Reyes vs.

Almanzor
REYES
GR
Nos.
196 SCRA 322

v.
L-49839-46,

April

26,

ALMANZOR
1991

FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo which are leased and
occupied as dwelling units by tenants who were paying monthly rentals of not exceeding P300.
Sometimes in 1971 the Rental Freezing Law was passed prohibiting for one year from its
effectivity, an increase in monthly rentals of dwelling units where rentals do not exceed three
hundred pesos (P300.00), so that the Reyeses were precluded from raising the rents and from
ejecting the tenants. In 1973, respondent City Assessor of Manila re-classified and reassessed the
value of the subject properties based on the schedule of market values, which entailed an
increase in the corresponding tax rates prompting petitioners to file a Memorandum of
Disagreement averring that the reassessments made were "excessive, unwarranted, inequitable,
confiscatory and unconstitutional" considering that the taxes imposed upon them greatly
exceeded the annual income derived from their properties. They argued that the income approach
should have been used in determining the land values instead of the comparable sales approach
which the City Assessor adopted.
ISSUE: Is the approach on tax assessment used by the City Assessor reasonable?
HELD: No. The taxing power has the authority to make a reasonable and natural classification
for purposes of taxation but the government's act must not be prompted by a spirit of hostility, or
at the very least discrimination that finds no support in reason. It suffices then that the laws
operate equally and uniformly on all persons under similar circumstances or that all persons must
be treated in the same manner, the conditions not being different both in the privileges conferred
and the liabilities imposed. Consequently, it stands to reason that petitioners who are burdened
by the government by its Rental Freezing Laws (then R.A. No. 6359 and P.D. 20) under the
principle of social justice should not now be penalized by the same government by the
imposition of excessive taxes petitioners can ill afford and eventually result in the forfeiture of
their properties.

Insurance Case Digest: Philippine Health Care Providers, Inc. V. CIR (2009)
G.R. No. 167330

September 18, 2009

Lessons Applicable: Elements (Insurance)

FACTS:
Philippine Health Care Providers, Inc. is a domestic corporation whose primary purpose
is "[t]o establish, maintain, conduct and operate a prepaid group practice health care
delivery system or a health maintenance organization to take care of the sick and disabled
persons enrolled in the health care plan and to provide for the administrative, legal, and
financial responsibilities of the organization." Individuals enrolled in its health care
programs pay an annual membership fee and are entitled to various preventive, diagnostic
and curative medical services provided by its duly licensed physicians, specialists and other
professional technical staff participating in the group practice health delivery system at a
hospital or clinic owned, operated or accredited by it.

January 27, 2000: Commissioner of Internal Revenue (CIR) sent petitioner a formal
demand letter and the corresponding assessment notices demanding the payment of
deficiency taxes, including surcharges and interest, for the taxable years 1996 and 1997 in
the total amount of P224,702,641.18

Petitioner protested the assessment in a letter dated February 23, 2000.

CIR did not act on the protest, petitioner filed a petition for review in the Court of
Tax Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments.

CTA: PARTIALLY GRANTED

to pay VAT

DST assessment CANCELLED AND SET ASIDE

CIR: health care agreement was a contract of insurance subject to DST under Section 185
of the 1997 Tax Code

CA: health care agreement was in the nature of a non-life insurance contract subject to
DST

Court Affirmed CA
ISSUE:

1.

W/N the Philippine Health Care Providers, Inc (HMO) was engaged in the business of
insurance during the pertinent taxable years - NO
2. W/N the Philippine Health Care Providers, Inc enters into an insurance contract - NO

HELD: motion for reconsideration is GRANTED

1. NO
P.D. 612 Insurance Code
Sec. 2 (2)
(2) The term "doing an insurance business" or "transacting an insurance business", within the
meaning of this Code, shall include:

(a) making or proposing to make, as insurer, any insurance contract;

(b) making or proposing to make, as surety, any contract of suretyship as a vocation and not as
merely incidental to any other legitimate business or activity of the surety;

(c) doing any kind of business, including a reinsurance business, specifically recognized as
constituting the doing of an insurance business within the meaning of this Code;

(d) doing or proposing to do any business in substance equivalent to any of the foregoing in a
manner designed to evade the provisions of this Code.

In the application of the provisions of this Code the fact that no profit is derived from the making
of insurance contracts, agreements or transactions or that no separate or direct consideration is
received therefor, shall not be deemed conclusive to show that the making thereof does not
constitute the doing or transacting of an insurance business.
no profit is derived from the making of insurance contracts, agreements or
transactions or that no separate or direct consideration is received therefore, shall not be
deemed conclusive to show that the making thereof does not constitute the doing or
transacting of an insurance business
2. NO
o

basic distinction between medical service corporations and ordinary health and accident
insurers is that the former undertake to provide prepaid medical services through
participating physicians, thus relieving subscribers of any further financial burden, while the
latter only undertake to indemnify an insured for medical expenses up to, but not beyond,
the schedule of rates contained in the policy
A participating provider of health care services is one who agrees in writing to render
health care services to or for persons covered by a contract issued by health service

corporation in return for which the health service corporation agrees to make payment
directly to the participating provider
any indemnification resulting from the payment for services rendered in case of
emergency by non-participating health providers would still be incidental to petitioners
purpose of providing and arranging for health care services and does not transform it into an
insurer.
As an HMO, it is its obligation to maintain the good health of its members
its undertaking under its agreements is not to indemnify its members against any
loss or damage arising from a medical condition but, on the contrary, to provide the health
and medical services needed to prevent such loss or damage.
Overall, petitioner appears to provide insurance-type benefits to its members (with
respect to its curative medical services), but these are incidental to the principal activity of
providing them medical care. The "insurance-like" aspect of petitioners business is
miniscule compared to its noninsurance activities. Therefore, since it substantially provides
health care services rather than insurance services, it cannot be considered as being in the
insurance business.
principal purpose test
purpose of determining what "doing an insurance business" means, we have to
scrutinize the operations of the business as a whole and not its mere components
letter dated September 3, 2000, the Insurance Commissioner confirmed that petitioner is
not engaged in the insurance business. This determination of the commissioner must be
accorded great weight
Section 2 (1) of the Insurance Code defines a contract of insurance as an agreement
whereby one undertakes for a consideration to indemnify another against loss, damage or
liability arising from an unknown or contingent event. An insurance contract exists where
the following elements concur: - NOT present
1. The insured has an insurable interest;
2. The insured is subject to a risk of loss by the happening of the designed peril;
3. The insurer assumes the risk;
4. Such assumption of risk is part of a general scheme to distribute actual losses among a
large group of persons bearing a similar risk and
5. In consideration of the insurers promise, the insured pays a premium.

no indemnity
member can take advantage of the bulk of the benefits anytime even in the
absence of any peril, loss or damage on his or her part.
assumption of the expense by petitioner is not confined to the happening of a
contingency but includes incidents even in the absence of illness or injury

Since indemnity of the insured was not the focal point of the agreement
but the extension of medical services to the member at an affordable cost, it did not partake
of the nature of a contract of insurance
HMO, undertakes a business risk when it offers to provide health services. But it is not
the risk of the type peculiar only to insurance companies. Insurance risk, also known as
actuarial risk, is the risk that the cost of insurance claims might be higher than the premiums
paid. The amount of premium is calculated on the basis of assumptions made relative to the
insured.
In our jurisdiction, a commentator of our insurance laws has pointed out that, even if a
contract contains all the elements of an insurance contract, if its primary purpose is the
rendering of service, it is not a contract of insurance. The primary purpose of the parties in
making the contract may negate the existence of an insurance contract.
health care agreements are clearly not within the ambit of Section 185 of the NIRC and
there was never any legislative intent to impose the same on HMOs

Ferrer v. Bautista
231 SCRA 257
Facts:
Gloria Ferrer claims ownership a strip of land south of Lot 1980 of the Cadastral survey of
Aringay, La Union by virtue of accretion, she being the owner of Lot 1980 covered by TCT T3280, which is immediately north of the land in question. On the other hand, Balanag and
Domondon equally assert ownership over the property on account of long occupation and by
virtue of Certificate of Title P-168, in the name of Magdalena Domondon, pursuant to Free
Patent 309504 issued on 24 January 1966.
On 23 March 1976, Ferrer filed a complaint with the CFI La Union to Quiet Title to Real
Property against Balanag and Domondon. On 07 December 1976, Judge Bautista issued an
order dismissing Ferrers complaint; because it constitutes a collateral or indirect attack on the
Free Patent and Original Certificate of Title. Ferrer filed a motion for reconsideration but was
denied. Pursuant to the SCs Resolution, Ferrer was allowed to file the petition for review on
certiorari under RA 5440 considering that only questions of law had been raised. The Court
dismissed the petition for lack of interest due to the failure of Ferrers counsel to submit the
requisite memorandum in support of the petition. In a Resolution dated 28 September 1978,
however, the Court resolved to reconsider the dismissal and to reinstate the petition.
The Supreme Court reversed and set aside the questioned order of dismissal of the trial court,
and rendered judgment declaring Ferrer to be the owner of the disputed parcel of land and
ordering Balanag and Domondon to reconvey the same to Ferrer; without costs.

