Philippine Association of Service Exporters v.

Drilon

Phil association of Service Exporters, Inc., is engaged principally in the recruitment of Filipino workers,
male and female of overseas employment. It challenges the constitutional validity of Dept. Order No. 1
(1998) of DOLE entitled “Guidelines Governing the Temporary Suspension of Deployment of Filipino
Domestic and Household Workers.” It claims that such order is a discrimination against males and
females. The Order does not apply to all Filipino workers but only to domestic helpers and females with
similar skills, and that it is in violation of the right to travel, it also being an invalid exercise of the
lawmaking power. Further, PASEI invokes Sec 3 of Art 13 of the Constitution, providing for worker
participation in policy and decision-making processes affecting their rights and benefits as may be
provided by law. Thereafter the Solicitor General on behalf of DOLE submitting to the validity of the
challenged guidelines involving the police power of the State and informed the court that the
respondent have lifted the deployment ban in some states where there exists bilateral agreement with
the Philippines and existing mechanism providing for sufficient safeguards to ensure the welfare and
protection of the Filipino workers.

ISSUE:

Whether or not D.O. No. 1 of DOLE is constitutional as it is an exercise of police power.

RULING:

“[Police power] has been defined as the "state authority to enact legislation that may interfere with
personal liberty or property in order to promote the general welfare." As defined, it consists of (1) an
imposition of restraint upon liberty or property, (2) in order to foster the common good. It is not capable
of an exact definition but has been, purposely, veiled in general terms to underscore its all-
comprehensive embrace.

“The petitioner has shown no satisfactory reason why the contested measure should be nullified. There
is no question that Department Order No. 1 applies only to "female contract workers," but it does not
thereby make an undue discrimination between the sexes. It is well-settled that "equality before the
law" under the Constitution does not import a perfect Identity of rights among all men and women. It
admits of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they
are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they
apply equally to all members of the same class.

The Court is satisfied that the classification made-the preference for female workers — rests on
substantial distinctions.

Ichong v Hernandez

Lao Ichong is a Chinese businessman who entered the country to take advantage of business
opportunities herein abound (then) – particularly in the retail business. For some time he and his fellow
Chinese businessmen enjoyed a “monopoly” in the local market in Pasay. Until in June 1954 when
Congress passed the RA 1180 or the Retail Trade Nationalization Act the purpose of which is to reserve
to Filipinos the right to engage in the retail business. Ichong then petitioned for the nullification of the
said Act on the ground that it contravened several treaties concluded by the RP which, according to him,
violates the equal protection clause (pacta sund servanda). He said that as a Chinese businessman
engaged in the business here in the country who helps in the income generation of the country he
should be given equal opportunity.

ISSUE: Whether or not a law may invalidate or supersede treaties or generally accepted principles.

HELD: Yes, a law may supersede a treaty or a generally accepted principle. In this case, there is no
conflict at all between the raised generally accepted principle and with RA 1180. The equal protection of
the law clause “does not demand absolute equality amongst residents; it merely requires that all
persons shall be treated alike, under like circumstances and conditions both as to privileges conferred
and liabilities enforced”; and, that the equal protection clause “is not infringed by legislation which
applies only to those persons falling within a specified class, if it applies alike to all persons within such
class, and reasonable grounds exist for making a distinction between those who fall within such class
and those who do not.”

For the sake of argument, even if it would be assumed that a treaty would be in conflict with a statute
then the statute must be upheld because it represented an exercise of the police power which, being
inherent could not be bargained away or surrendered through the medium of a treaty. Hence,
Ichong can no longer assert his right to operate his market stalls in the Pasay city market.

Lutz v. Araneta

FACTS:

Appelant in this case Walter Lutz in his capacity as the Judicial Administrator of the intestate of the
deceased Antonio Jayme Ledesma, seeks to recover from the Collector of the Internal Revenue the total
sum of fourteen thousand six hundred sixty six and forty cents (P 14, 666.40) paid by the estate as taxes,
under section 3 of Commonwealth Act No. 567, also known as the Sugar Adjustment Act, for the crop
years 1948-1949 and 1949-1950. Commonwealth Act. 567 Section 2 provides for an increase of the
existing tax on the manufacture of sugar on a graduated basis, on each picul of sugar manufacturer;
while section 3 levies on the owners or persons in control of the land devoted tot he cultivation of
sugarcane and ceded to others for consideration, on lease or otherwise - "a tax equivalent to the
difference between the money value of the rental or consideration collected and the amount
representing 12 per centum of the assessed value of such land. It was alleged that such tax is
unconstitutional and void, being levied for the aid and support of the sugar industry exclusively, which in
plaintiff's opinion is not a public purpose for which a tax may be constitutionally levied. The action was
dismissed by the CFI thus the plaintiff appealed directly to the Supreme Court.

