Villegas vs.
Hui Chiong Tsai Pao H ISSUES:
FACTS: This case involves an ordinance prohibiting aliens from being
employed or engage or participate in any position or occupation or business
enumerated therein, whether permanent, temporary or casual, without first
securing an employment permit from the Mayor of Manila and paying the
permit fee of P50.00. Private respondent Hiu Chiong Tsai Pao Ho who was
employed in Manila, filed a petition to stop the enforcement of such
ordinance as well as to declare the same null and void. Trial court rendered
judgment in favor of the petitioner, hence this case.
ISSUE: WON said Ordinance violates due process of law and equal protection
rule of the Constitution.
HELD: Yes. The Ordinance The ordinance in question violates the due
process of law and equal protection rule of the Constitution. Requiring a
person before he can be employed to get a permit from the City Mayor who
may withhold or refuse it at his will is tantamount to denying him the basic right
of the people in the Philippines to engage in a means of livelihood. While it is
true that the Philippines as a State is not obliged to admit aliens within its
territory, once an alien is admitted, he cannot be deprived of life without due
process of law. This guarantee includes the means of livelihood. The shelter
of protection under the due process and equal protection clause is given to all
persons, both aliens and citizens.
Villegas v Hiu Chiong Tsai Pao Ho (1978)
Villegas v Hiu Chiong Tsai Pao Ho GR No L-29646, November 10, 1978
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. Thus, a case was filed with CFI-Manila to stop enforcement of the
ordinance. CFI-Manila declared the ordinance void. Thus, the present
petition for certiorari.
1. (1) Is the ordinance violative of the cardinal rule of uniformity of
taxation?
2. (2) Does it violate the principle against undue designation of
legislative power?
3. (3) Does it violate the due process and equal protection clauses of
the Constitution?
RULING:
1. (1) Yes. The P50 fee is unreasonable not only because it is
excessive but because it fails to consider valid
substantial differences in situation among individual aliens who are
required to pay it. The same amount of P50 is being collected from
every employed alien whether he is casual or permanent, part time
or full time or whether he is a lowly employee or a highly paid
executive.
2. (2) Yes. It does not lay down any criterion or standard to guide the
Mayor in the exercise of his discretion. It has been held that where
an ordinance of a municipality fails to state any policy or to set up
any standard to guide or limit the action, thus conferring upon the
Mayor arbitrary and unrestricted power, such ordinance is invalid.
3. (3) Yes. Requiring a person before he can be employed to get a
permit from the City Mayor of Manila who may withhold or refuse it
at will is tantamount to denying him the basic right of the people in
the Philippines to engage in a means of livelihood. The shelter of
protection under the due process and equal protection clause is
given to all persons, both aliens and citizens.
Thus, the ordinance is invalid.
Villegas vs Hiu Chiong Tsai Pao Ho (1978)
February 15, 2013 markerwins Tax Law
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, rank-and-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.
] HELD:
CREBA VS. EXECUTIVE SECRETARY- MINIMUM CORPORATE INCOME
TAX
FACTS:
CREBA assails the imposition of the minimum corporate income tax (MCIT)
as being violative of the due process clause as it levies income tax even if
there is no realized gain. They also question the creditable withholding tax
(CWT) on sales of real properties classified as ordinary assets stating that
(1) they ignore the different treatment of ordinary assets and capital assets;
(2) the use of gross selling price or fair market value as basis for the CWT
and the collection of tax on a per transaction basis (and not on the net
income at the end of the year) are inconsistent with the tax on ordinary real
properties; (3) the government collects income tax even when the net
income has not yet been determined; and (4) the CWT is being levied upon
real estate enterprises but not on other enterprises, more particularly those
in the manufacturing sector.
ISSUE:
Are the impositions of the MCIT on domestic corporations and CWT on
income from sales of real properties classified as ordinary assets
unconstitutional?
NO. MCIT does not tax capital but only taxes income as shown by the fact
that the MCIT is arrived at by deducting the capital spent by a corporation in
the sale of its goods, i.e., the cost of goods and other direct expenses from
gross sales. Besides, there are sufficient safeguards that exist for the MCIT:
(1) it is only imposed on the 4th year of operations; (2) the law allows the
carry forward of any excess MCIT paid over the normal income tax; and (3)
the Secretary of Finance can suspend the imposition of MCIT in justifiable
instances.
The regulations on CWT did not shift the tax base of a real estate business’
income tax from net income to GSP or FMV of the property sold since the
taxes withheld are in the nature of advance tax payments and they are thus
just installments on the annual tax which may be due at the end of the
taxable year. As such the tax base for the sale of real property classified as

