PAL VS.

EDU, 164 SCRA 320 (1988)

Facts of the case:
The disputed registration fees were imposed by the commissioner Elevate pursuant to Section 8, RA
4136, the Land Transportation and Traffic Code.
PAL as a corporation is engaged in the air transportation business under the legislative franchise.
Under its franchise, PAL is exempt from the payment of taxes.
In 1971 however, appellee Commissioner elevate issued a regulation requiring all tax exempt entities, among
them PAL to pay motor vehicle registration fees.
Despite PALs protest, appellee refused to register the appellants motor vehicles unless the amounts
imposed were paid. PAL thus paid, under protest, P19,529.75 as registration fees of its motor vehicles.
After paying under protest, PAL wrote to Commissioner Edu demanding a refund of the amounts
paid, invoking Calalang vs. Lorenzo where it was held that motor vehicle registration fees are in reality taxes
from the payment of which PAL is exempt by virtue of its legislative franchise.
Edu denied request for refund based on Republic v. Phil. Rabbit Bus, that motor vehicle registration fees are
regulatory and not revenue measures and, therefore, do not come within the exemption granted to PAL under
its franchise.
PAL filed the complaint against LTC Commissioner EDu and National Treasurer Carbonell.
ISSUE: What is the nature of motor vehicle registration fees? Are they taxes or regulatory fees?
RULING ON TAX VS. LICENSE AND REGULATORY FEE
SC ruled that motor vehicles registration fees are TAXES. Fees may be regarded as taxes even
though they also serve as instruments of regulation because taxation may be made as an implementation of the
States police power. But if the purpose is primarily REVENUE, or if revenue is atleast, one of the real and
substantial purposes, then the exaction is properly called a TAX.
RULING ON PURPOSES OF TAX, OBJECTIVE OF TAXATION: GENERAL, FISCAL REVENUE
The Legislative intent and purpose behind the law requiring owners of vehicles , to pay for their
registration is mainly to raise funds for the construction and maintenance of highways and, to a much lesser
degree, pay for the operating expenses of the administering agency.
It is possible for an exaction to be both a tax and a regulation. License fees are charges, looked to as a
source of revenue as well as a means of regulation. The fees may be properly regarded as taxes eventhough
they also serve as an instrument of regulation. If the purpose is primarily revenue, or if revenue is atleast one
of the real and substantial purposes, then the exaction is properly called a TAX.
RULING ON NON-DELEGABILITY OF THE POWER TO TAX
It is clear from the provisions of section 73 of Commonwealth Act 123 and section 61 of the Land
Transportation and Traffic Code that the legislative intent and purpose behind the law requiring owners of
vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of highways
and to a much lesser degree, pay for the operating expenses of the administering agency.
There is a valid delegation to the Land Transportation Office. Simply put, if the exaction under RA
4136 were merely a regulatory fee, the imposition on RA 5448 need not be an additional tax. RA4136 also
speaks of other fees such as the special permit fees for certain types of motor vehicles (sec.10) and
additional fees for change of registration (sec.11). These are not to be understood as taxes because such fees
are very minimal to be revenue-raising. Thus they are not mentioned by Sec. 59 (b) of the Code as taxes like

the motor vehicle registration fee and chauffers license fee. Such fees are to go into the expenditures of the
Land Transportation Commission as provided for in the last proviso of Sec. 61.
Motor vehicle registration fees are at present exacted pursuant to the Land Transportation and Traffic
Code are actually taxes intended for additional revenues of government even if one-fifth or less of the amount
collected is set aside for the operating expenses of the agency administering the program.

White Light Corporation vs. 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.

OSG vs. AYALA

Facts:

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

The Senate Committee on Trade and Commerce found that the collection of parking fees by shopping malls is contrary
to National Building Code and figuratively speaking, the Code has expropriated the land for parking. Also,
Committee stated that the collection of parking fees would be against Article II of RA 9734 (Consumer Act of the
Philippines) as to the States policy of protecting the interest of consumers. Moreover, Section 201 of the National
Building Code gives the responsibility for the administration and enforcement of the provisions of the Code, including
the imposition of penalties for administrative violations thereof to the Secretary of Public Works. This is not being
strictly followed as the LGUs are tasked to discharge the regulatory powers of DPWH instead of DPWH instead.

As such, Senate Committee recommended that: 1) Office of Solicitor General should institute the action to enjoin the
collction of parking fees and enforce the sanctions for violation of National Building Code; 2) DTI pursuant to RA 7394
should enforce the provisions of Code relative to parking; and 3) Congress should amend and update the National
Building Code to prohibit the collection of parking fees and its waiver of liability.

Respondent SM Prime assailed the recommendation of the Committee and filed a Petition for Declaratory Relief under
Rule 63 of the Revised Rules of Court against DPWH and local building officials, contending that: 1) Rule XIX of
Implementing Rules and Regulations of National Building Code is unconstitutional and void; 2) respondent has the
legal right to lease parking spaces; and 3) National Building Code IRR is ineffective as it was not published for 3
consecutive weeks in newspaper of general circulation as mandated by Section 211 of PD 1096.

OSG then filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary Restraining Order and Writ
of Preliminary Injunction) to the RTC against respondents, prohibiting them from collecting parking fees and
contending that their practice of charging parking fees is violative of National Building Code.

The RTC held that: 1) OSG has the capacity to institute the proceeding it being a controversy of public welfare; 2) a
petition for declaratory relief is proper since all the requisites are present; 3) the Building Code with its IRR does not
necessarily impose that parking spaces shall be free of charge and providing parking spaces for free can be considered
as unlawful taking of property right without just compensation; and 4) there was no sufficient evidence to justify any
award for damages. They deemed that the respondents are not obligated to provide parking spaces free of charge.

OSG appealed the decision to CA, saying that RTC erred in holding that the National Building Code did not intend the
parking spaces to be free of charge. On the otherhand, respondent SM filed a separate appeal to the CA, contending
that: 1) RTC erred in failing to declare Rule XIX of IRR as unconstitutional; 2) RTC erred in failing to declare IRR
ineffective for not having been published as required by law; 3) RTC erred in dismissing the OSGs petition for failure
to exhaust administrative remedies; and 4) RTC erred in failing to declare that OSG has no legal standing as it is not a
real party-in-interest.

CA denied the appeals of both petitioners and respondents on the following grounds: 1) OSG did not fail to exhaust
administrative remedies and that an administrative review is not a condition precedent to judicial relief where the
question in dispute is purely a legal one and nothing of an administrative nature is to be or can be done; 2) the validity
of National Building Code IRR cannot be proceeded as it was not discussed in RTC and the controversy could be
settled on other grounds without touching the issue of validity since the courts should refrain from passing upon the
constitutionality of a law; and 3) Section 803 of National Building Code and Rule XIX of IRR are clear that they are
only intended to control the occupancy of areas and structures, and in the absence of provision of law, respondents
could not be obliged to provide parking spaces free of charge.

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

Police power is the power of promoting the public welfare by restraining and regulating the use of liberty and property.
It is usually exerted in order to merely regulate the use and enjoyment of the property of the owner. The power to
regulate, however, does not include the power to prohibit. A fortiori, the power to regulate does not include the power
to confiscate. Police power does not involve the taking or confiscation of property, with the exception of a few cases
where there is a necessity to confiscate private property in order to destroy it for the purpose of protecting peace and
order and of promoting the general welfare; for instance, the confiscation of an illegally possessed article, such as
opium and firearms
When there is a taking or confiscation of private property for public use, the State is no longer exercising police power,
but another of its inherent powers, namely, eminent domain. Eminent domain enables the State to forcibly acquire
private lands intended for public use upon payment of just compensation to the owner.
Normally, 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 the said power may not be availed of only to impose a
burden upon the owner of condemned property, without loss of title and possession. It is a settled rule that neither
acquisition of title nor total destruction of value is essential to taking. It is usually in cases where title remains with the
private owner that inquiry should be made to determine whether the impairment of a property is merely regulated or
amounts to a compensable taking. A regulation that deprives any person of the profitable use of his property constitutes
a taking and entitles him to compensation, unless the invasion of rights is so slight as to permit the regulation to be
justified under the police power. Similarly, a police regulation that unreasonably restricts the right to use business
property for business purposes amounts to a taking of private property, and the owner may recover therefor.
Although in the present case, title to and/or possession of the parking facilities remain/s with respondents, the
prohibition against their collection of parking fees from the public, for the use of said facilities, is already tantamount to

a taking or confiscation of their properties. The State is not only requiring that respondents devote a portion of the
latters properties for use as parking spaces, but is also mandating that they give the public access to said parking spaces
for free. Such is already an excessive intrusion into the property rights of respondents. Not only are they being deprived
of the right to use a portion of their properties as they wish, they are further prohibited from profiting from its use or
even just recovering therefrom the expenses for the maintenance and operation of the required parking facilities.
In conclusion, the total prohibition against the collection by respondents of parking fees from persons who use the mall
parking facilities has no basis in the National Building Code or its IRR. The State also cannot impose the same
prohibition by generally invoking police power, since said prohibition amounts to a taking of respondents property
without payment of just compensation.