ISSUE:

Whether or not the tax imposition in the Commonwealth Act No. 567 are unconstitutional.
RULING:

Yes, the Supreme Court held that the fact that sugar production is one of the greatest industry of our
nation, sugar occupying a leading position among its export products; that it gives employment to
thousands of laborers in the fields and factories; that it is a great source of the state's wealth, is one of
the important source of foreign exchange needed by our government and is thus pivotal in the plans of a
regime committed to a policy of currency stability. Its promotion, protection and advancement,
therefore redounds greatly to the general welfare. Hence it was competent for the legislature to find
that the general welfare demanded that the sugar industry be stabilized in turn; and in the wide field of
its police power, the law-making body could provide that the distribution of benefits therefrom be
readjusted among its components to enable it to resist the added strain of the increase in taxes that it
had to sustain.

The subject tax is levied with a regulatory purpose, to provide means for the rehabilitation and
stabilization of the threatened sugar industry. In other words, the act is primarily a valid exercise of
police power.

Lozano v. Martinez

This case is a consolidation of 8 cases regarding violations of the Bouncing Checks Law or Batas
Pambansa Blg. 22 (enacted April 3, 1979). In one of the eight cases, Judge David Nitafan of RTC Manila
declared the law unconstitutional. Among the arguments against the constitutionality of the law are a.)
it is violative of the constitutional provision on non-imprisonment due to debt, and b.) it impairs
freedom of contract.

ISSUE: Whether or not BP 22 is constitutional.

HELD: Yes, BP 22 is constitutional.

The Supreme Court first discussed the history of the law. The SC explained how the law on estafa was
not sufficient to cover all acts involving the issuance of worthless checks; that in estafa, it only punishes
the fraudulent issuance of worthless checks to cover prior or simultaneous obligations but not pre-
existing obligations.

BP 22 is aimed at putting a stop to or curbing the practice of issuing checks that are worthless, i.e.
checks that end up being rejected or dishonored for payment. The practice is proscribed by the state
because of the injury it causes to public interests.

BP 22 is not violative of the constitutional prohibition against imprisonment for debt. The “debt”
contemplated by the constitution are those arising from contracts (ex contractu). No one is going to
prison for non-payment of contractual debts.

However, non-payment of debts arising from crimes (ex delicto) is punishable. This is precisely why the
mala prohibita crime of issuing worthless checks as defined in BP 22 was enacted by Congress. It is a
valid exercise of police power.
Due to the insufficiency of the Revised Penal Code, BP 22 was enacted to punish the following acts:

…any person who, having sufficient funds in or credit with the drawee bank when he makes or draws
and issues a check, shall fail to keep sufficient funds or to maintain a credit to cover the full amount of
the check if presented within a period of ninety (90) days from the date appearing thereon, for which
reason it is dishonored by the drawee bank.

And

…any person who makes or draws and issues any check on account or for value, knowing at the time of
issue that he does not have sufficient funds in or credit with the drawee bank for the payment of said
check in full upon presentment, which check is subsequently dishonored by the drawee bank for
insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer,
without any valid reason, ordered the bank to stop payment.

Congress was able to determine at that time that the issuance of worthless checks was a huge problem.
The enactment of BP 22 is a declaration by the legislature that, as a matter of public policy, the making
and issuance of a worthless check is deemed public nuisance to be abated by the imposition of penal
sanctions.

Checks are widely used due to the convenience it brings in commercial transactions and confidence is
the primary basis why merchants rely on it for their various commercial undertakings. If such confidence
is shaken, the usefulness of checks as currency substitutes would be greatly diminished or may become
nil. Any practice therefore tending to destroy that confidence should be deterred for the proliferation of
worthless checks can only create havoc in trade circles and the banking community. Thus, the Congress,
through their exercise of police power, declared that the making and issuance of a worthless check is
deemed a public nuisance which can be abated by the imposition of penal sanctions.

The Supreme Court however also explained that (regardless of their previous explanation on ex delicto
debts) the non-payment of a debt is not the gravamen of the violations of BP 22. The gravamen of the
offense punished by BP 22 is the act of making and issuing a worthless check or a check that is
dishonored upon its presentation for payment. It is not the non-payment of an obligation which the law
punishes. The law is not intended or designed to coerce a debtor to pay his debt. The thrust of the law is
to prohibit, under pain of penal sanctions, the making of worthless checks and putting them in
circulation. Because of its deleterious effects on the public interest, the practice is proscribed by the law.
The law punishes the act not as an offense against property, but an offense against public order.

DECS v. San Diego

Respondent San Diego has flunked the NMAT (National Medical Admission Test) three times. When he
applied to take again, petitioner rejected his application based on the “three-flunk-rule”. He then filed
a petition before the RTC on the ground of due process and equal protection and challenging the
constitutionality of the order. The petition was granted by the RTC therefore this petition.
Issue:

Whether or not the NMAT “three-flunk-rule” order is valid and constitutional.

