Gancayo v Quezon City

G.R. No. 177807

October 11, 2011

FACTS
● On March 27, 1956, Quezon City Council issued Ordinance no. 2904 entitled “An
Ordinance requiring the Construction of Arcades, for Commercial Building to be
Constructed in Zones Designated as Business Zones in the Zoning Plan of Quezon
City, and Providing Penalties in Violation thereof”
○ An arcade is defined as any portion of a building above the first floor
projecting over the sidewalk beyond the first storey wall used as protection for
pedestrians against rain or sun.
● At the outset, it bears emphasis that at the time Ordinance No. 2904 was passed by
the city council, there was yet no building code passed by the national legislature.
Thus, the regulation of the construction of buildings was left to the discretion of local
government units.
● The ordinance covered the property of Justice Gancayco. Subsequently, sometime in
1965, Justice Gancayco sought the exemption of a two-storey building being
constructed on his property from the application of Ordinance No. 2904 that he be
exempted from constructing an arcade on his property.
○ On 2 February 1966, the City Council acted favorably on Justice Gancayco’s
request
● in March 2003, the Metropolitan Manila Development Authority (MMDA) conducted
operations to clear obstructions along the sidewalk of EDSA in Quezon City
○ The resolution authorized the MMDA and local government units to "clear the
sidewalks, streets, avenues, alleys, bridges, parks and other public places in
Metro Manila of all illegal structures and obstructions."
● On 28 April 2003, the MMDA sent a notice of demolition to Justice Gancayco alleging
that a portion of his building violated the National Building Code of the Philippines
(Building Code)
○ The MMDA gave Justice Gancayco fifteen (15) days to clear the portion of the
building that was supposed to be an arcade along EDSA.
○ Justice Gancayco did not comply with the notice. Soon after the lapse of the
fifteen (15) days, the MMDA proceeded to demolish the party wall, or what
was referred to as the "wing walls," of the ground floor structure
● On 29 May 2003, temporary restraining order and/or writ of preliminary injunction
before the Regional Trial Court (RTC) of Quezon City
● He alleged that the ordinance authorized ​the taking of private property without due
process of law and just compensation, because the construction of an arcade will
require 67.5 square meters from the 375 square meter property. In addition, he
claimed that the ordinance was selective and discriminatory in its scope and
application when it allowed the owners of the buildings located in the Quezon
City-San Juan boundary to Cubao Rotonda, and Balete to Seattle Streets to
construct arcades at their option​.
 ○ He thus sought the declaration of nullity of Ordinance No. 2904 and the
payment of damages. Alternately, he prayed for the payment of just
compensation should the court hold the ordinance valid.
● The City Government of Quezon City claimed that the ordinance was a valid exercise
of police power, regulating the use of property in a business zone​. In addition, it
pointed out that Justice Gancayco was already barred by ​estoppel, laches and
prescription.
● MMDA alleged that Justice Gancayco could not seek the nullification of an ordinance
that he had already violated, and that the ordinance enjoyed the presumption of
constitutionality. It further stated that the questioned property was a public nuisance
impeding the safe passage of pedestrians. Finally, the MMDA claimed that it was
merely implementing the legal easement established by Ordinance No. 2904.
● The RTC rendered its Decision on 30 September 2003 in favor of Justice Gancayco.
○ It held that the questioned ordinance was unconstitutional, ruling that it
allowed the taking of private property for public use without just compensation
● The MMDA thereafter appealed from the Decision of the trial court. On 18 July 2006,
the Court of Appeals (CA) partly granted the appeal
● The CA upheld the validity of Ordinance No. 2904 and lifted the injunction against the
enforcement and implementation of the ordinance. ​In so doing, it held that the
ordinance was a valid exercise of the right of the local government unit to promote
the general welfare of its constituents pursuant to its police powers.
○ The CA further stated that there was no taking of private property, since the
owner still enjoyed the beneficial ownership of the property, to wit:

Even with the requirement of the construction of arcaded sidewalks within his
commercial lot, appellee still retains the beneficial ownership of the said
property. Thus, there is no "taking" for public use which must be subject to
just compensation

● the CA held that the MMDA went beyond its powers when it demolished the subject
property. It further found that Resolution No. 02-28 only refers to sidewalks, streets,
avenues, alleys, bridges, parks and other public places in Metro Manila, thus
excluding Justice Gancayco’s private property. Lastly, the CA stated that ​the MMDA
is not clothed with the authority to declare, prevent or abate nuisances​.

ISSUES:

(1) Whether or not Justice Gancayco was estopped from assailing the validity of
Ordinance No. 2904
(2) Whether or not Ordinance no. 2904 is constitutional
(3) Whether or not the Wing Wall of Justice Gancayco’s building is a public nuisance
(4) Whether or not the MMDA legally demolished the property of Justice Gancayco

RULING:
 1. We find that petitioner was not guilty of estoppel. When it made the undertaking to
comply with all issuances of the BIR, which at that time it considered as valid,
petitioner did not commit any false misrepresentation or misleading act.
2. Justice Gancayco may not question the ordinance on the ground of equal protection
when he also benefited from the exemption. It bears emphasis that Justice Gancayco
himself requested for an exemption from the application of the ordinance in 1965 and
was eventually granted one. Moreover, he was still enjoying the exemption at the
time of the demolition as there was yet no valid notice from the city engineer. Thus,
while the ordinance may be attacked with regard to its different treatment of
properties that appears to be similarly situated, Justice Gancayco is not the proper
person to do so.
3. The fact that in 1966 the City Council gave Justice Gancayco an exemption from
constructing an arcade is an indication that the wing walls of the building are not
nuisances per se. The wing walls do not per se immediately and adversely affect the
safety of persons and property. The fact that an ordinance may declare a structure
illegal does not necessarily make that structure a nuisance. Clearly, when Justice
Gancayco was given a permit to construct the building, the city council or the city
engineer did not consider the building, or its demolished portion, to be a threat to the
safety of persons and property. This fact alone should have warned the MMDA
against summarily demolishing the structure.

