Digests Tax 2003

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DigestsTaxation Law I

Michael Vernon Guerrero Mendiola2003

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Ta!le o) Contents

Commissioner vs% lgue* G( L"2++,0* -. /e!ruar -,++ 1%%%%%%%%% -Luon Stevedoring Cor'% vs% Court o) Tax ''eals* G( L"30232* 2, ul -,++ 1%%%%%%%%% -

Lut vs% raneta* G( L".+4,* 22 Decem!er -,44 1%%%%%%%%% 2McCollough vs% Marland* -. 5S 3-6 7-+-,8 1%%%%%%%%% 2

&anhandle 9il vs% State o) Mississi''i* 2.. 5S 2-+ 7-,2+8 1%%%%%%%%% 3Commissioner vs% Lingaen Gul) :lectric* G( L"23..-* ; ugust -,++ 1%%%%%%%%% ;

#ational Develo'ment Co% vs% Commissioner* G( L"43,6-* 30 une -,+. 1%%%%%%%%% ;Domingo vs% Garlitos* G( L"-+,,3* 2, une -,63 1%%%%%%%%% 4

Commissioner vs% Itogon"Suoc Mines* G( L"242,,* 2, ul -,6, 1%%%%%%%%% 4(e'u!lic vs% Mam!ulao Lum!er* G( L"-..24* 2+ /e!ruar -,62 1%%%%%%%%% 4

/rancia vs% Intermediate ''ellate Court* G( L"6.6;,* 2+ une -,++ 1%%%%%%%%% 6Caltex &hili''ines vs% Commission on udit 7C98* G( ,24+4* + Ma -,,2 1%%%%%%%%% .

Cu 5nacolod"Murcia Milling Co%* G( L"-,+2;"26* , ul -,,, 1%%%%%%%%% -33-st In)antr &ost :xchange vs% &osadas* G( 33;03* ; Se'tem!er -,30 1%%%%%%%%% -;@ells /argo vs% Collector o) Internal (evenue* G( ;6.20* 2+ une -,;0 1%%%%%%%%% -4&hili''ine Match Co% Ltd% vs% Ce!u Cit* G( L"30.;4* -+ anuar -,.+ 1%%%%%%%%% -4

Commissioner vs% >ritish 9verseas irwas Cor'%* G( L"64..3".;* 30 'ril -,+. 1%%%%%%%%% -6Commissioner vs% ir India* G( L".2;;3* 2, anuar -,++ 1%%%%%%%%% -6

llied Thread vs% Cit o) Manila* G( L";02,6* 2- #ovem!er -,+; 1%%%%%%%%% -.!ra vs% =ernando* G( L";,336* 3- ugust -,+- 1%%%%%%%%% -.

ssociation o) Custom >ro$ers vs% Manila* G( L";3.6* 22 Ma -,43 1%%%%%%%%% -+Aa'atiran ng mga #agliling$od sa &amahalaan vs% Tan* G( L"+-3--* 30 une -,++ 1%%%%%%%%% -+

Sison vs% ncheta* G( L"4,;3-* 24 ul -,+; 1%%%%%%%%% -,uan Luna Su!division vs% Sarmiento* G( L"343+* 2+ Ma -,42 1%%%%%%%%% -,

Shell Co% vs% Vano* G( L"60,3* 2; /e!ruar -,4;1%%%%%%%%% 20Victorias Milling Co% vs% Munici'alit o) Victorias* G( L"2--+3* 2. Se'tem!er -,6+ 1%%%%%%%%% 20

&unsalan vs% Manila* G( L";+-.* 26 Ma -,4; 1%%%%%%%%% 2-9rmoc Sugar vs% Treasurer o) 9rmoc Cit* G( L"23.,;* -. /e!ruar -,6+ 1%%%%%%%%% 2-

&e'si"Cola >ottling Co% vs% Cit o) >utuan* G( L"22+-;* 2+ ugust -,6+ 1%%%%%%%%% 22Vera vs% Cuevas* G( L"336,3",;* 3- Ma -,., 1%%%%%%%%% 22

merican >i!le Societ vs% Manila* G( L",63.* 30 'ril -,4. 1%%%%%%%%% 23Cagaan :lectric &ower B Light Co% vs% Commissioner* G( L"60-26* 24 Se'tem!er -,+4 1%%%%%%%%% 23

Casanovas vs% =ord* G( L"3;.3* 22 March -,0. 1%%%%%%%%% 2;Churchill vs% Conce'cion* G( --4.2* 22 Se'tem!er -,-6 1%%%%%%%%% 2;

Villanueva vs% Iloilo Cit* G( L"2642-* 2+ Decem!er -,6+ 1%%%%%%%%% 24:astern Theatrical Co% vs% l)onso* G( L"--0;* 3- Ma -,;; 1%%%%%%%%% 24

(ees vs% lmanor* G( ;,+3,";6* 26 'ril -,,- 1%%%%%%%%% 26!ra Valle College vs% uino* G( L"3,0+6* -4 une -,++ 1%%%%%%%%% 26

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=errera vs% ?ueon Cit >oard o) ssessment ''eals* G( L"-42.0* 30 Se'tem!er -,6- 1%%%%%%%%% 2.Lladoc vs% Commissioner* G( L"-,20-* -6 une -,64 1%%%%%%%%% 2.

>isho' o) #ueva Segovia vs% &rovincial >oard o) Ilocos #orte* G( 2.4++* 3- Decem!er -,2. 1%%%%%%%%% 2+Commisioner vs% >isho' o) Missioner District o) the &hili''ine Islands* G( L"-,;;4* 3- ugust -,64 1%%%%%%%%% 2+

=odges vs% Iloilo Cit* G( L"-+-2,* 3- anuar -,631%%%%%%%%% 2,&rocter and Gam!le vs% agna* G( L"2;264* 2+ Decem!er -,., 1%%%%%%%%% 2,

Commissioner vs% Lednic$* G( L"-+-6,* 3- ul -,6; 1%%%%%%%%% 30Commissioner vs% avier* G( .+,43* 3- ul -,,- 1%%%%%%%%% 30

Meralco vs% Vera* G( L"2,,+.* 22 9cto!er -,.4 1%%%%%%%%% 3-Commissioner vs% Manila oc$e Clu!* G( L"+.44* 23 March -,46 1%%%%%%%%% 3-

SSS vs% >acolod Cit* G( L"34.26* 2- ul -,+2 1%%%%%%%%% 32#ita)an vs% Commissioner* G( L".+.+0* 23 ul -,+. 1%%%%%%%%% 32

Commissioner vs% (o!ertson* G( L".0--6"-,* -2 ugust -,+6 1%%%%%%%%% 32(eagan vs% Commissioner* G( L"263.,* 2. Decem!er -,6, 1%%%%%%%%% 33

Davao Light and &ower vs% Commissioner o) Customs* G( L"2+.3, and L"2+,02 1%%%%%%%%% 33Surigao Consolidated Mining vs% Collector* G( L"-;+.+* 26 Decem!er -,63 1%%%%%%%%% 3;

@onder Mechanical :ngineering vs% Court o) Tax ''eals* G( L"22+04 and L"2.+4+* 30 une -,.4 1%%%%%%%%% 34Visaas Ce!u Terminal vs% Commissioner* G( L"-,430 and L"-,;;;* 2. /e!ruar -,64 1%%%%%%%%% 34

Lealda :lectric vs% Commissioner* G( L"-6;2+* 30 'ril -,63 1%%%%%%%%% 36Misamis 9riental vs% Cagaan :lectric* G( ;4344* -2 anuar -,,0 1%%%%%%%%% 36

=ilado vs% Collector* G( L",;0+* 3- 9cto!er -,46 1%%%%%%%%% 3.Commissioner vs% Court o) Tax ''eals* G( ;;00.* 20 March -,,- 1%%%%%%%%% 3.

Maceda vs% Macaraig* G( ++2,-* 3- Ma -,,- 1%%%%%%%%% 3+Commissioner vs% &hoenix ssurance* G( L"-,.2.* 20 Ma -,64 1%%%%%%%%% 3,

Commissioner vs% Connel >ros% Co%* G( L"2..42"43* 30 ugust -,.- 1%%%%%%%%% 3,Commissioner vs% /iremans /und Insurance* G( L"306;;* , March -,+. 1%%%%%%%%% ;0Commissioner vs% Ce!u &ortland Cement* G( L"2,04,* -4 Decem!er -,+. 1%%%%%%%%% ;0

(e'u!lic vs% Vda% de /ernande* G( L",-;-* 24 Se'tem!er -,46 1%%%%%%%%% ;-Tanada vs% Tuvera* G( L"63,-4* 2; 'ril -,+4 1%%%%%%%%% ;-

>agatsing vs% (amire* G( L";-63-* -. Decem!er -,.6 1%%%%%%%%% ;2

Commissioner vs% >urroughs Ltd%* G( L"6643* -, une -,+6 1%%%%%%%%% ;2

Commissioner vs% Mega General Merchandise* G( L"6,-36* 30 Se'tem!er -,++ 1%%%%%%%%% ;3Commissioner vs% Court o) Tax ''eals* G( -0+34+* 20 anuar -,,4 1%%%%%%%%% ;3

Commissioner vs% Court o) ''eals* G( --,.6-* 2, ugust -,,6 1%%%%%%%%% ;;>S"C># >roadcating vs% Court o) Tax ''eals* G( L"42306* -2 9cto!er -,+- 1%%%%%%%%% ;;

In (: Eialcita* M ,0"6"0-4"SC* -+ 9cto!er -,,0 1%%%%%%%%% ;4Commissioner vs% Court o) ''eals* G( ,60-6* -. 9cto!er -,,- 1%%%%%%%%% ;4>orromeo vs% Civil Service Commission* G( ,6032* 3- ul -,,- 1%%%%%%%%% ;6

:sso Standard :astern vs% Commissioner* G( 2+40+",* . ul -,+, 1%%%%%%%%% ;6Guagua :lectric Light &lant Co% vs% Collector* G( L"236--* 2; 'ril -,6. 1%%%%%%%%% ;.

(e'u!lic vs% Limaco and De Guman Commercial Co%* G( L"-30+-* 3- ugust -,62 1%%%%%%%%% ;.Inter'rovincial uto!us Co% vs% Collector o) Internal (evenue* G( L"6.;-* 3- anuar -,46 1%%%%%%%%% ;+

Tan Guan vs% Court o) Tax ''eals* G( L"236.6* 2. 'ril -,6. 1%%%%%%%%% ;,

Darit vs% Cru* G( L"3,,-0* 26 Se'tem!er -,++ 1%%%%%%%%% ;,Collector vs% >eni'ao* G( L"-3646* 3- anuar -,62 1%%%%%%%%% 40Meralco Securities Cor'% vs% Savellano* G( L"36-+-* 23 9cto!er -,+21%%%%%%%%% 40

Commissioner vs% !ad* G( L"-,62.* 2. une -,6+ 1%%%%%%%%% 4-Commissioner vs% &rocter B Gam!le &hili''ines* G( L"66+3+* -4 'ril -,++ 1%%%%%%%%% 4-

Cit Lum!er vs% Domingo* G( L"-+6--* 30 anuar -,6; 1%%%%%%%%% 42Villamin vs% Court o) Tax ''eals* G( L"--436* 3- 9cto!er -,60 1%%%%%%%%% 42

S &o vs% Court o) Tax ''eals* G( L"+-;;6* -+ ugust -,++ 1%%%%%%%%% 43

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This collection contains one hundred one (101) cases

summarized in this format byMichael Vernon M. Guerrero (as a sophomore law student)

during the irst !emester" school year #00$%#00&in the Ta'ation aw class

under *tty. +iogenes Villarubia

at the *rellano ,ni-ersity !chool of aw (*,!).

ompiled as /+" uly #011.

erne Guerrero entered *,! in une #00#and e-entually graduated from *,! in #002.

