G.R. No. L-38429 June 30, 1988
CARLOS BALACUIT, LAMBERTO TAN and SERGIO YU CARCEL, petitioners-appellants, vs. COURT OF FIRST INSTANCE OF AGUSAN DEL NORTE AND BUTUAN CITY, Branch 11, and the CITY OF BUTUAN, respondents-appellees.

FACTS

Petitioners, managers of several movie theaters in Butuan City, challenged the constitutionality of City Ordinance No. 640. The ordinance mandated that children between seven and twelve years old be charged only one-half of the full adult price for admission tickets to movies and other public exhibitions. Violators faced fines and imprisonment. Petitioners filed a complaint before the Court of First Instance, arguing the ordinance was an ultra vires and invalid exercise of police power, and secured a temporary restraining order against its enforcement. The respondent City defended the ordinance, invoking the general welfare clause under its charter. The trial court upheld the ordinance’s validity, declaring it constitutional, dissolving the restraining order, and dismissing the complaint, albeit limiting the fine to P200.00 as prescribed by the city charter. Petitioners’ motion for reconsideration was denied, prompting this appeal.

ISSUE

Whether City Ordinance No. 640 of Butuan, which fixes admission ticket prices for children, is a valid exercise of police power under the city’s regulatory authority or general welfare clause.

RULING

The Supreme Court declared Ordinance No. 640 unconstitutional and void. The Court ruled that the power to “regulate” businesses, such as theaters under Section 15(n) of the city charter, does not encompass the power to control or fix the prices of admission tickets. This power to regulate is limited to aspects like the time and manner of operations, public safety, and sanitation, not the imposition of price controls on a private business. The Court distinguished this case from precedents where regulation was upheld for valid police objectives like preventing fraud or ensuring public health, noting that the ordinance here directly interfered with proprietary rights by dictating pricing. Furthermore, the Court held that the ordinance could not be justified under the general welfare clause. While municipalities can exercise police power via this clause, its exercise must have a clear and reasonable connection to public health, safety, morals, or general welfare. The ordinance failed this test, as the forced subsidy from theater owners to children within the specified age bracket constituted an arbitrary imposition without a corresponding public benefit or necessity. It was an unreasonable and oppressive interference with private business, amounting to a deprivation of property without due process of law. The decision of the lower court was reversed.