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National Power Corporation vs City of Cabanatuan

G.R. No. 149110 April 9, 2003

NATIONAL POWER CORPORATION, petitioner,

vs.

CITY OF CABANATUAN, respondent.

FACTS: Petitioner is a government-owned and controlled corporation created under Commonwealth Act No. 120, as amended.

For many years now, petitioner sells electric power to the residents of Cabanatuan City, posting a gross income of P107,814,187.96 in 1992.7 Pursuant

to section 37 of Ordinance No. 165-92,8 the respondent assessed the petitioner a franchise tax amounting to P808,606.41, representing 75% of 1% of

the latter’s gross receipts for the preceding year.

Petitioner refused to pay the tax assessment arguing that the respondent has no authority to impose tax on government entities. Petitioner also

contended that as a non-profit organization, it is exempted from the payment of all forms of taxes, charges, duties or fees in accordance with sec. 13 of

Rep. Act No. 6395, as amended.

The respondent filed a collection suit in the RTC, demanding that petitioner pay the assessed tax due, plus surcharge. Respondent alleged that

petitioner’s exemption from local taxes has been repealed by section 193 of the LGC, which reads as follows:

“Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently

enjoyed by all persons, whether natural or juridical, including government owned or controlled corporations, except local water districts, cooperatives

duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this

Code.”

RTC upheld NPC’s tax exemption. On appeal the CA reversed the trial court’s Order on the ground that section 193, in relation to sections 137 and 151

of the LGC, expressly withdrew the exemptions granted to the petitioner.

ISSUE: W/N the respondent city government has the authority to issue Ordinance No. 165-92 and impose an annual tax on “businesses enjoying a

franchise

HELD: YES. Taxes are the lifeblood of the government, for without taxes, the government can neither exist nor endure. A principal attribute of

sovereignty, the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to

promote public interest and common good. The theory behind the exercise of the power to tax emanates from necessity;32 without taxes, government

cannot fulfill its mandate of promoting the general welfare and well-being of the people.

Section 137 of the LGC clearly states that the LGUs can impose franchise tax “notwithstanding any exemption granted by any law or other special law.”

This particular provision of the LGC does not admit any exception. In City Government of San Pablo, Laguna v. Reyes,74 MERALCO’s exemption from

the payment of franchise taxes was brought as an issue before this Court. The same issue was involved in the subsequent case of Manila Electric

Company v. Province of Laguna.75 Ruling in favor of the local government in both instances, we ruled that the franchise tax in question is imposable

despite any exemption enjoyed by MERALCO under special laws, viz:

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“It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC to support their position that MERALCO’s tax exemption

has been withdrawn. The explicit language of section 137 which authorizes the province to impose franchise tax ‘notwithstanding any exemption granted

by any law or other special law’ is all-encompassing and clear. The franchise tax is imposable despite any exemption enjoyed under special laws.

Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless otherwise provided in this Code, tax exemptions or

incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations except (1)

local water districts, (2) cooperatives duly registered under R.A. 6938, (3) non-stock and non-profit hospitals and educational institutions, are withdrawn

upon the effectivity of this code, the obvious import is to limit the exemptions to the three enumerated entities. It is a basic precept of statutory

construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius

est exclusio alterius. In the absence of any provision of the Code to the contrary, and we find no other provision in point, any existing tax exemption or

incentive enjoyed by MERALCO under existing law was clearly intended to be withdrawn.

Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the local government unit may now impose a local tax at a rate not

exceeding 50% of 1% of the gross annual receipts for the preceding calendar based on the incoming receipts realized within its territorial jurisdiction.

The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is clearly manifested by the language used on (sic) Sections 137

and 193 categorically withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only tedious and impractical to

attempt to enumerate all the existing statutes providing for special tax exemptions or privileges, the LGC provided for an express, albeit general,

withdrawal of such exemptions or privileges. No more unequivocal language could have been used.”76 (emphases supplied)

Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance and support myriad activities of the local government

units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the

people. As this Court observed in the Mactan case, “the original reasons for the withdrawal of tax exemption privileges granted to government-owned or

controlled corporations and all other units of government were that such privilege resulted in serious tax base erosion and distortions in the tax treatment

of similarly situated enterprises.” With the added burden of devolution, it is even more imperative for government entities to share in the requirements of

development, fiscal or otherwise, by paying taxes or other charges due from them.

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CIR vs. Algue Inc.

Commissioner of Internal Revenue vs. Algue Inc.

GR No. L-28896 | Feb. 17, 1988

Facts:

 Algue Inc. is a domestic corp engaged in engineering, construction and other allied activities

 On Jan. 14, 1965, the corp received a letter from the CIR regarding its delinquency income taxes from 1958-1959, amtg to P83,183.85

 A letter of protest or reconsideration was filed by Algue Inc on Jan 18

 On March 12, a warrant of distraint and levy was presented to Algue Inc. thru its counsel, Atty. Guevara, who refused to receive it on the ground of
the pending protest

 Since the protest was not found on the records, a file copy from the corp was produced and given to BIR Agent Reyes, who deferred service of the
warrant

 On April 7, Atty. Guevara was informed that the BIR was not taking any action on the protest and it was only then that he accepted the warrant of
distraint and levy earlier sought to be served

 On April 23, Algue filed a petition for review of the decision of the CIR with the Court of Tax Appeals

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00 was 60% of the total commission.00. 1125.  Sec. This arrangement was understandable in view of the close relationship among the persons in the family corporation  The amount of the promotional fees was not excessive.000. considering that it was the payees who did practically everything. the claimed deduction of P75. to make up the total of P75. each payee made an accounting of all of the fees received by him or her.000.000.000. CTA also found.  Taxes are what we pay for civilization society. The amount of P75. was a family corporation where strict business procedures were not applied and immediate issuance of receipts was not required. Hence. 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  Taxation must be exercised reasonably and in accordance with the prescribed procedure. but later on conformed to the decision of CTA  There is no dispute that the payees duly reported their respective shares of the fees in their income tax returns and paid the corresponding taxes thereon. CIR claimed that the 75K promotional fees to be personal holding company income. every person who is able to must contribute his share in the running of the government. was permitted under the Internal Revenue Code and should therefore not have been disallowed by the CIR I_D1 CIR vs BPI GR 134062. an attempt to evade a legitimate assessment by involving an imaginary deduction  Algue Inc. that no distribution of dividends was involved  CIR suggests a tax dodge. to Algue Inc.’s appeal from the decision of the CIR was filed on time with the CTA in accordance with Rep. The government for its part. The total commission paid by the Philippine Sugar Estate Development Co.  Originally.  RA 1125: the appeal may be made within thirty days after receipt of the decision or ruling challenged  During the intervening period. after examining the evidence. made in accordance with law. Algue Inc. then the taxpayer has a right to complain and the courts will then come to his succor Algue Inc. If it is not.All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Without taxes. at the end of the year. 30 of the Tax Code: allowed deductions in the net income – Expenses . from the formation of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties. payments are fictitious because most of the payees are members of the same family in control of Algue and that there is not enough substantiation of such payments  CTA: 75K had been legitimately paid by Algue Inc. despite the natural reluctance to surrender part of one's hard earned income to the taxing authorities. the government would be paralyzed for lack of the motive power to activate and operate it.00 as clear profit from the transaction. These were collected by the Payees for their work in the creation of the Vegetable Oil Investment Corporation of the Philippines and its subsequent purchase of the properties of the Philippine Sugar Estate Development Company. CIR contentions: . And we also find that the claimed deduction by Algue Inc. This was a reasonable proportion. Algue still had a balance of P50. was P125K.000. Issue: W/N the Collector of Internal Revenue correctly disallowed the P75. 17 April 2007 3 .00 deduction claimed by Algue as legitimate business expenses in its income tax returns Ruling:  Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.00 was properly disallowed because it was not an ordinary reasonable or necessary business expense . the warrant was premature and could therefore not be served. for actual services rendered in the form of promotional fees. After deducting the said fees. including a reasonable allowance for salaries or other compensation for personal services actually rendered xxx  the burden is on the taxpayer to prove the validity of the claimed deduction  In this case. when the books were to be closed. Act No. 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.

the CA reversed the tax court’s decision and resolution and remanded the case to the CTA for a decision on the merits. The December 10.” Nothing in the old law required a written statement to the taxpayer of the law and facts on which the assessments were based.” BPI 4 . The fact that the amendment was necessary showed that. It declared that the proper assessments were those contained in the May 8. otherwise. in his May 8. and unappealable? Failure to protest within the 30-day period: 1)final and unappealable. All presumptions are in favor of the correctness of tax assessments. and as to what particular percentage tax the assessment refers to.FACTS: On 28 October 1988 petitioner Commissioner of Internal Revenue (CIR) assessed respondent Bank of the Philippine Islands’ (BPI) deficiency percentage and documentary stamp taxes in the total amount of P129. Clearly. the legislature intended to insert a new provision regarding the form and substance of assessments issued by the CIR. BPI must nevertheless be deemed to have failed to appeal the CIR’s final decision within the 30-day period. 1988 notices were not valid assessments because they did not inform the taxpayer of the legal and factual bases. In a letter dated 10 December 1988. CIR filed this case. 1988 reply it sent to the CIR did not qualify as a protest since BPI did not even consider the October 28. the legislature saw the need to modify the former Section 270 by inserting the aforequoted sentence. The sentence “The taxpayers shall be informed in writing of the law and the facts on which the assessments is made. prior to the introduction of the amendment. the only requirement was for the CIR to “notify” or inform the taxpayer of his “findings. BPI filed a petition for review in the CTA but the latter dismissed the case for lack of jurisdiction since the subject assessments had become final and unappealable. The CIR. the statute had an entirely different meaning. BPI received a letter on 27 June 1991 dated May 8. 1988 notices as valid or proper assessments. The CIR merely relied on the provisions of the former Section 270 prior to its amendment by RA 8424 (Tax Reform Act of 1997). 2) Whether or not the assessments made by the CIR were valid. final. 1991 response. the amount the taxpayer was to pay and a demand for payment within a prescribed period. In the absence of proof of any irregularities … an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. on the other hand. Moreover. 1988 letter as a protest. 1988 notices valid assessments? RULING: Yes the notices sufficiently met the requirements of a valid assessment under the old law and jurisprudence. the assessments shall be void” was not in the old Section of 270 but was later on inserted in the renumbered Section 228 in 1997.488. Evidently. It ruled that the October 28. 2) presumption of correctness RULING: Yes. stated that it was his “final decision on the matter. Under the former Section 270. when the assessments were made pursuant to the former Section 270. BPI’s failure to protest meant that the assessments made are final and unappealable. BPI was from then on barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits.656. Thus. BPI requested for the CIR to state or to inform the taxpayer why he is being assessed a deficiency. Subsequently. simply required that the assessments contain a computation of tax liabilities. The amendment introduced by RA 8424 was an innovation and could not be reasonably inferred from the old law. it held that BPI filed the petition for review in CTA on time. On appeal. ISSUES: 1) Were the October 28. The taxpayer has the duty to prove otherwise. 1988. There arose a presumption of correctness when BPI failed to protest the assessments: Tax assessments by tax examiners are presumed correct and made in good faith. Even if we consider the December 10. 1991 letter which provided the reasons for the claimed deficiencies. and the basis of the assessments. Accordingly. The CTA ruled that BPI failed to protest on time under Section 270 of the National Internal Revenue Code (NIRC) and Section 7 in relation to Section 11 of RA 1125. Jurisprudence. 1991 from CIR stating that it constitutes the final decision on the matter. Presumption of Correctness. BPI should have protested within 30 days from receipt of the notices dated October 28. there were two instances when an assessment became final and unappealable: 1) when it was not protested within 30 days and 2) when the adverse decision on the protest was not appealed to the CTA within 30 days from receipt of the final decision. Hence.63.

distilled spirits. Fortune Tobacco September 28. reads in part: “The specific tax from any brand of cigarettes within the next three (3) years of effectivity of this Act shall not be lower than the tax [which] is due from each brand on October 1. 5 .R.” To implement the 12% increase in specific taxes mandated under Section 145 of the 1997 Tax Code and again pursuant to its rule-making powers. RA 8240 took effect and a shift from ad valorem to specific taxes was made. The CTA First Divisions ruling was upheld on appeal by the CTA en banc. (3) and (4) hereof. (2). Instead. A principal attribute of sovereignty. shall be increased by twelve percent (12%) on January 1. 180006 Facts: Prior to January 1. the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good. without taxes.therefore had 30 days from the time it received the decision on June 27. The CIR’s motion for reconsideration of the CTA en banc’s decision was denied in a resolution. 1997. xxx The rates of specific tax on cigars and cigarettes under paragraphs (1). the excises taxes on cigarettes were in the form of ad valorem taxes. The theory behind the exercise of the power to tax emanates from necessity. Beginning January 1. the CTA First Division ruled in favor of Fortune Tobacco and granted its claim for refund. respondent Fortune Tobacco Corporation paid in advance excise taxes and filed an administrative claim for tax refund with the CIR for erroneously and/or illegally collected taxes in the amount of P491 million. however. Issue: Whether or not Section 1 of RR 17-99 is an unauthorized administrative legislation on the part of the CIR. No. 1997.” Pursuant to these laws. for without taxes. which reads partly: “Provided. In its decision. 1996. that the new specific tax rate for any existing brand of cigars [and] cigarettes packed by machine. wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1. the CIR issued RR 17-99. I_E1 CIR vs. A portion of Section 142(c) of the 1977 Tax Code. the government can neither exist nor endure. 2000. it filed a request for reconsideration and lodged its appeal in the CTA. 2000. 1991 to appeal but it did not. pursuant to Section 142 of the 1977 National Internal Revenue Code (1977 Tax Code). government cannot fulfill its mandate of promoting general welfare and well-being of the people. BPI is still liable under the subject tax assessments: That state will be deprived of the taxes validly due it and the public will suffer if taxpayers will not be held liable for the proper taxes assessed against them: Taxes are the lifeblood of the government. as amended by RA 8240. 2011 G.

Ruling: Yes. Uniformity in taxation requires that all subjects or objects of taxation. 8800. petitioner. then Holderfin B. are to be treated alike both in privileges and liabilities. respondents.[7] per Record. It appears that despite its awareness of the need to protect the increase of excise taxes to increase government revenue. RR 17-99. Petitioner Southern Cross Cement Corporation (Southern Cross) is a domestic corporation engaged in the business of cement manufacturing. The proviso in Section 1 of RR 17-99 clearly went beyond the terms of the law it was supposed to implement.). including tariffs.[5] Private respondent Philippine Cement Manufacturers Corporation[6] (Philcemcor) is an association of domestic cement manufacturers.R.A. The Court further said that the omission in the law in fact reveals the legislative intent not to adopt the higher tax rule. which was one of the laws enacted by Congress soon after the Philippines ratified the General Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement. of Switzerland (formerly Holderbank Financiere Glaris. the CIR also perpetuated the unequal tax treatment of similar goods that was supposed to be cured by the shift from ad valorem to specific taxes. to protect domestic industries and producers from increased imports which inflict or could inflict serious injury on them. of Mexico. 6 . Although the brands all belong to the same category. In the process. No. Cemex S. The rule on uniformity of taxation is violated by the proviso in Section 1.V. While Philcemcor heralds itself to be an association of domestic cement manufacturers. the proviso in Section 1.[3] The SMA provides the structure and mechanics for the imposition of emergency measures. Its principal stockholders are Taiheiyo Cement Corporation and Tokuyama Corporation. August 3.
 I_E2 G. similarly situated. Ltd. CEMENT MANUFACTURERS ASSOCIATION OF THE PHILIPPINES. it appears that considerable equity holdings. and Holcim Ltd. THE SECRETARY OF THE DEPARTMENT OF TRADE AND INDUSTRY. if not controlling interests in at least twelve (12) of its member-corporations. importation and exportation. Facts: Republic Act No.A. were acquired by the three largest cement manufacturers in the world. It effectively extended the qualification stated in the third paragraph of Section 145(c) of the 1997 Tax Code that was supposed to apply only during the transition period. Congress ultimately decided against adopting the higher tax rule. It has eighteen (18) members. 158540.. RR 17-99 authorized the imposition of different (and grossly disproportionate) tax rates. of France. the Safeguard Measures Act (SMA). THE SECRETARY OF THE DEPARTMENT OF FINANCE and THE COMMISSIONER OF THE BUREAU OF CUSTOMS. namely Financiere Lafarge S. vs. 2005] SOUTHERN CROSS CEMENT CORPORATION. de C. purportedly the largest cement manufacturers in Japan.V. and therefore entitles Fortune Tobacco to claim a refund of the overpaid excise taxes collected pursuant to this provision. production.

2002 is DENIED. Philcemcor challenged this Decision of the DTI Secretary by filing with the Court of Appeals a Petition for Certiorari. Despite the fact that the Court of Appeals Decision had not yet become final. as well as the Tariff Commissions Report. Prohibition and Mandamus[11] seeking to set aside the DTI Decision. ruling this time that that in light of the appellate courts Decision there was no longer any legal impediment to his deciding Philcemcors application for definitive safeguard measures. bag for three years on imported gray Portland Cement.60/40 kg. he imposed a definitive safeguard measure on the importation of gray Portland cement. Hence. Southern Cross filed the present petition. the case is REMANDED to the public respondent Secretary of Department of Trade and Industry for a final decision in accordance with RA 8800 and its Implementing Rules and Regulations. as the proper remedy is a petition for review with the CTA conformably with the SMA. No Costs.the DTIs disagreement with the conclusions of the Tariff Commission. Hence. the appeal.[42] Accordingly. Yet on 25 June 2003. 7 . the appeal. On 23 June 2003. The Court of Appeals had held that based on the foregoing premises. the Court found that the DTI should follow the regulations prescribed by SMA.[14] partially granted Philcemcors petition. contrary to the findings of the Tariff Commission. in a Decision[13] penned by Court of Appeals Associate Justice Elvi John Asuncion. arguing that the Court of Appeals has no jurisdiction over Philcemcors petition. Consequently. Issue: Whether or not the decision of DTI Secretary. On the other hand. wherein he ruled that that in light of the appellate courts Decision. due to the nature of this case. petitioner’s prayer to set aside the findings of the Tariff Commission in its assailed Report dated March 13. the DTI Secretary issued a new Decision. its binding force was cited by the DTI Secretary when he issued a new Decision on 25 June 2003. that the factual findings of the Tariff Commission on the existence or non-existence of conditions warranting the imposition of general safeguard measures are binding upon the DTI Secretary. the local cement industry had suffered serious injury as a result of the import surges. Held: NO. The Court held that he assailed Decision of the Court of Appeals is DECLARED NULL AND VOID and SET ASIDE. The Court of Appeals Twelfth Division. the assailed April 5. 2002 Decision of the Secretary of the Department of Trade and Industry is hereby SET ASIDE. The Decision of the DTI Secretary dated 25 June 2003 is also DECLARED NULL AND VOID and SET ASIDE.[41] He made a determination that. but at the same time. in the form of a definitive safeguard duty in the amount of P20. ultimately denying Philcemcors application for safeguard measures on the ground that the he was bound to do so in light of the Tariff Commissions negative findings. there was no longer any legal impediment to his deciding Philcemcors application for definitive safeguard measures. and. to impose safeguard measures is valid.

COA disallowed recover of financing charges.60/40 kg. respondents. QUICK FACTS: Caltex Philippines questions the decisions of COA for disallowing the offsetting of its claims for reimbursement with its due OPSF remittance FACTS: The Oil Price Stabilization Fund (OPSF) was created under Sec. FERNANDEZ and HONORABLE COMMISSIONER ALBERTO P. CRUZ. J. the local cement industry had suffered serious injury as a result of the import surges. Jr.Yet on 25 June 2003. petitioner. Caltex requested COA for an early release of its reimbursement certificates which the latter denied. It will be used to reimburse the oil companies for cost increase and possible cost underrecovery incurred due to reduction of domestic prices. 1992 CALTEX PHILIPPINES. No. bag for three years on imported gray Portland Cement. Petitioner’s Contention: 8 . in the form of a definitive safeguard duty in the amount of P20.. contrary to the findings of the Tariff Commission. as amended by EO 137 for the purpose of minimizing frequent price changes brought about by exchange rate adjustments. 92585 May 8. HONORABLE COMMISSIONER BARTOLOME C. I_E3 G. the DTI Secretary issued a new Decision. (2) purpose/objective of taxation: non-revenue / special / regulatory Ponente: Davide. Topic: (1) tax vs. ordinary debt. ruling this time that that in light of the appellate courts Decision there was no longer any legal impediment to his deciding Philcemcors application for definitive safeguard measures. he imposed a definitive safeguard measure on the importation of gray Portland cement. THE HONORABLE COMMISSION ON AUDIT.[41] He made a determination that.[42] Accordingly. inventory losses and sales to marcopper and atlas but allowed the recovery of product sale or those arising from export sales.R. DOCTRINE: A taxpayer may not offset taxes due from the claims that he may have against the government. 8. PD 1956. vs. COA sent a letter to Caltex directing the latter to remit to the OPSF its collection. INC.

 PD 1956. 21. as amended by EO No. Davao City. To ease the acute congestion in the government ports at Sasa and Sta. demand. I_E4 TERMINAL FACILITIES AND SERVICES CORPORATION vs.  There is not merit in Caltex’s contention that the OPSF contributions are not for a public purpose because they go to a special fund of the government. in reality. 137 explicitly provides that the source of OPSF is taxation. Denial of claim for reimbursement would be inequitable. Book V. Respondent’s Contention: Based on Francia v. Their primary obligation is to account for and remit the taxes collection to the administrator of the OPSF. Ana. ISSUE: WON Caltex is entitled to offsetting DECISION: NO. passed unto the end-users – the consuming public. a domestic corporation engaged in the business of providing port and terminal facilities as well as arrastre. PHILIPPINE PORTS AUTHORITY and PORT MANAGER.  The oil industry is greatly imbued with public interest as it vitally affects the general welfare. COA AFFIRMED HELD:  It is settled that a taxpayer may not offset taxes due from the claims that he may have against the government. This lack of public purpose behind OPSF exactions distinguishes it from tax. Taxes cannot be subject of compensation because the government and taxpayer are not mutually creditors and debtors of each other and a claim for taxes is not such a debt. NCC (compensation) and Sec. Title I-B of the Revised Administrative Code (Retention of Money for Satisfaction of Indebtedness to Government) allows offsetting. FACTS: Sometime in 1975 TEFASCO. and PORT DISTRICT OFFICER OF DAVAO CITY. it instead established a special fund. contract or judgment as is allowed to be set-off. IAC.Department of Finance issued Circular No. PPA welcomed the proposal and organized an inter- agency committee to study the plan.  Technically. Amounts due do not arise as a result of taxation since PD 1956 did not create a source of taxation. there’s no offsetting of taxes against the the claims that a taxpayer may have against the government. the oil companies merely act as agents for the Government in the latter’s collection since the taxes are. 4-88 allowing reimbursement. but are imposed by law. Taxation is no longer envisioned as a measure merely to raise revenue to support the existence of the government. as taxes do not arise from contracts or depend upon the will of the taxpayer. The specialized matters intended to be captured are: (a) bananas in consideration of 9 . stevedoring and other port-related services submitted to PPA a proposal for the construction of a specialized terminal complex with port facilities and a provision for port services in Davao City. taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry which is affected with public interest as to be within the police power of the State.

(d) tenure of five (5) years extendible by five (5) more years for TEFASCO's permit to operate cargo handling in its private port facilities. with default penalized by automatic withdrawal of its commercial private port permit and permit to operate cargo handling services. ISSUES/HELD: 1.75) payable monthly. 1984 TEFASCO and PPA executed a Memorandum of Agreement (MOA) providing among others for (a) acknowledgment of TEFASCO's arrears in government share at Three Million Eight Hundred Seven Thousand Five Hundred Sixty-Three Pesos and Seventy-Five Centavos (P3. 1978. 10 . this permit shall also be rendered null and void. the PPA Board passed on October 1.the rate of spoilage. It has also been held that “where the licensee has acted under the license in good faith. On April 21. among others.563. Central Bank that the administrative agency in issuing the permit must have assumed such obligation on itself. PPA again issued to TEFASCO another permit. Whether the authority given to TEFASCO to construct port facilities was only a privilege granted by PPA. CO/CO-1-067802. Hence this petition. 1983. without asking for one. It contained provisions for ten percent (10%) government share out of arrastre and stevedoring gross income and one hundred percent (100%) wharfage and berthing charges. and. 7 accepting and approving TEFASCO's project proposal. no general cargo shall be handled through the facility. It was a two-way advantage for both TEFASCO and PPA. (b) sugar. under which more onerous conditions were foisted on TEFASCO’s port operations. or on June 10. 50 under which TEFASCO. and has incurred expense in the execution of it. which is also the cause of consideration for the existence of the contract. the application imposed additional significant conditions. The facts certainly bear out the conclusion that PPA passed Resolution No. As acceptance of these considerations and execution thereof immediately followed. The conditions provide that the construction permit will entitle the applicant to operate the facility for a period of fifteen (15) years. Subsequently. 1976 the PPA Board of Directors passed Resolution No. the revocation of which would be a fraud on the licensee. (c) fertilizers. The TC ruled in favor of TEFACSO. TEFASCO received a cease and desist order in a letter dated June 1. The CA reversed this decision. (c) opening of its pier facilities to all commercial and third-party cargoes and vessels for a period coterminous with its foreshore lease contract with the National Government. without jeopardy to negotiation for a renewal for a period not exceeding ten (10) years. 1988 TEFASCO sued PPA and PPA Port Manager. Without the consent of TEFASCO. the authorization for TEFASCO to build and operate the specialized terminal complex with port facilities assumed the character of a truly binding contract between the grantor and the grantee. the business opportunities for the former and the decongestion of port traffic in Davao City for the latter. 7 and the terms and conditions thereof with a view to decongesting port traffic in government ports in Davao City and engaging TEFASCO to infuse its own funds and skills to operate another port therein. In return PPA promised to issue the necessary permits for TEFASCO’s port activities. NO. Two (2) years after the completion of the port facilities and the commencement of TEFASCO's port operations. TEFASCO complied with the MOA and paid the accrued and current government share. by making valuable improvements or otherwise. and Port Officer in Davao City for refund of government share it had paid and for damages as a result of alleged illegal exaction from its clients of one hundred percent (100%) berthing and wharfage fees. 7 and the terms and conditions thereof. was compelled to submit an application for construction permit. On August 30. (b) reduction of government share from ten percent (10%) to six percent (6%) on all cargo handling and related revenue (or arrastre and stevedoring gross income). On February 10. and therefore the licensor is estopped to revoke it xxx It has also been held that the license cannot be revoked without reimbursing the licensee for his expenditures or otherwise placing him in status quo. (d) specialized movement of beer in pallets containerized handling lumber and plywood. In the event that the Foreshore Lease Application expires or is disapproved/canceled. With such considerable amount of money spent in reliance upon the promises of PPA under Resolution No. Subsequently. it is regarded in equity as an executed contract and substantially an easement.807. TEFASCO heeded to this additional conditions. that is. designated as Special Permit No. it is too late for PPA to change the rules of engagement with TEFASCO as expressed in the said Resolution and other relevant documents.” For a regulatory permit to be impressed with contractual character we held in Batchelder v. 1976 Resolution No.

