STONE VS MISSISSIPPI (Waite, C.J.)101 US 814

Facts:

-the legislature of Mississippi passed an act, approved on Feb 16 1867, entitled an Act

incorporating the Mississippi Agricultural and Manufacturing Aid Society. Its provisions involve,

“to receive subscriptions, and sell and dispose of certificates of subscription which shall entitle

the holders thereof to…any lands, books, paintings, antiques, scientific instruments or apparatus,

or any other property or thing that may be ornamental, valuable, or useful…awarded to them…

by the casting of lots, or by lot, chance or otherwise.”

-Constitution of the State: adopted in convention May 15, 1868; ratified by the people on Dec 1,

1869; July 16, 1870-legislature passed an Act enforcing the provisions of the Constitution of the

State of Mississippi; Constitution of the State declares that the “legislature shall never authorize

any lottery; nor shall the sale of lottery-tickets be allowed; nor shall any lottery heretofore

authorized be permitted to be drawn, or tickets therein to be sold.”

-The Attorney-General of Mississippi filed charges against John B. Stone and others alleging that

they have violated the aforementioned provision of the Constitution; that they have been

carrying on a lottery or gift enterprise within said county and State under the name of “The

Mississippi Agricultural and Manufacturing Aid Society”

-The defendants (Stone, et.al.) aver that they were exercising the rights, privileges, and franchises

conferred by their charter, and that they have in all things complied with its provisions.

Issue: WON the legislature of a State can, by the charter of the lottery company, defeat the will of the people (Constitution) in relation to the further continuance of such business in the midst.

Ruling: The Court held that the respondents be ousted of and from all the liberties and privileges,

franchises and emoluments, exercised by them under and by virtue of the said Act which was

annulled with the enactment of the 1868 Constitution.

RD: The legislature cannot bargain away the police power of a State. Irrevocable grants of

property andfranchises may be made if they do not impair the supreme authority to make laws

for the right government of the State; but no legislature can curtail the power of its successors to

make such laws as they may deem proper in matters of police. Furthermore, police power

extends to all matters affecting the public health or the public morals. It cannot be denied that

lotteries are proper subjects for the exercise of this power.

ICHONG VS HERNANDEZ (Labrador, J.)101 Phil 1155

Facts: -RA 1180 entitled “An Act to Regulate the Retail Business” –nationalizes the retail trade business

-The main provisions of the Act are: “ (1) prohibition against persons, not citizens of the Phils.,

and against associations, partnerships and corporations the capital of which are not wholly

owned by citizens of the Phils., from engaging directly or indirectly in the retail trade … (2) a

prohibition against the establishment or opening by aliens actually engaged in the retail business

of additional stores or branches of retail business.”

-Petitioner, for and in his own behalf and on behalf of other alien residents corporations and

partnerships adversely affected by the provisions of RA 1180, brought this action to obtain a

judicial declaration that said Act is unconstitutional because it denies to alien residents the

equal protection of the laws and deprives of their liberty and property without due process of law

and that it violates international treaties.

-in answer, the solicitor-General and the Fiscal of the City of Manila contend that the Act was

passed in the valid exercise of the police power of the State, which exercise is authorized in the

Constitution in the interest of national economic survival and that no treaty or international

obligations are infringed.

Issue: WON the enactment falls within the scope of the police power of the state. Ruling: Yes. The disputed law was enacted to remedy a real actual threat and danger to national economy posed by alien dominance and control of the retail business and free citizens and country from dominance and control; the enactment clearly falls within the scope of the police power of the State, thru which and by which it protects its own personality and insures its security and future.

POWELL VS PENNSYLVANIA (Harlan, J.)127 US 678

Facts:

-the plaintiff is alleged to have unlawfully sold “as an article of food two cases, containing 5

pounds each, of an article designed to take the place of butter produced from pure

unadulterated milk, or cream from milk, the said article so sold as aforesaid being an article

manufactured out of certain oleaginous (oily) substances and compounds of the same other than

that produced from unadulterated milk or cream from milk, and said article so sold as aforesaid

being an imitation butter.”

-under an act (approved May 21, 1885 and which took effect July 1, 1885) entitled “An Act for

the

protection of the public health, and to prevent adulteration of dairy products, and fraud in the

sale thereof”, no person/firm/corporate body shall manufacture of any oleaginous (oily)

substance or any compound of the same other thatn that produced from unadulterated milk.

-Under Sec. 3 of the same act, it is provided that “for every such offense, forfeit and pay the sum

of $100, which shall be recoverable, with costs, by any person suing in the name of the

Commonwealth, as debts of like amount are by law recoverable, one-half of which sum, when so

recovered, shall be paid to the proper county treasurer for the use of the county in which suit is

brought, and the other half to the person or persons at whose instance such a suit shall

commence…”

Issue: WON the state can use the taxing power as an implement for the attainment of a legitimate police objective. Ruling: Yes.

