SPOUSES ANTONIO and FE YUSAY, G.R. No. 156684 Sgd. Adventor R.

Delos Santos
steps for the expropriation of the land of the petitioners for the purpose of Acting Sanggunian Secretary
Petitioners,
Present: developing it for low cost housing for the less privileged but deserving city
Attested: Approved:
CARPIO MORALES, inhabitants. The resolution reads as follows:
-versus - Chairperson, Sgd. Roberto J. Francisco Sgd. Benjamin S. Abalos
BRION, City Councilor & Acting City Mayor
RESOLUTION NO. 552, S-1997[4] Presiding Officer
BERSAMIN,
VILLARAMA, JR., and RESOLUTION AUTHORIZING HON. BENJAMIN S.
COURT OF APPEALS, CITY MAYOR SERENO, JJ. ABALOS TO TAKE THE NECESSARY LEGAL STEPS
and CITY COUNCIL FOR THE EXPROPRIATION OF A PARCEL OF LAND Notwithstanding that the enactment of Resolution No. 552 was but the initial
OF MANDALUYONG CITY, Promulgated: SITUATED ALONG DR.
Respondents. step in the Citys exercise of its power of eminent domain granted under Section
JOSE FERNANDEZ STREET, BARANGAY MAUWAY,
April 6, 2011 CITY OF MANDALUYONG, OWNED BY MR. 19 of the Local Government Code of 1991, the petitioners became alarmed, and
x-----------------------------------------------------------------------------------------x ANTONIO YUSAY
filed a petition for certiorari and prohibition in the RTC, praying for the annulment
RESOLUTION WHEREAS, there is a parcel of land situated along Dr. of Resolution No. 552 due to its being unconstitutional, confiscatory, improper,
Jose Fernandez Street, Barangay Mauway, City of
BERSAMIN, J.: Mandaluyong, owned and registered in the name of and without force and effect.
MR. ANTONIO YUSAY;

The petitioners appeal the adverse decision promulgated on October 18, WHEREAS, this piece of land have been occupied for The City countered that Resolution No. 552 was a mere authorization given to
about ten (10) years by many financially hard-up
2002[1] and resolution promulgated on January 17, 2003,[2] whereby the Court of families which the City Government of Mandaluyong the City Mayor to initiate the legal steps towards expropriation, which included
desires, among other things, to provide modest and
Appeals (CA) reversed and set aside the order issued in their favor on February making a definite offer to purchase the property of the petitioners; hence, the
decent dwelling;
19, 2002 by the Regional Trial Court, Branch 214, in Mandaluyong City suit of the petitioners was premature.
WHEREAS, the said families have already negotiated
(RTC).[3] Thereby, the CA upheld Resolution No. 552, Series of 1997, adopted to acquire this land but was refused by the above-
named owner in total disregard to the City On January 31, 2001, the RTC ruled in favor of the City and dismissed the
by the City of Mandaluyong (City) authorizing its then City Mayor to take the
Governments effort of providing land for the landless;
necessary legal steps for the expropriation of the parcel of land registered in the petition for lack of merit, opining that certiorari did not lie against a legislative act
WHEREAS, the expropriation of said land would
names of the petitioners. certainly benefit public interest, let alone, a step of the City Government, because the special civil action of certiorari was only
towards the implementation of social justice and urban available to assail judicial or quasi-judicial acts done without or in excess of
land reform in this City;
We affirm the CA. jurisdiction, or with grave abuse of discretion amounting to lack or excess of
WHEREAS, under the present situation, the City
Council deems it necessary to authorize Hon. Mayor jurisdiction; that the special civil action of prohibition did not also lie under the

Antecedents BENJAMIN S. ABALOS to institute expropriation circumstances considering that the act of passing the resolution was not a
proceedings to achieve the noble purpose of the City
Government of Mandaluyong. judicial, or quasi-judicial, or ministerial act; and that notwithstanding the

The petitioners owned a parcel of land with an area of 1,044 square meters issuance of Resolution No. 552, the City had yet to commit acts of
NOW, THEREFORE, upon motion duly seconded, the
situated between Nueve de Febrero Street and Fernandez Street in Barangay City Council of Mandaluyong, in session assembled, encroachment, excess, or usurpation, or had yet to act without or in excess of
RESOLVED, as it hereby RESOLVES, to authorize, as
Mauway, Mandaluyong City. Half of their land they used as their residence, and it is hereby authorizing, Hon. Mayor BENJAMIN S. jurisdiction or with grave abuse of discretion amounting lack or in excess of
ABALOS, to institute expropriation proceedings against jurisdiction.
the rest they rented out to nine other families. Allegedly, the land was their only
the above-named registered owner of that parcel of
property and only source of income. land situated along Dr. Jose Fernandez Street,
Barangay Mauway, City of Mandaluyong, (f)or the
purpose of developing it to a low-cost housing project However, on February 19, 2002, the RTC, acting upon the petitioners motion for
for the less privileged but deserving constituents of this reconsideration, set aside its decision and declared that Resolution No. 552 was
On October 2, 1997, the Sangguniang
City.
Panglungsod of Mandaluyong City adopted Resolution No. 552, Series of 1997, null and void. The RTC held that the petition was not premature because the
ADOPTED on this 2nd day of October 1997 at the City
to authorize then City Mayor Benjamin S. Abalos, Sr. to take the necessary legal of Mandaluyong. passage of Resolution No. 552 would already pave the way for the City to
deprive the petitioners and their heirs of their only property; that there was no
 (a) The writ is directed against a tribunal, board, or
due process in the passage of Resolution No. 552 because the petitioners had Before resolving these issues, however, the Court considers it officer exercising judicial or quasi-judicial
not been invited to the subsequent hearings on the resolution to enable them to necessary to first determine whether or not the action for certiorari and functions;

ventilate their opposition; and that the purpose for the expropriation was not for prohibition commenced by the petitioners in the RTC was a proper recourse of (b) Such tribunal, board, or officer has acted without or
in excess of jurisdiction, or with grave abuse of
public use and the expropriation would not benefit the greater number of the petitioners.
discretion amounting to lack or excess of
inhabitants. jurisdiction; and

Ruling (c) There is no appeal or any plain, speedy, and

adequate remedy in the ordinary course of law.[6]
Aggrieved, the City appealed to the CA.
We deny the petition for review, and find that certiorari and
It is further emphasized that a petition for certiorari seeks solely to
In its decision promulgated on October 18, 2002, the CA concluded prohibition were not available to the petitioners under the circumstances. Thus,
correct defects in jurisdiction,[7] and does not correct just any error or mistake
that the reversal of the January 31, 2001 decision by the RTC was not justified we sustain, albeit upon different grounds, the result announced by the CA, and
committed by a court, board, or officer exercising judicial or quasi-judicial
because Resolution No. 552 deserved to be accorded the benefit of the declare that the RTC gravely erred in giving due course to the petition
functions unless such court, board, or officer thereby acts without jurisdiction or
presumption of regularity and validity absent any sufficient showing to the for certiorari and prohibition.
in excess of jurisdiction or with such grave abuse of discretion amounting to lack
contrary; that notice to the petitioners (Spouses Yusay) of the succeeding
of jurisdiction.[8]
hearings conducted by the City was not a part of due process, for it was enough
that their views had been consulted and that they had been given the full
The first requisite is that the respondent tribunal, board, or officer
opportunity to voice their protest; that to rule otherwise would be to give every
1. must be exercising judicial or quasi-judicial functions. Judicial function,
affected resident effective veto powers in law-making by a local government Certiorari does not lie to assail the issuance of
a resolution by the Sanggunian Panglungsod according to Bouvier,[9] is the exercise of the judicial faculty or office; it also
unit; and that a public hearing, although necessary at times, was not
means the capacity to act in a specific way which appertains to the judicial
indispensable and merely aided in law-making.
The special civil action for certiorari is governed by Rule 65 of power, as one of the powers of government. The term, Bouvier continues,[10] is

the 1997 Rules of Civil Procedure, whose Section 1 provides: used to describe generally those modes of action which appertain to the
The CA disposed as follows:
judiciary as a department of organized government, and through and by means
WHEREFORE, premises considered, the questioned Section 1. Petition for certiorari. When any
of which it accomplishes its purpose and exercises its peculiar powers.
order of the Regional Trial Court, Branch 214, tribunal, board or officer exercising judicial or quasi-
Mandaluyong City dated February 19, 2002 in SCA judicial functions has acted without or in excess of its or
Case No. 15-MD, which declared Resolution No. 552, his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is Based on the foregoing, certiorari did not lie against
Series of 1997 of the City of Mandaluyong null and
void, is hereby REVERSED and SET ASIDE. No costs. no appeal, nor any plain, speedy, and adequate the Sangguniang Panglungsod, which was not a part of the Judiciary settling an
remedy in the ordinary course of law, a person
SO ORDERED.[5] aggrieved thereby may file a verified petition in the actual controversy involving legally demandable and enforceable rights when it
proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or adopted Resolution No. 552, but a legislative and policy-making body declaring
modifying the proceedings of such tribunal, board or its sentiment or opinion.
The petitioners moved for reconsideration, but the CA denied their motion. Thus, officer, and granting such incidental reliefs as law and
they appeal to the Court, posing the following issues, namely: justice may require.
xxx
Nor did the Sangguniang Panglungsod abuse its discretion in
1. Can the validity of Resolution No. 552 be assailed adopting Resolution No. 552. To demonstrate the absence of abuse of
even before its implementation?
discretion, it is well to differentiate between a resolution and an ordinance. The
For certiorari to prosper, therefore, the petitioner must allege and
2. Must a citizen await the takeover and possession
of his property by the local government before he first is upon a specific matter of a temporary nature while the latter is a law that
establish the concurrence of the following requisites, namely:
can go to court to nullify an unjust expropriation? is permanent in character.[11] No rights can be conferred by and be inferred from
a resolution, which is nothing but an embodiment of what the lawmaking body
 conferring the power or in other legislations. In this 4. A valid and definite offer has
has to say in the light of attendant circumstances. In simply expressing its case, Section 19 of RA 7160, which delegates to LGUs been previously made to the owner of
sentiment or opinion through the resolution, therefore, the Sangguniang the power of eminent domain, also lays down the the property sought to be expropriated,
parameters for its exercise. It provides as follows: but said offer was not accepted.
Panglungsodin no way abused its discretion, least of all gravely, for its
In the case at bar, the local chief executive
expression of sentiment or opinion was a constitutionally protected right. Section 19. Eminent Domain. A sought to exercise the power of eminent domain
local government unit may, through its pursuant to a resolution of the municipal council. Thus,
chief executive and acting pursuant to there was no compliance with the first requisite that the
Moreover, Republic Act No. 7160 (The Local Government Code) an ordinance, exercise the power of mayor be authorized through an ordinance. Petitioner
eminent domain for public use, or cites Camarines Sur vs. Court of Appeals to show that
required the City to pass an ordinance, not adopt a resolution, for the purpose of purpose, or welfare for the benefit of the a resolution may suffice to support the exercise of
poor and the landless, upon payment of eminent domain by an LGU. This case, however, is not
initiating an expropriation proceeding. In this regard, Section 19 of The Local
just compensation, pursuant to the in point because the applicable law at that time was BP
Government Code clearly provides, viz: provisions of the Constitution and 337, the previous Local Government Code, which had
pertinent laws: Provided, however, That provided that a mere resolution would enable an LGU
the power of eminent domain may not to exercise eminent domain. In contrast, RA 7160, the
Section 19. Eminent Domain. A local be exercised unless a valid and definite
government unit may, through its chief executive present Local Government Code which was already
offer has been previously made to the in force when the Complaint for expropriation was
and acting pursuant to an ordinance, exercise the owner, and such offer was not
power of eminent domain for public use, or purpose, or filed, explicitly required an ordinance for this
accepted: Provided, further, That the purpose.
welfare for the benefit of the poor and the landless, local government unit may immediately
upon payment of just compensation, pursuant to the take possession of the property upon
provisions of the Constitution and pertinent We are not convinced by petitioners
the filing of the expropriation insistence that the terms resolution and ordinance are
laws: Provided, however, That the power of eminent proceedings and upon making a deposit
domain may not be exercised unless a valid and synonymous. A municipal ordinance is different
with the proper court of at least fifteen from a resolution. An ordinance is a law, but a
definite offer has been previously made to the owner, percent (15%) of the fair market value
and such offer was not accepted: Provided, further, resolution is merely a declaration of the sentiment
of the property based on the current tax or opinion of a lawmaking body on a specific
That the local government unit may immediately take declaration of the property to be
possession of the property upon the filing of the matter. An ordinance possesses a general and
expropriated: Provided, finally, That, the permanent character, but a resolution is temporary
expropriation proceedings and upon making a deposit amount to be paid for the expropriated
with the proper court of at least fifteen percent (15%) of in nature. Additionally, the two are enacted
property shall be determined by the differently -- a third reading is necessary for an
the fair market value of the property based on the proper court, based on the fair market
current tax declaration of the property to be ordinance, but not for a resolution, unless decided
value at the time of the taking of the otherwise by a majority of all the Sanggunian
expropriated: Provided, finally, That, the amount to be property. (Emphasis supplied)
paid for the expropriated property shall be determined members.
by the proper court, based on the fair market value at Thus, the following essential requisites must
the time of the taking of the property. If Congress intended to allow LGUs to
concur before an LGU can exercise the power of exercise eminent domain through a mere resolution, it
eminent domain: would have simply adopted the language of the
previous Local Government Code. But Congress did
A resolution like Resolution No. 552 that merely expresses the 1. An ordinance is enacted by not. In a clear divergence from the previous Local
the local legislative Government Code, Section 19 of RA 7160 categorically
sentiment of the Sangguniang Panglungsod is not sufficient for the purpose of council authorizing the local chief requires that the local chief executive act pursuant to
executive, in behalf of the LGU, to an ordinance. Indeed, [l]egislative intent is determined
initiating an expropriation proceeding. Indeed, in Municipality of Paraaque v. exercise the power of eminent domain principally from the language of a statute. Where the
V.M. Realty Corporation,[12] a case in which the Municipality of Paraaque based or pursue expropriation proceedings language of a statute is clear and unambiguous, the
over a particular private property. law is applied according to its express terms, and
its complaint for expropriation on a resolution, not an ordinance, the Court ruled interpretation would be resorted to only where a literal
2. The power of eminent domain interpretation would be either impossible or absurd or
so: is exercised for public use, purpose or would lead to an injustice. In the instant case, there is
welfare, or for the benefit of the poor no reason to depart from this rule, since the law
The power of eminent domain is lodged in the and the landless. requiring an ordinance is not at all impossible, absurd,
legislative branch of government, which may delegate or unjust.
the exercise thereof to LGUs, other public entities and 3. There is payment of just
public utilities. An LGU may therefore exercise the compensation, as required under Moreover, the power of eminent domain
power to expropriate private property only when Section 9 Article III of the Constitution necessarily involves a derogation of a fundamental or
authorized by Congress and subject to the latters and other pertinent laws. private right of the people. Accordingly, the manifest
control and restraints, imposed through the law change in the legislative language from resolution
under BP 337 to ordinance under RA 7160 demands a
strict construction. No species of property is held by In view of the absence of the proper expropriation ordinance The petitioner must further allege in the petition and establish facts
individuals with greater tenacity, and is guarded by the authorizing and providing for the expropriation, the petition for certiorari filed in to show that any other existing remedy is not speedy or adequate.[18] A remedy
Constitution and laws more sedulously, than the right to
the freehold of inhabitants. When the legislature the RTC was dismissible for lack of cause of action. is plain, speedy and adequate if it will promptly relieve the petitioner from the
interferes with that right and, for greater public
injurious effects of that judgment and the acts of the tribunal or inferior court.[19]
purposes, appropriates the land of an individual without
his consent, the plain meaning of the law should not be 2.
Prohibition does not lie against expropriation
enlarged by doubtful interpretation.
The rule and relevant jurisprudence indicate that prohibition was not
xxx
The special civil action for prohibition is governed also by Section 2 available to the petitioners as a remedy against the adoption of Resolution No.
In its Brief filed before Respondent Court, 552, for the Sangguniang Panglungsod, by such adoption, was not exercising
of Rule 65 of the 1997 Rules of Civil Procedure, which states:
petitioner argues that its Sangguniang Bayan passed
an ordinance on October 11, 1994 which reiterated its judicial, quasi-judicial or ministerial functions, but only expressing its collective
Resolution No. 93-35, Series of 1993, and ratified all sentiment or opinion.
Section 2. Petition for prohibition. When the
the acts of its mayor regarding the subject
proceedings of any tribunal, corporation, board, officer
expropriation.
or person, whether exercising judicial, quasi-judicial or
ministerial functions, are without or in excess of its or Verily, there can be no prohibition against a procedure whereby the
This argument is bereft of merit. In the first
his jurisdiction, or with grave abuse of discretion
place, petitioner merely alleged the existence of such immediate possession of the land under expropriation proceedings may be
amounting to lack or excess of jurisdiction, and there is
an ordinance, but it did not present any certified true
no appeal or any other plain, speedy, and adequate
copy thereof. In the second place, petitioner did not taken, provided always that due provision is made to secure the prompt
remedy in the ordinary course of law, a person
raise this point before this Court. In fact, it was
aggrieved thereby may file a verified petition in the adjudication and payment of just compensation to the owner. [20] This bar against
mentioned by private respondent, and only in passing.
proper court, alleging the facts with certainty and
In any event, this allegation does not cure the inherent prohibition comes from the nature of the power of eminent domain as
praying that judgment be rendered commanding the
defect of petitioners Complaint for expropriation filed
respondent to desist from further proceedings in the necessitating the taking of private land intended for public use,[21] and the
on September 23, 1993. It is hornbook doctrine that:
action or matter specified therein, or otherwise granting
such incidental reliefs as law and justice may require. interest of the affected landowner is thus made subordinate to the power of the
x x x in a motion to dismiss based
xxx
on the ground that the complaint fails to State. Once the State decides to exercise its power of eminent domain, the
state a cause of action, the question
submitted before the court for power of judicial review becomes limited in scope, and the courts will be left to
determination is the sufficiency of the The function of prohibition is to prevent the unlawful and oppressive
determine the appropriate amount of just compensation to be paid to the
allegations in the complaint exercise of legal authority and to provide for a fair and orderly administration of
itself.Whether those allegations are true affected landowners. Only when the landowners are not given their just
or not is beside the point, for their truth justice.[14] The writ of prohibition is directed against proceedings that are done
is hypothetically admitted by the compensation for the taking of their property or when there has been no
motion. The issue rather is: admitting without or in excess of jurisdiction, or with grave abuse of discretion, there being
agreement on the amount of just compensation may the remedy of prohibition
them to be true, may the court render a no appeal or other plain, speedy and adequate remedy in the ordinary course of
valid judgment in accordance with the become available.
prayer of the complaint? law.[15] For grave abuse of discretion to be a ground for prohibition, the petitioner

