Case No.

1
MANAPAT VS CA

Facts:

Sometime in the 1960s, RCAM allowed a number of individuals to occupy the Grace Park
property on condition that they would vacate the premises should the former push through with
the plan to construct a school in the area. The plan, however, did not materialize, thus, the
occupants offered to purchase the portions they occupied. Later, as they could not afford RCAMs
proposed price, the occupants, organizing themselves as exclusive members of the Eulogio
Rodriguez, Jr. Tenants Association, Inc., petitioned the Government for the acquisition of the said
property, its subdivision into home lots, and the resale of the subdivided lots to them at a low
price.[5]

Acting on the associations petition, the Government, in 1963, through the Land Tenure
Administration (LTA), later succeeded by the Peoples Homesite and Housing Corporation (PHHC),
negotiated for the acquisition of the property from RCAM/PRC. But because of the high asking
price of RCAM and the budgetary constraints of the Government, the latters effort to purchase
and/or to expropriate the property was discontinued. RCAM then decided to effect, on its own,
the subdivision of the property and the sale of the individual subdivided lots to the
public.[6] Petitioners Manapat and Lim and respondents Loberanes, Quimque, Vega, Santos,
Oracion and Mercado in these consolidated cases were among those who purchased individual
subdivided lots of Grace Park directly from RCAM and/or PRC.

A significant turn of events however happened in 1977 when the late President
Ferdinand E. Marcos issued Presidential Decree (PD) No. 1072,[8] appropriating P1.2M out of the
Presidents Special Operations Funds to cover the additional amount needed for the
expropriation of Grace Park. The National Housing Authority (NHA), PHHCs successor, then filed
several expropriation proceedings over the already subdivided lots for the purpose of developing
Grace Park under the Zonal Improvement Program (ZIP) and subdividing it into small lots for
distribution and resale at a low cost to the residents of the area
Issue:
Whether or not the NHA may validly expropriate the parcels of land
Held:

Yes. The power of eminent domain is an inherent and indispensable power of the
State. Also called the power of expropriation, it is described as the highest and most exact idea of
property remaining in the government that may be acquired for some public purpose through a
method in the nature of a compulsory sale to the State.[47] By virtue of its sovereign character, the
exercise of the power prevails over the non-impairment clause,[48] and is clearly superior to the final
and executory judgment rendered by a court in an ejectment case.[49]

Being inherent, the power need not be specifically conferred on the government by the
Constitution. Section 9, Article III of the Constitution, which mandates that private property shall
not be taken for a public use without just compensation, merely imposes a limit on the
governments exercise of the power and provides a measure of protection to the individuals right
to property.[50]

Just like its two companion fundamental powers of the State,[51] the power of eminent domain is
exercised by the Legislature. However, it may be delegated by Congress to the President,
administrative bodies, local government units, and even to private enterprises performing public
services.[52]

Albeit the power partakes of a sovereign character, it is by no means absolute. Its exercise is
subject to limitations, one of which is, precisely, Section 9, Article III of the Constitution.

Over the years and in a plethora of cases, this Court has recognized the following requisites for
the valid exercise of the power of eminent domain: (1) the property taken must be private
property; (2) there must be genuine necessity to take the private property; (3) the taking must
be for public use; (4) there must be payment of just compensation; and (5) the taking must
comply with due process of law.
Since all of the requisites were met, NHA has the right to expropriate the parcels of land.
Parties:
Fermin Manapat vs Court of Appeals and National Housing Authority
Rights violated:
Fermin Manapat contended that it would be incongruous for the government to take his
land away from him only to give it back to him. However, such lands are only expropriated from
them so that it can be subdivided into smaller lots.
Case No. 2
Masikip vs City of Pasig
Facts:
Lourdes Dela Paz Masikip is the registered owner of a parcel of land, which the City of
Pasig sought to expropriate a portion thereof for the “sports development and recreational
activities” of the residents of Barangay Caniogan. This was in January 1994. Masikip refused.

On March 23, 1994, City of Pasig sought again to expropriate said portion of land for the alleged
purpose that it was “in line with the program of the Municipal Government to provide land
opportunities to deserving poor sectors of our community.”

Petitioner protested, so City of Pasig filed with the trial court a complaint for expropriation. The
Motion to Dismiss filed by Masikip was dismissed by the rial court on the ground that there was
genuine necessity to expropriate the property. Case was elevated to the Court of Appeals, which
dismissed petition for lack of merit.

Hence, this petition.

ISSUE:
W/N there was genuine necessity to expropriate the property

HELD:
Eminent domain is “the right of a government to take and appropriate private property
to the public use, whenever the public exigency requires it, which can be done only on condition
of providing a reasonably compensation therefor.” It is the power of the State or its
instrumentalities to take private property for public use and is inseparable from sovereignty and
inherent in government.

This power is lodged in the legislative branch of government. It delegates the power thereof to
the LGUs, other public entities and public utility corporations, subject only to constitutional
limitations. LGUs have no inherent power of eminent domain and may exercise it only when
expressly authorized by statute.

