Equal Protection Clause of the Constitution; Classification also Applies to Future Conditions

     TOPICS:

1. Requisites of a valid classification

Ormoc Sugar Company, Inc. vs. Treasurer of Ormoc City

FACTS:

The Municipal Board of Ormoc City passed Ordinance No. 4, s. 1964 imposing "on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City a municipal tax equivalent to one per centum (1%) per export sale to the United States of America and other foreign countries.”

Petitioner filed a case before the CFI of Leyte against Ormoc City, alleging that the ordinance violated the equal protection clause of the Constitution.

ISSUE:

Whether the ordinance violates the equal protection clause of the Constitution.

RULING: 

Yes, the ordinance is violative of the equal protection clause of the Constitution. 

Jurisprudence provides that the subject of legislation must be reasonable for it not to be violative of the equal protection clause of the Constitution, such that it must be based on substantial distinctions; germane to the purpose of the law; the classification applies not only to present conditions but also to future conditions which are substantially identical to those of the present; and that the classification applies only to those who belong to the same class. 

In this case, Ordinance No. 4, s. 1964 imposes taxes only on centrifugal sugar produced and exported by the Ormoc Sugar Company, Inc. and none other. The tax ordinance is exclusive to Ormoc Sugar Company, Inc. and does not apply to other identical sugar central which may be established in the future. 

Therefore, the ordinance is violative of equal protection as it applies only to present conditions and does not apply to future conditions which are substantially identical to those of the present. 

  

Tests of a Valid Ordinance - Formal and Substantive Requirements

     TOPICS:

1. Tests of a valid ordinance
2. Formal requirements - enacted within the corporate powers of the LGU; passed in accordance with the procedure prescribed by law
3. Substantive requirements - conform with the limitations under the Constitution and the statutes - due process requirements (procedural - notice & hearing & substantive - lawful means and lawful purpose) & the 6 requisites 

Legaspi vs. City of Cebu

FACTS:

The Sangguniang Panlungsod of the City of Cebu enacted Ordinance No. 1664 authorizing the traffic enforcers of Cebu City to immobilize any motor vehicle violating the parking restrictions. 

Petitioner Atty. Jaban had found his car being immobilized by a steel clamp, was impounded for 3 days, and that he was imposed with a fine of 4,200. Petitioner filed in the RTC of Cebu City seeking the declaration of Ordinance No. 1644 as unconstitutional for being in violation of due process. 

ISSUE:

Whether or not the ordinance is unconstitutional.

RULING: 

No, the ordinance is not unconstitutional. 

For an ordinance to be constitutional, it must comply with the formal requirements, such that it must be enacted within the corporate powers of the local government units, and it must comply with the substantive requirements, such that it must conform with the limitations under the Constitution.

In this case, Ordinance No. 1664 was enacted within the corporate powers of the local government units under Section 458 of the LGC, such as the power to regulate traffic on all streets and prohibit encroachments or obstacles. Moreover, Ordinance No. 1664 also conforms with the limitation on due process under the Constitution. While due process requires notice and hearing, the immobilization of illegally parked vehicles without notice falls under its exceptions. Notice is not necessary because the transgressors were not around at the time of the apprehension. 

Therefore, Ordinance No. 1664 is constitutional. 

  

What are the tests of a valid ordinance? What is the principle of Noscitur a Sociis?

    TOPICS:

1. What is the principle of noscitur a sociis? 
2. Which should prevail in case of conflict between a statute and an ordinance?
3. Tests of a valid ordinance

Magtajas vs. Pryce

FACTS:

In 1992, the Philippine Amusement and Gaming Corporation (PAGCOR) leased a portion of a building belonging to the Petitioner for the opening of its casino in Cagayan de Oro City. 

However, the Sangguniang Panlungsod of Cagayan de Oro City subsequently issued Ordinance No. 3353 and Ordinance No. 3375-93 prohibiting the issuance of business permits and cancelling existing permits for the operation of a casino.

The Petitioner assailed the ordinances before the CA, which declared the ordinances invalid. 

ISSUE:

Whether or not the assailed ordinances are valid. 

RULING: 

No, the assailed ordinances are not valid. 

A valid ordinance must not contravene the Constitution or any statute. 

In this case, the prohibition on the operation of casino in Cagayan de Oro City under Ordinance No. 3353 and Ordinance No. 3375-93 contravenes P.D. 1869, a statute granting the PAGCOR to operate casinos. 

Therefore, the ordinances are not valid.   

General Law vs. Special Law: Which should prevail in case of conflict?

   TOPICS:

1. Which should prevail in case of conflict between a special law and a general law? 
2. What should be the rule in construction in case of doubt in statutes conferring powers to administrative bodies?

Solid Homes, Inc. vs. Payawal

FACTS:

Petitioner Payawal entered into a contract to sell with Respondent Solid Homes, Inc. in 1975 over a subdivision lot in Marikina. Despite being fully paid in 1981, Respondent failed to execute a Deed of Sale in favor of the Petitioner. 

Hence, the Petitioner filed a complaint before the RTC Quezon City requesting the Respondent for the delivery of the title or, alternatively, the return of all the amounts they paid. The Respondent, in turn, moved to dismiss the complaint on the ground that the court had no jurisdiction, it being vested in the National Housing Authority under PD 957, as amended by PD 1344.

