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POLICE POWER

What is Police POWER? 1. The state has general powers, first, to enact such laws, in relation to persons and property within its borders, as may promote public health, public morals, and public safety, and the general prosperity and welfare of its inhabitants No state can deprive itself of the right to exercise the general police powers of a sovereignty. For a state to deprive itself or permit itself to be deprived of the right to enact laws to promote the general prosperity and welfare of its inhabitants, etc., would be to destroy the very purpose and objects of the state. No legislature can bargain away the public health, the public safety, or the public morals. The people themselves cannot do it, much less their servants. Governments are organized with a view to the preservation of these things. They cannot deprive themselves of the power to provide for them. (US vs Gomez) The police power of the State is a power coextensive with self-protection, and is not inaptly termed the "law of overruling necessity." When it is to advance the public welfare, the law is a legitimate exertion of the sovereign police power. (Rubi vs Provincial board) Police power is the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people. It is the most essential, insistent, and illimitable of powers. In a sense it is the greatest and most powerful attribute of the government. It is elastic and must be responsive to various social conditions. On it depends the security of social order, the life and health of the citizen, the comfort of an existence in a thickly populated community, the enjoyment of private and social life, and the beneficial use of property, and it has been said to be the very foundation on which our social system rests. However, it is not confined within narrow circumstances of precedents resting on past conditions; it must follow the legal progress of a democratic way of life. Municipal governments exercise this power under the general welfare clause: pursuant thereto they are clothed with authority to "enact such ordinances and issue such regulations as may be necessary to carry out and discharge the responsibilities conferred upon it by law, and such as shall be necessary and proper to provide for the health, safety, comfort and convenience, maintain peace and order, improve public morals, promote the prosperity and general welfare of the municipality and the inhabitants thereof, and insure the protection of property therein." Under the law, "every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary and proper for governance such as to promote health and safety, enhance prosperity, improve morals, and maintain peace and order in the local government unit, and preserve the comfort and convenience of the inhabitants therein. (Binay vs. Domingo) In the sense it could be hardly distinguishable with the totality of legislative power. It is in the above sense the greatest and most powerful attribute of government. It is the most essential, insistent, and at least illimitable powers, extending to all the great public needs. Its scope, over-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest benefits. The police power is thus a dynamic agency, suitably vague and far from precisely defined, rooted in the conception that men in organizing the state and imposing upon its government limitations to safeguard constitutional rights did not intend thereby to enable an individual citizen or a group of citizens to obstruct unreasonably the enactments of such salutary measures calculated to insure communal peace, safety, good order, and welfare. (Agustin vs Edu)

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SCOPE of Police Power 1. Police power is far-reaching in scope, and it is almost impossible to limit its sweep. It derives its existence from the very existence of the State itself, and does not need to be expressed or defined in its scope. It is said to be co-extensive with self - protection and survival, and as such it is the most positive and active of all governmental processes, the most essential, insistent and illimitable. Especially is it so under a modern democratic framework where the demands of society and of nations have multiplied to almost unimaginable proportions; the field and scope of police power has become almost boundless, just as the fields of public

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interest and public welfare have become almost all-embracing and have transcended human foresight. (Ichong vs .Hernandez) Police power extends only as far as public welfare is concerned. Enacted laws prohibiting citizens from exercising certain acts even in private is not a valid exercise of police power. (Lawrence vs. Texas)

Elements for Valid Exercise 1. To justify the State" in the exercise of its sovereign police power "it must appear, first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that the means are reasonable necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals." (US vs Toribio) If a law relates to the public health, safety, morals, comfort, or general welfare of the community, it is within the scope of the police power of the State. Within such bounds the wisdom, expediency, or necessity of the law does not concern the courts. From whatever direction the social, economic, or general welfare of the people is menaced, there is legal justification for the exercise of the police power; and the use of private property may be regulated or restricted to whatever extent may be necessary to preserve inviolate these declared essentials to the well being of the public. (Churchill vs Rafferty) It bears stressing that police power is lodged primarily in the National Legislature. It cannot be exercised by any group or body of individuals not possessing legislative power. The National Legislature, however, may delegate this power to the President and administrative boards as well as the lawmaking bodies of municipal corporations or local government units. Once delegated, the agents can exercise only such legislative powers as are conferred on them by the national lawmaking body. (MMDA vs. Bel-Air) Local governments are delegated police power by the State. The municipal board of the City of Manila, in the exercise of the police power, may reasonably regulate professions and business enterprise within its territorial limits when the public health, safety and welfare so demand. (Javier vs. Earnshaw) Police power is validly exercised if (a) the interests of the public generally, as distinguished from those of a particular class, require the interference of the State, and (b) the means employed are reasonably necessary to the attainment of the object sought to be accomplished and not unduly oppressive upon individuals.The right to quality education is not absolute. The Constitution also provides that "every citizen has the right to choose a profession or course of study, subject to fair, reasonable and equitable admission and academic requirements." The private respondent must yield to the challenged rule and give way to those better prepared. Where even those who have qualified may still not be accommodated in our already crowded medical schools, there is all the more reason to bar those who, like him, have been tested and found wanting. (DECS vs. San Diego) Class legislation discriminating against some and favoring others is prohibited. But classification on a reasonable basis, and not made arbitrarily or capriciously, is permitted. The rules governing classification are briefly as follows: The classification must be based on substantial distinctions which make real differences; it must be germane to the purposes of the law; it must not be limited to existing conditions only, and must apply equally to each member of the class." (People vs. Chan) The Court has been unable to find any constitutional infirmity in the Generics Act. It, on the contrary, implements the constitutional mandate for the State "to protect and promote the right to health of the people" and "to make essential goods, health and other social services available to all the people at affordable cost." There is no contract between doctor and patient in out-patient consultations in the first place. In any event, no private contract between doctor and patient may be allowed to override the power of the State to enact laws that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community. This power can neither be abdicated nor bargained away. All contractual and property rights are held subject to its fair exercise. (Del Rosario vs. Bengzon) Ordinance No. 4760 of the City of Manila is a manifestation of a police power measure specifically aimed to safeguard public morals. As such it is immune from any imputation of nullity resting purely on conjecture and unsupported by anything of substance. To hold otherwise would be to unduly restrict and narrow the scope of police power which has been properly characterized as the most essential, insistent and the least limitable of powers extending as it does "to all the great public needs." The policy of laissez faire has to

