Week 1 Digests

A.M. No. 93-7-696-0 February 21, 1995

In Re JOAQUIN T. BORROMEO, Ex Rel. Cebu City Chapter of the Integrated Bar of the Philippines

En Banc

Summary of Facts:

Respondent Joaquin Borromeo is not a lawyer but has read some law books and came to posses some awareness of a
few legal principles and procedures and he instituted legal proceedings in various courts for 16 years (1978-1995). His
incursions into lawyering were generated by his failure to follow through with his contractual obligations towards 3
banks, namely, (1) Traders Royal Bank (TRB), (2) United Coconut Planters Bank (UCPB), and (3) Security Bank and trust
Co. (SBTC), and his insistence on imposing his own terms and conditions for their fulfillment. The cases are as follows:

TRB

On June 2, 1978, he got a loan from it in the sum of P45,000.00. He secured this load by a real estate mortgage created
over 2 parcels of land owned respectively by Socorro Borromeo – Thakuria (his sister) and Teresita Winniefred Lavarino.
On June 16, 1978, Borromeo obtained a second loan from TRB in the amount of P10,000.00, this time giving as security a
mortgage over a parcel of land owned by the Heirs of Vicente V. Borromeo. Borromeo failed to pay the debts and
consequently, TRB caused the extra-judicial foreclosure of the mortgages given to secure them. Within the redemption
period, Borromeo made known to the Bank his intention to redeem the properties at their auction price. TRB manager
Blas C. Abril however made clear that Borromeo would also have to settle his outstanding account under Trust Receipt
No. 595/80 (P88,762.78), supra. Borromeo demurred, and this disagreement gave rise to a series of lawsuits
commenced by him against the Bank, its officers and counsel, as aforestated. On October 29, 1982 Borromeo filed a
complaint in the Cebu City Regional Trial Court for specific performance and damages against TRB and its local manager,
Blas Abril, and a reversed decision by the CA held that the "plaintiff (Borromeo) has lost his right of redemption and can
no longer compel defendant to allow redemption of the properties in question."

UCPB

Borromeo (together with a certain Mercader) also borrowed money from the United Coconut Planters Bank (UCPB) and
executed a real estate mortgage to secure repayment thereof. The mortgage was constituted over a 122-square-meter
commercial lot in Borromeo's name. This same lot was afterwards sold on August 7, 1980 by Borromeo to one Samson K.
Lao for P170,000.00, with a stipulation for its repurchase (pacto de retro) by him (Borromeo, as the vendor). The sale
was made without the knowledge and consent of UCPB. Again, Borromeo failed to fulfill his obligations. Shortly after
learning of Borromeo's default, and obviously to obviate or minimize the ill effects of the latter's delinquency, Lao
applied with the same bank (UCPB) for a loan, offering the property he had purchased from Borromeo as collateral. Lao
accordingly instituted a suit for consolidation of title, docketed to which Borromeo opposed the consolidation prayed
for. As a result, UCPB cancelled Lao's application for a loan and itself commenced proceedings foreclose the mortgage
constituted by Borromeo over the property. Borromeo also sued to stop UCPB from foreclosing the mortgage on his
property but the Cebu RTC dismissed the complaint and upheld UCPB’s right to foreclose along with award for moral
damages, attorney’s fees, and litigation expenses. Borromeo’s motion for reconsideration was also denied.

SBTC

The third banking institution which Joaquin T. Borromeo engaged in running court battles, was the Security Bank & Trust
Company (SBTC). From it Borromeo had obtained five (5) loans in the aggregate sum of P189,126.19, consolidated in a
single Promissory Note on May 31, 1979. To secure payment thereof, Summa Insurance Corp. (Summa) issued a
performance bond which set a limit of P200,000.00 on its liability thereunder. Again, as in the case of his obligations to
Traders Royal Bank and UCPB, Borromeo failed to discharge his contractual obligations. Hence, SBTC brought an action
in the Cebu City RTC against Borromeo and Summa for collection.

Issue: Whether Borromeo is guilty of contempt

Ruling: WHEREFORE, Joaquin T. Borromeo is found and declared GUILTY of constructive contempt repeatedly
committed over time, despite warnings and instructions given to him, and to the end that he may ponder his serious
errors and grave misconduct and learn due respect for the Courts and their authority, he is hereby sentenced to serve a
term of imprisonment of TEN (10) DAYS in the City Jail of Cebu City and to pay a fine of ONE THOUSAND PESOS
(P1,000.00). He is warned that a repetition of any of the offenses of which he is herein found guilty, or any similar or
other offense against courts, judges or court employees, will merit further and more serious sanctions.
 Week 1 Digests
G.R. No. 89572 December 21, 1989

DEPARTMENT OF EDUCATION, CULTURE AND SPORTS (DECS) and DIRECTOR OF CENTER FOR EDUCATIONAL
MEASUREMENT, petitioners, vs.ROBERTO REY C. SAN DIEGO and JUDGE TERESITA DIZON-CAPULONG, in her capacity as
Presiding Judge of the Regional Trial Court of Valenzuela, Metro Manila, Branch 172, respondents.

Cruz, J.

Summary of Facts:

Respondent is a graduate of the University of the East with a Bachelor of Science in Zoology degree. Petitioner claims
that respondent took the NMAT three times and flunked all three and thus is not allowed to take the NMAT again based
on the three-flunk rule of MECS Order No. 12, Series 1972 which stated that:

h) A student shall be allowed only three (3) chances to take the NMAT. After three (3) successive failures, a student shall
not be allowed to take the NMAT for the fourth time.

On the other hand, private respondent contends that he is entitled to take the NMAT once again. In his original petition
for mandamus, he first invoked his constitutional rights to academic freedom and quality education. By agreement of
the parties, the private respondent was allowed to take the NMAT scheduled on April 16, 1989, subject to the outcome
of his petition. In an amended petition filed with leave of court, he squarely challenged the constitutionality of MECS
Order No. 12, Series of 1972, containing the above-cited rule. The additional grounds raised were due process and equal
protection. After hearing, the respondent judge rendered a decision on July 4, 1989, declaring the challenged order
invalid and granting the petition. Judge Teresita Dizon-Capulong held that the petitioner had been deprived of his right
to pursue a medical education through an arbitrary exercise of the police power.

Issue: Whether the National Medical Admission Test (NMAT) is an arbitrary exercise of police power or Whether
someone who has taken the NMAT three times is entitled to take another based on one’s constitutional right to
academic freedom and quality education.

Held: The decision of the respondent judge must be reversed. the power to regulate and control the practice of
medicine includes the power to regulate admission to the ranks of those authorized to practice medicine, is also well
recognized. Thus, legislation and administrative regulations requiring those who wish to practice medicine first to take
and pass medical board examinations have long ago been recognized as valid exercises of governmental power.
Similarly, the establishment of minimum medical educational requirements-i.e., the completion of prescribed courses in
a recognized medical school-for admission to the medical profession, has also been sustained as a legitimate exercise of
the regulatory authority of the state. the rationale of regulation of this type: the improvement of the professional and
technical quality of the graduates of medical schools, by upgrading the quality of those admitted to the student body of
the medical schools. That upgrading is sought by selectivity in the process of admission, selectivity consisting, among
other things, of limiting admission to those who exhibit in the required degree the aptitude for medical studies and
eventually for medical practice. we are entitled to hold that the NMAT is reasonably related to the securing of the
ultimate end of legislation and regulation in this area and it is the protection of the public from the potentially deadly
effects of incompetence and ignorance in those who would undertake to treat our bodies and minds for disease or
trauma. The subject of the challenged regulation is certainly within the ambit of the police power. It is the right and
indeed the responsibility of the State to ensure that the medical profession is not infiltrated by incompetents to whom
patients may unwarily entrust their lives and health. The method employed by the challenged regulation is not irrelevant
to the purpose of the law nor is it arbitrary or oppressive. The three-flunk rule is intended to insulate the medical
schools and ultimately the medical profession from the intrusion of those not qualified to be doctors. There can be no
question that a substantial distinction exists between medical students and other students who are not subjected to the
NMAT and the three-flunk rule. The medical profession directly affects the very lives of the people, unlike other careers
which, for this reason, do not require more vigilant regulation. The accountant, for example, while belonging to an
equally respectable profession, does not hold the same delicate responsibility as that of the physician and so need not
be similarly treated. There would be unequal protection if some applicants who have passed the tests are admitted and
others who have also qualified are denied entrance. In other words, what the equal protection requires is equality
among equals.

