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Final Exam ReviewerPublic Corporations under Atty. Ordonez & Atty. BubanPUP Legal Annotations on Statutory Provisions Offered by Nonsensicals (LASON) Notes

Section 18.Power to Generate and Apply Resources. - Local government units shall have the

power and authority to establish an organization that shall be responsible for the efficient

and effective implementation of their development plans, program objectives and priorities;

to create their own sources of revenues and to levy taxes, fees, and charges which s hall

accrue exclusively for their use and disposition and which shall be retained by them; to have

a just share in national taxes which shall be automatically and directly released to them

without need of any further action; to have an equitable share in the proceeds from the

utilization and development of the national wealth and resources within their respective

territorial jurisdictions including sharing the same with the inhabitants by way of direct

benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or

personal property held by them in their proprietary capacity and to apply their resources and

assets for productive, developmental, or welfare purposes, in the exercise or furtherance of

their governmental or proprietary powers and functions and thereby ensure t heir

development into self-reliant communities and active participants in the attainment of

national goals.

Section 130.Fundamental Principles. - The following fundamental principles shall govern the

exercise of the taxing and other revenue-raising powers of local government units:

(a) Taxation shall be uniform in each local government unit;

(b) Taxes, fees, charges and other impositions shall:

(1) be equitable and based as far as practicable on t he taxpayer's ability

to pay;

(2) be levied and collected only for public purposes;

(3) not be unjust, excessive, oppressive, or confiscatory;

(4) not be contrary to law, public policy, national economic policy, or in

the restraint of trade;

(c) The collection of local taxes, fees, charges and other impositions shall in no case

be let to any private person;

(d) The revenue collected pursuant to the provisions of this Code shall inure solely

to the benefit of, and be subject to the disposition by, t he local government unit

levying the tax, fee, charge or other imposition unless otherwise specifically

provided herein; and,

(e) Each local government unit shall, as far as practicable, evolve a progressive

system of taxation.

PHILIPPINE PETROLEUM CORPORATION, petitioner, vs.MUNICIPALITY OF PILILLA, RIZAL,Represented by MAYOR NICOMEDES F. PATENIA, respondent.

Facts: Petitioner, Philippine Petroleum Corporation is a business enterprise engaged in the

manufacture of lubricated oil basestock. Under the National Internal Revenue Code of 1939,

manufactured oils and other fuels are subject to specific tax. Then PD No. 231, or the Local

Tax Code was issued governing t he exercise by lgus taxing and other revenue-raising powers.

Sections 19 and 19 (a) thereof, provide among others, that the municipality may impose

taxes on business, except on those for which fixed taxes are provided on manufacturers,

importers or producers of any article of commerce of whatever kind or nature, including

brewers, distillers, rectifiers, repackers, and compounders of liquors, distilled spirits and/or

wines in accordance with the schedule listed therein.

The Secretary of Finance issued Provincial Circular No. 26-73, directed to all provincial, city

and municipal treasurers to refrain from collecting any local tax imposed in old or new tax

ordinances subject to the specific tax under t he National Internal Revenue Code Likewise,

Provincial Circular No. 26 A-73 was issued by the Secretary of Finance instructing all City

Treasurers to refrain from collecting any local tax imposed in tax ordinances enacted before

or after the effectivity of the Local Tax Code.

Respondent Municipality of Pililla, Rizal, through Municipal Council Resolution No. 25, S-1974

enacted Municipal Tax Ordinance No. 1, S-1974 otherwise known a s "The Pililla Tax Code of

1974" said ordinance imposed a tax on business, except for those for w hich fixed taxes are

provided in the Local Tax Co de on manufacturers, importers, or producers of any article of

commerce of whatever kind or nature, including brewers, distillers, rectifiers, repackers, and

compounders of liquors, distilled spirits and/or wines in accordance with the schedule found

in the Local Tax Code, as well as mayor's permit, sanitary inspection fee and st orage permit

fee for flammable, combustible or explosive substances (Rollo, pp. 183-187), while Section

139 of the disputed ordinance imposed surcharges and interests on unpaid taxes, fees or

charges (Ibid., p. 193).

Subsequently Presidential Decree No. 426 was issued amending certain provisions of P.D.

231 but retaining Sections 19 and 19 (a) with adjusted rates and 22 (b).

P.D. 436 was promulgated increasing the specific tax on lubricating o ils, gasoline, bunker fuel

oil, diesel fuel oil and other similar petroleum products levied under S ections 142, 144 and

145 of the National Internal Revenue Code, as amended, and granting provinces, cities and


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municipalities certain shares in the specific tax on such products in lieu of local taxes imposed

on petroleum products.

The questioned Municipal Tax Ordinance No. 1 was reviewed and approved by the Provincial

Treasurer of Rizal on January 13, 1975 (Rollo, p. 143), but was not implemented and/or

enforced by the Municipality of Pililla because of its having been suspended up to now in

view of Provincial Circular Nos. 26-73 and 26 A-73.

Provincial Circular No. 6-77 dated March 13, 1977 was also issued directing all city and

municipal treasurers to refrain from collecting the so-called storage fee on flammable or

combustible materials imposed under the local tax ordinance of their respective locality, said

fee partaking of the nature of a strictly revenue measure or service charge.

On June 3, 1977, P.D. 1158 otherwise known as the National Internal Revenue Code of 1977

was enacted, Section 153 of which specifically imposes specific tax on refined and

manufactured mineral oils and motor fuels.

Enforcing the provisions of the above-mentioned ordinance, the respondent filed a

complaint on April 4, 1986 docketed as Civil Case No. 057-T against PPC for the collection of

the business tax from 1979 to 1986; storage permit fees from 1975 to 1986; mayor's permit

and sanitary inspection fees from 1975 to 1984. PPC, however, have already paid the last-

named fees starting 1985 (Rollo, p. 74).

Issue: Whether or not petitioner PPC whose oil products are subject to specific tax under the

NIRC, is still liable to pay (a) tax on business and (b) sto rage fees, considering Provincial

Circular No. 6-77; and mayor's permit and sanitary inspection fee unto the respondent

Municipality of Pililla, Rizal, based on Municipal Ordinance No. 1.

Held: PC No. 26-73 and PC No. 26 A-73 suspended the effectivity o f local tax ordinances

imposing a tax on business under Section 19 (a) of the Local Tax Code (P.D. No. 231), with

regard to manufacturers, retailers, wholesalers or dealers in petroleum products subject to

the specific tax under the National Internal Revenue Code NIRC , in view of Section 22 (b) of

the Code regarding non-imposition by municipalities of taxes on articles, subject to specific

tax under the provisions of the NIRC.

There is no question that Pililla's Municipal Tax Ordinance No. 1 imposing the assailed taxes,

fees and charges is valid especially Section 9 (A) which according to the trial court "was lifted

in toto and/or is a literal reproduction of Section 19 (a) of the Local Tax Code as amended by

P.D. No. 426." It conforms with the mandate of said law.

But P.D. No. 426 amending the Lo cal Tax Code is deemed to have repealed Provincial Circular

Nos. 26-73 and 26 A-73 iss ued by the Secretary of Finance when Sections 19 and 19 (a), were

carried over into P.D. No. 426 and no exemptions were given to manufacturers, wholesalers,

retailers, or dealers in petroleum products.

Well-settled is the rule that administrative regulations must be in harmony with the

provisions of the law. In case of discrepancy between the basic law and an implementing rule

or regulation, the former prevails

The exercise by local governments of the power to tax is ordained by the present

Constitution. To allow the continuous effectivity of the prohibition set forth in PC No. 26-73

(1) would be tantamount to restricting t heir power to tax by mere administrative issuances.

Under Section 5, Article X of the 1987 Constitution, only guidelines and limitations that may

be established by Congress can define and limit such power of local governments. Thus:

Each local government unit shall have the power to create its own

sources of revenues and to levy t axes, fees, and charges subject to such

guidelines and limitations as the Congress may provide, consistent with

the basic policy of local autonomy . . .

As to the authority of the mayor to waive payment of the mayor's permit and sanitary

inspection fees, the trial court did not err in holding that "since the power to tax includes the

power to exempt thereof which is essentially a legislative prerogative, it follows that a

municipal mayor who is an executive officer may not unilaterally withdraw such an

expression of a policy thru the enactment of a tax." The waiver partakes of the nature of an

exemption. It is an ancient rule t hat exemptions from taxation are construed in strictissimi

juris against the taxpayer and liberally in favor of the taxing authority

ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO

SANCHEZ,petitioners, vs. PHILIPPINE AMUSEMENTS AND GAMING CORPORATION

(PAGCOR)

Facts: On July 11, 1983, PAGCOR was created under PD 1869 to enable the Government to

regulate and centralize all games of chance authorized by existing f ranchise or permitted by

law. Basco and four others (all lawyers) assailed the validity of the law creating PAGCOR on

constitutional grounds among others particularly citing that the PAGCORs charter is against

the constitutional provision on local autonomy.

Basco et al contend that P.D. 1869 constitutes a waiver of the right of the City of Manila to

impose taxes and legal fees; that Section 13 par. (2) of P.D. 1869 which exempts PAGCOR, asthe franchise holder from paying any tax of any kind or form, income or otherwise, as well

as fees, charges or levies of whatever nature, whether National or Local is violative of the

local autonomy principle.

issue:Whether or not PAGCORs charter is violative of the principle of local autonomy.

Held:NO.

(a) The City of Manila, being a m ere Municipal corporation has no inherent right to impose

taxes (Icard v. City of Baguio, 83 Phil. 870; City of Iloilo v. Villanueva, 105 Phil. 337; Santos v.

Municipality of Caloocan, 7 SCRA 643). Thus, "the Charter or statute must plainly show an

intent to confer that power or the municipality cannot assume it" (Medina v. Cit y of Baguio,


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12 SCRA 62). Its "power to tax" therefore must always yield to a legislative act which is

superior having been passed upon by the state itself which has the "inherent power to tax"

(Bernas, the Revised [1973] Philippine Constitution, Vol. 1, 1 983 ed. p. 445).

(b) The Charter of the City of Manila is subject to control by Congress. It should be stressed

that "municipal corporations are mere creatures of Congress" (Unson v. Lacson, G.R. No.

7909, January 18, 1957) which has the power to "create and abolish municipal corporations"

due to its "general legislative powers" (Asuncion v. Yriantes, 28 Phil. 67; Merdanillo v.

Orandia, 5 SCRA 541). Congress, therefore, has the power of control over Local governments

(Hebron v. Reyes, G.R. No. 9124, July 2, 1950). And if Congress can grant the City of Manila

the power to tax certain matters, it can also provide for exemptions or even take back thepower.

(c) The City of Manila's power to impose license fees on gambling, has long been revoked. As

early as 1975, the power of local go vernments to regulate gambling thru the grant o f

"franchise, licenses or permits" was withdrawn by P.D. No. 771 and was vested exclusively on

the National Government, thus:

Sec. 1. Any provision of law t o the contrary notwithstanding, the

authority of chartered cities and other local governments to issue license,

permit or other form of franchise to operate, maintain and establish

horse and dog race tracks, jai-alai and other forms of gambling is hereby

revoked.

Sec. 2. Hereafter, all permits or franchises to operate, maintain and

establish, horse and dog race tracks, jai-alai and other forms of gambling

shall be issued by the national government upon proper application and

verification of the qualification of the applicant . . .

Therefore, only the National Government has the power to issue "licenses or permits" for the

operation of gambling. Necessarily, the power to demand or collect license fees which is a

consequence of the issuance of "licenses or permits" is no longer vested in the City of Manila.

(d) Local governments have no power to t ax instrumentalities of the National Government.

PAGCOR is a government owned or controlled corporation with an original charter, PD 1869.All of its shares of stocks are owned by the National Government. In addition to its corporate

powers (Sec. 3, Title II, PD 1869) it also exercises regulatory powers thus:

Sec. 9. Regulatory Power. The Corporation shall maintain a Registry of

the affiliated entities, and shall exercise all the powers, authority and the

responsibilities vested in the Securities and Exchange Commission over

such affiliating entities mentioned under the preceding section, including,

but not limited to amendments of Articles of Incorporation and By-Laws,

changes in corporate term, structure, capitalization and other matters

concerning the operation of the affiliated entities, the provisions of the

Corporation Code of the Philippines to the contrary notwithstanding,

except only with respect to original incorporation.

JESUS C. ESTANISLAO, in his capacity as the Secretary of Finance, petitioner,

vs. HONORABLE AMADO COSTALES

Facts: An Ordinance was passed by the Sangguniang Panglungsod of Zamboanga City on

February 1982. The Sanggunian sent a copy of theOrdinance to the then Minister of Finance

by registered mail for hisreview pursuant to P.D. No. 231, otherwise known as the Local

TaxCode. The Minister of Finance through Deputy MinisterRoman, Jr., sent the letter

addressed to the Sanggunian, suspendingthe effectivity of Ordinance No. 44 on the ground

that it contravenesSection 19(a) of the Local Tax Code. The City Mayor of Zamboanga

appealed the saiddecision of the Minister of Finance to the RT C of Zamboanga. The RTC heldthat Although the tax levied under said Ordinance is not among thosethat t he Sanggunian

may impose under the Local Tax Code, it upheldits validity because the Minister of Finance

did not take appropriateaction on the matter within the prescribed period of 120 days

afterreceipt of a copy thereof.

This petition for review on certiorari was filed by the incumbentSecretary of Finance alleging

that the trial court erred when it held thatthe failure of the Minister of Finance to s uspend

the effectivity of Ordinance No. 44 within 120 days from receipt of a copy thereof rendered

said Ordinance valid.

Issue: Whether or not Ordinance No. 44 of Zamboanga City imposing P0.01 tax p erliter of

softdrinks produced, manufactured, and/or bottled within theterritorial jurisdiction of the

City is valid?

Held: No.

From the foregoing, it is clear t hat a city, like public respondent Zamboanga City may impose,

in lieu of the graduated fixed tax prescribed under Section 19 of the Local Tax Code, a

percentage tax on the gross sales for the preceding calendar year of non-essential

commodities at the rate of not exceeding two per cent and on the gross sales of essential

commodities at the rate of not exceeding one per cent.

Ordinance No. 44 of the respondent Zamboanga Ci ty imposes P0.01 per liter of softdrinks

produced, manufactured, and/or bottled within the territorial jurisdiction of the City of

Zamboanga. No doubt this Ordinance is ultra vires as it is not within the authority of the City

to impose said tax. The authority of the City is limited to the imposition of a percentage tax

on the gross sales or receipts of said product which, being non-essential, shall be at the rate

of not exceeding 2% of the gross sales or receipts of the softdrinks for the preceding calendar

year. The tax being imposed under said Ordinance is based on the output or production and

not on the gross sales or receiptsas authorized under the Local Tax Code.

Public respondent Zamboanga City, however, invokes the ruling o f this Court in Pepsi-Cola

Bottling Company vs. Municipality of Tanauan, Leyte

4

whereby this Court upheld the validity


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of Municipal Ordinance No. 27 enacted by the Municipality of Tanauan, Leyte imposing a tax

of P0.01 for every gallon of softdrinks produced in the municipality as follows:

That brings Us to the question of whether the remaining Ordinance No.

27 imposes a percentage or a specific tax. undoubtedly, the taxing

authority conferred on local governments under Section 2, Republic Act

No. 2264, is broad enough as to extend to almost "everything, excepting

those which are mentioned therein." As long a s the tax levied under the

authority of a city or municipal ordinance is not within the exceptions and

limitations in the law, the same comes within the ambit of the general

rule, pursuant to the rules of expresio unius est exclusio alterious, andexceptio firmat regulum in casibus non excepti. The limitation applies,

particularly, to the prohibition against municipalities and municipal

districts to impose "any percentage tax on sales or other taxes in any

form based thereon nor impose taxes on articles subject to specific tax,

except gasoline, under the provisions of the National Internal Revenue

Code." For purposes of this particular limitation, a municipal ordinance

which prescribes a set ratio between the amount of the tax and the

volume of sale of the taxpayer imposes a sales tax and is nun and void for

being outside the power of the municipality to enact. But, the imposition

of "a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of

volume capacity" on all soft drinks produced or manufactured under

Ordinance No. 27 does not partake of the nature of a percentage tax on

sales, or other taxes in any form based thereon. The tax is levied on the

produce (whether sold or not) and not on the sales. The volume capacity

of the taxpayer's production of soft drinks is considered solely for

purposes of determining the tax rate on the products, but there is no set

ratio between the volume of sales and the amount of the tax.5

Said case was decided by this Court on the basis of the provisions of the Local Autonomy Act

(Republic Act No. 2264, as amended, which took effect on June 19, 1959), particularly Section

2 thereof, which gives the cities or municipalities ample taxing authority covering almost

"everything, excepting those mentioned herein."

However, the Local Autonomy Act has been superseded by th e Local Tax Code insofar as the

taxing authority in the provinces, cities or municipalities is concerned. By express language of

Section 64(a) of the Local Tax Code, "all existing tax ordinances of provinces, cities,

municipalities and barrios shall be deemed ipso facto nullified on June 30, 1974."6

The applicable law, therefore, to the present case is the Local Tax Code and not the Local

Autonomy Act.

HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE, petitioner, vs.

MAYOR ALFREDO S. LIM

Facts: The principal issue in this case is t he constitutionality of Section 187 of the Local

Government Code reading as follows:

Procedure For Approval And Effectivity Of Tax Ordinances And Revenue Measures;

Mandatory Public Hearings. The procedure for approval of local tax ordinances

and revenue measures shall be in accordance with the provisions of this Code:

Provided, That public hearings shall be conducted for the purpose prior to the

enactment thereof; Provided, further, That any question on the co nstitutionality or

legality of tax ordinances or revenue measures may be raised on appeal within thirty

(30) days from the effectivity thereof to the Secretary of Justice who shall render a

decision within sixty (60) days from the date of receipt of the appeal: Provided,

however, That such appeal shall not have the effect of suspending the effectivity of

the ordinance and the accrual and payment of the tax, fee, or charge levied therein:

Provided, finally, That within thirty (30) days after receipt of the decision or the lapseof the sixty-day period without the Secretary of Justice acting upon the appeal, the

aggrieved party may file appropriate proceedings with a court o f competent

jurisdiction.

Pursuant to Section 187 of the Local Government Code, the Secretary of Justice had, on

appeal to him of four oil companies and a taxpayer, declared Ordinance No. 7794, otherwise

known as the Manila Revenue Code, null and void for non-compliance with the prescribed

procedure in the enactment of tax ordinances and for containing certain provisions contrary

to law and public policy.

In a petition for certiorari filed by the City of Manila, the Regional Trial Court of Manila

revoked the Secretarys resolution and sustained the ordinance, holding inter alia that theprocedural requirements had been observed. More importantly, it declared Section 187 of

the Local Government Code as unconstitutional because of its vesture in the Secretary of

Justice of the power of control over local governments in violation of the policy of local

autonomy mandated in the Constitution and of the specific provision therein conferring on

the President of the Philippines only the power o f supervision over local governments. The

court cited the familiar distinction between control and supervision, the first being the

power of an officer to alter or modify or set aside what a subordinate o fficer had done in the

performance of his duties and to substitute the judgment of the former for the latter, while

the second is the power of a superior officer to see to it that lower officers perform their

functions is accordance with law.

Issues: Whether or not Section 187 of the Local Government Code is unconstitutional; and

Whether or not the Secretary of Justice can exercise control, rather than supervision, over

the local government

Held:

The judgment of the lower court is reversed in so far as its declaration that Section 187 of the

Local Government Code is unconstitutional but affirmed the said lower courts finding that

the procedural requirements in the enactment of the Manila Revenue Code have been

observed.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality

of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When

he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his


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own judgment for the judgment of the local government that enacted the measure.

Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his

own version of what the Code s hould be.

An officer in control lays down the rules in the doing of an act. It they are not followed, he

may, in his discretion, order the act undone or re-done by his subo rdinate or he may even

decide to do it himself. Supervision does not cover such authority. The supervisor or

superintendent merely sees to it that the rules are followed, but he himself does not lay

down such rules, nor does he have the discretion to modify or replace them. In the opinion of

the Court, Secretary Drilon did precisely this, and no more nor less than this, and so

performed an act not of control but of mere supervision.

Regarding the issue on the non-compliance with the prescribed procedure in the enactment

of the Manila Revenue Code, the Court carefully examined every exhibit and agree with the

trial court that the procedural requirements have indeed been observed. The only exceptions

are the posting of the ordinance as approved but this omission does not affect its validity,

considering that its publication in three successive issues of a newspaper of general

circulation will satisfy due process.

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY,petitioner, vs. HON. FERDINAND J.

MARCOS, in his capacity as the Presiding Judge of the RTC, Cebu City

Facts: Petitioner was created by virtue of RA6958, mandated to "principally undertake theeconomical,efficient and effective control, management and supervision of the Mactan

International Airport in theProvince of Cebu and the Lahug Airport in Cebu City. Under

Section 1: The authority shall be exempt fromrealty taxes imposed by the National

Government or any of its political subdivisions, agencies andinstrumentalities.However, the

Officer of the Treasurer of Cebu City demanded payment for realty taxes on parcels of land

belonging to petitioner. Petitioner objected invoking its tax exemption. It also asserted that it

is aninstrumentality of the government performing governmental functions, citing section

133 of the LGC whichputs limitations on the taxing powers of LGUs. The city refused insisting

that petitioner is a GOCCperforming proprietary functions whose t ax exemption was

withdrawn by Sections 193 and 234 of the LGC.Petitioner filed a declaratory relief before the

RTC. The trial court dismissed the petitioner rulingthat the LGC withdrew the tax exemption

granted the GOCCs.

Issue: Wheter or Not the City of Cebu has the power to impose taxes on petitioner

Held: Yes

There can be no question that under Section 14 RA 6958 the petitioner is exempt from the

payment of realty taxes imposed by the National Government or any of its political

subdivisions, agencies, andinstrumentalities. Nevertheless, since taxation is the rule and

exemption is the exception, the exemption may thus be withdrawn at the pleasure of the

taxing authority.

The LGC, enacted pursuant to Section 3, Article X of the constitution provides for th e exercisebyLGUs of their power to tax, the scope thereof or its limitations, and the exemption from

taxation. Section133 of the LGC prescribes the common limitations on the taxing powers o f

LGUs: (o) Taxes, fees or chargesof any k ind on the national government, its agencies and

instrumentalities and LGUs. Among the "taxes"enumerated in the LGC is real property tax.

Section 234 of LGC provides for the exemptions from payment of GOCCs, except as provided

therein. On the other hand, the LGC authorizes LGUs to grant tax exemption privileges.

Reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule,

aslaid down in Secs 133 the taxing powers of LGUs cannot extend to the levy of inter alia,

"taxes, fees, andcharges of any kind of the National Government, its agencies and

instrumentalties, and LGUs"; however,pursuant to Sec 232, provinces, cities, municipalities in

the Metropolitan Manila Area may impose the realproperty tax except o n, inter alia, "real

property owned by the Republic of the Philippines or any of itspolitical subdivisions exceptwhen the beneficial used thereof has been granted to a taxable person."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

generalrule, viz., they are withdrawn upon the effectivity of the LGC, except upon the

effectivity of the LGC,except those granted to local water districts, cooperatives duly

registered under R.A. No. 6938, non stockand non-profit hospitals and educational

institutions, and unless otherwise provided in the LGC. The latterproviso could refer to

Section 234, which enumerates the properties exempt from real property t ax. Butthe last

paragraph of Section 234 further qualifies the retention of the exemption in so far as the

realproperty taxes are concerned by limiting the retention only to those enumerated there-

in; all others notincluded in the enumeration lost the privilege upon the effectivity of the

LGC. Moreover, even as the realproperty is owned by the Republic of the Philippines, or any

of its political subdivisions covered by item (a)of the first paragraph of Section 234, theexemption is withdrawn if the beneficial use of such property hasbeen granted to taxable

person for consideration or otherwise.Since the last paragraph of Section 234 unequivocally

withdrew, upon the effectivity of the LGC,exemptions from real property taxes granted to

natural or juridical persons, including GOCCs, except as provided in the said section, and t he

petitioner is, undoubtedly, a government-owned corporation, itnecessarily follows that its

exemption from such tax granted it in Section 14 of its charter, R.A. No. 6958,has been

withdrawn. Any claim to the contrary can only be justified if the petitioner can s eek refuge

underany of the exceptions provided in Section 234, but not under Section 133, as it now

asserts, since, asshown above, the said section is qualified by Section 232 and 234. In short,

the petitioner can no longerinvoke the general rule in Section 133.It must show that the

parcels of land in question, which are real property, are any one of thoseenumerated in

Section 234, either by virtue of o wnership, character, or use of the property. Most likely,

itcould only be the first, but not under any explicit provision of the said section, for one

exists. In light of thepetitioner's theory that it is an "instrumentality of the Government", it

could only be within be first item of the first paragraph of t he section by expanding the scope

of the terms Republic of the Philippines" toembrace ."instrumentalities" and "agencies." This

view does not persuade us. In the first place, the petitioner's claim that it is an

instrumentality of the Government is based on Section 133(o), which expressly mentions the

word "instrumentalities"; and in the second place it fails to consider the fact that the

legislature used the phrase "National Government, its agencies and instrumentalities" "in

Section 133(o),but only the phrase "Republic of the Philippines or any of its political

subdivision "in Section 234(a).

