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27. Caltex Philippines vs.

Commission on Audit (COA)GR 92585, 8 May 1992

In 1989, COA sent a letter to Caltex, directing it to remit its collection to the Oil Price StabilizationFund (OPSF), excl udi ng
t hat unremi t t ed f or 1986 and 188 of t he addi t i onal t ax on pet r ol eum product s authorized under Section 8 of PD
1956; and that pending such remittance, all its claims for reimbursementf rom t he OPSF shal l be hel d i n abeyance.
Cal t ex r equest ed COA, not wi t hst andi ng an ear l y rel ease of i t s reimbursement certificates from the OPSF, which
COA denied. On 31 May 1989, Caltex submitted a proposalto COA for the payment and the recovery of claims. COA approved
the proposal but prohibited Caltex fromf urt her of f set i ng remi t t ances and rei mbursement s f or t he current and
ensui ng year s. Cal t ex moved f or reconsideration.
Whether the amounts due from Caltex to the OPSF may be offsetted against Caltex outstanding claimsfrom said funds.
Taxat i on i s no l onger envi si oned as a measure merel y t o rai se revenue t o suppor t t he exi st ence
of government ; t axes may be l evi ed wi t h a regul at or y purpose t o provi de means f or t he r ehabi l i t at i on
andstabilization of a threatened industry which is affected with public interest as to be within the police power ofthe state. PD
1956, as amended by EO 137, explicitly provides that the source of OPSF is taxation. A taxpayermay not of f set t axes due
f rom t he cl ai ms t hat he may have agai nst t he gover nment . Taxes cannot be t he subject of compensation because
the government and taxpayer are not mutually creditors and debtors of eachother and a claim for taxes is not such a debt,
demand, contract or judgment as is allowed to be set-off.

26. Pascual vs. Secretary of Public Works and CommunicationsGR L-10405, 29 December
RA 920 (Act appropriating funds for public works) was enacted in 1953 containing an item (Section 1c[a]) for the construction,
reconstruction, repair, extension and improvement of Pasig feeder road terminals(the projected and planned subdivision roads,
which were not yet constructed, within Antonio Subdivisionowned by Senator Jose C. Zulueta). Zulueta donated said parcels of
land to the Government 5 months afterthe enactment of RA 920, on the condition that if the Government violates such condition
the lands wouldrevert t o Zul uet a. The provi nci al gover nor of Ri zal , Wencesl ao Pascual , quest i oned t he
val i di t y of t hedonation and the Constitutionality of the item in RA 920, it being not for a public purpose.
Whether the item in the appropriation is valid.
The right of the legislature to appropriate funds is correlative with its right to tax, under constitutionalprovisions against taxation
except for public purposes and prohibiting the collection of a tax for one purposeand t he devot i on t hereof t o anot her
purpose, no appropr i at i on of st at e f unds can be made f or ot her t han a public purpose. The validity of a statute
depends upon the powers of Congress at the time of its passage orapproval, not upon events occupying, or acts performed,
subsequently thereto, unless the latter consist of anamendment of the organic law, removing, with retrospective operation, the
constitutional limitation infringedby sai d st at ut e. Herei n, i nasmuch as t he l and on whi ch t he proj ect ed f eeder
roads wer e t o be const ruct edbelonged to Senator Zulueta at the time RA 920 was passed by Congress, or approved by the
President, andthe disbursement of said sum became effective on 20 June 1953 pursuant to Section 13 of the Act, the resultis
that the appropriating sough a private purpose and hence, null and void.

38. Abra vs. HernandoGR L-49336, 31 August 1981
The provi nci al assessor made a t ax assessment on t he proper t i es of t he Roman Cat hol i c Bi shop of Bangued.
The bishop claims tax exemption from real estate tax, through an action for declaratory relief. Asummary judgment was made
granting the exemption without hearing the side of the Province of Abra.
Whether the properties of the Bishop of Bangued are tax-exempt.
The 1935 and the 1973 Constitutions differ in language as to the exemption of religious property fromtaxes as tehy should not
only be exclusively but also actually and directly used for religious purposes.Herei n, t he j udge accept ed at i t s f ace
t he al l egat i on of t he Bi shop i nst ead of demonst r at i ng t hat t here i s compliance with the constitutional provision that
allows an exemption. There was an allegation of lack of jurisdiction and of lack of cause of action, which should have compelled
the judge to accord a hearing to theprovince rather than deciding the case immediately in favor of the Bishop. Exemption from
taxation is notfavored and is never presumed, so that if granted, it must be strictly construed against the taxpayer. Theremu s t
b e p r o o f o f t h e a c t u a l a n d d i r e c t u s e o f t h e l a n d s , b u i l d i n g s , a n d i mp r o v e me n t s f o r
r e l i g i o u s ( o r charitable) purposes to be exempted from taxation.The case was remanded to the lower court for a trial on

48. Kapatiran ng mga Naglilingkod sa Pamahalaan vs. TanGR L-81311, 30 June 198
EO 273 was issued by the President of the Philippines which amended the Revenue Code, adopting thevalue-added tax (VAT)
effective 1 January 1988. Four petitions assailed the validity of the VAT Law fro beingbeyond t he Presi dent t o enact ; f or bei ng
oppressi ve, di scr i mi nat or y, regressi ve, and vi ol at i ve of t he dueprocess and equal prot ect i on cl auses,
among ot her s, of t he Const i t ut i on. The I nt egr at ed Cust oms Brokers Association particularly contend that it unduly
discriminate against customs brokers (Section 103 [r]) as theamended provision of the Tax Code provides that service
performed in the exercise of profession or calling(except cust om broker s) subj ect t o occupat i onal t ax under t he
Local Tax Code, and prof essi onal servi ces
performed by registered general professional partnerships are exempt from VAT.
Whether the E-VAT law discriminates against customs brokers.
The phrase except custom brokers is not meant to discriminate against custom brokers but to avert apotential conflict between
Sections 102 and 103 of the Tax Code, as amended. The distinction of the customsbrokers from the other professionals who are
subject to occupation tax under the Local Tax Code is basedupon material differences, in that the activities of customs brokers
partake more of a business, rather than aprof essi on and were t hus subj ect ed t o t he percent age t ax under Sect i on
174 of t he Tax Code pri or t o i t samendment by EO 273. EO 273 abolished the percentage tax and replaced it with the
VAT. If the Associationdid not protest the classification of customs brokers then, there is no reason why it should protest now.

36. Cagayan Electric Power & Light Co. vs. CommissionerGR L-60126, 25 September 1985

Cagayan Electric is a holder of a legislative franchise under Republic Act 3247 where payment of 3%tax on gross earnings is in
lieu of all taxes and assessments upon privileges, etc. In 1968, RA 5431 amendedthe franchise by making all corporate
taxpayers liable for income tax except those indicated in paragraph (c)(1) of Section 24 of the Tax Code. In 1969, through RA
6020, its franchise was extended to two other townsand the tax exemption was reenacted. In 1973, the Commissioner required
the company to pay deficiencyincome taxes for 1968 to 1971.
Whether the withdrawal of the franchises tax exemption violates the non-impairment clause of theConstitution.
Congr ess coul d i mpai r t he company s l egi sl at i ve f ranchi se by maki ng i t l i abl e f or i ncome t ax. TheConstitution
provides that a franchise is subject to amendment, alteration or repeal by the Congress when thepubl i c i nt er est so r equi res.
RA 3247 i t sel f provi des t hat t he f ranchi se i s subj ect t o amendment , et c. by Congress. The enactment of RA 5431
had the effect of withdrawing the companys exemption from income tax. The exemption was restored by the enactment of RA
6020. The company is liable only for the income taxfpr the period of 1 January to 3 August 1969.

42. Villanueva vs. Iloilo CityGR L-26521, 28 December 1968

On 30 September 1946, the Municipal Board of Iloilo City enacted Ordinance 86 imposing license taxf ees upon t enement
house ( P25); t enemen house part l y engaged or whol l y engaged i n and dedi cat ed t obusi ness i n Baza,
I znart , and Al deguer St reet s ( P24 per apart ment ); and t enement house, padt l y or whol l y engaged in business in
other streets (P12 per apartment). The validity of such ordinance was challenged byEusebio and Remedios Villanueva, owners
of four tenement houses containing 34 apartments. The SupremeCourt held the ordinance to be ultra vires. On 15 January 1960,
however, the municipal board, believing that itacqui r ed aut hor i t y t o enact an ordi nance of t he same nat ure
pursuant t o t he Local Aut onomy Act , enact edOrdinance 11 (series of 1960), Eusebio and Remedios Villaniueva assailed the ordinance
Whether Ordinance 11 violate the rule of uniformity of taxation.
The Court has rul ed t hat t enement houses const i t ut e a di st i nct cl ass of proper t y; and t hat t axes areuniform
and equal when imposed upon all property of the same class or character within the taxing authority.The fact that the owners of
the other classes of buildings in Iloilo are not imposed upon by the ordinance, orthat tenement taxes are imposed in other cities
do not violate the rule of equality and uniformity. The ruledoes not require that taxes for the same purpose should be imposed in
different territorial subdivisions at thesame time. So long as the burden of tax falls equally and impartially on all owners or
operators of tenementhouses similarly classified or situated, equality and uniformity is accomplished. The presumption that
taxstatutes are intended to operate uniformly and equally was not overthrown herein.

39. Abra Valley College vs. AquinoGR L-39086, 15 June 1988

Ab r a Va l l e y Co l l e g e r e n t s o u t t h e g r o u n d f l o o r o f i t s c o l l e g e b u i l d i n g t o No r t h e r n
Ma r k e t i n g Corporation while the second floor thereof is used by the Director of the College for residential purposes.
Themunicipal and provincial treasurers served upon the College a notice of seizure and later a notice of saledue to the
alleged failure of the College to pay real estate taxes and penalties thereon. The school filed suit toannul said notices, claiming
that it is tax-exempt.
Whether the College is exempt from taxes.
While the Court allows a more liberal and non-restrictive interpretation of the phrase exclusively isedfor educational purposes,
reasonable emphasis has always been made that exemption extends to facilitieswhi ch are i nci dent al t o and r easonabl y
necessar y f or t he accompl i shment of t he mai n purposes. Whi l e t he second floors use, as residence of the director,
is incidental to education; the lease of the first floor cannot byany stretch of imagination be considered incidental to the purposes
of education. The test of exemption fromtaxation is the use of the property for purposes mentioned in the Constititution.

37. Lladoc vs. CommissionerGR L-19201, 16 June 1965
En Banc, Paredes (J): 9 concur, 1 took no part
In 1957, the MB Estate Inc. of Bacolod City donated P10,000 in cash to the parish priest of Victorias,Negros Occi dent al ; t he
amount spent f or t he const r uct i on of a new Cat hol i c Church i n t he l ocal i t y, m as intended. In1958, MB Estate filed
the donors gift tax return. In 1960, the Commissioner issued an assessmentf or donee s gi f t t ax agai nst t he pari sh. The
pri est l odged a prot est t o t he assessment and request ed t he withdrawal thereof.
Whether the Catholic Parish is tax exempt.
The phr ase exempt f rom t axat i on shoul d not be i nt er pret ed t o mean exempt i on f r om al l ki nds of t axes. The
exempt i on i s onl y f rom t he payment of t axes assessed on such proper t i es as pr opert y t axes
ascontradistinguished from excise taxes. A donees gift tax is not a property tax but an excise tax imposed on thetransfer of
property by way of gift inter vivos. It does not rest upon general ownership, but an excise upon theuse made of the properties,
upon the exercise of the privilege of receiving the properties. The imposition of such excise tax on property used for religious
purpose do not constitute an impairment of the Constitution.The tax exemption of the parish, thus, does not extend to
excise taxes.

40. Bishop of Nueva Segovia vs. Provincial Board of Ilocos NorteGR 27588, 31 December 1927
En Banc, Avancena (J): 5 concur
The Roman Catholic Apostolic Church is the owner of a parcel of land in San Nicolas, Ilocos Norte.On the south side is a part of
the Church yard, the convent and an adjacent lost used for a vegetable garden inwhich there is a stable and a well for the use of
the convent. In the center is the remainder of the churchyardand the Church. On the north side is an old cemetery with its two
walls still standing, and a portion whereformerly stood a tower. The provincial board assessed land tax on lots comprising the
north and south side,which the church paid under protest. It filed suit to recover the amount.
Whether the lots are covered by the Churchs tax exemption.
The exemption in favor of the convent in the payment of land tax refers to the home of the priest whopresides over the church
and who has to take care of himself in order to discharge his duties. The exemptioni ncl udes not onl y t he l and act ual l y
occupi ed by t he Chur ch but al so t he adj acent ground dest i ned t o t heordinary incidental uses of man. A vegetable
garden, thus, which belongs to a convent, where its use is limitedto the necessity of the priest, comes under the exemption.
Further, land used as a lodging house by the peoplewho participate in religious festivities, which constitutes an incidental use in
religious functions, likewisecomes within the exemption. It cannot be taxed according to its former use, i.e. a cemetery.

46. Commissioner vs. Burroughs Ltd.GR L-6653, 19 June 1986Second Division, Paras (J): 4 concurFacts:
Burroughs Ltd is a foreign corporation authorized to engage in business in the Philippines. Its branchoffice in Makati applied with
the Central Bank for authority to remit to its parent company abroad, branchprofits. It paid 15% branch profit remittance tax. The
branch, however, later claimed for a refund or creditcontending that the branch profit remittance tax pursuant to a BIR ruling of
21 January 1980. The Court ofTax Appeal s grant ed t he company s pet i t i on. The Commi ssi oner f i l ed a pet i t i on
f or cer t i or ari , cl ai mi ngMemorandum Circular 8-82 (17 March 1982) should apply.
Whether the Memorandum Circular 8-82 should be retroactively applied.
Revenue Ruling of 21 January 1980 remains to apply in the case as the company paid the tax on 14March 1979. Memorandum
Circular 8-82 cannot be given retroactive effect in the light of Section 327 (non-ret roact i vel y of r ul i ngs) of t he t ax code.
The ret r oact i ve appl i cat i on of t he Ci rcul ar woul d depr i ve t he company the substantial amount of P172,058.90. The
misstates or omits material facts from his return or Iany document required of him by the BIR, or where the facts subsequently
gathered by the BIR are materiallydi f f erent f rom t he f act s on whi ch t he rul i ng i s based, or wher e t he t axpayer
act ed i n bad f ai t h t o al l ow t heretroactive application of the circular.

35. ABAKADA Guro Party List vs. Ermita G.R. No. 168056 September 1, 2005
Facts: ABAKADA GURO Party List, et al., filed a petition for prohibition o questioning the constitutionality of Sections 4, 5 and 6
of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the National Internal Revenue Code (NIRC). Section 4
imposes a 10% VAT on sale of goods and properties; Section 5 imposes a 10% VAT on importation of goods; and Section 6
imposes a 10% VAT on sale of services and use or lease of properties; These provisions contain a provision which authorizing
the President, upon recommendation of the Secretary of Finance, to raise the VAT rate to 12%, effective January 1, 2006, after
specified conditions have been satisfied.
Issues: Whether or not there is a violation of Article VI, Section 24 of the Constitution. Whether or not there is undue delegation
of legislative power in violation of Article VI Sec 28(2) of the Constitution. Whether or not there is a violation of the due process
and equal protection of the Constitution. Ruling: No, the revenue bill exclusively originated in the House of Representatives, the
Senate was acting within its constitutional power to introduce amendments to the House bill when it included provisions in
Senate Bill No. 1950 amending corporate income taxes, percentage, and excise and franchise taxes. No, there is no undue
delegation of legislative power but only of the discretion as to the execution of a law. This is constitutionally permissible.
Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it,
and what is the scope of his authority; in our complex economy that is frequently the only way in which the legislative process
can go forward. In this case, it is not a delegation of legislative power but a delegation of ascertainment of facts upon which
enforcement and administration of the increased rate under the law is contingent. No, the power of the State to make reasonable
and natural classifications for the purposes of taxation has long been established. Whether it relates to the subject of taxation,
the kind of property, the rates to be levied, or the amounts
to be raised, the methods of assessment, valuation and collection, the States power is entitled to presumption
of validity. As a rule, the judiciary will not interfere with such power absent a clear showing of unreasonableness, discrimination,
or arbitrarines

GR No. L-23645, October 29, 1968
25 SCRA 827

FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in San Fernando, Pampanga. It did not bear
the special anti-TB stamp required by the RA 1635. It was returned to the petitioner. Petitioner now assails the
constitutionality of the statute claiming that RA 1635 otherwise known as the Anti-TB Stamp law is violative of
the equal protection clause because it constitutes mail users into a class for the purpose of the tax while leaving
untaxed the rest of the population and that even among postal patrons the statute discriminatorily grants
exemptions. The law in question requires an additional 5 centavo stamp for every mail being posted, and no mail
shall be delivered unless bearing the said stamp.

ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly violative of the equal protection clause?

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.
The classification of mail users is based on the ability to pay, the enjoyment of a privilege and on administrative
convenience. Tax exemptions have never been thought of as raising revenues under the equal protection clause.

30. PLANTERS PRODUCTS, INC., vs. FERTIPHIL CORPORATION. [G.R. No. 166006. March 14, 2008.]
President Ferdinand Marcos, exercising his legislative powers, issued LOI No. 1465 which provided, among others, for the
imposition by the Fertilizer Pesticide Authority (FPA) of a capital recovery component (CRC) on thedomestic sale of all grades of
fertilizers in the Philippines. The goal is to make and keep respondent PPI viable. After the1986 Edsa Revolution, FPA voluntarily
stopped the imposition of the P10 levy. With the return of democracy, Fertiphildemanded from PPI a refund of the amounts it
paid under LOI No. 1465, but PPI refused to accede to the demandFertiphil filed a complaint for collection and damages against
FPA and PPI with the RTC in Makati. It questioned theconstitutionality of LOI No. 1465 for being unjust, unreasonable,
oppressive, invalid and an unlawful imposition thatamounted to a denial of due process of law. FPA, through the Solicitor
General, countered that the issuance of LOI No.1465 was a valid exercise of the police power of the State in ensuring the
stability of the fertilizer industry in the country
Whether the levy is in exercise of police power or taxation power- TAXATION
We agree with the RTC that the imposition of the levy was an exercise by the State of its taxation power. While itis true that the
power of taxation can be used as an implement of police power, the primary purpose of the levy isrevenue generation. 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.
An inherent limitation on the power of taxation is public purpose. Taxes areexacted only for a public purpose. They cannot be
used for purely private purposes or for the exclusive benefit of private persons.
The purpose of a law is evident from its text or inferable from other secondary sources. Here, we agree with the RTC and that
CA that the levy imposed under LOI No. 1465 was not for a public purpose because it expressly provided that the levy be
imposed to benefit PPI, a private company. The purpose is explicit from Clause 3 of the law

8 SCRA 224
GR No. L-18125, May 31, 1963

"A tax on property of the Government, whether national or local, would merely have the effect of taking money from one pocket
to put it in another pocket."

FACTS: National Waterworks and Sewerage Authority (NWSA), a public corporation owned by the Government of the
Philippines as well as all property comprising waterworks and sewerage systems placed under it, took over the Cabuyao-Sta.
Rosa-Bian Waterworks System in 1956. It was assessed by the Provincial Assessor of Laguna, for purposes of real estate
taxes, on the real properties owned by Cabuyao Waterworks. The respondent protested claiming it is exempted from the
payment of real estate taxes in view of the nature and kind of said property and functions and activities of petitioner. The
petitioner denied the protest arguing that such real properties are subject to real estate tax because although said properti es
belong to the Republic of the Philippines, the same holds it, not in its governmental, political or sovereign capacity, but in a
private, proprietary or patrimonial character, which, allegedly, is not covered by the exemption contained in section 3(a) of
Republic Act No. 470.

ISSUE: Are the real properties owned by the respondent public corporation subject to real estate tax?

HELD: No. Republic Act No. 470 makes no distinction between property held in a sovereign, governmental or political capacity
and those possessed in a private, proprietary or patrimonial character. And where the law does not distinguish neither may we,
unless there are facts and circumstances clearly showing that the lawmaker intended the contrary, but no such facts and
circumstances have been brought to our attention. Indeed, the noun "property" and the verb "owned" used in said section 3(a)
strongly suggest that the object of exemption is considered more from the view point of dominion, than from that of domain.
Moreover, taxes are financial burdens imposed for the purpose of raising revenues with which to defray the cost of the operation
of the Government, and a tax on property of the Government, whether national or local, would merely have the effect of taking
money from one pocket to put it in another pocket. Hence, it would not serve, in the final analysis, the main purpose of taxation.
What is more, it would tend to defeat it, on account of the paper work, time and consequently, expenses it would entail.
Philippines Ports Authority vs. City of Iloilo July 14, 2003Facts:PPA is created und PD 857 and under Section 25 of its charter,
PPA is exempted from paying real property tax.PPA is engaged in the business of arrastre and stevedoring and leasing of real
estate. Also, it owns a warehouse for itsoperation.On June 11, 1984, PD 1931 withdrew all tax exemptions privileges granted to GOCC.Thus, the
city of Iloilo seeks to collect from PPA business tax and real property tax from the last quarter of 1984 up to theyear 1986.However,
PPA claims the ff:1.
The City of Iloilo cannot collect real property taxes from PPA because the warehouse is part of the port. Under Sec420 of Civil
Code, ports are part of public dominion.2.
PPA is not subject to business tax because they are not engage in business. Their leasing of its property was notmotivated by
profit but duly to manage and control port operations.Issue: Is PPA exempted from paying real property and business
taxes?Held: NO.PPA cannot claim such theory that their warehouse is a public dominion because such theory is different from
the theorythey adopted and decided by the lower court. It is contrary and inconsistent with its former pleading- PPA claimed it is
aGOCC and therefore exempt from paying the real property tax. Thus, PPA is bound by its admission of ownership of
thewarehouse. It is therefore liable to pay real property tax.Also, under Sec 420 of the CC, the ports mentioned are those
constructed by the state . Thus, PPA should prove that itsport was constructed by the state in order to conclude that such
property is a public dominion. However, PPA failed toprove such.Also, granting that its port is a public dominion, its warehouse
which they constructed is considered to be an improvement.And improvement s made by the occupants is not exempted from
payment of tax.On their second claim, PPA is liable for business tax for the lease of their buildings to private corporations. During
pre-trial,they did not refute the claims of the city of Iloilo that they are engage in business nor did they present proof of
exemptionfrom tax.PPA admitted that their act of leasing is not necessarily for government function of administering ports but
forconvenience. Therefore, any income or profit generated by the entity, even without any intention of realizing profit is
stillsubject to business tax. What matters is that PPA leased its properties to private entities and from which PPA
earnedsubstantial income.