RD: Regulations of the said article’s sale and restraints against its improper use undoubtedly

could be made, as they may be made with respect to all kinds of property, but the prohibition of

its use and sale is nothing less than confiscation. “The right of property in an article involves the

right to sell and dispose of such article, as well as to use and enjoy it. Any act which declares

that the owner shall neither sell it nor dispose of it nor use and enjoy it, confiscates it,

deprivinghim of his property without due process of law. Against such arbitrary legislation by the

State, the fourteenth Amendment affords protection. But the prohibition of the State in any way

or for any use is quite a different thing from a regulation of the sale or use so as to protect the

health and morals of the community…”

LUTZ VS. ARANETA [98 Phil 148; G.R. No. L-7859; 22 Dec 1955]

Facts: Walter Lutz, as the Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, seeks to recover from J. Antonio Araneta, the Collector of Internal Revenue, the sum of money paid by the estate as taxes, pursuant to the Sugar Adjustment Act. Under Section 3 of said Act, taxes are levied on the owners or persons in control of the lands devoted to the cultivation of sugar cane. Furthermore, Section 6 states all the collections made under said Act shall be for aid and support of the sugar industry exclusively. Lutz contends that such purpose is not a matter of public concern hence making the tax levied for that cause unconstitutional and void. The Court of First Instance dismissed his petition, thus this appeal before the Supreme Court.

Issue: Whether or Not the tax levied under the Sugar Adjustment Act ( Commonwealth Act 567) is unconstitutional.

Held: The tax levied under the Sugar Adjustment Act is constitutional. The tax under said Act is levied with a regulatory purpose, to provide means for the rehabilitation and stabilization of the threatened sugar industry. Since sugar production is one of the great industries of our nation, its promotion, protection, and advancement, therefore redounds greatly to the general welfare. Hence, said objectives of the Act is a public concern and is therefore constitutional. It follows that the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. If objectives and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made with the implement of the state’s police power. In addition, it is only rational that the taxes be obtained from those that will directly benefit from it. Therefore, the tax levied under the Sugar Adjustment Act is held to be constitutional.

TIO VS. VIDEOGRAM REGULATORY BOARD [151 SCRA 208; G.R. No. L-75697; 18 Jun 1987]

Facts: The case is a petition filed by petitioner on behalf of videogram operators adversely affected by Presidential Decree No. 1987, “An Act Creating the Videogram Regulatory Board" with broad powers to regulate and supervise the videogram industry.

A month after the promulgation of the said Presidential Decree, the amended the National Internal Revenue Code provided that:

"SEC. 134. Video Tapes. — There shall be collected on each processed video-tape cassette, ready for playback, regardless of length, an annual tax of five pesos; Provided, That locally manufactured or imported blank video tapes shall be subject to sales tax."

"Section 10. Tax on Sale, Lease or Disposition of Videograms. — Notwithstanding any provision of law to the contrary, the province shall collect a tax of thirty percent (30%) of the purchase price or rental rate, as the case may be, for every sale, lease or disposition of a videogram containing a reproduction of any motion picture or audiovisual program.”

“Fifty percent (50%) of the proceeds of the tax collected shall accrue to the province, and the other fifty percent (50%) shall accrue to the municipality where the tax is collected; PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the City/Municipality and the Metropolitan Manila Commission.”

The rationale behind the tax provision is to curb the proliferation and unregulated circulation of videograms including, among others, videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly prejudiced the operations of movie houses and theaters. Such unregulated circulation have caused a sharp decline in theatrical attendance by at least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific, amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually in government revenues.

Videogram(s) establishments collectively earn around P600 Million per annum from

rentals, sales and disposition of videograms, and these earnings have not been subjected to tax, thereby depriving the Government of approximately P180 Million in taxes each year.

The unregulated activities of videogram establishments have also affected the viability of the movie industry.

Issues:

(1) Whether or not tax imposed by the DECREE is a valid exercise of police power.

(2) Whether or nor the DECREE is constitutional.

Held: Taxation has been made the implement of the state's police power. The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. And while it was also an objective of the DECREE to protect the movie industry, the tax remains a valid imposition.

We find no clear violation of the Constitution which would justify us in pronouncing Presidential Decree No. 1987 as unconstitutional and void. While the underlying objective of the DECREE is to protect the moribund movie industry, there is no question that public welfare is at bottom of its enactment, considering "the unfair competition posed by rampant film piracy; the erosion of the moral fiber of the viewing public brought about by the availability of unclassified and unreviewed video tapes containing pornographic films and films with brutally violent sequences; and losses in government revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video establishments are virtually untaxed since mere payment of Mayor's permit and municipal license fees are required to engage in business."

WHEREFORE, the instant Petition is hereby dismissed. No costs.

G.R. No. L-77194 March 15, 1988

VIRGILIO GASTON, HORTENCIA STARKE, ROMEO GUANZON, OSCAR VILLANUEVA, JOSE ABELLO, REMO RAMOS, CAROLINA LOPEZ, JESUS ISASI, MANUEL LACSON, JAVIER LACSON, TITO TAGARAO, EDUARDO SUATENGCO, AUGUSTO LLAMAS, RODOLFO SIASON, PACIFICO MAGHARI, JR., JOSE JAMANDRE, AURELIO GAMBOA, ET AL., petitioners, vs.REPUBLIC PLANTERS BANK, PHILIPPINE SUGAR COMMISSION, and SUGAR REGULATORY ADMINISTRATION, respondents, ANGEL H. SEVERINO, JR., GLICERIO JAVELLANA, GLORIA P. DE LA PAZ, JOEY P. DE LA PAZ, ET AL., and NATIONAL FEDERATION OF SUGARCANE PLANTERS, intervenors.

