PHIL. HEALTH CARE PROVIDERS, INC vs.

COMMISSIONER OF INTERNAL
REVENUE

FACTS:

Petitioner is a domestic corporation whose primary purpose is to establish, maintain, conduct and
operate a prepaid group practice health care delivery system or a health maintenance organization
to take care of the sick and disabled persons enrolled in the health care plan and to provide for the
administrative, legal, and financial responsibilities of the organization. On January 27, 2000,
respondent CIR sent petitioner a formal demand letter and the corresponding assessment notices
demanding the payment of deficiency taxes, including surcharges and interest, for the taxable
years 1996 and 1997 in the total amount of P224,702,641.18. The deficiency assessment was
imposed on petitioner’s health care agreement with the members of its health care program
pursuant to Section 185 of the 1997 Tax Code. Petitioner protested the assessment in a letter
dated February 23, 2000.
As respondent did not act on the protest, petitioner filed a petition for review in the Court of Tax
Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments. On April 5,
2002, the CTA rendered a decision, ordering the petitioner to PAY the deficiency VAT amounting to
P22,054,831.75 inclusive of 25% surcharge plus 20% interest from January 20, 1997 until fully
paid for the 1996 VAT deficiency and P31,094,163.87 inclusive of 25% surcharge plus 20% interest
from January 20, 1998 until fully paid for the 1997 VAT deficiency. Accordingly, VAT Ruling No.
[231]-88 is declared void and without force and effect. The 1996 and 1997 deficiency DST
assessment against petitioner is hereby CANCELLED AND SET ASIDE. Respondent is
ORDERED to DESIST from collecting the said DST deficiency tax. Respondent appealed the CTA
decision to the (CA) insofar as it cancelled the DST assessment. He claimed that petitioner’s
health care agreement was a contract of insurance subject to DST under Section 185 of the 1997
Tax Code.
On August 16, 2004, the CA rendered its decision which held that petitioner’s health care
agreement was in the nature of a non-life insurance contract subject to DST. Respondent is
ordered to pay the deficiency Documentary Stamp Tax. Petitioner moved for reconsideration but
the CA denied it.

ISSUES:

(1) Whether or not Philippine Health Care Providers, Inc. engaged in insurance business.
(2) Whether or not the agreements between petitioner and its members possess all elements
necessary in the insurance contract.

HELD:

NO. Health Maintenance Organizations are not engaged in the insurance business. The SC said in
June 12, 2008 decision that it is irrelevant that petitioner is an HMO and not an insurer because its
agreements are treated as insurance contracts and the DST is not a tax on the business but an
excise on the privilege, opportunity or facility used in the transaction of the business. Petitioner,
however, submits that it is of critical importance to characterize the business it is engaged in, that
is, to determine whether it is an HMO or an insurance company, as this distinction is indispensable
in turn to the issue of whether or not it is liable for DST on its health care agreements. Petitioner is
admittedly an HMO. Under RA 7878 an HMO is “an entity that provides, offers or arranges for
coverage of designated health services needed by plan members for a fixed prepaid premium. The
payments do not vary with the extent, frequency or type of services provided. Section 2 (2) of PD
1460 enumerates what constitutes “doing an insurance business” or “transacting an insurance
business”which are making or proposing to make, as insurer, any insurance contract; making or
proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental
to any other legitimate business or activity of the surety; doing any kind of business, including a
reinsurance business, specifically recognized as constituting the doing of an insurance business
within the meaning of this Code; doing or proposing to do any business in substance equivalent to
any of the foregoing in a manner designed to evade the provisions of this Code.

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

National Power Corporation vs City of Cabanatuan

FACTS:

Petitioner is a government-owned and controlled corporation created under Commonwealth Act

No. 120, as amended.

For many years now, petitioner sells electric power to the residents of Cabanatuan City, posting a
gross income of P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance No. 165-92,8 the
respondent assessed the petitioner a franchise tax amounting to P808,606.41, representing 75%
of 1% of the latter’s gross receipts for the preceding year.

Petitioner refused to pay the tax assessment arguing that the respondent has no authority to
impose tax on government entities. Petitioner also contended that as a non-profit organization, it is
exempted from the payment of all forms of taxes, charges, duties or fees in accordance with sec.
13 of Rep. Act No. 6395, as amended.

The respondent filed a collection suit in the RTC, demanding that petitioner pay the assessed tax
due, plus surcharge. Respondent alleged that petitioner’s exemption from local taxes has been
repealed by section 193 of the LGC, which reads as follows:

“Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or
juridical, including government owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of this Code.”

RTC upheld NPC’s tax exemption. On appeal the CA reversed the trial court’s Order on the ground
that section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the
exemptions granted to the petitioner.

ISSUE: W/N the respondent city government has the authority to issue Ordinance No. 165-92 and
impose an annual tax on “businesses enjoying a franchise

HELD:

YES. Taxes are the lifeblood of the government, for without taxes, the government can neither exist
nor endure. A principal attribute of sovereignty, the exercise of taxing power derives its source from
the very existence of the state whose social contract with its citizens obliges it to promote public
interest and common good. The theory behind the exercise of the power to tax emanates from
necessity;32 without taxes, government cannot fulfill its mandate of promoting the general welfare
and well-being of the people.
Section 137 of the LGC clearly states that the LGUs can impose franchise tax “notwithstanding any
exemption granted by any law or other special law.” This particular provision of the LGC does not
admit any exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO’s
exemption from the payment of franchise taxes was brought as an issue before this Court. The
same issue was involved in the subsequent case of Manila Electric Company v. Province of
Laguna.75 Ruling in favor of the local government in both instances, we ruled that the franchise tax
in question is imposable despite any exemption enjoyed by MERALCO under special laws, viz:

“It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC to
support their position that MERALCO’s tax exemption has been withdrawn. The explicit language
of section 137 which authorizes the province to impose franchise tax ‘notwithstanding any
exemption granted by any law or other special law’ is all-encompassing and clear. The franchise
tax is imposable despite any exemption enjoyed under special laws.

Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless
otherwise provided in this Code, tax exemptions or incentives granted to or presently enjoyed by all
persons, whether natural or juridical, including government-owned or controlled corporations
except (1) local water districts, (2) cooperatives duly registered under R.A. 6938, (3) non-stock and
non-profit hospitals and educational institutions, are withdrawn upon the effectivity of this code, the
obvious import is to limit the exemptions to the three enumerated entities. It is a basic precept of
statutory construction that the express mention of one person, thing, act, or consequence excludes
all others as expressed in the familiar maxim expressio unius est exclusio alterius. In the absence
of any provision of the Code to the contrary, and we find no other provision in point, any existing
tax exemption or incentive enjoyed by MERALCO under existing law was clearly intended to be
withdrawn.

Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the local
government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross
annual receipts for the preceding calendar based on the incoming receipts realized within its
territorial jurisdiction. The legislative purpose to withdraw tax privileges enjoyed under existing law
or charter is clearly manifested by the language used on (sic) Sections 137 and 193 categorically
withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only
tedious and impractical to attempt to enumerate all the existing statutes providing for special tax
exemptions or privileges, the LGC provided for an express, albeit general, withdrawal of such
exemptions or privileges. No more unequivocal language could have been used.”76 (emphases
supplied)

Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance
and support myriad activities of the local government units for the delivery of basic services
essential to the promotion of the general welfare and the enhancement of peace, progress, and
prosperity of the people. As this Court observed in the Mactan case, “the original reasons for the
withdrawal of tax exemption privileges granted to government-owned or controlled corporations
and all other units of government were that such privilege resulted in serious tax base erosion and
distortions in the tax treatment of similarly situated enterprises.” With the added burden of
devolution, it is even more imperative for government entities to share in the requirements of
development, fiscal or otherwise, by paying taxes or other charges due from them.

