POWER OF EMINENT DOMAIN The petitioner, Republic of the Philippines, is a political entity exercising governmental
CITY OF MANILA vs. CHINESE COMMUNITY OF MANILA powers through its branches and instrumentalities, one of which is the Bureau of
(G.R. No. 14355, October 31, 1919)
FACTS:
The plaintiff prayed that certain lands be expropriated for the purpose of constructing a
public improvement into an extension of Rizal Avenue, Manila which is necessary for the
plaintiff to exercise in fee simple of certain parcels of land. The defendant on the other hand,
contends that the expropriation was not necessary as a public improvement and that the
plaintiff has no right to expropriate the said cemetery or any part or portion thereof for
street purposes. The lower court declared that there was no necessity for the said
expropriation. Hence, this appeal.
ISSUE:
Whether or not the Courts can inquire into the necessity of expropriation of delegate, such as
the City of Manila?
HELD:
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. 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 courts, but the general authority of municipalities or entities must
not be confused with the right to exercise it in particular instances. The moment the
municipal corporation or entity attempts to exercise the authority conferred, it must comply
with the conditions accompanying the authority. The necessity for conferring the authority
upon a municipal corporation to exercise the right of eminent domain is admittedly within
the power of the legislature. But whether or not the municipal corporation or entity is
exercising the right in a particular case under the conditions imposed by the general
authority, is a question which the courts have the right to inquire into. 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. The authority of the city of Manila to expropriate private
lands for public purposes, is not denied as provided in its Charter. However, 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. In
the instant case, the record does not show conclusively that the plaintiff has definitely
decided that there exists a necessity for expropriation. The decision of the lower court is
affirmed.
REPUBLIC vs. PHILIPPINE LONG DISTANCE CO.
(G.R. No. L-18841, January 27, 1969)
FACTS:
Telecommunications. While the respondent, Philippine Long Distance Telephone has the
power to install, operate and maintain a telephone system throughout the Philippines and to
carry on the business of electrical transmission of messages within the Philippines and
between the Philippines and the telephone systems of other countries. Sometime in 1933,
the defendant and the RCA Communications, Inc., entered into an agreement whereby
telephone messages, could automatically be transferred to the lines of PLDT; and vice-versa.
The Bureau of Telecommunications set up its own Government Telephone System by utilizing
its own appropriation and equipment and by renting trunk lines of the PLDT to enable
government offices to call private parties. The respondent said that the bureau was violating
the conditions under which their Private Branch Exchange (PBX) is inter-connected with the
PLDT's facilities. The petitioner prayed commanding the PLDT to execute a contract with it,
through the Bureau, for the use of the facilities of defendant's telephone system. The lower
court rendered judgment that it could not compel the PLDT to enter into an agreement with
the Bureau because the parties were not in agreement. Both parties appealed.
ISSUE:
Whether or not the Bureau of Telecommunications has the right to demand interconnection
between the Government Telephone System and the PLDT.
HELD:
Yes. It is true that parties cannot be coerced to enter into a contract where no agreement
was made between them. Freedom to stipulate such terms and conditions is of the essence
of our contractual system, and by express provision of the statute, a contract may be
annulled if tainted by violence, intimidation or undue influence (Articles 1306, 1336, 1337,
Civil Code of the Philippines). But the court a quo has apparently overlooked that while the
Republic may not compel the PLDT to celebrate a contract with it, the Republic, in the
exercise of the sovereign of eminent domain, may require the telephone company to permit
interconnection of the Government Telephone System and that of PLDT, as the needs of the
government service may require, subject to the payment of just compensation. Ultimately,
the beneficiary of the interconnecting service would be the users of both telephone systems,
so that condemnation would be for public use.
PEOPLE vs. FAJARDO
(G.R. No. 12172, August 29, 1958)
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.
REPUBLIC vs. VDA. DE CASTELLVI
(G.R. No. L-20620, August 15, 1974)
FACTS:
The Republic of the Philippines occupied the land of Carmen M. vda. de Castellvi from 1 July
1947, by virtue of a contract of lease, on a year to year basis (from July 1 of each year to June
30 of the succeeding year). The Republic sought to renew the same but Castellvi refused. The
AFP refused to vacate the leased premises after the termination of the contract because it
would difficult for the army to vacate the premises in view of the permanent installations and
other facilities worth almost P500,000.00 that were erected and already established on the
property. Castellvi then brought suit to eject the Philippine Air Force from the land. While
this ejectment case was pending, the Republic filed on 26 June 1959 complaints for eminent
domain against the respondents over the 3 parcels of land. In its complaint, the Republic
alleged, among other things, that the fair market value of the above-mentioned lands,
according to the Committee on Appraisal for the Province of Pampanga, was not more than
P2,000 per hectare. The court authorizes the Republic to take immediate possession of the
lands upon deposit of that amount with the Provincial Treasurer of Pampanga. In 1961, the
trial court, rendered its decision in the ejectment case, finding that the unanimous
recommendation of the commissioners of P10.00 per square meter for the 3 lots subject of
the action is fair and just; and required the Republic to pay interests.
ISSUE:
Whether the taking of Castellvi‘s property occurred in 1947 or in 1959.
HELD:
The Republic urges that the "taking" of Castellvi's property should be deemed as of the year
1947 by virtue of afore-quoted lease agreement. In American Jurisprudence, Vol. 26, 2nd
edition, Section 157, on the subject of "Eminent Domain, we read the definition of "taking"
(in eminent domain) as follows: "Taking” under the power of eminent domain may be
defined generally as entering upon private property for more than a momentary period, and,
under the warrant or color of legal authority, devoting it to a public use, or otherwise
informally appropriating or injuriously affecting it in such a way as substantially to oust the
owner and deprive him of all beneficial enjoyment thereof." Pursuant to the aforecited
authority, a number of circumstances must be present in the "taking" of property for
purposes of eminent domain. First, the expropriator must enter a private property. This
circumstance is present in the instant case, when by virtue of the lease agreement the
Republic, through the AFP, took possession of the property of Castellvi. Second, the entrance
into private property must be for more than a momentary period. "Momentary" means,
"lasting but a moment; of but a moment's duration" (The Oxford English Dictionary, Volume
VI, page 596); "lasting a very short time; transitory; having a very brief life; operative or
recurring at every moment" (Webster's Third International Dictionary, 1963 edition.) The
word "momentary" when applied to possession or occupancy of (real) property should be
construed to mean "a limited period" not indefinite or permanent. The aforecited lease
contract was for a period of one year, renewable from year to year. The entry on the
property, under the lease, is temporary, and considered transitory. The fact that the
Republic, through the AFP, constructed some installations of a permanent nature does not
alter the fact that the entry into the land was transitory, or intended to last a year, although
renewable from year to year by consent of the owner of the land. By express provision of the
lease agreement the Republic, as lessee, undertook to return the premises in substantially
the same condition as at the time the property was first occupied by the AFP. It is claimed
that the ―INTENTION‖ of the lessee was to occupy the land permanently, as may be inferred
from the construction of permanent improvements. But this "INTENTION" cannot prevail
over the clear and express terms of the lease contract. Intent is to be deduced from the
language employed by the parties, and the terms of the contract, when unambiguous, as in
the instant case, are conclusive in the absence of averment and proof of mistake or fraud the
question being not what the intention wag, but what is expressed in the language used.
Moreover, in order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered (Art. 1371, Civil Code). If the intention of
the lessee (Republic) in 1947 was really to occupy permanently Castellvi's property, why was
the contract of lease entered into on year to year basis? Why was the lease agreement
renewed from year to year? Why did not the Republic expropriate this land of Castellvi in
1949 when, according to the Republic itself, it expropriated the other parcels of land that it
occupied at the same time as the Castellvi land, for the purpose of converting them into a jet
air base?" It might really have been the intention of the Republic to expropriate the lands in
question at some future time, but certainly mere notice much less an implied notice of such
intention on the part of the Republic to expropriate the lands in the future did not, and could
not, bind the landowner, nor bind the land itself. The expropriation must be actually
commenced in court. Third, the entry into the property should be under warrant or color of
legal authority. This circumstance in the "taking" may be considered as present in the instant
case, because the Republic entered the Castellvi property as lessee. Fourth, the property
must be devoted to a public use or otherwise informally appropriated or injuriously affected.
It may be conceded that the circumstance of the property being devoted to public use is
present because the property was used by the air force of the AFP. Fifth, the utilization of the
property for public use must be in such a way as to oust the owner and deprive him of all
beneficial enjoyment of the property. In the instant case, the entry of the Republic into the
property and its utilization of the same for public use did not oust Castellvi and deprive her of
all beneficial enjoyment of the property. Castellvi remained as owner, and was continuously
recognized as owner by the Republic, as shown by the renewal of the lease contract from
year to year, and by the provision in the lease contract whereby the Republic undertook to
return the property to Castellvi when the lease was terminated. Neither was Castellvi
deprived of all the beneficial enjoyment of the property, because the Republic was bound to
pay, and had been paying, Castellvi the agreed monthly rentals until the time when it filed
the complaint for eminent domain on June 26, 1959. It is clear, therefore, that the "taking" of
Castellvi's property for purposes of eminent domain cannot be considered to have taken
place in 1947 when the Republic commenced to occupy the property as lessee thereof. We
find merit in the contention of Castellvi that two essential elements in the "taking" of
property under the power of eminent domain, namely: (1) that the entrance and occupation
by the condemnor must be for a permanent, or indefinite period, and (2) that in devoting the
property to public use the owner was ousted from the property and deprived of its beneficial
use, were not present when the Republic entered and occupied the Castellvi property in
1947. Untenable also is the Republic's contention that although the contract between the
parties was one of lease on a year to year basis, it was "in reality a more or less permanent
right to occupy the premises under the guise of lease with the 'right and privilege' to buy the
property should the lessor wish to terminate the lease," and "the right to buy the property is
merged as an integral part of the lease relationship . . . so much so that the fair market value
has been agreed upon, not as of the time of purchase, but as of the time of occupancy". 15
We cannot accept the Republic's contention that a lease on a year to year basis can give rise
to a permanent right to occupy, since by express legal provision a lease made for a
determinate time, as was the lease of Castellvi's land in the instant case, ceases upon the day
fixed, without need of a demand (Article 1669, Civil Code). Neither can it be said that the
right of eminent domain may be exercised by simply leasing the premises to be expropriated
(Rule 67, Section 1, Rules of Court). Nor can it be accepted that the Republic would enter into
a contract of lease where its real intention was to buy, or why the Republic should enter into
a simulated contract of lease ("under the guise of lease", as expressed by counsel for the
Republic) when all the time the Republic had the right of eminent domain, and could
expropriate Castellvi's land if it wanted to without resorting to any guise whatsoever. Neither
can we see how a right to buy could be merged in a contract of lease in the absence of any
agreement between the parties to that effect. To sustain the contention of the Republic is to
sanction a practice whereby in order to secure a low price for a land which the government
intends to expropriate (or would eventually expropriate) it would first negotiate with the
owner of the land to lease the land (for say ten or twenty years) then expropriate the same
when the lease is about to terminate, then claim that the "taking" of the property for the
purposes of the expropriation be reckoned as of the date when the Government started to
occupy the property under the lease, and then assert that the value of the property being
expropriated be reckoned as of the start of the lease, in spite of the fact that the value of the
property, for many good reasons, had in the meantime increased during the period of the
lease. This would be sanctioning what obviously is a deceptive scheme, which would have the
effect of depriving the owner of the property of its true and fair market value at the time
when the expropriation proceedings were actually instituted in court. The Republic's claim
that it had the "right and privilege" to buy the property at the value that it had at the time
when it first occupied the property as lessee nowhere appears in the lease contract. What
was agreed expressly in paragraph No. 5 of the lease agreement was that, should the lessor
require the lessee to return the premises in the same condition as at the time the same was
first occupied by the AFP, the lessee would have the "right and privilege" (or option) of
paying the lessor what it would fairly cost to put the premises in the same condition as it was
at the commencement of the lease, in lieu of the lessee's performance of the undertaking to
put the land in said condition. The "fair value" at the time of occupancy, mentioned in the
lease agreement, does not refer to the value of the property if bought by the lessee, but
refers to the cost of restoring the property in the same condition as of the time when the
lessee took possession of the property. Such fair value cannot refer to the purchase price, for
purchase was never intended by the parties to the lease contract. It is a rule in the
interpretation of contracts that "However general the terms of a contract may be, they shall
not be understood to comprehend things that are distinct and cases that are different from
those upon which the parties intended to agree" (Art. 1372, Civil Code). (A number of
circumstances must be present in the ―taking‖ of property for purposes of eminent domain.
First, the expropriator must enter a private property. Second, the entrance into private
property must be for more than a momentary period. Third, the entry into the property
should be under warrant or color of legal authority. Fourth, the property must be devoted to
a public use or otherwise informally appropriated or injuriously affected. Fifth, the utilization
of the property for public use must be in such a way as to oust the owner and deprive him of
all beneficial enjoyment of the property. It is clear, therefore, that the "taking" of Castellvi's
property for purposes of eminent domain cannot be considered to have taken place in 1947
when the Republic commenced to occupy the property as lessee thereof. We find merit in
the contention of Castellvi that two essential elements in the "taking" of property under the
power of eminent domain, namely: (1) that the entrance and occupation by the condemnor
must be for a permanent, or indefinite period, and (2) that in devoting the property to public
use the owner was ousted from the property and deprived of its beneficial use, were not
present when the Republic entered and occupied the Castellvi property in 1947. 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.
Herein, it is undisputed that the Republic was placed in possession of the Castellvi property,
by authority of the court, on 10 August 1959. The ―taking‖ of the Castellvi property for the
purposes of determining the just compensation to be paid must, therefore, be reckoned as of
26 June 1959 when the complaint for eminent domain was filed.)
AMIGABLE vs. CUENCA
(G.R. No. L-26400, February 29, 1972)
FACTS:
Victoria Amigable, is the registered owner of a lot in Cebu City. Without prior expropriation
or negotiated sale, the government used a portion of said lot for the construction of the
Mango and Gorordo Avenues. Amigable's counsel wrote to the President of the Philippines,
requesting payment of theportion of her lot which had been appropriated by the
government. The claim was indorsed tothe Auditor General, who disallowed it in his 9th
Endorsement. Thus, Amigable filed in thecourt a quo a complaint, against the Republic of the
Philippines and Nicolas Cuenca(Commissioner of Public Highways) for the recovery of
ownership and possession of her lot. On July 29, 1959, the court rendered its decision holding
that it had no jurisdiction over the plaintiff's cause of action for the recovery of possession
and ownership of the lot on the ground that the government cannot be sued without its
consent, that it had neither original nor appellate jurisdiction to hear and decide plaintiff's
claim for compensatory damages, being a money claim against the government; and that it
had long prescribed, nor did it have jurisdiction over said claim because the government had
not given its consent to be sued. Accordingly, the complaint was dismissed.
ISSUE:
Can the appellant sue the government?
HELD:
Yes. Considering that no annotation in favor of the government appears at the back of her
certificate of title and that she has not executed any deed of conveyance of any portion of
her lot to the government, the appellant remains the owner of the whole lot. As registered
owner, she could bring an action to recover possession of the portion of land in question at
anytime because possession is one of the attributes of ownership. However, since restoration
of possession of said portion by the government is neither convenient nor feasible at this
time because it is now and has been used for road purposes, the only relief available isfor the
government to make due compensation which it could and should have done years ago. To
determine the due compensation for the land, the basis should be the price or value thereof
at the time of the taking. As regards the claim for damages, the plaintiff is entitled thereto in
the form of legal interest on the price of the land from the time it was taken up to the time
that payment is made by the government. In addition, the government should pay for
attorney's fees, the amount of which should be fixed by the trial court after hearing. (NOTE:
The owner does not need to file the usual claim for recovery of just compensation with the
Commission on Audit if the government takes over his property and devotes it to public use
without the benefit of expropriation. He may immediatetly file a complaint with the proper
court for payment of his property as the arbitrary action of the government shall be deemed
a waiver of its immunity from suit.) Cruz, pg. 74)
PHILIPPINE PRESS INSTITUTE vs. COMELEC
(G.R. No. 119694, May 22, 1995)
FACTS:
The Philippine Press Institute, Inc. ("PPI") is before this Court assailing the constitutional
validity of resolution No. 2772 issued by respondent Commission on Elections ("Comelec")
and its corresponding Comelec directive dated 22 March 1995, through a Petition for
Certiorari and Prohibition. Petitioner PPI is a non-stock, non-profit organization of newspaper
and magazine publishers. On 2 March 1995, Comelec promulgated Resolution No. 2772,
providing for a Comelec Space, which is a free print space of not less than one half (1/2) page
in at least one newspaper of general circulation in every province or city. In this Petition for
Certiorari and Prohibition with prayer for the issuance of a Temporary restraining order, PPI
asks us to declare Comelec resolution No. 2772 unconstitutional and void on the ground that
it violates the prohibition imposed by the Constitution upon the government, and any of its
agencies, against the taking of private property for public use without just compensation.
ISSUE:
May COMELEC compel the members of print media to donate ―Comelec Space?
HELD:
NO. To compel print media companies to donate "Comelec space" amounts to "taking" of
private personal property for public use or purposes. The taking of print space here sought to
be effected may first be appraised under the public of expropriation of private personal
property for public use. The threshold requisites for a lawful taking of private property for
public use need to be examined here: one is the necessity for the taking; another is the legal
authority to effect the taking. The element of necessity for the taking has not been shown by
respondent Comelec. It has not been suggested that the members of PPI are unwilling to sell
print space at their normal rates to Comelec for election purposes. Indeed, the unwillingness
or reluctance of Comelec to buy print space lies at the heart of the problem. Similarly, it has
not been suggested, let alone demonstrated, that Comelec has been granted the power of
imminent domain either by the Constitution or by the legislative authority. A reasonable
relationship between that power and the enforcement and administration of election laws by
Comelec must be shown; it is not casually to be assumed. The taking of private property for
public use it, of course, authorized by the Constitution, but not without payment of "just
compensation" (Article III, Section 9). And apparently the necessity of paying compensation
for "Comelec space" is precisely what is sought to be avoided by respondent Commission.
