tax 1 case 2

Published on June 2016 | Categories: Documents | Downloads: 41 | Comments: 0 | Views: 356
of 74
Download PDF   Embed   Report

Comments

Content


1. Philex Mining Corporation vs. CIR, G.R. No. 125704 August 28, 1998
FACTS:
The Court of Tax Appeals ordered Philex to pa the a!ou"t of P110, #77,##8.52
as ex$ise tax lia%ilit for the period fro! the 2"d &uarter of 1991 to the 2"d &uarter of
1992 plus 20' a""ual i"terest fro! August #, 1994 u"til full paid.
Philex refused to pa a"d argued that it had pe"di"g $lai!s for (AT i"put
$redit)refu"d for the taxes it paid for the ears 1989*1991 i" the a!ou"t of
P119,977,0+7.02 plus i"terest a"d therefore should %e applied agai"st the said ex$ise
tax lia%ilities i" a !a""er of a set*off or legal $o!pe"satio".
ISSUE:
,-N taxes $ould %e the su%.e$t of a set*off or legal $o!pe"satio"/
RUI!G0
No. Taxes $ould "ot %e the su%.e$t of a set*off or legal $o!pe"satio" for the
si!ple reaso" that the go1er"!e"t a"d the taxpaer are not mutual creditors and
debtors of each other. Claims for taxes are neither debts nor contracts. A
taxpaer $a""ot refuse to pa his taxes 2he" the fall due si!pl %e$ause he has a
$lai! agai"st the go1er"!e"t that the $olle$tio" of the tax is $o"ti"ge"t o" the result of
the la2suit it filed agai"st the go1er"!e"t. 3" the $ase at %ar, the $lai!s of Philex for
(AT refu"d is still pe"di"g litigatio". 4oreo1er, taxes are the life%lood of the go1er"!e"t
a"d should %e $olle$ted 2ithout u""e$essar hi"dra"$e.
Citi"g Francia v. Intermediate Appellate Court, the 5C $ategori$all held that
taxes $a""ot %e su%.e$t to set*off or $o!pe"satio", thus0
6,e ha1e $o"siste"tl ruled that there $a" %e "o off*setti"g of taxes agai"st the $lai!s
that the taxpaer !a ha1e agai"st the go1er"!e"t. A perso" $a""ot refuse to pa a
tax o" the grou"d that the go1er"!e"t o2es hi! a" a!ou"t e&ual to or greater tha" the
tax %ei"g $olle$ted. The $olle$tio" of tax $a""ot a2ait the results of a la2suit agai"st the
go1er"!e"t.7
". ATAS C#!S#I$ATE$ A!$ $E%E#PME!T C#RP#RATI#! vs.
C#MMISSI#!ER #F I!TER!A RE%E!UE, 8.9. No. 159490, :e%ruar 18, 2008
FACTS:
Atlas is a $orporatio" dul orga"i;ed a"d existi"g u"der Philippi"e la2s e"gaged
i" the produ$tio" of $opper $o"$e"trates for export. 3t is registered as a (AT e"tit a"d a
(AT 9egistratio" Certifi$ate No. +2*0*004#22 effe$ti1e August 15, 1990.
-" 5epte!%er 20, 199+, Atlas applied 2ith the <39 for the issua"$e of a tax
$redit $ertifi$ate or refu"d u"der 5e$tio" 10#=%> of the Tax Code. The $ertifi$ate 2ould
represe"t the (AT it paid for the first &uarter of 199+ i" the a!ou"t of PhP 7,907,##2.5+,
2hi$h $orrespo"ded to the i"put taxes "ot applied agai"st a" output (AT.
-" :e%ruar 22, 1995, Atlas the" filed 2ith the CTA a"d o" -$to%er 1+, 1997,
the CTA re"dered a ?e$isio" agai"st Atlas. The CTA held that Atlas failed to prese"t
suffi$ie"t e1ide"$e to 2arra"t the gra"t of tax $redit or refu"d for the alleged i"put taxes
paid % Atlas. 3t fou"d that the do$u!e"ts su%!itted % Atlas did "ot $o!pl 2ith
9e1e"ue 9egulatio" No. +*88.
Atlas ti!el filed its 4otio" for 9e$o"sideratio" of the a%o1e de$isio" $o"te"di"g
that it relied o" 5e$. 10# of the Tax Code 2hi$h !erel re&uired proof that the foreig"
ex$ha"ge pro$eeds has %ee" a$$ou"ted for i" a$$orda"$e 2ith the regulatio"s of the
Ce"tral <a"@ of the Philippi"es =C<P>. Co"se&ue"tl, Atlas asserted that the do$u!e"ts
it prese"ted, $oupled 2ith the testi!o" of its A$$ou"ti"g a"d :i"a"$e 4a"ager,
suffi$ie"tl pro1ed its $ase. The 4otio" for 9e$o"sideratio" 2as de"ied.
Atlas appealed a"d the CA de"ied a"d dis!issed AtlasA petitio" o" the grou"d of
i"suffi$ie"$ of e1ide"$e to support AtlasA a$tio" for tax $redit or refu"d.
ISSUE0 ,hether Atlas has suffi$ie"tl pro1e" e"title!e"t to a tax $redit or refu"d.
RUI!G:
No.
The 9ules of Court, 2hi$h is suppletor i" &uasi*.udi$ial pro$eedi"gs, parti$ularl
5e$. +49 of 9ule 1+2, 9e1ised 9ules o" B1ide"$e, is $lear that "o e1ide"$e 2hi$h has
"ot %ee" for!all offered shall %e $o"sidered. Thus, 2here the perti"e"t i"1oi$es or
re$eipts purportedl e1ide"$i"g the (AT paid % Atlas 2ere "ot su%!itted, the $ourts a
&uo e1ide"tl $ould "ot deter!i"e the 1era$it of the i"put (AT Atlas has paid.
4oreo1er, 2he" Atlas li@e2ise failed to su%!it perti"e"t export do$u!e"ts to pro1e
a$tual export sales 2ith due $ertifi$atio" fro! a$$redited %a"@s o" the export pro$eeds
i" foreig" $urre"$ 2ith the $orrespo"di"g $o"1ersio" rate i"to Philippi"e $urre"$, the
$ourts a &uo li@e2ise $ould "ot deter!i"e the 1era$it of the export sales as i"di$ated i"
AtlasA a!e"ded (AT retur".
&. MEECI# R. $#MI!G#, as Co''issioner o( Internal Reven)e 1s. *#!.
#RE!+# C. GARIT#S, in his ,apa,it- as .)/ge o( the Co)rt o( First Instan,e o(
e-te, an/ SIME#!A 0. PRICE, as A/'inistratrix o( the Intestate Estate o( the late
1alter S,ott Pri,e, 8.9. No. C*18994, Du"e 29, 19#+
FACTS:
3" ?o!i"go 1s. 4os$oso, the 5upre!e Court de$lared as fi"al a"d exe$utor the
order of the lo2er $ourt for the pa!e"t of estate a"d i"herita"$e taxes, $harges a"d
pe"alties a!ou"ti"g to Php 40,058.55 % the estate of the of the late ,alter Pri$e. The
petitio"er for exe$utio" filed % the fis$al 2as de"ied % the lo2er $ourt. The $ourt held
that the exe$utio" is u".ustified as the 8o1er"!e"t is i"de%ted to the estate for Php
2#2, 200 a"d ordered the a!ou"t of i"herita"$e taxes $a" %e dedu$ted fro! the
8o1er"!e"tAs i"de%ted"ess to the estate.
ISSUE: ,hether or "ot a tax a"d a de%t !a %e $o!pe"sated.
RUI!G: The $ourt ha1i"g .urisdi$tio" of the Bstate had fou"d that the $lai! of the
Bstate agai"st the go1er"!e"t has %ee" re$og"i;ed a"d the a!ou"t has alread %ee"
appropriated % a $orrespo"di"g la2, 9ep. A$t No. 2700. <oth the $lai! of the 8o1er"!e"t for
i"herita"$e taxes a"d the $lai! of the i"testate for ser1i$es re"dered ha1e alread
%e$o!e o1erdue a"d de!a"da%le as 2ell as full li&uidated. Co!pe"satio" ta@es pla$e
% operatio" of la2 a"d %oth de%ts are exti"guished to the $o"$urre"t a!ou"t. Therefore the
petitio"er has "o $lear right to exe$ute the .udg!e"t for taxes agai"st the estate of the de$eased
,alter Pri$e.
2. Co''issioner vs. Alg)e, 89 C*28890, 17 :e%ruar 1988
Fa,ts: The Philippi"e 5ugar Bstate ?e1elop!e"t Co!pa" =P5B?C> appoi"ted Algue
3"$. as its age"t, authori;i"g it to sell its la"d, fa$tories, a"d oil !a"ufa$turi"g pro$ess.
The (egeta%le -il 3"1est!e"t Corporatio" =(-3CP> pur$hased P5B?C properties. :or
the sale, Algue re$ei1ed a $o!!issio" of P125,000 a"d it 2as fro! this $o!!issio"
that it paid 8ue1ara, et. al. orga"i;ers of the (-3CP, P75,000 i" pro!otio"al fees. 3"
19#5, Algue re$ei1ed a" assess!e"t fro! the Co!!issio"er of 3"ter"al 9e1e"ue i" the
a!ou"t of P8+,18+.85 as deli"&ue"$ i"$o!e tax for ears 1958 a!d 1959. Algue filed
a protest or re&uest for re$o"sideratio" 2hi$h 2as "ot a$ted upo" % the <ureau of
3"ter"al 9e1e"ue =<39>. The $ou"sel for Algue had to a$$ept the 2arra"t of distra"t a"d
le1. Algue, ho2e1er, filed a petitio" for re1ie2 2ith the Court of Tax Appeals.
Iss)e: 3s the Colle$tor of the 3"ter"al 9e1ue $orre$t i" disallo2i"g the P75,000
dedu$tio" $lai!ed % Algue as a legiti!ate %usi"ess expe"se o" a$$ou"t that it 2as "ot
a" ordi"ar, reaso"a%le a"d "e$essar expe"se/
RUI!G:
No. The 5upre!e Court ruled i" fa1or of the CTA a"d Algue. The a!ou"t i"
&uestio" is a legiti!ate %usi"ess expe"se. The %urde" o" the part of the tax paer to
pro1e that said expe"ses 2ere "e$essar a"d reaso"a%le 2ere satisfa$toril $o!plied
2ith. ,ith this i" !i"d, the $ourt expou"ded o" the purpose a"d ratio"ale of taxatio",
Tax $olle$tio" should %e !ade i" a$$orda"$e 2ith la2 as a" ar%itrari"ess 2ill
"egate the 1er reaso" for go1er"!e"t itself. :or all the a2eso!e po2er of the tax
$olle$tor, he !a still %e stopped i" his tra$@s if the taxpaer $a" de!o"strate that the
la2 has "ot %ee" o%ser1ed. Eerei", the $lai!ed dedu$tio" =pursua"t to 5e$tio" +0 FaG
F1G of the Tax Code a"d 5e$tio" 70 F1G of 9e1e"ue 9egulatio" 20 as to $o!pe"satio" for
perso"al ser1i$es> had %ee" legiti!atel % Algue 3"$. 3t has further pro1e" that the
pa!e"t of fees 2as reaso"a%le a"d "e$essar i" light of the efforts exerted % the
paees i" i"du$i"g i"1estors =i" (-3CP> to i"1ol1e the!sel1es i" a" experi!e"tal
e"terprise or a %usi"ess re&uiri"g !illio"s of pesos.
3. !PC vs. Cit- o( Ca4anat)an 8.9. No. 149110, April 9, 200+
Fa,ts:
Natio"al Po2er Corporatio", a 8o1er"!e"t -2"ed a"d Co"trolled Corporatio"
2as assessed % the Cit of Ca%a"atua" for fra"$hise tax pursua"t to se$. +7 of
-rdi"a"$e No. 1#5*92. NPC refused to pa the tax assess!e"t o" the grou"ds that the
Cit of Ca%a"atua" has "o authorit to i!pose tax o" go1er"!e"t e"tities a"d also that
it is exe!pted as a "o"*profit orga"i;atio". :or its part, the Cit go1er"!e"t alleged that
NPCAs exe!ptio" fro! lo$al taxes has %ee" repealed % se$. 19+ of 9A 71#0.
Iss)e: ,hether or "ot NPC is lia%le to pa a" a""ual fra"$hise tax to the Cit
go1er"!e"t.
RUI!G:
-"e of the !ost sig"ifi$a"t pro1isio"s of the Co$al 8o1er"!e"t Code is the
re!o1al of the %la"@et ex$lusio" of i"stru!e"talities a"d age"$ies of the "atio"al
go1er"!e"t fro! the $o1erage of lo$al taxatio". Although as a ge"eral rule, C8Hs
$a""ot i!pose taxes, fees or $harges of a" @i"d o" the Natio"al 8o1er"!e"t, its
age"$ies a"d i"stru!e"talities, this rule "o2 ad!its a" ex$eptio", i.e., when specific
provisions of the LGC authorize the LGUs to impose taxes, fees or charges on the
aforementioned entities.
As $o!!o"l used, a fra"$hise tax is Ia tax o" the pri1ilege of tra"sa$ti"g
%usi"ess i" the state a"d exer$isi"g $orporate fra"$hises gra"ted % the state.I 3t is "ot
le1ied o" the $orporatio" si!pl for existi"g as a $orporatio", upo" its propert or its
i"$o!e, %ut o" its exer$ise of the rights or pri1ileges gra"ted to it % the go1er"!e"t.
Ee"$e, a $orporatio" "eed "ot pa fra"$hise tax fro! the ti!e it $eased to do %usi"ess
a"d exer$ise its fra"$hise. 3t is 2ithi" this $o"text that the phrase Itax o" %usi"esses
e".oi"g a fra"$hiseI i" se$tio" 1+7 of the C8C should %e i"terpreted a"d u"derstood.
(eril, to deter!i"e 2hether the petitio"er is $o1ered % the fra"$hise tax i" &uestio",
the follo2i"g re&uisites should $o"$ur0
=1> That petitio"er has a Ifra"$hiseI i" the se"se of a se$o"dar or spe$ial
fra"$hiseJ a"d
=2> That it is exer$isi"g its rights or pri1ileges u"der this fra"$hise 2ithi"
the territor of the respo"de"t $it go1er"!e"t.
NPC fulfills %oth re&uisites. To stress, a fra"$hise tax is i!posed %ased "ot o"
the o2"ership %ut o" the exer$ise % the $orporatio" of a pri1ilege to do %usi"ess. The
taxa%le e"tit is the $orporatio" 2hi$h exer$ises the fra"$hise, a"d "ot the i"di1idual
sto$@holders. < 1irtue of its $harter, petitio"er 2as $reated as a separate a"d disti"$t
e"tit fro! the Natio"al 8o1er"!e"t. 3t $a" sue a"d %e sued u"der its o2" "a!e, a"d
$a" exer$ise all the po2ers of a $orporatio" u"der the Corporatio" Code.
The 5upre!e C-urt also did "ot fi"d !erit i" the petitio"erKs $o"te"tio" that its
tax exe!ptio"s u"der its $harter su%sist despite the passage of the C8C.
As a rule, tax exemptions are construed strongly against the claimant.
Bxe!ptio"s !ust %e sho2" to exist $learl a"d $ategori$all, a"d supported % $lear
legal pro1isio"s. 3" the $ase at %ar, the petitio"erKs sole refuge is se$tio" 1+ of 9ep. A$t
No. #+95 exe!pti"g fro!, a!o"g others, Iall i"$o!e taxes, fra"$hise taxes a"d realt
taxes to %e paid to the Natio"al 8o1er"!e"t, its pro1i"$es, $ities, !u"i$ipalities a"d
other go1er"!e"t age"$ies a"d i"stru!e"talities.I
3t is 2orth !e"tio"i"g that se$tio" 192 of the C8C e!po2ers the C8Hs, through
ordi"a"$es dul appro1ed, to gra"t tax exe!ptio"s, i"itiati1es or reliefs. <ut i" e"a$ti"g
se$tio" +7 of -rdi"a"$e No. 1#5*92 2hi$h i!poses a" a""ual fra"$hise tax
I"ot2ithsta"di"g a" exe!ptio" gra"ted % la2 or other spe$ial la2,I the respo"de"t
$it go1er"!e"t $learl did "ot i"te"d to exe!pt the petitio"er fro! the $o1erage
thereof.
5. oren6o vs. Posa/as, #4 Phil +5+
Fa,ts:
Tho!as Ea"le died i" 1922 i" La!%oa"ga lea1i"g a 2ill 2)$ pro1ided that0
• A" !o"e left %e gi1e" to "ephe2 4atthe2
• All real estate shall "ot %e sold or disposed of 10 ears after his death. 3t
shall %e !a"aged % the exe$utors. The pro$eeds shall %e gi1e" to
"ephe2 4atthe2 i" 3rela"d to %e used o"l for the edu$atio" of Ea"leAs
%rotherKs $hildre" a"d their des$e"da"ts.
• 10 ears after Tho!asA death, his propert %e gi1e" to 4atthe2 to %e
disposed of i" the 2a he thi"@s !ost ad1a"tageous.
3" 1924, the C:3 appoi"ted a" ad!i"istrator, 4oore, e1e"tuall repla$ed %
Core";o =after 4oore resig"ed>. C39 assessed the estate i"herita"$e taxes fro! the
ti!e of Tho!asA death i"$ludi"g pe"alties for deli&ue"$ i" pa!e"t =P2@M>. C39
filed a !otio" %efore the C:3 prai"g that the Core";o %e ordered to pa the said
a!ou"t. The !otio" 2as gra"ted. Core";o paid u"der protest a"d as@ed for a refu"d.
C39 refused to refu"d.
Iss)es: =a> ,he" does the i"herita"$e tax a$$rue a"d 2he" !ust it %e satisfied/
=%> 5hould the i"herita"$e tax %e $o!puted o" the %asis of the 1alue of
the estate at the ti!e of the testatorKs death, or o" its 1alue te" ears later/
=a>HP-N ?BATE
Core";o asserts that arti$le #57 of the Ci1il Code =6the rights to the su$$essio" of
a perso" are tra"s!itted fro! the !o!e"t of his death7> operates o"l i" so far as
for$ed heirs are $o"$er"ed.
E-,B(B9, there is "o disti"$tio" %et2ee" differe"t $lasses of heirs. The
Ad!i"istrati1e Code i!poses the tax upo" the tra"s!issio" of propert of a de$ede"t,
!ade effe$ti1e % his death. A" excise or privilege tax is i!posed o" the right to
su$$eed to, re$ei1e, or ta@e propert % or u"der a 2ill or the i"testa$ la2, or deed,
gra"t, or gift to %e$o!e operati1e at or after death. The propert %elo"gs to the heirs at
the !o!e"t of the death of the a"$estor as $o!pletel as if the a"$estor had exe$uted
a"d deli1ered to the! a deed for the sa!e %efore his death.
5i"$e Tho!as Ea"le died o" 4a 27, 1922, the i"herita"$e tax a$$rued as of
the date. Eo2e1er, it does "ot follo2 that the o%ligatio" to pa the tax arose as of the
date. The ti!e for the pa!e"t o" i"herita"$e tax is fixed % the 9e1ised Ad!i"istrati1e
Code 2)$ pro1ides that the pa!e"t !ust %e !ade %efore e"tra"$e i"to possessio" of
the propert of the fidei$o!!issar or $estui &ue trust. Thus, the tax should ha1e %ee"
paid %efore the deli1er of the properties to 4oore as trustee i" 1924.
=%> AT TEB T34B -: ?BATE
Plai"tiff $o"te"ds that the estate of Tho!as Ea"le $ould "ot legall pass to
4atthe2 u"til after the expiratio" of 10 ears fro! the death of the testator i" 1922 a"d
the i"herita"$e tax should %e %ased o" the 1alue of the estate i" 19+2.
Hpo" the death of the de$ede"t, su$$essio" ta@es pla$e a"d the right of the
estate to tax 1ests i"sta"tl. The tax should %e !easured % the 1alue of the estate as it
stood at the ti!e of the de$ede"tKs death, regardless of a" su%se&ue"t $o"ti"ge"$
1alue of a" su%se&ue"t i"$rease or de$rease i" 1alue, or the postpo"e!e"t of the
a$tual possessio" or e".o!e"t of the estate % the %e"efi$iar.
728 Co''issioner vs. Alg)e
As to purpose or o%.e$ti1e of taxatio"0
63t is said that taxes are 2hat 2e pa for $i1ili;atio" so$iet. ,ithout taxes, the
go1er"!e"t 2ould %e paral;ed for la$@ of the !oti1e po2er to a$ti1ate a"d operate it.
Ee"$e, despite the "atural relu$ta"$e to surre"der part of o"eKs hard ear"ed i"$o!e to
the taxi"g authorities, e1er perso" 2ho is a%le to !ust $o"tri%ute his share i" the
ru""i"g of the go1er"!e"t. The go1er"!e"t for its part, is expe$ted to respo"d i" the
for! of ta"gi%le a"d i"ta"gi%le %e"efits i"te"ded to i!pro1e the li1es of the people a"d
e"ha"$e their !oral a"d !aterial 1alues. This s!%ioti$ relatio"ship is the ratio"ale of
taxatio" a"d should dispel the erro"eous "otio" that it is a" ar%itrar !ethod of exa$tio"
% those i" the seat of po2er.7
9. PA vs. E$U, 1#4 5C9A +20
FACTS:
Philippi"e Airli"es 3"$. is e"gaged i" air tra"sportatio" %usi"ess u"der a
legislati1e fra"$hise 2herei" it is exe!pt fro! tax pa!e"t. PAC has "ot %ee" pai"g
!otor 1ehi$le registratio" si"$e 195#. 5u%se&ue"tl, the Ca"d 9egistratio"
Co!!issio"er re&uired all tax exe!pt e"tities i"$ludi"g PAC to pa !otor 1ehi$le
registratio" fees.
ISSUE: ,hether or "ot registratio" fees as to !otor 1ehi$les are taxes to 2hi$h PAC is
exe!pted.
RUI!G:
Taxes are for re1e"ue 2hereas fees are exa$tio"s for purposes of regulatio" a"d
i"spe$tio", a"d are for that reaso" li!ited i" a!ou"t to 2hat is "e$essar to $o1er the
$ost of the ser1i$es re"dered i" that $o""e$tio". 3t is the o%.e$t of the $harge, a"d "ot
the "a!e, that deter!i"es 2hether a $harge is a tax or a fee. The !o"e $olle$ted
u"der 4otor (ehi$le Ca2 is "ot i"te"ded for the expe"ditures of the 4( -ffi$e %ut
a$$rues to the fu"ds for the $o"stru$tio" a"d !ai"te"a"$e of pu%li$ roads, streets a"d
%ridges.
As fees are "ot $olle$ted for regulator purposes as a" i"$ide"t to the e"for$e!e"t of
regulatio"s go1er"i"g the operatio" of !otor 1ehi$les o" pu%li$ high2as %ut to pro1ide
re1e"ue 2ith 2hi$h the 8o1er"!e"t is to $o"stru$t a"d !ai"tai" pu%li$ high2as for
e1ero"eAs use, the are 1erita%le taxes, "ot !erel fees. PAC is thus exe!pt fro!
pai"g su$h fees, ex$ept for the period %et2ee" Du"e 27, 19#8 to April 9, 1979 2here
its tax exe!ptio" i" the fra"$hise 2as repealed.
:. Tolentino vs. Se,retar- o( Finan,e, =2+5 5C9A #+0, 249 5C9A #28>
August 25, 1994J -$to%er +0, 1995
Fa,ts:
There are 1arious suits $halle"gi"g the $o"stitutio"alit of 9A 771# o" 1arious
grou"ds.
The 1alue*added tax =(AT> is le1ied o" the sale, %arter or ex$ha"ge of goods a"d
properties as 2ell as o" the sale or ex$ha"ge of ser1i$es. 3t is e&ui1ale"t to 10' of the
gross selli"g pri$e or gross 1alue i" !o"e of goods or properties sold, %artered or
ex$ha"ged or of the gross re$eipts fro! the sale or ex$ha"ge of ser1i$es. 9epu%li$ A$t
No. 771# see@s to 2ide" the tax %ase of the existi"g (AT sste! a"d e"ha"$e its
ad!i"istratio" % a!e"di"g the Natio"al 3"ter"al 9e1e"ue Code.
A!o"g the Petitio"ers 2as the Philippi"e Press 3"stitute 2hi$h $lai! that 9.A.
771# 1iolates their press freedo! a"d religious li%ert, ha1i"g re!o1ed the! fro! the
exe!ptio" to pa (alue Added Tax. 3t is $o"te"ded % the PP3 that % re!o1i"g the
exe!ptio" of the press fro! the (AT 2hile !ai"tai"i"g those gra"ted to others, the la2
dis$ri!i"ates agai"st the press. At a" rate, it is a1erred, Ie1e" "o"dis$ri!i"ator
taxatio" of $o"stitutio"all guara"teed freedo! is u"$o"stitutio"al.I PP3 argued that the
(AT is i" the "ature of a li$e"se tax.
Iss)e: ,hether or "ot the purpose of the (AT is the sa!e as that of a li$e"se tax.
R)ling:
A li$e"se tax, 2hi$h, u"li@e a" ordi"ar tax, is !ai"l for regulatio". 3ts i!positio"
o" the press is u"$o"stitutio"al %e$ause it las a prior restrai"t o" the exer$ise of its
right. Ee"$e, although its appli$atio" to others, su$h those selli"g goods, is 1alid, its
appli$atio" to the press or to religious groups, su$h as the Deho1ahAs ,it"esses, i"
$o""e$tio" 2ith the latterAs sale of religious %oo@s a"d pa!phlets, is u"$o"stitutio"al. As
the H.5. 5upre!e Court put it, 6it is o"e thi"g to i!pose a tax o" i"$o!e or propert of a
prea$her. 3t is &uite a"other thi"g to exa$t a tax o" hi! for deli1eri"g a ser!o".7
The (AT is, ho2e1er, differe"t. It is not a li,ense tax. 3t is "ot a tax o" the
exer$ise of a pri1ilege, !u$h less a $o"stitutio"al right. 3t is i!posed o" the sale, %arter,
lease or ex$ha"ge of goods or properties or the sale or ex$ha"ge of ser1i$es a"d the
lease of properties purel for re1e"ue purposes. To su%.e$t the press to its pa!e"t is
"ot to %urde" the exer$ise of its right a" !ore tha" to !a@e the press pa i"$o!e tax
or su%.e$t it to ge"eral regulatio" is "ot to 1iolate its freedo! u"der the Co"stitutio".
;. C#C#FE$ vs. Rep)4li,, 89 Nos. 177857*58, Da"uar 24, 2012
FACTS:
3" 1971, 9epu%li$ A$t No. #2#0 2as e"a$ted $reati"g the Co$o"ut 3"1est!e"t
:u"d =C3:>. The sour$e of the C3: 2as a P0.55 le1 o" the sale of e1er 100 @g. of
$opra. The Philippi"e Co$o"ut Ad!i"istratio" 2as tas@ed to $olle$t a"d ad!i"ister the
:u"d. -ut of the 0.55 le1, P0.02 2as pla$ed at the dispositio" of the C-C-:B?, the
re$og"i;ed "atio"al asso$iatio" of $o$o"ut produ$ers de$lared % the PCA. Co$ofu"d
re$eipts 2ere ought to %e issued to e1er $opra seller.
?uri"g the 4artial Ca2 regi!e, the" Preside"t :erdi"a"d 4ar$os issued se1eral
Preside"tial ?e$rees purportedl for the i!pro1e!e"t of the $o$o"ut i"dustr. The !ost
rele1a"t a!o"g these is P.?. No. 755 2hi$h per!itted the use of the :u"d for the
6a$&uisitio" of a $o!!er$ial %a"@ for the %e"efit of $o$o"ut far!ers a"d the
/istri4)tion o( the shares o( the sto,< of the %a"@ it FPCAG a$&uired free to the
$o$o"ut far!ers7 =5e$.2>.
Thus, the PCA a$&uired the :irst H"ited <a"@, later re"a!ed the H"ited Co$o"ut
Pla"ters <a"@ =HCP<>. The PCA %ought the 72.2' of PH<As outsta"di"g $apital sto$@
or 1+7,8## shares at P200 per share =P27, 57+,200.00> fro! Pedro Co.ua"g$o in
ehalf of the coconut farmers.! The rest of the :u"d 2as deposited to the HCP< i"terest
free.
:ar!ers 2ho had paid the C3: a"d registered their re$eipts 2ith PCA 2ere gi1e"
their $orrespo"di"g HCP< sto$@ $ertifi$ates. -"l 1# !illio" 2orth of C-C-:HN?
re$eipts 2ere registered a"d a large "u!%er of the $o$o"ut far!ers opted to sell all)part
of their HCP< shares to pri1ate i"di1iduals.
5i!pl put, parts of the $o$o"ut le1 fu"ds 2e"t dire$tl or i"dire$tl to 1arious
pro.e$ts a"d)or 2as $o"1erted i"to differe"t assets or i"1est!e"ts through the ears.
After the B?5A 9e1olutio", Preside"t Cora;o" A&ui"o issued Bxe$uti1e -rder 1
2hi$h $reated the Preside"tial Co!!issio" o" 8ood 8o1er"!e"t =PC88>.
The PC88 ai!ed to assist the Preside"t i" the re$o1er of ill*gotte" 2ealth
a$$u!ulated % the 4ar$oses a"d their $ro"ies. PC88 2as e!po2ered to file $ases
for se&uestratio" i" the 5a"diga"%aa".
A!o"g the se&uestered properties 2ere the shares of sto$@ i" the HCP<
registered i" the "a!e of 6o1er a !illio" $o$o"ut far!ers7 held i" trust % the PCA. The
5a"diga"%aa" allo2ed the se&uestratio" % ruli"g i" a Partial 5u!!ar Dudg!e"t that
the Co$o"ut Ce1 :u"ds are prima facie pu%li$ fu"ds a"d that 5e$tio" 1 a"d 2 of P?
No. 755 =a"d so!e other P?s> 2ere u"$o"stitutio"al.
The C-C-:B? represe"ti"g the 6o1er a !illio" $o$o"ut far!ers7 1ia Petitio" for
re1ie2 u"der 9ule 45 sought the re1ersal of the ruli"g $o"te"di"g a!o"g others that the
se&uestratio" a!ou"ted to 6ta@i"g of pri1ate propert 2ithout .ust $o!pe"satio" a"d
i!pair!e"t of 1ested right of o2"ership.7
ISSUE: ,hat is the NATH9B of the Co$o"ut Ce1 :u"d/
RUI!G:
The 5C ruled i" fa1or of the REPU=IC.
To %egi" 2ith, the Co$o"ut Ce1 2as i!posed i" the exer$ise of the 5tateAs
i"here"t po2er of taxatio". 3"deed, the Co$o"ut Ce1 :u"ds parta@e the "ature of
TANB5. The :u"ds 2ere ge"erated % 1irtue of statutor e"a$t!e"ts % the proper
legislati1e authorities a"d for pu%li$ purpose.
The :u"ds 2ere $olle$ted to a/van,e the govern'ent avo>e/ poli,- o(
prote,ting the ,o,on)t in/)str-. The 5C too@ .udi$ial "oti$e of the fa$t that the
$o$o"ut i"dustr is o"e of the great e$o"o!i$ pillars of our "atio", a"d $o$o"uts a"d
their %produ$ts o$$up a leadi"g positio" a!o"g the $ou"triesA export produ$ts.
Taxatio" is do"e "ot !erel to raise re1e"ues to support the go1er"!e"t, %ut also to
pro1ide !ea"s for the reha4ilitation an/ the sta4ili6ation o( a threatene/ in/)str-,
2hi$h is so affe$ted 2ith p)4li, interest.
1?. .ohn #s'ena vs. #s,ar #r4os, 220 5C9A 70+
8.9. No0 9988#, 4ar$h +1, 199+
Fa,ts0
Pres. 4ar$os $reated 5pe$ial A$$ou"t i" the 8e"eral :u"d =P.?. 195#>,
desig"ated as the -il Pri$e 5ta%ili;atio" :u"d =-P5:>. The -P5: 2as desig"ed to
rei!%urse oil $o!pa"ies for $ost i"$reases i" $rude oil a"d i!ported petroleu!
produ$ts resulti"g fro! ex$ha"ge rate ad.ust!e"ts a"d fro! i"$reases i" the 2orld
!ar@et pri$es of $rude oil.. Pres. A&ui"o, a!e"ded a"d pro!ulgated B.-. No. 1+7,
expa"di"g the grou"ds for rei!%urse!e"t to oil $o!pa"ies for possi%le $ost
u"derre$o1er i"$urred as a result of the redu$tio" of do!esti$ pri$es of petroleu!
produ$ts, the a!ou"t of the u"derre$o1er %ei"g left for deter!i"atio" % the 4i"istr of
:i"a"$e. The petitio" $lai!ed that the status of the -P5: as of 4ar$h +1, 1991 sho2ed
a 6Ter!i"al <ala"$e ?efi$it7 of so!e P12.877 %illio" a"d to a%ate su$h, the B"erg
9egulator <oard issued a" -rder appro1i"g the i"$rease i" pu!p pri$es of petroleu!
produ$ts. The -P5: defi$it should ha1e %ee" full $o1ered i" a spa" of # !o"ths %ut
-s$ar -r%os, i" his $apa$it as Bxe$uti1e 5e$retarJDesus Bsta"islao, i" his $apa$it as
5e$retar of :i"a"$eJ ,e"$eslao de la Pa;, i" his $apa$it as Eead of the -ffi$e of
B"erg AffairsJ Chair!a" 9ex (. Ta"tio"g$o a"d the B"erg 9egulator <oard O are
poised to a$$ept, pro$ess a"d pa $lai!s "ot authori;ed u"der P.?. 195#.
Iss)e: ,hat is the purpose of the -il Pri$e 5ta%ili;atio" :u"d/
RUI!G:
The -P5: is a ITrust A$$ou"tI 2hi$h 2as esta%lished 6for the purpose of
!i"i!i;i"g the fre&ue"t pri$e $ha"ges %rought a%out % ex$ha"ge rate ad.ust!e"t
a"d)or $ha"ges i" 2orld !ar@et pri$es of $rude oil a"d i!ported petroleu! produ$ts.7 3t
is $lear that 2hile the fu"ds $olle$ted !a %e referred to as taxesJ the are exa$ted i"
the exer$ise of the poli$e po2er of the 5tate. 4oreo1er, that the -P5: is a spe$ial fu"d
is plai" fro! the spe$ial treat!e"t gi1e" it % B.-. 1+7. 3t is segregated fro! the ge"eral
fu"dJ a"d 2hile it is pla$ed i" 2hat the la2 refers to as a Itrust lia%ilit a$$ou"t,I the fu"d
"o"etheless re!ai"s su%.e$t to the s$ruti" a"d re1ie2 of the C-A. The Court is
satisfied that these !easures $o!pl 2ith the $o"stitutio"al des$riptio" of a Ispe$ial
fu"d.I
The Court $ited (al!o"te 1. B9< a"d 8asto" 1. 9epu%li$ Pla"ters <a"@, 6The tax
$olle$ted is "ot i" a pure exer$ise of the taxi"g po2er. 3t is le1ied 2ith a regulator
purpose, to pro1ide a !ea"s for the sta%ili;atio" of the sugar =petroleu! produ$ts>
i"dustr. The le1 is pri!aril i" the exer$ise of the poli$e po2er of the 5tate.
11. CATE@ P*IIPPI!ES, I!C. vs. T*E *#!#RA=E C#MMISSI#! #! AU$IT,
*#!#RA=E C#MMISSI#!ER =ART##ME C. FER!A!$E+ an/ *#!#RA=E
C#MMISSI#!ER A=ERT# P. CRU+, 8.9. No. 92585, 4a 8, 1992
FACTS: -" :e%ruar 2, 1989, the Co!!issio" o" Audit =C-A> se"t a letter to
Caltex re&uesti"g the latter to re!it its tax $o"tri%utio"s a!ou"ti"g to P++5,0+7,#49 to
-il Pri$e 5ta%ili;atio" :u"d =-P5:> pursua"t to 5e$tio" 8 of P.?. No. 195#. A"other
letter 2as se"t to the petitio"er, stati"g that the total a!ou"t of its u"re!itted tax 2as
P1,287,##8,820.00 fro! 198#*1988 as 1erified % the -ffi$e of B"erg Affairs =-BA>.
?e"i"g su$h re&uest, Caltex a"s2ered to C-AAs letters as@i"g -BA for earl
release of rei!%urse!e"t $ertifi$ates fro! -P5:. C-A de"ied petitio"erAs re&uest %ut
i"stead as@ed Caltex to re!it its $olle$tio". As a repl, Caltex ga1e a proposal for its
pa!e"t %ased o" P? 195#, as a!e"ded % B.- 1+7J ?epart!e"t of :i"a"$e Cir$ular
No.
1*87J the Ne2 Ci1il Code as to $o!pe"satio"J a"d the 9e1ised Ad!i"istrati1e Code.
C-A a$$epted the proposal ex$ept those !atters i"1ol1i"g offsetti"g the re!itta"$es
a"d rei!%urse!e"ts.
Pursua"t to su$h agree!e"t, C-A i"for!ed -BA as to CaltexAs re!itta"$es
a!ou"ti"g to P1, 505,##8,90# to -P5: a"d allo2i"g -BA to rei!%urse Caltex the
a!ou"t of P1, 959,182,#12. Caltex, ho2e1er, disagreed 2ith su$h arra"ge!e"t. Caltex
there% i"sisted that its re!itta"$es a"d rei!%urse!e"ts !ust %e offset. <ut C-A
disregarded su$h $o"te"tio" holdi"g as a %asis the $ase of Francia vs. IAC and
Fernandez, argui"g that -P5: is "ot i" the for! of taxatio", therefore "ot for re1e"ue
purposes.
ISSUE: ,hether or "ot -P5: $o"tri%utio"s are for "o"*re1e"ue purposes of the
go1er"!e"t a"d it is still i" the for! of taxatio".

RUI!G:
PB5, -P5: are for "o"*re1e"ue purposes a"d is i" the "ature of taxes.
The 5upre!e Court fou"d "o !erit i" petitio"erKs $o"te"tio" that the -P5:
$o"tri%utio"s are "ot for a pu%li$ purpose %e$ause the go to a spe$ial fu"d of the
go1er"!e"t. Taxation is no longer envisione/ as a 'eas)re 'erel- to raise
reven)e to s)pport the existen,e o( the govern'entA taxes 'a- 4e levie/ >ith a
reg)lator- p)rpose to provi/e 'eans (or the reha4ilitation an/ sta4ili6ation o( a
threatene/ in/)str- >hi,h is a((e,te/ >ith p)4li, interest as to 4e >ithin the
poli,e po>er o( the state. There $a" %e "o dou%t that the oil i"dustr is greatl i!%ued
2ith pu%li$ i"terest as it 1itall affe$ts the ge"eral 2elfare. A" u"regulated i"$rease i"
oil pri$es $ould hurt the li1es of a !a.orit of the people a"d $ause e$o"o!i$ $risis of
u"told proportio"s. 3t 2ould ha1e a $hai" rea$tio" i" ter!s of, a!o"g others, de!a"ds
for 2age i"$reases a"d up2ard spiralli"g of the $ost of %asi$ $o!!odities. The
sta%ili;atio" the" of oil pri$es is of pri!e $o"$er" 2hi$h the state, 1ia its poli$e po2er,
!a properl address.
Also, P.?. No. 195#, as a!e"ded % B.-. No. 1+7, expli$itl pro1ides that the
sour$e of -P5: is taxatio". No a!ou"t of se!a"ti$al .uggleries $ould di! this fa$t.
1". ESS# STA!$AR$ EASTER!, I!C., 7(or'erl-, Stan/ar/B%a,))' #il Co'pan-8,
vs. T*E C#MMISSI#!ER #F I!TER!A RE%E!UE. 8.9. Nos. C*28508*9 Dul 7,
1989
Fa,ts: The CTA de"ied B55-As $lai!s for refu"d of o1erpaid i"$o!e taxes of
P102, 24#.00 for 1959 a"d P4+4,2+4.9+ for 19#0 i" CTA Cases No. 1251 a"d 1558
respe$ti1el.
3" CTA Case No. 1251, petitio"er B55- dedu$ted fro! its gross i"$o!e for
1959, as part of its ordi"ar a"d "e$essar %usi"ess expe"ses, the a!ou"t it had spe"t
for drilli"g a"d exploratio" of its petroleu! $o"$essio"s. This $lai! 2as disallo2ed %
the respo"de"t Co!!issio"er of 3"ter"al 9e1e"ue o" the grou"d that the expe"ses
should %e $apitali;ed a"d !ight %e 2ritte" off as a loss o"l 2he" a Idr holeI should
result. B55- the" filed a" a!e"ded retur" 2here it as@ed for the refu"d of P+2+,279.00
% reaso" of its a%a"do"!e"t as dr holes of se1eral of its oil 2ells a"d $lai!ed as
ordi"ar a"d "e$essar expe"ses the !argi" fees paid to the Ce"tral <a"@ o" profit
re!itta"$es to its Ne2 Por@ head offi$e.
3" CTA Case No. 1558, the C9 assessed B55- a defi$ie"$ i"$o!e tax for the
ear 19#0 arisi"g fro! the disallo2a"$e of the !argi" fees paid % B55- to the Ce"tral
<a"@ o" its profit re!itta"$es to its Ne2 Por@ head offi$e. B55- settled the sa!e %
appli"g as tax $redit its o1erpa!e"t o" its i"$o!e tax i" 1959 a"d pai"g u"der
protest the re!ai"i"g a!ou"t.
The C39 de"ied the $lai!s for refu"d of the o1erpa!e"t of its 1959 a"d 19#0
i"$o!e taxes, holdi"g that the !argi" fees paid to the Ce"tral <a"@ $ould "ot %e
$o"sidered taxes or allo2ed as dedu$ti%le %usi"ess expe"ses.
Iss)e: ,-N the !argi" fees 2ere dedu$ti%le fro! gross i"$o!e as a tax or a" ordi"ar
a"d "e$essar %usi"ess expe"se.
RUI!G:
The 'argin (ee >as i'pose/ 4- the State in the exer,ise o( its poli,e po>er
an/ not the po>er o( taxation. There are at least t2o $ases 2here 2e ha1e held that a
!argi" fee is "ot a tax %ut a" exa$tio" desig"ed to $ur% the ex$essi1e de!a"ds upo"
our i"ter"atio"al reser1e. 3" Caltex "#hil.$ Inc. v. Acting Commissioner of Customs, the
Court stated through Dusti$e Dose P. <e"g;o"0
6A !argi" le1 o" foreig" ex$ha"ge is a for! of ex$ha"ge $o"trol or restri$tio"
desig"ed to dis$ourage i!ports a"d e"$ourage exports, a"d ulti!atel, K$urtail a"
ex$essi1e de!a"d upo" the i"ter"atio"al reser1eK i" order to sta%ili;e the $urre"$. <
its "ature, the !argi" le1 is part of the rate of ex$ha"ge as fixed % the
go1er"!e"t.64oreo1er, it has %ee" settled that a tax is le1ied to pro1ide re1e"ue for
go1er"!e"t operatio"s, 2hile the pro$eeds of the !argi" fee are applied to stre"gthe"
our $ou"trKs i"ter"atio"al reser1es.
The 'argin (ees are not or/inar- an/ ne,essar- 4)siness expenses.
Assu!i"g that the expe"diture is ordi"ar a"d "e$essar i" the operatio" of the
taxpaerKs %usi"ess, the a"s2er to the &uestio" as to 2hether the expe"diture is a"
allo2a%le dedu$tio" as a %usi"ess expe"se !ust %e deter!i"ed fro! the "ature of the
expe"diture itself, 2hi$h i" tur" depe"ds o" the exte"t a"d per!a"e"$ of the 2or@
a$$o!plished % the expe"diture.
The Court held that the CTA 2as $orre$t i" sai"g that the !argi" fees are "ot
expe"ses i" $o""e$tio" 2ith the produ$tio" or ear"i"g of petitio"erKs i"$o!es i" the
Philippi"es. 65i"$e the !argi" fees i" &uestio" 2ere i"$urred for the re!itta"$e of fu"ds
to petitio"erKs Eead -ffi$e i" Ne2 Por@, 2hi$h is a separate a"d disti"$t i"$o!e
taxpaer fro! the %ra"$h i" the Philippi"es, for its disposal a%road, it $a" "e1er %e said
therefore that the !argi" fees 2ere appropriate a"d helpful i" the de1elop!e"t of
petitio"erKs %usi"ess i" the Philippi"es ex$lusi1el or 2ere i"$urred for purposes proper
to the $o"du$t of the affairs of petitio"erKs %ra"$h i" the Philippi"es ex$lusi1el or for the
purpose of reali;i"g a profit or of !i"i!i;i"g a loss i" the Philippi"es ex$lusi1el.7
7:8 Tolentino vs. Se,retar- o( Finan,e, =2+5 5C9A #+0, 249 5C9A #28>
As to 3"dire$t a"d ?ire$t Taxes
The Co"stitutio" does "ot reall prohi%it the i!positio" of i"dire$t taxes 2hi$h,
li@e the (AT, are regressi1e. ,hat it si!pl pro1ides is that Co"gress shall Ie1ol1e a
progressi1e sste! of taxatio".I The $o"stitutio"al pro1isio" has %ee" i"terpreted to
!ea" si!pl that Idire$t taxes are Q to %e preferred FRG as !u$h as possi%le, i"dire$t
taxes should %e !i"i!i;ed.I 3"deed, the !a"date to Co"gress is "ot to pres$ri%e, %ut
to e1ol1e, a progressi1e tax sste!. -ther2ise, sales taxes, 2hi$h perhaps are the
oldest for! of i"dire$t taxes, 2ould ha1e %ee" prohi%itedQ 5ales taxes are also
regressi1e.
69esort to i"dire$t taxes should %e !i"i!i;ed %ut "ot a1oided e"tirel %e$ause it
is diffi$ult, if "ot i!possi%le, to a1oid the! % i!posi"g su$h taxes a$$ordi"g to the
taxpaersK a%ilit to pa. 3" the $ase of the (AT, the la2 !i"i!i;es the regressi1e effe$ts
of this i!positio" % pro1idi"g for ;ero rati"g of $ertai" tra"sa$tio"s, 2hile gra"ti"g
exe!ptio"s to other tra"sa$tio"s.7
1&. Ernesto M. Ma,e/a, vs. *on. Catalino Ma,araig, .r., 8.9. No. 88291 4a +1,
1991
Fa,ts:
Co!!o"2ealth A$t 120 $reated NAP-C-9 as a pu%li$ $orporatio" to u"derta@e
the de1elop!e"t of hdrauli$ po2er a"d the produ$tio" of po2er fro! other sour$es.
9A +58 =1949> gra"ted NAP-C-9 tax a"d dut exe!ptio" pri1ileges. 9A #+95 =1971>
re1ised the $harter of the NAP-C-9, tas@i"g it to $arr out the poli$ of the "atio"al
ele$trifi$atio", a"d pro1ided i" detail NAP-C-9As tax ex$eptio"s. P? +80 =1974>
spe$ified that NAP-C-9As exe!ptio" i"$ludes all taxes, et$. i!posed 6dire$tl or
i"dire$tl.7 P? 9+8 i"tegrated the exe!ptio"s i" fa1or of 8-CCs i"$ludi"g their
su%sidiariesJ however, empowering the President or the Minister of Finance, upon
recommendation of the Fiscal Incentives eview !oard "FI!# to restore, partially
or completely, the exemptions withdrawn or revised. The :39< issued 9esolutio"
10*85 =7 :e%ruar 1985> restori"g the dut a"d tax exe!ptio"s pri1ileges of NAP-C-9
for period 11 Du"e 1984* +0 Du"e 1985. 9esolutio" 1*8# =1Da"uar 198#> restored su$h
exe!ptio" i"defi"itel effe$ti1e 1 Dul 1985. B- 9+ =1987> agai" 2ithdre2 the
exe!ptio". :39< issued 9esolutio" 17*87 =24 Du"e 1987> restori"g NAP-C-9As
exe!ptio", 2hi$h 2as appro1ed % the Preside"t o" 5 -$to%er 1987.
5i"$e 197#, oil fir!s "e1er paid ex$ise or spe$ifi$ a"d ad 1alore! taxes for
petroleu! produ$ts sold a"d deli1ered to NAP-C-9. -il $o!pa"ies started to pa
spe$ifi$ a"d ad 1alore! taxes o" their sales of oil produ$ts to NAP-C-9 o"l i" 1984.
!AP#C#R ,lai'e/ (or a re()n/ 7P25:.3: 'illion8. -"l portio" thereof,
$orrespo"di"g to Caltex, 2as appro1ed a"d released % 2a of a tax $redit !e!o. The
$lai! for refu"d of taxes paid % PetroPhil, 5hell a"d Caltex a!ou"ti"g to P410.58
!illio" 2as de"ied. NAP-C-9 !o1ed for re$o"sideratio", starti"g that all deli1eries of
petroleu! produ$ts to NAP-C-9 are tax exe!pt, regardless of the period of deli1er.
ISSUE: 1hether or not !PC is exe'pte/ (ro' pa-ing in/ire,t tax.
R)ling:
The NPC is exe!pted to pa i"dire$t taxes. The $ourt disti"guish dire$t tax fro!
i"dire$t tax.
a. ?ire$t Tax O that 2here the perso" supposed to pa the tax reall pas
it. %I&'(U& tra"sferri"g the %urde" to so!eo"e else.
%. 3"dire$t Tax O that 2here the tax is i!posed upo" goods )*F(+* rea$hi"g
the $o"su!er 2ho ulti!atel pas for it, "ot as a tax, %ut as a part
of the pur$hase pri$e.
The !ai" thrust of the petitio" is that u"der the latest a!e"d!e"t to the NPC
$harter % Preside"tial ?e$ree No. 9+8, the exe!ptio" of NPC fro! i"dire$t taxatio"
2as re1o@ed a"d repealed. The exe!ptio" of NPC fro! pa!e"t of taxes u"der P?
9+8 2as expressed i" ge"eral ter! 6ACC :-945 -: TANB57 2herei" there is a
deletio" of the phrases Idire$tl or i"dire$tlI 2hi$h is stated u"der Preside"tial ?e$ree
No. +80 that is repealed a"d a!e"ded % P? 9+8.
The use of the phrase Iall for!sI of taxes de!o"strate the i"te"tio" of the la2 to
gi1e NPC all the tax exe!ptio"s it has %ee" e".oi"g %efore. The ratio"ale for this
exe!ptio" is that %ei"g "o"*profit pu%li$ $orporatio" $reated for the ge"eral good a"d
2elfare 2holl o2"ed % the go1er"!e"t of the 9epu%li$ of the Philippi"es the NPC
Ishall de1ote all its retur"s fro! its $apital i"1est!e"t as 2ell as ex$ess re1e"ues fro!
its operatio", for expa"sio" to e"a%le the Corporatio" to pa the i"de%ted"ess a"d
o%ligatio"s a!ou"ti"g to P12 <illio" i" total do!esti$ i"de%ted"ess, at a" o"e ti!e,
a"d HS4 <illio" i" total foreig" loa"s at a" o"e ti!e, as of P? 9+8. The NPC !ust %e
a"d has to %e exe!pt fro! all for!s of taxes if this goal is to %e a$hie1ed.
12. C#MMISSI#!ER #F I!TER!A RE%E!UE, vs. .#*! G#TAMC# C S#!S, I!C.
an/ T*E C#URT #F TA@ APPEAS, 8.9. No. C*+1092 :e%ruar 27, 1987
Fa,ts:
The ,orld Eealth -rga"i;atio" is a" i"ter"atio"al orga"i;atio" 2hi$h e".os
pri1ileges a"d i!!u"ities u"der the Eost Agree!e"t e"tered i"to %et2ee" the
Philippi"es 2hi$h pro1ides that the -rga"i;atio", its assets, i"$o!e a"d other
properties shall %e exe!pt fro! all dire$t a"d i"dire$t taxes.
,he" the ,E- de$ided to $o"stru$t a %uildi"g to house its o2" offi$es statio"ed
i" 4a"ila, it e"tered i"to a further agree!e"t 2ith the 8o1er"!e"t that the -rga"i;atio"
!a i!port i"to the $ou"tr !aterials a"d fixtures re&uired for the $o"stru$tio" free fro!
all duties a"d taxes a"d agrees "ot to utili;e a" portio" of the i"ter"atio"al reser1es of
the 8o1er"!e"t.
3" i"1iti"g %ids for the $o"stru$tio" of the %uildi"g, the ,E- i"for!ed the %idders
that the %uildi"g to %e $o"stru$ted %elo"ged to a" i"ter"atio"al orga"i;atio" 2ith
diplo!ati$ status a"d thus exe!pt fro! the pa!e"t of all fees, li$e"ses, a"d taxes.
The $o"stru$tio" $o"tra$t 2as a2arded to respo"de"t Doh" 8ota!$o R 5o"s, 3"$. for
the stipulated pri$e of P+70,000.00, %ut 2he" the %uildi"g 2as $o!pleted the pri$e
rea$hed a total of P452,544.00.
5o!eti!e i" 4a 1958, the ,E- re$ei1ed a" opi"io" fro! the Co!!issio"er of
the <ureau of 3"ter"al 9e1e"ue stati"g that as the +' $o"tra$torKs tax is a" i"dire$t tax
o" the assets a"d i"$o!e of the -rga"i;atio" a"d thus, are exe!pt fro! tax i"
a$$orda"$e 2ith the Eost Agree!e"t. 5u%se&ue"tl, o" Du"e +, 1958, the
Co!!issio"er of 3"ter"al 9e1e"ue re1ersed his opi"io" a"d stated that as the +'
$o"tra$torKs tax is "ot a dire$t "or a" i"dire$t tax o" the ,E-, %ut a tax that is pri!aril
due fro! the $o"tra$tor, the sa!e is "ot $o1ered % the Eost Agree!e"t.
3" Da"uar 17, 19#1, the Co!!issio"er of 3"ter"al 9e1e"ue se"t a letter of
de!a"d to 8ota!$o de!a"di"g pa!e"t of P 1#,970.40, represe"ti"g the +'
$o"tra$torKs tax plus sur$harges o" the gross re$eipts.
9espo"de"t 8ota!$o appealed the Co!!issio"erKs de$isio" to the Court of Tax
Appeals, 2hi$h after trial re"dered a de$isio", i" fa1or of 8ota!$o.
Ee"$e, this appeal.
Iss)e: ,hether or "ot respo"de"t Doh" 8ota!$o R 5o"s, 3"$. should pa the +'
$o"tra$torKs tax u"der 5e$tio" 191 of the Natio"al 3"ter"al 9e1e"ue Code.
R)ling: Petitio"erKs positio" is that the $o"tra$torKs tax is i" the "ature of a" ex$ise tax
2hi$h is a $harge i!posed upo" the perfor!a"$e of a" a$t, the e".o!e"t of a pri1ilege
or the e"gagi"g i" a" o$$upatio". 3t is a tax due pri!aril a"d dire$tl o" the $o"tra$tor,
"ot o" the o2"er of the %uildi"g. 5i"$e this tax has "o %eari"g upo" the ,E-, it $a""ot
%e dee!ed a" i"dire$t taxatio" upo" it.
13. Sil<air 7Singapore8 Pte, t/. vs. Co''issioner #( Internal Reven)e, 8.9. No.
17+594, :e%ruar 0#, 2008
Fa,ts:
5il@air =5i"gapore> Pte., Ctd., a 5i"gaporea" $orporatio" e"gaged i" i"ter"atio"al
air $arriage, filed 2ith the <ureau of 3"ter"al 9e1e"ue a" appli$atio" for the refu"d of
P2,359,23?.9; ex$ise taxes paid for .et fuel fro! Petro" Corporatio" fro! Da"uar to
Du"e 2000. 3t %ased its $lai! fro! 5e$tio" 1+5 of the 1997 N39C, a"d Arti$le 4=2> of the
Air Tra"sport Agree!e"t %et2ee" 9P a"d 5i"gapore. <39 has "ot a$ted upo" said
appli$atio" so 5il@air filed a Petitio" for 9e1ie2 2ith the Court of Tax Appeals, 5e$o"d
?i1isio". <39 opposed said petitio" o" the grou"d that the ex$ise tax o" petroleu!,
%ei"g a dire$t lia%ilit of the !a"ufa$turer or produ$er, %e$o!es part of the pri$e 2he"
added to the $ost of said good sold to the %uer. CTA, 5e$o"d ?i1isio", i" its de$isio"
o" 27 4a 2005, dis!issed said petitio" o" the grou"d that the latter is "ot the proper
$lai!a"t, a"d li@e2ise de"ied 5il@airAs su%se&ue"t 4otio" for 9e$o"sideratio" therefor.
5u%se&ue"tl, 5il@airAs Petitio" for 9e1ie2 %efore CTA B" <a"$ 2as dis!issed for %ei"g
filed out of ti!e. Asso$iate Dusti$e CastaTeda, Dr. also stated i" his 5eparate Co"$urri"g
-pi"io" that 5il@air is "ot the proper part for the $lai!. 5il@air filed a"other 4otio" for
9e$o"sideratio" 2hi$h CTA B" <a"$ de"ied. Ee"$e, this Petitio" for 9e1ie2.
Iss)e: ,hether or "ot 5il@air is the proper part to $lai! for the tax $redit.
R)ling:
No, 5il@air is "ot the proper $lai!a"t for the tax $redit.
A. #etron Corporation is the proper claimant. 5C held that the proper part to $lai!
refu"d of the tax $redit 6is the statutory taxpayer, the perso"Q 2ho paid Fsaid
tax i!posed % la2G e1e" if he shifts the %urde" thereof to a"other.7 5e$tio" 1+0
=A> =2> thus pro1ides 6FuG"less other2ise spe$ifi$all allo2ed, the retur" shall %e
filed a"d the ex$ise tax paid % the !a"ufa$turer or produ$er %efore re!o1al of
do!esti$ produ$ts fro! pla$e of produ$tio".7 Petro", "ot 5il@air, is thus the o"e
e"titled to $lai! refu"d %ased o" 5e$tio" 1+5 of the N39C of 1997 a"d Arti$le
4=2> of the Air Tra"sport Agree!e"t %et2ee" 9P a"d 5i"gapore. The tax %urde"
passed % Petro" to 5il@air is "o lo"ger a tax %ut a part of the pur$hase pri$e.
The %est that 5il@air !a do, if allo2ed, is o"l to see@ rei!%urse!e"t of the tax
%urde" fro! Petro".
<. *xemption granted , law does not include indirect taxes. A" i"dire$t tax, i.e.,
ex$ise tax o" petroleu! produ$ts, is that i" 2hi$h the i"$ide"$e of taxatio"
=perso" statutoril lia%le to pa> falls o" o"e perso", a"d the i!pa$t of taxatio"
=%urde" of taxatio"> falls o" a"other. 5C ruled that 6FtGhe exe!ptio" gra"ted
u"der 5e$tio" 1+5 =%> of the N39C of 1997 a"d Arti$le 4=2> of the Air Tra"sport
Agree!e"t %et2ee" 9P a"d 5i"gapore $a""ot, 2ithout a $lear sho2i"g of
legislati1e i"te"t, %e $o"strued as i"$ludi"g i"dire$t taxes.7 5C further explai"ed
that 6FsGtatutes gra"ti"g tax exe!ptio"s !ust %e $o"strued i" strictissimi -uris
agai"st the taxpaer a"d li%erall i" fa1or of the taxi"g authorit, a"d if a"
exe!ptio" is fou"d to exist, it !ust "ot %e e"larged % $o"stru$tio".7
5il@airAs petitio" is ?BN3B?.
15. Co''issioner o( Internal Reven)e vs. Co)rt #( Appeals, Atlas
Consoli/ate/ Mining an/ $evelop'ent Corporation, an/ Co)rt o( Tax
Appeals
8.9. No. 104151, 4ar$h 10, 1995
Fa,ts: Atlas Co"slidated 4i"i"g a"d ?e1elop!e"t Corporatio" =AC4?C> is a
do!esti$ $orporatio" 2hi$h o2"s a"d operates a !i"i"g $o"$essio" at Toledo Cit,
Ce%u, the produ$ts of 2hi$h are exported to Dapa" a"d other foreig" $ou"tries. -" April
9, 1980 a"d 5epte!%er 2+, 1980, the Co!!issio"er of 3"ter"al 9e1e"ue =C39>, $aused
the ser1i$e of a" assess!e"t "oti$e a"d de!a"d for pa!e"t of the a!ou"t of
P12,+91,070.51 a"d P1+,5+1,4##.80 represe"ti"g defi$ie"$ ad valorem per$e"tage
a"d fixed taxes, i"$ludi"g i"$re!e"ts, 2ith P5,000.00 $o!pro!ise pe"alt for the
taxa%le ear 1975 a"d 197#, respe$ti1el, agai"st AC4?C.
AC4?C protested %oth assess!e"ts %ut the sa!e 2ere de"ied he"$e it filed t2o
separate petitio"s for re1ie2 i" the Court of Tax Appeals =CTA> 2hi$h 2ere e1e"tuall
$o"solidated.
CTA0 5ustai"ed the $o"te"tio" of AC4?C that i" $o!puti"g the ad valorem tax
o" $opper !i"eral, the refi"i"g a"d s!elti"g $harges should %e dedu$ted, i" additio" to
freight a"d i"sura"$e $harges, fro! the Co"do" 4etal Bx$ha"ge =C4B> pri$e of
!a"ufa$tured $opper.
Eo2e1er, the CTA held AC4?C lia%le for the a!ou"t of P1,572,#+7.48, ex$lusi1e
of i"terest, $o"sisti"g of 25' sur$harge for late pa!e"t of the ad valorem tax o" No1 U
?e$ 1975 a"d taxa%le ear 197#, a"d late fili"g of "oti$e of re!o1al of sil1er, gold a"d
prite extra$ted duri"g $ertai" periods, a"d for alleged defi$ie"$ !a"ufa$turerKs sales
tax a"d $o"tra$torKs tax.
<oth parties ele1ated their respe$ti1e $o"te"tio"s to the CA 1ia petitio"s for
re1ie2. C39 &uestio"ed the .udg!e"t deleti"g the ad valorem tax o" $opper a"d sil1er,
2hile AC4?C assailed that part of the de$isio" orderi"g it to pa P1,572,#+7.48
represe"ti"g alleged defi$ie"$ assess!e"t.
CA0 ?is!issed the petitio" of the C39 a"d affir!ed the de$isio" of the CTA i" the
$o!putatio" of ad 1alore! tax. 3t also redu$ed the lia%ilit of AC4?C % deleti"g the
25' sur$harge o" sil1er, gold, a"d prite extra$ted duri"g the period No1e!%er 1, 1974
to ?e$e!%er +1, 1975.
Iss)es:
1. ,hether or "ot refi"i"g a"d s!elti"g $harges should %e dedu$ted i" $o!puti"g
the ad 1alore! tax of AC4?C.
2. ,hether or "ot AC4?C is lia%le for the 25' sur$harge for alleged late fili"g of
"oti$e of re!o1al)late pa!e"t of the ad valorem tax o" sil1er, gold a"d prite extra$ted
duri"g the taxa%le ear 197#.
+. ,hether or "ot AC4?C is lia%le for !a"ufa$turerAs tax for selli"g gri"di"g steel
%alls.
4. ,hether or "ot AC4?C is lia%le for $o"tra$torAs tax for leasi"g its pla"e, !otor
%oat, a"d du!p tru$@.
R)ling:
1. Pes, the refi"i"g a"d s!elti"g $harges should %e dedu$ted i" $o!puti"g the ad
1alore! tax of AC4?C.
Ad valorem tax=defi"itio" i" 5e$ 24+ of the N39C> of 2' is to %e $o!puted o"
the %asis of the !ar@et 1alue of the !i"eral i" its $o"ditio" at the ti!e of su$h re!o1al
a"d %efore it u"dergoes a $he!i$al $ha"ge through !a"ufa$turi"g pro$ess.3t is a tax
"ot o" the !i"erals, %ut %ei"g a severan,e tax, it is $harge upo" the pri1ilege of
se1eri"g or extra$ti"g the !i"eral fro! the earth, the go1er"!e"tKs right to exa$t the
said i!post spri"gi"g fro! the 9egalia" theor of 5tate o2"ership of its "atural
resour$es.
A re1ie2 of the re$ords sho2ed that it 2as the Co"do" 4etal Bx$ha"ge pri$e o"
2ire %ar =a fi"ish produ$t of $opper, that had alread u"dergo"e pro$essi"g> that 2as
used as tax %ase % AC4?C for purposes of the 2' ad valorem tax o" $opper
$o"$e"trates si"$e there 2as "o a1aila%le !ar@et pri$e &uotatio" i" the $o!!odit
ex$ha"ge or !ar@ets of the 2orld for $opper $o"$e"trates "or 2as there a" !ar@et
&uotatio" lo$all o%tai"a%le.
Therefore, the i!posa%le ad valorem tax should %e %ased o" the selli"g pri$e of
the &uarried ra2 !i"erals, 2hi$h is its a$tual !ar@et 1alue, a"d "ot o" the pri$e of the
!a"ufa$tured produ$t. 3f the !ar@et 1alue $hose" for the re$@o"i"g is the 1alue of the
!a"ufa$tured or fi"ished produ$t, as i" the $ase at %ar, the" all expe"ses of pro$essi"g
or !a"ufa$turi"g should %e dedu$ted i" order to approxi!ate as $losel as is hu!a"l
possi%le the a$tual !ar@et 1alue of the ra2 !i"eral at the !i"e site.
2. Pes, AC4?C is lia%le for 25' sur$harge for the alleged late fili"g of "oti$e of
re!o1al)late pa!e"t of the ad valorem tax o" sil1er, gold a"d prite extra$ted duri"g
the taxa%le ear 197#.
H"der 5e$ 245 of the N39C, the pa!e"t of the ad valorem tax shall %e !ade
upo" re!o1al of the !i"eral produ$ts fro! the !i"e site or if pa!e"t $a""ot %e !ade,
% fili"g a %o"d i" the for! a"d a!ou"t to %e appro1ed % the Co!!issio"er
$o"ditio"ed upo" the pa!e"t of the said tax.
8i1e" the fa$t that AC4?C has the $apa%ilit, as testified % its a"alst, of deter!i"i"g
the esti!ated sil1er, gold, a"d prite $o"te"t of a" ore %efore it is a$tuall pro$essed for
separatio", %elie AC4?CAs $o"te"tio" that it should "ot %e re&uired to pa the 25'
sur$harge %e$ause the $orre$t &ua"tit of gold a"d sil1er $ould %e deter!i"ed o"l after
the $opper $o"$e"trates had go"e through the pro$ess of s!elti"g a"d refi"i"g i" Dapa"
2hile the a!ou"t of prite $a""ot %e deter!i"ed u"til after the flotatio" pro$ess
separati"g the $opper !i"eral fro! the 2aste !aterial 2as fi"ished.
+. No, AC4?C is "ot lia%le for !a"ufa$turerAs tax.
H"der the tax $ode =5e 18#>, the 7' !a"ufa$turerKs sales tax, 2hi$h is a" ex$ise
tax, is i!posed o" the !a"ufa$turer for e1er origi"al sale, %arter, ex$ha"ge a"d other
si!ilar tra"sa$tio" i"te"ded to tra"sfer o2"ership of arti$les. A I!a"ufa$turerI is defi"ed
as i"$ludi"g Ie1er perso" 2ho % phsi$al or $he!i$al pro$ess alters the exterior
texture or for! or i""er su%sta"$e of a" ra2 !aterial or !a"ufa$tured or partiall
!a"ufa$tured produ$t i" su$h !a""er as to prepare it for a spe$ial use or uses to 2hi$h
it $ould "ot ha1e %ee" put i" its origi"al $o"ditio" =Q> to produ$e su$h fi"ished produ$ts
for the purpose of their sale or distri%utio" to others a"d "ot for his o2" use or
$o"su!ptio".
3t $a""ot %e legall assertedthat AC4?C 2as e"gaged i" the %usi"ess of selli"g
gri"di"g steel %alls o" the %asis of the isolated tra"sa$tio" e"tered i"to % it i" 1975.
There is "o sho2i"g that said tra"sa$tio" 2as u"derta@e" % AC4?C 2ith a 1ie2 of
gai"i"g profit a"d 2ith the i"te"t of $arri"g o" a %usi"ess. -" the $o"trar, 2hat is
$lear is that the sale 2as !ore of a" a$$o!!odatio" to the other !i"i"g $o!pa"ies,
2ho 2ere experie"$i"g shortage i" gri"di"g steel %alls, a"d that AC4?C 2as
su%se&ue"tl repla$ed % other suppliers shortl thereafter.,ell*settled is the rule that
a"thi"g do"e as a !ere i"$ide"t to, or as a "e$essar $o"se&ue"$e of, the pri"$ipal
%usi"ess is "ot ordi"aril taxed as a" i"depe"de"t %usi"ess i" itself.
4. Pes, AC4?C is lia%le for $o"tra$torAs tax.
Co"tra$torKs tax, also a" ex$ise tax, is pro1ided for u"der 5e$tio" 191, paragraph
17 of 2hi$h de$lares that lessors of perso"al propert shall %e su%.e$t to a $o"tra$torKs
tax of +' of the gross re$eipts.
AC4?C $a""ot 1alidl $lai! that the leasi"g out of its perso"al properties 2as
!erel i"$ide"tal to its pri!ar li"e of %usi"ess a"d is a !ere isolated tra"sa$tio" "ot
i"te"ded for profit. 3ts %oo@ of a$$ou"ts sho2ed series of tra"sa$tio"s a"d that se1eral
disti"$t pa!e"ts 2ere !ade for the use of its perso"al properties su$h as its pla"e,
!otor %oat a"d du!p tru$@ a!ou"ti"g to P#+0,171.5# for tax ear +9 a"d
P2,450,218.#2 for tax ear 197#.
AC4?CAs $lai! that it did "ot gai" profit fro! su$h lease is "egated % the fa$t
that it 2as "ot a%le to sho2 proof of irregularities i" the assess!e"t !ade % the <39,
2hi$h are pri!a fa$ie presu!ed $orre$t a"d !ade i" good faith a"d 2ill "ot %e
distur%ed.
19. %illan)eva vs. Cit- #( Iloilo
=2# 5C9A 578>
FACTS:
9eli"g o" the passage of 9A 22#4 or the Co$al Auto"o! A$t, 3loilo e"a$ted
-rdi"a"$e 11 5eries of 19#0, i!posi"g a !u"i$ipal li$e"se tax o" te"e!e"t houses i"
a$$orda"$e 2ith the s$hedule of pa!e"t pro1ided % therei". (illa"ue1a a"d the other
appellees are apart!e"t o2"ers fro! 2ho! tshe $it $olle$ted li$e"se taxes % 1irtue of
-rdi"a"$e 11. Appellees a1er that the said ordi"a"$e is u"$o"stitutio"al for 9A 22#4
does "ot e!po2er $ities to i!pose apart!e"t taxesJ that the sa!e is oppressi1e a"d
u"reaso"a%le for it pe"ali;es those 2ho fail to pa the apart!e"t taxesJ that it
$o"stitutes "ot o"l dou%le taxatio" %ut tre%le taxatio"J a"d, that it 1iolates u"ifor!it of
taxatio".
Iss)es:
1. ?oes the ordi"a"$e i!pose dou%le taxatio"/
2. 3s 3loilo $it e!po2ered % 9A 22#4 to i!pose te"e!e"t taxes/
RUI!G:
,hile it is true that appellees are taxa%le u"der the N39C as real estate dealers,
a"d taxa%le u"der -rdi"a"$e 11, dou%le taxatio" !a "ot %e i"1o@ed. This is %e$ause
the sa!e tax !a %e i!posed % the "atio"al go1er"!e"t as 2ell as % the lo$al
go1er"!e"t. The $o"te"tio" that appellees are dou%l taxed %e$ause the are pai"g
real estate taxes a"d the te"e!e"t tax is also de1oid of !erit. A li$e"se tax !a %e
le1ied upo" a %usi"ess or o$$upatio" although the la"d or propert used i" $o""e$tio"
there2ith is su%.e$t to propert tax. 3" order to $o"stitute dou%le taxatio", %oth taxes
!ust %e the sa!e @i"d or $hara$ter. 9eal estate taxes a"d te"e!e"t taxes are "ot of
the sa!e $hara$ter.
9A 22#4 $o"fers lo$al go1er"!e"ts %road taxi"g po2ers. The i!positio" of the
te"e!e"t taxes does "ot fall 2ithi" the ex$eptio"s !e"tio"ed % the sa!e la2. 3t is
argued ho2e1er that the said taxes are real estate taxes a"d thus, the i!positio" of
!ore the 1 per $e"tu! real estate tax 2hi$h is the li!it pro1ided % CA 158, !a@es the
said ordi"a"$e ultra 1ires. The $ourt ruled that the tax i" &uestio" is "ot a real estate
tax. 3t does "ot ha1e the attri%utes of a real estate tax. < the title a"d the ter!s of the
ordi"a"$e, the tax is a !u"i$ipal tax 2hi$h !ea"s a" i!positio" or exa$tio" o" the right
to use or dispose of propert, to pursue a %usi"ess, o$$upatio" or $alli"g, or to exer$ise
a pri1ilege. Te"e!e"t houses %ei"g offered for re"t or lease $o"stitute a disti"$t for! of
%usi"ess or $alli"g a"d as su$h, the i!positio" of !u"i$ipal tax fi"ds support i" 5e$tio"
2 of 9A 22#4.
1:. Allie/ =an<ing vs. the D)e6on Cit- Govern'ent,
8. 9. N-. 15412#, 5epte!%er 15, 200#
FACTS: -" Dul 1, 1998, Allied <a"@i"g, as trustee for College Assura"$e Pla" of
the Philippi"es, 3"$., pur$hased fro! Ci2a"ag C. Nati1idad et al. a 1,000 s&uare !eter
par$el of la"d lo$ated alo"g Aurora <oule1ard, Vue;o" Cit i" the a!ou"t of
P+8,000,000.00.
Prior to the sale, Nati1idad et al. had %ee" pai"g the total a!ou"t
of P85,050.00 as a""ual real propert tax %ased o" the propertAs fair !ar@et 1alue
of P4,500,000.00 a"d assessed 1alue of P1,800,000.00 u"der Tax ?e$laratio" No. ?*
102*0+778.
After its a$&uisitio" of the propert, petitio"er 2as, i" a$$orda"$e 2ith 5e$tio" +
of the ordi"a"$e, re&uired to paP102,#00.00 as &uarterl real estate tax
=or P410,400.00 a""uall> u"der Tax ?e$laratio" No. ?*102*0+780 2hi$h pegged the
!ar@et 1alue of the propert at P+8,000,000.00 U the $o"sideratio" appeari"g i" the
?eed of A%solute 5ale, a"d its assessed 1alue atP15,200,000.00. Petitio"er paid the
&uarterl real estate tax for the propert fro! the 1
st
&uarter of 1999 up to the +
rd
&uarter
of 2000 2hi$h is paid u"der protest.
Petitio"er filed a petitio" for prohi%itio" a"d de$larator relief %efore the 9TC of
Vue;o" Cit assaili"g the 1alidit of 5e$. + of the Vue;o" Cit -rdi"a"$e 2hi$h states
that0
5e$. +. xxx Ee shall appl the "e2 assess!e"t le1el of 15' for reside"tial a"d 40'
for $o!!er$ial a"d i"dustrial $lassifi$atio", respe$ti1el as pres$ri%ed i" 5e$tio" 8 =a> of
the 199+ Vue;o" Cit 9e1e"ue Code to deter!i"e the assessed 1alue of the la"d.
Pro1idedJ ho2e1er, that par,els o( lan/ sol/, ,e/e/, trans(erre/ an/ ,onve-e/ (or
re')nerator- ,onsi/eration a(ter the e((e,tivit- o( this revision shall 4e s)4Ee,t to
real estate tax 4ase/ on the a,t)al a'o)nt re(le,te/ in the /ee/ o( ,onve-an,e or
the ,)rrent approve/ 6onal val)ation o( the =)rea) o( Internal Reven)e prevailing
at the ti'e o( sale, ,ession, trans(er an/ ,onve-an,e, >hi,hever is higher, as
evi/en,e/ 4- the ,erti(i,ate o( pa-'ent o( the ,apital gains tax iss)e/ there(or.
Petitio"er $o"te"ds that the pro1iso is $o"trar to the Co$al 8o1er"!e"t Code
a"d the Co$al Assess!e"t 9egulatio"s No. 1*92. 9TC later o" dis!issed the petitio".
ISSUE: ,hether or "ot se$tio" +, Vue;o" Cit -rdi"a"$e No. +57, 5eries of 1995,
2hi$h 2as a%rogated for %ei"g u"$o"stitutio"al, $a" %e the %asis of $olle$ti"g real
estate taxes prior to its repeal.
RUI!G:
No. The 1alidit of the pro1iso fixi"g the appraised 1alue of propert at the stated
$o"sideratio" at 2hi$h the propert 2as last sold is invali/ as it adopts a !ethod of
assess!e"t or appraisal of real propert $o"trar to the Co$al 8o1er"!e"t Code, its
3!ple!e"ti"g 9ules a"d 9egulatio"s a"d the Co$al Assess!e"t 9egulatio"s No. 1*92
issued % the ?epart!e"t of :i"a"$e. H"der these i!!ediatel stated authorities, real
properties shall %e appraised at the $urre"t a"d fair !ar@et 1alue pre1aili"g i" the
lo$alit 2here the propert is situated a"d $lassified for assess!e"t purposes o" the
%asis of its a$tual use.
6:air !ar@et 1alue7 is the pri$e at 2hi$h a propert !a %e sold % a seller 2ho is
"ot $o!pelled to sell a"d %ought % a %uer 2ho is "ot $o!pelled to %u, ta@i"g i"to
$o"sideratio" all uses to 2hi$h the propert is adapted a"d !ight i" reaso" %e applied.
The $riterio" esta%lished % the statute $o"te!plates a hpotheti$al sale. Ee"$e, the
%uers "eed "ot %e a$tual a"d existi"g pur$hasers.
7:8 Tolentino vs. Se,retar- o( Finan,e 7"&3 SCRA 5&?, "2; SCRA 5":8
As to Proportional or Flat ate
:i"all, it is $o"te"ded, for the reaso"s alread "oted, that 9.A. No. 771# also
1iolates Art. (3, W28=1> 2hi$h pro1ides that IThe rule of taxatio" shall %e u"ifor! a"d
e&uita%le. the Co"gress shall e1ol1e a progressi1e sste! of taxatio".I
B&ualit a"d u"ifor!it of taxatio" !ea"s that all taxa%le arti$les or @i"ds of propert of
the sa!e $lass %e taxed at the sa!e rate. The taxi"g po2er has the authorit to !a@e
reaso"a%le a"d "atural $lassifi$atio"s for purposes of taxatio". To satisf this
re&uire!e"t it is e"ough that the statute or ordi"a"$e applies e&uall to all perso"s,
for!s a"d $orporatio"s pla$ed i" si!ilar situatio". =Cit of <aguio 1. ?e Ceo", supraJ
5iso", Dr. 1. A"$heta, supra>
1;. Fran,is,o I. Chave6 vs. .ai'e =. #ngpin an/ Fi/elina Cr)6,
8.9. No. 7#778. Du"e #, 1990
FACTS:
5e$tio" 21 of Preside"tial ?e$ree No. 4#4 pro1ides that e1er fi1e ears starti"g
$ale"dar ear 1978, there shall %e a pro1i"$ial or $it ge"eral re1isio" of real propert
assess!e"ts. The re1ised assess!e"t shall %e the %asis for the $o!putatio" of real
propert taxes for the fi1e su$$eedi"g ears.
-" the stre"gth of the afore!e"tio"ed la2, the ge"eral re1isio" of assess!e"ts
2as $o!pleted i" 1984. Eo2e1er, Bxe$uti1e -rder No. 1019 2as issued, 2hi$h
deferred the $olle$tio" of real propert taxes %ased o" the 1984 1alues to Da"uar 1,
1988 i"stead of Da"uar 1, 1985.
-" No1e!%er 25, 198#, Preside"t Cora;o" A&ui"o issued Bxe$uti1e order No.
7+. 3t states that %egi""i"g Da"uar 1, 1987, the 1984 assess!e"ts shall %e the %asis
of the real propert $olle$tio". Thus, it effe$ti1el repealed Bxe$uti1e -rder No. 1019.
:ra"$is$o Cha1e;, a taxpaer a"d a la"d*o2"er, &uestio"ed the $o"stitutio"alit
of Bxe$uti1e -rder No. 7+. Ee alleges that it 2ill %ri"g u"reaso"a%le i"$rease i" real
propert taxes. 3" fa$t, a$$ordi"g to hi!, the appli$atio" of the assailed order 2ill $ause
a" ex$essi1e i"$rease i" real propert taxes % 100' to 400' o" i!pro1e!e"ts a"d up
to 100' o" la"d.
ISSUE: ,hether or "ot Bxe$uti1e -rder "o. 7+ i!poses u"reaso"a%le i"$rease i" real
propert taxes, thus, should %e de$lared u"$o"stitutio"al.
RUI!G:
The atta$@ o" Bxe$uti1e -rder No. 7+ has "o legal %asis as the ge"eral re1isio"
of assess!e"ts is a $o"ti"ui"g pro$ess !a"dated % 5e$tio" 21 of Preside"tial ?e$ree
No. 4#4. 3f at all, it is Preside"tial ?e$ree No. 4#4 2hi$h should %e $halle"ged as
$o"stitutio"all i"fir!. Eo2e1er, Cha1e; failed to raise a" o%.e$tio" agai"st said
de$ree.
,ithout Bxe$uti1e -rder No. 7+, the %asis for $olle$tio" of real propert taxes 2ill
still %e the 1978 re1isio" of propert 1alues. Certainly, to continue collecting real
property taxes based on valuations arrived at several years ago, in disregard of
the increases in the value of real properties that have occurred since then, is not
in consonance with a sound tax system. Fiscal ade$uacy, which is one of the
characteristics of a sound tax system, re$uires that sources of revenues must be
ade$uate to meet government expenditures and their variations.
"?. TAGA!IT# MI!I!G C#RP#RATI#! vs. C#MMISSI#!ER,
CTA Case No. 4702 April 28, 1995
Fa,ts:
Taga"ito 4i"i"g Corporatio" =T4C> is a do!esti$ $orporatio" expressl gra"ted
a per!it % the go1er"!e"t 1ia a" operati"g $o"tra$t to explore, de1elop a"d utili;e
!i"eral deposits fou"d i" a spe$ified portio" of a !i"eral reser1atio" area lo$ated i"
5urigao del Norte a"d o2"ed % the go1er"!e"t. 3" ex$ha"ge, T4C is o%liged to pa
roalt to the go1er"!e"t o1er a"d a%o1e other taxes. ?uri"g Dul to ?e$e!%er 1989,
T4C re!o1ed, shipped a"d sold su%sta"tial &ua"tities of <e"efi$iated Ni$@el 5ili$ate
ore a"d Chro!ite ore a"d paid ex$ise taxes i" the a!ou"t of Php#,277,99+.#5 i"
$o!plia"$e 2ith 5e$.151=+> of the Tax Code.
The 5' ex$ise tax 2as %ased o" the a!ou"t a"d 2eight sho2" i" the pro1isio"al
i"1oi$e issued % T4C. The !etalli$ !i"erals are the" shipped a%road to Dapa"ese
%uers 2here the !i"erals 2ere a"al;ed allegedl % i"depe"de"t sur1eors upo"
u"loadi"g at its port of desti"atio". A"alsis a%road 2ould ofte"ti!es re1eal a differe"t
1alue for the !etalli$ !i"erals fro! that i"di$ated i" the te!porar)pro1isio"al i"1oi$e
su%!itted % T4C. (aria"$e is i" the 6!ar@et 1alues7 i" the pro1isio"al i"1oi$e a"d that
i"di$ated i" the fi"al $al$ulatio" sheet prese"ted % the %uers. .ariances o$$ur i" the
2eight of the ship!e"t or the pri$e of the !etalli$ !i"erals per @ilogra! a"d so!eti!es
i" their !etalli$ $o"te"t resulti"g i" dis$repa"$ies i" the total selli"g pri$e. 3t is al2as
the pri$e i"di$ated i" the fi"al i"1oi$e that is deter!i"ati1e of the a!ou"t that the %uers
2ill e1e"tuall pa T4C.
&/C $o"te"ded that is e"titled to a refu"d %e$ause the a$tual !ar@et 1alue that
should %e !ade the %asis of the taxes is the a!ou"t spe$ified i" the i"depe"de"t
sur1eor a%road.
Iss)es:
1. ,hether or "ot T4C is e"titled to refu"d.
2. ,hether or "ot the a$tual !ar@et 1alue that should %e used should %e the !ar@et
1alue after the assess!e"t a%road 2as $o"du$ted.
RUI!G:
1. N-. Tax refu"d parta@e of the "ature of a" exe!ptio", a"d as su$h, tax
exe!ptio" $a""ot %e allo2ed u"less gra"ted i" the !ost expli$it a"d $ategori$al
la"guage. Taxes are 2hat 2e pa for $i1ili;ed so$iet. ,ithout taxes, the go1er"!e"t
2ould %e paral;ed for la$@ of the !oti1e po2er to a$ti1ate a"d operate it.
2. N-. Hse !ar@et 1alue right after re!o1al fro! the %ed or !i"es. 5e$. 151=+>
of the Tax Code10 o" all !etalli$ !i"erals, a tax of fi1e per$e"t =5'> %ased o" the a$tual
!ar@et 1alue of the gross output thereof at the time of removal, i" the $ase of those
lo$all extra$ted or produ$ed0 or the 1alue used % the <ureau of Custo!s i"
deter!i"i"g tariff a"d $usto!s duties, "et of ex$ise tax a"d 1alue*added tax, i" $ase of
i!portatio". The la2 refers to the a$tual !ar@et 1alue of the !i"erals at the ti!e these
!i"erals 2ere !o1ed a2a fro! the positio" it o$$upied, i.e. Philippi"e 1aluatio" a"d
a"alsis %e$ause it is i" this $ou"tr 2here these !i"erals 2ere extra$ted, re!o1ed a"d
e1e"tuall shipped a%road. To re$@o" the a$tual !ar@et 1alue at the ti!e of re!o1al is
also $o"siste"t 2ith the esse"$e of a" ex$ise tax. 3t is a $harge upo" the pri1ilege of
se1eri"g or extra$ti"g !i"erals fro! the earth, a"d is due a"d paa%le upo" re!o1al of
the !i"eral produ$ts fro! its %ed or !i"es =9epu%li$ Ce!e"t 1s. Co!!, 2+ 5C9A 9#7>.
"1. R#@AS vs. CTA, 89 C U2504+, April 2#, 19#8
Fa,ts:
A"to"io, Bduardo a"d Dose 9oxas, %rothers a"d at the sa!e ti!e part"ers of the
9oxas Co!pa"ia, i"herited fro! their gra"dpare"ts se1eral properties 2hi$h i"$luded
far!la"ds 2ith a total area of 19,000 he$tares =Nasug%u :ar!la"ds>. The te"a"ts
therei" expressed their desire to pur$hase fro! the %rothers the par$els 2hi$h the
a$tuall o$$upied so the go1er"!e"t, pursua"t to the $o"stitutio"al !a"date to a$&uire
%ig la"ded estate a"d apportio" the! a!o"g la"dless te"a"ts, persuaded the %rothers
sell the sa!e. 9oxas Cia. the" agreed to sell 1+, 500 he$tares of the la"ds %ut the
go1er"!e"t, ho2e1er, did "ot ha1e e"ough fu"ds, so the for!er allo2ed the far!ers to
%u the la"ds for the sa!e pri$e %ut % i"stall!e"t. 5u%se&ue"tl, the C39 de!a"ded
fro! the %rothers the pa!e"t of defi$ie"$ i"$o!e taxes resulti"g fro! the sale of the
far!la"ds a"d $o"sidered the part"ership as e"gaged i" the %usi"ess of real estate,
he"$e, 100' of the profits deri1ed therefro! 2as taxed. The %rothers protested the
assess!e"t %ut the sa!e 2as de"ied. -" appeal, the Court of Tax Appeals sustai"ed
the assess!e"t. Ee"$e, this appeal.

Iss)e: 3s 9oxas Cia. lia%le for the pa!e"t of defi$ie"$ i"$o!e for the sale of the
far!la"ds/
R)ling:
No. Although the =far!ers) 1e"dees> paid for their respe$ti1e holdi"gs i"
i"stall!e"t for a period of 10 ears, it 2ould "e1ertheless "ot !a@e the 1e"dor 9oxas
Cia. a real estate dealer duri"g the 10*ear a!orti;atio" period. 3t should %e %or"e i"
!i"d that the sale of the Nasug%u far! la"ds to the 1er far!ers 2ho tilled the! for
ge"eratio"s 2as "ot o"l i" $o"so"a"$e 2ith, %ut !ore i" o%edie"$e to the re&uest a"d
pursua"t to the poli$ of our 8o1er"!e"t to allo$ate la"ds to the la"dless. Eo2e1er, the
8o1er"!e"t $ould "ot $o!pl 2ith its dut for la$@ of fu"ds so 9oxas Cia. shouldered
the 8o1er"!e"tKs %urde", 2e"t out of its 2a a"d sold la"ds dire$tl to the far!ers i"
the sa!e 2a a"d u"der the sa!e ter!s as 2ould ha1e %ee" the $ase had the
8o1er"!e"t do"e it itself. :or this !ag"a"i!ous a$t, the !u"i$ipal $ou"$il of Nasug%u
passed a resolutio" expressi"g the peopleKs gratitude.
The po2er of taxatio" is so!eti!es $alled also the po2er to destro. Therefore it
should %e exer$ised 2ith $autio" to !i"i!i;e i".ur to the proprietar rights of a
taxpaer. 3t !ust %e exer$ised fairl, e&uall a"d u"ifor!l, lest the tax $olle$tor @ill the
Ihe" that las the golde" eggI. A"d, i" order to !ai"tai" the ge"eral pu%li$Ks trust a"d
$o"fide"$e i" the 8o1er"!e"t this po2er !ust %e used .ustl a"d "ot trea$herousl. 3t
does "ot $o"for! 2ith -ur se"se of .usti$e i" the i"sta"t $ase for the 8o1er"!e"t to
persuade the taxpaer to le"d it a helpi"g ha"d a"d later o" to pe"ali;e hi! for dul
a"s2eri"g the urge"t $all.
3" fi"e, 9oxas Cia. $a""ot %e $o"sidered a real estate dealer for the sale i"
&uestio". Ee"$e, pursua"t to5e$tio" +4 of the Tax Code the la"ds sold to the far!ers
are $apital assets, a"d the gai" deri1ed fro! thesale thereof is $apital gai", taxa%le o"l
to the exte"t of 50'.
"". Tana/a vs. Angara, 8.9. No. 118295, 4a 2, 1997
Fa,ts: -" April 15, 1994 9i;ali"o Na1arro, the 5e$retar of ?epart!e"t of Trade
a"d 3"dustr represe"ti"g the 8o1er"!e"t of the 9epu%li$ of the Philippi"es, sig"ed the
:i"al A$t B!%odi"g the results of the Hrugua 9ou"d of 4ultilateral Negotiatio"s. <
sig"i"g the :i"al A$t he %ou"d the Philippi"es to su%!it to its respe$ti1e $o!pete"t
authorities the ,T- =,orld Trade -rga"i;atio"> Agree!e"ts to see@ appro1al.
-" ?e$e!%er 14, 1994, the Phillipi"e 5e"ate adopted 9esolutio" No. 97 to ratif
the ,T- agree!e"t.
This is a petitio" see@i"g to "ullif the ratifi$atio" of the ,orld Trade -rga"i;atio"
=,T-> Agree!e"t.
The ,T- ope"s a$$ess to foreig" !ar@ets, espe$iall its !a.or tradi"g part"ers,
through the redu$tio" of tariffs o" its exports, parti$ularl agri$ultural a"d i"dustrial
produ$ts. Thus, pro1ides "e2 opportu"ities for the ser1i$e se$tor $ost a"d u"$ertai"t
asso$iated 2ith exporti"g a"d !ore i"1est!e"t i" the $ou"tr. These are the predi$ted
%e"efits as refle$ted i" the agree!e"t a"d as 1ie2ed % the sig"ator 5e"ators, a 6free
!ar@et7 espoused % ,T-.
Petitio"ers &uestio" the $o"$urre"$e of the respo"de"ts a$ti"g i" their $apa$ities
as 5e"ators % sig"i"g the said agree!e"t a"dthe $o"stitutio"alit of the ,T-
agree!e"t as it derogates fro! the po2er to tax, 2hi$h is lodged i" the Co"gress a"d
1iolates 5e$ 19, Arti$le 33, pro1idi"g for the de1elop!e"t of a self relia"t a"d
i"depe"de"t "atio"al e$o"o!, a"d 5e$tio"s 10 a"d 12, Arti$le N33, pro1idi"g for the
6:ilipi"o first7 poli$.
Iss)es: ,hether or "ot the pro1isio"s of the ,T- agree!e"t a"d its three a""exes
$o"tra1e"e se$. 19, arti$le 33, a"d se$s. 10 a"d 12, arti$le N33, of the Philippi"e
Co"stitutio".
R)ling:
< its 1er title, Arti$le 33 of the Co"stitutio" is a 6de$laratio" of pri"$iples a"d
state poli$ies.7 These pri"$iples i" Arti$le 33 are "ot i"te"ded to %e self*exe$uti"g
pri"$iples read for e"for$e!e"t through the $ourts. The are used % the .udi$iar as
aids or as guides i" the exer$ise of its po2er of .udi$ial re1ie2, a"d % the legislature i"
its e"a$t!e"t of la2s. As held i" the leadi"g $ase of 0ilosa,an, Incorporated vs.
/orato, the pri"$iples a"d state poli$ies e"u!erated i" Arti$le 33 a"d so!e se$tio"s of
Arti$le N33 are "ot 6self*exe$uti"g pro1isio"s, the disregard of 2hi$h $a" gi1e rise to a
$ause of a$tio" i" the $ourts. The do "ot e!%od .udi$iall e"for$ea%le $o"stitutio"al
rights %ut guideli"es for legislatio".7
"&. A!$ TRA!SP#RTATI#! #FFICE FT#G, et al. vs. CITH #F =UTUA!,
represente/ in this ,ase 4- $e'o,rito $. Pla6a II, Cit- Ma-or.
8.9. No. 1+1512, Da"uar 20, 2000
FACTS:
9espo"de"t Cit of <utua" asserts that o"e of the salie"t pro1isio"s i"trodu$ed % the
Co$al 8o1er"!e"t Code is i" the area of lo$al taxatio" 2hi$h allo2s C8Hs to $olle$t
registratio" fees or $harges alo"g 2ith, i" its 1ie2, the $orrespo"di"g issua"$e of all
@i"ds of li$e"ses or per!its for the dri1i"g of tri$$les.
5e$. 129. #ower to Create 1ources or +evenue. O Ba$h lo$al go1er"!e"t u"it
shall exer$ise its po2er to $reate its o2" sour$es of re1e"ue a"d to le1 taxes,
fees, a"d $harges su%.e$t to the pro1isio"s herei", $o"siste"t 2ith the %asi$
poli$ of lo$al auto"o!. 5u$h taxes, fees, a"d $harges shall a$$rue ex$lusi1el
to the lo$al go1er"!e"t u"its.
5e$. 1++. Common Limitations on the &axing #owers of Local Government Units.
O H"less other2ise pro1ided herei", the exer$ise of the taxi"g po2ers of
pro1i"$es, $ities, !u"i$ipalities, a"d %ara"gas shall "ot exte"d to the le1 of the
follo2i"g0
x x x x x x x x x
=l> Taxes, fees or $harges for the registratio" of !otor 1ehi$les a"d for the
issua"$e of all @i"ds of li$e"ses or per!its for the dri1i"g thereof, ex,ept
tri,-,les.
The Cit of <utua" asserts that 5e$. 129 a"d 5e$.1++ of the Co$al 8o1er"!e"t Code is their
%asis for said ordi"a"$e a"d that, said pro1isio"s authori;e C8Hs to $olle$t registratio"
fees or $harges alo"g 2ith, i" its 1ie2, the $orrespo"di"g issua"$e of all @i"ds of
li$e"ses or per!its for the dri1i"g of tri$$les.CT- explai"s that o"e of the fu"$tio"s of
the Natio"al 8o1er"!e"t, that , i"deed has %ee" tra"sferred to C8Hs is the fra"$hisi"g
authorit o1er tri$$les*for*hire of the CT:9< %ut N-T the authorit of the CT- to
register all !otor 1ehi$les a"d to issue to &ualified perso"s of li$e"ses to dri1e su$h
1ehi$les. The 9TC of <utua" de$reed a" issua"$e of a PB94ANBNT ,93T -:
3NDHCT3-N agai"st T- prohi%iti"g a"d e".oi"i"g CT-, as 2ell as its e!ploees a"d
other perso"s a$ti"g i" its %ehalf, fro! =a> registeri"g tri$$les a"d =%> issui"g li$e"ses
to tri$$le dri1ers. The CA sustai"ed the 9TCAs de$isio". The ad1erse ruli"gs of %oth
Courts pro!pted the CT- to file a" i"sta"t petitio" for re1ie2 o" $ertiorari to a""ul a"d
set aside the earlier Court de$isio"s.
ISSUE:
,-N u"der the prese"t set up, the po2er of the Ca"d 9egistratio" -ffi$e =ICT-I> to
register, tri$$les i" parti$ular, as 2ell as to issue li$e"ses for the dri1i"g thereof, has
li@e2ise de1ol1ed to lo$al go1er"!e"t u"its.
RUI!G: !o.
The relia"$e !ade % respo"de"ts o" the %road taxi"g po2er of lo$al go1er"!e"t u"its,
spe$ifi$all u"der 5e$tio" 1++ of the Co$al 8o1er"!e"t Code, is ta"ge"tial. Poli$e
po2er a"d taxatio", alo"g 2ith e!i"e"t do!ai", are i"here"t po2ers of so1ereig"t
2hi$h the 5tate !ight share 2ith lo$al go1er"!e"t u"its % delegatio" gi1e" u"der a
$o"stitutio"al or a statutor fiat. All these i"here"t po2ers are for a pu%li$ purpose a"d
legislati1e i" "ature %ut the si!ilarities .ust a%out e"d there. The %asi$ ai! of poli$e
po2er is pu%li$ good a"d 2elfare. Taxatio", i" its $ase, fo$uses o" the po2er of
go1er"!e"t to raise re1e"ue i" order to support its existe"$e a"d $arr out its legiti!ate
o%.e$ti1es. Although $orrelati1e to ea$h other i" !a" respe$ts, the gra"t of o"e does
"ot "e$essaril $arr 2ith it the gra"t of the other. The t2o po2ers are, % traditio" a"d
.urisprude"$e, separate a"d disti"$t po2ers, 1ari"g i" their respe$ti1e $o"$epts,
$hara$ter, s$opes a"d li!itatio"s. To $o"strue the tax pro1isio"s of 5e$tio" 1++=1>
i"disti"$ti1el 2ould result i" the repeal to that exte"t of CT-Ks regulator po2er 2hi$h
e1ide"tl has "ot %ee" i"te"ded.
"2. RUFI!# R. TA! vs. RAM#! R. $E R#SARI#, .R., as SECRETARH #F
FI!A!CE C .#SE U. #!G, as C#MMISSI#!ER #F I!TER!A RE%E!UE,
8.9. No. 109289, -$to%er +, 1994
FACTS:
These t2o $o"solidated spe$ial $i1il a$tio"s for prohi%itio" $halle"ge, i" 8.9. No.
109289, the $o"stitutio"alit of 9epu%li$ A$t No. 749#, also $o!!o"l @"o2" as the
5i!plified Net 3"$o!e Taxatio"" 5$he!e =65N3T7>, a!e"di"g $ertai" pro1isio"s of the
Natio"al 3"ter"al 9e1e"ue 9egulatio"s No. 29+, pro!ulgated % pu%li$ respo"de"ts
pursua"t to said la2.
Petitio"er i"ti!ates that 9epu%li$ A$t No. 749# dese$rates the $o"stitutio"al
re&uire!e"t that taxatio" 6shall %e u"ifor! a"d e&uita%le7 i" that the la2 2ould "o2
atte!pt to tax si"gle proprietorships a"d professio"als differe"tl fro! the !a""er it
i!poses the tax o" $orporatio"s a"d part"erships. Petitio"ers $lai! to %e taxpaers
ad1ersel affe$ted % the $o"ti"ued i!ple!e"tatio" of the a!e"dator legislatio".
ISSUE:
?oes 9epu%li$ A$t No. 749# 1iolate the Co"stitutio" for i!posi"g taxes that are "ot
u"ifor! a"d e&uita%le/
RUI!G:
The Petitio" is dis!issed. H"ifor!it of taxatio", li@e the @i"dred $o"$ept of e&ual
prote$tio", !erel re&uires that all su%.e$ts or o%.e$ts of taxatio", si!ilarl situated, are
to %e treated ali@e %oth i" pri1ileges a"d lia%ilities =Dua" Cu"a 5u%di1isio" 1s.
5ar!ie"to, 91 Phil. +71>. H"ifor!it does "ot forfe"d $lassifi$atio" as lo"g as0 =1> the
sta"dards that are used therefor are su%sta"tial a"d "ot ar%itrar, =2> the $ategori;atio"
is ger!a"e to a$hie1e the legislati1e purpose, =+> the la2 applies, all thi"gs %ei"g e&ual,
to %oth prese"t a"d future $o"ditio"s, a"d =4> the $lassifi$atio" applies e&uall 2ell to all
those %elo"gi"g to the sa!e $lass =Pepsi Cola 1s. Cit of <utua", 24 5C9A +J <as$o
1s. PA8C-9, 197 5C9A 771>.
,hat !a i"stead %e per$ei1ed to %e appare"t fro! the a!e"dator la2 is the
legislati1e i"te"t to i"$reasi"gl shift the i"$o!e tax sste! to2ards the s$hedular
approa$h i" the i"$o!e taxatio" of i"di1idual taxpaers a"d to !ai"tai", % a"d large,
the prese"t glo%al treat!e"t o" taxa%le $orporatio"s. ,e $ertai"l do "ot 1ie2 this
$lassifi$atio" to %e ar%itrar a"d i"appropriate.
Ea1i"g arri1ed at this $o"$lusio", the plea of petitio"er to ha1e the la2 de$lared
u"$o"stitutio"al for %ei"g 1iolati1e of due pro$ess !ust perfor$e fail. The due pro$ess
$lause !a $orre$tl %e i"1o@ed o"l 2he" there is a $lear $o"tra1e"tio" of i"here"t or
$o"stitutio"al li!itatio"s i" the exer$ise of the tax po2er.
"3. CIR vs. Santos, 277 5C9A #17 =1997>
Fa,ts:
8uild of Phil. De2ellers &uestio"s the $o"stitutio"alit of $ertai" pro1isio"s of the
N39C a"d Tariff a"d Custo!s Code of the Philippi"es. 3t is their $o"te"tio" that prese"t
Tariff a"d tax stru$ture i"$reases !a"ufa$turi"g $osts a"d re"der lo$al .e2elr
!a"ufa$turers u"$o!petiti1e agai"st other $ou"tries., i" support of their positio", the
su%!itted 2hat the purported to %e a" exhausti1e stud of the tax rates o" .e2elr
pre1aili"g i" other Asia" $ou"tries, i" $o!pariso" to tax rates le1ied i" the $ou"tr.
Dudge 5a"tos of 9TC Pasig, ruled that the la2s i" &uestio" are $o"fis$ator a"d
oppressi1e a"d de$lared the! 3N-PB9AT3(B a"d ,3TE-H9 :-9CB AN? B::BCT
i"sofar as petitio"ers are $o"$er"ed.
Petitio"er C39 assailed de$isio" re"dered % respo"de"t .udge $o"te"di"g that
the latter has "o authorit to pass .udg!e"t upo" the taxatio" poli$ of the go1er"!e"t.
Petitio"ers also i!pug" the de$isio" % asserti"g that there 2as "o sho2i"g that the tax
la2s o" .e2elr are $o"fis$ator.
ISSUE: ,hether or "ot the 9egio"al Trial Court has authorit to pass .udg!e"t upo"
taxatio" poli$ of the go1er"!e"t.
RUI!G:
The poli$ of the $ourts is to a1oid ruli"g o" $o"stitutio"al &uestio"s a"d to
presu!e that the a$ts of the politi$al depart!e"ts are 1alid i" the a%se"$e of a $lear
a"d u"!ista@a%le sho2i"g to the $o"trar.
This is "ot to sa that 9TC has "o po2er 2hatsoe1er to de$lare a la2
u"$o"stitutio"al. <ut this authorit does "ot exte"d to de$idi"g &uestio"s 2hi$h pertai"
to legislati1e poli$.
9TC ha1e the po2er to de$lare the la2 u"$o"stitutio"al %ut this authorit does
"ot exte"d to de$idi"g &uestio"s 2hi$h pertai" to legislati1e poli$. 9TC $a" o"l loo@
i"to the 1alidit of a pro1isio", that is 2hether or "ot it has %ee" passed a$$ordi"g to the
pro1isio"s laid do2" % la2, a"d thus $a""ot i"&uire as to the reaso"s for its existe"$e.
+ULI2G (2 &'* *3&*2& (F L*GI1LA&I.* #(%*+ &( &A3
5C held that it is 2ithi" the po2er f the legislature 2hether to tax .e2elr or "ot.
,ith the legislature pri!aril lies the dis$retio" to deter!i"e the "ature =@i"d>, o%.e$t
=purpose>, exte"t =rate>, $o1erage =su%.e$t> a"d situs =pla$e> of taxatio".
"5. Ma,e/a vs. ER=, 192 5C9A +#5 a"d 199 5C9A 454
Fa,ts: -" 10 5epte!%er 1990, Caltex =Philippi"es>, 3"$., Pilipi"as 5hell
Petroleu! Corporatio", a"d Petro" Corporatio" proferred separate appli$atio"s 2ith
the B"erg 9egulator <oard for per!issio" to i"$rease the 2holesale posted pri$es of
petroleu! produ$ts, a"d !ea"2hile, for pro1isio"al authorit to i"$rease te!poraril
su$h 2holesale posted pri$es pe"di"g further pro$eedi"gs. -" 5epte!%er 21, 1990, the
B"erg 9egulator <oard, i" a .oi"t =o" three appli$atio"s> order gra"ted pro1isio"al
relief a"d authori;es said appli$a"ts a 2eighted a1erage pro1isio"al i"$rease of -NB
PB5- AN? :-9TP*T,- CBNTA(-5 =P1.42> per liter i" the 2holesale posted pri$es of
their 1arious petroleu! produ$ts, refi"ed a"d)or !ar@eted % the! lo$all. The
petitio"ers, 5e"ator Br"esto 4a$eda a"d Att. -li1er Co;a"o su%!its that the sa!e 2as
issued 2ithout proper "oti$e a"d heari"g i" 1iolatio" of 5e$tio" +, paragraph =e>, of
Bxe$uti1e -rder No. 172, a"d has %ee" issued 2ith gra1e a%use of dis$retio",
ta"ta!ou"t to la$@ of .urisdi$tio", a"d $orre$ti%le % $ertiorari. Ee"$e, this petitio"
prai"g for i".u"$ti1e relief, to stop the B"erg 9egulator <oard fro! i!ple!e"ti"g its
order, dated 5epte!%er 21, 1990, !a"dati"g a pro1isio"al i"$rease i" the pri$es of
petroleu! a"d petroleu! produ$ts.
Iss)e: ,hether or "ot the -rder of the B"erg 9egulator <oard !a"dati"g a
pro1isio"al i"$rease o" petroleu! produ$ts 2as issued i" 1iolatio" of pri"$iple of "o"*
delegatio" of taxatio" po2er.
RUI!G:
The <oard -rder authori;i"g the pro$eeds ge"erated % the i"$rease to %e
deposited to the -P5: is "ot a" a$t of taxatio". 3t is authori;ed % Preside"tial ?e$ree
No. 195#, as a!e"ded % Bxe$uti1e -rder No. 1+7, as follo2s0
5BCT3-N 8. There is here% $reated a Trust A$$ou"t i" the %oo@s of a$$ou"ts of the
4i"istr of B"erg to %e desig"ated as -il Pri$e 5ta%ili;atio" :u"d =-P5:> for the
purpose of !i"i!i;i"g fre&ue"t pri$e $ha"ges %rought a%out % ex$ha"ge rate
ad.ust!e"ts a"d)or $ha"ges i" 2orld !ar@et pri$es of $rude oil a"d i!ported petroleu!
produ$ts. xxx
B1ide"tl, authorities ha1e %ee" u"a%le to $olle$t e"ough taxes "e$essar to
reple"ish the -P5: as pro1ided % Preside"tial ?e$ree No. 195#, a"d he"$e, there 2as
"o a1aila%le alter"ati1e %ut to hi@e existi"g pri$es.
The -P5:, as the Court held i" the afore$ited CACP $ases, !ust "ot %e
u"derstood to %e a fu"di"g desig"ed to guara"tee oil fir!sK profits although as a
su%sid, or a trust a$$ou"t, the Court has "o dou%t that oil fir!s !a@e !o"e fro! it. As
2e held there, ho2e1er, the -P5: 2as esta%lished pre$isel to prote$t the $o"su!i"g
pu%li$ fro! the errati$ !o1e!e"t of oil pri$es a"d to pre$lude oil $o!pa"ies fro! ta@i"g
ad1a"tage of flu$tuatio"s o$$urri"g e1er so ofte". As a %uffer !e$ha"is!, it sta%ili;es
do!esti$ pri$es % %ri"gi"g a%out a u"ifor! rate rather tha" lea1i"g pri$i"g to the
$apri$es of the !ar@et.
3" all li@elihood, therefore, a" oil hi@e 2ould ha1e pro%a%l %ee" i!!i"e"t, 2ith or
2ithout trou%le i" the 8ulf, although trou%le 2ould ha1e pro%a%l aggra1ated it.0 "ad
71&8 Ma,e/a vs. Ma,araig, 8.9. No. 88291 4a +1, 1991
As to the the prin,iple o( nonB/elegation o( taxation po>er:
B.-. No. 9+ is $o!plete i" itself a"d $o"stitutes a valid delegation of legislative
power to the FI+) a"d as a%o1e dis$ussed, the tax exe!ptio" pri1ilege that 2as
restored to NPC % :39< 9esolutio" No. 17*87 of Du"e 1987 i"$ludes exe!ptio" fro!
i"dire$t taxes a"d duties o" petroleu! produ$ts used i" its operatio" 2hi$h 2as issued
pursua"t thereto, as it 2as dul appro1ed % the Preside"t as re&uired % said
exe$uti1e order through the respo"de"t Bxe$uti1e 5e$retar.
4oreo1er, u"der 5e$tio" +, Arti$le N(333 of the Tra"sitor Pro1isio"s of the 1987
Co"stitutio", it is pro1ided that0
All existi"g la2s, de$rees, exe$uti1e orders, pro$la!atio", letters of
i"stru$tio"s, a"d other exe$uti1e issua"$es "ot i"$o"siste"t 2ith this
$o"stitutio" shall re!ai" operati1e u"til a!e"ded, repealed or re1o@ed.
"9. =as,o vs. PAGC#R, 8.9. No. 91#49, 4a 14, 1991
Fa,ts:
-" Dul 11, 198+, PA8C-9 2as $reated u"der P.?. 18#9 to e"a%le the
8o1er"!e"t to regulate a"d $e"trali;e all ga!es of $ha"$e authori;ed % existi"g
fra"$hise or per!itted % la2. P.?. 18#9 $o"tai"ed a pro1isio" =5e$tio" 1+ par. =2>>
2hi$h exe!pts PA8C-9, fro! pai"g a" Itax of a" @i"d or for!, i"$o!e or
other2ise, as 2ell as fees, $harges or le1ies of 2hate1er "ature, 2hether Natio"al or
Co$al.I <as$o et al. see@s to a""ul said la2 allegi"g that0 3t $o"stitutes a 2ai1er of a
right pre.udi$ial to a third perso" 2ith a right re$og"i;ed % la2 si"$e it 2ai1ed the
4a"ila Cit go1er"!e"tKs right to i!pose taxes a"d li$e"se fees, 2hi$h is re$og"i;ed %
la2J a"d that the la2 has i"truded i"to the lo$al go1er"!e"tKs right to i!pose lo$al taxes
a"d li$e"se fees 2hi$h is i" $o"tra1e"tio" of the $o"stitutio"all e"shri"ed pri"$iple of
lo$al auto"o!.
ISSUES: ,hether or "ot P.?. 18#9 $o"stitutes a 2ai1er of the right of the Cit of 4a"ila
to i!pose taxes a"d li$e"se feesJ ,hether or "ot P.?. 18#9 is i"
$o"tra1e"tio" 2ith the Co"stitutio"As pri"$iple of lo$al auto"o!.
RUI!G:
P.?. 18#9 is $o"stitutio"al. The $o"te"tio" of the petitio"ers is 2ithout !erit for
the follo2i"g reaso"s0
P.?. 18#9 2as e"a$ted pursua"t to the poli$ of the go1er"!e"t to Iregulate a"d
$e"trali;e thru a" appropriate i"stitutio" all ga!es of $ha"$e authori;ed % existi"g
fra"$hise or per!itted % la2I =1st 2hereas $lause, P? 18#9>. As 2as su%se&ue"tl
pro1ed, regulati"g a"d $e"trali;i"g ga!%li"g operatio"s i" o"e $orporate e"tit O the
PA8C-9, 2as %e"efi$ial "ot .ust to the 8o1er"!e"t %ut to so$iet i" ge"eral. 3t is a
relia%le sour$e of !u$h "eeded re1e"ue for the $ash strapped 8o1er"!e"t. 3t pro1ided
fu"ds for so$ial i!pa$t pro.e$ts a"d su%.e$ted ga!%li"g to I$lose s$ruti", regulatio",
super1isio" a"d $o"trol of the 8o1er"!e"tI =4th ,hereas Clause, P? 18#9>. ,ith the
$reatio" of PA8C-9 a"d the dire$t i"ter1e"tio" of the 8o1er"!e"t, the e1il pra$ti$es
a"d $orruptio"s that go 2ith ga!%li"g 2ill %e !i"i!i;ed if "ot totall eradi$ated. Pu%li$
2elfare, the", lies at the %otto! of the e"a$t!e"t of P? 189#.
":. #+A$A vs. C#MMISSI#!ER, 120 5C9A ++7
Fa,ts: Petitio"er Co;ada $lai!s that he is a taxpaer a"d a %o"afide ele$tor of
Ce%u Cit a"d a tra"sie"t 1oter of Vue;o" Cit, 4etro 4a"ila, 2ho desires to ru" for the
positio" i" the <atasa" Pa!%a"saJ 2hile petitio"er 9o!eo <. 3got alleges that, as a
taxpaer, he has sta"di"g to petitio" % !a"da!us the $alli"g of a spe$ial ele$tio" as
!a"dated % the 197+ Co"stitutio". As reaso" for their petitio", petitio"ers allege that
the are I... deepl $o"$er"ed a%out their duties as $iti;e"s a"d desirous to uphold the
$o"stitutio"al !a"date a"d rule of la2 ...J that the ha1e filed the i"sta"t petitio" o" their
o2" a"d i" %ehalf of all other :ilipi"os si"$e the su%.e$t !atters are of profou"d a"d
ge"eral i"terest. I
The respo"de"t C-4BCBC, represe"ted % $ou"sel, opposes the petitio"
allegi"g, su%sta"tiall, that 1> petitio"ers la$@ sta"di"g to file the i"sta"t petitio" for the
are "ot the proper parties to i"stitute the a$tio"J 2> this Court has "o .urisdi$tio" to
e"tertai" this petitio"J a"d +> 5e$tio" 5=2>, Arti$le (333 of the 197+ Co"stitutio" does "ot
appl to the 3"teri! <atasa" Pa!%a"sa.
Iss)e: ,hether or "ot petitio"ers la$@ sta"di"g to file the i"sta"t petitio" for the
are "ot the proper parties to i"stitute the a$tio".
RUI!G:
As taxpaers, petitio"ers !a "ot file the i"sta"t petitio", for "o2here therei" is it
alleged that tax !o"e is %ei"g illegall spe"t. The a$t $o!plai"ed of is the i"a$tio" of
the C-4BCBC to $all a spe$ial ele$tio", as is allegedl its !i"isterial dut u"der the
$o"stitutio"al pro1isio" a%o1e $ited, a"d therefore, i"1ol1es "o expe"diture of pu%li$
fu"ds. 3t is o"l 2he" a" a$t $o!plai"ed of, 2hi$h !a i"$lude a legislati1e e"a$t!e"t
or statute, i"1ol1es the illegal expe"diture of pu%li$ !o"e that the so*$alled taxpaer
suit !a %e allo2ed. ,hat the $ase at %ar see@s is o"e that e"tails expe"diture of
pu%li$ fu"ds 2hi$h !a %e illegal %e$ause it 2ould %e spe"t for a purpose that of $alli"g
a spe$ial ele$tio" 2hi$h, as 2ill %e sho2", has "o authorit either i" the Co"stitutio" or
a statute.
As 1oters, "either ha1e petitio"ers the re&uisite i"terest or perso"alit to &ualif
the! to !ai"tai" a"d prose$ute the prese"t petitio". The u"$halle"ged rule is that the
perso" 2ho i!pug"s the 1alidit of a statute !ust ha1e a perso"al a"d su%sta"tial
i"terest i" the $ase su$h that he has sustai"ed, or 2ill sustai", dire$t i".ur as a result of
its e"for$e!e"t. 3" the $ase %efore Hs, the alleged i"a$tio" of the C-4BCBC to $all a
spe$ial ele$tio" to fill*up the existi"g 1a$a"$ies i" the <atasa" Pa!%a"sa, sta"di"g
alo"e, 2ould ad1ersel affe$t o"l the ge"erali;ed i"terest of all $iti;e"s. Petitio"ersK
sta"di"g to sue !a "ot %e predi$ated upo" a" i"terest of the @i"d alleged here, 2hi$h
is held i" $o!!o" % all !e!%ers of the pu%li$ %e$ause of the "e$essaril a%stra$t
"ature of the i".ur supposedl shared % all $iti;e"s. Co"$rete i".ur, 2hether a$tual or
threate"ed, is that i"dispe"sa%le ele!e"t of a dispute 2hi$h ser1es i" part to $ast it i" a
for! traditio"all $apa%le of .udi$ial resolutio". ,he" the asserted har! is a
Ige"erali;ed grie1a"$eI shared i" su%sta"tiall e&ual !easure % all or a large $lass of
$iti;e"s, that har! alo"e "or!all does "ot 2arra"t exer$ise of .urisdi$tio". As ad1erted
to earlier, petitio"ers ha1e "ot de!o"strated a" per!issi%le perso"al sta@e, for
petitio"er Co;adaAs i"terest as a" alleged $a"didate a"d as a 1oter are "ot suffi$ie"t to
$o"fer sta"di"g. Petitio"er Co;ada does "ot o"l fail to i"for! the Court of the regio" he
2a"ts to %e a $a"didate %ut !a@es i"dis$ri!i"ate de!a"d that spe$ial ele$tio" %e
$alled throughout the $ou"tr.
71&8 Ma,e/a vs. Ma,araig, 8.9. No. 88291 4a +1, 1991
As to the issue o" the i"stitutio" of a 6TaxpaerAs 5uit7
3" resol1i"g the third issue, i" the petitio" it is alleged that petitio"er is Ii"stituti"g
this suit i" his $apa$it as a taxpaer a"d a dul*ele$ted 5e"ator of the Philippi"es.I
Pu%li$ respo"de"t argues that petitio"er !ust sho2 he has sustai"ed dire$t i".ur as a
result of the a$tio" a"d that it is "ot suffi$ie"t for hi! to ha1e a !ere ge"eral i"terest
$o!!o" to all !e!%ers of the pu%li$.

The Court ho2e1er agrees 2ith the petitio"er that as a taxpaer he !a file the
i"sta"t petitio" follo2i"g the ruli"g i" Lozada 2he" it i"1ol1es illegal expe"diture of
pu%li$ !o"e. The petitio" &uestio"s the legalit of the tax refu"d to NPC % 2a of tax
$redit $ertifi$ates a"d the use of said assig"ed tax $redits % respo"de"t oil $o!pa"ies
to pa for their tax a"d dut lia%ilities to the <39 a"d <ureau of Custo!s.
Assu!i"g petitio"er has the perso"alit to file the petitio", pu%li$ respo"de"ts
also allege that the proper re!ed for petitio"er is a" appeal to the Court of Tax Appeals
u"der 5e$tio" 7 of 9.A. No. 125 i"stead of this petitio". Eo2e1er 5e$tio" 11 of said la2
pro1idesO
5e$. 11. ,ho !a appealJ effe$t of appealOA" perso", asso$iatio" or $orporatio"
ad1ersel affe$ted % a de$isio" or ruli"g of the Co!!issio"er of 3"ter"al 9e1e"ue, the
Colle$tor of Custo!s =Co!!issio"er of Custo!s> or a" pro1i"$ial or Cit <oard of
Assess!e"t Appeals !a file a" appeal i" the Court of Tax Appeals 2ithi" thirt das
after re$eipt of su$h de$isio" or ruli"g.
:ro! the foregoi"g, it is o"l the taxpaer ad1ersel affe$ted % a de$isio" or
ruli"g of the Co!!issio"er of 3"ter"al 9e1e"ue, the Co!!issio"er of Custo!s or a"
pro1i"$ial or $it <oard of Assess!e"t Appeal 2ho !a appeal to the Court of Tax
Appeals. Petitio"er does not fall u"der this $ategor.
";. C*A%E+ vs. PRESI$E!TIA C#MMISSI#! #! G##$ G#%ER!ME!T 7PCGG8,
8. 9. No. 1+071#, 4a 19, 1999
Fa,ts:
4o1a"ts 4a. 3!elda 4ar$os*4a"oto$, :erdi"a"d 9. 4ar$os 33 a"d 3re"e 4ar$os*
Ara"eta allege that the are parties a"d sig"atories to the 8e"eral a"d 5upple!e"tal
Agree!e"ts dated ?e$e!%er 28, 199+, 2hi$h this Court, i" its ?e$isio" pro!ulgated o"
?e$e!%er 9, 1998, de$lared INHCC AN? (-3? for %ei"g $o"trar to la2 a"d the
Co"stitutio".I As su$h, the $lai! to Iha1e a legal i"terest i" the !atter i" litigatio", or i"
the su$$ess of either of the parties or a" i"terest agai"st %oth as to 2arra"t their
i"ter1e"tio".I The add that their ex$lusio" fro! the i"sta"t $ase resulted i" a de"ial of
their $o"stitutio"al rights to due pro$ess a"d to e&ual prote$tio" of the la2s. The also
raise the Ipri"$iple of hierar$hi$al ad!i"istratio" of .usti$eI to i!pug" the CourtKs
$og"i;a"$e of petitio"erKs dire$t a$tio" %efore it.
Iss)e: ,hether or "ot 4o1a"ts 4a. 3!elda 4ar$os*4a"oto$, :erdi"a"d 9. 4ar$os 33
a"d 3re"e 4ar$os*Ara"eta ha1e a legal i"terest i" the !atter i" litigatio".
RUI!G:
The assailed ?e$isio" has %e$o!e fi"al a"d exe$utorJ the origi"al parties ha1e
"ot filed a" !otio" for re$o"sideratio", a"d the period for doi"g so has lo"g lapsed.
3"deed, the !o1a"ts are "o2 legall %arred fro! see@i"g lea1e to parti$ipate i" this
pro$eedi"g.
4o1a"ts $lai! that their ex$lusio" fro! the pro$eedi"g regardi"g the Agree!e"ts
to 2hi$h the 2ere parties a"d sig"atories 2as a de"ial of Itheir propert right to
$o"tra$t 2ithout due pro$ess of la2.I
,e rule that the !o1a"ts are !erel i"$ide"tal, "ot i"dispe"sa%le, parties to the
i"sta"t $ase. <ei"g $o"tra$tors to the 8e"eral a"d 5upple!e"tal Agree!e"ts i"1ol1i"g
their supposed properties, the $lai! that their i"terests are affe$ted % the petitio".
Eo2e1er, as exhausti1el dis$ussed i" the assailed ?e$isio", the Agree!e"ts
u"de"ia%l $o"tai" ter!s a" $o"ditio" that are $learl $o"trar to the Co"stitutio" a"d
the la2s a"d are "ot su%.e$t to $o!pro!ise. 5u$h ter!s a"d $o"ditio"s $a""ot %e
gra"ted % the PC88 to a"o"e, "ot .ust to !o1a"ts. <ei"g so, "o argu!e"t of the
$o"tra$tors 2ill !a@e su$h illegal a"d u"$o"stitutio"al stipulatio"s pass the test of
1alidit. The 1oid agree!e"t 2ill "ot %e re"dered operati1e % the partiesK alleges
perfor!a"$e =partial or full> of their respe$ti1e prestatio"s. A $o"tra$t that 1iolates the
Co"stitutio" a"d the la2 is "ull a"d 1oid aintio a"d 1ests "o rights a"d $reates "o
o%ligatio"s. 3t produ$es "o legal effe$t at all.3" legal ter!s, the !o1a"ts ha1e reall "o
i"terest to prote$t or right to assert i" this pro$eedi"g. Co"trar to their allegatio"s, "o
i"fra$tio" upo" their rights has %ee" $o!!itted.
The origi"al petitio" of :ra"$is$o 3. Cha1e; sought to e"for$e a $o"stitutio"al
right agai"st the Preside"tial Co!!issio" o" 8ood 8o1er"!e"t =PC88> a"d to
deter!i"e 2hether the latter has %ee" a$ti"g 2ithi" the %ou"ds of its authorit. 3" the
pro$ess of ad.udi$atio", there is "o "eed to $all o" ea$h a"d e1er part 2ho! said
age"$ has $o"tra$ted 2ith.
&?. Gon6ales vs. !arvasa, 8.9. N-. 1408+5, August 14, 2000
Fa,ts0 -" No1e!%er 2#, 1998, % 1irtue of Bxe$uti1e -rder =B-> No. 4+,
Preside"t Doseph Bstrada $reated the Philippi"e Co!!issio" o" Co"stitutio"al 9efor!
=PCC9>, i" order to stud a"d re$o!!e"d proposed a!e"d!e"ts a"d)or re1isio"s to
the 1987 Co"stitutio", a"d the !a""er of i!ple!e"ti"g the sa!e. H"der 5e$tio" 7 of
B- 4+, the a!ou"t of P+,000,000 is appropriated for its operatio"al expe"ses to %e
sour$ed fro! the fu"ds of the -ffi$e of the Preside"t. Petitio"er 9a!o" A. 8o";ales, i"
his $apa$it as a taxpaer a"d a $iti;e", assailed the $o"stitutio"alit of the $reatio" of
PCC9 a"d of the positio"s of preside"tial $o"sulta"ts, ad1isers a"d assista"ts.
Petitio"er as@ed the $ourt to e".oi" the PCC9 a"d the preside"tial $o"sulta"ts, ad1isers
a"d assista"ts fro! a$ti"g as su$h. Petitio"er also sought to e".oi" the Co!!issio" o"
Audit =C-A> fro! passi"g i" audit expe"ditures for the PCC9 a"d the preside"tial
$o"sulta"ts, ad1isers a"d assista"ts. Petitio"er a"$hored his petitio" o" t2o grou"ds0=1>
he $o"te"ded that PCC9 is a pu%li$ offi$e 2hi$h o"l the legislature $a" $reate % 2a
of la2Ja"d =2> he asserted that % $reati"g the PCC9, the Preside"t is i"ter1e"i"g i" a
pro$ess fro! 2hi$h he is totall ex$luded % the Co"stitutio", 2hi$h is the a!e"d!e"t
of the fu"da!e"tal $harter.
Iss)e0 ,hether petitio"er has a legal sta"di"g to &uestio" the $o"stitutio"alit of B- 4+
i" his $apa$it as a $iti;e" a"d as a taxpaer.
R)ling0
N-.The Court ruled that petitio"er failed to esta%lish his locus standiso as to
e"a%le hi! to see@ .udi$ial redress as a $iti;e" a"d as a taxpaer.
A $iti;e" a$&uires sta"di"g o"l if he $a" esta%lish that he has suffered so!e
a$tual or threate"ed i".ur as a result of the allegedl illegal $o"du$t of the go1er"!e"t.
The i".ur !ust %e fairl tra$ea%le to the $halle"ged a$tio" a"d is li@el to %e redressed
% a fa1ora%le a$tio". 3" the $ase at %ar, petitio"er has "ot sho2" that he has sustai"ed
or is i" da"ger of sustai"i"g a" perso"al i".ur attri%uta%le to the $reatio" of the PCC9.
Petitio"er has sustai"ed "o dire$t, or e1e" i"dire$t, i".ur. -"l Co"gress, "ot petitio"er,
$a" $lai! a" i".ur i" this $ase si"$e, si"$e a$$ordi"g to the latter, the Preside"t has
e"$roa$hed upo" the legislati1e po2er to $reate a pu%li$ offi$e a"d to propose
a!e"d!e"ts to the Charter % for!i"g the PCC9.
A taxpaer is dee!ed to ha1e sta"di"g to raise a $o"stitutio"al issue 2he" it is sho2"
that pu%li$ fu"ds ha1e %ee" dis%ursed i" alleged $o"tra1e"tio" of the la2 or the
Co"stitutio". A taxpaerAs a$tio" is properl %rought o"l 2he" there is a" exer$ise %
Co"gress of its taxi"g or spe"di"g po2er. 3" the i"sta"t $ase, it is appare"t that there is
"o exer$ise % Co"gress of its taxi"g or spe"di"g po2er. The appropriatio" of
P+,000.000 for the PCC9 2ere authori;ed % the Preside"t, "ot % Co"gress. 3" fa$t,
there 2as "o appropriatio" at all %e$ause i" its stri$t se"se, appropriatio" has %ee"
defi"ed as "othi"g !ore tha" the legislati1e authori;atio" pres$ri%ed % the Co"stitutio"
that !o"e !a %e paid out of the Treasur, 2hile appropriatio" !ade % la2 refers to
the a$t of the legislature setti"g apart or assig"i"g to a parti$ular use a $ertai" su! to
%e used i" the pa!e"t of de%ts or dues fro! the 5tate to its $reditors.The fu"ds used
for the PCC9 2ere ta@e" fro! fu"ds i"te"ded for the -ffi$e of the Preside"t, i" the
exer$ise of the Chief Bxe$uti1eAs po2er to tra"sfer fu"ds pursua"t to 5e$tio" 25 =5> of
Arti$le (3 of the Co"stitutio". ,hile the $ourt retai"s the po2er to de$ide 2hether or "ot
it 2ill allo2 a taxpaerAs suit, petitio"er failed to sho2 that he is a real part i" i"terest U
that he sta"ds to %e %e"efited or i".ured % the .udg!e"t or that he is e"titled to the
a1ails of the suit.
&1. =AHA! vs. Exe,)tive Se,retar-, 8.9. No. 1+8570, -$to%er 10, 2000
Fa,ts:After !u$h "egotiatio" 2ith the respe$ti1e represe"tati1es of %oth the Philippi"es
a"d the H"ited 5tates of A!eri$a =H5> that started o" Dul 18, 1997, the" Preside"t
:idel (. 9a!os appro1ed said agree!e"t, 2hi$h 2as respe$ti1el sig"ed %
?epart!e"t of :oreig" Affairs =?:A> 5e$retar ?o!i"go 5ia;o" a"d H5 A!%assador
Tho!as Eu%%ard o" :e%ruar 10, 1998.
-" -$to%er 5, 1998, the" Preside"t Doseph B. Bstrada, through respo"de"t
5e$retar of :oreig" Affairs, ratified the (:A.
The (:A, for 2hi$h 5e"ate $o"$urre"$e 2as sought a"d re$ei1ed o" 4a 27,
1999. -" Du"e 1, 1999, the (:A offi$iall e"tered i"to for$e after a" Bx$ha"ge of Notes
%et2ee" respo"de"t 5e$retar 5ia;o" a"d H5 A!%assador Eu%%ard.
The (:AAs Arti$lesA $o"stitutio"alit 2ere $halle"ged o" se1eral grou"ds.
9egardi"g duties, taxes a"d other si!ilar $harges, the follo2i"g Arti$le pro1ides0
6Arti$le (33
3!portatio" a"d Bxportatio"
61. H"ited 5tates 8o1er"!e"t e&uip!e"t, !aterials, supplies, a"d other
propert i!ported i"to or a$&uired i" the Philippi"es % or o" %ehalf of the
H"ited 5tates ar!ed for$es i" $o""e$tio" 2ith a$ti1ities to 2hi$h this
agree!e"t applies, shall %e free of all Philippi"e duties, taxes a"d other
si!ilar $harges. xxx
62. 9easo"a%le &ua"tities of perso"al %aggage, perso"al effe$ts, a"d other
propert for the perso"al use of H"ited 5tates perso""el !a %e i!ported
i"to a"d used i" the Philippi"es free of all duties, taxes a"d other si!ilar
$harges duri"g the period of their te!porar sta i" the Philippi"es. xxx
Iss)e0
?o the petitio"ers ha1e legal ta"di"g as $o"$er"ed $iti;e"s, taxpaers or
legislators to &uestio" the $o"stitutio"alit of the (:A/
R)ling:
No.
A part %ri"gi"g a suit $halle"gi"g the $o"stitutio"alit of a la2, a$t, or statute
!ust sho2 6"ot o"l that the la2 is i"1alid, %ut also that he has sustai"ed or i" is i"
i!!ediate, or i!!i"e"t da"ger of sustai"i"g so!e dire$t i".ur as a result of its
e"for$e!e"t, a"d "ot !erel that he suffers there% i" so!e i"defi"ite 2a.7 Ee !ust
sho2 that he has %ee", or is a%out to %e, de"ied so!e right or pri1ilege to 2hi$h he is
la2full e"titled, or that he is a%out to %e su%.e$ted to so!e %urde"s or pe"alties %
reaso" of the statute $o!plai"ed of.
Petitio"ers failed to sho2, to the satisfa$tio" of this Court, that the ha1e
sustai"ed, or are i" da"ger of sustai"i"g a" dire$t i".ur as a result of the e"for$e!e"t
of the (:A. As taxpaers, petitio"ers ha1e "ot esta%lished that the (:A i"1ol1es the
exer$ise % Co"gress of its taxi"g or spe"di"g po2ers. A taxpaerAs suit refers to a
$ase 2here the a$t $o!plai"ed of dire$tl i"1ol1es the illegal dis%urse!e"t of pu%li$
fu"ds deri1ed fro! taxatio".
Clearl, i"as!u$h as "o pu%li$ fu"ds raised % taxatio" are i"1ol1ed i" this $ase,
a"d i" the a%se"$e of a" allegatio" % petitio"ers that pu%li$ fu"ds are %ei"g !isspe"t
or illegall expe"ded, petitio"ers, as taxpaers, ha1e "o legal sta"di"g to assail the
legalit of the (:A.
5i!ilarl, the petitio"er*legislators =Ta"ada, Arroo, et$.> do "ot possess the
re&uisite lo$us sta"di to sue. 3" the a%se"$e of a $lear sho2i"g of a" dire$t i".ur to
their perso" or to the i"stitutio" to 2hi$h the %elo"g, the $a""ot sue. The 3"tegrated
<ar of the Philippi"es =3<P> is also stripped of sta"di"g i" these $ases. The 3<P la$@s
the legal $apa$it to %ri"g this suit i" the a%se"$e of a %oard resolutio" fro! its <oard of
8o1er"ors authori;i"g its Natio"al Preside"t to $o!!e"$e the prese"t a$tio".
Co"solidated petitio"s for $ertiorari a"d i".u"$tio" 2ere dis!issed.
&". $el Mar vs. PAGC#R, 8.9. No. 1+8298 Du"e 19, 2001
Fa,ts:
These t2o $o"solidated petitio"s $o"$er" the issue of 2hether the fra"$hise
gra"ted to the Philippi"e A!use!e"t a"d 8a!i"g Corporatio" =PA8C-9> i"$ludes the
right to !a"age a"d operate .ai*alai. The Philippi"e A!use!e"t a"d 8a!i"g
Corporatio" is a go1er"!e"t*o2"ed a"d $o"trolled $orporatio" orga"i;ed a"d existi"g
u"der Preside"tial ?e$ree No. 18#9 2hi$h 2as e"a$ted o" Dul 11, 198+. Pursua"t to
5e$tio"s 1 a"d 10 of P.?. No. 18#9, respo"de"t PA8C-9 re&uested for legal ad1i$e
fro! the 5e$retar of Dusti$e as to 2hether or "ot it is authori;ed % its Charter to
operate a"d !a"age .ai*alai fro"to"s i" the $ou"tr. 3" its -pi"io" No. #7, 5eries of
199# dated Dul 15, 199#, the Se,retar- o( .)sti,e opi"ed that 6the authorit of
PA8C-9 to operate a"d !ai"tai" ga!es of $ha"$e or ga!%li"g exte"ds to .ai*alai
2hi$h is a for! of sport or ga'e pla-e/ (or 4ets a"d that the Charter of PA8C-9
a!ou"ts to a legislati1e fra"$hise for the purpose.7
Petitio"ers 9aoul <. del 4ar, :ederi$o 5. 5a"do1al 33, 4i$hael T. ?efe"sor, a"d
i"ter1e"or Dua" 4iguel Lu%iri, are s)ing as taxpa-ers an/ in their ,apa,it- as
'e'4ers o( the *o)se o( Representatives represe"ti"g the :irst ?istri$t of Ce%u
Cit, the Co"e Co"gressio"al ?istri$t of 4ala%o"*Na1otas, the Third Co"gressio"al
?istri$t of Vue;o" Cit, a"d the Third Co"gressio"al ?istri$t of <u@id"o", respe$ti1el.
Iss)e: ,hether or "ot there is a 1alid taxpaerAs suit.
RUI!G:
The 5upre!e Court held that as !e!%ers of the Eouse of 9eprese"tati1es,
petitio"ers ha1e legal sta"di"g to file the petitio"s at %ar. 3" the i"sta"t $ases,
petitio"ers $o!plai" that the operatio" of .ai*alai $o"stitutes a" i"fri"ge!e"t %
PA8C-9 of the legislatureAs ex$lusi1e po2er to gra"t fra"$hise. To the exte"t the
po2ers of Co"gress are i!paired, so is the po2er of ea$h !e!%er thereof, si"$e his
offi$e $o"fers a right to parti$ipate i" the exer$ise of the po2ers of that i"stitutio", so
petitio"ers $o"te"d. The $o"te"tio" $o!!a"ds our $o"$urre"$e for it is "o2 settled
that a !e!%er of the Eouse of 9eprese"tati1es has sta"di"g to !ai"tai" i"1iolate the
prerogati1es, po2ers a"d pri1ileges 1ested % the Co"stitutio" i" his offi$e. As
pres$ie"tl stressed i" the $ase of 0ilosa,an, Inc., 1i;0
6,e fi"d the i"sta"t petitio" to %e of tra"s$e"de"tal i!porta"$e to the pu%li$. The
issues it raised are of para!ou"t pu%li$ i"terest a"d of a $ategor e1e" higher tha"
those i"1ol1ed i" !a" of the afore$ited $ases. The ra!ifi$atio"s of su$h issues
i!!easura%l affe$t the so$ial, e$o"o!i$, a"d !oral 2ell*%ei"g of the people e1e" i"
the re!otest %ara"gas of the $ou"tr a"d the $ou"ter*produ$ti1e a"d retrogressi1e
effe$ts of the e"1isio"ed o"*li"e lotter sste! are as staggeri"g as the %illio"s i" pesos
it is expe$ted to raise. The legal sta"di"g the" of the petitio"ers deser1es re$og"itio" x
x x.7
&;. .oel G. Miran/a vs. Antonio C. Carreon et al., 8.9. No. 14+540. April 11, 200+
Fa,ts:
3" the earl part of 1988, (i$e 4aor A!elita Na1arro, 2hile ser1i"g as A$ti"g
4aor of the Cit of 5a"tiago %e$ause of the suspe"sio" of 4aor Dose 4ira"da,
appoi"ted the a%o1e*"a!ed respo"de"ts to 1arious positio"s i" the $it
go1er"!e"t. Their appoi"t!e"ts 2ere 2ith per!a"e"t status a"d %ased o" the
e1aluatio" !ade % the Cit Perso""el 5ele$tio" a"d Pro!otio" <oard =P5P<> $reated
pursua"t to 9epu%li$ A$t No. 71#0. The Ci1il 5er1i$e Co!!issio" =C5C> appro1ed the
appoi"t!e"ts.
,he" 4aor Dose 4ira"da reassu!ed his post o" 4ar$h 5, 1998 after his
suspe"sio", he $o"sidered the $o!positio" of the P5P< irregular si"$e the !a.orit
part, to 2hi$h he %elo"gs, 2as "ot properl represe"ted. Ee the" for!ed a three*!a"
spe$ial perfor!a"$e audit tea! $o!posed of 9o%erto C. <aaua, A"to"io AC. 4arti"e;
a"d A"to"io C. 5a"tos, to $o"du$t a perso""el e1aluatio" audit of those 2ho 2ere
pre1iousl s$ree"ed % the P5P< a"d those o" pro%atio". After $o"du$ti"g the
e1aluatio", the audit tea! su%!itted to hi! a report dated Du"e 8, 1998 stati"g that the
respo"de"ts 2ere fou"d 62a"ti"g i" =their> perfor!a"$e.7
-" Du"e 10, 1998, or three !o"ths after 4aor 4ira"da reassu!ed his post, he
issued a" order ter!i"ati"g respo"de"tsA ser1i$es effe$ti1e Du"e 15, 1998 %e$ause the
6perfor!ed poorl7 duri"g the pro%atio"ar period.
9espo"de"ts appealed to the C5C. -" -$to%er 19, 1998, the C5C issued
9esolutio" No. 982717 re1ersi"g the order of 4aor 4ira"da. 4ea"2hile, the
C-4BCBC dis&ualified 4aor Dose 4ira"da as a !aoralt $a"didate i" the 1998 4a
ele$tio"s. Eis so" .oel G. Miran/a, herei" petitio"er, su%stituted for hi! a"d 2as
pro$lai!ed 4aor of 5a"tiago Cit. Ee the" filed a !otio" for re$o"sideratio" of the
C5C 9esolutio" No. 982717 =i" fa1or of respo"de"ts> %ut it 2as de"ied i" the C5C
9esolutio" No. 990557 dated 4ar$h +, 1999.
Petitio"er $o"te"ds that as a taxpaer, he has a legal i"terest i" the $ase at %ar,
he"$e, $a" la2full file this petitio".
Iss)e: ,hether or "ot the petitio"er has legal sta"di"g to !ai"tai" the i"sta"t $ase.
R)ling:
The 5upre!e Court held that petitio"er, "ot %ei"g a real part i" i"terest, has "o
legal perso"alit to file this petitio". <esides, his !otio" for re$o"sideratio" 2as 1alidl
2ithdra2" % the i"$u!%e"t 4aor. B1e" assu!i"g he is a real part i" i"terest, 2e see
"o reaso" to distur% the fi"di"gs of %oth the C5C a"d the Court of Appeals. The
rei"state!e"t of respo"de"ts 2ho, u"fortu"atel, 2ere 1i$ti!s of politi$al %i$@eri"gs, is
i" order.
7118 Caltex vs. Co''ission on A)/it, 8.9. No. 92585, 4a 8, 1992
As to Inherent %imitations& Purpose must be public in nature
,e fi"d "o !erit i" petitio"erKs $o"te"tio" that the -P5: $o"tri%utio"s are "ot for
a pulic purpose %e$ause the go to a spe$ial fu"d of the go1er"!e"t. Taxation is no
longer envisione/ as a 'eas)re 'erel- to raise reven)e to s)pport the existen,e
o( the govern'entA taxes 'a- 4e levie/ >ith a reg)lator- p)rpose to provi/e
'eans (or the reha4ilitation an/ sta4ili6ation o( a threatene/ in/)str- >hi,h is
a((e,te/ >ith p)4li, interest as to 4e >ithin the poli,e po>er o( the state. There
$a" %e "o dou%t that the oil i"dustr is greatl i!%ued 2ith pu%li$ i"terest as it 1itall
affe$ts the ge"eral 2elfare. A" u"regulated i"$rease i" oil pri$es $ould hurt the li1es of
a !a.orit of the people a"d $ause e$o"o!i$ $risis of u"told proportio"s. 3t 2ould ha1e
a $hai" rea$tio" i" ter!s of, a!o"g others, de!a"ds for 2age i"$reases a"d up2ard
spiralli"g of the $ost of %asi$ $o!!odities. The sta%ili;atio" the" of oil pri$es is of pri!e
$o"$er" 2hi$h the state, 1ia its poli$e po2er, !a properl address.
Also, P.?. No. 195#, as a!e"ded % B.-. No. 1+7, expli$itl pro1ides that the
sour$e of -P5: is taxatio". No a!ou"t of se!a"ti$al .uggleries $ould di! this fa$t.
&2. Pas,)al vs. Se,retar- o( P)4li, 1or<s, 110 Phil ++1
Fa,ts:A la2 2as e"a$ted i" 195+ $o"tai"i"g a pro1isio" for the
$o"stru$tio",re$o"stru$tio", repair, exte"sio" a"d i!pro1e!e"t of Pasig feeder road
ter!i"als2ithi" A"to"io 5u%di1isio" o2"ed % 5e"ator Dose C. Lulueta. Lulueta
6do"ated7 saidpar$els of la"d to the 8o1er"!e"t 5 !o"ths after the e"a$t!e"t of the
la2, o" the$o"ditio" that if the 8o1er"!e"t 1iolates su$h $o"ditio" the la"ds 2ould
re1ert toLulueta. The pro1i"$ial go1er"or of 9i;al, ,e"$eslao Pas$ual, &uestio"ed the
1alidit of the do"atio" a"d the Co"stitutio"alit of the parti$ular pro1isio", it %ei"g
a"appropriatio" "ot for a pu%li$ purpose.
Iss)e: 3s the appropriatio" 1alid/
RUI!G:
No. The appropriatio" of a!ou"t for the $o"stru$tio" o" a la"d o2"ed %pri1ate
i"di1idual is i"1alid i!positio" si"$e it results i" the pro!otio" of pri1atee"terprise, it
%e"efits the propert of a parti$ular i"di1idual. The pro1isio" that thela"d thereafter %e
do"ated to the go1er"!e"t does "ot $ure this defe$t. The rule isthat if the pu%li$
ad1a"tage or %e"efit is !erel i"$ide"tal i" the pro!otio" of aparti$ular e"terprise, su$h
defe$t shall re"der the la2 i"1alid. -" the other ha"d, if 2hat is i"$ide"tal is the
pro!otio" of a pri1ate e"terprise, the tax la2 shall %edee!ed 6for pu%li$ purpose7.
&3. %alentin Tio vs. %i/eogra' Reg)lator- =oar/, 8.9. No. C*75#97 Du"e 18, 1987
Fa,ts: Preside"tial ?e$ree No. 1987 e"titled 6A" A$t Creati"g the (ideogra!
9egulator <oard7 2ith %road po2ers to regulate a"d super1ise the 1ideogra! i"dustr,
too@ effe$t o" April 10, 198#. This petitio" 2as filed o" 5epte!%er 1, 198# % (ale"ti"
Tio o" his o2" %ehalf a"d of other 1ideogra! operators assaili"g the $o"stitutio"alit of
P? 1987. -" -$to%er 2+, 198#, 8reater 4a"ila Theaters Asso$iatio", 3"tegrated 4o1ie
Produ$ers, 3!porters a"d ?istri%utors Asso$iatio" a"d Philippi"e 4otio" Pi$tures
Produ$ers Asso$iatio" 2ere per!itted to i"ter1e"e i" the $ase, o1er petitio"erAs
oppositio", upo" the allegatio"s that i"ter1e"tio" 2as "e$essar for the $o!plete
prote$tio" of their rights a"d that their 6sur1i1al a"d 1er existe"$e is threate"ed % the
u"regulated proliferatio" of fil! pira$.7 This de$ree 2as also rei"for$ed % P? 1994
2hi$h a!e"ded the Natio"al 3"ter"al 9e1e"ue Code. The a!e"d!e"t pro1ides that
6there shall %e $olle$ted o" ea$h pro$essed 1ideo*tape $assette, read for pla%a$@,
regardless of le"gth, a" a""ual tax of fi1e pesos pro1ided that lo$all !a"ufa$tured or
i!ported %la"@ 1ideo tapes shall %e su%.e$t to sales tax.7 P? 1987 also i!posed a +0'
tax o" the gross re$eipts paa%le to the lo$al go1er"!e"t. The petitio"ers also
$o"te"ded that the +0' tax i!posed is harsh, oppressi1e a"d $o"fis$ator.
Iss)es: ,hether or "ot P? 1987 is u"$o"stitutio"al. ,hether or "ot the le1 of the
+0' tax is for a pu%li$ purpose. ,hether or "ot the +0' tax i!posed is harsh,
oppressi1e a"d $o"fis$ator.
R)ling:
The 5upre!e Court fou"d "o $lear 1iolatio" of the Co"stitutio" 2hi$h 2ould .ustif
pro"ou"$i"g P? 1987 as u"$o"stitutio"al. The petitio"ers failed to o1er$o!e the
presu!ptio" of 1alidit 2hi$h atta$hes to a $halle"ged statute. The le1 of the +0' tax
is for a pu%li$ purpose. 3t 2as i!posed pri!aril to a"s2er the "eed for regulati"g the
1ideo i"dustr %e$ause of the ra!pa"t fil! pira$, the flagra"t 1iolatio" of i"telle$tual
propert rights a"d the proliferatio" of por"ographi$ 1ideo tapes. ,hile the dire$t
%e"efi$iaries of P? 1987 is the !o1ie i"dustr, the $iti;e"s are held to %e its i"dire$t
%e"efi$iaries. The tax i!posed is "ot o"l regulator %ut also a re1e"ue !easure
pro!pted % the reali;atio"s that ear"i"gs of 1ideogra! esta%lish!e"ts of arou"d P#00
!illio" a""uall ha1e "ot %ee" taxed, depri1i"g the go1er"!e"t of a" additio"al sour$e
of re1e"ue.
-" the issue that the +0' tax i!posed is harsh, oppressi1e a"d $o"fis$ator, it is
%eo"d &uestio" that a tax does "ot $ease to %e 1alid !erel %e$ause it regulates or
e1e" defi"itel deters the a$ti1ities taxed. The po2er to i!pose taxes is so u"li!ited i"
for$e a"d so sear$hi"g i" exte"t, that the $ourts s$ar$el 1e"ture to de$lare that it is
su%.e$t to a" restri$tio"s 2hate1er, ex$ept su$h as rest i" the dis$retio" of the authorit
2hi$h exer$ises it. 3" i!posi"g a tax, the legislature a$ts upo" its $o"stitue"ts. This is,
i" ge"eral, a suffi$ie"t se$urit agai"st erro"eous a"d oppressi1e taxatio".
&5. Gaston vs. Rep)4li, Planter, 158 5C9A #2#
Fa,ts: Petitio"ers are sugar produ$ers a"d pla"ters a"d !illers filed a
4AN?A4H5 to i!ple!e"t the pri1ati;atio" of 9epu%li$ Pla"ters <a"@, a"d for the
tra"sfer of the shares i" the go1er"!e"t %a"@ to sugar produ$ers a"d pla"ters.
=%e$ause the are allegedl the true %e"efi$ial o2"ers of the %a"@ si"$e the pa P1.00
per pi$ul of sugar fro! the pro$eeds of sugar produ$ers as 5TA<3C3LAT3-N :BB5>.
The shares are $urre"tl held % Philsu$o! ) 5ugar 9egulator Ad!i".
The 5olge" $ou"tered that the sta%ili;atio" fees are $o"sidered go1er"!e"t
fu"ds a"d that the tra"sfer of shares to fro! Philsu$o! to the sugar produ$ers 2ould %e
irregular.
Iss)es0 ,hat is the "ature of the P1.00 sta%ili;atio" fees $olle$ted fro! sugar
produ$ers/ Are the fu"ds held i" trust for the!, or are the pu%li$ fu"ds/ Are the
shares i" the %a"@ =paid usi"g these fees> o2"ed % the go1er"!e"t Philsu$o! or
pri1atel % the differe"t sugar pla"ters fro! 2ho! su$h fees 2ere $olle$ted/
RUI!G: PH<C3C :HN?5. ,hile it is true that the $olle$ted fees 2ere used
to %u shares i" 9P<, it did "ot $olle$t said fees for the a$$ou"t of sugar produ$ers. The
sta%ili;atio" fees 2ere $harged o" sugar produ$ed a"d !illed 2hi$h ACC9HB? T-
PE3C5HC-4, u"der P? ++8.
The fees $olle$ted A9B 3N TEB NATH9B -: A TAN., 2hi$h is 2ithi" the po2er of
the state to i!pose :-9 TEB P9-4-T3-N -: TEB 5H8A9 3N?H5T9P. The
$o"stitute sugar lie"s. The $olle$tio"s a$$rue to a 5PBC3AC :HN?5. 3t is le1ied "ot
purel for taxatio", %ut for regulatio", to pro1ide !ea"s T- 5TA<3C3LB TEB 5H8A9
3N?H5T9P. The le1 is pri!aril a" exer$ise of poli$e po2ers.
The fa$t that the 5tate has ta@e" !o"e pursua"t to la2 is suffi$ie"t to $o"stitute
the! as 5TATB :HN?5, e1e" though held for a spe$ial purpose. Ea1i"g %ee" le1ied for
a spe$ial purpose, the re1e"ues are treated as a spe$ial fu"d, ad!i"istered i" trust for
the purpose i"te"ded. -"$e the purpose has %ee" fulfilled or a%a"do"ed, the %ala"$e
2ill %e tra"sferred to the ge"eral fu"ds of go1At.
3t is a spe$ial fu"d si"$e the fu"ds are deposited i" PN<, "ot i" the Natio"al
Treasur. The sugar pla"ters are N-T <BNB:3C3AC -,NB95. The !o"e is $olle$ted
fro! the! o"l %e$ause the it is also the 2ho are to %e %e"efited fro! the
expe"diture of fu"ds deri1ed fro! it. The i"1esti"g of the fu"ds i" 9P< is "ot alie" to the
purpose si"$e the <a"@ is a $o!!odit %a"@ for sugar, $o"$ei1ed for the sugar i"dustrA
gro2th a"d de1elop!e"t.
9e1e"ues deri1ed fro! taxes $a""ot %e used purel for pri1ate purposes or for
the ex$lusi1e %e"efit of pri1ate perso"s. The 5ta%ili;atio" :u"d is to %e utili;ed for the
%e"efit of the BNT39B 5H8A9 3N?H5T9P, a"d all its $o!po"e"ts, sta%ili;atio" of
do!esti$ a"d foreig" !ar@ets, si"$e the sugar i"dustr is of 1ital i!porta"$e to the
$ou"trAs e$o"o! a"d "atio"al i"terest.
7;8 Co,o(e/ vs. Rep)4li,, 89 Nos. 177857*58, Da"uar 24, 2012
P)rpose ')st 4e P)4li, in !at)re
Taxes are i!posed o"l for a pu%li$ purpose. The :u"d i" parti$ular 2as $reated
for the prote$tio" of the e"tire $o$o"ut i"dustr, a"d !ore i!porta"tl for the $o"su!i"g
pu%li$. 3t 2as $reated "ot espe$iall for the $o$o"ut far!ers %ut for the e"tire $o$o"ut
i"dustr, al%eit the i!pro1e!e"t of the i"dustr 2ould dou%tless redou"d to the %e"efit
of the far!ers.
Thus, the 5C $a""ot allo2 the $o"1ersio" of spe$ial fu"ds i"to a pri1ate fu"d for
the %e"efit of pri1ate i"di1iduals. H"der Art. (3, 5e$tio" 29 =+>, 6All !o"e $olle$ted o"
a" tax le1ied for a spe$ial purpose shall %e treated as a spe$ial fu"d a"d paid out for
su$h purpose o"l. 3f the purpose for 2hi$h a spe$ial fu"d 2as $reated has %ee"
fulfilled or a%a"do"ed, the %ala"$e, if a", shall %e tra"sferred to the ge"eral fu"ds of
the 8o1er"!e"t.7
The 5C ruled that the fa$t that the $o$o"ut le1 fu"ds 2ere $olle$ted fro! the
perso"s or e"tities i" the $o$o"ut i"dustr, a!o"g others, does "ot a"d $a""ot e"title
the! to %e %e"efi$ial o2"ers of the su%.e$t fu"ds U or !ore %lu"tl, o2"ers thereof i"
their pri1ate $apa$it. 5aid pri1ate i"di1iduals i.e. the far!ers $a""ot o2" the HCP<
shares of sto$@s so pur$hased usi"g the said spe$ial fu"ds of the 8o1er"!e"t.
7"98 =as,o vs. PAGC#R, 8.9. No. 91#49, 4a 14, 1991
As to $elegation to o,al Govern'ents
a8 The Cit of 4a"ila, %ei"g a !ere 4u"i$ipal $orporatio" has "o i"here"t right to
i!pose taxes, thus it $a""ot assu!e itI. 3ts Ipo2er to taxI therefore !ust al2as ield to
a legislati1e a$t 2hi$h is superior ha1i"g %ee" passed upo" % the state itself 2hi$h has
the Ii"here"t po2er to taxI.
48 The Charter of the Cit of 4a"ila is su%.e$t to $o"trol % Co"gress. 3f Co"gress $a"
gra"t the Cit of 4a"ila the po2er to tax $ertai" !atters, it $a" also pro1ide for
exe!ptio"s or e1e" ta@e %a$@ the po2er.
,8 The Cit of 4a"ilaKs po2er to i!pose li$e"se fees o" ga!%li"g, has lo"g %ee"
re1o@ed % P.?. No. 771 a"d 2as 1ested ex$lusi1el o" the Natio"al 8o1er"!e"t.
/8 Co$al go1er"!e"ts ha1e "o po2er to tax i"stru!e"talities of the Natio"al
8o1er"!e"t. -ther2ise, its operatio" !ight %e %urde"ed, i!peded or su%.e$ted to
$o"trol % a !ere Co$al go1er"!e"t. PA8C-9 is a go1er"!e"t o2"ed or $o"trolled
$orporatio" 2ith a" origi"al $harter, P? 18#9. 3t also exer$ises regulator po2ers si"$e
it regulates ga!%li"g $asi"os, thus it perfor!s go1er"!e"tal fu"$tio"s a"d pla$es it i"
the $ategor of a" age"$ or i"stru!e"talit of the 8o1er"!e"t.
e8 The Co"stitutio" =Art. N 5e$. 5> pro1ides that lo$al go1er"!e"ts shall ha1e the po2er
to i!pose taxes a"d fees %ut this is su%.e$t to guideli"es a"d li!itatio"s as the
Co"gress !a pro1ide.
&9. A!$ TRA!SP#RTATI#! #FFICE FT#G vs. CITH #F =UTUA!, represente/ in
this ,ase 4- $e'o,rito $. Pla6a II,Cit- Ma-or, 8.9. No. 1+1512, Da"uar 20, 2000.
Fa,ts: 9espo"de"t Cit of <utua" asserts that o"e of the salie"t pro1isio"s
i"trodu$ed % the Co$al 8o1er"!e"t Code is i" the area of lo$al taxatio" 2hi$h allo2s
C8Hs to $olle$t registratio" fees or $harges alo"g 2ith, i" its 1ie2, the $orrespo"di"g
issua"$e of all @i"ds of li$e"ses or per!its for the dri1i"g of tri$$les.
5e$. 129. #ower to Create 1ources or +evenue. O Ba$h lo$al go1er"!e"t u"it
shall exer$ise its po2er to $reate its o2" sour$es of re1e"ue a"d to le1 taxes,
fees, a"d $harges su%.e$t to the pro1isio"s herei", $o"siste"t 2ith the %asi$
poli$ of lo$al auto"o!. 5u$h taxes, fees, a"d $harges shall a$$rue ex$lusi1el
to the lo$al go1er"!e"t u"its.
5e$. 1++. Common Limitations on the &axing #owers of Local Government Units.
O H"less other2ise pro1ided herei", the exer$ise of the taxi"g po2ers of
pro1i"$es, $ities, !u"i$ipalities, a"d %ara"gas shall "ot exte"d to the le1 of the
follo2i"g0
x x x x x x x x x
=l> Taxes, fees or $harges for the registratio" of !otor 1ehi$les a"d for the
issua"$e of all @i"ds of li$e"ses or per!its for the dri1i"g thereof, ex,ept
tri,-,les.
The Cit of <utua" asserts that 5e$. 129 a"d 5e$.1++ of the Co$al 8o1er"!e"t Code is their
%asis for said ordi"a"$e a"d that, said pro1isio"s authori;e C8Hs to $olle$t registratio"
fees or $harges alo"g 2ith, i" its 1ie2, the $orrespo"di"g issua"$e of all @i"ds of
li$e"ses or per!its for the dri1i"g of tri$$les.CT- explai"s that o"e of the fu"$tio"s of
the Natio"al 8o1er"!e"t, that , i"deed has %ee" tra"sferred to C8Hs is the fra"$hisi"g
authorit o1er tri$$les*for*hire of the CT:9< %ut N-T the authorit of the CT- to
register all !otor 1ehi$les a"d to issue to &ualified perso"s of li$e"ses to dri1e su$h
1ehi$les. The 9TC of <utua" de$reed a" issua"$e of a PB94ANBNT ,93T -:
3NDHCT3-N agai"st T- prohi%iti"g a"d e".oi"i"g CT-, as 2ell as its e!ploees a"d
other perso"s a$ti"g i" its %ehalf, fro! =a> registeri"g tri$$les a"d =%> issui"g li$e"ses
to tri$$le dri1ers. The CA sustai"ed the 9TCAs de$isio". The ad1erse ruli"gs of %oth
Courts pro!pted the CT- to file a" i"sta"t petitio" for re1ie2 o" $ertiorari to a""ul a"d
set aside the earlier Court de$isio"s.
Iss)e:
,-N u"der the prese"t set up, the po2er of the Ca"d 9egistratio" -ffi$e =ICT-I> to
register, tri$$les i" parti$ular, as 2ell as to issue li$e"ses for the dri1i"g thereof, has
li@e2ise de1ol1ed to lo$al go1er"!e"t u"its.
R)ling:
The po2er o1er tri$$les gra"ted u"der 5e$tio" 458=8>=+>=(3> of the Co$al
8o1er"!e"t Code to C8Hs is the po2er to regulate their operatio" a"d to gra"t
fra"$hises for the operatio" thereof. The ex$lusio"ar $lause $o"tai"ed i" the tax
pro1isio"s of 5e$tio" 1++=1> of the Co$al 8o1er"!e"t Code !ust "ot %e held to ha1e
had the effe$t of 2ithdra2i"g the express po2er of CT- to $ause the registratio" of all
!otor 1ehi$les a"d the issua"$e of li$e"ses for the dri1i"g thereof.
5aid po2ers =to register a"d issue li$e"ses> re!ai" u"der CT-As ex$lusi1e
.urisdi$tio". The registratio" a"d li$e"si"g fu"$tio"s are 1ested i" the CT- =pursua"t to
Art. + 5e$.4 =d> F1G, 10 of 9A 41+#*Ca"d Tra"sportatio" a"d Traffi$ Code> 2hile
fra"$hisi"g a"d regulator respo"si%ilities are 1ested i" the CT:9< =Ca"d Tra"sportatio"
:ra"$hisi"g a"d 9egulator <oardJ pursua"t to B- X 202>. H"der the Co$al 8o1er"!e"t
Code=spe$ifi$all 5e$. 458 =8>=+>=(3>>, the o,al Govern'ent Units no> have the po>er
to REGUATE =to fix, esta%lish or $o"trol, to ad.ust % rule, !ethod or esta%lish !ode to
dire$t % rule or restri$tio"J or to su%.e$t to go1er"i"g pri"$iples or la2s> the operation
o( tri,-,les (or hire an/ grant (ran,hises thereo( %ut the are still su%.e$t to the
guideli"es pres$ri%ed % the ?-TC =?epart!e"t of Tra"sportatio"
a"d Co!!u"i$atio"sJ u"der Arti$le 458=a> F+*(3G of the 9A 71#0>.
&:. Congress'an EnriI)e T. Gar,ia 7Se,on/ $istri,t o( =ataan8 vs. the Exe,)tive
Se,retar-, the Co''issioner #( C)sto's, the !ational E,ono'i, an/ $eveB
lop'ent A)thorit-, the Tari(( Co''ission, the Se,retar- #( Finan,e, an/ the
Energ- Reg)lator- =oar/, 8.9. No. 10127+, 211 5C9A 219, Dul 0+, 1992.
Fa,ts: -" 27 No1e!%er 1990, Pres. Cora;o" A&ui"o issued Bxe$uti1e -rder No.
4+8 2hi$h i!posed a" additio"al dut of 5' ad 1alore! to i!ported goods %rought i"
the Philippi"es. 3t 2as i!posed a$ross the %oard o" all i!ported arti$les, i"$ludi"g
$rude oil a"d other oil produ$ts i!ported i"to the Philippi"es. -" Da"uar +, 1991, it 2as
agai" i"$reased to 9' ad 1alore! % 1irtue of Bxe$uti1e -rder No. 44+.
-" 24 Dul 1991, the ?epart!e"t of :i"a"$e re&uested the Tariff Co!!issio" to
i"itiate the pro$ess re&uired % the Tariff a"d Custo!s Code for the i!positio" of a
spe$ifi$ le1 o" $rude oil a"d other petroleu! produ$ts, as !a"dated % 5e$tio" 104 of
the Tariff a"d Custo!s Code. :ollo2i"g su$h re&uest, the Tariff Co!!issio" $o"du$ted
a pu%li$ heari"g as re&uired % 5e. 404 of the aforesaid $ode.
-" August 15, 1991, agai" the Preside"t issued Bxe$uti1e -rder No. 475 2as
issued % redu$i"g the rate of additio"al dut o" all i!ported arti$les fro! 9' to 5' ad
1alore!, ex$ept for $rude oil a"d other oil produ$ts 2hi$h $o"ti"ued to %e su%.e$t to the
additio"al dut of 9' ad 1alore!.
-" August 1#, 1991, upo" $o!pletio" of the pu%li$ heari"gs $o"du$ted % the
Tariff Co!!issio"s, it su%!itted a report to the Preside"t. A$ti"g o" su$h report, the
Preside"t issued Bxe$uti1e -rder No. 478 2hi$h le1ied a spe$ial dut of P0.95 per liter
or P151.05 per %arrel of i!ported $rude oil a"d P1.00 per liter of i!ported oil produ$ts.
This spe$ial dut 2as i" additio" to the 9' ad 1alore! duties.
<e$ause of these foregoi"g $ir$u!sta"$es, Co"gress!a" 8ar$ia alleged the
illegalit a"d u"$o"stitutio"alit of Bxe$uti1e -rder Nos. 475 a"d 478. Ee $o"te"ded
that it ru"s $ou"ter the pro1isio" of 5e$. 24, Art. (3 of the Co"stitutio". Ee a1erred that
si"$e the Co"stitutio" 1ests the authorit to e"a$t re1e"ue %ills i" Co"gress, the
Preside"t !a "ot assu!e su$h po2er % issui"g exe$uti1e orders 2hi$h are i" the
"ature of re1e"ue*ge"erati"g !easures.
Ee e1e" argued that Bxe$uti1e -rders No. 475 a"d 478 $o"tra1e"e 5e$tio" 401
of the Tariff a"d Custo!s Code, 2hi$h 5e$tio" authori;es the Preside"t, a$$ordi"g to
petitio"er, to i"$rease, redu$e or re!o1e tariff duties or to i!pose additio"al duties o"l
2he" "e$essar to prote$t lo$al i"dustries or produ$ts %ut "ot for the purpose of raisi"g
additio"al re1e"ue for the go1er"!e"t.
Ee"$e, this petitio".
Iss)e: ,hether or "ot the Preside"t is 1ested 2ith delegated taxi"g po2er thus,
authori;ed her to issue exe$uti1e orders i!posi"g tariff rates.
R)ling0 PB5.
5e$tio" 28=2> of Arti$le (3 of the Co"stitutio" pro1ides as follo2s0
6=2> The Co"gress !a, % la2, authori;e the Preside"t to fix 2ithi" spe$ified
li!its, a"d su%.e$t to su$h li!itatio"s a"d restri$tio"s as it !a i!pose, tariff rates,
i!port a"d export &uotas, to""age a"d 2harfage dues, a"d other duties or i!posts
2ithi" the fra!e2or@ of the "atio"al de1elop!e"t progra! of the 8o1er"!e"t.I
There is thus expli$it $o"stitutio"al per!issio" to Co"gress to authori;e the
Preside"t Isu%.e$t to su$h li!itatio"s a"d restri$tio"s as Co"gress !a i!poseI to fix
I2ithi" spe$ifi$ li!itsI Itariff rates x x x a"d other duties or i!posts x x x.I
The rele1a"t $o"gressio"al statute is the Tariff a"d Custo!s Code of the
Philippi"es, a"d 5e$tio"s 104 a"d 401, the perti"e"t pro1isio"s thereof. 5e$tio" 401
ho2e1er pertai"s to :lexi%le Clause 2hi$h holds that the Preside"t has the po2er to
ad.ust tariff rates for purposes of prote$ti"g our lo$al i"dustries.
Therefore, Bxe$uti1e -rder Nos. 475 a"d 478 are 1alid a"d $o"stitutio"al %
1irtue of the delegated taxi"g po2er gra"ted to Preside"t Cora;o" A&ui"o.
1?. .ohn #s'ena vs. #s,ar #r4os, 220 5C9A 70+
8.9. No0 9988#, 4ar$h +1, 199+
Ex,eption to the Prin,iple o( !onB/elegation o( the Po>er to Tax
The Court fi"ds that the pro1isio" $o"ferri"g the authorit upo" the B9< to
i!pose additio"al a!ou"ts o" the Petroleu! produ$ts pro1ides a suffi$ie"t sta"dard %
2hi$h the authorit !ust %e exer$ised. 3" additio" to the ge"eral poli$ of the la2 to
prote$t the lo$al $o"su!er % sta%ili;i"g a"d su%sidi;i"g do!esti$ pu!p rates, P.?.
195# expressl authori;es the B9< to i!pose additio"al a!ou"ts to aug!e"t the
resour$es of the :u"d.
Although the pro1isio" authori;i"g the B9< to i!pose additio"al a!ou"ts $ould
%e $o"strued to refer to the po2er of taxatio", it $a""ot %e o1erloo@ed that the
o1erridi"g $o"sideratio" is to e"a%le the delegate to a$t 2ith expedie"$ i" $arri"g out
the o%.e$ti1es of the la2 2hi$h are e!%ra$ed % the poli$e po2er of the 5tate. :or a
1alid delegatio" of po2er, it is esse"tial that the la2 delegati"g the po2er !ust %e =1>
$o!plete i" itself, that is it !ust set forth the poli$ to %e exe$uted % the delegate a"d
=2> it !ust fix a sta"dard O li!its of 2hi$h are suffi$ie"tl deter!i"ate or deter!i"a%le
O to 2hi$h the delegate !ust $o"for!. 3t see!s o%1ious that 2hat the la2 i"te"ded
2as to per!it the additio"al i!posts for as lo"g as there exists a "eed to prote$t the
ge"eral pu%li$ a"d the petroleu! i"dustr fro! the ad1erse $o"se&ue"$es of pu!p rate
flu$tuatio"s. I,here the sta"dards set up for the guida"$e of a" ad!i"istrati1e offi$er
a"d the a$tio" ta@e" are i" fa$t re$orded i" the orders of su$h offi$er, so that Co"gress,
the $ourts a"d the pu%li$ are assured that the orders i" the .udg!e"t of su$h offi$er
$o"for! to the legislati1e sta"dard, there is "o failure i" the perfor!a"$e of the
legislati1e fu"$tio"s.I
&;. Co''issioner vs. CA, 8.9. No 1197#1, August 29, 199#
Fa,ts: 9A 7#54 2as e"a$ted % Co"gress o" Du"e 10, 199+ a"d too' effect
(uly ), *++). 3t a!e"ded partl 5e$. 142 =$> of the N39C.
:ortu"e To%a$$o !a"ufa$tured the follo2i"g $igaretter %ra"ds0 Eope, 4ore a"d
Cha!pio". Prior to 9A 7#54, these + %ra"ds 2ere $o"sidered lo$al %ra"ds su%.e$ted to
a" ad valorem tax of 20 to 45'. Appli"g the a!e"d!e"t, the + %ra"ds should fall
u"der 5e$ 142 =$> =2> N39C a"d shall %e taxed fro! 20 to 45'.
Eo2e1er, o" (uly *, *++), petitio"er Co!!issio"er of 3"ter"al 9e1e"ue issued
evenue Memorandum Circular),-+) 2hi$h re$lassified the + %ra"ds as lo$all
!a"ufa$tured $igarettes %eari"g a foreig" %ra"d su%.e$t to the 55' ad valorem tax. The
re$lassifi$atio" 2as %efore 9A 7#54 too@ effe$t.
In effect, the memo circular sub.ected the ) brands to the provisions of /ec
*01 "c# "*# 2IC imposing upon these brands a rate of 334 i"stead of .ust 20 to
45' u"der 5e$ 142 =$> =2> N39C.
Iss)e: ,hether or "ot 9e1e"ue 4e!ora"du! Cir$ular +7*9+ 2as 1alid a"d
e"for$ea%le.
R)ling:
2o, there was lac' of notice and hearing violated due process re$uired for
promulgated rules. Moreover, it infringed on uniformity of taxation 5 e$ual
protection since other local cigarettes bearing foreign brands had not been
included within the scope of the memo circular.
Co"trar to petitio"erAs $o"te"tio", the !e!o 2as "ot a !ere i"terpretati1e rule
%ut a legislati1e rule i" the "ature of su%ordi"ate legislatio", desig"ed to i!ple!e"t a
pri!ar legislatio" % pro1idi"g the details thereof. Pro!ulgated legislati1e rules !ust
%e pu%lished.
-" the other ha"d, i"terpretati1e rules o"l pro1ide guideli"es to the la2 2hi$h
the ad!i"istrati1e age"$ is i" $harge of e"for$i"g.
<39, i" re$lassifi"g the + %ra"ds a"d raisi"g their appli$a%le tax rate, did "ot
si!pl i"terpret 9A 7#54 %ut legislated u"der its &uasi*legislati1e authorit.
71&8 Ernesto M. Ma,e/a, vs. *on. Catalino Ma,araig, .r.,
8.9. No. 88291 4a +1, 1991
As to the Exe'ption o( Govern'ent Entities
The NPC is exe!pted to pa i"dire$t taxes. T
The !ai" thrust of the petitio" is that u"der the latest a!e"d!e"t to the NPC
$harter % Preside"tial ?e$ree No. 9+8, the exe!ptio" of NPC fro! i"dire$t taxatio"
2as re1o@ed a"d repealed. The exe!ptio" of NPC fro! pa!e"t of taxes u"der P?
9+8 2as expressed i" ge"eral ter! 6ACC :-945 -: TANB57 2herei" there is a
deletio" of the phrases Idire$tl or i"dire$tlI 2hi$h is stated u"der Preside"tial ?e$ree
No. +80 that is repealed a"d a!e"ded % P? 9+8.
The use of the phrase Iall for!sI of taxes de!o"strate the i"te"tio" of the la2 to
gi1e NPC all the tax exe!ptio"s it has %ee" e".oi"g %efore. The ratio"ale for this
exe!ptio" is that %ei"g "o"*profit pu%li$ $orporatio" $reated for the ge"eral good a"d
2elfare 2holl o2"ed % the go1er"!e"t of the 9epu%li$ of the Philippi"es the NPC
Ishall de1ote all its retur"s fro! its $apital i"1est!e"t as 2ell as ex$ess re1e"ues fro!
its operatio", for expa"sio" to e"a%le the Corporatio" to pa the i"de%ted"ess a"d
o%ligatio"s a!ou"ti"g to P12 <illio" i" total do!esti$ i"de%ted"ess, at a" o"e ti!e,
a"d HS4 <illio" i" total foreig" loa"s at a" o"e ti!e, as of P? 9+8. The NPC !ust %e
a"d has to %e exe!pt fro! all for!s of taxes if this goal is to %e a$hie1ed.
3t is $lear fro! the foregoi"g that the la2!a@er did "ot i"te"d that the said
pro1isio"s of P.?. No. 9+8 shall %e $o"strued stri$tl agai"st NPC a"d that the pro1isio"
of P.?. No. 9+8 its purpose is to !ai"tai" the tax exe!ptio" of NPC fro! all forms of
taxes i"$ludi"g i"dire$t taxes as pro1ided for u"der 9.A. No. #895 a"d P.?. No. +80 if it
is to attai" its goals. -" the $o"trar, the la2 !a"dates that it should %e i"terpreted
li%erall so as to e"ha"$e the tax exe!pt status of NPC. A $hro"ologi$al re1ie2 of the
NPC la2s 2ill sho2 that it has %ee" the la2!a@erKs i"te"tio" that the NPC 2as to %e
$o!pletel tax exe!pt fro! all for!s of taxes O dire$t a"d i"dire$t.
Therefore, that NPC had %ee" gra"ted tax exe!ptio" pri1ileges for %oth dire$t
a"d i"dire$t taxes u"der P.?. No. 9+8.
Ma,tan Ce4) International Airport A)thorit- vs. Mar,os
8.9. No. 120082, 5epte!%er 11, 199#
Fa,ts: Petitio"er 2as $reated % 1irtue of 9A#958, !a"dated to Ipri"$ipall
u"derta@e the e$o"o!i$al, effi$ie"t a"d effe$ti1e $o"trol, !a"age!e"t a"d super1isio"
of the 4a$ta" 3"ter"atio"al Airport i" the Pro1i"$e of Ce%u a"d the Cahug Airport i"
Ce%u Cit. H"der 5e$tio" 10 The authorit shall %e exe!pt fro! realt taxes i!posed %
the Natio"al 8o1er"!e"t or a" of its politi$al su%di1isio"s, age"$ies a"d
i"stru!e"talities.
Eo2e1er, the -ffi$er of the Treasurer of Ce%u Cit de!a"ded pa!e"t for realt
taxes o" par$els of la"d %elo"gi"g to petitio"er. Petitio"er o%.e$ted i"1o@i"g its tax
exe!ptio". 3t also asserted that it is a" i"stru!e"talit of the go1er"!e"t perfor!i"g
go1er"!e"tal fu"$tio"s, $iti"g se$tio" 1++ of the Co$al 8o1er"!e"t Code 2hi$h puts
li!itatio"s o" the taxi"g po2ers of C8Hs. The $it refused i"sisti"g that petitio"er is a
8o1er"!e"t -2"ed a"d Co"trolled Corporatio" perfor!i"g proprietar fu"$tio"s 2hose
tax exe!ptio" 2as 2ithdra2" % 5e$tio"s 19+ a"d 2+4 of the Co$al 8o1er"!e"t Code.
Petitio"er filed a de$larator relief %efore the 9egio"al Trial Court. The trial $ourt
dis!issed the petitio"er ruli"g that the Co$al 8o1er"!e"t Code 2ithdre2 the tax
exe!ptio" gra"ted the 8o1er"!e"t -2"ed a"d Co"trolled Corporatio"s.
Iss)e: ,-N the Cit of Ce%u has the po2er to i!pose taxes o" petitio"er.
RUI!G: Pes.
As a ge"eral rule, the po2er to tax is a" i"$ide"t of so1ereig"t a"d is
u"li!ited i" its ra"ge, a$@"o2ledgi"g i" its 1er "ature "o li!its, so that se$urit agai"st
its a%use is to %e fou"d o"l i" the respo"si%ilit of the legislature 2hi$h i!poses the tax
o" the $o"stitue"$ 2ho are to pa it. 5i"$e taxes are 2hat 2e pa for $i1ili;ed so$iet,
or are the life%lood of the "atio", the la2 fro2"s agai"st exe!ptio"s fro! taxatio" a"d
statutes gra"ti"g tax exe!ptio"s are thus $o"strued strictissimi -uris agai"st the
taxpaers a"d li%erall i" fa1or of the taxi"g authorit. A $lai! of exe!ptio" fro! tax
pa!e"t !ust %e $learl sho2" a"d %ased o" la"guage i" the la2 too plai" to %e
!ista@e".
There $a" %e "o &uestio" that u"der 5e$tio" 14 9A #958 the petitio"er is exe!pt
fro! the pa!e"t of realt taxes i!posed % the Natio"al 8o1er"!e"t or a" of its
politi$al su%di1isio"s, age"$ies, a"d i"stru!e"talities. Ne1ertheless, si"$e taxatio" is
the rule a"d exe!ptio" is the ex$eptio", the exe!ptio" !a thus %e 2ithdra2" at the
pleasure of the taxi"g authorit.
The Co$al 8o1er"!e"t Code, e"a$ted pursua"t to 5e$tio" +, Arti$le N of the
$o"stitutio" pro1ides for the exer$ise % Co$al 8o1er"!e"t H"its of their po2er to tax,
the s$ope thereof or its li!itatio"s, a"d the exe!ptio" fro! taxatio". 5e$tio" 1++ of the
Co$al 8o1er"!e"t Code pres$ri%es the $o!!o" li!itatio"s o" the taxi"g po2ers of
Co$al 8o1er"!e"t H"its.
As to tax exe!ptio"s or i"$e"ti1es gra"ted to or prese"tl e".oed % "atural or
.uridi$al perso"s, i"$ludi"g go1er"!e"t*o2"ed a"d $o"trolled $orporatio"s, 5e$tio" 19+
of the C8C pres$ri%es the ge"eral rule, 1i;., the are 2ithdra2" upo" the effe$ti1it of
the C8C, ex$ept those gra"ted to lo$al 2ater distri$ts, $ooperati1es dul registered
u"der 9.A. No. #9+8, "o" sto$@ a"d "o"*profit hospitals a"d edu$atio"al i"stitutio"s,
a"d u"less other2ise pro1ided i" the C8C. The latter pro1iso $ould refer to 5e$tio" 2+4,
2hi$h e"u!erates the properties exe!pt fro! real propert tax. <ut the last paragraph
of 5e$tio" 2+4 further &ualifies the rete"tio" of the exe!ptio" i" so far as the real
propert taxes are $o"$er"ed % li!iti"g the rete"tio" o"l to those e"u!erated there*
i"J all others "ot i"$luded i" the e"u!eratio" lost the pri1ilege upo" the effe$ti1it of the
C8C.
"". Tana/a vs. Angara, 8.9. No. 118295, 4a 2, 1997
As to International Co'it-
,hile so1ereig"t has traditio"all %ee" dee!ed a%solute a"d all*e"$o!passi"g
o" the do!esti$ le1el, it is ho2e1er su%.e$t to restri$tio"s a"d li!itatio"s 1olu"taril
agreed to % the Philippi"es, expressl or i!pliedl, as a !e!%er of the fa!il of
"atio"s. H"&uestio"a%l, the Co"stitutio" did "ot e"1isio" a her!it*tpe isolatio" of the
$ou"tr fro! the rest of the 2orld. 3" its ?e$laratio" of Pri"$iples a"d 5tate Poli$ies, the
Co"stitutio" 6adopts the ge"erall a$$epted pri"$iples of i"ter"atio"al la2 as part of the
la2 of the la"d, a"d adheres to the poli$ of pea$e, e&ualit, .usti$e, freedo!,
$ooperatio" a"d a!it, 2ith all "atio"s.I < the do$tri"e of i"$orporatio", the $ou"tr is
%ou"d % ge"erall a$$epted pri"$iples of i"ter"atio"al la2, 2hi$h are $o"sidered to %e
auto!ati$all part of our o2" la2s. -"e of the oldest a"d !ost fu"da!e"tal rules i"
i"ter"atio"al la2 is pactasuntservanda ** i"ter"atio"al agree!e"ts !ust %e perfor!ed i"
good faith. 6A treat e"gage!e"t is "ot a !ere !oral o%ligatio" %ut $reates a legall
%i"di"g o%ligatio" o" the parties x xx. A state 2hi$h has $o"tra$ted 1alid i"ter"atio"al
o%ligatio"s is %ou"d to !a@e i" its legislatio"s su$h !odifi$atio"s as !a %e "e$essar
to e"sure the fulfill!e"t of the o%ligatio"s u"derta@e".7
< their i"here"t "ature, treaties reall li!it or restri$t the a%solute"ess of
so1ereig"t. < their 1olu"tar a$t, "atio"s !a surre"der so!e aspe$ts of their state
po2er i" ex$ha"ge for greater %e"efits gra"ted % or deri1ed fro! a $o"1e"tio" or
pa$t. After all, states, li@e i"di1iduals, li1e 2ith $oe&uals, a"d i" pursuit of !utuall
$o1e"a"ted o%.e$ti1es a"d %e"efits, the also $o!!o"l agree to li!it the exer$ise of
their other2ise a%solute rights. Thus, treaties ha1e %ee" used to re$ord agree!e"ts
%et2ee" 5tates $o"$er"i"g su$h 2idel di1erse !atters as, for exa!ple, the lease of
"a1al %ases, the sale or $essio" of territor, the ter!i"atio" of 2ar, the regulatio" of
$o"du$t of hostilities, the for!atio" of allia"$es, the regulatio" of $o!!er$ial relatio"s,
the settli"g of $lai!s, the lai"g do2" of rules go1er"i"g $o"du$t i" pea$e a"d the
esta%lish!e"t of i"ter"atio"al orga"i;atio"s. The so1ereig"t of a state therefore $a""ot
i" fa$t a"d i" realit %e $o"sidered a%solute. Certai" restri$tio"s e"ter i"to the pi$ture0
=1> li!itatio"s i!posed % the 1er "ature of !e!%ership i" the fa!il of "atio"s a"d =2>
li!itatio"s i!posed % treat stipulatio"s.
A portio" of so1ereig"t !a %e 2ai1ed 2ithout 1iolati"g the Co"stitutio", %ased
o" the ratio"ale that the Philippi"es 6adopts the ge"erall a$$epted pri"$iples of
i"ter"atio"al la2 as part of the la2 of the la"d a"d adheres to the poli$ of pea$e,
e&ualit, .usti$e, freedo!, $ooperatio", a"d a!it 2ith all "atio"s.
21. MITSU=IS*I C#RP#RATI#! J MA!IA =RA!C* vs. C#MMISSI#!ER #F
I!TER!A RE%E!UE, FC.T.A. CA5B N-. #1+9. ?e$e!%er 17, 200+.G
Fa,ts: Petitio"er is the Philippi"e <ra"$h of 4itsu%ishi Corporatio", a $orporatio"
dul orga"i;ed a"d existi"g u"der the la2s of Dapa".
Through a" Bx$ha"ge of Notes %et2ee" the 8o1er"!e"t of Dapa" a"d the
8o1er"!e"t of the Philippi"es, it 2as agreed that a loa" a!ou"ti"g to :ort <illio" :our
Eu"dred 4illio" Dapa"ese Pe" =P40,400,000,000> 2ill %e exte"ded to the 9epu%li$ of
the Philippi"es % the the" -1erseas B$o"o!i$ Cooperatio" :u"d.
The 8o1er"!e"t of the 9epu%li$ of the Philippi"es, 2ill, itself or through its
i"stru!e"talities, assu!e all fis$al le1ies or taxes i!posed i" the 9epu%li$ of the
Philippi"es o" Dapa"ese fir!s a"d "atio"als operati"g as suppliers, $o"tra$tors or
$o"sulta"ts o" a"d )or i" $o""e$tio" 2ith a" i"$o!e that !a a$$rue fro! the suppl
of produ$ts of Dapa" a"d ser1i$es of Dapa"ese "atio"als to %e pro1ided u"der the Coa".
-" Du"e 21, 1991, the Natio"al Po2er Corporatio" =herei"after, INPCI> a"d
4itsu%ishi Corporatio", petitio"erKs head offi$e i" Dapa", e"tered i"to a $o"tra$t for the
e"gi"eeri"g, suppl, $o"stru$tio", i"stallatio", testi"g a"d $o!!issio"i"g of o"e =1> x
+00 4, <ata"gas Coal*:ired Ther!al Po2er Pro.e$t 33 at Cala$a, <ata"gas.
The Cala$a 33 Pro.e$t 2as $o!pleted % the petitio"er o" ?e$e!%er 2, 1995 %ut
2as o"l a$$epted % NPC o" Da"uar +1, 1998.
-" Dul 15, 1998, petitio"er filed its 3"$o!e Tax 9etur" for the fis$al ear e"ded
4ar$h +1, 1998 2ith the <ureau of 3"ter"al 3" the retur", petitio"er =%ei"g the 4a"ila
<ra"$h of 4itsu%ishi Corporatio"> reported a" i"$o!e tax due of P90,481,711.00.
-" 5epte!%er 7, 1998, the respo"de"t issued <ureau of 3"ter"al 9e1e"ue
9uli"g No. ?A*407*98 =Bxhi%it Y> 2here it held that I4itsu%ishi has "o lia%ilit for
i"$o!e tax a"d other taxes a"d fis$al le1ies si"$e the said taxes 2ere assu!ed % the
Philippi"e 8o1er"!e"t.I
-" Du"e +0, 2000, petitio"er filed a" ad!i"istrati1e $lai! for refu"d a"d)or tax
$redit 2ith respo"de"t i" the a!ou"t of P52,#12,812.00, represe"ti"g its erro"eousl
paid i"$o!e taxes i" the a!ou"t of P44,288,712 a"d erro"eousl paid %ra"$h profit
re!itta"$e tax i" the a!ou"t of P8,+24,100.00 $orrespo"di"g to the -BC:*fu"ded
portio" of its Cala$a 33 Pro.e$t.
-" Dul 1+, 2000, petitio"er, i" order to suspe"d the ru""i"g of the t2o*ear
period 2ithi" 2hi$h to file a .udi$ial $lai! for refu"d, filed the i"sta"t petitio" for re1ie2
pursua"t to 5e$tio" 229 of the Tax Code.
ISSUE: ,hether or "ot 4itsu%ishi is e"titled to tax refu"ds.
R)ling:
PB5.
There 2as a" erro"eous pa!e"t of the su%.e$t taxes % petitio"er for the
reaso" that said taxes are to %e assu!ed % the 8o1er"!e"t of the Philippi"es through
its exe$uti"g age"$, the NPC.
As defi"ed i" <la$@Ks Ca2 ?i$tio"ar, #th Bditio", the 2ord Iassu!eI !ea"s Ito
ta@e o", %e$o!e %ou"d, or put o"eself i" pla$e of a"other as to a" o%ligatio" or
lia%ilitI. As $a" %e glea"ed fro! the defi"itio", the 8o1er"!e"t of the Philippi"es,
through NPC, %i"ds itself to shoulder the tax o%ligatio"s a"d lia%ilities of petitio"er.
Therefore, the i"$o!e tax a"d <P9T pa!e"ts !ade % petitio"er to respo"de"t
2he" su$h pa!e"ts should ha1e %ee" !ade % the NPC, u"dou%tedl, put petitio"erKs
$ase i" the operatio" of 5e$tio" 229 of the Tax Code as o"e i"1ol1i"g erro"eous
pa!e"t.
A $areful readi"g of the pro1isio"s of the Bx$ha"ge of Notes 2ill sho2 that it is
the i"te"tio" of the t2o go1er"!e"ts "ot to use the pro$eeds of the loa" i" the pa!e"t
of all fis$al le1ies or taxes i!posed % the Philippi"es. 3" 1ie2 thereof, 2e %elie1e that to
de" petitio"erKs $lai! for refu"d 2ould 1iolate the $o1e"a"t that the fu"ded a!ou"t
should "ot %e su%.e$t to a" taxes.
2". Iloilo =ottlers, In,. vs. Cit- #( Iloilo, 89 No. C*52019, 19 August 1988
Fa,ts: 3loilo <ottlers, 3"$. =3<3>, e"gaged i" selli"g Pepsi*Cola a"d 7*up softdri"@s,
has its %ottli"g pla"t i" Pa1ia, 3loilo si"$e Dul 19#8, %ut is selli"g softdri"@s i" 3loilo Cit.
-" 11 Da"uar 19#0, Cit of 3loilo e"a$ted -rdi"a"$e No. 5 series of 19#0, as
a!e"ded. 5aid ordi"a"$e i!poses a P0.10 !u"i$ipal tax for e1er $ase of 24 %ottles
=P0.015 for e1er $ase of 24 %ottles if pri$e is "ot !ore tha" P0.05> o" perso"s, fir!s or
$orporatio"s e"gaged i" the distri%utio", !a"ufa$ture, a"d %ottli"g of softdri"@s 2ithi"
the $itAs .urisdi$tio". As to distri%utors, the are taxed regardless of 2here their pla"t
!a %e situated. :ro! Da"uar 1972, 3<3 has %ee" pai"g said tax u"der protest. 3loilo
Cit later assessed a"d de!a"ded 3<3 to pa %a$@ taxes, 2hi$h 3<3 also paid u"der
protest.
-" 12 Dul 1972, it filed %efore C:3 of 3loilo a suit to re$o1er pa!e"ts a!ou"ti"g
to P+,+29.20. C:3 fa1ored 3<3, ruli"g that it is "ot lia%le u"der said tax ordi"a"$e a"d
dire$ti"g Cit of 3loilo to pa P+,+29.20 a"d the a!ou"ts paid su%se&ue"tl after the
fili"g of the $o!plai"t. Hpo" appeal, CA $ertified the $ase to the 5upre!e Court.
Iss)e: ,hether 3loilo <ottlers, 3"$. is lia%le u"der 3loilo CitAs tax ordi"a"$e that
i!poses a !u"i$ipal li$e"se tax o" distri%utors of softdri"@s.
RUI!G:
PB5, 3loilo <ottlers, 3"$. is lia%le to pa said !u"i$ipal tax.
3<3 is e"gaged i" selli"g separate fro! its pri"$ipal %usi"ess of !a"ufa$turi"g. To
hold 3<3 lia%le to pa !u"i$ipal tax, 5C e"dea1ored to pro1e that it is e"gaged i" selli"g
separate fro! its pri"$ipal %usi"ess of !a"ufa$turi"g so as to fall u"der the $ategor
6distri%utors7 i" the pro1isio" of the tax ordi"a"$e. 5C fou"d that 6Fi"G the $ase at %ar,
the $o!pa" distri%uted its softdri"@s % !ea"s of a fleet of deli1er tru$@s 2hi$h 2e"t
dire$tl to $usto!ers i" the differe"t pla$es i" lloilo pro1i"$e. 5ales tra"sa$tio"s 2ith
$usto!ers 2ere e"tered i"to a"d sales 2ere perfe$ted a"d $o"su!!ated % route
sales!e". Tru$@ sales 2ere !ade i"depe"de"tl of tra"sa$tio"s i" the !ai" offi$e.7
3<3As sales are 2ithi" the .urisdi$tio" of 3loilo Cit a"d are thus taxa%le. 5C held
that 6the tax i!posed u"der -rdi"a"$e No. 5 is a" ex$ise tax.., Fthat i!posedG o" the
pri1ilege of distri%uti"g, !a"ufa$turi"g or %ottli"g softdri"@s. <ei"g Fsu$hG, it $a" %e
le1ied % the taxi"g authorit o"l 2he" the a$ts, pri1ileges or %usi"esses are do"e or
perfor!ed 2ithi" the .urisdi$tio" of said authoritQ. 5pe$ifi$all, the situs of the a$t of
distri%uti"g, %ottli"g or !a"ufa$turi"g softdri"@s !ust %e 2ithi" $it li!its, %efore a"
e"tit e"gaged i" a" of the a$ti1ities !a %e taxed i" 3loilo Cit.7 As 3<3 i"deed !ade
sales i" 3loilo Cit as explai"ed a%o1e, 5C de$lared it lia%le to pa !u"i$ipal tax u"der
the tax ordi"a"$e.
Co''issioner o( Internal Reven)e vs. =ritish #verseas Air>a-s Corporation An/
Co)rt #( Tax Appeals, 149 5C9A +95
Fa,ts: <ritish -1erseas Air2as Corp =<-AC> is a 100' <ritish 8o1er"!e"t*
o2"ed $orporatio" e"gaged i" i"ter"atio"al airli"e %usi"ess a"d is a !e!%er of the
3"terli"e Air Tra"sport Asso$iatio", a"d thus, it operates air tra"sportatio" ser1i$es a"d
sells tra"sportatio" ti$@ets o1er the routes of the other airli"e !e!%ers.
:ro! 1959 to 1972, <-AC had "o la"di"g rights for traffi$ purposes i" the
Philippi"es a"d thus, did "ot $arr passe"gers a"d)or $argo to or fro! the Philippi"es
%ut !ai"tai"ed a ge"eral sales age"t i" the Philippi"es * ,ar"er <ar"es R Co. Ctd. a"d
later, Va"tas Air2as * 2hi$h 2as respo"si%le for selli"g <-AC ti$@ets $o1eri"g
passe"gers a"d $argoes. The Co!!issio"er of 3"ter"al 9e1e"ue assessed defi$ie"$
i"$o!e taxes agai"st <-AC.
Iss)e: ,hether the re1e"ue deri1ed % <-AC fro! ti$@et sales i" the Philippi"es,
$o"stitute i"$o!e of <-AC fro! Philippi"e sour$es, a"d a$$ordi"gl taxa%le.
RUI!G:
The sour$e of a" i"$o!e is the propert, a$ti1it, or ser1i$e that produ$ed the
i"$o!e. :or the sour$e of i"$o!e to %e $o"sidered as $o!i"g fro! the Philippi"es, it is
suffi$ie"t that the i"$o!e is deri1ed fro! a$ti1it 2ithi" the Philippi"es. Eerei", the sale
of ti$@ets i" the Philippi"es is the a$ti1it that produ$ed the i"$o!e. the ti$@ets
ex$ha"ged ha"ds here a"d pa!e"t for fares 2ere also !ade here i" the Philippi"e
$urre"$.
The situs of the sour$e of pa!e"ts is the Philippi"es. The flo2 of 2ealth
pro$eeded fro!, a"d o$$urred 2ithi" Philippi"e territor, e".oi"g the prote$tio"
a$$orded % the Philippi"e go1er"!e"t. 3" $o"sideratio" of su$h prote$tio", the flo2 of
2ealth should share the %urde" of supporti"g the go1er"!e"t. P? #8, i" relatio" to P?
1+55, e"sures that i"ter"atio"al airli"es are taxed o" their i"$o!e fro! Philippi"e
sour$es. The 2 1)2' tax o" gross %illi"gs is a" i"$o!e tax. 3f it had %ee" i"te"ded as a"
ex$ise tax or per$e"tage tax, it 2ould ha1e %ee" pla$ed u"der Title ( of the Tax Code
$o1eri"g taxes o" %usi"ess.
22. *ope>ell Po>er Corp vs. Co''issioner o( Internal Reven)e, CTA Case No.
5+10, No1e!%er 18, 1998

Fa,ts:
Petitio"er sought for tax $redit)refu"d of i"put 1alue*added tax =(AT> paid o"
$apital goods. Eope2ell Po2er Corp. 3s a do!esti$ $orporatio" e"gaged i" the %usi"ess
of po2er ge"eratio" a"d sale. The %asis for as@i"g for su$h refu"d is 5e$ 10# =%> of the
Tax Code as a!e"ded % 9A 771#. =petitio"er a$tuall relied o" 5e$ 10# =$> of the 1994
Tax Code 2hi$h 2as the la2 go1er"i"g at that ti!eJ sa!e $o"te"t a"2a>. 5e$ 10# =$>
of the 1994 Tax Code re&uires that a" appli$a"t for refu"d pro1e that a. 3t is a (AT
registered perso" %. 3"put taxes $lai!ed 2as paid o" $apital goods $. 3"put taxes ha1e
"ot %ee" applied agai"st output tax lia%ilit d. Ad!i"istrati1e $lai! 2as seaso"a%l filed
=2 r pres$ripti1e period> .-f its # $lai!s, 4 had pres$ri%ed a"d 2 had %ee" filed
seaso"a%l. Court 2as also $o"1i"$ed that re&uisites =a> a"d =$> had %ee" !et.
Iss)e: ,hether or "ot there should %e a refu"d or 2hether or "ot the i"put taxes
$lai!ed 2as paid o" $apital goods.
RUI!G:
Pes, the expe"ditures 2ere properl $o"sidered as $apital goods. The
a!ou"t 2as re$o!puted a"d redu$ed though.
Capital goods refer to goods 2ith esti!ated useful life greater tha" 1 ear a"d
2hi$h are treated as depre$ia%le assets u"der 5e$ 29=f>, used dire$tl or i"dire$tl i"
the produ$tio" a"d sale of taxa%le goods or ser1i$es.
5tatutoril, $apital expe"ditures are spe$ified as a!ou"ts paid out for a "e2
%uildi"g or for per!a"e"t i!pro1e!e"ts or %etter!e"ts !ade to i"$rease the 1alue of
a" propert or a!ou"ts expe"ded i" restori"g propert.
Eope2ell spe"t for e"gi"eeri"g a"d stru$tural ser1i$es for purposes of
$o"stru$ti"g po2er pla"t fa$ilities "eeded i" the produ$tio" of ele$tri$it 2hi$h is itAs a
$hief produ$t. 5u$h expe"ses are "e$essar a"d as su$h, should for! part of the $ost
of the po2er pla"t fa$ilities.
23. $onal/ . S'ith, petitioner vs. Co''issioner o( Internal Reven)e
C.T.A Case "o. #2#8 5epte!%er 12, 2002.
Fa,ts:
This petitio" for re1ie2 i"1ol1es a $lai! for refu"d i" the a!ou"t of -"e 4illio"
:i1e Eu"dred Thirt Three Thousa"d 5ix Eu"dred a"d 5ixt pesos R 70)100
=15++,##0.70> allegedl represe"ti"g the i"$o!e tax erro"eousl paid % herei"
petitio"er for taxa%le ear 1998.
Petitio"er is a $iti;e" of the H"ited 5tates a"d is e!ploed as Co"troller of
Coastal 5u%i$ <a Ter!i"al, 3"$. , a %usi"ess e"tit lo$ated 2ithi" the 5u%i$ 5pe$ial
B$o"o!i$ Lo"e as $reated % 9epu%li$ A$t 7227. -" April 15, 1999, petitio"er filed his
a""ual i"$o!e tax retur" a"d paid P1,5++,##0.70 i" $o!pe"satio" i"$o!e taxes for
the i"$o!e he deri1ed fro! his e!plo!e"t. Clai!i"g that the pa!e"t of i"$o!e tax
o" his $o!pe"satio" 2as erro"eous, petitio"er filed a 2ritte" $lai! for refu"d 2ith the
<39 o" April 5, 2001. Petitio"er alleged that he is $o1ered % 9a 7227 or other2ise
@"o2" as the <ases Co"1ersio" a"d ?e1elop!e"t A$t of 1992, thus he is tax exe!pt.
As there 2as "o i!!ediate a$tio" a"d the t2o ear pres$ripti1e period 2as a%out to
lapse, petitio"er ele1ated his $ase to the CTA % 2a of petitio" for re1ie2 o" April #,
2001.
Iss)es:
=1> ,hether or "ot 5e$tio" 12 =$> of 9epu%li$ A$t No. 7227 applies to petitio"er.
=2> ,hether or "ot alie"s 2or@i"g 2ithi" the 5u%i$ 5pe$ial B$o"o!i$ Lo"e are 2ithi"
Philippi"e .urisdi$tio" to %e su%.e$ted fro! i"$o!e taxes o" i"$o!e ear"ed fro! su$h
e!plo!e"tJ
RUI!G:
718 No. 9A 7227 applies o"l to %usi"ess esta%lish!e"ts 2ithi" the 5u%i$
5pe$ial B$o"o!i$ Lo"e. 3t o"l operates o" the said group.
Petitio"er reli"g upo" 9A 7227 other2ise @"o2" as the <ases Co"1ersio" ad
?e1elop!e"t A$t of 1992 2hi$h states that0 5e$. 12.5u%i$ 5pe$ial B$o"o!i$ Lo"es. U
xxx xxx xxx =$> The Pro1isio" of existi"g la2s, rules a"d regulatio"s to the $o"trar
"ot2ithsta"di"g, "o taxes, lo$al a"d "atio"al, shall %e i!posed 2ithi" the 5u%i$ 5pe$ial
B$o"o!i$ Lo"e shall %e re!itted to the Natio"al 8o1er"!e"t, o"e per$e"t =1'> ea$h
to the lo$al go1er"!e"t u"its affe$ted % the de$laratio" of the ;o"e i" proportio" to
their populatio" area, a"d other fa$tors. 3" additio", there is here% esta%lished a
de1elop!e"t fu"d of o"e per$e"t =1'> of the gross i"$o!e ear"ed % all %usi"esses
a"d e"terprises 2ithi" the 5u%i$ 5pe$ial B$o"o!i$ Lo"e to %e utili;ed for the
de1elop!e"t of !u"i$ipalities outside the Cit of -lo"gapo a"d the 4u"i$ipalit of
5u%i$, a"d other !u"i$ipalities $o"tiguous to the %ase areas. 3" $ase of $o"fli$t
%et2ee" "atio"al a"d lo$al la2s 2ith respe$t to tax exe!ptio" pri1ileges i" the 5u%i$
5pe$ial B$o"o!i$ Lo"e, the sa!e shall %e resol1ed i" fa1or of the latter.
7"8 3"di1idual alie"s e!ploed 2ithi" the 5u%i$ 5pe$ial B$o"o!i$ Lo"e =55BL>
are "ot exe!pt fro! the a2eso!e po2er of Philippi"e taxatio" espe$iall so that the
sour$ed out their ear"i"gs fro! 2ithi" the Philippi"es. The se$ured area of 55BL,
2hi$h is 1irtuall deli"eated i" !etes a"d %ou"ds % Pro$la!atio" No. 5+2, issued %
the the" Preside"t :idel 9a!os o" :e%ruar 1, 1995, is i" realit part of the territorial
.urisdi$tio" of the Philippi"es. To %uttress the poi"t that 55BL is i"deed 2ithi" the
Philippi"e .urisdi$tio", 5e$tio" 12 =h> of 9A 7227, a$tuall pla$ed the fe"$ed*off area of
55BL u"der the respo"si%ilit of the Philippi"e Natio"al 8o1er"!e"t, thus, IThe
defe"se of the ;o"e a"d the se$urit of its peri!eters shall %e the respo"si%ilit of the
Natio"al 8o1er"!e"t i" $oordi"atio" 2ith the 5u%i$ <a 4etropolita" Authorit. The
5u%i$ <a 4etropolita" Authorit shall pro1ide a"d esta%lish its o2" i"ter"al se$urit
a"d fire*fighti"g for$es.I5u$h %ei"g the $ase, all su%.e$ts o1er 2hi$h the Philippi"es
$a" exer$ise do!i"io" are "e$essaril o%.e$ts of taxatio". As su$h, all su%.e$ts of
taxatio" 2ithi" its .urisdi$tio" are re&uired to pa tax i" ex$ha"ge of the prote$tio" that
the state gi1es. Thus, the 55BL, %ei"g 2ithi" the territorial %ou"daries of the
Philippi"es, the alie"s residi"g therei", 2ho e".o the %e"efits a"d prote$tio" fro! the
said state are "ot exe!pt fro! $o"tri%uti"g their share i" the ru""i"g of the
go1er"!e"t. The ha1e the %ou"de" dut to surre"der part of their hard*ear"ed
i"$o!e to the taxi"g authorities.

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close