Ruling:

Yes. It is the right and responsibility of the State to insure that the medical profession is not infiltrated
by incompetents to whom patients may unwarily entrust their lives and health. The method employed
by the challenged regulation is not irrelevant to the purpose of the law nor is it arbitrary or oppressive.
The right to quality education is not absolute. The Constitution provides that “ every citizen has the
right to choose a profession or course of study, subject to fair, reasonable and equitable admission and
academic requirements”. It is not enough to simply invoke the right to quality education as a guarantee
of the Constitution but one must show that he is entitled to it because of his preparation and promise.
Petition was granted and the RTC ruling was reversed.

Ynot v. IAC

There had been an existing law which prohibited the slaughtering of carabaos (EO 626). To strengthen
the law, Marcos issued EO 626-A which not only banned the movement of carabaos from interprovinces
but as well as the movement of carabeef. On 13 Jan 1984, Ynot was caught transporting 6 carabaos from
Masbate to Iloilo. He was then charged in violation of EO 626-A. Ynot averred EO 626-A as
unconstitutional for it violated his right to be heard or his right to due process. He said that the authority
provided by EO 626-A to outrightly confiscate carabaos even without being heard is unconstitutional.
The lower court ruled against Ynot ruling that the EO is a valid exercise of police power in order to
promote general welfare so as to curb down the indiscriminate slaughter of carabaos.

ISSUE: Whether or not the law is valid.

HELD: The SC ruled that the EO is not valid as it indeed violates due process. EO 626-A ctreated a
presumption based on the judgment of the executive. The movement of carabaos from one area to the
other does not mean a subsequent slaughter of the same would ensue. Ynot should be given to defend
himself and explain why the carabaos are being transferred before they can be confiscated. The
SC found that the challenged measure is an invalid exercise of the police power because the method
employed to conserve the carabaos is not reasonably necessary to the purpose of the law and, worse, is
unduly oppressive. Due process is violated because the owner of the property confiscated is denied the
right to be heard in his defense and is immediately condemned and punished. The conferment on the
administrative authorities of the power to adjudge the guilt of the supposed offender is a clear
encroachment on judicial functions and militates against the doctrine of separation of powers. There is,
finally, also an invalid delegation of legislative powers to the officers mentioned therein who are granted
unlimited discretion in the distribution of the properties arbitrarily taken.
City Government of Quezon City v. Ericta

Quezon City enacted an ordinance entitled “ORDINANCE REGULATING THE ESTABLISHMENT,

MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE CEMETERY OR BURIAL GROUND WITHIN
THE JURISDICTION OF QUEZON CITY AND PROVIDING PENALTIES FOR THE VIOLATION THEREOF”. The
law basically provides that at least six (6) percent of the total area of the memorial park cemetery shall
be set aside for charity burial of deceased persons who are paupers and have been residents of Quezon
City for at least 5 years prior to their death, to be determined by competent City Authorities. QC justified
the law by invoking police power.

ISSUE: Whether or not the ordinance is valid.

HELD: The SC held the law as an invalid exercise of police power. There is no reasonable relation
between the setting aside of at least six (6) percent of the total area of all private cemeteries for charity
burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the
general welfare of the people. The ordinance is actually a taking without compensation of a certain area
from a private cemetery to benefit paupers who are charges of the municipal corporation. Instead of
building or maintaining a public cemetery for this purpose, the city passes the burden to private
cemeteries.

Association of Small Landowners v. Secretary of Agrarian Reform

These are four consolidated cases questioning the constitutionality of the Comprehensive Agrarian
Reform Act (R.A. No. 6657 and related laws i.e., Agrarian Land Reform Code or R.A. No. 3844).

Brief background: Article XIII of the Constitution on Social Justice and Human Rights includes a call for
the adoption by the State of an agrarian reform program. The State shall, by law, undertake an agrarian
reform program founded on the right of farmers and regular farmworkers, who are landless, to own
directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of
the fruits thereof. RA 3844 was enacted in 1963. P.D. No. 27 was promulgated in 1972 to provide for the
compulsory acquisition of private lands for distribution among tenant-farmers and to specify maximum
retention limits for landowners. In 1987, President Corazon Aquino issued E.O. No. 228, declaring full
land ownership in favor of the beneficiaries of PD 27 and providing for the valuation of still unvalued
lands covered by the decree as well as the manner of their payment. In 1987, P.P. No. 131, instituting a
comprehensive agrarian reform program (CARP) was enacted; later, E.O. No. 229, providing the
mechanics for its (PP131’s) implementation, was also enacted. Afterwhich is the enactment of R.A. No.
6657, Comprehensive Agrarian Reform Law in 1988. This law, while considerably changing the earlier
mentioned enactments, nevertheless gives them suppletory effect insofar as they are not inconsistent
with its provisions.

[Two of the consolidated cases are discussed below]

G.R. No. 78742: (Association of Small Landowners vs Secretary)

The Association of Small Landowners in the Philippines, Inc. sought exception from the land distribution
scheme provided for in R.A. 6657. The Association is comprised of landowners of ricelands and
cornlands whose landholdings do not exceed 7 hectares. They invoke that since their landholdings are
less than 7 hectares, they should not be forced to distribute their land to their tenants under R.A. 6657
for they themselves have shown willingness to till their own land. In short, they want to be exempted
from agrarian reform program because they claim to belong to a different class.

G.R. No. 79777: (Manaay vs Juico)

Nicolas Manaay questioned the validity of the agrarian reform laws (PD 27, EO 228, and 229) on the
ground that these laws already valuated their lands for the agrarian reform program and that the
specific amount must be determined by the Department of Agrarian Reform (DAR). Manaay averred that
this violated the principle in eminent domain which provides that only courts can determine just
compensation. This, for Manaay, also violated due process for under the constitution, no property shall
be taken for public use without just compensation.

Manaay also questioned the provision which states that landowners may be paid for their land in bonds
and not necessarily in cash. Manaay averred that just compensation has always been in the form of
money and not in bonds.

ISSUE:

1. Whether or not there was a violation of the equal protection clause.

2. Whether or not there is a violation of due process.

3. Whether or not just compensation, under the agrarian reform program, must be in terms of cash.

HELD:

1. No. The Association had not shown any proof that they belong to a different class exempt from the
agrarian reform program. Under the law, classification has been defined as the grouping of persons or
things similar to each other in certain particulars and different from each other in these same
particulars. To be valid, it must conform to the following requirements:

(1) it must be based on substantial distinctions;

(2) it must be germane to the purposes of the law;

(3) it must not be limited to existing conditions only; and

(4) it must apply equally to all the members of the class.

Equal protection simply means that all persons or things similarly situated must be treated alike both as
to the rights conferred and the liabilities imposed. The Association have not shown that they belong to a
different class and entitled to a different treatment. The argument that not only landowners but also
owners of other properties must be made to share the burden of implementing land reform must be
rejected. There is a substantial distinction between these two classes of owners that is clearly visible
except to those who will not see. There is no need to elaborate on this matter. In any event, the
Congress is allowed a wide leeway in providing for a valid classification. Its decision is accorded
recognition and respect by the courts of justice except only where its discretion is abused to the
detriment of the Bill of Rights. In the contrary, it appears that Congress is right in classifying small
landowners as part of the agrarian reform program.

2. No. It is true that the determination of just compensation is a power lodged in the courts. However,
there is no law which prohibits administrative bodies like the DAR from determining just compensation.
In fact, just compensation can be that amount agreed upon by the landowner and the government –
even without judicial intervention so long as both parties agree. The DAR can determine just
compensation through appraisers and if the landowner agrees, then judicial intervention is not needed.
What is contemplated by law however is that, the just compensation determined by an administrative
body is merely preliminary. If the landowner does not agree with the finding of just compensation by an
administrative body, then it can go to court and the determination of the latter shall be the final
determination. This is even so provided by RA 6657:

Section 16 (f): Any party who disagrees with the decision may bring the matter to the court of proper
jurisdiction for final determination of just compensation.

3. No. Money as [sole] payment for just compensation is merely a concept in traditional exercise of
eminent domain. The agrarian reform program is a revolutionary exercise of eminent domain. The
program will require billions of pesos in funds if all compensation have to be made in cash – if
everything is in cash, then the government will not have sufficient money hence, bonds, and other
securities, i.e., shares of stocks, may be used for just compensation.

Pascual v. Secretary of Public Works

In 1953, Republic Act No. 920 was passed. This law appropriated P85,000.00 “for the construction,
reconstruction, repair, extension and improvement Pasig feeder road terminals”. Wenceslao Pascual,
then governor of Rizal, assailed the validity of the law. He claimed that the appropriation was actually
going to be used for private use for the terminals sought to be improved were part of the Antonio
Subdivision. The said Subdivision is owned by Senator Jose Zulueta who was a member of the same
Senate that passed and approved the same RA. Pascual claimed that Zulueta misrepresented in
Congress the fact that he owns those terminals and that his property would be unlawfully enriched at
the expense of the taxpayers if the said RA would be upheld. Pascual then prayed that the Secretary of
Public Works and Communications be restrained from releasing funds for such purpose. Zulueta, on the
other hand, perhaps as an afterthought, donated the said property to the City of Pasig.

ISSUE: Whether or not the appropriation is valid.

HELD: No, the appropriation is void for being an appropriation for a private purpose. The subsequent
donation of the property to the government to make the property public does not cure the
constitutional defect. The fact that the law was passed when the said property was still a private
property cannot be ignored. “In accordance with the rule that the taxing power must be exercised for
public purposes only, money raised by taxation can be expanded only for public purposes and not for
the advantage of private individuals.” Inasmuch as the land on which the projected feeder roads were
to be constructed belonged then to Zulueta, the result is that said appropriation sought a private
purpose, and, hence, was null and void.

