GENERAL POWERS and ATTRIBUTES of LGUs Pub Corp

Governmental Powers

Police Power or the General Welfare Clause (Sec. 16 of LGC)

1) Vicente De La Cruz vs Edgardo Paras

Subject Shall Be Expressed in the Title Police Power Not Validly Exercise

FACTS: Vicente De La Cruz et al were club & cabaret operators. They assail the constitutionality
of Ord. No. 84, Ser. of 1975 or the Prohibition and Closure Ordinance of Bocaue, Bulacan. De la
Cruz averred that the said Ordinance violates their right to engage in a lawful business for the said
ordinance would close out their business. That the hospitality girls they employed are healthy and
are not allowed to go out with customers. Judge Paras however lifted the TRO he earlier issued
against Ord. 84 after due hearing declaring that Ord 84. is constitutional for it is pursuant to RA
938 which reads AN ACT GRANTING MUNICIPAL OR CITY BOARDS AND COUNCILS THE
POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE AND OPERATION OF
CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE TERRITORIAL
JURISDICTIONS. Paras ruled that the prohibition is a valid exercise of police power to promote
general welfare. De la Cruz then appealed citing that they were deprived of due process.

ISSUE: Whether or not a municipal corporation, Bocaue, Bulacan can, prohibit the exercise of a
lawful trade, the operation of night clubs, and the pursuit of a lawful occupation, such clubs
employing hostesses pursuant to Ord 84 which is further in pursuant to RA 938.

HELD: The SC ruled against Paras. If night clubs were merely then regulated and not prohibited,
certainly the assailed ordinance would pass the test of validity. SC had stressed reasonableness,
consonant with the general powers and purposes of municipal corporations, as well as
consistency with the laws or policy of the State. It cannot be said that such a sweeping exercise of
a lawmaking power by Bocaue could qualify under the term reasonable. The objective of fostering
public morals, a worthy and desirable end can be attained by a measure that does not encompass
too wide a field. Certainly the ordinance on its face is characterized by overbreadth. The purpose
sought to be achieved could have been attained by reasonable restrictions rather than by an
absolute prohibition. Pursuant to the title of the Ordinance, Bocaue should and can only regulate
not prohibit the business of cabarets.

2) Binay vs Domingo
G.R. No. 92389, September 11, 1991

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

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

Held:
1. The police power is a governmental function, an inherent attribute of sovereignty, which was
born with civilized government. It is founded largely on the maxims, "Sic utere tuo et ahenum non
laedas and "Salus populi est suprema lex. Its fundamental purpose is securing the general
welfare, comfort and convenience of the people.

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

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

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

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

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

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

3) Tano v Socrates

FACTS:
On Dec 15, 1992, the Sangguniang Panglungsod ng Puerto Princesa enacted an ordinance
banning the shipment of all live fish and lobster outside Puerto Princesa City from January 1,
1993 to January 1, 1998 (Ordinance No. 15-92: "AN ORDINANCE BANNING THE
SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY
FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS,
PENALTIES AND FOR OTHER PURPOSES THEREOF).

Subsequently the Sangguniang Panlalawigan, Provincial Government of Palawan enacted a

resolution prohibiting the catching, gathering, possessing, buying, selling, and shipment of a
several species of live marine coral dwelling aquatic organisms for 5 years, in and coming from
Palawan waters.
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The petitioners Airline Shippers Association of Palawan together with marine merchants were
charged for violating the above ordinance and resolution by the city and provincial governments.
The petitioners now allege that they have the preferential rights as marginal fishermen granted
with privileges provided in Section 149 of the Local Government Code, invoking the invalidity of
the above-stated enactments as violative of their preferential rights.

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

ISSUE:
Are the challenged ordinances unconstitutional?

HELD:
No. The Supreme Court found the petitioners contentions baseless and held that the challenged
ordinances did not suffer from any infirmity, both under the Constitution and applicable laws.
There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal
fisherman. Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence
fishermen, but to lay stress on the duty of the State to protect the nations marine wealth. The so-
called preferential right of subsistence or marginal fishermen to the use of marine resources is
not at all absolute. In accordance with the Regalian Doctrine, marine resources belong to the state
and pursuant to the first paragraph of Section 2, Article XII of the Constitution, their exploration,
development and utilization...shall be under the full control and supervision of the State.

The enacted resolution and ordinance of the LGU were not violative of their preferential rights. The
enactment of these laws was a valid exercise of the police power of the LGU to protect public
interests and the public right to a balanced and healthier ecology. The rights and privileges
invoked by the petitioners are not absolute. The general welfare clause of the local government
code mandates for the liberal interpretation in giving the LGUs more power to accelerate
economic development and to upgrade the life of the people in the community. The LGUs are
endowed with the power to enact fishery laws in its municipal waters which necessarily includes
the enactment of ordinances in order to effectively carry out the enforcement of fishery laws in
their local community.

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

4) White Light Corp v City of Manila

Facts:
On December 3, 1992, City Mayor Alfredo S. Lim signed into law Manila City Ordinance No. 7774
entitled An Ordinance Prohibiting Short-Time Admission, Short-Time Admission Rates, and
Wash-Up Rate Schemes in Hotels, Motels, Inns, Lodging Houses, Pension Houses, and Similar
Establishments in the City of Manila (the Ordinance). The ordinance sanctions any person or
corporation who will allow the admission and charging of room rates for less than 12 hours or the
renting of rooms more than twice a day.

The petitioners White Light Corporation (WLC), Titanium Corporation (TC), and Sta. Mesa Tourist
and Development Corporation (STDC), who own and operate several hotels and motels in Metro
Manila, filed a motion to intervene and to admit attached complaint-in-intervention on the ground
that the ordinance will affect their business interests as operators. The respondents, in turn,
alleged that the ordinance is a legitimate exercise of police power.

