BOT 117 SCRA 597 Facts: Petitioner Taxicab Operators seek to declare the nullity on Memorandum Circular No. 77-42 of the Board of Transportation. Herein petitioner is a domestic corporation compound of taxicab operators, who are grantees of Certificate of Public Convenience to operate taxicabs within the City of Manila and to any other place in Luzon accessible to vehicular traffic. The Memorandum issued by BOT ordered the phasing out and replacement of old and dilapidated taxis. Now, pursuant to this policy, the Board promulgated a regulation in the effect that “no car beyond six years shall be operated as a taxi.” Petitioners contend that procedural due process was violated because position papers were not asked of them and because there was no public hearing prior to the issuance of the regulation. Issue: Whether procedural due process was violated in the case at bar. Held: No, there was no violation of petitioner’s constitutional right to due process. The Board has a valid range of choices for gathering information or data and is not bound to make use all of them. Moreover, previous notice and hearing so required in judicial and quasi-judicial proceedings but not in the promulgation of general rule.

REPUBLIC VS. MERALCO GR 141314, 15 November 2002 Facts: On 23 December 1993, Meralco filed with the Energy Regulatory Board (ERB) an application for the revision of its rate schedules. On 28 January 1994, the ERB issued an order granting a provisional increase of P0.184/kwh subject to the condition that in event that the board finds that Meralco is entitled to a lesser increase in rates all excess amounts collected shall be refunded or credited to its customers. Subsequently, ERB rendered its decision adopting the audit of the Commission on Audit (COA) and authorized Meralco to implement a rate adjustment of P0.017/kwh, but ordered the refund of the excess amount of P0.167/kwh collected from the billing cycles of February 1994 to February 1997, holding that income tax should not be treated as operating expense, and applying the net average investment method in the computation of the rate base. On appeal, the Court of Appeals set aside the ERB decision insofar as it directed the reduction of the rates by P0.167/kwh and the refund to Meralco’s customers. Motions for reconsideration were denied. Hence, this petition. Issue: Whether income tax may be shifted to the public utility’s customer. Held: Income tax should be borne by the taxpayer alone as they are payments made in exchange for benefits received by the taxpayer from the State. No benefit is derived by the customers of a public utility for such entity and no direct contribution is made by the payment of income tax to the operation of a public utility for purposes of generating revenue or profit. Thus, the burden of paying income tax should be Meralco’s alone and should not be shifted to the customers by including the same in the computation of its operating expenses.

LUTZ VS. ARANETA GR L-7859, 22 December 1955 Facts: A Walter Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, sought to recover the sum of P14,666.40 paid by the estate as taxes from the Commissioner under Section E of Commonwealth Act 567 (the Sugar Adjustment Act), alleging that such tax is unconstitutional as it levied for the aid and support of the sugar industry exclusively, which is in his opinion not a public purpose. Issue: Whether the tax is valid in supporting an industry. Held: The tax is levied with a regulatory purpose, i.e. to provide means for the rehabilitation and stabilization of the threatened sugar industry. The act is primarily an exercise of police power, and is not a pure exercise of taxing power. As sugar production is one of the great industries of the Philippines; and that its promotion, protection and advancement redounds greatly to the general welfare, the legislature found that the general welfare demanded that the industry should be stabilized, and provided that the distribution of benefits therefrom be readjusted among its component to enable it to resist the added strain of the increase in tax that it had to sustain. Further, it cannot be said that the devotion of tax money to experimental stations to seek increase of efficiency in sugar production, utilization of byproducts, etc., as well as to the improvement of living and working conditions in sugar mills

Case Digests by Date Cortez

and plantations, without any part of such money being channeled directly to private persons, constitute expenditure of tax money for private purposes. The tax is valid.

LIM vs. PACQUING G.R. 115044, January 27, 1995 Facts: On 15 September 1994, respondent Associated Development Corporation (ADC) filed a petition for prohibition seeking to prevent GAB from withdrawing the provisional authority that had been granted them to operate jai-alai. ADC's franchise was invalidated by PD No. 771, which expressly revoked all existing franchises to operate all forms of gambling facilities issued by local governments. Respondent contends that Ordinance No. 7065 authorized the Mayor to allow ADC to operate Jai-Alai in the City of Manila. ADC also assails the constitutionality of PD No. 771 as violative of the equal protection and non-impairment clauses of the Constitution. Issue: Whether ADC has a valid franchise to operate the Jai-Alai de Manila. Held: PD No. 771 is a valid exercise of the inherent police power of the State. Gambling is essentially antagonistic and self-reliance. It breeds indolence and erodes the value of good, honest and hard work. It is, as very aptly stated by PD No. 771, a vice and a social ill which government must minimize (if not eradicate) in pursuit of social and economic development. Jai-alai is not a mere economic activity which the law seeks to regulate. It is essentially gambling and whether it should be permitted and, if so, under what conditions are questions primarily for the lawmaking authority to determine, talking into account national and local interests. Here, it is the police power of the State that is paramount. On the alleged violation of the non-impairment and equal protection clauses of the Constitution, it should be remembered that a franchise is not in the strict sense a simple contract but rather it is more importantly, a mere privilege specially in matters which are within the government's power to regulate and even prohibit through the exercise of the police power. Thus, a gambling franchise is always subject to the exercise of police power for the public welfare. ADC has no franchise from Congress to operate the jai-alai therefore, it may not operate even if it has a license from the Mayor to operate the jai-alai in the City of Manila.

ICHONG VS. HERNANDEZ 101 PHIL 155 Facts: The Congress of the Philippines enacted the act which nationalizes the retail trade business, Republic Act No. 1180 entitled “An Act to Regulate the Retail Business,” prohibiting aliens in general to engage in retail trade in our country. Petitioner, for and in his own behalf and on behalf of other alien residents, corporations and partnerships adversely affected by the provisions of RA No. 1180, brought this action to obtain a judicial declaration that said Act is unconstitutional. Issue: Whether Congress in enacting R.A. No. 1180 violated the UN Charter, the UN Declaration of Human Rights and the Philippine-Chinese Treaty of Amity. Held: The UN Charter imposes no strict or legal obligations regarding the rights and freedom of their subjects, and the Declaration of Human Rights contains nothing more than a mere recommendation, or a common standard of achievement for all peoples and all nations. The Treaty of Amity between the Republic of the Philippines and the Republic of China guarantees equality of treatment to the Chinese nationals “upon the same terms as the nationals of any other country. But the nationals of China are not discriminated against because nationals of all other countries, except those of the United States, who are granted special rights by the Constitution, are all prohibited from engaging in the retail trade. But even supposing that the law infringes upon the said treaty, the treaty is always subject to qualification or amendment by a subsequent law, and the same may never curtail or restrict the scope of the police power of the State.

Case Digests by Date Cortez

LOZANO VS. MARTINEZ 146 SCRA 323, 1986 Facts: The present case involves consolidated cases for crime committed for violation of B.P. 22 or known as the bouncing check law. The accused of these cases asserted that B.P. 22 is a violation of constitutional inhibition that no person shall be imprisoned for non-payment of debts, and therefore, unconstitutional. Issue: Whether the effuse punished by B.P. 22 is the non-payment of an obligation. Held: The gravemen of B.P. 22 is the issuance of a worthless check, not the non-payment of an obligation. The thrust of the law is to prohibit, under pain of penal sanction, the making of the worthless check and putting them into circulation. Because of its deleterious effect on the public interest, the practice is prescribed by the law. The law punishes the act not as offense against property but an offense against public order. The legislature may not validly be considered as non-payment of debt ex contracts, and an act may not be considered and punished as malum in se, but each act may be penalized under police power as malum prohibitum because of the harm it cause to the public. Police power of the state has been described as the “most essential, insistent and illimitable powers” which enables it to prohibit all things hurtful to the comfort, safety and welfare of the society.

Case Digests by Date Cortez

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