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some extent given way to the assumption by the government of the right of intervention even in contractual relations affected with public interest. (Ermita-Malate vs. City Mayor) Judicial Review White Light Cor. Vs. City of Manila The exercise of police power is subject to judicial review when life, liberty or property is affected. However, this is not in any way meant to take it away from the vastness of State police power whose exercise enjoys the presumption of validity. It was acknowledged that the judiciary would defer to the legislature unless there is a discrimination against a "discrete and insular" minority or infringement of a "fundamental right". Consequently, two standards of judicial review were established: strict scrutiny for laws dealing with freedom of the mind or restricting the political process, and the rational basis standard of review for economic legislation. In terms of judicial review of statutes or ordinances, strict scrutiny refers to the standard for determining the quality and the amount of governmental interest brought to justify the regulation of fundamental freedoms. Strict scrutiny is used today to test the validity of laws dealing with the regulation of speech, gender, or race as well as other fundamental rights as expansion from its earlier applications to equal protection. The United States Supreme Court has expanded the scope of strict scrutiny to protect fundamental rights such as suffrage, judicial access and interstate travel. The promotion of public welfare and a sense of morality among citizens deserves the full endorsement of the judiciary provided that such measures do not trample rights this Court is sworn to protect. The notion that the promotion of public morality is a function of the State is as old as Aristotle. The advancement of moral relativism as a school of philosophy does not de-legitimize the role of morality in law, even if it may foster wider debate on which particular behavior to penalize. It is conceivable that a society with relatively little shared morality among its citizens could be functional so long as the pursuit of sharply variant moral perspectives yields an adequate accommodation of different interests.

EMINENT DOMAIN
Section 9. Private property shall not be taken for public use without just compensation. What is the Power of Eminent Domain?

1. Eminent domain is a fundamental State power that is inseparable from sovereignty. It is governments right
to appropriate, in the nature of a compulsory sale to the State, private property for public use or purpose. Inherently possessed by the national legislature the power of eminent domain may be validly delegated to local governments, other public entities and public utilities. For the taking of private property by the government to be valid, the taking must be for public use and there must be just compensation Local Government Code 18 in force at the time expropriation proceedings were initiated. Section 9 of said law states: Section 9.Eminent Domain. A local government unit may, through its head and acting pursuant to a resolution of its sanggunian, exercise the right of eminent domain and institute condemnation proceedings for public use or purpose. (Moday vs. CA) Nevertheless, despite the existence of a serious dilemma, local government units are not given an unbridled authority when exercising their power of eminent domain in pursuit of solutions to these problems. The basic rules shall have to be followed. The exercise by local government units of the power of eminent domain is not without limitations. Private lands rank last in the order of priority for purposes of socialized housing. In the same vein, expropriation proceedings are to be resorted to only when the other modes of acquisition have been exhausted. Compliance with these conditions must be deemed mandatory because these are the only safeguards in securing the right of owners of private property to due process when their property is expropriated for public use. Indeed, it must be emphasized that the State has a paramount interest in exercising its power of eminent domain for the general good considering that the right of the State to expropriate private property as long as it is for public use always takes precedence over the interest of private property owners. However we must not lose sight of the fact that the individual rights affected by the exercise of such right are also entitled to protection, bearing in mind that the exercise of this superior right cannot override the guarantee of due process extended by the law to owners of the property to be expropriated. In this regard, vigilance over compliance with the due process requirements is in order. (Filstream vs. CA)

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3. The Court holds that, where the owner agrees voluntarily to the taking of his property by the government for
public use, he thereby waives his right to the institution of a formal expropriation proceeding covering such property. Further, as the Court also held in Eusebio v. Luis, the failure for a long time of the owner to question the lack of expropriation proceedings covering a property that the government had taken constitutes a waiver of his right to gain back possession. The Mendozas' remedy is an action for the payment of just compensation, not ejectment. In Republic of the Philippines v. Court of Appeals, the Court affirmed the RTC's power to award just compensation even in the absence of a proper expropriation proceeding. It held that the RTC can determine just compensation based on the evidence presented before it in an ordinary civil action for recovery of possession of property or its value and damages. As to the time when just compensation should be fixed, it is settled that where property was taken without the benefit of expropriation proceedings and its owner filed

