150875397 compiled-case-digests-on-constitutional-law-2

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Republic of the Philippines
Supreme Court
Manila
FIRST DIVISION
METROPOLITAN MANILA G.R. No. 179554
DEVELOPMENTAUTHORITY,
Petitioner, Present:

PUNO, C.J., Chairperson,
-versus- CARPIO
MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
TRACKWORKS RAIL TRANSIT
ADVERTISING, VENDING Promulgated:
AND PROMOTIONS,INC.,
Respondent. December 16, 2009
x-----------------------------------------------------------------------------------------x
R E S O L U T I O N
BERSAMIN, J.:
This case concerns whether the Metropolitan Manila Development
Authority (MMDA) could unilaterally dismantle the billboards, signages and other
advertizing media in the structures of the Metro Rail Transit 3 (MRT3) installed by
respondent advertising company by virtue of its existing contract with the owner of
the MRT3.
The trial and appellate courts ruled that MMDA did not have the authority to
dismantle. MMDA is now before the Court to assail such adverse ruling.
Antecedents
In 1997, the Government, through the Department of Transportation and
Communications, entered into a build-lease-transfer agreement (BLT agreement)
with Metro Rail Transit Corporation, Limited (MRTC) pursuant to Republic Act
No. 6957 (Build, Operate and Transfer Law), under which MRTC undertook to
build MRT3 subject to the condition that MRTC would own MRT3 for 25 years,
upon the expiration of which the ownership would transfer to the Government.

The BLT agreement stipulated, among others, that MRTC could build and
develop commercial premises in the MRT3 structures, or obtain advertising
income therefrom,viz:
16.1. Details of Development Rights. DOTC hereby confirms and awards
to Metro Rail the rights to (a) develop commercial premises in the Depot and the
air space above the Stations, which shall be allowed to such height as is legally
and technically feasible, (b) lease or sub-lease interests or assign such interests in
the Depot and such air space and (c) obtain any advertising income from the
Depot and such air space and LRTS Phase I….
“LRTS Phase I” means the rail transport system comprising about 16.9 line
kilometers extending from Taft Avenue, Pasay City, to North Avenue, Quezon
City, occupying a strip in the center of EDSA approximately 10.5 meters wide
(approximately 12 meters wide at or around the Boni Avenue, Santolan and
Buendia Stations), plus about 0.1 to 0.2 line kilometers extending from the North
Avenue Station to the Depot, together with the Stations, 73 Light Rail Vehicles
and all ancillary plant, equipment and facilities, as more particularly detailed in
the Specifications.
16.2. Assignment of Rights. During the Development Rights Period,
Metro Rail shall be entitled to assign all or any of its rights, titles and interests in
the Development Rights to bona fide real estate developers. In this connection,
Metro Rail may enter into such development, lease, sub-lease or other agreements
or contracts relating to the Depot and the air space above the Stations (the space
not needed for all or any portion of the operation of the LRTS) for all or any
portion of the Development Rights Period….
In 1998, respondent Trackworks Rail Transit Advertising, Vending &
Promotions, Inc. (Trackworks) entered into a contract for advertising services with
MRTC. Trackworks thereafter installed commercial billboards, signages and other
advertizing media in the different parts of the MRT3. In 2001, however, MMDA
requested Trackworks to dismantle the billboards, signages and other advertizing
media pursuant to MMDA Regulation No. 96-009, whereby MMDA prohibited the
posting, installation and display of any kind or form of billboards, signs, posters,
streamers, in any part of the road, sidewalk, center island, posts, trees, parks and
open space. After Trackworks refused the request of MMDA, MMDA proceeded
to dismantle the former’s billboards and similar forms of advertisement.
On March 1, 2002, Trackworks filed against MMDA in the Regional Trial
Court (RTC) in Pasig City an injunction suit (with prayer for the issuance of a

temporary restraining order [TRO] and preliminary injunction), docketed as Civil
Case No. 68864.
On March 6, 2002, the RTC (Branch 155) issued a TRO, enjoining MMDA
from dismantling or destroying Trackworks’ billboards, signages and other
advertizing media. On March 25, 2002, the RTC issued a writ of preliminary
injunction for the same purpose.
Without filing a motion for reconsideration to challenge the RTC’s
issuances, MMDA brought a petition for certiorari and prohibition before the
Court of Appeals (CA), docketed as C.A.-G.R. SP No. 70932, but the CA denied
the petition and affirmed the RTC on August 31, 2004. The CA ultimately denied
MMDA’s motion for reconsiderationthrough its resolution issued on March 14,
2005.
Thence, MMDA appealed to this Court (G.R. No. 167514), which denied
MMDA’s petition for review on October 25, 2005.[1]
Ruling of the RTC
In the meanwhile, on October 10, 2005, the RTC (Branch 155) rendered its
decision permanently enjoining MMDA from dismantling, removing or destroying
the billboards, signages and other advertizing media installed by Trackworks on
the interior and exterior structures of the MRT3.[2]
Ruling of the CA
MMDA appealed the RTC’s decision to the CA.
On April 30, 2007, the CA denied the MMDA’s appeal,[3] holding that
Trackworks’ right to install billboards, signages and other advertizing media on the
interior and exterior structures of the MRT3 must be protected by a writ of
permanent injunction; and that MMDA had no power to dismantle, remove or
destroy Trackworks’ billboards, signages and other advertizing media.[4]

MMDA moved for reconsideration, but the CA resolution denied the motion
for reconsideration on September 3, 2007.[5]
Hence, this appeal by petition for review.
Issues
MMDA claims that its mandate under its charter[6] of formulating,
coordinating and monitoring of policies, standards, progress and projects for the
use of thoroughfares and the promotion of safe and convenient movement of
persons and goods prompted its issuance of MMDA Regulation No. 96-009, which
reads in part:
h. ) It is unlawful for any person/s, private or public corporations,
advertising and promotions companies, movie producers, professionals and
service contractors to post, install, display any kind or form of billboards, signs,
posters, streamers, professional service advertisements and other visual clutters in
any part of the road, sidewalk, center island, posts, trees parks and open space.
MMDA avers that the conversion of the center island of Epifanio Delos
Santos Avenue (EDSA) into the carriageway of the MRT3 line did not exempt the
EDSA center island from the coverage of the MMDA regulation;[7] that the
Government’s grant of development rights to MRTC was not an abdication of its
right to regulate, and, therefore, the development of the MRT3 remained subject to
all existing and applicable national and local laws, ordinances, rules and
regulations;[8] that MMDA was merely implementing existing and applicable
laws;[9] that Trackworks’ advertising materials were placed indiscriminately and
without due regard to safety, and as such might be classified as obstructions and
distractions to the motorists traversing EDSA;[10] and that the interests of a few
should not prevail over the good of the greater number in the community whose
safety and general welfare MMDA was mandated to protect.[11]

Trackworks maintains, on the other hand, that MMDA’s petition was
defective for its failure to raise any genuine question of law; and that the CA’s
decision dated April 30, 2007 was valid and correct.[12]
Ruling of the Court
The petition has no merit.
That Trackworks derived its right to install its billboards, signages and other
advertizing media in the MRT3 from MRTC’s authority under the BLT agreement
to develop commercial premises in the MRT3 structure or to obtain advertising
income therefrom is no longer debatable. Under the BLT agreement, indeed,
MRTC owned the MRT3 for 25 years, upon the expiration of which MRTC would
transfer ownership of the MRT3 to the Government.
Considering that MRTC remained to be the owner of the MRT3 during the
time material to this case, and until this date, MRTC’s entering into the contract for
advertising services with Trackworks was a valid exercise of ownership by the
former. In fact, in Metropolitan Manila Development Authority v. Trackworks Rail
Transit Advertising, Vending & Promotions, Inc.,[13] this Court expressly
recognized Trackworks’ right to install the billboards, signages and other
advertising media pursuant to said contract. The latter’s right should, therefore, be
respected.
It is futile for MMDA to simply invoke its legal mandate to justify the
dismantling of Trackworks’ billboards, signages and other advertising media.
MMDA simply had no power on its own to dismantle, remove, or destroy the
billboards, signages and other advertising media installed on the MRT3 structure
by Trackworks. In Metropolitan Manila Development Authority v. Bel-Air Village
Association, Inc.,[14] Metropolitan Manila Development Authority v. Viron
Transportation Co., Inc.,[15] and Metropolitan Manila Development Authority v.
Garin,[16] the Court had the occasion to rule that MMDA’s powers were limited to
the formulation, coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installing a system, and

administration. Nothing in Republic Act No. 7924 granted MMDA police power,
let alone legislative power.[17]
Clarifying the real nature of MMDA, the Court held:
xxx The MMDA is, as termed in the charter itself, a “development authority”. It is
an agency created for the purpose of laying down policies and coordinating with
the various national government agencies, people’s organizations, non-
governmental organizations and the private sector for the efficient and expeditious
delivery of basic services in the vast metropolitan area. All its functions are
administrative in nature and these are actually summed up in the charter
itself, viz:
Sec.2. Creation of the Metropolitan Manila Development Authority.- xxx.
The MMDA shall perform planning, monitoring and coordinative functions, and in the
process exercise regulatory and supervisory authority over the delivery of metro-wide
services within Metro Manila, without diminution of the autonomy of local government
units concerning purely local matters.[18]
The Court also agrees with the CA’s ruling that MMDA Regulation No. 96-
009 and MMC Memorandum Circular No. 88-09 did not apply to Trackworks’
billboards, signages and other advertising media. The prohibition against posting,
installation and display of billboards, signages and other advertising media applied
only to public areas, but MRT3, being private property pursuant to the BLT
agreement between the Government and MRTC, was not one of the areas as to
which the prohibition applied. Moreover, MMC Memorandum Circular No. 88-09
did not apply to Trackworks’ billboards, signages and other advertising media in
MRT3, because it did not specifically cover MRT3, and because it was issued a
year prior to the construction of MRT3 on the center island of EDSA. Clearly,
MMC Memorandum Circular No. 88-09 could not have included MRT3 in its
prohibition.
MMDA’s insistence that it was only implementing Presidential Decree No.
1096 (Building Code) and its implementing rules and regulations is not persuasive.
The power to enforce the provisions of the Building Code was lodged in the
Department of Public Works and Highways (DPWH), not in MMDA, considering
the law’s following provision, thus:

Sec. 201. Responsibility for Administration and Enforcement. –
The administration and enforcement of the provisions of this Code including the
imposition of penalties for administrative violations thereof is hereby vested in
the Secretary of Public Works, Transportation and Communications, hereinafter
referred to as the “Secretary.”
There is also no evidence showing that MMDA had been delegated by
DPWH to implement the Building Code.
WHEREFORE, we deny the petition for review, and affirm
the decision dated April 30, 2007 and the resolution dated September 3, 2007.
Costs against the petitioner.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson

CONCHITACARPIO MORALES TERESITA J. LEONARDO-DE CASTRO
Associate Justice Associate Justice
MARTIN S. VILLARAMA, JR.
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice

lawphil
Today is Thursday, November 15, 2012
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SUPREME COURT
Manila
EN BANC
G.R. No. 122846 January 20, 2009
WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA TOURIST & DEVELOPMENT
CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM, Respondent.
D E C I S I O N
Tinga, J.:
With another city ordinance of Manila also principally involving the tourist district as subject, the Court is confronted ane wwith the
incessant clash between government power and individual liberty in tandem with the archetypal tension between law and
morality.
In City of Manila v. Laguio, Jr.,1
the Court affirmed the nullification of a city ordinance barring the operation of motels and inns,
among other establishments, within the Ermita-Malate area. The petition at bar assails a similarly-motivated city ordinance that
prohibits those same establishments from offering short-time admission, as well as pro-rated or "wash up" rates for such
abbreviated stays. Our earlier decision tested the city ordinance against our sacred constitutional rights to liberty, due pr ocess
and equal protection of law. The same parameters apply to the present petition.
This Petition2
under Rule 45 of the Revised Rules on Civil Procedure, which seeks the reversal of the Decision3
in C.A.-G.R. S.P.
No. 33316 of the Court of Appeals, challenges the validity of Manila City Ordinance No. 7774 entitled, "An Ordinance Prohibit ing
Short-Time Admission, Short-Time Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses,
Pension Houses, and Similar Establishments in the City of Manila" (the Ordinance).
I.
The facts are as follows:
On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law the Ordinance.4
The Ordinance is reproduced in

full, hereunder:
SECTION 1. Declaration of Policy. It is hereby the declared policy of the City Government to protect the best interest, health and
welfare, and the morality of its constituents in general and the youth in particular.
SEC. 2. Title. This ordinance shall be known as "An Ordinance" prohibiting short time admission in hotels, motels, lodging
houses, pension houses and similar establishments in the City of Manila.
SEC. 3. Pursuant to the above policy, short-time admission and rate [sic], wash-up rate or other similarly concocted terms, are
hereby prohibited in hotels, motels, inns, lodging houses, pension houses and similar establishments in the City of Manila.
SEC. 4. Definition of Term[s]. Short-time admission shall mean admittance and charging of room rate for less than twelve (12)
hours at any given time or the renting out of rooms more than twice a day or any other term that may be concocted by owners or
managers of said establishments but would mean the same or would bear the same meaning.
SEC. 5. Penalty Clause. Any person or corporation who shall violate any provision of this ordinance shall upon conviction thereof
be punished by a fine of Five Thousand (P5,000.00) Pesos or imprisonment for a period of not exceeding one (1) year or both
such fine and imprisonment at the discretion of the court; Provided, That in case of [a] juridical person, the president, the
manager, or the persons in charge of the operation thereof shall be liable: Provided, further, That in case of subsequent
conviction for the same offense, the business license of the guilty party shall automatically be cancelled.
SEC. 6. Repealing Clause. Any or all provisions of City ordinances not consistent with or contrary to this measure or any portion
hereof are hereby deemed repealed.
SEC. 7. Effectivity. This ordinance shall take effect immediately upon approval.
Enacted by the city Council of Manila at its regular session today, November 10, 1992.
Approved by His Honor, the Mayor on December 3, 1992.
On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a complaint for declaratory relief with
prayer for a writ of preliminary injunction and/or temporary restraining order ( TRO)5
with the Regional Trial Court (RTC) of
Manila, Branch 9 impleading as defendant, herein respondent City of Manila (the City) represented by Mayor Lim.6
MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its prohibited establishments, be declared invalid and
unconstitutional. MTDC claimed that as owner and operator of the Victoria Court in Malate, Manila it was authorized by
Presidential Decree (P.D.) No. 259 to admit customers on a short time basis as well as to charge customers wash up rates for
stays of only three hours.
On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation (TC) and Sta. Mesa Tourist and
Development Corporation (STDC) filed a motion to intervene and to admit attached complaint-in-intervention7
on the ground that
the Ordinance directly affects their business interests as operators of drive-in-hotels and motels in Manila.8
The three companies
are components of the Anito Group of Companies which owns and operates several hotels and motels in Metro Manila. 9
On December 23, 1992, the RTC granted the motion to intervene.10
The RTC also notified the Solicitor General of the
proceedings pursuant to then Rule 64, Section 4 of the Rules of Court. On the same date, MTDC moved to withdraw as plaintiff. 11
On December 28, 1992, the RTC granted MTDC's motion to withdraw.12
The RTC issued a TRO on January 14, 1993, directing
the City to cease and desist from enforcing the Ordinance.13
The City filed an Answer dated January 22, 1993 alleging that the
Ordinance is a legitimate exercise of police power.14
On February 8, 1993, the RTC issued a writ of preliminary injunction ordering the city to desist from the enforcement of the

Ordinance.15
A month later, on March 8, 1993, the Solicitor General filed his Comment arguing that the Ordinance is
constitutional.
During the pre-trial conference, the WLC, TC and STDC agreed to submit the case for decision without trial as the case involved
a purely legal question.16
On October 20, 1993, the RTC rendered a decision declaring the Ordinance null and void. The
dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing, [O]rdinance No. 7774 of the City of Manila is hereby declared null and void.
Accordingly, the preliminary injunction heretofor issued is hereby made permanent.
SO ORDERED.17
The RTC noted that the ordinance "strikes at the personal liberty of the individual guaranteed and jealously guarded by the
Constitution."18
Reference was made to the provisions of the Constitution encouraging private enterprises and the incentive to
needed investment, as well as the right to operate economic enterprises. Finally, from the observation that the illicit relationships
the Ordinance sought to dissuade could nonetheless be consummated by simply paying for a 12-hour stay, the RTC likened the
law to the ordinance annulled in Ynot v. Intermediate Appellate Court,19 where the legitimate purpose of preventing indiscriminate
slaughter of carabaos was sought to be effected through an inter-province ban on the transport of carabaos and carabeef.
The City later filed a petition for review on certiorari with the Supreme Court.20
The petition was docketed as G.R. No. 112471.
However in a resolution dated January 26, 1994, the Court treated the petition as a petition for certiorari and referred the petition
to the Court of Appeals.21
Before the Court of Appeals, the City asserted that the Ordinance is a valid exercise of police power pursuant to Section 458
(4)(iv) of the Local Government Code which confers on cities, among other local government units, the power:
[To] regulate the establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns, pension
houses, lodging houses and other similar establishments, including tourist guides and transports.22
The Ordinance, it is argued, is also a valid exercise of the power of the City under Article III, Section 18(kk) of the Revis ed Manila
Charter, thus:
"to enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance of the prosperity and the
promotion of the morality, peace, good order, comfort, convenience and general welfare of the city and its inhabitants, and s uch
others as be necessary to carry into effect and discharge the powers and duties conferred by this Chapter; and to fix penalties for
the violation of ordinances which shall not exceed two hundred pesos fine or six months imprisonment, or both such fine and
imprisonment for a single offense.23
Petitioners argued that the Ordinance is unconstitutional and void since it violates the right to privacy and the freedom of
movement; it is an invalid exercise of police power; and it is an unreasonable and oppressive interference in their business.
The Court of Appeals reversed the decision of the RTC and affirmed the constitutionality of the Ordinance. 24
First, it held that the
Ordinance did not violate the right to privacy or the freedom of movement, as it only penalizes the owners or operators of
establishments that admit individuals for short time stays. Second, the virtually limitless reach of police power is only constrained
by having a lawful object obtained through a lawful method. The lawful objective of the Ordinance is satisfied since it aims to curb
immoral activities. There is a lawful method since the establishments are still allowed to operate. Third, the adverse effect on the
establishments is justified by the well-being of its constituents in general. Finally, as held in Ermita-Malate Motel Operators
Association v. City Mayor of Manila, liberty is regulated by law.
TC, WLC and STDC come to this Court via petition for review on certiorari.25
In their petition and Memorandum, petitioners in

essence repeat the assertions they made before the Court of Appeals. They contend that the assailed Ordinance is an invalid
exercise of police power.
II.
We must address the threshold issue of petitioners’ standing. Petitioners allege that as owners of establishments offering "wash-
up" rates, their business is being unlawfully interfered with by the Ordinance. However, petitioners also allege that the equal
protection rights of their clients are also being interfered with. Thus, the crux of the matter is whether or not these estab lishments
have the requisite standing to plead for protection of their patrons' equal protection rights.
Standing or locus standi is the ability of a party to demonstrate to the court sufficient connection to and harm from the law or
action challenged to support that party's participation in the case. More importantly, the doctrine of standing is built on the
principle of separation of powers,26
sparing as it does unnecessary interference or invalidation by the judicial branch of the
actions rendered by its co-equal branches of government.
The requirement of standing is a core component of the judicial system derived directly from the Constitution. 27
The constitutional
component of standing doctrine incorporates concepts which concededly are not susceptible of precise definition. 28
In this
jurisdiction, the extancy of "a direct and personal interest" presents the most obvious cause, as well as the standard test f or a
petitioner's standing.29
In a similar vein, the United States Supreme Court reviewed and elaborated on the meaning of the three
constitutional standing requirements of injury, causation, and redressability in Allen v. Wright.30
Nonetheless, the general rules on standing admit of several exceptions such as the overbreadth doctrine, taxpayer suits, third
party standing and, especially in the Philippines, the doctrine of transcendental importance.31
For this particular set of facts, the concept of third party standing as an exception and the overbreadth doctrine are appropriate.
In Powers v. Ohio,32
the United States Supreme Court wrote that: "We have recognized the right of litigants to bring actions on
behalf of third parties, provided three important criteria are satisfied: the litigant must have suffered an ‘injury -in-fact,’ thus giving
him or her a "sufficiently concrete interest" in the outcome of the issue in dispute; the litigant must have a close relation to the
third party; and there must exist some hindrance to the third party's ability to protect his or her own interests." 33
Herein, it is clear
that the business interests of the petitioners are likewise injured by the Ordinance. They rely on the patronage of their cus tomers
for their continued viability which appears to be threatened by the enforcement of the Ordinance. The relative silence in
constitutional litigation of such special interest groups in our nation such as the American Civil Liberties Union in the Uni ted
States may also be construed as a hindrance for customers to bring suit.34
American jurisprudence is replete with examples where parties-in-interest were allowed standing to advocate or invoke the
fundamental due process or equal protection claims of other persons or classes of persons injured by state action. In Griswold v.
Connecticut,35
the United States Supreme Court held that physicians had standing to challenge a reproductive health statute that
would penalize them as accessories as well as to plead the constitutional protections available to their patients. The Court held
that:
"The rights of husband and wife, pressed here, are likely to be diluted or adversely affected unless those rights are considered in
a suit involving those who have this kind of confidential relation to them."36
An even more analogous example may be found in Craig v. Boren,37 wherein the United States Supreme Court held that a
licensed beverage vendor has standing to raise the equal protection claim of a male customer challenging a statutory scheme
prohibiting the sale of beer to males under the age of 21 and to females under the age of 18. The United States High Court
explained that the vendors had standing "by acting as advocates of the rights of third parties who seek access to their market or
function."38
Assuming arguendo that petitioners do not have a relationship with their patrons for the former to assert the rights of the latter,
the overbreadth doctrine comes into play. In overbreadth analysis, challengers to government action are in effect permitted to
raise the rights of third parties. Generally applied to statutes infringing on the freedom of speech, the overbreadth doctrine

applies when a statute needlessly restrains even constitutionally guaranteed rights.39
In this case, the petitioners claim that the
Ordinance makes a sweeping intrusion into the right to liberty of their clients. We can see that based on the allegations in the
petition, the Ordinance suffers from overbreadth.
We thus recognize that the petitioners have a right to assert the constitutional rights of their clients to patronize their
establishments for a "wash-rate" time frame.
III.
To students of jurisprudence, the facts of this case will recall to mind not only the recent City of Manila ruling, but our 1967
decision in Ermita-Malate Hotel and Motel Operations Association, Inc., v. Hon. City Mayor of Manila.40
Ermita-Malate concerned
the City ordinance requiring patrons to fill up a prescribed form stating personal information such as name, gender, nationality,
age, address and occupation before they could be admitted to a motel, hotel or lodging house. This earlier ordinance was
precisely enacted to minimize certain practices deemed harmful to public morals. A purpose similar to the annulled ordinance
in City of Manila which sought a blanket ban on motels, inns and similar establishments in the Ermita-Malate area. However, the
constitutionality of the ordinance in Ermita-Malate was sustained by the Court.
The common thread that runs through those decisions and the case at bar goes beyond the singularity of the localities covered
under the respective ordinances. All three ordinances were enacted with a view of regulating public morals including particular
illicit activity in transient lodging establishments. This could be described as the middle case, wherein there is no wholesa le ban
on motels and hotels but the services offered by these establishments have been severely restricted. At its core, this is another
case about the extent to which the State can intrude into and regulate the lives of its citizens.
The test of a valid ordinance is well established. A long line of decisions including City of Manila has held that for an ordinance to
be valid, it must not only be within the corporate powers of the local government unit to enact and pass according to the
procedure prescribed by law, it must also conform to the following substantive requirements: (1) must not contravene the
Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but
may regulate trade; (5) must be general and consistent with public policy; and (6) must not be unreasonable. 41
The Ordinance prohibits two specific and distinct business practices, namely wash rate admissions and renting out a room more
than twice a day. The ban is evidently sought to be rooted in the police power as conferred on local government units by the
Local Government Code through such implements as the general welfare clause.
A.
Police power, while incapable of an exact definition, has been purposely veiled in general terms to underscore its
comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response as the conditions
warrant.42
Police power is based upon the concept of necessity of the State and its corresponding right to protect itself and its
people.43
Police power has been used as justification for numerous and varied actions by the State. These range from the
regulation of dance halls,44
movie theaters,45
gas stations46
and cockpits.47
The awesome scope of police power is best
demonstrated by the fact that in its hundred or so years of presence in our nation’s legal system, its use has rarely been de nied.
The apparent goal of the Ordinance is to minimize if not eliminate the use of the covered establishments for illicit sex, prostitution,
drug use and alike. These goals, by themselves, are unimpeachable and certainly fall within the ambit of the police power of the
State. Yet the desirability of these ends do not sanctify any and all means for their achievement. Those means must align with
the Constitution, and our emerging sophisticated analysis of its guarantees to the people. The Bill of Rights stands as a reb uke to
the seductive theory of Macchiavelli, and, sometimes even, the political majorities animated by his cynicism.
Even as we design the precedents that establish the framework for analysis of due process or equal protection questions, the
courts are naturally inhibited by a due deference to the co-equal branches of government as they exercise their political
functions. But when we are compelled to nullify executive or legislative actions, yet another form of caution emerges. If the Court
were animated by the same passing fancies or turbulent emotions that motivate many political decisions, judicial integrity is

compromised by any perception that the judiciary is merely the third political branch of government. We derive our respect an d
good standing in the annals of history by acting as judicious and neutral arbiters of the rule of law, and there is no surer way to
that end than through the development of rigorous and sophisticated legal standards through which the courts analyze the most
fundamental and far-reaching constitutional questions of the day.
B.
The primary constitutional question that confronts us is one of due process, as guaranteed under Section 1, Article III of the
Constitution. Due process evades a precise definition.48
The purpose of the guaranty is to prevent arbitrary governmental
encroachment against the life, liberty and property of individuals. The due process guaranty serves as a protection against
arbitrary regulation or seizure. Even corporations and partnerships are protected by the guaranty insofar as their property is
concerned.
The due process guaranty has traditionally been interpreted as imposing two related but distinct restrictions on government,
"procedural due process" and "substantive due process." Procedural due process refers to the procedures that the government
must follow before it deprives a person of life, liberty, or property.49
Procedural due process concerns itself with government
action adhering to the established process when it makes an intrusion into the private sphere. Examples range from the form o f
notice given to the level of formality of a hearing.
If due process were confined solely to its procedural aspects, there would arise absurd situation of arbitrary government action,
provided the proper formalities are followed. Substantive due process completes the protection envisioned by the due process
clause. It inquires whether the government has sufficient justification for depriving a person of life, liberty, or property.50
The question of substantive due process, moreso than most other fields of law, has reflected dynamism in progressive legal
thought tied with the expanded acceptance of fundamental freedoms. Police power, traditionally awesome as it may be, is now
confronted with a more rigorous level of analysis before it can be upheld. The vitality though of constitutional due process has not
been predicated on the frequency with which it has been utilized to achieve a liberal result for, after all, the libertarian ends
should sometimes yield to the prerogatives of the State. Instead, the due process clause has acquired potency because of the
sophisticated methodology that has emerged to determine the proper metes and bounds for its application.
C.
The general test of the validity of an ordinance on substantive due process grounds is best tested when assessed with the
evolved footnote 4 test laid down by the U.S. Supreme Court in U.S. v. Carolene Products.51
Footnote 4 of the Carolene Products
case acknowledged that the judiciary would defer to the legislature unless there is a discrimination against a "discrete and
insular" minority or infringement of a "fundamental right."52
Consequently, two standards of judicial review were established: strict
scrutiny for laws dealing with freedom of the mind or restricting the political process, and the rational basis standard of r eview for
economic legislation.
A third standard, denominated as heightened or immediate scrutiny, was later adopted by the U.S. Supreme Court for evaluating
classifications based on gender53
and legitimacy.54
Immediate scrutiny was adopted by the U.S. Supreme Court in Craig,55
after
the Court declined to do so in Reed v. Reed.56
While the test may have first been articulated in equal protection analysis, it has in
the United States since been applied in all substantive due process cases as well.
We ourselves have often applied the rational basis test mainly in analysis of equal protection challenges. 57
Using the rational
basis examination, laws or ordinances are upheld if they rationally further a legitimate governmental interest. 58
Under
intermediate review, governmental interest is extensively examined and the availability of less restrictive measures is
considered.59
Applying strict scrutiny, the focus is on the presence of compelling, rather than substantial, governmental interest
and on the absence of less restrictive means for achieving that interest.
In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard for determining the quality and the
amount of governmental interest brought to justify the regulation of fundamental freedoms.60
Strict scrutiny is used today to test

the validity of laws dealing with the regulation of speech, gender, or race as well as other fundamental rights as expansion from
its earlier applications to equal protection.61
The United States Supreme Court has expanded the scope of strict scrutiny to
protect fundamental rights such as suffrage,62
judicial access63
and interstate travel.64
If we were to take the myopic view that an Ordinance should be analyzed strictly as to its effect only on the petitioners at bar,
then it would seem that the only restraint imposed by the law which we are capacitated to act upon is the injury to property
sustained by the petitioners, an injury that would warrant the application of the most deferential standard – the rational basis test.
Yet as earlier stated, we recognize the capacity of the petitioners to invoke as well the constitutional rights of their patr ons –
those persons who would be deprived of availing short time access or wash-up rates to the lodging establishments in question.
Viewed cynically, one might say that the infringed rights of these customers were are trivial since they seem shorn of politi cal
consequence. Concededly, these are not the sort of cherished rights that, when proscribed, would impel the people to tear up
their cedulas. Still, the Bill of Rights does not shelter gravitas alone. Indeed, it is those "trivial" yet fundamental freed oms – which
the people reflexively exercise any day without the impairing awareness of their constitutional consequence – that accurately
reflect the degree of liberty enjoyed by the people. Liberty, as integrally incorporated as a fundamental right in the Consti tution, is
not a Ten Commandments-style enumeration of what may or what may not be done; but rather an atmosphere of freedom where
the people do not feel labored under a Big Brother presence as they interact with each other, their society and nature, in a
manner innately understood by them as inherent, without doing harm or injury to others.
D.
The rights at stake herein fall within the same fundamental rights to liberty which we upheld in City of Manila v. Hon. Lagui o, Jr.
We expounded on that most primordial of rights, thus:
Liberty as guaranteed by the Constitution was defined by Justice Malcolm to include "the right to exist and the right to be f ree
from arbitrary restraint or servitude. The term cannot be dwarfed into mere freedom from physical restraint of the person of the
citizen, but is deemed to embrace the right of man to enjoy the facilities with which he has been endowed by his Creator, sub ject
only to such restraint as are necessary for the common welfare."[65
] In accordance with this case, the rights of the citizen to be
free to use his faculties in all lawful ways; to live and work where he will; to earn his livelihood by any lawful calling; a nd to pursue
any avocation are all deemed embraced in the concept of liberty.[66]
The U.S. Supreme Court in the case of Roth v. Board of Regents, sought to clarify the meaning of "liberty." It said:
While the Court has not attempted to define with exactness the liberty . . . guaranteed [by the Fifth and Fourteenth Amendmen ts],
the term denotes not merely freedom from bodily restraint but also the right of the individual to contract, to engage in any of the
common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship God
according to the dictates of his own conscience, and generally to enjoy those privileges long recognized . . . as essential to the
orderly pursuit of happiness by free men. In a Constitution for a free people, there can be no doubt that the meaning of "lib erty"
must be broad indeed.67
[Citations omitted]
It cannot be denied that the primary animus behind the ordinance is the curtailment of sexual behavior. The City asserts befo re
this Court that the subject establishments "have gained notoriety as venue of ‘prostitution, adultery and fornications’ in Manila
since they ‘provide the necessary atmosphere for clandestine entry, presence and exit and thus became the ‘ideal haven for
prostitutes and thrill-seekers.’"68
Whether or not this depiction of a mise-en-scene of vice is accurate, it cannot be denied that
legitimate sexual behavior among willing married or consenting single adults which is constitutionally protected 69
will be curtailed
as well, as it was in the City of Manila case. Our holding therein retains significance for our purposes:
The concept of liberty compels respect for the individual whose claim to privacy and interference demands respect. As the case
of Morfe v. Mutuc, borrowing the words of Laski, so very aptly stated:
Man is one among many, obstinately refusing reduction to unity. His separateness, his isolation, are indefeasible; indeed, they
are so fundamental that they are the basis on which his civic obligations are built. He cannot abandon the consequences of hi s