Sangguniang Bayan cannot declare a particular thing as a nuisance per se and order
its condemnation. It does not have the power to find, as a fact, that a particular thing
is a nuisance when such thing is not a nuisance per se; nor can it authorize the
extrajudicial condemnation and destruction of that as a nuisance which in its nature,
situation or use is not such. Those things must be determined and resolved in the
ordinary courts of law.

MMDA illegally demolished Gancayco's property.

Southern Luzon Drug Corporation (SDLC) vs Department of Social Welfare and

Development (DSWD)
G.R. No. 199669
April 25, 2017

FACTS

● On April 23, 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of
Senior Citizens to Nation-Building, Grant Benefits and Special Privileges and For
Other Purposes," was enacted. Under the said law, a senior citizen, who must be at
least 60 years old and has an annual income of not more than P60,000.00, may avail
of the privileges provided in Section 4 thereof, one of which is 20% discount on the
purchase of medicines. The said provision states:
○ Sec. 4. Privileges for the Senior Citizen. - x x x:

a) the grant of twenty percent (20%) discount from all establishments relative
to utilization of transportation services, hotels and similar lodging
 establishment, restaurants and recreation centers and purchase of medicine
anywhere in the country: Provided, That private establishments may claim the
cost as tax credit[.]
● To recoup the amount given as discount to qualified senior citizens, covered
establishments can claim an equal amount as tax credit which can be applied against
the income tax due from them.
● On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A. No.
9257, amending some provisions of R.A. No. 7432. The new law retained the 20%
discount on the purchase of medicines but removed the annual income ceiling
thereby qualifying all senior citizens to the privileges under the law.
○ Further, R.A. No. 9257 modified the tax treatment of the discount granted to
senior citizens, from tax credit to tax deduction from gross income, computed
based on the net cost of goods sold or services rendered.
○ SEC. 4. Privileges for the Senior Citizens. - The senior citizens shall be
entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative
to the utilization of services in hotels and similar lodging establishments,
restaurants and recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of senior citizens, including
funeral and burial services for the death of senior citizens;

The establishment may claim the discounts granted under (a), (f), (g) and (h)
as tax deduction based on the net cost of the goods sold or services
rendered: Provided, That the cost of the discount shall be allowed as
deduction from gross income for the same taxable year that the discount is
granted. Provided, further, That the total amount of the claimed tax deduction
net of value-added tax if applicable, shall be included in their gross sales
receipts for tax purposes and shall be subject to proper documentation and to
the provisions of the National Internal Revenue Code, as amended.
(Emphasis ours)
● On May 28, 2004, the DSWD issued the Implementing Rules and Regulations (IRR)
of R.A. No. 9257. Article 8 of Rule VI of the said IRR provides:
○ Article 8. Tax Deduction of Establishments. - The establishment may claim
the discounts granted under Rule V, Section 4 - Discounts for Establishments;
Section 9, Medical and Dental Services in Private Facilities and Sections 10
and 11 -Air, Sea and Land Transportation as tax deduction based on the net
cost of the goods sold or services rendered. Provided, That the cost of the
discount shall be allowed as deduction from gross income for the same
taxable year that the discount is granted; Provided, further, That the total
amount of the claimed tax deduction net of value-added tax if applicable, shall
be included in their gross sales receipts for tax purposes and shall be subject
to proper documentation and to the provisions of the National Internal
Revenue Code, as amended; Provided, finally, that the implementation of the
tax deduction shall be subject to the Revenue Regulations to be issued by the
 Bureau of Internal Revenue (BIR) and approved by the Department of
Finance (DOF). (Emphasis ours)
● The change in the tax treatment of the discount given to senior citizens did not sit
well with some drug store owners and corporations, claiming it affected the
profitability of their business.
● Thus, on January 13, 2005, I Carlos Superdrug Corporation (Carlos Superdrug),
together with other. corporation and proprietors operating drugstores in the
Philippines, filed a Petition for Prohibition with Prayer for Temporary Restraining
Order (TRO) I and/or Preliminary Injunction before this Court.
○ assailing the constitutionality of Section 4(a) of R.A. No. 9257 primarily on the
ground that it amounts to taking of private property without payment of just
compensation.
○ Case was dismissed for lack of merit
● Meanwhile, on March 24, 1992, R.A. No. 7277 pertaining to the "Magna Carta for
Disabled Persons" was enacted, codifying the rights and privileges of PWDs.
● Thereafter, on April 30, 2007, R.A. No. 9442 was enacted, amending R.A. No. 7277.
One of the salient amendments in the law is the insertion of Chapter 8 in Title 2
thereof, which enumerates the other privileges and incentives of PWDs, including the
grant of 20% discount on the purchase of medicines. Similar to R.A. No. 9257,
covered establishments shall claim the discounts given to PWDs as tax deductions
from the gross income, based on the net cost of goods sold or services rendered.
● On February 26, 2008, the petitioner filed a Petition for Prohibition with Application for
TRO and/or Writ of Preliminary Injunction with the CA, seeking to declare as
unconstitutional (a) Section 4(a) of R.A. No. 9257, and (b) Section 32 of R.A. No.
9442 and Section 5.1 of its IRR, insofar as these provisions only allow tax deduction
on the gross income based on the net cost of goods sold or services rendered as
compensation to private establishments for the 20% discount that they are required
to grant to senior citizens and PWDs
○ Further, the petitioner prayed that the respondents be permanently enjoined
from implementing the assailed provisions.

