Ermita Malate Hotel & Motel Operators Association v.

City of Manila [GR L-

24693, 31 July 1967]
Ermita Malate Hotel & Motel Operators Association v. City of Manila [GR L-24693, 31 July 1967]
En Banc, Fernando (J): 7 concur, 2 on leave

Facts: On 13 June 1963, Ordinance 4760 was issued by the municipal board of the City of Manila and
approved by Vice Mayor Herminio Astorga, who was at the time acting Mayor of the City of Manila. The
ordinance (1) imposes a P6,000.00 fee per annum for first class motels and P4,500.00 for second class
motels; (2) requires the owner, manager, keeper or duly authorized representative of a hotel, motel, or
lodging house to refrain from entertaining or accepting any guest or customer or letting any room or
other quarter to any person or persons without his filling up the prescribed form in a lobby open to
public view at all times and in his presence, wherein the surname, given name and middle name, the
date of birth, the address, the occupation, the sex, the nationality, the length of stay and the number of
companions in the room, if any, with the name, relationship, age and sex would be specified, with data
furnished as to his residence certificate as well as his passport number, if any, coupled with a
certification that a person signing such form has personally filled it up and affixed his signature in the
presence of such owner, manager, keeper or duly authorized representative, with such registration
forms and records kept and bound together; (3) provides that the premises and facilities of such hotels,
motels and lodging houses would be open for inspection either by the City Mayor, or the Chief of Police,
or their duly authorized representatives. The ordinance also classified motels into two classes and
required the maintenance of certain minimum facilities in first class motels such as a telephone in each
room, a dining room or restaurant and laundry; while second class motels are required to have a dining
room. It prohibited a person less than 18 years old from being accepted in such hotels, motels, lodging
houses, tavern or common inn unless accompanied by parents or a lawful guardian and made it unlawful
for the owner, manager, keeper or duly authorized representative of such establishments to lease any
room or portion thereof more than twice every 24 hours. It provided a penalty of automatic cancellation
of the license of the offended party in case of conviction. On 5 July 1963, the Ermita-Malate Hotel and
Motel Operators Association (EMHMOA), its member Hotel del Mar, and a certain Go Chiu filed a
petition for prohibition against the mayor of the City of Manila in his capacity as he is charged with the
general power and duty to enforce ordinances of the City of Manila and to give the necessary orders for
the faithful execution and enforcement of such ordinances. There was a plea for the issuance of
preliminary injunction and for a final judgment declaring the above ordinance null and void and
unenforceable. The lower court on 6 July 1963 issued a writ of preliminary injunction ordering the
Mayor to refrain from enforcing said Ordinance 4760 from and after 8 July 1963. After the submission of
the memoranda, ruled that the City of Manila lack authority to regulate motels and rendering Ordinance
4760 unconstitutional and therefore null and void. It made permanent the preliminary injunction issued
by the Mayor and his agents to restrain him from enforcing the ordinance. The Mayor of Manila
appealed to the Supreme Court.
Issue: Whether the regulations imposed on motels and hotels (increasing license fees, partially
restricting the freedom to contract, and restraining the liberty of individuals) is valid and/or
constitutional.

Held: Yes. The ordinance was enacted to minimize certain practices hurtful to public morals. It was made
as there is observed an alarming increase in the rate of prostitution, adultery and fornication in Manila
traceable in great part to the existence of motels, which provide a necessary atmosphere for clandestine
entry, presence and exit and thus become the ideal haven for prostitutes and thrill seekers. The
ordinance proposes to check the clandestine harboring of transients and guests of these establishments
by requiring these transients and guests to fill up a registration form, prepared for the purpose, in a
lobby open to public view at all times, and by introducing several other amendatory provisions
calculated to shatter the privacy that characterizes the registration of transients and guests. The
increase in the license fees was intended to discourage establishments of the kind from operating for
purpose other than legal and to increase the income of the city government. Further, the restriction on
the freedom to contract, insofar as the challenged ordinance makes it unlawful for the owner, manager,
keeper or duly authorized representative of any hotel, motel, lodging house, tavern, common inn or the
like, to lease or rent any room or portion thereof more than twice every 24 hours, with a proviso that in
all cases full payment shall be charged, cannot be viewed as a transgression against the command of
due process. It is neither unreasonable nor arbitrary. Precisely it was intended to curb the opportunity
for the immoral or illegitimate use to which such premises could be, and, are being devoted.
Furthermore, the right of the individual is necessarily subject to reasonable restraint by general law for
the common good. The liberty of the citizen may be restrained in the interest of the public health, or of
the public order and safety, or otherwise within the proper scope of the police power. State in order to
promote the general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to
secure the general comfort, health, and prosperity of the state. 
DEUTSCHE BANK AG MANILA BRANCH v. CIR, GR No. 188550, 2013-08-19
Facts:

Issues:

This Court is now confronted with the issue of whether the failure to strictly comply with RMO No. 1-
2000 will deprive persons or corporations of the benefit of a tax treaty.

Ruling:

RP-Germany Tax Treaty, which provides that where a resident of the Federal Republic of Germany has a
branch in the Republic of the Philippines, this branch may be subjected to the branch profits remittance
tax withheld at source in accordance with Philippine law but shall not... exceed 10% of the gross amount
of the profits remitted by that branch to the head office.

By virtue of the RP-Germany Tax Treaty, we are bound to extend to a branch in the Philippines, remitting
to its head office in Germany, the benefit of a preferential rate equivalent to 10% BPRT.

The CTA ruled that prior application for a tax treaty relief is mandatory, and noncompliance with this
prerequisite is fatal to the taxpayer's availment of the preferential tax rate.

We disagree.

Simply put, tax treaties are entered into to minimize, if not eliminate the harshness of international
juridical double taxation, which is why they are also known as double tax treaty or double tax
agreements.

Likewise, it must be stressed that there is nothing in RMO No. 1-2000 which would indicate a
deprivation of entitlement to a tax treaty relief for failure to comply with the 15-day period.

CTA's... outright denial of a tax treaty relief for failure to strictly comply with the prescribed period is not
in harmony with the objectives of the contracting state to ensure that the benefits granted under tax
treaties are enjoyed by duly entitled persons or corporations.

Bearing in mind the rationale of tax treaties, the period of application for the availment of tax treaty
relief as required by RMO No. 1-2000 should not operate to divest entitlement to the relief as it would
constitute a violation of the duty required by good faith in complying... with a tax treaty.

denial of the availment of tax relief for the failure of a taxpayer to apply within the prescribed period
under the administrative issuance would impair the value of the tax treaty.

