PLANTERS PRODUCTS, INC., v.

FERTIPHIL CORPORATION
(G.R. No. 166006, March 14, 2008)

FACTS:

PPI and Fertiphil are both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals. In 1985, then Pres
Marcos , issued LOI No. 1465 which provided, among others, for the imposition of a capital recovery component (CRC) on the domestic sale of all
grades of fertilizers in the Philippines (capital contribution component of not less than P10 per bag. This capital contribution shall be collected until
adequate capital is raised to make PPI viable). Pursuant to this, Fertiphil paid to the Fertilizer and Pesticide Authority (FPA). The latter remitted the
same to the Far East Bank and Trust Company, the depositary bank of PPI.

After the 1986 EDSA Revolution, FPA voluntarily stopped the imposition. Fertiphil asked for a refund, but ton avail. It filed complaint for collection
and damages and questioned the constitutionality of the LOI. OSG countered that it is a valid exercise of police power. RTC ruled in favor of
Fertiphil. It declared that the LOI is an exercise of taxation power, which should be invalidated for not being levied for public purpose. CA affirmed.

ISSUE:

W/N the LOI No. 1465 is a valid exercise of the power of taxation

RULING: NO. (not for public purpose)

Taxes are exacted only for a public purpose. The P10 levy is unconstitutional because it was not for a public purpose. The levy was imposed to
give undue benefit to PPI.

The term public purpose is not defined. It is an elastic concept that can be hammered to fit modern standards. Jurisprudence states that public
purpose should be given a broad interpretation. It does not only pertain to those purposes which are traditionally viewed as essentially government
functions, such as building roads and delivery of basic services, but also includes those purposes designed to promote social justice. Thus, public
money may now be used for the relocation of illegal settlers, low-cost housing and urban or agrarian reform. While the categories of what may
constitute a public purpose are continually expanding in light of the expansion of government functions, the inherent requirement that taxes can only
be exacted for a public purpose still stands. Public purpose is the heart of a tax law. When a tax law is only a mask to exact funds from the public
when its true intent is to give undue benefit and advantage to a private enterprise, that law will not satisfy the requirement of public purpose.

Apparently, the levy imposed under LOI No. 1465 was not for a public purpose:

1. The LOI expressly provided that the levy be imposed to benefit PPI, a private company.
2. The LOI provides that the imposition of the P10 levy was conditional and dependent upon PPI becoming financially viable. This
suggests that the levy was actually imposed to benefit PPI.
3. The levies paid under the LOI were directly remitted and deposited by FPA to Far East Bank and Trust Company, the depositary bank
of PPI. This proves that PPI benefited from the LOI. It is also proves that the main purpose of the law was to give undue benefit and
advantage to PPI.
4. The levy was used to pay the corporate debts of PPI. As can be read from the 1985 Letter of Understanding, PPI was in deepf financial
problem because of its huge corporate debts.
 WENCESLAO PASCUAL (Governor of Rizal) v. THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL.
(G.R. No. L-10405, December 29, 1960)

FACTS:

Jose Zulueta, then a Senator and the owner of several parcels of residential land situated in Pasig, Rizal, and known as the Antonio Subdivision,
certain portions of which had been reserved for the projected feeder roads. The Congress passed Republic Act No. 920, appropriating P85,000.00
for the "construction, reconstruction, repair, extension and improvement" of said roads. In order to give a semblance of legality, when there is
absolutely none, to the aforementioned appropriation, Zulueta executed an alleged deed of donation of said property in favour of the Government.
The same was accepted by the Executive Secretary.

Wenceslao Pascual, the provincial governor of Rizal, filed an action for declaratory relief, with injunction, seeking to nullify the specific provision
of RA 920 concerning the appropriation for the construction of said roads. He prayed that a writ of injunction be issued enjoining the Secretary of
Public Works and Communications, the Director of the Bureau of Public Works and Highways and Jose C. Zulueta from ordering or allowing the
continuance of the above-mentioned feeder roads project.

Respondents moved to dismiss the petition as it should be the provincial fiscal, and not the governor who should file the case and represent
Rizal. The lower court held that the appropriation in question was clearly for a private, not a public purpose. Notwithstanding, it upheld the same
upon the grounds that petitioner may not contest the legality of the donation above referred to because the same does not affect him directly, and
that if the donation is valid, it cured the unconstitutionality of the appropriation.

ISSUE:

W/N the appropriation under RA 920 is valid and constitutional

RULING: NO. case remanded

It is a general rule that the legislature is without power to appropriate public revenue for anything but a public purpose. Incidental to the public or
to the state, which results from the promotion of private interest and the prosperity of private enterprises or business, does not justify their aid by the
use public money.

Generally, under the express or implied provisions of the constitution, public funds may be used only for 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 for a public purpose.

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. 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.

As to Pascuals legal standing to sue, it is sufficient to note that:

It is well-stated that the validity of a statute may be contested only by one who will sustain a direct injury in consequence of its
enforcement. Yet, there are many decisions nullifying, at the instance of taxpayers, laws providing for the disbursement of public
funds, upon the theory that "the expenditure of public funds by an officer of the State for the purpose of administering
an unconstitutional act constitutes a misapplication of such funds," which may be enjoined at the request of a taxpayer.
 RP v. CITY OF KIDAPAWAN
(G.R. NO. 166651, December 9, 2005)

FACTS:

To reduce the country's dependence on imported energy supplies and accelerate the development of geothermal resources, then Pres
Marcos issued PD No. 1442. Said law allowed the government to enter into service contracts for financial, technical, management or other forms
of assistance with qualified domestic and foreign entities, for the exploration, development, exploitation, or utilization of the country's geothermal
resources.

In 1992, then Pres Aquino issued Proclamation No. 853 which excluded certain portions of the land embraced in the Mt. Apo National Park
and declared the same as geothermal reservation under the administration of the PNOC, now referred to as the MAGRA. DOE entered into a
service contract with PNOC-EDC, a government owned or controlled corporation created and existing under the Corporation Code, to
exclusively conduct geothermal operations within the MAGRA. For this, PNOC-EDC built a 104-megawatt power plant within the MAGRA which
produces electricity through turbines using steam extracted from the MAGRA as fuel.

City Treasurer of Kidapawan, Cotabato notified PNOC-EDC of its tax delinquency. PNOC-EDC filed petition for prohibition with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining order which sought to enjoin the respondents from issuing assessments
or notice of delinquency and from proceeding with the public auction of the Geothermal Reservation Area. RTC ruled that PNOC-EDC is not
exempt from paying the real property taxes and that only the improvements can be auction because the MAGRA is part of the Mt. Apo National
Park which has not been re-classified as alienable agricultural land. PNOC-EDCs MR was denied. Hence, this petition for review on certiorari.

ISSUE:

W/N PNOC-EDC is exempted from real property taxes

RULING: NO.

PNOC-EDC is a government owned or controlled corporation conferred by law with corporate powers. Under its charter, no tax exemptions
were granted. Even if PNOC-EDC was awarded exemptions in its charter, the same were withdrawn by the LGC.

The Local Government Code (Section 234) exempts from real property taxation properties of the government, provided the beneficial use of
the property was not transferred to a taxable person. Conversely, if the beneficial use has been transferred to a taxable entity, such as PNOC-
EDC, then the real property owned by the government, which in this case is the MAGRA, is subject to real property tax.

The provisions of the service contract cannot be invoked. The power to tax and to grant tax exemptions is vested in the Congress and, to a
certain extent, in the local legislative bodies. Under Section 28(4), Article VI of the Constitution, no law granting any tax exemption shall be
passed without the concurrence of a majority of all Members of Congress. Thus the exemption provided in the service contract cannot be given
effect because the DOE, representing the government in the execution of the contract, has no authority to grant the same. (baka ito na yung
about non-delegation of power)

Taxes are what we pay for civilized society, or are the lifeblood of the nation. The law frowns against exemptions from taxation and statutes
granting tax exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority.
 MANILA ELECTRIC COMPANY vs. PROVINCE OF LAGUNA and BENITO R. BALAZO (Provincial Treasurer)
(G.R. No. 131359. May 5, 1999)

FACTS:

Certain municipalities in Laguna issued resolutions through their respective municipal councils granting franchise in favor of MERALCO for
the supply of electric light, heat and power within their concerned areas. In 1991, RA 7160 (Local Government Code) was enacted enjoining
local government units to create their own sources of revenue and to levy taxes, fees and charges, subject to the limitations expressed therein,
consistent with the basic policy of local autonomy. Pursuant to this, Laguna enacted Ordinance No. 01-92 which imposed franchise tax.

Consequently, Balazo sent a demand letter to MERALCO for the payment of franchise tax. MERALCO paid the same under protest and later
claimed for a refund. It alleged that that the franchise tax it had paid and continued to pay to the National Government pursuant to P.D. 551
already included the franchise tax imposed by the Provincial Tax Ordinance. The Governor denied the same. MERALCO filed a complaint for
refund, with a prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order against Laguna and Balazo. The trial
court dismissed the same. Hence, this petition.

ISSUE:

W/N Laguna had authority to impose taxes under Ordinance No. 01-92

RULING: YES.

Prefatorily, it might be well to recall that local governments do not have the inherent power to tax except to the extent that such power might
be delegated to them either by the basic law or by statute. Presently, under Article X of the 1987 Constitution, a general delegation of that power
has been given in favor of local government units.

Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local
government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum,
allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications,
election, appointment and removal, term, salaries, powers and functions, and duties of local officials, and all other matters relating to
the organization and operation of the local units.
xxxxxxxxx
Sec. 5. Each local government shall have the power to create its own sources of revenues and to levy taxes, fees, and charges
subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such
taxes, fees and charges shall accrue exclusively to the local governments.

Under the now prevailing Constitution, where there is neither a grant nor a prohibition by statute, the tax power must be deemed
to exist although Congress may provide statutory limitations and guidelines. The basic rationale for the current rule is to safeguard the
viability and self-sufficiency of local government units by directly granting them general and broad tax powers. Nevertheless, the
fundamental law did not intend the delegation to be absolute and unconditional; the constitutional objective obviously is to ensure that, while
the local government units are being strengthened and made more autonomous, the legislature must still see to it that (a) the taxpayer will
not be over-burdened or saddled with multiple and unreasonable impositions; (b) each local government unit will have its fair share of
available resources; (c) the resources of the national government will not be unduly disturbed; and (d) local taxation will be fair, uniform, and
just.

This is consistent with the State policy to ensure autonomy to local governments and the objective of the LGC that they enjoy genuine
and meaningful local autonomy to enable them to attain their fullest development as self-reliant communities and make them effective
partners in the attainment of national goals. The power to tax is the most effective instrument to raise needed revenues to finance and
support myriad activities of local government units for the delivery of basic service essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the people.

CONTRACTUAL TAX EXEMPTIONS vs. THOSE GRANTED UNDER FRANCHISES

. Contractual tax exemptions, in the real sense of the term and where the non-impairment clause of the Constitution can rightly be
invoked, are those agreed to by the taxing authority in contracts, such as those contained in government bonds or debentures, lawfully
entered into by them under enabling laws in which the government, acting in its private capacity, sheds its cloak of authority and waives its
governmental immunity. Truly, tax exemptions of this kind may not be revoked without impairing the obligations of contracts. These
contractual tax exemptions, however, are not to be confused with tax exemptions granted under franchises. A franchise partakes the nature
of a grant which is beyond the purview of the non-impairment clause of the Constitution.
 SMITH, BELL AND CO. (PHIL.), INC. v. COMMISSIONER OF INTERNAL REVENUE
(G.R. No. L-28271 July 25, 1975)

FACTS:

From 1963 to 1965, SBCI imported 119 cases of "Chatteau Gay" wine which it declared as "still wine" for which it paid specific tax of
P1.00 per liter of volume capacity. To determine the specific and correct amount of taxes due, CIR ordered it tested and analyzed in BIR
Laboratory Center. The test result showed that Chatteau Gay "is a delicate table wine, with an alcohol content of 9.5% by volume (volume
745 cc @ 290C), characterized with explosion upon opening and effervescence due to CO2 (residual)," and concluded that it should be
classified as "sparkling wine."

Sparkling wines are bottled before the fermentation has ceased so that they contain carbon dioxide gas in solution at greater than
atmospheric pressure. When they are served, the carbon dioxide is liberated with effervescence. These gas and alcoholic contents vary
according to the market for which they are intended. They may be dry or sweet, light or strong. Champagne, sparkling Burgundy, and Asti-
Spumante are examples of sparkling wines.

Based on this, CIR assessed a deficiency specific tax against SBCI, imposing P12.00 per liter of volume capacity on sparkling wines.
SBCI did not dispute the correctness of the assessment but contended that the same is unconstitutional because Section 134(a) of the Tax
Code under which it was issued lays down an insufficient and hazy standard by which the policy and purpose of the law may be ascertained
and as well gives the Commissioner blanket authority to decide what is or is not the meaning of "sparkling wines." It alleged that this
amounts to abdication of legislative power violative of the established doctrine, delegata potestas non potest delegate, and the due process
clause of the Constitution. CIR disagreed.

ISSUE:

W/N Section 134 (a) of the Tax Code is unconstitutional for being violative of the doctrine of non-delegation of taxation power

RULING: NO.

The law clearly and indubitably discloses the legislative will, leaving to the officers charged with implementation and execution thereof no
more than the administrative function of determining whether a particular kind of wine or imitation wine falls in one class or another. In the
performance of this function, the internal revenue officers are demonstrably guided by the sound established practices and technology of the
wine industry, an industry as aged and widely dispersed as one can care to know.

Here, CIR had the petitioner's wine examined and analyzed. SBCI, on the other hand, does not appear to have made a similar effort. Having chosen
to engage in the wine trading business, the petitioner is duty bound to know the kinds of wine it deals in, particularly insofar as such knowledge may
be relevant to the proper appreciation of its tax liabilities, and cannot take comfort in its pretended ignorance of what sparkling wine is.
 CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan) v. THE EXECUTIVE SECRETARY, THE COMMISSIONER OF
CUSTOMS, THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, THE TARIFF COMMISSION, THE SECRETARY OF
FINANCE, and THE ENERGY REGULATORY BOARD
(G.R. No. 101273 July 3, 1992)

FACTS:

In 1990, the Pres issued EO 438 which imposed, in addition to any other duties, taxes and charges imposed by law on all articles imported
into the Philippines, an additional duty of five percent (5%) ad valorem. EO 443 (1991) increased the rate to 9%. EO 475 reduced it to 5%,
except in the cases of crude oil and other oil products which continued to be subject to the additional duty 9% ad valorem. EO 478 levied (in
addition to the aforementioned additional duty of nine percent (9%) ad valorem and all other existing ad valorem duties) a special duty of P0.95
per liter or P151.05 per barrel of imported crude oil and P1.00 per liter of imported oil products.

Garcia filed a petition for certiorari, prohibition, and mandamus, assailing the constitutionality of EO Nos. 475 & 478. He maintained that the
Constitution vests the authority to enact revenue bills in Congress, the President may not assume such power. Also, the President may increase
increase, reduce or remove tariff duties or impose additional duties only when necessary to protect local industries or products but not for the
purpose of raising additional revenue for the government.

ISSUE:

W/N EO Nos. 475 & 478 are constitutional

RULING: YES.

Under Section 24, Article VI of the Constitution, the enactment of appropriation, revenue and tariff bills, like all other bills is, of course, within
the province of the Legislative rather than the Executive Department. It does not follow, however, that therefore Executive Orders Nos. 475 and
478, assuming they may be characterized as revenue measures, are prohibited to the President, that they must be enacted instead by the
Congress of the Philippines.

Section 28(2) of Article VI of the Constitution provides as follows:

(2) The Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and
restrictions as it may impose, tariff rates, import and export quotas, tonage and wharfage dues, and other duties or imposts
within the framework of the national development program of the Government.

There is thus explicit constitutional permission to Congress to authorize the President "subject to such limitations and restrictions
Congress may impose" to fix "within specific limits" "tariff rates . . . and other duties or imposts . . ."

To conclude, Garcia has not successfully overcome the presumptions of constitutionality and legality to which those Executive
Orders are entitled.

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Customs duties" is "the name given to taxes on the importation and exportation of commodities, the tariff or tax assessed upon
merchandise imported from, or exported to, a foreign country
 NATIONAL POWER CORPORATION v. PROVINCE OF LANAO DEL SUR, LANAO DEL SUR GOVERNOR SAIDAMEN B.
PANGARUNGAN and LANAO DEL SUR PROVINCIAL TREASURER HADJI MACMOD L. DALIDIG
(G.R. No. 96700, November 19, 1996)

FACTS: