DELA CRUZ V.

EDGARDO PARAS
Subject Shall Be Expressed in the Title Police Power Not Validly Exercise
Vicente De La Cruz et al were club & cabaret operators. They assail the
constitutionality of Ord. No. 84, Ser. of 1975 or the Prohibition and Closure Ordinance
of Bocaue, Bulacan. De la Cruz averred that the said Ordinance violates their right to
engage in a lawful business for the said ordinance would close out their business.
That the hospitality girls they employed are healthy and are not allowed to go out
with customers. Judge Paras however lifted the TRO he earlier issued against Ord. 84
after due hearing declaring that Ord 84. is constitutional for it is pursuant to RA 938
which reads AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE
POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF
CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL
JURISDICTIONS. Paras ruled that the prohibition is a valid exercise of police power to
promote general welfare. De la Cruz then appealed citing that they were deprived of
due process.
ISSUE: Whether or not a municipal corporation, Bocaue, Bulacan can, prohibit the
exercise of a lawful trade, the operation of night clubs, and the pursuit of a lawful
occupation, such clubs employing hostesses pursuant to Ord 84 which is further in
pursuant to RA 938.
HELD: The SC ruled against Paras. If night clubs were merely then regulated and not
prohibited, certainly the assailed ordinance would pass the test of validity. SC had
stressed reasonableness, consonant with the general powers and purposes of
municipal corporations, as well as consistency with the laws or policy of the State. It
cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could
qualify under the term reasonable. The objective of fostering public morals, a worthy
and desirable end can be attained by a measure that does not encompass too wide a
field. Certainly the ordinance on its face is characterized by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions rather
than by an absolute prohibition. Pursuant to the title of the Ordinance, Bocaue should
and can only regulate not prohibit the business of cabarets.

Dela Cruz v. Paras Digest

Dela Cruz v Paras
G.R. No. L-42571-72 July 25, 1983
Fernando, CJ:

Facts:
1. Assailed was the validity of an ordinance which prohibit the operation of night clubs.
Petitioners contended that the ordinance is invalid, tainted with nullity, the municipality
being devoid of power to prohibit a lawful business, occupation or calling. Petitioners at
the same time alleging that their rights to due process and equal protection of the laws
were violated as the licenses previously given to them was in effect withdrawn without
judicial hearing.
2. RA 938, as amended, was originally enacted on June 20, 1953. It is entitled: "An Act
Granting Municipal or City Boards and Councils the Power to Regulate the Establishments,
Maintenance and Operation of Certain Places of Amusement within Their Respective
Territorial Jurisdictions.'

The first section reads, "The municipal or city board or council of each chartered city shall
have the power to regulate by ordinance the establishment, maintenance and operation of
night clubs, cabarets, dancing schools, pavilions, cockpits, bars, saloons, bowling alleys,
billiard pools, and other similar places of amusement within its territorial jurisdiction:
On May 21, 1954, the first section was amended to include not merely "the power to
regulate, but likewise "Prohibit ... " The title, however, remained the same. It is worded
exactly as RA 938.

3. As thus amended, if only the said portion of the Act was considered, a municipal council
may go as far as to prohibit the operation of night clubs. The title was not in any way
altered. It was not changed one bit. The exact wording was followed. The power granted
remains that of regulation, not prohibition.

4. Petitioners contended that RA 938 which prohibits the operation of night clubs would give
rise to a constitutional question. The lower court upheld the constitutionality and validity
of Ordinance No. 84 and dismissed the cases. Hence this petition for certiorari by way of
appeal.

ISSUE: Whether or not the ordinance is valid

NO. It is unconstitutional. It undoubtly involves a measure not embraced within the

regulatory power but an exercise of an assumed power to prohibit.

1. The Constitution mandates: "Every bill shall embrace only one subject which shall be
expressed in the title thereof. "Since there is no dispute as the title limits the power to
regulating, not prohibiting, it would result in the statute being invalid if, as was done by the
Municipality of Bocaue, the operation of a night club was prohibited. There is a wide gap
between the exercise of a regulatory power "to provide for the health and safety, promote
the prosperity, and improve the morals, in the language of the Administrative Code, such
competence extending to all "the great public needs.

2. In accordance with the well-settled principle of constitutional construction that between

two possible interpretations by one of which it will be free from constitutional infirmity
and by the other tainted by such grave defect, the former is to be preferred. A construction
that would save rather than one that would affix the seal of doom certainly commends
itself.
3. Under the Local Govt Code, it is clear that municipal corporations cannot prohibit the
operation of night clubs. They may be regulated, but not prevented from carrying on their
business. It would be, therefore, an exercise in futility if the decision under review were
sustained. All that petitioners would have to do is to apply once more for licenses to
operate night clubs. A refusal to grant licenses, because no such businesses could legally
open, would be subject to judicial correction. That is to comply with the legislative will to
allow the operation and continued existence of night clubs subject to appropriate
regulations. In the meanwhile, to compel petitioners to close their establishments, the
necessary result of an affirmance, would amount to no more than a temporary termination
of their business.

4. Herein what was involved is a measure not embraced within the regulatory power but an
exercise of an assumed power to prohibit.
Binay vs Domingo Case Digest
Equal Protection Clause, General Welfare Clause, Police Power, Powers of Municipal Corporations

Facts:

Petitioner Municipality of Makati, through its Council, approved Resolution No. 60 which
extends P500 burial assistance to bereaved families whose gross family income does not
exceed P2,000.00 a month. The funds are to be taken out of the unappropriated available
funds in the municipal treasury. The Metro Manila Commission approved the resolution.
Thereafter, the municipal secretary certified a disbursement of P400,000.00 for the
implementation of the program. However, the Commission on Audit disapproved said
resolution and the disbursement of funds for the implementation thereof for the following
reasons: (1) the resolution has no connection to alleged public safety, general welfare,
safety, etc. of the inhabitants of Makati; (2) government funds must be disbursed for public
purposes only; and, (3) it violates the equal protection clause since it will only benefit a few
individuals.

Issues:

1. Whether Resolution No. 60 is a valid exercise of the police power under the general
welfare clause
2. Whether the questioned resolution is for a public purpose
3. Whether the resolution violates the equal protection clause

Held:

1. The police power is a governmental function, an inherent attribute of sovereignty, which

was born with civilized government. It is founded largely on the maxims, "Sic utere tuo et
ahenum non laedas and "Salus populi est suprema lex. Its fundamental purpose is securing
the general welfare, comfort and convenience of the people.

Police power is inherent in the state but not in municipal corporations. Before a municipal
corporation may exercise such power, there must be a valid delegation of such power by the
legislature which is the repository of the inherent powers of the State.

Municipal governments exercise this power under the general welfare clause. Pursuant
thereto they are clothed with authority to "enact such ordinances and issue such regulations
as may be necessary to carry out and discharge the responsibilities conferred upon it by law,
and such as shall be necessary and proper to provide for the health, safety, comfort and
convenience, maintain peace and order, improve public morals, promote the prosperity and
general welfare of the municipality and the inhabitants thereof, and insure the protection of
property therein.

2. Police power is not capable of an exact definition but has been, purposely, veiled in
general terms to underscore its all comprehensiveness. Its scope, over-expanding to meet
the exigencies of the times, even to anticipate the future where it could be done, provides
enough room for an efficient and flexible response to conditions and circumstances thus
assuring the greatest benefits.

The police power of a municipal corporation is broad, and has been said to be commensurate
with, but not to exceed, the duty to provide for the real needs of the people in their health,
safety, comfort, and convenience as consistently as may be with private rights. It extends to
all the great public needs, and, in a broad sense includes all legislation and almost every
function of the municipal government. It covers a wide scope of subjects, and, while it is
especially occupied with whatever affects the peace, security, health, morals, and general
welfare of the community, it is not limited thereto, but is broadened to deal with conditions
which exists so as to bring out of them the greatest welfare of the people by promoting public
convenience or general prosperity, and to everything worthwhile for the preservation of
comfort of the inhabitants of the corporation. Thus, it is deemed inadvisable to attempt to
frame any definition which shall absolutely indicate the limits of police power.

Public purpose is not unconstitutional merely because it incidentally benefits a limited number
of persons. As correctly pointed out by the Office of the Solicitor General, "the drift is towards
social welfare legislation geared towards state policies to provide adequate social services,
the promotion of the general welfare, social justice as well as human dignity and respect for
human rights." The care for the poor is generally recognized as a public duty. The support for
the poor has long been an accepted exercise of police power in the promotion of the common
good.

3. There is no violation of the equal protection clause. Paupers may be reasonably classified.
Different groups may receive varying treatment. Precious to the hearts of our legislators,
down to our local councilors, is the welfare of the paupers. Thus, statutes have been passed
giving rights and benefits to the disabled, emancipating the tenant-farmer from the bondage
of the soil, housing the urban poor, etc. Resolution No. 60, re-enacted under Resolution No.
243, of the Municipality of Makati is a paragon of the continuing program of our government
towards social justice. The Burial Assistance Program is a relief of pauperism, though not
complete. The loss of a member of a family is a painful experience, and it is more painful for
the poor to be financially burdened by such death. Resolution No. 60 vivifies the very words
of the late President Ramon Magsaysay 'those who have less in life, should have more in
law." This decision, however must not be taken as a precedent, or as an official go-signal for
municipal governments to embark on a philanthropic orgy of inordinate dole-outs for motives
political or otherwise. (Binay vs Domingo, G.R. No. 92389, September 11, 1991)

Patalinghug v CA (1994)
Patalinghug v CA
GR No 104786, January 27, 1994

FACTS:
A funeral home was constructed in Davao City. Per ordinance, the same should not be less than 50 meters away from
residential lots. A building owned by Tepoot is both used as a dwelling and as a business is located within 50 meters of the
funeral home. Under its tax declaration, the commercial property is labeled as residential tax purposes.

ISSUE:
Is the construction illegal?

RULING:
No. Mr. Tepoots building is, whether or not it is residential or not, is a factual determination which we should not disturb. A tax
declaration is not conclusive of the nature of the property for zoning purposes.

Tano vs Socrates
Natural and Environmental Laws; Constitutional Law; Regalian Doctrine
GR No. 110249; August 21, 1997

FACTS:

On Dec 15, 1992, the Sangguniang Panglungsod ng Puerto Princesa enacted an ordinance banning
the shipment of all live fish and lobster outside Puerto Princesa City from January 1, 1993 to
January 1, 1998. Subsequently the Sangguniang Panlalawigan, Provincial Government of Palawan
enacted a resolution prohibiting the catching , gathering, possessing, buying, selling, and
shipment of a several species of live marine coral dwelling aquatic organisms for 5 years, in and
coming from Palawan waters.

Petitioners filed a special civil action for certiorari and prohibition, praying that the court declare
the said ordinances and resolutions as unconstitutional on the ground that the said ordinances
deprived them of the due process of law, their livelihood, and unduly restricted them from the
practice of their trade, in violation of Section 2, Article XII and Sections 2 and 7 of Article XIII of
the 1987 Constitution.

ISSUE:

Are the challenged ordinances unconstitutional?

HELD:

No. The Supreme Court found the petitioners contentions baseless and held that the challenged
ordinances did not suffer from any infirmity, both under the Constitution and applicable laws.
There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal
fisherman. Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence
fishermen, but to lay stress on the duty of the State to protect the nations marine wealth. The so-
called preferential right of subsistence or marginal fishermen to the use of marine resources is
not at all absolute.

In accordance with the Regalian Doctrine, marine resources belong to the state and pursuant to
the first paragraph of Section 2, Article XII of the Constitution, their exploration, development
and utilization...shall be under the full control and supervision of the State.

In addition, one of the devolved powers of the LCG on devolution is the enforcement of fishery
laws in municipal waters including the conservation of mangroves. This necessarily includes the
enactment of ordinances to effectively carry out such fishery laws within the municipal waters. In
light of the principles of decentralization and devolution enshrined in the LGC and the powers
granted therein to LGUs which unquestionably involve the exercise of police power, the validity of
the questioned ordinances cannot be doubted.

Facts: On 15 December 1992 the Sanguniang Panglungsod of Puerto Princesa enacted Ordinance
No 15-92 to establish a closed season for the species of fish or aquatic animals covered therein
for a period of five years; and on 22 January 1993 acting Mayor Amado Lucero issued Order No
23 to protect the coral in the marine waters of the City of Puerto Princesa and the Province of
Palawan from further destruction due to illegal fishing activities. The petitioners, invoked the
Court for certiorari contending both ordinances for depriving them of due process of law, their
livelihood, and unduly restricted them from the practice of their trade, in violation of Section 2,
Article XII and Sections 2 and 7 of Article XIII of the 1987 Constitution.
Issue: Whether or not Ordinance 15-92 enacted by Sanguniang Panglungsod and Order No 23 by
Acting Mayor Lucero are within the limits of police power?
Decision: Petition dismissed and TRO lifted. Ordinance 15-92 and Order No 23 are valid. The
relationship then between the activities barred by Ordinance No. 15-92 of the City of Puerto
Princesa and the prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province of
Palawan, on one hand, and the use of sodium cyanide, on the other, is painfully obvious. In sum,
the public purpose and reasonableness of the Ordinances may not then be controverted.
acts

The Sangguniang Panlungsod of Puerto Princessa enacted ordinance no. 15-92 banning the shipment of
live fish and lobster outside Puerto Princessa City for a period of 5 years. In the same light, the
Sangguniang Panlalawigan of Palawan also enacted a resolution that prohibits the catching, gathering,
buying, selling and possessing and shipment of live marine coral dwelling aquatic organisms for a period of
5 years within the Palawan waters. The petitiones Airline Shippers Association of Palawan together with
marine merchants were charged for violating the above ordinance and resolution by the city and provincial
governments. The petitioners now allege that they have the preferential rights as marginal fishermen
granted with privileges provided in Section 149 of the Local Government Code, invoking the invalidity of the
above-stated enactments as violative of their preferential rights.

Issue

Whether or not the enacted resolutions and ordinances by the local government units violative of the
preferential rights of the marginal fishermen ?
Tano v Socrates (Environmental Law)
Tano v Socrates
GR No. 110249

August 21, 1997

FACTS:

The Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance N

o. 15-92 which took effect on January 1, 1993 entitled: "AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO
PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING
EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF.

ISSUE:

Is the ordinance valid and constitutional?

APPLICABLE LAWS:

Section 2 of Article X I I reads: The State shall protect the nation' s marine
wealth in its archipelagic waters, territorial sea, and exclusive economic z
one, and reserve its use and enjoyment exclusively to Filipino citizens. The
Congress may, by law , allow small-scale utilization of natural resources by
Filipino citizens, as w ell as cooperative fish farming, with priority to
subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.

Sections 2 and 7 of Article XIII provide: Sec. 2. The promotion of social justice
shall include the commitment to create economic opportunities based on
freedom of initiative and self-reliance. x x x x x x x x x Sec. 7. The State shall
protect the rights of subsistence fishermen, especially of local communities, to
the preferential use of the communal marine and fishing resources, both
inland and offshore. It shall provide support to such fishermen through
appropriate technology and research, adequate financial, production, and
marketing assistance, and other services. The State shall also protect, develop,
and conserve such resources. The protection shall ex tend to offshore fishing
grounds of subsistence fishermen against foreign intrusion. Fishworkers shall
 receive a just share from their labor in the utilization of marine and fishing
resources.

General Welfare Clause, expressly mentions this right:

SEC. 16. General Welfare.-- Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers
necessary, appropriate, or incidental for its efficient and effective governance,
and those which are essential to the promotion of the general welfare. Within their
respective territorial jurisdictions, local government units shall ensure and
support, among other things, the preservation and enrichment of culture, promote
health and safety, enhance the right of the people to a balanced ecology,
encourage and support the development of appropriate and self-reliant scientific
and technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their
inhabitants. (underscoring supplied).

RULING:

YES. In light then of the principles of decentralization and devolution enshrined in

the LGC and the powers granted to local government units under Section 16 (the
General Welfare Clause), and under Sections 149, 447 (a) (1) (vi), 458 (a) (1) (vi)
and 468 (a) (1) (vi), which unquestionably involve the exercise of police power,
the validity of the questioned Ordinances cannot be doubted.

Both Ordinances have two principal objectives or purposes:

(1) to establish a closed season for the species of fish or aquatic animals
covered therein for a period of five years, and

(2) to protect the corals of the marine waters of the City of Puerto Princesa and
the Province of Palawan from further destruction due to illegal fishing activities. It
is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is
invalid or unenforceable because it was not approved by the Secretary of the
DENR. If at all, the approval that should be sought would be that of the Secretary
of the Department of Agriculture (not DENR) of municipal ordinances affecting
fishing and fisheries in municipal waters. In closing, we commend the
Sangguniang Panlungsod of the City of Puerto Princesa and Sangguniang
Panlalawigan of the Province of Palawan for exercising the requisite political will to
enact urgently needed legislation to protect and enhance the marine
environment, thereby sharing In the herculean task of arresting the tide of
ecological destruction. We hope that other local government units shall now be
roused from their lethargy and adopt a more vigilant stand in the battle against
the decimation of our legacy to future generations. At this time, the repercussions
of any further delay in their response may prove disastrous, if not, irreversible.

White Light Corporation vs City of Manila

G.R. No. 122846 January 20, 2009

Petitioner: White Light Corporation, Titanium Corporation and Sta. Mesa Tourist &
Development Corporation
Respondent: City of Manila

Facts: On December 3, 1992, City Mayor Alfredo S. Lim signed into a law Manila City
Ordinance No. 7774 entitled An Ordinance Prohibiting Short-Time Admission, Short-Time
Admission Rates, and Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses,
Pension Houses, and Similar Establishments in the City of Manila. On December 15, 1992,
the Malate Tourist and Development Corporation (MTDC) filed a complaint for declaratory
relief with prayer for a writ of preliminary injunction and/or temporary restraining order
(TRO) impleading as defendant, herein respondent City of Manila represented by Mayor Lim
with the prayer that the Ordinance be declared invalid and unconstitutional.
On December 21, 1992, petitioners White Light Corporation (WLC), Titanium Corporation
(TC) and Sta. Mesa Tourist and Development Corporation (STDC) filed a motion to intervene
and to admit attached complaint-in-intervention on the ground that the Ordinance directly
affects their business interests as operators of drive-in-hotels and motels in Manila. The RTC
issued a TRO directing the City to cease and desist from enforcing the Ordinance. The City
alleges that the Ordinance is a legitimate exercise of police power. On October 20, 1993, the
RTC rendered a decision declaring the Ordinance null and void. On a petition for review on
certiorari, the Court of Appeals reversed the decision of the RTC and affirmed the
constitutionality of the Ordinance.