Principles:
City of Manila vs Judge Perfecto
Laguio
G.R. No. 118127 – 455 SCRA 308 – Political Law – Constitutional Law – Police Power

On 30 Mar 1993, Mayor Lim signed into law Ord 7783 entitled AN ORDINANCE
PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING
CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE
ERMITA-MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES. It basically prohibited establishments such as bars, karaoke bars,
motels and hotels from operating in the Malate District which was notoriously viewed
as a red light district harboring thrill seekers. Malate Tourist Development Corporation
avers that the ordinance is invalid as it includes hotels and motels in the enumeration
of places offering amusement or entertainment. MTDC reiterates that they do not
market such nor do they use women as tools for entertainment. MTDC also avers that
under the LGC, LGUs can only regulate motels but cannot prohibit their operation. The
City reiterates that the Ordinance is a valid exercise of Police Power as provided as well
in the LGC. The City likewise emphasized that the purpose of the law is to promote
morality in the City.

ISSUE: Whether or not Ordinance 7783 is valid.

HELD: The SC ruled that the said Ordinance is null and void. The SC noted that for an
ordinance to be valid, it must not only be within the corporate powers of the local
government unit to enact and must be passed according to the procedure prescribed
by law, it  must also conform to the following substantive requirements:

(1) must not contravene the Constitution or any statute;

(2) must not be unfair or oppressive;

(3) must not be partial or discriminatory;

(4) must not prohibit but may regulate trade;

(5) must be general and consistent with public policy; and

(6) must not be unreasonable.

The police power of the City Council, however broad and far-reaching, is subordinate to
the constitutional limitations thereon; and is subject to the limitation that its exercise
must be reasonable and for the public good. In the case at bar, the enactment of the
Ordinance was an invalid exercise of delegated power as it is unconstitutional and
repugnant to general laws.
White Light Corp., vs City of
Manila
Published November 22, 2010

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G.R. No. 122846 – 576 SCRA 416 – Political Law – Constitutional Law – Police Power – Not
Validly Exercised – Infringement of Private Rights

On 3 Dec 1992, then Mayor Lim signed into law Ord 7774 entitled “An Ordinance
prohibiting short time admission in hotels, motels, lodging houses, pension houses and
similar establishments in the City of Manila”. White Light Corp is an operator of mini
hotels and motels who sought to have the Ordinance be nullified as the said Ordinance
infringes on the private rights of their patrons. The RTC ruled in favor of WLC. It ruled
that the Ordinance strikes at the personal liberty of the individual guaranteed by the
Constitution. The City maintains that the ordinance is valid as it is a valid exercise of
police power. Under the LGC, the City is empowered to regulate the establishment,
operation and maintenance of cafes, restaurants, beerhouses, hotels, motels, inns,
pension houses, lodging houses and other similar establishments, including tourist
guides and transports. The CA ruled in favor of the City.

ISSUE: Whether or not Ord 7774 is valid.

HELD: The SC ruled that the said ordinance is null and void as it indeed infringes upon
individual liberty. It also violates the due process clause which serves as a guaranty for
protection against arbitrary regulation or seizure. The said ordinance invades private
rights. Note that not all who goes into motels and hotels for wash up rate are really
there for obscene purposes only. Some are tourists who needed rest or to “wash up” or
to freshen up. Hence, the infidelity sought to be avoided by the said ordinance is more
or less subjected only to a limited group of people. The SC reiterates that individual
rights may be adversely affected only to the extent that may fairly be required by the
legitimate demands of public interest or public welfare.
Lutz vs Araneta Case Digest
WALTER LUTZ VS. ANTONIO ARANETA 

G.R. NO. L-7859 

DECEMBER 22, 1955 

FACTS: This case was initiated in the Court of First Instance of Negros Occidental to test the legality of
the taxes imposed by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment Act. 

Promulgated in 1940, the due to the threat to our industry by the imminent imposition of export taxes upon
sugar as provided in the Tydings-McDuffe Act, and the "eventual loss of its preferential position in the
United States market"; wherefore, the national policy was expressed "to obtain a readjustment of the
benefits derived from the sugar industry by the component elements thereof" and "to stabilize the sugar
industry so as to prepare it for the eventuality of the loss of its preferential position in the United States
market and the imposition of the export taxes." 

In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the manufacture of
sugar, on a graduated basis, on each picul of sugar manufactured; while section 3 levies on owners or
persons in control of lands devoted to the cultivation of sugar cane and ceded to others for a
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. 

Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme
Ledesma, seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the
estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-1950; alleging 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 having been dismissed by the Court of First Instance, the plaintiffs appealed the case
directly to this Court (Judiciary Act, section 17). 

ISSUE: Whether or not the CA No. 567 or Sugar Adjustment Act is constitutional and for public purpose. 

HELD: The basic defect in the plaintiff's position is his assumption that the tax provided for in
Commonwealth Act No. 567 is a pure exercise of the taxing power. Analysis of the Act, and particularly of
section 6, will show that the 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 an exercise of the
police power. 

This Court can take judicial notice of the fact that sugar production is one of the great industries of our
nation, sugar occupying a leading position among its export products; that it gives employment to
thousands of laborers in fields and factories; that it is a great source of the state's wealth, is one of the
important sources 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 should be stabilized in turn; and in the wide field of its police
power, the lawmaking 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. 

Once it is conceded, as it must, that the protection and promotion of the sugar industry is a matter of
public concern, it follows that the Legislature may determine within reasonable bounds what is necessary
for its protection and expedient for its promotion. Here, the legislative discretion must be allowed fully
play, subject only to the test of reasonableness; and it is not contended that the means provided in
section 6 of the law bear no relation to the objective pursued or are oppressive in character. If objective
and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise
funds for their prosecution and attainment. Taxation may be made the implement of the state's police
power. 

That the tax to be levied should burden the sugar producers themselves can hardly be a ground of
complaint; indeed, it appears rational that the tax be obtained precisely from those who are to be
benefited from the expenditure of the funds derived from it. At any rate, it is inherent in the power to tax
that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities
which result from a singling out of one particular class for taxation, or exemption infringe no constitutional
limitation". 

From the point of view we have taken it appears of no moment that the funds raised under the Sugar
Stabilization Act, now in question, should be exclusively spent in aid of the sugar industry, since it is that
very enterprise that is being protected. It may be that other industries are also in need of similar
protection; that the legislature is not required by the Constitution to adhere to a policy of "all or none." As
ruled in Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably
hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it
might have been applied;" and that "the legislative authority, exerted within its proper field, need not
embrace all the evils within its reach".
cSE DIGEST: MMP V. SECRETARY (DPWH)
G.R. No. 175356 : December 3, 2013

MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC.,

Petitioners, v. SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND
DEVELOPMENT and THE SECRETARY OF THE DEPARTMENT OF FINANCE,
Respondents.

DEL CASTILLO, J.:

FACTS:

On April 23, 1992, RA 7432 or the Seniors Citizens Act was passed into law granting 20% discounts from
all establishments relative to utilization of transportation services, hotels and similar lodging
establishments, restaurants and recreation centers and purchase of medicine anywhere in the country,
Provided, That private establishments may claim the cost as tax credit.

On August 23, 1993, Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432. Sections 2(i)
of which provides for the definition of a Tax credit which refers to the amount representing the 20%
discount granted to a qualified senior citizen by all establishments which discount shall be deducted by
the said establishments from their gross income for income tax purposes and from their gross sales for
value-added tax or other percentage tax purposes and Section 4 of RR No. 02-94 which provides for the
recording/bookkeeping requirements for private establishments requiring them to keep separate and
accurate records of sales made to senior citizens.

In CIR v. Central Luzon Drug Corp, 496 Phil 307 (2005), the Court declared Sections 2(i) and 4 of RR No.
02-94 as erroneous because these contravene RA 7432 that specifically allow private establishments to
claim a tax credit the amount of discounts they grant. In turn the IRR issued pursuant thereto provide
for the procedures for its availment. To deny such credit, despite the plain mandate of the law and the
regulations carrying out that mandate, is indefensible.

In effect, the tax credit benefit under RA 7432 is related to a sales discount. This contrived definition is
improper, considering that the latter has to be deducted from gross sales in order to compute the gross
income in the income statement and cannot be deducted again, even for purposes of computing the
income tax. When the law says that the cost of the discount may be claimed as a tax credit, it means
that the amount when claimed shall be treated as a reduction from any tax liability, plain and simple.
The option to avail of the tax credit benefit depends upon the existence of a tax liability, but to limit the
benefit to a sales discount which is not even identical to the discount privilege that is granted by law
does not define it at all and serves no useful purpose. The definition must, therefore, be stricken down.

The law cannot be amended by a mere regulation. In fact, a regulation that "operates to create a rule
out of harmony with the statute is a mere nullity;" it cannot prevail. It is a cardinal rule that courts "will
and should respect the contemporaneous construction placed upon a statute by the executive officers
whose duty it is to enforce it x x x."

In the present case, the tax authorities have given the term tax credit in Sections 2.i and 4 of RR 2-94 a
meaning utterly in contrast to what RA 7432 provides. The intent of Congress in granting a mere
discount privilege, not a sales discount.

In case of conflict, the law must prevail. A "regulation adopted pursuant to law is law." Conversely, a
regulation or any portion thereof not adopted pursuant to law is no law and has neither the force nor
the effect of law.

On February 26, 2004, RA 9257 or the Expanded Senior Citizens Actamended certain provisions of RA
7432, granting 20% discount to qualified senior citizens and the establishments may claim the discounts
granted as tax deduction based on the net cost of the goods sold or services rendered: Provided, That
the cost of the discount shall be allowed as deduction from gross income for the same taxable year that
the discount is granted. Provided, further, That the total amount of the claimed tax deduction net of
value added tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be
subject to proper documentation and to the provisions of the National Internal Revenue Code, as
amended.

The Secretary of Finance issued RR No. 4-2006 and the DSWD issued its own IRR for their
implementation of the tax provision of RA 9257.

Petitioners Manila Memorial Park, Inc. and La Funeraria Paz-Sucat, Inc., domestic corporations engaged
in the business of providing funeral and burial services, feeling aggrieved by the tax deduction scheme,
petitioners prayed that Section 4 of RA 9257 and the IRR issued by DSWD and the DOF be declared
unconstitutional insofar as these allow business establishments to claim the 20% discount given to
senior citizens as a tax deduction; that the DSWD and the DOF be prohibited from enforcing the same;
and that the tax credit treatment of the 20% discount under the former Section 4 (a) of RA 7432 be
reinstated.

ISSUES

Whether the petition presents an actual case or controversy

Whether Section 4 of RA No. 9257 and its Implementing Rules and Regulations, insofar as they provide
that the 20% discount to Senior Citizens may be claimed as tax deduction by the private establishments
are invalid and unconstitutional.

HELD: The Petition lacks merit.

POLITICAL LAW - actual case or controversy.

We shall first resolve the procedural issue. When the constitutionality of a law is put in issue, judicial
review may be availed of only if the following requisites concur: "(1) the existence of an actual and
appropriate case; (2) the existence of personal and substantial interest on the part of the party raising
the question of constitutionality; (3) recourse to judicial review is made at the earliest opportunity; and
(4) the question of constitutionality is the lis mota of the case." General v. Urro, G.R. No. 191560, March
29, 2011

In this case, the tax deduction scheme challenged by petitioners has a direct adverse effect on them.
Thus, there exists an actual case or controversy.

POLITICAL LAW tax deduction scheme is an exercise of police power of the State

Based on the afore-stated DOF Opinion, the tax deduction scheme does not fully reimburse petitioners
for the discount privilege accorded to senior citizens. This is because the discount is treated as a
deduction, a tax-deductible expense that is subtracted from the gross income and results in a lower
taxable income. Being a tax deduction, the discount does not reduce taxes owed on a peso for peso
basis but merely offers a fractional reduction in taxes owed. Theoretically, the treatment of the discount
as a deduction reduces the net income of the private establishments concerned. The discounts given
would have entered the coffers and formed part of the gross sales of the private establishments, were it
not for R.A. No. 9257. The permanent reduction in their total revenues is a forced subsidy corresponding
to the taking of private property for public use or benefit. This constitutes compensable taking for which
petitioners would ordinarily become entitled to a just compensation. Just compensation is defined as
the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not
the takers gain but the owners loss. The word just is used to intensify the meaning of the word
compensation, and to convey the idea that the equivalent to be rendered for the property to be taken
shall be real, substantial, full and ample.

A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would not
meet the definition of just compensation. Having said that, this raises the question of whether the State,
in promoting the health and welfare of a special group of citizens, can impose upon private
establishments the burden of partly subsidizing a government program. The Court believes so.

The Senior Citizens Act was enacted primarily to maximize the contribution of senior citizens to nation-
building, and to grant benefits and privileges to them for their improvement and well-being as the State
considers them an integral part of our society.

The priority given to senior citizens finds its basis in the Constitution as set forth in the law itself.

As a form of reimbursement, the law provides that business establishments extending the twenty
percent discount to senior citizens may claim the discount as a tax deduction. The law is a legitimate
exercise of police power which, similar to the power of eminent domain, has general welfare for its
object.

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

Undeniably, the success of the senior citizens program rests largely on the support imparted by
petitioners and the other private establishments concerned. This being the case, the means employed in
invoking the active participation of the private sector, in order to achieve the purpose or objective of the
law, is reasonably and directly related. Without sufficient proof that Section 4 (a) of R.A. No. 9257 is
arbitrary, and that the continued implementation of the same would be unconscionably detrimental to
petitioners, the Court will refrain from quashing a legislative act. Carlos Superdrug Corp v. DSWD, 553
Phil. 120 (2007).

When we ruled that petitioners in Carlos Superdrug case failed to prove that the 20% discount is
arbitrary, oppressive or confiscatory. We noted that no evidence, such as a financial report, to establish
the impact of the 20% discount on the overall profitability of petitioners was presented in order to show
that they would be operating at a loss due to the subject regulation or that the continued
implementation of the law would be unconscionably detrimental to the business operations of
petitioners.

In the case at bar, petitioners proceeded with a hypothetical computation of the alleged loss that they
will suffer similar to what the petitioners in Carlos Superdrug Corporationdid.

We, thus, found that the 20% discount as well as the tax deduction scheme is a valid exercise of the
police power of the State.
CIR v. CENTRAL LUZON DRUG CORPORATION, GR NO. 148512, 2006-06-26
Facts:

Central Luzon Drug Corporation has been a retailer of medicines and other pharmaceutical products
since December 19, 1994. In 1995, it opened three (3) drugstores as a franchisee under the business
name and style of "Mercury Drug."

For the period January 1995 to December 1995, in conformity to the mandate of Sec. 4(a) of R.

Subsequently, on December 27, 1996, claiming that according to Sec. 4(a) of R.A. No. 7432, the amount
of P219,778 should be applied as a tax credit, respondent filed a claim for refund in the amount of
P150,193... he amount of P150,193 claimed as a refund represents the tax credit allegedly due to
respondent under R.A. No. 7432.

the CTA dismissed the petition, declaring that even if the law treats the 20% sales discounts granted to
senior citizens as a tax credit, the same cannot apply when there is no tax liability or the amount  of the
tax credit is greater than the tax due

. In... the latter case, the tax credit will only be to the extent of the tax liability.

Also, no refund can be granted as no tax was erroneously, illegally and actually collected based on the
provisions of Section 230, now Section 229, of the Tax Code.

Furthermore, the law does not state that a refund can be claimed by the private establishment
concerned as an alternative to the tax credit.

Thus, respondent filed with the CA a Petition for Review

On May 31, 2001, the CA rendered a Decision stating that Section 229 of the Tax Code does not apply in
this case. It concluded that the 20% discount given to senior citizens which is treated as a tax credit
pursuant to Sec. 4(a) of R.A. No. 7432 is considered just compensation... and, as such, may be carried
over to the next taxable period if there is no current tax liability

Issues:

whether the 20% sales discount granted by respondent to qualified senior citizens pursuant to Sec. 4(a)
of R.A. No. 7432 may be claimed as a tax credit or as a deduction from gross sales in accordance with
Sec. 2(1) of Revenue

Regulations No. 2-94.

Ruling:

The CA and the CTA correctly ruled that based on the plain wording of the law discounts given under
R.A. No. 7432 should be treated as tax credits, not deductions from income.
The above provision explicitly employed the word "tax credit."  Nothing in the provision suggests for it
to mean a "deduction" from gross sales. To construe it otherwise would be a departure from the clear
mandate of the law.

Thus, the 20% discount required by the Act to be given to senior citizens is a tax credit, not a deduction
from the gross sales of the establishment concerned.

As a corollary to this, the definition of "tax credit" found in Section 2(1) of Revenue Regulations No. 2-94
is... erroneous as it refers to tax credit as the amount representing the 20% discount  that "shall be
deducted by the said establishment from their gross sales for value added tax and other percentage tax
purposes." This definition is contrary to what our lawmakers... had envisioned with regard to the
treatment of the discount granted to senior citizens.

Finally, for purposes of clarity, Sec. 229[11] of the Tax Code does not apply to cases that fall under Sec. 4
of R.A. No. 7432 because the former provision governs exclusively all kinds of refund or credit of internal
revenue taxes that were erroneously or... illegally imposed and collected pursuant to the Tax Code while
the latter extends the tax credit benefit to the private establishments concerned even before tax
payments have been made.

The tax credit that is contemplated under the Act is a form of just compensation, not a... remedy for
taxes that were erroneously or illegally assessed and collected. In the same vein, prior payment of any
tax liability is not a precondition before a taxable entity can benefit from the tax credit. The credit may
be availed of upon payment of the tax due, if any. Where... there is no tax liability or where a private
establishment reports a net loss for the period, the tax credit can be availed of and carried over to the
next taxable year.

It must also be stressed that unlike in Sec. 229 of the Tax Code wherein the remedy of refund is available
to the taxpayer, Sec. 4 of the law speaks only of a tax credit, not a refund.

As earlier mentioned, the tax credit benefit granted to the establishments can be deemed as their just
compensation for private property taken by the State for public use. The privilege enjoyed by the senior
citizens does not come directly from the State, but rather from the... private establishments concerned.
CASE DIGEST : US vs TURIBIO
G.R. No. L-5060 January 26, 1910 THE UNITED STATES, plaintiff-appellee, vs. LUIS TORIBIO,
defendant-appellant.

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.

Facts: 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.
Taxicab Operators vs. Board of Transportation
- November 01, 2015

Taxicab Operators vs. Board of Transportation

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

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

Petitioners allege that the questioned Circulars did not afford them procedural and substantive due
process, equal protection of the law, and protection against arbitrary and unreasonable classification
and standard. Among others, they question the issuance of the Circulars without first calling them to a
conference or requiring them to submit position papers or other documents enforceability thereof only
in Metro Manila; and their being applicable only to taxicabs and not to other transportation services.

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

Held:

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

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

It is clear from the provision of Section 2 of P.D. 101 aforequoted, that the leeway accorded the Board
gives it a wide range of choice in gathering necessary information or data in the formulation of any
policy, plan or program. It is not mandatory that it should first call a conference or require the
submission of position papers or other documents from operators or persons who maybe affected, this
being only one of the options open to the Board, which is given wide discretionary authority. Petitioners
cannot justifiably claim, therefore, that they were deprived of procedural due process. Neither can they
state with certainty that public respondents had not availed of other sources of inquiry prior to issuing
the challenged Circulars. Operators of public conveyances are not the only primary sources of the data
and information that may be desired by the BOT.
Sangalang v. IAC (G.R. No. 71169. December 22, 1988)
18AUG
FACTS:

The Mayor of Makati directed Bel-Air Village Association (BAVA) to opening of several streets to the
general public, after a series of developments in zoning regulations. All but Jupiter St. was voluntarily
opened. The strong opposition later gave way when the municipal officials force-opened the gates of
said street for public use. The area ceased to be purely residential. Action for damages was brought
against Ayala Corporation and BAVA for alleged breach of contract, to maintain the purely residential
status of the area. Other similarly situated also filed their respective cases. All were dismissed in the trial
court. The Court of Appeals affirmed the said dismissals.

ISSUE:

Whether or not there is a contract between homeowners and Ayala Corporation violated in opening the
Jupiter street for public use.

HELD:

No. There was no contract to speak of in the case, hence nothing was violated.

RATIO:

Petitioners cannot successfully rely on the alleged promise by Ayala Corporation, to build a “[f]ence
along Jupiter [street] with gate for entrance and/or exit as evidence of Ayala’s alleged continuing
obligation to maintain a wall between the residential and commercial sections. Assuming there was a
contract violated, it was still overtaken by the passage of zoning ordinances which represent a legitimate
exercise of police power. The petitioners have not shown why Courts should hold otherwise other than
for the supposed “non-impairment” guaranty of the Constitution, which is secondary to the more
compelling interests of general welfare. The Ordinance has not been shown to be capricious or arbitrary
or unreasonable to warrant the reversal of the judgments so appealed.
Ynot vs IAC
G.R. NO. 74457 MARCH 20, 1987
RESTITUTO YNOT, PETITIONER, VS. INTERMEDIATE APPELLATE COURT, THE
STATION COMMANDER, INTEGRATED NATIONAL POLICE, BAROTAC NUEVO,
ILOILO AND THE REGIONAL DIRECTOR, BUREAU OF ANIMAL INDUSTRY,
REGION IV, ILOILO CITY, RESPONDENTS.

Facts:

Former President Ferdinand E. Marcos has given orders prohibiting the interprovincial

movement of carabaos and the slaughtering of carabaos not complying with the requirements of
Executive Order No. 626, effective October 25, 1980.

On January 13, 1984, the petitioner transported six carabaos in a pump boat from Masbate to
Iloilo when the same was confiscated by the police station commander of Barotac Nuevo, Iloilo
for the violation of E.O. 626-A. A case was filed by the petitioner questioning the constitutionality
of executive order and the recovery of the carabaos. After considering the merits of the case,
the confiscation was sustained and the court declined to rule on the constitutionality issue. The
petitioner appealed the decision to the Intermediate Appellate Court but it also upheld the ruling
of RTC.

Issue:

Is E.O. 626-A unconstitutional?

Ruling:

The Respondent contends that it is a valid exercise of police power to justify EO 626-A
amending EO 626 in asic rule prohibiting the slaughter of carabaos except under certain
conditions. The supreme court said that The reasonable connection between the means
employed and the purpose sought to be achieved by the questioned measure is missing the
Supreme Court do not see how the prohibition of the inter-provincial transport of carabaos can
prevent their indiscriminate slaughter, considering that they can be killed anywhere, with no less
difficulty in one province than in another. Obviously, retaining the carabaos in one province will
not prevent their slaughter there, any more than moving them to another province will make it
easier to kill them there
The Supreme Court found E.O. 626-A unconstitutional. The executive act defined the
prohibition, convicted the petitioner and immediately imposed punishment, which was carried
out forthright. Due process was not properly observed. In the instant case, the carabaos were
arbitrarily confiscated by the police station commander, were returned to the petitioner only after
he had filed a complaint for recovery and given a supersedeas bond of Php 12,000.00. The
measure struck at once and pounced upon the petitioner without giving him a chance to be
heard, thus denying due process.
City Government of Quezon City vs Ericta
Facts:

Quezon City council enacted an ordinance entitled "Ordinance Regulating the

Establishment, Maintenance and Operation of Private Memorial Type Cemetery or Burial Ground
within the Jurisdiction of Quezon City and Providing Penalties for the Violation thereof" . Section
9 of the ordinance provides that: "At least six (6) percent of the total area of the
memorial park cemetery shall be set aside for charity burial of deceased persons who
are paupers and have been residents of Quezon City for at least 5 years prior to their
death, to be determined by competent City Authorities.”

For seven years, the ordinance has not been enforced until the Quezon City Council
passed a resolution requesting the City Engineer of Quezon City to stop any further
selling and/or transaction of memorial park lots in QC where the owners thereof failed
to donate the required 6% for pauper burial. Pursuant to such resolution, the City
Engineer notified Himlayang Pilipino Inc. in writing that Sec. 9 of Ordinance 6118 would
be enforced. 

Himlayang Pilipino filed with the CFI-QC a petition for declaratory relief, prohibition and
mandamus with preliminary injunction seeking to annul Section 9 of the ordinance for
being contrary to the Constitution, the QC Charter, Local Autonomy Act and Revised
Administrative Code. 

The lower court declared said provision null and void, thus the City Council of QC filed
the petition for review before the SC. The QC Council argued that the taking of the
respondent's property is a valid and reasonable exercise of police power and that the
land is taken for a public use as it is intended for the burial ground of paupers. They
further argue that the QC Council is authorized under its charter, in the exercise of local
police power, "to make such further ordinances and resolutions not repugnant to law as
may be necessary to carry into effect and discharge the powers and duties conferred by
this Act and such as it shall deem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort and
convenience of the city and the inhabitants thereof, and for the protection of property
therein." 

On the other hand, Himlayang Pilipino, Inc. contends that the taking or confiscation of
property is obvious because the questioned ordinance permanently restricts the use of
the property such that it cannot be used for any reasonable purpose and deprives the
owner of all beneficial use of his property. The respondent also stresses that the
general welfare clause is not available as a source of power for the taking of the
property in this case because it refers to "the power of promoting the public welfare by
restraining and regulating the use of liberty and property." The respondent points out
that if an owner is deprived of his property outright under the State's police power, the
property is generally not taken for public use but is urgently and summarily destroyed
in order to promote the general welfare. 

Issues: 

1. Does QC council have the authority to issue create the provision in question? 
2. Is the ordinance is a valid exercise of police power? 

Held:

1. There is nothing in the Charter of Question City that would justify provision in
question. It cannot be justified under the power granted to Quezon City to tax, fix the
license fee, and regulate such other business, trades, and occupation as may be
established or practiced in the City because the power to regulate does not include the
power to prohibit. A fortiori, the power to regulate does not include the power to
confiscate. Neither is the provision justified under R.A. 537 authorizing the city council
to 'prohibit the burial of the dead within the center of population of the city and provide
for their burial in such proper place and in such manner as the council may determine,
subject to the provisions of the general law regulating burial grounds and cemeteries
and governing funerals and disposal of the dead' because such provision does not
authorize confiscation of property to serve as burial grounds. 

2. The police power of Quezon City is defined in sub-section 00, Sec. 12, Rep. Act 537
which reads as follows:
(00) To make such further ordinance and regulations not repugnant to law as may be
necessary to carry into effect and discharge the powers and duties conferred by this act
and such as it shall deem necessary and proper to provide for the health and safety,
promote, the prosperity, improve the morals, peace, good order, comfort and convenience
of the city and the inhabitants thereof, and for the protection of property therein; and
enforce obedience thereto with such lawful fines or penalties as the City Council may
prescribe under the provisions of subsection (jj) of this section.
Police power is defined by Freund as 'the power of promoting the public welfare by
restraining and regulating the use of liberty and property'. It is usually exerted in order
to merely regulate the use and enjoyment of property of the owner. If he is deprived of
his property outright, it is not taken for public use but rather to destroy in order to
promote the general welfare. In police power, the owner does not recover from the
government for injury sustained in consequence thereof. It has been said that police
power is the most essential of government powers, at times the most insistent, and
always one of the least limitable of the powers of government. This power embraces
the whole system of public regulation. The Supreme Court has said that police power is
so far-reaching in scope that it has almost become impossible to limit its sweep. As it
derives its existence from the very existence of the state itself, it does not need to be
expressed or defined in its scope. Being coextensive with self-preservation and survival
itself, it is the most positive and active of all governmental processes, the most
essential insistent and illimitable especially it is so under the modern democratic
framework where the demands of society and nations have multiplied to almost
unimaginable proportions. The field and scope of police power have become almost
boundless, just as the fields of public interest and public welfare have become almost
all embracing and have transcended human foresight. Since the Courts cannot foresee
the needs and demands of public interest and welfare, they cannot delimit beforehand
the extent or scope of the police power by which and through which the state seeks to
attain or achieve public interest and welfare. (Ichong vs. Hernandez, L-7995, May 31, 1957).

It will be seen from the foregoing authorities that police power is usually exercised in
the form of mere regulation or restriction in the use of liberty or property for the
promotion of the general welfare. It does not involve the taking or confiscation of
property with the exception of a few cases where there is a necessity to confiscate
private property in order to destroy it for the purpose of protecting the peace and order
and of promoting the general welfare as for instance, the confiscation of an illegally
possessed article, such as opium and firearms.

It seems to the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon
City is not a mere police regulation but an outright confiscation. It deprives a person of
his private property without due process of law, nay, even without compensation.

There is no reasonable relation between the setting aside of at least six (6) percent of
the total area of an private cemeteries for charity burial grounds of deceased paupers
and the promotion of health, morals, good order, safety, or the general welfare of the
people. The ordinance is actually a taking without compensation of a certain area from
a private cemetery to benefit paupers who are charges of the municipal corporation.
Instead of building or maintaining a public cemetery for this purpose, the city passes
the burden to private cemeteries. (City Government Of Quezon City Ericta, G.R. No. L-
34915, June 24, 1983)
OFFICE OF SOLICITOR GENERAL v. AYALA LAND
INCORPORATED, GR No. 177056, 2009-09-18
Facts:

Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate

shopping malls in various locations in Metro Manila. Respondent SM
Prime constructs, operates, and leases out commercial buildings and
other structures, among which, are SM City, Manila; SM Centerpoint, Sta.

Mesa, Manila; SM City, North Avenue, Quezon City; and SM Southmall, Las
Piñas.

The shopping malls operated or leased out by respondents have parking

facilities for all kinds of motor vehicles, either by way of parking spaces
inside the mall buildings or in separate buildings and/or adjacent lots that
are solely devoted for use as parking spaces.

Respondents expend for the maintenance and administration of their

respective parking facilities.

The parking tickets or cards issued by respondents to vehicle owners

contain the stipulation that respondents shall not be responsible for any
loss or damage to the vehicles parked in respondents' parking facilities.

In 1999, the Senate Committees on Trade and Commerce and on Justice

and Human Rights conducted a joint investigation for the following
purposes: (1) to inquire into the legality of the prevalent practice of
shopping malls of charging parking fees; (2) assuming arguendo... that the
collection of parking fees was legally authorized, to find out the basis and
reasonableness of the parking rates charged by shopping malls; and (3) to
determine the legality of the policy of shopping malls of denying liability
in cases of theft, robbery, or carnapping,... by invoking the waiver clause
at the back of the parking tickets.

In view of the foregoing, the Committees find that the collection of

parking fees by shopping malls is contrary to the National Building Code
and is therefor [sic] illegal. While it is true that the Code merely requires
malls to provide parking spaces, without... specifying whether it is free or
not, both Committees believe that the reasonable and logical
interpretation of the Code is that the parking spaces are for free.

Respondent SM Prime thereafter received information that, pursuant to

Senate Committee Report No. 225, the DPWH Secretary and the local
building officials of Manila, Quezon City, and Las Piñas intended to
institute, through the OSG, an action to enjoin respondent SM Prime and...
similar establishments from collecting parking fees, and to impose upon
said establishments penal sanctions under Presidential Decree No. 1096,
otherwise known as the National Building Code of the Philippines
(National Building Code), and its Implementing Rules and Regulations

(IRR).

The RTC then held that there was no sufficient evidence to justify any
award for damages.

The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases
No. 00-1208 and No. 00-1210 that:

FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc.,
Robinsons Land Corporation, Shangri-la Plaza Corporation and SM Prime
Holdings[,] Inc. are not obligated to provide parking spaces in their malls
for the use of their patrons or public in general,... free of charge.

The fallo of the 25 January 2007 Decision of the Court of Appeals reads:

WHEREFORE, premises considered, the instant appeals are DENIED.

Accordingly, appealed Decision is hereby AFFIRMED in toto.

Issues:

THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE RULING

OF THE LOWER COURT THAT RESPONDENTS ARE NOT OBLIGED TO
PROVIDE FREE PARKING SPACES TO THEIR CUSTOMERS OR THE
PUBLIC.

Ruling:

The Court finds no merit in the present Petition.

There is nothing therein pertaining to the collection (or non-collection) of

parking fees by respondents. In fact, the term "parking fees" cannot even
be found at all in the entire National Building Code and its IRR.

Without using the term outright, the OSG is actually invoking police power
to justify the regulation by the State, through the DPWH Secretary and
local building officials, of privately owned parking facilities, including the
collection by the owners/operators of such facilities... of parking fees
from the public for the use thereof.

When there is a taking or confiscation of private property for public use,

the State is no longer exercising police power, but another of its inherent
powers, namely, eminent domain. Eminent domain enables the State to
forcibly acquire private lands intended for public use upon... payment of
just compensation to the owner.

Although in the present case, title to and/or possession of the parking

facilities remain/s with respondents, the prohibition against their
collection of parking fees from the public, for the use of said facilities, is
already tantamount to a taking or confiscation of their... properties.

The State is not only requiring that respondents devote a portion of the
latter's properties for use as parking spaces, but is also mandating that
they give the public access to said parking spaces for free.

