Philippine Health Care Providers v. CIR, G.R. No.
167330, The power of taxation is sometimes called also the power to
September 18, 2009
Facts:
The petitioner is a domestic corporation providing
preventive, diagnostic and curative medical services to its
members by its duly licensed physicians, specialists, and other
professional technical staff participating in the group practice
health delivery system at a hospital or clinic owned, operated
or accredited by it. On January 27, 2000 respondent sent the
petitioner a formal demand letter and the corresponding
assessment notices demanding the payment of the deficiency
of taxes, including surcharges and interest for the taxable
years of 1996-1997 in the total amount of P224, 702, 641.00.
Issue: Whether or not the respondent may demand such
amount to tax the petitioner.
Ruling: No. The court ruled that the power to tax is an incident
of sovereignty and is unlimited in its range, acknowledging in
its very nature no limits, so that security against its abuse is to
be found only in the responsibility of the legislature which
imposes the tax on the constituency who is to pay it. So potent
indeed is the power that it was once opined that "the power to
tax involves the power to destroy."
Petitioner claims that the assessed DST to date which
amounts to ₱376 million is way beyond its net worth of ₱259
million.54 Respondent never disputed these assertions. Given
the realities on the ground, imposing the DST on petitioner
would be highly oppressive. It is not the purpose of the
government to throttle private business. On the contrary, the
government ought to encourage private
enterprise.55 Petitioner, just like any concern organized for a
lawful economic activity, has a right to maintain a legitimate
business.56 As aptly held in Roxas, et al. v. CTA, et al.:57
destroy. Therefore it should be exercised with caution to
minimize injury to the proprietary rights of a taxpayer. It must
be exercised fairly, equally and uniformly, lest the tax collector
kill the "hen that lays the golden egg."58
Legitimate enterprises enjoy the constitutional protection not to
be taxed out of existence. Incurring losses because of a tax
imposition may be an acceptable consequence but killing the
business of an entity is another matter and should not be
allowed. It is counter-productive and ultimately subversive of
the nation’s thrust towards a better economy which will
ultimately benefit the majority of our people.59
YMCAv.CIR,G.R.No.L-7988,January19,1916(EB)
Facts:
The Young Men’s Christian Association came to the
Philippines in 1898. After seeking the support in the
international committee of the YMCA based in New York, it
was able to secure funds for the establishment and building of
a three-storey establishment dedicated for both religious,
educational and charitable purposes of the organization. The
city of Manila contended that the property is taxable but was
argued by the petitioners claiming that the property was
exempt from taxation under the charter of Manila.
Issue: Whether or not the property is exempted from the
imposition of taxes.
Ruling: Yes. The court ruled that there is no doubt about the
correctness of the contention that an institution must devote
itself exclusively to one or the other of the purpose mentioned
in the statute before it can be exempt from taxation; but the
statute does not say that it must be devoted exclusively to
any one of the purposes therein mentioned. It may be a
combination of two or three or more of those purposes and still
be entitled to exempt. The Young Men's Christian Association
of Manila cannot be said to be an institution
used exclusively for religious purposes, or an institution used
exclusively for charitable purposes, or an institution devoted
exclusively to educational purposes; but we believe it can be
truthfully said that it is an institution used exclusively for all
three purposes, and that, as such, it is entitled to be exempted
from taxation.
Vested right

- A right is vested when the right to enjoyment has

become the property of some particular person or
persons as a present interest. (Ayog vs Cusi)
- the privilege to enjoy property legally vested, to
enforce contracts, and enjoy the rights of property
conferred by the existing law" (12 C.J.S. 955, Note
46, No. 6)
- some right or interest which has become fixed and
established and is no longer open to doubt or
controversy. (Down vs Blount)
- expresses the concept of present fixed interest
which in right reason and natural justice should be
protected against arbitrary State action.