Punsalan v. Municipal Board of Manila

Facts: Petitioners, who are professionals in the city, assail Ordinance No. 3398 together with the law
authorizing it (Section 18 of the Revised Charter of the City of Manila). The ordinance imposes a
municipal occupation tax on persons exercising various professions in the city and penalizes non-
payment of the same. The law authorizing said ordinance empowers the Municipal Board of the city to
impose a municipal occupation tax on persons engaged in various professions. Petitioners, having
already paid their occupation tax under section 201 of the National Internal Revenue Code, paid the tax
under protest as imposed by Ordinance No. 3398. The lower court declared the ordinance invalid and
affirmed the validity of the law authorizing it.

Issue: Whether or Not the ordinance and law authorizing it constitute class legislation, and authorize
what amounts to double taxation.

Held: The Legislature may, in its discretion, select what occupations shall be taxed, and in its discretion
may tax all, or select classes of occupation for taxation, and leave others untaxed. It is not for the courts
to judge which cities or municipalities should be empowered to impose occupation taxes aside from that
imposed by the National Government. That matter is within the domain of political departments. The
argument against double taxation may not be invoked if one tax is imposed by the state and the other is
imposed by the city. It is widely recognized that there is nothing inherently terrible in the requirement
that taxes be exacted with respect to the same occupation by both the state and the political
subdivisions thereof. Judgment of the lower court is reversed with regards to the ordinance and
affirmed as to the law authorizing it.

Lladoc v. Commissioner of Internal Revenue

Facts: Sometime in 1957, M.B. Estate Inc., of Bacolod City, donated 10,000.00 pesos in cash to Fr. Crispin
Ruiz, the parish priest of Victorias, Negros Occidental, and predecessor of Fr. Lladoc, for the construction
of a new Catholic church in the locality. The donated amount was spent for such purpose.
On March 3, 1958, the donor M.B. Estate filed the donor's gift tax return. Under date of April 29, 1960.
Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic
Parish of Victorias of which petitioner was the parish priest.

Issue: Whether or not the imposition of gift tax despite the fact the Fr. Lladoc was not the Parish priest
at the time of donation, Catholic Parish priest of Victorias did not have juridical personality as the
constitutional exemption for religious purpose is valid.

Held: Yes, imposition of the gift tax was valid, under Section 22(3) Article VI of the Constitution
contemplates exemption only from payment of taxes assessed on such properties as Property taxes
contra distinguished from Excise taxes The imposition of the gift tax on the property used for religious
purpose is not a violation of the Constitution. A gift tax is not a property by way of gift inter vivos.

The head of the Diocese and not the parish priest is the real party in interest in the imposition of the
donee's tax on the property donated to the church for religious purpose.

Abra Valley College v. Aquino

Blog: Armada

Philip Clavecilla's Case Digest Blog

Thursday, June 9, 2016

ABRA VALLEY COLLEGE INC. vs. AQUINO

This is an old taxation case which had been covered by the 1935 Constitution.

Question: Is tax exemption which is embraced in the words "Exclusively Used for Educational Purposes"
liberally construed?
Answer: YES.

Therefore: A reasonable emphasis can be made that the tax exemption may extend to facilities which
are INCIDENTAL TO and REASONABLY NECESSARY for the accomplishment of the main purpose (which is
to educate).

Further Question: Can a ground floor of an educational institution (which is tax exempted), being used
for commercial purpose and its second floor being used for residential purpose fall under said
extension?

Further Answer: The residential issue may be qualified depending on who is residing. The commercial
issue? NO.

FACTS:

Abra Valley College (a private school), located at Benguet, Abra, an educational corporation and
institution of higher learning incorporated with the SEC filed a complaint with the Benguet provincial
fiscal to annul and declare void the NOTICE OF SEIZURE and a NOTICE OF SALE of its lot and building by
the municipal and provincial treasurers for non-payment of real estate taxes and its penalties.

So a certain Paterno Mellare who probably was with Public Respondent AQUINO (sorry I didn’t read any
further) who most probably (patay to, I’m inferring once again) are the municipal and provincial
treasurers filed through counsel a motion to dismiss the complaint.

So what the Provincial Fiscal did was they filed a memorandum for the government where they opined
that based on the evidence, the laws applicable, and previous court decisions and jurisprudence, the
school building and the school lot used for educational purpose of Abra Valley College are exempted
from payment of taxes.

The trial court disagreed. Lets try to look at the evidence and what they found out.

You see what actually happened here was that Abra Valley College (AVC) was renting out the ground
floor of its college building to Northern Marketing Corporation (NMC) while the second floor thereof is
used by the Director of the College for residential purposes. So this is precisely the reason why the
municipal and provincial treasurers served upon the College a “notice of seizure” and later a “notice of
sale” due to the alleged failure of the College to pay real estate taxes and penalties thereon.

So this falls under a case of a claim for tax exemption.

ISSUE:

Was the tax imposition on the College is violative of the Constitutional prohibition against taxation of
religious, charitable, and educational entities?

Maybe we should rephrase the question. The question is, whether or not the lot and building in
question are used exclusively for educational purpose? E pinaparenta yung ground floor eh, ginawa
namang residential yung second floor. Kaya siguro sinabe ng municipal and provincial treasurers
“Pinaglololoko nyo kame, ok tataxan namen kayo, and pag di na kayo makabayad, we will seize that
property, then we will sell it” (again don’t quote me on that, para may istorya lang).

RULING:

While the Court allows a more liberal and non-restrictive interpretation of the phrase “exclusively used
for educational purposes,” reasonable emphasis has always been made that exemption extends to
facilities which are incidental to and reasonably necessary for the accomplishment of the main
purposes.

While the second floor’s use, as residence of the director, is incidental to education; the lease of the first
floor cannot by any stretch of imagination be considered incidental to the purposes of education.

The test of exemption from taxation is the use of the property for purposes mentioned in the
Constitution.

So there we go. Let's reiterate: While the use of the second floor of the main building in the case at bar
for residential purposes of the Director of the school and his family may find justification under the
concept of INCIDENTAL USE, which is complimentary to the main or primary purpose which is
educational, the lease of the first floor thereof to the Northern Marketing Corporation cannot by any
stretch of imagination be considered incidental to the purpose of education.

So the Supreme Court affirmed the lower court ruling stating it correctly arrived at the conclusion that
the school building as well as the lot where it is built, should be taxed. Not because of the second floor
issue but of the first floor.

However since it is only a portion of its premises is used for purpose of commerce, the high court
directed that it is only fair that half of the assessed tax be returned to the school.

Gerochi v. DOE
Mactan Cebu Int’l Airport v. Marcos

Petitioner was created by virtue of RA 6958. Section 1 thereof states that the authority shall be exempt
from realty taxes imposed by the National Government or any of its political subdivisions, agencies and
instrumentalities. However, the Treasurer of Cebu City demanded payment for realty taxes from
petitioner. Petitioner filed a declaratory relief before the Regional Trial Court. The trial court dismissed
the petitioner ruling that the Local Government Code withdrew the tax exemption granted to
Government owned and controlled corporation.

ISSUE:
Whether the city of Cebu has the power to impose taxes on petitioner

RULING:
Yes. Taxation is the rule and exemption is the exception, the exemption may thus be withdrawn at the
pleasure of the taxing authority. As to tax exemptions or incentives granted to or presently enjoyed by
natural or juridical persons, including government- owned and controlled corporations, section 193 of
the LGC prescribes the general rule, viz, they are withdrawn upon the effectivity of the LGC, except
those granted to local water districts, cooperatives, duly registered under RA 6938, non stock and
nonprofit hospitals and educational institutions and unless otherwise provided in the LGC.

MIAA v. CA

"Ey where's Dory??!!" Woops! somebody's excited to see 'Finding Dory' in the cinemas. After 13 years
my goodness!! Finally!! We found Dory.

Try to check this out this is original. Manila International Airport Authority (MIAA) is the operator of the
Ninoy International Airport (NAIA) formerly known as MIA (Manila International Airport) located at
Paranaque City of course.

I wonder why its name was changed in the first place when MIA has more of a universal touch to
it. Well now that President Duterte is taking over, and obviously we can sense that he is allergic to
anything Liberal Party, I wonder if he would revert back NAIA's name to MIA. Well I hope he does. NAIA
sounds like something that is wanting to be inclusive but by it sound still is exclusive.

Thing is.. I wonder how would we refer to it. "Ah.. lets meet at the MIA formerly know as NAIA which
was formerly know as MIA". Geez funny I remember this upperclassman friend of mine when I was still
new in my previous law school. His name's Prince. So whenever I see him at the corridor or maybe
introduce him to lady batchmates I always refer to him (in a kidding mode) as "Prince!!.. formerly known
as The Artist.. which was formerly known as Prince" LOL. (I'm reminded of Prince.. God bless his
soul) "Chip you suck!" The guy just laughs reaches out and tickles my tummy. Ah he's such a nice friend.
Works at a big bank in Makati. The guy's a prince really. His car's really nice. And such a nice guy too. I
always saw him as an upperclassman whose not puffed-up. Well anyway.

So what happened here was.. the Officers of Paranaque City sent notices to MIAA due to real estate tax
delinquency. MIAA then settled some of the amount.

Now when MIAA failed to settle the entire amount, the officers of Paranaque city threatened to levy and
subject to auction the land and buildings of MIAA, which they did.

MIAA then sought for a Temporary Restraining Order (TRO) from the CA but failed to do so within the
60 days reglementary period, so the petition was dismissed.

MIAA then sought for the TRO with the Supreme Court a day before the public auction, MIAA was
granted with the TRO but unfortunately the TRO was received by the Paranaque City officers 3 hours
after the public auction. See what I told you? See how original this case was? I mean what on earth
was MIAA doing?? Talk about all the right moves.

MIAA claims that although the charter provides that the title of the land and building are with MIAA still
the ownership is with the Republic of the Philippines. MIAA also contends that it is an instrumentality of
the government and as such exempted from real estate tax. So in other words, MIAA's bone of
contention and defense lie solely on the principle that the land and buildings of MIAA are of public
dominion and therefore cannot be subjected to levy and auction sale.