In conclusion, the total prohibition against the collection by respondents

of parking fees from persons who use the mall parking facilities has no
basis in the National Building Code or its IRR. The State also cannot
impose the same prohibition by generally invoking police... power, since
said prohibition amounts to a taking of respondents' property without
payment of just compensation.

WHEREFORE, the instant Petition for Review on Certiorari is hereby

DENIED.

Principles:

Police power is the power of promoting the public welfare by restraining

and regulating the use of liberty and property. It is usually exerted in
order to merely regulate the use and enjoyment of the property of the
owner. The power to regulate, however, does not include the... power to
prohibit.

Police power does not involve the taking or confiscation of property, with
the exception of a few cases where there is a necessity to confiscate
private property in order to... destroy it for the purpose of protecting
peace and order and of promoting the general welfare; for instance, the
confiscation of an illegally possessed article, such as opium and firearms.
(THE DISINI CASE) Jose Jesus M. Disini, JR., Rowena S. Disini, Lianne Ivy P. Medina, Janette
Toral and Ernesto Sonido, JR., Petitioners vs. The Secretary of Justice, The Secretary of the
Department of the Interior and Local Government, The Executive Director of the Information
and Communications Technology Office, The Chief of the Philippine National Police, and The
Director of the National Bureau of Investigation, Respondents
Jose Jesus M. Disini, JR., Rowena S. Disini, Lianne Ivy P. Medina, Janette Toral and Ernesto
Sonido, JR., Petitioners
vs
The Secretary of Justice, The Secretary of the Department of the Interior and Local
government, The Executive Director of the Information and Communications Technology
Office, The Chief of the Philippine National Police, and The Director of the National Bureau of
Investigation, Respondents.
(The Disini Case) GR No. 203335 11 February 2014

Facts:

These consolidated petitions seek to declare several provisions of Republic Act (RA) 10175, the
Cybercrime Prevention Act of 2012, unconstitutional and void.

The cybercrime law aims to regulate access to and use of the cyberspace. The cyberspace is a boon to
the need of a current generation for greater information and facility of communication. But all is not
well with the system since it could not filter out a number of persons of ill will who would want to use
cyberspace technology for mischiefs and crimes. One of them can, for instance, avail himself of the
system to unjustly ruin the reputation of another or bully the latter by posting defamatory statements
against him that people can read.

And because linking with the internet opens up a user to communication from others, the ill-motivated
can use the cyberspace for committing theft by hacking into or surreptitiously accessing his bank
account or credit card or defrauding him through false representations.

The wicked can use the cyberspace, too, for illicit trafficking in sex or for exposing to pornography
guileless children who have access to the internet.

For these reasons, the government has a legitimate right to regulate the use of cyberspace and contain
and punish wrongdoings. The government certainly has the duty and the right to prevent these
tomfooleries from happening and punish their perpetrators, hence the Cybercrime Prevention Act.

But petitioners claim that the means adopted by the cybercrime law for regulating undesirable
cyberspace activities violate certain of their constitutional rights.

Pending hearing and adjudication of the issues presented in these cases, on February 5, 2013, the Court
extended the original 120-day temporary restraining order (TRO) that it earlier issued on October 9,
2012, enjoining respondent government agencies from implementing the cybercrime law until further
orders.

ISSUES:

1. The petitioners contend that Section 4(a)(1) fails to meet the strict scrutiny standard required of
laws that interfere with the fundamental rights of the people. Is Section 4(a)(1) on Illegal Access
unconstitutional?

2.  Petitioners claim that Section 4(a)(3) suffers from overbreadth in that, while is seeks to
discourage data interference, it intrudes into the area of protected speech and expression,
creating a chilling and deterrent effect on these guaranteed freedoms.

3. Petitioners claim that Section 4(a)(6) or cyber-squatting violates the equal protection clause in
that, not being narrowly tailored, it will cause a user using his real name to suffer the same fate
as those who use aliases or take the name of another in satire, parody, or any other literary
device.

4. Petitioners claim that Section 4(b)(3) violates the constitutional rights to due process and to
privacy and correspondence, and transgresses the freedom of the press.

5. Petitioners claim that cybersex violates the freedom of expression clause of the Constitution.

6. Petitioners are wary that a person who merely doodles on paper and imagines a sexual abuse of
a 16-year old is not criminally liable for producing child pornography but one who formulates
the idea on his laptop would be.

7. Is Section 4(c)(3) unconstitutional for penalizing the transmission of unsolicited commercial

communications?

8. Petitioners dispute the constitutionality of both the penal code provisions on libel as well as
Section4(c)(4) of the Cybercrime Prevention Act on cyberlibel.

9. Petitioners assail the constitutionality of Section 5 that renders criminally liable any person who
wilfully abets or aids in the commission or attempts to commit any of the offenses enumerated
as cybercrimes. It suffers from overbreadth, creating a chilling and deterrent effect on protected
expression.

10. Is Section 6 on the penalty of one degree higher constitutional?

11. Is Section 7 on the prosecution under both the Revised Penal Code (RPC) and RA 10175
constitutional?

12. Is Section 8 valid and constitutional?

13. Is Section 12 on Real-Time collection of traffic data valid and constitutional?

 14. Is Section 13 on preservation of computer data valid and constitutional?

15. Is Section 14 on disclosure of computer data valid and constitutional?

16. Is Section 15 on search, seizure and examination of computer data valid and constitutional?

17. Is Section 17 on destruction of computer data valid and constitutional?

18. Is Section 19 on restricting or blocking access to computer data valid and constitutional?

19. Is Section 20 on obstruction of justice valid and constitutional?

20. Is Section 24 on Cybercrime Investigation and Coordinating Center (CICC) valid and
constitutional?

21. Is Section 26(a) on CICC’s power and functions valid and constitutional?

Ruling:

1. No. The strict scrutiny standard, an American constitutional construct, is useful in determining
the constitutionality of laws that tend to target a class of things or persons. According to this
standard, a legislative classification that impermissibly interferes with the exercise of
fundamental right or operates to the peculiar class disadvantage of a suspect class is presumed
unconstitutional. The Court finds nothing in Section 4(a)(1) that calls for the application of the
strict scrutiny standard since no fundamental freedom, like speech, is involved in punishing what
is essentially a condemnable act – accessing the computer system of another without right. It is
a universally condemnable act.

2. Under the overbreadth doctrine, a proper governmental purpose, constitutionally subject to

state regulation, may not be achieved by means that unnecessarily sweep its subject broadly,
thereby invading the area of protected speech. Section 4(a)(3) does not encroach on these
freedoms at all. It simply punishes what essentially is a form of vandalism, the act of wilfully
destroying without right the things that belong to others, in this case their computer data,
electronic document, or electronic data message. Such act has no connection to guaranteed
freedoms. Ergo, there is no freedom to destroy other people’s computer systems and private
documents. All penal laws, like the cybercrime law, have of course an inherent chilling effect,
an in terrorem effect, or the fear of possible prosecution that hangs on the heads of citizens who
are minded to step beyond the boundaries of what is proper. But to prevent the State from
legislating criminal laws because they instil such kind of fear is to render the state powerless in
addressing and penalizing socially harmful conduct.

3. No, the challenge to the constitutionality of Section 4(a)(6) is baseless. The law is reasonable in
penalizing the act of acquiring the domain name in bad faith to profit, mislead, destroy
reputation, or deprive others who are not ill-motivated of the rightful opportunity of registering
the same. It is the evil purpose for which one uses the name that the law condemns.

4. No. In assessing the challenge that the State has impermissibly intruded into these zones of
privacy, a court must determine whether a person has exhibited a reasonable expectation of
 privacy and, if so, whether that expectation has been violated by unreasonable government
intrusion. The law punishes those who acquire or use identifying information without right,
implicitly to cause damage. Petitioners fail to show how government effort to curb computer-
related identity theft violates the right to privacy and correspondence as well as the right to due
process. There is no fundamental right to acquire another’s personal right. The Court has
defined intent to gain as an internal act which can be established through overt acts of the
offender, and it may be presumed from the furtive taking of useful property pertaining to
another, unless special circumstances reveal a different intent on the part of the perpetrator. As
such, the press, whether in the quest of news reporting or social investigation, has nothing to
fear since a special circumstance is present to negate intent to gain which is required by this
Section.

5. The Court will not declare Section 4(c)(1) unconstitutional where it stands a construction that
makes it apply only to persons engaged in the business of maintaining, controlling, or operating,
directly or indirectly, the lascivious exhibition of sexual organs or sexual activity with the aid of a
computer system as Congress has intended.

6. The constitutionality of Section 4(c)(3) is not successfully challenged. The law makes the penalty
higher by one degree when the crime is committed in cyberspace. But no one can complain
since the intensity or duration of penalty is a legislative prerogative and there is a rational basis
for such higher penalty.

7. Yes, because to prohibit the transmission of unsolicited ads would deny a person the right to
read his emails, even unsolicited commercial ads addressed to him. Commercial speech is a
separate category of speech which us not accorded the same level of protection as that given to
other constitutionally guaranteed forms of expression but is nonetheless entitled to protection.
The State cannot rob him of this right without violating the constitutionally guaranteed freedom
of expression. Thus, unsolicited advertisements are legitimate forms of expression.

8. Since the penal code and implicitly, the cybercrime law, mainly target libel against private
persons, the Court recognizes that these laws imply a stricter standard of malice to convict the
author of a defamatory statement where the offended party is a public figure. The elements of
libel are: (a) the allegation of a discreditable act or condition concerning another; (b) publication
of the charge; (c) identity of the person defamed; and (d) existence of malice.There is actual
malice or malice in fact when the offender makes the defamatory statement with the
knowledge that it is false or with reckless disregard of whether it was false or not. The reckless
disregard standard used here required a high degree of awareness of probable falsity. There
must be sufficient evidence to permit the conclusion that the accused in fact entertained serious
doubts as to the truth of the statement he published. Gross or even extreme negligence is not
sufficient to establish actual malice. The defense of absence of actual malice, even when the
statement turns out to be false, is available where the offended party is a public official or a
public figure. But, where the offended party is a private individual, the prosecution need not
prove the presence of actual malice. For his defense, the accused must show that he has a
justifiable reason for the defamatory statement even if it was in fact true.

9. A governmental purpose, which seeks to regulate the use of cyberspace communication

technology to protect a person’s reputation and peace of mind, cannot adopt means that will
 unnecessarily and broadly sweep, invading the area of protected freedoms. If such means are
adopted, self-inhibition borne of fear of what sinister predicaments await internet users will
suppress otherwise robust discussion of public issues. Democracy will be threatened and with it,
all liberties. Penal laws should provide reasonably clear guidelines for law enforcement officials
and triers of facts to prevent arbitrary and discriminatory enforcement. The terms “aiding or
abetting” constitute broad sweep that generates chilling effect on those who express
themselves through cyberspace posts, comments, and other messages. Hence, Section 5 of the
cybercrime law that punishes “aiding or abetting” libel on the cyberspace is a nullity.

10. Yes, because there exists a substantial distinction between crimes committed through the use of
information and communication technology and similar crimes committed using other means. In
using the technology in question, the offender often evades identification and is able to reach
far more victims or cause greater harm.

11. The Court resolves to leave the determination of the correct application of Section 7 that
authorizes prosecution of the offender under both the Revised Penal Code and Republic Act
10175 to actual cases, with the exception of the crimes of:

1.

1. Online libel as to which, charging the offender under both Section 4(c)(4) of
Republic Act 10175 and Article 353 of the Revised Penal Code constitutes a
violation of the proscription against double jeopardy; as well as

2. Child pornography committed online as to which, charging the offender under

both Section 4(c)(2) of Republic Act 10175 and Republic Act 9775 or the Anti-
Child Pornography Act of 2009 also constitutes a violation of the same
proscription, and, in respect to these, is void and unconstitutional.

12. Valid and constitutional, because the matter of fixing penalties for the commission of crimes is
as a rule a legislative prerogative.

13. Void and unconstitutional, because Section 12 does not permit law enforcement authorities to
look into the contents of the messages and uncover the identities of the sender and the
recipient. Thus, the authority that Section 12 gives law enforcement agencies is too sweeping
and lacks restraint.

14. Valid and constitutional, because the user ought to have kept a copy of that data when it
crossed his computer if he was so minded. There was no undue deprivation of property since
the data that service providers preserve on orders of law enforcement authorities are not made
accessible to users by reasons of the issuance of such orders.

15. Valid and constitutional, because what Section 14 envisions is merely the enforcement of a duly
issued court warrant. Disclosure can be made only after judicial intervention.

16. Valid and constitutional, because Section 15 merely enumerates the duties of law enforcement
authorities that would ensure proper collection, preservation, and use of computer system or
data that have been seized by virtue of a court warrant.
17. Valid and constitutional, because it is unclear that the user has a demandable right to require
the service provider to have that copy of data saved indefinitely for him in its storage system.

18. Void and unconstitutional, because Section 19 not only precludes any judicial intervention but it
also disregards jurisprudential guidelines established to determine the validity of restrictions on
speech.

19. Valid and constitutional insofar as it applies to the provisions of Chapter IV which are not struck
down by the Court.

20. and 21. Valid and constitutional, because cybercrime law is complete in itself when it directed
the CICC to formulate and implement a national cybersecurity plan. The law gave sufficient
standards for the CICC to follow when it provided a definition of cybersecurity.