RTC declared Ordinance No. 7774 null and void as it strikes at the personal liberty of the
individual guaranteed and jealously guarded by the Constitution. Reference was made to the
provisions of the Constitution encouraging private enterprises and the incentive to needed
investment, as well as the right to operate economic enterprises. Finally, from the observation that
the illicit relationships the Ordinance sought to dissuade could nonetheless be consummated by
simply paying for a 12-hour stay,

When elevated to CA, the respondents asserted that the ordinance is a valid exercise of police
power pursuant to Section 458 (4)(iv) of the Local Government Code which confers on cities the
power to regulate the establishment, operation and maintenance of cafes, restaurants,
beerhouses, hotels, motels, inns, pension houses, lodging houses and other similar
establishments, including tourist guides and transports. Also, they contended that under Art III
Sec 18 of Revised Manila Charter, they have the power to enact all ordinances it may deem
necessary and proper for the sanitation and safety, the furtherance of the prosperity and the
promotion of the morality, peace, good order, comfort, convenience and general welfare of the city
and its inhabitants and to fix penalties for the violation of ordinances.

Petitioners argued that the ordinance is unconstitutional and void since it violates the right to
privacy and freedom of movement; it is an invalid exercise of police power; and it is unreasonable
and oppressive interference in their business.
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CA, in turn, reversed the decision of RTC and affirmed the constitutionality of the ordinance. First,
it held that the ordinance did not violate the right to privacy or the freedom of movement, as it only
penalizes the owners or operators of establishments that admit individuals for short time stays.
Second, the virtually limitless reach of police power is only constrained by having a lawful object
obtained through a lawful method. The lawful objective of the ordinance is satisfied since it aims to
curb immoral activities. There is a lawful method since the establishments are still allowed to
operate. Third, the adverse effect on the establishments is justified by the well-being of its
constituents in general. Hence, the petitioners appealed before the SC.

Issue: Whether Ordinance No. 7774 is a valid exercise of police power of the State.

Held: No. Ordinance No. 7774 cannot be considered as a valid exercise of police power, and as
such, it is unconstitutional.

The facts of this case will recall to mind not only the recent City of Manila v Laguio Jr ruling, but
the 1967 decision in Ermita-Malate Hotel and Motel Operations Association, Inc., v. Hon. City
Mayor of Manila. The common thread that runs through those decisions and the case at bar goes
beyond the singularity of the localities covered under the respective ordinances. All three
ordinances were enacted with a view of regulating public morals including particular illicit activity
in transient lodging establishments. This could be described as the middle case, wherein there is
no wholesale ban on motels and hotels but the services offered by these establishments have
been severely restricted. At its core, this is another case about the extent to which the State can
intrude into and regulate the lives of its citizens

The test of a valid ordinance is well established. A long line of decisions including City of Manila
has held that for an ordinance to be valid, it must not only be within the corporate powers of the
local government unit to enact and pass according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must not contravene the Constitution or any
statute; (2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not
prohibit but may regulate trade; (5) must be general and consistent with public policy; and (6) must
not be unreasonable.

The ordinance in this case prohibits two specific and distinct business practices, namely wash rate
admissions and renting out a room more than twice a day. The ban is evidently sought to be
rooted in the police power as conferred on local government units by the Local Government Code
through such implements as the general welfare clause.

Police power is based upon the concept of necessity of the State and its corresponding right to
protect itself and its people. Police power has been used as justification for numerous and varied
actions by the State.
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The apparent goal of the ordinance is to minimize if not eliminate the use of the covered
establishments for illicit sex, prostitution, drug use and alike. These goals, by themselves, are
unimpeachable and certainly fall within the ambit of the police power of the State. Yet the
desirability of these ends do not sanctify any and all means for their achievement. Those means
must align with the Constitution.

SC contended that if they were to take the myopic view that an ordinance should be analyzed
strictly as to its effect only on the petitioners at bar, then it would seem that the only restraint
imposed by the law that they were capacitated to act upon is the injury to property sustained by
the petitioners. Yet, they also recognized the capacity of the petitioners to invoke as well the
constitutional rights of their patrons those persons who would be deprived of availing short time
access or wash-up rates to the lodging establishments in question. The rights at stake herein fell
within the same fundamental rights to liberty. Liberty as guaranteed by the Constitution was
defined by Justice Malcolm to include the right to exist and the right to be free from arbitrary
restraint or servitude. The term cannot be dwarfed into mere freedom from physical restraint of the
person of the citizen, but is deemed to embrace the right of man to enjoy the facilities with which
he has been endowed by his Creator, subject only to such restraint as are necessary for the
common welfare,

Indeed, the right to privacy as a constitutional right must be recognized and the invasion of it
should be justified by a compelling state interest. Jurisprudence accorded recognition to the right
to privacy independently of its identification with liberty; in itself it is fully deserving of constitutional
protection. Governmental powers should stop short of certain intrusions into the personal life of
the citizen.

An ordinance which prevents the lawful uses of a wash rate depriving patrons of a product and the
petitioners of lucrative business ties in with another constitutional requisite for the legitimacy of the
ordinance as a police power measure. It must appear that the interests of the public generally, as
distinguished from those of a particular class, require an interference with private rights and the
means must be reasonably necessary for the accomplishment of the purpose and not unduly
oppressive of private rights. It must also be evident that no other alternative for the
accomplishment of the purpose less intrusive of private rights can work. More importantly, a
reasonable relation must exist between the purposes of the measure and the means employed for
its accomplishment, for even under the guise of protecting the public interest, personal rights and
those pertaining to private property will not be permitted to be arbitrarily invaded.

Lacking a concurrence of these requisites, the police measure shall be struck down as an
arbitrary intrusion into private rights. The behavior which the ordinance seeks to curtail is in fact
already prohibited and could in fact be diminished simply by applying existing laws. Less intrusive
measures such as curbing the proliferation of prostitutes and drug dealers through active police
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work would be more effective in easing the situation. So would the strict enforcement of existing
laws and regulations penalizing prostitution and drug use. These measures would have minimal
intrusion on the businesses of the petitioners and other legitimate merchants. Further, it is
apparent that the ordinance can easily be circumvented by merely paying the whole day rate
without any hindrance to those engaged in illicit activities. Moreover, drug dealers and prostitutes
can in fact collect wash rates from their clientele by charging their customers a portion of the rent
for motel rooms and even apartments.

SC reiterated that individual rights may be adversely affected only to the extent that may fairly be
required by the legitimate demands of public interest or public welfare. The State is a leviathan
that must be restrained from needlessly intruding into the lives of its citizens. However well-
intentioned the ordinance may be, it is in effect an arbitrary and whimsical intrusion into the rights
of the establishments as well as their patrons. The ordinance needlessly restrains the operation of
the businesses of the petitioners as well as restricting the rights of their patrons without sufficient
justification. The ordinance rashly equates wash rates and renting out a room more than twice a
day with immorality without accommodating innocuous intentions.

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals is REVERSED,
and the Decision of the Regional Trial Court of Manila, Branch 9, is REINSTATED. Ordinance No.
7774 is hereby declared UNCONSTITUTIONAL. No pronouncement as to costs.

5) SOCIAL JUSTICE SOCIETY VS. ATIENZA CASE DIGEST

Facts: On November 20, 2001, The Sangguniang Panglunsod of Maynila enacted Ordinance No.
8027. Hon. Jose L. Atienza, jr. approved the said ordinance on November 28, 2001. and it
became effective on December 28, 2001. Ordinance No. 8027 reclassified the area of Pandacan
and Sta. Ana from industrial to commercial and directed the owners and operators of businesses
disallowed under Section 1 to cease and desist from operating their businesses within six months
from the date of effectivity of the ordinance. Among the businesses situated in the area are the so-
called Pandacan Terminals of the oil companies Caltex, Petron and Shell.

However, on June 26, 2002, the City of Manila and the Department of Energy entered into a
memorandum of understanding with the oil companies in which they agreed that :scaling down of
Pandacan Terminals was the most viable and practicable option. Under the memorandum of
understanding, the City of Manila and the Department of Energy permits the Oil Companies to
continuously operate in compliance with legal requirements, within the limited area resulting from
the joint operations and the scale down program.

The Sangguniang Panlungsod ratified the memorandum of understanding in Resolution No. 97. In
that resolution, the Sanggunian declared that the memorandum of understanding was effective
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only for a period of six months starting July 25, 2002. Thereafter, on January 30, 2003, the
Sanggunian adopted Resolution No. 13 extending the validity of Resolution No. 97 to April 30,
2003 and authorizing Mayor Atienza to issue special business permits to the oil companies.
Resolution No. 13, s. 2003 also called for a reassessment of the ordinance.

Issue: Whether or not respondent has the mandatory legal duty to enforce Ordinance No. 8027
and order the removal of the Pandacan Terminals. And Whether or not the June 26, 2002
memorandum of understanding and the resolutions ratifying it can amend or repeal Ordinance No.
8027.

Held: YES. The Local Government Code imposes upon respondent the duty, as City Mayor of
Manila, to enforce all laws and ordinances relative to the governance of the city. One of these is
Ordinance No. 8027. As the chief executive of the city, he has the duty to put into effect Ordinance
No. 8027 as long as it has not been repealed by the Sanggunian or negated by the courts.

On the other hand assuming that the terms of the memorandum of understanding were
contradictory with Ordinance No. 8027, the resolutions which ratified it and made it binding on the
City of Manila expressly gave it full force and effect only until April 30, 2003. There is nothing that
legally hinders respondent from enforcing Ordinance No. 8027. Wherefore the Court Ordered
Hon. Jose L. Atienza, Jr., as mayor of the city of Manila to immediately enforce Ordinance No.
8027.

In Dimaporo v. Mitra, Jr., it provides that officers cannot refuse to perform their duty on the ground
of an alleged invalidity of the statute imposing the duty. It might seriously hinder the transaction of
public business if these officers were to be permitted in all cases to question the constitutionality
of statutes and ordinances imposing duties upon them and which have not judicially been
declared unconstitutional.

Taxing Power (Local Taxation: Sec. 5-7 of Article X, 1987 Consti; Sec. 128-196 of LGC)

1) MIAA v CA

FACTS:
Manila International Airport Authority (MIAA) operates the Ninoy Aquino International
Airport (NAIA) as stated in EO 903 (the MIAA Charter). As operator of the airport, it
administers the land, improvements and equipment within the NAIA Complex.
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued
Opinion No. 061, which states that the Local Government Code of 1991 withdrew the
exemption from real estate tax granted to the MIAA under Section 21 of its Charter. Thus,
MIAA negotiated with the respondent City of Paraaque with regards to the real estate tax
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imposed. It then paid some of the real estate tax already due.On 28 June 2001, it received
Final Notices of Real Estate Tax Delinquency.
On 17 July 2001, the City Treasurer, issued notices of levy and warrants of levy on the
Airport Lands and Buildings. The Mayor threatened to sell the said lands and buildings at a
public auction, should the it failed to pay. MIAA thus sought a clarification of the OGCC
Opinion.On 9 August 2001, the OGCC issued Opinion No. 147 clarifying its previous
Opinion. The latter pointed out that Section 206 of the Local Government Code requires
persons exempt from real estate tax to show proof of exemption. It opined that Section 21
of the MIAA Charter is the proof that MIAA is exempt from real estate tax.
On 1 October 2001, MIAA filed a petition with the CA. It sought to restrain the respondent
from imposing real estate tax on, levying against, and auctioning for public sale the Airport
Lands and Buildings. On 5 October 2001, the CA dismissed the petition because the MIAA
filed it beyond the 60-day reglementary period. The appellate court also denied its motion
for reconsideration and supplemental motion for reconsideration.
Meanwhile, in January 2003, the respondent already posted notices of auction sale on 7
February 2003. A day before the public auction, the MIAA filed before the SC a motion to
restrain respondents from auctioning the Airport Lands and Buildings. On 7 February 2003,
the Court issued a temporary restraining order (TRO) effective immediately. However,
respondents only received the TRO threehours after the conclusion of the public auction.
On 29 March 2005, the Court heard the parties in oral arguments. MIAA admits that its
Charter has placed the title to the Airport Lands and Buildings in its name. However, it
pointed out that it cannot claim ownership over these properties since the real owner is the
Republic of the Philippines. Thus, the said properties are inalienable and are not subject to
real estate tax by local governments.
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew
the tax exemption privileges of "government-owned and-controlled corporations" (GOCC)
upon the effectivity of the Local Government Code. Also, an international airport is not
among the exceptions mentioned in Section 193 of the Code. Thus, respondents assert
that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate
tax.

