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NarrativesConstitutional Law II

Michael Vernon Guerrero Mendiola2005

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'able o( Contents

%utter v" )steban *G% L-!+0, ., Ma/ .5!1 .3rti&as v" 4eati *G% L-26+0 . 7ecember .+1 2

Villanueva v" Castaneda *G% L-6.!.. 2. Se$tember .,+1 !San&alan& v" Intermediate A$$ellate Court 8IAC9 *G% +..6 22 7ecember .,,1 3rti&as v" Court o( A$$eals *G% .26.02 7ecember 20001 +

Abella v" NL%C *G% +.,.! 20 :ul/ .,+1 ,'iro v" ;ontanosas *G% L-!2!.2 25 November .,!1

Caleon v" A&us 7evelo$ment Cor$" *G% ++!65 + A$ril .21 .0Meralco v" La&una *G% .!.!5 5 Ma/ .1 .0

This collection contains nine (9) cases

summarized in this format by

Michael Vernon M. Guerrero (as a senior law student)

during the First Semester school year !""#$!""%in the &olitical 'aw eiew classunder *ean Mariano Magsalin +r.

at the ,rellano -niersity School of 'aw (,-S').om/iled as &*F Se/tember !"0!.

1erne Guerrero entered ,-S' in +une !""!

and eentually graduated from ,-S' in !""%.

2e /assed the &hili//ine bar e3aminations immediately after (,/ril !""4).

berne&uerrero"word$ress"com


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Narratives (Berne Guerrero)

112 Rutter v. Esteban [GR L-3708, 18 May 1953]En Banc, Bautista-Angelo (J): 6 concur, 1 concurs with dispositive part

Facts On 20 August 1941, Royal L. Rutter sold to Placido J. Esteban 2 parcels o land situated in t!e "ity o

#anila. $o secure t!e pay%ent o said balance o P4,&00, a irst %ortgage o'er t!e sa%e parcels o land !as

been constituted in a'or o Rutter. $!e deed o sale !a'ing been registered, a ne( title (as issued in a'or oPlacido J. Esteban (it! t!e %ortgage duly annotated on t!e bac) t!ereo. Esteban ailed to pay t!e t(oinstall%ents as agreed upon, as (ell as t!e interest t!at !ad accrued t!ereon, and so on 2 August 1949, Rutterinstituted an action in t!e "ourt o *irst +nstance "*+- #anila to reco'er t!e balance due, t!e interest duet!ereon, and t!e attorneys ees stipulated in t!e contract. $!e co%plaint also contains a prayer or t!e sale o

t!e properties %ortgaged in accordance (it! la(. Esteban ad%itted a'er%ents o t!e co%plaint but set updeense on t!e %oratoriu% clause e%bodied in RA /42 appro'ed 2 July 194&-, allo(ing a (ar suerer &years ro% t!e settle%ent o !is clai% by t!e P!ilippine ar a%age "o%%ission. Ater a %otion orsu%%ary 3udg%ent !as been presented by Esteban, and t!e reuisite e'idence sub%itted co'ering t!e rele'ant

acts, t!e court rendered 3udg%ent dis%issing t!e co%plaint !olding t!at t!e obligation (!ic! Rutter see)s toenorce is not yet de%andable under t!e %oratoriu% la(. Rutter iled a %otion or reconsideration (!erein !eraised or t!e irst ti%e t!e constitutionality o t!e %oratoriu% la(, but t!e %otion (as denied. Rutter

appealed.

!ssue !et!er Republic Act /42 is unconstitutional or being 'iolati'e o t!e constitutional pro'ision

orbidding t!e i%pair%ent o t!e obligation o contracts.

"e#$ 5tatutes declaring a %oratoriu% on t!e enorce%ent o %onetary obligations are not o recentenact%ent. $!ese %oratoriu% la(s are not ne(. #oratoriu% la(s !a'e been adopted 6during ti%es o

inancial distress, especially (!en incident to, or caused by, a (ar.6 $!e #oratoriu% La( is a 'alid e7erciseby t!e 5tate o its police po(er, being an e%ergency %easure. Alt!oug! conceding t!at t!e obligations o t!econtract (ere i%paired, t!e i%pair%ent (as (it!in t!e police po(er o t!e 5tate as t!at po(er (as called intoe7ercise by t!e public econo%ic e%ergency (!ic! t!e legislature !ad ound to e7ist. 8ot only is t!e

constitutional pro'ision contract clause- ualiied by t!e %easure o control (!ic! t!e 5tate retains o'er

re%edial processes, but t!e 5tate also continues to possess aut!ority to saeguard t!e 'ital interest o itspeople. +t does not %atter t!at legislation appropriate to t!at end 6!as t!e result o %odiying or abrogatingcontracts already in eect.6 8ot only are e7isting la(s read into contracts in order to i7 obligations as

bet(een t!e parties, but t!e reser'ation o essential attributes o so'ereign po(er is also read into contracts asa postulate o t!e legal order. $!e policy o protecting contracts against i%pair%ent presupposes t!e%aintenance o a go'ern%ent by 'irtue o (!ic! contractual relations are (ort! (!ile, a go'ern%ent (!ic!retains adeuate aut!ority to secure t!e peace and good order o society. 5o%e o t!ese la(s, !o(e'er, !a'e

also been declared 6'oid as to contracts %ade beore t!eir passage (!ere t!e suspension o re%ediesprescribed is indeinite or unreasonable in duration.6 $!e true test, t!ereore, o t!e constitutionality o a

%oratoriu% statute lies in t!e deter%ination o t!e period o suspension o t!e re%edy. +t is reuired t!at suc!suspension be deinite and reasonable, ot!er(ise it (ould be 'iolati'e o t!e constitution. erein, obligations

!ad been pending since 194: as a result o t!e issuance o E7ecuti'e Orders 2: and /2 and at present t!eirenorce%ent is still in!ibited because o t!e enact%ent o Republic Act /42 and (ould continue to be

unenorceable during t!e &;year period granted to pre(ar debtors to aord t!e% an opportunity to re!abilitatet!e%sel'es, (!ic! in plain language %eans t!at t!e creditors (ould !a'e to obser'e a 'igil o at least 12 yearsbeore t!ey could eect a liuidation o t!eir in'est%ent dating as ar bac) as 1941. $!is period see%s to beunreasonable, i not oppressi'e. !ile t!e purpose o "ongress is plausible, and s!ould be co%%ended, t!e

relie accorded (or)s in3ustice to creditors (!o are practically let at t!e %ercy o t!e debtors. $!eir !ope toeect collection beco%es e7tre%ely re%ote, %ore so i t!e credits are unsecured. And t!e in3ustice is %orepatent (!en, under t!e la(, t!e debtor is not e'en reuired to pay interest during t!e operation o t!e relie.$!us, t!e "ourt declared t!at t!e continued operation and enorce%ent o Republic Act /42 at t!e present

ti%e is unreasonable and oppressi'e, and s!ould not be prolonged a %inute longer, and t!e sa%e s!ould be

Constitutional Law II, 2005 ( 1 )


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declared null and 'oid and (it!out eect. $!is also !olds true as regards E7ecuti'e Orders 2: and /2,considering t!at said Orders contain no li%itation (!atsoe'er in point o ti%e as regards t!e suspension o t!eenorce%ent and eecti'ity o %onetary obligations. $!is pronounce%ent is %ost especially needed in 'ie(o t!e re'i'al clause e%bodied in said Act i and (!en it is declared unconstitutional or in'alid.

113 %rt&'as v. Feat& [GR L-2()70, 1( *ece+ber 1979]En Banc, Santos (J): 7 concur, too! no part

Facts Ortigas, #adrigal < 5ia is a li%ited partners!ip and *eati =an) and $rust "o., is a corporation dulyorgani>ed and e7isting in accordance (it! t!e la(s o t!e P!ilippines. Ortigas is engaged in real estate

business, de'eloping and selling lots to t!e public, particularly t!e ig!(ay ills 5ubdi'ision along E5A,#andaluyong. On 4 #arc! 19:2, Ortigas, as 'endor, and Augusto Padilla and 8ati'idad Angeles, as 'endees,entered in separate agree%ents o sale on install%ents o'er t(o parcels o land. On 19 July 192, t!e 'endeestranserred t!eir rig!ts and interests o'er t!e lots in a'or o E%%a "!a'e>. =ot! agree%ents contained

stipulations or restrictions as to t!e re%o'al o soil, t!e %aterials o t!e buildings, and sanitary installations,(!ic! (ere annotated in t!e $"$s (it! t!e Ri>al Registry o eeds. *eati =an) e'entually acuired said lotson 2/ July 192, one boug!t directly ro% "!a'e>, and t!e ot!er ro% Republic *lour #ills to (!o% "!a'e>

sold it pre'iously-. On : #ay 19/, *eati =an) began laying t!e oundation and co%%enced t!e constructiono a building to be de'oted to ban)ing purposes, but (!ic! could also be de'oted to, and used e7clusi'ely or,residential purposes. $!e ollo(ing day, Ortigas de%anded t!at *eati =an) stop t!e construction o t!e

co%%ercial building on t!e lots, clai%ing t!at t!e restrictions annotated (ere i%posed as part o its generalbuilding sc!e%e designated or t!e beautiication and de'elop%ent o ig!(ay ills 5ubdi'ision. *eati =an)

reused to co%ply (it! t!e de%and, contending t!at t!e building (as being constructed in accordance (it!t!e >oning regulations Resolution 2?, dated 4 *ebruary 190 by #unicipal "ouncil o #andaluyong-, t!at it

!as iled building and planning per%it applications (it! t!e %unicipality o #andaluyong, and t!at it !adaccordingly obtained building and planning per%its to proceed (it! t!e construction. Ortigas iled t!eco%plaint (it! t!e lo(er court "i'il "ase ??0-, see)ing t!e issuance o 6a (rit o preli%inary in3unction topre'ent t!e construction o a co%%ercial ban) building in t!e pre%ises in 'ie( o t!e building restrictions

annotated in t!e *eati =an)s $"$s. $!e trial court dis%issed t!e co%plaint !olding t!at t!e restrictions (ere

subordinate to #unicipal Resolution 2?, rendering t!e restrictions ineecti'e and unenorceable. On 2 #arc!19:, Ortigas iled a %otion or reconsideration. $!e trial court denied t!e %otion or reconsideration in itsorder o 2 #arc! 19:. On 2 April 19: Ortigas iled its notice o appeal, its record on appeal, and a cas!

appeal bond. On 14 April 19:, t!e appeal (as gi'en due course by t!e appellate court and t!e records o t!ecase (ere ele'ated directly to t!e 5upre%e "ourt, since only uestions o la( (ere raised.

!ssue!et!er t!e constitutional guarantee o non;i%pair%ent o contracts is absolute.

"e#$ !ile non;i%pair%ent o contracts is constitutionally guaranteed, t!e rule is not absolute, since it !as

to be reconciled (it! t!e legiti%ate e7ercise o police po(er, i.e., 6t!e po(er to prescribe regulations topro%ote t!e !ealt!, %orals, peace, education, good order or saety and general (elare o t!e people.6

+n'ariably described as 6t!e %ost essential, insistent, and illi%itable o po(ers6 and 6in a sense, t!e greatestand %ost po(erul attribute o go'ern%ent,6 t!e e7ercise o t!e po(er %ay be 3udicially inuired into and

corrected only i it is capricious, (!i%sical, un3ust or unreasonable, t!ere !a'ing been a denial o due processor a 'iolation o any ot!er applicable constitutional guarantee. Police po(er 6is elastic and %ust be responsi'eto 'arious social conditions@ it is not conined (it!in narro( circu%scriptions o precedents resting on pastconditions@ it %ust ollo( t!e legal progress o a de%ocratic (ay o lie. Public (elare (!en clas!ing (it!

t!e indi'idual rig!t to property s!ould pre'ail t!roug! t!e states e7ercise o its police po(er. erein, t!e%unicipality o #andaluyong e7ercised police po(er to saeguard or pro%ote t!e !ealt!, saety, peace, goodorder and general (elare o t!e people in t!e locality. E5A, a %ain traic artery (!ic! runs t!roug! se'eralcities and %unicipalities in t!e #etro #anila area, supports an endless strea% o traic and t!e resulting

acti'ity, noise and pollution are !ardly conduci'e to t!e !ealt!, saety or (elare o t!e residents in its route.



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a'ing been e7pressly granted t!e po(er to adopt >oning and subdi'ision ordinances or regulations, t!e#unicipal "ouncil o #andaluyong (as reasonably 3ustiied under t!e circu%stances in passing t!e sub3ectresolution. $!e %oti'es be!ind t!e passage o t!e uestioned resolution being reasonable, and it being a6legiti%ate response to a elt public need,6 not (!i%sical or oppressi'e, t!e non;i%pair%ent o contracts

clause o t!e "onstitution (ill not bar t!e %unicipalitys proper e7ercise o t!e po(er. *urt!er, la(s and

reser'ation o essential attributes o so'ereign po(er are read into contracts agreed upon by t!e parties. 8otonly are e7isting la(s read into contracts in order to i7 obligations as bet(een t!e parties, but t!e reser'ationo essential attributes o so'ereign po(er is also read into contracts as a postulate o t!e legal order. $!epolicy o protecting contracts against i%pair%ents presupposes t!e %aintenance o a go'ern%ent by 'irtue o(!ic! contractual relations are (ort!(!ile, a go'ern%ent (!ic! retains adeuate aut!ority to secure t!e

peace and good order o society. $!e la( or%s part o, and is read into, e'ery contract, unless clearlye7cluded t!erero% in t!ose cases (!ere suc! e7clusion is allo(ed.

11( #anueva v. astane$a [GR L-)1311, 21 e/te+ber 1987]

"irst #ivision, $ru% (J): & concur, 1 on leave'

Facts On ? 8o'e%ber 191, t!e %unicipal council o 5an *ernando Pa%panga- adopted Resolution 21&

aut!ori>ing so%e 24 %e%bers o t!e *ernandino nited #erc!ants and $raders Association *#$A- toconstruct per%anent stalls and sell along #ercado street, on a strip o land %easuring 12 by ?? %eterstalipapa-. $!e action (as protested on 10 8o'e%ber 191 by *elicidad Billanue'a, *ernando "aisip, Antonio

Liang, *elina #iranda, Ricardo Puno, *lorencio La7a, and Rene Oca%po clai%ing t!at t!ey (ere grantedpre'ious aut!ori>ation by t!e %unicipal go'ern%ent to conduct business t!erein-, in "i'il "ase 2040, (!ere

t!e "ourt o *irst +nstance "*+- Pa%panga, =ranc! 2, issued a (rit o preli%inary in3unction t!at pre'entedt!e *#$A %e%bers ro% constructing t!e said stalls until inal resolution o t!e contro'ersy. On 1& January

194, (!ile t!e case (as pending, t!e %unicipal council o 5an *ernando adopted Resolution 29, (!ic!declared t!e sub3ect area as 6t!e par)ing place and as t!e public pla>a o t!e %unicipality,6 t!ereby i%pliedlyre'o)ing Resolution 21& series o 191-. On 2 8o'e%ber 19&, Judge Andres ". Aguilar decided t!eaoresaid case and !eld t!at t!e land occupied by Billanue'a, et. al., being public in nature, (as beyond t!e

co%%erce o %an and t!ereore could not be t!e sub3ect o pri'ate occupancy. $!e (rit o preli%inary

in3unction (as %ade per%anent. $!e decision (as not enorced as t!e petitioners (ere not e'icted ro% t!eplace. $!e nu%ber o 'endors in t!e area talipapa- ballooned to 200. $!e area deteriorated increasingly tot!e great pre3udice o t!e co%%unity in general, as t!e %a)es!it stalls render t!e area as 'irtual ire trap. $!e

proble% estered or so%e %ore years under a presu%ably uneasy truce a%ong t!e protagonists, none o(!o% %ade any %o'e, or so%e reason. On 12 January 19&2, t!e Association o "oncerned "iti>ens and"onsu%ers o 5an *ernando iled a petition or t!e i%%ediate i%ple%entation o Resolution 29, to restore t!eproperty to its original and custo%ary use as a public pla>a. Acting t!ereon ater an in'estigation conducted

by t!e %unicipal attorney, O+" Oice o t!e #ayor- Bicente #acalino issued on 14 June 19&2 a resolutionreuiring t!e %unicipal treasurer and t!e %unicipal engineer to de%olis! t!e stalls beginning 1 July 19&2. $!e

Billanue'a, et. al. iled a petition or pro!ibition (it! t!e "*+ Pa%panga "i'il "ase 4?0- on 2 June 19&2.$!e 3udge denied t!e petition on 19 July 19&2, and t!e %otion or reconsideration on : August 19&2,

pro%pting Billanue'a, et. al. to ile a petition on certiorari (it! t!e 5upre%e "ourt. Paterno Cue'arra, (!oreplaced #acalino as O+" o 5an *ernando, (as i%pleaded.

!ssue !et!er t!e Ordinance i%pairs t!e alleged lease contracts bet(een t!e %ar)et stall 'endors occupyingt!e %unicipal pla>a and t!e Co'ern%ent.

"e#$ A public pla>a is beyond t!e co%%erce o %an and so cannot be t!e sub3ect o lease or any ot!ercontractual underta)ing. $!e lease o a public pla>a o a %unicipality in a'or o a pri'ate person is null and'oid. A pla>a cannot be used or t!e construction o %ar)et stalls, specially o residences, and t!at suc!structures constitute a nuisance sub3ect to abate%ent according to la(. $o(n pla>as are properties o public

do%inion, to be de'oted to public use and to be %ade a'ailable to t!e public in general. $!ey are outside t!e



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co%%erce o %an and cannot be disposed o or e'en leased by t!e %unicipality to pri'ate parties. Also, aportion o a public side(al) is li)e(ise beyond t!e co%%erce o %an. Any contract entered into in connection(it! t!e side(al), is ipso acto null and ultra 'ires. $!e side(al) (as intended or and (as used by t!epublic, in going ro% one place to anot!er. $!e streets and public places o t!e city s!all be )ept ree and clear

or t!e use o t!e public, and t!e side(al)s and crossings or t!e pedestrians, and t!e sa%e s!all only be used

or occupied or ot!er purposes as pro'ided by ordinance or regulation@ stalls bloc) t!e ree passage opedestrians resulting to clogged (it! 'e!icular traic. On t!e ot!er !and, police po(er under t!e general(elare clause aut!ori>es t!e %unicipal council to enact suc! ordinances and %a)e suc! regulations, notrepugnant to la(, as %ay be necessary to carry into eect and disc!arge t!e po(ers and duties conerred uponit by la( and suc! as s!all see% necessary and proper to pro'ide or t!e !ealt! and saety, pro%ote t!e

prosperity, i%pro'e t!e %orals, peace, good order, co%ort, and con'enience o t!e %unicipality and t!ein!abitants t!ereo, and or t!e protection o property t!erein. $!us, police po(er cannot be surrendered orbargained a(ay t!roug! t!e %ediu% o a contract. E'ery contract aecting t!e public interest suers acongenital inir%ity in t!at it contains an i%plied reser'ation o t!e police po(er as a postulate o t!e e7isting

legal order. $!is po(er can be acti'ated at any ti%e to c!ange t!e pro'isions o t!e contract, or e'en abrogateit entirely, or t!e pro%otion or protection o t!e general (elare. 5uc! an act (ill not %ilitate against t!ei%pair%ent clause, (!ic! is sub3ect to and li%ited by t!e para%ount police po(er.

