1. CIR V M.J.

LHUILLER PAWNSHOP, INC

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 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 they’re being no change in the law,
the interpretation thereof should not have been altered.

2. CIR V CA AND FORTUNE:

Facts:

Fortune Tobacco Corporation ("Fortune Tobacco"), engaged in the manufacture

of different brands of cigarettes, registered "Champion," "Hope," and "More"
cigarettes. BIR classified them as foreign brands since they were listed in the
World Tobacco Directory as belonging to foreign companies. However, Fortun
changed the names of 'Hope' to 'Hope Luxury' and 'More' to 'Premium More,'
thereby removing the said brands from the foreign brand category.

A 45% Ad Valorem taxes were imposed on these brands. Then Republic Act
("RA") No. 7654 was enacted – 55% for locally manufactured foreign brand while
45% for locally manufactured brands. 2 days before the effectivity of RA 7654,
Revenue Memorandum Circular No. 37-93 ("RMC 37-93"), was issued by the
BIR saying since there is no showing who the real owner/s are of Champion,
Hope and More, it follows that the same shall be considered locally manufactured
foreign brand for purposes of determining the ad valorem tax - 55%. BIR sent via
telefax a copy of RMC 37-93 to Fortune Tobacco addressed to no one in
particular. Then Fortune Tobacco received, by ordinary mail, a certified xerox
copy of RMC 37-93. CIR assessed Fortune Tobacco for ad valorem tax
deficiency amounting to P9,598,334.00.
Fortune Tobacco filed a petition for review with the CTA. 8 CTA upheld the
position of Fortune. CA affirmed.

Issue:

WON it was necessary for BIR to follow the legal requirements when it issued its
RMC

Held.

YES. CIR may not disregard legal requirements in the exercise of its quasi-
legislative powers which publication, filing, and prior hearing.
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. BUT when, upon 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, the agency must accord, at
least to those directly affected, a chance to be heard, before that new issuance is
given the force and effect of law.
RMC 37-93 cannot be viewed simply 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 which subjects mentioned brands to 55% the BIR not simply
interpreted 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.

3. CITY OF MANILA V COCA-COLA BOTTLERS PHIL:

FACTS:

Respondent paid the local business tax only as a manufacturers as it was

expressly exempted from the business tax under a different section and which
applied to businesses subject to excise, VAT or percentage tax under the Tax
Code. The City of Manila subsequently amended the ordinance by deleting the
provision exempting businesses under the latter section if they have already paid
taxes under a different section in the ordinance. This amending ordinance was
later declared by the Supreme Court null and void. Respondent then filed a
protest on the ground of double taxation. RTC decided in favor of Respondent
and the decision was received by Petitioner on April 20, 2007. On May 4, 2007,
Petitioner filed with the CTA a Motion for Extension of Time to File Petition for
Review asking for a 15-day extension or until May 20, 2007 within which to file its
Petition. A second Motion for Extension was filed on May 18, 2007, this time
asking for a 10-day extension to file the Petition. Petitioner finally filed the
Petition on May 30, 2007 even if the CTA had earlier issued a resolution
dismissing the case for failure to timely file the Petition.

ISSUES:

(1) Has Petitioner’s the right to appeal with the CTA lapsed?
(2) Does the enforcement of the latter section of the tax ordinance constitute
double taxation?

HELD:

(1) NO. Petitioner complied with the reglementary period for filing the petition.
From April 20, 2007, Petitioner had 30 days, or until May 20, 2007, within which
to file their Petition for Review with the CTA. The Motion for Extension filed by
the petitioners on May 18, 2007, prior to the lapse of the 30-day period on 20
May 2007, in which they prayed for another extended period of 10 days, or until
30 May 2007, to file their Petition for Review was, in reality, only the first Motion
for Extension of petitioners. Thus, when Petitioner filed their Petition via
registered mail their Petition for Review on 30 May 2007, they were able to
comply with the period for filing such a petition.

(2) YES. There is indeed double taxation if respondent is subjected to the taxes
under both Sections 14 and 21 of the tax ordinance since these are being
imposed: (1) on the same subject matter — the privilege of doing business in the
City of Manila; (2) for the same purpose — to make persons conducting business
within the City of Manila contribute to city revenues; (3) by the same taxing
authority — petitioner City of Manila; (4) within the same taxing jurisdiction —
within the territorial jurisdiction of the City of Manila; (5) for the same taxing
periods — per calendar year; and (6) of the same kind or character — a local
business tax imposed on gross sales or receipts of the business.

4. CITY OF BAGUIO V DE LEON:

FACTS:

The City of Baguio passed a license fee on any person, entity or corporation
doing business in the City. The ordinance sourced its authority from RA 329,
thereby amending the city charter empowering it to fix the license fee and
regulate businesses, trades and occupation as may be established 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 statutory 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:

Is the ordinance valid?

RULING:

Yes. 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 statutory 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 imposed by the City.
Third, violation of uniformity is out of place it being widely recognized that 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 both the state
and the political subdivision thereof.

5. ABAKADA GURO PARTY LIST V PURISIMA

FACTS:

Petitioners question the Attrition Act of 2005 and contend that by establishing a
system of rewards and incentives when they exceed their revenue targets, the
law (1) transforms the officials and employees of the BIR and BOC into
mercenaries and bounty hunters; (2) violates the constitutional guarantee of
equal protection as it limits the scope of the law to the BIR and BOC; (3) unduly
delegates to the President the power to fix revenue targets without sufficient
standards; and (4) violates the doctrine of separation of powers by creating a
Congressional Oversight Committee to approve the law’s implementing rules.

ISSUE:

Is R.A. No. 9335 constitutional?

HELD:

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 establishes safeguards
by imposing liabilities on officers and employees who are guilty of negligence,
abuses, malfeasance, etc. Neither is the equal protection clause violated since
the law recognizes a valid classification as only the BIR and BOC have the
common distinct primary function of revenue generation. There are sufficient
policy and standards to guide the President in fixing revenue targets as the
revenue targets are based on the original estimated revenue collection expected
of the BIR and the BOC.

However, the creation of a Joint Congressional Oversight Committee for the

purpose of reviewing the IRR formulated by agencies of the executive branch
(DOF, DBM, NEDA, etc.) is unconstitutional since it violates the doctrine of
separation of powers since Congress arrogated judicial power upon itself.

6. ASSOCIATION OF CUSTOM TAX BROKERS V MANILA

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.
 7. SHELL COMPANY OF PHIL ISLAND V MUN OF CORDOVA
8. CREBA V ROMULO

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?

HELD:

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 buyer in connection with the
performance of the duties as a withholding agent.
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.
 9. COMMISSIONER OF CUSTOM V HYPERMIX

Facts:

At the center of controversy in this case is Customs Memorandum Order (CMO)

No. 27-2003 issued by the Commissioner of Customs on November 7, 2003.
Said issuance provided that, for tariff purposes, wheat shall be classified
according to the following: (1) importer or consignee; (2) country of origin; (3) port
of discharge. The same likewise made an exclusive list of corporations, ports of
discharge, commodity descriptions and countries of origin. On these factors
would depend whether wheat would be classified as food grade (3%) or feed
grade (7%). The CMO also placed the procedure for protest or Valuation and
Classifica- tion Review Committee (VCRC) cases.
In anticipation of the implementa- tion of CMO 27-2003, respondent filed on
December 19, 2003, a Petition for Declaratory Relief with the Regional Trial
Court (RTC). Hypermix claims that said CMO: (1) was issued without observing
the provisions of the Revised Administrative Code; (2) declared it to be a feed
grade supplier sans the benefit of prior assessment and examination; (3) violated
the equal protection clause of the 1987 Constitution; and (4) was confisca- tory in
nature since it had a retroactive application.
The RTC issued a twenty (20) day Temporary Restraining Order (TRO) on
January 24, 2004. Subsequently the Commissioner of Customs filed a Motion to
Dismiss based on the ensuing grounds: (1) that RTC is without jurisdiction
because Hypermix was seeking for a judicial determina- tion of the classification
of wheat; (2) action for Declaratory Relief is im- proper; (3) The CMO was an
internal administrative rule and not legislative in character; (4) Hypermix’
assertions were speculative and premature. Finally, petitioner “X x x likewise
opposed the application for a writ of preliminary injunction on the ground that
they had not inflicted any injury through the issuance x x x; and that the action
would be contrary to the rule that administrative issuances are assumed valid
until declared otherwise.”
The RTC and Court of Appeals (CA) decided in favor of respondent Hypermix
Feeds Corporation.

Issues:

1. Did the CA decide a question of

substance?
2. Did the CA make a mistake in pronouncing that the RTC acted within its
jurisdiction?

Held:
The Supreme Court (SC) denied the petition and decided in favor of Hypermix
Feeds Corporation, the respondent herein.
The SC first tackled the issue regarding Declaratory Relief. The court mentioned
that for an action for Declaratory Relief to prosper, these requisites must be
present: (1) justiciable controversy; (2) persons whose interests are adverse; (3)
legal interest of the party seeking the action; and (4) issue must be ripe for
judicial determination. The court ruled that the petition filed by respondent in the
lower court meets the requirements.

The SC said: “Indeed, the Consti- tution vests the power of judicial review or the
power to declare a law, treaty, international or executive agreement, presidential
decree, order, instruction, ordinance, or regulation in the courts, including the
regional trial courts. This is within the scope of judicial power, which includes the
authority of the courts to determine in an appropriate action the validity of the
acts of the political departments.”

The court also ruled that the controversy is between two parties who have
adverse interest, i.e., the Commissioner of Customs is imposing the tariff rate
that Hypermix is refusing to pay. On the third requirement, the SC declared: “X x
x. 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. The
shipment was set to arrive in December 2003. Upon its arrival, it would be
subjected to the conditions of CMO 27-2003. The regulation calls for the
imposition of different tariff rates, depending on the factors enumerated therein.
Thus, respondent alleged that it would be made to pay 7% tariff applied to feed
grade wheat, instead of the 3% tariff on food grade wheat. In addition,
respondent would have to go through the procedure under CMO 27-2003, which
would undoubtedly toll its time and resources.”

The SC likewise mentioned that issue is ripe for judicial determination because
litigation is forthcoming for the reason that Hypermix is not included in the list of
flour millers grouped as food grade wheat importers. The court struck down CMO
27-2003 for violating the Revised Administrative Code rules on Filing and Public
Participation. Furthermore, it ruled that the provision of the Memorandum is
unconstitu- tional for being violative of the equal protection clause of the 1987
Constitu- tion. There must be a valid classifica- tion. Moreover, the SC declared
that petitioner Commissioner of Customs went beyond his powers when CMO
27-2003 limited the customs officer’s duties mandated under Section 1403 of the
Tariff and Customs Code of the Philippines (TCCP)[Duties of Customs Officer
Tasked to Examine, Classify, and Appraise Imported Articles].

10. JUDY ANN SANTOS V PEOPLE

Facts:

On 19 May 2005, then Bureau of Internal Revenue (BIR) Commissioner

Guillermo L. Parayno, Jr. wrote to the Department of Justice (DOJ) Secretary
Raul M. Gonzales a letter[5] regarding the possible filing of criminal charges
against petitioner.
petitioner,... her return... substantial under declaration of income, which
constituted prima facie evidence of false or fraudulent return under Section
248(B)

Prosecution Attorney Olivia Laroza-Torrevillas issued a Resolution dated 21

October 2005 finding probable cause and recommending the filing of a criminal
information against petitioner... for violation of Section 255 in relation to Sections
254 and 248(B) of the NIRC, as amended.

Pursuant to the 21 October 2005 DOJ Resolution, Information for violation of

Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended,
was filed with the CTA on 3 November 2005

On 10 January 2006, petitioner filed with the CTA First Division a Motion to
Quash

The officer who filed the information had no authority to do so the CTA First
Division denied petitioner's Motion to Quash

On 1 June 2006, petitioner filed with the CTA en banc a Motion for Extension of
Time to File Petition for Review

She filed... her Petition for Review with the CTA en banc on 16 June 2006.

a resolution denying a motion to quash is not a proper subject... of an appeal to

the Court En Banc under Section 11 of R.A. No. 9282 because a ruling denying a
motion to quash is only an interlocutory order, as such, it cannot be made the
subject of an appeal pursuant to said law and the Rules of Court.

Petitioner's primary argument is that a resolution of a CTA Division denying a

motion to quash is a proper subject of an appeal to the CTA en banc under
Section 18 of Republic Act No. 1125, as amended, because the law does not say
that only a resolution that constitutes a... final disposition of a case may be
appealed to the CTA en banc.

11. AMERICAN BIBLE SOCIETY V CITY OF MANILA

Fact:

In the course of its ministry, Petitioner’s Philippine agency has been distributing
and selling bibles and/or gospel portions thereof (except during the Japanese
occupation) throughout the Philippines and translating the same into several
Philippine dialects. Respondent informed Petitioner that it was conducting the
business of general merchandise since November, 1945, without providing itself
with the necessary Mayor’s permit and municipal license, in violation of the City
Ordinances, and required plaintiff to secure, within three days, the corresponding
permit and license fees. Plaintiff protested against this requirement, but the City
Treasurer demanded that plaintiff deposit and pay under protest. To avoid the
closing of its, paid the defendant under protest the said permit and license fees.
In its complaint plaintiff prays that judgment be rendered declaring the said
Municipal Ordinances illegal and unconstitutional, and that the defendant be
ordered to refund to the plaintiff paid under protest, together with legal interest
thereon, and the costs, plaintiff further praying for such other relief and remedy
as the court may deem just equitable. CFI Dismissed the Petition for lack of
merit, which the petitioner raised the issue to the CA which certified the case to
SC for the reason that the errors assigned to the lower Court involved only
questions of law. Adrian Avilado Antazo

Issues:

Whether the Selling activity of the Petitioner is exempted from Taxation?

Whether the Mayor’s Permit requirement impair Petitioner’s right to the free
exercise and enjoyment of its religious profession and worship, as well as its
rights of dissemination of religious beliefs?

Held:

Yes, It may be true that in this said case, the price asked for the bibles and other
religious pamphlets was in some instances a little bit higher than the actual cost
of the same but this cannot mean that appellant was engaged in the business or
occupation of selling said “merchandise” for profit. For the reason that the
provisions of City of Manila Ordinance No. 2529, as amended, cannot be applied
to appellant, for in doing so it would impair its free exercise and enjoyment of its
religious profession and worship as well as its rights of dissemination of religious
beliefs.
No, the Mandatory obtention of the Mayor’s permit before any person can
engage in any of the businesses, trades or occupations enumerated therein do
not imposes any charge upon the enjoyment of a right granted by the
Constitution, nor tax the exercise of religious practices. That Ordinance No. 3000
cannot be considered unconstitutional, even if applied to plaintiff Society.

12. ANGELES UNIVERSITY V CITY OF ANGELES

13. RMC 76-2003
14. DEPARTMENT OF FINANCE ORDER NO. 137-87
15. LUNG CENTER OF THE PHIL QUEZON CITY

FACTS:

The Petitioner is a non-stock, non-profit entity which owns a parcel of land in

Quezon City. Erected in the middle of the aforesaid lot is a hospital known as the
Lung Center of the Philippines. The ground floor is being leased to a canteen,
medical professionals whom use the same as their private clinics, as well as to
other private parties. The right portion of the lot is being leased for commercial
purposes to the Elliptical Orchids and Garden Center. The petitioner accepts
paying and non-paying patients. It also renders medical services to out-patients,
both paying and non-paying. Aside from its income from paying patients, the
petitioner receives annual subsidies from the government.

Petitioner filed a Claim for Exemption from realty taxes amounting to about
Php4.5 million, predicating its claim as a charitable institution. The city assessor
denied the Claim. When appealed to the QC-Local Board of Assessment, the
same was dismissed. The decision of the QC-LBAA was affirmed by the Central
Board of Assessment Appeals, despite the Petitioners claim that 60% of its
hospital beds are used exclusively for charity.

ISSUE:

Whether or not the Petitioner is entitled to exemption from realty taxes

notwithstanding the fact that it admits paying clients and leases out a portion of
its property for commercial purposes.

HELD:

The Court held that the petitioner is indeed a charitable institution based on its
charter and articles of incorporation. As a general principle, a charitable
institution does not lose its character as such and its exemption from taxes
simply because it derives income from paying patients, whether out-patient or
confined in the hospital, or receives subsidies from the government, so long as
the money received is devoted or used altogether to the charitable object which it
is intended to achieve; and no money inures to the private benefit of the persons
managing or operating the institution.

Despite this, the Court held that the portions of real property that are leased to
private entities are not exempt from real property taxes as these are not actually,
directly and exclusively used for charitable purposes. (strictissimi juris)
Moreover, P.D. No. 1823 only speaks of tax exemptions as regards to:
income and gift taxes for all donations, contributions, endowments and
equipment and supplies to be imported by authorized entities or persons and by
the Board of Trustees of the Lung Center of the Philippines for the actual use and
benefit of the Lung Center; and
taxes, charges and fees imposed by the Government or any political
subdivision or instrumentality thereof with respect to equipment purchases
(expression unius est exclusion alterius/expressium facit cessare tacitum)
 16. ABRA VALLEY COLLEGE V AQUINO:

Fact:

Petitioner, filed a complaint in the court a quo 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. The “Notice
of Sale” was caused to be served upon the petitioner by the respondent
treasurers for the sale at public auction of said college lot and building, which
sale was held on the same date. Dr. Paterno Millare, then Municipal Mayor of
Bangued, Abra, offered the highest bid which was duly accepted. the respondent
filed through counstel a motion to dismiss the complaint. Nonetheless, the trial
court disagreed because of the use of the second floor by the Director of
petitioner school for residential purposes. He thus ruled for the government and
rendered the assailed decision. Hence petitioner instead availed of the instant
petition for review on certiorari with prayer for preliminary injunction before the
Supreme Court. Adrian Avilado Antazo

Issue: Whether the Educational Institution Properties which is not exclusively

used for educational purposes is not eligible for tax exemption.

Held: Yes, Under the 1935 Constitution, the trial court correctly arrived at the
conclusion that the school building as well as the lot where it is built, should be
taxed, not because the second floor of the same is being used by the Director
and his family for residential purposes, but because the first floor thereof is being
used for commercial purposes. However, since only a portion is used for
purposes of commerce, it is only fair that half of the assessed tax be returned to
the school involved. Moreover, the exemption in favor of property used
exclusively for charitable or educational purposes is ‘not limited to property
actually indispensable’ therefor but extends to facilities which are incidental to
and reasonably necessary for the accomplishment of said purposes. But it must
be stressed however, that while the court allows a more liberal and non-
restrictive interpretation of the phrase “exclusively used for educational
purposes”, reasonable emphasis has always been made that exemption extends
to facilities which are incidental to and reasonably necessary for the
accomplishment of the main purposes. Otherwise stated, the use of the school
building or lot for commercial purposes is neither contemplated by law, nor by
jurisprudence, The lease of the first floor thereof to the Northern Marketing
Corporation cannot by any stretch of the imagination be considered incidental to
the purpose of education.

17. SISON V ANCHETA:

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 or not the assailed provision violates the equal protection and
due process clauses of the Constitution while also violating the rule that taxes
must be uniform and equitable.

Held: The petition is without merit.

On due process - it is undoubted that it may be invoked where a taxing statute is
so arbitrary that it finds no support in the Constitution. An obvious example is
where it can be shown to amount to the confiscation of property from abuse of
power. Petitioner alleges arbitrariness but his mere allegation does not suffice
and there must be a factual foundation of such unconsitutional taint.
On equal protection - it suffices that the laws operate equally and uniformly on all
persons under similar circumstances, both in the privileges conferred and the
liabilities imposed.
On the matter that the rule of taxation shall be uniform and equitable - this
requirement is met when the tax operates with the same force and effect in every
place where the subject may be found." Also, :the rule of uniformity does not call
for perfect uniformity or perfect equality, because this is hardly unattainable."
When the problem of classification became of issue, the Court said: "Equality and
uniformity in taxation means that all taxable articles or kinds of property of the
same class shall be taxed the same rate. The taxing power has the authority to
make reasonable and natural classifications for purposes of taxation..." As
provided by this Court, where "the differentation" complained of "conforms to the
practical dictates of justice and equity" it "is not discriminatory within the meaning
of this clause and is therefore uniform."

18. ORMOC SUGAR COMPANY V TREASURE OF ORMOC

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.

19. VILLEGAS V HIU CHIONG TSAI PAO HO

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.
 20. TOLENTINO V SECRETARY OF FINANCE

FACTS:

These are motions seeking reconsideration of our decision dismissing the

petitions filed in these cases for the declaration of unconstitutionality of R.A. No.
7716, otherwise known as the Expanded Value-Added Tax Law. Now it is
contended by the Philippine Press Institute (PPI) that by removing the exemption
of the press from the VAT while maintaining those granted to others, the law
discriminates against the press. At any rate, it is averred, “even
nondiscriminatory taxation of constitutionally guaranteed freedom is
unconstitutional.”

ISSUE:

Does sales tax on bible sales violative of religious and press freedom?

RULING:

No. The Court was speaking in that case of a license tax, which, unlike an
ordinary tax, is mainly for regulation. Its imposition on the press is
unconstitutional because it lays a prior restraint on the exercise of its right.
Hence, although its application to others, such those selling goods, is valid, its
application to the press or to religious groups, such as the Jehovah’s Witnesses,
in connection with the latter’s sale of religious books and pamphlets, is
unconstitutional. As the U.S. Supreme Court put it, “it is one thing to impose a tax
on income or property of a preacher. It is quite another thing to exact a tax on
him for delivering a sermon.”

The VAT is, however, different. It is not a license tax. It is not a tax on the
exercise of a privilege, much less a constitutional right. It is imposed on the sale,
barter, lease or exchange of goods or properties or the sale or exchange of
services and the lease of properties purely for revenue purposes. To subject the
press to its payment is not to burden the exercise of its right any more than to
make the press pay income tax or subject it to general regulation is not to violate
its freedom under the Constitution.