TAXATION I CASE DIGESTS

1. ABRA VALLEY COLLEGE, INC. VS AQUINO

JUNE 15 1988 Paras, J.
FACTS:
Abra Valley College, an educational corporation and institution of higher learning duly incorporated with
the SEC filed a complaint to annul and declare void the Notice of Seizure and the Notice of Sale of
its lot and building located at Bangued, Abra, for non-payment of real estate taxes and penalties. Paterno
Millare filed through counsel a motion to dismiss the complaint. The provincial fiscal filed a
memorandum for the government wherein they opined hat based on the evidence, the laws applicable,
court decisions and jurisprudence, the school building and the school lot used for educational purposes of
the Abra Valley College are exempted from payment of taxes. Nonetheless, the trial court disagreed
because of the use of the second floor by the Director of the said school for residential purpose. He thus
ruled for the government and rendered the assailed decision.
ISSUE:
Whether or not the lot and building in question are used exclusively for educational purposes?
HELD: NO. It must be stressed that while the court allows a more liberal and non-restrictive
interpretation of the phrase exclusively used for educational purposes as provided for in the Article VI,
Section 22, Paragraph 3 of the 1935Philippine Constitution, reasonable emphasis has always been made
that exemption extends to facilities which are incidental to and reasonably necessary for the
accomplishment of the main purpose. Otherwise stated, the use of the school building or lot for
commercial purposes is neither contemplated by law, nor by jurisprudence. Thus, while the use of the
second floor of the main building in the case at bar for residential purposes of the Director and his family,
may find justification under the concept of incidental use, which is complimentary to the main or primary
purpose educational, the lease of the first floor thereof to the Northern Marketing Corporation cannot by
any stretch of the imagination be considered incidental to the purposes of education. Under the 1935
Constitution, the trial court correctly arrived at the conclusion that the school building as well as the lot
where it is built, should be taxed, not because the second floor of the same is being used by the director
and his family for residential purposes, but because the first floor thereof is being used for commercial
purposes. However, since only a portion is used for purposes of commerce, it is only fair that half of the
assessed tax be return to the school involved.
2. Allied Thread vs. City of Manila
GR L-40296, 21 November 1984
En Banc, Abad Santos (J): 10 concur, 2 took no part
Facts:
Allied Thread Co. Inc. is engaged in the business of manufacturing sewing thread and yarn. It operates
its factory and maintains an office in Pasig, Rizal. In order to sell its products in Manila and in other parts
of the Philippines, it engaged the services of a sales broker, Ker & Co. Ltd., the latter deriving
commissions from every sale made for its principal. The City of Manila enacted Ordinance 7516
imposing business taxes based on gross sales on a graduated basis on manufacturers, importers or
producers doing business in Manila. Allied Thread and Ker & Co. alleged that said ordinance is invalid
for being contrary to Section 54 of PD 426.
Issue:
Whether Allied Thread is properly taxed in Manila.
Held:
Ordinance 7516, as amended, imposes a business tax on manufacturers, importers or producers doing
business in Manila. The tax imposition is upon the performance of an act, enjoyment of a privilege, or the
engaging in an occupation, and hence is in the nature of an excise tax. The power to levy an excise upon
the perforance of an act or the engaging in an occupation does not depend upon the domicile of the person
subject to the excise, nor upon the physical location of the property and in connection with the act or
occupation taxed, but depends upon the place in which the act is performed or occupation engaged in.
Thus, since Allied Thread sells its products in the City of Manila through its broker, Ker & Co., it cannot
escape the tax liability imposed by Ordinance 7516, as amended.

3. American Bible Society vs. Manila

GR L-9637, 30 April 1957
Second Division, Felix (J): 7 concur, 1 concur in result
Facts:
In the course of its ministry, the Philippine agency of the American Bible Society has been distributing
and selling bibles and/or gospel portions thereof throughout the Philippines and translating the same into
several Philippine dialets. The acting City Treasurer of Manila required the society to secure the
corresponding Mayors permit and municipal license fees, together with compromise covering the period
from the 4th quarter of 1945 to the 2nd quarter of 1953. The society paid such under protest, and filed suit
questioning the legality of the ordinances under which the fees are being collected.
Issue:
Whether the municipal ordinances violate the freedom of religious profession and worship.
Held:
A tax on the income of one who engages in religious activities is different from a tax on property used
or employed in connection with those activities. It is one thing to impose a tax on the income or property
of a preacher, and another to exact a tax for him for the privilege of delivering a sermon. The power to tax
the exercise of a privilege is the power to control or suppress its enjoyment. Even if religious groups and
the press are not altogether free from the burdens of the government, the act of distributing and selling
bibles is purely religious and does not fall under Section 27 (e) of the Tax Code (CA 466). The fact that
the price of bibles,etc. are a little higher than actual cost of the same does not necessarily mean it is
already engaged in business for profit. Ordinance 2529 and 3000 are not applicable to the Society.

4. Commissioner vs. Algue

GRL-28896, 17 February 1988
First Division, Cruz (J); 4 concur
Facts:
The Philippine Sugar Estate Development Company (PSEDC) appointed Algue Inc. as its agent,
authorizing it to sell its land, factories, and oil manufacturing process. The Vegetable Oil Investment
Corporation (VOICP) purchased PSEDC properties. For the sale, Algue received a commission of
P125,000 and it was from this commission that it paid Guevara, et. al. organizers of the VOICP, P75,000
in promotional fees. In 1965, Algue received an assessment from the Commissioner of Internal Revenue
in the amount of P83,183.85 as delinquency income tax for years 1958 amd 1959. Algue filed a protest or
request for reconsideration which was not acted upon by the Bureau of Internal Revenue (BIR). The
counsel for Algue had to accept the warrant of distrant and levy. Algue, however, filed a petition for
review with the Court of Tax Appeals.
Issue:
Whether the assessment was reasonable.
Held:
Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.
Every person who is able to pay must contribute his share in the running of the government. The
Government, for his part, is expected to respond in the form of tangible and intangible benefits intended

to improve the lives of the people and enhance their moral and material values. This symbiotic
relationship is the rationale of taxation and should dispel the erroneous notion that is an arbitrary method
of exaction by those in the seat of power. Tax collection, however, should be made in accordance with law
as any arbitrariness will negate the very reason for government itself. For all the awesome power of the
tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate that the law has not
been observed. Herein, the claimed deduction (pursuant to Section 30 [a] [1] of the Tax Code and Section
70 [1] of Revenue Regulation 2: as to compensation for personal services) had been legitimately by Algue
Inc. It has further proven that the payment of fees was reasonable and necessary in light of the efforts
exerted by the payees in inducing investors (in VOICP) to involve themselves in an experimental
enterprise or a business requiring millions of pesos.
The assessment was not reasonable.
5. MARUBENI CORPORATION V. COMMISSIONER OF INTERNAL REVENUE
(177 SCRA 500)
Topic: Tax on dividends remitted to foreign corporations
Facts:
Marubeni Corporation is a Japanese corporation licensed to engage in business in the Philippines.
When the profitson Marubeni s investments in Atlantic Gulf and Pacific Co. of Manila were declared, a
10% final dividend tax was withheld from it, and another 15% profit remittance tax based on the
remittable amount after the final 10% withholding tax were paid to the Bureau of Internal Revenue.
Marubeni Corp. now claims for a refund or tax credit for the amount which it has allegedly overpaid the
BIR.
Issues and Ruling:
1. W/N the dividends Marubeni Corporation received from Atlantic Gulf and Pacific Co. are effectively
connected with its conduct or business in the Philippines as to be considered branch profits subject to
15%profit remittance tax imposed under Section 24(b)(2) of the National Internal Revenue
Code.NO. Pursuant to Section 24(b)(2) of the Tax Code, as amended, only profits remitted abroad by
a branch office to its head office which are effectively connected with its trade or business in the
Philippines are subject to the 15% profit remittance tax. The dividends received by Marubeni
Corporation from Atlantic Gulf and Pacific Co. are not income arising from the business activity in
which Marubeni Corporation is engaged. Accordingly, said dividends if remitted abroad are not
considered branch profits for purposes of the 15% profit remittance tax imposed by Section 24(b)(2)
of the Tax Code, as amended.2.
2. Whether Marubeni Corporation is a resident or non-resident foreign corporation. Marubeni
Corporation is a non-resident foreign corporation, with respect to the transaction. Marubeni
Corporation s head office in Japan is a separate and distinct income taxpayer from the branch in the
Philippines. The investment on Atlantic Gulf and Pacific Co. was made for purposes peculiarly
germane to the conduct of the corporate affairs of Marubeni Corporation in Japan, but certainly not
of the branch in the Philippines.3.
3. At what rate should Marubeni be taxed?15%. The applicable provision of the Tax Code is Section
24(b)(1)(iii) in conjunction with the Philippine-Japan Tax Treaty of 1980. As a general rule, it is
taxed 35% of its gross income from all sources within the Philippines. However, a discounted rate of
15% is given to Marubeni Corporation on dividends received from Atlantic Gulf and Pacific Co. on
the condition that Japan, its domicile state, extends in favor of Marubeni Corporation a tax credit of
not less than20% of the dividends received. This 15% tax rate imposed on the dividends received
under Section 24(b)(1)(iii) is easily within the maximum ceiling of 25% of the gross amount of the
dividends as decreed in Article 10(2)(b) of the Tax Treaty.
Notes:
Each tax has a different tax basis. Under the Philippine-Japan Tax Convention, the 25% rate fixed is the
maximum rate, as reflected in the phrase shallnot exceed. This means that any tax imposable by the
contracting state concerned should not exceed the 25%limitation and said rate would apply only if the tax
imposed by our laws exceeds the same.

6. Commissioner vs. Procter & Gamble Philippines

GR L-66838, 15 April 1988
Second Division, Paras (J)
Facts:
Procter and Gamble Philippines is a wholly owned subsidiary of Procter and Gamble USA (PMCUSA), a non-resident foreign corporation in the Philippines, not engaged in trade and business therein.
PMC-USA is the sole shareholder of PMC Philippines and is entitled to receive income from PMC
Philippines in the form of dividends, if not rents or royalties. For the taxable years 1974 and 1975, PMC
Philippines filed its income tax return and also declared dividends in favor of PMC-USA. In 1977, PMC
Philippines, invoking the tax-sparing provision of Section 24 (b) as the withholding agent of the
Philippine Government with respect to dividend taxes paid by PMC-USA, filed a claim for the refund of
20 percentage point portion of the 35 percentage whole tax paid with the Commissioner of Internal
Revenue.
Issue:
Whether PMC Philippines is entitled to the 15% preferential tax rate on dividends declared and remitted
to its parent corporation.
Held:
The issue raised is one made for the first time before the Supreme Court. Under the same underlying
principle of prior exhaustion of administrative remedies, on the judicial level, issues not raised in the
lower court cannot be generally raised for the first time on appeal. Nonetheless, it is axiomatic that the
state can never be allowed to jeopardize the governments financial position. The submission of the
Commissioner that PMC Philippines is but a withholding agent of the government and therefore cannot
claim reimbursement of alleged overpaid taxes, is completely meritorious. The real party in interest is
PMC-USA, which should prove that it is entitled under the US Tax Code to a US Foreign Tax Credit
equivalent to at least 20 percentage points spared or waived as otherwise considered or deemed paid by
the Government. Herein, the claimant failed to show or justify the tax return of the disputed 15% as it
failed to show the actual amount credited by the US Government against the income tax due from PMCUSA on the dividends received from PMC Philippines; to present the income tax return of PMC-USA for
1975 when the dividends were received; and to submit duly authenticated document showing that the US
government credited the 20% tax deemed paid in the Philippines.
7. CIR v Solidbank Corporation (G.R. No. 148191)
Facts:
Solidbank filed its Quarterly Percentage Tax Returns reflecting gross receipts amounting to
P1,474,693.44. It alleged that the total included P350,807,875.15 representing gross receipts from passive
income which was already subjected to 20%final withholding tax (FWT). The Court of Tax Appeals
(CTA) held in Asian Ban Corp. v Commissioner, that the 20% FWT should not form part of its taxable
gross receipts for purposes of computing the tax. Solidbank, relying on the strength of this decision, filed
with the BIR a letter-request for the refund or tax credit. It also filed a petition for review with the CTA
where the it ordered the refund. The CA ruling, however, stated that the 20% FWT did not form part of
the taxable gross receipts because the FWT was not actually received by the bank but was directly
remitted to the government. The Commissioner claims that although the FWT was not actually received
by Solidbank, the fact that the amount redounded to the banks benefit makes it part of the taxable gross
receipts in computing the Gross Receipts Tax. Solidbank says the CA ruling is correct.
Issue:
Whether or not the FWT forms part of the gross receipts tax.
Held:
Yes. In a withholding tax system, the payee is the taxpayer, the person on whom the tax is imposed. The
payor, a separate entity, acts as no more than an agent of the government for the collection of tax in order
to ensure its payment. This amount that is used to settle the tax liability is sourced from the proceeds
constitutive of the tax base.These proceeds are either actual or constructive. Both parties agree that there
is no actual receipt by the bank. What needs to be determined is if there is constructive receipt. Since the
payee is the real taxpayer, the rule on constructive receipt can be rationalized.

The Court applied provisions of the Civil Code on actual and constructive possession. Article 531 of the
Civil Code clearly provides that the acquisition of the right of possession is through the proper acts and
legal formalities established. The withholding process is one such act. There may not be actual receipt of
the income withheld; however, as provided for in Article 532, possession by any person without any
power shall be considered as acquired when ratified by the person in whose name the act of possession is
executed. In our withholding tax system, possession is acquired by the payor as the withholding agent of
the government, because the taxpayer ratifies the very act of possession for the government. There is thus
constructive receipt.
The processes of bookkeeping and accounting for interest on deposits and yield on deposit substitutes that
are subjected to FWT are tantamount to delivery, receipt or remittance. Besides, Solidbank admits that its
income is subjected to a tax burden immediately upon receipt, although it claims that it derives no
pecuniary benefit or advantage through the withholding process.
There being constructive receipt, part of which is withheld, that income is included as part of the tax base
on which the gross receipts tax is imposed.
8. COMMISIONER OF INTERNAL REVENUE vs. S.C. JOHNSON AND SON, INC.,
Facts:
S.C. JOHNSON AND SON, INC., a domestic corporation organized and operating under the Philippine
laws, entered into a license agreement with SC Johnson and Son, United States of America (USA), a nonresident foreign corporation based in the U.S.A. pursuant to which the [respondent] was granted the right
to use the trademark, patents and technology owned by the latter including the right to manufacture,
package and distribute the products covered by the Agreement and secure assistance in management,
marketing and production from SC Johnson and Son, U. S. A.
The said License Agreement was duly registered with the Technology Transfer Board of the Bureau of
Patents, Trade Marks and Technology Transfer under Certificate of Registration No. 8064.For the use of
the trademark or technology, [respondent] was obliged to pay SC Johnson and Son, USA royalties based
on a percentage of net sales and subjected the same to 25% withholding tax on royalty payments which
[respondent] paid for the period covering July 1992 to May 1993 in the total amount of P1,603,443.00
On October 29, 1993, [respondent] filed with the International Tax Affairs Division (ITAD) of the BIR a
claim for refund of overpaid withholding tax on royalties arguing that, the antecedent facts attending
[respondent's] case fall squarely within the same circumstances under which said MacGeorge and Gillete
rulings were issued. Since the agreement was approved by the Technology Transfer Board, the
preferential tax rate of 10% should apply to the [respondent]. We therefore submit that royalties paid by
the [respondent] to SC Johnson and Son, USA is only subject to 10% withholding tax pursuant to the
most-favored nation clause of the RP-US Tax Treaty [Article 13 Paragraph 2 (b) (iii)] in relation to the
RP-West Germany Tax Treaty [Article 12 (2) (b)] (Petition for Review [filed with the Court of Appeals]
The RP-US Tax Treaty states that:
1) Royalties derived by a resident of one of the Contracting States from sources within the other
Contracting State may be taxed by both Contracting States.
2) However, the tax imposed by that Contracting State shall not exceed.
a) In the case of the United States, 15 percent of the gross amount of the royalties, and
b) In the case of the Philippines, the least of:
(i) 25 percent of the gross amount of the royalties;
(ii) 15 percent of the gross amount of the royalties, where the royalties are paid by a corporation
registered with the Philippine Board of Investments and engaged in preferred areas of activities; and
(iii) the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar
circumstances to a resident of a third State.

The RP-Germany Tax Treaty provides:

(2) However, such royalties may also be taxed in the Contracting State in which they arise, and according
to the law of that State, but the tax so charged shall not exceed:
b) 10 percent of the gross amount of royalties arising from the use of, or the right to use, any patent,
trademark, design or model, plan, secret formula or process, or from the use of or the right to use,
industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or
scientific experience.
For as long as the transfer of technology, under Philippine law, is subject to approval, the limitation of the
tax rate mentioned under b) shall, in the case of royalties arising in the Republic of the Philippines, only
apply if the contract giving rise to such royalties has been approved by the Philippine competent
authorities.
The Commissioner did not act on said claim for refund. Private respondent S.C. Johnson & Son, Inc.
(S.C. Johnson) then filed a petition for review before the Court of Tax Appeals (CTA).The Court of Tax
Appeals rendered its decision in favor of S.C. Johnson and ordered the Commissioner of Internal Revenue
to issue a tax credit certificate in the amount of P963,266.00 representing overpaid withholding tax on
royalty payments, beginning July, 1992 to May, 1993.2
The Commissioner of Internal Revenue thus filed a petition for review with the Court of Appeals which
rendered the decision finding no merit in the petition and affirming in toto the CTA ruling.
Thus, this petition.
Issue:
Whether the Court of Appeals erred in ruling that SC Johnson and Son, USA is entitled to the Most
Favored Nation Tax rate of 10% on Royalties as provide in the RP-US Tax Treaty in relation to the RPWest Germany Tax Treaty?
Ruling:
Under Article 24 of the RP-West Germany Tax Treaty, the Philippine tax paid on income from sources
within the Philippines is allowed as a credit against German income and corporation tax on the same
income. In the case of royalties for which the tax is reduced to 10 or 15 percent according to paragraph 2
of Article 12 of the RP-West Germany Tax Treaty, the credit shall be 20% of the gross amount of such
royalty. To illustrate, the royalty income of a German resident from sources within the Philippines arising
from the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or
process, is taxed at 10% of the gross amount of said royalty under certain conditions. The rate of 10% is
imposed if credit against the German income and corporation tax on said royalty is allowed in favor of the
German resident. That means the rate of 10% is granted to the German taxpayer if he is similarly granted
a credit against the income and corporation tax of West Germany. The clear intent of the matching
credit is to soften the impact of double taxation by different jurisdictions.
The RP-US Tax Treaty contains no similar matching credit as that provided under the RP-West
Germany Tax Treaty. Hence, the tax on royalties under the RP-US Tax Treaty is not paid under similar
circumstances as those obtaining in the RP-West Germany Tax Treaty. Therefore, the most favored
nation clause in the RP-West Germany Tax Treaty cannot be availed of in interpreting the provisions of
the RP-US Tax Treaty.5
The rationale for the most favored nation clause, the concessional tax rate of 10 percent provided for in
the RP-Germany Tax Treaty should apply only if the taxes imposed upon royalties in the RP-US Tax
Treaty and in the RP-Germany Tax Treaty are paid under similar circumstances. This would mean that
private respondent must prove that the RP-US Tax Treaty grants similar tax reliefs to residents of the
United States in respect of the taxes imposable upon royalties earned from sources within the Philippines
as those allowed to their German counterparts under the RP-Germany Tax Treaty.
The RP-US and the RP-West Germany Tax Treaties do not contain similar provisions on tax crediting.
Article 24 of the RP-Germany Tax Treaty expressly allows crediting against German income and
corporation tax of 20% of the gross amount of royalties paid under the law of the Philippines. On the
other hand, Article 23 of the RP-US Tax Treaty, which is the counterpart provision with respect to relief
for double taxation, does not provide for similar crediting of 20% of the gross amount of royalties paid.

Since the RP-US Tax Treaty does not give a matching tax credit of 20 percent for the taxes paid to the
Philippines on royalties as allowed under the RP-West Germany Tax Treaty, private respondent cannot be
deemed entitled to the 10 percent rate granted under the latter treaty for the reason that there is no
payment of taxes on royalties under similar circumstances.
9. CITY OF BAGUIO vs. DE LEON
25 SCRA 938
GR No. L-24756, October 31, 1968
"There is no double taxation where one tax is imposed by the state and the other is imposed by the city."
FACTS:
The City of Baguio passed an ordinance imposing a license fee on any person, entity or corporation doing
business in the City. The ordinance sourced its authority from RA No. 329, thereby amending the city
charter empowering it to fix the license fee and regulate businesses, trades and occupations as may be
established or practiced in the City. De Leon was assessed for P50 annual fee it being shown that he was
engaged in property rental and deriving income therefrom. The latter assailed the validity of the ordinance
arguing that it is ultra vires for there is no statury authority which expressly grants the City of Baguio to
levy such tax, and that there it imposed double taxation, and violates the requirement of uniformity.
ISSUE: Are the contentions of the defendant-appellant tenable?
HELD: No. First, RA 329 was enacted amending Section 2553 of the Revised Administrative Code
empowering the City Council not only to impose a license fee but to levy a tax for purposes of revenue,
thus the ordinance cannot be considered ultra vires for there is more than ample statutory authority for the
enactment thereof. Second, an argument against double taxation may not be invoked where one tax is
imposed by the state and the other is imposed by the city, so that where, as here, Congress has clearly
expressed its intention, the statute must be sustained even though double taxation results. And third,
violation of uniformity is out of place it being widely recognized that there is nothing inherently
obnoxious in the requirement that license fees or taxes be exacted with respect to the same occupation,
calling or activity by both the state and the political subdivisions thereof.
10. De Villata vs. JS Stanley (GR 8154, 20 December 1915)
En Banc, Carson (J): 4 concur, 1 concur in result
Facts:
Joaquin de Villata is the master of SS Vizcaya of the coastwise trade. As such captain, on 6 July 1912,
when sailing from the port of Gubat to the port of Legaspi, Philippine Islands, he failed to notify the
postmaster of the former port, in advance, of his intended sailing, and therefore failed to carry the mails
between said ports. The Collector of Customs (JS Stanley, Acting Insular Collector of Customs) was
threatening to suspend or revoke the license of de Villata by reason of said facts, under and by virtue of
the terms of Customs Administrative Circular 627. De Villata filed an application for a writ of prohibition
directed against the Collector of Customs to restrain him from enforcing Customs Administrative Circular
627against de Villata. The case was submitted to the Supreme Court upon de Villatas demurrer to
Stanleys answer to the complaint.The Supreme Court held that the complaint, unless amended, must be
dismissed, on the ground that no cause of action is developed by the pleadings. The Court ordered that 20
days thereafter, the complaint be dismissed at the costs of the de Villata unless amended so as to set forth
a cause of action, and 10 days thereafter let therecord be filed in the archives of original actions in the
Supreme Court.
1.Customs Administrative Circular 627 (Prescribing regulations for the transportation of mails
on vessels engaged in the Philippine coastwise trade, 24 December 1910)
[par 1] Every vessel to which a license is granted under the provisions of section 117 of Act No. 355
to engage in the coastwise trade of the Philippine Islands . . . shall carry mail tendered for transportation
in a safe and secure manner, and shall keep the same free from injury by water or otherwise. Masters,
owners, or agents of vessels shall give prompt advance notice of the intended sailing thereof to the
postmaster at each port of departure in ample time to permit the making up of mails for dispatch. Any
changes in such sailings shall also be promptly communicated to the postmaster.

[par 2] Mails carried by vessels shall be delivered at ports of call on shore or on a wharf immediately after
arrival and prior to the discharge or lading of any cargo, and shall be taken from shore or wharf just
before the vessels sailing time, except at ports where the postal authorities have arranged for ship-side
delivery.
[par 3] Each vessel mentioned in the preceding paragraph shall be provided with a lock box having a slot
in the top or side thereof to receive letters, papers, or other mail matter delivered on board the vessel after
the mails have been closed at the post office for that particular voyage. All mail matter deposited in such
box shall be delivered by the master, or his representative, to the postmaster at a port of call where a post
office is located.
[par 4] The master, owner, agent, or other person in charge of a vessel shall be legally liable for the loss of
or damage to mail in his custody, or in the custody of his representatives or agents.
[par 5] The license of the master of any vessel engaged in the coastwise trade of the Philippine Islands
may be suspended or revoked by the Insular Collector of Customs for failure to comply with or strictly
enforce the regulations governing the transportation of mails.
[par 6] Postmasters throughout the Islands are requested to promptly report to this office in writing any
unnecessary delay in the handling of mails transported by vessels, or failure on the part of masters thereof
to comply with the requirements of this circular.
[par 7] Philippine customs officers shall give due publicity to the terms of this circular.
2. Decree of 4 August 1863
A decree dated 4 August 1863, provided as follows: In the matter of the investigation made for the
application of the provisions now in force relative to the notice to be given in advance to the post office of
the sailings of ships, in the exceptional case of a ship just arrived in port and which has to sail
immediately for the convenience of the interests of its owners or consignees, Having considered the
ordinances relating to packet boats and other royal orders and superior decrees imposing upon the captain
of every ship the duty of giving notice to the postoffice four days in advance at least of the date they are
to sail and the port of destination, Considering that the actual application of such provisions might affect
in a remarkable way the commercial interests in the very exceptional case spoken of, where the ship just
anchored should have to set sail again before the period of four days referred to, The capitamia del puerto,
the administracion general de aduanas, comandancia general de carabineros and the administracion
general de correos, having been heard, This superior civil government ordains: That when a ship falls
within the precise exceptional case raised by the within resolution, its captain shall only be required to
give, from the very instant of determining the sailing of the ship, immediate notice to the postoffice
stating the day and hour in which the sailing must be made, For the purposes that may be proper, let this
decree be communicated to the comandancia general de marina, capitania del puerto de Manila and
Cavite and the administracion general de correos, and let same be published in the Gazette for general
information. Report to the government of H. M. and file. (Berriz, Diccionario de la Administracion de
Filipinas, 1888, vol. 1, p. 516.)
3.Decree of 13 January 1876
A later decree dated 13 January 1876, was as follows: Having considered the consultation made by
the comandancia general de marina proposing the amendment of section 7 of the superior decree of
December 18, 1868, relative to the duty imposed upon shipowners or consignees of steamers whether
national or foreign, plying between this port and the other ports of the Archipelago or China and vice
versa, of giving four days notice before the day they are to sail, to their great prejudice; and Having
considered the reports submitted by the direccion general de administracion civil and the administracion
general de correos: Considering the fact that since that superior order was enforced, the fortunate increase
of steamers and consequently the frequent repetition of voyages made by them, is evident, and therefore,
this circumstance alone would change the object or reason which at that time made it necessary to impose
the duty referred to in said section 7. Considering the importance and value at certain times of the prompt
clearance of one of its ships to a commercial firm which is at all times worthy of protection by the
government. This general government ordains as follows: (1) The period of four days prescribed by
section 7 of the superior decree of December 18, 1868, is reduced to two. (2) The shipowners or
consignees of steamers, whether national or foreign, plying between this port and the other ports of the
archipelago or China, and vice versa, shall give notice to the captain of the ports before midday, in order
that the post office may have immediate notice of the sailing at an hour that may enable it to insert same
in the Gazette of next day, and the ship may sail in the afternoon of the day next following. (3) The office

