Churchill & Tait v.

Rafferty

32 Phil. 580 (1915)

In re: Police power of the State, Lawful Subject of police power

This is an appeal from a judgment of the Court of First Instance of Manila. The case
involves a dual question one involving the power of the court to restrain by injunction the
collection of the tax in question and the other relating to the power of the Collector of
Internal Revenue to remove any sign, signboard, or billboard upon the ground that the
same is offensive to the sight or is otherwise a nuisance.
The focus of this digest is to highlight the cases’ latter aspect as correlated to the police
power of the State.

Facts

Appellees, Francis A. Churchill and Stewart Tait are involved in the advertising
business, particularly in billboard advertising. Their billboards located upon private lands
in the Province of Rizal were removed upon complaints and by the orders of the
defendant Collector of Internal Revenue by virtue of the provisions of subsection (b) of
section 100 of Act No. 2339.
Appellees, in their supplementary complaint challenge the power of the of the Collector
of Internal Revenue to remove any sign, signboard, or billboard upon the ground that
the same is offensive to the sight or is otherwise a nuisance and maintain that the
billboards in question “in no sense constitute a nuisance and are not deleterious to the
health, morals, or general welfare of the community, or of any persons.” Defendant
Collector of Internal Revenue avers that after due investigation made upon the
complaints of the British and German Consuls, the defendant “decided that the billboard
complained of was and still offensive to the sight and is otherwise a nuisance.”

Issue

1. Was the enactment assailed by the plaintiffs was a

legitimate exercise of the police power of the Government?

Held

The High Court is of the opinion that unsightly advertisements or signs, signboards, or
billboards which are offensive to the sight, are not disassociated from the general
welfare of the public. This is not establishing a new principle, but carrying a well-
recognized principle to further application. Moreover, if the police power may be
exercised to encourage a healthy social and economic condition in the country, and if
the comfort and convenience of the people are included within those subjects,
everything which encroaches upon such territory is amenable to the police power.
Judgmentreversed.
U.S. Supreme Court

Boyd v. United States, 116 U.S. 616 (1886)

Boyd v. United States

Argued December 11, 14, 1886

Decided February 1, 1886

116 U.S. 616

Syllabus

The 6th section of the act of June 22, 1874, entitled "An act to amend the customs
revenue laws," &c., which section authorizes a court of the United States, in revenue
cases, on motion of the government attorney, to require the defendant or claimant to
produce in court his private books, invoice and papers, or else the allegations of the
attorney to be taken as confessed: Held, to be unconstitutional and void a applied to
suits for penalties or to establish a forfeiture of the party's goods, as being repugnant to
the Fourth and Fifth Amendments of the Constitution.

Where proceedings were in rem to establish a forfeiture of certain goods alleged to

have been fraudulently imported without paying the duties thereon, pursuant to the 12th
section of said act: Held, That an order of the court made under said 5th section,
requiring the claimants of the goods to produce a certain invoice in court for the
inspection of the government attorney, and to be offered in evidence by him, was an
unconstitutional exercise of authority, and that the inspection of the invoice by the
attorney, and its admission in evidence, were erroneous and unconstitutional
proceedings.

It does not require actual entry upon premises and search for and seizure of papers to
constitute an unreasonable search and seizure within the meaning of the Fourth
Amendment; a compulsory production of a party's private books and papers to be used
against himself or his property in a criminal or penal proceeding, or for a forfeiture, is
within the spirit and meaning of the Amendment.

It is equivalent to a compulsory production of papers to make the nonproduction of them

a confession of the allegations which it is pretended they will prove.

A proceeding to forfeit a person's goods for an offence against the laws, though civil in
form, and whether in rem or in personam, is a "criminal case" within the meaning of that
part of the Fifth Amendment which declares that no person "shall be compelled, in any
criminal case, to be a witness against himself."
The seizure or compulsory production of a man's private papers to be used in evidence
against him is equivalent to compelling him to be a witness against himself, and, in a
prosecution for a crime, penalty or forfeiture, is equally within the prohibition of the Fifth
Amendment.

Both amendments relate to the personal security of the citizen. They nearly run into,
and mutually throw light upon, each other. When the thing forbidden in the Fifth
Amendment, namely, compelling a man to be a witness against himself, is the object of
a search and seizure of his private papers, it is an "unreasonable search and seizure"
within the Fourth Amendment.

Page 116 U. S. 617

Search and seizure af a man' private paper to be used in evidence for the purpose of
convicting him of a crime, recovering a penalty, or of forfeiting his property is totally
different from the search and seizure of stolen goods, dutiable articles on which the
duties have not been paid, and the like, which rightfully belong to the custody of the law.

Constitutional provision for the security of person and property should be liberally
construed.

This was an information against thirty-five cases of polished plate glass. The facts which
make the case are stated in the opinion of the court. Judgment in favor of the United
States. The claimants sued out this writ of error.

MAXIMO CALALANG vs A. D. WILLIAMS, ET AL.,

G.R. No. 47800 December 2, 1940
Doctrine: Social Justice
LAUREL, J.:

Facts:

The National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to
the Director of the Public Works and to the Secretary of Public Works and Communications
that animal-drawn vehicles be prohibited from passing along the following for a period of one
year from the date of the opening of the Colgante Bridge to traffic:

1) Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas

Street from 7:30Am to 12:30 pm and from 1:30 pm to 530 pm; and

2) along Rizal Avenue extending from the railroad crossing at Antipolo Street to
Echague Street from 7 am to 11pm

The Chairman of the National Traffic Commission on July 18, 1940 recommended to the
Director of Public Works with the approval of the Secretary of Public Works the adoption of
thethemeasure proposed in the resolution aforementioned in pursuance of the provisions of theCo
mmonwealth Act No. 548 which authorizes said Director with the approval from the
Secretary of the Public Works and Communication to promulgate rules and regulations to
regulate and control the use of and traffic on national roads.

On August 2, 1940, the Director recommended to the Secretary the approval of the
recommendations made by the Chairman of the National Traffic Commission with
modifications. The Secretary of Public Works approved the recommendations on August
10,1940. The Mayor of Manila and the Acting Chief of Police of Manila have enforced and
caused to be enforced the rules and regulation. As a consequence, all animal-drawn vehicles are
not allowed to pass and pick up passengers in the places above mentioned to the detriment not
only of their owners but of the riding public as well.

Issues:
1) Whether the rules and regulations promulgated by the respondents pursuant to the provisions
of Commonwealth Act NO. 548 constitute an unlawful inference with legitimate business or
trade and abridged the right to personal liberty and freedom of locomotion?

2) Whether the rules and regulations complained of infringe upon the constitutional
precept regarding the promotion of social justice to insure the well-being and economic security
of all the people?

Held:
1) No. The promulgation of the Act aims to promote safe transit upon and avoid obstructions on
national roads in the interest and convenience of the public. In enacting said law, the National
Assembly was prompted by considerations of public convenience and welfare. It was inspired by
the desire to relieve congestion of traffic, which is a menace to the public safety. Public welfare
lies at the bottom of the promulgation of the said law and the state in order to promote the
general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subject to all kinds of restraints and burdens in order
to secure the general comfort, health, and prosperity of the State. To this fundamental aims of the
government, the rights of the individual are subordinated. Liberty is a blessing which should not
be made to prevail over authority because society will fall into anarchy. Neither should authority
be made to prevail over liberty because then the individual will fall into slavery. The paradox lies
in the fact that the apparent curtailment of liberty is precisely the very means of insuring its
preserving.

2) No. Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of
all governments on the time-honored principles of salus populi estsuprema lex.

Social justice must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting health, comfort and quiet of all
persons, and of bringing about “the greatest good to the greatest number.”

Taxicab Operators vs. Board of Transportation

- November 01, 2015

Taxicab Operators vs. Board of Transportation

G.R. No. L-59234. September 30, 1982.

Facts:
Petitioners who are taxicab operators assail the constitutionality of Memorandum Circular No. 77-42
issued by the Board of Transportation (BOT) providing for the phasing out and replacement of old and
dilapidated taxicabs; as well as Implementing Circular No. 52 issued pursuant thereto by the Bureau of
Land Transportation (BLT) instructing personnel of the BLT within the National Capital Region to
implement the said BOT Circular, and formulating a schedule of phase-out of vehicles to be allowed and
accepted for registration as public conveyances.

Petitioners allege that the questioned Circulars did not afford them procedural and substantive due
process, equal protection of the law, and protection against arbitrary and unreasonable classification
and standard. Among others, they question the issuance of the Circulars without first calling them to a
conference or requiring them to submit position papers or other documents enforceability thereof only
in Metro Manila; and their being applicable only to taxicabs and not to other transportation services.

Issues:
Whether or not the constitutional guarantee of due process was denied to the taxicab operators and/or
other persons affected by the assailed Circular No. 52.

