BOARD OF ASSESSMENT APPEALS OF LAGUNA vs.
CITY OF
CTA, NWSA 8 SCRA 224
GR No. L-18125, May 31, 1963
"A tax on property of the Government, whether national
or local, would merely have the effect of taking money
from one pocket to put it in another pocket."
FACTS:
National Waterworks and Sewerage Authority (NWSA), a
public corporation owned by the Government of the Philippines
as well as all property comprising waterworks and sewerage
systems placed under it, took over the Cabuyao-Sta. Rosa-
Biñan Waterworks System in 1956. It was assessed by the
Provincial Assessor of Laguna, for purposes of real estate
taxes, on the real properties owned by Cabuyao Waterworks.
The respondent protested claiming it is exempted from the
payment of real estate taxes in view of the nature and kind of
said property and functions and activities of petitioner. The
petitioner denied the protest arguing that such real properties
are subject to real estate tax because although said properties
belong to the Republic of the Philippines, the same holds it, not
in its governmental, political or sovereign capacity, but in a
private, proprietary or patrimonial character, which, allegedly,
is not covered by the exemption contained in section 3(a) of
Republic Act No. 470.
ISSUE: Are the real properties owned by the respondent public
corporation subject to real estate tax?
HELD: No. Republic Act No. 470 makes no distinction between
property held in a sovereign, governmental or political capacity
and those possessed in a private, proprietary or patrimonial
character. And where the law does not distinguish neither may
we, unless there are facts and circumstances clearly showing
that the lawmaker intended the contrary, but no such facts and
circumstances have been brought to our attention. Indeed, the
noun "property" and the verb "owned" used in said section 3(a)
strongly suggest that the object of exemption is considered
more from the view point of dominion, than from that of
domain.
Moreover, taxes are financial burdens imposed for the purpose
of raising revenues with which to defray the cost of the
operation of the Government, and a tax on property of the
Government, whether national or local, would merely have the
effect of taking money from one pocket to put it in another
pocket. Hence, it would not serve, in the final analysis, the
main purpose of taxation. What is more, it would tend to defeat
it, on account of the paper work, time and consequently,
expenses it would entail.
PEPSI-COLA BOTTLING CO. OF THE PHILS. VS.
BUTUAN, 24 SCRA 789
Facts:
Ordinance 110 was enacted by the City of Butuan imposing a
tax of P0.10 per case of 24 bottles of softdrinks or carbonated
drinks. The tax was imposed upon dealers engaged in selling
softdrinks or carbonated drinks. When Ordinance 110, the tax
was imposed upon an agent or consignee of any person,
association, partnership, company or corporation engaged in
selling softdrinks or carbonated drinks, with “agent or
consignee” being particularly defined on the inserted provision
Section 3-A. In effect, merchants engaged in the sale of
softdrinks, etc. are not subject to the tax unless they are
agents or consignees of another dealer who must be one
engaged in business outside the City. Pepsi-Cola Bottling Co.
filed suit to recover sums paid by it to the city pursuant to the
Ordinance, which it claims to be null and void.
Issue:
Whether the Ordinance is discriminatory.
Held:
The Ordinance, as amended, is discriminatory since only
sales by “agents or consignees” of outside dealers would
be subject to the tax. Sales by local dealers, not acting for
or on behalf of other merchants, regardless of the volume
of their sales , and even if the same exceeded those made
by said agents or consignees of producers or merchants
established outside the city, would be exempt from the tax.
The classification made in the exercise of the authority to
tax, to be valid must be reasonable, which would be
satisfied if the classification is based upon substantial
distinctions which makes real differences; these are
germane to the purpose of legislation or ordinance; the
classification applies not only to present conditions but also
to future conditions substantially identical to those of the
present; and the classification applies equally to all those
who belong to the same class. These conditions are not
fully met by the ordinance in question.
PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. VS.
MUNICIPALITY OF TANAUAN, LEYTE, 69 SCRA 460
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.
JOHN H. OSMEÑA V. OSCAR ORBOS, 220 SCRA 703
FACTS:
Senator John Osmeña assails the constitutionality of
paragraph 1c of PD 1956, as amended by EO 137,
empowering the Energy Regulatory Board (ERB) to approve
the increase of fuel prices or impose additional amounts on
petroleum products which proceeds shall accrue to the Oil
Price Stabilization Fund (OPSF) established for the
reimbursement to ailing oil companies in the event of sudden
price increases. The petitioner avers that the collection on oil
products establishments is an undue and invalid delegation of
legislative power to tax. Further, the petitioner points out that
since a 'special fund' consists of monies collected through the
taxing power of a State, such amounts belong to the State,
although the use thereof is limited to the special
purpose/objective for which it was created. It thus appears
that the challenge posed by the petitioner is premised
primarily on the view that the powers granted to the ERB
under P.D. 1956, as amended, partake of the nature of the
taxation power of the State.
