MACEDA vs. MACARAIG, JR.

197 SCRA 771

GR No. 88291 May 31, 1991

The National Power Corporation (NAPOCOR) was created by Commonwealth Act No. 120. In 1949, it
was given tax exemption by Republic Act No. 358. In 1984, Presidential Decree No. 1931 was passed
removing the tax exemption of NAPOCOR and other government owned and controlled corporations
(GOCCs). There was a reservation, however, that the president or the Minister of Finance, upon
recommendation by the Fiscal Incentives Review Board (FIRB), may restore or modify the exemption.
In 1985, the tax exemption was revived. It was again removed in 1987 by virtue of Executive Order 93
which again provided that upon FIRB recommendation it can again be restored. In the same year, FIRB
resolved to restore the exemption. The same was approved by President Corazon Aquino through
Executive Secretary Catalino Macaraig, Jr. acting as her alter ego. Ernesto Maceda assailed the FIRB
resolution averring that the power granted to the FIRB is an undue delegation of legislative power.
Macedas claim was strengthened by Opinion 77 issued by then DOJ Secretary Sedfrey Ordoez.
Macaraig however did not give credence to the opinion issued by the DOJ secretary.
ISSUE: Whether or not the Executive Secretary can validly ignore the legal opinion of the Justice
Secretary.
HELD: Yes. The Supreme Court first ruled that there is no undue delegation of legislative power. First of
all, since the NAPOCOR is a GOCC and is non-profit it can be exempt from taxation. Also, Opinion 77
issued by DOJ Secretary Ordoez was validly overruled by Macaraig. This action by Macaraig is valid
because the Executive Secretary, by authority of the President, has the power to modify, alter or reverse
the construction of a statute given by a department secretary pursuant to the presidents control power.

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Sison vs Ancheta (1984)
Facts: Batas Pambansa 135 was enacted. Sison, as taxpayer, alleged that its provision (Section 1) unduly
discriminated against him by the imposition of higher rates upon his income as a professional, that it
amounts to class legislation, and that it transgresses against the equal protection and due process clauses
of the Constitution as well as the rule requiring uniformity in taxation.
Issue: Whether BP 135 violates the due process and equal protection clauses, and the rule on uniformity
in taxation.
Held: There is a need for proof of such persuasive character as would lead to a conclusion that there was
a violation of the due process and equal protection clauses. Absent such showing, the presumption of
validity must prevail. Equality and uniformity in taxation means that all taxable articles or kinds of
property of the same class shall be taxed at the same rate. The taxing power has the authority to make
reasonable and natural classifications for purposes of taxation. Where the differentitation conforms to the
practical dictates of justice and equity, similar to the standards of equal protection, it is not discriminatory
within the meaning of the clause and is therefore uniform. Taxpayers may be classified into different
categories, such as recipients of compensation income as against professionals. Recipients of
compensation income are not entitled to make deductions for income tax purposes as there is no
practically no overhead expense, while professionals and businessmen have no uniform costs or expenses
necessaryh 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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Tolentino vs. Secretaryof Finance
Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the Expanded
Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill did not exclusively originate
from the House of Representatives as required by Section 24, Article 6 of the Constitution. Even though
RA 7716 originated as HB 11197 and that it passed the 3 readings in the HoR, the same did not complete
the 3 readings in Senate for after the 1
st
reading it was referred to the Senate Ways & Means Committee
thereafter Senate passed its own version known as Senate Bill 1630. Tolentino averred that what Senate
could have done is amend HB 11197 by striking out its text and substituting it with the text of SB 1630 in
that way the bill remains a House Bill and the Senate version just becomes the text (only the text) of the
HB. (Its ironic however to note that Tolentino and co-petitioner Raul Roco even signed the said Senate
Bill.)
ISSUE: Whether or not the EVAT law is procedurally infirm.
HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was
consistent with the power of the Senate to propose or concur with amendments to the version originated
in the HoR. What the Constitution simply means, according to the 9 justices, is that the initiative must
come from the HoR. Note also that there were several instances before where Senate passed its own
version rather than having the HoR version as far as revenue and other such bills are concerned. This
practice of amendment by substitution has always been accepted. The proposition of Tolentino concerns a
mere matter of form. There is no showing that it would make a significant difference if Senate were to
adopt his over what has been done.

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Villegas vs Hiu Chiong Tsai Pao Ho (1978)
Facts: The Municipal Board of Manila enacted Ordinance 6537 requiring aliens (except those employed
in the diplomatic and consular missions of foreign countries, in technical assistance programs of the
government and another country, and members of religious orders or congregations) to procure the
requisite mayors permit so as to be employed or engage in trade in the City of Manila. The permit fee is
P50, and the penalty for the violation of the ordinance is 3 to 6 months imprisonment or a fine of P100 to
P200, or both.
Issue: Whether the ordinance imposes a regulatory fee or a tax.
Held: The ordinances purpose is clearly to raise money under the guise of regulation by exacting P50
from aliens who have been cleared for employment. The amount is unreasonable and excessive because it
fails to consider difference in situation among aliens required to pay it, i.e. being casual, permanent, part-
time, rank-and-file or executive.
[ 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. ]
Villanueva v. City of Iloilo
FACTS: Relying on the passage of RA 2264 or the Local Autonomy Act, Iloilo enacted Ordinance 11
Series of 1960, imposing a municipal license tax on tenement houses in accordance with the schedule of
payment provided by therein. Villanueva and the other appellees are apartment owners from whom the
city collected license taxes by virtue of Ordinance 11. Appellees aver that the said ordinance is
unconstitutional for RA 2264 does not empower cities to impose apartment taxes; that the same is
oppressive and unreasonable for it penalizes those who fail to pay the apartment taxes; that it constitutes
not only double taxation but treble taxation; and, that it violates uniformity of taxation.
Issues: 1. Does the ordinance impose double taxation? 2. Is Iloilo city empowered by RA 2264 to impose
tenement taxes?
Held: 1. While it is true that appellees are taxable under the NIRC as real estate dealers, and taxable under
Ordinance 11, double taxation may not be invoked. This is because the same tax may be imposed by the
national government as well as by the local government. The contention that appellees are doubly taxed
because they are paying real estate taxes and the tenement tax is also devoid of merit. A license tax may
be levied upon a business or occupation although the land or property used in connection therewith is
subject to property tax. In order to constitute double taxation, both taxes must be the same kind or
character. Real estate taxes and tenement taxes are not of the same character.
2. RA 2264 confers local governments broad taxing powers. The imposition of the tenement taxes does
not fall within the exceptions mentioned by the same law. It is argued however that the said taxes are real
estate taxes and thus, the imposition of more the 1 per centum real estate tax which is the limit provided
by CA 158, makes the said ordinance ultra vires. The court ruled that the tax in question is not a real
estate tax. It does not have the attributes of a real estate tax. By the title and the terms of the ordinance,
the tax is a municipal tax which means an imposition or exaction on the right to use or dispose of
property, to pursue a business, occupation or calling, or to exercise a privilege. Tenement houses being
offered for rent or lease constitute a distinct form of business or calling and as such, the imposition of
municipal tax finds support in Section 2 of RA 2264.
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PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs. MUNICIPALITY OF TANAUAN
69 SCRA 460
GR No. L-31156, February 27, 1976

"Legislative power to create political corporations for purposes of local self-government 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 one-sixteenth (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 self-government 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.
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Abra Valley College v. Aquino
G.R. No. L-39086 June 15, 1988
Paras, J.

Facts:

Petitioner, an educational corporation and institution of higher learning duly incorporated with
the Securities and Exchange Commission in 1948, filed a complaint to annul and declare void the Notice
of Seizure and the Notice of Sale of its lot and building located at Bangued, Abra, for non-payment of
real estate taxes and penalties amounting to P5,140.31. Said Notice of Seizure by respondents
Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the
said taxes thereon.

The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned
decision. The trial court ruled for the government, holding that the second floor of the building is being
used by the director for residential purposes and that the ground floor used and rented by Northern
Marketing Corporation, a commercial establishment, and thus the property is not being used exclusively
for educational purposes. Instead of perfecting an appeal, petitioner availed of the instant petition for
review on certiorari with prayer for preliminary injunction before the Supreme Court, by filing said
petition on 17 August 1974.

Issue:

whether or not the lot and building are used exclusively for educational purposes

Held:

Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, 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.
Reasonable emphasis has always been made that the exemption extends to facilities which are incidental
to and reasonably necessary for the accomplishment of the main purposes. The use of the school building
or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. In the case at bar,
the lease of the first floor of the building to the Northern Marketing Corporation cannot by any stretch of
the imagination be considered incidental to the purpose of education. The test of exemption from taxation
is the use of the property for purposes mentioned in the Constitution.

The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the
assessed tax be returned to the petitioner. The modification is derived from the fact that the ground floor
is being used for commercial purposes (leased) and the second floor being used as incidental to education
(residence of the director).