D.D. This is especially true in the light of PPA’s practice of collecting one hundred percent (100%) of the wharfage and berthing dues by cornering the cargoes and vessels. Inasmuch as the TEFASCO port is privately owned and maintained. The cause of action of TEFASCO is the injury it suffered as a result of the illegal imposition on its clientele of such dues and charges that should have otherwise gone to it as private port usage fee. Trial court dismissed the petition. No. Whether the award of fifty percent (50%) and thirty percent (30%) of the wharfage dues and berthing charges to TEFASCO as actual damages representing private port usage fees from 1977 to 1991. 4. was proper. Whether the imposition of 10% wharfage fees and berthing charges is void. until such time that the President upon recommendation of the Board may order that the adjusted schedule of dues are in effect. YES. 441. Considering these pleaded facts. TEFASCO’s cause of action has been sufficiently alleged and proven. this impost is more in consonance with the description of government share as consideration for the "supervision inherent in the upgrading and improvement of port operations. TEFASCO is asserting injury to its right to collect valuable consideration for the use of its facilities and wrongdoing on the part of PPA prejudicing such right. 3.00 per annum for commercial ports and P10. and Operation The PPA issuance scrapped government share in the income of private ports where no government facilities had been installed and in place thereof imposed a one-time privilege fee of P20. license taxation must not be "so unreasonable to show a purpose to prohibit a business which is not itself injurious to public health or morals.00 yearly for non-commercial ports. the absurd and confiscatory character of government share is convincingly proved by PPA's decision itself to abandon the disadvantageous scheme through Administrative Order No. Development. PPA is bereft of any authority to impose whatever amount it pleases as government share in the gross income of TEFASCO from its arrastre and stevedoring operations. 857 as amended that wharfage and berthing rates collectible by PPA "upon the coming into operation of this Decree shall be those now provided under Parts 1. as it were. in midstream." In the case at bar. In passing. P. Whether the imposition of 10% and later reduced to 6% government share was proper.000. 2. Accordingly. As an elementary principle of law. It is aggravated by the fact that these unlawful rates were collected by PPA long after the port facilities of TEFASCO had been completed and functioning. Petitioner appealed for the dismissal of the ordinance. or in private wharves where no loading or unloading facilities are owned and maintained by the government. Issue: Whether or not license fee enforced by the Municipal Board is valid? 11 .D." I_E5 Physical Therapy Organization vs Municpal Board GR 10448 30 August 1957 Facts: Municipal Board of Manila enacted Ordinance 3659 regulating the operations of massage clinics in Manila penalizing and enforcing permit fee for its operation. even before they were landed and berthed at TEFASCO’s privately owned port. we rule that the applicable rate for imported or exported articles loaded or unloaded thereat is not one hundred percent (100%) but only fifty percent (50%) of the rates specified in P. No. They contend that City of Manila is without authority to regulate the operation of massagists and the operation of massage clinics and that the fee is unreasonable and unconscionable. NO. 3 and 6 of Title VII of Book II of The Tariff and Customs Code.000. 2. 06-95 dated 4 December 1995." PPA cannot unilaterally peg such rates but must rely on either The Tariff and Customs Code or the quasi-legislative issuances of the President in view of the legislative prerogative of rate-fixing. 441 (1974) amending The Tariff and Customs Code fixed wharfage dues at fixed amounts per specified quantity brought into or involving national ports or at fifty percent (50%) of the rates provided for herein in case the articles imported or exported from or transported within the Philippines are loaded or unloaded offshore. of which said services are an integral part. No.Liberalized Regulation on Private Ports Construction. It is very clear from P. YES.

Act 4136 were merely a 12 . (supra). or for the exercise of the profession of chauffeur x x x” making the intent to impose a tax more apparent. 1988. Simply put. 212 [1951]) where it was held that motor vehicle registration fees are in reality taxes from the payment of which PAL is exempt by virtue of its legislative franchise.) Such is the case of motor vehicle registration fees.” where the law could have referred to an original tax and not one in addition to the tax already imposed on the registration. however. Act 4136 does the law specifically state that the imposition is a tax.  After paying under protest. invoking the ruling in Calalang v. appellee Commissioner Romeo F. even Rep. then the exaction is properly called a tax (Umali.  Sometime in 1971. one of the real and substantial purposes. at least. Act 587 quoted in the Calalang case. L-41383. speaks of an “additional tax. imposed the said permit fee for its regulation. JR. operation or ownership of a motor vehicle as a “tax or fee.” Though nowhere in Rep. Thus. Nature: PETITION to review the decision of the Court of First Instance Ponente: GUTIERREZ. EDU and UBALDO CARBONELL No. if the exaction under Rep. Section 59(b) speaks of “taxes or fees x x x for the registration or operation or on the ownership of any motor vehicle. ROMEO F. If the purpose is primarily revenue.  Appellee Edu denied the request for refund basing his action on the decision in Republic v. PAL through counsel. The end sought to be attained in the Ordinance is to prevent the commission of immorality and the practice of prostitution in an establishment masquerading as a massage clinic where the operators thereof offer to massage or manipulate superficial parts of the bodies of customers for hygienic and aesthetic purposes. Lorenzo (97 Phil. the appellee refused to register the appellant’s motor vehicles unless the amounts imposed under Republic Act 4136 were paid. Manila Municipal Board considered the practice of hygienic and aesthetic massage not as a useful and beneficial occupation which will promote and is conducive to public morals. PAL is exempt from the payment of taxes. I_E6 PHILIPPINE AIRLINES. among them PAL to pay motor vehicle registration fees. wrote a letter dated May 19. to Commissioner Edu demanding a refund of the amounts paid.” From this judgment. It is patent therefrom that the legislators had in mind a regulatory tax as the law refers to the imposition on the registration. Act 4136. August 15. Act 5448 cited by the respondents. Issue: 1) What is the nature of motor vehicle registration fees? Are they taxes or regulatory fees? 2) May the respondent administrative agency be required to refund the amounts stated in the complaint of PAL? Ratio: 1) TAX.Decision: Decision affirmed. INC.  Despite PAL’s protestations. P100. and consequently. Philippine Rabbit Bus Lines.. PAL appealed to the Court of Appeals. Philippine Rabbit Bus Lines. vs. The conclusions become inescapable in view of Section 70(b) of Rep. Compared to permit fees required in other operations. Facts:  Under its franchise. The permit fee is made payable by the operator of a massage clinic who may not be a massagist himself. Edu. or if revenue is. Inc. or ownership of a motor vehicle under Rep. operation. issued a regulation requiring all tax exempt entities. J. 1971.00 may appear to be too large and rather unreasonable. Inc.  the trial court rendered a decision dismissing the appellant’s complaint “guided by the later ruling laid down by the Supreme Court in the case of Republic v. ed. The same provision appears as Section 59(b) in the Land Transportation Code.

