SOCIAL JUSTICE SOCIETY VS LIM

(GR No. 187836 & 187916, 2014 & 2015)
Note: A sequel to the case of Social Justice Society v.
Mayor Atienza, Jr.
Where the Court found: (1) that the ordinance subject
thereof – Ordinance No. 8027 – was enacted "to safeguard
the rights to life, security and safety of the inhabitants of
Manila;" (2) that it had passed the tests of a valid
ordinance; and (3) that it is not superseded by Ordinance
No. 8119. Declaring that it is constitutional and valid, the
Court accordingly ordered its immediate enforcement with
a specific directive on the relocation and transfer of the
Pandacan oil terminals.
Ruling: NO. Ordianance No. 8187 is not valid. Although
the Local Government Code of 1991 expressly provides
that the Sangguniang Panlungsod is vested with the power
to "reclassify land within the jurisdiction of the city" the
validity and constitutionality of Ordinance No. 8027 (the old
ordinance relocating the oil companies) was declared as a
guarantee for the protection of the constitutional right to life
of the residents of Manila and the new ordinance would be
contradictory to the purpose of the enactment of the
previous ordinance.

Highlighting that the Court has so ruled that the Pandacan

oil depots should leave, herein petitioners now seek the
nullification of Ordinance No. 8187, which contains
provisions contrary to those embodied in Ordinance No.
8027. Allegations of violation of the right to health and the
right to a healthful and balanced environment are also
included

Facts: Pandacan was unofficially designated as the

industrial center of Manila. During the war, due to the
unused petroleum being set on fire it destroyed the
Pandacan terminals and rendered its network of depots
and service stations inoperative. After the war, the oil
depots were reconstructed and the three major oil
companies resumed the operation of their depots.

On October 12, 2001, the oil companies (Petron, Chevron

and Shell) and the DOE entered into a MOA
(Memorandum of Agreement) to address the perceived
risks posed by the proximity of communities, businesses
and offices to the Pandacan oil terminals, consistent with
the principle of sustainable development but said MOA
was shory-lived.

On Nov. 20, 2001, former Mayor Atienza and sa SP

(Sanguniang Panlungsod) enacted Ordinance No, 8027
which reclassified the use of the land in Pandacan, Sta.
Ana, and its adjoining areas from Industrial II to
Commercial I.

On June 16, 2006, Mayor Atienza approved Ordinance No.

8119 (An Ordinance Adopting the Manila Comprehensive
Land Use Plan and Zoning Regulations of 2006 and
Providing for the Administration, Enforcement and
Amendment thereto)

On May 14, 2009, Mayor Lim succeeded Mayor Atienza

and the SP enacted Ordinance No. 8187. The new
Ordinance repealed, amended, rescinded or otherwise
modified Ordinance No. 8027, Section 23 of Ordinance No.
8119, and all other Ordinances or provisions inconsistent
therewith thereby allowing, once again, the operation of
Pollutive/Non-Hazardous and Pollutive/Hazardous
manufacturing ang processing establishments.

Issue: WON Ordinance No. 8187 is valid

CARLOS SUPERDRUG CORP. VS DSWD
[GR NO. 166494, JUNE 29, 2007]
Note: Case about Senior Citizen’s Discount (old [RA 7432]
and new [RA 9257 enacted on Feb. 26, 2004 to amend RA
7432] law)
Tax Credit (under old law)- peso-for-peso deduction from a
taxpayer’s tax liability due to the government of the amount
of discounts such establishment has granted to a senior
citizen (gov’t binabalik yung 20% na discount for seniors in
total sa establishment)
 It must be noted, however, that conceptually, a tax
credit scheme under the Philippine tax system,
necessitates that prior payments of taxes have
been made and the taxpayer is attempting to
recover this tax payment from his/her income tax
due. The tax credit scheme under R.A. No. 7432 is,
therefore, inapplicable since no tax payments have
previously occurred.
Tax deduction (under new law)- yung 20% na discount
mababawasan sa gross income tax nila based sa cost ng
goods sold or services rendered (kung ilan na benta nila to
seniors pwede nila ibawas sa computation ng gross
income nila and yung 32% ng 20% na discount is
babayaran ng gov’t and the rest ng 20% discount shoulder
ng establishment)
 It may be necessary to note that while the burden
on [the] government is slightly diminished in terms
of its percentage share on the discounts granted to
senior citizens, the number of potential
establishments that may claim tax deductions,
have however, been broadened.
 Aside from the establishments that may claim tax
credits under the old law, more establishments
were added under the new law such as:
establishments providing medical and dental
services, diagnostic and laboratory services,
including professional fees of attending doctors in
all private hospitals and medical facilities, operators
of domestic air and sea transport services, public
railways and skyways and bus transport services.
Illustration na binigay sa case
Tax Deduction Tax Credit
Gross Sales x x x x x x x x x x x x
Less: Cost of goods sold x x x x x x x x x x
Net Sales x x x x x x x x x x x x
Less: Operating Expenses:
Tax Deduction on Discounts x x x x --
Other deductions: x x x x x x x x
Net Taxable Income x x x x x x x x x x
Tax Due x x x x x x
Less: Tax Credit -- ______x x
Net Tax Due -- x x
As shown above, 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
Facts: On October 1, 2004 DOH issued AO No, 171 (the
Policies and Guidelines to Implement the Relevant
Provisions of Republic Act 9257, otherwise known as the
“Expanded Senior Citizen’s Act of 2003”) which provided
for the grant of the 20% discount in the purchase of
unbranded generic medicine from all establishments
dispensing medicines for the exclusive use of the senior
citizens.
On Nov. 12, 2004, DOH issued AO 177 which
amended AO 171. Under AO 177, the 20% discount shall
not be limited to the purchase of unbranded generic
medicines only, but shall extend to both prescription and
non-prescription medicines whether branded or generic.
Petitioners in this case filed for unconstitutionality
of Sec 4(a) of RA 9257 which provides:
SEC. 4. Privileges for the Senior Citizens. – The senior
citizens shall be entitled to the following:
(a) the grant of twenty percent (20%) discount from all
establishments relative to the utilization of services in
hotels and similar lodging establishments, restaurants and
recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of
senior citizens, including funeral and burial services for the
death of senior citizens;
...
The establishment may claim the discounts granted under
(a), (f), (g) and (h) as tax deduction based on the net cost
of the goods sold or services rendered: Provided, That the
cost of the discount shall be allowed as deduction from
gross income for the same taxable year that the discount is
granted. Provided, further, That the total amount of the
claimed tax deduction net of value added tax if applicable,
shall be included in their gross sales receipts for tax
purposes and shall be subject to proper documentation
and to the provisions of the National Internal Revenue
Code, as amended.
On the following grounds:
1) The law is confiscatory because it infringes Art. III, Sec.
9 of the Constitution which provides that private property
shall not be taken for public use without just compensation;
2) It violates the equal protection clause (Art. III, Sec. 1)
enshrined in our Constitution which states that "no person
shall be deprived of life, liberty or property without due
process of law, nor shall any person be denied of the equal
protection of the laws;" and
3) The 20% discount on medicines violates the
constitutional guarantee in Article XIII, Section 11 that
makes "essential goods, health and other social services
available to all people at affordable cost."
 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:

1) drugstores impose a mark-up of only 5% to 10% on

branded medicines; and
2) the law failed to provide a scheme whereby drugstores
will be justly compensated for the discount.

Issue: WON the tax deduction scheme as a

reimbursement mechanism for the twenty percent (20%)
discount is valid.

WON the State can impose upon private

establishments the burden of partly subsidizing a gov’t
program.

Ruling: YES. The tax deduction scheme is valid. 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.

*Police Power- 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 "the power vested in the
legislature by the constitution to make, ordain,
and establish all manner of wholesome and
reasonable laws, statutes, and ordinances, either
with penalties or without, not repugnant to the
constitution, as they shall judge to be for the good
and welfare of the commonwealth, and of the subjects
of the same."

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. (Also kulang yung evidence ng company to prove
the alleged confiscatory effect of the provision in question.

YES. The State can impose the burden of a gov’t

program to private establishments as there was no
sufficient proof that the argued provision would lead to
detrimental effects to the petitioners.
CITY OF BATANGAS VS SHELL
[GR No. 195003, JUNE 7, 2017]
Note: Shell own a refinery situated in Tabangao, Batangas
City (Tabangao Refinery)
Facts: On May 28, 2001, the SP (Sanguniang
Panlungsod) enacted an Ordinance which required heavy
industries operating along the portions of Batangas Bay to
construct desalination plants to facilitate the use of
seawater as a coolant for their industrial facilities which
said Ordinance states:
“SECTION 3. - MANDATORY REQUIREMENT FOR THE
APPROVAL OF HEAVY INDUSTRIES ALONG THE
BATANGAS CITY PORTION OF BATANGAS BAY AND
OTHER AREAS. - In addition to the requirements provided
by laws and ordinances, the City Government shall not
grant permit or clearance or its approval for any project or
program involving the construction or establishment of
heavy industries along the Batangas City portion of the
Batangas Bay and other areas delineated as Heavy
Industrial Zone without the required DESALINATION
PLANT for use of sea water instead of underground fresh
water for cooling system and industrial purposes.
SECTION 4. - GRACE PERIOD PROVIDED FOR HEAVY
INDUSTRIES. - All heavy industries already established or
approved by the City Government prior to the enactment of
this Ordinance, including those to be established, are
granted a period of five (5) years, counted from the date of
approval of this Ordinance, to install [a] desalination plant.
SECTION 5. - AUTHORITY TO GRANT EXEMPTION
FROM THE CONSTRUCTION OF DESALINATION
PLANT. - The City Mayor with the concurrence of the
Sangguniang Panlungsod may grant exemption for a given
period to an industry from installation or construction of
DESALINATION PLANT on the basis of the following
conditions:
5.1. The exemption will not adversely affect the
environment, public health, public safety and the
welfare of the people, more particularly, the local
aquifers, as shown by a comprehensive ground
water assessment or comprehensive hydrological
study conducted by the industry and presented by the
industry applying for exemption.
5.2. The industry or proposed project will support
economic-based activities and provide livelihood,
employment, vital community services and
facilities while at the same time posing no
adverse effect on the community.
5.3. A public hearing is conducted.
5.4. Such other reasonable conditions which the
City Mayor may require with the concurrence of
the Sangguniang Panlungsod.
x x xx
SECTION 7. PENAL CLAUSE. -Any person who shall
authorize the start of the construction, development or
operation of any project considered as heavy industry
without the approval of the government authorities herein
mentioned shall suffer an imprisonment of not less than six
(6) months nor more than one (1) year and a fine of
₱5,000.00.
If the violator is a juridical person or association, the
penalty shall be imposed upon the owner, President,
project manager and/or persons directly in charge of the
construction, development and operation of the project.
SECTION 8. POWER OF THE CITY MAYOR TO ISSUE A
CEASE AND DESIST ORDER. - The City Mayor, upon
knowledge of the violation of this ordinance shall issue a
cease and desist order for the stoppage of the
construction, development or operation of the project or
industry and shall exercise all powers necessary to give
effect to the said order.
SECTION 9. ADMINISTRATIVE FINE. - An administrative
fine/penalty of ₱5,000.00 per day of violation of this
ordinance shall be imposed upon the owner, President,
project manager, and/or persons directly in charge of the
construction, development and operation of the project or
industry.”
Batangas City claims that it is exercising its police power.
Issue: WON the assailed ordinance is a valid exercise of
police power of Batangas City.
Ruling:
RTC- INVALID. In its entirety for want of necessity and for
not conducting prior public hearing, and for violating the
due process clause of the Constitution with respect to its
(sic) Sec. 8, City Ordinance No. 3, [s]. 2001
CA- AFFIRMED RTC. Appeal was DISSMISSED due to
lack of merit.
SC- AFFIRMED CA.
NO. The assailed ordinance is not a valid exercise
of police power, as police power is the power to prescribe
regulations to promote the health, morals, peace,
education, good order, safety, and general welfare of the
people and that national statutes govern over ordinances.
Hence, there is no doubt, therefore, that the Assailed
Ordinance effectively contravenes the provisions of the
Water Code as it arrogates unto Batangas City the power
to control and regulate the use of ground water which, by
virtue of the provisions of the Water Code, pertains solely
to the NWRB. By enacting the Assailed Ordinance,
Batangas City acted in excess of the powers granted to it
as an LGU.
BASCO vs PAGCOR
[GR No. 91649, MAY 14, 1991]

Note: PAGCOR was created via PD 1067-A

PD 1869 created PAGCOR to enable the gov’t to
regulate and centralize all games of chance authorized by
existing franchise or permitted by law.

Facts: Petitioners in this case filed an insant petition

seeking to annul PAGCOR Charter as they believed it to
be contrary to morals, public policy and order because:

A. It constitutes a waiver of a right prejudicial to a

third person with a right recognized by law. It
waived the Manila City government's right to
impose taxes and license fees, which is
recognized by law;

B. For the same reason stated in the immediately

preceding paragraph, the law has intruded into the
local government's right to impose local taxes and
license fees. This, in contravention of the constitutionally
enshrined principle of local autonomy;

C. It violates the equal protection clause of the

constitution in that it legalizes PAGCOR —
conducted gambling, while most other forms of
gambling are outlawed, together with prostitution,
drug trafficking and other vices;

D. It violates the avowed trend of the Cory

government away from monopolistic and crony
economy, and toward free enterprise and
privatization.

As well the petitioners claim that PD 1869 is

contrary to the declared national policy of the “new
restored democracy” and people’s will as expressed in the
1987 Constitution.

Issue: WON PD 1869 is valid.

Ruling: YES. PD 1869 is valid. Gambling is generally

prohibited unless allowed by law but the prohibition of
gambling does not mean that the government cannot
regulate it in the exercise if its police power. PD 1869 was
enacted to “regulate and centralize though an appropriate
institution all games of chance authorized by existing
franchise or permitted by law”

As was subsequently proved, regulating and

centralizing gambling operations in one corporate entity —
the PAGCOR, was beneficial not just to the Government
but to society in general. It is a reliable source of much
needed revenue for the cash strapped Government. With
the creation of PAGCOR and the direct intervention of the
Government, the evil practices and corruptions that go with
gambling will be minimized if not totally eradicated.
COMMISSIONER OF INTERNAL REVENUE VS SAN
MIGUEL CORPORATION
[GR No. 205045, 205723, January 25, 2017]
Facts: On Oct. 19, 1999, San Mig Corp’s former Assistant
Vice President for Finance (De Guzman) wrote a request
to the BIR Excise Tax Services Assistant Commissioner
(Albar) to request the registration of and authority to
manufacture “San Mig Light” to be taxed at P 12.15 per
liter. The letter dated October 27, 1999 granted this
request.
On Nov. 3, 1999, De Guzman advised Albar that
“San Mig Light” would be sold at the SRP of P 21.15 per
liter at P 6.98 per bottle, less value-added tax and specific
tax and that “San Mig Light” would be classified under
“Medium Priced Brand” to be taxed at P 9.15 per liter.
On Jan. 28, 2002, San Miguel Corporation's Vice
President and Manager of the Group Tax Services
(Villacorte) wrote to the BIR Chief og the large Tax Payers
Assistance Division II (LTAD II) to request information on
tax rate and classification of “San Mig Light” and “Gold
Eagle King”
On Feb. 7. 2002 LTAD II’s Acting Chief Item replied
to Villacorte’s letter and confirmed that based on he
submitted documents, San Miguel Corp. was allowed to
register, manufacture and sell “San Mig Light: as a new
brand and had been paying its excise tax for a
considerable length of time and it was classified and rated
under a new brand.
San Miguel was then demanded to pay for the
deficiencies in the amounts of:
(a) ₱876,098,898.83, inclusive of interest until April 30,
2004, for the period of November to December 1999 at
₱12.52 per liter, and January 2000 to January 7, 2004 at
₱13.61 per liter;30 and
(b) P30,763,133.68, inclusive of interest until June 30,
2004, for the period January 8, 2004 to January 29, 2004.
San Miguel Corp paid and are now asking for a refund.
Issue: WON the deficiency excise tax assessments issued
by BIR were valid.
Ruling: NO. The deficiencies were not valid as the court
says that SML is not a variant of Pale Pilsen it is a totally
different as in the definition of variant under the law there
are two types the first involves the use of a modifier that is
prefixed and/or suffixed to a brand root name, and the
second involves the use of the same logo or design of
existing brand and for SML there being no root name of
"San Miguel" or "San Mig" in its existing brand names. The
existing registered and classified brand name of petitioner
at that time was "Pale Pilsen." Therefore, the word "Light"
cannot he considered as a mere suffix to the word "San
Miguel”and records show that there are marked differences
in the designs of the existing brand "Pale Pilsen" and the
new brand "San Mig Light”.

On May 28, 2002, Assistant Commissioner Abella

of BIR’s Large Taxpayers Service issued a Notice of
Discrepancy against San Miguel Corp. In said notice it
stated that “San Mig Light” was a variant of its existing
beer products and must be subjected to a higher excise
tax. SML should have been taxed at P 19.91 per liter
instead of P9.15 per liter in the year 1999 and for the year
2000 the 12% increase should be based on the rate of
Pl9.91 per liter under Section l 43(C)(2) of the Tax Code.
Which made a total of P 824,750,204.97 (exclusive of
increments for years 1999 to April 2002)

San Miguel Corp wrote a letter-reply requesting the

withdrawal of the Notice of Discrepancy and claimed that
SML was not a variant of its any existing beer.

Abella reiterated that SML was a variant of San

Miguel Pale Pilsen and Villacorte replied that SML be
reconfirmed as a new brand to which in the conferences
held by the BIR 5 members of the BIR Management
Committee voted that it was a variant of Pale Pilsen and 2
members voted that it was a variant of Premium

A Preliminary Assessment Notice (PAN) was

issued against San Miguel Corp. for the deficiency excise
tax amounting to P 852, 039, 418.15 from 1999 to January
7, 2004 and another PAN for the deficiency from Jan 8,
2004 to January 29, 2004.
PEOPLE VS ANDRE MARTI Ruling: NO. The NBI did not violate Sec. 2 and 3 of Art. III
[GR No. 81561, JANUARY 18, 1991] of the constitution as the constitutional proscription against
unlawful searches and seizures therefore applies as a
Note: This is a crim case restraint directed only against the government and its
agencies tasked with the enforcement of the law. Thus, it
People in the case: could only be invoked against the State to whom the
Andre Marti (accused) restraint against arbitrary and unreasonable exercise of
Shirley Reyes (common-law wife ni Andre Marti) power is imposed and in this case, the protection against
Anita Reyes (no relation to Shirley; worker ng Manila unreasonable searches and seizures cannot be extended
Packaging and Export Forwarders) to acts committed by private individuals so as to bring it
Job Reyes (Husband of Anita and a proprietor) within the ambit of alleged unlawful intrusion by the
government.
Facts: Andre Marti and Shirley between 10-11 am on
August 14, 1987 went to the booth of Manila Packaging
and Export Forwarders with 4 gift wrapped packages to
send a package to their friend in Zurich, Switzerland
(Walter Fierz). Anita who attended to them asked Marti if
she could inspect the packages but he did not allow it and
assured Anita that the packages simply contained books,
cigars, and gloves and were gifts to his friend in Zurich to
which Anita did not insist again and packed them inside a
brown box.

Before the delivery of the package to the Bureau of

Customs and/or Bureau of Posts, Job Reyes, following
standard procedure and opened the brown box for final
inspection and when he opened the box there was a
peculiar odor; he squeezed one of the bundles. Opening
one of the bundles, he pulled out a cellophane wrapper
protruding from the opening of one of the gloves. He made
an opening on one of the cellophane wrappers and took
several grams of the contents thereof. Job then wrote a
letter to the NBI which reported the shipment and
requested that the cellophane wrapper be examined in the
laboratory and it turns out that that the package contained
bricks or cake-like dried marijuana leaves.

Issue: WON NBI violated Sec. 2 and 3 of Art. III of the

Constitution.

Note: Sec. 2 and 3 of Art. III of Consti:

Sec. 2. The right of the people to be secure in their

persons, houses, papers and effects against unreasonable
searches and seizures of whatever nature and for any
purpose shall be inviolable, and no search warrant or
warrant of arrest shall issue except upon probable cause to
be determined personally by the judge after examination
under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be
seized.

Sec. 3. (1) The privacy of communication and

correspondence shall be inviolable except upon lawful
order of the court, or when public safety or order requires
otherwise as prescribed by law.
(2) Any evidence obtained in violation of
this or the preceding section shall be inadmissible for any
purpose in any proceeding.