City Govt of Quezon City v Ericta

G.R. No. L-3491 June 24, 1983

Principle: The ordinance requiring owners of commercial cemeteries to reserve 6% of their

burial lots for burial
grounds of paupers was held invalid; it was not an exercise of the police power, but of eminent
domain.

Facts:

Section 9 of Ordinance No. 6118, S-64 provides that at least 6% of the total area of the memorial
park cemetery shall be set aside for the charity burial of deceased persons who are paupers and
have been residents of Quezon City for at least 5 years prior to their death. As such, the Quezon
City engineer required the respondent, Himlayang Pilipino Inc, to stop any further selling and/or
transaction of memorial park lots in Quezon City where the owners thereof have failed to donate
the required 6% space intended for paupers burial.

The then Court of First Instance and its judge, Hon. Ericta, declared Section 9 of Ordinance No.
6118, S-64 null and void.

Petitioners argued that the taking of the respondent’s property is a valid and reasonable exercise
of police power and that the land is taken for a public use as it is intended for the burial ground
of paupers. They further argued that the Quezon City Council is authorized under its charter, in
the exercise of local police power, ” to make such further ordinances and resolutions not
repugnant to law as may be necessary to carry into effect and discharge the powers and duties
conferred by this Act and such as it shall deem necessary and proper to provide for the health and
safety, promote the prosperity, improve the morals, peace, good order, comfort and convenience
of the city and the inhabitants thereof, and for the protection of property therein.”

On the otherhand, respondent Himlayang Pilipino, Inc. contended that the taking or confiscation
of property was obvious because the questioned ordinance permanently restricts the use of the
property such that it cannot be used for any reasonable purpose and deprives the owner of all
beneficial use of his property.

Issue:
Is Section 9 of the ordinance in question a valid exercise of the police power?

Held:

No. The Sec. 9 of the ordinance is not a valid exercise of the police power.
Occupying the forefront in the bill of rights is the provision which states that ‘no person shall be
deprived of life, liberty or property without due process of law’ (Art. Ill, Section 1 subparagraph
1, Constitution). On the other hand, there are three inherent powers of government by which the
state interferes with the property rights, namely-. (1) police power, (2) eminent domain, (3)
taxation. These are said to exist independently of the Constitution as necessary attributes of
sovereignty.

An examination of the Charter of Quezon City (Rep. Act No. 537), does not reveal any provision
that would justify the ordinance in question except the provision granting police power to the
City. Section 9 cannot be justified under the power granted to Quezon City to tax, fix the license
fee, and regulate such other business, trades, and occupation as may be established or practiced
in the City. The power to regulate does not include the power to prohibit or confiscate. The
ordinance in question not only confiscates but also prohibits the operation of a memorial park
cemetery.

Under the provisions of municipal charters which are known as the general welfare clauses, a
city, by virtue of its police power, may adopt ordinances to the peace, safety, health, morals and
the best and highest interests of the municipality. It is a well-settled principle, growing out of the
nature of well-ordered and society, that every holder of property, however absolute and may be
his title, holds it under the implied liability that his use of it shall not be injurious to the equal
enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the
rights of the community. A property in the state is held subject to its general regulations, which
are necessary to the common good and general welfare. Rights of property, like all other social
and conventional rights, are subject to such reasonable limitations in their enjoyment as shall
prevent them from being injurious, and to such reasonable restraints and regulations, established
by law, as the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient. The state, under the police power, is possessed
with plenary power to deal with all matters relating to the general health, morals, and safety of
the people, so long as it does not contravene any positive inhibition of the organic law and
providing that such power is not exercised in such a manner as to justify the interference of the
courts to prevent positive wrong and oppression.

However, in the case at hand, there is no reasonable relation between the setting aside of at least
six (6) percent of the total area of an private cemeteries for charity burial grounds of deceased
paupers and the promotion of health, morals, good order, safety, or the general welfare of the
people. The ordinance is actually a taking without compensation of a certain area from a private
cemetery to benefit paupers who are charges of the municipal corporation. Instead of building or
maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries.

The expropriation without compensation of a portion of private cemeteries is not covered by

Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which empowers the city
council to prohibit the burial of the dead within the center of population of the city and to
provide for their burial in a proper place subject to the provisions of general law regulating burial
grounds and cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides
in Section 177 (q) that a Sangguniang panlungsod may “provide for the burial of the dead in such
place and in such manner as prescribed by law or ordinance” it simply authorizes the city to
provide its own city owned land or to buy or expropriate private properties to construct public
cemeteries. This has been the law and practise in the past. It continues to the present.
Expropriation, however, requires payment of just compensation. The questioned ordinance is
different from laws and regulations requiring owners of subdivisions to set aside certain areas for
streets, parks, playgrounds, and other public facilities from the land they sell to buyers of
subdivision lots. The necessities of public safety, health, and convenience are very clear from
said requirements which are intended to insure the development of communities with salubrious
and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the
subdivision developer when individual lots are sold to home-owners.

WHEREFORE, the petition for review is hereby DISMISSED. The decision of the respondent
court is affirmed.
National Housing Authority V. Hon. Pastor P. Reyes,

123 Scra 245 (1983)

Principle: As a requirement for eminent domain, “public use” is the general concept of meeting
public need or public exigency. It is not confined to actual use by the public in its traditional
sense. The idea that “public use” is strictly limited to clear cases of “use by the public” has been
abandoned. The term “public use” has now been held to be synonymous with “public interest”,
“public benefit”, “public welfare”, and “public convenience”

Facts:

Respondent National Housing Authority (NHA) filed complaints for the expropriation of
sugarcane lands belonging to the petitioners. The stated public purpose of the expropriation was
the expansion of the Dasmariñas Resettlement Project to accommodate the squatters who were
relocated from the Metropolitan Manila area. The trial court rendered judgment ordering the
expropriation of these lots and the payment of just compensation. The Supreme Court affirmed
the judgment of the lower court.

A few years later, petitioners contended that respondent NHA violated the stated public purpose
for the expansion of the Dasmariñas Resettlement Project when it failed to relocate the squatters
from the Metro Manila area, as borne out by the ocular inspection conducted by the trial court
which showed that most of the expropriated properties remain unoccupied. Petitioners likewise
question the public nature of the use by respondent NHA when it entered into a contract for the
construction of low cost housing units, which is allegedly different from the stated public
purpose in the expropriation proceedings. Hence, it is claimed that respondent NHA has forfeited
its rights and interests by virtue of the expropriation judgment and the expropriated properties
should now be returned to herein petitioners.

Issue:

Whether or not the judgment of expropriation was forfeited in the light of the failure of
respondent NHA to use the expropriated property for the intended purpose but for a totally
different purpose.

Held:

The Supreme Court held in favor of the respondent NHA. Accordingly, petitioners cannot insist
on a restrictive view of the eminent domain provision of the Constitution by contending that the
contract for low cost housing is a deviation from the stated public use. It is now settled doctrine
that the concept of public use is no longer limited to traditional purposes. The term "public use"
has now been held to be synonymous with "public interest," "public benefit," "public welfare,"
and "public convenience." Thus, whatever may be beneficially employed for the general welfare
satisfies the requirement of public use."

In addition, the expropriation of private land for slum clearance and urban development is for a
public purpose even if the developed area is later sold to private homeowners, commercials
firms, entertainment and service companies, and other private concerns. Moreover, the
Constitution itself allows the State to undertake, for the common good and in cooperation with
the private sector, a continuing program of urban land reform and housing which will make at
affordable cost decent housing and basic services to underprivileged and homeless citizens in
urban centers and resettlement areas. The expropriation of private property for the purpose of
socialized housing for the marginalized sector is in furtherance of social justice.
MANOSCA V CA

G.R. No. 106440 January 29, 1996

Principle: The practical reality that greater benefit may be derived by Iglesia ni Cristo members
than most others could well be true, but such peculiar advantage still remains merely incidental
and secondary in nature. That only few would actually benefit from the expropriation of the
property does not necessarily diminish the essence and character of public use.

Facts:

Petitioners inherited a piece of land when the parcel was ascertained by the NHI to have been the
birth site of Felix Y. Manalo, the founder of Iglesia Ni Cristo, it passed Resolution No. 1,
declaring the land to be a national historical landmark. Petitioners moved to dismiss the
complaint on the main thesis that the intended expropriation was not for a public purpose and,
incidentally, that the act would constitute an application of public funds, directly or indirectly,
for the use, benefit, or support of Iglesia ni Cristo, a religious entity, contrary to the provision of
Section 29(2), Article VI, of the 1987 Constitution.

Issue:

Whether or not the expropriation of the land whereat Manalo was born is valid and
constitutional.

Held:

Yes. The taking to be valid must be for public use. There was a time when it was felt that a literal
meaning should be attached to such a requirement. Whatever project is undertaken must be for
the public to enjoy, as in the case of streets or parks. Otherwise, expropriation is not allowable. It
is not so any more. As long as the purpose of the taking is public, then the power of eminent
domain comes into play. As just noted, the constitution in at least two cases, to remove any
doubt, determines what public use is. One is the expropriation of lands to be subdivided into
small lots for resale at cost to individuals. The other is the transfer, through the exercise of this
power, of utilities and other private enterprise to the government. It is accurate to state then that
at present whatever may be beneficially employed for the general welfare satisfies the
requirement of public use.
NATIONAL POWER CORPORATION vs. SPOUSES CHIONG

G.R. No. 152436. June 20, 2003

Principle: The aforementioned rule, however, is modified where only a part of a certain property
is expropriated. At the same time, from the total compensation must be deducted the value of
consequential benefits, if any, provided consequential benefits shall not exceed consequential
damages.

FACTS:

Petitioner is a government owned and controlled corporation for the development of

hydroelectric power, pursuant to RA 6395. In order to carry out its purpose, NPC is authorized to
exercise the power of eminent domain. On Feb.19, 1998, NPC filed a complaint for eminent
domain with the RTC of Iba, Zambales, seeking the acquisition of an easement of right-of-way
and certain portions of agricultural lands owned by Igmedio and Liwayway Chiong and the Heirs
of Agrifina Angeles to be used in its Northwestern Luzon Transmission Line Project.
Respondents averred that the fair market value is P1,100 /m². On Mar.9, 2000, Atty. Castillo and
Ms.Ragadio submitted their report that the property have a fair market value of P500/m². On
May 5, 2000, Atty. Alog submitted his report recommending that NPC pay an easement fee of
P20,957.88 and P9,187.05 to heirs of Angeles and spouses Chiong, respectively. Furthermore,
Atty. Alog assessed the properties to have fair market value of P22.50/m² for Angeles and
P15.75/m² for Chiong.

ISSUE:

Whether or not NPC should be required to pay full market value as just compensation despite the
fact that the petitioner was only acquiring an easement of right-of-way

HELD:

In eminent domain or expropriation proceedings, the general rule is that the just compensation to
which the owner is entitled to is the market value, which is “the sum of money which a person
desirous but not compelled to buy, and an owner wiling but not compelled to sell, would agree
on as a price to be given and received therefor.” When only a part of a property is expropriated, the owner is
also entitled to recover for the consequential damage, if any, to the remaining part of the property,
from which value of consequential benefits must be deducted. In fixing the valuation at P500/m²,
the CA noted that the trial court had considered the reports of the commissioners and proofs
submitted by the parties. The trial court found that the land sought to be expropriated are
agricultural land with minimal improvements. It is the nature and character of the land at the
time of the taking that is the principal criterion to determine just compensation to the landowner.
Without any showing that the valuation is exorbitant or otherwise unjustified, factual finding of
the CA is binding on the parties.
Commissioner of Internal Revenue vs. Central Luzon Drug Corporation
G.R. No. 159647 April 15, 2005

Principle: The tax credit given to commercial establishments for the discount enjoyed by senior
citizens pursuant to R.A. 7432 (Senior Citizens Act) is a form of just compensation for private
property taken by the State for public use, since the privilege enjoyed by senior citizens does not
come directly from the State, but from the private establishments concerned.

Facts:
Respondents operated six drugstores under the business name Mercury Drug. From January to
December 1996 respondent granted 20% sales discount to qualified senior citizens on their
purchases of medicines pursuant to RA 7432 for a total of ₱ 904,769.

On April 15, 1997, respondent filed its annual Income Tax Return for taxable year 1996
declaring therein net losses. On Jan. 16, 1998 respondent filed with petitioner a claim for tax
refund/credit of ₱ 904,769.00 allegedly arising from the 20% sales discount. Unable to obtain
affirmative response from petitioner, respondent elevated its claim to the Court of Tax Appeals.
The court dismissed the same but upon reconsideration, the latter reversed its earlier ruling and
ordered petitioner to issue a Tax Credit Certificate in favor of respondent citing CA GR SP No.
60057 (May 31, 2001, Central Luzon Drug Corp. vs. CIR) citing that Sec. 229 of RA 7432 deals
exclusively with illegally collected or erroneously paid taxes but that there are other situations
which may warrant a tax credit/refund.

CA affirmed Court of Tax Appeal's decision reasoning that RA 7432 required neither a tax
liability nor a payment of taxes by private establishments prior to the availment of a tax credit.
Moreover, such credit is not tantamount to an unintended benefit from the law, but rather a just
compensation for the taking of private property for public use.

Issue:
Whether or not respondent, despite incurring a net loss, may still claim the 20% sales discount as
a tax credit.

Ruling:
Yes, it is clear that Sec. 4a of RA 7432 grants to senior citizens the privilege of obtaining a 20%
discount on their purchase of medicine from any private establishment in the country. The latter
may then claim the cost of the discount as a tax credit. Such credit can be claimed even if the
establishment operates at a loss.

A tax credit generally refers to an amount that is “subtracted directly from one’s total tax
liability.” It is an “allowance against the tax itself” or “a deduction from what is owed” by a
taxpayer to the government.
A tax credit should be understood in relation to other tax concepts. One of these is tax deduction
– which is subtraction “from income for tax purposes,” or an amount that is “allowed by law to
reduce income prior to the application of the tax rate to compute the amount of tax which is
due.” In other words, whereas a tax credit reduces the tax due, tax deduction reduces the income
subject to tax in order to arrive at the taxable income.

A tax credit is used to reduce directly the tax that is due, there ought to be a tax liability before
the tax credit can be applied. Without that liability, any tax credit application will be
useless. There will be no reason for deducting the latter when there is, to begin with, no existing
obligation to the government. However, as will be presented shortly, the existence of a tax credit
or its grant by law is not the same as the availment or use of such credit. While the grant is
mandatory, the availment or use is not. If a net loss is reported by, and no other taxes are
currently due from, a business establishment, there will obviously be no tax liability against
which any tax credit can be applied. For the establishment to choose the immediate availment of
a tax credit will be premature and impracticable.
EPZA v DULAY

G.R. No. L-59603 April 29, 1987

Principle: The ascertainment of what constitutes just compensation for property taken in
eminent domain cases is a judicial prerogative, and PD 76, which fixes payment on the basis of
the assessment by the assessor or the declared valuation by the owner, is unconstitutional.

Facts:

The four parcels of land which are the subject of this case is where the Mactan Export Processing
Zone Authority in Cebu (EPZA) is to be constructed. Private respondent San Antonio
Development Corporation (San Antonio, for brevity), in which these lands are registered under,
claimed that the lands were expropriated to the government without them reaching the agreement
as to the compensation. Respondent Judge Dulay then issued an order for the appointment of the
commissioners to determine the just compensation. It was later found out that the payment of the
government to San Antonio would be P15 per square meter, which was objected to by the latter
contending that under PD 1533, the basis of just compensation shall be fair and according to the
fair market value declared by the owner of the property sought to be expropriated, or by the
assessor, whichever is lower. Such objection and the subsequent Motion for Reconsideration
were denied and hearing was set for the reception of the commissioner’s report. EPZA then filed
this petition for certiorari and mandamus enjoining the respondent from further hearing the case.

Issue:

Whether or Not the exclusive and mandatory mode of determining just compensation in PD 1533
is unconstitutional.

Held:

The Supreme Court ruled that the mode of determination of just compensation in PD 1533 is
unconstitutional.

The method of ascertaining just compensation constitutes impermissible encroachment to

judicial prerogatives. It tends to render the courts inutile in a matter in which under the
Constitution is reserved to it for financial determination. The valuation in the decree may only
serve as guiding principle or one of the factors in determining just compensation, but it may not
substitute the court’s own judgment as to what amount should be awarded and how to arrive at
such amount. The determination of just compensation is a judicial function. The executive
department or the legislature may make the initial determination but when a party claims a
violation of the guarantee in the Bill of Rights that the private party may not be taken for public
use without just compensation, no statute, decree, or executive order can mandate that its own
determination shall prevail over the court’s findings. Much less can the courts be precluded from
looking into the justness of the decreed compensation.