769. 60057 (May 31.” It is an “allowance against the tax itself” or “a deduction from what is owed” by a taxpayer to the government. respondent elevated its claim to the CTA via Petition for Review.769. respondent filed its annual ITR for taxable year 1996 declaring therein net losses. 2) NO. were correctly imposed because the tax exemption in the franchise of PAL was repealed during the period. Moreover.00 alledgedly arising from the 20% sales discount. For said period respondent granted a total of ₱ 904. Such credit can be claimed even if the establishment operates at a loss. 1998 respondent filed with petitioner a claim for tax refund/credit of ₱ 904. an amended franchise was given to PAL in 1979. 159647. the imposition in Rep. Central Luzon Drug Corporation GR No. 16. A tax credit generally refers to an amount that is “subtracted directly from one’s total tax liability. such credit is not tantamount to an unintended benefit from the law. On April 15. On Jan.” From January to December 1996 respondent granted 20% sales discount to qualified senior citizens on their purchases of medicines pursuant to RA 7432. but rather a just compensation for the taking of private property for public use. In 1996 it operated six (6) drugstores under the business name and style “Mercury Drug. regulatory fee. However. CTA dismissed the same but on MR. CTA reversed its earlier ruling and ordered petitioner to issue a Tax Credit Certificate in favor of respondent citing CA GR SP No. Act 5448 need not be an “additional” tax. Any registration fees collected between June 27. 229 of RA 7432 deals exclusively with illegally collected or erroneously paid taxes but that there are other situations which may warrant a tax credit/refund. may still claim the 20% sales discount as a tax credit. it is clear that Sec. vs. RULING: Yes. 1968 and April 9. 1979. I_E7 Commissioner of Internal Revenue vs. despite incurring a net loss. we rule that motor vehicle registration fees as at present exacted pursuant to the Land Transportation and Traffic Code are actually taxes intended for additional revenues of government even if one fifth or less of the amount collected is set aside for the operating expenses of the agency administering the program. 2001. 13 . x x x In view of the foregoing. Unable to obtain affirmative response from petitioner. Central Luzon Drug Corp. CIR) citing that Sec. 1997. The latter may then claim the cost of the discount as a tax credit. ISSUE: W/N respondent. CA affirmed CTA decision reasoning that RA 7432 required neither a tax liability nor a payment of taxes by private establishments prior to the availment of a tax credit. April 15. 2005 Facts: Respondent is a domestic corporation engaged in the retailing of medicines and other pharmaceutical products. 4a of RA 7432 grants to senior citizens the privilege of obtaining a 20% discount on their purchase of medicine from any private establishment in the country.

formed a partnership called Roxas y Compania. while a tax liability is essential to the availment or use of any tax credit.” In other words. in their own respective behalf and as judicial co-guardians of JOSE ROXAS. whereas a tax credit reduces the tax due. J. At the conclusion of the WW2. Leido. vs. One of these is tax deduction – which is subtraction “from income for tax purposes. COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE. will be an improvident usance. Antonio Roxas. Eduardo Roxas and Jose Roxas. 1968 ANTONIO ROXAS. respondents. Since a tax credit is used to reduce directly the tax that is due. to begin with. the irrefutable fact remains that. For the establishment to choose the immediate availment of a tax credit will be premature and impracticable. Congress has granted without conditions a tax credit benefit to all covered establishments. Perez and Associates for petitioners. for the existence or grant solely of such credit. L-25043 April 26. Office of the Solicitor General for respondents. said children.R. Petition is denied. While the grant is mandatory. No. namely. a business establishment.” or an amount that is “allowed by law to reduce income prior to the application of the tax rate to compute the amount of tax which is due. Without that liability. under RA 7432. the tenants who have all been tilling the lands in Nasugbu for 14 . CTA. EDUARDO ROXAS and ROXAS Y CIA. tax deduction reduces the income subject to tax in order to arrive at the taxable income. where no tax is due. there will obviously be no tax liability against which any tax credit can be applied. the availment or use is not. On the contrary. 23 SCRA 276 (1968) G. and no other taxes are currently due from.. Nevertheless. In addition. the existence of a tax credit or its grant by law is not the same as the availment or use of such credit. BENGZON. The Tax Code is in fact replete with provisions granting or allowing tax credits. no existing obligation to the government. even though no taxes have been previously paid. J. I_F3 Roxas v. there ought to be a tax liability before the tax credit can be applied.A tax credit should be understood in relation to other tax concepts. Andrada.. Spanish subjects. There will be no reason for deducting the latter when there is. as will be presented shortly. for the losing establishment to immediately apply such credit.P. prior tax payments are not. petitioners. To manage the above-mentioned properties. However. any tax credit application will be useless. transmitted to their grandchildren by hereditary succession several properties.: Facts: Don Pedro Roxas and Dona Carmen Ayala. neither a tax liability nor a prior tax payment is needed. If a net loss is reported by. However.

the contribution to the Manila Police trust fund is an allowable deduction for said trust fund belongs to the Manila Police. In the case at bar. However. It was the bounden duty of the Government to pay the agreed compensation after it had persuaded Roxas y Cia. hence. a contribution to a government entity is deductible when used exclusively for public purposes. Roxas y Cia. intended to be used exclusively for its public functions. and the disallowance of deductions from gross income of various business expenses and contributions claimed by Roxas y Cia.000. NO. of the unreported 50% of the net profits for 1953 and 1955 derived from the sale of the Nasugbu farmlands to the tenants. allowed the farmers to buy the lands for the same price but by installment. The contributions to the Christmas funds of the Pasay City Police. Roxas y Cia. It should be borne in mind that the sale of the Nasugbu farmlands to the very farmers who tilled them for generations was not only in consonance with. a government entity. taxable only to the extent of 50%. the payment of deficiency income taxes resulting from the inclusion as income of Roxas y Cia. the Government could not comply with its duty for lack of funds. For its part. DISALLOWED DEDUCTIONS Roxas y Cia. and Baguio City Police Christmas funds. Obligingly. Pasay City Firemen. they instituted an appeal in the CTA which sustained the assessment. ordinary and necessary. 15 . it would nevertheless make the vendor Roxas y Cia.00 as loan. Hence. subdivided its Nasugbu farmlands and sold them to the farmers on installment. cannot be considered a real estate dealer for the sale in question. II. a real estate dealer during the 10-year amortization period.048. Issue: I. Are the deductions for business expenses and contributions deductible? Ruling: I. in consonance with the constitutional mandate to acquire big landed estates and apportion them among landless tenant- farmers. It turned out however that the Government did not have funds to cover the purchase price. pursuant to section 34 of the Tax Code. Roxas y Cia.000 for survey and distribution expenses.500 hectares to the Government for distribution to actual occupants for a price of P2. the municipal council of Nasugbu passed a resolution expressing the people’s gratitude. to sell its haciendas. and the Roxas brothers. and to subsequently subdivide them among the farmers at very reasonable terms and prices. Conferences were held with the farmers in the early part of 1948 and finally the Roxas brothers agree to sell 13. 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. The Roxas brothers protested the assessment but inasmuch as said protest was denied. persuaded the Roxas brothers to part with their landholdings. Philippines Herald's fund for Manila's neediest families and Our Lady of Fatima chapel at Far Eastern University. the disallowance must be sustained. In fine.generations expressed their desire to purchase from Roxas y Cia.079. Collateral for such loan were the lands proposed to be sold to the farmers. the parcels which they actually occupied. Is the gain derived from the sale of the Nasugbu farm lands an ordinary gain. On the other hand. The CIR demanded from Roxas y Cia. For the reason that Roxas y CIa. and incurred in connection with his business.47 plus P300.00 for tickets to a banquet given in honor of Sergio Osmena and P28. the amount of P1. and the gain derived from the sale thereof is capital gain. 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. the land sold to the farmers are capital assets. The deduction were claimed as representation expenses. For this reason.500. The findings of the Court of Tax Appeals must therefore be sustained (disallowed deduction). Manila Police Trust Fund. hence 100% taxable? And is Roxas y Cia liable for the payment of deficiency income for the sale of Nasugbu farmlands? II. 100% of the profits derived there from was taxed.00 for San Miguel beer given as gifts to various persons. Under the arrangement. but more in obedience to the request and pursuant to the policy of our Government to allocate lands to the landless. 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. the Government. and contracted with the Rehabilitation Finance Corporation to pay its loan from the proceeds of the yearly amortizations paid by the farmers. the Commissioner considered the partnership as engaged in the business of real estate. For this magnanimous act. Hence. the evidence does not show such link between the expenses and the business of Roxas y Cia. The petitioners also claim deductions for contributions to the Pasay City Police. and so a special arrangement was made for the Rehabilitation Finance Corporation to advance to Roxas y Cia. The proposition of the CIR cannot be favorably accepted in this isolated transaction with its peculiar circumstances inspite of the fact that there were hundreds of vendees. Although they paid for their respective holdings in installment for the period of 10 years. deducted from its gross income the amount of P40. shouldered the Government’s burden. Under Section 39(h). this appeal.