ISSUES

Legaspi vs City of Cebu

GR No. 159110
December 10, 2013

FACTS

● On January 27, 1997 the Sangguniang Panlungsod of the City of Cebu enacted
Ordinance No. 1664 to authorize the traffic enforcers of Cebu City to immobilize any
motor vehicle violating the parking restrictions and prohibitions defined in Ordinance
No. 801 (Traffic Code of Cebu City).
● On July 29, 1997, Atty. Bienvenido Jaban (Jaban,Sr.) and his son Atty. Bienvenido
Douglas Luke Bradbury Jaban (Jaban,Jr.) brought suit in the RTC in Cebu City
against the City of Cebu, seeking the declaration of Ordinance No. 1644 as
 unconstitutional for being in violation of due process and for being contrary to law,
and damages.
● Their complaint alleged that on June 23, 1997, Jaban Sr. had properly parked his car
in a paying parking area on Manalili Street, Cebu City to get certain records and
documents from his office; that upon his return after less than 10 minutes, he had
found his car being immobilized by a steel clamp, and a notice being posted on the
car to the effect that it would be a criminal offense to break the clamp;
○ that he had been infuriated by the immobilization of his car because he had
been thereby rendered unable to meet an important client on that day; that his
car was impounded for three days, and was informed at the office of the
CITOM that he had first to pay₱4,200.00as a fine to the City Treasurer of
Cebu City for the release of his car;
○ the fine was imposed without any court hearing and without due process of
law, for he was not even told why his car had been immobilized
○ he had undergone a similar incident of clamping of his car on the early
morning of November 20, 1997 while his car was parked properly in a parking
lot in front of the San Nicolas Pasil Market in Cebu City without violating any
traffic regulation or causing any obstruction; that he was compelled to pay
₱1,500.00
○ without any court hearing and final judgment; that on May 19, 1997, Jaban, Jr.
parked his car in a very secluded place where there was no sign prohibiting
parking; that his car was immobilized by CITOM operative Lito Gilbuena; and
that he was compelled to pay the total sum of ₱1,400.00 for the release of his
car without a court hearing and a final judgment rendered by a court of justice
● On August 11, 1997, Valentino Legaspi (Legaspi) likewise sued in the RTC the City
of Cebu,T.C. Sayson, Ricardo Hapitan and John Does to demand the delivery of
personal property, declaration of nullity of the Traffic Code of Cebu City, and
damages
● the City Attorney of Cebu presented similar defenses, essentially stating that the
traffic enforcers had only upheld the law by clamping the vehicles of the plaintiffs;
● The City of Cebu and its co-defendants appealed to the CA, assigning the following
errors to the RTC, namely:
○ (a) the RTC erred in declaring that Ordinance No. 1664 was unconstitutional;
○ (b) granting, arguendo, that Ordinance No. 1664 was unconstitutional, the
RTC gravely erred in holding that any violation prior to its declaration as being
unconstitutional was irrelevant;
○ (c) granting, arguendo, that Ordinance No. 1664 was unconstitutional, the
RTC gravely erred in awarding damages to the plaintiffs;
○ (d) granting, arguendo, that the plaintiffs were entitled to damages, the
damages awarded were excessive and contrary to law; and
○ (e) the decision of the RTC was void, because the Office of the Solicitor
General (OSG) had not been notified of the proceedings.
● Defendants-appellants contend that the passage of Ordinance 1664is in accordance
with the police powers exercised by the City of Cebu through the Sangguniang
 Panlungsod and granted by RA 7160, otherwise known as the Local Government
Code.

ISSUES

● Whether Ordinance No. 1664 was enacted within the ambit of the legislative powers
of the City of Cebu
● Whether Ordinance No. 1664 complied with the requirements for validity and
constitutionality, particularly the limitations set by the Constitution and the relevant
statutes.

RULING

The petitions for review have no merit.

● The answer is in the affirmative. Indeed, with no issues being hereby raised against
the formalities attendant to the enactment of Ordinance No. 1664, we presume its full
compliance with the test in that regard. Congress enacted the LGC as the
implementing law for the delegation to the various LGUs of the State’s great powers,
namely: the police power, the power of eminent domain, and the power of taxation.
The LGC was fashioned to delineate the specific parameters and limitations to be
complied with by each LGU in the exercise of these delegated powers with the view
of making each LGU a fully functioning subdivision of the State subject to the
constitutional and statutory limitations.
● The tests of a valid ordinance are well established. A long line of decisions has held
that for an ordinance to be valid, it must not only be within the corporate powers of
the local government unit to enact and must be passed according to the procedure
prescribed by law, it must also conform to the following substantive requirements:
○ (1) must not contravene the Constitution or any statute;
○ (2) must not be unfair or oppressive;
○ (3) must not be partial or discriminatory;
○ (4) must not prohibit but may regulate trade;
○ (5) must be general and consistent with public policy; and
○ (6) must not be unreasonable.

City of Batangas vs Philippine Shell

GR No 195003
June 7, 2017

FACTS

● Batangas City is a local government unit created by virtue of its charter, Republic Act
No. 5495 (RA 5495). Under RA 5495, Batangas City constitutes a political body
corporate, and is endowed with powers which pertain to a municipal corporation
○ The Sangguniang Panlungsod is the legislative body of Batangas City.
● Shell Philippines Exploration, B.V. (SPEX) is a foreign corporation licensed to do
business in the Philippines.
 ○ In furtherance of the mandate of Presidential Decree No. 87 (PD 87) to
promote the discovery and production of indigenous petroleum, the
Department of Energy (DOE) executed Service Contract No. 38 (SC 38) with
SPEX under which SPEX was tasked to explore and develop possible
petroleum sources in North Western Palawan.
○ SPEX's exploration led to the discovery of an abundant source of natural gas
in the Malampaya field off the shores of Palawan, which thereafter gave rise
to the Malampaya Project. The Malampaya Project required the construction
of a 504-kilometer offshore pipeline for the transport of natural gas from
Malampaya field to Batangas, for treatment in PSPC's Tabangao Refinery.
● On May 28, 2001, the Sangguniang Panlungsod enacted the Assailed Ordinance
which requires heavy industries operating along the portions of Batangas Bay within
the territorial jurisdiction of Batangas City to construct desalination plants to facilitate
the use of seawater as coolant for their industrial facilities.
● Heavy industries subject of the Assailed Ordinance had until May 28, 2006 to comply
with its provisions. Among the facilities affected by the Assailed Ordinance is PSPC's
Tabangao Refinery.
● On May 23, 2006, PSPC filed against Batangas City and the Sangguniang
Panlungsod a Petition for Declaration of Nullity (PSPC Petition) before the RTC
praying that the Assailed Ordinance be declared null and void.
○ SPEX filed a petition-in-intervention (Intervention) praying for the same relief.
○ JG Summit Petrochemical Corporation (JG Summit) and First Gas Power
Corporation (First Gas) filed similar petitions
● PSPC averred that the Assailed Ordinance constitutes an invalid exercise of police
power as it failed to meet the substantive requirements for validity.
○ argued that the Assailed Ordinance contravenes the Water Code of the
Philippines (Water Code), and encroaches upon the power of the National
Water Resources Board (NWRB) to regulate and control the Philippines'
water resources.
○ PSPC alleged that the Assailed Ordinance unduly singles out heavy
industries, and holds them solely accountable for the loss of water and
destruction of aquifers without basis, resulting in the deprivation of their
property rights without due process of law.
○ PSPC contended that the Assailed Ordinance was not posted or published in
a newspaper of general circulation in the province, nor were public hearings
or consultations involving concerned parties conducted thereon
○ Further, there are no records showing that the Assailed Ordinance, as
approved by the Sangguniang Panlungsod, was forwarded to the
Sangguniang Panlalawigan of the Province of Batangas after it was approved
by the city mayor, as required by Section 56 of the Local Government Code
(LGC).
● SPEX essentially adopted the allegations of PSPC and prayed for the same relief,
asserting that it possesses material and direct interest in the subject matter of the
PSPC Petition.
 ● In response, Batangas City and ​the Sangguniang Panlungsod maintained that they
have the power to enact the Assailed Ordinance pursuant to the general welfare
clause under the LGC
○ The rationale of the Assailed Ordinance is to stop PSPC and other industries
similarly situated from relying "too much" on ground water as coolants for their
machineries, and alternatively promote the use of seawater for such purpose,
considering that fresh ground water is a "perishable commodity."
○ Batangas City and the Sangguniang Panlungsod c​ountered that the
"regulation or prohibition" on the use of ground water is merely incidental to
the main purpose of the Assailed Ordinance, which is to compel heavy
industries such as PSPC to construct desalination plants
○ Batangas City and the Sangguniang Panlungsod took exception to PSPC's
allegations and asserted that ​the Assailed Ordinance had been published in
Dyaryo Veritas, a newspaper of general circulation in the area. Moreover,
Batangas City and the Sangguniang Panlungsod claimed that a joint public
hearing on the Assailed Ordinance had in fact been conducted by the
Sangguniang Panlungsod and Sangguniang Panlalawigan, where PSPC was
duly represented.
○ Finally, Batangas City and the Sangguniang Panlungsod averred that since
PSPC and SPEX, along with other concerned heavy industries, essentially
question the former' s authority to regulate and prohibit the use of fresh
ground water, they should have first referred their grievances to NWRB by
filing a complaint for adjudication on the threatened revocation of their existing
water permits.
● On June 21, 2007, the RTC resolved the First Gas Petition by issuing a Decision
declaring the Assailed Ordinance null and void.
● Subsequently, on June 29, 2007 the RTC rendered a Decision, this time resolving
the PSPC and JG Summit petitions. The dispositive portion of said Decision reads:
○ t is evident that from foregoing factual milieu and parameters, the questioned
ordinance is INVALID, as it is hereby declared INVALID, in its entirety for
want of necessity and for not conducting prior public hearing, and for violating
the due process clause of the Constitution with respect to its (sic) Sec. 8, City
Ordinance No. 3, [s]. 2001. No pronouncement as to costs.

SO ORDERED.

● The RTC also noted that the Sangguniang Panlungsod failed to consult the NWRB
before enacting the Assailed Ordinance, thereby encroaching upon its authority.

ISSUE

● The sole issue for this Court's determination is whether the CA erred in affirming the
RTC Decision which declared the Assailed Ordinance invalid.
RULING

● Batangas City contends that it has the legal authority to enact ordinances in the
exercise of its police power for the purpose of promoting the general welfare of its
inhabitants. Thus, it asserts that it has the power to regulate PSPC's and SPEX's
right to use ground water, as continued use would be injurious to public interest.
Further, Batangas City insists that there is factual basis to justify the enactment of the
Assailed Ordinance. According to Batangas City, these testimonies should be given
more weight, since they are based on "actual facts and experience." ​These
assertions lack merit.
● Batangas City claims that the enactment of the Assailed Ordinance constitutes a
valid exercise of its police power. This claim is erroneous.

RATIO DECIDENI:

● No, Batangas does not have said power under the Local Government Code. Section
133 of the LGC puts a limitation on LGUs power to tax. They shall have no power to
levy taxes, fees or charges on petroleum products. Thus, the omnibus grant of power
to LGUs under Section 143(h) of the LGC cannot overcome the specific exception or
exemption in Section 133(h) of the same Code.

