G.R. No. 163866 - Olivarez vs. Court of Appeals

In 1974, Presidential Decree (P.D.) No. 449, known as the Cockfighting Law of 1974, was enacted.

Section 5(b) of the Decree limited cockpit establishments to one per city or municipality, except in cities or municipalities with a population of over one hundred thousand, where two may be operated.

The Local Government Code of 1991 emerged as a significant development by transferring authority to the municipal sangguniang bayan.

Under Section 447(a)(3)(v), municipal councils were empowered to authorize and license the establishment, operation, and maintenance of cockpits, in addition to regulating cockfighting and commercial breeding of gamecocks.

The Sangguniang Bayan of Daanbantayan, Cebu, enacted Municipal Ordinance No. 6 in 1993.

This ordinance mirrored the limitations of PD 449 by allowing a number of cockpits based on the municipality’s population.
It contained a provision that permitted amendments to increase the number of cockpits if the municipal population warranted it.

Shortly thereafter, Municipal Ordinance No. 7, also in 1993, amended Section 5 of the previous ordinance.

The amended provision unconditionally allowed the operation of up to three cockpits in the municipality.

On November 8, 1995, petitioner Leonardo Tan applied for a permit with the Municipal Gamefowl Commission to establish and operate a cockpit in Sitio Combado, Bagay, Daanbantayan.

At the time, respondent Socorro Y. PereAa already operated a cockpit in the municipality since the 1970s under a valid license.

After the Municipal Gamefowl Commission recommended the issuance of a permit to Tan, Mayor Lamberto Te issued the permit on January 20, 1996, valid until December 31, 1996.
In response, PereAa filed a complaint for damages and an injunction against Tan, Te, and Roberto Uy.

PereAa contended that the operation of a second cockpit was unlawful under the Cockfighting Law (due to the one-cockpit rule for a municipality with a population below 100,000) and alleged that Tan was operating at a site in Malingin, less than five kilometers away from her establishment.
She claimed actual, moral, and exemplary damages while also seeking a declaration that the mayor’s permit was null and void.

The Regional Trial Court (RTC), Branch 61 of Bogo, Cebu, initially granted a writ of preliminary injunction but eventually dismissed the complaint for damages.

The RTC observed that Ordinance No. 6 (as originally enacted) implemented the provisions of the Cockfighting Law, and though it questioned the effect of the subsequent amendment under Ordinance No. 7, it ruled that there was insufficient evidence of damages.
The RTC noted that there was no bad faith in the issuance of the permit by Mayor Te as it was in accordance with the then-valid municipal ordinances.

PereAa’s Motion for Reconsideration was denied, with the RTC affirming the validity of both Ordinance Nos. 6 and 7 as well as Resolution No. 78-96, which granted Tan a ten-year franchise.

Held Ordinance No. 7 invalid for unconditionally allowing the operation of more than one cockpit—despite the standard of PD 449—in a municipality with a population below the required threshold.
Agreed with the RTC on denying damages but modified the ruling by enjoining Tan from operating a cockpit or conducting cockfights in Daanbantayan.

The issue of the validity of municipal ordinances, particularly whether their effect could be collaterally attacked in an action for damages that did not explicitly seek annulment, was raised.

Petitioners questioned whether the Local Government Code, by granting local autonomy, has rendered the Cockfighting Law inoperative.
They also challenged whether the municipal ordinance allowing three cockpits (Ordinance No. 7) could be valid under the continuing effect of PD 449’s restrictions.
A further issue was whether an action for damages could properly review the validity of a municipal ordinance not expressly contested by a prayer for annulment, given the absence of the municipality’s participation in the case.

Whether the Local Government Code’s delegation of power to municipal governments, particularly through Section 447(a)(3)(v), effectively renders inoperative Section 5(b) of the Cockfighting Law of 1974.
Whether Municipal Ordinance No. 7, which permits the operation of three cockpits in Daanbantayan regardless of population constraints, is valid and constitutional in light of national police power limitations.
Whether the validity of a municipal ordinance may be determined in an action for damages and injunction where the petition for annulment of the ordinance was not expressly included.
How the competing principles of national police power and local autonomy should be reconciled in the regulation of cockfighting.