Issue: Whether Manila City Ordinance No. 7774 is a valid exercise of police power

Ruling: Police power, while incapable of an exact definition, has been purposely veiled in
general terms to underscore its comprehensiveness to meet all exigencies and provide enough
room for an efficient and flexible response as the conditions warrant. Police power is based
upon the concept of necessity of the State and its corresponding right to protect itself and its
people. Police power has been used as justification for numerous and varied actions by the
State. The apparent goal of the Ordinance is to minimize if not eliminate the use of the
covered establishments for illicit sex, prostitution, drug use and alike. These goals, by
themselves, are unimpeachable and certainly fall within the ambit of the police power of the
State. Yet the desirability of these ends do not sanctify any and all means for their
achievement. Those means must align with the Constitution, and our emerging sophisticated
analysis of its guarantees to the people.
That the Ordinance prevents the lawful uses of a wash rate depriving patrons of a product and
the petitioners of lucrative business ties in with another constitutional requisite for the
legitimacy of the Ordinance as a police power measure. It must appear that the interests of the
public generally, as distinguished from those of a particular class, require an interference with
private rights and the means must be reasonably necessary for the accomplishment of the
purpose and not unduly oppressive of private rights. It must also be evident that no other
alternative for the accomplishment of the purpose less intrusive of private rights can work.
More importantly, a reasonable relation must exist between the purposes of the measure and
the means employed for its accomplishment, for even under the guise of protecting the public
interest, personal rights and those pertaining to private property will not be permitted to be
arbitrarily invaded. Lacking a concurrence of these requisites, the police measure shall be
struck down as an arbitrary intrusion into private rights. As held in Morfe v. Mutuc, the
exercise of police power is subject to judicial review when life, liberty or property is affected.
However, this is not in any way meant to take it away from the vastness of State police power
whose exercise enjoys the presumption of validity. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL.

WHITE LIGHT CORPORATION v. CITY OF MANILA January

20, 2009 (CASE DIGEST)
CONSTITUTIONAL LAW II

FUNDAMENTAL POWERS OF THE STATE

POLICE POWER

WHITE LIGHT CORPORATION, TITANIUM CORPORATION

and STA. MESA TOURIST AND DEVELOPMENT
CORPORATION petitioner v. CITY OF MANILA,
represented by DE CASTRO, MAYOR ALFREDO S.
LIM, respondents.

January 20, 2009

TINGA, J.:
FACTS:

The City Mayor, Alfredo Lim signed into law Ordinance No. 7774 which is
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 3, 1992.

petitioners in this case filed a case before the RTC praying that the
ordinance be declared invalid and unconstitutional. RTC eventually
rendered its decision declaring the said ordinance null and void. It was
then elevated to the Court of Appeals which reversed the decision of the
RTC and affirmed the constitutional of the ordinance.

ISSUE:
Whether or not the said Ordinance is null and Void

RULING:

Yes, though the goal of the ordinance According to the Supreme Court, is
to eliminate and if not, minimize the use of 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. However, the desirability of these ends do not
sanctify any all means for their achievement. Those means must align
with the Constitution, and our emerging sophisticated analysis of its
guarantees to the people. The Bill of Rights stands as a rebuke to the
seductive theory of Macchiavelli, and, sometimes even, the political
majorities animated by his cynicism.

The Ordinance prevents the lawful uses of 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 police
power measure. It must appear that the interest of the public,
generally, as distinguished from those of particular class, require an
interference with private rights and that the means employed be
reasonably necessary for the accomplishment of the purpose and not
unduly oppressive of private rights. It must be evident that no other
alternative for the accomplishment of the purpose less intrusive of the
private rights can work. More importantly, a reasonable relation must
exist between the purpose 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.

WHITE LIGHT CORPORATION, TITANIUM CORPORATION and STA.

MESA TOURIST & DEVELOPMENT CORPORATION, Petitioners,
vs.
CITY OF MANILA, represented by DE CASTRO, MAYOR ALFREDO
S. LIM,Respondent.
Facts:
On December 3, 1992, City Mayor Alfredo S. Lim signed into 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 (the Ordinance). The ordinance
sanctions any person or corporation who will allow the admission and
charging of room rates for less than 12 hours or the renting of rooms
more than twice a day.
The petitioners White Light Corporation (WLC), Titanium Corporation
(TC), and Sta. Mesa Tourist and Development Corporation (STDC), who
own and operate several hotels and motels in Metro Manila, filed a
motion to intervene and to admit attached complaint-in-intervention on
the ground that the ordinance will affect their business interests as
operators. The respondents, in turn, alleged that the ordinance is a
legitimate exercise of police power.
RTC declared Ordinance No. 7774 null and void as it strikes at the
personal liberty of the individual guaranteed and jealously guarded by
the Constitution. Reference was made to the provisions of the
Constitution encouraging private enterprises and the incentive to needed
investment, as well as the right to operate economic enterprises. Finally,
from the observation that the illicit relationships the Ordinance sought to
dissuade could nonetheless be consummated by simply paying for a 12-
hour stay,
When elevated to CA, the respondents asserted that the ordinance is a
valid exercise of police power pursuant to Section 458 (4)(iv) of the Local
Government Code which confers on cities the power to regulate the
establishment, operation and maintenance of cafes, restaurants,
beerhouses, hotels, motels, inns, pension houses, lodging houses and
other similar establishments, including tourist guides and transports.
Also, they contended that under Art III Sec 18 of Revised Manila Charter,
they have the power to enact all ordinances it may deem necessary and
proper for the sanitation and safety, the furtherance of the prosperity
and the promotion of the morality, peace, good order, comfort,
convenience and general welfare of the city and its inhabitants and to fix
penalties for the violation of ordinances.
Petitioners argued that the ordinance is unconstitutional and void since it
violates the right to privacy and freedom of movement; it is an invalid
exercise of police power; and it is unreasonable and oppressive
interference in their business.
CA, in turn, reversed the decision of RTC and affirmed the
constitutionality of the ordinance. First, it held that the ordinance did not
violate the right to privacy or the freedom of movement, as it only
penalizes the owners or operators of establishments that admit
individuals for short time stays. Second, the virtually limitless reach of
police power is only constrained by having a lawful object obtained
through a lawful method. The lawful objective of the ordinance is
satisfied since it aims to curb immoral activities. There is a lawful
method since the establishments are still allowed to operate. Third, the
adverse effect on the establishments is justified by the well-being of its
constituents in general.
Hence, the petitioners appeared before the SC.
Issue:
Whether Ordinance No. 7774 is a valid exercise of police power of the
State.
Held:
No. Ordinance No. 7774 cannot be considered as a valid exercise of
police power, and as such, it is unconstitutional.
The facts of this case will recall to mind not only the recent City of Manila
v Laguio Jr ruling, but the 1967 decision in Ermita-Malate Hotel and Motel
Operations Association, Inc., v. Hon. City Mayor of Manila. The common
thread that runs through those decisions and the case at bar goes
beyond the singularity of the localities covered under the respective
ordinances. All three ordinances were enacted with a view of regulating
public morals including particular illicit activity in transient lodging
establishments. This could be described as the middle case, wherein
there is no wholesale ban on motels and hotels but the services offered
by these establishments have been severely restricted. At its core, this is
another case about the extent to which the State can intrude into and
regulate the lives of its citizens
The test of a valid ordinance is well established. A long line of decisions
including City of Manila has held that for an ordinance to be valid, it must
not only be within the corporate powers of the local government unit to
enact and pass according to the procedure prescribed by law, it must
also conform to the following substantive requirements: (1) must not
contravene the Constitution or any statute; (2) must not be unfair or
oppressive; (3) must not be partial or discriminatory; (4) must not
prohibit but may regulate trade; (5) must be general and consistent with
public policy; and (6) must not be unreasonable.
The ordinance in this case prohibits two specific and distinct business
practices, namely wash rate admissions and renting out a room more
than twice a day. The ban is evidently sought to be rooted in the police
power as conferred on local government units by the Local Government
Code through such implements as the general welfare clause.
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.
SC contended that if they were to take the myopic view that an
ordinance should be analyzed strictly as to its effect only on the
petitioners at bar, then it would seem that the only restraint imposed by
the law that they were capacitated to act upon is the injury to property
sustained by the petitioners. Yet, they also recognized the capacity of the
petitioners to invoke as well the constitutional rights of their patrons
those persons who would be deprived of availing short time access or
wash-up rates to the lodging establishments in question. The rights at
stake herein fell within the same fundamental rights to liberty. Liberty as
guaranteed by the Constitution was defined by Justice Malcolm to
include the right to exist and the right to be free from arbitrary restraint
or servitude. The term cannot be dwarfed into mere freedom from
physical restraint of the person of the citizen, but is deemed to embrace
the right of man to enjoy the facilities with which he has been endowed
by his Creator, subject only to such restraint as are necessary for the
common welfare,
Indeed, the right to privacy as a constitutional right must be recognized
and the invasion of it should be justified by a compelling state interest.
Jurisprudence accorded recognition to the right to privacy independently
of its identification with liberty; in itself it is fully deserving of
constitutional protection. Governmental powers should stop short of
certain intrusions into the personal life of the citizen.
An ordinance which 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.
The behavior which the ordinance seeks to curtail is in fact already
prohibited and could in fact be diminished simply by applying existing
laws. Less intrusive measures such as curbing the proliferation of
prostitutes and drug dealers through active police work would be more
effective in easing the situation. So would the strict enforcement of
existing laws and regulations penalizing prostitution and drug use. These
measures would have minimal intrusion on the businesses of the
petitioners and other legitimate merchants. Further, it is apparent that
the ordinance can easily be circumvented by merely paying the whole
day rate without any hindrance to those engaged in illicit activities.
Moreover, drug dealers and prostitutes can in fact collect wash rates
from their clientele by charging their customers a portion of the rent for
motel rooms and even apartments.
SC reiterated that individual rights may be adversely affected only to the
extent that may fairly be required by the legitimate demands of public
interest or public welfare. The State is a leviathan that must be
restrained from needlessly intruding into the lives of its citizens.
However well-intentioned the ordinance may be, it is in effect an
arbitrary and whimsical intrusion into the rights of the establishments as
well as their patrons. The ordinance needlessly restrains the operation of
the businesses of the petitioners as well as restricting the rights of their
patrons without sufficient justification. The ordinance rashly equates
wash rates and renting out a room more than twice a day with
immorality without accommodating innocuous intentions.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of
Appeals is REVERSED, and the Decision of the Regional Trial Court of
Manila, Branch 9, is REINSTATED. Ordinance No. 7774 is hereby declared
UNCONSTITUTIONAL. No pronouncement as to costs.
Police Power Not Validly Exercised Infringement of Private Rights
On 3 Dec 1992, then Mayor Lim signed into law Ord 7774 entitled An Ordinance
prohibiting short time admission in hotels, motels, lodging houses, pension houses
and similar establishments in the City of Manila. White Light Corp is an operator of
mini hotels and motels who sought to have the Ordinance be nullified as the said
Ordinance infringes on the private rights of their patrons. The RTC ruled in favor of
WLC. It ruled that the Ordinance strikes at the personal liberty of the individual
guaranteed by the Constitution. The City maintains that the ordinance is valid as it is
a valid exercise of police power. Under the LGC, the City is empowered to regulate the
establishment, operation and maintenance of cafes, restaurants, beerhouses, hotels,
motels, inns, pension houses, lodging houses and other similar establishments,
including tourist guides and transports. The CA ruled in favor of the City.
ISSUE: Whether or not Ord 7774 is valid.
HELD: The SC ruled that the said ordinance is null and void as it indeed infringes
upon individual liberty. It also violates the due process clause which serves as a
guaranty for protection against arbitrary regulation or seizure. The said ordinance
invades private rights. Note that not all who goes into motels and hotels for wash up
rate are really there for obscene purposes only. Some are tourists who needed rest or
to wash up or to freshen up. Hence, the infidelity sought to be avoided by the said
ordinance is more or less subjected only to a limited group of people. The SC
reiterates that individual rights may be adversely affected only to the extent that may
fairly be required by the legitimate demands of public interest or public welfare.
CITY OF MANILA VS. CHINESE COMMUNITY [40 Phil
349; No. 14355; 31 Oct 1919]
Saturday, January 31, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

