PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs.
questions challenging the constitutionality of the several
MUNICIPALITY OF TANAUAN
69 SCRA 460
GR No. L-31156, February 27, 1976
"Legislative power to create political corporations for
purposes of local self-government carries with it the power
to confer on such local governmental agencies the power to
tax.
FACTS: Plaintiff-appellant Pepsi-Cola commenced a
complaint with preliminary injunction to declare Section 2 of
Republic Act No. 2264, otherwise known as the Local
Autonomy Act, unconstitutional as an undue delegation of
taxing authority as well as to declare Ordinances Nos. 23 and
27 denominated as "municipal production tax" of the
Municipality of Tanauan, Leyte, null and void. Ordinance 23
levies and collects from soft drinks producers and
manufacturers a tax of one-sixteenth (1/16) of a centavo for
every bottle of soft drink corked, and Ordinance 27 levies
and collects on soft drinks produced or manufactured within
the territorial jurisdiction of this municipality a tax of ONE
CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of
volume capacity. Aside from the undue delegation of
authority, appellant contends that it allows double taxation,
and that the subject ordinances are void for they impose
percentage or specific tax.
ISSUE: Are the contentions of the appellant tenable?
HELD: No. On the issue of undue delegation of taxing power,
it is settled that the power of taxation is an essential and
inherent attribute of sovereignty, belonging as a matter of
right to every independent government, without being
expressly conferred by the people. It is a power that is
purely legislative and which the central legislative body
cannot delegate either to the executive or judicial
department of the government without infringing upon the
theory of separation of powers. The exception, however, lies
in the case of municipal corporations, to which, said theory
does not apply. Legislative powers may be delegated to local
governments in respect of matters of local concern. By
necessary implication, the legislative power to create political
corporations for purposes of local self-government carries
with it the power to confer on such local governmental
agencies the power to tax.
Also, there is no validity to the assertion that the delegated
authority can be declared unconstitutional on the theory of
double taxation. It must be observed that the delegating
authority specifies the limitations and enumerates the taxes
over which local taxation may not be exercised. The reason
is that the State has exclusively reserved the same for its
own prerogative. Moreover, double taxation, in general, is
not forbidden by our fundamental law, so that double
taxation becomes obnoxious only where the taxpayer is
taxed twice for the benefit of the same governmental entity
or by the same jurisdiction for the same purpose, but not in
a case where one tax is imposed by the State and the other
by the city or municipality.
On the last issue raised, the ordinances do not partake of the
nature of a percentage tax on sales, or other taxes in any
form based thereon. The tax is levied on the produce
(whether sold or not) and not on the sales. The volume
capacity of the taxpayer's production of soft drinks is
considered solely for purposes of determining the tax rate on
the products, but there is not set ratio between the volume
of sales and the amount of the tax.
Acuna v Arroyo
G.R. No.79310
July 14, 1989
Facts:
RA No. 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988 was signed into law by then
President Corazon Aquino. There were a number of legal
measures enacted to implement the CARL.
In the instant case, the petitioners are landowners and sugar
planters in the Victorias Mill District in Negros Occidental. Co-
petitioner Planters’ Committee is an organization composed
of 1,400 planter-members. This petition seeks to prohibit the
implementation of Proclamation No. 131 and EO No. 229.
The petitioners claim that the power to provide for a CARP as
decreed by the constitution belongs to Congress and not the
President. Even assuming that the interim legislative power
of the President was properly exercised, Proc. No. 131 and
EO No. 229 would still have to be annulled for violating the
constitutional provisions on just compensation, due process
and equal protection
Section 2 of Proc. No. 131 provides:
Agrarian Reform Fund.- There is hereby created a special
fund, to be known as the Agriarian Reform Fund, an initial
amount of FIFTY BILLION PEOS to cover the estimated cost
of the CARP from 1987 -1992 which shall be sourced from
the receipts of the sale of the assets of the Asset Privatization
Trust and Receipts of sale of ill-gotten wealth received
through the PCGG and such other sources as government
may deem appropriate. The amounts collected and accruing
to this special fund shall be appropriated automatically for
the purpose authorized in this Proclamation. The money
needed to cover the cost of the contemplated expropriated
has yet to be raised and cannot be appropriated at this time.
Petitioners contend that taking must be simultaneous with
payment of just compensation as it is traditionally
understood, i.e., with money and in full, but no such payment
is contemplated in Sec. 5 of EO No. 229.
The petitioners also argue that in the issuance of the two
measures, no effort was made to make a careful study of the
sugar planters’ situation. To the extent that the sugar
planters have been lumped in the same legislation with other
farmers, although they are a separate group with problems
exclusively their own, their right to equal protection has been
violated.
Issue: Whether or not Proc. No. 131 and EO No. 229 are
valid.
Held: The Court upheld the presumption of constitutionality
in favour of Proc. No. 131 and EO No. 229. Contrary to the
petitioners’ contention, a pilot project to determine the
feasibility of CARP and a general survey on the people’s
opinion thereon are not indispensable prerequisites to its
promulgation.
On the alleged violation of the equal protection clause, the
sugar planters have failed to show that they belong to a
different class and should be treated differently.
Regarding the issue of just compensation, it cannot be denied
that the issue involved in the case is a revolutionary kind of
expropriation.
The expropriation in the instant case affects all private
agricultural lands whenever found and of whatever kind as
long as they are in excess of the maximum retention limits
allowed their owners. This kind of expropriation is intended
for the benefit not only of a particular community but of the
entire Filipino nation.
Such a program will involve not mere million of pesos. The
cost will be tremendous. Considering the vast areas of land
subject to expropriation under the laws before us, we
estimate that hundreds of billions of pesos will be needed,
far more indeed that the amount of P50 billion initially
appropriated, which is already staggering as it is by our
present standards.
We assume that the framers of the Constitution were aware
of this difficulty when they called for agrarian reform as a top
priority project of the government. It is a part of this
assumption that when they envisioned the expropriation that
would be needed, they also intended that the just
compensation would have to be paid not in the orthodox way
but a less conventional if more practical method. There can
be doubt that they were aware of the financial limitations of
the government and had no illusions that there would be
enough money to pay in cash and in full for the lands they
wanted to be distributed among the farmers. we may
therefore assume that their intention was to allow such
manner of payment as is now provided for by the CARP Law,
particularly the payment of the balance, or indeed of the
entire amount of the just compensation, with other things of
value.
Accepting the theory that payment of the just compensation
is not always required to be made fully in money, we further
that the proportion of cash payment to the other things of
value constituting the total payment, as determined on the
basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner.
Hence, the validity of Proc. No. 131 and EO No. 229 is
SUSTAINED.
Pabico vs. Juico
G.R. No. 79744
July 14, 1989
Emancipation of Tenants: Department of Agrarian
Reform
Facts: The petitioner alleges that the then Secretary of
Department of Agrarian Reform, in violation of due process
and the requirement for just compensation, placed his
landholding under the coverage of Operation Land Transfer.
Certificates of Land Transfer were subsequently issued to the
private respondents, who then refused payment of lease
rentals to him.
On 3 September 1986, the petitioner protested the
erroneous inclusion of his small landholding under Operation
Land transfer and asked for the recall and cancellation of the
Certificates of Land Transfer in the name of the private
respondents.
He claims that on 24 December 1986, his petition was denied
without hearing.
On 17 February 1987, he filed a motion for reconsideration,
which had not been acted upon when E.O. Nos. 228 and 229
were issued. These orders rendered his motion moot and
academic because they directly effected the transfer of his
land to the private respondents.
Issue: Whether or not E.O. Nos. 228 and 229 were invalidly
issued by the President of the Philippines
Ruling:
The power of President Aquino to promulgate E.O. Nos. 228
and 229, was authorized under Section 6 of the Transitory
Provisions of the 1987 Constitution.
The incumbent president shall continue to exercise legislative
powers until the first Congress is convened.
Commissioner of Internal Revenue vs. Central Luzon
Drug Corporation
G.R. No. 159647
April 15, 2005
Facts:
Respondents operated six drugstores under the business
name Mercury Drug. From January to December 1996
respondent granted 20% sales discount to qualified senior
citizens on their purchases of medicines pursuant to RA 7432
for a total of ₱ 904,769.
On April 15, 1997, respondent filed its annual Income Tax
Return for taxable year 1996 declaring therein net losses. On
Jan. 16, 1998 respondent filed with petitioner a claim for tax
refund/credit of ₱ 904,769.00 allegedly arising from the 20%
sales discount. Unable to obtain affirmative response from
petitioner, respondent elevated its claim to the Court of Tax
Appeals. The court dismissed the same but upon
reconsideration, the latter reversed its earlier ruling and
ordered petitioner to issue a Tax Credit Certificate in favor of
respondent citing CA GR SP No. 60057 (May 31, 2001,
Central Luzon Drug Corp. vs. CIR) citing that Sec. 229 of RA
7432 deals exclusively with illegally collected or erroneously
paid taxes but that there are other situations which may
warrant a tax credit/refund.
CA affirmed Court of Tax Appeal's decision reasoning that RA
7432 required neither a tax liability nor a payment of taxes
by private establishments prior to the availment of a tax
credit. Moreover, such credit is not tantamount to an
unintended benefit from the law, but rather a just
compensation for the taking of private property for public
use.
Issue:
Whether or not respondent, despite incurring a net loss, may
still claim the 20% sales discount as a tax credit.
Ruling:
Yes, it is clear that Sec. 4a of RA 7432 grants to senior
citizens the privilege of obtaining a 20% discount on their
purchase of medicine from any private establishment in the
country. The latter may then claim the cost of the discount
as a tax credit. Such credit can be claimed even if the
establishment operates at a loss.
A tax credit generally refers to an amount that is “subtracted
directly from one’s total tax liability.” It is an “allowance
against the tax itself” or “a deduction from what is owed” by
a taxpayer to the government.
A tax credit should be understood in relation to other tax
concepts. One of these is tax deduction – which is subtraction
“from income for tax purposes,” or an amount that is
“allowed by law to reduce income prior to the application of
the tax rate to compute the amount of tax which is due.” In
other words, whereas a tax credit reduces the tax due, tax
deduction reduces the income subject to tax in order to arrive
at the taxable income.
A tax credit is used to reduce directly the tax that is due,
there ought to be a tax liability before the tax credit can be
applied. Without that liability, any tax credit application will
be useless. There will be no reason for deducting the latter
when there is, to begin with, no existing obligation to the
government. However, as will be presented shortly, the
existence of a tax credit or its grant by law is not the same
as the availment or use of such credit. While the grant is
mandatory, the availment or use is not. If a net loss is
reported by, and no other taxes are currently due from, a
business establishment, there will obviously be no tax
liability against which any tax credit can be applied. For the
establishment to choose the immediate availment of a tax
credit will be premature and impracticable.
CASE DIGEST: DOUBLE TAXATION
NURSERY CARE CORPORATION, ET AL, vs. ACEVEDO,
G.R. No. 180651, July 30, 2014
FACTS OF THE CASE:
The CITY OF MANILA assessed and collected taxes from the
individual petitioners pursuant to Section 15 (Tax on
Wholesalers, Distributors, or Dealers) and Section 17 (Tax
on Retailers) of the Revenue Code of Manila. At the same
time, the CITY OF MANILA imposed additional taxes
upon the petitioners pursuant to Section 21 of the
Revenue Code of Manila, as amended, as a condition for the
renewal of their respective business licenses for the year
1999. SECTION 21 OF THE REVENUE CODE OF MANILA
stated: Section 21. Tax on Business Subject to the Excise,
Value-Added or Percentage Taxes under the NIRC - On any
of the following businesses and articles of commerce subject
to the excise, VALUE-ADDED OR PERCENTAGE TAXES
under the National Internal Revenue Code, hereinafter
referred to as NIRC, as amended, a tax of FIFTY PERCENT
(50%) OF ONE PERCENT (1%) per annum on the gross
sales or receipts of the preceding calendar year is
hereby imposed: A) On person who sells goods and services
in the course of trade or businesses; x x x PROVIDED, that
all registered businesses in the City of Manila already paying
the aforementioned tax shall be exempted from payment
thereof.
To comply with the City of Manila’s assessment of taxes
under Section 21, the PETITIONERS paid under protest the
following amounts corresponding to the first quarter of 1999,
to wit: (a) Nursery Care Corporation ₱595,190.25; (b)
Shoemart Incorporated ₱3,283,520.14; (c) Star Appliance
Center ₱236,084.03; (d) H & B, Inc. ₱1,271,118.74; (e)
Supplies Station, Inc. ₱239,501.25; (f) Hardware Work
Shop, Inc. ₱609,953.24. By letter dated March 1, 1999, the
PETITIONERS formally requested the Office of the City
Treasurer for the tax credit or refund of the local
business taxes paid under protest. However, then City
Treasurer Anthony Acevedo (Acevedo) denied the
request.
On April 8, 1999, the PETITIONERS, sought the
reconsideration of the denial of their request. Still, the CITY
TREASURER did not reconsider. In the meanwhile, Liberty
Toledo succeeded Acevedo as the City Treasurer of Manila.
PETITIONERS filed their respective petitions for certiorari
in the Regional Trial Court (RTC) in Manila.
RTC held that it perceives NO INSTANCE OF THE
CONSTITUTIONALLY PROSCRIBED DOUBLE
TAXATION, in the strict, narrow or obnoxious sense,
imposed upon the petitioners under Section 15 and 17, on
the one hand, and under Section 21, on the other, of the
questioned Ordinance. The tax imposed under Section 15
and 17, as against that imposed under Section 21, are
levied against different tax objects or subject matter. The tax
under Section 15 is imposed upon wholesalers, distributors
or dealers, while that under Section 17 is imposed upon
retailers. In short, taxes imposed under Section 15 and
17 is a tax on the business of wholesalers, distributors,
dealers and retailers. On the other hand, the tax imposed
upon herein petitioners under Section 21 is not a tax
against the business of the petitioners (as wholesalers,
distributors, dealers or retailers) but is rather a tax against
consumers or end-users of the articles sold by petitioners.
CA affirmed the decision of the RTC.
ISSUE: Whether or not the collection of taxes under Section
21 of Ordinance No. 7794, as amended, constitutes double
taxation. YES
RULING:
There is DOUBLE TAXATION when the same taxpayer is
taxed twice when he should be taxed only once for the
same purpose by the same taxing authority within the
same jurisdiction during the same taxing period, and
the taxes are of the same kind or character. DOUBLE
TAXATION is obnoxious.
DOUBLE TAXATION means taxing the same property
twice when it should be taxed only once; that is, "taxing
the same person twice by the same jurisdiction for the
same thing." It is obnoxious when the taxpayer is taxed
twice, when it should be but once. Otherwise described as
"DIRECT DUPLICATE TAXATION," the two taxes must be
imposed on the same subject matter, for the same purpose,
by the same taxing authority, within the same jurisdiction,
during the same taxing period; and the taxes must be of the
same kind or character.
Using the aforementioned test, the COURT finds that there
is INDEED DOUBLE TAXATION IF RESPONDENT IS
SUBJECTED TO THE TAXES UNDER BOTH SECTIONS 14
AND 21 OF TAX ORDINANCE NO. 7794, since these are
being imposed: (1) on the same subject matter – the
privilege of doing business in the City of Manila; (2) for the
same purpose – to make persons conducting business
within the City of Manila contribute to city revenues; (3) by
the same taxing authority – petitioner City of Manila; (4)
within the same taxing jurisdiction – within the territorial
jurisdiction of the City of Manila; (5) for the same taxing
periods – per calendar year; and (6) of the same kind or
character – a local business tax imposed on gross sales or
receipts of the business.
Based on the foregoing reasons, PETITIONER should not
have been subjected to taxes under Section 21 of the Manila
Revenue Code for the fourth quarter of 2001, considering
that it had already been paying local business tax under
Section 14 of the same ordinance.
Accordingly, respondent’s assessment under both Sections
14 and 21 had no basis. PETITIONER is indeed liable to
pay business taxes to the City of Manila; nevertheless,
considering that the FORMER has already paid these taxes
under Section 14 of the Manila Revenue Code, it is exempt
from the same payments under Section 21 of the same
code. Hence, payments made under Section 21 must be
refunded in favor of petitioner. It is undisputed that
PETITIONER paid business taxes based on Sections 14 and
21 for the fourth quarter of 2001 in the total amount of
₱470,932.21. Therefore, it is ENTITLED TO A REFUND OF
₱164,552.04 corresponding to the payment under Section
21 of the Manila Revenue Code.
In fine, the IMPOSITION OF THE TAX UNDER SECTION
21 OF THE REVENUE CODE OF MANILA constituted
double taxation, and the taxes collected pursuant
thereto must be refunded.
IMPORTANT PRINCIPLE: WHEN IS THERE DOUBLE
TAXATION; REQUISITES OF DOUBLE TAXATION
WHEN IS THERE DOUBLE TAXATION?
There is DOUBLE TAXATION when the same taxpayer is
taxed twice when he should be taxed only once for the
same purpose by the same taxing authority within the
same jurisdiction during the same taxing period, and
the taxes are of the same kind or character. DOUBLE
TAXATION is obnoxious.
DOUBLE TAXATION means taxing the same property
twice when it should be taxed only once; that is, "taxing
the same person twice by the same jurisdiction for the
same thing." It is obnoxious when the taxpayer is taxed
twice, when it should be but once. Otherwise described as
"DIRECT DUPLICATE TAXATION," the two taxes must be
imposed on the same subject matter, for the same purpose,
by the same taxing authority, within the same jurisdiction,
during the same taxing period; and the taxes must be of the
same kind or character.
REQUISITES OF DOUBLE TAXATION:
Using the aforementioned test, the COURT finds that there
is INDEED DOUBLE TAXATION IF RESPONDENT IS
SUBJECTED TO THE TAXES UNDER BOTH SECTIONS 14
AND 21 OF TAX ORDINANCE NO. 7794, since these are
being imposed:
(1) On the same subject matter – the privilege of doing
business in the City of Manila;
(2) For the same purpose – to make persons conducting
business within the City of Manila contribute to city revenues;
(3) By the same taxing authority – petitioner City of
Manila;
(4) Within the same taxing jurisdiction – within the
territorial jurisdiction of the City of Manila;
(5) For the same taxing periods – per calendar year; and
(6) Of the same kind or character – a local business tax
imposed on gross sales or receipts of the business.
G.R. No. 168056 September 1, 2005
ABAKADA GURO PARTY LIST (Formerly AASJAS)
OFFICERS SAMSON S. ALCANTARA and ED VINCENT S.
ALBANO, Petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY EDUARDO
ERMITA; HONORABLE SECRETARY OF THE
DEPARTMENT OF FINANCE CESAR PURISIMA; and
HONORABLE COMMISSIONER OF INTERNAL REVENUE
GUILLERMO PARAYNO, JR., Respondent.
Facts:
Petitioners ABAKADA GURO Party List challenged the
constitutionality of R.A. No. 9337 particularly Sections 4, 5
and 6, amending Sections 106, 107 and 108, respectively, of
the National Internal Revenue Code (NIRC). These
questioned provisions contain a uniform proviso authorizing
the President, upon recommendation of the Secretary of
Finance, to raise the VAT rate to 12%, effective January 1,
2006, after any of the following conditions have been
satisfied, to wit:
. . . That the President, upon the recommendation of the
Secretary of Finance, shall, effective January 1, 2006, raise
the rate of value-added tax to twelve percent (12%), after
any of the following conditions has been satisfied:
(i) Value-added tax collection as a percentage of Gross
Domestic Product (GDP) of the previous year exceeds two
and four-fifth percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of
the previous year exceeds one and one-half percent (1 ½%).
Petitioners argue that the law is unconstitutional, as it
constitutes abandonment by Congress of its exclusive
authority to fix the rate of taxes under Article VI, Section
28(2) of the 1987 Philippine Constitution. They further argue
that VAT is a tax levied on the sale or exchange of goods and
services and cannot be included within the purview of tariffs
under the exemption delegation since this refers to customs
duties, tolls or tribute payable upon merchandise to the
government and usually imposed on imported/exported
goods. They also said that the President has powers to cause,
influence or create the conditions provided by law to bring
about the conditions precedent. Moreover, they allege that
no guiding standards are made by law as to how the
Secretary of Finance will make the recommendation. They
claim, nonetheless, that any recommendation of the
Secretary of Finance can easily be brushed aside by the
President since the former is a mere alter ego of the latter,
such that, ultimately, it is the President who decides whether
to impose the increased tax rate or not.
Issues:
Whether or not R.A. No. 9337 has violated the provisions in
Article VI, Section 24, and Article VI, Section 26 (2) of the
Constitution.
Whether or not there was an undue delegation of legislative
power in violation of Article VI Sec 28 Par 1 and 2 of the
Constitution.
Whether or not there was a violation of the due process and
equal protection under Article III Sec. 1 of the Constitution.
Discussions:
Basing from the ruling of Tolentino case, it is not the law, but
the revenue bill which is required by the Constitution to
“originate exclusively” in the House of Representatives, but
Senate has the power not only to propose amendments, but
also to propose its own version even with respect to bills
which are required by the Constitution to originate in the
House. the Constitution simply means is that the initiative for
filing revenue, tariff or tax bills, bills authorizing an increase
of the public debt, private bills and bills of local application
must come from the House of Representatives on the theory
that, elected as they are from the districts, the members of
the House can be expected to be more sensitive to the local
needs and problems. On the other hand, the senators, who
are elected at large, are expected to approach the same
problems from the national perspective. Both views are
thereby made to bear on the enactment of such laws.
In testing whether a statute constitutes an undue delegation
of legislative power or not, it is usual to inquire whether the
statute was complete in all its terms and provisions when it
left the hands of the legislature so that nothing was left to
the judgment of any other appointee or delegate of the
legislature.
The equal protection clause under the Constitution means
that “no person or class of persons shall be deprived of the
same protection of laws which is enjoyed by other persons
or other classes in the same place and in like circumstances.”
Rulings:
R.A. No. 9337 has not violated the provisions. The revenue
bill exclusively originated in the House of Representatives,
the Senate was acting within its constitutional power to
introduce amendments to the House bill when it included
provisions in Senate Bill No. 1950 amending corporate
income taxes, percentage, excise and franchise taxes. Verily,
Article VI, Section 24 of the Constitution does not contain
any prohibition or limitation on the extent of the
amendments that may be introduced by the Senate to the
House revenue bill.
There is no undue delegation of legislative power but only of
the discretion as to the execution of a law. This is
constitutionally permissible. Congress does not abdicate its
functions or unduly delegate power when it describes what
job must be done, who must do it, and what is the scope of
his authority; in our complex economy that is frequently the
only way in which the legislative process can go forward.
Supreme Court held no decision on this matter. The power of
the State to make reasonable and natural classifications for
the purposes of taxation has long been established. Whether
it relates to the subject of taxation, the kind of property, the
rates to be levied, or the amounts to be raised, the methods
of assessment, valuation and collection, the State’s power is
entitled to presumption of validity. As a rule, the judiciary
will not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness.