Lifeblood Doctrine

1. Camp John Hay Development Corporation v. CBAA, 706 SCRA 547

FACTS:
Respondent City Assessor of Baguio City notified petitioner about the issuance
against it of real property tax assessment. In response, petitioner questioned the
assessments for lack of legal. The City Assessor replied that the said subject was
issued on the basis of the approved building permits and pursuant to Sections 201
to 206 of RA No. 7160. Consequently, petitioner filed with the Board of Tax
Assessment Appeals (BTAA) an appeal. BTAA enjoined petitioner to first comply
as to the payment under protest of the subject real property taxes before the hearing
of its appeal. Aggrieved, petitioner elevated the case before the CBAA. The CBAA
and the CTA En Banc upheld the subject Resolutions of the CBAA. The CBAA's
position is that the LBAA has not decided the case on the merits. Undaunted by the
pronouncements in the abovementioned Resolutions, petitioner appealed to the
CTA En Banc.

ISSUE:
Whether or not respondent CTA En Banc erred in dismissing for lack of merit the
petition and accordingly affirmed the order of the CBAA to remand the case to the
LBAA for further proceedings

HELD:
No. In the present case, the authority of the assessor is not being questioned. There
are questions of fact that are not allowed in a petition for certiorari, prohibition and
mandamus. The court a quo is therefore precluded from entertaining the petition,
and it appropriately dismissed the case. The restriction upon the power of courts to
impeach tax assessment without a priorpayment, under protest, of the taxes
assessed is consistent with the doctrine that taxes are the lifeblood of the nation
and as such their collection cannot be curtailed by injunction or any like action;
otherwise, the state or, in this case, the local government unit, shall be crippled in
dispensing the needed services to the people, and its machinery gravely disabled.
2. Vera v. Fernandez, 89 SCRA 199
FACTS:
Appeal from two orders of the Court of First Instance of Negros Occidental, in
Special Proceedings No. 7794, entitled: "Intestate Estate of Luis D. Tongoy," the
first dated July 29, 1969 dismissing the Motion for Allowance of Claim and for an
Order of Payment of Taxes by the Government of the Republic of the Philippines
against the Estate of the late Luis D. Tongoy, for deficiency income taxes for the
years 1963 and 1964 of the decedent in the total amount of P3,254.80, inclusive
5% surcharge, 1% monthly interest and compromise penalties. The second, dated
October 7, 1969, denying the Motion for reconsideration of the Order of dismissal
The claim represents the indebtedness to the government of the late Luis D.
Tongoy for deficiency income taxes in the total sum of P3,254.80 as above stated,
covered by Assessment Notices, to which motion was attached. The Motion for
allowance of claim and for payment of taxes dated May 28, 1969 was filed on June
3, 1969 by the Regional Director of the Bureau of Internal Revenue. The
Administrator opposed the motion solely on the ground that the claim was barred
under Section 5, Rule 86 of the Rules of Court. On September 18, 1969, a motion
for reconsideration was filed, but was denied in an Order dated October 7, 1969.
Hence, this appeal on certiorari
ISSUE:
Whether the claim for taxes against the estate of a deceased person be still
collected
HELD:
In the instant case, petitioners filed an application (Motion for Allowance of Claim
and for an Order of Payment of Taxes) which, though filed after the expiration of
the time previously limited but before an order of the distribution is entered, should
have been granted by the respondent court, in the absence of any valid ground, as
none was shown, justifying denial of the motion, especially considering that it was
for allowance Of claim for taxes due from the estate, which in effect represents a
claim of the people at large, the only reason given for the denial that the claim was
filed out of the previously limited period, sustaining thereby private respondents'
contention, erroneously as has been demonstrated.
3. CIR v. Algue, Inc., 158 SCRA 9
FACTS:
The private respondent, a domestic corporation engaged in engineering,
construction and other allied activities, received a letter from the petitioner
assessing it in the total amount of P83, 183.85 as delinquency income taxes for the
years 1958 and 1959. Algue flied a letter of protest or request for recon Atty.
Guevara filed a petition for review of the decision of the Commissioner of Internal
Revenue with the Court of Tax Appeals on April 23, 1965. Atty. Algue was told
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. sideration,
which was received on the same day in the office of the petitioner.
ISSUE:
Whether or not the Collector of Internal Revenue correctly disallowed the
P75,000.00 deduction claimed by private respondent Algue as legitimate business
expenses in its income tax returns
HELD:
No. The Supreme Court agrees with the respondent court that the amount of the
promotional fees was not excessive. The amount of P75,000.00 was 60% of the
total commission. This was a reasonable proportion, considering that it was the
payees who did practically everything, from the formation of the Vegetable Oil
Investment Corporation to the actual purchase by it of the Sugar Estate properties.
It is said that taxes are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power to activate and
operate it. Hence, despite the natural reluctance to surrender part of one's hard-
earned income to the taxing authorities, every person who is able to must
contribute his share in the running of the government.
4. YMCA v. CIR, 298 SCRA 83
FACTS:
YMCA is a non-stock, non-profit institution. Private Respondent earned, among
others, an income of P676, 829.80 from leasing out a portion of its premises to
small shop owners. On July 2, 1984, the CIR issued an assessment to private
respondent, in the total amount of P415,615.01 including surcharge and interest,
for deficiency income tax. Private respondent formally protested the assessment
and, as a supplement to its basic protest, filed a letter dated October 8, 1985. The
CIR denied the claims of YMCCA.
ISSUE:
Whether or not the income derived from rentals of real property owned by the
Young Men's Christian Association of the Philippines, Inc. (YMCA) subject to
income tax under the National Internal Revenue Code (NIRC) and the
Constitution?
HELD:
The income is not exempt from tax. Under NIRC, the income received by civic
league or clubs not organized for profit are exempt from tax in respect to income
received by them. The exemption does not apply to income derived from any of
their properties or any activities conducted for profit regardless of the disposition
made of such income. Because taxes are the lifeblood of the nation, stict
interpretation in construing tax exemptions should be applied. Exemption “must be
granted in a statute stated in a language too clear to be mistaken.”
5. Marcos II v. CA, 273 SCRA 47
FACTS:
Investigation disclosed that the Marcoses failed to file a written notice of the
decedent, an estate tax returns, as well as several income tax returns covering the
years 1982 to 1986. The CIR avers that copies of the deficiency estate and income
tax assessments were all personally and constructively served upon Imelda and
Bongbong through their respective caretakers at their last known addresses.
Moreover, a notice to Taxpayer inviting Mrs. Marcos (or her duly authorized
representative or counsel), to a conference, was furnished the counsel of Mrs.
Marcos, Dean Antonio Coronel - but to no avail. The BIR Commissioner issued
several notices of levy on real property against certain parcels of land owned by
the Marcoses - to satisfy the alleged estate tax and deficiency income taxes.
ISSUE:
Whether or not the proper avenues of assessment and collection of the said tax
obligations were taken by the respondent Bureau
HELD:
Claims for taxes, whether assessed before or after the death of the deceased, can be
collected from the heirs even after the distribution of the properties of the
decedent. They are exempted from the application of the statute of nonclaims. The
heirs shall be liable therefor, in proportion to their share in the Inheritance. The
approval of the court, sitting in probate, or as a settlement tribunal over the
deceased is not a mandatory requirement in the collection of estate taxes. There is
nothing in the Tax Code, and in the pertinent remedial laws that implies the
necessity of the probate or estate settlement court's approval of the state's claim for
estate taxes, before the same can be enforced and collected.
6. Reyes v. Almanzor, 196 SCRA 322
FACTS:
In 1971 the Rental Freezing Law was passed prohibiting for one year from its
effectivity, an increase in monthly rentals of dwelling units where rentals do not
exceed three hundred pesos (P300.00). Petitioners JBL Reyes et al. owned a parcel
of land in Tondo which are leased and occupied as dwelling units by tenants who
were paying rent of not exceeding P300. In 1973, respondent City Assessor of
Manila re-classified and reassessed the value of the subject properties based on the
schedule of market values, which entailed an increase in the corresponding tax
rates prompting petitioners to file a Memorandum of Disagreement averring that
the reassessments made were "excessive, unwarranted, inequitable, confiscatory
and unconstitutional" considering that the taxes imposed upon them greatly
exceeded the annual income derived from their properties. They argued that the
income approach should have been used in determining the land values instead of
the comparable sales approach which the City Assessor adopted.
ISSUE:
Whether the approach on tax assessment used by the City Assessor reasonable?
HELD:
No. The taxing power has the authority to make a reasonable and natural
classification for purposes of taxation but the government's act must not be
prompted by a spirit of hostility, or at the very least discrimination that finds no
support in reason. It suffices then that the laws operate equally and uniformly on
all persons under similar circumstances or that all persons must be treated in the
same manner, the conditions not being different both in the privileges conferred
and the liabilities imposed. Consequently, it stands to reason that petitioners who
are burdened by the government by its Rental Freezing Laws (then R.A. No. 6359
and P.D. 20) under the principle of social justice should not now be penalized by
the same government by the imposition of excessive taxes petitioners can ill afford
and eventually result in the forfeiture of their properties.
7. Lutz v. Araneta, 98 Phil. 148
FACTS:
The law in question was passed in 1940, and section 1 of it declares an emergency
because the Tydings-McDuffe Act's impending export taxes on sugar threaten to
harm our industry and cause it to "eventually lose its preferential position in the
United States market." As a result, the country's policy was to obtain a
readjustment of the benefits derived from the sugar industry by the component
elements thereof The stated goal of the national policy was "to set the way for a
realignment of the benefits gained from the sugar business by the component
constituents therein".
Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate
Estate of Antonio Jayme Ledesma, seeks to recover from the Collector of Internal
Revenue the sum of P14,666.40 paid by the estate as taxes, under section 3 of the
Act, for the crop years 1948-1949 and 1949-1950; alleging that such tax is
unconstitutional and void, being levied for the aid and support of the sugar industry
exclusively, which in plaintiff's opinion is not a public purpose for which a tax may
be constitutionally levied.
ISSUE:
Whether the support of the sugar industry is a public purpose to which a tax may
be
constitutionally levied.
HELD:
Yes. The tax levied under the Sugar Adjustment Act is constitutional. The tax
under said Act is levied with a regulatory purpose, to provide means for the
rehabilitation and stabilization of the threatened sugar industry. Since sugar
production is one of the great industries of our nation, its promotion, protection,
and advancement, therefore redounds greatly to the general welfare. Hence, said
objectives of the Act is a public concern and is therefore constitutional.
8. Gomez v. Palomar, 25 SCRA 827
FACTS:
In San Fernando, Pampanga, petitioner Benjamin Gomez mailed a letter through
post office. It lacked the unique anti-TB stamp that the RA 1635 mandated. The
petitioner received it back, thus and so, the petitioner now challenges the
constitutionality of the law, arguing that RA 1635, also known as the Anti-TB
Stamp law, which said to violates the equal protection clause because it classifies
mail users as a group for taxation purposes while exempting the rest of the
population from the charge, and that even among postal customers, the law grants
exemptions in a discriminatory manner since no mail may be delivered unless it
bears the additional 5 centavo stamp required by the relevant statute for each piece
of mail being posted.

