TAXREV_Case Digest.pdf

8/14/2019 TAXREV_Case Digest.pdf

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COMMISSIONER OF INTERNAL REVENUE vs.CEBU PORTLAND CEMENT COMPANY and COURT OF TAX APPEALS

G.R. No. L-29!9 D"#"$%"& '!( '9)*

FACTS+By virtue of a decision of the Court of Tax Appeals rendered on June 21, 1961, as modified on appeal by the

upreme Court on !ebruary 2", 196#, the Commissioner of $nternal %evenue &as ordered to refund to the Cebu 'ortlandCement Company the amount of '(#9,)*+9+, representin- overpayments of ad valorem taxes on cement produced andsold by it after .ctober 19#"

.n /arch 2+, 196+, follo&in- denial of motions for reconsideration filed by both the petitioner and the privaterespondent, the latter moved for a &rit of execution to enforce the said 0ud-ment

The motion &as opposed by the petitioner on the -round that the private respondent had an outstandin- sales taxliability to &hich the 0ud-ment debt had already been credited $n fact, it &as stressed, there &as still a balance o&in- on thesales taxes in the amount of ' ),"+9,2"9+# plus 2+ surchar-e

.n April 22, 196+, the Court of Tax Appeals -ranted the motion, holdin- that the alle-ed sales tax liability of theprivate respondent &as still bein- uestioned and therefore could not be set3off a-ainst the refund

ISSUE+4hether or not the 0ud-ment debt can be enforced a-ainst private respondent5s sales tax liability, the latter stil

bein- uestioned

RULINGThe ar-ument that the assessment cannot as yet be enforced because it is still bein- contested loses si-ht of the

ur-ency of the need to collect taxes as 7the lifeblood of the -overnment7 $f the payment of taxes could be postponed bysimply uestionin- their validity, the machinery of the state &ould -rind to a halt and all -overnment functions &ould beparaly8ed

The Tax Code provides ec 291 Injunction not available to restrain collection of tax. 3 o court shall have authorityto -rant an in0unction to restrain the collection of any national internal revenue tax, fee or char-e imposed by this Code

$t -oes &ithout sayin- that this in0unction is available not only &hen the assessment is already bein- uestioned in acourt of 0ustice but more so if, as in the instant case, the challen-e to the assessment is still3and only3on the administrativelevel There is all the more reason to apply the rule here because it appears that even after creditin- of the refund a-ainsthe tax deficiency, a balance of more than ' ) million is still due from the private respondent

COMMISSIONER OF INTERNAL REVENUE vs.ALGUE and T,E COURT OF TAX APPEALSG.R. No. L-2))9 F"%&a&/ '*( '9))

FACTS+The 'hilippine u-ar :state ;evelopment Company had earlier appointed Al-ue as its a-ent, authori8in- it to sel

its land, factories and oil manufacturin- process 'ursuant to such authority, Alberto


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$t is said that taxes are &hat &e pay for civili8ation society 4ithout taxes, the -overnment &ould be paraly8ed forlac> of the motive po&er to activate and operate it ence, despite the natural reluctance to surrender part of one=s hardearned income to the taxin- authorities, every person &ho is able to must contribute his share in the runnin- of the-overnmentRATIO+ T0a1 no "&son s0a33 %" d"&4v"d o5 &o"&1/ 6410o1 d" &o#"ss o5 3a6.

C.N. ,ODGES vs. MUNICIPAL BOARD OF T,E CITY OF ILOILOG.R. No. L-')'29 7ana&/ 8'( '98

FACTS+.n June 1(, 196*, the /unicipal Board of the City of $loilo enacted .rdinance o ((, series of 196*, pursuant to

the provisions of %epublic Act o 226), >no&n as the ocal Autonomy Act, reuirin- any person, firm, association orcorporation to pay a sales tax of 12 of 1 of the sellin- price of any motor vehicle and prohibitin- the re-istration of the saleof the motor vehicle in the /otor ?ehicles .ffice of the City of $loilo unless the tax has been paid

C od-es, &ho &as en-a-ed in the business of buyin- and sellin- second3hand motor vehicles in the City of$loilo, is one of those affected by the enactment of the ordinance, and believin- that the same is invalid for havin- beenpassed in excess of the authority conferred by la& upon the municipal board, he filed on June 2", 196* a petition fordeclaratory 0ud-ment &ith the Court of !irst $nstance of $loilo prayin- that said ordinance be declared void ab initio

The court a quo rendered decision on ;ecember +, 196* holdin- that that part of the ordinance &hich reuires theo&ner of a used motor vehicle to pay a sales tax of 12 of 1 of the sellin- price is valid, but the portion thereof &hich

reuires the payment of the tax as a condition precedent for the re-istration of the sale in the /otor ?ehicles .ffice is invalidfor bein- repu-nant to ection 2DhE of %epublic Act 226) Both parties have appealed

ISSUE+4hether or not the ordinance in uestion is valid even &ith re-ard to the portion &hich reuires the payment of the

tax as a condition precedent for the re-istration of the sale in the /otor ?ehicles .ffice of said city

RULING+The City of $loilo has the authority and po&er to approve the ordinance in uestion for it merely imposes a

percenta-e tax on the sale of a second3hand motor vehicle that may be carried out &ithin the city by any person, firm,association or corporation o&nin- or dealin- &ith it &ho may come &ithin the 0urisdiction

The reuirement of the ordinance cannot be considered a tax in the li-ht vie&ed by the court a quofor the same ismerely a coercive measure to ma>e the enforcement of the contemplated sales tax more effective 4ell3settled is the

principle that taxes are imposed for the support of the -overnment in return for the -eneral advanta-e and protection &hichthe -overnment affords to taxpayers and their property Taxes are the lifeblood of the -overnment

ASSOCIATION OF CUSTOM BROERS( INC. vs. MUNICIPAL BOARDG.R. No. L-:8* Ma/ 22( '9!8

FACTS+The Association of Customs Bro>ers, $nc, &hich is composed of all bro>ers and public service operators of moto

vehicles in the City of /anila challen-e the validity .rdinance o (("9 on the -round that D1E &hile it levies a so3calledproperty tax it is in reality a license tax &hich is beyond the po&er of the /unicipal Board of the City of /anilaF D2E saidordinance offends a-ainst the rule of uniformity of taxationF and D(E it constitutes double taxation

The respondents contend on their part that the challen-ed ordinance imposes a property tax &hich is &ithin thepo&er of the City of /anila to impose under its %evised Charter Gection 1+ DpE of %epublic Act o )*9H, and that the tax inuestion does not violate the rule of uniformity of taxation, nor does it constitute double taxation

ISSUE+4hether or not the ordinance is null and void

RULING+The ordinance infrin-es the rule of the uniformity of taxation ordained by our Constitution ote that the ordinance

exacts the tax upon all motor vehicles operatin- &ithin the City of /anila $t does not distin-uish bet&een a motor vehicle forhire and one &hich is purely for private use either does it distin-uish bet&een a motor vehicle re-istered in the City of/anila and one re-istered in another place but occasionally comes to /anila and uses its streets and public hi-h&ays Thisis an ineuality &hich &e find in the ordinance, and &hich renders it offensive to the Constitution

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ESSO STANDARD EASTERN( INC v. COMMISSIONER OF INTERNAL REVENUEG.R. Nos. L-2)!)-9( 73/ *( '9)9

FACTS+ $n CTA Case o 12#1, :sso tandard :astern $nc D:ssoE deducted from its -ross income for 19#9, as part of itsordinary and necessary business expenses, the a$on1 41 0ad s"n1 5o& d&4334n; and " could not be considered taxes or allo&ed asdeductible business expenses

:sso appealed to the Court of Tax Appeals DCTAE for the refund of the mar-in fees it had earlier paid contendin-that the mar-in fees &ere deductible from -ross income either as a tax or as an ordinary and necessary business expenseo&ever, :sso5s appeal &as denied

ISSUE+

D1E 4hether or not the mar-in fees are taxesD2E 4hether or not the mar-in fees are necessary and ordinary business expenses

RULING+D1E o A tax is levied to provide revenue for -overnment operations, &hile the proceeds of the mar-in fee are

applied to stren-then our country=s international reserves The mar-in fee &as imposed by the tate in the exercise of itspolice po&er and not the po&er of taxation

D2E o .rdinarily, an expense &ill be considered =necessary= &here the expenditure is appropriate and helpful in thedevelopment of the taxpayer=s business $t is =ordinary= &hen it connotes a payment &hich is normal in relation to thebusiness of the taxpayer and the surroundin- circumstances ince the mar-in fees in uestion &ere incurred for theremittance of funds to Esso=s ,"ad O554#" 4n N"6 Yo&>, &hich is a separate and distinct income taxpayer from the branchin the 'hilippines, for its disposal abroad, it can never be said therefore that the mar-in fees &ere appropriate and helpful inthe development of :sso=s business in the 'hilippines exclusively or &ere incurred for purposes proper to the conduct of the

affairs of :sso=s branch in the 'hilippines exclusively or for the purpose of reali8in- a profit or of minimi8in- a loss in the'hilippines exclusively

A mar-in fee on forei-n exchan-e is a form of exchan-e control or restriction desi-ned to discoura-e imports andultimately curtail excessive demand upon the itertnational reserve in order to stabili8e the currency

PROGRESSIVE DEVELOPMENT CORPORATION v. ?UE@ON CITYG.R. No. L-8)'( A&43 2:( '9)9

FACTS+.n ;ecember 2), 1969, the City Council of ue8on City adopted .rdinance o "99", other&ise >no&n as the

/ar>et Code of ue8on City ection ( of said ordinance provides that Kprivately o&ned and operated public mar>ets shalsubmit monthly to the Treasurer=s .ffice, a certified list of stallholders sho&in- the amount of stall fees or rentals paid daily

by each stallholder, and shall pay 1* of the -ross receipts from stall rentals to the City, , as supervision feeL.n July 1#, 19"2, 'ro-ressive ;evelopment Corporation D'ro-ressiveE, o&ner and operator of a public mar>et>no&n as the 7!armers /ar>et M hoppin- Center7 filed a 'etition for 'rohibition &ith 'reliminary $n0unction a-ainst ue8onCity on the -round that the supervision fee or license tax imposed by the above3mentioned ordinance is in reality a tax onincome &hich ue8on City may not impose, the same bein- expressly prohibited by %epublic Act o 226), as amendedother&ise >no&n as the ocal Autonomy Act

$n its Ans&er, ue8on City, throu-h the City !iscal, contended that it had authority to enact the uestionedordinances, maintainin- that the tax on -ross receipts imposed therein is not a tax on income

The lo&er court ruled that the uestioned imposition is not a tax on income, but rather a privile-e tax or license fee&hich local -overnments, li>e ue8on City, are empo&ered to impose and collect

ISSUE+

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4hether the tax imposed by ue8on City on -ross receipts of stall rentals is properly characteri8ed as parta>in- ofthe nature of an income tax

RULING+o The tax imposed in the controverted ordinance constitutes, not a tax on income, not a city income tax Das

distin-uished from the national income tax imposed by the ational $nternal %evenue CodeE &ithin the meanin- of ection 2D-E of the ocal Autonomy Act, but rather a license tax or fee for the re-ulation of the business in &hich 'ro-ressive isen-a-ed 4hile it is true that the amount imposed by the uestioned ordinances may be considered in determinin- &hetherthe exaction is really one for revenue or prohibition, instead of one of re-ulation under the police po&er, it nevertheless &ilbe presumed to be reasonable

P,ILIPPINE AIRLINES( INC. v. EDUG.R. No. L- :'8)8( A;s1 '!( '9))

FACTS+The 'hilippine Airlines D'AE is a corporation en-a-ed in the air transportation business under a le-islative

franchise, Act o )2"(9 @nder its franchise, 'A is exempt from the payment of taxesometime in 19"1, ho&ever, and Transportation Commissioner %omeo ! :levate D:levateE issued a re-ulation

pursuant to ection +, %epublic Act )1(6, other&ise >no&n as the and and Transportation and Traffic Code, reuirin- altax exempt entities, amon- them 'A to pay motor vehicle re-istration fees

;espite 'A=s protestations, :levate refused to re-ister 'A=s motor vehicles unless the amounts imposed under%epublic Act )1(6 &ere paid 'A thus paid, under protest, re-istration fees of its motor vehicles After payin- under protest'A throu-h counsel, &rote a letter dated /ay 19,19"1, to and Transportation Commissioner %omeo :du D:dudemandin- a refund of the amounts paid :du denied the reuest for refund ence, 'A filed a complaint a-ainst :du andational Treasurer @baldo Carbonell DCarbonellE

The trial court dismissed 'A=s complaint 'A appealed to the Court of Appeals &hich in turn certified the case tothe upreme Court

ISSUE+4hether or not motor vehicle re-istration fees are considered as taxes

RULING+

Ies $f the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then theexaction is properly called a tax uch is the case of motor vehicle re-istration fees The motor vehicle re-istration fees areactually taxes intended for additional revenues of the -overnment even if one fifth or less of the amount collected is set asidefor the operatin- expenses of the a-ency administerin- the pro-ram

VILLEGAS v. ,IU C,IONG TSAI PAO ,OG.R. No. L-29:( Nov"$%"& '( '9*)

FACTS+.n !ebruary 22, 196+, the /unicipal Board of /anila passed City .rdinance o 6#(" The said city ordinance &as

also si-ned by then /anila /ayor Antonio J ?ille-as D?ille-asE

ection 1 of the said city ordinance prohibits aliens from bein- employed or to en-a-e or participate in any positionor occupation or business enumerated therein, &hether permanent, temporary or casual, &ithout first securin- anemployment permit from the /ayor of /anila and payin- the permit fee of '#*** except persons employed in thediplomatic or consular missions of forei-n countries, or in the technical assistance pro-rams of both the 'hilippinein- in their respective households, and members of reli-iousorders or con-re-ations, sect or denomination, &ho are not paid monetarily or in >ind

iu Chion- Tsai 'ao o DTsai 'ao oE &ho &as employed in /anila, filed a petition &ith the C!$ of /anila todeclare City .rdinance o 6#(" as null and void for bein- discriminatory and violative of the rule of the uniformity intaxation

The trial court declared City .rdinance o 6#(" null and void ?ille-as filed the present petition

ISSUE+4hether or not City .rdinance o 6#(" is a tax or revenue measure

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RULING+Ies The contention that City .rdinance o 6#(" is not a purely tax or revenue measure because its principa

purpose is re-ulatory in nature has no merit 4hile it is true that the first part &hich reuires that the alien shall secure anemployment permit from the /ayor involves the exercise of discretion and 0ud-ment in the processin- and approval ordisapproval of applications for employment permits and therefore is re-ulatory in character the second part &hich reuiresthe payment of '#*** as employee=s fee is not re-ulatory but a revenue measure There is no lo-ic or 0ustification inexactin- '#*** from aliens &ho have been cleared for employment $t is obvious that the purpose of the ordinance is toraise money under the -uise of re-ulation

COMPAIA GENERAL DE TABACOS DE FILIPINAS vsCITY OF MANILA( ET AL

G.R. No. L-''9 7n" 29( '98

FACTS+'etitioner filed an action in the C!$ /anila to recover from City of /anilaDCity E the sum of '1#,2+*** alle-edly

overpaid by it as taxes on its &holesale and retail sales of liuor for the period from the third uarter of 19#) to the seconduarter of 19#", inclusive, under .rdinances os (6(), ((*1, and (+16

Tabacalera=s action for refund is based on the theory that, in connection &ith its liquor sales, it should pay the

license fees but not the municipal sales taxesF and since it already paid the license fees aforesaid, the sales taxes paid by itN amountin- to the sum of '1#,2*+** N under the three ordinances is an overpayment made by mista>e, and thereforerefundable

The City contends that for the permit issued to it Tabacalera is sub0ect to pay the license feesprescribed by.rdinance o ((#+, aside from the sales taxesimposed by .rdinances os (6(), ((*1, and (+16

ISSUE+4hether or not the taxes imposed are valid

RULING+.rdinance o ((#+ is clearly one that prescribes municipal license fees for the privile-e to en-a-e in the business

of sellin- liuor or alcoholic bevera-es .n the other hand, it is clear that .rdinances os (6(), ((*1, and (+16 imposetaxes on the sales of -eneral merchandise, &holesale or retail, and are revenue measures enacted by the /unicipal Board

of /anila by virtue of its po&er to tax dealers for the sale of such merchandiseThat Tabacalera is bein- sub0ected to double taxation is more apparent than real As already stated &hat is

collected under .rdinance o ((#+ is a license fee for the privile-e of en-a-inin the sale of liuor .n the other hand,&hat the three ordinances mentioned heretofore impose is a tax for revenue purposes based on the sales made of the samearticle or merchandise $t is already settled in this connection that both a license fee and a tax may be imposed on the samebusiness or occupation, or for sellin- the same article, this not bein- in violation of the rule a-ainst double taxation

AMERICAN MAIL LINE( ET AL vs CITY OF BASILAN( ET ALG.R. No. L-'2:* Ma/ 8'( '9'

FACTSAppellees are forei-n shippin- companies licensed to do business in the 'hilippines, &ith offices in /anila Thei

vessels call at Basilan City and anchor in the bay or channel &ithin its territorial &aters As the city treasurer assessed andattempted to collect from them the anchora-e fees prescribed in the aforesaid amendatory ordinance, they filed the presentaction for ;eclaratory %elief to have the courts determine its validity @pon their petition the lo&er court issued a &rit opreliminary in0unction restrainin- appellants from collectin- or attemptin- to collect from them the fees prescribed therein

Appellant contended that, throu-h its city council, it had authority to enact the uestioned ordinance in the exerciseof either its revenue3raisin- po&er or of its police po&er The uestion to be resolved is &hether the City of Basilan has theauthority to enact .rdinance 1+* and to collect the anchora-e fees prescribed therein

ISSUE$s the ordinance valid exercise of taxin- po&er of the City of Basilan

RULING

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@nder para-raph DaE sec 1), %A 2++, it is clear that the City of Basilan may only levy and collect taxes for-eneral and special purposes in accordance &ith or as provided by la&F in other &ords, the city of Basilan &as not -ranted ablan>et po&er of taxation The use of the phrase 7in accordance &ith la&7 N &hich, in our opinion, means the same as7provided by la&7 N clearly discloses the le-islative intent to limit the taxin- po&er of the City

$t has been held that the po&er to re-ulate as an exercise of police po&er does not include the po&er to imposefees for revenue purposes Appellant city=s o&n contention that the uestioned ordinance &as enacted in the exercise of itspo&er of taxation, ma>es it obvious that the fees imposed are not merely re-ulatory

7O,N ,. OSMEAvs OSCAR ORBOS "1 a3G.R. No. 99)) Ma 8'( '998

FACTS+.ctober 1*, 19+), 'resident !erdinand /arcos issued '; 19#6 creatin- a pecial Account in the


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The Court deemed it relevant to discuss its holdin- in ut8 v Araneta !or in this ut8 case, Common&ealth Act#6", other&ise >no&n as the u-ar Ad0ustment Act, all collections made thereunder 7shall accrue to a special fund in the'hilippine Treasury, to be >no&n as the =u-ar Ad0ustment and tabili8ation !und,= and shall be paid out only for any or all ofthe follo&in- purposes or to attain any or all of the follo&in- ob0ectives, as may be provided by la&7 Analysis of the Act, andparticularly ection 6, &ill sho& that the tax is levied &ith a re-ulatory purpose, to provide means for the rehabilitation andstabili8ation of the threatened su-ar industry In other words, the act is primarily an exercise of the police power

.n the authority of the above case, then, 4e hold that the special assessment at bar may be considered assimilarly as the above, that is, that the levy for the 'hilsu-in !und is not so much an exercise of the po&er of taxation, nothe imposition of a special assessment, but, the exercise of the police po&er for the -eneral &elfare of the entire country $tis, therefore, an exercise of a soverei-n po&er &hich no private citi8en may la&fully resist

VICTORIAS MILLING CO.( INC. vs. T,E MUNICIPALITY OF VICTORIAS( PROVINCE OF NEGROS OCCIDENTALG.R. No. L-2'')8 S"1"$%"& 2*( '9)

FACTS+ This case calls into uestion the validity of .rdinance o 1, series of 19#6, of the /unicipality of ?ictorias, e-ros.ccidental

The disputed ordinance imposed license taxes on operators of su-ar centrals and su-ar refineries The chan-es&ere &ith respect to su-ar centrals, by increasin- the rates of license taxesF and as to su-ar refineries, by increasin- the

rates of license taxes as &ell as the ran-e of -raduated schedule of annual output capacity!or, the production of plaintiff ?ictorias /illin- Co, $nc in both its su-ar central and its su-ar refinery located in the

/unicipality of ?ictorias comes &ithin these items 'laintiff filed suit belo& to as> for 0ud-ment declarin- .rdinance o 1, series of 19#6, null and void The plaintifcontends that the ordinance is discriminatory since it sin-les out plaintiff &hich is the only operator of a su-ar central and asu-ar refinery &ithin the 0urisdiction of defendant municipality

The trial court rendered its 0ud-ment declarin- that the ordinance in uestion refers to license taxes or fees Bothplaintiff and defendant directly appealed to the upreme Court

ISSUE+4as .rdinance o 1, series of 19#6, passed by defendant=s municipal council as a re-ulatory enactment or as a

revenue measureO

RULING+The present imposition must be treated as a levy for revenue purposes A uic> -lance at the bi- amount of

maximum annual tax set forth in the ordinance, ')*,***** for su-ar centrals, and ')*,***** for su-ar refineries, &ilreadily convince one that the tax is really a revenue tax And then, &e read in the ordinance nothin- &hich &ould as much asindicate that the tax imposed is merely for police inspection, supervision or re-ulation


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RULING+Analysis of the Act, and particularly of section 6 &ill sho& that the tax is levied &ith a re-ulatory purpose, to provide

means for the rehabilitation and stabili8ation of the threatened su-ar industry $n other &ords, the act is primarily an exerciseof the police po&er

The protection and promotion of the su-ar industry is a matter of public concern, it follo&s that the e-islature maydetermine &ithin reasonable bounds &hat is necessary for its protection and expedient for its promotion $f ob0ective andmethods are ali>e constitutionally valid, no reason is seen &hy the state may not levy taxes to raise funds for theirprosecution and attainment Taxation may be made the implement of the state=s police po&er

REPUBLIC OF T,E P,ILIPPINES( &"&"s"n1"d %/ 10" PRESIDENTIAL COMMISSION ON GOOD GOVERNMENTPCGG vs. COCOFED( ET AL. and BALLARES( ET AL.( EDUARDO M. CO7UANGCO 7R. and 10" SANDIGANBAYAN

F4&s1 D4v4s4onG.R. No. ':*2-: D"#"$%"& ':( 2'

FACTS+The 'Ceovers of alle-edly

ill3-otten companies, assets and properties, real or personalAmon- the properties seuestered by the Commission &ere shares of stoc> in the @nited Coconut 'lanters Ban>

D@C'BE re-istered in the names of the alle-ed 7one million coconut farmers,7 the so3called Coconut $ndustry $nvestment!und companies DC$$! companiesE and 'rivate %espondent :duardo Co0uan-co Jr

.n January 2(, 199#, the trial court rendered its final ;ecision nullifyin- and settin- aside the %esolution of theandi-anbayan &hich lifted the seuestration of the sub0ect @C'B shares

ISSUE+Are the Coconut evy !unds raised throu-h the tate5s police and taxin- po&ersO

RULING+$ndeed, coconut levy funds parta>e of the nature of taxes &hich, in -eneral, are enforced proportional contributions

from persons and properties, exacted by the tate by virtue of its soverei-nty for the support of -overnment and for all publicneeds

Based on this definition, a tax has three elements, namely aE it is an enforced proportional contribution frompersons and propertiesF bE it is imposed by the tate by virtue of its soverei-ntyF and cE it is levied for the support of the-overnment

Taxation is done not merely to raise revenues to support the -overnment, but also to provide means for therehabilitation and the stabili8ation of a threatened industry, &hich is so affected &ith public interest as to be &ithin the policepo&er of the tate

ENCESLAO PASCUAL vs T,E SECRETARY OF PUBLIC ORS AND COMMUNICATIONS( ET AL.G.R. No. L-':! D"#"$%"& 29( '9

FACTS+.n Au-ust (1, 19#), petitioner 4enceslao 'ascual instituted this action for declaratory relief, &ith in0unction, upon

the -round that %epublic Act o 92*, entitled 7An Act Appropriatin- !unds for 'ublic 4or>s7, approved on June 2*, 19#(,contained, in section 13C DaE thereof, an item D)(GhHE of '+#,***** 7for the construction, reconstruction, repair, extension

and improvement7 of 'asi- feeder road terminalsF that, at the time of the passa-e and approval of said Act, theaforementioned feeder roads &ere 7nothin- but pro0ected and planned subdivision roads, not yet constructed, &ithin theAntonio ubdivision situated at 'asi-, %i8al7 &hich pro0ected feeder roads 7do not connect any -overnment propertyor any important premises to the main hi-h&ay7F

%espondents moved to dismiss the petition upon the -round that petitioner had 7no le-al capacity to sue7, and thathe petition did 7not state a cause of action7

ISSUE+hould appropriation usin- public funds be made for public purposes onlyO

RULING+

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The ri-ht of the le-islature to appropriate funds is correlative &ith its ri-ht to tax, and, under constitutionalprovisions a-ainst taxation except for public purposes and prohibitin- the collection of a tax for one purpose and thedevotion thereof to another purpose, no appropriation of state funds can be made for other than for a public purpose

The test of the constitutionality of a statute reuirin- the use of public funds is &hether the statute is desi-ned topromote the public interest, as opposed to the furtherance of the advanta-e of individuals, althou-h each advanta-e toindividuals mi-ht incidentallyserve the public

OSMEA VS. ORBOSG.R. No. 99)) Ma 8'( '998

FACTS+.ctober 1*, 19+), 'resident !erdinand /arcos issued '; 19#6 creatin- a pecial Account in the et prices of crude oil and imported petroleum products 4hile thefunds collected may be referred to as taxes, they are exacted in the exercise of the o34#" o6"& of the tate

PEPSI-COLA BOTTLING COMPANY OF T,E P,IILIPPINES( INC. VS. MUNICIPALITY OF TANAUAN

G.R. No. L-8''! F"%&a&/ 2*( '9*

FACTS+$n !ebruary 196(, plaintiff commenced a complaint see>in- to declare ection 2 of %A 226) Docal Autonomy Act

unconstitutional as an undue dele-ation of taxin- po&er and to declare .rdinance os 2( and 2" issued by the/unicipality of Tanauan, eyte as null and void

/unicipal .rdinance o 2( levies and collects from soft drin>s producers and manufacturers one3sixteenth D116of a centavo for every bottle of soft drin> cor>ed .n the other hand, /unicipal .rdinance o 2" levies and collects on sofdrin>s produced or manufactured &ithin the territorial 0urisdiction of the municipality a tax of one centavo D'**1E on each-allon of volume capacity The tax imposed in both .rdinances os 2( and 2" is denominated as 7municipal productiontaxL

ISSUES+1 $s ection 2 of %A 226) an undue dele-ation of the po&er of taxationO2 ;o .rdinance os 2( and 2) constitute double taxation and impose percenta-e or specific taxesO

RULING+1 . The po&er of taxation is purely le-islative and cannot be dele-ated to the executive or 0udicial departmen

of the -overnment &ithout infrin-in- upon the theory of separation of po&ers But as an exception, the theorydoes not apply to municipal corporations e-islative po&ers may be dele-ated to local -overnments in respecof matters of local concern

2 . The /unicipality of Tanauan discovered that manufacturers could increase the volume contents of eachbottle and still pay the same tax rate since tax is imposed on every bottle cor>ed To combat this scheme/unicipal .rdinance o 2" &as enacted As such, it &as a repeal of /unicipal .rdinance o 2( $n the

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stipulation of facts, the parties admitted that the /unicipal Treasurer &as enforcin- /unicipal .rdinance o2" only ence, there &as no case of double taxation

SOCIAL SECURITY SYSTEM VS. CITY OF BACOLODG.R. No. L-8!*2 73/ 2'( '9)2

FACTS+'etitioner ocial ecurity ystem, for operation purposes, maintains a five3storey buildin- in Bacolod City occupyin-four parcels of land aid lands and buildin-s &ere assessed for taxation 'etitioner failed to pay the realty taxes for theyears 196+, 1969 and 19"* Conseuently, the City of Bacolod levied upon said lands and buildin-s and declared themforfeited in its favor $n protest, petitioner &rote the city mayor throu-h the city treasurer see>in- reconsideration of theforfeiture proceedin- on the -round that it is a -overnment3o&ned and controlled corporation and as such, should be exempfrom payment of real estate taxes o action &as ho&ever ta>en Thereafter, petitioner filed an action in court for thenullification of the court proceedin-s The court ruled that the properties of petitioner are not exempt from the payment ofreal property tax because these are not one of the exemptions under ection 29 of the Charter of Bacolod City and there isno other la& providin- for its exemption

ISSUE+hould the sub0ect properties maintained by petitioner be exempt from payment of real property taxO

RULING+I: 4hether a -overnment o&ned and controlled corporation is performin- -overnmental or proprietary function is

immaterial ection 29 of the Charter of Bacolod City does not contain any ualification &hatsoever in providin- for theexemption from real estate taxes of 7lands and buildin-s o&ned by the Common&ealth or %epublic of 'hilippines7 ence&hen the le-islature exempted lands and buildin-s o&ned by the -overnment from payment of said taxes, &hat it intended&as a broad and comprehensive application of such mandate, re-ardless of &hether such property is devoted to-overnmental or proprietary purpose

!urther, '; 2) has amended the ocial ecurity Act of 19#) expressly exemptin- the from payment of anytax thereby removin- all doubts as to its exemption

SEA-LAND SERVICE( INC. VS. COURT OF APPEALSG.R. No. '22! A&43 8( 2'

FACTS'etitioner ea3and ervice $ncorporated, an American international shippin- company licensed by the ecurities

and :xchan-e Commission to do business in the 'hilippines entered into a contract &ith the @nited tates


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FACTS+.n April 1", 19"*, Atlas Consolidated /inin- and ;evelopment Corporation entered into a oan and ales Contrac

&ith /itsubishi /etal Corporation for purposes of the pro0ected expansion of the productive capacity of the former=s mines inToledo, Cebu @nder said contract, /itsubishi a-reed to extend a loan to Atlas =in the amount of P2*,***,*****, @nitedtates currency Atlas, in turn undertoo> to sell to /itsubishi all the copper concentrates produced for a period of fifteen D1#Eyears /itsubishi thereafter applied for a loan &ith the :xport3$mport Ban> of Japan D:ximban>E for purposes of its obli-ationunder said contract $ts loan application &as approved on /ay 26, 19"* in the euivalent sum of P2*,***,***** in @nitedtates currency at the then prevailin- exchan-e rate

'ursuant to the contract bet&een Atlas and /itsubishi, interest payments &ere made by the former to the lattertotalin- '1(,1)(,966"9 for the years 19") and 19"# The correspondin- 1# tax thereon in the amount of '1,9"1,#9#*1&as &ithheld pursuant to ection 2) DbE D1E and ection #( DbE D2E of the ational $nternal %evenue Code, as amended by'residential ;ecree o 1(1, and duly remitted to the had nothin- to do &ith the sale of the copper concentrates since all tha

/itsubishi stated in its loan application &ith the former &as that the amount bein- procured &ould be used as a loan to andin consideration for importin- copper concentrates from Atlas uch an innocuous statement of purpose could not have beenintended for, nor could it le-ally constitute, a contract of a-ency The conclusion is indubitableF /$T@B$$, and .T

:Q$/BAR, is the sole creditor of ATA, the former bein- the o&ner of the P2* million upon completion of its loan contrac&ith :Q$/BAR of Japan

$t is settled a rule in this 0urisdiction that la&s -rantin- exemption from tax are construed strictissimi jurisa-ainst thetaxpayer and liberally in favor of the taxin- po&er Taxation is the rule and exemption is the exception

8's1INFANTRY POST EXC,ANGE vs. POSADASG.R. No. 88:8. S"1"$%"& :( '98

FACTS+The (1st $nfantry 'ost :xchan-e is a post exchan-e constituted in accordance &ith Army re-ulations and the la&s

of the @nited tates in the course of its duly authori8ed business transactions, the :xchan-e made many purchases ovarious and diverse commodities, -oods, &ares and merchandise from various merchants in the 'hilippines TheCommissioner collected a sales tax of 1 12 of the -ross value of the commodities, etc from the merchants &ho sold saidcommodities to the :xchan-e A formal protest &as lod-ed by the :xchan-e

ISSUE+4hether or not the petitioner is exempt from the sales tax imposed a-ainst its suppliers

RULING+The court ruled in the ne-ative Taxes have been collected from merchants &ho made sales to Army 'ost

:xchan-es since 19*) DAct 11+9, ection 1(9E imilar taxes are paid by those &ho sell merchandise to the 'hilippines of accounts of the /anila branch office of respondent corporation

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$n the course of the examination, petitioner found respondent to have undeclared income from t&o D2E contractsin the 'hilippines 'etitioner=s revenue examiners recommended an assessment for deficiency income, branch profiremittance, contractor=s and commercial bro>er=s taxes %espondent uestioned this assessment %espondent then receiveda letter form petitioner assessin- respondent several deficiency taxes .n eptember 26, 19+6, respondent filed t&o D2petitions for revie& &ith the Court of Tax Appeals

:arlier, on Au-ust 2, 19+6, :xecutive .rder D:.E o )1 declarin- a one3time amnesty coverin- unpaid incometaxes for the years 19+1 to 19+# &as issued @nder this :., a taxpayer &ho &ished to avail of the income tax amnestyshould comply &ith certain reuirements $n accordance &ith the terms of :. o )1, respondent filed its tax amnestyreturn dated .ctober (*, 19+6 .n ovember 1", 19+6, the scope and covera-e of :. o )1 &as expanded by :xecutive.rder D:.E o 6)

ISSUE+4hether or not herein respondent=s deficiency tax liabilities &ere extin-uished upon respondent=s availment of tax

amnesty under :xecutive .rders os )1 and 6)

RULING+ection ) DbE of :. o )1 is very clear and unambi-uous $t excepts from income tax amnesty those taxpayers

7&ith income tax cases already filed in court as of the effectivity hereof7 The point of reference is the date of effectivity of:. o )1 The difficulty lies &ith respect to the contractor=s tax assessment and respondent=s availment of the amnestyunder :. o 6) includin- estate and donor=s taxes and tax on business

$n the instant case, the va-ueness in ection ) DbE brou-ht about by :. o 6) should be construed strictly a-ainstthe taxpayer The term 7income tax cases7 should be read as to refer to estate and donor=s taxes and taxes on business

&hile the &ord 7hereof,7 to :. o 6) ince :xecutive .rder o 6) too> effect on ovember 1", 19+6, conseuentlyinsofar as the taxes in :. o 6) are concerned, the date of effectivity referred to in ection ) DbE of :. o )1 should beovember 1", 19+6 There is nothin- in :. o 6) that provides that it should retroact to the date of effectivity of :. o)1, the ori-inal issuance either is it necessarily implied from :. o 6) that it or any of its provisions should applyretroactively

REAGAN vs. COMMISSIONER OF INTERNAL REVENUEG.R. No. L-28*9( 2*. D"#"$%"& 2*( '99

FACTS+4illiam %ea-an imported a tax3free 196* Cadillac car &ith accessories valued at @ P 6,))(+(, includin- frei-ht

insurance and other char-es After acuirin- a permit to sell the car from the base commander of Clar> Air Base, %ea-an

sold the car to a certain 4illie Johnson Jr of the @ /arine Corps stationed in an-ley 'oint, Cavite for @P 6,6**Johnson sold the same, on the same day to !red /eneses, a !ilipino As a result of the transaction, the Commissionerendered %ea-an liable for income tax in the sum of '2,9"* %ea-an claimed that he &as exempt as the transactionoccurred in Clar> Air Base, &hich as he contends is Ka base outside the 'hilippinesL

ISSUE+4hether or not petitioner %ea-an &as covered by the tax exemption

RULING+The court ruled in the ne-ative The 'hilippines, as an independent and soverei-n country, exercises its authority

over its entire domain Any state may, ho&ever, by its consent, express or implied, submit to a restriction of its soverei-nri-hts $t may allo& another po&er to participate in the exercise of 0urisdictional ri-ht over certain portions of its territory Bydoin- so, it by no means follo&s that such areas become impressed &ith an alien character The areas retain their status as

native soil Clar> Air Base is &ithin 'hilippine territorial 0urisdiction to tax, and thus, %ea-an &as liable for the income taxarisin- from the sale of his automobile in Clar> The la& does not loo> &ith favor on tax exemptions and that he &ho &ouldsee> to be thus privile-ed must 0ustify it by &ords too plain to be mista>en and too cate-orical to be misinterpreted %ea-anhas not done so, and cannot do so

TIU vs. COURT OF APPEALSGR. No. '2*:' 7ana&/ 2( '999

FACTSCon-ress, &ith the approval of the 'resident, passed into la& %A "22" entitled 7An Act Acceleratin- the Conversion

of /ilitary %eservations $nto .ther 'roductive @ses, Creatin- the Bases Conversion and ;evelopment Authority for this

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'urpose, 'rovidin- !unds Therefor and for .ther 'urposes7 ection 12 thereof created the ubic pecial :conomicSone and -ranted there to special privile-es 'resident %amos issued :xecutive .rder o 9", clarifyin- the application othe tax and duty incentives The 'resident issued :xecutive .rder o 9"3A, specifyin- the area &ithin &hich the tax3andduty3free privile-e &as operative The petitioners challen-ed before this Court the constitutionality of :. 9"3A for alle-edlybein- violative of their ri-ht to eual protection of the la&s This Court referred the matter to the Court of Appeals'roclamation o #(2 &as issued by 'resident %amos $t delineated the exact metes and bounds of the ubic pecia:conomic and !ree 'ort Sone, pursuant to ection 12 of %A "22" %espondent Court held that 7there is no substantialdifference bet&een the provisions of :. 9"3A and ection 12 of %A "22" $n both, the =ecured Area= is precise and &ell3defined as = the lands occupied by the ubic aval Base and its conti-uous extensions as embraced, covered anddefined by the 19)" /ilitary Bases A-reement bet&een the 'hilippines and the @nited tates of America, as amended =7

ISSUE+4hether or not :xecutive .rder o 9"3A violates the eual protection clause of the Constitution

RULING+o The Court found real and substantive distinctions bet&een the circumstances obtainin- inside and those outside

the ubic aval Base, thereby 0ustifyin- a valid and reasonable classification The fundamental ri-ht of eual protection ofthe la&s is not absolute, but is sub0ect to reasonable classification $f the -roupin-s are characteri8ed by substantiadistinctions that ma>e real differences, one class may be treated and re-ulated differently from another The classificationmust also be -ermane to the purpose of the la& and must apply to all those belon-in- to the same class

7O,N PEOPLES ALTERNATIVE COALITION vs. BCDA

GR. No. ''9**! O#1o%"& 2:( 28

FACTS%epublic Act o "22" set out the policy of the -overnment to accelerate the sound and balanced conversion into

alternative productive uses of the former military bases $t created Bases Conversion and ;evelopment Authority $t alsocreated the ubic pecial :conomic and !ree 'ort Sone $t -ranted the ubic :S incentives $t expressly -ave authority tothe 'resident to create throu-h executive proclamation, sub0ect to the concurrence of the local -overnment units directlyaffected, other pecial :conomic Sones in the areas covered BC;A entered into a /emorandum of A-reement and :scro&

A-reement &ith Tuntex and Asia&orld BC;A, Tuntex and Asia&orld executed a Joint ?enture A-reement Thean--unian- 'anlun-sod of Ba-uio City as>ed BC;A to exclude all the baran-ays partly or totally located &ithin CampJohn ay from the reach or covera-e of any plan or pro-ram for its development The san--unian adopted and submitted a1#3point concept for the development of Camp John ay BC;A, Tuntex and Asia4orld a-reed to some, but re0ected or

modified the other proposals They stressed the need to declare Camp John ay a :S as a condition precedent inaccordance %A o "22" The san--unian reuested the /ayor to order the determination of realty taxes &hich may becollected from real properties of Camp John ay $t &as intended to intelli-ently -uide the san--unian in determinin- itsposition on &hether Camp John ay be declared a :S, it bein- of the vie& that such declaration &ould exempt the camp5sproperty and the economic activity therein from local or national taxation The san--unian passed a resolution see>in- theissuance by 'resident %amos of a presidential proclamation declarin- an area of 2++1 hectares of the camp as a :S'resident %amos issued 'roclamation o )2* &hich established a :S on a portion of Camp John ay

ISSUE4hether 'roclamation o )2* is constitutional

RULING+4hile the -rant of economic incentives may be essential to the creation and success of :Ss, free trade 8ones and

the li>e, the -rant thereof to the John ay :S cannot be sustained The incentives under %A o "22" are exclusive onlyto the ubic :S, hence, the extension of the same to the John ay :S finds no support therein either does the same-rant of privile-es to the John ay :S find support in the other la&s specified under ection ( of 'roclamation o )2*,&hich la&s &ere already extant before the issuance of the proclamation or the enactment of %A o "22" /oreimportantly, the nature of most of the assailed privile-es is one of tax exemption $t is the le-islature, unless limited by aprovision of the state constitution, that has full po&er to exempt any person or corporation or class of property from taxationits po&er to exempt bein- as broad as its po&er to tax The challen-ed -rant of tax exemption &ould circumvent theConstitution5s imposition that a la& -rantin- any tax exemption must have the concurrence of a ma0ority of all the membersof Con-ress

COCONUT OIL REFINERS ASSOCIATION INC. vs. BCDA

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G.R. No. '82!2* 73/ 29( 2!

FACTS+%epublic Act o "22" &as enacted providin- for the sound and balanced conversion of the Clar> and ubic military

reservations and their extensions into alternative productive uses in the form of special economic 8ones in order to promotethe economic and social development of Central u8on in particular and the country in -eneral 'resident %amos issued:xecutive .rder o +* &hich declared that Clar> shall have all the applicable incentives -ranted to the ubic pecia:conomic and !ree 'ort Sone under %epublic Act o "22" The C:S shall have all the applicable incentives in the ubicpecial :conomic and !ree 'ort Sone under %A "22" The C:S /ain Sone coverin- the Clar> Air Base proper shall haveall the investment incentives, &hile the C:S ub3Sone coverin- the rest of the C:S shall have limited incentives The fulincentives in the Clar> :S /ain Sone and the limited incentives in the Clar> :S ub3Sone shall be determined by theBC;A BC;A passed Board %esolution o 9(3*#3*() allo&in- the tax and duty3free sale at retail of consumer -oodsimported via Clar> for consumption outside the C:S The 'resident issued :. o 9", KClarifyin- the Tax and ;uty !ree$ncentive 4ithin the ubic pecial :conomic Sone 'ursuant to %A o "22"L :. 9"3A &as issued, K!urther Clarifyin- theTax and ;uty3!ree 'rivile-e 4ithin the ubic pecial :conomic and !ree 'ort SoneL

ISSUE4hether or not :xecutive .rder o 9"3A, ection # of :xecutive .rder o +*, and ection ) of BC;A Board

%esolution o 9(3*#3*() are null and void

RULING+

The Court finds that the settin- up of such commercial establishments &hich are the only ones duly authori8ed tosell consumer items tax and duty3free is still &ell &ithin the policy enunciated in ection 12 of %epublic Act o "22" that K the ubic pecial :conomic Sone shall be developed into a self3sustainin-, industrial, commercial, financial andinvestment center to -enerate employment opportunities in and around the 8one and to attract and promote productiveforei-n investmentsL The Court reiterates that the second sentences of para-raphs 12 and 1( of :xecutive .rder o 9"3

A, allo&in- tax and duty3free removal of -oods to certain individuals, even in a limited amount, from the ecured Area of the:S, are null and void for bein- contrary to ection 12 of %epublic Act o "22" aid ection clearly provides thaKexportation or removal of -oods from the territory of the ubic pecial :conomic Sone to the other parts of the 'hilippineterritory shall be sub0ect to customs duties and taxes under the Customs and Tariff Code and other relevant tax la&s of the'hilippinesL

PROVINCE OF ABRA vs. ,ERNANDOG.R. No. L-:988 A;s1 8'( '9)'

FACTS+.n the face of this certiorari and mandamus petition, it clearly appears that the actuation of respondent Jud-e

ernando left much to be desired There &as a denial of a motion to dismiss an action for declaratory relief by %omanCatholic Bishop of Ban-ued desirous of bein- exempted from a real estate tax follo&ed by a summary 0ud-ment -rantin-such exemption, &ithout even hearin- the side of petitioner $t &as the submission of counsel that an action for declaratoryrelief &ould be proper only before a breach or violation of any statute, executive order or re-ulation /oreover, there bein- atax assessment made by the 'rovincial Assessor on the properties of respondent, petitioner failed to exhaust theadministrative remedies available under '; o )6) before filin- such court action %espondent Jud-e alle-ed that there 7isno uestion that the real properties sou-ht to be taxed by the 'rovince of Abra are properties of the respondent %omanCatholic Bishop of Ban-ued, $nc7 The very next sentence assumed the very point it as>ed &hen he cate-orically stated7i>e&ise, there is no dispute that the properties includin- their procedure are actually, directly and exclusively used by the

Roman Catholic ishop of angued, Inc. for religious or charitable purposes 7 !or him then 7The proper remedy of thepetitioner is appeal and not this special civil action7

ISSUE4hether or not the properties of respondent %oman Catholic Bishop should be exempt from taxation

RULING+%espondent Jud-e &ould not have erred so -rievously had he merely compared the provisions of the presen

Constitution &ith that appearin- in the 19(# Charter on the tax exemption of 7lands, buildin-s, and improvements7 There isa mar>ed difference @nder the 19(# Constitution 7Cemeteries, churches, and parsona-es or convents appurtenant theretoand all lands, buildin-s, and improvements used exclusively for reli-ious, charitable, or educational purposes shall beexempt from taxation7 The present Constitution added 7charitable institutions, mosues, and non3profit cemeteries7 andreuired that for the exemption of 7lands, buildin-s, and improvements,7 they should not only be 7exclusively7 but also

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7actually and 7directly7 used for reli-ious or charitable purposes The Constitution is &orded differently The chan-eshould not be i-nored $t must be duly ta>en into consideration

TOLENTINO vs. SECRETARY OF FINANCEG.R. No. ''!:!! O#1o%"& 8( '99!

FACTS+/otions &ere filed see>in- reconsideration of the upreme Court decision dismissin- the petitions for the

declaration of unconstitutionality of %A o ""16, other&ise >no&n as the :xpanded ?alue3Added Tax a& The motionsof &hich there are 1* in all, have been filed by the several petitioners in these cases

ISSUES+1 4hether or not %A o ""16 did not 7ori-inate exclusively7 in the ouse of %epresentatives as reuired by Art ?

ec 2) of the Constitution2 4hether or not %A o ""16 is violative of press freedom and reli-ious freedom under Art $$$ ecs ) and # of the

Constitution( 4hether or not there is violation of the rule on taxation under Art ?$ ec 2+ D1E of the Constitution) 4hether or not there is an impairment of obli-ation of contracts under Art $$$ ec 1* of the Constitution# 4hether or not there is violation of the due process clause under Art $$$ ec 1 of the Constitution

RULING+1 4hile Art ?$ ec 2) provides that all appropriation, revenue or tariff bills, bills authori8in- increase of the public

debt, bills of local application, and private bills must 7ori-inate exclusively in the ouse of %epresentatives,7 it also adds,7but the Senate may propose or concur with amendments7 $n the exercise of this po&er, the enate may propose anentirely ne& bill as a substitute measure

2. ince the la& -ranted the press a privile-e, the la& could ta>e bac> the privile-e anytime &ithout offense to theConstitution The ?AT is not a license tax $t is not a tax on the exercise of a privile-e, much less a constitutional ri-ht $t isimposed on the sale, barter, lease or exchan-e of -oods or properties or the sale or exchan-e of services and the lease oproperties purely for revenue purposes To sub0ect the press to its payment is not to burden the exercise of its ri-ht anymore than to ma>e the press pay income tax or sub0ect it to -eneral re-ulation is not to violate its freedom under theConstitution

( The Constitution does not really prohibit the imposition of indirect taxes &hich, li>e the ?AT, are re-ressive 4hatit simply provides is that Con-ress shall 7evolve a pro-ressive system of taxation7

) Contracts must be understood as havin- been made in reference to the possible exercise of the ri-htful authorityof the -overnment and no obli-ation of contract can extend to the defeat of that authority

# .n the alle-ed violation of due process, hardship to taxpayers alone is not an adeuate 0ustification forad0udicatin- abstract issues .ther&ise, ad0udication &ould be no different from the -ivin- of advisory opinion that does notreally settle le-al issues 4e are told that it is our duty under Art ?$$$, ec 1 D2E to decide &henever a claim is made that7there has been a -rave abuse of discretion amountin- to lac> or excess of 0urisdiction on the part of any branch orinstrumentality of the -overnment7 This duty can only arise if an actual case or controversy is before us

ABAADA G&o Pa&1/ L4s1 vs. E&$41aG.R. No. ')! S"1"$%"& '( 2!

FACTS+Before %A o 9((" too> effect, petitioners!!"!#! $%R& 'arty ist, et al., filed a petition for prohibition on

/ay 2", 2**# uestionin- the constitutionality of ections ), # and 6 of %A o 9((", amendin- ections 1*6, 1*" and1*+, respectively, of the ational $nternal %evenue Code D$%CE ection ) imposes a 1* ?AT on sale of -oods andproperties, ection # imposes a 1* ?AT on importation of -oods, and ection 6 imposes a 1* ?AT on sale of servicesand use or lease of properties These uestioned provisions contain a uniform provisoauthori8in- the 'resident, uponrecommendation of the ecretary of !inance, to raise the ?AT rate to 12, effective January 1, 2**6, after specifiedconditions have been satisfied 'etitioners ar-ue that the la& is unconstitutional

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ISSUES+1 4hether or not there is a violation of Article ?$, ection 2) of the Constitution2 4hether or not there is undue dele-ation of le-islative po&er in violation of Article ?$ ec 2+D2E of the Constitution( 4hether or not there is a violation of the due process and eual protection under Article $$$ ec 1 of the

Constitution

RULING+1 ince there is no uestion that the revenue bill exclusively ori-inated in the

ouse of %epresentatives, the enate &as actin- &ithin its constitutional po&er to introduce amendments to the ouse bil&hen it included provisions in enate Bill o 19#* amendin- corporate income taxes, percenta-e, and excise and franchisetaxes

2 There is no undue dele-ation of le-islative po&er but only of the discretion as to the execution of a la& This isconstitutionally permissible Con-ress does not abdicate its functions or unduly dele-ate po&er &hen it describes &hat 0obmust be done, &ho must do it, and &hat is the scope of his authorityF in our complex economy that is freuently the only &ayin &hich the le-islative process can -o for&ard

( The po&er of the tate to ma>e reasonable and natural classifications for the purposes of taxation has lon- beenestablished 4hether it relates to the sub0ect of taxation, the >ind of property, the rates to be levied, or the amounts to beraised, the methods of assessment, valuation and collection, the tate5s po&er is entitled to presumption of validity As arule, the 0udiciary &ill not interfere &ith such po&er absent a clear sho&in- of unreasonableness, discrimination, o

arbitrariness

MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS( INC. vs.DEPARTMENT OF FINANCE SECRETARY

G.R. No. ')!2: Nov"$%"& '( '99:

FACTS+'etitioner /isamis .riental Association of Coco Traders, $nc is a domestic corporation en-a-ed in the buyin- and

sellin- of copra in /isamis .riental The petitioner alle-es that prior to the issuance of %evenue /emorandum Circular )"391 on June 11, 1991, &hich implemented ?AT %ulin- 19*39*, copra &as classified as a-ricultural food product under ec1*(DbE of the ational $nternal %evenue Code and, therefore, exempt from ?AT at all sta-es of production or distribution

'etitioner sou-ht to nullify %evenue /emorandum Circular o )"391 and en0oin the collection by respondentrevenue officials of the ?alue Added Tax D?ATE on the sale of copra by members of petitioner or-ani8ation as theclassification had the effect of denyin- to the petitioner the exemption it previously en0oyed &hen copra &as classified as ana-ricultural food product under ec 1*(DbE of the $%C

ISSUE+4hether there is violation of eual protection clause because &hile coconut farmers and copra producers areexempt, traders and dealers are not, althou-h both sell copra in its ori-inal state

RULING+

There is a material or substantial difference bet&een coconut farmers and copra producers, on the one hand, andcopra traders and dealers, on the other The formerproduce and sell copra, the latter merely sell copra The Constitution

does not forbid the differential treatment of persons so lon- as there is a reasonable basis for classifyin- them differently

COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALSG.R. No. ''9*' A;s1 29( '99

FACTS+!ortune Tobacco Corporation D7!ortune Tobacco7E is en-a-ed in the manufacture of different brands of ci-arettes

The 'hilippine 'atent .ffice issued to the corporation separate certificates of trademar> re-istration over 7Champion,77ope,7 and 7/ore7 ci-arettes The initial position of the C$% &as to classify =Champion,= =ope,= and =/ore= as forei-n brandssince they &ere listed in the 4orld Tobacco ;irectory as belon-in- to forei-n companies o&ever, !ortune Tobacco

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chan-ed the names of =ope= to =ope 'uxury(and =/ore= to =)remium /ore,= thereby removin- the said brands from theforei-n brand cate-ory

%A o "6#), &as enacted and became effective on *( July 199( $t amended ection 1)2DcED1E of the $%C Aboua month after the enactment and t&o D2E days before the effectivity of %A "6#), %evenue /emorandum Circular o ("39(D7%/C ("39(7E %eclassification of Ci-arettes ub0ect to :xcise Tax, &as issued by the B$% !ortune Tobacco reuested fora revie&, reconsideration and recall of %/C ("39( The reuest &as denied on 29 July 199( The follo&in- day, or on (*July 199(, the C$% assessed !ortune Tobacco for ad valorem tax deficiency amountin- to '9,#9+,(()**

.n *( Au-ust 199(, !ortune Tobacco filed a petition for revie& &ith the CTA The CTA upheld the position of!ortune Tobacco and ad0ud-ed %/C o ("39( as defective

ISSUE+4hether or not there is a violation of the due process of la&

RULING+A readin- of %/C ("39(, particularly considerin- the circumstances under &hich it has been issued, convinces us

that the circular cannot be vie&ed simply as a corrective measure or merely as construin- ection 1)2DcED1E of the $%C, asamended, but has, in fact and most importantly, been made in order to place 7ope uxury,7 7'remium /ore7 and7Champion7 &ithin the classification of locally manufactured ci-arettes bearin- forei-n brands and to thereby have themcovered by %A "6#)

$n so doin-, the B$% not simply intrepreted the la&F verily, it le-islated under its uasi3le-islative authority The dueobservance of the reuirements of notice, of hearin-, and of publication should not have been then i-nored The Court isconvinced that the hastily promul-ated %/C ("39( has fallen short of a valid and effective administrative issuance

COMMISSIONER OF INTERNAL REVENUE vs.LINGAYEN GULF OF ELECTRIC POER

G.R. No. L-28**' A;s1 :( '9))

FACTS+The respondent taxpayer, in-ayen


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FACTS+This petition see>s to nullify :xecutive .rder o 2"( D:. 2"(, for shortE, issued by the 'resident of the 'hilippines

on 2# July 19+", to ta>e effect on 1 January 19++, and &hich amended certain sections of the ational $nternal %evenueCode and adopted the value3added tax D?AT, for shortE, for bein- unconstitutional in that its enactment is not alled-edly&ithin the po&ers of the 'residentF that the ?AT is oppressive, discriminatory, re-ressive, and violates the due process andeual protection clauses and other provisions of the 19+" Constitution

ISSUE4hether or not :. 2"( &as enacted by the president &ith -rave abuse of discretion and &hether or not such la& isunconstitutional

RULING'etitioners have failed to sho& that :. 2"( &as issued capriciously and &himsically or in an arbitrary or despotic

manner by reason of passion or personal hostility $t appears that a comprehensive study of the ?AT had been extensivelydiscussed by this framers and other -overnment a-encies involved in its implementation, even under the pasadministration The petitioners have failed to adeuately sho& that the ?AT is oppressive, discriminatory or un0ust'etitioners merely rely upon ne&spaper articles &hich are actually hearsay and have evidentiary value To 0ustify thenullification of a la&, there must be a clear and uneuivocal breach of the Constitution, not a doubtful and ar-umentativeimplication The disputed sales tax is also euitable $t is imposed only on sales of -oods or services by persons en-a-e inbusiness &ith an a--re-ate -ross annual sales exceedin- '2**,***** mall corner sari*saristores are conseuentlyexempt from its application

SISON vs. ANC,ETAG.R. No. L-!9:8' 73/ 2!( '9):

FACTS+'etitioner assailed the validity of ection 1 of Batas 'ambansa Bl- 1(# &hich further amends ection 21 of the

ational $nternal %evenue Code of 19"", &hich provides for rates of tax on citi8ens or residents on DaE taxable compensationincome, DbE taxable net income, DcE royalties, pri8es, and other &innin-s, DdE interest from ban> deposits and yield or anyother monetary benefit from deposit substitutes and from trust fund and similar arran-ements, DeE dividends and share ofindividual partner in the net profits of taxable partnership, DfE ad0usted -ross income

'etitioner as taxpayer alle-es that by virtue thereof, 7he &ould be unduly discriminated a-ainst by the imposition o

hi-her rates of tax upon his income arisin- from the exercise of his profession vis*a*visthose &hich are imposed upon fixedincome or salaried individual taxpayers e characteri8es the above section as arbitrary amountin- to class le-islationoppressive and capricious in characterISSUE

4hether or not B' 1(# ec 1 is violative of due procee and eual protection clause

RULINGThe difficulty confrontin- petitioner is thus apparent e alle-es arbitrariness A mere alle-ation, as here does not

suffice There must be a factual foundation of such unconstitutional taint Considerin- that petitioner here &ould condemnsuch a provision as void or its face, he has not made out a case This is merely to adhere to the authoritative doctrine tha&ere the due process and eual protection clauses are invo>ed, considerin- that they arc not fixed rules but rather broadstandards, there is a need for of such persuasive character as &ould lead to such a conclusion Absent such a sho&in-, the

presumption of validity must prevail ;ue process &as not violated

VILLEGAS vs. ,UI C,IONG TSAI PAOG.R. No. L-29: Nov"$%"& '( '9*)

FACTS.n !ebruary 22, 196+, the /unicipal Board of /anila passed City .rdinance o 6#(" The said city ordinance &as

also si-ned by then /anila /ayor Antonio J ?ille-as D?ille-asEection 1 of the said city ordinance prohibits aliens from bein- employed or to en-a-e or participate in any position

or occupation or business enumerated therein, &hether permanent, temporary or casual, &ithout first securin- anemployment permit from the /ayor of /anila and payin- the permit fee of '#*** except persons employed in thediplomatic or consular missions of forei-n countries, or in the technical assistance pro-rams of both the 'hilippine

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inin their respective households, and members of reli-iousorders or con-re-ations, sect or denomination, &ho are not paid monetarily or in >ind

iu Chion- Tsai 'ao o DTsai 'ao oE &ho &as employed in /anila, filed a petition &ith the C!$ of /anila todeclare City .rdinance o 6#(" as null and void for bein- discriminatory and violative of the rule of the uniformity intaxation

The trial court declared City .rdinance o 6#(" null and void ?ille-as filed the present petition

ISSUE4hether or not the #*** employment permit fee imposed by virtue of .rdinance o 6#(" is a violation of the eua

protection clause

RULINGThe '#*** fee is unreasonable not only because it is excessive but because it fails to consider valid substantial

differences in situation amon- individual aliens &ho are reuired to pay it Althou-h the eual protection clause of theConstitution does not forbid classification, it is imperative that the classification should be based on real and substantiadifferences havin- a reasonable relation to the sub0ect of the particular le-islation The same amount of '#*** is bein-collected from every employed alien &hether he is casual or permanent, part time or full time or &hether he is a lo&lyemployee or a hi-hly paid executive .rdinance o 6#(" is void because it does not contain osu--est any standard or criterion to -uide the mayor in the exercise of the po&er &hich has been -ranted to him by theordinance

VILLANUEVA v. CITY OF ILOILOG.R. No. 2!2' D"#"$%"& 2)( '9)

FACTS+ The municipal board of $loilo City enacted .rdinance +6, imposin- license tax fees as follo&s 1E tenement house'2#**anuallyF 2E tenement house, partly or &holly en-a-ed in or dedicated to business in the streets of J/ Basa, $8nar

Aldeuer, '2)** per apartmentF (E tenement house, partly or &holly en-a-ed in business in any other streets, '12** peapartment

The validity and constitutionality of this ordinance &ere challen-ed by the spouses ?illanueva, o&ners of ) tenementhouses containin- () apartments

ISSUE+;oes .rdinance 11 violate the rules of uniformity of taxationO

RULING+o This court has ruled that tenement houses constitute a distinct class of property $t has li>e&ise ruled that taxes

are uniform and eual &hen imposed upon all properties of the same class or character &ithin the taxin- authorityL The fact,therefore, that the o&ners of other classes of buildin-s in the City of $loilo do not pay the taxes imposed by the ordinance inuestion is no ar-ument at all a-ainst uniformity and euality of the tax imposition

PEPSI-COLA BOTTLING CO. OF T,E P,ILIPPINES( INC. v. CITY OF BUTUANG.R. No. 22)': A;s1 2)( '9)

FACTS+The City of Butuan enacted .rdinance o 11* &hich &as subseuently amended by .rdinance o 122

.rdinance o 11* as amended, imposes a tax on any person, association, etc of '*1* per case of 2) bottles of 'epsi3Cola and the plaintiff 'epsi3Cola paid under protest The plaintiff filed a complaint for the recovery of the amount paid underprotest on the -round that .rdinance o 11* is ille-al, that the tax imposed is excessive and that it is unconstitutional'laintiff maintains that the ordinance is null and void because it is un0ust and discriminatory

ISSUE+4hether or not the ordinance in uestion is violative of the uniformity reuired by the ConstitutionO

RULING+

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Ies .nly sales by Ka-ents or consi-neesL of outside dealers &ould be sub0ect to the tax ales by local dealers,not actin- for or on behalf of other merchants, re-ardless of the volume of their sales, and even if the same exceeded thosemade by said a-ents or consi-nees of producers or merchants established outside the City of Butuan, &ould be exempfrom the disputed tax The classification to be valid and reasonable must be 1E based upon substantial distinctionsF2E-ermane to the purpose of the ordinanceF (E applicable, not only to present conditions, but also to future conditionssubstantially identical to those presentF and )E applicable eually to all those &ho belon- to the same class Theseconditions are not fully met by the ordinance in uestion

ORMOC SUGAR COMPANY( INC. v. TREASURER OF ORMOC CITYG.R. No. 28*9: F"%&a&/ '*( '9)

FACTS+The /unicipal Board of .rmoc City passed .rdinance o ) imposin- Kon any and all productions of centrifu-a

su-ar milled at the .rmoc u-ar Company, $nc, in .rmoc City a municipal tax euivalent to one per centum D1E per exportsale to @A and other forei-n countriesL 'ayments for said tax &ere made, under protest, by .rmoc u-ar Company, $nc.rmoc u-ar Company, $nc filed before the Court of !irst $nstance of eyte a complaint a-ainst the City of .rmoc as &elas its Treasurer, /unicipal Board and /ayor alle-in- that the ordinance is unconstitutional for bein- violative of the euaprotection clause and the rule of uniformity of taxation The court rendered a decision that upheld the constitutionality of theordinance ence, this appeal

ISSUE+4hether or not constitutional limits on the po&er of taxation, specifically the eual protection clause and rule of

uniformity of taxation, &ere infrin-edO

RULING+Ies :ual protection clause applies only to persons or thin-s identically situated and does not bar a reasonable

classification of the sub0ect of le-islation, and a classification is reasonable &here 1E it is based upon substantial distinctions2E these are -ermane to the purpose of the la&F (E the classification applies not only to present conditions, but also to futureconditions substantially identical to those presentF and )E the classification applies only to those &ho belon- to the sameclass

A perusal of the reuisites sho&s that the uestioned ordinance does not meet them, for it taxes only centrifu-asu-ar produced and exported by the .rmoc u-ar Company, $nc and none other The taxin- ordinance should not be

sin-ular and exclusive as to exclude any subseuently established su-ar central for the covera-e of the tax

LUT@ v. ARANETAG.R. No. *)!9 D"#"$%"& 22( '9!!

FACTS+This case &as initiated in the Court of !irst $nstance of e-ros .ccidental to test the le-ality of the taxes imposed

by Common&ealth Act o #6" Du-ar Ad0ustment ActE ection ( of the said la& levies on o&ners or persons in control oflands devoted to the cultivation of su-ar cane and ceded to others for a consideration, on lease or other&ise a tax euivalentto the difference bet&een the money value of the rental or consideration collected and the amount representin- 12 per

centum of the assessed value of such land 'laintiff ut8, in his capacity as Judicial Administrator of the $ntestate :state ofedesma, see>s to recover from the Collector of $nternal %evenue the sum paid by him as taxes alle-in- that such tax isunconstitutional and void, bein- levied for the aid and support of the su-ar industry exclusively, &hich in plaintiff5s opinion isnot a public purpose for &hich a tax may be constitutionally levied The action havin- been dismissed by the Court of !irs$nstance, the plaintiffs appealed the case

ISSUE+4hether or not the la& in uestion is constitutionalO

RULING+ Ies The tax levied is &ith a re-ulatory purpose, to provide means for the rehabilitation and stabili8ation of thethreatened su-ar industry The act is primarily an exercise of the police po&er That the tax to be levied should burden thesu-ar producers themselves can hardly be a -round of complaint $t appears rational that the tax be obtained precisely from

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those &ho are to be benefited from the expenditure of the funds derived from it At any rate, it is inherent in the po&er totax that a state be free to select the sub0ects of taxation, and it has been repeatedly ruled that Kineualities &hich result froma sin-lin- out of one particular for taxation or exemption infrin-e no constitutional limitationL $t appears of no moment thathe funds raised under the u-ar tabili8ation Act, no& in uestion, should be exclusively spent in aid of the su-ar industry,since it is that very enterprise that is bein- protected

ASSOCIATION OF CUSTOMS BROERS "1 a3. vs.T,E MUNICIPALITY BOARD o5 Man43a "1 a3.

G.R. No. L-:8*( Ma/ 22( '9!8

FACTS+This is a petition for declaratory relief to test the validity of .rdinance o (("9 passed by the /unicipal Board of

the City of /anila on /arch 2), 19#*The petitioners &hich is composed of all bro>ers and public service operators of motorvehicles in the City of /anila, and s in said City, challen-e the validity of said ordinance on the -round that D1E &hile it levies a so3called property tax it isin reality a license tax &hich is beyond the po&er of the /unicipal Board of the City of /anila

ISSUE+4hether or not .rdinance o (("9 is valid as held by the C!$ of /anila

RULING+

o The ordinance in uestion &hile it refers to property tax and it is fixed ad valoremyet &e cannot re0ect the ideathat it is merely levied on motor vehicles operatin- &ithin the City of /anila &ith the main purpose of raisin- funds to beexpended exclusively for the repair, maintenance and improvement of the streets and brid-es in said city This is precisely&hat the /otor ?ehicle a& DAct o (992E intends to prevent, for the reason that, under said Act, municipal corporationalready participate in the distribution of the proceeds that are raised for the same purpose of repairin-, maintainin- andimprovin- brid-es and public hi-h&ay Dsection "( of the /otor ?ehicle a&E This prohibition is intended to preventduplication in the imposition of fees for the same purpose $t is for this reason that &e believe that the ordinance in uestionmerely imposes a license fee althou-h under the cloa> of an ad valoremtax to circumvent the prohibition above adverted to

EASTERN T,EATRICAL CO.( INC.( ET AL.vs VICTOR( ALFONSOG.R. No. L-'': Ma/ 8'( '9:9

FACTS+T&elve corporation en-a-ed in motion picture business filed a complaint to impu-n the validity of .rdinance o

29#+ of the City of /anila3 A .%;$AC: $/'.$< A !:: . T: '%$C: .! :?:%I A;/$$. T$CR:T .;BI C$:/AT.


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&hat places of amusement taxed by the ordinance do not constitute a class by themselves and &hich can be confused&ith those not included in the ordinance

P,ILIPPINE TRUST COMPANY vs. YATCOG.R. Nos. L-:2!!( :2!( :2!9 and :2** 7ana&/ 28( '9:

FACTS'rior to the filin- of these suits, and for a number of years, the plaintiffs3appellants had been payin- capital and

deposit taxes &ithout protest, formerly under section 111 of Act o 11+9, and later under section 1)99 of the %evisedAdministrative Code of 191", as amended Appellants challen-e the constitutionality of the aforesaid section of the %evised Administrative Code, principally onthe -rounds that it violates the rule re-ardin- uniformity of taxation, and that it is discriminatory, and therefore violative of theeual protection clause of the Constitution Appellants stoutly maintain that althou-h the fore-oin- provision is of -eneraapplication and operates on all ban>s of the same >ind doin- business in the 'hilippines, the exemption of the ational CityBan> of e& Ior> from the impositions therein specifically provided Dational City Ban> of e& Ior> v 'osadas G296 @)9", +* a& ed (#1H, ma>es the la& discriminatory and violates the rule of uniformity in taxation

ISSUE+4hether or not the said section of the %evised Administrative Code violates the rule on uniformity of taxation

RULING+

o A tax is considered uniform &hen it operates &ith the same force and effect in every place &here the sub0ecmay be found ection 1)99 of the %evised Administrative Code, as amended, applies uniformly to, and operates on, alban>s in the 'hilippines &ithout distinction and discrimination, and if the ational City Ban> of e& Ior> is exempted fromits operation because it is a federal instrumentality sub0ect only to the authority of Con-ress, that alone could have the effectof renderin- it violative of the rule of uniformity $n every &ell3re-ulated and enli-htened state or -overnment, certaindescriptions of property and also certain institutions are exempt from taxation, but these exemptions have never beenre-arded as disturbin- the rules of taxation, even &here the fundamental la& had ordained that it should be uniform

C,URC,ILL vs. CONCEPCION G.R. No. ''!*2 S"1"$%"& 22( '9'

FACTSection 1** of Act o 2((9 imposed an annual tax of ') per suare meter upon 7electric si-ns, billboards, and

spaces used for postin- or displayin- temporary si-ns, and all si-ns displayed on premises not occupied by buildin-s7 Thissection &as subseuently amended by Act o 2)(2, effective by reducin- the tax on such si-ns, billboards, etc, to '2 persuare meter or fraction thereof !rancis A Churchill and te&art Tait, o&ners of a si-n or billboard containin- an area of #2suare meters constructed on private property in the city of /anila and exposed to public vie&, &ere taxes thereon '1*)The tax &as paid under protest

'laintiffs assailed that they &ere -ainin- lesser profit than &hat they ou-ht to receive because of the tax imposed bythe said la& o&ever, it &as proven that there &as no attempt on the part of the plaintiffs to raise the advertisin- rates inorder to cope up &ith the said tax rates $t &ill thus be seen that the contention that the rates char-ed for advertisin- cannotbe raised is purely hypothetical, based entirely upon the opinion of the plaintiffs, unsupported by actual test, and that theplaintiffs themselves admit that a number of other persons have voluntarily and &ithout protest paid the tax herein

complained of

ISSUE$s the tax void for lac> of uniformityO

RULINGA tax is uniform, &ithin the constitutional reuirement, &hen it operates &ith the same force and effect in every place

&here the sub0ect of it is found 7@niformity,7 as applied to the constitutional provision that all taxes shall be uniform, meansthat all property belon-in- to the same class shall be taxed ali>e The statute under consideration imposes a tax of '2 persuare meter or fraction thereof upon every electric si-n, bill3board, etc, &herever found in the 'hilippine $slands .r inother &ords, 7the rule of taxation7 upon such si-ns is uniform throu-hout the $slands The e-islature selected si-ns andbillboards as a sub0ect for taxation and it must be presumed that it, in so doin-, acted &ith a full >no&led-e of the situation

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MANILA ELECTRIC COMPANY v. PROVINCE OF LAGUNA and BENITO BALA@O 4n 04s #aa#41/ as P&ov4n#4a3T&"as&"& o5 La;na

G.R. No. '8'8!9. Ma/ !( '999.

FACTS/anila :lectric Company D/:%AC.E &as -ranted a franchise from certain municipalities of a-una .n

eptember 1(, 1991, %epublic Act "16*, other&ise >no&n as the ocal


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CAGAYAN ELECTRIC POER AND LIG,T CO.( INC v. COMMISSIONER OF INTERNAL REVENUE and COURT OFTAX APPEALS

G.R. No. L-'2. S"1"$%"& 2!( '9)!

FACTS+'etitioner Ca-ayan :lectric 'o&er and i-ht Co, $nc DC:'AC.E is the holder of a le-islative franchise, %epublic

Act (2)" under &hich, it is exempted from Ktaxes, and assessments of &hatever authority upon privile-es, earnin-s, incomefranchise, and poles, &ires transformers, and insulatorsL

.n June 2", 196+, %epublic Act #)(1 amended ection 2) of the Tax Code, ma>in- the petitioner liable for incometax in addition to franchise tax .n Au-ust ), 1969, %epublic Act 6*2* &as enacted under &hich, the petitioner &as a-aintax exempted

The Commissioner of $nternal %evenue DC$%E sent a demand letter on !ebruary 1#, 19"(, reuirin- petitioner to paythe deficiency for income taxes for 196+319"1 @pon petitioner=s contention, the C$% cancelled the assessments for 19"* buinsisted those for 196+ and 1969

'etitioner filed a petition for revie& &ith the tax court &hich held petitioner responsible only for the period fromJanuary 1 to Au-ust (, 1969, or before the passa-e of %epublic Act 6)2* &hich reiterated its tax exemption Thus, theappeal

ISSUE+4hether petitioner=s franchise is a contract &hich can be impaired by an implied appeal

RULING+Ies Con-ress could impair petitioner=s franchise by ma>in- it liable for income tax from &hich heretofore it &as

exempted by virtue of the exemption provided in its franchise The Constitution provides that a franchise is sub0ect toamendment, alteration, or repeal by Con-ress &hen public interest so reuires 'etitioner=s franchise, under %epublic Ac(2)" also provide it is sub0ect to the Constitution

%epublic Act #)(1 &ithdre& petitioner=s exemption but &as restored by subseuent enactment Thus, it is only liablefor the period of January 1 to Au-ust (, 1969 &hen its tax exemption &as modified

LEALDA ELECTRIC CO.( INC v. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALSG.R. No. L-':2). A&43 8( '98

FACTS+

.n June 11, 19)9, Alfredo, /ario and Ben0amin Benito formed a partnership to operate an electric plant uchelectric plant &as -ranted a franchise in the year 191# to supply electric current to the municipalities of Albay The franchisethe Certificate of public convenience and the electric plant &as transferred to the said partnership @nder its franchise, theori-inal -rantee and successors3in3interest paid a franchise tax of 2 on the -ross earnin-s, until .ctober 1, 19)6, &hensection 2#9 of the ational $nternal %evenue Code &as amended by %epublic Act (9, &hich increased the franchise tax to#

.n a date undisclosed, petitioner filed a petition for refund contendin- that on its charter, it &as liable to pay afranchise tax of 2 and not # of its earnin-s and receipts

As several petitions &ere not -iven definite action, thus petitioner filed &ith the Court of Tax Appeals DCTAE apetition, prayin- for refund from the period of January 2*, 19)" to .ctober 1), 19#+ The CTA dismissed the petition

Thus, the petition, on the -round that Act o2)"#, as amended by Act 262*, -rantin- its franchise constitute aprivate contract bet&een the petitioner and the


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1* of Act o (6(6 Conseuently, section 2#9 of the Tax Code became the basic franchise tax to be paid by holders ofall existin- and future franchises uch bein- the case, the act amendin- the section must be deemed applied to petitioner

7. CASANOVAS vs. 7NO. S. ,ORDG.R. No. 8:*8 Ma 22( '9*

FACTS $n 1+9", the panish , non3profit, reli-ious, missionary corporation duly re-istered and doin-business in the 'hilippines The defendant appellee is a municipal corporation &ith po&ers that are to be exercised inconformity &ith the provisions of the %evised Charter of the City of /anila $n the course of its ministry, the 'hilippine a-encyof the American Bible ociety has been distributin- and sellin- bibles andor -ospel portions thereof throu-hout the'hilippines and translatin- the same into several 'hilippine dialets The actin- City Treasurer of /anila reuired the societyto secure the correspondin- /ayorUVs permit and municipal license fees, to-ether &ith compromise coverin- the periodfrom the )th uarter of 19)# to the 2nd uarter of 19#( The society paid such under protest, and filed suit uestionin- thele-ality of the ordinances under &hich the fees are bein- collected

ISSUE 4hether or not the municipal ordinances violate the freedom of reli-ious profession and &orship

RULING A tax on the income of one &ho en-a-es in reli-ious activities is different from a tax on property used or employed inconnection &ith those activities $t is one thin- to impose a tax on the income or property of a preacher, and another to exacta tax for him for the privile-e of deliverin- a sermon The po&er to tax the exercise of a privile-e is the po&er to control orsuppress its en0oyment :ven if reli-ious -roups and the press are not alto-ether free from the burdens of the -overnmentthe act of distributin- and sellin- bibles is purely reli-ious and does not fall under ection 2" DeE of the Tax Code DCA )66EThe fact that the price of bibles, etc are a little hi-her than actual cost of the same does not necessarily mean it is alreadyen-a-ed in business for profit .rdinance 2#29 and (*** are not applicable to the ociety for in doin- so it &ould impair itsfree exercise and en0oyment of its reli-ious profession and &orship as &ell as its ri-hts of dissemination of reli-ious beliefs

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ABRA VALLEY COLLEGE( INC vs.

,ON. 7UAN P. A?UINO( 7d;"( Co&1 o5 F4&s1 Ins1an#"( A%&aG.R. NO. 89) 7n" '!( '9))

FACTS 'etitioner, an educational corporation and institution of hi-her learnin- duly incorporated &ith the ecurities and:xchan-e Commission in 19)+, filed a complaint to annul and declare void the 7otice of ei8ure= and the 7otice of ale7 ofits lot and buildin- located at Ban-ued, Abra, for non3payment of real estate taxes and penalties amountin- to '#,1)*(1aid 7otice of ei8ure7 by respondents /unicipal Treasurer and 'rovincial Treasurer, defendants belo&, &as issued for thesatisfaction of the said taxes thereon The parties entered into a stipulation of facts adopted and embodied by the trial court in its uestioned decision Thetrial court ruled for the -overnment, holdin- that the second floor of the buildin- is bein- used by the director for residentiapurposes and that the -round floor used and rented by orthern /ar>etin- Corporation, a commercial establishment, andthus the property is not bein- used UWexclusivelyU for educational purposes $nstead of perfectin- an appeal, petitioneavailed of the instant petition for revie& on certiorari &ith prayer for preliminary in0unction before the upreme Court, by filin-said petition on 1" Au-ust 19")

ISSUE 4hether or not the lot and buildin- are used exclusively for educational purposes

RULINGection 22, para-raph (, Article ?$, of the then 19(# 'hilippine Constitution, expressly -rants exemption from realty

taxes for cemeteries, churches and parsona-es or convents appurtenant thereto, and all lands, buildin-s, and improvementsused exclusively for reli-ious, charitable or educational purposes %easonable emphasis has al&ays been made that theexemption extends to facilities &hich are incidental to and reasonably necessary for the accomplishment of the mainpurposes The use of the school buildin- or lot for commercial purposes is neither contemplated by la&, nor by

0urisprudence $n the case at bar, the lease of the first floor of the buildin- to the orthern /ar>etin- Corporation cannot byany stretch of the ima-ination be considered incidental to the purpose of education The test of exemption from taxation isthe use of the property for purposes mentioned in the Constitution

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