Dela Cruz v.
Paras 1983 Commission on Audit disapproved said resolution and the disbursement of funds for
FACTS:
Vicente De La Cruz et al were club & cabaret operators. They assail the
constitutionality of Ord. No. 84, Ser. of 1975 or the Prohibition and Closure Ordinance
of Bocaue, Bulacan. De la Cruz averred that the said Ordinance violates their right to
engage in a lawful business for the said ordinance would close out their business.
That the hospitality girls they employed are healthy and are not allowed to go out with
customers. Judge Paras however lifted the TRO he earlier issued against Ord. 84
after due hearing declaring that Ord 84. is constitutional for it is pursuant to RA 938
which reads “AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS
THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND
OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR
RESPECTIVE TERRITORIAL JURISDICTIONS”. Paras ruled that the prohibition is a
valid exercise of police power to promote general welfare. De la Cruz then appealed
citing that they were deprived of due process.
ISSUE:
Whether or not a municipal corporation, Bocaue, Bulacan can, prohibit the exercise of
a lawful trade, the operation of night clubs, and the pursuit of a lawful occupation,
such clubs employing hostesses pursuant to Ord 84 which is further in pursuant to RA
938.
HELD:
The SC ruled against Paras. If night clubs were merely then regulated and not
prohibited, certainly the assailed ordinance would pass the test of validity. SC had
stressed reasonableness, consonant with the general powers and purposes of
municipal corporations, as well as consistency with the laws or policy of the State. It
cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could
qualify under the term reasonable. The objective of fostering public morals, a worthy
and desirable end can be attained by a measure that does not encompass too wide a
field. Certainly the ordinance on its face is characterized by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions rather than
by an absolute prohibition. Pursuant to the title of the Ordinance, Bocaue should and
can only regulate not prohibit the business of cabarets.
Binay v. Domingo 1991
Facts: Petitioner Municipality of Makati, through its Council, approved Resolution No.
60 which extends P500 burial assistance to bereaved families whose gross family
income does not exceed P2,000.00 a month. The funds are to be taken out of the
unappropriated available funds in the municipal treasury. The Metro Manila
Commission approved the resolution. Thereafter, the municipal secretary certified a
disbursement of P400,000.00 for the implementation of the program. However, the
the implementation thereof for the following reasons: (1) the resolution has no
connection to alleged public safety, general welfare, safety, etc. of the inhabitants of
Makati; (2) government funds must be disbursed for public purposes only; and, (3) it
violates the equal protection clause since it will only benefit a few individuals.
Issues:
1. Whether Resolution No. 60 is a valid exercise of the police power under the
general welfare clause
2. Whether the questioned resolution is for a public purpose
3. Whether the resolution violates the equal protection clause
Held:
1. The police power is a governmental function, an inherent attribute of sovereignty,
which was born with civilized government. It is founded largely on the maxims, "Sic
utere tuo et ahenum non laedas and "Salus populi est suprema lex. Its fundamental
purpose is securing the general welfare, comfort and convenience of the people.
Police power is inherent in the state but not in municipal corporations. Before a
municipal corporation may exercise such power, there must be a valid delegation of
such power by the legislature which is the repository of the inherent powers of the
State.
Municipal governments exercise this power under the general welfare clause.
Pursuant thereto they are clothed with authority to "enact such ordinances and issue
such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for the
health, safety, comfort and convenience, maintain peace and order, improve public
morals, promote the prosperity and general welfare of the municipality and the
inhabitants thereof, and insure the protection of property therein.
2. Police power is not capable of an exact definition but has been, purposely, veiled in
general terms to underscore its all comprehensiveness. Its scope, over-expanding to
meet the exigencies of the times, even to anticipate the future where it could be done,
provides enough room for an efficient and flexible response to conditions and
circumstances thus assuring the greatest benefits.
The police power of a municipal corporation is broad, and has been said to be
commensurate with, but not to exceed, the duty to provide for the real needs of the
people in their health, safety, comfort, and convenience as consistently as may be
with private rights. It extends to all the great public needs, and, in a broad sense
includes all legislation and almost every function of the municipal government. It
covers a wide scope of subjects, and, while it is especially occupied with whatever
affects the peace, security, health, morals, and general welfare of the community, it is
not limited thereto, but is broadened to deal with conditions which exists so as to bring
out of them the greatest welfare of the people by promoting public convenience or
general prosperity, and to everything worthwhile for the preservation of comfort of the
inhabitants of the corporation. Thus, it is deemed inadvisable to attempt to frame any
definition which shall absolutely indicate the limits of police power.
Public purpose is not unconstitutional merely because it incidentally benefits a limited
number of persons. As correctly pointed out by the Office of the Solicitor General, "the
drift is towards social welfare legislation geared towards state policies to provide
adequate social services, the promotion of the general welfare, social justice as well
as human dignity and respect for human rights." The care for the poor is generally
recognized as a public duty. The support for the poor has long been an accepted
exercise of police power in the promotion of the common good.
3. There is no violation of the equal protection clause. Paupers may be reasonably
classified. Different groups may receive varying treatment. Precious to the hearts of
our legislators, down to our local councilors, is the welfare of the paupers. Thus,
statutes have been passed giving rights and benefits to the disabled, emancipating
the tenant-farmer from the bondage of the soil, housing the urban poor, etc.
Resolution No. 60, re-enacted under Resolution No. 243, of the Municipality of Makati
is a paragon of the continuing program of our government towards social justice. The
Burial Assistance Program is a relief of pauperism, though not complete. The loss of a
member of a family is a painful experience, and it is more painful for the poor to be
financially burdened by such death. Resolution No. 60 vivifies the very words of the
late President Ramon Magsaysay 'those who have less in life, should have more in
law." This decision, however must not be taken as a precedent, or as an official go-
signal for municipal governments to embark on a philanthropic orgy of inordinate dole-
outs for motives political or otherwise.
Patalinhug v. CA 1994
Facts:
On November 17, 1982, the Sangguniang Panlungsod of Davao City enacted
Ordinance No. 363, series of 1982 otherwise known as the "Expanded Zoning
Ordinance of Davao City," declaring AC-2 District to be dominantly a commercial area
compatible for industrial use. Said Ordinance likewise required that funeral or
memorial homes must have adequate parking space and that they shall be
established not less than 50 meters from any residential structures, churches and
other institutional buildings. Thereafter, upon prior approval and certification of zoning
compliance by Zoning Administrator issued on February 10, 1987 Building Permit No.
870254, petitioner constructed a funeral parlor named Metropolitan Funeral Parlor at
Cabaguio Avenue, Agdao, Davao City, which was followed by complaints from
residents of the area. The complainants attacked the validity of the zoning ordinance
that was deemed the funeral parlor’s go signal to establish its business in the
residential area occupied by the complainants;
ISSUE: WON the City of Davao can declare a residential area as a commercial zone
HELD: YES The declaration of the said area as a commercial zone thru a municipal
ordinance is an exercise of police power to promote the good order and general
welfare of the people in the locality. Corollary thereto, the state, in order to promote
the general welfare, may interfere with personal liberty, with property, and with
business and occupations. Thus, persons may be subjected to certain kinds of
restraints and burdens in order to secure the general welfare of the state and to this
fundamental aim of government, the rights of the individual may be subordinated. The
ordinance which regulates the location of funeral homes has been adopted as part of
comprehensive zoning plans for the orderly development of the area covered
thereunder
Tano v Socrates August 21, 1997
FACTS:
The Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance N o.
15-
92 which took effect on January 1, 1993 entitled: "AN ORDINANCE BANNING
THE SHIPMENT OF ALL
LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM JAN
UARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS,
PENALTIES AND FOR OTHER PURPOSES THEREOF.
ISSUE:
Is the ordinance valid and constitutional?
APPLICABLE LAWS:
• Section 2 of Article X I I reads: The State shall protect the nation'
s marine wealth in its archipelagic waters, territorial sea, and exclusive
economic z one, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law , allow small-
scale utilization of natural resources by Filipino citizens, as w ell as
cooperative fish farming, with priority to subsistence fishermen and fishworkers
in rivers, lakes, bays, and lagoons.
• Sections 2 and 7 of Article XIII provide: Sec. 2. The promotion of social
justice shall include the commitment to create economic opportunities based on
freedom of initiative and self-reliance. x x x x x x x x x Sec. 7. The State shall
protect the rights of subsistence fishermen, especially of local communities, to
the preferential use of the communal marine and
fishing resources, both inland and offshore. It shall provide support to such
fishermen through appropriate technology and research, adequate financial,
production, and marketing assistance, and other services. The State shall also
protect, develop, and conserve such resources. The protection shall ex
tend to offshore fishing grounds of subsistence
fishermen against foreign intrusion. Fishworkers shall receive a just share from
their labor in the utilization of marine and fishing resources.
• General Welfare Clause, expressly mentions this right:
SEC. 16. General Welfare.-- Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which
are essential to the promotion of the general welfare. Within their respective territorial
jurisdictions, local government units shall ensure and support, among other things,
the preservation and enrichment of culture, promote health and safety, enhance the
right of the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public
morals, enhance economic prosperity and social justice, promote full employment
among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants. (underscoring supplied).
RULING:
YES. In light then of the principles of decentralization and devolution enshrined in the
LGC and the powers granted to local government units under Section 16 (the General
Welfare Clause), and under Sections 149, 447 (a) (1) (vi), 458 (a) (1) (vi) and 468 (a)
(1) (vi), which unquestionably involve the exercise of police power, the validity of the
questioned Ordinances cannot be doubted.
Both Ordinances have two principal objectives or purposes:
(1) to establish a “closed season” for the species of fish or aquatic animals covered
therein for a period of five years, and
(2) to protect the corals of the marine waters of the City of Puerto Princesa and the
Province of Palawan from further destruction due to illegal fishing activities. It is
incorrect to say that the challenged Ordinance of the City of Puerto Princesa is invalid
or unenforceable because it was not approved by the Secretary of the DENR. If at all,
the approval that should be sought would be that of the Secretary of the Department
of Agriculture (not DENR) of municipal ordinances affecting fishing and fisheries in
municipal waters. In closing, we commend the Sangguniang Panlungsod of the City
of Puerto Princesa and Sangguniang Panlalawigan of the Province of Palawan for
exercising the requisite political will to enact urgently needed legislation to protect and
enhance the marine environment, thereby sharing In the herculean task of arresting
the tide of ecological destruction. We hope that other local government units shall
now be roused from their lethargy and adopt a more vigilant stand in the battle
against the decimation of our legacy to future generations. At this time, the
repercussions of any further delay in their response may prove disastrous, if not,
irreversible.
White Light Corporation vs City of Manila 2009
Petitioner: White Light Corporation, Titanium Corporation and Sta. Mesa Tourist &
Development Corporation
Respondent: City of Manila
Facts:
On December 3, 1992, City Mayor Alfredo S. Lim signed into a law Manila City
Ordinance No. 7774 entitled “An Ordinance Prohibiting Short-Time Admission, Short-
Time Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging
Houses, Pension Houses, and Similar Establishments in the City of Manila.” On
December 15, 1992, the Malate Tourist and Development Corporation (MTDC) filed a
complaint for declaratory relief with prayer for a writ of preliminary injunction and/or
temporary restraining order (TRO) impleading as defendant, herein respondent City of
Manila represented by Mayor Lim with the prayer that the Ordinance be declared
invalid and unconstitutional.
On December 21, 1992, petitioners White Light Corporation (WLC), Titanium
Corporation (TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed a
motion to intervene and to admit attached complaint-in-intervention on the ground that
the Ordinance directly affects their business interests as operators of drive-in-hotels
and motels in Manila. The RTC issued a TRO directing the City to cease and desist
from enforcing the Ordinance. The City alleges that the Ordinance is a legitimate
exercise of police power. On October 20, 1993, the RTC rendered a decision
declaring the Ordinance null and void. On a petition for review on certiorari, the Court
of Appeals reversed the decision of the RTC and affirmed the constitutionality of the
Ordinance.
Issue:
Whether Manila City Ordinance No. 7774 is a valid exercise of police power
Ruling:
Police power, while incapable of an exact definition, 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 as the conditions warrant.
Police power is based upon the concept of necessity of the State and its
corresponding right to protect itself and its people. Police power has been used as
justification for numerous and varied actions by the State. The apparent goal of the
Ordinance is to minimize if not eliminate the use of the covered establishments for
illicit sex, prostitution, drug use and alike. These goals, by themselves, are
unimpeachable and certainly fall within the ambit of the police power of the State. Yet
the desirability of these ends do not sanctify any and all means for their achievement.
Those means must align with the Constitution, and our emerging sophisticated
analysis of its guarantees to the people.
That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a
product and the petitioners of lucrative business ties in with another constitutional
requisite for the legitimacy of the Ordinance as a police power measure. It must
appear that the interests of the public generally, as distinguished from those of a
particular class, require an interference with private rights and the means must be
reasonably necessary for the accomplishment of the purpose and not unduly
oppressive of private rights. It must also be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. More
importantly, a reasonable relation must exist between the purposes of the measure
and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private property
will not be permitted to be arbitrarily invaded. Lacking a concurrence of these
requisites, the police measure shall be struck down as an arbitrary intrusion into
private rights. As held in Morfe v. Mutuc, the exercise of police power is subject to
judicial review when life, liberty or property is affected. However, this is not in any way
meant to take it away from the vastness of State police power whose exercise enjoys
the presumption of validity. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL.
City of Manila vs Chinese Community of Manila 1919
FACTS:
Petitioner (City of Manila) filed a petition praying that certain lands be expropriated for
the purpose of constructing a public improvement namely, the extension of Rizal
Avenue, Manila and claiming that such expropriation was necessary.
Herein defendants, on the other hand, alleged (a) that no necessity existed for said
expropriation and (b) that the land in question was a cemetery, which had been used
as such for many years, and was covered with sepulchres and monuments, and that
the same should not be converted into a street for public purposes.
The lower court ruled that there was no necessity for the expropriation of the
particular strip of land in question.
Petitioner therefore assails the decision of the lower court claiming that it (petitioner)
has the authority to expropriate any land it may desire; that the only function of the
court in such proceedings is to ascertain the value of the land in question; that neither
the court nor the owners of the land can inquire into the advisable purpose of the
expropriation or ask any questions concerning the necessities therefor; that the courts
are mere appraisers of the land involved in expropriation proceedings, and, when the
value of the land is fixed by the method adopted by the law, to render a judgment in
favor of the defendant for its value.
ISSUE:
W/N the courts may inquire into and hear proof upon the necessity of the
expropriation?
HELD:
Yes. The very foundation of the right to exercise eminent domain is a genuine
necessity, and that necessity must be of a public character. The ascertainment of the
necessity must precede or accompany, and not follow, the taking of the
land. (Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt.,
281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)
The general power to exercise the right of eminent domain must not be confused with
the right to exercise it in a particular case. The power of the legislature to confer, upon
municipal corporations and other entities within the State, general authority to
exercise the right of eminent domain cannot be questioned by the courts, but that
general authority of municipalities or entities must not be confused with the right to
exercise it in particular instances. 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 eminent domain 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 which the courts have the right to inquire into.
The conflict in the authorities upon the question whether the necessity for the exercise
of the right of eminent domain is purely legislative and not judicial, arises generally in
the wisdom and propriety of the legislature in authorizing the exercise of the right of
eminent domain instead of in the question of the right to exercise it in a particular
case. (Creston Waterworks Co. vs. McGrath, 89 Iowa, 502.)
By the weight of authorities, the courts have the power of restricting the exercise of
eminent domain to the actual reasonable necessities of the case and for the purposes
designated by the law.
City of Manila vs The Arellano Law Colleges Inc.
FACTS:
RA 267 provides that cities and municipalities are authorized to contract loans from
Reconstruction Finance Corporation for the purpose of purchasing or expropriating
homesites within their territorial jurisdiction and reselling them at cost to residents.
The court below ruled that this provision empowers cities to purchase but not
expropriate and so dismissed the present action, which seeks to condemn several
parcels of land situated in Legarda St. Manila.
ISSUE:
WON the necessity for condemnation is shown to justify the expropriation.

HELD:
No. The SC is inclined to believe that Act No. 267 empowers cities to expropriate as
well as to purchase lands for homesites. The word "expropriating," taken singly or
with the text, is susceptible of only meaning. But this power to expropriate is
necessarily subject to the limitations and conditions noted in the decisions above
cited. The National Government may not confer its instrumentalities authority which
itself may not exercise. A stream can not run higher than its source.
To authorize the condemnation of any particular land by a grantee of the power of
eminent domain, a necessity must exist for the taking thereof for the proposed uses
and purposes.
Necessity within the rule that the particular property to be expropriated must be
necessary. does not mean an absolute but only a reasonable or practical necessity,
such as would combine the greatest benefit to the public with the least inconvenience
and expense to the condemning party and property owner consistent with such
benefits.
The land in question has cost the owner P140,000. The people for whose benefit the
condemnation is being undertaken are so poor they could ill afford to meet this high
price, unless they intend to borrow the money with a view to disposing of the property
later for a profits. Cheaper lands not dedicated to a purpose so worthy as a school
and more suited to the occupants' needs and means, if really they only want to own
their own homes, are plenty elsewhere
the defendant not only has invested a considerable amount for its property but had
the plans for construction ready and would have completed the project a long time
ago had it not been stopped by the city authorities.
Municipality of Meycauayan vs Intermediate Appellate Court (IAC) 1988
Facts:
Respondent Philippine Pipes and Merchandising Corporation filed with the
Office of the Municipal Mayor of Meycauayan, Bulacan an application for a permit to
fence a parcel of land. The fencing of said property was allegedly to enable the
storage of the respondent’s heavy equipment and various finished products.
The Municipal Council of Meycauayan passed Resolution manifesting the
intention to expropriate the respondent’s parcel of land. It was opposed by the
respondent Philippine Pipes and Merchandising Corporation with the office of the
Provincial Governor.
Special Committee recommended that the Provincial Board of Bulacan
disapprove or annul the resolution in question because there was no genuine
necessity for the Municipality of Meycauyan to expropriate the respondent’s property
for use as a public road. Then Provincial Board of Bulacan passed Resolution
disapproving and annulling the Resolution passed by the Municipal Council of
Meycauayan.
However, Petitioner (Municipality of Meycauayan) filed with the RTC of
Malolos, Bulacan a special civil action for expropriation, and upon deposit of the
amount of P24,025.00, which is the market value of the land, with the PNB, the trial
court issued a writ of possession in favor of the Petitioner.
The respondent went to IAC, on petition for review, which the appellate court
affirmed the trial court’s decision. But upon MR, the decision was reversed and held
that there is no genuine necessity to expropriate the land for use as public road as
there were several other roads for the same purpose and another more expropriate
lot for the proposed public road.
Issue:
Whether or not Petitioner has the right to expropriate?
Held:
The Petitioner’s purpose in expropriating the respondent’s property is to
convert the same into a public road for the purposes to ease the traffic in the area of
vehicles. However, it reveals that there are other connecting links or several roads for
the same purpose and another lot for proposed public road. The Petitioner itself
admits that there are four (4) such cross roads in existence.
The foundation of the right to exercise the power of eminent domain is
genuine necessity and that necessity must be of public character. Condemnation of
private property is justified only if it is for the public good and there is genuine
necessity of a public character. Consequently, the courts have the power to inquire
into the legality of the exercise of the right of eminent domain and to determine
whether there is a genuine necessity therefor.
It is still a judicial question whether in the exercise of such
competence, the party adversely affected is the victim of partiality and
prejudice. That the equal protection clause will not allow.
There is absolutely no showing in the petition why the more appropriate lot
for the proposed road which was offered for sale has not been the subject of the
petitioner’s attempt to expropriate assuming there is a real need for another
connecting road. Petition DISMISSED.
Municipality of Paranaque v VM Realty G.R. No. 127820. July 20, 1998
Petition for review on certiorari
Facts:
Under a city council resolution, the Municipality of Parañaque filed on September 20,
1993, a Complaint for expropriation against Private Respondent V.M. Realty
Corporation over two parcels of land of 10,000 square meters. The city previously
negotiated for the sale of the property but VM didn’t accept.
The trial court issued an Order dated February 4, 1994, authorizing petitioner to take
possession of the subject property upon deposit with its clerk of court of an amount
equivalent to 15 percent of its fair market value based on its current tax declaration.
According to the respondent, the complaint failed to state a cause of action because it
was filed pursuant to a resolution and not to an ordinance as required by RA 7160
(the Local Government Code); and (b) the cause of action, if any, was barred by a
prior judgment or res judicata. Petitioner claimed that res judicata was not applicable.
The trial court dismissed the case. The petitioner’s MFR was denied. The CA
affirmed.
Issues:
1. WON a resolution duly approved by the municipal council has the same force and
effect of an ordinance and will not deprive an expropriation case of a valid cause of
action.
2. WON the principle of res judicata as a ground for dismissal of case is not
applicable when public interest is primarily involved.
Held: No to 1st Yes to 2nd. Petition dismissed.
Ratio:
1. Petitioner contends that a resolution approved by the municipal council for the
purpose of initiating an expropriation case “substantially complies with the
requirements of the law” because the terms “ordinance” and “resolution” are
synonymous for “the purpose of bestowing authority [on] the local government unit
through its chief executive to initiate the expropriation proceedings in court in the
exercise of the power of eminent domain.
To strengthen this point, the petitioner cited Article 36, Rule VI of the Rules and
Regulations Implementing the Local Government Code, which provides: “If the LGU
fails to acquire a private property for public use, purpose, or welfare through
purchase, the LGU may expropriate said property through a resolution of the
Sanggunian authorizing its chief executive to initiate expropriation proceedings.”
Court-No. The power of eminent domain is lodged in the legislative branch of
government, which may delegate the exercise thereof to LGUs, other public entities
and public utilities. An LGU may therefore exercise the power to expropriate private
property only when authorized by Congress and subject to the latter’s control and
restraints, imposed “through the law conferring the power or in other legislations.
Sec 19, RA 7160
A local government unit may, through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public use, or purpose, or
welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws.
Thus, the following essential requisites must concur before an LGU can exercise the
power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or
for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III of
the Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted.
In the case at bar, the local chief executive sought to exercise the power of eminent
domain pursuant to a resolution of the municipal council. Thus, there was no
compliance with the first requisite that the mayor be authorized through an ordinance.
We are not convinced by petitioner’s insistence that the terms “resolution” and
“ordinance” are synonymous. A municipal ordinance is different from a resolution. An
ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion
of a lawmaking body on a specific matter. An ordinance possesses a general and
permanent character, but a resolution is temporary in nature.
If Congress intended to allow LGUs to exercise eminent domain through a mere
resolution, it would have simply adopted the language of the previous Local
Government Code. But Congress did not. In a clear divergence from the previous
Local Government Code, Section 19 of RA 7160 categorically requires that the local
chief executive act pursuant to an ordinance.
Moreover, the power of eminent domain necessarily involves a derogation of a
fundamental or private right of the people.[35] Accordingly, the manifest change in the
legislative language -- from “resolution” under BP 337 to “ordinance” under RA 7160 -
- demands a strict construction.
When the legislature interferes with that right and, for greater public purposes,
appropriates the land of an individual without his consent, the plain meaning of the
law should not be enlarged by doubtful interpretation.
Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only
a resolution to authorize an LGU to exercise eminent domain. It is axiomatic that the
clear letter of the law is controlling and cannot be amended by a mere administrative
rule issued for its implementation.
Strictly speaking, the power of eminent domain delegated to an LGU is in reality not
eminent but “inferior” domain, since it must conform to the limits imposed by the
delegation, and thus partakes only of a share in eminent domain.
2. As correctly found by the Court of Appeals and the trial court, all the requisites for
the application of res judicata are present in this case. There is a previous final
judgment on the merits in a prior expropriation case involving identical interests,
subject matter and cause of action, which has been rendered by a court having
jurisdiction over it.
Be that as it may, the Court holds that the principle of res judicata, which finds
application in generally all cases and proceedings, cannot bar the right of the State or
its agent to expropriate private property.
Eminent Domain can reach every form of property which the State might need for
public use whenever they need it.
While the principle of res judicata does not denigrate the right of the State to exercise
eminent domain, it does apply to specific issues decided in a previous case.
In Republic vs De Knecht, the Court ruled that the power of the State or its agent to
exercise eminent domain is not diminished by the mere fact that a prior final judgment
over the property to be expropriated has become the law of the case as to the
parties. The State or its authorized agent may still subsequently exercise its right to
expropriate the same property, once all legal requirements are complied with.
CITY OF CEBU, Petitioner, vs. APOLONIO M. DEDAMO, JR., Respondent. 2002
Doctrine:
Under the principle of conclusiveness of judgment, when a right or fact has been
judicially tried and determined by a court of competent jurisdiction, or when an
opportunity for such trial has been given, the judgment of the court, as long as it
remains unreversed, should be conclusive upon the parties and those in privity with
them. Stated differently, conclusiveness of judgment bars the re-litigation in a second
case of a fact or question already settled in a previous case.
Facts:
1. The present controversy is an off-shoot of Civil Case No. CEB-14632 for
eminent domain over two (2) parcels of land owned by spouses Apolonio
and Blasa Dedamo (Spouses Dedamo), filed by the petitioner before the
Regional Trial Court (RTC) of Cebu City, Branch 13, on September 17,
1993. The petitioner immediately took possession of the lots after depositing
P51,156.00 with the Philippine National Bank pursuant to Section 19 of
Republic Act No. 7160.4
2. During the pendency of the case, or on December 14, 1994, the petitioner
and Spouses Dedamo entered into a Compromise Agreement whereby the
latter agreed to part with the ownership of the parcels of land in favor of the
former in consideration of ONE MILLION SEVEN HUNDRED EIGHTY-SIX
THOUSAND FOUR HUNDRED PESOS (P1,786,400.00) as provisional
payment and just compensation in an amount to be determined by a panel of
commissioners.
3. Forthwith, the panel was constituted and a report was submitted to the RTC
recommending the sum of P20,826,339.50 as just compensation. The report
was adopted and approved by the RTC in its Order dated December 27,
1996.5
4. The RTC Order was affirmed by the CA and then by the Court, in a Decision
dated May 7, 2002, when the matter was elevated for review in a petition
docketed as G.R. No. 142971.
5. When the said decision became final and executory on September 20, 2002,
the case was remanded for execution to the RTC, before which, a motion for
the issuance of a writ of execution was filed by Spouses Dedamo on April 4,
2003. On May 16, 2003, the RTC granted the motion and ordered the
issuance of the writ
a. In the meantime, Spouses Dedamo passed away and they were
substituted in the case by herein respondent.
6. On December 23, 2003, the petitioner paid the respondent the sum of
P19,039,939.50 which is the difference between the just compensation due
and the provisional payment already made.
7. On March 24, 2004, the respondent filed a Manifestation and Motion before
the RTC to order the petitioner to pay interest on the just compensation
computed from the time of actual taking of the lands.
RTC: On April 30, 2004, the RTC denied the motion and ruled that it can no
longer amend a final and executory judgment that did not specifically direct
the payment of legal interest. Adamant, the respondent sought recourse
before the CA asserting that the petitioner is liable to pay: (a) 12% legal
interest on the unpaid balance of the just compensation computed from the
time of actual taking of the property up to the date of payment of just
compensation; and (b) 12% legal interest from the time the decision
awarding just compensation became final and executory on September 20,
2002 until its satisfaction on December 23, 2003.
CA: The CA awarded legal interest accruing from the time the RTC Order
dated December 27, 1996 awarding just compensation was affirmed with
finality by the Supreme Court up to the time of full payment thereof in line
with the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals 6 that when
a court judgment awarding a sum of money becomes final and executory, it
shall earn legal interest of 12% per annum reckoned from such finality until
satisfaction.
Issue:
Whether or not the petitioner can still question the respondent’s entitlement of legal
interest awarded by the CA.
Held:
NO! The petition is denied on the ground of res judicata in the mode of
conclusiveness of judgment.
A perusal of the allegations in the present case evidently shows that the petitioner
broaches the issues similarly raised and already resolved in G.R. No. 172942.
Under the principle of conclusiveness of judgment, when a right or fact has
been judicially tried and determined by a court of competent jurisdiction, or
when an opportunity for such trial has been given, the judgment of the court, as
long as it remains unreversed, should be conclusive upon the parties and those
in privity with them. Stated differently, conclusiveness of judgment bars the re-
litigation in a second case of a fact or question already settled in a previous
case.
The adjudication in G.R. No. 172942 has become binding and conclusive on the
petitioner who can no longer question the respondent’s entitlement to the 12% legal
interest awarded by the CA. The Court’s determination in G.R. No. 172942 on the
reckoning point of the 12% legal interest is likewise binding on the petitioner who
cannot re-litigate the said matter anew through the present recourse.
Thus, the judgment in G.R. No. 172942 bars the present case as the relief sought in
the latter is inextricably related to the ruling in the former
Jesus Estanislao vs. Amado Costales 1991
FACTS:
The Sanggunian Panglungsod passed ordinance No 44 of Zamboanga City. The
same was sent to the Minister of Finance where it was found out to contravenes
Section 19 of the local Tax Code. The authority of the city is limited to the imposition
of a percentage tax on the gross sales or receipts of said production. The tax being
imposed in the ordinance is based on the output or production and not on the gross
sales or receipts as authorized under the local tax code. The city Mayor of
Zamboanga questioned such decision of the Finance Minister and the lower court
ruled in favor of the former by reason of prescription. The ordinance imposed P0.01
per liter of softdrinks produced, manufactured and or bottled within the territorial
jurisdiction of the City of Zamboanga.
ISSUE:
Whether or not Ordinance No. 44 contravenes the Local Tax Code of 1974.
RULING:
The court ruled that the tax ordinances issued by the local autonomy is governed by
the Local Tax Code of 1974 as it was stated in Section 64 (a) thereof all existing tax
ordinances of provinces, cities, municipalities and barrios shall be deemed ipso facto
nullified on June 30, 1974. The court also clarified that the 120 days that lapsed
before the Minister of Finance acted on the ordinance did not render the action
inoperative due to prescription. Even if the Secretary of Finance failed to review or act
on the ordinance within 120 days, it does not follow as a legal consequence thereof
that an otherwise invalid ordinance is thereby validated. It does not also mean that the
Secretary can no longer act by suspending and/or revoking an invalid ordinance even
after the lapse of 120 day period.
Philippine Petroleum Corporation vs Municipality of Pililla Rizal
198 SCRA 82 [GR No. 90776 June 3, 1991]
Facts:
Philippine Petroleum Corporation is a business enterprise engaged in the
manufacture of lubricated oil base stocks which is a petroleum product, with its
refinery plant situated at Malaya, Pilillia Rizal, conducting its business activities within
the territorial jurisdiction of municipality of Pilillia, Rizal and is in continuous operation
up to the present. PPC owns and maintains an oil refinery including 49 storage tanks
for its petroleum products in Malaya, Pililla, Rizal. Under section 142 of NIRC of 1939,
manufactured oils and other fuels are subject to specific tax. Respondent municipality
of Pilillia, Rizal through municipal council resolution no. 25-s-1974 enacted municipal
tax ordinance no. 1-s-1974 otherwise known as “The Pililla Tax Code Of 1974” on
June 14, 1974 which took effect on July 1, 1974. Sections 9 and 10 of the said
ordinance imposed a tax on business, except for those which fixed taxes are provided
in the local tax code on manufacturers, importers, or producers of any article of
commerce of whatever kind or nature, including brewers, distiller, rectifiers, repackers
and compounders of liquors distilled spirits and/or wines in accordance with the
schedule found in the local tax code, as well as mayor’s permit sanitary inspection fee
and storage permit fee for flammable, combustible or explosive substances, while
section 139 of the disputed ordinance imposed surcharges and interests on unpaid
taxes, fees or charges. Enforcing the provisions of the above mentioned ordinance,
the respondent filed a complaint on April 4, 1986 docketed as civil case no. 057-T
against PPC for the collection of the business tax from 1979 to 1986; storage permit
fees from 1975 to 1986; mayor’s permit fee and sanitary permit inspection fees from
1975 to 1984. PPC, however, have already paid the last named fees starting 1985.
Issue:
Whether or not the Municipality may validly impose taxes on petitioner’s business.
Held:
No. While section 2 of PD 436 prohibits the imposition of local taxes on petroleum
products, said decree did not amend sections 19 and 19 (a) of PD 231 as amended
by PD 426, wherein the municipality is granted the right to levy taxes on business of
manufacturers, importers, producers of any article of commerce of whatever kind or
nature. A tax on business is distinct from a tax on the article itself. Thus, if the
imposition of tax on business of manufacturers, etc. in petroleum products
contravenes a declared national policy, it should have been expressly stated in PD
No. 436.
The exercise by local governments of the power to tax is ordained by the present
constitution. To allow the continuous effectivity of the prohibition set forth in PC no.
26-73 would be tantamount to restricting their power to tax by mere administrative
issuances. Under section 5, article X of the 1987 constitution, only guidelines and
limitations that may be established by congress can define and limit such power of
local governments.
The storage permit fee being imposed by Pilillia’s tax ordinance is a fee for the
installation and keeping in storage of any flammable, combustible or explosive
substances. In as much as said storage makes use of tanks owned not by the
Municipality of Pilillia but by petitioner PPC, same is obviously not a charge for any
service rendered by the municipality as what is envisioned in section 37 of the same
code.
Tuzon and Mapagu v. CA 1992
Public officers not personally liable for injuries occasioned by performance of
official duty within scope of official authority; erroneous interpretation of
ordinance does not constitute bad faith.
Facts:
In 1977, the Sangguniang Bayan of Camalaniugan, Cagayan thought of fund-raising
scheme to help finance the construction of a Sports and Nutrition Center. They
adopted Resolution No. 9 whereby all thresher operators who will apply for a permit to
thresh will be required to donate 1% of all the palay threshed by them.
Private respondent Jurado tried to pay the P285.00 license fee for thresher operators
but Municipal Treasurer Mapagu refused to accept payment and required him to first
secure a mayor’s permit. Mayor Domingo Tuzon, on the other hand, said that Jurado
should first comply with Resolution No. 9 and sign the agreement before the permit
could be issued.
Jurado filed an action for mandamus with the CFI Cagayan to compel the issuance of
the mayor’s permit and license. He filed another petition for declaratory judgment
against the resolution for being illegal either as a donation or as a tax measure.
Named defendants were the same respondents and all the members of the
Sangguniang Bayan of Camalaniugan
The trial court upheld the challenged measure. Jurado appealed to the Court of
Appeals which affirmed the validity of Resolution No. 9 and the implementing
agreement. Nevertheless, it found Tuzon and Mapagu liable to pay actual and moral
damages for acting maliciously and in bad faith when they denied Jurado's application
for the mayor's permit and license. As for the Resolution, it was passed by the
Sanggunian in the lawful exercise of its legislative powers granted by Article XI,
Section 5 of the 1973 Constitution which provided that each LGU shall have the
power to create its own source revenue and to levy taxes, subject to such limitation as
may be provided by law. And also under Article 4, Sec. 29, PD 231: The barrio council
may solicit money, materials, and other contributions from private agencies and
individuals.
Issues:
1. WON a resolution imposing a 1% donation is a valid exercise of the taxing power of
an LGU.
2. WON petitioners are liable in damages to private respondent Jurado for having
withheld from him the mayor's permit and license because of his refusal to comply
with Resolution No. 9.
Held:
1. NO. While it would appear from the wording of the resolution that the municipal
government merely intends to "solicit" the 1% contribution from the threshers, the
implementing agreement seems to make the donation obligatory and a condition
precedent to the issuance of the mayor’s permit. This goes against the nature of a
donation, which is an act of liberality and is never obligatory.
If, on the other hand, it is to be considered a tax ordinance, then it must be shown in
view of the challenge raised by the private respondents to have been enacted in
accordance with the requirements of the Local Tax Code. These would include the
holding of a public hearing on the measure and its subsequent approval by the
Secretary of Finance, in addition to the usual requisites for publication of ordinances
in general. .
2. NO. Petitioners acted within the scope of their authority and in consonance with
their honest interpretation of the resolution in question. It was not for them to rule on
its validity. In the absence of a judicial decision declaring it invalid, its legality would
have to be presumed. As executive officials of the municipality, they had the duty to
enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled
by the courts. xxx As a rule, a pubic officer, whether, judicial, quasijudicial or
executive, is not personally liable to one injured in consequence of an act performed
within the scope of his official authority, and in line of his official duty. xxx It has been
held that an erroneous interpretation of an ordinance does not constitute nor does it
amount to bad faith, that would entitle an aggrieved party to an award for damages.
(Philippine Match Co. Ltd. v. City of Cebu)
The private respondent anchors his claim for damages on Article 27 of the New Civil
Code, which reads:
Art. 27. Any person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty may file
an action for damages and other relief against the latter, without prejudice to any
disciplinary administrative action that may be taken.
In the present case, it has not even been alleged that the Mayor Tuzon's refusal to act
on the private respondent's application was an attempt to compel him to resort to
bribery to obtain approval of his application. It cannot be said either that the mayor
and the municipal treasurer were motivated by personal spite or were grossly
negligent in refusing to issue the permit and license to Jurado.
It is no less significant that no evidence has been offered to show that the petitioners
singled out the private respondent for persecution. Neither does it appear that the
petitioners stood to gain personally from refusing to issue to Jurado the mayor's
permit and license he needed. The petitioners were not Jurado's business
competitors nor has it been established that they intended to favor his competitors.
On the contrary, the record discloses that the resolution was uniformly applied to all
the threshers in the municipality without discrimination or preference.
The private respondent complains that as a result of the petitioners' acts, he was
prevented from operating his business all this time and earning substantial profit
therefrom, as he had in previous years. But as the petitioners correctly observed, he
could have taken the prudent course of signing the agreement under protest and later
challenging it in court to relieve him of the obligation to "donate." Pendente lite, he
could have continued to operate his threshing business and thus avoided the
lucrocesante that he now says was the consequence of the petitioners' wrongful act.
He could have opted for the less obstinate but still dissentient action, without loss of
face, or principle, or profit.
Drilon v. Lim
G.R. No. 112497, August 4, 1994
Presumption of Constitutionality
Petitioner: Hon. Franklin M. Drilon as SOJ
Respondent: Mayor Alfredo Lim
Facts: Four oil companies and a taxpayer appealed to Drilon who then declared the
Manila Revenue Code null and void for non-compliance with prescribed procedure in
enacting tax ordinances pursuant to Sec. 187 of LGC.
RTC Ruling: It revoked Drilon’s decision and sustained the ordinance, holding that
procedural requirements were observed. It also declared Sec. 187 of LGC as
unconstitutional because it vested within the SOJ the power and control over local
governments, violating local autonomy.
Drilon petitioned to SC avering that Sec. 187 was constitutional and that procedural
requirements were not observed. Petition was originally dismissed because SolGen
had not submitted certified true copy of the Decision but was reinstated after Drilon
MR-ed.
Issue: W/N Sec. 187 is constitutional, and procedural requirements specified therein
were not observed in the enactment of the MRC?
Held: YES. RTC ruling is reversed in that it declares Sec. 187 unconstitutional, but
SC affirms RTC ruling that procedural requirements were satisfied.
Ratio: RTC was rather hasty in invalidating Sec. 187 because it allegedly empowers
the SOJ to review tax ordinances and to annul them. It gave power to control rather
than to supervise. Sec. 187 authorizes the SOJ to review only the constitutionality or
legality of tax ordinances and if necessary, revoke them. When he modifies or sets
aside a tax ordinance, he is not authorized to substitute his own judgement for the
judgement of the local government.
SC finds that Drilon set aside the MRC, but he did not replace it with his own version
of what it should be. He did not say that it is a bad law. He only found that it was
illegal. This is an act of mere supervision, not of control.
Drilon declared that there were no written notices of public hearings on the draft MRC,
as required by law; no copies of the proposed MRC was published; no minutes were
submitted; and it was not translated into Tagalog. On the other hand, RTC ruled that
procedure requirements were satisfied. SC agrees with RTC. But because
substantive provisions were not raised in the petition, SC makes no ruling on that.

LGC, Section 187. Procedure for Approval and Effectivity of Tax, Ordinances and
Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local
tax ordinances and revenue measures shall be in accordance with the provisions of
this Code: Provided, That public hearings shall be conducted for the purpose prior to
the enactment thereof: Provided, further, That any question on the constitutionality or
legality of tax ordinances or revenue measures may be raised on appeal within thirty
(30) days from the effectivity thereof to the Secretary of Justice who shall render a
decision within sixty (60) days from the date of receipt of the appeal: Provided,
however, That such appeal shall not have the effect of suspending the effectivity of
the ordinance and the accrual and payment of the tax, fee, or charge levied therein:
Provided, finally, That within thirty (30) days after receipt of the decision or the lapse
of the sixty-day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.
BENGUET CORPORATION VS. CENTRAL BOARD OF ASSESSMENT APPEALS ET AL
G.R. No. 106041, January 29, 1993
FACTS:
In 1985, the Provincial Assessor of Zambales assessed petitioner’s tailings dam and
land thereunder as taxable improvements over its protest. The realty tax assessment
amounted to P11,319,304.00. The assessment was appealed to the Board of
Assessment Appeals of the Province of Zambales. The appeal was dismissed on the
ground of the petitioner's failure to pay the realty taxes that fell due during the
pendency of the appeal.
On appeal, respondent CBAA reversed the dismissal of the appeal but agreed that
the tailings dam and the lands submerged were subject to realty tax.
Petitioner’s contention
While petitioner does not dispute that the tailings dam may be considered realty within
the meaning of Article 415 of the Civil Code, it insists, however, that the dam cannot
be subjected to realty tax as a separate and independent property because it does
not constitute an "assessable improvement" on the mine although a considerable sum
may have been spent in constructing and maintaining it.
OSG’s contention
OSG argued that the dam is an assessable improvement because it enhances the
value and utility of the mine. The primary function of the dam is to receive, retain and
hold the water coming from the operations of the mine, and it also enables the
petitioner to impound water, which is then recycled for use in the plant.
ISSUES:
1. Whether or not the tailings dam is subject to realty tax?
2. Whether or not it can be considered as immovable property?
HELD:
Yes. Petition is denied.
It would appear that whether a structure constitutes an improvement so as to partake
of the status of realty would depend upon the degree of permanence intended in its
construction and use. The expression "permanent" as applied to an improvement
does not imply that the improvement must be used perpetually but only until the
purpose to which the principal realty is devoted has been accomplished. It is sufficient
that the improvement is intended to remain as long as the land to which it is annexed
is still used for the said purpose.
The Real Property Tax Code does not carry a definition of "real property" and simply
says that the realty tax is imposed on "real property, such as lands, buildings,
machinery and other improvements affixed or attached to real property." In the
absence of such a definition, we apply Article 415 of the Civil Code, the pertinent
portions of which state:
Art. 415. The following are immovable property.
(1) Lands, buildings and constructions of all kinds adhered to the soil;
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner, in such a way
that it cannot be separated therefrom without breaking the material or
deterioration of the object.
Section 2 of C.A. No. 470 or the Assessment Law provides that the realty tax is due
"on the real property, including land, buildings, machinery and other improvements"
not specifically exempted in Section 3 thereof. Thus, the tailings dam does not fall
under any of the classes of exempt real properties enumerated.
Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property
Tax Code defines improvement as follows:
(k) Improvements — is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adopt it for new or further purposes.
The Court held that the subject dam falls within the definition of an "improvement"
because it is permanent in character and it enhances both the value and utility of
petitioner's mine. Moreover, the immovable nature of the dam defines its character as
real property under Article 415 of the Civil Code and thus makes it taxable under
Section 38 of the Real Property Tax Code.

Likewise, the Court gave respect to the conclusions of quasi-judicial agencies like the
CBAA, which, because of the nature of its functions and its frequent exercise, has
developed expertise in the resolution of assessment problems. The only exception to
this rule is where it is clearly shown that the administrative body has committed grave
abuse of discretion.
National Development Co vs Cebu City and Augusto Pacis
G.R. No. 51593 November 5, 1992
Bellosillo, J.:
Facts:
National Development Company (NDC) is a GOCC authorized to engage in
commercial, industrial, mining, agricultural and other enterprises necessary or
contributory to economic development or important to public interest. It also operates
subsidiary corporations one of which is National Warehousing Corporation (NWC).
On August 10, 1939, the President issued Proclamation No. 430 reserving Block no.
4, Reclamation Area No. 4, of Cebu City for warehousing purposes under the
administration of NWC. Subsequently, in 1940, a warehouse with a floor area of 1,940
square meters more or less, was constructed thereon.In 1947, EO 93 dissolved NWC
with NDC taking over its assets and functions.
In 1948, Cebu City assessed and collected from NDC real estate taxes on the land
and the warehouse thereon. By the first quarter of 1970, a total of P100,316.31 was
paid by NDC 11 of which only P3,895.06 was under protest. NDC asked for a full
refund contending that the land and the warehouse belonged to the Republic and
therefore exempt from taxation. The CFI ordered Cebu City to refund to NDC the real
estate taxes paid by it.
Issue:
1. Whether or not the land is exempted from tax.
2. Whether or not the warehouse is exempted from tax.
Held:
The SC finds that National Development Company (NDC) is exempt from real estate
tax on the reserved land but liable for the warehouse erected thereon.
The land – The Republic, like any individual, may form a corporation with personality
and existence distinct from its own. The separate personality allows a GOCC to hold
and possess properties in its own name and, thus, permit greater independence and
flexibility in its operations. It may, therefore, be stated that tax exemption of property
owned by the Republic of the Philippines "refers to properties owned by the
Government and by its agencies which do not have separate and distinct
personalities (unincorporated entities).
To come within the ambit of the exemption provided in Art. 3, par. (a), of the
Assessment Law, it is important to establish that the property is owned by the
government or its unincorporated agency, and once government ownership is
determined, the nature of the use of the property, whether for proprietary or sovereign
purposes. The land remains “absolute property of the government." The government
"does not part with its title by reserving them (lands), but simply gives notice to all the
world that it desires them for a certain purpose." As its title remains with the Republic,
the reserved land is clearly recovered by the tax exemption provision.
The warehouse – As regards the warehouse constructed on a public reservation, a
different rule should apply because "[t]he exemption of public property from taxation
does not extend to improvements on the public lands made by pre-emptioners,
homesteaders and other claimants, or occupants, at their own expense, and these
are taxable by the state . . ." Consequently, the warehouse constructed on the
reserved land by NWC (now under administration by NDC), indeed, should properly
be assessed real estate tax as such improvement does not appear to belong to the
Republic.
Prov. of Tarlac v. Judge Alcantara (1992)
Facts:
Tarlac Enterprises Inc is the owner of a parcel of land in Mabini, Tarlac, an ice drop
factory in said land, machinery shed and other machinery. These properties were
declared for purposes of Taxation in the Provincial Assessor’s Office. The Provincial
Treasurer found that real estate taxes for the years 1974 until 1992 in the amount of
P532,435.55 including penalties were not yet paid. Therefore, the Provincial
Treasurer Jose Meru filed a complaint praying that the company pay the said sum as
well as damages.
The company filed a motion to dismiss. But the lower court denied the motion.
Thereafter, petitioner set the auction sale of the private respondent's properties to
satisfy the real estate taxes due. This prompted the private respondent to file a motion
praying that petitioner be directed to desist from proceeding with the public auction
sale. The lower court issued an order granting said motion to prevent mootness of the
case considering that the properties to be sold were the, subjects of the complaint.
The company then filed an answer saying that under Section 40(g) of PD46 in relation
to PD 551, it was exempt from paying said tax. The court rendered the decision
dismissing the complaint. It ruled that P.D. No. 551 expressly exempts private
respondent from paying the real property taxes demanded, it being a grantee of a
franchise to generate, distribute and sell electric current for light. The court held that
in lieu of said taxes, private respondent had been required to pay 2% franchise tax in
line with the intent of the law to give assistance to operators such as the private
respondent to enable the consumers to enjoy cheaper rates.
Issue:
WON Tarlac Enterprises, Inc. is exempt from the payment of real property tax under
Sec. 40 (g) of P.D. No. 464 in relation to P.D. No. 551, as amended.
Held:
No
Ratio:
Sec. 40(g) of P.D. No. 464, the Real Property Tax Code, provides: SEC. 40.
Exemptions from Real Property Tax. - The exemption shall be as follows: (g) Real
property exempt under other laws.
Private respondent contends that the "other laws" referred to in this Section is P.D.
No. 551 (Lowering the Cost to Consumers of Electricity by Reducing the Franchise
Tax Payable by Electric Franchise Holders and the Tariff on Fuel Oils for the
Generation of Electric Power by Public Utilities). Its pertinent provisions state:
SECTION 1. Any provision of law or local ordinance to the contrary notwithstanding,
the franchise tax payable by all grantees of franchises to generate, distribute and sell
electric current for light, heat and power shall be two (2%) of their gross receipts
received from the sale of electric current and from transactions incident to the
generation, distribution
We do not agree with the lower court that the phrase "in lieu of all taxes and
assessments of whatever nature" in the second paragraph of Sec. 1 of P.D. No. 551
expressly exempts private respondent from paying real property taxes. As correctly
observed by the petitioner, said proviso is modified and delimited by the phrase "on
earnings, receipts. income and privilege of generation, distribution and sale" which
specifies the kinds of taxes and assessments which shall not be collected in view of
the imposition of the franchise tax. Said enumerated items upon which taxes shall not
be imposed, have no relation at all to, and are entirely different from. real properties
subject to tax.
If the intention of the law is to exempt electric franchise grantees from paying real
property tax and to make the 2% franchise tax the only imposable tax, then said
enumerated items would not have been added when PD 852 was enacted to amend
P.D. No. 551. The legislative authority would have simply stopped after the phrase
"national or local authority" by putting therein a period. On the contrary, it went on to
enumerate what should not be subject to tax thereby delimiting the extent of the
exemption.
We likewise do not find merit in private respondent's contention that the real
properties being taxed, viz., the machinery for the generation and distribution of
electric power, the building housing said machinery, and the land on which said
building is constructed, are necessary for the operation of its business of generation,
distribution and sale of electric current and, therefore, they should be exempted from
taxation. Private respondent apparently does not quite comprehend the distinction
among the subject matters or objects of the taxes involved. It bears emphasis that
P.D. No. 551 as amended by P.D. No. 852 deals with franchise tax and tariff on fuel
oils and the "earnings, receipts, income and privilege of generation, distribution and
sale of electric current" are the items exempted from taxation by the imposition of said
tax or tariff duty. On the other hand, the collection complaint filed by petitioner
specified only taxes due on real properties. While P.D. No. 551 was intended to give
"assistance to the franchise holders by reducing some of their tax and tariff
obligations," to construe said decree as having granted such franchise holders
exemption from payment of real property tax would unduly extend the ambit of
exemptions beyond the purview of the law.
The annexes attached to private respondent's comment on the petition to prove by
contemporaneous interpretation its claimed tax exemption are not of much help to it.
Department Order No. 35-74 dated September 16, 1974 11 regulating the
implementation of P.D. No. 551 merely reiterates the "in lieu of all taxes" proviso.
Local Tax Regulations No. 3-75 12 issued by then Secretary of Finance Cesar Virata
and addressed to all Provincial and City Treasurers enjoins strict compliance with the
directive that "the franchise tax imposed under Local Tax Ordinances pursuant to
Section 19 of the Local Tax Code, as amended, shall be collected from business
holding franchises but not from establishments whose franchise contains the in lieu of
all taxes' proviso," thereby clearly indicating that said proviso exempts taxpayers like
private respondent from paying the franchise tax collected by the provinces under the
Local Tax Code. Lastly, the letter 13 of the then Bureau of Internal Revenue Acting
Commissioner addressed to the Matic Law Office granting exemption to the latter's
client from paying the "privilege (fixed) tax which is an excise tax on the privilege of
engaging in business" clearly excludes realty tax from such exemption.
We also find misplaced the lower court's and the private respondent's reliance on
Butuan Sawmill. Inc. v. City of Butuan. In that case, the questioned tax is a tax on the
gross sales or receipts of said sawmill while the tax involved herein is a real property
tax. The City of Butuan is categorically prohibited therein by Sec. 2(j) of the Local
Autonomy Act from imposing "taxes of any kind . . . on person paying franchise tax."
On the other hand, P.D. No. 551 is not as all-encompassing as said provision of the
Local Autonomy Act for it enumerates the items which are not taxable by virtue of the
payment of franchise tax.
It has always been the rule that "exemptions from taxation are construed in strictissimi
juris against the taxpayer and liberally in favor of the taxing authority" primarily
because "taxes are the lifeblood of government and their prompt and certain
availability is an imperious need." Thus, to be exempted from payment of taxes, it is
the taxpayer's duty to justify the exemption "by words too plain to be mistaken and too
categorical to be misinterpreted.; Private respondent has utterly failed to discharge return. While the MCIAA is obliged to re-convey Lot No. 988 to Tudtud et al., they
this duty. must return to the MCIAA what they received as just compensation for the
expropriation of Lot No. 988, plus legal interest to be computed from default, which in
this case runs from the time the MCIAA complies with its obligationto the
respondents. Tudtud et al., must likewise pay the MCIAA the necessary expenses it
may have incurred in sustaining Lot No. 988 and the monetary value of its services in
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY v. BENJAMIN managing it to the extent that Tudtud et al., were benefited thereby. Following Article
TUDTUD, et al. 571 SCRA 165 (2008) 1187 of the Civil Code, the MCIAA may keep whatever income or fruits it may
have obtained from Lot No. 988, and Tudtud et al., need not account for the interests
FACTS: that the amounts they received as just compensation may have earned in
the meantime.

The National Airports Corporation (NAC) filed a complaint for expropriation in order to
expand the Cebu Lahug Airport. It sought to acquire, by negotiated sale or
expropriation, several lots adjoining the then existing airport which included the
parcels of land owned by the predecessors-in- interest of respondents Benjamin AQUILINO Q. PIMENTEL JR., vs. Hon. ALEXANDER AGUIRRE July 19, 2000
Tudtud et al. NAC assured the owners that they would reacquire the land if it is
no longerneeded by the airport. The Court of First Instance of Cebu granted the FACTS:
expropriation. No structures related to the operation of the Cebu Lahug Airport were
constructed on the land expropriated. Respondent Lydia Adlawan (Lydia), acting as This is a petition for certiorari and prohibition seeking to annul Section 1 of
attorney-in-fact of the original owners, sent a letter to the general manager of the AdministrativeOrder No. 372, issued by the President, insofar as it requires local
petitioner Mactan CebuInternational Airport Authority (MCIAA), the new owner of the government units to reducetheir expenditures by 25% of their authorized regular
lot and demanded to repurchase the lot at the same price paid at the time of the appropriations for non-personal servicesand to enjoin respondents from implementing
taking, without interest. Lydia filed a complaint before the Regional Trial Court (RTC) Section 4 of the Order, which withholds a portionof their internal revenue allotments.
of Cebu City for reconveyance and damages against the MCIAA. The RTC
of Cebu rendered judgment in favor of Tudtud et al. MCIAA appealed to the Court of ADMINISTRATIVE ORDER NO. 372
Appeals but it affirmed the RTC decision. MCIAA then filed a Motion for
Reconsideration but was denied.
SECTION 1. All government departments and agencies, including state universities
and colleges,government-owned and controlled corporations and local governments
ISSUE:
units will identify andimplement measures in FY 1998 that will reduce total
expenditures for the year by at least 25%of authorized regular appropriations for
Whether or not Tudtud et al. are entitled for the re-conveyance of the land non-personal services items, along the followingsuggested areas:
expropriated
SECTION 4. Pending the assessment and evaluation by the Development Budget
HELD: CoordinatingCommittee of the emerging fiscal situation, the amount equivalent to
10% of the internal revenueallotment to local government units shall be withheld.
Tudtud et al.’s witness respondent Justiniano Borga declared that the original owners
did not oppose the expropriation of the lot upon the assurance of the NAC that they ISSUE:
would reacquire it if it is no longer needed by the airport. The rights and duties
between the MCIAA and Tudtud et al are governed by Article 1190 of the Civil Code WON the president committed grave abuse of discretion in ordering all LGUS to adopt
which provides: When the conditions have for their purpose the extinguishment of a 25% cost reduction program in violation of the LGU’S fiscal autonomy and the
an obligation to give, the parties, upon the fulfillment of said conditions, shall return to withholding of 10% of the LGU’S IRA.
each other what they have received. In case of the loss, deterioration, or improvement
of the thing, the provisions which, with respect to the debtor, are laid down in the
HELD:
preceding article [Article 1189] shall be applied to the party who is bound to
Section 1 of the AO does not violate local fiscal autonomy. Local fiscal autonomy
does not ruleout any manner of national government intervention by way of
supervision, in order to ensurethat local programs, fiscal and otherwise, are
consistent with national goals. AO 372 is merelydirectory and has been issued by the
President consistent with his powers of supervision overlocal governments. A
directory order cannot be characterized as an exercise of the power ofcontrol. The
AO is intended only to advise all government agencies and instrumentalities
toundertake cost-reduction measures that will help maintain economic stability in the
country. Itdoes not contain any sanction in case of noncompliance.The Local
Government Code also allows the President to interfere in local fiscal
matters,provided that certain requisites are met: (1) an unmanaged public sector
deficit of the nationalgovernment; (2) consultations with the presiding officers of
the Senate and the House of

Representatives and the presidents of the various local leagues; (3) the
correspondingrecommendation of the secretaries of the Department of Finance,
Interior and Local Government,and Budget and Management; and (4) any adjustment
in the allotment shall in no case be lessthan 30% of the collection of national internal
revenue taxes of the third fiscal year preceding thecurrent one.Section 4 of AO 372
cannot be upheld. A basic feature of local fiscal autonomy is the automaticrelease of
the shares of LGUs in the national internal revenue. This is mandated by
theConstitution and the Local Government Code. Section 4 which orders the
withholding of 10% ofthe LGU’s IRA clearly contravenes the Constitution and the law.