There is nothing at all to prevent newspaper and magazine publishers from voluntarily giving
free print space to Comelec for the purposes contemplated in Resolution No. 2772. Section 2
of resolution No. 2772 does not, however, provide a constitutional basis for compelling
publishers, against their will, in the kind of factual context here present, to provide free print
space for Comelec purposes. Section 2 does not constitute a valid exercise of the power of
eminent domain. As earlier noted, the Solicitor General also contended that Section 2 of
Resolution No. 2772, even if read as compelling publishers to "donate" "Comelec space," may
be sustained as a valid exercise of the police power of the state. This argument was,
however, made too casually to require prolonged consideration on their part. Firstly, there
was no effort (and apparently no inclination on the part of Comelec) to show that the police
power - essentially a power of legislation - has been constitutionally delegated to respondent
Commission. Secondly, while private property may indeed be validly taken in the legitimate
exercise of the police power of the state, there was no attempt to show compliance in the
instant case with the requisites of a lawful taking under the police power. Section 2 of
Resolution No. 2772 is a blunt and heavy instrument that purports, without a showing of
existence of a national emergency or other imperious public necessity, indiscriminately and
without regard the the individual business condition of particular newspapers or magazines
located in different parts of the country, to take private property of newspaper or magazine
publishers. No attempt was made to demonstrate that a real and palpable or urgent
necessity for the taking of print space confronted the Comelec and that Section 2 of
Resolution No. 2772 was itself the only reasonable and calibrated response to such necessity
available to Comelec. Section 2 does not constitute a valid exercise of the police power of the
State.
SUMULONG vs. GUERRERO
(G.R. No. L-48665, September 30, 1987)
FACTS:
On December 5,1977, the National Housing Authority (NHA) filed a complaint for
expropriation of parcels of land covering approximately 25 hectares, (in Antipolo Rizal)
including the lots of 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 P1.00 per square meter adopting the market value fixed by the
provincial assessor in accordance with presidential decrees prescribing the valuation of
property in expropriation proceedings. 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 1224 which defines ―the policy on the
expropriation of private property for socialized housing upon payment of just
compensation.‖ On 17 January 1978, Judge Buenaventura Guerrero issued the order issuing a
writ of possession in favor of NHA. Sumulong and Vidanes-Balaoing filed a motion for
reconsideration on the ground that they had been deprived of the possession of their
property without due process of law. This was, however, denied. They filed a petition for
certiorari with the Supreme Court.
ISSUE:
Whether the taking of private property for ―socialized housing, which would benefit a few
and not all citizens, constitutes taking for ―public use.
HELD:
Yes. The exercise of the power of eminent domain is subject to certain limitations imposed by
the constitution (1973), i.e. that private property shall not be taken for public use without
just compensation‖ (Art. IV, sec. 9); and that no person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be denied the equal protection of
the laws‖ (Art. IV, sec. 1). The term ―public use‖ has acquired a more comprehensive
coverage. To the literal import of the term signifying strict use or employment by the public
has been added the broader notion of indirect public benefit or advantage. Specifically, urban
renewal or redevelopment and the construction of low-cost housing is recognized as a public
purpose, not only because of the expanded concept of public use but also because of specific
provisions in the Constitution. The 1973 Constitution made it incumbent upon the State to
establish, maintain and ensure adequate social services including housing [Art. II, sec. 7].
Shortage in housing is a matter of state concern since it directly and significantly affects
public health, safety, the environment and in sum, the general welfare. The public character
of housing measures does not change because units in housing projects cannot be occupied
by all but only by those who satisfy prescribed qualifications. A beginning has to be made, for
it is not possible to provide housing for all who need it, all at once. ―Socialized housing‖ falls
within the confines of ―public use‖. Various factors can come into play in the valuation of
specific properties singled out for expropriation. The values given by provincial assessors are
usually uniform for very wide areas covering several barrios or even an entire town with the
exception of the poblacion. Individual differences are never taken into account. The value of
land is based on such generalities as its possible cultivation for rice, corn, coconuts, or other
crops. Very often land described as "cogonal" has been cultivated for generations. Buildings
are described in terms of only two or three classes of building materials and estimates of
areas are more often inaccurate than correct. Tax values can serve as guides but cannot be
absolute substitutes for just compensation. To say that the owners are estopped to question
the valuations made by assessors since they had the opportunity to protest is illusory. The
overwhelming mass of landowners accept unquestioningly what is found in the tax
declarations prepared by local assessors or municipal clerks for them. They do not even look
at, much less analyze, the statements. The idea of expropriation simply never occurs until a
demand is made or a case filed by an agency authorized to do so.
MANOSCA vs. COURT OF APPEALS
(G.R. No. 106440, January 29, 1986)
FACTS:
Petitioners inherited a piece of land which was later declared as national landmark due to
being ascertained by National Historic Institute (NHI) as the birthplace of Felix Y. Manalo, the
founder of Iglesia ni Cristo. On the opinion of Secretary of Justice, he said that the place must
be subjected to the power of eminent domain since places invested with unusual historical
interest is a public use which such power may be authorized. Thus, Republic, through the
office of Solicitor General instituted a complaint for expropriation and filed an urgent motion
for the issuance for an order to permit it to take immediate possession of the property. The
trial court issued an order authorizing Republic to take over the property once the required
sum would have been deposited with the Municipal Treasurer of Taguig, Metro Manila. The
petitioners moved to dismiss the complaint since such expropriation would constituted an
application of funds directly or indirectly for the use, benefit, or support of Iglesia ni Cristo,
which is contrary to the provision of Section 29 (2) Article VI of the 1987 Constitution.
ISSUE:
Whether or not the ―public use‖ requirement of Eminent Domain is extant in the attempted
expropriation by the Republic of a 492- square-meter parcel of land as declared by the NHI as
a national landmark?
HELD:
Yes.According to Justice Black, term ―public use‖ means one which confers benefit or
advantage to the public and it is not confined to actual use by public. It may also be said to
mean public usefulness, utility or advantage, or what is productive of general benefit. The
term "public use," not having been otherwise defined by the constitution, must be
considered in its general concept of meeting a public need or a public exigency. 16 Black
summarizes the characterization given by various courts to the term; thus: Public Use.
Eminent domain. The constitutional and statutory basis for taking property by eminent
domain. For condemnation purposes, "public use" is one which confers same benefit or
advantage to the public; it is not confined to actual use by public. It is measured in terms of
right of public to use proposed facilities for which condemnation is sought and, as long as
public has right of use, whether exercised by one or many members of public, a "public
advantage" or "public benefit" accrues sufficient to constitute a public use. Montana Power
Co. vs. Bokma, Mont. 457 P. 2d 769, 772, 773. Public use, in constitutional provisions
restricting the exercise of the right to take private property in virtue of eminent domain,
means a use concerning the whole community as distinguished from particular individuals.
But each and every member of society need not be equally interested in such use, or be
personally and directly affected by it; if the object is to satisfy a great public want or
exigency, that is sufficient. Rindge Co. vs. Los Angeles County, 262 U.S. 700, 43 S.Ct. 689, 692,
67 L.Ed. 1186. The term may be said to mean public usefulness, utility, or advantage, or what
is productive of general benefit. It may be limited to the inhabitants of a small or restricted
locality, but must be in common, and not for a particular individual. The use must be a
needful one for the public, which cannot be surrendered without obvious general loss and
inconvenience. A "public use" for which land may be taken defies absolute definition for it
changes with varying conditions of society, new appliances in the sciences, changing
conceptions of scope and functions of government, and other differing circumstances
brought about by an increase in population and new modes of communication and
transportation. Katz v. Brandon, 156 Conn., 521, 245 A.2d 579,586. 17 The validity of the
exercise of the power of eminent domain for traditional purposes is beyond question; it is
not at all to be said, however, that public use should thereby be restricted to such traditional
uses. The idea that "public use" is strictly limited to clear cases of "use by the public" has long
been discarded. 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 so any more. 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 is public use. One is the
expropriation of lands to be subdivided into small lots for resale at cost to individuals. The
other is 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. Chief
Justice Fernando, writing the ponencia in J.M. Tuason & Co. vs. Land Tenure Administration,
has viewed the Constitution a dynamic instrument and one that "is not to be construed
narrowly or pedantically" so as to enable it "to meet adequately whatever problems the
future has in store." Fr. Joaquin Bernas, a noted constitutionalist himself, has aptly observed
that what, in fact, has ultimately emerged is a concept of public use which is just as broad as
"public welfare." Petitioners ask: But "(w)hat is the socalled unusual interest that the
expropriation of (Felix Manalo's) birthplace become so vital as to be a public use appropriate
for the exercise of the power of eminent domain" when only members of the Iglesia ni Cristo
would benefit? This attempt to give some religious perspective to the case deserves little
consideration, for what should be significant is the principal objective of, not the casual
consequences that might follow from, the exercise of the power. The purpose in setting up
the marker is essentially to recognize the distinctive contribution of the late Felix Manalo to
the culture of the Philippines, rather than to commemorate his founding and leadership of
the Iglesia ni Cristo. The practical reality that greater benefit may be derived by members of
the Iglesia ni Cristo than by most others could well be true but such a peculiar advantage still
remains to be merely incidental and secondary in nature. Indeed, that only a few would
actually benefit from the expropriation of property does not necessarily diminish the essence
and character of public use.
EPZA vs. DULAY
(G.R. No. L-59603, April 29, 1987)
FACTS:
A certain parcel of land was reserved by the President of the Philippines for petitioner Export
Processing Zone Authority (EPZA) for the establishment of an export processing zone.
However, not all of the reserved area was public land. The petitioner made an offer to
purchase the lands registered in the name of the private respondent, but, the parties failed
to have an agreement on the sale of the property. Thus, the petitioner filed a complaint for
expropriation with a prayer for the issuance of a writ of possession against private
respondent on the Court of First Instance of Cebu. The respondent judge favored the petition
and issued a writ of possession authorizing the petitioner to take into possession the said
property. Having determined the just compensation as only the issue to be resolved, the
respondent judge issued an order regarding the appointment of certain persons as
commissioners who are tasked to report to the court the just compensation for the
properties sought to be expropriated. Consequently, commissioners were appointed and,
afterwards, recommended in their report that the amount of P15.00 per square meter as the
fair and reasonable value of just compensation for the properties. Subsequently, petitioners
objected to the said order on the grounds that P.D. No. 1533 has superseded Section 5 to 8 of
Rule 67 of the Rules of court on the ascertainment of just compensation through
commissioners.
ISSUE:
Whether or not Sections 5 to 8, Rule 67 of the Revised Rules of Court had been repealed or
deemed amended by P.D. No. 1533 insofar as the appointment of commissioners to
determine the just compensation is concerned.
HELD:
The Supreme Court ruled that the P.D. No. 1533, which eliminates the court‘s discretion to
appoint commissioners pursuant to Rule 67 of the Rules of Court, is unconstitutional and
void, since constitutes an impermissible encroachment on judicial prerogatives. The
determination of "just compensation" in eminent domain cases is a judicial function. The
executive department or the legislature may make the initial determinations but when a
party claims a violation of the guarantee in the Bill of Rights that private property may not be
taken for public use without just compensation, no statute, decree, or executive order can
mandate that its own determination shag prevail over the court's findings. Much less can the
courts be.
MUNICIPALITY OF PARAÑAQUE vs. V.M. REALTY CORP.
(G.R. No. 127820, July 20, 1998)
FACTS:
A complaint for expropriation was filed by the Municipality of Parañaque against V.M. Realty
Corporation involving two parcels of land located at Parañaque, Metro Manila. The complaint
was in pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993. The complaint
was for the purpose of alleviateing the living conditions of the underprivileged by providing
homes for the homeless through a socialized housing project. Previously, an offer for the sale
of the property was made by the petitioner, however, the latter did not accept. The Regional
Trial Court of Makati issued order authorizing the petitioner to take possession of the subject
property upon deposit to the Clerk of Court of an amount equivalent to 15 percent of its fair
market value base on its current tax declaration. However, upon the private respondent‘s
motion to dismiss, the trial court nullified its previous order and dismissed the case. Thus,
petitioner appealed to the Court of Appeals. But the appellate court affirmed in toto the trial
court‘s decision.
ISSUE:
Whether or not the exercise of the power of eminent domain is valid.
HELD:
The following essential requisites must concur before an LGU can exercise the power of
eminent domain: (1) An ordinance is enacted by the local legislative council authorizing the
local chief executive, in behalf of the LGU, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private property.(2) The power of
eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor
and the landless.(3) There is payment of just compensation, as required under Section 9,
Article III of the Constitution, and other pertinent laws.(4) A valid and definite offer has been
previously made to the owner of the property sought to be expropriated, but said offer was
not accepted. The Supreme Court ruled that there was no compliance with the first requisite
since the mayor sought to exercise the power of eminent domain pursuant to a resolution
only. Ordinance is not synonymous to resolution. An ordinance is a law, possesses a general
or permanent character, and makes third reading for its enactment necessary. On the other
hand, a resolution is merely a declaration of the sentiment or opinion of a lawmaking body
on a specific matter, temporary in nature and its enactment required only the decision of
majority of all the Sanggunian members.
REPUBLIC vs. LIM
(G.R. No. 161656, June 29, 2005)
FACTS:
In 1938, the Republic instituted a special civil action for expropriation of a land in Lahug,
Cebu City for the purpose of establishing a military reservation for the Philippine Army. The
said lots were registered in the name of Gervasia and Eulalia Denzon. The Republic deposited
P9,500 in the PNB then took possession of the lots. Thereafter, on May 1940, the CFI
rendered its Decision ordering the Republic to pay the Denzons the sum of P4,062.10 as just
compensation. The Denzons appealed to the CA but it was dismissed on March 11, 1948. An
entry of judgment was made on April 5, 1948.
In 1950, one of the heirs of the Denzons, filed with the National Airports Corporation a claim
for rentals for the two lots, but it "denied knowledge of the matter." On September 6, 1961,
Lt. Cabal rejected the claim but expressed willingness to pay the appraised value of the lots
within a reasonable time.
For failure of the Republic to pay for the lots, on September 20, 1961, the Denzons·
successors-in-interest,Valdehueza and Panerio, filed with the same CFI an action for recovery
of possession with damages against the Republic and AFP officers in possession of the
property.
On November 1961, Titles of the said lots were issued in the names of Valdehueza and
Panerio with the annotation "subject to the priority of the National Airports Corporation to
acquire said parcels of land, Lots 932 and939 upon previous payment of a reasonable market
value".
On July 1962, the CFI promulgated its Decision in favor of Valdehueza and Panerio, holding
that they are the owners and have retained their right as such over lots because of the
Republic·s failure to pay the amount of P4,062.10,adjudged in the expropriation proceedings.
However, in view of the annotation on their land titles, they were ordered to execute a deed
of sale in favor of the Republic.
They appealed the CFI·s decision to the SC. The latter held that Valdehueza and Panerio are
still the registered owners of Lots 932 and 939, there having been no payment of just
compensation by the Republic. SC still ruled that they are not entitled to recover possession
of the lots but may only demand the payment of their fair market value.
Meanwhile, in 1964, Valdehueza and Panerio mortgaged Lot 932 to Vicente Lim, herein
respondent, as security for their loans. For their failure to pay Lim despite demand, he had
the mortgage foreclosed in 1976. The lot title was issued in his name.
On 1992, respondent Lim filed a complaint for quieting of title with the RTC against the
petitioners herein. On 2001, the RTC rendered a decision in favor of Lim, declaring that he is
the absolute and exclusive owner of the lot with all the rights of an absolute owner including
the right to possession. Petitioners elevated the case to the CA. In its Decision dated
September 18, 2003, it sustained the RTC Decision saying: ´... This is contrary to the rules of
fair play because the concept of just compensation embraces not only the correct
determination of the amount to be paid to the owners of the land,but also the payment for
the land within a reasonable time from its taking. Without prompt payment, compensation
cannot be considered "just"...”
Petitioner, through the OSG, filed with the SC a petition for review alleging that they remain
as the owner of Lot 932.
ISSUE:
Whether the Republic has retained ownership of Lot 932 despite its failure to pay
respondent’s predecessors-in-interest the just compensation therefor pursuant to the
judgment of the CFI rendered as early as May 14, 1940.
HELD:
One of the basic principles enshrined in our Constitution is that no person shall be deprived
of his private property without due process of law; and in expropriation cases, an essential
element of due process is that there must be just compensation whenever private property is
taken for public use. Accordingly, Section 9, Article III, of our Constitution mandates: "Private
property shall not be taken for public use without just compensation." The Republic
disregarded the foregoing provision when it failed and refused to pay respondent’s
predecessors-in-interest the just compensation for Lots 932 and 939.
The Court of Appeals is correct in saying that Republic’s delay is contrary to the rules of fair
play. In jurisdictions similar to ours, where an entry to the expropriated property precedes
the payment of compensation, it has been held that if the compensation is not paid in a
reasonable time, the party may be treated as a trespasser ab initio.
As early as May 19, 1966, in Valdehueza, this Court mandated the Republic to pay
respondent’s predecessors-in- interest the sum of P16,248.40 as "reasonable market value of
the two lots in question." Unfortunately, it did not comply
and allowed several decades to pass without obeying this Court’s mandate. It is tantamount
to confiscation of private property. While it is true that all private properties are subject to
the need of government, and the government may take them whenever the necessity or the
exigency of the occasion demands, however from the taking of private property by the
government under the power of eminent domain, there arises an implied promise to
compensate the owner for his loss.
There is a recognized rule that title to the property expropriated shall pass from the owner to
the expropriator only upon full payment of the just compensation. So, how could the
Republic acquire ownership over Lot 932 when it has not paid its owner the just
compensation, required by law, for more than 50 years? Clearly, without full payment of just
compensation, there can be no transfer of title from the landowner to the expropriator.
SC ruled in earlier cases that expropriation of lands consists of two stages. First is concerned
with the determination of the authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise. The second is concerned with the determination by
the court of "the just compensation for the property sought to be taken." It is only upon the
completion of these two stages that expropriation is said to have been completed In Republic
v. Salem Investment Corporation, we ruled that, "the process is not completed until payment
of just compensation." Thus, here, the failure of the Republic to pay respondent and his
predecessors-in-interest for a period of 57 years rendered the expropriation process
incomplete.
Thus, SC ruled that the special circumstances prevailing in this case entitle respondent to
recover possession of the expropriated lot from the Republic.
While the prevailing doctrine is that "the non-payment of just compensation does not entitle
the private landowner to recover possession of the expropriated lots, however, in cases
where the government failed to pay just compensation within five (5) years from the finality
of the judgment in the expropriation proceedings, the owners concerned shall have the right
to recover possession of their property. After all, it is the duty of the government, whenever
it takes property from private persons against their will, to facilitate the payment of just
compensation. In Cosculluela v. Court of Appeals, we defined just compensation as not only
the correct determination of the amount to be paid to the property owner but also the
payment of the property within a reasonable time. Without prompt payment, compensation
cannot be considered "just."
POWER OF TAXATION
SISON vs. ANCHETA
(G.R. No. L-59431, July 25, 1984)
FACTS:
Batas Pambansa 135 was enacted. Sison, as taxpayer, alleged that its provision (Section 1)
unduly discriminated against him by the imposition of higher rates upon his income as a
professional, that it amounts to class legislation, and that it transgresses against the equal
protection and due process clauses of the Constitution as well as the rule requiring
uniformity in taxation.
ISSUE:
Whether BP 135 violates the due process and equal protection clauses, and the rule on
uniformity in taxation.
HELD:
There is a need for proof of such persuasive character as would lead to a conclusion that
there was a violation of the due process and equal protection clauses. Absent such showing,
the presumption of validity must prevail. Equality and uniformity in taxation means that all
taxable articles or kinds of property of the same class shall be taxed at the same rate. The
taxing power has the authority to make reasonable and natural classifications for purposes of
taxation. Where the differentitation conforms to the practical dictates of justice and equity,
similar to the standards of equal protection, it is not discriminatory within the meaning of the
clause and is therefore uniform. Taxpayers may be classified into different categories, such
as recipients of compensation income as against professionals. Recipients of compensation
income are not entitled to make deductions for income tax purposes as there is no practically
no overhead expense, while professionals and businessmen have no uniform costs or
expenses necessaryh to produce their income. There is ample justification to adopt the gross
system of income taxation to compensation income, while continuing the system of net
income taxation as regards professional and business income.
PASCUAL vs. SECRETARY OF PUBLIC WORKS
(G.R. No. L-10405, December 29, 1960)
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,
contained, in section 1-C (a) thereof, an item (43[h]) 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 said feeder roads were "nothing but
projected and planned subdivision roads within the Antonio Subdivision situated at Pasig,
Rizal" near Shaw Boulevard, not far away from the intersection between the latter and EDSA,
which projected feeder roads "do not connect any government property or any important
premises to the main highway"; that the aforementioned Antonio Subdivision (as well as the
lands on which said feeder roads were to be construed) 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, 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", respondents Zulueta
executed on December 12, 1953, while he was a member of the Senate of the Philippines, an
alleged deed of donation 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, 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 voidab 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.
ISSUE:
Whether the contested item of Republic Act No. 920 unconstitutional and, therefor, illegal?
HELD:
No. 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, latter on, became Republic Act 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 (see section 13 of said Act). 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. 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. Again, it is well-stated that the validity of a statute may be contested
only by one who will sustain a direct injury in consequence of its enforcement. Yet, there are
many decisions nullifying, at the instance of taxpayers, laws providing for the disbursement
of public funds, upon the theory that "the expenditure of public funds by an officer of the
State for the purpose of administering an unconstitutional act constitutes a misapplication of
such funds," which may be enjoined at the request of a taxpayer. Republic Act No. 920 is
unconstitutional, since the legislature is without power to appropriate public revenue for
anything but a public purpose and the project feeder roads are at the time private properties.
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 for a public purpose.
PUNSALAN vs. MUNICIPAL BOARD OF MANILA
(G.R. No. L-4817, May 26, 1954)
FACTS:
An ordinance was approved by the Municipal Board of the City of Manila which imposes a
municipal occupation tax on persons exercising various professions in the city and penalizes
non-payment of the tax by a fine of not more than two hundred pesos or by imprisonment of
not more than six months or by both such fine and imprisonment in the discretion of the
court. The ordinance was in pursuance to paragraph (1) Section 18 of the Revised Charter of
the City of Manila which empowers the Municipal Board of said city to impose a municipal
occupation tax, not to exceed P50 per annum, on persons engaged in the various professions
above referred to the plaintiffs, after having paid their occupation tax, now being required to
pay the additional tax prescribed in the ordinance. The plaintiffs paid the said tax under
protest. The lower court declared the validity of the law authorizing the enactment of the
ordinance, but declared the latter illegal and void since its penalty provided for the
nonpayment of tax was not legally authorized.
ISSUE:
Is this ordinance and the law authorizing it constitute class legislation, are unjust and
oppressive, and authorize what amounts to double taxation?
HELD:
NO. To begin with defendants' appeal, we find that the lower court was in error in saying that
the imposition of the penalty provided for in the ordinance was without the authority of law.
The last paragraph (kk) of the very section that authorizes the enactment of this tax
ordinance (section 18 of the Manila Charter) in express terms also empowers the Municipal
Board "to fix penalties for the violation of ordinances which shall not exceed to(sic) two
hundred pesos fine or six months" imprisonment, or both such fine and imprisonment, for a
single offense." Hence, the pronouncement below that the ordinance in question is illegal
and void because it imposes a penalty not authorized by law is clearly without basis.
Secondly, In raising the hue and cry of "class legislation", the burden of plaintiffs' complaint is
not that the professions to which they respectively belong have been singled out for the
imposition of this municipal occupation tax; and in any event, the Legislature may, in its
discretion, select what occupations shall be taxed, and in the exercise of that discretion it
may tax all, or it may select for taxation certain classes and leave the others untaxed. (Cooley
on Taxation, Vol. 4, 4th ed., pp. 3393- 3395.) Plaintiffs' complaint is that while the law has
authorized the City of Manila to impose the said tax, it has withheld that authority from
other chartered cities, not to mention municipalities. We do not think it is for the courts to
judge what particular cities or municipalities should be empowered to impose occupation
taxes in addition to those imposed by the National Government. That matter is peculiarly
within the domain of the political departments and the courts would do well not to encroach
upon it. Moreover, as the seat of the National Government and with a population and
volume of trade many times that of any other Philippine city or municipality, Manila, no
doubt, offers a more lucrative field for the practice of the professions, so that it is but fair
that the professionals in Manila be made to pay a higher occupation tax than their brethren
in the provinces. Thirdly, Plaintiffs brand the ordinance unjust and oppressive because they
say that it creates discrimination within a class in that while professionals with offices in
Manila have to pay the tax, outsiders who have no offices in the city but practice their
profession therein are not subject to the tax. Plaintiffs make a distinction that is not found in
the ordinance. The ordinance imposes the tax upon every person "exercising" or "pursuing"
— in the City of Manila naturally — any one of the occupations named, but does not say that
such person must have his office in Manila. What constitutes exercise or pursuit of a
profession in the city is a matter of judicial determination. The argument against double
taxation may not be invoked where one tax is imposed by the state and the other is imposed
by the city (1 Cooley on Taxation, 4th ed., p. 492), it being widely recognized that there is
nothing inherently obnoxious in the requirement that license fees or taxes be exacted with
respect to the same occupation, calling or activity by both the state and the political
subdivisions thereof.
LLADOC vs. COMMISSIONER OF INTERNAL REVENUE
(G.R. No. L-19201, June 16, 1965)
FACTS:
In 1957, the MB Estate Inc., of Bacolod City, donated P10,000.00 in cash to Fr. Crispin Ruiz
then parish priest of Victorias, Negros Occidental, and predecessor of Fr. Casimiro Lladoc, for
the construction of a new Catholic Church in the locality. The total samount was actually
spent for the purpose intended. On 3 March 1958, MB Estate filed the donor‘s gift tax return.
Under date of 29 April 1960, the Commissioner of Internal Revenue issued as assessment for
donee‘s gift tax against the Catholic Parish of Victorias, Negros Occidental, of which
petitioner was the priest. The tax amounted to P1,370.00 including surcharges, interest of 1%
monthly from 15 May 1958 to 15 June 1960, and the compromise for the late filing of the
return. Petitioner lodged a protest to the assessment and requested the withdrawal thereof.
The protest and the motion for reconsideration presented to the Commissioner of Internal
Revenue were denied. The petitioner appealed to the CTA on 2 November 1960. After
hearing, the CTA affirmed the decision of the Commissioner of Internal Revenue except the
imposition of compromise penalty of P20. Fr. Lladoc appealed to the Supreme Court.
ISSUE:
Whether a donee‘s gift tax may be assessed against the Catholic Church.
HELD:
Yes. The phrase ―exempt from taxation,‖ as employed in the Constitution should not be
interpreted to mean exemption from all kinds of taxes. Section 22(3), Art. VI of the
Constitution of the Philippines, exempts from taxation cemeteries, churches and personages
or convents, appurtenant thereto, and all lands, buildings, and improvements used
exclusively for religious purposes. The exemption is only from the payment of taxes assessed
on such properties enumerated, as property taxes, as contra-distinguished from excise taxes.
A donee‘s gift tax is not a property tax but an excise tax imposed on the transfer of property
by way of gift inter vivos. Its assessment was not on the property themeselves. It does not
rest upon general ownership, but an excise upon the use made of the properties, upon the
exercise of the privilege of receiving the properties. The imposition of such excise tax on
property used for religious purposes does not constitute an impairment of the Constitution.
ABRA VALLEY COLLEGE vs. AQUINO
(G.R. No. L-39086, June 15, 1988)
FACTS:
Petitioner Abra Valley College is an educational corporation and institution of higher learning
duly incorporated with the SEC in 1948. On 6 July 1972, the Municipal and Provincial
treasurers (Gaspar Bosque and Armin Cariaga, respectively) and issued a Notice of Seizure
upon the petitioner for the college lot and building (OCT Q-83) for the satisfaction of said
taxes thereon. The treasurers served upon the petitioner a Notice of Sale on 8 July 1972, the
sale being held on the same day. Dr. Paterno Millare, then municipal mayor of Bangued,
Abra, offered the highest bid of P 6,000 on public auction involving the sale of the college lot
and building. The certificate of sale was correspondingly issued to him. The petitioner filed a
complaint on 10 July 1972 in the court a quo to annul and declare void the ―Notice of
Seizure‖ and the ―Notice of Sale‖ of its lot and building located at Bangued, Abra, for non-
payment of real estate taxes and penalties amounting to P5,140.31. On 12 April 1973, the
parties entered into a stipulation of facts adopted and embodied by the trial court in its
questioned decision. The trial court ruled for the government, holding that the second floor
of the building is being used by the director for residential purposes and that the ground
floor used and rented by Northern Marketing Corporation, a commercial establishment, and
thus the property is not being used ―exclusively‖ for educational purposes. Instead of
perfecting an appeal, petitioner availed of the instant petition for review on certiorari with
prayer for preliminary injunction before the Supreme Court, by filing said petition on 17
August 1974.
ISSUE:
Whether the College is exempt from taxes.
HELD:
Yes. While the Court allows a more liberal and non-restrictive interpretation of the phrase
―exclusively used for educational purposes,‖ reasonable emphasis has always been made
that exemption extends to facilities which are incidental to and reasonably necessary for the
accomplishment of the main purposes. While the second floor‘s use, as residence of the
director, is incidental to education; the lease of the first floor cannot by any stretch of
imagination be considered incidental to the purposes of education. The test of exemption
from taxation is the use of the property for purposes mentioned in the Constititution. Adonis
Notes: The SC stated that if only the judge had read the 1973 Constitution, he should have
known the difference between the 1935 and the 1973 Constitution and he could not have
summarily dismissed the case. There is a substantial distinction between the 1935 and the
1973 Constitution. In the 1935 Constitution the requirement for exemption for real property
taxes is “exclusively” , while the 1973 Constitution requires “actually, directly & exclusively”.
The SC remanded to the Court of Origin for further hearing. (excerpts from Sababan Notes)