PEOPLE OF THE PHILIPPINES vs. ANDRE MARTI

Facts:

On August 14, 1987, the appellant and his common-law wife, Shirley Reyes went to Manila
Packaging and Export Forwarders to send packages to Zurich, Switzerland. It was received by
Anita Reyes and ask if she could inspect the packages. Shirley refused and eventually convinced
Anita to seal the package making it ready for shipment. Before being sent out for delivery, Job
Reyes, husband of Anita and proprietor of the courier company, conducted an inspection of the
package as part of standard operating procedures. Upon opening the package, he noticed a
suspicious odor which made him took sample of the substance he found inside. He reported this to
the NBI and invited agents to his office to inspect the package. In the presence of the NBI agents,
Job Reyes opened the suspicious package and found dried-marijuana leaves inside. A case was
filed against Andre Marti in violation of R.A. 6425 and was found guilty by the court a quo. Andre
filed an appeal in the Supreme Court claiming that his constitutional right of privacy was violated
and that the evidence acquired from his package was inadmissible as evidence against him.

Issue: Can the Constitutional Right of Privacy be enforced against private individuals?

Ruling:

The Supreme Court held based on the speech of Commissioner Bernas that the Bill of Rights
governs the relationship between the individual and the state.

The constitutional proscription against unlawful searches and seizures therefore applies as a
restraint directed only against the government and its agencies tasked with the enforcement of the
law. It is not meant to be invoked against acts of private individuals. It will be recalled that Mr Job
Reyes was the one who opened the box in the presence of the NBI agents in his place of business.
The mere presence of the NBI agents did not convert the reasonable search effected by Mr. Reyes
into a warrantless search and siezure proscribed by the constitution. Merely to observe and look at
that which is in plain sight is not a search.

The judgement of conviction finding appeallant guilty beyond reasonable doubt of the crime
charged was AFFIRMED.

Estrada vs. Sandiganbayan

G.R. No. 148560. November 19, 2001

Facts:

On 4 April 2001, an Information for plunder was filed against former President Joseph Ejercito
Estrada. Petitioner Joseph Ejercito Estrada, the highest-ranking official to be prosecuted under RA
7080 (An Act Defining and Penalizing the Crime of Plunder), as amended by RA 7659, assailed the
said law for being unconstitutional. He contends that (a) it suffers from the vice of vagueness; (b) it
dispenses with the “reasonable doubt” standard in criminal prosecutions; and, (c) it abolishes the
element ofmens rea in crimes already punishable under The Revised Penal Code, all of which are
violations of fundamental right of due process.

Issue: Whether or not the crime of plunder is unconstitutional for being vague?

Decision:

The test in determining whether a criminal statute is void for uncertainty is whether the language
conveys a sufficiently definite warning as to the proscribed conduct when measured by common
understanding and practice. The “vagueness” doctrine merely requires a reasonable degree of
certainty for the statute to be upheld – not absolute precision or mathematical exactitude. A facial
challenge is allowed to be made to a vague statute and to one which is overbroad because of
possible “chilling effect” upon protected speech. The theory is that “[w]hen statutes regulate or
proscribe speech and no readily apparent construction suggests itself as a vehicle for rehabilitating
the statutes in a single prosecution, the transcendent value to all society of constitutionally
protected expression is deemed to justify allowing attacks on overly broad statutes with no
requirement that the person making the attack demonstrate that his own conduct could not be
regulated by a statute drawn with narrow specificity.” The possible harm to society in permitting
some unprotected speech to go unpunished is outweighed by the possibility that the protected
speech of others may be deterred and perceived grievances left to fester because of possible
inhibitory effects of overly broad statutes

Southern Hemisphere vs Anti-Terrorism Council

Facts:

The case consists of 6 petitions challenging the constitutionality of RA 9372, “An Act to Secure the
State and Protect our People from Terrorism,” aka Human Security Act of 2007. Petitioner-
organizations assert locus standi on the basis of being suspected “communist fronts” by the
government, whereas individual petitioners invoke the “transcendental importance” doctrine and
their status as citizens and taxpayers.
Petitioners claim that RA 9372 is vague and broad, in that terms like “widespread and extraordinary
fear and panic among the populace” and “coerce the government to give in to an unlawful demand”
are nebulous, leaving law enforcement agencies with no standard to measure the prohibited acts.

Issue:
•Whether or not a penal statute may be assailed for being vague as applied to petitioners.

Held:

No. A limited vagueness analysis of the definition of “terrorism” in RA 9372 is legally impossible
absent an actual or imminent charge against them.
A statute or acts suffers from the defect of vagueness when it lacks comprehensible standards that
men of common intelligence must necessarily guess at its meaning and differ as to its application.
A “facial” challenge is likewise different from an “as applied” challenge. “Facial” challenge is an
examination of the entire law, pinpointing its flaws and defects, not only on the basis of its actual
operation to the parties, but also on the assumption or prediction that its very existence may cause
others not before the court to refrain from constitutionally protected speech or activities. Under no
case may ordinary penal statutes be subjected to a facial challenge. If facial challenge to a penal
statute is permitted, the prosecution of crimes may be hampered. No prosecution would be
possible.

NURSERY CARE CORPORATION VS AVECEDO

FACTS:
The City of Manila assessed and collected taxes from the individual petitioners pursuant to Section
15 (Tax on Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the Revenue
Code of Manila.3 At the same time, the City of Manila imposed additional taxes upon the
petitioners pursuant to Section 21 of the Revenue Code of Manila,4 as amended, as a condition for
the renewal of their respective business licenses for the year 1999.

By letter dated March 1, 1999, the petitioners formally requested the Office of the City Treasurer for
the tax credit or refund of the local business taxes paid on the first quarter of 1999 in compliance
with the Section 21. However, then City Treasurer Anthony Acevedo (Acevedo) denied the request
through his letter of March 10, 1999. On April 29, 1999, the petitioners files their respective
petitions for certitorari in the RTC on the issue as consolidated whether or not the collection of
taxes under Section 21 of rdinance No. 7794 as amended constitutes double taxation.

The RTC ruled that thhe tax imposed under Section 15 and 17, as against that imposed under
Section 21, are levied against different tax objects or subject matter. The tax under Section 15 is
imposed upon wholesalers, distributors or dealers, while that under Section 17 is imposed upon
retailers. In short, taxes imposed under Section 15 and 17 is a tax on the business of wholesalers,
distributors, dealers and retailers. On the other hand, the tax imposed upon herein petitioners
under Section 21 is not a tax against the business of the petitioners (as wholesalers, distributors,
dealers or retailers) but is rather a tax against consumers or end-users of the articles sold by
petitioners.

Moreover, the petitioners only act as the collection agent of the City while the ones actually paying
the tax are the consumers or end-users of the articles being sold by petitioners. The taxes imposed
under Sec. 21 represent additional amounts added by the business establishment to the basic
prices of its goods and services which are paid by the end-users to the businesses. It is actually
not taxes on the business of petitioners but on the consumers. Hence, there is no double taxation.
This in effect resolves in favor of the constitutionality of the assailed sections of Ordinance No.
7807 of the City of Manila.

Petitioner’s appealed to the CA which was dismissed for lack of jurisdiction.

ISSUE:
Whether the act of the City Treasurer of Manila in imposing , assessing, and collecting the
additional business tax under section 21 of Ordinance No. 7794 as amended by Ordinance No.
7807 is constitutive of double taxation and violative of the local government code of 1991.

RULING:

The imposition of the tax under Section 21 of the Revenue Code of Manila constituted double
taxation.

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 holds that all the elements of double taxation concurred upon the City of Manila’s
assessment on and collection from the petitioners of taxes for the first quarter of 1999 pursuant to
Section 21 of the Revenue Code of Manila.
Firstly, because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold
goods and services in the course of trade or business based on a certain percentage of his gross
sales or receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed
the tax on a person who sold goods and services in the course of trade or business but only
identified such person with particularity, namely, the wholesaler, distributor or dealer (Section 15),
and the retailer (Section 17), all the taxes – being imposed on the privilege of doing business in the
City of Manila in order to make the taxpayers contribute to the city’s revenues – were imposed on
the same subject matter and for the same purpose.
Secondly, the taxes were imposed by the same taxing authority (the City of Manila) and within the
same jurisdiction in the same taxing period (i.e., per calendar year).
Thirdly, the taxes were all in the nature of local business taxes.
Mary Grace Natividad S. Poe-Llamanzares vs. COMELEC
G.R. No. 221697 & 221698-700
Doctrine: A foundling is a natural-born citizen.