115 an'a#an' v. !nter+e$&ate //e##ate urt ! [GR 711)9, 22 *ece+ber 1988]4 a#s e#-&r#a'e ssc&at&n !nc. vs. !nter+e$&ate //e##ate urt [GR 7(37)], e#-&r #a'e

ssc&at&n !nc. vs. urt 6 //ea#s [GR 7)39(], e#-&r #a'e ssc&at&n !nc. vs. urt 6 //ea#s [GR 78182], an$ , e#-&r #a'e ssc&at&n !nc. vs.

urt 6 //ea#s [GR 82281]En Banc, Sariento (J): 1 concur, 1 on leave, & too! no part

Facts *+ 7116. =el;Air Billage is located nort! o =uendia A'enue e7tension across a stretc! oco%%ercial bloc) ro% Reposo 5treet in t!e (est up to Dodiac 5treet in t!e east. !en =el;Air Billage (asplanned, t!is bloc) bet(een Reposo and Dodiac 5treets ad3oining =uendia A'enue in ront o t!e 'illage (as

designated as a co%%ercial bloc). =el;Air Billage (as o(ned and de'eloped into a residential subdi'ision in

t!e 19:0s by #a)ati e'elop%ent "orporation #"-, (!ic! in 19& (as %erged (it! Ayala "orporation.5pouses 5angalang reside at 110 Jupiter 5t. bet(een #a)ati A'e. and Reposo 5t.@ 5pouses Caston reside at 4Jupiter 5t. bet(een #a)ati A'e. and Dodiac 5t.@ 5pouses =riones reside at Jupiter 5t.@ (!ile =el;Air

Billage Association, +nc. =ABA- is t!e !o%eo(ners association in =el;Air Billage (!ic! ta)es care o t!esanitation, security, traic regulations and general (elare o t!e 'illage. $!e lots (!ic! (ere acuired by t!e5angalangs, t!e Castons, t!e =rioneses in 190, 19:? and 19:&, respecti'ely, all sold by #" sub3ect tocertain conditions and ease%ents contained in eed Restrictions (!ic! or%ed a part o eac! deed o sale i.e.

being auto%atic %e%bers o =el;Air Association (!o %ust abide by t!e rules and regulations laid do(n byt!e Association as per sanitation, security and general (elare o t!e co%%unityF@ t!at lots cannot be

subdi'ided and only used or residential purposes@ t!at single a%ily !ouse be constructed in single lot@ noco%%ercial or ad'ertising signs placed or erected on t!e lot@ no ar% ani%als allo(ed, pets allo(ed@ ease%ent

o 2 %eters (it!in lot@ lot not used or i%%oral or illegal trade or acti'ity@ grass al(ays tri%%ed@ Restrictionsin orce or :0 years starting 1: January 19:?-. #" constructed a ence on t!e co%%ercial bloc) along

Jupiter 5treet in 19, alt!oug! it (as not part o t!e original plan. $!e ence (as partially destroyed in 19?0due to a typ!oon. $!e ence (as subseuently rebuilt by t!e Ayala. Jupiter 5treet (as (idened in 19?2, andt!e ence !ad to be destroyed. pon reuest o =ABA, t!e (all (as rebuilt inside t!e boundary o t!eco%%ercial bloc). Ayala inally decided to subdi'ide and sell t!e lots in t!e co%%ercial bloc) bet(een

=uendia and Jupiter. =ABA reuested conir%ation o use o t!e co%%ercial lots. On /0 June 19?2, Ayalali)e(ise inor%ed =ABA t!at in a e( %ont!s it s!all subdi'ided and sell t!e co%%ercial lots bordering t!enort! side o =uendia A'enue E7tension ro% Reposo 5t. up to Dodiac 5t. eed restrictions building !a'ingset bac) o 19 %eters, and %atters RE entrances and e7its- are i%posed in suc! co%%ercial lots to !ar%oni>e

and blend (it! t!e de'elop%ent and (elare o =el;Air Billage. Ayala urt!er applied or special %e%bers!ip



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in =ABA o t!e co%%ercial lot o(ners, t!e application sub%itted to =ABAGs board o go'ernors or decision.On 2: 5epte%ber 19?2, !eig!t li%itations or buildings (ere increased ro% 12.: %eters to 1: %eters andJupiter street is (idened by /.: %eters. $!e (idening o t!e street reduced t!e association dues to be re%ittedto =ABA, inas%uc! t!at it no( applies to ?,?2 s.%. rat!er t!an &1,:90 s.%. ue rates !a'e increased

ro% P0.:Hs.% in 19?2 to P/Hs.% in 19&0. On 4 April 19?:, #a)ati enacted Ordinance &1, pro'iding or t!e

>oniication o #a)ati, (!ic! classiied =el;Air Billage as a "lass A Residential Done, (it! its boundary int!e sout! e7tending to t!e center line o Jupiter 5treet "!apter /, Article 1, 5ection /.0/, paragrap! *-. $!e=uendia A'enue e7tension area (as classiied as Ad%inistrati'e Oice Done (it! its boundary in t!e 8ort!;8ort! East E7tending also up to t!e center line o Jupiter 5treet "!apter /, Article 1, 5ection /.0:, paragrap!"-. $!e Residential Done and t!e Ad%inistrati'e Oice Done !a'e a co%%on boundary along t!e center line

o Jupiter 5treet. $!e >oning (as later ollo(ed under t!e "o%pre!ensi'e Doning Ordinance or t!e 8ational"apital Region adopted by t!e #etro #anila "o%%ission as Ordinance &1;01 on 14 #arc! 19&1, (it!%odiication t!at =el;Air Billage is si%ply bounded in t!e 5out!;5out!east by Jupiter 5treet, and t!e bloc);deep strip along t!e nort!(est side o =uendia A'enue E7tension ro% Reposo to E5A as ig! +ntensity

"o%%ercial Done. nder t!e >oning classiication, Jupiter 5treet is a co%%on boundary o =el;Air Billageand t!e co%%ercial >one. On 1? January 19??, t!e Oice o t!e #ayor o #a)ati directed =ABA, in t!einterest o public (elare and purpose o easing traic congestion, t!e opening o t!e A%apola Estrella;

#ercedes@ Pal%a gate;Billena-, #ercedes E5A;+%eldaHA%apola 3unction-, Dodiac #ercedes;=uendia-,Jupiter Dodiac;Reposo, connecting #etropolitan a'enue to Pasong $a%o and B. "ru> e7tension-, 8eptune#a)ati a'e.;Reposo-, Orbit *.DobelH "andelaria intersection IJupiter Paseo de Ro7as@ #ercedes;=uendia-

streets o =el;Air Billage or public use. On 10 *ebruary, =ABA replied, e7pressing concern o t!e residentsabout t!e opening o t!e streets to general public and reuesting t!e indeinite postpone%ent o t!e plan to

open Jupiter 5t. to public 'e!icles. =ABA, !o(e'er, 'oluntarily opened t!e ot!er streets. On 12 August 19??,t!e %unicipal oicials o #a)ati allegedly opened, destroyed and re%o'ed t!e gates constructed at t!e corner

o Reposo 5t. and Jupiter 5t. as (ell as gatesHences constructed at Jupiter 5treet and #a)ati A'enue orcibly@t!ereby opening Jupiter street to public traic. +ncreased traic (as obser'ed along Jupiter 5treet ater itsopening to public use. Purc!asers o t!e co%%ercial lots started constructing t!eir respecti'e buildings andde%olis!ed t!e ence or (all (it!in t!e boundary o t!eir lots. #any o(ners constructed t!eir o(n ences and