an action for recovery of possession before the commencement of expropriation proceedings, it is the value of the property at the time of taking that is controlling. (Republic vs. Mendoza) When is the power of Eminent Domain exercised by the Legislature? Visayan Refining Co. vs. Camus and Paredes The power of eminent domain, with respect to the conditions under which the property is taken, must of course be exercised in subjection to all the restraints imposed by constitutional or organic law. The two provisions by which the exercise of this power is chiefly limited in this jurisdiction are found in the third section of the Jones Act, already mentioned, which among other things declares (1) that no law shall be enacted which shall deprive any person of property without due process of law and (2) that private property shall not be taken for public use without just compensation. The latter of these provisions is directly aimed at the taking of property under the exercise of the power of eminent domain; and as this requirement, in connection with the statutes enacted to make sure the payment of compensation, usually affords all the protection that the owner of property can claim, it results that the due process clause is rarely invoked by the owner in expropriation proceedings. Nevertheless it should be noted that the whole problem of expropriation is resolvable in its ultimate analysis into a constitutional question of due process of law. The specific provisions that just compensation shall be made is merely in the nature of a superadded requirement to be taken into account by the Legislature in prescribing the method of expropriation. Even were there no organic or constitutional provision in force requiring compensation to be paid, the seizure of one's property without payment, even though intended for a public use, would undoubtedly be held to be a taking without due process of law and a denial of the equal protection of the laws.

When is the power of Eminent Domain exercised by LGU? 1. There is a wide distinction between a legislative declaration that a municipality is given authority to exercise the right of eminent domain, and a decision by the municipality that there exist a necessity for the exercise of that right in a particular case. The first is a declaration simply that there exist reasons why the right should be conferred upon municipal corporation, while the second is the application of the right to a particular case. Certainly, the legislative declaration relating to the advisability of granting the power cannot be converted into a declaration that a necessity exists for its exercise in a particular case, and especially so when, perhaps, the land in question was not within the territorial authority was granted. Whether it was wise, advisable, or necessary to confer upon a municipality the power to exercise the right of eminent domain, is a question with which the courts are not concerned. But when that right or authority is exercised for the purpose of depriving citizens of their property, the courts are authorized, in this jurisdiction, to make inquiry and to hear proof upon the necessity in the particular case, and not the general authority. The general power to exercise the right of eminent domain must not be confused with the right to exercise it in aparticular case. The power of the legislature to confer, upon municipal corporations and other entities within the State, general authority to exercise the right of eminent domain cannot be questioned by the courts, but that general authority of municipalities or entities must not be confused with the right to exercise it in particular instances. The moment the municipal corporation or entity attempts to exercise the authority conferred, it must comply with the conditions accompanying the authority. The necessity for conferring the authority upon a municipal corporation to exercise the right of eminent domain is admittedly within the power of the legislature. But whether or not the municipal corporation or entity is exercising the right in a particular case under the conditions imposed by the general authority, is a question which the courts have the right to inquire into. (City of Manila vs. Chinese Community of Manila)

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The basis for the exercise of the power of eminent domain by local government units is Section 19 of RA 7160 which provides that: A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, purpose, or welfare for the benefits of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws; Provided, however, That the power of eminent domain may not be exercised unless a valid and definite offer has been previously made to the owner, and such offer was not accepted; Provided, further, That the local government unit may immediately take possession of the property upon the filing of the expropriation proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the property based on the current tax declaration of the property to be expropriated; Provided, finally, That the amount to be paid for the expropriated property shall be determined by the proper court, based on the fair market value at the time of the taking of the property. The courts have the obligation to determine whether the following requisites have been complied with by the local government unit concerned: 1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the local government unit, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property. 2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless. 3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws. 4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted. (Heirs of Alberto Suguitan vs. City of Mandaluyong)

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A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws: . . . In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a resolution of the municipal council. Thus, there was no compliance with the first requisite. Thus, the following essential requisites must concur before an LGU can exercise the power of eminent domain: 1. 1.An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular private property. 2.The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless. 3.There is payment of just compensation, as required under Section 9, Article III of the Constitution, and other pertinent laws.

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A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not accepted. The Court holds that the principle of res judicata, which finds application in generally all cases and proceedings, cannot bar the right of the State or its agent to expropriate private property, so the State or its authorized agent may still subsequently exercise its right to expropriate the same property, once all legal requirements are complied with. (Mun. of Paranaque vs. VM Realty)

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A resolution will not suffice for an LGU to be able to expropriate private property A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance possesses a general and permanent character, but a resolution is temporary in nature. Additionally, the two are enacted differently a third reading is necessary for an ordinance, but not for a resolution, unless decided otherwise by a majority of all theSanggunian members.