 

MELENCIO-HERRERA, J.:

Petitioners are sugar producers, sugarcane planters and millers, who have come to this Court in their individual capacities and in representation of other sugar producers, planters and millers, said to be so numerous that it is impracticable to bring them all before the Court although the subject matter of the present controversy is of common interest to all sugar producers, whether parties in this action or not.

Respondent Philippine Sugar Commission (PHILSUCOM, for short) was formerly the government office tasked with the function of regulating and supervising the sugar industry until it was superseded by its co-respondent Sugar Regulatory Administration (SRA, for brevity) under Executive Order No. 18 on May 28, 1986. Although said Executive Order abolished the PHILSUCOM, its existence as a juridical entity was mandated to continue for three (3) more years "for the purpose of prosecuting and defending suits by or against it and enables it to settle and close its affairs, to dispose of and convey its property and to distribute its assets."

Respondent Republic Planters Bank (briefly, the Bank) is a commercial banking corporation.

Angel H. Severino, Jr., et al., who are sugarcane planters planting and milling their sugarcane in different mill districts of Negros Occidental, were allowed to intervene by the Court, since they have common cause with petitioners and respondents having interposed no objection to their intervention. Subsequently, on January 14,1988, the National Federation of Sugar Planters (NFSP) also moved to intervene, which the Court allowed on February 16,1988.

Petitioners and Intervenors have come to this Court praying for a Writ of mandamus commanding respondents:

TO IMPLEMENT AND ACCOMPLISH THE PRIVATIZATION OF REPUBLIC PLANTERS BANK BY THE TRANSFER AND DISTRIBUTION OF THE SHARES OF STOCK IN THE SAID BANK; NOW HELD BY AND STILL CARRIED IN THE NAME OF THE PHILIPPINE SUGAR COMMISSION, TO THE SUGAR PRODUCERS, PLANTERS AND MILLERS, WHO ARE THE TRUE BENEFICIAL OWNERS OF THE 761,416 COMMON SHARES VALUED AT P36,548.000.00, AND 53,005,045 PREFERRED SHARES (A, B & C) WITH A TOTAL PAR VALUE OF P254,424,224.72, OR A TOTAL INVESTMENT OF P290,972,224.72, THE SAID INVESTMENT HAVING BEEN FUNDED BY THE DEDUCTION OF Pl.00 PER PICUL FROM SUGAR PROCEEDS OF THE SUGAR PRODUCERS COMMENCING THE YEAR 1978-79 UNTIL THE PRESENT AS STABILIZATION FUND PURSUANT TO P.D. # 388.

Respondent Bank does not take issue with either petitioners or its correspondents as it has no beneficial or equitable interest that may be affected by the ruling in this Petition, but welcomes the filing of the Petition since it will settle finally the issue of legal ownership of the questioned shares of stock.

Respondents PHILSUCOM and SRA, for their part, squarely traverse the petition arguing that no trust results from Section 7 of P.D. No. 388; that the stabilization fees collected are considered government funds under the Government Auditing Code; that the transfer of shares of stock from PHILSUCOM to the sugar producers would be irregular, if not illegal; and that this suit is barred by laches.

The Solicitor General aptly summarizes the basic issues thus: (1) whether the stabilization fees collected from sugar planters and millers pursuant to Section 7 of P.D. No. 388 are funds in trust for them, or public funds; and (2) whether shares of stock in respondent Bank paid for with said stabilization fees belong to the PHILSUCOM or to the different sugar planters and millers from whom the fees were collected or levied.

P. D. No. 388, promulgated on February 2,1974, which created the PHILSUCOM, provided for the collection of a Stabilization Fund as follows:

SEC. 7. Capitalization, Special Fund of the Commission, Development and Stabilization Fund. — There is hereby established a fund for the commission for the purpose of financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market to be administered in trust by the Commission and deposited in the Philippine National Bank derived in the manner herein below cited from the following sources:

a. Stabilization fund shall be collected as provided for in the various provisions of this Decree.

b. Stabilization fees shall be collected from planters and millers in the amount of Two (P2.00) Pesos for every picul produced and milled for a period of five years from the approval of this Decree and One (Pl.00) Peso for every picul produced and milled every year thereafter.

Provided: That fifty (P0.50) centavos per picul of the amount levied on planters, millers and traders under Section 4(c) of this Decree will be used for the payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees for the purpose of accomplishing and employees for the purpose of accomplishing the efficient performance of the duties of the Commission.

Provided, further: That said amount shall constitute a lien on the sugar quedan and/or warehouse receipts and shall be paid immediately by the planters and mill companies, sugar centrals and refineries to the Commission. (paragraphing and bold supplied).

Section 7 of P.D. No. 388 does provide that the stabilization fees collected "shall be administered in trust by the Commission." However, while the element of an intent to create a trust is present, a resulting trust in favor of the sugar producers, millers and planters cannot be said to have ensued because the presumptive intention of the parties is not reasonably ascertainable from the language of the statute itself.