ordinary assets remains to be the net taxable income and the use of the
GSP or FMV is because these are the only factors reasonably known to the
Go against the due process clause because the government collects income
buyer in connection with the performance of the duties as a withholding
agent.
Contravene the equal protection clause because the CWT is being charged
Neither is there violation of equal protection even if the CWT is levied only
on the real industry as the real estate industry is, by itself, a class on its own
and can be validly treated different from other businesses.
1. Chamber of Real Estate and Builders’ Associations, Inc., v. The Hon.
Executive Secretary Alberto Romulo, et al
G.R. No. 160756. March 9, 2010
Facts: Petitioner Chamber of Real Estate and Builders’ Associations, Inc.
(CREBA), an association of real estate developers and builders in the
Philippines, questioned the validity of Section 27(E) of the Tax Code which
imposes the minimum corporate income tax (MCIT) on corporations.
Under the Tax Code, a corporation can become subject to the MCIT at the
rate of 2% of gross income, beginning on the 4th taxable year immediately
following the year in which it commenced its business operations, when such
MCIT is greater than the normal corporate income tax. If the regular income
tax is higher than the MCIT, the corporation does not pay the MCIT.
CREBA argued, among others, that the use of gross income as MCIT base
amounts to a confiscation of capital because gross income, unlike net income,
is not realized gain.
CREBA also sought to invalidate the provisions of RR No. 2-98, as amended,
otherwise known as the Consolidated Withholding Tax Regulations, which
prescribe the rules and procedures for the collection of CWT on sales of real
properties classified as ordinary assets, on the grounds that these regulations:
Use gross selling price (GSP) or fair market value (FMV) as basis for
determining
the income tax on the sale of real estate classified as ordinary assets, instead
of the entity’s net taxable income as provided for under the Tax Code;
Mandate the collection of income tax on a per transaction basis, contrary to the
Tax Code provision which imposes income tax on net income at the end of
the taxable period;
tax even when the net income has not yet been determined; gain is never
assured by mere receipt of the selling price; and
upon real estate enterprises, but not on other business enterprises, more
particularly, those in the manufacturing sector, which do business similar to
that of a real estate enterprise.
Issues: (1) Is the imposition of MCIT constitutional? (2) Is the imposition of
CWT on income from sales of real properties classified as ordinary assets
constitutional?
Held: (1) Yes. The imposition of the MCIT is constitutional. An income tax is
arbitrary and confiscatory if it taxes capital, because it is income, and not
capital, which is subject to income tax. However, MCIT is imposed on gross
income which is computed by deducting from gross sales the capital spent by
a corporation in the sale of its goods, i.e., the cost of goods and other direct
expenses from gross sales. Clearly, the capital is not being taxed.
Various safeguards were incorporated into the law imposing MCIT.
Firstly, recognizing the birth pangs of businesses and the reality of the need
to recoup initial major capital expenditures, the MCIT is imposed only on the
4th taxable year immediately following the year in which the corporation
commenced its operations.
Secondly, the law allows the carry-forward of any excess of the MCIT paid
over the normal income tax which shall be credited against the normal income
tax for the three immediately succeeding years.
Thirdly, since certain businesses may be incurring genuine repeated losses,
the law authorizes the Secretary of Finance to suspend the imposition of MCIT
if a corporation suffers losses due to prolonged labor dispute, force majeure
and legitimate business reverses.
(2) Yes. Despite the imposition of CWT on GSP or FMV, the income tax base
for sales of real property classified as ordinary assets remains as the entity’s
net taxable income as provided in the Tax Code, i.e., gross income less
allowable costs and deductions. The seller shall file its income tax return and
credit the taxes withheld by the withholding agent-buyer against its tax due. If
the tax due is greater than the tax withheld, then the taxpayer shall pay the
difference. If, on the other hand, the tax due is less than the tax withheld, the
taxpayer will be entitled to a refund or tax credit.
The use of the GSP or FMV as basis to determine the CWT is for purposes of
practicality and convenience. The knowledge of the withholding agent-buyer
is limited to the particular transaction in which he is a party. Hence, his basis
can only be the GSP or FMV which figures are reasonably known to him.
Also, the collection of income tax via the CWT on a per transaction basis, i.e.,
upon consummation of the sale, is not contrary to the Tax Code which calls
for the payment of the net income at the end of the taxable period. The taxes
withheld are in the nature of advance tax payments by a taxpayer in order to
cancel its possible future tax obligation. They are installments on the annual
tax which may be due at the end of the taxable year. The withholding agent-
buyer’s act of collecting the tax at the time of the transaction, by withholding
the tax due from the income payable, is the very essence of the withholding
tax method of tax collection.
On the alleged violation of the equal protection clause, the taxing power has
the authority to make reasonable classifications for purposes of taxation.
Inequalities which result from singling out a particular class for taxation, or
exemption, infringe no constitutional limitation. The real estate industry is, by
itself, a class and can be validly treated differently from other business
enterprises.
What distinguishes the real estate business from other manufacturing
enterprises, for purposes of the imposition of the CWT, is not their production
processes but the prices of their goods sold and the number of transactions
involved. The income from the sale of a real property is bigger and its
frequency of transaction limited, making it less cumbersome for the parties to
comply with the withholding tax scheme. On the other hand, each
manufacturing enterprise may have tens of thousands of transactions with
several thousand customers every month involving both minimal and
substantial amounts.
CITY OF BAGUIO vs. DE LEON
25 SCRA 938
GR No. L-24756, October 31, 1968
"There is no double taxation where one tax is imposed by the state and the
other is imposed by the city."
FACTS: The City of Baguio passed an ordinance imposing a license fee on
any person, entity or corporation doing business in the City. The ordinance
sourced its authority from RA No. 329, thereby amending the city charter
empowering it to fix the license fee and regulate businesses, trades and
occupations as may be established or practiced in the City. De Leon was
assessed for P50 annual fee it being shown that he was engaged in property
rental and deriving income therefrom. The latter assailed the validity of the
ordinance arguing that it is ultra vires for there is no statury authority which
expressly grants the City of Baguio to levy such tax, and that there it imposed
double taxation, and violates the requirement of uniformity.
ISSUE: Are the contentions of the defendant-appellant tenable?
HELD: No. First, RA 329 was enacted amending Section 2553 of the Revised
Administrative Code empowering the City Council not only to impose a license
fee but to levy a tax for purposes of revenue, thus the ordinance cannot be
considered ultra vires for there is more than ample statury authority for the
enactment thereof.
Second, an argument against double taxation may not be invoked where
one tax is imposed by the state and the other is imposed by the city, so that
where, as here, Congress has clearly expressed its intention, the statute must
be sustained even though double taxation results.
And third, violation of uniformity is out of place it being widely recognized
that there is nothing inherently obnoxious in the requirement that license fees
or taxes be exacted with respect to the same occupation, calling or activity by
both the state and the political subdivisions thereof.
City of Baguio v De Leon COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MICHEL J.
GR No. L-24756, October 31, 1968 LHUILLIER PAWNSHOP,

FACTS: INC., respondent.

The City of Baguio passed a license fee on any person, entity or corporation [G.R. No. 150947. July 15, 2003] 406 scra 178
doing business in the City. The ordinance
sourced its authority from RA 329, thereby amending the city charter FACTS:
empowering it to fix the license fee and regulate businesses, trades and
Revenue Memorandum Orders (RMOs) were issued imposing a 5%
occupation as may be established in the City. De Leon was assessed for
lending investor’s tax on
P50 annual fee it being shown that he was engaged in property rental and
deriving income therefrom. The latter assailed the validity of the ordinance pawnshop. Pursuant to this, the BIR issued an assessment against Michel
arguing that it is ultra vires for there is no statutory authority which expressly J. Lhuillier Pawnshop,
grants the City of Baguio to levy such tax and that there it imposed double
taxation and violates the requirement of uniformity. Inc. (hereafter Lhuillier) demanding payment of deficiency percentage
tax. Lhuillier filed an
ISSUE:
administrative protest, contending, inter alia, that pawnshops are
Is the ordinance valid?
different from lending
RULING: investors, which are subject to the 5% percentage tax under the specific
Yes. First, RA 329 was enacted amending Section 2553 of the Revised provision of the Tax
Administrative Code empowering the City Council not only to impose a
license fee but to levy a tax for purposes of revenue, thus the ordinance Code. Its protest having been unacted upon, Lhuillier with the CTA which
cannot be considered ultra vires for there is more than ample statutory for declared the RMO’s in
the enactment thereof.
question null and void insofar as they classify pawnshops as lending
Second, an argument against double taxation may not be invoked where
investors subject to 5%
one tax is imposed by the state and the other imposed by the City.
Third, violation of uniformity is out of place it being widely recognized that percentage tax.
there is nothing inherently obnoxious in the requirement that license fees of
taxes be enacted with respect to the same occupation, calling or activity by ISSUE: Are pawnshops included in the term lending investors for the
both the state and the political subdivision thereof. purpose of imposing the

5% percentage tax under then Section 116 of the NIRC?

HELD: NO. While it is true that pawnshops are engaged in the business of
lending money, they

are not considered “lending investors” for the purpose of imposing the
5% percentage

taxes since: (1) prior to its amendment the NIRC, pawnshops and
lending investors were
subjected to different tax treatments; (2) Congress never intended implementation of the law but substantially increases the burden of
pawnshops to be treated in those governed, it

the same way as lending investors, since the amendment of the NIRC behooves the agency to accord at least to those directly affected a
treated both tax subjects chance to be heard, and

differently’ (3) Under the maxim expressio unius est exclusio alterius, the thereafter to be duly informed, before that new issuance is given the force
mention of one thing and effect of law.

implies the exclusion of another thing not mentioned, Sec. 116 [15]
subjects to percentage tax

dealers in securities and lending investors only.

RMO No. 15-91 and RMC No. 43-91 cannot be viewed simply as
implementing rules or

ISSUE: Whether or not the RMOs in question are valid corrective measures revoking in the process the previous rulings of
past
HELD: NO. There are two kinds of administrative issuances: the
legislative rule and Commissioners. Specifically, they would have been amendatory
provisions applicable to
the interpretative rule. A legislative rule is in the nature of subordinate
legislation, designed to pawnshops. Without these disputed CIR issuances, pawnshops would not
be liable to pay the
implement a primary legislation by providing the details thereof. An
interpretative rule, on the 5% percentage tax, considering that they were not specifically included
in Section 116 of the
other hand, is designed to provide guidelines to the law which the
administrative agency is in NIRC of 1977, as amended. In so doing, the CIR did not simply
interpret the law. The due
charge of enforcing
observance of the requirements of notice, hearing, and publication
When an administrative rule is merely interpretative in nature, its should not have been
applicability needs
ignored
nothing further than its bare issuance, for it gives no real consequence more
than what the law

itself has already prescribed. When, on the other hand, the

administrative rule goes beyond

merely providing for the means that can facilitate or render least
cumbersome the
 COMMISSIONER OF INTERNAL REVENUE v. MICHEL J. LHUILLIER
PAWNSHOP, INC. G.R. No. 150947. July 15, 2003
FACTS:
On 1991, the CIR issued Revenue Memorandum Order (RMO) No. 15-91,
which was clarified by RMO No. 43-91 imposing a 5% lending investors tax
on pawnshops. It held that the principal activity of pawnshops is lending
money at interest and incidentally accepting personal property as security for
the loan. Since pawnshops are considered as lending investors
effective, they also become subject to documentary stamp taxes.
On 1997, the Bureau of Internal Revenue (BIR) issued an Assessment Notice
against Lhuillier demanding payment of deficiency percentage.
Lhuillier filed an administrative protest with the Office of the Revenue Regional
Director contending that neither the Tax Code nor the VAT Law expressly
imposes 5% percentage tax on the gross income of pawnshops; that
pawnshops are different from lending investors, which are subject to the 5%
percentage tax under the specific provision of the Tax Code; that RMO No.
15-91 is not implementing any provision of the Internal Revenue laws but is a
new and additional tax measure on pawnshops, which only Congress could
enact, and that it impliedly amends the Tax Code, and that it is a class
legislation as it singles out pawnshops.
On 1998, the BIR issued Warrant of Distraint and/or Levy against Lhuilliers
property for the enforcement and payment of the assessed percentage tax.
When Lhuiller's protest was not acted upon, they elevated it to the CIR which
was also not acted upon. Lhuiller filed a Notice and Memo on Appeal with the
CTA.
On 2000, the CTA held the the RMOs were void and that the Assessment
Notice should be cancelled.
The CIR filed a motion for review with the CA which only affirmed the CTA's
decision thus this case in bar.
ISSUE: Whether pawnshops included in the term lending investors for the
purpose of imposing the 5% percentage tax under the NIRC.
RULING:
No.
The held that even though the RMOs No were issued in accordance with the
power of the CIR, they cannot issue administrative rulings or circulars not
consistent with the law sought to be applied. It should remain consistent with
the law they intend to carry out. Only Congress can repeal or amend the law.
In the NIRC, the term lending investor includes all persons who make a
practice of lending money for themselves or others at interest. A pawnshop,
on the other hand, is defined under Section 3 of P.D. No. 114 as a person or
entity engaged in the business of lending money on personal property
delivered as security for loans.
While it is true that pawnshops are engaged in the business of lending money,
they are not considered lending investors for the purpose of imposing the 5%
percentage taxes citing the following reasons:
1. Pawnshops and lending investors were subjected to different tax treatments
as per the NIRC.
2. Congress never intended pawnshops to be treated in the same way as
lending investors.
3. Section 116 of the NIRC of 1977, as amended by E.O. No. 273, subjects to
percentage tax dealers in securities and lending investors only. There is no
mention of pawnshops.
4. The BIR had ruled several times prior to the issuance of the RMOs that
pawnshops were not subject to the 5% percentage tax imposed by Section
116 of the NIRC of 1977. As Section 116 of the NIRC of 1977 was practically
lifted from Section 175 of the NIRC of 1986, and there being no change in the
law, the interpretation thereof should not have been altered.

