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F: Pepsi Cola filed a complaint declaring that Section 2 in the Local Autonomy Act was
unconstitutional as an undue delegation of taxing authority. In addition, Pepsi Cola also declared
null and void two ordinances, Nos. 23 and 27 passed in the municipality of Tanauan. The tax
imposed in both Ordinances is denominated as "municipal production tax.' The acting municipal
treasurer of Tanauan sent a letter to Pepsi Cola asking Pepsi Cola to comply the provisions of
Ordinance 27. The court upheld the constitutionality of Sec. 2 of the Local Autonomy Act thereby
declaring the two ordinances valid.
Section 2. Taxation. Any provision of law to the contrary notwithstanding, all chartered
cities, municipalities and municipal district shall have authority to impose municipal
license taxes or fees upon persons engaged in any occupation or business, or exercising
privileges in chartered cities, municipalities or municipal districts by requiring them to
secure licenses at rates fixed by the municipal board or city council of the city, the
municipal council of the municipality, or the municipal district council of the municipal
district; to collect fees and charges for services rendered by the city, municipality or
municipal district; to regulate and impose reasonable fees for services rendered in
connection with any business, profession or occupation being conducted within the city,
municipality or municipal district and otherwise to levy for public purposes, just and
uniform taxes, licenses or fees: Provided, That municipalities and municipal districts shall,
in no case, impose any percentage tax on sales or other taxes in any form based thereon
nor imposed taxes on articles subject to specific tax, except gasoline, under the provisions
of the national internal revenue code: Provided, however, That no city, municipality or
municipal district may levy or impose any of the following:

Residence tax;


Documentary stamp tax;

Taxes on the business of persons engaged in the printing and publication of any
newspaper, magazine, review or bulletin appearing at regular intervals and having fixed
prices for subscription and sale, and which is not published primarily for the purpose of
publishing advertisements;
Taxes on persons operating waterworks, irrigation and other public utilities except
electric light, heat and power;

Taxes on forest products and forest concessions;


Taxes on estates, inheritances, gifts, legacies, and other acquisitions mortis causa;


Taxes on income of any kind whatsoever;

Taxes or fees for the registration of motor vehicles and for the issuance of all kinds
of licenses or permits for the driving thereof;
Customs duties registration, wharfage on wharves owned by the national
government, tonnage, and all other kinds of customs fees, charges and dues;

Taxes of any kind on banks, insurance companies, and persons paying franchise tax;

Taxes on premiums paid by owners of property who obtain insurance directly with
foreign insurance companies.
A tax ordinance shall go into effect on the fifteenth day after its passage, unless the
ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall
have authority to suspend the effectivity of any ordinance within one hundred and twenty
days after its passage, if, in his opinion, the tax or fee therein levied or imposed is unjust,
excessive, oppressive, or confiscatory, and when the said secretary exercises this
authority the effectivity of such ordinance shall be suspended.
In such event the municipal board or city council in the case of cities and the municipal
council or municipal district council in the case of municipalities and municipal districts
may appeal the decision of the Secretary of Finance to the court during the pendency of
which case the tax levied shall be considered as paid under protest.
Levies and collects "from soft drinks producers and manufacturers a tai of one-sixteenth
(1/16) of a centavo for every bottle of soft drink corked." 2 For the purpose of computing
the taxes due, the person, firm, company or corporation producing soft drinks shall submit
to the Municipal Treasurer a monthly report, of the total number of bottles produced and
corked during the month.
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." 4 For the purpose of computing the taxes due, the
person, fun company, partnership, corporation or plant producing soft drinks shall submit
to the Municipal Treasurer a monthly report of the total number of gallons produced or
manufactured during the month. 5

I: Is Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive?
R: 1. 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. 6 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. 7 This is sanctioned by immemorial practice.

8 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. 9 Under the New Constitution, local governments are granted the autonomous
authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides:
"Each local government unit shall have the power to create its sources of revenue and to levy
taxes, subject to such limitations as may be provided by law." Withal, it cannot be said that
Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to
enact and vest in local governments the power of local taxation.
The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense,
would not suffice to invalidate the said law as confiscatory and oppressive. In delegating the
authority, the State is not limited 6 the exact measure of that which is exercised by itself. When it
is said that the taxing power may be delegated to municipalities and the like, it is meant that
there may be delegated such measure of power to impose and collect taxes as the legislature
may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of
public policy the State has not deemed wise to tax for more general purposes. 10 This is not to
say though that the constitutional injunction against deprivation of property without due process
of law may be passed over under the guise of the taxing power, except when the taking of the
property is in the lawful exercise of the taxing power, as when (1) the tax is for a public purpose;
(2) the rule on uniformity of taxation is observed; (3) either the person or property taxed is within
the jurisdiction of the government levying the tax; and (4) in the assessment and collection of
certain kinds of taxes notice and opportunity for hearing are provided. 11 Due process is usually
violated where the tax imposed is for a private as distinguished from a public purpose; a tax is
imposed on property outside the State, i.e., extraterritorial taxation; and arbitrary or oppressive
methods are used in assessing and collecting taxes. But, a tax does not violate the due process
clause, as applied to a particular taxpayer, although the purpose of the tax will result in an injury
rather than a benefit to such taxpayer. Due process does not require that the property subject to
the tax or the amount of tax to be raised should be determined by judicial inquiry, and a notice
and hearing as to the amount of the tax and the manner in which it shall be apportioned are
generally not necessary to due process of law. 12
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. 13 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, since We have not adopted
as part thereof the injunction against double taxation found in the Constitution of the United
States and some states of the Union. 14 Double taxation becomes obnoxious only where the
taxpayer is taxed twice for the benefit of the same governmental entity 15 or by the same
jurisdiction for the same purpose, 16 but not in a case where one tax is imposed by the State and
the other by the city or municipality. 17
2. Do Ordinances Nos. 23 and 27 constitute double taxation and impose percentage or specific
The plaintiff-appellant submits that Ordinance No. 23 and 27 constitute double taxation,
because these two ordinances cover the same subject matter and impose practically the same
tax rate. The thesis proceeds from its assumption that both ordinances are valid and legally
enforceable. This is not so. As earlier quoted, Ordinance No. 23, which was approved on
September 25, 1962, levies or collects from soft drinks producers or manufacturers a tax of one-

sixteen (1/16) of a centavo for .every bottle corked, irrespective of the volume contents of the
bottle used. When it was discovered that the producer or manufacturer could increase the
volume contents of the bottle and still pay the same tax rate, the Municipality of Tanauan
enacted Ordinance No. 27, approved on October 28, 1962, imposing a tax of one centavo (P0.01)
on each gallon (128 fluid ounces, U.S.) of volume capacity. The difference between the two
ordinances clearly lies in the tax rate of the soft drinks produced: in Ordinance No. 23, it was
1/16 of a centavo for every bottle corked; in Ordinance No. 27, it is one centavo (P0.01) on each
gallon (128 fluid ounces, U.S.) of volume capacity. The intention of the Municipal Council of
Tanauan in enacting Ordinance No. 27 is thus clear: it was intended as a plain substitute for the
prior Ordinance No. 23, and operates as a repeal of the latter, even without words to that effect.
18 Plaintiff-appellant in its brief admitted that defendants-appellees are only seeking to enforce
Ordinance No. 27, series of 1962. Even the stipulation of facts confirms the fact that the Acting
Municipal Treasurer of Tanauan, Leyte sought t6 compel compliance by the plaintiff-appellant of
the provisions of said Ordinance No. 27, series of 1962. The aforementioned admission shows
that only Ordinance No. 27, series of 1962 is being enforced by defendants-appellees. Even the
Provincial Fiscal, counsel for defendants-appellees admits in his brief "that Section 7 of Ordinance
No. 27, series of 1962 clearly repeals Ordinance No. 23 as the provisions of the latter are
inconsistent with the provisions of the former."
That brings Us to the question of whether the remaining Ordinance No. 27 imposes a percentage
or a specific tax. Undoubtedly, the taxing authority conferred on local governments under
Section 2, Republic Act No. 2264, is broad enough as to extend to almost "everything, accepting
those which are mentioned therein." As long as the text levied under the authority of a city or
municipal ordinance is not within the exceptions and limitations in the law, the same comes
within the ambit of the general rule, pursuant to the rules of exclucion attehus and exceptio
firmat regulum in cabisus non excepti 19 The limitation applies, particularly, to the prohibition
against municipalities and municipal districts to impose "any percentage tax or other taxes in
any form based thereon nor impose taxes on articles subject to specific tax except gasoline,
under the provisions of the National Internal Revenue Code." For purposes of this particular
limitation, a municipal ordinance which prescribes a set ratio between the amount of the tax and
the volume of sale of the taxpayer imposes a sales tax and is null and void for being outside the
power of the municipality to enact. 20 But, the imposition of "a tax of one centavo (P0.01) on
each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft drinks produced or
manufactured under Ordinance No. 27 does 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. 21
Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified
articles, such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars
and cigarettes, matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil,
diesel fuel oil, cinematographic films, playing cards, saccharine, opium and other habit-forming
drugs. 22 Soft drink is not one of those specified.
F: Petitioners filed an action praying that Sec. 34 of the Electric Power Industry Reform Act and
Rule 18 of the Rules and Regulation be declared unconstitutional. The universal charge provided
for under Sec. 34 of the EPIRA and sought to be implemented under Sec. 2, Rule 18 of the IRR of

the said law is a tax which is to be collected from all electric end-users and self-generating
entities. The power to tax is strictly a legislative function and as such, the delegation of said
power to any executive or administrative agency like the ERC is unconstitutional, giving the same
unlimited authority. The assailed provision clearly provides that the Universal Charge is to be
determined, fixed and approved by the ERC, hence leaving to the latter complete discretionary
legislative authority. The imposition of the Universal Charge on all end-users is oppressive and
confiscatory and amounts to taxation without representation as the consumers were not given a
chance to be heard and represented.
I: 1) Whether or not, the Universal Charge imposed under Sec. 34 of the EPIRA is a tax; and
2)Whether or not there is undue delegation of legislative power to tax on the part of the ERC.[26]
R: First Issue
To resolve the first issue, it is necessary to
distinguish the States power of taxation from
the police power.
The power to tax is an incident of sovereignty
and is unlimited in its range, acknowledging in
its very nature no limits, so that security
against its abuse is to be found only in the
responsibility of the legislature which imposes
the tax on the constituency that is to pay it.
[30] It is based on the principle that taxes are
the lifeblood of the government, and their
prompt and certain availability is an imperious
need.[31] Thus, the theory behind the exercise
of the power to tax emanates from necessity;
without taxes, government cannot fulfill its
mandate of promoting the general welfare and
well-being of the people

he power of the state to promote public welfare
by restraining and regulating the use of liberty
and property.[33] It is the most pervasive, the
least limitable, and the most demanding of the
three fundamental powers of the State. The
justification is found in the Latin maxims salus
populi est suprema lex (the welfare of the
people is the supreme law) and sic utere tuo ut
alienum non laedas (so use your property as
not to injure the property of others). As an
inherent attribute of sovereignty which virtually
extends to all public needs, police power grants
a wide panoply of instruments through which
the State, as parens patriae, gives effect to a
host of its regulatory powers.[34] We have held
that the power to "regulate" means the power
to protect, foster, promote, preserve, and
control, with due regard for the interests, first
and foremost, of the public, then of the utility
and of its patrons.[35]
these two powers rests in the purpose for which

The conservative and pivotal distinction between

the charge is made.
If generation of revenue is the primary purpose if regulation is the primary purpose, the fact
and regulation is merely incidental, the that revenue is incidentally raised does not
imposition is a tax
make the imposition a tax.
Second Issue
The principle of separation of powers ordains that each of the three branches of government has
exclusive cognizance of and is supreme in matters falling within its own constitutionally allocated
sphere. A logical corollary to the doctrine of separation of powers is the principle of nondelegation of powers. delegation of legislative power to various specialized administrative
agencies is allowed as an exception to this principle.

Given the volume and variety of interactions in today's society, it is doubtful if the legislature can
promulgate laws that will deal adequately with and respond promptly to the minutiae of
everyday life. Hence, the need to delegate to administrative bodies - the principal agencies
tasked to execute laws in their specialized fields - the authority to promulgate rules and
regulations to implement a given statute and effectuate its policies. All that is required for the
valid exercise of this power of subordinate legislation is that the regulation be germane to the
objects and purposes of the law and that the regulation be not in contradiction to, but in
conformity with, the standards prescribed by the law. These requirements are denominated as
the completeness test and the sufficient standard test.
Under the first test, the law must be complete in all its terms and conditions when it leaves the
legislature such that when it reaches the delegate, the only thing he will have to do is to enforce
it. The second test mandates adequate guidelines or limitations in the law to determine the
boundaries of the delegate's authority and prevent the delegation from running riot.
As to the second test, this Court had, in the past, accepted as sufficient standards the following:
"interest of law and order;"[51] "adequate and efficient instruction;"[52] "public interest;"[53]
"justice and equity;"[54] "public convenience and welfare;"[55] "simplicity, economy and
efficiency;"[56] "standardization and regulation of medical education;"[57] and "fair and
equitable employment practices."[58] Provisions of the EPIRA such as, among others, to ensure
the total electrification of the country and the quality, reliability, security and affordability of the
supply of electric power[59] and watershed rehabilitation and management[60] meet the
requirements for valid delegation, as they provide the limitations on the ERCs power to formulate
the IRR. These are sufficient standards.
F: Valley Trading Co. filed a complaint seeking a declaration of the supposed nullity of a portion of
an ordinance of the Revenue Code of Isabela which imposed a graduated tax on retailers,
independent wholesalers and distributors. Valley Trading contends that said ordinance imposes a
"graduated fixed tax based on Sales" that "in effect imposes a sales tax in contravention to the
Local Tax Code which prohibits a municipality from imposing a percentage tax on sales.
Respondents on the other hand contends that the tax is an annual fixed business tax, not a
percentage tax on sales, imposable by a municipality under the Local Tax Code.
F: Algue received a letter from the Commissioner that it had a delinquency income tax for two
years. Algue then filed a letter of protest. A warrant of distraint and levy was then presented to
Algue however its counsel refused to receive such on the ground of a pending protest. A search
of the protest was made but remained fruitless. The counsel then produced his file copy and
gave it to BIR. The counsel then accepted the warrant of distraint and levy.
Comissioner contends that a deduction claimed by Algue was properly disallowed. The
Comissioner further contends that the payments of the promotional fees are fictitious because

most of the payees are members of the same family in control of Algue. It is argued that no
indication was made as to how such payments were made, whether by check or in cash, and
there is not enough substantiation of such payments. In short, the petitioner suggests a tax
dodge, an attempt to evade a legitimate assessment by involving an imaginary deduction.

I: Whether the claimed deduction by the private respondent was permitted under the Internal
Revenue Code?
R: Yes. While it is true that the burden is on the taxpayer to prove the validity of the claimed
deduction, In the present case, however, we find that the onus has been discharged
satisfactorily. The private respondent has proved that the payment of the fees was 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. This was no mean feat and should be, as it was,
sufficiently recompensed.
The total commission paid by the Philippine Sugar Estate Development Co. to the private
respondent was P125,000.00. 21 After deducting the said fees, Algue still had a balance of
P50,000.00 as clear profit from the transaction. The amount of P75,000.00 was 60% of the total
commission. This was a reasonable proportion, considering that it was the payees who did
practically everything, from the formation of the Vegetable Oil Investment Corporation to the
actual purchase by it of the Sugar Estate properties. This finding of the respondent court is in
accord with the following provision of the Tax Code:
SEC. 30. Deductions from gross income.--In computing net income there shall be allowed as
(a) Expenses:

In general.--All the ordinary and necessary expenses paid or incurred during the taxable

year in carrying on any trade or business, including a reasonable allowance for salaries or other
compensation for personal services actually rendered; ... 22
and Revenue Regulations No. 2, Section 70 (1), reading as follows:
SEC. 70. Compensation for personal services.--Among the ordinary and necessary expenses paid
or incurred in carrying on any trade or business may be included a reasonable allowance for
salaries or other compensation for personal services actually rendered. The test of deductibility
in the case of compensation payments is whether they are reasonable and are, in fact, payments
purely for service. This test and deductibility in the case of compensation payments is whether

they are reasonable and are, in fact, payments purely for service. This test and its practical
application may be further stated and illustrated as follows:
Any amount paid in the form of compensation, but not in fact as the purchase price of services, is
not deductible. (a) An ostensible salary paid by a corporation may be a distribution of a dividend
on stock. This is likely to occur in the case of a corporation having few stockholders, Practically
all of whom draw salaries. If in such a case the salaries are in excess of those ordinarily paid for
similar services, and the excessive payment correspond or bear a close relationship to the
stockholdings of the officers of employees, it would seem likely that the salaries are not paid
wholly for services rendered, but the excessive payments are a distribution of earnings upon the
stock. . . . (Promulgated Feb. 11, 1931, 30 O.G. No. 18, 325.)
NOTES: Philippine Sugar Estate Development Company had earlier appointed Algue as its agent,
authorizing it to sell its land, factories and oil manufacturing process. Pursuant to such authority,
Alberto Guevara, Jr., Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and Pablo Sanchez,
worked for the formation of the Vegetable Oil Investment Corporation, inducing other persons to
invest in it. 14 Ultimately, after its incorporation largely through the promotion of the said
persons, this new corporation purchased the PSEDC properties. 15 For this sale, Algue received
as agent a commission of P126,000.00, and it was from this commission that the P75,000.00
promotional fees were paid to the aforenamed individuals. 16
Without taxes, the government would be paralyzed for lack of the motive power to activate and
operate it. Hence, despite the natural reluctance to surrender part of one's hard earned income
to the taxing authorities, every person who is able to must contribute his share in the running of
the government. The government for its part, is expected to respond in the form of tangible and
intangible benefits intended to improve the lives of the people and enhance their moral and
material values. This symbiotic relationship is the rationale of taxation and should dispel the
erroneous notion that it is an arbitrary method of exaction by those in the seat of power.
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.
F: The Roxas brothers inherited agricultural lands, residential house and shares of stock in
corporations from their grandparents. The children then formed a partnership Roxas y Cia. The
Commissioner of Internal Revenue demanded from Roxas y Cia the payment of real estate
dealer's tax and tax for dealers of securities. The assessment for real estate dealers tax was
based on the fact that one of the Roxas was paying house rentals to the partnership and that
the demand for the tax on dealers of securities was based on the fact that the partnership made

profits from the purchase and sale of securities. The Comissioner also assessed deficiency
income taxes against the Roxas brothers.
The deficiency income taxes resulted from the inclusion as income of Roxas y Cia. of the
unreported 50% of the net profits for 1953 and 1955 derived from the sale of the Nasugbu farm
lands to the tenants, and the disallowance of deductions from gross income of various business
expenses and contributions claimed by Roxas y Cia. and the Roxas brothers. For the reason that
Roxas y Cia. subdivided its Nasugbu farm lands and sold them to the farmers on installment, the
Commissioner considered the partnership as engaged in the business of real estate, hence,
100% of the profits derived therefrom was taxed.
I: (1) Is the gain derived from the sale of the Nasugbu farm lands an ordinary gain, hence 100%
Although the tenants paid for their respective holdings in installment for a period of ten years, it
would nevertheless not make the vendor Roxas y Cia. a real estate dealer during the ten-year
amortization period. It should be borne in mind that the sale of the Nasugbu farm lands 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. It was the bounden duty of the Government to pay the agreed compensation after it
had persuaded Roxas y Cia. to sell its haciendas, and to subsequently subdivide them among the
farmers at very reasonable terms and prices. However, the Government could not comply with
its duty for lack of funds. Obligingly, Roxas y Cia. shouldered the Government's burden, went out
of its way and sold lands directly to the farmers in the same way and under the same terms as
would have been the case had the Government done it itself. For this magnanimous act, the
municipal council of Nasugbu passed a resolution expressing the people's gratitude.
(2) Are the deductions for business expenses and contributions deductible?
(3) Is Roxas y Cia. liable for the payment of the fixed tax on real estate dealers?
Roxas y Cia. deducted from its gross income the amount of P40.00 for tickets to a banquet given
in honor of Sergio Osmena and P28.00 for San Miguel beer given as gifts to various persons. The
deduction were claimed as representation expenses. Representation expenses are deductible
from gross income as expenditures incurred in carrying on a trade or business under Section
30(a) of the Tax Code provided the taxpayer proves that they are reasonable in amount, ordinary
and necessary, and incurred in connection with his business. In the case at bar, the evidence
does not show such link between the expenses and the business of Roxas y Cia. The findings of
the Court of Tax Appeals must therefore be sustained.
The petitioners also claim deductions for contributions to the Pasay City Police, Pasay City
Firemen, and Baguio City Police Christmas funds, Manila Police Trust Fund, Philippines Herald's
fund for Manila's neediest families and Our Lady of Fatima chapel at Far Eastern University.

The contributions to the Christmas funds of the Pasay City Police, Pasay City Firemen and Baguio
City Police are not deductible for the reason that the Christmas funds were not spent for public
purposes but as Christmas gifts to the families of the members of said entities. Under Section
39(h), a contribution to a government entity is deductible when used exclusively for public
purposes. For this reason, the disallowance must be sustained. On the other hand, the
contribution to the Manila Police trust fund is an allowable deduction for said trust fund belongs
to the Manila Police, a government entity, intended to be used exclusively for its public functions.
The contributions to the Philippines Herald's fund for Manila's neediest families were disallowed
on the ground that the Philippines Herald is not a corporation or an association contemplated in
Section 30 (h) of the Tax Code. It should be noted however that the contributions were not made
to the Philippines Herald but to a group of civic spirited citizens organized by the Philippines
Herald solely for charitable purposes. There is no question that the members of this group of
citizens do not receive profits, for all the funds they raised were for Manila's neediest families.
Such a group of citizens may be classified as an association organized exclusively for charitable
purposes mentioned in Section 30(h) of the Tax Code.
Rightly, the Commissioner of Internal Revenue disallowed the contribution to Our Lady of Fatima
chapel at the Far Eastern University on the ground that the said university gives dividends to its
stockholders. Located within the premises of the university, the chapel in question has not been
shown to belong to the Catholic Church or any religious organization. On the other hand, the
lower court found that it belongs to the Far Eastern University, contributions to which are not
deductible under Section 30(h) of the Tax Code for the reason that the net income of said
university injures to the benefit of its stockholders. The disallowance should be sustained.
Lastly, Roxas y Cia. questions the imposition of the real estate dealer's fixed tax upon it, because
although it earned a rental income of P8,000.00 per annum in 1952, said rental income came
from Jose Roxas, one of the partners. Section 194 of the Tax Code, in considering as real estate
dealers owners of real estate receiving rentals of at least P3,000.00 a year, does not provide any
qualification as to the persons paying the rentals. The law, which states: 1wph1.t
. . . "Real estate dealer" includes any person engaged in the business of buying, selling,
exchanging, leasing or renting property on his own account as principal and holding himself out
as a full or part-time dealer in real estate or as an owner of rental property or properties rented
or offered to rent for an aggregate amount of three thousand pesos or more a year: . . .
(Emphasis supplied) .
is too clear and explicit to admit construction. The findings of the Court of Tax Appeals or, this
point is sustained.1wph1.t

To Summarize, no deficiency income tax is due for 1953 from Antonio Roxas, Eduardo Roxas and
Jose Roxas. For 1955 they are liable to pay deficiency income tax in the sum of P109.00, P91.00
and P49.00, respectively,
WHEREFORE, the decision appealed from is modified. Roxas y Cia. is hereby ordered to pay the sum of
P150.00 as real estate dealer's fixed tax for 1952, and Antonio Roxas, Eduardo Roxas and Jose Roxas are
ordered to pay the respective sums of P109.00, P91.00 and P49.00 as their individual deficiency income tax all
corresponding for the year 1955. No costs. So ordered.

NOTES: the tenants who have all been tilling the lands in Nasugbu for generations expressed
their desire to purchase from Roxas y Cia. the parcels which they actually occupied. For its part,
the Government, in consonance with the constitutional mandate to acquire big landed estates. It
turned out however that the Government did not have funds to cover the purchase price, and so
a special arrangement was made for the Rehabilitation Finance Corporation to advance to Roxas
y Cia. the amount of P1,500,000.00 as loan. Collateral for such loan were the lands proposed to
be sold to the farmers. Under the arrangement, Roxas y Cia. allowed the farmers to buy the lands
for the same price but by installment, and contracted with the Rehabilitation Finance Corporation
to pay its loan from the proceeds of the yearly amortizations paid by the farmers.
F: Petitioners claimed that RA 7716 or Expanded Value Added Tax Law

did not "originate

exclusively" in the House of Representatives as required by Art. VI, 24 of the Constitution.

Although they admit that H. No. 11197 was filed in the House of Representatives where it passed
three readings and that afterward it was sent to the Senate where after first reading it was
referred to the Senate Ways and Means Committee, they complain that the Senate did not pass it
on second and third readings. Instead what the Senate did was to pass its own version (S. No.
1630) which it approved. A petitioner adds that what the Senate committee should have done
was to amend H. No. 11197 by striking out the text of the bill and substituting it with the text of
S. No. 1630. That way, it is said, "the bill remains a House bill and the Senate version just
becomes the text (only the text) of the House bill."
R: The enactment of S. No. 1630 is not the only instance in which the Senate proposed an
amendment to a House revenue bill by enacting its own version of a revenue bill. The enactment
of S. No. 1630 is not the only instance in which the Senate, in the exercise of its power to
propose amendments to bills required to originate in the House, passed its own version of a

House revenue measure. It is noteworthy that, in the particular case of S. No. 1630, petitioners
Tolentino and Roco, as members of the Senate, voted to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino,
concerns a mere matter of form. Petitioner has not shown what substantial difference it would
make if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead enacted
as a substitute measure, "taking into Consideration . . . H.B. 11197."
The rules of senate insofar as amendments are concerned states that No amendment by
substitution shall be entertained unless the text thereof is submitted in writing.



====among others