1

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B!CD<E
Befoie R.A. No. 9SS7 took effect, petitioneis ABAKABA u0R0 Paity List, et al.,
fileu a petition foi piohibition on Nay 27, 2uuS questioning the constitutionality
of Sections 4, S anu 6 of R.A. No. 9SS7, amenuing Sections 1u6, 1u7 anu 1u8,
iespectively, of the National Inteinal Revenue Coue (NIRC). Section 4 imposes a
1u% vAT on sale of goous anu piopeities, Section S imposes a 1u% vAT on
impoitation of goous, anu Section 6 imposes a 1u% vAT on sale of seivices anu
use oi lease of piopeities. These questioneu piovisions contain a unifoimp io v
is o authoiizing the Piesiuent, upon iecommenuation of the Secietaiy of
Finance, to iaise the vAT iate to 12%, effective }anuaiy 1, 2uu6, aftei specifieu
conuitions have been satisfieu. Petitioneis aigue that the law is
unconstitutional.

F<<G3<E

1. Whethei oi not theie is a violation of Aiticle vI, Section 24 of the
Constitution.

2. Whethei oi not theie is unuue uelegation of legislative powei in violation of
Aiticle vI Sec 28(2) of the Constitution.

S. Whethei oi not theie is a violation of the uue piocess anu equal piotection
unuei Aiticle III Sec. 1 of the Constitution.

5G.F6&E

1. Since theie is no question that the ievenue bill exclusively oiiginateu in the
Bouse of Repiesentatives, the Senate was acting within its constitutional powei
to intiouuce amenuments to the Bouse bill when it incluueu piovisions in
Senate Bill No. 19Su amenuing coipoiate income taxes, peicentage, anu excise
anu fianchise taxes.

2. Theie is no unuue uelegation of legislative powei but only of the uiscietion as
to the execution of a law. This is constitutionally peimissible. Congiess uoes not
abuicate its functions oi unuuly uelegate powei when it uesciibes what job
must be uone, who must uo it, anu what is the scope of his authoiity; in oui
complex economy that is fiequently the only way in which the legislative
piocess can go foiwaiu.

S. The powei of the State to make ieasonable anu natuial classifications foi the
puiposes of taxation has long been establisheu. Whethei it ielates to the subject
of taxation, the kinu of piopeity, the iates to be levieu, oi the amounts to be
iaiseu, the methous of assessment, valuation anu collection, the State's powei is
entitleu to piesumption of valiuity. As a iule, the juuiciaiy will not inteifeie with
such powei absent a cleai showing of unieasonableness, uisciimination, oi
aibitiaiiness.

5=>'?H/I 102 J+4?'H+) .'4?=(

uR L-1772S
28 Febiuaiy 1962

FACTS:
Nambulao Lumbei Company paiu the uoveinment a total of P9,127.Su as
iefoiestation chaiges. Baving founu liable foi an aggiegate amount of P4,8u2.S7
foi foiest chaiges, it contenueu that since the Republic (uoveinment) has not
maue use of the iefoiestation chaiges foi iefoiesting the uenuueu aiea of the
lanu coveieu by the company's license, the Republic shoulu iefunu saiu amount
oi, if it cannot be iefunueu, at least the company shoulu be compensateu with
what it oweu the Republic foi iefoiestation chaiges.

ISS0E:
Whethei taxes may be subject of set-off oi compensation.

BELB:
Inteinal ievenue taxes, such as foiest chaiges, cannot be the subject of set-off oi
compensation. A claim foi taxes is not such a uebt, uemanu, contiact oi
juugment as is alloweu to be set-off unuei the statutes of set-off, which aie
constiueu unifoimly, in the light of public policy, to excluue the iemeuy in an
action oi any inuebteuness of the State oi municipality to one who is liable to
the State oi municipality foi taxes. Neithei aie they subject of iecoupment since
they uo not aiise out of the contiact oi tiansaction sueu on.

2
Taxes aie not in the natuie of contiacts between the paities but giow out of a
uuty to, anu aie the positive acts of the goveinment, to the making anu
enfoicing of which, the peisonal consent of inuiviuual taxpayeis is not iequiieu.


$)4/KL) 102 &+(H/,)0

uR L-1899S
29 }une 196S


FACTS:
In Bomingo vs. Noscoso (1u6 PBIL 11S8), the Supieme Couit ueclaieu as final
anu executoiy the oiuei of the Couit of Fiist Instance of Leyte foi the payment
of estate anu inheiitance taxes, chaiges anu penalties amounting to P4u,uS8.SS
by the Estate of the late Waltei Scott Piice. The petition foi execution fileu by
the fiscal, howevei, was uenieu by the lowei couit. The Couit helu that the
execution is unjustifieu as the uoveinment itself is inuebteu to the Estate foi
262,2uu; anu oiueieu the amount of inheiitance taxes be ueuucteu fiom the
uoveinment's inuebteuness to the Estate.

ISS0E:
Whethei a tax anu a uebt may be compensateu.

BELB:
The couit having juiisuiction of the Estate hau founu that the claim of the Estate
against the uoveinment has been iecognizeu anu an amount of P262,2uu has
alieauy been appiopiiateu by a coiiesponuing law (RA 27uu). 0nuei the
ciicumstances, both the claim of the uoveinment foi inheiitance taxes anu the
claim of the intestate foi seivices ienueieu have alieauy become oveiuue anu
uemanuable as well as fully liquiuateu. Compensation, theiefoie, takes place by
opeiation of law, in accoiuance with Aiticle 1279 anu 129u of the Civil Coue,
anu both uebts aie extinguisheu to the concuiient amount.


$)4/KL) 12 &+(H/,)0
Labiauoi, } (}une 29, 196S)Petitionei: Nelecio Bomingo as Commissionei of
Inteinal RevenueResponuent: Bon. Loienzo uailitos, CFI Leyte
Facts:
1. In Nelecio Bomingo v. }uuge Noscoso
-
SC ueclaieu as final anu executoi the oiuei of payment by the estate of Waltei
Scott Piice of estate & inheiitance taxes, chaiges, anupenalties P4uK.2.
Petition foi execution of this juugment was sought
-
Atty Beneuicto submitteu:a. Note by the then Pies. Cailos uaicia uiiecting the
Bii. 0f Lanus to pay Nis.
Piice (auministiatix of Waltei Piice's estate) PS69,14u
b. RA 27uu, page 76S: appiopiiating P262,2uu foi payment to Nis. Piice.S. CFI:
Petition BENIEB, execution is not justifiable since the uovt is inuebteu to
theestate. The payment of the claim of CIR uefeiieu until the uovt has paiu this
uebt.Bence this petition to Set Asiue the above oiuei.
Issue:
wn the set-offuefeiment of the claim of CIR is piopei.
Belu:
It is piopei. Compensationset-off of taxes may happen by opeiation of law
when bothuebts aie uue anu uemanuable.1. The oiuinaiy pioceuuie to settle
claims befoie an estate is not a petition foi execution,but by piesenting a claim
befoie the piobate couit.a. Aluamiz vs. }uuge of CFI Ninuoio- Execution may
issue only wheie theuevisees, legatees oi heiis have enteieu into possession of
theii iespectivepoitions in the estate piioi to settlement anu payment of the
uebts anu expensesof auministiation anu it is latei asceitaineu that theie aie
such uebts anuexpenses to be paiu, in which case "the couit having juiisuiction
of the estatemay, by oiuei foi that puipose, aftei heaiing, settle the amount of
theii seveialliabilities, anu oiuei how much anu in what mannei each peison
shall contiibute,anu may issue execution if ciicumstances iequiie" (Rule 89,
section 6; seealso Rule 74, Section 4; Emphasis supplieu.)b. Legal basis is the
fact that the piopeities belonging to the state aie unuei custouia legis, which
continues until saiu piopeities have been uistiibuteu amongthe heiis.2. Couit
having juiisuiction also founu that the claim of the estate has been iecognizeu
by
the gov't anu has alieauy appiopiiateu the coiiesponuing amount.
S.
Claim of the uov't
foi inheiitance taxes against the estate is uue anu uemanuable. The
claim of the estate against the uov't is also uue, uemanuable anu is fully
liquiuateu.
Compensation, theiefoie, takes place by opeiation of law, in accoiuance with
thepiovisions of Aiticles 1279 anu 129u of the Civil Coue, anu both uebts aie
extinguisheuto the concuiient amount.