isolation, which are, broadly speaking, that his experience is private, and the will built out of that experience personal to himself.
If he surrenders his will to others, he surrenders himself. If his will is set by the will of others, he ceases to be a maste r of himself.
I cannot believe that a man no longer a master of himself is in any real sense free.
Indeed, the right to privacy as a constitutional right was recognized in Morfe, the invasion of which should be justified by a
compelling state interest. Morfe accorded recognition to the right to privacy independently of its identification with liberty; in itself
it is fully deserving of constitutional protection. Governmental powers should stop short of certain intrusions into the pers onal life
of the citizen.70
We cannot discount other legitimate activities which the Ordinance would proscribe or impair. There are very legitimate uses for a
wash rate or renting the room out for more than twice a day. Entire families are known to choose pass the t ime in a motel or hotel
whilst the power is momentarily out in their homes. In transit passengers who wish to wash up and rest between trips have a
legitimate purpose for abbreviated stays in motels or hotels. Indeed any person or groups of persons in need of comfortable
private spaces for a span of a few hours with purposes other than having sex or using illegal drugs can legitimately look to
staying in a motel or hotel as a convenient alternative.
E.
That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and the petitioners of lucrative
business ties in with another constitutional requisite for the legitimacy of the Ordinance as a police power measure. It must
appear that the interests of the public generally, as distinguished from those of a particular class, require an interference with
private rights and the means must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive of
private rights.71
It must also be evident that no other alternative for the accomplishment of the purpose less intrusive of private
rights can work. More importantly, a reasonable relation must exist between the purposes of the measure and the means
employed for its accomplishment, for even under the guise of protecting the public interest, personal rights and those pertai ning
to private property will not be permitted to be arbitrarily invaded.72
Lacking a concurrence of these requisites, the police measure shall be struck down as an arbitrary intrusion into private rig hts. As
held in Morfe v. Mutuc, the exercise of police power is subject to judicial review when life, liberty or property is
affected.73
However, this is not in any way meant to take it away from the vastness of State police power whose exercise enjoys
the presumption of validity.74
Similar to the Comelec resolution requiring newspapers to donate advertising space to candidates, this Ordinance is a blunt and
heavy instrument.75
The Ordinance makes no distinction between places frequented by patrons engaged in illicit activities and
patrons engaged in legitimate actions. Thus it prevents legitimate use of places where illicit activities are rare or even unhear d of.
A plain reading of section 3 of the Ordinance shows it makes no classification of places of lodging, thus deems them all
susceptible to illicit patronage and subject them without exception to the unjustified prohibition.
The Court has professed its deep sentiment and tenderness of the Ermita-Malate area, its longtime home,76
and it is skeptical of
those who wish to depict our capital city – the Pearl of the Orient – as a modern-day Sodom or Gomorrah for the Third World set.
Those still steeped in Nick Joaquin-dreams of the grandeur of Old Manila will have to accept that Manila like all evolving big
cities, will have its problems. Urban decay is a fact of mega cities such as Manila, and vice is a common problem confronted by
the modern metropolis wherever in the world. The solution to such perceived decay is not to prevent legitimate businesses from
offering a legitimate product. Rather, cities revive themselves by offering incentives for new businesses to sprout up thus
attracting the dynamism of individuals that would bring a new grandeur to Manila.
The behavior which the Ordinance seeks to curtail is in fact already prohibited and could in fact be diminished simply by app lying
existing laws. Less intrusive measures such as curbing the proliferation of prostitutes and drug dealers throug h active police work
would be more effective in easing the situation. So would the strict enforcement of existing laws and regulations penalizing
prostitution and drug use. These measures would have minimal intrusion on the businesses of the petitioners an d other
legitimate merchants. Further, it is apparent that the Ordinance can easily be circumvented by merely paying the whole day ra te
without any hindrance to those engaged in illicit activities. Moreover, drug dealers and prostitutes can in fact collect "wash rates"

from their clientele by charging their customers a portion of the rent for motel rooms and even apartments.
IV.
We reiterate that individual rights may be adversely affected only to the extent that may fairly be required by the legitimat e
demands of public interest or public welfare. The State is a leviathan that must be restrained from needlessly intruding into th e
lives of its citizens. However well-intentioned the Ordinance may be, it is in effect an arbitrary and whimsical intrusion into the
rights of the establishments as well as their patrons. The Ordinance needlessly restrains the operation of the businesses of the
petitioners as well as restricting the rights of their patrons without sufficient justification. The Ordinance rashly equat es wash
rates and renting out a room more than twice a day with immorality without accommodating innocuous intentions.
The promotion of public welfare and a sense of morality among citizens deserves the full endorsement of the judiciary provide d
that such measures do not trample rights this Court is sworn to protect.77
The notion that the promotion of public morality is a
function of the State is as old as Aristotle.78
The advancement of moral relativism as a school of philosophy does not de-
legitimize the role of morality in law, even if it may foster wider debate on which particular behavior to penalize. It is conceivable
that a society with relatively little shared morality among its citizens could be functional so long as the pursuit of sharpl y variant
moral perspectives yields an adequate accommodation of different interests.79
To be candid about it, the oft-quoted American maxim that "you cannot legislate morality" is ultimately illegitimate as a matter of
law, since as explained by Calabresi, that phrase is more accurately interpreted as meaning that efforts to legislate morality will
fail if they are widely at variance with public attitudes about right and wrong.80
Our penal laws, for one, are founded on age-old
moral traditions, and as long as there are widely accepted distinctions between right and wrong, they will remain so oriented .
Yet the continuing progression of the human story has seen not only the acceptance of the right-wrong distinction, but also the
advent of fundamental liberties as the key to the enjoyment of life to the fullest. Our democracy is distinguished from non -free
societies not with any more extensive elaboration on our part of what is moral and immoral, but from our recognition that the
individual liberty to make the choices in our lives is innate, and protected by the State. Independent and fair -minded judges
themselves are under a moral duty to uphold the Constitution as the embodiment of the rule of law, by reason of their expression
of consent to do so when they take the oath of office, and because they are entrusted by the people to uphold the law. 81
Even as the implementation of moral norms remains an indispensable complement to governance, that prerogative is hardly
absolute, especially in the face of the norms of due process of liberty. And while the tension may often be left to the courts to
relieve, it is possible for the government to avoid the constitutional conflict by employing more judicious, less drastic mea ns to
promote morality.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED, and the Decision of the Regional
Trial Court of Manila, Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL. No
pronouncement as to costs.
SO ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice
(On Official Leave)
ANTONIO T. CARPIO
Associate Justice
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
RENATO C. CORONA
Associate Justice
CONCHITA CARPIO MORALES
Associate Justice
ADOLFO S. AZCUNA
Associate Justice
PRESBITERO J. VELASCO, JR.
Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
ANTONIO EDUARDO B. NACHUR
Associate Justice
TERESITA LEONARDO DE CASTRO
Associate Justice
(On Sick Leave)
ARTURO D. BRION
Associate Justice
(On Official Leave)
DIOSDADO M. PERALTA
Associate Justice
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice
Footnotes
1 G.R. 118127, 12 April 2005, 455 SCRA 308.
2
See rollo, pp. 4-41.
3
Id. at 42-59. Penned by Associate Justice Jaime M. Lantin, concurred in by Associate Justices Ricardo P.
Galvez (later, Solicitor-General) and Antonio P. Solano.
4
Id. at 46.
5
Id. at 62-69.
6
Id. at 45-46.

7
Id. at 70-77.
8
Id. at 47.
9
Id.
10
Id.
11
Id. at 48.
12
Id. at 81.
13
Id. at 82-83.
14
Id. at 84-99.
15
Id. at 104-105.
16
Id. at 49.
17 Id. at 52.
18
Id. at 120.
19
No. L-74457, 20 March 1987, 148 SCRA 659.
20
Rollo, pp. 129-145.
21
Id. at 158.
22
Id. at 53.
23
Id.
24
Id. at 43-59.
25 Id. at 4-40.
26
Allen v. Wright, 468 U.S. 737 (1984).
27 Const., Art. VIII , Sec. 5, Sanlakas v. Executive Secretary Reyes, 466 Phil. 482 (2004).
28
Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979).
29
See Domingo v. Carague, G.R. No. 161065, 15 April 2005, 456 SCRA 450. See also Macasiano v. National
Housing Authority, G.R. No. 107921, 1 July 1993, 224 SCRA 236.
30
468 U.S. 737 (1984).