Province of Abra vs. Hernando, 107 SCRA 104 (1981) G.R. No. L-49336
August 31, 1981
Fact: First, there was a denial of a motion to dismiss an action for
declaratory relief by private respondent Roman Catholic Bishop of Bangued
desirous of being exempted from a real estate tax followed by a summary
judgment granting such exemption, without even hearing the side of
petitioner, wantonly violated the rights of petitioner to due process, by giving
due course to the petition of private respondent for declaratory relief, and
thereafter without allowing petitioner to answer and without any hearing,
adjudged the case; all in total disregard of basic laws of procedure and basic
provisions of due process in the constitution, thereby indicating a failure to
grasp and understand the law, which goes into the competence of the
Honorable Presiding Judge.” It was the submission of counsel that an action
for declaratory relief would be proper only before a breach or violation of any
statute, executive order or regulation. Moreover, there being a tax
assessment made by the Provincial Assessor on the properties of
respondent Roman Catholic Bishop, petitioner failed to exhaust the
administrative remedies available under Presidential Decree No. 464 before
filing such court action. Further, it was pointed out to respondent Judge that
he failed to abide by the pertinent provision of such Presidential Decree.
Issue: Whether Tax exemption is presumed in favor of the claimant?
Held: No, Respondent Judge would not have erred so grievously had he
merely compared the provisions of the present Constitution with that
appearing in the 1935 Charter on the tax exemption of “lands, buildings, and
improvements.” There is a marked difference. Under the 1935 Constitution:
“Cemeteries, churches, and parsonages or convents appurtenant thereto,
and all lands, buildings, and improvements used exclusively for religious,
charitable, or educational purposes shall be exempt from taxation.” The
present Constitution added “charitable institutions, mosques, and non-profit
cemeteries” and required that for the exemption of “:lands, buildings, and
improvements,” they should not only be “exclusively” but also “actually and
“directly” used for religious or charitable purposes. The Constitution is
worded differently. The change should not be ignored. It must be duly taken
into consideration. Reliance on past decisions would have sufficed were the
words “actually” as well as “directly” not added. There must be proof
therefore of the actual and direct use of the lands, buildings, and
improvements for religious or charitable purposes to be exempt from
taxation. According to Commissioner of Internal Revenue v. Guerrero: “From
1906, in Catholic Church v. Hastings to 1966, in Esso Standard Eastern, Inc.
v. Acting Commissioner of Customs, it has been the constant and uniform
holding that exemption from taxation is not favored and is never presumed,
so that if granted it must be strictly construed against the taxpayer.
Affirmatively put, the law frowns on exemption from taxation, hence, an
exempting provision should be construed strictissimi juris.” In Manila Electric
Company v. Vera, a 1975 decision, such principle was reiterated, reference
being made to Republic Flour Mills, Inc. v. Commissioner of Internal
Revenue; Commissioner of Customs v. Philippine Acetylene Co. & CTA; and
Davao Light and Power Co., Inc. v. Commissioner of Customs.
FACTS:
The Provincial Assessor of Abra levied a tax assessment on the properties
of respondent Roman Catholic Bishop of Bangued.
An action for declaratory relief by private respondent Roman Catholic
Bishop of Bangued desiring to be exempted from a real estate tax followed
by a summary judgment granting such exemption, without even hearing
the side of petitioner.
Acting Provincial Fiscal, as counsel for petitioner (Province of Abra),
contended that the respondent Judge in said summary judgment Hon.
Harold M. Hernando [may I quote] "virtually ignored the pertinent provisions
of the Rules of Court; . . . wantonly violated the rights of petitioner to due
process, by giving due course to the petition of private respondent for
declaratory relief, and thereafter without allowing petitioner to answer
and without any hearing, adjudged the case; all in total disregard of
basic laws of procedure and basic provisions of due process in the
constitution, thereby indicating a failure to grasp and understand the law,
which goes into the competence of the Honorable Presiding Judge."
The Bishop of Bengued filed a petition for declaratory relief on the ground
that it is exempted from payment of real estate taxes, its properties
being actually, directly and exclusively used for religious or charitable
purposes as sources of support for the bishop, the parish priest and his
helpers.
Onga naman. The good bishop seemed to have filed the petition for
declaratory relief on the ground of a clear Constitutional basis.. anong
masama don?
Petitioner (Province of Abra) filed a motion to dismiss but the same was
denied. After conducting a summary hearing, respondent Judge
granted the exemption without hearing the side of petitioner.
Yun.. dun sila nagkamale..
Hence, this present petition for certiorari and mandamus alleging denial of
procedural due process.
ISSUE:
Whether the present requirement of actual exclusive and direct use of
property for charitable and religious purposes is material.
RULING:
Under Article VI, Section 22, paragraph 3 of the 1935
Constitution: "Cemeteries, churches, and parsonages or convents
appurtenant thereto, and all lands, building, and improvements used
exclusively for religious, charitable, or educational purposes shall be exempt
from taxation."
The present Constitution (Article VIII, Section 17, paragraph 3)
added "charitable institutions, mosques, and non-profit cemeteries" and
required that for the exemption of "lands, buildings, and
improvements," they should not only be "exclusively" but also
"actually" and "directly" used for religious or charitable purposes.
The court said the Constitution is worded differently. The change should not
be ignored. It must be duly taken into consideration. Petitioner Province of
Abra is therefore fully justified in invoking the protection of procedural
due process.
If there is any case where proof is necessary to demonstrate that there is
compliance with the Constitutional provision that allows an exemption, this is
it.
Onga naman... but instead, Judge Hernando accepted at its face the
allegation of private respondent. Wala nang procedural due process to listen
to the other party, decide nalang.
It clearly appears, therefore, that in failing to accord a hearing to petitioner
Province of Abra and deciding the case immediately in favor of private
respondent Bishop of Bengued, respondent Judge failed to abide by the
constitutional command of procedural due process.
Province of Abra wins this case.
Churchill v Concepcion (1916) spaces used for posting or displaying temporary signs, and all signs
displayed on premises not occupied
by buildings." The rate was later reduced to P2 by Act No. 2432, as
amended by Act No. 2445, which
Churchill v Concepcion was ratified by the Congress of the United States.
GR No 11572, September 22, 1916 Meanwhile, Francis A. Churchill and Stewart Tait, copartners doing business
under the firm name and
FACTS: style of the Mercantile Advertising Agency, owners of a sign or billboard
Section 100 of Act 2339 imposed an annual tax of P4 per square meter upon containing an area of 52
electric signs, billboards, and spaces used for posting or displaying square meters constructed on private property in the city of Manila and
exposed to public view, were
temporary signs, and all signs displayed on premises not occupied by
taxes thereon P104. The tax was paid under protest and the plaintiffs having
buildings. The section was amended by Act 2432, reducing the tax to P2 per
exhausted all their
square meter. Francis A. Churchill and Stewart Tait, co-partners in administrative remedies instituted an action under section 140 of Act No.
Mercantile Advertising Agency, owned a billboard to which they were taxes 2339 against the Collector of
at P104. The tax was paid under protest. Churchill and Tait instituted the Internal Revenue to recover back the amount thus paid. It was alleged that
action to recover the amount. the tax constitutes
deprivation of property without compensation or due process of law,
ISSUE: because it is confiscatory and
Is the statute and the tax imposed void for lack of uniformity? unjustly discriminatory and the said tax is void for lack of uniformity, because
it is not graded
RULING: according to value; because the classification on which it is based on any
No, the tax is valid. reasonable ground; and
furthermore, because it constitutes double taxation.
ISSUES
Uniformity in taxation means that all taxable articles or kinds of property, of
1.)
the same class, shall be taxed at the same rate. It does not mean that all Whether the tax in question is confiscatory as to the business of the plaintiff
lands, chattels, securities, incomes, occupations, franchises, privileges, 2.)
necessities, and luxuries shall all be assessed at the same rate. Different Whether the tax is void for lack f uniformity or because it is not graded
articles may be taxed at different amounts provided the rate is uniform on according to value or
the same class everywhere, with all people, at all times. constitutes double taxation, or because the classification upon which it is
Herein, the Act imposes a tax of P2 per square meter or a fraction thereof based is mere arbitrary
upon every electric sign, billboard, etc. Wherever found in the Philippine selection and not based on any reasonable grounds?
Islands. The rule of taxation upon such signs is uniform throughout the HELD
islands. The rule does not require taxes to be graded according to the value 1.)
of the subjects upon which they are imposed, especially those levied as No. The tax herein complained of falls far short of being confiscatory.
privilege or occupation taxes. Consequently, it cannot be
held that the Legislature has gone beyond the power conferred upon it by
FRANCIS A. CHURCHILL v. CONCEPCION the Philippine Bill in so
G.R. No. 11572, September 22, 1916 far as the amount of the tax is concerned. It can be observed that there are
FACTS other businessmen who
Act No. 2339 imposed an annual tax of P4 per square meter upon “"electric are paying the tax without protest and presumably making a reasonable
signs, billboards, and profit from their business.
The power to impose taxes is one so unlimited in force and so searching in British American Tobacco v. Camacho (2008)
extent, that the courts G.R. No. 163583 August 20, 2008
scarcely venture to declare that it is subject to any restrictions whatever, YNARES-SANTIAGO, J.
except such as rest in the
discretion of the authority which exercises it. It reaches to every trade or Lessons Applicable: Court of Tax Appeals Jurisdiction, Regional Trial Court
occupation; to every Jurisdiction, Equal Protection and Uniformity of Taxation (constitutional
object of industry, use, or enjoyment; to every species of possession; and it issue), BIR Power to Conduct Resurvey and Reclassification (delegated by
imposes a burden express legislation)
which, in case of failure to discharge it, may be followed by seizure and sale
or confiscation of Laws Applicable:
property. No attribute of sovereignty is more pervading, and at no point does
the power of the FACTS:
government affect more constantly and intimately all the relations of life than
through the exactions  June 2001, petitioner British American Tobacco introduced and sold
made under it. Lucky Strike, Lucky Strike Lights and Lucky Strike Menthol Lights
2.) cigarettes w/ SRP P 9.90/pack - Initial assessed excise tax: P 8.96/pack
No. The “rule of taxation” upon such signs is uniform throughout the island. It (Sec. 145 [c])
must be noted that a  February 17, 2003: RR 9-2003: Periodic review every 2 years or earlier
tax is uniform when it operates with the same force and effect in every place of the current net retail price of new brands and variants thereof for the
where the subject of it purpose of the establishing and updating their tax classification
is found. "Uniformity," as applied to the constitutional provision that all taxes  March 11, 2003: RMO 6-2003: Guidelines and procedures in
shall be uniform, establishing current net retail prices of new brands of cigarettes and
means that all property belonging to the same class shall be taxed alike. The alcohol products
law does not require  August 8, 2003: RR 22-2003: Implement the revised tax classification of
taxes to be graded according to the value of the subject or subjects upon certain new brands introduced in the market after January 1, 1997
which they are imposed, based on the survey of their current net retail prices. This increased the
especially those levied as privilege or occupation taxes. The fact that the excise tax to P13.44 since the average net retail price is above P
land upon which the 10/pack. This cause petitioner to file before the RTC of Makati a petition
billboards are located is taxed at so much per unit and the billboards at so for injunction with prayer for issuance of a Temporary Restraining Order
much per square meter and/or Writ of Preliminary Injunction sought to enjoin the implementation
does not constitute "double taxation." Double taxation, within the true of Sec. 145 of the NIRC, RR No. 1-97, 9-2003, 22-2003 and 6-2003 on
meaning of that expression, the ground that they discriminate against new brands of cigarettes in
does not necessarily affect its validity. It is not for the judiciary to say that the violation of the equal protection and uniformity provisions of the
classification upon Constitution
which the tax is based "is mere arbitrary selection and not based upon any  RTC: Dismissed
reasonable grounds. The  While petitioner's appeal was pending, RA 9334 amending Sec. 145 of
Legislature selected signs and billboards as a subject for taxation and it the 1997 NIRC among other took effect on January 1, 2005 which in
must be presumed that it, in effect increased petitioners excise tax to P25/pack
so doing, acted with a full knowledge of the situation  Petitioner filed a Motion to Admit attached supplement and a
supplement to the petition for review assailing the constitutionality of RA
9334 and praying a downward classification of Lucky Strike products at
the bracket taxable at P 8.96/pack since existing brands are still taxed
 based on their price as of October 1996 eventhough they are equal or
higher than petitioner's product price.
 Philip Morris Philippines Manufacturing Incorporated, Fortune Tobacco
Corp., Mighty Corp. and JT International Intervened.
 Fortune Tobacco claimed that the CTA should have the exclusive
appellate jurisdiction over the decision of the BIR in tax disputes
ISSUE:
1. W/N the RTC rather than the CTA has jurisdiction.
2. W/N RA 9334 of the classification freeze provision is unconstitutional
for violating the equal protection and uniformity provisions of the
Constitution
3. W/N RR Nos. 1-97, 9-2003, 22-2003 and RA 8243 even prior to its
amendment by RA 9334 can authorize the BIR to conduct resurvey
and reclassification.
HELD:
1. Yes. The jurisdiction of the CTA id defined in RA 1125 which confers on
the CTA jurisdiction to resolve tax disputes in general. BUT does NOT
include cases where the constitutionality of a law or rule is challenged which
is a judicial power belonging to regular courts.
2. No. In Sison Jr. v. Ancheta, the court held that "xxx It suffices then that
the laws operate equally and uniformly on all persons under similar
circumstances or that all persons must be treated in the same manner, the
conditions not being different, both in the privileges conferred and the
liabilities imposed. If the law be looked upon in tems of burden on charges,
those that fall within a class should be treated in the same fashion, whatever
restrictions cast on some in the group equally binding on the rest.
xxx" Thus, classification if rational in character is allowable. In Lutz v.
Araneta: "it is inherent in the power to tax that a state be free to select the
subjects of taxation, and it has been repeatedly held that 'inequalities which
result from a singling out of one particular class for taxation, or exemption
infringe no constitutional limitation" SC previously held: "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"
Under the the rational basis test, a legislative classification, to survive an
equal protection challenge, must be shown to rationally further a legitimate
state interest. The classifications must be reasonable and rest upon some
ground of difference having a fair and substantial relation to the object of the
legislation
A legislative classification that is reasonable does not offend the
constitutional guaranty of the equal protection of the laws. The classification
is considered valid and reasonable provided that: (1) it rests on substantial
distinctions; (2) it is germane to the purpose of the law; (3) it applies, all
things being equal, to both present and future conditions; and (4) it applies
equally to all those belonging to the same class.
Moreover, petitioner failed to clearly demonstrate the exact extent of such
impact as the price is not the only factor that affects competition.
3. NO. Unless expressly granted to the BIR, the power to reclassify cigarette
brands remains a prerogative of the legislature which cannot be usurped by
the former. These are however modified by RA 9334.
British American Tobacco Corporation v. Finance Secretary Camacho, BIR
Commissioner Parayno (2008)
Doctrine: Classification if rational in character is allowable. The taxing
power has the authority
to make reasonable and natural classifications for purposes of taxation.
Facts:
Amending Sections 138, 139, 140, and 142 of the NIRC, as Amended and
For Other
Purposes," which took effect on January 1, 1997
period January 2, 1997 to December 31, 2003, such that said cigarettes
shall remain in the
classification under which the BIR has determined them to belong as of
December 31,
2003, until revised by Congress.
rate as inflation and price appreciation were not factored in.
Net Retail
Price
(excluding
excise tax
and VAT
2005 Tax 2007 Tax 2009 Tax 2011 Tax Supreme
Court
Classificatio
n
Less than
P5 per COMMISSIONER OF CUSTOMS v. HYPERMIX FEEDS CORPORATION,
pack GR No. 179579, 2012-02-01
P2/pack P2.23/pack P2.47/pack P2.72/pack Low-priced
Bet P5- Facts:
P6.50 On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-
P6.35/pack P6.74/pack P7.14/pack P7.56/pack Medium- 2003. Under the Memorandum, for tariff purposes, wheat was classified
priced according to the following: (1) importer or consignee; (2) country of origin;
Bet P6.50- and (3) port of discharge.[5] The... regulation provided an exclusive list of
P10 corporations, ports of discharge, commodity descriptions and countries of
P10.35/pack P10.88/pack P11.43/pack P12/pack High-priced origin. Depending on these factors, wheat would be classified either as food
Above P10 P25/pack P26.06/pack P27.16/pack P28.30/pack Premium- grade or feed grade. The corresponding tariff for food grade wheat was 3%,
priced for feed... grade, 7%.
rate
and poses barrier to entry in the cigarette industry CMO 27-2003 further provided for the proper procedure for protest or
Valuation and Classification Review Committee (VCRC) cases. Under this
net retail price as of October 1, 1996. procedure, the release of the articles that were the subject of protest
new entrants required the importer to post a cash bond to cover the tariff... differential.[6]
priced while it is classified as Premium Priced.
WON: A month after the issuance of CMO 27-2003, on 19 December 2003,
1. The pertinent portions of RA 8240, as amended by RA 9334, respondent filed a Petition for Declaratory Relief[7] with the Regional Trial
discriminates against Court (RTC) of Las Piñas City. It anticipated the implementation of the
new cigarette brands and favors old cigarette brands? regulation on its imported and perishable
2. The classification freeze provision unduly favors older brands over newer
brands? Chinese milling wheat in transit from China.[8] Respondent contended that
Held: In applying the rational basis test, the Court found the questioned law CMO 27-2003 was issued without following the mandate of the Revised
Constitutional. Administrative Code on public participation, prior notice, and publication or
of the equal protection of the laws. registration with the University of... the Philippines Law Center.
(1) it rests on substantial distinctions; Respondent also alleged that the regulation summarily adjudged it to be a
(2) it is germane to the purpose of the law; feed grade supplier without the benefit of prior assessment and examination;
(3) it applies, all things being equal, to both present and future conditions; thus, despite having imported food grade wheat, it would be subjected to the
and 7% tariff upon the arrival of the shipment, forcing... them to pay 133% more
(4) it applies equally to all those belonging to the same class. than was proper.
market,
objectives (i.e. promoting fair competition among the players in the industry) Furthermore, respondent claimed that the equal protection clause of the
would Constitution was violated when the regulation treated non-flour millers
suggest that, by Congress’s own standards, the current excise tax system differently from flour millers for no reason at all.
on sin products
is imperfect. But the Court cannot declare a statute unconstitutional merely Lastly, respondent asserted that the retroactive application of the regulation
because it was confiscatory in nature.
can be improved or that it does not tend to achieve all of its stated
Issues:
objectives.
discuss the propriety of an action for declaratory relief.
Ruling:
The requirements of an action for declaratory relief are as follows: (1) there
must be a justiciable controversy; (2) the controversy must be between
persons whose interests are adverse; (3) the party seeking declaratory relief
must have a legal interest in the controversy; and
(4) the issue involved must be ripe for judicial determination.[15] We find that
the Petition filed by respondent before the lower court meets these
requirements.
First, the subject of the controversy is the constitutionality of CMO 27-2003
issued by petitioner Commissioner of Customs.
Second, the controversy is between two parties that have adverse interests.
Petitioners are summarily imposing a tariff rate that respondent is refusing to
pay.
Third, it is clear that respondent has a legal and substantive interest in the
implementation of CMO 27-2003. Respondent has adequately shown that,
as a regular importer of wheat, on 14 August 2003, it has actually made
shipments of wheat from China to Subic.
Finally, the issue raised by respondent is ripe for judicial determination,
because litigation is inevitable[19] for the simple and uncontroverted reason
that respondent is not included in the enumeration of flour millers classified
as food grade wheat... importers. Thus, as the trial court stated, it would
have to file a protest case each time it imports food grade wheat and be
subjected to the 7% tariff.
It is therefore clear that a petition for declaratory relief is the right remedy
given the circumstances of the case.
When an administrative rule is merely interpretative in nature, its applicability
needs nothing further than its bare issuance, for it gives no real
consequence more than what the law itself has already prescribed. When,
on the other hand, the administrative rule goes beyond... merely providing
for the means that can facilitate or render least cumbersome the
implementation of the law but substantially increases the burden of those
governed, it behooves the agency to accord at least to those directly
affected a chance to be heard, and thereafter to be... duly informed, before
that new issuance is given the force and effect of law.
Because petitioners failed to follow the requirements enumerated by the
Revised Administrative Code, the assailed regulation must be struck down.
Going now to the content of CMO 27-3003, we likewise hold that it is
unconstitutional for being violative of the equal protection clause of the
Constitution.
The equal protection clause means that no person or class of persons shall
be deprived of the same protection of laws enjoyed by other persons or
other classes in the same place in like circumstances. Thus, the guarantee
of the equal protection of laws is not violated if there... is a reasonable
classification. For a classification to be reasonable, it must be shown that
(1) it rests on substantial distinctions; (2) it is germane to the purpose of the
law; (3) it is not limited to existing conditions only; and (4) it applies equally
to all members... of the same class.
Unfortunately, CMO 27-2003 does not meet these requirements. We do not
see how the quality of wheat is affected by who imports it, where it is
discharged, or which country it came from.
The regulation, therefore, does not become disadvantageous to respondent
only, but even to the state.
It is also not clear how the regulation intends to "monitor more closely wheat
importations and thus prevent their misclassification."
Petitioner Commissioner of Customs also went beyond his powers when the
regulation limited the customs officer's duties mandated by Section 1403 of
the Tariff and Customs Law, as amended.
The provision mandates that the customs officer must first assess and
determine the classification of the imported article before tariff may be
imposed. Unfortunately, CMO 23-2007 has already classified the article
even before the customs officer had the chance to examine it. In... effect,
petitioner Commissioner of Customs diminished the powers granted by the
Tariff and Customs Code with regard to wheat importation when it no longer
required the customs officer's prior examination and assessment of the
proper classification of the wheat.
It is well-settled that rules and regulations, which are the product of a
delegated power to create new and additional legal provisions that have the
effect of law, should be within the scope of the statutory authority granted by
the legislature to the administrative agency. It... is required that the
regulation be germane to the objects and purposes of the law; and that it be
not in contradiction to, but in conformity with, the standards prescribed by
law.
In summary, petitioners violated respondent's right to due process in the
issuance of CMO 27-2003 when they failed to observe the requirements
under the Revised Administrative Code. Petitioners likewise violated
respondent's right to equal protection of laws when they provided... for an
unreasonable classification in the application of the regulation. Finally,
petitioner Commissioner of Customs went beyond his powers of delegated
authority when the regulation limited the powers of the customs officer to
examine and assess imported articles.
ABAKADA Guro Party List vs Purisima
Facts:
Petitioners seeks to prevent respondents from implementing and enforcing
Republic Act (RA) 9335. R.A. 9335 was enacted to optimize the revenue-
generation capability and collection of the Bureau of Internal Revenue (BIR)
and the Bureau of Customs (BOC). The law intends to encourage BIR and
BOC officials and employees to exceed their revenue targets by providing a
system of rewards and sanctions through the creation of a Rewards and
Incentives Fund (Fund) and a Revenue Performance Evaluation Board
(Board). It covers all officials and employees of the BIR and the BOC with at
least six months of service, regardless of employment status.
Petitioners, invoking their right as taxpayers filed this petition challenging the
constitutionality of RA 9335, a tax reform legislation. They contend that, by
establishing a system of rewards and incentives, the law “transforms the
officials and employees of the BIR and the BOC into mercenaries and
bounty hunters” as they will do their best only in consideration of such
rewards. Thus, the system of rewards and incentives invites corruption and
undermines the constitutionally mandated duty of these officials and
employees to serve the people with utmost responsibility, integrity, loyalty
and efficiency.
Petitioners also claim that limiting the scope of the system of rewards and
incentives only to officials and employees of the BIR and the BOC violates
the constitutional guarantee of equal protection. There is no valid basis for
classification or distinction as to why such a system should not apply to
officials and employees of all other government agencies.
In addition, petitioners assert that the law unduly delegates the power to fix
revenue targets to the President as it lacks a sufficient standard on that
matter. While Section 7(b) and (c) of RA 9335 provides that BIR and BOC
officials may be dismissed from the service if their revenue collections fall
short of the target by at least 7.5%, the law does not, however, fix the
revenue targets to be achieved. Instead, the fixing of revenue targets has
been delegated to the President without sufficient standards. It will therefore
be easy for the President to fix an unrealistic and unattainable target in order
to dismiss BIR or BOC personnel.
Finally, petitioners assail the creation of a congressional oversight
committee on the ground that it violates the doctrine of separation of powers.
While the legislative function is deemed accomplished and completed upon
the enactment and approval of the law, the creation of the congressional
oversight committee permits legislative participation in the implementation
and enforcement of the law.
Issues:
1. Whether or not the scope of the system of rewards and incentives
limitation to officials and employees of the BIR and the BOC violates the
constitutional guarantee of equal protection.
2. Whether or not there was an unduly delegation of power to fix revenue
targets to the President.
3. Whether or not the doctrine of separation of powers has been violated in
the creation of a congressional oversight committee.
Discussions:
1. The Court referred to the ruling of Victoriano v. Elizalde Rope Workers’
Union, which states that “the guaranty of equal protection of the laws is
not a guaranty of equality in the application of the laws upon all citizens
of the State.
The equal protection of the laws clause of the Constitution allows
classification. Classification in law, as in the other departments of knowledge
or practice, is the grouping of things in speculation or practice because they
agree with one another in certain particulars. A law is not invalid because of
simple inequality. The very idea of classification is that of inequality, so that it
goes without saying that the mere fact of inequality in no manner determines
the matter of constitutionality.
The Court has held that the standard is satisfied if the classification or
distinction is based on a reasonable foundation or rational basis and is not
palpably arbitrary. “
2. To determine the validity of delegation of legislative power, it needs the
following: (1) the completeness test and (2) the sufficient standard test.
A law is complete when it sets forth therein the policy to be executed,
carried out or implemented by the delegate. It lays down a sufficient
standard when it provides adequate guidelines or limitations in the law
to map out the boundaries of the delegate’s authority and prevent the
delegation from running riot. To be sufficient, the standard must specify
the limits of the delegate’s authority, announce the legislative policy and
identify the conditions under which it is to be implemented.
3. Based from the ruling under Macalintal v. Commission on Elections, it is
clear that congressional oversight is not unconstitutionalper se,
meaning, it neither necessarily constitutes an encroachment on the
executive power to implement laws nor undermines the constitutional
separation of powers. Rather, it is integral to the checks and balances
inherent in a democratic system of government. It may in fact even
enhance the separation of powers as it prevents the over-accumulation
of power in the executive branch.
Rulings:
1. The equal protection clause recognizes a valid classification, that is, a
classification that has a reasonable foundation or rational basis and not
arbitrary.22 With respect to RA 9335, its expressed public policy is the
optimization of the revenue-generation capability and collection of the
BIR and the BOC.23 Since the subject of the law is the revenue-
generation capability and collection of the BIR and the BOC, the
incentives and/or sanctions provided in the law should logically pertain
to the said agencies. Moreover, the law concerns only the BIR and the
BOC because they have the common distinct primary function of
generating revenues for the national government through the collection
of taxes, customs duties, fees and charges.
Both the BIR and the BOC principally perform the special function of being
the instrumentalities through which the State exercises one of its great
inherent functions – taxation. Indubitably, such substantial distinction is
germane and intimately related to the purpose of the law. Hence, the
classification and treatment accorded to the BIR and the BOC under R.A.
9335 fully satisfy the demands of equal protection.
2. R.A. 9335 adequately states the policy and standards to guide the
President in fixing revenue targets and the implementing agencies in
carrying out the provisions of the law under Sec 2 and 4 of the said Act.
Moreover, the Court has recognized the following as sufficient
standards: “public interest,” “justice and equity,” “public convenience and
welfare” and “simplicity, economy and welfare.”33 In this case, the
declared policy of optimization of the revenue-generation capability and
collection of the BIR and the BOC is infused with public interest.
3. The court declined jurisdiction on this case. The Joint Congressional
Oversight Committee in RA 9335 was created for the purpose of
approving the implementing rules and regulations (IRR) formulated by
the DOF, DBM, NEDA, BIR, BOC and CSC. On May 22, 2006, it
 approved the said IRR. From then on, it became functus officio and
ceased to exist. Hence, the issue of its alleged encroachment on the
executive function of implementing and enforcing the law may be
considered moot and academic.
YES. R.A. No. 9335 is constitutional, except for Section 12 of the law which
creates a Joint Congressional Oversight Committee to review the law’s IRR.
That RA No. 9335 will turn BIR and BOC employees and officials into
“bounty hunters and mercenaries” is purely speculative as the law

ABAKADA GURO PARTYLIST vs. PURISIMA- Attrition Act of 2005, R.A. establishes safeguards by imposing liabilities on officers and employees who
are guilty of negligence, abuses, malfeasance, etc. Neither is the equal
No. 9335
protection clause violated since the law recognizes a valid classification as
only the BIR and BOC have the common distinct primary function of revenue

FACTS: generation. There are sufficient policy and standards to guide the President
in fixing revenue targets as the revenue targets are based on the original
Petitioners question the Attrition Act of 2005 and contend that by estimated revenue collection expected of the BIR and the BOC.
establishing a system of rewards and incentives when they exceed their
revenue targets, the law (1) transforms the officials and employees of the
However, the creation of a Joint Congressional Oversight Committee for the
BIR and BOC into mercenaries and bounty hunters; (2) violates the
purpose of reviewing the IRR formulated by agencies of the executive
constitutional guarantee of equal protection as it limits the scope of the law
branch (DOF, DBM, NEDA, etc.) is unconstitutional since it violates the
to the BIR and BOC; (3) unduly delegates to the President the power to fix
doctrine of separation of powers since Congress arrogated judicial power
revenue targets without sufficient standards; and (4) violates the doctrine of
upon itself.
separation of powers by creating a Congressional Oversight Committee to
approve the law’s implementing rules.

ISSUE:

Is R.A. No. 9335 constitutional?

HELD:
 KAPATIRAN NG MGA NAGLILINGKOD SA PAMAHALAAN NG
PILIPINAS, INC., HERMINIGILDO C. DUMLAO, GERONIMO Q. QUADRA,
and MARIO C. VILLANUEVA v. HON. BIENVENIDO TAN G.R. No. 81311.
June 30, 1988
FACTS:
The four consolidated cases questions the validity of the VAT (Executive
Order 273) for being unconstitutional in that its enactment is not allegedly
within the powers of the President; that the VAT is oppressive, discriminatory,
regressive, and violates the due process and equal protection clauses and
other provisions of the 1987 Constitution.
The Solicitor General prays for the dismissal of the petitions on the ground
that the petitioners have failed to show justification for the exercise of its
judicial powers. He also questions the legal standing of the petitioners who,
he contends, are merely asking for an advisory opinion from the Court, there
being no justiciable controversy for resolution.
ISSUE: Whether VAT is unconstitutional.
RULING:
No. First, the Court held that the President had authority to issue EO 273 as
it was provided in the Provisional constitution that the President shall have
legislative powers.
Second, petitioners have failed to show that EO 273 was issued capriciously
and whimsically or in an arbitrary or despotic manner by reason of passion or
personal hostility. It appears that a comprehensive study of the VAT had been
extensively discussed by this framers and other government agencies
involved in its implementation, even under the past administration.
Lastly, petitioners also failed to prove that EO 273 is oppressive,
discriminatory, unjust and regressive, in violation of the equal protection
clause. Petitioners merely rely upon newspaper articles which are actually
hearsay and have evidentiary value. To justify the nullification of a law. there
must be a clear and unequivocal breach of the Constitution, not a doubtful and
argumentative implication. As the Court sees it, EO 273 satisfies all the
requirements of a valid tax.
In any event, if petitioners seriously believe that the adoption and continued
application of the VAT are prejudicial to the general welfare or the interests of
the majority of the people, they should seek recourse and relief from the
political branches of the government. The Court, following the time-honored
doctrine of separation of powers, cannot substitute its judgment for that of the
President as to the wisdom, justice and advisability of the adoption of the VAT.
The Court can only look into and determine whether or not EO 273 was
enacted and made effective as law, in the manner required by, and consistent
with, the Constitution, and to make sure that it was not issued in grave abuse
of discretion amounting to lack or excess of jurisdiction; and, in this regard,
the Court finds no reason to impede its application or continued
implementation.
RUFINO R. TAN v. RAMON R. DEL ROSARIO, JR., as SECRETARY OF
FINANCE & JOSE U. ONG, as COMMISSIONER OF INTERNAL
REVENUE G.R. No. 109289. October 3, 1994
FACTS:
The consolidated cases questions the constitutionality of RA 7496 or the
Simplified Net Income Taxation Scheme. Petitioners claim to be taxpayers
adversely affected by the continued implementation of the amendatory
legislation. Petitioners also assailed Section 6 of Revenue Regulations No.
2-93: that public respondents have exceeded their rule-making authority in
applying SNIT to general professional partnerships.
The Solicitor General agrees with the public respondents.
ISSUE: Whether RA 7496 and RR Nos. 2-93 are unconstitutional.
RULING:
No. RA 7496 does not impose tax on single proprietorships and professionals
differently from the manner it imposes the tax on corporations and
partnerships. Such system of income taxation has long been the prevailing
rule even prior to RA 7496. Uniformity of taxation merely requires that all
subjects or objects of taxation, similarly situated, are to be treated alike both
in privileges and liabilities.
Also, the Court clarifies that a general professional partnership is not itself an
income taxpayer. The income tax is imposed not on the professional
partnership, which is tax exempt, but on the partners themselves in their
individual capacity computed on their distributive shares of partnership profits
as provided in Section 23 of the Tax Code.
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 profession. Under the present income
tax system all individuals deriving income from any source whatsoever are
treated in almost invariably the same manner and under a common set of
rules.
The phrase "income taxpayers" is an all embracing term used in the Tax Code,
and it practically covers all persons who derive taxable income. Partnerships
no matter how created or organized, are subject to income tax which, for
purposes of the above categorization, are by law assimilated to be within the
context of, and so legally contemplated as, corporations.
Section 6 of Revenue Regulation No. 2-93 did not alter, but merely confirmed,
the above standing rule as now so modified by Republic Act No. 7496 on
basically the extent of allowable deductions applicable to all individual income
taxpayers on their non-compensation income. There is no evident intention of
the law, either before or after the amendatory legislation, to place in an
unequal footing or in significant variance the income tax treatment of
professionals who practice their respective professions individually and of
those who do it through a general professional partnership.
Tan v. Del Rosario Digest
Tan v Del Rosario
Facts:
1. Two consolidated cases assail the validity of RA 7496 or the Simplified Net
Income Taxation Scheme ("SNIT"), which amended certain provisions of the
NIRC, as well as the Rules and Regulations promulgated by public
respondents pursuant to said law.
2. Petitioners posit that RA 7496 is unconstitutional as it allegedly violates the
following provisions of the Constitution:
-Article VI, Section 26(1) — Every bill passed by the Congress shall embrace
only one subject which shall be expressed in the title thereof.
- Article VI, Section 28(1) — The rule of taxation shall be uniform and
equitable. The Congress shall evolve a progressive system of taxation.
- Article III, Section 1 — No person shall be deprived of . . . property without
due process of law, nor shall any person be denied the equal protection of the
laws.
3. Petitioners contended that public respondents exceeded their rule-making
authority in applying SNIT to general professional partnerships. Petitioner
contends that the title of HB 34314, progenitor of RA 7496, is deficient for
being merely entitled, "Simplified Net Income Taxation Scheme for the Self-
Employed and Professionals Engaged in the Practice of their
Profession" (Petition in G.R. No. 109289) when the full text of the title actually
reads,
'An Act Adopting the Simplified Net Income Taxation Scheme For The Self-
Employed and Professionals Engaged In The Practice of Their Profession,
 Amending Sections 21 and 29 of the National Internal Revenue Code,' as Tan vs. Del Rosario Case Digest
amended. Petitioners also contend it violated due process.

Tan vs. Del Rosario

5. The Solicitor General espouses the position taken by public respondents.
237 SCRA 324
6. The Court has given due course to both petitions.

ISSUE: Whether or not the tax law is unconstitutional for violating due
process Facts:

Petitioners challenge the constitutionality of RA 7496 or the

simplified income taxation scheme (SNIT) under Arts (26) and (28) and III
NO. The due process clause may correctly be invoked only when there is a
(1). The SNIT contained changes in the tax schedules and different
clear contravention of inherent or constitutional limitations in the exercise of
treatment in the professionals which petitioners assail as unconstitutional for
the tax power. No such transgression is so evident in herein case.
being isolative of the equal protection clause in the constitution.

1. Uniformity of taxation, like the concept of equal protection, merely requires that
all subjects or objects of taxation, similarly situated, are to be treated alike
both in privileges and liabilities. Uniformity does not violate classification as
long as: (1) the standards that are used therefor are substantial and not
arbitrary, (2) the categorization is germane to achieve the 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.
2. What is apparent from the amendatory law is the legislative intent to
increasingly shift the income tax system towards the schedular approach in
the income taxation of individual taxpayers and to maintain, by and large, the
present global treatment on taxable corporations. The Court does not view
this classification to be arbitrary and inappropriate.
Issue:
Is the contention meritorious?
Ruling:
No. uniformity of taxation, like the hindered concept of equal
protection, merely require that all subjects or objects of taxation similarly
situated are to be treated alike both privileges and liabilities. Uniformity, does
not offend classification as long as it rest on substantial distinctions, it is
germane to the purpose of the law. It is not limited to existing only and must
apply equally to all members of the same class.
The legislative intent is to increasingly shift the income tax system
towards the scheduled approach in taxation of individual taxpayers and
maintain the present global treatment on taxable corporations. This
classification is neither arbitrary nor inappropriate.
Tan vs. Del Rosario
237 SCRA 324
Facts:
Petitioner seeks declaration of unconstitutionality of RA7496 (also known
as Simplified Net Income Taxation) due to violation of the following
constitutional provision:
Article VI, Section 26(1) — Every bill passed by the Congress shall embrace
only one subject which shall be expressed in the title thereof.
Article VI, Section 28(1) — The rule of taxation shall be uniform and
equitable. The Congress shall evolve a progressive system of taxation.
The petitioner stressed that it violates the equal protection clause as it only
imposed taxes upon one who practice his profession and not to those who
are engaged to single proprietorship.
Article III, Section 1 — No person shall be deprived of . . . property without
due process of law, nor shall any person be denied the equal protection of
the laws.
Issue:
Whether or not RA 7496 violates the aforestated provision of the constitution
Held:
The SC ruled in the negative. The said law is not arbitrary; it is germane to
the purpose of the law and; applies to all things of equal conditions and of
same class.
It is neither violative of equal protection clause due to the existence of
substantial difference between one who practice his profession alone and
one who is engaged to proprietorship. Further, the SC said that RA 7496 is
just an amendatory provision of the code of taxpayers where it classifies
taxpayers in to four main groups: Individuals, Corporations, Estate under
Judicial Settlement and Irrevocable Trust. The court would have appreciated
the contention of the petitioner if RA 7496 was an independent law. But
since it is attached to a law that has already classified taxpayers, there is no
violation of equal protection clause.
Tan v Del Rosario, Jr.
Facts:
This is a consolidated case involving the constitutionality of RA 7496 or the
Simplified Net Income Taxation (SNIT) scheme.
Petitioners claim to be taxpayers adversely affected by the continued
implementation of the SNIT. In the 1st case, they contend that the House Bill
which eventually became RA 7496 is a misnomer or deficient because it was
named as “Simplified Net Income Taxation Scheme for the Self-Employed
and Professionals Engaged in the Practice of their Profession” while the
actual title contains the said words with the additional phrase, “…Amending
Section 21 and 29 of the National Internal Revenue Code”.
In the 2nd case, they argue that respondents have exceeded their rule-
making authority in applying SNIT to general professional partnerships by
issuing Revenue Regulation 2-93 to carry out the RA.
Issue:
Whether or not general professional partnerships may be taxed under SNIT
Held:
No. A general professional partnership is not itself an income taxpayer.
Income tax is imposed not on the partnership (which is tax exempt), but on
the 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 and one who
does it through partnership with others in the exercise of a common
profession.
In the case, SNIT is not envisioned by the Congress to cover corporations or
partnerships which are independently subject to the payment of income tax.
***
Notes:
*2 KINDS OF PARTNERSHIPS UNDER TAX CODE
1. Taxable Partnerships – no matter how it was created or organized, they
are subject to income tax by law.
2. Exempt Partnerships – the partners, not the partnership (although
obligated to file an income tax return for administration and data) are liable
for income tax in their individual capacity.
Ipinaskil ni cee lois sa 4:56 PM
Tan vs Del Rosario GR No 109289 03 October 1994
11WednesdayMAR 2015
Facts: Republic Act No 17946 limited the allowable deductions from gross
income of single proprietorship and professionals in the computation of their
taxable income. It was argued that this violated the requirement of uniformity
in taxation and due process because single proprietorships and
professionals were taxed differently from corporations and partnerships.
Issue: Whether or not deductions should be uniform for all?
Decision: Petition dismissed. Uniformity does not prohibit classification so
long as the requirements for a valid classification under the equal protection
clause are complied with. Shifting the taxation of individuals to the scheduled
system which makes the income tax depend on the kind of taxable income
and maintaining for corporations the global treatment which treat in common
all kinds if taxable income of the taxpayer is not arbitrary.
ABAKADA Guro Party List vs. Ermita
G.R. No. 168056 September 1, 2005
FACTS:
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et
al., filed a petition for prohibition on May 27, 2005 questioning the
constitutionality of Sections 4, 5 and 6 of R.A. No. 9337, amending Sections
106, 107 and 108, respectively, of the National Internal Revenue Code
(NIRC). Section 4 imposes a 10% VAT on sale of goods and properties,
Section 5 imposes a 10% VAT on importation of goods, and Section 6
imposes a 10% VAT on sale of services and use or lease of properties.
These questioned provisions contain a uniformp ro v is o authorizing the
President, upon recommendation of the Secretary of Finance, to raise the
VAT rate to 12%, effective January 1, 2006, after specified conditions have
been satisfied. Petitioners argue that the law is unconstitutional.
ISSUES:
1. Whether or not there is a violation of Article VI, Section 24 of the
Constitution.
2. Whether or not there is undue delegation of legislative power in violation
of Article VI Sec 28(2) of the Constitution.
3. Whether or not there is a violation of the due process and equal protection
under Article III Sec. 1 of the Constitution.
RULING:
1. Since there is no question that 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, and
excise and franchise taxes.
2. 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.
3. 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.