Held:
The Supreme Court held that there was no denial of due process since calling the taxicab operators or
persons who may be affected by the questioned Circulars to a conference or requiring them to submit
position papers or other documents is only one of the options open to the BOT which is given wide
discretionary authority under P.D. No. 101; and fixing a six- year ceiling for a car to be operated as
taxicab is a reasonable standard adopted to apply to all vehicles affected uniformly, fairly, and justly.

The Court also ruled that neither has the equal protection clause been violated by initially enforcing the
Circulars only in Metro Manila since it is of common knowledge that taxicabs in this city, compared to
those of other places, are subjected to heavier traffic pressure and more constant use, thus making for a
substantial distinction; nor by non-application of the Circulars to other transportation services because
the said Circulars satisfy the criteria required under the equal protection clause, which is the uniform
operation by legal means so that all persons under identical or similar circumstances would be accorded
the same treatment both in privilege conferred and the liabilities imposed.

It is clear from the provision of Section 2 of P.D. 101 aforequoted, that the leeway accorded the Board
gives it a wide range of choice in gathering necessary information or data in the formulation of any
policy, plan or program. It is not mandatory that it should first call a conference or require the
submission of position papers or other documents from operators or persons who maybe affected, this
being only one of the options open to the Board, which is given wide discretionary authority. Petitioners
cannot justifiably claim, therefore, that they were deprived of procedural due process. Neither can they
state with certainty that public respondents had not availed of other sources of inquiry prior to issuing
the challenged Circulars. Operators of public conveyances are not the only primary sources of the data
and information that may be desired by the BOT.

WILFREDO MOSQUEDA v. PILIPINO BANANA GROWERS & EXPORTERS ASSOCIATION, GR No. 189185,
2016-08-16

Facts:

After several committee hearings and consultations with various stakeholders, the Sangguniang
Panlungsod of Davao City enacted Ordinance No. 0309, Series of 2007, to impose a ban against aerial
spraying as an agricultural practice by all agricultural entities within Davao City

The Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) and two of its members, namely:
Davao Fruits Corporation and Lapanday Agricultural and Development Corporation (PBGEA, et al.), filed
their petition in the RTC to challenge the constitutionality of the ordinance

They alleged that the ordinance exemplified the unreasonable exercise of police power; violated the
equal protection clause; amounted to the confiscation of property without due process of law; and
lacked publication pursuant] to Section 511[6] of Republic Act No. 7160
On September 22, 2007, after trial, the RTC rendered judgment declaring Ordinance No. 0309-07 valid
and constitutional

The RTC opined that the City of Davao had validly exercised police power[13] under the General Welfare
Clause of the Local Government Code;[14] that the ordinance, being based on a valid classification, was
consistent with the Equal Protection Clause; that aerial spraying was distinct from other methods of
pesticides application because it exposed the residents to a higher degree of health risk caused by aerial
drift;[15] and that the ordinance enjoyed the presumption of constitutionality, and could be invalidated
only upon a clear showing that it had violated the Constitution.

On January 9, 2009, the CA promulgated its assailed decision reversing the judgment of the RTC.[22] It
declared Section 5 of Ordinance No. 0309-07 as void and unconstitutional for being unreasonable and
oppressive;

The CA did not see any established relation between the purpose of protecting the public and the
environment against the harmful effects of aerial spraying, on one hand, and the imposition of the ban
against aerial spraying of all forms of substances, on the other.

Issues:

whether or not Ordinance No. 0309-07 is unconstitutional on due process and equal protection grounds
for being unreasonable and oppressive, and an invalid exercise of police power: (a) in imposing a ban on
aerial spraying as an agricultural practice in Davao City under Section 5; (b) in decreeing a 3-month
transition-period to shift to other modes of pesticide application under Section 5; and (c) in requiring
the maintenance of the 30-meter buffer zone under Section 6 thereof in all agricultural lands in Davao
City.

Ruling:

The Sangguniang Bayan of Davao Cityenacted Ordinance No. 0309-07under its corporate powers... the
right to a balanced and healthful ecology under Section 16 is an issue of transcendental importance with
intergenerational implications. It is under this milieu that the questioned ordinance should be
appreciated.

Advancing the interests of the residents who are vulnerable to the alleged health risks due to their
exposure to pesticide drift justifies the motivation behind the enactment of the ordinance. The City of
Davao has the authority to enact pieces of legislation that will promote the general welfare, specifically
the health of its constituents. Such authority should not be construed, however, as a valid license for the
City of Davao to enact any ordinance it deems fit to discharge its mandate. A thin but well-defined line
separates authority to enact legislations from the method of accomplishing the same.

Ordinance No. 0309-07 violates the Due Process Clause

A valid ordinance must not only be enacted within the corporate powers of the local government and
passed according to the procedure prescribed by law.[108] In order to declare it as a valid piece of local
legislation, it must also comply with the following substantive requirements, namely: (1) it must not
contravene the Constitution or any statute; (2) it must be fair, not oppressive; (3) it must not be partial
or discriminatory; (4) it must not prohibit but may regulate trade; (5) it must be general and consistent
with public policy; and (6) it must not be unreasonable.[109]In the State's exercise of police power, the
property rights of individuals may be subjected to restraints and burdens in order to fulfill the objectives
of the Government.[110] A local government unit is considered to have properly exercised its police
powers only if it satisfies the following requisites, to wit: (1) the interests of the public generally, as
distinguished from those of a particular class, require the interference of the State; and (2) the means
employed are reasonably necessary for the attainment of the object sought to be accomplished and not
unduly oppressive.[111] The first requirement refers to the Equal Protection Clause of the Constitution;
the second, to the Due Process Clause of the Constitution.[112]Substantive due process requires that a
valid ordinance must have a sufficient justification for the Government's action.[113] This means that in
exercising police power the local government unit must not arbitrarily, whimsically or despotically enact
the ordinance regardless of its salutary purpose. So long as the ordinance realistically serves a legitimate
public purpose, and it employs means that are reasonably necessary to achieve that purpose without
unduly oppressing the individuals regulated, the ordinance must survive a due process challenge.

The required civil works for the conversion to truck-mounted boom spraying alone will consume
considerable time and financial resources given the topography and geographical features of the
plantations.[117] As such, the conversion could not be completed within the short timeframe of three
months. Requiring the respondents and other affected individuals to comply with the consequences of
the ban within the three-month period under pain of penalty like fine, imprisonment and even
cancellation of business permits would definitely be oppressive as to constitute abuse of police power.

The respondents posit that the requirement of maintaining a buffer zone under Section 6 of the
ordinance violates due process for being confiscatory; and that the imposition unduly deprives all
agricultural landowners within Davao City of the beneficial use of their property that amounts to taking
without just compensation.

The position of the respondents is untenable.

In City of Manila v. Laguio, Jr.,[118] we have thoroughly explained that taking only becomes confiscatory
if it substantially divests the owner of the beneficial use of its property

Ordinance No. 0309-07 violates the Equal Protection Clause

The constitutional right to equal protection requires that all persons or things similarly situated should
be treated alike, both as to rights conferred and responsibilities imposed. It requires public bodies and
institutions to treat similarly situated individuals in a similar manner. The guaranty equal protection
secures every person within the State's jurisdiction against intentional and arbitrary discrimination,
whether occasioned by the express terms of a statue or by its improper execution through the State's
duly constituted authorities. The concept of equal justice under the law demands that the State governs
impartially, and not to draw distinctions between individuals solely on differences that are irrelevant to
the legitimate governmental objective.
Equal treatment neither requires universal application of laws to all persons or things without
distinction,[120] nor intends to prohibit legislation by limiting the object to which it is directed or by the
territory in which it is to operate.[121] The guaranty of equal protection envisions equality among
equals determined according to a valid classification.[122] If the groupings are characterized by
substantial distinctions that make real differences, one class may be treated and regulated differently
from another.[123] In other word, a valid classification must be: (1) based on substantial distinctions; (2)
germane to the purposes of the law; (3) not limited to existing conditions only; and (4) equally
applicable to all members of the class.

In our view, the petitioners correctly argue that the rational basis approach appropriately applies herein.
Under the rational basis test, we shall: (1) discern the reasonable relationship between the means and
the purpose of the ordinance; and (2) examine whether the means or the prohibition against aerial
spraying is based on a substantial or reasonable distinction. A reasonable classification includes all
persons or things similarly situated with respect to the purpose of the law.

Davao City justifies the prohibition against aerial spraying by insisting that the occurrence of drift causes
inconvenience and harm to the residents and degrades the environment. Given this justification, does
the ordinance satisfy the requirement that the classification must rest on substantial distinction?We
answer in the negative.

The occurrence of pesticide drift is not limited to aerial spraying but results from the conduct of any
mode of pesticide application. Even manual spraying or truck-mounted boom spraying produces drift
that may bring about the same inconvenience, discomfort and alleged health risks to the community
and to the environment.[141] A ban against aerial spraying does not weed out the harm that the
ordinance seeks to achieve.[142] In the process, the ordinance suffers from being "underinclusive"
because the classification does not include all individuals tainted with the same mischief that the law
seeks to eliminate.[143] A classification that is drastically underinclusive with respect to the purpose or
end appears as an irrational means to the legislative end because it poorly serves the intended purpose
of the law.

WHEREFORE, the Court DENIES the consolidated petitions for review on certiorari for their lack of merit;
AFFIRMS the decision promulgated on January 9, 2009 in C.A.-G.R. CV No. 01389-MIN. declaring
Ordinance No. 0309-07 UNCONSTITUTIONAL;

Principles:

Constitutional Law... the right to a balanced and healthful ecology under Section 16 is an issue of
transcendental importance with intergenerational implications.

Political Law... taking only becomes confiscatory if it substantially divests the owner of the beneficial use
of its property
CASE DIGEST : US vs TURIBIO
G.R. No. L-5060 January 26, 1910 THE UNITED STATES, plaintiff-appellee, vs. LUIS TORIBIO,
defendant-appellant.

Facts: Respondent Toribio is an owner of carabao, residing in the town of Carmen in the province of
Bohol. The trial court of Bohol found that the respondent slaughtered or caused to be slaughtered a
carabao without a permit from the municipal treasurer of the municipality wherein it was slaughtered, in
violation of Sections 30 and 33 of Act No. 1147, an Act regulating the registration, branding, and
slaughter of Large Cattle. The act prohibits the slaughter of large cattle fit for agricultural work or other
draft purposes for human consumption.

The respondent counters by stating that what the Act is (1) prohibiting is the slaughter of large cattle in
the municipal slaughter house without a permit given by the municipal treasurer. Furthermore, he
contends that the municipality of Carmen has no slaughter house and that he slaughtered his carabao in
his dwelling, (2) the act constitutes a taking of property for public use in the exercise of the right of
eminent domain without providing for the compensation of owners, and it is an undue and unauthorized
exercise of police power of the state for it deprives them of the enjoyment of their private property.

Issue: Whether or not Act. No. 1147, regulating the registration, branding and slaughter of large cattle, is
an undue and unauthorized exercise of police power.

Held: It is a valid exercise of police power of the state.

Facts: The Supreme court Said sections 30 and 33 of the Act prohibit and penalize the slaughtering or
causing to be slaughtered for human consumption of large cattle at any place without the permit provided
for in section 30
Where the language of a statute is fairly susceptible of two or more constructions, that construction
should be adopted which will most tend to give effect to the manifest intent of the lawmaker and promote
the object for which the statute was enacted, and a construction should be rejected which would tend to
render abortive other provisions of the statute and to defeat the object which the legislator sought to attain
by its enactment

The Supreme Court also said that if they will follow the contention of Toribio it will defeat the purpose of
the law.

The police power rests upon necessity and the right of self-protection and if ever the invasion of private
property by police regulation can be justified, The Supreme Court think that the reasonable restriction
placed upon the use of carabaos by the provision of the law under discussion must be held to be
authorized as a reasonable and proper exercise of that power.

The Supreme Court cited events that happen in the Philippines like an epidemic that wiped 70-100% of
the population of carabaos.. The Supreme Court also said that these animals are vested with public
interest for they are fundamental use for the production of crops. These reasons satisfy the requesites of
a valid exercise of police power

The Supreme court finally said that article 1147 is not an exercise of the inherent power of eminent
domain. The said law does not constitute the taking of caraboes for public purpose; it just serve as a
mere regulation for the consumption of these private properties for the protection of general welfare and
public interest.

CITY OF MANILA VS. CHINESE COMMUNITY [40 Phil 349; No. 14355; 31 Oct 1919]
Saturday, January 31, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The City of Manila, plaintiff herein, prayed for the expropriation of a portion private cemetery for
the conversion into an extension of Rizal Avenue. Plaintiff claims that it is necessary that such public
improvement be made in the said portion of the private cemetery and that the said lands are within
their jurisdiction.

Defendants herein answered that the said expropriation was not necessarybecause other routes
were available. They further claimed that the expropriation of the cemetery would create
irreparable loss and injury to them and to all those persons owing and interested in the graves
andmonuments that would have to be destroyed.

The lower court ruled that the said public improvement was not necessaryon the particular-strip of land
in question. Plaintiff herein assailed that they have the right to exercise the power of eminent domain
and that the courts have no right to inquire and determine the necessity of the expropriation. Thus, the
same filed an appeal.

Issue: Whether or not the courts may inquire into, and hear proof of the necessity of the expropriation.

Held: The courts have the power of restricting the exercise of eminentdomain to the actual reasonable
necessities of the case and for the purposes designated by the law. The moment the municipal
corporation or entity attempts to exercise the authority conferred, it must comply with the conditions
accompanying the authority. The necessity for conferring the authority upon a municipal corporation to
exercise the right of eminentdomain is admittedly within the power of the legislature. But whether or
not the municipal corporation or entity is exercising the right in a particular case under the conditions
imposed by the general authority, is a question that the courts have the right to inquire to.

REPUBLIC OF THE PHILIPPINES VS. PLDT, digested

26 SCRA 620 (1969) (Constitutional Law – Eminent Domain, Expropriation, Just Compensation)

FACTS: Public petitioner commenced a suit against private respondent praying for the right of the
Bureau of Telecommunications to demand interconnection between the Government Telephone System
and that of PLDT, so that the Government Telephone System could make use of the lines and facilities of
the PLDT. Private respondent contends that it cannot be compelled to enter into a contract where no
agreement is had between them.
ISSUE: Whether or not interconnection between PLDT and the Government Telephone System can be a
valid object for expropriation.

HELD: Yes, in the exercise of the sovereign power of eminent domain, the Republic may require the
telephone company to permit interconnection as the needs of the government service may require,
subject to the payment of just compensation. The use of lines and services to allow inter-service
connection between the both telephone systems, through expropriation can be a subject to an
easement of right of way.

Philippine Long Distance Telephone Co. [PLDT] v. NTC and ETCI [G.R. No.88404. October 18, 1990]

23NOV

FACTS

Private respondent Express Telecommunications Co., Inc. (ETCI) obtained from Congress Republic Act
No. 2090 a franchise to establish radio stations for domestic and transoceanic telecommunications.
Petitioner PLDT invoked the “prior operator” or “protection of investment” doctrine in its opposition to
ETCI’s subsequent application for Certificate of Public Convenience and Necessity (CPCN). The National
Telecommunications Commission (NTC) granted provisional authority to ETCI subject to the condition
that it shall enter into “interconnection agreement” with PLDT. PLDT elevated the case to the Supreme
Court pointing out ETCI’s defective legislative franchise to operate telecommunications system, among
others. ETCI contends that PLDT’s special civil action must deal only on issues whether the NTC acted
without jurisdiction of with grave abuse of discretion in granting ETCI the assailed provisional authority.

ISSUES

Whether or not:

(1) ETCI is entitled of provisional authority;

(2) R.A. No 2090 partakes ETCI’s valid legislative franchise;

(3) PLDT may refuse NTC Order to enter into “interconnection agreement” with ETCI;

RULING

(1) YES. The provisional authority is granted in a very limited sense: for a period of 18 months which
may be revoked or revised by NTC, and applicable only in Metro Manila. Contrary to PLDT’s contention
that it is nothing short of a Certificate of Public Convenience and Necessity (CPCN), basic differences
exist. The issuance of CPCN is still subject to the exclusive prerogative of the NTC after full evaluation of
the application.
(2) YES. The NTC construed the technical term in R.A. No. 2090 “radiotelephony” liberally as to include
the operation of a cellular mobile telephone system. The construction given by an administrative
agency deserves great weight and respect. To otherwise question the validity or applicability of R.A. No.
2090 is a collateral attack on the statute which is not allowed. A franchise is a property right and cannot
be revoked or forfeited without due process of law. The determination of the right to the exercise of a
franchise, or whether the right to enjoy such privilege has been forfeited by non-user, is more properly
the subject of the prerogative writ of quo warranto.

(3) NO. The PLDT cannot justifiably refuse to interconnect. The interconnection which has been required
of PLDT is a form of “intervention” with property rights dictated by the encompassing objective for the
common good. The NTC, as the regulatory agency of the State, merely exercised its delegated authority
to regulate the use of telecommunications networks when it decreed interconnection.

NATIONAL POWER CORPORATION v. NATIONAL POWER CORPORATION, GR No.

211731, 2016-12-07
Facts:
National Power Corporation (NAPOCOR) sought to expropriate a 3,907-square-meter
portion of a property owned by the Spouses Conchita Malapascua-Malijan and Lazaro
Malijan (the Spouses Malijan)
An expropriation case was, therefore, filed with the RTC, Branch 6 of Tanauan City,
Batangas. The Spouses Malijan did not interpose any objection to the expropriation of the
property, hence, the sole issue that needed to be resolved was the determination of the just
compensation.
e RTC created a Board of Commissioners that would recommend the amount of just
compensation. In the Commissioner's Report submitted by the same Board, the
recommended price of the property was P3,500.00 per square meter or a total amount of
Thirteen Million Six Hundred Seventy-Four Thousand Five Hundred Pesos
(P13,674,500.00). Such amount of just compensation was based on the ocular inspection
made on the property; the local market condition; and the standards set in Section 5 of the
Implementing Rules and Regulations (IRR) of Republic Act (R.A.) No. 8974. In view of the
presence and proliferation of the several commercial and industrial establishments near the
subject property, the Commissioners found it more prudent and reasonable to appraise the
property as commercial or industrial.
Based on the provisions of Section 4, Rule 67 of the Rules of Court, the just compensation
of the property should be based on the value of the property at the time the taking of the
same or the filing of the complaint, whichever came first
According to NAPOCOR, the taking of the property occurred in 1972 whereas the institution
of the complaint was made thirty-four (34) years after, hence, the just compensation should
be based on the value of the property in 1972.
The RTC, on February 22, 2008, rendered its Decision denying NAPOCOR's plea that the
just compensation be based on the value of the property in 1972
NAPOCOR elevated the case to the CA insisting that it is not liable for the payment of just
compensation in the amount of P3,500.00 per square meter or a total amount of
P13,676,500.00 pertaining to the affected area of the subject property; instead, it is only
liable for an amount equivalent to the fair market value of the same property at the time it
was taken in 1972. On June 13, 2012, the CA rendered the assailed Decision in favor of
NAPOCOR
Issues:
COURT OF APPEALS GRAVELY ERRED UNDER THE LAW IN HOLDING THAT THE
SUBJECT PROPERTY WAS TAKEN IN 1972
COURT OF APPEALS GRAVELY ERRED UNDER THE LAW WHEN IT HELD IN THE
QUESTIONED DECISION THAT JUST COMPENSATION BE BASED IN 1972 WHEN THE
SUBJECT PROPERTY WAS ALLEGEDLY TAKEN.
Ruling:
The Rules of Court require that only questions of law should be raised in petitions filed
under Rule 45.[3] This court is not a trier of facts. It will not entertain questions of fact as the
factual findings of the appellate courts are "final, binding[,] or conclusive on the parties and
upon this [c]ourt"[4] when supported by substantial evidence.[5] Factual findings of the
appellate courts will not be reviewed nor disturbed on appeal to this court
Seeking recourse from this Court through a petition for review on certiorari under Rule 45
bears significantly on the manner by which this Court shall treat findings of fact and
evidentiary matters. As a general rule, it becomes improper for this court to consider factual
issues: the findings of fact of the trial court, as affirmed on appeal by the Court of Appeals,
are conclusive on this court. "The reason behind the rule is that [this] Court is not a trier of
facts and it is not its duty to review, evaluate, and weigh the probative value of the evidence
adduced before the lower courts."
However, these rules do admit exceptions. Over time, the exceptions to these rules have
expanded.[10] At present, there are 10 recognized exceptions that were first listed in
Medina v. Mayor Asistio, Jr.
(1) When the conclusion is a finding grounded entirely on speculation, surmises or
conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3)
Where there is a grave abuse of discretion; (4) When the judgment is based on a
misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court
of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7) The findings of the Court of
Appeals are contrary to those of the trial court; (8) When the findings of fact are conclusions
without citation of specific evidence on which they are based; (9) When the facts set forth in
the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; and (10) The finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by the evidence on record.
Just compensation is "the fair value of the property as between one who receives, and one
who desires to sell, x x x fixed at the time of the actual taking by the government." This rule
holds true when the property is taken before the filing of an expropriation suit, and even if it
is the property owner who brings the action for compensation... in Republic v. Lara, et al.
"The value of the property should be fixed as of the date when it was taken and not the date
of the filing of the proceedings." For where property is taken ahead of the filing of the
condemnation proceedings, the value thereof may be enhanced by the public purpose for
which it is taken; the entry by the plaintiff upon the property may have depreciated its value
thereby; or, there may have been a natural increase in the value of the property from the
time it is taken to the time the complaint is filed, due to general economic conditions. The
owner of private property should be compensated only for what he actually loses; it is not
intended that his compensation shall extend beyond his loss or injury. And what he loses is
only the actual value of his property at the time it is taken x x x.
It is settled that the taking of private property for public use, to be compensable, need not
be an actual physical taking or appropriation.[22] Indeed, the expropriator's action may be
short of acquisition of title, physical possession, or occupancy but may still amount to a
taking.[23] Compensable taking includes destruction, restriction, diminution, or interruption
of the rights of ownership or of the common and necessary use and enjoyment of the
property in a lawful manner, lessening or destroying its value.[24] It is neither necessary
that the owner be wholly deprived of the use of his property,[25] nor material whether the
property is removed from the possession of the owner, or in any respect changes
hands.[26] Thus, there exists no reversible error on the part of the CA when it ruled that just
compensation must be computed at the time of the taking in 1972.
WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of Court
dated May 11, 2014 of Conchita Malapascua-Malijan and Heirs of Lazaro Malijan in G.R.
No. 211818 is DENIED for lack of merit, while the Petition for Review on Certiorari under
Rule 45 dated April 21, 2014 of the National Power Corporation is GRANTED.
Consequently, the Decision dated June 13, 2012 of the Court of Appeals and its
subsequent Resolution dated March 12, 2014, reversing the Decision dated February 22,
2008 of the Regional Trial Court, Branch 6, Tanauan City, Batangas, are AFFIRMED with
the modification that the award of exemplary damages and attorney's fees is DELETED.

ONORABLE ALVIN P. VERGARA, IN HIS CAPACITY AS CITY MAYOR OF CABANATUAN CITY AND
SANGGUNIANG PANLUNGSOD OF CABANATUAN CITY, Petitioners
vs.
LOURDES MELENCIO S GRECIA, REPRESENTED BY RENATO GRECIA, AND SANDRA MELENCIO IN
REPRESENTATION OF MA. PAZ SAGADO VDA. DE MELENCIO, CONCHITA MELENCIO, CRISTINA
MELENCIO AND LEONARDO MELENCIO, Respondents

DECISION

REYES, J.:

Before this Cpurt is a petition for review on certiorari1 seking to annul and set aside the Decision2 dated
August 8, 2008 and the Resolution3 dated December 5, 2008 of the Court of Appeals(CA) in CA-G.R. SP
No. 97851. The CA affirmed with modification the Order4 dated November 8, 2006 of the Regional Trial
Court (RTC) of Cabanatuan City, Branch 86, and the Order5 dated January 30, 2007 issued by the RTC of
Cabanatuan City, Branch 30, in Civil Case No. 5078, and reduced the amount to be paid by Honorable
Julius Cesar Vergara (Mayor Vergara), in his capacity as Mayor of Cabanatuan City, and the Sangguniang
Panlungsod of Cabanatuan (Sanggunian) (petitioners) from Ten Million Pesos (Pl0,000,000.00) to Two
Million Five Hundred Fifty-Four Thousand Three Hundred Thirty-Five Pesos (₱2,554,335.00) representing
15o/o of the total value of the property of Lourdes Melencio S. Grecia (Lourdes), represented by Renato
Grecia, and Sandra Melencio, in representation of Ma. Paz, Conchita, Cristina and Leonardo, all
surnamed Melencio (respondents).

The Facts

The subject of this petition is a parcel of land covered by Transfer Certificate of Title No. T-101793, with
an area of 7,420 square meters, more or less, situated in Barangay Barrera, Cabanatuan City, and
registered under the name of the respondents.6

The record showed that sometime in 1989, the subject land was taken by the Sanggunian for road-right-
of-way and road widening projects. Despite the taking of the subject land and the completion of the
road widening projects, the Sanggunian failed to tender the just compensation to the respondents.
Upon the request of Lourdes, the Sanggunian created an appraisal committee, composed of City
Assessor of Cabanatuan Lorenza L. Esguerra as Chairman, with City Treasurer Bernardo C. Pineda and
City Engineer Mac Arthur C. Yap as members, to determine the proper amount of just compensation to
be paid by the Sanggunian for the subject land. The Appraisal Committee then issued Resolution No. 20-
S-2001 7 recommending the payment of P2,295.00 per sq mas just compensation.8

Thereafter, the Sanggunian issued Resolution No. 148-20009 authorizing Mayor Vergara to negotiate,
acquire, purchase and accept properties needed by the Sanggunian for its project.

Pursuant to the said resolution, on December 4, 2001, Mayor Vergara executed a Memorandum of
Agreement10(MOA) with Lourdes as Attorney-in-fact of the respondents, whereby
the Sanggunian bound itself to pay the respondents the amount of Pl 7,028,900.00 in 12 years at the
rate of

₱1,419,075.00 every year starting the first quarter of 2002 as payment of the subject land.

More than four years had lapsed after the signing of the MOA but no payment was ever made by the
petitioners to the respondents despite the fact that the subject land was already taken by the
petitioners and was being used by the constituents of the City of Cabanatuan.11

Despite personal and written demands,12 the petitioners still failed to pay the respondents the just and
fair compensation of the subject land.13 In a letter14 dated November 18, 2005, Mayor Vergara said that
the Sangguniandenied the ratification of the MOA per its Resolution No. 129-20015 on the ground of
fiscal restraint or deficit of the Sanggunian. In view of this resolution, Mayor Vergara claimed that the
said MOA could neither be enforced, nor bind the Sanggunian.

Aggrieved, on December 29, 2005, the respondents filed a petition for mandamus16 before the RTC of
Cabanatuan City, which was raffled to Branch 86.
On September 18, 2006, R TC-Branch 86 rendered its Order17 in favor of the respondents, thus:

WHEREFORE, let a writ of mandamus be issued compelling [the petitioners] to pay the [respondents] the
following sums of money:

1. Php17,028,900.00 as just compensation of their.property taken by the Sanggunian plus accrued legal
interest thereon from the filing of this case until fully paid;

2. Php50,000.00 as attorney's fees; and

3. Php50,000.00 as actual expenses and damages.

SO ORDERED. 18

The petitioners immediately filed their appeal19 before the CA, docketed as CA-G.R. SP No. 98397.
However, before the records of appeal were submitted to the CA, the respondents filed a Motion for
Partial Execution20 before the RTC-Branch 86.21

On November 8, 2006, the RTC-Branch 86 issued an Order22 granting the respondents' motion and
thereby ordering the petitioners to pay the sum of ₱10,000,000.00 as partial execution of the decision.
The petitioners then filed a motion for inhibition and a motion for reconsideration.23

On November 17, 2006, RTC-Branch 86 issued an Order granting the motion for inhibition which
subsequently led to the assignment by raffle of the case to RTC-Branch 30.24

On January 30, 2007, RTC-Branch 30 issued an Order25 denying the petitioners' motions.

On February 7, 2007, a writ of execution was issued. Accordingly, a Notice· of Garnishment was issued to
the manager of United Coconut Planters Bank of Cabanatuan City. 26

Aggrieved, the petitioners filed a Petition for Certiorari with urgent Motion for the Issuance of a
Temporary Restraining Order and Writ of Preliminary Injunction27 before the CA.

In a Resolution28 dated February 26, 2007, the CA granted the petitioners’ prayer for an injunctive relief
and enjoined the RTC-Branch 30 Presiding Judge and Sheriff from enforcing the said writ of execution
and orders.

On appeal, the CA, in its Decision29 dated August 8, 2008, affirmed the trial court's order but modified
the same by reducing the amount to be paid by the petitioners from ₱10,000,000.00 to ₱2,554,335.00
representing 15% of the value of the property as provided by law.30 Undeterred, the petitioners filed a
motion for reconsideration31 but it was denied. 32 Hence, this petition.

For their part, the petitioners argue that the subject land is a subdivision road which is beyond the
commerce of man as provided for in Section 50 of Presidential Decree (P.D.) No. 1529.33 Thus, the said
contract entered into by Mayor Vergara with the respondents is null and void, and there is no obligation
on the part of the petitioners to pay the respondents. 34
The Issue

The main issue before this Court is whether there is propriety in the partial execution of the judgment
pending appeal.

Ruling of the Court

The petition is bereft of merit.

To begin with, the Court notes that there has already been a final judgment in CA-G.R. SP No. 98397.
The CA Third. Division issued a Resolution35 dated March 14, 2008 dismissing the petitioners' appeal on
the ground of lack of jurisdiction stating that the issues that were raised are pure questions of law. The
petitioners filed a motion for reconsideration but it was also denied.36 hence, the case was elevated to
this Court which was docketed as G.R. No. 186211. However, in a Resolution dated June 22, 2011, the
Court Second Division likewise denied the petition.

It is uncontroverted that the subject land was taken by the petitioners without paying any compensation
to the respondents that is too long to be ignored. The petitioners, however, argue that they are not
obliged to pay the respondents because the subject land is burdened by encumbrances37 which showed
that it is a subdivision lot which is beyond the commerce of man. Thus, the MOA between the
petitioners and the respondents is null and void. To support their argument, they invoked Section 50 of
P.D. No. 1529.38 Essentially, the sole issue for resolution is whether the petitioners are liable for just
compensation. Hence, the pertinent point of inquiry is whether the subject land of the respondents is
beyond the commerce of man as provided for in Section 50 of P.D. No. 1529.

Meanwhile, a look at the petition in CA-G.R. SP No. 98397, now G.R. No. 186211, would show that the
petitioners interposed the same issues in their appeal: (1) the subject land is not within the commerce
of men, hence, the MOA is void; (2) the petitioners are under estoppel to deny its liability under the
MOA; (3) Mayor Vergara has no authority to sign the MOA prior to its approval by the Sanggunian; and
(4) there is no basis for the lower court to award attorney's fees and damages.39

Since these issues did not merit the attention of the Court in G.R. No. 1 86211, the Court will now put all
these issues to rest.

ONE. The alleged encumbrance in the respondents’ title ad interpretation and application of Section
5040 of P.D. No. 1529 are no longer novel since this Court had already made a definitive ruling on the
mater in the case of Republic of the Philippines v. Ortigas and Company Limited Partnership,41

where the Court ruled that therein petitioners' reliance on Section 50 of P.D. No. 1529 is erroneous
since it contemplates roads and streets in a subdivided property, not public thoroughfares built on a
private property that was taken from an owner for public purpose. A public thoroughfare is not a
subdivision road or street.
Section 50 contemplates roads and streets in a subdivided property, not public thoroughfares built on a
private property that was taken from an owner for public purpose. A public thoroughfare is not a
subdivision road or street.

xxxx

Delineated roads and streets, whether part of a subdivision or segregated for public use, remain private
and will remain as such until conveyed to the ·government by donation or through expropriation
proceedings. An owner may not be forced to donate his or her property even if it has been delineated as
road lots because that would partake of an illegal taking. He or she may even choose to retain said
properties. If he or she chooses to retain them, however, he or she also retains the burden of
maintaining them and paying for real estate taxes.

xxxx

x x x [W]hen the road or street was delineated upon government request and taken for public use, as in
this case, the government has no choice but to compensate the owner for his or her sacrifice, lest it
violates the constitutional provision against taking without just . compensation, thus:

Section 9. Private property shall not be taken for public use without just compensation.

As with all laws, Section 50 of the Property Registration Decree cannot be interpreted to mean a license
on the part of the government to disregard constitutionally guaranteed rights. 42 (Citations omitted)

Apparently, the subject land is within the commerce of man and is therefore a proper subject of an
expropriation proceeding. Pursuant to this, the MOA between the petitioners and the respondents is
valid and binding. Thus, there is no need to discuss the matter of the petitioners' estoppel or the
authority of Mayor Vergara to sign the MOA.

TWO. The petitioners are liable to pay the full market value of the subject land.

Without a doubt, the respondents are entitled to the payment of just compensation. The right to
recover just compensation is enshrined in the Bill of Rights; Section 9, Article III of the 1987 Constitution
states that no private property shall be taken for public use without just compensation.

There is no question raised concerning the right of the petitioners here to acquire the subject land under
the power of eminent domain. But the exercise of such right is not unlimited, for two mandatory
requirements should underlie the Government's exercise of the power of eminent domain namely: (1)
that it is for a particular public purpose; and (2) that just compensation be paid to the property owner.
These requirements partake the nature of implied conditions that should be complied with to enable
the condemnor to keep the property expropriated. 43

Undisputedly, in this case, the purpose of the condemnation is public but there was no payment of just
compensation to the respondents. The petitioners should have first instituted eminent domain
proceedings and deposit with the authorized government depositary an amount equivalent to the
assessed value of the subject land before it occupied the same. Due to the petitioners' omission, the
respondents were constrained to file inverse condemnation proceedings to demand the payment of just
compensation before the trial court. From 1989 until the present, the respondents were deprived of just
compensation, while the petitioners continuously burdened their property.

The determination of just compensation in eminent domain cases is a judicial function and any valuation
for just compensation laid down in the statutes may serve only as a guiding principle or one of the
factors in determining just compensation but it may not substitute the court's own judgment as to what
amount should be awarded and how to arrive at such amount.44

An evaluation of the circumstances of this case and the parties' arguments showed that the petitioners
acted oppressively in their position to deny the respondents of the just compensation that the
immediate taking of their property entailed. The Court cannot allow the petitioners to profit from its
failure to comply with the mandate of the law. To adequately compensate the respondents from the
decades of burden on their land, the petitioners should be made to pay the full value of Pl 7,028,900.00
representing the just compensation of the subject land at the time of the filing of the instant complaint
when the respondents made a judicial demand for just compensation.

THREE. The undue delay of the petitioners to pay the just compensation brought about the basis for the
grant of interest.1âwphi1

Apart from the requirement that compensation for expropriated land must be fair and reasonable,
compensation, to be "just", must also be made without delay. Without prompt payment, compensation
cannot be considered "just" if the property is immediately taken as the property owner suffers the
immediate deprivation of both his land and its fruits or income. 45

Obviously, the delay in payment of just compensation occurred and cannot at all be disputed. The
undisputed fact is that the respondents were deprived of their lands since 1989 and have not received a
single centavo to date. The petitioners should not be allowed to exculpate itself from this delay and
should suffer all the consequences the delay has caused.

The Court has already dealt with cases involving similar background and issues, that is, the government
took control and possession of the subject properties for public use without initiating expropriation
proceedings and without payment of just compensation, and the landowners failed for a long period of
time to question such government act and later instituted actions to recover just compensation with
damages.

Here, the records showed that the respondents fully cooperated with the petitioners' road widening
program, and allowed their landholdings to be taken by the petitioners without any questions. The
present case therefore is not one where substantial conflict arose on the issue of whether expropriation
is proper; the respondents voluntarily submitted to expropriation and surrendered their landholdings,
and never contested the valuation that was made. Apparently, had the petitioners paid the just
compensation on the subject land, there would have been no need for this case. But, as borne by the
records, the petitioners refused to pay, telling instead that the subject land is beyond the commerce of
man. Hence, the respondents have no choice but to file actions to claim what is justly due to them.
Consequently, interest must be granted to the respondents.

The rationale for imposing the interest is to compensate the petitioners for the income they would have
made had thel been properly compensated for their properties at the time of the taking. 46 There is a
need for prompt payment and the necessity of the payment of interest to compensate for any delay in
the payment of compensation for property already taken. 47 Settled is the rule that the award of interest
is imposed in the nature of damages for delay in payment which in effect makes the obligation on the
part of the government one of forbearance. This is to ensure prompt payment of the value of the land
and limit the opportunity loss of the owner that can drag from days to decades. 48

Based on a judicious review of the records and application of jurisprudential rulings, legal interest shall
be pegged at the rate of twelve percent (12%) per annum, reckoned from the time of the filing of the
complaint for expropriation, which in this case is on December 29, 2005, the date when the respondents
filed a petition for mandamus to compel the petitioners to comply with the MOA. Thereafter, or
beginning July 1, 2013, until fully paid, just compensation shall earn interest at the new legal rate of six
percent (6%) per annum, conformably with the modification on the rules respecting interest rates
introduced by the Bangko Sentral ng Pilipinas Monetary Board Circular No. 799, Series of 2013.49 To
clarify, this incremental interest is not granted on the computed just compensation; rather, it is a
penalty imposed for damages incurred by the landowner due to the delay in its payment.50

FOURTH. The award of exemplary damages and attorney's fees is warranted.

The taking of the respondents' subject land without the benefit of expropriation proceedings and
without payment of just compensation, clearly resulted in an "expropriate now, pay later" situation,
which the Court abhors. It has been more than two decades since the petitioners took the subject land
without a timely expropriation proceeding and without the petitioners exerting efforts to negotiate with
the respondents.

This irregularity will not proceed without any consequence. The Court had repeatedly ruled that the
failure of the government to initiate an expropriation proceeding to the prejudice of the landowner may
be corrected with the awarding of exemplary damages, attorney's fees and costs of litigation.51

Evidently, the petitioners' oppressive taking of the subject land for a very long period of time surely
resulted in pecuniary loss to the respondents. The petitioners cannot now be heard to claim that they
were simply protecting their interests when they stubbornly defended their erroneous arguments
before the courts. The more truthful statement is that they adopted a grossly unreasonable position and
the unwanted developments that followed, particularly the attendant delay, should be directly
chargeable to them.

Indeed, the respondents were deprived of their subject land for road widening programs, were
uncompensated, and were left without any expropriation proceeding undertaken. Hence, in order to
serve as a deterrent to the State for failing to institute such proceedings within the prescribed period
under the law, the award of exemplary damages and attorney's fees is in order.
In sum, the respondents have waited too long before the petitioners fully pay the amount of the just
compensation due them. Since the trial court had already made the proper determination of the
amount of just compensation in accordance with law and to forestall any further delay in the resolution
of this case, it is but proper to order the petitioners to pay in full the amount of ₱17,028,900.00
representing the just compensation of the subject land. Furthermore, the respondents are entitled to·
an additional grant of interest, exemplary damages and attorney's fees. In accordance with existing
jurisprudence, the award of exemplary damages in the amount of ₱200,000.00 is proper, as well as
attorney's fees equivalent to one percent (1%) of the total amount due.

WHEREFORE, the petition is DENIED. The Decision dated , August 8, 2008 and the Resolution dated
December 5, 2008 of the Court of Appeals in CA-G.R. SP No. 97851 are AFFIRMED with MODIFICATION.
Honorable Alvin P. Vergara, in his capacity as Mayor of Cabanatuan City, and the Sangguniang
Panlungsod of Cabanatuan are hereby ordered to PAY Lourdes Melencio S. Grecia, represented by
Renato Grecia, and Sandra Melencio, in representation of Ma. Paz Salgado V da. De Melencio, Conchita
Melencio, Cristina Melencio and Leonardo Melencio the amount of Seventeen Million Twenty-Eight
Thousand Nine Hundred Pesos (₱17,028,900.00) representing the just compensation of the subject land,
exemplary damages in the amount of Two Hundred Thousand Pesos (₱200,000.00), and attorney's fees
equivalent to one percent (1%) of the amount due. Lastly, legal interest shall be pegged at the rate of
twelve percent (2%) per annum, from the time of judicial demand on December 29, 2005. Thereafter, or
beginning July 1, 2013, until fully paid, just compensation shall earn interest at the new legal rate of six
percent (6%) per annum.

SO ORDERED

Constitutional Law: DE KNECHT VS. COURT OF APPEALS

DE KNECHT VS. COURT OF APPEALS

Facts:
The instant case is an unending sequel to several suits commenced almost twenty years ago
involving a parcel of land located at the corner of the south end of EDSA and F.B. Harrison in Pasay
City. The land was owned by petitioners Cristina de Knecht and her son, Rene Knecht.
On the land, the Knechts constructed eight houses, leased out the seven and occupied one of them
as their residence. In 1979, the government filed for the expropriation of Knechts’ property.
The government wanted to use the land for the completion of the Manila Flood Control and
Drainage Project and the extension of the EDSA towards Roxas Boulevard. In 1982, the City
Treasurer of Pasay discovered that the Knechts failed to pay real estate taxes on the property from
1980 to 1982. As a consequence of this deficiency, the City Treasurer sold the property at public
auction for the same amount of their deficiency taxes. The highest bidders were respondent
Spouses Anastacio and Felisa Babiera (the Babieras) and respondent Spouses Alejandro and Flor
Sangalang (the Sangalangs). Subsequently, Sangalang and Babiera sold the land to respondent
Salem Investment Corporation. On February 17, 1983, the Batasang Pambansa passed B.P. Blg. 340
authorizing the national government to expropriate certain properties in Pasay City for the EDSA
Extension. The property of the Knechts was part of those expropriated under B.P. Blg. 340. The
government gave out just compensation for the lands expropriated under B.P. Blg. 340. Salem was
included and received partial payment. Seven of the eight houses of the Knechts were demolished
and the government took possession of the portion of land on which the houses stood. Since the
Knechts refused to vacate their one remaining house, Salem filed a case against them for unlawful
detainer. As defense, the Knechts claimed ownership of the land and building. The Municipal Trial
Court however ordered the Knechts' ejectment thus their residence was demolished. The Knechts
continuously claimed ownership of the property and allege that they must be given just
compensation.

Issue: Whether or not Knechts are the lawful owners of the land at subject.