Sec. 19, LGC: LGU may, through its chief executive and acting pursuant to an ordinance, exercise
the power of eminent domain for public use, purpose or welfare for the benefit of the poor and
landless, upon payment of just compensation, pursuant to the provisions of the Constitution and
pertinent laws.
Provided:

(1) power of eminent domain may not be exercised unless a valid and definite offer has been
previously made to the owner and such offer was not accepted;
(2) LGU may immediately take possession of the property upon the filing of expropriation
proceedings and upon making a deposit with the proper court of at least 15% fair market value
of the property based on the current tax declaration; and
(3) amount to be paid for expropriated property shall be determined by the proper court, based
on the fair market value at the time of the taking of the property

There is already an established sports development and recreational activity center at Rainforest
Park in Pasig City. Evidently, there is no “genuine necessity” to justify the expropriation. The
records show that the Certification issued by the Caniogan Barangay Council which became the
basis for the passage of Ordinance No. 4, authorizing the expropriation, indicates that the
intended beneficiary is the Melendres Compound Homeowner’s Association, a private, non-
profit organization, not the residents of Caniogan.
Parties:
Lourdes de la Paz Masikip vs City of Pasig
Rights violated:
The right to own and possess property
Decision:
There is no “genuine necessity” to justify the expropriation. The records show that the
Certification issued by the Caniogan Barangay Council which became the basis for the passage of
Ordinance No. 4, authorizing the expropriation, indicates that the intended beneficiary is the
Melendres Compound Homeowner’s Association, a private, non-profit organization, not the
residents of Caniogan. The right to own and possess property is one of the most cherished rights
of men. It is so fundamental that it has been written into organic law of every nation where the
rule of law prevails. Unless the requisite of genuine necessity for the expropriation of one’s
property is clearly established, it shall be the duty of the courts to protect the rights of
individuals to their private property. Important as the power of eminent domain may be, the
inviolable sanctity which the Constitution attaches to the property of the individual requires not
only that the purpose for the taking of private property be specified. The genuine necessity for
the taking, which must be of a public character, must also be shown to exist.
Case No. 3
NPC vs Gutierrez
Facts:
Petitioner filed an action to acquire a right of way over the land of Respondents for the
construction of transmission lines. Petitioner was adjudged to pay the full market value of land
traversed by the transmission lines. Petitioner argued that it was only asking for a right of way.

Issue:
Whether or Not the acquisition of the right of way constitutes "taking" and such the case
will be entitled just compensation.

Held:
The acquisition of the right of way constitutes taking. It perpetually deprives Respondents
of their proprietary rights. No plant higher than three meters is allowed below the transmission
lines. Because of high tension current conveyed through the transmission lines, danger to life
and limbs cannot be discounted. The owner of the property is entitled to just compensation.

Parties:
National Power Corporation vs Misericordia Gutierrez and Ricardo Malit and CA
Rights Violated:
Propriety rights- ownership of real property or business
Eminent Domain:
The power of eminent domain results in the taking or appropriation of title to, and
possession of, the expropriated property; but no cogent reason appears why said power may not
be availed of to impose only a burden upon the owner of condemned property, without loss of
title and possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement of right-of-way
Decision:
The easement of right-of-way is definitely a taking under the power of eminent domain.
Considering the nature and effect of the installation of the 230 KV Mexico-Limay transmission
lines, the limitation imposed by NPC against the use of the land for an indefinite period deprives
private respondents of its ordinary use. For these reasons, the owner of the property
expropriated is entitled to a just compensation, which should be neither more nor less,
whenever it is possible to make the assessment, than the money equivalent of said property
Case No. 4
Republic vs La Orden
Facts:
To ease and solve the daily traffic congestion on Legarda Street, the Government drew plans to extend
Azcarraga St. (now Recto) from its junction with Mendiola St., up tothe Sta. Mesa Rotonda, Sampaloc,
Manila. To carry out this plan it offered to buy a portion of approximately 6,000 square meters of a bigger
parcel belonging to La Orden situated on Mendiola St. Not having been able to reach an agreement on the
matter with the owner, the Government instituted an expropriation proceeding. On May 27, 1957 the trial
court valued the property in question atP270,000.00 and authorized appellant to take immediate possession
upon depositing said amount. The deposit having been made with the City Treasurer of Manila, the trial court
issued the corresponding order directing the Sheriff of Manila to place appellant in possession of the property
aforesaid. In answer, the herein appellee filed a motion to dismiss the complaint based on the grounds that: (1) the
property sought to be expropriated is already dedicated to public use and therefore is not subject to expropriation;
(2) there is no necessity for the proposed expropriation; (3) the proposed Azcarraga Extension could pass through
a different site which would entail less expense to the Government and which would not necessitate the
expropriation of a property dedicated to education. The trial court granted the motion, holding that the
expropriation was not of extreme necessity. Hence this present petition.
Issue:

Whether or not there is a genuine necessity for the exercise of the Power of Eminent Domain.

Held:

It is the rule in this jurisdiction that private property may be expropriated for public use and upon
payment of just compensation; that condemnation of private property is justified only if it is for the public good
and there is a genuine necessity therefor 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 or not there is a genuine
necessity therefor. It does not need extended argument to show that whether or not the proposed opening
of the Azcarraga extension is a necessity in order to relieve the daily congestion of traffic on Legarda St., is a
question of fact dependent not only upon the facts of which the trial court very liberally took judicial notice
but also up on other factors that do not appear of record and must, therefore, be established by means
of evidence. The parties should have been given an opportunity to present their respective evidence upon these
factors and others that might be of direct or indirect help in determining the vital question of fact involved, namely,
the need to open the extension of Azcarraga street to ease and solve the traffic congestion on Legarda
street. WHEREFORE, the appealed order of dismissal is set aside and the present case is remanded to the trial
court for further proceedings in accordance with this decision.
Parties:

Republic of the Philippines vs La Orden De PP. Benedectino S. de Filipinas (a domestic

religious corporation that owns San Beda College)

Rights violated:

Right to property

Eminent Domain:

It is the rule in this jurisdiction that private property may be expropriated for public use
and upon payment of just compensation; that condemnation of private property is justified only
if it is for the public good and there is a genuine necessity therefor 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 or not there is a genuine necessity therefor

Decision:

It does not need extended argument to show that whether or not the proposed opening
of the Azcarraga extension is a necessity in order to relieve the daily congestion of traffic on
Legarda St., is a question of fact dependent not only upon the facts of which the trial court very
liberally took judicial notice but also up on other factors that do not appear of record and must,
therefore, be established by means of evidence. We are, therefore, of the opinion that the
parties should have been given an opportunity to present their respective evidence upon these
factors and others that might be of direct or indirect help in determining the vital question of
fact involved
Case No. 5

Republic of the Philippines vs PLDT

Facts:

The Bureau of Telecommunications set up its own Government Telephone System by utilizing its own
appropriation and equipment and by renting trunk lines of the PLDT tenable government offices
to call private parties. Their subscription agreement prohibits the public use of the service
furnished the telephone subscriber for his private use. The Bureau has extended its services to
the general public since 1948, using the same trunk lines owned by, and rented from, the PLDT,
and prescribing its (the Bureau's) own schedule of rates. On 7April 1958, the defendant
Philippine Long Distance Telephone Company, complained to the Bureau of Telecommunications
that said bureau was violating the conditions under which their Private Branch Exchange (PBX) is
inter-connected with the PLDT's facilities, referring to the rented trunk lines, for the Bureau had
used the trunk lines not only for the use of government offices but even to serve private persons
or the general public, in competition with the business of the PLDT. Soon after, it disconnected
the trunk lines being rented by the Bureau. Republic commenced suit against the defendant, in
the Court of First Instance of Manila, praying in its complaint for judgment commanding the
PLDT to execute a contract with plaintiff, through the Bureau, for the use of the facilities of
defendant's telephone system throughout the Philippines under such terms and conditions as
the court might consider reasonable, and for a writ of preliminary injunction against the
defendant company to restrain the severance of the existing telephone connections
and/or restore those severed.
ISSUE:

Whether the courts may compel PLDT to execute a contract with the Republic.

HELD:

We agree with the court below that parties cannot be coerced to enter into a contract
where no agreement is had between them as to the principal terms and conditions of
the contract. Freedom to stipulate such terms and conditions is of the essence of our contractual
system, and by express provision of the statute, a contract may be annulled if tainted by
violence, intimidation, or undue influence (Articles 1306, 1336, 1337, Civil Code of the
Philippines). But the court a quo has apparently overlooked that while the Republic may not
compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the
sovereign power of eminent domain, require the telephone company to permit interconnection
of the government telephone system and that of the PLDT, as the needs of the government
service may require, subject to the payment of just compensation to be determined by the
court. Nominally, of course, the power of eminent domain results in the taking or appropriation
of title to, and possession of, the expropriated property; but no cogent reason appears why said
power may not be availed of to impose only a burden upon the owner of condemned property,
without loss of title and possession. It is unquestionable that real property may, through
expropriation, be subjected to an easement of right of way. The use of the PLDT's lines and
services to allow inter-service connection between both telephone systems is not
much different. In either case private property is subjected to a burden for public use and
benefit. If, under section 6, Article XIII, of the Constitution, the State may, in the interest of
national welfare, transfer utilities to public ownership upon payment of just compensation, there
is no reason why the State may not require a public utility to render services in the general
interest, provided just compensation is paid therefor. Ultimately, the beneficiary of the
interconnecting service would be the users of both telephone systems, so that the
condemnation would be for public use.
Parties:
Republic of the Philippines vs PLDT
Rights violated:
Right to just compensation, right to property
Eminent Domain:
The power of eminent domain results in the taking or appropriation of title to, and
possession of, the expropriated property; but no cogent reason appears why the said power may
not be availed of to impose only a burden upon the owner of condemned property, without loss
of title and possession. It is unquestionable that real property may, through expropriation, be
subjected to an easement of right of way.
Held:
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.
Case No. 6
Republic of the Philippines vs Borbon

Facts:
NAPOCOR entered a property located in Barangay San Isidro, Batangas City in order to
construct and maintain transmission lines. Respondents heirs of Saturnino Q. Borbon owned the
property. NAPOCOR filed a complaint for expropriation in the Regional Trial Court in Batangas
City (RTC), seeking the acquisition of an easement of right of way over a portion of the property.
The respondents staunchly maintained that NAPOCOR had not negotiated with them before
entering the property and that the entry was done without their consent; nonetheless, they
tendered no objection to NAPOCOR’s entry provided it would pay just compensation not only for
the portion sought to be expropriated but for the entire property whose potential was greatly
diminished, if not totally lost, due to the project.

During the pendency of an appeal, NAPOCOR filed a Manifestation and Motion to Discontinue
Expropriation Proceedings, informing that the parties failed to reach an amicable agreement;
that the property sought to be expropriated was no longer necessary for public purpose because
of the intervening retirement of the transmission lines installed on the respondents’ property;
that because the public purpose for which such property would be used thereby ceased to exist,
the proceedings for expropriation should no longer continue, and the State was now duty-bound
to return the property to its owners; and that the dismissal or discontinuance of the
expropriation proceedings was in accordance with Section 4, Rule 67 of the Rules of Court.

Issue:
Whether or not the expropriation proceedings should be discontinued or dismissed
pending appeal.

Ruling:
The dismissal of the proceedings for expropriation at the instance of NAPOCOR is proper,
but, conformably with Section 4, Rule 67 of the Rules of Court, the dismissal or discontinuance of
the proceedings must be upon such terms as the court deems just and equitable.
Before anything more, we remind the parties about the nature of the power of eminent domain.
The right of eminent domain is “the ultimate right of the sovereign power to appropriate, not
only the public but the private property of all citizens within the territorial sovereignty, to public
purpose.” 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.

Public use, in common acceptation, means “use by the public.” However, the concept has
expanded to include utility, advantage or productivity for the benefit of the public. “Public use”
has now been held to be synonymous with “public interest,” “public benefit,” and “public
convenience.”