ISSUE:
Whether or not the Airport Lands and Buildings of MIAA are exempt from real estate tax?

HELD:
Yes. MIAA's Airport Lands and Buildings are exempt from real estate tax.First, MIAA is not
a GOCC, but an instrumentality of the National Government. Section 2(10) of the
Administrative Code defines a government "instrumentality" as any agency of the National
Government, not integrated within the department framework, vested with special functions
or jurisdiction by law, endowed with some if not all corporate powers, administering special
funds, and enjoying operational autonomy, usually through a charter..., while Section
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133(o) of the Local Government Code, states that Taxes, fees or charges of any kind on
the National Government, its agencies and instrumentalities and local government units
cannot be imposed. Thus, it is exempt from local taxation. Second, the real properties of
MIAA are owned by the Republic of the Philippines. Article 420 of the Civil Code states that
some of the properties that belong to the State are Those intended for public use, such as
roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character, and Section 234(a) of the Local Government
Code exempts from real estate tax any "[r]eal property owned by the Republic of the
Philippines. Thus, it is exempt from real estate tax.

2) Mactan Cebu International Airport Authority v Marcos

FACTS:
Petitioner Mactan Cebu International Airport Authority was created by virtue of R.A. 6958,
mandated to principally undertake the economical, efficient, and effective control, management,
and supervision of the Mactan International Airport and Lahug Airport, and such other airports as
may be established in Cebu.

Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment
of realty taxes in accordance with Section 14 of its charter. However, on October 11, 1994, Mr.
Eustaquio B. Cesa, Officer in Charge, Office of the Treasurer of the City of Cebu, demanded
payment from realty taxes in the total amount of P2,229,078.79. Petitioner objected to such
demand for payment as baseless and unjustified claiming in its favor the afore cited Section 14 of
R.A. 6958. It was also asserted that it is an instrumentality of the government performing
governmental functions, citing Section 133 of the Local Government Code of 1991.

Section 133. Common limitations on the Taxing Powers of Local Government Units.

The exercise of the taxing powers of the provinces, cities, barangays, municipalities shall not
extend to the levi of the following:

xxx Taxes, fees or charges of any kind in the National Government, its agencies and
instrumentalities, and LGUs. xxx

Respondent City refused to cancel and set aside petitioners realty tax account, insisting that the
MCIAA is a government-controlled corporation whose tax exemption privilege has been withdrawn
by virtue of Sections 193 and 234 of Labor Code that took effect on January 1, 1992.

ISSUE: Whether or not the petitioner is a taxable person

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HELD: Taxation is the rule and exemption is the exception. MCIAAs exemption from payment of
taxes is withdrawn by virtue of Sections 193 and 234 of the LGC. Statutes granting tax exemptions
shall be strictly construed against the taxpayer and liberally construed in favor of the taxing
authority.

As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons,

including government-owned and controlled corporations, section 193 of the LGC prescribes the
general rule, viz, they are withdrawn upon the effectivity of the LGC, except those granted to local
water districts, cooperatives, duly registered under RA 6938, non stock and nonprofit hospitals
and educational institutions and unless otherwise provided in the LGC.

The petitioner cannot claim that it was never a taxable person under its Charter. It was only
exempted from the payment of realty taxes. The grant of the privilege only in respect of this tax is
conclusive proof of the legislative intent to make it a taxable person subject to all taxes, except
real property tax.

3) City Government of Quezon City v. Bayan Telecommunications, Inc.

G.R. No.162015. March 6, 2006

FACTS: Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder

under Republic Act (R.A.) No. 3259 (1961) to establish and operate radio stations for domestic
telecommunications, radiophone, broadcasting and telecasting. Section 14 (a) of R.A. No. 3259
states: The grantee shall be liable to pay the same taxes on its real estate, buildings and
personal property, exclusive of the franchise, xxx. In 1992, R.A. No. 7160, otherwise known as
the Local Government Code of 1991 (LGC) took effect. Section 232 of the Code grants local
government units within the Metro Manila Area the power to levy tax on real properties. Barely few
months after the LGC took effect, Congress enacted R.A. No. 7633, amending Bayantels original
franchise. The Section 11 of the amendatory contained the following tax provision: The grantee,
its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and
personal property, exclusive of this franchise, xxx. In 1993, the government of Quezon City
enacted an ordinance otherwise known as the Quezon City Revenue Code withdrawing tax
exemption privileges.

ISSUE: Whether or not Bayantels real properties in Quezon City are exempt from real property
taxes under its franchise.

