INHERENT POWERS

1. REPUBLIC V. MERALCO (G.R. NO. 141314)

Facts:

MERALCO filed with petitioner ERB an application for the revision of its rate schedules to reflect an average
increase in its distribution charge. ERB granted a provisional increase subject to the condition that should the COA
thru its audit report find MERALCO is entitled to a lesser increase, all excess amounts collected from the latter’s
customers shall either be refunded to them or correspondingly credited in their favor. The COA report found that
MERALCO is entitled to a lesser increase, thus ERB ordered the refund or crediting of the excess amounts. On
appeal, the CA set aside the ERB decision. MRs were denied.

Issue:

Whether or not the regulation of ERB as to the adjustment of rates of MERALCO is valid.

Ruling: YES.

The regulation of rates to be charged by public utilities is founded upon the police powers of the State and statutes
prescribing rules for the control and regulation of public utilities are a valid exercise thereof. When private property
is used for a public purpose and is affected with public interest, it ceases to be juris privati only and becomes subject
to regulation. The regulation is to promote the common good. Submission to regulation may be withdrawn by the
owner by discontinuing use; but as long as use of the property is continued, the same is subject to public regulation.

In regulating rates charged by public utilities, the State protects the public against arbitrary and excessive rates while
maintaining the efficiency and quality of services rendered. However, the power to regulate rates does not give the
State the right to prescribe rates which are so low as to deprive the public utility of a reasonable return on
investment. Thus, the rates prescribed by the State must be one that yields a fair return on the public utility upon the
value of the property performing the service and one that is reasonable to the public for the services rendered. The
fixing of just and reasonable rates involves a balancing of the investor and the consumer interests.
2. Lao Ichong vs Jaime Hernandez
Constitutional Law – Treaties May Be Superseded by Municipal Laws in the Exercise of Police Power
Lao Ichong is a Chinese businessman who entered the country to take advantage of business opportunities herein
abound (then) – particularly in the retail business. For some time he and his fellow Chinese businessmen enjoyed a
“monopoly” in the local market in Pasay. Until in June 1954 when Congress passed the RA 1180 or the Retail Trade
Nationalization Act the purpose of which is to reserve to Filipinos the right to engage in the retail business. Ichong
then petitioned for the nullification of the said Act on the ground that it contravened several treaties concluded by the
RP which, according to him, violates the equal protection clause (pacta sund servanda). He said that as a Chinese
businessman engaged in the business here in the country who helps in the income generation of the country he should
be given equal opportunity.
ISSUE: Whether or not a law may invalidate or supersede treaties or generally accepted principles.
HELD: Yes, a law may supersede a treaty or a generally accepted principle. In this case, there is no conflict at all
between the raised generally accepted principle and with RA 1180. The equal protection of the law clause “does not
demand absolute equality amongst residents; it merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and liabilities enforced”; and, that the equal protection
clause “is not infringed by legislation which applies only to those persons falling within a specified class, if it applies
alike to all persons within such class, and reasonable grounds exist for making a distinction between those who fall
within such class and those who do not.”
For the sake of argument, even if it would be assumed that a treaty would be in conflict with a statute then the statute
must be upheld because it represented an exercise of the police power which, being inherent could not be bargained
away or surrendered through the medium of a treaty. Hence, Ichong can no longer assert his right to operate his
market stalls in the Pasay city market.

3. Magtajas v. Pryce Properties Corp.

G.R. No. 111097, July 20, 1994

Cruz, J.

Facts:

PAGCOR decided to expand its operations to Cagayan de Oro City. To this end, it leased a portion of a building
belonging to Pryce Properties Corporation, Inc., renovated and equipped the same, and prepared to inaugurate its
casino there during the Christmas season. Civic organizations angrily denounced the project. The religious elements
echoed the objection and so did the women's groups and the youth. Demonstrations were led by the mayor and the
city legislators. The media trumpeted the protest, describing the casino as an affront to the welfare of the city. The
contention of the petitioners is that it is violative of the Sangguniang Panlungsod of Cagayan de Oro City Ordinance
No. 3353 prohibiting the use of buildings for the operation of a casino and Ordinance No. 3375-93 prohibiting the
operation of casinos. On the other hand, the respondents invoke P.D. 1869 which created PAGCOR to help
centralize and regulate all games of chance, including casinos on land and sea within the territorial jurisdiction of the
Philippines. The Court of Appeals ruled in favor of the respondents. Hence, the petition for review.

Issue:
Whether or not the Ordinance No. 3353 and Ordinance No. 3375-93 are valid

Held:

No. Cagayan de Oro City, like other local political subdivisions, is empowered to enact ordinances for the purposes
indicated in the Local Government Code. It is expressly vested with the police power under what is known as the
General Welfare Clause now embodied in Section 16 as follows:Sec. 16.

General Welfare

. — Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom,
as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government
units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and
safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate
and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and
social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort
and convenience of their inhabitants. There is a requirement that the ordinances should not contravene a statute.
Municipal governments are only agents of the national government. Local councils exerciseonly delegated
legislative powers conferred on them by Congress as the national law making body. The delegate cannot be superior
to the principal or exercise powers higher than those of the latter. It is a heresy to suggest that the local government
units can undo the acts of Congress, from which they have derived their power in the first place, and negate by mere
ordinance the mandate of the statute.

Casino gambling is authorized by P.D. 1869. This decree has the status of a statute that cannot be amended or
nullified by a mere ordinance

4. Valentin Tio vs Videogram Regulatory Board

151 SCRA 208 – Political Law – The Embrace of Only One Subject by a Bill
Delegation of Power – Delegation to Administrative Bodies
In 1985, Presidential Dedree No. 1987 entitled “An Act Creating the Videogram Regulatory Board” was enacted
which gave broad powers to the VRB to regulate and supervise the videogram industry. The said law sought to
minimize the economic effects of piracy. There was a need to regulate the sale of videograms as it has adverse effects
to the movie industry. The proliferation of videograms has significantly lessened the revenue being acquired from the
movie industry, and that such loss may be recovered if videograms are to be taxed. Section 10 of the PD imposes a
30% tax on the gross receipts payable to the LGUs.
In 1986, Valentin Tio assailed the said PD as he averred that it is unconstitutional on the following grounds:
1. Section 10 thereof, which imposed the 30% tax on gross receipts, is a rider and is not germane to the subject matter
of the law.
2. There is also undue delegation of legislative power to the VRB, an administrative body, because the law allowed
the VRB to deputize, upon its discretion, other government agencies to assist the VRB in enforcing the said PD.
ISSUE: Whether or not the Valentin Tio’s arguments are correct.
HELD: No.
1. The Constitutional requirement that “every bill shall embrace only one subject which shall be expressed in the title
thereof” is sufficiently complied with if the title be comprehensive enough to include the general purpose which a
statute seeks to achieve. In the case at bar, the questioned provision is allied and germane to, and is reasonably
necessary for the accomplishment of, the general object of the PD, which is the regulation of the video industry through
the VRB as expressed in its title. The tax provision is not inconsistent with, nor foreign to that general subject and
title. As a tool for regulation it is simply one of the regulatory and control mechanisms scattered throughout the PD.
2. There is no undue delegation of legislative powers to the VRB. VRB is not being tasked to legislate. What was
conferred to the VRB was the authority or discretion to seek assistance in the execution, enforcement, and
implementation of the law. Besides, in the very language of the decree, the authority of the BOARD to solicit such
assistance is for a “fixed and limited period” with the deputized agencies concerned being “subject to the direction
and control of the [VRB].”

5. CASE DIGEST : Restituto Ynot Vs IAC

G.R. No. 74457 March 20, 1987 RESTITUTO YNOT, petitioner, vs. INTERMEDIATE APPELLATE COURT,
THE STATION COMMANDER, INTEGRATED NATIONAL POLICE, BAROTAC NUEVO, ILOILO and THE
REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY, REGION IV, ILOILO CITY, respondents.

On January 13, 1984, the petitioner transported six carabaos in a pump boat from Masbate to Iloilo when the same
was confiscated by the police station commander of Barotac Nuevo, Iloilo for the violation of E.O. 626-A. A case
was filed by the petitioner questioning the constitutionality of executive order and the recovery of the carabaos.
After considering the merits of the case, the confiscation was sustained and the court declined to rule on the
constitutionality issue. The petitioner appealed the decision to the Intermediate Appellate Court but it also upheld
the ruling of RTC.

Issue:

Is E.O. 626-A unconstitutional?

Ruling:

The Respondent contends that it is a valid exercise of police power to justify EO 626-A amending EO 626 in asic
rule prohibiting the slaughter of carabaos except under certain conditions. The supreme court said that The
reasonable connection between the means employed and the purpose sought to be achieved by the questioned
measure is missing the Supreme Court do not see how the prohibition of the inter-provincial transport of carabaos
can prevent their indiscriminate slaughter, considering that they can be killed anywhere, with no less difficulty in
one province than in another. Obviously, retaining the carabaos in one province will not prevent their slaughter
there, any more than moving them to another province will make it easier to kill them there

The Supreme Court found E.O. 626-A unconstitutional. The executive act defined the prohibition, convicted the
petitioner and immediately imposed punishment, which was carried out forthright. Due process was not properly
observed. In the instant case, the carabaos were arbitrarily confiscated by the police station commander, were
returned to the petitioner only after he had filed a complaint for recovery and given a supersedeas bond of
P12,000.00. The measure struck at once and pounced upon the petitioner without giving him a chance to be heard,
thus denying due process.
6. Ermita Malate v City of Manila 20 SCRA 849 (1967)
J. Fernando

Facts:

Ermita-Malate Hotel and Motel Operators Association, and one of its members Hotel del Mar Inc. petitioned for the
prohibition of Ordinance 4670 on June 14, 1963 to be applicable in the city of Manila.