31
Supra note 29.
32
499 U.S. 400 (1991).
33
Id. at p 410-411.
34
See Kelsey McCowan Heilman, The Rights of Others: Protection and Advocacy Organizations Associational
Standing to Sue, 157 U. Pa. L. Rev. 237, for a general discussion on advocacy groups.
35
381 U.S. 479(1965).
36
Id. at 481.
37
429 U.S. 190 (1976).
38
Id. at 194.
39
Chavez v. Comelec, G.R. No. 162777, 31 August 2004, 437 SCRA 415; Adiong v. Comelec, G.R. No. 103956,
31 March 1992, 207 SCRA 712.
40127 Phil. 306 (1967).
41
City of Manila v. Laguio, Jr., supra note 1; Tatel v. Municipality of Virac, G.R. No. 40243, 11 March 1992, 207
SCRA 157, 161; Solicitor General v. Metropolitan Manila Authority, G.R. No. 102782, 11 December 1991, 204
SCRA 837, 845; Magtajas v. Pryce Properties Corp., Inc., G.R. No. 111097, 20 July 1994, 234 SCRA 255, 268 -
267.
42
Ermita-Malate Hotel and Motel Operators Association, Inc. v. City Mayor of Manila, 127 Phil. 306 (1967).
43
JMM Promotion and Management Inc. v. Court of Appeals, 329 Phil. 87, 94 (1996) citing Rubi v. Provincial
Board of Mindoro, 39 Phil. 660 (1919).
44
U.S. v. Rodriguez, 38 Phil. 759.
45
People v. Chan, 65 Phil. 611 (1938).
46
Javier v. Earnshaw, 64 Phil. 626 (1937).
47 Pedro v. Provincial Board of Rizal, 56 Phil. 123 (1931).
48
See U.S. v. Ling Su Fan, 10 Phil. 104 (1908); Insular Government v. Ling Su Fan, 15 Phil. 58 (1910).
49 Lopez v. Director of Lands, 47 Phil. 23, 32 (1924).
50
See City of Manila v. Hon. Laguio, Jr., supra note 1 at 330 citing CHEMERINSKY, ERWIN, CONSTITUTIONAL
LAW PRINCIPLES AND POLICIES, 2nd Ed. 523 (2002).
51
304 U.S. 144 (1938).
52
Id, at 152.

53
Craig v. Boren, 429 U.S. 190 (1976).
54
Clark v. Jeter, 486 U.S. 456 (1988).
55
429 U.S. 190 (1976).
56
404 U.S. 71 (1971).
57
Central Bank Employee’s Association v. Bangko Sentral ng Pilipinas, 487 Phil. 531 (2004); Association of Small
Landowners in the Philippines v. Secretary of Agrarian Reform, G.R. Nos. 78742, 79310, 79744, and 79777, July
14, 1989, 175 SCRA 343; In Ermita-Malate, supra note 1 at 324, the Court in fact noted: "if the liberty involved
were freedom of the mind or the person, the standard for the validity of government acts is much more rigorous
and exacting, but where the liberty curtailed affects what are at the most rights of property, the permissible scope
of regulatory measures is wider."
58
Central Bank Employee’s Association v. Bangko Sentral ng Pilipinas, supra note 57.
59
Id.
60
Mendoza, J., Concurring Opinion in Estrada v. Sandiganbayan, G.R. No. 148560, 19 November 2001, 369
SCRA 394.
61
Id.
62
Bush v. Gore, 531 U.S. 98 (2000).
63
Boddie v. Connecticut, 401 U.S. 371 (1971).
64 Shapiro v. Thompson, 394 U.S. 618 (1969). It has been opined by Chemerinsky that the use of the equal
protection clause was to avoid the use of substantive due process since the latter fell into disfavor in the United
States. See Erwin Chemerinsky, Constitutional Law, Principles and Policies (2nd ed. 2002).
65
Morfe v. Mutuc, 130 Phil. 415 (1968).
66Id. at 440.
67
City of Manila v. Laguio, Jr., supra note 1 at 336-337.
68 Rollo, p. 258.
69
"Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their bonds in
intimate sexual conduct within the motel's premises — be it stressed that their consensual sexual behavior does
not contravene any fundamental state policy as contained in the Constitution. (See Concerned Employee v.
Glenda Espiritu Mayor, A.M. No. P-02-1564, 23 November 2004) Adults have a right to choose to forge such
relationships with others in the confines of their own private lives and still retain their dignity as free persons. The
liberty protected by the Constitution allows persons the right to make this choice. Their right to liberty under the
due process clause gives them the full right to engage in their conduct without intervention of the government, as
long as they do not run afoul of the law. Liberty should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must

include privacy as well, if it is to be a repository of freedom. The right to be let alone is the beginning of all
freedom — it is the most comprehensive of rights and the right most valued by civilized men." City of
Manila v. Hon. Laguio, Jr. supra note 1 at 337-338.
70
City of Manila v. Laguio, Jr., supra note 1 at 338-339.
71
Metro Manila Development Authority v. Viron Transportation Co., G.R. Nos. 170656 and 170657, 15 August
2007, 530 SCRA 341.
72
U.S. v. Toribio, 15 Phil. 85 (1910).
73
130 Phil. 415 (1968).
74
Carlos Superdrug v. DSWD, G.R. No. 166494, June 29, 2007, Alalayan v. National Power Corporation, 24 Phil.
172 (1968); U.S. v. Salaveria, 39 Phil. 102 (1918).
75
Philippine Press Institute v. Comelec, 314 Phil. 131 (1995).
76
Supra note 1.
77
City of Manila v. Hon. Laguio, Jr., supra note 1; De La Cruz, et al. v. Hon. Paras, et al., 208 Phil. 490 (1983);
Ermita-Malate Hotel and Motel Operations Association, Inc. v. City Mayor of Manila, supra note 42.
78
"The end of the state is not mere life; it is, rather, a good quality of life." Therefore any state "which is truly so
called, and is not merely one in name, must devote itself to the end of encouraging goodness. Otherwise, a
political association sinks into a mere alliance…" The law "should be a rule of life such as will make the members
of a [state] good and just." Otherwise it "becomes a mere covenant – or (in the phrase of the Sophist Lycophron)
‘a guarantor of men’s rights against one another.’" Politics II.9.6-8.1280 31-1280bii; cited in Hamburger, M.,
Morals and Law: The Growth of Aristotle’s Legal Theory (1951 ed.), p. 178.
79
Greenwalt, K., Conflicts of Law and Morality (1989 ed.), at 38.
80
Steven G., Render Unto Caesar that which is Caesars, and unto God that which is God’s, 31 Harv. J.L. & Pub.
Pol'y 495. He cites the example of the failed Twentieth (?) Amendment to the U.S. Constitution, which prohibited
the sale and consumption of liquor, where it was clear that the State cannot justly and successfully regulate
consumption of alcohol, when huge portions of the population engage in its consumption.
See also Posner, Richard H., The Problematics of Moral And Legal Theory, The Belknap Press of
Harvard University Press (2002). He writes:
. . . Holmes warned long ago of the pitfalls of misunderstanding law by taking its moral vocabulary too
seriously. A big part of legal education consists of showing students how to skirt those pitfalls. The law
uses moral terms in part because of its origin, in part to be impressive, in part to speak a language that
the laity, to whom the commands of the law are addressed, is more likely to understand – and in part,
because there is a considerable overlap between law and morality. The overlap, however, is too limited to
justify trying to align these two systems of social control (the sort of project that Islamic nations such as
Iran, Pakistan, and Afghanistan have been engaged in of late). It is not a scandal when the law to
pronounce it out of phase with current moral feeling. If often is, and for good practical reasons (in
particular, the law is a flywheel, limiting the effects of wide swings in public opinion). When people make
that criticism—as many do of the laws, still found on the statute books of many states, punishing
homosexual relations—what they mean is that the law neither is supported by public opinion nor serves

any temporal purpose, even that of stability, that it is merely a vestige, an empty symbol.
81
See Burton, S., Judging in Good Faith, (1992 ed.), at 218.
The Lawphil Project - Arellano Law Foundation
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Today is Thursday, November 15, 2012
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SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 124795 December 10, 2008
FORFOM DEVELOPMENT CORPORATION, petitioner,
vs.
PHILIPPINE NATIONAL RAILWAYS, respondent.
D E C I S I O N
CHICO-NAZARIO, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court which seeks to set aside the Decision1
of the

Court of Appeals dated 24 April 1996.
Petitioner Forfom Development Corporation (Forfom) is a domestic corporation duly organized and existing under the laws of the
Philippines with principal office at Cabuyao, Laguna, while respondent Philippine National Railways (PNR) is a government
corporation engaged in proprietary functions with principal office at the PNR Railway Station, C.M. Recto Avenue, Tutuban,
Binondo, Manila.
The facts, stripped of the non-essentials, are as follows:
Forfom is the registered owner of several parcels of land in San Vicente, San Pedro, Laguna under Transfer Certificates of Title
(TCT) Nos. T-34384, T-34386 and 34387, all of the Registry of Deeds of Laguna. Said parcels of land were originally registered
in the name of Felix Limcaoco, predecessor-in-interest of Forfom, under Original Certificates of Title (OCT) Nos. (0-326) 0-384
and (0-328) 0-386.
In a cabinet meeting held on 1 November 1972, then President Ferdinand E. Marcos approved the Presidential Commuter
Service Project, more commonly known as the Carmona Project of the President. Per Resolution No. 751 dated 2 November
1972 of the PNR Board of Directors, its General Manager was authorized to implement the project. The San Pedro -Carmona
Commuter Line Project was implemented with the installation of railroad facilities and appurtenances.
During the construction of said commuter line, several properties owned by private individuals/corporations were traversed as
right-of-way. Among the properties through which the commuter line passed was a 100,128 square-meter portion owned by
Forfom covered by TCT Nos. T-34384, T-34386 and T-34387.
On 24 August 1990, Forfom filed before the Regional Trial Court (RTC) of Binan, Laguna a complaint 2
for Recovery of
Posssession of Real Property and/or Damages. It alleged that PNR, with the aid of military men, and without its consent and
against its will, occupied 100,128 square meters of its property located in San Pedro, Laguna and installed thereon railroad and
railway facilities and appurtenances. It further alleged that PNR rented out portions of the property to squatters along the rail road
tracks. Despite repeated verbal and written demands for the return of the property or for the payment of its price, PNR faile d to
comply. It prayed that PNR be ordered to vacate the property and to cause the eviction of all shanties and squatters that PNR
had taken in as lessees, and that it be restored to the peaceful occupation and enjoyment thereof. It likewise asked that For fom
be ordered to pay (a) P1,000.00 per month per hectare from occupation of the property until the same is vacated as rentals plus
interest at 24% per annum; (b) P1,600,000.00 as unrealized income from occupation of the property up to the present plus 12%
interest per annum until fully paid; (c) P150,000.00 for actual damages on account of the destruction of crops and improvements
on the property when the occupation of the property commenced plus 12% interest per annum until fully paid; (d) at
least P100,000.00 as exemplary damages; (e) P100,000.00 plus 15% of the amount and properties to be recovered as attorney's
fees; and (f) costs of the suit.3
In its Amended Answer,4
PNR alleged that, per authority granted by law (Presidential Decree No. 741), it acquired parcels of land
used in the construction of the railway track to Carmona, Cavite. It, however, denied that the property acquired from Forfom was
leased to tenants. It likewise denied that the acquisition of Forfom's property was made without the consent of Dr. Felix
Limcaoco, the former owner of the property. It stressed that the acquisition of the properties used in the project was done through
negotiations with the respective owners. It asserted that no crop was damaged when it acquired the property subject of the ca se.
Further, it denied liability for unrealized income, exemplary damages and attorney's fees.
PNR explained that former President Ferdinand E. Marcos approved what was known to be the Carmona Project -- a 5.1
kilometer railroad extension line from San Pedro, Laguna to San Jose, Carmona, Cavite to serve th e squatters' resettlement area
in said localities. It claimed that it negotiated with the respective owners of the affected properties and that they were pa id just
compensation. Dr. Felix Limcaoco, it said, was not paid because he failed to present the corresponding titles to his properties. It
claimed that the right to and just compensation for the subject property was the declared fair market value at the time of th e
taking which was P0.60 per square meter. It disclosed that in a meeting with the representatives of Dr. Limcaoco, the price
agreed upon was P1.25 per square meter, the amount the adjoining owners was paid. It prayed that the instant complaint be
dismissed, and that the owner of the properties involved be compelled to accept the amount of P1.25 per square meter as price

for the properties.
In an Order dated 29 October 1990, the pre-trial conference on the case was set.5
On 13 March 1991, for failure of the parties to
reach any agreement, pre-trial was terminated and trial of the case scheduled.6
Thereafter, trial on the merits ensued.
The following witnesses testified for Forfom: (1) Leon Capati; (2) Marites Dimaculangan; (3) Marilene L. de Guzman; (4) Gavino
Rosas de Claro; and (5) Jose Elazegui.
Mr. Leon Capati,7
employee of Forfom, testified that he knew Dr. Felix Limcaoco, Sr. because he worked for him since 1951 until
his death. He knew Forfom Development Corporation to be a corporation formed by the children of Dr. Limcaoco and owner of
the properties left behind by said doctor. He said he worked as overseer in Hacienda Limcaoco in San Pedro, Laguna owned by
Dr. Limcaoco. Said hacienda was converted to the Olympia Complex Subdivision now owned by Forfom. Being a worker of
Forfom, he disclosed that in 1972, the PNR forcibly took portions of the property of Forfom. Armed men installed railroads and
even used bulldozers which caused the destruction of around eleven hectares of sugar land. Since 1972, he said PNR used the
property for its benefit and even leased part of it to people living near the railroad. At that time, he claimed that the value of
sugarcane was P200.00 per piko and that the plantation harvested sixty (60) tons annually worth P224,000.00. In all, from 1972
to 1985, he claimed Forfom lost P2,917,200.00 in ruined sugar, unrealized harvest, excluding unrealized harvest for nine mango
trees which yielded 60 kaings per tree per harvest.
Ms. Marites Dimaculangan,8
an officer of Forfom, corroborated the testimony of Mr. Leon Capati. She presented
documents9
showing that Hacienda Limcaoco was previously owned by Dr. Felix Limcaoco, then the ownership was transferred
to Forfom. As proof that Hacienda Limcaoco was converted into a low-cost housing subdivision known as the Olympia Complex
Subdivision, she presented permits from the Human Settlements Regulatory Commission and from the Municipality of San
Pedro.10
She also adduced in evidence several letters11
allegedly showing that PNR occupied the property owned by the
Limcaocos. As a result, around eleven hectares of the sugar cane plantation were destroyed.12
From 1972 to 1985, she claimed
that part of the property taken by PNR was leased to squatters beside the railroad tracks. She added that Forfom incurred a l oss
totaling P2,917,200.00. She claimed that the current price of land contiguous to the parcels taken by PNR was P1,000.00 per
square meter.
Ms. Marilene L. De Guzman,13
Executive Vice-President of Forfom and daughter of the Late Dr. Felix Limcaoco, corroborated the
testimonies of Mr. Capati and Ms. Dimaculangan. She disclosed that his father died on 25 March 1973. She learned from her
father and from Mr. Leon Capati that when the armed men took a portion of their property, the armed men did not show any court
order or authority from any agency of the government. The armed men used bulldozers destroying 11 hectares of sugarcane and
some mango trees. She said those taken over were used as railroad tracks and a portion beside the tracks were be ing leased to
squatters. She revealed that the present fair market value of land at Olympia Complex is P1,400.00 per square meter.14 If the
land is not developed, same can be sold for P800.00 per square meter. She said from the time their property was taken over by
PNR, her family has been writing to PNR regarding compensation for their land.15
Ms. De Guzman said the property was still in the name of Dr. Felix Limcaoco, Sr. and Mrs. Olympia Limcaoco when the PNR
took over a portion of their properties. She said she was not informed by Mr. Capati that the PNR took the sa id property over
pursuant to a Presidential Mandate in order to provide transportation for relocated squatters. She explained that her father and
Mr. Capati were not advised to harvest their crops and were surprised by the taking over of the land.
Mr. Gavino Rosas de Claro,16
Land Register Examiner of the Register of Deeds of Calamba, Laguna, testified as representative
of the Register of Deeds. He brought in Court the originals of TCT Nos. T-3438417
and T-34386,18
both in the name of Forfom
Development Corporation and OCT Nos. (O-326) O-38419
and (O-328) O-386, both in the name of Dr. Felix Limcaoco,
Sr.20
Thereafter, photocopies thereof were compared with the originals which were found to be faithful reproductions of the same.
Jose Elazegui,21
Supervisor, Southern Tagalog Facoma, Inc. was presented to show the production of sugar and molasses on
the property of Forfom. He presented duplicate original copies of Tuos ng inaning Tubo for the years 1984-1985, 1985-1986,
1986-1987 and 1987-1988.22
The documents showed the production (average yield per area per picul) in other properties owned
by Forfom other than the properties subject matter of this case.

For the defendant, Mrs. Edna Ramos, Department Manager of the Real Estate Department of the PNR, took the stand. 23
She
testified that she was familiar with the acquisition by the PNR of the right of way for the San Pedro-Carmona Commuter Line. It
was acquired and established by Presidential Mandate and pursuant to the authority of the PNR to expropriate under its charter
(Presidential Decree No. 741).24
She explained that President Ferdinand E. Marcos authorized the PNR to acquire said right of
way in a Cabinet Meeting on 1 November 1972 as evidenced by an excerpt of the minutes of the meeting of the PNR Board of
Directors on Resolution No. 751.25
The right of way was acquired to provide a cheap, efficient and safe means of transportation to
the squatters who were relocated in Cavite. The commuter line, she said, was primarily for service rather than profit. As sho wn by
the letter26
dated 30 April 1974 of Nicanor T. Jimenez, former General Manager of the PNR, to Mrs. Olympia Hemedes Vda. de
Limcaoco, the acquisition of the right of way was with the knowledge and consent of Dr. Felix Limcaoco, Sr.
Mrs. Ramos disclosed that the total area acquired by the PNR for the San Pedro-Carmona Commuter Line was 15.7446 hectares
or sixteen (16) lots in all owned by seven (7) private landowners and three (3) corporations. Among the private landowners were
Isabel Oliver, Leoncia Blanco, Catalina Sanchez, Tomas Oliver, Alejandro Oliver and Antonio Sibulo. Per record of PNR, they
were paid P1.25 per square meter for their lands. They executed Absolute Deeds of Sale in favor of the PNR, as a result of
which, titles to the lands were transferred to PNR.27
The remaining 9 lots belonging to the three private corporations - Forfom
Development Corporation, Alviar Development Manufacturing & Trading Supply Corp. and Life Realty Development Corporation -
were not paid for because these corporations were not able to present their respective titles, which had been used as loan
collaterals in the Philippine National Bank and the Government Service Insurance System.28
The unit price per square meter,
which the negotiating panel of the PNR and the representatives of the three corporations was considering then, was P1.25. In a
letter dated 3 October 1975, Mr. Felix Limcaoco, Jr. of Forfom was asking for P12.00 per square meter for their land
and P150,000.00 for damaged sugar crops and mango trees.29
She likewise said she had the minutes of the conference between
Mr. Limcaoco and the PNR Chief Construction Engineer held at the PNR General Manager's Office on 24 July 1979.30
Mrs. Ramos clarified that as a matter of policy, PNR employees and other persons were not allowed to settle on the PNR's righ t
of way. Squatting along the right of way had never been encouraged. To prevent its proliferation, special contracts were entered
into with selected parties under strict conditions to vacate the property leased upon notice. She explained that the leasing of
PNR's right of way was an incidental power and was in response to the government's social housing project.
In its decision dated 29 October 1992, the trial court ruled generally in favor of plaintiff, the dispositive portion reading :
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against defendant
ordering the latter to pay the former the following:
1. Just compensation of the subject real properties consisting of 100,128 square meters and covered by
TCT Nos. T-34387, T-34384 and T-34386 at P10.00 per square meter, with legal interest from the time of
actual taking of plaintiff's real properties until payment is made by the defendant;
2. The amount of P4,480,000.00 as unearned income of plaintiff from 1972 up to the current year, and
thereafter, the amount of P224,000 yearly, with legal interest until payment is made;
3. Actual damages in the amount of P150,000 corresponding to sugarcane crops and mango trees
destroyed or damaged as a result of the unlawful taking of plaintiff's real properties, with legal interest
until payment is made;
4. The amount of P100,000 as and for attorney's fees;
5. The amount of P150,000 for litigation expenses plus the costs of this suit.
Plaintiff's claim for recovery of possession and the other prayers in the complaint are hereby dismissed for want
of merit.31

The trial court found that the properties of Forfom were taken by PNR without due process of law and without just compensation.
Although the power of eminent domain was not exercised in accordance with law, and PNR occupied petitioner's properties
without previous condemnation proceedings and payment of just compensation, the RTC ruled that, by its acquies cence, Forfom
was estopped from recovering the properties subject of this case. As to its right to compensation and damages, it said that t he
same could not be denied. The trial court declared that P10.00 per square meter was the fair and equitable market value of the
real properties at the time of the taking thereof.
Not contented with the decision, both parties appealed to the Court of Appeals by filing their respective Notices of Appeal. 32
PNR
questioned the trial court's ruling fixing the just compensation at P10.00 per square meter and not the declared value of P0.60
per square meter or the fair market value of P1.25 paid to an adjacent owner. It likewise questioned the award of actual damages
and unearned income to Forfom.
On 24 April 1996, the appellate court disposed of the case as follows:
WHEEFORE, the decision appealed from is hereby AFFIRMED insofar as (1) it denies plaintiff's claim for
recovery of possession and (2) it awards just compensation at the rate of P10.00 per square meter which
defendant must pay to plaintiff, but with legal rate of interest thereon hereby specifically fixed at six (6) percent
per annum starting from January of 1973 until full payment is made. However, the appealed decision is
MODIFIED in the sense that plaintiff's claim for damages is DENIED for lack of merit.
No pronouncement as to costs.33
Except for the deletion of the award of damages, attorney's fees and litigation expenses, the appellate court agreed the with trial
court. We quote:
There is no dispute that defendant neither commenced an expropriation proceedings nor paid just compensation
prior to its occupation and construction of railroad lines on the subject property. Nevertheless, plaintiff's prayer to
recover the property cannot be granted. Immediately after the occupation, or within a reasonable time thereafter,
there is no showing that the same was opposed or questioned by plaintiff or its representatives on the ground that
defendant never filed an expropriation proceedings and that no just compensation was ever paid. Neither is there
a showing that plaintiff sought to recover the property because the taking was done forcibly with the aid of armed
men. Instead, and this is borne out by certain communications between the parties through their respective
officers or representatives, what plaintiff actually did was to negotiate with defendant for the purpose of fixing the
amount which the latter should pay as just compensation and, if there be any, damages. x x x.
x x x x
Clearly, a continuing negotiation between the parties took place for the purpose only of fixing the amount of just
compensation and not because plaintiff wanted to recover the subject property. Thus, the failure of defendant to
first file an expropriation proceedings and pay just compensation is now beside the point. And even if the
contention of plaintiff that defendant used force is true, the former can no longer complain at this time. What
controls now is the fact that by its own act of negotiating with defendant for the payment of just compensation,
plaintiff had in effect made representations that it acquiesced to the taking of its property by defendant. We
therefore agree with the lower court that plaintiff, by its acquiescence, waived its right, and is thus estopped, from
recovering the subject property or from challenging any supposed irregularity in its acquisition.
x x x x
Plaintiff's right to recover just compensation, however, remains. On this matter, we agree with the P10.00 per
square meter valuation fixed by the trial court x x x.

x x x x
With the long delay in the payment of just compensation however, defendant should pay interest thereon at the
legal rate of six (6) percent per annum from the time of occupation until payment is made. x x x.34
Still unsatisfied with the decision, Forfom filed the instant petition for review on certiorari raising the following issues:
A. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER CANNOT RECOVER
POSSESSION OF ITS LAND DESPITE THE ADMISSION THAT IT WAS FORCIBLY TAKEN (DURING THE
MARTIAL LAW ERA) WITHOUT ANY EXPROPRIATION PROCEEDING OR PAYMENT OF COMPENSATION
SIMPLY BECAUSE PETITIONER DID NOT OPPOSE THE ARMED AND FORCIBLE TAKING THEREOF:
B. THE HONORABLE COURT OF APPEALS EMPLOYED DOUBLE STANDARD OF JUSTICE IN ADMITTING
HEARSAY EVIDENCE OF PNR YET REJECTING THAT OF PETITIONER WHICH IS PROPERLY IDENTIFIED
WITH ABUNDANT CROSS EXAMINATION CONDUCTED ON THE BASIS OF PETITIONER'S REJECTED
EVIDENCE:
C. THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY IN HOLDING THAT IN THIS ACTION "THE
FAILURE OF DEFENDANT TO FIRST FILE AN EXPROPRIATION PROCEEDINGS AND PAY JUST
COMPENSATION (FOR THE PROPERTY OF PETITIONER FORCIBLY TAKEN BY PRIVATE RESPONDENT)
IS (NOW) BESIDE THE POINT."
D. THE HONORABLE COURT OF APPEALS ERRED IN AGREEING WITH THE RTC IN FIXING THE
COMPENSATION FOR THE LAND FORCIBLY TAKEN BY PNR AT A RIDICULOUS, OUTRAGEOUS, AND
ABSURD PRICE OF P10.00 PER SQUARE METER DESPITE THE EVIDENCE SHOWING THAT THE PRICE
OF LAND IN THE ADJACENT AND SURROUNDING AREAS IS MORE THAN P1,500.00 PER SQUARE
METER:
E. THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE EVIDENCE ESTABLISHING THE
RIGHT OF THE PETITIONER TO BE AWARDED ACTUAL OR COMPENSATORY DAMAGES, ATTORNEY'S
FEES, AND UNREALIZED INCOME:
F. THE HONORABLE COURT OF APPEALS ERRED IN AND ABUSED ITS DISCRETION IN ADOPTING
DOUBLE STANDARD IN ITS EVALUATION OF THE EVIDENCE AND IN ADMITTING PNR's PATENTLY
HEARSAY EVIDENCE WHILE REJECTING PETITIONER'S RELEVANT - MATERIAL AND ADMISSIBLE
EVIDENCE:
G. THE HONORABLE COURT OF APPEALS DEVIATED FROM ESTABLISHED JURISPRUDENCE IN
UNJUSTIFIABLY IGNORING AND SETTING ASIDE THE FINDINGS OF FACTS OF THE TRIAL COURT THAT
ARE IN FACT SUPPORTED BY ABUNDANT EVIDENCE:
H. THE HONORABLE COURT OF APPEALS APPARENTLY SUPPRESSED THE EVIDENCE THAT PRIVATE
RESPONDENT PNR APART FROM FORCIBLY TAKING THE LAND OF PETITIONER WITH THE
EMPLOYMENT OF ARMED MEN, RENTED OUT PORTIONS OF SAID LAND TO ITS TENANTS WHO PAID
HEFTY RENTALS FOR THE USE OF THE SAME AS RESIDENTIAL LOTS (AND NOT FOR PUBLIC
PURPOSES).35
On the other hand, PNR accepted the decision of the Court of Appeals and no longer appealed.
The primary question to be resolved is: Can petitioner Forfom recover possession of its property because respondentPNR failed
to file any expropriation case and to pay just compensation?

The power of eminent domain is an inherent and indispensable power of the State. Being inherent, the power need not be
specifically conferred on the government by the Constitution.36
Section 9, Article III states that private property shall not be taken
for public use without just compensation. The constitutional restraints are public use and just compensation.37
The fundamental power of eminent domain is exercised by the Legislature. It may be delegated by Congress to the local
governments, other public entities and public utilities.38
In the case at bar, PNR, under its charter,39
has the power of
expropriation.
A number of circumstances must be present in the taking of property for purposes of eminent domain: (1) the expropriator must
enter a private property; (2) the entrance into private property must be for more than a momentary period; (3) the entry into the
property should be under warrant or color of legal authority; (4) the property must be devoted to a public purpose or otherwi se
informally, appropriately or injuriously affected; and (5) the utilization of the property for public use must be in such a way as to
oust the owner and deprive him of all beneficial enjoyment of the property.40
In the case at bar, the expropriator (PNR) entered the property of Forfom, a private land. The entrance into Forfom's propert y
was permanent, not for a fleeting or brief period. PNR has been in control, possession and enjoyment of the s ubject land since
December 1972 or January 1973. PNR's entry into the property of Forfom was with the approval of then President Marcos and
with the authorization of the PNR's Board of Directors. The property of Forfom measuring around eleven hectares was devoted to
public use - railroad tracks, facilities and appurtenances for use of the Carmona Commuter Service. With the entrance of PNR
into the property, Forfom was deprived of material and beneficial use and enjoyment of the property. It is clear from th e foregoing
that there was a taking of property within the constitutional sense.
Forfom argues that the property taken from it should be returned because there was neither expropriation case filed by PNR no r
just compensation paid for the same.
It can be gathered from the records that Forfom accepted the fact of the taking of its land when it negotiated with PNR for just
compensation, knowing fully well that there was no expropriation case filed at all. Forfom's inaction for almost eighteen (18 ) years
to question the absence of expropriation proceedings and its discussions with PNR as to how much petitioner shall be paid for its
land preclude it from questioning the PNR's power to expropriate or the public purpose for which the power was exercised. In
other words, it has waived its right and is estopped from assailing the takeover of its land on the ground that there was no case
for expropriation that was commenced by PNR.
In Manila Railroad Co. v. Paredes,41
the first case in this jurisdiction in which there was an attempt to compel a public service
corporation, endowed with the power of eminent domain, to vacate the property it had occupied without first acquiring title thereto
by amicable purchase or expropriation proceedings, we said:
x x x whether the railroad company has the capacity to acquire the land in dispute by virtue of its delegated power
of eminent domain, and, if so, whether the company occupied the land with the express or implied consent or
acquiescence of the owner. If these questions of fact be decided in the affirmative, it is uniformly held that an
action of ejectment or trespass or injunction will not lie against the railroad company, but only an action for
damages, that is, recovery of the value of the land taken, and the consequential damages, if any. The primary
reason for thus denying to the owner the remedies usually afforded to him against usurpers is the irremedial
injury which would result to the railroad company and to the public in general. It will readily be seen that the
interruption of the transportation service at any point on the right of way impedes the entire service of the
company and causes loss and inconvenience to all passengers and shippers using the line. Under these
circumstances, public policy, if not public necessity, demands that the owner of the land be denied the ordinarily
remedies of ejectment and injunction. The fact that the railroad company has the capacity to eventually acquire
the land by expropriation proceedings undoubtedly assists in coming to the conclusion that the property owner
has no right to the remedies of ejectment or injunction. There is also something akin to equitable estoppel in the
conduct of one who stands idly by and watches the construction of the railroad without protest. x x x. But the real
strength of the rule lies in the fact that it is against public policy to permit a property owner, under such
circumstances, to interfere with the service rendered to the public by the railroad company. x x x. (I)f a landowner,

knowing that a railroad company has entered upon his land and is engaged in constructing its road without having
complied with a statute requiring either payment by agreement or proceedings to condemn, remains inactive and
permits it to go on and expend large sums in the work, he is estopped from maintaining either trespass or
ejectment for the entry, and will be regarded as having acquiesced therein, and will be restricted to a suit fo r
damages.
Further, in De Ynchausti v. Manila Electric Railroad & Light Co.,42
we ruled:
The owner of land, who stands by, without objection, and sees a public railroad constructed over it, can not, after
the road is completed, or large expenditures have been made thereon upon the faith of his apparent
acquiescence, reclaim the land, or enjoin its use by the railroad company. In such a case there can only remain to
the owner a right of compensation.
x x x x
One who permits a railroad company to occupy and use his land and construct its roads thereon without
remonstrance or complaint, cannot afterwards reclaim it free from the servitude he has permitted to be imposed
upon it. His acquiescence in the company's taking possession and constructing its works under circumstances
which made imperative his resistance, if he ever intended to set up illegality, will be considered a waiver. But
while this presumed waiver is a bar to his action to dispossess the company, he is not deprived of his action for
damages for the value of the land, of for injuries done him by the construction or operation of the road.
x x x x
We conclude that x x x the complaint in this action praying for possession and for damages for the alleged
unlawful detention of the land in question, should be dismissed x x x but that such dismissal x x x should be
without prejudice to the right of the plaintiff to institute the appropriate proceedings to recover the value of the
lands actually taken, or to compel the railroad corporation to take the necessary steps to secure the
condemnation of the land and to pay the amount of the compensation and damages assessed in the
condemnation proceedings.
In Ansaldo v. Tantuico, Jr.,43
a case involving the takeover by the Government of two private lots to be used for the widening of a
road without the benefit of an action for expropriation or agreement with its owners, we held that the owners therein, having been
silent for more than two decades, were deemed to have consented to such taking -- although they knew that there had been no
expropriation case commenced -- and therefore had no reason to impugn the existence of the power to expropriate or the public
purpose for which that power had been exercised. In said case, we directed the expropriator to forthwith institute the approp riate
expropriation action over the land, so that just compensation due the owners may be determined in accordance with the Rules of
Court.
From the afore-cited cases, it is clear that recovery of possession of the property by the landowner can no longer be allowed on
the grounds of estoppel and, more importantly, of public policy which imposes upon the public utility the obligation to continue its
services to the public. The non-filing of the case for expropriation will not necessarily lead to the return of the property to the
landowner. What is left to the landowner is the right of compensation.
Forfom argues that the recovery of its property is justified because PNR failed to pay just compensation from the time its pr operty
was taken. We do not agree. It is settled that non-payment of just compensation does not entitle the private landowners to
recover possession of their expropriated lot.44
Forfom contends that since there is enormous proof that portions of the property taken by PNR were being leased to third parties
there was enough justification for the Court of Appeals to order the return to petitioner of the leased portions as well as t he rents
received therefrom.

We find such contention to be untenable. As ruled above, Forfom's inaction on and acquiescence to the taking of its land without
any expropriation case being filed, and its continued negotiation with PNR on just compensation for the land, prevent him fro m
raising any issues regarding the power and right of the PNR to expropriate and the public purpose for which the right was
exercised. The only issue that remains is just compensation. Having no right to further question PNR's act of taking over and the
corresponding public purpose of the condemnation, Forfom cannot now object to PNR's lease of portions of the land to third
parties. The leasing out of portions of the property is already a matter between PNR and third persons in which Forfom can no
longer participate. The same no longer has any bearing on the issue of just compensation.
Forfom further avers that the leasing out of portions of the property to third persons is beyond the scope of public use and thus
should be returned to it. We do not agree. The public-use requisite for the valid exercise of the power of eminent domain is a
flexible and evolving concept influenced by changing conditions. At present, it may not be amiss to state that whatever is
beneficially employed for the general welfare satisfies the requirement of public use.45
The term "public use" has now been held
to be synonymous with "public interest," "public benefit," "public welfare," and "public convenience."46
It includes the broader
notion of indirect public benefit or advantage.47
Whatever may be beneficially employed for the general welfare satisfies the
requirement of public use.48
In the instant case, Mrs. Ramos of the PNR explains that the leasing of PNR's right of way is an incidental power and is in
response to the government's social housing project. She said that to prevent the proliferation of squatting along the right of way,
special contracts were entered into with selected parties under strict conditions to vacate the property leased upon notice. To the
court, such purpose is indeed public, for it addresses the shortage in housing, which is a matter of concern for the state, a s it
directly affects public health, safety, environment and the general welfare.
Forfom claims it was denied due process when its property was forcibly taken without due compensation for it. Forfom is not
being denied due process. It has been given its day in court. The fact that its cause is being heard by this Cour t is evidence that
it is not being denied due process.
We now go to the issue of just compensation.
Under Section 5 of the 1997 Rules of Civil Procedure, the court shall appoint not more than three competent and disinterested
persons as commissioners to ascertain and report to the court the just compensation for the property. Though the ascertainment
of just compensation is a judicial prerogative,49
the appointment of commissioners to ascertain just compensation for the property
sought to be taken is a mandatory requirement in expropriation cases. While it is true that the findings of commissioners may be
disregarded and the trial court may substitute its own estimate of the value, it may only do so for valid reasons; that is, where the
commissioners have applied illegal principles to the evidence submitted to them, where they have disregarded a clear
preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive. Thus, "trial with the aid of
the commissioners is a substantial right that may not be done away with capriciously or for no reason at all."50
In the case before us, the trial court determined just compensation, but not in an expropriation case. Moreover, there was no
appointment of commissioners as mandated by the rules. The appointment of commissioners is one of the steps involved in
expropriation proceedings. What the judge did in this case was contrary to what the rules prescribe. The judge should not hav e
made a determination of just compensation without first having appointed the required commissioners who would initial ly
ascertain and report the just compensation for the property involved. This being the case, we find the valuation made by the trial
court to be ineffectual, not having been made in accordance with the procedure provided for by the rules.
The next issue to be resolved is the time when just compensation should be fixed. Is it at the time of the taking or, as Forfom
maintains, at the time when the price is actually paid?
Where actual taking was made without the benefit of expropriation proceedings, and the owner sought recovery of the
possession of the property prior to the filing of expropriation proceedings, the Court has invariably ruled that it is the va lue of the
property at the time of taking that is controlling for purposes of compensation.51
In the case at bar, the just compensation should
be reckoned from the time of taking which is January 1973. The determination thereof shall be made in the expropriation case to
be filed without delay by the PNR after the appointment of commissioners as required by the rules.

Admittedly, the PNR's occupation of Forfom's property for almost eighteen (18) years entitles the latter to payment of intere st at
the legal rate of six (6%) percent on the value of the land at the time of taking until full payment is made by the PNR.52
For almost 18 years, the PNR has enjoyed possession of the land in question without the benefit of expropriation proceedings. It
is apparent from its actuations that it has no intention of filing any expropriation case in order to formally place the subj ect land in
its name. All these years, it has given Forfom the runaround, failing to pay the just compensation it rightly deserves. PNR's
uncaring and indifferent posture must be corrected with the awarding of exemplary damages, attorney's fees and expenses of
litigation. However, since Forfom no longer appealed the deletion by both lower courts of said prayer for exemplary damages, the
same cannot be granted. As to attorney's fees and expenses of litigation, we find the award thereof to be just and equitable. The
amounts of P100,000.00 as attorney's fees and P50,000.00 as litigation expenses are reasonable under the premises.
As explained above, the prayer for the return of the leased portions, together with the rental received therefrom, is denied.
Unearned income for years after the takeover of the land is likewise denied. Having turned over the property to PNR, Forfom has
no more right to receive any income, if there be any, derived from the use of the property which is already under the control and
possession of PNR.
As to actual damages corresponding to the sugarcane and mango trees that were allegedly destroyed when PNR entered and
took possession of the subject land, we find that the same, being a question of fact, is better left to be determined by the
expropriation court where the PNR will be filing the expropriation case. Evidence for such claim may be introduced before the
condemnation proceedings.53
WHEREFORE, the instant petition is PARTIALLY DENIED insofar as it denies Forfom Development Corporation's prayer for
recovery of possession (in whole or in part) of the subject land, unearned income, and rentals. The petition is PARTIALLY
GRANTED in that attorney's fees and litigation expenses in the amounts of P100,000.00 and P50,000.00, respectively, are
awarded. The Philippine National Railways is DIRECTED to forthwith institute the appropriate expropriation action over the land
in question, so that just compensation due to its owner may be determined in accordance with the Rules of Court, with interest at
the legal rate of six (6%) percent per annum from the time of taking until full payment is made. As to the claim for the alle ged
damaged crops, evidence of the same, if any, may be presented before the expropriation court. No costs.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
RUBEN T. REYES
Associate Justice
A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writ er of
the opinion of the Court's Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson - Third Division
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, Icertify that the concl usions in
the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's
Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Penned by Associate Justice Romeo A. Brawner with Associate Justices Alfredo L. Benipayo and Buenaventura
J. Guerrero, concurring; CA rollo, pp. 164-173.
2
Raffled to Branch 24.
3
Records, pp. 1-6.
4 Id. at 77-80.
5
Id. at 38.
6
Id. at 90.
7
Id. at 507-510.
8
Id. at 125-129.
9
Id. at 137-149.
10 Id. at 204-207.
11
Id. at 150-177.
12
Id. at 178-203.
13
Id. at 340-344.
14
Id. at 599-612.

15
Id. at 532-549.
16
TSN, 2 October 1991, pp. 2-17.
17
Records, pp. 513-514.
18
Id. at 517-518.
19
Id. at 515-516.
20
Id. at 519-520.
21
TSN, 2 October 1991, pp. 18-34.
22
Records, pp. 591-594.
23
Id. at 709-712.
24
Id. at 681-691.
25 Id. at 692-693.
26
Id. at 696.
27
Id. at 699-703.
28
Id. at 704-705.
29
Id. at 706-707.
30
Id. at 708.
31
Id. at 727.
32
Id. at 728 and 730.
33 CA rollo, p. 172.
34
Id. at 167-170.
35 Rollo, pp. 11-12.
36
Manapat v. Court of Appeals, G.R. No. 110478, 15 October 2007, 536 SCRA 32, 47-48.
37
Reyes v. National Housing Authority, 443 Phil. 603, 610 (2003).
38
National Power Corporation v. Court of Appeals, 479 Phil. 850, 860 (2004).
39
Republic Act No. 4156, as amended by Republic Act No. 6366 and Presidential Decree No. 741.

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