A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws. (Beluso vs. Mun. of Panay) ED: Taking 1. Taking' under the power of eminent domain may be defined generally as entering upon private property for more than a momentary period, and, under the warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him of all beneficial enjoyment thereof. Pursuant to the aforecited authority, a number of circumstances must be present in the "taking" of property for purposes of eminent domain. First, the expropriator must enter a private property. This circumstance is present in the instant case, when by virtue of the lease agreement the Republic, through the AFP, took possession of the property of Castellvi. Second, the entrance into private property must be for more than a momentary period. "Momentary" means, "lasting but a moment; of but a moment's duration". The word "momentary" when applied to possession or occupancy of (real) property should be construed to mean "a limited period" not indefinite or permanent. Third, the entry into the property should be under warrant or color of legal authority. This circumstance in the "taking" may be considered as present in the instant case, because the Republic entered the Castellvi property as lessee. Fourth, the property must be devoted to a public use or otherwise informally appropriated or injuriously affected. It may be conceded that the circumstance of the property being devoted to public use is present because the property was used by the air force of the AFP. Fifth, the utilization of the property for public use must be in such a way as to oust the owner and deprive him of all beneficial enjoyment of the property. We find merit in the contention of Castellvi that two essential elements in the "taking" of property under the power of eminent domain, namely: (1) that the entrance and occupation by the condemnor must be for a permanent, or indefinite period, and (2) that in devoting the property to public use the owner was ousted from the property and deprived of its beneficial use, were not present when the Republic entered and occupied the Castellvi property in 1947. (Republic vs. Vda. De Castellvi) 2. It was held that when the government takes away property from a private landowner for public use without going through the legal process of expropriation or negotiated sale, the aggrieved party may properly maintain a suit against the government without violating the doctrine of governmental immunity from suit without its consent. In the case at bar, since no annotation in favor of the government appears at the back of the certificate of title and plaintiff has not executed any deed of conveyance of any portion of the lot to the government, then she remains the owner of the lot. She could then bring an action to recover possession of the land anytime, because possession is one of the attributes of ownership. However, since such action is not feasible at this time since the lot has been used for other purposes, the only relief left is for the government to make due compensationprice or value of the lot at the time of the taking. (Amigable vs. Cuenca) Normally, the time of the taking coincides with the filing of the complaint for expropriation. Hence, many rulings of this Court have equated just compensation with the value of the property as of the time of filing of the complaint consistent with the above provision of the Rules. So too, where the institution of the action

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precedes entry into the property, the just compensation is to be ascertained as of the time of the filing of the complaint. A number of circumstances must be present in the taking of p roperty for purposes of eminent domain: (1) the expropriator must enter a private property; (2) the entrance into private property must be for more than a momentary period; (3) the entry into the property should be under warrant or color of legal authority; (4) the property must be devoted to a public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way to oust the owner and deprive him of all beneficial enjoyment of the property. (NAPOCOR vs. CA) 4. Nominally, 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 to impose only a burden upon the owner of condemned property, without loss of title and possession. It is unquestionable that real property may, through expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and services to allow inter-service connection between both telephone systems is not much different. In either case private property is subjected to a burden for public use and benefit. (Republic vs. PLDT) Indeed, provisions for COMELEC Tima have been made by amendment of the franchises of radio and television broadcast stations and, until the present case was brought, such provisions had not been thought of as taking property without just compensation. Art. XII, 11 of the Constitution authorizes the amendment of franchises for "the common good." What better measure can be conceived for the common good than one for free air time for the benefit not only of candidates but even more of the public, particularly the voters, so that they will be fully informed of the issues in an election? "[I]t is the right of the viewers and listeners, not the right of the broadcasters, which is paramount. (TELEBAP vs. COMELEC)

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ED: For Public Use 1. P.D. 1224 defines socialized housing as, the construction of dwelling units for the middle and lower class members of our society, including the construction of the supporting infrastructure and other facilities. The public use requirement for a valid exercise of the power of eminent domain is a flexible and evolving concept influenced by changing conditions. The taking to be valid must be for public use. As long as the purpose of the taking is public, then the power of eminent domain comes into play. It is accurate to state then that at present, whatever may be beneficially employed for the general welfare satisfies the requirement of public use. Ergo, socialized housing falls within the confines of public use. (Sumulong vs. Guerrero) The term public use, not having been otherwise defined by the constitution, must be considered in its general concept of meeting a public need or a public exigency. (Manosca vs. CA) More particularly, with respect to the element of public use, the expropriator should commit touse the property pursuant to the purpose stated in the petition for expropriation filed, failing which, it should file another petition for the new purpose. If not, it is then incumbent upon the expropriator to return the said property to its private owner, if the latter desires to reacquire the same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper exercise of the power of eminent domain, namely, the particular public purpose for which the property will be devoted. Accordingly, the private property owner would be denied due process of law, and the judgment would violate the property owners right to justice, fairness, and equity. (MCIAA vs. Lozada)

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ED: Just Compensation 1. The method of ascertaining just compensation constitutes impermissible encroachment to judicial prerogatives. It tends to render the courts inutile in a matter in which under the Constitution is reserved to it for financial determination. The valuation in the decree may only serve as guiding principle or one of the factors in determining just compensation, but it may not substitute the courts own judgment as to what amount should be awarded and how to arrive at such amount. The determination of just compensation is a judicial function. The executive department or the legislature may make the initial determination but when a

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party claims a violation of the guarantee inthe Bill of Rights that the private party may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the courts findings. Much less can the courts be precluded from looking into the justness of the decreed compensation. (EPZA vs. Dulay) We find, however, that the Court of Appeals erred in declaring that Civil Case No. 7327 was not an expropriation case. It was precisely in the exercise of the state's power of eminent domain under B.P. Blg. 340 that expropriation proceedings were instituted against the owners of the lots sought to be expropriated. B.P. Blg. 340 did not, by itself, lay down the procedure for expropriation. The law merely described the specific properties expropriated and declared that just compensation was to be determined by the court. It designated the then Ministry of Public Works and Highways as the administrator in the "prosecution of the project." Thus, in the absence of a procedure in the law for expropriation, reference must be made to the provisions on eminent domain in Rule 67 of the Revised Rules of Court. (De Knecht vs. CA) Private property shall not be taken for public use without just compensation. The Republic disregarded the foregoing provision when it failed and refused to pay respondents predecessors-in-interest the just compensation for Lots 932 and 939.The Court of Appeals is correct in saying that Republics delay is contrary to the rules of fair play. In jurisdictions similar to ours, where an entry to the expropriated property precedes the payment of compensation, it has been held that if the compensation is not paid in a reasonable time, the party may be treated as a trespasser ab initio. (Republic vs. Lim) The concept of just compensation contemplates of just and timely payment; it embraces not only the correct determination of the amount to be paid to the landowner, but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot, as Land Bank of the Philippines v. Court of Appeals instructs, be considered just, for the owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for years before actually receiving the amount necessary to cope with his loss. (Landbank vs. DARAB) Damages and Interest as Part of Just compensation 1. However, in taking respondents property without the benefit of expropriation proceedings and without payment of just compensation, the City of Pasig clearly acted in utter disregard of respondents proprietary rights. Such conduct cannot be countenanced by the Court. For said illegal taking, the City of Pasig should definitely be held liable for damages to respondents. Again, in Manila International 20 Airport Authority v. Rodriguez, the Court held that the government agencys illegal occupation of the owners property for a very long period of time surely resulted in pecuniary loss to the owner. The Court held as follows: Such pecuniary loss entitles him to adequate compensation in the form of actual or compensatory damages, which in this case should be the legal interest (6%) on the value of the land at the time of taking, from said point up to full payment by the MIAA. This is based on the principle that interest "runs as a matter of law and follows from the right of the landowner to be placed in as good position as money can accomplish, as of the date of the taking." (Hon. Eusebio vs. Luis) 2. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interest on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred. (Land Bank vs. Rivera) This is based on the principle that interest runs as a matter of law and follows from the right of the landowner to be placed in as good position as money can accomplish, as of the date of taking . (Sec. of DPWH vs. Sps. Tecson)

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ED: Judicial Review

Mun. of Binan vs. Garcia The determination by the Court of "the just compensation for the property sought to be taken." This is done by the 23 Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. Obviously, one or another of the parties may believe the order to be erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal of the order by taking an appeal therefrom. A similar two-phase feature is found in the special civil action of partition and accounting under Rule 69 of the Rules 24 of Court. The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a coownership in fact exists, and a partition is proper (i.e., not otherwise legally prescribed) and may be made by 25 voluntary agreement of all the parties interested in the property. This phase may end with a declaration that plaintiff 26 is not entitled to have a partition either because a co-ownership does not exist, or partition is legally prohibited. It may end, on the other hand, with an adjudgment that a co-ownership does in truth exist, partition is proper in the premises and an accounting of rents and profits received by the defendant from the real estate in question is in 27 order. In the latter case, "the parties may, ff they are able to agree, make partition among themselves by proper 28 instruments of conveyance, and the court shall confirm the partition so agreed upon. , In either case i.e. either the action is dismissed or partition and/or accounting is decreed the order is a final one, and may be appealed by any 29 party aggrieved thereby. The second phase commences when it appears that "the parties are unable to agree upon the partition" directed by the court. In that event partition shall be done for the parties by the Court with the assistance of not more than three 30 (3) commissioners. This second stage may well also deal with the rendition of the accounting itself and its approval by the Court after the parties have been accorded opportunity to be heard thereon, and an award for the recovery by 31 the party or parties thereto entitled of their just share in the rents and profits of the real estate in question." Such an order is, to be sure, final and appealable. ED: Allied Provisions Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the operation of any privately-owned public utility or business affected with public interest. (Article XII) The above provision pertains to the right of the State in times of national emergency, and in the exercise of its police power, to temporarily take over the operation of any business affected with public interest. The duration of the emergency itself is the determining factor as to how long the temporary takeover by the government would last. The temporary takeover by the government extends only to the operation of the business and not to the ownership thereof. As such the government is not required to compensate the private entity-owner of the said business as there is no transfer of ownership, whether permanent or temporary. The private entity-owner affected by the temporary takeover cannot, likewise, claim just compensation for the use of the said business and its properties as the temporary takeover by the government is in exercise of its police power and not of its power of eminent domain.

Article XII, section 17 of the 1987 Constitution envisions a situation wherein the exigencies of the times necessitate the government to temporarily take over or direct the operation of any privately owned public utility or business affected with public interest. It is the welfare and interest of the public which is the paramount consideration in determining whether or not to temporarily take over a particular business. Clearly, the State in effecting the temporary takeover is exercising its police power. Police power is the most essential, insistent, and illimitable of powers. Its exercise therefore must not be unreasonably hampered nor its exercise be a source of obligation by the government in the absence of damage due to arbitrariness of its exercise. Thus, requiring the government to pay reasonable

compensation for the reasonable use of the property pursuant to the operation of the business contravenes the Constitution. (Agan vs. PIATCO) Eminent Domain distinguished from Police Power 1. We think it is settled principle, growing out of the nature of well-ordered civil society, that every holder of property, however absolute and unqualified may be his title, holds it under the implied liability that his use of it may be so regulated that is shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. . . . Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restrain and regulations establish by law, as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient. This is very different from the right of eminent domain, the right of a government to take and appropriate private property to public use, whenever the public exigency requires it; which can be done only on condition of providing a reasonable compensation therefor. The power we allude to is rather the police power, the power vested in the legislature by the constitution, to make, ordain, and establish all manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the subjects of the same. It is much easier to perceive and realize the existence and sources of this power than to mark its boundaries or prescribe limits to its exercise. 2. It is not a valid exercise of police power.(INSTEAD IT SHOULD BE EMINENT DOMAIN) The ordinance is unreasonable and oppressive, in that it operates to permanently deprive appellants of the right to use their own property; hence, it oversteps the bounds of pp, and amounts to a taking of appellants property without just compensation. While property may be regulated in the interest of the general welfare, and, in its pursuit, the State may prohibit structure oppressive to sight, the State may not, under guise of pp, permanently divest owners of the beneficial use of their property and practically confiscate them solely to preserve or assure the aesthetic appearance of the community. The appellants would, in effect, be constrained to let their land remain idle and unused for their obvious purpose for which is best suited, being urban in character. To legally achieve that result, the municipality must give appellants just compensation and an opportunity to be heard. (Pp vs. Fajardo) Police power is exercised without provision for just compensation for its paramount consideration is public welfare. It is the state authority to enact legislation that may be interfere with personal liberty or property in order to promote the general welfare. It consists of 2 essential elements. First, it is an imposition of restraint upon liberty or property. Second, the power is exercised for the benefit of the common good. Its definition in elastic terms underscores its all-encompassing and comprehensive embrace. It is and still is the most essential, insistent, and illimitable of the States powers. It is familiar knowledge that unlike the power of eminent domain, pp is exercised without provision for just compensation for its paramount consideration is public welfare. (Agan vs. PIATCO) Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the 21 health, morals, peace, education, good order or safety and general welfare of the people." The State, through the legislature, has delegated the exercise of police power to local government units, as agencies of 22 the State. This delegation of police power is embodied in Section 16 of the Local Government Code of 23 1991 (R.A. No. 7160), known as the General Welfare Clause, which has two branches. "The first, known as the general legislative power, authorizes the municipal council to enact ordinances and make regulations not repugnant to law, as may be necessary to carry into effect and discharge the powers and duties conferred upon the municipal council by law. The second, known as the police power proper, authorizes the municipality to enact ordinances as may be necessary and proper for the health and safety, prosperity,

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morals, peace, good order, comfort, and convenience of the municipality and its inhabitants, and for the protection of their property." he Court joins the CA in finding that the real intent of the setback requirement was to make the parking space free for use by the public, considering that it would no longer be for the exclusive use of the respondents as it would also be available for use by the general public. Section 9 of Article III of the 1987 Constitution, a provision on eminent domain, provides that private property shall not be taken for public use without just compensation. (Fernando vs. St. Scho)

TAXATION
What is the Power of Taxation? 1. Taxes are the lifeblood of the government and their prompt and certain availability is an imperious need. The Government has two ways in collecting tax: a. Going after all the heirs and collecting from each one of them the amount of tax proportionate to the inheritance received. b. Subjecting the property of the estate to the payment of the tax due to the estate (lien against all property and rights for unpaid income tax) An heir is liable for the assessment as an heir and as a holder-transferee of property belonging to the estate/taxpayer. As a holder of the property, he is liable for the tax up to the amount of the property in his possession. The reason is that the Government has a lien on such property. This second remedy is the very avenue the Government took in the case to collect the tax in this case. (Commissioner vs. Pineda) It is said that taxes are what we pay for civilization society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one's hard earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. The government for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values. This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power. But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate, as it has here, that the law has not been observed. (Commissioner vs. Algue) 3. As the protection and promotion of the sugar industry is a matter of public concern, the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Taxation may be made the implement of the states police power. It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that inequalities which result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation. (Lutz vs. Araneta) The power to tax is an attribute of sovereignty. It is the strongest of all the powers of the government. There are restrictions as both the due process and equal protection clauses may properly be invoked. Due process clause may be invoked where a tax statute is so arbitrary as to find no support in the Constitution.

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The State is free to select the subjects of taxation and inequalities consequent to its exercise no constitutional limitation. The equal protection clause is inspired by the noble concept of approximating the ideal of the laws benefits being available to all and the affairs of men being governed by that serene and impartial uniformity. The Constitution does not require things which are different in fact or opinion to be treated in laws as though they were the same. Uniformity of taxation is quite similar to the standard of equal protection clause. Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation. Tax should apply to all persons, firms, and corporations placed in similar situations. Taxpayers may be classified into different categories where it rests on real differences. (Sison vs. Ancheta) When is the Power of Taxation exercised by the Legislature? 1. Municipal corporations have no inherent power to tax; their power must always yield to legislative act which is superior having been passed upon by the state itself which has the inherent power to tax. Congress has the power of control over local governments; if Congress can grant a municipal corporation the power to tax certain matters, it can also provide for exemptions or even take back the power. Local Government have no power to tax instrumentalities of the National Government. PAGCOR is therefore exempt from local taxes. This doctrine emanates from the supremacy of the National Government over local governments. The power to tax cannot be allowed to defeat an instrumentality or creation of the very entity which has the inherent power to yield it. The power of local government to impose taxes and fees is always subject to limitations which Congress may provide by law. The power of local government to "impose taxes and fees" is always subject to "limitations" which Congress may provide by law. Since PD 1869 remains an "operative" law until "amended, repealed or revoked" (Sec. 3, Art. XVIII, 1987 Constitution), its "exemption clause" remains as an exception to the exercise of the power of local governments to impose taxes and fees. It cannot therefore be violative but rather is consistent with the principle of local autonomy. (Basco vs. PAGCOR) Article X Section 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.