raise the rate of value- added tax to 12%. influence or create the conditions provided by law to bring about the conditions precedent. et al vs Exec. Sec. Ermita Facts: On May 24.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.A. 2005. equally and uniformly. the chapel in question has not been shown to belong to the Catholic Church or any religious organization. II. the lower court found that it belongs to the Far Eastern University. the Court issued a TRO enjoining government from implementing the law in response to a slew of petitions for certiorari and prohibition questioning the constitutionality of the new law. I_H1 Abakada Guro Party List. They argue that VAT is a tax levied on the sale or exchange of goods and services which can’t be included within the purview of tariffs under the exemption delegation since this refers to customs duties. 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. No. Located within the premises of the university. It must be exercised fairly. 2006. upon the recommendation of the Secretary of Finance. 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. Article VI Consti. they allege that no guiding standards are made by law as to how the Secretary of Finance will make the recommendation. lest the tax collector kill the “hen that lays the golden egg”. The power of taxation is sometimes called also the power to destroy. tolls or tribute payable upon merchandise to the government and usually imposed on imported/exported goods. Before the law took effect on July 1. 2005. or (ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1½%)” Petitioners allege that the grant of stand-by authority to the President to increase the VAT rate is an abdication by Congress of its exclusive power to tax because such delegation is not covered by Section 28 (2). 5 and 6: “That the President. after any of the following conditions has been satisfied: (i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%). 9337 is the common proviso in Sections 4. shall. On the other hand. Therefore it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. 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 President signed into law Republic Act 9337 or the VAT Reform Act. Sale of property by landowners to tenants under government policy to allocate lands to the landless subject not subject to real estate dealer’s tax. The disallowance should be sustained. for all the funds they raised were for Manila's neediest families. Moreover. 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 (it should be non-profit institution. The challenged section of R. Doctrines: I. 16 . effective January 1. They also said that the President has powers to cause.

constitutes undue delegation of legislative power? NO Held: The powers which Congress is prohibited from delegating are those which are strictly. Highlighting the absence of discretion is the fact that the word SHALL is used in the common proviso.Issue: Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate. The use of the word SHALL connotes a mandatory order. the VAT collection as a percentage of GDP of the previous year exceeds 2 4/5 % or the national government deficit as a percentage of GDP of the previous year exceeds one and 1½%. the Secretary of Finance. legislative. which cannot be evaded by the President. It is the nature of the power and not the liability of its use or the manner of its exercise which determines the validity of its delegation.complete as to the time when it shall take effect and as to whom it shall be applicable. It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the control of the executive. No discretion would be exercised by the President. Purely legislative power which can never be delegated is the authority to make a complete law. especially on account of the recommendatory power granted to the Secretary of Finance. If either of these two instances has occurred. contingent upon a specified fact or condition.whether by December 31. A sufficient standard is one which defines legislative policy. The exceptions are: (a) delegation of tariff powers to President under Constitution (b) delegation of emergency powers to President under Constitution (c) delegation to the people at large (d) delegation to local governments (e) delegation to administrative bodies For the delegation to be valid. 2006. 17 . by legislative mandate. marks its limits. and to determine the expediency of its enactment. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion. This is a duty. or inherently and exclusively. In this case. must submit such information to the President. It is a clear directive to impose the 12% VAT rate when the specified conditions are present. The legislature has made the operation of the 12% rate effective January 1. maps out its boundaries and specifies the public agency to apply it. 2005. Thus. 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. it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the conditions specified by Congress. Congress just granted the Secretary of Finance the authority to ascertain the existence of a fact--. it must be complete and it must fix a standard.

Without EO 73. concur or amend I_H2 Chavez v Ongpin GR No 76778. Congress does not abdicate its functions or unduly delegate power when it describes what job must be done. in our complex economy that is frequently the only way in which the legislative process can go forward. President Corazon Aquino issued EO 73 stating that beginning January 1. Congress did not delegate the power to tax but the mere implementation of the law. and what is the scope of his authority. considering that he possesses all the facilities to gather data and information and has a much broader perspective to properly evaluate them. Fiscal adequacy. requires that sources of revenue must be adequate to meet government expenditures and their variations. 1990 FACTS: Section 21 of Presidential Decree 464 provides that every 5 years starting calendar year 1978. 1987. a taxpayer and landowner. It is not the law but the bill that should originate from the House of Representatives 2.In making his recommendation to the President on the existence of either of the two conditions. violates co-equality between two houses 3. Not allowing senate to amend. to continue collecting real property taxes based on valuations arrived at several years ago. I_K-c8 18 . There is no undue delegation of legislative power but only of the discretion as to the execution of a law. On November 25. Certainly. This is constitutionally permissible. Senate can propose. the Secretary of Finance is not acting as the alter ego of the President or even her subordinate. The general revision was completed in 1984. He is acting as the agent of the legislative department. June 6. Francisco Chavez. His function is to gather and collate statistical data and other pertinent information and verify if any of the two conditions laid out by Congress is present. there shall be a provincial or city general revision of real property assessments. in disregard of the increases in the value of real properties that have occurred since then is not in consonance with a sound tax system. who must do it. 3 important keys ( in relation to Tolentino case) 1. the 1984 assessments shall be the basis of real property taxes. questioned the constitutionality of EO 74. He alleges that it will bring unreasonable increase in real property taxes. to determine and declare the event upon which its expressed will is to take effect. ISSUE: Is EO 73 constitutional? RULING: Yes. which is one of the characteristics of a sound tax system. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented. the basis for collection of real property taxes will still be the 1978 revision of property values. 1986.

The Sol-Gen argued that the issue has become moot and academic by reason of the lifting of PP 1017 by virtue of the declaration of PP 1021. another known anti-GMA news agency (Malaya) was raided and seized. 5 (GO 5). take care power and take over power. His arrest was however grounded on a warrant of arrest issued way back in 1985 for his actions against Marcos. David and some opposition Congressmen averred that PP1017 is unconstitutional for it has no factual basis and it cannot be validly declared by the president for such power is reposed in Congress. the Daily Tribune. 19 . HELD: PP 1017 and its implementing GO are partly constitutional and partly unconstitutional. Notwithstanding the cancellation of their rally permit. His supporters cannot visit him in jail because of the current imposition of PP 1017 and GO 5. the SC can take cognition of the case at bar. 2010 Share this. The SC ruled in the following way. was raided by the CIDG and they seized and confiscated anti-GMA articles and write ups. Olivares-Cacho also averred that the emergency contemplated in the Constitution are those of natural calamities and that such is an overbreadth. The SC ruled that PP 1017 is constitutional in part and at the same time some provisions of which are unconstitutional. In March. ISSUE: Whether or not PP 1017 and GO 5 is constitutional. GMA cancelled all plans to celebrate EDSA I and at the same time revoked all permits issued for rallies and other public organization/meeting.. On the same day.Randolf David vs President Gloria Macapagal-Arroyo November 7. The issue cannot be considered as moot and academic by reason of the lifting of the questioned PP. then president Gloria Macapagal-Arroyo (GMA) issued Presidential Proclamation 1017 (PP1017) and is to be implemented by General Order No. Pursuant to such PP. Kilusang Mayo Uno (KMU) head Randolf David proceeded to rally which led to his arrest. Beltran of Anakpawis. It is still in fact operative because there are parties still affected due to the alleged violation of the said PP. Petitioners claim that PP 1017 is an overbreadth because it encroaches upon protected and unprotected rights. Hence. due to the escape of some Magdalo members and the discovery of a plan (Oplan Hackle I) to assassinate the president. GMA issued PP 1021 which declared that the state of national emergency ceased to exist. was also arrested. The said law was aimed to suppress lawlessness and the connivance of extremists to bring down the government. which Cacho-Olivares is the editor. Also such declaration is actually a declaration of martial law. Later still.. Later that day. 4 0 0 0 ADVERTISEMENTS 489 SCRA 160 – Political Law – The Executive Branch – Presidential Proclamation 1017 – Take Care Clause – Take Over Power – Calling Out Power Bill of Rights – Freedom of Speech – Overbreadth In February 2006. The Sol-Gen averred that PP 1017 is within the president’s calling out power.

it stressed that ‘this does not prevent an examination of whether such power was exercised within permissible constitutional limits or whether it was exercised in a manner constituting grave abuse of discretion. The 7 consolidated cases at bar are not primarily ‘freedom of speech’ cases. The only criterion for the exercise of the calling-out power is that ‘whenever it becomes necessary. with supporting reports forming part of the records.’ the President may call the armed forces ‘to prevent or suppress lawless violence. Article 6 categorically states that ‘[t]he legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives. if entertained at all. The SC considered the President’s ‘calling-out’ power as a discretionary power solely vested in his wisdom. From the most to the least benign. The president can only “take care” of the carrying out of laws but cannot create or enact laws. GMA declared PP 1017.’ And such criterion has been met. the incontrovertible fact remains that PP 1017 pertains to a spectrum of conduct. GMA was not expected to simply fold her arms and do nothing to prevent or suppress what she believed was lawless violence. orders and regulations promulgated by me personally or upon my direction. lawless violence. Petitioners presented nothing to refute such events.’ To be sure. Mentioned are the escape of the Magdalo Group. by their terms. Indeed.’ Here. the overbreadth doctrine is not intended for testing the validity of a law that ‘reflects legitimate state interest in maintaining comprehensive control over harmful. which is manifestly subject to state regulation. However. Sec 1. Thus. They assail the clause ‘to enforce obedience to all the laws and to all decrees.) the president declared PP 1017. David et al averred that PP 1017 however violated Sec 1.Resolution by the SC on the Factual Basis of its declaration The petitioners were not able to prove that GMA has no factual basis in issuing PP 1017 and GO 5. these are: the calling-out power.’ Legislative power is peculiarly within the province of the Legislature. Art 6 of the Constitution for it arrogated legislative power to the President. insurrection and rebellion are considered ‘harmful’ and ‘constitutionally unprotected conduct. and the reproving statements from the communist leaders. particularly in the Philippine Marines. the defections in the military. Art 7 of the Constitution (He shall ensure that the laws be faithfully executed. invasion or rebellion. seek to regulate only ‘spoken words’ and again. invasion or rebellion. a ‘sequence’ of graduated powers. the overbreadth doctrine is an analytical tool developed for testing ‘on their faces’ statutes in free speech cases.’ Undoubtedly. the Court is convinced that the President was justified in issuing PP 1017 calling for military aid. A reading of the Solicitor General’s Consolidated Comment and Memorandum shows a detailed narration of the events leading to the issuance of PP 1017.’ Thus. There was also the Minutes of the Intelligence Report and Security Group of the Philippine Army showing the growing alliance between the NPA and the military. that ‘overbreadth claims. Resolution by the SC on the Calling Out Power Doctrine On the basis of Sec 17. Art 7 of the Constitution. The SC ruled that the assailed PP 1017 is unconstitutional insofar as it grants GMA the authority to promulgate ‘decrees. 20 . and the power to declare Martial Law. Also. a plain reading of PP 1017 shows that it is not primarily directed to speech or even speech-related conduct. neither Martial Law nor a state of rebellion nor a state of emergency can justify GMA’[s exercise of legislative power by issuing decrees. as Commander-in-Chief.’ The SC noted that such provision is similar to the power that granted former President Marcos legislative powers (as provided in PP 1081). their audacious threat of the Magdalo D-Day. constitutionally unprotected conduct. Resolution by the SC on the Overbreadth Theory First and foremost. claims of facial overbreadth are entertained in cases involving statutes which. absent any contrary allegations. Moreover. The SC ruled that GMA has validly declared PP 1017 for the Constitution grants the President. not free speech. the exercise of such power or duty must not stifle liberty. It is actually a call upon the AFP to prevent or suppress all forms of lawless violence. have been curtailed when invoked against ordinary criminal laws that are sought to be applied to protected conduct. judging the seriousness of the incidents. Such power is vested in Congress. the power to suspend the privilege of the writ of habeas corpus. Resolution by the SC on the Take Care Doctrine Pursuant to the 2nd sentence of Sec 17.

occupation. who deposited the amount of P40. et al. The construction of the stalls which Jumamil sought to stop through the preliminary injunction in the RTC was nevertheless finished. The Regional Trial Court dismissed Jumamil’s petition for declaratory relief with prayer for preliminary injunction and writ of restraining order. He questioned the constitutionality of Municipal Resolution 7.00. series of 1989 (Resolution 49). Café.000. as distinguished from mere interest in the question involved. Cafe and the members of the Sangguniang Bayan of Panabo. (2) The delegation must be for a limited period only. [GR 144570.000 each.515. It calls for more than just a generalized grievance. and with whom also the mayor had a prior contract to award the would be constructed stalls to all private respondents. however. Jumamil filed before the Regional Trial Court (RTC) of Panabo. The SC made a distinction. I_k-c9 Jumamil vs.000. or a mere incidental interest.Resolution by the SC on the Take Over Power Doctrine The president cannot validly order the taking over of private corporations or institutions such as the Daily Tribune without any authority from Congress. Some of the parties were close friends and/or relatives of Cafe. (3) The delegation must be subject to such restrictions as the Congress may prescribe. 7 and 49 were unconstitutional because they were passed for the business. provided for an initial appropriation of P765. The term “interest” means a material interest. the word emergency contemplated in the constitution is not limited to natural calamities but rather it also includes rebellion. (4) The emergency powers must be exercised to carry out a national policy declared by Congress. Subsequently. denominated as Ordinance 10. enjoyment and benefit of private respondents. It is a valid exercise of the calling out power of the president by the president. Thus. Series of 1989 (Resolution 7).000 to each of the 57 private respondents. rendering the prayer therefor moot and academic. the petition was amended due to the passage of Resolution 49.000 for the construction of stalls around a proposed terminal fronting the Panabo Public Market which was destroyed by fire. that resolutions and ordinances did not provide for any notice of publication that the special privilege and unwarranted benefits conferred on the private respondents may be availed of by anybody who can deposit the amount of P40. appropriating a further amount of P1. The leases of the stalls were then awarded by public raffle which. On appeal. Jumamil vs. was limited to those who had deposited P40. Prior to the passage of these resolutions.000 for the construction of additional stalls in the same public market. some of which were close friends and/or relative of the mayor and the sanggunian. et al. et al. 21 September 2005] Third Division. Resolution by the SC on the Issue that PP 1017 is a Martial Law Declaration The SC ruled that PP 1017 is not a Martial Law declaration and is not tantamount to it. Resolution 7. Mayor Cafe had already entered into contracts with those who advanced and deposited (with the municipal treasurer) from their personal funds the sum of P40. Café. Issue [1]: Whether Jumamil had the legal standing to bring the petition for declaratory relief Held [1]: Legal standing or locus standi is a party’s personal and substantial interest in a case such that he has sustained or will sustain direct injury as a result of the governmental act being challenged.000 each. Jumamil alleges that Resolution Nos. and on 24 July 2000 (CA GR CV 35082). Vivencio V. the petition was amended anew to include the 57 awardees of the stalls as private respondents. Davao del Norte a petition for declaratory relief with prayer for preliminary injunction and writ of restraining order against Mayor Jose J. the Court of Appeals affirmed the decision of the trial court. an interest in issue affected by the decree.000. and ordered Jumamil to pay attorney’s fees in the amount of P1. and that nor there were any prior notice or publication pertaining to contracts entered into by public and private respondents for the construction of stalls to be awarded to private respondents that the same can be availed of by anybody willing to deposit P40. Jumamil filed the petition for review on certiorari. The authority from Congress must be based on the following: (1) There must be a war or other emergency.00 for each stall. Davao del Norte. On the other hand. Corona (J): 4 concur Facts: In 1989. Unless a person’s constitutional rights are adversely 21 . enacting Appropriation Ordinance 111. the president can declare the state of national emergency but her exercise of emergency powers does not come automatically after it for such exercise needs authority from Congress.

Mayor Cafe and private respondents had already entered into lease contracts for the construction and award of the market stalls. Jumamil asserted that “there (was) no publication or invitation to the public that this contract (was) available to all who (were) interested to own a stall and (were) willing to deposit P40. and Plaridel C. there was the time-honored presumption of regularity of official duty. former lawmaker. Parties suing as taxpayers must specifically prove sufficient interest in preventing the illegal expenditure of money raised by taxation. even if the Court disregards Jumamil’s lack of legal standing. Garcia likewise claiming that he filed the suit as a taxpayer. occupation. mainly seek to nullify a DPWH resolution which recommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of the civil works known as Contract Package No. however. however. the Supreme Court may brush aside technicalities of procedure and take cognizance of the suit. Held [2]: Objections to a taxpayer's suit for lack of sufficient personality.000.” Such claim was obviously an afterthought. even prior to their enactment. Jumamil alleged that these ordinances were “passed for the business. I_K-C10 ABAYA vs. I (CP I). It was only in the “Remark to Comment” he filed in the Supreme Court did he first assert that “he (was) willing to engage in business and (was) interested to occupy a market stall. A taxpayer need not be a party to the contract to challenge its validity. But." FACTS: The petitioners.000 each with the municipal treasurer. to determine whether or not the other branches of the Government have kept themselves within the limits of the Constitution and the laws and that they have not abused the discretion given to them. His unsubstantiated allegation that the public was not notified did not suffice. February 14.280. standing or interest are procedural matters.” Jumamil failed to prove the subject ordinances and agreements to be discriminatory. He was questioning the official acts of the the mayor and the members of the Sanggunian in passing the ordinances and entering into the lease contracts with private respondents. Davao del Norte and not in his personal capacity. The expenditure of public funds by an officer of the State for the purpose of executing an unconstitutional act constitutes a misapplication of such funds. Jumamil brought the petition in his capacity as taxpayer of the Municipality of Panabo. counter that the “public respondents’ act of entering into this agreement was authorized by the Sangguniang Bayan of Panabo per Resolution 180 dated 10 October 1988” and that “all the people interested were invited to participate in investing their savings. and a Filipino citizen. a decision had already been made to award the market stalls to the private respondents who deposited P40. and in keeping with the Court's duty. Feliciano are instructive: (1) the character of the funds or other assets involved in the case. absent any showing to the contrary. specially explicated in the 1987 Constitution. 167919. and a Filipino citizen. the award of the stalls was necessarily limited only to those who advanced their personal funds for their construction.000 each and who were either friends or relatives of the mayor or members of the Sanggunian. he should have clearly established that such ordinances operated unfairly against those who were not notified and who were thus not given the opportunity to make their deposits. Furthermore. EBDANE. he has no legal standing. Jumamil did not seasonably allege his interest in preventing the illegal expenditure of public funds or the specific injury to him as a result of the enforcement of the questioned resolutions and contracts. which amounts were made available to the municipality during the construction of the stalls. JR. The deposits. 515 SCRA 720 GR No. 22 . former military officer. were needed to ensure the speedy completion of the stalls after the public market was gutted by a series of fires. They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation pursuant to the said resolution. Abaya who claims that he filed the instant petition as a taxpayer. and (3) the lack of any other party with a more direct and specific interest in raising the questions being raised. The subject resolutions/ordinances appropriated a total of P2. Considering that he was asking the Court to nullify the acts of the local political department of Panabo. There being no doctrinal definition of transcendental importance.000 for the construction of the public market stalls. Davao del Norte. Thus.affected by the statute or ordinance. Private respondents admitted they deposited P40. Issue [2]: Whether the rule on locus standi should be relaxed. the following determinants formulated by former Supreme Court Justice Florentino P. Considering the importance to the public of a suit assailing the constitutionality of a tax law. Jumamil alleged that these ordinances were discriminatory because. enjoyment and benefit of private respondents” (that is. (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government. allegedly for the private benefit of respondents) because even before they were passed. The resolutions being assailed were appropriations ordinances. Plaridel M.” Respondents. this petition must still fail. 2007 "A taxpayer need not be a party to the contract to challenge its validity.

Limitations on the Power of Taxation 16. Consequently. Briefly stated. or exemption infringe no constitutional limitation. or that there is a wastage of public funds through the enforcement of an invalid or unconstitutional law.  FPA remits its collection to Far East Bank and Trust Company who applies to the payment of corporate debts of Planters Products Inc. private and public suit. Locus standi. (PPI)  After the Edsa Revolution. easier to file public suit. under the constitutional provision against taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another purpose as appropriation for state funds can be made for other than a public purpose. 23 . including those cases involving taxpayers. 166006 March 14. Lessons Applicable: Bet. More particularly. for the imposition of a capital recovery component (CRC) on the domestic sale of all grades of fertilizers which resulted in having Fertiphil paying P 10/bag sold to the Fertilizer and Perticide Authority (FPA). Apply real party in interest test for private suit and direct injury test for public suit. Pascual v.R. Araneta If objectives and methods are alike constitutionally valid. Secretary of Public Works and Communications The right of the legislature to appropriate funds is correlative with its right to tax. unreaonable oppressive. The prevailing doctrine in taxpayer’s suits is to allow taxpayers to question contracts entered into by the national government or government. however. G.owned or controlled corporations allegedly in contravention of law.. issued LOI No. 1465 which provided. 2008 REYES. Taxation may be made with the implement of the state’s police power. I_K-c13 Product v. Fertiphil demanded a refund but PPI refused. Validity test varies depending on which inherent power Laws Applicable: FACTS:  President Ferdinand Marcos. no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. invalid and unlawful resulting to denial of due process of law. R. Lutz v. FPA voluntarily stopped the imposition of the P10 levy.ISSUE: Has petitioners the legal standing to file the instant case against the government? HELD: Petitioners. as taxpayers. exercising his legislative powers. Inequalities which result from a singling out of one particular class for taxation.T. it is a party’s personal and substantial interest in a case such that he has sustained or will sustain direct injury as a result of the governmental act being challenged. possess locus standi to file the present suit. Upon return of democracy. Fertiphil Corp. taxpayers or voters who actually sue in the public interest. I_K-c12 40. locus standi is a right of appearance in a court of justice on a given question. No. I_K-C11 III. Significantly. 1465 is unjust. suits are not brought by parties who have been personally injured by the operation of a law or any other government act but by concerned citizens. the Court. J. A taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed. Fertiphil filed a complaint for collection and damages against FPA and PPI with the RTC on the ground that LOI No. has invariably adopted a liberal stance on locus standi. in a catena of cases. or that public money is being deflected to any improper purpose. among others. a taxpayer need not be a party to the contract to challenge its validity. is merely a matter of procedure and it has been recognized that in some cases.

is circumscribed by inherent and constitutional limitations. 3542 which allegedly repeals or amends RA No. Being a mere procedural technicality. W/N LOI No. it has also been held that locus standi may be waived in the public interest such as cases of transcendental importance or with far-reaching implications whether private or public suit. The main purpose of police power is the regulation of a behavior or conduct. ISSUE: 1. it is for purpose of revenue. prohibits the importation of rice and corn "by the Rice and Corn Administration or any other government agency. L-21897 October 22 1963 [Executive Agreements] FACTS: Exec. Public purpose does NOT only pertain to those purpose which are traditionally viewed as essentially governmental function such as building roads and delivery of basic services. The lawful subjects and lawful means tests are used to determine the validity of a law enacted under the police power. 2207. The power of taxation. it bore the ultimate burden of paying the levy which made its products more expensive and harm its business. Police power and the power of taxation are inherent powers of the state but distinct and have different tests for validity. low-cost housing and urban or agrarian reform. and by or on behalf of the Government of the Philippines. Yes. But it is a robbery for the State to tax the citizen and use the funds generation for a private purpose. They contended that the government has already constitute valid executive agreements with Vietnam and Burma. As a seller. the latter should prevail and the conflict be resolved under the American jurisprudence. 1465 is an invalid exercise of the power of taxation rather the police power Held: 1. In private suits. No. They add that after enjoining the Rice and Corn administration and any other government agency from importing rice and corn. Secretary Hechanova authorised the importation of foreign rice to be purchased from private sources. Yes. Police power is the power of the state to enact the legislation that may interfere with personal liberty on property in order to promote general welfare. on the other hand. In this case. In public suits. Gonzales filed a petition opposing the said implementation because RA No. 24 . 10 of RA 3542 indicates that only private parties may import rice under its provisions. While. locus standi requires a litigant to be a "real party in interest" or party who stands to be benefited or injured by the judgment in the suit. Thus. I_K-c15 GONZALES VS HECHANOVA Posted by kaye lee on 12:36 PM G. W/N Fertiphil has locus standi 2. while taxation is revenue generation." Respondents alleged that the importation permitted in RA 2207 is to be authorized by the President of the Philippines. Fertiphil has locus standi. the power of taxation is the power to levy taxes as to be used for public purpose.  RTC and CA favored Fertiphil holding that it is an exercise of the power of taxation ad is as such because it is NOT for public purpose as PPI is a private corporation. but also includes those purposes designed to promote social justice. FPA answered that it is a valid exercise of the police power of the state in ensuring the stability of the fertilizing industry in the country and that Fertiphil did NOT sustain damages since the burden imposed fell on the ultimate consumers. 3. that in case of conflict between RA 2207 and 3542. S. public money may now be used for the relocation of illegal settlers.R. It is also of paramount public importance since it involves the constitutionality of a tax law and use of taxes for public purpose. 2. there is the right of the ordinary citizen to petition the courts to be freed from unlawful government intrusion and illegal official action subject to the direct injury test or where there must be personal and substantial interest in the case such that he has sustained or will sustain direct injury as a result.

the main function of the Executive is to enforce laws enacted by Congress. 2207 and 3452. except in the exercise of his veto power. by executive agreement. Under the Constitution. Even assuming that said contracts may properly considered as executive agreements. He may not defeat legislative enactments that have acquired the status of law. by indirectly repealing the same through an executive agreement providing for the performance of the very act prohibited by said laws.ISSUE: W/N the executive agreements may be validated in our courts. He may not interfere in the performance of the legislative powers of the latter. The Court is not satisfied that the status of said tracts as alleged executive agreements has been sufficiently established. RULING: No. he may not. under the American constitutional system enter into executive agreements without previous legislative authority. as well as null and void. said agreements being inconsistent with the provisions of Republic Acts Nos. I_K-c16 25 . Although the President may. enter into a transaction which is prohibited by statutes enacted prior thereto. from a constitutional viewpoint. the same are unlawful.