MMDA v. Viron Transportation, GR 170656 (2007)

MMDA v. Viron Transportation, GR 170656 (2007)
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FACTS:
On February 10, 2003 President Gloria Macapagal Arroyo issued Executive Order 179 "Providing for the Establishment of Greater Manila Mass Transport System". The EO tasked the MMDA to undertake measures to ease traffic congestion in Metro Manila. Thereupon, the MMDA recommended a plan to eliminate the bus terminals along major thoroughfares through the provision of mass transport terminal facilities that would integrate existing transport varied modes. The Metro Manila Council, the governing board and policy - making body of the MMDA, issued a Resolution expressing support to the Project citing the need to remove the bus terminals located along major thoroughfares in Metro Manila.
On February 24, 2003 the Viron Transport Co. Inc. filed a petition for declaratory relief before the RTC of Manila., asking the Court to construe the scope, extent, and limitation of the power of MMDA to regulate traffic under R.A. No. 7924 (An Act Creating the MMDA). Viron also asked for a Ruling on whether the planned closure of terminals contravenes the Public Service Act and related Laws.
Mencorp Transporttion System Inc. filed a similar petition, asking the Court to declare the E.O. unconstitutional and illegal over possessory rights with prayer for the issuance of temporary restraining order and or writ of preliminary injunction to restrain closure proposal.
Mencorp petition was incorporated with the Viron and raffled to RTC Manila of June 19, 2003. The prayer for TRO and or Preliminary Injunction was denied. On January 24, 2005 the trial court sustained the constitutionality and legality of the EO pursuant to RA 7924, ruling that the E.O. was a valid exercise of the police power of the state as it satisfied the Two Tests of Public Welfare and Lawful Means.
On September 8, 2005 the trial court reversed its decision ruling that (1) the EO was an unreasonable exercise of police power, 2. that the authority of the MMDA under section (5) (e) of RA 7924 does not include the power to order the closure of existing bus terminals, and (3) that the E.O is inconsistent with the provisions of Public Service Act.
Petitioner's motion for reconsideration was denied by a Resolution dated November 23, 2005. Hence the Petition which faults the trial court.      

ISSUE:
Whether or not E.O. 179 was unconstitutional as it constitutes unreasonable exercise of police power by President Gloria Macapagal Arroyo.

RULING:
Yes. The designation of the MMDA as the implementing agency for the Project may not be sustained. It is ultra vires, there being no legal basis.
By designating the MMDA as the implementing agency of the Project, the President clearly overstepped the limits of the authority conferred by law, rendering E.O. No. 179 ultra vires. Under the provisions of E.O. No. 125, as amended, it is the DOTC, and not the MMDA, which is authorized to establish and implement a project such as the one subject of the cases at bar. Thus, the President, although authorized to establish or cause the implementation of the Project, must exercise the authority through the instrumentality of the DOTC as the primary implementing and administrative entity in the promotion, development and regulation of networks of transportation, and the one so authorized to establish and implement a project such as the Project in question.
The validity of the designation of MMDA flies in the absence of a specific grant of authority to it under R.A. No. 7924. Section 2 of R.A. No. 7924 specifically authorizes the MMDA to perform "planning, monitoring and coordinative functions, and in the process exercise regulatory and supervisory authority over the delivery of metro-wide services," including transport and traffic management. Unlike the legislative bodies of the local government units, there is no provision in R.A. No. 7924 that empowers the MMDA or its Council to ‘enact ordinances, approve resolutions and appropriate funds for the general welfare’ of the inhabitants of Metro Manila. 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, nongovernmental 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.
Assuming that police power was delegated to the MMDA, its exercise of such power does not satisfy the two tests of a valid police power measure, viz: (1) the interest of the public generally, as distinguished from that of a particular class, requires its exercise; and (2) the means employed are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.44 Stated differently, the police power legislation must be firmly grounded on public interest and welfare and a reasonable relation must exist between the purposes and the means.
In Lucena Grand Central Terminal v. JAC Liner Inc. two Ordinances were passed by the Sangguniang Panlungsod of Lucena declaring that no other terminal shall be situated, constructed, maintained or established inside or within the City of Lucena and declared as inoperable all temporary terminals therein. The Ordinances were challenged for being unconstitutional on the ground that the measures constituted an invalid exercise of police power, an undue taking of private property, and a violation of the constitutional prohibition against monopolies.
In De la Cruz v. Paras, and Lupangco v. Court of Appeals, the Court held that the assailed Ordinances were characterized by over breadth as they went beyond what was reasonably necessary to solve the traffic problem in the City while they make compulsory use of the Lucena Grand Terminal for fees, rentals, and charges thus unduly oppressive.
The EO for the closure of respondents' terminal is not in line with the provisions of the Public Service Act. Paragraph (a) Section 13 of Chapter II of the Public Service Act vested the Public Service Commission (PSC, now LTFRB) with the jurisdiction, supervision, and control over all public services and their franchises, equipment, and other properties. The PSC was empowered to "impose such conditions as to construction, equipment, maintenance, service, or operation as the public interests and convenience may reasonably require" in approving any franchise or privilege. The establishment, as well as the maintenance of vehicle parking areas or passenger terminals, is generally considered a necessary service to be provided by provincial bus operators like respondents, hence, the investments they have poured into the acquisition or lease of suitable terminal sites. Eliminating the terminals would thus run counter to the provisions of the Public Service Act.