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COMMISSIONER OF INTERNAL REVENUE vs. CEBU PORTLAND CEMENT COMPANY and COURT OF TAX APPEALS G.R. No. L-29 !9 D"#"$%"& '!( '9)* FACTS+ By virtue of a decision of the Court of Tax Appeals rendered on June 21, 1961, as modified on appeal by the upreme Court on !ebruary 2", 196#, the Commissioner of $nternal %evenue &as ordered to refund to the Cebu 'ortland Cement Company the amount of '(#9,)*+,9+, representin- overpayments of ad valorem taxes on cement produced and sold by it after .ctober 19#", .n /arch 2+, 196+, follo&in- denial of motions for reconsideration filed by both the petitioner and the private respondent, the latter moved for a &rit of execution to enforce the said 0ud-ment, The motion &as opposed by the petitioner on the -round that the private respondent had an outstandin- sales tax liability to &hich the 0ud-ment debt had already been credited, $n fact, it &as stressed, there &as still a balance o&in- on the sales taxes in the amount of ' ),"+9,2"9,+# plus 2+1 surchar-e, .n April 22, 196+, the Court of Tax Appeals -ranted the motion, holdin- that the alle-ed sales tax liability of the private respondent &as still bein- 2uestioned and therefore could not be set3off a-ainst the refund, ISSUE+ 4hether or not the 0ud-ment debt can be enforced a-ainst private respondent5s sales tax liability, the latter still bein- 2uestioned, RULING6 The ar-ument that the assessment cannot as yet be enforced because it is still bein- contested loses si-ht of the ur-ency of the need to collect taxes as 7the lifeblood of the -overnment,7 $f the payment of taxes could be postponed by simply 2uestionin- their validity, the machinery of the state &ould -rind to a halt and all -overnment functions &ould be paraly8ed, The Tax Code provides6 ec, 291, Injunction not available to restrain collection of tax. 3 9o court shall have authority to -rant an in0unction to restrain the collection of any national internal revenue tax, fee or char-e imposed by this Code, $t -oes &ithout sayin- that this in0unction is available not only &hen the assessment is already bein- 2uestioned in a court of 0ustice but more so if, as in the instant case, the challen-e to the assessment is still3and only3on the administrative level, There is all the more reason to apply the rule here because it appears that even after creditin- of the refund a-ainst the tax deficiency, a balance of more than ' ) million is still due from the private respondent, COMMISSIONER OF INTERNAL REVENUE vs. ALGUE and T,E COURT OF TAX APPEALS G.R. No. L-2))9- F"%&.a&/ '*( '9)) FACTS+ The 'hilippine u-ar :state ;evelopment Company had earlier appointed Al-ue as its a-ent, authori8in- it to sell its land, factories and oil manufacturin- process, 'ursuant to such authority, Alberto <uevara, Jr,, :duardo <uevara, $sabel <uevara, :dith, .=!arell, and 'ablo anche8, &or>ed for the formation of the ?e-etable .il $nvestment Corporation, inducin- other persons to invest in it, @ltimately, after its incorporation lar-ely throu-h the promotion of the said persons, this ne& corporation purchased the ' :;C properties, !or this sale, Al-ue received as a-ent a commission of '126,***,**, and it &as from this commission that the '"#,***,** promotional fees &ere paid to the aforenamed individuals, The petitioner contends that the claimed deduction of '"#,***,** &as properly disallo&ed because it &as not an ordinary reasonable or necessary business expense, The Court of Tax Appeals had seen it differently, A-reein- &ith Al-ue, it held that the said amount had been le-itimately paid by the private respondent for actual services rendered, The payment &as in the form of promotional fees, ISSUE+ 4hether or not the Collector of $nternal %evenue correctly disallo&ed the '"#,***,** deduction claimed by private respondent Al-ue as le-itimate business expenses in its income tax returns, RULING+ The upreme Court a-rees &ith the respondent court that the amount of the promotional fees &as not excessive, The amount of '"#,***,** &as 6*1 of the total commission, This &as a reasonable proportion, considerin- that it &as the payees &ho did practically everythin-, from the formation of the ?e-etable .il $nvestment Corporation to the actual purchase by it of the u-ar :state properties, $t is said that taxes are &hat &e pay for civili8ation society, 4ithout taxes, the -overnment &ould be paraly8ed for lac> of the motive po&er to activate and operate it, Aence, despite the natural reluctance to surrender part of one=s hard earned income to the taxin- authorities, every person &ho is able to must contribute his share in the runnin- of the -overnment, C.N. ,ODGES vs. MUNICIPAL BOARD OF T,E CITY OF ILOILO G.R. No. L-')'29 0an.a&/ 1'( '9-1

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FACTS+ .n June 1(, 196*, the /unicipal Board of the City of $loilo enacted .rdinance 9o, ((, series of 196*, pursuant to the provisions of %epublic Act 9o, 226), >no&n as the Bocal Autonomy Act, re2uirin- any person, firm, association or corporation to pay a sales tax of 1C2 of 11 of the sellin- price of any motor vehicle and prohibitin- the re-istration of the sale of the motor vehicle in the /otor ?ehicles .ffice of the City of $loilo unless the tax has been paid, C, 9, Aod-es, &ho &as en-a-ed in the business of buyin- and sellin- second3hand motor vehicles in the City of $loilo, is one of those affected by the enactment of the ordinance, and believin- that the same is invalid for havin- been passed in excess of the authority conferred by la& upon the municipal board, he filed on June 2", 196* a petition for declaratory 0ud-ment &ith the Court of !irst $nstance of $loilo prayin- that said ordinance be declared void ab initio, The court a quo rendered decision on ;ecember +, 196* holdin- that that part of the ordinance &hich re2uires the o&ner of a used motor vehicle to pay a sales tax of 1C2 of 11 of the sellin- price is valid, but the portion thereof &hich re2uires the payment of the tax as a condition precedent for the re-istration of the sale in the /otor ?ehicles .ffice is invalid for bein- repu-nant to ection 2DhE of %epublic Act 226), Both parties have appealed, ISSUE+ 4hether or not the ordinance in 2uestion is valid even &ith re-ard to the portion &hich re2uires the payment of the tax as a condition precedent for the re-istration of the sale in the /otor ?ehicles .ffice of said city, RULING+ The City of $loilo has the authority and po&er to approve the ordinance in 2uestion for it merely imposes a percenta-e tax on the sale of a second3hand motor vehicle that may be carried out &ithin the city by any person, firm, association or corporation o&nin- or dealin- &ith it &ho may come &ithin the 0urisdiction, The re2uirement of the ordinance cannot be considered a tax in the li-ht vie&ed by the court a quo for the same is merely a coercive measure to ma>e the enforcement of the contemplated sales tax more effective, 4ell3settled is the principle that taxes are imposed for the support of the -overnment in return for the -eneral advanta-e and protection &hich the -overnment affords to taxpayers and their property, Taxes are the lifeblood of the -overnment, ASSOCIATION OF CUSTOM BRO2ERS( INC. vs. MUNICIPAL BOARD G.R. No. L-31*- Ma/ 22( '9!1 FACTS+ The Association of Customs Bro>ers, $nc,, &hich is composed of all bro>ers and public service operators of motor vehicles in the City of /anila challen-e the validity .rdinance 9o, (("9 on the -round that D1E &hile it levies a so3called property tax it is in reality a license tax &hich is beyond the po&er of the /unicipal Board of the City of /anilaF D2E said ordinance offends a-ainst the rule of uniformity of taxationF and D(E it constitutes double taxation, The respondents contend on their part that the challen-ed ordinance imposes a property tax &hich is &ithin the po&er of the City of /anila to impose under its %evised Charter G ection 1+ DpE of %epublic Act 9o, )*9H, and that the tax in 2uestion does not violate the rule of uniformity of taxation, nor does it constitute double taxation, ISSUE+ 4hether or not the ordinance is null and void RULING+ The ordinance infrin-es the rule of the uniformity of taxation ordained by our Constitution, 9ote that the ordinance exacts the tax upon all motor vehicles operatin- &ithin the City of /anila, $t does not distin-uish bet&een a motor vehicle for hire and one &hich is purely for private use, 9either does it distin-uish bet&een a motor vehicle re-istered in the City of /anila and one re-istered in another place but occasionally comes to /anila and uses its streets and public hi-h&ays, This is an ine2uality &hich &e find in the ordinance, and &hich renders it offensive to the Constitution, ESSO STANDARD EASTERN( INC v. COMMISSIONER OF INTERNAL REVENUE G.R. Nos. L-2)! )-9( 0.4/ *( '9)9 FACTS+ $n CTA Case 9o, 12#1, :sso tandard :astern $nc, D:ssoE deducted from its -ross income for 19#9, as part of its ordinary and necessary business expenses, the amount it had spent for drillin- and exploration of its petroleum concessions, This claim &as disallo&ed by the Commissioner of $nternal %evenue DC$%E on the -round that the expenses should be capitali8ed and mi-ht be &ritten off as a loss only &hen a 7dry hole7 should result, :sso then filed an amended return &here it as>ed for the refund of

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'(2(,2"9,** by reason of its abandonment as dry holes of several of its oil &ells, Also claimed as ordinary and necessary expenses in the same return &as the amount of '()*,+22,*), representin- mar-in fees it had paid to the Central Ban> on its profit remittances to its 9e& Ior> head office, .n Au-ust #, 196), the C$% -ranted a tax credit of '221,*((,** only, disallo&in- the claimed deduction for the mar-in fees paid on the -round that the mar-in fees paid to the Central Ban> could not be considered taxes or allo&ed as deductible business expenses, :sso appealed to the Court of Tax Appeals DCTAE for the refund of the mar-in fees it had earlier paid contendin- that the mar-in fees &ere deductible from -ross income either as a tax or as an ordinary and necessary business expense, Ao&ever, :sso5s appeal &as denied, ISSUE+ D1E 4hether or not the mar-in fees are taxes, D2E 4hether or not the mar-in fees are necessary and ordinary business expenses, RULING+ D1E 9o, A tax is levied to provide revenue for -overnment operations, &hile the proceeds of the mar-in fee are applied to stren-then our country=s international reserves, The mar-in fee &as imposed by the tate in the exercise of its police po&er and not the po&er of taxation, D2E 9o, .rdinarily, an expense &ill be considered =necessary= &here the expenditure is appropriate and helpful in the development of the taxpayer=s business, $t is =ordinary= &hen it connotes a payment &hich is normal in relation to the business of the taxpayer and the surroundin- circumstances, ince the mar-in fees in 2uestion &ere incurred for the remittance of funds to :sso=s Aead .ffice in 9e& Ior>, &hich is a separate and distinct income taxpayer from the branch in the 'hilippines, for its disposal abroad, it can never be said therefore that the mar-in fees &ere appropriate and helpful in the development of :sso=s business in the 'hilippines exclusively or &ere incurred for purposes proper to the conduct of the affairs of :sso=s branch in the 'hilippines exclusively or for the purpose of reali8in- a profit or of minimi8in- a loss in the 'hilippines exclusively, PROGRESSIVE DEVELOPMENT CORPORATION v. 5UE6ON CITY G.R. No. L-1- )'( A7&84 23( '9)9 FACTS+ .n ;ecember 2), 1969, the City Council of Jue8on City adopted .rdinance 9o, "99", other&ise >no&n as the /ar>et Code of Jue8on City, ection ( of said ordinance provides that Kprivately o&ned and operated public mar>ets shall submit monthly to the Treasurer=s .ffice, a certified list of stallholders sho&in- the amount of stall fees or rentals paid daily by each stallholder, ,,, and shall pay 1*1 of the -ross receipts from stall rentals to the City, ,,, , as supervision feeL, .n July 1#, 19"2, 'ro-ressive ;evelopment Corporation D'ro-ressiveE, o&ner and operator of a public mar>et >no&n as the 7!armers /ar>et M hoppin- Center7 filed a 'etition for 'rohibition &ith 'reliminary $n0unction a-ainst Jue8on City on the -round that the supervision fee or license tax imposed by the above3mentioned ordinance is in reality a tax on income &hich Jue8on City may not impose, the same bein- expressly prohibited by %epublic Act 9o, 226), as amended, other&ise >no&n as the Bocal Autonomy Act, $n its Ans&er, Jue8on City, throu-h the City !iscal, contended that it had authority to enact the 2uestioned ordinances, maintainin- that the tax on -ross receipts imposed therein is not a tax on income, The lo&er court ruled that the 2uestioned imposition is not a tax on income, but rather a privile-e tax or license fee &hich local -overnments, li>e Jue8on City, are empo&ered to impose and collect, ISSUE+ 4hether the tax imposed by Jue8on City on -ross receipts of stall rentals is properly characteri8ed as parta>in- of the nature of an income tax, RULING+ 9o, The tax imposed in the controverted ordinance constitutes, not a tax on income, not a city income tax Das distin-uished from the national income tax imposed by the 9ational $nternal %evenue CodeE &ithin the meanin- of ection 2 D-E of the Bocal Autonomy Act, but rather a license tax or fee for the re-ulation of the business in &hich 'ro-ressive is en-a-ed, 4hile it is true that the amount imposed by the 2uestioned ordinances may be considered in determinin- &hether the exaction is really one for revenue or prohibition, instead of one of re-ulation under the police po&er, it nevertheless &ill be presumed to be reasonable, P,ILIPPINE AIRLINES( INC. v. EDU G.R. No. L- 3'1)1( A.9.s: '!( '9)) FACTS+ The 'hilippine Airlines D'ABE is a corporation en-a-ed in the air transportation business under a le-islative franchise, Act 9o, )2"(9, @nder its franchise, 'AB is exempt from the payment of taxes, ometime in 19"1, ho&ever, Band Transportation Commissioner %omeo !, :levate D:levateE issued a re-ulation pursuant to ection +, %epublic Act )1(6, other&ise >no&n as the Band and Transportation and Traffic Code, re2uirin- all tax exempt entities, amon- them 'AB to pay motor vehicle re-istration fees,

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;espite 'AB=s protestations, :levate refused to re-ister 'AB=s motor vehicles unless the amounts imposed under %epublic Act )1(6 &ere paid, 'AB thus paid, under protest, re-istration fees of its motor vehicles, After payin- under protest, 'AB throu-h counsel, &rote a letter dated /ay 19,19"1, to Band Transportation Commissioner %omeo :du D:duE demandin- a refund of the amounts paid, :du denied the re2uest for refund, Aence, 'AB filed a complaint a-ainst :du and 9ational Treasurer @baldo Carbonell DCarbonellE, The trial court dismissed 'AB=s complaint, 'AB appealed to the Court of Appeals &hich in turn certified the case to the upreme Court, ISSUE+ 4hether or not motor vehicle re-istration fees are considered as taxes, RULING+ Ies, $f the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax, uch is the case of motor vehicle re-istration fees, The motor vehicle re-istration fees are actually taxes intended for additional revenues of the -overnment even if one fifth or less of the amount collected is set aside for the operatin- expenses of the a-ency administerin- the pro-ram, VILLEGAS v. ,IU C,IONG TSAI PAO ,O G.R. No. L-29-3-( Nov"$%"& ' ( '9*) FACTS+ .n !ebruary 22, 196+, the /unicipal Board of /anila passed City .rdinance 9o, 6#(", The said city ordinance &as also si-ned by then /anila /ayor Antonio J, ?ille-as D?ille-asE, ection 1 of the said city ordinance prohibits aliens from bein- employed or to en-a-e or participate in any position or occupation or business enumerated therein, &hether permanent, temporary or casual, &ithout first securin- an employment permit from the /ayor of /anila and payin- the permit fee of '#*,** except persons employed in the diplomatic or consular missions of forei-n countries, or in the technical assistance pro-rams of both the 'hilippine <overnment and any forei-n -overnment, and those &or>in- in their respective households, and members of reli-ious orders or con-re-ations, sect or denomination, &ho are not paid monetarily or in >ind, Aiu Chion- Tsai 'ao Ao DTsai 'ao AoE &ho &as employed in /anila, filed a petition &ith the C!$ of /anila to declare City .rdinance 9o, 6#(" as null and void for bein- discriminatory and violative of the rule of the uniformity in taxation, The trial court declared City .rdinance 9o, 6#(" null and void, ?ille-as filed the present petition, ISSUE+ 4hether or not City .rdinance 9o, 6#(" is a tax or revenue measure, RULING+ Ies, The contention that City .rdinance 9o, 6#(" is not a purely tax or revenue measure because its principal purpose is re-ulatory in nature has no merit, 4hile it is true that the first part &hich re2uires that the alien shall secure an employment permit from the /ayor involves the exercise of discretion and 0ud-ment in the processin- and approval or disapproval of applications for employment permits and therefore is re-ulatory in character the second part &hich re2uires the payment of '#*,** as employee=s fee is not re-ulatory but a revenue measure, There is no lo-ic or 0ustification in exactin- '#*,** from aliens &ho have been cleared for employment, $t is obvious that the purpose of the ordinance is to raise money under the -uise of re-ulation,

COMPA;IA GENERAL DE TABACOS DE FILIPINAS vs, CITY OF MANILA( ET AL G.R. No. L-'--'9 0.n" 29( '9-1 FACTS+ 'etitioner filed an action in the C!$ /anila to recover from City of /anilaDCity E the sum of '1#,2+*,** alle-edly overpaid by it as taxes on its &holesale and retail sales of li2uor for the period from the third 2uarter of 19#) to the second 2uarter of 19#", inclusive, under .rdinances 9os, (6(), ((*1, and (+16, Tabacalera=s action for refund is based on the theory that, in connection &ith its liquor sales, it should pay the license fees but not the municipal sales taxesF and since it already paid the license fees aforesaid, the sales taxes paid by it N amountin- to the sum of '1#,2*+,** N under the three ordinances is an overpayment made by mista>e, and therefore refundable, The City contends that for the permit issued to it Tabacalera is sub0ect to pay the license fees prescribed by .rdinance 9o, ((#+, aside from the sales taxes imposed by .rdinances 9os, (6(), ((*1, and (+16,

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ISSUE+ 4hether or not the taxes imposed are valid RULING+ .rdinance 9o, ((#+ is clearly one that prescribes municipal license fees for the privile-e to en-a-e in the business of sellin- li2uor or alcoholic bevera-es, .n the other hand, it is clear that .rdinances 9os, (6(), ((*1, and (+16 impose taxes on the sales of -eneral merchandise, &holesale or retail, and are revenue measures enacted by the /unicipal Board of /anila by virtue of its po&er to tax dealers for the sale of such merchandise, That Tabacalera is bein- sub0ected to double taxation is more apparent than real, As already stated &hat is collected under .rdinance 9o, ((#+ is a license fee for the privile-e of en-a-in- in the sale of li2uor, .n the other hand, &hat the three ordinances mentioned heretofore impose is a tax for revenue purposes based on the sales made of the same article or merchandise, $t is already settled in this connection that both a license fee and a tax may be imposed on the same business or occupation, or for sellin- the same article, this not bein- in violation of the rule a-ainst double taxation, AMERICAN MAIL LINE( ET AL vs, CITY OF BASILAN( ET AL G.R. No. L-'2-3* Ma/ 1'( '9-' FACTS6 Appellees are forei-n shippin- companies licensed to do business in the 'hilippines, &ith offices in /anila, Their vessels call at Basilan City and anchor in the bay or channel &ithin its territorial &aters, As the city treasurer assessed and attempted to collect from them the anchora-e fees prescribed in the aforesaid amendatory ordinance, they filed the present action for ;eclaratory %elief to have the courts determine its validity, @pon their petition the lo&er court issued a &rit of preliminary in0unction restraininappellants from collectin- or attemptin- to collect from them the fees prescribed therein, Appellant contended that, throu-h its city council, it had authority to enact the 2uestioned ordinance in the exercise of either its revenue3raisin- po&er or of its police po&er, The 2uestion to be resolved is &hether the City of Basilan has the authority to enact .rdinance 1+* and to collect the anchora-e fees prescribed therein, ISSUE6 $s the ordinance valid exercise of taxin- po&er of the City of Basilan, RULING6 @nder para-raph DaE sec, 1), %,A, 2++, it is clear that the City of Basilan may only levy and collect taxes for -eneral and special purposes in accordance &ith or as provided by la&F in other &ords, the city of Basilan &as not -ranted a blan>et po&er of taxation, The use of the phrase 7in accordance &ith la&7 N &hich, in our opinion, means the same as 7provided by la&7 N clearly discloses the le-islative intent to limit the taxin- po&er of the City, $t has been held that the po&er to re-ulate as an exercise of police po&er does not include the po&er to impose fees for revenue purposes, Appellant city=s o&n contention that the 2uestioned ordinance &as enacted in the exercise of its po&er of taxation, ma>es it obvious that the fees imposed are not merely re-ulatory, 0O,N ,. OSME;A vs, OSCAR ORBOS ": a4 G.R. No. 99))- Ma&#< 1'( '991 FACTS+ .ctober 1*, 19+), 'resident !erdinand /arcos issued ',;, 19#6 creatin- a pecial Account in the <eneral !und, desi-nated as the .il 'rice tabili8ation !und D.' !E, The .' ! &as desi-ned to reimburse oil companies for cost increases in crude oil and imported petroleum products resultin- from exchan-e rate ad0ustments and from increases in the &orld mar>et prices of crude oil, ubse2uently, the .' ! &as reclassified into a 7trust liability account,7, 'resident Cora8on C, A2uino promul-ated :, ., 1(" expandinthe -rounds for reimbursement to oil companies for possible cost under recovery incurred as a result of the reduction of domestic prices of petroleum products, The petitioner ar-ues inter alia that 7the monies collected pursuant to , , ',;, 19#6, as amended, must be treated as a = ':C$AB !@9;,= not as a =trust account= or a =trust fund,= and that 7if a special tax is collected for a specific purpose, the revenue -enerated therefrom shall =be treated as a special fund= to be used only for the purpose indicated, and not channeled to another -overnment ob0ective,7 'etitioner further points out that since 7a =special fund= consists of monies collected throu-h the taxin- po&er of a tate, such amounts belong to the State , althou-h the use thereof is limited to the special purposeCob0ective for &hich it &as created,7 ISSUE+ 4hether or not the funds collected under '; 19#6 is an exercise of the po&er of taxation RULING+ The levy is primarily in the exercise of the police po&er of the tate, 4hile the funds collected may be referred to as taxes, they are exacted in the exercise of the police po&er of the tate,

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4hat petitioner &ould &ish is the fixin- of some definite, 2uantitative restriction, or 7a specific limit on ho& much to tax,7 The Court is cited to this re2uirement by the petitioner on the premise that &hat is involved here is the po&er of taxationF but as already discussed, this is not the case, 4hat is here involved is not so much the po&er of taxation as police po&er, Althou-h the provision authori8in- the :%B to impose additional amounts could be construed to refer to the po&er of taxation, it cannot be overloo>ed that the overridin- consideration is to enable the dele-ate to act &ith expediency in carryin- out the ob0ectives of the la& &hich are embraced by the police po&er of the tate, $t &ould seem that from the above32uoted rulin-, the petition for prohibition should fail, REPUBLIC OF T,E P,ILIPPINES( vs, BACOLOD-MURCIA MILLING CO.( INC.( MA-AO SUGAR CENTRAL CO.( INC.( and TALISAY-SILAY MILLING COMPANY G.R. Nos. L-'9)23( L-'9)2! and '9)2- 0.4/ 9( '9-FACTS+ Joint appeal by three su-ar centrals, respondents herein, from a decision of the Court of !irst $nstance of /anila findin- them liable for special assessments under ection 1# of %epublic Act 9o, 6(2, The appellants= thesis is simply to the effect that the 71* centavos per picul of su-ar7 authori8ed to be collected under ec, 1# of %epublic 6(2 is a special assessment, As such, the proceeds thereof may be devoted only to the specific purpose for &hich the assessment &as authori8ed, a special assessment beina levy upon property predicated on the doctrine that the property a-ainst &hich it is levied derives some special benefit from the improvement, $t is not a tax measure intended to raise revenues for the <overnment, ISSUE+ $s the imposition of special assessment an exercise of the taxin- po&er RULING+ The Court deemed it relevant to discuss its holdin- in But8 v, Araneta, !or in this But8 case, Common&ealth Act #6", other&ise >no&n as the u-ar Ad0ustment Act, all collections made thereunder 7shall accrue to a special fund in the 'hilippine Treasury, to be >no&n as the = u-ar Ad0ustment and tabili8ation !und,= and shall be paid out only for any or all of the follo&in- purposes or to attain any or all of the follo&in- ob0ectives, as may be provided by la&,7 Analysis of the Act, and particularly ection 6, &ill sho& that the tax is levied &ith a re-ulatory purpose, to provide means for the rehabilitation and stabili8ation of the threatened su-ar industry, In other words, the act is primarily an exercise of the police power, .n the authority of the above case, then, 4e hold that the special assessment at bar may be considered as similarly as the above, that is, that the levy for the 'hilsu-in !und is not so much an exercise of the po&er of taxation, nor the imposition of a special assessment, but, the exercise of the police po&er for the -eneral &elfare of the entire country, $t is, therefore, an exercise of a soverei-n po&er &hich no private citi8en may la&fully resist, VICTORIAS MILLING CO.( INC. vs. T,E MUNICIPALITY OF VICTORIAS( PROVINCE OF NEGROS OCCIDENTAL G.R. No. L-2'')1 S"7:"$%"& 2*( '9-) FACTS+ This case calls into 2uestion the validity of .rdinance 9o, 1, series of 19#6, of the /unicipality of ?ictorias, 9e-ros .ccidental, The disputed ordinance imposed license taxes on operators of su-ar centrals and su-ar refineries, The chan-es &ere6 &ith respect to su-ar centrals, by increasin- the rates of license taxesF and as to su-ar refineries, by increasin- the rates of license taxes as &ell as the ran-e of -raduated schedule of annual output capacity, !or, the production of plaintiff ?ictorias /illin- Co,, $nc, in both its su-ar central and its su-ar refinery located in the /unicipality of ?ictorias comes &ithin these items, 'laintiff filed suit belo& to as> for 0ud-ment declarin- .rdinance 9o, 1, series of 19#6, null and void, The plaintiff contends that the ordinance is discriminatory since it sin-les out plaintiff &hich is the only operator of a su-ar central and a su-ar refinery &ithin the 0urisdiction of defendant municipality, The trial court rendered its 0ud-ment declarin- that the ordinance in 2uestion refers to license taxes or fees, Both plaintiff and defendant directly appealed to the upreme Court, ISSUE+ 4as .rdinance 9o, 1, series of 19#6, passed by defendant=s municipal council as a re-ulatory enactment or as a revenue measureO RULING+ The present imposition must be treated as a levy for revenue purposes, A 2uic> -lance at the biamount of maximum annual tax set forth in the ordinance, ')*,***,** for su-ar centrals, and ')*,***,** for su-ar refineries, &ill readily convince one that the tax is really a revenue tax, And then, &e read in the

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ordinance nothin- &hich &ould as much as indicate that the tax imposed is merely for police inspection, supervision or re-ulation, <iven the purposes 0ust mentioned, &e find no &arrant in lo-ic to -ive our assent to the vie& that the ordinance in 2uestion is solely for re-ulatory purpose, 'lain is the meaninconveyed, The ordinance is for raisin- money, To say other&ise is to misread the purpose of the ordinance, =ALTER LUT6 vs. 0. ANTONIO ARANETA G.R. No. L-*)!9 D"#"$%"& 22( '9!! FACTS+ This case &as initiated in the Court of !irst $nstance of 9e-ros .ccidental to test the le-ality of the taxes imposed by Common&ealth Act 9o, #6", other&ise >no&n as the u-ar Ad0ustment Act, 'laintiff, 4alter But8 see>s to recover from the Collector of $nternal %evenue the sum of '1),666,)* paid by the estate as taxes, under section ( of the Act, for the crop years 19)+319)9 and 19)9319#*F alle-in- that such tax is unconstitutional and void, bein- levied for the aid and support of the su-ar industry exclusively, &hich in plaintiff=s opinion is not a public purpose for &hich a tax may be constitutioally levied, The action havin- been dismissed by the Court of !irst $nstance, the plaintifs appealed the case directly to the upreme Court, ISSUE+ $s the tax provided for in Common&ealth Act 9o, #6" a pure exercise of the taxin- po&erO RULING+ Analysis of the Act, and particularly of section 6 &ill sho& that the tax is levied &ith a re-ulatory purpose, to provide means for the rehabilitation and stabili8ation of the threatened su-ar industry, $n other &ords, the act is primarily an exercise of the police po&er, The protection and promotion of the su-ar industry is a matter of public concern, it follo&s that the Be-islature may determine &ithin reasonable bounds &hat is necessary for its protection and expedient for its promotion, $f ob0ective and methods are ali>e constitutionally valid, no reason is seen &hy the state may not levy taxes to raise funds for their prosecution and attainment, Taxation may be made the implement of the state=s police po&er, REPUBLIC OF T,E P,ILIPPINES( &"7&"s"n:"d %/ :<" PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT >PCGG? vs. COCOFED( ET AL. and BALLARES( ET AL.( EDUARDO M. CO0UANGCO 0R. and :<" SANDIGANBAYAN >F8&s: D8v8s8on? G.R. No. '3* -2--3 D"#"$%"& '3( 2 ' FACTS+ The 'C<< issued and implemented numerous se2uestrations, free8e orders and provisional ta>eovers of alle-edly ill3-otten companies, assets and properties, real or personal, Amon- the properties se2uestered by the Commission &ere shares of stoc> in the @nited Coconut 'lanters Ban> D@C'BE re-istered in the names of the alle-ed 7one million coconut farmers,7 the so3called Coconut $ndustry $nvestment !und companies DC$$! companiesE and 'rivate %espondent :duardo Co0uan-co Jr, .n January 2(, 199#, the trial court rendered its final ;ecision nullifyin- and settin- aside the %esolution of the andi-anbayan &hich lifted the se2uestration of the sub0ect @C'B shares, ISSUE+ Are the Coconut Bevy !unds raised throu-h the tate5s police and taxin- po&ersO RULING+ $ndeed, coconut levy funds parta>e of the nature of taxes &hich, in -eneral, are enforced proportional contributions from persons and properties, exacted by the tate by virtue of its soverei-nty for the support of -overnment and for all public needs, Based on this definition, a tax has three elements, namely6 aE it is an enforced proportional contribution from persons and propertiesF bE it is imposed by the tate by virtue of its soverei-ntyF and cE it is levied for the support of the -overnment, Taxation is done not merely to raise revenues to support the -overnment, but also to provide means for the rehabilitation and the stabili8ation of a threatened industry, &hich is so affected &ith public interest as to be &ithin the police po&er of the tate, =ENCESLAO PASCUAL vs, T,E SECRETARY OF PUBLIC =OR2S AND COMMUNICATIONS( ET AL. G.R. No. L-' 3 ! D"#"$%"& 29( '9FACTS+ .n Au-ust (1, 19#), petitioner 4enceslao 'ascual instituted this action for declaratory relief, &ith in0unction, upon the -round that %epublic Act 9o, 92*, entitled 7An Act Appropriatin- !unds for 'ublic

+
4or>s7, approved on June 2*, 19#(, contained, in section 13C DaE thereof, an item D)(GhHE of '+#,***,** 7for the construction, reconstruction, repair, extension and improvement7 of 'asi- feeder road terminalsF that, at the time of the passa-e and approval of said Act, the aforementioned feeder roads &ere 7nothinbut pro0ected and planned subdivision roads, not yet constructed, , , , &ithin the Antonio ubdivision , , , situated at , , , 'asi-, %i8al7 &hich pro0ected feeder roads 7do not connect any -overnment property or any important premises to the main hi-h&ay7F %espondents moved to dismiss the petition upon the -round that petitioner had 7no le-al capacity to sue7, and that the petition did 7not state a cause of action7, ISSUE+ hould appropriation usin- public funds be made for public purposes onlyO RULING+ The ri-ht of the le-islature to appropriate funds is correlative &ith its ri-ht to tax, and, under constitutional provisions a-ainst taxation except for public purposes and prohibitin- 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 for a public purpose, The test of the constitutionality of a statute re2uirin- the use of public funds is &hether the statute is desi-ned to promote the public interest, as opposed to the furtherance of the advanta-e of individuals, althou-h each advanta-e to individuals mi-ht incidentally serve the public, OSME;A VS. ORBOS G.R. No. 99))- Ma&#< 1'( '991 FACTS+ .ctober 1*, 19+), 'resident !erdinand /arcos issued ',;, 19#6 creatin- a pecial Account in the <eneral !und, desi-nated as the .il 'rice tabili8ation !und D.' !E, The .' ! &as desi-ned to reimburse oil companies for cost increases in crude oil and imported petroleum products resultin- from exchan-e rate ad0ustments and from increases in the &orld mar>et prices of crude oil, ubse2uently, the .' ! &as reclassified into a 7trust liability account,7, 'resident Cora8on C, A2uino promul-ated :, ., 1(" expandinthe -rounds for reimbursement to oil companies for possible cost under recovery incurred as a result of the reduction of domestic prices of petroleum products, The petitioner ar-ues inter alia that 7the monies collected pursuant to , , ',;, 19#6, as amended, must be treated as a = ':C$AB !@9;,= not as a =trust account= or a =trust fund,= and that 7if a special tax is collected for a specific purpose, the revenue -enerated therefrom shall =be treated as a special fund= to be used only for the purpose indicated, and not channeled to another -overnment ob0ective,7 'etitioner further points out that since 7a =special fund= consists of monies collected throu-h the taxin- po&er of a tate, such amounts belong to the State , althou-h the use thereof is limited to the special purposeCob0ective for &hich it &as created,7 ISSUE+ ;o the po&ers -ranted to the :%B under ',;, 19#6 parta>e of the nature of the taxation po&er of the tateO RULING+ 9., The .' ! &as established 7for the purpose of minimi8in- the fre2uent price chan-es brou-ht about by exchan-e rate ad0ustment andCor chan-es in &orld mar>et prices of crude oil and imported petroleum products, 4hile the funds collected may be referred to as taxes, they are exacted in the exercise of the 7o48#" 7o@"& of the tate, PEPSI-COLA BOTTLING COMPANY OF T,E P,IILIPPINES( INC. VS. MUNICIPALITY OF TANAUAN G.R. No. L-1''!- F"%&.a&/ 2*( '9*FACTS+ $n !ebruary 196(, plaintiff commenced a complaint see>in- to declare ection 2 of %,A, 226) DBocal Autonomy ActE unconstitutional as an undue dele-ation of taxin- po&er and to declare .rdinance 9os, 2( and 2" issued by the /unicipality of Tanauan, Beyte as null and void, /unicipal .rdinance 9o, 2( levies and collects from soft drin>s producers and manufacturers one3 sixteenth D1C16E of a centavo for every bottle of soft drin> cor>ed, .n the other hand, /unicipal .rdinance 9o, 2" levies and collects on soft drin>s produced or manufactured &ithin the territorial 0urisdiction of the municipality a tax of one centavo D'*,*1E on each -allon of volume capacity, The tax imposed in both .rdinances 9os, 2( and 2" is denominated as 7municipal production tax,L ISSUES+ 1, $s ection 2 of %,A, 226) an undue dele-ation of the po&er of taxationO 2, ;o .rdinance 9os, 2( and 2) constitute double taxation and impose percenta-e or specific taxesO RULING+

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1, 9., The po&er of taxation is purely le-islative and cannot be dele-ated to the executive or 0udicial department of the -overnment &ithout infrin-in- upon the theory of separation of po&ers, But as an exception, the theory does not apply to municipal corporations, Be-islative po&ers may be dele-ated to local -overnments in respect of matters of local concern, 2, 9., The /unicipality of Tanauan discovered that manufacturers could increase the volume contents of each bottle and still pay the same tax rate since tax is imposed on every bottle cor>ed, To combat this scheme, /unicipal .rdinance 9o, 2" &as enacted, As such, it &as a repeal of /unicipal .rdinance 9o, 2(, $n the stipulation of facts, the parties admitted that the /unicipal Treasurer &as enforcin- /unicipal .rdinance 9o, 2" only, Aence, there &as no case of double taxation, SOCIAL SECURITY SYSTEM VS. CITY OF BACOLOD G.R. No. L-1!*2- 0.4/ 2'( '9)2 FACTS+ 'etitioner ocial ecurity ystem, for operation purposes, maintains a five3storey buildin- in Bacolod City occupyin- four parcels of land, aid lands and buildin-s &ere assessed for taxation, 'etitioner failed to pay the realty taxes for the years 196+, 1969 and 19"*, Conse2uently, the City of Bacolod levied upon said lands and buildin-s and declared them forfeited in its favor, $n protest, petitioner &rote the city mayor throu-h the city treasurer see>in- reconsideration of the forfeiture proceedin- on the -round that it is a -overnment3o&ned and controlled corporation and as such, should be exempt from payment of real estate taxes, 9o action &as ho&ever ta>en, Thereafter, petitioner filed an action in court for the nullification of the court proceedin-s, The court ruled that the properties of petitioner are not exempt from the payment of real property tax because these are not one of the exemptions under ection 29 of the Charter of Bacolod City and there is no other la& providin- for its exemption, ISSUE+ hould the sub0ect properties maintained by petitioner property taxO be exempt from payment of real

RULING+ I: , 4hether a -overnment o&ned and controlled corporation is performin- -overnmental or proprietary function is immaterial, ection 29 of the Charter of Bacolod City does not contain any 2ualification &hatsoever in providin- for the exemption from real estate taxes of 7lands and buildin-s o&ned by the Common&ealth or %epublic of 'hilippines,7 Aence, &hen the le-islature exempted lands and buildin-s o&ned by the -overnment from payment of said taxes, &hat it intended &as a broad and comprehensive application of such mandate, re-ardless of &hether such property is devoted to -overnmental or proprietary purpose, !urther, ',;, 2) has amended the ocial ecurity Act of 19#) expressly exemptin- the from payment of any tax thereby removin- all doubts as to its exemption, SEA-LAND SERVICE( INC. VS. COURT OF APPEALS G.R. No. '22- ! A7&84 1 ( 2 ' FACTS6 'etitioner ea3Band ervice $ncorporated, an American international shippin- company licensed by the ecurities and :xchan-e Commission to do business in the 'hilippines entered into a contract &ith the @nited tates <overnment to transport military household -oods and effects of @, , military personnel assi-ned to the ubic 9aval Base, ea3Band paid its correspondin- corporate income tax for the taxable year 19+) at the rate of 1,#1 in accordance &ith ection 2#DaED2E of the 9ational $nternal %evenue Code in relation to Article 9 of the %'3@ Tax Treaty, ubse2uently, ea3Band filed a claim for refund alle-in- that the taxes it paid &ere made in mista>e because under the %'3@ /ilitary Base A-reement, it is exempt from the payment of taxes, ISSUE+ ;oes the income that petitioner derived from services in transportin- the household -oods and effects of @, , military personnel fall &ithin the tax exemption provided in the %'3@ /ilitary Bases A-reementO RULING+ 9., Ba&s -rantin- exemption from tax are construed strictissimi 0uris a-ainst the taxpayer and liberally in favor of the taxin- po&er, The transport or shipment of household -oods and effects of @, , military personnel is not included in the term 7construction, maintenance, operation and defense of the bases,L 9either could the performance of this service to the @, , -overnment be interpreted as directly related to the defense and security of the 'hilippine territories COMMISSIONER OF INTERNAL REVENUE vs.

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MITSUBIS,I METAL CORPORATION G.R. No. L-!39 ). 0an.a&/ 22( '99 FACTS+ .n April 1", 19"*, Atlas Consolidated /inin- and ;evelopment Corporation entered into a Boan and ales Contract &ith /itsubishi /etal Corporation for purposes of the pro0ected expansion of the productive capacity of the former=s mines in Toledo, Cebu, @nder said contract, /itsubishi a-reed to extend a loan to Atlas =in the amount of P2*,***,***,**, @nited tates currency, Atlas, in turn undertoo> to sell to /itsubishi all the copper concentrates produced for a period of fifteen D1#E years, /itsubishi thereafter applied for a loan &ith the :xport3$mport Ban> of Japan D:ximban>E for purposes of its obli-ation under said contract, $ts loan application &as approved on /ay 26, 19"* in the e2uivalent sum of P2*,***,***,** in @nited tates currency at the then prevailin- exchan-e rate, 'ursuant to the contract bet&een Atlas and /itsubishi, interest payments &ere made by the former to the latter totalin- '1(,1)(,966,"9 for the years 19") and 19"#, The correspondin- 1#1 tax thereon in the amount of '1,9"1,#9#,*1 &as &ithheld pursuant to ection 2) DbE D1E and ection #( DbE D2E of the 9ational $nternal %evenue Code, as amended by 'residential ;ecree 9o, 1(1, and duly remitted to the <overnment, ISSUE+ 4hether or not the interest income from the loans extended to Atlas by /itsubishi is excludible from -ross income taxation pursuant to ection 29 of the tax code and, therefore, exempt from &ithholdin- tax, RULING+ The court ruled in the ne-ative, :ximban> had nothin- to do &ith the sale of the copper concentrates since all that /itsubishi stated in its loan application &ith the former &as that the amount bein- procured &ould be used as a loan to and in consideration for importin- copper concentrates from Atlas, uch an innocuous statement of purpose could not have been intended for, nor could it le-ally constitute, a contract of a-ency, The conclusion is indubitableF /$T @B$ A$, and 9.T :Q$/BA9R, is the sole creditor of ATBA , the former bein- the o&ner of the P2* million upon completion of its loan contract &ith :Q$/BA9R of Japan, $t is settled a rule in this 0urisdiction that la&s -rantin- exemption from tax are construed strictissimi juris a-ainst the taxpayer and liberally in favor of the taxin- po&er, Taxation is the rule and exemption is the exception, 1's: INFANTRY POST EXC,ANGE vs. POSADAS G.R. No. 113 1. S"7:"$%"& 3( '91 FACTS+ The (1st $nfantry 'ost :xchan-e is a post exchan-e constituted in accordance &ith Army re-ulations and the la&s of the @nited tates, in the course of its duly authori8ed business transactions, the :xchan-e made many purchases of various and diverse commodities, -oods, &ares and merchandise from various merchants in the 'hilippines, The Commissioner collected a sales tax of 1 1C2 1 of the -ross value of the commodities, etc, from the merchants &ho sold said commodities to the :xchan-e, A formal protest &as lod-ed by the :xchan-e, ISSUE+ 4hether or not the petitioner is exempt from the sales tax imposed a-ainst its suppliers, RULING+ The court ruled in the ne-ative, Taxes have been collected from merchants &ho made sales to Army 'ost :xchan-es since 19*) DAct 11+9, ection 1(9E, imilar taxes are paid by those &ho sell merchandise to the 'hilippine <overnment, and by those &ho do business &ith the @ Army and 9avy in the 'hilippines, Aerein, the merchants &ho effected the sales to the 'ost :xchan-e are the ones &ho paid the taxF and it is the officers, soldiers, and civilian employees and their families &ho are benefited by the post exchan-e to &hom the tax is ultimately shifted, An Army 'ost :xchan-e, althou-h an a-ency &ithin the @ Army, cannot secure exemption from taxation for merchants &ho ma>e sales to the 'ost :xchan-e, COMMISSIONER OF INTERNAL REVENUE vs. MARUBENI CORPORATION G.R. No. '1*1**. D"#"$%"& ')( 2 ' FACTS+ %espondent /arubeni Corporation is a forei-n corporation and is duly re-istered to en-a-e in business in the 'hilippines, ometime in 9ovember 19+#, petitioner Commissioner of $nternal %evenue issued a letter of authority to examine the boo>s of accounts of the /anila branch office of respondent corporation,

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$n the course of the examination, petitioner found respondent to have undeclared income from t&o D2E contracts in the 'hilippines, 'etitioner=s revenue examiners recommended an assessment for deficiency income, branch profit remittance, contractor=s and commercial bro>er=s taxes, %espondent 2uestioned this assessment, %espondent then received a letter form petitioner assessin- respondent several deficiency taxes, .n eptember 26, 19+6, respondent filed t&o D2E petitions for revie& &ith the Court of Tax Appeals, :arlier, on Au-ust 2, 19+6, :xecutive .rder D:,.,E 9o, )1 declarin- a one3time amnesty coverinunpaid income taxes for the years 19+1 to 19+# &as issued, @nder this :,.,, a taxpayer &ho &ished to avail of the income tax amnesty should comply &ith certain re2uirements, $n accordance &ith the terms of :,., 9o, )1, respondent filed its tax amnesty return dated .ctober (*, 19+6, .n 9ovember 1", 19+6, the scope and covera-e of :,., 9o, )1 &as expanded by :xecutive .rder D:,.,E 9o, 6), ISSUE+ 4hether or not herein respondent=s deficiency tax liabilities &ere extin-uished upon respondent=s availment of tax amnesty under :xecutive .rders 9os, )1 and 6), RULING+ ection ) DbE of :,., 9o, )1 is very clear and unambi-uous, $t excepts from income tax amnesty those taxpayers 7&ith income tax cases already filed in court as of the effectivity hereof,7 The point of reference is the date of effectivity of :,., 9o, )1, The difficulty lies &ith respect to the contractor=s tax assessment and respondent=s availment of the amnesty under :,., 9o, 6) includin- estate and donor=s taxes and tax on business, $n the instant case, the va-ueness in ection ) DbE brou-ht about by :,., 9o, 6) should be construed strictly a-ainst the taxpayer, The term 7income tax cases7 should be read as to refer to estate and donor=s taxes and taxes on business &hile the &ord 7hereof,7 to :,., 9o, 6), ince :xecutive .rder 9o, 6) too> effect on 9ovember 1", 19+6, conse2uently, insofar as the taxes in :,., 9o, 6) are concerned, the date of effectivity referred to in ection ) DbE of :,., 9o, )1 should be 9ovember 1", 19+6, There is nothin- in :,., 9o, 6) that provides that it should retroact to the date of effectivity of :,., 9o, )1, the ori-inal issuance, 9either is it necessarily implied from :,., 9o, 6) that it or any of its provisions should apply retroactively, REAGAN vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. L-2-1*9( 2*. D"#"$%"& 2*( '9-9 FACTS+ 4illiam %ea-an imported a tax3free 196* Cadillac car &ith accessories valued at @ P 6,))(,+(, includin- frei-ht, insurance and other char-es, After ac2uirin- a permit to sell the car from the base commander of Clar> Air Base, %ea-an sold the car to a certain 4illie Johnson Jr, of the @ /arine Corps stationed in an-ley 'oint, Cavite for @ P 6,6**, Johnson sold the same, on the same day to !red /eneses, a !ilipino, As a result of the transaction, the Commissioner rendered %ea-an liable for income tax in the sum of '2,9"*, %ea-an claimed that he &as exempt as the transaction occurred in Clar> Air Base, &hich as he contends is Ka base outside the 'hilippines,L ISSUE+ 4hether or not petitioner %ea-an &as covered by the tax exemption, RULING+ The court ruled in the ne-ative, The 'hilippines, as an independent and soverei-n country, exercises its authority over its entire domain, Any state may, ho&ever, by its consent, express or implied, submit to a restriction of its soverei-n ri-hts, $t may allo& another po&er to participate in the exercise of 0urisdictional ri-ht over certain portions of its territory, By doin- so, it by no means follo&s that such areas become impressed &ith an alien character, The areas retain their status as native soil, Clar> Air Base is &ithin 'hilippine territorial 0urisdiction to tax, and thus, %ea-an &as liable for the income tax arisin- from the sale of his automobile in Clar>, The la& does not loo> &ith favor on tax exemptions and that he &ho &ould see> to be thus privile-ed must 0ustify it by &ords too plain to be mista>en and too cate-orical to be misinterpreted, %ea-an has not done so, and cannot do so, TIU vs. COURT OF APPEALS GR. No. '2*3' 0an.a&/ 2 ( '999 FACTS6 Con-ress, &ith the approval of the 'resident, passed into la& %A "22" entitled 7An Act Acceleratinthe Conversion of /ilitary %eservations $nto .ther 'roductive @ses, Creatin- the Bases Conversion and ;evelopment Authority for this 'urpose, 'rovidin- !unds Therefor and for .ther 'urposes,7 ection 12 thereof created the ubic pecial :conomic Sone and -ranted there to special privile-es, 'resident %amos issued :xecutive .rder 9o, 9", clarifyin- the application of the tax and duty incentives, The 'resident issued :xecutive .rder 9o, 9"3A, specifyin- the area &ithin &hich the tax3and3duty3free privile-e &as operative, The petitioners challen-ed before this Court the constitutionality of :. 9"3A for alle-edly beinviolative of their ri-ht to e2ual protection of the la&s, This Court referred the matter to the Court of Appeals, 'roclamation 9o, #(2 &as issued by 'resident %amos, $t delineated the exact metes and bounds

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of the ubic pecial :conomic and !ree 'ort Sone, pursuant to ection 12 of %A "22", %espondent Court held that 7there is no substantial difference bet&een the provisions of :. 9"3A and ection 12 of %A "22", $n both, the = ecured Area= is precise and &ell3defined as =, , , the lands occupied by the ubic 9aval Base and its conti-uous extensions as embraced, covered and defined by the 19)" /ilitary Bases A-reement bet&een the 'hilippines and the @nited tates of America, as amended , , ,=7 ISSUE+ 4hether or not :xecutive .rder 9o, 9"3A violates the e2ual protection clause of the Constitution RULING+ 9o, The Court found real and substantive distinctions bet&een the circumstances obtainin- inside and those outside the ubic 9aval Base, thereby 0ustifyin- a valid and reasonable classification, The fundamental ri-ht of e2ual protection of the la&s is not absolute, but is sub0ect to reasonable classification, $f the -roupin-s are characteri8ed by substantial distinctions that ma>e real differences, one class may be treated and re-ulated differently from another, The classification must also be -ermane to the purpose of the la& and must apply to all those belon-in- to the same class, 0O,N PEOPLES ALTERNATIVE COALITION vs. BCDA GR. No. ''9**! O#:o%"& 23( 2 1 FACTS6 %epublic Act 9o, "22" set out the policy of the -overnment to accelerate the sound and balanced conversion into alternative productive uses of the former military bases, $t created Bases Conversion and ;evelopment Authority, $t also created the ubic pecial :conomic and !ree 'ort Sone, $t -ranted the ubic :S incentives, $t expressly -ave authority to the 'resident to create throu-h executive proclamation, sub0ect to the concurrence of the local -overnment units directly affected, other pecial :conomic Sones in the areas covered, BC;A entered into a /emorandum of A-reement and :scro& A-reement &ith Tuntex and Asia&orld, BC;A, Tuntex and Asia&orld executed a Joint ?enture A-reement, The an--unian- 'anlun-sod of Ba-uio City as>ed BC;A to exclude all the baran-ays partly or totally located &ithin Camp John Aay from the reach or covera-e of any plan or pro-ram for its development, The san--unian adopted and submitted a 1#3point concept for the development of Camp John Aay, BC;A, Tuntex and Asia4orld a-reed to some, but re0ected or modified the other proposals, They stressed the need to declare Camp John Aay a :S as a condition precedent in accordance %,A, 9o, "22", The san--unian re2uested the /ayor to order the determination of realty taxes &hich may be collected from real properties of Camp John Aay, $t &as intended to intelli-ently -uide the san--unian in determinin- its position on &hether Camp John Aay be declared a :S, it bein- of the vie& that such declaration &ould exempt the camp5s property and the economic activity therein from local or national taxation, The san--unian passed a resolution see>in- the issuance by 'resident %amos of a presidential proclamation declarin- an area of 2++,1 hectares of the camp as a :S, 'resident %amos issued 'roclamation 9o, )2* &hich established a :S on a portion of Camp John Aay, ISSUE6 4hether 'roclamation 9o, )2* is constitutional RULING+ 4hile the -rant of economic incentives may be essential to the creation and success of :Ss, free trade 8ones and the li>e, the -rant thereof to the John Aay :S cannot be sustained, The incentives under %,A, 9o, "22" are exclusive only to the ubic :S, hence, the extension of the same to the John Aay :S finds no support therein, 9either does the same -rant of privile-es to the John Aay :S find support in the other la&s specified under ection ( of 'roclamation 9o, )2*, &hich la&s &ere already extant before the issuance of the proclamation or the enactment of %,A, 9o, "22", /ore importantly, the nature of most of the assailed privile-es is one of tax exemption, $t is the le-islature, unless limited by a provision of the state constitution, that has full po&er to exempt any person or corporation or class of property from taxation, its po&er to exempt bein- as broad as its po&er to tax, The challen-ed -rant of tax exemption &ould circumvent the Constitution5s imposition that a la& -rantin- any tax exemption must have the concurrence of a ma0ority of all the members of Con-ress,

COCONUT OIL REFINERS ASSOCIATION INC. vs. BCDA G.R. No. '12!2* 0.4/ 29( 2 ! FACTS+ %epublic Act 9o, "22" &as enacted providin- for the sound and balanced conversion of the Clar> and ubic military reservations and their extensions into alternative productive uses in the form of special economic 8ones in order to promote the economic and social development of Central Bu8on in particular and the country in -eneral, 'resident %amos issued :xecutive .rder 9o, +* &hich declared that Clar> shall have all the applicable incentives -ranted to the ubic pecial :conomic and !ree 'ort Sone under %epublic Act 9o, "22", The C :S shall have all the applicable incentives in the ubic pecial :conomic and !ree 'ort Sone under %A "22", The C :S /ain Sone coverin- the Clar> Air Base proper shall have all the investment incentives, &hile the C :S ub3Sone coverin- the rest of the C :S shall have limited

1(
incentives, The full incentives in the Clar> :S /ain Sone and the limited incentives in the Clar> :S ub3 Sone shall be determined by the BC;A, BC;A passed Board %esolution 9o, 9(3*#3*() allo&in- the tax and duty3free sale at retail of consumer -oods imported via Clar> for consumption outside the C :S, The 'resident issued :. 9o, 9", KClarifyin- the Tax and ;uty !ree $ncentive 4ithin the ubic pecial :conomic Sone 'ursuant to %,A, 9o, "22",L :. 9"3A &as issued, K!urther Clarifyin- the Tax and ;uty3!ree 'rivile-e 4ithin the ubic pecial :conomic and !ree 'ort Sone,L ISSUE6 4hether or not :xecutive .rder 9o, 9"3A, ection # of :xecutive .rder 9o, +*, and BC;A Board %esolution 9o, 9(3*#3*() are null and void ection ) of

RULING+ The Court finds that the settin- up of such commercial establishments &hich are the only ones duly authori8ed to sell consumer items tax and duty3free is still &ell &ithin the policy enunciated in ection 12 of %epublic Act 9o, "22" that K, , ,the ubic pecial :conomic Sone shall be developed into a self3sustainin-, industrial, commercial, financial and investment center to -enerate employment opportunities in and around the 8one and to attract and promote productive forei-n investments,L The Court reiterates that the second sentences of para-raphs 1,2 and 1,( of :xecutive .rder 9o, 9"3A, allo&intax and duty3free removal of -oods to certain individuals, even in a limited amount, from the ecured Area of the :S, are null and void for bein- contrary to ection 12 of %epublic Act 9o, "22", aid ection clearly provides that Kexportation or removal of -oods from the territory of the ubic pecial :conomic Sone to the other parts of the 'hilippine territory shall be sub0ect to customs duties and taxes under the Customs and Tariff Code and other relevant tax la&s of the 'hilippines,L PROVINCE OF ABRA vs. ,ERNANDO G.R. No. L-3911- A.9.s: 1'( '9)' FACTS+ .n the face of this certiorari and mandamus petition, it clearly appears that the actuation of respondent Jud-e Aernando left much to be desired, There &as a denial of a motion to dismiss an action for declaratory relief by %oman Catholic Bishop of Ban-ued desirous of bein- exempted from a real estate tax follo&ed by a summary 0ud-ment -rantin- such exemption, &ithout even hearin- the side of petitioner, $t &as the submission of counsel that an action for declaratory relief &ould be proper only before a breach or violation of any statute, executive order or re-ulation, /oreover, there bein- a tax assessment made by the 'rovincial Assessor on the properties of respondent, petitioner failed to exhaust the administrative remedies available under '; 9o, )6) before filin- such court action, %espondent Jud-e alle-ed that there 7is no 2uestion that the real properties sou-ht to be taxed by the 'rovince of Abra are properties of the respondent %oman Catholic Bishop of Ban-ued, $nc,7 The very next sentence assumed the very point it as>ed &hen he cate-orically stated6 7Bi>e&ise, there is no dispute that the properties includin- their procedure are actually, directly and exclusively used by the Roman Catholic ishop of angued, Inc. for religious or charitable purposes ,7 !or him then6 7The proper remedy of the petitioner is appeal and not this special civil action,7 ISSUE6 4hether or not the properties of respondent %oman Catholic Bishop should be exempt from taxation RULING+ %espondent Jud-e &ould not have erred so -rievously had he merely compared the provisions of the present Constitution &ith that appearin- in the 19(# Charter on the tax exemption of 7lands, buildin-s, and improvements,7 There is a mar>ed difference, @nder the 19(# Constitution6 7Cemeteries, churches, and parsona-es or convents appurtenant thereto, and all lands, buildin-s, and improvements used exclusively for reli-ious, charitable, or educational purposes shall be exempt from taxation,7 The present Constitution added 7charitable institutions, mos2ues, and non3profit cemeteries7 and re2uired that for the exemption of 76lands, buildin-s, and improvements,7 they should not only be 7exclusively7 but also 7actually and 7directly7 used for reli-ious or charitable purposes, The Constitution is &orded differently, The chan-e should not be i-nored, $t must be duly ta>en into consideration,

TOLENTINO vs. SECRETARY OF FINANCE G.R. No. ''!3!! O#:o%"& 1 ( '99! FACTS+ /otions &ere filed see>in- reconsideration of the upreme Court decision dismissin- the petitions for the declaration of unconstitutionality of %,A, 9o, ""16, other&ise >no&n as the :xpanded ?alue3Added Tax Ba&, The motions, of &hich there are 1* in all, have been filed by the several petitioners in these cases, ISSUES+

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1, 4hether or not %,A, 9o, ""16 did not 7ori-inate exclusively7 in the Aouse of %epresentatives as re2uired by Art, ?$ ec, 2) of the Constitution, 2, 4hether or not %,A, 9o, ""16 is violative of press freedom and reli-ious freedom under Art, $$$ ecs, ) and # of the Constitution, (, 4hether or not there is violation of the rule on taxation under Art, ?$ ec, 2+ D1E of the Constitution, ), 4hether or not there is an impairment of obli-ation of contracts under Art, $$$ ec, 1* of the Constitution, #, 4hether or not there is violation of the due process clause under Art, $$$ ec, 1 of the Constitution, RULING+ 1, 4hile Art, ?$ ec, 2) provides that all appropriation, revenue or tariff bills, bills authori8inincrease of the public debt, bills of local application, and private bills must 7ori-inate exclusively in the Aouse of %epresentatives,7 it also adds, 7 but the Senate may propose or concur with amendments ,7 $n the exercise of this po&er, the enate may propose an entirely ne& bill as a substitute measure, 2. ince the la& -ranted the press a privile-e, the la& could ta>e bac> the privile-e anytime &ithout offense to the Constitution, The ?AT is not a license tax, $t is not a tax on the exercise of a privile-e, much less a constitutional ri-ht, $t is imposed on the sale, barter, lease or exchan-e of -oods or properties or the sale or exchan-e of services and the lease of properties purely for revenue purposes, To sub0ect the press to its payment is not to burden the exercise of its ri-ht any more than to ma>e the press pay income tax or sub0ect it to -eneral re-ulation is not to violate its freedom under the Constitution, (, The Constitution does not really prohibit the imposition of indirect taxes &hich, li>e the ?AT, are re-ressive, 4hat it simply provides is that Con-ress shall 7evolve a pro-ressive system of taxation,7 ), Contracts must be understood as havin- been made in reference to the possible exercise of the ri-htful authority of the -overnment and no obli-ation of contract can extend to the defeat of that authority, #, .n the alle-ed violation of due process, hardship to taxpayers alone is not an ade2uate 0ustification for ad0udicatin- abstract issues, .ther&ise, ad0udication &ould be no different from the -ivinof advisory opinion that does not really settle le-al issues, 4e are told that it is our duty under Art, ?$$$, ec, 1 D2E to decide &henever a claim is made that 7there has been a -rave abuse of discretion amountinto lac> or excess of 0urisdiction on the part of any branch or instrumentality of the -overnment,7 This duty can only arise if an actual case or controversy is before us, ABA2ADA G.&o Pa&:/ L8s: vs. E&$8:a G.R. No. '-) !- S"7:"$%"& '( 2 ! FACTS+ Before %,A, 9o, 9((" too> effect, petitioners ! !"!#! $%R& 'arty Bist, et al., filed a petition for prohibition on /ay 2", 2**# 2uestionin- the constitutionality of ections ), # and 6 of %,A, 9o, 9((", amendin- ections 1*6, 1*" and 1*+, respectively, of the 9ational $nternal %evenue Code D9$%CE, ection ) imposes a 1*1 ?AT on sale of -oods and properties, ection # imposes a 1*1 ?AT on importation of -oods, and ection 6 imposes a 1*1 ?AT on sale of services and use or lease of properties, These 2uestioned provisions contain a uniform proviso authori8in- the 'resident, upon recommendation of the ecretary of !inance, to raise the ?AT rate to 121, effective January 1, 2**6, after specified conditions have been satisfied, 'etitioners ar-ue that the la& is unconstitutional, ISSUES+ 1, 4hether or not there is a violation of Article ?$, ection 2) of the Constitution, 2, 4hether or not there is undue dele-ation of le-islative po&er in violation of Article ?$ ec 2+D2E of the Constitution, (, 4hether or not there is a violation of the due process and e2ual protection under Article $$$ ec, 1 of the Constitution, RULING+ 1, ince there is no 2uestion that the revenue bill exclusively ori-inated in the Aouse of %epresentatives, the enate &as actin- &ithin its constitutional po&er to introduce amendments to the Aouse bill &hen it included provisions in enate Bill 9o, 19#* amendin- corporate income taxes, percenta-e, and excise and franchise taxes, 2, There is no undue dele-ation of le-islative po&er but only of the discretion as to the execution of a la&, This is constitutionally permissible, Con-ress does not abdicate its functions or unduly dele-ate po&er &hen it describes &hat 0ob must be done, &ho must do it, and &hat is the scope of his authorityF in our complex economy that is fre2uently the only &ay in &hich the le-islative process can -o for&ard, (, The po&er of the tate to ma>e reasonable and natural classifications for the purposes of taxation has lon- been established, 4hether it relates to the sub0ect of taxation, the >ind of property, the rates to be levied, or the amounts to be raised, the methods of assessment, valuation and collection, the

1#
tate5s po&er is entitled to presumption of validity, As a rule, the 0udiciary &ill not interfere &ith such po&er absent a clear sho&in- of unreasonableness, discrimination, or arbitrariness, MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS( INC. vs. DEPARTMENT OF FINANCE SECRETARY G.R. No. ' )!23 Nov"$%"& ' ( '993 FACTS+ 'etitioner /isamis .riental Association of Coco Traders, $nc, is a domestic corporation en-a-ed in the buyin- and sellin- of copra in /isamis .riental, The petitioner alle-es that prior to the issuance of %evenue /emorandum Circular )"391 on June 11, 1991, &hich implemented ?AT %ulin- 19*39*, copra &as classified as a-ricultural food product under ec, 1*(DbE of the 9ational $nternal %evenue Code and, therefore, exempt from ?AT at all sta-es of production or distribution, 'etitioner sou-ht to nullify %evenue /emorandum Circular 9o, )"391 and en0oin the collection by respondent revenue officials of the ?alue Added Tax D?ATE on the sale of copra by members of petitioner or-ani8ation as the classification had the effect of denyin- to the petitioner the exemption it previously en0oyed &hen copra &as classified as an a-ricultural food product under ec, 1*(DbE of the 9$%C ISSUE+ 4hether there is violation of e2ual protection clause because &hile coconut farmers and copra producers are exempt, traders and dealers are not, althou-h both sell copra in its ori-inal state, RULING+ There is a material or substantial difference bet&een coconut farmers and copra producers, on the one hand, and copra traders and dealers, on the other, The former produce and sell copra, the latter merely sell copra, The Constitution does not forbid the differential treatment of persons so lon- as there is a reasonable basis for classifyin- them differently, COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALS G.R. No. ''9*-' A.9.s: 29( '99FACTS+ !ortune Tobacco Corporation D7!ortune Tobacco7E is en-a-ed in the manufacture of different brands of ci-arettes, The 'hilippine 'atent .ffice issued to the corporation separate certificates of trademar> re-istration over 7Champion,7 7Aope,7 and 7/ore7 ci-arettes, The initial position of the C$% &as to classify =Champion,= =Aope,= and =/ore= as forei-n brands since they &ere listed in the 4orld Tobacco ;irectory as belon-in- to forei-n companies, Ao&ever, !ortune Tobacco chan-ed the names of =Aope= to =Aope 'uxury( and =/ore= to =)remium /ore,= thereby removin- the said brands from the forei-n brand cate-ory, %A 9o, "6#), &as enacted and became effective on *( July 199(, $t amended ection 1)2DcED1E of the 9$%C, About a month after the enactment and t&o D2E days before the effectivity of %A "6#), %evenue /emorandum Circular 9o, ("39( D7%/C ("39(7E %eclassification of Ci-arettes ub0ect to :xcise Tax, &as issued by the B$%, !ortune Tobacco re2uested for a revie&, reconsideration and recall of %/C ("39(, The re2uest &as denied on 29 July 199(, The follo&in- day, or on (* July 199(, the C$% assessed !ortune Tobacco for ad valorem tax deficiency amountin- to '9,#9+,((),**, .n *( Au-ust 199(, !ortune Tobacco filed a petition for revie& &ith the CTA, The CTA upheld the position of !ortune Tobacco and ad0ud-ed %/C 9o, ("39( as defective, ISSUE+ 4hether or not there is a violation of the due process of la&, RULING+ A readin- of %/C ("39(, particularly considerin- the circumstances under &hich it has been issued, convinces us that the circular cannot be vie&ed simply as a corrective measure or merely as construinection 1)2DcED1E of the 9$%C, as amended, but has, in fact and most importantly, been made in order to place 7Aope Buxury,7 7'remium /ore7 and 7Champion7 &ithin the classification of locally manufactured ci-arettes bearin- forei-n brands and to thereby have them covered by %A "6#), $n so doin-, the B$% not simply intrepreted the la&F verily, it le-islated under its 2uasi3le-islative authority, The due observance of the re2uirements of notice, of hearin-, and of publication should not have been then i-nored, The Court is convinced that the hastily promul-ated %/C ("39( has fallen short of a valid and effective administrative issuance, COMMISSIONER OF INTERNAL REVENUE vs. LINGAYEN GULF OF ELECTRIC PO=ER G.R. No. L-21**' A.9.s: 3( '9)) FACTS+

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The respondent taxpayer, Bin-ayen <ulf :lectric 'o&er Co,, $nc,, operates an electric po&er plant servin- the ad0oinin- municipalities of Bin-ayen and Binmaley, 'an-asinan, pursuant to the municipal franchise -ranted it by their respective municipal councils, under %esolution 9os, 1) and 2# of June 29 and July 2, 19)6, respectively, ection 1* of these franchises provides that said -rantee shall pay 21 of their -ross earnin-s obtained thru this privile-e, .n 9ovember 21, 19##, the Bureau of $nternal %evenue DB$%E assessed a-ainst and demanded from the private respondent the total amount of '19,29(,)1 representindeficiency franchise taxes and surchar-es for the years 19)6 to 19#) applyin- the franchise tax rate of #1 on -ross receipts from /arch 1, 19)+ to ;ecember (1, 19#) as prescribed in ection 2#9 of the 9ational $nternal %evenue Code, instead of the lo&er rates as provided in the municipal franchises,'endin- the hearin- of the said cases, %epublic Act D%,A,E 9o, (+)( &as passed on June 22, 1 96(, -rantin- to the private respondent a le-islative franchise for the operation of the electric li-ht, heat, and po&er system in the same municipalities of 'an-asinan, ection ) thereof provides that6 $n consideration of the franchise and ri-hts hereby -ranted, the -rantee shall pay into the $nternal %evenue office of each /unicipality in &hich it is supplyin- electric current to the public under this franchise, a tax e2ual to t&o per centum of the -ross receipts from electric current sold or supplied under this franchise, The petitioner submits that the said la& is unconstitutional insofar as it provides for the payment by the private respondent of a franchise tax of 21 of its -ross receipts, &hile other taxpayers similarly situated &ere sub0ect to the #1 franchise tax imposed in ection 2#9 of the Tax Code, thereby discriminatory and violative of the rule on uniformity and e2uality of taxation, ISSUE6 4hether or not ection ) of %,A, 9o, (+)( is unconstitutional for bein- violative of the 7uniformity and e2uality of taxation7 clause of the Constitution, RULING6 @niformity means that all property belon-in- to the same class shall be taxed ali>e The Be-islature has the inherent po&er not only to select the sub0ects of taxation but to -rant exemptions, Tax exemptions have never been deemed violative of the e2ual protection clause, Charters or special la&s -ranted and enacted by the Be-islature are in the nature of private contracts, They do not constitute a part of the machinery of the -eneral -overnment, 2APATIRAN NG MGA NAGLILING2OD SA PAMA,ALAAN vs. TAN G.R. No. )'1'' 0.n" 1 ( '9)) FACTS+ This petition see>s to nullify :xecutive .rder 9o, 2"( D:. 2"(, for shortE, issued by the 'resident of the 'hilippines on 2# July 19+", to ta>e effect on 1 January 19++, and &hich amended certain sections of the 9ational $nternal %evenue Code and adopted the value3added tax D?AT, for shortE, for beinunconstitutional in that its enactment is not alled-edly &ithin the po&ers of the 'residentF that the ?AT is oppressive, discriminatory, re-ressive, and violates the due process and e2ual protection clauses and other provisions of the 19+" Constitution, ISSUE6 4hether or not :. 2"( &as enacted by the president &ith -rave abuse of discretion and &hether or not such la& is unconstitutional, RULING6 'etitioners have failed to sho& that :. 2"( &as issued capriciously and &himsically or in an arbitrary or despotic manner by reason of passion or personal hostility, $t appears that a comprehensive study of the ?AT had been extensively discussed by this framers and other -overnment a-encies involved in its implementation, even under the past administration, The petitioners have failed to ade2uately sho& that the ?AT is oppressive, discriminatory or un0ust, 'etitioners merely rely upon ne&spaper articles &hich are actually hearsay and have evidentiary value, To 0ustify the nullification of a la&, there must be a clear and une2uivocal breach of the Constitution, not a doubtful and ar-umentative implication, The disputed sales tax is also e2uitable, $t is imposed only on sales of -oods or services by persons en-a-e in business &ith an a--re-ate -ross annual sales exceedin- '2**,***,**, mall corner sari*sari stores are conse2uently exempt from its application, SISON vs. ANC,ETA G.R. No. L-!931' 0.4/ 2!( '9)3 FACTS+ 'etitioner assailed the validity of ection 1 of Batas 'ambansa Bl-, 1(# &hich further amends ection 21 of the 9ational $nternal %evenue Code of 19"", &hich provides for rates of tax on citi8ens or residents on DaE taxable compensation income, DbE taxable net income, DcE royalties, pri8es, and other &innin-s, DdE interest from ban> deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arran-ements, DeE dividends and share of individual partner in the net profits of taxable partnership, DfE ad0usted -ross income,

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'etitioner as taxpayer alle-es that by virtue thereof, 7he &ould be unduly discriminated a-ainst by the imposition of hi-her rates of tax upon his income arisin- from the exercise of his profession vis*a*vis those &hich are imposed upon fixed income or salaried individual taxpayers, Ae characteri8es the above section as arbitrary amountin- to class le-islation, oppressive and capricious in character, ISSUE6 4hether or not B' 1(# ec 1 is violative of due procee and e2ual protection clause, RULING6 The difficulty confrontin- petitioner is thus apparent, Ae alle-es arbitrariness, A mere alle-ation, as here, does not suffice, There must be a factual foundation of such unconstitutional taint, Considerin- that petitioner here &ould condemn such a provision as void or its face, he has not made out a case, This is merely to adhere to the authoritative doctrine that &ere the due process and e2ual protection clauses are invo>ed, considerin- that they arc not fixed rules but rather broad standards, there is a need for of such persuasive character as &ould lead to such a conclusion, Absent such a sho&in-, the presumption of validity must prevail, ;ue process &as not violated, VILLEGAS vs. ,UI C,IONG TSAI PAO G.R. No. L-29-3- Nov"$%"& ' ( '9*) FACTS6 .n !ebruary 22, 196+, the /unicipal Board of /anila passed City .rdinance 9o, 6#(", The said city ordinance &as also si-ned by then /anila /ayor Antonio J, ?ille-as D?ille-asE, ection 1 of the said city ordinance prohibits aliens from bein- employed or to en-a-e or participate in any position or occupation or business enumerated therein, &hether permanent, temporary or casual, &ithout first securin- an employment permit from the /ayor of /anila and payin- the permit fee of '#*,** except persons employed in the diplomatic or consular missions of forei-n countries, or in the technical assistance pro-rams of both the 'hilippine <overnment and any forei-n -overnment, and those &or>in- in their respective households, and members of reli-ious orders or con-re-ations, sect or denomination, &ho are not paid monetarily or in >ind, Aiu Chion- Tsai 'ao Ao DTsai 'ao AoE &ho &as employed in /anila, filed a petition &ith the C!$ of /anila to declare City .rdinance 9o, 6#(" as null and void for bein- discriminatory and violative of the rule of the uniformity in taxation, The trial court declared City .rdinance 9o, 6#(" null and void, ?ille-as filed the present petition, ISSUE6 4hether or not the #*,** employment permit fee imposed by virtue of .rdinance 9o, 6#(" is a violation of the e2ual protection clause, RULING6 The '#*,** fee is unreasonable not only because it is excessive but because it fails to consider valid substantial differences in situation amon- individual aliens &ho are re2uired to pay it, Althou-h the e2ual protection clause of the Constitution does not forbid classification, it is imperative that the classification should be based on real and substantial differences havin- a reasonable relation to the sub0ect of the particular le-islation, The same amount of '#*,** is bein- collected from every employed alien &hether he is casual or permanent, part time or full time or &hether he is a lo&ly employee or a hi-hly paid executive, .rdinance 9o, 6#(" is void because it does not contain or su--est any standard or criterion to -uide the mayor in the exercise of the po&er &hich has been -ranted to him by the ordinance, VILLANUEVA v. CITY OF ILOILO G.R. No. 2-!2' D"#"$%"& 2)( '9-) FACTS+ The municipal board of $loilo City enacted .rdinance +6, imposin- license tax fees as follo&s6 1E tenement house, '2#,**anuallyF 2E tenement house, partly or &holly en-a-ed in or dedicated to business in the streets of J,/, Basa, $8nart Alde2uer, '2),** per apartmentF (E tenement house, partly or &holly en-a-ed in business in any other streets, '12,** per apartment, The validity and constitutionality of this ordinance &ere challen-ed by the spouses ?illanueva, o&ners of ) tenement houses containin- () apartments, ISSUE+ ;oes .rdinance 11 violate the rules of uniformity of taxationO RULING+ 9o, This court has ruled that tenement houses constitute a distinct class of property, $t has li>e&ise ruled that taxes are uniform and e2ual &hen imposed upon all properties of the same class or character &ithin the taxin- authority,L The fact, therefore, that the o&ners of other classes of buildin-s in the City of

1+
$loilo do not pay the taxes imposed by the ordinance in 2uestion is no ar-ument at all a-ainst uniformity and e2uality of the tax imposition, PEPSI-COLA BOTTLING CO. OF T,E P,ILIPPINES( INC. v. CITY OF BUTUAN G.R. No. 22)'3 A.9.s: 2)( '9-) FACTS+ The City of Butuan enacted .rdinance 9o, 11* &hich &as subse2uently amended by .rdinance 9o, 122, .rdinance 9o, 11* as amended, imposes a tax on any person, association, etc, of '*,1* per case of 2) bottles of 'epsi3Cola and the plaintiff 'epsi3Cola paid under protest, The plaintiff filed a complaint for the recovery of the amount paid under protest on the -round that .rdinance 9o, 11* is ille-al, that the tax imposed is excessive and that it is unconstitutional, 'laintiff maintains that the ordinance is null and void because it is un0ust and discriminatory, ISSUE+ 4hether or not the ordinance in 2uestion is violative of the uniformity re2uired by the ConstitutionO RULING+ Ies, .nly sales by Ka-ents or consi-neesL of outside dealers &ould be sub0ect to the tax, ales by local dealers, not actin- for or on behalf of other merchants, re-ardless of the volume of their sales, and even if the same exceeded those made by said a-ents or consi-nees of producers or merchants established outside the City of Butuan, &ould be exempt from the disputed tax, The classification to be valid and reasonable must be6 1E based upon substantial distinctionsF 2E-ermane to the purpose of the ordinanceF (E applicable, not only to present conditions, but also to future conditions substantially identical to those presentF and )E applicable e2ually to all those &ho belon- to the same class, These conditions are not fully met by the ordinance in 2uestion, ORMOC SUGAR COMPANY( INC. v. TREASURER OF ORMOC CITY G.R. No. 21*93 F"%&.a&/ '*( '9-) FACTS+ The /unicipal Board of .rmoc City passed .rdinance 9o, ) imposin- Kon any and all productions of centrifu-al su-ar milled at the .rmoc u-ar Company, $nc,, in .rmoc City a municipal tax e2uivalent to one per centum D11E per export sale to @ A and other forei-n countries,L 'ayments for said tax &ere made, under protest, by .rmoc u-ar Company, $nc, .rmoc u-ar Company, $nc, filed before the Court of !irst $nstance of Beyte a complaint a-ainst the City of .rmoc as &ell as its Treasurer, /unicipal Board and /ayor alle-in- that the ordinance is unconstitutional for bein- violative of the e2ual protection clause and the rule of uniformity of taxation, The court rendered a decision that upheld the constitutionality of the ordinance, Aence, this appeal, ISSUE+ 4hether or not constitutional limits on the po&er of taxation, specifically the e2ual protection clause and rule of uniformity of taxation, &ere infrin-edO RULING+ Ies, :2ual protection clause applies only to persons or thin-s identically situated and does not bar a reasonable classification of the sub0ect of le-islation, and a classification is reasonable &here 1E it is based upon substantial distinctionsF 2E these are -ermane to the purpose of the la&F (E the classification applies not only to present conditions, but also to future conditions substantially identical to those presentF and )E the classification applies only to those &ho belon- to the same class, A perusal of the re2uisites sho&s that the 2uestioned ordinance does not meet them, for it taxes only centrifu-al su-ar produced and exported by the .rmoc u-ar Company, $nc, and none other, The taxin- ordinance should not be sin-ular and exclusive as to exclude any subse2uently established su-ar central for the covera-e of the tax,

LUT6 v. ARANETA G.R. No. *)!9 D"#"$%"& 22( '9!! FACTS+ This case &as initiated in the Court of !irst $nstance of 9e-ros .ccidental to test the le-ality of the taxes imposed by Common&ealth Act 9o, #6" D u-ar Ad0ustment ActE, ection ( of the said la& levies on o&ners or persons in control of lands devoted to the cultivation of su-ar cane and ceded to others for a consideration, on lease or other&ise a tax e2uivalent to the difference bet&een the money value of the rental or consideration collected and the amount representin- 12 per centum of the assessed value of such land, 'laintiff But8, in his capacity as Judicial Administrator of the $ntestate :state of Bedesma, see>s

