Case Summary (G.R. No. 177056)
Factual Background: Mall Parking Facilities and Fees
Respondents operate shopping malls with on‑site parking facilities (owned, constructed, or leased). They incur construction, maintenance, security and administrative expenses for those facilities. Respondents uniformly charged parking fees to users (whether mall patrons or the general public) in specified schedules: Ayala Land (weekday and weekend rates), Robinsons (P20 for first three hours then P10/hour), Shangri‑La (flat P30/day), SM Prime (P10–P20 for first ~four hours then P10/hour). Parking tickets contained exculpatory clauses disclaiming liability for loss or damage.
Senate Investigation and Report (1999–2000)
Senate Committees on Trade and Commerce and Justice and Human Rights conducted hearings in 1999 on the legality and reasonableness of mall parking fees and the practice of exculpatory clauses. Senate Committee Report No. 225 (May 2, 2000) concluded that collection of parking fees by malls was contrary to the National Building Code and therefore illegal. The Report recommended that the OSG seek to enjoin fee collection and enforce penal provisions of the Code, that DTI and DPWH coordinate regulation, and that Congress amend the Code to expressly prohibit charging for parking and the use of waiver clauses.
Procedural Posture: Parallel RTC Actions
SM Prime filed a Rule 63 petition for declaratory relief (Civil Case No. 00‑1208) on October 3, 2000, challenging Rule XIX of the IRR as ultra vires and asserting a right to lease parking spaces. The OSG filed a petition for declaratory relief and injunction (Civil Case No. 00‑1210) on October 4, 2000, seeking to enjoin respondents from collecting parking fees and to declare the practice violative of the National Building Code. The two actions were consolidated by the RTC of Makati.
Issues Framed by the RTC
The RTC limited issues at pretrial to: (1) OSG’s capacity to sue and whether the parking fee controversy involved public welfare; (2) propriety of declaratory relief; (3) whether respondents are obligated to provide free parking; and (4) entitlement to damages.
RTC Findings and Ruling (May 29, 2002)
The RTC held that the OSG had capacity to sue and that the requisites for declaratory relief were satisfied. On the dispositive issue, the RTC concluded that neither the National Building Code (Section 803) nor Rule XIX of the IRR imposes an obligation to provide parking spaces free of charge. Article 1158 of the Civil Code was invoked to stress that obligations derived from law are not presumed and must be expressly provided. The RTC held that compelling free parking would constitute an unlawful taking of private property without just compensation and that parking provisions in the Code regulate occupancy/congestion and do not speak to fee collection. The RTC dismissed counterclaims and denied damages.
Court of Appeals Proceedings and Ruling (January 25, 2007)
The Court of Appeals initially agreed that the OSG’s appeal raised a pure question of law but nonetheless resolved the case on the merits because issues from SM Prime’s appeal warranted consideration. The appellate court affirmed the RTC on several points: the OSG’s capacity to sue, that exhaustion of administrative remedies was not required where the dispute was legal in character, and that the validity of the IRR need not be decided because it was not among agreed issues and the controversy could be resolved otherwise. Critically, the CA agreed that Section 803 and Rule XIX were intended to control occupancy and congestion and did not prescribe free parking; absent clear statutory or regulatory language, respondents could not be compelled to provide parking without charge. The CA denied the appeals and upheld the RTC decision in toto.
Supreme Court Issues Presented on Certiorari
The OSG moved for review before the Supreme Court, assigning a single error: that the Court of Appeals erred in affirming that respondents are not obliged to provide free parking spaces. The OSG argued that Section 803 and Rule XIX, read together with Section 102 (Declaration of Policy) of the National Building Code, authorize regulation to safeguard life, health, property and public welfare and thus justify requiring complimentary parking to reduce traffic congestion and protect ventilation and light standards.
Statutory Interpretation: Scope of Section 803, Rule XIX, and Section 102
The Supreme Court applied plain‑meaning principles: Section 803 and Rule XIX require minimum off‑street parking ratios (e.g., 1 slot/100 sq. m. for neighborhood shopping centers) but are silent on collection of parking fees. Section 102 sets forth policy objectives and the Code’s purpose to provide minimum standards for buildings’ location, design, use, and maintenance. The Court held that Section 102 does not constitute an open grant of regulatory power to regulate or prohibit fees beyond ensuring compliance with minimum building standards. Absent express statutory language, the Code and IRR cannot reasonably be read to mandate free parking.