It is essential that the element of public use of the property be maintained throughout the
proceedings for expropriation. The effects of abandoning the public purpose were explained in
Mactan-Cebu International Airport Authority v. Lozada, Sr., to wit:
More particularly, with respect to the element of public use, the expropriator should commit to
use the property pursuant to the purpose stated in the petition for expropriation filed, failing
which, it should file another petition for the new purpose.If not, it is then incumbent upon the
expropriator to return the said property to its private owner, if the latter desires to reacquire the
same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it would lack one
indispensable element for the proper exercise of the power of eminent domain, namely, the
particular public purpose for which the property will be devoted. Accordingly, the private
property owner would be denied due process of law, and the judgment would violate the
property owner’s right to justice, fairness and equity.
It is not denied that the purpose of the plaintiff was to acquire the land in question for public
use. The fundamental basis then of all actions brought for the expropriation of lands, under the
power of eminent domain, is public use. That being true, the very moment that it appears at any
stage of the proceedings that the expropriation is not for a public use, the action must
necessarily fail and should be dismissed, for the reason that the action cannot be maintained at
all except when the expropriation is for some public use. That must be true even during the
pendency of the appeal or at any other stage of the proceedings. If, for example, during the trial
in the lower court, it should be made to appear to the satisfaction of the court that the
expropriation is not for some public use, it would be the duty and the obligation of the trial court
to dismiss the action. And even during the pendency of the appeal, if it should be made to
appear to the satisfaction of the appellate court that the expropriation is not for public use, then
it would become the duty and the obligation of the appellate court to dismiss it.

Verily, the retirement of the transmission lines necessarily stripped the expropriation
proceedings of the element of public use. To continue with the expropriation proceedings
despite the definite cessation of the public purpose of the project would result in the rendition
of an invalid judgment in favor of the expropriator due to the absence of the essential element
of public use.
Accordingly, the Court grants the motion to discontinue the proceedings subject to the
conditions to be shortly mentioned hereunder, and requires the return of the property to the
respondents. Having said that, we must point out that NAPOCOR entered the property without
the owners’ consent and without paying just compensation to the respondents. Neither did it
deposit any amount as required by law prior to its entry. The Constitution is explicit in obliging
the Government and its entities to pay just compensation before depriving any person of his or
her property for public use. Considering that in the process of installing transmission lines,
NAPOCOR destroyed some fruit trees and plants without payment, and the installation of the
transmission lines went through the middle of the land as to divide the property into three lots,
thereby effectively rendering the entire property inutile for any future use, it would be unfair for
NAPOCOR not to be made liable to the respondents for the disturbance of their property rights
from the time of entry until the time of restoration of the possession of the property.

In view of the discontinuance of the proceedings and the eventual return of the property to the
respondents, there is no need to pay “just compensation” to them because their property would
not be taken by NAPOCOR. Instead of full market value of the property, therefore, NAPOCOR
should compensate the respondents for the disturbance of their property rights from the time of
entry until the time of restoration of the possession by paying to them actual or other
compensatory damages.
This should mean that the compensation must be based on what they actually lost as a result
and by reason of their dispossession of the property and of its use, including the value of the
fruit trees, plants and crops destroyed by NAPOCOR’s construction of the transmission lines.
Considering that the dismissal of the expropriation proceedings is a development occurring
during the appeal, the Court now treats the dismissal of the expropriation proceedings as
producing the effect of converting the case into an action for damages. For that purpose, the
Court remands the case to the court of origin for further proceedings. The court of origin shall
treat the case as if originally filed as an action for damages.

Parties:

Republic of the Philippines represented by NAPCOR vs heirs of Saturnino Q. Borbon

Rights violated:

Rights to just compensation since the entry was done without their consent in the
process, destroying some fruit trees without payment, and installing five transmission line posts
and five woodpoles for its project

Eminent Domain:

The right of eminent domain is "the ultimate right of the sovereign power to appropriate,
not only the public but the private property of all citizens within the territorial sovereignty, to
public purpose. 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.38 These requirements partake the nature of implied conditions that should be complied
with to enable the condemner to keep the property expropriated. The power of eminent domain
is a right reserved to the people or Government to take property for public use. It is the right of
the state, through its regular organization, to reassert either temporarily or permanently its
dominion over any portion of the soil of the state on account of public necessity and for the
public good. The right of eminent domain is the right which the Government or the people
retains over the estates of individuals to resume them for public use. It is the right of the people,
or the sovereign, to dispose, in case of public necessity and for the public safety, of all the wealth
contained in the state.

Decision:

The taking of private property, consequent to the Government’s exercise of its power of
eminent domain, is always subject to the condition that the property be devoted to the specific
public purpose for which it was taken. Corollarily, if this particular purpose or intent is not
initiated or not at all pursued, and is peremptorily abandoned, then the former owners, if they
so desire, may seek the reversion of the property, subject to the return of the amount of just
compensation received. In such a case, the exercise of the power of eminent domain has
become improper for lack of the required factual justification.60

This should mean that the compensation must be based on what they actually lost as a result
and by reason of their dispossession of the property and of its use, including the value of the
fruit trees, plants and crops destroyed by NAPOCOR’s construction of the transmission lines.
Considering that the dismissal of the expropriation proceedings is a development occurring
during the appeal, the Court now treats the dismissal of the expropriation proceedings as
producing the effect of converting the case into an action for damages. The Court DISMISSES the
expropriation proceedings due to the intervening cessation of the need for public use; REMANDS
the records to the Regional Trial Court, Branch 1, in Batangas City as the court of origin for
further proceedings to be conducted in accordance with the foregoing instructions; and ORDERS
said trial court to try and decide the issues with dispatch.
Case No. 7