They claimed that the ordinance was beyond the powers of the Manila City Board to regulate due to the fact that hotels
were not part of its regulatory powers. They also asserted that Section 1 of the challenged ordinance was
unconstitutional and void for being unreasonable and violative of due process insofar because it would impose
P6,000.00 license fee per annum for first class motels and P4,500.00 for second class motels; there was also the
requirement that the guests would fill up a form specifying their personal information.

There was also a provision that the premises and facilities of such hotels, motels and lodging houses would be open
for inspection from city authorites. They claimed this to be violative of due process for being vague.

The law also classified motels into two classes and required the maintenance of certain minimum facilities in first
class motels such as a telephone in each room, a dining room or, restaurant and laundry. The petitioners also invoked
the lack of due process on this for being arbitrary.

It was also unlawful for the owner to lease any room or portion thereof more than twice every 24 hours.

There was also a prohibition for persons below 18 in the hotel.

The challenged ordinance also caused the automatic cancellation of the license of the hotels that violated the ordinance.

The lower court declared the ordinance unconstitutional.

Hence, this appeal by the city of Manila.

Issue:

Whether Ordinance No. 4760 of the City of Manila is violative of the due process clause?

Held: No. Judgment reversed.

Ratio:
"The presumption is towards the validity of a law.” However, the Judiciary should not lightly set aside legislative
action when there is not a clear invasion of personal or property rights under the guise of police regulation.

O'Gorman & Young v. Hartford Fire Insurance Co- Case was in the scope of police power. As underlying questions
of fact may condition the constitutionality of legislation of this character, the resumption of constitutionality must
prevail in the absence of some factual foundation of record for overthrowing the statute." No such factual foundation
being laid in the present case, the lower court deciding the matter on the pleadings and the stipulation of facts, the
presumption of validity must prevail and the judgment against the ordinance set aside.”

There is no question but that the challenged ordinance was precisely enacted to minimize certain practices hurtful to
public morals, particularly fornication and prostitution. Moreover, the increase in the licensed fees was intended to
discourage "establishments of the kind from operating for purpose other than legal" and at the same time, to increase
"the income of the city government."

Police power is the power to prescribe regulations to promote the health, morals, peace, good order, safety and general
welfare of the people. In view of the requirements of due process, equal protection and other applicable constitutional
guaranties, however, the power must not be unreasonable or violative of due process.

There is no controlling and precise definition of due process. It has a standard to which the governmental action should
conform in order that deprivation of life, liberty or property, in each appropriate case, be valid. What then is the
standard of due process which must exist both as a procedural and a substantive requisite to free the challenged
ordinance from legal infirmity? It is responsiveness to the supremacy of reason, obedience to the dictates of justice.
Negatively put, arbitrariness is ruled out and unfairness avoided.

Due process is not a narrow or "technical conception with fixed content unrelated to time, place and circumstances,"
decisions based on such a clause requiring a "close and perceptive inquiry into fundamental principles of our society."
Questions of due process are not to be treated narrowly or pedantically in slavery to form or phrase.

Nothing in the petition is sufficient to prove the ordinance’s nullity for an alleged failure to meet the due process
requirement.

Cu Unjieng case: Licenses for non-useful occupations are also incidental to the police power and the right to exact a
fee may be implied from the power to license and regulate, but in fixing amount of the license fees the municipal
corporations are allowed a much wider discretion in this class of cases than in the former, and aside from applying the
well-known legal principle that municipal ordinances must not be unreasonable, oppressive, or tyrannical, courts have,
as a general rule, declined to interfere with such discretion. Eg. Sale of liquors.

Lutz v. Araneta- Taxation may be made to supplement the state’s police power.

In one case- “much discretion is given to municipal corporations in determining the amount," here the license fee of
the operator of a massage clinic, even if it were viewed purely as a police power measure.

On the impairment of freedom to contract by limiting duration of use to twice every 24 hours- It was not violative of
due process. 'Liberty' as understood in democracies, is not license; it is 'liberty regulated by law.' Implied in the term
is restraint by law for the good of the individual and for the greater good of the peace and order of society and the
general well-being.

Laurel- The citizen should achieve the required balance of liberty and authority in his mind through education and
personal discipline, so that there may be established the resultant equilibrium, which means peace and order and
happiness for all.
The freedom to contract no longer "retains its virtuality as a living principle, unlike in the sole case of People v Pomar.
The policy of laissez faire has to some extent given way to the assumption by the government of the right of
intervention even in contractual relations affected with public interest.

What may be stressed sufficiently is that if the liberty involved were freedom of the mind or the person, the standard
for the validity of governmental acts is much more rigorous and exacting, but where the liberty curtailed affects at the
most rights of property, the permissible scope of regulatory measure is wider.

On the law being vague on the issue of personal information, the maintenance of establishments, and the “full rate of
payment”- Holmes- “We agree to all the generalities about not supplying criminal laws with what they omit but there
is no canon against using common sense in construing laws as saying what they obviously mean."

7. Lozano vs. Martinez

FACTS: Petitioners were charged with violation of Batas Pambansa Bilang 22 (Bouncing Check Law). They moved
seasonably to quash the informations on the ground that the acts charged did not constitute an offense, the statute
being unconstitutional. The motions were denied by the respondent trial courts, except in one case, wherein the trial
court declared the law unconstitutional and dismissed the case. The parties adversely affected thus appealed.

ISSUES:

1. Does BP 22 is violate the constitutional provision on non-imprisonment due to debt?

2. Does it impair freedom of contract?
3. Does it contravene the equal protection clause?

HELD:

1. The enactment of BP 22 is a valid exercise of the police power and is not repugnant to the constitutional inhibition
against imprisonment for debt. The gravamen of the offense punished by BP 22 is the act of making and issuing a
worthless check or a check that is dishonored upon its presentation for payment. It is not the non-payment of an
obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust
of the law is to prohibit, under pain of penal sanctions, the making of worthless checks and putting them in circulation.
Because of its deleterious effects on the public interest, the practice is proscribed by the law. The law punishes the act
not as an offense against property, but an offense against public order.

Unlike a promissory note, a check is not a mere undertaking to pay an amount of money. It is an order addressed to a
bank and partakes of a representation that the drawer has funds on deposit against which the check is drawn, sufficient
to ensure payment upon its presentation to the bank. There is therefore an element of certainty or assurance that the
instrument will be paid upon presentation. For this reason, checks have become widely accepted as a medium of
payment in trade and commerce. Although not legal tender, checks have come to be perceived as convenient
substitutes for currency in commercial and financial transactions. The basis or foundation of such perception is
confidence. If such confidence is shaken, the usefulness of checks as currency substitutes would be greatly diminished
or may become nil. Any practice therefore tending to destroy that confidence should be deterred for the proliferation
of worthless checks can only create havoc in trade circles and the banking community.

The effects of the issuance of a worthless check transcends the private interests of the parties directly involved in the
transaction and touches the interests of the community at large. The mischief it creates is not only a wrong to the payee
or holder, but also an injury to the public. The harmful practice of putting valueless commercial papers in circulation,
multiplied a thousand fold, can very wen pollute the channels of trade and commerce, injure the banking system and
eventually hurt the welfare of society and the public interest.

2. The freedom of contract which is constitutionally protected is freedom to enter into “lawful” contracts. Contracts
which contravene public policy are not lawful. Besides, we must bear in mind that checks can not be categorized as
mere contracts. It is a commercial instrument which, in this modem day and age, has become a convenient substitute
for money; it forms part of the banking system and therefore not entirely free from the regulatory power of the state.
 3. There is no substance in the claim that the statute in question denies equal protection of the laws or is discriminatory,
since it penalizes the drawer of the check, but not the payee. It is contended that the payee is just as responsible for
the crime as the drawer of the check, since without the indispensable participation of the payee by his acceptance of
the check there would be no crime. This argument is tantamount to saying that, to give equal protection, the law should
punish both the swindler and the swindled. The petitioners’ posture ignores the well-accepted meaning of the clause
“equal protection of the laws.” The clause does not preclude classification of individuals, who may be accorded
different treatment under the law as long as the classification is not unreasonable or arbitrary. (Lozano vs Martinez,
G.R. No. L-63419, December 18, 1986)

8. MMDA vs Bel-Air Village Assoc.

March 27, 2000

Puno, J.

FACTS

Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro Manila. Respondent
Bel-Air Village Association, Inc. (BAVA) is a non-stock, non-profit corporation whose members are homeowners in
Bel-Air Village, a private subdivision in Makati City. Respondent BAVA is the registered owner of Neptune Street,
a road inside Bel-Air Village.

On December 30, 1995, respondent received from petitioner, through its Chairman, a notice dated December 22, 1995
requesting respondent to open Neptune Street to public vehicular traffic starting January 2, 1996.

Actions Filed:

1. BAVA – applied for injunction; trial court issued temporary restraining order but after due hearing, trial court denied
the issuance of a preliminary injunction.

2. BAVA – appealed to CA which issued preliminary injunction and later ruled that MMDA has no authority to order
the opening of Neptune Street, a private subdivision road and cause the demolition of its perimeter walls. It held that
the authority is lodged in the City Council of Makati by ordinance.

MMDA – filed motion for reconsideration but was denied by CA; hence the current recourse.

ISSUES

1. 1. Has the MMDA the mandate to open Neptune Street to public traffic pursuant to its regulatory and police
powers?
2. Is the passage of an ordinance a condition precedent before the MMDA may order the opening of subdivision
roads to public traffic?

HELD
The MMDA is, as termed in the charter itself, "development authority." All its functions are administrative in nature.

The powers of the MMDA are limited to the following acts: formulation, coordination, regulation, implementation,
preparation, management, monitoring, setting of policies, installation of a system and administration. There is no
syllable in R.A. No. 7924 that grants the MMDA police power, let alone legislative power.

The MMDA has no power to enact ordinances for the welfare of the community. It is the local government units,
acting through their respective legislative councils that possess legislative power and police power. In the case at bar,
the Sangguniang Panlungsod of Makati City did not pass any ordinance or resolution ordering the opening of Neptune
Street, hence, its proposed opening by petitioner MMDA is illegal and the respondent Court of Appeals did not err in

so ruling.

The MMDA was created to put some order in the metropolitan transportation system but unfortunately the powers
granted by its charter are limited. Its good intentions cannot justify the opening for public use of a private street in a
private subdivision without any legal warrant. The promotion of the general welfare is not antithetical to the
preservation of the rule of law.

DISPOSITION

IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals

are affirmed.

EMINENT DOMAIN

1. CASE: ROXAS & CO. VS. CA

FACTS:

Petitioner Roxas & Co. is a domestic corporation and is the registered owner of three haciendas: Haciendas Palico,
Banilad and Caylaway, all located in the Municipality of Nasugbu, Batangas.

The events of this case occurred during the incumbency of then President Corazon C. Aquino. In February 1986,
President Aquino issued Proclamation No. 3 promulgating a Provisional Constitution. President Aquino signed on
July 22, 1987, Proclamation No. 131 instituting a Comprehensive Agrarian Reform Program and Executive Order No.
229 providing the mechanisms necessary to initially implement the program.
On July 27, 1987, the Congress of the Philippines formally convened and took over legislative power from the
President. This Congress passed Republic Act No. 6657, the Comprehensive Agrarian Reform Law (CARL) of 1988.
The Act was signed by the President on June 10, 1988 and took effect on June 15, 1988.

Before the laws effectivity, on May 6, 1988, petitioner filed with respondent DAR a voluntary offer to sell Hacienda
Caylaway pursuant to the provisions of E.O. No. 229. Haciendas Palico and Banilad were later placed under
compulsory acquisition by respondent DAR in accordance with the CARL.

HACIENDA PALICO:

- Assessed by Municipal Agrarian Officer (MARO), subjected to acquisition and distribution according to
CARL.
- Petitioner applied with DAR for conversion of said hacienda from agricultural to non-agricultural land.
- Application denied.
- Original TCT was replaced with CLOA (Certificate of Land Ownership Award, registered with DAR) and
compensated with appropriate value thru LBP Trust Accounts.

HACIENDA BANILAD:

- Same with Hacienda Palico.

HACIENDA CAYLAWAY

- Voluntarily offered to the government.

On August 24, 1993, petitioner instituted Case No. N-0017-96-46 (BA) with respondent DAR Adjudication Board
(DARAB) praying for the cancellation of the CLOAs issued by respondent DAR in the name of several persons.
Petitioner alleged that the Municipality of Nasugbu, where the haciendas are located, had been declared a tourist zone,
that the land is not suitable for agricultural production, and that the Sangguniang Bayan of Nasugbu had reclassified
the land to non-agricultural.

In a Resolution dated October 14, 1993, respondent DARAB held that the case involved the prejudicial question of
whether the property was subject to agrarian reform, hence, this question should be submitted to the Office of the
Secretary of Agrarian Reform for determination.

Petitioners questioned the expropriation of its properties under the CARL and the denial of due process in the
acquisition of its landholdings.

MARO – denied
CA – denied; MR = denied

ISSUE/S:

1. W/N the acquisition proceedings over the three haciendas were valid and in accordance with law; and
2. W/N SC has the power to rule on whether the lots were reclassified from agricultural to non-agricultural.

HELD:
 1. YES. Acquisition proceedings was against petitioner’s right to due process.

First, there was an improper service of the Notice of Acquisition. Notices to corporations should be served
through their president, manager, secretary, cashier, agent, or any of its directors or partners. Jaime Pimintel,
to whom the notice was served, was neither of those.

Second, there was no notice of coverage, meaning, the parcels of land were not properly identified before
they were taken by the DAR. Under the law, the land owner has the right to choose 5 hectares of land he
wishes to retain. Upon receiving the Notice of Acquisition, the petitioner had no idea which portions of its
estate were subject to compulsory acquisition.

Third, The CLOAs were issued to farmer beneficiaries without just compensation. The law provides that the
deposit must be made only in cash or LBP bonds. DAR’s opening of a trust account in petitioner’s name does
not constitute payment. Even if later, DAR substituted the trust account with cash and LBP bonds, such does
not cure the lack of notice, which still amounts to a violation of the petitioner’s right to due process.

2. NO. Despite all this, the court has no jurisdiction to rule on the reclassification of land from agricultural to
non-agricultural.

DAR’s failure to observe due process does not give the court the power to adjudicate over petitioner’s
application for land conversion. DAR is charged with the mandate of approving applications for land
conversion. They have the tools and experience needed to evaluate such applications; hence, they are the
proper agency with which applications for land use conversion are lodged. DAR should be given a chance to
correct their defects with regard to petitioner’s right to due process.

Petition dismissed.

2. BELEN VS CA

FACTS: A small portion of land owned by Manotok Realty Inc. situated in TOndo Manila was leased to Arturo
Belen. Unknown to the latter, a certain Juliano bought the house already build inside the lot in question. After the
fact came to the knowledge of Belen, he and Juliano came to an agreement that the latter will continue to stay in the
said lot on condition that Juliano will shoulder half of the rent of the lot to ManotoK Realty services. Later, a fire
razed to the ground of their houses. Belen prevented Juliano from ever erecting a house again within the area.
Howver, Belen acceded to the appeal of Juliano for a continued stay, provided that the latt

er wouldn’t stay beyond two and a half years.

Failng to honor the agreement, Belen sued Juliano before the Metropolitian Trial Court sometime in 1982 and got
favourable decision in 1984. Juliano appealed the decision to the Regional Trial Court of Manila. The RTC reversed
the decision of the lower court on the bases of PD 1670 and PD 1669 that purportedly expropriated the Manotok
property as early as 1980 where the land in question was located, saying that at the time Belen complained at the
MTC the said land was no longer a property of Manotok Realty.

Belen raised his case to the Appellate court. the court affirmed the RTC’

s decision on the same grounds. Finally, Belen petitioned the Supreme Court for certiorari arguing that Manotok was
still the rightful owner of the said property since no Just compensation has been extended to the said company. This
time, the High Court reversed and set aside the decisions of CA and RTC and re-instated the decision of the MTC .
ISSUES. WON PD 1670 and PD 1669 were constitutional and valid exercise of police power? WON the due
process clause was afforded to the aggrieved parties to be heard to determine propriety of the expropriation and the
just compensation? HELD: The Supreme Court, supra,. Declared PD1670 and PD 1669 unconstitutional for failing
to provide any form of hearing or procedure by which the petitioner could question the propriety of the
expropriation or the reasonableness of the compensation to be paid for the property

3. CITY GOVT OF QUEZON VS ERICTA

FACTS:

1. Section 9 of Ordinance 6118, S-64, entitled "Ordinance Regulating the Establishment, Maintenance and
Operation of Private Memorial Type Cemetery Or Burial Ground Within the Jurisdiction of Quezon City and
Providing Penalties for the Violation thereof" provides that at least 6% of the total area of the memorial park
cemetery shall be set aside for charity burial of deceased persons who are paupers and have been residents of
Quezon City for at least 5 years prior to their death, to be determined by competent City Authorities, and where the
area so designated shall immediately be developed and should be open for operation not later than 6 months from
the date of approval of the application.

2. For several years, section 9 of the Ordinance was not enforced by city authorities but 7 years after the enactment
of the ordinance, the Quezon City Council passed a resolution requesting the City Engineer, Quezon City, to stop
any further selling and/or transaction of memorial park lots in Quezon City where the owners thereof have failed to
donate the required 6% space intended for paupers burial.

3. Pursuant to this petition, the Quezon City Engineer notified Himlayang Pilipino, Inc. in writing that Section 9 of
Ordinance No. 6118, S-64 would be enforced.

4.Himlayang Pilipino reacted by filing with the Court of First Instance (CFI) of Rizal (Branch XVIII at Quezon
City), a petition for declaratory relief, prohibition and mandamus with preliminary injunction (Special Proceeding
Q-16002) seeking to annul Section 9 of the Ordinance in question for being contrary to the Constitution, the Quezon
City Charter, the Local Autonomy Act, and the Revised Administrative Code.

