Case Summary (G.R. No. 203249)
Petitioner
Lucena Grand Central Terminal, Inc., which intervened in the proceedings to defend its exclusive franchise rights under City Ordinance No. 1631.
Respondent
JAC Liner, Inc., a bus company that operated its own terminal within the city and challenged both Ordinance No. 1631 and Ordinance No. 1778 as unconstitutional.
Key Dates
• City Ordinance No. 1631 approved (franchise grant)
• City Ordinance No. 1778 promulgated (terminal regulation)
• RTC decision: March 31, 1999
• CA decision: December 15, 2000 (finality: June 5, 2001)
• SC decision: February 23, 2005
Applicable Law
• 1987 Philippine Constitution – exercise of police power; constitutional prohibition against monopolies; due process.
• Republic Act No. 7160 (Local Government Code) – limits on LGU authority; ultra vires acts.
• Rules of Court: Rule 3, Sec. 22; Rule 63, Secs. 3–4 (notice to Solicitor General).
Salient Provisions of the Ordinances
Ordinance No. 1631
• Grants Petitioner a 25-year franchise (renewable once) to establish and operate a common bus-jeepney terminal.
• Obligates the City not to grant any third party privilege or concession to operate any other bus, mini-bus or jeepney terminal.
Ordinance No. 1778
• Requires all out-of-town buses, mini-buses, and jeepneys to proceed to the common terminal for passenger boarding and alighting.
• Declares all temporary or other terminals within Lucena City inoperable.
• Amends earlier ordinances to vest exclusive terminal use in Petitioner’s facility.
Objectives of the Ordinances
To alleviate worsening traffic congestion in the city proper by localizing buses and jeepneys to a single, common terminal outside the poblacion, thereby clearing city streets of loading and unloading activities.
Procedural History
• JAC Liner filed a petition for prohibition and injunction in the RTC (Lucena City) against the City of Lucena and its officials, assailing the two ordinances.
• Lucena Grand Central Terminal, Inc. intervened to protect its franchise.
• RTC: upheld Ordinance No. 1631 (except Sec. 4(c) as ultra vires under the Local Government Code), declared Ordinance No. 1778 void, and issued prohibitory writs.
• CA: affirmed the RTC’s orders, dismissing the petition for lack of merit as to jurisdictional defects and police-power exercise.
• SC Grant: Rule 45 petition for review on jurisdictional service to the Solicitor General and constitutionality under police power.
Issue 1 – Jurisdiction and Notice to the Solicitor General
Petitioner contended that failure to serve the Solicitor General on the RTC orders rendered the proceedings void. The Court held:
• Rule 3, Sec. 22 – service to the Solicitor General is discretionary, not jurisdictional.
• Rule 63, Secs. 3–4 – requires notice of challenges to statutes and ordinances to the SG, but failure to notify does not divest jurisdiction.
• Actual service was shown by certification that the Solicitor General received the petition on October 1, 1998.
• No procedural defect impaired the trial court’s authority to resolve the case.
Issue 2 – Proper Exercise of Police Power
Under the 1987 Constitution, a valid exercise of police power requires:
(1) a public interest objective, and
(2) means reasonably necessary and not unduly oppressive.
Public Interest:
• Traffic congestion is a legitimate public welfare concern (Calalang v. Williams).
• Ordinances aimed at relieving congestion satisfy the first requisite.Reasonableness and Non-Oppression:
• Prohibiting all existing terminals and compelling exclusive use of one franchised facility is overbroad and unduly restrictive.
• Analogous precedents (De la Cruz v. Paras; Lupangco v. PRC) strike down measures that sweep beyond what is necessary or impose absolute bans.
• The ordinances force carriers, under penalty of law, to incur fees and charges at Petitioner’s terminal, constituting an unreasonable invasion of property and business rights.
Nuisance and Alternative Remedies
• Terminals are not nuisance per se; their regulation requir
Case Syllabus (G.R. No. 203249)
Factual Background
- Respondent Jac Liner, Inc., a common carrier operating buses on routes to and from Lucena City, challenged two city ordinances before the Regional Trial Court (RTC) of Lucena City.
- The ordinances in question—City Ordinance Nos. 1631 and 1778—granted an exclusive franchise to Lucena Grand Central Terminal, Inc. and regulated or prohibited the entry and operation of bus and jeepney terminals within the city proper.
- Jac Liner alleged that the ordinances were unconstitutional as an invalid exercise of police power, an undue taking of private property, and a violation of the constitutional ban on monopolies.
City Ordinance No. 1631
- Granted to Lucena Grand Central Terminal, Inc. (the “grantee”) a 25-year renewable franchise to “construct, finance, establish, operate and maintain a common bus-jeepney terminal facility in the City of Lucena.”
- Prohibited the city government, during the franchise period, from granting any third party the privilege or concession to operate any bus, mini-bus, or jeepney terminal.
- Provided for renewal for another 25-year term at the option of the grantee.
City Ordinance No. 1778
- Regulated the entrance of all buses, mini-buses, and out-of-town passenger jeepneys into Lucena City.
- Prohibited these vehicles from entering the city proper for loading or unloading, directing them instead to proceed to the common terminal at Diversion Road, Brgy. Ilayang Dupay.
- Declared all temporary terminals within Lucena City inoperable upon effectivity.
- Amended provisions of earlier ordinances (Nos. 1420 and 1557) to reinforce the exclusivity and permanence of the Lucena Grand Central Terminal as the only authorized facility.
Purpose of the Ordinances
- Expressed in the explanatory “Whereas” clause of Ordinance No. 1778:
- Traffic congestion in Lucena City had worsened.
- To ease and regulate traffic flow, prohibiting multiple terminals and directing all out-of-town carriers to the single common terminal.
Parties and Intervention
- Jac Liner, the primary petitioner, had maintained a terminal within Lucena City and was directly affected by the new ordinances.
- Lucena Grand Central Terminal, Inc., as grantee of the exclusive franchise, was allowed to intervene in the petition before the RTC, asserting its proprietary and contractual interests.
Procedural Posture
- RTC Hearing (Nov. 25, 1998): Parties agreed to submit the case on pleadings alone, dispensing with further evidence.
- RTC Order (Mar. 31, 1999):
- Declared Ordinance No. 1631 valid in its grant of franchise but struck down Sec. 4(c) (absolute prohibition on third-party terminals) as ultra vires under the Local Government Code.
- Declared Ordinance No. 1778 null and void for unconstitutional, oppressive, and unreasonable exercise of police power, specifically invalidating Sections 1(b), 3(c), and 3(e).
- Issued writs of prohibition and injunction against enforcement of the invalid provisions.
- RTC denied the intervenor’s Motion to Dismiss for l