Notes

1. Due process clause prohibits the annihilation of

vested rights. A state may not impair vested rights
by legislative enactment, by enactment or
subsequent enactment of municipal ordinance, or
by a change in the Constitution of a State except on
the legitimate exercise of police power. (12 C.J.S
955, Note 46,No.6)
2. Vested rights include not only include the legal or
equitable title to the enforcement of a demand, but
 also an exemption from new obligations after the
right has vested.
Carolino v.Senga, G.R.No.189649, April 20,2015
Facts: Jeremias Carolino was a retired COL of the AFP
receiving his monthly pension amounting to P18,315.00 in
December 1976 until the same was withheld from him by
respondents in March 2005. On June 3, 2005, Jeremias wrote
a letter addressed to the AFP Chief of Staff asking for the
reasons of the withholding of his retirement pay. In a letter
reply, Myrna F. Villaruz, LTC (FS) PA, Pension and Gratuity
Officer of the AFP Finance Center, informed Jeremias that his
loss of Filipino citizenship caused the deletion of his name in
the alpha list of the AFP Pensioners' Payroll effective March 5,
2005; and that he could avail of re-entitlement to his retirement
benefits and the restoration of his name in the AFP
Pensioners' Masterlist Payroll by complying with the
requirements prescribed under RA No. 9225, or the Dual
Citizenship Act. t was also mentioned that termination of
retirement benefits of pensioner of the AFP could be done
pursuant to the provisions of Presidential Decree (PD) No.
1638 which provides that the name of a retiree who loses his
Filipino citizenship shall be removed from the retired list and
his retirement benefits terminated upon such loss. It being in
consonance with the policy consideration that all retirement
laws inconsistent with the provisions of PD No. 1638 are
repealed and modified accordingly.
Issue: Whether or not the petitioner’s right to retirement
benefits be withheld from him upon the enactment of a new
law covering the same subject.
Ruling: No. PD No. 1638 was signed by then President
Ferdinand Marcos on September 10, 1979. Under Article 4 of
the Civil Code, it is provided that laws shall have no retroactive
effect, unless the contrary is provided. PD No. 1638 does not
contain any provision regarding its retroactive application, nor
the same may be implied from its language. Petitioner's
husband acquired vested right to the payment of his retirement
benefits which must be respected and cannot be affected by
the subsequent enactment of PD No. 1638 which provides that
loss of Filipino citizenship terminates retirement benefits.
Vested rights include not only legal or equitable title to the
enforcement of a demand, but also an exemption from new
obligations after the right has vested.
In fact, Section 36 of PD No. 1638 clearly provides that the
decree shall take effect upon its approval.
It has been observed that, generally, the term "vested right"
expresses the concept of present fixed interest, which in right
reason and natural justice should be protected against
arbitrary State action, or an innately just and imperative right
which an enlightened free society, sensitive to inherent and
irrefragable individual rights, cannot deny (16 C.J.S. 1174,
Note 71, No. 5, citing Pennsylvania Greyhound Lines, Inc. vs.
Rosenthal, 192 Atl. 2nd 587). In fact, Sections 33 and 35 of
PD No. 1638 recognize such vested right, to wit:
Section 33. Nothing in this Decree shall be construed in any
manner to reduce whatever retirement and separation pay or
gratuity or other monetary benefits which any person is
heretofore receiving or is entitled to receive under the
provisions of existing law.
1. Doctrine of issuance of mandamus- the petitioner
has a clear legal right to the performance of an act
sought to be compelled and the respondent has an
imperative duty to perform the same.
2. A purely ministerial act or duty is one that an officer
or tribunal performs in a given state of facts, in a
prescribed manner, in obedience to the mandate of
a legal authority, without regard to or the exercise
of its own judgment upon the propriety or
impropriety of the act done.
 3. It is discretionary if the law imposes a duty upon a
public officer, and gives him the right to decide how
or when the duty shall be performed.
4. The doctrine of exhaustion of administrative
remedies calls for resort first to the appropriate
administrative authorities in the resolution of the
controversy falling within their jurisdiction before the
same be elevated to the courts of justice for review.
Administrative Due Process
1. The essence of due process is to be heard, and, as
applied to administrative proceedings, this means a fair
and reasonable opportunity to explain one’s side, or an
opportunity to seek a reconsideration of the action or
ruling complained of.
2. Administrative due process cannot be fully equated
with due process in its strict judicial sense, for in the
former a formal or trial-type hearing is not always
necessary,16 and technical rules of procedure are not
strictly applied.
3. Due process, as a constitutional precept, does not
always and in all situations require a trial-type
proceeding. Due process is satisfied when a person is
notified of the charge against him and given an
opportunity to explain or defend himself. In
administrative proceedings, the filing of charges and
giving reasonable opportunity for the person so
charged to answer the accusations against him
constitute the minimum requirements of due process.
The essence of due process is simply to be heard, or
as applied to administrative proceedings, an
opportunity to explain one’s side, or an opportunity to
seek a reconsideration of the action or ruling
complained of. (Ledesma vs CA)
4. There is no denial of procedural due process where the
opportunity to be heard either through oral arguments
or through pleadings is accorded.
5. In an administrative proceeding like that conducted
against the petitioner, a respondent has the option of
engaging the services of counsel. As such, the right to
counsel is not imperative because administrative
investigations are themselves inquiries conducted only
to determine whether there are facts that merit
disciplinary measures against erring public officers and
employees, with the purpose of maintaining the dignity
of government service.
6. The Court held in Gonzales v. Civil Service
Commission that any defect in the observance of due
process is cured by the filing of a motion for
reconsideration, and that denial of due process cannot
be successfully invoked by a party who was afforded
the opportunity to be heard.
7. "To be heard" does not mean only verbal arguments in
court; one may be heard also thru pleadings. Where
opportunity to be heard, either through oral arguments
or pleadings, is accorded, there is no denial of
procedural due process.
8. In administrative proceedings, procedural due process
has been recognized to include the following: (1) the
right to actual or constructive notice of the institution of
proceedings which may affect a respondent’s legal
rights; (2) a real opportunity to be heard personally or
with the assistance of counsel, to present witnesses
and evidence in one’s favor, and to defend one’s rights;
(3) a tribunal vested with competent jurisdiction and so
constituted as to afford a person charged
administratively a reasonable guarantee of honesty as
well as impartiality; and (4) a finding by said tribunal
which is supported by substantial evidence submitted
for consideration during the hearing or contained in the
records or made known to the parties affected.
Fundamental and essential requirements of due process in
trials and investigation of an administrative character:
 1. right to a hearing, which includes the right of the party
interested or affected to present his own case and
submit evidence in support thereof.
2. Not only must the party be given an opportunity to
present his case and adduce evidence tending to
establish the rights which he asserts but the
tribunal must consider the evidence presented
3. While the duty to deliberate does not impose the
obligation to decide right, it does imply a necessity
which cannot be disregarded, namely, that of having
something to support its decision. A decision with
absolutely nothing to support it is a nullity,
4. Not only must there be some evidence to support a
finding or conclusion, but the evidence must be
substantial. Substantial evidence is more than a mere
scintilla. It means such relevant evidence as a
reasonable mind might accept as adequate to support
a conclusion.
5. The decision must be rendered on the evidence
presented at the hearing, or at least contained in the
record and disclosed to the parties affected.
6. The Court of Industrial Relations or any of its judges,
therefore, must act on its or his own independent
consideration of the law and facts of the controversy,
and not simply accept the views of a subordinate in
arriving at a decision.
7. The Court of Industrial Relations should, in all
controversial questions, render its decision in such a
manner that the parties to the proceeding can know the
various issues involved, and the reasons for the
decisions rendered. The performance of this duty is
inseparable from the authority conferred upon it.
Equal Protection Clause
Nature
-No person or class of persons shall be
deprived of the same protection of laws which is enjoyed by
other persons or other classes in the same place and in like
circumstances.
Notes:
1. It does not preclude classification of individuals who
may be accorded different treatment under the law
as long as the classification is reasonable and not
arbitrary.
2. It does not require absolute equality but merely that
all persons be treated alike under like conditions
both as to privileges conferred and liabilities
imposed.
3. Private actions, no matter how egregious, cannot
violate the equal protection guarantee. The equal
protection clause erects no shield against private
conduct, however discriminatory or wrongful.
4. In the absence of governmental interference, the
liberties guaranteed by the Constitution cannot be
invoked. Put differently, the Bill of Rights is not
meant to be invoked against acts of private
individuals.
5. Bona Fide Occupational Qualification (BFOQ) is
valid "provided it reflects an inherent quality
reasonably necessary for satisfactory job
performance."
Persons Protected
1. Available to all persons, natural or juridical (entitled
only to the protection in so far as their property is
concerned).
2. Citizens ( right to vote, hold public office, exploit
natural resources, and operate public utilities)
Valid Classification
Classification- grouping of persons or things similar to
each other in certain particulars and different from all others in
these same particulars.
 Classification, to be reasonable must :
1. Rest on substantial distinctions
2. Be germane to the purpose of the law
3. Not be limited to existing conditions only
4. Apply equally to all members of the same class
Notes:
1. The equal protection of the laws clause of the
Constitution allows classification.
2. The equal protection clause of the Constitution does
not require the universal application of the laws to all
persons without distinction; what it requires is simply
equality among equals as determined according to a
valid classification.
3. Congress is allowed a wide leeway in providing for a
valid classification.
4. Selective prosecution arises when a prosecutor
charges defendants based on “constitutionally
prohibited standards such as race, religion, or other
arbitrary classification.
5. The prosecution of one person to the exclusion of
others who may be just as guilty does not automatically
entail a violation of the equal protection clause. There
must be showing of discriminatory intent or clear and
intentional discrimination.
Chapter 7
Arrests and Seizures
Article 3
Section 2. The right of the people to be secure in their
persons, houses, papers, and effects against unreasonable
searches and seizures of whatever nature and for any purpose
shall be inviolable, and no search warrant or warrant of arrest
shall issue except upon probable cause to be determined
personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched
and the persons or things to be seized.
Requisites of valid search warrant or warrant of arrest:
1. It must be based on probable cause.
2. The probable cause must be determined personally
by the judge.
3. The determination must be made after examination
under oath or affirmation of the complainant and
the witnesses he may produce.
4. It must particularly describe the place to be
searched and the persons or things to be seized.
Scope of presentation
1. This constitutional right is available to all persons
including aliens whether accused of crime or not.
(Moncado vs People’s Court) and even
corporations (Stonehill vs Diokno) although they
may be required to open their books of accounts for
examination by the State in the exercise of police
power or the power of taxation.
General rule: Their premises may not be searched
nor their papers and effects seized.
Exception: There is a valid warrant
2. Eavesdropping on an accused in a public phone
booth is illegal unless with a warrant. (Katz vs US)
3. This right is personal and may be invoked only by
the person entitled to it.
4. The Bill of Rights does not govern relationships
between individuals; it cannot be invoked against
the acts of private individuals. (People vs Marti)
People vs Marti G.R. No 81561
If the search is made upon the request of law
enforcers, a warrant must generally be first secured if it is to
pass the test of constitutionality. However, if the search is
made at the behest or initiative of the proprietor of a private
establishment for its own and private purposes, as in the case,
and without intervention of the police authorities, the right
against unreasonable search and seizure cannot be invoked
for only the act of private individual, not the law enforcement,
is involved. In sum, the protection against unreasonable
search and seizures cannot be extended to acts committed by
private individuals so as to bring it within the ambit of alleged
unlawful intrusion by the government.
5. The constitutional guaranty against unreasonable
searches and seizure is applicable only against
government authorities.
Del Castillo vs People
The OSG argues that, assuming that the items seized
were found in another place not designated in the search
warrant, the same items should still be admissible as evidence
because the one who discovered them was a barangay tanod
who is a private individual, the constitutional guaranty against
unreasonable searches and seizure being applicable only to
government authorities. The contention is devoid of merit.
Having been established that the assistance of the barangay
tanods was sought by the police authorities who effected the
searched warrant, the same barangay tanods acted as agents
of persons in authority. By virtue of the above provisions, the
police officers, as well as the barangay tanods were acting as
agents of a person in authority during the conduct of the
search. Thus, the search conducted was unreasonable and
the confiscated items are inadmissible in evidence.
Young vs People
In this regard, jurisprudence has carved out specific
exceptions allowing direct resort to a certiorari petition, such
as: (a) where the order is a patent nullity, as where the
court a quo has no jurisdiction; (b) where the questions
raised in the certiorari proceedings have been duly raised and
passed upon by the lower court, or are the same as those
raised and passed upon in the lower court; (c) where there is
an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government
or of the petitioner or the subject matter of the action ,is
perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was
deprived of due process and there is extreme urgency for
relief; (f) where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the trial court
is improbable; (g) where the proceedings in the lower court are
a nullity for lack of due process; (h) where the proceedings
were ex parte, or in which the petitioner had no opportunity to
object; apd (i) where the issue raised is one purely of law
or where public interest is involved.
Probable Cause determined by the Prosecutor vs Judge
Judges and Prosecutors alike should distinguish the
preliminary inquiry which determines probable cause for the
issuance of a warrant of arrest from the preliminary
investigation proper which ascertains whether the offender
should be held for trial or released. Even if the two inquiries
are conducted in the course of one and the same proceeding,
there should be no confusion about the objectives. The
determination of probable cause for the warrant of arrest
is made by the Judge. The preliminary investigation proper
whether or not there is reasonable ground to believe that the
accused is guilty of the offense charged and, therefore,
whether or not he should be subjected to the exrense, rigors
and embarrassment of trial is the function of the Prosecutor.
Difference between executive and judicial determination
of probable cause
The executive determination of probable cause concerns
itself with whether there is enough evidence to support
an Information being filed. The judicial determination of
probable cause, on the other hand, determines whether a
warrant of arrest should be issued.
When can a Judge outrightly dismiss a case filed?
Accordingly, a judge may dismiss the case for lack of probable
cause only in clear-cut cases when the evidence on record
plainly fails to establish probable cause - that is when the
records readily show uncontroverted, and thus, established
facts which unmistakably negate the existence of the elements
of the crime charged.
Rule on private persons: The evidentiary value of the seized
specimen remains intact as long as the school personnel who
had initial contact with the drug/s was able to establish that the
evidence had not been tampered with when he handed it to
the police.
Probable Cause (Instances where needed to be established)
1. In sections 1 and 3 of Rule 114: By the investigating
officer, to determine whether there is sufficient ground
to engender a well-founded belief that a crime has
been committed and the respondent is probably guilty
thereof and should be held for trial.
2. In sections 6 and 9 of Rule 112: By the judge, to
determine whether a warrant of arrest or a commitment
order, if the accused has already been arrested, shall
be issued and that there is a necessity of placing the
respondent under immediate custody in order not to
frustrate the ends of justice.
3. In section 5(b) of Rule 113: By a peace officer or
private person making a warrantless arrest when an
offense has just been committed, and he has probable
cause to believe based on personal knowledge of facts
or circumstances that the person, to be arrested has
committed it
4. In section 4 of Rule 126: By the judge, to determine
whether a search warrant shall be issued, and only
upon probable cause in connection with one specific
offense to be determined personally by the judge after
examination under oath or affirmation of the
complainant and the witnesses he may produce, and
particularly describing the place to be searched and the
things to be seized.
Notes on Probable Cause:
1. Defined as the existence of such facts and
circumstances as would excite the belief in a
reasonable mind, acting on the facts within the
knowledge of prosecutor, that the person charged was
guilty of the crime for which he was prosecuted.
2. Demands more than bare suspicion and can never be
left to presupposition, conjecture or even convincing
logic.
3. Being based merely on opinion and reasonable belief,
it does not import absolute certainty.
4. Hearsay evidence is admissible in determining
probable cause in a preliminary investigation because
such investigation is merely preliminary , and does not
finally adjudicate rights and obligation of parties.
5. Preliminary investigation is not part of the criminal
action. (Estrada doctrine)
6. Preliminary investigation is not a fundamental right
guaranteed by the Constitution, instead it is statutory.
7. Probable cause required for the issuance of a freeze
order refers to “such facts and circumstances which
would lead a reasonably discreet, prudent or cautious
man to believe that an unlawful activity is about to be,
is being or has been committed and that the account or
any monetary instrument or property subject thereof
sought to be frozen is in anyway related to said
unlawful activity.
8. Initial hearsay information or tips from confidential
informants could very well serve as basis for the
issuance of search warrant, if followed up personally by
the recipient and validated. (Local Superior of the
Servants of Charity, Inc vs Jody King Construction and
Development Corp. )
 9. Defects in the preliminary investigation proceedings or
even in the absence thereof, will not render an
Information null and void. An exception to this rule,
however, was carved out for cases involving violations
of the rights to due process.
Personal evaluation of the Judge
1. Personally evaluate the report and the supporting
documents submitted by the prosecutor regarding the
existence of probable cause
2. If he is not satisfied that probable cause exists, he may
disregard the prosecutor’s report and require the
submission of supporting affidavits of witnesses to aid
him in arriving at a conclusion as to the existence of
probable cause.
Stonehill vs Diokno
 it is well settled that the legality of a seizure can be
contested only by the party whose rights have been
impaired thereby,9 and that the objection to an unlawful
search and seizure is purely personal and cannot be
availed of by third parties.
Requisites for in flagrante delicto:
1. the offender to be arrested must execute an overt act
indicating that he has just committed, is actually
committing, or is attempting to commit a crime
2. Such overt act is done in the presence or within the
view of the arresting officer.
Requisites for hot pursuit:
 an offense had in fact just been committed
 the arresting officer had personal knowledge of facts
indicating that the to be arrested has committed it.
Note:
 In both instances, the officer's personal knowledge of the
fact of the commission of an offense is absolutely
required. Under Section 5 (a), the officer himself
witnesses the crime; while in Section (b), he knows for a
fact that a crime has just been committed.
 In stop and frisk, Justice Bersamin remind police officers
that there should be "presence of more than one
seemingly innocent activity, which, taken together,
warranted a reasonable inference of criminal activity."
 Instigation is when the accused is lured into the
commission of the offense charged in order to prosecute
him. Entrapment is when officers employ ruses and
schemes to ensure the apprehension of the criminal
while in the actual commission of the crime.
Warrantless arrest
 There should be a lawful arrest first before a search be
made.(Miguel vs People Gr No 227038)
 Section 5, Rule 113 provides for lawful warrantless
arrest
Invalid warrantless arrest

Buy busts
 “trap for the unwary criminal”
 The idea to commit the crime originates from the
offender without inducement or prodding from anybody.
Search warrant- an order in writing issued in the name of the
People of the Philippines, signed by a judge, directed to a
peace officer commanding him to search for a personal
property described therein and bring it before the court.
Requisites:
1. Probable cause is present
2. Such probable cause must be determined personally
by the judge
3. The judge must examine, in writing and under oath or
affirmation, the complainant and the witnesses he or
she may produce.