1. Manila Memorial Park, Inc., et.al vs. Secretary of DSWD, et.al SECOND ISSUE: No.
SECOND ISSUE: No. It passed both the sufficient standard test and
FACTS:
Petitioners assail the constitutionality of RA 7432, as amended
because the tax deduction scheme is an exercise of eminent
domain, thus just compensation is needed.
ISSUE:W/N tax deduction is constitutional?
HELD: Yes, it is an exercise of police power, not eminent domain.
The regulation imposed:
(1) Discount does not prevent the establishments from adjusting the
level of prices of their goods and services;
(2) Discount does not apply to all customers only to senior
citizens.
The 20 percent discount required by the law to be given to senior
citizens is a tax credit, not merely a tax deduction from the gross
income or gross sale of the establishment concerned. A tax credit is
used by a private establishment only after the tax has been
computed; a tax deduction, before the tax is computed.
2. Gerochi, et.al vs. Department of Energy, et.al
FACTS:
Petitioners questions the imposition of Universal Charge. They say
that such charge is a tax and the power to tax is lodged exclusive to
Congress.
ISSUE/S: W/N Universal Charge is a tax?
W/N there is undue delegation of legislative powers?
RULING:
FIRST ISSUE: No, it is not a tax. It is an exercise of police power.
If the purpose of the action is to regulate, and revenue generation
is incidental, then it is the exercise of police power. On the other
hand, if the main purpose is revenue generation and regulation is
incidental, the states exercises its power to tax.
control test.
3. Francia vs. IAC
FACTS:
Francia owns a land expropriated by the government. Later on, his
other land, was sold at a public auction due to his failure to pay his
real estate taxes.
ISSUE/S: W/N Francias tax delinquency can be set off by the amount
the government owed him during the expropriation?
HELD: NO. No off-setting of taxes against the claims that the taxpayer
may have against the government. A person cannot refuse to pay a tax on
the ground that the government owes him an amount. A claim for taxes is
not such a debt, demand, contract or judgment allowed for set-off.
5. Diaz vs. Secretary of Finance
Petitioners questioned the imposition of VAT on tollways. They contend
that tollways are not sale of services that are subject to VAT.
ISSUE:
(1) W/N tollways are imposable of VAT and is considered sale of
services.
(2) W/N the imposition of VAT on tollways result to amounts to a tax
on tax and not on services
(3) W/N it is valid, even for failure to pass the administrative
feasibility?
FIRST ISSUE: Yes. The enumeration in the law is not exclusive. Congress
gave sale of services an encompassing meaning.
SECOND ISSUE: No. What the government seeks to tax are fees
collected from tollway operators. The toll fees essentially end up as
earnings of the tollway operators.
VAT is an indirect tax. Once shifted, VAT ceases to be a tax and simply
becomes part of the cost that the buyer must pay in order to purchase the
good, property or service.
THIRD ISSUE: Yes. Non-observance of Administrative Feasibility will Lutz questions the levying of tax for the exclusive purpose of aiding the
not render a tax imposition invalid. Thus, even if the imposition of VAT sugar industry exclusively.
seems burdensome, it is not necessarily invalid unless some aspect of it
ISSUE:Is it constitutional?
is shown to violate any law or constitution.
HELD: Yes.
Taxation may be made to implement police power. During this time, the
sugar industry is a great source of the states wealth. Thus, it is only
6. Bagtsing vs. Ramirez proper that the state should promote, advance and protect it. Ultimately,
it redounds greatly to the benefit of the general welfare.
FACTS:
9. Gomez vs. Palomar
There came a conflict between the Revised Charter of Manila and the
Local Tax Code on which law shall govern over the publication of a tax Gomez sent a mail without complying with to a special stamp. His mail
ordinance. was rejected. Proceeds of the stamps will go to the coffers of a certain
society built for finding a cure for TB.
RULING: Local Tax Code
ISSUE/S:
Revised Charter of Manila specific
W/N the tax is valid?
Local Tax Code general
RULING: Yes.
If a special statute refers to a subject in general, the general statute shall
be treated as particular. The eradication of a dreaded disease is a public purpose. The only benefit
to which the tax payer is constitutionally entitled is that derived from his
7. Tio vs. Videogram Regulatory Board
enjoyment of the privileges of living in an organized society, established
FACTS: and safeguarded by the devotion of taxes to public purposes.

PD 1987 is enacted imposing taxes on cassette tapes. Section 11 of such 10. Pascual vs. Secretary of Public Works
law authorized the Videogram board to solicit help from other branches of
FACTS:
the government for the implementation of the law.