The fact that there is no cause of action is must first demonstrate that the tribunal, corporation, board, officer, or person,
Here, however, the remedy of prohibition was not called for,
evident from the face of the Complaint for whether exercising judicial, quasi-judicial or ministerial functions, has exercised
expropriation which was based on a mere considering that only a resolution expressing the desire of the Sangguniang
resolution. The absence of an ordinance its or his power in an arbitrary or despotic manner, by reason of passion or
Panglungsod to expropriate the petitioners property was issued. As of then, it
authorizing the same is equivalent to lack of cause
personal hostility, which must be so patent and gross as would amount to an
of action. Consequently, the Court of Appeals was premature for the petitioners to mount any judicial challenge, for the
committed no reversible error in affirming the trial evasion, or to a virtual refusal to perform the duty enjoined or to act in
courts Decision which dismissed the expropriation power of eminent domain could be exercised by the City only through the filing
suit.[13] (Emphasis supplied) contemplation of law.[16] On the other hand, the term excess of
of a verified complaint in the proper court.[22] Before the City as the expropriating
jurisdiction signifies that the court, board, or officer has jurisdiction over a case
authority filed such verified complaint, no expropriation proceeding could be said
but has transcended such jurisdiction or acted without any authority.[17]
to exist. Until then, the petitioners as the owners could not also be deprived of
their property under the power of eminent domain.[23]
 absolute title to Lot No. 72 was transferred to the Republic of the Philippines was adduced to show how soon is the Mactan Airport to be placed in operation
under TCT No. 25030.5 and whether the Lahug Airport will be closed immediately thereafter. It is for the
WHEREFORE, we affirm the decision promulgated on October 18, Subsequently, when the Mactan International Airport commenced operations, other departments of the Government to determine said matters. The Court
the Lahug Airport was ordered closed by then President Corazon C. Aquino in a cannot substitute its judgment for those of the said departments or agencies. In
2002 in CA-G.R. SP No. 70618. Memorandum of 29 November 1989.6 Lot No. 72 was thus virtually abandoned.7 the absence of such a showing, the Court will presume that the Lahug
On 16 March 1990, Gopuco wrote8 the Bureau of Air Transportation, through the Airport will continue to be in operation.17 (emphasis supplied)1avvphi1
manager of the Lahug Airport, seeking the return of his lot and offering to return By the time Gopuco had filed his action for recovery of ownership of Lot No. 72,
Costs to be paid by the petitioners. the money previously received by him as payment for the expropriation. This Lahug Airport had indeed ceased to operate. Nevertheless, the trial court held:
letter was ignored.9 The fact of abandonment or closure of the Lahug Airport admitted by the
In the same year, Congress passed Republic Act No. 6958 creating the Mactan- defendant did not by itself, result in the reversion of the subject property back to
G.R. No. 158563 June 30, 2005 Cebu International Airport Authority (MCIAA) and in part providing for the the plaintiff. Nor did it vest in the plaintiff the right to demand reconveyance of
AIR TRANSPORTATION OFFICE (ATO) and MACTAN-CEBU transfer of the assets of the Lahug Airport thereto. Consequently, on 08 May said property.
INTERNATIONAL AIRPORT AUTHORITY (mciaa),petitioners, 1992, ownership of Lot No. 72 was transferred to MCIAA under TCT No. When real property has been acquired for public use unconditionally, either by
vs. 120356.10 eminent domain or by purchase, the abandonment or non-use of the real
APOLONIO GOPUCO, JR., respondent. On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint11 for property, does not ipso facto give to the previous owner of said property any
DECISION recovery of ownership of Lot No. 72 against the Air Transportation Office 12 and right to recover the same (Fery vs. Municipality of Cabanatuan, 42 Phil. 28).18
CHICO-NAZARIO, J.: the Province of Cebu with the Regional Trial Court (RTC) of Cebu, Branch X, In reversing the trial court, the Court of Appeals called attention to the fact that
When private land is expropriated for a particular public use, and that particular docketed as Civil Case No. CEB-11914. He maintained that by virtue of the both parties cited Fery v. Municipality of Cabanatuan,19 which the trial court also
public use is abandoned, does its former owner acquire a cause of action for closure of the Lahug Airport, the original purpose for which the property was relied on in its Decision. The court a quo agreed in Gopucos interpretation
recovery of the property? expropriated had ceased or otherwise been abandoned, and title to the property of Fery that when the CFI in Civil Case No. R-1881 held that,
The trial courts ruling in the negative was reversed by the Court of Appeals in its had therefore reverted to him. . . . [T]hen, no evidence was adduced to show how soon is the Mactan Airport to
Decision1 of 28 February 2001. Hence this petition for review under Rule 45 of Gopuco further alleged that when the original judgment of expropriation had be placed in operation and whether the Lahug Airport will be closed immediately
the 1997 Rules of Civil Procedure of the said Decision of the court a quo, and its been handed down, and before they could file an appeal thereto, the CAA thereafter.In the absence of such a showing, the Court will presume that the
Resolution2 of 22 May 2003 dismissing petitioners motion for reconsideration. offered them a compromise settlement whereby they were assured that the Lahug Airport will continue to be in operation, . . . .20
The facts, as adduced from the records, are as follows: expropriated lots would be resold to them for the same price as when it was the expropriation of the property was conditioned on its continued devotion to its
Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72 expropriated in the event that the Lahug Airport would be abandoned. Gopuco public purpose. Thus, although the MCIAA stressed that nothing in the judgment
consisting of 995 square meters located in the vicinity of the Lahug Airport in claims to have accepted this offer.13 However, he failed to present any proof on of expropriation expressly stated that the lands would revert to their previous
Cebu City covered by Transfer Certificate of Title (TCT) No. 13061-T. this matter, and later admitted that insofar as the said lot was concerned, no owners should the public use be terminated or abandoned, the Court of Appeals
The Lahug Airport had been turned over by the Unites States Army to the compromise agreement was entered into by the government and the previous nevertheless ruled that,
Republic of the Philippines sometime in 1947 through the Surplus Property owners.14 . . . [W]hile, there is no explicit statement that the land is expropriated with the
Commission, which accepted it in behalf of the Philippine Government. In 1947, Lastly, Gopuco asserted that he had come across several announcements in the condition that when the purpose is ended the property shall return to its owner,
the Surplus Property Commission was succeeded by the Bureau of Aeronautics, papers that the Lahug Airport was soon to be developed into a commercial the full import of the decision (in Civil Case No. R-1881) suggests that the
which office was supplanted by the National Airport Corporation (NAC). The complex, which he took to be a scheme of the Province of Cebu to make expropriation was granted because there is no clear showing that Lahug Airport
NAC was in turn dissolved and replaced with the Civil Aeronautics permanent the deprivation of his property. will be closed, the moment Mactan International Airport is put to operation. It
Administration (CAA).3 On 20 May 1994, the trial court rendered a Decision15 dismissing the complaint stands to reason that should that public use be abandoned, then the
Sometime in 1949, the NAC informed the owners of the various lots surrounding and directing the herein respondent to pay the MCIAA exemplary damages, expropriated property should revert back to its former owner.
the Lahug Airport, including the herein respondent, that the government was litigation expenses and costs. Moreover, the foundation of the right to exercise the power of eminent domain is
acquiring their lands for purposes of expansion. Some landowners were Aggrieved by the holding of the trial court, Gopuco appealed to the Court of genuine necessity. Condemnation is justified only if it is for the public good and
convinced to sell their properties on the assurance that they would be able to Appeals, which overturned the RTC decision, ordered the herein petitioners to there is genuine necessity of a public character. Thus, when such genuine
repurchase the same when these would no longer be used by the airport. reconvey Lot No. 72 to Gopuco upon payment of the reasonable price as necessity no longer exists as when the State abandons the property
Others, including Gopuco, refused to do so. determined by it, and deleted the award to the petitioners of exemplary expropriated, government interest must yield to the private right of the former
Thus, on 16 April 1952, the CAA filed a complaint with the Court of First damages, litigation expenses and costs. land owner, whose property right was disturbed as a consequence of the
Instance (CFI) of Cebu for the expropriation of Lot No. 72 and its neighboring The Motion for Reconsideration was denied16 on 22 May 2003, hence this exercise of eminent domain.
realties, docketed as Civil Case No. R-1881. petition, which raises the following issues: Justice, equity and fair play demand that the property should revert back to
On 29 December 1961, the CFI promulgated a Decision, WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT plaintiff-appellant upon paying the reasonable value of the land to be based on
1. Declaring the expropriation of [the subject lots, including Lot No. RESPONDENT HAS THE RIGHT TO RECLAIM OWNERSHIP OVER THE the prevailing market value at the time of judicial demand to recover the
72] justified and in lawful exercise of the right of eminent domain; SUBJECT EXPROPRIATED LOT BASED ON THE IMPORT OF THE property. If the State expects landowners to cooperate in its bid to take private
2. Declaring . a balance of 1,990 in favor of Apolonio Go Puco, DECEMBER 29, 1961 DECISION IN CIVIL CASE NO. 1881. property for its public use, so must it apply also the same standard, to allow the
Jr. with legal interest from November 16, 1947 until fully paid. ; WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD landowner to reclaim the property, now that the public use has been
3. After the payment of the foregoing financial obligation to the OF LITIGATION EXPENSES AND COSTS IN FAVOR OF PETITIONERS. abandoned.21
landowners, directing the latter to deliver to the plaintiff the In deciding the original expropriation case that gave rise to the present In this petition, the MCIAA reiterates that the Republic of the Philippines validly
corresponding Transfer Certificates of Title to their respective lots; controversy, Civil Case No. R-1881, the CFI reasoned that the planned expropriated Lot No. 72 through the proceedings in Civil Case No. R-1881, the
and upon the presentation of the said titles to the Register of expansion of the airport justified the exercise of eminent domain, thus: judgment of which had long become final and executory. It further asserts that
Deeds, ordering the latter to cancel the same and to issue, in lieu As for the public purpose of the expropriation proceeding, it cannot be doubted. said judgment vested absolute and unconditional title in the government,
thereof, new Transfer Certificates of Title in the name of the Although the Mactan Airport is being constructed, it does not take away the specifically on the petitioners, there having been no condition whatsoever that
plaintiff.4 actual usefulness and importance of the Lahug Airport; it is handling the air the property should revert to its owners in case the Lahug Airport should be
No appeal was taken from the above Decision on Lot No. 72, and the judgment traffic both civilian and military. From it aircrafts fly to Mindanao and Visayas and abandoned.
of condemnation became final and executory. Thereafter, on 23 May 1962, pass thru it on their return flights to the North and Manila. Then, no evidence
On the other hand, the respondent would have us sustain the appellate courts CHIONGBIAN had a right to repurchase the same if the purpose for which conflicting interest in the property. Thus, by filing the action, the condemnor in
interpretation of Fery as applied to the original judgment of expropriation, to the it was expropriated is ended or abandoned or if the property was to be effect merely serves notice that it is taking title and possession of the property,
effect that this was subject to the condition "that the Lahug Airport will continue used other than as the Lahug Airport."25 Moreover, we held that although and the defendant asserts title or interest in the property, not to prove a right to
to be in operation." other lot owners were able to successfully reacquire their lands by virtue of a possession, but to prove a right to compensation for the taking.35
We resolve to grant the petition. compromise agreement, since CHIONGBIAN was not a party to any such The only direct constitutional qualification is thus that "private property shall not
In Fery, the Court asked and answered the same question confronting us now: agreement, she could not validly invoke the same. be taken for public use without just compensation." 36 This prescription is
When private land is expropriated for a particular public use, and that particular The respondent would have us revisit this ruling for three reasons. First, intended to provide a safeguard against possible abuse and so to protect as well
public use is abandoned, does the land so expropriated return to its former because he claims there is no showing that the government benefited from the individual against whose property the power is sought to be
owner?22 entering into compromise agreements with the other lot owners; second, enforced.37lawphil.net
The answer to that question depends upon the character of the title acquired by because such a doctrine supposedly discriminates against those who have In this case, the judgment on the propriety of the taking and the adequacy of the
the expropriator, whether it be the State, a province, a municipality, or a "neither the werewithal nor the savvy to contest the expropriation," or agree to compensation received have long become final. We have also already held that
corporation which has the right to acquire property under the power of eminent modify the judgment; and third, because there exists between the government the terms of that judgment granted title in fee simple to the Republic of the
domain. If, for example, land is expropriated for a particular purpose, with the and the owners of expropriated realty an "implied contract" that the properties Philippines. Therefore, pursuant to our ruling in Fery, as recently cited in Reyes
condition that when that purpose is ended or abandoned the property involved will be used only for the public purpose for which they were acquired in v. National Housing Authority,38no rights to Lot No. 72, either express or implied,
shall return to its former owner, then, of course, when the purpose is the first place. have been retained by the herein respondent.
terminated or abandoned the former owner reacquires the property so As to respondents first and second arguments, we have time and again ruled We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu
expropriated. If, for example, land is expropriated for a public street and the that a compromise agreement, when not contrary to law, public order, public International Airport Authority,39concerning still another set of owners of lots
expropriation is granted upon condition that the city can only use it for a public policy, morals, or good customs, is a valid contract which is the law between the declared expropriated in the judgment in Civil Case No. R-1881. As with
street, then, of course, when the city abandons its use as a public street, it parties.26 It is a contract perfected by mere consent,27 whereby the parties, Chiongbian and the herein respondent, the owners of the lots therein did not
returns to the former owner, unless there is some statutory provision to the making reciprocal concessions, avoid litigation or put an end to one already appeal the judgment of expropriation, but subsequently filed a complaint for
contrary. . . If upon the contrary, however, the decree of expropriation gives to commenced. It has the force of law and is conclusive between the parties,28 and reconveyance. In ordering MCIAA to reconvey the said lots in their favor, we
the entity a fee simple title, then of course, the land becomes the absolute courts will not relieve parties from obligations voluntarily assumed, simply held that the predicament of petitioners therein involved a constructive trust
property of the expropriator, whether it be the State, a province, or municipality, because their contracts turned out to be unwise.29 Note that respondent has not "akin to the implied trust referred to in Art. 145440 of the Civil
and in that case the non-user does not have the effect of defeating the title shown that any of the compromise agreements were in any way tainted with Code."41 However, we qualified our Decision in that case, to the effect that,
acquired by the expropriation proceedings. (10 R.C.L., 240, sec. 202; 20 C.J. illegality, irregularity or imprudence. Indeed, anyone who is not a party to a We adhere to the principles enunciated in Fery and in Mactan-Cebu
1234, secs. 593-599 and numerous cases cited; Reichling vs. Covington contract or agreement cannot be bound by its terms, and cannot be affected by International Airport Authority, and do not overrule them. Nonetheless the weight
Lumber Co., 57 Wash., 225; 135 Am. St. Rep., 976; McConihay vs. Wright, 121 it.30 Since Gopuco was not a party to the compromise agreements, he cannot of their import, particularly our ruling as regards the properties of respondent
U.S., 201.) legally invoke the same.31 Chiongbian in Mactan-Cebu International Airport Authority, must be
When land has been acquired for public use in fee simple, unconditionally, Lastly, Gopuco argues that there is present, in cases of expropriation, an commensurate to the facts that were established therein as distinguished from
either by the exercise of eminent domain or by purchase, the former owner "implied contract" that the properties will be used only for the public purpose for those extant in the case at bar. Chiongbian put forth inadmissible and
retains no rights in the land, and the public use may be abandoned or the which they were acquired. No such contract exists. inconclusive evidence, while in the instant case we have preponderant
land may be devoted to a different use, without any impairment of the Eminent domain is generally described as "the highest and most exact idea of proof as found by the trial court of the existence of the right of repurchase
estate or title acquired, or any reversion to the former owner. (Fort Wayne property remaining in the government" that may be acquired for some public in favor of petitioners.
vs. Lake Shore, etc. Ry. Co., 132 Ind., 558; 18 L.R.A., 367.) (Emphases purpose through a method in the nature of a forced purchase by the Neither has Gopuco, in the present case, adduced any evidence at all
Supplied)23 State.32 Also often referred to as expropriation and, with less frequency, as concerning a right of repurchase in his favor. Heirs of Moreno is thus not in
Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and condemnation, it is, like police power and taxation, an inherent power of point.
unconditional title in the government? We have already had occasion to rule on sovereignty and need not be clothed with any constitutional gear to exist; The trial court was thus correct in denying Gopucos claim for the reconveyance
this matter in Mactan-Cebu International Airport Authority v. Court of instead, provisions in our Constitution on the subject are meant more to of Lot No. 72 in his favor. However, for failure of the petitioners to present any
Appeals,24 which is a related action for reconveyance of a parcel of land also regulate, rather than to grant, the exercise of the power. It is a right to take proof that this case was clearly unfounded or filed for purposes of harassment,
subject of the expropriation proceedings in Civil Case No. R-1881. One of the or reassert dominion over property within the state for public use or to meet a or that the herein respondent acted in gross and evident bad faith, the
landowners affected by the said proceeding was Virginia Chiongbian, to whom public exigency and is said to be an essential part of governance even in its reimposition of litigation expenses and costs has no basis. It is not sound public
the CFI ordered the Republic of the Philippines to pay 34,415.00, with legal most primitive form and thus inseparable from sovereignty.33 In fact, "all policy to set a premium upon the right to litigate where such right is exercised in
interest computed from the time the government began using her land. Like the separate interests of individuals in property are held of the government under good faith, as in the present case.42
herein respondent, she did not appeal from the CFIs judgment. Also like this tacit agreement or implied reservation. Notwithstanding the grant to WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals
Gopuco, she eventually filed for the reconveyance of her property when the individuals, the eminent domain, the highest and most exact idea of property, in CA-G.R. SP No. 49898 dated 28 February 2001, and its Resolution of 22 May
airport closed. Although she was upheld by both the RTC of Cebu and the Court remains in the government, or in the aggregate body of people in their sovereign 2003 are hereby REVERSED and SET ASIDE. The Decision of RTC-Branch X
of Appeals, on appeal we held that "the terms of the judgment (in Civil Case capacity; and they have the right to resume the possession of the property of Cebu dated 20 May 1994 in Civil Case No. CEB-11914 is REINSTATED with
No. R-1881) are clear and unequivocal and granted title to Lot No. 941 in whenever the public interest so requires it."34 the modification that the award of exemplary damages, litigation expenses and
fee simple to the Republic of the Philippines. There was no condition The ubiquitous character of eminent domain is manifest in the nature of the costs are DELETED.
imposed to the effect that the lot would return to CHIONGBIAN or that expropriation proceedings. Expropriation proceedings are not adversarial in the
conventional sense, for the condemning authority is not required to assert any
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY and AIR
TRANSPORTATION OFFICE, - versus - BERNARDO L. LOZADA, SR.,
and the

HEIRS OF ROSARIO MERCADO, namely, VICENTE LOZADA, MARIO M.

