1. PHILEX MINING VS CIR 294 SCRA 687 1. PHILEX V. CIR (tax v.

ordinary debt) FACTS: Pet was assailing the decision of CA affirming CTA ordering it to pay the amount of excise tax liability for the period from the 2nd quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from August 6, 1994 until fully paid pursuant to Sections 248 and 249 of the Tax Code of 1977. - BIR sent a letter to Philex asking it to settle its tax liabilities for the 2nd, 3rd and 4th quarter of 1991 as well as the 1st and 2nd quarter of 1992 - Philex protested the demand for payment of the tax liabilities stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P119,977,037.02 plus interest. Therefore these claims for tax credit/refund should be applied against the tax liabilities - BIR denied its claim, since these pending claims have not yet been established or determined with certainty, it follows that no legal compensation can take place. - BIR's denial of the offsetting of Philex's claim for VAT input credit/refund against its excise tax obligation, Philex raised the issue to the Court of Tax Appeals - CTA held against Philex ordering it to pay the deficiency contending that: - Thus, for legal compensation to take place, both obligations must be liquidated and demandable. "Liquidated" debts are those where the exact amount has already been determined. In the instant case, the claims of the Petitioner for VAT refund is still pending litigation, and still has to be determined by this Court. the liquidated debt of the Petitioner to the government cannot, therefore, be set-off against the unliquidated claim which Petitioner conceived to exist in its favor - ruled that "taxes cannot be subject to set-off on compensation since claim for taxes is not a debt or contract Philex now contends that the same should, ipso jure, offset its excise tax liabilities15 since both had already become "due and demandable, as well as fully liquidated;"16 hence, legal compensation can properly take place. Issue: may compensation take place Held: NO - taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. There is a material distinction between a tax and debt. Debts are due to the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity. - a tax is that it is compulsory rather than a matter of bargain. - Hence, a tax does not depend upon the consent of the taxpayer. If any taxpayer can defer the payment of taxes by raising the defense that it still has a pending claim for refund or credit, this would adversely affect the government revenue system. - A taxpayer cannot refuse to pay his taxes when they fall due simply because he has a claim against the government or that the collection of the tax is contingent on the result of the lawsuit it filed against the government. Philex's theory that would automatically apply its VAT input credit/refund against its tax liabilities can easily give rise to confusion and abuse, depriving the government of authority over the manner by which taxpayers credit and offset their tax liabilities. - Philex cited ITOGON-SUYOC RULING Such case is based on NIRC 1939 . pets case is governed by NIRC 1977 FACTS: BIR asked Philex to pay tax for 1991-1992 in the total amount of P123,821,982.52. Philex refused stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P119,977,037.02 plus interest. Therefore asking for an off-set. Philex filed a case with the CTA. Philex was able to obtain its VAT input credit/refund not only for the taxable year 1989 to 1991 but also for 1992 and 1994 In view of the grant of its VAT input credit/refund, Philex now contends that the same should, ipso jure, offset its excise tax liabilities, since both had already become due and demandable, as well as fully liquidated; hence, legal compensation can properly take place. ISSUE: WON there should be an offset? HELD: NO. Taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. There is a material distinction between a tax and debt.D E BTS are due to the Government in its corporate capacity, whileT AX ES are due to the Government in its sovereign capacity. Philexs claim is an outright disregard of the basic principle in tax law that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. A distinguishing feature of a tax is that it isc o mpu ls o r y rather than a matter of bargain. Hence, a tax does not depend upon the consent of the taxpayer. A taxpayer cannot refuse to pay his taxes when they fall due simply because he has a claim against the government or that the collection of the tax is contingent on the result of the lawsuit it filed against the government. Moreover, Philex's theory that would automatically apply its VAT input credit/refund against its tax liabilities can easily give rise to confusion and abuse, depriving the government of authority over the manner by which taxpayers credit and offset their tax liabilities.