HELD: YES. A clash between the inherent taxing power of the legislature, which necessarily
includes the power to exempt, and the local governments delegated power to tax under the aegis
of the 1987 Constitution must be ruled in favor of the former. The grant of taxing powers to LGUs
under the Constitution and the LGC does not affect the power of Congress to grant exemptions to
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certain persons, pursuant to a declared national policy. The legal effect of the constitutional grant
to local governments simply means that in interpreting statutory provisions on municipal taxing
powers, doubts must be resolved in favor of municipal corporations.

The legislative intent expressed in the phrase exclusive of this franchise cannot be construed
other than distinguishing between two (2) sets of properties, be they real or personal, owned by
the franchisee, namely, (a) those actually, directly and exclusively used in its radio or
telecommunications business, and (b) those properties which are not so used. It is worthy to note
that the properties subject of the present controversy are only those which are admittedly falling
under the first category.

Since R. A. No. 7633 was enacted subsequent to the LGC, perfectly aware that the LGC has
already withdrawn Bayantels former exemption from realty taxes, the Congress using, Section 11
thereof with exactly the same defining phrase exclusive of this franchise is the basis for
Bayantels exemption from realty taxes prior to the LGC. In plain language, the Court views this
subsequent piece of legislation as an express and real intention on the part of Congress to once
again remove from the LGCs delegated taxing power, all of the franchisees (Bayantels)
properties that are actually, directly and exclusively used in the pursuit of its franchise.

4) Drilon vs Lim
GR No. 112497August 4, 1994

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

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

Petitioners Argument:
1. The annulled Section 187 is constitutional and that the procedural requirements for the
enactment of tax ordinances as specified in the Local Government Code had indeed not been
observed. (Petition originally dismissed by the Court due to failure to submit certified true copy of
the decision, but reinstated it anyway.)
2. Grounds of non-compliance of procedure
a. No written notices as required by Art 276 of Rules of Local Government Code
b. Not published
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c. Not translated to tagalog

Supreme Courts Argument:

1. Section 187 authorizes the petitioner to review only the constitutionality or legality of tax
ordinance. What he found only was that it was illegal. That act is not control but supervision.
2. Control lays down the rules in the doing of act and if not followed order the act undone or re-
done. Supervision sees to it that the rules are followed.
3. Two grounds of declaring Manila Revenue Code null and void (1) inclusion of certain ultra vires
provisions (2) non-compliance with prescribed procedure in its enactment but were followed.
The requirements are upon approval of local development plans and public investment programs
of LGU not to tax ordinances.

5) Batangas City v Pilipinas Shell Corp

FACTS: Respondent, Pilipinas Shell, was only paying the amount of P98,964.71 for fees and other
charges which include the amount of P1,180.34 as Mayor's Permit. However, on February 20,
2001, petitioner Batangas City, through its City Legal Officer, sent a notice of assessment to
respondent demanding the payment of P92,373,720.50 and P312,656,253.04 as business taxes
for its manufacture and distribution of petroleum products. In addition, respondent was also
required and assessed to pay the amount of P4,299,851.00 as Mayor's Permit Fee based on the
gross sales of its Tabagao Refinery. The assessment was allegedly pursuant of Section 134 of the
LGC of 1991 and Section 23 of its Batangas City Tax Code of 2002.

In response, respondent filed a protest on April 17, 2002 contending among others that it is not
liable for the payment of the local business tax either as a manufacturer or distributor of petroleum
products. It further argued that the Mayor's Permit Fees are exorbitant, confiscatory, arbitrary,
unreasonable and not commensurable with the cost of issuing a license.

On May 13, 2002, petitioners denied respondent's protest and declared that under Section 14 of
the Batangas City Tax Code of 2002, they are empowered to withhold the issuance of the Mayor's
Permit for failure of respondent to pay the business taxes on its manufacture and distribution of
petroleum products.

On June 17, 2002, respondent filed a Petition for Review pursuant to Section 195 of the LGC of
1991 before the Regional Trial Court (RTC) of Batangas City.

In its petition, respondent maintained that petitioners have no authority to impose the said taxes
and fees, and argued that the levy of local business taxes on the business of manufacturing and
distributing gasoline and other petroleum products is contrary to law and against national policy. It
further contended that the Mayor's Permit Fee levied by petitioners were unreasonable and
confiscatory.
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In its Answer, petitioners contended that the City of Batangas can legally impose taxes on the
business of manufacturing and distribution of petroleum products, including the Mayor's Permit
Fees upon respondent.

Trial thereafter ensued.

In the interim, respondent paid under protest the Mayor's Permit Fees for the year 2003 amounting
to P774,840.50 as manufacturer and P3,525,010.50 as distributor. When respondent applied for
the issuance of the Mayor's Permit in 2004, it offered the amount of PI50,000.00 as compromise
Mayor's Permit Fee without prejudice to the outcome of the case then pending, which was
rejected by petitioners.

RTC of Batangas City rendered a Decision sustaining the imposition of business taxes by
petitioners upon the manufacture and distribution of petroleum products by respondent. However,
the RTC withheld the imposition of Mayor's Permit Fee in deference to the provisions of Section
147 of the LGC, in relation to Section 143(h) of the same Code, which imposed a limit to the
power of petitioners to collect the said business taxes.

ISSUE: Whether an LGU is empowered under the LGC to impose business taxes on persons or
entities engaged in the business of manufacturing and distribution of petroleum products.

HELD: In its petition, petitioners assert that any activity that involves the production or
manufacture and the distribution or selling of any kind or nature as a means of livelihood or with a
view to profit can be taxed by the LGUs. They posit that the authority granted to them by Section
143(h) of the LGC is so broad that it practically covers any business that the sanggunian
concerned may deem proper to tax, even including businesses which are already subject to
excise, value-added or percentage tax under the National Internal Revenue Code (NIRC) provided
that the same shall not exceed two percent of the gross sales or receipts of the preceding
calendar year.

We do not agree.

At the outset, it must be emphasized that although the power to tax is inherent in the State, the
same is not true for LGUs because although the mandate to impose taxes granted to LGUs is
categorical and long established in the 1987 Philippine Constitution, the same is not all
encompassing as it is subject to limitations as explicitly stated in Section 5, Article X of the 1987
Constitution,

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SECTION 5. Each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the
Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and
charges shall accrue exclusively to the local governments.

The power of a province to tax is limited to the extent that such power is delegated to it either by
the Constitution or by statute. Section 5, Article X of the 1987 Constitution is clear on this point.

Among the common limitations on the taxing powers of LGUs under Section 133 of the LGC is
paragraph (h) which states:

SECTION 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless
otherwise provided herein, the exercise of taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:
XXXX

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended,
and taxes, fees or charges on petroleum products.

On the contrary, Section 143 of the LGC defines the general power of LGUs to tax businesses
within its jurisdiction. Thus, the omnibus grant of power to LGUs under Section 143(h) of the LGC
cannot overcome the specific exception or exemption in Section 133(h) of the same Code. This is
in accord with the rule on statutory construction that specific provisions must prevail over general
ones. A special and specific provision prevails over a general provision irrespective of their relative
positions in the statute. Generalia specialibus non derogant. Where there is in the same statute a
particular enactment and also a general one which in its most comprehensive sense would
include what is embraced in the former, the particular enactment must be operative, and the
general enactment must be taken to affect only such cases within its general language as are not
within the provisions of the particular enactment.

Second, Article 232(h) of the Implementing Rules and Regulations (IRR) of the LGC of 1991
states:

ARTICLE 232. Tax on Business. - The Municipality may impose taxes on the following
businesses:
xxxx
(h) On any business not otherwise specified in the preceding paragraphs which the
sanggunian concerned may deem proper to tax provided that that on any business subject to the
excise tax. VAT or percentage tax under the NIRC, as amended, the rate of tax shall not exceed
two percent (2%) of gross sales or receipts of the preceding calendar year and provided further,
that in line with existing national policy, any business engaged in the production, manufacture,
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refining, distribution or sale of oil, gasoline, and other petroleum products shall not be subject to
any local tax imposed in this Article.18
Article 232 defines with more particularity the capacity of a municipality to impose taxes on
businesses. However, it admits of certain exceptions, specifically, that businesses engaged in the
production, manufacture, refining, distribution or sale of oil, gasoline, and other petroleum
products, shall not be subject to any local tax imposed by Article 232.

WHEREFORE, in view of the foregoing, the Court hereby resolves to DENY present petition. The
Decision dated January 22, 2009 and Resolution dated April 13, 2009 of the Court of Tax Appeals
En Banc in CTAEB No. 350 are AFFIRMED.

Eminent Domain (Sec.19, LGC; Sec.9 of Art.III of 1987 Consti; Rule 97 of Rules of Court)

1) City Government of QC vs Judge Ericta & Himlayang Pilipino

FACTS:
Section 9 of City Ordinance No. 6118, S-64 entitled "ORDINANCE REGULATING THE
ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE
CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND
PROVIDING PENALTIES FOR THE VIOLATION THEREOF" provides:

"At least six (6) percent of the total area of the memorial park cemetery shall be set
aside for charity burial of deceased persons who are paupers and have been residents of
Quezon City for at least 5 years prior to their death, to be determined by competent City
Authorities. The area so designated shall immediately be developed and should be open
for operation not later than six months from the date of approval of the application."

For seven years, this provision has not been enforced until the Quezon City Council passed the
resolution requesting the City Engineer of Quezon City to stop and further selling and/or
transaction of memorial park lots in QC where the owners thereof failed to donate the required 6%
for pauper burial. Pursuant to such resolution, the City Engineer notified Himlayang Pilipino Inc in
writing that Sec 9 of Ordinance 6118 would be enforced.

Because of this, Himlayang Pilipino filed the CFI at QC a petition for declaratory relief, prohibition
and mandamus with preliminary injunction seeking to annul Section 9 of the ordinance for being
contrary to the Constitution, the QC Charter, Local Autonomy Act and Revised Administrative
Code.

The lower court declared said provision null and void, thus the City Council of QC filed the petition
for review before the SC.
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The QC Council argue 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 argue 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 other hand, Himlayang Pilipino, Inc. contends that the taking or confiscation of property is
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. The respondent also stresses that the general welfare clause is not available as a
source of power for the taking of the property in this case because it refers to "the power of
promoting the public welfare by restraining and regulating the use of liberty and property." The
respondent points out that if an owner is deprived of his property outright under the State's police
power, the property is generally not taken for public use but is urgently and summarily destroyed
in order to promote the general welfare.

ISSUES:
1. Does QC council have the authority to issue create the provision in question?
2. Is Section 9 of Ordinance No. 6118, S-64 is a valid exercise of police power?

HELD:
1. NO.

There is nothing in the Charter of Question City that would justify provision in question. It 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 because the
power to regulate does not include the power to prohibit.

Neither is the provision justified under R.A. 537 authorizing the city council to 'prohibit the burial of
the dead within the center of population of the city and provide for their burial in such proper place
and in such manner as the council may determine, subject to the provisions of the general law
regulating burial grounds and cemeteries and governing funerals and disposal of the dead'
because such provision does not authorize confiscation of property to serve as burial grounds.

2. NO.

The police power of Quezon City provides:

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"To make such further ordinance and regulations 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; and
enforce obedience thereto with such lawful fines or penalties as the City Council may
prescribe under the provisions of subsection (jj) of this section."

In a long line of cases, police power is usually exercised in the form of mere regulation or
restriction in the use of liberty or property for the promotion of the general welfare. It does not
involve the taking or confiscation of property with the exception of a few cases where there is a
necessity to confiscate private property in order to destroy it for the purpose of protecting the
peace and order and of promoting the general welfare as for instance, the confiscation of an
illegally possessed article, such as opium and firearms. The provision in question is not merely
regulation but an outright confiscation. It deprives a person of its property without compensation.

The provision can neither be sustained on the ground of presumption of validity of a duly enacted
legislation. 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. Similarly, 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.

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 conducive and wholesome environments and the beneficiaries of the regulation,
in turn, are made to pay by the subdivision developer when individual lots are sold to home-
owners.

2) CITY OF CEBU vs. SPOUSES APOLONIO and BLASA DEDAMO

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

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FACTS: On 17 September 1993, petitioner City of Cebu filed a complaint for eminent domain
against respondents spouses Apolonio and Blasa Dedamo. The petitioner alleged therein that it
needed the land for a public purpose, i.e., for the construction of a public road which shall serve
as an access/relief road of Gorordo Avenue to extend to the General Maxilum Avenue and the
back of Magellan International Hotel Roads in Cebu City.

The lower court fixed the amount of just compensation at P20,826,339.50. Petitioner alleged that
the lower court erred in fixing the amount of just compensation at P20,826,339.50. The just
compensation should be based on the prevailing market price of the property at the
commencement of the expropriation proceedings. The petitioner did not convince the Court of
Appeals, which affirmed the lower courts decision in toto.

ISSUE: Whether or not just compensation should be determined as of the date of the filing of the
complaint.

HELD: No. In the case at bar, the applicable law as to the point of reckoning for the determination
of just compensation is Section 19 of R.A. No. 7160, which expressly provides that just
compensation shall be determined as of the time of actual taking. The petitioner has misread our
ruling in The National Power Corp. vs. Court of Appeals. We did not categorically rule in that case
that just compensation should be determined as of the filing of the complaint. We explicitly stated
therein that although the general rule in determining just compensation in eminent domain is the
value of the property as of the date of the filing of the complaint, the rule "admits of an exception:
where this Court fixed the value of the property as of the date it was taken and not at the date of
the commencement of the expropriation proceedings.

3) REPUBLIC vs. CA
G.R. No. 146587 July 2, 2002

FACTS: Petitioner (Philippine Information Agency) instituted expropriation proceedings covering a

total of 544,980 square meters of contiguous land situated along MacArthur Highway, Malolos,
Bulacan, to be utilized for the continued broadcast operation and use of radio transmitter facilities
for the Voice of the Philippines project.

Petitioner made a deposit of P517,558.80, the sum provisionally fixed as being the reasonable
value of the property. On 26 February 1979, or more than 9 years after the institution of the
expropriation proceedings, the trial court issued this order condemning the property and ordering
the plaintiff to pay the defendants the just compensation for the property.

It would appear that the National Government failed to pay the respondents the just compensation
pursuant to the foregoing decision. The respondents then filed a manifestation with a motion

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seeking payment for the expropriated property. In response, the court issued a writ of execution
for the implementation thereof.

Meanwhile, Pres. Estrada issued Proc. No. 22 transferring 20 hectares of the expropriated land to
the Bulacan State University.

Despite the courts order, the Santos heirs remained unpaid and no action was on their case until
petitioner filed its manifestation and motion to permit the deposit in court of the amount
P4,664,000 by way of just compensation.

The Santos heirs submitted a counter-motion to adjust the compensation from P6/sq.m. as
previously fixed to its current zonal value of P5,000/sq.m. or to cause the return of the
expropriated property.

The RTC Bulacan ruled in favor of the Santos heirs declaring its 26 February 1979 Decision to be
unenforceable on the ground of prescription in accordance with Sec. 6, Rule 39 of the 1964/1997
ROC which states that a final and executory judgment or order may be executed on motion within
5 years from the date of its entry. RTC denied petitioners Motion to Permit Deposit and ordered
the return of the expropriated property to the heirs of Santos.

ISSUES:
1. WON the petitioner may appropriate the property
2. WON the respondents are entitled to the return of the property in question

HELD:

1. The right of eminent domain is usually understood to be an ultimate right of the sovereign
power to appropriate any property within its territorial sovereignty for a public purpose.
Fundamental to the independent existence of a State, it requires no recognition by the
Constitution, whose provisions are taken as being merely confirmatory of its presence and as
being regulatory, at most, in the due exercise of the power. In the hands of the legislature, the
power is inherent, its scope matching that of taxation, even that of police power itself, in many
respects. It reaches to every form of property the State needs for public use and, as an old case
so puts it, all separate interests of individuals in property are held under a tacit agreement or
implied reservation vesting upon the sovereign the right to resume the possession of the property
whenever the public interest so requires it.

The ubiquitous character of eminent domain is manifest in the nature of the expropriation
proceedings. Expropriation proceedings are not adversarial in the conventional sense, for the
condemning authority is not required to assert any conflicting interest in the property. Thus, by
filing the action, the condemnor in effect merely serves notice that it is taking title and possession
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of the property, and the defendant asserts title or interest in the property, not to prove a right to
possession, but to prove a right to compensation for the taking.

Obviously, however, the power is not without its limits: first, the taking must be for public use, and
second, that just compensation must be given to the private owner of the property. These twin
proscriptions have their origin in the recognition of the necessity for achieving balance between
the State interests, on the one hand, and private rights, upon the other hand, by effectively
restraining the former and affording protection to the latter. In determining public use, two
approaches are utilized - the first is public employment or the actual use by the public, and the
second is public advantage or benefit. It is also useful to view the matter as being subject to
constant growth, which is to say that as society advances, its demands upon the individual so
increases, and each demand is a new use to which the resources of the individual may be
devoted.

The expropriated property has been shown to be for the continued utilization by the PIA, a
significant portion thereof being ceded for the expansion of the facilities of the Bulacan State
University and for the propagation of the Philippine carabao, themselves in line with the
requirements of public purpose. Respondents question the public nature of the utilization by
petitioner of the condemned property, pointing out that its present use differs from the purpose
originally contemplated in the 1969 expropriation proceedings. The argument is of no moment.
The property has assumed a public character upon its expropriation. Surely, petitioner, as the
condemnor and as the owner of the property, is well within its rights to alter and decide the use of
that property, the only limitation being that it be for public use, which, decidedly, it is.

2. NO. In insisting on the return of the expropriated property, respondents would exhort on the
pronouncement in Provincial Government of Sorsogon vs. Vda. de Villaroya where the unpaid
landowners were allowed the alternative remedy of recovery of the property there in question. It
might be borne in mind that the case involved the municipal government of Sorsogon, to which the
power of eminent domain is not inherent, but merely delegated and of limited application. The
grant of the power of eminent domain to local governments under Republic Act No. 7160 cannot
be understood as being the pervasive and all-encompassing power vested in the legislative
branch of government. For local governments to be able to wield the power, it must, by enabling
law, be delegated to it by the national legislature, but even then, this delegated power of eminent
domain is not, strictly speaking, a power of eminent, but only of inferior, domain or only as broad
or confined as the real authority would want it to be.

Thus, in Valdehueza vs. Republic where the private landowners had remained unpaid ten years
after the termination of the expropriation proceedings, this Court ruled -

The points in dispute are whether such payment can still be made and, if so, in what amount.
Said lots have been the subject of expropriation proceedings. By final and executory judgment in
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said proceedings, they were condemned for public use, as part of an airport, and ordered sold to
the government. x x x It follows that both by virtue of the judgment, long final, in the expropriation
suit, as well as the annotations upon their title certificates, plaintiffs are not entitled to recover
possession of their expropriated lots - which are still devoted to the public use for which they were
expropriated - but only to demand the fair market value of the same.

"Said relief may be granted under plaintiffs' prayer for: `such other remedies, which may be
deemed just and equitable under the premises'."

The Court proceeded to reiterate its pronouncement in Alfonso vs. Pasay City where the recovery
of possession of property taken for public use prayed for by the unpaid landowner was denied
even while no requisite expropriation proceedings were first instituted. The landowner was merely
given the relief of recovering compensation for his property computed at its market value at the
time it was taken and appropriated by the State.

The judgment rendered by the Bulacan RTC in 1979 on the expropriation proceedings provides
not only for the payment of just compensation to herein respondents but likewise adjudges the
property condemned in favor of petitioner over which parties, as well as their privies, are bound.
Petitioner has occupied, utilized and, for all intents and purposes, exercised dominion over the
property pursuant to the judgment. The exercise of such rights vested to it as the condemnee
indeed has amounted to at least a partial compliance or satisfaction of the 1979 judgment,
thereby preempting any claim of bar by prescription on grounds of non-execution. In arguing for
the return of their property on the basis of non-payment, respondents ignore the fact that the right
of the expropriatory authority is far from that of an unpaid seller in ordinary sales, to which the
remedy of rescission might perhaps apply. An in rem proceeding, condemnation acts upon the
property. After condemnation, the paramount title is in the public under a new and independent
title; thus, by giving notice to all claimants to a disputed title, condemnation proceedings provide a
judicial process for securing better title against all the world than may be obtained by voluntary
conveyance.

Respondents, in arguing laches against petitioner did not take into account that the same
argument could likewise apply against them. Respondents first instituted proceedings for payment
against petitioner on 09 May 1984, or five years after the 1979 judgment had become final. The
unusually long delay in bringing the action to compel payment against herein petitioner would
militate against them. Consistently with the rule that one should take good care of his own
concern, respondents should have commenced the proper action upon the finality of the judgment
which, indeed, resulted in a permanent deprivation of their ownership and possession of the
property.

The constitutional limitation of just compensation is considered to be the sum equivalent to the
market value of the property, broadly described to be the price fixed by the seller in open market in
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the usual and ordinary course of legal action and competition or the fair value of the property as
between one who receives, and one who desires to sell, it fixed at the time of the actual taking by
the government. Thus, if property is taken for public use before compensation is deposited with
the court having jurisdiction over the case, the final compensation must include interests on its just
value to be computed from the time the property is taken to the time when compensation is
actually paid or deposited with the court. In fine, between the taking of the property and the actual
payment, legal interests accrue in order to place the owner in a position as good as (but not better
than) the position he was in before the taking occurred.

The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value
of the property to be computed from the time petitioner instituted condemnation proceedings and
took the property in September 1969. This allowance of interest on the amount found to be the
value of the property as of the time of the taking computed, being an effective forbearance, at
12% per annum should help eliminate the issue of the constant fluctuation and inflation of the
value of the currency over time. Article 1250 of the Civil Code, providing that, in case of
extraordinary inflation or deflation, the value of the currency at the time of the establishment of the
obligation shall be the basis for the payment when no agreement to the contrary is stipulated, has
strict application only to contractual obligations. In other words, a contractual agreement is
needed for the effects of extraordinary inflation to be taken into account to alter the value of the
currency.

All given, the trial court of Bulacan in issuing its order, dated 01 March 2000, vacating its decision
of 26 February 1979 has acted beyond its lawful cognizance, the only authority left to it being to
order its execution. Verily, private respondents, although not entitled to the return of the
expropriated property, deserve to be paid promptly on the yet unpaid award of just compensation
already fixed by final judgment of the Bulacan RTC on 26 February 1979 at P6.00 per square
meter, with legal interest thereon at 12% per annum computed from the date of "taking" of the
property, i.e., 19 September 1969, until the due amount shall have been fully paid.

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