of the captain of the port will report daily to the administracion general de correos all ships that at 12
oclock, noon, may have requested the visita de salida and in the event of there being none a report shall
be sent stating that fact. (4) The report of the captain of the ports office must be at that administracion
general before 2 oclock, p. m., every day. (5) Captains and consignees of ships can in no case request the
visita de salida without the period of forty-eight hours intervening between the time they report and the
visit, so as to give opportune notice to the administracion de correos. (6) The centro de correos shall send
the notices to the Gazette and other newspapers, and shall post them besides on a bulletin board at the
door of the postoffice. (Berriz, Diccionario de la Administracion de Filipinas, 1888, vol. 1, pp. 528, 529.)
4.Vessels required to carry mails under Spanish sovereignty
An examination of its terms leaves little room for doubt that under Spanish sovereignty the
Government of these Islands assumed and exercised the right to prescribe reasonable regulations
requiring vessels trading in the Philippine Islands to carry the mails and to give due notice of their sailing
hours to the postal authorities. Indeed it is a matter of common knowledge that, under the laws and
regulations in force at the time of the change of sovereignty, all vessels engaged in the coasting trade were
required to carry the mails, and to furnish the postal authorities with due notice of their sailing hours.
There is no allegation in pleadings denying the continuance in force of this practice under American
sovereignty down to the date of the issuance of the above cited Customs Administrative Circular.
5.Nothing in Philippine Bill of Rights depriving government power to make and enforce regulations
There is nothing in the Philippine Bill of Rights which deprived the Philippine Government of the
power to make and enforce reasonable regulations of this nature with which it was clothed prior to the
enactment of that statute.
6. Regulations and control exercised on vessels licensed to engage in interisland trade not in
contravention of Philippine Bill of Rights or US Constitution Vessels licensed to engage in the interisland
trade are common carriers; and that as to them, there is an extensive field of regulation and control which
may properly be exercised by the state without contravention of the provisions of the Philippine Bill of
Rights or the Constitution of the United States; and this notwithstanding the fact that the enforcement of
such regulations may tend to restrict their liberty, and to control the free exercise of their discretion in the
conduct of their business to a degree and in a form and manner which would not be tolerated under the
constitutional guarantees with relation to the private business of a private citizen.
7. Business of common carriers affected with public interest Common carriers exercise a sort of public
office, and have duties to perform in which the public is interested. Their business is, therefore, affected
with a public interest, and is subject to public regulation.
8. As business is of public employment, state may impose reasonable regulations The nature of the
business in which they are engaged as a public employment, is such that it is clearly
within the power of the state to impose such just and reasonable regulations thereon as in the interest of
the public it may deem proper. Of course such regulations must not have the effect of depriving an owner
of this property without due process of law, nor of confiscating or appropriating private property without
just compensation, nor of limiting or prescribing irrevocably vested rights or privileges lawfully acquired
under a charter or franchise. But aside from such constitutional limitations, the determination of the
nature and extent of the regulations which should be precribed rests in the hands of the legislator. (New
Jersey Steam Nav. Co.vs. Merchants Bank, 6 How., 344, 382; Munn vs. Illinois, 94 U. S., 113, 13().)
9.Power to regulate not power to destroy, limitation not confiscation
The power to regulate is not a power to destroy, and limitation is not the equivalent of confiscation.
Under pretense of regulating fares and freights the state can not require a railroad corporation to carry
persons or property without reward. Nor can it do that which in law amounts to a taking of private
property for public use without just compensation, or without due process of law. (Chicago etc. R. Co. v.s.
Minnesota, 134 U. S.,418; Minneapolis Eastern R. Co. vs. Minnesota, 134 U. S., 467.)
10.Judicial interference does not occur unless the case presents flagrant attack upon rights and
property in guise of regulation. The judiciary ought not to interfere with regulations established under
legislative sanction unless they are so plainly and palpably unreasonable as to make their enforcement
equivalent to the taking of property for public use without such compensation as under all the
circumstances is just both to the owner and to the public, that is, judicial interference should never occur
unless the case presents, clearly and beyond all doubt, such a flagrant attack upon the rights and property
under the guise of regulations as to compel the court to say that the regulations in question will have the
effect to deny just compensation for private property taken for the public use. (Chicago etc. R. Co. vs.

Well- man, 143 U. S., 339; Smyth vs. Ames, 169 U. S., 466, 524; Henderson Bridge Co. vs. Henderson
City, 173 U. S., 592, 614.) (Fisher vs. Yangco Steamship Co., 31 Phil.Rep., 1.)
11.Regulation is reasonable
A regulation requiring all coasting vessels licensed to engage in the interisland trade to carry the mails
and give prompt advance notice in all cases of intended sailings in ample time to permit dispatch of mails,
and of changes of sailing hours, (manifestly with a view to make it possible for the post-office officials to
tender mail for transportation at the last practicable moment prior to the hour of departure) is a reasonable
regulation, made in the interests of the public, which the state has a right to impose when it grants licenses
to the vessels affected thereby.
12.Governments incur considerable expenditures to secure safety of vessels plying in Philippine
waters Considerable expenditures of public money have been made in the past and continue to be made
annually for the purpose of securing the safety of vessels plying in Philippine waters. To this end
lighthouses have been erected; wharfs and docks constructed; and buoys, bells and other warning signals
maintained at points of danger. Largely for the purpose of conveying timely warnings of threatening
weather to those that go down into the sea in ships, appropriations are made for the support of a Weather
Bureau. Coast and geodetic surveys are conducted to keep them informed as to the dangers hidden
beneath the treacherous sea. Licensed pilots are provided to insure safe entry into the dangerous ports and
harbors throughout the Islands. Maps, charts and general information as to conditions affecting travel by
water are kept up to date, and furnished all vessels having need for them. In a word, the Government
unhesitatingly spends a considerable part of the public funds wherever and whenever it appears that the
safety and even the convenience of the shipping in Philippine waters will be advanced thereby. Can it be
fairly contended that a regulation is unreasonable which requires vessels licensed to engage in the
interisland trade, in whose behalf the public funds are so lavishly expended, to hold themselves in
readiness to carry the public mails when duly tendered for transportation, and to give such reasonable
notice of their sailing hours as will insure the prompt dispatchof all mails ready for delivery at the hours
thus designated?
13.
Regulations only begin to affect business of shipowner when it enters into employment as
common carrier It is only when the owner of a vessel enters the quasi-public employment of a common
carrier that regulations of this kind begin to affect or control the conduct of his business, and he cannot be
heard to complain that he is deprived of his property without due process of law when he elects, of his
own free will and accord, to secure a license as a common carrier in Philippine waters, and to engage in a
business, one of the conditions of which is that he will comply with such regulations. Under the law in
force in these Islands at the time of the change of sovereignty, and of the enactment of the Act of
Congress the owners of all licensed coasting vessels were required to comply with regulations of this
character, as one of the conditions upon which they were permitted to engage in the quasi-public
employment of carriers in the interisland trade. No one is compelled to comply with these regulations
unless he voluntarily enters upon the business which they affect, and if he does enter such business he
cannot; claim that he is unlawfully deprived, without due process of law, of that which he voluntarily
agrees to surrender.
14.
Uniformity of taxes (assuming)
If regulations of this kind be regarded as in the nature of a tax upon the vessels affected thereby, the
tax cannot be attacked for lack of uniformity so long as it is laid uniformly upon all the members of the
class to which it extends. The only limitation upon the authority conferred is uniformity in laying the tax,
and uniformity does not require the equal application of the tax to all persons or corporations who may
come within its operation, but it is limited to geographical uniformity.
15.
Distinction between equality and uniformity
The distinction between equality and uniformity in taxation is thus stated in Black on
Constitutional Law, page 392, citing Miller, Const., 241: In practice, therefore, equality in taxation
means to be called upon to pay taxes, which taxes shall be strictly proportioned to the relative value of
their taxable
property. And uniformity in taxation means that all taxable articles or kinds of property, of the same
class,shall be taxed at the same rate. It does not mean that lands, chattels, securities, incomes,
occupations,franchises, privileges, necessities, and luxuries shall all be assessed at the same rate.

Different articles may be taxed at different amounts, provided the rate is uniform on the same class
everywhere, with all people, and at all times.
16.
Power to impose taxes unlimited in force
The power to impose taxes is one so unlimited in force and so searching in extent, that the courts
scarcely venture to declare that it is sub.iect to any restrictions whatever, except such as rest in the
discretion of the authority which exercises it. It reaches to every trade or occupation; to every object of
industry, use, or enjoyment; to every species of possession; and it imposes a burden which, in case of
failure to discharge it, may be followed by seizure and sale or confiscation of property. No attribute of
sovereignty is more pervading, and at no point does the power of the Government affect more constantly
and intimately all the relations of life than through the exactions made under it. . . .
17.
Power to tax rests upon necessity, and is inherent in every sovereignty
The power to tax rests upon necessity, and is inherent in every sovereignty. The legislature of every
free State will possess it under the general grant of legislative power, whether particularly specified in the
constitution among the powers to be exercised by it or not. No constitutional government can exist
without it, and no arbitrary government without regular and steady taxation could be anything but an
oppressive and vexatious despotism, since the only alterative to taxation would be a forced extortion for
the needs of government from such persons or objects as the men in power might select as victims. Chief
Justice Marshall has said of this power: The power of taxing the people and their property is essential to
the very existence of government, and may be legitimately exercised on the objects to which it is
applicable to the utmost extent to which the government may choose to carry it.
18.
Security against abuse of power of taxation
The only security against the abuse of this power is found in the structure of the government itself. In
imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against
erroneous and oppressive taxation. The people of a State, therefore, give to their government a right of
taxing themselves and their property; and as the exigencies of the government cannot be limited, they
prescribe no limits to the exercise of this right, resting confidently on the interest of the legislator, and on
the influence of the constituents over their representative, to guard them against its abuse.
19.
Scope of power of legislation and taxation
The power of legislation, and consequently of taxation, operates on all persons and property
belonging to the body politic. This is an original principle, which has its foundation in society itself. It is
granted by all for the benefit of all. It resides in the government as part of itself, and need not be reserved
where property of any description, or the right to use it in any manner, is granted to individuals or
corporate bodies. However absolute the right of an individual may be, it is still in the nature of that right
that it must bear a portion of the public burdens, and that portion must be determined by the legislature.
This vital power may be abused; but the interest, wisdom, and justice of the representative body, and its
relations with its constituents, furnish the only security where there is no express contract against unjust
and excessive taxation, as well as against unwise legislation generally.
20.
Judicial department unfit to inquire on degree of taxation
It is unfit for the judicial department to inquire what degree of taxation is the legitimate use, and what
degree may amount to the abuse, of the power. The judicial cannot prescribe to the legislative department
of the government limitations upon the exercise of its acknowledged powers. The power to tax may be
exercised oppressively upon persons, but the responsibility of the legislature is not to the courts, but to the
people by whom its members are elected. So if a particular tax bears heavily upon a corporation or a class
of corporations, it cannot, for that reason only, be pronounced contrary to the Constitution. (Veazie Bank
vs.Fenno, 8 Wall., 533, 548.)

