PLANTERS PRODUCTS INC.

VS FERTIPHIL
- Public purpose if the heart of tax law
- Planters Product Inc. (PPI) and Fertiphil Corp. Are both engaged in importation and
distribution of fertilizers, pesticides and agricultural chemicals.
- Pres. Marcos issue LOI No. 1465 which imposed a capital recovery component of not
less than P 10 per bag on the sale of fertilizers.
- Fertilizer and Pesticide Authority is the one who collects the P 10.
- Fertiphl would pay and FPA would collect and will deposit it to the depository bank of
PPI.
- After the EDSA revolution, Fertiphil demanded the refund of the P 10 levy but PPI
refuse to repay.
- Fertiphil filed a case alleging that LOI 1465 was unconstitutioanl because it was only
made to help PPI pay its debt.
- FPA countered that the levy was a valid exercise of the power of taxation or police power.
ISSUE: W/N LOI 1465 is unconstitutional?
RULING: YES. Power of taxation is only for a public purpose. They cannot be used for
private purposes or fortheh exclusive benefit of private persons. LOI 1465 WAS IMPOSED
TO BENEFIT PPI, IT WAS CONDITIONAL AND DEPENDENT UPON PPI BECOMING
VIABLE, the levies were directly remitted to the depository bank of PPI, the levy was used
to pay PPI’s debts.

Why only for public purpose? Because the power to tax is for the general welfare.
What is public purpose? It does not only pertain to those purposes which are traditionally
viewed as essentially government functions, such as building roads and delivery of basic
services, but also includes those purposes designed to promote social justice.

PASCUAL VS SECRETARY
- Power to appropriate public revenues must only be for public purpose.
- Test of contitutionality of a statute requiring the use of public funds is whether the statute
is designed to promote public interests as ooposed to the furtherance of an individual.
- Zulueta offered to donate the projected feeder roads located in the Antonion Subdivisio
(which is owned by Zulueta) to the municipality of pasig. These roads were not yet
constructed, do not connect to any government property or any highways
- No deed of donation was executed.
- RA 920 contained an item worth 85k for the construction , repairs, extension of the said
project feeders roads.
- A deed of donation of the parcels of land was executed in favor of the government which
was accepted.
- Governor Pascual contested RA 920 alleging that it was null and void and that the deed
of donation was unconstitutional.
ISSUE: w/n the item of 85k was appropriate for public purpose?
RULING: NO. The appropriation was sought for private purpose. Although a donation to
the govenrment after 5 months after the approvale of RA 920 was made it did not in any way
cure the questioned appropriation.
 Governor Pascual had a legal personality to file the case him being a tax payer representing
the province of rizal which is the most populated province where the tax payersr bear a
substantial portion of taxation.

BAGATSING VS RAMIREZ favorite ni sir

- Entrusting of the collection the fees or taxes to a private corporation does not destroy the
public purpose of the ordinance.
- Ord. 7552 was enacted which regulate public markets and prescribe fees for rentals of
stalls which was then approved by Mayor Bagatsing.
- Federation of Manila Market Vendors sought the declaration of the ordinance was null
because they argued that the feees was diverted to private use of the ASIATIC
INTEGRATED CORP. since the collection had ben let by the city to the corporation in a
management and operating contract.
ISSUE: W/N delegating the collection of taxes to a private entity invalidates a tax ordinance
or defeats its public purpose?
RULING: NO. So long as the purpose is public, it does not matter whether the agency
through which the money is dispensed is public or private.

right to tax depends upon the ultimate use, purpose and object for which the fund is raised.
people may be taxed for a public purpose, although it be under the direction of an individual
or private corporation.

fees collected do not go directly to ASIATIC INTEGRATED CORP and Ord 7522 was not
made for the corporation but for raising revenues for the city.

LUTZ VS ARANETA favorite ni sir ( intertwined the case of Sison vs Ancheta CASE
the 4 enumerations were mentioned)
- The legislature in order to protect the sugar industry may determine within reasonable
bounds what is necessary for its protection and expedient for its promotion.
- Walter Lutz is the judicial administrator of the Intestate Estate of Antonio Ledesma he
sought to recover from the CIR a sum of P 14,666 paid by the estate tax for the crop years
claiming that the tax imposed is void.
- It claimed that it is unconstitutional because it was levied for the sugar industry which for
Lutz is not for public purpose.
ISSUE: Whether the tax levied under the Commonwealth Act 567 for the sugar industry is for a
public purpose?
RULING: Yes. The sugar industry is one of the great industries of our nation hence its
promotion, protection and advancement redounds greatly to the general welfare hence it is a
matter of public concern. Legislature can determine reasonable bounds to protect and expedient
its promotion subject to the test of reasonbleness

TIO VS VRB (same with LUTZ case also apply the ILO-ILO case)
-public purpose of a tax may legally exist even if the motive to impose the tax was to favor one
industry over another.
- it is inherent in the power to tax that a state may freely select the subject of taxation and that
inequalities that result from singling out a particular class does not infringe a constitutional
limitation.
- PD 1987 has broad powers to regulate and supervise the videogram industry. Thereafter PD
1987 was amended by. PD 1994 amending the NIRC where an annual tax of 5 pesos on each
processed video-tape, cassette, ready for playback provided that locally manufactured blank
video tapes shall be subject to sales tax.
ISSUE: W/N the tax imposed is harsh and oppressive?
RULING: NO. The tax imposed of 30% is not only regulatory but also a revenue measure
because it was realized that the videogram establishments have earnings aroung P 600M per
annum and have not been subjected to tax thereby depriving the government additional source of
revenue.
- The tax is an END-USER TAX imposed on retailers for every videogram made available
for public viewing.
- This is similar to the 30% tax amusement tax borne by the movie industry which the
theater owners pay to the government.
- The levy is for public purpose to answer the need for regulating the video industry.
- PURPOSE: because of the rampant film piracy, flagrant violations of IP rights,
proliferation of pronographic video tapes, protect the movie industry.
- Public purpose of a tax can still exist even if the motive was to favor one indsutry over
another.

CALTEX VS COA
- Taxes may be levied with a regulatory purpose to provide means for the rehabilitation and
stabilization of a threatened industry which is affected with public interest as to be within
the police power of the state.
- Oil industry is imbued with public interest as it vitally affects the general welfare. If the
oil prices are unregulated it will hurt the lives of a majority of people and could cause an
economic crisis.
- Oil price stabilization fund (OPSF) was created for the purpose of minimizing frequent
price changes brought by exchange rate adjustments and/or changes in world market
prices of crude oil and petroleum products.
- COA sent a letter to Caltex to remit to the OPSF its colleciton failure to do so all of its
claims for reimbursement from the OPSF shall be held in abeyance.
- Caltex requested from COA an early release of the reimbursement from the OPSF.
- Caltex then submitted a proposal but COA prohibited further offsetting remittances /
reimbursements for the current and ensuing years.
ISSUE:Whether the amounts due to the OPSF can be offset against Caltex’s claims from said
funds.

RULING: No. A taxpayer may not offset taxes due from the claims that he may have against the
government. Taxes cannot be the subject of compensation because the government and taxpayer
are not mutually creditors and debtors of each other and a claim for taxes is not such a debt,
demand, contract or judgment as is allowed to be set-off.
The oil companies are merely agents of the government when collecting taxes for the OPSF
because the taxes are passed unto the public hence, Clatex has the primary obligation to account
for and remit the taxes collected to OPSF.

Oil industry is greatly imbued with public interest because it affects the general welfare.

GOMEZ VS PALOMAR
- The director of posts through RA 1635 amended by RA 2631 ordered the printing and
issuance of semi-postal stamps with face value showing the regular postage charge plus
the additional amount of 5 centavos to help raise funds for the Philippine Tuberculosis
Society.
- No mail matter shall be accepted unless it bears such semi-postal stamps.
- Additional proceeds realized from the sale of the semi-postal stamps shall constitute a
special fund and be deposited with the National Treasury to be expended by the
philippine tuberculosis society.
ISSUE: W/N the tax is invalid because it is not levied for a public purpose because there are
no special benefits that accrued to the mail user as tax payers.
RULING: NO. Eradication of a disease is for public purpose.

The money raised for the anti-tb stamps is spent for the benefit of the PTS although a private
organization but through which the state acts in carrying out what is essentially a public
function. The money is treated as a special fund need not be appropriated by law.