Public officers who must be natural-born citizens: (Please commit to memory)

1.President and Vice-President, Art. VII, Sec. 2
2.Members of Congress, Art. VI, Sec. 3 & 6
3.Justices of the Supreme Court and lower collegiate courts, Art. VIII, Sec. 7 (1)
4.Ombudsman and his deputies, Art. XI, Sec. 8
5.Members of the Constitutional Commission, Art. IX, B, Sec. 1 (1); and D, Sec. 1(1)
6.Members of the Central Monetary Authority, Art. XII, Sec. 20
7.Members of the Commission on Human Rights Art. XIII, Sec. 17 (2)

Statement of Facts:

Mary Grace Natividad S. Poe-Llamanzares (petitioner) was found abandoned as a newborn infant
in the Parish Church of Jaro, Iloilo by a certain Edgardo Militar (Edgardo) on 3 September 1968.
On 15 October 2015, petitioner filed her COC for the Presidency for the May 2016 Elections. 56 In
her COC, the petitioner declared that she is a natural-born citizen
Petitioner's filing of her COC for President in the upcoming elections triggered the filing of several
COMELEC cases against her which were the subject of these consolidated cases. Respondent's
contention is that petitioner committed material misrepresentation when she stated in her COC that
she is a natural-born Filipino citizen on account that she is a foundling, and that such position could
only be filled by natural-born Filipinos.

Issue: Whether or not are foundlings considered as natural-born citizens

Ruling:

Yes, the Supreme Court ruled in favor of Mary Grace Natividad S. Poe-Llamanzares and declared
her as qualified to be a candidate for President in the National and local Elections of May 2016.
First, statistically during the years 1965-1975, the chances of any child in the Philippines being
born as a natural-born Filipino was 99.83% according to the PSA.

Second, with the silence og the 1935 Constitution on the nationality of foundlings, the courts
referred to the 1934 Constitutional Convention, where it was settled that there was no need to
include such a provision since such cases were too few, and by international law, the principle was
that children of unknown parents are deemed citizens of the country where they are found.

Third, Universal Declaration of Human Rights ("UDHR") has been interpreted by this Court as part
of the generally accepted principles of international law and binding on the State.130 Article 15
thereof states:
1. Everyone has the right to a nationality.
2. No one shall be arbitrarily deprived of his nationality nor denied the right to change his
nationality.
Fourth, The Philippines has also ratified the UN Convention on the rights of a child. Article 14 reads
that “A child whose parents are both unknown shall have the nationality of the country of birth.”
CIR vs. S. C. Johnson & son, Inc.
In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the Philippines
will give up a part of the tax in the expectation that the tax given up for this particular investment is
not taxed by the other country.
In order to eliminate double taxation, a tax treaty resorts to several methods. First, it sets out the
respective rights to tax of the state of source or situs and of the state of residence with regard to
certain classes of income or capital.
The second method for the elimination of double taxation applies whenever the state of source is
given a full or limited right to tax together with the state of residence. In this case, the treaties
make it incumbent upon the state of residence to allow relief in order to avoid double taxation.

Facts:

Respondent is a domestic corporation organized and operating under the Philippine Laws, entered
into a licensed agreement with the SC Johnson and Son, USA, a non-resident foreign corporation
based in the USA pursuant to which the respondent was granted the right to use the trademark,
patents and technology owned by the later including the right to manufacture, package and
distribute the products covered by the Agreement and secure assistance in management,
marketing and production from SC Johnson and Son USA.
For the use of trademark or technology, respondent was obliged to pay SC Johnson and Son, USA
royalties based on a percentage of net sales and subjected the same to 25% withholding tax on
royalty payments which respondent paid for the period covering July 1992 to May 1993 in the total
amount of P1,603,443.00.
On October 29, 1993, respondent filed with the International Tax Affairs Division (ITAD) of the BIR
a claim for refund of overpaid withholding tax on royalties arguing that, the antecedent facts
attending respondents case fall squarely within the same circumstances under which said
MacGeorge and Gillette rulings were issued. Since the agreement was approved by the
Technology Transfer Board, the preferential tax rate of 10% should apply to the respondent. So,
royalties paid by the respondent to SC Johnson and Son, USA is only subject to 10% withholding
tax.
The Commissioner did not act on said claim for refund. Private respondent SC Johnson & Son, Inc.
then filed a petition for review before the CTA, to claim a refund of the overpaid withholding tax on
royalty payments from July 1992 to May 1993.
On May 7, 1996, the CTA rendered its decision in favor of SC Johnson and ordered the CIR to
issue a tax credit certificate in the amount of P163,266.00 representing overpaid withholding tax on
royalty payments beginning July 1992 to May 1993.
The CIR thus filed a petition for review with the CA which rendered the decision subject of this
appeal on November 7, 1996 finding no merit in the petition and affirming in toto the CTA ruling.

Issue: Whether or not SC Johnson is right in assailing their claims.

Held:

The RP-US Tax Treaty is just one of a number of bilateral treaties which the Philippines has
entered into for the avoidance of double taxation. The purpose of these international agreements is
to reconcile the national fiscal legislations of the contracting parties in order to help the taxpayer
avoid simultaneous taxation in two different jurisdictions. More precisely, the tax conventions are
drafted with a view towards the elimination of international juridical double taxation, which is
defined as the imposition of comparable taxes in two or more states on the same taxpayer in
respect of the same subject matter and for identical periods. The apparent rationale for doing away
with double taxation is to encourage the free flow of goods and services and the movement of
capital, technology and persons between countries, conditions deemed vital in creating robust and
dynamic economies. Foreign investments will only thrive in a fairly predictable and reasonable
international investment climate and the protection against double taxation is crucial in creating
such a climate.
Double taxation usually takes place when a person is resident of a contracting state and derives
income from, or owns capital in, the other contracting state and both states impose tax on that
income or capital. In order to eliminate double taxation, a tax treaty resorts to several methods.
First, it sets out the respective rights to tax of the state of source or situs and of the state of
residence with regard to certain classes of income or capital. In some cases, an exclusive right to
tax is conferred on one of the contracting states; however, for other items of income or capital, both
states are given the right to tax, although the amount of tax that may be imposed by the state of
source is limited.
The second method for the elimination of double taxation applies whenever the state of source is
given a full or limited right to tax together with the state of residence. In this case, the treaties make
it incumbent upon the state of residence to allow relief in order to avoid double taxation. There are
two methods of relief- the exemption method and the credit method. In the exemption method, the
income or capital which is taxable in the state of source or situs is exempted in the state of
residence, although in some instances it may be taken into account in determining the rate of tax
applicable to the taxpayers remaining income or capital. On the other hand, in the credit method,
although the income or capital which is taxed in the state of source is still taxable in the state of
residence, the tax paid in the former is credited against the tax levied in the latter. The basic
difference between the two methods is that in the exemption method, the focus is on the income or
capital itself, whereas the credit method focuses upon the tax.
In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the Philippines
will give up a part of the tax in the expectation that the tax given up for this particular investment is
not taxed by the other country. Thus the petitioner correctly opined that the phrase royalties paid
under similar circumstances in the most favored nation clause of the US-RP Tax Treaty necessarily
contemplated circumstances that are tax-related.
Given the purpose underlying tax treaties and the rationale for the most favored nation clause, the
concessional tax rate of 10 percent provided for in the RP-Germany Tax Treaty should apply only if
the taxes imposed upon royalties in the RP-US Tax Treaty and in the RP-Germany Tax Treaty are
paid under similar circumstances. This would mean that private respondent must prove that the
RP-US Tax Treaty grants similar tax reliefs to residents of the United States in respect of the taxes
imposable upon royalties earned from sources within the Philippines as those allowed to their
German counterparts under the RP-Germany Tax Treaty.
The intention behind the adoption of the provision on relief from double taxation in the two tax
treaties in question should be considered in light of the purpose behind the most favored nation
clause.
The purpose of a most favored nation clause is to grant to the contracting party treatment not less
favorable than that which has been or may be granted to the most favored among other countries.
The most favored nation clause is intended to establish the principle of equality of international
treatment by providing that the citizens or subjects of the contracting nations may enjoy the
privileges accorded by either party to those of the most favored nation. The essence of the
principle is to allow the taxpayer in one state to avail of more liberal provisions granted in another
tax treaty to which the country of residence of such taxpayer is also a party provided that the
subject matter of taxation, in this case royalty income, is the same as that in the tax treaty under
which the taxpayer is liable.
The court accordingly agree with petitioner that since the RP-US Tax Treaty does not give a
matching tax credit of 20 percent for the taxes paid to the Philippines on royalties as allowed under
the RP-West Germany Tax Treaty, private respondent cannot be deemed entitled to the 10 percent
rate granted under the latter treaty for the reason that there is no payment of taxes on royalties
under similar circumstances.
It bears stress that tax refunds are in the nature of tax exemptions. As such they are regarded as in
derogation of sovereign authority and to be construed strictissimi juris against the person or entity
claiming the exemption. The burden of proof is upon him who claims the exemption in his favor and
he must be able to justify his claim by the clearest grant of organic or statute law. Private
respondent is claiming for a refund of the alleged overpayment of tax on royalties; however, there
is nothing on record to support a claim that the tax on royalties under the RP-US Tax Treaty is paid
under similar circumstances as the tax on royalties under the RP-West Germany Tax Treaty.
WHEREFORE, for all the foregoing, the instant petition is GRANTED.

Mactan-Cebu International Airport Authority vs. Bernardo L. Lozada

Doctrine:

– Limitation on the exercise of power; right of the private owner.

– Expropriation of property is always subject to a specific condition for the public. Abandonment of
said specific condition entitles the former owner to reconveyance/repurchase of the expropriated
property.

Statement of Facts:

MCIAA using the power of eminent domain granted by the Government expropriated lot 88 from
the Lozadas for the purpose of expanding Lahug airport. The expansion was abandoned, and the
Lozadas seek to repurchase the said lot.
MCIAA however anchors its contention that the expropriation proceedings did not provide for the
condition that should the intended use of lot 88 be abandoned, the property would revert back to
the Lozadas.

Issue: Whether or not the Lozadas are entitled to a repurchase of lot 88.

Ruling:
1.Yes, Expropriation of property is always subject to the condition that it would be used for a
specific public purpose. The expansion of Lahug airport having been abandoned entitles the former
owners to reacquire their ownership. Return of the property is subject to the return of the just
compensation with the necessary expenses incurred by MCIAA in maintaining the lot.

Dispositive Portion:

WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the Court of Appeals,
affirming the October 22, 1999 Decision of the Regional Trial Court, Branch 87, Cebu City, and its
February 7, 2007 Resolution are AFFIRMED with MODIFICATION as follows:
1. Respondents are ORDERED to return to petitioners the just compensation they received for the
expropriation of Lot No. 88, plus legal interest, in the case of default, to be computed from the time
petitioners comply with their obligation to reconvey Lot No. 88 to them;
2. Respondents are ORDERED to pay petitioners the necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary value of their services to the extent that respondents
were benefited thereby;
3. Petitioners are ENTITLED to keep whatever fruits and income they may have obtained from Lot
No. 88; and
4. Respondents are also ENTITLED to keep whatever interests the amounts they received as just
compensation may have earned in the meantime, as well as the appreciation in value of Lot No.
88, which is a natural consequence of nature and time;
In light of the foregoing modifications, the case is REMANDED to the Regional Trial Court, Branch
57, Cebu City, only for the purpose of receiving evidence on the amounts that respondents will
have to pay petitioners in accordance with this Courts’ decision. No costs.
SO ORDERED.
Secretary of Justice vs. Lantion

Subject matter: Relativity of Due Process; Not all situations calling for procedural safeguards call
for the same kind of procedure. This requires a reasonable degree of flexibility in the applying
procedural due process. This does not apply to substantive due process.

Facts: The secretary of justice, Franklin Drilon, Representing the government of the Philippines
entered into an extradition treaty between the Government of U.S.
By virtue of the extradition treaty between the U.S. and the Philippines, the U.S. requested for the
extradition of Mark Jimenez for violations of US tax and election laws.

Pending evaluation of the extradition documents, Mark Jimenez requested for copies of the U.S
extradition request. In response, the secretary of justice denied the request.

On January 18, 2000, petitioner was ordered to furnish private respondent copies of the extradition
request and its supporting papers and to grant the latter reasonable period within which to file his
comment with supporting evidence.

On February 3, 2000, the petitioner filed an urgent motion for consideration.

Private respondent oppose petitioner’s urgent motion for reconsideration. He states that he must
be afforded the right to notice and hearing as required by our Constitution. He likens an extradition
proceeding to a criminal proceeding and the evaluation stage to a preliminary investigation.

On January 18, 2000, the Supreme Court dismissed the petition at bar and ordered the petitioner
to furnish private respondent copies of the extradition request and its supporting papers and to
grant him reasonable period within which to file his comment with supporting evidence.
On February 3, 2000, the petitioner timely filed an urgent motion for reconsideration.

Private respondent oppose petitioner’s urgent motion for reconsideration. He states that he must
be afforded the right to notice and hearing as required by our Constitution. He likens an extradition
proceeding to a criminal proceeding and the evaluation stage to a preliminary investigation.
The court hereby resolves petitioner’s urgent motion for reconsideration
Issue:

Whether or not the private respondent is entitled to the due process right to notice and hearing
during the evaluation stage of the extradition process

Held:
The Court held that private respondent is not entitled of the right to notice and hearing during the
evaluation stage of the extradition process.
Private respondent defences his position by likening an extradition proceeding to criminal
proceeding and the evaluation stage to preliminary and the evaluation stage a preliminary
investigation. The court is not persuaded
An extradition proceeding is sui generis. It is not a criminal proceeding which will call into operation
all the rights of an accused as guaranteed by the Bill of Rights. The process of extradition does not
involve the determination of the guilt or innocence of an accused. His guilt or innocence will be
adjudged in the court of the state where he will be extradited. Hence, as a rule, constitutional rights
that are only relevant to determine the guilt or innocence of an accused cannot be invoked by an
extraditee especially by one whose extradition papers are still undergoing evaluation.
As an extradition proceeding is not criminal in character and the evaluation stage in an extradition
proceeding is not akin to a preliminary investigation, the due process safeguards in the latter do
not necessarily apply to the former. This we hold for the procedural due process required by a
given set of circumstances "must begin with a determination of theprecise nature of the
government function involved as well as the private interest that has been affected by
governmental action." The concept of due process is flexible for "not all situations calling for
procedural safeguards call for the same kind of procedure."
As aforesaid, P.D. No. 1069 which implements the RP-US Extradition Treaty affords an extraditee
sufficient opportunity to meet the evidence against him once the petition is filed in court. The time
for the extraditee to know the basis of the request for his extradition is merely moved to the filing in
court of the formal petition for extradition. The extraditee's right to know is momentarily withheld
during the evaluation stage of the extradition process to accommodate the more compelling
interest of the State to prevent escape of potential extraditees which can be precipitated by
premature information of the basis of the request for his extradition. No less compelling at that
stage of the extradition proceedings is the need to be more deferential to the judgment of a co-
equal branch of the government, the Executive, which has been endowed by our Constitution with
greater power over matters involving our foreign relations. Needless to state, this balance of
interests is not a static but a moving balance which can be adjusted as the extradition process
moves from the administrative stage to the judicial stage and to the execution stage depending on
factors that will come into play. In sum, we rule that the temporary hold on private respondent's
privilege of notice and hearing is a soft restraint on his right to due process which will not deprive
him of fundamental fairness should he decide to resist the request for his extradition to the United
States. There is no denial of due process as long as fundamental fairness is assured a party.

CARLOS SUPERDRUG CORP., ET. AL. vs. DSWD

G.R. No. 166494 June 29, 2007

FACTS

Petitioners are domestic corporations and proprietors operating drugstores in the Philippines.
Meanwhile, AO 171 or the Policies and Guidelines to Implement the Relevant Provisions of
Republic Act 9257, otherwise known as the “Expanded Senior Citizens Act of 2003” was issued by
the DOH, providing the grant of twenty percent (20%) discount in the purchase of unbranded
generic medicines from all establishments dispensing medicines for the exclusive use of the senior
citizens.

DOH issued Administrative Order No 177 amending A.O. No. 171. Under A.O. No. 177, the twenty
percent discount shall not be limited to the purchase of unbranded generic medicines only, but
shall extend to both prescription and non-prescription medicines whether branded or generic.
Thus, it stated that “[t]he grant of twenty percent (20%) discount shall be provided in the purchase
of medicines from all establishments dispensing medicines for the exclusive use of the senior
citizens.”

Petitioners assert that Section 4(a) of the law is unconstitutional because it constitutes
deprivation of private property. Compelling drugstore owners and establishments to grant the
discount will result in a loss of profit and capital because 1) drugstores impose a mark-up of only
5% to 10% on branded medicines; and 2) the law failed to provide a scheme whereby drugstores
will be justly compensated for the discount.
RULING

The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of
private property for public use or benefit. This constitutes compensable taking for which petitioners
would ordinarily become entitled to a just compensation.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by
the expropriator. The measure is not the taker’s gain but the owner’s loss. The word just is used to
intensify the meaning of the word compensation, and to convey the idea that the equivalent to be
rendered for the property to be taken shall be real, substantial, full and ample.
A tax deduction does not offer full reimbursement of the senior citizen discount. As such, it would
not meet the definition of just compensation.

Having said that, this raises the question of whether the State, in promoting the health and welfare
of a special group of citizens, can impose upon private establishments the burden of partly
subsidizing a government program.

The Court believes so.

The law grants a twenty percent discount to senior citizens for medical and dental services, and
diagnostic and laboratory fees; admission fees charged by theaters, concert halls, circuses,
carnivals, and other similar places of culture, leisure and amusement; fares for domestic land, air
and sea travel; utilization of services in hotels and similar lodging establishments, restaurants and
recreation centers; and purchases of medicines for the exclusive use or enjoyment of senior
citizens. As a form of reimbursement, the law provides that business establishments extending the
twenty percent discount to senior citizens may claim the discount as a tax deduction.

The law is a legitimate exercise of police power which, similar to the power of eminent
domain, has general welfare for its object. Police power is not capable of an exact definition, but
has been purposely veiled in general terms to underscore its comprehensiveness to meet all
exigencies and provide enough room for an efficient and flexible response to conditions and
circumstances, thus assuring the greatest benefits. 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 “[t]he 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.

Police power as an attribute to promote the common good would be diluted considerably if on the
mere plea of petitioners that they will suffer loss of earnings and capital, the questioned provision is
invalidated. Moreover, in the absence of evidence demonstrating the alleged confiscatory effect of
the provision in question, there is no basis for its nullification in view of the presumption of validity
which every law has in its favor.

Given these, it is incorrect for petitioners to insist that the grant of the senior citizen discount is
unduly oppressive to their business, because petitioners have not taken time to calculate correctly
and come up with a financial report, so that they have not been able to show properly whether or
not the tax deduction scheme really works greatly to their disadvantage.

The Court is not oblivious of the retail side of the pharmaceutical industry and the competitive
pricing component of the business. While the Constitution protects property rights, petitioners must
accept the realities of business and the State, in the exercise of police power, can intervene in the
operations of a business which may result in an impairment of property rights in the process.

Moreover, the right to property has a social dimension. While Article XIII of the Constitution
provides the precept for the protection of property, various laws and jurisprudence, particularly on
agrarian reform and the regulation of contracts and public utilities, continuously serve as a
reminder that the right to property can be relinquished upon the command of the State for the
promotion of public good.
Hon. Ma. Lourdes C. Fernando vs. St. Scholastica’s College
G.R. No. 161107, March 12, 2013, J. Mendoza

Doctrine:
– The LGU cannot compel or impose restrictions of the property rights of private persons under the
guise of police powers.
– Test of Police Power: Lawful subject and Lawful means.

Statement of Facts:

Respondents St. Scholastica’s College (SSC) and St. Scholastica’s Academy-Marikina, Inc. (SSA-
Marikina) are educational institutions organized under the laws of the Republic of the Philippines,
with principal offices and business addresses at Leon Guinto Street, Malate, Manila, and at West
Drive, Marikina Heights, Marikina City, respectively.

On April 2, 2000, the City Government of Marikina sent a letter to the respondents ordering them to
demolish and replace the fence of their Marikina property to make it 80% see-thru, and, at the
same time, to move it back about six (6) meters to provide parking space for vehicles to park.
On April 26, 2000, the respondents requested for an extension of time to comply with the directive.
In response, the petitioners, through then City Mayor Bayani F. Fernando, insisted on the
enforcement of the subject ordinance.

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, Marikina, Branch 273 (RTC),
docketed as SCA Case No. 2000-381-MK.

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court, which
seeks to set aside the December 1, 2003 Decision of the Court of Appeals (CA) in CA-G.R. SP No.
75691.

Issue:

1.Whether or not Section 5 of Ordinance No. 192 is a valid use of Police Power.
2.Whether or not Section 3.1 of Ordinance No. 192 is a violation of St. Scholastica’s right to
privacy.

Ruling:

1.No, the Government of Marikina must show the reasonable relation between the purpose of
police power and the means employed. The ordinance failed the test of Police Power and shall be
struck down as an arbitrary intrusion into private rights and a violation of the due process clause.
The order to demolish the fence of St. Scholastica and move it back 6 meters would amount to an
appropriation of property which could only be done through the power of Eminent Domain.
2.Yes. The goal of section 3.1 is to “to discourage, suppress or prevent the concealment of
prohibited or unlawful acts.” The court, however, ruled that 80% see-through would be a violation of
the right to privacy considering that there are nuns living at St. Scholastica.

Dispositive Portion:

WHEREFORE, the petition is DENIED. The October 2, 2002 Decision of the Regional Trial Court in
SCA Case No. 2000-381-MK is AFFIRMED but MODIFIED to read as follows:
WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the
respondents to permanently desist from enforcing or implementing Sections 3.1 and 5 of
Ordinance No. 192, Series of 1994, as amended, on the petitioners' property in question located in
Marikina Heights, Marikina, Metro Manila.
G.R. No. 211356, September 29, 2014

CRISOSTOMO B. AQUINO v. MUNICIPALITY OF MALAY, AKLAN

NATURE:

This is a Petition for Review on Certiorari challenging the Decision1 and the Resolution of the
Court of Appeals. The assailed rulings denied Crisostomo Aquino’s Petition for Certiorari for not
being the proper remedy to question the issuance and implementation of Executive Order No. 10,
Series of 2011 (EO 10), ordering the demolition of his hotel establishment.

FACTS:

Boracay Island West Cove Management Philippines, Inc. applied for a building permit covering the
construction of a three-storey hotel over a parcel of land in Malay, Aklan, which is covered by a
Forest Land Use Agreement for Tourism Purposes (FLAgT) issued by the Department of
Environment and Natural Resources (DENR). The Municipal Zoning Administrator denied
petitioner’s application on the ground that the proposed construction site was within the “no build
zone” demarcated in Municipal Ordinance 2000-131.

Petitioner appealed the denial action to the Office of the Mayor but despite follow up, no action was
ever taken by the respondent mayor.

A Cease and Desist Order was issued by the municipal government, enjoining the expansion of the
resort, and on June 7, 2011, the Office of the Mayor of Malay, Aklan issued the assailed EO 10,
ordering the closure and demolition of Boracay West Cove’s hotel.

EO 10 was partially implemented on June 10, 2011. Thereafter, two more instances followed
wherein respondents demolished the improvements introduced by Boracay West Cove.

Petitioner filed a Petition for Certiorari with prayer for injunctive relief with the CA Alleging that the
order was issued and executed with grave abuse of discretion

Contentions of West Cove:

1) The hotel cannot summarily be abated because it is not a nuisance per se, given the hundred
million peso-worth of capital infused in the venture.
2) Municipality of Malay, Aklan should have first secured a court order before proceeding with the
demolition.

Contention of the Mayor: The demolition needed no court order because the municipal mayor has
the express power under the Local Government Code (LGC) to order the removal of illegally
constructed buildings

The CA dismissed the petition solely on procedural ground, i.e., the special writ of certiorari can
only be directed against a tribunal, board, or officer exercising judicial or quasi-judicial functions
and since the issuance of EO 10 was done in the exercise of executive functions, and not of
judicial or quasi-judicial functions, certiorari will not lie.

ISSUE:
Whether the judicial proceedings should first be conducted before the LGU can order the closure
and demolition of the property in question.

HELD:

The Court ruled that the property involved cannot be classified as a nuisance per se which can
therefore be summarily abated. Here, it is merely the hotel’s particular incident, its location and not
its inherent qualities that rendered it a nuisance. Otherwise stated, had it not been constructed in
the no build zone, Boracay West Cove could have secured the necessary permits without issue. As
such, even if the hotel is not a nuisance per se, it is still a nuisance per accidens

Generally, LGUs have no power to declare a particular thing as a nuisance unless such a thing is a
nuisance per se. Despite the hotel’s classification as a nuisance per accidens, however, the LGU
may nevertheless properly order the hotel’s demolition. This is because, in the exercise of police
power and the general welfare clause, property rights of individuals may be subjected to restraints
and burdens in order to fulfill the objectives of the government. Moreover, the Local Government
Code authorizes city and municipal governments, acting through their local chief executives, to
issue demolition orders. The office of the mayor has quasi-judicial powers to order the closing and
demolition of establishments.

FERRER JR. vs. BAUTISTA

DOCTRINE: The Constitution allows local governments to raise their own sources of revenue but
the provision of a public service is not subject to any form of tax imposition; taxes on idle lands and
socialized housing are valid but tax on garbage collection is invalid.

FACTS:

Respondent Quezon City Council enacted Ordinance No. SP-2095, S-2011 or the Socialized
Housing Tax (SHT) of Quezon City. 0.5% that shall be collected on the assessed value of land in
excess of 100,000 that shall accrue to the Socialized Housing Programs of the Q.C. Government.
Another ordinance was enacted - Ordinance No. SP-2235, S-2013 for garbage fee. The proceeds
collected from garbage fees on residential properties shall be deposited solely and exclusively in
an earmarked special amount under the general fund to be utilized for garbage collections.

Petitioner contends that the Quezon City Government cannot invoke a valid exercise of its power
to create sources of income under Sec. 5, Art. X of the 1987 Constitution. The Special Housing Tax
is tantamount to a penalty and cannot be viewed as a “charity” from real property since it is forced
and not voluntary. It is alleged also that the Special Housing Tax is a kind of legislation that violates
the right to property owners to equal protection laws since it favors informal settlers who occupy
property not their own and pay no taxes over law-abiding real property owners who pay income
and realty taxes. As to the implementation of garbage fees, petitioner contends that it cannot be
justified as an exercise of police power. It is discriminatory and tantamount to double taxation.

Respondent insisted that the questioned ordinances are proper exercises of police power. They
assert that the SHT applies equally to all real property owners without discrimination. There is no
way that the ordinance could violate the equal protection clause because real property owners and
informal settlers do not belong to the same class.
For the Garbage Fee collection, it only collects an average fee in the meager amount of 33
centavos per day from every household for garbage collection and waste management. In addition,
there is no double taxation because the real property tax is imposed on ownership based on its
assessed value, while the garbage fee is required on the domestic household.

ISSUE: Whether or not the Local Government validly exercised their legislative functions.

RULING:
Yes. LGUs are able to legislate only by virtue of a valid delegation of legislative power from the
national legislature; they are mere agents vested with what is called the power of subordinate
legislation. With regard to the power of taxation, it is indubitably the most effective instrument to
raise needed revenues in financing and supporting myriad activities of the LGUs for the delivery of
basic services essential to the promotion of the general welfare and the enhancement of peace,
progress and prosperity of the people.
The Constitution allows local governments to raise their own sources of revenue but the provision
of a public service is not subject to any form of tax imposition; taxes on idle lands and socialized
housing are valid but tax on garbage collection is invalid.

VIRGILIO AGABON, et al. v. NLRC

FACTS

Virgilio and Jenny Agabon worked for respondent Riviera Home Improvements, Inc. as gypsum
and cornice installers from January 1992 until Feb 1999. Their employment was terminated when
they were dismissed for allegedly abandoning their work. Petitioners Agabon then filed a case of
illegal dismissal. /// The LA ruled in favor of the spouses and ordered Riviera to pay them their
money claims. The NLRC reversed the LA, finding that the Agabons were indeed guilty of
abandonment. The CA modified the LA by ruling that there was abandonment but ordering Riviera
to pay the Agabons’ money claims.

The arguments of both parties are as follows:

The Agabons claim, among others that Riviera violated the requirements of notice and hearing
when the latter did not send written letters of termination to their addresses.

Riviera admitted to not sending the Agabons letters of termination to their last known addresses
because the same would be futile, as the Agabons do not reside there anymore. However, it also
claims that the Agabons abandoned their work. More than once, they subcontracted installation
works for other companies. They already were warned of termination if the same act was repeated,
still, they disregarded the warning.

ISSUES:
1.Whether the Agabons were illegally dismissed
2.Whether Riviera violated the requirements of notice and hearing
3.Is the violation of the procedural requirements of notice and hearing for termination of employees
a violation of the Constitutional due process?
4.What are the consequences of violating the procedural requirements of termination?

RULING:

Valid dismissal but violation of statutory due process = payment of nominal damages (P30,000) &
balance of 13th month pay, etc.
1.No. There was just cause for their dismissal, i.e., abandonment. Art. 282 specifies the grounds
for just dismissal, to wit:
a.Serious misconduct or willful disobedience of the lawful orders of the employer or his duly
authorized representative in connection with the employee’s work
b.Gross and habitual neglect of the by the employee of his duties (includes abandonment)
c.Fraud or willful breach of the trust reposed by the employer or his duly authorized representative
to the employee
d.Commission of a crime or offense by the employee against the person of the employer or any
member of his immediate family or his duly authorized representative
e.Any other causes analogous to the foregoing.

To establish abandonment, two elements must be present:

a.The unjustified failure of the employee to report for work
b.A clear intention to sever e-e relationship, manifested by overt acts

2.Yes. While the employer has the right to expect good performance, diligence, good conduct and
loyalty from its employees, it also has the duty to provide just compensation to his employees and
to observe the procedural requirements of notice and hearing in the termination of his employees.
Procedure of termination (Omnibus Rules Implementing the Labor Code):
a.A written notice to the employee specifying the grounds for termination and giving the employee
reasonable opportunity to be heard
b.A hearing where the employee is given the opportunity to respond to the charges against him
and present evidence or rebut the evidence presented against him (if he so requests)
c.A written notice of termination indicating that grounds have been established to justify his
termination upon due consideration of all circumstances

3.No. Constitutional due process is that provided under the Constitution, which involves the
protection of the individual against governmental oppression and the assurance of his rights In
civil, criminal and administrative proceedings; statutory due process is that found in the Labor
Code and its Implementing Rules and protects the individual from being unjustly terminated without
just or authorized cause after notice and hearing.

4. The dismissal is valid, but Riviera should pay nominal damages to the Agabons in vindication of
the latter for violating their right to notice and hearing. The penalty is in the nature of a penalty or
indemnification, the amount dependent on the facts of each case, including the nature of gravity of
offense of the employer.

In this case, the Serrano doctrine was re-examined.

First, in the Serrano case, the dismissal was upheld, but it was held to be ineffectual (without legal
effect). Hence, Serrano was still entitled to the payment of his backwages from the time of
dismissal until the promulgation of the court of the existence of an authorized cause. Further, he
was entitled to his separation pay as mandated under Art. 283. The ruling is unfair to employers
and has the danger of the following consequences:
a.The encouragement of filing frivolous suits even by notorious employees who were justly
dismissed but were deprived of statutory due process; they are rewarded by invoking due process
b.It would create absurd situations where there is just or authorized cause but a procedural
infirmity invalidates the termination, ie an employee who became a criminal and threatened his co-
workers’ lives, who fled and could not be faound
c.It could discourage investments that would generate employment in the economy
Second, the payment of backwages is unjustified as only illegal termination gives the employee the
right to be paid full backwages. When the dismissal is valid or upheld, the employee has no right to
backwages.
Garcia vs. J. Drilon and Garcia
G. R. No. 179267, 25
Facts:

Private respondent Rosalie filed a petition before the RTC of Bacolod City a Temporary Protection
Order against her husband, Jesus, pursuant to R.A. 9262, entitled “An Act Defining Violence
Against Women and Their Children, Providing for Protective Measures for Victims, Prescribing
Penalties Therefor, and for Other Purposes.” She claimed to be a victim of physical, emotional,
psychological and economic violence, being threatened of deprivation of custody of her children
and of financial support and also a victim of marital infidelity on the part of petitioner.

The TPO was granted but the petitioner failed to faithfully comply with the conditions set forth by
the said TPO, private-respondent filed another application for the issuance of a TPO ex parte. The
trial court issued a modified TPO and extended the same when petitioner failed to comment on
why the TPO should not be modified. After the given time allowance to answer, the petitioner no
longer submitted the required comment as it would be an “axercise in futility.”

Petitioner filed before the CA a petition for prohibition with prayer for injunction and TRO on,
questioning the constitutionality of the RA 9262 for violating the due process and equal protection
clauses, and the validity of the modified TPO for being “an unwanted product of an invalid law.”

The CA issued a TRO on the enforcement of the TPO but however, denied the petition for failure to
raise the issue of constitutionality in his pleadings before the trial court and the petition for
prohibition to annul protection orders issued by the trial court constituted collateral attack on said
law.

Petitioner filed a motion for reconsideration but was denied. Thus, this petition is filed.

Issues:

WON the CA erred in dismissing the petition on the theory that the issue of constitutionality was not
raised at the earliest opportunity and that the petition constitutes a collateral attack on the validity
of the law.

WON the CA committed serious error in failing to conclude that RA 9262 is discriminatory, unjust
and violative of the equal protection clause.

WON the CA committed grave mistake in not finding that RA 9262 runs counter to the due process
clause of the Constitution

WON the CA erred in not finding that the law does violence to the policy of the state to protect the
family as a basic social institution

WON the CA seriously erredin declaring RA 9262 as invalid and unconstitutional because it allows
an undue delegation of judicial power to Brgy. Officials.

Decision:

1. Petitioner contends that the RTC has limited authority and jurisdiction, inadequate to tackle the
complex issue of constitutionality. Family Courts have authority and jurisdiction to consider the
constitutionality of a statute. The question of constitutionality must be raised at the earliest possible
time so that if not raised in the pleadings, it may not be raised in the trial and if not raised in the trial
court, it may not be considered in appeal.
2. RA 9262 does not violate the guaranty of equal protection of the laws. Equal protection simply
requires that all persons or things similarly situated should be treated alike, both as to rights
conferred and responsibilities imposed. In Victoriano v. Elizalde Rope Workerkers’ Union, the Court
ruled that all that is required of a valid classification is that it be reasonable, which means that the
classification should be based on substantial distinctions which make for real differences; that it
must be germane to the purpose of the law; not limited to existing conditions only; and apply
equally to each member of the class. Therefore, RA9262 is based on a valid classification and did
not violate the equal protection clause by favouring women over men as victims of violence and
abuse to whom the Senate extends its protection.

3. RA 9262 is not violative of the due process clause of the Constitution. The essence of due
process is in the reasonable opportunity to be heard and submit any evidence one may have in
support of one’s defense. The grant of the TPO exparte cannot be impugned as violative of the
right to due process.

4. The non-referral of a VAWC case to a mediator is justified. Petitioner’s contention that by not
allowing mediation, the law violated the policy of the State to protect and strengthen the family as a
basic autonomous social institution cannot be sustained. In a memorandum of the Court, it ruled
that the court shall not refer the case or any issue therof to a mediator. This is so because violence
is not a subject for compromise.

5. There is no undue delegation of judicial power to Barangay officials. Judicial power includes the
duty of the courts of justice to settle actual controversies involving rights which are legally
demandable and enforceable and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on any part of any branch of the Government
while executive power is the power to enforce and administer the laws. The preliminary
investigation conducted by the prosecutor is an executive, not a judicial, function. The same holds
true with the issuance of BPO. Assistance by Brgy. Officials and other law enforcement agencies
is consistent with their duty executive function.

The petition for review on certiorari is denied for lack of merit.

YRASUEGUI vs PAL
FACTS:

THIS case portrays the peculiar story of an international flight steward who was dismissed because
of his failure to adhere to the weight standards of the airline company.
The proper weight for a man of his height and body structure is from 147 to 166 pounds, the ideal
weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual of PAL.
In 1984, the weight problem started, which prompted PAL to send him to an extended vacation until
November 1985. He was allowed to return to work once he lost all the excess weight. But the
problem recurred. He again went on leave without pay from October 17, 1988 to February 1989.
Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained
overweight. On January 3, 1990, he was informed of the PAL decision for him to remain grounded
until such time that he satisfactorily complies with the weight standards. Again, he was directed to
report every two weeks for weight checks, which he failed to comply with.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check
would be dealt with accordingly. He was given another set of weight check dates, which he did not
report to.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation
of company standards on weight requirements. Petitioner insists that he is being discriminated as
those similarly situated were not treated the same.
On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his
ideal weight, “and considering the utmost leniency” extended to him “which spanned a period
covering a total of almost five (5) years,” his services were considered terminated “effective
immediately.”
LABOR ARBITER: held that the weight standards of PAL are reasonable in view of the nature of
the job of petitioner. However, the weight standards need not be complied with under pain of
dismissal since his weight did not hamper the performance of his duties.
NLRC affirmed.
CA: the weight standards of PAL are reasonable. Thus, petitioner was legally dismissed because
he repeatedly failed to meet the prescribed weight standards. It is obvious that the issue of
discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal
for being overweight.

ISSUE: WON he was validly dismissed.

HELD:

YES

A reading of the weight standards of PAL would lead to no other conclusion than that they
constitute a continuing qualification of an employee in order to keep the job. The dismissal of the
employee would thus fall under Article 282(e) of the Labor Code.

In the case at bar, the evidence on record militates against petitioner’s claims that obesity is a
disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible
for him to lose weight given the proper attitude, determination, and self-discipline. Indeed, during
the clarificatory hearing on December 8, 1992, petitioner himself claimed that “[t]he issue is could I
bring my weight down to ideal weight which is 172, then the answer is yes. I can do it now.”

Petitioner has only himself to blame. He could have easily availed the assistance of the company
physician, per the advice of PAL.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight
attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the
CA correctly puts it, “[v]oluntariness basically means that the just cause is solely attributable to the
employee without any external force influencing or controlling his actions. This element runs
through all just causes under Article 282, whether they be in the nature of a wrongful action or
omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it
lacks the element of intent found in Article 282(a), (c), and (d).”

METROPOLITAN MANILA DEVELOPMENT AUTHORITY, petitioner, vs. BEL-

AIR VILLAGE ASSOCIATION, INC., respondent.

Facts:

1.Petitioner MMDA is a government agency tasked with the delivery of basic services in Metro
Manila, including “transport and traffic management.” Respondent Bel-Air Village Association, Inc.
is the registered owner of Neptune Street, a private road inside Bel-Air Village.
2.Neptune runs parallel to Kalayaan Avenue, a national road open to the general public.
3.Bel-Air received from MMDA, through its Chairman, a notice requesting it to open Neptune Street
to public vehicular traffic “for the safe and convenient movement of persons”. Bel-Air was also
apprised that the perimeter wall separating the subdivision from the adjacent Kalayaan Avenue
would be demolished.
4.Bel-Air instituted against MMDA a case for injunction and prayed for the issuance of a temporary
restraining order and preliminary injunction enjoining the opening of Neptune Street and prohibiting
the demolition of the perimeter wall.
5.MMDA claims that it has the authority to open Neptune Street to public traffic because it is an
agent of the state endowed with police power in the delivery of basic services in Metro Manila so
that there is no need for the City of Makati to enact an ordinance opening Neptune Street to the
public.
Issue: Whether or not the Metropolitan Manila Development Authority (MMDA) has the mandate to
open Neptune Street to public traffic pursuant to its regulatory and police powers?
Decision: No.

Ratio:

1.Police power is lodged primarily in the National Legislature. It cannot be exercised by any group
or body of individuals not possessing legislative power. Our Congress delegated police power to
the local government units in the Local Government Code of 1991. But the MMDA is not a local
government unit or a public corporation endowed with legislative power. Even its governing board,
the Metro Manila Council has not been delegated any legislative power, unlike the legislative
bodies of local government units.
2.The functions of MMDA are administrative in nature. According to its Charter, R.A. 7924:
"Sec. 2. Creation of the Metropolitan Manila Development Authority. -- –x x x.
The MMDA shall perform planning, monitoring and coordinative functions, and in the process
exercise regulatory and supervisory authority over the delivery of metro-wide services within Metro
Manila, without diminution of the autonomy of the local government units concerning purely local
matters."
3.Petitioner cannot seek refuge in the cases of Sangalang v. Intermediate Appellate Court where
the Court upheld certain ordinances as a legitimate exercise of police power because both Makati
and the then Metro Manila Commission which issued the said ordinances had the power to enact
them. The MMC under P. D. No. 824 is not the same entity as the MMDA under R. A. No. 7924.
Unlike the MMC, the MMDA has no power to enact ordinances for the welfare of the community.

MANAPAT vs. CA
Principle:
The power of eminent domain is an inherent and indispensable power of the State. Also called the
power of expropriation, it is described as the highest and most exact idea of property remaining in
the government that may be acquired for some public purpose through a method in the nature of a
compulsory sale to the State.By virtue of its sovereign character, the exercise of the power prevails
over the non-impairment clause, and is clearly superior to the final and executory judgment
rendered by a court in an ejectment case.

Albeit the power partakes of a sovereign character, it is by no means absolute. Its exercise is
subject to limitations, one of which is, precisely, Section 9, Article III of the Constitution.
Over the years and in a plethora of cases, this Court has recognized the following requisites for the
valid exercise of the power of eminent domain: (1) the property taken must be private property; (2)
there must be genuine necessity to take the private property; (3) the taking must be for public use;
(4) there must be payment of just compensation; and (5) the taking must comply with due process
of law.

Facts:

Sometime in the 1960s, RCAM allowed a number of individuals to occupy the Grace Park property
on condition that they would vacate the premises should the former push through with the plan to
construct a school in the area. The plan, however, did not materialize, thus, the occupants offered
to purchase the portions they occupied. Later, as they could not afford RCAMs proposed price, the
occupants, organizing themselves, petitioned the Government for the acquisition of the said
property at a low price.
The Government, in 1963, through the Land Tenure Administration (LTA), succeeded by Peoples
Homesite and Housing Corporation (PHHC), negotiated for the acquisition of the property from
RCAM/PRC. But because of the high asking price of RCAM and the latters effort to purchase and/
or to expropriate the property was discontinued. RCAM then decided to effect, on its own, the
subdivision of the property and the sale of the individual subdivided lots to the public which the
petitioners were among those who purchased individual subdivided lots of Grace Park directly from
RCAM and/or PRC.
In 1977 when President Marcos issued (PD) No. 1072, appropriating P1.2M out of the Presidents
Special Operations Funds to cover the additional amount needed for the expropriation of Grace
Park. The National Housing Authority (NHA), PHHCs successor, then filed several expropriation
proceedings over the already subdivided lots for the purpose of developing Grace Park under the
Zonal Improvement Program (ZIP) and subdividing it into small lots for distribution and resale at a
low cost to the residents of the area.
NHA ordered the condemnation of the involved lots and fixed the amount of just compensation at
P180.00 per square meter. Petitioner elevated the matter to CA in which the CA reversed some
cases and affirmed others.

Issue: Whether or Not the NHA may validly expropriate the parcels of land subject of these cases?

Ruling:

The power of eminent domain is an inherent and indispensable power of the State. Also called the
power of expropriation, it is described as the highest and most exact idea of property remaining in
the government that may be acquired for some public purpose through a method in the nature of a
compulsory sale to the State.By virtue of its sovereign character, the exercise of the power prevails
over the non-impairment clause,and is clearly superior to the final and executory judgment
rendered by a court in an ejectment case.

Being inherent, the power need not be specifically conferred on the government by the
Constitution. Section 9, Article III of the Constitution, which mandates that private property shall not
be taken for a public use without just compensation, merely imposes a limit on the governments
exercise of the power and provides a measure of protection to the individuals right to property.

Just like its two companion fundamental powers of the State, the power of eminent domain is
exercised by the Legislature. However, it may be delegated by Congress to the President,
administrative bodies, local government units, and even to private enterprises performing public
services.

Albeit the power partakes of a sovereign character, it is by no means absolute. Its exercise is
subject to limitations, one of which is, precisely, Section 9, Article III of the Constitution.
Over the years and in a plethora of cases, this Court has recognized the following requisites for the
valid exercise of the power of eminent domain and accordingly, the question that this Court must
resolve is whether these requisites have been adequately addressed.

(1) the property taken must be private property

It is incontrovertible that the parcels of land subject of these consolidated petitions are private
property
(2) there must be genuine necessity to take the private property
Genuine necessity must be of a public character. As a rule, the determination of whether there is
genuine necessity for the exercise is a justiciable question. However, when the power is exercised
by the Legislature, the question of necessity is essentially a political question. Thus, in City of
Manila v. Chinese Community,[57] we held: The legislature, in providing for the exercise of the
power of eminent domain, may directly determine the necessity for appropriating private property
for a particular improvement for public use, and it may select the exact location of the
improvement. In such a case, it is well-settled that the utility of the proposed improvement, the
extent of the public necessity for its construction, the expediency of constructing it, the
suitableness of the location selected and the consequent necessity of taking the land selected for
its site, are all questions exclusively for the legislature to determine, and the courts have no power
to interfere, or to substitute their own views for those of the representatives of the people.
In the instant cases, the authority to expropriate came from Presidential Decree No. 1072, issued
by then President Ferdinand E. Marcos in 1977. At that time, and as explicitly recognized under the
1973 Constitution, President Marcos had legislative powers. Perforce, the expropriation of the
subject properties identified with specificity in the P.D. --- was directed by legislation. The issue of
necessity then assumed the nature of a political question.
(3) the taking must be for public use
As set forth in its petition, NHA justifies the taking of the subject property for the purpose of
improving and upgrading the area by constructing roads and installing facilities thereon under the
Governments zonal improvement program and subdividing them into much smaller lots for
distribution and sale at a low cost to qualified beneficiaries, mostly underprivileged long-time
occupants of Grace Park. It need only be added, at this juncture, that the public use requisite for
the valid exercise of the power of eminent domain is a flexible and evolving concept influenced by
changing conditions. At present, it may not be amiss to state that whatever is beneficially employed
for the general welfare satisfies the requirement of public use.
(4) there must be payment of just compensation
To satisfy the fourth requisite, we affirm the appellate courts disposition that the subject cases be
remanded to the trial court for the determination of the amount of just compensation. Under case
law, the said determination is a judicial prerogative.
(5) the taking must comply with due process of law.
In the expropriation proceedings, all the parties have been given their day in court. That they are
now before this Court is attestation enough that they were not denied due process of law.

WHEREFORE, PREMISES CONSIDERED, the May 27, 1993 Decision of the Court of Appeals in
CA-G.R. CV No. 10200-10212 and the June 28, 1994 Decision in CA-G.R. CV No. 27159 are
AFFIRMED; and the March 2, 1994 and the July 25, 1994 Resolutions in CA-G.R. CV Nos.
10200-10212 are REVERSED and SET ASIDE.

Dartmouth College v. Woodward

Contract Clause, Limitations on the Powers of the States

Facts:
In 1769 the King of England granted a charter to Dartmouth College. This document spelled out
the purpose of the school, set up the structure to govern it, and gave land to the college. In 1816,
the state legislature of New Hampshire passed laws that revised the charter. These laws changed
the school from private to public. They changed the duties of the trustees. They changed how the
trustees were selected.
The existing trustees filed suit. They claimed that the legislature violated the Constitution. They
said that Article 1, Section 10, of the Constitution prevented a state from "impairing" (that is,
weakening or canceling) a contract.

The Issue
W/N under the Constitution, can a state legislature change the charter of a college?
W/N Dartmouth College would remain private or become a state school. More broadly, what is
protected by the Constitution's "contract" clause?

Ruling:

By a 5-1 margin, the Court agreed with Dartmouth. The Court struck down the law, so Dartmouth
continued as a private college. Chief Justice Marshall wrote the majority opinion. He said that the
charter was, in essence, a contract between the King and the trustees. Even though we were no
longer a royal colony, the contract is still valid because the Constitution says that a state cannot
pass laws to impair a contract.