OSG v.

Ayala
Facts:
This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules
of Court, filed by petitioner seeking the reversal and setting aside of the
decision of CA which affirmed the decision of RTC, which denied the Motion
for Reconsideration of OSG. The RTC adjudged that respondents Ayala Land
Incorporated (Ayala Land), Robinsons Land Corporation (Robinsons),
Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM
Prime) could not be obliged to provide free parking spaces in their malls to
their patrons and the general public.

The Senate Committee on Trade and Commerce found that the collection of
parking fees by shopping malls is contrary to National Building Code and
figuratively speaking, the Code has “expropriated” the land for parking. Also,
Committee stated that the collection of parking fees would be against Article II
of RA 9734 (Consumer Act of the Philippines) as to the State’s policy of
protecting the interest of consumers. Moreover, Section 201 of the National
Building Code gives the responsibility for the administration and enforcement
of the provisions of the Code, including the imposition of penalties for
administrative violations thereof to the Secretary of Public Works. This is not
being strictly followed as the LGUs are tasked to discharge the regulatory
powers of DPWH instead of DPWH instead.

As such, Senate Committee recommended that: 1) Office of Solicitor General

should institute the action to enjoin the collction of parking fees and enforce
the sanctions for violation of National Building Code; 2) DTI pursuant to RA
7394 should enforce the provisions of Code relative to parking; and 3)
Congress should amend and update the National Building Code to prohibit the
collection of parking fees and its waiver of liability.

Respondent SM Prime assailed the recommendation of the Committee and

filed a Petition for Declaratory Relief under Rule 63 of the Revised Rules of
Court against DPWH and local building officials, contending that: 1) Rule XIX
of Implementing Rules and Regulations of National Building Code is
unconstitutional and void; 2) respondent has the legal right to lease parking
spaces; and 3) National Building Code IRR is ineffective as it was not
published for 3 consecutive weeks in newspaper of general circulation as
mandated by Section 211 of PD 1096.

OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for
Temporary Restraining Order and Writ of Preliminary Injunction) to the RTC
against respondents, prohibiting them from collecting parking fees and
contending that their practice of charging parking fees is violative of National
Building Code.

The RTC held that: 1) OSG has the capacity to institute the proceeding it
being a controversy of public welfare; 2) a petition for declaratory relief is
proper since all the requisites are present; 3) the Building Code with its IRR
does not necessarily impose that parking spaces shall be free of charge and
providing parking spaces for free can be considered as unlawful taking of
property right without just compensation; and 4) there was no sufficient
evidence to justify any award for damages. They deemed that the
respondents are not obligated to provide parking spaces free of charge.

OSG appealed the decision to CA, saying that RTC erred in holding that the
National Building Code did not intend the parking spaces to be free of charge.
On the otherhand, respondent SM filed a separate appeal to the CA,
contending that: 1) RTC erred in failing to declare Rule XIX of IRR as
unconstitutional; 2) RTC erred in failing to declare IRR ineffective for not
having been published as required by law; 3) RTC erred in dismissing the
OSG’s petition for failure to exhaust administrative remedies; and 4) RTC
erred in failing to declare that OSG has no legal standing as it is not a real
party-in-interest.

CA denied the appeals of both petitioners and respondents on the following

grounds: 1) OSG did not fail to exhaust administrative remedies and that an
administrative review is not a condition precedent to judicial relief where the
question in dispute is purely a legal one and nothing of an administrative
nature is to be or can be done; 2) the validity of National Building Code IRR
cannot be proceeded as it was not discussed in RTC and the controversy
could be settled on other grounds without touching the issue of validity since
the courts should refrain from passing upon the constitutionality of a law; and
3) Section 803 of National Building Code and Rule XIX of IRR are clear that
they are only intended to control the occupancy of areas and structures, and
in the absence of provision of law, respondents could not be obliged to
provide parking spaces free of charge.

As such, OSG presented itself to SC for the instant Petition for Review.

Issues:
1. Whether the CA erred in affirming the ruling of RTC that respondents are
not obliged to provide free parking spaces to their customers or the public.
2. Whether the petition of OSG for prohibiting the collection of parking fees is
a valid exercise of the police power of State.

Held:
1. No. The CA was correct in affirming the ruling of RTC, and the respondents
are not obliged to provide free parking spaces. SC found no merit in the
OSG’s petition:

Sec 803 of National Building Code.

Percentage of Site Occupancy states that maximum site occupancy shall be
governed by the use, type of construction, and height of the building and the
use, area, nature, and location of the site; and subject to the provisions of the
local zoning requirements and in accordance with the rules and regulations
promulgated by the Secretary.

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing
for maximum site occupancy, the following provisions on parking and
loading space requirements shall be observed:
1. The parking space ratings listed below are minimum off-street
requirements for specific uses/occupancies for buildings/structures:
1.1 The size of an average automobile parking slot shall be computed as 2.4
meters by 5.00 meters for perpendicular or diagonal parking, 2.00 meters by
6.00 meters for parallel parking. A truck or bus parking/loading slot shall be
computed at a minimum of 3.60 meters by 12.00 meters. The parking slot
shall be drawn to scale and the total number of which shall be indicated on
the plans and specified whether or not parking accommodations, are
attendant-managed. (See Section 2 for computation of parking requirements).
xxxx
1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area

 SECTION 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health,
property, and public welfare, consistent with the principles of sound
environmental management and control; and to this end, make it the purpose
of this Code to provide for all buildings and structures, a framework of
minimum standards and requirements to regulate and control their location,
site, design, quality of materials, construction, use, occupancy, and
maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly
contributes to the aim of safeguarding “life, health, property, and public
welfare, consistent with the principles of sound environmental management
and control.” Adequate parking spaces would contribute greatly to alleviating
traffic congestion when complemented by quick and easy access thereto
because of free-charge parking. Moreover, the power to regulate and control
the use, occupancy, and maintenance of buildings and structures carries with
it the power to impose fees and, conversely, to control — partially or, as in
this case, absolutely — the imposition of such fees.
The explicit directive of the above is that respondents, as operators/lessors of
neighborhood shopping centers, should provide parking and loading spaces
with the minimum ratio of one slot per 100 square meters of shopping floor
area. There is nothing therein pertaining to the collection (or non-collection) of
parking fees by respondents. In fact, the term “parking fees” cannot even be
found at all in the entire National Building Code and its IRR. One rule of
statutory construction is that if a statute is clear and unequivocal, it must be
given its literal meaning and applied without any attempt at interpretation.
Since Section 803 of the National Building Code and Rule XIX of its IRR do
not mention parking fees, then simply, said provisions do not regulate the
collection of the same

The OSG cannot rely on Section 102 of the National Building Code to expand
the coverage of Section 803 of the same Code and Rule XIX of the IRR, so as
to include the regulation of parking fees. The OSG limits its citation to the first
part of Section 102 of the National Building Code declaring the policy of the
State “to safeguard life, health, property, and public welfare, consistent with
the principles of sound environmental management and control”; but totally
ignores the second part of said provision, which reads, “and to this end, make
it the purpose of this Code to provide for all buildings and structures, a
framework of minimum standards and requirements to regulate and control
their location, site, design, quality of materials, construction, use, occupancy,
and maintenance.” While the first part of Section 102 of the National Building
Code lays down the State policy, it is the second part thereof that explains
how said policy shall be carried out in the Code. Section 102 of the National
Building Code is not an all-encompassing grant of regulatory power to the
DPWH Secretary and local building officials in the name of life, health,
property, and public welfare. On the contrary, it limits the regulatory power of
said officials to ensuring that the minimum standards and requirements for all
buildings and structures, as set forth in the National Building Code, are
complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum
requirements for parking spaces for buildings, Rule XIX of the IRR also
mandates that such parking spaces be provided by building owners free of
charge. If Rule XIX is not covered by the enabling law, then it cannot be
added to or included in the implementing rules. The rule-making power of
administrative agencies must be confined to details for regulating the mode or
proceedings to carry into effect the law as it has been enacted, and it cannot
be extended to amend or expand the statutory requirements or to embrace
matters not covered by the statute. Administrative regulations must always be
in harmony with the provisions of the law because any resulting discrepancy
between the two will always be resolved in favor of the basic law.

2. No. The petition of OSG to prohibit collection of parking fees is not a valid
exercise of the police power of State.
It is not sufficient for the OSG to claim that “the power to regulate and control
the use, occupancy, and maintenance of buildings and structures carries with
it the power to impose fees and, conversely, to control, partially or, as in this
case, absolutely, the imposition of such fees.” Firstly, the fees within the
power of regulatory agencies to impose are regulatory fees. It has been
settled law in this jurisdiction that this broad and all-compassing governmental
competence to restrict rights of liberty and property carries with it the
undeniable power to collect a regulatory fee. It looks to the enactment of
specific measures that govern the relations not only as between individuals
but also as between private parties and the political society. True, if the
regulatory agencies have the power to impose regulatory fees, then
conversely, they also have the power to remove the same. Even so, it is
worthy to note that the present case does not involve the imposition by the
DPWH Secretary and local building officials of regulatory fees upon
respondents; but the collection by respondents of parking fees from persons
who use the mall parking facilities. Secondly, assuming arguendo that the
DPWH Secretary and local building officials do have regulatory powers over
the collection of parking fees for the use of privately owned parking facilities,
they cannot allow or prohibit such collection arbitrarily or whimsically. Whether
allowing or prohibiting the collection of such parking fees, the action of the
DPWH Secretary and local building officials must pass the test of classic
reasonableness and propriety of the measures or means in the promotion of
the ends sought to be accomplished.

Without using the term outright, the OSG is actually invoking police power to
justify the regulation by the State, through the DPWH Secretary and local
building officials, of privately owned parking facilities, including the collection
by the owners/operators of such facilities of parking fees from the public for
the use thereof. The Court finds, however, that in totally prohibiting
respondents from collecting parking fees, the State would be acting beyond
the bounds of police power.

Police power is the power of promoting the public welfare by restraining and
regulating the use of liberty and property. It is usually exerted in order to
merely regulate the use and enjoyment of the property of the owner. The
power to regulate, however, does not include the power to prohibit. A fortiori,
the power to regulate does not include the power to confiscate. Police power
does not involve the taking or confiscation of property, with the exception of a
few cases where there is a necessity to confiscate private property in order to
destroy it for the purpose of protecting peace and order and of promoting the
general welfare; for instance, the confiscation of an illegally possessed article,
such as opium and firearms.

When there is a taking or confiscation of private property for public use, the
State is no longer exercising police power, but another of its inherent powers,
namely, eminent domain. Eminent domain enables the State to forcibly
acquire private lands intended for public use upon payment of just
compensation to the owner.

Normally, of course, the power of eminent domain results in the taking or

appropriation of title to, and possession of, the expropriated property; but no
cogent reason appears why the said power may not be availed of only to
impose a burden upon the owner of condemned property, without loss of title
and possession. It is a settled rule that neither acquisition of title nor total
destruction of value is essential to taking. It is usually in cases where title
remains with the private owner that inquiry should be made to determine
whether the impairment of a property is merely regulated or amounts to a
compensable taking. A regulation that deprives any person of the profitable
use of his property constitutes a taking and entitles him to compensation,
unless the invasion of rights is so slight as to permit the regulation to be
justified under the police power. Similarly, a police regulation that
unreasonably restricts the right to use business property for business
purposes amounts to a taking of private property, and the owner may recover
therefor.

Although in the present case, title to and/or possession of the parking facilities
remain/s with respondents, the prohibition against their collection of parking
fees from the public, for the use of said facilities, is already tantamount to a
taking or confiscation of their properties. The State is not only requiring that
respondents devote a portion of the latter’s properties for use as parking
spaces, but is also mandating that they give the public access to said parking
spaces for free. Such is already an excessive intrusion into the property rights
of respondents. Not only are they being deprived of the right to use a portion
of their properties as they wish, they are further prohibited from profiting from
its use or even just recovering therefrom the expenses for the maintenance
and operation of the required parking facilities.

In conclusion, the total prohibition against the collection by respondents of

parking fees from persons who use the mall parking facilities has no basis in
the National Building Code or its IRR. The State also cannot impose the same
prohibition by generally invoking police power, since said prohibition amounts
to a taking of respondents’ property without payment of just compensation.

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The
Decision dated 25 January 2007 and Resolution dated 14 March 2007 of the Court of
Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision dated 29 May
2002 of the Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-
1208 and No. 00-1210 are hereby AFFIRMED. No costs.