Ruling: WHEREFORE, the petition is GRANTED. The decision of the respondent court dated January 13, 1989, is
REVERSED, with costs against the private respondent. It is so ordered.
 Week 1 Digests
G.R. No. L-20387 January 31, 1968

JESUS P. MORFE, plaintiff-appellee, vs. AMELITO R. MUTUC, as Executive Secretary, ET AL., defendants-appellants.

G.R. No. L-20387 January 31, 1968

Summary of Facts: Congress in 1960 enacted the Anti-Graft and Corrupt Practices Act to deter public officials and
employees from committing acts of dishonesty and improve the tone of morality in public service. It was declared to be
the state policy "in line with the principle that a public office is a public trust, to repress certain acts of public officers and
private persons alike which constitute graft or corrupt practices or which may lead thereto." One of the specific
provisions of the Anti-Graft and Corrupt Practices Act of 1960 is that every public officer, either within thirty (30) days
after its approval or after his assumption of office "and within the month of January of every other year thereafter", as
well as upon the termination of his position, shall prepare and file with the head of the office to which he belongs, "a
true detailed and sworn statement of assets and liabilities, including a statement of the amounts and sources of his
income, the amounts of his personal and family expenses and the amount of income taxes paid for the next preceding
calendar: . . .” Thus, the aforementioned statement is being questioned in this declaratory relief proceeding for being
violative of due process as an oppressive exercise of police power and as an unlawful invasion of the constitutional right
to privacy, implicit in the ban against unreasonable search and seizure construed together with the prohibition against
self-incrimination. then Executive Secretary and the then Secretary of Justice as defendants, where after practically
admitting the facts alleged, they denied the erroneous conclusion of law and as one of the special affirmative defenses
set forth: "1. That when a government official, like plaintiff, accepts a public position, he is deemed to have voluntarily
assumed the obligation to give information about his personal affair, not only at the time of his assumption of office but
during the time he continues to discharge public trust. The private life of an employee cannot be segregated from his
public life. . . ." he answer likewise denied that there was a violation of his constitutional rights against self-incrimination
as well as unreasonable search and seizure and maintained that "the provision of law in question cannot be attacked on
the ground that it impairs plaintiff's normal and legitimate enjoyment of his life and liberty because said provision
merely seeks to adopt a reasonable measure of insuring the interest or general welfare in honest and clean public
service and is therefore a legitimate exercise of the police power. On appeal, the lower court declared "unconstitutional,
null and void Section 7, Republic Act No. 3019, insofar as it required periodical submittal of sworn statements of
financial conditions, assets and liabilities of an official or employee of the government after he had once submitted such
a sworn statement upon assuming office; . . . .

Issue: Whether the provision in the Anti graft and Corruption law is in violation of due process as an oppressive exercise
of police power and as an unlawful invasion of the constitutional right to privacy

Held: No.

1. Factual Foundation: In Ermita-Malate Hotel and Motel Operators Association v. The Mayor of Manila, it was the
holding of this Court that in the absence of a factual foundation, the lower court deciding the matter purely "on
the pleadings and the stipulation of facts, the presumption of validity must prevail." In the present case likewise
there was no factual foundation on which the nullification of this section of the statute could be based. Hence as
noted the decision of the lower court could be reversed on that ground.
2. Purpose of the law: the Anti-Graft Act of 1960 like the earlier statute was precisely aimed at curtailing and
minimizing the opportunities for official corruption and maintaining a standard of honesty in the public service.
It is intended to further promote morality in public administration. A public office must indeed be a public trust.
Nobody can cavil at its objective; the goal to be pursued commands the assent of all. The conditions then
prevailing called for norms of such character. In the aforesaid Ermita-Malate Hotel decision, there is a
reaffirmation of its nature and scope as embracing the power to prescribe regulations to promote the health,
morals, education, good order, safety, or the general welfare of the people. It has been negatively put forth by
Justice Malcolm as "that inherent and plenary power in the state which enables it to prohibit all things hurtful to
the comfort, safety and welfare of society."
3. Public Officer’s right to freedom: liberty as guaranteed by the Constitution was defined by Justice Malcolm to
include "the right to exist and the right to be free from arbitrary personal restraint or servitude. In accordance
with this case therefore, the rights of the citizens to be free to use his faculties in all lawful ways; to live and
work where he will; to earn his livelihood by any lawful calling; to pursue any avocation, are all deemed
embraced in the concept of liberty. This Court in the same case, however, gave the warning that liberty as
understood in democracies, is not license. Implied in the term is restraint by law for the good of the individual
and for the greater good, the peace and order of society and the general well-being. No one can do exactly as he
pleases. Every man must renounce unbridled license. Admittedly without the challenged provision, a public
officer would be free from such a requirement. To the extent then that there is a compulsion to act in a certain
way, his liberty is affected. It cannot be denied however that under the Constitution, such a restriction is
allowable as long as due process is observed.
4. Privacy: It cannot be denied that the rational relationship such a requirement possesses with the objective of a
valid statute goes very far in precluding assent to an objection of such character. This is not to say that a public
officer, by virtue of a position he holds, is bereft of constitutional protection; it is only to emphasize that in
subjecting him to such a further compulsory revelation of his assets and liabilities, including the statement of the
 Week 1 Digests
amounts and sources of income, the amounts of personal and family expenses, and the amount of income taxes
paid for the next preceding calendar year, there is no unconstitutional intrusion into what otherwise would be a
private sphere.
5. Unreasonable search and seizure and against self-incrimination: search and seizure being incidental to an arrest,
and therefore reasonable regardless of petitioner's consent. It thus appears clear that no violation of the
guarantee against unreasonable search and seizure has been shown to exist by such requirement of further
periodical submission of one's financial condition as set forth in the Anti-Graft Act of 1960.
6. Insult to the personal integrity and official dignity of public officials: Nor could such a provision be nullified on
the allegation that it constitutes "an insult to the personal integrity and official dignity" of public officials. On its
face, it cannot thus be stigmatized. As to its being unnecessary, it is well to remember that this Court, in the
language of Justice Laurel, "does not pass upon questions of wisdom, justice or expediency of legislation." As
expressed by Justice Tuason: "It is not the province of the courts to supervise legislation and keep it within the
bounds of propriety and common sense. That is primarily and exclusively a legislative concern." 83 There can be
no possible objection then to the observation of Justice Montemayor: "As long as laws do not violate any
Constitutional provision, the Courts merely interpret and apply them regardless of whether or not they are wise
or salutary." For they, according to Justice Labrador, "are not supposed to override legitimate policy and . . .
never inquire into the wisdom of the law."

Ruling: WHEREFORE, the decision of the lower court of July 19, 1962 "declaring unconstitutional, null and void Section 7,
Republic Act No. 3019, insofar as it requires periodical submittal of sworn statements of financial conditions, assets and
liabilities of an official or employee of the government after he had once submitted such a sworn statement . . . is
reversed." Without costs.
 Week 1 Digests
G.R. No. 122846 January 20, 2009

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA. MESA TOURIST & DEVELOPMENT CORPORATION,
Petitioners, vs. CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO S. LIM, Respondent.