Republic of the Philippines, represented by National Power Corporation (NAPCOR) vs

Heirs of Borbon
GR No 165354
January 12, 2015

FACTS

● The National Power Corporation (NAPOCOR) is a government-owned and

-controlled corporation
● In February 1993, NAPOCOR entered a property located in Barangay San Isidro,
Batangas City in order to construct and maintain transmission lines for the 230 KV
Mahabang Parang-Pinamucan Power Transmission Project
○ Respondents heirs of Saturnino Q. Borbon owned the property
● On May 26, 1995, NAPOCOR filed a complaint for expropriation in the Regional Trial
Court in Batangas City (RTC), seeking the acquisition of an easement of right of way
over a portion of the property involving an area of only 6,326 square meters, more or
less, alleging that it had negotiated with the respondents for the acquisition of the
easement but they had failed to reach any agreement; and that, nonetheless, it was
willing to deposit the amount of ₱9,790.00 representing the assessed value of the
portion sought to be expropriated
○ It prayed for the issuance of a writ of possession upon deposit to enable it to
enter and take possession and control of the affected portion of the property;
to demolish all improvements existing thereon; and to commence construction
of the transmission line project. It likewise prayed for the appointment of three
commissioners to determine the just compensation to be paid
 ● respondents staunchly maintained that NAPOCOR had not negotiated with them
before entering the property and that the entry was done without their consent in the
process, destroying some fruit trees without payment, and installing five transmission
line posts and five woodpoles for its project
● that, nonetheless, they tendered no objection to NAPOCOR’s entry provided it would
pay just compensation not only for the portion sought to be expropriated but for the
entire property whose potential was greatly diminished, if not totally lost, due to the
project and that their property was classified as industrial land. Thus, they sought the
dismissal of the complaint, the payment of just compensation of ₱1,000.00/square
meter, and attorney’s fees; and to be allowed to nominate their representative to the
panel of commissioners to be appointed by the trial court.
● In the pre-trial conference conducted on December 20, 1995, the parties stipulated
on: (1) the location of the property; (2) the number of the heirs of the late Saturnino
Q. Borbon; (3) the names of the persons upon whom title to the property was issued;
and (4) the ownership and possession of the property.
● the RTC adopted the recommendation contained in the joint report, and ruled thusly:
○ he RTC ordered NAPOCOR to pay the respondents: (1) just compensation for
the whole area of 14,257 square meters at the rate of ₱550.00/square meter;
(2) legal rate of interest from May 5, 1995 until full payment; and (3) the costs
of suit
● On April 29, 2004, the CA promulgated its decision
○ WHEREFORE, premises considered, the Decision dated November 27, 2000
of Branch I of the Regional Trial Court of Batangas City, is hereby AFFIRMED
with the MODIFICATION that plaintiff-appellant shall pay only for the occupied
6,326 square meters of the subject real property at the rate of ₱550.00 per
square meter and to pay legal interest therefrom until fully paid.

ISSUE

● whether or not the expropriation proceedings should be discontinued or dismissed

pending appeal

RULING

● The dismissal of the proceedings for expropriation at the instance of NAPOCOR is

proper, but, conformably with Section 4, Rule 67 of the Rules of Court, the dismissal
or discontinuance of the proceedings must be upon such terms as the court deems
just and equitable.
● The right of eminent domain is “the ultimate right of the sovereign power to
appropriate, not only the public but the private property of all citizens within the
territorial sovereignty, to public purpose.” But the exercise of such right is not
unlimited, for two mandatory requirements should underlie the Government’s
exercise of the power of eminent domain, namely: (1) that it is for a particular public
purpose; and (2) that just compensation be paid to the property owner. These
requirements partake the nature of implied conditions that should be complied with to
enable the condemnor to keep the property expropriated.
 ○ Public use, in common acceptation, means “use by the public.” However, the
concept has expanded to include utility, advantage or productivity for the
benefit of the public. “Public use” has now been held to be synonymous with
“public interest,” “public benefit,” and “public convenience.”
● It is essential that the element of public use of the property be maintained throughout
the proceedings for expropriation.
● More particularly, with respect to the element of public use, the expropriator should
commit to use 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 owner’s right to justice, fairness and equity.
● Verily, the retirement of the transmission lines necessarily stripped the expropriation
proceedings of the element of public use. To continue with the expropriation
proceedings despite the definite cessation of the public purpose of the project would
result in the rendition of an invalid judgment in favor of the expropriator due to the
absence of the essential element of public use.
● Accordingly, the Court grants the motion to discontinue the proceedings subject to
the conditions to be shortly mentioned hereunder, and requires the return of the
property to the respondents. Having said that, we must point out that NAPOCOR
entered the property without the owners’ consent and without paying just
compensation to the respondents. Neither did it deposit any amount as required by
law prior to its entry. The Constitution is explicit in obliging the Government and its
entities to pay just compensation before depriving any person of his or her property
for public use. Considering that in the process of installing transmission lines,
NAPOCOR destroyed some fruit trees and plants without payment, and the
installation of the transmission lines went through the middle of the land as to divide
the property into three lots, thereby effectively rendering the entire property inutile for
any future use, it would be unfair for NAPOCOR not to be made liable to the
respondents for the disturbance of their property rights from the time of entry until the
time of restoration of the possession of the property.

Barangay Sindalan vs Court of Appeals (CA)

GR No 150640
March 22, 2007

FACTS

● On April 8, 1983, pursuant to a resolution passed by the barangay council, petitioner

Barangay Sindalan, San Fernando, Pampanga, represented by Barangay Captain
Ismael Gutierrez, filed a Complaint for eminent domain against respondents spouses
Jose Magtoto III and Patricia Sindayan, the registered owners of a parcel of land
● Petitioner sought to convert a portion of respondents' land into Barangay Sindalan's
feeder road.
● The alleged public purposes sought to be served by the expropriation were stated in
Barangay Resolution No. 6, as follows:
○ WHEREAS, said parcels of land shall be used, when acquired, as a barangay
feeder road for the agricultural and other products of the residents, and just as
inlet for their basic needs;