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Elements for valid exercise (Taxation) 1. Article VI, 1987 Philippine Constitution

SECTION 28. (1) The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. (2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. (3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. (4) No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress. SECTION 29. (1) No money shall be paid out of the Treasury except in pursuance of an appropriation made by law. (2) No public money or property shall be appropriated, applied, paid, or employed, directly or indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian institution, or system of religion, or of any priest, preacher, minister, or other religious teacher, or dignitary as such, except when such priest, preacher, minister, or dignitary is assigned to the armed forces, or to any penal institution, or government orphanage or leprosarium. (3) All money collected on any tax levied for a special purpose shall be treated as a special fund and paid out for such purpose only. If the purpose for which a special fund was created has been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the Government. 2. Now for equal protection. The applicable standard to avoid the charge that there is a denial of this constitutional mandate whether the assailed act is in the exercise of the lice power or the power of eminent domain is to demonstrated that the governmental act assailed, far from being inspired by the attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumtances which if not Identical are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the 20 group equally binding on the rest." That same formulation applies as well to taxation measures. The equal protection clause is, of course, inspired by the noble concept of approximating the Ideal of the laws benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the Idea of law. There is, however, wisdom, as well as realism in these words of Justice Frankfurter: "The equality at which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, address to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they 21 were the same." Hence the constant reiteration of the view that classification if rational in character is 22 allowable. As a matter of fact, in a leading case of Lutz V. Araneta, this Court, through Justice J.B.L. Reyes, went so far as to hold "at any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one 23 particular class for taxation, or exemption infringe no constitutional limitation.'"

7. Petitioner likewise invoked the kindred concept of uniformity. According to the Constitution: "The rule of 24 taxation shag be uniform and equitable." This requirement is met according to Justice Laurel in Philippine 25 Trust Company v. Yatco, decided in 1940, when the tax "operates with the same force and effect in every 26 place where the subject may be found. " He likewise added: "The rule of uniformity does not call for 27 perfect uniformity or perfect equality, because this is hardly attainable." The problem of classification did not present itself in that case. It did not arise until nine years later, when the Supreme Court held: "Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for 28 purposes of taxation, ... . As clarified by Justice Tuason, where "the differentiation" complained of "conforms to the practical dictates of justice and equity" it "is not discriminatory within the meaning of this 29 clause and is therefore uniform." There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar 30 situation." 8. Further on this point. Apparently, what misled petitioner is his failure to take into consideration the distinction between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. Taxpayers may be classified into different categories. To repeat, it. is enough that the classification must rest upon substantial distinctions that make real differences. In the case of the gross income taxation embodied in Batas Pambansa Blg. 135, the, discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. Taxpayers who are recipients of compensation income are set apart as a class. As there is practically no overhead expense, these taxpayers are e not entitled to make deductions for income tax purposes because they are in the same situation more or less. On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income. There is ample justification then for the Batasang Pambansa to adopt the gross system of income taxation to compensation income, while continuing the system of net income taxation as regards professional and business income. 9. Nothing can be clearer, therefore, than that the petition is without merit, considering the (1) lack of factual 31 foundation to show the arbitrary character of the assailed provision; (2) the force of controlling doctrines on due process, equal protection, and uniformity in taxation and (3) the reasonableness of the distinction between compensation and taxable net income of professionals and businessman certainly not a suspect classification. (Sison vs. Ancheta) 3. Powers of taxation may be delegated to local governments on matters of local concern. By necessary implication, the legislative power to create political corporations for purposes of local self-government carries with it the power to confer on such local government agencies the power to tax. In delegating the authority, the State is not limited to the exact measure of that which is exercised by itself. When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be delegated such measure of power to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes. Taking of property without due process of law may not be passed over under the guise of taxing power, except when the latter is exercised lawfully as when: a. The tax is for a public purpose b. The rule of uniformity of taxation is observed c. Either the person or property taxed is within the jurisdiction of the government levying the tax d. In the assessment and collection of certain kinds if taxes notice and opportunity for hearing are provided Delegation of taxing power to local governments may not be assailed on the ground of double taxation. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same

