Pacific Wide Realty and Devt Corp vs. Puerto Azul Land, Inc.

FACTS:
In G.R. No. 180893
Puerto Azul Land, Inc. (PALI) is the owner and developer of the Puerto Azul Complex situated in Ternate, Cavite. In order
to finance its operations, it obtained loans from various banks. However, PALI was unable to keep up with the payment of
its obligations, both current and those that were about to fall due. One of its creditors, the Export and Industry Bank (EIB)
later substituted by Pacific Wide Realty and Development Corporation (PWRDC) filed foreclosure proceedings on
PALIs mortgaged properties. PALI filed a petition for suspension of payments and rehabilitation, accompanied by a
proposed rehabilitation plan and three (3) nominees for the appointment of a rehabilitation receiver.
On December 13, 2005, the RTC rendered a Decision approving PALIs petition for suspension of payments and
rehabilitation.
In G.R. No. 178768
On March 3, 2005, EIB filed an urgent motion to order PALI and/or the mortgagor TUI/rehabilitation receiver to pay all the
taxes due on Transfer Certificate of Title (TCT) No. 133164. EIB claimed that the property covered by TCT No. 133164,
registered in the name of TUI, was one of the properties used to secure PALIs loan from EIB.
PALI opposed the motion, arguing that the rehabilitation courts stay order stopped the enforcement of all claims, whether
for money or otherwise, against a debtor, its guarantors, and its sureties not solidarily liable to the debtor; thus, TCT No.
133164 was covered by the stay order.
The court reiterated that TCT No. 133164, under the name of TUI, was excluded from the stay order. In order to protect
the interest of EIB as creditor of PALI, it may foreclose TCT No. 133164 and settle the delinquency taxes of third-party
mortgagor TUI with the local government of Pasay City.
PALI filed with the CA a petition for certiorari under Rule 65 of the Rules of Court, ascribing grave abuse of discretion on
the part of the rehabilitation court in allowing the foreclosure of a mortgage constituted over the property of an
accommodation mortgagor, to secure the loan obligations of a corporation seeking relief in a rehabilitation proceeding.
On July 27, 2009, the Court ordered the consolidation of the two petitions.
ISSUE
Whether the terms of the rehabilitation plan are unreasonable and in violation of the non-impairment clause
RULING
No. The terms of the rehabilitation plan are reasonable and does not violate the non-impairment clause
Under the Rules of Procedure on Corporate Rehabilitation, rehabilitation is defined as the restoration of the debtor to a
position of successful operation and solvency, if it is shown that its continuance of operation is economically feasible and
its creditors can recover by way of the present value of payments projected in the plan, more if the corporation continues
as a going concern than if it is immediately liquidated.
We find nothing onerous in the terms of PALIs rehabilitation plan. The restructuring of the debts of PALI is part and parcel
of its rehabilitation. Moreover, per findings of fact of the RTC and as affirmed by the CA, the restructuring of the debts of
PALI would not be prejudicial to the interest of PWRDC as a secured creditor.

We also find no merit in PWRDCs contention that there is a violation of the impairment clause. Section 10, Article III of the
Constitution mandates that no law impairing the obligations of contract shall be passed. This case does not involve a law
or an executive issuance declaring the modification of the contract among debtor PALI, its creditors and its
accommodation mortgagors. Thus, the non-impairment clause may not be invoked.