ISSUE:
Is there an undue delegation of the legislative power of
taxation?
HELD:
None. It seems clear that while the funds collected may be
referred to as taxes, they are exacted in the exercise of the
police power of the State. Moreover, that the OPSF as a
special fund is plain from the special treatment given it by E.O.
137. It is segregated from the general fund; and while it is
placed in what the law refers to as a "trust liability account,"
the fund nonetheless remains subject to the scrutiny and
review of the COA. The Court is satisfied that these measures
comply with the constitutional description of a "special fund."
With regard to the alleged undue delegation of legislative
power, the Court finds that the provision conferring the
authority upon the ERB to impose additional amounts on
petroleum products provides a sufficient standard by which the
authority must be exercised. In addition to the general policy of
the law to protect the local consumer by stabilizing and
subsidizing domestic pump rates, P.D. 1956 expressly
authorizes the ERB to impose additional amounts to augment
the resources of the Fund.
MAYOR ANTONIO J. VILLEGAS V. HIU CHIONG TSAI PAO
HO AND JUDGE ARCA, 86 SCRA 270
FACTS:
The Municipal Board of Manila enacted Ordinance 6537
requiring aliens (except those employed in
the diplomatic and consular missions of foreign countries, in
technical assistance programs of the government and another
country, and members of religious orders or congregations) to
procure the requisite mayor’s permit so as to be employed or
engage in trade in the City of Manila. The permit fee is P50,
and the penalty for the violation of the ordinance is 3 to 6
months imprisonment or a fine of P100 to P200, or both.
Issue:
Whether the ordinance imposes a regulatory fee or a tax.
Held:
The ordinance’s purpose is clearly to raise money under the
guise of regulation by exacting P50 from
aliens who have been cleared for employment. The amount
is unreasonable and excessive because it fails to consider
difference in situation among aliens required to pay it, i.e.
being casual, permanent, part-time, rankand-
file or executive.
The Ordinance was declared invalid as it is arbitrary,
oppressive and unreasonable, being applied only to aliens
who are thus deprived of their rights to life, liberty and
property and therefore violates the due process and equal
protection clauses of the Constitution. Further, the ordinance
does not lay down any criterion or standard to guide the
Mayor in the exercise of his discretion, thus conferring upon
the mayor arbitrary and unrestricted powers.
CARLOS SUPERDRUG ET. AL V. DSWD
FACTS:
Petitioners are domestic corporations and proprietors operating
drugstores in the Philippines.
Public respondents, on the other hand, include the DSWD,
DOH, DOF, DOJ, and the DILG, specifically tasked to monitor
the drugstores’ compliance with the law; promulgate the
implementing rules and regulations for the effective
implementation of the law; and prosecute and revoke the
licenses of erring drugstore establishments.
President Gloria Macapagal-Arroyo signed into law R.A. No.
9257 otherwise known as the “Expanded Senior Citizens Act of
2003.”
Sec. 4(a) of the Act states that The senior citizens shall be
entitled to the following: (a) the grant of twenty percent (20%)
discount from all establishments relative to the utilization of
services in hotels and similar lodging establishments,
restaurants and recreation centers, and purchase of medicines
in all establishments for the exclusive use or enjoyment of
senior citizens, including funeral and burial services for the
death of senior citizens;
Petitioners assert that Section 4(a) of the law is
unconstitutional because it constitutes deprivation of private
property. Compelling drugstore owners and establishments to
grant the discount will result in a loss of profit and capital
because according to them drugstores impose a mark-up of
only 5% to 10% on branded medicines, and the law failed to
provide a scheme whereby drugstores will be justly
compensated for the discount.
ISSUE:
WON RA 9257 is constitutional.
HELD:
YES. The law is a legitimate exercise of police power which,
similar to the power of eminent domain, has general welfare for
its object. Police power is not capable of an exact definition,
but has been purposely veiled in general terms to underscore
its comprehensiveness to meet all exigencies and provide
enough room for an efficient and flexible response to
conditions and circumstances, thus assuring the greatest
benefits. Accordingly, it has been described as the most
essential, insistent and the least limitable of powers, extending
as it does to all the great public needs. It is [t]he power vested
in the legislature by the constitution to make, ordain, and
establish all manner of wholesome and reasonable laws,
statutes, and ordinances, either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the
good and welfare of the commonwealth, and of the subjects of
the same.
For this reason, when the conditions so demand as determined
by the legislature, property rights must bow to the primacy of
police power because property rights, though sheltered by due
process, must yield to general welfare.
Police power as an attribute to promote the common good
would be diluted considerably if on the mere plea of petitioners
that they will suffer loss of earnings and capital, the questioned
provision is invalidated. Moreover, in the absence of evidence
demonstrating the alleged confiscatory effect of the provision in
question, there is no basis for its nullification in view of the
presumption of validity which every law has in its favor.
Given these, it is incorrect for petitioners to insist that the grant
of the senior citizen discount is unduly oppressive to their
business, because petitioners have not taken time to calculate
correctly and come up with a financial report, so that they have
not been able to show properly whether or not the tax
deduction scheme really works greatly to their disadvantage.
In treating the discount as a tax deduction, petitioners insist
that they will incur losses. However,petitioner’s computation is
clearly flawed.
For purposes of reimbursement, the law states that the cost of
the discount shall be deducted from gross income, the amount
of income derived from all sources before deducting allowable
expenses, which will result in net income. Here, petitioners
tried to show a loss on a per transaction basis, which should
not be the case. An income statement, showing an accounting
of petitioners sales, expenses, and net profit (or loss) for a
given period could have accurately reflected the effect of the
discount on their income. Absent any financial statement,
petitioners cannot substantiate their claim that they will be
operating at a loss should they give the discount. In addition,
the computation was erroneously based on the assumption
that their customers consisted wholly of senior citizens. Lastly,
the 32% tax rate is to be imposed on income, not on the
amount of the discount.
While the Constitution protects property rights, petitioners must
accept the realities of business and the State, in the exercise
of police power, can intervene in the operations of a business
which may result in an impairment of property rights in the
process.
CIR vs. CA, CTA and FORTUNE TOBACCO
CORPORATION G.R. No. 119761 August 29, 1996, Taxation
FACTS:
‘Champion,’ ‘Hope,’ and ‘More’ were classified as foreign
brands since they were listed in the World Tobacco Directory
as belonging to foreign companies.
However, Fortune Tobacco changed the names of ‘Hope’ to
‘Hope Luxury’ and ‘More’ to ‘Premium More,’ thereby removing
the said brands from the foreign brand category and registered
as a local brand.” Ad Valorem taxes were imposed on these
brands.
RMC 37-93, Reclassification of Cigarettes Subject to Excise
Tax, was issued by the BIR which aims to collect deficiencies
on ad valorem taxes against Fortune Tobacco following their
reclassification as foreign branded cigarettes.
“HOPE,” “MORE” and “CHAMPION” being manufactured by
Fortune Tobacco Corporation were considered locally
manufactured cigarettes bearing a foreign brand subject to the
55% ad valorem tax on cigarettes under RA 7654.
Fortune Tobacco filed a petition for review with the CTA. RMC
37-93 is found to be defective, invalid and unenforceable.
The CA sustained the decision of the CTA. Hence, this appeal.
ISSUE: Is RMC 37-93 a mere interpretative ruling, therefore
not requiring, for its effectivity, hearing and filing with the UP
Law Center?
RULING: A reading of RMC 37-93, particularly considering the
circumstances under which it has been issued, convinces us
that the circular cannot be viewed simply as a corrective
measure (revoking in the process the previous holdings of past
Commissioners) or merely as construing Section 142(c)(1) of
the NIRC, as amended, but has, in fact and most importantly,
been made in order to place “Hope Luxury,” “Premium More”
and “Champion” within the classification of locally
manufactured cigarettes bearing foreign brands and to thereby
have them covered by RA 7654.
Specifically, the new law would have its amendatory provisions
applied to locally manufactured cigarettes which at the time of
its effectivity were not so classified as bearing foreign brands.
Prior to the issuance of the questioned circular, “Hope Luxury,”
“Premium More,” and “Champion” cigarettes were in the
category of locally manufactured cigarettes not bearing foreign
brand subject to 45% ad valorem tax.
Hence, without RMC 37-93, the enactment of RA 7654, would
have had no new tax rate consequence on private
respondent’s products. Evidently, in order to place “Hope
Luxury,” “Premium More,” and “Champion” cigarettes within the
scope of the amendatory law and subject them to an increased
tax rate, the now disputed RMC 37-93 had to be issued. In so
doing, the BIR not simply intrepreted the law; verily, it
legislated under its quasi-legislative authority.The due
observance of the requirements of notice, of hearing, and of
publication should not have been then ignored.
Indeed, the BIR itself, in its RMC 10-86, has observed and
provided:
In order that there shall be a just enforcement of rules and
regulations, in conformity with the basic element of due
process, the following procedures are hereby prescribed for
the drafting, issuance and implementation of the said Revenue
Tax Issuances:
(1) This Circular shall apply only to (a) Revenue
Regulations; (b) Revenue Audit Memorandum Orders; and (c)
Revenue Memorandum Circulars and Revenue Memorandum
Orders bearing on internal revenue tax rules and regulations.
(2) Except when the law otherwise expressly provides, the
aforesaid internal revenue tax issuances shall not begin to be
operative until after due notice thereof may be fairly presumed.
Due notice of the said issuances may be fairly presumed only
after the following procedures have been taken;
xxx xxx xxx
(5) Strict compliance with the foregoing procedures is
enjoined.
Nothing on record could tell us that it was either impossible or
impracticable for the BIR to observe and comply with the
above requirements before giving effect to its questioned
circular.
All taken, the Court is convinced that the hastily promulgated
RMC 37-93 has fallen short of a valid and effective
administrative issuance.
The decision of the Court of Appeals, sustaining that of the
Court of Tax Appeals, is AFFIRMED.
EASTERN THEATRICAL CO., INC. ET AL vs VICTOR
ALFONSO GR No. No. L-1104 May 31, 1949
FACTS:
Petitioners, corporations engaged in the motion picture
business, impugns the validity of Ordinance No. 2958 (“An
Ordinance Imposing a Fee on the Price of Every Admission
Ticket Sold by Cinematographs, Theaters, Vaudeville
Companies, Theatrical Shows and Boxing Exhibition and
Providing for Other Purposes”) enacted by the Municipal Board
of the City of Manila. The complaint assailed the validity of the
said ordinance on the ground that the Municipal Board of
Manila exceeded and over-stepped the power granted it the
Charter of the City of Manila, among others. Defendants allege
as affirmative defenses that the ordinance was passed by the
Municipal Board of Manila by virtue of its express legislative
power to tax fix the license fee and regulate the business of
theaters, cinematographs and further to fix the location of and
to tax, fix the license fee for and regulate the business of
theatrical performances public exhibition circus and other
performances and places of amusement. They also allege that
since May 1, 1946, when the ordinance in question took effect
plaintiffs have been charging the theater-going public
increased prices for admission to the cinematographs owned
and operated to the
graduated tax imposed by said ordinance and as a result while
refusing to pay said tax but at the same time collecting an
amount equal to said tax plaintiffs have taken undue
advantage of said ordinance to realized more profits. The CFI
of
Manila upheld the validity of the ordinance, thus the plaintiffs
instituted an appeal.
ISSUE
Whether Ordinance No. 2958 is valid? YES
HELD: Yes, the Municipal Board has the power to enact the
Ordinance. Appellants contend that the lower court erred in
holding that under section 2444 (m) of the Revised
administrative Code the Municipal Board of the City of Manila
had the power to enact Ordinance No. 2958. The assumption
of the plaintiff that the power granted to the City of Manila by
section
2444(m) of the Revised Administrative Code is limited only to
the authority to impose a tax on business, with exclusion of the
power to impose a tax amusement is based on an arbitrary
labeling of the kind of tax authorized by said section 2444(m).
The tax therein authorized cannot be defined as tax on
business and cannot be restricted within a smaller scope than
what is authorized by the words used, to the extent of
excluding what plaintiffs describe as tax on amusement. The
very fact that
section 2444 (m) of the Revised Administrative Code includes
theaters, cinematographs, public billiard tables, public pool
tables, bowling alleys, dance halls, public dancing halls,
cabarets, circuses and other similar places, race tracks, horse
races, theatrical performances, public exhibition, circus and
other performances and places of amusements, will show
conclusively that the power to tax amusement is expressly
included within the power granted by section 2444(m) of the
Revised Administrative Code.
MANILA RACE HORSE TRAINERS ASSOCIATION, INC vs.
MANUEL DE LA FUENTE
G.R. No. L-2947
January 11, 1951
FACTS:
Petitioners challenged the constitutionality of Section 1 of
Batas Pambansa Blg. 135. It amended
Section 21 of the National Internal Revenue Code of 1977,
which provides for rates of tax on citizens or residents on (a)
taxable compensation income, (b) taxable net income, (c)
royalties, prizes, and other winnings, (d) interest from bank
deposits and yield or any other monetary benefit from deposit
substitutes and from trust fund and similar arrangements, (e)
dividends and share of individual partner in the net profits of
taxable partnership, (f) adjusted gross income.
Petitioner as taxpayer alleged that "he would be unduly
discriminated against by the imposition of higher rates of tax
upon his income arising from the exercise of his profession vis-
a-vis those which are imposed upon fixed income or salaried
individual taxpayers." He characterizes the above section as
arbitrary amounting to class legislation, oppressive and
capricious in character.
For petitioner, therefore, there is a transgression of both the
equal protection and due process clauses of the Constitution
as well as of the rule requiring uniformity in taxation.
The OSG prayed for dismissal of the petition due to lack of
merit.
ISSUE:
Whether or not the Ordinance is constitutional and valid
as has been enacted in accordance with the powers of the
Municipal Board granted by the Charter of the City of Manila.
HELD:
The Court did not believe that the Ordinance made
arbitrary classification. There is equality and uniformity in
taxation if all articles or kinds of property of the same class are
taxed at the same rate. Thus, it was held that, the fact that
some places of amusement are not taxed while others
are taxed, is not argument at all against the equality and
uniformity of tax imposition." In applying this to the case, there
would be discrimination if some boarding stables of the same
class used for the same number of horses were not taxed or
were made to pay less or more than others.
SISON VS. ANCHETA
GR No. L-59431, 25 July 1984
Facts: Section 1 of BP Blg 135 amended the Tax Code and
petitioner Antero M. Sison, as taxpayer, alleges that "he would
be unduly discriminated against by the imposition of higher
rates of tax upon his income arising from the exercise of his
profession vis-a-vis those which are imposed upon fixed
income or salaried individual taxpayers. He characterizes said
provision as arbitrary amounting to class legislation,
oppressive and capricious in character. It therefore violates
both the equal protection and due process clauses of the
Constitution as well asof the rule requiring uniformity in
taxation.
Issue: Whether BP 135 violates the due process and equal
protection clauses, and the rule on uniformity in taxation.
Held: There is a need for proof of such persuasive character
as would lead to a conclusion that there was a violation of the
due process and equal protection clauses. Absent such
showing, the presumption of validity must prevail. Equality and
uniformity in taxation means that all taxable articles or kinds of
property of the same class shall be taxed at the same rate. The
taxing power has the authority to make reasonable and natural
classifications for purposes of taxation. Where the
differentiation conforms to the practical dictates of justice and
equity, similar to the standards of equal protection, it is not
discriminatory within the meaning of the clause and is therefore
uniform. Taxpayers may be classified into different categories,
such as recipients of compensation income as against
professionals. Recipients of compensation income are not
entitled to make deductions for income tax purposes as there
is no practically no overhead expense, while professionals and
businessmen have no uniform costs or expenses necessary to
produce their income. There is ample justification to adopt the
gross system of income taxation to compensation income,
while continuing the system of net income taxation as regards
professional and business income.
JUAN LUNA SUBDIVISION VS. SARMIENTO
GR L-3538, 28 MAY 1952
FACTS: Juan Luna Subdivision is a local corporation which
issued a check to the City Treasurer of Manila for amount to be
applied to its land tax for the second semester of 1941. The
records of the City Treasurer do not show what was done with
the check (It appears that it was deposited with the Philippine
National Bank [PNB]). After liberation (WWII), the City
Treasurer refused to refund the corporation’s deposit or apply it
to such future taxes as might be found due, while the
Philippine Trust Co (to which the check was presented) was
unwilling to reverse its debit entry against Juan Luna Subd.
Said amount is also subject of another Taxation Law I, 2004 (
19 ) Digests (Berne Guerrero) disagreement between the
corporation and the City Treasure, with the corporation
claiming that the wholeamount of the check for the taxes for
the last semester of 1941 have been remitted by
Commonwealth Act 703 (1945).
ISSUE: Whether the provision allowing the remission covers
taxes paid before the enactment of Commonwealth Act 703, or
taxes which were still unpaid.
HELD: The law is clear that it applies to “taxes and penalties
due and payable,” i.e. taxes owed or owing. The remission of
taxes due and payable to the exclusion og taxes already
collected does not constitute unfair discrimination. Each set of
taxes is a class by itself, and the law would be open to attack
as class legislation only if all taxpayers belonging to one class
were not treated alike. Herein, they are not. The taxpayers who
paid their taxes before liberation and those who had not were
not on the same footing on the need of material relief.
Taxpayers who had been in arrears in their obligation whould
have to satisfy their liability with genuine currency, while the
taxes paid during the occupation had been satisfied in
Japanese War Notes, many of them at a time when those
notes were well-nigh worthless. To refund those taxes with
restored currency would be unduly enrich many of the payers
at a greater expense to the people at large.
ASSOCIATION OF CUSTOM BROKERS, INC. vs.
MUNICIPAL BOARD
G.R. No. L-4376 May 22, 1953
FACTS:
The Association of Customs Brokers, Inc., which is
composed of all brokers and public service operators of motor
vehicles in the City of Manila challenge the validity Ordinance
No. 3379 on the ground that (1) while it levies a so-called
property tax it is in reality a license tax which is beyond the
power of the Municipal Board of the City of Manila; (2) said
ordinance offends against the rule of uniformity of taxation; and
(3) it constitutes double taxation.
The respondents contend on their part that the
challenged ordinance imposes a property tax which is within
the power of the City of Manila to impose under its Revised
Charter [Section 18 (p) of Republic Act No. 409], and that the
tax in question does not violate the rule of uniformity of
taxation, nor does it constitute double taxation.
ISSUE:
Whether or not the ordinance is null and void
RULING:
The ordinance infringes the rule of the uniformity of
taxation ordained by our Constitution. Note that the ordinance
exacts the tax upon all motor vehicles operating within the City
of Manila. It does not distinguish between a motor vehicle for
hire and one which is purely for private use. Neither does it
distinguish between a motor vehicle registered in the City of
Manila and one registered in another place but occasionally
comes to Manila and uses its streets and public highways. This
is an inequality which we find in the ordinance, and which
renders it offensive to the Constitution.
ORMOC SUGAR CO INC. VS TREASURER OF ORMOC
CITY
FACTS:
The Municipal Board of Ormoc City passed Ordinance No. 4,
imposing "on any and all productions of sugar milled at
petitioner's, municipal tax of 1% per export sale. Petitioner paid
but were under protest.
Petitioner filed before the CFI contending that the ordinance is
unconstitutional for being in violation of the equal protection
clause and the rule of uniformity of taxation, aside from being
an export tax forbidden under Section 2287 of the Revised
Administrative Code. It further alleged that the tax is neither a
production nor a license tax which Ormoc City its charter and
under Section 2 of Republic Act 2264, or the Local Autonomy
Act, is authorized to impose; that it also violates RA 2264
because the tax is on both the sale and export of sugar.
ISSUE:Whether the ordinance is valid.
RULING:
NO. The SC held that it violates the equal protection clause for
it taxes only sugar produced and exported by petitioner and
none other. Even though petitioner, at the time of the
enactment of the ordinance, was the only sugar central in
Ormoc, the classification should have been in terms applicable
to future conditions as well. The taxing ordinance should not be
singular and exclusive as to exclude any subsequently
established sugar central, of the same class as petitioner, for
the coverage of the tax.
Though, petitioner can be refunded, they are not entitled to
interest because the taxes were not arbitrarily collected as the
ordinance provided a sufficient basis to preclude arbitrariness,
the same being then presumed constitutional until declared
otherwise.
MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS
INC VS. DEPARTMENT OF FINANCE SECRETARY
FACTS:
Petitioner is engaged in the buying and selling of copra in
Misamis Oriental. The petitioner questions Revenue
Memorandum Circular 47-91 issued by the respondent, in
which copra was classified as agricultural non-food product
effectively removing copra as one of the exemptions under
Section 103 of the NIRC.
Section 103a of the NIRC states that the sale of agricultural
non-food products in their original state is exempt from VAT
only if the sale is made by the primary producer or owner of the
land from which the same are produced and not by any other
person or entity. Section 103b states the sale of agricultural
food products in their original state is exempt from VAT at all
stages of production or distribution regardless of who the seller
is - which the petitioner enjoys. The reclassification had the
effect of denying to the petitioner this exemption when copra
was classified as an agricultural food product.
Petitioner filed a motion for prohibition.
ISSUE: Whether the Circular is valid.
RULING:
Yes. The Court first stated that the CIR gave the circular a
strict construction consistent with the rule that tax exemptions
must be strictly construed against the taxpayer and liberally in
favor of the state.
The Court also stated that the Circular is not discriminatory and
in violation of the equal protection clause. Petitioner likened
copra farmers / producers, who are exempted from VAT and
copra traders, which the Court disagreed.
Lastly, petitioners argued that the Circular was
counterproductive which the Court answers that it is a question
of wisdom or policy which should be addressed to respondent
officials and to Congress.
TOLENTINO VS. SECRETARY OF FINANCE G.R. NO.
115455, AUGUST 25, 1994
FACTS
RA 7716, otherwise known as the Expanded Value-Added
Tax Law, is an act that seeks to widen the tax base of the
existing VAT system and enhance its administration by
amending the National Internal Revenue Code. There are
various suits questioning and challenging the
constitutionality of RA 7716 on various grounds.
Tolentino contends that RA 7716 did not originate
exclusively from the House of Representatives but is a mere
consolidation of HB. No. 11197 and SB. No. 1630 and it did
not pass three readings on separate days on the Senate
thus violating Article VI, Sections 24 and 26(2) of the
Constitution, respectively.
Art. VI, Section 24: All appropriation, revenue or tariff bills,
bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the
House of Representatives, but the Senate may propose or
concur with amendments.
Art. VI, Section 26(2): No bill passed by either House shall
become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form
have been distributed to its Members three days before its
passage, except when the President certifies to the
necessity of its immediate enactment to meet a public
calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon
shall be taken immediately thereafter, and the yeas and
nays entered in the Journal.
ISSUE:
Whether RA 7166 violates the principle of progressive system
of taxation
RULING:
No. Lacking empirical data on which to base any conclusion
regarding these arguments, any discussion whether the VAT is
regressive in the sense that it will hit the poor and middle
income group in society harder than it will the rich is largely an
academic exercise.
Regressivity is not a negative standard for courts to enforce.
“Evolve a progressive system of taxation” is a directive to
Congress. These provisions are placed in the Constitution as
moral incentives to legislation, not as judicially enforceable
rights.
G.R. No. 3473 March 22, 1907
J. CASANOVAS, plaintiff-appellant, vs. JNO. S. HORD,
defendant-appellee.
FACTS: In 1897, the Spanish Government, in accordance with
the provisions of the royal decree of 14 may 1867, granted J.
Casanovas certain mines in the province of Ambos Camarines,
of which mines the latter is now the owner. That these were
validly perfected mining concessions granted to prior to 11
April 1899 is conceded. They were so considered by the
Collector of Internal Revenue and were by him said to fall
within the provisions of section 134 of Act No. 1189, known as
the Internal Revenue Act. That section is as follows:
SEC. 134. On all valid perfected mining concessions
granted prior to April eleventh, eighteen hundred and
ninety-nine, there shall be levied and collected on the
after January first, nineteen hundred and five, the
following taxes:
2. (a) On each claim containing an area of sixty
thousand square meters, an annual tax of one
hundred pesos; (b) and at the same rate
proportionately on each claim containing an area in
excess of, or less than, sixty thousand square meters.
 3. On the gross output of each an ad valorem tax
equal to three per centum of the actual market value
of such output.
The defendant accordingly imposed upon these properties the
tax mentioned in section 134, which tax, as has before been
stated, J. Casanovas paid under protest.
ISSUE: Whether Section 134 of Act 1189 is valid.
ISSUE:
Is Section 134 valid?
RULING:
No, the concessions granted by the Government of Spain to
the plaintiff, constitute contracts between the parties; that
section 134 of the Internal Revenue Law impairs the obligation
of these contracts, and is therefore void as to them.
The deed constituted a contract between the Spanish
Government and Casanovas. Furthermore, the section
conflicts with Section 60 of the Act of Congress of July 1, 1902,
which indicate that concessions can be cancelled only by
reason of illegality in the procedure by which they were
obtained, or for failure to comply with the conditions prescribed
as requisites for their retention in the laws under which they
were granted. The grounds were not shown nor claimed in the
case.
CAGAYAN ELECTRIC POWER & LIGHT CO.,
INC., petitioner, vs. COMMISSIONER OF INTERNAL
REVENUE and COURT OF APPEALS, respondents.
Facts:
The petitioner is the holder of a legislative franchise, Republic
Act No. 3247, under which its payment of 3% tax on its gross
earnings from the sale of electric current is "in lieu of all taxes
and assessments of whatever authority upon privileges,
earnings, income, franchise, and poles, wires, transformers,
and insulators of the grantee, from which taxes and
assessments the grantee is hereby expressly exempted" (Sec.
3).
On June 27, 1968, Republic Act No. 5431 amended section 24
of the Tax Code by making liable for income tax all corporate
taxpayers not specifically exempt be taxed. Thus, franchise
companies were subjected to income tax in addition to
franchise tax.
However, in petitioner's case, its franchise was amended by
Republic Act No. 6020, effective August 4, 1969. The
amendment reenacted the tax exemption in its original charter
or neutralized the modification made by Republic Act No. 5431.
Commissioner of Internal Revenue in a demand letter dated
February 15, 1973 required the petitioner to pay deficiency
income taxes for 1968-to 1971. The petitioner contested the
assessments that it was still exempt from taxes.
Issue: Whether or not the Commissioner of Internal Revenue’s
demand is valid?
Ruling: No.
The Constitution provides that a franchise is subject to
amendment, alteration or repeal by the Congress when the
public interest so requires (Sec. 8, Art. XIV, 1935 Constitution;
Sec. 5, Art. XIV, 1973 Constitution),
Republic Act No. 5431, in amending section 24 of the Tax
Code by subjecting to income tax all corporate taxpayers not
expressly exempted therein and in section 27 of the Code, had
the effect of withdrawing petitioner's exemption from income
tax.
However, the exemption was restored by the subsequent
enactment on August 4, 1969 of Republic Act No. 6020 which
reenacted the said tax exemption. Hence, the petitioner is
liable only for the income tax for the period from January 1 to
August 3, 1969 when its tax exemption was modified by
Republic Act No. 5431.
Phil. Power and Development Co. v. CIR
CTA Case No. 1152 Oct. 31, 1965
Facts
Petitioner is engaged in the business of supplying
electric light, heat and power pursuant to municipal franchises
granted under Act No. 667. Prior to herein period covered (Oct.
1, 1955 to June 30, 1960) by the alleged deficiency, petitioner
has been paying franchise tax based on Section 259 of the Tax
Code which is 5%. But through a letter from respondent dated
June 15, 1955 and July 13, 1955, petitioner pays based on
Resolution No. 81 which is only 2%. Further, said resolution
provided that the franchise shall be subject to amendment,
alteration or repeal by the Congress. Now, this appeal for
holding petitioner liable for deficiency franchise tax and tax
erroneously credited.
Issue
Is petitioner liable based on the 2% franchise tax?

Ruling
No. Nowhere in the franchises of petitioner can be
found a provision to the effect that the franchise tax prescribed
therein "shall be in lieu of all other taxes.” Inasmuch as said
franchises do not preclude the imposition of a higher franchise
tax, petitioner-grantee is subject to the 5% franchise tax
provided in Section 259 of the Tax Code, as amended, and not
to the lower rate of franchise tax prescribed in the franchises in
question. More so, because each franchise was granted with
the express "understanding and upon the condition that it shall
be subject to amendment, alteration or repeal by the Congress.
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 CFI Abra (Branch I) is affirmed subject to
the modification that half of the assessed tax be returned to the
petitioner. The modification is derived from the fact that the
ground floor is being used for commercial purposes (leased)
and the second floor being used as incidental to education
(residence of the director).

FACTS: Petitioner, an educational corporation and institution

of higher learning duly incorporated with the Securities and
Exchange Commission in 1948, filed a complaint to annul and
declare void the “Notice of Seizure’ and the “Notice of Sale” of
its lot and building located at Bangued, Abra, for non-payment
of real estate taxes and penalties amounting to P5,140.31.
Said “Notice of Seizure” by respondents Municipal Treasurer
and Provincial Treasurer, defendants below, was 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 questioned decision. The trial
court ruled for the government, holding that the second floor of
the building is being used by the director for residential
purposes and that the ground floor used and rented by
Northern Marketing Corporation, a commercial establishment,
and thus the property is not being used exclusively for
educational purposes. Instead of perfecting an appeal,
petitioner availed of the instant petition for review on certiorari
with prayer for preliminary injunction before the Supreme
Court, by filing said petition on 17 August 1974.

ISSUE: Whether or not the lot and building are used

exclusively for educational purposes.

HELD: Section 22, paragraph 3, Article VI, of the then 1935

Philippine Constitution, expressly grants exemption from realty
taxes for cemeteries, churches and parsonages or convents
appurtenant thereto, and all lands, buildings, and
improvements used exclusively for religious, charitable or
educational purposes.ﾝ Reasonable emphasis has always
been made that the exemption extends to facilities which are
incidental to and reasonably necessary for the accomplishment
of the main purposes. The use of the school building or lot for
commercial purposes is neither contemplated by law, nor by
jurisprudence. In the case at bar, the lease of the first floor of
the building to the Northern Marketing Corporation cannot by
any stretch of the imagination be considered incidental to the