Republic of the Philippines

SUPREME COURT
Manila Same; Value Added Tax; The provision subjecting Philippine
Amusement and Gaming Corporation (PAGCOR) to 10% Value
EN BANC Added Tax (VAT) is invalid for being contrary to Republic Act
(R.A.) No. 9337.—Anent the validity of RR No. 16-2005, the Court
G.R. No. 172087 March 15, 2011 holds that the provision subjecting PAGCOR to 10% VAT is
invalid for being contrary to R.A. No. 9337. Nowhere in R.A. No.
PHILIPPINE AMUSEMENT AND GAMING CORPORATION 9337 is it provided that petitioner can be subjected to VAT. R.A.
(PAGCOR), Petitioner, No. 9337 is clear only as to the removal of petitioner’s exemption
vs. from the payment of corporate income tax, which was already
THE BUREAU OF INTERNAL REVENUE (BIR), represented addressed above by this Court. Philippine Amusement and
herein by HON. JOSE MARIO BUÑAG, in his official Gaming Corporation (PAGCOR) vs. Bureau of Internal Revenue,
capacity as COMMISSIONER OF INTERNAL 645 SCRA 338, G.R. No. 172087 March 15, 2011
REVENUE, Public Respondent,
JOHN DOE and JANE DOE, who are persons acting for, in
behalf, or under the authority of Respondent.Public and
Private Respondents.

DECISION

Taxation; Tax Exemptions; As a rule, tax exemptions are

construed strongly against the claimant.—Taxation is the rule and
exemption is the exception. The burden of proof rests upon the
party claiming exemption to prove that it is, in fact, covered by the
exemption so claimed. As a rule, tax exemptions are construed
strongly against the claimant. Exemptions must be shown to exist
clearly and categorically, and supported by clear legal provision.
In this case, PAGCOR failed to prove that it is still exempt from
the payment of corporate income tax, considering that Section 1
of R.A. No. 9337 amended Section 27 (c) of the National Internal
Revenue Code of 1997 by omitting PAGCOR from the
exemption. The legislative intent, as shown by the discussions in
the Bicameral Conference Meeting, is to require PAGCOR to pay
corporate income tax; hence, the omission or removal of
PAGCOR from exemption from the payment of corporate income
tax.
 Republic of the Philippines sugar central cannot be subject to tax because the ordinance
SUPREME COURT expressly points to Ormoc Sugar Company, Inc. as the entity to
Manila be levied upon.

EN BANC

G.R. No. L-23794 February 17, 1968 Taxation; Tax; Refund of; No interest can be claimed; Reasons.—
Appellant is not entitled to interest on the refund because the
ORMOC SUGAR COMPANY, INC., plaintiff-appellant, taxes were not arbitrarily collected. There is sufficient basis to
vs. preclude arbitrariness. The constitutionality of the statute is
THE TREASURER OF ORMOC CITY, THE MUNICIPAL presumed until declared otherwise.
BOARD OF ORMOC CITY, HON. ESTEBAN C. CONEJOS as
Mayor of Ormoc City and ORMOC CITY, defendants-
appellees.

Ponce Enrile, Siguion Reyna, Montecillo & Belo and Teehankee,

Carreon & Tañada for plaintiff-appellant.
Ramon O. de Veyra for defendants-appellees.

Constitutional law; Equal protection of law; Reasonable

classification ; Requisites.—The equal protection clause only to
persons or things identically situated and does not bar a
reasonable classification of the subject of legislation. A
classification is reasonable where (1) it is based on substantial
distinctions which make real differences; (2) these are germane
to the purpose of the law; (3) the classification applies not only to
present conditions but also to future conditions which are
substantially identical to those of the present; (4) the classification
applies only to those who belong to the same class.

Same; Same; Same; Tax ordinance should not be singlular and

exclusive.—When the taxing ordinance was enacted, Ormoc
Sugar Co., Inc. was the only sugar central in the City. A
reasonable classification should be in terms applicable to future
conditions as well. The taxing ordinance should not be singular
and exclusive as to exclude any subsequently established sugar
central from the coverage of the tax. A subsequently established
 Republic of the Philippines donee’s tax on property donated to the church for religious
SUPREME COURT purposes.
Manila

EN BANC
APPEAL from a judgment of the Court of Tax Appeals.
G.R. No. L-19201 June 16, 1965

REV. FR. CASIMIRO LLADOC, petitioner,

vs. The facts are stated in the opinion of the Court.
The COMMISSIONER OF INTERNAL REVENUE and The
COURT of TAX APPEALS, respondents.

Hilado and Hilado for petitioner. Hilado & Hilado for petitioner.
Office of the Solicitor General for respondents.

Taxation; Constitutional exemption for religious purpose refers

only to property taxes.—Section 22(3), Art. VI of the Constitution
of the Philippines, exempts from taxation cemeteries, churches
and parsonages or convents, appurtenant thereto, and all lands,
buildings, and improvements used exclusively for religious
purposes. The exemption is only from the payment of taxes
assessed on such properties enumerated, as property taxes, as
contra-distinguished from excise taxes.

Same: Same; Gift tax; Imposition of gift tax on property used for
religious purposes not violation of Constitution.—A gift tax is not
a property tax, but an excise tax imposed on the transfer of
property by way of gift inter vivos, the imposition of which on
property used exclusively for religious purposes, does not
constitute an impairment of the Constitution.

Same; Same; Parties; Head of diocese real party in interest in

gift tax on church property.—The head of the diocese and not
the parish priest is the real party in interest in the imposition of a
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19371 February 28, 1966
HOSPITAL DE SAN JUAN DE DIOS, INC., plaintiff-appellant,
vs.
PASAY CITY, PABLO CUNETA, R. N. ASCAÑO and G. C.
FUENTES, defendants-appellees.
Teodoro Padilla for the plaintiff-appellant.
R. N. Ascaño and G. C. Fuentes for the defendants-appellees.
DIZON, J.:
Charitable institutions; Burden of proof to show that charitable
institution is operating otherwise.—It not being disputed that
appellant was organized as a charitable institution, the
presumption is that it is operating as such, the burden of proof
being on appellees to show that it is operating otherwise. The
record does not show that they have satisfactorily discharged this
burden.
Same; Exemption from payment of fees and taxes; Case at bar.—
The articles of incorporation of the Hospital de San Juan de Dios,
Inc. show that it has no capital stock and that no part of its net
income, if any, could inure to the benefit of any private individual.
There is also the ruling of the Workmen’s Compensation
Commissioner and the Undersecretary of Labor that said hospital
is a charitable institution, exempt from the scope of the
Workmen’s Compensation Act. The hospital’s cashier also issued
a statement to the effect that the hospital maintains two free
wards of sixty beds each. Appellees admit that in addition to the
said free wards, the hospital also maintains six free beds in the
Pediatric Section. There is, therefore, sufficient evidence that the
hospital doles out charity, and, hence, should be exempt from the
payment of the inspection fees provided in Section 5, Ordinance
No. 7, series of 1945, as amended by Ordinance No. 22, series
of 1947, and further amended by Ordinance No. 54, series of
1955, of the City of Pasay.
Same; Making of profit does not affect too: exemption of
charitable institution.—The making of profit does not destroy the
tax exemption of a charitable, benevolent or educational
institution. (Jesus Sacred Heart College vs. Collector, L-6807,
May 20, 1954.)
Same; Charging fees for paying beds.—The fact that a hospital
charges fees for paying beds does not make it lose its character
as a charitable institution if the same were used to partly finance
the expenses of the free wards maintained by the hospital.
(U.S.T. Hospital Employees Association vs. Sto. Tomas
University Hospital, L-6988, May 24, 1952; Collector of Internal
Revenue vs. St. Paul’s Hospital in Iloilo, L-12127, May 25, 1959;
San Juan de Dios Hospital vs. Metropolitan Water District, 54
Phil. 174.)
Same; Charging medical and hospital fees.—The mere charging
of medical and hospital fees from those who can afford to pay
does not make the institution one established for profit or gain.
(Manila Sanitarium and Hospital vs. Gabuco, G.R. No. L-14331,
January 31, 1963.)