CIR VS MARUBENI (sir discussed this)

- Services rendered OUTSIDE the taxing jurisdiction of the Philippines are NOT
SUBJECT TO CONTRACTOR’S TAX.
- CIR assessed Marubeni which is a Japanese corporation for deficiency income arsing
from undeclared income from 2 contracts in the Philippines.
- Marubeni questioned the assessment and then filed an application for tax amensty
pursuant to EO 41.
- Marubeni then filed a supplementary tax amnesty return after EO 41 was expanded but
CIR contended that Marubeni id not properly aval the tax amensty because as provided
under sec. 4 of EO 41 those with income taxes already filed in court as of the effectivity
may not avail the amnesty.
ISSUE: W/N Marubeni is expemted from paying tax?
RULING: YES. Because Marubeni was able to prove that not all of its work was done in the
Philippines because there were some that were completed in Japan.

The services rendered were outside the Philippines taxing jurisdiction therefore not subject to
contractor’s tax.

What were the reasons of Marubeni why they should not be liable for deficiency tax?
1. The incoem form the projects came from offshore portion as opposed to onshore portion.
2. Alll materials and equipment were manufactured in Japan in the offshore portion.
3. The situs of the 2 projects is in the Philippines and the material and services rendered
were all within the territorial jurisdiction of the Philippines.
MERALCO VS YATCO
- The commonwealth of the Philippines has the power to impose tax upon the insured
regardless of whether the contract is executed in a foreign country and with a foreign
corporation if:
a. The insured against is in the Philippines
b. Certain incidents of the contract are to be attended in the Philippines (payments of
dividends, sending of an unjuster in case of dispute, making proof of loss)
- Manila Electric Co. insured with City of New York Insurance real and personal properties
situated in the Philippines. They are not licensed to do business in the Philippines and
having no agents therein.
- Broker of Manila Electric Co. paid the insurance company premiums in the sum of P 91,
696. The CIR assessed and levied a tax which Manila Elc. Paid under protest.
ISSUE: W/N CIR exceeded his powers in taxing Meralco’s paid premium?
RULING: Where the risk insured against and certain incidents of the contract are to be
attended in the Philippines such as payment of dividends when received in cash, the
Philippines may impose tax regardless of whether the contract is executed abroad.
There are substantial elements of the contract may be said to be so situated in the Philippines
as to give its government the power to tax.

The government of the Philippies beenfits the foreign corporation because it is protecting the
properties insured that is why the foreign corporation should pay a contribution therefor.

CIR VS FORTUNE TOBACCO (statutory law shall prevail) (read again)

- Fortune Tobacco manufactured cigarette brands that were subject to ad-valorem tax
under sec 142 of the TAX CODE of 1977 as AMENDED.
- RA 8240 however shifted from ad valorem tax to specific tax which imposed excise tax
on cigarette brands. The rates of excise tax on cigars and cigarettes is increased by 12 %
on jan 1 2000
- Secretary of Finance then issued revenue regulation RR 17-99 whre the specific tax rate
shall not be lower than the excie tac paid prior to Jan 1,2000.

ISSUE: W/N the revenue regulation has exceeded the allowable limits of legislative
delegation?

RULING: YES. Rr 17-99 WENT FURTHER BY ADDING THE NEW SPECIFIC tax rate
for any existing brand of cigars, cigaretters packed by machine, distillied spirits etc. Shall not
be lower than the excise tax that is actually being paid prior to Jan. 1 ,2000.

Section 145 mandates a new rate of excise tax for cigarettes packed by machine due to the
12% increase effective on 1 January 2000 without regard to whether the revenue collection
By adding the qualification, RR No. 17-99 effectively imposes a tax which is the higher
amount between the ad valorem tax being paid at the end of the three (3)-year transition
period and the specific tax under paragraph C, sub-paragraph (1)-(4), as increased by 12%—
a situation not supported by the plain wording of Section 145 of the Tax Code.
If there is a discrepany between an amended law from an implementing regulation based on the
old law, the law amended will prevail.

BOARD OF ASSESSMENT APPEALS VS CTA

-National Waterworks and Sewage Authority is a PUBLIC CORPORATION owned by the
Government.
NWSA took all the property of the local government owned waterroks and sewerage system
hence the Porvincial Assessor of Laguna made an asessment for real estate taxes like water
pipes, buoldings, reservoir, intake etc. For the reasons that:
A. NSWA holds the property in question in a private, proprietary or patrimonial character.
B. RA no. 104 sec. 1 provides that all corporations, agencies or instrumentalities owned or
controlled by the Government are subject to taxation.

NWSA claimed that they are exempted from taxation.

ISSUE: w/n the water pipes, reservoir , intake and buildings are used by NWSA are subject to
real estate tax.
RULING: NO. RA NO. 104 SEC1 is inapplicale to this case because charges imposed upon
transaction, business etc does not include taxes on real property like real estate.
Commonwealth Act No. 470 provides that property owned by the Philippines makes no
distinction between a property held in a sovereign, governmental or political capacity and those
possessed in a private proprietary or patrimonial character.

Court highlighted that taxes are imposed for raising revenues and a tax on property of the
government whether national or local would merely have the effect of taking money to put it to
antoher pocket of the same entity.

MCIAA s MARCOS
- Exemtpion from taxes may be withdrawn at the pleasure of the taxing authority exept
where the exemption was granted to private parties based on material consideration of a
mutual nature which then becomes contractual which covers it under the non-impairment
claim of the Constitution.
- Mactan Cebu International Airport was reated to manage the Mactan and Lahug Airport.
Since the time of its creation, MCIAA enjoyed the privilege of exemption from payment
of realty taxes as provided under sec. 14 of its Charter.
- Mr. Cesa from the Office of the treasure demanded payment from MCIAA payment of
realty taxs on several parcels of land belong to the petitioner.
- MCIAA objected to the demand because of sec 14 of RA 6958 and that it is an
instrumentality performing governmental functions citing sec 133 of the LGC.

However the city of Cebu alleges that the exemption was repealed by sec 234 of the LGC and
that MCIAA is not an instrumentality but a GOCC performing properiatary functions.
ISSUE: W/N MCIAA is exempted from realty taxes? – NO.
W/N MCIAA is a taxable person? -YES.

RULING: no longer exempted because it was withdrawn upon the effectivitr of the lGC.

MCIAA is a taxable person because it was only exempted from paying realty taxes and not other
taxes.

The tax being refered here are those pertaining to the parcels of alnd that were transferred to
MCIAA and not just the beneficial use of it. The transfer being referred here is the absolute
conveyance of the ownership because MCIAA authorized capital stock consists of real estate
and/or administered by airports.. .

Even if MCIAA is exempted form tax being an instrumentality it does not prevent the Congress
from decreeing that even instrumentalities or agencies of the government performing
governmental functions may be subject to tax if it is to fulfill a constitutional mandate and
national policy. 1

MCIAA owns the land in question and Art 234 of the LGC is no longer applicable.

BASCO VS PAGCOR (apply yung screenshot ni sir na sinend sa GC)

- Local government have no power to tax instrumentalities of the National Government
This is because of the supremacy of the National Government over local government and that
the national government is a taxing authority.

PAGCOR was created to reguate and centralize all games of chance.

BASCO and 4 other lawyers assailed the validity of the law on the ground that:
1. PAGCOR’s charter is against constitutional provision on local autonomy
2. Waived the right of the City of Manila to impose taxes and legal fees.
3. Sec. 13 of PD 1869 exempts PAGCOR from paying any tax of any kind or form ,
fees ,charges of whatever nature whether National or Local which violates the local
autonomy principle.
ISSUE: W/N PAGCOR shall be exempt from TAX?
RULING: YES. SC ruled that PAGCOR is a GOCC with an original charter but because of its
role of being able to operate and regulate gambling casinos it placesit in a categry of an agency
or instrumentality of the government which make it exempted from local taxes otherwise its
operation may be burdened or impeded by the Local government.

MIAA VS CA (Atty. Differentiated this case with MCIAA vs LAPU-LAPU)

- There is no doubt that airport lands and buildinsgs are exempt from real estate tax under
SEC. 234 of the LGC for these are properties of public dominion which makes these
properties not subject to execution or foreclosure sale.
- Manila International Airport Authotiy operated NAIA , adminsiters the land,
imporevement and equipment within the NAIA complex under EO 903 during Pres
Marcos’ time.
- 600 hectares of land were transferred to MIAA where such cannot be disposed through
sale or other mode unless approved by the President.
- Because of the LGC of 1991 the tax exemption of MIAA was withdrawn resulting for
MIAA to negotiate with the City of Paranaque to pay the real estate tax imposed by the
City.
- MIAA still failed to pay the taxes thus the City of paranaque threatened to sell at public
auction its airport land and buildings if they still failed to pay the real estate tax
delinquency
.
ISSUE: W/N airport lands and buildings of MIAA are exempt from real estate tax?
RULING: YES. Real estate tax assessments are void because MIAA is an instrumentality
although vested with corporate powers, and not a GOCC thus exempted from local taxation.