G.R. No. 176625
LOZADA, MARCIA L. GODINEZ, VIRGINIA L. FLORES, BERNARDO
LOZADA, JR., DOLORES GACASAN, SOCORRO CAFARO and ROSARIO
LOZADA, represented by MARCIA LOZADA GODINEZ
On December 29, 1961, the trial court rendered judgment in favor of the Office dispose and resell the properties which may be found to be no longer
Petitioners,
NACHURA, J.: Republic and ordered the latter to pay Lozada the fair market value of Lot No. necessary as an airport, then the policy of this Office is to give priority to the

This is a petition for review on certiorari under Rule 45 of the Rules of Court, 88, adjudged at P3.00 per square meter, with consequential damages by way of former owners subject to the approval of the President.

seeking to reverse, annul, and set aside the Decision[1] dated February 28, 2006
legal interest computed from November 16, 1947the time when the lot was first
and the Resolution[2] dated February 7, 2007 of the Court of Appeals (CA)
(Cebu City), Twentieth Division, in CA-G.R. CV No. 65796. occupied by the airport. Lozada received the amount of P3,018.00 by way of On November 29, 1989, then President Corazon C. Aquino issued a

payment. Memorandum to the Department of Transportation, directing the transfer of

The antecedent facts and proceedings are as follows:
general aviation operations of the Lahug Airport to
Subject of this case is Lot No. 88-SWO-25042 (Lot No. 88), with an area of
The affected landowners appealed. Pending appeal, the Air Transportation the MactanInternational Airport before the end of 1990 and, upon such transfer,
1,017 square meters, more or less, located in Lahug, Cebu City. Its original
Office (ATO), formerly CAA, proposed a compromise settlement whereby the the closure of the Lahug Airport.
owner was Anastacio Deiparine when the same was subject to expropriation
owners of the lots affected by the expropriation proceedings would either not
proceedings, initiated by the Republic of the Philippines (Republic), represented
appeal or withdraw their respective appeals in consideration of a commitment Sometime in 1990, the Congress of the Philippines passed Republic Act (R.A.)
by the then Civil Aeronautics Administration (CAA), for the expansion and
that the expropriated lots would be resold at the price they were expropriated in No. 6958, entitled An Act Creating the Mactan-Cebu International Airport
improvement of the Lahug Airport. The case was filed with the then Court of
the event that the ATO would abandon the Lahug Airport, pursuant to an Authority, Transferring Existing Assets of the Mactan International Airport and
First Instance of Cebu, Third Branch, and docketed as Civil Case No. R-1881.
established policy involving similar cases. Because of this promise, Lozada did the Lahug Airport to the Authority, Vesting the Authority with Power to

not pursue his appeal. Thereafter, Lot No. 88 was transferred and registered in Administer and Operate the Mactan International Airport and the Lahug Airport,
As early as 1947, the lots were already occupied by the U.S. Army. They were
the name of the Republic under TCT No. 25057. and For Other Purposes.
turned over to the Surplus Property Commission, the Bureau of Aeronautics, the

National Airport Corporation and then to the CAA.

The projected improvement and expansion plan of the old Lahug Airport, From the date of the institution of the expropriation proceedings up to the

however, was not pursued. present, the public purpose of the said expropriation (expansion of the airport)
During the pendency of the expropriation proceedings, respondent Bernardo L.
was never actually initiated, realized, or implemented.Instead, the old airport
Lozada, Sr. acquired Lot No. 88 from Deiparine. Consequently, Transfer
Lozada, with the other landowners, contacted then CAA Director Vicente Rivera, was converted into a commercial complex. Lot No. 88 became the site of a jail
Certificate of Title (TCT) No. 9045 was issued in Lozadas name.
Jr., requesting to repurchase the lots, as per previous agreement. The CAA known as Bagong Buhay Rehabilitation Complex, while a portion thereof was

replied that there might still be a need for the LahugAirport to be used as an occupied by squatters.[3]The old airport was converted into what is now known

emergency DC-3 airport. It reiterated, however, the assurance that should this as the Ayala I.T. Park, a commercial area.
 transfer of general aviation operations at general aviation operations of the Lahug
the Lahug Airportto the Mactan-Cebu Airport to the Mactan-Cebu International
International Airport Authority; Airport Authority and to close the Lahug
Airport after such transfer[.][5]
Thus, on June 4, 1996, petitioners initiated a complaint for the recovery of (i) Since the public purpose for the expropriation no
longer exists, the property must be returned to
possession and reconveyance of ownership of Lot No. 88. The case was the plaintiffs.[4]
During trial, respondents presented Bernardo Lozada, Sr. as their lone witness,
docketed as Civil Case No. CEB-18823 and was raffled to the Regional Trial
while petitioners presented their own witness, Mactan-Cebu International Airport
In their Answer, petitioners asked for the immediate dismissal of the
Court (RTC), Branch 57, Cebu City. The complaint substantially alleged as
Authority legal assistant Michael Bacarisas.
complaint. They specifically denied that the Government had made assurances
follows:
to reconvey Lot No. 88 to respondents in the event that the property would no

(a) Spouses Bernardo and Rosario Lozada were the On October 22, 1999, the RTC rendered its Decision, disposing as follows:
registered owners of Lot No. 88 covered by longer be needed for airport operations. Petitioners instead asserted that the
TCT No. 9045;
judgment of condemnation was unconditional, and respondents were, therefore, WHEREFORE, in the light of the foregoing, the Court
(b) In the early 1960s, the Republic sought to acquire
hereby renders judgment in favor of the plaintiffs,
by expropriation Lot No. 88, among others, in
not entitled to recover the expropriated property notwithstanding non-use or Bernardo L. Lozada, Sr., and the heirs of Rosario
connection with its program for the
Mercado, namely, Vicente M. Lozada, Marcia L.
improvement and expansion of
Godinez, Virginia L. Flores, Bernardo M. Lozada, Jr.,
the Lahug Airport; abandonment thereof.
Dolores L. Gacasan, Socorro L. Cafaro and Rosario M.
Lozada, represented by their attorney-in-fact Marcia
(c) A decision was rendered by the Court of First
Lozada Godinez, and against defendants Cebu-Mactan
Instance in favor of the Government and
International Airport Authority (MCIAA) and Air
against the land owners, among whom was
After pretrial, but before trial on the merits, the parties stipulated on the following Transportation Office (ATO):
Bernardo Lozada, Sr. appealed therefrom;
1. ordering MCIAA and ATO to restore to
(d) During the pendency of the appeal, the parties set of facts: plaintiffs the possession and ownership of their land,
entered into a compromise settlement to the
Lot No. 88 Psd-821 (SWO-23803), upon payment of
effect that the subject property would be
the expropriation price to plaintiffs; and
resold to the original owner at the same price
when it was expropriated in the event that the (1) The lot involved is Lot No. 88-SWO-25042 of the
Banilad Estate, situated in the City of Cebu, 2. ordering the Register of Deeds to effect the
Government abandons the Lahug Airport;
containing an area of One Thousand transfer of the Certificate of Title from defendant[s] to
Seventeen (1,017) square meters, more or plaintiffs on Lot No. [88], cancelling TCT No. 20357 in
(e) Title to Lot No. 88 was subsequently transferred to
less; the name of defendant MCIAA and to issue a new title
the Republic of the Philippines (TCT No.
on the same lot in the name of Bernardo L. Lozada, Sr.
25057);
(2) The property was expropriated among several other and the heirs of Rosario Mercado, namely: Vicente M.
properties in Lahug in favor of the Republic of Lozada, Mario M. Lozada, Marcia L. Godinez, Virginia
(f) The projected expansion and improvement of
the Philippines by virtue of a Decision dated L. Flores, Bernardo M. Lozada, Jr., Dolores L.
the Lahug Airport did not materialize;
December 29, 1961 of the CFI of Cebu in Civil Gacasan, Socorro L. Cafaro and Rosario M. Lozada.
(g) Plaintiffs sought to repurchase their property from Case No. R-1881;
No pronouncement as to costs.
then CAA Director Vicente Rivera. The latter
replied by giving as assurance that priority (3) The public purpose for which the property was
expropriated was for the purpose of SO ORDERED.[6]
would be given to the previous owners,
subject to the approval of the President, the Lahug Airport;
should CAA decide to dispose of the
properties; (4) After the expansion, the property was transferred in
the name of MCIAA; [and] Aggrieved, petitioners interposed an appeal to the CA. After the filing of the
(h) On November 29, 1989, then President Corazon C.
Aquino, through a Memorandum to the (5) On November 29, 1989, then President Corazon C.
Aquino directed the Department of necessary appellate briefs, the CA rendered its assailed Decision dated
Department of Transportation and
Communications (DOTC), directed the Transportation and Communication to transfer
 so expropriated. If x x x land is expropriated for a public whether the Lahug Airport will
street and the expropriation is granted upon condition be closed immediately
February 28, 2006, denying petitioners appeal and affirming in toto the Decision
that the city can only use it for a public street, then, of thereafter. It is up to the other
course, when the city abandons its use as a public departments of the
of the RTC, Branch 57, Cebu City. Petitioners motion for reconsideration was, street, it returns to the former owner, unless there is Government to determine said
some statutory provision to the contrary. x x x. If, upon matters. The Court cannot
likewise, denied in the questioned CA Resolution dated February 7, 2007. the contrary, however, the decree of expropriation gives substitute its judgment for
to the entity a fee simple title, then, of course, the land those of the said departments
becomes the absolute property of the expropriator, or agencies. In the absence of
whether it be the State, a province, or municipality, and such showing, the Court will
in that case the non-user does not have the effect of presume that
Hence, this petition arguing that: (1) the respondents utterly failed to prove that defeating the title acquired by the expropriation the Lahug Airport will continue
proceedings. x x x. to be in operation (emphasis
supplied).
there was a repurchase agreement or compromise settlement between them When land has been acquired for public
use in fee simple, unconditionally, either by the While in the trial in Civil Case No. R-1881 [we] could
and the Government; (2) the judgment in Civil Case No. R-1881 was absolute exercise of eminent domain or by purchase, the former have simply acknowledged the presence of public
owner retains no right in the land, and the public use purpose for the exercise of eminent domain regardless
may be abandoned, or the land may be devoted to a of the survival of Lahug Airport, the trial court in
and unconditional, giving title in fee simple to the Republic; and (3) the different use, without any impairment of the estate or its Decision chose not to do so but instead prefixed its
title acquired, or any reversion to the former owner. x x finding of public purpose upon its understanding
respondents claim of verbal assurances from government officials violates the x.[8] that Lahug Airport will continue to be in
operation. Verily, these meaningful statements in the
body of the Decision warrant the conclusion that the
Statute of Frauds.
expropriated properties would remain to be so until it
was confirmed that Lahug Airport was no longer in
Contrary to the stance of petitioners, this Court had ruled otherwise
operation. This inference further implies two (2) things:
(a) after the Lahug Airport ceased its undertaking as
in Heirs of Timoteo Moreno and Maria Rotea v. Mactan-Cebu International such and the expropriated lots were not being used for
The petition should be denied.
any airport expansion project, the rights vis--vis the
Airport Authority,[9] thus expropriated Lots Nos. 916 and 920 as between the
State and their former owners, petitioners herein, must
be equitably adjusted; and (b) the foregoing
Petitioners anchor their claim to the controverted property on the supposition unmistakable declarations in the body of
Moreover, respondent MCIAA has brought to our the Decision should merge with and become an
attention a significant and telling portion in intrinsic part of the fallo thereof which under the
that the Decision in the pertinent expropriation proceedings did not provide for the Decision in Civil Case No. R-1881 validating our premises is clearly inadequate since the dispositive
discernment that the expropriation by the predecessors portion is not in accord with the findings as contained in
the condition that should the intended use of Lot No. 88 for the expansion of of respondent was ordered under the running the body thereof.[10]
impression that Lahug Airport would continue in
operation
the Lahug Airport be aborted or abandoned, the property would revert to
As for the public purpose of
the expropriation proceeding, Indeed, the Decision in Civil Case No. R-1881 should be read in its entirety,
respondents, being its former owners. Petitioners cite, in support of this
it cannot now be
doubted. Although Mactan Air wherein it is apparent that the acquisition by the Republic of the expropriated
position, Fery v. Municipality of Cabanatuan,[7] which declared that the port is being constructed, it
does not take away the actual
usefulness and importance of lots was subject to the condition that the LahugAirport would continue its
Government acquires only such rights in expropriated parcels of land as may be
the Lahug Airport: it is
handling the air traffic both operation. The condition not having materialized because the airport had been
allowed by the character of its title over the properties civilian and military. From it
aircrafts fly to Mindanao and
abandoned, the former owner should then be allowed to reacquire the
Visayas and pass thru it on
If x x x land is expropriated for a particular purpose, their flights to the North
with the condition that when that purpose is ended or and Manila. Then, no evidence expropriated property.[11]
abandoned the property shall return to its former owner, was adduced to show how
then, of course, when the purpose is terminated or soon is the Mactan Airport to
abandoned the former owner reacquires the property be placed in operation and
On this note, we take this opportunity to revisit our ruling in Fery, which involved nature of implied conditions that should be complied with to enable the

an expropriation suit commenced upon parcels of land to be used as a site for a condemnor to keep the property expropriated.[16] Even without the foregoing declaration, in the instant case, on the question of

public market. Instead of putting up a public market, whether respondents were able to establish the existence of an oral compromise

respondent Cabanatuan constructed residential houses for lease on the More particularly, with respect to the element of public use, the expropriator agreement that entitled them to repurchase Lot No. 88 should the operations of

area. Claiming that the municipality lost its right to the property taken since it did should commit to use the property pursuant to the purpose stated in the petition the Lahug Airport be abandoned, we rule in the affirmative.

not pursue its public purpose, petitioner Juan Fery, the former owner of the lots for expropriation filed, failing which, it should file another petition for the new

expropriated, sought to recover his properties. However, as he had admitted purpose. If not, it is then incumbent upon the expropriator to return the said It bears stressing that both the RTC, Branch 57, Cebu and the CA have passed

that, in 1915, respondent Cabanatuan acquired a fee simple title to the lands in property to its private owner, if the latter desires to reacquire the upon this factual issue and have declared, in no uncertain terms, that a

question, judgment was rendered in favor of the municipality, following American same. Otherwise, the judgment of expropriation suffers an intrinsic flaw, as it compromise agreement was, in fact, entered into between the Government and

jurisprudence, particularly City of Fort Wayne v. Lake Shore & M.S. RY. would lack one indispensable element for the proper exercise of the power of respondents, with the former undertaking to resell Lot No. 88 to the latter if the

Co.,[12] McConihay v. Theodore Wright,[13] and Reichling v. Covington Lumber eminent domain, namely, the particular public purpose for which the property will improvement and expansion of the Lahug Airport would not be pursued. In

Co.,[14] all uniformly holding that the transfer to a third party of the expropriated be devoted. Accordingly, the private property owner would be denied due affirming the factual finding of the RTC to this effect, the CA declared

real property, which necessarily resulted in the abandonment of the particular process of law, and the judgment would violate the property owners right to
Lozadas testimony is cogent. An octogenarian
widower-retiree and a resident of Moon
public purpose for which the property was taken, is not a ground for the recovery justice, fairness, and equity.
Park, California since 1974, he testified that
government representatives verbally promised him and
of the same by its previous owner, the title of the expropriating agency being his late wife while the expropriation proceedings were
on-going that the government shall return the property if
one of fee simple. In light of these premises, we now expressly hold that the taking of private the purpose for the expropriation no longer exists. This
promise was made at the premises of the airport. As far
as he could remember, there were no expropriation
property, consequent to the Governments exercise of its power of eminent proceedings against his property in 1952 because the
first notice of expropriation he received was in
Obviously, Fery was not decided pursuant to our now sacredly held domain, is always subject to the condition that the property be devoted to the 1962. Based on the promise, he did not hire a
lawyer. Lozada was firm that he was promised that the
lot would be reverted to him once the public use of the
constitutional right that private property shall not be taken for public use without specific public purpose for which it was taken. Corollarily, if this particular lot ceases. He made it clear that the verbal promise
was made in Lahug with other lot owners before the
just compensation.[15] It is well settled that the taking of private property by the purpose or intent is not initiated or not at all pursued, and is peremptorily 1961 decision was handed down, though he could not
name the government representatives who made the
promise. It was just a verbal promise; nevertheless, it is
Governments power of eminent domain is subject to two mandatory abandoned, then the former owners, if they so desire, may seek the reversion of binding. The fact that he could not supply the
necessary details for the establishment of his
requirements: (1) that it is for a particular public purpose; and (2) that just the property, subject to the return of the amount of just compensation assertions during cross-examination, but that When it
will not be used as intended, it will be returned back, we
just believed in the government, does not dismantle the
compensation be paid to the property owner. These requirements partake of the received. In such a case, the exercise of the power of eminent domain has
credibility and truthfulness of his allegation. This Court
notes that he was 89 years old when he testified in
become improper for lack of the required factual justification.[17] November 1997 for an incident which happened
 decades ago. Still, he is a competent witness capable landowner] or that [the landowner] had a right to
of perceiving and making his perception known. The repurchase the same if the purpose for which it was
minor lapses are immaterial. The decision of the expropriated is ended or abandoned or if the property
In executory contracts there is a wide field for fraud
competency of a witness rests primarily with the trial was to be used other than as the Lahug Airport. This
because unless they be in writing there is no palpable
judge and must not be disturbed on appeal unless it is omission notwithstanding, and while the inclusion of
evidence of the intention of the contracting parties. The
clear that it was erroneous. The objection to his this pronouncement in the judgment of condemnation
statute has precisely been enacted to prevent
competency must be made before he has given any would have been ideal, such precision is not absolutely
fraud. However, if a contract has been totally or partially
testimony or as soon as the incompetency becomes necessary nor is it fatal to the cause of petitioners
performed, the exclusion of parol evidence would
apparent. Though Lozada is not part of the compromise herein. No doubt, the return or repurchase of the
promote fraud or bad faith, for it would enable the
agreement,[18] he nevertheless adduced sufficient condemned properties of petitioners could be readily
defendant to keep the benefits already delivered by him
evidence to support his claim.[19] justified as the manifest legal effect or consequence of
from the transaction in litigation, and, at the same time,
the trial courts underlying presumption that Lahug
evade the obligations, responsibilities or liabilities
Airport will continue to be in operation when it granted
assumed or contracted by him thereby.[22]
the complaint for eminent domain and the airport
discontinued its activities.
As correctly found by the CA, unlike in Mactan Cebu International Airport
The predicament of petitioners involves a constructive
Authority v. Court of Appeals,[20] cited by petitioners, where respondent therein In this case, the Statute of Frauds, invoked by petitioners to bar the claim of trust, one that is akin to the implied trust referred to in
Art. 1454 of the Civil Code, If an absolute conveyance
offered testimonies which were hearsay in nature, the testimony of Lozada was respondents for the reacquisition of Lot No. 88, cannot apply, the oral of property is made in order to secure the performance
of an obligation of the grantor toward the grantee, a
trust by virtue of law is established. If the fulfillment of
based on personal knowledge as the assurance from the government was compromise settlement having been partially performed. By reason of such the obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the property
personally made to him. His testimony on cross-examination destroyed neither assurance made in their favor, respondents relied on the same by not pursuing to him. In the case at bar, petitioners conveyed Lots
No. 916 and 920 to the government with the latter
obliging itself to use the realties for the expansion of
his credibility as a witness nor the truthfulness of his words. their appeal before the CA. Moreover, contrary to the claim of petitioners, the Lahug Airport; failing to keep its bargain, the
government can be compelled by petitioners to
fact of Lozadas eventual conformity to the appraisal of Lot No. 88 and his reconvey the parcels of land to them, otherwise,
petitioners would be denied the use of their properties
upon a state of affairs that was not conceived nor
Verily, factual findings of the trial court, especially when affirmed by seeking the correction of a clerical error in the judgment as to the true area of contemplated when the expropriation was authorized.