Let's see if it will hold.

On the other hand, the officers of Paranaque City claim that MIAA is a GOCC (government owned and
controlled corporation) therefore not exempted to real estate tax.

ISSUE:

Whether or not:
1. MIAA is an instrumentality of the government and not a government owned and controlled
corporation and as such exempted from tax.

2. The land and buildings of MIAA are part of the public dominion and thus cannot be the subject of
levy and auction sale.

RULING:

1. Under the Local government code, (GOCCs) government owned and controlled corporation are NOT
exempted from real estate tax.

MIAA is not a government owned and controlled corporation, for to become one MIAA should either
be a stock or non stock corporation. MIAA is not a stock corporation for its capital is not divided into
shares. It is not a non stock corporation since it has no members.

MIAA is an instrumentality of the government vested with corporate powers and government
functions. Under the civil code, property may either be under public dominion or private ownership.
Those under public dominion are owned by the State and are utilized for public use, public service and
for the development of national wealth. When properties under public dominion cease to be for
public use and service, they form part of the patrimonial property of the State.

2. The court held that the land and buildings of MIAA are part of the public dominion. Since the airport
is devoted for public use, for the domestic and international travel and transportation. Even if MIAA
charge fees, this is for support of its operation and for regulation and does not change the character of
the land and buildings of MIAA as part of the public dominion.

As part of the public dominion the land and buildings of MIAA are outside the commerce of man. To
subject them to levy and public auction is contrary to public policy. Unless the President issues a
proclamation withdrawing the airport land and buildings from public use, these properties remain to be
of public dominion and are inalienable. As long as the land and buildings are for public use the
ownership is with the Republic of the Philippines

MIAA wins this case. Well I guess it has after all the luxury to take lightly such period prescriptions in
this case. It knew very well from the start its contentions will be very strong.

Sison, Jr v. Ancheta

Sison assails the validity of BP 135 w/c further amended Sec 21 of the National Internal Revenue Code of
1977. The law provides that there’d be a higher tax impost against income derived from professional
income as opposed to regular income earners. Sison, as a professional businessman, and as taxpayer
alleges that by virtue thereof, “he would be unduly discriminated against by the imposition of higher
rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are
imposed upon fixed income or salaried individual taxpayers.” He characterizes the above section as
arbitrary amounting to class legislation, oppressive and capricious in character. There is a transgression
of both the equal protection and due process clauses of the Constitution as well as of the rule requiring
uniformity in taxation.

ISSUE: Whether the imposition of a higher tax rate on taxable net income derived from business or
profession than on compensation is constitutionally infirm.

HELD: The SC ruled against Sison. The power to tax, an inherent prerogative, has to be availed of to
assure the performance of vital state functions. It is the source of the bulk of public funds. Taxes, being
the lifeblood of the government, their prompt and certain availability is of the essence. According to the
Constitution: “The rule of taxation shall be uniform and equitable.” However, the rule of uniformity does
not call for perfect uniformity or perfect equality, because this is hardly attainable. Equality and
uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed
at the same rate. The taxing power has the authority to make reasonable and natural classifications for
purposes of taxation. Where “the differentiation” complained of “conforms to the practical dictates of
justice and equity” it “is not discriminatory within the meaning of this clause and is therefore uniform.”
There is quite a similarity then to the standard of equal protection for all that is required is that the tax
“applies equally to all persons, firms and corporations placed in similar situation.

What misled Sison is his failure to take into consideration the distinction between a tax rate and a tax
base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible
items and at the same time reducing the applicable tax rate. Taxpayers may be classified into different
categories. In the case of the gross income taxation embodied in BP 135, the discernible basis of
classification is the susceptibility of the income to the application of generalized rules removing all
deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to
all of them. Taxpayers who are recipients of compensation income are set apart as a class. As there is
practically no overhead expense, these taxpayers are not entitled to make deductions for income tax
purposes because they are in the same situation more or less. On the other hand, in the case of
professionals in the practice of their calling and businessmen, there is no uniformity in the costs or
expenses necessary to produce their income. It would not be just then to disregard the disparities by
giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis
of gross income. There is ample justification then for the Batasang Pambansa to adopt the gross system
of income taxation to compensation income, while continuing the system of net income taxation as
regards professional and business income.

Tolentino v. Secretary of Fin

Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the
Expanded Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill did not exclusively
originate from the House of Representatives as required by Section 24, Article 6 of the Constitution.
Even though RA 7716 originated as HB 11197 and that it passed the 3 readings in the HoR, the same did
not complete the 3 readings in Senate for after the 1st reading it was referred to the Senate Ways &
Means Committee thereafter Senate passed its own version known as Senate Bill 1630. Tolentino
averred that what Senate could have done is amend HB 11197 by striking out its text and substituting it
with the text of SB 1630 in that way “the bill remains a House Bill and the Senate version just becomes
the text (only the text) of the HB”. (It’s ironic however to note that Tolentino and co-petitioner Raul
Roco even signed the said Senate Bill.)

