Raul L. Lambino, et al. vs. COMELEC, et al. , G.R. No.

174153, October 25, 2006 Topic:

Amendment or Revision of the Constitution (procedure- proposal)

Facts:

On 15 February 2006, petitioners commenced gathering signatures for an initiative petition to

change the 1987 Constitution and filed a petition with the COMELEC to hold a plebiscite that will
ratify their initiative petition under Section 5(b) and (c) and Section 7 of Republic Act No. 6735
or the Initiative and Referendum Act ("RA 6735"). The petitioners alleged that their petition had
the support of 6,327,952 individuals constituting at least twelve per centum (12%) of all registered
voters, with each legislative district represented by at least three per centum (3%) of its registered
voters. The petitioner's initiative petition changes the 1987 Constitution by modifying Sections 1-
7 of Article VI (Legislative Department) and Sections 1-4 of Article VII (Executive Department)
and by adding Article XVIII entitled "Transitory Provisions." These proposed changes will shift
the present Bicameral-Presidential system to a Unicameral-Parliamentary form of government.
The COMELEC issued its Resolution denying due course to the petitioner's petition for lack of an
enabling law governing initiative petitions to amend the Constitution. The COMELEC invoked
this Court's ruling in Santiago v. Commission on Elections declaring RA 6735 inadequate to
implement the initiative clause on proposals to amend the Constitution.

Issue:

Whether the petitioner's initiative petition complies with Section 2, Article XVII of the
Constitution on amendments to the Constitution through a people's initiative.

Held:

There is no merit to the petition. The petitioner miserably failed to comply with the basic
requirements of the Constitution for conducting a people's initiative. Thus, there is even no need
to revisit Santiago case, as the present petition warrants dismissal based alone on the petitioner's
glaring failure to comply with the basic requirements of the Constitution. Section 2, Article XVII
of the Constitution is the governing constitutional provision that allows a people's initiative to
propose amendments to the Constitution. The essence of amendments "directly proposed by the
people through initiative upon a petition" is that the entire proposal on its face is a petition by the
people. This means two essential elements must be present. First, the people must author and thus
sign the entire proposal. No agent or representative can sign on their behalf. Second, as an initiative
upon a petition, the proposal must be embodied in a petition. These essential elements are present
only if the full text of the proposed amendments is first shown to the people who express their
assent by signing such complete proposal in a petition. Thus, an amendment is "directly proposed
by the people through initiative upon a petition" only if the people sign on a petition that contains
the full text of the proposed amendments.

Gonzales vs. COMELEC

Topic: Amendment or Revision of the Constitution (procedure- ratification)

Facts:
In June 1967, Republic Act 4913 was passed. This law provided for the COMELEC to hold a
plebiscite for the proposed amendments to the Constitution. It was provided in the said law that
the plebiscite shall be held on the same day that the general national elections shall be held
(November 14, 1967). This was questioned by Ramon Gonzales and other concerned groups as
they argued that this was unlawful as there would be no proper submission of the proposals to the
people who would be more interested in the issues involved in the general election rather than in
the issues involving the plebiscite.

Gonzales also questioned the validity of the procedure adopted by Congress when they came up
with their proposals to amend the Constitution (RA 4913). In this regard, the COMELEC and other
respondents interposed the defense that said act of Congress cannot be reviewed by the courts
because it is a political question.

Issue:

Whether or not a plebiscite may be held simultaneously with a general election.

Held:

Yes. There is no prohibition to the effect that a plebiscite must only be held on a special election.
SC held that there is nothing in this provision of the [1935] Constitution to indicate that the election
therein referred to is a special, not a general election. The circumstance that the previous
amendment to the Constitution had been submitted to the people for ratification in special elections
merely shows that Congress deemed it best to do so under the circumstances then obtaining. It
does not negate its authority to submit proposed amendments for ratification in general elections.
Although Justice J. B. L. Reyes and Justice Sanchez dissented. "Plebiscite should be held on a
special date so as to facilitate "fair submission, intelligent consent or rejection". they should be
able to compare the original proposition with the amendment proposition.

Tolentino vs. COMELEC

Topic: Amendment or Revision of the Constitution (procedure- ratification)

Facts:
The Constitutional Convention of 1971 scheduled an advance plebiscite concerning only the
proposal to lower the voting age from 21 to 18. This was even before the rest of the draft of the
Constitution (that was then under revision) had been approved. Arturo Tolentino then filed a
motion to prohibit such plebiscite.

Issue:

Whether or not the petition for the prohibition of the plebiscite is valid.

Held:
Yes. If the advance plebiscite will be allowed, there will be an improper submission to the people.
Such is not allowed. The proposed amendments shall be approved by a majority of the votes cast
at an election at which the amendments are submitted to the people for ratification. Election here
is singular which meant that the entire constitution must be submitted for ratification at one
plebiscite only. Furthermore, the people were not given a proper “frame of reference” in arriving
at their decision because they had at the time no idea yet of what the rest of the revised Constitution
would ultimately be and therefore would be unable to assess the proposed amendment in the light
of the entire document. This is the “Doctrine of Submission” which means that all the proposed
amendments to the Constitution shall be presented to the people for the ratification or rejection at
the same time, not piecemeal.

Almario vs. Alba

Topic: Amendment or Revision of the Constitution (procedure- ratification)

Facts:

In January 1984, a plebiscite was to be held to allow the voters to either approve or reject
amendments to the Constitution proposed by the Batasang Pambansa. The proposed amendments
are embodied in four (4) separate questions to be answered by simple yes or no answers. Alex
Almario and some other concerned groups seek to enjoin the submission in the said plebiscite of
Questions No. 3 (“grant” as an additional mode of acquiring lands belonging to the public domain)
and 4 (the undertaking by the government of a land reform program and a social reform program)
to the people for ratification or rejection on the ground that there has been no fair and proper
submission following the doctrine laid down in Tolentino vs. COMELEC. However, unlike in the
case of Tolentino vs. COMELEC, Almario et al do not seek to prohibit the holding of the plebiscite
but only ask for more time for the people to study the meaning and implications of the said
questions/proposals until the nature and effect of the proposals are fairly and properly submitted
to the electorate.

Issue:

Whether or not Questions 3 and 4 can be presented to the people on a later date.

Held:

No. This is a political question. The necessity, expediency, and wisdom of the proposed
amendments are beyond the power of the courts to adjudicate. Precisely, whether or not “grant” of
public land and “urban land reform” are unwise or improvident or whether or not the proposed
amendments are unnecessary is a matter which only the people can decide. The questions are
presented for their determination. Assuming that a member or some members of the Supreme
Court may find undesirable any additional mode of disposing of public land or an urban land
reform program, the remedy is to vote “NO” in the plebiscite but not to substitute his or their
aversion to the proposed amendments by denying to the millions of voters an opportunity to
express their own likes or dislikes. Further, Almario et al have failed to make out a case that the
average voter does not know the meaning of “grant” of public land or of “urban land reform.”
Stone vs. Mississippi, 101 U.S. 814, May 10, 1880
Topic: Impairment Clause

Facts:

In 1867, the provisional state legislature of Mississippi chartered the Mississippi Agricultural,
Educational, and Manufacturing Aid Society. The Society was chartered to run a lottery for the
next 25 years; however, in 1868, a new constitution ratified by the people outlawed lotteries in the
state. John Stone and others associated with the Society were arrested in 1874 for running a lottery.
The Society claimed they were protected by the provisions of their charter while the state declared
that the subsequent enforcement legislation had repealed the grant.

Issue:

Whether or not there was a violation of the impairment clause?

Held:

The said provision is not in conflict with sec. 10, art. 1 of the Constitution of the United States,
which prohibits a State from "passing a law impairing the obligation of contracts." The legislature
cannot, by chartering a lottery company, defeat the will of the people of the state authoritatively
expressed, in relation to the continuance of such business in their midst. The Court stated that no
legislation had the authority to bargain away the public health and morals. The Court viewed the
lottery as a vice that threatened the public health and morals. The contracts protected in the
Constitution are property rights, not governmental rights. Therefore, one can only obtain
temporary suspension of the governmental rights (in this case, the right to outlaw actions) in a
charter which can be revoked by the will of the people.

Powell vs. Pennsylvania 127 U.S., 678

Topic: Police Power

Facts:

The Fourteenth Amendment to the Constitution was not designed to interfere with the exercise of
the police power by the state for the protection of health, the prevention of fraud, and the
preservation of the public morals. The prohibition of the manufacture out of oleaginous substances,
or out of any compound thereof other than that produced from unadulterated milk or cream from
unadulterated milk, of an article designed to take the place of butter or cheese produced from pure
unadulterated milk or cream from unadulterated milk, or the prohibition upon the manufacture of
any imitation or adulterated butter or cheese, or upon the selling or offering for sale, or having in
possession with intent to sell, the same, as an article of food, is a lawful exercise by the power to
protect, by police regulations, the public health.
Whether the manufacture of oleomargarine or imitation butter of the kind described in the Act of
the Legislature of Pennsylvania of May 21, 1885 (Laws of Penn. of 1885, p. 22, No. 25) is or may
be conducted in such a way or with such skill and secrecy as to baffle ordinary inspection, or
whether it involves such danger to the public health as to require, for the protection of the people,
the entire suppression of the business, rather than its regulation in such manner as to permit the
manufacture and sale of articles of that class that do not contain noxious ingredients, are questions
of fact and of public policy which belong to the legislative department to determine

Issue:

Whether such statute is valid.

Held:

Yes. The statute of Pennsylvania of May 21, 1885, "for the protection of the public health, and to
prevent adulteration of dairy products and fraud in the sale thereof" neither denies to persons within
the jurisdiction of the state the equal protection of the laws nor deprives persons of their property
without that compensation required by law, and is not repugnant in these respects to the Fourteenth
Amendment to the Constitution of the United States.

Walter Lutz v. J. Antonio Araneta GR No. L-7859, December 22, 1955

Topic: Legitimate exercise of police power

Facts:

Petitioner acts in his capacity as judicial administrator of Antonio Ledesma, sought to recover from
the CIR the sum of money paid by the estate as taxes, assailing the constitutionality of the Sugar
Adjustment Act (Section 3 of the CA 567) for it increases the existing tax imposed on the
manufacture of sugar, alleging that such is not being levied for public purposes only but solely and
exclusively for the aid and support of the sugar industry. At the time of the enactment of such act,
the sugar industry was in an imminent threat of loss and is in need to be stabilized.

Issue:

Whether or not CA 567 is valid and constitutional, despite it being allegedly in violation of the
equal protection clause and the purpose of which is not for the benefit of the general public but
solely for the rehabilitation of the sugar industry.
Industry?

Held:

Yes. The rehabilitation and promotion of the sugar industry is a matter of public concern and would
be benefited by the general welfare consequently. It is bound in the discretion of the Legislature
to determine within reasonable bounds what is necessary for its protection and efficient for its
promotion. The legislative must be allowed to fully exercise its power subject only to the test of
reasonableness and it is not contended that the means provided by the law bear no relation to the
objective sought to be attained or are oppressive in character. But if the objective and methods are
alike and is constitutionally valid then there is no reason why the state may not levy taxes to raise
funds for their prosecution and attainment. Taxation may be used as a valid exercise of police
power.

Valentin Tio vs. Videogram Regulatory Board, et. al. GR No. L-75697, June 18, 1987
Topic: Taxation as exercise of police power

Facts:

Petitioner questions the validity of PD 1987 entitled an “Act creating the Videogram Regulatory
Board”, focusing on Section 10 thereof, which sought to impose a tax of 30% on the gross receipts
payable to the local government. Petitioner assails that aside from being a rider and not germane
to the subject matter such imposition was being harsh, confiscatory, oppressive and/or unlawfully
restraints trade and in violation of the due process clause of Constitution.

Issue:

Whether PD 1987 a valid exercise of taxing power of the state?

Held:

Yes. The validity of imposing taxes does not merely cease because it regulates, discourages or
deters the activities or business being taxed. The power to impose taxes is so pervasive and
unlimited in force that the courts rarely venture to declare it to be subject to any restrictions except
those which rest in the discretion of the authority which exercises it. The levying of 30% tax is
deemed for public purpose, it was imposed primarily to supply the need for regulating the video
industry, particularly because of rampant film piracy, the flagrant violation of intellectual property
rights and the proliferation of pornographic video tapes. While the imposition of the tax decree to
protect solely the movie industry, the tax remains a valid imposition. Even if it favors one industry
only, the public purpose of a tax may legally exist.

Association of landowners in the Philippines, Inc. v. Secretary of Agrarian Reform

Facts:

These are consolidated cases involving common legal questions including serious challenges to
the constitutionality of R.A. No. 6657 also known as the "Comprehensive Agrarian Reform Law
of 1988. In G.R. No. 79777, the petitioners are questioning the P.D No. 27 and E.O Nos. 228 and
229 on the grounds inter alia of separation of powers, due process, equal protection and the
constitutional limitation that no private property shall be taken for public use without just
compensation. In G.R. No. 79310, the petitioners in this case claim that the power to provide for
a Comprehensive Agrarian Reform Program as decreed by the Constitution belongs to the
Congress and not to the President, the also allege that Proclamation No. 131 and E.O No. 229
should be annulled for violation of the constitutional provisions on just compensation, due process
and equal protection. They contended that the taking must be simultaneous with payment of just
compensation which such payment is not contemplated in Section 5 of the E.O No. 229. In G.R.
No. 79744, the petitioner argues that E.O Nos. 228 and 229 were invalidly issued by the President
and that the said executive orders violate the constitutional provision that no private property shall
be taken without due process or just compensation which was denied to the petitioners. In G.R.
No 78742 the petitioners claim that they cannot eject their tenants and so are unable to enjoy their
right of retention because the Department of Agrarian Reform has so far not issued the
implementing rules of the decree. They therefore ask the Honorable Court for a writ of mandamus
to compel the respondents to issue the said rules.

Issue:

Whether or not the laws being challenged is a valid exercise of Police power or Power of Eminent
Domain.

Held:

Police Power through the Power of Eminent Domain, though there are traditional distinction
between the police power and the power of eminent domain, property condemned under police
power is noxious or intended for noxious purpose, the compensation for the taking of such property
is not subject to compensation, unlike the taking of the property in Eminent Domain or the power
of expropriation which requires the payment of just compensation to the owner of the property
expropriated.

Carlos Superdrug Corp. v. Department of Social Welfare and Development G.R.

No. 166494, June 9, 2007
Topic: Legitimate exercise of police power

Facts:

Petitioners are domestic corporations and proprietors operating drugstores in the Philippines.
Petitioners assail the constitutionality of Section 4(a) of RA 9257, otherwise known as the
“Expanded Senior Citizens Act of 2003.” Section 4(a) of RA 9257 grants twenty percent (20%)
discount as privileges for the Senior Citizens. Petitioner contends that said law is unconstitutional
because it constitutes deprivation of private property.

Issue:

Whether or not RA 9257 is unconstitutional.

Held:

Petition is dismissed. The law is a legitimate exercise of police power which, similar to the power
of eminent domain, has general welfare for its object. Accordingly, it has been described as “the
most essential, insistent and the least limitable of powers, extending as it does to all the great public
needs.” It is the power vested in the legislature by the constitution to make, ordain, and establish
all manner of wholesome and reasonable laws, statutes, and ordinances, either with penalties or
without, not repugnant to the constitution, as they shall judge to be for the good and welfare of the
commonwealth, and of the subjects of the same.” For this reason, when the conditions so demand
as determined by the legislature, property rights must bow to the primacy of police power because
property rights, though sheltered by due process, must yield to general welfare

Ermita-Malate Hotel & Motel Operators vs. City Mayor of Manila, G.R. No. L-24693 July
31, 1967

Facts:

The petitioners filed a petition for prohibition against Ordinance No. 4760 for being violative of
the due process clause, contending that said ordinance is not only arbitrary, unreasonable or
oppressive but also vague, indefinite and uncertain, and likewise allege the invasion of the right to
privacy and the guaranty against self-incrimination. The lower court ruled in favor of the
petitioners.

Issue:

Whether or not Ordinance No. 4760 is against the due process clause.

Held:

The SC ruled in favor of Astorga. There is a presumption that the laws enacted by Congress (in
this case Municipal Board) are valid. Without a showing or a strong foundation of invalidity, the
presumption stays. As in this case, there was only a stipulation of facts and such cannot prevail
over the presumption. Further, the ordinance is a valid exercise of Police Power. There is no
question but that the challenged ordinance was precisely enacted to minimize certain practices
hurtful to public morals. This is to minimize prostitution. The increase in taxes not only
discourages hotels/motels in doing any business other than legal but also increases the revenue of
the LGU concerned. And taxation is a valid exercise of police power as well.

The due process contention is likewise untenable. There is no controlling and precise definition of
due process. It has a standard to which the governmental action should conform in order that
deprivation of life, liberty or property, in each appropriate case, be valid. What then is the standard
of due process which must exist both as a procedural and a substantive requisite to free the
challenged ordinance from legal infirmity? It is responsiveness to the supremacy of reason,
obedience to the dictates of justice. Negatively put, arbitrariness is ruled out and unfairness
avoided. Nothing in the petition is sufficient to prove the ordinance’s nullity for an alleged failure
to meet the due process requirement.

On the impairment of freedom to contract by limiting duration of use to twice every 24 hours- It
was not violative of due process. 'Liberty' as understood in democracies, is not license; it is 'liberty
regulated by law.' Implied in the term is restraint by law for the good of the individual and for the
greater good of the peace and order of society and the general well-being. The Court reversed the
judgment of the lower court and lifted the injunction on the Ordinance in question
City of Manila v. Laguio

Facts:

On 30 Mar 1993, Mayor Lim signed into law Ord 7783 entitled “An ordinance prohibiting the
establishment or operation of business providing certain forms of amusement, entertainment,
services and facilities in the Ermita-Malate Area, prescribing penalties for violation thereof, and
for other purposes. It basically prohibited establishments such as bars, karaoke bars, motels and
hotels from operating in the Malate District which was notoriously viewed as a red light district
harboring thrill seekers. Malate Tourist Development Corporation avers that the ordinance is
invalid as it includes hotels and motels in the enumeration of places offering amusement or
entertainment. MTDC reiterates that they do not market such nor do they use women as tools for
entertainment. MTDC also avers that under the LGC, LGUs can only regulate motels but cannot
prohibit their operation. The City reiterates that the Ordinance is a valid exercise of Police Power
as provided as well in the LGC. The City likewise emphasized that the purpose of the law is to
promote morality in the City.

Issue: Whether or not Ordinance 7783 is valid.

HELD: The SC ruled that the said Ordinance is null and void. The SC noted that for an ordinance
to be valid, it must not only be within the corporate powers of the local government unit to enact
and must be passed according to the procedure prescribed by law, it must also conform to the
following substantive requirements: (1) must not contravene the Constitution or any statute; (2)
must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit
but may regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.

The police power of the City Council, however broad and far-reaching, is subordinate to the
constitutional limitations thereon; and is subject to the limitation that its exercise must be
reasonable and for the public good. In the case at bar, the enactment of the Ordinance was an
invalid exercise of delegated power as it is unconstitutional and repugnant to general laws.

White Light Corp. vs. City of Manila G.R. No. 122846 January 20, 2009 Topic:
Police Power – Not Validly Exercised – Infringement of Private Rights

Facts:

Then City Mayor Alfredo S. Lim signed into law Manila City Ordinance No. 7774 entitled “An
Ordinance Prohibiting Short -Time Admission, Short-Time Admission Rates, and Wash-Up Rate
Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses, and Similar Establishments in
the City of Manila. Such ordinance will sanction any person or corporation who will allow the
admission and charging of room rates for less than 12 hours or the renting of rooms more than
twice a day. The petitioner is one of the operators of mini hotels and motels who sought to have
the Ordinance nullified as the said Ordinance infringes on the private rights of their patrons.
The decision of the Regional Trial Court ruled in favor of the petitioner and declared Ordinance
7774 null and void. The ruling deemed the Ordinance striking to the personal liberty of the
individual guaranteed by the Constitution. The respondent contends that the ordinance shall not be
held void for it is a valid exercise of Police Power. It is stated in the Local Government Code that
the City has the power to regulate the establishment, operation and maintenance of cafes,
restaurants, beer-houses, hotels, motels, inns, pension houses, lodging houses and other similar
establishments, including tourist guides and transports. The Court of Appeals ruled in favor of the
respondent.

Issue:

Whether or not Ordinance No. 7774 is a valid exercise of police power of the State.

Held:

No. Ordinance No. 7774 cannot be considered as a valid exercise of police power, therefore it is
unconstitutional.

The Supreme Court ruled that the said ordinance is null and void as it indeed infringes upon
individual liberty. It also violates the due process clause which serves as a guaranty for protection
against arbitrary regulation or seizure. The said ordinance invades private rights. Note that not all
who goes into motels and hotels for wash up rate are really there for obscene purposes only. Some
are tourists who needed rest or to “wash up” or to freshen up. Hence, the infidelity sought to be
avoided by the said ordinance is more or less subjected only to a limited group of people. The
Supreme Court reiterates that individual rights may be adversely affected only to the extent that
may fairly be required by the legitimate demands of public interest or public welfare.

Taxicab Operators of Manila v. Board of Transportation G.R. No. L-59234, September 30,
1982
Topic: Tests of Police Power-Lawful Subject

Facts:

Petitioner assailed the constitutionality of an administrative regulation phasing out taxicabs

operating more than six years old. The basis of the contention is that it is in violation to the
constitutional rights of equal protection because it was only enforced in the city of Manila and
directed solely to the taxi industry. Respondents claims that the purpose of the regulation is to
promote safety and comfort for the commuters and prevents any dangers posed by old and
dilapidated taxis.

Issue:

Whether or not the administrative regulation phasing out taxicabs more than six years old is a
valid exercise of police power.

Held:
No. The State in the exercise of its police power, can prescribe regulations to promote the safety
and general welfare of the people. In addition, there is no infringement of the equal protection
clause because it is common knowledge that taxicabs in Manila are subjected to heavier traffic
pressure and more constant use, creating a substantial distinction from taxicabs of other places.

Velasco vs. Villegas

Topic: Tests of Police Power-Lawful Subject

Facts:

The case is an appeal of the order of the lower court dismissing the suit for declaratory relief
attacking the constitutionality of the Ordinance No. 4964 of the City of Manila on the ground that
it amounts to deprivation of property of petitioners-appellants of their means of livelihood without
due process of law. The ordinance stipulated that “it shall be prohibited for any operator of any
barber shop to conduct the business of massaging the customers or other persons in any adjacent
room or rooms of said barber shop, or in any shop and the room where massaging is conducted is
the same person”.

Issue:

Is Ordinance No 4964 of the City of Manila Constitutional?

Held:

It is a police power measure. The objectives of the enactment are (1) To be able to impose payment
of the license fee for engaging in the business of massage clinic under Ordinance No. 3659 as
amended by Ordinance 4767, an entirely different measure than the ordinance regulating the
business of barbershops and (2) in order to forestall possible immorality which might grow out of
construction of separate rooms for the massage parlors.

Bautista vs. Junio

Topic: Tests of Police Power-Lawful Subject

Facts:

Letter of Instruction No. 869 was assailed for being allegedly violative of due process and equal
protection guarantee of the Constitution wherein motor vehicles with Heavy (H) and Extra Heavy
(EH) plates were being banned on weekdays and holidays for energy conservation purposes.

Issue:

Whether or not Letter of Instruction No. 869 is violative of certain Constitutional rights

Held:
Letter of Instruction No. 869 is a valid exercise of police power wherein they cut the rights to
liberty and property for the promotion of general welfare by prohibiting Heavy (H) and Extra
Heavy (EH) vehicles from using public streets on weekends and legal holidays, the object of which
is for energy conservation.

Lozano vs. Martinez

Topic: Tests of Police Power-Lawful Subject

Facts:

Batas Pambansa No. 22 or BP 22 otherwise known as the Bouncing Check Law was assailed for
being in conflict with the Constitutional Provision on Bill of Rights that states, "No person shall
be imprisoned for debt or non-payment of a poll tax." Petitioners insist that, since the offense under
BP 22 is consummated only upon the dishonor or non-payment of the check when it is presented
to the drawee bank, the statute is really a "bad debt law" rather than a "bad check law." What it
punishes is the non-payment of the check, not the act of issuing it. The statute, it is claimed, is
nothing more than a veiled device to coerce payment of a debt under the threat of penal sanction.

Issue:

Whether or not BP 22 transgressed the constitutional provision against imprisonment for debt.

Held:

BP 22 does not conflict with the constitutional inhibition against imprisonment for debt. The
gravamen of the offense punished by BP 22 is the act of making and issuing a worthless check or
a check that is dishonored upon its presentation for payment. It is not the non-payment of an
obligation which the law punishes. The law is not intended or designed to coerce a debtor to pay
his debt. The thrust of the law is to prohibit, under pain of penal sanctions, the making of worthless
checks and putting them in circulation. The effects of the issuance of a worthless check transcend
the private interest of the parties directly involved in the transaction and touch the interest of the
community at large. Checks have become widely accepted as a medium of payment in trade and
commerce. Although not legal tender, checks have come to be perceived as convenient substitutes
for currency in commercial and financial transactions. The basis or foundation of such perception
is confidence. If such confidence is shakes the usefulness of checks as currency substitutes would
be greatly diminished. Any practice therefore tending to destroy that confidence should be deterred
for the proliferation of worthless checks can only create havoc in trade circles and the banking
practices. The SC found that the enactment of BP 22 a valid exercise of police power and is not
repugnant to the constitutional inhibition against imprisonment of debt.

DEPED vs. San Diego

Topic: Tests of Police Power-Lawful Subject

Facts:
The Respondent has failed the NMAT 3 times and consequently denied to take it again for the
fourth time on the ground that under its rule the student who failed thrice in the exam shall not be
allowed to take the exam again for the fourth time. Because of this the Respondent filed a case
invoking his Constitutional rights on academic freedom and quality of education.

Issue:

Is the admission rule an arbitrary exercise of police power?

Held:

Yes. The three flunk rule is intended to insulate the medical schools and ultimately, the medical
profession from the intrusion of those not qualified to be doctors. The State needs to implement
decisive steps to regulate system of education by directing students to the course there He is best
suited through initial tests and evaluation. The right and indeed the responsibility of the State to
insure that the medical profession is not infiltrated by incompetents, to whom patients may,
unwarily entrust their lives and health.

Sangalang vs.. Intermediate Court of Appeals

Topic: Tests of Police Power-Lawful Subject

Facts:

Jose Sangalang, with his wife Lutgarda Sangalang, both residents of No. 110 Jupiter Street,
Makati, Metro Manila filed a complaint to enforce by specific performance restrictive easement
upon property, specifically the Bel - Air Village subdivision in Makati, Metro Manila, pursuant to
stipulations embodied in the deeds of sale covering the subdivision, and for damages.

Issue:

Whether or not the opening of Orbit Street to traffic by the mayor was warranted by the demands
of the common good and a valid exercise of police power

Held:

As asserted in Sangalang, the opening of Jupiter Street was warranted by the demands of the
common good, in terms of traffic decongestion and public convenience. SC also uphold the
opening of Orbit Street for the same rationale. The act of the mayor now challenged is that of
police power which is the state’s authority to enact legislation that may interfere with the personal
liberty or property in order to promote the general welfare.” It consists of the (1) imposition of
restraint upon liberty and property (2) in order to foster the common good.

Del Rosario vs. Bengzon

Topic: Tests of Police Power-Lawful Subject

Facts:
This is a class suit filed by officers of the Philippine Medical Association, the national organization
of medical doctors in the Philippines, on behalf of their professional brethren who are of kindred
persuasion, wherein this Court is asked to declare as unconstitutional, hence, null and void, some
provisions of the Generics Act of 1988 (Rep. Act No. 6675), and of the implementing
Administrative Order No. 62 issued pursuant thereto, specifically: that all government health
agencies and their personnel as well as other government agencies shall use generic terminology
or generic names in all transactions related to purchasing, prescribing, dispensing and
administering of drugs and medicines and all medical, dental and veterinary practitioners,
including private practitioners, shall write prescriptions using the generic name.

Issue:

Whether or not the Generic Acts is unconstitutional?

Held:

The purpose of the Generic Acts is to carry out the policy of the State to promote and require the
use of generic drug products that are therapeutically equivalent to their brand name counterparts”
for the therapeutic effect of a drug does not depend on its brand but on the active ingredients which
it contains. The medicine that cures is the active ingredients of the drug and not the brand name
by which it has been baptized by the manufacturer. The Court has been unable to find constitutional
infirmity in the Generic Acts. It implements the Constitutional mandate for the State to promote
right to health of the people and to make essential goods, health and other social services available
to all the people at affordable cost.

Social Justice vs. Atienza

Topic: Tests of Police Power-Lawful Subject

Facts:

The Sanggunian enacted a Zoning Ordinance reclassifying the zone of the oil depot from industrial
to commercial zone. As a result of the reclassification the depot is no longer allowed to be utilized
as such, thus Petitioners filed a complaint assailing the validity of the ordinance. The Petitioners
argued that they are fighting for their right to property alleging that they stand to lose billions of
pesos if forced to relocate to other depot.

Issue:

Whether or not the Zoning Ordinance a valid exercise of police power?

Held:

The Court upheld the Zoning Ordinance of City of Manila reclassifying certain areas from
industrial to commercial zone, thus oil terminals operating therein are no longer allowed. In the
exercise of police power, property rights of individuals may be subjected to restraints and burdens
in order to fulfill the objectives of the government. However the interference must be reasonable
and not arbitrary and to forestall arbitrariness, the methods or means used to protect public health,
morals, safety or welfare must have a reasonable relations to the end in view.

Ynot vs. Intermediate Appellate Court

Topic: Tests of Police Power-Lawful Subject

Facts:

President Marcos amended Executive Order No. 626-A which orders that no carabao and carabeef
shall be transported from one province to another; such violation shall be subject to confiscation
and forfeiture by the government. On January 13, 1984, Petitioner’s 6 carabaos were confiscated
by the police station commander of Barotac Nuevo, Iloilo for having been transported from
Masbate to Iloilo in violation of EO 626-A. He issued a writ for replevin, challenging the
constitutionality of said EO. The trial court sustained the confiscation of the animals and declined
to rule on the validity of the law on the ground that it lacked authority to do so. Its decision was
affirmed by the IAC. Hence, this petition for review filed by Petitioner.

Issue:

Whether or not police power is properly enforced

Held:

No. The protection of the general welfare is the particular function of the police power which both
restraints and is restrained by due process. The police power is simply defined as the power
inherent in the State to regulate liberty and property for the promotion of the general welfare. As
long as the activity or the property has some relevance to the public welfare, its regulation under
the police power is not only proper but necessary. In the case at bar, E.O.626-A has the same
lawful subject as the original executive order (E.O. 626 as cited in Toribio case) but NOT the same
lawful method. The reasonable connection between the means employed and the purpose sought
to be achieved by the questioned measure is missing. The challenged measure is an invalid exercise
of the police power because the method employed to conserve the carabaos is not reasonably
necessary to the purpose of the law and, worse, is unduly oppressive.

City Government of Quezon City v. Ericta

Topic: Police Power – Not Validly Exercised

Facts:

Quezon City enacted an ordinance entitled“ORDINANCE

REGULATING THE
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”. The law basically provides that
at least six (6) percent of the total area of the memorial park cemetery shall be set aside for charity
burial of deceased persons who are paupers and have been residents of Quezon City for at least 5
years prior to their death, to be determined by competent City Authorities. QC justified the law by
invoking police power.

Issue:

Whether or not the ordinance is valid.

Held:

The SC held the law as an invalid exercise of police power. There is no reasonable relation
between the setting aside of at least six (6) percent of the total area of all 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.

Office of the Solicitor General v. Ayala land Inc. G.R. No. 177056 September 18, 2009
Topic: Tests of Police Power-Lawful Means

Facts:

This is a Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, filed by
petitioner seeking the reversal and setting aside of the decision of CA which affirmed the decision
of RTC, which denied the Motion for Reconsideration of OSG. The RTC adjudged that
respondents Ayala Land Incorporated (Ayala Land), Robinsons Land Corporation (Robinsons),
Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM Prime) could not be
obliged to provide free parking spaces in their malls to their patrons and the general public.

Issues:

Whether the petition of OSG for prohibiting the collection of parking fees is a valid exercise of
the police power of State.

Held:
No. The petition of OSG to prohibit collection of parking fees is not a valid exercise of the police
power of State. It is not sufficient for the OSG to claim that “the power to regulate and control the
use, occupancy, and maintenance of buildings and structures carries with it the power to impose
fees and, conversely, to control, partially or, as in this case, absolutely, the imposition of such
fees.” Firstly, the fees within the power of regulatory agencies to impose are regulatory fees. It has
been settled law in this jurisdiction that this broad and all-compassing governmental competence
to restrict rights of liberty and property carries with it the undeniable power to collect a regulatory
fee. It looks to the enactment of specific measures that govern the relations not only as between
individuals but also as between private parties and the political society. True, if the regulatory
agencies have the power to impose regulatory fees, then conversely, they also have the power to
remove the same. Even so, it is worthy to note that the present case does not involve the imposition
by the DPWH Secretary and local building officials of regulatory fees upon respondents; but the
collection by respondents of parking fees from persons who use the mall parking facilities.
Secondly, assuming arguendo that the DPWH Secretary and local building officials do have
regulatory powers over the collection of parking fees for the use of privately owned parking
facilities, they cannot allow or prohibit such collection arbitrarily or whimsically. Whether
allowing or prohibiting the collection of such parking fees, the action of the DPWH Secretary and
local building officials must pass the test of classic reasonableness and propriety of the measures
or means in the promotion of the ends sought to be accomplished. Without using the term outright,
the OSG is actually invoking police power to justify the regulation by the State, through the DPWH
Secretary and local building officials, of privately owned parking facilities, including the
collection by the owners/operators of such facilities of parking fees from the public for the use
thereof. The Court finds, however, that in totally prohibiting respondents from collecting parking
fees, the State would be acting beyond the bounds of police power. Police power is the power of
promoting the public welfare by restraining and regulating the use of liberty and property. It is
usually exerted in order to merely regulate the use and enjoyment of the property of the owner.
The power to regulate, however, does not include the power to prohibit. Wherefore, the instant
Petition for Review on Certiorari is hereby denied.

Fernando vs St. Scholastica’s College

Topic: Privacy of communication and correspondence

Facts:

Respondent SSC’s property is enclosed by a tall concrete perimeter fence. Marikina City enacted
an ordinance which provides that walls and fences shall not be built within a five-meter allowance
between the front monument line and the building line of an establishment. The City Government
of Marikina sent a letter to the respondents ordering them to demolish, replace, and move back the
fence. As a response, the respondents filed a petition for prohibition with an application for a writ
of preliminary injunction and temporary restraining order before the Regional Trial Court of
Marikina. The RTC granted the petition and the CA affirmed. Hence, this certiorari.

Issue:

Is Marikina ordinance no. 192, imposing a five-meter setback, a valid exercise of police power?

Held:

No. Police power is the plenary order 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, retire its exercise
and ;2) the means employed are reasonable 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 compensation. Anent
the objectives of prevention of concealment of unlawful acts and un-neighborliness due to the
walls and fences, the parking area is not reasonably necessary for the accomplishment of these
goals. The Court, thus, finds Section 5 of the ordinance to unreasonable and oppressive. Hence,
the exercise of police power is not valid.

Republic of the Philippines vs. Castellvi

Facts:

The owner of a parcel of land that has been rented and occupied by the government since 1947
refused to extend the lease, the latter commenced expropriation proceedings in 1959. During the
assessment of just compensation, the government argued that it had taken the property when the
contract of lease commenced and not when the proceedings begun. The owner maintains that the
disputed land was not taken when the government commenced to occupy the said land as lessee
because the essential elements of the “taking” of property under the power of eminent domain,
namely (1) entrance and occupation by condemner upon the private property for more than a
momentary period, and (2) devoting it to a public use in such a way as to oust the owner and
deprive him of all beneficial enjoyment of the property, are not present.

Issue:

Whether or not the taking of property has taken place when the condemner has entered and
occupied the property as lessee.

Held:

No, the property was deemed taken only when the expropriation proceedings commenced in 1959.
The essential elements of the taking are: (1) Expropriator must enter a private property, (2) for
more than a momentary period, (3) and under warrant of legal authority, (4) devoting it to public
use, or otherwise informally appropriated or injuriously affecting it in such a way as (5)
substantially to oust the owner and deprive him of all beneficial enjoyment thereof. In the case at
bar, these elements were not present when the government entered and occupied the property under
a contract of lease.

Export Processing Zone Authority vs. Dulay, G.R. No. L-59603, April 29, 1987
Topic: Appointment of Commissioners to determine just compensation in expropriation.

Facts:

A land reserve was provided for the Export Processing Zone which some portion of the land is
privately owned by the respondents. Petitioner offered to purchase the land but both parties did
not come to an agreement in terms of the assessed value of the property. Petitioner files an
expropriation case which the court decided in favor of them and issued a writ of possession for the
immediate possession of land subject to just compensation. Respondents however are not
amenable to the amount and thus the court appointed commissioners to determine the appropriate
property value. Petitioner now questions the appointment of commissioners to determine the value
of property while invoking PD No. 1533 that indicates the determination of just compensation is
based on the declared value indicated by the land owner and the assessor whichever is lower and
there is no need to appoint commissioners for the purpose of assessing the property value.

Issue:

Whether or not P.D. 1533 is unconstitutional

Held:

The court ruled that PD No. 1533 only serves as a guiding principle providing some considerations
in the determination of just compensation in expropriation proceedings. It does not substitute the
discretion vested upon the court to exercise in determining the fair and just compensation in
expropriating property. The appointment of commissioners is one way the court may determine
the fair and just compensation in dispute for judicial evaluation. The mode of determining just
compensation is unconstitutional. The method of ascertaining just compensation constitutes
permissible encroachment to judicial prerogatives and tends to render the court in which under the
Constitution is reserved to it for financial determination

Angeles University Foundation Vs Angeles City, GR 189999, June 27, 2012

Topic: Taxation-Distinguish of Taxes from License

Facts:

Petitioner is a non -stock, non-profit educational foundation, demanded a building permit fee
assessment for the construction of the AUF Medical Center but claimed exemption from the same
as well as from other permits and fees by virtue of Republic Act No. 6055. Respondent disputed
the claimed exemption by stating that the impositions are regulatory in nature and not taxes from
which petitioner is exempt under the said law.

Issue:

Whether or not the building permit fee is exempted by virtue of RA 6055

Held:

No. It is a regulatory fee. The DPWH has in fact issued implementing rules which provide the
bases for assessment of fees and petitioner has failed to show that they were arbitrarily determined
or unrelated to the activity being regulated. Neither has there been proof that the fee was
unreasonable or in excess of the cost of regulation or inspection. The Court added that even if there
was incidental revenue, the same is deemed not to change the nature of the charge. Thus, the City
of Angeles was justified in its assessment.

Punzalan vs. Municipal Board of Manila, GR L-4817, May 26, 1954

Topic: Double Taxation

Facts:

Petitioners, who are professionals in the city, assail Ordinance No. 3398 together with the law
authorizing it (Section 18 of the Revised Charter of the City of Manila). The ordinance imposes a
municipal occupation tax on persons exercising various professions in the city and penalizes non-
payment of the same. The law authorizing said ordinance empowers the Municipal Board of the
city to impose a municipal occupation tax on persons engaged in various professions. Petitioners,
having already paid their occupation tax under section 201 of the National Internal Revenue Code,
paid the tax under protest as imposed by Ordinance No. 3398. The lower court declared the
ordinance invalid and affirmed the validity of the law authorizing it.

Issue:

Whether or not the professional fees paid is double taxation.

Held:

No. The professional tax paid is not a double taxation. Tax collected by the City of Manila is
different from the tax paid to the National Internal Revenue by virtue of Ordinance No. 3398. It is
not considered as double taxation. It is not for the courts to judge which cities or municipalities
should be empowered to impose occupation taxes aside from that imposed by the National
Government. That matter is within the domain of political departments. The argument against
double taxation may not be invoked if one tax is imposed by the state and the other is imposed by
the city. It is widely recognized that there is nothing inherently terrible in the requirement that
taxes be exacted with respect to the same occupation by both the state and the political subdivisions
thereof. Judgment of the lower court is reversed with regards to the ordinance and affirmed as to
the law authorizing it.

Swedish Match Philippines, Inc. vs. The Treasurer of the City Of Manila, GR No.
181277; 700 SCRA 482
Topic: Taxation - Double Taxation – Collection of Tax in the same Property Twice

Facts:

On 17 October 2003, petitioner filed a Petition for Refund of Taxes with the RTC of Manila in
accordance with Section 196 of the Local Government Code. On 20 October 2001, petitioner paid
business taxes in the total amount of P470,932.21. The assessed amount was based in pursuant of
Sections 14 and 21 of Ordinance No. 7794, otherwise known as the Manila Revenue Code.
Petitioner points out that Section 21 is not in itself invalid, but the enforcement of this provision
would constitute double taxation if business taxes have already been paid under Section 14 of the
same revenue code. The RTC Manila dismissed the Petitioner’s petition and the Court of Tax
Appeals Second Division affirmed the RTC’s dismissal of the Petition for Refund of Taxes on the
ground that petitioner had failed to state the authority of Ms. Beleno to institute the suit. The CTA
En Banc likewise denied the Petition for Review.

Issue:

Whether or not Sec. 21 of Ord. No. 7794 constitute double taxation and is unconstitutional?

Held:

Double taxation means taxing the same property twice when it should be taxed only once; that is,
"taxing the same person twice by the same jurisdiction for the same thing." It is obnoxious when
the taxpayer is taxed twice, when it should be but once. Otherwise described as "direct duplicate
taxation," the two taxes must be imposed on the same subject matter, for the same purpose, by the
same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes
must be of the same kind or character. The Court finds that there is indeed double taxation if
respondent is subjected to the taxes under both Sections 14 and 21 of Tax Ordinance No. 7794,
since these are being imposed: (1) on the same subject matter – the privilege of doing business in
the City of Manila; (2) for the same purpose – to make persons conducting business within the
City of Manila contribute to city revenues; (3) by the same taxing authority – petitioner City of
Manila; (4) within the same taxing jurisdiction – within the territorial jurisdiction of the City of
Manila; (5) for the same taxing periods – per calendar year; and (6) of the same kind or character
– a local business tax imposed on gross sales or receipts of the business. Petitioner is indeed liable
to pay business taxes to the City of Manila; nevertheless, considering that the former has already
paid these taxes under Section 14 of the Manila Revenue Code, it is exempt from the same
payments under Section 21 of the same code. Hence, payments made under Section 21 must be
refunded in favor of petitioner.

Virgilio Gaston vs. Republic Planters Bank, L-77194; 158 SCRA 626
Topic: Taxation – Collection of Public Funds for Private Purposes

Facts:

Petitioners are sugar producers, sugarcane planters and millers, Respondent Philippine Sugar
Commission (PHILSUCOM, for short) was formerly the government office tasked with the
function of regulating and supervising the sugar industry until it was superseded by its co-
respondent Sugar Regulatory Administration (SRA, for brevity) under Executive Order No. 18 on
May 28, 1986 Although said Executive Order abolished the PHILSUCOM, its existence as a
juridical entity was mandated to continue for three (3) more years "for the purpose of prosecuting
and defending suits by or against it and enables it to settle and close its affairs, to dispose of and
convey its property and to distribute its assets." Petitioners and Intervenors have come to this Court
praying for a Writ of Mandamus to compel PHILSUCOM to implement and accomplish the
privatization of Republic Planter’s Bank by the transfer and distribution of the shares of stock in
the said bank claiming that they are the true beneficial owners of the 761,416 common shares
valued at P36,548,000 and 53,005,045preferred shares with a total par value of P254,424,224.72
for the reason that the said investment had been funded by the deduction of P1 per Picul from sugar
proceeds of the sugar producers commencing the year 1978-1979 until the present as stabilization
fund pursuant to P.D. No. 388.

Issue:

Whether or not shares of stock in respondent Bank paid for with said stabilization fees are public
funds?

Held:

Having been levied for a special purpose, the revenues collected are to be treated as a special fund,
to be, in the language of the statute, "administered in trust' for the purpose intended. Once the
purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general
funds of the Government. That is the essence of the trust intended (See 1987 Constitution, Article
VI, Sec. 29(3), lifted from the 1935 Constitution, Article VI, Sec. 23(l]). To rule in petitioners'
favor would contravene the general principle that revenues derived from taxes cannot be used for
purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is
to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization of
the domestic market," including the foreign market the industry being of vital importance to the
country's economy and to national interest.

Planters Products, Inc. vs. Fertiphil Corporation G.R. No. 166006 March 14, 2008
Topic: Power to tax

Facts:

Petitioner and private respondent Fertiphil are private corporations incorporated under
Philippine laws. They are both engaged in the importation and distribution of fertilizers,
pesticides and agricultural chemicals. On 3 June 1985, then President Ferdinand Marcos,
exercising his legislative powers, issued LOI No. 1465 which provided, among others, for the
imposition of a capital recovery component (CRC) on the domestic sale of all grades of fertilizers
in the Philippines. The LOI provides: 3. The Administrator of the Fertilizer Pesticide Authority to
include in its fertilizer pricing formula a capital contribution component of not less than P10 per
bag. This capital contribution shall be collected until adequate capital is raised to make PPI viable.
Such capital contribution shall be applied by FPA to all domestic sales of fertilizers in the
Philippines. Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it sold in the
domestic market to the Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount
collected to the Far East Bank and Trust Company, the depositary bank of PPI. Fertiphil paid P6,
689,144 to FPA from July 8, 1985 to January 24, 1986. After the 1986 EDSA Revolution, FPA
voluntarily stopped the imposition of the P10 levy. With the return of democracy, Fertiphil
demanded from PPI a refund of the amounts it paid under LOI No. 1465, but PPI refused to accede
to the demand. Fertiphil filed a complaint for collection and damages against FPA and PPI with
the RTC in Makati. It questioned the constitutionality of LOI No. 1465 for being unjust,
unreasonable, oppressive, and invalid and an unlawful imposition that amounted to a denial of due
process of law.
Issue:

Whether the imposition of the levy was an exercise by the State of its taxation power

Held:

Yes. The imposition of the levy was an exercise by the State of its taxation power. While it is true
that the power of taxation can be used as an implement of police power, the primary purpose of
the levy is revenue generation. If the purpose is primarily revenue, or if revenue is, at least, one of
the real and substantial purposes, then the exaction is properly called a tax. The P10 levy under
LOI No. 1465 is too excessive to serve a mere regulatory purpose.

The levy, no doubt, was a big burden on the seller or the ultimate consumer. It increased the price
of a bag of fertilizer by as much as five percent. A plain reading of the LOI also supports the
conclusion that the levy was for revenue generation. The LOI expressly provided that the levy was
imposed "until adequate capital is raised to make PPI viable.

PAGCOR vs. BIR, G.R. No. 172087: 645 SCRA 388

Topic: Taxation – Removal of Tax Exemption

Facts:

Petitioner Philippine Amusement and Gaming Corporation (PAGCOR), seeking the declaration of
nullity of Section 1 of Republic Act (R.A.) No. 9337 insofar as it amends Section 27 (c) of the
National Internal Revenue Code of 1997, by excluding petitioner from exemption from corporate
income tax for being repugnant to Sections 1 and 10 of Article III of the Constitution. Simultaneous
to its creation, P.D. No. 1067-B (supplementing P.D. No. 1067-A) was issued exempting
PAGCOR from the payment of any type of tax, except a franchise tax of five percent (5%) of the
gross revenue. Thereafter, on June 2, 1978, P.D. No. 1399 was issued expanding the scope of
PAGCOR's exemption. PAGCOR's tax exemption was removed in June 1984 through P.D. No.
1931, but it was later restored by Letter of Instruction No. 1430, which was issued in September
1984. Under Section 1 of R.A. No. 9337, amending Section 27 (c) of the National Internal Revenue
Code of 1977, petitioner is no longer exempt from corporate income tax as it has been effectively
omitted from the list of GOCCs that are exempt from it.

Issue:

Whether or not PAGCOR is still exempt from corporate income tax and VAT with the enactment
of R.A. No. 9337.

Held:

Indeed, by extending the exemption to entities or individuals dealing with PAGCOR, the
legislature clearly granted exemption also from indirect taxes. It must be noted that the indirect tax
of VAT, as in the instant case, can be shifted or passed to the buyer, transferee, or lessee of the
goods, properties, or services subject to VAT. Thus, by extending the tax exemption to entities or
individuals dealing with PAGCOR in casino operations, it is exempting PAGCOR from being
liable to indirect taxes. It is settled rule that in case of discrepancy between the basic law and a
rule or regulation issued to implement said law, the basic law prevails, because the said rule or
regulation cannot go beyond the terms and provisions of the basic law.43 RR No. 16-2005,
therefore, cannot go beyond the provisions of R.A. No. 9337. Since PAGCOR is exempt from
VAT under R.A. No. 9337, the BIR exceeded its authority in subjecting PAGCOR to 10% VAT
under RR No. 16-2005; hence, the said regulatory provision is hereby nullified.

Lung Center of the Phil. vs. Quezon City, G.R. No. 144104; 443 SCRA 119, 138,
Topic: Taxation – Charitable Institutions Exempted from Realty Tax

Facts:

On June 7, 1993, both the land and the hospital building of the petitioner were assessed for real
property taxes in the amount of P4, 554,860 by the City Assessor of Quezon City.Petitioner is a
non-stock, non -profit entity established by virtue of PD No. 1823, seeks exemption from real
property taxes when the City Assessor issued Tax Declarations for the land and the hospital
building. A big space at the ground floor is being 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 charge for their professional services. Almost one-half of the entire
area on the left side of the building along Quezon Avenue is vacant and idle, while a big portion
on the right side, at the corner of Quezon Avenue and Elliptical Road, is being leased for
commercial purposes to a private enterprise known as the Elliptical Orchids and Garden Center.
Petitioner alleged that as a charitable institution, is exempted from real property taxes under Sec
28(3) Art VI of the Constitution.

Issue:

Whether or not the Lung Center of the Philippines is exempted from Tax as provided under the
constitution being a charitable institution?

Held:

The petition is partially granted. We hold that the petitioner is a charitable institution within the
context of the 1973 and 1987 Constitutions. To determine whether an enterprise is a charitable
institution/entity or not, the elements which should be considered include the statute creating the
enterprise, its corporate purposes, its constitution and by-laws, the methods of administration, the
nature of the actual work performed, the character of the services rendered, the indefiniteness of
the beneficiaries, and the use and occupation of the properties.

The settled rule in this jurisdiction is that laws granting exemption from tax are
construed strictissimi juris against the taxpayer and liberally in favor of the taxing
power. Taxation is the rule and exemption is the exception. The effect of an exemption is
equivalent to an appropriation. Hence, a claim for exemption from tax payments must be clearly
shown and based on language in the law too plain to be mistaken.

Casimiro Lladoc vs. Commissioner of Internal Revenue, G.R. No. L-19201; 14 SCRA
292, Topic: Taxation – Institutions Exempted from Payment of Tax

Facts:

In 1957, the M.B. Estate, Inc., of Bacolod City, donated Php 10,000.00 in cash to Rev. Fr. Crispin
Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein petitioner, for
the construction of a new Catholic Church in the locality. On March 3, 1958, the donor M.B.
Estate, Inc., filed the donor's gift tax return. The respondent Commissioner of Internal Revenue
issued an assessment for donee's gift tax against the Catholic Parish of Victorias. The tax amounted
to P1,370.00 including surcharges, interests of 1% monthly from May 15, 1958 to June 15, 1960,
and the compromise for the late filing of the return.

Issue:

Whether or not the Parish Church are included in the Tax Exemption?

Held:

It is a cardinal rule in taxation that exemptions from payment thereof are highly disfavored by law,
and the party claiming exemption must justify his claim by a clear, positive, or express grant of
such privilege by law. The phrase "exempt from taxation" as employed in Section 22(3), Article
VI of the Constitution of the Philippines, should not be interpreted to mean exemption from all
kinds of taxes. Statutes exempting charitable and religious property from taxation should be
construed fairly though strictly and in such manner as to give effect to the main intent of the
lawmakers.

Philippine Coconut Producers Federation v. Republic of the

Philippines Topic: Effects of Declaration of Unconstitutionality

Facts:

These are consolidated case regarding the RA No. 6260, enacted in 1971 creating the CIC to
administer the CIF to source P0.55 levy on the sale of every 100kg. of copra. Of the P0.55 levy
which the copra seller was, or ought to be issued Coco Fund Receipts, P0.02 was placed at the
disposition of Cocofed, the national association of coconut producers declared by the Philippine
Coconut Administration(PHILCOA, now PCA) as having the largest membership. The declaration
of martial law in 1972 saw the issuance of several P.D.’s purportedly designed to improve the
coconut industry through the collection and use of the levy fund. Through the years the collected
levy funds went directly and indirectly to various projects and/or converted to different assets and
investments. Then came the 1986 EDSA event, and one of the priorities of President Aquino’s
revolutionary government was to recover the ill-gotten wealth reportedly amassed by the Marcos
Family and close relatives, nominees and associates. Apropos thereto, she issued Executive Order
Nos. (E.Os.) 1, 2 and 14, as amended by E.O. 14-A, all Series of 1986. PCGG instituted before the
Sandiganbayan a recovery suit docketed thereat as CC No. 0033, hence the case.

Issue:

Whether or not the portions of the P.D.’s are unconstitutional.

Held:

No. The SC affirmed the ruling the Sandiganbayan that the question of the constitutionality of the
portions of the P.D.’s is the very core of Plaintiff’s causes of action and defences thereto. The SC
further explained that The Court is also mindful that lower courts are admonished to observe a
becoming modesty in examining constitutional questions, but that they are nonetheless not
prevented from resolving the same whenever warranted, subject only to review by the highest
tribunal. It is true that, as a general rule, the question of constitutionality must be raised at the
earliest opportunity. The Honorable Supreme Court has clearly stated that the general rule admits
of exceptions, thus: For courts will pass upon a constitutional question only when presented before
it in bona fide cases for determination, and the fact that the question has not been raised before is
not a valid reason for refusing to allow it to be raised later. It has been held that the determination
of a constitutional question is necessary whenever it is essential to the decision of the case as where
the right of a party is founded solely on a statute, the validity of which is attacked.