Buck vs Bell

Facts: Carrie Buck was a feeble minded woman who was committed to a state mental institution. Her
condition had been present in her family for the last three generations. A Virginia law allowed for the
sexual sterilization of inmates of institutions to promote the "health of the patient and the welfare of
society." Before the procedure could be performed, however, a hearing was required to determine
whether or not the operation was a wise thing to do.

Issue: Did the Virginia statute which authorized sterilization deny Buck the right to due process of the
law and the equal protection of the laws as protected by the Fourteenth Amendment?

Held: The Court found that the statute did not violate the Constitution. Justice Holmes made clear that
Buck's challenge was not upon the medical procedure involved but on the process of the substantive
law. Since sterilization could not occur until a proper hearing had occurred (at which the patient and a
guardian could be present) and after the Circuit Court of the County and the Supreme Court of Appeals
had reviewed the case, if so requested by the patient. Only after "months of observation" could the
operation take place. That was enough to satisfy the Court that there was no Constitutional violation.
Citing the best interests of the state, Justice Holmes affirmed the value of a law like Virginia's in order to
prevent the nation from "being swamped with incompetence . . . Three generations of imbeciles are
enough."

Rutter vs Esteban
FACTS: In August 20, 1941, Rutter sold to Esteban 2 parcels of land in Manila. Esteban paid 3/4ths of the
purchase price and they constituted a mortgage over one of the parcels to secure the payment of the
balance.

However, the war broke out and somehow, Esteban was not able to pay the balance of the purchase
price on the due date and so, on August 2, 1949, Rutter instituted an action to recover the balance with
the CFI.

Esteban admitted the averments of the complaint but as a defense, he claimed that his obligation was a
pre-war obligation covered by the moratorium embodied in R.A. No. 342.

Section 2 of Republic Act No. 342 provides that “all debts and other monetary obligations contracted
before December 8, 1941, any provision in the contract creating the same or any subsequent
aggreement affecting such obligation to the contrary notwithstanding, shall not due and demandable for
a period of eight (8) years from and after settlement of the war damage claim of the debtor by the
Philippine War Damage Commission.”

The CFI ruled in favor of the debtor Esteban. This brings us to the sole issue raised by petitioner on
appeal

ISSUE: Whether or not R.A. No. 342, which declared a moratorium on certain pre-war obligations, is
unconstitutional for violation of the Constitutional provision prohibiting the impairment of the
obligation of contracts.

HELD: Yes. R.A. No. 342 is unconstitutional.

Statutes declaring a moratorium on obligations are generally constitutional Statutes declaring a
moratorium on obligations are not new: “For some 1,400 years western civilization has made use of
extraordinary devices for saving the credit structure, devices generally known as moratoria. The
moratorium is postponement of fulfillment of obligations decreed by the state through the medium of
the courts or the legislature. Its essence is the application of the sovereign power.”

Such laws were often passed during or after times of financial distress such as wars and disasters.
Similar laws were passed in some US states after the civil war and they have been declared
constitutional. Some laws however, were declared unconstitutional where the period of moratorium
prescribed is indefinite or unreasonable.

The argument that moratorium laws impair the obligation of contracts does not hold water. It is justified
as a valid exercise of the state of it's police power.

In the US case, Home Building and Loan Association vs. Blaisdell, it was held that:

The economic interests of the State may justify the exercise of its continuing and dominant protective
power notwithstanding interference with contracts. . . .

xxx

Similarly, where the protective power of the State is exercised in a manner otherwise appropriate in the
regulation of a business it is no objection that the performance of existing contracts may be frustrated
by the prohibition of injurious practices. . . .

. . . . The question is not whether the legislative action affects contracts incidentally, or directly or
indirectly, but whether the legislation is addressed to a legitimate end and the measures taken are
reasonable and appropriate to that end.

Thus the “true test” of constitutionality of a moratorium statute “lies in the determination of the
period of a suspension of the remedy. It is required that such suspension be definite and reasonable,
otherwise it would be violative of the constitution.”

R.A. No. 342 is unconstitutional for being unreasonable

The moratorium law, enacted in 1948, came on the heels of executive orders likewise declaring
moratoriums. With its 8 year moratorium period, it is clearly unreasonable for creditors who have to
“observe a vigil of 12 years” to collect on debts which have become demandable as early as 1941. And
the injustice is more patent when, under the law, the debtor is not even required to pay interest during
the operation of the relief.

The court also noted that the reconstruction is paying off and that the Philippines is headed to better
times. Hence the Supreme Court declared R.A. No. 342 unreasonable and oppressive and hence, null
and void and without effect.

Disposition:
Esteban was ordered to pay the balance with interest at the rate of 7% per annum with 12% attorneys
fees.
US vs Toribio
Facts: Respondent Toribio is an owner of carabao, residing in the town of Carmen in the province of
Bohol. The trial court of Bohol found that the respondent slaughtered or caused to be slaughtered a
carabao without a permit from the municipal treasurer of the municipality wherein it was slaughtered,
in violation of Sections 30 and 33 of Act No. 1147, an Act regulating the registration, branding, and
slaughter of Large Cattle. The act prohibits the slaughter of large cattle fit for agricultural work or other
draft purposes for human consumption.

The respondent counters by stating that what the Act is (1) prohibiting is the slaughter of large cattle in
the municipal slaughter house without a permit given by the municipal treasurer. Furthermore, he
contends that the municipality of Carmen has no slaughter house and that he slaughtered his carabao in
his dwelling, (2) the act constitutes a taking of property for public use in the exercise of the right of
eminent domain without providing for the compensation of owners, and it is an undue and
unauthorized exercise of police power of the state for it deprives them of the enjoyment of their private
property.

Issue: Whether or not Act. No. 1147, regulating the registration, branding and slaughter of large cattle, is
an undue and unauthorized exercise of police power.

Held: It is a valid exercise of police power of the state.

The Supreme court Said sections 30 and 33 of the Act prohibit and penalize the slaughtering or causing
to be slaughtered for human consumption of large cattle at any place without the permit provided for in
section 30
Where the language of a statute is fairly susceptible of two or more constructions, that construction
should be adopted which will most tend to give effect to the manifest intent of the lawmaker and
promote the object for which the statute was enacted, and a construction should be rejected which
would tend to render abortive other provisions of the statute and to defeat the object which the
legislator sought to attain by its enactment

The Supreme Court also said that if they will follow the contention of Toribio it will defeat the purpose
of the law.

The police power rests upon necessity and the right of self-protection and if ever the invasion of private
property by police regulation can be justified, The Supreme Court think that the reasonable restriction
placed upon the use of carabaos by the provision of the law under discussion must be held to be
authorized as a reasonable and proper exercise of that power.

The Supreme Court cited events that happen in the Philippines like an epidemic that wiped 70-100% of
the population of carabaos.. The Supreme Court also said that these animals are vested with public
interest for they are fundamental use for the production of crops. These reasons satisfy the requesites
of a valid exercise of police power

The Supreme court finally said that article 1147 is not an exercise of the inherent power of eminent
domain. The said law does not constitute the taking of caraboes for public purpose; it just serve as a
mere regulation for the consumption of these private properties for the protection of general welfare
and public interest.
US vs Causby
Facts: Thomas Lee Causby owned a chicken farm outside of Greensboro, North Carolina. The farm was
located near an airport used regularly by the United States military. According to Causby, noise from the
airport regularly frightened the animals on his farm, resulting in the deaths of several chickens. The
problem became so severe that Causby was forced to abandon his business. Under an ancient doctrine
of the common law, land ownership extended to the space above and below the earth. Using this
doctrine as a basis, Causby sued the United States, arguing that he owned the airspace above his farm.
By flying planes in this airspace, he argued, the government had confiscated his property without
compensation, thus violating the Takings Clause of the Fifth Amendment. The United States Court of
Claims accepted Causby's argument, and ordered the government to pay compensation.

Issue: Did the flying of planes by the United States military over Causby's farm constitute a violation of
the Takings Clause of the Fifth Amendment?

Held:Yes, to an extent. In a 5-2 opinion authored by Justice William O. Douglas, the Court concluded that
the ancient common law doctrine "has no place in the modern world." Justice Douglas noted that, were
the Court to accept the doctrine as valid, "every transcontinental flight would subject the operator to
countless trespass suits. Common sense revolts at the idea." However, while the Court rejected the
unlimited reach above and below the earth described in the common law doctrine, it also ruled that, "if
the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate
reaches of the enveloping atmosphere." Without defining a specific limit, the Court stated that flights
over the land could be considered a violation of the Takings Clause if they led to "a direct and immediate
interference with the enjoyment and use of the land." Given the damage caused by the particularly low,
frequent flights over his farm, the Court determined that the government had violated Causby's rights,
and he was entitled to compensation. (Chief Justice Harlan Fiske Stone died on April 22; Justice Robert
H. Jackson took no part in the consideration or decision in the case, leaving the court with 7 members.)