Summary of Facts: On December 3, 1992, City Mayor Alfredo S. Lim (Mayor Lim) signed into law an Ordinance
prohibiting short time admission in hotels, motels, lodging houses, pension houses and similar establishments in the City
of Manila. The policy prohibited Short-time admissions which meant admittance and charging of room rate for less than
twelve (12) hours at any given time or the renting out of rooms more than twice a day or any other term that may be
concocted by owners or managers of said establishments but would mean the same or would bear the same meaning;
with the purpose of protecting the best interest, health and welfare, and the morality of its constituents in general and
the youth in particular. On December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a
complaint for declaratory relief with prayer for a writ of preliminary injunction and/or temporary restraining order
( TRO)5 with the Regional Trial Court (RTC) of Manila, Branch 9 impleading as defendant, herein respondent City of
Manila (the City) represented by Mayor Lim.6 MTDC prayed that the Ordinance, insofar as it includes motels and inns as
among its prohibited establishments, be declared invalid and unconstitutional. MTDC claimed that as owner and
operator of the Victoria Court in Malate, Manila it was authorized by Presidential Decree (P.D.) No. 259 to admit
customers on a short time basis as well as to charge customers wash up rates for stays of only three hours. On
December 31, Components of the Anito Group of companies namely: petitioners White Light Corporation (WLC),
Titanium Corporation (TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed a motion to intervene and to
admit attached complaint-in-intervention7 on the ground that the Ordinance directly affects their business interests as
operators of drive-in-hotels and motels in Manila. RTC granted the motion to intervene and issued the writ of
preliminary injunction ordering the city to desist from the enforcement of the ordinance and eventually declared the
ordinance null and void. Upon appeal by the city, the CA reversed the RTC’s decision and affirmed the constitutionality
of the Ordinance.24 First, it held that the Ordinance did not violate the right to privacy or the freedom of movement, as
it only penalizes the owners or operators of establishments that admit individuals for short time stays.

Petitioner’s contention: that the Ordinance is unconstitutional and void since it violates the right to privacy and the
freedom of movement; it is an invalid exercise of police power; and it is an unreasonable and oppressive interference in
their business.

City of Manila’s contention: that the Ordinance is a valid exercise of police power pursuant to Section 458 (4)(iv) of the
Local Government Code which confers on cities, among other local government units, the power:

[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 Ordinance, it is argued, is also a valid exercise of the power of the City under Article III, Section 18(kk) of the Revised
Manila Charter, thus:

"to enact all ordinances it may deem necessary and proper for the sanitation and safety, the furtherance of the
prosperity and the promotion of the morality, peace, good order, comfort, convenience and general welfare of
the city and its inhabitants, and such others as be necessary to carry into effect and discharge the powers and
duties conferred by this Chapter; and to fix penalties for the violation of ordinances which shall not exceed two
hundred pesos fine or six months imprisonment, or both such fine and imprisonment for a single offense.

Issue: Whether the ordinance is a valid exercise of police power by the City of Manila or if it is an unreasonable and
oppressive interference in their business.

Held: That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and the petitioners of
lucrative business ties in with another constitutional requisite for the legitimacy of the Ordinance as a police power
measure. It must appear that the interests of the public generally, as distinguished from those of a particular class,
require an interference with private rights and the means must be reasonably necessary for the accomplishment of the
purpose and not unduly oppressive of private rights.71 It must also be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. More importantly, a reasonable relation must
exist between the purposes of the measure and the means employed for its accomplishment, for even under the guise
of protecting the public interest, personal rights and those pertaining to private property will not be permitted to be
arbitrarily invaded. Lacking a concurrence of these requisites, the police measure shall be struck down as an arbitrary
intrusion into private rights. As held in Morfe v. Mutuc, the exercise of police power is subject to judicial review when
life, liberty or property is affected. However, this is not in any way meant to take it away from the vastness of State
police power whose exercise enjoys the presumption of validity. The Ordinance makes no distinction between places
frequented by patrons engaged in illicit activities and patrons engaged in legitimate actions. Thus it prevents legitimate
use of places where illicit activities are rare or even unheard of. A plain reading of section 3 of the Ordinance shows it
makes no classification of places of lodging, thus deems them all susceptible to illicit patronage and subject them
without exception to the unjustified prohibition. The solution to such perceived decay is not to prevent legitimate
businesses from offering a legitimate product. Rather, cities revive themselves by offering incentives for new businesses
to sprout up thus attracting the dynamism of individuals that would bring a new grandeur to Manila.
 Week 1 Digests

The behavior which the Ordinance seeks to curtail is in fact already prohibited and could in fact be diminished simply by
applying existing laws. Less intrusive measures such as curbing the proliferation of prostitutes and drug dealers through
active police work would be more effective in easing the situation. So would the strict enforcement of existing laws and
regulations penalizing prostitution and drug use. These measures would have minimal intrusion on the businesses of the
petitioners and other legitimate merchants. Further, it is apparent that the Ordinance can easily be circumvented by
merely paying the whole day rate without any hindrance to those engaged in illicit activities. Moreover, drug dealers and
prostitutes can in fact collect "wash rates" from their clientele by charging their customers a portion of the rent for
motel rooms and even apartments.

Ruling: WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED, and the Decision of the
Regional Trial Court of Manila, Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared UNCONSTITUTIONAL.
No pronouncement as to costs.
 Week 1 Digests
G.R. No. 238467

MARK ANTHONY V. ZABAL, THITING ESTOSO JACOSALEM, AND ODON S. BANDIOLA, Petitioner vs.

RODRIGO R. DUTERTE, President of the Republic of the Philippines; SALVADOR C. MEDIALDEA, Executive Secretary; and
EDUARDO M. ANO, [Secretary] of the Department of Interior and Local Government, Respondents

Summary of Facts:

Issue:

Held:

Ruling:
 Week 1 Digests
G.R. No. 176625

MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR TRANSPORTATION OFFICE, Petitioners, vs. BERNARDO L.
LOZADA, SR. Respondents.

NACHURA, J.:

Summary of Facts: Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of 1,017 square meters, more
or less, located in Lahug, Cebu City. Its original owner was Anastacio Deiparine when the same was subject to
expropriation proceedings, initiated by the Republic of the Philippines (Republic), represented by the then Civil
Aeronautics Administration (CAA), for the expansion and improvement of the Lahug Airport. The case was filed with the
then Court of First Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881. During the pendency of the
expropriation proceedings, respondent Bernardo L. Lozada, Sr. acquired Lot No. 88 from Deiparine. On December 29,
1961, the trial court rendered judgment in favor of the Republic and ordered the latter to pay Lozada the fair market
value of Lot No. 88, adjudged at P3.00 per square meter, with consequential damages by way of legal interest computed
from November 16, 1947--the... time when the lot was first occupied by the airport. Lozada, with the other landowners,
contacted then CAA Director Vicente Rivera, Jr., requesting to repurchase the lots, as per previous agreement. On
November 29, 1989, then President Corazon C. Aquino issued a Memorandum to the Department of Transportation,
directing the transfer of general aviation operations of the Lahug Airport to the Mactan International Airport before the
end of 1990 and, upon such transfer, the... closure of the Lahug Airport. From the date of the institution of the
expropriation proceedings up to the present, the public purpose of the said expropriation (expansion of the airport) was
never actually initiated, realized, or implemented. Thus, on June 4, 1996, petitioners initiated a complaint for the
recovery of possession and reconveyance of ownership of Lot No. 88. On October 22, 1999, the RTC rendered its
Decision, disposing as follows... he Court hereby renders judgment in favor of the plaintiffs, Bernardo L. Lozada, Sr.,...
Aggrieved, petitioners interposed an appeal to the CA. After the filing of the necessary appellate briefs, the CA rendered
its assailed Decision dated February 28, 2006, denying petitioners' appeal and affirming in toto the Decision of the RTC,
Branch 57, Cebu City. Hence this appeal. Petitioners anchor their claim to the controverted property on the supposition
that the Decision in the pertinent expropriation proceedings did not provide for the condition that should the intended
use of Lot No. 88 for the expansion of the Lahug Airport be aborted or abandoned, the property would revert to
respondents, being its former owners. Petitioners cite, in support of this position, Fery v. Municipality of Cabanatuan
which declared that the Government acquires only such rights in expropriated parcels of land as may be allowed by the
character of its title over the properties.

Issue: Whether the expropriated lands are subject to recovery of former owners when the condition not having been
materialized/

Held: The petition should be denied. Contrary to the stance of petitioners, this Court had ruled otherwise in Heirs of
Timoteo Moreno and Maria Rotea v. Mactan-Cebu International Airport Authority. Obviously, Fery was not decided
pursuant to our now sacredly held constitutional right that private property shall not be taken for public use without just
compensation. It is well settled that the taking of private property by the Government’s power of eminent domain is
subject to two mandatory requirements: (1) that it is for a particular public purpose; and (2) that just compensation be
paid to the property owner. These requirements partake of the nature of implied conditions that should be complied
with to enable the condemnor to keep the property expropriated. More particularly, with respect to the element of
public use, the expropriator should commit to use the property pursuant to the purpose stated in the petition for
expropriation filed, failing which, it should file another petition for the new purpose. If not, it is then incumbent upon
the expropriator to return the said property to its private owner, if the latter desires to reacquire the same. Otherwise,
the judgment of expropriation suffers an intrinsic flaw, as it would lack one indispensable element for the proper
exercise of the power of eminent domain, namely, the particular public purpose for which the property will be devoted.
Accordingly, the private property owner would be denied due process of law, and the judgment would violate the
property owner’s right to justice, fairness, and equity. In light of these premises, we now expressly hold that the taking
of private property, consequent to the Government’s exercise of its power of eminent domain, is always subject to the
condition that the property be devoted to the specific public purpose for which it was taken. Corollarily, if this particular
purpose or intent is not initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they
so desire, may seek the reversion of the property, subject to the return of the amount of just compensation received. In
such a case, the exercise of the power of eminent domain has become improper for lack of the required factual
justification.

Ruling: WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals, affirming the
October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and its February 7, 2007 Resolution are
AFFIRMED with MODIFICATION as follows:

1. Respondents are ORDERED to return to petitioners the just compensation they received for the expropriation of Lot
No. 88, plus legal interest, in the case of default, to be computed from the time petitioners comply with their obligation
to reconvey Lot No. 88 to them;

2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in maintaining Lot No. 88,
plus the monetary value of their services to the extent that respondents were benefited thereby;
 Week 1 Digests
3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from Lot No. 88; and

4. Respondents are also ENTITLED to keep whatever interests the amounts they received as just compensation may have
earned in the meantime, as well as the appreciation in value of Lot No. 88, which is a natural consequence of nature and
time;

In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court, Branch 57, Cebu City, only for
the purpose of receiving evidence on the amounts that respondents will have to pay petitioners in accordance with this
Court’s decision. No costs.
 Week 1 Digests

G.R. No. L-28896 February 17, 1988

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. ALGUE, INC., and THE COURT OF TAX APPEALS, respondents.

Summary of Facts: The Philippine Sugar Estate Development Company had earlier appointed Algue as its agent,
authorizing it to sell its land, factories and oil manufacturing process. Pursuant to such authority, Alberto Guevara, Jr.,
Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and Pablo Sanchez, worked for the formation of the Vegetable Oil
Investment Corporation, inducing other persons to invest in it. Ultimately, after its incorporation largely through the
promotion of the said persons, this new corporation purchased the PSEDC properties. For this sale, Algue received as
agent a commission of P126,000.00, and it was from this commission that the P75,000.00 promotional fees were paid to
the aforenamed individuals. The petitioner contends that the claimed deduction of P75,000.00 was properly disallowed
because it was not an ordinary reasonable or necessary business expense. The Court of Tax Appeals had seen it
differently. Agreeing with Algue, it held that the said amount had been legitimately paid by the private respondent for
actual services rendered. The payment was in the form of promotional fees.

Issue: Whether or not the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction claimed by
private respondent Algue as legitimate business expenses in its income tax returns.

Held: The Supreme Court agrees with the respondent court that the amount of the promotional fees was not excessive.
The amount of P75,000.00 was 60% of the total commission. This was a reasonable proportion, considering that it was
the payees who did practically everything, from the formation of the Vegetable Oil Investment Corporation to the actual
purchase by it of the Sugar Estate properties. It is said that taxes are what we pay for civilization society. Without taxes,
the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural
reluctance to surrender part of one's hard-earned income to the taxing authorities, every person who is able to must
contribute his share in the running of the government.

Ruling: We hold that the appeal of the private respondent from the decision of the petitioner was filed on time with the
respondent court in accordance with Rep. Act No. 1125. And we also find that the claimed deduction by the private
respondent was permitted under the Internal Revenue Code and should therefore not have been disallowed by the
petitioner.

ACCORDINGLY, the appealed decision of the Court of Tax Appeals is AFFIRMED in toto, without costs.

SO ORDERED.

SUMMARY OF PRINCIPLES:

1. As a rule, the collection of taxes should be made in accordance with law.

Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other
hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for
government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the
taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.

2. An appeal from a decision of the Commissioner of Internal Revenue with the Court of Tax Appeals is 30 days from
receipt thereof.

The chronology as shown in the case indicates that the petition was filed seasonably. According to Rep. Act No. 1125,
the appeal may be made within thirty days after receipt of the decision or ruling challenged.

3. As a general rule, the warrant of distraint and levy is proof of the finality of the assessment. An exception to this rule,
however, is where there is a letter of protest after receipt of notice of assessment.

It is true that as a rule the warrant of distraint and levy is "proof of the finality of the assessment" and "renders hopeless
a request for reconsideration," being "tantamount to an outright denial thereof and makes the said request deemed
rejected." But there is a special circumstance in the case at bar that prevents application of this accepted doctrine.

The proven fact is that four days after the private respondent received the petitioner's notice of assessment, it filed its
letter of protest. This was apparently not taken into account before the warrant of distraint and levy was issued; indeed,
such protest could not be located in the office of the petitioner. It was only after Atty. Guevara gave the BIR a copy of
the protest that it was, if at all, considered by the tax authorities. During the intervening period, the warrant was
premature and could therefore not be served.
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4. As the Court of Tax Appeals correctly noted, the protest filed by private respondent was not pro forma and was
based on strong legal considerations.

It thus had the effect of suspending on January 18, 1965, when it was filed, the reglementary period which started on
the date the assessment was received, viz., January 14, 1965. The period started running again only on April 7, 1965,
when the private respondent was definitely informed of the implied rejection of the said protest and the warrant was
finally served on it. Hence, when the appeal was filed on April 23, 1965, only 20 days of the reglementary period had
been consumed.

5. The burden rests on the taxpayer to prove validity of the claimed deduction successfully discharged.

In the present case, however, we find that the onus has been discharged satisfactorily. The private respondent has
proved that the payment of the fees was necessary and reasonable in the light of the efforts exerted by the payees in
inducing investors and prominent businessmen to venture in an experimental enterprise and involve themselves in a
new business requiring millions of pesos. This was no mean feat and should be, as it was, sufficiently recompensed.

6. What is the purpose or rationale of taxation?

It is said that taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack of
the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one's hard-
earned income to the taxing authorities, every person who is able to must contribute his share in the running of the
government.

The government, for its part, is expected to respond in the form of tangible and intangible benefits intended to improve
the lives of the people and enhance their moral and material values, This symbiotic relationship is the rationale of
taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power.