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John Hay Peoples Alternative Coalition, et al. v Lim, The challenged grant of tax exemption would circumvent the Constitution's imposition that a
G.R. No.119775, October 24, 2003
ISSUE:
Whether the tax exemptions and other financial incentives granted to the Subic SEZ under
Section 12 of R.A. No. 7227 (Bases Conversion and Development Act of 1992), are
applicable to the John Hay Special Economic Zone.
PETITIONER’S CONTENTION:
The petitioners now allege that nowhere in R. A. No. 7227 is there a grant of tax exemption
to SEZs yet to be established in base areas, unlike the grant under Section 12 thereof of tax
exemption and investment incentives to the therein established Subic SEZ. The grant of tax
exemption to the John Hay SEZ, petitioners conclude, thus contravenes Article VI, Section
28 (4) of the Constitution which provides that "No law granting any tax exemption shall be
passed without the concurrence of a majority of all the members of Congress.
SUPREME COURT’S RULING:
It is clear that under Section 12 of R.A. No. 7227 it is only the Subic SEZ which was granted
by Congress with tax exemption, investment incentives and the like. There is no express
extension of the aforesaid benefits to other SEZs still to be created at the time via presidential
proclamation.
While the grant of economic incentives may be essential to the creation and success of SEZs,
free trade zones and the like, the grant thereof to the John Hay SEZ cannot be sustained. The
incentives under R.A. No. 7227 are exclusive only to the Subic SEZ, hence, the extension of
the same to the John Hay SEZ finds no support therein. Neither does the same grant of
privileges to the John Hay SEZ find support in the other laws specified under Section 3 of
Proclamation No. 420, which laws were already extant before the issuance of the
proclamation or the enactment of R.A. No. 7227.
More importantly, the nature of most of the assailed privileges is one of tax exemption. It is
the legislature, unless limited by a provision of the state constitution, that has full power to
exempt any person or corporation or class of property from taxation, its power to exempt
being as broad as its power to tax. Other than Congress, the Constitution may itself provide
for specific tax exemptions, or local governments may pass ordinances on exemption only
from local taxes.
law granting any tax exemption must have the concurrence of a majority of all the members
of Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are
by tradition and usage for Congress to legislate upon. If it were the intent of the legislature to
grant to the John Hay SEZ the same tax exemption and incentives given to the Subic SEZ, it
would have so expressly provided in the R.A. No. 7227.
Thus, the second sentence of Section 3 of Proclamation No. 420 is hereby declared NULL
AND VOID and is accordingly declared of no legal force and effect.
Philippine Airlines v. Secretary of Finance and Commissioner,
G. R. No. 115873, August 25,1994
ISSUE:
Whether or not  R.A. No. 7716 violates Art. VI, §26 (1) of the Constitution which provides
that "Every bill passed by Congress shall embrace only one subject which shall be expressed
in the title thereof."
PETITIONER’S CONTENTION:
PAL contends that the amendment of its franchise by the withdrawal of its exemption from
the VAT is not expressed in the title of the law.
Pursuant to §13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in
lieu of all other taxes, duties, royalties, registration, license and other fees and charges of any
kind, nature, or description, imposed, levied, established, assessed or collected by any
municipal, city, provincial or national authority or government agency, now or in the future."
PAL was exempted from the payment of the VAT along with other entities by §103 of the
National Internal Revenue Code, which provides as follows:
§103. Exempt transactions. — The following shall be exempt from the value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws or international agreements to which
the Philippines is a signatory.

SUPREME COURT’S RULING:
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX
(VAT) SYSTEM [BY] WIDENING ITS TAX BASE AND ENHANCING ITS
ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING
THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED AND FOR OTHER PURPOSES," Congress thereby clearly expresses its
intention to amend any provision of the NIRC which stands in the way of accomplishing the
purpose of the law.
To require every end and means necessary for the accomplishment of the general objectives
of the statute to be expressed in its title would not only be unreasonable but would actually
render legislation impossible.
The details of a legislative act need not be specifically stated in its title, but matter germane to
the subject as expressed in the title, and adopted to the accomplishment of the object in view,
may properly be included in the act. Thus, it is proper to create in the same act the machinery
by which the act is to be enforced, to prescribe the penalties for its infraction, and to remove
obstacles in the way of its execution. If such matters are properly connected with the subject
as expressed in the title, it is unnecessary that they should also have special mention in the
title.  educational purposes, then said revenues and income shall be exempt from taxes and duties.
Commissioner of Internal Revenue v. De La Salle University, Inc.,
G.R. No. 196596, 9 November 2016
ISSUE:
Whether DLSU's income and revenues proved to have been used actually, directly and
exclusively for educational purposes are exempt from duties and taxes
PETITIONER’S CONTENTION:
Petitioner’s contend that DLSU's rental income is taxable regardless of how such income is
derived, used or disposed of. Section 30 (H) of the Tax Code, which states among others, that
the income of whatever kind and character of a non-stock and non-profit educational
institution from any of its properties, real or personal, or from any of its activities conducted
for profit regardless of the disposition made of such income, shall be subject to tax.
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Commissioner posits that a tax-exempt organization like DLSU is exempt only from property
tax but not from income tax on the rentals earned from property.