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

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

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

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

Held: The courts have the power of restricting the exercise of eminent domain
to the actual reasonable necessities of the case and for the purposes designated
by the law. The moment the municipal corporation or entity attempts to exercise
the authority conferred, it must comply with the conditions accompanying the
authority. The necessity for conferring the authority upon a municipal corporation
to exercise the right of eminent domain is admittedly within the power of the
legislature. But whether or not the municipal corporation or entity is exercising
the right in a particular case under the conditions imposed by the general
authority, is a question that the courts have the right to inquire to.
City of Manila vs Chinese Community of Manila , GR 14355 (1D), 31 October 1919
FACTS: Petitioner (City of Manila) filed a petition praying that certain lands be
expropriated for the purpose of constructing a public improvement namely, the
extension of Rizal Avenue, Manila and claiming that such expropriation was necessary.
Herein defendants, on the other hand, alleged (a) that no necessity existed for said
expropriation and (b) that the land in question was a cemetery, which had been used
as such for many years, and was covered with sepulchres and monuments, and that
the same should not be converted into a street for public purposes.
The lower court ruled that there was no necessity for the expropriation of the
particular strip of land in question.
Petitioner therefore assails the decision of the lower court claiming that it (petitioner)
has the authority to expropriate any land it may desire; that the only function of the
court in such proceedings is to ascertain the value of the land in question; that neither
the court nor the owners of the land can inquire into the advisable purpose of the
expropriation or ask any questions concerning the necessities therefor; that the
courts are mere appraisers of the land involved in expropriation proceedings, and,
when the value of the land is fixed by the method adopted by the law, to render a
judgment in favor of the defendant for its value.
ISSUE: W/N the courts may inquire into and hear proof upon the necessity of the
expropriation?
HELD: Yes. The very foundation of the right to exercise eminent domain is a genuine
necessity, and that necessity must be of a public character. The ascertainment of the
necessity must precede or accompany, and not follow, the taking of the
land. (Morrison vs. Indianapolis, etc. Ry. Co., 166 Ind., 511; Stearns vs. Barre, 73 Vt.,
281; Wheeling, etc. R. R. Co. vs. Toledo, Ry. etc. Co., 72 Ohio St., 368.)
The general power to exercise the right of eminent domain must not be confused with
the right to exercise it in a particular case. The power of the legislature to confer,
upon municipal corporations and other entities within the State, general authority to
exercise the right of eminent domain cannot be questioned by the courts, but that
general authority of municipalities or entities must not be confused with the right to
exercise it in particular instances. The moment the municipal corporation or entity
attempts to exercise the authority conferred, it must comply with the conditions
accompanying the authority. The necessity for conferring the authority upon a
municipal corporation to exercise the right of eminent domain is admittedly within the
power of the legislature. But whether or not the municipal corporation or entity is
exercising the right in a particular case under the conditions imposed by the general
authority, is a question which the courts have the right to inquire into.
The conflict in the authorities upon the question whether the necessity for the
exercise of the right of eminent domain is purely legislative and not
judicial, arises generally in the wisdom and propriety of the legislature in authorizing
the exercise of the right of eminent domain instead of in the question of the right to
exercise it in a particular case. (Creston Waterworks Co. vs. McGrath, 89 Iowa, 502.)
By the weight of authorities, the courts have the power of restricting the exercise of
eminent domain to the actual reasonable necessities of the case and for the purposes
designated by the law. (Fairchild vs. City of St. Paul. 48 Minn., 540.)

Municipality of Meycauayan vs. Intermediate Appellate Court

GR no. 72126, Jan 29, 1988

Facts:
Philippine Pipes and Merchandising Corporation, the respondent, owns a parcel of land adjacent
to its factory covered by Transfer Certificates #215165 and 37879. In 1975, the company filed for
an application to fence the said land for use as storage for their heavy equipment and finished
products. At the same time, the Municipal Council of Meycauayan passed Resolution # 258
manifesting intention to expropriate the land with title #37879 for use as public road. The
Provincial Board of Bulacan disapproved and annulled the resolution. In 1983, the Municipal
council once again passed a resolution with the same intent which was then approved by the
Provl Board in 1984.Feb 14 1984, petitioner filed a special civil action for expropriation with RTC
of Malolos. Upon deposit of P24,025.00, the market value, the trial court issued writ of possession
in favor of petitioner. Respondent appealed with IAC and the latter affirmed the trial courts
decision. Respondent filed for motion for reconsideration and IAC re-examined its decision and
reversed the decision saying there is no genuine necessity to expropriate the land as public road
since there are several roads for that purpose and that another more appropriate lot is available.
Also, IAC opined that the land is more ideal for storage area. Thus, this is a petition for review on
Certiorari for the IAC resolution or Court of appeals resolution dismissing the special civil action
for expropriation filed by petitioner.
Issue:
Is the petitioner justified for expropriating the land?

Held:
The foundation of the right to exercise power of eminent domain is GENUINE NECESSITY
and the necessity must be of PUBLIC CHARACTER. Condemnation of private property is justified
only if it is for the public good and there is genuine necessity. Thus, the courts have power to
inquire into the legality of the exercise of the right of eminent domain and to determine whether
there is genuine necessity.

SC found that the land is just about 6-7 meters wide, clearly not appropriate for building a
public road considering that it can only accommodate a one way road and that there are several
roads already used for the same purpose. Also, there is a much wider strip of land that is for sale
and is more appropriate for expropriation. The purpose of the petitioner that the road is needed
to decongest the volume of traffic can be fully and better attained by the other roads or the other
land and expropriating this land will only cause unjustified damage to the company.

Municipality of Meycauayan vs Intermediate Appellate Court (IAC)

Facts:

Respondent Philippine Pipes and Merchandising Corporation filed with the

Office of the Municipal Mayor of Meycauayan, Bulacan an application for a permit to
fence a parcel of land. The fencing of said property was allegedly to enable the
storage of the respondents heavy equipment and various finished products.

The Municipal Council of Meycauayan passed Resolution manifesting the

intention to expropriate the respondents parcel of land. It was opposed by the
respondent Philippine Pipes and Merchandising Corporation with the office of the
Provincial Governor.

Special Committee recommended that the Provincial Board of Bulacan

disapprove or annul the resolution in question because there was no genuine
necessity for the Municipality of Meycauyan to expropriate the respondents property
for use as a public road. Then Provincial Board of Bulacan passed Resolution
disapproving and annulling the Resolution passed by the Municipal Council of
Meycauayan.

However, Petitioner (Municipality of Meycauayan) filed with the RTC of

Malolos, Bulacan a special civil action for expropriation, and upon deposit of the
amount of P24,025.00, which is the market value of the land, with the PNB, the trial
court issued a writ of possession in favor of the Petitioner.

The respondent went to IAC, on petition for review, which the appellate court
affirmed the trial courts decision. But upon MR, the decision was reversed and held
that there is no genuine necessity to expropriate the land for use as public road as
there were several other roads for the same purpose and another more expropriate
lot for the proposed public road.

Issue:
 Whether or not Petitioner has the right to expropriate?

Held:

The Petitioners purpose in expropriating the respondents property is to

convert the same into a public road for the purposes to ease the traffic in the area of
vehicles. However, it reveals that there are other connecting links or several roads
for the same purpose and another lot for proposed public road. The Petitioner itself
admits that there are four (4) such cross roads in existence.

The foundation of the right to exercise the power of eminent domain is

genuine necessity and that necessity must be of public character. Condemnation of
private property is justified only if it is for the public good and there is genuine
necessity of a public character. Consequently, the courts have the power to
inquire into the legality of the exercise of the right of eminent domain and to
determine whether there is a genuine necessity therefor.

It is still a judicial question whether in the exercise of such

competence, the party adversely affected is the victim of partiality and
prejudice. That the equal protection clause will not allow.

There is absolutely no showing in the petition why the more appropriate lot for
the proposed road which was offered for sale has not been the subject of the
petitioners attempt to expropriate assuming there is a real need for another
connecting road.

Petition DISMISSED.

Municipality of Paranaque v VM Realty G.R. No.

127820. July 20, 1998
J. Panganiban

Petition for review on certiorari

Facts:

Under a city council resolution, the Municipality of Paraaque filed on September 20, 1993, a Complaint for
expropriation against Private Respondent V.M. Realty Corporation over two parcels of land of 10,000
square meters. The city previously negotiated for the sale of the property but VM didnt accept.

The trial court issued an Order dated February 4, 1994, authorizing petitioner to take possession of the
subject property upon deposit with its clerk of court of an amount equivalent to 15 percent of its fair market
value based on its current tax declaration.

According to the respondent, the complaint failed to state a cause of action because it was filed pursuant to
a resolution and not to an ordinance as required by RA 7160 (the Local Government Code); and (b) the
cause of action, if any, was barred by a prior judgment or res judicata. Petitioner claimed that res judicata
was not applicable.

The trial court dismissed the case. The petitioners MFR was denied. The CA affirmed.
Issues:

1. WON a resolution duly approved by the municipal council has the same force and effect of an ordinance
and will not deprive an expropriation case of a valid cause of action.

2. WON the principle of res judicata as a ground for dismissal of case is not applicable when public interest
is primarily involved.

Held: No to 1st Yes to 2nd. Petition dismissed.

Ratio:

1. Petitioner contends that a resolution approved by the municipal council for the purpose of initiating an
expropriation case substantially complies with the requirements of the law because the terms ordinance
and resolution are synonymous for the purpose of bestowing authority [on] the local government unit
through its chief executive to initiate the expropriation proceedings in court in the exercise of the power of
eminent domain.

To strengthen this point, the petitioner cited Article 36, Rule VI of the Rules and Regulations Implementing
the Local Government Code, which provides: If the LGU fails to acquire a private property for public use,
purpose, or welfare through purchase, the LGU may expropriate said property through a resolution of the
Sanggunian authorizing its chief executive to initiate expropriation proceedings.

Court-No. The power of eminent domain is lodged in the legislative branch of government, which may
delegate the exercise thereof to LGUs, other public entities and public utilities. An LGU may therefore
exercise the power to expropriate private property only when authorized by Congress and subject to the
latters control and restraints, imposed through the law conferring the power or in other legislations.

Sec 19, RA 7160

A local government unit may, through its chief executive and acting pursuant to an ordinance, exercise the
power of eminent domain for public use, or purpose, or welfare for the benefit of the poor and the landless,
upon payment of just compensation, pursuant to the provisions of the Constitution and pertinent laws.

Thus, the following essential requisites must concur before an LGU can exercise the power of eminent
domain:

1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of
the LGU, to exercise the power of eminent domain or pursue expropriation proceedings over a particular
private property.

2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the
poor and the landless.

3. There is payment of just compensation, as required under Section 9, Article III of the Constitution, and
other pertinent laws.

4. A valid and definite offer has been previously made to the owner of the property sought to be
expropriated, but said offer was not accepted.

In the case at bar, the local chief executive sought to exercise the power of eminent domain pursuant to a
resolution of the municipal council. Thus, there was no compliance with the first requisite that the mayor be
authorized through an ordinance.
We are not convinced by petitioners insistence that the terms resolution and ordinance are
synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a resolution is
merely a declaration of the sentiment or opinion of a lawmaking body on a specific matter. An ordinance
possesses a general and permanent character, but a resolution is temporary in nature.

If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would have
simply adopted the language of the previous Local Government Code. But Congress did not. In a clear
divergence from the previous Local Government Code, Section 19 of RA 7160 categorically requires that
the local chief executive act pursuant to an ordinance.

Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or private right
of the people.[35] Accordingly, the manifest change in the legislative language -- from resolution under BP
337 to ordinance under RA 7160 -- demands a strict construction.

When the legislature interferes with that right and, for greater public purposes, appropriates the land of
an individual without his consent, the plain meaning of the law should not be enlarged by doubtful
interpretation.

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution
to authorize an LGU to exercise eminent domain. It is axiomatic that the clear letter of the law is controlling
and cannot be amended by a mere administrative rule issued for its implementation.

Strictly speaking, the power of eminent domain delegated to an LGU is in reality not eminent but inferior
domain, since it must conform to the limits imposed by the delegation, and thus partakes only of a share in
eminent domain.

2. As correctly found by the Court of Appeals and the trial court, all the requisites for the application of res
judicata are present in this case. There is a previous final judgment on the merits in a prior expropriation
case involving identical interests, subject matter and cause of action, which has been rendered by a court
having jurisdiction over it.

Be that as it may, the Court holds that the principle of res judicata, which finds application in generally all
cases and proceedings, cannot bar the right of the State or its agent to expropriate private property.

Eminent Domain can reach every form of property which the State might need for public use whenever they
need it.

While the principle of res judicata does not denigrate the right of the State to exercise eminent domain, it
does apply to specific issues decided in a previous case.

In Republic vs De Knecht, the Court ruled that the power of the State or its agent to exercise eminent
domain is not diminished by the mere fact that a prior final judgment over the property to be expropriated
has become the law of the case as to the parties. The State or its authorized agent may still subsequently
exercise its right to expropriate the same property, once all legal requirements are complied with.
Municipality of Paraaque vs. VM Realty
292 SCRA 676
Panganiban, J.:

FACTS:
Pursuant to a Sanggunian Bayan Resolution of the petitioner municipality, an expropriation complaint against the property of herein
respondent for the purpose of alleviating the living conditions of the underprivileged by providing homes for the homeless through a
socialized housing project. The RTC of Makati authorized petitioner to take possession of subject property upon deposit to the court
an amount of its fair market value. Respondent filed a counter claim alleging that the complaint failed to state a cause of action
because it was filed pursuant to a resolution and not to an ordinance as required by RA 7160.

ISSUE:
Whether or not the Resolution of the Municipal council is a substantial compliance of the statutory requirement of Section 19, RA
7160 in the exercise of the power of eminent domain.

RULING:
The power of eminent by LGUs may be affected only by ordinance not by a mere resolution. The following essential requisites must
concur before an LGU can exercise the power of eminent domain.
1. An ordinance is enacted by the local legislative council authorizing the local chief executive, in behalf of the LGUs to exercise the
power of eminent domain to pursue expropriation proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Sec 9, Article III of the Constitution and other pertment.
4. A valid and definite offer has been previously made to the owner of the property sought to be expropriated, but said offer was not
accepted.

In the case at bar, the first requisite that there must be an ordinance was not complied with by the local chief executive. A municipal
ordinance is different from a resolution. An ordinance is a law, it possesses a general and permanent character while a resolution is
temporary in nature.
The petition is hereby denied without prejudice to petitioners proper exercise of its power of eminent domain over subject property.
CITY OF CEBU, Petitioner, vs. APOLONIO M. DEDAMO, JR., Respondent.
Doctrine: Under the principle of conclusiveness of judgment, when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, or when an opportunity for such trial has been given, the
judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and those in
privity with them. Stated differently, conclusiveness of judgment bars the re-litigation in a second case of a fact
or question already settled in a previous case.
Facts:
1. The present controversy is an off-shoot of Civil Case No. CEB-14632 for eminent domain over two (2)
parcels of land owned by spouses Apolonio and Blasa Dedamo (Spouses Dedamo), filed by the
petitioner before the Regional Trial Court (RTC) of Cebu City, Branch 13, on September 17, 1993. The
petitioner immediately took possession of the lots after depositing P51,156.00 with the Philippine
National Bank pursuant to Section 19 of Republic Act No. 7160.4
2. During the pendency of the case, or on December 14, 1994, the petitioner and Spouses Dedamo
entered into a Compromise Agreement whereby the latter agreed to part with the ownership of the
parcels of land in favor of the former in consideration of ONE MILLION SEVEN HUNDRED EIGHTY-SIX
THOUSAND FOUR HUNDRED PESOS (P1,786,400.00) as provisional payment and just compensation
in an amount to be determined by a panel of commissioners.
3. Forthwith, the panel was constituted and a report was submitted to the RTC recommending the sum of
P20,826,339.50 as just compensation. The report was adopted and approved by the RTC in its Order
dated December 27, 1996.5
4. The RTC Order was affirmed by the CA and then by the Court, in a Decision dated May 7, 2002, when
the matter was elevated for review in a petition docketed as G.R. No. 142971.
5. When the said decision became final and executory on September 20, 2002, the case was remanded for
execution to the RTC, before which, a motion for the issuance of a writ of execution was filed by
Spouses Dedamo on April 4, 2003. On May 16, 2003, the RTC granted the motion and ordered the
issuance of the writ
a. In the meantime, Spouses Dedamo passed away and they were substituted in the case by
herein respondent.
6. On December 23, 2003, the petitioner paid the respondent the sum of P19,039,939.50 which is the
difference between the just compensation due and the provisional payment already made.
7. On March 24, 2004, the respondent filed a Manifestation and Motion before the RTC to order the
petitioner to pay interest on the just compensation computed from the time of actual taking of the lands.

RTC: On April 30, 2004, the RTC denied the motion and ruled that it can no longer amend a final and
executory judgment that did not specifically direct the payment of legal interest. Adamant, the
respondent sought recourse before the CA asserting that the petitioner is liable to pay: (a) 12% legal
interest on the unpaid balance of the just compensation computed from the time of actual taking of the
property up to the date of payment of just compensation; and (b) 12% legal interest from the time the
decision awarding just compensation became final and executory on September 20, 2002 until its
satisfaction on December 23, 2003.
CA: The CA awarded legal interest accruing from the time the RTC Order dated December 27, 1996
awarding just compensation was affirmed with finality by the Supreme Court up to the time of full
payment thereof in line with the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals 6 that when a
court judgment awarding a sum of money becomes final and executory, it shall earn legal interest of
12% per annum reckoned from such finality until satisfaction.
Issue: Whether or not the petitioner can still question the respondents entitlement of legal interest awarded by
the CA.
Held: NO! The petition is denied on the ground of res judicata in the mode of conclusiveness of judgment.
A perusal of the allegations in the present case evidently shows that the petitioner broaches the issues similarly
raised and already resolved in G.R. No. 172942.
Under the principle of conclusiveness of judgment, when a right or fact has been judicially tried and
determined by a court of competent jurisdiction, or when an opportunity for such trial has been given,
the judgment of the court, as long as it remains unreversed, should be conclusive upon the parties and
those in privity with them. Stated differently, conclusiveness of judgment bars the re-litigation in a
second case of a fact or question already settled in a previous case.
The adjudication in G.R. No. 172942 has become binding and conclusive on the petitioner who can no longer
question the respondents entitlement to the 12% legal interest awarded by the CA. The Courts determination in
G.R. No. 172942 on the reckoning point of the 12% legal interest is likewise binding on the petitioner who cannot
re-litigate the said matter anew through the present recourse.
Thus, the judgment in G.R. No. 172942 bars the present case as the relief sought in the latter is inextricably
related to the ruling in the former.
WHEREFORE, premises considered, the Petition is hereby DENIED.

CITY OF CEBU vs. SPOUSES APOLONIO and BLASA DEDAMO

[G.R. No. 142971, May 7, 2002]

FACTS:

On 17 September 1993, Petitioner City of Cebu filed a complaint for eminent domain against
respondents spouses Apolonio and Blasa Dedamo. The petitioner alleged that they needed the parcels of
land owned by the respondents for public purpose because they are planning to construct a public road
which will serve as an access or relief road of Gorordo Avenue to extend to the General Maxilum Avenue
and the back of Magellan International Hotel Roads in Cebu City.

However, the respondents filed a motion to dismiss the complaint because the purpose of
expropriation was not for public purpose but for the benefit of the Cebu Holdings, Inc. They alleged that
the petitioner could simply buy directly the property from them at its fair market value just like what they
did with the neighboring lots and the price offered was very low. They also alleged that they have no other
land in Cebu City.

From this, a pre-trial was conducted. On 23 August 1994, the petitioner filed a motion for the
issuance of a writ of possession pursuant to Section 19 of R.A. No. 7160. The motion was granted by the
trial court on 21 September 1994. The parties executed an agreement and submitted to the trial wherein
they declared that they have partially settled the case in consideration of the stipulations in the
agreement.

Pursuant to the said agreement, the trial court appointed Palermo M. Lugo, Alfredo Cisneros and
Herbert E. Buot to be the commissioners to determine the just compensation of the lots sought to be
expropriated. The commissioners report contained that the plaintiff is directed to pay a just
compensation costs P24,865.930.00 to the respondents.
 But the petitioner filed a motion for reconsideration on the ground that the commissioners report
was inaccurate since it included an area which was not subject to expropriation. Then the commissioners
submit an amendment which made the just compensation costs P20,826,339.50 which was later approved
by the trial court.

Petitioner elevated the case to the Court of Appeals alleging that the lower court erred in fixing the
amount of just compensation at P20,826,339.50. They also alleged that just compensation should be based
on the prevailing market price of the property at the commencement of the expropriation proceedings.
However, the Court of Appeals was not convinced and affirmed the lower courts decision.

The petitioner filed with a petition for review to the SC. They asserted that just compensation
should be determined on September 17, 1993, as of the date of the filing of the complaint and not at the
time the property was actually taken in 1994.

ISSUE:

whether just compensation should be determined as of the date of the filing of the complaint.

HELD:

No. Just compensation should not be determined as of the date of the filing of the complaint.

Eminent domain is a fundamental State power that is inseparable from sovereignty. It is the Governments
right to appropriate, in the nature of a compulsory sale to the State, private property for public use or
purpose.[9] However, the Government must pay the owner thereof just compensation as consideration
therefor.

In this case, the applicable law as to the point of determining the just compensation is Section 19 of R.A.
No. 7160, which expressly provides that just compensation shall be determined as of the time of actual
taking. The SC justifies that although the general rule in determining just compensation in eminent
domain is the value of the property as of the date of the filing of the complaint, the rule admits of an
exception: where this Court fixed the value of the property as of the date it was taken and not at the date of
the commencement of the expropriation proceedings.

Moreover, both of the parties agreed to be bound by the report of the commission so they need to comply
on the agreement in good faith. Also, the petitioner was too late to question the valuation without violating
the principle of equitable estoppel. And lastly, Section 4, Rule 67 of the Rules of Court cannot prevail over
R.A. 7160, which is a substantive law.
Therefore, the petition was denied.
Jesus Estanislao vs. Amado Costales
GRN 96516 May 8, 1991 / 196 SCRA 853
Gancayco, J.:
FACTS:
The Sanggunian Panglungsod passed ordinance No 44 of Zamboanga City. The same was sent to the Minister of Finance where it
was found out to contravenes Section 19 of the local Tax Code. The authority of the city is limited to the imposition of a percentage
tax on the gross sales or receipts of said production. The tax being imposed in the ordinance is based on the output or production
and not on the gross sales or receipts as authorized under the local tax code. The city Mayor of Zamboanga questioned such
decision of the Finance Minister and the lower court ruled in favor of the former by reason of prescription. The ordinance imposed
P0.01 per liter of softdrinks produced, manufactured and or bottled within the territorial jurisdiction of the City of Zamboanga.
ISSUE:
Whether or not Ordinance No. 44 contravenes the Local Tax Code of 1974.
RULING:
The court ruled that the tax ordinances issued by the local autonomy is governed by the Local Tax Code of 1974 as it was stated in
Section 64 (a) thereof all existing tax ordinances of provinces, cities, municipalities and barrios shall be deemed ipso facto nullified
on June 30, 1974. The court also clarified that the 120 days that lapsed before the Minister of Finance acted on the ordinance did not
render the action inoperative due to prescription. Even if the Secretary of Finance failed to review or act on the ordinance within 120
days, it does not follow as a legal consequence thereof that an otherwise invalid ordinance is thereby validated. It does not also
mean that the Secretary can no longer act by suspending and/or revoking an invalid ordinance even after the lapse of 120 day
period.

Tuzon and Mapagu vs. CA and Jurado

Public officers not personally liable for injuries occasioned by

performance of official duty within scope of official authority; erroneous
interpretation of ordinance does not constitute bad faith.

Facts:

In 1977, the Sangguniang Bayan of Camalaniugan, Cagayan thought of fund-raising scheme

to help finance the construction of a Sports and Nutrition Center. They adopted Resolution
No. 9 whereby all thresher operators who will apply for a permit to thresh will be required to
donate 1% of all the palay threshed by them.

Private respondent Jurado tried to pay the P285.00 license fee for thresher operators but
Municipal Treasurer Mapagu refused to accept payment and required him to first secure a
mayors permit. Mayor Domingo Tuzon, on the other hand, said that Jurado should first
comply with Resolution No. 9 and sign the agreement before the permit could be issued.

Jurado filed an action for mandamus with the CFI Cagayan to compel the issuance of the
mayors permit and license. He filed another petition for declaratory judgment against the
resolution for being illegal either as a donation or as a tax measure. Named defendants were
the same respondents and all the members of the Sangguniang Bayan of Camalaniugan

The trial court upheld the challenged measure. Jurado appealed to the Court of Appeals
which affirmed the validity of Resolution No. 9 and the implementing agreement.
Nevertheless, it found Tuzon and Mapagu liable to pay actual and moral damages for acting
maliciously and in bad faith when they denied Jurado's application for the mayor's permit and
license. As for the Resolution, it was passed by the Sanggunian in the lawful exercise of its
legislative powers granted by Article XI, Section 5 of the 1973 Constitution which provided
that each LGU shall have the power to create its own source revenue and to levy taxes,
subject to such limitation as may be provided by law. And also under Article 4, Sec. 29, PD
231: The barrio council may solicit money, materials, and other contributions from private
agencies and individuals.

Issues:

1. WON a resolution imposing a 1% donation is a valid exercise of the taxing power of an

LGU.

2. WON petitioners are liable in damages to private respondent Jurado for having withheld
from him the mayor's permit and license because of his refusal to comply with Resolution No.
9.

Held:

1. NO. While it would appear from the wording of the resolution that the municipal government
merely intends to "solicit" the 1% contribution from the threshers, the implementing
agreement seems to make the donation obligatory and a condition precedent to the issuance
of the mayors permit. This goes against the nature of a donation, which is an act of liberality
and is never obligatory.
If, on the other hand, it is to be considered a tax ordinance, then it must be shown in view of
the challenge raised by the private respondents to have been enacted in accordance with the
requirements of the Local Tax Code. These would include the holding of a public hearing on
the measure and its subsequent approval by the Secretary of Finance, in addition to the usual
requisites for publication of ordinances in general. .