the CA, are binding and conclusive on this Court and may not be reviewed. A Lot No. 88 do not conclusively establish that respondents absolutely parted with Although the symmetry between the instant case and
the situation contemplated by Art. 1454 is not perfect,
the provision is undoubtedly applicable. For, as
petition for certiorari under Rule 45 of the Rules of Court contemplates only their property. To our mind, these acts were simply meant to cooperate with the
explained by an expert on the law of trusts: The only
problem of great importance in the field of constructive
questions of law and not of fact.[21] Not one of the exceptions to this rule is government, particularly because of the oral promise made to them. trust is to decide whether in the numerous and varying
fact situations presented to the courts there is a
present in this case to warrant a reversal of such findings. wrongful holding of property and hence a threatened
unjust enrichment of the defendant. Constructive trusts
are fictions of equity which are bound by no unyielding
The right of respondents to repurchase Lot No. 88 may be enforced based on a formula when they are used by courts as devices to
remedy any situation in which the holder of legal title
As regards the position of petitioners that respondents testimonial evidence constructive trust constituted on the property held by the government in favor of may not in good conscience retain the beneficial
interest.
violates the Statute of Frauds, suffice it to state that the Statute of Frauds the former. On this note, our ruling in Heirs of Timoteo Moreno is In constructive trusts, the arrangement is temporary
and passive in which the trustees sole duty is to
operates only with respect to executory contracts, and does not apply to instructive, viz.: transfer the title and possession over the property to
the plaintiff-beneficiary. Of course, the wronged party
seeking the aid of a court of equity in establishing a
contracts which have been completely or partially performed, the rationale constructive trust must himself do equity. Accordingly,
Mactan-Cebu International Airport Authority is correct in the court will exercise its discretion in deciding what
stating that one would not find an express statement in acts are required of the plaintiff-beneficiary as
thereof being as follows:
the Decision in Civil Case No. R-1881 to the effect conditions precedent to obtaining such decree and has
that the [condemned] lot would return to [the
 the obligation to reimburse the trustee the consideration
received from the latter just as the plaintiff-beneficiary
4. Respondents are also ENTITLED to keep whatever interests the amounts
would if he proceeded on the theory of rescission. In
the good judgment of the court, the trustee may also be
paid the necessary expenses he may have incurred in In accordance with Article 1190[25] of the Civil Code vis--vis Article 1189, which they received as just compensation may have earned in the meantime, as well
sustaining the property, his fixed costs for
improvements thereon, and the monetary value of his provides that (i)f a thing is improved by its nature, or by time, the improvement as the appreciation in value of Lot No. 88, which is a natural consequence of
services in managing the property to the extent that
plaintiff-beneficiary will secure a benefit from his acts.
shall inure to the benefit of the creditor x x x, respondents, as creditors, do not nature and time;
The rights and obligations between the constructive
trustee and the beneficiary, in this case, respondent have to pay, as part of the process of restitution, the appreciation in value of Lot
MCIAA and petitioners over Lots Nos. 916 and 920, are
echoed in Art. 1190 of the Civil Code, When the
conditions have for their purpose the extinguishment of No. 88, which is a natural consequence of nature and time.[26] In light of the foregoing modifications, the case is REMANDED to the Regional
an obligation to give, the parties, upon the fulfillment of
said conditions, shall return to each other what they Trial Court, Branch 57, Cebu City, only for the purpose of receiving evidence on
have received x x x In case of the loss, deterioration or
improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding WHEREFORE, the petition is DENIED. The February 28, 2006 Decision of the the amounts that respondents will have to pay petitioners in accordance with this
article shall be applied to the party who is bound to
return x x x.[23] Court of Appeals, affirming the October 22, 1999 Decision of the Regional Trial Courts decision. No costs.

Court, Branch 87, Cebu City, and its February 7, 2007 Resolution
G.R. No. 87335 February 12, 1990
On the matter of the repurchase price, while petitioners are obliged to reconvey
are AFFIRMED with MODIFICATION as follows:
REPUBLIC OF THE PHILIPPINES, petitioner,
Lot No. 88 to respondents, the latter must return to the former what they vs.
CRISTINA DE KNECHT AND THE COURT OF APPEALS, respondents.
received as just compensation for the expropriation of the property, plus legal
1. Respondents are ORDERED to return to petitioners the just compensation
Villanueva, Talamayan, Nieva, Elegado, and Ante Law Offices for respondent
interest to be computed from default, which in this case runs from the time Cristina de Knecht.
they received for the expropriation of Lot No. 88, plus legal interest, in the case

petitioners comply with their obligation to respondents.

of default, to be computed from the time petitioners comply with their obligation

GANCAYCO, J.:
to reconvey Lot No. 88 to them;

Respondents must likewise pay petitioners the necessary expenses they may The issue posed in this case is whether an expropriation proceeding that was
determined by a final judgment of this Court may be the subject of a subsequent
have incurred in maintaining Lot No. 88, as well as the monetary value of their legislation for expropriation.
2. Respondents are ORDERED to pay petitioners the necessary expenses the

services in managing it to the extent that respondents were benefited thereby. On February 20, 1979 the Republic of the Philippines filed in the Court of First
latter incurred in maintaining Lot No. 88, plus the monetary value of their Instance (CFI) of Rizal in Pasay City an expropriation proceedings against the
owners of the houses standing along Fernando Rein-Del Pan streets among
services to the extent that respondents were benefited thereby; them Cristina De Knecht (de Knecht for short) together with Concepcion
Cabarrus, and some fifteen other defendants, docketed as Civil Case No. 7001-
Following Article 1187[24] of the Civil Code, petitioners may keep whatever P.

income or fruits they may have obtained from Lot No. 88, and respondents need On March 19, 1979 de Knecht filed a motion to dismiss alleging lack of
3. Petitioners are ENTITLED to keep whatever fruits and income jurisdiction, pendency of appeal with the President of the Philippines,
prematureness of complaint and arbitrary and erroneous valuation of the
not account for the interests that the amounts they received as just properties. On March 29, 1979 de Knecht filed an ex parte urgent motion for the
they may have obtained from Lot No. 88; and
issuance by the trial court of a restraining order to restrain the Republic from
compensation may have earned in the meantime. proceeding with the taking of immediate possession and control of the property
sought to be condemned. In June, 1979 the Republic filed a motion for the No pronouncement as to Costs. 3 the Fernando Rein-Del Pan streets as the line through which the EDSA should
issuance of a writ of possession of the property to be expropriated on the ground be extended to Roxas Boulevard is arbitrary and should not receive judicial
that it had made the required deposit with the Philippine National Bank (PNB) of approval." 5 It is based on the recommendation of the Human Settlements
Hence the Republic filed that herein petition for review of the A aforestated
10% of the amount of compensation stated in the complaint. In an order dated Commission that the choice of Cuneta street as the line of the extension will
decision whereby the following issues were raised:
June 14, 1979 the lower court issued a writ of possession authorizing the minimize the social impact factor as the buildings and improvement therein are
Republic to enter into and take possession of the properties sought to be mostly motels. 6
condemned, and created a Committee of three to determine the just I
compensation for the lands involved in the proceedings.
In view of the said finding, this Court set aside the order of the trial court dated
WHETHER OR NOT THE ENACTMENT OF BATAS June 14, 1979 authorizing the Republic of the Philippines to take possession of
On July 16, 1979 de Knecht filed with this Court a petition for certiorari and PAMBANSA BLG. 340 IS THE PROPER GROUND the properties sought to be condemned and enjoined the respondent judge from
prohibition docketed as G.R. No. L-51078 and directed against the order of the FOR THE DISMISSAL OF THE EXPROPRIATION taking any further action in the case except to dismiss the same.
lower court dated June 14, 1979 praying that the respondent be commanded to CASE. (PROPERLY PUT, WHETHER OR NOT THE
desist from further proceeding in the expropriation action and from implementing LOWER COURT COMMITTED GRAVE ABUSE OF
Said decision having become final no action was taken by the lower court on the
said order. On October 30, 1980 this Court rendered a decision, the dispositive DIS CRETION IN DISMISSING CIVIL CASE NO. 7001-
said directive of this Court to dismiss the case. Subsequently B.P. Blg. 340 was
part of which reads as follows: P UPON JUDICIAL NOTICE OF B.P. BLG. 340).
enacted by the Batasang Pambansa on February 17, 1983. On the basis of said
law petitioner filed a motion to dismiss the case before the trial court and this
WHEREFORE, the petition for certiorari and prohibition II was granted.
is hereby granted. The order of June 14, 1979
authorizing the Republic of the Philippines to take c
WHETHER OR NOT THE DPWH'S "CHOICE" OF On appeal by de Knecht to the Court of Appeals the appellate court held that the
enter upon the possession of the properties sought to
LAND TO BE EXPROPRIATED IS STILL AN ISSUE decision of the Supreme Court having become final, the petitioner's right as
be condemned is set aside and the respondent Judge
UNDER THE CIRCUMSTANCES, SAID "CHOICE" determined therein should no longer be disturbed and that the same has
is permanently enjoined from taking any further action
HAVING BEEN SUPPLANTED BY THE become the law of the case between the parties involved. Thus, the appellate
on Civil Case No. 7001-P, entitled 'Republic of the
LEGISLATURE'S CHOICE. court set aside the questioned order of the trial court and issued another order
Philippines vs. Concepcion Cabarrus Vda. de Santos,
dismissing the expropriation proceedings before the lower court pursuant to the
et al.' except to dismiss said case. 1
ruling in De Knecht case.
III
On August 8, 1981 defendants Maria Del Carmen Roxas Vda. de Elizalde,
While it is true that said final judgment of this Court on the subject becomes the
Francisco Elizalde and Antonio Roxas moved to dismiss the expropriation action WHETHER OR NOT THE LAW OF THE CASE law of the case between the parties, it is equally true that the right of the
in compliance with the dispositive portion of the aforesaid decision of this Court THEORY SHOULD BE APPLIED TO THE CASE AT petitioner to take private properties for public use upon the payment of the just
which had become final and in order to avoid further damage to same BAR. 4 compensation is so provided in the Constitution and our laws. 7 Such
defendants who were denied possession of their properties. The Republic filed a
expropriation proceedings may be undertaken by the petitioner not only by
manifestation on September 7, 1981 stating, among others, that it had no
The petition is impressed with merit. There is no question that as early as 1977, voluntary negotiation with the land owners but also by taking appropriate court
objection to the said motion to dismiss as it was in accordance with the
pursuant to the Revised Administrative Code, the national government, through action or by legislation. 8
aforestated decision.
the Department of Public Works and Highways began work on what was to be
the westward extension of Epifanio de los Santos Avenue (EDSA) outfall (or When on February 17, 1983 the Batasang Pambansa passed B.P. Blg. 340
On September 2, 1983, the Republic filed a motion to dismiss said case due to outlet) of the Manila and suburbs flood control and drainage project and the expropriating the very properties subject of the present proceedings, and for the
the enactment of the Batas Pambansa Blg. 340 expropriating the same Estero Tripa de Gallina. These projects were aimed at: (1) easing traffic same purpose, it appears that it was based on supervening events that occurred
properties and for the same purpose. The lower court in an order of September congestion in the Baclaran and outlying areas; (2) controlling flood by the after the decision of this Court was rendered in De Knecht in 1980 justifying the
2, 1983 dismissed the case by reason of the enactment of the said law. The construction of the outlet for the Estero Tripa de Gallina (which drains the area expropriation through the Fernando Rein-Del Pan Streets.
motion for reconsideration thereof was denied in the order of the lower court of Marikina, Pasay, Manila and Paranaque); and (3) thus completing the Manila
dated December 18, 1986. Flood and Control and Drainage Project.
The social impact factor which persuaded the Court to consider this extension to
be arbitrary had disappeared. All residents in the area have been relocated and
De Knecht appealed from said order to the Court of Appeals wherein in due So the petitioner acquired the needed properties through negotiated purchase duly compensated. Eighty percent of the EDSA outfall and 30% of the EDSA
course a decision was rendered on December 28, 1988, 2 the dispositive part of starting with the lands from Taft Avenue up to Roxas Boulevard including the extension had been completed. Only private respondent remains as the solitary
which reads as follows: lands in Fernando Rein-Del Pan streets. It acquired through negotiated obstacle to this project that will solve not only the drainage and flood control
purchases about 80 to 85 percent of the lands involved in the project whose problem but also minimize the traffic bottleneck in the area.
PREMISES CONSIDERED, the order appealed from is owners did not raise any objection as to arbitrariness on the choice of the project
hereby SET ASIDE. As prayed for in the appellant's and of the route. It is only with respect to the remaining 10 to 15 percent along
the route that the petitioner cannot negotiate through a sales agreement with a The Solicitor General summarizing the situation said
brief another Order is hereby issued dismissing the
expropriation proceedings (Civil Case No. 51078) few land owners, including de Knecht whose holding is hardly 5% of the whole
before the lower court on the ground that the choice of route area. Thus, as above related on February 20, 1979 the petitioner filed the
The construction and completion of the Metro Manila
Fernando Rein-Del Pan Streets as the line through expropriation proceedings in the Court of First Instance.
Flood Control and Drainage Project and the EDSA
which the Epifanio de los Santos Avenue should be extension are essential to alleviate the worsening traffic
extended is arbitrary and should not receive judicial There is no question that in the decision of this Court dated October 30, 1980 problem in the Baclaran and Pasay City areas and the
approval. in De Knecht vs. Bautista, G.R. No. L-51078, this Court held that the "choice of perennial flood problems. Judicial notice may be taken
 that these problems bedevil life and property not only in WHEREFORE, the petition is hereby GRANTED and the questioned decision of circumstance in the case at bar that prevents application of this accepted
the areas directly affected but also in areas much the Court of Appeals dated December 28, 1988 and its resolution dated March doctrine.
beyond. Batas Pambansa Blg. 340 was enacted to 9, 1989 are hereby REVERSED and SET ASIDE and the order of Branch III of
hasten 'The Project' and thus solve these problems, the then Court of First Instance of Rizal in Pasay City in Civil Case No. 7001-P
The proven fact is that four days after the private respondent received the
and its implementation has resulted so far in an dated September 2, 1983 is hereby reinstated without pronouncement as to
petitioner's notice of assessment, it filed its letter of protest. This was apparently
80% completion of the EDSA outfall and a 30% costs.
not taken into account before the warrant of distraint and levy was issued;
completion of the EDSA extension, all part of 'The
indeed, such protest could not be located in the office of the petitioner. It was
Project'.
G.R. No. L-28896 February 17, 1988 only after Atty. Guevara gave the BIR a copy of the protest that it was, if at all,
considered by the tax authorities. During the intervening period, the warrant was
This instant case stands in the way of the final solution premature and could therefore not be served.
COMMISSIONER OF INTERNAL REVENUE, petitioner,
of the above-mentioned problems, solely because the
vs.
single piece of property I occupied' by De Knecht,
ALGUE, INC., and THE COURT OF TAX APPEALS, respondents. As the Court of Tax Appeals correctly noted," 11 the protest filed by private
although already expropriated under B.P. Blg. 340, is
respondent was not pro forma and was based on strong legal considerations. It
the only parcel of land where Government engineers
thus had the effect of suspending on January 18, 1965, when it was filed, the
could not enter due to the 'armed' resistance offered by CRUZ, J.:
reglementary period which started on the date the assessment was received,
De Knecht, guarded and surrounded as the lot is
viz., January 14, 1965. The period started running again only on April 7, 1965,
perennially by De Knecht's fierce private security
Taxes are the lifeblood of the government and so should be collected without when the private respondent was definitely informed of the implied rejection of
guards. It may thus be said that De Knecht, without any
unnecessary hindrance On the other hand, such collection should be made in the said protest and the warrant was finally served on it. Hence, when the
more legal interest in the land, single-handedly stands
accordance with law as any arbitrariness will negate the very reason for appeal was filed on April 23, 1965, only 20 days of the reglementary period had
in the way of the completion of 'The Project' essential to
government itself. It is therefore necessary to reconcile the apparently conflicting been consumed.
the progress of Metro Manila and surrounding areas.
Without the property she persists in occupying and interests of the authorities and the taxpayers so that the real purpose of taxation,
without any bloodletting, the EDSA outfall construction which is the promotion of the common good, may be achieved.
Now for the substantive question.
on both sides of the said property cannot be joined
together,and the flood waters of Pasay, Paraaque and The main issue in this case is whether or not the Collector of Internal Revenue
Marikina which flow through the Estero Tripa de The petitioner contends that the claimed deduction of P75,000.00 was properly
correctly disallowed the P75,000.00 deduction claimed by private respondent
Gallina will continue to have no way or outlet that could disallowed because it was not an ordinary reasonable or necessary business
Algue as legitimate business expenses in its income tax returns. The corollary
drain into Manila Bay. Without said property, the EDSA expense. The Court of Tax Appeals had seen it differently. Agreeing with Algue,
issue is whether or not the appeal of the private respondent from the decision of
extension, already 30% completed, can in no way be it held that the said amount had been legitimately paid by the private respondent
the Collector of Internal Revenue was made on time and in accordance with law.
finished, and traffic will continue to clog and jam the for actual services rendered. The payment was in the form of promotional fees.
intersections of EDSA and Taft Avenue in Baclaran and These were collected by the Payees for their work in the creation of the
pile up along the airport roads. We deal first with the procedural question. Vegetable Oil Investment Corporation of the Philippines and its subsequent
purchase of the properties of the Philippine Sugar Estate Development
Company.
In sum, even in the face of BP340, De Knecht holds the The record shows that on January 14, 1965, the private respondent, a domestic
Legislative sovereign will and choice inutile. 9 corporation engaged in engineering, construction and other allied activities,
received a letter from the petitioner assessing it in the total amount of Parenthetically, it may be observed that the petitioner had Originally claimed
P83,183.85 as delinquency income taxes for the years 1958 and 1959.1 On these promotional fees to be personal holding company income 12 but later
The Court finds justification in proceeding with the said expropriation January 18, 1965, Algue flied a letter of protest or request for reconsideration, conformed to the decision of the respondent court rejecting this assertion.13 In
proceedings through the Fernando Rein-Del Pan streets from ESDA to Roxas which letter was stamp received on the same day in the office of the fact, as the said court found, the amount was earned through the joint efforts of
Boulevard due to the aforestated supervening events after the rendition of the petitioner. 2 On March 12, 1965, a warrant of distraint and levy was presented to the persons among whom it was distributed It has been established that the
decision of this Court in De Knecht. the private respondent, through its counsel, Atty. Alberto Guevara, Jr., who Philippine Sugar Estate Development Company had earlier appointed Algue as
refused to receive it on the ground of the pending protest. 3 A search of the its agent, authorizing it to sell its land, factories and oil manufacturing process.
protest in the dockets of the case proved fruitless. Atty. Guevara produced his Pursuant to such authority, Alberto Guevara, Jr., Eduardo Guevara, Isabel
B.P. Blg. 340 therefore effectively superseded the aforesaid final and executory
file copy and gave a photostat to BIR agent Ramon Reyes, who deferred service Guevara, Edith, O'Farell, and Pablo Sanchez, worked for the formation of the
decision of this Court. And the trial court committed no grave abuse of discretion
of the warrant. 4 On April 7, 1965, Atty. Guevara was finally informed that the Vegetable Oil Investment Corporation, inducing other persons to invest in
in dismissing the case pending before it on the ground of the enactment of B.P.
BIR was not taking any action on the protest and it was only then that he it.14 Ultimately, after its incorporation largely through the promotion of the said
Blg. 340.
accepted the warrant of distraint and levy earlier sought to be served.5 Sixteen persons, this new corporation purchased the PSEDC properties.15 For this sale,
days later, on April 23, 1965, Algue filed a petition for review of the decision of Algue received as agent a commission of P126,000.00, and it was from this
Moreover, the said decision, is no obstacle to the legislative arm of the the Commissioner of Internal Revenue with the Court of Tax Appeals.6 commission that the P75,000.00 promotional fees were paid to the aforenamed
Government in thereafter (over two years later in this case) making its own individuals.16
independent assessment of the circumstances then prevailing as to the propriety
of undertaking the expropriation of the properties in question and thereafter by The above chronology shows that the petition was filed seasonably. According
to Rep. Act No. 1125, the appeal may be made within thirty days after receipt of There is no dispute that the payees duly reported their respective shares of the
enacting the corresponding legislation as it did in this case. The Court agrees in
the decision or ruling challenged.7 It is true that as a rule the warrant of distraint fees in their income tax returns and paid the corresponding taxes thereon.17 The
the wisdom and necessity of enacting B.P. Blg. 340. Thus the anterior decision
and levy is "proof of the finality of the assessment" 8 and renders hopeless a Court of Tax Appeals also found, after examining the evidence, that no
of this Court must yield to this subsequent legislative flat.
request for reconsideration," 9 being "tantamount to an outright denial thereof distribution of dividends was involved.18
and makes the said request deemed rejected." 10 But there is a special
The petitioner claims that these payments are fictitious because most of the purely for service. This test and its practical application ACCORDINGLY, the appealed decision of the Court of Tax Appeals is
payees are members of the same family in control of Algue. It is argued that no may be further stated and illustrated as follows: AFFIRMED in toto, without costs.
indication was made as to how such payments were made, whether by check or
in cash, and there is not enough substantiation of such payments. In short, the
Any amount paid in the form of compensation, but not G.R. No. 79307 August 29, 1989
petitioner suggests a tax dodge, an attempt to evade a legitimate assessment by
in fact as the purchase price of services, is not
involving an imaginary deduction.
deductible. (a) An ostensible salary paid by a
COMMISSIONER OF CUSTOMS, petitioner,
corporation may be a distribution of a dividend on
vs.
We find that these suspicions were adequately met by the private respondent stock. This is likely to occur in the case of a corporation
THE HON. RAMON P. MAKASIAR, RTC Judge, Branch 35, Manila and THE
when its President, Alberto Guevara, and the accountant, Cecilia V. de Jesus, having few stockholders, Practically all of whom draw
DISTILLERS CO. LTD. OF ENGLAND, respondents.
testified that the payments were not made in one lump sum but periodically and salaries. If in such a case the salaries are in excess of
in different amounts as each payee's need arose. 19 It should be remembered those ordinarily paid for similar services, and the
that this was a family corporation where strict business procedures were not excessive payment correspond or bear a close Quasha, Asperilla, Ancheta, Pena & Nolasco for private respondent.
applied and immediate issuance of receipts was not required. Even so, at the relationship to the stockholdings of the officers of
end of the year, when the books were to be closed, each payee made an employees, it would seem likely that the salaries are
accounting of all of the fees received by him or her, to make up the total of not paid wholly for services rendered, but the excessive
P75,000.00. 20 Admittedly, everything seemed to be informal. This arrangement payments are a distribution of earnings upon the stock.
was understandable, however, in view of the close relationship among the . . . (Promulgated Feb. 11, 1931, 30 O.G. No. 18, 325.) CORTES, J.:
persons in the family corporation.
It is worth noting at this point that most of the payees were not in the regular Petitioner Commissioner of Customs seeks the reversal of respondent judge's
We agree with the respondent court that the amount of the promotional fees was employ of Algue nor were they its controlling stockholders. 23 decision dated 20 July 1987 in Civil Case No. 82-12821 entitled "The Distillers
not excessive. The total commission paid by the Philippine Sugar Estate Co. Ltd., of England v. Victorio Francisco, et al.," the dispositive portion of which
Development Co. to the private respondent was P125,000.00. 21After deducting reads as follows:
The Solicitor General is correct when he says that the burden is on the taxpayer
the said fees, Algue still had a balance of P50,000.00 as clear profit from the
to prove the validity of the claimed deduction. In the present case, however, we
transaction. The amount of P75,000.00 was 60% of the total commission. This
find that the onus has been discharged satisfactorily. The private respondent WHEREFORE, having been issued by the Collector of
was a reasonable proportion, considering that it was the payees who did
has proved that the payment of the fees was necessary and reasonable in the Customs in excess of his jurisdiction the disputed
practically everything, from the formation of the Vegetable Oil Investment
light of the efforts exerted by the payees in inducing investors and prominent Warrant of Seizure and Detention dated January 2,
Corporation to the actual purchase by it of the Sugar Estate properties. This
businessmen to venture in an experimental enterprise and involve themselves in 1979, in Seizure Identification No. 2-79 of the Bureau of
finding of the respondent court is in accord with the following provision of the
a new business requiring millions of pesos. This was no mean feat and should Customs, as well as all the proceedings taken thereon
Tax Code:
be, as it was, sufficiently recompensed. are declared NULL and VOID, and the writ of
prohibition prayed for is GRANTED. The public
SEC. 30. Deductions from gross income.--In computing respondent is ordered to REFRAIN and DESIST from
It is said that taxes are what we pay for civilization society. Without taxes, the
net income there shall be allowed as deductions conducting any proceedings for the seizure and
government would be paralyzed for lack of the motive power to activate and
operate it. Hence, despite the natural reluctance to surrender part of one's hard forfeiture of the articles in question until after the Court
(a) Expenses: earned income to the taxing authorities, every person who is able to must having taken cognizance and legal custody thereof has
contribute his share in the running of the government. The government for its rendered its final judgment in the criminal cases which
part, is expected to respond in the form of tangible and intangible benefits involve the same articles. Without costs.
(1) In general.--All the ordinary and necessary
intended to improve the lives of the people and enhance their moral and material
expenses paid or incurred during the taxable year in
values. This symbiotic relationship is the rationale of taxation and should dispel SO ORDERED. [RTC Decision, p. 7; Rollo, p. 26].
carrying on any trade or business, including a
the erroneous notion that it is an arbitrary method of exaction by those in the
reasonable allowance for salaries or other
seat of power.
compensation for personal services actually rendered; The undisputed acts are as follows:
... 22
But even as we concede the inevitability and indispensability of taxation, it is a
requirement in all democratic regimes that it be exercised reasonably and in On 7 December 1978, the then Court of First Instance of Manila (herein referred
and Revenue Regulations No. 2, Section 70 (1), reading as follows: to as CFI-MANILA) issued Search and Seizure Warrants in Criminal Case Nos.
accordance with the prescribed procedure. If it is not, then the taxpayer has a
right to complain and the courts will then come to his succor. For all the 8602 and 8603 entitled "People of the Philippines vs. Howard J. Sosis,, et al.,"
SEC. 70. Compensation for personal services.--Among awesome power of the tax collector, he may still be stopped in his tracks if the for violation of Section 11 (a) and/or 11(e) of Republic Act No. 3720, * and
the ordinary and necessary expenses paid or incurred taxpayer can demonstrate, as it has here, that the law has not been observed. violation of Article 188 of the Revised Penal Code (captioned as "Substituting
in carrying on any trade or business may be included a and altering trademarks, tradenames, or service marks"), respectively, and
reasonable allowance for salaries or other ordering the seizure of the following:
We hold that the appeal of the private respondent from the decision of the
compensation for personal services actually rendered.
petitioner was filed on time with the respondent court in accordance with Rep.
The test of deductibility in the case of compensation a) Materials:
Act No. 1125. And we also find that the claimed deduction by the private
payments is whether they are reasonable and are, in
respondent was permitted under the Internal Revenue Code and should
fact, payments purely for service. This test and
therefore not have been disallowed by the petitioner. All whisky, bottles, labels, caps, cartons, boxes,
deductibility in the case of compensation payments is
whether they are reasonable and are, in fact, payments machinery equipment or other materials used or
intended to be used, or suitable for use, in connection
 with counter-feiting or imitation of Johnnie Walker Sec. 2530. Property subject to forfeiture under Tariff The present controversy arose when private respondent, on 11 June 1982,
Scotch Whisky (Emphasis supplied) and Customs law: objected to the continuation by the Collector of Customs of the seizure
proceedings claiming, among others, that these proceedings would hamper or
even jeopardize the preliminary investigation being conducted by the fiscal. The
b) Documents: xxx
Collector of Customs ignored the objections.

xxx (f) Any article the importation or exportation of which is

In order to stop and enjoin the Hearing Officer of the Bureau of Customs from
effected or attempted contrary to law, or any article of
taking further action in the seizure proceedings of the subject goods, private
prohibited importation or exportation, and all other
under the control and possession of: respondent on 24 September 1982 filed a petition for prohibition with preliminary
articles which, in the opinion of the collector have been
injunction and/or temporary restraining order, docketed as Civil Case No. 82-
used, are or were entered to be used as instruments in
12721. It must be noted at this juncture that the petition was heard not before
1. Howard J. Sosis the importation or exportation of the former.
the CFI-MANILA which originally issued the search warrants, but before another
sala, that of respondent judge of the Regional Trial Court, Branch 35, Manila.
2. George Morrison Lonie xxx
Respondent judge issued a temporary restraining order on 29 September 1982.
3. Hercules Bottling Co. On 29 January 1979, the CFI-MANILA issued an order authorizing the transfer Subsequently, a writ for preliminary injunction was issued as well. Petitioner filed
and delivery of the seized articles to the customs warehouse located at South an answer on 12 November 1982. On 20 July 1987, respondent judge rendered
Harbor, Port of Manila, subject to the following conditions: a decision holding that the Collector of Customs acted in excess of its
4. Lauro Villanueva jurisdiction in issuing the warrant of seizure and detention considering that the
subject goods had already come under the legal custody of the CFI-MANILA.
1. The Commissioner of Customs is willing to have Hence, petitioner represented by the Solicitor General, filed the instant petition
5. Vicente Velasco custody of the same and guarantees their safekeeping on 11 August 1987.
at all times in the same quantity, quality, manner and
6. Manuel Esteban condition when the articles shall be turned over to and
received by the Bureau of Customs in custodia legis, In the meantime, Howard Sosis and company were charged for violation of
subject to the further orders from the Court; Chapter VI, Sec. 11(a) & (e) of Republic Act 3720 in Criminal Case No. 88-
7. Eugenio Mauricio 63157 and for violation of Article 188 of the Revised Penal Code in Criminal
Case No. 88-63156 before the Regional Trial Court and the Metropolitan Trial
2. No article shall be transferred without the presence Court of Manila, respectively [Rollo, p. 83].
[Rollo, pp. 106-107]. of a representative of the applicant, the defendants, the
Commissioner of Customs and the Court; these
On 8 December 1978, a composite team from the Ministry of Finance Bureau of representatives to secure the necessary escort as In his petition, the Commissioner of Customs assigns as errors the following:
Investigation and Intelligence (herein referred to as BII), the Bureau of Customs guarantee that nothing will happen during the transfer
and the Integrated National Police enforced the search and seizure warrants, of the articles.
I. RESPONDENT JUDGE ERRED IN ISSUING A
and seized and confiscated the following articles, among others, found in the TEMPORARY RESTRAINING ORDER AND
premises of the Hercules Bottling Co., Inc. (herein referred to as HERCULES) at 3. The Commissioner of Customs to issue the proper SUBSEQUENTLY A WRIT OF INJUNCTION IN CIVIL
Isla de Provisor, Paco, Manila: and necessary receipt for each and every article CASE NO. 82-12721 NOTWITHSTANDING THE FACT
transferred to and received by the Bureau of Customs THAT PRIVATE RESPONDENT, THE DISTILLERS
Six (6) Tanks of Scotch Whisky; 417 cartons each pursuant to this order [Rollo, p. 22]. CO., LTD., OF ENGLAND HAS NO VALID CAUSE OF
containing I doz. bottles of "Johnnie Walker Black Label ACTION AGAINST HEREIN PETITIONER;
Whisky"; 109 empty bottles; Empty Cartons of "Johnnie Meanwhile, the validity and constitutionality of the issuance and service of the
Walker Black Label Scotch Whisky" number 900-2044 search and seizure warrants issued by the CFI- MANILA were contested in and II. RESPONDENT RTC JUDGE GRAVELY ERRED IN
empty cartons. [Rollo, p. 21]. upheld by the Court of Appeals in CA-G.R. No. SP-09153-R entitled "Hercules TAKING COGNIZANCE OF THE PETITION AND IN
Bottling Co. Inc., et al., v. Victoriano Savellano, et al." HERCULES filed a PROCEEDING TO HEAR AND RENDER A DECISION
The articles seized remained in the premises of HERCULES guarded and petition for certiorari in the Supreme Court but in a resolution dated 26 IN CIVIL CASE NO. 82-12721 NOTWITHSTANDING
secured by BII personnel. November 1986 in G.R. No. 55061 captioned as Hercules Bottling Co., Inc. v. THE FACT THAT THE TRIAL COURT HAS NO
The Court of Appeals, the Court dismissed the petition. JURISDICTION OVER THE CASE [Rollo, pp. 10-11].
On 2 January 1979, the Collector of Customs for the Port of Manila, after being
informed of the seizure of the subject goods and upon verification that the same Consequently, the City Fiscal of Manila proceeded with the preliminary Petitioner contends that the authority of the Bureau of Customs over seizure and
were imported contrary to law, issued a warrant of seizure and detention, in investigation of the criminal cases, where private respondent, The Distillers Co. forfeiture cases is beyond the judicial interference of the Regional Trial Court,
Seizure Identification No. 2-79, and ordered the immediate seizure and turnover Ltd. of England, claiming to be the owner and exclusive manufacturer of Johnnie even in the form of certiorari, prohibition or mandamus which are really attempts
of the seized items to its Auction and Cargo Disposal Division at the Port of Walker Scotch Whiskey was the private complainant [Rollo, p. 61], With the to review the Commissioner's actions [Rollo, p. 98]. Petitioner argues that
Manila. Seizure and forfeiture proceedings were then initiated against the dismissal of HERCULES' petition, the Bureau of Customs also resumed hearing judicial recourse from the decision of the Bureau of Customs on seizure and
above-enumerated articles for alleged violation of Section 2530 (f) of the Tariff the seizure and forfeiture proceedings over the said articles. forfeiture cases can only be sought in the Court of Tax Appeals and eventually
and Customs Code, in relation to Republic Act 3720, to wit: in this Court.
Private respondent however contends that while the law may have vested which are the lifeblood that enables the government to carry out functions it has proceedings [See Dodge v. US, 71 L. ed. 392 (1926); US v. Mack, 79 L. ed.
exclusive jurisdiction in the Bureau of Customs over forfeiture and seizure been instituted to perform. 1559 (1935) citing The Ann, 3 L. ed. 734 (1815); Fettig Canning Co. v. Steckler,
cases, in this case respondent judge had jurisdiction to enjoin the Bureau of 188 F. 2d 715 (1951) citing Strong v. US, 46 F. 2d 257, 79 ALR 150 (1931)].
Customs from continuing with its seizure and forfeiture proceedings since the
Notwithstanding these considerations, respondent judge entertained private
articles here were already in custodia legis, by virtue of the search warrants
respondent's petition for prohibition holding that the seizure and forfeiture Therefore, contrary to the import of respondent judge's decision, the Collector of
issued by the CFI-MANILA. Private respondent contends that respondent judge
proceedings instituted in the Bureau of Customs was null and void because the Customs was not precluded by law or legal principle from assuming jurisdiction
may properly take cognizance of the instant case since unlike the cases cited by
subject goods were earlier seized by virtue of the warrants issued by the CFI- over the subject goods. No legal infirmity attended the seizure and forfeiture
petitioner, the action for prohibition was brought not to claim ownership or
MANILA in Criminal Cases Nos. 8602 and 8603. proceedings over the subject goods.
possession over the goods but only to preserve the same and to prevent the
Bureau of Customs from doing anything prejudicial to the successful prosecution
of the criminal cases [Rollo, p. 123]. This holding is erroneous. The Court must emphasize at this point that the instant case does not involve a
conflict of jurisdictions. Proceedings before the regular courts for criminal
prosecutions against Howard Sosis, et al., and seizure and forfeiture
The issue thus presented is whether or not respondent judge may enjoin the Even if it be assumed that a taint of irregularity may be imputed to the exercise
proceedings for the subject goods conducted by the Bureau of Customs may be
Collector of Customs from continuing with its seizure and forfeiture proceedings by the Collector of Customs of his jurisdiction to institute seizure and forfeiture
maintained simultaneously and independently of each other. For the nature of
over goods earlier seized by virtue of search warrants issued by the CFI- proceedings over the subject goods because he had accepted custody of the
the two proceedings are entirely different such that a resolution in one is not
MANILA. same under conditions specified in the CFI-Manila order dated January 29,
decisive of the issue in the other. The latter, which is administrative and civil in
1979, it would not mean that respondent judge was correspondingly vested with
nature, is directed against the res or articles imported and entails a
the jurisdiction to interfere with such proceedings (See Ponce Enrile v.
The instant petition is impressed with merit. determination of the legality of its importation. The former is directed against
Vinuya supra]. It bears repeating that law and settled jurisprudence clearly
those persons who may be held liable for violating the penal laws in connection
deprive the regional trial courts of jurisdiction to enjoin the Collector of Customs
with the importation [See Diosamito v. Balanque, G.R. No. L-30734, July
This Court finds that respondent-judge has failed to adhere to the prevailing rule from exercising his exclusive authority to order seizure and forfeiture
28,1969,28 SCRA 836; People v. CFI, G.R. No. L-41686, November 17, 1980,
which denies him jurisdiction to enjoin the Bureau of Customs from taking further proceedings over imported goods.
101 SCRA 86].
action in the seizure and forfeiture proceedings over the subject goods.
Moreover, there is no legal basis for respondent judge's conclusion that the
Private respondent, however, argues that conflict may arise regarding the
Jurisprudence is replete with cases which have held that regional trial courts are Collector of Customs is deprived of his jurisdiction to issue the assailed warrant
disposition of the subject goods if the proceedings before the Collector of
devoid of any competence to pass upon the validity or regularity of seizure and of seizure and detention, and to institute seizure and forfeiture proceedings for
Customs and the regular courts were allowed to proceed simultaneously. Private
forfeiture proceedings conducted in the Bureau of Customs, and to enjoin, or the subject goods simply because the same were first taken in custodia legis.
respondent contends that in view of the nature of the seizure and forfeiture
otherwise interfere with, these proceedings. The Collector of Customs sitting in
proceedings, a judgment in favor of HERCULES will result in the release of the
seizure and forfeiture proceedings has exclusive jurisdiction to hear and
Undeniably, the subject goods have been brought under the legal control of the subject goods to the claimants thereof, while an unfavorable decision will entail
determine all questions touching on the seizure and forfeiture of dutiable goods.
CFI-MANILA by virtue of its search and seizure warrants and are, therefore, their destruction or sale. It is asserted that either of the two outcomes will
The regional trial courts are precluded from assuming cognizance over such
in custodia legis. But this fact merely serves to deprive any other court or hamper or even jeopardize the ongoing criminal prosecutions, said goods
matters even through petitions of certiorari, prohibition or mandamus
tribunal, except one having supervisory control or superior jurisdiction in the comprising the substantial part of the evidence for the People of the Philippines.
[See General Travel Service v. David, G.R. No. L-19259, September 23, 1966,
premises, of the right to divest the CFI-MANILA of its custody and control of the
18 SCRA 59; Pacis v. Averia, G.R. No. L-22526, November 29, 1966, 18 SCRA
said property [Collector of Internal Revenue v. Flores Vda. de Codinera G.R. No.
907; De Joya v. Lantin, G.R. No. L-24037, April 27, 1967, 19 SCRA 893; Ponce Proper adherence by both tribunals to the rules of comity as defined in the
L-9675, September 28, 1957], or to interfere with and change its possession
Enrile v. Vinuya G.R. No. L-29043, January 30, 1971, 37 SCRA 381; Collector of leading case of The Government of the Philippines v. Gale [24 Phil. 95 (1931)]
without its consent [National Power Corporation v. De Veyra, G.R. No. L-15763,
Customs v. Torres, G.R. No. L-22977, May 31, 1972, 45 SCRA 272; Pacis v. will forestall the conflict feared. In that case the Court had established the rule
December 22, 1961, 3 SCRA 646; De Leon v. Salvador, G.R. Nos. L-30871 & L-
Geronimo, G.R. No. L-24068, April 23, 1974,56 SCRA 583; Commissioner of that where the preservation and safekeeping of the subject matter of an action is
31603, December 28, 1970, 36 SCRA 567; Vlasons Enterprises Corporation v.
Customs v. Navarro, G.R. No. L-33146, May 31, 1977, 77 SCRA 264; Republic demanded, as it is made to appear that these articles may prove to be of vital
Court of Appeals, G.R. No. 61688, October 28, 1987, 155 SCRA 186].
v. Bocar, G.R. No. L-35260, September 4, 1979,93 SCRA 78; De la Fuente v. importance as exhibits in the prosecution of other charges in another
De Veyra, G.R. No. L-35385, January 31, 1983, 120 SCRA 451]. proceeding, the rules for the orderly course of proceedings in courts and
In the instant case, the CFI-Manila was not divested of its jurisdiction over the tribunals forbid the disposition or destruction thereof in one action which would
subject goods, nor were its processes interfered with by the Collector of prejudice the other, and vice versa [Id. at pp. 98-99].
It is likewise well-settled that the provisions of the Tariff and Customs Code and
Customs. It, in fact, authorized the transfer and delivery of the subject goods
that of Republic Act No. 1125, as amended ** specify the proper fora for the
from the premises of HERCULES to the Bureau of Customs warehouse/bodega
ventilation of any legal objections or issues raised concerning these The State in the instant case must be given reasonable opportunity to present its
at the South Harbor, Port of Manila thereby entrusting the Bureau of Customs
proceedings. Actions of the Collector of Customs are appealable to the cases for the proper enforcement of the applicable provisions of the Revised
with the actual possession and control of the same.
Commissioner of Customs, whose decisions, in turn, are subject to the exclusive Penal Code, Republic Act No. 3720, and the Tariff and Customs Code, and the
appellate jurisdiction of the Court of Tax Appeals. Thereafter, an appeal lies to prosecution of the violators thereof. It follows then that the execution of any final
this Court through the appropriate petition for review by writ of certiorari. On the other hand, since the Collector of Customs herein had actual possession decision in the seizure and forfeiture case before the Bureau of Customs,
Undeniably, regional trial courts do not share these review powers. and control over the subject goods, his jurisdiction over the goods was secured whether it requires the destruction, sale or the release of the subject goods,
for the purpose of instituting seizure and forfeiture proceedings to determine should not frustrate the prosecution's task of duly presenting and offering its
whether or not the same were imported into the country contrary to law evidence in Criminal Cases Nos. 88-63156 and 88-63157.
The above rule is anchored upon the policy of placing no unnecessary
[See Papa v. Mago, G.R. No. L-27360, February 28, 1968, 22 SCRA 857]. This
hindrance on the government's drive not only to prevent smuggling and other
is consistent with the principle that the basic operative fact for the institution and
frauds upon customs, but also, and more importantly, to render effective and It is apropos to note that for evidentiary purposes, it would not be necessary to
perfection of proceedings in rem like the seizure and forfeiture proceedings
efficient the collection of import and export duties due the state. For tariff and present each and every item of the goods in question before the courts trying
pursuant to the Tariff and Customs Code, is the actual or constructive
customs duties are taxes constituting a significant portion of the public revenue the criminal cases. Thus, a representative quantity of the goods, as may be
possession of the res by the tribunal empowered by law to conduct the
agreed upon by the authorized customs officials and fiscals prosecuting the A site for the new building was selected on Calle Concepcion, Ermita, and the The purposes of this association shall be exclusively religious,
criminal cases, shall be set aside as evidence to be presented in the above building contract was let on the 8th of January following. The cornerstone was charitable and educational, in developing the Christian character
criminal cases and retained in custodia legis until final judgment is secured in laid with appropriate ceremonies on July 10, 1908, and the building was formally and usefulness of its members and in improving the spiritual,
these cases. The rest of the goods may be disposed of in accordance with the dedicated on October 20, 1909. mental, social and physical condition of young men.
final decision rendered in the seizure and forfeiture proceedings pursuant to the
Tariff and Customs Code.
The building is composed of three parts. The main structure, located in the Speaking generally, the association claims exemption from taxation on the
center, is three stories high and includes a reception hall, social hall and game ground that it is a religious, charitable and educational institution combined. That
WHEREFORE, in view of the foregoing, the respondent judge's decision dated rooms, lecture room, library, reading room and rooming apartments. The small it has an educational department is not denied. It is undisputed that the aim of
20 July 1987 is REVERSED. The seizure and forfeiture proceedings involving building lying to the left of the principal structure, as one faces the front from this department is to furnish, at much less than cost, instruction in subjects that
