constitutional freedom of speech against the alleged abuses of some Pasig policemen; and that their mass demonstration was not a declaration of strike because it was not directed against the respondent firm.

After considering the aforementioned stipulation of facts submitted by the parties, Judge Joaquin M. Salvador, in an order dated September 15, 1969, found herein petitioner PBMEO guilty of bargaining in bad faith and herein petitioners, as directly responsible for perpetrating the said unfair labor practice were considered to have lost their status as employees of the respondent Company.

Issue:

Whether the respondents’ act of concluding that the petitioners acted in bad faith for proceeding with the demonstration and expelling them from the company is unconstitutional.

Held:

No.  The pretension of their employer that it would suffer loss or damage by reason of the absence of its employees is a plea for the preservation merely of their property rights. Such apprehended loss or damage would not spell the difference between the life and death of the firm or its owners or its management.

While the Bill of Rights also protects property rights, the primacy of human rights over property rights is recognized. Because these freedoms are “delicate and vulnerable, as well as supremely precious in our society” and the “threat of sanctions may deter their exercise almost as potently as the actual application of sanctions,” they “need breathing space to survive,” permitting government regulation only “with narrow specificity.”

In seeking sanctuary behind their freedom of expression well as their right of assembly and of petition against alleged persecution of local officialdom, the employees and laborers of herein private respondent firm were fighting for their very survival, utilizing only the weapons afforded them by the Constitution — the untrammelled enjoyment of their basic human rights.  The condition in which the employees found themselves vis-a-vis the local police of Pasig, was a matter that vitally affected their right to individual existence as well as that of their families. Material loss can be repaired or adequately compensated. The debasement of the human being broken in morale and brutalized in spirit-can never be fully evaluated in monetary terms.

The primacy of human rights — freedom of expression, of peaceful assembly and of petition for redress of grievances — over property rights has to be sustained.

There was a lack of human understanding or compassion on the part of the firm in rejecting the request of the Union for excuse from work for the day shifts in order to carry out its mass demonstration. And to regard as a ground for dismissal the mass demonstration held against the Pasig police, not against the company, is gross vindictiveness on the part of the employer, which is as unchristian as it is unconstitutional.

The respondent company is the one guilty of unfair labor practice. Because the refusal on the part of the respondent firm to permit all its employees and workers to join the mass demonstration against alleged police abuses and the subsequent separation of the eight (8) petitioners from the service constituted an unconstitutional restraint on the freedom of expression, freedom of assembly and freedom petition for redress of grievances, the respondent firm committed an unfair labor practice defined in Section 4(a-1) in relation to Section 3 of Republic Act No. 875, otherwise known as the Industrial Peace Act. Section 3 of Republic Act No. 8 guarantees to the employees the right “to engage in concert activities for … mutual aid or protection”; while Section 4(a-1) regards as an unfair labor practice for an employer interfere with, restrain or coerce employees in the exercise their rights guaranteed in Section Three.”  The insistence on the part of the respondent firm that the workers for the morning and regular shift should not participate in the mass demonstration, under pain of dismissal, was as heretofore stated, “a potent means of inhibiting speech.”

Apart from violating the constitutional guarantees of free speech and assembly as well as the right to petition for redress of grievances of the employees, the dismissal constitutes a denial of social justice likewise assured by the fundamental law to these lowly employees. Section 5 of Article II of the Constitution imposes upon the State “the promotion of social justice to insure the well-being and economic security of all of the people,” which guarantee is emphasized by the other directive in Section 6 of Article XIV of the Constitution that “the State shall afford protection to labor …”. Respondent Court of Industrial Relations as an agency of the State is under obligation at all times to give meaning and substance to these constitutional guarantees in favor of the working man; for otherwise these constitutional safeguards would be merely a lot of “meaningless constitutional patter.” Under the Industrial Peace Act, the Court of Industrial Relations is enjoined to effect the policy of the law “to eliminate the causes of industrial unrest by encouraging and protecting the exercise by employees of their right to self-organization for the purpose of collective bargaining and for the promotion of their moral, social and economic well-being.” It is most unfortunate in the case at bar that respondent Court of Industrial Relations, the very governmental agency designed therefor, failed to implement this policy and failed to keep faith with its avowed mission — its raison d’etre — as ordained and directed by the Constitution.

Management has shown not only lack of good-will or good intention, but a complete lack of sympathetic understanding of the plight of its laborers who claim that they are being subjected to indignities by the local police, It was more expedient for the firm to conserve its income or profits than to assist its employees in their fight for their freedoms and security against alleged petty tyrannies of local police officers. This is sheer opportunism. Such opportunism and expediency resorted to by the respondent company assaulted the immunities and welfare of its employees. It was pure and implement selfishness, if not greed.

If free expression was accorded recognition and protection to fortify labor unionism such as in the Republic Savings Bank vs CIR, where the complaint assailed the morality and integrity of the bank president no less, such recognition and protection for free speech, free assembly and right to petition are rendered all the more justifiable and more imperative in the case at bar, where the mass demonstration was not against the company nor any of its officers.

WHEREFORE, judgement is hereby rendered:

(1) setting aside as null and void the orders of the respondent Court of Industrial Relations dated September 15 and October 9, 1969; and

(2) directing the re instatement of the herein eight (8) petitioners, with full back pay from the date of their separation from the service until re instated, minus one day’s pay and whatever earnings they might have realized from other sources during their separation from the service.

With costs against private respondent Philippine Blooming Company, Inc.

Case Brief: City Govt of Quezon City v Ericta

G.R. No. L-3491 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.

Facts:

Section 9 of Ordinance No. 6118, S-64 provides that at least 6% of the total area of the memorial park cemetery shall be set aside for the charity burial of deceased persons who are paupers and have been residents of Quezon City for at least 5 years prior to their death. As such, the Quezon City engineer required the respondent, Himlayang Pilipino Inc, 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.

The then Court of First Instance and its judge, Hon. Ericta, declared Section 9 of Ordinance No. 6118, S-64 null and void.

Petitioners argued 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 argued 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 otherhand, respondent Himlayang Pilipino, Inc. contended that the taking or confiscation of property was 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.

Issue:
Is Section 9 of the ordinance in question a valid exercise of the police power?

Held:

No. The Sec. 9 of the ordinance is not a valid exercise of the police power.

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.

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 regulate such other business, trades, and occupation as may be established or practised in the City. The power to regulate does not include the power to prohibit or confiscate. The ordinance in question not only confiscates but also prohibits the operation of a memorial park cemetery.

Police power is defined by Freund as ‘the power of promoting the public welfare by restraining and regulating the use of liberty and property’. It is usually exerted in order to merely regulate the use and enjoyment of 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.

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. A 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.

However, in the case at hand, 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.

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