Pascual questions the RA 920 when it appropriated funds for the Pasig
ISSUE/S: W/N there was undue delegation f law making authority.
feeder road terminals where in fact, the property was privately owned.
HELD: No.
ISSUE/S: W/N the appropriation is valid?
The true distinction is between the delegations of power to make the law,
RULING: No. Money raised by taxation can be expended only for public
which necessarily involves a discretion as to what it shall be, and
purposes and not for the advantage of private individuals.
conferring authority or discretion as to its execution to be exercised under
and in pursuance of the law. The first cannot be done; to the latter, no 11. Planters Products, Inc. vs. Fertiphil Corporation
valid objection can be made.
FACTS:
8. Lutz vs. Araneta
Pres. Marcos issued a Letter of Instruction collecting from traders a certain
amount to benefit Planters Products, Inc. Respondents claim that such
collection can be justified as exerciser of police power.
ISSUE/S:
1. W/N is it an exercise of police power or taxation?
2. W/N the levying was for a public purpose?
RULING:
FIRST ISSUE: Power of taxation. (Same; about regulation and revenue). The
primary purpose is revenue generation for PPI.
SECOND ISSUE: NO. There was no public purpose.
An inherent limitation on taxation is public purpose. Taxation
cannot benefit private persons only.
12. ABAKADA vs. Ermita
President Arroyo signed RA 9337 or VAT Reform Act into law.
The president upon the recommendation of the Secretary of Finance, may
raise the rate to 12% percent if certain conditions are complied.
ISSUE/S:
(1) W/N there was undue delegation of legislative power?
(2) W/N there was a violation of the principle on progressivity of taxes?
RULING:
FIRST ISSUE: NO.
What is delegated to the president is simply the ascertainment of facts
upon which enforcement and administration of the increase rate under the
law is contingent. There is only a ministerial duty on the part of the
President to immediately impose the 12% rate upon factual matters
outside of the control of the executive.
SECOND ISSUE: NO.
The constitution did not prohibit the imposition of indirect taxes, like VAT.
What it simply provides is that Congress shall evolve a progressive
system of taxation.
13. MCIAA vs. City of Lapu-Lapu
Upon its creation, MCIAA enjoyed exemption from real estate taxes. Later
1996, MCIAA is no longer exempt from real estate taxes.
Now, City of Lapu-Lapu imposes real estate taxes to MCIAA. MCIAA posits
it is a government instrumentality, thus, exempt from real estate taxes.
ISSUE/S:
W/N MCIAA is subject to real estate taxes?
RULING: NO. MCIAA is a government instrumentality vested with
corporate powers and performing essential public services. Properties of
public dominion, being for public use, are not subject to tax.
14. Tolentino vs. Secretary of Finance
FACTS:
Petitioners assail the constitutionality of RA 7166 on the ground that it
violates the non-impairment clause of the constitution.
RULING: NO.
The parties to a contract cannot fetter the exercise of the taxing power of
the State. For only are existing laws read into contracts in order to fix
obligations as between parties, but the reservation of essential attributes
of sovereign power is also read into contracts as a basic postulate of the
legal order. This policy of protecting contracts against impairment
presupposes the maintenance of a government which retains adequate
authority to secure the peace and good order of society. The impairment
clause is not a limitation to the states power to tax.
16. British American Tobacco vs. Camacho
FACTS:
Petitioner introduced new brands to the market. Accordingly, BIR issued
series of regulations allowing them to reclassify and update the new
brands every two years. Also, they implemented a price freeze. Petitioner
filed a TRO and assailed the regulations unconstitutional and the price
freeze as provided under Sec 145 of NIRC.
RULING:
FIRST ISSUE: YES, the regulation is invalid.
RA 9334, the law created giving BIR the power to reclassify cigarette
brands, did not give it the authority to reclassify and update the
reclassification of new brands as often as 2 years or earlier.
SECOND ISSUE: YES, the price freeze is valid and constitutional.
The classification freeze did not violate the equal protection clause.
18. Sison vs. Ancheta
FACTS:
BP 135 was enacted taxing professionals. Sison questions the same by
saying that it is a violation of the equal protection clause as well as the
rule requiring the uniformity in taxation.
RULING: NO.
The legislation passed the test provided for in the due process and equal
protection clause. As regards the uniformity of taxes, the same is satisfied
if, all taxable articles or kinds of property of the same class shall be taxed
at the same time. The taxing power has the authority to make reasonable
and natural classifications for purposes of taxation.
19. Osmea vs. Orbos
FACTS:
President Marcos issued PD 1956 creating the OSPF. It was made for the
stabilization of prices of oil in the Philippines. It acted as a buffer.
ISSUE/S:
W/N the OSPF is a valid exercise of taxation power?
RULING:
NO. It is an exercise of police power. The OSPF was established precisely
to protect local consumers from the adverse consequences that such
frequent oil price adjustments may have upon the economy. The funds
collected may be referred to as taxes but they were exacted in the
exercise of police power.
20. Lung Center of the Philippines vs. City of Quezon
The petitioner is a non-stock, non-profit entity. It caters to both paying and
non-paying patients. Some portion of its building is for its non-paying
patients and the bigger portion was leased for private practitioners.
ISSUE/S:
(1) W/N petitioner is a charitable institution?
(2) W/N petitioner is exempted from real estate taxes.
RULING:
FIRST ISSUE: YES.
The test whether an enterprise is charitable or not is whether it exists to
carry out a purpose reorganized in law as charitable or whether it is
maintained for gain, profit, or private advantage.
SECOND ISSUE: PARTIALLY.
The portions leased to private entities are not exempt from the taxes. In
order to be entitled to exemption the petitioner is burdened to prove, by
clear and unequivocal, that (a) it is a charitable institution; and (b) its real
properties are ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable
purposes. If real property is used for one or more commercial purposes, it
is not exclusively used for the exempted purposes but is subject to
taxation.
21. CIR vs. CA and YMCA
YMCA is a non-stock, non-profit institution. Private respondent gained
earnings from private sources, as such rentals. CIR taxed them for such
sources.
ISSUE/S:
W/N the income derived from rentals of real property owned by YMCA is
subject to income tax.
RULING: YES.
Rental income derived by a tax-exempt organization from the lease of its
properties is not exempt from taxation. The bare allegation alone that one
is a non-stock, non-profit educational institution is insufficient to justify its
exemption from the payment of income tax.
22. CIR vs. S.C. Johnson performance in good faith of treaty obligations on the part of the states
that enter into the agreement.
The respondent, a domestic corporation, entered into a license agreement
with S.C. Johnson USA, a non-resident foreign corporation. The application for the availment of the tax treaty as required by the RMO
shall not operate to divest entitlement to the relief as it would constitute a
Upon their undertaking, SC Johnson USA claims the application of the
violation of the duty required by good faith in complying with a tax treaty.
most favored clause, thereby granting them a preferential tax 10% rate.
To reconcile things, it is not needed that the application may come prior so
ISSUE:W/N SC Johnson USA is applicable in this case.
long as it will eventually be complied with.
RULING: NO. Most favored clause is not applicable because what is
24. Nursery Care Corporation vs. City of Manila
involved is the payment of taxes, not royalties per se.
25. City of Manila vs. Coca cola
The most favored clause means the grant of to the contracting party a
treatment not less than that which has been or may be granted to the FACTS:
most favored among other countries. The phrase paid under similar
The City of Manila imposes taxes based on Sec 15 (Tax on Wholesalers,
circumstances must be construed to refer to payment of royalties and
Distributors or Dealers) and Sec 17 (Tax on Realties) of its Revenue Code.
not to the payment of taxes.
Further, it imposes additional taxes under Sec 21, as a condition for the
Exempt method refers to the income or capital which is taxable in the renewal of their respective business licenses.
state of source or situs is exempted in the state of residence. Focus is
ISSUE/S: W/N there is double taxation?
more on the income or capital asset. While Credit method means that
although the income or capital which is taxed is still taxable in the state of RULING: YES. Sec 21 constituted double taxation.
residence, the tax paid in the former (income) is credited against the tax
levied in the latter (capital). It focuses on the tax. Nursery Care and Coca cola were subjected to the following taxes:

23. Deutsche Bank Manila vs. CIR Same subject matter privilege of doing business in manila
Same purpose - to make them contribute to manila
Petitioner withheld 15% of its branch profit remittance tax to Deutsche Same taxing authority city of manila
Bank Germany. It requested from the International Tax Affairs Division for Same taxing jurisdiction city of manila
the confirmation of its entitlement to a preferential tax rate under the Rp-
Same taxing period per calendar year
Germany Tax Treaty. It also claimed refund because it believed it overpaid
Same kind or character local business tax imposed on gross sales
in accordance with the preferential tax rate.
or receipts.
ITAD denied the application because petitioner violated RMO 1-2000
26. CIR vs. Toda
where a fifteen period must be observed before filing the application.
FACTS:
ISSUE: Which one shall prevail, the RMO or the treaty?
Toda was the President of CIC, a stock corporation. He owns 99.99% equity
RULING: The Treaty.
of which. Further sales were conducted until it reached RMI. However,
By virtue of the treaty, Deutsche bank must benefit to the beneficial tax there is a suspicion that the sales in between and before reaching RMI are
rate of 10%. The doctrine of pacta sunt servanda demands the dummies.
ISSUE/S: Is this a case of tax avoidance or tax evasion?
RULING: Tax evasion.
Tax avoidance is the tax saving device within the means sanctioned by
law. It should be used by the tax payer with good faith and within arms
length. Tax evasion on the other hand, is an illegal scheme.
Factors of tax evasion: (1) the end to be achieved (paying less tax); (2) an
accompanying state of mind which is described a s being evil, in bad faith,
willful, or deliberate and not accidental; and (3) a course of action or
failure of action which is unlawful.
27. Abaya vs. Ebdane
ISSUE:When can a taxpayer file a taxpayers suit?
RULING:
(1) When public funds are illegally disbursed;
(2) when public money deflected for an improper purpose;
(3) there is wastage of public funds
28. David vs. Macapagal-Arroyo
FACTS:
President Arroyo issue PP 1017 in accordance with her emergency powers.
As a result, several people were detained, including the petitioner.
Petitioner questions the validity of the PP. Respondent camp said that
petitioner had no legal standing to sue.
ISSUE/S: W/N petitioner has legal standing?
RULING: YES.
The following are exceptions to the locus standi rule:
(1) cases involve constitutional issues;
(2) taxpayers, a claim for illegal disbursement of public funds or tax
measure is unconstitutional;
(3) voters, a clear showing of interest in the validity of election law in
question;
(4) concerned citizens, on matters of transcendental importance which
must be settled early;
(5) legislators, if official action infringes upon their prerogatives of as
legislators.
29. Gonzales vs. Marcos
President Marcos issues EO 30 for the construction of the Cultural Centre
of the Philippines. It was funded purely through donations.
Gonzales claims that such EO is an encroachment by the President on the
legislative prerogative.
ISSUE/S: W/N petitioner have locus standi?
RULING: NO.
The money spent for the cultural centre is gathered via donations. No
possible squandering of public funds is manifested. It lacks an essential
pre-requisite of a tax payer suit.
30. Vinsons-Chato vs. Fortune Tobacco Corporation
ISSUE/S: W/N a public officer may be validly sued in her personal
capacity for acts done in accordance with her official duties?
RULING:
GR: NOT LIABLE.
EXP: YES. She is not immune from damages for acts done in bad faith
which, being outside the scope of his authority, are no longer protected by
the mantle of immunity for official actions.
INCOME TAXATION
1. CIR vs. Javier
Javier mistakenly received an amount mistakenly wired to her. Petitioner
made a declaration that there was a mistake in the amount of cash she
received. Subsequently, CIR taxed her for the amount including the
mistakenly wired to her accounts. CIR imposed thereupon a 50% fraud
penalty.
ISSUE/S: W/N Javier is liable for the fraud penalty.
RULING: NO.
Petitioner made it clear in her memorandum that she received the excess
amount by mistake. The fraud contemplated by law is actual and not
constructive. There must be an intentional fraud. Error or mistake of law is
not fraud. The records failed to show that there petitioner intended doing Activities for profit should not escape taxation. An institution cannot use
the same. its corporate for to prevent its profitable activities from being taxed.
2. Conwi vs. CTA 5. CIR vs. CA, CTA, YMCA
ISSUE/S: W/N petitioners et.al are exempt from the application of CBC ISSUE/S: W/N income derived from rentals of real property owned by
no. 289 YMCA, subject to income tax?
RULING: NO. RULING: NO.
Petitioners are citizens of the Philippines, their income, within or without, What is exempted under the constitution is the tax on real properties and
are subject to income tax. not on income. YMCA is exempted from paying real estate taxes but not
income tax.
3. Obillos, Jr. vs. CIR, CTA
Also, YMCA is not an educational institution (school) as depicted in the
FACTS:
constitution. It will still not be exempt from income tax assuming that it
Obillos, Sr. left parcels of lands for his children, the petitioners. Years after proves that that its activities were actually, directly and exclusively used
their fathers death, the petitioners sold the property. After which, CIR for charitable puposes.
imposed a corporate income tax on them saying that they are an
6. SMI-ED vs. CIR
unregistered partnership.
Petitioner tried to venture into manufacturing. However, due to some
ISSUE/S: W/N the siblings formed a partnership?
complications, it failed even to start operations. Afterwards, it decided to
RULING: NO. sell all its properties.

There was no intention. The division of the profit was merely incidental to ISSUE/S:
the dissolution of co-ownership which was in the nature of things a
(1) W/N SMI-ED is entitled to benefits given to PEZA-registered
temporary state. To inflict upon said tax would be oppressive.
enterprises?
4. CIR vs. St. Lukes Medical Center
(2) W/N Petitioners sale of properties subject to capital gains tax?
St. Lukes is a non-stock, non-profit hospital. However, CIR taxed them and
RULING:
asked for tax deficiencies. St. Lukes defended that it is a charitable
institution and that it is exempted from income tax. The generation of FIRST ISSUE: NO.
income from paying patients does not destroy its charitable character.
Corporations that may be granted with fiscal incentives and the 5%
ISSUE/S: W/N St. Lukes is liable for 10% preferential tax rate? preferential tax are those considered to have started entering into
commercial transactions that are not merely incidental to but are related
RULING: YES.
to the purposes of the business. SMI-ED never began operations.
Section 27(B) introduced the concept of proprietary non-stock
SECOND ISSUE: YES.
corporations. Under said provision, instead of the regular 30%,
corporations deemed as proprietary non-stock corporations are granted The following are considered ordinary assets:
10% preferential tax rate.
1. Stocks in trade
 2. Property that should be included in the tax payers inventory at the
close of the taxable year.
3. Property held for sale in the ordinary course of the taxpayers
business.
4. Depreciable property used in the trade or business.
5. Real property used in the trade or business.
The properties sold by SMI-ED are capital assets. Only presumed gain from
the sale of petitioners land and/or building may be subjected to the 6%
CGT. The income from sale of petitioners machineries and equipment is
subject to the provisions on normal corporate income tax.
Since petitioner had not started its operations, it was also not subject to
the minimum corporate income tax of 2% on gross income. Therefore,
petitioner is not liable for any income tax.
7. Republic vs. Soriano
FACTS:
Sorianos land was expropriated by the Government.
ISSUE/S: W/N the government is entitled to pay the CGT?
RULING: NO.
Under the NIRC, payment of CGT is on the account of the seller. Since it is
a passive income, the seller should be the one to bear it.
However, in the case of documentary stamp taxes, it is the government
that pays, unless prior agreed.
8. Banco de Oro vs. Republic
Deposit substitutes alternative form of obtaining funds from the public
other than deposits through the issuance, endorsement, or acceptance of
debt instruments for the borrowers own account, for the purpose of
relending or purchasing of receivables and other obligations, or financing
their own needs or the needs of their agent or dealer.
at any one time every transaction executed in the primary and convince the courts. However, in this case, Baier-Nickel failed to prove
secondary market in connection with the purchase or sale of securities.
Rationale behind the Withholding tax system:
1. To provide the tax payer a convenient manner to meet his probable
income tax liability.
2. To ensure the collection of income tax which can otherwise be lost or
substantially reduced through failure to file the corresponding returns.
3. To improve the governments cash flow.
Dumaguete Cathedral Credit Cooperative vs. CIR
FACTS:
DCCCO is a cooperative established within the meaning of the law. At
some time, BIR subjected then to final tax and for the petitioners failure
to pay, a delinquency tax of 20% was also imposed.
ISSUE/S: W/N the imposition of final withholding tax is valid?
RULING: NO.
The law provides that cooperative are not to be subjected to FWT. Also,
said exception extends to its members.
11. CIR vs. Baier-Nickel
FACTS:
Baier-Nickel is the non-resident German President of JUBANITEX, a
domestic corporation. For her compensation, JUBANITEX kept a 10%
withholding tax. Later, Baier-Nickel filed for a refund because JUBANITEX
mistakenly withheld the 10%. Her income is not derived within the
Philippines.
ISSUE/S: W/N Baier-Nickels compensation is taxable?
RULING: YES.
The key word in determining the taxability of non-resident aliens is the
incomes source, the place where the service is actually rendered.
Since tax refunds are strictly construed against the claimant, one should
that she rendered her services outside the Philippines.
12. Santos vs. Servier Philippines
FACTS: In claiming exemption of taxes for benefit plan, the following must concur:
Santos was employed by Servier Philippines. She took a vacation leave, 1. Benefit plan maintained by employer
however, she was not able to return to work due to health complications. 2. Retiree has been in the service of the employer for 10 years
Being unable to recover, Servier Philippines was forced to terminate 3. Retiree is not less than 50 years old when he retired
Santos. A benefit plan was granted to Santos family but not all was 4. This benefit is only availed once
released because a portion of which was withheld by the company.
ISSUE/S: W/N Santoss plan is taxable?
RULING: YES.