ISSUE: Whether or not the EVAT law is procedurally infirm.

HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was
consistent with the power of the Senate to propose or concur with amendments to the version
originated in the HoR. What the Constitution simply means, according to the 9 justices, is that the
initiative must come from the HoR. Note also that there were several instances before where Senate
passed its own version rather than having the HoR version as far as revenue and other such bills are
concerned. This practice of amendment by substitution has always been accepted. The proposition of
Tolentino concerns a mere matter of form. There is no showing that it would make a significant
difference if Senate were to adopt his over what has been done.

Phil. Blooming Mills Employee v. Phil. Blooming Mills Co.

Facts:

Philippine Blooming Employees Organization (PBMEO) decided to stage a mass demonstration in front
of Malacañang to express their grievances against the alleged abuses of the Pasig Police.

After learning about the planned mass demonstration, Philippine Blooming Mills Inc., called for a
meeting with the leaders of the PBMEO. During the meeting, the planned demonstration was confirmed
by the union. But it was stressed out that the demonstration was not a strike against the company but
was in fact an exercise of the laborers' inalienable constitutional right to freedom of expression,
freedom of speech and freedom for petition for redress of grievances.

The company asked them to cancel the demonstration for it would interrupt the normal course of their
business which may result in the loss of revenue. This was backed up with the threat of the possibility
that the workers would lose their jobs if they pushed through with the rally.

A second meeting took place where the company reiterated their appeal that while the workers may be
allowed to participate, those from the 1st and regular shifts should not absent themselves to
participate, otherwise, they would be dismissed. Since it was too late to cancel the plan, the rally took
place and the officers of the PBMEO were eventually dismissed for a violation of the ‘No Strike and No
Lockout’ clause of their Collective Bargaining Agreement.
The lower court decided in favor of the company and the officers of the PBMEO were found guilty of
bargaining in bad faith. Their motion for reconsideration was subsequently denied by the Court of
Industrial Relations for being filed two days late.

Issue:

Whether or not the workers who joined the strike violated the CBA?

Held:

No. While the Bill of Rights also protects property rights, the primacy of human rights over property
rights is recognized. Because these freedoms are "delicate and vulnerable, as well as supremely precious
in our society" and the "threat of sanctions may deter their exercise almost as potently as the
actual application of sanctions," they "need breathing space to survive," permitting government
regulation only "with narrow specificity." Property and property rights can be lost thru prescription; but
human rights are imprescriptible. In the hierarchy of civil liberties, the rights to freedom of expression
and of assembly occupy a preferred position as they are essential to the preservation and vitality of our
civil and political institutions; and such priority "gives these liberties the sanctity and the sanction not
permitting dubious intrusions."

The freedoms of speech and of the press as well as of peaceful assembly and of petition for redress of
grievances are absolute when directed against public officials or "when exercised in relation to our right
to choose the men and women by whom we shall be governed.”

Simon v. CHR

FACTS:
On July 23, 1990, the Commission on Human Rights (CHR) issued and order, directing the petitioners "to
desist from demolishing the stalls and shanties at North EDSA pending the resolution of the
vendors/squatters complaint before the Commission" and ordering said petitioners to appear before the
CHR.
On September 10, 1990, petitioner filed a motion to dismiss questioning CHR's jurisdiction and
supplemental motion to dismiss was filed on September 18, 1990 stating that Commissioners' authority
should be understood as being confined only to the investigation of violations of civil and political rights,
and that "the rights allegedly violated in this case were not civil and political rights, but their privilege to
engage in business".
On March 1, 1991, the CHR issued and Order denying petitioners' motion and supplemental motion to
dismiss. And petitioners' motion for reconsideration was denied also in an Order, dated April 25, 1991.
The Petitioner filed a a petition for prohibition, praying for a restraining order and preliminary injunction.
Petitioner also prayed to prohibit CHR from further hearing and investigating CHR Case No. 90-1580,
entitled "Ferno, et.al vs. Quimpo, et.al".
ISSUE:
Is the issuance of an "order to desist" within the extent of the authority and power of the CRH?

HELD:
No, the issuance of an "order to desist" is not within the extent of authority and power of the CHR. Article
XIII, Section 18(1), provides the power and functions of the CHR to "investigate, on its own or on
complaint by any part, all forms of human rights violation, involving civil and political rights".
The "order to desist" however is not investigatory in character but an adjudicative power that the it does
not possess. The Constitutional provision directing the CHR to provide for preventive measures and legal
aid services to the underprivileged whose human rights have been violated or need protection may not
be construed to confer jurisdiction on the Commission to issue an restraining order or writ of injunction,
for it were the intention, the Constitution would have expressly said so. Not being a court of justice, the
CHR itself has no jurisdiction to issue the writ, for a writ of preliminary injunction may only be issued by
the Judge in any court in which the action is pending or by a Justice of the CA or of the SC.
The writ prayed for the petition is granted. The CHR is hereby prohibited from further proceeding with
CHR Case No. 90-1580.