Greenfield v.

Meer (Exemption from Taxation) Facts

Since the year 1933, the plaintiff has been continuously engaged in the
embroidery business. In 1935, the plaintiff began engaging in buying and selling
mining stocks and securities for his own exclusive account and not for the
account of others.

The plaintiff has not been a dealer in securities as defined in section 84 (t) of
Commonwealth Act No. 466; he has no established place of business for the
purchase and sale of mining stocks and securities; and he was never a member
of any stock exchange.

The plaintiff filed an income tax return where he claims a deduction of

P67,307.80 representing the net loss sustained by him in mining stocks
securities during the year 1939. The defendant disallowed said item of deduction
on the ground that said losses were sustained by the plaintiff from the sale of
mining stocks and securities which are capital assets, and that the loss arising
from the sale of the same should be allowed only to the extent of the gains from
such sales, which gains were already taken into consideration in the computation
of the alleged net loss of P67,307.80.

Issue

Whether the personal and additional exemptions granted by section 23 of

Commonwealth Act No. 466 should be considered as a credit against or be
deducted from the net income, or whether it is the tax on such exemptions that
should be deducted from the tax on the total net income.

Held/Ratio

Personal and additional exemptions claimed by appellant should be credited

against or deducted from the net income.

"Exception is an immunity or privilege; it is freedom from a charge or burden to

which others are subjected." (If the amounts of personal and additional
exemptions fixed in section 23 are exempt from taxation, they should not be
included as part of the net income, which is taxable. There is nothing in said
section 23 to justify the contention that the tax on personal exemptions (which
are exempt from taxation) should first be fixed, and then deducted from the tax
on the net income.

SSS vs. Bacolod CityGR L-35726, 21 July 1982Second Division,

Escolin (J): 5 concur
Facts: The Social Security System (SSS) is a government agency
created under RA 1161. In pursuance of its operations, SSS maintains a
number of regional offices, one of which is a 5-storey building
occupying 4 parcels of land in Bacolod City. Said building and lands
were assessed for taxation. For failure to pay the realty taxes thereon,
the city levid upon said properties. SSS sought reconsideration on the
ground that SSS is a government-owned and -controlled corporation
and is exempt from payment of real estate taxes.
Issue: Whether SSS property in Bacolod City is tax-exempt.
Held: The distinction whether the government-owned or controlled
corporation exercises ministrant or proprietory function is of no
relevance as the exemption does not relate to legal fees but on realty
taxes. The Charter of Bacolod City does not contain any qualification
whatsoever in providing fro the exemption from real estate taxes of
lands and building owned by the Government/ It is axiomatic that when
public property is involved, exemption is the rule and taxation is the
exception. PD 24, amending the Social Security Act of 1954, has
already removed all doubts as to the exemption of the SS from taxation
(Section 16).
1. CIR and Commissioner of Customs vs. Botelho Shipping Corp. &
General Shipping Co., Inc.
G.R. Nos. L-21633-34 June 29, 1967

FACTS: Reparations Commission of the Philippines sold to Botelho the vessel "M/S
Maria Rosello" for the amount of P6,798,888.88. The former likewise sold to General
Shipping the vessel "M/S General Lim" at the price of P6,951,666.66. Upon arrival at the
port of Manila, the Bureau of Customs placed the same under custody and refused to
give due course [to applications for registration], unless the aforementioned sums of
P483,433 and P494,824 be paid as compensating tax. The buyers subsequently filed with
the CTA their respective petitions for review. Pending the case, Republic Act No. 3079
amended Republic Act No. 1789 — the Original Reparations Act, under which the
aforementioned contracts with the Buyers had been executed — by exempting buyers of
reparations goods acquired from the Commission, from liability for the compensating
tax.

Invoking [section 20 of the RA 3079], the Buyers applied, for the renovation of their
utilizations contracts with the Commission, which granted the application, and, then,
filed with the Tax Court, their supplemental petitions for review. The CTA ruled in favor
of the buyers.

[On appeal, the CIR and COC maintain that such proviso should not be applied
retroactively], upon the ground that a tax exemption must be clear and explicit; that
there is no express provision for the retroactivity of the exemption, established by
Republic Act No. 3079, from the compensating tax; that the favorable provisions, which
are referred to in section 20 thereof, cannot include the exemption from compensating
tax; and, that Congress could not have intended any retroactive exemption, considering
that the result thereof would be prejudicial to the Government.

ISSUE: Whether or not the tax exemption can be applied retroactively

HELD: YES. The inherent weakness of the last ground becomes manifest when we
consider that, if true, there could be no tax exemption of any kind whatsoever, even if
Congress should wish to create one, because every such exemption implies a waiver of
the right to collect what otherwise would be due to the Government, and, in this sense, is
prejudicial thereto. It may not be amiss to add that no tax exemption — like any other
legal exemption or exception — is given without any reason therefor. In much the same
way as other statutory commands, its avowed purpose is some public benefit or interest,
which the law-making body considers sufficient to offset the monetary loss entitled in
the grant of the exemption. Indeed, section 20 of Republic Act No. 3079 exacts a
valuable consideration for the retroactivity of its favorable provisions, namely, the
voluntary assumption, by the end-user who bought reparations goods prior to June 17,
1961 of "all the new obligations provided for in" said Act.

Furthermore, Section 14 of the Law on Reparations, as amended, exempts from the

compensating tax, not particular persons, but persons belonging to a particular class.
Indeed, appellants do not assail the constitutionality of said section 14, insofar as it
grants exemptions to end-users who, after the approval of Republic Act No. 3079, on
June 17, 1961, purchased reparations goods procured by the Commission. From the
viewpoint of Constitutional Law, especially the equal protection clause, there is no
difference between the grant of exemption to said end-users, and the extension of the
grant to those whose contracts of purchase and sale mere made before said date, under
Republic Act No. 1789.