21.
Judicial department charged with duty of enforcing constitution; Separation of powers
As a result of our written constitution, it is axiomatic that the judicial department of the government is

charged with the solemn duty of enforcing the Constitution, and therefore in cases properly presented, of
determining whether a given manifestation of authority has exceed the power conferred by that
instrument, no instance is afforded from the foundation of the government where an act, which was within
a power conferred, was declared to be repugnant to the Constitution, because it appeared to the judicial
mind that the particular exertion of constitutional power was either unwise or unjust. To announce such a
principle would amount to declaring that in our constitutional system the judiciary was not only charged
with the duty of upholding the Constitution but also with the responsibility of correcting every possible
abuse arising from the exercise by the other departments of their conceded authority. So to hold would be
to overthrow the entire distinction between the legislative, judicial and executive departments of the
government, upon which our system is founded, and would be a mere act of judicial usurpation. (McCray
vs. U. S., 195 U. S., 27.)
22.
Presumed intention of Collector in circular
The provisions of paragraph I require trading vessels to carry mails tendered for transportation in a
safe and secure manner. This does not necessarily require these vessels to accept and to carry mail free of
charge. It is only when goods are lawfully tendered that common carriers may be compelled to carry
them, and it must be presumed that the author of the circular had in mind a lawful tender of mails when
he wrote this paragraph. If a vessels may not be required to carry mail without direct compensation, or a
contract providing for such compensation, it must be presumed that the Collector did not intend to require
vessels to accept mail without tender of reasonable compensation for such services or provision for
payment by contract or otherwise, and that this paragraph was intended merely as a regulation requiring
the acceptance of all mail thus lawfully tendered and the safe transportation of such mail when accepted
for transportation.
23.
No fact or allegation in pleading that Collector of Customs is compelling vessels master to
carry mail free of charge
There is absence of the necessary allegations setting forth that the Collector of Customs has
compelled and is threatening to compel the master of the Viscaya to carry mails free of charge. It does not
appear from the pleadings, nor in fact, that any attempt has been made or is being made by the Collector
to compel the master of the Vizcaya, over his protest, to carry mail without compensation. The allegations
of the complaint disclose merely that he threatened to enforce the regulations of the circular requiring the
master of the Vizcaya to make provision for the transportation of the mails when tendered, and for the
giving of reasonable notice as to sailing hours upon which such tender might be based.
24.
Section 3 of Act 355
Section 3 of Act 355 provides that the customs service shall embrace, among other things, (1) the
documenting of vessels built or owned in the Philippine Islands, etc.; (2) the exclusion of foreign vessels
from the coastwise trade; (3) the entry and clearance of vessels; (4) the enforcement of such regulation of
commerce, foreign and coastwise, as shall be established by competent authority; and (5) the regulation of
thecarriage of passengers by water and the licensing of vessels therefor.
25.
Section 7 of Act 355
Section 7 of Act 355 provides, in part, as follows: The Insular Collector shall have general authority
throughout the Philippine Islands in all matters embraced within the jurisdiction of the Customs Service.
26.
Section 19 of Act 355
Section 19 of Act 355 provides, in part, as follows: The Insular Collector shall, from time to time,
make and promulgate general rules and regulations, not inconsistent withlaw, subject to the approval of
the Secretary of Finance and Justice: (1) Directing the manner of execution of the customs law and laws
relating to commerce, navigation. and immigration. xxx (7) Prescribing the method of loading and
unloading merchandise and the transportation thereof by bonded carriers, railways, vessels, bonded
lighters, carts, or otherwise
27.
Section 73 of Act 355
Section 73 of Act 355 provides as follows: In the coasting trade, the admeasurement, documenting,

enrollment and licensing of vessels built or owned in the Philippine Archipelago and in the making and
recording of all documents relating thereto, the Insular Collector shall observe, promulgate, and enforce
such orders and regulations respecting the same as have been heretofore or shall hereafter be prescribed
by the proper authority. In the absence of such regulations or orders he shall observe and follow the laws
of the United States and the regulations of the Treasury Department of the United States so far as the
same may be, in his sound judgment, applicable. Certificates of protection shall hereafter be signed by the
collector of customs at ports where issued and countersigned by the Insular Collector.
28.
Section 134 of Act 355
Section 134 of Act 355 is as follows: The coastwise trade shall be under the general control and
supervision of the Insular Collector, and under the direct supervision of collectors of customs at the
subports of entry within their respective collection districts.
29.
Section 1 of Act 780, as amended by Section 1 of Act 1602
Section 1 of Act 780, as amended by section 1 of Act 1602, provides, in part, as follows: A board is
hereby created, to consist of the Insular Collector of Customs, the supervising inspector of hulls and
boilers, and assistant inspector of hulls, one person holding an unexpired license as master in the
Philippine coastwise trade, and one other competent person, whose duty it shall be to examine and certify
for licenses all applicants for licenses as watch officers and engineers upon vessels of the Philippine
Islands.
30.
Section 2 of Act 780
Section 2 of Act 780 is as follows: Whenever any person applies for license as master, mate, patron,
or engineer of a Philippine coastwise vessel it shall be the duty of the Board on Philippine Marine
Examinations to make a thorough inquiry as to his character and carefully to examine the applicant, the
evidence he presents in support of his application, and such other evidence as it may deem proper or
desirable, and if satisfied that his capacity, experience, habits of life, and character are such as to warrant
the belief that he can be safely intrusted with the duties and responsibilities of the position for which he
makes application, it shall so certify to the Insular Collector of Customs, who shall issue a license
authorizing such applicant to act as master, mate, patron, or engineer, as the case may be.
31.
Section 6 of Act 780
Section 6 of Act 780 is as follows: Every license authorized to be issued as above set forth shall be
operative and in force until July first, nineteen hundred and four, but the Insular Collector of Customs
may at any time suspend or revoke any license upon satisfactory proof of misconduct, intemperate habits,
incapacity, or inattention to duty on the part of the licensee.
32.
Section 2 of Act 1025
Section 2 of Act 1025 is as follows: Upon the expiration of the license authorized to be issued by
said Act Numbered Seven Hundred and eighty, the said Board is further authorized and empowered to
renew such license from year to year upon due application being made as prescribed in said Act, but each
renewal shall be operative for only one year. In case of renewal of license the written examination
required by section three of said Act shall not be had but the applicant for renewal shall only be required
to submit to an examination, if deemed necessary by the Board, to test his physical soundness, but the
Board is authorized to refuse any application for renewal upon satisfactory evidence of misconduct,
intemperate habits, incapacity, or inattention to duty on the part of the licensee and also to revoke any
such renewal license, when granted, for the same reasons, or any of them.
33.
Duties of captain of the port devolved upon Insular Collector of Customs and his subordinates
The duties of the captain of the port, as that office formerly existed and as provided in the Spanish
laws, now devolve upon the Insular Collector of Customs and his subordinates as he may direct, pursuant
to the provisions of section 1 of Act No. 625. Any duties which the captain of the port was required to
perform under the decrees and similar regulations issued under the Spanish Administration of the
Government of these Islands, devolved upon the Collector of Customs at the date of the promulgation of
Circular 627, so far as those decrees and similar regulations continued in force at that time.

