Pandacan oil depot must go: Social Justice Society vs. Atienza case digest

(Just the other day, the Supreme Court affirmed the authority of Manila City to issue — and enforce — an Ordinance reclassifying certain areas within the city. The reclassification adversely affected the oil companies, which are now forced to relocate their oil terminals in Pandacan. This is a digest of Social Justice Society vs. Atienza, G.R. No. 156052, 13 February 2008. Other procedural issues are not discussed.)


The Social Justice Society sought to compel respondent Hon. Jose L. Atienza, Jr., then mayor of the City of Manila, to enforce Ordinance No. 8027 that was enacted by the Sangguniang Panlungsod of Manila in 2001. Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the owners and operators of businesses disallowed under the reclassification to cease and desist from operating their businesses within six months from the date of effectivity of the ordinance. Among the businesses situated in the area are the so-called “Pandacan Terminals” of the oil companies (the brief history of the Pandacan Oil Terminals is here).

In 2002, the City of Manila and the Department of Energy (DOE) entered into a memorandum of understanding (MOU) with the oil companies. They agreed that “the scaling down of the Pandacan Terminals [was] the most viable and practicable option.” The Sangguniang Panlungsod ratified the MOU in Resolution No. 97. In the same resolution, the Sanggunian declared that the MOU was effective only for a period of six months starting 25 July 2002, which period was extended up to 30 April 2003.

This is the factual backdrop of the Supreme Court’s 7 March 2007 Decision. The SC ruled that respondent had the ministerial duty under the Local Government Code (LGC) to “enforce all laws and ordinances relative to the governance of the city,” including Ordinance No. 8027. After the SC promulgated its Decision, Chevron Philippines Inc. (Chevron), Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Shell) (the “oil companies”) and the Republic of the Philippines, represented by the DOE, sought to intervene and ask for a reconsideration of the decision.

Intervention of the oil companies and the DOE allowed in the interest of justice

Intervention is a remedy by which a third party, not originally impleaded in the proceedings, becomes a litigant therein to enable him, her or it to protect or preserve a right or interest which may be affected by such proceedings. The allowance or disallowance of a motion to intervene is addressed to the sound discretion of the court. While the motions to intervene respectively filed by the oil companies and the DOE were filed out of time, these motions were granted because they presented novel issues and arguments. DOE’s intervention was also allowed considering the transcendental importance of this case.

Ordinance No. 8119 did not impliedly repeal Ordinance No. 8027

Repeal by implication proceeds on the premise that where a statute of later date clearly reveals the intention of the legislature to abrogate a prior act on the subject, that intention must be given effect. Implied repeals are not favored and will not be so declared unless the intent of the legislators is manifest.

There are two kinds of implied repeal. The first is: where the provisions in the two acts on the same subject matter are irreconcilably contradictory, the latter act, to the extent of the conflict, constitutes an implied repeal of the earlier one. The second is: if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal the earlier law. The oil companies argue that the situation here falls under the first category.

For the first kind of implied repeal, there must be an irreconcilable conflict between the two ordinances. However, there was no legislative purpose to repeal Ordinance No. 8027. There is no conflict since both ordinances actually have a common objective, i.e., to shift the zoning classification from industrial to commercial (Ordinance No. 8027) or mixed residential/commercial (Ordinance No. 8119). While it is true that both ordinances relate to the same subject matter, i.e., classification of the land use of the area where Pandacan oil depot is located, if there is no intent to repeal the earlier enactment, every effort at reasonable construction must be made to reconcile the ordinances so that both can be given effect.

Moreover, it is a well-settled rule in statutory construction that a subsequent general law does not repeal a prior special law on the same subject unless it clearly appears that the legislature has intended by the latter general act to modify or repeal the earlier special law. The special law must be taken as intended to constitute an exception to, or a qualification of, the general act or provision. Ordinance No. 8027 is a special law since it deals specifically with a certain area described therein (the Pandacan oil depot area) whereas Ordinance No. 8119 can be considered a general law as it covers the entire city of Manila.

