Vous êtes sur la page 1sur 8

Taxation 1 Digested Cases

VIRGILIO GASTON v. REPUBLIC PLANTERS BANK Facts: Petitioners are sugar producers, sugarcane planters and millers. Philippine Sugar Commission (PHILSUCOM) was formerly the government office tasked with the function of regulating and supervising the sugar industry, it was superseded by its co-respondent Sugar Regulatory Administration. Respondent Republic Planters Bank is a commercial banking corporation. Petitioners filed a MANDAMUS to implement the privatization of Republic Planters Bank, and for the transfer and distribution of the shares of stock in the said to sugar producers, planters and millers because they believe that they are the true beneficial owners of the bank since they pay P1.00 per picul of sugar from the proceeds of sugar producers as STABILIZATION FEES The shares are currently held by Philsucom / Sugar Regulatory Admin. They traverse the petition arguing that no trust results from Section 7 of P.D. No. 388; that the stabilization fees collected are considered government funds under the Government Auditing Code; The Solicitor General countered that the stabilization fees are considered government funds and that the transfer of shares to from Philsucom to the sugar producers would be irregular. Issue: What is the nature of the P1.00 stabilization fees collected from sugar producers? Are they funds held in trust for them, or are they public funds? Are the shares in the bank owned by the government Philsucom or privately by the different sugar planters from whom such fees were collected? RULING: The stabilization fees were charged on sugar produced and milled which ACCRUED TO PHILSUCOM, under PD 338. The stabilization fees collected are in the nature of tax, which is within the power of the state to impose for the promotion of the sugar industry and its components. The fact that the State has taken money pursuant to law and having been levied for a special purpose, the revenues collected are treated as state funds. Once the purpose has been fulfilled or abandoned, the balance will be transferred to the general funds of government. The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in pursuance of an appropriation made by law. It is stated in (1987) Constitution, Article VI, Sec. 29[1] that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law. The sugar planters are NOT BENEFICIAL OWNERS. The money is collected from them only because they are the one to be benefited from the expenditure of funds derived from it. The fact that one-half of the amount levied is to be utilized for the "payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees of PHILSUCOM. The investing of the funds in RPB is not alien to the purpose since the Bank is a commodity bank for sugar, conceived for the sugar industry growth and development. Revenues derived from taxes cannot be used purely for private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be utilized for the benefit of the ENTIRE SUGAR INDUSTRY, and all its components, since the sugar industry is of vital importance to the countrys economy and national interest. The Writ of mandamus is denied and the Petition hereby dismissed.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases _______________________________________________________________________________


Notes: P. D. No. 388, promulgated on February 2,1974, which created the PHILSUCOM, provided for the collection of a Stabilization Fund as follows: SEC. 7. Capitalization, Special Fund of the Commission, Development and Stabilization Fund. There is hereby established a fund for the commission for the purpose of financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market to be administered in trust by the Commission and deposited in the Philippine National Bank derived in the manner herein below cited from the following sources: a. Stabilization fund shall be collected as provided for in the various provisions of this Decree. b. Stabilization fees shall be collected from planters and millers in the amount of Two (P2.00) Pesos for every picul produced and milled for a period of five years from the approval of this Decree and One (Pl.00) Peso for every picul produced and milled every year thereafter. Provided: That fifty (P0.50) centavos per picul of the amount levied on planters, millers and traders under Section 4(c) of this Decree will be used for the payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees for the purpose of accomplishing and employees for the purpose of accomplishing the efficient performance of the duties of the Commission.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases


Planters Products Inc vs Fertiphil Corp G.R. No. 166006 March 14, 2008 FACTS: Petitioner Planters Products Inc (PPI) and respondent Fertiphil are private corporations incorporated under Philippine laws, both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals. Marcos then issued Letter of Instruction (LOI) 1465, imposing a (CRC) capital recovery component of Php10.00 per bag of fertilizer. The levy was to continue until adequate capital was raised to make PPI financially viable. Fertiphil remitted to the Fertilizer and Pesticide Authority (FPA), which was then remitted the depository bank of PPI. Fertiphil paid P6,689,144 to FPA from 1985 to 1986. After the 1986 Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. Fertiphil demanded from PPI a refund of the amount it remitted, however PPI refused to the demand. Fertiphil filed a complaint for collection and damages, questioning the constitutionality of LOI 1465, claiming that it was unjust, unreasonable, oppressive, invalid and an unlawful imposition that amounted to a denial of due process. Fertiphil alleged that the LOI solely favored PPI, a privately owned corporation, which used the proceeds to maintain its monopoly of the fertilizer industry. FPA, through the Solicitor General, countered that the issuance of LOI No.1465 was a valid exercise of the police power of the State in ensuring the stability of the fertilizer industry in the country PPI argues that Fertiphil has no locus standi to question the constitutionality of LOI No. 1465 because it does not have a "personal and substantial interest in the case or will sustain direct injury as a result of its enforcement." It asserts that Fertiphil did not suffer any damage from the imposition because the incidence of the levy fell on the ultimate consumer or the farmers themselves, not on the seller fertilizer company. ISSUE: Whether or not Fertiphil has locus standi to question the constitutionality of LOI No. 1465. Whether or not the P10 levy in the exercise of taxation power is unconstitutional? RULING: On Locus Standi Whether or not the complaint for collection is characterized as a private or public suit , Fertiphil has locus standi to file it. Fertiphil suffered a direct injury from the enforcement of LOI No. 1465. It was required to pay the P10 levy imposed for every bag of fertilizer sold on the domestic market. The liability of Fertiphil and other domestic sellers of fertilizer to pay the levy are made indefinite. They are required to continuously pay the levy until adequate capital is raised for PPI. The fact of payment is sufficient injury to Fertiphil. The imposition of the levy was an exercise of the taxation power of the state. While it is true that the power to tax can be used as an implement of police power, the primary purpose of the levy was revenue generation. The P10 levy under LOI No. 1465 is too excessive to serve a mere regulatory purpose . The LOI expressly provided that the levy was imposed until adequate capital is raised to make PPI viable. The P10 levy is unconstitutional because it was not for a public purpose. The levy was imposed to give undue benefit to PPI.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases


PPI has no basis that the levy was imposed to ensure the stability of the fertilizer industry in the country. The levy imposed under LOI No. 1465 was not for a public purpose. An inherent limitation on the power of taxation is public purpose. Taxes are exacted only for a public purpose. They cannot be used for purely private purposes or for the exclusive benefit of private persons. It is clearly indicated in the LOI that the levy was exacted for the benefit of PPI, a private corporation. The levy was used to pay the corporate debts of PPI. It was revealed to the Letter of understanding that PPI was in deep financial problems because of its huge corporate debts and it was guaranteed by the government to pay its debts to the foreign creditors thats why President Marcos issued LOI No. 1465. Fertiphil also argues that, even if the LOI is enacted under the police power, it is still unconstitutional because it did not promote the general welfare of the people or public interest. Under the operative fact doctrine, the law is recognized as unconstitutional but the effects of the unconstitutional law may be left undisturbed as a matter of equity and fair play. It produces no rights, imposes no duties and affords no protection. It has no legal effect. It is, in legal contemplation, inoperative as if it has not been passed. Being void, Fertiphil is not required to pay the levy. All levies paid should be refunded in accordance with the general civil code principle against unjust enrichment. The general rule is supported by Article 7 of the Civil Code, which provides: ART. 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be excused by disuse or custom or practice to the contrary. When the courts declare a law to be inconsistent with the Constitution, the former shall be void and the latter shall govern. The Court did not find anything evil in ordering PPI to refund the amounts paid by Fertiphil under LOI No. 1465. It would be inequitable and unjust not to order a refund. To do so would unjustly enrich PPI at the expense of Fertiphil. Article 22 of the Civil Code explicitly provides that every person who, through an act of performance by another comes into possession of something at the expense of the latter without just or legal ground shall return the same to him. We cannot allow PPI to profit from an unconstitutional law. Justice and equity dictate that PPI must refund the amounts paid by Fertiphil. The Petition of PPI is DENIED.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases


American Bible Society vs. City of Manila Facts: American Bible Society is a foreign, non-stock, non-profit, religious, missionary corporation duly registered and doing business in the Philippines through its Philippine agency established in Manila in November, 1898. City of Manila is a municipal corporation with powers that are to be exercised in conformity with the provisions of Republic Act No. 409, known as the Revised Charter of the City of Manila American Bible Society has been distributing and selling bibles and/or gospel portions throughout the Philippines and translating the same into several Philippine dialect City Treasurer of Manila informed American Bible Society that it was violating several Ordinances such as Ordinance No. 3000 for operating without the necessary mayors permit and Ordinance no. 2529, 3028 and 3364 for not paying any license fees, thereby requiring the corporation to secure the permit and license fees covering th nd the period from 4 quarter of 1945 up to 2 quarter 1953. To avoid closing of its business, American Bible Society paid the City of Manila its permit and license fees under protest American Bible filed a complaint, questioning the constitutionality and legality of the Ordinances 2529 and 3000, and prayed for a refund of the payment made to the City of Manila. They contended that they had been in the Philippines since 1899 and were not required to pay any license fee or sales tax and it never made any profit from the sale of its bibles City of Manila prayed that the complaint be dismissed, reiterating the constitutionality of the Ordinances in question. Trial Court dismissed the complaint. American Bible Society appealed to the Court of Appeals Issues: Whether or not the ordinances of the City of Manila, Nos. 3000, 2529, 3028 and 3364 are constitutional and applicable to the case at bar. Whether or not American Bible Society is liable to pay sales tax for the distribution and sale of bibles? Ruling: Article III, section 1, clause (7) of the Constitution of the Philippines guarantees the freedom of religious profession and worship. No religion test shall be required for the exercise of civil or political rights. Ordinances Nos. 2529 and 3000 are both unconstitutional and illegal because they provide for religious censorship and restrain the free exercise and enjoyment of its religious profession, to wit: the distribution and sale of bibles and other religious literature to the people of the Philippines. Under Sec. 1 of Ordinance 3000, person or entity engaged in any of the business, trades or occupation enumerated under Sec. 3 must obtain a Mayors permit and license from the City Treasurer . American Bible Societys business is not among those enumerated The license fees required to be paid are not imposed directly upon any religious institution but upon those engaged in any of the business such as retail dealers in general merchandise. It is stated in Sec. 27 (e) of Commonwealth Act No. 466 or the National Internal Revenue Code, that Corporations or associations organized and operated exclusively for religious purposes liable to the tax imposed under this Code shall not be taxed Appellant's counsel claims that the (CIR) Collector of Internal Revenue has exempted the plaintiff from this tax and says that such exemption clearly indicates that the act of distributing and selling bibles because it is purely religious.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases

The price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the same but this cannot mean that American Bible Society was engaged in the business or occupation of selling said merchandise for profit. With respect to Ordinance No. 3000 which requires the obtention the Mayor's permit before any person can engage in any of the businesses, the court do not find that it imposes any charge upon the enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices. Therefore, The court held that Ordinance No. 2529 of the City of Manila is not applicable to the American Bible Society and defendant-appellee is powerless to license or tax the business of American Bible Society for it would impair plaintiff's right to the free exercise and enjoyment of its religious profession and worship and its right of dissemination of religious beliefs. The court reverse the decision appealed from, sentencing defendant to return to the plaintiff the sum of P5,891.45 unduly collected from it.
NOTES: Section 1, subsection (7) of Article III of the Constitution of the Republic of the Philippines, provides that: (7) No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religion test shall be required for the exercise of civil or political rights. Section 1 of Ordinance No. 3000 reads as follows: SEC. 1. PERMITS NECESSARY. It shall be unlawful for any person or entity to conduct or engage in any of the businesses, trades, or occupations enumerated in Section 3 of this Ordinance or other businesses, trades, or occupations for which a permit is required for the proper supervision and enforcement of existing laws and ordinances governing the sanitation, security, and welfare of the public and the health of the employees engaged in the business specified in said section 3 hereof, WITHOUT FIRST HAVING OBTAINED A PERMIT THEREFOR FROM THE MAYOR AND THE NECESSARY LICENSE FROM THE CITY TREASURER. 2 provisions of law that may have bearing on this case: a. Chapter 60 of the Revised Administrative Code, the Municipal Board of the City of Manila is empowered to tax and fix the license fees on retail dealers engaged in the sale of books b. Sec. 18(o) of RA 409: to tax and fix the license fee on dealers in general merchandise, including importers and indentors, except those dealers who may be expressly subject to the payment of some other municipal tax. Further, Dealers in general merchandise shall be classified as (a) wholesale dealers and (b) retail dealers. For purposes of the tax on retail dealers, general merchandise shall be classified into four main classes: namely (1) luxury articles, (2) semiluxury articles, (3) essential commodities, and (4) miscellaneous articles.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases


CITY ASSESSOR OF CEBU VS. ASSOCIATION OF BENEVOLA DE CEBU FACTS: Association of Benevola de Cebu , a non-stock non-profit organization, is the owner of Chong Hua Hospital (CHH), In the late 1990s, CHH Medical Arts Center (CHHMAC) was constructed and in 1998, it was issued with a certification classifying the building as commercial. City Assessor of Cebu assessed the building the assessment level of 35% and not 10% which is currently imposed on private respondent herein. It is petitioners strong belief that CHHMAC, which is built on a rented land and situated about 100 meters from the main building of CHH, is not an extension nor an integral part of CHH and it should not enjoy the 10% special assessment because it is classified as commercial. Petitioner argues that CHHMAC was built and is intended for profit and functions commercially and CHH can still function and accomplish its purpose without the existence of CHHMAC. City Assessors inspection team shows that CHHMAC is a commercial establishment based on the following: (1) CHHMAC is exclusively intended for lease to doctors; (2) there are neither operating rooms nor beds for patients; and (3) the doctors renting the spaces earn income from the patients who avail themselves of their services. Benevola de Cebu contended that the CHHMAC building is used actually, directly and exclusively part of the hospital and should have an assessment level of 10% same to the main building and the other separate building which is the CHH Dietary and Records Department Local Board of Assessment Appeals (LBAA) pointed out that there is no reason therefore why a higher level would be imposed for CHHMAC as it is similarly situated with the CHH Dietary and Records Departments. Central Board of Assessment Appeals (CBAA) agreed with the LBAA. It is of public knowledge that before the CHHMAC was constructed, the accredited doctors of CHH were housed in the main hospital building of CHH and that hospital have plenty of spaces leased out to medical practitioners, which is both an accepted and desirable fact. Petitioner brought before the CA a petition for review The CA ruled that the fact that rentals are paid by CHH accredited doctors and medical specialists for spaces in CHHMAC has no bearing on its classification as a hospital, since CHHMAC serves also as a place for medical checkup, diagnosis, treatment, and care for its patients. The appellate court also applied Secs. 215 and 216 of the Local Government Code (Republic Act No. 7160) which classify buildings used for hospitals as special cases of real property and not as commercial. CHHMAC being an integral part of CHH is not commercial but special and should be imposed the 10% special assessment. ISSUE: Whether or not the new building is liable to pay the 35% assessment level? RULING: CHHMAC is not liable to pay the 35% assessment level because the new building is an integral part of the hospital and should not be assessed as commercial. The CHHMAC facility is reasonably necessary for the operations of Chong Hua Hospital. It is primarily used by the CHHs accredited physicians to perform medical check-up, diagnosis, treatment, and care of patients. For another, it also serves as a specialized outpatient department of the hospital.

Cases Digested by PJ Lacebal,

(Read at your own risk)

Taxation 1 Digested Cases


Charging rentals for the offices used by its accredited physicians cannot be equated to a commercial venture , Respondent has an explanation about his matter. First, CHHMAC is only for its consultants or accredited doctors and medical specialists. Second, the charging of rentals is a practical necessity: (1) to recoup the investment cost of the building, (2) to pay for the rentals for the lot CHHMAC is built on, and (3) to maintain the CHHMAC building and its facilities. Third, it pays the proper taxes for its rental income Fourth, the net income from the lease income of CHHMAC is used for respondents other charitable projects. The Court point out with the appellate courts application of Sec. 216 in relation with Sec. 215 of the Local Government Code on the proper classification of the CHHMAC. It is stated in Sec. 216 that all lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals shall be classified as special. Applying these provisions in line with City Tax Ordinance of Cebu City, the 10% special assessment should be imposed for the CHHMAC building which should be classified as "special." The petition is DENIED for lack of merit and the October 31, 2001 Decision and March 11, 2002 Resolution of the CA are hereby AFFIRMED. No pronouncement as to costs.
Notes: SEC. 215. Classes of Real Property for Assessment Purposes.For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland or special. SEC. 216. Special Classes of Real Property.All lands, buildings, and other improvements thereon actually, directly and exclusively used for hospitals, cultural or scientific purposes, and those owned and used by local water districts, and government-owned or controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power shall be classified as special.

Cases Digested by PJ Lacebal,

(Read at your own risk)