19
to recover from the Collector of $nternal %evenue the sum paid by him as taxes alle-in- that such tax is unconstitutional and void, bein- levied for the aid and support of the su-ar industry exclusively, &hich in plaintiff5s opinion is not a public purpose for &hich a tax may be constitutionally levied, The action havinbeen dismissed by the Court of !irst $nstance, the plaintiffs appealed the case, ISSUE+ 4hether or not the la& in 2uestion is constitutionalO RULING+ Ies, The tax levied is &ith a re-ulatory purpose, to provide means for the rehabilitation and stabili8ation of the threatened su-ar industry, The act is primarily an exercise of the police po&er, That the tax to be levied should burden the su-ar producers themselves can hardly be a -round of complaint, $t appears rational that the tax be obtained precisely from those &ho are to be benefited from the expenditure of the funds derived from it, At any rate, it is inherent in the po&er to tax that a state be free to select the sub0ects of taxation, and it has been repeatedly ruled that Kine2ualities &hich result from a sin-lin- out of one particular for taxation or exemption infrin-e no constitutional limitation,L $t appears of no moment that the funds raised under the u-ar tabili8ation Act, no& in 2uestion, should be exclusively spent in aid of the su-ar industry, since it is that very enterprise that is bein- protected, ASSOCIATION OF CUSTOMS BRO2ERS ": a4. vs. T,E MUNICIPALITY BOARD oA Man84a ": a4. G.R. No. L-31*-( Ma/ 22( '9!1 FACTS+ This is a petition for declaratory relief to test the validity of .rdinance 9o, (("9 passed by the /unicipal Board of the City of /anila on /arch 2), 19#*,The petitioners &hich is composed of all bro>ers and public service operators of motor vehicles in the City of /anila, and <, /anlapit, $nc,, a member of said association, also a public service operator of the truc>s in said City, challen-e the validity of said ordinance on the -round that D1E &hile it levies a so3called property tax it is in reality a license tax &hich is beyond the po&er of the /unicipal Board of the City of /anila, ISSUE+ 4hether or not .rdinance 9o, (("9 is valid as held by the C!$ of /anila, RULING+ 9o, The ordinance in 2uestion &hile it refers to property tax and it is fixed ad valorem yet &e cannot re0ect the idea that it is merely levied on motor vehicles operatin- &ithin the City of /anila &ith the main purpose of raisin- funds to be expended exclusively for the repair, maintenance and improvement of the streets and brid-es in said city, This is precisely &hat the /otor ?ehicle Ba& DAct 9o, (992E intends to prevent, for the reason that, under said Act, municipal corporation already participate in the distribution of the proceeds that are raised for the same purpose of repairin-, maintainin- and improvin- brid-es and public hi-h&ay Dsection "( of the /otor ?ehicle Ba&E, This prohibition is intended to prevent duplication in the imposition of fees for the same purpose, $t is for this reason that &e believe that the ordinance in 2uestion merely imposes a license fee althou-h under the cloa> of an ad valorem tax to circumvent the prohibition above adverted to, EASTERN T,EATRICAL CO.( INC.( ET AL. vs, VICTOR( ALFONSO G.R. No. L-'' 3 Ma/ 1'( '939 FACTS+ T&elve corporation en-a-ed in motion picture business filed a complaint to impu-n the validity of .rdinance 9o, 29#+ of the City of /anila3 A9 .%;$9A9C: $/'. $9< A !:: .9 TA: '%$C: .! :?:%I A;/$ $.9 T$CR:T .B; BI C$9:/AT.<%A'A , TA:AT:% ?A@;:?$BB: C./'A9$: TA:AT%$CAB A.4 A9; B.Q$9< :QA$B$T$.9, 'laintiffs, operator of theaters in /anila And distributor of local or imported films impu-ns ections 1, 2 and ) of said ordinance as null and void upon the follo&in- -rounds6 D aE !or violation the Constitution more particular the provision re-ardin- the uniformity and e2uality of taxation and the e2ual protection of the la&sF DbE because it contravenes, violates and is inconsistent &ith, existin- national le-islation more particularly revenue and tax la&s and D cE because it is unfair, un0ust, arbitrary capricious unreasonable oppressive and is contrary to and violation our basic and reco-ni8es principles of taxation and licensinla&s, ISSUE+ 4hether or not .rdinance 9o, 29#+ violated the principle of e2uality and uniformity of taxation en0oined by the Constitution, RULING+

2*
9o, the said .rdinance does not violate the principle of e2uality and uniformity of taxation, The fact that some places of amusement are not taxed &hile others, such as cinemato-raphs, theaters, vaudeville companies, theatrical sho&s, and boxin- exhibitions and other >inds of amusements or places of amusement are taxed, is no ar-ument at all a-ainst the e2uality and uniformity of the tax imposition, :2uality and uniformity of the tax imposition, :2uality and uniformity in taxation means that all taxable articles or >inds of property of the same class shall be taxed at the same rate, The taxin- po&er has the authority to ma>e reasonable and natural classifications for purposes of taxationF and the appellants cannot point out &hat places of amusement taxed by the ordinance do not constitute a class by themselves and &hich can be confused &ith those not included in the ordinance, P,ILIPPINE TRUST COMPANY vs. YATCO G.R. Nos. L-3-2!!( 3-2!-( 3-2!9 and 3-2** 0an.a&/ 21( '93 FACTS6 'rior to the filin- of these suits, and for a number of years, the plaintiffs3appellants had been payincapital and deposit taxes &ithout protest, formerly under section 111 of Act 9o, 11+9, and later under section 1)99 of the %evised Administrative Code of 191", as amended, Appellants challen-e the constitutionality of the aforesaid section of the %evised Administrative Code, principally on the -rounds that it violates the rule re-ardin- uniformity of taxation, and that it is discriminatory, and therefore violative of the e2ual protection clause of the Constitution, Appellants stoutly maintain that althou-h the fore-oin- provision is of -eneral application and operates on all ban>s of the same >ind doin- business in the 'hilippines, the exemption of the 9ational City Ban> of 9e& Ior> from the impositions therein specifically provided D9ational City Ban> of 9e& Ior> v, 'osadas G296 @, , )9", +* Ba& ed, (#1H, ma>es the la& discriminatory and violates the rule of uniformity in taxation ISSUE+ 4hether or not the said section of the %evised Administrative Code violates the rule on uniformity of taxation, RULING+ 9o, A tax is considered uniform &hen it operates &ith the same force and effect in every place &here the sub0ect may be found, ection 1)99 of the %evised Administrative Code, as amended, applies uniformly to, and operates on, all ban>s in the 'hilippines &ithout distinction and discrimination, and if the 9ational City Ban> of 9e& Ior> is exempted from its operation because it is a federal instrumentality sub0ect only to the authority of Con-ress, that alone could have the effect of renderin- it violative of the rule of uniformity, $n every &ell3re-ulated and enli-htened state or -overnment, certain descriptions of property and also certain institutions are exempt from taxation, but these exemptions have never been re-arded as disturbin- the rules of taxation, even &here the fundamental la& had ordained that it should be uniform,

C,URC,ILL vs. CONCEPCION G.R. No. ''!*2 S"7:"$%"& 22( '9'FACTS6 ection 1** of Act 9o, 2((9 imposed an annual tax of ') per s2uare meter upon 7electric si-ns, billboards, and spaces used for postin- or displayin- temporary si-ns, and all si-ns displayed on premises not occupied by buildin-s,7 This section &as subse2uently amended by Act 9o, 2)(2, effective by reducinthe tax on such si-ns, billboards, etc,, to '2 per s2uare meter or fraction thereof, !rancis A, Churchill and te&art Tait, o&ners of a si-n or billboard containin- an area of #2 s2uare meters constructed on private property in the city of /anila and exposed to public vie&, &ere taxes thereon '1*), The tax &as paid under protest, 'laintiffs assailed that they &ere -ainin- lesser profit than &hat they ou-ht to receive because of the tax imposed by the said la&, Ao&ever, it &as proven that there &as no attempt on the part of the plaintiffs to raise the advertisin- rates in order to cope up &ith the said tax rates, $t &ill thus be seen that the contention that the rates char-ed for advertisin- cannot be raised is purely hypothetical, based entirely upon the opinion of the plaintiffs, unsupported by actual test, and that the plaintiffs themselves admit that a number of other persons have voluntarily and &ithout protest paid the tax herein complained of, ISSUE6 $s the tax void for lac> of uniformityO RULING6 A tax is uniform, &ithin the constitutional re2uirement, &hen it operates &ith the same force and effect in every place &here the sub0ect of it is found, 7@niformity,7 as applied to the constitutional provision that all taxes shall be uniform, means that all property belon-in- to the same class shall be taxed ali>e, The statute under consideration imposes a tax of '2 per s2uare meter or fraction thereof upon every electric si-n, bill3board, etc,, &herever found in the 'hilippine $slands, .r in other &ords, 7the rule of taxation7 upon such si-ns is uniform throu-hout the $slands, The Be-islature selected si-ns and billboards

21
as a sub0ect for taxation and it must be presumed that it, in so doin-, acted &ith a full >no&led-e of the situation, MANILA ELECTRIC COMPANY v. PROVINCE OF LAGUNA and BENITO BALA6O 8n <8s #a7a#8:/ as P&ov8n#8a4 T&"as.&"& oA La9.na G.R. No. '1'1!9. Ma/ !( '999. FACTS

/anila :lectric Company D/:%ABC.E &as -ranted a franchise from certain municipalities of Ba-una, .n eptember 1(, 1991, %epublic Act "16*, other&ise >no&n as the Bocal <overnment Code of 1991 &as enacted, en0oinin- loval -overnment units to create their o&n sources of revenue and to levy taxes, fees and char-es, sub0ect to the limitations expressed therein, consistent &ith the basic policy of local autonomy, 'ursuant to this Code, respondent province enacted a 'rovincial .rdinance providin- that Ka tax on business en0oyin- franchise, at a rate of #*1 of 11 of the -ross annual receipts,,,L .n the basis of such ordinance, the 'rovincial Treasurer sent a demand letter to /:%ABC. for the tax payment, /:%ABC. paid under protest, Thereafter, a formal claim for refund &as sent by /:%ABC. to the 'rovincial Treasurer claimin- that the franchise tax it had paid and continue to pay to the 9ational <overnment already includes the franchise tax as provided under 'residential ;ecree ##1, The claim &as denied, /:%ABC. filed an appeal &ith the trial court but &as dismissed, Thus the petition, ISSUE 4hether the imposition of a franchise tax under section 2,*9 of the Ba-una 'rovincial .rdinance 9o, *1392 violates the non3impairment clause of the Constitution, RULING 9o, Althou-h local -overnments do not have the inherent po&er to tax, such po&er may be dele-ated to them either by basic la& or by statute, This is provided under Article Q of the 19+" Constitution, The rationale for the current rule is to safe-uard the viability and self3sufficiency of local -overnment units by directly -rantin- them -eneral and broad tax po&ers, The Bocal <overnment Code of 1991 repealed the Tax Code, $t explicitly authori8es provincial -overnments, not&ithstandin- Kany exemption -ranted by any la&, or other special la&s, xxx DtoE impose a tax on business en0oyin- a franchise, The phrase, Kin lieu of all taxesL have to -ive &ay to the peremptory lan-ua-e of the Bocal <overnment Code, T,E PROVINCE OF MISAMIS ORIENTAL &"7&"s"n:"d %/ 8:s PROVINCIAL TREASURER v. CAGAYAN ELECTRIC PO=ER AND LIG,T COMPANY G.R. No. L-3!1!!. 0an.a&/ '2( '99 FACTS Ca-ayan :lectric 'o&er and Bi-ht Company, $nc, DC:'ABC.E &as -ranted a franchise on June 1", 1961 under %epublic Act (2)", $t &as amended by %epublic Act (#"* and %epublic Act 6*2*, .n June 2+, 19"(, the Bocal Tax Code &as promul-ated &hich provides that the province may impose a tax on businesses en0oyin- franchise, 'ursuant thereto, the 'rovince of /isamis enacted 'rovincial %evenue .rdinance 9o, 19, $t demanded payment, C:'ABC. refused to pay, alle-in- that it is exempt from all taxes except the franchise tax re2uired by %epublic Act 6*2*, The provincial fiscal upheld the ordinance, C:'ABC. paid under protest, .n appeal to the ecretary of Justice, ruled in favor of C:'ABC., The province filed a petition &ith the trial court but &as dismissed, Thus, the petition, ISSUE 4hether C:'ABC. is exempt from payin- the provincial franchise tax, RULING Ies, !irst off, there is no provision in '; 9o, 2(1 expressly or impliedly amendin- or repealin- sec, ( of %A 6*2* &hich exempts C:'ABC., The rule is that a special and local statute applicable to a particular case is not repealed by a later statute &hich is -eneral in its terms, provisions and application even if the terms of the -eneral act are broad enou-h to include the cases in the special la& unless there is manifest intent to repeal or alter the special la&, The franchise of C:'ABC. expressly exempts it from payment of Kall taxes of &hatever authorityL except (1 tax on its -ross earnin-s, uch exemption is part of the inducement for the acceptance of the franchise and the rendition of public service by the -rantee, Bocal Tax %e-ulation 9o, (3"# issued by the ecretary of !inance on June 26, 19"6, has made it crystal clear that the franchise tax provided in the Bocal Tax Code D',;, 9o, 2(1, ec, 9E may only be imposed on companies &ith franchises that do not contain the exemptin- clause Ki n*lieu*of*all*taxesL,

CAGAYAN ELECTRIC PO=ER AND LIG,T CO.( INC v. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS G.R. No. L-- '2-. S"7:"$%"& 2!( '9)!

22
FACTS+ 'etitioner Ca-ayan :lectric 'o&er and Bi-ht Co,, $nc DC:'ABC.E is the holder of a le-islative franchise, %epublic Act (2)" under &hich, it is exempted from Ktaxes, and assessments of &hatever authority upon privile-es, earnin-s, income, franchise, and poles, &ires transformers, and insulatorsL, .n June 2", 196+, %epublic Act #)(1 amended ection 2) of the Tax Code, ma>in- the petitioner liable for income tax in addition to franchise tax, .n Au-ust ), 1969, %epublic Act 6*2* &as enacted under &hich, the petitioner &as a-ain tax exempted, The Commissioner of $nternal %evenue DC$%E sent a demand letter on !ebruary 1#, 19"(, re2uirinpetitioner to pay the deficiency for income taxes for 196+319"1, @pon petitioner=s contention, the C$% cancelled the assessments for 19"* but insisted those for 196+ and 1969, 'etitioner filed a petition for revie& &ith the tax court &hich held petitioner responsible only for the period from January 1 to Au-ust (, 1969, or before the passa-e of %epublic Act 6)2* &hich reiterated its tax exemption, Thus, the appeal, ISSUE+ 4hether petitioner=s franchise is a contract &hich can be impaired by an implied appeal, RULING+ Ies, Con-ress could impair petitioner=s franchise by ma>in- it liable for income tax from &hich heretofore it &as exempted by virtue of the exemption provided in its franchise, The Constitution provides that a franchise is sub0ect to amendment, alteration, or repeal by Con-ress &hen public interest so re2uires, 'etitioner=s franchise, under %epublic Act (2)" also provide it is sub0ect to the Constitution, %epublic Act #)(1 &ithdre& petitioner=s exemption but &as restored by subse2uent enactment, Thus, it is only liable for the period of January 1 to Au-ust (, 1969 &hen its tax exemption &as modified, LEALDA ELECTRIC CO.( INC v. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS G.R. No. L-'-32). A7&84 1 ( '9-1 FACTS+ .n June 11, 19)9, Alfredo, /ario and Ben0amin Benito formed a partnership to operate an electric plant, uch electric plant &as -ranted a franchise in the year 191# to supply electric current to the municipalities of Albay, The franchise, the Certificate of public convenience and the electric plant &as transferred to the said partnership, @nder its franchise, the ori-inal -rantee and successors3in3interest paid a franchise tax of 21 on the -ross earnin-s, until .ctober 1, 19)6, &hen section 2#9 of the 9ational $nternal %evenue Code &as amended by %epublic Act (9, &hich increased the franchise tax to #1, .n a date undisclosed, petitioner filed a petition for refund contendin- that on its charter, it &as liable to pay a franchise tax of 21 and not #1 of its earnin-s and receipts, As several petitions &ere not -iven definite action, thus petitioner filed &ith the Court of Tax Appeals DCTAE a petition, prayin- for refund from the period of January 2*, 19)" to .ctober 1), 19#+, The CTA dismissed the petition, Thus, the petition, on the -round that Act 9o,2)"#, as amended by Act 262*, -rantin- its franchise constitute a private contract bet&een the petitioner and the <overnment and such cannot be amended, altered or repealed by ection 2#9 of the Tax Code, ISSUE 4hether petitioner should pay #1 of his -ross earnin-s,

RULING Ies, 'etitioner=s franchise does not specifically state that the rate of the franchise tax shall be 21 of his -ross earnin-s or receipts, $t simply provides that the -rantee and successors3in3interest shall pay the same franchise tax imposed upon other -rantees at the time Act 9o, 2)"# &as enacted, !ranchise holders did pay the rate of 21 until the rate &as increased to #1, Also, prior to its amendment, ection 2#9 of the Tax Code merely provided that -rantees of franchises should pay on their -ross earnin-s or receipts Ksuch taxes,,,as are specified in special charters upon &hom franchises are conferredL, This does not cover franchise holders &hose charters did not specify the rate of franchise tax, $t &as covered under ection 1* of Act 9o, (6(6, Conse2uently, section 2#9 of the Tax Code became the basic franchise tax to be paid by holders of all existin- and future franchises, uch bein- the case, the act amendin- the section must be deemed applied to petitioner, 0. CASANOVAS vs. 0NO. S. ,ORD G.R. No. 13*1 Ma&#< 22( '9 * FACTS6 $n 1+9", the panish <overnment, in accordance &ith the provisions of the royal decree of 1) may 1+6", -ranted J, Casanovas certain mines in the province of Ambos Camarines, of &hich mines the latter is no& the o&ner, That these &ere validly perfected minin- concessions -ranted to prior to 11 April 1+99 is conceded, They &ere so considered by the Collector of $nternal %evenue and &ere by him said to fall &ithin the provisions of ection 1() of Act 11+9 D$nternal %evenue ActE, The defendant Commissioner, J9. , Aord, imposed upon these properties the tax mentioned in ection 1(), &hich plaintiff Casanovas paid under protest,

2(
ISSUE6 4hether or not ection 1() of Act 11+9 is valid, RULING6 The deed constituted a contract bet&een the panish <overnment and Casanovas, The obli-ation in the contract &as impaired by the enactment of ection 1() of the $nternal %evenue Ba&, thereby infrin-in- the provisions of ection # of the Act of Con-ress of 1 July 19*2, !urthermore, the section conflicts &ith ection 6* of the Act of Con-ress of 1 July 19*2, &hich indicate that concessions can be cancelled only by reason of ille-ality in the procedure by &hich they &ere obtained, or for failure to comply &ith the conditions prescribed as re2uisites for their retention in the la&s under &hich they &ere -ranted, There is no claim in this case that there &as any ille-ality in the procedure by &hich these concessions &ere obtained, nor is there any claim that the plaintiff has not complied &ith the conditions prescribed in the royal decree of 1+6", As to the alle-ation that the section violates uniformity of taxation, the Court found it unnecessary to consider the claim in vie& of the result at &hich the Court has arrived,

AMERICAN BIBLE SOCIETY vs. CITY OF MANILA G.R. No. L-9-1* A7&84 1 ( '9!* FACTS6 'laintiff3appellant is a forei-n, non3stoc>, non3profit, reli-ious, missionary corporation duly re-istered and doin- business in the 'hilippines, The defendant appellee is a municipal corporation &ith po&ers that are to be exercised in conformity &ith the provisions of the %evised Charter of the City of /anila, $n the course of its ministry, the 'hilippine a-ency of the American Bible ociety has been distributin- and sellin- bibles andCor -ospel portions thereof throu-hout the 'hilippines and translatin- the same into several 'hilippine dialets, The actin- City Treasurer of /anila re2uired the society to secure the correspondin- /ayorTUVs permit and municipal license fees, to-ether &ith compromise coverin- the period from the )th 2uarter of 19)# to the 2nd 2uarter of 19#(, The society paid such under protest, and filed suit 2uestionin- the le-ality of the ordinances under &hich the fees are bein- collected, ISSUE6 4hether or not the municipal ordinances violate the freedom of reli-ious profession and &orship,

RULING6 A tax on the income of one &ho en-a-es in reli-ious activities is different from a tax on property used or employed in connection &ith those activities, $t is one thin- to impose a tax on the income or property of a preacher, and another to exact a tax for him for the privile-e of deliverin- a sermon, The po&er to tax the exercise of a privile-e is the po&er to control or suppress its en0oyment, :ven if reli-ious -roups and the press are not alto-ether free from the burdens of the -overnment, the act of distributinand sellin- bibles is purely reli-ious and does not fall under ection 2" DeE of the Tax Code DCA )66E, The fact that the price of bibles, etc, are a little hi-her than actual cost of the same does not necessarily mean it is already en-a-ed in business for profit, .rdinance 2#29 and (*** are not applicable to the ociety for in doin- so it &ould impair its free exercise and en0oyment of its reli-ious profession and &orship as &ell as its ri-hts of dissemination of reli-ious beliefs,

ABRA VALLEY COLLEGE( INC vs. ,ON. 0UAN P. A5UINO( 0.d9"( Co.&: oA F8&s: Ins:an#"( A%&a G.R. NO. 19 )- 0.n" '!( '9)) FACTS6 'etitioner, an educational corporation and institution of hi-her learnin- duly incorporated &ith the ecurities and :xchan-e Commission in 19)+, filed a complaint to annul and declare void the 79otice of ei8ure= and the 79otice of ale7 of its lot and buildin- located at Ban-ued, Abra, for non3payment of real estate taxes and penalties amountin- to '#,1)*,(1, aid 79otice of ei8ure7 by respondents /unicipal Treasurer and 'rovincial Treasurer, defendants belo&, &as issued for the satisfaction of the said taxes thereon, The parties entered into a stipulation of facts adopted and embodied by the trial court in its 2uestioned decision, The trial court ruled for the -overnment, holdin- that the second floor of the buildinis bein- used by the director for residential purposes and that the -round floor used and rented by 9orthern /ar>etin- Corporation, a commercial establishment, and thus the property is not bein- used TUWexclusivelyTU for educational purposes, $nstead of perfectin- an appeal, petitioner availed of the instant petition for revie& on certiorari &ith prayer for preliminary in0unction before the upreme Court, by filin- said petition on 1" Au-ust 19"), ISSUE6

2)
4hether or not the lot and buildin- are used exclusively for educational purposes, RULING6 ection 22, para-raph (, Article ?$, of the then 19(# 'hilippine Constitution, expressly -rants exemption from realty taxes for cemeteries, churches and parsona-es or convents appurtenant thereto, and all lands, buildin-s, and improvements used exclusively for reli-ious, charitable or educational purposes, %easonable emphasis has al&ays been made that the exemption extends to facilities &hich are incidental to and reasonably necessary for the accomplishment of the main purposes, The use of the school buildin- or lot for commercial purposes is neither contemplated by la&, nor by 0urisprudence, $n the case at bar, the lease of the first floor of the buildin- to the 9orthern /ar>etin- Corporation cannot by any stretch of the ima-ination be considered incidental to the purpose of education, The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution, The decision of the C!$ Abra DBranch $E is affirmed sub0ect to the modification that half of the assessed tax be returned to the petitioner, The modification is derived from the fact that the -round floor is bein- used for commercial purposes DleasedE and the second floor bein- used as incidental to education Dresidence of the directorE, COMMISSIONER OF INTERNAL REVENUE( vs. BIS,OP OF T,E MISSIONARY DISTRICT OF T,E P,ILIPPINE ISLANDS OF T,E PROTESTANT EPISCOPAL C,URC, IN T,E U.S.A. and T,E COURT OF TAX APPEALS G.R. No. L-'933! A.9.s: 1'( '9-! FACTS6

%espondent Bishop of the /issionary ;istrict of the 'hilippines $slands of the 'rotestant, :piscopal Church in the @, ,A, is a corporation sole duly re-istered &ith the ecurities and :xchan-e Commission, .n the other hand, the /issionary ;istrict of the 'hilippine $slands of the 'rotestant :piscopal Church the @, ,A, Dhereinafter referred to as /issionary ;istrictE is a duly incorporated and established reli-ious society and o&ns and operates the t, Bu>e=s Aospital in Jue8on City, the Brent Aospital in Samboan-a City and the t, tephen=s Ai-h chool in /anila, $n 19#" to 19#9, the /issionary ;istrict received various shipments of materials, supplies, e2uipment and other articles intended for use in the construction and operation of the ne& t, Bu>eTUVs Aospital, .n these shipments, the Commissioner collected compensation tax, The /issionary ;istrict filed claims for refund, but &hich &as denied by the Commissioner on the -round that t, Bu>eTUVs Aospital &as not a charitable institution and therefore &as not exempt from taxes because it admits pay patients, ISSUE+ 4hether or not the shipments for t, Bu>eTUVs Aospital are tax3exempt, RULING6 The follo&in- re2uisites must concur in order that a taxpayer may claim exemption under the la& D1E the imported articles must have been donatedF D2E the donee must be a duly incorporated or established international civic or-ani8ation, reli-ious or charitable society, or institution for civic reli-ious or charitable purposesF and D(E the articles so imported must have been donated for the use of the or-ani8ation, society or institution or for free distribution and not for barter, sale or hire, As the la& does not distin-uish or 2ualify the en0oyment or the exemption Das the ecretary of !inance did in ;epartment .rder 1+, series of 19#+E, the admission of pay patients does not detract from the charitable character of a hospital, if its funds are devoted exclusively to the maintenance of the institution, Thus, the shipments are tax exempt, LLADOC v. Co$$8ss8on"& oA In:"&na4 R"v"n." G.R. No. L-'92 ' 0.n" '-( '9-! FACTS6

ometime in 19#", the /,B, :state, $nc,, of Bacolod City, donated '1*,***,** in cash to %ev, !r, Crispin %ui8, then parish priest of ?ictorias, 9e-ros .ccidental, and predecessor of herein petitioner, for the construction of a ne& Catholic Church in the locality, The total amount &as actually spent for the purpose intended, .n /arch (, 19#+, the donor /,B, :state, $nc,, filed the donor=s -ift tax return, @nder date of April 29, 196*, the respondent Commissioner of $nternal %evenue issued an assessment for donee=s -ift tax a-ainst the Catholic 'arish of ?ictorias, 9e-ros .ccidental, of &hich petitioner &as the priest, 'etitioner lod-ed a protest to the assessment and re2uested the &ithdra&al thereof, The protest and the motion for reconsideration presented to the Commissioner of $nternal %evenue &ere denied, The petitioner appealed to the Court of Tax Appeals, ISSUE6 4hether or not the assessment for donee5s -ift tax &as valid, considerin- the fact that the Constitution exempts petitioner from taxation

2#
RULING+ ection 22 D(E, Art, ?$ of the Constitution of the 'hilippines, exempts from taxation cemeteries, churches and parsona-es or convents, appurtenant thereto, and all lands, buildings, and improvements used exclusively for reli-ious purposes, The exemption is only from the payment of taxes assessed on such properties enumerated, as property taxes, as contra distin-uished from excise taxes, $n the present case, &hat the Collector assessed &as a donee=s -ift taxF the assessment &as not on the properties themselves, $t did not rest upon -eneral o&nershipF it &as an excise upon the use made of the properties, upon the exercise of the privile-e of receivin- the properties, /anifestly, -ift tax is not &ithin the exemptinprovisions of the section 0ust mentioned, A -ift tax is not a property tax, but an excise tax imposed on the transfer of property by &ay of -ift inter vivos, the imposition of &hich on property used exclusively for reli-ious purposes, does not constitute an impairment of the Constitution,