2. NO. Petitioners acted within the scope of their authority and in consonance with their
honest interpretation of the resolution in question. It was not for them to rule on its validity. In
the absence of a judicial decision declaring it invalid, its legality would have to be presumed.
As executive officials of the municipality, they had the duty to enforce it as long as it had not
been repealed by the Sangguniang Bayan or annulled by the courts. xxx As a rule, a pubic
officer, whether, judicial, quasijudicial or executive, is not personally liable to one injured in
consequence of an act performed within the scope of his official authority, and in line of his
official duty. xxx It has been held that an erroneous interpretation of an ordinance does not
constitute nor does it amount to bad faith, that would entitle an aggrieved party to an award
for damages. (Philippine Match Co. Ltd. v. City of Cebu)

The private respondent anchors his claim for damages on Article 27 of the New Civil Code,
which reads:

Art. 27. Any person suffering material or moral loss because a public servant or employee
refuses or neglects, without just cause, to perform his official duty may file an action for
damages and other relief against the latter, without prejudice to any disciplinary administrative
action that may be taken.

In the present case, it has not even been alleged that the Mayor Tuzon's refusal to act on the
private respondent's application was an attempt to compel him to resort to bribery to obtain
approval of his application. It cannot be said either that the mayor and the municipal treasurer
were motivated by personal spite or were grossly negligent in refusing to issue the permit and
license to Jurado.
 It is no less significant that no evidence has been offered to show that the petitioners singled
out the private respondent for persecution. Neither does it appear that the petitioners stood to
gain personally from refusing to issue to Jurado the mayor's permit and license he needed.
The petitioners were not Jurado's business competitors nor has it been established that they
intended to favor his competitors. On the contrary, the record discloses that the resolution
was uniformly applied to all the threshers in the municipality without discrimination or
preference.

The private respondent complains that as a result of the petitioners' acts, he was prevented
from operating his business all this time and earning substantial profit therefrom, as he had in
previous years. But as the petitioners correctly observed, he could have taken the prudent
course of signing the agreement under protest and later challenging it in court to relieve him
of the obligation to "donate." Pendente lite, he could have continued to operate his threshing
business and thus avoided the lucrocesante that he now says was the consequence of the
petitioners' wrongful act. He could have opted for the less obstinate but still dissentient action,
without loss of face, or principle, or profit. (Tuzon and Mapagu vs. CA and Jurado, G.R. No.
90107, August 21, 1992)
Drilon vs Lim
GR No. 112497
August 4, 1994
The principal issue in this case is the constitutionality of Section 187 of the Local Government
Code. The Secretary of Justice (on appeal to him of four oil companies and a taxpayer)
declared Ordinance No. 7794 (Manila Revenue Code) null and void for non-compliance with
the procedure in the enactment of tax ordinances and for containing certain provisions
contrary to law and public policy.

RTCs Ruling:

1. The RTC revoked the Secretarys resolution and sustained the ordinance. It declared Sec 187
of the LGC as unconstitutional because it vests on the Secretary the power of control over
LGUs in violation of the policy of local autonomy mandated in the Constitution.

Petitioners Argument:

1. The annulled Section 187 is constitutional and that the procedural requirements for the
enactment of tax ordinances as specified in the Local Government Code had indeed not been
observed. (Petition originally dismissed by the Court due to failure to submit certified true
copy of the decision, but reinstated it anyway.)
2. Grounds of non-compliance of procedure
a. No written notices as required by Art 276 of Rules of Local Government Code
b. Not published
c. Not translated to tagalog
 Supreme Courts Argument:
1. Section 187 authorizes the petitioner to review only the constitutionality or legality of tax
ordinance. What he found only was that it was illegal. That act is not control but supervision.
2. Control lays down the rules in the doing of act and if not followed order the act undone or re-
done. Supervision sees to it that the rules are followed.
3. Two grounds of declaring Manila Revenue Code null and void (1) inclusion of certain ultra
vires provisions (2) non-compliance with prescribed procedure in its enactment but were
followed.
The requirements are upon approval of local development plans and public investment
programs of LGU not to tax ordinances.
Drilon v. Lim
G.R. No. 112497, August 4, 1994
Cruz, J.

Facts:
The principal issue in this case is the constitutionality of Section 187 of the
Local Government Code1. The Secretary of Justice (on appeal to him of four oil
companies and a taxpayer) declared Ordinance No. 7794 (Manila Revenue Code)
null and void for non-compliance with the procedure in the enactment of tax
ordinances and for containing certain provisions contrary to law and public policy.

The RTC revoked the Secretarys resolution and sustained the ordinance. It
declared Sec 187 of the LGC as unconstitutional because it vests on the Secretary
the power of control over LGUs in violation of the policy of local autonomy
mandated in the Constitution. The Secretary argues that the annulled Section 187
is constitutional and that the procedural requirements for the enactment of tax
ordinances as specified in the Local Government Code had indeed not been
observed. (Petition originally dismissed by the Court due to failure to submit
certified true copy of the decision, but reinstated it anyway.)

Issue:
WON the lower court has jurisdiction to consider the constitutionality of Sec
187 of the LGC

Held:
Yes. BP 129 vests in the regional trial courts jurisdiction over all civil cases in
which the subject of the litigation is incapable of pecuniary estimation. Moreover,
Article X, Section 5(2), of the Constitution vests in the Supreme Court appellate
jurisdiction over final judgments and orders of lower courts in all cases in which
the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance,
or regulation is in question.

1
Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures; Mandatory Public Hearings. The procedure for approval of local tax ordinances
and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the
enactment thereof; Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within
thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal:
Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge
levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting
upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.
 In the exercise of this jurisdiction, lower courts are advised to act with the
utmost circumspection, bearing in mind the consequences of a declaration of
unconstitutionality upon the stability of laws, no less than on the doctrine of
separation of powers. It is also emphasized that every court, including this Court,
is charged with the duty of a purposeful hesitation before declaring a law
unconstitutional, on the theory that the measure was first carefully studied by the
executive and the legislative departments and determined by them to be in
accordance with the fundamental law before it was finally approved. To doubt is to
sustain. The presumption of constitutionality can be overcome only by the
clearest showing that there was indeed an infraction of the Constitution.

Issue:
WON Section 187 of the LGC is unconstitutional

Held:
Yes. Section 187 authorizes the Secretary of Justice to review only the
constitutionality or legality of the tax ordinance and, if warranted, to revoke it on
either or both of these grounds. When he alters or modifies or sets aside a tax
ordinance, he is not also permitted to substitute his own judgment for the
judgment of the local government that enacted the measure. Secretary Drilon did
set aside the Manila Revenue Code, but he did not replace it with his own version
of what the Code should be.. What he found only was that it was illegal. All he did
in reviewing the said measure was determine if the petitioners were performing
their functions in accordance with law, that is, with the prescribed procedure for
the enactment of tax ordinances and the grant of powers to the city government
under the Local Government Code. As we see it, that was an act not of control but
of mere supervision.

An officer in control lays down the rules in the doing of an act. If they are
not followed, he may, in his discretion, order the act undone or re-done by his
subordinate or he may even decide to do it himself. Supervision does not cover
such authority. The supervisor or superintendent merely sees to it that the rules
are followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them.

Significantly, a rule similar to Section 187 appeared in the Local Autonomy

Act. That section allowed the Secretary of Finance to suspend the effectivity of a
tax ordinance if, in his opinion, the tax or fee levied was unjust, excessive,
oppressive or confiscatory. Determination of these flaws would involve the
exercise of judgment or discretion and not merely an examination of whether or
not the requirements or limitations of the law had been observed; hence, it would
smack of control rather than mere supervision. That power was never questioned
before this Court but, at any rate, the Secretary of Justice is not given the same
latitude under Section 187. All he is permitted to do is ascertain the
constitutionality or legality of the tax measure, without the right to declare that, in
his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion
on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on
two grounds, to with, the inclusion therein of certain ultra vires provisions and
non-compliance with the prescribed procedure in its enactment. These grounds
affected the legality, not the wisdom or reasonableness, of the tax measure.

The issue of non-compliance with the prescribed procedure in the

enactment of the Manila Revenue Code is another matter. (allegations: No written
notices of public hearing, no publication of the ordinance, no minutes of public
hearing, no posting, no translation into Tagalog)

Judge Palattao however found that all the procedural requirements had been
observed in the enactment of the Manila Revenue Code and that the City of
Manila had not been able to prove such compliance before the Secretary only
because he had given it only five days within which to gather and present to him
all the evidence (consisting of 25 exhibits) later submitted to the trial court. We
agree with the trial court that the procedural requirements have indeed been
observed. Notices of the public hearings were sent to interested parties as
evidenced. The minutes of the hearings are found in Exhibits M, M-1, M-2, and M-
3. Exhibits B and C show that the proposed ordinances were published in the
Balita and the Manila Standard on April 21 and 25, 1993, respectively, and the
approved ordinance was published in the July 3, 4, 5, 1993 issues of the Manila
Standard and in the July 6, 1993 issue of Balita, as shown by Exhibits Q, Q-1, Q-2,
and Q-3.

The only exceptions are the posting of the ordinance as approved but this
omission does not affect its validity, considering that its publication in three
successive issues of a newspaper of general circulation will satisfy due process. It
has also not been shown that the text of the ordinance has been translated and
disseminated, but this requirement applies to the approval of local development
plans and public investment programs of the local government unit and not to tax
ordinances.

National Development Co vs Cebu City

Date: November 5, 1992
Plaintiff Appellee: National Development Co
Defendants Appellants: Cebu City and Augusto Pacis

Ponente: Bellosillo

Facts: National Development Company (NDC) is a GOCC authorized to engage in commercial, industrial, mining, agricultural and
other enterprises necessary or contributory to economic development or important to public interest. It also operates subsidiary
corporations one of which is National Warehousing Corporation (NWC).
On August 10, 1939, the President issued Proclamation No. 430 reserving Block no. 4, Reclamation Area No. 4, of Cebu
City for warehousing purposes under the administration of NWC. Subsequently, in 1940, a warehouse with a floor area of 1,940
square meters more or less, was constructed thereon. In 1947, EO 93 dissolved NWC with NDC taking over its assets and
functions.
In 1948, Cebu City assessed and collected from NDC real estate taxes on the land and the warehouse thereon. By the
first quarter of 1970, a total of P100,316.31 was paid by NDC 11 of which only P3,895.06 was under protest. NDC asked for a full
refund contending that the land and the warehouse belonged to the Republic and therefore exempt from taxation. The CFI
ordered Cebu City to refund to NDC the real estate taxes paid by it.