US vs Caltex
CERTIORARI TO THE COURT OF CLAIMS
Syllabus
In the circumstances of this case, the wartime destruction of private property by the Army to prevent its
imminent capture and use by an advancing enemy did not entitle the owner to compensation under the
Fifth Amendment. Pp. 344 U. S. 150-156.
(a) Whether or not the principle laid down in United States v. Pacific R. Co., 120 U. S. 227, was dictum
when enunciated, this Court holds that it is the law today. Pp. 344 U. S. 153-154.
(b) Mitchell v. Harmony, 13 How. 115, and United States v. Russell, 13 Wall. 623, distinguished. Pp. 344
U. S. 152-153.
(c) A different result is not required by the fact that the Army exercised "deliberation" in singling out this
property, in "requisitioning" it from its owners, and in exercising "control" over it before destroying it,
nor by the fact that the destruction was effected prior to withdrawal. Pp. 154-155.
120 Ct.Cl. 518, 100 F.Supp. 970, reversed.
In a suit to recover compensation under the Fifth Amendment for property destroyed by the Army in
wartime to prevent its use by the enemy, the Court of Claims gave judgment for the plaintiffs. 120 Ct.Cl.
518, 100 F.Supp. 970. This Court granted certiorari. 343 U.S. 955. Reversed, p. 344 U. S. 156.
Page 344 U. S. 150
MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.
Each of the respondent oil companies owned terminal facilities in the Pandacan district of Manila at the
time of the Japanese attack upon Pearl Harbor. These were used to receive, handle and store petroleum
products from incoming ships and to release them for further distribution throughout the Philippine
Islands. Wharves, rail and automotive equipment, pumps, pipelines, storage tanks, and warehouses
were included in the property on hand at the outbreak of the war, as well as a normal supply of
petroleum products.
News of the Pearl Harbor attack reached Manila early in the morning of December 8, 1941. On the same
day, enemy air attacks were mounted against our forces in the Philippines, and thereafter the enemy
launched his amphibious assault.
On December 12, 1941, the United States Army, through its Chief Quartermaster, stationed a control
officer at the terminals. Operations continued at respondents' plants, but distribution of the petroleum
products for civilian use was severely restricted. A major share of the existing supplies was requisitioned
by the Army.
The military situation in the Philippines grew worse. In the face of the Japanese advance, the
Commanding General, on December 23, 1941, ordered the withdrawal of all troops on Luzon to the
Bataan Peninsula. On December 25, 1941, he declared Manila to be an open city. On that same day, the
Chief Engineer on the staff of the Commanding General addressed to each of the oil companies letters
stating that the Pandacan oil deposits "are requisitioned by the U.S. Army." The letters further stated:
"Any action deemed necessary for the destruction of this property will be handled by the U.S. Army." An
engineer in the employ of one of the companies
Page 344 U. S. 151
was commissioned a first lieutenant in the Army Corps of Engineers to facilitate this design.
On December 26, he received orders to prepare the facilities for demolition. On December 27, 1941,
while enemy planes were bombing the area, this officer met with representatives of the companies. The
orders of the Chief Engineer had been transmitted to the companies. Letters from the Deputy Chief of
Staff, by command of General MacArthur, also had been sent to each of the oil companies, directing the
destruction of all remaining petroleum products and the vital parts of the plants. Plans were laid to carry
out these instructions, to expedite the removal of products which might still be of use to the troops in
the field, and to lay a demolition network about the terminals. The representatives of Caltex were given,
at their insistence, a penciled receipt for all the terminal facilities and stocks of Caltex.
At 5:40 p.m., December 31, 1941, while Japanese troops were entering Manila, Army personnel
completed a successful demolition. All unused petroleum products were destroyed, and the facilities
were rendered useless to the enemy. The enemy was deprived of a valuable logistic weapon.
After the war, respondents demanded compensation for all of the property which had been used or
destroyed by the Army. The Government paid for the petroleum stocks and transportation equipment
which were either used or destroyed by the Army, but it refused to compensate respondents for the
destruction of the Pandacan terminal facilities. Claiming a constitutional right under the Fifth
Amendment [Footnote 1] to just compensation for these terminal facilities, respondents sued in the
Court of Claims. Recovery was allowed. 120 Ct.Cl. 518, 100 F.Supp.
Page 344 U. S. 152
970. We granted certiorari to review this judgment. 343 U.S. 955.
As reflected in the findings of the Court of Claims, there were two rather distinct phases of Army
operations in the Pandacan District in December, 1941. While the military exercised considerable
control over the business operations of respondents' terminals during the period between December 12
and December 26, there was not, according to the findings below, an assumption of actual physical or
proprietary dominion over them during this period. [Footnote 2] Bound by these findings, respondents
do not now question the holding of the Court of Claims that, prior to December 27, there was no seizure
for which just compensation must be paid.
Accordingly, it is the legal significance of the events that occurred between December 27 and December
31 which concerns us. Respondents concede that the Army had a right to destroy the installations. But
they insist that the destruction created a right in themselves to exact fair compensation from the United
States for what was destroyed.
The argument draws heavily from statements by this Court in Mitchell v. Harmony, 13 How. 115 (1852),
and United States v. Russell, 13 Wall. 623 (1871). We agree that the opinions lend some support to
respondents' view. [Footnote 3]
Page 344 U. S. 153
But the language in those two cases is far broader than the holdings. Both cases involved equipment
which had been impressed by the Army for subsequent use by the Army. In neither was the Army's
purpose limited, as it was in this case, to the sole objective of destroying property of strategic value to
prevent the enemy from using it to wage war the more successfully.
A close reading of the Mitchell and Russell cases shows that they are not precedent to establish a
compensable taking in this case. Nor do those cases exhaust all that has been said by this Court on the
subject. In United States v. Pacific R. Co., 120 U. S. 227(1887), Justice Field, speaking for a unanimous
Court, discussed the question at length. That case involved bridges which had been destroyed during the
war between the states by a retreating Northern Army to impede the advance of the Confederate Army.
[Footnote 4] Though the point was not directly involved, the Court raised the question of whether this
act constituted a compensable taking by the United States, and answered it in the negative:
"The destruction or injury of private property in battle, or in the bombardment of cities and towns, and
in many other ways in the war, had to be borne by the sufferers alone, as one of its consequences.
Whatever would embarrass or impede the advance
Page 344 U. S. 154
of the enemy, as the breaking up of roads or the burning of bridges, or would cripple and defeat him, as
destroying his means of subsistence, were lawfully ordered by the commanding general. Indeed, it was
his imperative duty to direct their destruction. The necessities of the war called for and justified this.
The safety of the state in such cases overrides all considerations of private loss. [Footnote 5]"
It may be true that this language also went beyond the precise questions at issue. But the principles
expressed were neither novel nor startling, for the common law had long recognized that, in times of
imminent peril -- such as when fire threatened a whole community -- the sovereign could, with
immunity, destroy the property of a few that the property of many and the lives of many more could be
saved. [Footnote 6] And what was said in the Pacific Railroad case was later made the basis for the
holding in Juragua Iron Co. v. United States, 212 U. S. 297, where recovery was denied to the owners of
a factory which had been destroyed by American soldiers in the field in Cuba because it was thought
that the structure housed the germs of a contagious disease.
Therefore, whether or not the principle laid down by Justice Field was dictum when he enunicated it, we
hold that it is law today. In our view, it must govern in this case. Respondents and the majority of the
Court of Claims, arguing to the contrary, have placed great emphasis on the fact that the Army exercised
"deliberation" in singling out this property, in "requisitioning" it from its owners, and in exercising
"control" over it before devastating it. We need not labor over these labels; it may be
Page 344 U. S. 155
that they describe adequately what was done, but they do not show the legal consequences of what
was done. The "requisition" involved in this case was no more than an order to evacuate the premises
which were slated for demolition. The "deliberation" behind the order was no more than a design to
prevent the enemy from realizing any strategic value from an area which he was soon to capture.
Had the Army hesitated, had the facilities only been destroyed after retreat, respondents would
certainly have no claims to compensation. The Army did not hesitate. It is doubtful that any concern
over the legal niceties of the situation entered into the decision to destroy the plants promptly, while
there was yet time to destroy them thoroughly. [Footnote 7] Nor do we think it legally significant that
the destruction was effected prior to withdrawal. The short of the matter is that this property, due to
the fortunes of war, had become a potential weapon of great significance to the invader. It was
destroyed, not appropriated for subsequent use. It was destroyed that the United States might better
and sooner destroy the enemy.
The terse language of the Fifth Amendment is no comprehensive promise that the United States will
make whole all who suffer from every ravage and burden of war. This Court has long recognized that, in
wartime, many losses must be attributed solely to the fortunes of war,
Page 344 U. S. 156
and not to the sovereign. [Footnote 8] No rigid rules can be laid down to distinguish compensable losses
from noncompensable losses. Each case must be judged on its own facts. But the general principles laid
down in the Pacific Railroad case seem especially applicable here. Viewed realistically, then, the
destruction of respondents' terminals by a trained team of engineers in the face of their impending
seizure by the enemy was no different than the destruction of the bridges in the Pacific Railroad case.
Adhering to the principles of that case, we conclude that the court below erred in holding that
respondents have a constitutional right to compensation on the claims presented to this Court.
Reversed

Guido vs Rural Progress

This a petition for prohibition to prevent the Rural Progress Administration and Judge Oscar Castelo of
the Court of First Instance of Rizal from proceeding with the expropriation of the petitioner Justa G.
Guido's land, two adjoining lots, part commercial, with a combined area of 22,655 square meters,
situated in Maypajo, Caloocan, Rizal, just outside the north Manila boundary, on the main street running
from this city to the north. Four grounds are adduced in support of the petition, to wit:
(1) That the respondent RPA (Rural Progress Administration) acted without jurisdiction or corporate
power in filling the expropriation complaint and has no authority to negotiate with the RFC a loan of
P100,000 to be used as part payment of the value of the land.
(2) That the land sought to be expropriated is commercial and therefore excluded within the purview of
the provisions of Act 539.
(3) That majority of the tenants have entered with the petitioner valid contracts for lease, or option to
buy at an agreed price, and expropriation would impair those existing obligation of contract.
(4) That respondent Judge erred in fixing the provisional value of the land at P118,780 only and in
ordering its delivery to the respondent RPA.
We will take up only ground No. 2. Our conclusion on this branch of the case will make superfluous a
decision on the other questions raised.
Sections 1 and 2 of Commonwealth Act No. 539, copied verbatim, are as follows:
SECTION 1. The President of the Philippines is authorized to acquire private lands or any interest therein,
through purchaser or farms for resale at reasonable prices and under such conditions as he may fix to
their bona fide tenants or occupants or to private individuals who will work the lands themselves and
who are qualified to acquire and own lands in the Philippines.
SEC. 2. The President may designated any department, bureau, office, or instrumentality of the National
Government, or he may organize a new agency to carry out the objectives of this Act. For this purpose,
the agency so created or designated shall be considered a public corporation.
The National Assembly approved this enactment on the authority of section 4 of Article XIII of the
Constitution which, copied verbatim, is as follows:
The Congress may authorize, upon payment of just compensation, the expropriation of lands to be
subdivided into small lots and conveyed at cost to individuals.
What lands does this provision have in view? Does it comprehend all lands regardless of their location,
nature and area? The answer is to be found in the explanatory statement of Delegate Miguel Cuaderno,
member of the Constitutional Convention who was the author or sponsor of the above-quoted
provision. In this speech, which was entitled "Large Estates and Trust in Perpetuity" and is transcribed in
full in Aruego's "The Framing of the Philippine Constitution," Mr. Cuaderno said:
There has been an impairment of public tranquility, and to be sure a continuous of it, because of the
existence of these conflicts. In our folklore the oppression and exploitation of the tenants are vividly
referred to; their sufferings at the hand of the landlords are emotionally pictured in our drama; and
even in the native movies and talkies of today, this theme of economic slavery has been touched upon.
In official documents these same conflicts are narrated and exhaustively explained as a threat to social
order and stability.
But we should go to Rizal inspiration and illumination in this problem of this conflicts between landlords
and tenants. The national hero and his family were persecuted because of these same conflicts in
Calamba, and Rizal himself met a martyr's death because of his exposal of the cause of the tenant class,
because he would not close his eyes to oppression and persecution with his own people as
victims.lawphi1.nêt
I ask you, gentlemen of the Convention, knowing this as you do and feeling deeply as you must feel a
regret over the immolation of the hero's life, would you not write in the Constitution the provision on
large estates and trust in perpetuity, so that you would be the very instrument of Providence to
complete the labors of Rizal to insure domestic tranquility for the masses of our people?
If we are to be true to our trust, if it is our purpose in drafting our constitution to insure domestic
tranquility and to provide for the well-being of our people, we cannot, we must fail to prohibit the
ownership of large estates, to make it the duty of the government to break up existing large estates, and
to provide for their acquisition by purchase or through expropriation and sale to their occupants, as has
been provided in the Constitutions of Mexico and Jugoslavia.
No amendment was offered and there was no debate. According to Dean Aruego, Mr. Cuaderno's
resolution was readily and totally approved by the Convention. Mr. Cuaderno's speech therefore may be
taken as embodying the intention of the framers of the organic law, and Act No. 539 should be
construed in a manner consonant with that intention. It is to be presumed that the National Assembly
did not intend to go beyond the constitutional scope of its powers.
There are indeed powerful considerations, aside from the intrinsic meaning of section 4 of Article XIII of
the Constitution, for interpreting Act No. 539 in a restrictive sense. Carried to extremes, this Act would
be subversive of the Philippine political and social structure. It would be in derogation of individual
rights and the time-honored constitutional guarantee that no private property of law. The protection
against deprivation of property without due process for public use without just compensation occupies
the forefront positions (paragraph 1 and 2) in the Bill for private use relieves the owner of his property
without due process of law; and the prohibition that "private property should not be taken for public
use without just compensation" (Section 1 [par. 2], Article III, of the Constitution) forbids necessary
implication the appropriation of private property for private uses (29 C.J.S., 819). It has been truly said
that the assertion of the right on the part of the legislature to take the property of and citizen and
transfer it to another, even for a full compensation, when the public interest is not promoted thereby, is
claiming a despotic power, and one inconsistent with very just principle and fundamental maxim of a
free government. (29 C.J.S., 820.)
Hand in hand with the announced principle, herein invoked, that "the promotion of social justice to
insure the well-being and economic security of all the people should be the concern of the state," is a
declaration, with which the former should be reconciled, that "the Philippines is a Republican state"
