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.

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