The doctrine of resulting trusts is founded on the presumed intention of the parties; and as a general rule, it arises where, and only where such may be reasonably presumed to be the intention of the parties, as determined from the facts and circumstances existing at the time of the transaction out of which it is sought to be established (89 C.J.S. 947).

No implied trust in favor of the sugar producers either can be deduced from the imposition of the levy. "The essential Idea of an implied trust involves a certain antagonism between the cestui que trust and the trustee even when the trust has not arisen out of fraud nor out of any transaction of a fraudulent or immoral character (65 CJ 222). It is not clearly shown from the statute itself that the PHILSUCOM imposed on itself the obligation of holding the stabilization fund for the benefit of the sugar producers. It must be categorically demonstrated that the very administrative agency which is the source of such regulation would place a burden on itself (Batchelder v. Central Bank of the Philippines, L-25071, July 29,1972,46 SCRA 102, citing People v. Que Po Lay, 94 Phil. 640 [1954]).

Neither can petitioners place reliance on the history of respondents Bank. They recite that at the beginning, the Bank was owned by the Roman-Rojas Group. Because it underwent difficulties

early in the year 1978, Mr. Roberto S. Benedicto, then Chairman of the PHILSUCOM, submitted a proposal to the Central Bank for the rehabilitation of the Bank. The Central Bank acted favorably on the proposal at the meeting of the Monetary Board on March 31, 1978 subject to the infusion of fresh capital by the Benedicto Group. Petitioners maintain that this infusion of fresh capital was accomplished, not by any capital investment by Mr. Benedicto, but by PHILSUCOM, which set aside the proceeds of the P1.00 per picul stabilization fund to pay for its subscription in shares of stock of respondent Bank. It is petitioners' submission that all shares were placed in PHILSUCOM's name only out of convenience and necessity and that they are the true and beneficial owners thereof.

In point of fact, we cannot see our way clear to upholding petitioners' position that the investment of the proceeds from the stabilization fund in subscriptions to the capital stock of the Bank were being made for and on their behalf. That could have been clarified by the Trust Agreement, dated May 28, 1986, entered into between PHILSUCOM, as "Trustor" acting through Mr. Fred J. Elizalde as Officer-in-Charge, and respondent RPB- Trust Department' as "Trustee," acknowledging that PHILSUCOM holds said shares for and in behalf of the sugar producers," the latter "being the true and beneficial owners thereof." The Agreement, however, did not get off the ground because it failed to receive the approval of the PHILSUCOM Board of Commissioners as required in the Agreement itself.

The SRA, which succeeded PHILSUCOM, neither approved the Agreement because of the adverse opinion of the SRA, Resident Auditor, dated June 25,1986, which was aimed by the Chairman of the Commission on Audit, on January 26,1987.

On February 19, 1987, the SRA, resolved to revoke the Trust Agreement "in the light of the ruling of the Commission on Audit that the aforementioned Agreement is of doubtful validity."

From the legal standpoint, we find basis for the opinion of the Commission on Audit reading:

That the government, PHILSUCOM or its successor-in-interest, Sugar Regulatory Administration, in particular, owns and stocks. While it is true that the collected stabilization fees were set aside by PHILSUCOM to pay its subscription to RPB, it did not collect said fees for the account of the sugar producers. That stabilization fees are charges/levies on sugar produced and milled which accrued to PHILSUCOM under PD 338, as amended. ...

The stabilization fees collected are in the nature of a tax, which is within the power of the State to impose for the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b], P.D. No. 388). The collections made accrue to a "Special Fund," a "Development and Stabilization Fund," almost Identical to the "Sugar Adjustment and Stabilization Fund" created under Section 6 of Commonwealth Act 567. 1 The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for the stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the State (Lutz vs. Araneta, supra.).

The protection of a large industry constituting one of the great sources of the state's wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign. (Johnson vs. State ex rel. Marey, 128 So. 857, cited in Lutz vs. Araneta, supra).

The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special purpose — that of "financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market

the fact that the State has taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they are held for a special purpose (Lawrence vs. American Surety Co., 263 Mich 586, 249 ALR 535, cited in 42 Am. Jur. Sec. 2, p. 718). Having been levied for a special purpose, the revenues collected are to be treated as a special fund, to be, in the language of the statute, "administered in trust' for the purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general funds of the Government. That is the essence of the trust intended (See 1987 Constitution, Article VI, Sec. 29(3), lifted from the 1935 Constitution, Article VI, Sec. 23(l]). 2

The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in pursuance of an appropriation made by law (1987) Constitution, Article VI, Sec. 29[1],1973 Constitution, Article VIII, Sec. 18[l]).

That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from them since it is also they who are to be benefited from the expenditure of the funds derived from it. The investment in shares of respondent Bank is not alien to the purpose intended because of the Bank's character as a commodity bank for sugar conceived for the industry's growth and development. Furthermore, of note is the fact that one-half, (1/2) or PO.50 per picul, of the amount levied under P.D. No. 388 is to be utilized for the "payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees of PHILSUCOM" thereby immediately negating the claim that the entire amount levied is in trust for sugar, producers, planters and millers.

To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization of the domestic market," including the foreign market the industry being of vital importance to the country's economy and to national interest.

WHEREFORE, the Writ of mandamus is denied and the Petition hereby dismissed. No costs.

This Decision is immediately executory.

SO ORDERED.

Association of Small Landowners vs Sec of Agrarian   Reform

The subjects of this petition are a 9-hectare riceland worked by four tenants and owned by petitioner Nicolas Manaay and his wife and a 5-hectare riceland worked by four tenants and owned by petitioner Augustin Hermano, Jr. The tenants were declared full owners of these lands by E.O. No. 228 as qualified farmers under P.D. No. 27.

The petitioners are questioning P.D. No. 27 and E.O. Nos. 228 and 229 on grounds inter alia of separation of powers, due process, equal protection and the constitutional limitation that no private property shall be taken for public use without just compensation.

They contend that President Aquino usurped legislative power when she promulgated E.O. No. 228. The said measure is invalid also for violation of Article XIII, Section 4, of the Constitution, for failure to provide for retention limits for small landowners. Moreover, it does not conform to Article VI, Section 25(4) and the other requisites of a valid appropriation.

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. It is only where the owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the people is the supreme law.

Taxicab Operators vs Board of   Transportation

Police Power

Petitioner Taxicab Operators of Metro Manila, Inc. (TOMMI) is a domestic corporation composed of taxicab operators, who are grantees of Certificates of Public Convenience to operate taxicabs within the City of Manila and to any other place in Luzon accessible to vehicular traffic.

On October 10, 1977, respondent Board of Transportation (BOT) issued Memorandum Circular No. 77-42 which reads:

SUBJECT:  Phasing out and Replacement of Old and Dilapidated Taxis

On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553, seeking to nullify MC No. 77-42 or to stop its implementation; to allow the registration and operation in 1981 and subsequent years of taxicabs of model 1974, as well as those of earlier models which were phased-out, provided that, at the time of registration, they are roadworthy and fit for operation.

ISSUE

“A.  Did BOT and BLT promulgate the questioned memorandum circulars in accord with the manner required by Presidential Decree No. 101, thereby safeguarding the petitioners’ constitutional right to procedural due process?

B.  Granting arguendo, that respondents did comply with the procedural requirements imposed by Presidential Decree No. 101, would the implementation and enforcement of the assailed memorandum circulars violate the petitioners’ constitutional rights to.

(1)  Equal protection of the law;

(2)  Substantive due process; and

(3)  Protection against arbitrary and unreasonable classification and standard?

HELD

As enunciated in the preambular clauses of the challenged BOT Circular, the overriding consideration is the safety and comfort of the riding public from the dangers posed by old and dilapidated taxis. The State, in the exercise of its police power, can prescribe regulations to promote the health, morals, peace, good order, safety and general welfare of the people. It can prohibit all things hurtful to comfort, safety and welfare of society. [5] It may also regulate property rights. [6] In the language of Chief Justice Enrique M. Fernando “the necessities imposed by public welfare may justify the exercise of governmental authority to regulate even if thereby certain groups may plausibly assert that their interests are disregarded”.

TOMAS VELASCO et al vs HON. ANTONIO J. VILLEGAS et   al

G.R. No. L-24153 February 14, 1983

FERNANDO, C.J.:

This is an appeal from an order of the lower court dismissing a suit for declaratory relief challenging the constitutionality based on Ordinance No. 4964 of the City of Manila, the contention being that it amounts to a deprivation of property of petitioners-appellants of their means of livelihood without due process of law. The assailed ordinance is worded thus: “It shall be prohibited for any operator of any barber shop to conduct the business of massaging customers or other persons in any adjacent room or rooms of said barber shop, or in any room or rooms within the same building where the barber shop is located as long as the operator of the barber shop and the room where massaging is conducted is the same person.” 1 As noted in the appealed order, petitioners-appellants admitted that criminal cases for the violation of this ordinance had been previously filed and decided. The lower court, therefore, held that a petition for declaratory relief did not lie, its availability being dependent on there being as yet no case involving such issue having been filed. 2

Even if such were not the case, the attack against the validity cannot succeed. As pointed out in the brief of respondents-appellees, it is a police power measure. The objectives behind its enactment are: “(1) To be able to impose payment of the license fee for engaging in the business of massage clinic under Ordinance No. 3659 as amended by Ordinance 4767, an entirely different measure than the ordinance regulating the business of barbershops and, (2) in order to forestall possible immorality which might grow out of the construction of separate rooms for massage of customers.” 3 This Court has been most liberal in sustaining ordinances based on the general welfare clause. As far back as U.S. v. Salaveria, 4 a 1918 decision, this Court through Justice Malcolm made clear the significance and scope of such a clause, which “delegates in statutory form the police power to a municipality. As above stated, this clause has been given wide application by municipal authorities and has in its relation to the particular circumstances of the case been liberally construed by the courts. Such, it is well to really is the progressive view of Philippine jurisprudence.” 5 As it was then, so it has continued to be. 6 There is no showing, therefore, of the unconstitutionality of such ordinance.

WHEREFORE, the appealed order of the lower court is affirmed. No costs.