,ERRERA v. 5UE6ON CITY BOARD OF ASSESSMENT GR.No.L-'!2* S"7:"$%"& 1 ( '9-' FACTS6 .n July 2), 19#2, the ;irector of the Bureau of Aospitals authori8ed the petitioners to establish and operate the 7 t, Catherine=s Aospital7, located at #+ ;, Tua8on, ta, /esa Aei-hts, Jue8on City D:xhibit 7!3 17, p, ", B$% rec,E, .n or about January (, 19#(, the petitioners sent a letter to the Jue8on City Assessor re2uestin- exemption from payment of real estate tax on the lot, buildin- and other improvements comprisin- the hospital statin- that the same &as established for charitable and humanitarian purposes and not for commercial -ain, After an inspection of the premises in 2uestion and after a careful study of the case, the exemption from real property taxes &as -ranted effective the years 19#(, 19#) and 19##, ubse2uently, ho&ever, the Jue8on City Assessor notified the petitioners that the aforesaid properties &ere re3classified from exempt to 7taxable7 and thus assessed for real property taxes, The petitioners appealed the assessment to the Jue8on City Board of Assessment Appeals, &hich affirmed the decision of the City Assessor, A motion for reconsideration thereof &as denied, !rom this decision, the petitioners instituted the instant appeal, The buildin- involved in this case is principally used as a hospital, ISSUE6 4hether or not the lot, buildin- and other improvements occupied by the t, Catherine Aospital are exempt from the real property tax, RULING+ $t is &ell settled, that the admission of pay3patients does not detract from the charitable character of a hospital, if all its funds are devoted 7exclusively to the maintenance of the institution7 as a 7public charity7, $n other &ords, &here renderin- charity is its primary ob0ect, and the funds derived from payments made by patients able to pay are devoted to the benevolent purposes of the institution, the mere fact that a profit has been made &ill not deprive the hospital of its benevolent character7 /oreover, the exemption in favor of property used exclusively for charitable or educational purposes is 7not limited to property actually indispensable7 therefor, but extends to facilities &hich are 7incidental to and reasonably necessary for7 the accomplishment of said purposes, 4ithin the purvie& of the Constitutional exemption from taxation, the t, Catherine=s Aospital is, therefore, a charitable institution, and the fact that it admits pay3patients does not bar it from claiminthat it is devoted exclusively to benevolent purposes, it bein- admitted that the income derived from pay3 patients is devoted to the improvement of the charity &ards, &hich represent almost t&o3thirds D2C(E of the bed capacity of the hospital, aside from 7out3charity patients7 &ho come only for consultation, BIS,OP OF NUEVA SEGOVIA v. PROVINCIAL BOARD OF ILOCOS NORTE G.RNo.L-2*!)) D"#"$%"& 1'( '92* FACTS6 The plaintiff, the %oman Catholic Apostolic Church, represented by the Bishop of 9ueva e-ovia, possesses and is the o&ner of a parcel of land in the municipality of an 9icolas, $locos 9orte, all four sides of &hich face on public streets, .n the south side is a part of the churchyard, the convent and an ad0acent lot used for a ve-etable -arden, containin- an area off 1,62) s2uare meters, in &hich there is a stable and a &ell for the use of the convent, $n the center is the remainder of the churchyard and the church, .n the north is an old cemetery &ith t&o of its &alls still standin-, and a portion &here formerly stood a to&er, the base of &hich still be seen, containin- a total area of +,9## s2uare meters, As re2uired by the defendants, on July (, 192# the plaintiff paid, under protest, the land tax on the lot ad0oinin- the convent and the lot &hich formerly &as the cemetery &ith the portion &here the to&er stood, The plaintiff filed this action for the recovery of the sum paid by to the defendants by &ay of land tax, alle-in- that the collection of this tax is ille-al, The lo&er court absolved the defendants from the complaint in re-ard to the lot ad0oinin- convent and declared that the tax collected on the lot, &hich

26
formerly &as the cemetery and on the portion &here the lo&er stood, &as ille-al, Both parties appealed from this 0ud-ment, ISSUE 4hether or not the lots of petitioner are exempted from land tax RULING The exemption in favor of the convent in the payment of the land tax Dsec, ()) GcH Administrative CodeE refers to the home of the parties &ho presides over the church and &ho has to ta>e care of himself in order to dischar-e his duties, $n therefore must, in the sense, include not only the land actually occupied by the church, but also the ad0acent -round destined to the ordinary incidental uses of man, The 0ud-ment appealed from is reversed in all it parts and it is held that both lots are exempt from land tax and the defendants are ordered to refund to plaintiff &hatever &as paid as such tax, &ithout any special pronouncement as to costs,

Co$$8ss8on"& oA In:"&na4 R"v"n." v. Co.&: oA A77"a4s and YMCA G.R.No.L-'23 31 O#:o%"& '3( '99) FACTS6 'rivate %espondent I/CA is a non3stoc>, non3profit institution, &hich conducts various pro-rams and activities that are beneficial to the public, especially the youn- people, pursuant to its reli-ious, educational and charitable ob0ectives, $n 19+*, private respondent earned, amon- others, an income of '6"6,+29,+* from leasin- out a portion of its premises to small shop o&ners, li>e restaurants and canteen operators, and ')),2#9,** from par>in- fees collected from non3members, .n July 2, 19+), the commissioner of internal revenue DC$%E issued an assessment to private respondent, in the total amount of ')1#,61#,*1 includin- surchar-e and interest, for deficiency income tax, deficiency expanded &ithholdin- taxes on rentals and professional fees and deficiency &ithholdin- tax on &a-es, 'rivate respondent formally protested the assessment and, as a supplement to its basic protest, filed a letter dated .ctober +, 19+#, $n reply, the C$% denied the claims of I/CA, Contestin- the denial of its protest, the I/CA filed a petition for revie& at the Court of Tax Appeals DCTAE on /arch 1), 19+9, $n due course, the CTA issued this rulin- in favor of the I/CA6 ISSUE6 4hether or not the I/CA is exempted from rental income derived from the lease of its properties RULING 'etitioner ar-ues that &hile the income received by the or-ani8ations enumerated in ection 2" Dno& ection 26E of the 9$%C is, as a rule, exempted from the payment of tax 7in respect to income received by them as such,7 the exemption does not apply to income derived 7xxx from any of their properties, real or personal, or from any of their activities conducted for profit, re-ardless of the disposition made of such income xxx7 4e a-ree &ith the commissioner, $n the instant case, the exemption claimed by the I/CA is expressly disallo&ed by the very &ordinof the last para-raph of then ection 2" of the 9$%C &hich mandates that the income of exempt or-ani8ations Dsuch as the I/CAE from any of their properties, real or personal, be sub0ect to the tax imposed by the same Code, LUNG CENTER OF T,E P,ILIPPINES vs,5UE6ON CITY and CONSTANTINO P. ROSAS G.R. No. '33' 3 0.n" 29( 2 3 FACTS+ The petitioner, a non3stoc> and non3profit entity is the re-istered o&ner of a parcel of land &here erected in the middle of the aforesaid lot is a hospital >no&n as the Bun- Center of the 'hilippines, A bispace at the -round floor is bein- leased to private parties, for canteen and small store spaces, and to medical or professional practitioners &ho use the same as their private clinics for their patients &hom they char-e for their professional services, Almost one3half of the entire area on the left side of the buildinalon- Jue8on Avenue is vacant and idle, &hile a bi- portion on the ri-ht side, at the corner of Jue8on Avenue and :lliptical %oad, is bein- leased for commercial purposes to a private enterprise >no&n as the :lliptical .rchids and <arden Center, .n June ", 199(, both the land and the hospital buildin- of the petitioner &ere assessed for real property taxes in the amount of '),##),+6* by the City Assessor of Jue8on City but the former filed a Claim for :xemption from real property taxes &ith the City Assessor, predicated on its claim that it is a charitable institution, ISSUE+ 4hether or not the petitioner5 real properties are exempted from realty tax exemptions,

2"
RULING+ :ven as &e find that the petitioner is a charitable institution, those portions of its real property that are leased to private entities are not exempt from real property taxes as these are not actually, directly and exclusively used for charitable purposes, 4hat is meant by actual, direct and exclusive use of the property for charitable purposes is the direct and immediate and actual application of the property itself to the purposes for &hich the charitable institution is or-ani8ed, Aence, a claim for exemption from tax payments must be clearly sho&n and based on lan-ua-e in the la& too plain to be mista>en, @nder ection 2 of 'residential ;ecree 9o, 1+2(, the petitioner does not en0oy any property tax exemption privile-es for its real properties as &ell as the buildin- constructed thereon, $f the intentions &ere other&ise, the same should have been amon- the enumeration of tax exempt privile-es under ection 2, P&o#:"& and Ga$%4" P<848778n"s Man.Aa#:.&8n9 Co&7. vs. M.n8#87a48:/ oA 0a9na G. R. No. L-232-! 2) D"#"$%"& '9*9 FACTS+ 'etitioner 'rocter and <amble 'hilippines /anufacturin- Corp, is a consolidated corporation of 'rocter and <amble Tradin- Company en-a-ed in the manufacture of soap, edible oil, mar-arine and other similar products, 'etitioner maintains a Kbode-aL in the municipality of Ja-na, &here it stores copra purchased in the municipality and ships the same for its manufacturin- and other operations, $n 19#), the /unicipal Council of Ja-na enacted .rdinance ), imposin- stora-e fees of all exportable copra deposite in the bode-a &ithin the 0urisdiction of the municipality of Ja-na, Bohol, !rom 19#+ to 196(, the company paid the municipality, alle-edly under protest, stora-e fees, $n 196), it filed suit, &herein it prayed that the .rdinance be declared inapplicable to it, and if not, that it be declared ultra vires and void, ISSUE+ 4hether the .rdinance is void, as it amounts to double taxation, RULING+ The validity of the .rdinance must be upheld pursuant to the broad authority conferred upon municipalities by Common&ealth Act )"2 Dpromul-ated 19(9E, &hich &as the prevailin- la& &hen the .rdinance is actually a municipal license tax or fee on persons, firms and corporations exercisin- the privile-e of storin- copra &ithin the municipality5s territorial 0urisdiction, uch fees imposed do not amount to double taxation, !or double taxation to exist, the same property must be taxed t&ice, &hen it should be taxed but once, A tax on the company5s products is different from the tax on the privile-e of storin- copra in a bode-a situated &ithin the territorial boundary of the municipality,

PEPSI-COLA BOTTLING COMPANY OF T,E P,ILIPPINES( INC. vs, MUNICIPALITY OF TANAUAN( LEYTE( T,E MUNICIPAL MAYOR( ET AL. G.R. No. L-1''!- F"%&.a&/ 2*( '9*FACTS+ .n !ebruary 1), 196(, the plaintiff3appellant, 'epsi3Cola Bottlin- Company commenced a complaint before the Court of !irst $nstance of Beyte for that court to declare ection 2 of %epublic Act 9o, 226)3the Bocal Autonomy Act, unconstitutional as an undue dele-ation of taxin- authority as &ell as to declare .rdinances 9os, 2( and 2", series of 1962, of the municipality of Tanauan, Beyte, null and void, /, ., 9o, 2(, levies and collects 7from soft drin>s producers and manufacturers a tai of one3sixteenth D1C16E of a centavo for every bottle of soft drin> cor>ed,7 .n the other hand, /, ., 9o, 2", &hich &as approved on .ctober 2+, 1962, levies and collects 7on soft drin>s produced or manufactured &ithin the territorial 0urisdiction of this municipality a tax of .9: C:9TA?. D'*,*1E on each -allon D12+ fluid ounces, @, ,E of volume capacity,7 The tax imposed in both .rdinances 9os, 2( and 2" is denominated as 7municipal production tax,= The C!$ of Beyte rendered 0ud-ment 7dismissin- the complaint and upholdin- the constitutionality of G ection 2, %epublic Act 9o, 226)H declarin- .rdinance 9os, 2( and 2" le-al, Aence this petition, The petitioner contends .rdinances 9os, 2( and 2" constitute double taxation because these t&o ordinances cover the same sub0ect matter and impose practically the same tax rate and impose percenta-e or specific taxes, ISSUES+ ;o .rdinances 9os, 2( and 2" constitute double taxation and impose percenta-e or specific taxesO RULING+ 9o, the .rdinances does not constitute double taxation, The difference bet&een the t&o ordinances clearly lies in the tax rate of the soft drin>s produced6 in .rdinance 9o, 2(, it &as 1C16 of a centavo for every bottle cor>edF in .rdinance 9o, 2", it is one centavo D'*,*1E on each -allon D12+ fluid ounces, @, ,E of volume capacity, The intention of the /unicipal Council of Tanauan in enactin- .rdinance 9o, 2" is thus clear6 it &as intended as a plain substitute for the prior .rdinance 9o, 2(, and operates as a repeal of the latter, even &ithout &ords to that effect,

2+

EUSEBIO VILLANUEVA( ET AL.( vs,CITY OF ILOILO G.R. No. L-2-!2' D"#"$%"& 2)( '9-) !ACT 6 .n January 1#, 196* the municipal board of $loilo City, believin-, obviously, that &ith the passa-e of %epublic Act 226), other&ise >no&n as the Bocal Autonomy Act, it had ac2uired the authority or po&er to enact an ordinance similar to that previously declared by this Court as ultra vires Dtaxin- tenement housesE, enacted .rdinance 11, series of 196* &hich taxes those involve in the business of rentinapartment houses, $n $loilo City, the appellees :usebio ?illanueva and %emedios , ?illanueva are o&ners of five tenement houses, a--re-ately containin- )( apartments, &hile the other appellees and the same %emedios , ?illanueva are o&ners of ten apartments, .n July 11, 1962 and April 2), 196), the plaintiffs3appellees filed a complaint, and an amended complaint, respectively, a-ainst the City of $loilo, in the aforementioned court, prayin- that .rdinance 11, series of 196*, be declared 7invalid for bein- beyond the po&ers of the /unicipal Council of the City of $loilo to enact, and unconstitutional for bein- violative of the rule as to uniformity of taxation and for deprivin- said plaintiffs of the e2ual protection clause of the Constitution,7 and that the City be ordered to refund the amounts collected from them under the said ordinance, .n /arch (*, 1966,1 the lo&er court rendered 0ud-ment declarin- the ordinance ille-al, $ @:6 $s .rdinance 11, series of 196*, of the City of $loilo, ille-al because it imposes double taxationO

%@B$9<6 There is no double taxation, $t is a &ell3settled rule that a license tax may be levied upon a business or occupation althou-h the land or property used in connection there&ith is sub0ect to property tax, $n order to constitute double taxation in the ob0ectionable or prohibited sense the same property must be taxed t&ice &hen it should be taxed but onceF both taxes must be imposed on the same property or sub0ect3matter, for the same purpose, by the same tate, <overnment, or taxin- authority, &ithin the same 0urisdiction or taxin- district, durin- the same taxin- period, and they must be the same >ind or character of tax,7 $t has been sho&n that a real estate tax and the tenement tax imposed by the ordinance, althou-h imposed by the same taxin- authority, are not of the same >ind or character, D"47<"& T&ad"s Co&7o&a:8on vs. IAC G.R. No. L--92!9. 0an.a&/ 2-( '9)). FACTS6 ;elfin 'acheco and his sister, 'ela-ia 'acheco, &ere the o&ners of 2",169 s2uare meters of real estate in the /unicipality of 'olo Dno& ?alen8uelaE, 'rovince of Bulacan Dno& /etro /anilaE, The said co3 o&ners leased to Construction Components $nternational $nc, the same property and providin- that durinthe existence or after the term of this lease the lessor should he decide to sell the property leased shall first offer the same to the lessee and the letter has the priority to buy under similar conditions, .n Au-ust (, 19"), lessee Construction Components $nternational, $nc, assi-ned its ri-hts and obli-ations under the contract of lease in favor of Aydro 'ipes 'hilippines, $nc, &ith the conformity and consent of lessors ;elfin 'acheco and 'ela-ia 'acheco, .n January (, 19"6, a deed of exchan-e &as executed bet&een lessors ;elfin and 'ela-ia 'acheco and defendant ;elpher Trades Corporation &hereby the former conveyed to the latter the leased property to-ether &ith another parcel of land for 2,#** shares of stoc> of defendant corporation &ith a total value of '1,#**,***,**, .n the -round that it &as not -iven the first option to buy the property, respondent Aydro 'ipes 'hilippines, $nc,, a complaint for reconveyance of Bot, 9o, 1*9# in its favor, The Court of !irst $nstance of Bulacan ruled in favor of the plaintiff, The lo&er court=s decision &as affirmed on appeal by the $ntermediate Appellate Court, ISSUE6 4hether or not the 7;eed of :xchan-e7 of the properties executed by the 'achecos on the one hand and the ;elpher Trades Corporation on the other &as meant to be a contract of sale, RULING6 4e rule for the petitioners, $n the case at bar, in exchan-e for their properties, the 'achecos ac2uired 2,#** ori-inal unissued no par value shares of stoc>s of the ;elpher Trades Corporation, Conse2uently, the 'achecos became stoc>holders of the corporation by subscription, 7The essence of the stoc> subscription is an a-reement to ta>e and pay for ori-inal unissued shares of a corporation, formed or to be formed,7 $n effect, the ;elpher Trades Corporation is a business conduit of the 'achecos, 4hat they really did &as to invest their properties and chan-e the nature of their o&nership from unincorporated to

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incorporated form by or-ani8in- ;elpher Trades Corporation to ta>e control of their properties and at the same time save on inheritance taxes, The records do not point to anythin- &ron- or ob0ectionable about this 7estate plannin-7 scheme resorted to by the 'achecos, 7The le-al ri-ht of a taxpayer to decrease the amount of &hat other&ise could be his taxes or alto-ether avoid them, by means &hich the la& permits, cannot be doubted,7

,"n9 Ton9 T"B:84"s Co.( In#. Vs CIR G.R. No. L-'9*1*. A.9.s: 2-( '9-). FACTS6 $n 19#2 the Collector of $nternal %evenue assessed a-ainst the petitioner deficiency sales taxes and surchar-es for the year 19)9 and the first four months of 19#* in the a--re-ate sum of '+9,12(,#+, The assessment &as appealed to the Board of Tax Appeals, &hence the case &as transferred to the Court of Tax Appeals upon its or-ani8ation in 19#), and there &as affirmed in its decision dated !ebruary 2+, 19#2, The deficiency taxes in 2uestion &ere assessed on importations of textiles from abroad, The -oods &ere &ithdra&n from Customs by 'an3 Asiatic Commercial Co,, $nc,, &hich paid, in the name of the petitioner, the correspondin- advance sales tax under section 1+(DbE of the $nternal %evenue Code, The assessment for the deficiency &as made a-ainst the petitioner, Aen- Ton- Textiles Co,, $nc, on the -round that it &as the real importer of the -oods and did not pay the taxes due on the basis of the -ross sellin- prices thereof, ISSUE6 4hether or not petitioner &as -uilty of fraud so as to &arrant the imposition of a penalty of #*1 on the deficiency, RULING6 'etitioner excepts to the conclusion of the Court of Tax Appeals and avers that the importation papers &ere placed in the name of the petitioner only for purposes of accommodation, that is, to introduce the petitioner to textile suppliers abroadF and that the petitioner &as not in a financial position to ma>e the importations in 2uestion, These circumstances sho& nothin- but a private arran-ement bet&een the petitioner and 'an3Asiatic Commercial, &hich in no &ay affected the role of the petitioner as the importer, The arran-ement resorted to does not by itself alone 0ustify the penalty imposed, ection 1+(DaE, para-raph (, of the $nternal %evenue Code, as amended by %epublic Act 9o, 2#(, spea>s of &illful ne-lect to file the return or &illful ma>in- of a false or fraudulent return, An attempt to minimi8e one=s tax does not necessarily constitute fraud, $t is a settled principle that a taxpayer may diminish his liability by any means &hich the la& permits, Co$$8ss8on"& oA In:"&na4 R"v"n."s vs. Toda G.R. No. '3*')). S"7:"$%"& '3( 2 3 FACTS6 .n 2 /arch 19+9, C$C authori8ed Beni-no ', Toda, Jr,, 'resident and o&ner of 99,9911 of its outstandin- capital stoc>, to sell the Cibeles Buildin-, .n (* Au-ust 19+9, Toda purportedly sold the property for '1** million to %afael A, Altona-a, &ho, in turn, sold the same property on the same day to %oyal /atch $nc, D%/$E for '2** million, Three and a half years later Toda died, .n 29 /arch 199), the B$% sent an assessment notice and demand letter to the C$C for deficiency income tax for the year 19+9, .n 2" January 199#, the :state of Beni-no ', Toda, Jr,, represented by special co3administrators Borna Rapunan and /ario Bu8a Bautista, received a 9otice of Assessment from the C$% for deficiency income tax for the year 19+9, The :state thereafter filed a letter of protest, The Commissioner dismissed the protest, .n 1# !ebruary 1996, the :state filed a petition for revie& &ith the CTA, $n its decision the CTA held that the Commissioner failed to prove that C$C committed fraud to deprive the -overnment of the taxes due it, $t ruled that even assumin- that a pre3conceived scheme &as adopted by C$C, the same constituted mere tax avoidance, and not tax evasion, Aence, the CTA declared that the :state is not liable for deficiency of income tax, The Commissioner filed a petition for revie& &ith the Court of Appeals, The Court of Appeals affirmed the decision of the CTA, Aence, this recourse to the C, ISSUE6 4hether or not this is a case of tax evasion or tax avoidance, RULING6 Tax evasion connotes the inte-ration of three factors6 D1E the end to be achieved, i.e., the payment of less than that >no&n by the taxpayer to be le-ally due, or the non3payment of tax &hen it is sho&n that a tax is dueF D2E an accompanyin- state of mind &hich is described as bein- Kevil,L in Kbad faith,L K&illfull,Lor Kdeliberate and not accidentalLF and D(E a course of action or failure of action &hich is unla&ful, All these factors are present in the instant case, The scheme resorted to by C$C in ma>in- it appear that there &ere t&o sales of the sub0ect properties, i.e,, from C$C to Altona-a, and then from Altona-a to %/$ cannot be considered a le-itimate tax plannin-, uch scheme is tainted &ith fraud, Altona-a5s sole purpose of ac2uirin- and transferrin- title of the sub0ect properties on the same day &as to create a tax shelter, The sale to him &as merely a tax ploy, a sham, and &ithout business purpose and economic

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substance, ;oubtless, the execution of the t&o sales &as calculated to mislead the B$% &ith the end in vie& of reducin- the conse2uent income tax liability, Davao G.4A L.$%"& Co&7o&a:8on vs. CIR G.R. No. ''*1!9. 0.4/ 21( '99). FACTS6 !rom July 1, 19+* to January (1, 19+2 petitioner purchased, from various oil companies, refined and manufactured mineral oils as &ell as motor and diesel fuels, aid oil companies paid the specific taxes imposed on the sale of said products, Bein- included in the purchase price of the oil products, the specific taxes paid by the oil companies &ere eventually passed on to the petitioner in this case, 'etitioner filed before %espondent C$% a claim for refund in the amount of '12*,+2#,11, representin- 2#1 of the specific taxes actually paid on the above3mentioned fuels and oils that &ere used by petitioner in its operations as forest concessionaire, .n January 2*, 19+(, petitioner filed at the CTA a petition for revie&, The CTA rendered its decision findin- petitioner entitled to a partial refund of specific taxes in the reduced amount of '2,92(,1#, $n re-ard to the other purchases, the CTA -ranted the claim, but it computed the refund based on rates deemed paid under %A 1)(#, and not on the hi-her rates actually paid by petitioner under the 9$%C, $nsistin- that the basis for computin- the refund should be the increased rates prescribed by ections 1#( and 1#6 of the 9$%C, petitioner elevated the matter to the Court of Appeals, The Court of Appeals affirmed the CTA ;ecision, Aence, this petition for revie&, ISSUE6 4hether or not petitioner is entitled to the refund of 2#1 of the amount of specific taxes it actually paid on various refined and manufactured mineral oils, RULING6 At the outset, it must be stressed that petitioner is entitled to a partial refund under ection # of %A 1)(#, &hich &as enacted to provide means for increasin- the Ai-h&ay pecial !und, A tax cannot be imposed unless it is supported by the clear and express lan-ua-e of a statuteF on the other hand, once the tax is un2uestionably imposed, KGaH claim of exemption from tax payments must be clearly sho&n and based on lan-ua-e in the la& too plain to be mista>en,L ince the partial refund authori8ed under ection #, %A 1)(#, is in the nature of a tax exemption, it must be construed strictissimi juris a-ainst the -rantee, Aence, petitioner5s claim of refund on the basis of the specific taxes it actually paid must expressly be -ranted in a statute stated in a lan-ua-e too clear to be mista>en, P,ILIPPINE ACETYLENE CO.( INC. vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS <,%, 9o, B319"*" Au-ust 1", 196"

FACTS+ The petitioner is a corporation en-a-ed in the manufacture and sale of oxy-en and acetylene -ases, $t made various sales of its products to the 9ational 'o&er Corporation and to the ?oice of America an a-ency of the @nited tates <overnment, The sales to the 9'C amounted to '1)#,+66,"*, &hile those to the ?.A amounted to '1,6+(, on account of &hich the respondent Commission of $nternal %evenue assessed a-ainst, and demanded from, the petitioner the payment of '12,91*,6* as deficiency sales tax and surchar-e, pursuant to the ec,1+6 of the 9ational $nternal %evenue Code, The petitioner denied liability for the payment of the tax on the -round that both the 9'C and the ?.A are exempt from taxation, ISSUE+ $s the petitioner exempt from payin- tax on sales it made to the 1E 9'C and the 2E ?.A because both entities are exempt from taxationO RULING+ 1E 9o, C hold that the tax imposed by section 1+6 of the 9ational $nternal %evenue Code is a tax on the manufacturer or producer and not a tax on the purchaser except probably in a very remote and inconse2uential sense, Accordin-ly its levy on the sales made to tax3exempt entities li>e the 9'C is permissible, 2E 9o, .nly sales made 7for exclusive use in the construction, maintenance, operation or defense of the bases,7 in a &ord, only sales to the 2uartermaster, are exempt under Article ? from taxation, ales of -oods to any other party even if it be an a-ency of the @nited tates, such as the ?.A, or even to the 2uartermaster but for a different purpose, are not free from the payment of the tax, Co$$8ss8on"& oA In:"&na4 R"v"n." vs. Co.&:s oA TaB A77"a4( ": a4 G.R. No. ''!139 A7&84 ')( '99*

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FACTS6 Ateneo de /anila is an educational institution &ith auxiliary units and branches all over the 'hilippines, .ne such auxiliary unit is the $nstitute of 'hilippine Culture D$'CE, &hich has no le-al personality separate and distinct from that of private respondent, The $'C is a 'hilippine unit en-a-ed in social science studies of 'hilippine society and culture, .ccasionally, it accepts sponsorships for its research activities from international or-ani8ations, private foundations and -overnment a-encies, .n July +, 19+(, private respondent received from petitioner Commissioner of $nternal %evenue a demand letter dated June (, 19+(, assessin- private respondent the sum of '1"),*)(,9" for alle-ed deficiency contractor=s tax the value of &hich &as later on, upon private respondent5s re2uest for reinvesti-ation, reduced to ')6,#16,)1, @nsatisfied, 'rivate respondent filed in the Court of Tax Appeals a petition for revie& of the said letter3decision of the petitioner &hich rendered a decision in its favor and ordered the tax assessment cancelled, ISSUE6 $s Ateneo de /anila @niversity, throu-h its auxiliary unit or branch N the $nstitute of 'hilippine Culture N performin- the &or> of an independent contractor and, thus, sub0ect to the three percent contractor=s tax levied by then ection 2*# of the 9ational $nternal %evenue CodeO RULING6 9o, The upreme Court held that Ateneo de /anila @niversity is not sub0ect to the contractor5s tax, $t explained that to fall under its covera-e, ection 2*# of the 9ational $nternal %evenue Code re2uires that the independent contractor be en-a-ed in the business of sellin- its services, The Court, ho&ever, found no evidence that Ateneo=s $nstitute of 'hilippine Culture ever sold its services for a fee to anyone or &as ever en-a-ed in a business apart from and independently of the academic purposes of the university, /oreover, the Court of Tax Appeals accurately and correctly declared that the Kfunds received by the Ateneo de /anila @niversity are technically not a fee, They may ho&ever fall as -ifts or donations &hich are tax3exempt7 as sho&n by private respondent=s compliance &ith the re2uirement of ection 12( of the 9ational $nternal %evenue Code providin- for the exemption of such -ifts to an educational institution,

Ca4:"B P<848778n"s( In#. v. Co$$8ss8on on A.d8: G.R. No. 92!)! Ma/ )( '992 FACTS6 %espondent Commission on Audit DC.AE directed petitioner Caltex 'hilippines, $nc, DC'$E to remit to the .il 'rice tabili8ation !und D.' !E its collection of the additional tax on petroleum products pursuant to ',;, 19#6, as &ell as unremitted collections of the above tax coverin- the years 19+6, 19+" and 19++, &ith interests and surchar-es, and advisin- it that all its claims for reimbursements from the .' ! shall be held in abeyance pendin- such remittance, C.A further directed petitioner oil company to desist from further offsettin- the taxes collected a-ainst outstandin- claims for 19+9 and subse2uent periods, $ts motion for reconsideration of the eventual decision of the C.A on the matter havin- been denied, C'$ imputes that respondent commission erred in preventin- the former from exercisin- the ri-ht to offset its remittances a-ainst the reimbursement vis3X3vis the .' !, ISSUE6 4hether or not the amounts due to the .' ! from petitioner may be offset a-ainst the latter5s outstandin- claims from said fundO RULING6 9o, $t is settled that a taxpayer may not offset taxes due from claims that he may have a-ainst the <overnment, Taxes cannot be the sub0ect of compensation because the <overnment and the taxpayer are not mutually creditors and debtors of each other and a claim for taxes is not such a debt, demand, contract or 0ud-ment as is allo&ed to be set off, The Court further ruled that taxation is no lon-er envisioned as a measure merely to raise revenue to support the existence of the <overnment, Taxes may be levied for a re-ulatory purpose such as to provide means for the rehabilitation and stabili8ation of a threatened industry &hich is affected &ith public interest, a concern &hich is &ithin the police po&er of the tate to address,

LU6ON STEVEDORING CORPORATION vs. COURT OF TAX APPEALS and :<" ,ONORABLE COMMISSIONER OF INTERNAL REVENUE G.R. No. No. L-1 212 0.4/ 29( '9)) FACTS6 Aerein petitioner imported various en-ine parts and other e2uipment for &hich it paid, under protest, the assessed compensatin- tax, @nable to secure a tax refund from the Commissioner of $nternal %evenue, it filed a 'etition for %evie& &ith the Court of Tax Appeals in order to be -ranted a refund,

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'etitioner contends that tu-boats are included in the term Kcar-o vesselsL &hich are exemped from compensatin- tax under article 19* of the 9ational $nternal %evenue Code, Ae ar-ues that in le-al contemplation, the tu-boat and a bar-e loaded &ith car-oes &ith the former to&in- the latter for loadinand unloadin- of a vessel in part, constitute a sin-le vessel, Accordin-ly, it concludes that the en-ines, spare parts and e2uipment imported by it and used in the repair and maintenance of its tu-boats are exempt from compensatin- tax, .n the other hand, respondent contends that 7tu-boats7 are not 7Car-o vessel7 because they are neither desi-ned nor used for carryin- andCor transportin- persons or -oods by themselves but are mainly employed for to&in- and pullin- purposes, ISSUE6 4hether or not tu-boats are included in the term Kcar-o vesselsL &hich are exempted from compensatin- tax under article 19* of the 9ational $nternal %evenue Code, RULING6 9o, tu-boats are not included in the term Kcar-o vesselsL &hich are exempted from compensatintax under article 19* of the 9ational $nternal %evenue Code, The upreme Court explained that under the definition of tu-boat, Ka diesel or steam po&er vessel desi-ned primarily for movin- lar-e ships to and from piers for to&in- bar-es and li-hters in harbors, rivers and canals,L 4hich clearly do not fall under the cate-ories of passen-er andCor car-o vessels, Thus, it is a cardinal principle of statutory construction that &here a provision of la& spea>s cate-orically, the need for interpretation is obviated, no plausible pretense bein- entertained to 0ustify non3compliance, All that has to be done is to apply it in every case that falls &ithin its terms,

NATIONAL DEVELOPMENT COMPANY vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. No. L-!19-' 0.n" 1 ( '9)* FACTS6 9ational ;evelopment Company D9;CE is a domestic corporation &ith principal offices in /anila, $t entered into contracts in To>yo &ith several Japanese shipbuildin- companies for the construction of t&elve ocean3-oin- vessels, $nitial payments &ere made in cash and throu-h irrevocable letters of credit, !ourteen promissory notes &ere si-ned for the balance by the 9;C and, as re2uired by the shipbuilders, -uaranteed by the %epublic of the 'hilippines, Thereafter, remainin- payments and the interests thereon &ere remitted in due time by the 9;C to To>yo, After the vessels &ere delivered, the 9;C remitted to the shipbuilders in To>yo the interest on the balance of the purchase price, 9o tax &as &ithheld, The Commissioner of $nternal %evenue held that the interest remitted to the Japanese shipbuilders on the unpaid balance of the purchase price of the vessels ac2uired by petitioner is sub0ect to income tax under the Tax Code, The petitioner ar-ues that the Japanese shipbuilders &ere not sub0ect to tax under the Tax Code, 'etitioner contends that the interest payments &ere obli-ations of the %epublic of the 'hilippines and that the promissory notes of the 9;C &ere -overnment securities exempt from taxation under ection 29DbEG)H of the Tax Code, ISSUE6 4hether petitioner should not be held liable due to the underta>in- si-ned by the ecretary of !inance and because the interest payments &ere obli-ations of the %epublic of the 'hilippines and that the promissory notes of the 9;C &ere -overnment securities exempt from taxation under ection 29DbEG)H of the Tax Code as alle-ed by petitioner, RULING6 9o, 'etitioner should be held liable, There is nothin- in ection 29DbEG)H of the Tax Code exemptinthe interests from taxes, !urthermore in the said underta>in-, petitioner has not established a clear &aiver therein of the ri-ht to tax interests, Tax exemptions cannot be merely implied but must be cate-orically and unmista>ably expressed, Any doubt concernin- this 2uestion must be resolved in favor of the taxinpo&er, $t is not the 9;C that is bein- taxed, $t &as the income of the Japanese shipbuilders and not the %epublic of the 'hilippines that &as sub0ect to the tax the 9;C did not &ithhold, $n effect, therefore, the imposition of the deficiency taxes on the 9;C is a penalty for its failure to &ithhold the same from the Japanese shipbuilders, MANILA ELECTRIC COMPANY vs. Co$$8ss8on"& oA In:"&na4 R"v"n." G.R. Nos. No. L-299)*s and L-21)3* O#:o%"& 22( '9*! FACTS6 /:%ABC. is the holder of a franchise by the /unicipal Board of the City of /anila to /r, Charles /, &ift and later assumed and ta>en over by petitioner to construct, maintain, and operate an electric li-ht, heat, and po&er system in the City of /anila and its suburbs, $n t&o separate occasions, /:%ABC. imported copper &ires, transformers, and insulators for use in the operation of its business, The Collector of Customs, as ;eputy of Commissioner of $nternal %evenue, levied and collected a compensatin- tax for

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the said importation, /:%ABC. claims for a refund alle-in- that it &as exempted from such compensatintax based on para-raph 9 of its franchise, The court stated that /:%ABC.=s claim for exemption from the payment of the compensatin- tax is not clear or expressed, Aence, this appeal, ISSUE6 4hether or not petitioner is exempted to pay compensatin- tax for its purchase or receipt of commodities, -oods, &ares, or merchandise outside the 'hilippines, RULING6 9o, .ne &ho claims to be exempt from the payment of a particular tax must do so under clear and unmista>able terms found in the statute, Tax exemptions are strictly construed a-ainst the taxpayer, $n the case at bar, the Court is not a&are &hether or not the tax exemption provisions contained in 'ar, 9, 'art T&o of Act 9o, )+) of the 'hilippine Commission of 19*2 &as incorporated in the municipal franchise -ranted because no admissible copy of .rdinance of the said Board &as ever presented in evidence by the petitioner, !urthermore there is no 7plain and unambi-uous terms7 declarin- petitioner /:%ABC. exempt from payin- a compensatin- tax on its imports of poles, &ires, transformers, and insulators, The last clause of para-raph 9 merely reaffirms, &hat has been expressed in the first sentence that petitioner is exempted from payment of property tax, A compensatin- tax is not a property tax but an excise tax imposed on the performance of an act, the en-a-in- in an occupation, or the en0oyment of a privile-e, ERNESTO M. MACEDA vs. ,ON. CATALINO MACARAIG( 0R.( ": a4. G.R. No. No. ))29' Ma/ 1'( '99' and G.R. No. No. ))29' 0.n" )( '991 FACTS6 Common&ealth Act 9o, 12* created the 9'C as a public corporation to underta>e the development of hydraulic po&er and the production of po&er from other sources, everal la&s &ere enacted -rantin9'C tax and duty exemption privile-es such as taxes, duties, fees, imposts, char-es and restrictions of the %epublic of the 'hilippines, its provinces, cities and municipalities 7directly or indirectly,7 on all petroleum products used by 9'C in its operation, Ao&ever ',;, 9o, 19(1 &ithdre& all tax exemption privile-es -ranted in favor of -overnment3o&ned or controlled corporations includin- their subsidiaries but empo&ered the 'resident andCor the then /inister of !inance, upon recommendation of the !$%B to restore, partially or totally, the exemption &ithdra&n, B$% ruled that the exemption privilege enjoyed by +)C under said section covers only taxes for which it is directly liable and not on taxes which are only shifted to it, $n 19+6, B$% Commissioner Tan, Jr, states that all deliveries of petroleum products to 9'C are tax exempt, re-ardless of the period of delivery,Thereafter, the !$%B issued several %esolutions in different occasions restorin- the tax and duty exemption privile-es of 9'C indefinite period due to the restoration of the tax exemption privile-es of 9'C, 9'C applied &ith the B$% for a 7refund of pecific Taxes paid on petroleum products, .n Au-ust 6, 19+", the ecretary of Justice, .pinion opined that 7the po&er conferred upon !iscal $ncentives %evie& Board constitute undue dele-ation of le-islative po&er and, therefore, unconstitutional, Ao&ever, respondents !inance ecretary and the :xecutive ecretary declared that 79'C under the provisions of its %evised Charter retains its exemption from duties and taxes imposed on the petroleum products purchased locally and used for the -eneration of electricity, Thereafter investi-ations &ere made for the refund of the tax payments of the 9'C &hich includes /illions of pesos Tax refund, 'etitioner, as member of the 'hilippine enate introduced as %esolution ;irectin- the enate Blue %ibbon Committee, $n Aid of Be-islation, to conduct a !ormal and :xtensive $n2uiry into the %eported /assive Tax /anipulations and :vasions by .il Companies, particularly Caltex D'hils,E $nc,, 'ilipinas hell and 'etrophil, 4hich 4ere /ade 'ossible By Their Availin- of the 9on3:xistin- :xemption of 9ational 'o&er Corporation D9'CE from $ndirect Taxes, %esultin- %ecently in Their .btainin- A Tax %efund Totallin- '1,## Billion !rom the ;epartment of !inance, ISSUE6 4hether or not respondent 9'C is le-ally entitled to the 2uestioned tax and duty refunds, RULING6 Ies, $n <,%, 9o, 9o, ++291 the upreme Court ruled in favor of exemptin- 9'C to the said taxes, Also in <,%, 9o, 9o, ++291 the upreme Court ruled in favor of respondents, 9'C under the provisions of its %evised Charter retains its exemption from duties and taxes imposed on the petroleum products purchased locally and used for the -eneration of electricity, 'residential ;ecree 9o, 9(+ amended the tax exemption of 9'C by simplifyin- the same la& in -eneral terms, $t succinctly exempts 9'C from 7 all forms of taxes, duties, fees, imposts, as &ell as costs and service fees includin- filin- fees, appeal bonds, supersedeas bonds, in any court or administrative proceedin-s,7 the 9'C electric po&er rates did not carry the taxes and duties paid on the fuel oil it used, The point is that &hile these levies &ere in fact paid to the -overnment, no part thereof &as recovered from the sale of electricity produced, As a conse2uence, as of our most recent information, some '1,## B in claims represent amounts for &hich the oil suppliers and 9'C are 7out3of3poc>et, There &ould have to be specific order to the Bureaus concerned for the resumption of the processin- of these claims,

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COMMISSIONER OF INTERNAL REVENUE vs. 0O,N GOTAMCO C SONS( INC. and T,E COURT OF TAX APPEALS G.R. No. No. L-1' 92 F"%&.a&/ 2*( '9)* FACTS6 The 4orld Aealth .r-ani8ation D4A. for shortE is an international or-ani8ation &hich has a re-ional office in /anila, An a-reement &as entered into bet&een the %epublic of the 'hilippines and the said .r-ani8ation on July 22, 19#1, ection 11 of that A-reement provides, inter alia, that 7the .r-ani8ation, its assets, income and other properties shall be6 DaE exempt from all direct and indirect taxes,L The 4A. decided to construct a buildin- to house its o&n offices, as &ell as the other @nited 9ations offices stationed in /anila, A biddin- &as held for the buildin- construction, The 4A. informed the bidders that the buildin- to be constructed belon-ed to an international or-ani8ation exempted from the payment of all fees, licenses, and taxes, and that therefore their bids 7must ta>e this into account and should not include items for such taxes, licenses and other payments to <overnment a-encies,7 Thereafter, the construction contract &as a&arded to John <otamco M ons, $nc, D<otamco for shortE, ubse2uently, the Commissioner of $nternal %evenue sent a letter of demand to <otamco demandin- payment of for the (1 contractor=s tax plus surchar-es on the -ross receipts it received from the 4A. in the construction of the latter=s buildin-, 4A., The 4A. issued a certification that the bid of John <otamco M ons, should be exempted from any taxes in connection &ith the construction of the 4orld Aealth .r-ani8ation office buildin- because such can be considered as an indirect tax to 4A., Ao&ever, The Commissioner of $nternal %evenue contends that the (1 contractor=s tax is not a direct nor an indirect tax on the 4A., but a tax that is primarily due from the contractor, and thus not covered by the tax exemption a-reement ISSUE6 4hether or not the said (1 contractor5s tax imposed upon petitioner is covered by the Kdirect and indirect tax exemptionL -ranted to 4A. by the -overnment, RULING6 Ies, The (1 contractor5s tax imposed upon petitioner is covered by the Kdirect and indirect tax exemptionL -ranted to 4A., Aence, petitioner cannot be held liable for such contractor5s tax, The upreme Court explained that direct taxes are those that are demanded from the very person &ho, it is intended or desired, should pay themF &hile indirect taxes are those that are demanded in the first instance from one person in the expectation and intention that he can shift the burden to someone else, 4hile it is true that the contractor=s tax is payable by the contractor, Ao&ever in the last analysis it is the o&ner of the buildin- that shoulders the burden of the tax because the same is shifted by the contractor to the o&ner as a matter of self3preservation, Thus, it is an indirect tax a-ainst the 4A. because, althou-h it is payable by the petitioner, the latter can shift its burden on the 4A.,

Co$$8ss8on"& oA In:"&na4 R"v"n." vs. Co.&: oA A77"a4s and YMCA G.R. No. '23 31( O#:o%"& '3( '99) FACTS+ 'rivate %espondent I/CA is a non3stoc>, non3profit institution, &hich conducts various pro-rams and activities that are beneficial to the public, especially the youn- people, pursuant to its reli-ious, educational and charitable ob0ectives, The Commissioner of $nternal %evenue issued an assessment to private respondent, in the total amount of ')1#,61#,*1 includin- surchar-e and interest, for deficiency income tax, deficiency expanded &ithholdin- taxes on rentals and professional fees and deficiency &ithholdin- tax on &a-es, 'rivate respondent formally protested the assessment and, as a supplement to its basic protest, filed a letter dated .ctober +, 19+#, $n reply, the Commissioner denied the claims of I/CA, I/CA filed a petition for revie& at the Court of Tax Appeals, The CTA ruled in favor of the I/CA, The Commissioner elevated the case to the Court of Appeals &hich initially decided in its favor by reinstatin- the assessment of deficiency fixed, contract of Appeals &hich initially decided in its favor by reinstatin- the assessment of deficiency fixed, contractor5s and income taxes, Ao&ever, findin- merit in I/CA5s motion for reconsideration , the appellate court reversed itself and promul-ated the first assessed resolution dated eptember 2+, 199# -rantin- said motion of I/CA by affirmin- the CTA5s decision in toto, .n !ebruary 29, 1996, the Court of Appeals denied the Commissioner5s motion for reconsideration, ISSUE+ 4hether or not the rental income of I/CA on its real estate is sub0ect to tax, RULING+ The Court ruled that the exemption claimed by the I/CA is expressly disallo&ed by the very &ordin- of the last para-raph of then ection 2" of the 9$%C &hich mandates that the income of exempt or-ani8ations Dsuch as the I/CAE from any of their properties, real or personal, be sub0ect to the tax imposed by the same Code, Because the last para-raph of said section une2uivocally sub0ects to tax the

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rent income of the I/CA from its real property, the Court is duty3bound to abide strictly by its literal meanin- and to refrain from resortin- to any convoluted attempt at construction, N8:aAan vs. Co$$8ss8on"& oA In:"&na4 R"v"n." G.R. No. L-*)*) ( 0.4/ 21( '9)* FACTS+ The Chief Justice has previously issued a directive to the !iscal /ana-ement and Bud-et .ffice to continue the deduction of &ithholdin- taxes from salaries of the Justices of the upreme Court and other members of the 0udiciary, This &as affirmed by the upreme Court en banc on ;ecember ), 19+", 'etitioners are the duly appointed and 2ualified Jud-es presidin- over Branches #2, 19 and #(, respectively, of the %TC, 9ational Capital Judicial %e-ion, all &ith stations in /anila, They see> to prohibit andCor perpetually en0oin the Commissioner of $nternal %evenue and the !inancial .fficer of the upreme Court, from ma>in- any deduction of &ithholdin- taxes from their salaries, They contend that this constitutes diminution of salary contrary to ection 1*, Article ?$$$ of the 19+" Constitution, &hich provides that the salary of the members of the upreme Court and 0ud-es of lo&er courts shall be fixed by la& and that Kdurin- their continuance in office, their salary shall not be decreased,L 4ith the filin- of the petition, the Court deemed it best to settle the issue throu-h 0udicial pronouncement, even if it had dealt &ith the matter administratively, The upreme Court dismissed the petition for prohibition, ISSUE+ 4hether or not the salaries of 0ud-es are sub0ect to tax, RULING+ The salaries of members of the Judiciary are sub0ect to the -eneral income tax applied to all taxpayers, Althou-h such intent &as someho& and inadvertently not clearly set forth in the final text of the 19+" Constitution, the deliberations of the 19+6 Constitutional Commission ne-ate the contention that the intent of the framers is to revert to the ori-inal concept of Knon3diminutionL of salaries of 0udicial officers, Aence, the doctrine in 'erfecto v, /eer and :ndencia vs, ;avid do not apply anymore, Justices and 0ud-es are not only the citi8ens &hose income has been reduced in acceptin- service in -overnment and yet sub0ect to income tax, uch is true also of Cabinet members and all other employees,

P&ov8n#" oA A%&a vs. ,"&nando G.R. No. L-3911-( A.9.s: 1'( '9)' FACTS+ The provincial assessor made a tax assessment on the properties of the %oman Catholic Bishop of Ban-ued, The bishop claims tax exemption from real estate tax based on the provisions of ection 1", para-raph (, Article ?$$ of the 19"( Constitution, Ae filed an action for declaratory relief, Jud-e Aernando of the C!$ Abra presided over the case, The petitioner province filed a motion to dismiss, based on lac> of 0urisdiction, &hich &as denied, $t &as follo&ed by a summary 0ud-ment -rantin- the exemption &ithout hearin- the side of the petitioner, The upreme Court -ranted the petition, set aside the June 19, 19"+ resolution, and ordered the respondent 0ud-e, or &hoever is actin- on his behalf, to hear the case on meritF &ithout costs, ISSUE+ 4hether or not the properties of the Bishop of Ban-ued are tax3exempt,

RULING+ The 19(# and the 19"( Constitutions differ in lan-ua-e as to the exemption of reli-ious property from taxes as they should not only be KexclusivelyL but also KactuallyL and KdirectlyL used for reli-ious purposes, Aerein, the 0ud-e accepted at its face the alle-ation of the Bishop instead of demonstratin- that there is compliance &ith the constitutional provision that allo&s an exemption, There &as an alle-ation of lac> of 0urisdiction and of lac> of cause of action, &hich should have compelled the 0ud-e to accord a hearin- to the province rather than decidin- the case immediately in favor of the Bishop, :xemption from taxation is not favored and is never presumed, so that if -ranted, it must be strictly construed a-ainst the taxpayer, There must be proof of the actual and direct use of the lands, buildin-s, and improvements for reli-ious Dor charitableE purposes to be exempted from taxation, The case &as remanded to the lo&er court for a trial on merits, Co$$8ss8on"& oA In:"&na4 R"v"n." vs. M8:s.%8s<8 M":a4 Co&7o&a:8on G.R. No. !39 ) and G.R. No. ) 3'( 0an.a&/ 22( '99 FACTS+

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/itsubishi /etal Corporation, a Japanese corporation licensed to do business in the 'hilippines, entered into a Boan and ale Contract &ith Atlas Consolidated /inin- and ;evelopment Coporation &hereby /itsubishi lent P2*,***,*** for the expansion of the latter5s mines, particularly the installation of a ne& concentrator for copper production, Atlas, in turn, undertoo> to sell to /itsubishi all of the copper concentrates produced by said machine for 1# years, !or this purpose, /itsubishi applied for and &as -ranted a loan by the :xport3 $mport Ban> of Japan D:ximban>E and a consortium of Japanese ban>s, As a-reed upon bet&een /itsubishi and Atlas, the latter -ave interest payments for 19") and 19"# amountin- to '1(,1)(,966,"9, &ith the correspondin- 1#1 tax thereon &ithheld and remitted to the <overnment as re2uired by the Tax Code, .n /arch #, 19"6, /itsubishi filed a claim for tax credit of the sum of '1,9"2,#9#,*1 representinthe tax &ithheld on the interest payment, That claim, not havin- been acted upon by the B$%, /itsubishi then filed a petition contendin- that /itsubishi &as a mere a-ent of :ximban>, a Japanese <overnment financin- institution &hich financed the loan, uch -overnmental status of :ximban> &as the basis of /itsubishi5s claim for exemption from payin- tax on the interest payments pursuant to ection 29 DbE D+E DAE Dno&, ection (2 GBHG"HGaH, 199" 9$%CE, The CTA -ranted the tax credit in favor of /itsubishi, &hich later executed a &aiver in favor of Atlas, ISSUE+ 4hether or not the interest income from the loans extended to Atlas by /itsubishi is excludible from -ross income taxation and thus exempt from &ithholdintax, RULING+ $t is settled that la&s -rantin- exemption from tax are construed strictissimi juris a-ainst the taxpayer and liberally in favor of the taxin- po&er, Taxation is the rule and exemption is the exception, The burden of proof rests upon the party claimin- exemption to prove that it is in fact covered by the exemption so claimed, &hich onus private respondents have failed to dischar-e, The taxability of a party cannot be blandly -lossed over on the basis of a supposed Kbroad, pra-matic analysisL alone &ithout substantial supportive evidence, lest -overnmental operations suffer due to diminution of much needed funds, Co$$8ss8on"& oA In:"&na4 R"v"n." vs Go:a$#o and Sons( In#. G.R. No. L-1' 92 F"%&.a&/ 2*( '9)* FACTS6 The 4orld Aealth .r-ani8ation D4A.E entered into a Aost A-reement &ith the %epublic of the 'hilippines &hich provides that 7the .r-ani8ation, its assets, income and other properties shall be exempt from all direct and indirect taxes, 4hen the 4A. decided to construct a buildin- to house its o&n offices in /anila, it entered into a further a-reement &ith the <overnment that it may import into the country materials and fixtures re2uired for the construction free from all duties and taxes, After invitin- bids, the contract &as a&arded to respondent John <otamco M ons, $nc, for the stipulated price of '("*,***,**, Thereafter, the Commissioner of $nternal %evenue sent a letter of demand to <otamco demandinpayment of '16,9"*,)*, representin- the (1 contractor=s tax plus surchar-es on the -ross receipts it received from the 4A. in the construction of the latter=s buildin-, %espondent <otamco appealed the Commissioner=s decision to the Court of Tax Appeals, &hich after trial rendered a decision, in favor of <otamco and reversed the Commissioner=s decision, Aence, petitioner brou-ht the case to the upreme Court, 'etitioner maintains the position that the contractor=s tax is a tax due primarily and directly on the contractor, not on the o&ner of the buildin-, ince this tax has no bearin- upon the 4A., it cannot be deemed an indirect taxation upon it, ISSUE6 4hether or not John <otamco M ons, $nc, should pay the (1 contractor=s tax under ection 191 of the 9ational $nternal %evenue Code, RULING6 9o, The upreme Court held that %espondent John <otamco and ons, $nc, is not re2uired to pay the (1 contractor5s tax under the 9ational $nternal %evenue Code, $t explained that direct taxes are those that are demanded from the very person &ho, it is intended or desired, should pay themF &hile indirect taxes are those that are demanded in the first instance from one person in the expectation and intention that he can shift the burden to someone else, The contractor=s tax is of course payable by the contractor but in the last analysis it is the o&ner of the buildin- that shoulders the burden of the tax because the same is shifted by the contractor to the o&ner as a matter of self3preservation, Thus, it is an indirect tax, And it is an indirect tax on the 4A. because, althou-h it is payable by the petitioner, the latter can shift its burden on the 4A., $t is the 4A. that &ill pay the tax indirectly throu-h the contractor and it certainly cannot be said that =this tax has no bearin- upon the 4orld Aealth .r-ani8ation, Accordin-ly, findin- no reversible error committed by the respondent Court of Tax Appeals, the upreme Court affirmed the appealed decision,

1's: InAan:&/ Pos: EB#<an9" vs. Posadas G.R. No. 113 1 S"7:"$%"& 3( '91

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FACTS6 'etitioner Thirty3first $nfantry 'ost :xchan-e is an a-ency &ithin the @nited tates Army, under the control of the officers of the Army, All of the -oods sold to and purchased by the petitioner are intended for resale to and are in fact resold to the officers, soldiers and the civilian employees of the Army, and their families, Juan 'osadas, Jr,, Collector of $nternal %evenue of the 'hilippine $slands, and his predecessors in that office, have collected from the merchants &ho made the sales of the commodities, -oods, &ares, and merchandise to the plaintiff :xchan-e, taxes at the rate of one and one3half per centum on the -ross value in money of the commodities, The effect of the demand and collection of taxes &as to increase the cost thereof to the plaintiff :xchan-e, Contendin- that the merchandises are exempted from taxes, petitioner brou-ht the case before the upreme Court, ISSUE6 4hether or not merchandise is relieved from said tax &hen it is sold to the Army or 9avy of the @nited tates for resale to individuals by means or throu-h the post exchan-es or ship=s stores RULING6 9o, The upreme Court ruled that merchandise is not exempted from taxes &hen it is sold to the Army of the @nited tates for resale, $t explained that althou-h The revenue la&s at that time provided that 7no specific tax shall be collected on any articles sold and delivered directly to the @nited tates Army or 9avy for actual use or issue by the Army or 9avy, and any taxes &hich have been paid on articles so sold and delivered for such use or issue shall be refunded upon such sale and delivery, the Court is not inclined to believe that -oods sold to the soldiers and sailors of the Army and 9avy, even thou-h they be sold throu-h said exchan-es by the intervention of officers of the Army and 9avy, are -oods sold directly to the @nited tates Army or 9avy for actual use or issue by the Army or 9avy, PLDT vs. C8:/ oA Davao G.R. No. '31)-* A.9.s: 22( 2

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FACTS6 'etitioner 'hilippine Bon- ;istance Telephone Co,, $nc, D'B;TE applied for a /ayor=s 'ermit to operate its ;avao /etro :xchan-e, Ao&ever, %espondent City of ;avao &ithheld action on the application pendin- payment by petitioner of the local franchise tax in the amount of '(,6+1,9+#,"2 for the first to the fourth 2uarter of 1999, 'etitioner protested the assessment of the local franchise tax and re2uested a refund of the franchise tax paid by it for the year 199" and the first to the third 2uarters of 199+, 'etitioner contended that it &as exempted from the payment of franchise tax based on an opinion of the Bureau of Bocal <overnment !inance DBB<!E citin- ection 2( of %A "92# &hich provides e2uality of treatment in the telecommunication industry, 9evertheless, respondent Adelaida B, Barcelona, City Treasurer of ;avao, denied the protest and claim for tax refund of petitioner, ISSUE6 4hether or not 'B;T is exempted to pay the local franchise tax, RULING6 9o, the upreme Court held that 'etitioner 'B;T is not exempted from the local franchise tax because it does not appear that, in approvin- Y2( of %,A, 9o, "92#, Con-ress intended it to operate as a blan>et tax exemption to all telecommunications entities, $t explained that the acceptance of petitioner=s theory &ould result in absurd conse2uences, $t is different if Con-ress enacts a la& specifically -rantinuniform advanta-es, favor, privile-e, exemption, or immunity to all telecommunications entities, !urthermore, the court emphasi8ed that tax exemptions are hi-hly disfavored,

S"a-Land S"&v8#"s( In#. vs. Co.&: oA A77"a4s G.R. No. '22- ! A7&84 1 ( 2 ' FACTS6 'etitioner ea3Band ervice $ncorporated D :A3BA9;E, an American international shippin- company licensed by the ecurities and :xchan-e Commission to do business in the 'hilippines entered into a contract &ith the @nited tates <overnment to transport military household -oods and effects of @, , military personnel assi-ned to the ubic 9aval Base, :A3BA9; filed &ith the Bureau of $nternal %evenue DB$%E the correspondin- corporate $ncome Tax %eturn D$T%E and paid the income tax due thereon of 1,#1 as re2uired in ection 2# DaED2E of the 9ational $nternal %evenue Code D9$%CE in relation to Article 9 of the %'3@ Tax Treaty, amountin- to '+"*,*9(,12, Claimin- that it paid the aforementioned income tax by mista>e, a &ritten claim for refund &as filed &ith the B$%, Ao&ever, before the said claim for refund could be acted upon by public respondent Commissioner of $nternal %evenue, petitioner filed a petition for revie& &ith the Court of Tax Appeals DCTAE to 0udicially pursue its claim for refund and to stop the runnin- of the t&o3year prescriptive period under

(+
the then ection 2)( of the 9$%C, The CTA rendered its decision denyinthe income tax it paid in 19+), :A3BA9;5s claim for refund of

ISSUE6 4hether or not the income that petitioner derived from services in transportin- the household -oods and effects of @, , military personnel falls &ithin the tax exemption provided in Article Q$$, para-raph ) of the %'3@ /ilitary Bases A-reement, RULING6 9o, The upreme Court held that the petitioner is not included in the tax exemption provided in the %'3@ /ilitary Bases A-reement, $t explained that althou-h the /ilitary Bases a-reement provides that no @ national shall be liable to pay income tax in the 'hilippines in respect of any profits derived under a contract made in the @nited tates &ith the -overnment of the @nited tates in connection &ith the construction, maintenance, operation and defense of the bases it is obvious that the transport or shipment of household -oods and effects of @, , military personnel is not included in the term 7construction, maintenance, operation and defense of the bases,7 9either could the performance of this service to the @, , -overnment be interpreted as directly related to the defense and security of the 'hilippine territories,

MANILA ELECTRIC COMPANY VS. PROVINCE OF LAGUNA G.R. No. '1'1!9. Ma/ !( '999 FACTS+ 'rovince of Ba-una by virtue of existin- la&s then in effect, issued resolutions throu-h their respective municipal councils -rantin- franchise in favor of petitioner /anila :lectric Company DK/:%ABC.LE for the supply of electric li-ht, heat and po&er &ithin their concerned areas, .n 19 January 19+(, /:%ABC. &as li>e&ise -ranted a franchise by the 9ational :lectrification Administration to operate an electric li-ht and po&er service in the /unicipality of Calamba, Ba-una, .n 12 eptember 1991, KBocal <overnment Code of 1991,L &as enacted en0oinin-Ddirectin-E local -overnment units to create their o&n sources of revenue and to levy taxes, fees and char-es, sub0ect to the limitations expressed therein, consistent &ith the basic policy of local autonomy, 'ursuant to the provisions of the Code, respondent province enacted Ba-una 'rovincial .rdinance 9o, *1392, %espondent 'rovincial Treasurer sent a demand letter to /:%ABC. for the correspondin- tax payment, 'etitioner /:%ABC. paid the tax, &hich then amounted to '19,#2*,62+,)2, under protest, A formal claim for refund &as thereafter sent by /:%ABC. to the 'rovincial Treasurer of Ba-una claiminthat the franchise tax it had paid and continued to pay to the 9ational <overnment pursuant to ',;, ##1 already included the franchise tax imposed by the 'rovincial Tax .rdinance, /:%ABC. contended that the imposition of a franchise tax under ection 2,*9 of Ba-una 'rovincial .rdinance 9o, *1392, insofar as it concerned /:%ABC., contravened the provisions of ection 1 of ',;, ##1, ISSUE+ 4hether or not the tax exemption should be &ithdra&n to -ive &ay to the authoritative lan-ua-e of the Bocal <overnment Code specifically providin- for the &ithdra&al of such exemption &ithout violatinthe Constitutiion, RULING+ Ies, Truly, tax exemptions of this >ind may not be revo>ed &ithout impairin- the obli-ations of contracts, These contractual tax exemptions, ho&ever, are not to be confused &ith tax exemptions -ranted under franchises, A franchise parta>es the nature of a -rant &hich is beyond the purvie& of the non3impairment clause of the Constitution, $ndeed, Article Q$$, ection 11, of the 19+" Constitution, li>e its precursor provisions in the 19(# and the 19"( Constitutions, is explicit that no franchise for the operation of a public utility shall be -ranted except under the condition that such privile-e shall be sub0ect to amendment, alteration or repeal by Con-ress as and &hen the common -ood so re2uires, TIU VS. COURT OF APPEALS G.R. NO. '2*3' . 0ANUARY 2 ( '999 FACTS+ Con-ress passed into la& %A "22", ection 12 thereof created the ubic pecial :conomic Sone and -ranted thereto special privile-es,The 'resident issued :xecutive .rder 9o, 9"3A D:. 9"3AE, specifyinthe area &ithin &hich the tax3and3duty3free privile-e &as operative, .n .ctober 26, 199), the petitioners challen-ed before this Court the constitutionality of :. 9"3A for alle-edly bein- violative of their ri-ht to e2ual protection of the la&s, $n a %esolution dated June 2", 199#, this Court referred the matter to the Court of Appeals, pursuant to %evised Administrative Circular 9o, 139#, 'etitioners contend that the :S encompasses D1E the City of .lon-apo, D2E the /unicipality of ubic in Sambales, and D(E the area formerly occupied by the ubic 9aval Base, Ao&ever, :. 9"3A, accordin- to them, narro&ed do&n the area &ithin &hich the special privile-es -ranted to the entire 8one &ould apply to the present Kfenced3in former ubic 9aval BaseL only, $t has thereby excluded the residents of the first t&o components of the 8one from en0oyin- the benefits -ranted by the la&, $t has

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effectively discriminated a-ainst them, &ithout reasonable or valid standards, in contravention of the e2ual protection -uarantee, ISSUE+ 4hether the provisions of :xecutive .rder 9o, 9"3A confinin- the application of %,A, "22" -rantintax and duty incentives only to businesses and residents &ithin the secured area and excludin- the residents of the 8one outside of the secured area is discriminatory or not, RULING+ 9o, 4e rule in favor of the constitutionality and validity of the assailed :., aid .rder is not violative of the e2ual protection clauseF neither is it discriminatory, %ather, &e find real and substantive distinctions bet&een the circumstances obtainin- inside and those outside the ubic 9aval Base, thereby 0ustifyin- a valid and reasonable classification, There are substantial differences bet&een the bi- investors &ho are bein- lured to establish and operate their industries in the so3called Ksecured areaL and the present business operators outside the area, .n the one hand, &e are tal>in- of billion3peso investments and thousands of new 0obs, .n the other hand, definitely none of such ma-nitude, $n the first, the economic impact &ill be nationalF in the second, only local, :ven more important, at this time the business activities outside the Ksecured areaL are not li>ely to have any impact in achievin- the purpose of the la&, &hich is to turn the former military base to productive use for the benefit of the 'hilippine economy, There is, then, hardly any reasonable basis to extend to them the benefits and incentives accorded in %A "22", MACTAN CEBU INTERNATIONAL AIRPORT VS. MARCOS G.R. No. '2 )2. S"7:"$%"& ''( '99FACTS+ 'etitioner /actan Cebu $nternational Airport Authority D/C$AAE &as created by virtue of %epublic Act 9o, 69#+, mandated to Kprincipally underta>e the economical, efficient and effective control, mana-ement and supervision of the /actan $nternational Airport in the 'rovince of Cebu and the BahuAirport in Cebu City, x x x and such other airports as may be established in the 'rovince of Cebu x x xL D ec, (, %A 69#+E, ince the time of its creation, petitioner /C$AA en0oyed the privile-e of exemption from payment of realty taxes in accordance &ith ection 1) of its Charter .n .ctober 11, 199), ho&ever, /r, :usta2uio B, Cesa, .fficer3in3Char-e, .ffice of the Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of land belon-in- to the petitioner, 'etitioner ob0ected to such demand for payment as baseless and un0ustified, claimin- in its favor the aforecited ection 1) of %A 69#+ &hich exempts it from payment of realty taxes, $t &as also asserted that it is an instrumentality of the -overnment performin- -overnmental functions, citin- ection 1(( of the Bocal <overnment Code of 1991 &hich puts limitations on the taxin- po&ers of local -overnment units, ISSUE+ Can the City of Cebu demand payment of realty taxes on several parcels of land belon-in- to the petitionerO RULING+ Ies, ince the last para-raph of ection 2() une2uivocally &ithdre&, upon the effectivity of the B<C, exemptions from payment of real property taxes -ranted to natural or 0uridical persons, includin-overnment3o&ned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a -overnment3o&ned corporation, it necessarily follo&s that its exemption from such tax -ranted it in ection 1) of its Charter, %,A, 9o, 69#+, has been &ithdra&n, COMMISSIONER OF INTERNAL REVENUE vs.FRAN2 ROBERTSON G.R. Nos. * ''--'9. A.9.s: '2( '9)FACTS+ The 2uestion involvin- this case is the scope of the tax exemption provision in Article Q$$, 'ar, 2, of the %'3@ /ilitary Bases A-reement of 19)", The private respondents are citi8ens of the @nited tatesF holders of American passports and admitted as pecial Temporary ?isitors under ection 9 DaE visa of the 'hilippine $mmi-ration Act of 19)*, as amendedF civilian employees in the @, , /ilitary Base in the 'hilippines in connection &ith its construction, maintenance, operation, and defenseF and incomes are solely derived from salaries from the @, , -overnment by reason of their employment in the @, , Bases in the 'hilippines,7 The Court a quo after due hearin-, rendered its 0ud-ment in favor of respondents cancellin- and settin- aside the assessments for deficiency income taxes of respondents for the taxable years 1969319"2, inclusive of interests and penalties, ISSUE+ 4hether or not the public respondent erred in holdin- that private respondents are exempted from payin- 'hilippine income tax, RULING+

)*
The la& and the facts of the case are so clear that there is no room left for @s to doubt the validity of private respondents= defense, $n order to avail oneself of the tax exemption under the %'3@ /ilitary Bases A-reement6 he must be a national of the @nited tates employed in connection &ith the construction, maintenance, operation or defense, of the bases, residin- in the 'hilippines by reason of such employment, and the income derived is from the @, , <overnment DArt, Q$$ par, 2 of '$3@ /ilitary Bases A-reement of 19)"E, aid circumstances are all present in the case at bar, Bi>e&ise, 4e find no 0ustifiable reason to disturb the findin-s and rulin-s of the lo&er court in its decision, Bas#o vs PAGCOR G.R. No. 9'-39. Ma/ '3( '99' FACTS+ .n July 11, 19+(, 'A<C.% &as created under ',;, 1+69 to enable the <overnment to re-ulate and centrali8e all -ames of chance authori8ed by existin- franchise or permitted by la&, To attain these ob0ectives 'A<C.% is -iven territorial 0urisdiction all over the 'hilippines, @nder its Charter=s repealinclause, all la&s, decrees, executive orders, rules and re-ulations, inconsistent there&ith, are accordin-ly repealed, amended or modified, But petitioners contend that ',;, 1+69 constitutes a &aiver of the ri-ht of the City of /anila to impose taxes and le-al feesF that the exemption clause in ',;, 1+69 is violative of the principle of local autonomy, They must be referrin- to ection 1( par, D2E of ',;, 1+69 &hich exempts 'A<C.%, as the franchise holder from payin- any 7tax of any >ind or form, income or other&ise, as &ell as fees, char-es or levies of &hatever nature, &hether 9ational or Bocal,7 ISSUE+ 4hether or not ',;, 1+69 constitutes a &aiver of the ri-ht of the city of /anila to impose taxes and le-al fees to 'A<C.%, RULING+ The City of /anila, bein- a mere /unicipal corporation has no inherent ri-ht to impose taxes, Thus, 7the Charter or statute must plainly sho& an intent to confer that po&er or the municipality cannot assume it7, $ts 7po&er to tax7 therefore must al&ays yield to a le-islative act &hich is superior havin- been passed upon by the state itself &hich has the 7inherent po&er to tax7, The Charter of the City of /anila is sub0ect to control by Con-ress, R"7.%48# vs IAC G.R. No. L--9133. A7&84 2-( '99' FACTS+ .n April 1#, 19+*, the %epublic of the 'hilippines, throu-h the Bureau of $nternal %evenue, commenced an action to collect from the spouses Antonio 'astor and Clara %eyes3'astor deficiency income taxes for the years 19## to 19#9, The 'astors filed a motion to dismiss the complaint, but the motion &as denied, .n Au-ust 2, 19"#, they filed an ans&er admittin- there &as an assessment a-ainst them of '1",11",*+ for income tax deficiency but denyin- liability therefor, They contended that they had availed of the tax amnesty under ',;,=s 9os, 2(, 21( and ("* and had paid the correspondin- amnesty taxes amountin- to '1*,)** or 1*1 of their reported untaxed income under ',;, 2(, '2,9#1,2* or 2*1 of the reported untaxed income under ',;, 21(, and a final payment on .ctober 26, 19"( under ',;, ("* evidenced by the <overnment=s .fficial %eceipt 9o, 1*#2(++, Conse2uently, the <overnment is in estoppel to demand and compel further payment of income taxes by them, ISSUE+ 4hether or not the payment of deficiency income tax under the tax amnesty and its acceptance by the <overnment operated to divest the <overnment of the ri-ht to further recover from the taxpayer, even if there &as an existin- assessment a-ainst the latter at the time he paid the amnesty tax, RULING+ :ven assumin- that the deficiency tax assessment of '1",11",*+ a-ainst the 'astor spouses &ere correct, since the latter have already paid almost the e2uivalent amount to the <overnment by &ay of amnesty taxes under ',;, 9o, 21(, and &ere -ranted not merely an exemption, but an amnesty, for their past tax failin-s, the <overnment is estopped from collectin- the difference bet&een the deficiency tax assessment and the amount already paid by them as amnesty tax, A tax amnesty, bein- a -eneral pardon or intentional overloo>in- by the tate of its authority to impose penalties on persons other&ise -uilty of evasion or violation of a revenue or tax la&, parta>es of an absolute for-iveness or &aiver by the <overnment of its ri-ht to collect &hat other&ise &ould be due it, and in this sense, pre0udicial thereto, particularly to -ive tax evaders, &ho &ish to relent and are &illin- to reform a chance to do so and thereby become a part of the ne& society &ith a clean slate,

Co$$8ss8on"& oA In:"&na4 R"v"n." vs CA

)1
G.R. No. ' )1!). 0an.a&/ 2 ( '99! FACTS+ .n 22 Au-ust 19+6, :,., )1 &as promul-ated declarin- a one3time tax amnesty on unpaid income taxes, later amended to include estate and donor=s taxes and taxes on business, for the taxable years 19+1 to 19+#, Availin- itself of the amnesty, respondent %,.,A, Auto 'roducts 'hilippines, $nc,, filed, in .ctober 19+6 and 9ovember 19+6, its Tax Amnesty %eturn and upplemental Tax Amnesty %eturn, respectively, and paid the correspondin- amnesty taxes due, 'rior to this availment, petitioner Commissioner of $nternal %evenue, in a communication received by private respondent on 1( Au-ust 19+6, assessed the latter deficiency income and business taxes for its fiscal years ended (* eptember 19+1 and (* eptember 19+2 in an a--re-ate amount of '1,)1*,1#","1, The taxpayer &rote bac> to state that since it had been able to avail itself of the tax amnesty, the deficiency tax notice should forth&ith be cancelled and &ithdra&n, The re2uest &as denied by the Commissioner, on the -round that %evenue /emorandum .rder )3+", implementin- :,., )1, had construed the amnesty covera-e to include only assessments issued by the Bureau of $nternal %evenue after the promul-ation of the executive order on 22 Au-ust 19+6 and not to assessments theretofore made, ISSUE+ 4hether or not the position ta>en by the Commissioner coincides &ith the meanin- and intent of :,., )1, RULING+ The period of the amnesty &as later extended to *# ;ecember 19+6 from (1 .ctober 19+6 by :,., #), dated *) 9ovember 19+6, and, its covera-e expanded, under :,., 6), dated 1" 9ovember 19+6, to include estate and honors taxes and taxes on business, $f, as the Commissioner ar-ues, :,., )1 had not been intended to include 19+1319+# tax liabilities already assessed DadministrativelyE prior to 22 Au-ust 19+6, the la& could have simply so provided in its exclusionary clauses, $t did not, The conclusion is unavoidable, and it is that the executive order has been desi-ned to be in the nature of a -eneral -rant of tax amnesty sub0ect only to the cases specifically excepted by it, ,84ado vs Co44"#:o& oA In:"&na4 R"v"n." GR L-93 ). O#:o%"& 1'( '9!FACTS+ :milio Ailado filed his income tax return for 19#1 &ith the treasurer of Bacolod City, Ae is claimina deductible item of '12,+(",6# from his -ross income under the <eneral Circular ?312( issued by the Collector of $nternal %evenue, ubse2uently, the ecretary of !inance, throu-h the Collector, issued <eneral Circular ?31(9 &hich revo>ed and declared void Circular ?312(, $t provided that losses of property &hich occurred in 4orld 4ar $$ from fires, storms, ship&rec> or other casualty, or from robbery, theft, or embe88lement are deductible in the year of actual loss or destruction of said property, Thereafter, the deductions &ere disallo&ed, ISSUE+ 4hether or not Ailado can claim compensation for destruction of his property durin- the &ar under the la&s in effect at that time, RULING+ 'hilippines $nternal %evenue Ba&s are not political in nature and as such &ere continued in force durin- the period of enemy occupation and in effect &ere actually enforced by the occupation -overnment, uch tax la&s are deemed to be la&s of the occupied territory and not of the occupyinenemy, As of the end of 19)#, there &as no la& &hich Ailado could claim for the destruction of his properties durin- the battle for the liberation of the 'hilippines, @nder the 'hilippine %ehabilitation Act of 19)+, the payment of claims by the 4ar ;ama-e Commission depended upon its discretions non3payment of &hich does not -ive rise to any enforceable ri-ht, Assumin- that the loss Ddeductible itemE represents a portion of the "#1 of his &ar dama-e claim, the amount &ould be at most a proper deduction of his 19#* -ross income Dnot on his 19#1 -ross incomeE as the last installment and notice of discontinuation of payment by the 4ar ;ama-e Commission &as made in 19#*, M8sa$8s O&8"n:a4 Asso#8a:8on oA Co#o T&ad"&s( 8n#. vs. D"7a&:$"n: oA F8nan#" S"#&":a&/ G.R. No. ' )!23. Nov"$%"& ' ( '993 FACTS+ 'etitioner /isamis .riental Association of Coco Traders, $nc, is a domestic corporation &hose members, individually or collectively, are en-a-ed in the buyin- and sellin- of copra in /isamis .riental, The petitioner alle-es that prior to the issuance of %evenue /emorandum Circular )"391 on June 11, 1991, &hich implemented ?AT %ulin- 19*39*, copra &as classified as a-ricultural food product under P 1*(DbE of

)2
the 9ational $nternal %evenue Code and, therefore, exempt from ?AT at all sta-es of production or distribution, @nder ec, 1*(DbE of the 9$%C, the sale of a-ricultural food products in their ori-inal state is exempt from ?AT at all sta-es of production or distribution, The reclassification had the effect of denyinto the petitioner the exemption it previously en0oyed &hen copra &as classified as an a-ricultural food product under Y1*(DbE of the 9$%C, 'etitioner challen-es %/C 9o, )"391 on various -rounds, ISSUE+ 4hether %/C 9o, )"391 is discriminatory and violative of the e2ual protection clause of the Constitution, RULING+ The court ruled in the ne-ative, 'etitioner claims that %/C 9o, )"391 is violative of the e2ual protection clause because &hile coconut farmers and copra producers are exempt, traders and dealers are not, althou-h both sell copra in its ori-inal state, 'etitioners add that oil millers do not en0oy tax credit out of the ?AT payment of traders and dealers, The ar-ument has no merit, There is a material or substantial difference bet&een coconut farmers and copra producers, on the one hand, and copra traders and dealers, on the other, The former produce and sell copra, the latter merely sell copra, The Constitution does not forbid the differential treatment of persons so lon- as there is a reasonable basis for classifyin- them differently, $t is not true that oil millers are exempt from ?AT, 'ursuant to Y 1*2 of the 9$%C, they are sub0ect to 1*1 ?AT on the sale of services, Co$$8ss8on"& oA In:"&na4 R"v"n." vs. Co.&: oA A77"a4s and A4<a$%&a Ind.s:&8"s( In#. G.R. No. ''*9)2. F"%&.a&/ -( '99* FACTS+ Alhambra $ndustries, $nc, is a domestic corporation en-a-ed in the manufacture and sale of ci-ar and ci-arette products, .n " /ay 1991 private respondent received a letter dated 26 April 1991 from the Commissioner of $nternal %evenue assessin- it deficiency Ad ?alorem Tax DA?TE in the amount ' )++,(96,62, 'rivate respondent filed a protest a-ainst the proposed assessment &ith a re2uest that the same be &ithdra&n and cancelled, 'etitioner denied such protest, The dispute arose from the discrepancy in the taxable base on &hich the excise tax is to apply on account of t&o incon-ruous B$% %ulin-s6 D1E B$% %ulin- )"(3++ dated ) .ctober 19++ &hich excluded the ?AT from the tax base in computin- the fifteen percent D1#1E excise tax dueF and, D2E B$% %ulin- *1"391 dated 11 !ebruary 1991 &hich included bac> the ?AT in computin- the tax base for purposes of the fifteen percent D1#1E ad valorem tax, ISSUE+ 4hether ec, 1)2 DdE of the Tax Code, &hich provides for the inclusion of the ?AT in the tax base for purposes of computin- the 1#1 ad valorem tax, is the applicable la& in the instant case as it specifically applies to the manufacturer=s &holesale price of ci-ar and ci-arette products and not ec, 12" DbE of the Tax Code &hich applies in -eneral to the &holesale of -oods or domestic products, RULING+ ec, 1)2 bein- a specific provision applicable to ci-ar and ci-arettes must prevail over ec, 12" DbE, a -eneral provision of la& insofar as the imposition of the ad valorem tax on ci-ar and ci-arettes is concerned, Conse2uently, the application of ec, 12" DbE to the &holesale price of ci-ar and ci-arette products for purposes of computin- the ad valorem tax is patently erroneous, Accordin-ly, B$% %ulin)"(3++ is void ab initio as it contravenes the express provisions of ec, 1)2 DdE of the Tax Code, Ao&ever, &ell3entrenched is the rule that rulin-s and circulars, rules and re-ulations promul-ated by the Commissioner of $nternal %evenue &ould have no retroactive application if to so apply them &ould be pre0udicial to the taxpayers, The B$% is no& ordered to refund private respondent of the collected taxes form the latter,

Co$$8ss8on"& oA In:"&na4 R"v"n." vs. L8n9a/"n G.4A E4"#:&8# Po@"& Co.( In# G.R. No. L-21**'. A.9.s: 3( '9)) FACTS+ The respondent taxpayer, Bin-ayen <ulf :lectric 'o&er Co,, $nc,, operates an electric po&er plant servin- the ad0oinin- municipalities of Bin-ayen and Binmaley, both in the province of 'an-asinan, pursuant to the municipal franchise -ranted it by their respective municipal councils, .n 9ovember 21, 19##, the Bureau of $nternal %evenue DB$%E assessed a-ainst and demanded from the private respondent the total amount of '19,29(,)1 representin- deficiency franchise taxes and surchar-es for the years 19)6 to 19#) applyin- the franchise tax rate of #1 on -ross receipts, The private respondent re2uested for a reinvesti-ation of the case on the -round that instead of incurrin- a deficiency liability, it made an overpayment of the franchise tax, $n its letters dated July 2, and Au-ust 9, 19#+ to the petitioner Commissioner, the private respondent protested the said assessment and re2uested for a conference &ith a vie& to settlin- the liability amicably, $n his letters dated July 2# and Au-ust 2+, 19#+, the Commissioner denied the re2uest of the private respondent, Thus, the appeal to the respondent Court

)(
of Tax Appeals, 'endin- the hearin- of the said cases, %epublic Act D%,A,E 9o, (+)( &as passed on June 22, 1 96(, -rantin- to the private respondent a le-islative franchise for the operation of the electric li-ht, heat, and po&er system in the same municipalities of 'an-asinan and comes &ith it a tax e2ual to t&o per centum of the -ross receipts from electric current sold or supplied under this franchise, ISSUES+ D1E 4hether or not the #1 franchise tax prescribed in ection 2#9 of the 9ational $nternal %evenue Code assessed a-ainst the private respondent on its -ross receipts reali8ed before the effectivity of %,A3 9o, (+)( is collectible, D2E 4hether or not the respondent taxpayer is liable for the fixed and deficiency percenta-e taxes in the amount of '(,*2#,96 for the period before the approval of its municipal franchises, RULING+ %,A, 9o, (+)( provided that the private respondent should pay only a 21 franchise tax on its -ross receipts, 7in lieu of any and all taxes andCor licenses of any >ind, nature or description levied, established, or collected by any authority &hatsoever, municipal, provincial, or national, no& or in the future ,,, and effective further upon the date the original franchise was granted, no other tax andCor licenses other than the franchise tax of t&o per centum on the -ross receipts ,,, shall be collected, any provision of la& to the contrary not&ithstandin-,7 Thus, by virtue of %,A3 9o, (+)(, the private respondent &as liable to pay only the 21 franchise tax, effective from the date the ori-inal municipal franchise &as -ranted, As to the second issue, the le-islative franchise D%,A, 9o, (+)(E exempted the -rantee from all >inds of taxes other than the 21 tax from the date the original franchise was granted , The exemption, therefore, did not cover the period before the franchise &as -ranted, i,e, before !ebruary 2), 19)+, Ao&ever, as pointed out by the respondent court in its findin-s, durin- the period covered by the instant case, that is from January 1, 19)6 to ;ecember (1, 1961, the private respondent paid the amount of '(),1+),(6, &hich &as very much more than the amount ri-htfully due from it, Aence, the private respondent should no lon-er be made to pay for the deficiency tax in the amount of '(,*2#,9+ for the period from January 1, 19)6 to !ebruary 29, 19)+, ABS-CBN B&oad#as:8n9 Co&7. vs. Co.&: oA TaB A77"a4s G.R. No. L-!21 -. O#:o%"& '2( '9)' FACTS+ ;urin- the period pertinent to this case, petitioner corporation &as en-a-ed in the business of telecastin- local as &ell as forei-n films ac2uired from forei-n corporations not en-a-ed in trade or business &ithin the 'hilippines for &hich petitioner paid rentals after &ithholdin- income tax of (*1of one3 half of the film rentals, $n implementin- ection )DbE of the Tax Code, the Commissioner issued <eneral Circular ?3((), 'ursuant thereto, AB 3CB9 Broadcastin- Corp, dutifully &ithheld and turned over to the B$% (*1 of Z of the film rentals paid by it to forei-n corporations not en-a-ed in trade or business in the 'hilippines, The last year that the company &ithheld taxes pursuant to the Circular &as in 196+, .n 2" June 19*+, %A #)(1 amended ection 2) DbE of the Tax Code increasin- the tax rate from (*1 to (#1 and revisin- the tax basis from Ksuch amountL referrin- to rents, etc, to K-ross income,L $n 19"1, the Commissioner issued a letter of assessment and demand for deficiency &ithholdin- income tax for years 196# to 196+, The company re2uested for reconsiderationF &here the Commissioner did not act upon, ISSUES+ 4hether %evenue /emorandum Circular )3"1, revo>in- <eneral Circular ?3((), may be retroactively applied, RULING+ %ulin-s or circulars promul-ated by the Commissioner have no retroactive application &here to so apply them &ould be pre0udicial to taxpayers, Aerein ,the pre0udice the company of the retroactive application of /emorandum Circular )3"1 is beyond 2uestion, $t &as issued only in 19"1, or three years after 196+, the last year that petitioner had &ithheld taxes under <eneral Circular 9o, ?3((), The assessment and demand on petitioner to pay deficiency &ithholdin- income tax &as also made three years after 196+ for a period of time commencin- in 196#, The company &as no lon-er in a position to &ithhold taxes due from forei-n corporations because it had already remitted all film rentals and had no lon-er control over them &hen the ne& circular &as issued, $nsofar as the enumerated exceptions are concerned, the company does not fall under any of them, P<848778n" BanD oA Co$$"&#" >PB#o$? v. Co$$8ss8on"& oA In:"&na4 R"v"n." >CIR? G.R. No. ''2 23. 0an.a&/ 2)( '999 FACTS6 'etitioner 'Bcom paid its 2uarterly income tax for the first and second 2uarters of 19+# totallin- to 'hp#, *16,9#),**, ubse2uently, 'Bcom suffered losses so that &hen it filed its Annual $ncome Tax for the year3 ended ;ecember (1, 19+6, it reported a net loss and declared no tax payable for the year, 'etitioner also earned rental income for both 19+# and 19+6 and the correspondin- tax thereof &as &ith held and remitted by the lessees to the B$%, .n Au-ust ", 19+" or after more than t&o years from payment of taxes, 'Bcom filed for a tax refund, 'endin- investi-ation of the B$%, petitioner filed a petition for revie& &ith the Court of Tax Appeals, The

))
CTA denied the tax refund on the -round that application for refund must be made &ithin t&o years from the payment of tax as provided by the 9ational $nternal %evenue Code, 'etitioner contended that the t&o year period has been chan-ed to ten years upon a memorandum issued by the Commissioner of $nternal %evenue, The Court of Appeal affirmed in toto the rulin- of the CTA, ISSUE6 ;id the CTA erred in denyin- the plea for tax refund on the -round of prescriptionO RULING6 9o, The relaxation of revenue re-ulation by a memorandum issued by the B$% is not &arranted as it disre-ards the t&o year period set by la&, ection 2(* of the 9ational $nternal %evenue Code of 19"" provides for the t&o year period for filin- a claim for refund or credit, 4hen the Actin- Commissioner of $nternal %evenue issued a memorandum chan-in- the prescriptive period of t&o years to ten years, such circular created a clear inconsistency &ith the provision of ection 2(* of 9$%C, $n so doin-, the B$% did not simply interpret the la&, rather it le-islated -uidelines contrary to the statute passed by the con-ress, Co$$8ss8on"& oA In:"&na4 R"v"n." v. ToD/o S<8778n9 Co.LTD G.R. No. L--)2!2. Ma/ 2-( '99! FACTS6 'rivate %espondent is a forei-n corporation represented in the 'hilippines by oriamont teamship A-encies, $ncorporated, $t o&ns and operates tramper vessel /C? <ardenia, 9asutra chartered /C? <ardenia to load ra& su-ar in the 'hilippines, oriamont A-ency paid the re2uired income and common carrier taxes for its transaction &ith 9asutra, Ao&ever, upon arrival, the vessel found no su-ar for loadin-, 'rivate respondent, therefore, filed a claim for tax credit before the petitioner Commissioner of $nternal %evenue for erroneous payment, ;ue to the failure of petitioner to act promptly on the matter, private respondent filed a petition for revie& before the Court of Tax Appeals DCTAE &hich favoured the tax credit, 'etitioner filed a motion for reconsideration, but it &as denied by the CTA, hence this petition contendin- that private respondent has the burden of proof to support its claim of refund, that it failed to prove that it did not reali8e any receipt from its charter a-reement and it suppressed evidence &hen it did not present its charter a-reement, ISSUE6 4hether or not private respondent failed to prove that it derived no receipt from its charter a-reement, hence, not entitled to a refund, RULING6 4e find no merit in the petition, The respondent Court of Tax Appeals held that sufficient evidence has been adduced by private respondent provin- that it derived no receipt from its charter a-reement &ith 9asutra, The Clearance ?essel to a !orei-n 'ort issued by the ;istrict Collector of Customs support such findin-, /oreover, the B$% examiner and its appellate division both recommended the approval of private respondent5s claim of tax refund, R"/"s v. A4$onEo& G.R. Nos. L-39)19 F 3-. A7&84 2-( '99' FACTS6 The 9ational le-islature enacted %,A, 6(#9 &hich prohibits an increase in monthly rentals of d&ellin- unit or land on &hich another5s d&ellin- is located, &here the rental does not exceed 'hp(**,**, The act also suspended article 16"( of the Civil Code thereby disallo&in- e0ectment of lessees, These prohibitions &ere made absolute by the filin- of 'residential ;ecree 2*, Conse2uently, petitioners herein are precluded from increasin- monthly rentals and in e0ectin- the lessees, The respondent city assessor of /anila reassessed the value of the petitioners5 properties based on the scheduled mar>et value thereof, This entailed an increase in the tax rates promptin- petitioners to file a /emorandum of ;isa-reement &ith the Board of Tax Assessment Appeals averrin- that the reassessment &as excessive, un&arranted, ine2uitable, confiscatory and unconstitutional considerin- that the tax imposed upon them is -reater than the annual income derived from the property, They also ar-ued that the income approach should have been used in determinin- the land values instead of the comparable sales approach, The Board of tax Assessment Appeals considered the assessment valid and the same &as affirmed by the Central Board of Assessment appeals, hence this petition, ISSUE6 ;id the board err in adoptin- the comparable sales approach in fixin- the assessed value of the propertiesO RULING6 The petition is impressed &ith merit,

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$t is un2uestionable that both the Comparable ales Approach and the $ncome Approach -enerally acceptable methods of appraisal for taxation purposes, Ao&ever, it is conceded that proprietary of one, as a-ainst the other &ould depend on several factors, Aence, as early as 192(, it been stressed that the assessors , in findin- the value of the property, have to consider all circumstances and elements of value and must exercise a prudent discretion in reachin- conclusions, are the has the

Co$$8ss8on"& oA In:"&na4 R"v"n." v. A49."( In#.( and :<" Co.&: oA TaB A77"a4s G.R. No. L F 2))9-. F"%&.a&/ '*( '9)) FACTS6 .n January 1), 196#, the private respondent, a domestic corporation en-a-ed in en-ineerin-, construction and other allied activities, received a letter from the petitioner assessin- it a delin2uency income tax for the year 19#+ and 19#9, After four days from its receipt, Al-ue filed a letter of protest &hich &as stamped and received by the petitioner, ;espite the protest, private respondent received a &arrant of distraint and levy, Al-ue refused to receive it on the -round of pendin- protest until it &as finally informed that the B$% &as not ta>in- any action on the protest, $t therefore filed a petition for revie& of the decision of the Commissioner of $nternal %evenue DC$%E &ith the Court of Tax Appeals, The CTA ruled in favour of Al-ue holdin- that the 'hp"#, ***,** in dispute shall be considered as deductible from income it bein- in the form of promotional expense and contrary to petitioner5s contention that it &as not an ordinary and reasonable business expense, ISSUE6 ;id the Collector of $nternal %evenue correctly disallo& the deduction claimed by private respondent Al-ue as le-itimate business expense in its $ncome Tax %eturnO RULING6 4e a-ree &ith respondent court that the amount of promotional fee &as not excessive and &as reasonable, hence, allo&in- the deduction of the disputed amount in the $ncome Tax %eturn of private respondent, The findin- of respondent court is in accordance &ith the provision of the Tax Code on deductions from -ross income, The solicitor -eneral is correct in sayin- that the burden to prove the validity of claimed deduction is on the tax payer, The private respondent has proved this, The amount in dispute &as necessary and reasonable in the li-ht of the efforts of the respondent corporation to induce investors, ENGRACIO FRANCIA vs, INTERMEDIATE APPELLATE COURT G.R. No. L--*-39( 0.n" 2)( '9)) FACTS+ :n-racio !rancia is the re-istered o&ner of a residential lot and a t&o3story house located in 'asay City, .n .ctober 1#, 19"", a 12# s2uare meter portion of !rancia=s property &as expropriated by the %epublic for the sum of '),116,**, ince 196( up to 19"" inclusive, !rancia failed to pay his real estate taxes, Thus, on ;ecember #, 19"", his property &as sold at public auction pursuant the %eal 'roperty Tax Code in order to satisfy a tax delin2uency of '2,)**,**, Ao !ernande8 &as the hi-hest bidder for the property, !rancia &as not present durin- the auction sale since he &as in $li-an City at that time helpinhis uncle ship bananas, .n /arch (, 19"9, !rancia received a notice of hearin- K$n re6 'etition for :ntry of 9e& Certificate of Title7 filed by Ao !ernande8, see>in- the cancellation of TCT and the issuance in his name of a ne& certificate of title, @pon verification throu-h his la&yer, !rancia discovered that a !inal Bill of ale had been issued in favor of Ao !ernande8 by the City Treasurer on ;ecember 11, 19"+, The auction sale and the final bill of sale &ere both annotated at the bac> of TCT 9o, )"(9 D(""9#E by the %e-ister of ;eeds, .n /arch 2*, 19"9, !rancia filed a complaint to annul the auction sale, Thelo&er court rendered a decision a-ainst his favor, The $ntermediate Appellate Court affirmed the decision of the lo&er court in toto. Aence, this petition for revie&, ISSUE+ 4hether or not the contention of !rancia that his tax delin2uency of '2,)**,** has been extin-uished by le-al compensation is correct claimin- that the -overnment o&ed him '),116,** &hen a portion of his land &as expropriated on .ctober 1#, 19"", RULING+ This principal contention of the petitioner has no merit, 4e have consistently ruled that there can be no off3settin- of taxes a-ainst the claims that the taxpayer may have a-ainst the -overnment, A person cannot refuse to pay a tax on the -round that the -overnment o&es him an amount e2ual to or -reater than the tax bein- collected, The collection of a tax cannot a&ait the results of a la&suit a-ainst the -overnment, A claim for taxes is not such a debt, demand, contract or 0ud-ment as is allo&ed to be set3off under the statutes of set3off, &hich are construed uniformly, in the li-ht of public policy, to exclude the remedy in an action or any indebtedness of the state or municipality to one &ho is liable to the state or

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municipality for taxes, 9either are they a proper sub0ect of recoupment since they do not arise out of the contract or transaction sued on, COMMISSIONER OF INTERNAL REVENUE vs. ITOGON-SUYOC MINES( INC. G.R. No. L-2!299( 0.4/ 29( '9-9 FACTS+ %espondent $to-on3 uyoc /ines, $nc, filed on January 1(, 1961, its income tax return for the fiscal year 19#93196*, $t declared a taxable income of '11),(6+,*) and a tax due thereon amountin- to '26,(1*,)1, for &hich it paid on the same day, the amount of '1(,1##,2* as the first installment of the income tax due, .n /ay 1", 1961, petitioner filed an amended income tax return, reportin- therein a net loss of '((1,"*",((, $t thus sou-ht a refund from the Commissioner of $nternal %evenue, no& the petitioner, .n !ebruary 1), 1962, respondent $to-on3 uyoc /ines, $nc, filed its income tax return for the fiscal year 196*31961, settin- forth its income tax liability to the tune of '9",()#,**, but deductin- the amount of '1(,1##,2* representin- alle-ed tax credit for overpayment of the precedin- fiscal year 19#93 196*, *n ;ecember 1+, 1962, petitioner Commissioner of $nternal %evenue assessed a-ainst the respondent the amount of '1,#12,+( as 11 monthly interest on the aforesaid amount of '1(,1##,2* from January 16, 1962 to ;ecember (1, 1962, The basis for such an assessment &as the absence of le-al ri-ht to deduct said amount before the refund or tax credit thereof &as approved by petitioner Commissioner of $nternal %evenue, uch an assessment &as contested by respondent before the Court of Tax Appeals &hich ruled in its favor, Aence this petition for revie&, ISSUE6 4hether or not the Court of Tax Appeals erred &hen it absolved respondent corporation 7from liability to pay the sum of '1,#12,+( as 11 monthly interest for delin2uency in the payment of income tax for the fiscal year 196*31961,L RULING6 $t could not be error for the Court of Tax Appeals, considerin- the admitted fact of overpayment, entitlin- respondent to refund, to hold that petitioner should not repose an interest on the aforesaid sum of '1(,1##,2* 7&hich after all &as paid to and received by the -overnment even before the incidence of the tax in 2uestion,7 $t &ould be, accordin- to the Court of Tax Appeals, 7unfair and un0ust7 to do so, The 9ational $nternal %evenue Code provides that interest upon the amount determined as a deficiency shall be assessed and shall be paid upon notice and demand from the Commissioner of $nternal %evenue at the specified, $t is made clear, ho&ever, in an earlier provision found in the same section that if in any precedin- year, the taxpayer &as entitled to a refund of any amount due as tax, such amount, if not yet refunded, may be deducted from the tax to be paid, There is no 2uestion respondent &as entitled to a refund, $nstead of &aitin- for the sum involved to be delivered to it, it deducted the said amount from the tax that it had to pay, That it had a ri-ht to do accordin- to the la&, MELECIO R. DOMINGO vs. ,ON. LOREN6O C. GARLITOS G.R. No. L-')993( 0.n" 29( '9-1 FACTS+ This is a petition for certiorari and mandamus a-ainst respondent 0ud-e see>in- to annul certain orders of the court and for an order in this Court to direct respondent to execute the 0ud-ment in favor of the <overnment a-ainst the estate of 4alter cott 'rice for internal revenue taxes, $t appears that in /elecio %, ;omin-o vs, Aon, Jud-e , C, /oscoso, <,%, 9o, B31)6"), January (*, 196*, this Court declared as final and executory the order for the payment by the estate of the estate and inheritance taxes, char-es and penalties, amountin- to ')*,*#+,##, issued by the Court of !irst $nstance of Beyte in, special proceedin-s 9o, 1) entitled 7$n the matter of the $ntestate :state of the Bate 4alter cott 'rice,7 $n order to enforce the claims a-ainst the estate the fiscal presented a petition dated June 21, 1961, to the court belo& for the execution of the 0ud-ment, The petition &as, ho&ever, denied by the court &hich held that the execution is not 0ustifiable ISSUE+ 4hether or not the petitioner has the clear ri-ht to execute the 0ud-ment for taxes a-ainst the estate of the deceased 4alter cott 'rice, RULING+ The petition to set aside the above orders of the court belo& and for the execution of the claim of the <overnment a-ainst the estate must be denied for lac> of merit, The ordinary procedure by &hich to settle claims of indebtedness a-ainst the estate of a deceased person, as an inheritance tax, is for the claimant to present a claim before the probate court so that said court may order the administrator to pay the amount thereof, Another -round for denyin- the petition is the fact that the court havin- 0urisdiction of the estate had found that the claim of the estate a-ainst the <overnment has been reco-ni8ed and an amount of '262,2** has already been appropriated for the purpose by a correspondin- la& D%ep, Act 9o, 2"**E, @nder the above circumstances, both the claim of the <overnment for inheritance taxes and the claim of the intestate for services rendered have already become overdue and demandable is &ell as fully li2uidated, Compensation, therefore, ta>es place by operation of la&, in accordance &ith the provisions of

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Articles 12"9 and 129* of the Civil Code, and both debts are extin-uished to the concurrent amount, $t is clear, therefore, that the petitioner has no clear ri-ht to execute the 0ud-ment for taxes a-ainst the estate of the deceased 4alter cott 'rice, REPUBLIC OF T,E P,ILIPPINES vs. MAMBULAO LUMBER COMPANY( ET AL. G.R. No. L-'**2!( F"%&.a&/ 2)( '9-2 FACTS+ There are three causes of action in this case in &hich the defendants admitted all these three liabilities &ith an a--re-ate amount of '), +*2,(", Thou-h such liabilities are admitted it interposed the defense thou-h exhibits that from July (1, 19)+ to ;ecember 29, 19#6, defendant /ambulao Bumber Company paid to the %epublic of the 'hilippines '+,2**,#2 for =reforestation char-es= and for the period commencin- from April (*, 19)" to June 2), 19)+, said defendant paid '92",*+ to the %epublic of the 'hilippines for =reforestation char-es=, These reforestation &ere paid to the plaintiff in pursuance of ection 1 of %epublic Act 11# &hich provides that there shall be collected, in addition to the re-ular forest char-es provided under ection 26) of Common&ealth Act )66 >no&n as the 9ational $nternal %evenue Code, the amount of '*,#* on each cubic meter of timber,,, cut out and removed from any public forest for commercial purposes, The total amount of the reforestation char-es paid by /ambulao Bumber Company is '9,12",#*, and it is the contention of the defendant that since the %epublic of the 'hilippines has not made use of those reforestation char-es collected from it for reforestin- the denuded area of the land covered by its license, the %epublic of the 'hilippines should refund said amount, or, if it cannot be refunded, at least it should be compensated &ith &hat /ambulao Bumber Company o&ed the %epublic of the 'hilippines for reforestation char-es, ISSUE+ 4hether or not the sum of '9,12",#* paid by defendant company to plaintiff as reforestation char-es from 19)" to 19#6 may be set off or applied to the payment of the sum of '),+*2,(" as forest char-es due and o&in- from defendant to plaintiff, RULING+ The court find defendants claim devoid of any merit, 9ote that there is nothin- in the la& &hich re2uires that the amount collected as reforestation char-es should be used exclusively for the reforestation of the area covered by the license of a licensee or concessionaire, and that if not so used, the same should be refunded to him, The -eneral rule, based on -rounds of public policy is &ell3settled that no set3off is admissible a-ainst demands for taxes levied for -eneral or local -overnmental purposes, The reason on &hich the -eneral rule is based, is that taxes are not in the nature of contracts bet&een the party and party but -ro& out of a duty to, and are the positive acts of the -overnment, to the ma>in- and enforcin- of &hich, the personal consent of individual taxpayers is not re2uired, T<" An:8-G&aA: L"a9." oA :<" P<848778n"s( In# v. San 0.an G.R. No. 9**)*. A.9.s: '( '99FACTS6 Actin- upon an authority -ranted by the .ffice of the 'resident, the 'rovince &as able to ne-otiate &ith respondent .rti-as M Co,, Btd, D.rti-asE for the ac2uisition of four parcels of land located in @-on9orte, 'asi-, Three deeds of absolute sale &ere executed on April 22 and /ay 9, 19"#, &hereby .rti-as transferred its o&nership over a total of 192,1"" s2uare meters of land to the 'rovince at '11*,** per s2uare meter, The pro0ected construction, ho&ever, never materiali8ed because of the decimation of the 'rovince5s resources brou-ht about by the creation of the /etro /anila Commission D//CE in 19"6, The said property &as eventually sold to ?alley ?ie& %ealty ;evelopment Corporation D?alley ?ie&E for '"**,** per s2uare meters, The said property &as eventually sold to ?alley ?ie& %ealty ;evelopment Corporation D?alley ?ie&E for '"**,** per s2uare meter or a total of '1(),#2(,9**,**, of &hich (* million &as -iven as do&npayment, .n /ay 1*, 19++, after learnin- about the sale, .rti-as filed before Branch 1#1 of the %e-ional Trial Court of 'asi- an action for rescission of contract plus dama-es &ith preliminary in0unction a-ainst the 'rovince, ;oc>eted as Civil 9o, ##9*), the complaint alle-ed that the 'rovince violated one of the terms of its contracts &ith .rti-as by sellin- the sub0ect lots &hich &ere intended to be utili8ed solely as a site for the construction of the %i8al Technolo-ical Colle-es and the %i8al 'rovincial Aospital, ISSUE6 $s the present action a taxpayer5s suitO RULING6 'etitioner and respondents a-ree that to constitute a taxpayer5s suit, t&o re2uisites must be met, namely, that public funds are disbursed by a political subdivision or instrumentality and in doin- so, a la& is violated or some irre-ularity is committed, and that the petitioner is directly affected by the alle-ed ultra vires act, $n the case at bar, disbursement of public funds &as only made in 19"# &hen the 'rovince bou-ht the lands from .rti-as at '11*,** per s2uare meter in line &ith the ob0ectives of ',;, 6"),

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@ndeniably, as a taxpayer, petitioner &ould someho& be adversely affected by an ille-al use of public money, 4hen, ho&ever, no such unla&ful spendin- has been sho&n, as in the case at bar, petitioner, even as a taxpayer, cannot 2uestion the transaction validly executed by and bet&een the 'rovince and .rti-as for the simple reason that it is not privy to said contract, $n other &ords, petitioner has absolutely no cause of action, and conse2uently no locus standi, in the instant case,

0o/a ":.a4. vs. PCGG( G.R. No. 9-!3' A.9.s: 23( '991 FACTS6 All thirty3five D(#E petitioners in this pecial Civil Action for 'rohibition and /andamus &ith 'rayer for 'reliminary $n0unction andCor %estrainin- .rder see> to en0oin the 'residential Commission on <ood <overnment D'C<<E from proceedin- &ith the auction sale scheduled on 11 January 1991 by Christie=s of 9e& Ior> of the .ld /asters 'aintin-s and 1+th and 19th century silver&are sei8ed from /alaca[an- and the /etropolitan /useum of /anila and placed in the custody of the Central Ban>, .n 9 Au-ust 199*, /ateo A,T, Caparas, then Chairman of 'C<<, &rote then 'resident Cora8on C, A2uino, re2uestin- her for authority to si-n the proposed Consi-nment A-reement bet&een the %epublic of the 'hilippines throu-h 'C<< and Christie, /anson and 4oods $nternational, $nc, concernin- the scheduled sale on 11 January 1991 of ei-hty3t&o D+2E .ld /asters 'aintin-s and anti2ue silver&are sei8ed from /alaca[an- and the /etropolitan /useum of /anila alle-ed to be part of the ill3-otten &ealth of the late 'resident /arcos, his relatives and cronies, .n 1) Au-ust 199*, then 'resident A2uino, throu-h former :xecutive ecretary Catalino /acarai-, Jr,, authori8ed Chairman Caparas to si-n the Consi-nment A-reement allo&in- Christie=s of 9e& Ior> to auction off the sub0ect art pieces for and in behalf of the %epublic of the 'hilippines, .n 1# Au-ust 199*, 'C<<, throu-h Chairman Caparas, representin- the <overnment of the %epublic of the 'hilippines, si-ned the Consi-nment A-reement &ith Christie=s of 9e& Ior>, ISSUE6 Can petitioners as taxpayer5s challen-e the validity of the acts of the 'C<<O

RULING6 9o, They lac> basis in fact and in la&, These paintin-s le-ally belon-s to the foundation or corporation or the members thereof, althou-h the public has been -iven the opportunity to vie& and appreciate these paintin-s &hen they &ere placed on exhibit, imilarly, as alle-ed in the petition, the pieces of anti2ue silver&are &ere -iven to the /arcos couple as -ifts from friends and di-nitaries from forei-n countries on their silver &eddin- and anniversary, an occasion personal to them 9ot every action filed by a taxpayer can 2ualify to challen-e the le-ality of official acts done by the -overnment, A taxpayer=s suit can prosper only if the -overnmental acts bein- 2uestioned involve disbursement of public funds upon the theory that the expenditure of public funds by an officer of the state for the purpose of administerin- an unconstitutional act constitutes a misapplication of such funds, &hich may be en0oined at the re2uest of a taxpayer, LoEada vs. COMELEC G.R. No. L-!9 -) 0an.a&/ 2*( '9)1 FACTS6 This is a petition for mandamus filed by Jose /ari :ulalio C, Bo8ada and %omeo B, $-ot as a representative suit for and in behalf of those &ho &ish to participate in the election irrespective of party affiliation, to compel the respondent C./:B:C to call a special election to fill up existin- vacancies numberin- t&elve D12E in the $nterim Batasan 'ambansa, 'etitioner Bo8ada claims that he is a taxpayer and a bonafide elector of Cebu City and a transient voter of Jue8on City, /etro /anila, &ho desires to run for the position in the Batasan 'ambansaF &hile petitioner %omeo B, $-ot alle-es that, as a taxpayer, he has standin- to petition by mandamus the callinof a special election as mandated by the 19"( Constitution, The respondent C./:B:C, represented by counsel, opposes the petition alle-in-, substantially, that petitioners lac> standin- to file the instant petition for they are not the proper parties to institute the action ISSUE6 As taxpayers, may the petitioners file the instant petitionO RULING6 As taxpayers, petitioners may not file the instant petition, for no&here therein is it alle-ed that tax money is bein- ille-ally spent, The act complained of is the inaction of the C./:B:C to call a special election, as is alle-edly its ministerial duty under the constitutional provision above cited, and therefore, involves no expenditure of public funds, $t is only &hen an act complained of, &hich may include a le-islative enactment or statute, involves the ille-al expenditure of public money that the so3called taxpayer suit may be allo&ed,

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