Held:
The Supreme Court held that the Knechts were not the owners anymore of the said land. The
Knechts' right to the land had been foreclosed after they failed to redeem it one year after the sale
at public auction. Since the petitions questioning the order of dismissal were likewise dismissed by
the Court of Appeals and this Court, the order of dismissal became final and res judicata on the
issue of ownership of the land. Petitioners contended that they did not receive notice of their tax
delinquency. Neither did they receive notice of the auction sale. However, this question has been
previously raised in the cases which have been already set aside. The court is not a trier of facts. Res
judicata has already set it. The Knechts therefore are not the lawful owners of the land and are not
any longer accountable for just compensation given by the government.
Note: Res judicata is a ground for dismissal of an action. It is a rule that precludes parties from
relitigating Issue actually litigated and determined by a prior and final judgment. It pervades every
well-regulated system of jurisprudence, and is based upon two grounds embodied in various
maxims of the common law one, public policy and necessity, that there should be a limit to
litigation; and another, the individual should not be vexed twice for the same cause. When a right of
fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity
for such trial has been given, the judgment of the court, so long as it remains unreversed, should be
conclusive upon the parties and those in privity with them in law or estate. To follow a contrary
doctrine would subject the public peace and quiet to the will and neglect of individuals and prefer
the gratification of the litigious disposition of the parties to the preservation of the public
tranquility.Res judicata applies when: (1) the former judgment or order is final; (2) the judgment
or order is one on the merits; (3) it was rendered by a court having jurisdiction over the subject
matter and the parties; (4) there is between the first and second actions, identity of parties, of
subject matter and of cause of action.

125 Phil. 590

MAKALINTAL, J.:

Petition for certiorari with preliminary injunction by Meralco Workers Union, hereinafter called the
Union, against the Honorable Nicasio Yatco, Presiding Judge of the Court of First Instance of Quezon
City, and the Manila Electric Company, hereinafter called the Company.

On May 15, 1962, the Company filed a complaint against the Union in the Court of First Instance of
Quezon City with a prayer for the issuance of a writ of preliminary injunction ordering the Union "to
restrain (sic) and desist from obstructing, stopping, blocking, coercing, intimidating or in any way or
manner preventing plaintiff Hermenegildo B. Reyes, the executives and officials and the non-striking
employees of the Company from going in and out of its main office, of the Rockwell and Blaisdell power
plants and all other offices, stations and plants of the Company."

Defendant Union opposed the prayer for injunction on the ground of lack of jurisdiction, the matter
being one which involved a labor dispute. After the incident was heard on May 17, 1962, respondent
Court granted the writ prayed for in its order of May 18, 1962, on the basis of the following facts which
it considered established at that hearing:

"During the summary hearing, Mr. H. B. Reyes was presented by the plaintiffs as its lone witness. He
testified that he is the Vice President of the Manila Electric Company, as well as its legal counsel. He
said that he is the one directly responsible in resolving all labor questions and relations with employees
and all negotiations in connection with any demands or complaints of the union and the employees
collective bargaining agreement with the Meralco Workers Union effective as of January 1, 1957 for five
(5) years or which expired on December 31, 1961. However, before the expiration of the five (5) year
period, or more particularly on October, 1961, the union transmitted its demand for a renegotiation
with plaintiff company, at the same time sending their demands. In accordance with his duties, Mr. H.B.
Reyes, negotiated with the members of the Union with the aim in view, of coming to a settlement as to
the demands conveyed by the union. The first preliminary negotiation was held on December 13, 1961,
Subsequently, they held various conferences, more particularly, on February 19 or 23, March 1 and
March 7, after which a written reply to the demands was made by him (Exh. A) and the reply thereto of
the union marked as Exh. A-1, was presented. On April 2, 1962, the company received a notice of strike
from the defendant union dated March 26, 1962 (Exhs. B and B-1). At 7:15 in the evening of May 3,
1962, a strike was declared by the defendant union. During the strike, attempts had been made to settle
the case by no less than the Secretary of Labor Norberto Romualdez, Undersecretary of Labor Bernar-
dino Abes and Director Guevara of the Bureau of Labor Relations, so much so, that lengthy conferences
had been conducted. Finally, however, the government officials interceding to settle the dispute
amicably gave up all hopes as according to them, the leaders of the defendant union are making an
unreasonable demand.

It also appears from the testimony of Mr. H. B. Reyes that since the strike was officially declared at 7:15
in the evening of May 3, 1962, the members of the striking union have picketed the office of the
Meralco at San Marcelino Street, and all its offices and sub stations. The picket line refused to allow
non-striking employees of the plaintiff company to perform their usual chores, so much so, that they
coerced and intimidated those who wanted to break through the picket lines. Citing specific examples,
Mr. H. B. Reyes, testified that in the Rockwell station of the plaintiff company situated at Makati, Rizal,
there are about 6 to 7 employees virtually detained inside the station because the members of the
defendant union formed a picket line therein, and said employees cannot come out of the compound
because they cannot come in anymore, in which event, the service of the plaintiff company to the Cities
of Manila, Quezon, Pasay, Caloocan, San Pablo, Lucena and Provinces of Cavite, Laguna, Bulacan, Rizal
and Quezon will be cut off resulting into a complete and total blackout in said cities and provinces. As a
matter of fact, Mr. Reyes, testified that food to the people inside the Rockwell station cannot be taken
in by land transportation as the members of the defendant union coerced and blocked the passageway
of the trucks intending to enter the Rockwell Station. Hence, the plaintiff company thought of supplying
food to them by means of airplane. However, this became dangerous because the members of the
union devised a way of harassing the airdropping of food by shooting rockets into the air which made it
hazardous not only to the airplane but also to the inhabitants within the vicinity of said station by virtue
of the fact that if the airplane is hit by the rocket, it may plummet down to the station and it will cause a
conflagration. Likewise, the rocket might fall down and hit a sensitive part of the station which might
cause a conflagration.

In Blaisdell Station at Isla de Provisor in Manila, the same thing is happening. Mr. Reyes averred that
there is a lone road leading to the station which is blocked by the picket line of the defendant union. The
members of the picket line block all vehicles that intend to go to the compound, hence the plaintiff
company devised a method of sending food to the people inside the Blaisdell Station by means of
tugboats. There were instances, however, where this method proved futile as the defendant union also
used two tugboats in order to intercept the tugboat of plaintiff company thereby frustrating the attempt
of the plaintiff company to bring in food.

In Manila, with the exception of Mr. H. B. Reyes and the personnel manager, the picket line prevents the
non-striking employees and customers of Meralco from entering inside the office compound at the pain
of threats and intimidation. Thus, since the declaration of the strike, the office compound is completely
paralyzed.

In Quezon City, an incident of violence was reported. In the evening of May 4, a report was intercepted
by the company that a certain area in La Loma, Quezon City, was without lights. The next day May 5,
Mr. Evans went on an inspection tour of the place and seeing nobody there, he sent Loreto Baetiong, a
non-striking employee, to go and fix the transformer. While Baetiong was already fixing the
transformer, and climbing the post he was asked to come down by a certain Villarba a member of the
striking union. After coming down the post, Villarba, with a shotgun in his hand, chased Baetiong and
when the latter was cornered, Villarba hit him with the butt of the shotgun resulting in the filing of a
complaint with the Fiscal's Office.

A more serious incident was related by Mr. H. B. Reyes in Court. He testified that on May 12, at about
1:30 in the morning, the transmission line connecting Manila with the Botocan hydro-electric plant
automatically ran out of circuit. So, the whole area was scouted and the scouting crew discovered that
the steel tower was sawed off. The photographs showing the condition of the tower and the base
thereof as it is sawed off is portrayed in the photographs marked as Exhibits D-1, D-2, and D-4, and in
the Manila Times issue of May 15, 1962, marked as Exhibit D.
The foregoing substantially shows the acts of violence relied upon by the plaintiffs in seeking from this
Court a writ of preliminary injunction."

The Union moved to reconsider the order, but pending resolution of its motion filed the instant petition
for certiorari in this Court, with a prayer for preliminary injunction. Subsequently the Union withdrew
its motion for reconsideration. This Court gave due course to the petition but did not issue the
preliminary injunction prayed for by petitioner.

On May 30, 1962, the same day this Court gave due course to the petition, a "Return to Work
Agreement" was entered into by the Union and the company in the Bureau of Labor Relations. By virtue
of that agreement the labor dispute between them was settled, the strike and picketing ended and the
members of the Union returned to work under a no-strike and no-lockout stipulation.

Respondent company thereafter filed a motion to dismiss the instant petition without regard to the
merits because the issues had already become moot. We believe that the motion is well taken. The acts
enjoined by the writ of preliminary injunction issued by respondent Judge no longer exist. It is a settled
rule that a court will not determine moot questions or abstract propositions, nor express an opinion in a
case in which no practical relief can be granted.

Petitioner Union objects to the dismissal on the ground that it has a claim for damages allegedly
suffered by it by reason of the improper issuance of the injunction, and points out that a ruling thereon
is necessary for purposes of such claim.

We believe that petitioner's objection is without merit. The preliminary injunction issued by respondent
Court was not against the strike declared by the Union or the picketing it was conducting, but against
acts of violence and intimidation which on their face were unjustified, not to say unlawful. Irrespective
of the question of jurisdiction, an order of the court prohibiting the commission of such acts cannot con-
ceivably be a ground on which to base a claim for damages. On the other hand, the parties having come
to an amicable settlement of their main dispute, apparently without any reservation as to any
contemplated claim for damages, a definite termination of this litigation would be more conducive to
the preservation of industrial peace and, from the long-range viewpoint, more beneficial to the
employees concerned.

Wherefore, the petition is dismissed, without pronouncement as to costs.

United States v. Sanchez

No. 81

Argued October 20, 1950

Decided November 13, 1950

340 U.S. 42

Syllabus

1. The tax of $100 per ounce imposed by § 2590 of the Internal Revenue Code on transferors of
marihuana who make transfers to unregistered transferees without the order form required by § 2591
and without payment by the transferees of the tax imposed by § 2590 is a valid exercise of the taxing
power of Congress, notwithstanding its collateral regulatory purpose and effect. Pp. 340 U. S. 44-45.

(a) A tax is not invalid merely because it regulates, discourages, or deters the activities taxed, nor
because the revenue obtained is negligible, or the revenue purpose is secondary. P. 340 U. S. 44.

(b) A tax is not invalid merely because it affects activities which Congress might not otherwise regulate.
P.340 U. S. 44.

2. The tax levied by § 2590(a)(2) is not conditioned on the commission of a crime, and it may properly be
treated as a civil, rather than a criminal, sanction. Pp. 340 U. S. 45-46.

(a) That Congress provided civil procedure for collection indicates its intention that the levy be treated
as civil in character. P. 340 U. S. 45.

(b) The civil character of the tax of $100 per ounce imposed by § 2590(a)(2) is not altered by its severity
in relation to the tax of $1 per ounce levied by § 2590(a)(1). Pp. 340 U. S. 45-46.

(c) The imposition by § 2590(b) of liability on transferors is reasonably adapted to secure payment of the
tax by transferees or stop transfers to unregistered persons, as well as to provide an additional source
from which the expense of unearthing clandestine transfers can be recovered. Pp. 340 U. S. 45-46.

Reversed.

The United States brought suit in the District Court to recover taxes alleged to be due under the
Marihuana Tax Act, 50 Stat. 551, now 26 U.S.C. § 2590 et seq. Defendants' motion to dismiss, attacking
the constitutionality of the tax, was granted by the District Court. On direct appeal to this
Court, reversed, p. 340 U. S. 46.

Page 340 U. S. 43

CIR V SC JOHNSON INC. June 25, 1999

Monday, January 26, 2009 Posted by Coffeeholic Writes

Labels: Case Digests, 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 tax refunds are considered as tax exemptions.

Held: It bears stress that tax refunds are in the nature of tax exemptions. As such they are registered 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 Treaty is paid under similar circumstances
as the tax on royalties under the RP-West Germany Tax Treaty.
AIR TRANSPORTATION OFFICE, Petitioner, vs. SPOUSES DAVID* ELISEA RAMOS, Respondents.

G.R. No. 159402 February 23, 2011

Facts:

Spouses David and Elisea Ramos (respondents) discovered that a portion of their land registered under
Transfer Certificate of Title No. T-58894 of the Baguio City land records with an area of 985 square
meters, was used for Loakan Airport being operated by petitioner Air Transportation Office (ATO). On
August 11, 1995, the respondents agreed after negotiations to convey the affected portion by deed of
sale to the ATO in consideration of the amount of P778,150.00. However, the ATO failed to pay despite
repeated verbal and written demands.

Thus, on April 29, 1998, the respondents filed an action for collection against the ATO. In their answer,
the ATO and its co-defendants invoked as defense the issuance of President Marcos that had reserved
certain parcels of land that included the respondents’ affected portion for use of the Loakan Airport,
that the RTC had no jurisdiction to entertain the action without the State’s consent considering that the
deed of sale had been entered into in the performance of governmental functions.

On November 10, 1998, the RTC denied the ATO’s motion for a preliminary hearing of the affirmative
defense. After the RTC likewise denied the ATO’s motion for reconsideration on December 10, 1998, the
ATO commenced a special civil action for certiorari in the CA to assail the RTC’s orders. The CA dismissed
the petition for certiorari, however, upon its finding that the assailed orders were not tainted with grave
abuse of discretion.

Subsequently, February 21, 2001, the RTC rendered its decision in favor of the spouses Ramos.

Hence, the appeal by petition for review on certiorari.

Issue:

The only issue presented for resolution is whether the ATO could be sued without the State’s consent.

Ruling:

The petition for review has no merit.

The immunity of the State from suit, known also as the doctrine of sovereign immunity or non-suability
of the State, is expressly provided in Article XVI of the 1987 Constitution, viz:

Section 3. The State may not be sued without its consent.

The immunity from suit is based on the political truism that the State, as a sovereign, can do no wrong.
Moreover, a sovereign is exempt from suit, not because of any formal conception or obsolete theory,
but on the logical and practical ground that there can be no legal right as against the authority that
makes the law on which the right depends.
Practical considerations dictate the establishment of an immunity from suit in favor of the State.
Otherwise, and the State is suable at the instance of every other individual, government service may be
severely obstructed and public safety endangered because of the number of suits that the State has to
defend against.

According to Father Bernas, a recognized commentator on Constitutional Law, to wit: [A] continued
adherence to the doctrine of non-suability is not to be deplored for as against the inconvenience that
may be caused private parties, the loss of governmental efficiency and the obstacle to the performance
of its multifarious functions are far greater if such a fundamental principle were abandoned and the
availability of judicial remedy were not thus restricted. With the well-known propensity on the part of
our people to go to court, at the least provocation, the loss of time and energy required to defend
against law suits, in the absence of such a basic principle that constitutes such an effective obstacle,
could very well be imagined.

An unincorporated government agency without any separate juridical personality of its own enjoys
immunity from suit because it is invested with an inherent power of sovereignty. Accordingly, a claim for
damages against the agency cannot prosper; otherwise, the doctrine of sovereign immunity is violated.

The need to distinguish between an unincorporated government agency performing governmental

function and one performing proprietary functions has arisen. The immunity has been upheld in favor of
the former because its function is governmental or incidental to such function; It has not been upheld in
favor of the latter whose function was not in pursuit of a necessary function of government but was
essentially a business.

Contrary to appellants’ conclusions, it was not merely the collection of landing and parking fees which
was declared as proprietary in nature by the High Court in Teodoro, but management and maintenance
of airport operations as a whole, as well. Thus, in the much later case of Civil Aeronautics Administration
vs. Court of Appeals (167 SCRA 28 [1988]), the Supreme Court, reiterating the pronouncements laid
down in Teodoro, declared that the CAA (predecessor of ATO) is an agency not immune from suit, it
being engaged in functions pertaining to a private entity. It went on to explain in this wise:

The Civil Aeronautics Administration comes under the category of a private entity. Although not a body
corporate it was created, like the National Airports Corporation, not to maintain a necessary function of
government, but to run what is essentially a business, even if revenues be not its prime objective but
rather the promotion of travel and the convenience of the travelling public. It is engaged in an
enterprise which, far from being the exclusive prerogative of state, may, more than the construction of
public roads, be undertaken by private concerns. [National Airports Corp. v. Teodoro, supra, p. 207.]

in Republic Act 776, Sec. 32(24) and (25), it can be seen that the CAA is tasked with private or non-
governmental functions which operate to remove it from the purview of the rule on State immunity
from suit. For the correct rule as set forth in the Teodoro case states:

Suits against State agencies with relation to matters in which they have assumed to act in private or
non-governmental capacity, and various suits against certain corporations created by the state for public
purposes, but to engage in matters partaking more of the nature of ordinary business rather than
functions of a governmental or political character, are not regarded as suits against the state. The latter
is true, although the state may own stock or property of such a corporation for by engaging in business
operations through a corporation, the state divests itself so far of its sovereign character, and by
implication consents to suits against the corporation. (59 C.J., 313) [National Airports Corporation v.
Teodoro, supra, pp. 206-207]

Accordingly, as the CAA was created to undertake the management of airport operations which
primarily involve proprietary functions, it cannot avail of the immunity from suit accorded to
government agencies performing strictly governmental functions.

Lastly, the issue of whether or not the ATO could be sued without the State’s consent has been
rendered moot by the passage of Republic Act No. 9497, otherwise known as the Civil Aviation Authority
Act of 2008.

With the CAAP having legally succeeded the ATO pursuant to R.A. No. 9497, the obligations that the ATO
had incurred by virtue of the deed of sale with the Ramos spouses might now be enforced against the
CAAP.