If Section 234(a) intended to extend the exception therein to the withdrawal of the

exemption frompayment of real property taxes under the last sentence of the said section tothe agencies andinstrumentalities of the National Government mentioned in Section 133(o),


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then it should have restated the wording of the latter. Yet, it did not Moreover, that Congress

did not wish to expand the scope of theexemption in Section 234(a) to include real property

owned by other instrumentalities or agencies of thegovernment including government-

owned and controlled corporations is further borne out by the fact thatthe source of this

exemption is Section 40(a) of P.D. No. 646, otherwise known as the Real Property

TaxCode.Note that as a reproduced in Section 234(a), the phrase "and any government-

owned or controlledcorporation so exempt by its charter" was exc luded. The justification for

this restricted exemption inSection 234(a) seems obvious: to limit further tax exemption

privileges, specially in light of the generalprovision on withdrawal of exemption from

payment of real property taxes in the last paragraph of property taxes in the last paragraph

of Section 234. These policy considerations are consistent with theState policy to ensureautonomy to local governments 33 and the objective of the LGC t hat they enjoygenuine and

meaningful local autonomy to enable them to attain th eir fullest development as self-

reliantcommunities and make them effective partners in the attainment of national goals.

With the repealing clause of RA 7160 the tax exemption provided. All general and special in

the charter of the MCIAA has been expressly repeated. It state laws, acts, City Charters,

decrees, executive orders, proclamations and administrative regulations, or part of parts

thereof which are inconsistent with any of the provisions of the Code are hereby repeated or

modified accordingly. Therefore the SC affirmed the decision and order of the RTC and herein

petitioner has to pay the assessed realty tax of its properties effective January 1, 1992 up to

the present.

TITLE V

Local Fiscal Administration

CHAPTER I

General Provisions

Section 304.Scope. - This Title shall govern the conduct and management of financial affairs,

transactions, and operations of provinces, cities, municipalities, and barangays.

Section 305.Fundamental Principles. - The financial affairs, transactions, and operations of

local government units shall be governed by the following fundamental principles:

(a) No money shall be paid out of the local treasury except in pursuance of an

appropriations ordinance or law;

(b) Local government funds and monies shall be spent solely for public purposes;

(c) Local revenue is generated only from sources expressly authorized by law or

ordinance, and collection thereof shall at all times be acknowledged properly;

(d) All monies officially received by a local government officer in any capacity o r on

any occasion shall be accounted for as local funds, unless otherwise provided by

law;

(e) Trust funds in the local treasury shall not be paid out except in fulfillment of the

purpose for which the trust was c reated or the funds received;

(f) Every officer of the local government unit whose duties permit or require the

possession or custody of local funds shall be properly bonded, and such officer shall

be accountable and responsible for said funds and for the safekeeping thereof in

conformity with the provisions of law;

(g) Local governments shall formulate sound financial plans, and local budgets shal l

be based on functions, activities, and projects, in terms of expected results;

(h) Local budget plans and goals shall, as far as practicable, be harmonized with

national development plans, goals, and strategies in order to optimize the

utilization of resources and to avoid duplication in the use of fiscal and physical

resources;

(i) Local budgets shall operationalize approved local development plans;

(j) Local government units shall ensure that their r espective budgets incorporate

the requirements of their component units and provide for equitable allocation of

resources among these component units;

(k) National planning shall be based on local planning to ensure that the needs and

aspirations of the people as articulated by the local government units in their

respective local development plans are considered in the formulation of budgets of

national line agencies or offices;

(l) Fiscal responsibility shall be shared by all those exercising authority over the

financial affairs, transactions, and operations of the local government units; and

(m) The local government unit shall endeavor to have a balanced budget in each

fiscal year of operation.

Power of Eminent Domain

Section 19. RA 7160 Eminent Domain. - A local government u nit may, through its chief

executive and acting pursuant to an ordinance, exercise the power of eminent domain for

public use, or purpose or welfare for the benefit of the poor and the landless, upon payment

of just compensation, pursuant to the provisions of the Constitution and pertinent laws:

Provided, however, That the power of eminent domain may not be exercised unless a valid

and definite offer has been previously made to the owner, and such offer was not accepted:

Provided, further, That the local government unit may immediately take possession of the

property upon the filing of the expropriation proceedings and upon making a deposit with

the proper court of at least fifteen percent (15%) of the fair market value of the property

based on the current tax declaration of the property to be expropriated: Provided, finally,


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That, the amount to be paid for the expropriated property shall be determined by the proper

court, based on the fair market value at the time of the taking o f the property.

RULE 67 Expropriation Rules of Court

Section 1. The complaint. The right of eminent domain shall be exercised by the filing of a

verified complaint which shall state with certainty the right and purpose of expropriation,

describe the real or personal property sought to be expropriated, and join as defendants all

persons owning or claiming to own, or occupying, any part thereof or interest therein,

showing, so far as practicable, the separate interest of each defendant. If the title to any

property sought to be expropriated appears to be in the Republic of the Philippines, althoughoccupied by private individuals, or if the title is otherwise obscure or doubtful so that the

plaintiff cannot with accuracy or certainty specify who are the real owners, averment to that

effect shall be made in the complaint. (1a)

Section 2. Entry of plaintiff upon depositing value with authorized government depositary.

Upon the filing of the complaint or at any time thereafter and after due notice to the

defendant, the plaintiff shall have the right to take or enter upon the possession of the real

property involved if he deposits with the authorized government depositary an amount

equivalent to the assessed value of the property for purposes of taxation to be held by such

bank subject to the orders of the court. Such deposit shall be in money, unless in lieu thereof

the court authorizes the deposit of a certificate of deposit of a government bank of the

Republic of the Philippines payable on demand to the authorized government depositary.

If personal property is involved, its value shall be provisionally ascertained and the amount t o

be deposited shall be promptly fixed by t he court.

After such deposit is made the court shall order the sheriff or other proper officer to

forthwith place the plaintiff in possession of the property involved and promptly submit a

report thereof to the court with service of copies to the parties. (2a)

Section 3. Defenses and objections. If a defendant has no objection or defense to the

action or the taking of his property, he may file and serve a notice of appearance and a

manifestation to that effect, specifically designating or identifying the property in which he

claims to be interested, within the time stated in the summons. Thereafter, he shall be

entitled to notice of all proceedings affecting the same.

If a defendant has any objection to the filing of or the allegations in the complaint, or any

objection or defense to the taking of his property, he shall serve his answer within the timestated in the summons. The answer shall specifically designate or identify the property in

which he claims to have an interest, state the nature and extent of the interest claimed, and

adduce all his objections and defenses to the taking of his property. No counterclaim, cross-

claim or third-party complaint shall be alleged or allowed in the answer or any subsequent

pleading.

A defendant waives all defenses and objections not so alleged but the court, in the interest of

justice, may permit amendments to the answer to be made not later than ten (10) days from

the filing thereof. However, at the trial of the issue of just compensation whether or not a

defendant has previously appeared or answered, he may present evidence as to the amount

of the compensation to be paid for his property, and he may share in the distribution of the

award. (n)

Section 4. Order of expropriation. If the objections to and the defenses against the right ofthe plaintiff to expropriate the property are overruled, or when no party appears to defend

as required by this Rule, the court may issue an order of expropriation declaring that the

plaintiff has a lawful right to take the property sought to be expropriated, for the public use

or purpose described in the complaint, upon the payment of just compensation to be

determined as of the date of the taking of the property or the filing of the complaint,

whichever came first.

A final order sustaining the right to expropriate the property may be appealed by any party

aggrieved thereby. Such appeal, however, shall not prevent the court from determining the

just compensation to be paid.

After the rendition of such an order, the plaintiff shall not be permitted to dismiss or

discontinue the proceeding except on such terms as t he court deems just and equitable. (4a)

Section 5. Ascertainment of compensation. Upon the rendition of the order of

expropriation, the court shall appoint not more than three (3) competent and disinterested

persons as commissioners to ascertain and report to the court the just compensation for the

property sought to be taken. The order of appointment shall designate the time and place of

the first session of the hearing to be held by the commissioners and specify the time within

which their report shall be submitted to the court.

Copies of the order shall be served on the parties. Objections to the appointment of any of

the commissioners shall be filed with the court within ten (10) days from service, and shall be

resolved within thirty (30) days after all the commissioners shall have received copies of the

objections. (5a)

Section 6. Proceedings by commissioners. Before entering upon the performance of their

duties, the commissioners shall take and subscribe an oath that they will faithfully performtheir duties as commissioners, which oath shall be filed in court with the other proceedings

in the case. Evidence may be introduced by either party before the commissioners who are

authorized to administer oaths on hearings before them, and the commissioners shall, unless

the parties consent to the contrary, after due notice to the parties, to attend, view and

examine the property sought to be expropriated and its surroundings, and may measure the

same, after which either party may, by himself or counsel, argue the case. The

commissioners shall assess the consequential damages to the property not taken and deduct

from such consequential damages the consequential benefits to be derived by the owner

from the public use or purpose of the property taken, the operation of its franchise by the

corporation or the carrying on of the business of the corporation or person taking the

property. But in no case shall the consequential benefits assessed exceed the consequential

damages assessed, or the owner be deprived of the actual value of his property so taken. (6a)

Section 7. Report by commissioners and judgment thereupon. The court may order the

commissioners to report when any particular portion of the real estate shall have been

passed upon by them, and may render judgment upon such partial report, and direct the

commissioners to proceed with their work as to subsequent portions of the property sought

to be expropriated, and may from time to time so deal with such property. The

commissioners shall make a full and accurate report to the court of all their proceedings, and

such proceedings shall not be effectual until the court shall have accepted their report and

rendered judgment in accordance with their recommendations. Except as otherwise

expressly ordered by the court, such report shall be filed within sixty (60) days from the date

the commissioners were notified of their appointment, which time may be extended in the

discretion of the court. Upon the filing of such report, the clerk of the court shall serve copies

thereof on all interested parties, with notice that they are allowed ten (10) days within which

to file objections to the findings of the report, if they so desire. (7a)


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Section 8. Action upon commissioners' report. Upon the expiration of the period of ten

(10) days referred to in the preceding section, or even before the expiration of such period

but after all the interested parties have filed their objections to t he report or their statement

of agreement therewith, the court may, after hearing, accept the report and render

judgment in accordance therewith, or, for cause shown, it may recommit the same to the

commissioners for further report of facts, or it may set aside the report and appoint new

commissioners; or it may accept the report in part and reject it in part and it may make such

order or render such judgment as shall secure to the plaintiff the property essential to the

exercise of his right of expropriation, and to the defendant just compensation for the

property so taken. (8a)

Section 9. Uncertain ownership; conflicting claims. If the ownership of the property taken

is uncertain, or there are conflicting claims to any part thereof, the court may order any sum

or sums awarded as compensation for the property to be paid to the court for the benefit of

the person adjudged in the same proceeding to be entitled thereto. But the judgment shall

require the payment of the sum o r sums awarded to either the defendant or the court before

the plaintiff can enter upon the property, or retain it for the public use or purpose if entry

has already been made. (9a)

Section 10. Rights of plaintiff after judgment and payment. Upon payment by the plaintiff

to the defendant of the compensation fixed by the judgment, with legal interest thereon

from the taking of the possession of the property, or after tender to him of the amount so

fixed and payment of the costs, the plaintiff shall have the right to enter upon the property

expropriated and to appropriate it for the public use or purpose defined in the judgment, orto retain it should he have taken immediate possession thereof under the provisions of

section 2 hereof. If the defendant and his counsel absent themselves from the court, or

decline to receive the amount tendered, the same shall be ordered to be deposited in court

and such deposit shall have the same effect as actual payment thereof to the defendant or

the person ultimately adjudged entitled thereto. (10a)

Section 11. Entry not delayed by appeal; effect of reversal. The right of the plaintiff to

enter upon the property of the defendant and appropriate the same for public use or

purpose shall not be delayed by an appeal from the judgment. But if the appellate court

determines that plaintiff has no right of expropriation, judgment shall be rendered ordering

the Regional Trial Court to forthwith enforce the restoration to the defendant of the

possession of the property, and to determine the damages which the defendant sustained

and may recover by reason of the possession taken by the plaintiff. (11a)

Section 12. Costs, by whom paid. The fees of the commissioners shall be taxed as a part of

the costs of the proceedings. All costs, except those of rival claimants litigating their claims,

shall be paid by the plaintiff, unless an appeal is taken by the owner of the property and the

judgment is affirmed, in which event the costs of the appeal shall be paid by the owner. (12a)

Section 13. Recording judgment, and its effect. The judgment entered in expropriation

proceedings shall state definitely, by an adequate description, the particular property or

interest therein expropriated, and the nature of the public use or purpose for which it is

expropriated. When real estate is expropriated, a certified copy of such judgment shall be

recorded in the registry of deeds of the place in which the property is situated, and its effect

shall be to vest in the plaintiff the title to the real estate so described for such public use orpurpose. (13a)

Section 14. Power of guardian in such proceedings. The guardian or guardian ad litem of a

minor or of a person judicially declared to be incompetent may, with the approval of the

court first had, do and perform on behalf of his ward any act, matter, or thing respecting the

expropriation for public use or purpose of property belonging to such minor or person

judicially declared to be incompetent, which such minor or person judicially declared to be

incompetent could do in such proceedings if he were of age or competent. (14a)

Limitations

Moday vs Court of Appeals

Moday is a landowner in Bunawan, Agusan del Sur. In 1989, the Sangguniang Bayan of

Bunawan passed a resolution authorizing the mayor to initiate an expropriation case against

a 1 hectare portion of Modays land. Purpose of which is to erect a gymnasium and other

public buildings. The mayor approved the resolution and the resolution was transmitted to

the Sangguniang Panlalawigan which disapproved the said resolution ruling that the

expropriation is not necessary because there are other lots owned by Bunawan that can be

used for such purpose. The mayor pushed through with the expropriation nonetheless.

ISSUE: Whether or not a municipality may expropriate private property by virtue of a

municipal resolution which was disapproved by the Sangguniang Panlalawigan.

HELD: Yes. Eminent domain, the power which the Municipality of Bunawan exercised in the

instant case, is a fundamental State power that is inseparable from sovereignty. It is

governments right to appropriate, in the nature of a compulsory sale to the State, private

property for public use or purpose. Inherently possessed by the national legislature, the

power of eminent domain may be validly delegated to local governments, other public

entities and public utilities. For the taking of private property by the government to be valid,

the taking must be for public use and there must be just compensation. The only ground

upon which a provincial board may declare any municipal resolution, ordinance, or order

invalid is when such resolution, ordinance, or order is beyond the p owers conferred upon

the council or president making the same. This was not the case in the case at bar as the SP

merely stated that there are other available lands for the purpose sought, the SP did not

even bother to declare the SB resolution as invalid. Hence, the expropriation case is valid.

Municipality of Paranaque vs VM Realty Corp

Facts: Petitioner sought to exercise its power of eminent domainbased on a resolution by the

municipal council. Petitioner cites a previous case wherein a resolution gave authority to


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exercise eminent domain. Petitioner also relies on the Implementing Rules, which provides

that a resolution authorizes a Local Government Unit to exercise eminent domain.

Issue: Whether or Not an LGU can exercise its power of eminent domain pursuant to a

resolution by its law-making body.

Held: Under Section 19, of the present Local Government Code (RA 7160), it is stated as the

first requisite that LGUs can exercise its power of eminent domain if there is

an ordinance enacted by its legislative body enabling the municipal chief executive. A

resolution is not an ordinance, the former is only an opinion of a law-making body, the latter

is a law. The case cited by Petitioner involves BP 337, which was the previous Local

Government Code, which is obviously no longer in effect. RA 7160 prevails over

the Implementing Rules, the former being the law itself and the latter only

an administrative rule which cannot amend the former.

CITY OF CEBU vs. SPOUSES APOLONIO and BLASA DEDAMO

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.

Camarines Sur vs CA

Facts: On December 22, 1988, the Sangguniang Panlalawigan of the Province of Camarines

Sur passed a Resolution authorizing the Provincial Governor to purchase or expropriate

property contiguous to the provincial Capitol site, in order to establish a pilot farm for non-food and non-traditional agricultural crops and a housing project for provincial government

employees. Pursuant to the Resolution, the Province o f Camarines Sur, through its Governor,

filed two separate cases for expropriation against Ernesto N. San Joaquin and Efren N. San

Joaquin, at the Regional Trial Court, Pili, Camarines Sur. The San Joaquins moved to dismiss

the complaints on the ground of inadequacy of the price offered for their property. In an

order, the trial court denied the motion to dismiss and authorized the Province of Camarines

Sur to take possession of the property upon the deposit with the Clerk of Court the amount

provisionally fixed by the trial court to answer for damages that private respondents may

suffer in the event that the expropriation cases do not prosper.

The San Joaquins filed a motion for relief from the order, authorizing the Province ofCamarines Sur to take possession of their property and a motion to admit an amended

motion to dismiss. Both motions were denied in the order dated February 26, 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution of

the Sangguniang Panlalawigan be declared null and void; (b) that the complaints for

expropriation be dismissed; and (c) that the order denying the motion to dismiss and

allowing the Province of Camarines Sur to take possession of the property subject of the

expropriation and the order dated February 26, 1990, denying the motion to admit the

amended motion to dismiss, be set aside. They also asked that an order be issued to restrain

the trial court from enforcing the writ of possession, and thereafter to issue a writ of

injunction.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General

stated that under Section 9 of the Local Government Code (B.P. Blg. 337), there was no need

for the approval by the Office of the President of the exercise by the Sangguniang

Panlalawigan of the right of eminent domain. However, the Solicitor General expressed the

view that the Province of Camarines Sur must first secure the approval of the Department of

Agrarian Reform of the plan to expropriate the lands of petitioners for use as a housing

project.

The Court of Appeals set aside the order of the trial court, allowing the Province of

Camarines Sur to take possession of private respondents' lands and the order denying the

admission of the amended motion to dismiss. It also ordered the trial court to suspend theexpropriation proceedings until after the Province of Camarines Sur shall have submitted the


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requisite approval of the Department of Agrarian Reform to convert the classification of the

property of the private respondents from agricultural to non -agricultural land.

Issue:

WON the Province of Cam Sur must first secure the approval of the Department of Agrarian

Reform of the plan to expropriate the lands o f the San Joaquins.

HELD:

To sustain the Court of Appeals would mean that the local government units can no longer

expropriate agricultural lands needed for the construction of roads, bridges, schools,hospitals, etc., without first applying for conversion of the use of the lands with the

Department of Agrarian Reform, because all of these projects would naturally involve a

change in the land use. In effect, it would then be the Department of Agrarian Reform to

scrutinize whether the expropriation is for a public purpose or public use.

Ratio: WHEREFORE, the petition is GRANTED and the questioned decision of the Court of

Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of

Camarines Sur to take possession of private respondents' property; (b) orders the trial court

to suspend the expropriation proceedings; and (c) requires the Province of Camarines Sur to

obtain the approval of the Department of Agrarian Reform to convert or reclassify private

respondents' property from agricultural to non-agricultural use.The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial

court, denying the amended motion to dismiss of the private respondents.

SO ORDERED.

City of Mandaluyong vs. Aguilar [GR 137152, 29 January 2001]

Antonio, Francisco, Thelma, Eusebio, and Rodolfo N. Aguilar, constructed residential houses

several decades ago on a portion of the 3 lots located at 9 de Febrero Street, Barangay

Mauwag, City of Mandaluyong. The Aguilars had since leased out these houses to tenants

until the present. On the vacant portion of the lots, other families constructed residential

structures which they likewise occupied. In 1983, the lots were classified by Resolution 125

of the Board of the Housing and Urban Development Coordinating Council as an Area forPriority Development for urban land reform under Proclamation 1967 and 2284 of then

President Marcos. As a result of this classification, the tenants and occupants of the lots

offered to purchase the land from the Aguilars, but the latter refused to sell. On 7 November

1996, the Sangguniang Panlungsod of Mandaluyong, upon petition of the Kapitbisig, an

association of tenants and occupants of the subject land, adopted Resolution 516, Series of

1996 authorizing Mayor Benjamin Abalos of the City of Mandaluyong to initiate action for the

expropriation of the subject lots and construction of a medium-rise condominium for

qualified occupants of the land. On 10 January 1996, Mayor Abalos allegedly sent a letter to

the Aguilars offering to purchase the said property at P3,000.00 per square meter. On 4

August 1997, the City filed with the Regional Trial Court (RTC), Branch 168, Pasig City a

complaint for expropriation, seeking to expropriate 3 adjoining parcels of land with anaggregate area of 1,847 square meters in the names of the Aguilars, and praying that the

fixing of just compensation at the fair market value of P3,000.00 per square meter. In their

answer, the Aguilars, except Eusebio who died in 1995, denied having received a copy of

Mayor Abalos' offer to purchase their lots. They alleged that the expropriation of the ir land is

arbitrary and capricious, and is not for a public purpose; that the subject lots are their only

real property and are too small for expropriation, while the City has several properties

inventoried for socialized housing; and that the fair market value of P3,000.00 per square

meter is arbitrary because the zonal valuation set by the Bureau of Internal Revenue is

P7,000.00 per square meter. As counterclaim, the Aguilars prayed for damages of P21

million. On 5 November 1997, the City filed an Amended Complaint and named as an

additional defendant Virginia N. Aguilar and, at the same time, substituted Eusebio Aguilarwith his heirs. The City also excluded from expropriation TCT N59870 and thereby reduced

the area sought to be expropriated from three (3) parcels of land to two (2) parcels totalling

1,636 square meters.The Amended Complaint was admitted by the trial court on 18

December 1997. On 17 September 1998, the trial court issued an order dismissing the

Amended Complaint after declaring the Aguilars as "small property owners" whose land is

exempt from expropriation under Republic Act 7279. The court also found that the

expropriation was not for a public purpose for the City's failure to present any evidence that

the intended beneficiaries of the expropriation are landless and homeless residents of

Mandaluyong. The City moved for reconsideration. On 29 December 1998, the court denied

the motion. The City filed a petition for review with the Supreme Court.

Issue: Whether the City has exhausted all means to acquire the land under the hands of

private persons, but which is within t he Areas for Priority Development (APD).

Held: Presidential Decree (PD) 1517, the Urban Land Reform Act, was issued by then

President Marcos in 1978. The decree adopted as a State policy the liberation of human

communities from blight, congestion and hazard, and promotion of their development and

modernization, the optimum use of land as a national resource for public welfare. Pursuant

to this law, Proclamation 1893 was issued in 1979 declaring the entire Metro Manila as

Urban Land Reform Zone for purposes of urban land reform. This was amended in 1980 by

Proclamation 1967 and in 1983 by Proclamation 2284 which identified and specified 245 sites

in Metro Manila as Areas for Priority Development and Urban Land Reform Zones. Theacquisition of lands for socialized housing is governed by several provisions in the law.

Pursuant to Section 9 of RA 7279, Lands for socialized housing are to be acquired in the

following order: (1) government lands; (2) alienable lands of the public domain; (3)

unregistered or abandoned or idle lands; (4) lands within the declared Areas for Priority

Development (APD), Zonal Improvement Program (ZIP) sites, Slum Improvement and

Resettlement (SIR) sites which have not yet been acquired; (5) BLISS sites which have not yet

been acquired; and (6) privately- owned lands. Section 9, however, is not a single provision

that can be read separate from the other provisions of the law. It must be read together with

Section 10 of RA 7279. Thus, lands for socialized housing under RA 7279 are to be acquired in

several modes. Among these modes are the following: (1) community mortgage; (2) land

swapping, (3) land assembly or consolidation; (4) land banking; (5) donation to thegovernment; (6) joint venture agreement; (7) negotiated purchase; and (8) expropriation.


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The mode of expropriation is subject to two conditions: (a) it shall be resorted to only when

the other modes of acquisition have been exhausted; and (b) parcels of land owned by small

property owners are exempt from such acquisition. The acquisition of the lands in the

priority list must be made subject to the modes and conditions set forth in the next

provision. In other words, land that lies within the APD may be acquired only in the modes

under, and subject to the conditions of, Section 10. Herein, the City claims that it had

faithfully observed the different modes of land acquisition for socialized housing under RA

7279 and adhered to the priorities in the acquisition for socialized housing under said law. It,

however, did not state with particularity whether it exhausted the other modes of

acquisition in Section 9 of the law before it decided to expropriate the subject lots. The lawstates "expropriation shall be resorted to when other modes of acquisition have been

exhausted." The City alleged only one mode of acquisition, i.e., by negotiated purchase. The

City, through the City Mayor, tried to purchase the lots from the Aguilars but the latter

refused to sell. As to the other modes of acquisition, no mention has been made. Not even

Resolution 516, Series of 1996 of the Sangguniang Panlungsod authorizing the Mayor of

Mandaluyong to effect the expropriation of the subject property states whether the city

government tried to acquire the same by community mortgage, land swapping, land

assembly or consolidation, land banking, donation to the government, or joint venture

agreement under Section 9 of the law.

City of Iloilo vs LegaspiVia a Petition for Certiorari and Prohibition with Prayer for Issuance of a Writ of Preliminary

Injunction and Temporary Restraining Order, the City of Iloilo, represented by Mayor Jerry P.

Treas, seeks the nullification and/or modification of the Order dated 05 June 2002 of

Honorable Emilio Legaspi, Presiding Judge, Regional Trial Court, Branch 22, Iloilo City,

denying its Motion for Reconsideration of the courts Order dated 15 April 2002, holding in

abeyance the resolution of the Motion for Issuance of Writ of Possession until after it shall

have rested its case.

The City Council of Iloilo enacted an Ordinance allowing the City Mayor to buy the said

property in question and in refusal to commence an expropriation proceeding.

The property owner refused to sell the property hence the government started an

expropriation proceeding.The City of Iloilo filed an eminent domain case and deposited the 15% of the current market

value of the property to the clerk of court with prayer for the issuance o f writ of possession.

The trial court held in abeyance the writ prayed for hence the present case.

Petitioner has the irrefutable right to exercise its power of eminent domain. It being a local

government unit, the basis for its exercise is granted under Section 19 of Rep. Act No. 7160,

to wit:

Sec. 19. Eminent Domain. - A local government unit may, through its chief executive and

acting pursuant to an ordinance, exercise the power of eminent domain for public use, or

purpose, or welfare for the benefit of the poor and the landless, upon payment of just

compensation, pursuant to the provisions of the Constitution and pertinent laws: Provided,

however, That the power of eminent domain may not be exercised unless a valid and definiteoffer has been previously made to the owner, and such offer was not accepted: Provided,

further, That the local government unit may immediately take possession of the property

upon the filing of the expropriation proceedings and upon making a deposit with the proper

court of at least fifteen percent (15%) of the fair market value of the property based on the

current tax declaration of the property to be expropriated: Provided, finally, That the

amount to be paid for the expropriated property shall be determined by the proper court,

based on the fair market value at the time of the taking of the property.

The requisites for authorizing immediate entry are as follows: the filing of a complaint for

expropriation sufficient in form and substance; and the deposit of the amount equivalent to

fifteen percent (15%) of the fair market value of the property to be expropriated based on itscurrent tax declaration. Upon compliance with these requirements, the issuance of a writ of

possession becomes ministerial.

Reclassification of Lands

Section 20. Reclassification of Lands. -

(a) A city or municipality may, through an ordinance passed by the sanggunian after

conducting public hearings for the p urpose, authorize the reclassification of agricultural lands

and provide for the manner of their utilization or disposition in the following cases: (1) when

the land ceases to be economically feasible and sound for agricultural purposes as

determined by the Department of Agriculture or (2) where the land shall have substantially

greater economic value for residential, commercial, or industrial purposes, as determined by

the sanggunian concerned: Provided, That such reclassification shall be limited to the

following percentage of the total agricultural land area at the time of the passage of the

ordinance:

(1) For highly urbanized and independent component cities, fifteen percent (15%);

(2) For component cities and first to the third class municipalities, ten percent (10%); and

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That

agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act

Numbered Sixty-six hundred fifty-seven (R.A. No. 6657). otherwise known as "The

Comprehensive Agrarian Reform Law", shall not be affected by the said reclassification and

the conversion of such lands into other purposes shall be governed by Section 65 of said Act.

(b) The President may, when public interest so requires and upon recommendation of the

National Economic and Development Authority, authorize a city or municipality to reclassifylands in excess of the limits set in the next preceding paragraph.

(c) The local government units shall, in conformity with existing laws, continue to prepare

their respective comprehensive land use plans enacted through zoning ordinances which

shall be the primary and dominant bases for the future use of land resources: Provided. That

the requirements for food production, human settlements, and industrial expansion shall be

taken into consideration in the preparation of such plans.

(d) Where approval by a national agency is required for reclassification, such approval shall

not be unreasonably withheld. Failure to act on a proper and complete application for

reclassification within three (3) months from receipt of the same shall be deemed as

approval thereof.

(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any

manner the provisions of R.A. No. 6657.


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Fortich vs Corona

The dramatic and well-publicized hunger strike staged by some alleged farmer-

beneficiaries in front of the Department of Agrarian Reform compound in Quezon City on

October 9, 1997 commanded nationwide attention that even church leaders and some

presidential candidates tried to intervene for the strikers cause.

The strikers protested the March 29, 1996 Decision[1]

of the Office of the President

(OP), issued through then Executive Secretary Ruben D. Torres in OP Case No. 96-C-6424,

which approved the conversion of a one hundred forty-four (144)-hectare land from

agricultural to agro-industrial/institutional area. This led the Office of the President, through

then Deputy Executive Secretary Renato C. Corona, to issue the so-called Win-Win

Resolution

[2]

on November 7, 1997, substantially modifying its earlier Decision after ithadalready become final and executory . The said Resolution modified the approval of the

land conversion to agro-industrial area only to the extent of forty-four (44) hectares, and

ordered the remaining one hundred (100) hectares to be distributed to qualified farmer-

beneficiaries.

Thus, this instant case.

When the Office of the President issued the Order dated June 23,1997 declaring the Decision

of March 29, 1996 final and executory, as no one has seasonably filed a motion for

reconsideration thereto, the said Office had lost its jurisdiction to re-open the case, more so

modify its Decision. Having lost its jurisdiction, the Office of the President has no more

authority to entertain the second motion for reconsideration filed by respondent DAR

Secretary, which second motion became the basis of the assailed Win-Win Resolution.

Section 7 of Administrative Order No. 18 and Section 4, Rule 43 of the Revised Rules of Court

mandate that only one (1) motion for reconsideration is allowed to be taken from the

Decision of March 29, 1996. And even if a second motion for reconsideration was permitted

to be filed in exceptionally meritorious cases, as provided in the second paragraph of

Section 7 of AO 18, still the said motion should not have been entertained considering that

the first motion for reconsideration was not seasonably filed, thereby allowing the Decision

of March 29, 1996 to lapse into finality. Thus, the act of the Office of the President in re-

opening the case and substantially modifying its March 29,1996 Decision which had already

become final and executory, was in gross disregard of the rules and basic legal precept that

accord finality to administrative determinations.

Roxas and Co. Inc vs CA

Petitioner Roxas and Co. Is a corporation that owns 3 haciendas in Batangas, which the

government wishes to acquire under the Comprehensive Agrarian Law (CARL). Before the

effectivity of the law, the petitioner filed with the Department of Agrarian Reform a

voluntary offer to sell (VOS) Hacienda Caylaway pursuant to EO 229, which served as

guidelines to the comprehensive agrarian program.

The two other haciendasBanilad and Palicowere placed under compulsory acquisition by

the DAR in accordance with the CARL.

Hacienda Banilad and Palico

DAR sent invitations to Roxas and Co in order to discuss the results of the DAR investigation,

finding both Banilad and Palico qualified under the CARP. For Hacienda Palico, DAR sent a

letter of acquisition to Roxas and Co at their offices in Manila, while for Hacienda Banilad,

DAR addressed the notices to Jaime Pimintel, caretaker of the said hacienda. It was

petitioner Pimintel who attended all the proceedings regarding the two haciendas. Hence,

during trial, Roxas and Co claimed that they were not informed of the acquisition

proceedings on their two haciendas.

DAR then opened a trust account in favor of petitioner Roxas and Co. These trust accounts

were replaced by DAR with cash and Land Bank of the Philippines (LBP) bonds. Meanwhile,

petitioner Roxas applied for the conversion of the haciendas from agricultural to non-

agricultural. Despite this, DAR proceeded with the acquisition of the two haciendas. It then

issued and distributed certificate of land ownership awards (CLOA) to farmer beneficiaries.

Hacianda CaylawayAlthough Hacienda Caylaway was initially offered for sale to the government, Roxas and Co

sent a letter to DAR secretary withdrawing its offer. According to Roxas, the reclassification

of Caylaway from agricultural to non agricultural was authorized by the Sangguniang Bayan

of Nasugbu. Also, the municipality of Nasugbu where the haciendas are located had been

declared a tourist zone. Roxas also argued that the land is not suitable for agricultural

purposes.

DAR secretary denied Roxas withdrawal of his VOS. According to the secretary, the

withdrawal can only be based on specific grounds such as unsuitability of soil for agriculture,

slope of the lad is ov er 180 degrees and that the land is undeveloped.

Despite the denial of the withdrawal of the VOS, petitioner still filed an application for

conversion with the DAR Adjudication Board (DARAB), which submitted the case to theSecretary of DAR for resolution. The DAR secretary dismissed the c ase.

Roxas and Co went to the CA on appeal. CA dismissed appeal claiming that petitioners failed

to exhaust administrative remedies.

Issues:

1. WON the court can take cognizance of petitioners petition despite failure toexhaust administrative remedies

2. WON acquisition proceedings against the petitioners were valid3. WON the court can rule on whether the haciendas may be reclassified from

agricultural to non agricultural

Held:1. Yes. Petitioners action falls under the exception to the doctrine of exhaustion of

administrative remedies sine there is no other plain, speedy, and adequate remedy

for the petitioners at this point. The CLOAs were already issued despite the fact

that there was no just compensation.

2. Acquisition proceedings against petitioners violated their right to due process.First, there was an improper service of the Notice of Acquisition. Notices to

corporations should be served through their president, manager, secretary,

cashier, agent, or any of its directors or partners. Jaime Pimintel, to whom the

notice was served, was neither of those. Second, there was no notice of coverage,

meaning, the parcels of land were not properly identified before they were taken

by the DAR. Under the law, the land owner has the right to choose 5 hectares ofland he wishes to retain. Upon receiving the Notice of Acquisition, petitioner
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corporation had no idea which portions of its estate were subject to compulsory

acquisiton. Third, The CLOAs were issued to farmer beneficiaries without just

compensation. The law provides that the deposit must be made only in cash or LBP

bonds. DARs opening of a trust account in petitioners name does not con stitute

payment. Even if later, DAR substituted the trust account with cash and LBP bonds,

such does not cure the lack of notice, which still amounts to a violation of the

petitioners right to due process.

3. Despite all this, the court has not jurisdiction to rule on the reclassification of landfrom agricultural to non agricultural. DARs failure to o bserve due process does not

give the court the power to adjudicate over petitioners application for landconversion. DAR is charged with the mandate of approving applications for land

conversion. They have the tools and experience needed to evaluate such

applications; hence, they are the proper agency with which applications for land

use conversion are lodged. DAR should be given a chance to correct their defects

with regard to petitioners right to due process.

Petitioner dismissed.

Indeed, the doctrine of primary jurisdiction does not warrant a court to arrogate unto

itself authority to resolve a controversy the jurisdiction over which is initially lodged with

an administrative body of special competence.[91]

Respondent DAR is in a better position to

resolve petitioners application for conversion, being primarily the agency possessing the

necessary expertise on the matter. The power to determine whether Haciendas Palico,

Banilad and Caylaway are non-agricultural, hence, exempt from the coverage of the CARL

lies with the DAR, not with this Court.

Finally, we stress that the failure of respondent DAR to comply with the requisites of

due process in the acquisition proceedings does not give this Court the power to nullify the

CLOAs already issued to the farmer beneficiaries. To assume the power is to short-circuit

the administrative process, which has yet to run its regular course. Respondent DAR must

be given the chance to correct its procedural lapses in the acquisition proceedings. In

Hacienda Palico alone, CLOA's were issued to 177 farmer beneficiaries in 1993.[92]

Since

then until the present, these farmers have been cultivating their lands .[93]

It goes against

the basic precepts of justice, fairness and equity to deprive these people, through no fault

of their own, of the land they till. Anyhow, the farmer beneficiaries hold the property in

trust for the rightful owner of the land.

IN VIEW WHEREOF, the petition is granted in part and the acquisition proceedings overthe three haciendas are nullified for respondent DAR's failure to observe due process

therein. In accordance with the guidelines set forth in this decision and the applicable

administrative procedure, the case is hereby remanded to respondent DAR for proper

acquisition proceedings and determination of petitioner's application for conversion.

Dept of Agrarian Reform vs Saranggani Agricultural

The Sangguniang Bayan of Alabel, Sarangani passed Resolution No. 97-08 adopting a 10 year

comprehensive development plan of the municipality and its land use. On January 30, 1998,

pursuant to Municipal Zoning Ordinance No. 08, Series of 1997, and to accelerate the

development and urbanization of Alabel, the Sangguniang Bayan of Alabel passed Resolution

No. 98-03 reclassifying lots that were located within the built-up areas, based on the 1995-

2005 Land Use Plan of the municipality, from agricultural to non-agricultural uses. Later, the

Sangguniang Panlalawigan of Sarangani approved Resolution No. 98-018 or the ResolutionAdopting the Ten-Year Municipal Comprehensive Development Plan (MCDP 1995-2205) and

the Land Use Development Plan and Zoning Ordinance of the Municipality of Alabel,

Sarangani Per Resolution No. 97-08 and Municipal Ordinance No. 97-08, S. of 1997 of the

Sangguniang Bayan of Alabel. A portion of the area involving376.5424 hectares, however,

was covered by the CARP commercial farms deferment scheme. The Zoning Certification

issued by the office of the Municipal Planning and Development Council (MPDC)showed that

reclassified from agricultural and pasture land to residential, commercial institutional, light

industrial and open space in the1995-2005 land use plan of Alabel. The respondent then field

an application for land use conversion of certain parcels of land. Meanwhile, members of the

Sarangani Agrarian Reform Beneficiaries Association, Inc. (SARBAI) sent a letter-petition to

the DAR Secretary oppposing the application for land use conversion filed by SACI. SARBAIalleged that its members were merely forced to si gn the waiver of rights, considering that the

commercial farm deferment period ended on June 15, 1998. Later, the PLUTC agreed to

recommend the disapproval of a portion of a property which was still viable for agriculture.

The conversion was deferred subject to the submission of certain requirements. Later, the

appealed to the Office of the President. The Office of t he President dismissed the appeal and

denied, so they filed with the Court of Appeals a petition for review raising substantially the

same issues. The CA granted the petition and ordred DAR to issue a conversion order. As to

the deferred portion, DAR was directed to expedite the processing and evaluation of

petitioners application.

Issue:WON a notice of coverage is an indispensable requirement for the acquisition of land

Held:

No, Under the circumstances, a notice of coverage is not an indispensable requirement

before DAR can acquire the subject lots or commercial farms, which are covered by a

deferment period under the Comprehensive Agrarian Reform Law (CARL) or R.A. No 6657

upon its effectivity on June 15, 1998

Issue:

WON the DAR should use the comprehensive land use plans and ordinance of the local

sanggunian as primary reference

Held: Yes, Section 20 of Republic Act No. 7160, otherwise known as the Local Government

Code of 1991,empowers the local government units to reclassify agricultural lands.

Memorandum Circular No. 54 Prescribing the Guidelines Governing Section 20 of R.A. No.

7160 Otherwise Known as the Local Government Code of 1991Authoriz

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