(alls and e%ployed t!eir o(n security guards. On 2? January 19?&, Ayala donated t!e entire Jupiter 5treet

ro% #etropolitan A'enue to Dodiac 5treet to =ABA. it! t!e opening o t!e entire Jupiter street to publictraic, t!e residential lots located in t!e nort!ern side o Jupiter 5treet ceased to be used or purely residentialpurposes, and beca%e co%%ercial in c!aracter. On 29 October 19?9, spouses 5angalang iled an action or

da%ages against Ayala predicated on bot! breac! o contract and on tort or uasi;delict. A supple%entalco%plaint (as later iled by t!e 5angalangs to aug%ent t!e relies prayed or in t!e original co%plaintbecause o alleged super'ening e'ents (!ic! occurred during t!e trial o t!e case. "lai%ing to be si%ilarlysituated, spouses Caston, =riones, and =ABA inter'ened in t!e case. $!e "*+ Pasig rendered a decision in

a'or o t!e 5angalangs a(arding t!e% P:00,000 as actual and conseuential da%ages, P2# as %oralda%ages, P:00,000 as e7e%plary da%ages, P100,000 as attorneyGs ees, and t!e cost o suit. $!e inter'enors

Caston and =riones (ere a(arded P400,000 as conseuential da%ages, P:00,000 as %oral da%ages,P:00,000 as e7e%plary da%ages, P:0,000 as attorneyGs ees, and t!e cost o suit@ eac!. +nter'enor =ABA (as

a(arded t!e sa%e e7cept or %oral da%ages. $!e da%ages a(arded bear legal interest ro% t!e iling o t!eco%plaint. Ayala (as also ordered to restoreHreconstruct t!e peri%eter (all at t!e original position in 19 at

its o(n e7pense (it!in %ont!s ro% inality o 3udg%ent. On appeal, t!e "ourt o Appeals re'ersed and setaside t!e decision or not being supported by acts and la( on t!e %atter@ and entered anot!er, dis%issing t!ecase or lac) o cause o action@ (it!out pronounce%ent as to costs. 5angalang appealed.

*+ 7/&76. $!e =el;Air Billage Association =ABA- iled and action to enorce t!e restrictions stipulated int!e deeds o sale e7ecuted by t!e Ayala "orporation. =ABA originally broug!t t!e co%plaint in t!e R$"#a)ati, principally or speciic peror%ance, =ABA alleging t!at Rosario de Jesus $enorio allo(ed "eciliaCon>al'e> to occupy and con'ert t!e !ouse at 0 Jupiter 5treet into a restaurant, (it!out its )no(ledge and

consent, and in 'iolation o t!e deed restrictions (!ic! pro'ide t!at t!e lot and building t!ereon %ust be used



8/13


only or residential purposes upon (!ic! t!e prayed;or %ain relie (as or $enorio and Con>al'es toper%anently rerain ro% using t!e pre%ises as co%%ercial and to co%ply (it! t!e ter%s o t!e eedRestrictions. $!e trial court dis%issed t!e co%plaint on a procedural ground, i.e., pendency o an identicalaction, "i'il "ase /2/4 =ABA '. $enorio-. $!e "ourt o Appeals air%ed, and !eld, in addition, t!at Jupiter

5treet 6is classiied as ig! density co%%ercial ";/- >one as per "o%pre!ensi'e Doning Ordinance &1;01

or 8"R ollo(ing its o(n ruling in A";CR 49 =ABA '. y;Land Realty < e'elop%ent "orp.-. =ABAappealed.

*+ 76&/. 5pouses Eduardo Ro%ualde> and =uena $ioseco are t!e o(ners o a !ouse and lot located at 10&Jupiter 5t $"$ //2/94, Registry o eeds Ri>al-.At t!e ti%e t!ey acuired t!e sub3ect !ouse and lot, se'eral

restrictions (ere already annotated on t!e re'erse side o t!eir title. $!e restrictions- re%ain in orce or :0years ro% 1: January 19:?, unless sooner cancelled in its entirety by 2H/ 'ote o t!e %e%bers in goodstanding o t!e =el;Air Billage Association =ABA-. o(e'er, t!e Association %ay ro% ti%e to ti%e, addne( ones, a%end or abolis! particular restrictions or parts t!ereo by %a3ority rule. uring t!e early part o

19?9, =ABA noted t!at certain reno'ations and constructions (ere being %ade by t!e spouses on t!epre%ises. $!e latter ailed to inor% =ABA o t!e acti'ity, e'en upon reuest, t!at pro%pted =ABA to send itsc!ie security oicer to 'isit t!e pre%ises on 2/ #arc! 19?9 and ound out t!at t!e spouses (ere putting up a

ba)e and coee s!op. $!e spouses (ere re%inded t!at t!ey (ere 'iolating t!e deed restriction, but t!e latterproceeded (it! t!e construction o t!e ba)e s!op. On /0 April 19?9, =ABA (rote t!e spouses to desist ro%using t!e pre%ises or co%%ercial purposes, (it! t!reat o suit. espite t!e (arning, t!e spouses proceeded

(it! t!e construction o t!eir ba)e s!op. $!e trial court ad3udged in a'or o =ABA. On appeal, t!e "ourt oAppeals re'ersed t!e decision on t!e strengt! o its !olding in A";CR 49. =ABA ele'ated t!e %atter to

t!e 5upre%e "ourt by a petition or re'ie( on certiorari. $!e "ourt initially denied t!e petition or lac) o%erit, or (!ic! =ABA soug!t a reconsideration. Pending resolution, t!e case (as reerred to t!e 5econd

i'ision and t!ereater, to t!e "ourt En =anc en consulta. Per Resolution, dated 29 April 19&&, t!e case (asconsolidated (it! CR ?4/? and &22&1.

*+ 7010. olores *illey leased !er building and lot situated at 20: Reposo 5treet to t!e ad'ertising ir% J.

Ro%ero and Associates, in alleged 'iolation o deed restrictions (!ic! stipulated t!at *illeys lot could only

be used or residential purposes. $!e =el;Air Billage Association =ABA- soug!t 3udg%ent ro% t!e lo(ercourt ordering t!e *illey and J.Ro%ero to per%anently rerain ro% using t!e pre%ises in uestion asco%%ercial and to co%ply (it! t!e ter%s o t!e deed restrictions. $!e trial court granted t!e relie soug!t or

by =ABA (it! t!e a additional i%position o e7e%plary da%ages o P:0,000.00 and attorneys ees oP10,000.00. $!e trial court ga'e e%p!asis to t!e restricti'e clauses contained in *illeys deed o sale ro%=ABA, (!ic! %ade t!e con'ersion o t!e building into a co%%ercial one a 'iolation. Appeal (as %adeclai%ing t!at t!e restrictions in t!e deed o sale are out%oded. =ABA on t!e ot!er !and relied on a rigid

interpretation o t!e contractual stipulations agreed upon (it! *illey, in eect arguing t!at t!e restrictions are'alid ad ininitu%. $!e "ourt o Appeals o'erturned t!e lo(er court, obser'ing t!at J. Ro%ero < Associates

!ad been gi'en aut!ority to open a co%%ercial oice by t!e u%an 5ettle%ents Regulatory "o%%ission.

CR &22&1F Bioleta #oncal, o(ner o a parcel o land (it! a residential !ouse constructed t!ereon situated at104 Jupiter 5treet, leased !er property to #a3al e'elop%ent "orporation, (it!out t!e consent o t!e =el;Air

Billage Association =ABA-. 5!e purc!ased t!e lot ro% #a)ati e'elop%ent "orporation. $!e lot inuestion is restricted to be used or residential purposes only as part o t!e deed restrictions annotated on itstitle. +t is on t!e sa%e side o t!e street (!ere t!ere are restaurants, clinics, place%ent or e%ploy%entagencies and ot!er co%%ercial or business establis!%ents. $!ese establis!%ents, !o(e'er, (ere sued by

=ABA in t!e proper court. $!e trial court dis%issed t!e =ABAs co%plaint, a dis%issal air%ed on appeal.$!e appellate court declared t!at t!e opening o Jupiter 5treet to !u%an and 'e!icular traic, and t!eco%%erciali>ation o t!e #unicipality o #a)ati in general, (ere circu%stances t!at !ad %ade co%pliance by#oncal (it! t!e aoresaid 6deed restrictions6 6e7tre%ely diicult and unreasonable, a de'elop%ent t!at !ad

e7cused co%pliance altoget!er under Article 12? o t!e "i'il "ode. =ABA appealed.



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rt FactsCR ?4/?, ?/94, ?&1&2, and &22&1 are eorts to enorce t!e 6deed restrictions6 againstspeciic residents o Jupiter 5treet and, (it! respect to CR ?&1&2, Reposo 5treet. $!e residents !a'e allegedlycon'erted t!eir residences into co%%ercial establis!%ents a restaurant in CR ?4/?, a ba)ery and coee

s!op in CR ?/94, an ad'ertising ir% in CR ?&1&2@ and a construction co%pany, apparently, in CR &22&1-

in 'iolation o t!e said restrictions. $!eir %ot!er case, CR ?119 is, on t!e ot!er !and, a petition to !old t!e'endor itsel, Ayala "orporation or%erly #a)ati e'elop%ent "orporation-, liable or tearing do(n t!eperi%eter (all along Jupiter 5treet t!at !ad t!eretoore closed its co%%ercial section ro% t!e residences o=el;Air Billage and us!ering in, as a conseuence, t!e ull 6co%%erciali>ation6 o Jupiter 5treet, in 'iolationo t!e 'ery restrictions it !ad aut!ored. $!e "ourt o Appeals dis%issed all : appeals on t!e basis pri%arily o

its ruling in A";CR 49, 6=el;Air Billage, +nc. '. y;Land Realty e'elop%ent "orporation, et al.,6 in(!ic! t!e appellate court e7plicitly re3ected clai%s under t!e sa%e 6deed restrictions6 as a result o Ordinance&1 enacted by t!e Co'ern%ent o t!e #unicipality o #a)ati, as (ell as "o%pre!ensi'e Doning Ordinance&101 pro%ulgated by t!e #etropolitan #anila "o%%ission, (!ic! t(o ordinances allegedly allo(ed t!e use

o Jupiter 5treet bot! or residential and co%%ercial purposes. +t (as li)e(ise !eld t!at t!ese t(in %easures(ere 'alid as a legiti%ate e7ercise o police po(er.

!ssue!et!er t!e constitutional guarantee on non;i%pair%ent o contracts can be raised as a deterrent to t!ee7ercise o police po(er.

"e#$ All contracts are sub3ect to t!e o'erriding de%ands, needs, and interests o t!e greater nu%ber as t!e5tate %ay deter%ine in t!e legiti%ate e7ercise o police po(er. $!e "ourt guarantees sanctity o contract and

is said to be t!e 6la( bet(een t!e contracting parties,6 but (!ile it is so, it cannot contra'ene 6la(, %orals,good custo%s, public order, or public policy.6 Abo'e all, it cannot be raised as a deterrent to police po(er,

designed precisely to pro%ote !ealt!, saety, peace, and en!ance t!e co%%on good, at t!e e7pense ocontractual rig!ts, (!ene'er necessary. Police po(er is t!e po(er to prescribe regulations to pro%ote t!e!ealt!, %orals, peace, education, good order or saety and general (elare o t!e people. +n'ariably describedas 6t!e %ost essential, insistent, and illi%itable o po(ers6 and 6in a sense, t!e greatest and %ost po(erul

attribute o go'ern%ent,6 t!e e7ercise o t!e po(er %ay be 3udicially inuired into and corrected only i it is

capricious, (!i%sical, un3ust or unreasonable, t!ere !a'ing been a denial o due process or a 'iolation o anyot!er applicable constitutional guarantee. Police po(er is elastic and %ust be responsi'e to 'arious socialconditions@ it is not conined (it!in narro( circu%scriptions o precedents resting on past conditions@ it %ust

ollo( t!e legal progress o a de%ocratic (ay o lie. Public (elare, (!en clas!ing (it! t!e indi'idual rig!tto property, s!ould be %ade to pre'ail t!roug! t!e states e7ercise o its police po(er. erein, t!e ##"Ordinance represents a legiti%ate e7ercise o police po(er, as t!e ordinance is neit!er capricious or arbitraryor unreasonable@ but t!at it is based on co%pelling interests o general (elare. $!e restricti'e ease%ents are

si%ilar to any ot!er contract, and s!ould not deter t!e 'alid e7ercise o police po(er. $!e ##" !asreclassiied Jupiter 5treet into a !ig! density co%%ercial >one, pursuant to Ordinance &1;01. 5angalang,

=ABA, et. al., t!us !a'e no cause o action on t!e strengt! alone o said deed restrictions.K

11) %rt&'as v. urt 6 //ea#s [GR 12)102, ( *ece+ber 2000]Second #ivision, uisu2ing (J): / concur

Facts On 2: August 19?, Ortigas < "o%pany sold to E%ilia er%oso, a parcel o land located inCreen!ills 5ubdi'ision +B, 5an Juan, #etro #anila $"$ 0?/?- (it! conditions duly annotated on t!ecertiicate o title issued to E%ilia. +n 19&1, t!e #etropolitan #anila "o%%ission no( ##A- enacted

##" Ordinance &1;01 "o%pre!ensi'e Doning Area or t!e 8ational "apital Region-, (!ic! reclassiied asa co%%ercial area a portion o Ortigas A'enue ro% #adison to Roose'elt 5treets o Creen!ills 5ubdi'ision(!ere t!e lot is located. On & June 19&4, +s%ael #at!ay +++ leased t!e lot ro% E%ilia er%oso and J.P.er%oso Realty "orp.. $!e lease contract did not speciy t!e purposes o t!e lease. $!ereupon, #at!ay

constructed a single story co%%ercial building or Creen!ills Auto!aus, +nc., a car sales co%pany. On 1&



10/13


January 199:, Ortigas iled a co%plaint against E%ilia er%oso (it! t!e R$" Pasig =ranc! 21, "i'il "ase49/1-, see)ing t!e de%olition o t!e said co%%ercial structure or !a'ing 'iolated t!e ter%s and conditionso t!e eed o 5ale. $!e co%plaint (as later a%ended to i%plead +s%ael C. #at!ay +++ and J.P. er%osoRealty "orp., (!ic! !a'e 10 interest in t!e lot. +n !is ans(er, #at!ay +++ denied any )no(ledge o t!e

restrictions on t!e use o t!e lot and iled a cross;clai% against t!e er%osos. On 1 June 199:, t!e trial court

issued t!e (rit o preli%inary in3unction. On 29 June 199:, #at!ay +++ %o'ed to set aside t!e in3uncti'eorder, but t!e trial court denied t!e %otion. #at!ay +++ t!en iled (it! t!e "A a special ci'il action orcertiorari "A;CR 5P /919/-, ascribing to t!e trial court gra'e abuse o discretion in issuing t!e (rit opreli%inary in3unction. e clai%ed t!at ##" Ordinance &1;01 classiied t!e area (!ere t!e lot (as locatedas co%%ercial area and said ordinance %ust be read into t!e 2: August 19? eed o 5ale as a concrete

e7ercise o police po(er. Ortigas < "o%pany a'erred t!at restrictions duly annotated on t!e title %ust pre'ailo'er t!e ordinance. On 2: #arc! 199, t!e appellate court granted t!e petition, nulliied and set aside t!eassailed orders. $!e appellate court !eld t!at t!e ##" Ordinance eecti'ely nulliied t!e restrictionsallo(ing only residential use o t!e property in uestion. Ortigas seasonably %o'ed or reconsideration, but

t!e appellate court denied it on 1/ August 199. Ortigas iled t!e petition or re'ie(.

!ssue!et!er ordinances, in e7ercise o police po(er, be gi'en retroacti'e eect and i%pair 'ested rig!ts

and contracts.

"e#$ +n general, la(s are to be construed as !a'ing only prospecti'e operation. Le7 prospicit, non respicit.

Eually settled, only la(s e7isting at t!e ti%e o t!e e7ecution o a contract are applicable t!ereto and notlater statutes, unless t!e latter are speciically intended to !a'e retroacti'e eect. A later la( (!ic! enlarges,

abridges, or in any %anner c!anges t!e intent o t!e parties to t!e contract necessarily i%pairs t!e contractitsel and cannot be gi'en retroacti'e eect (it!out 'iolating t!e constitutional pro!ibition against

i%pair%ent o contracts. One e7ception in'ol'es police po(er. A la( enacted in t!e e7ercise o police po(erto regulate or go'ern certain acti'ities or transactions could be gi'en retroacti'e eect and %ay reasonablyi%pair 'ested rig!ts or contracts. Police po(er legislation is applicable not only to uture contracts, buteually to t!ose already in e7istence. 8on;i%pair%ent o contracts or 'ested rig!ts clauses (ill !a'e to yield

to t!e superior and legiti%ate e7ercise by t!e 5tate o police po(er to pro%ote t!e !ealt!, %orals, peace,

education, good order, saety, and general (elare o t!e people. #oreo'er, statutes in e7ercise o 'alid policepo(er %ust be read into e'ery contract. ##" Ordinance &1;01 is a legiti%ate police po(er %easure aspre'iously !eld in 5angalang 's. +A". $!us, ollo(ing t!e ruling in Ortigas < "o., Ltd. 's. *eati =an) ed sub;leasing o part o t!e leased pre%ises to t!ird persons (it!out securing t!e consent o t!elessor (it!in t!e reuired 0;day period ro% t!e pro%ulgation o t!e ne( la( =P 2:-. Ater trial, t!e court auo rendered its decision ordering "aleon and all persons clai%ing possession under !er a- to 'acate t!e

pre%ises alluded to in t!e co%plaint@ b- to re%o'e (!ate'er i%pro'e%ent s!e introduced on t!e property@ c-to pay A" t!e a%ount o P2,000.00 as attorneys ees@ and d- to pay t!e costs. "aleon appealed t!e decision

to t!e Regional $rial "ourt R$"- and on 24 8o'e%ber 19&0, t!e R$" air%ed in toto t!e decision o t!e#$". $!e R$" decision (as appealed to t!e "ourt o Appeals or re'ie(. $!e appellate court, on 2& January

19&?, dis%issed t!e petition outrig!t or not being pri%a acie %eritorious. "aleon iled t!e petition orre'ie( on certiorari (it! t!e 5upre%e "ourt.

!ssue!et!er legislation, appropriate to saeguard 'ital interests o t!e people, %ay %odiy or abrogate

contracts already in eect.

"e#$ $!e constitutional guaranty o non;i%pair%ent o obligations o contract is li%ited by and sub3ect tot!e e7ercise o police po(er o t!e 5tate in t!e interest o public !ealt!, saety, %orals and general (elare. +n

spite o t!e constitutional pro!ibition, t!e 5tate continues to possess aut!ority to saeguard t!e 'ital interestso its people. Legislation appropriate to saeguarding said interest %ay %odiy or abrogate contracts alreadyin eect. E'ery contract aecting public interest suers a congenital inir%ity in t!at it contains an i%pliedreser'ation o t!e police po(er as a postulate o t!e e7isting legal order. $!is po(er can be acti'ated at

anyti%e to c!ange t!e pro'isions o t!e contract, or e'en abrogate it entirely, or t!e pro%otion or protectiono t!e general (elare. 5uc! an act (ill not %ilitate against t!e i%pair%ent clause, (!ic! is sub3ect to and

li%ited by t!e para%ount police po(er. =atas Pa%bansa 2:, 6An Act Regulating Rentals o (elling nits oro Land On !ic! Anot!ers (elling is Located and *or Ot!er Purposes6 s!o(s t!at t!e sub3ect %atter is

t!e regulation o rentals and is intended only or d(elling units (it! speciied %ont!ly rentals constructedbeore t!e la( beca%e eecti'e. =P 2: is deri'ed ro% P 20 (!ic! !as been declared by t!e "ourt as a

police po(er legislation, applicable to leases entered into prior to 14 July 19?1 eecti'ity date o RA :/9-,so t!at t!e applicability t!ereo to e7isting contracts cannot be denied.

120 Mera#c v. La'una [GR 131359, 5 May 1999]

4hird #ivision, 5itug (J): / concur

Facts On 'arious dates, certain %unicipalities o t!e Pro'ince o Laguna, including, =ian, 5ta. Rosa, 5anPedro, Luisiana, "alauan and "abuyao, by 'irtue o e7isting la(s t!en in eect, issued resolutions t!roug!

t!eir respecti'e %unicipal councils granting ranc!ise in a'or o t!e #anila Electric "o%pany #eralco- or



13/13


t!e supply o electric lig!t, !eat and po(er (it!in t!eir concerned areas. On 19 January 19&/, #eralco (asli)e(ise granted a ranc!ise by t!e 8ational Electriication Ad%inistration to operate an electric lig!t andpo(er ser'ice in t!e #unicipality o "ala%ba, Laguna. On 12 5epte%ber 1991, Republic Act ?10 1991Local Co'ern%ent "ode LC"F- (as enacted to ta)e eect on 1 January 1992 en3oining local go'ern%ent

units to create t!eir o(n sources o re'enue and to le'y ta7es, ees and c!arges, sub3ect to t!e li%itations

e7pressed t!erein, consistent (it! t!e basic policy o local autono%y. Pursuant to t!e pro'isions o t!e "ode,Laguna enacted Pro'incial Ordinance 01;92, eecti'e 1 January 199/, (!ic! pro'ided a *ranc!ise $a75ection 2.09-. On t!e basis o t!e ordinance, Pro'incial $reasurer sent a de%and letter to #eralco or t!ecorresponding ta7 pay%ent. #eralco paid t!e ta7 under protest. A or%al clai% or reund (as t!ereater sentby #eralco to t!e Pro'incial $reasurer o Laguna clai%ing t!at t!e ranc!ise ta7 it !ad paid and continued to

pay to t!e 8ational Co'ern%ent pursuant to P ::1 5ection 1- already included t!e ranc!ise ta7 i%posedby t!e Pro'incial $a7 Ordinance. On 2& August 199:, t!e clai% or reund o #eralco (as denied in a lettersigned by Co'ernor Lina. +n denying t!e clai%, t!e pro'ince relied on a %ore recent la(, RA ?10 1991LC"-, t!an t!e old decree in'o)ed by #eralco P ::1-. On 14 *ebruary 199, #eralco iled (it! t!e

Regional $rial "ourt R$"- o 5ta. "ru>, Laguna, a co%plaint or reund, (it! a prayer or t!e issuance o a(rit o preli%inary in3unction andHor $RO, against t!e Pro'ince o Laguna and =ala>o in !is capacity as t!ePro'incial $reasurer o Laguna. $!e trial court, in its assailed decision o /0 5epte%ber 199?, dis%issed t!e

co%plaint and declared t!e ordinance 'alid, binding, reasonable, and enorceable. ence, t!e petition.

!ssue !et!er t!e (it!dra(al o ta7 e7e%ption to #eralco by t!e local go'ern%ent unit pro'ince- 'iolates

t!e non;i%pair%ent clause o t!e "onstitution.

"e#$ $!e Local Co'ern%ent "ode o 1991 !as incorporated and adopted, by and large, t!e pro'isions o t!eno( repealed Local $a7 "ode P 2/1 pursuant to 5ection 2, Article +, 19?/ "onstitution@ in eect since 1

July 19?/-. $!e 1991 "ode e7plicitly aut!ori>es pro'incial go'ern%ents, not(it!standing 6any e7e%ptiongranted by any la( or ot!er special la( to i%pose a ta7 on businesses en3oying a ranc!ise 5ection 1/?-.+ndicati'e o t!e legislati'e intent to carry out t!e "onstitutional %andate o 'esting broad ta7 po(ers to localgo'ern%ent units, t!e Local Co'ern%ent "ode !as eecti'ely (it!dra(n ta7 e7e%ptions or incenti'es

t!eretoore en3oyed by certain entities 5ection 19/-. !ile ta7 e7e%ptions contained in special ranc!ises are

in t!e nature o contracts and a part o t!e induce%ent or carrying on t!e ranc!ise, t!ese e7e%ptions,ne'ert!eless are ar ro% being strictly contractual in nature. "ontractual ta7 e7e%ptions, in t!e real sense ot!e ter% and (!ere t!e non;i%pair%ent clause o t!e "onstitution can rig!tly be in'o)ed, are t!ose agreed to

by t!e ta7ing aut!ority in contracts, suc! as t!ose contained in go'ern%ent bonds or debentures, la(ullyentered into by t!e% under enabling la(s in (!ic! t!e go'ern%ent, acting in its pri'ate capacity, s!eds itscloa) o aut!ority and (ai'es its go'ern%ental i%%unity. $ruly, ta7 e7e%ptions o t!is )ind %ay not bere'o)ed (it!out i%pairing t!e obligations o contracts. $!ese contractual ta7 e7e%ptions, !o(e'er, are not to

be conused (it! ta7 e7e%ptions granted under ranc!ises. A ranc!ise parta)es t!e nature o a grant (!ic! isbeyond t!e pur'ie( o t!e non;i%pair%ent clause o t!e "onstitution. +ndeed, Article ++, 5ection 11, o t!e

19&? "onstitution, li)e its precursor pro'isions in t!e 19/: and t!e 19?/ "onstitutions, is e7plicit t!at noranc!ise or t!e operation o a public utility s!all be granted e7cept under t!e condition t!at suc! pri'ilege

s!all be sub3ect to a%end%ent, alteration or repeal by "ongress as and (!en t!e co%%on good so reuires.+ndeed, Article ++, 5ection 11, o t!e 19&? "onstitution is e7plicit t!at no ranc!ise or t!e operation o a

public utility s!all be granted e7cept under t!e condition t!at suc! pri'ilege s!all be sub3ect to a%end%ent,alteration or repeal by "ongress as and (!en t!e co%%on good so reuires.


7 non impairment

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