BETOY
GANCAYCO vs. ROMULO
Facts: Retired Justice Emilio A. Gancayco bought a parcel of land located EDSA,3 Quezon City. A few years later, the
Quezon City Council issued Ordinance No. 2904, entitled "An Ordinance Requiring the Construction of Arcades, for
Commercial Buildings to be Constructed in Zones Designated as Business Zones in the Zoning Plan of Quezon City,
and Providing Penalties in Violation Thereof. It required the relevant property owner to construct an arcade along
EDSA. An arcade is defined as any portion of a building above the first floor projecting over the sidewalk beyond the
first storey wall used as protection for pedestrians against rain or sun. It bears emphasis that at the time Ordinance No.
2904 was passed by the city council, there was yet no building code passed by the national legislature. Thus, the
regulation of the construction of buildings was left to the discretion of local government units. Under this particular
ordinance, the city council required that the arcade is to be created by constructing the wall of the ground floor facing
the sidewalk a few meters away from the property line. Thus, the building owner is not allowed to construct his wall up
to the edge of the property line, thereby creating a space or shelter under the first floor. In effect, property owners
relinquish the use of the space for use as an arcade for pedestrians, instead of using it for their own purposes.
The ordinance covered the property of Justice Gancayco. Subsequently, Justice Gancayco sought the exemption of a
two-storey building being constructed on his property from the application of Ordinance No. 2904 that he be exempted
from constructing an arcade on his property. The City Council acted favorably on Justice Gancaycos request "subject
to the condition that upon notice by the City Engineer, the owner shall, within reasonable time, demolish the enclosure
of said arcade at his own expense when public interest so demands."
The MMDA then sent a notice of demolition to Justice Gancayco alleging that a portion of his building violated the
National Building Code of the Philippines in relation to Ordinance No. 2904. He did not comply with the notice. The
MMDA then proceeded to demolish the party wall of the ground floor structure. The City Government of Quezon City
claimed that the ordinance was a valid exercise of police power, regulating the use of property in a business zone.
Justice Gancayco filed a Petition with prayer for a temporary restraining order and/or writ of preliminary injunction.
The RTC ruled that the ordinance was unconstitutional. The Court of Appeals reversed the RTCs decision and ruled
that the ordinance was a valid exercise of the right of the local government unit to promote the general welfare of its
constituents pursuant to its police powers.

Issue: Whether Ordinance No. 2094 is a valid exercise of police power.

Held: Yes, it is a valid delegation of Police Power
Ratio: Police power is an inherent attribute of sovereignty. It has been defined as the power vested by the Constitution
in the legislature to make, ordain, and establish all manner of wholesome and reasonable laws, statutes and ordinances,
either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of
the commonwealth, and for the subjects of the same. The power is plenary and its scope is vast and pervasive, reaching
and justifying measures for public health, public safety, public morals, and the general welfare. In the exercise of police
power, property rights of individuals may be subjected to restraints and burdens in order to fulfil the objectives of the
government.
For this reason, when the conditions so demand as determined by the legislature, property rights must bow to the
primacy of police power because property rights, though sheltered by due process, must yield to general welfare.
Police power as an attribute to promote the common good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, the questioned provision is invalidated. Moreover, in the
absence of evidence demonstrating the alleged confiscatory effect of the provision in question, there is no basis for its
nullification in view of the presumption of validity which every law has in its favor.
It is clear that the primary objectives of the city council of Quezon City when it issued the questioned ordinance
ordering the construction of arcades were the health and safety of the city and its inhabitants; the promotion of their
prosperity; and the improvement of their morals, peace, good order, comfort, and the convenience. At the time that the
ordinance was passed, there was no national building code enforced to guide the city council; thus, there was no law of
national application that prohibited the city council from regulating the construction of buildings, arcades and sidewalks
in their jurisdiction.