Mandamus lies to compel respondent Mayor to enforce Ordinance No. 8027

The oil companies insist that mandamus does not lie against respondent in consideration of the separation of powers of the executive and judiciary. However, while it is true that Courts will not interfere by mandamus proceedings with the legislative or executive departments of the government in the legitimate exercise of its powers, there is an exception – to enforce mere ministerial acts required by law to be performed by some officer thereof. A writ of mandamus is the power to compel “the performance of an act which the law specifically enjoins as a duty resulting from office, trust or station.”

The oil companies also argue that petitioners had a plain, speedy and adequate remedy to compel respondent to enforce Ordinance No. 8027, which was to seek relief from the President of the Philippines through the Secretary of the Department of Interior and Local Government (DILG) by virtue of the President’s power of supervision over local government units. This suggested process, however, would be unreasonably long, tedious and consequently injurious to the interests of the local government unit (LGU) and its constituents whose welfare is sought to be protected. A party need not go first to the DILG in order to compel the enforcement of an ordinance. Besides, the resort to an original action for mandamus before the SC is undeniably allowed by the Constitution.

Ordinance No. 8027 is constitutional and valid

The tests of a valid ordinance are well established. For an ordinance to be valid, it must not only be within the corporate powers of the LGU to enact and be passed 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. There is no showing that the Ordinance is unconstitutional.

The City of Manila has the power to enact Ordinance No. 8027

Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of its police power. Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the health, morals, peace, education, good order or safety and general welfare of the people. This power flows from the recognition that salus populi est suprema lex (the welfare of the people is the supreme law).

While police power rests primarily with the national legislature, such power may be delegated. Section 16 of the LGC, known as the general welfare clause, encapsulates the delegated police power to local governments. LGUs like the City of Manila exercise police power through their respective legislative bodies, in this case, the Sangguniang Panlungsod or the city council. Specifically, the Sanggunian can enact ordinances for the general welfare of the city.

This police power was also provided for in RA 409 or the Revised Charter of the City of Manila. Specifically, the Sanggunian has the power to “reclassify land within the jurisdiction of the city.”

The enactment of Ordinance No. 8027 is a legitimate exercise of police power

As with the State, local governments may be considered as having properly exercised their police power only if the following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular class, require its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. In short, there must be a concurrence of a lawful subject and a lawful method.

Ordinance No. 8027 is a valid police power measure because there is a concurrence of lawful subject and lawful method. It was enacted “for the purpose of promoting sound urban planning, ensuring health, public safety and general welfare” of the residents of Manila. The Sanggunian was impelled to take measures to protect the residents of Manila from catastrophic devastation in case of a terrorist attack on the Pandacan Terminals. Towards this objective, the Sanggunian reclassified the area defined in the ordinance from industrial to commercial.

The ordinance was intended to safeguard the rights to life, security and safety of all the inhabitants of Manila and not just of a particular class. The depot is perceived, rightly or wrongly, as a representation of western interests which means that it is a terrorist target. As long as it there is such a target in their midst, the residents of Manila are not safe. It therefore became necessary to remove these terminals to dissipate the threat. Wide discretion is vested on the legislative authority to determine not only what the interests of the public require but also what measures are necessary for the protection of such interests. Clearly, the Sanggunian was in the best position to determine the needs of its constituents.

In the exercise of police power, property rights of individuals may be subjected to restraints and burdens in order to fulfill the objectives of the government. Otherwise stated, the government may enact legislation that may interfere with personal liberty, property, lawful businesses and occupations to promote the general welfare. However, the interference must be reasonable and not arbitrary. And to forestall arbitrariness, the methods or means used to protect public health, morals, safety or welfare must have a reasonable relation to the end in view.