the goods in question before the Bureau of Customs may proceed subject to the Called Concepcion, is the kitchen and servant's quarters. The large wing to the will greatly increase the mental efficiency and wage-earning capacity of young
above pronouncements relative to the setting aside of so much of the goods as right is known as the athletic building, where the bowling alleys, swimming pool, men, prepare them in special lines of business and offer them special lines of
may be required for evidentiary purposes. locker rooms and gymnasium-auditorium are located. The construction is of study. Attention is given to subjects included in civil service and consular
reinforced concrete with steel trussed roof covered with interlocking red tiles. examinations both here and in the United States. The courses offer commercial
subjects, as well as many others, and include stenography and typewriting,
G.R. No. L-7988 January 19, 1916
bookkeeping, arithmetic, English composition, foreign languages, including
The main or central portion of the building is 150 by 45 feet and stands 20
elementary and advanced Spanish and Tagalog, special courses in Philippine
meters back from the sidewalk. An iron canopy, suspended by brackets, projects
THE YOUNG MEN'S CHRISTIAN ASSOCIATION OF MANILA, plaintiff- history, public speaking, surveying, horticulture, tropical dependencies, and the
over the driveway which lies in front and shelters the main entrance. A wide
appellant, group of subjects required for entrance into the consular services, such as
arched doorway opens into a large reception room, on the left of which is the
vs. political economy, American and modern history. Courses are also offered in
public office and the secretary's private office, while on the right is the reading
THE COLLECTOR OF INTERNAL REVENUE, defendant-appellee. law, social, ethics, political economy and other subjects.
and writing rooms, and beyond that the library, each about 30 feet square. From
the reception room, on the left, a broad concrete stairway leads to the second
Haussermann, Cohn and Fisher for appellant. floor. The institution has also its religious department. In that department there are,
City Attorney Escaler for appellee. generally speaking, three main lines of work Bible study, religious meetings
and special classes. Course are offered in the Life of Christ and the Old
Passing out of the rear of the reception hall one enters upon a veranda some 15
Testament and in the larger social significance of the teachings of Jesus.
MORELAND, J.: feet in width running the full length of the main structure which looks out on the
Meetings are held on Sunday afternoons and several times during the week and
tennis courts and affords an excellent place for lounging, games and general
courses are offered in the study of missions, in the method of teaching the Bible
social purposes. To the left of the entrance hall and also opening upon the
The question at issue in this case is whether or not the building and grounds of and kindred subjects.
veranda are two large rooms of about the same size as those on the right of the
the Young Men's Christian Association of Manila are subject to taxation, under reception hall, the first being the billiard room and the other the restaurant. The
section 48 of the charter of the city of Manila quoted in the footnote [syllabus]. athletic building is entered from the rear veranda. It is a two story wing 68 by 85 The atmosphere of the Young Men's Christian Association is distinctly religious
feet. Passing from the veranda into the athletic hall one finds first, on the left, the and there is constant effort on the part of the officials to create a religious spirit;
The city of Manila, contending that the property is taxable, assessed it and toilet room, and beyond this, to the rear, the shower baths and locker rooms. and to that end there is continuous pressure to induce members to attend not
levied a tax thereon. It was paid under protest and this action begun to recover it The swimming pool is in the center of the athletic wing and is 60 by 19 feet in only the religious services of the association but also those of one or another of
on the ground that the property was exempt from taxation under the charter of size, lined with cement. To the right of the swimming pool are the bowling alleys. the churches of Manila. While the association is nonsectarian, it is preeminently
the city of Manila. The decision was for the city and the association appealed. A wide stairways leads to the second floor. Above the swimming-pool and religious; and the fundamental basis and groundwork is the Christian religion. All
bowling alley is a large room 50 by 85 feet which is the gymnasium and also the of the officials of the association are devoted Christians, members of a church,
auditorium when occasion requires. About one-third of the roof converting the and have dedicated their lives to the spread of the Christian principles and
The Young Men's Christian Association came to the Philippine with the army of athletic wing is used as a roof garden. building of Christian character.
occupation in 1898. When the large body of troops in Manila was removed to
permanent quarters at Fort William McKinley in February, 1905, an independent
association for Manila was organized under the direction of the Army and navy The second and third floors of the main building are given over almost wholly to The institution also has charitable features. It makes no profit on any of its
departments. Shortly after the organization of the association the directors made rooming apartments and baths. On the second floor over the entrance hall is a activities. The professors and instructors in all departments serve without pay
a formal request to the international committee of the Young Men's Christian members' parlor, from which a small balcony projects over the main entrance. and freely give of their time and ability to further the purposes of the institution.
Association in New York City for the assistance and cooperation of its foreign The remainder of the second floor and all to the third are composed of the living The chief secretary and his assistant receive no salary from the institution.
department. I response to this request Mr. John R. Mott, general secretary of the rooms. These apartments, of which there are 14 on the second and 20 on the Whatever they are paid comes from the United States. In estimating the cost of
foreign department, visited Manila in January 1907. After a conference with the third floor are approximately 18 by 14 feet each. They provide accommodations instruction in the various departments, or of the other things for which pay is
directors and interested friends it was decided to conduct a campaign to secure for 64 men. received, no account is taken of the interest on the money invested in the
funds for an adequate and permanent association. In the name of the grounds and building, of deterioration in value resulting from the lapse of time, or
international committee and friends in America Mr. Mott guaranteed P170,000 of the fact that the professors and instructors and certain officials receive no
The purposes of the association, as set forth in its charter and constitution, are:
for the construction of a building on condition that friend in the Philippines pay. We have, then, a building and grounds, professors and instructors, and
secure the site and adequately furnish the building. The campaign for funds was certain institution officials, furnished free of charge, and which makes no profit
begun here on February 15, 1907, and, by the 15th of March following, P83,000 To develop the Christian character and usefulness of its members, even on that basis. This, it would seem, would lend some color to the claim that
was subscribed, nearly one thousand different persons contributing. Thereupon to improve the spiritual, intellectual, social and physical condition of the association takes on some of the aspect of a charitable institution. While it
the Young Men's Christian Association of Manila was incorporated under the law young men, and to acquire, hold, mortgage, and dispose of the appears that the association is not exclusively religious or charitable or
of the Philippine Islands and received its character in June, 1907. necessary lands, buildings and personal property for the use of said educational, it is demonstrated that it is a happy combination of all three, giving
corporation exclusively for religious, charitable and educational to its membership the religious opportunities of the church, the educational
purposes, and not for investment or profit.
opportunities of the school and the blessings of charity where needed without There is no doubt about the correctness of the contention that an institution must The plaintiff filed this action for the recovery of the sum paid by to the
the recipient feeling or even knowing that he is the object of charity. devote itself exclusively to one or the other of the purpose mentioned in the defendants by way of land tax, alleging that the collection of this tax is illegal.
statute before it can be exempt from taxation; but the statute does not say that it The lower court absolved the defendants from the complaint in regard to the lot
must be devoted exclusively to any one of the purposes therein mentioned. It adjoining convent and declared that the tax collected on the lot, which formerly
It is claimed, however, that the institution is run as a business in that it keeps a
may be a combination of two or three or more of those purposes and still be was the cemetery and on the portion where the lower stood, was illegal. Both
lodging and boarding house. It may be admitted that there are 64 persons
entitled to exempt. The Young Men's Christian Association of Manila cannot be parties appealed from this judgment.
occupying rooms in the main building as lodgers or roomers and that they take
said to be an institution used exclusively for religious purposes, or an institution
their meals at the restaurant below. These facts, however, are far from
used exclusively for charitable purposes, or an institution devoted exclusively to
constituting a business in ordinary acceptation of the word. In the first place, no The exemption in favor of the convent in the payment of the land tax (sec. 344
educational purposes; but we believe it can be truthfully said that it is an
profit is realized by the association in any sense. In the second place, it is [c] Administrative Code) refers to the home of the parties who presides over the
institution used exclusively for all three purposes, and that, as such, it is entitled
undoubted, as it is undisputed, that the purpose of the association is not, church and who has to take care of himself in order to discharge his duties. In
to be exempted from taxation.
primarily, to obtain the money which comes from the lodgers and boarders. The therefore must, in the sense, include not only the land actually occupied by the
real purpose is to keep the membership continually within the sphere of church, but also the adjacent ground destined to the ordinary incidental uses of
influence of the institution; and thereby to prevent, as far as possible, the The judgment appealed from is reversed and the cause remanded with man. Except in large cities where the density of the population and the
opportunities which vice president to young men in foreign countries who lack instructions to enter a judgment against the city of Manila and in favor of the development of commerce require the use of larger tracts of land for buildings, a
home or other similar influences. We regard this feature of the institution not as Young Men's Christian Association of Manila in the sum of P6,221.35. Without vegetable garden belongs to a house and, in the case of a convent, it use is
a business or means of making money, but, rather, as a very efficient means of costs in this instance. So ordered. limited to the necessities of the priest, which comes under the
maintaining the influence of the institution over its membership. As we held in exemption.lawphi1.net
the case of the Columbia Club, religious and moral teachings do not always stop
with the spoken word; but to be effective in the highest degree they must follow
In regard to the lot which formerly was the cemetery, while it is no longer used
the young man through as many moments of his life as possible. To this end the
as such, neither is it used for commercial purposes and, according to the
feature of the Young Men's Christian Association to which objection is made
evidence, is now being used as a lodging house by the people who participate in
lends itself with great effect; and we are, accordingly, forced to regards this
religious festivities, which constitutes an incidental use in religious functions,
activity of the institution not as a business but as a method by which the
G.R. No. L-27588 December 31, 1927 which also comes within the exemption.
institution maintains its influence and conserves the benefits which its
organization was designed to confer.
THE ROMAN CATHOLIC BISHOP OF NUEVA SEGOVIA, as representative The judgment appealed from is reversed in all it parts and it is held that both lots
of the Roman Catholic Apostolic Church, plaintiff-appellant, are exempt from land tax and the defendants are ordered to refund to plaintiff
As we have seen in the description already given of the association building and
vs. whatever was paid as such tax, without any special pronouncement as to costs.
grounds, no part is occupied for any but institutional purposes. From end to end
THE PROVINCIAL BOARD OF ILOCOS NORTE, ET AL., defendants- So ordered.
the building and grounds are devoted exclusively to the purposes stated in the
constitution of the association. The library and reading rooms, the game and appellants.
lounging halls, the lecture rooms, the auditorium, the baths, pools, devices for G.R. No. L-39086 June 15, 1988
physical development, and the grounds, are all dedicated exclusively to the Vicente Llanes and Proceso Coloma for plaintiff-appellant.
objects and purpose of the association the building of Christian character and Provincial Fiscal Santos for defendant-appellants.
the creation of moral sentiment and fiber in men. It is the belief of the Young ABRA VALLEY COLLEGE, INC., represented by PEDRO V.
Men's Christian Association that a Christian man, a man of moral sentiment and BORGONIA, petitioner,
firm moral fiber, is yet a better man for being also all-round man one who is vs.
sound not only according to Christian principles and the highest moral HON. JUAN P. AQUINO, Judge, Court of First Instance, Abra; ARMIN M.
conceptions, but physically and mentally; whose body and mind act in harmony CARIAGA, Provincial Treasurer, Abra; GASPAR V. BOSQUE, Municipal
and within the limits which the rights of others set; who are gentleman in Treasurer, Bangued, Abra; HEIRS OF PATERNO MILLARE, respondents.
AVANCEA, J.:
physical and mental struggles, as well as in religious service; who have self-
respect and self-restraint; who can hit hard and still kindly; who can lose without
envy; who can congratulate his conqueror with sincerity; who can vie without The plaintiff, the Roman Catholic Apostolic Church, represented by the Bishop
temper, contend without malice, concede without regret; who can win and still be of Nueva Segovia, possesses and is the owner of a parcel of land in the
generous, in short, one who fights hard but square. To the production of such municipality of San Nicolas, Ilocos Norte, all four sides of which face on public PARAS, J.:
men the association lends all its efforts, husbands all its resources. streets. On the south side is a part of the churchyard, the convent and an
adjacent lot used for a vegetable garden, containing an area off 1,624 square This is a petition for review on certiorari of the decision * of the defunct Court of
meters, in which there is a stable and a well for the use of the convent. In the First Instance of Abra, Branch I, dated June 14, 1974, rendered in Civil Case
We are aware that there are many decisions holding that institutions of this center is the remainder of the churchyard and the church. On the north is an old
character are not exempt from taxation; but, on investigation, we find that the No. 656, entitled "Abra Valley Junior College, Inc., represented by Pedro V.
cemetery with two of its walls still standing, and a portion where formerly stood a Borgonia, plaintiff vs. Armin M. Cariaga as Provincial Treasurer of Abra, Gaspar
majority of them are based on statutes much narrower than the one under tower, the base of which still be seen, containing a total area of 8,955 square
consider and that in all probability the decisions would have been otherwise if V. Bosque as Municipal Treasurer of Bangued, Abra and Paterno Millare,
meters. defendants," the decretal portion of which reads:
the court had been passing on a statute similar to ours. On the other hand, there
are many decisions of the courts in the United States founded on statutes like
the Philippine statute which hold that associations of this class are exempt from As required by the defendants, on July 3, 1925 the plaintiff paid, under protest, IN VIEW OF ALL THE FOREGOING, the Court hereby
taxation. We have examined all of the decisions, both for and against, with care the land tax on the lot adjoining the convent and the lot which formerly was the declares:
and deliberation, and we are convinced that the weight of authority sustains the cemetery with the portion where the tower stood.
positions we take in this case.
 That the distraint seizure and sale by the Municipal On September 1, 1972 the respondent Paterno Millare filed his answer (Annex WHEREFORE, it is respectfully prayed of the
Treasurer of Bangued, Abra, the Provincial Treasurer of "5," ibid; Rollo, pp. 106-108). Honorable Court to consider and admit this stipulation
said province against the lot and building of the Abra of facts on the point agreed upon by the parties.
Valley Junior College, Inc., represented by Director
On October 12, 1972, with the aforesaid sale of the school premises at public
Pedro Borgonia located at Bangued, Abra, is valid;
auction, the respondent Judge, Hon. Juan P. Aquino of the Court of First Bangued, Abra, April 12, 1973.
Instance of Abra, Branch I, ordered (Annex "6," ibid; Rollo, pp. 109-110) the
That since the school is not exempt from paying taxes, respondents provincial and municipal treasurers to deliver to the Clerk of Court
Sgd. Agripino Brillantes
it should therefore pay all back taxes in the amount of the proceeds of the auction sale. Hence, on December 14, 1972, petitioner,
Typ AGRIPINO BRILLANTES
P5,140.31 and back taxes and penalties from the through Director Borgonia, deposited with the trial court the sum of P6,000.00
Attorney for Plaintiff
promulgation of this decision; evidenced by PNB Check No. 904369.

Sgd. Loreto Roldan

That the amount deposited by the plaintaff him the sum On April 12, 1973, the parties entered into a stipulation of facts adopted and
Typ LORETO ROLDAN
of P60,000.00 before the trial, be confiscated to apply embodied by the trial court in its questioned decision. Said Stipulations reads:
Provincial Fiscal
for the payment of the back taxes and for the
Counsel for Defendants
redemption of the property in question, if the amount is
STIPULATION OF FACTS Provincial Treasurer of
less than P6,000.00, the remainder must be returned to
Abra and the Municipal
the Director of Pedro Borgonia, who represents the
Treasurer of Bangued, Abra
plaintiff herein; COME NOW the parties, assisted by counsels, and to
this Honorable Court respectfully enter into the
following agreed stipulation of facts: Sgd. Demetrio V. Pre
That the deposit of the Municipal Treasurer in the
Typ. DEMETRIO V. PRE
amount of P6,000.00 also before the trial must be
Attorney for Defendant
returned to said Municipal Treasurer of Bangued, Abra; 1. That the personal circumstances of the parties as
Paterno Millare (Rollo, pp. 17-18)
stated in paragraph 1 of the complaint is admitted; but
the particular person of Mr. Armin M. Cariaga is to be
And finally the case is hereby ordered dismissed with
substituted, however, by anyone who is actually holding side from the Stipulation of Facts, the trial court among others, found the
costs against the plaintiff.
the position of Provincial Treasurer of the Province of following: (a) that the school is recognized by the government and is offering
Abra; Primary, High School and College Courses, and has a school population of
SO ORDERED. (Rollo, pp. 22-23) more than one thousand students all in all; (b) that it is located right in the heart
of the town of Bangued, a few meters from the plaza and about 120 meters from
2. That the plaintiff Abra Valley Junior College, Inc. is
the Court of First Instance building; (c) that the elementary pupils are housed in
Petitioner, an educational corporation and institution of higher learning duly the owner of the lot and buildings thereon located in
a two-storey building across the street; (d) that the high school and college
incorporated with the Securities and Exchange Commission in 1948, filed a Bangued, Abra under Original Certificate of Title No. 0-
students are housed in the main building; (e) that the Director with his family is
complaint (Annex "1" of Answer by the respondents Heirs of Paterno Millare; 83;
in the second floor of the main building; and (f) that the annual gross income of
Rollo, pp. 95-97) on July 10, 1972 in the court a quo to annul and declare void
the school reaches more than one hundred thousand pesos.
the "Notice of Seizure' and the "Notice of Sale" of its lot and building located at
3. That the defendant Gaspar V. Bosque, as Municipal
Bangued, Abra, for non-payment of real estate taxes and penalties amounting to
treasurer of Bangued, Abra caused to be served upon
P5,140.31. Said "Notice of Seizure" of the college lot and building covered by From all the foregoing, the only issue left for the Court to determine and as
the Abra Valley Junior College, Inc. a Notice of Seizure
Original Certificate of Title No. Q-83 duly registered in the name of petitioner, agreed by the parties, is whether or not the lot and building in question are used
on the property of said school under Original Certificate
plaintiff below, on July 6, 1972, by respondents Municipal Treasurer and exclusively for educational purposes. (Rollo, p. 20)
of Title No. 0-83 for the satisfaction of real property
Provincial Treasurer, defendants below, was issued for the satisfaction of the
taxes thereon, amounting to P5,140.31; the Notice of
said taxes thereon. The "Notice of Sale" was caused to be served upon the
Seizure being the one attached to the complaint as The succeeding Provincial Fiscal, Hon. Jose A. Solomon and his Assistant, Hon.
petitioner by the respondent treasurers on July 8, 1972 for the sale at public
Exhibit A; Eustaquio Z. Montero, filed a Memorandum for the Government on March 25,
auction of said college lot and building, which sale was held on the same date.
1974, and a Supplemental Memorandum on May 7, 1974, wherein they opined
Dr. Paterno Millare, then Municipal Mayor of Bangued, Abra, offered the highest
"that based on the evidence, the laws applicable, court decisions and
bid of P6,000.00 which was duly accepted. The certificate of sale was 4. That on June 8, 1972 the above properties of the
jurisprudence, the school building and school lot used for educational purposes
correspondingly issued to him. Abra Valley Junior College, Inc. was sold at public
of the Abra Valley College, Inc., are exempted from the payment of taxes."
auction for the satisfaction of the unpaid real property
(Annexes "B," "B-1" of Petition; Rollo, pp. 24-49; 44 and 49).
taxes thereon and the same was sold to defendant
On August 10, 1972, the respondent Paterno Millare (now deceased) filed
Paterno Millare who offered the highest bid of
through counstel a motion to dismiss the complaint.
P6,000.00 and a Certificate of Sale in his favor was Nonetheless, the trial court disagreed because of the use of the second floor by
issued by the defendant Municipal Treasurer. the Director of petitioner school for residential purposes. He thus ruled for the
On August 23, 1972, the respondent Provincial Treasurer and Municipal government and rendered the assailed decision.
Treasurer, through then Provincial Fiscal Loreto C. Roldan, filed their answer
5. That all other matters not particularly and specially
(Annex "2" of Answer by the respondents Heirs of Patemo Millare; Rollo, pp. 98-
covered by this stipulation of facts will be the subject of After having been granted by the trial court ten (10) days from August 6, 1974
100) to the complaint. This was followed by an amended answer (Annex
evidence by the parties. within which to perfect its appeal (Per Order dated August 6, 1974; Annex "G" of
"3," ibid, Rollo, pp. 101-103) on August 31, 1972.
Petition; Rollo, p. 57) petitioner instead availed of the instant petition for review
on certiorari with prayer for preliminary injunction before this Court, which used and rented by a commercial establishment, the Northern Marketing Moreover, the exemption in favor of property used
petition was filed on August 17, 1974 (Rollo, p.2). Corporation (See photograph attached as Annex "8" (Comment; Rollo, p. 90]). exclusively for charitable or educational purposes is
'not limited to property actually indispensable' therefor
(Cooley on Taxation, Vol. 2, p. 1430), but extends to
In the resolution dated August 16, 1974, this Court resolved to give DUE Due to its time frame, the constitutional provision which finds application in the
facilities which are incidental to and reasonably
COURSE to the petition (Rollo, p. 58). Respondents were required to answer case at bar is Section 22, paragraph 3, Article VI, of the then 1935 Philippine
necessary for the accomplishment of said purposes,
said petition (Rollo, p. 74). Constitution, which expressly grants exemption from realty taxes for
such as in the case of hospitals, "a school for training
"Cemeteries, churches and parsonages or convents appurtenant thereto, and all
nurses, a nurses' home, property use to provide
lands, buildings, and improvements used exclusively for religious, charitable or
Petitioner raised the following assignments of error: housing facilities for interns, resident doctors,
educational purposes ...
superintendents, and other members of the hospital
staff, and recreational facilities for student nurses,
I interns, and residents' (84 CJS 6621), such as "Athletic
Relative thereto, Section 54, paragraph c, Commonwealth Act No. 470 as
amended by Republic Act No. 409, otherwise known as the Assessment Law, fields" including "a firm used for the inmates of the
THE COURT A QUO ERRED IN SUSTAINING AS VALID THE SEIZURE AND provides: institution. (Cooley on Taxation, Vol. 2, p. 1430).
SALE OF THE COLLEGE LOT AND BUILDING USED FOR EDUCATIONAL
PURPOSES OF THE PETITIONER. The test of exemption from taxation is the use of the property for purposes
The following are exempted from real property tax
under the Assessment Law: mentioned in the Constitution (Apostolic Prefect v. City Treasurer of Baguio, 71
II Phil, 547 [1941]).
xxx xxx xxx
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND It must be stressed however, that while this Court allows a more liberal and non-
BUILDING OF THE PETITIONER ARE NOT USED EXCLUSIVELY FOR restrictive interpretation of the phrase "exclusively used for educational
(c) churches and parsonages or convents appurtenant purposes" as provided for in Article VI, Section 22, paragraph 3 of the 1935
EDUCATIONAL PURPOSES MERELY BECAUSE THE COLLEGE
thereto, and all lands, buildings, and Philippine Constitution, reasonable emphasis has always been made that
PRESIDENT RESIDES IN ONE ROOM OF THE COLLEGE BUILDING.
improvements used exclusively for religious, charitable, exemption extends to facilities which are incidental to and reasonably necessary
scientific or educational purposes. for the accomplishment of the main purposes. Otherwise stated, the use of the
III school building or lot for commercial purposes is neither contemplated by law,
xxx xxx xxx nor by jurisprudence. Thus, while the use of the second floor of the main
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND building in the case at bar for residential purposes of the Director and his family,
BUILDING OF THE PETITIONER ARE NOT EXEMPT FROM PROPERTY may find justification under the concept of incidental use, which is
In this regard petitioner argues that the primary use of the school lot and building complimentary to the main or primary purposeeducational, the lease of the
TAXES AND IN ORDERING PETITIONER TO PAY P5,140.31 AS REALTY
is the basic and controlling guide, norm and standard to determine tax first floor thereof to the Northern Marketing Corporation cannot by any stretch of
TAXES.
exemption, and not the mere incidental use thereof. the imagination be considered incidental to the purpose of education.
IV
As early as 1916 in YMCA of Manila vs. Collector of lnternal Revenue, 33 Phil. It will be noted however that the aforementioned lease appears to have been
217 [1916], this Court ruled that while it may be true that the YMCA keeps a raised for the first time in this Court. That the matter was not taken up in the to
THE COURT A QUO ERRED IN ORDERING THE CONFISCATION OF THE lodging and a boarding house and maintains a restaurant for its members, still court is really apparent in the decision of respondent Judge. No mention thereof
P6,000.00 DEPOSIT MADE IN THE COURT BY PETITIONER AS PAYMENT these do not constitute business in the ordinary acceptance of the word, but an was made in the stipulation of facts, not even in the description of the school
OF THE P5,140.31 REALTY TAXES. (See Brief for the Petitioner, pp. 1-2) institution used exclusively for religious, charitable and educational purposes, building by the trial judge, both embodied in the decision nor as one of the
and as such, it is entitled to be exempted from taxation. issues to resolve in order to determine whether or not said properly may be
The main issue in this case is the proper interpretation of the phrase "used exempted from payment of real estate taxes (Rollo, pp. 17-23). On the other
exclusively for educational purposes." In the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 hand, it is noteworthy that such fact was not disputed even after it was raised in
Phil. 352 [1972], this Court included in the exemption a vegetable garden in an this Court.
adjacent lot and another lot formerly used as a cemetery. It was clarified that the
Petitioner contends that the primary use of the lot and building for educational term "used exclusively" considers incidental use also. Thus, the exemption from
purposes, and not the incidental use thereof, determines and exemption from Indeed, it is axiomatic that facts not raised in the lower court cannot be taken up
payment of land tax in favor of the convent includes, not only the land actually for the first time on appeal. Nonetheless, as an exception to the rule, this Court
property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence, occupied by the building but also the adjacent garden devoted to the incidental
the seizure and sale of subject college lot and building, which are contrary has held that although a factual issue is not squarely raised below, still in the
use of the parish priest. The lot which is not used for commercial purposes but interest of substantial justice, this Court is not prevented from considering a
thereto as well as to the provision of Commonwealth Act No. 470, otherwise serves solely as a sort of lodging place, also qualifies for exemption because
known as the Assessment Law, are without legal basis and therefore void. pivotal factual matter. "The Supreme Court is clothed with ample authority to
this constitutes incidental use in religious functions. review palpable errors not assigned as such if it finds that their consideration is
necessary in arriving at a just decision." (Perez vs. Court of Appeals, 127 SCRA
On the other hand, private respondents maintain that the college lot and building The phrase "exclusively used for educational purposes" was further clarified by 645 [1984]).
in question which were subjected to seizure and sale to answer for the unpaid this Court in the cases of Herrera vs. Quezon City Board of assessment
tax are used: (1) for the educational purposes of the college; (2) as the Appeals, 3 SCRA 186 [1961] and Commissioner of Internal Revenue vs. Bishop
permanent residence of the President and Director thereof, Mr. Pedro V. Under the 1935 Constitution, the trial court correctly arrived at the conclusion
of the Missionary District, 14 SCRA 991 [1965], thus that the school building as well as the lot where it is built, should be taxed, not
Borgonia, and his family including the in-laws and grandchildren; and (3) for
commercial purposes because the ground floor of the college building is being because the second floor of the same is being used by the Director and his
family for residential purposes, but because the first floor thereof is being used
for commercial purposes. However, since only a portion is used for purposes of Defendant answered the complaint, maintaining in turn that said ordinances
commerce, it is only fair that half of the assessed tax be returned to the school were enacted by the Municipal Board of the City of Manila by virtue of the power 2nd quarter 1949 17,802.08
involved. granted to it by section 2444, subsection (m-2) of the Revised Administrative
Code, superseded on June 18, 1949, by section 18, subsection (1) of Republic 3rd quarter 1949 16,640.79
Act No. 409, known as the Revised Charter of the City of Manila, and praying
PREMISES CONSIDERED, the decision of the Court of First Instance of Abra, 4th quarter 1949 15,961.38
that the complaint be dismissed, with costs against plaintiff. This answer was
Branch I, is hereby AFFIRMED subject to the modification that half of the
replied by the plaintiff reiterating the unconstitutionality of the often-repeated
assessed tax be returned to the petitioner.
ordinances. 1st quarter 1950 18,562.46

G.R. No. L-9637 April 30, 1957 2nd quarter 1950 21,816.32
Before trial the parties submitted the following stipulation of facts:

AMERICAN BIBLE SOCIETY, plaintiff-appellant, 3rd quarter 1950 25,004.55

COME NOW the parties in the above-entitled case, thru their
vs.
undersigned attorneys and respectfully submit the following 4th quarter 1950 45,287.92
CITY OF MANILA, defendant-appellee.
stipulation of facts:
1st quarter 1951 37,841.21
City Fiscal Eugenio Angeles and Juan Nabong for appellant.
1. That the plaintiff sold for the use of the purchasers at its principal
Assistant City Fiscal Arsenio Naawa for appellee.
office at 636 Isaac Peral, Manila, Bibles, New Testaments, bible 2nd quarter 1951 29,103.98
portions and bible concordance in English and other foreign
FELIX, J.: languages imported by it from the United States as well as Bibles, 3rd quarter 1951 20,181.10
New Testaments and bible portions in the local dialects imported
and/or purchased locally; that from the fourth quarter of 1945 to the
Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary 4th quarter 1951 22,968.91
first quarter of 1953 inclusive the sales made by the plaintiff were as
corporation duly registered and doing business in the Philippines through its follows:
Philippine agency established in Manila in November, 1898, with its principal 1st quarter 1952 23,002.65
office at 636 Isaac Peral in said City. The defendant appellee is a municipal
corporation with powers that are to be exercised in conformity with the 2nd quarter 1952 17,626.96
Quarter Amount of Sales
provisions of Republic Act No. 409, known as the Revised Charter of the City of
Manila. 3rd quarter 1952 17,921.01
4th quarter 1945 P1,244.21

In the course of its ministry, plaintiff's Philippine agency has been distributing 1st quarter 1946 2,206.85 4th quarter 1952 24,180.72
and selling bibles and/or gospel portions thereof (except during the Japanese
occupation) throughout the Philippines and translating the same into several 2nd quarter 1946 1,950.38 1st quarter 1953 29,516.21
Philippine dialects. On May 29 1953, the acting City Treasurer of the City of
Manila informed plaintiff that it was conducting the business of general
merchandise since November, 1945, without providing itself with the necessary 3rd quarter 1946 2,235.99
2. That the parties hereby reserve the right to present evidence of
Mayor's permit and municipal license, in violation of Ordinance No. 3000, as other facts not herein stipulated.
amended, and Ordinances Nos. 2529, 3028 and 3364, and required plaintiff to 4th quarter 1946 3,256.04
secure, within three days, the corresponding permit and license fees, together
with compromise covering the period from the 4th quarter of 1945 to the 2nd 1st quarter 1947 13,241.07 WHEREFORE, it is respectfully prayed that this case be set for
quarter of 1953, in the total sum of P5,821.45 (Annex A). hearing so that the parties may present further evidence on their
2nd quarter 1947 15,774.55 behalf. (Record on Appeal, pp. 15-16).

Plaintiff protested against this requirement, but the City Treasurer demanded
that plaintiff deposit and pay under protest the sum of P5,891.45, if suit was to 3rd quarter 1947 14,654.13 When the case was set for hearing, plaintiff proved, among other things, that it
be taken in court regarding the same (Annex B). To avoid the closing of its has been in existence in the Philippines since 1899, and that its parent society is
business as well as further fines and penalties in the premises on October 24, 4th quarter 1947 12,590.94 in New York, United States of America; that its, contiguous real properties
1953, plaintiff paid to the defendant under protest the said permit and license located at Isaac Peral are exempt from real estate taxes; and that it was never
fees in the aforementioned amount, giving at the same time notice to the City 1st quarter 1948 11,143.90 required to pay any municipal license fee or tax before the war, nor does the
Treasurer that suit would be taken in court to question the legality of the American Bible Society in the United States pay any license fee or sales tax for
ordinances under which, the said fees were being collected (Annex C), which 2nd quarter 1948 14,715.26 the sale of bible therein. Plaintiff further tried to establish that it never made any
was done on the same date by filing the complaint that gave rise to this action. profit from the sale of its bibles, which are disposed of for as low as one third of
In its complaint plaintiff prays that judgment be rendered declaring the said the cost, and that in order to maintain its operating cost it obtains substantial
3rd quarter 1948 38,333.83
Municipal Ordinance No. 3000, as amended, and Ordinances Nos. 2529, 3028 remittances from its New York office and voluntary contributions and gifts from
and 3364 illegal and unconstitutional, and that the defendant be ordered to certain churches, both in the United States and in the Philippines, which are
4th quarter 1948 16,179.90 interested in its missionary work. Regarding plaintiff's contention of lack of profit
refund to the plaintiff the sum of P5,891.45 paid under protest, together with
legal interest thereon, and the costs, plaintiff further praying for such other relief in the sale of bibles, defendant retorts that the admissions of plaintiff-appellant's
1st quarter 1949 23,975.10 lone witness who testified on cross-examination that bibles bearing the price of
and remedy as the court may deem just equitable.
70 cents each from plaintiff-appellant's New York office are sold here by plaintiff- Section 1, subsection (7) of Article III of the Constitution of the Republic of the As to the license fees that the Treasurer of the City of Manila required the
appellant at P1.30 each; those bearing the price of $4.50 each are sold here at Philippines, provides that: society to pay from the 4th quarter of 1945 to the 1st quarter of 1953 in the sum
P10 each; those bearing the price of $7 each are sold here at P15 each; and of P5,821.45, including the sum of P50 as compromise, Ordinance No. 2529, as
those bearing the price of $11 each are sold here at P22 each, clearly show that amended by Ordinances Nos. 2779, 2821 and 3028 prescribes the following:
(7) No law shall be made respecting an establishment of religion, or
plaintiff's contention that it never makes any profit from the sale of its bible, is
prohibiting the free exercise thereof, and the free exercise and
evidently untenable.
enjoyment of religious profession and worship, without SEC. 1. FEES. Subject to the provisions of section 578 of the
discrimination or preference, shall forever be allowed. No religion Revised Ordinances of the City of Manila, as amended, there shall
After hearing the Court rendered judgment, the last part of which is as follows: test shall be required for the exercise of civil or political rights. be paid to the City Treasurer for engaging in any of the businesses
or occupations below enumerated, quarterly, license fees based on
gross sales or receipts realized during the preceding quarter in
As may be seen from the repealed section (m-2) of the Revised Predicated on this constitutional mandate, plaintiff-appellant contends that
accordance with the rates herein prescribed: PROVIDED,
Administrative Code and the repealing portions (o) of section 18 of Ordinances Nos. 2529 and 3000, as respectively amended, are unconstitutional
HOWEVER, That a person engaged in any businesses or
Republic Act No. 409, although they seemingly differ in the way the and illegal in so far as its society is concerned, because they provide for
occupation for the first time shall pay the initial license fee based on
legislative intent is expressed, yet their meaning is practically the religious censorship and restrain the free exercise and enjoyment of its religious
the probable gross sales or receipts for the first quarter beginning
same for the purpose of taxing the merchandise mentioned in said profession, to wit: the distribution and sale of bibles and other religious literature
from the date of the opening of the business as indicated herein for
legal provisions, and that the taxes to be levied by said ordinances to the people of the Philippines.
the corresponding business or occupation.
is in the nature of percentage graduated taxes (Sec. 3 of Ordinance
No. 3000, as amended, and Sec. 1, Group 2, of Ordinance No.
Before entering into a discussion of the constitutional aspect of the case, We
2529, as amended by Ordinance No. 3364). xxx xxx xxx
shall first consider the provisions of the questioned ordinances in relation to their
application to the sale of bibles, etc. by appellant. The records, show that by
IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court is letter of May 29, 1953 (Annex A), the City Treasurer required plaintiff to secure a GROUP 2. Retail dealers in new (not yet used) merchandise,
of the opinion and so holds that this case should be dismissed, as it Mayor's permit in connection with the society's alleged business of distributing which dealers are not yet subject to the payment of any municipal
is hereby dismissed, for lack of merits, with costs against the and selling bibles, etc. and to pay permit dues in the sum of P35 for the period tax, such as (1) retail dealers in general merchandise; (2) retail
plaintiff. covered in this litigation, plus the sum of P35 for compromise on account of dealers exclusively engaged in the sale of . . . books, including
plaintiff's failure to secure the permit required by Ordinance No. 3000 of the City stationery.
of Manila, as amended. This Ordinance is of general application and not
Not satisfied with this verdict plaintiff took up the matter to the Court of Appeals
particularly directed against institutions like the plaintiff, and it does not contain
which certified the case to Us for the reason that the errors assigned to the xxx xxx xxx
any provisions whatever prescribing religious censorship nor restraining the free
lower Court involved only questions of law.
exercise and enjoyment of any religious profession. Section 1 of Ordinance No.
3000 reads as follows: As may be seen, the license fees required to be paid quarterly in Section 1 of
Appellant contends that the lower Court erred: said Ordinance No. 2529, as amended, are not imposed directly upon any
religious institution but upon those engaged in any of the business or
SEC. 1. PERMITS NECESSARY. It shall be unlawful for any
occupations therein enumerated, such as retail "dealers in general
1. In holding that Ordinances Nos. 2529 and 3000, as respectively person or entity to conduct or engage in any of the businesses,
merchandise" which, it is alleged, cover the business or occupation of selling
amended, are not unconstitutional; trades, or occupations enumerated in Section 3 of this Ordinance or
bibles, books, etc.
other businesses, trades, or occupations for which a permit is
required for the proper supervision and enforcement of existing laws
2. In holding that subsection m-2 of Section 2444 of the Revised and ordinances governing the sanitation, security, and welfare of Chapter 60 of the Revised Administrative Code which includes section 2444,
Administrative Code under which Ordinances Nos. 2592 and 3000 the public and the health of the employees engaged in the business subsection (m-2) of said legal body, as amended by Act No. 3659, approved on
were promulgated, was not repealed by Section 18 of Republic Act specified in said section 3 hereof, WITHOUT FIRST HAVING December 8, 1929, empowers the Municipal Board of the City of Manila:
No. 409; OBTAINED A PERMIT THEREFOR FROM THE MAYOR AND THE
NECESSARY LICENSE FROM THE CITY TREASURER.
(M-2) To tax and fix the license fee on (a) dealers in new
3. In not holding that an ordinance providing for taxes based on
automobiles or accessories or both, and (b) retail dealers in new
gross sales or receipts, in order to be valid under the new Charter of The business, trade or occupation of the plaintiff involved in this case is not (not yet used) merchandise, which dealers are not yet subject to the
the City of Manila, must first be approved by the President of the particularly mentioned in Section 3 of the Ordinance, and the record does not payment of any municipal tax.
Philippines; and show that a permit is required therefor under existing laws and ordinances for
the proper supervision and enforcement of their provisions governing the
sanitation, security and welfare of the public and the health of the employees For the purpose of taxation, these retail dealers shall be classified
4. In holding that, as the sales made by the plaintiff-appellant have
engaged in the business of the plaintiff. However, sections 3 of Ordinance 3000 as (1) retail dealers in general merchandise, and (2) retail dealers
assumed commercial proportions, it cannot escape from the
contains item No. 79, which reads as follows: exclusively engaged in the sale of (a) textiles . . . (e) books,
operation of said municipal ordinances under the cloak of religious
including stationery, paper and office supplies, . . .: PROVIDED,
privilege.
HOWEVER, That the combined total tax of any debtor or
79. All other businesses, trades or occupations not manufacturer, or both, enumerated under these subsections (m-1)
The issues. As may be seen from the proceeding statement of the case, the mentioned in this Ordinance, except those upon which the and (m-2), whether dealing in one or all of the articles mentioned
issues involved in the present controversy may be reduced to the following: (1) City is not empowered to license or to tax P5.00 herein, SHALL NOT BE IN EXCESS OF FIVE HUNDRED PESOS
whether or not the ordinances of the City of Manila, Nos. 3000, as amended, PER ANNUM.
and 2529, 3028 and 3364, are constitutional and valid; and (2) whether the Therefore, the necessity of the permit is made to depend upon the power of the
provisions of said ordinances are applicable or not to the case at bar. City to license or tax said business, trade or occupation.
and appellee's counsel maintains that City Ordinances Nos. 2529 and 3000, as pays the higher or highest rate of tax prescribed by ordinance. Article III, section 1, clause (7) of the Constitution of the Philippines aforequoted,
amended, were enacted in virtue of the power that said Act No. 3669 conferred Wholesale dealers shall pay the license tax as such, as may be guarantees the freedom of religious profession and worship. "Religion has been
upon the City of Manila. Appellant, however, contends that said ordinances are provided by ordinance. spoken of as a profession of faith to an active power that binds and elevates
longer in force and effect as the law under which they were promulgated has man to its Creator" (Aglipay vs. Ruiz, 64 Phil., 201).It has reference to one's
been expressly repealed by Section 102 of Republic Act No. 409 passed views of his relations to His Creator and to the obligations they impose of
For purposes of this section, the term "General merchandise" shall
on June 18, 1949, known as the Revised Manila Charter. reverence to His being and character, and obedience to His Will (Davis vs.
include poultry and livestock, agricultural products, fish and other
Beason, 133 U.S., 342). The constitutional guaranty of the free exercise and
allied products.
enjoyment of religious profession and worship carries with it the right to
Passing upon this point the lower Court categorically stated that Republic Act
disseminate religious information. Any restraints of such right can only be
No. 409 expressly repealed the provisions of Chapter 60 of the Revised
The only essential difference that We find between these two provisions that justified like other restraints of freedom of expression on the grounds that there
Administrative Code but in the opinion of the trial Judge, although Section 2444
may have any bearing on the case at bar, is that, while subsection (m-2) is a clear and present danger of any substantive evil which the State has the
(m-2) of the former Manila Charter and section 18 (o) of the new seemingly differ
prescribes that the combined total tax of any dealer or manufacturer, or both, right to prevent". (Taada and Fernando on the Constitution of the Philippines,
in the way the legislative intent was expressed, yet their meaning is practically
enumerated under subsections (m-1) and (m-2), whether dealing in one or all of Vol. 1, 4th ed., p. 297). In the case at bar the license fee herein involved is
the same for the purpose of taxing the merchandise mentioned in both legal
the articles mentioned therein, shall not be in excess of P500 per annum, the imposed upon appellant for its distribution and sale of bibles and other religious
provisions and, consequently, Ordinances Nos. 2529 and 3000, as amended,
corresponding section 18, subsection (o) of Republic Act No. 409, does not literature:
are to be considered as still in full force and effect uninterruptedly up to the
contain any limitation as to the amount of tax or license fee that the retail dealer
present.
has to pay per annum. Hence, and in accordance with the weight of the
In the case of Murdock vs. Pennsylvania, it was held that an
authorities above referred to that maintain that "all rights and liabilities which
ordinance requiring that a license be obtained before a person
Often the legislature, instead of simply amending the pre-existing have accrued under the original statute are preserved and may be enforced,
could canvass or solicit orders for goods, paintings, pictures, wares
statute, will repeal the old statute in its entirety and by the same since the reenactment neutralizes the repeal, therefore continuing the law in
or merchandise cannot be made to apply to members of Jehovah's
enactment re-enact all or certain portions of the preexisting law. Of force without interruption", We hold that the questioned ordinances of the City of
Witnesses who went about from door to door distributing literature
course, the problem created by this sort of legislative action Manila are still in force and effect.
and soliciting people to "purchase" certain religious books and
involves mainly the effect of the repeal upon rights and liabilities
pamphlets, all published by the Watch Tower Bible & Tract Society.
which accrued under the original statute. Are those rights and
Plaintiff, however, argues that the questioned ordinances, to be valid, must first The "price" of the books was twenty-five cents each, the "price" of
liabilities destroyed or preserved? The authorities are divided as to
be approved by the President of the Philippines as per section 18, subsection (ii) the pamphlets five cents each. It was shown that in making the
the effect of simultaneous repeals and re-enactments. Some adhere
of Republic Act No. 409, which reads as follows: solicitations there was a request for additional "contribution" of
to the view that the rights and liabilities accrued under the repealed
twenty-five cents each for the books and five cents each for the
act are destroyed, since the statutes from which they sprang are
pamphlets. Lesser sum were accepted, however, and books were
actually terminated, even though for only a very short period of (ii) To tax, license and regulate any business, trade or occupation even donated in case interested persons were without funds.
time. Others, and they seem to be in the majority, refuse to accept being conducted within the City of Manila, not otherwise
this view of the situation, and consequently maintain that all rights enumerated in the preceding subsections, including percentage
an liabilities which have accrued under the original statute are taxes based on gross sales or receipts, subject to the approval of On the above facts the Supreme Court held that it could not be said
preserved and may be enforced, since the re-enactment neutralizes the PRESIDENT, except amusement taxes. that petitioners were engaged in commercial rather than a religious
the repeal, therefore, continuing the law in force without interruption. venture. Their activities could not be described as embraced in the
(Crawford-Statutory Construction, Sec. 322). occupation of selling books and pamphlets. Then the Court
but this requirement of the President's approval was not contained in section continued:
2444 of the former Charter of the City of Manila under which Ordinance No.
Appellant's counsel states that section 18 (o) of Republic Act No, 409 introduces 2529 was promulgated. Anyway, as stated by appellee's counsel, the business
a new and wider concept of taxation and is different from the provisions of of "retail dealers in general merchandise" is expressly enumerated in subsection "We do not mean to say that religious groups and the press are free
Section 2444(m-2) that the former cannot be considered as a substantial re- (o), section 18 of Republic Act No. 409; hence, an ordinance prescribing a from all financial burdens of government. See Grosjean vs.
enactment of the provisions of the latter. We have quoted above the provisions municipal tax on said business does not have to be approved by the President American Press Co., 297 U.S., 233, 250, 80 L. ed. 660, 668, 56 S.
of section 2444(m-2) of the Revised Administrative Code and We shall now copy to be effective, as it is not among those referred to in said subsection (ii). Ct. 444. We have here something quite different, for example, from
hereunder the provisions of Section 18, subdivision (o) of Republic Act No. 409, Moreover, the questioned ordinances are still in force, having been promulgated a tax on the income of one who engages in religious activities or a
which reads as follows: by the Municipal Board of the City of Manila under the authority granted to it by tax on property used or employed in connection with activities. It is
law. one thing to impose a tax on the income or property of a preacher. It
is quite another to exact a tax from him for the privilege of delivering
(o) To tax and fix the license fee on dealers in general merchandise,
a sermon. The tax imposed by the City of Jeannette is a flat license
including importers and indentors, except those dealers who may The question that now remains to be determined is whether said ordinances are tax, payment of which is a condition of the exercise of these
be expressly subject to the payment of some other municipal tax inapplicable, invalid or unconstitutional if applied to the alleged business of constitutional privileges. The power to tax the exercise of a privilege
under the provisions of this section. distribution and sale of bibles to the people of the Philippines by a religious is the power to control or suppress its enjoyment. . . . Those who
corporation like the American Bible Society, plaintiff herein. can tax the exercise of this religious practice can make its exercise
Dealers in general merchandise shall be classified as (a) wholesale so costly as to deprive it of the resources necessary for its
dealers and (b) retail dealers. For purposes of the tax on retail With regard to Ordinance No. 2529, as amended by Ordinances Nos. 2779, maintenance. Those who can tax the privilege of engaging in this
dealers, general merchandise shall be classified into four main 2821 and 3028, appellant contends that it is unconstitutional and illegal because form of missionary evangelism can close all its doors to all those
classes: namely (1) luxury articles, (2) semi-luxury articles, (3) it restrains the free exercise and enjoyment of the religious profession and who do not have a full purse. Spreading religious beliefs in this
essential commodities, and (4) miscellaneous articles. A separate worship of appellant. ancient and honorable manner would thus be denied the needy. . . .
license shall be prescribed for each class but where commodities of
different classes are sold in the same establishment, it shall not be
compulsory for the owner to secure more than one license if he
 It is contended however that the fact that the license tax can It may be true that in the case at bar the price asked for the bibles and other
suppress or control this activity is unimportant if it does not do so. religious pamphlets was in some instances a little bit higher than the actual cost
But that is to disregard the nature of this tax. It is a license tax a of the same but this cannot mean that appellant was engaged in the business or
flat tax imposed on the exercise of a privilege granted by the Bill of occupation of selling said "merchandise" for profit. For this reason We believe
Rights . . . The power to impose a license tax on the exercise of that the provisions of City of Manila Ordinance No. 2529, as amended, cannot
these freedom is indeed as potent as the power of censorship which be applied to appellant, for in doing so it would impair its free exercise and
this Court has repeatedly struck down. . . . It is not a nominal fee enjoyment of its religious profession and worship as well as its rights of
imposed as a regulatory measure to defray the expenses of policing dissemination of religious beliefs.
the activities in question. It is in no way apportioned. It is flat license
tax levied and collected as a condition to the pursuit of activities
With respect to Ordinance No. 3000, as amended, which requires the obtention
whose enjoyment is guaranteed by the constitutional liberties of
the Mayor's permit before any person can engage in any of the businesses,
press and religion and inevitably tends to suppress their exercise.
trades or occupations enumerated therein, We do not find that it imposes any
That is almost uniformly recognized as the inherent vice and evil of
charge upon the enjoyment of a right granted by the Constitution, nor tax the
this flat license tax."
exercise of religious practices. In the case of Coleman vs. City of Griffin, 189
S.E. 427, this point was elucidated as follows:
Nor could dissemination of religious information be conditioned
upon the approval of an official or manager even if the town were
An ordinance by the City of Griffin, declaring that the practice of
owned by a corporation as held in the case of Marsh vs. State of
distributing either by hand or otherwise, circulars, handbooks,
Alabama (326 U.S. 501), or by the United States itself as held in the
advertising, or literature of any kind, whether said articles are being
case of Tucker vs. Texas (326 U.S. 517). In the former case the
delivered free, or whether same are being sold within the city limits
Supreme Court expressed the opinion that the right to enjoy
of the City of Griffin, without first obtaining written permission from
freedom of the press and religion occupies a preferred position as
the city manager of the City of Griffin, shall be deemed a nuisance
against the constitutional right of property owners.
and punishable as an offense against the City of Griffin, does not
deprive defendant of his constitutional right of the free exercise and
"When we balance the constitutional rights of owners of property enjoyment of religious profession and worship, even though it
against those of the people to enjoy freedom of press and religion, prohibits him from introducing and carrying out a scheme or
as we must here, we remain mindful of the fact that the latter purpose which he sees fit to claim as a part of his religious system.
occupy a preferred position. . . . In our view the circumstance that
the property rights to the premises where the deprivation of property
It seems clear, therefore, that Ordinance No. 3000 cannot be considered
here involved, took place, were held by others than the public, is not
unconstitutional, even if applied to plaintiff Society. But as Ordinance No. 2529
sufficient to justify the State's permitting a corporation to govern a
of the City of Manila, as amended, is not applicable to plaintiff-appellant and
community of citizens so as to restrict their fundamental liberties
defendant-appellee is powerless to license or tax the business of plaintiff Society
and the enforcement of such restraint by the application of a State
involved herein for, as stated before, it would impair plaintiff's right to the free
statute." (Taada and Fernando on the Constitution of the
exercise and enjoyment of its religious profession and worship, as well as its
Philippines, Vol. 1, 4th ed., p. 304-306).
rights of dissemination of religious beliefs, We find that Ordinance No. 3000, as
amended is also inapplicable to said business, trade or occupation of the
Section 27 of Commonwealth Act No. 466, otherwise known as the National plaintiff.
Internal Revenue Code, provides:
Wherefore, and on the strength of the foregoing considerations, We hereby
SEC. 27. EXEMPTIONS FROM TAX ON CORPORATIONS. The reverse the decision appealed from, sentencing defendant return to plaintiff the
following organizations shall not be taxed under this Title in respect sum of P5,891.45 unduly collected from it. Without pronouncement as to costs.
to income received by them as such It is so ordered.

(e) Corporations or associations organized and operated exclusively

for religious, charitable, . . . or educational purposes, . . .: Provided,
however, That the income of whatever kind and character from any
of its properties, real or personal, or from any activity conducted for
profit, regardless of the disposition made of such income, shall be
liable to the tax imposed under this Code;

Appellant's counsel claims that the Collector of Internal Revenue has exempted
the plaintiff from this tax and says that such exemption clearly indicates that the
act of distributing and selling bibles, etc. is purely religious and does not fall
under the above legal provisions.