Administrative Rule‑Making Limits
The Court reiterated the principle that administrative rules and implementing regulations must conform to and not extend the enabling statute. Agencies may issue rules implementing the statute’s details but cannot amend, expand or add substantive obligations not covered by the statute. Therefore, Rule XIX cannot be read to impose obligations (such as free parking) not authorized by PD 1096.
Police Power, Regulatory Fees, and the Limits of State Regulation
The OSG’s argument invoked police power to regulate privately owned parking to advance public welfare (e.g., reduce congestion). The Court noted that police power authorizes regulation and the imposition of regulatory fees but does not ordinarily empower the State to prohibit the owner from charging for use of private property in a way that amounts to confiscation. Regulatory measures that effectively deprive owners of profitable use of their property can constitute a taking.
Eminent Domain and Compensable Taking Analysis
The Court analyzed whether prohibiting parking fees would amount to a taking under eminent domain principles. It observed that regulation which deprives property owners of the profitable use of property may amount to a compensable taking unless the invasion is so slight as to be justified under police power. A blanket prohibition on charging for private parking would substantially intrude upon property rights: respondents would be deprived of the ability to recover construction and maintenan
...continue readingCase Syllabus (G.R. No. 177056)
Citation, Court and Panel
- Reported at 616 Phil. 587, Third Division, G.R. No. 177056, Decision promulgated September 18, 2009.
- Decision authored by J. Chico-Nazario; concurrence by Ynares‑Santiago (Chairperson), Velasco, Jr., Nachura, and Peralta, JJ.
- Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court filed by petitioner Office of the Solicitor General (OSG) seeking reversal of the Court of Appeals Decision dated 25 January 2007 and its Resolution dated 14 March 2007, which affirmed the Regional Trial Court (RTC) of Makati City, Branch 138 Joint Decision dated 29 May 2002 in Civil Cases No. 00-1208 and No. 00-1210.
Parties and Nature of Respondents' Businesses
- Petitioner: Office of the Solicitor General (OSG), representing the Government and acting on matters of public interest and deputized by the Senate through Senate Committee Report No. 225.
- Respondents:
- Ayala Land Incorporated — operates shopping malls in various locations in Metro Manila.
- Robinsons Land Corporation — operates shopping malls in various locations in Metro Manila.
- Shangri‑la Plaza Corporation — operates shopping malls in various locations in Metro Manila; rents its parking facilities which were constructed for the lessor’s account.
- SM Prime Holdings, Inc. — constructs, operates and leases commercial buildings and structures; specific properties mentioned: SM City Manila; SM Centerpoint, Sta. Mesa, Manila; SM City North Avenue, Quezon City; SM Southmall, Las Piñas.
- All respondents provide parking facilities for motor vehicles either inside mall buildings, separate buildings, or adjacent lots devoted to parking. Respondents expend funds for construction (Ayala, Robinsons, SM Prime) or rent (Shangri‑la), maintenance, administration and security of parking facilities and collect parking fees from users — patrons and non‑patrons alike.
Factual Background: Parking Facilities, Fees and Ticket Terms
- Nature and operation of parking facilities:
- Parking facilities exist as appurtenant spaces inside malls, in dedicated structures, or in adjacent lots.
- Respondents provide maintenance, administration and security personnel for parked vehicles and orderly parking operations.
- Parking fees charged (as stated in the source):
- Ayala Land: On weekdays, P25.00 for the first four hours and P10.00 for every succeeding hour; on weekends, flat rate of P25.00 per day.
- Robinsons: P20.00 for the first three hours and P10.00 for every succeeding hour.
- Shangri‑la: Flat rate of P30.00 per day.
- SM Prime: P10.00 to P20.00 (depending on whether the parking space is outdoors or indoors) for the first three hours and 59 minutes, and P10.00 for every succeeding hour or fraction thereof.
- Parking tickets or cards issued by respondents contain a stipulation that respondents shall not be responsible for any loss or damage to the vehicles parked in their parking facilities.
Senate Inquiry, Findings and Recommendations (Senate Committee Report No. 225)
- Joint investigation conducted in 1999 by the Senate Committees on Trade and Commerce and on Justice and Human Rights after three public hearings (30 September, 3 November, 1 December 1999).
