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COURSE INTRODUCTION

Course Overview, Course Assignments, Course Requirements

MODULE 1

FUNDAMENTAL POWER OF THE STATE

POWER OF EMINENT DOMAIN

1. CITY OF MANILA vs. CHINESE COMMUNITY 40 Phil 349

FACTS: The City of Manila, plaintiff herein, prayed for the expropriation of a portion private
cemetery for the conversion into an extension of Rizal Avenue. Plaintiff claims that it is necessary
that such public improvement be made in the said portion of the private cemetery and that the
said lands are within their jurisdiction.
Defendants herein answered that the said expropriation was not necessary because other routes
were available. They further claimed that the expropriation of the cemetery would create
irreparable loss and injury to them and to all those persons owing and interested in the graves
and monuments that would have to be destroyed.
The lower court ruled that the said public improvement was not necessary on the particular-strip
of land in question. Plaintiff herein assailed that they have the right to exercise the power of
eminent domain and that the courts have no right to inquire and determine the necessity of the
expropriation. Thus, the same filed an appeal.
ISSUE: Whether or not the courts may inquire into, and hear proof of the necessity of the
expropriation.
HELD:The courts have the power of restricting the exercise of eminent domain to the actual
reasonable necessities of the case and for the purposes designated by the law. The moment the
municipal corporation or entity attempts to exercise the authority conferred, it must comply with
the conditions accompanying the authority. The necessity for conferring the authority upon a
municipal corporation to exercise the right of eminent domain is admittedly within the power of
the legislature. But whether or not the municipal corporation or entity is exercising the right in a
particular case under the conditions imposed by the general authority, is a question that the
courts have the right to inquire to.

2. REPUBLIC vs. PLDT SCRA 620

FACTS:

This is the case where the Bureau of Telecommunications entered into agreement with Philippine
Long Distance Telephone Company (PLDT) for the establishment by the bureau of Government
Telephone System. In the year 1948, the Bureau has extended its services with general public,
using the same trunk lines owned by, and rented from, the PLDT, and prescribing its (the
Bureau's) own schedule of rates. Through these trunk lines, a Government Telephone System
(GTS) subscriber could make a call to a PLDT subscriber in the same way that the latter could
make a call to the former.

In year 1958, Director of the Bureau entered into agreement with RCA Communications, Inc.
under a provisional agreement. By reason of such agreement, PLDT extended its complained to
the Bureau that the Bureau is violating the conditions under which their Private Branch Exchange
(PBX) is inter-connected with the PLDT's facilities, referring to the rented trunk lines, for the
Bureau had used the trunk lines not only for the use of government offices but even to serve
private persons or the general public, in competition with the business of the PLDT. When PLDT
did not receive a reply, it disconnected the trunkline of the Bureau.

Now the republic filed an action before the Court of First Instance praying that the PLDT be
commanded to execute contract with the government through the Bureau. The plaintiff assert
that the disconnection made by PLDT has isolated the Philippines from the rest of the world,
except United States.

CFI dismissed part of the complaint which commanding PLDT to enter into contract with the
government.
ISSUE(S):

Can the PLDT be compelled to enter into interconnecting contract with the Republic
RULING:

Yes, the Court held that parties can not be coerced to enter into a contract where no agreement
is had between them as to the principal terms and conditions of the contract. Freedom to
stipulate such terms and conditions is of the essence of our contractual system, and by express
provision of the statute, a contract may be annulled if tainted by violence, intimidation, or undue
influence (Articles 1306, 1336, 1337, Civil Code of the Philippines). But the court a quo has
apparently overlooked that while the Republic may not compel the PLDT to celebrate a contract
with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the
telephone company to permit interconnection of the government telephone system and that of
the PLDT, as the needs of the government service may require, subject to the payment of just
compensation to be determined by the court.
Nominally, of course, the power of eminent domain results in the taking or appropriation of title
to, and possession of, the expropriated property; but no cogent reason appears why the said
power may not be availed of to impose only a burden upon the owner of condemned property,
without loss of title and possession. It is unquestionable that real property may, through
expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and
services to allow inter-service connection between both telephone systems is not much different.
In either case private property is subjected to a burden for public use and benefit. If, under
section 6, Article XIII, of the Constitution, the State may, in the interest of national welfare,
transfer utilities to public ownership upon payment of just compensation, there is no reason why
the State may not require a public utility to render services in the general interest, provided just
compensation is paid therefor. Ultimately, the beneficiary of the interconnecting service would be
the users of both telephone systems, so that the condemnation would be for public use.

3. PEOPLE VS FAJARDO GR 12172, Aug. 29 1958

Facts:

Appeal from the decision of the Court of First Instance of Camarines Sur convicting defendants-
appellants Juan F. Fajardo and Pedro Babilonia of a violation of Ordinance No. 7, Series of 1950, of
the Municipality of Baao, Camarines Sur, for having... constructed without a permit from the
municipal mayor a building that destroys the view of the public plaza.

SEC. 3. PENALTY Any violation of the provisions of the above, this ordinance, shall make the
violation liable to pay a fine of not less than P25 nor more than P50 or imprisonment of not less
than 12 days nor more than 24 days or both, at the discretion of the court. If said... building
destroys the view of the Public Plaza or occupies any public property, it shall be removed at the
expense of the owner of the building or house.

hereupon, appellants proceeded with the construction of the building without a permit, because
they needed a place of residence... very badly, their former house having been destroyed by a
typhoon and hitherto they had been living on leased property.

On February 26, 1954, appellants were charged before and convicted by the justice of the peace
court of Baao, Camarines Sur, for violation of the ordinance in question. Defendants appealed to
the Court of First Instance, which affirmed the conviction, and sentenced appellants to... pay a fine
of P35 each and the costs, as well as to demolish the building in question because it destroys the
view of the public plaza of Baao, in that "it hinders the view of travelers from the National Highway
to the said public plaza." From this decision, the accused appealed... to the Court of Appeals, but
the latter forwarded the records to us because the appeal attacks the constitutionality of the
ordinance in question.
Issues:

A first objection to the validity of the ordinance in question is that under it the mayor has absolute
discretion to issue or deny a permit.

he ordinance fails to state any policy, or to set up any standard to guide or limit the mayor's action.
No purpose to be attained by... requiring the permit is expressed; no conditions for its grant or
refusal are enumerated. It is not merely a case of deficient standards; standards are entirely
lacking.

he danger of... such an ordinance is that it makes possible arbitrary discriminations and abuses in
its execution, depending upon no conditions or qualifications whatever, other than the unregulated
arbitrary will of the city authorities as the touchstone by which its validity is to be tested.

The ordinance should have established a rule by which its impartial enforcement could be secured.
All of the authorities cited above sustain this conclusion."

It is contended, on the other hand, that the mayor can refuse a permit solely in case that the
proposed building "destroys the view of the public plaza or occupies any public property" (as stated
in its section 3) ;

Even thus interpreted, the ordinance is unreasonable and oppressive, in that it operates to...
permanently deprive appellants of the right to use their own property; hence, it oversteps the
bounds of police power, and amounts to a taking of appellants property without just compensation.

The validity of the ordinance in question was justified by the court below under section 2243... c)
To establish fire limits in populous centers, prescribe the kinds of buildings that may be constructed
or repaired within them, and issue permits for the creation or repair thereof, charging a fee which
shall be determined by the municipal council and which shall not be less... than two pesos for each
building permit and one peso for each repair permit issued. The fees collected under the provisions
of this subsection shall accrue to the municipal school fund."

Under the provisions of the section above quoted, howeverv the power of the municipal council to
require the issuance of building permits rests upon its first establishing fire limits in populous parts
of the town and prescribing the kinds of buildings that may be constructed or... repaired within
them. As there is absolutely no showing in this case that the municipal council had either
established fire limits within the municipality or set standards for the kind or kinds of buildings to
be constructed or repaired within them before it passed the ordinance... in question, it is clear that
said ordinance was not conceived and promulgated under the express authority of sec. 2243 (c)
aforequoted.
Ruling:

We rule that the regulation in question, Municipal Ordinance No. 7, Series of 1950, of the
Municipality of Baao, Camarines Sur, was beyond the authority of said municipality to enact, and is
therefore null and void. Hence, the conviction of herein appellants is reversed, and... said accused
are acquitted, with costs de oficio. So ordered.

Principles:
The ordinance thus confers upon the mayor arbitrary and unrestricted power to grant or deny the
issuance of... building permits, and it is a settled rule that such an undefined and unlimited
delegation of power to allow or prevent an activity, per se lawful, is invalid (People vs. Vera, 65
Phil., 56; Primicias vs. Fugoso, 80 Phil., 71; Schloss Poster Adv. Co.vs. Rock Hill, 2 SE (2d)

An ordinance which permanently so restricts the use of property that it can not be used for any
reasonable purpose goes, it is plain, beyond regulation and must be recognized as a taking of the
property. The only substantial difference, in such case,... between restriction and actual taking, is
that the restriction leaves the owner subject to the burden of payment of taxation, while outright
confiscation would relieve him of that burden."

A regulation which substantially deprives an owner of all beneficial use of his property is
confiscation and is a deprivation within the meaning of the 14th Amendment."

4. REPUBLIC VS VDA. De CASTELLVI GR No. 20620, Aug.15, 1974

Facts:
After the owner of a parcel of land that has been rented and occupied by the government in 1947
refused to extend the lease, the latter commenced expropriation proceedings in 1959. During the
assessment of just compensation, the government argued that it had taken the property when
the contract of lease commenced and not when the proceedings begun. The owner maintains
that the disputed land was not taken when the government commenced to occupy the said land
as lessee because the essential elements of the “taking” of property under the power of eminent
domain, namely (1) entrance and occupation by condemnor upon the private property for more
than a momentary period, and (2) devoting it to a public use in such a way as to oust the owner
and deprive him of all beneficial enjoyment of the property, are not present.
Issue: Whether or not the taking of property has taken place when the condemnor has entered
and occupied the property as lesse.
Ratio:
First, the expropriator must enter the property, which is admitted in this case.

Second, the entrance must be more than a momentary period. In this case, the lease contract
was renewable annually. The entry on 1947 under lease was temporary and considered
transitory. Even if AFP constructed improvements, it does not alter the fact that the entry was not
permanent, in that it was meant to last only for a year. Lease contract contained express
provision that Government would return lot at the end of the agreement. Express contract
provision prevails over “intent” to take.
Third, the public use must be in such a way to oust the owner and deprive him of all beneficial
enjoyment of the property. In this case, the entry of the AFP into the property did not oust
Castellvi and deprive her of all beneficial enjoyment of the property. Castellvi remained as owner
during the lease period.
Neither is the Government’s contention that the fact that the lease provision was year to year it
had the permanent right to occupy.
The determination of just compensation should be determined as of the date of the filing of the
complaint under Sec. 4, Rule 67. Government was placed in possession over the property only on
August 1959. The value should be based on June 1959, the date the case was filed.
On the issue of the value of the land, Government insists that the land is still agricultural land,
hence should be valued at around 20 centavos per sqm. However, the land has not been used for
agriculture since the occupation by the AFP. It was even declared under its Tax declaration to be
a residential lot of which they have been paying taxes. The court valued the lot at 5 pesos per
sqm instead of the 10 pesos per sqm as declared by the Commissioners. SC decided this was the
fair price.
On the issue of interest, 6% interest is imposed beginning August 10, 1959 or the time the lot’s
possession was given to the Government.

5. AMIGABLE VS CUENCA GR No. 26400, August 15, 1974

FACTS:

Amigable is the registered owner of a lot covered by a Transfer Certificate of Title, where no
annotation in favor of the government of any right or interest in the property appears at the back
of the certificate. Without prior expropriation or negotiated sale, the government used a portion
of said lot for the construction of the Mango and Gorordo Avenues.

It appears that said avenues already existed since 1921. In 1958, Amigable’s counsel wrote the
President of the Philippines, requesting payment of the portion of her lot, which had been
appropriated by the government. The claim was indorsed to the Auditor General, who disallowed
it. Amigable then filed in the court a quo a complaint against the Republic of the Philippines and
Nicolas Cuenca, in his capacity as Commissioner of Public Highways for the recovery of ownership
and possession of the land traversed by the Mango and Gorordo Avenues. She also sought the
payment of compensatory damages for the illegal occupation of her land, moral damages,
attorney’s fees and the costs of the suit. The Government had not given its consent to be sued.
ISSUE:

WON the appellant may properly sue the government under the facts of the case.
HELD:

YES. Where the government takes away property from a private landowner for public use without
going through the legal process of expropriation or negotiated sale, the aggrieved party may
properly maintain a suit against the government without thereby violating the doctrine of
governmental immunity from suit without its consent. The doctrine of governmental immunity
from suit cannot serve as an instrument for perpetrating an injustice on a citizen. Had the
government followed the procedure indicated by the governing law at the time, a complaint
would have been filed by it, and only upon payment of the compensation fixed by the judgment,
or after tender to the party entitled to such payment of the amount fixed, may it “have the right
to enter in and upon the land so condemned, to appropriate the same to the public use defined in
the judgment.” If there were an observance of procedural regularity, petitioners would not be in
the sad plaint they are now. It is unthinkable then that precisely because there was a failure to
abide by what the law requires, the government would stand to benefit. It is not too much to say
that when the government takes any property for public use, which is conditioned upon the
payment of just compensation, to be judicially ascertained, it makes manifest that it submits to
the jurisdiction of a court. There is no thought then that the doctrine of immunity from suit could
still be appropriately invoked.

6. PHILIPPINE PRESS INSTITUTE vs. COMELEC GR No. 119694, May 22, 1995
DOCTRINE OF THE CASE:

Section 2 of Resolution No. 2772 is a blunt and heavy instrument that purports, without a
showing of existence of a national emergency or other imperious public necessity, indiscriminately
and without regard to the individual business condition of particular newspapers or magazines
located in differing parts of the country, to take private property of newspaper or magazine
publishers.

No attempt was made to demonstrate that a real and palpable or urgent necessity for the taking
of print space confronted the Comelec and that Section 2 of Resolution No. 2772 was itself the
only reasonable and calibrated response to such necessity available to the Comelec. Section 2
does not constitute a valid exercise of the police power of the State. Philippine Press Institute,
Inc. vs. Commission on Elections, 244 SCRA 272, G.R. No. 119694 May 22, 1995

FACTS:
Respondent Comelec promulgated Resolution no. 2772 directing newspapers to provide free
Comelec space of not less than one-half page for the common use of political parties and
candidates.

The Comelec space shall be allocated by the Commission, free of charge, among all candidates to
enable them to make known their qualifications, their stand on public issue and their platforms of
government. The Comelec space shall also be used by the Commission for dissemination of vital
election information.

Petitioner Philippine Press Institute, Inc. (PPI), a non-profit organization of newspaper and
magazine publishers, asks the Supreme Court to declare Comelec Resolution 2772
unconstitutional and void on the ground that it violates the prohibition imposed by the
Constitution upon the government against the taking of private property for public use without
just compensation.

On behalf of the respondent Comelec, the Solicitor General claimed that the Resolution is
permissible exercise of the power of supervision (police power) of the Comelec over the
information operations of print media enterprises during the election period to safeguard and
ensure a fair, impartial and credible election.

ISSUE: Whether Comelec Resolution No. 2772 is unconstitutional

HELD: The Supreme Court declared the Resolution as unconstitutional. It held that to compel
print media companies to donate “Comelec space” amounts to “taking” of private personal
property without payment of the just compensation required in expropriation cases.

Moreover, the element for the taking has not been established by respondent Comelec,
considering that the newspapers are not unwilling to sell advertising space.

The taking of private property for public use is authorized by the constitution, but not without
payment of just compensation. Also Resolution No. 2772 does not constitute a valid exercise of
the police power of the state. In such case at bench, there is no showing of exixtence of national
emergency to take private property of newspapers or magazine publishers.
 7. SUMULONG VS GUERRERO GR 48685, Sept 30,1987
Fact: On December 5, 1977 the National Housing Authority (NIIA) filed a complaint for
expropriation of parcels of land covering approximately twenty five (25) hectares, (in Antipolo,
Rizal) including the lots of petitioners Lorenzo Sumulong and Emilia Vidanes-Balaoing.

Petitioners filed a motion for reconsideration on the ground that they had been deprived of the
possession of their property without due process of law. This was however, denied.

Hence, this petition challenging the orders of respondent Judge and assailing the constitutionality
of Pres. Decree No. 1224, as amended. Petitioners argue that:
Issue: Whether “socialized housing” as defined in Pres. Decree No. 1224, as amended, for the
purpose of condemnation proceedings is not “public use” since it will benefit only “a handful of
people, bereft of public character?
Held: No, “socialized housing” fans within the confines of “public use”. It is, particularly important
to draw attention to paragraph (d) of Pres. Dec. No. 1224 which opportunities inextricably linked
with low-cost housing, or slum clearance, relocation and resettlement, or slum improvement
emphasize the public purpose of the project. The use to which it is proposed to put the subject
parcels of land meets the requisites of “public use”. The lands in question are being expropriated
by the NHA for the expansion of Bagong Nayon Housing Project to provide housing facilities to
low-salaried government employees.

8. MANOSCA VS COURT OF APPEALS G.R. No. 106440, 29 January 1996

Fact: Petitioners inherited a piece of land located at P. Burgos Street, Calzada, Taguig. Metro
Manila, with an area of about four hundred ninety-two (492) square meters. When the parcel was
ascertained by the NHI to have been the birthsite of Felix Y. Manalo, the founder of Iglesia Ni
Cristo, it passed Resolution No. 1, Series of 1986, pursuant to Section 42 of Presidential Decree
No. 260, declaring the land to be a national historical landmark. The resolution was approved by
the Minister of Education, Culture and Sports At the same time, respondent Republic filed an
urgent motion for the issuance of an order to permit it to take immediate possession of the
property. The motion was opposed by petitioners. After a hearing, the trial court issued an order
fixing the provisional market and assessed values of the property and authorizing the Republic to
take over the property once the required sum would have been deposited with the Municipal
Treasurer of Taguig, Metro Manila.

Petitioners moved to dismiss the complaint on the main thesis that the intended expropriation
was not for a public purpose and, incidentally, that the act would constitute an application of
public funds, directly or indirectly, for the use, benefit, or support of Iglesia ni Cristo, a religious
entity, contrary to the provision of the Constitution. Petitioners sought, in the meanwhile, a
suspension in the implementation of the 03rd August 1989 order of the trial court. On 15
February 1990, following the filing by respondent Republic of its reply to petitioners’ motion
seeking the dismissal of the case, the trial court issued its denial of said motion to dismiss.6 Five
(5) days later, or on 20 February 1990,7 another order was issued by the trial court, declaring
moot and academic the motion for reconsideration and/or suspension of the order of 03 August
1989 with the rejection of petitioners’ motion to dismiss. Petitioners’ motion for the
reconsideration of the 20th February 1990 order was likewise denied by the trial court in its 16th
April 1991 order. Petitioners then lodged a petition with the Court of Appeals which the appellate
court dismissed for failure to show any grave abuse of discretion or lack of jurisdictional
competence on the part of the trial court. A motion for the reconsideration of the decision was
denied subsequently by appellate court.
ssue: Whether the expropriation was not for a public purpose and, incidentally, that the act
would constitute an application of public funds, directly or indirectly, for the use, benefit, or
support of Iglesia ni Cristo, a religious entity, contrary to the provision of Section 29(2), Article
VI, of the 1987 Constitution.
Held: No, Public Use. Eminent domain. The constitutional and statutory basis for taking property
by eminent domain. For condemnation purposes, “public use” is one which confers same benefit
or advantage to the public; it is not confined to actual use by public. It is measured in terms of
right of public to use proposed facilities for which condemnation is sought and, as long as public
has right of use, whether exercised by one or many members of public, a “public advantage” or
“public benefit” accrues sufficient to constitute a public use. The idea that “public use” is strictly
limited to clear cases of “use by the public” has long been discarded.

9. EPZA vs. DULAY G.R. No. L-59609, 29 April 1987

Facts: Under Proclamation No. 1811, a certain parcel of land of the public domain situated in
Lapu-Lapu City, Mactan, Cebu was reserved for the establishment of an export processing zone
by petitioner Export Processing Zone Authority (EPZA). However, not all the reserved area was
public land. Four parcels of the land were owned and registered in the name of the private
respondent, San Antonio Development Corporation. EPZA offered to purchase the parcels of land
from the respondent in accordance with the valuation set forth in Section 92, Presidential Decree
(P.D.) No. 464, as amended. The parties failed to reach an agreement. Petitioner filed a
complaint for expropriation with a prayer for the issuance of a writ of possession to expropriate
the aforesaid parcels of land pursuant to P.D. No. 66, as amended, which empowers the
petitioner to acquire by condemnation proceedings any property for the establishment of export
processing zones, in relation to Proclamation No. 1811, for the purpose of establishing the
Mactan Export Processing Zone. Respondent Judge Dulay issued the order of condemnation
declaring petitioner as having the lawful right to take the properties sought to be condemned,
upon the payment of just compensation to be determined as of the filing of the complaint. Judge
Dulay then issued an order for the appointment of the commissioners to determine the just
compensation. It was later found out that the payment of the government to San Antonio would
be P15 per square meter, which was objected to by the petitioner contending that under PD
1533, the basis of just compensation shall be fair and according to the fair market value declared
by the owner of the property sought to be expropriated, or by the assessor, whichever is lower.
Such objection and the subsequent Motion for Reconsideration were denied. EPZA then filed this
petition for certiorari and mandamus.
Issue: W/N the mode of determining just compensation under PD 1533 is unconstitutional.
Held: YES. The method of ascertaining just compensation constitutes impermissible
encroachment to judicial prerogatives. It tends to render the courts inutile in a matter in which
under the Constitution is reserved to it for financial determination. The valuation in the decree
may only serve as guiding principle or one of the factors in determining just compensation, but it
may not substitute the court’s own judgment as to what amount should be awarded and how to
arrive at such amount. The determination of "just compensation" in eminent domain cases is a
judicial function. The executive department or the legislature may make the initial determinations
but when a party claims a violation of the guarantee in the Bill of Rights that private property
may not be taken for public use without just compensation, no statute, decree, or executive order
can mandate that its own determination shall prevail over the court's findings. Much less can the
courts be precluded from looking into the "just-ness" of the decreed compensation. P.D. No.
1533, which eliminates the court's discretion to appoint is unconstitutional and void.

10. Municipality of Parañaque vs. V.M. Realty Corporation, G.R. No. 127820, 20 July 1998
Facts: Municipality of Paranaque filed a complaint for expropriation against VM Realty over two
parcels of land in order to provide homes for the homeless through a housing project. ● VM Realty
alleged that the complaint failed to state a cause of action because it was filed pursuant to a
resolution and not to an ordinance as required by RA 7160 (the Local Government Code); ● They
also alleged that the cause of action, if any, was barred by a prior judgment or res judicata. ●
Petitioner cited Article 36, Rule VI of the Implementing Rules, which requires only a resolution to
authorize an LGU to exercise eminent domain.
Issue: W/N a resolution by the municipal council has the same effect as an ordinance and will not
deprive an expropriation case of a valid cause of action.
Held: NO. Resolution and ordinance are not synonymous. An ordinance is a law, but a resolution is
merely a declaration of the sentiment or opinion of a lawmaking body. An LGU may only exercise
the power to expropriate private property only when authorized by Congress and subject to its
control and restraints, This can be found in Sec 19 of RA 7160. While the petitioner relied on Article
36, Rule VI of the Implementing Rules, the Court disagreed stating that Section 19 of RA 7160, the
law itself, prevails over the former. Strictly speaking, the power of eminent domain delegated to an
LGU is not eminent but “inferior” domain, since it must conform to the limits imposed by Congress.

Doctrine:
LGU cannot exercise the power to expropriate private property pursuant to a resolution. The
requirement, as per the Local Government Code, to exercise the power is an ordinance.

NOTES: Requisites before an LGU can exercise the power of eminent domain: SEC 19, RA 7160 An
ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf
of the LGU. Eminent domain is exercised for public use, purpose or welfare, or for the benefit of
the poor and the landless. There is payment of just compensation A valid and definite offer has
been previously made to the owner of the property to be expropriated, but was not accepted.
 11. REPUBLIC VS VICENTE LIM, G.R. No. 161656, June 29, 2005
Facts:
On September 5, 1938, the Republic of the Philippines (Republic) instituted a special civil action for
expropriation with the Court of First Instance (CFI) of Cebu, involving Lots of the Banilad Friar Land
Estate, Lahug, Cebu City, for the purpose of establishing a military reservation for the Philippine
Army. After depositing ₱9,500.00 with the Philippine National Bank, the Republic took possession of
the lots. Thereafter, the CFI rendered its Decision ordering the Republic to pay the Denzons the
sum of ₱4,062.10 as just compensation. In 1950, Jose Galeos, one of the heirs of the Denzons,
filed with the National Airports Corporation a claim for rentals for the two lots, but it “denied
knowledge of the matter.” Another heir, Nestor Belocura, brought the claim to the Office of then
President Carlos Garcia who wrote the Civil Aeronautics Administration and the Secretary of
National Defense to expedite action on said claim. in 1962, the CFI promulgated its Decision in
favor of Valdehueza and Panerio, holding that they are the owners and have retained their right as
such over Lots 932 and 939 because of the Republic’s failure to pay the amount of ₱4,062.10,
adjudged in the expropriation proceedings. In view of “the differences in money value from 1940
up to the present,” the court adjusted the market value at ₱16,248.40, to be paid with 6% interest
per annum from April 5, 1948, date of entry in the expropriation proceedings, until full payment.

Meanwhile, in 1964, Valdehueza and Panerio mortgaged and foreclosed Lot 932 to Vicente Lim for
failure to pay. in 1992, respondent filed a complaint for quieting of title with the (RTC) seeking an
absolute and exclusive possession of the property. in 2001, the RTC rendered a decision in favor of
respondent. Petitioners elevated the case to the CA but the Ruling of the RTC was upheld and
affirmed.

Issue:
Whether the owner of the expropriated land is entitled for the repossession of his property when
party condemning refuses to pay the compensation which has been assessed or agreed upon?

Held:
Yes, while the prevailing doctrine is that “the non-payment of just compensation does not entitle
the private landowner to recover possession of the expropriated lots,26 however, in cases where
the government failed to pay just compensation within five (5) years from the finality of the
judgment in the expropriation proceedings, the owners concerned shall have the right to recover
possession of their property. This is in consonance with the principle that “the government cannot
keep the property and dishonor the judgment.” To be sure, the five-year period limitation will
encourage the government to pay just compensation punctually. This is in keeping with justice and
equity. After all, it is the duty of the government, whenever it takes property from private persons
against their will, to facilitate the payment of just compensation which the court defined as not only
the correct determination of the amount to be paid to the property owner but also the payment of
the property within a reasonable time. Without prompt payment, compensation cannot be
considered “just.”

POWER OF TAXATION

12. SISON vs. ANCHETA G.R. No. L-59431, 25 July 1984

FACTS:

This is a petition assailing the validity of Batas Pambansa 135 Section 1 which further amends
Section 21 of the National Internal Revenue Code of 1977. Petitioner as taxpayer alleges that by
virtue thereof, “he would be unduly discriminated against by the imposition of higher rates of tax
upon his income arising from the exercise of his profession vis-à-vis those which are imposed
upon fixed income or salaried individual taxpayers. He characterizes the above section as
arbitrary amounting to class legislation, oppressive and capricious in character.

For petitioner, therefore, there is a transgression of both the equal protection and due process
clauses of the Constitution as well as of the rule requiring uniformity in taxation
ISSUE:

Whether or not the provision violates the equal protection and due process of the Constitution as
well as of the rule requiring uniformity in taxation?
RULING:

The petition must be dismissed. It is manifest that the field of state activity has assumed a much
wider scope, hence, the need for more revenues. The power to tax, an inherent prerogative, has
to be availed of to assure the performance of vital state functions. It is the source of the bulk of
public funds.

The petitioner alleges arbitrariness. A mere allegation, as here. does not suffice. There must be a
factual foundation of such unconstitutional taint. Absent such a showing, the presumption of
validity must prevail.

Now for equal protection. It suffices that the laws operate equally and uniformly on all persons
under similar circumstances or that all persons must be treated in the same manner, the
conditions not being different, both in the privileges conferred and the liabilities imposed. That
same formulation applies as well to taxation measures.

Petitioner likewise invoked the kindred concept of uniformity. “Equality and uniformity in taxation
means that all taxable articles or kinds of property of the same class shall be taxed at the same
rate. The taxing power has the authority to make reasonable and natural classifications for
purposes of taxation. There is quite a similarity then to the standard of equal protection for all
that is required is that the tax “applies equally to all persons, firms and corporations placed in
similar situation.

What misled petitioner is his failure to take into consideration the distinction between a tax rate
and a tax base. It is enough that the classification must rest upon substantial distinctions that
make real differences. In the case of professionals in the practice of their calling and
businessmen, there is no uniformity in the costs or expenses necessary to produce their income.

There is ample justification then for the Batasang Pambansa to adopt the gross system of income
taxation to compensation income, while continuing the system of net income taxation as regards
professional and business income

The petition is without merit, considering the (1) lack of factual foundation to show the arbitrary
character of the assailed provision; (2) the force of controlling doctrines on due process, equal
protection, and uniformity in taxation and (3) the reasonableness of the distinction between
compensation and taxable net income of professionals and businessman certainly not a suspect
classification.

SUMMARY OF PRINCIPLES:
1. The Constitution provides restrictions to the power to tax.
Adversely affecting as it does property rights, both the due process and equal protection clauses
may properly be invoked, as petitioner does, to invalidate in appropriate cases a revenue
measure. If it were otherwise, there would be truth to the 1803 dictum of Chief Justice Marshall
that “the power to tax involves the power to destroy.”

In a separate opinion in Graves v. New York, Justice Frankfurter, after referring to it as an

“unfortunate remark,” characterized it as “a flourish of rhetoric [attributable to] the intellectual
fashion of the times [allowing] a free use of absolutes.”

This is merely to emphasize that it is not and there cannot be such a constitutional mandate.
Justice Frankfurter could rightfully conclude: “The web of unreality spun from Marshall’s famous
dictum was brushed away by one stroke of Mr. Justice Holmes’s pen: ‘The power to tax is not the
power to destroy while this Court sits.’
So it is in the Philippines.

2. The SC ruled that, a bare allegation that Batas 135, which sets different income tax schedules
for fixed income earners and business or professional income earners, is arbitrary does not suffice
to invalidate said tax statute.
In the present case, the difficulty confronting petitioner is thus apparent. He alleges arbitrariness.
A mere allegation, as here, does not suffice. There must be a factual foundation of such
unconstitutional taint.
Considering that petitioner here would condemn such a provision as void on its face, he has not
made out a case. This is merely to adhere to the authoritative doctrine that where the due
process and equal protection clauses are invoked, considering that they are not fixed rules but
rather broad standards, there is a need for proof of such persuasive character as would lead to
such a conclusion.

Absent such a showing, the presumption of validity must prevail.

3. It is undoubted that the due process clause may be invoked where a taxing statute is so
arbitrary that it finds no support in the Constitution.
An obvious example is where it can be shown to amount to the confiscation of property. That
would be a clear abuse of power. It then becomes the duty of this Court to say that such an
arbitrary act amounted to the exercise of an authority not conferred. That properly calls for the
application of the Holmes dictum.
It has also been held that where the assailed tax measure is beyond the jurisdiction of the state,
or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it
is subject to attack on due process grounds.
4. The Constitution does not require things which are different in fact or opinion to be treated in
law as though they were the same.”
Hence the constant reiteration of the view that classification if rational in character is allowable.
As a matter of fact, in a leading case of Lutz V. Araneta, this Court, through Justice J.B.L. Reyes,
went so far as to hold “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.’
”
5. Uniformity in taxation quite similar to the standard of equal protection.
Petitioner likewise invoked the kindred concept of uniformity. According to the Constitution: “The
rule of taxation shall be uniform and equitable.”
This requirement is met according to Justice Laurel in Philippine Trust Company v. Yatco, decided
in 1940, when the tax “operates with the same force and effect in every place where the subject
may be found.” He likewise added: “The rule of uniformity does not call for perfect uniformity or
perfect equality, because this is hardly attainable.”
The problem of classification did not present itself in that case. It did not arise until nine years
later, when the Supreme Court held: “Equality and uniformity in taxation means that all taxable
articles or kinds of property of the same class shall be taxed at the same rate. The taxing power
has the authority to make reasonable and natural classifications for purposes of taxation.”

As clarified by Justice Tuason, where “the differentiation” complained of “conforms to the

practical dictates of justice and equity” it “is not discriminatory within the meaning of this clause
and is therefore uniform.” There is quite a similarity then to the standard of equal protection for
all that is required is that the tax “applies equally to all persons, firms and corporations placed in
similar situation.”
6. Taxpayers may be classified into different categories where it rests on real differences.
In this case, what misled petitioner is his failure to take into consideration the distinction between
a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by
eliminating all deductible items and at the same time reducing the applicable tax rate. Taxpayers
may be classified into different categories. To repeat, it is enough that the classification must rest
upon substantial distinctions that make real differences.
In the case of the gross income taxation embodied in Batas Pambansa Blg. 135, the discernible
basis of classification is the susceptibility of the income to the application of generalized rules
removing all deductible items for all taxpayers within the class and fixing a set of reduced tax
rates to be applied to all of them.
Taxpayers who are recipients of compensation income are set apart as a class. As there is
practically no overhead expense, these taxpayers are not entitled to make deductions for income
tax purposes because they are in the same situation more or less.
On the other hand, in the case of professionals in the practice of their calling and businessmen,
there is no uniformity in the costs or expenses necessary to produce their income. It would not
be just then to disregard the disparities by giving all of them zero deduction and indiscriminately
impose on all alike the same tax rates on the basis of gross income.
There is ample justification then for the Batasang Pambansa to adopt the gross system of income
taxation to compensation income, while continuing the system of net income taxation as regards
professional and business income.
 13. PASCUAL vs. SECRETARY OF PUBLIC WORKS G.R. No. L-10405, 29 December 1960
"A law appropriating the public revenue is invalid if the public advantage or benefit, derived from
such expenditure, is merely incidental in the promotion of a particular enterprise."

FACTS: Governor Wenceslao Pascual of Rizal instituted this action for declaratory relief, with
injunction, upon the ground that RA No. 920, which apropriates funds for public works
particularly for the construction and improvement of Pasig feeder road terminals. Some of the
feeder roads, however, as alleged and as contained in the tracings attached to the petition, were
nothing but projected and planned subdivision roads, not yet constructed within the Antonio
Subdivision, belonging to private respondent Zulueta, situated at Pasig, Rizal; and which
projected feeder roads do not connect any government property or any important premises to the
main highway. The respondents' contention is that there is public purpose because people living
in the subdivision will directly be benefitted from the construction of the roads, and the
government also gains from the donation of the land supposed to be occupied by the streets,
made by its owner to the government.

ISSUE: Should incidental gains by the public be considered "public purpose" for the purpose of
justifying an expenditure of the government?
HELD: No. It is a general rule that the legislature is without power to appropriate public revenue
for anything but a public purpose. It is the essential character of the direct object of the
expenditure which must determine its validity as justifying a tax, and not the magnitude of the
interest to be affected nor the degree to which the general advantage of the community, and
thus the public welfare, may be ultimately benefited by their promotion. Incidental to the public
or to the state, which results from the promotion of private interest and the prosperity of private
enterprises or business, does not justify their aid by the use public money.
The test of the constitutionality of a statute requiring the use of public funds is whether the
statute is designed to promote the public interest, as opposed to the furtherance of the
advantage of individuals, although each advantage to individuals might incidentally serve the
public.

14. Punsalan vs. Municipal Board of the City of Manila G.R. No. L-4817, 26 May 1954
Fact: The municipal board of the City of Manila on July 25, 1950, imposes a municipal occupation
tax on persons exercising various professions in the city and penalizes non-payment of the tax
“by a fine of not more than two hundred pesos or by imprisonment of not more than six months,
or by both such fine and imprisonment in the discretion of the court.” Among the professions
taxed were those to which plaintiffs belong. The ordinance was enacted pursuant to paragraph
(1) of section 18 of the Revised Charter of the City of Manila (as amended by Republic Act No.
409), which empowers the Municipal Board of said city to impose a municipal occupation tax, not
to exceed P50 per annum, on persons engaged in the various professions above referred to.

Having already paid their occupation tax under section 201 of the National Internal Revenue
Code, plaintiffs, upon being required to pay the additional tax prescribed in the ordinance, paid
the same under protest and then brought the present suit for the purpose already stated. The
lower court upheld the validity of the provision of law authorizing the enactment of the ordinance
but declared the ordinance itself illegal and void on the ground that the penalty there in provided
for non-payment of the tax was not legally authorized. From this decision both parties appealed
to this Court, and the only question they have presented for our determination is whether this
ruling is correct or not, for though the decision is silent on the refund of taxes paid plaintiffs
make no assignment of error on this point.
Issue: whether double taxation of certain classes is authorized by law?
Held: Yes, the Legislature may, in its discretion, select what occupations shall be taxed, and in
the exercise of that discretion it may tax all, or it may select for taxation certain classes and leave
the others untaxed.

15. Lladoc v. Commissioner of Internal Revenue GR L-19201, 16 June 1965

Fact: Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to
Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein
petitioner, for the construction of a new Catholic Church in the locality. The total amount was
actually spent for the purpose intended. On March 3, 1958, the donor M.B. Estate, Inc., filed the
donor’s gift tax return. Under date of April 29, 1960, the respondent Commissioner of Internal
Revenue issued an assessment for donee’s gift tax against the Catholic Parish of Victorias, Negros
Occidental, of which petitioner was the priest. The tax amounted to P1,370.00 including
surcharges, interests of 1% monthly from May 15, 1958 to June 15, 1960, and the compromise
for the late filing of the return. Petitioner lodged a protest to the assessment and requested the
withdrawal thereof. The protest and the motion for reconsideration presented to the
Commissioner of Internal Revenue were denied. The petitioner appealed to the Court of Tax
Appeals on November 2, 1960. In the petition for review, the Rev. Fr. Casimiro Lladoc claimed,
among others, that at the time of the donation, he was not the parish priest in Victorias; that
there is no legal entity or juridical person known as the “Catholic Parish Priest of Victorias,” and,
therefore, he should not be liable for the donee’s gift tax. It was also asserted that the
assessment of the gift tax, even against the Roman Catholic Church, would not be valid, for such
would be a clear violation of the provisions of the Constitution.
Issue: Whether the petitioner is liable for the assessed donee’s gift tax on the donated for the
construction of the Victorias Parish Church.
Held: Yes, exempts from taxation cemeteries, churches and parsonages or convents, appurtenant
thereto, and all lands, buildings, and improvements used exclusively for religious purposes. The
exemption is only from the payment of taxes assessed on such properties enumerated, as
property taxes, as contra distinguished from excise taxes. In the present case, what the Collector
assessed was a donee’s gift tax; the assessment was not on the properties themselves. It did not
rest upon general ownership; it was an excise upon the use made of the properties, upon the
exercise of the privilege of receiving the properties (Phipps vs. Com. of Int. Rec. 91 F 2d 627).
Manifestly, gift tax is not within the exempting provisions of the section just mentioned. A gift tax
is not a property tax, but an excise tax imposed on the transfer of property by way of gift inter
vivos, the imposition of which on property used exclusively for religious purposes, does not
constitute an impairment of the Constitution. As well observed by the learned respondent Court,
the phrase “exempt from taxation,” as employed in the Constitution (supra) should not be
interpreted to mean exemption from all kinds of taxes. And there being no clear, positive or
express grant of such privilege by law, in favor of petitioner, the exemption herein must be
denied.

16. Abra Valley College vs. Aquino GR L-39086, 15 June 1988

Fact: Petitioner, filed a complaint in the court a quo to annul and declare void the “Notice of
Seizure’ and the “Notice of Sale” of its lot and building located at Bangued, Abra, for non-
payment of real estate taxes and penalties. The “Notice of Sale” was caused to be served upon
the petitioner by the respondent treasurers for the sale at public auction of said college lot and
building, which sale was held on the same date. Dr. Paterno Millare, then Municipal Mayor of
Bangued, Abra, offered the highest bid which was duly accepted. the respondent filed through
counstel a motion to dismiss the complaint. Nonetheless, the trial court disagreed because of the
use of the second floor by the Director of petitioner school for residential purposes. He thus ruled
for the government and rendered the assailed decision. Hence petitioner instead availed of the
instant petition for review on certiorari with prayer for preliminary injunction before the Supreme
Court. A
Issue: Whether the Educational Institution Properties which is not exclusively used for
educational purposes is not eligible for tax exemption.
Held: Yes, Under the 1935 Constitution, the trial court correctly arrived at the conclusion that
the school building as well as the lot where it is built, should be taxed, not because the second
floor of the same is being used by the Director and his family for residential purposes, but
because the first floor thereof is being used for commercial purposes. However, since only a
portion is used for purposes of commerce, it is only fair that half of the assessed tax be returned
to the school involved. Moreover, the exemption in favor of property used exclusively for
charitable or educational purposes is ‘not limited to property actually indispensable’ therefor but
extends to facilities which are incidental to and reasonably necessary for the accomplishment of
said purposes. But it must be stressed however, that while the court allows a more liberal and
non-restrictive interpretation of the phrase “exclusively used for educational purposes”,
reasonable emphasis has always been made that exemption extends to facilities which are
incidental to and reasonably necessary for the accomplishment of the main purposes. Otherwise
stated, the use of the school building or lot for commercial purposes is neither contemplated by
law, nor by jurisprudence, The lease of the first floor thereof to the Northern Marketing
Corporation cannot by any stretch of the imagination be considered incidental to the purpose of
education