People vs Fajardo

Facts:

On 15 August 1950, during the incumbency of Juan F. Fajardo as mayor of the municipality
of Baao, Camarines Sur, the municipal council passed Ordinance 7, series of 1950,providing that
“any person or persons who will construct or repair a building should, before constructing or
repairing, obtain a written permit from the Municipal Mayor,” that “a fee of not less than P2.00
should be charged for each building permit and P1.00 for each repair permit issued,” and that any
violation of the provisions of the ordinance shall make the violator liable to pay a fine of not less
than P25 nor more than P50 or imprisonment of not less than 12 days nor more than 24 days or
both, at the discretion of the court; and that if said building destroys the view of the Public Plaza
or occupies any public property, it shall be removed at the expense of the owner of the building
or house. 4 years later, after the term of Fajardo as mayor had expired, he and his son-in-law,
Pedro Babilonia, filed a written request with the incumbent municipal mayor for a permit to
construct a building adjacent to their gasoline station on a parcel of land registered in Fajardo’s
name, located along the national highway and separated from the public plaza by a creek. On 16
January 1954, the request was denied, for the reason among others that the proposed building
would destroy the view or beauty of the public plaza. On 18 January 1954, Fajardo and Babilonia
reiterated their request for a building permit, but again the request was turned down by the
mayor. Whereupon, Fajardo and Babilonia proceeded with the construction of the building
without a permit, because they needed a place of residence very badly, their former house having
been destroyed by a typhoon and hitherto they had been living on leased property. On 26
February 1954, Fajardo and Babilonia were charged before and convicted by the justice of the
peace court of Baao, Camarines Sur, for violation of Ordinance 7. Fajardo and Babilonia appealed
to the Court of First Instance (CDI), which affirmed the conviction, and sentenced both to pay a
fine of P35 each and the costs, as well as to demolish the building in question because it destroys
the view of the public plaza of Baao. From this decision, Fajardo and Babilonia appealed to the
Court of Appeals, but the latter forwarded the records to the Supreme Court because the appeal
attacks the constitutionality of the ordinance in question.
Issue:
Whether the refusal of the Mayor of Baao to issue a building permit on the ground that
the proposed building would destroy the view of the public plaza is an undue deprivation of the
use of the property in question, and thus a taking without due compensation.
Held:
Yes. The ordinance doesn’t state any standard that limits the grant of power to the mayor.
It is an arbitrary and unlimited conferment.
Ordinances which thus invest a city council with a discretion which is purely arbitrary, and which
may be exercised in the interest of a favored few, are unreasonable and invalid.
The ordinance should have established a rule by which its impartial enforcement could be secured.
All of the authorities cited above sustain this conclusion.

The ordinance is unreasonable and oppressive, in that it operates to permanently deprive

appellants of the right to use their own property; hence, it oversteps the bounds of police power,
and amounts to a taking of appellants property without just compensation.
While property may be regulated to the interest of the general welfare, and the state may
eliminate structures offensive to the sight, the state may not permanently divest owners of the
beneficial use of their property and practically confiscate them solely to preserve or assure the
aesthetic appearance of the community.
Fajardo would be constrained to let the land be fallow and not be used for urban purposes. To do
this legally, there must be just compensation and they must be given an opportunity to be heard.
An ordinance which permanently so restricts the use of property that it can not be used for any
reasonable purpose goes, it is plain, beyond regulation and must be recognized as a taking of the
property.

The validity was also refuted by the Admin Code which states:
SEC. 2243. Certain legislative powers of discretionary character. — The municipal council shall
have authority to exercise the following discretionary powers:

(c) To establish fire limits in populous centers, prescribe the kinds of buildings that may
be constructed or repaired within them, and issue permits for the creation or repair thereof,
charging a fee which shall be determined by the municipal council and which shall not be less than
two pesos for each building permit and one peso for each repair permit issued. The fees collected
under the provisions of this subsection shall accrue to the municipal school fund.
Since, there was absolutely no showing in this case that the municipal council had either
established fire limits within the municipality or set standards for the kind or kinds of buildings to
be constructed or repaired within them before it passed the ordinance in question, it is clear that
said ordinance was not conceived and promulgated under the express authority of sec. 2243 (c)

Parties:
People of the Philippines vs Juan F. Fajardo

Rights violated:
Right to their own property, right to just compensation

Decision
The refusal of the Mayor of Baao to issue a building permit to Fajardo and Babilonia was
predicated on the ground that the proposed building would “destroy the view of the public plaza”
by preventing its being seen from the public highway. Even thus interpreted, the ordinance is
unreasonable and oppressive, in that it operates — to permanently deprive the latter of the right
to use their own property; hence, it oversteps the bounds of police power, and amounts to a taking
of the property without just compensation. But while property may be regulated in the interest of
the general welfare such as to regard the beautification of neighborhoods as conducive to the
comfort and happiness of residents), and in its pursuit, the State may prohibit structures offensive
to the sight, the State may not, under the guise of police power, permanently divest owners of the
beneficial use of their property and practically confiscate them solely to preserve or assure the
aesthetic appearance of the community. As the case now stands, every structure that may be
erected on Fajardo’s land, regardless of its own beauty, stands condemned under the ordinance
in question, because it would interfere with the view of the public plaza from the highway. Fajardo
would, in effect, be constrained to let their land remain idle and unused for the obvious purpose
for which it is best suited, being urban in character. To legally achieve that result, the municipality
must give Fajardo just compensation and an opportunity to be heard.
POWER OF TAXATION
Case No.1
NPC vc City of Cabanatuan
Facts:
Petitioner is a government-owned and controlled corporation created under
Commonwealth Act No. 120, as amended.
For many years now, petitioner sells electric power to the residents of Cabanatuan City, posting a
gross income of P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance No. 165-92,8 the
respondent assessed the petitioner a franchise tax amounting to P808,606.41, representing 75%
of 1% of the latter’s gross receipts for the preceding year.

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

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

“Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or
juridical, including government owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of this Code.”
RTC upheld NPC’s tax exemption. On appeal the CA reversed the trial court’s Order on the ground
that section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the
exemptions granted to the petitioner.

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

HELD:
YES. Taxes are the lifeblood of the government, for without taxes, the government can
neither exist nor endure. A principal attribute of sovereignty, the exercise of taxing power derives
its source from the very existence of the state whose social contract with its citizens obliges it to
promote public interest and common good. The theory behind the exercise of the power to tax
emanates from necessity;32 without taxes, government cannot fulfill its mandate of promoting
the general welfare and well-being of the people.
Section 137 of the LGC clearly states that the LGUs can impose franchise tax “notwithstanding any
exemption granted by any law or other special law.” This particular provision of the LGC does not
admit any exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO’s exemption
from the payment of franchise taxes was brought as an issue before this Court. The same issue
was involved in the subsequent case of Manila Electric Company v. Province of Laguna.75 Ruling in
favor of the local government in both instances, we ruled that the franchise tax in question is
imposable despite any exemption enjoyed by MERALCO under special laws, viz:
“It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC to
support their position that MERALCO’s tax exemption has been withdrawn. The explicit language
of section 137 which authorizes the province to impose franchise tax ‘notwithstanding any
exemption granted by any law or other special law’ is all-encompassing and clear. The franchise
tax is imposable despite any exemption enjoyed under special laws.
Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless
otherwise provided in this Code, tax exemptions or incentives granted to or presently enjoyed by
all persons, whether natural or juridical, including government-owned or controlled corporations
except (1) local water districts, (2) cooperatives duly registered under R.A. 6938, (3) non-stock and
non-profit hospitals and educational institutions, are withdrawn upon the effectivity of this code,
the obvious import is to limit the exemptions to the three enumerated entities. It is a basic precept
of statutory construction that the express mention of one person, thing, act, or consequence
excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius. In the
absence of any provision of the Code to the contrary, and we find no other provision in point, any
existing tax exemption or incentive enjoyed by MERALCO under existing law was clearly intended
to be withdrawn.
Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the local
government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross annual
receipts for the preceding calendar based on the incoming receipts realized within its territorial
jurisdiction. The legislative purpose to withdraw tax privileges enjoyed under existing law or charter
is clearly manifested by the language used on (sic) Sections 137 and 193 categorically withdrawing
such exemption subject only to the exceptions enumerated. Since it would be not only tedious and
impractical to attempt to enumerate all the existing statutes providing for special tax exemptions
or privileges, the LGC provided for an express, albeit general, withdrawal of such exemptions or
privileges. No more unequivocal language could have been used.”76 (emphases supplied)
Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance
and support myriad activities of the local government units for the delivery of basic services
essential to the promotion of the general welfare and the enhancement of peace, progress, and
prosperity of the people. As this Court observed in the Mactan case, “the original reasons for the
withdrawal of tax exemption privileges granted to government-owned or controlled corporations
and all other units of government were that such privilege resulted in serious tax base erosion and
distortions in the tax treatment of similarly situated enterprises.” With the added burden of
devolution, it is even more imperative for government entities to share in the requirements of
development, fiscal or otherwise, by paying taxes or other charges due from them.
Parties:

National Power Corporation vs City of Cabanatuan

Power of Taxation:

Taxes are the lifeblood of the government, for without taxes, the government can neither
exist nor endure. A principal attribute of sovereignty, the exercise of taxing power derives its
source from the very existence of the state whose social contract with its citizens obliges it to
promote public interest and common good.

Decision:

The power to tax is the most effective instrument to raise needed revenues to finance and
support myriad activities of the local government units for the delivery of basic services essential
to the promotion of the general welfare and the enhancement of peace, progress, and prosperity
of the people. As this Court observed in the Mactan case, "the original reasons for the withdrawal
of tax exemption privileges granted to government-owned or controlled corporations and all other
units of government were that such privilege resulted in serious tax base erosion and distortions
in the tax treatment of similarly situated enterprises."78 With the added burden of devolution, it is
even more imperative for government entities to share in the requirements of development, fiscal
or otherwise, by paying taxes or other charges due from them.
Case No.2

Chamber of Real Estate and Builders Inc., vs Romulo

Facts:
Petitioner is an association of real estate developers and builders in the Philippines. It
impleaded former Executive Secretary Alberto Romulo, then acting Secretary of Finance Juanita
D. Amatong and then Commissioner of Internal Revenue Guillermo Parayno, Jr. as respondents.
Petitioner assails the validity of the imposition of minimum corporate income tax (MCIT) on
corporations and creditable withholding tax (CWT) on sales of real properties classified as ordinary
assets.
Section 27(E) of RA 8424 provides for MCIT on domestic corporations and is implemented
by RR 9-98. Petitioner argues that the MCIT violates the due process clause because it levies
income tax even if there is no realized gain.
Petitioner also seeks to nullify Sections 2.57.2(J) (as amended by RR 6-2001) and 2.58.2 of
RR 2-98, and Section 4(a)(ii) and (c)(ii) of RR 7-2003, all of which prescribe the rules and procedures
for the collection of CWT on the sale of real properties categorized as ordinary assets.Petitioner
contends that these revenue regulations are contrary to law for two reasons:first, they ignore the
different treatment by RA 8424 of ordinary assets and capital assets andsecond, respondent
Secretary of Finance has no authority to collect CWT, much less, to base the CWT on the gross
selling price or fair market value of the real properties classified as ordinary assets.

Petitioner also asserts that the enumerated provisions of the subject revenue regulations
violate the due process clause because, like the MCIT, the government collects income tax even
when the net income has not yet been determined. They contravene the equal protection clause
as well because the CWT is being levied upon real estate enterprises but not on other business
enterprises, more particularly those in the manufacturing sector.

ISSUES:
Whether or not the imposition of the MCIT on domestic corporations is unconstitutional?

Whether or not the imposition of CWT on income from sales of real properties classified
as ordinary assets under RRs 2-98, 6-2001 and 7-2003, is unconstitutional?

Whether or not this Court should take cognizance of the present case?

HELD:
The petition is dismissed. The Secretary of Finance is granted, under Section 244 of RA
8424, the authority to promulgate the necessary rules and regulations for the effective
enforcement of the provisions of the law. Such authority is subject to the limitation that the rules
and regulations must not override, but must remain consistent and in harmony with, the law they
seek to apply and implement. It is well-settled that an administrative agency cannot amend an act
of Congress.

It has been recognized that the method of withholding tax at source is a procedure of collecting
income tax which is sanctioned by our tax laws. The withholding tax system was devised for three
primary reasons: first, to provide the taxpayer a convenient manner to meet his probable income
tax liability; second, to ensure the collection of income tax which can otherwise be lost or
substantially reduced through failure to file the corresponding returns and third, to improve the
governments cash flow. This results in administrative savings, prompt and efficient collection of
taxes, prevention of delinquencies and reduction of governmental effort to collect taxes through
more complicated means and remedies.

Respondent Secretary has the authority to require the withholding of a tax on items of income
payable to any person, national or juridical, residing in the Philippines .Such authority is derived
from Section 57(B) of RA 8424 The questioned provisions of RR 2-98, as amended, are well within
the authority given by Section 57(B) to the Secretary,i.e., the graduated rate of 1.5%-5% is
between the 1%-32% range; the withholding tax is imposed on the income payable and the tax is
creditable against the income tax liability of the taxpayer for the taxable year.
Parties:
Chamber of Real Estate and Builders Inc., vs Romulo (Executive Secretary)

Rights violated:

Property rights

Power of Taxation:

Taxation is an inherent attribute of sovereignty.[34] It is a power that is purely

legislative.[35] Essentially, this means that in the legislature primarily lies the discretion to

determine the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs (place)

of taxation.[36] It has the authority to prescribe a certain tax at a specific rate for a particular public

purpose on persons or things within its jurisdiction. In other words, the legislature wields the

power to define what tax shall be imposed, why it should be imposed, how much tax shall be

imposed, against whom (or what) it shall be imposed and where it shall be imposed.
As a general rule, the power to tax is plenary and unlimited in its range, acknowledging in its very

nature no limits, so that the principal check against its abuse is to be found only in the

responsibility of the legislature (which imposes the tax) to its constituency who are to pay

it.[37] Nevertheless, it is circumscribed by constitutional limitations. At the same time, like any

other statute, tax legislation carries a presumption of constitutionality.

Decision:
The MCIT is not an additional tax imposition. It is imposed in lieu of the normal net
income tax, and only if the normal income tax is suspiciously low.

The MCIT merely approximates the amount of net income tax due from a corporation, pegging
the rate at a very much reduced 2% and uses as the base the corporation’s gross income
Case No. 3