Issue: WON the NDC is exempt from real estate taxes

Held: No

Ratio: As already adverted to, one of the principal issues before Us is the interpretation of a provision of the Assessment Law, the
precursor of the then Real Property Tax Code and the Local Government Code, where "ownership" of the property and not "use"
is the test of tax liability. Section, 3 par. (a), of the Assessment Law, on which NDC claims real estate tax exemption, provides
Section 3. Property exempt from tax. The exemptions shall be as follows: (a) Property owned by the United States of America,
the Commonwealth of the Philippines, any province, city, municipality at municipal district.
The same opinion of NDC was passed upon in National Development Co. v. Province of Nueva Ecija where We held that
its properties were not comprehended in Sec. 3, par (a), of the Assessment Law. Commonwealth Act No. 182 which created NDC
contains no provision exempting it from the payment of real estate tax on properties it may acquire. NDC does not come under
classification of municipal or public corporation in the sense that it may sue and be sued in the same manner as any other private
corporations, and in this sense, it is an entity different from the government, NPC may be sued without its consent, and is subject
to taxation. That plaintiff herein does not exercise sovereign powers and, hence, cannot invoke the exemptions thereof but is an
agency for the performance of purely corporate, proprietary or business functions, is apparent from its Organic Act.
We find no compelling reason why the foregoing ruling, although referring to lands which would eventually be
transferred to private individuals, should not apply equally to this case.
NDC cites Board of Assessment Appeals, Province of Laguna v. CTA and National Waterworks and Sewerage Authority
(NWSA). In that case, the properties of NWSA, a GOCC, were exempt from real estate tax because Sec. 3, par (c), of R.A. 470 did
not distinguish between those possessed by the government in sovereign/governmental/political capacity and those in private
proprietary patrimonial character. The conflict between NDC v. Nueva Ecija, supra, and BAA v. CTA and NWSA, , is more superficial
than real. The NDC decision speaks of properties owned by NDC, while the BAA ruling concerns properties belonging to the
Republic
In the case at bar, no similar statement appears in the stipulation of facts, hence, ownership of subject properties
should first be established. For, while it may be stated that the Republic owns NDC, it does not necessary follow that properties
owned by NDC, are also owned by Republic in the same way that stockholders are not ipso facto owners of the properties of
their corporation.
The Republic may form a corporation with personality and existence distinct from its own. The separate personality
allows a GOCC to hold and possess properties in its own name and, thus, permit greater independence and flexibility in its
operations. It may, therefore, be stated that tax exemption of property owned by the Republic of the Philippines "refers to
properties owned by the Government and by its agencies which do not have separate and distinct personalities (unincorporated
entities).
The foregoing discussion does not mean that because NDC, like most GOCC's engages in commercial enterprises all
properties of the government and its unincorporated agencies possessed in propriety character are taxable. Similarly, in the case
at bar, NDC proceeded on the premise that the BAA ruling declared all properties owed by GOCC's as properties in the name of
the Republic, hence, exempt under Sec. 3 of the Assessment Law.

Issue: WON the property is exempt from payment of real estate taxes

Held: Yes

Ratio: To come within the ambit of the exemption provided in Art. 3, par. (a), of the Assessment Law, it is important to establish
that the property is owned by the government or its unincorporated agency, and once government ownership is determined, the
nature of the use of the property, whether for proprietary or sovereign purposes, becomes immaterial. What appears to have
been ceded to NWC (later transferred to NDC), in the case before Us, is merely the administration of the property while the
government retains ownership of what has been declared reserved for warehousing purposes under Proclamation No. 430.
A reserved land is defined as a "[p]ublic land that has been withheld or kept back from sale or disposition." The land
remains "absolute property of the government." The government "does not part with its title by reserving them (lands), but
simply gives notice to all the world that it desires them for a certain purpose." Absolute disposition of land is not implied from
reservation; it merely means "a withdrawal of a specified portion of the public domain from disposal under the land laws and the
appropriation thereof, for the time being, to some particular use or purpose of the general government." As its title remains with
the Republic, the reserved land is clearly recovered by the tax exemption provision.
CEBU nevertheless contends that the reservation of the property in favor of NWC or NDC is a form of disposition of
public land which, subjects the recipient (NDC ) to real estate taxation under Sec. 115 of the Public Land Act.
The essential question then is whether lands reserved pursuant to Sec. 83 are comprehended in Sec. 115 and, therefore, taxable.
Section 115 of the Public Land Act should be treated as an exception to Art. 3, par. (a), of the Assessment Law. While
ordinary public lands are tax exempt because title thereto belongs to the Republic, Sec. 115 subjects them to real estate tax even
before ownership thereto is transferred in the name of the beneficiaries. Sec. 115 comprehends three (3) modes of disposition of
Lands under the Public Land Act, to wit: homestead, concession, and contract.
Liability to real property taxes under Sec. 115 is predicated on (a) filing of homestead application, (b) approval of
concession and, (c) signing of contract. Significantly, without these words, the date of the accrual of the real estate tax would be
indeterminate. Since NDC is not a homesteader and no "contract" (bilateral agreement) was signed, it would appear, then, that
reservation under Sec. 83, being a unilateral act of the President, falls under "concession". "Concession" as a technical term
under the Public Land Act is synonymous with "alienation" and "disposition", and is defined in Sec. 10 as "any of the methods
authorized by this Act for the acquisition, lease, use, or benefit of the lands of the public domain other than timber or mineral
lands." Logically, where Sec. 115 contemplates authorized methods for acquisition, lease, use, or benefit under the Act, the
taxability of the land would depend on whether reservation under Sec. 83 is one such method of acquisition, etc. Tersely put, is
reservation synonymous with alienation? Or, are the two terms antithetical and mutually exclusive? Indeed, reservation connotes
retention, while concession (alienation) signifies cession.
Section 8 and 88 of the Public Land Act provide that reserved lands are excluded from that may be subject of
disposition. As We view it, the effect of reservation under Sec. 83 is to segregate a piece of public land and transform it into non-
alienable or non-disposable under the Public Land Act. Section 115, on the other hand, applies to disposable public lands. Clearly,
therefore, Sec. 115 does not apply to lands reserved under Sec. 83. Consequently, the subject reserved public land remains tax
exempt.
However, as regards the warehouse constructed on a public reservation, a different rule should apply because "[t]he
exemption of public property from taxation does not extend to improvements on the public lands made by pre-emptioners,
homesteaders and other claimants, or occupants, at their own expense, and these are taxable by the state . . ." Consequently, the
warehouse constructed on the reserved land by NWC (now under administration by NDC), indeed, should properly be assessed
real estate tax as such improvement does not appear to belong to the Republic.
Since the reservation is exempt from realty tax, the erroneous tax payments collected by CEBU should be refunded to
NDC. This is in consonance with Sec. 40, par. (a) of the former Real Property Tax Code which exempted from taxation real
property owned by the Republic of the Philippines or any of its political subdivisions, as well as any GOCC so exempt by its
charter.
As regards the requirement of paying under protest before judicial recourse, CEBU argues that in any case NDC is not
entitled to refund because Sec. 75 of R.A. 3857, the Revised Charter of the City of Cebu, requires payment under protest before
resorting to judicial action for tax refund; that it could not have acted on the first demand letter of NDC of 20 May 1970 because
it was sent to the City Assessor and not to the City Treasurer; that, consequently, there having been no appropriate prior
demand, resort to judicial remedy is premature; and, that even on the premise that there was proper demand, NDC has yet to
exhaust administrative remedies by way of appeal to the Department of Finance and/or Auditor General before taking judicial
action.
NDC does not agree. It disputes the applicability of the payment-under-protest requirement is Sec. 75 of the Revised
Cebu City Charter because the issue is not the validity of tax assessment but recovery of erroneous payments under Arts. 2154
and 2155 of the Civil Code. It cites the case of East Asiaticvs City of Davao which held that where the tax is unauthorized, "it is not
a tax assessed under the charter of the City of Davao and for that reason no protest is necessary for a claim or demand for its
refund."
In the case at bar, petitioner, therefore, cannot be said to have waived his right. He had no knowledge of the fact that it
was exempted from payment of the realty tax under Commonwealth Act No. 470. Payment was made through error or mistake,
in the honest belief that petitioner was liable, and therefore could not have been made under protest, but with complete
voluntariness. In any case, a taxpayer should not be held to suffer loss by his good intention to comply with what he believes is
his legal obligation, where such obligation does not really exist . . . The fact that petitioner paid thru error or mistake, and the
government accepted the payment, gave rise to the application of the principle of solutio indebiti under Article 2154 of the New
Civil Code, which provides that "if something is received when there is no right to demand it, and it was unduly delivered through
mistake, the obligation to return it arises." There is, therefore, created a tie or juridical relation in the nature of solutio indebiti,
expressly classified as quasi-contract under Section 2, Chapter I of Title XVII CC.
The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient principle that no one shall
enrich himself unjustly at the expense of another . . . Hence, it would seem unedifying for the government, that knowing it has
no right at all to collect or to receive money for alleged taxes paid by mistake, it would be reluctant to return the same . . .
Petitioner is not unsatisfied in the assessment of its property. Assessment having been made, it paid the real estate taxes without
knowing that it is