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

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

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

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

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

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

TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILS. VS. COMELEC [289 SCRA 337; G.R. NO. 132922; 21 APR 1998]

Facts: Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. (TELEBAP) is an organization of lawyers of radio and television broadcasting companies. It was declared to be without legal standing to sue in this case as, among other reasons, it was not able to show that it was to suffer from actual or threatened injury as a result of the subject law. Petitioner GMA Network, on the other hand, had the requisite standing to bring the constitutional challenge. Petitioner operates radio and television broadcast stations in the Philippines affected by the enforcement of Section 92, B.P. No. 881.

Petitioners challenge the validity of Section 92, B.P. No. 881 which provides:

“Comelec Time- The Commission shall procure radio and television time to be known as the “Comelec Time” which shall be allocated equally and impartially among the candidates within the area of coverage of all radio and television stations. For this purpose, the franchise of all radio broadcasting and television stations are hereby amended so as to provide radio or television time, free of charge, during the period

of campaign.”

Petitioner contends that while Section 90 of the same law requires COMELEC to procure print space in newspapers and magazines with payment, Section 92 provides that air time shall be procured by COMELEC free of charge. Thus it contends that Section 92 singles out radio and television stations to provide free air time.

Petitioner claims that it suffered losses running to several million pesos in providing COMELEC Time in connection with the 1992 presidential election and 1995 senatorial election and that it stands to suffer even more should it be required to do so again this year. Petitioners claim that the primary source of revenue of the radio and television stations is the sale of air time to advertisers and to require these stations to provide free air time is to authorize unjust taking of private property. According to petitioners, in 1992 it lost P22,498,560.00 in providing free air time for one hour each day and, in this year’s elections, it stands to lost P58,980,850.00 in view of COMELEC’s requirement that it provide at least 30 minutes of prime time daily for such.

Issues:

(1) Whether of not Section 92 of B.P. No. 881 denies radio and television broadcast companies the equal protection of the laws.

(2) Whether or not Section 92 of B.P. No. 881 constitutes taking of property without due process of law and without just compensation.

Held: Petitioner’s argument is without merit. All broadcasting, whether radio or by television stations, is licensed by the government. Airwave frequencies have to be allocated as there are more individuals who want to broadcast that there are frequencies to assign. Radio and television broadcasting companies, which are given franchises, do not own the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the temporary privilege to use them. Thus, such exercise of the privilege may reasonably be burdened with the performance by the grantee of some form of public service. In granting the privilege to operate broadcast stations and supervising radio and television stations, the state spends considerable public funds in licensing and supervising them.

The argument that the subject law singles out radio and television stations to provide free air time as against newspapers and magazines which require payment of just compensation for the print space they may provide is likewise without merit. Regulation of the broadcast industry requires spending of public funds which it does not do in the case of print media. To require the broadcast industry to provide free air time for COMELEC is a fair exchange for what the industry gets.

As radio and television broadcast stations do not own the airwaves, no private property is taken by the requirement that they provide air time to the COMELEC.

BLAS F. OPLE, vs. RUBEN D. TORRES et alEN BANC[G.R. No. 127685, July 23, 1998]

FACTS OF THE CASE:

President Fidel V. Ramos issued Administrative Order (A.O.) 308 onDecember 12, 1996 entiltled “Adoption of NationalComputerizedIdentification Reference System” or commonly known as “NatioanalID System”.Senator Blas F. Ople filed a petition before the Supreme Courtquestioning the constitutionality of the said executive issuance ontwo important grounds, viz: one, it is a usurpation of the power ofCongress to legislate, and two, it impermissibly intrudes on ourcitizenry's protected zone of privacy. We grant the petition for therights sought to be vindicated by the petitioner need strongerbarriers against further erosion.

CORE ISSUES AND SUPREME COURT RULINGS

ISSUE: Appropriateness of the subject matter to be covered by theA.O. 308SUPREME COURT:We hold that A.O. No. 308 involves a subject that is not appropriate tobe covered by an administrative order.RATIONALE:Administrative power is concerned with the work of applying policiesand enforcing orders as determined by proper governmental organs.An administrative order is an ordinance issued by the President whichrelates to specific aspects in the administrative operation ofgovernment. It must be in harmony with the law and should be for thesole purpose of implementing the law and carrying out the legislativepolicy.A.O 308 does not implement the Administrative Code of 1987. TheCode covers both the internal administration of government, i.e,internal organization, personnel and recruitment, supervision anddiscipline, and the effects of the functions performed by administrativeofficials on private individuals or parties outside government.It cannot be simplistically argued that A.O. No. 308 merely implementsthe Administrative Code of 1987. It establishes for the first time aNational Computerized Identification Reference System. Such a Systemrequires a delicate adjustment of various contending state policies --the primacy of national security, the extent of privacy interest againstdossier-gathering by government, the choice of policies, etc. Indeed,the dissent of Mr. Justice Mendoza states that the A.O. No. 308 involvesthe all-important freedom of thought. As said administrative orderredefines the parameters of some basic rights of our citizenry vis-a-visthe State as well as the line that separates the administrative power ofthe President to make rules and the legislative power of Congress, itought to be evident that it deals with a subject that should be coveredby law.ISSUE: No usurpation of legislative authority because A.O. No. 308 isnot a law and it confers no right, imposes no duty, affords noprotection, and creates no office.SUPREME COURT:Under A.O. No. 308, a citizen cannot transact business withgovernment agencies delivering basic services to the people withoutthe contemplated identification card. No citizen will refuse to get thisidentification card for no one can avoid dealing with government. It isthus clear as daylight that without the ID, a citizen will have difficultyexercising his rights and enjoying his privileges. Given this reality, the

contention that A.O. No. 308 gives no right and imposes no dutycannot stand.Again, with due respect, the dissenting opinions unduly expand thelimits of administrative legislation and consequently erodes the plenarypower of Congress to make laws. This is contrary to the establishedapproach defining the traditional limits of administrative legislation. Aswell stated by Fisher: ". . . Many regulations however, bear directly onthe public. It is here that administrative legislation must be restricted inits scope and application. Regulations are not supposed to be asubstitute for the general policy-making that Congress enacts in theform of a public law. Although administrative regulations are entitled torespect, the authority to prescribe rules and regulations is not anindependent source of power to make laws."( The court did not really categorically say that there was usurpation oflegislative authority but explained that A. O. 308 is not an appropriatesubject for Administrative Order for reasons explained above. It merelyopined that it goes beyond the limits of administrative legislation.)

RIGHT TO PRIVACYISSUE: DOES A.0 308 VIOLATE THE RIGHT TO PRIVACY?SUPREME COURT:Yes. Assuming, arguendo, that A.O. No. 308 need not be the subject ofa law, still it cannot pass constitutional muster as an administrativelegislation because facially it violates the right to privacy. A.O. 308 is sovague. The vagueness, the overbreadth of A.O. No. 308 which ifimplemented will put our people's right to privacy in clear and presentdanger. There are no vital safeguards.A.O. No. 308 should also raise our antennas for a further look will showthat it does not state whether encoding of data is limited to biologicalinformation alone for identification purposes. In fact, the SolicitorGeneral claims that the adoption of the Identification ReferenceSystem will contribute to the "generation of population data fordevelopment planning." 54 This is an admission that the PopulationReference Number (PRN) will not be used solely for identification butfor the generation of other data with remote relation to the avowedpurposes of A.O. No. 308. Clearly, the indefiniteness of A.O. No. 308can give the government the roving authority to store and retrieveinformation for a purpose other than the identification of the individualthrough his PRN .The potential for misuse of the data to be gathered under A.O. No. 308cannot be underplayed as the dissenters do. Pursuant to saidadministrative order, an individual must present his PRN everytime hedeals with a government agency to avail of basic services andsecurity. His transactions with the government agency will necessarilybe recorded -- whether it be in the computer or in the documentaryfile of the agency. The individual's file may include his transactions forloan availments, income tax returns, statement of assets and liabilities,reimbursements for medication, hospitalization, etc. The more frequentthe use of the PRN, the better the chance of building a huge andformidable information base through the electronic linkage of the files.The data may be gathered for gainful and useful governmentpurposes; but the existence of this vast reservoir of personal informationconstitutes a covert invitation to misuse, a temptation that may be toogreat for some of our authorities to resist.We can even grant, arguendo, that the computer data file will be

limited to the name, address and other basic personal informationabout the individual. Even that hospitable assumption will not saveA.O. No. 308 from constitutional infirmity for again said order does nottell us in clear and categorical terms how these information gatheredshall be handled. It does not provide who shall control and access thedata, under what circumstances and for what purpose. These factorsare essential to safeguard the privacy and guaranty the integrity of theinformation. Well to note, the computer linkage gives othergovernment agencies access to the information. Yet, there are nocontrols to guard against leakage of information. When the accesscode of the control programs of the particular computer system isbroken, an intruder, without fear of sanction or penalty, can make useof the data for whatever purpose, or worse, manipulate the datastored within the system.It is plain and we hold that A.O. No. 308 falls short of assuring thatpersonal information which will be gathered about our people will onlybe processed for unequivocally specified purposes. The lack of propersafeguards in this regard of A.O. No. 308 may interfere with theindividual's liberty of abode and travel by enabling authorities to trackdown his movement; it may also enable unscrupulous persons toaccess confidential information and circumvent the right against selfincrimination;it may pave the way for "fishing expeditions" bygovernment authorities and evade the right against unreasonablesearches and seizures. The possibilities of abuse and misuse of the PRN,biometrics and computer technology are accentuated when weconsider that the individual lacks control over what can be read orplaced on his ID, much less verify the correctness of the dataencoded. They threaten the very abuses that the Bill of Rights seeks toprevent.Excerpts from the concurring opinion of the Supreme Court justices:Justice ROMERO, concur“ So terrifying are the possibilities of a law such as Administrative OrderNo. 308 in making inroads into the private lives of the citizens, a virtualBig Brother looking over our shoulders, that it must, without delay, be"slain upon sight" before our society turns totalitarian with each of us, amindless robot.”Justice Vitug, concur“Administrative Order No. 308 appears to be so extensively drawn thatcould, indeed, allow unbridled options to become available to itimplementors beyond the reasonable comfort of the citizens and ofresidents alike.

RIGHT TO PRIVACY RECOGNIZED UNDER THE CONSTITUTIONHereunder are the provisions in the 1987 Constitution which recognize ourRight to Privacy :Section 3(1) of the Bill of Rights:"Sec. 3. (1) The privacy of communication and correspondence shall beinviolable except upon lawful order of the court, or when public safety ororder requires otherwise as prescribed by law."Other facets of the right to privacy are protected in various provisions ofthe Bill of Rights, viz: 34"Sec. 1. No person shall be deprived of life, liberty, or property without dueprocess of law, nor shall any person be denied the equal protection of thelaws.Sec. 2. The right of the people to be secure in their persons, houses,

papers, and effects against unreasonable searches and seizures ofwhatever nature and for any purpose shall be inviolable, and no searchwarrant or warrant of arrest shall issue except upon probable cause to bedetermined personally by the judge after examination under oath oraffirmation of the complainant and the witnesses he may produce, andparticularly describing the place to be searched and the persons or thingsto be seized.xxx xxx xxxSec. 6. The liberty of abode and of changing the same within the limitsprescribed by law shall not be impaired except upon lawful order of thecourt. Neither shall the right to travel be impaired except in the interest ofnational security, public safety, or public health, as may be provided bylaw.xxx xxx xxx.Sec. 8. The right of the people, including those employed in the publicand private sectors, to form unions, associations, or societies for purposesnot contrary to law shall not be abridged.Sec. 17. No person shall be compelled to be a witness against himself.Personal Analysis:A.O. 308 was declared unconstitutional by the Supreme Court en banc forreasons above stated. It bears stressing that the bulk of discussion in thecase focused more on the issue of infringement of the right to privacy. Ascan be gleaned from A.O. 308, the provisions were so general that therewere no clear and vital guidelines to safeguard the information stored inthe Identification Card. Had President Fidel V. Ramos issued a morecomplete and detailed guidelines providing for the metes and bounds ofthe ID System, the decision could have been otherwise.Even the argument of the respondents that rules and regulations wouldbe issued by the committee later, the court still reject the same. The courtsaid.: The rules and regulations to be drawn by the IACC cannot remedythis fatal defect. Rules and regulations merely implement the policy of thelaw or order. On its face, A.O. No. 308 gives the Inter-AgencyCoordinating Committee (IACC) virtually unfettered discretion todetermine the metes and bounds of the ID System.In one press conference last month, Presidential Spokesperson IgnacioBunye said that there is really no need to pass a law to push through withthe plan of the National ID System. An executive issuance by thePresident would suffice provided this time the said order will now bedetailed, comprehensive and contains all the vital safeguards. From hisstatement, it can be deduced therefrom that the reservation andbacklash by the supreme court on the on the Ople case (A.O 308) havebeen taken into consideration by Malacanang.

G.R. No. 89572 December 21, 1989 DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS) and DIRECTOR OF CENTER FOR EDUCATIONAL MEASUREMENT,p e ti ti o n er s, vs. ROBERTO REY C. SAN DIEGO and JUDGE TERESITA DIZON-CAPULONG, in her capacity as Presiding Judge of the Regional Trial Court of Valenzuela, Metro Manila, Branch 172,r e sp o nd e n ts. Ramon M. Guevara for private respondent.

CRUZ,J .: The private respondent is a graduate of the University of the East with a degree of Bachelor of Science in Zoology. The petitioner claims that he took the NMAT three times and flunked it as many times.1 When he applied to take it again, the petitioner rejected his application on the basis of the aforesaid rule. He then went to the Regional Trial Court of Valenzuela, Metro Manila, to compel his admission to the test. After hearing, the respondent judge rendered a decision on July 4, 1989, declaring the challenged order invalid and granting the petition. Judge Teresita Dizon-Capulong held that the petitioner had been deprived of his right to pursue a medical education through an arbitrary exercise of the police power. RULING: There is no need to redefine here the police power of the State. Suffice it to repeat that the power is validly exercised if (a) the interests of the public generally, as distinguished from those of a particular class, require the interference of the State, and (b) the means employed are reasonably necessary to the attainment of the object sought to be accomplished and not unduly oppressive upon individuals.5 In other words, the proper exercise of the police power requires the concurrence of a lawful subject and a lawful method. The subject of the challenged regulation is certainly within the ambit of the police power. It is the right and indeed the responsibility of the State to insure that the medical profession is not infiltrated by incompetents to whom patients may unwarily entrust their lives and health. The method employed by the challenged regulation is not irrelevant to the purpose of the law nor is it arbitrary or oppressive. The three-flunk rule is intended to insulate the medical schools and ultimately the medical profession from the intrusion of those not qualified to be doctors. While every person is entitled to aspire to be a doctor, he does not have a constitutional right to be a doctor. This is true of any other calling in which the public interest is involved; and the closer the link, the longer the bridge to one's ambition. The State has the responsibility to harness its human resources and to see to it that they are not dissipated or, no less worse, not used at all. These resources must be applied in a manner that will best promote the common good while also giving the individual a sense of satisfaction. A person cannot insist on being a physician if he will be a menace to his patients. The Court feels that it is not enough to simply invoke the right to quality education as a guarantee of the Constitution: one must show that he is entitled to it because of his preparation and promise. The private respondent has failed the NMAT five times.7 While his persistence is noteworthy, to say the least, it is certainly misplaced, like a hopeless love. No depreciation is intended or mad DECISION WHEREFORE, the petition is GRANTED. The decision of the respondent court dated January 13, 1989, is REVERSED, with costs against the private respondent. It is so ordered.