ISSUE:
Whether the Anti-TB Stamp Law unconstitutional

HELD:
No. It is settled that the legislature has the inherent power to select the subjects of
taxation and to grant exemptions. This power has aptly been described as "of wide
range and flexibility." Indeed, it is said that in the field of taxation, more than in
other areas, the legislature possesses the greatest freedom in classification. The
reason for this is that traditionally, classification has been a device for fitting tax
programs to local needs and usages in order to achieve an equitable distribution of
the tax burden. The classification of mail users is based on the ability to pay, the
enjoyment of a privilege and on administrative convenience. Tax exemptions have
never been thought of as raising revenues under the equal protection clause.
9. Punsalan v. Mun. Board of the City of Manila, 95 Phil. 46
FACTS:
Petitioners, who are city professionals, criticize Ordinance No. 3398 and the statute
that made it possible (Section 18 of the Revised Charter of the City of Manila).
According to the regulation, those who practice a variety of professions in the city
are required to pay a municipal occupation tax, and failure to do so is punishable.
The statute that authorizes the aforementioned regulation gives the city's Municipal
Board the authority to charge people who work in a variety of professions a
municipal occupation tax. The petitioners paid the occupation tax required by
Ordinance No. 3398 despite having already paid their tax under section 201 of the
National Internal Revenue Code. The lower court upheld the legality of the
ordinance's authorizing law while declaring it invalid.
ISSUE:
Whether Ordinance No. 3398 and the statute that made it possible is valid.
HELD:
Yes. The Legislature may, in its discretion, select what occupations shall be taxed,
and in its discretion may tax all, or select classes of occupation for taxation, and
leave others untaxed. It is not for the courts to judge which cities or municipalities
should be empowered to impose occupation taxes aside from that imposed by the
National Government. The matter is within the domain of political departments.
The argument against double taxation may not be invoked if one tax is imposed by
the state and the other is imposed by the city. It is widely recognized that there is
nothing inherently terrible in the requirement that taxes be exacted with respect to
the same occupation by both the state and the political subdivisions thereof.
Judgment of the lower court is reversed with regards to the ordinance and affirmed
as to the law authorizing it.
10. Francia v. IAC, 162 SCRA 753
FACTS:
The Republic of the Philippines expropriated a piece of Engarcio Francia's Pasay
City property for P4,116.00. However, as a result of his refusal to pay P2,400 in
real estate taxes from 1963 to 1977, the Pasay City City Treasurer later sold his
land at public auction. Francia filed a case to have the sale revoked, claiming that
the amount owed to him by the government should have been deducted from his
obligation to pay tax arrears.
ISSUE:
Whether or not the tax owed by Francia should be set-off by the “debt” owed him
by the government.

HELD:
No. As a rule, set-off of taxes is not allowed. There is no legal basis for the
contention. By legal compensation, obligations of persons, who in their own right
are reciprocally debtors and creditors of each other, are extinguished (Art. 1278,
Civil Code). This is not applicable in taxes. There can be no off-setting of taxes
against the claims that the taxpayer may have against the government. A person
cannot refuse to pay a tax on the ground that the government owes him an amount
equal to or greater than the tax being collected. The collection of a tax cannot await
the results of a lawsuit against the government.
Inherent Limitations
21. Board of Assessment Appeals of Laguna v. CTA, 8 SCRA 224
FACTS:
The Cabuyao-Sta was taken over by the National Waterworks and Sewerage
Authority (NWSA), a public company that is controlled by the Government of the
Philippines along with all real estate that includes waterworks and sewerage
systems placed under it. System of Rosa-Bian Waterworks in 1956. For the
purpose of calculating real estate taxes, it was assessed against the real estate that
Cabuyao Waterworks possessed. The respondent objected, stating that according to
the nature and kind of the aforementioned property as well as the uses and
activities of the petitioner, it is exempt from paying real estate taxes. The petitioner
rejected the protest, claiming that although while the real estate is owned by the
Republic of the Philippines, it is not held in its name and is therefore subject to real
estate tax.
ISSUE:
Whether the real properties owned by the respondent public corporation subject to
real estate tax
HELD:
No. Republic Act No. 470 makes no distinction between property held in a
sovereign, governmental or political capacity and those possessed in a private,
proprietary or patrimonial character. The law does not distinguish neither may we,
unless there are facts and circumstances clearly showing that the lawmaker
intended the contrary, but no such facts and circumstances have been brought to
our attention. Indeed, the noun "property" and the verb "owned" used in said
section 3(a) strongly suggest that the object of exemption is considered more from
the view point of dominion, than from that of domain. Moreover, taxes are
financial burdens imposed for the purpose of raising revenues with which to defray
the cost of the operation of the Government, and a tax on property of the
Government, whether national or local, would merely have the effect of taking
money from one pocket to put it in another pocket. Hence, it would not serve, in
the final analysis, the main purpose of taxation. What is more, it would tend to
defeat it, on account of the paper work, time and consequently, expenses it would
entail.

22. Pepsi Cola Bottling Co. y City of Butuan, 24 SCRA 789

FACTS:
The City of Butuan's Municipal Ordinance No. 110, which the plaintiff-appellant
Pepsi-Cola challenges as being void because it resembles an import tax, amounts to
double taxation, is highly unjust and discriminatory, excessive, oppressive, and
confiscatory, and represents an improper delegation of the power to tax, was the
basis for the amounts that Pepsi-Cola paid to the City of Butuan under protest and
that latter collected. Regardless of the volume of sales, the ordinance charges taxes
on every case of soft drinks, alcoholic beverages, and other carbonated beverages
transported to agents and/or consignees by outside dealers or any individual or
corporation that conducts its primary operations outside the City.
ISSUE:
Whether the tax ordinance violate the uniformity requirement of taxation
HELD:
The Supreme Court ruled in favor of Pepsi-Cola. The general principle against
delegation of legislative powers, in consequence of the theory of separation of
powers is subject to one well-established exception, namely: legislative powers
may be delegated to local governments—to which said theory does not apply—in
respect of matters of local concern. . Therefore, even if the City of Butuan has the
authority to levy taxes, the relevant legislation is nevertheless void since it is unfair
and discriminatory. The Constitution's need for consistency is broken since the tax
would only apply to sales made by "agents or consignees" of outside dealers.
23. Pepsi Cola Bottling Co, v. Municipality of Tanuan, 69 SCRA 460
FACTS:
Pepsi Cola has a bottling plant in the Municipality of Tanauan, Leyte. The
Municipality approved Ordinance No. 23 which levies and collects "from soft
drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo for
every bottle of soft drink corked". Pepsi Cola assailed the validity of the
ordinances as it alleged that they constitute double taxation.

ISSUE:
Whether the contentions of the Pepsi Cola Bottling tenable

HELD: No. On the issue of undue delegation of taxing power, it is settled that the
power of taxation is an essential and inherent attribute of sovereignty, belonging as
a matter of right to every independent government, without being expressly
conferred by the people. It is a power that is purely legislative and which the
central legislative body cannot delegate either to the executive or judicial
department of the government without infringing upon the theory of separation of
powers. The exception, however, lies in the case of municipal corporations, to
which, said theory does not apply. Legislative powers may be delegated to local
governments in respect of matters of local concern. By necessary implication, the
legislative power to create political corporations for purposes of local self-
government carries with it the power to confer on such local governmental
agencies the power to tax.
 Also, there is no validity to the assertion that the delegated authority can be
declared unconstitutional on the theory of double taxation. It must be observed that
the delegating authority specifies the limitations and enumerates the taxes over
which local taxation may not be exercised.

24. Osmeña v. Orbos, 220 SCRA 703

FACTS:
On October 10, 1984, Pres. Marcos issued P.D. 1956 creating a Special Account in
the General Fund, designated as the Oil Price Stabilization Fund (OPSF). OPSF
was designed to reimburse oil companies for cost increases in crude oil and
imported petroleum products resulting from exchange rate adjustments and from
increases in the world market prices of crude oil. Pres. Aquino, amended P.D.
1956, expanding the grounds for reimbursement to oil companies. The amount of
the underrecovery being left for determination by the Ministry of Finance. If the
purpose for which a special fund was created has been fulfilled or abandoned, the
balance, if any, shall be transferred to the general government funds. Petitioner
argues that since a 'special fund' consists of monies collected through the taxing
power of a State, such amounts belong to the State, although the use thereof is
limited to the special purpose/objective for which it was created.
ISSUE:
Whether or not the paragraph 1 (c) of P.D. No. 1956, as amended by Executive
Order No. 137, for "being an undue and invalid delegation of legislative power to
the Energy Regulatory Board.
HELD:
The Court finds that the provision conferring the authority upon the ERB to impose
additional amounts on petroleum products provides a sufficient standard by which
the authority must be exercised. In addition to the general policy of the law to
protect the local consumer by stabilizing and subsidizing domestic pump rates, §
8(c) of P.D. 1956 expressly authorizes the ERB to impose additional amounts to
augment the resources of the Fund.

25. Villegas v. Hiu Chiong Tsai Pao Ho, 86 SCRA 270

FACTS:
The Municipal Board of Manila passed Ordinance 6537 requiring foreigners to
obtain the necessary mayor's permit in order to work or conduct business in the
City of Manila, with the exception of those employed in foreign diplomatic and
consular missions, technical assistance programs of the government and another
country, and members of religious orders or congregations. The P50 permission fee
is required, and violating the regulation is punishable by three to six months in jail,
a P100 to P200 fine, or both. Hiu Chiong Tsai Pao Ho (Tsai Pao Ho) who was
employed in Manila, filed a petition with the CFI of Manila to declare City
Ordinance No. 6537 as null and void for being discriminatory and violative of the
rule of the uniformity in taxation.The trial court declared City Ordinance No. 6537
null and void. Villegas filed the present petition.
ISSUE:
Whether the ordinance imposes a regulatory fee or a tax.
HELD:
The ordinance’s purpose is clearly to raise money under the guise of regulation by
exacting P50 from aliens who have been cleared for employment. The amount is
unreasonable and excessive because it fails to consider difference in situation
among aliens required to pay it, i.e. being casual, permanent, part-time, rank-and-
file or executive. The Ordinance was declared invalid as it is arbitrary, oppressive
and unreasonable, being applied only to aliens who are thus deprived of their rights
to life, liberty and property and therefore violates the due process and equal
protection clauses of the Constitution. Further, the ordinance does not lay down
any criterion or standard to guide the Mayor in the exercise of his discretion, thus
conferring upon the mayor arbitrary and unrestricted powers.

Equal Protection Clause

32. Gomez vs. Palomar
FACTS:
In San Fernando, Pampanga, petitioner Benjamin Gomez mailed a letter through
post office. It lacked the unique anti-TB stamp that the RA 1635 mandated. The
petitioner received it back, thus and so, the petitioner now challenges the
constitutionality of the law, arguing that RA 1635, also known as the Anti-TB
Stamp law, which said to violates the equal protection clause because it classifies
mail users as a group for taxation purposes while exempting the rest of the
population from the charge, and that even among postal customers, the law grants
exemptions in a discriminatory manner since no mail may be delivered unless it
bears the additional 5 centavo stamp required by the relevant statute for each piece
of mail being posted.

ISSUE:
Wheteher the Anti-TB Stamp Law unconstitutional, for being allegedly violative
of the equal protection clause

HELD:
No. It is settled that the legislature has the inherent power to select the subjects of
taxation and to grant exemptions. This power has aptly been described as "of wide
range and flexibility." Indeed, it is said that in the field of taxation, more than in
other areas, the legislature possesses the greatest freedom in classification. The
reason for this is that traditionally, classification has been a device for fitting tax
programs to local needs and usages in order to achieve an equitable distribution of
the tax burden. The classification of mail users is based on the ability to pay, the
enjoyment of a privilege and on administrative convenience. Tax exemptions have
never been thought of as raising revenues under the equal protection clause.