Issue:
Whether or not Ferrer the lawful owner of the questioned property.
Held:
Article 457 of the Civil Code provides that to the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects of the current of the waters.
Undoubtedly, Ferrer is the lawful owner of the accretion, she being the registered owner of Lot
1980 which adjoins the alluvial property.
Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion
which is gradually received from the effects of the current of waters The rationale for the rule is
to provide some kind of compensation to owners of land continually exposed to the destructive
force of water and subjected to various easements
The Director of Lands has no authority to grant a free patent over land that has passed to private
ownership and which has thereby ceased to be public land. Any title thus issued or conveyed by
him would be null and void. The nullity arises, not from fraud or deceit, but from the fact that the
land is no longer under the jurisdiction of the Bureau of Lands, the latters authority being
limited only to lands of public dominion and not those that are privately owned. In the present
case, Balanag and Domondon acquired no right or title over the disputed land by virtue of the
free patent since at the time it was issued in 1966, it was already private property and not a part
of the disposable land of the public domain.

ERMITA-MALATE HOTEL AND MOTEL OPERATORS ASSOCIATION, INC. vs CITY

MAYOR OF MANILA
FACTS: Petitioners assailed the constitutionality of Manila Ordinance No. 4760 regulating the
operation of hotels, motels and lodging houses on the ground that it is unreasonable and hence
violative to the due process clause, wherein it requires establishments to provide guest
registration forms on the lobby open for public view at all times.
RespondentCityMayor contends that the challenged ordinance was a valid and proper exercise of
police power measure for the proper purpose of curbing immorality. An explanatory note for the
challenged ordinance made mention of the alarming increase in the rate of prostitution, adultery
and fornication inManilatraceable in great part to the existence of motels and the like.
ISSUE: Whether or not Ordinance No. 4760 is violative of the due process clause.
HELD: No, the challenged ordinance as an exercise of police power was precisely enacted to
minimize certain practices hurtful to public morals. As a due process requirement, an ordinance

must not outrun the bounds of reason and result in sheer oppression for it to be valid. Thus it
would be unreasonable to stigmatize an ordinance enacted precisely for the well-being of the
people, specially if there is no factual foundation being laid to prove its alleged violation of due
process and offset the ordinances presumed validity.

PEOPLE OF THE PHILIPPINES vs. ANDRE MARTI (193 SCRA 57) Case Digest
Facts:
On August 14, 1987, the appellant and his common-law wife, Shirley Reyes went to Manila
Packaging and Export Forwarders to send packages to Zurich, Switzerland. It was received by
Anita Reyes and ask if she could inspect the packages. Shirley refused and eventually convinced
Anita to seal the package making it ready for shipment. Before being sent out for delivery, Job
Reyes, husband of Anita and proprietor of the courier company, conducted an inspection of the
package as part of standard operating procedures. Upon opening the package, he noticed a
suspicious odor which made him took sample of the substance he found inside. He reported this
to the NBI and invited agents to his office to inspect the package. In the presence of the NBI
agents, Job Reyes opened the suspicious package and found dried-marijuana leaves inside. A
case was filed against Andre Marti in violation of R.A. 6425 and was found guilty by the court a
quo. Andre filed an appeal in the Supreme Court claiming that his constitutional right of privacy
was violated and that the evidence acquired from his package was inadmissible as evidence
against him.
Issue:
Can the Constitutional Right of Privacy be enforced against private individuals?
Ruling:
The Supreme Court held based on the speech of Commissioner Bernas that the Bill of Rights
governs the relationship between the individual and the state.
The constitutional proscription against unlawful searches and seizures therefore applies as a
restraint directed only against the government and its agencies tasked with the enforcement of
the law. It is not meant to be invoked against acts of private individuals. It will be recalled that
Mr Job Reyes was the one who opened the box in the presence of the NBI agents in his place of
business. The mere presence of the NBI agents did not convert the reasonable search effected by
Mr. Reyes into a warrantless search and siezure proscribed by the constitution. Merely to observe
and look at that which is in plain sight is not a search.

The judgement of conviction finding appeallant guilty beyond reasonable doubt of the crime
charged was AFFIRMED.