3e passed the /hilippine bar e'aminations immediately after (*pril #004).

www%!erneguerrero%com

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Digests (Berne Guerrero)

[1]

Commissioner vs. AlgueGRL-28890 1! "e#ru$r% 1988

First Division, Cruz (J); 4 concur

"$&ts' The Philippine Sugar Estate Development Compan (PSEDC) appointe! "lgue #nc$ as its agent,authorizing it to sell its lan!, %actories, an! oil manu%acturing process$ The &egeta'le il #nvestmentCorporation (CP) purchase! PSEDC properties$ For the sale, "lgue receive! a commission o% P*+,an! it -as %rom this commission that it pai! .uevara, et$ al$ organizers o% the CP, P/+, in promotional%ees$ #n 01+, "lgue receive! an assessment %rom the Commissioner o% #nternal 2evenue in the amount o%P3,3$3+ as !elin5uenc income ta6 %or ears 0+3 am! 0+0$ "lgue %ile! a protest or re5uest %orreconsi!eration -hich -as not acte! upon ' the 7ureau o% #nternal 2evenue (7#2)$ The counsel %or "lgueha! to accept the -arrant o% !istrant an! lev$ "lgue, ho-ever, %ile! a petition %or revie- -ith the Coourt o%Ta6 "ppeals$

ssue' 8hether the assessment -as reasona'le$

el*'Ta6es are the li%e'loo! o% the government an! so shoul! 'e collecte! -ithout unnecessar hin!rance$Ever person -ho is a'le to pa must contri'ute his share in the running o% the government$ The .overnment,%or his part, is e6pecte! to respon! in the %orm o% tangi'le an! intangi'le 'ene%its inten!e! to improve thelives o% the people an! enhance their moral an! material values$ This sm'iotic relationship is the rationale o%ta6ation an! shoul! !ispel the erroneous notion that is an ar'itrar metho! o% e6action ' those in the seat o%po-er$

Ta6 collection, ho-ever, shoul! 'e ma!e in accor!ance -ith la- as an ar'itrariness -ill negate the verreason %or government itsel%$ For all the a-esome po-er o% the ta6 collector, he ma still 'e stoppe! in histrac9s i% the ta6paer can !emonstrate that the la- has not 'een o'serve!$ :erein, the claime! !e!uction(pursuant to Section a< < o% the Ta6 Co!e an! Section / < o% 2evenue 2egulation *= as to

compensation %or personal services) ha! 'een legitimatel ' "lgue #nc$ #t has %urther proven that thepament o% %ees -as reasona'le an! necessar in light o% the e%%orts e6erte! ' the paees in in!ucinginvestors (in CP) to involve themselves in an e6perimental enterprise or a 'usiness re5uiring millions o%pesos$

The assessment -as not reasona'le$

[2]

Lu+on ,teve*oring Cor. vs. Court o /$ Ae$lsGR L-022 29 ul% 1988

Secon! Division, Paras (J)= 4 concur

"$&ts'>uzon Steve!oring Corp$ importe! various engine parts an! other e5uipment %or tug'oat repair an!maintenance in 01 an! 01*$ #t pai! the assesse! compensation ta6 un!er protest$ ?na'le to secure a ta6re%un! %rom the Commissioner (%or the amount o% P,44*$), it %ile! a petition %or revie- -ith the Court o%Ta6 "ppeals (CT")$ The CT" !enie! the petition, as -ell as the motion %or reconsi!eration %ile! therea%ter$

ssue'8hether the corporation is e6empt %rom the compensation ta6$

el*'"s the po-er o% ta6ation is a high prerogative o% sovereignt, the relin5uishment o% such is neverpresume! an! an re!uction or !imunition thereo% -ith respect to its mo!e or its rate, must 'e strictl

/$$tion L$3 2004 ( 1 )

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construe!, an! the same must 'e couche! in !ear an! unmista9a'le terms in or!er that it ma 'e applie!$ Thecorporation@s tug'oats !o not %all un!er the categories o% passenger or cargo vessels to avail o% the e6emption%rom compensation ta6 in Section 0 o% the Ta6 Co!e$ #t ma 'e %urther note! that the amen!ment o% Section0 o% 2epu'lic "ct /1 -as inten!e! to provi!e incentives an! in!ucements to 'olster the shipping in!ustran! not the 'usiness o% steve!oring, in -hich the corporation is engage! in$

>uzon Steve!oring Corp$ is not e6empt %rom compensating ta6 un!er Section 0, an! is thus not entitle! tore%un!$

[]

Lut+ vs. Ar$net$GR L-!859 22 De&em#er 1955

First Division, 2ees J7> (J)= 3 concur

"$&ts' "8alter >utz, as Ju!icial "!ministrator o% the #ntestate Estate o% "ntonio Jame >e!esma, sought torecover the sum o% P4,1111$4 pai! ' the estate as ta6es %rom the Commissioner un!er Section e o%

Common-ealth "ct +1/ (the Sugar "!Austment "ct), alleging that such ta6 is unconstitutional as it levie! %orthe ai! an! support o% the sugar in!ustr e6clusivel, -hich is in his opinion not a pu'lic purpose$

ssue'8hether the ta6 is vali! in supporting an in!ustr$

el*' The ta6 is levie! -ith a regulator prupose, i$e$ to provi!e means %or the reha'ilitation an! sta'ilizationo% the threatene! sugar in!ustr$ The act is primaril an e6ercise o% police po-er, an! is not a pure e6ercise o%ta6ing po-er$ "s sugar pro!uction is one o% the great in!ustries o% the Philippines; an! that its promotion,protection an! a!vancement re!oun!s greatl to the general -el%are, the legislature %oun! that the general-el%are !eman!e! that the in!ustr shoul! 'e sta'ilize!, an! provi!e! that the !istri'ution o% 'ene%itsthere%rom 'e rea!Auste! among its component to ena'le it to resist the a!!e! strain o% the increase in ta6 that itha! to sustain$ Further, it cannot 'e sai! that the !evotion o% ta6 mone to e6perimental stations to see9

increase o% e%%icienc in sugar pro!uction, utilization o% 'Bpro!ucts, etc$, as -ell as to the improvement o%living an! -or9ing con!itions in sugar mills an! plantations, -ithout an part o% such mone 'eing channele!!iectl to private persons, constitute e6pen!iture o% ta6 mone %or private purposes$

The ta6 is vali!$

[4]

6&Colloug7 vs. 6$r%l$n*

1! , 1 (1819) 6$rs7$ll (C)

"$&ts' The ?nite! States Congress incorporate! a 'an9, the 7an9 o% the ?nite! States; an! esta'lishe! a'ranch in the State o% arlan!$ The State o% arlan!, in turn, through its legislature, impose! a ta6 uponthe 'an9$

ssue'8hether the State o% arlan! can ta6 a %e!eral 'an9$

el*' The .overnment o% the ?nite! States, though limite! in its po-ers, is supreme$ #ts la-s, -hen ma!e inpursuance o% the Constitution, %orm the supreme la- o% the lan!, anthing in the Constitution or la-s o% anState, to the contrar, not -ithstan!ing$ "mong the enumerate! po-ers o% the government are to la an!collect ta6es; to regulate commerce; to !eclare an! con!uct a -ar; an! to raise an! support armies an! navies$Still, the po-er o% ta6ation is retaine! ' the States$ #t is not a'ri!ge! ' the grant o% a similar po-er to the

/$$tion L$3 2004 ( 2 )

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.overnment o% the ?nion$ #t is to 'e concurrentl e6ercise! ' the t-o governments$ Consistentl -ith a %airconstruction o% the Constitutions= the po-er to ta6 involves the po-er to !estro; the po-er to !estro ma!e%eat an! ren!er useless the po-er to create; an! there is a plain repugnance in con%erring on onegovernment a po-er to control the constitutional measures o% another, -hich other, -ith respect to those vermeasures, is !eclare! to 'e supreme over that -hcih e6erts the control$ Ta6ation !oes not necessaril an!

unavoi!a'l !estro$ To carr it to the e6cess o% !estruction -oul! 'e an a'use, an! -oul! 'anish thatcon%i!ence -hich is essential to all government$ :ence, the States have no po-er to retar!, impe!e, 'ur!en,or in an manner control, the operations o% the constitutional la-s enacte! ' Congress to carr into e6ecutionthe po-ers veste! in the general government$ The la- passe! ' the legislature o% arlan!, imposing a ta6on the 7an9 o% the ?nite! States, is unconstitutional an! voi!$

[5]

:$n7$n*le ;il vs. ,t$te o 6ississii

2!! , 218 (1928) Butler ()

"$&ts'The la-s o% ississippi provi!e! that an person engage! in the 'usiness o% !istri'utor o% gasoline,

or retail !ealer in gasoline, shall pa an e6cise ta6 %or the privilege o% engaging in such 'usiness, e6cept thatsol! in interstate commerce or puchase! outsi!e the state an! 'rought in ' the consumer %or his o-n use$Since 0*+, Panhan!le il Co$ has 'een engage! in such 'usiness$ Su'se5uentl, the State sue! to recoverta6es claime! on account o% sales ma!e ' the compan to the ?nite! States %or the use o% its Coast .uar!%leet in service in the .ul% o% e6ico an! its &eteran@s :ospital at .ul%port$ The compan !e%en!e! on thegroun! that ississippi statutes relevant to the case, i% construe! to impose ta6es on such sales, are repugnantto the %e!eral constitution$

ssue'8hether Panhan!le il Co$ is lia'le %or the e6cise ta6 impose! ' the State o% ississippi$

el*'The ?nite! States is empo-ere! ' the Constitution to maintain an! operate the %leet an! the hospital$"uthorization an! la-s enacte! pursuant to the Constitution are supreme, an! in case o% con%lict, control state

enactments$ The States ma not 'ur!en or inter%ere -ith the e6ertion o% national po-er, or ma9e it a source o%revenue or ta9e the %un!s raise! or ta6 the means %or %or the per%ormance o% %e!eral %unctions$ 8hile the Stateo% ississippi ma impose charges upon the compan %or the privilege o% carring tra!e that is su'Aect to thepo-er o% the State, it ma not la an ta6 upon transactions ' -hich the ?nite! States secures the things!esire! %or its governmental purposes$ The necessar operation o% the statutes -hen so construe! is !irectl toretar!, impe!e, an! 'ur!en the e6ertion ' the ?nite! States o% its constitutional po-ers to operate the %leetan! the hospital$ The e6actions !eman!e! in%ringe upon the right to have the Constitutional in!epen!ence o%the ?nite! States, in respect to such purchases, remain untrammele!$

Panhan!le il Co$ is, thus, not lia'le %or the ta6es claime!$

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Commissioner vs. Ling$%en Gul =le&tri&GR L-2!!1 4 August 1988En 7anc, Sarmiento (J)= concur

"$&ts' >ingaen .ul% Electric Po-er operates an electric po-er plant serving the municipalities o% >ingaenan! 7inmale, Pangaisnan, pursuant to municipal %ranchise grante! it ' the respective municipal councils$The %ranchises provi!e! that the grantee shall pa 5uarterl to the Provincial Treasur o% Pangasinan o%the gross earnings o'taine! through the privilege %or the %irst * ears (%rom 041), an! * !uring theremaining + ears o% the li%e o% the %ranchise$ #n 043, the Philippine Presi!ent approve! the %ranchise (2"34)$ #n 0++, the 7#2 assesse! an! !eman!e! against the compan !e%icienc %ranchise ta6es an!surcharges %ro the ears 041 to 0+4 appling the %ranchise ta6 rate o% + on gross receipts %rom 043 to0+4$ The compan as9e! %or a reinvestigation, -hich -as !enie!$

ssue [1]' 8hether the Court can in5uire into the -is!om o% the "ct$

el* [1]'The Court !oes not have the authorit to in5uire into the -is!om o% the "ct$ Charters or special

la-s grante! an! enacte! ' the >egislatur are in the nature o% private contracts$ The !o not contitute a parto% the machiner o% the general government$ The are usuall a!opte! a%ter care%ul consi!eration o% theprivate rights in relation -ith the resultant 'ene%its o% the State$ #n passing a special charter, the attention o%the >egislature is !irecte! to the %acts an! circumstances -hich the act or charter is inten!e! to meet$ The>egislature consi!ers an! ma9es provision %or all the circumstance o% the particular case$ The Court ought notto !istur' the ruling o% the Court o% Ta6 "ppeals on the constitutionalit o% the la- in 5uestion$

ssue [2]' 8hether a rate 'elo- + on gross income violate the uni%ormit o% ta6 clause in the Constitution$

el* [2]'" ta6 is uni%orm -hen it operates -ith the same %orce an! e%%ect in ever place -here the su'Aect o%it is %oun!$ ?ni%ormit means that all propert 'elonging to the same class shall 'e ta6e! ali9e$ The legislaturehas the inherent po-er not onl to select the su'Aects o% ta6ation 'ut to grant e6emptions$ Ta6 e6emptions

have never 'een !eeme! violateve o% the e5ual protection clause$ :erein, the + %ranchise ta6 rate provi!e!in Section *+0 o% the Ta6 Co!e -as never inten!e! to have a universal application$ Section *+0 e6presslallo-s the pament o% ta6es at rates lo-er than + -hen the charter granting the %ranchise preclu!es theimposition o% a higher ta6$ 2" 34 !i! not onl %i6 an! speci% a %ranchise ta6 o% * on its gross receipts,'ut ma!e it in lieu o% an an! all ta6es, all la-s to the contrar not-ithstan!ing$

The compan, hence, is not lia'le %or !e%icienc ta6es$

[!]

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ssue' 8hether the GDC is lia'le %or !e%icienc ta6$

el*' The Japanese ship'uil!ers -ere lia'le on the interest remitte! to them un!er Section / o% the Ta6Co!e$ The GDC is not the one ta6e!$ The imposition o% the !e%icienc ta6es on the GDS is a penalt %or its%ailure to -ithhol! the same %rom the Japanese ship'uil!ers$ Such lia'ilit is impose! ' Section +(c) o% the

Ta6 Co!e$ GDC -as remiss in the !ischarge o% its o'ligation o% its o'ligation as the -ithhol!ing agent o% thegovernment an! so shoul! 'e lia'le %or its omission$

[8]

Domingo vs. G$rlitosGR L-1899 29 une 19

En 7anc, >a'ra!or (J)= 3 concur, concur in result, too9 no part

"$&ts' #nDomingo vs$ oscoso (1 P:#> 3), the Supreme Court !eclare! as %inal an! e6ecutor theor!er o% the Court o% First #nstance o% >ete %or the pament o% estate an! inheritance ta6es, charges an!

penalties amounting to P4,+3$++ ' the Estate o% the late 8alter Scott Price$ The petition %or e6ecution %ile!' the %iscal, ho-ever, -as !enie! ' the lo-er court$ The Court hel! that the e6ecution is unAusti%ie! as the.overnment itsel% is in!e'te! to the Estate %or *1*,*; an! or!ere! the amount o% inheritance ta6es 'e!e!ucte! %rom the .overnment@s in!e'te!ness to the Estate$

ssue'8hether a ta6 an! a !e't ma 'e compensate!$

el*' The court having Auris!iction o% the Estate ha! %oun! that the claim o% the Estate against the.overnment has 'een recognize! an! an amount o% P*1*,* has alrea! 'een appropriate! ' acorrespon!ing la- (2" */)$ ?n!er the circumstances, 'oth the claim o% the .overnment %or inheritanceta6es an! the claim o% the intestate %or services ren!ere! have alrea! 'ecome over!ue an! !eman!a'le as-ell as %ull li5ui!ate!$ Compensation, there%ore, ta9es place ' operation o% la-, in accor!ance -ith "rticle

*/0 an! *0 o% the Civil Co!e, an! 'oth !e'ts are e6tinguishe! to the concurrent amount$

[9]

Commissioner vs. togon-,u%o& 6inesGR L-25299 29 ul% 199En 7anc, Fernan!o (J)= 0 concur, too9 no part

"$&ts'#togonBSuoc ines %ile! its income ta6 return %or the %iscal ear 0+0 to 01$ Four months later, it%ile! an amen!e! income ta6 return, reporting a loss$ #t thus sought a re%un! %rom the Commissioner$ 8hen it%ile! its income ta6 return on the ne6t ear, it !e!ucte! an amount representing allege! ta6 cre!it %oroverpament %or the prece!ing %iscal ear$ The Commissioner impose! an amount P,+*$3 as monthlinterest on the amount o% P,++$* %rom Januar to Decem'er 01*$ The 'asis %or such assessment -asallege!l the a'sence o% a legal right to !e!uct sai! amount 'e%ore the ta6 cre!it or re%un! is approve! ' theCommissioner$

ssue'8hether the assessment on interest -as Austi%ie!$

el*'The Ta6 Co!e provi!es that interest upon the amount !etermine! as a !e%icienc shall 'e assesse! an!shall 'e pai! upon notice an! !eman! %rom the Commissioner at the rate therein speci%ie!$ #t ma!e clear,ho-ever, in an earlier provision %oun! in the same section that i% in an prece!ing ear, the ta6paer -asentitle! to a re%un! o% an amount !ue as ta6, such amount, i% not re%un!e!, ma 'e !e!ucte! %rom the ta6 to

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'e pai!$ "lthough the imposition o% monthl interest !oes not constitute penalt 'ut a Aust compensation to theState %or the !ela in paing the ta6 an! %or the concomitant use ' the ta6paer o% %un!s that right%ullshoul! 'e in government@s han!s; in light o% the overpament %or 0+0 an! 01, it cannot 'e sai! that theta6paer -as guilt o% !ela ena'ling it to utilize the mone$

The compan is entitle! to re%un!$

[10]

Reu#li& vs. 6$m#ul$o Lum#er

GR L-1!!25 28 "e#ru$r% 192En 7anc, 7arrera (J)= concur

"$&ts'am'ulao >um'er Compan pai! the .overnment a total o% P0,*/$+ as re%orestation charges$:aving %oun! lia'le %or an aggregate amount o% P4,3*$/ %or %orest charges, it conten!e! that since the2epu'lic (.overnment) has not ma!e use o% the re%orestation charges %or re%oresting the !enu!e! area o% thelan! covere! ' the compan@s license, the 2epu'lic shoul! re%un! sai! amount or, i% it cannot 'e re%un!e!, at

least the compan shoul! 'e compensate! -ith -hat it o-e! the 2epu'lic %or re%orestation charges$

ssue'8hether ta6es ma 'e su'Aect o% setBo%% or compensation$

el*'#nternal revenue ta6es, such as %orest charges, cannot 'e the su'Aect o% setBo%% or compensation$ " claim%or ta6es is not such a !e't, !eman!, contract or Au!gment as is allo-e! to 'e setBo%% un!er the statutes o% setBo%%, -hich are construe! uni%orml, in the light o% pu'lic polic, to e6clu!e the reme! in an action or anin!e'te!ness o% the State or municipalit to one -ho is lia'le to the State or municipalit %or ta6es$ Geitherare the su'Aect o% recoupment since the !o not arise out o% the contract or transaction sue! on$

Ta6es are not in the nature o% contracts 'et-een the parties 'ut gro- out o% a !ut to, an! are the positive actso% the government, to the ma9ing an! en%orcing o% -hich, the personal consent o% in!ivi!ual ta6paers is not

re5uire!$

[11]

"r$n&i$ vs. nterme*i$te Aell$te CourtGR L-!49 28 une 1988Thir! Division, .utierrez Jr$ (J)= 4 concur

"$&ts'Engracio Francia -as the registere! o-ner o% a house an! lot locate! in Pasa Cit$ " portion o% suchpropert -as e6propriate! ' the 2epu'lic o% the Philippines in 0//$ #t appeare! that Francia !i! not pa hisreal estate ta6es %rom 01 to 0//$ Thus, his propert -as sol! in a pu'lic auction ' the Cit Treasurer o%Pasa Cit$

ssue'8hether the e6propriation pament ma compensate %or the real estate ta6es !ue$

el*'There can 'e no o%%Bsetting o% ta6es against the claims that the ta6paer ma have against thegovernment$ " person canot re%use to pa a ta6 on the groun! that the government o-es him an amount e5ualto or greater than the ta6 'eing collecte!$ The collection o% a ta6 annot a-ait the results o% a la-suit agianstthe government$ #nternal revenue ta6es cannot 'e the su'Aect o% compensation$ The .overnment an! theta6paer are not mutuall cre!itors an! !e'tors o% each other un!er "rticle */3 o% the Civil Co!e an! a claimo% ta6es is not such a !e't, !eman!, contract or Au!gment as is allo-e! to 'e setBo%%$

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the e6cess %ee is clearl impose! %or the purpose o% revenue$ There is nothing in the charter o% the Citin!icating legislative intent to con%er tot the municipal 'oar! to impose a license ta6 %or revenue on theconstruction o% 'uil!ings$ "lthough the cit can re5uire the construction o% arca!es in certain circumstances,the license %ee prescri'e! ' r!inance is illegal$

[14]

?illeg$s vs iu C7iong /s$i :$o oGR L-294 10

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has not proven the propert in 5uestion is use! e6clusivel %or religious purposes; 'ut that it appearsthat thesame is 'eing use! to other nonBreligious purposes$ Thus, the "postolic Pre%ect is re5uire! to pa the specialassessment$

[1]

:7iliine Airlines vs. =*uR L-418 15 August 1988

En 7anc, .utierrez Jr$ (J)= concur

"$&ts' The Philippine "irlines (P">) is engage! in the air transportation 'usiness un!er a legislative%ranchise, "ct 4*/, -herein it is e6empt %rom the pament o% ta6es$ n the strength o% an opinion o% theSecretar o% Justice (pinion / o% 0+1),P"> -as !etermine! to have not 'een paing motor vehicle registration %ees since 0+1$ The >an!Transportation Commissioner re5uire! all ta6 e6empt entities, inclu!ing P">, to pa motor vehicleregistration %ees$ P"> proteste!$

ssue'8hether registration %ees as to motor vehicles are ta6es to -hich Philippine "irlines is e6empt$

el*'Ta6es are %or revenue, -hereas %ees are e6actions %or purposes o% regulation an! inspection, an! are %orthat reason limite! in amount to -hat is necessar to cover the cost o% the services ren!ere! in thatconnection$ #t is the o'Aect o% the charge, an! not the name, that !etermines -hether a charge is a ta6 or a %ee$The mone collecte! un!er the otor &ehicle >a- is not inten!e! %or the e6pen!itures o% the otor &ehicle%%ice 'ut accrues to the %un!s %or the construction an! maintenance o% pu'lic roa!s, streets an! 'ri!ges$ "sthe %ees are not collecte! %or regulator purposes as an inci!ent to the en%orcement o% regulations governingthe operation o% motor vehicles on pu'lic high-as, 'ut to provi!e revenue -ith -hich the .overnment is toconstruct an! maintain pu'lic high-as %or everone@s use, the are verita'le ta6es, not merel %ees$ P"> is,thus, e6empt %rom paing such %ees, e6cept %or the perio! 'et-een */ June 013 to 0 "pril 0/0, -here its ta6e6eption in the %ranchise -as repeale!$

[1!]

:rogressive Develoment Coror$tion vs. @ue+on Cit%GR 081 24 Aril 1989

Thir! Division, Feliciano (J)= 4 concur

"$&ts'The Cit Council o% Kuezon Cit a!opte! r!inance /00/ (010) -here privatel o-ne! an! operate!pu'lic mar9ets to pa o% the gross receipts %rom stall rentals to the Cit, as supervision %ee$ Suchor!inance -as amen!e! ' r!inance 0*1 (0/*), -hich impose! a + ta6 on gross receipts on rentals orlease o% space in privatelBo-ne! pu'lic mar9ets in Kuezon Cit$ Progressive Development Corp$, o-ne! an!operator o% Farmer@s ar9et an! Shopping Center, %ile! a petition %or prohi'ition against the cit on thegroun! that the supervision %ee or license ta6 impose! is in realit a ta6 on income the cit cannot impose$

ssue'8hether the supervision %ee I license ta6 is a ta6 on income$

el*'The + ta6 impose! in r!inance 0*1 !oes not constitute a ta6 on income, nor a cit income ta6(!istinguishe! %rom the national income ta6 ' the Ta6 Co!e) -ithin the meaning o% Section * (g) o% the >ocal"utonom "ct, 'ut rather a license ta6 or %ee %or the regulation o% 'usiness in -hich the compan is engage!$To 'e consi!ere! a license %ee, the imposition must relate to an occupation or activit that so engages thepu'lic interest in health, morals, sa%et an! !evelopment as to re5uire regulations %or the protection an!promotion o% such pu'lic interest; the imposition must also 'ear a reasona'le relation to the pro'a'le

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e6penses o% the regulation, ta9ing into account not onl the costs o% !irect regulation 'ut also its inci!entalconse5uences as -ell$ The gross receipts %rom stall rentals have 'een use! onl as a 'asis %or computing the%ees or ta6es !ue to the cit to cover the latter@s a!ministrative e6penses$ The use o% the gross amount o% stallrentals, as 'asis %or the !etermination o% the collecti'le amount o% license ta6, !oes not ' itsel% convert orren!er the license ta6 into a prohi'ite! cit ta6 on income$ For or!inaril, the higher the amount o% stall

rentals, the higher the aggregate volume o% %oo!stu%%s an! relate! items sol! in the privatel o-ne! mar9et;an! the higher the volume o% goo!s sol! in such mar9et, the greater e6tent an! %re5uenc o% inspection an!supervision that ma 'e reasona'l re5uire! in the interest o% the 'uing pu'lic$

[18]

Ameri&$n 6$il Line vs. B$sil$nGR L-124! 1 6$% 191

En 7anc, Dizon (J)= 0 concur, too9 no part

"$&ts'The Cit Council o% 7asilan Cit enacte! r!inance 3 (0++) imposing upon a %oreign vesselengage! in coast-ise tra!e -hich ma anchor -ithin the territorial -aters o% 7asilan Cit to pa an anchorage

%ee o% hal% centavo per registere! gross ton o% the vessle %or the %irst *4 hours, provi!e! that the ma6imumcharge shall not e6cee! P/+ per !a$ "s the cit treasurer assesse! an! attempte! to collect %rom "mericanail >ine the anchorage %ees, the compan %ile! an action %or !eclarator relie% to have the courts !eterminethe vali!it o% the or!inance$

ssue'8hether the anchorage %ees -ere %or regulator or revenue purposes$

el*'The %ees re5uire! are inten!e! %or revenue purposes$ The %ees have no proper or reasona'le relation tothe cost o% issuing the permits an! the cost o% inspection or surveillance; 'eing 'ase! upon the tonnage o% thevessels$ The %ees impose! on the vessels e6cee! even the har'or %ees impose! ' the Gational .overnment toraise revenues %or the Port 8or9s Fun!$ The Cit o% 7asilan -as not grante! a 'lan9et authorit or po-er o%ta6ation, 'ut merel given the po-ers to lev an! collect ta6es %or general an! special purposes in accor!ance

-ith or as provi!e! ' la-$ The po-er to regulate as an e6ercise o% police po-er !oes not inclu!e the po-erto impose %ees %or revie- purposes$

The or!inance -as invali!$

[19]

,$l*$n$ vs. loiloGR L-104!0 2 une 1958

En 7anc, ontemaor (J)= 3 concur

"$&ts' #n 041, the Cit o% #loilo promulgate! r!inance *3, -hich strictl prohi'its the transport o% %oo!suppl an! la'or animals outsi!e #loilo -ithout %irst o'taining the necessar license permit %rom the maor$?n!er the or!inance, Sera%in Sal!ana ha! 'een paing, un!er protest, soBcalle! %ees on %ish 'ought in #loiloan! sent to anila %rom 1 Septem'er to 1 Decem'er 041$

ssue'8hether the license %ee -as vali!l impose!$

el*'" license %ee represents the permission conce!e! to !o an act is in the main purpose o% police po-er,an! is not suppose! to 'e impose! %or revenue$ " propert ta6, on the other han!, is a ta6 in the or!inarsense, assessing accor!ing to the value o% propert$ Ju!ging %rom the amount o% %ees %i6e! in the or!inance,the soBcalle! %ees -ere in realit ta6es %or cit revenue$ "s such, the are unauthorize! ' the la- or the Cit

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Charter, an! are alson in contravention o% Sections **3/ an! *1*0 o% the 2evise! "!ministrative Co!e$ Theprohi'ition against ta9ing animals an! articles outsi!e #loilo -ithout maor@s permit is in restraint o% tra!ean! a curtailment o% the rights o% the o-ners o% sai! animals an! articles to %reel sell an! o% prospectivepurchasers to 'u an! !ispose o% them -ithout the cit limits in the or!inar course o% commerce an! tra!e$The or!inance is ultra vires an!, thus, is null an! voi!$

[20]

Com$ni$ Gener$l *e /o#$&os *e "iliin$s vs. 6$nil$GR L-119 29 une 19

En 7anc, Dizon (J)= 3 concur, * too9 no part

"$&ts'Compania .eneral !e Ta'acos !e Filipinas (Ta'acalera) pai! the Cit o% anila the %i6e! license %eesprescri'e! ' r!inance +3 %or the ears 0+4 to 0+/$ #n 0+4, Cit r!inance 14 an! 31 -erepasse!; -here the term general merchan!ise %oun! therein inclu!e! all articles in Sections * to 43 o% theTa6 Co!e (thus, also li5uor un!er Se!ctions to +)$ The Ta'acalera pai! its -holesaler@s an! retailer@sta6es$ #n 0+4, the Cit Treasurer a!!resse! a letter to an accounting %irm, e6pressing the vie- that li5uor

!ealers paing the annual -holesale an! retail %i6e! ta6 un!er r!inance +3 are not su'Aect to the-holesale aan! retail !ea9lers@ ta6es prescri'e! ' Cit r!inances 14, , an! 31$ The Ta'acalera,upon learning o% sai! stoppe! inclu!ing 5uarterl s-orn !eclaratons re5uire! ' the latter or!inances, an! in0+/, !eman!e! re%un!e o% the allege! overpament$ The claim -as !isallo-e!$

ssue'8hether there is a !istinction 'et-een r!inance +3 an! r!inances 14, an! 31, toprevent re%un! to the compan$

el*' .enerall, the term ta6 applies to all 9in!s o% e6actions -hich 'ecome pu'lic %un!s$ >egall,ho-ever, a license %ee is a legal concept 5uite !istinct %rom ta6= the %ormer is impose! in the e6ercise o%police po-er %or purposes o% regulation, -hile the latter is impose! un!er the ta6ing po-er %or the purpose o%raising revenues$ r!inance +3 prescri'es municipal license %ees %or the privilege to engage in the 'usiness

o% selling li5uor or alcohol 'everages; consi!ering that the sale o% into6icating li5uor is (potentiall) harm%ulto pu'lic health an! morals, an! must 'e su'Aect to supervision or regulation ' the State an! ' cities an!municipalities authorize! to act in the premises$ n the other han!, r!inances 14 , an! 31impose! ta6es on the sales o% general merchan!ise, -holesale or retail, an! are revenue measures enacte! 'the unicipal 7oar! o% anila$

7oth a license %ee an! a ta6 ma 'e impose! on the same 'usiness or occupation, or %or selling the samearticle, -ithout it 'eing in violation o% the rule against !ou'le ta6ation$ The contrar vie- o% the Treasurer inits letter is o% no conse5uence as the government is not 'oun! ' the errors or mista9es committe! ' itso%%icers, speciall on matters o% la-$

The compan, thus, is not entitle! to re%un!$

[21]

:7iliine A&et%lene Co. n&. vs. CommissionerGR L-19!0! 1! August 19!

En 7anc, Castro (J)= / concur, * too9 no part

"$&ts'Philippine "cetlene Co$ #nc$ is engage! in the manu%acture an! sale o% o6gen an! acetlene gases$ #tsol! its pro!ucts to the Gational Po-er Corporation (Gapocor), an agenc o% the Philippine .overnment, an!the &oice o% "merica (&"), an agenc o% the ?nite! States .overnment$ The Commissioner assesse!

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!e%icienc sales ta6 an! surcharges against the compan$ The compan !enie! lia'ilit %or the pament o% ta6on the groun! that 'oth Gapocor an! &" are e6empt %rom ta6es$

ssue'8hether Philippine "cetlene Co$ is e6empt %rom the ta6$

el*'Sales ta6 are pai! ' the manu%acturer or pro!ucer -ho must ma9e a true an! complete return o% theamount o% his, her or its gross monthl sales, receipts or earnings or gross value o% output actuall remove!%rom the %actor or mill, -arehouse an! to pa the ta6 !ue thereon$ The ta6 impose! ' Section 31 o% theTa6 Co!e is a ta6 on the manu%acturer or pro!ucer an! not a ta6 on the purchaser e6cept pro'a'l in a verremote an! inconse5uential sense$ "ccor!ingl, its lev on the sales ma!e to ta6Be6empt entities li9e theGapocor is permissi'le$ n the other han!, there is nothing in the language o% the ilitar 7ases "greementto -arrant the general e6emption grante! ' .eneral Circular &B4 (04/)$ Thus, the e6pansive constructiono% the ta6 e6emption is voi!; an! the sales to the &" are su'Aect to the pament o% percentage ta6es un!erSection 31 o% the Ta6 Co!e$ There%ore, ta6 e6emption is strictl construe! an! e6emption -ill n'ot 'e hel!to 'e con%erre! unless the terms un!er -hich it is grante! clearl an! !istinctl sho- that such -as theintention$

[22]

Commissioner vs. Ameri&$n Ru##er

GR L-19! 29 (J)= 3 concur

"$&ts'"merican 2u''er Compan sol! its ru''er pro!ucts locall an! as prescri'e! ' the Commissioner@sregulation, the compan !eclare! the same %or ta6 purposes in -hich the Commissioner accor!ingl assesse!$The compan pai! un!er protest the correspon!ing sales ta6es thereon, claiming e6emption un!er Section 33(') o% the Ta6 Co!e, an! su'se5uentl claime! re%un!$ 8ith the Commissioner re%using to !o so, the case -as'rought 'e%ore the Court o% Ta6 "ppeals, -hich uphel! the Commissioner@s stan! that the compan is notentitle! to recover the sales ta6 that ha! 'een separatel 'ille! to its customers, an! pai! ' the latter$

ssue'8hether the compan can recover the sales ta6 pai!$

el*'The sales ta6 is ' la- impose! !irectl, not on the thing sol!, 'ut on the act (sale) o% the manu%acturer,pro!ucer, or importer, -ho is e6clusivel ma!e lia'le %or its timel pament$ 8here the ta6 mone pai! 'the compan came %rom is reall no concern o% the .overnment, 'ut solel a matter 'et-een the companan! its customers$ nce recovere!, the compan must hol! the re%un!e! ta6es in trust %or hte in!ivi!ualpurchasers -ho a!vance! pament thereo%, an! -hose names must appear in compan recor!s$ :erein, thecompan sales 'et-een *4 "ugust 0+1 (approval o% 2" 1*) to ** June 0+/ (-hen 2" 3+1 restore! thee6emption o% agricultural pro!ucts -hether in their original %orm or not) -ere properl ta6e!$ Such amountcorrespon!ing to the perio! are not recovera'le$

[2]

Commissioner vs. Got$m&oGR L-1092 2! "e#ru$r% 198!

First Division, ap (J)> 1 concur

"$&ts'The 8orl! Tra!e rganization (8:) !eci!e! to construct a 'uil!ing to house its o%%ices, as -ell asthe other ?nite! Gations %%ices in anila$ #n inviting 'i!s %or the construction o% the 'uil!ing, the 8:in%orme! the 'i!!ers o% its ta6 e6emptions$ The contract -as a-ar!e! to John .otamco an! Sons$ TheCommissioner opine! that a contractor@s ta6 shoul! 'e !ue %rom the contractor$ The 8: issue! a

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certi%ication that .otamco shoul! 'e e6empte!, 'ut the Commissioner insiste! on the ta6$ 2aise! in the Courto% Ta6 "ppeals, the court rule! in %avor o% .otamco$

ssue'8hether .otamco is li9e-ise %rom the contractor@s ta6 in lieu o% 8:@s e6emption %rom in!irectta6es$

el*'Direct ta6es are those that are !eman!e! %rom the ver person -ho, it is inten!e! or !esire!, shoul!pa them; -hile in!irect ta6es are those that are !eman!e! in the %irst instance %rom one person in thee6pectation an! intention that he can shi%t the 'ur!en to someone else$ :erein, the contractor@s ta6 is paa'le' the contractor 'ut it is the o-ner o% the 'uil!ing that shoul!ers the 'ur!en o% the ta6 'ecause the same isshi%te! ' the contractor to the o-ner as a matter o% sel%Bpreservation$ Such ta6 is an in!irect ta6 on theorganization, as the pament thereo% or its inclusion in the 'i! price -oul! have meant an increase in theconstruction cost o% the 'uil!ing$

:ence, the Contractee@s (8:) e6emption %rom in!irect ta6es implies that contractor (.otamco) is e6empt%rom contractor@s ta6$

[24]

:$s&u$l vs. ,e&ret$r% o :u#li& ors $n* Communi&$tions

GR L-10405 29 De&em#er 190En 7anc, Concepcion (J)= concur

"$&ts'2" 0* ("ct appropriating %un!s %or pu'lic -or9s) -as enacte! in 0+ containing an item (Section ca

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ac5uire! the #nsular Sugar 2e%iner %or P$/ million paa'le in installments %rom the procee!s o% the sugarta6 to 'e collecte! un!er 2" 1*$ The operation o% the re%iner %or 0+4 to 0+/ -as !isastrous as the#nstitute su%%ere! tremen!ous losses$ Conten!ing that the purchase o% the re%iner -ith mone %rom the#nstitute@s %un! -as not authorize! un!er 2" 1*, an! that the continue! operation o% the re%iner is inimicalto their interest, 7acolo!Burcia illing Co$, aBao Sugar Central, TalisaBSila illing Co$ an! the Central

"zucarera !el Danao re%use! to continue -ith their contri'ution to sai! %un!$ The trial court %oun! them lia'leun!er 2" 1*$

ssue'8hether the ta6paers ma re%use to pa the special assessment, allege!l !istinct %rom an or!inar ta6-hich no one can re%use to pa$

el*'The nature o% a special assessment similar to the case has 'een !iscusse! an! e6plaine! in >utz vs$"raneta$ The special assessment or lev %or the Philippine Sugar #nstitute (Philsugin) Fun! is not so much ane6ercise o% the po-er o% ta6ation, nor the imposition o% a special assessment, 'ut the e6ercise o% police po-er%or the general -el%are o% the entire countr$ #t is, there%ore, an e6ercise o% a sovereign po-er -hich no privatecitizen ma la-%ull resist$ Section *a o% the Charter authorizing Philsugin to con!uct research -or9 %or thesugar in!ustr in all its phases, either agricultural or in!ustrial, %or the purpose o% intro!ucing into the sugar

in!ustr such practices or processes that -ill re!uce the cost o% pro!uction an! achieve greater e%%icienc inthe in!ustr, Austi%ies the ac5uisition o% the re%iner in 5uestion$ The %inancial loss resulting %rom the operationthereo% is no means an in!e6 that the in!ustr !i! not pro%it there%rom, as other gains o% a !i%%erent nature(such as e6perience) ma have 'een realize!$

[2]

1st n$ntr% :ost =&7$nge vs. :os$*$sGR 40 4 ,etem#er 190

En 7anc, alcolm (J)= + concur

"$&ts'The st #n%antr Post E6change is a post e6change constitute! in accor!ance -ith "rm regulations

an! the la-s o% the ?nite! States$ in the course o% its !ul authorize! 'usiness transactions, the E6changema!e man purchases o% various an! !iverse commo!ities, goo!s, -ares an! merchan!ise %rom variousmerchants in the Philippines$ The Commissioner collecte! a sales ta6 o% I* o%the gross value o% thecommo!ities, etc$ %rom the merchants -ho sol! sai! commo!ities to the E6change$ " %ormal protest -aslo!ge! ' the E6change$

ssue'8hether the E6change is e6empt %rom the sales ta6 impose! against its suppliers$

el*'Ta6es have 'een collecte! %rom merchants -ho ma!e sales to "rm Post E6changes since 04 ("ct30, Section 0)$ Similar ta6es are pai! ' those -ho sell merchan!ise to the Philippine .overnment, an!' those -ho !o 'usiness -ith the ?S "rm an! Gav in the Philippines$ :erein, the merchants -ho e%%ecte!the sales to the Post E6change are the ones -ho pai! the ta6; an! it is the o%%icers, sol!iers, an! civilianemploees an! their %amilites -ho are 'ene%ite! ' the post e6change to -hom the ta6 is ultimatel shi%te!$The ta6 lai! upon the merchants -ho sell to the "rm Post E6changes !oes not inter%ere -ith the supremaco% the ?S .overnment, nor -ith the operations o% its instrumentalities, such as the ?S "rm, to such e6tent orin such a manner as to ren!er the ta6 illegal$ The ta6 !oes not !eprive the "rm o% the po-er to serve the.overnment as it -as inten!e! to serve it, or hin!er the e%%icient e6ercise o% its po-er$

"n "rm Post E6change, although an agenc -ithin the ?S "rm, cannot secure e6emption %rom ta6ation %ormerchants -ho ma9e sales to the Post E6change$

[2!]

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ells "$rgo vs. Colle&tor o ntern$l RevenueGR 4!20 28 une 1940First Division, oran (J)= 4 concur, concur in result

"$&ts'7ir!ie >illian Ee !ie! on 1 Septem'er 0*, at >os "ngeles, Cali%ornia, the place o% her allege! lastresi!ence an! !omicile$ "mong the properties she le%t -as her I* conAugal shares o% stoc9 in the 7enguetConsoli!ate! ining Co$, an anonmous partnership (socie!a! anonima), organize! un!er the la-s o% thePhilippines$ She le%t a -ill !ul a!mitte! to pro'ate in Cali%ornia -here her estate -as a!ministere! an!settle!$ 8ells Fargo 'an9 an! ?nion Trust Co$ -as !ul appointe! trustee o% the trust ' the sai! -ill$ TheFe!eral an! Cali%ornia State@s inheritance ta6es !ue thereon have 'een !ul pai!$ The Collector o% #nternal2evenue in the Philippines, ho-ever, sought to su'Aect the shares o% stoc9 to inheritance ta6, to -hich 8ellsFargo o'Aecte!$

ssue'8hether the shares o% stoc9 are su'Aect to Philippine inheritance ta6 consi!ering that the !ece!ent -as!omicile! in Cali%ornia$

el*'riginall, the settle! la- in the ?nite! States is that intangi'les have onl one situs %or the purpose o%inheritance ta6, an! such situs is in the !omicile o% the !ece!ent at the time o% his or her !eath$ 7ut the rulehas 'een rela6e!$ The ma6im mo'ila se5uuntur personam, upon -hich the rule rests, has 'een !ecrie! as amere %iction o% la- having its origin in consi!erations o% general convenience an! pu'lic polic, an! cannot'e applie! to limit or control teh right o% the State to ta6 propert -ithin its Auris!iction an! must iel! toesta'lishe! %act o% legal o-nership, actual presence an! control else-here, an! cannot 'e applie! i% to !o so-houl! result in inescapa'le an! patent inAustice$ The rela6ation o% the original rule rests on either o% t-o%un!amental consi!erations= () upon the recognition o% the inherent po-er o% each government to ta6persons, properties, an! rights -ithin its Auris!iction an! enAoing, thus, the protection o% its la-s; an! (*)upon the principle that as to intangi'les, a single location in space is har!l possi'le, consi!ering the multiple,!istinct relationships -hich ma 'e entere! into -ith respect thereto$

:erein, the actual situs o% the shares o% stoc9 is in the Philippines, the corporation 'eing !omicile! therein$The certi%icates o% stoc9 remaine! in the Philippines up to the time -hen the !ecease! !ie! in Cali%ornia, an!the -ere in possession o% one Srena cMee, secretar o% the corporation, to -hom the have 'een!elivere! an! in!orse! in 'lan9$ cMee ha! the legal title to the certi%icates o% stoc9 hel! in trust %or the trueo-ner thereo%$ The o-ner resi!ing in Cali%ornia has e6ten!e! here her activities -ith respect to herintangi'les so as to avail heresel% o% the protection an! 'ene%it o% Philippine la-s$ "ccor!ingl, theAuris!iction o% the Philippine .overnment to ta6 must 'e uphel!$

[28]

:7iliine 6$t&7 Co. Lt*. vs. Ce#u Cit%

GR L-0!45 18 $nu$r% 19!8Secon! Division, "5uino (J)= concur, on leave

"$&ts'Ce'u Cit impose! a 5uarterl ta6 (sales ta6 o% ) on gross sales or receipts o% merchants, !ealers,importers an! manu%acturers or an commo!it !oing 'usiness in Ce'u Cit, through r!inance */0$ Section0 o% the r!inance provi!e! that, %or the purpose o% the ta6, all !eliveries o% goo!s or commo!ities store! inCe'u Cit, or i% not store! are soll! in that cit sahll 'e consi!ere! as sales in the cit an! shall 'e ta6a'le$Philippine atch Co$ >t!$, -ith principal o%%ice in anila, 5uestione! the legalit o% the ta6 collecte! ' theCit o% Ce'u on sales o% matches store! ' the compan in Ce'u Cit 'ut !elivere! to customers outsi!e thecit$

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ssue'8hether the Cit o% Ce'u can ta6 sales o% matches -hich -ere per%ecte! an! pai! %or in Ce'u Cit 'ut-here the matches -ere !elivere! to customers outsi!e the cit$

el*'The cit can vali!l ta6 the sales o% matches to customers outsi!e o% the cit as long as the or!ers -ere'oo9e! an! pai! %or in the compan@s 'ranch o%%ice in the cit$ Those matches can 'e regar!e! as sol! in the

cit, as contemplate! in the or!inance, 'ecause the matches -ere !elvere! to the carrier in Ce'u Cit$.enerall, !eliver to the carrier is !eliver to the 'uer ("rticle +*, Civil Co!e)$ " !i%%erent interpretation-oul! !e%eat the ta6 or!inance in 5uestion or encourage ta6 evasion through the simple e6pe!ient o%arranging %or the !eliver o% the matches at the outs9irts o% the cit though the purchases -ere e%%ecte! an!pai! %or in the compan@s 'ranch o%%ice in the cit$ The municipal 'oar! o% the cit is empo-ere! to provi!e%or the lev an! collection o% ta6es %or general an! special purposes in accor!ance -ith la-$

[29]

Commissioner vs. Britis7 ;verse$s Air3$%s Cor.GR L-5!!-!4 0 Aril 198!

En 7anc, elencioB:errera (J)= / concur, too9 no part

"$&ts'7ritish verseas "ir-as Corp$ (7"C) is a 7ritis .overnmentBo-ne! corporation engage! ininternational airline 'usiness an! is a mem'er o% the #nterline "ir Transport "ssociation, an! thus, it operatesair transportation service an! sells transportation tic9ets over the routes o% the other airline mem'ers$ From0+0 to 0/*, 7"C ha! no lan!ing rights %or tra%%ic purposes in the Philippines an! thus !i! not carrpassengers an!Ior cargo to or %rom the Philippines 'ut maintaine! a general sales agent in the Philippines BB8arner 7arnes N Co$ >t!$, an! later, Kantas "ir-aus BB -hich -as responsi'le %or selling 7"C tic9etscovering passengers an! cargoes$ The Commissioner o% #nternal 2evenue assesse! !e%icienc income ta6esagainst 7"C$

ssue'8hether the revenue !erive! ' 7"C %rom tic9et sales in the Philippines %or air transportation, -hilehaving no lan!ing rights in the Philippines, constitute income o% 7"C %rom Philippine sources, an!

accor!ingl, ta6a'le$

el*'The source o% an income is the propert, activit or service that pro!uce! the income$ For the source o%income to 'e consi!ere! as coming %rom the Philippines, it is su%%icient that the income is !erive! %romactivit -ithin the Philippines$ :erein, the sale o% tic9ets in the Philippines is the activit that pro!uce! theincome$ The tic9ets e6change! han!s here an! paments %or %ares -ere also ma!e here in Philippine currenc$The situs o% the source o% paments is the Philippines$ The %lo- o% -ealth procee!e! %rom, an! occure!-ithin, Philippine territor, enAoing the protection accor!e! ' the Philippine .overnment$ #n consi!erationo% such protection, the %lo- o% -ealth shoul! share the 'ur!en o% supporting the government$ PD 13, inrelation to PD ++, ensures that international airlines are ta6e! on their income %rom Philippine sources$ The* I* ta6 on gross 'illings is an income ta6$ #% it ha! 'een inten!e! as an e6cise or percentage ta6, it -oul!have 'een place! un!er Title & o% the Ta6 Co!e covering ta6es on 'usiness$

[0]

Commissioner vs. Air n*i$GR L-!244 29 $nu$r% 1988

First Division, .ancaco (J)= 4 concur

"$&ts'"ir #n!ia is a %oreign corporation an! an o%%Bline international carrier not engage! in the 'usiness o% airtransporation in the Philippines$ "ir #n!ia sells airplane tic9ets in the Philippines trhough its general salesagent, Philippine "irlines$ Sai! tic9ets are service! ' "ir #n!ia outsi!e the Philippines$ The Commissioner o%

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#nternal 2evenue assesse! against "ir #n!ia the amount o% P4*,4/$13 representing *$++ income ta6 on itsgross Philippine 'illngs pursuant to Section *4 (') (*) o% the Ta6 Co!e, as amen!e!, inclusive o% th e+surcharge an! interest %or -ill%ul neglect to %ile a return as provi!e! un!er Section /* o% the same Co!e$ "ir#n!ia appeale! to the Court o% Ta6 "ppeals$

ssue'8hether the revenue !erive! ' an international air carrier %rom sles o% tic9ets in the Philippines %or airtransportation, -hile having no lan!ing rights in the countr, constitutes income o% sai! carrier %romPhilippine sources, an! thus ta6a'le un!er Section *4 (') (*) o% the Ta6 Co!e$

el*'7ase! on the !octrine enunciate! in 7ritish verseas "ir-as Corp$, the revenue !erive! ' "ir #n!ia%rom the sales o% airplane tic9ets, through its agent in the Philippines, must 'e consi!ere! ta6a'le income$ "scorrectl assesse! ' the Commissioner, such income is su'Aect to a *$+ ta6 pursuant to PD ++, amen!ingsection *4 (') (*) o% the Ta6 Co!e$

[1]

Allie* /7re$* vs. Cit% o 6$nil$

GR L-4029 21

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el*'The 0+ an! the 0/ Constitutions !i%%er in language as to the e6emption o% religious propert %romta6es as teh shoul! not onl 'e e6clusivel 'ut also actuall an! !irectl use! %or religious purposes$:erein, the Au!ge accepte! at its %ace the allegation o% the 7ishop instea! o% !emonstrating that there iscompliance -ith the constitutional provision that allo-s an e6emption$ There -as an allegation o% lac9 o%

Auris!iction an! o% lac9 o% cause o% action, -hich shoul! have compelle! the Au!ge to accor! a hearing to theprovince rather than !eci!ing the case imme!iatel in %avor o% the 7ishop$ E6emption %rom ta6ation is not%avore! an! is never presume!, so that i% grante!, it must 'e strictl construe! against the ta6paer$ Theremust 'e proo% o% the actual an! !irect use o% the lan!s, 'uil!ings, an! improvements %or religious (orcharita'le) purposes to 'e e6empte! %rom ta6ation$

The case -as reman!e! to the lo-er court %or a trial on merits$

[]

Asso&i$tion o Custom Broers vs. 6$nil$GR L-4! 22 6$% 195

En 7anc, 7autistaB"ngelo (J)= concur, 4 concur in result

"$&ts'The "ssociation o% Customs 7ro9ers, -hich is compose! o% all 'ro9ers an! pu'lic service operators o%motor vehicles in the Cit o% anila, challenges the vali!it o% r!inance /0 on the groun!s () that -hileit levies a soBcalle! propert ta6, it is in realit a license ta6 -hich is 'eon! the po-er o% the anilaunicipal 7oar!; (*) that sai! or!inance o%%en!s against the rule on uni%ormit o% ta6es; an! () that itconstitutes !ou'le ta6ation$

ssue'8hether the or!inance in%ringes on the rule on uni%ormit o% ta6es as or!aine! ' the Constitution$

el*'8hile the ta6 in the r!inance re%ers to propert ta6 an! it is %i6e! a! valorem, it is merel levie! onall motor vehicles operating -ithin anila -ith the main purpose o% raising %un!s to 'e e6pen!e! e6clusivel

%or the repair, maintenance an! improvement o% the streets an! 'ri!ges in sai! cit$ The or!inance imposes alicense %ee although un!er the cloa9 o% an a! valorem ta6 to circumvent the prohi'ition in the otor &ehicle>a-$ Further, it !oes not !istinguish 'et-een a motor vehicle %or hire an! one -hich is purel %or private use$Geither !oes it !istinguish 'et-een a motor vehicle registere! in anila an! one registere! in another place'ut occasionall comes to anila an! uses its streets an! pu'lic high-as$ The !istinction is necessar i% heor!inance inten!s to 'ur!en -ith ta6 onl those registere! in anila as ma 'e in%erre! %rom the -or!operating use! therein$ There is an ine5ualit in the or!inance -hich ren!ers it o%%ensive to theConstitution$

[4]

$$tir$n ng mg$

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per%orme! ' registere! general pro%essional partnerships are e6empt %rom &"T$

ssue'8hether the EB&"T la- !iscriminates against customs 'ro9ers$

el*'The phrase e6cept custom 'ro9ers is not meant to !iscriminate against custom 'ro9ers 'ut to avert a

potential con%lict 'et-een Sections * an! o% the Ta6 Co!e, as amen!e!$ The !istinction o% the customs'ro9ers %rom the other pro%essionals -ho are su'Aect to occupation ta6 un!er the >ocal Ta6 Co!e is 'ase!upon material !i%%erences, in that the activities o% customs 'ro9ers parta9e more o% a 'usiness, rather than apro%ession an! -ere thus su'Aecte! to the percentage ta6 un!er Section /4 o% the Ta6 Co!e prior to itsamen!ment ' E */$ E */ a'olishe! the percentage ta6 an! replace! it -ith the &"T$ #% the "ssociation!i! not protest the classi%ication o% customs 'ro9ers then, there is no reason -h it shoul! protest no-$

[5]

,ison vs. An&7et$GR L-5941 25 ul% 1984

En 7anc, Fernan!o (J)= 0 concur, * concur in result, concur in separate opinion, too9 no part

"$&ts'7atas Pam'ansa + -as enacte!$ Sison, as ta6paer, allege! that its provision (Section ) un!ul!iscriminate! against him ' the imposition o% higher rates upon his income as a pro%essional, that it amountsto class legislation, an! that it transgresses against the e5ual protection an! !ue process clauses o% theConstitution as -ell as the rule re5uiring uni%ormit in ta6ation$

ssue'8hether 7P + violates the !ue process an! e5ual protection clauses, an! the rule on uni%ormit inta6ation$

el*'There is a nee! %or proo% o% such persuasive character as -oul! lea! to a conclusion that there -as aviolation o% the !ue process an! e5ual protection clauses$ "'sent such sho-ing, the presumption o% vali!itmust prevail$ E5ualit an! uni%ormit in ta6ation means that all ta6a'le articles or 9in!s o% propert o% the

same class shall 'e ta6e! at the same rate$ The ta6ing po-er has the authorit to ma9e reasona'le an! naturalclassi%ications %or purposes o% ta6ation$ 8here the !i%%erentitation con%orms to the practical !ictates o% Austicean! e5uit, similar to the stan!ar!s o% e5ual protection, it is not !iscriminator -ithin the meaning o% theclause an! is there%ore uni%orm$ Ta6paers ma 'e classi%ie! into !i%%erent categories, such as recipients o%compensation income as against pro%essionals$ 2ecipients o% compensation income are not entitle! to ma9e!e!uctions %or income ta6 purposes as there is no practicall no overhea! e6pense, -hile pro%essionals an!'usinessmen have no uni%orm costs or e6penses necessarh to pro!uce their income$ There is ampleAusti%ication to a!opt the gross sstem o% income ta6ation to compensation income, -hile continuing thesstem o% net income ta6ation as regar!s pro%essional an! 'usiness income$

[]

u$n Lun$ ,u#*ivision vs. ,$rmiento

GR L-58 28 6$% 1952En 7anc, Tuason (J)= / concur

"$&ts'Juan >una Su'!ivision is a local corporation -hich issue! a chec9 to the Cit Treasurer o% anila %oramount to 'e applie! to its lan! ta6 %or the secon! semester o% 04$ The recor!s o% the Cit Treasurer !o notsho- -hat -as !one -ith the chec9 (#t appears that it -as !eposite! -ith the Philippine Gational 7an9PG7

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!isagreement 'et-een the corporation an! the Cit Treasure, -ith the corporation claiming that the-holeamount o% the chec9 %or the ta6es %or the last semester o% 04 have 'een remitte! ' Common-ealth"ct / (04+)$

ssue' 8hether the provision allo-ing the remission covers ta6es pai! 'e%ore the enactment o%

Common-ealth "ct /, or ta6es -hich -ere still unpai!$

el*'The la- is clear that it applies to ta6es an! penalties !ue an! paa'le, i$e$ ta6es o-e! or o-ing$ Theremission o% ta6es !ue an! paa'le to the e6clusion og ta6es alrea! collecte! !oes not constitute un%air!iscrimination$ Each set o% ta6es is a class ' itsel%, an! the la- -oul! 'e open to attac9 as class legislationonl i% all ta6paers 'elonging to one class -ere not treate! ali9e$ :erein, the are not$ The ta6paers -hopai! their ta6es 'e%ore li'eration an! those -ho ha! not -ere not on the same %ooting on the nee! o% materialrelie%$ Ta6paers -ho ha! 'een in arrears in their o'ligation -houl! have to satis% their lia'ilit -ith genuinecurrenc, -hile the ta6es pai! !uring the occupation ha! 'een satis%ie! in Japanese 8ar Gotes, man o% themat a time -hen those notes -ere -ellBnigh -orthless$ To re%un! those ta6es -ith restore! currenc -oul! 'eun!ul enrich man o% the paers at a greater e6pense to the people at large$

[!]

,7ell Co. vs. ?$no

GR L-09 24 "e#ru$r% 1954En 7anc, Pa!illa (J)= concur

"$&ts'The municipal council o% Cor!ova, Ce'u a!opte! r!inance (041) imposing an annual ta6 o% P+on occupation or the e6ercise o% the privilege o% installation manager; r!inance 0 (04/) imposing an annualta6 o% P4 %or local !eposits in !rums o% com'usti'le an! in%lamma'le materials an! an annual ta6 o% P*%or tin can %actories; an! r!inance (043) imposing an annual ta6 o% P+ on tin can %actories having ama6imum annual output capacit o% , tin cans$ Shell Co$, a %oreign corporation, %ile! suit %or the re%un!o% the ta6es pai! ' it, on the groun! that the or!inances imposing such ta6es are ultra vires$

ssue'8hether r!inance is !iscriminator an! hostile 'ecause there is no other person in the localit-ho e6ercise such !esignation or occupation$

el*'The %act that there is no other person in the localit -ho e6ercises such a !esignation or calling !oesnot ma9e the or!inance !iscriminator an! hostile, inasmuch as it is an! -ill 'e applica'le to an person or%irm -ho e6ercises such calling or occupation name! or !esignate! as installation manager$

[8]

?i&tori$s 6illing Co. vs. 6uni&i$lit% o ?i&tori$s

GR L-2118 2! ,etem#er 198En 7anc, Sanchez (J)= 0 concur

"$&ts'r!inance (0+1) -as approve! ' the municipal council o% &ictorias ' -a o% an amen!ment to *municipal or!inances separatel imposing license ta6es on operators o% sugar centrals an! sugar re%ineries$The changes -ere= () -ith respect to sugar centrals, ' increasing the rates o% license ta6es; an! (*) as tosugar re%ineries, ' increasing the rates o% license ta6es as -ell as teh range o% gra!uate! sche!ule o% annualoutput capacit$ &ictorias illing 5uestione! the vali!it o% r!inance as it, among others, allege!l single!out &ictorias illing Co$ since it is the onl operator o% a sugar central an! a sugar re%iner -ithin theAuris!iction o% the municipalit$

/$$tion L$3 2004 ( 20 )

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ssue'8hether r!inance is !iscriminator$

el*'The or!inance !oes not single out &ictorias as the onl o'Aect o% the or!inance 'ut is ma!e to appl toan sugar central or sugar re%iner -hich ma happen to operate in the municipalit$ The %act that &ictoriasilling is actuall the sole operator o% a sugar central an! a sugar re%iner !oes not ma9e the or!inance

!iscriminator$ The or!inance is unli9e that in rmoc Sugar Compan vs$ unicipal 7oar! o% rmoc Cit,-hich speci%icall spelle! out rmoc Sugar as the su'Aect o% the ta6ation, the name o% the compan herein-as never mentione! in the or!inance$

[9]

:uns$l$n vs. 6$nil$GR L-481! 2 6$% 1954

En 7anc, 2ees (J)= / concur

"$&ts'r!inance 03 -as enacte! pursuant to paragraph o% Section 3 o%the 2evise! Charter o% the Cito% anila, imposing a municipal occupation ta6 on persons e6ercising various pro%essions in the cit$ &arious

pro%essionals %ile! suit to annul the or!inance an! the provision o% la- authorizing the enactment o% theor!inance, an! to call %or the re%un! collecte! ta6es un!er the or!inance$

ssue'8hether the r!inance violates the e5ual protection clause$

el*'The legislature ma, in its !iscretion, select -hat occupation shall 'e ta6e!, an! in the e6ercise o% that!iscretion it ma ta6 all, or it ma select %or ta6ation certain classes an! leave the other unta6e!$ anila, asthe seat o% the Gational .overnment an! -ith a population an! volume o% tra!e man times that o% an otherPhilippine cit or municipalit, o%%ers a more lucrative %iel! %or the practice o% the pro%essions, so that it is 'ut%air that the pro%essionals in anila 'e ma!e to pa a higher occupation ta6 than their 'rethen in theprovinces$ The or!inance imposes the ta6 upon ever person e6ercising or pursuing an o% the occupationname! in the or!inance, an! !oes not ma9e an !istinction 'et-een pro%essional having o%%ices in anila an!

outsi!ers -ho practice their pro%ession therein$ 8hat constitutes e6ercise or pursuit o% a pro%ession in the citis a matter o% Au!icial !etermination$

The r!inance !oes not violate the e5ual protection clause$

[40]

;rmo& ,ug$r vs. /re$surer o ;rmo& Cit%GR L-2!94 1! "e#ru$r% 198

En 7anc, 7angzon JP (J)= 0 concur

"$&ts'#n 014, the unicipal 7oar! o% rmoc Cit passe! r!inance 4, imposing on an an! all pro!uctionso% centri%uga sugar mille! at the rmoc Sugar Co$ #nc$ in rmoc Cit a municpal ta6 e5uivalent to pere6port sale to the ?nite! States an! other %oreign countries$ The compan pai! the sai! ta6 un!er protest$ #tsu'se5uentl %ile! a case see9ing to invali!ate the or!inance %or 'eing unconstitutional$

ssue'8hether the or!inance violates the e5ual protection clause$

el*'The r!inance ta6es onl centri%ugal sugar pro!uce! an! e6porte! ' the rmoc Sugar Co$ #nc$ an!none other$ "t the time o% the ta6ing or!inance@s enacte!, the compan -as the onl sugar central in rmocCit$ The classi%ication, to 'e reasona'le, shoul! 'e in terms applica'le to %uture con!itions as -ell$ Theta6ing or!inance shoul! not 'e singular an! e6clusive as to e6clu!e an su'se5uentl esta'lishe! sugar

/$$tion L$3 2004 ( 21 )

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central, o% the same class as the present compan, %rom the coverage o% the ta6$ "s it is no-, even i% later asimilar compan is set up, it cannot 'e su'Aect to the ta6 'ecause the or!inance e6pressl points onl to thecompan as the entit to 'e levie! upon$

[41]

:esi-Col$ Bottling Co. vs. Cit% o Butu$nGR L-22814 28 August 198

En 7anc, Concepcion (J)= + concur

"$&ts'r!inance -as enacte! ' the Cit o% 7utuan imposing a ta6 o% P$ per case o% *4 'ottles o%so%t!rin9s or car'onate! !rin9s$ The ta6 -as impose! upon !ealers engege! in selling so%t!rin9s orcar'onate! !rin9s$ 8hen r!inance , the ta6 -as impose! upon an agent or consignee o% an person,association, partnership, compan or corporation engage! in selling so%t!rin9s or car'onate! !rin9s, -ithagent or consignee 'eing particularl !e%ine! on the inserte! provision Section B"$ #n e%%ect, merchantsengage! in the sale o% so%t!rin9s, etc$ are not su'Aect to the ta6 unless the are agents or consignees o% another!ealer -ho must 'e one engage! in 'usiness outsi!e the Cit$ PepsiBCola 7ottling Co$ %ile! suit to recover

sums pai! ' it to the cit pursuant to the r!inance, -hich it claims to 'e null an! voi!$

ssue'8hether the r!inance is !iscriminator$

el*'The r!inance, as amen!e!, is !iscriminator since onl sales ' agents or consignees o% outsi!e!ealers -oul! 'e su'Aect to the ta6$ Sales ' local !ealers, not acting %or or on 'ehal% o% other merchants,regar!less o% the volume o% their sales , an! even i% the same e6cee!e! those ma!e ' sai! agents orconsignees o% pro!ucers or merchants esta'lishe! outsi!e the cit, -oul! 'e e6empt %rom the ta6$ Theclassi%ication ma!e in the e6ercise o% the authorit to ta6, to 'e vali! must 'e reasona'le, -hich -oul! 'esatis%ie! i% the classi%ication is 'ase! upon su'stantial !istinctions -hich ma9es real !i%%erences; these aregermane to the purpose o% legislation or or!inance; the classi%ication applies not onl to present con!itions 'utalso to %uture con!itions su'stantiall i!entical to those o% the present; an! the classi%ication applies e5uall to

all those -ho 'elong to the same class$ These con!itions are not %ull met ' the or!inance in 5uestion$

[42]

?er$ vs. Cuev$sGR L-9-94 1 6$% 19!9First Division, De Castro (J)= 4 concur, too9 no part

"$&ts'Consoli!ate! Philippines #nc$, .eneral il9 Co$ (Phil$) #nc$, an! il9 #n!ustries #nc$ are engage! inthe manu%acture, sale an! !istri'ution o% %ille! mil9 pro!ucts throughout the Philippines$ The #nstitute o%Evaporate! Fulle! il9 anu%acturers o% the Philippines is a corporation organize! to uphol! an! maintainthe highest stan!ar!s o% local %ille! mil9 in!ustries, o% -hich the companies are mem'ers$ The Commissionerre5uire! the companies to -ith!ra- %rom the mar9et all o% their %ille! mil9 pro!ucts -hich !o not 'ear theinscription re5uire! ' Section 10 (#nscription to 'e place! on s9imme! mil9) o% the Ta6 Co!e -ithin +!as %rom receipt o% or!er -ith e6plicit -arning o% prosection %or nonBcompliance$ The companies %ile! anaction %or prohi'ition an! inAunction$

ssue'8hether Section 10 o% theTa6 Co!e can 'e en%orce! against the companies$

el*' 8ith Section 4 (speci%ic ta6 impose! on s9imme! mil9) an! Section // (penalt on sale o%s9imme! mil9 -ithout pament o% speci%ic ta6 an! legen! re5uire! in Section 10) repeale! ' 2" 44 an!2" 41, respectivel; Section 10 has lost its ta6 purpose, an! thus the Commissioner necessar lost his

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authorit to en%orce the same$ Further, Section 10 applies to s9imme! mil9, -hich is !i%%erent to %ille! mil9$Furthermore, Section 10 is onl 'eing en%orce! against the respon!ent companies na! not againstmanu%acturers, !istri'utors or sellers o% con!ense! s9imme! mil9 such as S##>"C, S", 72E#>,EGF"#>, an! >"C$ Such 9in! o% en%orcement amounts to an unconstitutional !enial o% the e5ualprotection o% the la-s, %or the la-, i% not e5uall en%orce! to persons similarl situate!, -oul! o%%en! against

the Constitution$

[4]

Ameri&$n Bi#le ,o&iet% vs. 6$nil$

GR L-9! 0 Aril 195!Secon! Division, Feli6 (J)= / concur, concur in result

"$&ts'#n the course o% its ministr, the Philippine agenc o% the "merican 7i'le Societ has 'een !istri'utingan! selling 'i'les an!Ior gospel portions thereo% throughout the Philippines an! translating the same intoseveral Philippine !ialets$ The acting Cit Treasurer o% anila re5uire! the societ to secure thecorrespon!ing aor@s permit an! municipal license %ees, together -ith compromise covering the perio!

%rom the 4th 5uarter o% 04+ to the *n! 5uarter o% 0+$ The societ pai! such un!er protest, an! %ile! suit5uestioning the legalit o% the or!inances un!er -hich the %ees are 'eing collecte!$

ssue'8hether the municipal or!inances violate the %ree!om o% religious pro%ession an! -orship$

el*'" ta6 on the income o% one -ho engages in religious activities is !i%%erent %rom a ta6 on propert use!or emploe! in connection -ith those activities$ #t is one thing to impose a ta6 on the income or propert o% apreacher, an! another to e6act a ta6 %or him %or the privilege o% !elivering a sermon$ The po-er to ta6 thee6ercise o% a privilege is the po-er to control or suppress its enAoment$ Even i% religious groups an! the pressare not altogether %ree %rom the 'ur!ens o% the government, the act o% !istri'uting an! selling 'i'les is purelreligious an! !oes not %all un!er Section */ (e) o% the Ta6 Co!e (C" 411)$ The %act that the price o% 'i'les,etc$ are a little higher than actual cost o% the same !oes not necessaril mean it is alrea! engage! in 'usiness

%or pro%it$ r!inance *+*0 an! are not applica'le to the Societ$

[44]

C$g$%$n =le&tri& :o3er Lig7t Co. vs. CommissionerGR L-012 25 ,etem#er 1985Secon! Division, "5uino (J)= + concur

"$&ts'Cagaan Electric is a hol!er o% a legislative %ranchise un!er 2epu'lic "ct *4/ -here pament o% ta6 on gross earnings is in lieu o% all ta6es an! assessments upon privileges, etc$ #n 013, 2" +4 amen!e!the %ranchise ' ma9ing all corporate ta6paers lia'le %or income ta6 e6cept those in!icate! in paragraph (c)() o% Section *4 o% the Ta6 Co!e$ #n 010, through 2" 1*, its %ranchise -as e6ten!e! to t-o other to-nsan! the ta6 e6emption -as reenacte!$ #n 0/, the Commissioner re5uire! the compan to pa !e%iciencincome ta6es %or 013 to 0/$

ssue'8hether the -ith!ra-al o% the %ranchise@s ta6 e6emption violates the nonBimpairment clause o% theConstitution$

el*'Congress coul! impair the compan@s legislative %ranchise ' ma9ing it lia'le %or income ta6$ TheConstitution provi!es that a %ranchise is su'Aect to amen!ment, alteration or repeal ' the Congress -hen thepu'lic interest so re5uires$ 2" *4/ itsel% provi!es that the %ranchise is su'Aect to amen!ment, etc$ 'Congress$ The enactment o% 2" +4 ha! the e%%ect o% -ith!ra-ing the compan@s e6emption %rom income

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ta6$ The e6emption -as restore! ' the enactment o% 2" 1*$ The compan is lia'le onl %or the income ta6%pr the perio! o% Januar to "ugust 010$

[45]

C$s$nov$s vs. or*GR L-4! 22 6$r&7 190!First Division, 8illar! (J)= 4 concur, !issents

"$&ts'#n 30/, the Spanish .overnment, in accor!ance -ith the provisions o% the roal !ecree o% 4 ma31/, grante! J$ Casanovas certain mines in the province o% "m'os Camarines, o% -hich mines the latter isno- the o-ner$ That these -ere vali!l per%ecte! mining concessions grante! to prior to "pril 300 isconce!e!$ The -ere so consi!ere! ' the Collector o% #nternal 2evenue an! -ere ' him sai! to %all -ithinthe provisions o% Section 4 o% "ct 30 (#nternal 2evenue "ct)$ The Commissioner, JG S$ :or!, impose!upon these properties the ta6 mentione! in Section 4, -hich Casanovas pai! un!er protest$

ssue'8hether Section 4 o% "ct 30 is vali!$

el*'The !ee! constitute! a contract 'et-een the Spanish .overnment an! Casanovas$ The o'ligation in thecontract -as impaire! ' the enactment o% Section 4 o%the #nternal 2evenue >a, there' in%ringing theprovisions o% Section + o% the "ct o% Congress o% Jul 0*$ Furthermore, the section con%licts -ith Section1 o% the "ct o% Congress o% Jul 0*, -hich in!icate that concessions can 'e cancelle! onl ' reason o%illegalit in the proce!ure ' -hich the -er o'taine!, or %or %ailure to compl -ith the con!itions prescri'e!as re5uisites %or their retention in the la-s un!er -hich the -er grante!$ The groun!s -ere not sho-n orclaime! in the case$ "s to the allegation that the section violates uni%ormit o% ta6ation, the Court %oun! itunnecessar to consi!er the claim in vie- o% the result at -hich the Court has arrive!$

[4]

C7ur&7ill vs. Con&e&ionGR 115!2 22 ,etem#er 191

Secon! Division, Trent (J)= 4 concur

"$&ts'Section o% "ct *0 (promulgate! 04) impose! an annual ta6 o% P4 per s5uare meter uponelectric signs, 'ill'oar!s, an! spaces use! %or posting or !isplaing temporar signs, an! all signs !isplae!on premises not occupie! ' 'uil!ings$ The section -as amen!e! ' "ct *4*, re!ucing the ta6 to P* pers5uare meter$ The ta6es impose! ' "ct *4* -ere rati%ie! ' the ?S Congress on 4 arch 0+$ Francis "$Churchill an! Ste-art Tait, coBpartners in ercantile "!vertising "genc, o-e! a 'ill'oar! to -hich the-ere ta6e! at P4$ The ta6 -as pai! un!er protest$ Churchill an! Tait institute! the action to recover theamount$

ssue'8hether the statute or ta6 is voi! %or lac9 o% uni%ormit$

el*'?ni%ormit in ta6ation means that all ta6a'le articles or 9in!s o% propert, o% the same class, shall 'eta6e! at the same rate$ #t !oes not mean that lan!s, chattels, securities, incomes, occupations, %ranchises,privileges, necessities, an! lu6uries shall all 'e assesse! at the same rate$ Di%%erent articles ma 'e ta6e! at!i%%erent amounts provi!e! the rate is uni%orm on the same class ever-here, -ith all people, at all times$:erein, the "ct imposes a ta6 o% P* per s5uare meter or a %raction thereo% upon ever electric sign, 'ill'oar!,etc$, -herever %oun! in the Philippine #slan!s$ The rule o% ta6ation upon such signs is uni%orm throughout theislan!s$ The rule !oes not re5uire ta6es to 'e gra!e! accor!ing to the value o% the su'Aect(s) upon -hich theare impose!, especiall those levie! as privilege or occupation ta6es$

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[4!]

?ill$nuev$ vs. loilo Cit%

GR L-2521 28 De&em#er 198

En 7anc, Castro (J)= 3 concur

"$&ts'n Septem'er 041, the unicipal 7oar! o% #loilo Cit enacte! r!inance 31 imposing license ta6%ees upon tenement house (P*+); tenemen house partl engage! or -holl engage! in an! !e!icate! to'usiness in 7aza, #znart, an! "l!eguer Streets (P*4 per apartment); an! tenement house, pa!tl or -hollengage! in 'usiness in other streets (P* per apartment)$ The vali!it o% such or!inance -as challenge! 'Euse'io an! 2eme!ios &illanueva, o-ners o% %our tenement houses containing 4 apartments$ The SupremeCourt hel! the or!inance to 'e ultra vires$ n + Januar 01, ho-ever, the municipal 'oar!, 'elieving that itac5uire! authorit to enact an or!inance o% the same nature pursuant to the >ocal "utonom "ct, enacte!r!inance (series o% 01), Euse'io an! 2eme!ios &illaniueva assaile! the or!inance ane-$

ssue'8hether r!inance violate the rule o% uni%ormit o% ta6ation$

el*'The Court has rule! that tenement houses constitute a !istinct class o% propert; an! that ta6es areuni%orm an! e5ual -hen impose! upon all propert o% the same class or character -ithin the ta6ing authorit$The %act that the o-ners o% the other classes o% 'uil!ings in #loilo are not impose! upon ' the or!inance, orthat tenement ta6es are impose! in other cities !o not violate the rule o% e5ualit an! uni%ormit$ The rule!oes not re5uire that ta6es %or the same purpose shoul! 'e impose! in !i%%erent territorial su'!ivisions at thesame time$ So long as the 'ur!en o% ta6 %alls e5uall an! impartiall on all o-ners or operators o% tenementhouses similarl classi%ie! or situate!, e5ualit an! uni%ormit is accomplishe!$ The presumption that ta6statutes are inten!e! to operate uni%orml an! e5uall -as not overthro-n herein$

[48]

=$stern /7e$tri&$l Co. vs. AlonsoGR L-1104 1 6$% 1944

Secon! Division, Per%ecto (J)= + concur

"$&ts'The municipal 'oar! o% anila enacte! r!inance *0+3 (series o% 041) imposing a %ee on the price o%ever a!mission tic9et sol! ' cinematograph theaters, vau!eville companies, theatrical sho-s an! 'o6inge6hi'itions, in a!!ition to %ees impose! un!er Sections 1 an! //3 o% r!inance 1$ Eastern TheatricalCo$, among others, 5uestion the vali!it o% or!inance, on the groun! that it is unconstitutional %or 'eingcontrar to the provisions on uni%ormit an! e5ualit o% ta6ation an! the e5ual protection o% the la-sinasmuch as the or!inance !oes not ta6 other 9in!s o% amusement, such as race trac9s, coc9pits, ca'arets,concert halls, circuses, an! other places o% amusement$

ssue'8hether the or!inance violates the rule on uni%ormit an! e5ualit o% ta6ation$

el*'E5ualit an! uni%ormit in ta6ation means that all ta6a'le articles or 9in!s o% propert o% the same classshall 'e ta6e! at the same rate$ The ta6ing po-er has the authorit to ma9e reasona'le an! naturalclassi%ications %or purposes o% ta6ation; an! the theater companies cannot point out -hat places o% amusementta6e! ' the or!inance !o not constitute a class ' themselves an! -hich can 'e con%use! -ith those notinclu!e! in the or!inance$ The %act that some- places o% amusement are not ta6e! -hile others, li9e the onesherein, are ta6e! is no argument at all against the e5ualit an! uni%ormit o% the ta6 imposition$

[49]

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Re%es vs. Alm$n+orGR 4989-4 2 Aril 1991En 7anc, Paras (J)= + concur

"$&ts'J7>, E!mun!o an! ilagros 2ees are o-ners o% parcels o% lan! in anila -hich are lease! an!occupie! as !-elling sites ' tenants$ #n 0/, 2" 1+0 -as passe! prohi'iting an increase o% monthlrentals o% !-elling units or o% lan! on -hich another !-elling is locate! %or one ear a%ter e%%ectivit %orrentals not e6cee!ing P 'ut allo-ing an increase o% rent therea%ter ' not more than $ The "ct alsosuspen!e! the operation o% "rticle 1/ o% the Civil Co!e (eAectment o% lessess)$ PD * amen!e! 2" 1+0 'a'solutel prohi'iting the increase an! in!e%initel suspen!ing "rticle 1/$ The 2eeses, thus, -erepreclu!e! %rom raising the rentals an! %rom eAecting the tenants$ #n 0/, the Cit "ssessor o% anilareclassi%ie! an! reassesse! the value o% the properties 'ase! on the sche!ule o% mar9et values !ul revie-e!' the Secretar o% Finance$ "s it entaile! an increase o% the correspon!ing ta6 rates, the 2eeses %ile! amemoran!um o% !isagreement -ith the 7oar! o% Ta6 "ssessment "ppeals an! averring therein that thereassessments -ere e6cessive, un-arrante!, une5uita'le, con%iscator an! unconstitutional inasmuch as theta6es impose! e6cee!e! the annual income !erive! %rom their properties; an! that the income approach

shoul! have 'een use! in !etermining lan! values instea! o% the comparative sales approach -hich theassessor a!opte!$

ssue'8hether the reassessment is une5uita'le$

el*'Ta6ation is e5uita'le -hen its 'ur!en %alls on those 'etter a'le to pa$ Ta6ation is progressive -hen itsrate goes up !epen%ing on the resources o% the person a%%ecte!$ Ta6es are uni%orm -hen all ta6a'le articles or9in!s o% propert o% the same class are ta6e! at the same rate$ The ta6ing po-er has the authorit to ma9ereasona'le an! natural classi%ication %or purposes o% ta6ation$ >a-s shoul! operate e5uall an! uni%orml,ho-ever, on all persons un!er similar circumstances or that all persons mus t 'e treate! in the same manner,the con!itiions not 'eing !i%%erent 'oth in the privileges con%erre! an! lia'ilities impose!$ Finall, un!er the2eal Propert Ta6 Co!e (PD 414), propert must 'e appraise! at its cuurent an! %air mar9et value$ The mar9et

value o% the properties covere! ' PD *, thus cannot 'e e5uate! -ith the mar9et value o% properties not socovere!$ Shcu propert covere! ' PD * has naturall a much lesser mar9et value in vie- o% the rentalrestrictions$ "lthough ta6es are the li%e'loo! o% the government an! shoul! 'e collecte! -ithout unnecessarhin!rance, such collection shoul! 'e ma!e in accor!ance -ith la- as an ar'itrariness -ill negate the verreason %or government itsel%$ "s teh 2eeses are 'ur!ene! ' the 2ent Freeze >a-s (2" 1+0 an! PD *),the shoul! not 'e penalize! ' the same government ' the imposition o% e6cessive ta6es the cancan illa%%or! an! -oul! eventuall result in the %or%eiture o% their properties, un!er the principle o% social Austice$

[50]

A#r$ ?$lle% College vs. AEuino

GR L-908 15 une 1988Secon! Division, Paras (J)= 4 concur

"$&ts' "'ra &alle College rents out the groun! %loor o% its college 'uil!ing to Gorthern ar9etingCorporation -hile the secon! %loor thereo% is use! ' the Director o% the College %or resi!ential purposes$ Themunicipal an! provincial treasurers serve! upon the College a notice o% seizure an! later a notice o% sale!ue to the allege! %ailure o% the College to pa real estate ta6es an! penalties thereon$ The school %ile! suit toannul sai! notices, claiming that it is ta6Be6empt$

ssue'8hether the College is e6empt %rom ta6es$

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el*'8hile the Court allo-s a more li'eral an! nonBrestrictive interpretation o% the phrase e6clusivel ise!%or e!ucational purposes, reasona'le emphasis has al-as 'een ma!e that e6emption e6ten!s to %acilities-hich are inci!ental to an! reasona'l necessar %or the accomplishment o% the main purposes$ 8hile thesecon! %loor@s use, as resi!ence o% the !irector, is inci!ental to e!ucation; the lease o% the %irst %loor cannot 'an stretch o% imagination 'e consi!ere! inci!ental to the purposes o% e!ucation$ The test o% e6emption %rom

ta6ation is the use o% the propert %or purposes mentione! in the Constititution$

[51]

errer$ vs. @ue+on Cit% Bo$r* o Assessment Ae$ls

GR L-152!0 0 ,etem#er 191First Division, Concepcion (J)= 1 concur

"$&ts' #n 0+*, the Director o% the 7ureau o% :ospitals authorize! Jose &$ :errera an! Ester changco:errera to esta'lish an! operate the St$ Catherine@s :ospital$ #n 0+, the :erreras sent a letter to the KuezonCit "ssessor re5uesting e6emption %rom pament o% real estate ta6 on the hospital, stating that the same -asesta'lishe! %or charita'le an! humanitarian purposes an! not %or commercial gain$ The e6emption -as

grante! e%%ective ears 0+ to 0++$ #n 0++, ho-ever, the "ssessor reclassi%ie! the properties %rome6empt to ta6a'le e%%ective 0+1, as it -as ascertaine! that out * 'e!s in the hospital, * o% -hich are%or paBpatients$ " school o% mi!-i%er is also operate! -ithin the premises o% the hospital$

ssue'8hether St$ Catherine@s :ospital is e6empt %rom reallt ta6$

el*'The a!mission o% paBpatients !oes not !etract %rom the charita'le character o% a hospital, i% all its%un!s are !evote! e6clusivel to the maintenance o% the institution as a pu'lic charit$ The e6emption in%avor o% propert use! e6clusivel %or charita'le or e!ucational purpose is not limite! to propert actuallin!ispensa'le there%ore, 'ut e6ten!s to %acilities -hich are inci!ental to an! reasona'l necessar %or theaccomplishment o% sai! purpose, such as in the case o% hospitals BB a school %or training nurses; a nurses@home; propert use! to provi!e housing %acilities %or interns, resi!ent !octors, superinten!ents an! otehr

mem'ers o% the hospital sta%%; an! recreational %acilities %or stu!ent nurses, interns an! resi!ents$ 8ithin thepurvie- o% the Constitution, St$ Catherine@s :ospital is a charita'le institution e6empt %rom ta6ation$

[52]

Ll$*o& vs. CommissionerGR L-19201 1 une 195

En 7anc, Pare!es (J)= 0 concur, too9 no part

"$&ts'#n 0+/, the 7 Estate #nc$ o% 7acolo! Cit !onate! P, in cash to the parish priest o% &ictorias,Gegros cci!ental; the amount spent %or the construction o% a ne- Catholic Church in the localit,m asinten!e!$ #n0+3, 7 Estate %ile! the !onor@s gi%t ta6 return$ #n 01, the Commissioner issue! an assessment%or !onee@s gi%t ta6 against the parish$ The priest lo!ge! a protest to the assessment an! re5ueste! the-ith!ra-al thereo%$

ssue'8hether the Catholic Parish is ta6 e6empt$

el*'The phrase e6empt %rom ta6ation shoul! not 'e interprete! to mean e6emption %rom all 9in!s o%ta6es$ The e6emption is onl %rom the pament o% ta6es assesse! on such properties as propert ta6es ascontra!istinguishe! %rom e6cise ta6es$ " !onee@s gi%t ta6 is not a propert ta6 'ut an e6cise ta6 impose! on thetrans%er o% propert ' -a o% gi%t inter vivos$ #t !oes not rest upon general o-nership, 'ut an e6cise upon theuse ma!e o% the properties, upon the e6ercise o% the privilege o% receiving the properties$ The imposition o%

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such e6cise ta6 on propert use! %or religious

Documents

Digests Tax 2003