5.There being no issue of fact and the questions raised being purely legal, both the City Government and Himlayang
Pilipino agreed to the rendition of a judgment on the pleadings.

6.The CFI rendered the decision declaring Section 9 of Ordinance 6118, S-64 null and void. A motion for
reconsideration having been denied, the City Government and City Council filed the petition or review with the
Supreme Court.

ISSUE: Whether the setting aside of 6% of the total area of all private cemeteries for charity burial grounds of
deceased paupers is tantamount to taking of private property without just compensation

RULING

1. There is no reasonable relation between the setting aside of at least 6% of the total area of all private cemeteries
for charity burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the
general welfare of the people.

2. The ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit
paupers who are charges of the municipal corporation.
3.Instead of building or maintaining a public cemetery for this purpose, the city passes the burden to private
cemeteries.

4. The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of
Republic Act 537, the Revised Charter of Quezon City which empowers the city council to prohibit the burial of the
dead within the center of population of the city and to provide for their burial in a proper place subject to the
provisions of general law regulating burial grounds and cemeteries.

5.When the Local Government Code, Batas Pambansa 337 provides in Section 177 (q) that a Sangguniang
panlungsod may "provide for the burial of the dead in such place and in such manner as prescribed by law or
ordinance" it simply authorizes the city to provide its own city owned land or to buy or expropriate private
properties to construct public cemeteries.

6.This has been the law and practice in the past and it continues to the present. Expropriation, however, requires
payment of just compensation. The questioned ordinance is different from laws and regulations requiring owners of
subdivisions to set aside certain areas for streets, parks, playgrounds, and other public facilities from the land they
sell to buyers of subdivision lots.

7.The necessities of public safety, health, and convenience are very clear from said requirements which are intended
to insure the development of communities with salubrious and wholesome environments. The beneficiaries of the
regulation, in turn, are made to pay by the subdivision developer when individual lots are sold to homeowners

4. THE CITY OF MANILA, plaintiff-appellant,

vs.
CHINESE COMMUNITY OF MANILA, ET AL., defendants-appellees.

G.R. No. L-14355, October 31, 1919

FACTS

The important question presented by this appeal is: In expropriation proceedings by the city of Manila, may
the courts inquire into, and hear proof upon, the necessity of the expropriation?

The City of Manila presented a petition in the Court of First Instance of said city, praying that certain lands,
therein particularly described, be expropriated for the purpose of constructing a public improvement. The petitioner
alleged that for the purpose of constructing an extension of Rizal Avenue, Manila, it is necessary for the plaintiff to
acquire ownership of certain parcels of land situated in the district of Binondo. The defendants – the Chinese
Community of Manila, Ildefonso Tambunting, and Feliza Concepcion de Delgado – alleged in their Answer (a) that
no necessity existed for said expropriation and (b) that the land in question was a cemetery, which had been used as
such for many years, and was covered with sepulchres and monuments, and that the same should not be converted
into a street for public purposes. One of the defendants, Ildefonso Tampbunting, offered to grant a right of way for
the said extension over other land, without cost to the plaintiff, in order that the sepulchers, chapels and graves of his
ancestors may not be disturbed.

The Honorable Simplicio del Rosario, decided that there was no necessity for the expropriation of the
particular strip of land in question, and absolved each and all of the defendants from all liability under the complaint,
without any finding as to costs. On appeal, the plaintiff contended that the city of Manila has authority to expropriate
private lands for public purposes. Section 2429 of Act No. 2711 (Charter of the city of Manila) provides that "the
city (Manila) . . . may condemn private property for public use."

ISSUE
 Whether or not the City of Manila can condemn private property for public use

HELD

No. It is true that Section 2429 of Act No. 2711, or the Charter of the City of Manila states that "the city
(Manila) . . . may condemn private property for public use." But when the statute does not designate the property to
be taken nor how it may be taken, the necessity of taking particular property is a question for the courts. When the
application to condemn or appropriate property is made directly to the court, the question of necessity should be
raised (Wheeling, etc. R. R. Co. vs. Toledo, Ry, etc., Co. [72 Ohio St., 368]). 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.

The impossibility of measuring the damage and inadequacy of a remedy at law is too apparent to admit of
argument. To disturb the mortal remains of those endeared to us in life sometimes becomes the sad duty of the
living; but, except in cases of necessity, or for laudable purposes, the sanctity of the grave, the last resting place of
our friends, should be maintained, and the preventative aid of the courts should be invoked for that object. (Railroad
Company vs. Cemetery Co., 116 Tenn., 400; Evergreen Cemetery Association vs. The City of New Haven, 43
Conn., 234; Anderson vs. Acheson, 132 Iowa, 744; Beatty vs. Kurtz, 2 Peters, 566.)

Whether or not the cemetery is public or private property, its appropriation for the uses of a public street,
especially during the lifetime of those specially interested in its maintenance as a cemetery, should be a question of
great concern, and its appropriation should not be made for such purposes until it is fully established that the greatest
necessity exists therefor. In the present case, even granting that a necessity exists for the opening of the street in
question, the record contains no proof of the necessity of opening the same through the cemetery. The record shows
that adjoining and adjacent lands have been offered by Tambunting to the city free of charge, which will answer
every purpose of the plaintiff.

The judgment of the lower court was affirmed.

RATIO/DOCTRINE

[1] The taking of private property for any use, which is not required by the necessities or convenience of
the inhabitants of the state, is an unreasonable exercise of the right of eminent domain, and beyond the power of the
legislature to delegate. (Bennett vs. Marion, 106 Iowa, 628, 633; Wilson vs. Pittsburg, etc. Co., 222 Pa. St., 541,
545; Greasy, etc. Co. vs. Ely, etc. Co., 132 Ky., 692, 697.) To justify the exercise of this extreme power (eminent
domain) where the legislature has left it to depend upon the necessity that may be found to exist, in order to
accomplish the purpose of the incorporation, … the party claiming the right to the exercise of the power should be
required to show at least a reasonable degree of necessity for its exercise (New Central Coal Co. vs. George's etc.
Co. [37 Md., 537, 564]).

[2] The general power to exercise the right of eminent domain must not be confused with the right to
exercise it in a particular 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.

[3] The right of expropriation is not an inherent power in a municipal corporation, and before it can
exercise the right some law must exist conferring the power upon it. When the courts come to determine the
question, they must only find (a) that a law or authority exists for the exercise of the right of eminent domain, but
(b) also that the right or authority is being exercised in accordance with the law. In the present case there are two
conditions imposed upon the authority conceded to the City of Manila: First, the land must be private; and, second,
the purpose must be public. If the court, upon trial, finds that neither of these conditions exists or that either one of
them fails, certainly it cannot be contended that the right is being exercised in accordance with law.

[4] The exercise of the right of eminent domain, whether directly by the State, or by its authorized agents,
is necessarily in derogation of private rights, and the rule in that case is that the authority must be strictly construed.
No species of property is held by individuals with greater tenacity, and none is guarded by the constitution and laws
more sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right, and, for
greater public purposes, appropriates the land of an individual without his consent, the plain meaning of the law
should not be enlarged by doubtly interpretation. (Bensely vs. Mountainlake Water Co., 13 Cal., 306 and cases cited
[73 Am. Dec., 576].)

5 National Power Corporation vs. Angas [GR 60225-26, 8 May 1992]

Second Division, Paras (J): 4 concur

Facts: On 13 April and 3 December 1974, the National Power Corporation (NAPOCOR), a government-owned and
controlled corporation and the agency through which the government undertakes the on-going infrastructure and
development projects throughout the country, filed two complaints for eminent domain with the Court of First
Instance (now Regional Trial Court) of Lanao del Sur (against Lacsamana Batugan, and/or Guimba Shipping &
Development Corporation, Magancong Digayan, Moctara Lampaco, Lampaco Pasandalan, Dimaporo Subang, Hadji
Daluma Kinidar, Dimaampao Baute, Pangonotan Cosna Tagol, Salacop Dimacaling, Hadji Sittie Sohra Linang
Batara, Bertudan Pimping And/Or Cadurog Pimping, Butuan Tagol,

Disangcopan Marabong, and Hadji Salic Sawa in Civil Case 2248; and against Mangorsi Casan, Casnangan
Batugan, Pundamarug Atocal, Pasayod Pado, Dimaampao Baute, Casnangan Baute, Dimaporo Subang, Tambilawan
Ote, Manisun Atocal, and Masacal Tomiara in Civil Case 2277). The complaint which sought to expropriate certain
specified lots situated at Limogao, Saguiaran, Lanao del Sur was for the purpose of the development of hydro-
electric power and production of electricity as well as the erection to such subsidiary works and constructions as
may be necessarily connected therewith. Both cases were jointly tried upon agreement of the parties. After a series
of hearings were held, on 15 June 1979, a consolidated decision was rendered by the lower court, declaring and
confirming that the lots mentioned and described in the complaints have entirely been lawfully condemned and
expropriated by NAPOCOR, and ordering the latter to pay the landowners certain sums of money as just
compensation for their lands expropriated "with legal interest thereon until fully paid. Two consecutive motions for
reconsideration of the consolidated decision were filed by NAPOCOR. The same were denied by the court.
NAPOCOR did not appeal on the consolidated decision, which became final and executory. Thus, on 16 May 1980,
one of the landowners (Sittie Sohra Batara) filed an ex-parte motion for the execution of the decision, praying that
petitioner be directed to pay her the unpaid balance of P14,300.00 for the lands expropriated from her, including
legal interest which she computed at 6% per annum. The said motion was granted by the lower court. Thereafter, the
lower court directed the petitioner to deposit with its Clerk of Court the sums of money as adjudged in the joint
decision dated 15 June 1979. NAPOCOR complied with said order and deposited the sums of money with interest
computed at 6% per annum. On 10 February 1981, another landowner (Pangonatan Cosna Tagol) filed with the trial
court an ex-parte motion praying, for the first time, that the legal interest on the just compensation awarded to her by
the court be computed at 12% per annum as allegedly "authorized under and by virtue of Circular 416 of the Central
Bank issued pursuant to Presidential Decree 116 and in a decision of the Supreme Court that legal interest allowed
in the judgment of the courts, in the absence of express contract, shall be computed at 12% per annum." On 11
February 1981, the lower court granted the said motion allowing 12% interest per annum. Subsequently, the other
landowners filed motions also praying that the legal interest on the just compensation awarded to them be computed
at 12% per annum, on the basis of which the lower court issued on 10 March 1981 and 28 August 1981 orders
bearing similar import. NAPOCOR moved for the reconsideration of the lower court's last order dated 28 August
1981, which the court denied on 25 January 1982. NAPOCOR filed a petition for certiorari and mandamus with the
Supreme Court.

Issue: Whether, in the computation of the legal rate of interest on just compensation for expropriated lands, the rate
applicable as legal interest is 6% (Article 2209 of the Civil Code) or 12% (Central Bank Circular 416).

Held: Article 2209 of the Civil Code, which provides that "If the obligation consists in the payment of a sum of
money, and the debtor incurs a delay, the indemnity for damages, there being no stipulation to the contrary, shall be
the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per
annum," and not Central Bank Circular 416, is the law applicable. The Central Bank circular applies only to loan or
forbearance of money, goods or credits and to judgments involving such loan or forbearance of money, goods or
credits. This is evident not only from said circular but also from Presidential Decree 116, which amended Act 2655,
otherwise known as the Usury Law. On the other hand, Article 2209 of the Civil Code applies to transactions
requiring the payment of indemnities as damages, in connection with any delay in the performance of the obligation
arising therefrom other than those covering loan or forbearance of money, goods or credits. Herein, the transaction
involved is clearly not a loan or forbearance of money, goods or credits but expropriation of certain parcels of land
for a public purpose, the payment of which is without stipulation regarding interest, and the interest adjudged by the
trial court is in the nature of indemnity for damages. The legal interest required to be paid on the amount of just
compensation for the properties expropriated is manifestly in the form of indemnity for damages for the delay in the
payment thereof. Therefore, since the kind of interest involved in the joint judgment of the lower court sought to be
enforced in this case is interest by way of damages, and not by way of earnings from loans, etc. Article 2209 of the
Civil Code shall apply.

6. National Power Corporation vs. Gutierrez [GR 60077, 18 January 1991]

Third Division, Bidin (J): 2 concur, 1 concurs with reservation

Facts: The National Power Corporation (NAPOCOR), a government owned and controlled entity, in accordance
with Commonwealth Act 120, is invested with the power of eminent domain for the purpose of pursuing its
objectives, which among others is the construction, operation, and maintenance of electric transmission lines for
distribution throughout the Philippines. For the construction of its 230 KV Mexico-Limay transmission lines,
NAPOCOR's lines have to pass the lands belonging to Matias Cruz, Heirs of Natalia Paule and spouses Misericordia
Gutierrez and Ricardo Malit (covered by tax declarations 907, 4281 and 7582, respectively). NAPOCOR initiated
negotiations for the acquisition of right of way easements over the aforementioned lots for the construction of its
transmission lines but unsuccessful in this regard, NAPOCOR was constrained to file eminent domain proceedings
against Gutierrez, et. al. on 20 January 1965. Upon filing of the corresponding complaint, NAPOCOR deposited the
amount of P973.00 with the Provincial Treasurer of Pampanga, tendered to cover the provisional value of the land of
the Malit and Gutierrez. And by virtue of which, NAPOCOR was placed in possession of the property of the spouses
so it could immediately proceed with the construction of its Mexico-Limay 230 KV transmission line. In this
connection, by the trial court's order of 30 September 1965, the spouses were authorized to withdraw the fixed
provisional value of their land in the sum of P973.00. Meanwhile, for the purpose of determining the fair and just
compensation due Gutierrez, et. al., the court appointed 3 commissioners, comprised of one representative of
NAPOCOR, one for the affected families and the other from the court, who then were empowered to receive
evidence, conduct ocular inspection of the premises, and thereafter, prepare their appraisals as to the fair and just
compensation to he paid to the owners of the lots. Hearings were consequently held before said commissioners and
during their hearings, the case of the Heirs of Natalia Paule was amicably settled by virtue of a Right of Way Grant
executed by Guadalupe Sangalang for herself and in behalf of her co-heirs in favor of NAPOCOR. The case against
Matias Cruz was earlier decided by the court, thereby leaving only the case against the spouses Malit and Gutierrez
still to be resolved. Accordingly, the commissioners submitted their individual reports. With the reports submitted,
the lower court rendered a decision, ordering NAPOCOR to pay Malit and Gutierrez the sum of P10 per square
meter as the fair and reasonable compensation for the right-of-way easement of the affected area, which is 760
squares, or a total sum of P7,600.00 and P800.00 as attorney's fees. Dissatisfied with the decision, NAPOCOR filed
a motion for reconsideration which was favorably acted upon by the lower court, and in an order dated 10 June
1973, it amended its previous decision, reducing the amount awarded to to P5.00 per square meter as the fair and
reasonable market value of the 760

square meters belonging to the said spouses, in light of the classification of the land to be partly commercial and
partly agricultural. Still not satisfied, an appeal was filed by the NAPOCOR with the Court of Appeals but appellate
court, on 9 March 1982, sustained the trial court. NAPOCOR filed the petition for review on certiorari before the
Supreme Court.

Issue: Whether the spouses are deprive of the property’s ordinary use and thus the easement of right of way in favor
of NAPOCOR constitutes taking.

Held: The acquisition of the right-of-way easement falls within the purview of the power of eminent domain. Such
conclusion finds support in similar cases of easement of right-of- way where the Supreme Court sustained the award
of just compensation for private property condemned for public use. Herein, the easement of right-of-way is
definitely a taking under the power of eminent domain. Considering the nature and effect of the installation of the
230 KV Mexico-Limay transmission lines, the limitation imposed by NAPOCOR against the use of the land for an
indefinite period deprives spouses Malit and Gutierrez of its ordinary use. For these reasons, the owner of the
property expropriated is entitled to a just compensation, which should be neither more nor less, whenever it is
possible to make the assessment, than the money equivalent of said property. Just compensation has always been
understood to be the just and complete equivalent of the loss which the owner of the thing expropriated has to suffer
by reason of the expropriation. The price or value of the land and its character at the time it was taken by the
Government are the criteria for determining just compensation. The above price refers to the market value of the
land which may be the full market value thereof. It appearing that the trial court did not act capriciously and
arbitrarily in setting the price of P5.00 per square meter of the affected property, the said award is proper and not
unreasonable.

7. TELEBAP vs COMELEC Case Digest

Telecommunications And Broadcast Attorneys Of The Phils. Vs. COMELEC
289 SCRA 337
G.R. No. 132922
April 21, 1998
Facts: Petitioner Telecommunications and Broadcast Attorneys of the Philippines, Inc. (TELEBAP) is an organization
of lawyers of radio and television broadcasting companies. It was declared to be without legal standing to sue in this
case as, among other reasons, it was not able to show that it was to suffer from actual or threatened injury as a result
of the subject law. Petitioner GMA Network, on the other hand, had the requisite standing to bring the constitutional
challenge. Petitioner operates radio and television broadcast stations in thePhilippines affected by the enforcement of
Section 92, B.P. No. 881.

Petitioners challenge the validity of Section 92, B.P. No. 881 which provides:

“Comelec Time- The Commission shall procure radio and television time to be known as the “Comelec Time” which
shall be allocated equally and impartially among the candidates within the area of coverage of all radio and television
stations. For this purpose, the franchise of all radio broadcasting and television stations are hereby amended so as to
provide radio or television time, free of charge, during the period of campaign.”

Petitioner contends that while Section 90 of the same law requires COMELEC to procure print space in newspapers
and magazines with payment, Section 92 provides that air time shall be procured by COMELEC free of charge. Thus
it contends that Section 92 singles out radio and television stations to provide free air time.

Petitioner claims that it suffered losses running to several million pesos in providing COMELEC Time in connection
with the 1992 presidential election and 1995 senatorial election and that it stands to suffer even more should it be
required to do so again this year. Petitioners claim that the primary source of revenue of the radio and television
stations is the sale of air time to advertisers and to require these stations to provide free air time is to authorize unjust
taking of private property. According to petitioners, in 1992 it lost P22,498,560.00 in providing free air time for one
hour each day and, in this year’s elections, it stands to lost P58,980,850.00 in view of COMELEC’s requirement that
it provide at least 30 minutes of prime time daily for such.

Issue:

Whether of not Section 92 of B.P. No. 881 denies radio and television broadcast companies the equal protection of
the laws.

Whether or not Section 92 of B.P. No. 881 constitutes taking of property without due process of law and without just
compensation.
Held: Petitioner’s argument is without merit. All broadcasting, whether radio or by television stations, is licensed by
the government. Airwave frequencies have to be allocated as there are more individuals who want to broadcast that
there are frequencies to assign. Radio and television broadcasting companies, which are given franchises, do not own
the airwaves and frequencies through which they transmit broadcast signals and images. They are merely given the
temporary privilege to use them. Thus, such exercise of the privilege may reasonably be burdened with the
performance by the grantee of some form of public service. In granting the privilege to operate broadcast stations and
supervising radio and television stations, the state spends considerable public funds in licensing and supervising them.

The argument that the subject law singles out radio and television stations to provide free air time as against
newspapers and magazines which require payment of just compensation for the print space they may provide is
likewise without merit. Regulation of the broadcast industry requires spending of public funds which it does not do
in the case of print media. To require the broadcast industry to provide free air time for COMELEC is a fair exchange
for what the industry gets.

As radio and television broadcast stations do not own the airwaves, no private property is taken by the requirement
that they provide air time to the COMELEC.

TAXATION

1 Sison vs Ancheta (1984)

February 15, 2013 markerwins Tax Law

Facts: Batas Pambansa 135 was enacted. Sison, as taxpayer, alleged that its provision (Section 1) unduly
discriminated against him by the imposition of higher rates upon his income as a professional, that it amounts to
class legislation, and that it transgresses against the equal protection and due process clauses of the Constitution as
well as the rule requiring uniformity in taxation.

Issue: Whether BP 135 violates the due process and equal protection clauses, and the rule on uniformity in taxation.

Held: There is a need for proof of such persuasive character as would lead to a conclusion that there was a violation
of the due process and equal protection clauses. Absent such showing, the presumption of validity must prevail.
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. Where the differentitation conforms to the practical dictates of justice and equity, similar to the
standards of equal protection, it is not discriminatory within the meaning of the clause and is therefore uniform.
Taxpayers may be classified into different categories, such as recipients of compensation income as against
professionals. Recipients of compensation income are not entitled to make deductions for income tax purposes as
there is no practically no overhead expense, while professionals and businessmen have no uniform costs or expenses
necessaryh to produce their income. There is ample justification 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.
 2. REV. FR. CASIMIRO LLADOC v. The COMMISSIONER OF
INTERNAL REVENUE and The COURT of TAX APPEALS. G.R. No. L-
19201. June 16, 1965
FACTS:

M.B. Estate, Inc. donated P10,000.00 in cash to the parish priest of Victorias, Negros Occidental, for the
construction of a new Catholic Church in the locality. The total amount was actually spent for the purpose
intended.

A year later, M.B. Estate, Inc., filed the donor's gift tax return. CIR issued an assessment for donee's gift tax
against the parish, of which petitioner was the priest.

Petitioner filed a protest which was denied by the CIR. He then filed an appeal with the CTA citing that he was
not the parish priest at the time of donation, that there is no legal entity or juridical person known as the "Catholic
Parish Priest of Victorias," and, therefore, he should not be liable for the donee's gift tax and that assessment of
the gift tax is unconstitutional.

The CTA denied the appeal thus this case.

ISSUE: Whether petitioner and the parish are liable for the donee's gift tax.

RULING:

Yes for the parish. The Constitution only made mention of property tax and not of excise tax as stated in Section
22, par 3. The assessment of the CIR did not rest upon general ownership; it was an excise upon the use made
of the properties, upon the exercise of the privilege of receiving the properties. A gift tax is not a property tax,
but an excise tax imposed on the transfer of property by way of gift inter vivos, the imposition of which on
property used exclusively for religious purposes, does not constitute an impairment of the Constitution.

No for the petitioner. The Court ordered petitioner to be substituted by the Head of Diocese to pay the said gift
tax after the CIR and Solicitor General did not object to such substitution.

3. Philex Mining Corporation v CIR (1998)

Philex Mining Corporation v CIR GR No 125704, August 28, 1998

FACTS:
BIR sent a letter to Philex asking it to settle its tax liabilities amounting to P124 million. Philex protested the
demand for payment stating that it has pending claims for VAT input credit/refund amounting to P120 million.
Therefore, these claims for tax credit/refund should be applied against the tax liabilities.
In reply the BIR found no merit in Philex’s position. On appeal, the CTA reduced the tax liability of Philex.

ISSUES:

1. Whether legal compensation can properly take place between the VAT input credit/refund and the excise
tax liabilities of
Philex Mining Corp;
2. Whether the BIR has violated the NIRC which requires the refund of input taxes within 60 days
 3. Whether the violation by BIR is sufficient to justify non-payment by Philex

RULING:

1. No, legal compensation cannot take place. The government and the taxpayer are not creditors and debtors
of each other.
2. Yes, the BIR has violated the NIRC. It took five years for the BIR to grant its claim for VAT input credit.
Obviously, had the
BIR been more diligent and judicious with their duty, it could have granted the refund
3. No, despite the lethargic manner by which the BIR handled Philex’s tax claim, it is a settled rule that in the
performance of
government function, the State is not bound by the neglect of its agents and officers. It must be stressed that
the same is not a valid reason for the non-payment of its tax liabilities.

4. CIR v CA & YMCA (1998)

CIR v CA & YMCA

GR No 124043, October 14, 1998

FACTS:
In 1980, YMCA earned an income of 676,829.80 from leasing out a portion of its premises to small shop owners,
like restaurants and canteen operators and 44,259 from parking fees collected from non-members. On July 2, 1984,
the CIR issued an assessment to YMCA for deficiency taxes which included the income from lease of YMCA’s real
property. YMCA formally protested the assessment but the CIR denied the claims of YMCA. On appeal, the CTA
ruled in favor of YMCA and excluded income from lease to small shop owners and parking fees. However, the CA
reversed the CTA but affirmed the CTA upon motion for reconsideration.

ISSUE:
Whether the rental income of YMCA is taxable

RULING:
Yes. The exemption claimed by YMCA is expressly disallowed by the very wording of then Section 27 of the NIRC
which mandates that the income of exempt organizations (such as the YMCA) from any of their properties, real or
personal, be subject to the tax imposed by the same Code. While the income received by the organizations
enumerated in Section 26 of the NIRC is, as a rule, exempted from the payment of tax in respect to income received
by them as such, the exemption does not apply to income derived from any of their properties, real or personal or
from any of their activities conducted for profit, regardless of the disposition made of such income.

Digest #2

Facts:
The main question in this case is: “is the income derived from rentals of real property owned by Young Men’s
Christian Association of the Philippines (YMCA) – established as “a welfare, educational and charitable non-profit
corporation” – subject to income tax under the NIRC and the Constitution? In 1980, YMCA earned an income of
P676,829 from leasing out a portion of its premises to small shop owners, like restaurants and canteen operators and
P44k form parking fees.

Issue:
Whether or not the rental income of the YMCA taxable
Ruling:
Yes. The exemption claimed by the YMCA is expressly disallowed by the very wording of the last paragraph of
then Sec. 27 of the NIRC; court is duty-bound to abide strictly by its literal meaning and to refrain from resorting to
any convoluted attempt at construction. The said provision mandates that the income of exempt organizations (such
as YMCA) from any of their properties, real or personal, be subject to the tax imposed by the same Code. Private
respondent is exempt from the payment of property tax, but nit income tax on rentals from its property.

5. CHAVEZ VS PCGG

G.R. No. 130716 December 9, 1998

FACTS: Petitioner Francisco I. Chavez, in his capacity as taxpayer, citizen and a former government official asked
the court to prohibit and enjoin respondents [PCGG and its chairman] from privately entering into, perfecting and/or
executing any agreement with the heirs of the late President Ferdinand E. Marcos . . . relating to and concerning the
properties and assets of Ferdinand Marcos located in the Philippines and/or abroad — including the so-called Marcos
gold hoard.

Chavez assailed the validity of the General and Supplemental Agreement executed by the government (through
PCGG) and the Marcos heirs on December 28,1993.

Item No. 2 of the General Agreement states that the assets of the PRIVATE PARTY (Marcos heirs) shall be net of
and exempt from, any form of taxes due the Republic of the Philippines.

ISSUE: W/N the compromise agreement entered into by the PCGG and the Marcos heirs which committing to exempt
from all forms of taxes the properties to be retained by the Marcos heirs is valid.

HELD: The petition is GRANTED. The General and Supplemental Agreement dated December 28, 1993, which
PCGG and the Marcos heirs entered into are hereby declared NULL AND VOID for being contrary to law and the
Constitution.

Under Item No. 2 of the General Agreement, the PCGG commits to exempt from all forms of taxes the properties to
be retained by the Marcos heirs. This is a clear violation of the Construction. The power to tax and to grant tax
exemptions is vested in the Congress and, to a certain extent, in the local legislative bodies. Section 28 (4), Article VI
of the Constitution, specifically provides: "No law granting any tax exemption shall be passed without the concurrence
of a majority of all the Member of the Congress." The PCGG has absolutely no power to grant tax exemptions, even
under the cover of its authority to compromise ill-gotten wealth cases.

Even granting that Congress enacts a law exempting the Marcoses form paying taxes on their properties, such law will
definitely not pass the test of the equal protection clause under the Bill of Rights. Any special grant of tax exemption
in favor only of the Marcos heirs will constitute class legislation. It will also violate the constitutional rule that
"taxation shall be uniform and equitable."

Neither can the stipulation be construed to fall within the power of the commissioner of internal revenue to
compromise taxes. Such authority may be exercised only when (1) there is reasonable doubt as to the validity of the
claim against the taxpayer, and (2) the taxpayer's financial position demonstrates a clear inability to pay. Definitely,
neither requisite is present in the case of the Marcoses, because under the Agreement they are effectively conceding
the validity of the claims against their properties, part of which they will be allowed to retain. Nor can the PCGG grant
of tax exemption fall within the power of the commissioner to abate or cancel a tax liability. This power can be
exercised only when (1) the tax appears to be unjustly or excessively assessed, or (2) the administration and collection
costs involved do not justify the collection of the tax due. In this instance, the cancellation of tax liability is done even
before the determination of the amount due. In any event, criminal violations of the Tax Code, for which legal actions
have been filed in court or in which fraud is involved, cannot be compromised.

6. CIR VS SC JOHNSON & SON, INCS AND CA [G.R. No. 127105. June 25, 1999]
Respondent, JOHNSON AND SON, INC a domestic corporation organized and operating under the Philippine laws,
entered into a license agreement with SC Johnson and Son, United States of America (USA), a non-resident foreign
corporation based in the U.S.A. pursuant to which the [respondent] was granted the right to use the trademark, patents
and technology owned by the latter including the right to manufacture, package and distribute the products covered
by the Agreement and secure assistance in management, marketing and production from SC Johnson and Son, U. S.
A.
The said License Agreement was duly registered with the Technology Transfer Board of the Bureau of Patents, Trade
Marks and Technology Transfer under Certificate of Registration No. 8064 . For the use of the trademark or
technology, SC JOHNSON AND SON, INC was obliged to pay SC Johnson and Son, USA royalties based on a
percentage of net sales and subjected the same to 25% withholding tax on royalty payments which respondent paid
for the period covering July 1992 to May 1993.00 On October 29, 1993, SC JOHNSON AND SON, USA filed with
the International Tax Affairs Division (ITAD) of the BIR a claim for refund of overpaid withholding tax on royalties
arguing that, since the agreement was approved by the Technology Transfer Board, the preferential tax rate of 10%
should apply to the respondent. Respondent submits that royalties paid to SC Johnson and Son, USA is only subject
to 10% withholding tax pursuant to the most-favored nation clause of the RP-US Tax Treaty in relation to the RP-
West Germany Tax Treaty. The Internal Tax Affairs Division of the BIR ruled against SC Johnson and Son, Inc. and
an appeal was filed by the former to the Court of tax appeals.
The CTA ruled against CIR and ordered that a tax credit be issued in favor of SC Johnson and Son, Inc. Unpleased
with the decision, the CIR filed an appeal to the CA which subsequently affirmed in toto the decision of the CTA.
Hence, an appeal on certiorari was filed to the SC.

THE MAIN ISSUE:

WON SC JOHNSON AND SON,USA IS ENTITLED TO THE MOST FAVORED NATION TAX RATE OF
10% ON ROYALTIES AS PROVIDED IN THE RP-US TAX TREATY IN RELATION TO THE RP-WEST
GERMANY TAX TREATY.

The concessional tax rate of 10 percent provided for in the RP-Germany Tax Treaty could not apply to taxes imposed
upon royalties in the RP-US Tax Treaty since the two taxes imposed under the two tax treaties are not paid under
similar circumstances, they are not containing similar provisions on tax crediting.

The United States is the state of residence since the taxpayer, S. C. Johnson and Son, U. S. A., is based there. Under
the RP-US Tax Treaty, the state of residence and the state of source are both permitted to tax the royalties, with a
restraint on the tax that may be collected by the state of source. Furthermore, the method employed to give relief from
double taxation is the allowance of a tax credit to citizens or residents of the United States against the United States
tax, but such amount shall not exceed the limitations provided by United States law for the taxable year. The
Philippines may impose one of three rates- 25 percent of the gross amount of the royalties; 15 percent when the
royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred areas
of activities; or the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar
circumstances to a resident of a third state.

Given the purpose underlying tax treaties and the rationale for the most favored nation clause, the Tax Treaty should
apply only if the taxes imposed upon royalties in the RP-US Tax Treaty and in the RP-Germany Tax Treaty are paid
under similar circumstances. This would mean that private respondent must prove that the RP-US Tax Treaty grants
similar tax reliefs to residents of the United States in respect of the taxes imposable upon royalties earned from sources
within the Philippines as those allowed to their German counterparts under the RPGermany Tax Treaty. The RP-US
and the RP-West Germany Tax Treaties do not contain similar provisions on tax crediting. Article 24 of the RP-
Germany Tax Treaty, supra, expressly allows crediting against German income and corporation tax of 20% of the
gross amount of royalties paid under the law of the Philippines. On the other hand, Article 23 of the RP-US Tax
Treaty, which is the counterpart provision with respect to relief for double taxation, does not provide for similar
crediting of 20% of the gross amount of
royalties paid.

At the same time, the intention behind the adoption of the provision on relief from double taxation in the two tax
treaties in question should be considered in light of the purpose behind the most favored nation clause.

What is the most favored nation clause?

The purpose of a most favored nation clause is to grant to the contracting party treatment not less favorable than that
which has been or may be granted to the “most favored” among other countries. It is intended to establish the principle
of equality of international treatment by providing that the citizens or subjects of the contracting nations may enjoy
the privileges accorded by either party to those of the most favored nation. The essence of the principle is to allow the
taxpayer in one state to avail of more liberal provisions granted in another tax treaty to which the country of residence
of such taxpayer is also a party provided that the subject matter of taxation, in this case royalty income, is the same as
that in the tax treaty under which the taxpayer is liable.

The RP-US Tax Treaty does not give a matching tax credit of 20 percent for the taxes paid to the Philippines on
royalties as allowed under the RP-West Germany Tax Treaty, private respondent cannot be deemed entitled to the 10
percent rate granted under the latter treaty for the reason that there is no payment of taxes on royalties under similar
circumstances.

TAXATION RELATED TOPICS:

What is the purpose of a tax treaty?

The purpose of these international agreements is to reconcile the national fiscal legislations of the contracting parties
in order to help the taxpayer avoid simultaneous taxation in two different jurisdictions.

The goal of double taxation conventions would be thwarted if such treaties did not provide for effective measures to
minimize, if not completely eliminate, the tax burden laid upon the income or capital of the investor. Thus, if the rates
of tax are lowered by the state of source, in this case, by the Philippines, there should be a concomitant commitment
on the part of the state of residence to grant some form of tax relief, whether this be in the form of a tax credit or
exemption. Otherwise, the tax which could have been collected by the Philippine government will simply be collected
by another state, defeating the object of the tax treaty since the tax burden imposed upon the investorwould remain
unrelieved. If the state of residence does not grant some form of tax relief to the investor, no benefit would redound
to the Philippines, i.e., increased investment resulting from a favorable tax regime, should it impose a lower tax rate
on the royalty earnings of the investor, and it would be better to impose the regular rate rather than lose much-needed
revenues to another country.

What is international double taxation and the rationale for doing away with it?

International juridical double taxation is defined as the imposition of comparable taxes in two or more states on the
same taxpayer in respect of the same subject matter and for identical periods; The apparent rationale for doing away
with double taxation is to encourage the free flow of goods and services and the movement of capital, technology and
persons between countries, conditions deemed vital in creating robust and dynamic economies.

When is there double taxation?

Double taxation usually takes place when a person is resident of a contracting state and derives income from, or owns
capital in, the other contracting state and both states impose tax on that income or capital.

What are the methods of eliminating double taxation?

 First, it sets out the respective rights to tax of the state of source or situs and of the state of residence with
regard to certain classes of income or capital. In some cases, an exclusive right to tax is conferred on one of
the contracting states; however, for other items of income or capital, both states are given the right to tax,
although the amount of tax that may be imposed by the state of source is limited.

 The second method for the elimination of double taxation applies whenever the state of source is given a full
or limited right to tax together with the state of residence. In this case, the treaties make it incumbent upon
the state of residence to allow relief in order to avoid double taxation. In this case, the treaties make it
incumbent upon the state of residence to allow relief in order to avoid double taxation.

What are the methods of relief under the second method?

There are two methods of relief—the exemption method and the credit method.

 Exemption method, the income or capital which is taxable in the state of source or situs is exempted in the
state of residence, although in some instances it may be taken into account in determining the rate of tax
applicable to the taxpayer’s remaining income or capital.
 Credit method, although the income or capital which is taxed in the state of source is still taxable in the state
of residence, the tax paid in the former is credited against the tax levied in the latter.

 The basic difference between the two methods is that in the exemption method, the focus is on the income
or capital itself, whereas the credit method focuses upon the tax.

What is the rationale of reducing tax rates in negotiating tax treaties?

In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the
Philippines will give up a part of the tax in the expectation that the tax given up for this particular investment is not
taxed by the other country.
What are tax refunds?

Tax refunds are in the nature of tax exemptions, and as such they are regarded as in derogation of sovereign authority
and to be construed strictissimi juris against the person or entity claiming the exemption.

Who has the burden of proof in tax exemption?

The burden of proof is upon him who claims the exemption in his favor and he must be able to justify his claim by the
clearest grant of organic or statute law.

DUE PROCESS

1. KWONG SING VS. CITY OF MANILA [41 Phil 103; G.R. No. 15972; 11 Oct 1920]
Friday, January 30, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: Kwong Sing, in his own behalf and of other Chinese laundrymen who has general and the same
interest, filed a complaint for a preliminary injunction. The Plaintiffs also questioned the validity of
enforcing Ordinance No. 532 by the city of Manila. Ordinance No. 532 requires that the receipt be
in duplicate in English and Spanish duly signed showing the kind and number of articles delivered by
laundries and dyeing and cleaning establishments. The permanent injunction was denied by the trial court.
The appellants claim is that Ordinance No. 532 savors of class legislation; putting in mind that they are
Chinese nationals. It unjustly discriminates between persons in similar circumstances; and that it
constitutes an arbitrary infringement of property rights. They also contest that the enforcement of the
legislation is an act beyond the scope of their police power. In view of the foregoing, this is an appeal
with the Supreme Court.

Issues:

(1) Whether or Not the enforcement of Ordinance no, 532 is an act beyond the scope of police power

(2) Whether or Not the enforcement of the same is a class legislation that infringes property rights.

Held: Reasonable restraints of a lawful business for such purposes are permissible under the police power.
The police power of the City of Manila to enact Ordinance No. 532 is based on Section 2444, paragraphs
(l) and (ee) of the Administrative Code, as amended by Act No. 2744, authorizes the municipal board of
the city of Manila, with the approval of the mayor of the city:

(l) To regulate and fix the amount of the license fees for the following: xxxx xxxxxlaundries xxxx.

(ee) To enact all ordinances it may deem necessary and proper for the sanitation and safety, the
furtherance of the prosperity, and the promotion of the morality, peace, good order, comfort, convenience,
and general welfare of the city and its inhabitants.

The court held that the obvious purpose of Ordinance No. 532 was to avoid disputes between laundrymen
and their patrons and to protect customers of laundries who are not able to decipher Chinese
charactersfrom being defrauded. (Considering that in the year 1920s, people of Manila are more familiar
with Spanish and maybe English.)

In whether the ordinance is class legislation, the court held that the ordinance invades
no fundamental right, and impairs no personal privilege. Under the guise of police regulation, an attempt
is not made to violate personal property rights. The ordinance is neither discriminatory nor unreasonable
in its operation. It applies to all public laundries without distinction, whether they belong to Americans,
Filipinos, Chinese, or any other nationality. All, without exception, and each every one of them without
distinction, must comply with the ordinance. The obvious objection for the implementation of the
ordinance is based in sec2444 (ee) of the Administrative Code. Although, an additional burden will be
imposed on the business and occupation affected by the ordinance such as that of the appellant by
learning even a few words in Spanish or English, but mostly Arabic numbers in order to properly issue a
receipt, it seems that the same burdens are cast upon the them. Yet, even if private rights of person or
property are subjected to restraint, and even if loss will result to individuals from the enforcement of the
ordinance, this is not sufficient ground for failing to uphold the power of the legislative body. The very
foundation of the police power is the control of private interests for the public welfare.

Finding that the ordinance is valid, judgment is affirmed, and the petition for a preliminary injunction is
denied, with costs against the appellants.

2. GSIS V. MONTESCLAROS

FACTS:

Nicolas Montesclaros, a 72-year-old widower married Milagros Orbiso, who was then 43 years old, on 10 July 1983.
Nicolas filed with the GSIS an application for retirement benefits under the Revised Government Insurance Act of
1977.

In his retirement application, he designated his wife as his sole beneficiary. GSIS approved Nicolas’application for
retirement effective 17 February 1984, granting a lump sum payment of annuity for the first five years and a monthly
annuity after.

Nicolas died on 22 April 1992. Milagros filed with the GSIS a claim for survivorship pension under PD 1146 but was
denied the claim because, under section 18 of PD 1146, the surviving spouse has no right to survivorship pension if
the surviving spouse contracted the marriage with the pensioner within three years before the pensioner qualified for
the pension.

Nicolas wed Milagros on 10 July 1983, less than one year from his date of retirement on 17 February 1984. Milagros
filed with the trial court a special civil action for declaratory relief questioning the validity of Sec. 18 of PD 1146.

The trial court rendered judgment declaring Milagros eligible for survivorship pension and ordered GSIS to pay
Milagros the benefits including interest. Citing Articles 115and 117 of the Family Code, the trial court held that
retirement benefits, which the pensioner has earned for services rendered and for which the pensioner has contributed
through monthly salary deductions, are onerous acquisitions. Since retirement benefits are property the pensioner
acquired through labor, such benefits are conjugal property. The trial court held that the prohibition in Section 18 of
PD 1146 is deemed repealed for being inconsistent with the Family Code, a later law. The Family Code has retroactive
effect if it does not prejudice or impair vested rights.

The trial court held that Section 18 of PD 1146 was repealed by the Family Code, a later law. GSIS appealed to the
Court of Appeals, which affirmed the trial court’s decision. Hence, this appeal.

In a letter dated 10 January 2003, Milagros informed the Court that she has accepted GSIS’ decision disqualifying her
from receiving survivorship pension and that she is no longer interested in pursuing the case. However, the Court will
still resolve the issue despite the manifestation of Milagros because social justice and public interest demand the
resolution of the constitutionality of the proviso.

ISSUE:

Whether the proviso in Section 18 of PD 1146 is constitutional.

HELD:

NO. The sole proviso Sec. 18 of PD 1146 is unconstitutional. Under Section 18 of PD 1146, it prohibits the dependent
spouse from receiving survivorship pension if such dependent spouse married the pensioner within three years before
the pensioner qualified for the pension. The Court holds that such proviso is discriminatory and denies equal protection
of the law.

The proviso is contrary to Section 1, Article III of the Constitution, which provides that [n]o person shall be deprived
of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

The proviso is unduly oppressive in outrightly denying a dependent spouses claim for survivorship pension if the
dependent spouse contracted marriage to the pensioner within the three-year prohibited period.

There is outright confiscation of benefits due the surviving spouse without giving the surviving spouse an opportunity
to be heard.

The proviso undermines the purpose of PD 1146, which is to assure comprehensive and integrated social security and
insurance benefits to government employees and their dependents in the event of sickness, disability, death, and
retirement of the government employees.

A statute based on reasonable classification does not violate the constitutional guaranty of the equal protection
of the law. The requirements for a valid and reasonable classification are:
(1) it must rest on substantial distinctions;
(2) it must be germane to the purpose of the law;
(3) it must not be limited to existing conditions only; and
(4) it must apply equally to all members of the same class. Thus, the law may treat and regulate one class differently
from another class provided there are real and substantial differences to distinguish one class from another.
The proviso in question does not satisfy these requirements. The proviso discriminates against the dependent spouse
who contracts marriage to the pensioner within three years before the pensioner qualified for the pension. Under the
proviso, even if the dependent spouse married the pensioner more than three years before the pensioners death, the
dependent spouse would still not receive survivorship pension if the marriage took place within three years before the
pensioner qualified for pension. The object of the prohibition is vague. There is no reasonable connection between the
means employed and the purpose intended. The law itself does not provide any reason or purpose for such a
prohibition. If the purpose of the proviso is to prevent deathbed marriages, then we do not see why the proviso reckons
the three-year prohibition from the date the pensioner qualified for pension and not from the date the pensioner died.
The classification does not rest on substantial distinctions. Worse, the classification lumps all those marriages
contracted within three years before the pensioner qualified for pension as having been contracted primarily for
financial convenience to avail of pension benefits.
Indeed, the classification is discriminatory and arbitrary. This is probably the reason Congress deleted the proviso in
Republic Act No. 8291 (RA 8291), otherwise known as the Government Service Insurance Act of 1997, the law
revising the old charter of GSIS (PD 1146). Under the implementing rules of RA 8291, the surviving spouse who
married the member immediately before the members death is still qualified to receive survivorship pension unless
the GSIS proves that the surviving spouse contracted the marriage solely to receive the benefit.
Thus, the present GSIS law does not presume that marriages contracted within three years before retirement or death
of a member are sham marriages contracted to avail of survivorship benefits. The present GSIS law does not
automatically forfeit the survivorship pension of the surviving spouse who contracted marriage to a GSIS member
within three years before the members retirement or death. The law acknowledges that whether the surviving spouse
contracted the marriage mainly to receive survivorship benefits is a matter of evidence. The law no longer prescribes
a sweeping classification that unduly prejudices the legitimate surviving spouse and defeats the purpose for which
Congress enacted the social legislation.
Wherefore, the proviso in Section 18 of Presidential Decree No. 1146 is void for being violative of the constitutional
guarantees of due process and equal protection of the law.