created to secure to the Filipino people "the blessings of independence under a regime of justice, liberty
and democracy." Democracy, as a way of life enshrined in the Constitution, embraces as its necessary
components freedom of conscience, freedom of expression, and freedom in the pursuit of happiness.
Along with these freedoms are included economic freedom and freedom of enterprise within
reasonable bounds and under proper control. In paving the way for the breaking up of existing large
estates, trust in perpetuity, feudalism, and their concomitant evils, the Constitution did not propose to
destroy or undermine the property right or to advocate equal distribution of wealth or to authorize of
what is in excess of one's personal needs and the giving of it to another. Evincing much concern for the
protection of property, the Constitution distinctly recognize the preferred position which real estate has
occupied in law for ages. Property is bound up with every aspects of social life in a democracy as
democracy is conceived in the Constitution. The Constitution owned in reasonable quantities and used
legitimately, plays in the stimulation to economic effort and the formation and growth of a social middle
class that is said to be the bulwark of democracy and the backbone of every progressive and happy
country.
The promotion of social justice ordained by the Constitution does not supply paramount basis for
untrammeled expropriation of private land by the Rural Progress Administration or any other
government instrumentality. Social justice does not champion division of property or equality of
economic status; what it and the Constitution do guaranty are equality of opportunity, equality of
political rights, equality before the law, equality between values given and received on the basis of
efforts exerted in their production. As applied to metropolitan centers, especially Manila, in relation to
housing problems, it is a command to devise, among other social measures, ways and means for the
elimination of slums, shambles, shacks, and house that are dilapidated, overcrowded, without
ventilation. light and sanitation facilities, and for the construction in their place of decent dwellings for
the poor and the destitute. As will presently be shown, condemnation of blighted urban areas bears
direct relation to public safety health, and/or morals, and is legal.
In reality, section 4 of Article XIII of the Constitution is in harmony with the Bill of Rights. Without that
provision the right of eminent domain, inherent in the government, may be exercised to acquire large
tracts of land as a means reasonably calculated to solve serious economic and social problem. As Mr.
Aruego says "the primary reason" for Mr. Cuaderno's recommendation was "to remove all doubts as to
the power of the government to expropriation the then existing landed estates to be distributed at costs
to the tenant-dwellers thereof in the event that in the future it would seem such expropriation
necessary to the solution of agrarian problems therein."
In a broad sense, expropriation of large estates, trusts in perpetuity, and land that embraces a whole
town, or a large section of a town or city, bears direct relation to the public welfare. The size of the land
expropriated, the large number of people benefited, and the extent of social and economic reform
secured by the condemnation, clothes the expropriation with public interest and public use. The
expropriation in such cases tends to abolish economic slavery, feudalistic practices, and other evils
inimical to community prosperity and contentment and public peace and order. Although courts are not
in agreement as to the tests to be applied in determining whether the use is public or not, some go far in
the direction of a liberal construction as to hold that public advantage, and to authorize the exercise of
the power of eminent domain to promote such public benefit, etc., especially where the interest
involved are considerable magnitude. (29 C.J.S., 823, 824. See also People of Puerto Rico vs. Eastern
Sugar Associates, 156 Fed. [2nd], 316.) In some instances, slumsites have been acquired by
condemnation. The highest court of New York States has ruled that slum clearance and reaction of
houses for low-income families were public purposes for which New York City Housing authorities could
exercise the power of condemnation. And this decision was followed by similar ones in other states. The
underlying reasons for these decisions are that the destruction of congested areas and insanitary
dwellings diminishes the potentialities of epidemic, crime and waste, prevents the spread of crime and
diseases to unaffected areas, enhances the physical and moral value of the surrounding communities,
and promotes the safety and welfare of the public in general. (Murray vs. La Guardia, 52 N.E. [2nd], 884;
General Development Coop. vs. City of Detroit, 33 N.W. [2ND], 919; Weizner vs. Stichman, 64 N.Y.S.
[2nd], 50.) But it will be noted that in all these case and others of similar nature extensive areas were
involved and numerous people and the general public benefited by the action taken.
The condemnation of a small property in behalf of 10, 20 or 50 persons and their families does not inure
to the benefit of the public to a degree sufficient to give the use public character. The expropriation
proceedings at bar have been instituted for the economic relief of a few families devoid of any
consideration of public health, public peace and order, or other public advantage. What is proposed to
be done is to take plaintiff's property, which for all we know she acquired by sweat and sacrifice for her
and her family's security, and sell it at cost to a few lessees who refuse to pay the stipulated rent or
leave the premises.
No fixed line of demarcation between what taking is for public use and what is not can be made; each
case has to be judge according to its peculiar circumstances. It suffices to say for the purpose of this
decision that the case under consideration is far wanting in those elements which make for public
convenience or public use. It is patterned upon an ideology far removed from that consecrated in our
system of government and embraced by the majority of the citizens of this country. If upheld, this case
would open the gates to more oppressive expropriations. If this expropriation be constitutional, we see
no reason why a 10-, 15-, or 25-hectare farm land might not be expropriated and subdivided, and sold to
those who want to own a portion of it. To make the analogy closer, we find no reason why the Rural
Progress Administration could not take by condemnation an urban lot containing an area of 1,000 or
2,000 square meters for subdivision into tiny lots for resale to its occupants or those who want to build
thereon.
The petition is granted without special findings as to costs.

Commissioner vs Botelho Corp.

On August 30, 1960, the Reparations Commission of the Philippines — hereinafter referred to as the
Commission — and Botelho Shipping Corporation — hereinafter referred to as Botelho — entered into a
"Contract of Conditional Purchase and Sale of Reparations Goods," whereby the former agreed to sell to
Botelho for P6,798,888.88 the vessel "M/S Maria Rosello," procured by the Commission from Japan,
pursuant to the provisions of the Philippine-Japanese Reparations Agreement of May 9, 1956. On
September 19, 1960, the Commission signed a similar contract with General Shipping Co., Inc. —
hereinafter referred to as General Shipping — for the sale thereto of "M/S General Lim" at the price of
P6,951,666.66. Both agreements, couched in identical terms, except as to price, stipulated that:
a) The Reparations Commission "retains title to and ownership of the above described vessel until it is
fully paid for." (Exh. "A", p. 2, both cases)
b) The stipulated purchase price of the M/S MARIA ROSELLO was to be paid by Botelho to the
Commission under a deferred payment plan in 10 equal yearly installments of P717,333.49, bearing 3%
interest per annum, beginning August 31, 1962 and August 31 of every year thereafter until the year
1972, while the purchase price of the M/S GENERAL LIM was to be paid by General Shipping to the
Commission under a deferred payment plan in 10 equal yearly installments of P723,132.68, bearing 3%
interest per annum beginning September 30 of every year until the year 1972. (Exhs. 9, p. 4 and A-2,
both cases) (See Respondents' brief, p. 4.)
Delivered in Japan to its respective buyers, acting on behalf of the Commission, the vessels, upon their
departure from Tokyo, on the maiden trip thereof to the Philippines, were issued, by the Philippine Vice-
Consul in said city, provisional certificates of Philippine registry in the name of the Commission, so that
the vessels could proceed to the Philippines and secure therein the respective final registration
document.
Upon arrival at the port of Manila, the Buyer filed the corresponding applications for registration of the
vessels, but, the Bureau of Customs placed the same under custody and refused to give due course to
said applications, unless the aforementioned sums of P483,433 and P494,824 be paid as compensating
tax. As the Commissioner of Customs refused to reconsider the stand taken by his office, the Buyers
simultaneously filed with the Court of Tax Appeals their respective petitions for review, against the
Commissioner of Customs and the Commissioner of Internal Revenue — hereinafter referred to
collectively as Appellants — with urgent motion for suspension of the collection of said tax. After a joint
hearing on this motion, the same was, on October 31, 1960, granted by the Tax Court, upon the sum of a
P500,000.00 bond by each one of the Buyers.
On June 17, 1961, while these cases were pending trial in said Court, Republic Act No. 3079 amended
Republic Act No. 1789 — the Original Reparations Act, under which the aforementioned contracts with
the Buyers had been executed — by exempting buyers of reparations goods acquired from the
Commission, from liability for the compensating tax. Moreover, section 20 of Republic Act No. 3079,
provides:
x x x This Act shall take effect upon its approval, except that the amendment contained in Section seven
hereof relating to the requirements of procurement orders including the requirement of down payment
by private applicant end-users shall not apply to procurement orders already duty issued and verified at
the time of the passage of this amendatory Act, and except further that the amendment contained in
Section ten relating to the insurance of the reparations goods by the end-users upon delivery shall apply
also to goods covered by contracts already entered into by the Commission and end-user prior to the
approval of this amendatory Act as well as goods already delivered to the end-user, and except further
that the amendments contained in Sections eleven and twelve hereof relating to the terms of
installment payments on capital goods disposed of to private parties, and the execution of a
performance bond before delivery of reparations goods, shall not apply to contracts for the utilization of
reparations goods already entered into by the Commission and the end-users prior to the approval of
this amendatory Act: Provided, That any end-user may apply for the renovation of his utilization contract
with the Commission in order to avail of any provision of this amendatory Act which is more favorable to
an applicant end-user than has heretofore been granted in like manner and to the same extent as an
end-user filing his application after the approval of this amendatory Act, and the Commission may agree
to such renovation on condition that the end-user shall voluntarily assume all the new obligations
provided for in this amendatory Act.
Invoking the provisions of this section 20, the Buyers applied, therefore, for the renovation of their
utilizations contracts with the Commission, which granted the application, and, then, filed with the Tax
Court, their supplemental petitions for review. Subsequently, the parties submitted Stipulations of Fact
and, after a joint trial, at which they introduced additional evidence, said Court rendered the appealed
decision, reversing the decisions herein Appellants, and declared said Buyers exempt from the
compensating tax sought to be assessed against the vessels aforementioned. Hence, these appeals by
the Government G.R. No. L-21633 refers to the case as regards "M/S Maria Rosello," whereas "M/S
General Lim" is the subject-matter of G.R. No. L-21634.
It seems clear that, under Republic Act No. 1789 — pursuant to which the contracts of Conditional
Purchase and Sale in question had been executed — the vessels "M/S Maria Rosello" and "M/S General
Lim" were subject to compensating tax. Indeed, Section 14 of said Act provides that "reparations goods
obtained by private parties shall be exempt only from the payment of customs duties, consular fees and
the special import tax." Although this Section was amended by R.A. No. 3079, to include the
compensating tax" among the exemptions enumerated therein, such amendment took place, not only
after the contracts involved in these appeals had been perfected and partly consummated, but, also,
after the corresponding compensating tax had become due and payment thereof demanded by
Appellants herein. It is, moreover, obvious that said additional exemption should not and cannot be
given retroactive operation, in the absence of a manifest intent of Congress to do this effect. The issue
in the cases at bar hinges on whether or not such intent is clear.
Appellants maintain the negative, upon the ground that a tax exemption must be clear and explicit; that
there is no express provision for the retroactivity of the exemption, established by Republic Act No.
3079, from the compensating tax; that the favorable provisions, which are referred to in section 20
thereof, cannot include the exemption from compensating tax; and, that Congress could not have
intended any retroactive exemption, considering that the result thereof would be prejudicial to the
Government.
The inherent weakness of the last ground becomes manifest when we consider that, if true, there could
be no tax exemption of any kind whatsoever, even if Congress should wish to create one, because every
such exemption implies a waiver of the right to collect what otherwise would be due to the
Government, and, in this sense, is prejudicial thereto. In fact, however, tax exemptions may and do
exist, such as the one prescribed in section 14 of Republic Act No. 1789, as amended by Republic Act No.
3079, which, by the way, is "clear and explicit," thus, meeting the first ground of appellant's contention.
It may not be amiss to add that no tax exemption — like any other legal exemption or exception — is
given without any reason therefor. In much the same way as other statutory commands, its avowed
purpose is some public benefit or interest, which the law-making body considers sufficient to offset the
monetary loss entitled in the grant of the exemption. Indeed, section 20 of Republic Act No. 3079 exacts
a valuable consideration for the retroactivity of its favorable provisions, namely, the voluntary
assumption, by the end-user who bought reparations goods prior to June 17, 1961 of "all
the new obligations provided for in" said Act.
The argument adduced in support of the third ground is that the view adopted by the Tax Court would
operate to grant exemption to particular persons, the Buyers herein. It should be noted, however, that
there is no constitutional injunction against granting tax exemptions to particular persons. In fact, it is
not unusual to grant legislative franchises to specific individuals or entities, conferring tax exemptions
thereto. What the fundamental law forbids is the denial of equal protection, such as through
unreasonable discrimination or classification.1äwphï1.ñët
Furthermore, Section 14 of the Law on Reparations, as amended, exempts from the compensating tax,
not particular persons, but persons belonging to a particular class. Indeed, appellants do not assail the
constitutionality of said section 14, insofar as it grants exemptions to end-users who, after the approval
of Republic Act No. 3079, on June 17, 1961, purchased reparations goods procured by the Commission.
From the viewpoint of Constitutional Law, especially the equal protection clause, there is no difference
between the grant of exemption to said end-users, and the extension of the grant to those whose
contracts of purchase and sale mere made before said date, under Republic Act No. 1789.
It is true that Republic Act No. 3079 does not explicitly declare that those who purchased reparations
goods prior to June 17, 1961, are exempt from the compensating tax. It does not say so, because they
do not really enjoy such exemption, unless they comply with the proviso in Section 20 of said Act, by
applying for the renovation of their respective utilization contracts, "in order to avail of any provision of
the Amendatory Act which is more favorable" to the applicant. In other words, it is manifest, from the
language of said section 20, that the same intended to give such buyers the opportunity to be treated
"in like manner and to the same extent as an end-user filing his application after this approval of this
Amendatory Act." Like the "most-favored-nation-clause" in international agreements, the
aforementioned section 20 thus seeks, not to discriminate or to create an exemption or exception, but
to abolish the discrimination, exemption or exception that would otherwise result, in favor of the end-
user who bought after June 17, 1961 and against one who bought prior thereto. Indeed, it is difficult to
find a substantial justification for the distinction between the one and the other. As correctly held by the
Tax Court in Philippine Ace Lines, Inc. v. Commissioner of Internal Revenue (C.T.A. Nos. 964 and 984,
January 25, 1963), and reiterated in the cases under consideration:
x x x In providing that the favorable provision of Republic Act No. 3079 shall be available to applicants
for renovation of their utilization contracts, on condition that said applicants shall voluntarily assume all
the new obligations provided in the new law, the law intends to place persons who acquired reparations
goods before the enactment of the amendatory Act on the same footing as those who acquire
reparations goods after its enactment. This is so because of the provision that once an application for
renovation of a utilization contract has been approved, the favorable provisions of said Act shall be
available to the applicant "in like manner and to the same extent, as an end-user filing his application
alter the approval of this amendatory Act." To deny exemption from compensating tax to one whose
utilization contract has been renovated, while granting the exemption to one who files an application for
acquisition of reparations goods after the approval of the new law, would be contrary to the express
mandate of the new law, that they both be subject to the same privileges in like manner and to the
same extent. It would be manifest distortion of the literal meaning and purpose of the new law.
Wherefore, the appealed decision of the Court of Tax Appeals is hereby affirmed in toto, without any
pronouncement as to costs. It is so ordered

