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JESUS IS LORD CHRISTIAN SCHOOL FOUNDATION, INC. VS. MUNICIPALITY (NOW CITY) OF PASIG, METRO
MANILA, digested

Posted by Pius Morados on November 8, 2011

GR # 152230 August 9, 2005 (Constitutional Law – Eminent Domain, Expropriation, Valid and Definite Offer)

FACTS: Court of Appeals affirmed the lower court’s decision of declaring respondent municipality (now city) as having the right
to expropriate petitioner’s property for the construction of an access road. Petitioner argues that there was no valid and
definite offer made before a complaint for eminent domain was filed as the law requires (Art. 35, Rules and Regulations
Implementing the Local Government Code). Respondent contends that a letter to purchase was offered to the previous owners
and the same was not accepted.

ISSUE: Whether or not a letter to purchase is sufficient enough as a definite and valid offer to expropriate.

HELD: No. Failure to prove compliance with the mandatory requirement of a valid and definite offer will result in the dismissal
of the complaint. The purpose of the mandatory requirement to be first made to the owner is to encourage settlements and
voluntary acquisition of property needed for public purposes in order to avoid the expense and delay of a court of action.

G.R. No. 165828 NPC v. HEIRS OF SANGKAY 656 SCRA 60

NPC v. HEIRS OF SANGKAY

656 SCRA 60

G.R. No. 165828

August 24, 2011

TOPIC: Eminent Domain; Just Compensation

FACTS: National Power Corporation (NPC) undertook the Agus River Hydroelectric Power Plant Project to generate electricity
for Mindanao. It included the construction of several underground tunnels to be used in diverting the water flow from the Agus
River to the hydroelectric plants.

On 1997, Respondents sued NPC for recovery of damages of the property and a prayer for just compensation. They alleged that
the tunnel deprived them of the agricultural, commercial, industrial and residential value of their land; and that their land had
also become an unsafe place for habitation, forcing them and their workers to relocate to safer grounds.

ISSUE: Whether the Heirs of Sangkay have the right to just compensation

RULING: Just compensation is the full and fair equivalent of the property taken from its owner by the expropriator. It has the
objective to recover the value of property taken in fact by the governmental defendant, even though no formal exercise of the
power of eminent domain has been attempted by the taking agency.

The underground tunnels impose limitations on respondents’ use of the property for an indefinite period and deprive them of its
ordinary use. Hence, respondents are clearly entitled to the payment of just compensation.

Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it is liable to pay not merely an easement fee
but rather the full compensation for land. It is settled that the taking of private property for public use, to be compensable,
need not be an actual physical taking or appropriation. This is so because in this case, the nature of the easement practically
deprives the owners of its normal beneficial use. Compensable taking includes destruction, restriction, diminution, or
interruption of the rights of ownership or of the common and necessary use and enjoyment of the property in a lawful manner,
lessening or destroying its value

Fortich vs Corona 398 SCRA 685 Posted on December 6, 2012

100 SCAD 781 298 SCRA 685 1998

The Office of the President modified its decision which had already become final and executory.

FACTS:

On November 7, 1997, the Office of the President (OP) issued a “win-win” Resolution which reopened case O.P. Case No. 96-C-
6424. The said Resolution substantially modified its March 29, 1996 Decision. The OP had long declared the said Decision final
& executory after the DAR’s Motion for Reconsideration was denied for having been filed beyond the 15-day reglementary
period.

The SC then struck down as void the OP’s act, it being in gross disregard of the rules & basic legal precept that accord finality
to administrative determinations.

The respondents contended in their instant motion that the “win-win” Resolution of November 7, 1997 is not void since “it seeks
to correct an erroneous ruling,” hence, the “March 29, 1996 decision…could not as yet become final and executory as to be
beyond modification”. They further explained that the DAR’s failure to file their Motion for Reconsideration on time was
“excusable”.

ISSUE:

Was the OP’s modification of the Decision void or a valid exercise of its powers and prerogatives?
1. Whether the DAR’s late filing of the Motion for Reconsideration is excusable.
2. Whether the respondent’s have shown a justifiable reason for the relaxation of rules.
3. Whether the issue is a question of technicality.

HELD:

1.No.Sec.7 of Administrative Order No. 18, dated February 12, 1987, mandates that ‘decisions/resolutions/orders of the Office
of the President shall…become final after the lapse of 15 days from receipt of a copy therof xxx’ unless a Motion for
Reconsideration thereof is filed within such period.

The respondent’s explanation that the DAR’s office procedure ‘made it impossible…to file its Motion for Reconsideration on
time’ since the said decision had to be referred to its different departments cannot be considered a valid justification. While
there is nothing wrong with such referral, the DAR must not disregard the reglementary period fixed by law, rule or regulation.

The rules relating to reglementary period should not be made subservient to the internal office procedure of an administrative
body.

2.

No. The final & executory character of the OP Decision can no longer be disturbed or substantially modified. Res judicata has
set in and the adjudicated affair should forever be put to rest.

Procedural rules should be treated with utmost respect and due regard since they are designed to facilitate the adjudication of
cases to remedy the worsening problem of delay in the resolution of rival claims and in the administration of justice. The
Constitution guarantees that “all persons shall have a right to the speedy disposition of their cases before all judicial, quasi-
judicial and administrative bodies.”

While a litigation is not a game of technicalities, every case must be prosecuted in accordance with the prescribed procedure to
ensure an orderly & speedy administration of justice. The flexibility in the relaxation of rules was ‘never intended to forge a
bastion for erring litigants to violate the rules with impunity.’

A liberal interpretation & application of the rules of procedure can only be resorted to in proper cases and under justifiable
causes and circumstances.

3.

No. It is a question of substance & merit.

A decision/resolution/order of an administrative body, court or tribunal which is declared void on the ground that the same was
rendered Without or in Excess of Jurisdiction, or with Grave Abuse of Discretion, is a mere technicality of law or procedure.
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Jurisdiction is an essential and mandatory requirement before a case or controversy can be acted on. Moreover, an act is still
invalid if done in excess of jurisdiction or with grave abuse of discretion.

In the instant case, several fatal violations of law were committed. These grave breaches of law, rules & settled jurisprudence
are clearly substantial, not of technical nature.

When the March 29, 1996 OP Decision was declared final and executory, vested rights were acquired by the petitioners, and all
others who should be benefited by the said Decision.

In the words of the learned Justice Artemio V. Panganiban in Videogram Regulatory Board vs CA, et al., “just as a losing party
has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality
of the resolution of his/her case.”

ROXAS VS. CA

G.R. No. 118436March 21, 1997

FACTS: This is a petition for review of the CA decision dated December 8, 1994 alleging reversible error committed by
respondent appellate court when it affirmed the decision of the RTC of Cavite.

On July 1990, herein private respondent Maguesun Management and Development Corporation (Maguesun Corporation) filed an
Application for Registration of two parcels of unregistered land located in Tagaytay City. In support of its application for
registration, Maguesun Corporation presented a Deed of Absolute Sale dated June 10, 1990, executed by Zenaida Melliza as
vendor and indicating the purchase price to be P170,000.00. Zenaida Melliza in turn, bought the property from the original
petitioner herein (because she was substituted by her heirs in the proceedings upon her death), Trinidad de Leon vda. de Roxas
for P200,000.00 two and a half months earlier, as evidenced by a Deed of Sale and an Affidavit of Self-Adjudication.

Notices of the initial hearing were sent by the Land Registration Authority (LRA) on the basis of Maguesun Corporation’s
application for registration enumerating adjoining owners, occupants or adverse claimants; Since Trinidad de Leon vda. de Roxas
was not named therein, she was not sent a notice of the proceedings. After an Order of general default was issued, the trial
court proceeded to hear the land registration case. Eventually, on February 1991 the RTC granted Maguesun Corporation’s
application for registration.

It was only when the caretaker of the property was being asked to vacate the land that petitioner Trinidad de Leon Vda. de
Roxas learned of its sale and the registration of the lots in Maguesun Corporation’s name.

Hence, on April 1991, petitioner filed a petition for review before the RTC to set aside the decree of registration on the ground
that Maguesun Corporation committed actual fraud. She alleged that the lots were among the properties she inherited from her
husband, former President Manuel A. Roxas and that her family had been in open, continuous, adverse and uninterrupted
possession of the subject property in the concept of owner for more than thirty years before they applied for its registration
under the Torrens System of land titling (in which no decision has been rendered thereon). Petitioner further denied that she
sold the lots to Zenaida Melliza whom she had never met before and that her signature was forged in both the Deed of Sale and
the Affidavit of Self-Adjudication. She also claimed that Maguesun Corporation intentionally omitted her name as an adverse
claimant, occupant or adjoining owner in the application for registration submitted to the LRA such that the latter could not
send her a Notice of Initial Hearing.

A document examiner from the PNP concluded that there was no forgery. Upon petitioner’s motion, the signatures were re-
examined by another expert from NBI. The latter testified that the signatures on the questioned and sample documents were,
however, not written by the same person.

Despite the foregoing testimonies and pronouncements, the trial court dismissed the petition for review of decree of
registration. Placing greater weight on the findings and testimony of the PNP document examiner, it concluded that the
questioned documents were not forged and if they were, it was Zenaida Melliza, and not Maguesun Corporation, who was
responsible. Accordingly, Maguesun Corporation did not commit actual fraud.

In a decision dated December 8, 1994, respondent court denied the petition for review and affirmed the findings of the trial
court. The CA held that petitioner failed to and demonstrate that there was actual or extrinsic fraud, not merely constructive
or intrinsic fraud, a prerequisite for purposes of annuling a judgment or reviewing a decree of registration.
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Hence, the instant petition for review where it is alleged that the CA erred in ruling that Maguesun Corporation did not commit
actual fraud warranting the setting aside of the registration decree and in resolving the appeal on the basis of Maguesun
Corporation’s good faith. Petitioners pray that the registration of the subject lots in the name of Maguesun Corporation be
cancelled, that said property be adjudicated in favor of petitioners and that respondent corporation pay for damages.

ISSUE: WON private respondent Maguesun Corporation committed actual fraud (signature forgery) in obtaining a decree of
registration over the two parcels of land, actual fraud being the only ground to reopen or review a decree of registration.

HELD: WHEREFORE, the instant petition is hereby GRANTED. The Decision of the CA is hereby REVERSED AND SET AS

1. The Court here finds that respondent Maguesun Corporation committed actual fraud in obtaining the decree of registration
sought to be reviewed by petitioner. A close scrutiny of the evidence on record leads the Court to the irresistible conclusion
that forgery was indeed attendant in the case at bar. Although there is no proof of respondent Maguesun Corporation’s direct
participation in the execution and preparation of the forged instruments, there are sufficient indicia which proves that
Maguesun Corporation is not the “innocent purchaser for value” who merits the protection of the law. Even to a layman’s eye, the
documents, as well as the enlarged photographic exhibit of the signatures, reveal forgery. Additionally, Zenaida Melliza’s non-
appearance raises doubt as to her existence

Petitioner and her family also own several other pieces of property, some of which are leased out as restaurants. This is an
indication that petitioner is not unaware of the value of her properties. Hence, it is unlikely that indication that she would sell
over 13,000 sqm of prime property in Tagaytay City to a stranger for a measly P200,000.00. Would an ordinary person sell more
than 13,000 sqm of prime property for P170,000.00 when it was earlier purchased for P200,000.00?

3. Petitioner Vda. de Roxas contended that Maguesun Corporation intentionally omitted their name, or that of the Roxas family,
as having a claim to or as an occupant of the subject property.

The names in full and addresses, as far as known to the undersigned, of the owners of all adjoining properties; of the persons
mentioned in paragraphs 3 and 5 (mortgagors, encumbrancers, and occupants) and of the person shown on the plan (original
application submitted in LRC No) as claimants are as follows:

Hilario Luna, Jose Gil, Leon Luna, Provincial Road

all at Tagaytay City (no house No.) 30

The highlighted words are typed in with a different typewriter, with the first five letters of the word “provincial” typed over
correction fluid. Maguesun Corporation, however, annexed a differently-worded application for the petition to review case. In
the copy submitted to the trial court, the answer to the same number is as follows:

Hilario Luna, Jose Gil, Leon Luna, Roxas.

The discrepancy which is unexplained appears intentional. If the word “Roxas” were indeed erased and replaced with “Provincial
Road all at Tagaytay City (no house No.)” in the original application submitted in LRC No. TG-373 BUT the copy with the word
“Roxas” was submitted to the trial court, it is reasonable to assume that the reason is to mislead the court into thinking that
“Roxas” was placed in the original application as an adjoining owner, encumbrancer, occupant or claimant, the same application
which formed the basis for the LRA Authority in sending out notices of initial hearing. (Section 15 of PD No. 1529 actually
requires the applicant for registration to state the full names and addresses of all occupants of the land and those of adjoining
owners, if known and if not known, the extent of the search made to find them. Respondent corporation likewise failed to
comply with this requirement of law.)

Respondent corporation’s intentional concealment and representation of petitioner’s interest in the subject lots as possessor,
occupant and claimant constitutes actual fraud justifying the reopening and review of the decree of registration. Through such
misfeasance, the Roxas family was kept ignorant of the registration proceedings involving their property, thus effectively
depriving them of their day in court

The truth is that the Roxas family had been in possession of the property uninterruptedly through their caretaker, Jose
Ramirez. Respondent Maguesun Corporation also declared in number 5 of the same application that the subject land was
unoccupied when in truth and in fact, the Roxas family caretaker resided in the subject property.
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To conclude, it is quite clear that respondent corporation cannot tack its possession to that of petitioner as predecessor-in-
interest. Zenaida Melliza conveyed not title over the subject parcels of land to Maguesun Corporation as she was not the owner
thereof. Maguesun Corporation is thus not entitled to the registration decree which the trial court granted in its decision.

Petitioner has not been interrupted in her more than thirty years of open, uninterrupted, exclusive and notorious possession in
the concept of an owner over the subject lots by the irregular transaction to Zenaida Melliza. She therefore retains title
proper and sufficient for original registration over the two parcels of land in question pursuant to Section 14 of PD No. 1529.

NOTES:

1. Registration of untitled land under the Torrens System is done pursuant to PD No. 1529, the Property Registration Decree
which amended and codified laws relative to registration of property. 15 Adjudication of land in a registration (or cadastral)
case does not become final and incontrovertible until the expiration of one year after the entry of the final decree. Before
such time, the decision remains under the control and sound discretion of the court rendering the decree, which court after
hearing, may set aside the decision or decree and adjudicate the land to another party. 16 Absence, minority or other disability
of any person affected, or any proceeding in court for reversing judgments, are not considered grounds to reopen or revise said
decree. s. 17 It is further required that a petition for reopening and review of the decree of registration be filed within one
year from the date of entry of said decree, that the petitioner has a real and dominical right and the property has not yet been
transferred to an innocent purchaser.

2. Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception practiced by
means of the misrepresentation or concealment of a material fact. 19 Constructive fraud is construed as a fraud because of its
detrimental effect upon public interests and public or private confidence, even though the act is not done or committed with an
actual design to commit positive fraud or injury upon other persons.

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue
involved in the original action, or where the acts constituting the fraud were or could have been litigated therein, and is
regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it
operates upon matters pertaining not to the judgment itself but to the manner in which it is procured, so that there is not a
fair submission of the controversy. 21 Extrinsic fraud is also actual fraud, but collateral to the transaction sued upon. 22

The distinctions are significant because only actual fraud or extrinsic fraud has been accepted as grounds for a judgment to be
annulled or, as in this case, a decree of registration reopened and reviewed.

Disclosure of petitioner’s adverse interest, occupation and possession should be made at the appropriate time, i.e., at the time
of the application for registration, otherwise, the persons concerned will not be sent notices of the initial hearing and will,
therefore, miss the opportunity to present their opposition or claims.

Also, Publication of the Notice of Initial Hearing was made in the Official Gazette and in the Record Newsweekly, admittedly
not a newspaper of general circulation. While publication of the notice in the Official Gazette is sufficient to confer
jurisdiction upon the court, publication in a newspaper of general circulation remains an indispensable procedural requirement.
Couched in mandatory terms, it is a component of procedural due process and aimed at giving “as wide publicity as possible” so
that all persons having an adverse interest in the land subject of the registration proceedings may be notified thereof.
Although jurisdiction of the court is not affected, the fact that publication was not made in a newspaper of general circulation
is material and relevant in assessing the applicant’s right or title to the land.

DELA CRUZ vs. GARCIA

G.R. NO. 177728. July 31, 2009.

FACTS:

For several months in 2005, then 21-year old Jenie San Juan dela Cruz (Jenie) and then 19-year old Christian Dominique Sto.
Tomas Aquino (Dominique) lived together as husband and wife without the benefit of marriage. They resided in the house of
Dominique's parents Domingo B. Aquino and Raquel Sto. Tomas Aquino at Teresa, Rizal. On September 4, 2005, Dominique died.
After almost two months, Jenie, who continued to live with Dominique's parents, gave birth to her minor child Christian dela
Cruz "Aquino" at the Antipolo Doctors Hospital, Antipolo City. Jenie applied for registration of the child's birth, using
Dominique's surname Aquino, with the Office of the City Civil Registrar, Antipolo City, in support of which she submitted the
child's Certificate of Live Birth, Affidavit to Use the Surname of the Father (AUSF) which she had executed and signed, and
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Affidavit of Acknowledgment executed by Dominique's father Domingo Butch Aquino. Both affidavits attested, inter alia, that
during the lifetime of Dominique, he had continuously acknowledged his yet unborn child, and that his paternity had never been
questioned. Jenie attached to the AUSF a document entitled "AUTOBIOGRAPHY" which Dominique, during his lifetime, wrote in
his own handwriting.

ISSUE:

Whether or not the minor child can bear the surname of the deceased.

HELD:

Yes. It is thus the policy of the Family Code to liberalize the rule on the investigation of the paternity and filiation of children,
especially of illegitimate children. The State as parens patriae affords special protection to children from abuse, exploitation
and other conditions prejudicial to their development. In the eyes of society, a child with an unknown father bears the stigma
of dishonor. It is to petitioner minor child's best interests to allow him to bear the surname of the now deceased Dominique and
enter it in his birth certificate.

Municipality of Biñan vs. Garcia

Post under case digests, Remedial Law at Friday, February 03, 2012 Posted by Schizophrenic Mind

Facts: The expropriation suit was commenced by complaint of the Municipality of Biñan, Laguna filed in the RTC. The complaint
named as defendants the owners of eleven (11) adjacent parcels of land in Biñan The land sought to be expropriated was
intended for use as the new site of a modern public market and the acquisition was authorized by a resolution of the
Sangguniang Bayan. One of the defendants, Francisco filed a MTD. Her motion was filed pursuant to Section 3, Rule 67. Her
"motion to dismiss" was thus actually a pleading, taking the place of an answer in an ordinary civil action; it was not an ordinary
motion governed by Rule 15, or a "motion to dismiss" within the contemplation of Rule 16. Respondent Judge issued a writ of
possession in favor of the plaintiff Municipality.

Francisco filed a "Motion for Separate Trial. She alleged she had the special defense of "a constitutional defense of vested
right via a pre-existing approved Locational Clearance from the H.S.R.C. The Court granted the motion. It directed that a
separate trial be held for Francisco regarding her special defenses.

Judge issued order dismissing the complaint "as against defendant FRANCISCO," and amending the Writ of Possessions as to
"exclude therefrom and from its force and effects said defendant .. and her property ..."

The Municipality filed a MR. Francisco filed an "Ex-Parte Motion for Execution and/or Finality of Order," contending that the
Order had become "final and executory for failure of the Municipality to file a motion for reconsideration and/or appeal within
the reglementary period," i.e "fifteen (15) days counted from the notice of the final order .. appealed from.

The Municipality contended that "multiple appeals are allowed by law" in actions of eminent domain, and hence the period of
appeal is thirty (30), not fifteen (15) days;the special civil action of partition and accounting under Rule 69.

Issue: whether the special civil action of eminent domain under Rule 67 is a case "wherein multiple appeals are allowed, as
regards which 'the period of appeal shall be thirty [30] days, instead of fifteen (15) days

Held: In actions of eminent domain, as in actions for partition, since no less than two (2) appeals are allowed by law, the period
for appeal from an order of condemnation is thirty (30) days counted from notice of order and not the ordinary period of
fifteen (15) days prescribed for actions in general, conformably with the provision of Section 39 of BP129 to the effect that in
"appeals in special proceedings in accordance with Rule 109 of the Rules of Court and other cases wherein multiple appeals are
allowed, the period of appeal shall be thirty (30) days, a record of appeal being required.

The municipality's MR was therefore timely presented, well within the thirty-day period laid down by law therefor; and it was
error for the Trial Court to have ruled otherwise and to have declared that the order sought to be considered had become final
and executory.

It is claimed by the Municipality that the issuance of such a separate, final order or judgment had given rise "ipso facto to a
situation where multiple appeals became available." The Municipality is right. In an action against several defendants, the court
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may, when a several judgment is proper, render judgment against one or more of them, leaving the action to proceed against the
others. " In lieu of the original record, a record on appeal will perforce have to be prepared and transmitted to the appellate
court. More than one appeal being permitted in this case, therefore, "the period of appeal shall be thirty (30) days, a record of
appeal being required as provided by the Implementing Rules in relation to Section 39 of B.P. Blg. 129.

Brgy San Roque, Talisay Cebu v Heirs of Francisco Pastor

334 SCRA 127 – Political Law – Municipal Corporation – Eminent Domain – Expropriation – BP 129

In 1997, Brgy. San Roque of Talisay, Cebu filed for an expropriation suit before the MTC of Talisay against the heirs of Franco
Pastor. The MTC denied the suit because apparently under BP 129, MTCs do not have jurisdiction over expropriation cases as it
is the RTCs that are lodged with the power to try such cases. So Brgy. San Roque filed it before RTC Talisay but then Judge
Jose Soberano, Jr. denied the suit as he ruled that the action for eminent domain affected title to real property; hence, the
value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. The
judge also concluded that the action should have been filed before the MTC since the value of the subject property was less
than P20,000.

ISSUE: Whether or not the RTC should take cognizance of the expropriation case.

HELD: Yes. Under Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original jurisdiction over “all civil
actions in which the subject of the litigation is incapable of pecuniary estimation; . . . . .” The present action involves the
exercise of the right to eminent domain, and that such right is incapable of pecuniary estimation.

What are the two phases of expropriation cases?

The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the
propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action,
“of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use
or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of
the complaint.” An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action
and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for
thereafter as the Rules expressly state, in the proceedings before the Trial Court, “no objection to the exercise of the right of
condemnation (or the propriety thereof) shall be filed or heard.”

The second phase of the eminent domain action is concerned with the determination by the court of “the just compensation for
the property sought to be taken.” This is done by the Court with the assistance of not more than three (3) commissioners. The
order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too.
It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . .

It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its
instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the
authority of the government entity, the necessity of the expropriation, and the observance of due process. In the main, the
subject of an expropriation suit is the government’s exercise of eminent domain, a matter that is incapable of pecuniary
estimation.

THIRD DIVISION, G.R. No. 169263, September 21, 2011, CITY OF MANILA, PETITIONER, VS. MELBA TAN TE,
RESPONDENT.

The City of Manila enacted Ordinance No. 7951, an ordinance authorising the mayor to acquire by negotiation or expropriation
pieces of real property along Maria Clara and Forbes Streets where low-cost housing could be built and awarded to bona-fide
residents therein. One of those included was the property of Melba, 475-square meter property included within the 1,425 sq.
meter covered property. Melba acquired the property from one Emerlinda in 1996, and it was already occupied by several
families whose leasehold rights have already expired. Melba was able to secure a writ of execution from the MTC of Manila, but
it remained unexexcuted, as it was opposed by the city. Between the time an order of execution and a writ of demolition were
issued, the city filed an expropriation complaint against the property. The RTC dismissed the first compliant upon motion by
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Melba for failure to show that an ordinance authorised the expropriation and non-compliance with the provisions of Republic
Act 7279.

The city filed a second expropriation complaint, this time armed with Ordinance No. 7951, and alleging that pursuant thereto, it
had already offered to buy the property from Melba, which the latter failed to retrieve from the post office despite notice.
The city was thereby compelled to file the complaint, after depositing in trust with the Land Bank of the Philippines
P1,000,000.00 in cash, representing the just compensation required by law.

Melba, instead of filing, filed a motion to dismiss, and raised the following grounds: Ordinance No. 7951 was an invalid ordinance
because it violated a rule against taking private property without just compensation; that petitioner did not comply with the
requirements of Sections 9 and 10 of R.A. No. 7279; and that she qualified as a small property owner and, hence, exempt from
the operation of R.A. No. 7279, the subject lot being the only piece of realty that she owned.

The city then moved to be allowed to enter the proper, but the RTC dismissed the complaint filed by the city in this wise: First,
the trial court held that while petitioner had deposited with the bank the alleged P1M cash in trust for respondent, petitioner
nevertheless did not submit any certification from the City Treasurer’s Office of the amount needed to justly compensate
respondent for her property. Second, it emphasized that the provisions of Sections 9 and 10 of R.A. No. 7279 are mandatory in
character, yet petitioner had failed to show that it exacted compliance with them prior to the commencement of this suit.
Lastly, it conceded that respondent had no other real property except the subject lot which, considering its total area, should
well be considered a small property exempted by law from expropriation.

On appeal to the Court of Appeals by the city, the appellate court denied the appeal, hence the city of Manila elevated its case
to the Supreme Court. In its petition, the city avers that the dismissal denied it the opportunity to show compliance with
Sections 9 and 10 of RA 7279; Melba had other properties aside from the subject property. Whether or not it had complied
with the law is a matter best treated in a full-blown trial rather than in a motion to dismiss. Melba on the other hand countered
that Ordinance 7951 is an invalid ordinance; expropriation for socialized housing must abide by the priorities in land acquisition
and the available modes of land acquisition laid out in the law, and that expropriation of privately-owned lands avails only as the
last resort. She also invokes the exemptions provided in the law. She professes herself to be a small property owner under
Section 3 (q), and claims that the subject property is the only piece of land she owns where she, as of yet, has not been able to
build her own home because it is still detained by illegal occupants whom she had already successfully battled with in the
ejectment court. Replying, the city averred that by virtue of its power of eminent domain included in its charter, it is not bound
by the provisions of Republic Act 7279.

The Supreme Court:

The public use requirement for a valid exercise of the power of eminent domain is a flexible and evolving concept influenced by
changing conditions.

The taking to be valid must be for public use. There was a time where it was felt that a literal meaning should be attached to
such a requirement. Whatever project is undertaken must be for the public to enjoy, as in the case of streets or parks.
Otherwise, expropriation is not allowable. It is not anymore. As long as the purpose of the taking is public, then the power of
eminent domain comes into play. x x x The constitution in at least two cases, to remove any doubt, determines what is public use.
One is the expropriation of lands to be divided into small lots for resale at cost to individuals. The other is in the transfer,
through the exercise of this power, of utilities and other enterprise to the government. It is accurate to state then that at
present whatever may be beneficially employed for the general welfare satisfies the requirement of public use.

The term “public use” has acquired a more comprehensive coverage. To the literal import of the term signifying strict use or
employment by the public has been added the broader notion of indirect public benefit or advantage. x x x

The restrictive view of public use may be appropriate for a nation which circumscribes the scope of government activities and
public concerns and which possesses big and correctly located public lands that obviate the need to take private property for
public purposes. Neither circumstance applies to the Philippines. We have never been a laissez-faire state. And the necessities
which impel the exertion of sovereign power are all too often found in areas of scarce public land or limited government
resources.
9

Specifically, urban renewal or development and the construction of low-cost housing are recognized as a public purpose, not only
because of the expanded concept of public use but also because of specific provisions in the Constitution. x x x The 1987
Constitution [provides]:

The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free
the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of
living and an improved quality of life for all. (Article II, Section 9)

The State shall, by law and for the common good, undertake, in cooperation with the private sector, a continuing program for
urban land reform and housing which will make available at affordable cost decent housing and basic services to underprivileged
and homeless citizens in urban centers and resettlement areas. x xx In the implementation of such program the State shall
respect the rights of small property owners. (Article XIII, Section 9)

Housing is a basic human need. Shortage in housing is a matter of state concern since it directly and significantly affects public
health, safety, the environment and in sum, the general welfare. The public character of housing measures does not change
because units in housing projects cannot be occupied by all but only by those who satisfy prescribed qualifications. A beginning
has to be made, for it is not possible to provide housing for all who need it, all at once.

Population growth, the migration to urban areas and the mushrooming of crowded makeshift dwellings is a worldwide
development particularly in developing countries. So basic and urgent are housing problems that the United Nations General
Assembly proclaimed 1987 as the “International Year of Shelter for the Homeless” “to focus the attention of the international
community on those problems.” The General Assembly is seriously concerned that, despite the efforts of Governments at the
national and local levels and of international organizations, the driving conditions of the majority of the people in slums and
squatter areas and rural settlements, especially in developing countries, continue to deteriorate in both relative and absolute
terms.” [G.A. Res. 37/221, Yearbook of the United Nations 1982, Vol. 36, p. 1043-4]

In light of the foregoing, the Court is satisfied that “socialized housing” falls within the confines of “public use.”

Congress passed R.A. No. 7279, to provide a comprehensive and continuing urban development and housing program as well as
access to land and housing by the underprivileged and homeless citizens; uplift the conditions of the underprivileged and
homeless citizens in urban areas by making available decent housing at affordable cost; optimize the use and productivity of
land and urban resources; reduce urban dysfunctions which affect public health, safety and ecology; and improve the capability
of local governments in undertaking urban development and housing programs and projects, among others. Accordingly, all city
and municipal governments are mandated to inventory all lands and improvements within their respective locality and identify
lands which may be utilized for socialized housing and as resettlement sites for acquisition and disposition to qualified
beneficiaries. Section 10 thereof authorizes local government units to exercise the power of eminent domain to carry out the
objectives of the law, but subject to the conditions stated therein and in Section 9.”

THE CITY OF ILOILO, Represented by HON. JERRY P. TREÑAS, City Mayor, petitioner, vs.

HON. JUDGE EMILIO LEGASPI, Presiding Judge, RTC, Iloilo City, Branch 22, and HEIRS OF MANUELA YUSAY,
Represented by SYLVIA YUSAY DEL ROSARIO and ENRIQUE YUSAY, JR.,respondents.

G.R. No. 154614 November 25, 2004

FACTS:

The Sangguniang Panlungsod of the City of Iloilo on March 7, 2001 enacted regulation ordinance granting umbrella authority to
then Mayor Mansueto A. Malabor to institute expropriation proceedings on Lot No. 935, registered in the name of Manuela
Yusay, located at barangay Sto. Niño Norte, Arevalo, Iloilo City.

On March 14, 2001, Mayor Malabor wrote Mrs. Sylvia Yusay del Rosario, administration of the estate, making formal offer to
purchase the property for the purpose of converting the same as an on-site relocation for the poor and landless resident of the
city. With apparent refusal to sell the property, the city represented by Mayor Jerry P. Treñas filed an expropriation case
based on the Power of State on Eminent Domain. Upon the strict compliance to the governing rules on expropriation, the city of
Iloilo argued that it is entitled to an immediate issuance of a writ of possession.
10

ISSUES:

1. When does a court order become final and executory?

2. What is the legal basis of the Local Government Unit to exercise power of eminent domain?

3. What are the requisites in issuance of Writ of Possession?

RULING:

A. Time-honored and of constant observance is the principle that no order dictated in open court had no juridical existence
before it is set in writing, signed, promulgated and served on the parties. Since the order orally pronounced in court had no
juridical existence yet, the period within which to file a motion for reconsideration cannot be reckoned therefrom, but from
the time the same was received in writing. Petitioner had fifteen (15) days from its receipt of the written order within which to
file a motion for reconsideration.

B. Petitioner has the irrefutable right to exercise its power of eminent domain. It being a local government unit, the basis for
its exercise is granted under Section 19 of Rep. Act No. 7160, to wit:

Sec. 19 Eminent Domain. - A local government unit may, through its chief executive and acting pursuant to an ordinance,
exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws.

C. For a writ of possession to issue, only two requirements are required: the sufficiency in form and substance of the complaint
and the required provisional deposit. Section 19 of Rep. Act No. 7160 provides that the local government unit may take
immediate possession of the property upon the filing of the expropriation proceedings and upon making a deposit of at least
fifteen percent (15%) of the fair market value of the property based on its current tax declaration. As long as the
expropriation proceedings have been commenced and the deposit has been made, the local government unit cannot be barred
from praying for the issuance of a writ of possession.

Petition is hereby GRANTED.

De La Paz Masikip vs City of Pasig GR 136349 (Jan 23, 2006)

G.R. No. 136349

January 23, 2006

FACTS

Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521 square meters located at
Pag-Asa, Caniogan, Pasig City, Metro Manila. The then Municipality of Pasig, now City of Pasig, respondent, notified petitioner of
its intention to expropriate a 1,500 square meter portion of her property to be used for the sports development and
recreational activities of the residents of Barangay Caniogan. This was pursuant to Ordinance No. 42, Series of 1993 enacted by
the then Sangguniang Bayan of Pasig.

Again, respondent wrote another letter to petitioner, but this time the purpose was allegedly in line with the program of the
Municipal Government to provide land opportunities to deserving poor sectors of our community. Petitioner sent a reply to
respondent stating that the intended expropriation of her property is unconstitutional, invalid, and oppressive, as the area of
her lot is neither sufficient nor suitable to provide land opportunities to deserving poor sectors of our community.

Respondent filed with the trial court a complaint for expropriation and petitioner filed a Motion to Dismiss the complaint
alleging that plaintiff has no cause of action for the exercise of the power of eminent domain considering that: (1) there is no
genuine necessity for the taking of the property sought to be expropriated; and (2) plaintiff has arbitrarily and capriciously
chosen the property sought to be expropriated. The trial court issued an Order denying the Motion to Dismiss, on the ground
that there is a genuine necessity to expropriate the property for the sports and recreational activities of the residents of
Pasig. The Court of Appeals affirmed the decision of the trial court. Hence, this petition.

ISSUE:
11

Whether or not there is a genuine necessity for the taking of the property of petitioner.

HELD:

The Supreme Court held that respondent City of Pasig has failed to establish that there is a genuine necessity to expropriate
petitioner’s property. The records show that the Certification issued by the Caniogan Barangay Council the basis for the
passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended beneficiary is the Melendres
Compound Homeowners Association, a private, nonprofit organization, not the residents of Caniogan. It can be gleaned that the
members of the said Association are desirous of having their own private playground and recreational facility. Petitioner’s lot is
the nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The necessity has not been
shown, especially considering that there exists an alternative facility for sports development and community recreation in the
area, which is the Rainforest Park, available to all residents of Pasig City, including those of Caniogan. Therefore, the petition
for review was Granted.

CITY OF MANILA VS. CHINESE COMMUNITY [40 Phil 349; No. 14355; 31 Oct 1919]

Saturday, January 31, 2009 Posted by Coffeeholic Writes

Labels: Case Digests, Political Law

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.

PERCIVAL MODAY vs COURT OF APPEALS

Posted on July 25, 2013 by winnieclaire

Standard

[G.R. No. 107916. February 20, 1997.]

FACTS:

• On July 23, 1989, the Sangguniang Bayan of the Municipality of Bunawan in Agusan del Sur passed Resolution No. 43-
89,

“Authorizing the Municipal Mayor to Initiate the Petition for Expropriation of a One (1) Hectare Portion of Lot No. 6138-Pls-4
Along the National Highway Owned by Percival Moday for the Site of Bunawan Farmers Center and Other Government Sports
Facilities.

• In due time, Resolution No. 43-89 was approved by then Municipal Mayor Anuncio C. Bustillo and transmitted to the
Sangguniang Panlalawigan for its approval
12

• Sangguniang Panlalawigan disapproved said Resolution and returned it with the comment that “expropriation is
unnecessary considering that there are still available lots in Bunawan for the establishment of the government center.”

• The Municipality of Bunawan, herein public respondent, subsequently filed a Petition for Eminent Domain against
petitioner Percival Moday before the RTC

• , public respondent municipality filed a Motion to Take or Enter Upon the Possession of Subject Matter of This Case
stating that it had already deposited with the municipal treasurer the necessary amount in accordance with Section 2, Rule 67
of the Revised Rules of Court and that it would be in the government’s best interest for public respondent to be allowed to take
possession of the property

• the Regional Trial Court granted respondent municipality’s motion to take possession of the land

o that the Sangguniang Panlalawigan’s failure to declare the resolution invalid leaves it effective.

o that the duty of the Sangguniang Panlalawigan is merely to review the ordinances and resolutions passed by the
Sangguniang Bayan under the old LGC

o that the exercise of eminent domain is not one of the two acts enumerated in Section 19 thereof requiring the approval
of the Sangguniang Panlalawigan

CA upheld the trial court. Meanwhile, the Municipality of Bunawan had erected three buildings on the subject property.

ISSUE: whether a municipality may expropriate private property by virtue of a municipal resolution which was disapproved by
the Sangguniang Panlalawigan.

HELD: YES.

Eminent domain, the power which the Municipality of Bunawan exercised in the instant case, is a fundamental State power that
is inseparable from sovereignty. It is government’s right to appropriate, in the nature of a compulsory sale to the State, private
property for public use or purpose. Inherently possessed by the national legislature the power of eminent domain may be validly
delegated to local governments, other public entities and public utilities. For the taking of private property by the government
to be valid, the taking must be for public use and there must be just compensation

The Municipality of Bunawan’s power to exercise the right of eminent domain is not disputed as it is expressly provided for in
Batas Pambansa Blg. 337, the Local Government Code 18 in force at the time expropriation proceedings were initiated. Section 9
of said law states:

“Section 9.Eminent Domain. — A local government unit may, through its head and acting pursuant to a resolution of its
sanggunian, exercise the right of eminent domain and institute condemnation proceedings for public use or purpose.”

POLITICAL LAW; LOCAL GOVERNMENT CODE (B.P. 337); POWER OF THE SANGGUNIANG PANLALAWIGAN TO REVIEW
ORDINANCES, RESOLUTIONS AND EXECUTIVE ORDERS PROMULGATED BY THE MUNICIPAL MAYOR; DECLARATION OF
INVALIDITY MUST BE ON THE SOLE GROUND THAT IT IS BEYOND THE POWER OF THE SANGGUNIAN BAYAN OR
MAYOR TO ISSUE THE RESOLUTION, ORDINANCE OR ORDER UNDER REVIEW. — The Sangguniang Panlalawigan’s
disapproval of Municipal Resolution No. 43-89 is an infirm action which does not render said resolution null and void. The law, as
expressed in Section 153 of B.P. BLG. 337, grants the Sangguniang Panlalawigan the power to declare a municipal resolution
invalid on the sole ground that it is beyond the power of the Sangguniang Bayan or the Mayor to issue. Although pertaining to a
similar provision of law but different factual milieu then obtaining, the Court’s pronouncements in Velazco vs. Blas, where we
cited significant early jurisprudence, are applicable to the case at bar. “The only ground upon which a provincial board may
declare any municipal resolution, ordinance, or order invalid is when such resolution, ordinance, or order is ‘beyond the powers
conferred upon the council or president making the same.’ Absolutely no other ground is recognized by the law. A strictly legal
question is before the provincial board in its consideration of a municipal resolution, ordinance, or order. The provincial (board’s)
disapproval of any resolution, ordinance, or order must be premised specifically upon the fact that such resolution, ordinance, or
order is outside the scope of the legal powers conferred by law. If a provincial board passes these limits, it usurps the
legislative functions of the municipal council or president. Such has been the consistent course of executive authority.” Thus,
13

the Sangguniang Panlalawigan was without the authority to disapprove Municipal Resolution No. 43-89 for the Municipality of
Bunawan clearly has the power to exercise the right of eminent domain and its Sangguniang Bayan the capacity to promulgate
said resolution, pursuant to the earlier-quoted Section 9 of B.P. Blg. 337. Perforce, it follows that Resolution No. 43-89 is valid
and binding and could be used as lawful authority to petition for the condemnation of petitioners’ property.

NAPOCOR vs. CA

Facts: On Nov. 4, 1967, a typhoon called ¨Welming¨ hit Central Luzon passing through NAPOCOR´s Angat Hydro-Electric
Project Dam in Bulacan. The water level had reach the danger height of 212 meters above sea level and abruptly opened the
spillway gates. This action by NAPOCOR had an extraordinary large volume of water rushed and hit the installations and
construction works of ECI (Engineering Construction, Inc.) a contractor of NAWASA for its tunnel in Bulacan. The negligent
manner of opening the spillway gates by NAPOCOR had washed away, lost or destroyed ECI´s facilities and structures.
NAPOCOR alleged that the destruction and loss was due to force majeure.

Issue: WON NAPOCOR is liable for the destruction.

Ruling: Petition Dismissed

Ratio: NAPOCOR cannot escape liability because it´s negligence was the proximate cause of the loss and damage even though
the typhoon was an act of God. It was undoubtly negligent when it only opened the spillway gates at the height of typhoon
¨Welming¨ when it knew very well that it was safer to open it gradually. To be exempt from liability, NAPOCOR must be free
from any previous negligence.

City Government of Quezon vs. Judge Ericta GR No. L-34915 June 24, 1983

Facts:

An ordinance was promulgated in Quezon city which approved the the regulation ofestablishment of private cemeteries in the
said city. According to the ordinance, 6% of the total area of the private memorial park shall be set aside for charity burial of
deceased persons who are paupers and have been residents of QC. Himlayang Pilipino, a private memorial park, contends that
the taking or confiscation of property restricts the use of property such that it cannot be used for any reasonable purpose and
deprives the owner of all beneficial use of his property. It also contends that the taking is not a valid exercise of police power,
since the properties taken in the exercise of police power are destroyed and not for the benefit of the public.

Issue:

Whether or not the ordinance made by Quezon City is a valid taking of private property

Ruling:

No, the ordinance made by Quezon City is not a valid way of taking private property. The ordinace is actually a taking without
compensation of a certain area from a private cemetery to benefit paupers who are charges of the municipal corporation.
Instead of building or maintaing a public cemeteries. State's exercise of the power of expropriation requires payment of just
compensation. Passing the ordinance without benefiting the owner of the property with just compensation or due process, would
amount to unjust taking of a real property. Since the property that is needed to be taken will be used for the public's benefit,
then the power of the state to expropriate will come forward and not the police power of the state.

G.R. No. 103125, May 17, 1993

Province of Camarines Sur

vs Court of Appeals

Facts:

This is an appeal for certiorari on the decision on the issue on whether the expropriation of agricultural lands by LGU is subject
to prior approval of the DAR.
14

December 1988, Sangguniang Panlalawigan of CamSur authorized the provincial governor to purchase or expropriate property
contiguous to the provincial capitol site in order to establish a pilot farm for non-food and non-traditional agricultural crops and
a housing project for provincial government employees.

Pursuant to the resolution, Gov. Villafuerte filed two separate cases for expropriation against Ernesto San Joaquin and Efren
San Joaquin. Upon motion for the issuance of writ or possession, San Joaquins failed to appear at the hearing.

San Joaquins later moved to dismiss the complaints on the ground of inadequacy of the price offered for their property. The
court denied the motion to dismiss and authorized the province to take possession of the properties.

San Joaquins filed for motion for relief, but denied as well. In their petition. Asked by the CA, Solicitor General stated that
there is no need for the approval of the president for the province to expropriate properties, however, the approval of the DAR
is needed to convert the property from agricultural to non-agricultural (housing purpose).

CA set aside the decision of the trial court suspending the possession and expropriation of the property until th province has
acquired the approval of DAR. Hence, this petition.

Ruling:

The rules on conversion of agricultural lands found in Section 4 (k) and 5 (1) of Executive Order No. 129-A, Series of 1987,
cannot be the source of the authority of the Department of Agrarian Reform to determine the suitability of a parcel of
agricultural land for the purpose to which it would be devoted by the expropriating authority. While those rules vest on the
Department of Agrarian Reform the exclusive authority to approve or disapprove conversions of agricultural lands for
residential, commercial or industrial uses, such authority is limited to the applications for reclassification submitted by the land
owners or tenant beneficiaries.

To sustain the Court of Appeals would mean that the local government units can no longer expropriate agricultural lands needed
for the construction of roads, bridges, schools, hospitals, etc, without first applying for conversion of the use of the lands with
the Department of Agrarian Reform, because all of these projects would naturally involve a change in the land use. In effect, it
would then be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose or public use.

Ordinarily, it is the legislative branch of the local government unit that shall determine whether the use of the property sought
to be expropriated shall be public, the same being an expression of legislative policy. The courts defer to such legislative
determination and will intervene only when a particular undertaking has no real or substantial relation to the public use.

REYES VS CA (320 SCRA 486)

Reyes vs Court of Appeals

320 SCRA 486 [GR No. 118233 December 10, 1999]

Facts: The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances – 87, 91, 95, 100 and 101. On May
21, 1993, petitioners filed an appeal with the Department of Justice assailing the constitutionality of these tax ordinances
allegedly because they were promulgated without previous public hearings thereby constituting deprivation of property without
due process of law. However the same was dismissed.

Issue: Whether or not the assailed ordinances are valid.

Held: Yes. A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective
way or instrument to raise needed revenues to finance and support the myriad activities of the local government units for
delivery of basic services essential to the promotion of general welfare and enhancement of peace, progress and prosperity of
the people. Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason
that protest over tax ordinance are required to be done within certain time frames. In the instant case, it is our view that the
failure of petitioners to appeal to the secretary of justice within 30 days as required by section 187 of Republic Act No. 7160
is fatal to their cause.
15

Petitioners have not proved in the case before us that the Sangguniang Bayan of San Juan failed to conduct the required public
hearings before the enactment of Ordinances 87, 95, 91, 100, and 101. Although the Sanggunian had the control of records or
better means of proof regarding the facts alleged, petitioners are not relieved from the burden of proving their averments.
Proof that public hearings were not held falls on the petitioner’s shoulders. For failing to discharge that burden, their petition
was properly dismissed.

For the purpose of securing certainty where doubt would be intolerable, it is a general rule that the regularity of the enactment
of an officially promulgated statute or ordinance may not be impeached by parol evidence or oral testimony either of individual
officers and members, or of strangers who may be interested in nullifying legislative action. This rules supplements the
presumption in favor of the regularity of official conduct which we have upheld repeatedly, absent a clear showing to the
contrary.

CITY OF MANILA vs. COCA-COLA BOTTLERS PHILIPPINES, INC.- CTA, Double Taxation

FACTS:

Respondent paid the local business tax only as a manufacturers as it was expressly exempted from the business tax under a
different section and which applied to businesses subject to excise, VAT or percentage tax under the Tax Code. The City of
Manila subsequently amended the ordinance by deleting the provision exempting businesses under the latter section if they have
already paid taxes under a different section in the ordinance. This amending ordinance was later declared by the Supreme Court
null and void. Respondent then filed a protest on the ground of double taxation. RTC decided in favor of Respondent and the
decision was received by Petitioner on April 20, 2007. On May 4, 2007, Petitioner filed with the CTA a Motion for Extension of
Time to File Petition for Review asking for a 15-day extension or until May 20, 2007 within which to file its Petition. A second
Motion for Extension was filed on May 18, 2007, this time asking for a 10-day extension to file the Petition. Petitioner finally
filed the Petition on May 30, 2007 even if the CTA had earlier issued a resolution dismissing the case for failure to timely file
the Petition.

ISSUES:

(1) Has Petitioner’s the right to appeal with the CTA lapsed?

(2) Does the enforcement of the latter section of the tax ordinance constitute double taxation?

HELD:

(1) NO. Petitioner complied with the reglementary period for filing the petition. From April 20, 2007, Petitioner had 30 days, or
until May 20, 2007, within which to file their Petition for Review with the CTA. The Motion for Extension filed by the
petitioners on May 18, 2007, prior to the lapse of the 30-day period on 20 May 2007, in which they prayed for another
extended period of 10 days, or until 30 May 2007, to file their Petition for Review was, in reality, only the first Motion for
Extension of petitioners. Thus, when Petitioner filed their Petition via registered mail their Petition for Review on 30 May
2007, they were able to comply with the period for filing such a petition.

(2) YES. There is indeed double taxation if respondent is subjected to the taxes under both Sections 14 and 21 of the tax
ordinance since these are being imposed: (1) on the same subject matter — the privilege of doing business in the City of Manila;
(2) for the same purpose — to make persons conducting business within the City of Manila contribute to city revenues; (3) by
the same taxing authority — petitioner City of Manila; (4) within the same taxing jurisdiction — within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods — per calendar year; and (6) of the same kind or character —
a local business tax imposed on gross sales or receipts of the business.

Banking Corp. v. CA

G.R. No. 125508 July 19, 2000

VITUG, J.

Lessons Applicable: Capital asset, capital loss, inventory depends on the nature of the business

Laws Applicable:
16

FACTS:

Petitioner China Bank made a 53% equity investment in First CBC Capital (Asia) Ltd., a Hongkong Subsidiary of P 16,227, 851.80

1906: with the approval of the Bangko Sentral, it wrote of as worthless investment for being insolvent in its 1987 Income Tax
Return treated as bad debts o ordinary loss deductible.

CIR contends it should be capital loss.

CTA and CA on Petition for Review on Certiorari: upheld CIR contention

ISSUE: W/N Capital loss (NOT Ordinary Loss)

HELD: Yes. Petition is DENIED

Equity investment is a capital asset resulting in a capital gain or a capital loss. A capital asset is defined negatively in Section
33(1) of the NIRC

(1) Capital assets. - The term 'capital assets' means property held by the taxpayer (whether or not connected with his trade or
business), but does not include:

stock in trade of the taxpayer; or

other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the
taxable year; or

property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; or

property used in the trade or business, of a character which is subject to the allowance for depreciation provided in subsection
(f) of section twenty-nine; or

real property used in the trade or business of the taxpayer

Thus, shares of stock; like the other securities defined in Section 20(t)[4] of the NIRC, would be ordinary assets only to a
dealer in securities or a person engaged in the purchase and sale of, or an active trader (for his own account) in, securities.

Section 20(u) of the NIRC defines a dealer in securities thus" (u) The term 'dealer in securities' means a merchant of stocks or
securities, whether an individual, partnership or corporation, with an established place of business, regularly engaged in the
purchase of securities and their resale to customers; that is, one who as a merchant buys securities and sells them to
customers with a view to the gains and profits that may be derived therefrom."

In the hands, however, of another who holds the shares of stock by way of an investment, the shares to him would be capital
assets. When the shares held by such investor become worthless, the loss is deemed to be a loss from the sale or exchange of
capital assets.

Loss sustained by the holder of the securities, which are capital assets (to him), is to be treated as a capital loss as if incurred
from a sale or exchange transaction. A capital gain or a capital loss normally requires the concurrence of two conditions for it to
result: (1) There is a sale or exchange; and (2) the thing sold or exchanged is a capital asset. When securities become worthless,
there is strictly no sale or exchange but the law deems the loss anyway to be "a loss from the sale or exchange of capital assets

Capital losses are allowed to be deducted only to the extent of capital gains, i.e., gains derived from the sale or exchange of
capital assets, and not from any other income of the taxpayer.

Yamane vs BA Lepanto

In 1998, BA Lepanto Condominium Corporation (Lepanto) received a tax assessment in the amount of P1.6 million from Luz
Yamane, the City Treasurer of Makati, for business taxes. Lepanto protested the assessment as it averred that Lepanto, as a
corporation, is not organized for profit; that it merely exists for the maintenance of the condominium. Yamane denied the
protest. Lepanto then appealed the denial to the RTC of Makati. RTC Makati affirmed the decision of Yamane. Lepanto then
filed a petition for review under Rule 42 with the Court of Appeals. The Court of Appeals reversed the RTC.
17

Yamane now filed a petition for review under Rule 45 with the Supreme Court. Yamane avers that a.) Lepanto is liable for local
taxation because its act of maintaining the condominium is an activity for profit because the end result of such activity is the
betterment of the market value of the condominium which makes it easier to sell it; that Lepanto is earning profit from fees
collected from condominium unit owners; and that b.) Lepanto’s petition for review of the decision of the RTC to the CA is
erroneous because when the RTC decided on the appeal brought to it by Lepanto, the RTC was exercising its original jurisdiction
and not its appellate jurisdiction; that as such, what Lepanto should have done is to file an ordinary appeal under Rule 41.

ISSUE: Whether or not a RTC deciding an appeal from the decision of a city treasurer on tax protests is exercising original
jurisdiction. Whether or not a condominium corporation organized solely for the maintenance of a condominium is liable for local
taxation.

HELD:

1. Yes. Although the LGC (Section 195) provides that the remedy of the taxpayer whose protest is denied by the local
treasurer is “to appeal with the court of competent jurisdiction” or in this case the RTC (considering the amount of tax liability
is P1.6 million), such appeal when decided by the RTC is still in the exercise of its original jurisdiction and not its appellate
jurisdiction. This is because appellate jurisdiction is defined as the authority of a court higher in rank to re-examine the final
order or judgment of a lower court which tried the case now elevated for judicial review. Here, the City Treasurer is not a
lower court.

The Supreme Court however clarifies that this ruling is only applicable to similar cases before the passage of Republic Act 9282
(effective April 2004). Under RA 9282, the Court of Tax Appeals (CTA), not CA, exercises exclusive appellate jurisdiction to
review on appeal decisions, orders or resolutions of the Regional Trial Courts in local tax cases whether originally decided or
resolved by them in the exercise of their original or appellate jurisdiction.

2. No. Lepanto was not organized for profit. The fees it was collecting from the condominium unit owners redound to the
owners themselves because the fees collected are being used for the maintenance of the condo. Further, it appears that the
assessment issued by Yamane did not state the legal basis for the tax being imposed on Lepanto – it merely states that Makati
is authorized to collect business taxes under the Local Government Code (LGC) but no other reference specific reference to
specific laws were cited.

City Government of Quezon City v. Bayan Telecommunications, Inc. [G.R. No.162015. March 6, 2006]

23 NOV

FACTS

Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under Republic Act (R.A.) No. 3259
(1961) to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting.
Section 14 (a) of R.A. No. 3259 states: “The grantee shall be liable to pay the same taxes on its real estate, buildings and
personal property, exclusive of the franchise, xxx”. In 1992, R.A. No. 7160, otherwise known as the “Local Government Code of
1991” (LGC) took effect. Section 232 of the Code grants local government units within the Metro Manila Area the power to levy
tax on real properties. Barely few months after the LGC took effect, Congress enacted R.A. No. 7633, amending Bayantel’s
original franchise. The Section 11 of the amendatory contained the following tax provision: “The grantee, its successors or
assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise,
xxx“. In 1993, the government of Quezon City enacted an ordinance otherwise known as the Quezon City Revenue Code
withdrawing tax exemption privileges.

ISSUE

Whether or not Bayantel’s real properties in Quezon City are exempt from real property taxes under its franchise.
18

RULING

YES. A clash between the inherent taxing power of the legislature, which necessarily includes the power to exempt, and the
local government’s delegated power to tax under the aegis of the 1987 Constitution must be ruled in favor of the former. The
grant of taxing powers to LGUs under the Constitution and the LGC does not affect the power of Congress to grant exemptions
to certain persons, pursuant to a declared national policy. The legal effect of the constitutional grant to local governments
simply means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of municipal
corporations.

The legislative intent expressed in the phrase “exclusive of this franchise” cannot be construed other than distinguishing
between two (2) sets of properties, be they real or personal, owned by the franchisee, namely, (a) those actually, directly and
exclusively used in its radio or telecommunications business, and (b) those properties which are not so used. It is worthy to note
that the properties subject of the present controversy are only those which are admittedly falling under the first category.

Since R. A. No. 7633 was enacted subsequent to the LGC, perfectly aware that the LGC has already withdrawn Bayantel’s
former exemption from realty taxes, the Congress using, Section 11 thereof with exactly the same defining phrase “exclusive of
this franchise” is the basis for Bayantel’s exemption from realty taxes prior to the LGC. In plain language, the Court views this
subsequent piece of legislation as an express and real intention on the part of Congress to once again remove from the LGC’s
delegated taxing power, all of the franchisee’s (Bayantel’s) properties that are actually, directly and exclusively used in the
pursuit of its franchise.

LUCMAN V. MALAWI (G.R. NO. 159794)

Facts:

Respondents were the incumbent barangay chairmen of their respective barangays prior to the May 1997 barangay elections.
The May 1997 failed barangay elections resulted to a special election which likewise failed. Consequently, respondents remained
in office in a holdover capacity. Then, LBP was selected as the government depositary bank for the IRAs of the barangays
headed by respondents. Respondents had to open new accounts in behalf of their government units with the proper LBP branch
to withdraw their IRAs but were refused by petitioner unless the requirements were met Respondents were eventually allowed
to open but were not allowed to withdraw the IRA funds in the absence of the requisite Accountant’s advice. Thereafter, some
other persons presented themselves before petitioner as the new barangays and to them, petitioner released the IRA funds.
Respondents moved to compel petitioner to release to them the IRA funds. RTC and CA ruled in favor of respondents.

Issue:

Whether or not respondents have no legal personality to institute the petition for mandamus in their own names since the IRAs
rightfully belong to the respective barangays and not to them.

Ruling:

By virtue of the deposits, there exists between the barangays as depositors and LBP a creditor-debtor relationship. Fixed,
savings, and current deposits of money in banks and similar institutions are governed by the provisions concerning simple loan. In
other words, the barangays are the lenders while the bank is the borrower.

This Court elucidated on the matter in Guingona, Jr., et al. v. The City Fiscal of Manila, et al., citing Serrano v. Central Bank of
the Philippines, thus:

Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of bank
deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans (Art. 1980,
Civil Code; Gullas v. Phil. National Bank, 62 Phil. 519). Current and savings deposits are loans to a bank because it can use the
same. The petitioner here in making time deposits that earn interest with respondent Overseas Bank of Manila was in reality a
creditor of the respondent Bank and not a depositor. The respondent Bank was in turn a debtor of petitioner. Failure of the
respondent Bank to honor the time deposit is failure to pay its obligation as a debtor and not a breach of trust arising from a
depository’s failure to return the subject matter of the deposit.
19

The relationship being contractual in nature, mandamus is therefore not an available remedy since mandamus does not lie to
enforce the performance of contractual obligations.

Pepsi Cola Bottiling Co. vs City of Butuan (1968)

February 15, 2013 markerwins Tax Law

Facts: Ordinance 110 was enacted by the City of Butuan imposing a tax of P0.10 per case of 24 bottles of softdrinks or
carbonated drinks. The tax was imposed upon dealers engeged in selling softdrinks or carbonated drinks. When Ordinance 110,
the tax was imposed upon an agent or consignee of any person, association, partnership, company or corporation engaged in
selling softdrinks or carbonated drinks, with “agent or consignee” being particularly defined on the inserted provision Section 3-
A. In effect, merchants engaged in the sale of softdrinks, etc. are not subject to the tax unless they are agents or consignees
of another dealer who must be one engaged in business outside the City. Pepsi-Cola Bottling Co. filed suit to recover sums paid
by it to the city pursuant to the Ordinance, which it claims to be null and void.

Issue: Whether the Ordinance is discriminatory.

Held: The Ordinance, as amended, is discriminatory since only sales by “agents or consignees” of outside dealers would be
subject to the tax. Sales by local dealers, not acting for or on behalf of other merchants, regardless of the volume of their
sales , and even if the same exceeded those made by said agents or consignees of producers or merchants established outside
the city, would be exempt from the tax. The classification made in the exercise of the authority to tax, to be valid must be
reasonable, which would be satisfied if the classification is based upon substantial distinctions which makes real differences;
these are germane to the purpose of legislation or ordinance; the classification applies not only to present conditions but also to
future conditions substantially identical to those of the present; and the classification applies equally to all those who belong to
the same class. These conditions are not fully met by the ordinance in question.

Swedish Match Philippines, Inc. v. The Treasurer of City of Manila G.R. No. 181277, July 3, 2013

"What constitutes double taxation"

FACTS:

This is a case filed by the petitioner for Refund of Taxes. In its letter to the City of Manila Treasurer, the petitioner claimed
double taxation when it paid business taxes under Sections 14 and 21 of Ordinance No. 7794 which is the Manila Revenue Code.
The respondent contends that both sections refer to two distinct objects of tax, hence they are not the same in character and
kind that will result in double taxation. The RTC, CTA division and CTA en banc denied the petition for a tax refund filed by the
petitioner.

ISSUE:

Whether or not both sections of the Manila Revenue Code constitute double taxation

RULING:
Yes, there is double taxation.
The ELEMENTS OF DOUBLE TAXATION ARE:
The taxes are imposed on
1. The same subject matter
2. For the same purpose
3. By the same taxing authority
4. Within the same taxing jurisdiction
5. For the same taxing period
6. The same kind of character

While the petitioner is liable for the payment of business taxes to the City of Manila, the fact that it already paid under
section 14 of the Manila Revenue Code, it is already precluded from paying the tax imposed under section 21 of the same code.

As has been noted by the court, both sections are imposed for the following:
1. for the same subject matter, which is for doing business in the City of Manila
2. for the same purpose, which his to contribute to the city revenues
20

3. By the same taxing authority, which is the City of Manila

Considering these nature of taxes paid by the petitioner under both sections of the Code, the court held that the petitioner is
entitled to a tax refund for the tax it paid under Section 21.

BULACAN VS CA (299 SCRA 442)

The Province of Bulacan vs Court of Appeals

299 SCRA 442 [GR No. 126232 November 27, 1998]

Facts: On June 26, 1992, the Sangguniang Panlalawigan passed provincial ordinance no. 3 known as “Ordinance Enacting The
Revenue Code Of The Bulacan Province” which was to take effect on July 1, 1992 Section 21 of the ordinance provides as
follows:

Sec 21. Imposition of Tax – There is hereby levied and collected a tax of 10% of the fair market value in the locality per cubic
meter of ordinary stores, sand, gravel, earth and other quarry resources, such but not limited to marble, granite, volcanic
cinders, basalt, tuff and rock phosphate, extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and
other public waters within its territorial jurisdiction.

Pursuant thereto, the provincial treasurer of Bulacan in a letter dated November 11, 1992, assessed private respondent Republic
Cement Corporation Php2,524,692.13 for extracting lime stones, shale and silica from several parcels of private land in the
province during the third quarter of 1992 until the second quarter of 1993. Believing that the province, on the bases of the
above-said ordinance, had no authority to impose taxes on quarry resources extracted from private lands, Republic Cement
formally contested the same on December 23, 1993. The same was, however, denied by the provincial treasurer on January 17,
1994. Republic Cement, consequently filed a petition for declaratory relief with the Regional Trial Court (RTC) of Bulacan on
February 14, 1993. The province filed a motion to dismiss Republic Cement’s petition which was granted by the trial court on
May 13, 1993, which ruled that declaratory relief was improper, allegedly because a breach of the ordinance had been
committed by Republic Cement.

Issue: Whether or not provincial ordinance no. 3 is valid to allow the petitioner to impose taxes on ordinary stones, sand, gravel,
earth, and other quarry resources.

Held: No. On the basis of section 134 of Republic Act No. 7169, the local government code, ruled that a province was
empowered to impose taxes only on sand, gravel, and other quarry resources extracted from public lands, its authority to tax
being limited to by said provision only to those taxes, fees and charges provided in article 1, chapter 2, title I of Book II of the
local government code.

As correctly pointed out by petitioners, section 186 of the same code allows petitioners to levy taxes other than those
specifically enumerated under the code, subject to the conditions specified therein.

The tax imposed by the province of Bulacan is an excise tax, being a tax upon the performance, carrying or an excise of an
activity. Under section 133 of the local government code, a province may not, therefore, levy excise taxes on articles already
taxed by the National Internal Revenue Code (NIRC).

The NIRC levies a tax on all quarry resources, regardless of origin, whether extracted from public or private land. Thus, a
province may not ordinarily impose taxes on stones, sand,gravel, earth and other quarry resources, as the same are already
taxed under NIRC. The province can, however, impose a tax on stones, sand, gravel, earth and other quarry resources extracted
from public lands because it is expressly empowered to do so under the local government code. As to stones, sand, gravel, earth
and other quarry resources extracted from private land, however it may not do so, because of the limitation provided by section
133 of the code in relation to section 151 of the NIRC.
21

Given the above disquisition, petitioners cannot claim that the appellate court unjustly deprived them of the power to create
their sources of revenue, their assessment of taxes against Republic Cement being ultra vires, traversing as it does the
limitations set by the local government code.

Furthermore, section 21 of provincial ordinance no. 3 is practically only a reproduction of section 138 of the local government
code. A cursory reading of both could show that both refer to ordinary sand, gravel, stone, earth and other quarry resources
extracted from public lands. Even if we disregard the limitation set by section 133 of the local government code, petitioners,
may not impose taxes on stone, sand, gravel, earth and other quarry resources extracted from private lands. Petitioners may
not involve the regalian doctrine to extend coverage of their ordinance to quarry resources extracted from private lands, for
taxes, being burdens, are not to be presumed beyond what the applicable statute expressly and clearly declares, tax statutes
being construed strictissimi juris against the government.

PALMA VS MALANGAS (413 SCRA 572)

Palma Development Corporation vs Municipality of Malangas

413 SCRA 572 [GR No. 152492 October 16, 2003]

Facts: Petitioner Palma Development Corporation is engaged in milling and selling rice and corn to wholesalers in Zamboanga City.
It uses the municipal port of Malangas, Zamboanga del Sur as transshipment port for its goods. The port, as well as the
surrounding roads leading to it, belong to and are maintained by the Municipality of Malangas, Zamboanga del Sur. On January
16, 1994, the municipality passed municipal revenue code no. 09 series of 1993, which was subsequently approved by the
Sangguniang Panlalawigan of Zamboanga del Sur in resolution no. 1330 dated August 4, 1994. Section 56.01 of the ordinance
reads as follows:

Sec 56.01 Imposition of Fees. There shall be collected service fee for its use of the municipal roads or streets leading to the
wharf and to any point along the shorelines within the jurisdiction of the municipality and for police surveillance on all goods and
all equipment harboured or sheltered in the premises of the wharf and other within the jurisdiction of the municipality [xxx]

Accordingly, the service fees imposed by section 56.01 of the ordinance was paid by petitioner under protest. It contended
that under Republic Act No. 7160, otherwise known as the local government code of 1991, municipal governments did not have
authority to tax goods and vehicles that passed through their jurisdictions. Thereafter, before the Regional Trial Court of
Pagadian City, petitioner filed against the Municipality of Malangas on November 29, 1995, an action for declaratory relief
assailing the validity of section 56.01 of the municipal ordinance.

Issue: Whether or not the imposition of service fee is proper and valid.

Held: No. By the express language of section 153 and 155 RA 7160, local government units, through their sanggunian, may
prescribe the terms and conditions for the imposition of toll fees or charges for the use of any public road, pier or wharf
funded and constructed by them. A service fee imposed on vehicles using municipal roads leading to the wharf is thus valid,
however, section 133 (e) of RA 7160 prohibits the imposition, in the guise of wharfage fees — as well as other taxes or charges
in any form whatsoever on goods or merchandise. It is therefore irrelevant if the fee imposed are actually for police
surveillance on the goods, because any other form of imposition on goods passing through the territorial jurisdiction of the
municipality is clearly prohibited by section 133 (e).

Manila Electric Company v. Province of Laguna (G.R. No. 131359. May 5, 1999)

18 AUG

FACTS:

MERALCO was granted a franchise by several municipal councils and the National Electrification Administration to operate an
electric light and power service in the Laguna. Upon enactment of Local Government Code, the provincial government issued
ordinance imposing franchise tax. MERALCO paid under protest and later claims for refund because of the duplicity with
Section 1 of P.D. No. 551. This was denied by the governor (Joey Lina) relying on a more recent law (LGC). MERALCO filed with
the RTC a complaint for refund, but was dismissed. Hence, this petition.

ISSUE:
22

Whether or not the imposition of franchise tax under the provincial ordinance is violative of the non-impairment clause of the
Constitution and of P.D. 551.

HELD:

No. There is no violation of the non-impairment clause for the same must yield to the inherent power of the state (taxation).
The provincial ordinance is valid and constitutional.

RATIO:

The Local Government Code of 1991 has incorporated and adopted, by and large, the provisions of the now repealed Local Tax
Code. The 1991 Code explicitly authorizes provincial governments, notwithstanding “any exemption granted by any law or other
special law, . . . (to) impose a tax on businesses enjoying a franchise.” A franchise partakes the nature of a grant which is beyond
the purview of the non-impairment clause of the Constitution. Article XII, Section 11, of the 1987 Constitution, like its
precursor provisions in the 1935 and the 1973 Constitutions, is explicit that no franchise for the operation of a public utility
shall be granted except under the condition that such privilege shall be subject to amendment, alteration or repeal by Congress
as and when the common good so requires.

PETRON CORPORATION v. MAYOR TOBIAS M. TIANGCO and

MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of the

MUNIPALITY OF NAVOTAS, METRO MANILA

G.R. 158881, 16 April 2006, Second Division, (Tinga, J.

While local government units are authorized to burden all such other class of goods with “taxes, fees and charges,” excepting
excise taxes, a specific prohibition is imposed barring the levying of any other type of taxes with respect to petroleum
products.

In accordance to the New Navotas Revenue Code or Ordinance 92-03, petitioner Petron Corporation was assessed a total tax of
P6,259,087.62. Petron filed a letter protest arguing that it is exempt from paying local business taxes as provided by Article
232 (h) of the Implementing Rules of the Local Government Code.

The letter-protest was denied. A Complaint for Cancellation of Assessment was filed before the Regional Trial Court (RTC) of
Malabon. The RTC dismissed the Complaint and required Petron to pay the assessed tax. A Motion for Reconsideration was filed
but it was later denied by the court. Hence, the filing of this petition.

ISSUE:

Whether or not a local government unit is empowered under the Local Government Code (LGC) to impose business taxes on
persons or entities engaged in the sale of petroleum

HELD:

Petition GRANTED.

Section 133(h) of the LGC reads as follows:

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise
of the taxing powers of provinces, cities, municipalities, and Barangays shall not extend to the levy of the following:

xxx

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on
petroleum products;

Evidently, Section 133 prescribes the limitations on the capacity of local government units to exercise their taxing powers
otherwise granted to them under the LGC. Apparently, paragraph (h) of the Section mentions two kinds of taxes which cannot
23

be imposed by local government units, namely: “excise taxes on articles enumerated under the National Internal Revenue Code
[(NIRC)], as amended;” and “taxes, fees or charges on petroleum products.”

The power of a municipality to impose business taxes is provided for in Section 143 of the LGC. Under the provision, a
municipality is authorized to impose business taxes on a whole host of business activities. Suffice it to say, unless there is
another provision of law which states otherwise, Section 143, broad in scope as it is, would undoubtedly cover the business of
selling diesel fuels, or any other petroleum product for that matter.

Section 133(h) provides two kinds of taxes which cannot be imposed by local government units: “excise taxes on articles
enumerated” under the NIRC, as amended; and “taxes, fees or charges on petroleum products.” There is no doubt that among
the excise taxes on articles enumerated under the NIRC are those levied on petroleum products, per Section 148 of the NIRC.

The power of a municipality to impose business taxes derives from Section 143 of the Code that specifically enumerates several
types of business on which it may impose taxes, including manufacturers, wholesalers, distributors, dealers of any article of
commerce of whatever nature; those engaged in the export or commerce of essential commodities; retailers; contractors and
other independent contractors; banks and financial institutions; and peddlers engaged in the sale of any merchandise or article
of commerce. This obviously broad power is further supplemented by paragraph (h) of Section 143 which authorizes the
sanggunian to impose taxes on any other businesses not otherwise specified under Section 143 which the sanggunian concerned
may deem proper to tax.

This ability of local government units to impose business or other local taxes is ultimately rooted in the 1987 Constitution.
Section 5, Article X assures that “[e]ach local government unit shall have the power to create its own sources of revenues and
to levy taxes, fees and charges,” though the power is “subject to such guidelines and limitations as the Congress may provide.”
There is no doubt that following the 1987 Constitution and the Code, the fiscal autonomy of local government units has received
greater affirmation than ever. Previous decisions that have been skeptical of the viability, if not the wisdom of reposing fiscal
autonomy to local government units have fallen by the wayside.

Section 5(a) of the Code states that “[a]ny provision on a power of a local government unit shall be liberally interpreted in its
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local
government unit.” But somewhat conversely, Section 5(b) then proceeds to assert that “[i]n case of doubt, any tax ordinance or
revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer.”
And this latter qualification has to be respected as a constitutionally authorized limitation which Congress has seen fit to
provide. Evidently, local fiscal autonomy should not necessarily translate into abject deference to the power of local government
units to impose taxes.

Section 133(h) states that local government units “shall not extend to the levy of xxx taxes, fees or charges on petroleum
products.” Respondents assert that the phrase “taxes, fees or charges on petroleum products” pertains to the imposition of
direct or excise taxes on petroleum products, and not business taxes. If the phrase actually pertains to excise taxes, then it
would be an exercise in utter redundancy, since the preceding phrase already prohibits the imposition of excise taxes on
articles already subject to such taxes under the NIRC, such as petroleum products. There would be no sense on the part of the
legislature to twice emphasize in the same sentence that excise taxes on petroleum products are beyond the pale of local
government taxation.

The Court concedes that a tax on a business is distinct from a tax on the article itself, or for that matter, that a business tax
is distinct from an excise tax. However, such distinction is immaterial insofar as the latter part of Section 133(h) is concerned,
for the phrase “taxes, fees or charges on petroleum products” does not qualify the kind of taxes, fees or charges that could
withstand the absolute prohibition imposed by the provision. It would have been a different matter had Congress, in crafting
Section 133(h), barred “excise taxes” or “direct taxes,” or any category of taxes only, for then it would be understood that only
such specified taxes on petroleum products could not be imposed under the prohibition. The absence of such a qualification
leads to the conclusion that all sorts of taxes on petroleum products, including business taxes, are prohibited by Section 133(h).
Where the law does not distinguish, we should not distinguish.

The language of Section 133(h) makes plain that the prohibition with respect to petroleum products extends not only to excise
taxes thereon, but all “taxes, fees and charges.” The earlier reference in paragraph (h) to excise taxes comprehends a wider
range of subjects of taxation: all articles already covered by excise taxation under the NIRC, such as alcohol products, tobacco
products, mineral products, automobiles, and such non-essential goods as jewelry, goods made of precious metals, perfumes, and
yachts and other vessels intended for pleasure or sports. In contrast, the later reference to “taxes, fees and charges” pertains
24

only to one class of articles of the many subjects of excise taxes, specifically, “petroleum products”. While local government
units are authorized to burden all such other class of goods with “taxes, fees and charges,” excepting excise taxes, a specific
prohibition is imposed barring the levying of any other type of taxes with respect to petroleum products.

RCPI v. Provincial Assesor of South Cotabato, et. al.

Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie!

G.R. No. 144486. April 13, 2005

Facts:

R.A. No. 2036 of 1957, as amended by R.A. No. 4054, granted RCPI a 50-year franchise. Thus, Sec. 14 of the amended law, in
gist, provides that the grantee shall pay the same taxes as may be required by law. Said tax shall be in lieu of any and all taxes
of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national,
from which taxes the grantee is hereby expressly exempted.

On 10 June 1985, the municipal treasurer of Tupi, South Cotabato assessed RCPI real property taxes from 1981 to 1985. The
municipal treasurer demanded that RCPI pay P166,810 as real property tax on its radio station building in Barangay Kablon, as
well as on its machinery shed, radio relay station tower and its accessories, and generating sets, based on the following tax
declarations.

RCPI protested the assessment before the Local Board of Assessment Appeals (LBAA') and claimed that all its assessed
properties are personal properties and thus exempt from the real property tax. It also pointed out that its franchise exempts
RCPI from 'paying any and all taxes of any kind, nature or description in exchange for its payment of tax equal to one and one-
half per cent on all gross receipts from the business conducted under its franchise. It further claimed that any deviation from
its franchise would violate the non-impairment of contract clause of the Constitution. Finally, RCPI stated that the value of the
properties assessed has depreciated since their acquisition in the 1960s.

The Provincial Assessor of South Cotabato opposed RCPI's claims on all points.

The Local Board of Assessment Appeals ruled that appellant is ordered to pay the real property taxes, inclusive of all penalties,
surcharges and interest accruing as of the date of actual payment, on the properties covered; in which the Central Board of
Assessment Appeals affirmed.

The Appelate Court ruled that decision of the Central Board of Assessment Appeals is hereby MODIFIED. Petitioner is
declared exempt from paying the real property taxes assessed upon its machinery and radio equipment mounted as accessories
to its relay tower. The decision assessing taxes upon petitioner's radio station building, machinery shed, and relay station tower
is, however, affirmed.

Issues:

1. Whether the appellate court erred when it excluded RCPI's tower, relay station building, and machinery shed from tax
exemption; and

2. Whether the appellate court erred when it did not resolve the issue of nullity of the tax declarations and assessments due to
non-inclusion of depreciation allowance.

Held:

Exemption from Real Property Tax

First, Congress passed the Local Government Code that withdrew all the tax exemptions existing at the time of its passage
including that of RCPI's. Second, Congress enacted the franchise of telecommunications companies, such as Islacom, Bell, Island
Country, IslaTel, TeleTech, Major Telecoms, and Smart, with the 'in lieu of all taxes' proviso. Third, Congress passed RA 7925
entitled 'An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public
Telecommunications Services' which, through Section 23, mandated the equality of treatment of service providers in the
telecommunications industry.
25

The existing legislative policy is clearly against the revival of the 'in lieu of all taxes' clause in franchises of telecommunications
companies. After the VAT on telecommunications companies took effect on January 1, 1996, Congress never again included the
'in lieu of all taxes' clause in any telecommunications franchise it subsequently approved. RCPI cannot also invoke the equality of
treatment clause under Section 23 of Republic Act No. 7925. The franchises of the petitioners all expressly declare that the
franchisee shall pay the real estate tax, using words similar to Section 14 of RA 2036, as amended.

It is an elementary rule in taxation that exemptions are strictly construed against the taxpayer and liberally in favor of the
taxing authority. It is the taxpayer's duty to justify the exemption by words too plain to be mistaken and too categorical to be
misinterpreted.

Exclusion of Depreciation Allowance

RCPI contends that the tax declarations and assessments covering its radio relay station tower, radio station building, and
machinery shed are void because the assessors did not consider depreciation allowance in their assessments. The Court have
examined the records of this case and found that RCPI raised before the LBAA and the CBAA the nullity of the assessments
due to the non-inclusion of depreciation allowance. Therefore, RCPI did not raise this issue for the first time. However, even if
the court considers this issue, under the Real Property Tax Code depreciation allowance applies only to machinery and not to
real property.

The petition is denied and affirmed the decision of the Court of Appeals.

DIGITAL TELECOMMUNICATIONS, INC. vs. CITY GOVERNMENT OF BATANGAS- Real Property Tax

FACTS:

Petitioner was granted a 25-year franchise to install telecommunications systems under a law which states that “The grantee
shall be liable to pay the same taxes on its real estate, buildings, and personal property exclusive of this franchise x x x.” As
they were not being issued a Mayor’s permit, Petitioner paid the Real Property Tax under protest arguing that the phrase
“exclusive of this franchise” means that only the real properties not used in furtherance of its franchise are subject to Real
Property Tax while those real properties which are used in its telecommunications business are exempt from Real Property Tax.

ISSUE:

Are Petitioner’s real properties used in its telecommunications business exempt from Real Property Tax?

HELD:

NO. Petitioner’s real properties, whether or not used in its telecommunications business, are subject to Real Property Tax. The
phrase “exclusive of this franchise” qualifies the term “personal property.” This means that Petitioner’s legislative franchise,
which is an intangible personal property, shall not be subject to taxes. This is to put franchise grantees in parity with non-
franchisees as the latter obviously do not have franchises which may potentially be subject to realty tax. There is nothing in
the first sentence of Section 5 which expressly or even impliedly exempts Petitioner from Real Property Tax. Petitioner’s
reliance on the BLGF’s opinion stating that real properties owned by telecommunications companies are exempt from Real
Property Tax is without basis as the BLGF has no authority to rule on claims for exemption from Real Property Tax.