The means adopted by the Sanggunian was the enactment of a zoning ordinance which reclassified the area where the depot is situated from industrial to commercial. A zoning ordinance is defined as a local city or municipal legislation which logically arranges, prescribes, defines and apportions a given political subdivision into specific land uses as present and future projection of needs. As a result of the zoning, the continued operation of the businesses of the oil companies in their present location will no longer be permitted. The power to establish zones for industrial, commercial and residential uses is derived from the police power itself and is exercised for the protection and benefit of the residents of a locality. Consequently, the enactment of Ordinance No. 8027 is within the power of the Sangguniang Panlungsod of the City of Manila and any resulting burden on those affected cannot be said to be unjust.

Ordinance No. 8027 is not unfair, oppressive or confiscatory which amounts to taking without compensation

According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not only regulate but also absolutely prohibits them from conducting operations in the City of Manila. However, the oil companies are not prohibited from doing business in other appropriate zones in Manila. The City of Manila merely exercised its power to regulate the businesses and industries in the zones it established.

The oil companies also argue that the ordinance is unfair and oppressive because they have invested billions of pesos in the depot, and the forced closure will result in huge losses in income and tremendous costs in constructing new facilities. This argument has no merit. In the exercise of police power, there is a limitation on or restriction of property interests to promote public welfare which involves no compensable taking. Compensation is necessary only when the state’s power of eminent domain is exercised. In eminent domain, property is appropriated and applied to some public purpose. Property condemned under the exercise of police power, on the other hand, is noxious or intended for a noxious or forbidden purpose and, consequently, is not compensable. The restriction imposed to protect lives, public health and safety from danger is not a taking. It is merely the prohibition or abatement of a noxious use which interferes with paramount rights of the public. In the regulation of the use of the property, nobody else acquires the use or interest therein, hence there is no compensable taking.

In this case, the properties of the oil companies and other businesses situated in the affected area remain theirs. Only their use is restricted although they can be applied to other profitable uses permitted in the commercial zone.

Ordinance No. 8027 is not partial and discriminatory

The oil companies take the position that the ordinance has discriminated against and singled out the Pandacan Terminals despite the fact that the Pandacan area is congested with buildings and residences that do not comply with the National Building Code, Fire Code and Health and Sanitation Code.

An ordinance based on reasonable classification does not violate the constitutional guaranty of the equal protection of the law. The requirements for a valid and reasonable classification are: (1) it must rest on substantial distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited to existing conditions only; and (4) it must apply equally to all members of the same class. The law may treat and regulate one class differently from another class provided there are real and substantial differences to distinguish one class from another.

Here, there is a reasonable classification. What the ordinance seeks to prevent is a catastrophic devastation that will result from a terrorist attack. Unlike the depot, the surrounding community is not a high-value terrorist target. Any damage caused by fire or explosion occurring in those areas would be nothing compared to the damage caused by a fire or explosion in the depot itself. Accordingly, there is a substantial distinction. The enactment of the ordinance which provides for the cessation of the operations of these terminals removes the threat they pose. Therefore it is germane to the purpose of the ordinance. The classification is not limited to the conditions existing when the ordinance was enacted but to future conditions as well. Finally, the ordinance is applicable to all businesses and industries in the area it delineated.

Ordinance No. 8027 is not inconsistent with RA 7638 and RA 8479

The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because it contravenes RA 7638 (DOE Act of 1992) and RA 8479 (Downstream Oil Industry Deregulation Law of 1998).

It is true that ordinances should not contravene existing statutes enacted by Congress. However, a brief survey of decisions where the police power measure of the LGU clashed with national laws shows that the common dominator is that the national laws were clearly and expressly in conflict with the ordinances/resolutions of the LGUs. The inconsistencies were so patent that there was no room for doubt. This is not the case here. The laws cited merely gave DOE general powers to “establish and administer programs for the exploration, transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources” and “to encourage certain practices in the [oil] industry which serve the public interest and are intended to achieve efficiency and cost reduction, ensure continuous supply of petroleum products.” These powers can be exercised without emasculating the LGUs of the powers granted them. When these ambiguous powers are pitted against the unequivocal power of the LGU to enact police power and zoning ordinances for the general welfare of its constituents, it is not difficult to rule in favor of the latter. Considering that the powers of the DOE regarding the Pandacan Terminals are not categorical, the doubt must be resolved in favor of the City of Manila.

The principle of local autonomy is enshrined in and zealously protected under the Constitution. An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of LGUs. The LGC was specially promulgated by Congress to ensure the autonomy of local governments as mandated by the Constitution. There is no showing how the laws relied upon by the oil companies and DOE stripped the City of Manila of its power to enact ordinances in the exercise of its police power and to reclassify the land uses within its jurisdiction.

The DOE cannot exercise the power of control over LGUs

Another reason that militates against the DOE’s assertions is that Section 4 of Article X of the Constitution confines the President’s power over LGUs to one of general supervision. Consequently, the Chief Executive or his or her alter egos, cannot exercise the power of control over them. The President and his or her alter egos, the department heads, cannot interfere with the activities of local governments, so long as they act within the scope of their authority. Accordingly, the DOE cannot substitute its own discretion for the discretion exercised by the sanggunian of the City of Manila. In local affairs, the wisdom of local officials must prevail as long as they are acting within the parameters of the Constitution and the law.

Ordinance No. 8027 is not invalid for failure to comply with RA 7924 and EO 72

The oil companies argue that zoning ordinances of LGUs are required to be submitted to the Metropolitan Manila Development Authority (MMDA) for review and if found to be in compliance with its metropolitan physical framework plan and regulations, it shall endorse the same to the Housing and Land Use Regulatory Board (HLURB). Their basis is Section 3 (e) of RA 7924 and Section 1 of E.O. 72. They argue that because Ordinance No. 8027 did not go through this review process, it is invalid.

The argument is flawed. RA 7942 does not give MMDA the authority to review land use plans and zoning ordinances of cities and municipalities. This was only found in its implementing rules which made a reference to EO 72. EO 72 expressly refers to comprehensive land use plans (CLUPs) only. Ordinance No. 8027 is admittedly not a CLUP nor intended to be one. Instead, it is a very specific ordinance which reclassified the land use of a defined area in order to prevent the massive effects of a possible terrorist attack. It is Ordinance No. 8119 which was explicitly formulated as the “Manila [CLUP] and Zoning Ordinance of 2006.” CLUPs are the ordinances which should be submitted to the MMDA for integration in its metropolitan physical framework plan and approved by the HLURB to ensure that they conform with national guidelines and policies. Moreover, even assuming that the MMDA review and HLURB ratification are necessary, the oil companies did not present any evidence to show that these were not complied with. In accordance with the presumption of validity in favor of an ordinance, its constitutionality or legality should be upheld in the absence of proof showing that the procedure prescribed by law was not observed.


Essentially, the oil companies are fighting for their right to property. They allege that they stand to lose billions of pesos if forced to relocate. However, based on the hierarchy of constitutionally protected rights, the right to life enjoys precedence over the right to property. The reason is obvious: life is irreplaceable, property is not. When the state or LGU’s exercise of police power clashes with a few individuals’ right to property, the former should prevail.

Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027. Without a doubt, there are no impediments to its enforcement and implementation. Any delay is unfair to the inhabitants of the City of Manila and its leaders who have categorically expressed their desire for the relocation of the terminals. Their power to chart and control their own destiny and preserve their lives and safety should not be curtailed by the intervenors’ warnings of doomsday scenarios and threats of economic disorder if the ordinance is enforced.

Just the same, the Court noted that it is not about to provoke a crisis by ordering the immediate relocation of the Pandacan Terminals out of its present site. The enforcement of a decision, specially one with far-reaching consequences, should always be within the bounds of reason, in accordance with a comprehensive and well-coordinated plan, and within a time-frame that complies with the letter and spirit of our resolution. To this end, the oil companies have no choice but to obey the law.

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