G.R. No.
191667, April 17, 2013 (1) Taxpayer is allowed to sue if: (1) public funds derived from taxation are disbursed
Land Bank of the Philippines
vs Eduardo M. Cacayuran
Ponente: Perlas-Bernabe
Facts:
This is a petition for Review on Certiorari of the CA affirming the RTC in declaring the
nullity of the loan agreements entered into by Land Bank and the Municipality of
Agoo, La Union.
Agoo SB passed a certain resolution to implement a redevelopment plan to redevelop
the Agoo Public Plaza. To finance the plan, SB passed a resolution authorizing then
Maor Eriguel to obtain a loan from Land Bank, incidental to it, mortgaged a portion
of the plaza as collateral. It has also authorized the assignment of a portion if the IRA
and monthly income in favor of Land Bank to secure the payment. 10 Kiosks were
made at the plaza, then were rented out. Later, a commercial center on the Plaza lot
was built too, with a loan from Land Bank, posting the same securities as the first
loan.
The commercial loan was opposed by some residents of the municipality embodied
in a manifesto launched through a signature campaign by the residents and
Cacayuran. Invoking his right as taxpayer, Cacayuran filed a complaint against the
officials and Land bank assailing the validity of the loans on the ground that the Plaza
lot used as collateral is property of public dominion and therefore beyond the
commerce of man.
RTC Ruling: declared the nullity of the subject loans, saying that the oans were passed
in a highly irregular manner, as such, the Municipality is not bound by the same.
Aggrieved, Land Bank filed notice of appeal.
Ruling of CA: affirmed with modification the RTC's ruling, excluding the Vice Mayor
from any personal liability arising from the subject loans. Cacayuran has locus standi
as resident and taxpayer in the municipality and the issue involves public interest.
The plaza cannot be a valid collateral to a loans for it is of public dominion.
Land Bank filed this instant petition.
Issues:
(1) whether Cacayuran has locus standi
SC Ruling:
by a political subdivision or instrumentality and in doing so, a law is violated or some
irregularity is committed; and (2) the petitioner is directly affected by the alleged act.
In the case, the proceeds from the Subject Loans had already been converted into
public funds by the Municipality’s receipt thereof. Funds coming from private sources
become impressed with the characteristics of public funds when they are under
official custody. Public plaza belongs to public dominion, Cacayuran need not to be a
privy to the loans, as long as taxes are involved, people have a right to question the
contracts entered into by the government.
Diaz vs. Secretary of Finance (2011)
Facts:
Petitioners Renato V. Diaz and Aurora Ma. F. Timbol (petitioners) filed this petition
for declaratory relief assailing the validity of the impending imposition of
value-added tax (VAT) by the Bureau of Internal Revenue (BIR) on
the collections of tollway operators. Court treated the case as one
of prohibition.
Petitioners hold the view that Congress did not, when it enacted the NIRC, intend to
include toll fees within the meaning of "sale of services" that are subject to VAT; that
a toll fee is a "user's tax," not asale of services; that to impose VAT on toll
fees would amount to a tax on public service; and that,since VAT was never
factored into the formula for computing toll fees, its imposition would violate thenon-
impairment clause of the constitution.
The government avers that the NIRC imposes VAT on all kinds of services
of franchise grantees,including tollway operations; that the Court should seek
the meaning and intent of the law from the words used in the statute; and that the
imposition of VAT on tollway operations has been the subjectas early as 2003
of several BIR rulings and circulars.
The government also argues that petitioners have no right to invoke the non-
impairment of contractsclause since they clearly
have no personal interest in existing toll
operating agreements (TOAs) between the government and tollway
operators. At any rate, the non-impairment clause cannot limitthe State's sovereign taxing
power which is generally read into contracts.
Issue:May toll fees collected by tollway operators be subjected to VAT (Are tollway
operations a franchiseand/or a service that is subject to VAT)?
Ruling: When a tollway operator takes a toll fee from a motorist, the fee is in effect for
the latter's use of thetollway facilities over which the operator enjoys private
proprietary rights that its contract and the law recognize. In this sense, the tollway
operator is no different from the service providers under Section108 who allow
others to use their properties or facilities for a fee.
Tollway operators are franchise grantees and they do not belong to exceptions that
Section 119 sparesfrom the payment of VAT. The word "franchise" broadly covers
government grants of a special rightto do an act or series of acts of public concern.
Tollway operators are, owing to the nature and objectof their business, "franchise
grantees." The construction, operation, and maintenance of toll facilitieson public
improvements are activities of public consequence that necessarily require a special
grant of authority from the state.
A tax is imposed under the taxing power of the government principally
for the purpose of raisingrevenues to fund public expenditures. Toll
fees, on the other hand, are collected by private tollway operators
as reimbursement for the costs and expenses incurred in the construction,
maintenance andoperation of the tollways, as well as to assure them a reasonable
margin of income. Although toll feesare charged for the use of public facilities,
therefore, they are not government exactions that can bep r o p e r l y t r e a t e d
as a tax. Taxes may be imposed only by the government under
i t s s o v e r e i g n authority, toll fees may be demanded by either the government or
private individuals or entities, as anattribute of ownership.
ANGELES UNIVERSITY FOUNDATION vs. CITY OF ANGELES et. al
G.R. No. 189999, June 27, 2012
Facts:
1. Petitioner is an educational institution and was converted into a non-stock, non-
profit education foundation under the provisions of R.A. 6055
