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Philippine Match Co. Ltd. vs.

Cebu City GR L-30745, 18 January 1978 Second Division, Aquino (J): 3 concur, 1 on leave Facts: Cebu City imposed a quarterly tax (sales tax of 1%) on gross sales or receipts of merchants, dealers, importers and manufacturers or any commodity doing business in Cebu City, through Ordinance 279. Section 9 of the Ordinance provided that, for the purpose of the tax, all deliveries of goods or commodities stored in Cebu City, or if not stored are sold in that city shall be considered as sales in the city and shall be taxable. Philippine Match Co. Ltd., with principal office in Manila, questioned the legality of the tax collected by the City of Cebu on sales of matches stored by the company in Cebu City but delivered to customers outside the city. Issue: Whether the City of Cebu can tax sales of matches, which were perfected and paid for in Cebu City but where the matches were delivered to customers outside the city. Held: The city can validly tax the sales of matches to customers outside of the city as long as the orders were booked and paid for in the companys branch office in the city. Those matches can be regarded as sold in the city, as contemplated in the ordinance, because the matches were delivered to the carrier in Cebu City. Generally, delivery to the carrier is delivery to the buyer (Article 1523, Civil Code). A different interpretation w o u l d d e f e a t t h e t a x ordinance in question or encourage tax evasion through the s i m p l e e x p e d i e n t o f arranging for the delivery of the matches at the outskirts of the city though the purchases were affected and paid for in the companys branch office in the city. The municipal board of the city is empowered to provide for the levy and collection of taxes for general and special purposes in accordance with law. Commissioner vs. British Overseas Airways Corp. GR L-65773-74, 30 April 1987 En Banc, Melencio-Herrera (J): 7 concur, 1 took no part Facts: British Overseas Airways Corp. (BOAC) is a 100% British Government-owned corporation engaged in international airline business and is a member of the Interline Air Transport Association, and thus, it operates air transportation service and sells transportation tickets over the routes of the other airline members. From 1959 to 1972, BOAC had no landing rights for traffic purposes in the Philippines they were not issued a Certificate of public convenience and necessity to operate in the Philippines by the Civil Aeronautics Board (CAB), except for a nine-month period, partly in 1961 and partly in 1962,

when it was granted a temporary landing permit by the CAB and thus did not carry passengers and/or cargo to or from the Philippines but maintained a general sales agent in the Philippines -Warner Barnes & Co. Ltd., and later, Qantas Airways -- which was responsible for selling BOAC tickets covering passengers and cargoes. The Commissioner of Internal Revenue assessed deficiency income taxes against BOAC. Issue: Whether the revenue derived by BOAC from ticket sales in the Philippines for air transportation, while having no landing rights in the Philippines, constitute income of BOAC from Philippine sources, and accordingly, taxable. Held: The source of an income is the property, activity or service that produced the income. For the source of income to be considered as coming from the Philippines, it is sufficient that the income is d erived from activity within the Philippines. Herein, the sale of tickets in the Philippines is the activity that produced the income. The tickets exchanged hands here and payments for fares were also made here in Philippine currency. The situs of the source of payments is the Philippines. The flow of wealth proceeded from, and occurred within, Philippine territory, enjoying the protection accorded by the Philippine Government. In consideration of such protection, the flow of wealth should share the burden o f supporting the government. PD 68, in relation to PD 1355, ensures that international airlines are taxed on their income from Philippine sources. The 2 1/2 %tax on gross billings is an income tax. If it had been intended as an excise or percentage tax, it would have been placed under Title V of the Tax Code covering taxes on business PHIL. GUARANTY CO., INC. v. CIR GR No. L-22074, April 30, 1965 13 SCRA 775 FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance company, entered into reinsurance contracts with foreign insurance companies not doing business in the country, thereby ceding to foreign reinsurers a portion of the premiums on insurance it has originally underwritten in the Philippines. The petitioner from its gross income excluded the premiums paid by such companies when it files its income tax returns for 1953 and 1954. Furthermore, it did not withhold or pay tax on them. Consequently, the CIR assessed against the petitioner withholding taxes on the ceded reinsurance premiums to which the latter protested the assessment on the ground that the premiums are not subject to tax for the premiums did not constitute income from sources within the Philippines because the foreign reinsurers did not engage in business in the Philippines, and CIR's previous rulings did not require insurance companies to

withhold income tax due from foreign companies. ISSUE: Are insurance companies not required to withhold tax on reinsurance premiums ceded to foreign Insurance companies, which deprives the government from collecting the tax due from them? HELD: No. The power to tax is an attribute of sovereignty. It is a power emanating from necessity. It is a necessary burden to preserve the State's sovereignty and a means to give the citizenry an army to resist an aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public improvement designed for the enjoyment of the citizenry and those which come within the State's territory, and facilities and protection which a government is supposed to provide. Considering that the reinsurance premiums in question were afforded protection by the government and the recipient foreign reinsurers exercised rights and privileges guaranteed by our laws, such reinsurance premiums and reinsurers should share the burden of maintaining the state. The petitioner's defense of reliance of good faith on rulings of the CIR requiring no withholding of tax due on reinsurance premiums may free the taxpayer from the payment of surcharges or penalties imposed for failure to pay the corresponding withholding tax, but it certainly would not exculpate it from liability to pay such withholding tax. The Government is not estopped from collecting taxes by the mistakes or errors of its agents. G.R. No. L-10405 December 29, 1960 WENCESLAO PASCUAL, in his official capacity as Provincial Governor of Rizal, petitioner-appellant, vs. THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL Pascual vs Secretary of Public Works Case Digest WENCESLAU PASCUAL, AS PROVINCIAL GOVERNOR VS. SECRETARY OF PUBLIC WORKS FACTS: On August 31, 1954, petitioner Wenceslao Pascual, as Provincial Governor of Rizal, instituted this action for declaratory relief, with injunction, upon the ground that Republic Act No. 920, entitled "An Act Appropriating Funds for Public Works", approved on June 20, 1953, an item of P85,000.00, "for the construction, reconstruction, repair, extension and improvement" of "Pasig feeder road terminals"; that, at the time of the passage and approval of said Act, the aforementioned feeder roads were "nothing but projected and planned subdivision roads, not yet constructed, within the Antonio Subdivision

situated at Pasig, Rizal" which projected feeder roads "do not connect any government property or any important premises to the main highway"; that the aforementioned Antonio Subdivision were private properties of respondent Jose C. Zulueta, who, at the time of the passage and approval of said Act, was a member of the Senate of the Philippines; that on May 29, 1953, respondent Zulueta, addressed a letter to the Municipal Council of Pasig, Rizal, offering to donate said projected feeder roads to the municipality of Pasig, Rizal; that, on June 13, 1953, the offer was accepted by the council, subject to the condition "that the donor would submit a plan of the said roads and agree to change the names of two of them"; that no deed of donation in favor of the municipality of Pasig was, however, executed; that on July 10, 1953, respondent Zulueta wrote another letter to said council, calling attention to the approval of Republic Act No. 920, and the sum of P85,000.00 appropriated therein for the construction of the projected feeder roads in question; that the municipal council of Pasig endorsed said letter of respondent Zulueta to the District Engineer of Rizal, who, up to the present "has not made any endorsement thereon"; that inasmuch as the projected feeder roads in question were private property at the time of the passage and approval of Republic Act No. 920, the appropriation of P85,000.00 therein made, for the construction, reconstruction, repair, extension and improvement of said projected feeder roads, was "illegal and, therefore, void ab initio"; that said appropriation of P85,000.00 was made by Congress because its members were made to believe that the projected feeder roads in question were "public roads and not private streets of a private subdivision'"; that, "in order to give a semblance of legality, when there is absolutely none, to the aforementioned appropriation", respondent Zulueta executed, on December 12, 1953, while he was a member of the Senate of the Philippines, an alleged deed of donationcopy of which is annexed to the petitionof the four (4) parcels of land constituting said projected feeder roads, in favor of the Government of the Republic of the Philippines; that said alleged deed of donation was, on the same date, accepted by the then Executive Secretary; that being subject to an onerous condition, said donation partook of the nature of a contract; that, as such, said donation violated the provision of our fundamental law prohibiting members of Congress from being directly or indirectly financially interested in any contract with the Government, and, hence, is unconstitutional, as well as null and void ab initio, for the construction of the projected feeder roads in question with public funds would greatly enhance or increase the value of the aforementioned subdivision of respondent Zulueta, "aside from relieving him from the burden of constructing his subdivision streets or roads at his own expense"; that the construction of said projected feeder roads was then being undertaken by the Bureau of Public Highways; and that, unless restrained by the court, the respondents would continue to execute, comply with, follow and implement the aforementioned illegal provision of law, "to the irreparable damage, detriment and prejudice not only to the petitioner but to the Filipino nation." ISSUE: Whether or not the statute is unconstitutional and void? HELD: "It is a general rule that the legislature is without power to appropriate

public revenue for anything but a public purpose. * * * It is the essential character of the direct object of the expenditure, which must determine its validity as justifying a tax, and not the magnitude of the interests to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. Incidental advantage to the public or to the state, which results from the promotion of private interests and the prosperity of private enterprises or business, does not justify their aid by the use of public money." (25 R.L.C. pp. 398-400; Italics supplied.) The rule is set forth in Corpus Juris Secundum in the following language: "In accordance with the rule that the taxing power must be exercised for public purposes only, money raised by taxation can be expended only for public purposes and not for the advantage of private individuals." Explaining the reason underlying said rule, Corpus Juris Secundum states: "Generally, under the express or implied provisions of the constitution, public funds may be used only for a public purpose. The right of the legislature to appropriate funds is correlative with its right to tax, and, under constitutional provisions against taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another purpose, no appropriation of state funds can be made for other than a public purpose. * * * "The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interests, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals might incidentally serve the public. * * * ." (81 C.J.S. p. 1147; italics supplied.) The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon events occurring, or acts performed, subsequently thereto. Referring to the P85,000.00 appropriation for the projected feeder roads in question, the legality thereof depended upon whether said roads were public or private property when the bill, which, later on, became Republic Act No. 920, was passed by Congress, or, when said bill was approved by the President and the disbursement of said sum became effective, or on June 20, 1953. Inasmuch as the land on which the projected feeder roads were to be constructed belonged then to respondent Zulueta, the result is that said appropriation sought a private purpose, and, hence, was null and void.4 The donation to the Government, over five (5) months after the approval and effectivity of said Act, made, according to the petition, for the purpose of giving a "semblance of legality", or legalizing, the appropriation in question, did not cure its aforementioned basic defect. Consequently, a judicial nullification of said donation need not precede the declaration of unconstitutionality of said appropriation.

PEPSI-COLA BOTTLING CO. MUNICIPALITY OF TANAUAN 69 SCRA 460 GR No. L-31156, February 27, 1976

OF

THE

PHILS.,

INC.

vs.

"Legislative power to create political corporations for purposes of local selfgovernment carries with it the power to confer on such local governmental agencies the power to tax. FACTS: Plaintiff-appellant Pepsi-Cola commenced a complaint with preliminary injunction to declare Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos. 23 and 27 denominated as "municipal production tax" of the Municipality of Tanauan, Leyte, null and void. Ordinance 23 levies and collects from soft drinks producers and manufacturers a tax of onesixteenth (1/16) of a centavo for every bottle of soft drink corked, and Ordinance 27 levies and collects on soft drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. Aside from the undue delegation of authority, appellant contends that it allows double taxation, and that the subject ordinances are void for they impose percentage or specific tax. ISSUE: Are the contentions of the appellant tenable? HELD: No. On the issue of undue delegation of taxing power, it is settled that the power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent government, without being expressly conferred by the people. It is a power that is purely legislative and which the central legislative body cannot delegate either to the executive or judicial department of the government without infringing upon the theory of separation of powers. The exception, however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative powers may be delegated to local governments in respect of matters of local concern. By necessary implication, the legislative power to create political corporations for purposes of local selfgovernment carries with it the power to confer on such local governmental agencies the power to tax. Also, there is no validity to the assertion that the delegated authority can be declared unconstitutional on the theory of double taxation. It must be observed that the delegating authority specifies the limitations and enumerates the taxes over which local taxation may not be exercised. The reason is that the State has exclusively reserved the same for its own prerogative. Moreover, double taxation, in general, is not forbidden by our fundamental law, so that double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the

same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the city or municipality. On the last issue raised, the ordinances do not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on the products, but there is not set ratio between the volume of sales and the amount of the tax. Villegas Vs. Hiu Chiong 86 SCRA 270 No.L-29646 November 10, 1978 Facts: The controverted Ordinance no. 6537 was passed by the Municipal Board of Manila on February 22, 1968 and signed by Mayor Villegas. It is an ordinance making it unlawful for any person not a citizen of the Philippines to be employed in any place of employment or to be engaged in any kind of trade business or occupation within the city of Manila without securing an employment permit from the Mayor of Manila and for other purposes. Hiu Chiong Tsai Pao Ho, who was employed in Manila filed a petition praying for the writ of preliminary injunction and restraining order to stop the enforcement of said ordinance. Issue: Whether or Not Ordinance no.6537 violates the due process and equal protection clauses of the Constitution. Held: It is a revenue measure. The city ordinance, which imposes a fee of 50.00 pesos to enable aliens generally to be employed in, the city of Manila is not only for the purpose of regulation. While it is true that the first part, which requires the alien to secure an employment permit from the Mayor, involves the exercise of discretion and judgment in processing and approval or disapproval of application is regulatory in character, the second part, which requires the payment of a sum of 50.00 pesos, is not a regulatory but a revenue measure. Ordinance no. 6537 is void and unconstitutional. This is tantamount to denial of the basic human right of the people in the Philippines to engaged in a means of livelihood. While it is true that the Philippines as a state is not obliged to admit aliens within it's territory, once an alien is admitted he cannot be deprived of life without due process of law. This guarantee includes the means of livelihood. Also it does not lay down any standard to guide the City Mayor in the issuance or denial of an alien employment permit fee.

People Vs. Cayat 68 Phil 12 G.R. No. 45987 May 5,1939 Facts: Law prohibits any member of a non-Christian tribe to buy, receive, have in his possession, or drink, any intoxicating liquors of any kind. The law, Act No. 1639, exempts only the so-called native wines or liquors which the members of such tribes have been accustomed to take. Issue: Whether or Not the law denies equal protection to one prosecuted and sentenced for violation of said law. Held: No. It satisfies the requirements of a valid classification, one of which is that the classification under the law must rest on real or substantial distinctions. The distinction is reasonable. The classification between the members of the nonChristian and the members of the Christian tribes is not based upon accident of birth or parentage but upon the degree of civilization and culture. The term nonChristian tribes refers to a geographical area and more directly to natives of the Philippines of a low grade civilization usually living in tribal relationship apart from settled communities. The distinction is reasonable for the Act was intended to meet the peculiar conditions existing in the non- Christian tribes The prohibition is germane to the purposes of the law. It is designed to insure peace and order in and among the non- Christian tribes has often resulted in lawlessness and crime thereby hampering the efforts of the government to raise their standards of life and civilization. This law is not limited in its application to conditions existing at the time of the enactment. It is intended to apply for all times as long as those conditions exists. The Act applies equally to all members of the class. That it may be unfair in its operation against a certain number of nonChristians by reason of their degree of culture is not an argument against the equality of its operation nor affect the reasonableness of the classification thus established. G.R. No. L-23794 February 17, 1968 ORMOC SUGAR COMPANY, INC., Plaintiff-Appellant, vs. THE TREASURER OF ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY, HON. ESTEBAN C. CONEJOS as Mayor of Ormoc City and ORMOC CITY, Defendants-Appellees. Facts: The Municipal Board of Ormoc City passed a municipal tax ordinance imposing on any and all productions of centrifugal sugar milled at the Ormoc Sugar

Company Inc. one percent per export sale to the US and other foreign countries. Said company filed before the CFI of Leyte a complaint against the City of Ormoc, its Treasurer, Municipal Board and Mayor, alleging said ordinance is violation of the equal protection clause and the rule of uniformity of taxation, among other things. Ormoc Sugar Company Inc. was the only sugar central in Ormoc City at the time. Issue: WON the constitutional limits on the power of taxation, specifically the EPC and uniformity of taxation, were infringed. Held: Yes. Though Ormoc Sugar Company Inc. is the only sugar central in the city of Ormoc at the time, the classification, to be reasonable, should be in terms applicable to future conditions as well. Said ordinance shoouldnt be singular and exclusive as to exclude any subsequently established sugar central, of the same class as plaintiff, for coverage of the tax. EPC applies only to persons or things identically situated and doesnt bar a reasonable classificationof the subject of legislation. A classification is reasonable where: 1) it is based on substantial distinctions which make real differences; (2) these are germane to the purpose of the law; (3) the classification applies not only to present conditions but also to future conditions which are substantially identical to those of the present; (4) the classification applies only to those who belong to the same class. Association of Custom Brokers vs. Manila GR L-4376, 22 May 1953 En Banc, Bautista-Angelo (J): 3 concur, 4 concur in result Facts: The Association of Customs Brokers, which is composed of all brokers and public service operators of motor vehicles in the City of Manila, challenges the validity of Ordinance 3379 on the grounds (1) that while it levies a so -called property tax, it is in reality a license tax which is beyond the power of the Manila Municipal Board; (2) that said or dinance offends against the rule on uniformity of taxes; and (3) that it constitutes double taxation. Issue: Whether the ordinance infringes on the rule on uniformity of taxes as ordained by the Constitution. Held: While the tax in the Ordinance refers to property tax and it is fixed ad valorem, it is merely levied on all motor vehicles operating within Manila with the main purpose of raising funds to be expended exclusively for the repair, maintenance

and improvement of the streets and bridges in said city. The ordinance imposes a license fee although under the cloak of an ad valorem tax to circumvent the prohibition in the Motor Vehicle Law. Further, it does not distinguish between a motor vehicle for hire and one, which is purely for private use. Neither does it distinguish between a motor vehicle registered in Manila and one registered in another place but occasionally comes to Manila and uses its streets and public highways. The distinction is necessary if he ordinance intends to burden with tax only those registered in Manila as may be inferred from the word o p e r a t i n g u s e d t h e r e i n . T h e r e i s a n i n e q u a l i t y i n t h e o r d i n a n c e , w h i c h r e n d e r s i t o f f e n s i v e t o t h e Constitution. Shell Co. vs. Vano GR L-6093, 24 February 1954 En Banc, Padilla (J): 10 concur Facts: The municipal council of Cordova, Cebu adopted Ordinance 10 (1946) imposing an annual tax of P150 on occupation or the exercise of the privilege of installation manager; Ordinance 9 (1947) imposing an annual tax of P40 for local deposits in drums of combustible and inflammable materials and an annual tax of P200 for tin can factories; and Ordinance 11 (1948) imposing an annual tax of P150 on tin can factories having a maximum annual output capacity of 30,000 tin cans. Shell Co., a foreign corporation, filed suit for the refund of the taxes paid by it, on the ground that the ordinances imposing such taxes are ultra vires. Issue: Whether Ordinance 10 is discriminatory and hostile because there is no other person in the locality who exercises such designation or occupation. Held: The fact that there is no other person in the locality who exercises such a designation or calling does not make the ordinance discriminatory and hostile, inasmuch as it is and will be applicable to any person or firm who exercises such calling or occupation named or designated as installation manager. Villegas vs. Hiu Tsing Tai, 86 SCRA 270 Pao Ho is a Chinese national employed in the City of Manila. On 27 March 1968, then Manila mayor Antonio Villegas signed Ordinance No. 6537. The said ordinance prohibits foreign nationals to be employed within the City of Manila without first securing a permit from the Mayor of Manila. The permit will cost them P50.00. Pao Ho, on 04 May 1968 filed a petition for prohibition against the said Ordinance alleging that as a police power measure, it makes no distinction between useful and non-useful occupations, imposing a fixed P50.00 employment permit, which is out of proportion to the cost of registration and that it fails to prescribe any standard to guide and/or limit the action of the Mayor, thus, violating the fundamental principle on illegal delegation of legislative

powers. Judge Arca of Manila CFI ruled in favor of Pao Ho and he declared the Ordinance as being null and void. ISSUE: Whether or not there is undue delegation to the Mayor of Manila. HELD: The decision of Judge Arca is affirmed. Ordinance No. 6537 does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion. It has been held that where an ordinance of a municipality fails to state any policy or to set up any standard to guide or limit the mayors action, expresses no purpose to be attained by requiring a permit, enumerates no conditions for its grant or refusal, and entirely lacks standard, thus conferring upon the Mayor arbitrary and unrestricted power to grant or deny the issuance of building permits, such ordinance is invalid, being an undefined and unlimited delegation of power to allow or prevent an activity per se lawful. Ordinance No. 6537 is void because it does not contain or suggest any standard or criterion to guide the mayor in the exercise of the power, which has been granted to him by the ordinance. The ordinance in question violates the due process of law and equal protection rule of the Constitution. Cagayan Electric Power & Light Co. vs. Commissioner GR L-60126, 25 September 1985 Second Division, Aquino (J): 5 concur Facts: Cagayan Electric is a holder of a legislative franchise under Republic Act 3247 where payment of 3% tax on gross earnings is in lieu of all taxes and assessments upon privileges, etc. In 1968, RA 5431 amended the franchise by making all corporate taxpayers liable for income tax except those indicated in paragraph (c) of Section 24 of the Tax Code. In 1969, through RA 6020, its franchise was extended to two other towns and the tax exemption was reenacted. In 1973, the Commissioner required the company to pay deficiency income taxes for 1968 to 1971. Issue: Whether the withdrawal of the franchises tax exemption violates the non impairment clause of the Constitution. Held: Congress could impair the companys legislativ e franchise by making it liable for income tax. The Constitution provides that a franchise is subject to amendment, alteration or repeal by the Congress when the public interest so requires. RA 3247 itself provides that the franchise is subject to amendment, etc. by Congress. The enactment of RA 5431 had the effect of withdrawing the companys exemption from income tax. The exemption was restored by the enactment of RA 6020. The company is liable only for the income tax for the period of 1 January to 3 August 1969.

Tolentino vs. Secretary of Finance G.R. No. 115455 235 SCRA 630 (1994) FACTS: RA 7716, otherwise known as the Expanded Value-Added Tax Law, is an act that seeks to widen the tax base of the existing VAT system and enhance its administration by amending the National Internal Revenue Code. There are various suits questioning and challenging the constitutionality of RA 7716 on various grounds. Tolentino contends that RA 7716 did not originate exclusively from the House of Representatives but is a mere consolidation of HB. No. 11197 and SB. No. 1630 and it did not pass three readings on separate days on the Senate thus violating Article VI, Sections 24 and 26(2) of the Constitution, respectively. Art. VI, Section 24: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Art. VI, Section 26(2): No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. ISSUE: Whether or not RA 7716 violated Art. VI, Section 24 and Art. VI, Section 26(2) of the Constitution. HELD: No. The phrase originate exclusively refers to the revenue bill and not to the revenue law. It is sufficient that the House of Representatives initiated the passage of the bill, which may undergo extensive changes in the Senate. SB. No. 1630, having been certified as urgent by the President need not meet the requirement not only of printing but also of reading the bill on separate days.

Abra vs. Hernando GR L-49336, 31 August 1981 Second Division, Fernando (J): 3 concur, 1 concur in result, 1 on leave Facts: The provincial assessor made a tax assessment on the properties of the Roman Catholic Bishop of Bangued. The bishop claims tax exemption from real estate tax, through an action for declaratory relief. A summary judgment was made granting the exemption without hearing the side of the Province of Abra. Issue: Whether the properties of the Bishop of Bangued are tax-exempt. Held: The 1935 and the 1973 Constitutions differ in language as to the exemption of religious property from taxes as tehy should not only be exclusively but also actually and directly used for religious purposes. Herein, the judge accepted at its face the allegatio n of the Bishop instead of demonstrating that there is compliance with the constitutional provision that allows an exemption. There was an allegation of lack of jurisdiction and of lack of cause of action, which should have compelled the judge to accord a hearing to the province rather than deciding the case immediately in favor of the Bishop. Exemption from taxation is not favored and is never presumed, so that if granted, it must be strictly construed against the taxpayer. There m u s t b e proof of the actual and direct use of the lands, buildings, a n d i m p r o v e m e n t s f o r r e l i g i o u s ( o r charitable) purposes to be exempted from taxation. The case was remanded to the lower court for a trial on merits. LLADOC VS. COMMISSIONER OF INTERNAL REVENUE [14 SCRA 292; NO.L-19201; 16 JUN 1965] Saturday, January 31, 2009 Posted by Coffeeholic Writes Labels: Case Digests Political Law Facts: Sometime in 1957, M.B. Estate Inc., of Bacolod City, donated 10,000.00 pesos in cash to Fr. Crispin Ruiz, the parish priest of Victorias, Negros Occidental, and predecessor of Fr. Lladoc, for the construction of a new Catholic church in the locality. The donated amount was spent for such purpose. On March 3, 1958, the donor M.B. Estate filed the donor's gift tax return. Under date of April 29, 1960.

Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic Parish of Victorias of which petitioner was the parish priest. Issue: Whether or not the imposition of gift tax despite the fact the Fr. Lladoc was not the Parish priest at the time of donation, Catholic Parish priest of Victorias did not have juridical personality as the constitutional exemption for religious purpose is valid. Held: Yes, imposition of the gift tax was valid, under Section 22(3) Article VI of the Constitution contemplates exemption only from payment of taxes assessed on such properties as Property taxes contra distinguished from Excise taxes The imposition of the gift tax on the property used for religious purpose is not a violation of the Constitution. A gift tax is not a property by way of gift inter vivos. The head of the Diocese and not the parish priest is the real party in interest in the imposition of the donee's tax on the property donated to the church for religious purpose. Jose V. Herrera and Ester Herrera vs. The Quezon City Board Of Assessment Appeals 3 SCRA 186 G.R. No. L-15270 September 30, 1961 Concepcion, J. Doctrine: Where rendering charity is its primary object, and the funds derived from payments made by patients able to pay are devoted to the benevolent purposes of the institution, the mere fact that a profit has been made will not deprive the hospital of its benevolent character. The exemption in favor of property used exclusively for charitable or educational purposes is not limited to property actually indispensable therefor but extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes.

Facts: Petitioners Jose and Ester Herrera were authorized by the Director of the Bureau of Hospitals to establish and operate the St. Catherine's Hospital. In 1953, the petitioners sent a letter to the Quezon City Assessor requesting exemption from payment of real estate tax on the lot, building and other

improvements comprising the hospital stating that the same was established for charitable and humanitarian purposes and not for commercial gain which was granted effective the years 1953 to 1955. Subsequently, however, in a letter dated August 10, 1955 the Quezon City Assessor notified the petitioners that the aforesaid properties were re-classified from exempt to "taxable" and thus assessed for real property taxes effective 1956. The petitioners appealed the assessment to the Quezon City Board of Assessment Appeals, which, affirmed the decision of the City Assessor. A motion for reconsideration thereof was denied. From this decision, the petitioners instituted the instant appeal. The building involved in this case is principally used as a hospital. From the evidence presented by petitioners, it is made to appear that there are two kinds of charity patients (a) those who come for consultation only ("out-charity patients"); and (b) those who remain in the hospital for treatment ("lying-inpatients"). Petitioners also operate within the premises of the hospital the "St. Catherine's School of Midwifery" which was granted government recognition by the Secretary of Education. The students practice in the St. Catherine's Hospital, as well as in the St. Mary's Hospital, which is also owned by the petitioners. A separate set of accounting books is maintained by the school for midwifery distinct from that kept by the hospital. However, the petitioners have refused to submit a separate statement of accounts of the school.

Issue: Whether or not the said properties are used exclusively for charitable or educational purposes which are exempt from real property tax

Held: The Supreme Court ruled in the affirmative. The Court of Tax Appeals decided the issue in the negative, upon the ground that the St. Catherine's Hospital has a pay ward for ... pay-patients, who are charged for the use of the private rooms, operating room, laboratory room, delivery room, etc., like other hospitals operated for profit and that petitioners and their family occupy a portion of the building for their residence. It should be noted, however, that, according to the very statement of facts made in the decision appealed from, of the thirty-two (32) beds in the hospital, twenty (20) are for charity-patients; that the income realized from pay-patients is spent for improvement of the charity wards; and that petitioners, Dr. Ester Ochangco Herrera, as directress of said hospital, does not receive any salary, although its resident physician gets a monthly salary of P170.00. It is well settled, in this connection, that the admission of pay-patients does not detract from the charitable character of a hospital, if all its funds are devoted exclusively to the

maintenance of the institution as a public charity. In other words, where rendering charity is its primary object, and the funds derived from payments made by patients able to pay are devoted to the benevolent purposes of the institution, the mere fact that a profit has been made will not deprive the hospital of its benevolent character. Moreover, the exemption in favor of property used exclusively for charitable or educational purposes is not limited to property actually indispensable therefor but extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes, such as, in the case of hospitals, a school for training nurses, a nurses' home, property use to provide housing facilities for interns, resident doctors, superintendents, and other members of the hospital staff, and recreational facilities for student nurses, interns and residents. Within the purview of the Constitutional exemption from taxation, the St. Catherine's Hospital is, therefore, a charitable institution, and the fact that it admits pay-patients does not bar it from claiming that it is devoted exclusively to benevolent purposes, it being admitted that the income derived from paypatients is devoted to the improvement of the charity wards, which represent almost two-thirds (2/3) of the bed capacity of the hospital, aside from "outcharity patients" who come only for consultation. WHEREFORE, the decision of the Court of Tax Appeals, as well as that of the Assessment Board of Appeals of Quezon City, are hereby reversed and set aside, and another one entered declaring that the lot, building and improvements constituting the St. Catherine's Hospital are exempt from taxation under the provisions of the Constitution, without special pronouncement as to costs. It is so ordered. Facts: New Yorks Education Law requires local public school authorities to lend textbooks free of charge to all students in grade 7 to 12, including those in private schools. The Board of Education contended that said statute was invalid and violative of the State and Federal Constitutions. An order barring the Commissioner of Education (Allen) from removing appellants members from office for failure to comply with the requirement and an order preventing the use of state funds for the purchase of textbooks to be lent to parochial schools were sought for. The trial court held the statute unconstitutional. The Appellate Division reversed the decision and dismissed the complaint since the appellant have no standing. The New York Court of Appeals, ruled that the appellants have standing but the law is not unconstitutional. Issue: Whether or Not the said ordinances are constitutional and valid (contention: it restrains the free exercise and enjoyment of the religious profession and worship of appellant).

Held: Section 1, subsection (7) of Article III of the Constitution, provides that: (7) No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religion test shall be required for the exercise of civil or political rights. The provision aforequoted is a constitutional guaranty of the free exercise and enjoyment of religious profession and worship, which carries with it the right to disseminate religious information. It may be true that in the case at bar the price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the same but this cannot mean that appellant was engaged in the business or occupation of selling said "merchandise" for profit. For this reason. The Court believe that the provisions of City of Manila Ordinance No. 2529, as amended, cannot be applied to appellant, for in doing so it would impair its free exercise and enjoyment of its religious profession and worship as well as its rights of dissemination of religious beliefs. With respect to Ordinance No. 3000, as amended, the Court do not find that it imposes any charge upon the enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices. It seems clear, therefore, that Ordinance No. 3000 cannot be considered unconstitutional, however inapplicable to said business, trade or occupation of the plaintiff. As to Ordinance No. 2529 of the City of Manila, as amended, is also not applicable, so defendant is powerless to license or tax the business of plaintiff Society. WHEREFORE, defendant shall return to plaintiff the sum of P5,891.45 unduly collected from it.

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