Taxation 1 - Digests 2

8/11/2019 Taxation 1 - Digests 2

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Pascual v. Sec. of Public Works (1960)

FACTS: CONCEPCION, J .: Congress passed an RAappropriating P85K for the construction of Pasig feeder roadterminals.

Wenceslao Pascual, the Governor of Ri al filed an action for declarator! relief and in"unction, claiming that at the time of the passage and approval of the Act, these feeder roads had not

!et #een constructed and $ere not connected to an!government propert! or main high$a!. %he feeder roads $ereactuall! $ithin the Antonio &u#division, $hich $as o$ned #!'ose (ulueta, a mem#er of the &enate of the Philippines.(ulueta, #efore the passage of the Act, had offered to donatethe propert! to the municipalit! of Pasig, #ut the deed of donation $as e)ecuted onl! several months after the RA $as

passed. *ence, Congress appropriated pu#lic funds for theconstruction of feeder roads that $ere, at the time the la$ $as

passed, private propert!.

ISSU : Whether the appropriation is valid.

! "#:

%he appropriation is invalid.

%he ta)ing po$er must #e e)ercised for pu#lic purposes onl!and not for the advantage of private individuals. %he right of the legislature to appropriate pu#lic funds is correlative $ithits right to ta). As the Constitution prohi#its ta)ation e)ceptfor a pu#lic purpose, so also no appropriation of state fundscan #e made other than for a pu#lic purpose.

%he test of the constitutionalit! of a statute re+uiring the use of pu#lic funds is $hether the statute is designed to promote the pu#lic interests as opposed to the furtherance of the advantageof individuals, although such advantage to individuals mightincidentally serve the pu#lic.

ven if su#se+uentl!, (ulueta e)ecuted the deed of donation infavor of the municipalit!, ma-ing the roads pu#lic propert!,the appropriation is still invalid. %he validit! of the statutedepends upon the po$ers of Congress at the time of its

passage, not upon events occurring after. At the time the #ill$as passed, the road $as still private propert!.

%herefore, the appropriation sought a private purpose and $asnull and void. %he su#se+uent donation could not have curedthis nullit!.

TI$ %S. %I# $&'A ' &U"AT$' *$A'# +1,1SC'A -0 / &.'. o. " 2,692/ 1 3u4 19 25

Fac s: %he case is a petition filed #! petitioner on #ehalf of

videogram operators adversel! affected #! Presidential ecree

/o. 0182, 3An Act Creating the 4ideogram Regulator! oard6$ith #road po$ers to regulate and supervise the videogramindustr!.

A month after the promulgation of the said Presidentialecree, the amended the /ational 7nternal Revenue Code

provided that:

6& C. 0 9. 4ideo %apes. %here shall #e collected on each processed video;tape cassette, read! for pla!#ac-, regardlessof length, an annual ta) of five pesos< Provided, %hat locall!manufactured or imported #lan- video tapes shall #e su#"ect tosales ta).6

6&ection 0=. %a) on &ale, >ease or isposition of 4ideograms. /ot$ithstanding an! provision of la$ to the contrar!, the province shall collect a ta) of thirt! percent ? =@ of the purchase price or rental rate, as the case ma! #e, for ever!sale, lease or disposition of a videogram containing areproduction of an! motion picture or audiovisual program.B

3 ift! percent ?5=@ of the proceeds of the ta) collected shallaccrue to the province, and the other fift! percent ?5=@ shallaccrue to the municipalit! $here the ta) is collected'IE&&E?, J&., J.,concurring@

&enators andCongressmen are directl!elected #! the people.Administrative officialsare not. 7f the mem#ers of an administrative #od!are, as is so often the case,appointed not on the #asisof competence and

+ualifications #ut out of political or personalconsiderations, it is notonl! the sense of personalresponsi#ilit! to theelectorate affected #!legislation $hich ismissing. %he e)pertise ande)perience needed for theissuance of sound rulesand regulations $ould also

#e sorel! lac-ing.

7 #elieve that in thee)ercise of +uasi;legislative po$ers,administrative agencies,much, much more thanCongress, should holdhearings and should #egiven guidelines as to$hen notices and hearingsare essential even in +uasi;legislation.

S IT! * "" K C$.(P!I".) I C. vs.C$ ISSI$ ' $F I T ' A"' % U

G.R. /o. >;I8I20. 'ul!I5, 0125L

S@llabus:

0. %AQA%7D/ R 4 /OE R > Q RC7& &A# I IST'ATI%FU CTI$ 7/EA%% R& DA&& &&E /% A/CD>> C%7D/ D&P C7 7C %AQ & D/W7/ & O/ R S CTI$ 1DG $F T!TA C$# . %herecan #e no uncertaint! thatthe purpose of &ection 0 9of the %a) Code is toimpose specific on ta)$ines and imitation $ines.%he first clause of saidsection states so in plainlanguage. %he su#;enumeration that follo$sunmista-a#l! prescri#esthe amount of the ta)specificall! to #e paid for each t!pe of $ine or imitation $ine soclassified and descri#ed.

%he section clearl! andindu#ita#l! discloses thelegislative $ill, leaving tothe officers charged $ithimplementation ande)ecution thereof no morethan the administrativefunction of determining$hether a particular -indof $ine or imitation $inefalls in one class or another. 7n the

performance of thisfunction the internalrevenue officers aredemonstrativel! guided #!the sound, esta#lished

practices and technolog!of $ine industr!.

I. D/ W*D /GAG &7/ W7/ %RA 7/G

O&7/ && 7& O%DO/ %D K/DW %*

K7/ & D W7/ & *A>& 7/. Dne $ho

has chosen to engage inthe $ine trading #usinessis dut! #ound to -no$ the-inds of $ine he deals in,

particularl! insofar assuch -no$ledge ma! #erelevant to the proper appreciation of ta)lia#ilities, and cannot ta-ecomfort in his pretendedignorance of $hat aspar-ling $ine is.

CA&%RD, ':

a ure: Petition for revie$ of the decision of the C%A affirming thedeficienc! assessmentmade #! the C7R Revenueagainst &mith ell.

Fac s:0. Petitioner imported l01cases of 6Chatteau Ga!6$ine $hich it declared as6still $ine6 under &ection0 9?# of the %a) Codeand paid thereon thespecific ta) of P0.== per liter of volume capacit!.

I. C7R ordered it ?$inestested and anal! ed in the

7R >a#orator! Center todetermine the correctamount of thespecific ta) due on thesaid importation.

. 7R concluded that$ines should #e claasifiedas 3spar-ling $ineB #asedon a #oo- entitled6Chemistr! S %echnolog!of Wines and >i+uors6 #!*erstein and 'aco#s.?#ased it on thegasSalcohol content

9. C7R then assessed adeficienc! specific ta) onthe imported ChatteauGa! in the sum of P00,20 .1= under &ection0 9?a of the %a) Code$hich imposes a specificta) of P0I.== per liter of volume capacit! onspar-ling $ines.

5. Petitioner contends:

a. that assessment isunconstitutional #ecause&ection 0 9?a of the %a)Code under $hich it $asissued la!s do$n aninsufficient and ha !standard #! $hich the

polic! and purpose of thela$ ma! #e ascertainedand as $ell gives theCommissioner #lan-etauthorit! to decide $hat isor is not the meaning of 3spar-ling $ines.B

#. there is an a#dicationof legislative po$er violative of the esta#lisheddoctrine, delegate potestasnon potest delegare, andthe due process clause of the Constitution.

H. C7R:a. Argued that &ection0 9 of the %a) Code isclear as to the categoriesof the articles su#"ect tospecific ta)es and thecorresponding amounts of ta) to #e paid.

2. C%A favored C7R

Issue:WD/ the assessmentviolated the esta#lisheddoctrine, delegata potestasnon potest delegare, andthe due processclause of the Constitution.

$.

!el7:0. &ection 0 9 of the %a)Code provides: 6&pecificta) on $ines. Dn $inesand imitation $ines thereshall #e collected, per liter of volume capacit!, the

follo$ing ta)es:

?a &par-ling $ines,regardless of proof, t$elve

pesos?# &till $ines containingfourteen per centum of alcohol or less, e)ceptthose produced fromcasu! and duhat, one peso.?c &till $ines containingmore than fourteen per centum of alcohol, t$o

pesos. 7mitation $inescontaining more thant$ent!;five per centum of alcohol shall #e ta)ed asdistilled spirits.B

I. %he a#ove +uoted provision is to impose aspecific ta) on $ines andimitation $ines. %he firstclause of &ection 0 9states so in plain language.%he sole o#"ect of the su#;enumeration that follo$sis in turn unmista-a#l! to


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prescri#e the amount of the ta) specificall! to #e

paid for each t!pe of $ineandFor imitation $ine soclassified and descri#ed.T;e sec io4 ;ereforeclearl@ a47 i47ubi abl@7iscloses ;e le isla ive=ill leavi4 o ;eofficers c;ar e7 =i ;i?ecu io4 ;ereof 4o?ore ;a4 ;ea7?i4is ra ive fu4c io4of 7e er?i4i4 =;e ;er aa$s. 7toperates a gas plant inEanila and furnishes gasservice to the people of Eanila and itssurrounding areas via afranchise granted #! thePhilippine Government.Eanila gas is associated$ith 7slands Gas ?from

/e$ or- and Generalinance ?from (urich,

&$it erland . oth of $hich are not Philippine

residents.

%he terms of franchise of Eanila Gas included ane)emption clause $hichstates:

3%he grantee shallannuall! on the fifth da!of 'anuar! of each !ear

pa! to the Cit! of Eanilaand the municipalities inthe Province of Ri al in$hich gas is sold, t$o andone half per centum of the

gross receipts $ithin saidcit! and municipalities,respectivel!, during the

preceding !ear. Sai7es I4sular


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and the first assigned error herein discussed isaccuratel! set forth, #utthat his opinion on thesecond su#"ect and thesecond assigned error isnot accuratel! reflected,

#ecause on this lastdivision his vie$scoincide $ith those of theappellant. *o$ever, in theinterest of the promptdisposition of this case,the decision has #een$ritten up in accordance$ith instructions receivedfrom the court.

'udgment affirmed, $iththe cost of this instanceassessed against theappellant.

&.'. o. 1,D29D Au us-9 -006C$ ISSI$ ' $FI T ' A"' % U Petitioner,vs.3U"IA *AI '

ICL " as re


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application of our incometa) la$. PetitionGRA/% .

CI' v. arube4iCore!te andinstalled to the

pier $ith the useof #olts.

C7R found thatEaru#eni $aslia#le for contractor s ta)on the offshore

portion. Earu#eni filed a

petition $ith theC%A, arguingthat the incomederived from theoffshore portionshould #e e)emptfrom ta) since it$as derivedoutside of thePhilippine

"urisdiction.

I: WF/ income of Earu#eni is ta)a#le evenif it claims that it $asearned outside of thePhilippines. /D,Earu#eni is /D% lia#lefor the contractorNs ta).

': A contractorNs ta) is inthe nature of an e)cise ta)on the e)ercise of a

privilege of sellingservices or la#or rather than a sale of products. 7tis directl! collecti#le fromthe person e)ercising the

privilege. eing an e)ciseta), it can #e levied #! theta)ing authorit! onl!$hen the acts, privileges

or #usiness are done or performed $ithin the

"urisdiction of saidauthorit!. >i-e propert!ta)es, it cannot #eimposed on an occupationor privilege outside theta)ing district.

7n this case, the shiploaders, #oats and mo#ile

e+uipment used in theconstruction pro"ects $ereall designed, engineeredand fa#ricated in 'apan.%he! $ere merel! shippedto >e!te and assem#ledthere. While theconstruction andinstallation $or- $erecompleted $ithin thePhilippines, some piecesof e+uipment and supplies$ere completel! designedand engineered in 'apan.&ince these services $ererendered outside theta)ing "urisdiction of thePhilippines, the! aretherefore not su#"ect to thecontractorNs ta).

A I"A " CT'ICC$ PA vs. A.".

ATC$ Collec or of I4 er4al 'eve4ue (19D9)

#$CT'I : When thesu#stantial elements of thecontract entered into aresituated in the RP, theGovernment ac+uires the

po$er to ta).

oreign corporations aredeemed to have su#mittedto the "urisdiction of theRP $hen it entered suchcontract $ith a domesticcorporation.

FACTS:

7n 01 5, plaintiff Eanila lectric Compan!,a corporation organi edand e)isting under thela$s of thePhilippines i4sure7 =i ;

;e ci @ of e= ork I4sura4ce Co?


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process or that of thee+ual protection of the la$s: as $hen thela$ is alleged to #ear#itrar!, oppressiveor discriminator!.

%he rela)ation of theoriginal rule rests oneither of t$ofundamentalconsiderations:

o ?0 upon therecognitionof theinherent

po$er of eachgovernment

to ta) persons, propertiesand rights$ithin its

"urisdictionanden"o!ing,thus, the

protection of its la$s< and

o ?I upon the principle thatintangi#les, asinglelocation inspace ishardl!

possi#le,consideringthe multiple,distinctrelationships$hich ma!

#e enteredinto $ithrespectthereto.

7n the instant case, theac ual si us of theshares of stoc- is inthe Philippines, the

corporation #eingdomiciled therein.And #esides, thecer ifica es of s ock have remained in thiscountr! up to the time$hen the deceaseddied in California, and

the! $ere in possession of the secretary of the #enguet Consolidated , to$hom the! have #eendelivered andindorsed in #lan-.%his indorsementgave the secretar! theright to vote thecertificates at the

general meetings of the stoc-holders, tocollect dividends, anddispose of the sharesin the manner shema! deem fit, $ithout

pre"udice to her lia#ilit! to the o$ner for violation of instructions.

or all practical purposes, thesecretar! had the legaltitle to the certificatesof stoc- held in trustfor the true o$ner thereof. %he o$ner residing in Californiahas e)tended here her activities $ith respectto her intangi#les soas to avail herself of

the protection and #enefit of thePhilippine la$s.Accor7i4 l@ ;e

Buris7ic io4 of ;eP;ili


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Respondent Compan!filed the necessar! 7mport

ntr! for #oth.

. %he invoice anddeclared unit price $asV=.HH for the t$oimportations. *o$ever,the ureau of Customsreappraised it at the rate of V0.=8 per piece #ased onan 6Alert /otice6 sent #!

inance Attach s a#road.

9. Respondent Compan! paid the increased ta)esand duties amounting toP08,510.== andP5I,IIH.== for therespective shipments, #utfiled Eanila Protests /os.1I29 and 1I25 claiming arefund of said amounts.

5. Respondent Compan!also ordered sealed #eamsfrom the Onited &tates$orth V08,1H9.59 for $hich the corresponding7mport ntr! $as filed.

H. %he invoice price of the merchandise $asV=.1=8 per piece #ut theCollector re;appraised it toV0. 5 a piece #ased on an

6Alert /otice6

2. Again, RespondentCompan! paid theincreased duties and ta)esamounting to PH2,5I5.==

#ut filed at the same timeEanila Protest /o. 1I82for refund of the e)cess

paid.

8. Collector denied the protests. Commissioner of Customs, affirmed in totothe consolidated ecisionappealed from on theground that 6Alert /oticesare sent #! inanceAttach s in their officialcapacit! as such officials,a$are of their #oundendut! to -eep the

epartment of inancea#reast $ith the current

prices of commodities for the imposition of correctamount of duties and ta)eson ta)a#le importations.6

1. levated the case toC%A $hich ordered torefund the overpaidcustoms duties to CamposRueda Corporation since itviolated &ection I=0 of the%ariff and Customs Code

0=. *ence the instant petition

Issue:0. WD/ there is aviolation of due process$hen D& re;appraisedthe importations.

!el7:S. ?violated the due

process re+uirement thatfindings of Admin%ri#unal should #esupported #! su#stantialevidence presented at thehearing or at leastcontained in the records or disclosed to the partiesaffected

0. Respondent s re;appraisal of the su#"ectshipments or articlesimported $ere #ased onthe alleged piece of document -no$n as 6Alert

/otice6 $hich $as noteven presented #!respondent to the Court.

I. Records do not sho$from $hat data the allegedalerted value $as ta-en,and ho$ theCommissioner of Customsascertained andesta#lished the homeconsumption value of theimported articles andFor merchandise and $henand $here such alertedvalue $as pu#lished asre+uired #! la$. U47er

;ese circu?s a4ces ;ere a


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price of such or similar article in Eanila or other

principal mar-ets in thePhilippines on the date thedut! #ecomes pa!a#le onthe article under appraisement, in the usual$holesale +uantities andin the ordinar! course of trade, minus

6?a %$ent! ?I= per centthereof for e)penses and

profits< and?# uties andta)es paid thereon.6

5. Clearl!, the dutia#levalue of an importedarticle is #ased on thehome consumption valueor price as declared in theconsular, commercial,trade or sales invoice. *u=;ere ;ere is areaso4able 7oub ;ecorrec 7u iable values;all be ascer ai4e7 fro?

;e reis e7such that recourse toreports from commercialattach s or other information #ecamenecessar!. ei ;er =as

;ere co?GOs to ta)goods and merchandisecarried in and out of their turf, the act of Drmoc Cit!is still violative of e+ual

protection. %he ordinanceis discriminator! for itta)es onl! centrifugalsugar produced ande)ported #! the Drmoc&ugar Compan!, 7nc. andnone other. At the time of the ta)ing ordinanceNsenactment, Drmoc &ugar Compan!, 7nc., it is true,$as the onl! sugar centralin the cit! of Drmoc. &till,the classification, to #ereasona#le, should #e interms applica#le to future

conditions as $ell. es.+ual protection clause

applies onl! to persons or things identicall! situatedand does not #ar areasona#le classificationof the su#"ect of legislation, and aclassification is reasona#le$here 0 it is #ased uponsu#stantial distinctions< Ithese are germane tothepurpose of the la$<

the classification appliesnot onl! to presentconditions, #ut also tofuture conditionssu#stantiall! identical tothose present< and 9 theclassification applies onl!to those $ho #elong to thesame class. %he ta)ingordinance should not #esingular and e)clusive asto e)clude an!su#se+uentl! esta#lishedsugar central, of the sameclass as plaintiff, from the

coverage of the ta). As itis no$, even if later asimilar compan! is set up,it cannot #e su#"ect to theta) #ecause the ordinancee)pressl! points onl! toDrmoc &ugar Compan!,7nc. as the entit! to #elevied upon

Tiu v. CA (1999) : ualPro ec io4 of ;e "a=s/PA &A I*A 3.:

Congress passedRA 2II2 $hichcreated the &u#ic&pecial

conomic (one,

granting ta) anddut! incentives?ta) and dut!;freeimportations of ra$ materials,capital ande+uipment to

#usinesses andresidents $ithinthe areaencompassed #!the one.

%he la$ providesthat no local andnational ta)esshall #e imposed$ithin the one.7n lieu of ta)es,

@ of the grossincome of enterprisesoperating $ithinthe one shall #eremitted to the

/ationalGovernment, 0@to the localgovernmentunits, and 0@ to adevelopmentfund to #eutili ed for thedevelopment of municipalitiesoutside Dlangapoand &u#ic.

Pres. Ramos later issued an Dspecif!ing a3secured areaBarea $ithin the


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one in $hich the privileges $ereoperative.

o $92 ta)anddut!;freeimportations$illonl!appl! tora$materials,capitalgoodsande+ui

pment

#roughtin

#! #usiness

enterprisesintothe&&(.

)ceptfor importta)

andduties,all

#usinessarere+uiredto

pa!thespecified

ta)es in&ection0I?c

of RA2II2.

o $92 A the

ta)incentives areonl!applica#le to

#usinessenterprises andindividualsresiding$ithinthesecuredarea.

o

Petitionersoutside the3secured areaBchallenged theconstitutionalit!of this D for allegedl! #eingviolative of their right to e+ual

protection of thela$s.

%he! assert thatthe && (encompasses ?0the Cit! of Dlongapo, ?I theEunicipalit! of &u#ic in(am#ales, and? the areaformerl!

occupied #! the&u#ic /aval

ase. *o$ever,D 12;A,

according tothem, narro$eddo$n the area$ithin $hich thespecial privilegesgranted to theentire one $ouldappl! to the

present 3fenced;

in former &u#ic /aval aseB

onl!. 7t hashere#! e)cludedthe residents of the first t$ocomponents of the one fromen"o!ing the

#enefits granted #! the la$.

I: WF/ the D confiningthe application of the

privileges under RA 2II2$ithin the secured areaand e)cluding theresidents of the oneoutside the secured areaviolates the e+ual

protection clause. /D.

': %here are real andsu#stantive distinctions

#et$een the circumstanceso#taining inside andoutside the &u#ic /aval

#ase, there#! "ustif!ingavalid and reasona#leclassification.

or a validclassification, thefollo$ingre+uisites must

#e present:0. it must rest on

su#stantial differencesuc-! &tri-e

ilter, >uc-!&tri-e >ights and>uc-! &tri-eEenthol >ights.>uc-! &tri-e $asta)ed #ased on itssuggested grossretail price fromthe time of itsintroduction inthe mar-et inI==0 until the

7R mar-et

surve! in I== .%he #rands $eresold at PII.59,PII.H0 andPI0.I so theapplica#le ta)rate is P0 .99 per

pac-. A% no$argues that the6classificationfree e provision6violates the e+ual

protection anduniformit! ofta)ation clauses

#ecause the>uc-! &tri-e

#rands are ta)ed #ased on their011H net retail

prices $hile ne$ #rands are ta)ed #ased on their present da! netretail prices.%hus, >uc-!&tri-e suffersfrom higher ta)es$hile itscompetitors pa! alo$er amount.

A% furtherargued that theto#acco e)cisela$ $asdiscriminator!

#ecause under it, #rands thatentered themar-et after 011H$ere imposedta)es #ased ontheir currentretail prices $hileolder #rands paidta)es #ased ontheir 011H retail

prices.Eean$hile,Philip Eorris,

ortune %o#acco,

Eight! Corp. and'% 7nternational?respodnents;in;interventionclaim that noine+ualit! e)ists

#et$eencigarettes andthat nullificationof said anne)$ould #ringa#out tremendousloss.

7: 0. WFn &ec. 095 ofthe /7RC violates PCand uniformit! of ta)ationclauses

I.WF/ the RevenueRegulations areinvalid in so far asthe! empo$er 7R toreclassif! and update

the classification of

ne$ #rands ever!t$o !ears or earlier

R: &ec 095 /7RC isconstitutional #ut the RRsare invalid for gratning the

7R the po$er toreclassif! and update theclassification.

0 /7RC isconstitutional

%he classificationfree e provisiondoes not violatethe e+ual

protection anduniformit! ofta)ation. 7t meetsthe standards forvalidclassification:rests on asu#stantialdistinction, isgermane to the

purpose of thela$, applies to

present andfuture conditionsand appliese+uall! to allthose #elongingto the same class.

?/D% : %hesecond condition,ho$ever, $as notfull! satisfied asit failed to

promote faircompetitionamong the

pla!ers in theindustr!.*o$ever, thisdoes not ma-ethe assailed la$unconstitutional

%he classificationfree e provision$as done in goodfaith and isgermane to the

purpose of thela$. 7t $asinserted forreasons of

practicalit! ande)pedienc!.

&ince a ne$ #rand $as not !et

in e)istence at thetime of the

passage of RA8I9=, thenCongress neededa uniformmechanism to fi)the ta) #rac-et of a ne$ #rand. %hecurrent net retail

price, similar to$hat $as used toclassif! the

#rands as ofDcto#er 0, 011H,$as thus thelogical and

practical choice. With the

amendmentsintroduced #! RA1 9, thefree ing of theta) classificationsno$ e)pressl!applies not "ust toold #rands?cigarettes $hichare ta)ed on the

#asis of averagenet retail price asof Dcto#er 0,011H #ut tone$er #randsintroduced afterthe effectivit! ofRA 8I9= on'anuar! 0, 0112

and an! ne$ #rand that $ill #eintroduced in thefuture.

%hus, theclassificationfree e provisioncould hardl! #econsidered #iasedto$ared older

#rands overne$er #rands.

Congress $as

even $illing todelegate the

po$er to periodicall!ad"ust the e)ciseta) rate and ta)

#rac-ets as $ellas to periodicall!resurve! andreclassif! thecigarette #rands

#ased on theincrease in the

consumer price


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inde) to the Dand the 7R.

%hus, the provision $as theresult ofCongressNsearnest efforts toimprove theefficienc! andeffectivit! of theta)administrationover sin products$hile tr!ing to

#alance the same$ith other &tateinterests.

$4 U4ifor?i @:Oniformit! ofta)ation re+uiresthat all su#"ectsor o#"ects ofta)ation,similarl! situated,are to #e treatedali-e #oth in

privileges andlia#ilities. 7n theinstant case, thereis no +uestionthat the C Pmeets thegeographicaluniformit!re+uirement

#ecause theassailed la$applies to A>>C7GAR %%

RA/ & n thePhilippines.

$4 I4e ui abli @a47'e ressivi @:

A% claims thatthe use ofdifferent ta)

#ases for old #rands as against

ne$ #rands isdiscriminator! Fine+uita#le, andthat the C P isregressive incharacter. %hiscannot #esustained #ecausethe C P meetsthe re+uirementsof the PC.

Dn regressivit! ;;the e)cise ta)

imposed oncigarettes is an

indirect ta), andthus, regressivein character.*DW 4 R, thisdoes not meanthat the la$ ma!

#e declaredunconstitutional

#ecause theConstitution doesnot prohi#it theimposition ofindirect ta)es #utmerel! providesthat Congressshall 4D>4

progressives!stem ofta)ation.

I %he 7R RR isinvalid #ecausethe /7RC does

/D% authori ethe 7R to updatethe ta)classification ofne$ #rands ever!I !ears or earlier.

%he po$er toreclassif!cigarette #randsremains inCongress.

Allo$ing the periodicreclassification of

#rands mighttempt cigarettemanufacturers tomanipulate their

#rands pricelevels or #ri#e theta) implementersto allo$ their

#rands to #eclassified as alo$er ta) #rac-et.

G.R. /o. >;II9I0Earch 08, 01H2

I US " CT'IC C$.I C ., Petitioner , vs. CTAand CI' , &espondents .

#$CT'I : %he statusof petitioner s municipalfranchises as propert! and

propert! right isdependent upon or +ualified #! the nature and

limitations of the authorit!under $hich said

franchises $ere granted #!the municipal corporationsconcerned. &uch authorit!shall #e Ysu#"ect to the

po$er of Congress toalter, modif! or repeal thesame . 7n effecting suchalteration, our legislativedepartment has ?erel@e>ercise7 a of 0@ of its grossreceipts for the firstI= !ears and I@ for the ne)t fifteen ?05

!ears.

RA 1 amended?0191 &ec. I51 of the%a) Code imposing ata) of 5@ upon $hichsuch franchises areconferred.

Imus Electric paidfranchise ta) at therate of 5@ of its grossreceipts until 015

$hen it filed a claimfor refund of

pa!ments made at theaforesaid rate of 5@for the period 0198;0150.

&aid claim for refund$as granted as to

period from 015=;0150. /onetheless,C7R assessed Imus

Electric demanding

pa!ment of deficienc!ta) and surcharge.

Opon refusal of theCommissioner toreconsider theassessment, Imus

Electric petitioned theC%A for the revie$ of the Commissioner sruling alleging that:

o ?0 %hefranchise is a

privatecontract$hich $ould

#e impaired #! theapplicationof &ectionI51 and this$ould #e inviolation of the non;impairmentclause of theConstitutionealdacase: 3As amended #! RA

1, &ection I51 of the %a)Code #ecame the #asic ta)la$ not onl! #ecause it$as entitled 6%a) onCorporate ranchises6 #utalso #ecause it 6fi)ed therate of franchise ta) to #e

paid #! holders of alle)isting and futurefranchises.6

%he status of petitioner smunicipal franchises as

propert! and propert!right is dependent upon or +ualified #! the nature andlimitations of the authorit!under $hich saidfranchises $ere granted #!the municipal corporationsconcerned. &uch authorit!shall #e Ysu#"ect to the

po$er of Congress toalter, modif! or repeal thesame .

or all intents and purposes, said legal provision alters the pertinent provisions of said franchises. 7neffecting such alteration,our legislative departmenthas merel! e)ercised,

ho$ever, a po$er e)pressl! reserved thereto #! said franchises, and hasacted, therefore, inconformit! there$ith, notin violation of the

provisions thereof or tothe detriment of the rightsthere#! vested in

petitioner herein.

Wherefore, the "udgmentappealed from isA 7RE $ith themodification that the I5@surcharge imposed on

petitioner should #e, andis, eliminated, there#!reducing the ta) from atotal of P =,19=. ?$ithsurcharge to PI9,25I.IH.

P;ili


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(1) T! ' IS $%I$"ATI$ $FT! 8UA"P'$T CTI$C"AUS

%he pertinent parts of &ections 01 and I 9of the >GC provide:

&ection 01 .1ithdra!al of 'ax

Exemption Privileges.Onless other$ise

provided in this Code,ta) e)emptions or incentives granted to,or presentl! en"o!ed

#! all persons,$hether natural or

"uridical, includinggovernment;o$ned

and controlledcorporations, e)ceptlocal $ater districts,cooGC,$ere alread!ta);e)empt.

%he e+ual protectionclause under theConstitution meansthat no person or classof persons shall #edeprived of the same

protection of la$s$hich is en"o!ed #!

other persons or other classes in the same

place and in li-ecircumstances. T;us

;e uara4 @ of ;ee ual GC to "ustif! thedifferent ta) treatment

#et$een electriccooperatives covered

#! P. . /o. IH1 andelectric cooperativesunder R.A. /o. H1 8.

Firs , su#stantialdistinctions e)ist

#et$een cooperativesunder P. . /o. IH1and cooperativesunder R.A. /o. H1 8.%hese distinctions aremanifest in at leastt$o material respects$hich go into thenature of cooperativesenvisioned #! R.A.

/o. H1 8 and $hichcharacteristics are not

present in the t!pe of cooperativeassociations createdunder P. . /o. IH1.

a. Ca


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CooperativeCode. &enatedeli#erations:

o lec riccoois

o7a@ =oul74o fallu47er ;e

er?coo


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sources ofi4a4ce ;e7evelo


24/33

a47Mor be4eficiar@ of ;e loa4. %hus, the

$ithdra$al #! the>GC under &ections01 and I 9 of the ta)e)emptions

previousl! en"o!ed #! petitioners does notimpair the o#ligationof the #orro$er, thelender or the

#eneficiar! under theloan agreements as infact, no ta) e)emptionis granted therein.

W! ' F$' the petition is /7 andthe %RD issued is>7 % .

A*'A %A""C$"" & I C.re


25/33

o ?0 for theeducational

purposes of thecollegeocal oard held>ung Center lia#le for real

propert! ta)es.ecision $as

affirmed #! MCCentral oard.Petition $aselevated to &C.

7: 0 WFn >ung Center is a charita#le institution$ithin the conte)t of P08I and under the Consti; & I WFn the real

properties of the >ungCenter are e)empt fromreal propert! ta)es; /D

R: 0 S ;e "u4Ce4 er is a c;ari ablei4s i u io4.

%o determine$hether anenterprise is acharita#leinstitution, theelements $hich

should #econsideredinclude thestatute creating it,its purpose, #!;la$s, servicesand natureF use of

properties.

Onder P 08I ,the >ung Center is a non;profitand non;stoc- corporation$hich, su#"ect tothe provisions of the decree, is to

#e administered #! the Dffice of the President of the Philippines$ith the Einistr!of *ealth and theEinistr! of *uman

&ettlements. 7t$as organi ed for

the $elfare and #enefit of the

ilipino people principall! tohelp com#at thehigh incidence of lung and

pulmonar!diseases in thePhilippines.

%he Articles of 7ncorporation of >C provide thatits medicalservices are to #erendered to the

pu#lic in generalin an! and all$al-s of lifeincluding those$ho are poor andthe need! $ithoutdiscrimination.

A charita#leinstitution doesnot lose itscharacter as suchand its e)emptionfrom ta)essimpl! #ecause itderives incomefrom pa!ing

patients, $hether out;patient, or confined in thehospital, or receives su#sidiesfrom thegovernment, solong as themone! receivedis used for theC*AR7%A >o#"ective it isintended for, andno mone! inuresto the private

#enefit of the persons

managing or operating theinstitution.

7n this case, themone! received

#! the >ungCenter #ecomes a

part of the trustfund and must #edevoted to pu#lictrust purposesand cannot #ediverted to

private profit or #enefit.

Onder P 08I ,the >ung Center is entitled toreceivedonations. %he>ung Center doesnot lose itscharacter as acharita#leinstitution simpl!

#ecause of govsu#sidies?donation .

I $ 4o allare e>e?< fro?real ung Center does /D% en"o!an! propert! ta)e)emption

privileges for itsreal propertiesand #uildings. 7f the intentions$ere other$ise,the same shouldhave #een amongthe enumerationof ta) e)empt

privileges under &ection I thereof.

Onder the 012and 0182Constitutions andRA 20H= in order

to #e entitled to


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the e)emption of propert! ta), the>ung Center should prove thata it is acharita#leinstitution< and?# its real

properties areAC%OA>> ,

7R C%> andQC>O&74 >

used for charita#le

purposes.o 7f real

propert!is usedfor oneor morecommer cial

purposes, it is note)clusivel! usedfor thee)empted

purposes #ut issu#"ecttota)ation.%*O&,3e)clusi

vel!Bmeans&D> >

.o What is

meant #!actual,directande)clusive use of the

propert!for charita#le

purposesis the

7R C%,7EE7A% ,AC%OA>application of thePRDP

R%itself tothe

purposesfor $hichthecharita#leinstitution isorgani ed. 7t is

/D% theuse of 7/CDE

of the propert!$Fc isthecontrolling factor ?toe)empt .

7n this case,$hile portions of the hospital areused for thetreatment of

patients, other parts are #eingleased to privateindividuals for their clinics and acanteen. urther,a portion of the

land is #eingleased to a

private individualfor her #usinessenterprise under the #usinessname 6 llipticalDrchids andGarden Center.6

%hus, portions of the land leased to

private entitiesand individuals

are /D% ta)e)empt, $hilethose used for

patients, pa!ingand non;pa!ing,are e)empt.

CI' v CA a47 CA(199 /


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/nder theConstitution0Article 47,&ection I8 of theConstitutione)empts3charita#leinstitutionsB fromthe pa!ment notonl! of ta)es.*DW 4 R,acdg to constiframers, thee)emption does

/D% pertain toincome ta) #utonl! propert!ta)es.

or the ECA to #e granted thee)emption as an3educationalinstitutionB under the Consti ?Art09 &ec 9 , it must

prove $ithsu#stantialevidence that:

a. it fallsunder theclassificationnon;stoc-,non;

profiteducationalinstitution< and

#. theincomeit see-sto #ee)empted fromta)ationis used

actuall!,directl!,ande)clusivel! for educational

purposes

*o$ever, no evidence$as su#mitted #!

ECA to provethat the! met the

re+uisites. %heterm 3educationalinstitutionB or 3institution of learningB hasac+uired a $ell;-no$n technicalmeaning, of $hich themem#ers of theConstitutionalCommission aredeemedcogni ant.

Onder the ducationAct of 018I, suchterm refers toschools, $hich iss!non!mous $ithformal educationDR a schoolseminar!,college, or educationalesta#lishment.%he Court, upone)amining the3AmendedArticles of 7ncorporationBand 3 !;>a$sBof the ECA,

#ut found nothingin them that evenhints that it is a

school or aneducationalinstitution.

ven if ECA is aneducationalinstitution, theCourt also notesthat ECA didnot su#mit proof of the

proportionateamount of the

su#"ect incomethat $as actuall!,directl! ande)clusivel! usedfor educational

purposes.

%1T+ *if -ir as3s a out ho! this differs !ithO'HE& cases+@ 'he casesrelied on y DAC% do not

support its cause. DAC%of Aanila v. CI& and % ra

alley College, Inc. v. %4uino are not applica le,

ecause the controversy inoth cases involved

exemption from the payment of property tax,not income tax. Hospital de -an Juan de


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of surcharge andinterest.

C%A canceled thedeficienc!contractorNs ta)assessment, $Fc$as affirmed #!the CA.

C7R filed a

petition for revie$ #efore the&C.

7: WFn Ateneoshould pa! the

@ contractorNsta) under &ec I=5of the %a) Code

R: /D. 0 7n case of

dou#t, statutes onta) impositionare to #e

construedstrongl! againstthe GD4 and infavor of citi ens,

#ecause #urdensare /D% to #eimposed nor

presumed #e!ond$hat ise)pressed.

AteneoNs 7PC / 4 R sold itsservices for a fee

to an!one or $asever engaged in a #usiness apartfrom andindependentl! of the academic

purposes of theuniversit!.

unds received #! Ateneo aretechnicall! not afee. %he! ma!ho$ever fall asgifts or donations$hich are 3ta);e)emptB assho$n #!AteneoNscompliance $Fthe /7RCre+uirement

providing for thee)emption of such gifts to aneducationalinstitution.

I %he term[independent

contractorsNinclude persons$hose activit!consistsessentiall! of thesale of all -indsof services for afee.

'he term grossreceipts7 meansall amountsreceived y the

prime or principal contractor as thetotal contract

price,undiminished yamount paid tothe

su contractor, shall e excluded from the taxa le gross receipts of the

su contractor. AteneoNs 7PC

cannot #edeemed either asa contract of saleor a contract for a

piece of $or-. !the contract of sale, one of thecontracting

parties o#ligateshimself totransfer theo$nership of andto deliver adeterminatething, and theother to pa!therefor a pricecertain in mone!or its e+uivalent.

7n the case of acontract for a

piece of $or-,

the contractor #inds himself toe)ecute a piece of $or- for theemplo!er, inconsideration of acertain price or compensation.

*DW 4 R, it isclear in from theevidence onrecord that there$as no sale either

of o#"ects or services #ecause

there $as notransfer of o$nership over the research datao#tained or theresults of research pro"ectsunderta-en #! the7PC.

T$ SU :Ateneo is /D% acontractor sellingits services for afee #ut anacademicinstitutionconducting theseresearches

pursuant to itscommitments toeducation and,ultimatel!, to

pu#lic service.ducation is and

/D% profit is themotive for underta-ing theresearch pro"ects.

Tole4 i4o v. Sec. of Fi4a4ce (199,)

&everal parties filedcomplaints in the &C+uestioning the legalit! of

)panded 4A% la$ ?RA220H , $hich sought to$iden the ta) #ase of thee)isting 4A% s!stem

?X %'@ a tax levied on the sale, arter or exchangeof goods and properties

%- 1E$$ %- as on the sale or exchange of

services= or -IAP$D taxon spending consumption :

0 %heP;ili


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press is a licensetax , $hich ismainl! for regulation A/isunconstitutional

#ecause it la!sPR7DR R &%RA7/% onthe e)ercise of aright.

7n this case, the4A% is not alicense ta)

#ecause it is not ata) on thee)ercise of a

privilege or of aconstitutionalright. 7t isimposed on thesale of goods

purel! for revenue

purposes. I Philippine

i#le &ociet!claims that theimposition of 4A% on the salesof its #i#les7/ R7/G & onreligious freedom

#ecause the ta)7/CR A& & the

price of the #i#les, $hileR OC7/G thevolume of sales.

7t also claimse)emption fromthe registrationfee of P0-.

R: %he resulting #urden on thee)ercise of religious freedomis so7/C7 /%A> asto ma-e itdifficult todifferentiate itfrom an! other economicimposition thatmight ma-e theright todisseminatereligiousdoctrines costl!.

%o follo$ P &Nargument of

increasing the ta)on the sale of

vestments $ould #e to la! animpermissi#le

#urden on theright of the

preacher to ma-ea sermon.

%he registrationfee is reall! "ustto pa! for thee)penses of registration andenforcement of the provisions of the la$. ven if P & is e)cusedfrom pa!ingta)es on those

#i#les that itdistri#utes for free, it still has to

pa! theregistration feesince it alsoengages in thesale of #i#les.

. CR A claimsthat the la$:

a impairs theo#ligations of contracts #ecausethe application of the ta) to e)istingcontracts of thesale of real

propert! #!installment $ouldresult insu#stantialincreases inmonthl!amorti ations,$hich the #u!er did not anticipateat the time heentered into thecontract.

# violates e+ual protection sincethe la$ e)emptslo$;cost housingfrom 4A% #ut

/D% middle;class housing.

c eing anindirect,regressive ta),4A% violates theconstitutionalmandate to

provide a progressive

s!stem of ta)ation.

R: a 4A% does /D%

violate the non;impairmentclause #ecausethe o#ligation of contractsCA//D% defeatthe authorit! of

the governmentto ta) #! virtue of its sovereignt!.

# /either did itviolate PC

#ecause there$as a su#stantialdistinction

#et$een thehomeless poor and the middleclass. %he middleclass can affordto rent houses$hile thehomeless poor cannot.

c As to it #eing aregressive ta),the Constitutiondoes not prohi#itregressive ta)es.What it simpl!

provides is thatCongress shallevolve a

progressives!stem of ta)ation, $hichmeans that directta)es are to #e

preferred andindirect ta)esminimi ed.

4A% providese)emptions infavor of #asicgoods utili ed #!the lo$er income

#rac-ets and its #urden actuall!falls more onthose goods thatconsumers fromthe higher income #rac-et

#u!. %herefore, the ta)

is not repugnantto theConstitution.

3o;4 !a@ PeoaOnion and Camp'ohn *a! as

premier touristdestinations andrecreationcenters.

C A,%O/% Q andA&7AWDR>e)ecuted a '4A to

put up the aguio


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7nternationalevelopment and

EanagementCorporation$hich $ouldlease areas $ithinCamp 'ohn *a!and Poro Pointfor the attainmentof the tourist andrecreation spotsin >a Onion andCamp 'ohn *a!.

President RamosissuedProclamation /o.9I= $hichesta#lished a & (on a portion of Camp 'ohn *a!.I nd sentence of &ection of saidProclamation

provided for national and localta) e)emption$ithin andgraned other economicincentives to the'ohn *a! &pecial

conomic (one. 3&ection :

7nvestmentClimate in 'ohn*a! &pecial

conomic (one.;Pursuant to&ection 5?m and&ection 05 of RA

/o. 2II2, the'ohn *a! PoroPoint

evelopmentCorporation shallimplement allnecessar!

policies, rules,and regulations

governing theone, includinginvestmentincentives, inconsultation $ith

pertinentgovernmentdepartments.A?o4 o ;ers

;e o4e s;all;ave all ;ea


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challenged grantof ta) e)emptionmust haveconcurrence of ama"orit! of allmem#ers of Congress. 7nsame vein, theother -inds of

privilegese)tended to the'ohn *a! & (are #! traditionand usage for Congress tolegislate upon.

%a) e)emptioncannot #e impliedas it must #ecategoricall! andun mista-a#l!e)pressed U if it$ere the intent of the legislature togrant to the 'ohn*a! & ( thesame ta)e)emption andincentives givento &u#ic & (, it$ould have soe)pressl!

provided in RA2II2.

C A, under R.A 2II2,

is e)pressl! entrusted $ith #road rights of o$nershipand administration over Camp 'ohn *a!, as thegoverning agenc! of the'ohn *a! & (.

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