GR 148339; (February, 2005) (Digest)
G.R. No. 148339 ; February 23, 2005
LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, vs. JAC LINER, INC., Respondent.
FACTS
The City of Lucena enacted Ordinance No. 1631, granting petitioner Lucena Grand Central Terminal, Inc. an exclusive 25-year franchise, renewable for another 25 years, to operate the sole common bus-jeepney terminal facility in the city. Ordinance No. 1778 subsequently mandated all provincial buses and out-of-town jeepneys to use this terminal exclusively, prohibiting them from entering the city proper or maintaining their own terminals. The stated objective was to alleviate traffic congestion. Respondent JAC Liner, Inc., a common carrier operating its own terminal within Lucena, challenged the ordinances as unconstitutional, arguing they constituted an invalid exercise of police power, an undue taking of property, and created an illegal monopoly.
The Regional Trial Court declared Ordinance No. 1631 valid but struck down its exclusive grant clause and nullified Ordinance No. 1778 as an ultra vires and unreasonable police power measure. The Court of Appeals affirmed the nullity of both ordinances. Petitioner Lucena Grand Central Terminal, Inc. elevated the case to the Supreme Court, contending the ordinances were valid exercises of local government power to regulate terminals and abate nuisances for public welfare.
ISSUE
Whether City Ordinance Nos. 1631 and 1778, which grant an exclusive franchise to operate the sole common terminal and compel all provincial carriers to use it, constitute a valid exercise of police power.
RULING
No. The Supreme Court denied the petition and affirmed the appellate court’s decision, ruling the ordinances invalid. The Court held that while local governments possess police power to regulate public utilities and promote general welfare under the Local Government Code, such power must be exercised within constitutional limits. The ordinances failed the test of a valid police measure: they were not reasonably necessary for the intended purpose of easing traffic.
The Court found the grant of an exclusive franchise for 25 years, renewable for another 25, to a single private entity was oppressive and created a monopoly, violating the constitutional prohibition against monopolies and combinations in restraint of trade. It effectively confiscated the existing terminals and businesses of carriers like JAC Liner without due process and just compensation. The Court emphasized that a bus terminal is not a nuisance per se that can be summarily abated without judicial proceedings. The objective of traffic decongestion, while legitimate, could be achieved by less restrictive means that do not confer exclusive commercial benefits or eliminate competition. The ordinances’ overbreadth and the excessive duration of the monopoly rendered them an unreasonable and invalid exercise of police power.