34.
Insular collector clothed with necessary authority to prepare, promulgate, and enforce Customs
Administrative Circular 627
Insofar as Customs Administrative Circular 627 consists of a body of reasonable regulations
controlling and prescribing the conduct of vessels licensed to engage in the coastwise trade, and of
licensed officers aboard such vessels, with reference to the transportation of mail, the Insular Collector
was clothed with the necessary authority at the date of the circular for its preparation, promulgation and
enforcement. The circular is, when correctly construed, such a body of reasonable regulations, touching
the conduct of coastwise vessels and their officers with reference to the transportation of mails
11. Domingo vs. Garlitos
GR L-18993, 29 June 1963
En Banc, Labrador (J): 8 concur,
1 concur in result, 1 took no part
Facts:
In Domingo vs. Moscoso (106 PHIL 1138), the Supreme Court declared as final and executory the
order of the Court of First Instance of Leyte for the payment of estate and inheritance taxes, charges and
penalties amounting to P40,058.55 by the Estate of the late Walter Scott Price. The petition for execution
filed by the fiscal, however, was denied by the lower court. The Court held that the execution is
unjustified as the Government itself is indebted to the Estate for 262,200; and ordered the amount of
inheritance taxes be deducted from the Governments indebtedness to the Estate.
Issue:
Whether a tax and a debt may be compensated.
Held:
The court having jurisdiction of the Estate had found that the claim of the Estate against the
Government has been recognized and an amount of P262,200 has already been appropriated by a
corresponding law (RA 2700). Under the circumstances, both the claim of the Government for inheritance
taxes and the claim of the intestate for services rendered have already become overdue and demandable as
well as fully liquidated. Compensation, therefore, takes place by operation of law, in accordance with
Article 1279 and 1290 of the Civil Code, and both debts are extinguished to the concurrent amount.
12. Garcia vs. Executive Secretary
G.R. 101273 July 3, 1992
FACTS: On 27 November 1990, Cory issued Executive Order 438 which imposed, in addition to any
other duties, taxes and charges imposed by law on all articles imported into the Philippines, an additional
duty of 5% ad valorem. This additional duty was imposed across the board on all imported articles,
including crude oil and other oil products imported into the Philippines. In 1991, EO 443 increased the
additional duty to 9%. In the same year, EO 475 was passed reinstating the previous 5% duty except that
crude oil and other oil products continued to be taxed at 9%. Garcia, a representative from Bataan, avers
that EO 475 and 478 are unconstitutional for they violate Sec 24 of Art 6 of the Constitution which
provides: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of
local application, and private bills shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments. He contends that since the Constitution vests the
authority to enact revenue bills in Congress, the President may not assume such power of issuing
Executive Orders Nos. 475 and 478 which are in the nature of revenue-generating measures.
ISSUE: Whether or not EO 475 and 478 are constitutional.
HELD: Under Section 24, Article VI of the Constitution, the enactment of appropriation, revenue and
tariff bills, like all other bills is, of course, within the province of the Legislative rather than the Executive
Department. It does not follow, however, that therefore Executive Orders Nos. 475 and 478, assuming
they may be characterized as revenue measures, are prohibited to the President, that they must be enacted
instead by the Congress of the Philippines. Section 28(2) of Article VI of the Constitution provides as
follows: (2) The Congress may, by law, authorize the President to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and
wharfage dues, and other duties or imposts within the framework of the national development program of

the Government. There is thus explicit constitutional permission to Congress to authorize the President
subject to such limitations and restrictions as [Congress] may impose to fix within specific limits
tariff rates . . . and other duties or imposts . . . .
13. Gonzales vs Hechanova
G.R. No. L-21897 October 22 1963 [Executive Agreements]
FACTS:
Exec. Secretary Hechanova authorised the importation of foreign rice to be purchased from private
sources. Gonzales filed a petition opposing the said implementation because RA No. 3542 which
allegedly repeals or amends RA No. 2207, prohibits the importation of rice and corn "by the Rice and
Corn Administration or any other government agency."
Respondents alleged that the importation permitted in RA 2207 is to be authorized by the President of the
Philippines, and by or on behalf of the Government of the Philippines. They add that after enjoining the
Rice and Corn administration and any other government agency from importing rice and corn, S. 10 of
RA 3542 indicates that only private parties may import rice under its provisions. They contended that the
government has already constitute valid executive agreements with Vietnam and Burma, that in case of
conflict between RA 2207 and 3542, the latter should prevail and the conflict be resolved under the
American jurisprudence.
ISSUE:
W/N the executive agreements may be validated in our courts.
RULING:
No. The Court is not satisfied that the status of said tracts as alleged executive agreements has been
sufficiently established. Even assuming that said contracts may properly considered as executive
agreements, the same are unlawful, as well as null and void, from a constitutional viewpoint, said
agreements being inconsistent with the provisions of Republic Acts Nos. 2207 and 3452. Although the
President may, under the American constitutional system enter into executive agreements without
previous legislative authority, he may not, by executive agreement, enter into a transaction which is
prohibited by statutes enacted prior thereto.
Under the Constitution, the main function of the Executive is to enforce laws enacted by Congress. He
may not interfere in the performance of the legislative powers of the latter, except in the exercise of his
veto power. He may not defeat legislative enactments that have acquired the status of law, by indirectly
repealing the same through an executive agreement providing for the performance of the very act
prohibited by said laws.
14. Lung Center of the Philippines vs. Quezon City
G.R. No. 144104, June 29, 2004 [Constitutional Law - Article VI: Legislative Department; Taxation ]
FACTS:
Petitioner is a non-stock, non-profit entity established by virtue of PD No. 1823, seeks exemption from
real property taxes when the City Assessor issued Tax Declarations for the land and the hospital building.
Petitioner predicted on its claim that it is a charitable institution. The request was denied, and a petition
hereafter filed before the Local Board of Assessment Appeals of Quezon City (QC-LBAA) for reversal of
the resolution of the City Assessor. Petitioner alleged that as a charitable institution, is exempted from real
property taxes under Sec 28(3) Art VI of the Constitution. QC-LBAA dismissed the petition and the
decision was likewise affirmed on appeal by the Central Board of Assessment Appeals of Quezon City.
The Court of Appeals affirmed the judgment of the CBAA.
ISSUE:
1. Whether or not petitioner is a charitable institution within the context of PD 1823 and the 1973 and
1987 Constitution and Section 234(b) of RA 7160.
2. Whether or not petitioner is exempted from real property taxes.

RULING:
1. Yes. The Court hold that the petitioner is a charitable institution within the context of the 1973 and
1987 Constitution. Under PD 1823, the petitioner is a non-profit and non-stock corporation which, subject

to the provisions of the decree, is to be administered by the Office of the President with the Ministry of
Health and the Ministry of Human Settlements. The purpose for which it was created was to render
medical services to the public in general including those who are poor and also the rich, and become a
subject of charity. Under PD 1823, petitioner is entitled to receive donations, even if the gift or donation
is in the form of subsidies granted by the government.
2. Partly No. Under PD 1823, the lung center does not enjoy any property tax exemption privileges for its
real properties as well as the building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of the Constitution of the property taxes only. This
provision was implanted by Sec.243 (b) of RA 7160.which provides that in order to be entitled to the
exemption, the lung center must be able to prove that: it is a charitable institution and; its real properties
are actually, directly and exclusively used for charitable purpose. Accordingly, the portions occupied by
the hospital used for its patients are exempt from real property taxes while those leased to private entities
are not exempt from such taxes.
15. Maceda vs. Macaraig
197 SCRA 771
GR No. 88291 May 31, 1991
"A taxpayer may question the legality of a law or regulation when it involves illegal expenditure of public
money."
FACTS: Senator Ernesto Maceda sought to nullify certain decisions, orders, rulings, and resolutions of
respondents Executive Secretary, Secretary of Finance, Commissioner of Internal Revenue,
Commissioner of Customs and the Fiscal Incentives Review Board FIRB for exempting the National
Power Corporation (NPC) from indirect tax and duties. RA 358, RA 6395 and PD 380 expressly grant
NPC exemptions from all taxes whether direct or indirect. In 1984, however, PD 1931 and EO 93
withdrew all tax exemptions granted to all GOCCs including the NPC but granted the President and/or the
Secretary of Finance by recommendation of the FIRB the power to restore certain tax exemptions.
Pursuant to the latter law, FIRB issued a resolution restoring the tax and duty exemption privileges of the
NPC. The actions of the respondents were thus questioned by the petitioner by this petition for certiorari,
prohibition and mandamus with prayer for a writ of preliminary injunction and/or restraining order. To
which public respondents argued, among others, that petitioner does not have the standing to challenge
the questioned orders and resolution because he was not in any way affected by such grant of tax
exemptions.
ISSUE: Has a taxpayer the capacity to question the legality of the resolution issued by the FIRB restoring
the tax exemptions?
HELD: Yes. In this petition it is alleged that petitioner is "instituting this suit in his capacity as a taxpayer
and a duly-elected Senator of the Philippines." Public respondent argues that petitioner must show that he
has sustained direct injury as a result of the action and that it is not sufficient for him to have a mere
general interest common to all members of the public. The Court however agrees with the petitioner that
as a taxpayer he may file the instant petition following the ruling in Lozada when it involves illegal
expenditure of public money. The petition questions the legality of the tax refund to NPC by way of tax
credit certificates and the use of said assigned tax credits by respondent oil companies to pay for their tax
and duty liabilities to the BIR and Bureau of Customs.
16. MACTAN CEBU INTERNATIONAL AUTHORITY V. MARCOS (261 SCRA 667)
Topic: Tax exemption government-owned or controlled corporations
Facts:
Mactan Cebu International Airport Authority (MCIAA) was created by virtue of RA 6958. It enjoyed the
privilege of exemption from payment of taxes from the time of its creation until 1991, when the City of
Cebu demanded paymentfor realty taxes on several parcels of land belonging to MCIAA. MCIAA
contests the assessment and claims exemption.
Issue and Ruling:
W/N MCIAA is liable to pay taxes to the City of Cebu. YES. Since MCIAA is a government-owned or
controlled corporation, its exemption from payment of property taxes granted by Section 14 of its charter

has been withdrawn, by virtue of Section 234 of the Local Government Code. MCIAA cannot claim that
it was never a taxable person under its Charter. It 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.
Notes:
The power to tax, which was called by Justice Marshall as the power to destroy, cannot be allowed to
defeat an instrumentality or creation of the very entity which has the inherent power to wield it. As a
general rule, the power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in
its very nature no limits, so that security against its abuse is to be found only in the responsibility of the
legislature which imposes the tax on the constituency who are to pay it. Nevertheless, effective limitations
thereon may be imposed by the people through their Constitutions. Taxation is a destructive power which
interferes with personal property for the support of the government. Accordingly, tax statutes must be
construed strictly against the government and liberally in favor of the taxpayer.
Since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against
exemptions from taxation and statutes granting tax exemptions from taxation and statutes granting tax
exemptions are thus construed strictissimi juris against the taxpayers and liberally in favor of the taxing
authority. 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. The power to
tax is the most effective instrument to raise needed revenues to finance and support myriad activities of
local government units for the delivery of basic services essential to the promotion of the general welfare
and the enhancement of peace, progress, and prosperity of the people. Nothing can prevent Congress from
decreeing that even instrumentalities or agencies of the government performing governmental functions
may be subject to tax.