The RTC ruled in favor of the Petitioner and cited BP 129 as the basis of its jurisdiction. BP 129 is a later enactment, promulgated in 1981, as opposed to PD 957 as amended by PD 1344, as promulgated in 1978. 

ISSUE:

Whether or not the RTC has jurisdiction over the complaint involving refund or any other claims by a subdivision lot buyer against the developer. 

RULING: 

No, the RTC has no jurisdiction over the complaint involving a refund or any other claims by a subdivision lot buyer against the developer.

Under the rules of statutory construction, in case of conflict between a general law and a special law, the latter must prevail. Where the general act is later, the special statute will be construed as remaining an exception to its terms, unless repealed expressly or by necessary implication.

In this case, PD 957 as amended by PD 1344, a special law, should prevail over B.P. 129, a general law.  Although BP 129 is a later general law governing the general jurisdiction of the Regional Trial Court, it did not repeal PD 957 as amended by PD 1344, an earlier special law granting the National Housing Authority jurisdiction over refunds or any other claims by a subdivision lot buyer against the developer. Thus, the jurisdiction of the NHA should be construed as an exception to the general jurisdiction of the RTC.

Therefore, it is the NHA, and not the RTC, that has jurisdiction over refunds or any other claims by a subdivision lot buyer against the developer. 

Contract to Sell; Partial Payments; Reasonable Compensation

  TOPICS:

1. Contract to sell; effects of its cancellation
2. Treatment of partial payments received by the seller in a contract to sell
3. The concept of "full possession"
4. Computation of the reasonable compensation available to the seller for the use of the property by the buyer; prevailing standard in computing reasonable rentals 

 Spouses Rene Luis Godinez and Shemayne Godinez vs. Spouses Andrew Norman and Janet Norman 

FACTS:

In August 2006, Spouses Godinez agreed to sell (in an oral contract) their house in Subic Bay Freeport Zone to Spouses Norman for US $175,000.00.

On August 3, 2006, Spouses Norman paid $10,000 to Spouses Godinez as partial payment. The remaining balance would be paid within 30 days thereafter. After this initial payment, the Spouses Norman moved their furniture and appliances into the house. They also assigned a caretaker to act as a housekeeper. 

Thirty days from the initial payment, Spouses Norman requested an extension of time to pay the remaining balance. However, they only paid $30,000.00 on December 1, 2006.  

Sometime in 2007, Spouses Norman learned that the property had been sold to another buyer. So, Spouses Norman requested the return of their payments from the Spouses Godinez, amounting to $40,000.00. Spouses Norman only possessed the property for about four (4) months.

The RTC ordered the return of the partial payments made by Spouses Norman. The RTC ruled that there was a contract of sale and the $40,000.00 were in the form of an earnest money, which formed part of the purchase price. Absent of any stipulations that the money should be forfeited in favor of the seller in case of any substantial breach, then the partial payments should have been returned to the buyers in a rescission of the contract of sale.

The CA affirmed the decision of the RTC ordering the return of the partial payments made by Spouses Norman. However, the CA found that the contract was not a contract of sale, but a contract to sell. The nonpayment of the obligation to pay the full amount of the purchase price was not a breach of contract, but rather an unfulfilled suspensive condition, which prevented the seller from conveying the title to the buyer. Thus, failure to pay would render the contract to sell ineffective. 

ISSUE:

Whether or not the buyers, Spouses Norman, are entitled to the return of their payments of $40,000.00 made to the seller, Spouses Godinez, in the event of the buyers’ failure to pay the purchase price in a contract to sell.

RULING: 

No, the Spouses Norman are not entitled to the return of the total amount of $40,000.00 used as partial payment to Spouses Godinez in a contract to sell. 

Jurisprudence dictates that partial payments on a failed contract to sell may be retained by the seller as reasonable compensation for use of the property, provided that possession thereof was turned over to the buyers.

In this case, Spouses Godinez turned over the possession to Spouses Norman after the latter made an initial payment of $10,000.00. Spouses Norman even moved their furniture into the house and hired a caretaker to watch over the house. 

Therefore, Spouses Norman are not entitled to the return of the total amount of $40,000.00 partial payment made to Spouses Godinez in a failed contract to sell.

However, in a similar case decided by the Supreme Court, reasonable compensation is the payment of reasonable rentals, which is not meant to punish the illegality of the buyers’ actions, but to compensate the sellers’ inability to enjoy or use their own property. Although there is no definitive legal standard for computing reasonable rentals, the latest jurisprudence provides it to be 13.1% of the property’s total purchase price. 

In this case, the Court noted that the US$40,000.00 amounts to 22.9%, or over a fifth, of the total purchase price of the housing unit of Spouses Godinez, which is not commensurate to the value that Spouses Norman may have derived from their four (4)-month possession of the property. Thus, reasonable compensation may be set at 13.1% of the US$175,000.00 total purchase price, or US$22,925.00. 

Therefore, Spouses Godinez may retain US$22,925.00 of the US$40,000.00 partially paid to them, but must return the remaining US$17,075.00 to Spouses Norman.

*Note: The SC in the Olivarez case (2014) and Gomez case (2000) ruled that the total amount of the partial payments be totally forfeited in favor of the seller, considering that the buyers in these cases took possession of the property for 14 years and 8 years, respectively. 

Full text here.