2. COMMISSIONER OF INTERNAL REVENUE vs. ITOGONSUYOC MINES, INCG.R. No. L-25299, July 29, 1969 FACTS: Respondent Itogon-Suyoc Mines, Inc. filed on January 13, 1961, its income taxreturn for the fiscal year 1959- 1960. It declared a taxable income of P114,368.04 and atax due thereon amounting to P26,310.41, for which it paid on the same day, the amountof P13,155.20 as the first installment of the income tax due. On May 17, 1961, petitioner filed an amended income tax return, reporting therein a net loss of P331, 707.33. It thussought a refund from the Commissioner of Internal Revenue, now the petitioner. OnFebruary 14, 1962, respondent Itogon-Suyoc Mines, Inc. filed its income tax return for the fiscal year 1960-1961, setting forth its income tax liability to the tune of P97,345.00,but deducting the amount of P13,155.20 representing alleged tax credit for overpaymentof the preceding fiscal year 1959- 1960. 0n December 18, 1962, petitioner Commissioner of Internal Revenue assessed against the respondent the amount of P1,512.83 as 1% monthly interest on the aforesaid amount of P13,155.20 from January 16,1962 to December 31, 1962. The basis for such an assessment was the absence of legal right to deduct said amount before the refund or tax credit thereof was approved bypetitioner Commissioner of Internal Revenue. Such an assessment was contested byrespondent before the Court of Tax

Appeals which ruled in its favour. Hence this petitionfor review.ISSUE:Whether or not the Court of Tax Appeals erred when it absolved RespondentCorporation "from liability to pay the sum of P1, 512.83 as 1% monthly interest for delinquency in the payment of income tax for the fiscal year 1960-1961.RULING:It could not be error for the Court of Tax Appeals, considering the admitted fact of overpayment, entitling respondent to refund, to hold that petitioner should not repose aninterest on the aforesaid sum of P13,155.20 "which after all was paid to and received bythe government even before the incidence of the tax in question." It would be, accordingto the Court of Tax Appeals, "unfair and unjust" to do so. The National Internal RevenueCode provides that interest upon the amount determined as a deficiency shall beassessed and shall be paid upon notice and demand from the Commissioner of InternalRevenue at the specified. It is made clear, however, in an earlier provision found in thesame section that if in any preceding year, the taxpayer was entitled to a refund of anyamount due as tax, such amount, if not yet refunded, may be deducted from the tax to be paid. There is no question respondent was entitled to a refund. Instead of waiting for the sum involved to be delivered to it, it deducted the said amount from the tax that ithad to pay. That it had a right to do according to the law.

Moreover, the amount of P4k+ paid by the national government for thelot was deposited w/ the PNB LONG BEFORE the auction of theremaining property. OTHERS: Francia cannot deny receiving notice of the sale because heIN FACT admitted in his testimony that he received a letter regardingthe sale, and it was negligence on his part when he ignored suchnotice; As a general rule, gross inadequacy of price is not materialwhen the law gives the owner the right to redeem as when a sale ismade at public auction, upon the theory that the lesser the price, theeasier it is for the owner to effect redemption.

3. Francia v IAC Facts: Engracio Francia was the registered owner of a residential lot and a 2-story house in Pasay City. Subsequently, a 125 - sqm portion of Francias property wasexpropriated by the Republic of the Philippines for the sum of P4k+representing the estimated amount equivalent to the assessed value of the aforesaid portion. This was because of Francias failure to pay taxes for 14 years. The property was then sold at public auction pursuant to Section 73 of PD 464 known as the Real Property Tax Code. Fernandez was thehighest bidder for the property. Francia was not present during the auction sale since he was in IliganCity at that time helping his uncle ship bananas. Francia then received a notice of hearing of an LRC Case, whereFernandez sought to cancel Francias TCT and issue a new one in hisname. Francia thus filed a complaint to annul the auction sale, alleging that: -his tax liability should have been offset with the money paidto him by the government when they expropriated his otherproperty -He was not duly notified of the auction sale -the price at which his property was sold was grosslyinadequate with that of the propertys actual value (shocking to the senses) Lower court and IAC dismissed the complaint. Issue: W/n the auction was valid Ruling: YES, it was valid By legal compensation, obligations of persons, who in their own rightare reciprocally debtors and creditors of each other, are extinguished(Art. 1278, Civil Code). The circumstances of the case do not satisfy the requirementsprovided by Article 1279 (1) that each one of the obligors be bound principally andthat he be at the same time a principal creditor of theother..xxx(3) that the two debts be due. There can be no off-setting of taxes against the claims that thetaxpayer may have against the government. A person cannot refuse topay a tax on the ground that the government owes him an amountequal to or greater than the tax being collected. The collection of a taxcannot await the results of a lawsuit against the government. The government and taxpayer are NOT mutually creditors and debtorsof each other. In this case, the tax was due to the city government while theexpropriation was effected by the national government.

4. DOMINGO VS GARLITOS G.R. NO. 18993 June 29, 1963 Labrador, J.: FACTS:In Domingo vs. Moscoso, the Supreme Court declared as final and executor the order of the lower court for the payment of estate and inheritance taxes, charges and penalties amounting to Php 40,058.55 by the estate of the of the late Walter Price. The petitioner for execution filed by the fiscal was denied by the lower court. The court held that the execution is unjustified as the Government is indebted to the estate for Php262,200 and ordered the amount of inheritance taxes can be deducted from the Governments indebtedness to the estate. ISSUE: Whether of not a tax and a debt may be compensated. RULING: The court having jurisdiction of the Estate had found that the claim of the Estate against the government has been recognized and the amount has already been appropriated by a corresponding law. Both the claim of the Government for inheritance taxes and the claim of the intestate for services rendered have already become overdue and demandable is well as fully liquidated. Compensation takes place by operation of law and both debts are extinguished to the concurrent amount. Therefore the petitioner has no clear right to execute the judgment for taxes against the estate of the deceased Walter Price. 5. Bagatsing vs. Ramirez GR L-41631, 17 December 1976 EnBanc, Martin (J): 7 concur, 1 concur with qualification, 1 reserved vote Facts: In 1974, the Municipal Board of Manila enacted Ordinance 7522, regulating the operation of public markets and prescribing fees for the rentals of stalls and providing penalties for violation thereof. The Federation of Manila Market Vendors Inc. assailed the validity of the ordinance, alleging among others the non-compliance to the publication requirement under the Revised Charter of the City of Manila. Issue:Whether the publication requirement was complied with. Held: The Revised Charter of the City of Manila is a special act since it relates only to the City of Manila, whereas the Local Tax Code id a general law because it applies universally to all local governments. Section 17 of the Charter speaks of ordinance in general. Whereas, Section 43 of the Local Tax Code relates to ordinances levying or imposing taxes, fees or other charges in particular. While the Charter requires publication, before

the enactment of the ordinance and after approval thereof, in two daily newspapers of the general circulation in the city, the Local Tax Code only prescribes for publication widely circulated within the jurisdiction of the local government or by posting the ordinance in the local legislative hall or premises and in two other conspicuous places within the territorial jurisdiction of the local government. Being a general law with a special provision applicable in the case, the Local Tax Code prevails. 6. Pascual vs. Secretary of Public Works and Communications GR L-10405, 29 December 1960 En Banc, Concepcion (J): 10 concur Facts: RA 920 (Act appropriating funds for public works) was enacted in 1953 containing an item (Section 1 c[a]) for the construction, reconstruction, repair, extension and improvement of Pasig feeder road terminals (the projected and planned subdivision roads, which were not yet constructed, within Antonio Subdivision owned by Senator Jose C. Zulueta). Zulueta donated said parcels of land to the Government 5 months after the enactment of RA 920, on the condition that if the Government violates such condition the lands would revert to Zulueta. The provincial governor of Rizal, Wenceslao Pascual, questioned the validity of the donation and the Constitutionality of the item in RA 920, it being not for a public purpose. Issue: Whether the item in the appropriation is valid. Held: The right of the legislature to appropriate funds is correlative with its right to tax, under constitutional provisions against taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another purpose, no appropriation of state funds can be made for other than a public purpose. The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon events occupying, or acts performed, subsequently thereto, unless the latter consist of an amendment of the organic law, removing, with retrospective operation, the constitutional limitation infringed by said statute. Herein, inasmuch as the land on which the projected feeder roads were to be constructed belonged to Senator Zulueta at the time RA 920 was passed by Congress, or approved by the President, and the disbursement of said sum became effective on 20 June 1953 pursuant to Section 13 of the Act, the result is that the appropriating sough a private purpose and hence, null and void. 7. Osmea v. Orbos (Delegation to Admin Agencies) Facts: 1. Petitioner, John Osmea, filed R65 certiorari to assail the constitutionality of the provision ( 8, paragraph 1 (c) of P.D. No. 1956) conferring the authority upon the Energy Regulatory Board (ERB) to impose additional amounts on petroleum products as an undue delegation of legislative power. 2. PD 1956 created the Oil Price Stabilization Fund (OPSF) basically a buffer fund which is to reimburse the oil companies from their losses brought about by the governments artificial maintenance of oil prices. 3. OPSF drew funds through duty collections on petroleum products and additional amounts imposed on petroleum products