WHEREAS, presently, residents have to take a long circuitous dirt road

before they can reach the concrete provincial road, entailing so much time,
effort and money, not to mention possible damage and/or spilage [sic] on the
products consigned to or coming from, the market outside the barangay;
andcralawlibrary

WHEREAS, said lots, used as outlet or inlet road, shall contribute greatly to
the general welfare of the people residing therein social, cultural and health
among other things, beside economic

● Petitioner claimed that respondents' property was the most practical and nearest way
to the municipal road. Pending the resolution of the case at the trial court, petitioner
deposited an amount equivalent to the fair market value of the property.
● respondents stated that they owned the 27,000 - square meter property, a portion of
which is the subject of this case.
○ they alleged that their lot is adjacent to Davsan II Subdivision privately owned
by Dr. Felix David and his wife.
○ Prior to the filing of the expropriation case, said subdivision was linked to
MacArthur Highway through a pathway across the land of a certain Torres
family. Long before the passage of the barangay resolution, the wives of the
subdivision owner and the barangay captain, who were known to be agents of
the subdivision, had proposed buying a right-of-way for the subdivision across
a portion of respondents' property. These prospective buyers, however, never
returned after learning of the price which the respondents ascribed to their
property.
● Respondents alleged that the expropriation of their property was for private use, that
is, for the benefit of the homeowners of Davsan II Subdivision. They contended that
petitioner deliberately omitted the name of Davsan II Subdivision and, instead, stated
that the expropriation was for the benefit of the residents of Sitio Paraiso in order to
conceal the fact that the access road being proposed to be built across the
respondents' land was to serve a privately owned subdivision and those who would
purchase the lots of said subdivision. They also pointed out that under Presidential
Decree No. (PD) 957, it is the subdivision owner who is obliged to provide a feeder
road to the subdivision residents.
● The trial court ruled
○ the herein plaintiff is hereby declared as having a lawful right to take the
property hereinabove described and sought to be condemned for the public
purpose or use as aforestated, upon payment of just compensation to be
determined as of the date of the filing of the Complaint in this [sic]
 expropriation proceedings. Upon the entry of this Order of Condemnation, let
three (3) competent and disinterested persons be appointed as
Commissioners to ascertain and report to the Court the just compensation for
the property condemned.
● Upon respondents' appeal, the CA held:
○ We are convinced that it is the duty of the subdivision owner to provide the
right of way needed by residents of Davsan II Subdivision as provided for in
Section 29 of P.D. 957.
○ WHEREFORE, premises considered, the appealed Decision is hereby
REVERSED and SET ASIDE and the Complaint for Eminent Domain is
DISMISSED for lack of merit.

ISSUES

● Whether or not the proposed exercise of the power of eminent domain would be for a
public purpose

RULING

● Petition lacks merit.

RATIO DECIDENDI:

The power of eminent domain can only be exercised for public use and with just
compensation. Taking an individual’s private property is a deprivation which can only be
justified by a higher good·which is public use· and can only be counterbalanced by just
compensation. Without these safeguards, the taking of property would not only be unlawful,
immoral, and null and void, but would also constitute a gross and condemnable
transgression of an individual’s basic right to property as well.

Limiting Provisions: (Note: inherent power of the state, hence, there is no legal basis for the
grant. The Consti merely limit the power)

(a) Section 9, Bill of Rights: private property shall not be taken for public use without just
compensation.

(b) Section 1, Bill of Rights: no person shall be deprived of his/her life, liberty, or property
without due process of law.

Requisites:

1. Public use
2. Just compensation

Public Use, meaning:

● No precise meaning
● Public advantage, convenience, or benefit
 ● Anything which tends to enlarge the resources, increase the industrial energies, and
promote the productive power of any considerable number of the inhabitants of a
section of the state
● Leads to the growth of towns and the creation of new resources for the employment
of capital and labor
● Does NOT depend on the numerical count of those to be served or the smallness or
largeness of the community to be benefited

Just Compensation, meaning:

● the full and fair equivalent of the property taken from its owner by the expropriator
● gauge for computation is not the taker’s gain but the owner’s loss
● It must be real, substantial, full, and ample
● Not only must the payment be fair and correctly determined, but also WITHIN
REASONABLE TIME.

On due process:

It is settled that taking of property for a private use or without just compensation is a
deprivation of property without due process of law.

Application in this case:

The intended feeder road sought to serve the residents of the subdivision only. It has not
been shown that the other residents of Barangay Sindalan, San Fernando, Pampanga will
be benefited by the contemplated road to be constructed on the lot of respondents spouses.

Considering that the residents who need a feeder road are all subdivision lot owners, it is the
obligation of the Davsan II Subdivision owner to acquire a right-of-way for them.

However, the failure of the subdivision owner to provide an access road does not shift the
burden to petitioner. To deprive respondents of their property instead of compelling the
subdivision owner to comply with his obligation under the law is an abuse of the power of
eminent domain and is patently illegal. Without doubt, expropriation cannot be justified on
the basis of an unlawful purpose.

Public funds can be used only for a public purpose. In this proposed condemnation,
government funds would be employed for the benefit of a private individual without any legal
mooring. In criminal law, this would constitute malversation.

The petitioner’s proper remedy is to require the Davsan II Subdivision owner to file a
complaint for establishment of the easement of right-of-way under Articles 649 to 656 of the
Civil Code. Respondents must be granted the opportunity to show that their lot is not a
servient estate. Plainly, petitioner’s resort to expropriation is an improper cause of action.
Evergreen Manufacturing vs Republic of the Philippines
GR No 218628
September 6, 2017

FACTS

NAPOCOR vs RABIE
GR No 210218
August 17, 2016

FACTS

● NAPOCOR was tasked to perform the missionary electrification function and to

provide power generation and its associated power delivery systems in areas that are
not connected to the transmission system.
● On 1 December 2009, NAPOCOR filed a complaint for expropriation against
respondents Heirs of Antonina Rabie (respondents) for the acquisition of the
822-square meter portion of Lot No. 1439 to be used as access road for the Caliraya
Hydro Electric Power Plant of the Caliraya-Botocan-Kalayaan Build Rehabilitate and
Operate Transfer Project of the NAPOCOR.
● On 25 February 2010, respondents filed a Verified Answer, claiming that the then
current market value of the property was PI 0,000 per square meter on the inner
portion and P12,000 per square meter near the highway.
○ Respondents prayed, among others, for a just compensation in the amount of
P1,250,700, representing the Bureau of Internal Revenue (BIR) zonal
valuation for the "actual area to be occupied" by NAPOCOR which is 2,274
square meters, instead of 822 square meters only.
○ In addition, respondents sought payment for NAPOCOR's alleged
unauthorized entry and use of the property from 1940 to date.
● On 5 July 2010, NAPOCOR deposited with the Land Bank of the Philippines (Land
Bank) the amount of P411,000 representing the BIR zonal valuation of the affected
portion of the subject property, which was P500 per square meter.
● On 29 January 2013, the trial court issued an Order, the dispositive portion of which
reads
○ the Eight Hundred Twenty Two (822) square meters of the land owned by the
defendants is hereby expropriated in favor of the National Power Corporation
effective December 2009 upon payment of the fair market value of the
property at Eleven Thousand (PI 1,000.00) Pesos per square meter or a total
of Nine Million Forty-Two Thousand (P9,042,000.00) Pesos. Defendants'
claim that said property was occupied by plaintiff since 1940 is unrebutted,
hence, reasonable rentals of Twelve Thousand Pesos (PI2,000.00) yearly is
hereby awarded to defendants from the year 1940 to the present at a twelve
percent (12%) annual interest rate, until fully paid.
ISSUE

● Whether the trial court still had jurisdiction when it ruled on the Motion for Execution
Pending Appeal
● Whether there exists good reasons for the execution of the trial court’s decision
pending appeal
● Whether the NAPOCOR’s funds may be garnished or be the subject of execution

RULING

We Grant the petition

● Execution pending appeal, also called discretionary execution under Section 2(a),
Rule 39 of the Rules of Court, is allowed upon good reasons to be stated in a special
order after due hearing.

Ferrer vs Herbert Bautista

GR No 210551
June 30, 2015

FACTS

● Respondent Quezon City Council enacted an ordinance, Socialized Housing Tax of

Quezon City, which will collect 0.5% on the assessed value of land in excess of Php
100,000.00. This shall accrue to the Socialized Housing Programs of the Quezon City
Government.
○ The special assessment shall go to the General Fund under a special account
to be established for the purpose.
● On the other hand, Ordinance No. SP-2235 and S-2013 was enacted collecting
garbage fees on residential properties which shall be deposited solely and
exclusively in an earmarked special account under the general fund to be utilized for
garbage collections. Petitioner, a Quezon City property owner, questions the validity
of the said ordinances.

ISSUES

● Whether the Socialized Housing Tax is valid

● Whether the ordinance on Garbage Fee violates the rule on double taxation

RULING

● The SHT is valid. The tax is within the power of Quezon City Government to impose.
LGUs may be considered as having properly exercised their police power only if
there is a lawful subject and a lawful method. Herein, the tax is not a pure exercise of
taxing power or merely to raise revenue; it is levied with a regulatory purpose. The
levy is primarily in the exercise of the police power for the general welfare of the
entire city. It is greatly imbued with public interest. On the question of inequality, the
 disparities between a real property owner and an informal settler as two distinct
classes are too obvious and need not be discussed at length. The differentiation
conforms to the practical dictates of justice and equity and is not discriminatory within
the meaning of the Constitution. Notably, the public purpose of a tax may legally exist
even if the motive which impelled the legislature to impose the tax was to favor one
over another. Further, the reasonableness of Ordinance No. SP-2095 cannot be
disputed. It is not confiscatory or oppressive since the tax being imposed therein is
below what the UDHA actually allows. Even better, on certain conditions, the
ordinance grants a tax credit.
● No. Pursuant to Section 16 of the LGC and in the proper exercise of its corporate
powers under Section 22 of the same, the Sangguniang Panlungsod of Quezon City,
like other local legislative bodies, is empowered to enact ordinances, approve
resolutions, and appropriate funds for the general welfare of the city and its
inhabitants. In this regard, the LGUs shall share with the national government the
responsibility in the management and maintenance of ecological balance within their
territorial jurisdiction. The Ecological Solid Waste Management Act of 2000, affirms
this authority as it expresses that the LGUs shall be primarily responsible for the
implementation and enforcement of its provisions. Necessarily, LGUs are statutorily
sanctioned to impose and collect such reasonable fees and charges for services
rendered. The fee imposed for garbage collections under Ordinance No. SP-2235 is
a charge fixed for the regulation of an activity as provided by the same. As opposed
to petitioner’s opinion, the garbage fee is not a tax. Hence, not being a tax, the
contention that the garbage fee under Ordinance No. SP-2235 violates the rule on
double taxation must necessarily fail.

DCCCO vs Commissioner of Internal Revenue

GR No 182722
January 22, 2010

FACTS

● Petitioner Dumaguete Cathedral Credit Cooperative (DCCCO) is a credit cooperative

duly registered with and regulated by the Cooperative Development Authority (CDA).
On November 27, 2001, the Bureau of Internal Revenue (BIR) Operations Group
Deputy Commissioner, Lilian B. Hefti, issued Letters of Authority Nos. 63222 and
63223, authorizing BIR officers to examine petitioners books of accounts and other
accounting records for all internal revenue taxes for the taxable years 1999 and
2000.
● On October 16, 2002, petitioner received two other Pre-Assessment Notices for
deficiency withholding taxes also for taxable years 1999 and 2000.[10] The
deficiency withholding taxes cover the payments of the honorarium of the Board of
Directors, security and janitorial services, legal and professional fees, and interest on
savings and time deposits of its members.
● On October 22, 2002, petitioner informed BIR Regional Director Sonia L. Flores that
it would only pay the deficiency withholding taxes corresponding to the honorarium of
the Board of Directors, security and janitorial services, legal and professional fees for
the year 1999 in the amount of P87,977.86, excluding penalties and interest.
 ● On November 29, 2002, petitioner availed of the VAAP and paid the amounts of
P105,574.62 and P143,867.24. corresponding to the withholding taxes on the
payments for the compensation, honorarium of the Board of Directors, security and
janitorial services, and legal and professional services, for the years 1999 and 2000,
respectively.
● On April 24, 2003, petitioner received from the BIR Regional Director Flores, Letters
of Demand ordering petitioner to pay the deficiency withholding taxes, inclusive of
penalties, for the years 1999 and 2000 in the amounts of P1,489,065.30 and
P1,462,644.90, respectively.

ISSUE

● Whether or not it is liable to pay the deficiency withholding taxes on interest from
savings and time deposits of its members for the taxable years 1999 and 2000, as
well as the delinquency interest of 20% per annum.

RULING

Petitioners invocation of BIR Ruling No. 551-888, reiterated in BIR Ruling [DA-591-2006], is
proper. On November 16, 1988, the BIR declared in BIR Ruling No. 551-888 that
cooperatives are not required to withhold taxes on interest from savings and time deposits of
their members.

According to the CTA En Banc, the BIR Ruling was based on the premise that the savings
and time deposits were placed by the members of the cooperative in the bank.
Consequently, it ruled that the BIR Ruling does not apply when the deposits are maintained
in the cooperative such as the instant case.

There is nothing in the ruling to suggest that it applies only when deposits are maintained in
a bank. Rather, the ruling clearly states, without any qualification, that since interest from
any Philippine currency bank deposit and yield or any other monetary benefit from deposit
substitutes are paid by banks, cooperatives are not required to withhold the corresponding
tax on the interest from savings and time deposits of their members.

In BIR Ruling [DA-591-2006] dated October 5, 2006 the BIR opined that:

xxxx

3. Exemption of interest income on members deposit (over and above the share capital
holdings) from the 20% Final Withholding Tax.

The National Internal Revenue Code states that a final tax at the rate of twenty percent
(20%) is hereby imposed upon the amount of interest on currency bank deposit and yield or
any other monetary benefit from the deposit substitutes and from trust funds and similar
arrangement x x x for individuals under Section 24(B)(1) and for domestic corporations
under Section 27(D)(1). Considering the members deposits with the cooperatives are not
currency bank deposits nor deposit substitutes, Section 24(B)(1) and Section 27(D)(1),
therefore, do not apply to members of cooperatives and to deposits of primaries with
federations, respectively.

In this case, BIR Ruling No. 551-888 and BIR Ruling [DA-591-2006] are in perfect harmony
with the Constitution and the laws they seek to implement. Accordingly, the interpretation in
BIR Ruling No. 551-888 that cooperatives are not required to withhold the corresponding tax
on the interest from savings and time deposits of their members, which was reiterated in BIR
Ruling [DA-591-2006], applies to the instant case.

Members of cooperatives deserve a preferential tax treatment pursuant to RA 6938, as

amended by RA 9520.

Given that petitioner is a credit cooperative duly registered with the Cooperative
Development Authority (CDA), Section 24(B)(1) of the NIRC must be read together with RA
6938, as amended by RA 9520. Under Article 2 of RA 6938, as amended by RA 9520, Thus,
to encourage the formation of cooperatives and to create an atmosphere conducive to their
growth and development, the State extends all forms of assistance to them, one of which is
providing cooperatives a preferential tax treatment.

The legislative intent to give cooperatives a preferential tax treatment is apparent in Articles
61 and 62 of RA 6938, which read:

ART. 61. Tax Treatment of Cooperatives. Duly registered cooperatives under this Code
which do not transact any business with non-members or the general public shall not be
subject to any government taxes and fees imposed under the Internal Revenue Laws and
other tax laws. Cooperatives not falling under this article shall be governed by the
succeeding section.

ART. 62. Tax and Other Exemptions. Cooperatives transacting business with both members
and nonmembers shall not be subject to tax on their transactions to members.
Notwithstanding the provision of any law or regulation to the contrary, such cooperatives
dealing with nonmembers shall enjoy the following tax exemptions; x x x.

This exemption extends to members of cooperatives. It must be emphasized that

cooperatives exist for the benefit of their members. In fact, the primary objective of every
cooperative is to provide goods and services to its members to enable them to attain
increased income, savings, investments and productivity. Therefore, limiting the application
of the tax exemption to cooperatives would go against the very purpose of a credit
cooperative. Extending the exemption to members of cooperatives, on the other hand, would
be consistent with the intent of the legislature. Thus, although the tax exemption only
mentions cooperatives, this should be construed to include the members, pursuant to Article
126 of RA 6938, which provides:
ART. 126. Interpretation and Construction. In case of doubt as to the meaning of any
provision of this Code or the regulations issued in pursuance thereof, the same shall be
resolved liberally in favor of the cooperatives and their members.

All told, we hold that petitioner is not liable to pay the assessed deficiency withholding taxes
on interest from the savings and time deposits of its members, as well as the delinquency
interest of 20% per annum.

In closing, cooperatives, including their members, deserve a preferential tax treatment

because of the vital role they play in the attainment of economic development and social
justice. Thus, although taxes are the lifeblood of the government, the States power to tax
must give way to foster the creation and growth of cooperatives. To borrow the words of
Justice Isagani A. Cruz: The power of taxation, while indispensable, is not absolute and may
be subordinated to the demands of social justice.