BAYAN MUNA, as represented by Rep. SATUR OCAMPO, Rep. CRISPIN BELTRAN, and Rep. LIZA
L.
MAZA,
Petitioner,
vs.
ALBERTO ROMULO, in his capacity as Executive Secretary, and BLAS F. OPLE, in his capacity as
Secretary of Foreign Affairs, Respondents.
VELASCO, JR., J.:
Facts:
Petitioner Bayan Muna is a duly registered party-list group established to represent the marginalized sectors
of society. Respondent Blas F. Ople, now deceased, was the Secretary of Foreign Affairs during the period
material to thiscase. Respondent Alberto Romulo was impleaded in his capacity as then Executive Secretary.
Rome Statute of the International Criminal Court. Having a key determinative bearing on this case is the Rome
Statute establishing the International Criminal Court (ICC) with the power to exercise its jurisdiction over
persons for the mostserious crimes of international concern and shall be complementary to the national criminal
jurisdictions
Theserious crimes adverted to cover those considered grave under international law, such as genocide, crimes
againsthumanity, war crimes, and crimes of aggression.On December 28, 2000, the RP, through Charge
dAffaires
Enrique A. Manalo, signed the Rome Statute which, by itsterms,is subject to ratification, acceptance or
approval by the signatory states. As of the filing of the instant petition, only 92 out of the 139 signatory
countries appear to have completed the ratification, approval and concurrence process. The Philippines is not
among the 92.
Issue: Whether or not the RP-US Non Surrender Agreement is void ab initio for contracting obligations that are
either immoral or otherwise at variance with universally recognized principles of international law.
Held: No. Petitioner urges that theAgreement be struck down as void ab initio for imposing immoral
obligations and/or being at variance with allegedly universally recognized principles of international law. The
immoral aspect proceedsfrom the fact that the Agreement, as petitioner would put it, leaves criminals immune

from responsibility for unimaginable atrocities that deeply shock the conscience of humanity; it precludes our
country from delivering an American criminal to the ICC.
The above argument is a kind of recycling of petitioners earlier position, which, as already discussed, contends
that the RP, by entering into the Agreement, virtually abdicated its sovereignty and in theprocess undermined
its treaty obligations under the Rome Statute, contrary to international law principles.
The Court is not persuaded. Suffice it to state in this regard that the non-surrender agreement, as aptly
described by the Solicitor General, is an assertion by the Philippines of its desire to try and punish crimes
under its national law. The agreement is a recognition of the primacy and competence of the countrys judiciary
to try offenses under its national criminal laws and dispense justice fairly and judiciously. Petitioner, labors
under the erroneous impression that the Agreement would allow Filipinos and Americans committing high
crimes of international concern to escape criminal trial and punishment. This is manifestly incorrect. Persons
who may have committed acts penalized under the Rome Statute can be prosecuted and punished in the
Philippines or in the US; or with the consent of the RP or the US, before the ICC, assuming that all the
formalities necessary to bind both countries to the Rome Statute have been met.
Perspective wise, what the Agreement contextually prohibits is the surrender by either party of individuals to
international tribunals, like the ICC, without the consent of the other party, which may desire to prosecute the
crime under its existing laws. With this view, there is nothing immoral or violative of international law
concepts in the act of the Philippines of assuming criminal jurisdiction pursuant to the non-surrender
agreement over an offense considered criminal by both Philippine laws and the Rome Statute

International Agreements; treaties and executive agreements. Under international law, there is no difference
between treaties and executive agreements in terms of their binding effects on the contracting states concerned,
as long as the negotiating functionaries have remained within their powers. However, a treaty has greater
dignity than an executive agreement, because its constitutional efficacy is beyond doubt, a treaty having
behind it the authority of the President, the Senate, and the people; a ratified treaty, unlike an executive
agreement, takes precedence over any prior statutory enactment. Petitioner, in this case, argues that the NonSurrender Agreement between the Philippines and the US is of dubious validity, partaking as it does of the
nature of a treaty; hence, it must be duly concurred in by the Senate. Petitioner relies on the case,
Commissioner of Customs v. Eastern Sea Trading, in which the Court stated: international agreements
involving political issues or changes of national policy and those involving international arrangements of a
permanent character usually take the form of treaties; while those embodying adjustments of detail carrying
out well established national policies and traditions and those involving arrangements of a more or less
temporary nature take the form of executive agreements. According to petitioner, the subject of the Agreement
does not fall under any of the subject-categories that are enumerated in the Eastern Sea Trading case that may
be covered by an executive agreement, such as commercial/consular relations, most-favored nation rights,
patent rights, trademark and copyright protection, postal and navigation arrangements and settlement of claims.
The Supreme Court held, however, that the categorization of subject matters that may be covered by
international agreements mentioned in Eastern Sea Trading is not cast in stone. There are no hard and fast rules
on the propriety of entering, on a given subject, into a treaty or an executive agreement as an instrument of
international relations. The primary consideration in the choice of the form of agreement is the parties intent
and desire to craft an international agreement in the form they so wish to further their respective interests. The
matter of form takes a back seat when it comes to effectiveness and binding effect of the enforcement of a
treaty or an executive agreement, as the parties in either international agreement each labor under the pacta
sunt servanda principle.
International Agreements; limitations on sovereignty. The RP, by entering into the Agreement, does thereby
abdicate its sovereignty, abdication being done by its waiving or abandoning its right to seek recourse through
the Rome Statute of the ICC for erring Americans committing international crimes in the country. As it were,
the Agreement is but a form of affirmance and confirmation of the Philippines national criminal jurisdiction.
National criminal jurisdiction being primary, it is always the responsibility and within the prerogative of the
RP either to prosecute criminal offenses equally covered by the Rome Statute or to accede to the jurisdiction of
the ICC. Thus, the Philippines may decide to try persons of the US, as the term is understood in the
Agreement, under our national criminal justice system; or it may opt not to exercise its criminal jurisdiction
over its erring citizens or over US persons committing high crimes in the country and defer to the secondary
criminal jurisdiction of the ICC over them. In the same breath, the US must extend the same privilege to the
Philippines with respect to persons of the RP committing high crimes within US territorial jurisdiction. By
their nature, treaties and international agreements actually have a limiting effect on the otherwise

encompassing and absolute nature of sovereignty. By their voluntary act, nations may decide to surrender or
waive some aspects of their state power or agree to limit the exercise of their otherwise exclusive and absolute
jurisdiction. The usual underlying consideration in this partial surrender may be the greater benefits derived
from a pact or a reciprocal undertaking of one contracting party to grant the same privileges or immunities to
the other.

DUESTCHE BANK vs. CIR

Facts:
In accordance with Section 28(A)(5)4 of the National Internal Revenue Code (NIRC) of 1997, petitioner
withheld and remitted to respondent on 21 October 2003 the amount of PHP 67,688,553.51, which represented
the fifteen percent (15%) branch profit remittance tax (BPRT) on its regular banking unit (RBU) net income
remitted to Deutsche Bank Germany (DB Germany) for 2002 and prior taxable years.5
Believing that it made an overpayment of the BPRT, petitioner filed with the BIR Large Taxpayers
Assessment and Investigation Division on 4 October 2005 an administrative claim for refund or issuance of its
tax credit certificate in the total amount of PHP 22,562,851.17. On the same date, petitioner requested from the
International Tax Affairs Division (ITAD) a confirmation of its entitlement to the preferential tax rate of 10%
under the RP-Germany Tax Treaty.6
Alleging the inaction of the BIR on its administrative claim, petitioner filed a Petition for Review7 with the
CTA on 18 October 2005. Petitioner reiterated its claim for the refund or issuance of its tax credit certificate
for the amount of PHP 22,562,851.17 representing the alleged excess BPRT paid on branch profits remittance
to DB Germany.

