1. G.R. No.

92389 September 11, 1991

HON. JEJOMAR C. BINAY and the MUNICIPALITY OF MAKATI, petitioners,
vs.
HON. EUFEMIO DOMINGO and the COMMISSION ON AUDIT, respondents.
Jejomar C. Binay for himself and for his co-petitioner.
Manuel D. Tamase and Rafael C. Marquez for respondents.

Facts:

Petitioner Municipality of Makati, through its Council, approved Resolution No. 60 which extends P500
burial assistance to bereaved families whose gross family income does not exceed P2,000.00 a
month. The funds are to be taken out of the unappropriated available funds in the municipal
treasury. The Metro Manila Commission approved the resolution. Thereafter, the municipal secretary
certified a disbursement of P400,000.00 for the implementation of the program. However, the
Commission on Audit disapproved said resolution and the disbursement of funds for the
implementation thereof for the following reasons: (1) the resolution has no connection to alleged
public safety, general welfare, safety, etc. of the inhabitants of Makati; (2) government funds must
be disbursed for public purposes only; and, (3) it violates the equal protection clause since it will only
benefit a few individuals.

Issues:

1. Whether Resolution No. 60 is a valid exercise of the police power under the general welfare clause
2. Whether the questioned resolution is for a public purpose
3. Whether the resolution violates the equal protection clause

Held:

1. The police power is a governmental function, an inherent attribute of sovereignty, which was born
with civilized government. It is founded largely on the maxims, "Sic utere tuo et ahenum non laedas
and "Salus populi est suprema lex. Its fundamental purpose is securing the general welfare, comfort
and convenience of the people.

Police power is inherent in the state but not in municipal corporations. Before a municipal corporation
may exercise such power, there must be a valid delegation of such power by the legislature which is
the repository of the inherent powers of the State.

Municipal governments exercise this power under the general welfare clause. Pursuant thereto they
are clothed with authority to "enact such ordinances and issue such regulations as may be necessary
to carry out and discharge the responsibilities conferred upon it by law, and such as shall be
necessary and proper to provide for the health, safety, comfort and convenience, maintain peace and
order, improve public morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein.

2. Police power is not capable of an exact definition but has been, purposely, veiled in general terms
to underscore its all comprehensiveness. Its scope, over-expanding to meet the exigencies of the
times, even to anticipate the future where it could be done, provides enough room for an efficient
and flexible response to conditions and circumstances thus assuring the greatest benefits.

The police power of a municipal corporation is broad, and has been said to be commensurate with,
but not to exceed, the duty to provide for the real needs of the people in their health, safety,
comfort, and convenience as consistently as may be with private rights. It extends to all the great
public needs, and, in a broad sense includes all legislation and almost every function of the municipal
government. It covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it is not limited
thereto, but is broadened to deal with conditions which exists so as to bring out of them the greatest
welfare of the people by promoting public convenience or general prosperity, and to everything
worthwhile for the preservation of comfort of the inhabitants of the corporation. Thus, it is deemed
inadvisable to attempt to frame any definition which shall absolutely indicate the limits of police
power.

Public purpose is not unconstitutional merely because it incidentally benefits a limited number of
persons. As correctly pointed out by the Office of the Solicitor General, "the drift is towards social
welfare legislation geared towards state policies to provide adequate social services, the promotion of
the general welfare, social justice as well as human dignity and respect for human rights." The care
for the poor is generally recognized as a public duty. The support for the poor has long been an
accepted exercise of police power in the promotion of the common good.

3. There is no violation of the equal protection clause. Paupers may be reasonably classified. Different
groups may receive varying treatment. Precious to the hearts of our legislators, down to our local
councilors, is the welfare of the paupers. Thus, statutes have been passed giving rights and benefits
to the disabled, emancipating the tenant-farmer from the bondage of the soil, housing the urban
poor, etc. Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati is a
paragon of the continuing program of our government towards social justice. The Burial Assistance
Program is a relief of pauperism, though not complete. The loss of a member of a family is a painful
experience, and it is more painful for the poor to be financially burdened by such death. Resolution
No. 60 vivifies the very words of the late President Ramon Magsaysay 'those who have less in life,
should have more in law." This decision, however must not be taken as a precedent, or as an official
go-signal for municipal governments to embark on a philanthropic orgy of inordinate dole-outs for
motives political or otherwise. (Binay vs Domingo, G.R. No. 92389, September 11, 1991)

CARLOS SUPERDRUG CORP. vs. DSWD, ET. AL

GR No. 166494, June 29, 2007

FACTS:

Ÿ Petitioners, belonging to domestic corporations and proprietors operating drugstores in the Philippines, are praying
for preliminary injunction assailing the constitutionality of Section 4(a) of Republic Act (R.A.) No. 9257, otherwise known
as the “Expanded Senior Citizens Act of 2003.” On February 26, 2004, R.A. No. 9257, amending R.A. No. 7432, was signed
into law by President Gloria Macapagal-Arroyo and it became effective on March 21, 2004. Section 4(a) of the Act states:

SEC. 4. Privileges for the Senior Citizens. – The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in hotels and
similar lodging establishments, restaurants and recreation centers, and purchase of medicines in all establishments for
the exclusive use or enjoyment of senior citizens, including funeral and burial services for the death of senior citizens;
Ÿ The establishment may claim the discounts granted under (a), (f), (g) and (h) as tax deduction based on the net cost of
the goods sold or services rendered: Provided, That the cost of the discount shall be allowed as deduction from gross
income for the same taxable year that the discount is granted. Provided, further, That the total amount of the claimed
tax deduction net of value added tax if applicable, shall be included in their gross sales receipts for tax purposes and
shall be subject to proper documentation and to the provisions of the National Internal Revenue Code, as amended.

Ÿ The DSWD, on May 8, 2004, approved and adopted the Implementing Rules and Regulations of RA No. 9275, Rule VI,
Article 8 which contains the proviso that the implementation of the tax deduction shall be subject to the Revenue
Regulations to be issued by the BIR and approved by the DOF. With the new law, the Drug Stores Association of the
Philippines wanted a clarification of the meaning of tax deduction. The DOF clarified that under a tax deduction scheme,
the tax deduction on discounts was subtracted from Net Sales together with other deductions which are considered as
operating expenses before the Tax Due was computed based on the Net Taxable Income. On the other hand, under a tax
credit scheme, the amount of discounts which is the tax credit item, was deducted directly from the tax due amount.

Ÿ The DOH issued an Administrative Order that the twenty percent discount shall include both prescription and non-
prescription medicines, whether branded or generic. It stated that such discount would be provided in the purchase of
medicines from all establishments supplying medicines for the exclusive use of the senior citizens.

Ÿ Drug store owners assail the law with the contention that granting the discount would result to loss of profit and
capital especially that such law failed to provide a scheme to justly compensate the discount.
{Petitioners are domestic corporations and proprietors operating drugstores in the Philippines.

Public respondents, on the other hand, include the DSWD, DOH, DOF, DOJ, and the DILG, specifically tasked to monitor the
drugstores’ compliance with the law; promulgate the implementing rules and regulations for the effective implementation of the law;
and prosecute and revoke the licenses of erring drugstore establishments.

President Gloria Macapagal-Arroyo signed into law R.A. No. 9257 otherwise known as the “Expanded Senior Citizens Act of 2003.”

Sec. 4(a) of the Act states that The senior citizens shall be entitled to the following: (a) the grant of twenty percent (20%) discount from
all establishments relative to the utilization of services in hotels and similar lodging establishments, restaurants and recreation centers,
and purchase of medicines in all establishments for the exclusive use or enjoyment of senior citizens, including funeral and burial
services for the death of senior citizens;

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes deprivation of private property. Compelling
drugstore owners and establishments to grant the discount will result in a loss of profit and capital because according to them
drugstores impose a mark-up of only 5% to 10% on branded medicines, and the law failed to provide a scheme whereby drugstores
will be justly compensated for the discount.)

ISSUE: WON Section 4(a) of the Expanded Senior Citizens Act is unconstitutional or not violative of Article 3 Section 9 of
the Constitution which provides that private property shall not be taken for public use without just compensation and
the equal protection clause of Article 3 Section 1.
(ISSUE: WON RA 9257 is constitutional.)

HELD:
(YES. The law is a legitimate exercise of police power which, similar to the power of eminent domain, has general welfare for its object.
Police power is not capable of an exact definition, but has been purposely veiled in general terms to underscore its comprehensiveness
to meet all exigencies and provide enough room for an efficient and flexible response to conditions and circumstances, thus assuring
the greatest benefits. Accordingly, it has been described as the most essential, insistent and the least limitable of powers, extending
as it does to all the great public needs. It is [t]he power vested in the legislature by the constitution to make, ordain, and establish all
manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good and welfare of the commonwealth, and of the subjects of the same.
For this reason, when the conditions so demand as determined by the legislature, property rights must bow to the primacy of police
power because property rights, though sheltered by due process, must yield to general welfare.

Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of petitioners that they
will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover, in the absence of evidence demonstrating
the alleged confiscatory effect of the provision in question, there is no basis for its nullification in view of the presumption of validity
which every law has in its favor.

Given these, it is incorrect for petitioners to insist that the grant of the senior citizen discount is unduly oppressive to their business,
because petitioners have not taken time to calculate correctly and come up with a financial report, so that they have not been able to
show properly whether or not the tax deduction scheme really works greatly to their disadvantage.

In treating the discount as a tax deduction, petitioners insist that they will incur losses. However,petitioner’s computation is clearly
flawed.

For purposes of reimbursement, the law states that the cost of the discount shall be deducted from gross income, the amount of
income derived from all sources before deducting allowable expenses, which will result in net income. Here, petitioners tried to show
a loss on a per transaction basis, which should not be the case. An income statement, showing an accounting of petitioners sales,
expenses, and net profit (or loss) for a given period could have accurately reflected the effect of the discount on their income. Absent
any financial statement, petitioners cannot substantiate their claim that they will be operating at a loss should they give the discount.
In addition, the computation was erroneously based on the assumption that their customers consisted wholly of senior citizens. Lastly,
the 32% tax rate is to be imposed on income, not on the amount of the discount.

While the Constitution protects property rights, petitioners must accept the realities of business and the State, in the exercise of police
power, can intervene in the operations of a business which may result in an impairment of property rights in the process.)

Principles:
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. The measure is not the taker's gain but the owner's loss. The word just is used to intensify
the meaning of the word compensation, and to convey the idea... that the equivalent to be rendered for
the property to be taken shall be real, substantial, full and ample.
The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-
building, and to grant benefits and privileges to them for their improvement and well-being as the State
considers them an integral part of our society.
Article XIII of the Constitution provides the precept for the protection of property, various laws and
jurisprudence, particularly on agrarian reform and the regulation of contracts and public utilities,
continuously... serve as a reminder that the right to property can be relinquished upon the command of
the State for the promotion of public good.

MDA 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.
Metropolitan Manila Development Authority (MMDA), petitioner herein, is a Government Agency tasked with the delivery
of basic services in Metro Manila. Bel-Air Village Association (BAVA), respondent herein, received a letter of request from
the petitioner to open Neptune Street of Bel-Air Village for the use of the public. The said opening of Neptune Street will be for
the safe and convenient movement of persons and to regulate the flow of traffic in Makati City. This was pursuant to MMDA
law or Republic Act No. 7924. On the same day, the respondent was appraised that the perimeter wall separating the
subdivision and Kalayaan Avenue would be demolished.
The respondent, to stop the opening of the said street and demolition of the wall, filed a preliminary injunction and a
temporary restraining order. Respondent claimed that the MMDA had no authority to do so and the lower court decided in
favor of the Respondent. Petitioner appealed the decision of the lower courts and claimed that it has the authority to open
Neptune Street to public traffic because it is an agent of the State that can practice police power in the delivery of basic
services in Metro Manila.)

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?
(Whether or not the MMDA has the mandate to open Neptune Street to public traffic pursuant to its regulatory and police
powers.)

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.

(The Court held that the MMDA does not have the capacity to exercise police power. Police power is primarily lodged in the
National Legislature. However, police power may be delegated to government units. Petitioner herein is a development
authority and not a political government unit. Therefore, the MMDA cannot exercise police power because it cannot be
delegated to them.

It is not a legislative unit of the government. Republic Act No. 7924 does not empower the MMDA to enact ordinances,
approve resolutions and appropriate funds for the general welfare of the inhabitants of Manila. There is no syllable in the
said act that grants MMDA police power. It is an agency created for the purpose of laying down policies and coordinating
with various national government agencies, people’s organizations, non-governmental organizations and the private sector
for the efficient and expeditious delivery of basic services in the vast metropolitan area.)
 DISPOSITION
IN VIEW WHEREOF, the petition is denied. The Decision and Resolution of the Court of Appeals
are affirmed.

CITY OF MANILA VS. LAGUIO

FACTS: Private respondent Malate Tourist Development Corporation (MTDC) is a

corporation engaged in the business of operating hotels, motels, hostels and lodging
houses. It built and opened Victoria Court in Malate which was licensed as a motel
although duly accredited with the DOT as a hotel. On 28 June 1993, MTDC filed a Petition
for Declaratory Relief with Prayer for a Writ of Preliminary Injunction and/or Temporary
Restraining Order7 with the lower court impleading as defendants, herein petitioners City
of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the
City Council of Manila (City Council). MTDC prayed that the Ordinance, insofar as it
includes motels and inns as among its prohibited establishments, be declared invalid and
unconstitutional.
Enacted by the City Council and approved by petitioner City Mayor, the said Ordinance is
entitled–

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF

BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT,
SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING
PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.
Judge Laguio rendered the assailed Decision (in favour of respondent).

On 11 January 1995, petitioners filed the present Petition, alleging that the following errors
were committed by the lower court in its ruling:

(1) It erred in concluding that the subject ordinance is ultra vires, or otherwise, unfair,
unreasonable and oppressive exercise of police power;
(2) It erred in holding that the questioned Ordinance contravenes P.D. 499 which allows
operators of all kinds of commercial establishments, except those specified therein; and
(3) It erred in declaring the Ordinance void and unconstitutional.

ISSUE: WON the ordinance is unconstitutional.

HELD: The Court is of the opinion, and so holds, that the lower court did not err in
declaring the Ordinance, as it did, ultra vires and therefore null and void.
The tests of a valid ordinance are well established. A long line of decisions has held that for
an ordinance to be valid, it must not only be within the corporate powers of the local
government unit to enact and must be passed according to the procedure prescribed by
law, it must also conform to the following substantive requirements:
(1) must not contravene the Constitution or any statute;
(2) must not be unfair or oppressive;
(3) must not be partial or discriminatory;
(4) must not prohibit but may regulate trade;
(5) must be general and consistent with public policy; and
(6) must not be unreasonable.
The Ordinance was passed by the City Council in the exercise of its police power, an
enactment of the City Council acting as agent of Congress. This delegated police power is
found in Section 16 of the LGC, known as the general welfare clause.
The inquiry in this Petition is concerned with the validity of the exercise of such delegated
power.

A. The Ordinance contravenes

the Constitution

The enactment of the Ordinance was an invalid exercise of delegated power as it is

unconstitutional and repugnant to general laws.
The police power granted to LGUs must always be exercised with utmost observance of the
rights of the people to due process and equal protection of the law. Due process requires
the intrinsic validity of the law in interfering with the rights of the person to his life, liberty
and property.

Requisites for the valid exercise

of Police Power are not met

To successfully invoke the exercise of police power as the rationale for the enactment of
the Ordinance, and to free it from the imputation of constitutional infirmity, not only must
it appear that the interests of the public generally, as distinguished from those of a
particular class, require an interference with private rights, but the means adopted must
be reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.60 It must be evident that no other alternative for the accomplishment of
the purpose less intrusive of private rights can work. A reasonable relation must exist
between the purposes of the police measure and the means employed for its
accomplishment, for even under the guise of protecting the public interest, personal rights
and those pertaining to private property will not be permitted to be arbitrarily invaded.

Lacking a concurrence of these two requisites, the police measure shall be struck down as
an arbitrary intrusion into private rights a violation of the due process clause.

The object of the Ordinance was, accordingly, the promotion and protection of the social
and moral values of the community. Granting for the sake of argument that the objectives
of the Ordinance are within the scope of the City Council’s police powers, the means
employed for the accomplishment thereof were unreasonable and unduly oppressive.

The worthy aim of fostering public morals and the eradication of the community’s social
ills can be achieved through means less restrictive of private rights; it can be attained by
reasonable restrictions rather than by an absolute prohibition. The closing down and
transfer of businesses or their conversion into businesses “allowed” under the Ordinance
have no reasonable relation to the accomplishment of its purposes. Otherwise stated, the
prohibition of the enumerated establishments will not per se protect and promote the
social and moral welfare of the community; it will not in itself eradicate the alluded social
ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in
Manila.

The enumerated establishments are lawful pursuits which are not per se offensive to the
moral welfare of the community. While a motel may be used as a venue for immoral sexual
activity, it cannot for that reason alone be punished. It cannot be classified as a house of
ill-repute or as a nuisance per se on a mere likelihood or a naked assumption.

If the City of Manila so desires to put an end to prostitution, fornication and other social
ills, it can instead impose reasonable regulations such as daily inspections of the
establishments for any violation of the conditions of their licenses or permits; it may
exercise its authority to suspend or revoke their licenses for these violations; and it may
even impose increased license fees. In other words, there are other means to reasonably
accomplish the desired end.

It is readily apparent that the means employed by the Ordinance for the achievement of its
purposes, the governmental interference itself, infringes on the constitutional guarantees
of a person’s fundamental right to liberty and property.

Modality employed is
unlawful taking

It is an ordinance which permanently restricts the use of property that it can not be used
for any reasonable purpose goes beyond regulation and must be recognized as a taking of
the property without just compensation.78 It is intrusive and violative of the private
property rights of individuals.

There are two different types of taking that can be identified. A “possessory” taking occurs
when the government confiscates or physically occupies property. A “regulatory” taking
occurs when the government’s regulation leaves no reasonable economically viable use of
the property.

What is crucial in judicial consideration of regulatory takings is that government

regulation is a taking if it leaves no reasonable economically viable use of property in a
manner that interferes with reasonable expectations for use. When the owner of real
property has been called upon to sacrifice all economically beneficial uses in the name of
the common good, that is, to leave his property economically idle, he has suffered a taking.

The Ordinance gives the owners and operators of the “prohibited” establishments three (3)
months from its approval within which to “wind up business operations or to transfer to
any place outside of the Ermita-Malate area or convert said businesses to other kinds of
business allowable within the area.” The directive to “wind up business operations”
amounts to a closure of the establishment, a permanent deprivation of property, and is
practically confiscatory. Unless the owner converts his establishment to accommodate an
“allowed” business, the structure which housed the previous business will be left empty
and gathering dust. It is apparent that the Ordinance leaves no reasonable economically
viable use of property in a manner that interferes with reasonable expectations for use.
The second and third options to transfer to any place outside of the Ermita-Malate area
or to convert into allowed businessesare confiscatory as well. The penalty of permanent
closure in cases of subsequent violations found in Section 4 of the Ordinance is also
equivalent to a “taking” of private property.

Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning
ordinance, although a valid exercise of police power, which limits a “wholesome” property
to a use which can not reasonably be made of it constitutes the taking of such property
without just compensation. Private property which is not noxious nor intended for noxious
purposes may not, by zoning, be destroyed without compensation. Such principle finds no
support in the principles of justice as we know them. The police powers of local
government units which have always received broad and liberal interpretation cannot be
stretched to cover this particular taking.

Further, The Ordinance confers upon the mayor arbitrary and unrestricted power to close
down establishments. Ordinances such as this, which make possible abuses in its
execution, depending upon no conditions or qualifications whatsoever other than the
unregulated arbitrary will of the city authorities as the touchstone by which its validity is
to be tested, are unreasonable and invalid. The Ordinance should have established a rule
by which its impartial enforcement could be secured. Similarly, the Ordinance does not
specify the standards to ascertain which establishments “tend to disturb the community,”
“annoy the inhabitants,” and “adversely affect the social and moral welfare of the
community.”

The cited case supports the nullification of the Ordinance for lack of comprehensible
standards to guide the law enforcers in carrying out its provisions.

Petitioners cannot therefore order the closure of the enumerated establishments without
infringing the due process clause. These lawful establishments may be regulated, but not
prevented from carrying on their business.

B. The Ordinance violates Equal

Protection Clause

In the Court’s view, there are no substantial distinctions between motels, inns, pension
houses, hotels, lodging houses or other similar establishments. By definition, all are
commercial establishments providing lodging and usually meals and other services for the
public. No reason exists for prohibiting motels and inns but not pension houses, hotels,
lodging houses or other similar establishments. The classification in the instant case is
invalid as similar subjects are not similarly treated, both as to rights conferred and
obligations imposed. It is arbitrary as it does not rest on substantial distinctions bearing a
just and fair relation to the purpose of the Ordinance.

The Court likewise cannot see the logic for prohibiting the business and operation of
motels in the Ermita-Malate area but not outside of this area. A noxious establishment
does not become any less noxious if located outside the area.

The standard “where women are used as tools for entertainment” is also discriminatory as
prostitutionone of the hinted ills the Ordinance aims to banishis not a profession
exclusive to women. Both men and women have an equal propensity to engage in
prostitution. Thus, the discrimination is invalid.

C. The Ordinance is repugnant

to general laws; it is ultra vires

The Ordinance is in contravention of the Code (Sec 458) as the latter merely empowers
local government units to regulate, and not prohibit, the establishments enumerated in
Section 1 thereof.

With respect to cafes, restaurants, beerhouses, hotels, motels, inns, pension houses,
lodging houses, and other similar establishments, the only power of the City Council to
legislate relative thereto is to regulate them to promote the general welfare. The Code still
withholds from cities the power to suppress and prohibit altogether the establishment,
operation and maintenance of such establishments.

It is well to point out that petitioners also cannot seek cover under the general welfare
clause authorizing the abatement of nuisances without judicial proceedings. That tenet
applies to a nuisance per se, or one which affects the immediate safety of persons and
property and may be summarily abated under the undefined law of necessity. It can not be
said that motels are injurious to the rights of property, health or comfort of the
community. It is a legitimate business. If it be a nuisance per accidens it may be so proven
in a hearing conducted for that purpose. A motel is not per se a nuisance warranting its
summary abatement without judicial intervention.

Not only does the Ordinance contravene the Code, it likewise runs counter to the
provisions of P.D. 499. As correctly argued by MTDC, the statute had already converted
the residential Ermita-Malate area into a commercial area. The decree allowed the
establishment and operation of all kinds of commercial establishments except warehouse
or open storage depot, dump or yard, motor repair shop, gasoline service station, light
industry with any machinery or funeral establishment. The rule is that for an ordinance to
be valid and to have force and effect, it must not only be within the powers of the council
to enact but the same must not be in conflict with or repugnant to the general law.

Conclusion
All considered, the Ordinance invades fundamental personal and property rights and
impairs personal privileges. It is constitutionally infirm. The Ordinance contravenes
statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently
detailed and explicit that abuses may attend the enforcement of its sanctions. And not to
be forgotten, the City Council under the Code had no power to enact the Ordinance and is
therefore ultra vires, null and void.

Petition Denied.

Acebedo Optical Co. vs. Court of Appeals, G.R. No. 100152, March
31, 2000
Title of the Case: Acebedo Optical Co. vs. Court of Appeals
Nature: Petition for review under Rule 45 of the Rules of Court seeking to nullify the dismissal by the Court of Appeals of
the original petition for certiorari
Keywords: Optical shop, Business Permit

Petitioner: Acebedo Optical Company, Inc.

Respondent: The Honorable Court of Appeals

Facts: Petitioner applied with the Office of the City Mayor of Iligan for a business permit. After consideration of
petitioner's application and the opposition interposed thereto by local optometrists, respondent City Mayor issued
Business Permit No. 5342 subject to the following conditions: (1) Since it is a corporation, Acebedo cannot put up an
optical clinic but only a commercial store; (2) It cannot examine and/or prescribe reading and similar optical glasses for
patients, because these are functions of optical clinics; (3) It cannot sell reading and similar eyeglasses without a
prescription having first been made by an independent optometrist or independent optical clinic. Acebedo can only sell
directly to the public, without need of a prescription, Ray-Ban and similar eyeglasses; (4) It cannot advertise optical
lenses and eyeglasses, but can advertise Ray-Ban and similar glasses and frames; (5) It is allowed to grind lenses but
only upon the prescription of an independent optometrist.

On December 5, 1988, private respondent Samahan ng Optometrist Sa Pilipinas (SOPI lodged a complaint against the
petitioner alleging that Acebedo had violated the conditions set forth in its business permit and requesting the
cancellation and/or revocation of such permit. On July 19, 1989, the City Mayor sent petitioner a Notice of Resolution and
Cancellation of Business Permit effective as of said date and giving petitioner three (3) months to wind up its affairs.

Issue: Whether the City Mayor has the authority to impose special conditions, as a valid exercise of police power, in the
grant of business permits

Ratio: Police power as an inherent attribute of sovereignty is the power to prescribe regulations to promote the health,
morals, peace, education, good order or safety and general welfare of the people. It is essentially regulatory in nature
and the power to issue licenses or grant business permits, if exercised for a regulatory and not revenue-raising purpose,
is within the ambit of this power. The authority of city mayors to issue or grant licenses and business permits is beyond
cavil. However, the power to grant or issue licenses or business permits must always be exercised in accordance with law,
with utmost observance of the rights of all concerned to due process and equal protection of the law.

In the case under consideration, the business permit granted by respondent City Mayor to petitioner was burdened with
several conditions. Petitioner agrees with the holding by the Court of Appeals that respondent City Mayor acted beyond
his authority in imposing such special conditions in its permit as the same have no basis in the law or ordinance. Public
 respondents and private respondent SOPI are one in saying that the imposition of said special conditions is well within the
authority of the City Mayor as a valid exercise of police power.

The issuance of business licenses and permits by a municipality or city is essentially regulatory in nature. The authority,
which devolved upon local government units to issue or grant such licenses or permits, is essentially in the exercise of the
police power of the State within the contemplation of the general welfare clause of the Local Government Code.

What is sought by petitioner from respondent City Mayor is a permit to engage in the business of running an optical shop.
It does not purport to seek a license to engage in the practice of optometry. The objective of the imposition of subject
conditions on petitioner's business permit could be attained by requiring the optometrists in petitioner's employ to
produce a valid certificate of registration as optometrist, from the Board of Examiners in Optometry. A business permit is
issued primarily to regulate the conduct of business and the City Mayor cannot, through the issuance of such permit,
regulate the practice of a profession. Such a function is within the exclusive domain of the administrative agency
specifically empowered by law to supervise the profession, in this case the Professional Regulations Commission and the
Board of Examiners in Optometry.

Ruling: WHEREFORE, the petition is GRANTED; the Decision of the Court of Appeals in CA-GR SP No. 22995 REVERSED:
and the respondent City Mayor is hereby ordered to reissue petitioner's business permit in accordance with law and with
this disposition. No pronouncement as to costs.

Doctrine: The scope of police power has been held to be so comprehensive as to encompass almost all matters affecting
the health, safety, peace, order, morals, comfort and convenience of the community. Police power is essentially
regulatory in nature and the power to issue licenses or grant business permits, if exercised for a regulatory and not
revenue-raising purpose, is within the ambit of this power.

Requisites

1 - LAWFUL SUBJECT: The interests of the public generally, as distinguished from those of a particular class, require
the exercise of the police power

2 - LAWFUL MEANS: The means employed are reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals

Taxicab Operators vs. Board of Transportation

G.R. No. L-59234. September 30, 1982.

Facts:
Petitioners who are taxicab operators assail the constitutionality of Memorandum Circular No. 77-42
issued by the Board of Transportation (BOT) providing for the phasing out and replacement of old and
dilapidated taxicabs; as well as Implementing Circular No. 52 issued pursuant thereto by the Bureau of
Land Transportation (BLT) instructing personnel of the BLT within the National Capital Region to
implement the said BOT Circular, and formulating a schedule of phase-out of vehicles to be allowed and
accepted for registration as public conveyances.

Petitioners allege that the questioned Circulars did not afford them procedural and substantive due
process, equal protection of the law, and protection against arbitrary and unreasonable classification and
standard. Among others, they question the issuance of the Circulars without first calling them to a
conference or requiring them to submit position papers or other documents enforceability thereof only in
Metro Manila; and their being applicable only to taxicabs and not to other transportation services.
(OnOctober 10, 1977, BOT issued Memorandum Circular No. 77-42 that aimed to phase out and replace old dilapidated taxis
to insure only safe comfortable units are used by the public, to respond to complaints by metro manila residents regarding
the old dilapidated taxis, to make the commuting public more comfortable, have more convenience and safety. 6 years is
enough for taxi operators to get back cost of unit plus profits. à no car beyond 6 years can still be operated as taxi.
· Taxis model 1971 were considered withdrawn on Dec 31, 1977 à applied it to succeeding years just add one year to both
dates. à they had to surrender the expired taxi’s plates to the BoT for turnover to Land Transpo Commission.
· Pursuant to the above BOT circular, respondent Director of the Bureau of Land Transportation (BLT) issued Implementing
Circular No. 52, dated August 15, 1980, instructing the Regional Director, the MV Registrars and other personnel of BLT,
all within the NCR, to implement the phasing out of the taxis.
· On January 27, 1981, petitioners filed a Petition with the BOT, docketed as Case No. 80-7553, seeking to nullify MC No.
77-42 or to stop its implementation; to allow the registration and operation in 1981 and subsequent years of taxicabs of
model 1974, as well as those of earlier models which were phased-out, provided that, at the time of registration, they are
roadworthy and fit for operation.)

Issues:
Whether or not the constitutional guarantee of due process was denied to the taxicab operators and/or
other persons affected by the assailed Circular No. 52.
Held:

The Supreme Court held that there was no denial of due process since calling the taxicab operators or
persons who may be affected by the questioned Circulars to a conference or requiring them to submit
position papers or other documents is only one of the options open to the BOT which is given wide
discretionary authority under P.D. No. 101; and fixing a six- year ceiling for a car to be operated as taxicab
is a reasonable standard adopted to apply to all vehicles affected uniformly, fairly, and justly.

The Court also ruled that neither has the equal protection clause been violated by initially enforcing the
Circulars only in Metro Manila since it is of common knowledge that taxicabs in this city, compared to
those of other places, are subjected to heavier traffic pressure and more constant use, thus making for a
substantial distinction; nor by non-application of the Circulars to other transportation services because the
said Circulars satisfy the criteria required under the equal protection clause, which is the uniform
operation by legal means so that all persons under identical or similar circumstances would be accorded
the same treatment both in privilege conferred and the liabilities imposed.

It is clear from the provision of Section 2 of P.D. 101 aforequoted, that the leeway accorded the Board
gives it a wide range of choice in gathering necessary information or data in the formulation of any policy,
plan or program. It is not mandatory that it should first call a conference or require the submission of
position papers or other documents from operators or persons who maybe affected, this being only one of
the options open to the Board, which is given wide discretionary authority. Petitioners cannot justifiably
claim, therefore, that they were deprived of procedural due process. Neither can they state with certainty
that public respondents had not availed of other sources of inquiry prior to issuing the challenged
Circulars. Operators of public conveyances are not the only primary sources of the data and information
that may be desired by the BOT.
G.R. No. L-24153 February 14, 1983

TOMAS VELASCO, LOURDES RAMIREZ, SY PIN, EDMUNDO UNSON, APOLONIA RAMIREZ and LOURDES LOMIBAO, as
component members of the STA. CRUZ BARBERSHOP ASSOCIATION, in their own behalf and in representation of the
other owners of barbershops in the City of Manila, petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS, City Mayor of Manila, HON. HERMINIO A. ASTORGA, Vice-Mayor and Presiding Officer of
the Municipal Board in relation to Republic Act 4065, THE MUNICIPAL BOARD OF THE CITY OF MANILA and EDUARDO
QUINTOS SR., Chief of Police of the City of Manila, respondents-appellees.

Leonardo L. Arguelles for respondent-appellant.

FERNANDO, C.J.:

This is an appeal from an order of the lower court dismissing a suit for declaratory relief challenging the constitutionality
based on Ordinance No. 4964 of the City of Manila, the contention being that it amounts to a deprivation of property of
petitioners-appellants of their means of livelihood without due process of law. The assailed ordinance is worded thus: "It
shall be prohibited for any operator of any barber shop to conduct the business of massaging customers or other
persons in any adjacent room or rooms of said barber shop, or in any room or rooms within the same building where the
barber shop is located as long as the operator of the barber shop and the room where massaging is conducted is the
same person." 1 As noted in the appealed order, petitioners-appellants admitted that criminal cases for the violation of
this ordinance had been previously filed and decided. The lower court, therefore, held that a petition for declaratory
relief did not lie, its availability being dependent on there being as yet no case involving such issue having been filed. 2

Even if such were not the case, the attack against the validity cannot succeed. As pointed out in the brief of
respondents-appellees, it is a police power measure. The objectives behind its enactment are: "(1) To be able to impose
payment of the license fee for engaging in the business of massage clinic under Ordinance No. 3659 as amended by
Ordinance 4767, an entirely different measure than the ordinance regulating the business of barbershops and, (2) in
order to forestall possible immorality which might grow out of the construction of separate rooms for massage of
customers." 3 This Court has been most liberal in sustaining ordinances based on the general welfare clause. As far back
as U.S. v. Salaveria, 4 a 1918 decision, this Court through Justice Malcolm made clear the significance and scope of such a
clause, which "delegates in statutory form the police power to a municipality. As above stated, this clause has been
given wide application by municipal authorities and has in its relation to the particular circumstances of the case been
liberally construed by the courts. Such, it is well to really is the progressive view of Philippine jurisprudence." 5 As it was
then, so it has continued to be. 6 There is no showing, therefore, of the unconstitutionality of such ordinance.

WHEREFORE, the appealed order of the lower court is affirmed. No costs

Facts: Petitioners assailed the validity of Ordinance 4964, prohibiting barbershop to conduct massaging
customers in a separate room or in any room in the same building where the operator of the barbershop
and the room of massaging is the same. The contention being that it amounts to a deprivation of property
of petitioners-appellants of their means of livelihood without due process of law. Lower Court dismissed
the petition for declaratory relief.

Issue: Whether or not Ordinance 4964 is unconstitutional?

Decision: Decision affirmed. Order 4964 is a police power measure in order to forestall possible
immorality which might grow out of the construction of separate rooms for massage of customers.
Ermita-Malate Hotel Operations vs. City of Manila

Ermita-Malate Hotel Operations vs. City of Manila

Facts: On July 5, 1963 the petition for prohibition against Ordinance No. 4760 was filed by Ermita-Malate Hotel and
Motel Operators Association, one of its members, Hotel del Mar Inc., and Go Chiu, who is "the latter’s president and
general manager" against the respondent Mayor of the City of Manila who was sued in his capacity as such "charged
with the general power and duty to enforce ordinances of the City of Manila and to give the necessary orders for the
faithful execution and enforcement of such ordinances." It was alleged that the petitioner non-stock corporation is
dedicated to the promotion and protection of the interest of its eighteen (18) members "operating hotels and motels,
characterized as legitimate businesses duly licensed by both national and city authorities, regularly paying taxes,
employing and giving livelihood to not less than 2,500 person and representing an investment of more than P3 million."
It was then alleged that on June 13, 1963, the Municipal Board of the City of Manila enacted Ordinance No. 4760,
approved on June 14, 1963 by the then Vice-Mayor Herminio Astorga, who was at the time acting as Mayor of the City of
Manila. There was the assertion of its being beyond the powers of the Municipal Board of the City of Manila to enact
insofar as it would regulate motels, on the ground that in the revised charter of the City of Manila or in any other law.
Sec. 1: It was a violation of privacy and it was against self-incrimination and that is why it is unconstitutional and void.
Sec. 2: classifying rooms and prohibiting persons under 18 to be given any room without the company of parents. On
August 3, 1963 an answer was filed regarding the respondent mayor that the petitioners are licensed to engage in the
hotel or motel business in the City of Manila, of the provisions of the cited Ordinance but a denial of its alleged nullity,
whether on statutory or constitutional grounds the petition did fail to state a cause of action and that the challenged
ordinance bears a reasonable relation, to a proper purpose, which is to curb immorality, a valid and proper exercise of
the police power and that only the guests or customers not before the court could complain of the alleged invasion of
the right to privacy and the guaranty against self incrimination, with the assertion that the issuance of the preliminary
injunction ex parte was contrary to law, respondent Mayor prayed for, its dissolution and the dismissal of the petition.

Issue: WON Ordinance No. 4760 of the City of Manila is violative of the due process clause

Ruling: The lower court held that it is and adjudged it "unconstitutional, and, therefore, null and void." Nor does the
restriction on the freedom to contract, insofar as the challenged ordinance makes it unlawful for the owner, manager,
keeper or duly authorized representative of any hotel, motel, lodging house, tavern, common inn or the like, to lease or
rent room or portion thereof more than twice every 24 hours, with a proviso that in all cases full payment shall be
charged, call for a different conclusion. Again, such a limitation cannot be viewed as a transgression against the
command of due process. It is neither unreasonable nor arbitrary. The right of the individual is necessarily subject to
reasonable restraint by general law for the common good x x x The liberty of the citizen may be restrained in the interest
of the public health, or of the public order and safety, or otherwise within the proper scope of the police power."28The
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.31 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.The attack against the validity of the challenged ordinance cannot be considered a success.
Constitutional Law: REPUBLIC VS. PLDT

REPUBLIC VS. PLDT

Facts:

The plaintiff Republic of the Philippines is a political entity exercising government powers through one of its branches,
the Bureau of Telecommunication. Herein defendant, PLDT is a public service corporation holding a franchise to install
operates and maintains a telephone system.

After its creation, the BOT set up its own government telephone system by utilizing its own appropriations and other
equipment and by renting trunk lines of the PLDT to enable the govt offices to call privately. BOT entered into an
agreement with the RCA communications for joint overseas telephone service whereby BOT would convey overseas
calls received by RCA to local residents. PLDT complained to the BOT that it was a violation of the condition of their
agreement since the BOT had used trunk lines only for the use of government offices but even to serve private
persons or the general public in competition with the business of PLDT. Subsequently, the plaintiff commenced suit
against PLDT asking the court judgment be rendered ordering the PLDT to execute a contract with the plaintiff,
through the BOT for the use of the facilities of PLDT's telephone system throughout the country under such conditions
as the court may consider reasonable. The CFI rendered judgment stating that it could not compel PLDT to enter into
such agreement. Hence this petition.

ISSUE:

Whether or not the defendant PLDT can be compelled to enter into a contract with the plaintiff.

HELD:
The parties cannot be coerced to enter into a contract where no agreement is had between them. While the Republic
may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the sovereign power
of eminent domain, require the telephone company to permit interconnection of the government telephone system
and that of the PLDT subject to just compensation. The use of PLDT’s lines and services are subjected to a burden to
the respondent for the public use and benefit, thus, they constitute properties over which the power of eminent
domain may be exercised.

Republic vs. La Orden De PP. Benedictinos De Filipinas, G.R.

No. L-12792, February 28, 1961
The Power of Eminent Domain

To ease and solve the daily traffic congestion on Legarda Street, the Government drew plans to
extend Azcarraga street from its junction with Mendiola street, up to the Sta. Mesa Rotonda,
Sampaloc, Manila.

The petitioner in this case is the Republic of the Philippines through the Office of the
Solicitor General; and the respondent is La Orden de PP. Benedictinos de Filipinas, a
domestic religious corporation that owns the San Beda College.

Facts: To ease and solve the daily traffic congestion on Legarda Street, the Government drew
plans to extend Azcarraga St. (now Recto) from its junction with Mendiola St., up to the Sta.
Mesa Rotonda, Sampaloc, Manila. To carry out this plan it offered to buy a portion of
approximately 6,000 square meters of a bigger parcel belonging to La Orden situated on
Mendiola St. Not having been able to reach an agreement on the matter with the owner, the
Government instituted an expropriation proceeding. On May 27, 1957 the trial court valued the
property in question at P270,000.00 and authorized appellant to take immediate possession
upon depositing said amount. The deposit having been made with the City Treasurer of Manila,
the trial court issued the corresponding order directing the Sheriff of Manila to place appellant in
possession of the property aforesaid.

In answer, the herein appellee filed a motion to dismiss the complaint based on the grounds
that: (1) the property sought to be expropriated is already dedicated to public use and therefore
is not subject to expropriation; (2) there is no necessity for the proposed expropriation; (3) the
proposed Azcarraga Extension could pass through a different site which would entail less
expense to the Government and which would not necessitate the expropriation of a property
dedicated to education.

The trial court granted the motion, holding that the expropriation was not of extreme necessity.
Hence this present petition.

Issue: Whether or not there is a genuine necessity for the exercise of the Power of Eminent
Domain.

Held: It is the rule in this jurisdiction that private property may be expropriated for public use
and upon payment of just compensation; that condemnation of private property is justified only
if it is for the public good and there is a genuine necessity therefor of a public character.
Consequently, the courts have the power to inquire into the legality of the exercise of the right
of eminent domain and to determine whether or not there is a genuine necessity therefor.

It does not need extended argument to show that whether or not the proposed opening of the
Azcarraga extension is a necessity in order to relieve the daily congestion of traffic on Legarda
St., is a question of fact dependent not only upon the facts of which the trial court very liberally
took judicial notice but also up on other factors that do not appear of record and must,
therefore, be established by means of evidence. The parties should have been given an
opportunity to present their respective evidence upon these factors and others that might
be of direct or indirect help in determining the vital question of fact involved, namely, the need
to open the extension of Azcarraga street to ease and solve the traffic congestion on Legarda
street.

WHEREFORE, the appealed order of dismissal is set aside and the present case is
remanded to the trial court for further proceedings in accordance with this decision.
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].)
Republic vs. Vda. De Castellvi, et al. G.R. No. L-20620 August 15, 1974

FACTS: This case involves two cases of a complaint for eminent domain – one against Carmen Vda. de Castellvi, as the
administratix of the estate of the late Alfonso de Castellvi, and the other is against Maria Nieves Toledo-Gozun.

Republic: the fair market value of the subject properties, according to the Committee on Appraisal for the Province of
Pampanga, was not more than P 2,000 per hectare, or a total market value of P 259,669.10.

Castellvi: the subject land, being a residential land, had a fair market value of P15.00 per square meter, so it had a total
market value of P 11,389,485.

: The Republic, through the Philippine Air Force (PAF), had been, despite repeated demands, illegally occupying her
property since July 1, 1956, thereby preventing her from using and disposing of it, thus causing her damages by way of
unrealized profit.

: This stemmed from the fact that there was a lease agreement between Castellvi and the PAF on a yearly basis, which
started on July 1, 1947. When the contract expires, Castellvi did not renew the same because they want to sell the
leased property.

Toledo-Gozun: the parcels of land owned by her were residential lands and the fair market value of said lands was P
15.00 per square meter, so they had a total market value of P 8,085,675

: the complaint be dismissed, or that she be paid the amount of P 8,085,675, plus interest thereon at the rate of 6% per
annum from October 13, 1959, and attorney’s fess in the amount of P 50,000.

RTC: ordered that the Republic be placed in possession of the lands after it had deposited with the Provincial Treasurer
of Pampanga the amount of P 259,669.10.

: authorized the Provincial Treasurer of Pampanga to pay Toledo-Gozun the sum of P 107,609 as provisional
value of her lands

: authorized the Provincial Treasurer of Pampanga to pay Castellvi the amount of P 151,859.80 as provisional
value of the land

: appointed three commissioners to determine the value of the subject properties

Commissioners: Atty. Amadeo Yuzon, as commissioner for the court; Atty. Felicisimo Pamandanan for the plaintiff; and
Atty. Leonardo Lansangan for the defendants

: after having determined that the lands sought to be expropriated were residential lands, they recommended
unanimously that the lowest price that should be paid was P 10.00 per square meter, for both lands of Castellvi and
Toledo-Gozun. An additional P 5,000 be paid to Toledo-Gozun for improvements found on her land. Legal interest on the
compensation, computed from August 10, 1959, be paid after deducting the amounts already paid to the owners, and
that no consequential damages be awarded

RTC: the court finds that the unanimous recommendation of the commissioners of ten pesos (P10.00) per square meter
for the lots of Castellvi and Toledo-Gozun is fair and just

: the Republic will pay 6% interest per annum on the total value of the lands to Toledo-Gozun from the time that the
provisional value has been deposited (August 10, 1959) until full payment

: Republic will pay 6% interest per annum from July 1, 1956 when Republic commenced its illegal possession of the
Castellvi land until July 10, 1959 when the provisional value thereof was actually deposited in court

ISSUE: (As alleged by the Republic) Whether or not the “taking” of the properties under expropriation commenced with
the filing of the action.
Republic: the “taking” should be reckoned from the year 1947 when by virtue of a special lease agreement between the
Republic and Castellvi, the former was granted the “right and privilege” to buy the property should the lessor wish to
terminate the lease and that in the event of such sale, it was stipulated that the fair market value should be as of the
time of occupancy; and that the permanent improvements amounting to more than half a million pesos constructed
during a period of twelve years on the land, subject of expropriation, were indicative of an agreed pattern of
permanency and stability of occupancy by the Philippine Air Force in the interest of national security.

Castellvi: the “taking” of property under the power eminent domain requires two essential elements, to wit: (1)
entrance and occupation by condemnor upon the private property for more than a momentary or limited period, and (2)
devoting it to a public use in such a way as to oust the owner and deprive him of all beneficial enjoyment of the
property.

: the two elements are lacking

RULING: YES. A number of circumstances must be present in the “taking” of property for purposes of eminent domain.

1) The expropriator must enter a private property – this circumstance is present in the instant case, when by virtue of a
lease agreement the Republic, through PAF, took possession of the property of Castellvi

2) The entrance into private property must be for more than a momentary period – the word “momentary” when
applied to possession or occupancy of property should be construed to mean “a limited period” – not indefinite or
permanent. The entry on the property, under the lease, is temporary and considered transitory considering that the said
contract is renewable from year to year. The fact that the Republic constructed some installation of a permanent nature
does not alter the fact that the entry into the land was transitory or intended to last a year.

3) The entry into the property should be under warrant or color of legal authority – this circumstance is present in the
instant case because Republic entered the Castellvi property as lessee

4) The property must be devoted to a public use or otherwise informally appropriated or injuriously affected – this is
likewise present in this case because the property was used by the air force of the AFP

5) The utilization of the property for public use must be in such a way as to oust the owner and deprive him of all
beneficial enjoyment of the property – this is wanting in this case as Castellvi remained as owner and she was receiving
the monthly rentals of the property; hence, she was not deprived of the beneficial enjoyment of the property.

We hold, therefore, that the “taking’ of the Castellvi property should not be reckoned as of the year 1947 when the
Republic first occupied the same pursuant to the contract of lease, and that the just compensation to be paid for the
Castellvi property should not be determined on the basis of the value of the property as of that year. The lower court did
not commit an error when it held that the “taking” of the property under expropriation commenced with the filing of
the complaint in this case.

Under Section 4 of Rule 67 of the Rules of Court, the “just compensation” is to be determined as of the date of the filing
of the complaint. This Court has ruled that when the taking of the property sought to be expropriated coincides with the
commencement of the expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent
domain, the just compensation should be determined as of the date of the filing of the complaint. In the instant case, it
is undisputed that the Republic was placed in possession of the Castellvi property, by authority of the court, on August
10, 1959. The “taking” of the Castellvi property for the purposes of determining the just compensation to be paid must,
therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain was filed.
Constitutional Law:PEOPLE VS. FAJARDO
PEOPLE VS. FAJARDO

Facts:
The municipal council of baao, camarines sur stating among others that construction of a building, which will
destroy the view of the plaza, shall not be allowed and therefore be destroyed at the expense of the owner, enacted
an ordinance. Herein appellant filed a written request with the incumbent municipal mayor for a permit to
construct a building adjacent to their gasoline station on a parcel of land registered in Fajardo's name, located
along the national highway and separated from the public plaza by a creek. The request was denied, for the reason
among others that the proposed building would destroy the view or beauty of the public plaza. Defendants
reiterated their request for a building permit, but again the mayor turned down the request.
Whereupon, appellants proceeded with the construction of the building without a permit, because they needed a
place of residence very badly, their former house having been destroyed by a typhoon and hitherto they had been
living on leased property. Thereafter, defendants were charged in violation of the ordinance and subsequently
convicted. Hence this appeal.

Issue:Whether or Not the ordinance is a valid exercise of police power.

Held:
No. It is not a valid exercise of police power. The ordinance is unreasonable and oppressive, in that it operates to
permanently deprive appellants of the right to use their own property; hence, it oversteps the bounds of police
power, and amounts to a taking of appellant’s property without just compensation. We do not overlook that the
modern tendency is to regard the beautification of neighborhoods as conducive to the comfort and happiness of
residents.

As the case now stands, every structure that may be erected on appellants' land, regardless of its own beauty,
stands condemned under the ordinance in question, because it would interfere with the view of the public plaza
from the highway. The appellants would, in effect, be constrained to let their land remain idle and unused for the
obvious purpose for which it is best suited, being urban in character. To legally achieve that result, the municipality
must give appellants just compensation and an opportunity to be heard.

NO. The ordinance doesn’t state any standard that limits the grant of power to the mayor. It is an arbitrary and unlimited conferment.

The subject ordinance fails to state any policy, or to set up any standard to guide or limit the mayor’s action. The standards of the ordinance
are entirely lacking making it unreasonable and oppressive, hence, not a valid ordinance. While property may be regulated to the interest of
the general welfare, and the state may eliminate structures offensive to the sight, the state may not permanently divest owners of the
beneficial use of their property and practically confiscate them solely to preserve or assure the aesthetic appearance of the community.

Fajardo would be constrained to let the land be fallow and not be used for urban purposes. To do this legally, there must be just compensation
and they must be given an opportunity to be heard.

An ordinance which permanently so restricts the use of property that it can not be used for any reasonable purpose goes, it is plain, beyond
regulation and must be recognized as a taking of the property.

Hence, the conviction of herein appellants is reversed, and said accused are acquitted, with costs de oficio.

EPZA VS. DULAY [148 SCRA 305; G.R. No. L-59603; 29 Apr 1987]
Saturday, January 31, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The four parcels of land which are the subject of this case is where the Mactan Export Processing
Zone Authority in Cebu (EPZA) is to be constructed. Private respondent San Antonio Development
Corporation (San Antonio, for brevity), in which these lands are registered under, claimed that the lands
were expropriated to the government without them reaching the agreement as to the compensation.
Respondent Judge Dulay then issued an order for the appointment of the commissioners to determine the
just compensation. It was later found out that the payment of the government to San Antonio would be P15
per square meter, which was objected to by the latter contending that under PD 1533, the basis of just
compensation shall be fair and according to the fair market valuedeclared by the owner of the property
sought to be expropriated, or by the assessor, whichever is lower. Such objection and the
subsequentMotion for Reconsideration were denied and hearing was set for the reception of the
commissioner’s report. EPZA then filed this petition for certiorari and mandamus enjoining the respondent
from further hearing the case.

Issue: Whether or Not the exclusive and mandatory mode of determining just compensation in PD 1533 is
unconstitutional.

Held: The Supreme Court ruled that the mode of determination of just compensation in PD 1533 is
unconstitutional.

The method of ascertaining just compensation constitutes impermissible encroachment to judicial

prerogatives. It tends to render the courts inutile in a matter in which under the Constitution is reserved to
it for financial determination. The valuation in the decree may only serve as guiding principle or one of the
factors in determining just compensation, but it may not substitute the court’s own judgment as to
what amount should be awarded and how to arrive at such amount. The determination of just compensation
is a judicial function. The executive department or the legislature may make the initial determination but
when a party claims a violation of the guarantee in the Bill of Rights that the private party may not be taken
for public use without just compensation, no statute, decree, or executive order can mandate that its own
determination shall prevail over the court’s findings. Much less can the courts be precluded from looking
into the justness of the decreed compensation.

Sumulong vs. Guerrero

Facts:
On December 5, 1977 the National Housing Authority (NHA) filed a complaint for expropriation of parcels of land covering
approximately twenty-five (25) hectares in Antipolo, Rizal including the lots of petitioners Lorenzo Sumulong and Emilia
Vidanes-Balaoing with an area of 6,667 square meters and 3,333 square meters respectively. The land sought to be
expropriated were valued by the NHA at one peso (P1.00) per square meter adopting the market value.
Together with the complaint was a motion for immediate possession of the properties. The NHA deposited the
amount of P158,980.00 with the Philippine National Bank, representing the "total market value" of the subject 25 hectares
of land, pursuant to Presidential Decree No. 1224 which defines "the policy on the expropriation of private property
for socialized housing upon payment of just compensation."
 On January 17, 1978, Judge Buenaventura Guerrero issued a writ of possession when the NHA deposited with the
Philippine National Bank the amount of P158, 980.00. Petitioners filed a motion for reconsideration on the ground that they
had been deprived of the possession of their property without due process of law, which was however denied. Hence, the
resort to the Supreme Court.

Issue: Whether or not PD 1224 is violative of the due process clause since “socialized housing'' for the purpose of
condemnation proceeding is not really for a public purpose.

Ruling:
No. PD 1224 is not violative of the due process clause since “socialized housing'' for the purpose of condemnation
proceeding is really for a public purpose.
The "public use" requirement for a valid exercise of the power of eminent domain is a flexible and evolving concept
influenced by changing conditions. In this jurisdiction, the statutory and judicial trend has been summarized as follows: The
taking to be valid must be for public use. There was a time when it was felt that a literal meaning should be attached
to such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not anymore. As long as the purpose of the taking is public, then the
power of eminent domain comes into play. As just noted, the constitution in at least two cases, to remove any
doubt, determines what public use is. One is the expropriation of lands to be subdivided into small lots for resale
at cost to individuals. The other is in the transfer, through the exercise of this power, of utilities and other private
enterprise to the government. It is accurate to state then that at present whatever may be beneficially employed for
the general welfare satisfies the requirement of public use.

TELECOMMUNICATIONS AND BROADCAST ATTORNEYS OF THE PHILIPPINES, INC. and GMA NETWORK, INC.,
petitioners, vs. THE COMMISSION ON ELECTIONS, respondent.

[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. They are suing as citizens, taxpayers and
registered voters. 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. Other
petitioner, GMA Network, Inc., appears to have the requisite standing to bring this constitutional challenge.
Petitioner operates radio and television broadcast stations in the Philippines affected by the enforcement of Sec.
92 of B.P Blg. 881 requiring radio and television broadcast companies to provide free air time to the COMELEC
for the use of candidates for campaign and other political purposes. Petitioners challenge the validity of Sec. 92
on the ground (1) that it takes property without due process of law and without just compensation; (2) that it
denies radio and television broadcast companies the equal protection of the laws; and (3) that it is in excess of
the power given to the COMELEC to supervise or regulate the operation of media of communication or
information during the period of election. 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 COMELEC Time.

ISSUES:

(1) Whether or not Section 92 of B.P. No. 881 denies radio and television broadcast companies the equal
protection of the laws.
(2) Whether or not Section 92 of B.P. No. 881 constitutes taking of property without due process of law and
without just compensation.
RULING:

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. The use of property bears a social function and is
subject to the state’s duty to intervene for the common good. Broadcast media can find their just and highest
reward in the fact that whatever altruistic service they may render in connection with the holding of elections is
for that common good.
For the foregoing reasons, the petition is dismissed.

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 MexicoLimay 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

PHILIPPINE AIRLINES, INC. v. EDU

G.R. No. L- 41383, August 15, 1988

FACTS:
The Philippine Airlines (PAL) is a corporation engaged in the air transportation business under a
legislative franchise, Act No. 42739. Under its franchise, PAL is exempt from the payment of taxes.
Sometime in 1971, however, Land Transportation Commissioner Romeo F. Elevate (Elevate) issued a
regulation pursuant to Section 8, Republic Act 4136, otherwise known as the Land and Transportation and Traffic
Code, requiring all tax exempt entities, among them PAL to pay motor vehicle registration fees.
Despite PAL's protestations, Elevate refused to register PAL's motor vehicles unless the amounts imposed
under Republic Act 4136 were paid. PAL thus paid, under protest, registration fees of its motor vehicles. After
paying under protest, PAL through counsel, wrote a letter dated May 19,1971, to Land Transportation
Commissioner Romeo Edu (Edu) demanding a refund of the amounts paid. Edu denied the request for refund.
Hence, PAL filed a complaint against Edu and National Treasurer Ubaldo Carbonell (Carbonell).

The trial court dismissed PAL's complaint. PAL appealed to the Court of Appeals which in turn certified
the case to the Supreme Court.

ISSUE:
Whether or not motor vehicle registration fees are considered as taxes.

RULING:
Yes. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes,
then the exaction is properly called a tax. Such is the case of motor vehicle registration fees. The motor vehicle
registration fees are actually taxes intended for additional revenues of the government even if one fifth or less of
the amount collected is set aside for the operating expenses of the agency administering the program.

TIO VS. VIDEOGRAM REGULATORY BOARD [151 SCRA 208; G.R. No.
L-75697; 18 Jun 1987]
Friday, January 30, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The case is a petition filed by petitioner on behalf of videogram operators adversely
affected by Presidential Decree No. 1987, “An Act Creating the Videogram Regulatory Board"
with broad powers to regulate and supervise the videogram industry.

A month after the promulgation of the said Presidential Decree, the amended the National
Internal Revenue Code provided that:

"SEC. 134. Video Tapes. — There shall be collected on each processed video-tape cassette,
ready for playback, regardless of length, an annual tax of five pesos; Provided, That locally
manufactured or imported blank video tapes shall be subject to sales tax."

"Section 10. Tax on Sale, Lease or Disposition of Videograms. — Notwithstanding any

provision of law to the contrary, the province shall collect a tax of thirty percent (30%) of the
purchase price or rental rate, as the case may be, for every sale, lease or disposition of a
videogram containing a reproduction of any motion picture or audiovisual program.”

“Fifty percent (50%) of the proceeds of the tax collected shall accrue to the province, and the
other fifty percent (50%) shall accrue to the municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax shall be shared equally by the
City/Municipality and the Metropolitan Manila Commission.”
The rationale behind the tax provision is to curb the proliferation and unregulated circulation
of videograms including, among others, videotapes, discs, cassettes or any technical
improvement or variation thereof, have greatly prejudiced the operations of movie houses
and theaters. Such unregulated circulation have caused a sharp decline in theatrical
attendance by at least forty percent (40%) and a tremendous drop in the collection of sales,
contractor's specific, amusement and other taxes, thereby resulting in substantial losses
estimated at P450 Millionannually in government revenues.

Videogram(s) establishments collectively earn around P600 Million per annum from rentals,
sales and disposition of videograms, and these earnings have not been subjected to tax,
thereby depriving the Government of approximately P180 Million in taxes each year.

The unregulated activities of videogram establishments have also affected the viability of the
movie industry.

Issues:

(1) Whether or not tax imposed by the DECREE is a valid exercise of police power.

(2) Whether or nor the DECREE is constitutional.

Held: Taxation has been made the implement of the state's police power. The levy of the
30% tax is for a public purpose. It was imposed primarily to answer the need for regulating
the video industry, particularly because of the rampant film piracy, the flagrant violation of
intellectual property rights, and the proliferation of pornographic video tapes. And while it
was also an objective of the DECREE to protect the movie industry, the tax remains a valid
imposition.

We find no clear violation of the Constitution which would justify us in pronouncing

Presidential Decree No. 1987 as unconstitutional and void. While the underlying objective of
the DECREE is to protect the moribund movie industry, there is no question that public
welfare is at bottom of its enactment, considering "the unfair competition posed by rampant
film piracy; the erosion of the moral fiber of the viewing public brought about by the
availability of unclassified and unreviewed video tapes containing pornographic films and
films with brutally violent sequences; and losses in government revenues due to the drop in
theatrical attendance, not to mention the fact that the activities of video establishments are
virtually untaxed since mere payment of Mayor's permit and municipal license fees are
required to engage in business."

WHEREFORE, the instant Petition is hereby dismissed. No costs.

CALTEX (PHILIPPINES), INC., petitioner-appellant,
vs.
COMMISSIONER OF INTERNAL REVENUE, respondent-appellee.
Ross, Selph and Carrascoso for petitioner-appellant.
Office of the Solicitor General for respondent-appellee.
REYES, J.B.L. J.:
Appeal from a resolution of the Court of Tax Appeals in its CTA Case No. 966, dismissing, without
prejudice, the petition for review of herein petitioner-appellant, Caltex (Philippines) Inc., seeking a
refund of P6,110.00 (later reduced to P5,781.68 as per amended petition for review dated June 11,
1962) representing its payments of special import tax imposed on its importations from abroad of
various items of machinery, equipment, accessories and spare parts, of which it claims to be exempt,
pursuant to Section 6 of Republic Act No. 1394.
On 9 November 1960, Caltex (Philippines) Inc., filed in the Tax Court its petition for review against
respondent Commissioner of Internal Revenue in the Court of Appeals, alleging, inter alia, that it is a
domestic corporation and holder of a petroleum refining concession under Republic Act No. 387; that
it is engaged in a productive enterprise in which it has employed substantial amounts of capital and
labor in connection with the refining, storage, handling and distribution of petroleum products; that on
several occasions in 1958 and 1959 it imported from abroad various items of machinery, equipment,
accessories, and spare parts for use of its depots or installations and in the gasoline service stations;
that the Collector of Customs of Manila levied and collected in the aforesaid importations the special
import tax imposed by Republic Act No. 1394, and included said tax in landed costs of the imported
merchandise for the purpose of computing the compensating tax due thereon under Section 190 of
the National Internal Revenue Code and for which it (petitioner) paid the corresponding special import
tax and compensating tax so computed and imposed; that the aforesaid importations were not subject
to special import tax because Section 6 of Republic Act No. 1394 exempts from said tax "machinery,
equipment, accessories and spare parts for the use of industries; that the inclusion and imposition of
said special import tax in the landed costs of the imported merchandise for purposes of computing the
compensating tax due thereon was erroneous, and, as a consequence thereof, it (petitioner) overpaid
compensating taxes in the total sum of P5,781.68; that it (petitioner) filed claims for refund with
respondent Commissioner of Internal Revenue on the said overpaid compensating taxes, and until
the petition was filed respondent has failed to refund said amount, nor has he denied its claims for
refund; and that because the two-year prescriptive period for recovery of internal revenue taxes
illegally or erroneously collected as provided in Section 306 of the National Internal Revenue Code
will soon expire, it was constrained to file the instant petition while awaiting respondent's decision in
its claim for refund to protect its interests. Petitioner prays that respondent Commissioner of Internal
Revenue be ordered to refund the total sum of P5,781.68 paid by it as excess compensating taxes.
Although on 27 December 1960 respondent Commissioner of Internal Revenue answered the petition
for review substantially denying the material allegations thereof, the facts alleged by petitioner are
uncontroverted. At the hearing, petitioner submitted evidence that it filed protests with the Collector of
Customs of Manila against the imposition of the tax in question over its importations, that the earliest
liquidation of its several importations was made on 13 November 1958; and that, on 28 April 1960
and 4 November 1960, respectively, it filed claims for refund of the disputed tax with respondent
Commissioner of Internal Revenue. It was established, however, that when the petition for review was
commenced in the Tax Court on 9 November 1960, there had been no action yet by the Collector of
Customs of Manila on the protests of petitioner Caltex, nor has there been any decision on its claim
for refund.
Respondent did not present any evidence. After the parties filed their respective memorandums, the
case was submitted for decision.
As stated in the beginning of this opinion, the lower court dismissed the petition for review, without
prejudice, reasoning out that:
Petitioner filed protests against the levy and collection by the Collector of Customs of Manila of the
special import tax in question, but it does not appear that the question has been finally resolved by
the customs authorities.
The question in regard to the exemption of petitioner from or liability for the special import tax is a
matter falling within the jurisdiction of the Bureau of Customs and not of the Bureau of Internal
Revenue. Until and after the question in regard to the special import tax is resolved, the legality or
correctness of the compensating tax collected on said merchandise cannot be determined.
(Resolution, pages 85-86, CTA Record).
Petitioner filed a motion to reconsider said resolution, but the lower court denied it; hence, the present
appeal.
It is first contended by petitioner that the special import tax imposed by Republic Act No. 1394 is an
internal revenue tax, and, as such, a claim for refund of taxes so erroneously or illegally levied and
collected by the Collector of Customs pursuant to said law should be lodged with the Commissioner
of Internal Revenue and not with the Commissioner of Customs. Petitioner argues that the Customs
head and his subordinates are merely agents of the Revenue Commissioner in the collection of
national internal revenue on imported articles (Section 6, National Internal Revenue Code) ; and that
per Customs regulations, "protest against the payment of internal revenue taxes on imported
merchandise shall, if filed with the Collector of Customs, be transmitted directly to the Collector of
Internal Revenue for action in accordance with the provisions of the National Internal Revenue Code"
(Par. V, first sentence, Customs Administrative Order No. 226, dated December 3, 1957; 54 O.G.
301).
Petitioner's contention is not well-taken. In the guise of a demand for reimbursement of compensating
taxes, petitioner's case is actually one for exemption from the special import tax under Republic Act
No. 1394.
Since Section 4 of Republic Act No. 1394 provides that:
The special import tax shall be paid by the importer to the Bureau of Customs in accordance with the
regulations to be promulgated by the Department of Finance and prior to the release of the imported
goods, articles or products from customs custody.
and it being undisputed that the Special Import Tax Law (Republic Act No. 1394) is one of the laws
administered by the Bureau of Customs, it is evident that said law should be considered as customs
law, to which the section of Customs Administrative Order No. 226 (invoked by Caltex) does not
apply, since the section, by its terms, refers only to internal revenue taxes.
Disposing of a practically identical issue raised in another case, this Court, speaking through Mr.
Justice Labrador, held:
It is also contended that the Internal Revenue Law, especially the provisions thereof imposing the
advance sales tax under Section 183 (b), does not fall within the jurisdiction of the Bureau of Customs
for the reason that when the Bureau of Customs collects the advance sales tax it does so as deputies
of the Collector of Internal Revenue. It is argued as a consequence therefrom that the undervaluation
of the onions may not be considered as a violation of the customs laws or the laws and regulations
enforced by said bureau. There is no merit in this contention. The law considers as customs law all
laws and regulations subject to enforcement by the Bureau of Customs, thus:
"Customs Law" includes not only the provisions of the Customs Law and regulations pursuant thereto
but all other laws and regulations which are subject to enforcement by the Bureau of Customs or
otherwise within its jurisdiction. (Section 1419, last paragraph, Revised Administrative Code; now,
Section 3514, 10th paragraph, Tariff and Customs Code. (Leuterio vs. Commissioner of Customs,
G.R. No. L-9810, April 27, 1957; 53 O. G. 6520)
Having arrived at the foregoing conclusion, and since the Bureau of Customs has jurisdiction over the
special import tax in question (See also Section 602 (a) and (j) of the Tariff and Customs Code), it
also follows, as a logical consequence thereof, that any issue involving liability for, or exemption from,
said tax as well as the procedure on protests and appeals should be governed by the pertinent
provisions of the Tariff and Customs Code (Republic Act No. 1937), more specifically Sections 2308
to 2313 thereof. In fact, these provisions had been implemented by Customs Administrative Order
No. 226, dated December 3, 1957 (published in 54 O.G. 300-302), in which the special import tax is
enumerated as among those to be governed by said customs order.
It is also undisputed that the Collector of Customs of Manila has not yet acted upon the protests of
petitioner. Hence, there is no adverse ruling from which an appeal may be taken to the Commissioner
of Customs in accordance with Section 2313 of the Tariff and Customs Code. Likewise, there is no
decision or ruling of the Commissioner of Customs which may be appealed to the Court of Tax
Appeals, pursuant to Section 7(2) of Republic Act No. 1125 in relation to Section 2402 of Republic
Act No. 1937, both of which read —
SEC. 7. Jurisdiction. — The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to
review by appeal, as herein provided —
xxx xxx xxx
(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or
other money charger; seizure, detention or release of property affected; fines forfeitures or other
penalties imposed in relation thereto; or other matters arising under the Customs Law or other law or
part of law administered by the Bureau of Customs; (Republic Act No. 1125)
SEC. 2402. Review by Court of Tax Appeals. — The party aggrieved by a ruling of the Commissioner
on any matter brought before him upon protest or by his action or ruling in any case of seizure may
appeal to the Court of Tax Appeals, in the manner and within the period prescribed by laws and
regulations. (first paragraph, Republic Act No. 1937)
In the absence of any decision or ruling which may be the subject of an appeal or petition for review
to the Court of Tax Appeals, said court has no case to take cognizance of (See CNS Estate, Inc. vs.
Commissioner of Customs, G.R. No. L-18773, January 31, 1964). So that the lower court correctly
dismissed the petition for review of petitioner for being premature or for not stating a cause of action.
WHEREFORE, the resolution appealed from should be, as it is hereby affirmed. Costs against
petitioner-appellant Caltex (Philippines), Inc.

FRANCISCO I. CHAVEZ, vs. JAIME B. ONGPIN, in his capacity as

Minister of Finance and FIDELINA CRUZ, in her capacity as Acting
Municipal Treasurer of the Municipality of Las Piñas, respondents,
REALTY OWNERS ASSOCIATION OF THE PHILIPPINES, INC. G.R.
No 76778

FRANCISCO I. CHAVEZ, vs. JAIME B. ONGPIN, in his capacity as Minister of Finance and FIDELINA CRUZ, in her
capacity as Acting Municipal Treasurer of the Municipality of Las Piñas, respondents, REALTY OWNERS
ASSOCIATION OF THE PHILIPPINES, INC.
G.R. No 76778

Doctrine:
To continue collecting real property taxes based on valuations arrived at several years ago, in disregard of the
increases in the value of real properties that have occurred since then, is not in consonance with a sound tax
system. Fiscal adequacy, which is one of the characteristics of a sound tax system, requires that sources of
revenues must be adequate to meet government expenditures and their variations.

Facts:
Chavez, the petitioner, seeks to declare unconstitutional EO 73 of Pres Cory Aquino titled “PROVIDING FOR THE
COLLECTION OF REAL PROPERTY TAXES BASED ON THE 1984 REAL PROPERTY VALUES, AS PROVIDED FOR UNDER SECTION
21 OF THE REAL PROPERTY TAX CODE (PD 464), AS AMENDED.”

Chavez, as a taxpayer and an owner of three parcels of land. He alleges the following:
1. that EO 73 accelerated the application of the general revision of assessments thereby mandating an excessive
increase in real property taxes;
2. that sheer oppression is the result of increasing real property taxes at a period of time when harsh economic
conditions prevail; and
3. that the increase in the market values of real property as reflected in the schedule of values was brought
about only by inflation and economic recession.

Chavez argues further that the unreasonable increase in real property taxes brought about by EO No. 73 amounts to a
confiscation of property repugnant to the constitutional guarantee of due process.

The intervenor Realty Owners Association of the Philippines, Inc. (ROAP) joins Chavez in his petition to declare
unconstitutional EO 73, but additionally alleges the following: that Presidential Decree No. 464 is unconstitutional
insofar as it imposes an additional one percent (1%) tax on all property owners to raise funds for education, as real
property tax is admittedly a local tax for local governments and does not meet the requirements of due process.

ISSUE:
W/N the assailed EO is unconstitutional.

RULING:
NO.
The revision of the assessments in EO 73 does not impose new taxes nor increase taxes but changed the date of
implementation of the increase from January 1988 to January 1, 1987.

***There was an EO No. 1019 passed deferring the increase of tax. The original date of increase was supposed to be on
1985, and was moved to 1988. But with the issuance of EO 73, instead of 1988, gihimo ug 1987.

The Assessment for General Revision in 1984 was based on Section 21 of Presidential Decree No. 464.

Thus, the court agrees with the Office of the Solicitor General that the attack on Executive Order No. 73 has no legal
basis as the general revision of assessments is a continuing process mandated by Section 21 of Presidential Decree No.
464.

Also the change of date of increase was justified in the Whereas Clause of EO 73 which states:

WHEREAS, the collection of real property taxes based on the 1984 real property values was deferred to take
effect on January 1, 1988 instead of January 1, 1985, thus depriving the local government units of an additional
source of revenue;
WHEREAS, there is an urgent need for local governments to augment their financial resources to meet the rising
cost of rendering effective services to the people;

Court agrees with the observation of the Office of the Solicitor General that without EO 73, the basis for collection of
real property taxes win still be the 1978 revision of property values. Certainly, to continue collecting real property
taxes based on valuations arrived at several years ago, in disregard of the increases in the value of real properties
that have occurred since then, is not in consonance with a sound tax system. Fiscal adequacy, which is one of the
characteristics of a sound tax system, requires that sources of revenues must be adequate to meet government
expenditures and their variations.

Other issues:
Intervention of ROAP is not proper to be resolved in the present petition. The issue here is limited to the constitutionality
of EO 73. Intervention is not an independent proceeding, but an ancillary and supplemental one which, in the nature of
things, unless otherwise provided for by legislation (or Rules of Court), must be in subordination to the main proceeding,
and it may be laid down as a general rule that an intervention is limited to the field of litigation open to the original parties.

ROAP, who questioned PD 464, cannot assail it in his intervention since Chavez, original complainant, did not objected
PD 464.
 ANTONIO ROXAS, EDUARDO ROXAS and ROXAS Y CIA., in their own respective behalf and as judicial co-
guardians of JOSE ROXAS, Petitioners, -versus- COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL
REVENUE, Respondents G.R. No. L-25043, EN BANC, April 26, 1968, BENGZON, J.P, J.

The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to
minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax
collector kill the "hen that lays the golden egg". And, in order to maintain the general public's trust and confidence in the
Government this power must be used justly and not treacherously. It does not conform with Our sense of justice in the
instant case for the Government to persuade the taxpayer to lend it a helping hand and later on to penalize him for duly
answering the urgent call.

In fine, Roxas y Cia. cannot be considered a real estate dealer for the sale in question. Hence, pursuant to Section 34 of
the Tax Code the lands sold to the farmers are capital assets, and the gain derived from the sale thereof is capital gain,
taxable only to the extent of 50%.

FACTS:
During their bachelor days the Roxas brothers lived in the residential house at Wright St., Malate, Manila, which they
inherited from their grandparents. After Antonio and Eduardo got married, they resided somewhere else leaving only
Jose in the old house. In fairness to his brothers, Jose paid to Roxas y Cia. rentals for the house in the sum of P8,000.00 a
year.

On June 17, 1958, the Commissioner of Internal Revenue demanded from Roxas y Cia the payment of real estate
dealer's tax for 1952 in the amount of P150.00 plus P10.00 compromise penalty for late payment, and P150.00 tax for
dealers of securities for 1952 plus P10.00 compromise penalty for late payment. The assessment for real estate dealer's
tax was based on the fact that Roxas y Cia. received house rentals from Jose Roxas in the amount of P8,000.00.
Pursuant to Sec. 194 of the Tax Code, an owner of a real estate who derives a yearly rental income therefrom in the
amount of P3,000.00 or more is considered a real estate dealer and is liable to pay the corresponding fixed tax.

The Commissioner of Internal Revenue justified his demand for the fixed tax on dealers of securities against Roxas y Cia.,
on the fact that said partnership made profits from the purchase and sale of securities.

In the same assessment, the Commissioner assessed deficiency income taxes against the Roxas Brothers for the years
1953 and 1955

The deficiency income taxes resulted from the inclusion as income of Roxas y Cia. of the unreported 50% of the net
profits for 1953 and 1955 derived from the sale of the Nasugbu farm lands to the tenants, and the disallowance of
deductions from gross income of various business expenses and contributions claimed by Roxas y Cia. and the Roxas
brothers. For the reason that Roxas y Cia. subdivided its Nasugbu farm lands and sold them to the farmers on
installment, the Commissioner considered the partnership as engaged in the business of real estate, hence, 100% of the
profits derived therefrom was taxed.

The Commissioner of Internal Revenue contends that Roxas y Cia. could be considered a real estate dealer because it
engaged in the business of selling real estate. The business activity alluded to was the act of subdividing the Nasugbu
farm lands and selling them to the farmers-occupants on installment.

Roxas y Cia. questions the imposition of the real estate dealer's fixed tax upon it, because although it earned a rental
income of P8,000.00 per annum in 1952, said rental income came from Jose Roxas, one of the partners. Section 194 of
the Tax Code, in considering as real estate dealers owners of real estate receiving rentals of at least P3,000.00 a year,
does not provide any qualification as to the persons paying the rentals

ISSUE: Whether Roxas y Cia. liable for the payment of the fixed tax on real estate dealers (NO)

RULING:
It should be borne in mind that the sale of the Nasugbu farm lands to the very farmers who tilled them for generations
was not only in consonance with, but more in obedience to the request and pursuant to the policy of our Government to
allocate lands to the landless. It was the bounden duty of the Government to pay the agreed compensation after it had
persuaded Roxas y Cia. to sell its haciendas, and to subsequently subdivide them among the farmers at very reasonable
terms and prices. However, the Government could not comply with its duty for lack of funds. Obligingly, Roxas y Cia.
shouldered the Government's burden, went out of its way and sold lands directly to the farmers in the same way and
under the same terms as would have been the case had the Government done it itself. For this magnanimous act, the
municipal council of Nasugbu passed a resolution expressing the people's gratitude.

The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to
minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax
collector kill the "hen that lays the golden egg". And, in order to maintain the general public's trust and confidence in the
Government this power must be used justly and not treacherously. It does not conform with Our sense of justice in the
instant case for the Government to persuade the taxpayer to lend it a helping hand and later on to penalize him for duly
answering the urgent call.

In fine, Roxas y Cia. cannot be considered a real estate dealer for the sale in question. Hence, pursuant to Section 34 of
the Tax Code the lands sold to the farmers are capital assets, and the gain derived from the sale thereof is capital gain,
taxable only to the extent of 50%.

Pascual vs Secretary of Public Works Case Digest

WENCESLAU PASCUAL, AS PROVINCIAL GOVERNOR VS. SECRETARY OF PUBLIC WORKS

FACTS:
On August 31, 1954, petitioner Wenceslao Pascual, as Provincial Governor of Rizal, instituted this action for declaratory
relief, with injunction, upon the ground that Republic Act No. 920, entitled "An Act Appropriating Funds for Public Works",
approved on June 20, 1953, an item of P85,000.00, "for the construction, reconstruction, repair, extension and improvement"
of "Pasig feeder road terminals"; that, at the time of the passage and approval of said Act, the aforementioned feeder roads
were "nothing but projected and planned subdivision roads, not yet constructed, within the Antonio Subdivision situated at
Pasig, Rizal" which projected feeder roads "do not connect any government property or any important premises to the main
highway"; that the aforementioned Antonio Subdivision were private properties of respondent Jose C. Zulueta, who, at the
time of the passage and approval of said Act, was a member of the Senate of the Philippines; that on May 29, 1953,
respondent Zulueta, addressed a letter to the Municipal Council of Pasig, Rizal, offering to donate said projected feeder
roads to the municipality of Pasig, Rizal; that, on June 13, 1953, the offer was accepted by the council, subject to the
condition "that the donor would submit a plan of the said roads and agree to change the names of two of them"; that no
deed of donation in favor of the municipality of Pasig was, however, executed; that on July 10, 1953, respondent Zulueta
wrote another letter to said council, calling attention to the approval of Republic Act No. 920, and the sum of P85,000.00
appropriated therein for the construction of the projected feeder roads in question; that the municipal council of Pasig
endorsed said letter of respondent Zulueta to the District Engineer of Rizal, who, up to the present "has not made any
endorsement thereon"; that inasmuch as the projected feeder roads in question were private property at the time of the
passage and approval of Republic Act No. 920, the appropriation of P85,000.00 therein made, for the construction,
reconstruction, repair, extension and improvement of said projected feeder roads, was "illegal and, therefore, void ab initio";
that said appropriation of P85,000.00 was made by Congress because its members were made to believe that the projected
feeder roads in question were "public roads and not private streets of a private subdivision'"; that, "in order to give a
semblance of legality, when there is absolutely none, to the aforementioned appropriation", respondent Zulueta executed,
on December 12, 1953, while he was a member of the Senate of the Philippines, an alleged deed of donation—copy of
which is annexed to the petition—of the four (4) parcels of land constituting said projected feeder roads, in favor of the
Government of the Republic of the Philippines; that said alleged deed of donation was, on the same date, accepted by the
then Executive Secretary; that being subject to an onerous condition, said donation partook of the nature of a contract; that,
as such, said donation violated the provision of our fundamental law prohibiting members of Congress from being directly
or indirectly financially interested in any contract with the Government, and, hence, is unconstitutional, as well as null and
void ab initio, for the construction of the projected feeder roads in question with public funds would greatly enhance or
increase the value of the aforementioned subdivision of respondent Zulueta, "aside from relieving him from the burden of
constructing his subdivision streets or roads at his own expense"; that the construction of said projected feeder roads was
then being undertaken by the Bureau of Public Highways; and that, unless restrained by the court, the respondents would
continue to execute, comply with, follow and implement the aforementioned illegal provision of law, "to the irreparable
damage, detriment and prejudice not only to the petitioner but to the Filipino nation."

ISSUE: Whether or not the statute is unconstitutional and void?

HELD: "It is a general rule that the legislature is without power to appropriate public revenue for anything but a public
purpose. * * * It is the essential character of the direct object of the expenditure which must determine its validity as justifying
a tax, and not the magnitude of the interests to be affected nor the degree to which the general advantage of the community,
and thus the public welfare, may be ultimately benefited by their promotion. Incidental advantage to the public or to the
state, which results from the promotion of private interests and the prosperity of private enterprises or business, does not
justify their aid by the use of public money." (25 R.L.C. pp. 398-400; Italics supplied.)

The rule is set forth in Corpus Juris Secundum in the following language:

"In accordance with the rule that the taxing power must be exercised for public purposes only, money raised by taxation
can be expended only for public purposes and not for the advantage of private individuals."

Explaining the reason underlying said rule, Corpus Juris Secundum states:

"Generally, under the express or implied provisions of the constitution, public funds may be used only for a public purpose.
The right of the legislature to appropriate funds is correlative with its right to tax, and, under constitutional provisions against
taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another
purpose, no appropriation of state funds can be made for other than a public purpose. * * *

"The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote
the public interests, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals
might incidentally serve the public. * * * ." (81 C.J.S. p. 1147; italics supplied.)

The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon events
occurring, or acts performed, subsequently thereto. Referring to the P85,000.00 appropriation for the projected feeder roads
in question, the legality thereof depended upon whether said roads were public or private property when the bill, which, later
on, became Republic Act No. 920, was passed by Congress, or, when said bill was approved by the President and the
disbursement of said sum became effective, or on June 20, 1953. Inasmuch as the land on which the projected feeder roads
were to be constructed belonged then to respondent Zulueta, the result is that said appropriation sought a private purpose,
and, hence, was null and void.4 The donation to the Government, over five (5) months after the approval and effectivity of
said Act, made, according to the petition, for the purpose of giving a "semblance of legality", or legalizing, the appropriation
in question, did not cure its aforementioned basic defect. Consequently, a judicial nullification of said donation need not
precede the declaration of unconstitutionality of said appropriation.
 CONRADO L. TIU, JUAN T. MONTELIBANO JR. and ISAGANI M. JUNGCO, petitioners,
vs.
COURT OF APPEALS, HON. TEOFISTO T. GUINGONA JR., BASES CONVERSION AND DEVELOPMENT AUTHORITY, SUBIC BAY
METROPOLITAN AUTHORITY, BUREAU OF INTERNAL REVENUE, CITY TREASURER OF OLONGAPO and MUNICIPAL TREASURER OF
SUBIC, ZAMBALES, respondents
G.R. 127410 | January 20, 1999 | J. Panganiban
Doctrine:
The constitutional rights to equal protection of the law is not violated by an executive order, issued pursuant to law,
granting tax and duty incentives only to the business and residents within the “secured area” of the Subic Special
Economic Zone and denying them to those who live within the Zone but outside such “fenced-in” territory. The
Constitution does not require absolute equality among residents. It is enough that all persons under like
circumstances or conditions are given the same privileges and required to follow the same obligations. In short, a
classification based on valid and reasonable standards does not violate the equal protection clause.

Facts:
Petitioners assail the CA decision and resolution that upheld the constitutionality and validity of EO 97-A, according
to which the grant and enjoyment of the tax and duty incentives authorized under RA 7227 (“An Act Accelerating the
Conversion of Military Reservations Into Other Productive Uses, Creating the Bases Conversion and Development
Authority for this Purpose, Providing Funds Therefor and for Other Purposes”) were limited to the business
enterprises and residents within the fenced-in area of the Subic Special Economic Zone (SSEZ).

Among others, Section 12 of RA 7227 provides that, “The provision of existing laws, rules and regulations to the
contrary notwithstanding, no taxes, local and national, shall be imposed within the Subic Special Economic Zone. In
lieu of paying taxes, three percent (3%) of the gross income earned by all businesses and enterprises within the Subic
Special Economic Zone shall be remitted to the National Government, one percent (1%) each to the local government
units affected by the declaration of the zone in proportion to their population area, and other factors. In addition,
there is hereby established a development fund of one percent (1%) of the gross income earned by all businesses and
enterprises within the Subic Special Economic Zone to be utilized for the development of municipalities outside the
City of Olongapo and the Municipality of Subic, and other municipalities contiguous to the base areas xxx In case of
conflict between national and local laws with respect to tax exemption privileges in the Subic Special Economic
Zone, the same shall be resolved in favor of the latter;”

EO 97, which clarified the application of the incentives provided thus:

Sec. 1. On Import Taxes and Duties. — Tax and duty-free importations shall apply only to raw materials, capital
goods and equipment brought in by business enterprises into the SSEZ. Except for these items, importations of
other goods into the SSEZ, whether by business enterprises or resident individuals, are subject to taxes and duties
under relevant Philippine laws.
The exportation or removal of tax and duty-free goods from the territory of the SSEZ to other parts of the Philippine
territory shall be subject to duties and taxes under relevant Philippine laws.

Sec. 2. On All Other Taxes. — In lieu of all local and national taxes (except import taxes and duties), all business
enterprises in the SSEZ shall be required to pay the tax specified in Section 12(c) of R.A. No. 7227.
Respondent Court held that “there is no substantial difference between the provisions of EO 97-A and Section 12 of
RA 7227. In both, the ‘Secured Area’ is precise and well-defined as ‘. . . the lands occupied by the Subic Naval Base
and its contiguous extensions as embraced, covered and defined by the 1947 Military Bases Agreement between the
Philippines and the United States of America, as amended . . .'” The appellate court concluded that such being the
case, petitioners could not claim that EO 97-A is unconstitutional, while at the same time maintaining the validity of
RA 7227.

The court a quo also explained that the intention of Congress was to confine the coverage of the SSEZ to the “secured
area” and not to include the “entire Olongapo City and other areas mentioned in Section 12 of the law.”
The Court of Appeals further justified the limited application of the tax incentives as being within the prerogative of
the legislature, pursuant to its “avowed purpose [of serving] some public benefit or interest.” It ruled that “EO 97-A
merely implements the legislative purpose of [RA 7227].”

Disagreeing, petitioners now seek before us a review of the aforecited Court of Appeals Decision and Resolution.
Issue:
W/N EO 37-A is constitutional

Held:
YES. Said Order is not violative of the equal protection clause; neither is it discriminatory. There are real and
substantive distinctions between the circumstances obtaining inside and those outside the Subic Naval Base, thereby
justifying a valid and reasonable classification.
Classification, to be valid, must (1) rest on substantial distinctions, (2) be germane to the purpose of the
law, (3) not be limited to existing conditions only, and (4) apply equally to all members of the same
class.
We believe it was reasonable for the President to have delimited the application of some incentives to the confines of
the former Subic military base. It is this specific area which the government intends to transform and develop from
its status quo ante as an abandoned naval facility into a self-sustaining industrial and commercial zone, particularly
for big foreign and local investors to use as operational bases for their businesses and industries. The classification
is, therefore, germane to the purposes of the law.
Certainly, there are substantial differences between the big investors who are being lured to establish and operate
their industries in the so-called “secured area” and the present business operators outside the area. On the one hand,
we are talking of billion-peso investments and thousands of new, jobs. On the other hand, definitely none of such
magnitude. In the first, the economic impact will be national; in the second, only local.
It is well-settled that the equal-protection guarantee does not require territorial uniformity of laws.As long as there
are actual and material differences between territories, there is no violation of the constitutional clause. And of
course, anyone, including the petitioners, possessing the requisite investment capital can always avail of the same
benefits by channelling his or her resources or business operations into the fenced-off free port zone.
Lastly, the classification applies equally to all the resident individuals and businesses within the “secured area.” The
residents, being in like circumstances or contributing directly to the achievement of the end purpose of the law, are
not categorized further. Instead, they are all similarly treated, both in privileges granted and in obligations
required. Petition DENIED.