Tolentino et al is questioning the constitutionality of RA 7716 otheiwise known
as the Expanueu value Auueu Tax (EvAT) Law. Tolentino aveiieu that this
ievenue bill uiu not exclusively oiiginate fiom the Bouse of Repiesentatives as
iequiieu by Section 24, Aiticle 6 of the Constitution. Even though RA 7716
oiiginateu as BB 11197 anu that it passeu the S ieauings in the BoR, the same
uiu not complete the S ieauings in Senate foi aftei the 1
st
ieauing it was
S
iefeiieu to the Senate Ways & Neans Committee theieaftei Senate passeu its
own veision known as Senate Bill 16Su. Tolentino aveiieu that what Senate
coulu have uone is amenu BB 11197 by stiiking out its text anu substituting it
w the text of SB 16Su in that way "the bill iemains a Bouse Bill anu the Senate
veision just becomes the text (only the text) of the BB". Tolentino anu co-
petitionei Roco |howeveij even signeu the saiu Senate Bill.
F<<G3E Whethei oi not EvAT oiiginateu in the BoR.
M3.$E By a 9-6 vote, the SC iejecteu the challenge, holuing that such
consoliuation was consistent with the powei of the Senate to piopose oi concui
with amenuments to the veision oiiginateu in the BoR. What the Constitution
simply means, accoiuing to the 9 justices, is that the initiative must come fiom
the BoR. Note also that theie weie seveial instances befoie wheie Senate
passeu its own veision iathei than having the BoR veision as fai as ievenue anu
othei such bills aie conceineu. This piactice of amenument by substitution has
always been accepteu. The pioposition of Tolentino conceins a meie mattei of
foim. Theie is no showing that it woulu make a significant uiffeience if Senate
weie to auopt his ovei what has been uone.


#+>+,/(+K KL 4L+ 6+LH/H/KLN)O 0+ *+4+P+H++K KL */H/>/K+0@
FKI2 102 D+K Q&2R. No. 81S11 }une Su, 1988j
Post unuei case uigests, Taxation at Weunesuay, Naich u7, 2u12 Posteu by
Schizophienic Ninu
Facts: These foui (4) petitions seek to nullify Executive 0iuei No. 27S issueu by
the Piesiuent of the Philippines, anu which amenueu ceitain sections of the
National Inteinal Revenue Coue anu auopteu the value-auueu tax, foi being
unconstitutional in that its enactment is not allegeuly within the poweis of the
Piesiuent; that the vAT is oppiessive, uisciiminatoiy, iegiessive, anu violates
the uue piocess anu equal piotection clauses anu othei piovisions of the 1987
Constitution.

The vAT is a tax levieu on a wiue iange of goous anu seivices. It is a tax on the
value, auueu by eveiy sellei, with aggiegate gioss annual sales of aiticles
anuoi seivices, exceeuing P2uu,uu.uu, to his puichase of goous anu seivices,
unless exempt. vAT is computeu at the iate of u% oi 1u% of the gioss selling
piice of goous oi gioss ieceipts iealizeu fiom the sale of seivices.

The vAT is saiu to have eliminateu piivilege taxes, multiple iateu sales tax on
manufactuieis anu piouuceis, auvance sales tax, anu compensating tax on
impoitations. The fiameis of E0 27S that it is piincipally aimeu to iationalize
the system of taxing goous anu seivices; simplify tax auministiation; anu make
the tax system moie equitable, to enable the countiy to attain economic
iecoveiy.

The vAT is not entiiely new. It was alieauy in foice, in a mouifieu foim, befoie
E0 27S was issueu. As pointeu out by the Solicitoi ueneial, the Philippine sales
tax system, piioi to the issuance of E0 27S, was essentially a single stage value
auueu tax system computeu unuei the "cost subtiaction methou" oi "cost
ueuuction methou" anu was imposeu only on oiiginal sale, baitei oi exchange of
aiticles by manufactuieis, piouuceis, oi impoiteis. Subsequent sales of such
aiticles weie not subject to sales tax. Bowevei, with the issuance of PB 1991 on
S1 0ctobei 198S, a S% tax was imposeu on a seconu sale, which was ieuuceu to
1.S% upon the issuance of PB 2uu6 on S1 Becembei 198S, to take effect 1
}anuaiy 1986. Reuuceu sales taxes weie imposeu not only on the seconu sale,
but on eveiy subsequent sale, as well. E0 27S meiely incieaseu the vAT on
eveiy sale to 1u%, unless zeio-iateu oi exempt.

Issue: Whethei oi not E0 27S is unconstitutional

Belu: No. Petitioneis have faileu to show that E0 27S was issueu capiiciously
anu whimsically oi in an aibitiaiy oi uespotic mannei by ieason of passion oi
peisonal hostility. It appeais that a compiehensive stuuy of the vAT hau been
extensively uiscusseu by this fiameis anu othei goveinment agencies involveu
in its implementation, even unuei the past auministiation. As the Solicitoi
ueneial coiiectly sateu. "The signing of E.0. 27S was meiely the last stage in the
exeicise of hei legislative poweis. The legislative piocess staiteu long befoie
the signing when the uata weie gatheieu, pioposals weie weigheu anu the final
woiuings of the measuie weie uiafteu, ieviseu anu finalizeu. Ceitainly, it cannot
be saiu that the Piesiuent maue a jump, so to speak, on the Congiess, two uays
befoie it conveneu."

Next, the petitioneis claim that E0 27S is oppiessive, uisciiminatoiy, unjust anu
iegiessive.

The petitioneis" asseitions in this iegaiu aie not suppoiteu by facts anu
ciicumstances to waiiant theii conclusions. They have faileu to auequately
show that the vAT is oppiessive, uisciiminatoiy oi unjust. Petitioneis meiely
iely upon newspapei aiticles which aie actually heaisay anu have eviuentiaiy
value. To justify the nullification of a law, theie must be a cleai anu unequivocal
bieach of the Constitution, not a uoubtful anu aigumentative implication.

As the Couit sees it, E0 27S satisfies all the iequiiements of a valiu tax. It is
unifoim. A tax is consiueieu unifoim when it opeiates with the same foice anu
effect in eveiy place wheie the subject may be founu." The sales tax auopteu in
4
E0 27S is applieu similaily on all goous anu seivices solu to the public, which
aie not exempt, at the constant iate of u% oi 1u%.

The uisputeu sales tax is also equitable. It is imposeu only on sales of goous oi
seivices by peisons engage in business with an aggiegate gioss annual sales
exceeuing P2uu,uuu.uu. Small coinei saii-saii stoies aie consequently exempt
fiom its application. Likewise exempt fiom the tax aie sales of faim anu maiine
piouucts, spaieu as they aie fiom the inciuence of the vAT, aie expecteu to be
ielatively lowei anu within the ieach of the geneial public.

The Couit likewise finus no meiit in the contention of the petitionei Integiateu
Customs Biokeis Association of the Philippines that E0 27S, moie paiticulaily
the new Sec. 1uS (i) of the National Inteinal Revenue Coue, unuuly
uisciiminates against customs biokeis.

At any iate, the uistinction of the customs biokeis fiom the othei piofessionals
who aie subject to occupation tax unuei the Local Tax Coue is baseu upon
mateiial uiffeiences, in that the activities of customs biokeis (like those of
stock, ieal estate anu immigiation biokeis) paitake moie of a business, iathei
than a piofession anu weie thus subjecteu to the peicentage tax unuei Sec. 174
of the National Inteinal Revenue Coue piioi to its amenument by E0 27S. E0
27S abolisheu the peicentage tax anu ieplaceu it with the vAT.


!"5! R!..3S CT..3&3@ F6C2 R< !UGF6T VG63 7; 7W99*!5!<@ }.

FACTS:Abia valley College, an euucational coipoiation anu institution of
higheileaining uuly incoipoiateu with the SEC fileu a complaint to annul anu
ueclaievoiu the "Notice of Seizuie" anu the "Notice of Sale" of its lot anu
builuing locateuat Bangueu, Abia, foi non-payment of ieal estate taxes anu
penalties. PateinoNillaie fileu thiough counsel a motion to uismiss the
complaint. The piovincialfiscal fileu a memoianuum foi the goveinment
wheiein they opineu hat baseu onthe eviuence, the laws applicable, couit
uecisions anu juiispiuuence, the schoolbuiluing anu the school lot useu foi
euucational puiposes of the Abia valleyCollege aie exempteu fiom payment of
taxes. Nonetheless, the tiial couituisagieeu because of the use of the seconu
flooi by the Biiectoi of the saiu schoolfoi iesiuential puipose. Be thus iuleu foi
the goveinment anu ienueieu theassaileu uecision.ISS0E:Whethei oi not the lot
anu builuing in question aie useu exclusively foieuucational
puiposes.BELB:N0. It must be stiesseu that while the couit allows a moie
libeial anu non-iestiictive inteipietation of the phiase "exclusively useu foi
euucationalpuiposes" as pioviueu foi in the Aiticle vI, Section 22, Paiagiaph S
of the 19SSPhilippine Constitution, ieasonable emphasis has always been maue
thatexemption extenus to facilities which aie inciuental to anu ieasonably
necessaiyfoi the accomplishment of the main puipose. 0theiwise stateu, the
use of theschool builuing oi lot foi commeicial puiposes is neithei
contemplateu by law, noiby juiispiuuence. Thus, while the use of the seconu
flooi of the main builuing inthe case at bai foi iesiuential puiposes of the
Biiectoi anu his family, may finu justification unuei the concept of inciuental
use, which is complimentaiy to themain oi piimaiy puipose - euucational, the
lease of the fiist flooi theieof to theNoithein Naiketing Coipoiation cannot by
any stietch of the imagination beconsiueieu inciuental to the puiposes of
euucation.0nuei the 19SS Constitution, the iial couit coiiectly aiiiveu at
theconclusion that the school builuing as well as the lot wheie it is built, shoulu
betaxeu, not because the seconu flooi of the same is being useu by the uiiectoi
anuhis family foi iesiuential puiposes, but because the fiist flooi theieof is
being useufoi commeicial puiposes. Bowevei, since only a poition is useu foi
puiposes of commeice, it is only faii that half of the assesseu tax be ietuin to
the schoolinvolveu.

R/HH+K'=1+ 102 FH)/H) C/,-
uR L-26S21, 28 Becembei 1968En Banc, Castio (}): 8 concui
Facts:
0n Su Septembei 1946, the Nunicipal Boaiu of Iloilo City enacteu 0iuinance 86
imposinglicense tax fees upon tenement house (P2S); tenemen house paitly
engageu oi wholly engageu in anuueuicateu to business in Baza, Iznait, anu
Alueguei Stieets (P24 pei apaitment); anu tenementhouse, pautly oi wholly
engageu in business in othei stieets (P12 pei apaitment). The valiuity of
suchoiuinance was challengeu by Eusebio anu Remeuios villanueva, owneis of
foui tenement housescontaining S4 apaitments. The Supieme Couit helu the
oiuinance to be ultia viies. 0n 1S }anuaiy196u, howevei, the municipal boaiu,
believing that it acquiieu authoiity to enact an oiuinance of thesame natuie
puisuant to the Local Autonomy Act, enacteu 0iuinance 11 (seiies of 196u),
Eusebioanu Remeuios villaniueva assaileu the oiuinance anew.
Issue:
Whethei 0iuinance 11 violate the iule of unifoimity of taxation.
Belu:
The Couit has iuleu that tenement houses constitute a uistinct class of piopeity;
anu that taxesaie unifoim anu equal when imposeu upon all piopeity of the
same class oi chaiactei within thetaxing authoiity. The fact that the owneis of
the othei classes of builuings in Iloilo aie not imposeuupon by the oiuinance, oi
that tenement taxes aie imposeu in othei cities uo not violate the iule of
equality anu unifoimity. The iule uoes not iequiie that taxes foi the same
puipose shoulu be imposeuin uiffeient teiiitoiial subuivisions at the same time.
So long as the buiuen of tax falls equally anuimpaitially on all owneis oi
opeiatois of tenement houses similaily classifieu oi situateu, equality
anuunifoimity is accomplisheu. The piesumption that tax statutes aie intenueu
to opeiate unifoimly anuequally was not oveithiown heiein
S


*5TCD35 X &!J".3 R< JG6FCF*!.FDS

Facts: Petitionei uomestic coipoiation owns a Bouega within the juiisuiction of
iesponuent.

Responuent issueu a Nunicipal 0iuinance chaiging 1u centavos foi eveiy 1uu
kilos of stoieu copia with a fineimpiisonment if not followeu.

Foi 6 yeais aftei, petitionei paiu unuei piotest.

Petitionei then claimeu that oiuinance shoulu be iuleu inapplicable to it anu
that a iefunu be maue. Petitionei claims it is not ieally in the business of tiauing
copia, but only uses it in connection to its business, anu that it is an expoit tax.
Petitionei also alleges that it woulu leau to uouble taxation because it is not
involveu in the business of copia.

Issues:
(1) Whethei oi not iesponuent has the authoiity to issue the Nunicipal 0iuei.

(2) Whethei oi not theie is uouble taxation.

(S) Whethei oi not it is an expoit tax which is piohibiteu.

Belu:
(1) YES. Bioau authoiity has been gianteu to municipalities, incluuing the
powei to exeicise license taxes. In this case, the oiuinance is chaiging a license
tax foi the piivilege of stoiing copia. This is valiu because copia is highly
flammable, anu safety of the public is the intent of chaiging the tax. Also the iate
is not oppiessive oi unieasonable.

(2) N0. It is immateiial what the business of the petitionei is. The tax is, as saiu,
foi the piivilege to stoie copia in theii bouega which is entiiely uiffeient fiom a
tax on petitionei's piouucts. Foi uouble taxation to exist, the same thing must
be taxeu twice within the same juiisuiction, which is not the case heie.

(S) N0. 0nly wheie theie is a cleai showing that what is being taxeu is an expoit
to any foieign countiy woulu the piohibition come into play. When the
0iuinance itself speaks of "expoitable" copia, the meaning is not exclusively
expoit to a foieign countiy but shipment out of the municipality. The stoiage
fee impugneu is not a tax on expoit because it is imposeu not only upon copia to
be expoiteu but also upon copia solu anu to be useu foi uomestic puiposes if
stoieu in any waiehouse in the Nunicipality anu the weight theieof is 1uu kilos
oi moie.

The action has not yet piesciibeu because in the case of Nunicipality of 0pon v.
Caltex, the peiiou to iecovei municipal license taxes is 6 yeais, anu theiefoie
the claim heie is within the piesciiptive peiiou.

0iuinance sustaineu.


J!C3$! R< J!C!5!F&

The National Powei Coipoiation was cieateu by CA 12u. In 1949, it was given
tax exemption by RA SS8. NPC was fuithei stiengtheneu by RA 6S9S in 1971. In
1984, PB 19S1 was passeu iemoving the tax exemption of NPC anu othei
u0CCs. Theie was a ieseivation, howevei, that the piesiuent oi the Ninistei of
Finance upon iecommenuation by the Fiscal Incentives Review Boaiu may
iestoie oi mouify the exemption. In 198S, the tax exemption was ieviveu. It was
again iemoveu in 1987 by viitue of E0 9S wc again pioviueu that upon FIRB
iecommenuation it can again be iestoieu. In the same yeai, FIRB iesolveu to
iestoie the exemption. The same was appioveu by Coiy thiough exec sec
Nacaiaig acting as hei altei ego. Naceua opineu the FIRB iesolution aveiiing
that the powei gianteu to the FIRB is an unuue uelegation of legislative powei.
Bis claim was stiengtheneu by 0pinion 77 issueu by B0} Secietaiy 0iuoez.
ISS0E: Whethei oi not 0pinion 77 can be given cieuence.
BELB: The SC iuleu that theie is no unuue uelegation of legislative powei. Fiist
of all, since the NPC is a u0CC anu is non-piofit it can be exempt fiom taxation.
Also, 0pinion 77 issueu by B0} Sec 0iuoez was oveiiuleu by Nacaiaig. This
action by Nacaiaig is valiu because the Executive Secietaiy, by authoiity of the
Piesiuent, has the powei to mouify, altei oi ieveise the constiuction of a statute
given by a uepaitment secietaiy - puisuant to the piesiuent's contiol powei.