Lutz vs Araneta
Appelant in this case Walter Lutz in his capacity as the Judicial Administrator of the intestate of the
deceased Antonio Jayme Ledesma, seeks to recover from the Collector of the Internal Revenue the total
sum of fourteen thousand six hundred sixty six and forty cents (P 14, 666.40) paid by the estate as taxes,
under section 3 of Commonwealth Act No. 567, also known as the Sugar Adjustment Act, for the crop
years 1948-1949 and 1949-1950. Commonwealth Act. 567 Section 2 provides for an increase of the
existing tax on the manufacture of sugar on a graduated basis, on each picul of sugar manufacturer;
while section 3 levies on the owners or persons in control of the land devoted tot he cultivation of
sugarcane and ceded to others for consideration, on lease or otherwise - "a tax equivalent to the
difference between the money value of the rental or consideration collected and the amount
representing 12 per centum of the assessed value of such land. It was alleged that such tax is
unconstitutional and void, being levied for the aid and support of the sugar industry exclusively, which in
plaintiff's opinion is not a public purpose for which a tax may be constitutionally levied. The action was
dismissed by the CFI thus the plaintiff appealed directly to the Supreme Court.

ISSUE: Whether or not the tax imposition in the Commonwealth Act No. 567 are unconstitutional.

RULING: Yes, the Supreme Court held that the fact that sugar production is one of the greatest industry
of our nation, sugar occupying a leading position among its export products; that it gives employment to
thousands of laborers in the fields and factories; that it is a great source of the state's wealth, is one of
the important source of foreign exchange needed by our government and is thus pivotal in the plans of a
regime committed to a policy of currency stability. Its promotion, protection and advancement,
therefore redounds greatly to the general welfare. Hence it was competent for the legislature to find
that the general welfare demanded that the sugar industry be stabilized in turn; and in the wide field of
its police power, the law-making body could provide that the distribution of benefits therefrom be
readjusted among its components to enable it to resist the added strain of the increase in taxes that it
had to sustain.
The subject tax is levied with a regulatory purpose, to provide means for the rehabilitation and
stabilization of the threatened sugar industry. In other words, the act is primarily a valid exercise of
police power.

Republic vs Bacolod-Murcia Milling

RA 632 created the Philippine Sugar Institute, a semi-public corporation. In 1951, the Institute acquired
the Insular Sugar Refinery for P3.07 million payable in installments from the proceeds of the Sugar tax to
be collected under RA 632. The operation of the refinery for 1954 to 1957 was disastrous as the Institute
suffered tremendous losses. Contending that the purchase of refinery with money from the Institute’s
fund was not authorized under RA 632, and that the continued operation of the refinery is inimical to
their interest, Bacolod-Murcia Milling Co., Ma-ao Sugar Central, Talisay-Silay Milling Co. and the Central
Azucarera del Danao refused to continue with their contribution to said fund. The trial court found them
liable under RA 632. Hence, this petition.

ISSUE: Are the milling companies liable?

RULING: Yes. The special assessment or levy for the Philippine Sugar Institute Fund is not so much an
exercise of the power of
taxation, nor the imposition of a special assessment, but the exercise of police power for the general
welfare of the entire country. It is, therefore, an exercise of a sovereign power which no private citizen
may lawfully resist.
Section 2a of the charter authorizes Philsugin to acquire the refinery in question. The financial loss
resulting from the operation thereof is no means an index that the industry did profit therefrom, as
other gains of a different nature (such as experience) may have been realized.