- Purposes of the investigation:
- To inquire into the legality of the prevalent practice of shopping malls charging parking fees.
- Assuming collection is legally authorized, to find out the basis and reasonableness of the parking rates charged by shopping malls.
- To determine the legality of the policy of shopping malls of denying liability in cases of theft, robbery or carnapping by invoking waiver clauses on parking tickets.
- Participants invited: top executives of respondents, officials from DTI, DPWH, MMDA, other local government officials, and the Philippine Motorists Association as consumers’ representative.
- Conclusions in Senate Committee Report No. 225 (2 May 2000):
- The Committees found that collection of parking fees by shopping malls is contrary to the National Building Code and therefore illegal.
- The Code requires malls to provide parking spaces but does not specify free or paid; Committees interpreted the Code reasonably and logically to mean parking spaces are for free, citing practices in other countries (United States) where mall‑owned parking spaces are free of charge and figuratively describing the Code as having "expropriated" land for parking.
- Reference to Article II of R.A. No. 9734 (Consumer Act of the Philippines) to support the policy of protecting consumers and promoting general welfare.
- Observations on enforcement: Section 201 of National Building Code gives administration/enforcement responsibility to DPWH Secretary, but local implementation had been devolved to LGUs; no single national agency directly supervises enforcement of parking provisions.
- Recommendations contained in the Report:
- The Office of the Solicitor General should institute action to enjoin collection of parking fees and enforce penal sanctions under the National Building Code; study refund mechanisms for fees collected.
- The Department of Trade and Industry should enforce Code provisions relative to parking pursuant to R.A. No. 7394 and formulate implementing rules and regulations on mall parking with prior consultation with LGUs; coordinate with DPWH for regulation and supervision of construction and maintenance of parking establishments.
- Congress should amend and update the National Building Code to expressly prohibit shopping malls from collecting parking fees and prohibit invocation of waiver of liability.
Pre-Litigation and Parallel Filings in RTC
- Respondent SM Prime preemptively filed a Petition for Declaratory Relief on 3 October 2000 (Rule 63) against the DPWH Secretary and local building officials of Manila, Quezon City, Las Piñas; docketed Civil Case No. 00-1208 before RTC Makati, Branch 138 (Judge Sixto Marella, Jr.). SM Prime prayed for:
- Declaration Rule XIX of Implementing Rules and Regulations (IRR) of the National Building Code as ultra vires, unconstitutional and void;
- Declaration of its right to lease parking spaces appurtenant to commercial establishments;
- Declaration that IRR was ineffective for not having been published as required by Section 211 of PD No. 1096.
- The OSG filed a Petition for Declaratory Relief and Injunction (with prayer for TRO and Writ of Preliminary Injunction) on 4 October 2000; docketed Civil Case No. 00-1210 before RTC Makati, Branch 135 (Judge Francisco B. Ibay). OSG prayed that the RTC:
- After summary hearing, issue a TRO and writ of preliminary injunction restraining respondents from collecting parking fees from their customers; and
- After hearing, declare respondents’ practice violative of the National Building Code and make permanent any injunctive writ issued.
Consolidation, Pre‑trial and Issues Framed by the RTC
- On 23 October 2000, Judge Ibay issued an Order consolidating Civil Case No. 00-1210 with Civil Case No. 00-1208 pending before Judge Marella; consolidation resulted in coordinated proceedings.
- Pre‑trial conference held 8 August 2001; RTC issued a Pre‑Trial Order limiting issues to:
- Capacity of the OSG in Civil Case No. 00-1210 to institute the proceedings and whether the controversy in collection of parking fees is a matter of public welfare.
- Whether declaratory relief is proper.
- Whether Ayala Land, Robinsons, Shangri‑la and SM Prime are obligated to provide parking spaces in their malls for patrons or the public free of charge.
- Entitlement of the parties to award of damages.
RTC Joint Decision (29 May 2002) — Findings and Disposition
- RTC resolved the first two issues affirmatively:
- OSG has capacity to initiate Civil Case No. 00-1210 under PD No. 478 and the Administrative Code of 1987.
- All requisites for declaratory relief were present: justiciable controversy; adverse interests; legal interest; issue ripe for judicial determination — noting SM would be directly affected and OSG acts on public interest.
- On the