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CONSTI LAW 2 (ATTY. TAGARDA-MABILEN) Kani lang jud ako nakaya.

mu panaway ha. Hehe. Hope these
could help. Good luck and God


CIR vs SANTOS (Hermosisima, J.)

GR No. 119252, Aug 18, 1997


-Santos: referes to the Judge of RTC, Branch 67 Pasig

-Guild of Phil Jewlers, Inc.: an association of Filipino jewelers engaged in the manufacture of
jewelries; among its members are Hans Brumann, Inc., Miladay Jewels, Inc., Mercelles Inc., Solid
Gold Intl. Traders, Inc., Diagem Trading Corp., & Jewelry by Marco & Co., Inc. Respondent Marco
is the president of the Guild.

-Aug 5, 1988 : BIR Director Viray issued Regl. Mission Order No. 109-88 to conduct surveillance,
monitoring and inventory of all imported articles of Hans Brumann Inc. After said surveillance,
BIR requested the establishment not to sell the articles until it can be proven that the necessary
taxes thereon have been paid. Mr. Hans Brumann agreed and signed said order. He never filed a
protest on the preventive embargo.

-Oct 17, 1988 : hans Brumann was requested to prepare and make available to the BIR the
documents indicated therein; Brumann did not produce the documents

-Respondents Marco & Co. contended the constitutionality of Sec 150 (a) of NIR Code & prayed
that CIR and Customs be enjoined from issuing mission orders. Sec 150 (a) of NIR Code : “Non-
essential goods—There shall be levied, assessed and collected a tax equivalent to 20% based on
the wholesale price or the value of importation used by the Bureau of Customs in determining
tariff & custom duties; net of the excise tax and value added tax…” (Jewelry is considered non-
essential good)

Issue: WON Sec 150 (a) of the NIR code is unconstitutional.

Ruling: Court is not in the position to question wisdom of Sec 150 (a) of NIR Code.

RD: In imposing the aforementioned taxes and duties, the State, acting through the legislative
and executive branches, is exercising its sovereign prerogative. It is inherent in the power to tax
that the State be free to select the subjects of taxation, and it has been repeatedly held that
“inequalities which result from a singling out or one particular class for taxation, or exemption,
infringe no constitutional limitation.”



237 SCRA 324, 332 (1994)


-RA 7496 : Simplified Net Income Taxation Scheme for the Self-Employed and Professionals
Engaged in the Practice of their profession

-Revenue Regulations No. 2-93 : “Sec 6. General Professional Partnership—the general

professional partners (GPP) and the partners comprising the GPP are covered by RA 7496. Thus,
in determining the net profit of the partnership, only the direct costs mentioned in said law are to
be deducted from partnership income. Also, the expenses paid or incurred by partners in their
individual capacities in the practice of their profession which are not reimbursed or paid by the
partnership but are not considered as direct cost, are not deductible from his gross income.”

-Petitioners assails RA 7496 and corresponding regulations as violative of the constitutional

requirement that taxation shall be uniform and equitable.

Issue: WON RA 7496 and the corresponding regulations are violative of the constitutional
requirement that taxation shall be uniform and equitable.

Ruling: Petition denied.

RD: Uniformity of taxation means that (1) the standards that are used therefore are substantial
and not arbitrary, (2) the categorization is germane to achieve legislative purpose, (3) the law
applies, all things being equal, to both present and future conditions and (4) the classification
applies equally well to all those belonging to the same class.

Deliberations during the hearing for the bill show that the income tax is imposed not on the
professional partnership, which is tax exempt, but on partners themselves in their individual
capacity computed on their distributive shares of partnership profits.

There is no distinction in income tax liability between a person who practices his profession alone
or individually and one who does it through partnership with others in the exercise of a common



GR No. 166006, March 14, 2008


-PPI & Fertiphil are private corporations incorporated under Philippine laws.

-LOI No. 1465 (under Marcos): provided for the imposition of a capital recovery component (CRC)
on the domestic sale of all grades of fertilizers in the Philippines. “The administrator of the
Fertilizer Pesticide Authority (FPA) to include in its fertilizer pricing formula a capital contribution
component of not less than P10 per bag. This capital contribution shall be collected until
adequate capital is raised to make PPI viable. Such capital contribution shall be applied by FPA to
all domestic sales of fertilizers in the Phils.”

-Pursuant to LOI, Fertiphil paid P10 for every bag of fertilizer it sold in the domestic market to the
FPA. FPA then remitted the amount to Far East Bank and Trust Co., the bank of PPI. Fertiphil paid
P6, 689, 144 to FPA from July 8, 1985 to Jan 24, 1986.

-After 1986 Revolution, FPA voluntarily stopped imposition of P10 levy.

-Fertiphil demanded from PPI a refund of the amounts it paid under LOI 1465, PPI refused to
answer the demand, because the levy was said to be an exercise of police power.

Issue: WON the levy was a valid exercise of police power with taxation as an implementing

Ruling: No, levy not valid.

RD: A tax may be levied only for public purposes. Funds cannot be exacted under the guise of
taxation to promote a purpose that is not of public interest. It is not levied to benefit, aid and
promote a private enterprise such as PPI.