2. Sometime in August 2005, petitioner filed with the Office of the City Building
Official an application for a building permit for the construction of an 11-storey
building
3. Said office issued a Building Permit Fee Assessment in the amount of
P126,839.20 and P238,741.64 as Locational Clearance Fee.
4. Petitioner claimed that it is exempt from the payment of the building permit and
locational clearance fees, citing legal opinions rendered by the DOJ.
5. Petitioner also reminded the respondents that they have previously issued
building permits acknowledging such exemption from payment of building
permit fees on the construction of petitioner’s 4-storey AUF Information
Technology Center building
6. Petitioner stresses that the tax exemption granted to educational stock
corporations which have converted into non-profit foundations was broadened
to include any other charges imposed by the Government as one of the
incentives for such conversion.
Issues:
1. Whether petitioner is exempt from the payment of building permit and related
fees imposed under the National Building Code; and
2. Whether the parcel of land owned by petitioner which has been assessed for real
property tax is likewise exempt.
Ruling:
R.A. No. 6055 granted tax exemptions to educational institutions like petitioner
which converted to non-stock, non-profit educational foundations.
On February 19, 1977, P.D 1096 was issued adopting the National Building Code of
the Philippines. The said Code requires every person, firm or corporation, including
any agency or instrumentality of the government to obtain a building permit for any
construction, alteration or repair of any building or structure.
Exempted from the payment of building permit fees are:
 Public buildings and
 Traditional indigenous family dwellings.
Not being expressly included in the enumeration of structures to which the building
permit fees do not apply, petitioner’s claim for exemption rests solely on its
interpretation of the term “other charges imposed by the National Government” in
the tax exemption clause of R.A. No. 6055.
A “charge” is broadly defined as the “price of, or rate for, something,” while the word
“fee” pertains to a “charge fixed by law for services of public officers or for use of a
privilege under control of government.” As used in the LGC, charges refers to
pecuniary liability, as rents or fees against persons or property, while fee means a
charge fixed by law or ordinance for the regulation or inspection of a business or
activity.
Note that the “other charges” mentioned in Sec. 8 of R.A. No. 6055 is qualified by the
words “imposed by the Government on all property used exclusively for the
educational activities of the foundation.”
Building permit fees are not impositions on property but on the activity subject of Concededly, in the case of building permit fees imposed by the National Government
government regulation. While it may be argued that the fees relate to particular under the National Building Code, revenue is incidentally generated for the benefit
properties, i.e., buildings and structures, they are actually imposed on certain of local government units.
activities the owner may conduct either to build such structures or to repair, alter,
renovate or demolish the same.
Section 208: the Building Official is hereby authorized to retain not more than twenty
percent of his collection for the operating expenses of his office.
That a building permit fee is a regulatory imposition.
The remaining eighty percent shall be deposited with the provincial, city or municipal
Thus, ancillary permits such as electrical permit, sanitary permit and zoning clearance treasurer and shall accrue to the General Fund of the province, city or municipality
must also be secured and the corresponding fees paid before a building permit may concerned.
be issued.
Now, on petitioner’s claim that it is exempted from the payment of real property tax
Since building permit fees are not charges on property, they are not impositions from assessed against its real property presently occupied by informal settlers.
which petitioner is exempt.
Petitioner failed to discharge its burden to prove that its real property is actually,
As to petitioner’s argument that the building permit fees collected by respondents directly and exclusively used for educational purposes. While there is no allegation
are in reality taxes because the primary purpose is to raise revenues for the local or proof that petitioner leases the land to its present occupants, still there is no
government unit, the same does not hold water. compliance with the constitutional and statutory requirement that said real property
is actually, directly and exclusively used for educational purposes. The respondents
correctly assessed the land for real property taxes for the taxable period during which
A charge of a fixed sum which bears no relation at all to the cost of inspection and
the land is not being devoted solely to petitioner’s educational activities.
regulation may be held to be a tax rather than an exercise of the police power. In this
case, the Secretary of Public Works and Highways who is mandated to prescribe and
fix the amount of fees and other charges that the Building Official shall collect in
connection with the performance of regulatory functions, has promulgated and
issued the Implementing Rules and Regulations which provide for the bases of
assessment of such fees

Petitioner failed to demonstrate that the bases of assessment were arbitrarily

determined or unrelated to the activity being regulated. Neither has petitioner
adduced evidence to show that the rates of building permit fees imposed and
collected by the respondents were unreasonable or in excess of the cost of regulation
and inspection.

In distinguishing tax and regulation as a form of police power, the determining factor
is the purpose of the implemented measure. If the purpose is primarily to raise
revenue, then it will be deemed a tax even though the measure results in some form
of regulation. On the other hand, if the purpose is primarily to regulate, then it is
deemed a regulation and an exercise of the police power of the state, even though
incidentally, revenue is generated.