MIAA vs CA

Facts:
The Manila International Airport Authority (MIAA) operates the Ninoy
Aquino International Airport(NAIA) Complex in Parañaque City under Executive Order No. 903
(MIAA Charter), as amended. As such operator, it administers the land, improvements and
equipment within the NAIA Complex. In March1997, the Office of the Government Corporate
Counsel (OGCC) issued Opinion No. 061 to the effect that the Local Government Code of 1991
(LGC) withdrew the exemption from real estate tax granted to MIAA under Section 21 of its
Charter. Thus, MIAA paid some of the real estate tax already due. In June 2001, it received Final
Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to
2001. The City Treasurer subsequently issued notices of levy and warrants of levy on the airport
lands and buildings. At the instance of MIAA, the OGCC issued Opinion No. 147 clarifying Opinion
No. 061, pointing out that Sec. 206 of the LGC requires persons exempt from real estate tax to
show proof of exemption. According to the OGCC, Sec. 21 of the MIAA Charter is the proof that
MIAA is exempt from real estate tax. MIAA, thus, filed a petition with the Court of Appeals seeking
to restrain the City of Parañaque from imposing real estate tax on, levying against, and auctioning
for public sale the airport lands and buildings, but this was dismissed for having been filed out of
time. Hence, MIAA filed this petition for review, pointing out that it is exempt from real estate tax
under Sec.21 of its charter and Sec. 234 of the LGC. It invokes the principle that the government
cannot tax itself as a justification for exemption, since the airport lands and buildings, being
devoted to public use and public service, are owned by the Republic of the Philippines. On the
other hand, the City of Parañaque invokes Sec. 193 of the LGC, which expressly withdrew the tax
exemption privileges of government- owned and controlled corporations (GOCC) upon the
effectivity of the LGC. It asserts that an international airport is not among the exceptions
mentioned in the said law. Meanwhile, the City of Parañaque posted and published
notices announcing the public auction sale of the airport lands and buildings. In the afternoon
before the scheduled public auction, MIAA applied with the Court for the issuance of a TRO to
restrain the auction sale. The Court issued a TRO on the day of the auction sale, however, the same
was received only by the City of Parañaque three hours after the sale.
Issue:
Whether or not the airport lands and buildings of MIAA are exempt from real estate tax
Held:
The Petition is GRANTED. The airport lands and buildings of MIAA are exempt from real
estate tax imposed by local governments. Sec. 243(a) of the LGC exempts from real estate tax any
real property owned by the Republic of the Philippines. This exemption should be read in relation
with Sec. 133(o) of the LGC, which provides that the exercise of the taxing powers of local
governments shall not extend to the levy of taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities. These provisions recognize the basic principle
that local governments cannot tax the national government, which historically merely delegated
to local governments the power to tax. The rule is that a tax is never presumed and there must be
clear language in the law imposing the tax. This rule applies with greater force when local
governments seek to tax national government instrumentalities. Moreover, a tax exemption is
construed liberally in favor of national government instrumentalities. MIAA is not a GOCC, but an
instrumentality of the government. The Republic remains the beneficial owner of the
properties. MIAA itself is owned solely by the Republic. At any time, the President can transfer
back to the Republic title to the airport lands and buildings without the Republic paying MIAA any
consideration. As long as the airport lands and buildings are reserved for public use, their
ownership remains with the State. Unless the President issues a proclamation withdrawing these
properties from public use, they remain properties of public dominion. As such, they are
inalienable, hence, they are not subject to levy on execution or foreclosure sale, and they are
exempt from real estate tax. However, portions of the airport lands and buildings that MIAA leases
to private entities are not exempt from real estate tax. In such a case, MIAA has granted the
beneficial use of such portions for a consideration to a taxable person.
Parties:
Manila International Airport Authority vs CA
Power of Taxation:
The rule is that a tax is never presumed and there must be clear language in the law
imposing the tax. This rule applies with greater force when local governments seek
to tax national government instrumentalities. Moreover, a tax exemption is construed liberally in
favor of national government instrumentalities.
Decision:
The court held that the land and buildings of MIAA are part of the public
dominion. Since the airport is devoted for public use, for the domestic and
international travel and transportation. Even if MIAA charge fees, this is for support of its
operation and for regulation and does not change the character of the land and buildings of
MIAA as part of the public dominion. As part of the public dominion the land and buildings of MIAA
are outside the commerce of man. To subject them to levy and public auction is contrary to
public policy. Unless the President issues a proclamation withdrawing the airport land
and buildings from public use, these properties remain to be of public dominion and are
inalienable. As long as the land and buildings are for public use the ownership is with the Republic
of the Philippines.
Case No. 4
Planters Products Inc., vs Fertiphil Corp
Facts:
▪ President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which
provided, among others, for the imposition of a capital recovery component (CRC) on the
domestic sale of all grades of fertilizers which resulted in having Fertiphil paying P 10/bag
sold to the Fertilizer and Perticide Authority (FPA).
▪ FPA remits its collection to Far East Bank and Trust Company who applies to the payment of
corporate debts of Planters Products Inc. (PPI)
▪ After the Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. Upon
return of democracy, Fertiphil demanded a refund but PPI refused. Fertiphil filed a
complaint for collection and damages against FPA and PPI with the RTC on the ground that
LOI No. 1465 is unjust, unreaonable oppressive, invalid and unlawful resulting to denial of
due process of law.
▪ FPA answered that it is a valid exercise of the police power of the state in ensuring the
stability of the fertilizing industry in the country and that Fertiphil did NOT sustain damages
since the burden imposed fell on the ultimate consumers.
▪ RTC and CA favored Fertiphil holding that it is an exercise of the power of taxation ad is as
such because it is NOT for public purpose as PPI is a private corporation.

Issue:
W/N LOI No. 1465 is an invalid exercise of the power of taxation rather the police power
Held:

Yes. Police power and the power of taxation are inherent powers of the state but distinct
and have different tests for validity. Police power is the power of the state to enact the legislation
that may interfere with personal liberty on property in order to promote general welfare. While,
the power of taxation is the power to levy taxes as to be used for public purpose. The main
purpose of police power is the regulation of a behavior or conduct, while taxation is revenue
generation. The lawful subjects and lawful means tests are used to determine the validity of a law
enacted under the police power. The power of taxation, on the other hand, is circumscribed by
inherent and constitutional limitations. In this case, it is for purpose of revenue. But it is a robbery
for the State to tax the citizen and use the funds generation for a private purpose. Public purpose
does NOT only pertain to those purpose which are traditionally viewed as essentially governmental
function such as building roads and delivery of basic services, but also includes those purposes
designed to promote social justice. Thus, public money may now be used for the relocation of
illegal settlers, low-cost housing and urban or agrarian reform.
Parties:
Planters Products Inc., vs Fertiphil Corporation- both engaged in the importation and
distribution of fertilizers, pesticides and agricultural chemicals.
Power of Taxation:
Police power and the power of taxation are inherent powers of the State. These powers
are distinct and have different tests for validity. Police power is the power of the State to enact
legislation that may interfere with personal liberty or property in order to promote the general
welfare, while the power of taxation is the power to levy taxes to be used for public purpose. The
main purpose of police power is the regulation of a behavior or conduct, while taxation is revenue
generation. The “lawful subjects” and “lawful means” tests are used to determine the validity of
a law enacted under the police power. The power of taxation, on the other hand, is circumscribed
by inherent and constitutional limitations.
Decision:
An inherent limitation on the power of taxation is public purpose. Taxes are exacted only
for a public purpose. They cannot be used for purely private purposes or for the exclusive benefit
of private persons. The reason for this is simple. The power to tax exists for the general welfare;
hence, implicit in its power is the limitation that it should be used only for a public purpose. It
would be a robbery for the State to tax its citizens and use the funds generated for a private
purpose. As an old United States case bluntly put it: “To lay with one hand, the power of the
government on the property of the citizen, and with the other to bestow it upon favored
individuals to aid private enterprises and build up private fortunes, is nonetheless a robbery
because it is done under the forms of law and is called taxation.”