CTA: petitioner indeed paid the total amount of PHP 67,688,553.51 representing the 15% BPRT on its RBU
profits amounting to PHP 451,257,023.29 for 2002 and prior taxable years. However, the claim of petitioner
for a refund was denied on the ground that the application for a tax treaty relief was not filed with ITAD prior
to the payment by the former of its BPRT and actual remittance of its branch profits to DB Germany, or prior
to its availment of the preferential rate of ten percent (10%) under the RP-Germany Tax Treaty provision. The
court a quo held that petitioner violated the fifteen (15) day period.
Before the benefits of the tax treaty may be extended to a foreign corporation wishing to avail itself thereof,
the latter should first invoke the provisions of the tax treaty and prove that they indeed apply to the
corporation.
The CTA En Banc affirmed the CTA Second Divisions Decision dated 29 August 2008 and Resolution dated
14 January 2009. Citing Mirant, the CTA En Banc held that a ruling from the ITAD of the BIR must be
secured prior to the availment of a preferential tax rate under a tax treaty. Applying the principle of stare
decisis et non quieta movere, the CTA En Banc took into consideration that this Court had denied the Petition
in G.R. No. 168531 filed by Mirant for failure to sufficiently show any reversible error in the assailed
judgment.11 The CTA En Banc ruled that once a case has been decided in one way, any other case involving
exactly the same point at issue should be decided in the same manner.
The court likewise ruled that the 15-day rule for tax treaty relief application under RMO No. 1-2000 cannot be
relaxed for petitioner
ISSUE: whether the failure to strictly comply with RMO No. 1-2000 will deprive persons or corporations of
the
benefit
of
a
tax
treaty.
RULING:
SC reversed the CTAs decision on the ground of pacta sunt servanda. Pacta sunt servanda requires that
agreeing parties should comply with their treaty obligations in good faith. It held that the period of application
of tax treaty as required by RMO No. 01-2000 should not operate to divest entitlement to the relief as it would
constitute a violation of the doctrine of pacta sunt servanda. The obligation to comply with a tax treaty must
take precedence over RMO 01-2000.
The SC further explained that taxpayers cannot be deprived of their entitlement to the benefit of a treaty for
failure to strictly comply with an administrative issuance requiring the prior application for tax treaty relief.
According to the SC, at most, the application for a tax treaty relief from the BIR should merely operate to
confirm the entitlement of the taxpayer to the relief.
The BIR filed a Motion for Reconsideration of the SCs decision on the Deutsche Bank case; but, the SC
denied the motion with finality. Thus, the SC decision on the case has become final and executory.
the BIR cannot outright deny a TTRA based solely on the taxpaye rs non-compliance with the 15-day period
requirement before the availment of the relief. This ruling invalidated the rule stated in RMO 072-2010, which
provides that failure to file the tax treaty relief application within the prescribed period shall result in its
disqualification.
In People v. Macadaeg, G.R. No. L-4316, (May 28, 1952), obiter dictum is defined as an opinion uttered by
the way, not upon the point or question pending, as if turning aside from the main topic of the case to collateral
subjects. Hence, the foregoing statement of the SC is not final and conclusive because it is merely obiter
dictum. On the contrary, the SC did not expressly state that TTRA is not anymore required in order to claim
the entitlement. Thus, under this interpretation, the taxpayer must still file a TTRA with ITAD in order to
claim under a tax treaty benefit, but it is not required to file such application prior to the transaction.

SURIGAO DEL NORTE ELECTRIC COOPREATIVE vs. ERC

Facts:
The Association of Mindanao Rural Electric Cooperatives, as representative of SURNECO and of the other 33
rural electric cooperatives in Mindanao, filed a petition before the Energy Regulatory Board (ERB) for the
approval of the formula for automatic cost adjustment and adoption of the National Power Corporation (NPC)
restructured rate adjustment to comply with Republic Act (R.A.) No. 7832. The ERC (replaces ERB) hereby
confirms the Purchased Power Adjustment (PPA) of Surigao Del Norte Electric Cooperative, Inc.
(SURNECO) for the period February 1996 to July 2004 which resulted to an over-recovery for the amount of
PhP18,188,794.00. In this connection, SURNECO is hereby directed to refund to its Main Island consumers
starting the next billing cycle from receipt of this Order until such time that the full amount shall have been
refunded. But in Hikdop Island its resulted to an under-recovery for the amount of PhP2,478,045.00.
SURNECO is hereby authorized to collect from its Hikdop Island consumers starting the next billing cycle
from receipt of this Order until such time that the full amount shall have been collected.
Accordingly, SURNECO is directed to:
a) Reflect the PPA refund/collection as a separate item in the bill using the phrase "Previous Years
Adjustment on Power Cost";

b) Submit, within ten (10) days from its initial implementation of the refund/collection, a sworn statement
indicating its compliance with the aforecited directive; and
c) Accomplish and submit a report in accordance with the attached prescribed format, on or before the 30th
day of January of the succeeding year and every year thereafter until the amount shall have been fully
refunded/collected.
SURNECO filed a motion for reconsideration, but it was denied by the ERC. So, SURNECO went to CA via
petition for review, but it was also denied.
RULING:
It is beyond cavil that the State, in the exercise of police power, can regulate the rates imposed by a public
utility such as SURNECO. As we held in Republic of the Philippines v. Manila Electric Company[20]
The regulation of rates to be charged by public utilities is founded upon the police powers of the State and
statutes prescribing rules for the control and regulation of public utilities are a valid exercise thereof. When
private property is used for a public purpose and is affected with public interest, it ceases to be juris privati
only and becomes subject to regulation. The regulation is to promote the common good. Submission to
regulation may be withdrawn by the owner by discontinuing use; but as long as use of the property is
continued, the same is subject to public regulation.
Likewise, SURNECO cannot validly assert that the caps set by R.A. No. 7832 are arbitrary, or that they violate
the non-impairment clause of the Constitution for allegedly traversing the loan agreement between NEA and
ADB. Striking down a legislative enactment, or any of its provisions, can be done only by way of a direct
action, not through a collateral attack, and more so, not for the first time on appeal in order to avoid
compliance. The challenge to the laws constitutionality should also be raised at the earliest opportunity.[21]
Even assuming, merely for arguments sake, that the ERC issuances violated the NEA and ADB covenant, the
contract had to yield to the greater authority of the States exercise of police power. It has long been settled
that police power legislation, adopted by the State to promote the health, morals, peace, education, good order,
safety, and general welfare of the people prevail not only over future contracts but even over those already in
existence, for all private contracts must yield to the superior and legitimate measures taken by the State to
promote public welfare.

Executive Secretary vs. Forerunner Multi Resources

Facts:
EO 156 issued by President Gloria Macapagal Arroyo imposes a partial ban on the importation of motor vehicles which
is part of the measures of the EO to accelerate the sound development of the motor vehicle industry in the Philippines.
In Executive Secretary v. Southwing Heavy Industries, Inc. and two related petitions (collectively, Southwing), we
found EO 156 a valid executive issuance enforceable throughout the Philippine customs territory, except in the
Subic Special Economic and Freeport Zone in Zambales (Subic Freeport) by virtue of its status as a "separate
customs territory" under Republic Act No. 7227.7
Respondent corporation is engaged in the importation of motor vehicles via the Aparri, Cagayan, San Fernando ports,
sued the government in the RTC of Aparri to declare the said EO invalid due to the following reasons: (1) having been
issued by President Arroyo ultra vires; (2) trenching the Due Process and Equal Protection Clauses of the Constitution;
and (3) having been superseded by Executive Order No. 418 (EO 418),9 issued by President Arroyo on 4 April 2005,

modifying the tariff rates of imported used motor vehicles. Respondent sought a preliminary injunctive writ to enjoin,
litis pendentia, the enforcement of EO 156.
Ruling of the Court: the trial court granted relief, initially by issuing a temporary restraining order followed by a writ of
preliminary injunction granted in its Order of 27 November 2008. Upon petitioners motion, the court reconsidered its
order and lifted the injunction. Respondent elevated the case to the Court of Appeals in a certiorari petition.
Ruling of the Court of Appeals: The CA granted the certiorari and reinstated the previous order of the trial court. The
appellate court held that the implementation of EO 156 "would put petitioner in a financial crisis.
Petitioners argue that the CA committed a grave error of law by reinstating the injunction against EO 156 and argue that
Southwing controls the case, precluding the Court of Appeals from recognizing a clear legal right of respondent to
import used motor vehicles.
Respondents counters that the doctrinal import of Southwing was weakened by the subsequent issuance of EO 418.
ISSUE: whether the Court of Appeals erred in granting preliminary injunctive relief to respondent to enjoin
enforcement of EO 156.
Ruling:
YES. The CA was in error for reinstating the preliminary injunction against EO 156.
Respondent Without Clear Legal Right to Import Used Motor Vehicles
We found EO 156 a valid police power measure addressing an "urgent national concern":
There is no doubt that the issuance of the ban to protect the domestic industry is a reasonable exercise of police power.
The deterioration of the local motor manufacturing firms due to the influx of imported used motor vehicles is an urgent
national concern that needs to be swiftly addressed by the President. In the exercise of delegated police power, the
executive can therefore validly proscribe the importation of these vehicles.

GOLDENWAY MERCHANDISING CORPORATION vs. EQUITABLE PCI

Facts:
Goldenway Merchandising Corporation executed a real estate mortgage in favor of Equitable PIC over their property
located in Valenzuela for the amount of Two Million Pesos (P2,000,000.00) loan granted by respondent to petitioner
and was duly registered.
Petitioner failed to settle its obligation and therefore the real estate mortgage was foreclose. The properties were sold at
an execution sale at the amount of Php 3.5 million. Two certificates of sale were issued in the name of the respondent
and was duly registered an inscribed in the certificates of title.

Petitioner sought to redeem the property at the price the respondent acquired it. The petitioner and respondents counsel
met with the intention to exercise the right of redemption of the petitioner; however, petitioner was informed that the
right to redemption was no longer available since the properties were now registered in the name of Equitable. It was
verified by the Registry of Deeds.
Petitioner argued that the longer redemption period should apply and not the shorter one since the latter would result in
the impairment of obligation of contracts and violation of the equal protection clause under the Constitution. In its
Answer, the respondent argued that petitioner cannot claim that he was not aware of the redemption price and had all
the time to redeem the property after he received the demand letter for payment of his obligation in the real estate
mortgage. As to the check payment tendered by petitioner, respondent said that even assuming arguendo such
redemption was timely made, it was not for the amount as required by law.
TRIAL Court rendered its decision dismissing the content and the counterclaim and asserted that the constitutionality of
Sec. 47 of R.A. No. 8791 was never raised by the petitioner during the pre-trial and the trial. Aggrieved, petitioner
appealed to the CA which affirmed the trial courts decision.
COURT OF APPEALS: petitioner failed to justify why Section 47 of R.A. No. 8791 should be declared
unconstitutional. Furthermore, the appellate court concluded that a reading of Section 47 plainly reveals the intention to
shorten the period of redemption for juridical persons and that the foreclosure of the mortgaged properties in this case
when R.A. No. 8791 was already in effect clearly falls within the purview of the said provision. Motion for
reconsideration was likewise denied by the CA.
ISSUE:
RULING:
We agree with the CA that the legislature clearly intended to shorten the period of redemption for juridical persons
whose properties were foreclosed and sold in accordance with the provisions of Act No. 3135.27
The difference in the treatment of juridical persons and natural persons was based on the nature of the properties
foreclosed whether these are used as residence, for which the more liberal one-year redemption period is retained, or
used for industrial or commercial purposes, in which case a shorter term is deemed necessary to reduce the period of
uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner of these acquired assets. It must
be underscored that the General Banking Law of 2000, crafted in the aftermath of the 1997 Southeast Asian financial
crisis, sought to reform the General Banking Act of 1949 by fashioning a legal framework for maintaining a safe and
sound banking system.28 In this context, the amendment introduced by Section 47 embodied one of such safe and
sound practices aimed at ensuring the solvency and liquidity of our banks.1wphi1 It cannot therefore be disputed that
the said provision amending the redemption period in Act 3135 was based on a reasonable classification and germane to
the purpose of the law.
This legitimate public interest pursued by the legislature further enfeebles petitioners impairment of contract theory.
The right of redemption being statutory, it must be exercised in the manner prescribed by the statute,29 and within the
prescribed time limit, to make it effective. Furthermore, as with other individual rights to contract and to property, it has
to give way to police power exercised for public welfare.30 The concept of police power is well-established in this
jurisdiction. It has been defined as the "state authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare." Its scope, ever-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 assuming the greatest benefits.31
The freedom to contract is not absolute; all contracts and all rights are subject to the police power of the State and not
only may regulations which affect them be established by the State, but all such regulations must be subject to change
from time to time, as the general well-being of the community may require, or as the circumstances may change, or as
experience may demonstrate the necessity.32 Settled is the rule that the non-impairment clause of the Constitution must

yield to the loftier purposes targeted by the Government. The right granted by this provision must submit to the
demands and necessities of the States power of regulation.33 Such authority to regulate businesses extends to the
banking industry which, as this Court has time and again emphasized, is undeniably imbued with public interest.34
Having ruled that the assailed Section 47 of R.A. No. 8791 is constitutional, we find no reversible error committed by
the CA in holding that petitioner can no longer exercise the right of redemption over its foreclosed properties after the
certificate of sale in favor of respondent had been registered.

Carlos Superdrug Corporation vs DSWD

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

Issue: Whether or not RA 9257 is unconstitutional

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

Manila Memorial Park vs Secretary of DSWD

Facts:
RA 7432 was passed into law, granting senior citizens:

a) the grant of twenty percent (20%) discount from all establishments relative to utilization of transportation services,
hotels and similar lodging establishment[s], restaurants and recreation centers and purchase of medicine anywhere in
the country: Provided, That private establishments may claim the cost as tax credit;
b) a minimum of twenty percent (20%) discount on admission fees charged by theaters, cinema houses and concert
halls, circuses, carnivals and other similar places of culture, leisure, and amusement;
c) exemption from the payment of individual income taxes: Provided, That their annual taxable income does not exceed
the property level as determined by the National Economic and Development Authority (NEDA) for that year;
d) exemption from training fees for socioeconomic programs undertaken by the OSCA as part of its work;
e) free medical and dental services in government establishment[s] anywhere in the country, subject to guidelines to be
issued by the Department of Health, the Government Service Insurance System and the Social Security System;
f) to the extent practicable and feasible, the continuance of the same benefits and privileges given by the Government
Service Insurance System (GSIS), Social Security System (SSS) and PAG-IBIG, as the case may be, as are enjoyed by
those in actual service.