GMA Network, Inc.

vs Commission on Elections
734 SCRA 88 (2014)
FACTS:
Petitioners ABS-CBN, ABC, GMA and other radio and television networks in the Philippines questioned the
constitutionality of Section 9 (a) of COMELEC Resolution No. 9615 limiting the broadcast and radio advertisements
of candidates to one hundred twenty (120) minutes and political parties for national election positions to an
aggregate total of one hundred eighty (180) minutes. This was because for the May 2013 elections, respondent
COMELEC promulgated Resolution No. 9615, changing the interpretation of candidates' and political parties'
airtime limitation for political campaigns or advertisements from a "per station" basis, to a "total aggregate" basis.
The petitioners contend that such restrictive regulation on allowable broadcast time violates freedom of the press,
impairs the people's right to suffrage as well as their right to information relative to the exercise of their right to
choose who to elect during the forth coming elections. Respondents argue that the resolution goes in line with the
constitutional objective to equalize access to media during elections. It sees this as a more effective way of leveling
the playing field between candidates and political parties with enormous resources and those without much.
ISSUE:
Whether or not COMELEC Resolution No. 9615 on airtime limits is unconstitutional for violation of
freedom of expression, of speech and of the press.
HELD:
YES. The Court held that the assailed rule on “aggregate-based” airtime limits is unreasonable and
arbitrary as it unduly restricts and constrains the ability of candidates and political parties to reach out and
communicate with the people. Here, the reason for imposing the “aggregate-based” airtime limits – leveling the
playing field – does not constitute a compelling state interest which would justify such a substantial restriction on
the freedom of candidates and political parties to communicate their ideas, philosophies, platforms and programs
of government. This is specially so in the absence of a clear-cut basis for the imposition of such a prohibitive
measure. COMELEC is the office constitutionally and statutorily authorized to enforce election laws but it cannot
exercise its powers without limitations - or reasonable basis. It’s discretion must still be within the bounds of the
law.
The court ruled that it is unreasonable to adopt the aggregate-based time limits on broadcast time when
we consider that the Philippines is not only composed of so many islands. There are also a lot of languages and
dialects spoken among the citizens across the country. Accordingly, for a national candidate to really reach out to
as many of the electorates as possible, then it might also be necessary that he conveys his message through his
advertisements in languages and dialects that the people may more readily understand and relate to. To add all of
these airtimes in different dialects would greatly hamper the ability of such candidate to express himself, a clear
violation of his constitutional rights and a violation of his freedom of speech.
 RODOLFO S. BELTRAN vs. THE SECRETARY OF HEALTH
GR 133640 | November 25, 2005
FACTS
In 1994, RA No. 7719 (National Blood Services Act) was enacted seeking to provide an adequate supply of
safe blood by promoting voluntary blood donation and by regulating blood banks in the Philippines. Section 7
thereof provided for the phase-out of all commercial blood banks within 2 years after its effectivity.
The Act was passed after many studies showed that blood transfusions could lead to transmission of
diseases, and that blood sold by persons to commercial blood banks are three times more likely to have blood
transfusion transmissible diseases than those donated to the Philippine National Red Cross.
Prior to the expiration of the commercial blood banks’ licenses, they filed a petition assailing the
constitutionality and validity of RA 7719 and its Implementing Rules and Regulations, for discriminating against
freestanding blood banks in a manner, which is not germane to the purpose of the law.
ISSUE
Whether or not RA 7719 violates the petitioners’ right to equal protection of the law?
HELD
NO. First, RA 7719 is based on substantial distinctions. Non-profit blood banks operate for purely
humanitarian reasons and as a medical service, and encourage voluntary blood donation. On the other hand,
commercial blood banks are motivated by profit and treat blood as a sale of commodity.
Second, the classification and the consequent phase-out of blood banks is germane to the purpose of the
law, which is to provide the nation with an adequate supply of safe blood by promoting voluntary blood donation
and treating blood transfusion as a humanitarian or medical service rather than a commodity. This necessarily
involves the phase-out of commercial blood banks based on the fact that they operate as a business enterprise,
and they source their blood supply from paid blood donors who are considered unsafe.
Third, the Legislature intended for the general application of the law. Its enactment was not solely to
address the peculiar circumstances of the situation nor was it intended to apply only to existing conditions.
Lastly, the law applies equally to all commercial blood banks without exception.
 Carlos Superdrug Corporation v DSWD

Law in question: Constitutionality of RA 9257 (Section 4) known as Expanded Senior Citizen Act of 20013
Provisions mentioned: Section 1, 9 of Article III

FACTS:

 Petitioners are domestic corporations and proprietors operating drugstore in the Philippines who pray for
preliminary injunction assailing the constitutionality of Section (4) of RA 9257 which became effective on
March 21, 2004 when PGMA signed it into a law.
 Section 4(a) states that “The senior citizen shall be entitled of the following: (a) the grant of twenty
percent (20%) discount from all establishments relative to the utilization of services in hotels and similar
lodging establishments, restaurants and recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of senior citizens, including funeral and burial services
for the death of senior citizens; The establishment may claim the discounts granted under (a), (f), (g) and
(h) as tax deduction based on the net cost of the goods sold or services rendered
 In reference of the query of the Drug Stores Association of the Philippines (DSAP), DOF Director IV,
Lourdes Recente, clarified the tax deduction scheme. Under this scheme, the establishment concerned is
allowed to deduct from gross income, in computing for its tax liability, the amount of discounts granted to
senior citizens. This will be an amount equivalent to 32% of the twenty percent (20%) discounts so
granted. The establishment shoulders the remaining portion of the granted discounts.
 The petitioners assail the law is unconstitutional because it constitutes deprivation of private property
stated in Section 9 of Article III of the Constitution with contention that granting the discount would result
to loss of profit since drugstores only put 5-10% mark up in branded medicine. Petitioner cited a drug
“Norvasc” as an example. According to the petitioners, it acquires Norvasc from the distributors at P37.57
per tablet, and retails it at P39.60 (or at a margin of 5%). If it grants a 20% discount to senior citizens or an
amount equivalent to P7.92, then it would have to sell Norvasc at P31.68 which translates to a loss from
capital of P5.89 per tablet. Even if the government will allow a tax deduction, only P2.53 per tablet will be
refunded and not the full amount of the discount which is P7.92. In short, only 32% of the 20% discount
will be reimbursed to the drugstores.

ISSUE: WON Section 4(a) of RA 9257 is unconstitutional or violative of Section 9 of Article III of the Constitution
which provides that private property shall not be taken for public use without just compensation and the equal
protection clause under Section 1 of the same article.

HELD:

NO. To implement the above policy, the law grants a twenty percent discount to senior citizens and as a form of
reimbursement, the law provides that business establishments extending the twenty percent discount to senior
citizens may claim the discount as a tax deduction. The law is a legitimate exercise of police power which, similar to
the power of eminent domain, has general welfare for its object. Police power is not capable of an exact definition,
but has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and
provide enough room for an efficient and flexible response to conditions and circumstances, thus assuring the
greatest benefits.

Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover, in
the absence of evidence demonstrating the alleged confiscatory effect of the provision in question, there is no
basis for its nullification in view of the presumption of validity which every law has in its favor.
In treating the discount as a tax deduction, petitioners insist that they will incur losses because, referring to the
DOF Opinion, for every P1.00 senior citizen discount that petitioners would give, P0.68 will be shouldered by them
as only P0.32 will be refunded by the government by way of a tax deduction. Petitioners computation is flawed.
Here, petitioners tried to show a loss on a per transaction basis, which should not be the case. the computation
was erroneously based on the assumption that their customers consisted wholly of senior citizens.

Furthermore, it is unfair for petitioners to criticize the law because they cannot raise the prices of their medicines
given the cutthroat nature of the players in the industry. It is a business decision on the part of petitioners to peg
the mark-up at 5%. Selling the medicines below acquisition cost, as alleged by petitioners, is merely a result of this
decision. Inasmuch as pricing is a property right, petitioners cannot reproach the law for being oppressive, simply
because they cannot afford to raise their prices for fear of losing their customers to competition. Petition is
DISMISSED.
 Drugstores Association vs National Council on Disability Affairs

803 SCRA 25 (2016)

FACTS:

On March 24, 1992, Republic Act No. 7277, entitled "An Act Providing for the Rehabilitation, Self-
Development and Self-Reliance of Disabled Persons and their Integration into the Mainstream of Society and for
Other Purposes," otherwise known as the "Magna Carta for Disabled Persons," was passed into law. R.A. No. 9442
granted the PWDs a 20% discount on the purchase of medicine as well as other benefits if they were qualified to
obtain the PWD Identification Card. Petitioners questioned the constitutionality of the law saying it was an abusive
exercise of police power and invalid exercise of the power of eminent domain because it did not provide just
compensation to the drugstores. They also questioned the term “disability” as too broad and ambiguous. They
filed a Temporary Restraining Order before the CA asking to annul the implementation of the law.

ISSUE:

Whether or not RA 7277 is an invalid exercise of police power and the power of eminent domain.

HELD:

NO. The petition was dismissed. Police power is the power of the state to promote public welfare by
restraining and regulating the use of liberty and property. On the other hand, the power of eminent domain is the
inherent right of the state to condemn private property to public use upon payment of just compensation. In the
exercise of police power, property rights of private individuals are subjected to restraints and burdens in order to
secure the general comfort, health, and prosperity of the state. Though the retailers drugstores would incur losses,
police power is given greater weight over property rights.

A legislative act based on the police power requires the concurrence of a lawful subject and a lawful
method. The interests of the public generally should justify the interference of the state and the means employed
are reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals. It
has a valid subject considering that the concept of public use is no longer confined to the traditional notion of use
by the public, but held synonymous with public interest, public benefit, public welfare, and public convenience. In
this case, the PWD mandatory discount on the purchase of medicine is supported by a valid objective because it is
a declared policy of RA 7277 that persons with disability are part of Philippine society, and thus the State shall give
full support to the improvement of their total well-being and their integration into the mainstream of society. It
also follows a lawful method since before being issued the PWD card, it follows rigid screening and medical tests
which are provided by a registered doctor. Lastly, under Article XIII of Section 11, it states that: There shall be
priority for the needs of the underprivileged, sick, elderly, disabled, women, and children.
 JAMES MIRASOL ET. AL vs. DPWH and TOLL REGULATORY BOARD
G.R. No. 158793 | June 8, 2006
The police power is far-reaching in scope and is the "most essential, insistent and illimitable" of all government
powers.
FACTS
The petitioners sought to declare the nullity of certain administrative issuances for being inconsistent with
RA 2000. Pursuant to its mandate under RA 2000, DPWH issued DO 215 declaring the Coastal Road as limited
access area. The petitioners sought to prevent the enforcement of the total ban on motorcycles along the entire
breadth of North and South Luzon Expressways and the Coastal Road.
ISSUE
1. Whether or not administrative regulation banning the use of motorcycles is unconstitutional.
2. Whether the prohibition on the use of motorcycles in toll ways deprives the petitioners’ their right to travel.
HELD
1. NO. The use of public highways by motor vehicles is subject to regulation as an exercise of the police power of
the state. The sole standard in measuring its exercise is reasonableness, not exact definition and scientific
formulation. It is evident that assailed regulation does not impose unreasonable restrictions, but outlines
precautionary measures designed to ensure public safety.
2. NO. The right to travel does not mean the right to choose any vehicle in traversing a toll way. The right to travel
refers to the right to move from one place to another. Petitioners can traverse the toll way any time they choose
using private or public four-wheeled vehicles. Petitioners are not denied the right to move from Point A to Point B
along the toll way. Petitioners are free to access the toll way, much as the rest of the public can. The mode by
which petitioners wish to travel pertains to the manner of using the toll way, a subject that can be validly limited
by regulation.
Petitioners themselves admit that alternative routes are available to them. Their complaint is that these routes are
not the safest and most convenient. Even if their claim is true, it hardly qualifies as an undue curtailment of their
freedom of movement and travel. The right to travel does not entitle a person to the best form of transport or to
the most convenient route to his destination. The obstructions found in normal streets, which petitioners complain
of (i.e., potholes, manholes, construction barriers, etc.), are not suffered by them alone.
 SOCIAL JUSTICE SOCIETY V ALFREDO LIM

Law in question: Constitutionality of Ordinance No. 8187 known as “An Ordinance Amending Ordinance No. 8119,
Otherwise known as “The Manila Comprehensive Land Use Plan and Zoning Ordinance of 2006,’ by Creating a
Medium Industrial Zone and Heavy Industrial Zone and Providing for its Enforcement”

FACTS

 On 12 October 2001, a Memorandum of Agreement was entered into by oil companies (Chevron, Petron
and Shell) and Department of Energy for the creation of a Master Plan to address and minimize the
potential risks and hazards posed by the proximity of communities, business and offices to Pandacan oil
terminals without affecting security and reliability of supply and distribution of petroleum products.
 On 20 November 2001, the Sangguniang Panlungsod (SP) enacted Ordinance No. 8027 which reclassifies
the land use of Pandacan, Sta. Ana, and its adjoining areas from Industrial II to Commercial I.
 On 4 December 2002 (Mayor Atienza era pa ‘to), a petition for mandamus was filed before the Supreme
Court (SC) to enforce Ordinance No. 8027. Unknown to the SC, the oil companies filed before the Regional
Trial Court of Manila an action to annul Ordinance No. 8027 with application for writs of preliminary
prohibitory injunction and preliminary mandatory injunction. The same was issued in favor of Chevron
and Shell. Petron, on the other hand, obtained a status quo on 4 August 2004.
 On 16 June 2006, Mayor Jose Atienza, Jr. approved Ordinance No. 8119 entitled “An Ordinance Adopting
the Manila Comprehensive Land Use Plan and Zoning Regulations of 2006 and Providing for the
Administration, Enforcement and Amendment thereto”. This designates Pandacan oil depot area as a
Planned Unit Development/Overlay Zone.
 On 7 March 2007, the SC granted the petition for mandamus and directed Mayor Atienza to immediately
enforce Ordinance No. 8027. It declared that the objective of the ordinance is to protect the residents of
manila from the catastrophic devastation that will surely occur in case of a terrorist attack on the
Pandacan Terminals.
 The oil companies filed a Motion for Reconsideration (MR) on the 7 March 2007 Decision. The SC later
resolved that Ordinance No. 8027 is constitutional and that it was not impliedly repealed by Ordinance
No. 8119 as there is no irreconcilable conflict between them. SC later on denied with finality the second
MR of the oil companies.
 On 14 May 2009, during the incumbency of Mayor Alfredo Lim (Mayor Lim), the SP enacted Ordinance No.
8187. The Industrial Zone under Ordinance No. 8119 was limited to Light Industrial Zone, Ordinance No.
8187 appended to the list a Medium and a Heavy Industrial Zone where petroleum refineries and oil
depots are expressly allowed.
 Petitioners Social Justice Society Officers, Mayor Atienza, et.al. filed a petition for certiorari under Rule 65
assailing the validity of Ordinance No. 8187. Their contentions are as follows:
- It is an invalid exercise of police power because it does not promote the general welfare of the
people
- It is violative of Section 15 and 16, Article II of the 1987 Constitution as well as health and
environment related municipal laws and international conventions and treaties, such as: Clean
Air Act; Environment Code; Toxic and Hazardous Wastes Law; Civil Code provisions on nuisance
and human relations; Universal Declaration of Human Rights; and Convention on the Rights of
the Child
- The title of Ordinance No. 8187 purports to amend or repeal Ordinance No. 8119 when it actually
intends to repeal Ordinance No. 8027
 On the other hand, the respondents Mayor Lim, et.al. and the intervenors oil companies contend that:
- The petitioners have no legal standing to sue whether as citizens, taxpayers or legislators. They
further failed to show that they have suffered any injury or threat of injury as a result of the act
complained of
 - The petition should be dismissed outright for failure to properly apply the related provisions of
the Constitution, the Rules of Court, and/or the Rules of Procedure for Environmental Cases
relative to the appropriate remedy available
- The principle of the hierarchy of courts is violated because the SC only exercises appellate
jurisdiction over cases involving the constitutionality or validity of an ordinance under Section 5,
Article VIII of the 1987 Constitution
- It is the function of the SP to enact zoning ordinance without prior referral to the Manila Zoning
Board of Adjustment and Appeals; thus, it may repeal all or part of zoning ordinance sought to be
modified
- There is a valid exercise of police power
 On 28 August 2012, the SP enacted Ordinance No. 8283 which essentially amended the assailed
Ordinance to exclude the area where petroleum refineries and oil depots are located from the Industrial
Zone. The same was vetoed by Mayor Lim.

ISSUES

1. WON there are violations of environmental laws

RULING

1. None. The scope of the Rules of Procedure for Environmental Cases is embodied in Section 2, Part I, Rule I
thereof. It states that the Rules shall govern the procedure in civil, criminal and special civil actions before
the MeTCs, MTCCs, MTCs and MCTCs, and the RTCs involving the enforcement or violations of
environmental and other related laws, rules and regulations such as but not limited to: R.A. No. 6969,
Toxic Substances and Hazardous Waste Act; R.A. No. 8749, Clean Air Act; Provisions in C.A. No. 141; and
other existing laws that relate to the conservation, development, preservation, protection and utilization
of the environment and natural resources.

Notably, the aforesaid Rules are limited in scope. While, indeed, there are allegations of
violations of environmental laws in the petitions, these only serve as collateral attacks that would support
the other position of the petitioners – the protection of the right to life, security and safety.

2. No. The SC held that it is true that the petitions should have been filed with the RTC, it having concurrent
jurisdiction with the SC over a special civil action for prohibition, and original jurisdiction over petitions for
declaratory relief.

However, the petitions at bar are of transcendental importance warranting a relaxation of the
doctrine of hierarchy of courts. This is in accordance with the well-entrenched principle that rules of
procedure are not inflexible tools designed to hinder or delay, but to facilitate and promote the
administration of justice. Their strict and rigid application, which would result in technicalities that tend to
frustrate, rather than promote substantial justice, must always be eschewed. (Jaworski v. PAGCOR, 464
Phil. 375)

3. Yes. The SC referred to their Decision dated 7 March 2007 which ruled that the petitioners in that case
have a legal right to seek the enforcement of Ordinance No. 8027 because the subject of the petition
concerns a public right, and they, as residents of Manila, have a direct interest in the implementation of
the ordinances of the city.

No different are herein petitioners who seek to prohibit the enforcement of the assailed
ordinance, and who deal with the same subject matter that concerns a public right.
 In like manner, the preservation of the life, security and safety of the people is indisputably a
right of utmost importance to the public. Certainly, the petitioners, as residents of Manila, have the
required personal interest to seek relief to protect such right.

4. Yes. In striking down the contrary provisions of the assailed Ordinance relative to the continued stay of
the oil depots, the SC followed the same line of reasoning used in its 7 March 2007 decision, to wit:

“Ordinance No. 8027 was enacted for the purpose of promoting a sound urban
planning, ensuring health, public safety and general welfare of the residents of Manila. The
Sanggunian was impelled to take measures to protect the residents of Manila from catastrophic
devastation in case of a terrorist attack on the Pandacan Terminals. Towards this objective, the
Sanggunian reclassified the area defined in the ordinance from industrial to commercial.

The following facts were found by the Committee on Housing, Resettlement and Urban
Development of the City of Manila which recommended the approval of the ordinance:

(1) The depot facilities contained 313.5 million liters of highly flammable and highly
volatile products which include petroleum gas, liquefied petroleum gas, aviation
fuel, diesel, gasoline, kerosene and fuel oil among others;
(2) The depot is open to attack through land, water and air;
(3) It is situated in a densely populated place and near Malacañang Palace; and
(4) In case of an explosion or conflagration in the depot, the fire could spread to the
neighboring communities.

The Ordinance was intended to safeguard the rights to life, security and safety of all the
inhabitants of Manila and not just of a particular class. The depot is perceived, rightly or wrongly,
as a representation of western interests which means that it is a terrorist target. As long as there
is such a target in their midst, the residents of Manila are not safe. It therefore becomes
necessary to remove these terminals to dissipate the threat.”

The same best interest of the public guides the present decision. The Pandacan oil depot remains
a terrorist target even if the contents have been lessened. In the absence of any convincing reason to
persuade the Court that the life, security and safety of the inhabitants of Manila are no longer put at risk
by the presence of the oil depots, the SC holds that the Ordinance No. 8187 in relation to the Pandacan
Terminals is invalid and unconstitutional.

DISPOSITIVE PORTION

1. Ordinance No. 8187 is declared unconstitutional and invalid with respect to the continued stay of the
Pandacan Oil Terminals.
2. The incumbent mayor of the City of Manila is ordered to cease and desist from enforcing Ordinance No.
8187 and to oversee the relocation and transfer of the oil terminals out of the Pandacan area.

Note: In re-penned decision in 2015, the MR was denied with finality. The resolution is deemed final and executory
and no further pleadings, motions and papers shall be entertained in this case.
 SOUTHERN LUZON DRUG CORPORATION (SLDC) VS. DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT
(DSWD)

G.R. No. 199669 | April 25, 2017

FACTS

On 1992, R.A. No. 7432, entitled "An Act to Maximize the Contribution of Senior Citizens to Nation-
Building, Grant Benefits and Special Privileges and For Other Purposes," was enacted. Under the said law, a senior
citizen, who must be at least 60 y/o and has an annual income of not more than P60,000.00, may avail of the
privileges provided, one of which is 20% discount on the purchase of medicines.

On 2004, then President Gloria Macapagal-Arroyo signed R.A. No. 9257, amending some provisions of R.A.
No. 7432. The new law retained the 20% discount on the purchase of medicines but removed the annual income
ceiling thereby qualifying all senior citizens to the privileges under the law.

The change in the tax treatment of the discount given to senior citizens did not sit well with some drug
store owners and corporations, claiming it affected the profitability of their business. On 2005, Carlos Superdrug
Corporation with other corporations and proprietors operating drugstores in the Philippines, filed a Petition for
Prohibition with Prayer for Temporary Restraining Order and/or Preliminary Injunction before this Court primarily
on the ground that it amounts to taking of private property without payment of just compensation. In 2007, the
Court dismissed the petition and upheld the constitutionality of the assailed provision, holding that the same is a
legitimate exercise of police power.

A petition for review on Certiorari assailing the Decision of the Court of Appeals which dismissed the
petition for prohibition filed by Southern Luzon Drug Corporation against the DSWD, the National Council for the
Welfare of Disabled Persons (now National Council on Disability Affairs or NCDA), the DOF and the BIR, which
sought to prohibit the implementation of Section 4(a) of RA No. 9257, otherwise known as the "Expanded Senior
Citizens Act of 2003" and Sec. 32 of RA. No. 9442, which amends the "Magna Carta for Disabled Persons,"
particularly the granting of 20% discount on the purchase of medicines by senior citizens and persons with
disability (PWD), respectively, and treating them as tax deduction which dismissed the petition for prohibition filed
by Southern Luzon Drug Corporation against the Department of Social Welfare and Development , the National
Council for the Welfare of Disabled Persons (now National Council on Disability Affairs or NCDA), the DOF and BIR,
which sought to prohibit the implementation of Sec. 4(a) of RA No. 9257, otherwise known as the "Expanded
Senior Citizens Act of 2003" and Section 32 of R.A. No. 9442, which amends the "Magna Carta for Disabled
Persons," particularly the granting of 20% discount on the purchase of medicines by senior citizens and persons
with disability (PWD),: respectively, and treating them as tax deduction due to the reason that claiming it affects
the profitability of their business.

ISSUE

Whether or not the 20% Sales Discount for Senior Citizens PWDs violate the petitioner’s right to equal protection
of the law

HELD

No. The subject laws do not violate the equal protection clause. The equal protection clause is not
infringed by legislation which applies only to those persons falling within a specified class. If the groupings are
characterized by substantial distinctions that make real differences, one class may be treated and regulated
differently from another." For a classification to be valid, (1) it must be based upon substantial distinctions, (2) it
must be germane to the purposes of the law, (3) it must not be limited to existing

conditions only, and (4) it must apply equally to all members of the same class.
 HON. FERNANDO v ST. SCHOLASTICA COLLEGE

Law in Question: Ordinance No. 192 or known as Ordinance Regulating The Construction of Fences and Walls in
the Municipality of Marikina

FACTS:

 The City Government of Marikina sent a letter to the respondents ordering them to demolish and replace
the fence of their Marikina property to make it 80% see-thru, and, at the same time, to move it back
about six (6) meters to provide parking space for vehicles to park in line with Ordinance 192.
 Not in conformity, the respondents filed a petition for prohibition with an application for a writ of
preliminary injunction and temporary restraining order before the RTC, Marikina. The respondents argued
that the petitioners were acting in excess of jurisdiction in enforcing Ordinance No. 192, asserting that
such contravenes Section 1, Article III of the 1987 Constitution. That demolishing their fence and
constructing it six (6) meters back would result in the loss of at least 1,808.34 square meters, worth about
₱9,041,700.00, along West Drive, and at least 1,954.02 square meters, worth roughly ₱9,770,100.00,
along East Drive.
 The petitioners, on the other hand, countered that the ordinance was a valid exercise of police power, by
virtue of which, they could restrain property rights for the protection of public safety, health, morals, or
the promotion of public convenience and general prosperity.
 RTC and CA ruled in favor of the respondents.

ISSUE: WON Marikina Ordinance No. 192, imposing a five-meter setback, a valid exercise of police power

HELD:

NO. “Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the
health, morals, peace, education, good order or safety and general welfare of the people.” Two tests have been
used by the Court – the rational relationship test and the strict scrutiny test:

Under the rational relationship test, an ordinance must pass the following requisites: (1) the interests of the public
generally, as distinguished from those of a particular class, require its exercise; and (2) the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.

The real intent of the setback requirement was to make the parking space free for use by the public and not for the
exclusive use of respondents. This would be tantamount to a taking of private property for public use without just
compensation. The Court, thus, finds Section 5 of the Ordinance to be unreasonable and oppressive. Hence, the
exercise of police power is not valid.
 Basco vs Philippine Amusement and Gaming Corporation

197 SCRA 52 (1991)

FACTS:

The petitioners led by Atty. Basco questioned the constitutionality PD 1869, a consolidated law which
established the Philippine Amusement and Gaming Corporation (PAGCOR) Charter. On July 11, 1983, PAGCOR was
created under PD 1869, pursuant to the policy of the government, “ to regulate and centralize through an
appropriate institution all games of chance authorized by existing franchise or permitted by law.” This was
subsequently proven to be beneficial not just to the government but also to the society in general. It is a reliable
source of much needed revenue for the government. With the creation of PAGCOR and the direct intervention of
the Government, public welfare is promoted because the evil practices and corruptions that go with gambling will
be minimized if not totally eradicated. Petitioners argue that it is unconstitutional because: first, it is contrary to
morals, public policy and public order; second, it violates equal protection, as it legalizes gambling while other
forms are prohibited; third, it waives the City of Manila’s power to improve taxes because PAGCOR is exempt from
tax and fourth, it violates the constitutional provision against monopolies.

ISSUE:

Whether or not PD 1869 is unconstitutional and an invalid exercise of police power.

HELD:

NO. Gambling in all its forms, unless allowed by law, is generally prohibited. But the prohibition of
gambling does not mean that the Government cannot regulate it in the exercise of its police power. Police power is
defined as the “state authority to enact legislation that may interfere with personal liberty or property in order to
promote the general welfare”. It is therefore a valid exercise of police power because it promotes general welfare.
Also, PAGCOR has a dual role, to operate and to regulate gambling casinos. The latter role is governmental, which
places it in the category of an agency or instrumentality of the Government. Being an instrumentality of the
Government, PAGCOR should be and actually is exempt from local taxes.

PD 1869 does not violate the equal protection clause. The Constitution does not require situations which
are different in fact or opinion to be treated in law as though they were the same. Equal protection clause of the
Constitution does not preclude classification of individuals who may be accorded different treatment under the
law, provided it is not unreasonable or arbitrary. The clause does not prohibit the legislature from establishing
classes of individuals or objects upon which different rules shall operate. The mere fact that some gambling
activities like cockfighting, horse racing, sweepstakes, lotteries and races are legalized under certain conditions,
while others are prohibited, does not render the applicable laws, P.D. 1869 for one, unconstitutional. Lastly, It
should be noted that, as the provision is worded, monopolies are not necessarily prohibited by the Constitution.
The state must still decide whether public interest demands that monopolies be regulated or prohibited. Again,
this is a matter of policy for the Legislature to decide.
 CITY OF BATANGAS VS. PHILIPPINE SHELL PETROLEUM CORPORATION

G.R. No. 195003 | June 7, 2017

FACTS

On 2001, the Sangguniang Panlungsod enacted the Assailed Ordinance Ordinance No. 3, series of 2001, which
requires heavy industries operating along the portions of Batangas Bay within the territorial jurisdiction of
Batangas City to construct desalination plants to facilitate the use of seawater as coolant for their industrial
facilities.

On2006, Philippine Shell Petroleum Corp. filed against Batangas City and the Sangguniang Panlungsod a Petition
for Declaration of Nullity (PSPC Petition) before the RTC praying that the Assailed Ordinance be declared null and
void. 

PSPC averred that the Assailed Ordinance constitutes an invalid exercise of police power as it failed to meet the
substantive requirements for validity. PSPC argued that the Assailed Ordinance contravenes the Water Code of the
Philippines (Water Code), and encroaches upon the power of the National Water Resources Board (NWRB) to
regulate and control the Philippines' water resources. In addition, Batangas City and the Sangguniang Panlungsod
failed to sufficiently show the factual or technical basis for its enactment. 24 In this connection, PSPC alleged that
the Assailed Ordinance unduly singles out heavy industries, and holds them solely accountable for the loss of water
and destruction of aquifers without basis, resulting in the deprivation of their property rights without due process
of law

In response, Batangas City and the Sangguniang Panlungsod maintained that they have the power to enact the
Assailed Ordinance pursuant to the general welfare clause under the LGC.29 According to them, the rationale of
the Assailed Ordinance is to stop PSPC and other industries similarly situated from relying "too much" on ground
water as coolants for their machineries, and alternatively promote the use of seawater for such purpose,
considering that fresh ground water is a "perishable commodity.

RTC and CA ruled in favor of City of Batangas.

ISSUE

Whether or not the Assailed Ordinance is constitutes a valid exercise of its power

HELD

No. The claim of City of Batangas that the assailed ordinance constitutes a valid exercise of its power is erroneous.
Police power is the power to prescribe regulations to promote the health, morals, peace, education, good order,
safety, and general welfare of the people. As an inherent attribute of sovereignty, police power primarily rests with
the State. In furtherance of the State's policy to foster genuine and meaningful local autonomy, the national
legislature delegated the exercise of police power to local government units (LGUs) as agents of the State.

Since LGUs exercise delegated police power as agents of the State, it is incumbent upon them to act in conformity
to the will of their principal, the State. Necessarily, therefore, ordinances enacted pursuant to the general welfare
clause may not subvert the State's will by contradicting national statutes.
 CITY GOVERNMENT OF OF QUEZON CITY (GQC) v HON. ERICTA and HIMALAYANG PILIPINO INC. (HP)

Law in Question: Section 9 of Ordinance No. 6118 S-64 or known as Ordinance Regulating Establishment,
Maintenance, and Operation of Private Memorial Type Cemetery or Burial Ground within the Jurisdiction of
Quezon City and Providing Penalties for the Violation Thereof

FACTS:

 Ordinance No. 6118, S-64 was promulgated in Quezon City (GQC) which approved the regulation of
establishment of private cemeteries in the said city. It is stated in the ordinance that 6% of the total area
of the private memorial park shall be set aside for charity burial.
 Respondent, Himlayang Pilipino (HP) ,reacted by filing with the Court of First Instance of Rizal Branch XVIII
at Quezon City, a petition for declaratory relief, prohibition and mandamus with preliminary injunction
seeking to annul Section 9 of the Ordinance in question. The respondent alleged that the same is contrary
to the Constitution, the Quezon City Charter, the Local Autonomy Act, and the Revised Administrative
Code.
 GQC argued that the taking of the respondent's property is a valid and reasonable exercise of police
power and that the land is taken for a public use as it is intended for the burial ground of paupers.
 On the other hand, HP contends that the taking or confiscation of property is obvious because the
questioned ordinance permanently restricts the use of the property such that it cannot be used for any
reasonable purpose and deprives the owner of all beneficial use of his property.
 RTC and CA annulled the ordinance.

ISSUE: WON Section 9 of Ordinance 6118 is a valid exercise of police power

HELD:

NO. Police power is defined by Freund as 'the power of promoting the public welfare by restraining and regulating
the use of liberty and property. It has been said that police power is the most essential of government powers, at
times the most insistent, and always one of the least limitable of the powers of government.

It will be seen from the foregoing authorities that police power is usually exercised in the form of mere regulation
or restriction in the use of liberty or property for the promotion of the general welfare. It does not involve the
taking or confiscation of property with the exception of a few cases where there is a necessity to confiscate private
property in order to destroy it for the purpose of protecting the peace and order and of promoting the general
welfare as for instance, the confiscation of an illegally possessed article, such as opium and firearms. It seems to
the court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a mere police regulation but
an outright confiscation. It deprives a person of his private property without due process of law, nay, even without
compensation.

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of an private
cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order,
safety, or the general welfare of the people. The ordinance is actually a taking without compensation of a certain
area from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of building
or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries.
 Department of Transportation and Communication vs Abecina

795 SCRA 214 (2016)

FACTS:

Respondent Spouses Vicente and Maria Abecina are the registered owners of 5 parcels of land in
Camarines Norte. In February 1993, the DOTC awarded Digitel Telecommunications Philippines, Inc. a contract for
the management, operation, maintenance, and development of a Regional Telecommunications Development
Project (RTDP). Later on, the municipality of Jose Panganiban, Camarines Norte, donated a one thousand two
hundred (1,200) square-meter parcel of land to the DOTC for the implementation of the RDTP in the municipality.
However, the municipality erroneously included portions of the respondents' property in the donation. Pursuant to
the government projects, Digitel constructed a telephone exchange on the property which encroached on the
properties of the respondent spouses. The respondent spouses sent a demand letter to both the DOTC and Digitel
to vacate the premises and to pay unpaid rent/damages in the amount of P1,200,000. Neither the DOTC nor Digitel
complied with the demand. In its answer, the DOTC claimed immunity from suit and ownership over the subject
properties. Thereafter, the respondent spouses and Digitel executed a Compromise Agreement and entered into a
Contract of Lease. Both the RTC and CA ruled in favor of the respondents.

ISSUE:

Whether or not respondent spouses have a rightful claim to the property.

HELD:

YES. The petition is denied. Though the acts of the government are jure imperii thus validating their claim
of state immunity from suit, the principle is not absolute. The court held that government immunity from suit
could not be used as an instrument to perpetuate an injustice on a citizen. The Constitution identifies the
limitations to the near-limitless powers of the State. Among these limitations are the principles that no person
shall be deprived of life, liberty, or property without due process of law and that private property shall not be
taken for public use without just compensation. Our laws require that the State's power of eminent domain shall
be exercised through expropriation proceedings in court. Whenever private property is taken for public use, it
becomes the ministerial duty of the concerned office or agency to initiate expropriation proceedings. By necessary
implication, the filing of a complaint for expropriation is a waiver of State immunity.

If the DOTC had correctly followed the regular procedure upon discovering that it had encroached on the
respondents' property, it would have initiated expropriation proceedings instead of insisting on its immunity from
suit. The Department's entry into and taking of possession of the respondents' property amounted to an implied
waiver of its governmental immunity from suit. The court held that if in the future the factual circumstances
should change and the respondents refuse to continue the lease, then the DOTC may initiate expropriation
proceedings. But as matters now stand, the respondents are clearly willing to lease the property and there is no
need to take the said property.
 MANILA MEMORIAL PARK INC. VS SECRETARY OF DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT

G.R. No. 175356 | December 3, 2013

FACTS

RA 7432 was passed into law (amended by RA 9257), granting senior citizens 20% discount on certain
establishments. To implement the tax provisions of RA 9257, the Secretary of Finance and the DSWD issued its
own Rules and Regulations.

Petitioners are not questioning the 20% discount granted to senior citizens but are only assailing the
constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules and
regulations issued by the DSWD and the DOF.

Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution,
which provides that: "private property shall not be taken for public use without just compensation." Respondents
maintain that the tax deduction scheme is a legitimate exercise of the State’s police power.

ISSUE
Whether or not the legally mandated 20% senior citizen discount is an exercise of police power or eminent
domain.

HELD

YES. The 20% senior citizen discount is an exercise of police power. It may not always be easy to
determine whether a challenged governmental act is an exercise of police power or eminent domain. The judicious
approach, therefore, is to look at the nature and effects of the challenged governmental act and decide on the
basis thereof.

The 20% discount is intended to improve the welfare of senior citizens who, at their age, are less likely to
be gainfully employed, more prone to illnesses and other disabilities, and, thus, in need of subsidy in purchasing
basic commodities. It serves to honor senior citizens who presumably spent their lives on contributing to the
development and progress of the nation.

In turn, the subject regulation affects the pricing, and, hence, the profitability of a private establishment.

The subject regulation may be said to be similar to, but with substantial distinctions from, price control or
rate of return on investment control laws which are traditionally regarded as police power measures.

The subject regulation differs there from in that (1) the discount does not prevent the establishments
from adjusting the level of prices of their goods and services, and (2) the discount does not apply to all customers
of a given establishment but only to the class of senior citizens. Nonetheless, to the degree material to the
resolution of this case, the 20% discount may be properly viewed as belonging to the category of price regulatory
measures which affect the profitability of establishments subjected thereto. On its face, therefore, the subject
regulation is a police power measure.
 REYES v ALMANZOR

Topic: Taxation Powers

FACTS:

 Petitioners J.B.L. Reyes, Edmundo and Milagros Reyes are owners of parcels of land situated in Tondo and
Sta. Cruz Districts, City of Manila, which are leased and entirely occupied as dwelling sites by tenants. Said
tenants were paying monthly rentals not exceeding three hundred pesos (P300).
 In 1971, the National Legislature enacted Republic Act No. 6359 prohibiting for one year from its
effectivity, an increase in monthly rentals of dwelling units or of lands on which another's dwelling is
located, where such rentals do not exceed three hundred pesos. The said Act also suspended paragraph
(1) of Article 1673 of the Civil Code for two years from its effectivity thereby disallowing the ejectment of
lessees upon the expiration of the usual legal period of lease. Thereafter, PD 20 has been enacted making
RA 6359 permanent.
 In 1973, respondent City Assessor of Manila re-classified and reassessed the value of the subject
properties based on the schedule of market values duly reviewed by the Secretary of Finance. The
revision, as expected, entailed an increase in the corresponding tax rates prompting petitioners to file a
Memorandum of Disagreement with the Board of Tax Assessment Appeals. They averred that the
reassessments made were "excessive, unwarranted, inequitable, confiscatory and unconstitutional"
considering that the taxes imposed upon them greatly exceeded the annual income derived from their
properties.
 They argued that the income approach should have been used in determining the land values instead of
the comparable sales approach which the City Assessor adopted

ISSUE: WON the approach adopted by the City Assessor appropriate in assessing the property

HELD:

NO. The taxing power is an attribute of sovereignty. However, the power to tax is not unconfined as there are
restrictions. The due process and equal protection clauses of the Constitution limit this power. The law should
operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the
same manner. The market value of properties covered by PD 20 cannot be equated with the market value of
properties not covered. The former has naturally a much lesser market value in the view of the rental restriction.
Consequently, it stands to reason that petitioners who are burdened by the government by it Rental Freezing Law
under the principle of social justice should not now be penalized by the same government by imposition of
excessive taxes that petitioners can ill afford and eventually result in the forfeiture of their properties.
 Philippine Health Care Providers vs Commissioner of Internal Revenue

600 SCRA 413 (2009)

FACTS:

Petitioner is a domestic corporation whose primary purpose is to establish, maintain, conduct and operate
a prepaid group practice health care delivery system or a health maintenance organization to take care of the sick
and disabled persons enrolled in the health care plan and to provide for the administrative, legal, and financial
responsibilities of the organization. On January 27, 2000, respondent CIR sent petitioner a formal demand letter
and the corresponding assessment notices demanding the payment of deficiency taxes, for the taxable years 1996
and 1997 in the total amount of P224M. The deficiency assessment was imposed on petitioner’s health care
agreement with the members of its health care program pursuant to Section 185 of the 1997 Tax Code. Petitioner
protested the assessment in a letter but as respondent did not act on the protest; petitioner filed a petition for
review in the Court of Tax Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments. The
CTA rendered a decision, ordering the petitioner to pay the deficiency VAT amounting to P22M inclusive of 25%
surcharge plus 20% interest from January 20, 1997 until fully paid for the 1996 VAT deficiency and ₱31M inclusive
of 25% surcharge plus 20% interest from January 20, 1998 until fully paid for the 1997 VAT deficiency. Ano daw.
Accordingly, VAT Ruling No. [231]-88 is declared void and without force and effect. The 1996 and 1997 deficiency
DST assessment against petitioner is hereby cancelled and set aside. Respondent is ordered to desist from
collecting the said DST deficiency tax. Respondent appealed the CTA decision to the (CA) insofar as it cancelled the
DST assessment. He claimed that petitioner’s health care agreement was a contract of insurance subject to DST
under Section 185 of the 1997 Tax Code. The CA rendered its decision which held that petitioner’s health care
agreement was in the nature of a non-life insurance contract subject to DST. Respondent is ordered to pay the
deficiency Documentary Stamp Tax. Petitioner moved for reconsideration but the CA denied it.

ISSUE:

Whether or not Philippine Health Care Providers is engaged in insurance business thus subject to tax.

HELD:

NO. Philippine Health Care Providers is not subject to tax. Health Maintenance Organizations are not
engaged in the insurance business. The SC said in its decision that it is irrelevant that petitioner is an HMO and not
an insurer because its agreements are treated as insurance contracts and the DST is not a tax on the business but
an excise on the privilege, opportunity or facility used in the transaction of the business. It is important to
characterize the business it is engaged in and to determine whether it is an HMO or an insurance company, as this
distinction is important to determine whether or not it is liable for DST on its health care agreements. Petitioner is
admittedly an HMO. Under RA 7878, an HMO is “an entity that provides, offers or arranges for coverage of
designated health services needed by plan members for a fixed prepaid premium. The payments do not vary with
the extent, frequency or type of services provided. Section 2 (2) of PD 1460 enumerates what constitutes “doing an
insurance business” or “transacting an insurance business” which are making or proposing to make, as insurer, any
insurance contract; making or proposing to make, as surety, any contract of suretyship as a vocation and not as
merely incidental to any other legitimate business or activity of the surety.

Overall, petitioner appears to provide insurance-type benefits to its members, but these are incidental to
the principal activity of providing them medical care. The “insurance-like” aspect of petitioner’s business is small
compared to its noninsurance activities. Therefore, since it substantially provides health care services rather than
insurance services, it cannot be considered as being in the insurance business.
 CIR vs SAN MIGUEL CORP.

G.R. Nos. 205045 & 205723 | January 25, 2017

FACTS

These consolidated cases consider whether "San Mig Light" is a new brand or a variant of one of San
Miguel Corporation's existing beer brands, and whether the Bureau of Internal Revenue may issue notices of
discrepancy that effectively changes "San Mig Light" 's classification from new brand to variant. The issues involve
an application of Section 143 of the 1997 National Internal Revenue Code (Tax Code), as amended, on the
definition of a variant, which is subject to a higher excise tax rate than a new brand. This case also applies the
requirement in Rep. Act No. 9334 that reclassification of certain fermented liquor products introduced between
January 1, 1997 and December 31, 2003 can only be done by an act of Congress.

When respondent launched "San Mig Light" in 1999, it wrote the Bureau of Internal Revenue on October
19, 1999 requesting registration and authority to manufacture "San Mig Light" to be taxed as P12.15.

The Bureau of Internal Revenue granted this request in its October 27, 1999 letter. Contrary to
petitioner's contention, the registration granted was not merely for intellectual property protection but "for
internal revenue purposes only.

However, after granting such request, the CIR still, through Assistant Commissioner Abella, assessed SAN
MIG LIGHT as a variant instead of a new brand which entailed deficiency assessments to San Miguel Corp.

ISSUE

1. Whether or not "San Mig Light" is a new brand and not a variant of "San Miguel Pale Pilsen.

2. Whether or not the CIR is estopped from changing its position.

HELD

1. YES. SC upheld CTA’s decision that San Mig Light is a new brand. A 'variant of a brand' shall refer to a brand on
which a modifier is prefixed and/or suffixed to the root name of the brand. 'New brand' shall mean a brand
registered after the date of affectivity of R.A. No. 8240 on January 1, 1997. Thus, it is clear that when the product
"San Mig Light" was introduced in 1999, it was considered as an entirely new product and a new brand, there
being no root name of "San Miguel" or "San Mig" in its existing brand names. The existing registered brand name
of SMC at that time was "Pale Pilsen." Therefore, the word "Light" cannot he considered as a mere suffix to the
word "San Miguel," but an entirely new brand name, "San Mig Light." Further, in BIR's October, 1999 letter to SMC,
the registration granted was not merely for intellectual property protection but "for internal revenue purposes
only"

2. YES. SMC cannot be faulted for relying on these actions by the BIR. Because the BIR granted respondent's
request in its October 27, 1999 letter and confirmed this grant in its subsequent letters, respondent cannot be
faulted for relying on these actions by the Bureau of Internal Revenue.

While estoppel generally does not apply against government, especially when the case involves the collection of
taxes, an exception can be made when the application of the rule will cause injustice against an innocent party.136

Respondent had already acquired a vested right on the tax classification of its San Mig Light as a new brand. To
allow petitioner to change its position will result in deficiency assessments in substantial amounts against
respondent to the latter's prejudice.

The authority of the BIR to overrule, correct, or reverse the mistakes or errors of its agents is conceded. However,
this authority must be exercised reasonably,137 i.e., only when the action or ruling is patently erroneous138 or
patently contrary to law.139 For the presumption lies in the regularity of performance of official duty,140 and
reasonable care has been exercised by the revenue officer or agent in evaluating the facts before him or her prior
to rendering his or her decision or ruling—in this case, prior to the approval of the registration of San Mig Light as a
new brand for excise tax purposes. A contrary view will create disorder and confusion in the operations of the
Bureau of Internal Revenue and open the administrative agency to inconsistencies in the administration and
enforcement of tax laws.
 ERMITA MALATE HOTEL v CITY MAYOR OF MANILA

Law in Question: Ordinance No. 4760

FACTS:

 The Manila Municipal Board enacted Ordinance 4760 which was approved by then acting Mayor (Vice
Mayor) Astorga. It sought to regulate hotels and motels in Manila classifying them into 1st class with an
annual tax of P6,000 and 2nd class with an annual tax of P4,500. The same ordinance requires the hotels
and motels to get the demographics (such as surname, given name and middle name, the date of birth,
the address, the occupation, the sex, the nationality, the length of stay and the number of companions in
the room, if any, with the name, relationship, age and sex would be specified, with data furnished as to
his residence certificate as well as his passport number, if any ) of who checks in to their rooms. It
commands the hotels and motels to have wide open spaces so as not to conceal the identity of their
patrons.
 It also being provided that the premises and facilities of such hotels, motels and lodging houses would be
open for inspection either by the City Mayor, or the Chief of Police, or their duly authorized
representatives.
 Ermita-Malate impugned the validity of the law averring that such is oppressive, arbitrary and against due
process. The lower court as well as the appellate court ruled in favor of Ermita-Malate.

ISSUE: WON Ordinance No. 4760 is valid

HELD:

YES. There is no question but that the challenged ordinance was precisely enacted to minimize certain practices
hurtful to public morals. The explanatory note of the Councilor Herminio Astorga included as annex to the
stipulation of facts, speaks of the alarming increase in the rate of prostitution, adultery and fornication in Manila
traceable in great part to the existence of motels, which "provide a necessary atmosphere for clandestine entry,
presence and exit" and thus become the "ideal haven for prostitutes and thrill-seekers." The challenged ordinance
then proposes to check the clandestine harboring of transients and guests of these establishments by requiring
these transients and guests to fill up a registration form, prepared for the purpose, in a lobby open to public view
at all times, and by introducing several other amendatory provisions calculated to shatter the privacy that
characterizes the registration of transients and guests." Moreover, the increase in the licensed fees was intended
to discourage "establishments of the kind from operating for purpose other than legal" and at the same time, to
increase "the income of the city government." It would appear therefore that the stipulation of facts, far from
sustaining any attack against the validity of the ordinance, argues eloquently for it.

The mantle of protection associated with the due process guaranty does not cover petitioners. This particular
manifestation of a police power measure being specifically aimed to safeguard public morals is immune from such
imputation of nullity resting purely on conjecture and unsupported by anything of substance. To hold otherwise
would be to unduly restrict and narrow the scope of police power which has been properly characterized as the
most essential, insistent and the least limitable of powers, extending as it does "to all the great public needs." It
would be, to paraphrase another leading decision, to destroy the very purpose of the state if it could be deprived
or allowed itself to be deprived of its competence to promote public health, public morals, public safety and the
genera welfare. Negatively put, police power is "that inherent and plenary power in the State which enables it to
prohibit all that is hurtful to the comfort, safety, and welfare of society.
 Commissioner on Internal Revenue vs Central Luzon Drug Corporation

456 SCRA 414 (2005)

FACTS:

Respondent is a domestic corporation engaged in the retailing of medicine and it operated six drugstores
under the business name Mercury Drug. From January to December 1996 respondent granted 20% sales discount
to qualified senior citizens on their purchases of medicines pursuant to RA 7432 for a total of ₱ 904,769. On April
15, 1997, respondent filed its annual Income Tax Return for taxable year 1996 declaring therein net losses. On Jan.
16, 1998 respondent filed with petitioner a claim for tax refund/credit of ₱ 904,769 allegedly arising from the 20%
sales discount. Unable to obtain a response from petitioner, respondent elevated its claim to the Court of Tax
Appeals. The court dismissed the same but upon reconsideration, the latter reversed its earlier ruling and ordered
petitioner to issue a Tax Credit Certificate in favor of respondent citing that Sec. 229 of RA 7432 deals exclusively
with illegally collected or erroneously paid taxes but that there are other situations which may warrant a tax
credit/refund. CA affirmed Court of Tax Appeal's decision reasoning that RA 7432 required neither a tax liability nor
a payment of taxes by private establishments prior to the availment of a tax credit. Moreover, such credit is not
equivalent to an unintended benefit from the law, but rather a just compensation for the taking of private
property for public use.

ISSUE:

Whether or not respondent, despite incurring a net loss, may still claim the 20% sales discount as a tax
credit.

HELD:

YES. The petition is denied. It is clear that Sec. 4a of RA 7432 grants to senior citizens the privilege of
obtaining a 20% discount on their purchase of medicine from any private establishment in the country.
Respondent may then claim the cost of the discount as a tax credit. The privilege enjoyed by senior citizens does
not come directly from the State, but rather from the private establishments concerned. Accordingly, the tax credit
benefit granted to these establishments can be deemed as their just compensation for private property taken by
the State for public use. The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed
by the general public to which these citizens belong. The discounts given would have entered their business and
formed part of the gross sales of the private establishments concerned, were it not for RA 7432. The permanent
reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use
or benefit. Such credit can be claimed even if the establishment operates at a loss. A tax credit generally refers to
an amount that is “subtracted directly from one’s total tax liability.” It is an “allowance against the tax itself” or “a
deduction from what is owed” by a taxpayer to the government. A tax credit is not considered a sales discount and
should not be treated as tax deduction.

A tax credit should be understood in relation to other tax concepts. One of these is tax deduction – which
is subtraction “from income for tax purposes,” or an amount that is “allowed by law to reduce income prior to the
application of the tax rate to compute the amount of tax which is due.” In other words, whereas a tax credit
reduces the tax due, tax deduction reduces the income subject to tax in order to arrive at the taxable income. A tax
credit is used to reduce directly the tax that is due, there should be a tax liability before the tax credit can be
applied. Without that liability, any tax credit application will be useless. There will be no reason for deducting the
latter when there is no existing obligation to the government. However, the existence of a tax credit or its grant by
law is not the same as the availment or use of such credit. While the grant is mandatory, the availment or use is
not. If a net loss is reported by, and no other taxes are currently due from, a business establishment, there will
obviously be no tax liability against which any tax credit can be applied. For the establishment to choose the
immediate availment of a tax credit will be impracticable.
PEOPLE VS. MARTI

G.R. No. 81561 | 18 January 1991

FACTS

Andre Marti and his common-law wife, Sherly Reyes, went to the booth of the “Manila Packing and Export
Forwarders” with 4 wrapped packages. Marti informed the proprietress that he was sending the packages to a
friend in Zurich, Switzerland. The proprietress then asked if she could examine and inspect the packages. Martin
refused but he assures her that the packages simply contained books, cigars, and gloves. Before the box was
brought to the Bureau of Customs and Bureau of Posts, the proprietor, following the SOP, opened the boxes for
final inspection. An odor emitted from the box and that the gloves contain dried leaves. He prepared a letter and
reported to the NBI and requesting laboratory examinations. The dried marijuana leaves were found to have
contained inside the cellophane wrappers.

ISSUE

Whether the evidence of the imputed offense had been obtained in violation of Marti’s constitutional rights
against unreasonable search and seizure and privacy of communication.
HELD

NO. In the absence of governmental interference, the liberties guaranteed by the Constitution cannot be invoked
against the State.

The contraband in the case at bar having come into possession of the Government without the latter transgressing
appellant's rights against unreasonable search and seizure, the Court sees no cogent reason why the same should
not be admitted against him in the prosecution of the offense charged.

First, the factual considerations of the case at bar readily foreclose the proposition that NBI agents conducted an
illegal search and seizure of the prohibited merchandise. Records of the case clearly indicate that it was Mr. Job
Reyes, the proprietor of the forwarding agency, who made search/inspection of the packages. Said inspection was
reasonable and a standard operating procedure on the part of Mr. Reyes as a precautionary measure before
delivery of packages to the Bureau of Customs or the Bureau of Posts.
 CAPIN CADIZ v BRENT HOSPITAL

Topic: Illegal suspension & Immorality of being pregnant outside wedlock

FACTS:

 Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent) at the time
of her indefinite suspension from employment in 2006. The cause of suspension was Cadiz's
Unprofessionalism and Unethical Behavior Resulting to Unwed Pregnancy. It appears that Cadiz became
pregnant out of wedlock, and Brent imposed the suspension until such time that she marries her
boyfriend in accordance with law.
 Labor Tribunal ruled in favor of Brent Hospital which is an institution of the Episcopal Church in the
Philippines operating both a hospital and college where Cadiz was employed. The Labor Arbiter further
stated that her "immoral conduct was magnified as serious misconduct not only by her getting pregnant
as a result thereof before and without marriage. NLRC affirmed the decision of LT.
 CA also dismissed Cadiz’s petition outright due to technical defects in the petition: (1) incomplete
statement of material dates; (2) failure to attach registry receipts; and (3) failure to indicate the place of
issue of counsel's PTR and IBP official receipts.

ISSUE: WON impregnation outside wedlock is considered immoral and can be a ground for termination of Cadiz

HELD:

NO. To resolve this, the Court makes reference in a promulgated case Leus v St. Scholastica’s College. Leus was
dismissed from employment by the school for having borne a child out of wedlock. The Court ruled in Leus that the
determination of whether a conduct is disgraceful or immoral involves a two-step process: first, a consideration of
the totality of the circumstances surrounding the conduct; and second, an assessment of the said circumstances
vis-a-vis the prevailing norms of conduct, i.e., what the society generally considers moral and respectable.

In this case, the surrounding facts leading to Cadiz's dismissal are straightforward - she was employed as a human
resources officer in an educational and medical institution of the Episcopal Church of the Philippines; she and her
boyfriend at that time were both single; they engaged in premarital sexual relations, which resulted into
pregnancy. The foregoing circumstances, however, do not readily equate to disgraceful and immoral conduct.
Brent's Policy Manual and Employee's Manual of Policies do not define what constitutes immorality; it simply
stated immorality as a ground for disciplinary action. Instead, Brent erroneously relied on the standard dictionary
definition of fornication as a form of illicit relation and proceeded to conclude that Cadiz's acts fell under such
classification, thus constituting immorality. Jurisprudence has already set the standard of morality with which an
act should be gauged - it is public and secular, not religious.

With regards to the condition of Brent of marrying her boyfriend, it cannot be enforced. Republic Act No. 9710 or
the Magna Carta of Women51 protects women against discrimination in all matters relating to marriage and family
relations, including the right to choose freely a spouse and to enter into marriage only with their free and full
consent.