18. Ormoc Sugar vs. Treasurer of Ormoc City

GR L-23794, 17 February 1968
En Banc, Bangzon JP (J): 9 concur
Facts:
In 1964, the Municipal Board of Ormoc City passed Ordinance 4, imposing on any and all productions
of centrifuga sugar milled at the Ormoc Sugar Co. Inc. in Ormoc City a municpal tax equivalent to 1%
per export sale to the United States and other foreign countries. The company paid the said tax under
protest. It subsequently filed a case seeking to invalidate the ordinance for being unconstitutional.
Issue:
Whether the ordinance violates the equal protection clause.
Held:
The Ordinance taxes only centrifugal sugar produced and exported by the Ormoc Sugar Co. Inc. and
none other. At the time of the taxing ordinances enacted, the company was the only sugar central in
Ormoc City. The classification, to be reasonable, 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, of the same class as the present company, from the coverage of the tax. As it is
now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance
expressly points only to the company as the entity to be levied upon.

19. Pascual vs. Secretary of Public Works and Communications

GR L-10405, 29 December 1960
En Banc, Concepcion (J): 10 concur
Facts:
RA 920 (Act appropriating funds for public works) was enacted in 1953 containing an item (Section 1
c[a]) for the construction, reconstruction, repair, extension and improvement of Pasig feeder road
terminals (the projected and planned subdivision roads, which were not yet constructed, within Antonio
Subdivision owned by Senator Jose C. Zulueta). Zulueta donated said parcels of land to the
Government 5 months after the enactment of RA 920, on the condition that if the Government violates
such condition the lands would revert to Zulueta. The provincial governor of Rizal, Wenceslao Pascual,
questioned the validity of the donation and the Constitutionality of the item in RA 920, it being not for a
public purpose.
Issue:
Whether the item in the appropriation is valid.
Held:
The right of the legislature to appropriate funds is correlative with its right to tax, under constitutional
provisions against taxation except for public purposes and prohibiting the collection of a tax for one
purpose and the devotion thereof to another purpose, no appropriation of state funds can be made for
other than a public purpose. The validity of a statute depends upon the powers of Congress at the time of
its passage or approval, not upon events occupying, or acts performed, subsequently thereto, unless the
latter consist of an amendment of the organic law, removing, with retrospective operation, the
constitutional limitation infringed by said statute. Herein, inasmuch as the land on which the projected
feeder roads were to be constructed belonged to Senator Zulueta at the time RA 920 was passed by
Congress, or approved by the President, and the disbursement of said sum became effective on 20 June
1953 pursuant to Section 13 of the Act, the result is that the appropriating sough a private purpose and
hence, null and void.
20. PASEO REALTY AND DEVELOPMENT CORP. vs. COURT OF APPEALS
G.R. No. 119286 October 13, 2004FACTS
Topic: Tax Returns and Other Administrative Requirements:
FACTS: Paseo Realty and Development Corporation, a domestic corporation engaged in the lease of two
parcels of land at Paseo de Roxas in Makati City. On April 16, 1990, petitioner filed its Income Tax
Return for the calendaryear1989 declaring a gross income of P1,855,000.00, deductions of
P1,775,991.00, net income of P79,009.00, an income tax due thereon in the amount of P27,653.00, prior
years excess credit of P146,026.00, and creditable taxes withheld in 1989 of
P54,104.00 or a total tax credit of P200,130.00 and credit balance of P172,477.00.In a resolution dated
October 21, 1993 Respondent Courtre considered its decision of July 29, 1993 and dismissed the petition
for review, stating that it hasoverlooked the fact that the petitioners 1989 Corporate Income Tax
Return (Exh. A) indicated that the amount of P54,104.00 subject of petitioners claim for refund has
already been included as part and parcel of the P172,477.00 which the petitioner automatically applied as
tax credit for the succeeding taxable year 1990.
Petitioner filed a Motion for Reconsideration which was denied by respondent Court on March
10,1994.Petitioner filed a Petition for Review dated April 3, 1994with the Court of Appeals. Resolving
the twin issues of whether petitioner is entitled to a refund of P54,104.00 representing creditable taxes
withheld in 1989 and whether petitioner applied such creditable taxes withheld to its 1990income tax
liability, the appellate court held that petitioner is not entitled to a refund because it had already elected to
apply the total amount of P172,447.00, which includes the P54,104.00 refund claimed, against its income
tax liability for 1990. The appellate court elucidated on the reason for its dismissal of petitioners claimor
refund.
ISSUE:
Whether or not the alleged excess taxes paid by a corporation during a taxable year should be refunded or
credited against its tax liabilities for the succeeding year?
RULING:
The petition must be denied. As a matter of principle, it is not advisable for this Court to set aside the
conclusion reached by an agency such as the CTA which is, by the very nature of its functions, dedicated

exclusively to the study and consideration of tax problems and has necessarily developed an expertise on
the subject, unless there has been an abuse or improvident exercise of its authority. This interdiction finds
particular application in this case since the CTA, after careful consideration of the merits of the
Commissioner of Internal Revenues motion for reconsideration, reconsidered its earlier decision which
ordered the latter to refund the amount of P54,104.00 to petitioner. Its resolution cannot be successfully
assailed based, as it is, on the pertinent laws as applied to the facts.
Petitioners 1989 tax return indicates an aggregate creditable tax of P172,477.00, representing its 1988
excess credit of P146,026.00 and 1989 creditable tax of P54,104.00 less tax due for 1989, which it elected
to apply as tax credit for the succeeding taxable year. According to petitioner, it successively utilized this
amount when it obtained refunds in CTA Case No. 4439 and CTA Case No. 4528 and applied its1990 tax
liability, leaving a balance of P54,104.00, the amount subject of the instant claim for refund.
The confusion as to petitioners entitlement to a refund could altogether have been avoided had it
presented its tax return for 1990. Such return would have shown whether petitioner actually applied its
1989 tax credit of P172,477.00, which includes the P54,104.00 creditable taxes withheld for 1989subject
of the instant claim for refund, against its 1990 tax liability as it had elected in its 1989 return, or at least,
whether petitioners tax credit of P172,477.00 was applied to its approved refunds as it claims. As clearly
shown from the above-quoted provisions, in case the corporation is entitled to a refund of the excess
estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return maybe
credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding
year. The carrying forward of any excess or overpaid income tax for a given taxable year is limited to the
succeeding taxable year only. Taxation is a destructive power which interferes with the personal and
property rights of the people and takes from them a portion of their property for the support of the
government. And since taxes are what we pay 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 refund or
exemption from tax payments must be clearly shown and be based on language in the law too plain to be
mistaken. Else wise stated, taxation is the rule, exemption therefrom is the exception.
21. Pelaez vs. Auditor General
FACTS:
From Sept 04 to Oct 29, 1964, the President (Marcos) issued executive orders creating 33 municipalities
this is purportedly in pursuant to Sec 68 of the Revised Administrative Code which provides that the
President of the Philippines may by executive order define the boundary, or boundaries, of any province,
sub-province, municipality, [township] municipal district or other political subdivision, and increase or
diminish the territory comprised therein, may divide any province into one or more subprovincesThe
VP Emmanuel Pelaez and a taxpayer filed a special civil action to prohibit the auditor general from
disbursing funds to be appropriated for the said municipalities. Pelaez claims that the EOs are
unconstitutional. He said that Sec 68 of the RAC has been impliedly repealed by Sec 3 of RA 2370 which
provides that barrios may not be created or their boundaries altered nor their names changed except by
Act of Congress or of the corresponding provincial board upon petition of a majority of the voters in the
areas affected and the recommendation of the council of the municipality or municipalities in which the
proposed barrio is situated. Pelaez argues, accordingly: If the President, under this new law, cannot
even create a barrio, can he create a municipality which is composed of several barrios, since barrios are
units of municipalities? The Auditor General countered that only barrios are barred from being created
by the President. Municipalities are exempt from the bar and that t a municipality can be created without
creating barrios. Existing barrios can just be placed into the new municipality. This theory overlooks,
however, the main import of Pelaez argument, which is that the statutory denial of the presidential
authority to create a new barrio implies a negation of the bigger power to create municipalities, each of
which consists of several barrios.
ISSUE: Whether or not Congress has delegated the power to create barrios to the President by virtue of
Sec 68 of the RAC.
HELD: Although Congress may delegate to another branch of the government the power to fill in the
details in the execution, enforcement or administration of a law, it is essential, to forestall a violation of
the principle of separation of powers, that said law: (a) be complete in itself it must set forth therein
the policy to be executed, carried out or implemented by the delegate and (b) fix a standard the
limits of which are sufficiently determinate or determinable to which the delegate must conform in the
performance of his functions. Indeed, without a statutory declaration of policy, the delegate would, in
effect, make or formulate such policy, which is the essence of every law; and, without the aforementioned