SUPERME COURT’S RULING:
Article XIV, Section 4 (3) of the Constitution refers to 2 kinds of institutions; (1) non-stock,
non-profit educational institutions and (2) proprietary educational institutions. DLSU falls on
the first category. The difference is that The tax exemption granted to non-stock, non-profit
educational institutions is conditioned only on the actual, direct and exclusive use of their
revenues and assets for educational purposes. While tax exemptions may also be granted to
proprietary educational institutions, these exemptions may be subject to limitations imposed
by Congress.
The tax exemption granted by the Constitution to non-stock, non-profit educational
institutions, unlike the exemption that may be availed of by proprietary educational
institutions, is not subject to limitations imposed by law.
Article XIV, Section 4 (3) does not require that the revenues and income must have also been
sourced from educational activities or activities related to the purposes of an educational
institution. The phrase all revenues is unqualified by any reference to the source of revenues.
Thus, so long as the revenues and income are used actually, directly and exclusively for
Manila International Airport Authority v. Court of Appeals,
G.R. No. 155650, July 20, 2006
ISSUE:
Whether Airport Lands and Buildings of MIAA are exempt from real estate tax under
existing laws.
PETITIONER’S CONTENTION:
MIAA’s contention is that Airport Lands and Buildings are owned by the Republic. The
government cannot tax itself. The reason for tax exemption of public property is that its
taxation would not inure to any public advantage, since in such a case the tax debtor is also
the tax creditor.
SUPEREME COURT’S RULING:

Airport Lands and Buildings of MIAA are Owned by the Republic. Airport Lands and
Buildings are of Public Dominion
The Airport Lands and Buildings of MIAA are property of public dominion and therefore
owned by the State or the Republic of the Philippines.
No one can dispute that properties of public dominion mentioned in Article 420 of the Civil
Code, like “roads, canals, rivers, torrents, ports and bridges constructed by the State,” are
owned by the State. The term “ports” includes seaports and airports. The MIAA Airport
Lands and Buildings constitute a “port” constructed by the State. Under Article 420 of the
Civil Code, the MIAA Airport Lands and Buildings are properties of public dominion and
thus owned by the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use because they are used by the
public for international and domestic travel and transportation. The fact that the MIAA
collects terminal fees and other charges from the public does not remove the character of the
Airport Lands and Buildings as properties for public use.
The charging of fees to the public does not determine the character of the property whether it
is of public dominion or not. Article 420 of the Civil Code defines property of public
dominion as one “intended for public use.” The terminal fees MIAA charges to passengers, as
well as the landing fees MIAA charges to airlines, constitute the bulk of the income that
maintains the operations of MIAA. The collection of such fees does not change the character
of MIAA as an airport for public use. Such fees are often termed user’s tax. This means
taxing those among the public who actually use a public facility instead of taxing all the
public including those who never use the particular public facility.
Mactan Cebu International Airport Authority v. Hon. Ferdinand J. Marcos,
G.R. No. 120082, 11 September 1996
ISSUE:
Whether the MCIAA is exempted from realty taxes.
PETITIONER’S CONTENTION:
MCIAA claims that under its charter that it shall be exempt from realty taxes imposed by the
National Government or any of its political subdivisions, agencies and instrumentalities. In
1994, the Local Government Unit (LGU) of Cebu City demanded payment for realty taxes on
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several parcels of land belonging to MCIAA.
MCIAA objected to the same as baseless and unjustified, claiming its exemption under its
charter. Also, it cites the LGC stating that LGUs taxing power does not extend to taxes, fees
or charges of any kind on the National Government, its agencies and instrumentalities, and
local government units.
SUPEREME COURT’S RULING:
Tax statutes are construed strictly against the government and liberally in favor of the
taxpayer. But since taxes are paid for civilized society, or are the lifeblood of the nation, the
law frowns against exemptions from taxation and statutes granting tax exemptions are thus
construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority.
A claim of exemption from tax payments must be clearly shown and based on language in the
law too plain to be mistaken. Taxation is the rule, exemption therefrom is the exception.
However, if the grantee of the exemption is a political subdivision or instrumentality, the
rigid rule of construction does not apply because the practical effect of the exemption is
merely to reduce the amount of money that has to be handled by the government in the course
of its operations.
Further, since taxation is the rule and exemption therefrom the exception, the exemption may
be withdrawn at the pleasure of the taxing authority. The only exception to this rule is where
the exemption was granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and is thus covered by the non-impairment clause of
the Constitution.
MCIAA is a “taxable person” under its Charter (RA 6958), and was only exempted from the
payment of real property taxes. The grant of the privilege only in respect of this tax is
conclusive proof of the legislative intent to make it a taxable person subject to all taxes,
except real property tax.
Since Republic Act 7160 or the Local Government Code (LGC) expressly provides that “All
general and special laws, acts, city charters, decrees [sic], executive orders, proclamations
and administrative regulations, or part of parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly.”
With that repealing clause in the LGC, the tax exemption provided for in RA 6958 had been
expressly repealed by the provisions of the LGC. Therefore, MCIAA has to pay the assessed
realty tax of its properties effective after January 1, 1992 until the present.
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