CASE DIGESTS IN TAXATION I

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COMMISSIONER vs ALGUE, INC.

GR No. L-28896, February 17, 1988
158 SCRA 9
Facts: Algue Inc. filed its income tax returns showing deductions, for promotional fees paid, from their gross income. The BIR assessed
Algue based on such deductions contending that the promotional fees are not ordinary, reasonable and necessary expenses, thus,
disallowed. Algue was able to prove that the professional fees were necessary and reasonable in the light of the efforts exerted by the
payees in inducing investors and prominent businessmen to venture in an experimental enterprise and involve themselves in a new
business requiring millions of pesos.
Issue: Whether the BIR correctly disallowed the deduction.
Held: No, because Algue was able to prove that the professional fees were ordinary, necessary and reasonable. It is well-settled that
taxes are the lifeblood of the government and so should be collected without unnecessary hindrance On the other hand, such collection
should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary
to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the
promotion of the common good, may be achieved.
But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be
exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the
courts will then come to his succor. For all the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer
can demonstrate, as it has here, that the law has not been observed.

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OSMEA vs ORBOS
GR No 99886, March 31, 1993
Facts: The Oil Price Stabilization Fund (OPSF) was created by President Marcos to reimburse oil companies for cost increases in
crude oil. Subsequently, the OPSF was reclassified into a "trust liability account," and ordered released from the National Treasury to
the Ministry of Energy. It is contended that the creation of trust fund violates the Constitution on the reason that if a special tax is
collected for a specific purpose, the revenue generated as a special fund to be used only for the purpose indicated.
Issue: Whether the creation of the trust fund is unconstitutional.
Held: No. The tax collected is not in pure exercise of the taxing power. It is levied with a regulatory purpose, to provide a means for the
stabilization of the petroleum products industry. The levy is primarily in the exercise of the police power of the State.

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REPUBLIC OF THE PHILIPPINES vs BACOLOD-MURCIA

GR No. L-19824, L-19825, L-19826; July 9, 1966
Facts: RA 632 created the Philippine Sugar Institute, a semi-public corporation. It acquired the Insular Sugar Refinery from the
proceeds of the Sugar tax to be collected under RA 632. The operation of the refinery was disastrous. Bacolod-Murcia refused to pay
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its contribution to the said fund contending that the purchase of refinery with money from the Institutes fund was not authorized under
RA 632 and that the continued operation of the refinery is inimical to its interest.
Issue: Whether Bacolod- Murcia is liable.
Held: Yes. The special assessment or levy for the Philippine Sugar Institute Fund is not so much an exercise of the power of taxation,
nor the imposition of a special assessment, but the exercise of police power for the general welfare of the entire country. It is, therefore,
an exercise of a sovereign power which no private citizen may lawfully resist.

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TIO vs VIDEOGRAM REGULATORY BOARD

G.R. No. L-75697; 18 June 1987
151 SCRA 208
Facts: Tio assails the validity of PD 1987 entitled Act Creating the Videogram Regulatory Board which imposes a 30% tax on gross
receipts. Tio contends that the imposition is harsh, confiscatory, oppressive and/or unlawfully restraints trade in violation of the due
process clause of the Constitution.
Issue: Whether PD 1987 is a valid exercise of the power of taxation?
Held: Yes. Taxation has been made the implement of the state's police power. The levy of the 30% tax is for a public purpose. It was
imposed primarily to answer the need for regulating the video industry, particularly because of the rampant film piracy,
the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. And while it was also an objective
of the DECREE to protect the movie industry, the tax remains a valid imposition.

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REPUBLIC OF THE PHILIPPINES vs PATANAO

GR No L-22356, July 21, 1967
Facts: A complaint was filed against the defendant alleging that the latter failed to file income tax returns for 1953 and 1954. He filed
false and fraudulent returns for 1951, 1952 and 1955. the lower court dismissed the complaint holding that the action is barred by prior
judgment, defendant having been acquitted in criminal cases of the same court, which were prosecutions for failure to file income tax
returns and for non-payment of income taxes.
Issue: Whether the action is barred by prior judgment.
Held: No. Under the Penal Code the civil liability is incurred by reason of the offenders criminal act. The situation under the income tax
law is the exact opposite. Civil liability to pay taxes arises from the fact that one has engaged himself in business and not because of
any criminal act committed by him. The acquittal in the said criminal case cannot operate to discharge defendant from the duty of
paying the taxes which the law requires to be paid, since that duty is imposed by statute prior to and independently of any attempts by
the taxpayer to evade payment.

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PHIL. GUARANTY CO., INC. vs CIR

GR No. L-22074, April 30, 1965
13 SCRA 775
Facts: The petitioner, a domestic insurance company, entered into reinsurance contracts with foreign insurance companies not doing
business in the country. It ceded to foreign reinsurers a portion of the premiums on insurance it has originally underwritten in the
Philippines. The premiums paid by such companies were excluded by the petitioner from its gross income when it file its income tax
returns. 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.
Issue: whether insurance companies are not required to withhold tax on reinsurance premiums ceded to foreign insurance companies.
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.

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GOMEZ vs PALOMAR
GR No L-23645, October 29, 1968
Facts: Petitioners question the constitutionality of the RA 1635, which requires an additional 5 centavo stamp for every mail being
posted to help raise funds for the Philippine Tuberculosis Society, claiming that the law violates the equal protection cause because it
constitutes mail users into a class for tax purposes while leaving untaxed the rest of the population.
Issue: Whether RA 1635 is unconstitutional.
Held: No. It is settled that the legislature has the inherent power to select the subjects of taxation and to grant exemptions. This power
has aptly been described as "of wide range and flexibility." Indeed, it is said that in the field of taxation, more than in other areas, the
legislature possesses the greatest freedom in classification. The reason for this is that traditionally, classification has been a device for
fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden.

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TOLENTINO vs SECRETARY OF FINANCE

GR No. 115455, August 25, 1994
Facts: Various petitioners seek to declare RA 7166, which widens the tax base of the existing VAT system, as unconstitutional because
it violates Article VI, Section 28 (1) of the Constitution which provides that the rule of taxation shall be uniform and equitable. The
Congress shall evolve a progressive system of taxation.
Issue: Whether RA 7166 violates the principle of progressive system of taxation.

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Held: No. Regressivity is not a negative standard for courts to enforce. Evolve a progressive system of taxation is a directive to
Congress. These provisions are placed in the Constitution as moral incentives to legislation, not as judicially enforceable rights.

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LUTZ vs ARANETA
GR No. L-7859, December 22, 1955
98 PHIL 148
Facts: Plaintiff questioned the constitutionality of CA 567 or the Sugar Adjustment Act for it provided for an increase of the existing tax
on the manufacture of sugar. He alleged that such enactment is not being levied for a public purposebut solely and exclusively for the
aid and support of the sugar industry thus making it void and unconstitutional.
Issue: Whether CA 567 is constitutional.
Held: Yes. The protection and promotion of the sugar industry is a matter of public concern, it follows that the Legislature may
determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion
must be allowed to fully play, subject only to the test of reasonableness; and it is not contended that the means provided in the law bear
no relation to the objective pursued or are oppressive in character. If objective and methods are alike constitutionally valid, no reason is
seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the
state's police power.

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PUNSALAN vs MUNICIPAL BOARD OF MANILA

GR NO.L-4817; 26 MAY 1954
95 PHIL 46
Facts: Petitioners assailed the validity Ordinance No. 3398 which imposes a municipal occupation tax on persons exercising
various professions in the city and penalizes non-payment of the same. Petitioners contend that the ordinance is unjust and oppressive
and amounts to double taxation.
Issue: Whether Ordinance No 3398 constitutes double taxation?
Held: No. The argument against double taxation may not be invoked if one tax is imposed by the state and the other is imposed by the
city. It is widely recognized that there is nothing inherently terrible in the requirement that taxes be exacted with respect to the same
occupation by both the state and the political subdivisions thereof.

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CHAVEZ vs ONGPIN
GR No 76778, June 6, 1990
Facts: President Corazon Aquino issued EO 73 increasing the basis for assessment of real property tax. Chavez, a taxpayer and
landowner, questioned the constitutionality of EO 74. He alleged that it will bring unreasonable increase in real property taxes.
Issue: Whether EO 73 is constitutional.
Held: Yes. Without EO 73, the basis for collection of real property taxes will still be the 1978 revision of property values. Certainly, to
continue collecting real property taxes based on valuations arrived at several years ago, in disregard of the increases in the value of
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real properties that have occurred since then is not in consonance with a sound tax system. Fiscal adequacy, which is one of the
characteristics of a sound tax system, requires that sources of revenue must be adequate to meet government expenditures and their
variations.

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KAPATIRAN NG MGA NAGLILINGKOD SA PAMAHALAAN vs TAN

GR No 81311 June 30, 1988
Facts: EO 372 was issued by the President of the Philippines which amended the Revenue Code, adopting the value-added tax (VAT)
effective January 1, 1988. Four petitions assailed the validity of the VAT Law from being beyond the President to enact; for being
oppressive, discriminatory, regressive and violative of the due process and equal protection clauses, among others, of the Constitution.
Issue: Whether or not EO 273 is unconstitutional.
Held: No. Petitioners have failed to show that EO 273 was issued capriciously and whimsically or in an arbitrary or despotic manner
by reason of passion or personal hostility. They have failed to adequately show that the VAT is oppressive, discriminatory or unjust.
Petitioners merely rely upon newspaper articles which are actually hearsay and have evidentiary value. To justify the nullification of a
law, there must be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative implication. As the Court sees
it, EO 273 satisfies all the requirements of a valid tax. It is uniform. A tax is considered uniform when it operates with the same force
and effect in every place where the subject may be found."

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PHILIPPINE ACETYLENE CO. INC. vs CIR

GR No L-19707, August 17, 1967
Facts: Philippine Acetylene Co. Inc sold its oxygen and acetylene gases to Napocor and Voice of America (VOA). It refused to pay
sales tax on such sales on the ground that both Napocor and Voice of America are exempt from taxes.
Issue: Whether Philippine Acetylene Co. Inc is liable to pay the sales tax.
Held: Yes. When the consumer or end-user of a manufacturer product is tax-exempt, such exemption covers only those taxes for which
such consumer or end-user is directly liable. Indirect taxes are not included. Hence, the manufacturer cannot claim exemption from the
payment of sales tax, neither can the consumer or buyer of the product demand the refund of the tax that the manufacturer might have
passed on to him.

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MACEDA vs MACARAIG
GR No 88291, May 31, 1991
Facts: NPC was granted exemption from direct and indirect taxes under PD 938. NPC seeks to recover the indirect taxes passed by oil
companies which supplied bunker fuel oil to NPC.
Issue: Whether NPC is entitled to recover indirect taxes paid by it.
Held: Yes. When the law granting tax exemption specifically includes indirect taxes or when it is clearly manifest therein that legislative
intention to exempt embraces indirect taxes, then the buyer of the product or service sold has a right to be reimbursed the amount of
the taxes that the sellers passed on to him. By the very nature of indirect taxation, the economic burden of such taxation is expected to
be passed on through the channels of commerce to the user or consumer of the goods sold. Because, however, the NPC has been
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exempted from both direct and indirect taxation, the NPC must be held exempted from absorbing the economic burden of indirect
taxation.

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CIR vs GOTAMCO
GR No L-31092, February 27, 1987
Facts: The contract for the construction of the building of WHO in Manila was awarded to Gotamco. WHO enjoys tax exemptions.
WHO received an opinion from the CIR stating that the 3% contractors tax is an indirect tax, and thus WHO is exempt. Subsequently,
the CIR reversed his opinion stating that the 3% contractors tax is not a direct or indirect tax due on WHO, but a tax primarily due from
the contractor.
Issue: Whether Gotamco is liable for the tax.
Held: No. Where the exemption from indirect tax is given to the contractee, but the evident intention is to exempt the contractor so that
such contractor may no longer shift or pass on any tax to the contractee, the contractor may claim tax exemption on the transaction.

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CIR vs AMERICAN RUBBER COMPANY

GR No L-19667, November 29, 1966
Facts: American Rubber sold its rubber products locally and declared the same for tax purposes in which the Commissioner
accordingly assessed. The company paid under protest claiming that its rubber products were agricultural products exempt from sales
tax under Section 188b of the Tax Code.
Issue: whether American rubber is entitled to recover the sales tax paid by it.
Held: Yes. When the transaction itself is the one that is tax-exempt but through error the seller pays the tax and shifts the same to the
buyer, the seller gets the refund, but must hold it in trust for buyer.

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PHILIPPINE AIRLINES, INC. vs EDU

G.R. No. L- 41383, August 15, 1988
Facts: Under its franchise, PAL is exempt from the payment of taxes. The Land Transportation Commissioner issued a regulation
requiring all tax exempt entities, among them PAL to pay motor vehicle registration fees. The money collected from the motor vehicle
registration fees are intended for the construction and maintenance of public roads, streets and bridges.
Issue: Whether or not motor vehicle registration fees are considered as taxes.
Held: Yes. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is
properly called a tax. Such is the case of motor vehicle registration fees. The motor vehicle registration fees are actually taxes intended
for additional revenues of the government.

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PROGRESSIVE DEVELOPMENT CORPORATION vs QUEZON CITY

GR 36081, April 24, 1989
Facts: The City Council of Quezon City adopted an ordinance imposing a supervision fee for the regulation of privately-owned public
markets equal to 5% of gross receipts on rentals of space of privately-owned public markets in Quezon City. Progressive Development
Corp. filed a petition for prohibition against the city on the ground that the supervision fee is in reality a tax on income which the city
cannot impose.
Issue: Whether the supervision fee is a tax on income.
Held: No. The general rule is that the imposition is a tax if its primary purpose is to generate revenue and regulation is merely
incidental; but if regulation is the primary purpose, the fact that incidentally revenue is also obtained does not make the imposition of a
tax. Since the supervision fee is for regulatory purpose, it is not a tax.

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FRANCIA vs INTERMEDIATE APPELLATE COURT

GR No L-67649, June 28, 1988
Facts: Francia was the registered owner of a house and lot a portion of which was expropriated by the Republic of the Philippines.
Because he was not able to pay real property taxes from 1963 to 1977, his property was sold in a public auction. Francia contends that
his tax delinquency has been extinguished by legal compensation. He claims that the government owed him when a portion of his land
was expropriated.
Issue: Whether the expropriation payment compensate for the real estate taxes due.
Held: No. There can be no offsetting of taxes against the claims that the taxpayer may have against the government. A person cannot
refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected.
The collection of a tax cannot await the results of a lawsuit against the government. Internal revenue taxes cannot be the subject of
compensation. The Government and the taxpayer are not mutually creditors and debtors of each other under Article 1278 of the Civil
Code and a claim of taxes is not such a debt, demand, contract or judgment as is allowed to be set-off.

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DOMINGO vs GARLITOS
G.R. NO. 18993 June 29, 1963
Facts: In Domingo vs Moscoso, the SC declared as final and executor the order for the payment of the estate and inheritance taxes,
charges and penalties by the estate of the of the late Walter Price. It appears that the Government is indebted to the estate of Price.
Such claim has been recognized and the amount has been appropriated by a corresponding law (RA 2700).
Issue: Whether legal compensation may take place in the case at bar.
Held: Yes. Both the claim of the Government for inheritance taxes and the claim of the intestate for services rendered have already
become overdue and demandable as well as fully liquidated. Compensation, therefore, takes place by operation of law, in accordance
with Article 1279 and 1290 of the Civil Code, and both debts are extinguished to the concurrent amount.

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PHILEX MINING CORPORATION vs CIR

GR No 125704, August 28, 1998
Facts: BIR demanded from Philex the payment of its tax liabilities. Philex protested the demand stating that it has pending claims for
VAT input/refund, which should be applied against it tax liabilities.
Issue: Whether legal compensation can take place.
Held: No. The government and the taxpayer are not creditors and debtors or each other. Obligations in the nature of debts are due to
the government in its corporate capacity, while taxes are due to the government in its sovereign capacity.

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ROXAS vs CTA
GR No L-25043, April 26, 1968
Facts: The Roxas brothers inherited from their grandparents several properties which included farmlands. The government, in line with
the constitutional mandate to acquire big landed estates and apportion them among landless tenants-farmers, persuaded the Roxas
brothers to part with their landholdings. The brothers agreed to sell the lots to the government. Unfortunately, the government did not
have funds so the brothers agreed to a purchase by installment. Subsequently, the CIR demanded from the brothers the payment of
deficiency income taxes resulting from the sale.
Issue: whether the brothers are liable.
Held: No. It should be borne in mind that the sale of the farmlands to the very farmers who tilled them for generations was not only in
consonance with, but more in obedience to the request and pursuant to the policy of our Government to allocate lands to the
landless. In order to maintain the general publics trust and confidence in the Government this power must be used justly and not
treacherously. It does not conform to the sense of justice for the Government to persuade the taxpayer to lend it a helping hand and
later on penalize him for duly answering the urgent call.

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PASCUAL vs SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS

110 Phil. 331
Facts: Pascual assailed the validity of RA 920 appropriating P85,000.00 for the construction, reconstruction, repair, extension and
improvement Pasig feeder road terminals. He claimed that the appropriation was actually going to be used for private use for the
terminals sought to be improved were part of the Antonio Subdivision. The said Subdivision is owned by Senator Jose Zulueta who was
a member of the same Senate that passed and approved RA 920.
Issue: Whether or not the appropriation is valid.
Held: No, the appropriation is void for being an appropriation for a private purpose. In accordance with the rule that the taxing power
must be exercised for public purposes only, money raised by taxation can be expanded only for public purposes and not for the
advantage of private individuals. Inasmuch as the land on which the projected feeder roads were to be constructed belonged then to
Zulueta, the result is that said appropriation sought a private purpose, and, hence, was null and void.

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BAGATSING vs RAMIREZ
GR No L-41631, December 17, 1976
Facts: The Municipal Board of Manila enacted Ordinance 7522, regulating the operation of public markets and prescribing fees for the
rentals of stalls. Private respondent questioned the validity of the ordinance contending that the market stall fees imposed are diverted
to the exclusive private use of the Asiatic Integrated Corporation since the collection of said fees had been let by the City of Manila to
the said corporation in a "Management and Operating Contract."
Issue: Whether the delegation of the collection of tax to a private person/entity defeats the public purpose requirement of a tax
ordinance.
Held: No. The entrusting of the collection of the fees does not destroy the public purpose of the ordinance. So long as the purpose is
public, it does not matter whether the agency through which the money is dispensed is public or private. The right to tax depends upon
the ultimate use, purpose and object for which the fund is raised. It is not dependent on the nature or character of the person or
corporation whose intermediate agency is to be used in applying it. The people may be taxed for a public purpose, although it be under
the direction of an individual or private corporation.

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BASCO vs PAGCOR
GR 91649; May 14, 1991
197 SCRA 52, 65
Facts: Petitioner is seeking to annul the Philippine Amusement and Gaming Corporation (PAGCOR) Charter - PD 1869, because it
waived the Manila Cit governments right to impose taxes and license fees, which is recognized by law. For the same reason, the law
has intruded into the local governments right to impose local taxes and license fees.
Issue: Whether PD 1869 is valid.
Held: Yes. LGUs have no power to tax Government instrumentalities. PAGCOR, being a GOCC, is therefore exempt from local
taxes. The National Government is supreme over local governments. As such, mere creatures of the State cannot defeat national
policies using the power to tax as a tool for regulation. The power to tax cannot be allowed to defeat an instrumentality of the very
entity which has the inherent power to wield it. The power of LGUs to impose taxes & fees is always subject to limitation provided by
Congress.

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GARCIA vs EXECUTIVE SECRETARY

211 SCRA 219
Facts: President Corazon Aquino issued Executive Order No. 438 which imposed, in addition to any other duties, taxes and charges
imposed by law on all articles imported into the Philippines. Garcia questioned the validity of the said law for being violative of section
24 Article VI of the Constitution which provides that 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.
Issue: whether EO 438 is valid

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Held: Yes. Section 28(2) of Article VI of the Constitution explicitly allows the Congress to authorize the President subject to such
limitations and restrictions as Congress may impose to fix within specific limits tariff rates and other duties or imposts.

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MACEDA vs ENERGY REGULATORY BOARD

GR No. 96266, July 18, 1991
Facts: Upon the outbreak of the Persian Gulf conflict on August 1990, private respondents filed with the ERB their respective
applications on oil price increases. ERB then issued an order granting a provisional increase of P1.42 per liter. Petitioner Maceda filed
a petition for Prohibition seeking to nullify said increase. Petitioner claimed that if the price increase will be used to augment the Oil
Price Stabilization Fund (OPSF) this will constitute illegal taxation.
Issue: Whether the said increase amounts to illegal taxation.
Held: No. In the Maceda case, (G.R. Nos. 95203-05) this Court has already ruled that "the Board Order authorizing the proceeds
generated by the increase to be deposited to the OPSF is not an act of taxation but is authorized by Presidential Decree No. 1956. It is
an exercise of police power.

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REYES vs ALMANZOR
GR No. 43839-46; April 26, 1991
196 SCRA 322
Facts: Petitioners is an owner of parcels of land leased to tenants. RA 6359 was enacted prohibiting for one year an increase in
monthly rentals. The City Assessor of Manila assessed the value of petitioners property based on the schedule of market values duly
reviewed by the Secretary of Finance. The revision increased the tax rates and petitioner averred that the reassessment imposed upon
him greatly exceeded the annual income derived from their properties.
Issue: whether the approach on tax assessment used by the City Assessor reasonable.
Held: No. The taxing power has the authority to make a reasonable and natural classification for purposes of taxation but the
government's act must not be prompted by a spirit of hostility, or at the very least discrimination that finds no support in reason.
Consequently, it stands to reason that petitioners who are burdened by the government by its Rental Freezing Laws (then R.A. No.
6359 and P.D. 20) under the principle of social justice should not now be penalized by the same government by the imposition of
excessive taxes petitioners can ill afford and eventually result in the forfeiture of their properties.

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SISON, JR. vs ANCHETA

GR No. L-59431, July 25, 1984
Facts: Petitioners challenged the constitutionality of Section 1 of Batas Pambansa Blg. 135 which imposed different rates of tax for
different classes of income earners. He alleged that he would be unduly discriminated against by the imposition of higher rates of tax
upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual
taxpayers. He characterizes the above section as arbitrary amounting to class legislation, oppressive and capricious in character.
Issue: Whether BP 135 transgresses both the equal protection and due process clauses of the Constitution as well as of the
rule requiring uniformity in taxation
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Held: No. The presumption of validity must prevail. The taxing power has the authority to make reasonable and natural classifications
for purposes of taxation. Recipients of compensation income are not entitled to make deductions for income tax purposes as there is
practically no overhead expense, while professionals and businessmen have no uniform costs or expenses necessary to produce their
income. There is ample justification to adopt the gross system of income taxation to compensation income, while continuing the system
of net income taxation as regards professional and business income.

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VILLEGAS vs HIU CHIONG TSAI PAO HO

GR No L-29646, November 10, 1978
Facts: The Municipal Board of Manila enacted Ordinance 6537 requiring aliens to procure the requisite mayors permit so as to be
employed or engage in trade in the City of Manila.
Issue: Whether Ordinance 6537 is valid
Held: No. The Ordinance was declared invalid as it is arbitrary, oppressive and unreasonable, being applied only to aliens who are thus
deprived of their rights to life, liberty and property and therefore violates the due process and equal protection clauses of the
Constitution. Further, the ordinance does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion,
thus conferring upon the mayor arbitrary and unrestricted powers.

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MANILA RACE HORSE TRAINERS ASSOCIATION, INC vs DELA FUENTE

GR No. L-2947, January 11, 1951
88 Phil 60
Facts: The Municipal Board of the City of Manila enacted Ordinance 3065 which imposes tax on stable owners based on how many
horses they maintain in their stables. They prayed that said ordinance be declared invalid because it violates the equal protection
clause. They alleged that the tax imposed should be uniform whether there are horses or no horses are maintained in the stables.
Issue: Whether Ordinance 3065 is valid.
Held: Yes. The Court held that In taxing only boarding stables for race horses, we do not believe that the ordinance, makes arbitrary
classification. There is equality and uniformity in taxation if all articles or kinds of property of the same class are taxed at the same rate.
Applying this criterion to the present case, there would be discrimination if some boarding stables of the same class used for the same
number of horses were not taxed or were made to pay less or more than others.

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AMERICAN BIBLE SOCIETY vs CITY OF MANILA

G.R. No. L-9637; April 30, 1957
Facts: Plaintiff's Philippine agency has been distributing and selling bibles throughout the Philippines and translating the same into
several Philippine dialects. The City Treasurer of Manila, by virtue of Ordinance Nos. 3000, 2529, 3028 and 3364, required plaintiff to
secure the necessary Mayors permit and license fees. Plaintiff contended that the said ordinances are unconstitutional and illegal in so
far as its society is concerned, because they provide for religious censorship and restrain the free exercise and enjoyment of its
religious profession, to wit: the distribution and sale of bibles and other religious literature to the people of the Philippines.
Issue: Whether the ordinances in question are unconstitutional.
11 | P a g e

Held: Ordinance No. 3000, which requires a Mayor's permit before any person can engage in any of the businesses, trades or
occupations, does not impose any charge upon the enjoyment of a right granted by the Constitution nor tax the exercise of religious
practices. It cannot be considered unconstitutional, even if applied to plaintiff Society.
The other ordinances are valid. However, these cannot be applied to the plaintiff. This is because the defendant is powerless to license
or tax the business of plaintiff Society involved herein for it would impair plaintiff's right to the free exercise and enjoyment of its
religious profession and worship, as well as its rights of dissemination of religious beliefs.

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LUNG CENTER OF THE PHILIPPINES vs QUEZON CITY

Facts: Petitioner is a non-stock and non-profit entity. Petitioner owns a parcel of land where a portion of which is being leased for
commercial purposes. The City Assessor of Quezon City assessed both the land and building of petitioner for real property taxes.
Petitioner filed a claim for exemption predicated on its claim that it is a charitable institution. The petitioner alleged that under Section
28, paragraph 3 of the 1987 Constitution, the property is exempt from real property taxes.

Issue: Whether the real properties of the petitioner are exempt from real property taxes.
Held: The portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are not
exempt from such taxes. On the other hand, the portions of the land occupied by the hospital and portions of the hospital used for its
patients, whether paying or non-paying, are exempt from real property taxes.
Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order to be entitled to the exemption, the petitioner is burdened to
prove,

by clear

and unequivocal

proof,

that (a) it

is a charitable

institution;

and

(b) its real

properties

are ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable purposes. Exclusive is defined as possessed and enjoyed to the
exclusion of others; debarred from participation or enjoyment; and exclusively is defined, in a manner to exclude; as enjoying a
privilege exclusively. If real property is used for one or more commercial purposes, it is not exclusively used for the exempted purposes
but is subject to taxation. The words dominant use or principal use cannot be substituted for the words used exclusively without doing
violence to the Constitutions and the law. Solely is synonymous with exclusively.
What is meant by actual, direct and exclusive use of the property for charitable purposes is the direct and immediate and actual
application of the property itself to the purposes for which the charitable institution is organized. It is not the use of the income from the
real property that is determinative of whether the property is used for tax-exempt purposes.

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ABRA VALLEY COLLEGE, INC., vs HON. JUAN P. AQUINO

G.R. No. L-39086 June 15, 1988
Facts: Petitioner is an educational corporation and institution of higher learning. The second floor of the school is used by the Director
of petitioner for residential purposes while the ground floor of the college building is being used and rented by a commercial
establishment. Petitioner claims exemption from real property tax finding support under Section 22, paragraph 3, Article VI, of the then
1935 Philippine Constitution, which expressly grants exemption from realty taxes for "Cemeteries, churches and parsonages or
convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious, charitable or educational
purposes .
Issue: Whether petitioner is exempted from real property tax.
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Held: The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution. However, the phrase
"exclusively used for educational purposes" as provided for in Article VI, Section 22, paragraph 3 of the 1935 Philippine Constitution,
extends only to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. Otherwise
stated, the use of the school building or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. Thus, while
the use of the second floor of the main building in the case at bar for residential purposes of the Director and his family, may find
justification under the concept of incidental use, which is complimentary to the main or primary purposeeducational, the lease of the
first floor thereof to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the
purpose of education.

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SAN MIGUEL CORPORATION vs HON. CELSO AVELINO

G.R. No. L-39699 March 14, 1979
Facts: The Acting Secretary of Justice Macaraig rendered an opinion that the Mandaue Tax Code is "of doubtful validity." A suit for
collection against petitioner was filed by Respondent City where it squarely put in issue the validity of such ordinance, thus contesting
the opinion of the Acting Secretary of Justice. Petitioner filed a motion to dismiss on the ground of lack of jurisdiction claiming that the
collection suit is an appeal under Section 47 of PD 231, which the Court of First Instance has no jurisdiction.
Issue: Whether the filing of such action after such opinion was rendered may be considered "an appeal" under the Presidential Decree.
Held: No. It is an accepted juridical norm that the validity of a statute, an executive order or ordinance is a matter for the judiciary to
decide and that whenever in the disposition of a pending case such a question becomes unavoidable, then it is not only the power but
the duty of the Court to resolve such a question. It is likewise expressly provided in Section 43 of the Judiciary Act that the original
jurisdiction over all civil actions involving the legality of any tax, impost or assessment appertains to the Court of First Instance.

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PHILIPPINE PRESS INSTITUTE, INC. vs COMMISSION ON ELECTIONS

G.R. No. L-119694 May 22, 1995
Facts: COMELEC promulgated Resolution No. 2772 directing newspapers to provide free COMELEC space of not less than one-half
page for the common use of political parties and candidates. Petitioner asks the Supreme Court to declare the resolution
unconstitutional and void on the ground that it violates the prohibition imposed by the Constitution upon the government against the
taking of private property for public use without just compensation.
Issue: Whether COMELEC Resolution No. 2772 is unconstitutional.
Held: Yes. To compel print media companies to donate Comelec space amounts to taking of private personal property without
payment of the just compensation required in expropriation cases. Moreover, the element of necessity for the taking has not been
established by respondent Comelec, considering that the newspapers were not unwilling to sell advertising space. The taking of private
property for public use is authorized by the constitution, but not without payment of just compensation.

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WELLS FARGO BANK & UNION TRUST COMPANY vs THE COLLECTOR OF INTERNAL REVENUE
G.R. No. L-46720; June 28, 1940
Facts: Eye died in Los Angeles, California, USA which was also her place of domicile. She left intangibles consisting of 70,000 shares
in the Benguet Consolidated Mining Company, a corporation organized and existing under Philippine laws. The Collector of Internal
Revenue sought to assess and collect estate tax on the said shares. Wells Fargo Banks & Union Trust Company, the trustee of the
estate of the decedent Eye, objected to said assessment averring that said shares were already subjected to inheritance tax in
California and hence cannot be taxed again in the Philippines.
Issue: Whether or not the shares are subject to estate tax in the Philippines.
Held: Yes. The situs of taxation is here in the Philippines because the situs of the shares of stock concerned is in the Philippines. This
is due to the fact that the said shares were issued here by a domestic corporation which is also domiciled here. Furthermore, when Eye
was alive, she actually delivered the title to said shares to the resident secretary of the corporation here in the Philippines hence the
shares never left the Philippines.

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