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governmental entity or by the same jurisdiction for the same purpose, but not in case where one tax is imposed by the State and the other by the city of municipality. An increase in the tax alone would not not support the claim that the tax is oppresive, unjust and confiscatory. Municipal corporations are allowed much discretion in determining the rated of imposable taxes. Municipalities are empowered to impose not only municipal license but just and uniform taxes for public purposes. A municipal ordinance which imposes a tax of P0.01 for every gallon of soft drinks produced in the municipality does not partake of a percentage tax. The tax is levied on the produce and not on the sales. This is in line with the constitutional policy of according the widest possible autonomy to local government units in matters of local taxation. A municipal tax on soft drinks is not a specific tax. Specific taxes are those imposed on specified articles. Soft drinks is not one of those specified. (Pepsi-Cola vs. Mun. of Tanauan) Uniformity of taxation merely requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in priveleges and liablities. Uniformity does not forfend classification as long as: a. The standards that are used therefor are substantial and not arbitrary b. The categorization is germane to achieve the legislative purpose c. The law applies, all things being equal, to both present and future conditions d. The classification applies equally well to all those belonging to the same class. With the legislature lies in the discretion to determine the nature (kind), object (purpose), extent (rate), coverage (subjects)and situs (place) of taxation, and the Supreme Court cannot freely delve into those matters. Only when a tax measure becomes so unconscionable and unjust as to amount to confiscation of property can courts strike it down, for, despite all its plenitude, the power of tax cannot override constitutional proscriptions. The due process clause may correctly be invoked only when there is a clear contravention of inherent or constitutional limitations in the exercise of the tax power. Limiting allowable deductions from gross income is neither discordant with, nor opposed to the net income tax concept. RA 7496 did not therefore adopt a gross income taxation scheme. (Tan vs. Del Rosario) In accordance with the rule that the taxing power must be exercised for public purposes only, money raised by taxation can be expanded only for public purposes and not for the advantage of private individuals. It is a general rule that the legislature is without power to appropriate public revenues for anything but a public purpose.It is the essential character if the direct object of the expenditure which must determine its validity as justifying a tax and not the magnitude of the interests to be affected nor the degree to which the general advantage of the community, and thus the public welfare may be ultimately benefited by their promotion. Incidental advantage to the public or to the statedoes not justify their aid by the use of public money. The right of the legislature to appropriate public funds is correlative with its right to tax, and, under constitutional provisions against taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another purpose. (Pascual vs. Sec. of Public works) The argument against double taxation may not be invoked where one tax is imposed by the state and the other is imposed by the city, it being widely recognized that there is nothing inherently obnoxious in the requirement that license fees or taxes be exacted withr respect to the same occupation, calling or activity by both the state and the political subdivisions thereof. Where Congress has clearly expressed its intention, the statute must be sustained even though double taxation results. Equality and uniformity in taxation means that all taxable articles or kind of property of the same class shall be taxed at the same rate. A tax is considered uniform when it operates with the same force and effect in every place where the subject may be found. Where the statute or ordinance in question applies equally to all persons, firms and corporations placed in similar situation there is no infringement of the rule on equality. Inequalities which result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation. (City of Baguio vs. De Leon)

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The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution. The keeping of a lodging and a boarding house and a restaurant for its members do not constitute business in the ordinary acceptance of the word, but an institution used exclusively for religious, charitable and educational purposes,and as such, it is entitled to be exempted from taxation. The exemption in favor of property used exclusively for charitable or educational purposes is not limited to property actually indispensable therfor, but extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes. The exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purpose. The lease of the first floor to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purposes of education. Tax is properly imposed because the first floor is being used for commercial purposes. (Abra Valley vs. Aquino) The admission of pay-patients does not detract from the charitable character of a hospital, if all of its funds are devoted exclusively to the maintenance of the institution as a public charity. Where rendering charity is its primary object, and the funds derived from payments made by its patients able to pay are devoted to the benevolent purposes of the institution, the mere fact that a profit has been made will not deprive the hospital of its benevolent character. The exemption in favor of property used exclusively for charitable or educational purposes is not l imited to property actually indispensable therefor, but extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes. All lands, buildings and improvements used exclusively for religious, charitable or educational purposes shall be exempt from taxation regardless of whether or not material profits are derived from the operation of the institutions in question. In other words, Congress may, if it deems fit to do so, impose taxes upon such profits but said lands, buildings and improvements are beyond its taxing power. (Herrera vs. QC Assessment Board) The stabilization fees collected are in the nature of a tax which is within the power of the state to impose for the promotion of the sugar industry. The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for the stabilization of the sugar industry . The levy is primarily in the exercise of the police power of the State. Revenues derived from tax cannot be used for purely private purposes or for the exclusive benefit of private persons. (Gaston vs. Republic Planters Bank) To determine whether an enterprise is a charitable institution/ entity or not, the elements which should be considered include the statute creating the enterprise, its corporate purpose, its constitution and by laws, the methods of administration, the nature of the actual work performed, the character of the services rendered, the indefiniteness of the benefeciaries, and the use and occupation of the properties. The test whether an enterprise is charitable or not is whether it exists to carry out a purpose recognized in law as charitable or whether it is maintained for gain, profit, or private advantage. A charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients, whether out-patient, or confined in the hospital, or receives subsidies from the government, so long as the money received is devoted or used altogether to the charitable object which is intended to achieve, and no money inures to the private benefit which it is intended to achieve, and no money inures to the private benefit of the persons managing and operating the institution. The Lung Center does not lose its character as a charitable institution simply because the gift or donation is in the form of subsidies granted by the government. Those portions of Ling Centers real property that are leased to private entities are not exempt fr om real property taxes as those are not actually, directly and exclusively used for charitable purposes. Taxation is the rule and exemptio is the exception the effect of an exemption is an equivalent to an appropriation. A claim for exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. The tax exemption under Section 28(3) Article VI of the 1987 Philippine Constitution covers property tax only. For lands, buildings and improvements of the charitable institution to be considered exempt, the same should not be exclusively used for charitable purposes it is required that such property be used actually and directly for such purposes.

If real property is used for one or more commercial purposes, it is not exclusively used for the exempted purposes but is subject for taxation the words dominant use or principal use cannot be substituted for the words used exclusively without doing violence to the Constitutions and the law. Solely is synonimous with exclusively. (Lung Center of the Phil. vs. Quezon City)

Tax Exemptions 1. Art. XIV, Sec. 4 (3) All revenues and assets of non-stock, non-profit educational institutions used actually, directly, and exclusively for educational purposes shall be exempt from taxes and duties. Upon the dissolution or cessation of the corporate existence of such institutions, their assets shall be disposed of in the manner provided by law. 2. Art. VI, Sec. 28 (3); (4) (3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation. (4) No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress.