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Tax Digest

Tax Digest

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Published by Xandee Kuizon

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Published by: Xandee Kuizon on Jul 18, 2011
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Pascual v.

Secretary of Public Works and Communications FACTS: Pascual, in his official capacity as the Provincial Governor of Rizal, petitioned for a writ of certiorari against the dismissal of the case and dissolving of the preliminary injunction held by the Court of the First Instance. Petitioner prayed for that RA #920 be declared null and void, that the alleged Deed of Donation made by Zulueta be declared unconstitutional. Petitioner also prayed for an injunction enjoining Secretary of Public Works and Communications, Director of Public Works and Highways and the disbursing officers of the latter department from making and securing any further release of funds for the said road project. RA# 920 contained an item appropriating P85,000.00 which the petitioner alleged that it was for the construction of roads improving the private property of Jose Zuleta, a member of the Senate. ISSUES: 1. Whether or not RA # 920 is unconstitutional. 2. Whether or not Pascual has the legal capacity or to sue. HELD: 1. RA #920 is unconstitutional because the Congress is without power to appropriate public revenue for anything but public purpose. 2. Pascual has the personality to sue as a taxpayer recognizing the right of the taxpayer to assail the constitutionality of a legislation appropriating public funds.

respondents. HERNANDO. FERNANDO. all in total disregard of basic laws of procedure and basic provisions of due process in the constitution.The bishop claims tax exemption from real estate tax. Court of First Instance Abra. through an action for declaratory relief. represented by LADISLAO ANCHETA. adjudged the case. Provincial Assessor. wantonly violated the rights of petitioner to due process. The petitioner province filed a motion to dismiss.THE ROMAN CATHOLIC BISHOP OF BANGUED. represented by Bishop Odilo etspueler and Reverend FelipeFlores. Held: . based on lack of jurisdiction. thereby indicating a failure to grasp and understand the law. The Acting Provincial Fiscal. INC. as counsel for petitioner. in his capacity as Presiding Judge of Branch I. . and thereafter without allowing petitioner to answer and without any hearing. Judge Hernando of the CFI Abra presided over the case.vs... HONORABLE HAROLD M.C. It was followed by a summary judgment granting the exemption without hearing the side of the petitioner. by giving due course to the petition of private respondent for declaratory relief.THE PROVINCE OF ABRA. which was denied. Issue: WON Judge Hernando erred in denying the motion to dismiss of petitioner and in granting the tax exemption through summary judgment. petitioner. alleged that respondent Judge "virtually ignored the pertinent provisions of the Rules of Court.J.: Facts:The provincial assessor of Abra made a tax assessment on the properties of the Roman Catholic Bishop of Bangued..

11The Constitution is worded differently. hence. buildings. and any attempt to impose an import or export tax upon such goods in the guise of an unreasonable charge for wharfage.YES. and improvements. so that if granted it must be strictly construed against the taxpayer. There must be proof therefore of the actual and direct use of the lands. ISSUE: Whether or not there has been a violation of equal protection. Ormoc City passed a bill which read: ³There shall be paid to the City Treasurer on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company Incorporated. If there is any case where proof is necessary to demonstrate that there is compliance with the constitutional provision that allows an exemption. this is it. and improvements for religious or charitable purposes to be exempt from taxation. and improvements. It has been the constant and uniform holding that exemption from taxation is not favoured and is never presumed. the law frowns on exemption from taxation. respondent Judge accepted at its face the allegation of private respondent. therefore. Ormoc Sugar paid the tax (P7. or out of the same. after mentioning certain parcels of land owned by it. are that they are used "actually. upon goods and merchandise carried into the municipality.50) in protest averring that the same is violative of Sec 2287 of the Revised Administrative Code which provides: ³It shall not be in the power of the municipal council to impose a tax in any form whatever. All that was alleged in the petition for declaratory relief filed by private respondents. an exempting provision should be construed strictissimi juris. buildings. It clearly appears. that in failing to accord a hearing to petitioner Province of Abra and deciding the case immediately in favor of private respondent. and parsonages or convents appurtenant thereto." they should not only be "exclusively" but also "actually and "directly" used for religious or charitable purposes. in Ormoc City a municipal tax equivalent to one per centum (1%) per export sale to the United States of America and other foreign countries.087."10The present Constitution added "charitable institutions. the imposition actually amounts to a tax on the export of centrifugal sugar produced at Ormoc Sugar Company. shall be void. For production of sugar alone is not taxable. charitable. Inc. Reliance on past decisions would have sufficed were the words "actually" as well as "directly" not added. and all lands. or educational purposes shall be exempt from taxation. respondent Judge failed to abide by the constitutional command of procedural due process Ormoc Sugar Company Inc. churches.´ And that the ordinance is violative to equal protection as it singled out Ormoc Sugar As being liable for such tax impost for no other sugar mill is found in the city. directly and exclusively" as sources of support of the parish priest and his helpers and also of private respondent Bishop. Instead. Respondent Judge would not have erred so grievously had he merely compared the provisions of the present Constitution with that appearing in the 1935 Charter on the tax exemption of "lands. Petitioner Province of Abra is therefore fully justified in invoking the protection of procedural due process. . use of bridges or otherwise. buildings. and improvements used exclusively for religious. and non-profit cemeteries" and required that for the exemption of ": lands."There is a marked difference. Affirmatively put. the only time the tax applies is when the sugar produced is exported. The petition must be granted. Under the 1935 Constitution: "Cemeteries. buildings. vs Ormoc City et al 15 11 2010 Rate This ³Equal Protection´ In 1964. The change should not be ignored.´ Though referred to as a ³production tax´. mosques. It must be duly taken into consideration.

Issue [1]: Whether the Lung Center is a charitable institution within the context of Presidential Decree 1823 and the 1973 and 1987 Constitutions and Section 234(b) of Republic Act 7160. the Lung Center filed its petition for review on certiorari under Rule 45 of the Rules of Court. to be reasonable. The SC noted that even if Sec 2287 of the RAC had already been repealed by a latter statute (Sec 2 RA 2264) which effectively authorized LGUs to tax goods and merchandise carried in and out of their turf. affirmed on appeal by the Central Board of Assessment Appeals of Quezon City (CBAA) which ruled that the Lung Center was not a charitable institution and that its real properties were not actually. (J): 13 concur Facts: The Lung Center of the Philippines is a non-stock and non-profit entity established on 16 January 1981 by virtue of Presidential Decree 1823. the property is exempt from real property taxes. hence. as the entity to be levied upon. A big space at the ground floor is being leased to private parties. the Lung Center receives annual subsidies from the government. while a big portion on the right side. the act of Ormoc City is still violative of equal protection.463 square meters and is covered by Transfer Certificate of Title (TCT) 261320 of the Registry of Deeds of Quezon City.. Inc. at the corner of Quezon Avenue and Elliptical Road. it cannot be subject to the tax because the ordinance expressly points only to Ormoc Sugar Company. The Lung Center is a charitable institution within the context of the 1973 and 1987 Constitutions. It is the registered owner of a parcel of land. from the coverage of the tax. Undaunted. likewise. predicated on its claim that it is a charitable institution. Held [1]: YES. Inc. Quezon City. of the same class as plaintiff. The Lung Center sought relief from the Court of Appeals. 29 June 2004] En Banc. Almost one-half of the entire area on the left side of the building along Quezon Avenue is vacant and idle. and to medical or professional practitioners who use the same as their private clinics for their patients whom they charge for their professional services. for canteen and small store spaces. respectively. The Lung Center accepts paying and non-paying patients. The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central. should be in terms applicable to future conditions as well. Quezon City [GR 144104. SWO-04-000495. the elements which should be considered include the statute creating the enterprise. as amended. paragraph 3 of the 1987 Constitution. is being leased for commercial purposes to a private enterprise known as the Elliptical Orchids and Garden Center. and a petition was. in the Supreme Court. On 25 August 1993. On 7 June 1993. even if later a similar company is set up. as such. and none other. It also renders medical services to outpatients. thereafter. The Lung Center contends that it is a charitable institution and. Central District. Summary: Lung Center vs. it is true. is exempt from real property taxes. Still. At the time of the taxing ordinance¶s enactment. Aside from its income from paying patients.554. Ormoc Sugar Company. it was not entitled to real property tax exemption under the constitution and the law. To determine whether an enterprise is a charitable institution/entity or not. its corporate purposes. filed before the Local Board of Assessment Appeals of Quezon City (QCLBAA) for the reversal of the resolution of the City Assessor. The QC-LBAA rendered judgment dismissing the petition and holding the Lung Center liable for real property taxes. The QC-LBAA¶s decision was. As it is now. Inc. the methods of . on 17 July 2000 (CA-GR SP 57014). 29 June 2004) Lung Center vs. was the only sugar central in the city of Ormoc. It averred that a minimum of 60% of its hospital beds are exclusively used for charity patients and that the major thrust of its hospital operation is to serve charity patients. Accordingly. The ordinance is discriminatory for it taxes only centrifugal sugar produced and exported by the Ormoc Sugar Company. Quezon City (GR 144104. both paying and non-paying.860 by the City Assessor of Quezon City. The lot has an area of 121. the Lung Center filed a Claim for Exemption5 from real property taxes with the City Assessor.HELD: The SC held in favor of Ormoc Sugar. Tax Declarations C-021-01226 (16-2518) and C-021-01231 (15-2518-A) were issued for the land and the hospital building. which. Callejo Sr. particularly described as Lot RP-3B-3A-1-B-1. rendered judgment affirming the decision of the CBAA. directly and exclusively used for charitable purposes. Erected in the middle of the aforesaid lot is a hospital known as the Lung Center of the Philippines. both the land and the hospital building of the Lung Center were assessed for real property taxes in the amount of P4. its constitution and by-laws. The Lung Center¶s request was denied. the classification. located at Quezon Avenue corner Elliptical Road. The Lung Cwenter alleged that under Section 28.

Article VI of the 1987 Philippine Constitution covers property taxes only. The Lung Center does not lose its character as a charitable institution simply because the gift or donation is in the form of subsidies granted by the government. the fact that subsidization of part of the cost of furnishing such housing is by the government rather than private charitable contributions does not dictate the denial of a charitable exemption if the facts otherwise support such an exemption. as enjoying a privilege exclusively. The effect of an exemption is equivalent to an appropriation. It was organized for the welfare and benefit of the Filipino people principally to help combat the high incidence of lung and pulmonary diseases in the Philippines. Therefore. the rich as well as the poor. subject to the provisions of the decree. Further. The words "dominant use" or "principal use" cannot be substituted for the words "used exclusively" without doing violence to the Constitutions and the law. a charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients. and the use and occupation of the properties. as a general principle. Accordingly. Under the 1973 and 1987 Constitutions and RA 7160 in order to be entitled to the exemption. the nature of the actual work performed. the Lung Center is entitled to receive donations. On . "Exclusive" is defined as possessed and enjoyed to the exclusion of others. "in a manner to exclude.483. directly and exclusively used for charitable purposes. and (b) its real properties are ACTUALLY. the purposes for which the Lung Center was created are spelled out in its Articles of Incorporation. Hence. the Lung Center is a non-profit and non-stock corporation which. whether out-patient. Held [2]: PARTLY NO. The tax exemption under Section 28(3). the same should have been among the enumeration of tax exempt privileges under Section 2 thereof.136. may fall sick or be injured or wounded and become a subject of charity. The Lung Center failed to discharge its burden to prove that the entirety of its real property is actually." If real property is used for one or more commercial purposes. After all.45 as rentals in 1991 and P1. The money received by the Lung Center becomes a part of the trust fund and must be devoted to public trust purposes and cannot be diverted to private profit or benefit. other portions thereof are being leased to private individuals for their clinics and a canteen. Under PD 1823. The exemption must not be so enlarged by construction since the reasonable presumption is that the State has granted in express terms all it intended to grant at all. While portions of the hospital are used for the treatment of patients and the dispensation of medical services to them. and that unless the privilege is limited to the very terms of the statute the favor would be intended beyond what was meant. or receives subsidies from the government. is to be administered by the Office of the President of the Philippines with the Ministry of Health and the Ministry of Human Settlements. 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. whether paying or non-paying. The settled rule in this jurisdiction is that laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. Further. debarred from participation or enjoyment. Furthermore. the Lung Center does not enjoy any property tax exemption privileges for its real properties as well as the building constructed thereon. Taxation is the rule and exemption is the exception. a portion of the land is being leased to a private individual for her business enterprise under the business name "Elliptical Orchids and Garden Center. and no money inures to the private benefit of the persons managing or operating the institution. or confined in the hospital.679. DIRECTLY and EXCLUSIVELY used for charitable purposes. Solely is synonymous with exclusively. the Lung Center is burdened to prove. by clear and unequivocal proof. The raison d¶etre for the creation of the Lung Center is stated in the decree.999. What is meant by actual. and "exclusively" is defined." Indeed. the indefiniteness of the beneficiaries. Under PD 1823.administration. it is not exclusively used for the exempted purposes but is subject to taxation. the constitutional provision is implemented by Section 234(b) of Republic Act 7160 (Local Government Code of 1991). a claim for exemption from tax payments must be clearly shown and based on language in the law too plain to be mistaken. any person. 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.28 for 1992 from the said lessees. 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. Issue [2]: Whether the real properties of the Lung Center are exempt from real property taxes. directly and exclusively used for charitable purposes. where the medical services of the Lung Center are to be rendered to the public in general in any and all walks of life including those who are poor and the needy without discrimination. Consequently. that (a) it is a charitable institution. the character of the services rendered. If the intentions were otherwise. the Lung Center¶s evidence shows that it collected P1. Under PD 1823. so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve. Those portions of its real property that are leased to private entities are not exempt from real property taxes as these are not actually.

1977. ET AL. charges and penalties amounting to P40. 1963 Facts: The government has a claim against the estate of the Walter Scott Price of estate and inheritance taxes. at least it should be compensated with what Mambulao Lumber Company owed the Republic of the Philippines for reforestation charges.058. compensation takes effect by operation of law. 464 known as the Real Property Tax Code in order to satisfy a tax delinquency of P2. the law on compensation is inapplicable. GARLITOS. Thus. The collection of a tax cannot await the results of a lawsuit against the government. or.R. Since 1963 up to 1977 inclusive. Issue: May compensation take place? Ruling: There can be no off-setting of taxes against the claims that the taxpayer may have against the government. whether paying or non-paying. G. a 125 square meter portion of Francia¶s property was expropriated by the Republic of the Philippines for the sum of P4. No. ISSUE: May reforestation charges be set-off to forest charges owed by defendants to the government? Ruling: No. MELECIO R. Act No. takes place by operation of law. The claim of the estate against the Government has been recognized and an amount of P262. 2700).200 has already been appropriated for the purpose by a corresponding law (Rep. 1988 Facts: On October 15. G. 1962 FACTS: Defendants have a liability for forest charges to the Republic of the Philippines. therefore. Francia failed to pay his real estate taxes.R.R. No. MAMBULAO LUMBER COMPANY. L-18994. L-17725. are in the coffers of the government as taxes collected.00. The forest charges which the defendant Mambulao Lumber Company has paid to 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. and both debts are extinguished to the concurrent amount. if it cannot be refunded. ET AL. both the claim of the Government for inheritance taxes and the claim of the intestate for services rendered have already become overdue and demandable is well as fully liquidated. The government is at the same time indebted to the estate under administration in the amount of P262. on December 5. Defendants contended that since the Republic of the Philippines has not made use of those reforestation charges (RA 115) collected from it for reforesting the denuded area of the land covered by its license. DOMINGO vs.200. Compensation. INTERMEDIATE APPELLATE COURT. ET AL. ENGRACIO FRANCIA vs. and the government does not owe anything. June 28. No. February 28. Consequently. Issue: May the claim by the government against the estate be deducted from its debt to the estate? May compensation take place? Ruling: Yes. the portions of the land occupied by the hospital and portions of the hospital used for its patients. Under the above circumstances.400. LORENZO C. the Republic of the Philippines should refund said amount. his property was sold at public auction by the City Treasurer of Pasay City pursuant to Section 73 of Presidential Decree No. crystal clear that the Republic of the Philippines and the Mambulao Lumber Company are not creditors and debtors of each other. Appellant and appellee are not mutually creditors and debtors of each other. and extinguished both debts to the concurrent amount. because compensation refers to mutual debts. G.00 representing the estimated amount equivalent to the assessed value of the aforesaid portion.55. .the other hand.116. June 29. 1977. are exempt from real property taxes. L-67649. REPUBLIC vs. in accordance with the provisions of Articles 1279 and 1290 of the Civil Code.

which are construed uniformly. contract or judgment as is allowed to be set-off under the statutes of set-off. demand. demand. in the light of public policy. to exclude the remedy in an action or any indebtedness of the state or municipality to one who is liable to the state or municipality for taxes. . contract or judgment as is allowed to be set-off.A claim for taxes is not such a debt. Government and taxpayer are not mutually creditors and debtors of each other under Article 1278 of the Civil Code and a claim for taxes is not such a debt.

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