Sub Issue: (baka lang kasi itanong) WON powers granted to the ERB under PD 1956 partake of the nature of the taxation power of the State No; while the funds collected may be referred to as taxes, they are exacted in the exercise of the police power of the state. Main Issue: WON there was undue delegation of legislative power No; the delegation was valid. Ratio: 1. For a valid delegation of power, it is essential that the law delegating the power must be: a. Complete in itself; it must set forth the policy to be executed by the delegate and b. It must fix a standard limits of which are sufficiently determinate or determinable to which the delegate must conform 2. The standard indicates the circumstances under which the legislative comand is to be effected. Thereafter, the administrative agency may in pursuance of the standard promulgate supplemental rules and regulations. (Edu v. Ericta was cited) 3. Standard may be express or implied from the policy and purpose of the act considered as a whole. 4. In this case, STANDARD was so long as there exists the need to protect the general public and the petroleum industry from the adverse consequences of pump rate fluctuations. The assailed provision expressly authorized the ERB to impose additional amounts to augment the OPSF resources using this standard.

8. Villegas v. Hiu Chiong Tsai Pao Ho The Municipal Board of Manila passed an ordinance prohibiting an alienfrom being employed or engaging in any position or occupation orbusiness enumerated therein, whether permanent, temporary, orcasual, without first securing an employment permit from the Mayorand paying the P50 permit fee. Hiu Chiong filed an action to restrain the enforcement of the ordinanceand to have it declared null and void for being discriminatory andviolative of the rule on uniformity in taxation. The Mayor argued that the ordinance cannot be declared null and voidon the ground that it violates the rule on uniformity of taxationbecause this rule applies only to purely tax or revenue measures andnot to regulatory measures, such as the ordinance. Issue: W/n the ordinance is valid. Ruling: NO, the ordinance is void. The first part of the ordinance requiring an alien to secure anemployment permit is regulatory in character because it involves theexercise of discretion on the part of the Mayor in approving ordisapproving the applications. However, the second part which requires the payment of P50 asemployees fee is not regulatory but a revenue measure. There is nologic or justification in exacting P50 from aliens who have been clearedfor employment. The obvious purpose of the ordinance is to raisemoney under the guise of regulation. The P50 fee is unreasonable not only because it is excessive butbecause it fails to consider valid substantial differences in situationamong individual aliens who are required to pay it. The same amountis being collected from every employed alien, whether he is casual orpermanent, part time or full time, or whether he is a lowly employee ora highly paid executive.

11. Reyes v Almanzor JBL, Edmundo and Milagros Reyes are owners of parcels of land inManila which are leased and occupied as dwelling sites by tenants formonthly rentals not exceeding P300. In 1971, RA 6359 was passed prohibiting an increase of monthlyrentals of dwelling units or of land on which another dwelling is locatedfor one year after effectivity for rentals not exceeding P300 butallowing an increase of rent thereafter by not more than 10%. The Act also suspended the operation of Article 1673 of the Civil Code(ejectment of lessess). PD 20 amended RA 6359 by absolutely prohibiting the increase andindefinitely suspending Article 1673. The Reyeses, thus, were precluded from raising the rentals and fromejecting the tenants. In 1973, the City Assessor of Manila reclassified and reassessed thevalue of the properties based on the schedule of market values dulyreviewed by the Secretary of Finance. As it entailed an increase of the corresponding tax rates, the Reyesesfiled a memorandum of disagreement with the Board of TaxAssessment Appeals and averring that the reassessments wereexcessive, unwarranted, unequitable, confiscatory and unconstitutionalinasmuch as the taxes imposed exceeded the annual income derivedfrom their properties. They also argued that the income approach should have been usedin determining land values instead of the comparative salesapproach which the assessor adopted. Issue : W/n the assessment of the Board was proper Ruling: NO. SC ruled in favor of Reyeses and board was askesd to make re-assessment. Taxation is equitable when its burden falls on those better able to pay. Taxation is progressive when its rate goes up depenfing on theresources of the person affected. Taxes are uniform when all taxablearticles or kinds of property of the same class are taxed at the samerate. The taxing power has the authority to make reasonable and naturalclassification for purposes of taxation. Laws should operate equally anduniformly, however, on all persons under similar circumstances. Under the Real Property Tax Code (PD 464), property must beappraised at its current and fair market value. The market value of the properties covered by PD 20, thus cannot beequated with the market value of properties not so covered. Theproperty covered by PD 20 has naturally a much lesser market value inview of the rental restrictions. The factors determinant of the assessed value of the properties underthe comparable sales approach were not presented by theBoard/Assessors: 1)that the sale must represent a bonafide arm's lengthtransaction between a willing seller and a willing buyer2)the property must be comparable property. Nothing can justify their view as it is of judicial notice that forproperties covered by P.D. 20 especially during the time in question,there were hardly any willing buyers. As a general rule, there were notakers so that there can be no reasonable basis for the conclusion thatthese properties were comparable with other residential properties notburdened by P.D. 20. Also, although taxes are the lifeblood of the government and should becollected without unnecessary hindrance, such collection should bemade in accordance with law as any arbitrariness will negate the veryreason for government itself. In this case, since the Reyeses are burdened by the Rent Freeze Laws(RA 6359 and PD 20), they should not be penalized by the samegovernment by the imposition of excessive taxes they cannot ill affordand would eventually result in the forfeiture of their properties, underthe principle of social justice. 12. Lutz v. Araneta Commonwealth Act 567 or the Sugar AdjustmentAct, was promulgated in 1940 in response to the imminent threat tothe sugar

industry by the imposition of export taxes upon sugar asprovided in the Tydings-McDuffie Act, and the eventual loss of itspreferential position in the US market. In order to stabilize the sugar industry to preparefor the loss, CA 567 provided for an INCREASE in the existing tax onthe manufacture of sugar (on a graduated basis), the proceeds of which would accrue to the Sugar Adjustment and Stabilization Fund (aspecial fund in the Phil Treasury). Walter Lutz, in his capacity as administrator of theEstate of Antonio Ledesma, wanted to recover from the Collector of Internal Revenue the amount paid by the estate as taxes, alleging thatthe tax imposed by CA 567 is unconstitutional, being levied for the aidand support of the sugar industry exclusively, which is NOT a publicpurpose. Issue: W/n the tax is unconstitutional because it is notdevoted to a public purpose. Ruling: The tax is valid! The defect in the argument of Lutz is hisassumption that the tax provided for in CA 567 is a pure exercise of thetaxing power. In reality, the tax is levied with a regulatorypurpose, to provide means for the rehabilitation and stabilization of thethreatened sugar industry. Thus, it is primarily an exercise of policepower. Sugar production is one of the great industries of our nation. Sugar: oOccupies the leading position among export products oGives employment to thousands of laborers oIs an impt source of foreign exchange Thus, its development redounds to GEN. WELFAREand the legislature may determine within reasonable bounds what isnecessary for its protection and promotion. Taxation may be made theimplement of the States police power. It is inherent in the power to tax that a state be freeto select the subjects of taxation, so the argument that the tax to belevied burdens sugar producers themselves does not hold water It does not matter that the funds raised under theSugar Stabilization Act should be exclusively spent in aid of the sugarindustry, since it is that very enterprise that is being protected; legislature is not reqd by the Consti to adhere to the policy of all ornone. Lastly, the taxation does not constitute expenditureof tax money for private purposes, since the funds will be used toincrease sugar production, solve problems and improve workingconditions in sugar mills

12. Lutz vs. Araneta GR L-7859, 22 December 1955 First Division, Reyes JBL (J): 8 concur Facts: Walter Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, sought to recover the sum of P14,6666.40 paid by the estate as taxes from the Commissioner under Section e of Commonwealth Act 567 (the Sugar Adjustment Act), alleging that such tax is unconstitutional as it levied for the aid and support of the sugar industry exclusively, which is in his opinion not a public purpose. Issue: Whether the tax is valid in supporting an industry. Held: The tax is levied with a regulatory prupose, i.e. to provide means for the rehabilitation and stabilization of the threatened sugar industry. The act is primarily an exercise of police power, and is not a pure exercise of taxing power. As sugar production is one of the great industries of the Philippines; and that its promotion, protection and advancement redounds greatly to the general welfare, the legislature found that the general welfare demanded that the industry should be stabilized, and provided that the distribution of benefits therefrom be readjusted among its component to enable it to resist the added strain of the increase in tax that it had to sustain. Further, it cannot be said that the devotion of tax money to experimental stations to seek increase of

efficiency in sugar production, utilization of by-products, etc., as well as to the improvement of living and working conditions in sugar mills and plantations, without any part of such money being channeled diectly to private persons, constitute expenditure of tax money for private purposes. The tax is valid.

exclude any subsequently established sugar central, of the same class as the present company, from the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance expressly points only to the company as the entity to be levied upon.

12.LUTZ VS. ARANETA GR L-7859 December 22, 1955 Reyes, J.: FACTS:Walter Lutz, Judicial Administrator of the intestate estate of Ledesma, sought to recover the sum of Php14, 666.40 paid by the estate as taxes, alleging that such tax is unconstitutional as it levied for the aid and support of the sugar industry exclusively which is in his opinion not a public purpose. ISSUE: Whether or not tax is valid in supporting the sugar industry? RULING: The court ruled that the tax is valid as it served public purpose. The tax provided for in CA 567 is primarily an exercise of police power since sugar is a great source of income for the country and employs thousands of laborers. Hence, it was competent for the legislature to find that the general welfare demanded that the sugar industry should be stabilized in turn; and in the wide field of its police power, the lawmaking body could provide that the distribution of benefits therefrom be readjusted among its components to enable it to resist the added strain of the increase in taxes that it had to sustain.

14. Ormoc Sugar Co. v. Treasurer of Ormoc City: Uniformity andEqual Protection The Municipal Board of Ormoc City passed Ordinance No 4 imposing amunicipal tax of 1% per export sale of sugar milled at the Ormoc SugarCompany. Ormoc questioned the validity of the ordinance on the ground that itviolated the equal protection clause and the rule of uniformity intaxation. Issue: W/n the ordinance is valid. Ruling: NO, it is NOT. The Local Autonomy Act gave chartered cities, municipalities andmunicipal districts authority to levy for public purposes just anduniform taxes, licenses or fees. For a tax to be just and uniform, it must apply equally to thingsidentically situated. HOWEVER, classification can be made as long as itis be germane to purpose of law, rest on substantial distinctions, applyequally to all members of same class, apply to present and futureconditions. In this case, the tax imposed is violative of the equal protection clause. When the taxing ordinance was enacted, Ormoc Sugar was the ONLYsugar central in the city. A reasonable classification should be in terms applicable to futureconditions as well. The taxing power should not be singular andexclusive as to exclude any subsequent established sugar central fromthe coverage of the tax. A subsequently established sugar central cannot be subject to taxbecause the ordinance expressly points to Ormoc Sugar Company Incas the entity to be levied upon.

14. Ormoc Sugar vs. Treasurer of Ormoc City GR L-23794, 17 February 1968 En Banc, Bangzon JP (J): 9 concur Facts: In 1964, the Municipal Board of Ormoc City passed Ordinance 4, imposing on any and all productions of centrifuga sugar milled at the Ormoc Sugar Co. Inc. in Ormoc City a municpal tax equivalent to 1% per export sale to the United States and other foreign countries. The company paid the said tax under protest. It subsequently filed a case seeking to invalidate the ordinance for being unconstitutional. Issue: Whether the ordinance violates the equal protection clause. Held: The Ordinance taxes only centrifugal sugar produced and exported by the Ormoc Sugar Co. Inc. and none other. At the time of the taxing ordinances enacted, the company was the only sugar central in Ormoc City. The classification, to be reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and exclusive as to

15.Misamis Oriental Association of Coco Traders v. Dept. of FinanceSecretary The NIRC exempts from VAT the sale of agricultural non-food productsin their original state if the sale is made by the primary producer orowner of the land from which the same are produced. The sale made by any other person / entity, like a trader or dealer, isNOT exempt from the tax. A revenue memorandum circular was issued, reclassifying COPRA intoan agricultural non-food product. Misamis Oriental, w/c was engaged in the buying and selling of copra,claimed that the memorandum circular was discriminatory andviolative of the equal protection clause because while coconut farmersand copra producers are exempt, TRADERS and DEALERS are NOT,although both sell copra in its original state. ISSUE: W/n there was a violation of equal protection. RULING: NO, it was not violative of EPC The Constitution does not forbid the differential treatment of personsso long as there is a REASONABLE basis for classifying them differently. In this case, there is a material or substantial difference betweencoconut farmers and copra producers, on the one hand, and copratraders and dealers, on the other. The farmers/ producers PRODUCE and SELL copra, while traders anddealers merely SELL copra. The Constitution does not forbid the differential treatment of personsso long as there is a reasonable basis for classifying them differently

16. Victorias Milling v. Municipality of Victorias The municipal council of Victorias enactedOrdinance 1 w/c required sugar centrals operating w/in the municipality topay an annual municipal license tax. Based on the ordinance, Victorias Milling wasassessed 40K (imposed on sugar centrals) and another 40K (imposed onsugar refineries). Thus, Victorias Milling filed a suit to declare theordinance void since it: -a) exceeds the amount fixed in Provincial Circular 12-A issuedby the Finance Dept -b) is discriminatory, as it singles out VM, w/c is the onlyoperator of a sugar central and a sugar refinery within the jurisdiction of defendant municipality -c) constitutes double taxation -d) the national government has preempted the field of taxation with respect to sugar centrals or refineries The lower court held that the exaction was invalidbecause the municipality CANNOT impose a tax for revenue in the guise of a police measure. The amounts set forth in the ordinance also exceeded thecost of licensing, regulating, and surveillance. ISSUE: W/n the ordinance was valid. RULING: The ordinance was valid. The ordinance was promulgated not in the exerciseof the municipality's regulatory power but as a REVENUE measure,authorized by Commonwealth Act 472. Under this, a municipality is authorized to imposethree kinds of licenses: -1) license for regulation of useful occupations / enterprises -2) license for restriction/ regulation of non-useful occupationsor enterprises -3) license for revenue The first 2 fall w/in police power, while the 3rd is forrevenue purposes. The license fee in this case falls under #3 and isvalid. Generally speaking, it is NOT a license fee, but restson taxing power, w/c must be expressly conferred by statute upon themunicipality. There is no double taxation because the company isbeing taxed for the same object: One tax is on sugar centrals and the otheris on sugar refineries. It just so happens that the company is both. [Also,the tax was imposed based on capacity of the sugar centrals to produce, soit was really a license on the occupation or business of sugar centrals and sugar refineries and not on the sugar itself; hence there was no identity of object of taxation]. There is no discrimination despite the fact that thecompany is the only sugar producing entity in the municipality. VictoriasMilling is not named in the ordinance and should another corporationdecide to produce sugar in the area, it will be taxed accordingly. GENERAL RULE: If not for police inspection, supervision, regulation = it is a revenue measure!