HON. HEHERSON T. ALVAREZ v. PICOP RESOURCES, INC.G.R. No. 162243, December 3, 2009
Doctrine:
A timber license is not a contract within the purview of the non-impairment clause.
Facts:
PICOP filed with the DENR an application to have its Timber License Agreement (TLA) No. 43converted into an
IFMA.
PICOP filed before the (RTC) City a Petition for Mandamus against then DENR Sec Alvarez for unlawfully
refusing and/or neglecting to sign and execute the IFMA contract of PICOP even as the latter has complied with all the
legal requirements for the automatic conversion of TLA No. 43, as amended , in to an IF MA.
The cause of action of PICOP Resources, Inc. (PICOP) in its Petition for Mandamus with the trial court is clear:
the government is bound by contract, a 1969 Document signed by then President Ferdinand Marcos, to enter into an
Integrated Forest Management Agreement (IFMA) with PICOP.
Issue:
Whether the 1969 Document is a contract recognized under the non-impairment clause by which the
government may be bound (for the issuance of the IFMA)
He ld:
NO. Our definitive ruling in Oposa v. Factoran that a timber license is not a contract within the purview of the
non-impairment clause is edifying. We declared: Needless to say, all licenses may thus be revoked or rescinded by
executive action. It is not a contract, property or a property right protected by the due process claus e of the
Con stitu t ion.
Since timber licenses are not contracts, the non-impairment clause, which reads: "SEC. 10. No law impairin g
the obligation of contra cts sha ll be passed ." canno t be invoked .
T he Pre siden tial W arranty cannot, in any manner, be construed as a contractual underta kin g
assurin g PICOP of exclusive possession and enjoyment of its concession areas. Such an interpretation would resu lt in
the co mplete abdi cation b y the Sta te in favor of PIC O P of the soverei gn power to contro l and
supervi se the exploration , development and u tili za tion of the na tural resou rc es in the area.
Diaz vs. Secretary of Finance (2011)
Facts:
Petitioners Renato V. Diaz and Aurora Ma. F. Timbol (petitioners) filed this petition for declaratory relief assailing
the validity of the impending imposition of value-added tax (VAT) by the Bureau of Internal Revenue (BIR) on the
collections of tollway operators. Court treated the case as one of prohibition.
Petitioners hold the view that Congress did not, when it enacted the NIRC, intend to include toll fees within the meaning of
"sale of services" that are subject to VAT; that a toll fee is a "user's tax," not a sale of services; that to impose VAT on toll
fees would amount to a tax on public service; and that, since VAT was never factored into the formula for computing toll
fees, its imposition would violate the non-impairment clause of the constitution.
The government avers that the NIRC imposes VAT on all kinds of services of franchise grantees, including tollway
operations; that the Court should seek the meaning and intent of the law from the words used in the statute; and that the
imposition of VAT on tollway operations has been the subject as early as 2003 of several BIR rulings and circulars.
The government also argues that petitioners have no right to invoke the non-impairment of contracts clause since they
clearly have no personal interest in existing toll operating agreements (TOAs) between the government and tollway
operators. At any rate, the non-impairment clause cannot limit the State's sovereign taxing power which is generally read
into contracts.
Issue:
May toll fees collected by tollway operators be subjected to VAT (Are tollway operations a franchise and/or a
service that is subject to VAT)?
Ruling:
When a tollway operator takes a toll fee from a motorist, the fee is in effect for the latter's use of the tollway facilities over
which the operator enjoys private proprietary rights that its contract and the law recognize. In this sense, the tollway
operator is no different from the service providers under Section 108 who allow others to use their properties or facilities
for a fee.

Tollway operators are franchise grantees and they do not belong to exceptions that Section 119 spares from the payment
of VAT. The word "franchise" broadly covers government grants of a special right to do an act or series of acts of public
concern. Tollway operators are, owing to the nature and object of their business, "franchise grantees." The construction,
operation, and maintenance of toll facilities on public improvements are activities of public consequence that necessarily
require a special grant of authority from the state.
A tax is imposed under the taxing power of the government principally for the purpose of raising revenues to fund public
expenditures. Toll fees, on the other hand, are collected by private tollway operators as reimbursement for the costs and
expenses incurred in the construction, maintenance and operation of the tollways, as well as to assure them a reasonable
margin of income. Although toll fees are charged for the use of public facilities, therefore, they are not government
exactions that can be properly treated as a tax. Taxes may be imposed only by the government under its sovereign
authority, toll fees may be demanded by either the government or private individuals or entities, as an attribute of
ownership.
RE: REQUEST OF NATIONAL COMMITTEE ON LEGAL AID TO EXEMPT LEGAL AID CLIENTS FROM PAYING
FILING, DOCKET ANDOTHER FEES. A.M. No. 08-11-7-SC
Facts:
The Misamis Oriental Chapter of the Integrated Bar of the Philippines (IBP) promulgated Resolution No. 24, series of
2008. The resolution requested the IBPs National Committee on Legal Aid (NCLA) to ask for the exemption from the
payment of filing, docket and other fees of clients of the legal aid offices in the various IBP chapters.
Issue:
Should indigent litigant be exempted from paying docket fees?
Ruling:
Yes. The Constitution guarantees the rights of the poor to free access to the courts and to adequate legal assistance.
Recipients of the service of the NCLA and legal aid offices of IBP chapters may enjoy free access to courts by exempting
them from the payment of fees assessed in connection with the filing of a complaint or action in court. With these twin
initiatives, the guarantee of Section 11, Article III of Constitution is advanced and access to justice is increased by bridging
a significant gap and removing a major roadblock. Where there is a right, there must be a remedy. The remedy must not
only be effective and efficient, but also readily accessible. For a remedy that is inaccessible is no remedy at all.