standard, there would be no means to determine, with reasonable certainty, whether the delegate has acted
within or beyond the scope of his authority.
In the case at bar, the power to create municipalities is eminently legislative in character not
administrative.
22. People of the Philippines vs. Sandiganbayan
FACTS:
ON 18 MARCH 1986, ATTY. RAMIREZ AND ATTY. ABELLA, PCGG AGENTS, ISSUED A
SEQUESTRATION ORDER AGAINST THE RESTHOUS THE SOLE ISSUE PRESENTED IS
WHETHER OR NOT THE MARCH 18, 1986 SEQUESTRATION ORDER AGAINST PROPERTIES
OF IMELDA IN LEYTE INCLUDING THE RESTHOUSE AT OLOT. THEIR ORDER WAS NOT
SIGNED BY ANY PCGG COMMISSIONERS.
ISSUE:
IS THEIR ORDER VALID?
RULING:
NO. JUDICIAL OR QUASI-JUDICIAL POWERS MAY NOT BE DELEGATED. IN PCGG V. JUDGE
PEA,[1][17] THE COURT HELD THAT THE POWERS, FUNCTIONS AND DUTIES OF THE PCGG
AMOUNT TO THE EXERCISE OF QUASI-JUDICIAL FUNCTIONS, AND THE EXERCISE OF
SUCH FUNCTIONS CANNOT BE DELEGATED BY THE COMMISSION TO ITS
REPRESENTATIVES OR SUBORDINATES OR TASK FORCES BECAUSE OF THE WELL
ESTABLISHED PRINCIPLE THAT JUDICIAL OR QUASI-JUDICIAL POWERS MAY NOT BE
DELEGATED.
PETITIONER REPUBLIC ARGUES THAT MRS. MARCOS SHOULD BE DEEMED ESTOPPED
FROM QUESTIONING THE SEQUESTRATION OF HER OLOT RESTHOUSE BY HER ACTIONS
IN REGARD TO THE SAME. BUT A VOID ORDER PRODUCES NO EFFECT AND CANNOT BE
VALIDATED UNDER THE DOCTRINE OF ESTOPPEL. FOR THE SAME REASON, THE COURT
CANNOT ACCEPT PETITIONERS VIEW THAT MRS. MARCOS SHOULD HAVE FIRST SOUGHT
THE LIFTING OF THE SEQUESTRATION ORDER THROUGH A MOTION TO QUASH FILED
WITH THE PCGG. BEING VOID, THE SANDIGANBAYAN HAS THE POWER TO STRIKE IT
DOWN ON SIGHT.
23. Pepsi Cola vs. Mun. of Tanauan, Leyte
69 SCRA 460
Taxation Delegation to Local Governments Double Taxation
FACTS: Pepsi Cola has a bottling plant in the Municipality of Tanauan, Leyte. In September 1962, 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.
In December 1962, the Municipality also approved Ordinance No. 27 which levies and collects on soft
drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of one
centavo P0.01) on each gallon of volume capacity.
Pepsi Cola assailed the validity of the ordinances as it alleged that they constitute double taxation in two
instances: a) double taxation because Ordinance No. 27 covers the same subject matter and impose
practically the same tax rate as with Ordinance No. 23, b) double taxation because the two ordinances
impose percentage or specific taxes.
Pepsi Cola also questions the constitutionality of Republic Act 2264 which allows for the delegation of
taxing powers to local government units; that allowing local governments to tax companies like Pepsi
Cola is confiscatory and oppressive.
The Municipality assailed the arguments presented by Pepsi Cola. It argued, among others, that only
Ordinance No. 27 is being enforced and that the latter law is an amendment of Ordinance No. 23, hence
there is no double taxation.

ISSUE: Whether or not there is undue delegation of taxing powers. Whether or not there is double
taxation.
HELD: No. There is no undue delegation. The Constitution even allows such delegation. 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. Under the New
Constitution, local governments are granted the autonomous authority to create their own sources of
revenue and to levy taxes. Section 5, Article XI provides: Each local government unit shall have the
power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by
law. Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere
of the legislative power to enact and vest in local governments the power of local taxation.
There is no double taxation. The argument of the Municipality is well taken. Further, Pepsi Colas
assertion that the delegation of taxing power in itself constitutes double taxation cannot be merited. It
must be observed that the delegating authority specifies the limitations and enumerates the taxes over
which local taxation may not be exercised. The reason is that the State has exclusively reserved the same
for its own prerogative. Moreover, double taxation, in general, is not forbidden by our fundamental law
unlike in other jurisdictions. Double taxation becomes obnoxious only where the taxpayer is taxed twice
for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not
in a case where one tax is imposed by the State and the other by the city or municipality.
27. Sison vs. Ancheta
GR L-59431, 25 July 1984
En Banc, Fernando (J): 9 concur, 2 concur in result, 1 concur in separate opinion, 1 took no part
Facts:
Batas Pambansa 135 was enacted. Sison, as taxpayer, alleged that its provision (Section 1) unduly
discriminated against him by the imposition of higher rates upon his income as a professional, that it
amounts to class legislation, and that it transgresses against the equal protection and due process clauses
of the Constitution as well as the rule requiring uniformity in taxation.
Issue:
Whether BP 135 violates the due process and equal protection clauses, and the rule on uniformity in
taxation.
Held:
There is a need for proof of such persuasive character as would lead to a conclusion that there was a
violation of the due process and equal protection clauses. Absent such showing, the presumption of
validity must prevail. Equality and uniformity in taxation means that all taxable articles or kinds of
property of the same class shall be taxed at the same rate. The taxing power has the authority to make
reasonable and natural classifications for purposes of taxation. Where the differentitation conforms to the
practical dictates of justice and equity, similar to the standards of equal protection, it is not discriminatory
within the meaning of the clause and is therefore uniform. Taxpayers may be classified into different
categories, such as recipients of compensation income as against professionals. Recipients of
compensation income are not entitled to make deductions for income tax purposes as there is no
practically no overhead expense, while professionals and businessmen have no uniform costs or expenses
necessary to produce their income. There is ample justification to adopt the gross system of income
taxation to compensation income, while continuing the system of net income taxation as regards
professional and business income.
30. Victorias Milling Co. vs. Municipality of Victorias
GR L-21183, 27 September 1968
En Banc, Sanchez (J): 9 concur

Facts:
Ordinance 1 (1956) was approved by the municipal council of Victorias by way of an amendment to 2

municipal ordinances separately imposing license taxes on operators of sugar centrals and sugar
refineries. The changes were: (1) with respect to sugar centrals, by increasing the rates of license taxes;
and (2) as to sugar refineries, by increasing the rates of license taxes as well as teh range of graduated
schedule of annual output capacity. Victorias Milling questioned the validity of Ordinance 1 as it, among
others, allegedly singled out Victorias Milling Co. since it is the only operator of a sugar central and a
sugar refinery within the jurisdiction of the municipality.
Issue:
Whether Ordinance 1 is discriminatory.
Held:
The ordinance does not single out Victorias as the only object of the ordinance but is made to apply to
any sugar central or sugar refinery which may happen to operate in the municipality. The fact that
Victorias Milling is actually the sole operator of a sugar central and a sugar refinery does not make the
ordinance discriminatory. The ordinance is unlike that in Ormoc Sugar Company vs. Municipal Board of
Ormoc City, which specifically spelled out Ormoc Sugar as the subject of the taxation, the name of the
company herein was never mentioned in the ordinance.
31. Villanueva vs. Iloilo City
GR L-26521, 28 December 1968
En Banc, Castro (J): 8 concur
Facts:
On 30 September 1946, the Municipal Board of Iloilo City enacted Ordinance 86 imposing license tax
fees upon tenement house (P25); tenemen house partly engaged or wholly engaged in and dedicated to
business in Baza, Iznart, and Aldeguer Streets (P24 per apartment); and tenement house, padtly or wholly
engaged in business in other streets (P12 per apartment). The validity of such ordinance was challenged
by Eusebio and Remedios Villanueva, owners of four tenement houses containing 34 apartments. The
Supreme Court held the ordinance to be ultra vires. On 15 January 1960, however, the municipal board,
believing that it acquired authority to enact an ordinance of the same nature pursuant to the Local
Autonomy Act, enacted Ordinance 11 (series of 1960), Eusebio and Remedios Villaniueva assailed the
ordinance anew.
Issue:
Whether Ordinance 11 violate the rule of uniformity of taxation.
Held:
The Court has ruled that tenement houses constitute a distinct class of property; and that taxes are
uniform and equal when imposed upon all property of the same class or character within the taxing
authority.The fact that the owners of the other classes of buildings in Iloilo are not imposed upon by the
ordinance, or that tenement taxes are imposed in other cities do not violate the rule of equality and
uniformity. The rule does not require that taxes for the same purpose should be imposed in different
territorial subdivisions at the same time. So long as the burden of tax falls equally and impartially on all
owners or operators of tenement houses similarly classified or situated, equality and uniformity is
accomplished. The presumption that tax statutes are intended to operate uniformly and equally was not
overthrown herein.