G.R. No. 144104 June 29, 2004 LUNG CENTER OF THE PHILIPPINES, petitioner, vs. QUEZON CITY an CONST!

NTINO P. ROS!S, "n #"$ %a&a%"'( a$ C"'( !$$e$$o) o* Que+on C"'(,respondents. C!LLEJO, SR., J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, of the Decision1 dated July 17, !!! of the Court of "ppeals in C"#$.R. %& 'o. 57!14 which affirmed the decision of the Central (oard of "ssessment "ppeals holdin) that the lot owned *y the petitioner and its hospital *uildin) constructed thereon are su*+ect to assessment for purposes of real property ta,. T#e !n'e%e en'$ The petitioner -un) Center of the &hilippines is a non#stoc. and non#profit entity esta*lished on January 1/, 1011 *y virtue of &residential Decree 'o. 11 2. 3t is the re)istered owner of a parcel of land, particularly descri*ed as -ot 'o. R&#2#(#2"#1#(#1, %45#!4#!!!405, located at 6ue7on "venue corner 8lliptical Road, Central District, 6ue7on City. The lot has an area of 1 1,4/2 s9uare meters and is covered *y Transfer Certificate of Title :TCT; 'o. /12 ! of the Re)istry of Deeds of 6ue7on City. 8rected in the middle of the aforesaid lot is a hospital .nown as the -un) Center of the &hilippines. " *i) space at the )round floor is *ein) leased to private parties, for canteen and small store spaces, and to medical or professional practitioners who use the same as their private clinics for their patients whom they char)e for their professional services. "lmost one#half of the entire area on the left side of the *uildin) alon) 6ue7on "venue is vacant and idle, while a *i) portion on the ri)ht side, at the corner of 6ue7on "venue and 8lliptical Road, is *ein) leased for commercial purposes to a private enterprise .nown as the 8lliptical 5rchids and $arden Center. The petitioner accepts payin) and non#payin) patients. 3t also renders medical services to out#patients, *oth payin) and non#payin). "side from its income from payin) patients, the petitioner receives annual su*sidies from the )overnment. 5n June 7, 1002, *oth the land and the hospital *uildin) of the petitioner were assessed for real property ta,es in the amount of &4,554,1/! *y the City "ssessor of 6ue7on City.2 "ccordin)ly, Ta, Declaration 'os. C#! 1#!1 / :1/# 511; and C#! 1#!1 21 :15# 511#"; were issued for the land and the hospital *uildin), respectively.4 5n "u)ust 5, 1002, the petitioner filed a Claim for 8,emption5 from real property ta,es with the City "ssessor, predicated on its claim that it is a charita*le institution. The petitioner<s re9uest was denied, and a petition was, thereafter, filed *efore the -ocal (oard of "ssessment "ppeals of 6ue7on City :6C#-("", for *revity; for the reversal of the resolution of the City "ssessor. The petitioner alle)ed that under %ection 1, para)raph 2 of the 1017 Constitution, the property is e,empt from real property ta,es. 3t averred that a minimum of /!= of its hospital *eds are e,clusively used for charity patients and that the ma+or thrust of its hospital operation is to serve charity patients. The petitioner contends that it is a charita*le institution and, as such, is e,empt from real property ta,es. The 6C#-("" rendered +ud)ment dismissin) the petition and holdin) the petitioner lia*le for real property ta,es./

The 6C#-(""<s decision was, li.ewise, affirmed on appeal *y the Central (oard of "ssessment "ppeals of 6ue7on City :C("", for *revity;7 which ruled that the petitioner was not a charita*le institution and that its real properties were not actually, directly and e,clusively used for charita*le purposes> hence, it was not entitled to real property ta, e,emption under the constitution and the law. The petitioner sou)ht relief from the Court of "ppeals, which rendered +ud)ment affirmin) the decision of the C("".1 ?ndaunted, the petitioner filed its petition in this Court contendin) that@ ". TA8 C5?RT A QUO 8RR8D 3' D8C-"R3'$ &8T3T35'8R "% '5T 8'T3T-8D T5 R8"-TB T"C 8C8D&T35'% 5' TA8 $R5?'D TA"T 3T% -"'D, (?3-D3'$ "'D 3D&R5E8D8'T%, %?(J8CT 5F "%%8%%D8'T, "R8 '5T "CT?"--B, D3R8CT-B "'D 8CC-?%3E8-B D8E5T8D F5R CA"R3T"(-8 &?R&5%8%. (. 4A3-8 &8T3T35'8R 3% '5T D8C-"R8D "% R8"- &R5&8RTB T"C 8C8D&T ?'D8R 3T% CA"RT8R, &D 11 2, %"3D 8C8D&T35' D"B '8E8RTA8-8%% (8 8CT8'D8D ?&5' &R5&8R "&&-3C"T35'. The petitioner avers that it is a charita*le institution within the conte,t of %ection 1:2;, "rticle E3 of the 1017 Constitution. 3t asserts that its character as a charita*le institution is not altered *y the fact that it admits payin) patients and renders medical services to them, leases portions of the land to private parties, and rents out portions of the hospital to private medical practitioners from which it derives income to *e used for operational e,penses. The petitioner points out that for the years 1005 to 1000, 1!!= of its out# patients were charity patients and of the hospital<s 1 #*ed capacity, /!= thereof, or 17! *eds, is allotted to charity patients. 3t asserts that the fact that it receives su*sidies from the )overnment attests to its character as a charita*le institution. 3t contends that the Ge,clusivityG re9uired in the Constitution does not necessarily mean Gsolely.G Aence, even if a portion of its real estate is leased out to private individuals from whom it derives income, it does not lose its character as a charita*le institution, and its e,emption from the payment of real estate ta,es on its real property. The petitioner cited our rulin) in Herrera v. QC-BAA0 to *olster its pose. The petitioner further contends that even if &.D. 'o. 11 2 does not e,empt it from the payment of real estate ta,es, it is not precluded from see.in) ta, e,emption under the 1017 Constitution. 3n their comment on the petition, the respondents aver that the petitioner is not a charita*le entity. The petitioner<s real property is not e,empt from the payment of real estate ta,es under &.D. 'o. 11 2 and even under the 1017 Constitution *ecause it failed to prove that it is a charita*le institution and that the said property is actually, directly and e,clusively used for charita*le purposes. The respondents noted that in a newspaper report, it appears that )raft char)es were filed with the %andi)an*ayan a)ainst the director of the petitioner, its administrative officer, and Henaida Rivera, the proprietress of the 8lliptical 5rchids and $arden Center, for enterin) into a lease contract over 7,//2.12 s9uare meters of the property in 100! for only & !,!!! a month, when the monthly rental should *e &257,!!! a month as determined *y the Commission on "udit> and that instead of complyin) with the directive of the C5" for the cancellation of the

contract for *ein) )rossly pre+udicial to the )overnment, the petitioner renewed the same on Darch 12, 1005 for a monthly rental of only & 4,!!!. They assert that the petitioner uses the su*sidies )ranted *y the )overnment for charity patients and uses the rest of its income from the property for the *enefit of payin) patients, amon) other purposes. They aver that the petitioner failed to adduce su*stantial evidence that 1!!= of its out#patients and 17! *eds in the hospital are reserved for indi)ent patients. The respondents further assert, thus@ 12. That the claimsIalle)ations of the &etitioner -C& do not spea. well of its record of service. That *efore a patient is admitted for treatment in the Center, first impression is that it is pay#patient and re9uired to pay a certain amount as deposit. That even if a patient is livin) *elow the poverty line, he is char)ed with hi)h hospital *ills. "nd, without these *ills *ein) first settled, the poor patient cannot *e allowed to leave the hospital or *e dischar)ed without first payin) the hospital *ills or issue a promissory note )uaranteed and indorsed *y an influential a)ency or person .nown only to the Center> that even the remains of deceased poor patients suffered the same fate. Doreover, *efore a patient is admitted for treatment as free or charity patient, one must under)o a series of interviews and must su*mit all the re9uirements needed *y the Center, usually accompanied *y endorsement *y an influential a)ency or person .nown only to the Center. These facts were heard and admitted *y the &etitioner -C& durin) the hearin)s *efore the Aonora*le 6C#("" and Aonora*le C("". These are the reasons of indi)ent patients, instead of see.in) treatment with the Center, they prefer to *e treated at the 6ue7on 3nstitute. Can such practice *y the Center *e called charita*leJ1! T#e I$$ue$ The issues for resolution are the followin)@ :a; whether the petitioner is a charita*le institution within the conte,t of &residential Decree 'o. 11 2 and the 1072 and 1017 Constitutions and %ection 24:*; of Repu*lic "ct 'o. 71/!> and :*; whether the real properties of the petitioner are e,empt from real property ta,es. T#e Cou)',$ Ru-"n. The petition is partially )ranted. 5n the first issue, we hold that the petitioner is a charita*le institution within the conte,t of the 1072 and 1017 Constitutions. To determine whether an enterprise is a charita*le institutionIentity or not, the elements which should *e considered include the statute creatin) the enterprise, its corporate purposes, its constitution and *y#laws, the methods of administration, the nature of the actual wor. performed, the character of the services rendered, the indefiniteness of the *eneficiaries, and the use and occupation of the properties.11 3n the le)al sense, a charity may *e fully defined as a )ift, to *e applied consistently with e,istin) laws, for the *enefit of an indefinite num*er of persons, either *y *rin)in) their minds and hearts under the influence of education or reli)ion, *y assistin) them to esta*lish themselves in life or otherwise lessenin) the *urden of )overnment.1 3t may
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*e applied to almost anythin) that tend to promote the well#doin) and well#*ein) of social man. 3t em*races the improvement and promotion of the happiness of man.12 The word Gcharita*leG is not restricted to relief of the poor or sic..14 The test of a charity and a charita*le or)ani7ation are in law the same. The test whether an enterprise is charita*le or not is whether it e,ists to carry out a purpose reor)ani7ed in law as charita*le or whether it is maintained for )ain, profit, or private advanta)e. ?nder &.D. 'o. 11 2, the petitioner is a non#profit and non#stoc. corporation which, su*+ect to the provisions of the decree, is to *e administered *y the 5ffice of the &resident of the &hilippines with the Dinistry of Aealth and the Dinistry of Auman %ettlements. 3t was or)ani7ed for the welfare and *enefit of the Filipino people principally to help com*at the hi)h incidence of lun) and pulmonary diseases in the &hilippines. The raison detre for the creation of the petitioner is stated in the decree, viz@ 4hereas, for decades, respiratory diseases have *een a priority concern, havin) *een the leadin) cause of illness and death in the &hilippines, comprisin) more than 45= of the total annual deaths from all causes, thus, e,actin) a tremendous toll on human resources, which ailments are li.ely to increase and de)enerate into serious lun) diseases on account of una*ated pollution, industriali7ation and unchec.ed ci)arette smo.in) in the country> lavvph!l.net 4hereas, the more common lun) diseases are, to a )reat e,tent, preventa*le, and cura*le with early and ade9uate medical care, immuni7ation and throu)h prompt and intensive prevention and health education pro)rams> 4hereas, there is an ur)ent need to consolidate and reinforce e,istin) pro)rams, strate)ies and efforts at preventin), treatin) and reha*ilitatin) people affected *y lun) diseases, and to underta.e research and trainin) on the cure and prevention of lun) diseases, throu)h a -un) Center which will house and nurture the a*ove and related activities and provide tertiary#level care for more difficult and pro*lematical cases> 4hereas, to achieve this purpose, the $overnment intends to provide material and financial support towards the esta*lishment and maintenance of a -un) Center for the welfare and *enefit of the Filipino people.15 The purposes for which the petitioner was created are spelled out in its "rticles of 3ncorporation, thus@ %8C5'D@ That the purposes for which such corporation is formed are as follows@ 1. To construct, esta*lish, e9uip, maintain, administer and conduct an inte)rated medical institution which shall speciali7e in the treatment, care, reha*ilitation andIor relief of lun) and allied diseases in line with the concern of the )overnment to assist and provide material and financial support in the esta*lishment and maintenance of a lun) center primarily to *enefit the people of the &hilippines and in pursuance of the policy of the %tate to secure the well#

*ein) of the people *y providin) them speciali7ed health and medical services and *y minimi7in) the incidence of lun) diseases in the country and elsewhere. . To promote the no*le underta.in) of scientific research related to the prevention of lun) or pulmonary ailments and the care of lun) patients, includin) the holdin) of a series of relevant con)resses, conventions, seminars and conferences> 2. To stimulate and, whenever possi*le, underwrite scientific researches on the *iolo)ical, demo)raphic, social, economic, eu)enic and physiolo)ical aspects of lun) or pulmonary diseases and their control> and to collect and pu*lish the findin)s of such research for pu*lic consumption> 4. To facilitate the dissemination of ideas and pu*lic acceptance of information on lun) consciousness or awareness, and the development of fact#findin), information and reportin) facilities for and in aid of the )eneral purposes or o*+ects aforesaid, especially in human lun) re9uirements, )eneral health and physical fitness, and other relevant or related fields> 5. To encoura)e the trainin) of physicians, nurses, health officers, social wor.ers and medical and technical personnel in the practical and scientific implementation of services to lun) patients> /. To assist universities and research institutions in their studies a*out lun) diseases, to encoura)e advanced trainin) in matters of the lun) and related fields and to support educational pro)rams of value to )eneral health> 7. To encoura)e the formation of other or)ani7ations on the national, provincial andIor city and local levels> and to coordinate their various efforts and activities for the purpose of achievin) a more effective pro)rammatic approach on the common pro*lems relative to the o*+ectives enumerated herein> 1. To see. and o*tain assistance in any form from *oth international and local foundations and or)ani7ations> and to administer )rants and funds that may *e )iven to the or)ani7ation> 0. To e,tend, whenever possi*le and e,pedient, medical services to the pu*lic and, in )eneral, to promote and protect the health of the masses of our people, which has lon) *een reco)ni7ed as an economic asset and a social *lessin)> 1!. To help prevent, relieve and alleviate the lun) or pulmonary afflictions and maladies of the people in any and all wal.s of life, includin) those who are poor and needy, all without re)ard to or discrimination, *ecause of race, creed, color or political *elief of the persons helped> and to ena*le them to o*tain treatment when such disorders occur> 11. To participate, as circumstances may warrant, in any activity desi)ned and carried on to promote the )eneral health of the community>

1 . To ac9uire andIor *orrow funds and to own all funds or e9uipment, educational materials and supplies *y purchase, donation, or otherwise and to dispose of and distri*ute the same in such manner, and, on such *asis as the Center shall, from time to time, deem proper and *est, under the particular circumstances, to serve its )eneral and non#profit purposes and o*+ectives>lavvphil.net 12. To *uy, purchase, ac9uire, own, lease, hold, sell, e,chan)e, transfer and dispose of properties, whether real or personal, for purposes herein mentioned> and 14. To do everythin) necessary, proper, advisa*le or convenient for the accomplishment of any of the powers herein set forth and to do every other act and thin) incidental thereto or connected therewith.1/ Aence, the medical services of the petitioner are to *e rendered to the pu*lic in )eneral in any and all wal.s of life includin) those who are poor and the needy without discrimination. "fter all, any person, the rich as well as the poor, may fall sic. or *e in+ured or wounded and *ecome a su*+ect of charity.17 "s a )eneral principle, a charita*le institution does not lose its character as such and its e,emption from ta,es simply *ecause it derives income from payin) patients, whether out#patient, or confined in the hospital, or receives su*sidies from the )overnment, so lon) as the money received is devoted or used alto)ether to the charita*le o*+ect which it is intended to achieve> and no money inures to the private *enefit of the persons mana)in) or operatin) the institution.11 3n Congregational Sunday School etc. v. Board o! "evie#,10 the %tate %upreme Court of 3llinois held, thus@ K L"Mn institution does not lose its charita*le character, and conse9uent e,emption from ta,ation, *y reason of the fact that those recipients of its *enefits who are a*le to pay are re9uired to do so, where no profit is made *y the institution and the amounts so received are applied in furtherin) its charita*le purposes, and those *enefits are refused to none on account of ina*ility to pay therefor. The fundamental )round upon which all e,emptions in favor of charita*le institutions are *ased is the *enefit conferred upon the pu*lic *y them, and a conse9uent relief, to some e,tent, of the *urden upon the state to care for and advance the interests of its citi7ens. ! "s aptly stated *y the %tate %upreme Court of %outh Da.ota in $utheran Hospital Association o! South %a&ota v. Ba&er@ 1 K LTMhe fact that payin) patients are ta.en, the profits derived from attendance upon these patients *ein) e,clusively devoted to the maintenance of the charity, seems rather to enhance the usefulness of the institution to the poor> for it is a matter of common o*servation amon)st those who have )one a*out at all amon)st the sufferin) classes, that the deservin) poor can with difficulty *e persuaded to enter an asylum of any .ind confined to the reception of o*+ects of charity> and that their honest pride is much less wounded *y *ein) placed in an institution in which payin) patients are also received. The fact of receivin)

money from some of the patients does not, we thin., at all impair the character of the charity, so lon) as the money thus received is devoted alto)ether to the charita*le o*+ect which the institution is intended to further. The money received *y the petitioner *ecomes a part of the trust fund and must *e devoted to pu*lic trust purposes and cannot *e diverted to private profit or *enefit. 2 ?nder &.D. 'o. 11 2, the petitioner is entitled to receive donations. The petitioner does not lose its character as a charita*le institution simply *ecause the )ift or donation is in the form of su*sidies )ranted *y the )overnment. "s held *y the %tate %upreme Court of ?tah in 'orgason v. County Board o! ()ualization o! Salt $a&e County@ 4 %econd, the K )overnment su*sidy payments are provided to the pro+ect. Thus, those payments are li.e a )ift or donation of any other .ind e,cept they come from the )overnment. 3n *oth *nter+ountain Health Care and the present case, the cru, is the presence or a*sence of material reciprocity. 3t is entirely irrelevant to this analysis that the )overnment, rather than a private *enefactor, chose to ma.e up the deficit resultin) from the e,chan)e *etween %t. Dar.<s Tower and the tenants *y ma.in) a contri*ution to the landlord, +ust as it would have *een irrelevant in *nter+ountain Health Care if the patients< income supplements had come from private individuals rather than the )overnment. Therefore, the fact that su*sidi7ation of part of the cost of furnishin) such housin) is *y the )overnment rather than private charita*le contri*utions does not dictate the denial of a charita*le e,emption if the facts otherwise support such an e,emption, as they do here. 5 3n this case, the petitioner adduced su*stantial evidence that it spent its income, includin) the su*sidies from the )overnment for 1001 and 100 for its patients and for the operation of the hospital. 3t even incurred a net loss in 1001 and 100 from its operations. 8ven as we find that the petitioner is a charita*le institution, we hold, anent the second issue, that those portions of its real property that are leased to private entities are not e,empt from real property ta,es as these are not actually, directly and e,clusively used for charita*le purposes. The settled rule in this +urisdiction is that laws )rantin) e,emption from ta, are construed strictissi+i ,uris a)ainst the ta,payer and li*erally in favor of the ta,in) power. Ta,ation is the rule and e,emption is the e,ception. The effect of an e,emption is e9uivalent to an appropriation. Aence, a claim for e,emption from ta, payments must *e clearly shown and *ased on lan)ua)e in the law too plain to *e mista.en. / "s held in Salvation Ar+y v. Hoehn@ 7 "n intention on the part of the le)islature to )rant an e,emption from the ta,in) power of the state will never *e implied from lan)ua)e which will admit of any other reasona*le construction. %uch an intention must *e e,pressed in clear and unmista.a*le terms, or must appear *y necessary implication from the lan)ua)e used, for it is a well settled principle that, when a special privile)e or
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e,emption is claimed under a statute, charter or act of incorporation, it is to *e construed strictly a)ainst the property owner and in favor of the pu*lic. This principle applies with peculiar force to a claim of e,emption from ta,ation . K 1 %ection of &residential Decree 'o. 11 2, relied upon *y the petitioner, specifically provides that the petitioner shall en+oy the ta, e,emptions and privile)es@ %8C. . T"C 8C8D&T35'% "'D &R3E3-8$8%. (ein) a non#profit, non# stoc. corporation or)ani7ed primarily to help com*at the hi)h incidence of lun) and pulmonary diseases in the &hilippines, all donations, contri*utions, endowments and e9uipment and supplies to *e imported *y authori7ed entities or persons and *y the (oard of Trustees of the -un) Center of the &hilippines, 3nc., for the actual use and *enefit of the -un) Center, shall *e e,empt from income and )ift ta,es, the same further deducti*le in full for the purpose of determinin) the ma,imum deducti*le amount under %ection 2!, para)raph :h;, of the 'ational 3nternal Revenue Code, as amended. The -un) Center of the &hilippines shall *e e,empt from the payment of ta,es, char)es and fees imposed *y the $overnment or any political su*division or instrumentality thereof with respect to e9uipment purchases made *y, or for the -un) Center. 0 3t is plain as day that under the decree, the petitioner does not en+oy any property ta, e,emption privile)es for its real properties as well as the *uildin) constructed thereon. 3f the intentions were otherwise, the same should have *een amon) the enumeration of ta, e,empt privile)es under %ection @ 3t is a settled rule of statutory construction that the e,press mention of one person, thin), or conse9uence implies the e,clusion of all others. The rule is e,pressed in the familiar ma,im, e-pressio unius est e-clusio alterius. The rule of e-pressio unius est e-clusio alterius is formulated in a num*er of ways. 5ne variation of the rule is the principle that what is e,pressed puts an end to that which is implied. (-pressiu+ !acit cessare tacitu+ . Thus, where a statute, *y its terms, is e,pressly limited to certain matters, it may not, *y interpretation or construction, *e e,tended to other matters. ... The rule of e-pressio unius est e-clusio alterius and its variations are canons of restrictive interpretation. They are *ased on the rules of lo)ic and the natural wor.in)s of the human mind. They are predicated upon one<s own voluntary act and not upon that of others. They proceed from the premise that the le)islature would not have made specified enumeration in a statute had the intention *een not to restrict its meanin) and confine its terms to those e,pressly mentioned.2!

The e,emption must not *e so enlar)ed *y construction since the reasona*le presumption is that the %tate has )ranted in e,press terms all it intended to )rant at all, and that unless the privile)e is limited to the very terms of the statute the favor would *e intended *eyond what was meant.21 %ection 1:2;, "rticle E3 of the 1017 &hilippine Constitution provides, thus@ :2; Charita*le institutions, churches and parsona)es or convents appurtenant thereto, mos9ues, non#profit cemeteries, and all lands, *uildin)s, and improvements, actually, directly and e,clusively used for reli)ious, charita*le or educational purposes shall *e e,empt from ta,ation.2 The ta, e,emption under this constitutional provision covers property ta,es only.22 "s Chief Justice Ailario $. Davide, Jr., then a mem*er of the 101/ Constitutional Commission, e,plained@ G. . . what is e,empted is not the institution itself . . .> those e,empted from real estate ta,es are lands, *uildin)s and improvements actually, directly and e,clusively used for reli)ious, charita*le or educational purposes.G24 Conse9uently, the constitutional provision is implemented *y %ection 24:*; of Repu*lic "ct 'o. 71/! :otherwise .nown as the -ocal $overnment Code of 1001; as follows@ %8CT35' 24. (-e+ptions !ro+ "eal .roperty /a- . N The followin) are e,empted from payment of the real property ta,@ ... :*; Charita*le institutions, churches, parsona)es or convents appurtenant thereto, mos9ues, non#profit or reli)ious cemeteries and all lands, *uildin)s, and improvements actually, directly, ande,clusively used for reli)ious, charita*le or educational purposes.25 4e note that under the 1025 Constitution, G... all lands, *uildin)s, and improvements used Oe,clusively< for K charita*le K purposes shall *e e,empt from ta,ation.G2/ Aowever, under the 1072 and the present Constitutions, for Glands, *uildin)s, and improvementsG of the charita*le institution to *e considered e,empt, the same should not only *e Ge,clusivelyG used for charita*le purposes> it is re9uired that such property *e used GactuallyG and GdirectlyG for such purposes.27 3n li)ht of the fore)oin) su*stantial chan)es in the Constitution, the petitioner cannot rely on our rulin) in Herrera v. Quezon City Board o! Assess+ent Appeals which was promul)ated on %eptem*er 2!, 10/1 *efore the 1072 and 1017 Constitutions too. effect.21 "s this Court held in .rovince o! A0ra v. Hernando@20 K ?nder the 1025 Constitution@ GCemeteries, churches, and parsona)es or convents appurtenant thereto, and all lands, *uildin)s, and improvements used e,clusively for reli)ious, charita*le, or educational purposes shall *e e,empt from ta,ation.G The present Constitution added Gcharita*le institutions, mos9ues, and non#profit cemeteriesG and re9uired that for the e,emption of Glands, *uildin)s, and improvements,G they should not only *e Ge,clusivelyG *ut also GactuallyG and GdirectlyG used for reli)ious or charita*le purposes. The Constitution is worded differently. The chan)e should not *e i)nored. 3t must

*e duly ta.en into consideration. Reliance on past decisions would have sufficed were the words GactuallyG as well as GdirectlyG not added. There must *e proof therefore of the actual and direct use of the lands, *uildin)s, and improvements for reli)ious or charita*le purposes to *e e,empt from ta,ation. K ?nder the 1072 and 1017 Constitutions and Rep. "ct 'o. 71/! in order to *e entitled to the e,emption, the petitioner is *urdened to prove, *y clear and une9uivocal proof, that :a; it is a charita*le institution> and :*; its real properties are !CTU!LLY, 0IRECTLY and E1CLUSI2ELY used for charita*le purposes. G8,clusiveG is defined as possessed and en+oyed to the e,clusion of others> de*arred from participation or en+oyment> and Ge,clusivelyG is defined, Gin a manner to e,clude> as en+oyin) a privile)e e,clusively.G4! 3f real property is used for one or more commercial purposes, it is not e,clusively used for the e,empted purposes *ut is su*+ect to ta,ation.41 The words Gdominant useG or Gprincipal useG cannot *e su*stituted for the words Gused e,clusivelyG without doin) violence to the Constitutions and the law.4 %olely is synonymous with e,clusively.42 4hat is meant *y actual, direct and e,clusive use of the property for charita*le purposes is the direct and immediate and actual application of the property itself to the purposes for which the charita*le institution is or)ani7ed. 3t is not the use of the income from the real property that is determinative of whether the property is used for ta,#e,empt purposes.44 The petitioner failed to dischar)e its *urden to prove that the entirety of its real property is actually, directly and e,clusively used for charita*le purposes. 4hile portions of the hospital are used for the treatment of patients and the dispensation of medical services to them, whether payin) or non#payin), other portions thereof are *ein) leased to private individuals for their clinics and a canteen. Further, a portion of the land is *ein) leased to a private individual for her *usiness enterprise under the *usiness name G8lliptical 5rchids and $arden Center.G 3ndeed, the petitioner<s evidence shows that it collected &1,12/,412.45 as rentals in 1001 and &1,/70,000. 1 for 100 from the said lessees. "ccordin)ly, we hold that the portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are not e,empt from such ta,es.45 5n the other hand, the portions of the land occupied *y the hospital and portions of the hospital used for its patients, whether payin) or non#payin), are e,empt from real property ta,es. IN LIGHT OF !LL THE FOREGOING, the petition is P!RTI!LLY GR!NTE0. The respondent 6ue7on City "ssessor is here*y 0IRECTE0 to determine, after due hearin), the precise portions of the land and the area thereof which are leased to private persons, and to compute the real property ta,es due thereon as provided for *y law.

MANILA INTERNATIONAL AIRPORT AUTHORITY vs. COURT OF APPEALS G.R. No. 155650 July 20 2006 MIAA received Final Notices of Real Estate Tax Delinquency from the City of Para aque for the taxa!le years "##$ to $%%"& MIAA's real estate tax delinquency (as estimated at P)$* million& The City of Para aque+ throu,h its City Treasurer+ issued notices of levy and (arrants of levy on the Air-ort .ands and /uildin,s& The Mayor of the City of Para aque threatened to sell at -u!lic auction the Air-ort .ands and /uildin,s should MIAA fail to -ay the real estate tax delinquency& MIAA filed (ith the Court of A--eals an ori,inal -etition for -rohi!ition and in0unction+ (ith -rayer for -reliminary in0unction or tem-orary restrainin, order& The -etition sou,ht to restrain the City of Para aque from im-osin, real estate tax on+ levyin, a,ainst+ and auctionin, for -u!lic sale the Air-ort .ands and /uildin,s& Paranaque's Contention1 2ection "#3 of the .ocal 4overnment Code ex-ressly (ithdre( the tax exem-tion -rivile,es of 5,overnment6o(ned and6controlled cor-orations7 u-on the effectivity of the .ocal 4overnment Code& Res-ondents also ar,ue that a !asic rule of statutory construction is that the ex-ress mention of one -erson+ thin,+ or act excludes all others& An international air-ort is not amon, the exce-tions mentioned in 2ection "#3 of the .ocal 4overnment Code& Thus+ res-ondents assert that MIAA cannot claim that the Air-ort .ands and /uildin,s are exem-t from real estate tax& MIAA's contention1 Air-ort .ands and /uildin,s are o(ned !y the Re-u!lic& The ,overnment cannot tax itself& The reason for tax exem-tion of -u!lic -ro-erty is that its taxation (ould not inure to any -u!lic advanta,e+ since in such a case the tax de!tor is also the tax creditor& Issue1 89N Air-ort .ands and /uildin,s of MIAA are exem-t from real estate tax under existin, la(s: ;es& Er,o+ the real estate tax assessments issued !y the City of Para aque+ and all -roceedin,s ta<en -ursuant to such assessments+ are void& =eld1 "& MIAA is Not a 4overnment69(ned or Controlled Cor-oration MIAA is not a ,overnment6o(ned or controlled cor-oration !ut an instrumentality of the National 4overnment and thus exem-t from local taxation& MIAA is not a stoc< cor-oration !ecause it has no ca-ital stoc< divided into shares& MIAA has no stoc<holders or votin, shares& MIAA is also not a non6stoc< cor-oration !ecause it has no mem!ers& A non6 stoc< cor-oration must have mem!ers&

MIAA is a ,overnment instrumentality vested (ith cor-orate -o(ers to -erform efficiently its ,overnmental functions& MIAA is li<e any other ,overnment instrumentality+ the only difference is that MIAA is vested (ith cor-orate -o(ers& 8hen the la( vests in a ,overnment instrumentality cor-orate -o(ers+ the instrumentality does not !ecome a cor-oration& >nless the ,overnment instrumentality is or,ani?ed as a stoc< or non6stoc< cor-oration+ it remains a ,overnment instrumentality exercisin, not only ,overnmental !ut also cor-orate -o(ers& Thus+ MIAA exercises the ,overnmental -o(ers of eminent domain+ -olice authority and the levyin, of fees and char,es& At the same time+ MIAA exercises 5all the -o(ers of a cor-oration under the Cor-oration .a(+ insofar as these -o(ers are not inconsistent (ith the -rovisions of this Executive 9rder&7 $& Air-ort .ands and /uildin,s of MIAA are 9(ned !y the Re-u!lic a& Air-ort .ands and /uildin,s are of Pu!lic Dominion The Air-ort .ands and /uildin,s of MIAA are -ro-erty of -u!lic dominion and therefore o(ned !y the 2tate or the Re-u!lic of the Phili--ines& No one can dis-ute that -ro-erties of -u!lic dominion mentioned in Article *$% of the Civil Code+ li<e 5roads+ canals+ rivers+ torrents+ -orts and !rid,es constructed !y the 2tate+7 are o(ned !y the 2tate& The term 5-orts7 includes sea-orts and air-orts& The MIAA Air-ort .ands and /uildin,s constitute a 5-ort7 constructed !y the 2tate& >nder Article *$% of the Civil Code+ the MIAA Air-ort .ands and /uildin,s are -ro-erties of -u!lic dominion and thus o(ned !y the 2tate or the Re-u!lic of the Phili--ines& The Air-ort .ands and /uildin,s are devoted to -u!lic use !ecause they are used !y the -u!lic for international and domestic travel and trans-ortation& The fact that the MIAA collects terminal fees and other char,es from the -u!lic does not remove the character of the Air-ort .ands and /uildin,s as -ro-erties for -u!lic use& The char,in, of fees to the -u!lic does not determine the character of the -ro-erty (hether it is of -u!lic dominion or not& Article *$% of the Civil Code defines -ro-erty of -u!lic dominion as one 5intended for -u!lic use&7 The terminal fees MIAA char,es to -assen,ers+ as (ell as the landin, fees MIAA char,es to airlines+ constitute the !ul< of the income that maintains the o-erations of MIAA& The collection of such fees does not chan,e the character of MIAA as an air-ort for -u!lic use& 2uch fees are often termed user's tax& This means taxin, those amon, the -u!lic (ho actually use a -u!lic facility instead of taxin, all the -u!lic includin, those (ho never use the -articular -u!lic facility& !& Air-ort .ands and /uildin,s are 9utside the Commerce of Man The Court has also ruled that -ro-erty of -u!lic dominion+ !ein, outside the commerce of man+ cannot !e the su!0ect of an auction sale&

Pro-erties of -u!lic dominion+ !ein, for -u!lic use+ are not su!0ect to levy+ encum!rance or dis-osition throu,h -u!lic or -rivate sale& Any encum!rance+ levy on execution or auction sale of any -ro-erty of -u!lic dominion is void for !ein, contrary to -u!lic -olicy& Essential -u!lic services (ill sto- if -ro-erties of -u!lic dominion are su!0ect to encum!rances+ foreclosures and auction sale& This (ill ha--en if the City of Para aque can foreclose and com-el the auction sale of the )%%6hectare run(ay of the MIAA for non6-ayment of real estate tax& c& MIAA is a Mere Trustee of the Re-u!lic MIAA is merely holdin, title to the Air-ort .ands and /uildin,s in trust for the Re-u!lic& 2ection *@+ Cha-ter "$+ /oo< I of the Administrative Code allo(s instrumentalities li<e MIAA to hold title to real -ro-erties o(ned !y the Re-u!lic& n MIAA's case+ its status as a mere trustee of the Air-ort .ands and /uildin,s is clearer !ecause even its executive head cannot si,n the deed of conveyance on !ehalf of the Re-u!lic& 9nly the President of the Re-u!lic can si,n such deed of conveyance& d& Transfer to MIAA (as Meant to Im-lement a Reor,ani?ation The transfer of the Air-ort .ands and /uildin,s from the /ureau of Air Trans-ortation to MIAA (as not meant to transfer !eneficial o(nershi- of these assets from the Re-u!lic to MIAA& The -ur-ose (as merely toreor,ani?e a division in the /ureau of Air Trans-ortation into a se-arate and autonomous !ody& The Re-u!lic remains the !eneficial o(ner of the Air-ort .ands and /uildin,s& MIAA itself is o(ned solely !y the Re-u!lic& No -arty claims any o(nershi- ri,hts over MIAA's assets adverse to the Re-u!lic& e& Real Pro-erty 9(ned !y the Re-u!lic is Not Taxa!le 2ec $3* of the .4C -rovides that real -ro-erty o(ned !y the Re-u!lic of the Phili--ines or any of its -olitical su!divisions exce-t (hen the !eneficial use thereof has !een ,ranted+ for consideration or other(ise+ to a taxa!le -erson follo(in, are exem-ted from -ayment of the real -ro-erty tax& =o(ever+ -ortions of the Air-ort .ands and /uildin,s that MIAA leases to -rivate entities are not exem-t from real estate tax& For exam-le+ the land area occu-ied !y han,ars that MIAA leases to -rivate cor-orations is su!0ect to real estate tax&

The la( set out the -olicy of the ,overnment to accelerate the sound and !alanced conversion into alternative -roductive uses of the former military !ases under the "#*A Phili--ines6>nited 2tates of America Military /ases A,reement+ namely+ the Clar< and 2u!ic military reservations as (ell as their extensions includin, the Cohn =ay 2tation DCam- Cohn =ayE in the City of /a,uio& RA A$$A created the /ases Conversion and Develo-ment AuthorityF D/CDAE+ vestin, it (ith -o(ers -ertainin, to the multifarious as-ects of carryin, out the ultimate o!0ective of utili?in, the !ase areas in accordance (ith the declared ,overnment -olicy& RA A$$A li<e(ise created the 2u!ic 2-ecial Economic Gand Free PortH Ione D2u!ic 2EIE the metes and !ounds of (hich (ere to !e delineated in a -roclamation to !e issued !y the President of the Phili--inesJ and ,ranted the 2u!ic 2EI incentives ran,in, from tax and duty6 free im-ortations+ exem-tion of !usinesses therein from local and national taxes+ to other hall6nar<s of a li!erali?ed financial and !usiness climate& RA A$$A ex-ressly ,ave authority to the President to create throu,h executive -roclamation+ su!0ect to the concurrence of the local ,overnment units directly affected+ other 2-ecial Economic Iones D2EIE in the areas covered res-ectively !y the Clar< military reservation+ the 8allace Air 2tation in 2an Fernando+ .a >nion+ and Cam- Cohn =ay& 9n ") Au,ust "##3+ /CDA entered into a Memorandum of A,reement and Escro( A,reement (ith Tuntex D/&K&.E Co&+ .td& DT>NTELE and Asia(orld Internationale 4rou-+ Inc& DA2IA89R.DE+ -rivate cor-orations re,istered under the la(s of the /ritish Kir,in Islands+ -re-aratory to the formation of a 0oint venture for the develo-ment of Poro Point in .a >nion and Cam- Cohn =ay as -remier tourist destinations and recreation centers& * months later or on ") Decem!er ")+ "##3+ /CDA+ T>NTEL and A2IA89R.D executed a Coint Kenture A,reements (here!y they !ound themselves to -ut u- a 0oint venture com-any <no(n as the /a,uio International Develo-ment and Mana,ement Cor-oration (hich (ould lease areas (ithin Cam- Cohn =ay and Poro Point for the -ur-ose of turnin, such -laces into -rinci-al tourist and recreation s-ots+ as ori,inally envisioned !y the -arties under their Memorandum of A,reement& The /a,uio City ,overnment mean(hile -assed a num!er of resolutions in res-onse to the actions ta<en !y /CDA as o(ner and administrator of Cam- Cohn =ay& /y Resolution of $# 2e-tem!er "##3+ the 2an,,unian, Panlun,sod of /a,uio City officially as<ed /CDA to exclude all the !aran,ays -artly or totally located (ithin Cam- Cohn =ay from the reach or covera,e of any -lan or -ro,ram for its develo-ment& /y a su!sequent Resolution dated "# Canuary "##*+ the san,,unian sou,ht from /CDA an a!dication+ (aiver or quitclaim of its o(nershi- over the home lots !ein, occu-ied !y residents of # !aran,ays surroundin, the military reservation& 2till !y another resolution -assed on $" Fe!ruary "##*+ the san,,unian ado-ted and su!mitted to /CDA a "M6-oint conce-t for the develo-ment of Cam- Cohn =ay& The san,,unianFs vision ex-ressed+ amon, other thin,s+ a <ind of develo-ment that affords -rotection to the environment+ the ma<in, of a family6

Jo!" H#y P$o%l$s Al&$'"#&(v$ Co#l(&(o" vs. L() *GR 11+,,5 2- O.&o/$' 20001 E" 2#". C#'%(o3Mo'#l$s 4J56 + .o".u' 2 &oo7 "o %#'& F#.&s6 Re-u!lic Act A$$A+ entitled BAn Act Accelleratin, the Convetsion of Military Reservations into other Productive uses+ Creatin, the /ases Conversion and Develo-ment Authority for this Pur-ose+ Providin, Funds Therefor and for other -ur-oses+B other(ise <no(n as the B/ases Conversion and Develo-ment Act of "##$+B (as enacted on "3 March "##$&
5

oriented ty-e of tourist destination+ -riority in em-loyment o--ortunities for /a,uio residents and free access to the !ase area+ ,uaranteed -artici-ation of the city ,overnment in the mana,ement and o-eration of the cam-+ exclusion of the -reviously named nine !aran,ays from the area for develo-ment+ and lia!ility for local taxes of !usinesses to !e esta!lished (ithin the cam-&B /CDA+ T>NTEL and A2IA89R.D a,reed to some+ !ut re0ected or modified the other -ro-osals of the san,,unian&B They stressed the need to declare Cam- Cohn =ay a 2EI as a condition -recedent to its full develo-ment in accordance (ith the mandate of RA A$$A& 9n "" May "##*+ the san,,unian -assed a resolution requestin, the Mayor to order the determination of realty taxes (hich may other(ise !e collected from real -ro-erties of Cam- Cohn =ay& The resolution (as intended to intelli,ently ,uide the san,,unian in determinin, its -osition on (hether CamCohn =ay !e declared a 2EI+ the san,,unian !ein, of the vie( that such declaration (ould exem-t the cam-Fs -ro-erty and the economic activity therein from local or national taxation& More than a month later+ ho(ever+ the san,,unian -assed Resolution $MM+ D2eries of "##*E+B see<in, and su--ortin,+ su!0ect to its concurrence+ the issuance !y then President Ramos of a -residential -roclamation declarin, an area of $@M&" hectares of the cam- as a 2EI in accordance (ith the -rovisions of RA A$$A& To,ether (ith this resolution (as su!mitted a draft of the -ro-osed -roclamation for consideration !y the President& 9n M Culy "##* then President Ramos issued Proclamation *$% Dseries of "##*E+ Bcreatin, and desi,natin, a -ortion of the area covered !y the former Cam- Cohn =ay as the Cohn =ay 2-ecial Economic Ione -ursuant to Re-u!lic Act A$$A&B The Cohn =ay Peo-les Alternative Coalition+ et& al& filed the -etition for -rohi!ition+ mandamus and declaratory relief (ith -rayer for a tem-orary restrainin, order DTR9E andNor (rit of -reliminary in0unction on $M A-ril "##M challen,in,+ in the main+ the constitutionality or validity of Proclamation *$% as (ell as the le,ality of the Memorandum of A,reement and Coint Kenture A,reement !et(een the /CDA+ and T>NTEL and A2IA89R.D& Issu$6 8hether the -etitioners have le,al standin, in filin, the case questionin, the validity of Presidential Proclamation *$%& H$l86 It is settled that (hen questions of constitutional si,nificance are raised+ the court can exercise its -o(er of 0udicial revie( only if the follo(in, requisites are -resent1 D"E the existence of an actual and a--ro-riate caseJ D$E a -ersonal and su!stantial interest of the -arty raisin, the constitutional questionJ D3E the exercise of 0udicial revie( is -leaded at the earliest o--ortunityJ and D*E the constitutional question is the lis mota of the case&B RA A$$A ex-ressly requires the concurrence of the affected local ,overnment units to the creation of 2EIs out of all the !ase areas in the country&FB The ,rant !y the la( on local ,overnment units of the ri,ht of concurrence on the !asesF conversion is equivalent to vestin, a le,al standin,
6

on them+ for it is in effect a reco,nition of the real interests that communities near!y or surroundin, a -articular !ase area have in its utili?ation& Thus+ the interest of -etitioners+ !ein, inha!itants of /a,uio+ in assailin, the le,ality of Proclamation *$%+ is -ersonal and su!stantial such that they have sustained or (ill sustain direct in0ury as a result of the ,overnment act !ein, challen,ed&B Theirs is a material interest+ an interest in issue affected !y the -roclamation and not merely an interest in the question involved or an incidental interest+B for (hat is at sta<e in the enforcement of Proclamation *$% is the very economic and social existence of the -eo-le of /a,uio City& Moreover+ Petitioners Edil!erto T& Claravall and .ilia 4& ;aranon (ere duly elected councilors of /a,uio at the time+ en,a,ed in the local ,overnance of /a,uio City and (hose duties included decidin, for and on !ehalf of their constituents the question of (hether to concur (ith the declaration of a -ortion of the area covered !y Cam- Cohn =ay as a 2EI& Certainly then+ Claravall and ;aranon+ as city officials (ho voted a,ainstB the san,,unian Resolution No& $MM D2eries of "##*E su--ortin, the issuance of the no( challen,ed Proclamation *$%+ have le,al standin, to !rin, the -resent -etition& Quoted hereunder, for your information, is a resolution of this Court dated MAR 2+ 2005. 4&R& No& ""#AAM DJOHN HAY PEOPLES ALTERNAT !E COAL T ON, et al "s# Lim, et al$ /y their se-arate motions for reconsideration+ -u!lic res-ondents /ases Conversion Develo-ment Authority D/CDAE Cohn =ay Mana,ement Cor-oration DC=MCEG"H and Kictor .im+ and res-ondent6in6intervention CC= Develo-ment Cor-oration DCC=DCE see< the reconsideration of this CourtFs Decision of 9cto!er $*+ $%%3G$HO (hich invalidated the second sentence of 2ection 3 of Proclamation No& *$% insofar as it ,ranted tax exem-tions and incentives to the Cohn =ay 2-ecial Economic Ione D2EIE& It may !e recalled that on March "3+ "##$+ Re-u!lic Act No& A$$A+ G3H other(ise <no(n as the B/ases Conversion and Develo-ment Act of "##$+B (as enacted (ith the declared -olicy of acceleratin, Bthe sound and !alanced conversion into alternative -roductive uses of the Clar< and 2u!ic military reservations and their extensionsB 6includin, the Cohn =ay 2tation&G*H To this end+ R&A& No& A$$A created -u!lic res-ondent /CDA+GMH the 2u!ic 2EIG)H and the 2u!ic /ay Metro-olitan Authority&GAH R&A& No& A$$A li<e(ise authori?ed the President+ su!0ect to the concurrence of the local ,overnment units directly affected+ to create throu,h executive -roclamation other 2EIs in the areas covered res-ectively !y the

Clar< military reservation+ the 8allace Air 2tation in 2an Fernando+ .a >nion+ and the Cam- Cohn =ay in /a,uio& And u-on recommendation !y the /CDA+ the la( also authori?ed the President to create 2EIs in the munici-alities of Moron,+ =ermosa+ Dinalu-ihan+ Castille0os+ and 2an Marcelino&G@H 9n Culy M+ "##*+ then President Ramos+ on the request of the San%%unian% Panlun%sod of /a,uio City+G#H issued Proclamation No& *$% esta!lishin, the Cohn =ay 2EI1 PR9C.AMATI9N N9& *$% CREATIN4 AND DE2I4NATIN4 A P9RTI9N 9F T=E AREA C9KERED /; T=E F9RMER CAMP C9=N G=A;H A2 T=E C9=N =A; 2PECIA. EC9N9MIC I9NE P>R2>ANT T9 REP>/.IC ACT N9& A$$A Pursuant to the -o(ers vested in me !y the la( and the resolution of concurrence !y the City Council of /a,uio+ I+ FIDE. K& RAM92+ President of the Phili--ines+ do here!y create and desi,nate a -ortion of the area covered !y the former Cohn =ay reservation as em!raced+ covered+ and defined !y the "#*A Military /ases A,reement !et(een the Phili--ines and the >nited 2tates of America+ as amended+ as the Cohn =ay 2-ecial Economic Ione+ and accordin,ly order1 2ECTI9N "& Co&era%e of John Hay S'e(ial E(onomi( )one& 6 The Cohn =ay 2-ecial Economic Ione shall cover the area consistin, of T(o =undred Ei,hty Ei,ht and oneNtenth D$@@&"E hectares+ more or less+ of the total of 2ix =undred 2eventy62even D)AAE hectares of the Cohn =ay Reservation+ more or less+ (hich have !een surveyed and verified !y the De-artment of Environment and Natural Resources DDENRE as defined !y the follo(in, technical descri-tion1 A -arcel of land+ situated in the City of /a,uio+ Province of /en,uet+ Island of .u?on+ and -articularly descri!ed in survey -lans Psd6"3""%$6%%$)3# and Ccs6 "3""%$6%%%%3% as a--roved on ") Au,ust "##3 and $) Au,ust "##3+ res-ectively+ !y the De-artment of Environment and Natural Resources+ in detail containin, 1 .ot "+ .ot $+ .ot 3+ .ot *+ .ot M+ .ot )+ .ot A+ .ot "3+ .ot "*+ .ot "M+ and .ot $% of Ccs6"3""%$6%%%%3% 6 and6 .ot 3+ .ot *+ .ot M+ .ot )+ .ot A+ .ot @+ .ot #+ .ot "%+ .ot ""+ .ot "*+ .ot "M+ .ot ")+ .ot "A+ and .ot "@ of Psd6"3""%$6%%$)3# !ein, -ortions of TCT No& T63@"$+ .RC Rec& No& @A& 8ith a com!ined area of T89 =>NDRED EI4=T; EI4=T AND 9NENTENT= =ECTARE2 D$@@&" hectaresEJ Provided that the area consistin, of a--roximately 2ix and t(oNtenth D)&$Ehectares+ more or less+ -resently occu-ied !y the K9A and the residence of the Am!assador of the >nited 2tates+ shall !e considered as -art of the 2EI only u-on turnover of the -ro-erties to the ,overnment of the Re-u!lic of the Phili--ines&
9

2ec& $& *o&ernin% +ody of the John Hay S'e(ial E(onomi( )one & 6 Pursuant to 2ection "M of Re-u!lic Act No& A$$A+ the /ases Conversion and Develo-ment Authority is here!y esta!lished as the ,overnin, !ody of the Cohn =ay 2-ecial Economic Ione and+ as such+ authori?ed to determine the utili?ation and dis-osition of the lands com-risin, it+ su!0ect to -rivate ri,hts+ if any+ and in consultation and coordination (ith the City 4overnment of /a,uio after consultation (ith its inha!itants+ and to -romul,ate the necessary -olicies+ rules+ and re,ulations to ,overn and re,ulate the ?one thru the Cohn =ay Poro Point Develo-ment Cor-oration+ (hich is its im-lementin, arm for its economic develo-ment and o-timum utili?ation& 2ec& 3& n&estment Climate in John Hay S'e(ial E(onomi( )one& 6 Pursuant to 2ection MDmE and 2ection "M of Re-u!lic Act No& A$$A+ the Cohn =ay Poro Point Develo-ment Cor-oration shall im-lement all necessary -olicies+ rules+ and re,ulations ,overnin, the ?one+ includin, investment incentives+ in consultation (ith -ertinent ,overnment de-artments& Amon, others+ the ?one shall have all the a--lica!le incentives of the 2-ecial Economic Ione under 2ection "$ of Re-u!lic Act No& A$$A and those a--lica!le incentives ,ranted in the Ex-ort Processin, Iones+ the 9mni!us Investment Code of "#@A+ the Forei,n Investment Act of "##"+ and ne( investment la(s that may hereinafter !e enacted& 2ec& *& Role of ,e'artments, +ureaus, Offi(es, A%en(ies and nstrumentalities# 6 All =eads of de-artments+ !ureaus+ offices+ a,encies+ and instrumentalities of the ,overnment are here!y directed to ,ive full su--ort to /ases Conversion and Develo-ment Authority andNor its im-lementin, su!sidiary or 0oint venture to facilitate the necessary a--rovals to ex-edite the im-lementation of various -ro0ects of the conversion -ro,ram& 2ec& M& Lo(al Authority& 6 Exce-t as herein -rovided+ the affected local ,overnment units shall retain their !asic autonomy and identity& 2ec& )& Re'ealin% Clause& 6 All orders+ rules+ and re,ulations+ or -arts thereof+ (hich are inconsistent (ith the -rovisions of this Proclamation+ are here!y re-ealed+ amended+ or modified accordin,ly& 2ec& A& Effe(ti&ity& This -roclamation shall ta<e effect immediately& Done in the City of Manila+ this Mth day of Culy+ in the year of 9ur .ord+ nineteen hundred and ninety6four& 9n A-ril $M+ "##M+ -etitioners filed their Petition for -rohi!ition+ mandamus and declaratory relief assailin, D"E the constitutionality of Proclamation No& *$% and D$E the le,ality of the Memorandum of A,reement and Coint Kenture A,reement -reviously entered intoG"%H !et(een -u!lic res-ondent /CDA and -rivate res-ondents Tuntex D/&K&I&E Co&+ .td& DT>NTELE and Asia(orld Internationale 4rou-+ Inc& DA2IA89R.DE&

The questions re,ardin, the validity of the a,reements !et(een /CDA and T>NTEL and A2IA89R.D (ere rendered moot and academicG""H!y /CDAFs revocation of these a,reements !y letter of Novem!er $"+ "##M&G"$H 9n 9cto!er $*+ $%%3+ this Court -romul,ated its Decision+ (hich dis-osed as follo(s1 8=EREF9RE+ the second sentence of 2ection 3 of Proclamation No& *$% is here!y declared N>.. AND K9ID and is accordin,ly declared of no le,al force and effect& Pu!lic res-ondents are here!y en0oined from im-lementin, the aforesaid void -rovision& Proclamation No& *$%+ (ithout the invalidated -ortion+ remains valid and effective& 29 9RDERED& In their Motion for Reconsideration (ith Manifestation filed on Decem!er $#+ $%%3+ -u!lic res-ondents+ throu,h the 9ffice of the 4overnment Cor-orate Counsel+ su!mit the follo(in, ,rounds for reconsideration1 I. T=E =9N9RA/.E C9>RT ERRED IN R>.IN4 T=AT 2ECTI9N 3 9F PR9C.AMATI9N N9& *$% I2 N>.. AND K9ID A2 T=E C9=N =A; 2PECIA. EC9N9MIC I9NE ENC9;2 ELEMPTI9N F9R -si($ TALE2+ A2 8E.. A2 9T=ER FINANCIA. INCENTIKE2 4RANTED T9 T=E 2>/IC 2PECIA. EC9N9MIC I9NE+ IN T=AT1 A& T=E .A8+ C9N2IDERED IN IT2 ENTIRET; 2>PP9RT2 T=E C9NC.>2I9N T=AT T=E C9=N =A; 2PECIA. EC9N9MIC I9NE ENC9;2 T=E 2AME PRIKI.E4E2 A2 T=E 2>/IC 2PECIA. EC9N9MIC I9NE& /& T=E 4RANT 9F TAL ELEMPTI9N AND 9T=ER FINANCIA. INCENTIKE2 I2 IN=ERENT IN B2PECIA. EC9N9MIC I9NE2&B II. A22>MIN4 AR*.EN,O T=AT REP>/.IC ACT N9& A$$A D9E2 N9T 4RANT TAL ELEMPTI9N2 T9 2PECIA. EC9N9MIC I9NE2+ T=E 2EC9ND 2ENTENCE 9F 2ECTI9N T=REE 9F PR9C.AMATI9N N9& *$% I2 2>2CEPTI/.E 9F 9T=ER P.A>2I/.E INTERPRETATI9N2 8=IC= 89>.D ADDRE22 T=E A..E4ED C9N2TIT>TI9NA. INFIRMIT;& Ill. T=E C9=N =A; 2PECIA. EC9N9MIC I9NE MA; /E 4RANTED FINANCIA. INCENTIKE2 >NDER 9T=ER .A82+ A2 IMP.EMENTED /; T=E ELEC>TIKE&

I9. T=E =9N9RA/.E C9>RT ERRED IN R>.IN4 T=AT PETITI9NER2 =AKE .E4A. 2TANDIN4 T9 2>E& Intervenor CC=DC filed on March M+ $%%* a Motion for .eave to Intervene alle,in, that it+ to,ether (ith its consortium -artners Fil6Estate Mana,ement Inc& and Penta Ca-ital Investment Cor-oration+ entered into a .ease A,reement dated 9cto!er "#+ "##)G"3H (ith res-ondent /CDA for the develo-ment of the Cohn =ay 2EIJ and that it Bstands to !e most affectedB !y this CourtFs Decision Binvalidatin, the ,rant of tax exem-tion and other financial incentivesB in the Cohn =ay 2EI since BGiHts financial o!li,ations and develo-ment and investment commitments under the .ease A,reement (ere entered into u-on the -remise that these incentives are valid and su!sistin,&B CC=DC+ -rofferin, ,rounds -arallel to those of -u!lic res-ondents+G"*H thus -rays that1 D"E it !e ,ranted leave to intervene in this caseJ D$E its attached Motion for Reconsideration in Intervention !e admittedJ and D3E this CourtFs Decision of 9cto!er $*+ $%%3 !e reconsidered and -etitionersF -etition dismissed& /y 9rder of May $M+ $%%*+ this Court ,ranted CC=DCFs Motion for leave to Intervene and noted its Motion for Reconsideration in Intervention&G"MH At !ottom+ the controversy centers on (hether the tax exem-tions and other financial incentives ,ranted to the 2u!ic 2EI under 2ection "$ of R&A& No& A$$A are a--lica!le to the Cohn =ay 2EI& 2ection "$ of R&A& No& A$$A+ (hich -rovides for the B-oliciesB to ,overn and re,ulate the 2u!ic 2EI+ reads as follo(s1 2ECTI9N "$& 2u!ic 2-ecial Economic Ione& P 2u!0ect to the concurrence !y resolution of the san,,unian, -anlun,sod of the City of 9lon,a-o and the san,,unian, !ayan of the Munici-alities of 2u!ic+ Moron, and =ermosa+ &!$'$ (s !$'$/y .'$#&$8 # S%$.(#l E.o"o)(. #"8 F'$$3%o'& :o"$ consistin, of the City of 9lon,a-o and the Munici-ality of 2u!ic+ Province of Iam!ales+ the lands occu-ied !y the 2u!ic Naval /ase and its conti,uous extensions as em!raced+ covered+ and defined !y the "#*A Military /ases A,reement !et(een the Phili--ines and the >nited 2tates of America as amended+ and (ithin the territorial 0urisdiction of the Munici-alities of Moron, and =ermosa+ Province of /ataan+ hereinafter referred to as the 2u!ic 2-ecial Economic Ione (hose metes and !ounds shall !e delineated in a -roclamation to !e issued !y the President of the Phili--ines& 8ithin thirty D3%E days after the a--roval of this Act+ each local ,overnment unit shall su!mit its resolution of concurrence to 0oin the 2u!ic 2-ecial Economic Ione to the office of the President& Thereafter+ the President of the Phili--ines shall issue a -roclamation definin, the metes and !ounds of the Ione as -rovided herein&

10

T!$ #/ov$)$"&(o"$8 ;o"$ s!#ll /$ su/<$.& &o &!$ =ollo>("? %ol(.($s6 DaE 8ithin the frame(or< and su!0ect to the mandate and limitations of the Constitution and the -ertinent -rovisions of the .ocal 4overnment Code+ the 2u!ic 2-ecial Economic Ione s!#ll /$ 8$v$lo%$8 ("&o # s$l=3sus&#("("? ("8us&'(#l .o))$'.(#l =("#".(#l #"8 ("v$s&)$"& .$"&$' to ,enerate em-loyment o--ortunities in and around the ?one and to attract and -romote -roductive forei,n investmentsJ !E The 2u!ic 2-ecial Economic Ione shall !e o%$'#&$8 #"8 )#"#?$8 #s # s$%#'#&$ .us&o)s &$''(&o'y $"su'("? ='$$ =lo> o' )ov$)$"& o= ?oo8s and ca-ital (ithin+ into and ex-orted out of the 2u!ic 2-ecial Economic Ione+ as (ell as %'ov(8$ (".$"&(v$s su.! #s &#@ #"8 8u&y ='$$ ()%o'&#&(o"s o= '#> )#&$'(#ls .#%(&#l #"8 $Au(%)$"&& =o(ever+ ex-ortation or removal of ,oods from the territory of the 2u!ic 2-ecial Economic Ione to the other -arts of the Phili--ine territory shall !e su!0ect to customs duties and taxes under the Customs and Tariff Code and other relevant tax la(s of the Phili--inesJ DcE The -rovisions of existin, la(s+ rules and re,ulations to the contrary not(ithstandin,+ "o &#@$s lo.#l #"8 "#&(o"#l s!#ll /$ ()%os$8 >(&!(" &!$ Su/(. S%$.(#l E.o"o)(. :o"$. I" l($u o= %#y("? &#@$s &!'$$ %$'.$"& 40B5 o= &!$ ?'oss (".o)$ $#'"$8 /y #ll /us("$ss$s #"8 $"&$'%'(s$s (ithin the 2u!ic 2-ecial Economic Ione shall !e remitted to the National 4overnment+ o"$ %$'.$"& 41B5 $#.! &o &!$ lo.#l ?ov$'")$"& u"(&s #==$.&$8 /y &!$ 8$.l#'#&(o" o= &!$ ;o"$ (" %'o%o'&(o" &o &!$(' %o%ul#&(o" #'$# #"8 o&!$' =#.&o's. I" #88(&(o" &!$'$ (s !$'$/y $s&#/l(s!$8 # 8$v$lo%)$"& =u"8 o= o"$ %$'.$"& 41B5 o= &!$ ?'oss (".o)$ $#'"$8 /y #ll /us("$ss$s #"8 $"&$'%'(s$s >(&!(" &!$ Su/(. S%$.(#l E.o"o)(. :o"$ &o /$ u&(l(;$8 =o' &!$ Mu"(.(%#l(&y o= Su/(. #"8 o&!$' )u"(.(%#l(&($s .o"&(?uous &o *&!$1 /#s$ #'$#s. In case of conflict !et(een national and local la(s (ith res-ect to tax exem-tion -rivile,es in the 2u!ic 2-ecial Economic Ione+ the same shall !e resolved in favor of the latterJ DdE No $@.!#"?$ .o"&'ol %ol(.y s!#ll /$ #%%l($8 #"8 ='$$ )#'7$&s =o' =o'$(?" $@.!#"?$ ?ol8 s$.u'(&($s #"8 =u&u'$s s!#ll /$ #llo>$8 #"8 )#("&#("$8 in the 2u!ic 2-ecial Economic IoneJ DeE T!$ C$"&'#l 2#"7 &!'ou?! &!$ Mo"$&#'y 2o#'8 s!#ll su%$'v(s$ #"8 '$?ul#&$ &!$ o%$'#&(o"s o= /#"7s #"8 o&!$' =("#".(#l ("s&(&u&(o"s (ithin the 2u!ic 2-ecial Economic IoneJ DfE 2#"7("? #"8 F("#".$ s!#ll /$ l(/$'#l(;$8 >(&! &!$ $s&#/l(s!)$"& o= =o'$(?" .u''$".y 8$%os(&o'y u"(&s o= lo.#l .o))$'.(#l /#"7s #"8 o==s!o'$ /#"7("? u"(&s o= =o'$(?" /#"7s (ith minimum Central /an< re,ulationJ D,E A"y ("v$s&o' (ithin the 2u!ic 2-ecial Economic Ione >!os$ .o"&("u("? ("v$s&)$"& s!#ll "o& /$ l$ss &!#" T>o Hu"8'$8 =(=&y &!ous#"8 8oll#'s 4C250 0005 !(sD!$' s%ous$ #"8 8$%$"8$"& .!(l8'$" u"8$' &>$"&y3o"$ 4215 y$#'s o= #?$ s!#ll /$ ?'#"&$8 %$')#"$"& '$s(8$"& s&#&us >(&!(" &!$ Su/(.
11

S%$.(#l E.o"o)(. :o"$. They shall have freedom of in,ress and e,ress to and from the 2u!ic 2-ecial Economic Ione (ithout any need of s-ecial authori?ation from the /ureau of Immi,ration and De-ortation& T!$ Su/(. 2#y M$&'o%ol(&#" Au&!o'(&y '$=$''$8 &o (" S$.&(o" 10 o= &!(s A.& )#y #lso (ssu$ >o'7("? v(s#s '$"$>#/l$ $v$'y &>o 425 y$#'s &o =o'$(?" $@$.u&(v$s #"8 o&!$' #l($"s %oss$ss("? !(?!ly3&$.!"(.#l s7(lls >!(.! "o F(l(%("o >(&!(" &!$ Su/(. S%$.(#l E.o"o)(. :o"$ %oss$ss$s #s .$'&(=($8 /y &!$ E$%#'&)$"& o= L#/o' #"8 E)%loy)$"&. The names of aliens ,ranted -ermanent residence status and (or<in, visas !y the 2u!ic /ay Metro-olitan Authority shall !e re-orted to the /ureau of Immi,ration and De-ortation (ithin thirty D3%E days after issuance thereofJ DhE The defense of the ?one and the security of its -erimeters shall !e the res-onsi!ility of the National 4overnment in coordination (ith the 2u!ic /ay Metro-olitan Authority& The 2u!ic /ay Metro-olitan Authority shall -rovide and esta!lish its o(n internal security and firefi,htin, forcesJ and DiE Exce-t as herein -rovided+ the local ,overnment units com-risin, the 2u!ic 2-ecial Economic Ione shall retain their !asic autonomy and identity& The cities shall !e ,overned !y their res-ective charters and the munici-alities shall o-erate and function in accordance (ith Re-u!lic Act No& A")%+ other(ise <no(n as the .ocal 4overnment Code of "##"& DEm-hasis su--liedE In their first line of ar,ument+ res-ondents alle,e that the fore,oin, B-oliciesB or incentives+ (hile enumerated in reference to the 2u!ic 2EI+ are nonetheless ex-ressly made a--lica!le to the other 2EIs su!sequently created !y -residential -roclamation+ includin, the Cohn =ay 2EI+ !y 2ection "M of R&A& No& A$$A& Thus+ -u!lic res-ondents ar,ue1 That the -rivile,es of tax exem-tion and other financial incentives (ere ex-ressly -rovided under 2ection "$+ constitutin, the 22EI+ is merely a result of the then reality that it is -si($ (as only in 2u!ic /ay (here the -recise metes and !ounds of the 22EI+ as (ell as other relevant information+ (ere then availa!le to the 2enate& /ut &!$ ("&$"&(o" o= &!$ S$"#&$ >#s .l$#'ly &o $)%o>$' &!$ P'$s(8$"& >!o >oul8 &!$" !#v$ &!$ lu@u'y o= &()$ #"8 =u'&!$' s&u8($s &o .o"s&(&u&$ s%$.(#l $.o"o)(. ;o"$s (" &!$ =o')$' Cl#'7 A(' 2#s$ #"8 (&s $@&$"s(o"s (".lu8("? C#)% Jo!" H#y. T!(s %o>$' &o %'o.l#() &!$ o&!$' /#s$ #'$#s #s s%$.(#l $.o"o)(. ;o"$s (".lu8("? #ll %'(v(l$?$8 #%%u'&$"#"& &!$'$&o >#s ("s&$#8 8$l$?#&$8 &o &!$ P'$s(8$"& (" S$.&(o" 15 o= &!$ l#>. x x x R$%u/l(. A.& No. ,22, #u&!o'(;$s &!$ P'$s(8$"& &o 8$l("$#&$ S%$.(#l E.o"o)(. :o"$s (" &!$ =o')$' /#s$ #'$#s. T'u$ s$.&(o" 12 o= &!$ s#(8 l#> $"u)$'#&("? &!$ &#@ $@$)%&(o"s #"8 &!$ =("#".(#l (".$"&(v$s o= &!$ Su/(. S%$.(#l E.o"o)(. :o"$ (s $@%'$ssly )#8$ #%%l(.#/l$ &o &!$ =o')$' Su/(. 2#y N#v#l 2#s$. Ho>$v$' &!$'$ (s "o s!o>("? &!#& &!$ &$') Fs%$.(#l $.o"o)(. ;o"$sF us$8 &o 8$"o&$ >!#& &!$ P'$s(8$"& .#" $s&#/l(s! (" Jo!"

H#y 8o$s "o& !#v$ &!$ s#)$ 8$=("(&(o" #"8 .!#'#.&$'(s&(.s #s &!$ SSE:. DEm-hasis su--liedJ underscorin, in the ori,inalE A readin, of 2ection "M of R&A& No& A$$A does not+ ho(ever+ su--ort this -ro-osition& There is no dou!t that under 2ection "M Das in 2ection "$E the President has the -o(er to delineate+ !y -roclamation+ the metes and !ounds of 2EIs (hich may !e created in the other former !ase lands& =o(ever+ there is neither an ex-ress reference to 2ection "$ nor to the incentives ,ranted to the 2u!ic 2EI1 2ECTI9N "M& Clar< and 9ther 2-ecial Economic Iones& P 2u!0ect to the concurrence !y resolution of the local ,overnment units directly affected+ &!$ P'$s(8$"& (s !$'$/y #u&!o'(;$8 &o .'$#&$ /y $@$.u&(v$ %'o.l#)#&(o" # S%$.(#l E.o"o)(. :o"$ coverin, the lands occu-ied !y the Clar< military reservations and its conti,uous extensions as em!raced+ covered and defined !y the "#*A Military /ases A,reement !et(een the Phili--ines and the >nited 2tates of America+ as amended+ located (ithin the territorial 0urisdiction of An,eles City+ Munici-alities of Ma!alacat and Porac+ Province of Pam-an,a+ and the Munici-ality of Ca-as+ Province of Tarlac+ (" #..o'8#".$ >(&! &!$ %ol(.($s #s !$'$(" %'ov(8$8 ("so=#' #s #%%l(.#/l$ to the Clar< military reservations& The ,overnin, !ody of the Clar< 2-ecial Economic Ione shall li<e(ise !e esta!lished !y executive -roclamation (ith such -o(ers and functions exercised !y the Ex-ort Processin, Ione Authority -ursuant to Presidential Decree No& )) as amended& T!$ %ol(.($s &o ?ov$'" #"8 '$?ul#&$ &!$ Cl#'7 S%$.(#l E.o"o)(. :o"$ s!#ll /$ 8$&$')("$8 u%o" .o"sul&#&(o" >(&! &!$ ("!#/(&#"&s o= &!$ lo.#l ?ov$'")$"& u"(&s 8('$.&ly #==$.&$8 >!(.! s!#ll /$ .o"8u.&$8 >(&!(" s(@ 465 )o"&!s u%o" #%%'ov#l o= &!(s A.&. S()(l#'ly su/<$.& &o &!$ .o".u''$".$ /y '$solu&(o" o= &!$ lo.#l ?ov$'")$"& u"(&s 8('$.&ly #==$.&$8 &!$ P'$s(8$"& s!#ll .'$#&$ o&!$' S%$.(#l E.o"o)(. :o"$s (" the !ase areas of 8allace Air 2tation in 2an Fernando+ .a >nion Dexcludin, areas desi,nated for communications+ advance (arnin, and radar requirements of the Phili--ine Air Force to !e determined !y the Conversion AuthorityE and C#)% Jo!" H#y (" &!$ C(&y o= 2#?u(o. >-on recommendation of the Conversion Authority+ the President is li<e(ise authori?ed to create 2-ecial Economic Iones coverin, the Munici-alities of Moron,+ =ermosa+ Dinalu-ihan+ Castille0os+ and 2an Marcelino& DEm-hasis su--liedE Res-ondent6in6intervention CC=DC su!mits that !y authori?in, the President to create 2EIs Bin accordance (ith the -olicies as herein -rovided insofar as a--lica!le+B the first -ara,ra-h of 2ection "M refers to the -olicies enumerated in 2ection "$+ includin, exem-tion from local and national taxes&
12

This allusion to Bthe -olicies as herein -rovidedB can !y no means !e considered an ex-licit or unequivocal conferment of the tax exem-tions and other incentives set forth in 2ection "$ on other 2EIs& Nota!ly+ the -recedin, -ortions of R&A& No& A$$A ma<e mention of t(o sets of B-olicies1B D"E the ,eneral B-oliciesB that the la( is intended to further+&i/0 2ec& $& Declaration of Policies& P It is here!y declared the -olicy of the 4overnment to accelerate the sound and !alanced conversion into alternative -roductive uses of the Clar< and 2u!ic military reservations and their extensions DCohn =ay 2tation+ 8allace Air 2tation+ 9FDonnell Transmitter 2tation+ 2an Mi,uel Naval Communications 2tation and Ca-as Relay 2tationE+ to raise funds !y the sale of -ortions of Metro Manila military cam-s+ and to a--ly said funds as -rovided herein for the develo-ment and conversion to -roductive civilian use of the lands covered under the "#*A Military /ases A,reement !et(een the Phili--ines and the >nited 2tates of America+ as amended& It is li<e(ise the declared -olicy of the 4overnment to enhance the !enefits to !e derived from said -ro-erties in order to -romote the economic and social develo-ment of Central .u?on in -articular and the country in ,eneral&+ and D$E the a!ove6quoted B-oliciesB ,overnin, the 2u!ic 2EI& Considerin, that the su!0ect matter of the first -ara,ra-h of 2ection "M is the authority of the President to create other 2EIs in the former !ase lands+ it stands to reason that the same should !e exercised Bin accordance (ith the -oliciesB (hich -rovide the rationale for the la( as laid do(n in 2ection $ of R&A& No& A$$A& In contradistinction+ a -rovision authori?in, the President to define the metes and !ounds of other 2EIs Bin accordance (ithB the tax and financial incentives of the 2u!ic 2EI (ould !e nonsensical& These tax and financial incentives -rovide neither direction nor ,uidance to the President in his determination Dsu!0ect to the concurrence of the affected local ,overnment unitsE of the ,eo,ra-hic com-osition of the 2EIs& Moreover+ the third and fourth -ara,ra-hs of 2ection "M ex-licitly -rovide that the B-olicies to ,overn and re,ulateB the Cohn =ay 2EI Bshall !e determined u-on consultation (ith the inha!itants of the local ,overnment units directly affected+B there!y im-lyin, that the ,overnin, -olicies of the Cohn =ay 2EI+ unli<e that of the 2u!ic 2EI+ (ere yet to !e s-ecified and+ thus+ not -rovided for !y R&A& No& A$$A itself& In any event+ (hether it is 2ection "$ or 2ection "M of R&A& No& A$$A (hich is scrutini?ed+ the result is the same& There is no ex-ress extension of the incentives or !enefits,ranted to the 2u!ic 2EI to the other 2EIs still to !e created via -residential -roclamation&

As for res-ondent6in6intervention CC=DCFs ar,ument that the PresidentFs B-o(er to create 2-ecial Economic Iones carries (ith it the -o(er to -rovide for tax and financial incentives+B it does not lie& I& (s &!$ l$?(sl#&(v$ /'#".! >!(.! !#s &!$ ("!$'$"& %o>$' "o& o"ly &o s$l$.& &!$ su/<$.&s o= &#@#&(o" /u& &o ?'#"& $@$)%&(o"s.*161 Para,ra-h *+ 2ection $@ of Article KI of the Constitution is crystal clear1 BGnHo la( ,rantin, any tax exem-tion shall !e -assed (ithout the concurrence of a ma0ority of all the Mem!ers of the Con,ress&B =ence+ it is only the le,islature+ as limited !y the -rovisions of the Constitution+ (hich has full -o(er to exem-t any -erson or cor-oration or class of -ro-erty from taxation& The Constitution itself may -rovide for s-ecific tax exem-tionsG"AH or local ,overnments may -ass ordinances -rovidin, for exem-tion from local taxes+G"@H !ut+ other(ise+ it is only the le,islative !ranch (hich has the -o(er to ,rant tax exem-tions+ its -o(er to exem-t !ein, as !road as its -o(er to tax&G"#H Perha-s reali?in, that R&A& No& A$$A does not contain an ex-ress ,rant of tax exem-tions and financial incentives coverin, the Cohn =ay 2EI+ res-ondents+ as a second line of ar,ument+ im-lore the Court to construe the existence of such a ,rant -ursuant to (hat they claim to !e the le,islative intent of the la(& To this end+ they -osit that the Court should not a--ly the dee-ly6 entrenched rule that tax exem-tions cannot !e im-lied !ut must !e cate,orically and unmista<a!ly ex-ressedG$%H in a lan,ua,e too clear to !e mista<en&G$"H In this vein+ res-ondent6in6intervention CC=DC+ althou,h ac<no(led,in, that Bthe la( fro(ns a,ainst exem-tions from taxation+BG$$H nevertheless ar,ues that BGtHhe ,rant of tax exem-tion -rivile,es to the GCohn =ay 2EIH (as addressed -rimarily to -u!lic res-ondent /CDAB in order Bto achieve its mandate for an accelerated conversion of the former !aselands into economically -roductive uses+ at the least cost and ex-osure to the ,overnment&B Thus+ it contends that the Court should Ba--ly+ at least !y analo,y+ the -rinci-le that strict construction is not a--lica!le (here the ,rantee of the exem-tion is a -olitical su!division or instrumentality&B The Court is not -ersuaded& True+ it is a reco,ni?ed -rinci-le that the rule on stri(tissimi 1uris does not a--ly in the case of exem-tions in favor of a ,overnment -olitical su!division or instrumentality+G$3Hthe rationale for (hich has !een identified as follo(s1 BThe !asis for a--lyin, the rule of strict construction to statutory -rovisions ,rantin, tax exem-tions or deductions+ even more o!vious than (ith reference to the affirmative or levyin, -rovisions of tax statutes+ is to minimi?e differential treatment and foster im-artiality+ fairness+ and equality of treatment amon, tax -ayers&
1/

The reason for the rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. In such case the practical effect of an exemption is merely to reduce the amount of money that has to be handled by government in the course of its operations. For these reasons, provisions granting exemptions to government agencies may be construed liberally, in favor of non tax liability of such agencies."[24 DEm-hasis su--liedJ italics in the ori,inalE =o(ever+ the fore,oin, finds no a--lication to the -resent case& First+ there is a!solutely nothin, in R&A& No& A$$A (hich can !e considered a ,rant of tax exem-tion in favor of -u!lic res-ondent /CDA& Rather+ the !eneficiaries of the tax exem-tions and other incentives in 2ection "$ Dthe only -rovision in R&A& No& A$$A (hich ex-ressly ,rants tax exem-tionsE are clearly the !usiness enter-rises located (ithin the 2u!ic 2EI& To !e sure+ no(here in any of res-ondentsF -leadin,s is it -retended that the le,islature exem-ted the /CDA from taxation in order to accom-lish its mandate& 9n the contrary+ the alle,ed tax exem-tions and financial incentives are -lainly asserted to !e in favor of -rivate enter-rises doin, !usiness in the Cohn =ay 2EI& 2econd+ as noted a!ove+ the li!eral construction of tax exem-tions in favor of the ,overnment is -remised on their resultin, only in a reduction in infra6 ,overnmental fund transfers+ !ut not ,overnment revenue& Evidently+ this rationale does not a--ly+ (hether !y analo,y or other(ise+ in favor of -rivate !usiness enter-rises+ such as res-ondent6in6intervention CC=DC& Consequently+ res-ondentsF ar,uments for a li!eral construction of R&A& A$$A in favor of tax exem-tions and incentives to !usiness enter-rises in the Cohn =ay 2EI must necessarily fail& As the Court+ s-ea<in, throu,h Mr& Custice Kicente K& Mendo?a+ in the recent case of Phili''ine Lon% ,istan(e Tele'hone Com'any, n(# &# City of ,a&ao+G$MH had occasion to stress1 & & & Alon, (ith the -olice -o(er and eminent domain+ &#@#&(o" (s o"$ o= &!$ &!'$$ "$.$ss#'y #&&'(/u&$s o= sov$'$(?"&y. Co"s$Au$"&ly s&#&u&$s in dero,ation of soverei,nty+ such as those.o"&#("("? $@$)%&(o" ='o) &#@#&(o" s!oul8 /$ s&'(.&ly .o"s&'u$8 (" =#vo' o= &!$ s#&$. A s&#&$ .#""o& /$ s&'(%%$8 o= &!(s )os& $ss$"&(#l %o>$' /y 8ou/&=ul >o'8s #"8 o= &!(s !(?!$s& #&&'(/u&$ o= sov$'$(?"&y /y #)/(?uous l#"?u#?$.*261 DEm-hasis su--liedE Necessarily+ res-ondentsF other ar,uments+ de-endent as they are on a li!eral construction of tax exem-tions+ also fail&

Pu!lic res-ondentsF ar,ument that tax exem-tions are BinherentB in the term Bs-ecial economic ?oneB stands the conce-t on its head and cannot !e acce-ted& The tax exem-t character of an 2EI -roceeds from the statutory -rovisions ex-ressly conferrin, such exem-tions+ not vice6versa& The tail does not (a, the do,& Moreover+ a careful scrutiny of the 2enate deli!erations does not disclose a clear intention on the -art of the la( ma<in, -o(er to ma<e the tax exem-tions and financial incentives in 2ection "$ a--lica!le in the other 2EIs& The ado-tion of a sin,le uniform set of tax exem-tions and financial incentives for all 2EIs in the former !ase lands (as indeed su,,ested !y 2enator Paterno (hen 2ection "$ (as under consideration in the 2enate1 x x x S$"#&o' P#&$'"o6 Than< you Mr& President&

Cl#'7. G$ "$$8 &o s$& u% .$'&#(" s&#"8#'8s >!(.! &!$ P'$s(8$"& >oul8 o/s$'v$ (" s$&&("? u% &!os$ ;o"$s. So I >oul8 %'o%os$ &!#& &!$ %ol(.($s #%%l(.#/l$ &o #ll $.o"o)(. ;o"$s /$ s%$.(=($8 !$'$ #"8 &!os$ >!(.! '$l#&$ o"ly &o Su/(. /$ %u& (" # s&#"8#'8 =o' &!$ Su/(. $.o"o)(. ;o"$. S$"#&o' S!#!#"(1 Mr& President+ I thou,ht that this (as the s-ecial concern of our Collea,ue from Cavite& I remem!er quite clearly that last ni,ht+ some concern (as ex-ressed+ includin, from this Re-resentation+ that there (as no s-ecial attention !ein, ,iven to Clar<& It thin< it (as also 2enator Enrile (ho said that Clar< has s-ecific featuresJ it is landloc<ed+ et cetera& S$"#&o' P#&$'"o6 ;es& S$"#&o' S!#!#"(1 2o+ to sho( that (e are still interested in Clar< and its develo-ment+ and to avoid this very lon, -rocess of le,islatin, every detail of (hat a s-ecial economic ?one should !e+ I thou,ht it (as a,reed last ni,ht that (e should authori?e the President to create s-ecial economic ?ones (ith s-ecific reference to Clar<& This is (hy this a--ears in this form+ Mr& President& S$"#&o' P#&$'"o1 ;es& G(&!ou& ?o("? ("&o &!$ .'#=&("? o= &!$ &$@& M'. P'$s(8$"& (& >#s )y &!ou?!& &!#& %$'!#%s &!$'$ .oul8 /$ # s$.&(o" >!(.! s%$.(=($s &!$ %ol(.($s >!(.! s!#ll #%%ly &o #ll s%$.(#l $.o"o)(. ;o"$s. T!$" &!$'$ >oul8 /$ #"o&!$' s$.&(o" >!(.! (" $==$.& >(ll .'$#&$ &!$ Su/(. $.o"o)(. ;o"$ >!(.! >oul8 '$=$' &o &!os$ u"(Au$ #.&(v(&($s (" Su/(.. T!$" &!$'$ >oul8 /$ #"o&!$' s$.&(o" >!(.! >oul8 #u&!o'(;$ &!$ P'$s(8$"& &o .'$#&$ o&!$' s%$.(#l $.o"o)(. ;o"$s >(&! %#'&(.ul#' '$=$'$".$ &o Cl#'7 (" >!(.! s%$.(#l $.o"o)(. ;o"$s &!$ s&#"8#'8s s$& u% (" &!$ =('s& s$.&(o" >oul8 #%%ly. S$"#&o' S!#!#"(1 I ta<e it that+ that is 0ust a matter of reorderin, this section& S$"#&o' P#&$'"o6 ;es& I" o&!$' >o'8s I >oul8 l(7$ &o su??$s& &!#& &!$ /(ll .o"&#(" &!$ =$#&u'$s o= #"y s%$.(#l $.o"o)(. ;o"$ #"8 &!$" #"o&!$' s$.&(o" >oul8 .o"&#(" &!$ =$#&u'$s u"(Au$ &o Su/(. #s # s%$.(#l $.o"o)(. ;o"$.*2H1DEm-hasis su--liedE =o(ever+ as res-ondent CC=DC itself admits+ B2enator PaternoFs -ro-osal that Fthe -olicies a--lica!le to all s-ecial economic ?ones !e s-ecified here Din (hat (ould eventually !e 2ection "ME and those (hich relate only to 2u!ic !e -ut in a standard for the 2u!ic economic ?oneF (as not carried out+ as 2ection "M as finally -assed does not contain an enumeration of -olicies s-ecific only to non62u!ic 2EIs&B D>nderscorin, su--liedE Instead+ as -reviously noted+ 2ection "M of R&A& No& A$$A -rovides that the B-olicies to ,overn and re,ulateB the Cohn =ay 2EI Bshall !e determined u-on consultation (ith the inha!itants of the local ,overnment units directly affected&B

No(+ (ith res-ect to B/+B Mr& President+ on items " to )+G$AH (hat are they su--osed to !e: Are these -olicies: /ecause in my readin,+ su!-ara,ra-h+ su!-ara,ra-h B"B and su!-ara,ra-h B)B refer to activitiesJ namely+ shi--in, and tourism6relatedJ (hile su!6-ara,ra-hs B$+ 3+ *+ and MB re-resent -olicies (hich shall a--ly (ithin the ?one& S$"#&o' S!#!#"(6 thin< the intention here really (as to s-ecify the activities (hich should ta<e -lace (ithin this economic ?one& /ut+ on second readin,+ yes+ I thin< there is a mix6u- here of activities and -olicies& S$"#&o' P#&$'"o6 ;es& S$"#&o' S!#!#"(6 May!e some of these could !e transferred to 2ection "3& S$"#&o' P#&$'"o6 No(+ No& B"B and No& B)B+ are these authori?ations to en,a,e in these activities+ or are they mandates for the s-ecial economic ?one to en,a,e in these activities: S$"#&o' S!#!#"(6 ;es+ this is an attem-t to s-ecify the features+ the <ind of s-ecific activities (hich (ould !e unique to the s-ecial economic ?one of 2u!ic& This is (hy shi--in, is ,iven& S$"#&o' P#&$'"o6 ;es& Then I (ould -ro-ose+ Mr& President+ that these t(o activities+ namely B"B and B)+B !e se,re,ated as !ein, a--lica!le to the 2u!ic economic ?one+ !ecause they (ill not !e a--lica!le+ for exam-le+ in the Clar< economic ?one !ecause there (ould !e no shi--in, in Clar<& S$"#&o' S!#!#"(1 Mr& President+ 2ection "$+ refers exclusively to 2u!ic& There is no attem-t no( in this /CDA to do anythin, for Clar<& I thin< there is no time& S$"#&o' P#&$'"o6 Y$s. Y$& M'. P'$s(8$"& %#'#?'#%! FCF #u&!o'(;$s &!$ P'$s(8$"& o= &!$ P!(l(%%("$s &o %'o.l#() 8$l("$#&$ #"8 s%$.(=y &!$ )$&$s #"8 /ou"8s o= o&!$' s%$.(#l $.o"o)(. ;o"$s >(&! %#'&(.ul#' '$=$'$".$ &o

14

2i,nificantly+ these -olicies need not !e identical to those im-lemented in the 2u!ic 2EI since there may !e real and su!stantial differences in develo-ment -riorities+ local conditions and other relevant matters+ as the consultations may reveal& =o(ever+ insofar as these -olicies may include tax exem-tions+ -ara,ra-h *+ 2ection $@ of Article KI of the Constitution requires that any such exem-tions must !e in the form of le,islation -assed (ith the concurrence of a ma0ority of all the Mem!ers of the Con,ress& Finally+ contrary to -u!lic res-ondentsF inter-retation+ the Decision of 9cto!er $*+ $%%3 does not Btie the handsB of executive or administrative a,encies from im-lementin, any -resent or future le,islation (hich affords tax or other financial incentives to qualified -ersons doin, !usiness in the Cohn =ay 2EI or else(here& The second sentence of 2ection 3 of Proclamation No& *$% (as declared null and void only insofar as it -ur-orted to ,rant+ !y executive -roclamation and (ithout statutory !asis+ tax exem-tions and other financial incentives to !usiness enter-rises located in Cohn =ay 2EI& =o(ever+ (here there is statutory !asis for exem-tions or incentives+ there is nothin, to -revent qualified -ersons from a--lyin, for and availin, thereof& As stated in the dis-ositive -ortion of the decision+ Proclamation No& *$%+ (ithout the invalidated -ortion+ remains valid and effective& GHEREFORE+ the motions for reconsideration are here!y DENIED (ith FINA.IT;&

H$l86 The ar,ument that RA AA") did not ori,inate exclusively in the =ouse of Re-resentatives as required !y Art& KI+ 2ec& $* of the Constitution (ill not !ear analysis& To !e,in (ith+ it is not the la( !ut the revenue !ill (hich is required !y the Constitution to ori,inate exclusively in the =ouse of Re-resentatives& To insist that a revenuestatute and not only the !ill (hich initiated the le,islative -rocess culminatin, in the enactment of the la( must su!stantially !e the same as the =ouse !ill (ould !e to deny the 2enate's -o(er not only to concur (ith amendments !ut also to -ro-ose amendments& Indeed+ (hat the Constitution sim-ly means is that the initiative for filin,revenue+ tariff or tax !ills+ !ills authori?in, an increase of the -u!lic de!t+ -rivate !ills and !ills of local a--lication must come from the=ouse of Re-resentatives on the theory that+ elected as they are from the districts+ the mem!ers of the =ouse can !e ex-ected to !e more sensitive to the local needs and -ro!lems& Nor does the Constitution -rohi!it the filin, in the 2enate of a su!stitute !ill in antici-ation of its recei-t of the !ill from the =ouse+ so lon, as action !y the 2enate as a !ody is (ithheld -endin, recei-t of the =ouse !ill& The next ar,ument of the -etitioners (as that 2& No& ")3% did not -ass

TOLENTINO vs. SECRETARY o= FINANCE F#.&s6 The value6added tax DKATE is levied on the sale+ !arter or exchan,e of ,oods and -ro-erties as (ell as on the sale or exchan,e of services& RA AA") see<s to (iden the tax !ase of the existin, KAT system and enhance its administration !y amendin, the National Internal Revenue Code& There are various suits challen,in, the constitutionality of RA AA") on various ,rounds& 9ne contention is that RA AA") did not ori,inate exclusively in the =ouse of Re-resentatives as required !y Art& KI+ 2ec& $* of the Constitution+ !ecause it is in fact the result of the consolidation of $ distinct !ills+ =& No& """#A and 2& No& ")3%& There is also a contention that 2& No& ")3% did not -ass 3 readin,s as required !y the Constitution&

3 readin,s on se-arate days as required !y the Constitution !ecause the second and third readin,s (ere done on the same day& /ut this (as !ecause the President had certified 2& No& ")3% as ur,ent& The -residential certification dis-ensed (ith the requirement not only of -rintin, !ut also that of readin, the !ill on se-arate days& That u-on the certification of a !ill !y the President the requirement of 3 readin,s on se-arate days and of -rintin, and distri!ution can !e dis-ensed (ith is su--orted !y the (ei,ht of le,islative -ractice&

Issu$6 8hether or not RA AA") violates Art& KI+ 2ecs& $* and $)D$E of the Constitution

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