Why is it that although MIAA is an instrumentality with corporate powers it is still not a
GOCC? Because it is not a stock or non-stock corporation still making it an instrumentality.
It has no capital stock, no stockholders nor voting shares.

Airport lands and buildings are propety of public dominion owned by the State. Even if there
are terminal fees and other charges it does not remove the character of the said property as
for public use. Being for public use it is not subject to levy, encumbrance or auction sale of
any property. Unless it is granted to a taxable person which is not exempted from real
property tax.

MCIAA VS LAPU-LAPU (if there is a conflict between local and national laws , the
national law shall prevail)
- MCIAA is an intrsumentality of the government which under RA 6958 was given the
management and supervision of the Mactan International Airport and the Lahug Airport
in Cebu.
- They are exempted from realty taxes under sec 14 of RA 6958 but there is no tax
exemption extended to any subsidiary which may be organized by the MCIAA.
- Upon the creation of the LGC MCIAA is no longer exempted from real estate taxes,
hence City of Cebu issued a statement of real estate tax assessing the lotsof the Mactan
International airport.
- City of Lapu-lapu included in the tax assessments the airfield , runway and taxi way and
the lots on which there are built . Thereafter. Notices of levy on 18 real properties of the
MCIAA was issued.
- City of Lapu-lapu then had the properties auctioned but since there were no bidders they
bought the properties themselves where certificate of sale of delinquent property were
issued.
- In the 2006 case of MIAA vs CA , the MIAA was held to be exempted from real estate
tax imposed by local governments because MIAA is an instrumentality with corporate
powers. Again, although with corporate powers MIAA is not a stock corp or non-stock
corp as required to become a GOC. Being in this character it is considered as government
corporate entities and not GOCC’s
- When local governments invoke the power to tax on national government
instrumentalities, such power is construed strictly against local governments.
 -
- There is, moreover, no point in national and local governments taxing each other, unless a
sound and compelling policy requires such transfer of public funds from one government
pocket to another. There is also no reason for local governments to tax national
government instrumentalities for rendering essential public services to inhabitants of
local governments
.
CONSTI LIMITATION CASES

EASTERN THEATRICAL VS ALFONSO

- All taxable articles or kinds of property shall be taxed AT THE SAME RATE.
- TAXING AUTHORITY has the taxing power to make reasonable and natural
classifications for purposes of taxation.
- 12 corporations engaging in the motion picture business are impugning the validity of
Ordinance no. 2958 which imposed a fee on the price of every admission ticket sold by
cinematographs , theaters, etc.
- Ordinance no. 2958 specifically sec. 1,2, and 4 were being impugned on the following
grounds:

1. Violates the uniformity and eqaulty of taxation and the 3 equal protection of the laws.
2. Municipal board of manila exceeded the power granted to it by the charter of the city
of manila.
3. Violates existing revenue and tax laws.
4. It is unfair , unjust, arbitrary and a violation to basic principles of taxation and
licensing laws.
ISSUE: W/N the revised administrative code of the Municipal Board of the City of Manila had
the power to enact Ordinance No. 2958.

RULING: YES. The power to tax amusement is included within the power granted under the
Revised Administrative Code.

The fact that some places of amusement are not taxed while others are taxed is no argument at all
against the equality and uniformity of the tax imposition.

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.

It cannot also be pointed out what places of amusement taxed by the ordinance do not constitute
a class by themselves and which can be confused with those not included in the ordinance.

CHURCHILL VS CONCEPCION

- All taxable articles or kinds of property of the same class shall have the same tax rate.
 - Different articles may be taxed at different amounts PROVIDED the rate is uniform on
the same class everywhere.
- When is a tax uniform? If it operates within the same force and effect in every place
where the subject of it is found.
- Churchill and Tait are co-partners doing business in a Mercantile Advertising Agency.
- They owned a billboard with an area of 52 sq meters. They were then taxed in an amoun
of P 104.00. (2 peso per sq meter as provided under Act No. 2432.

ISSUE: Are tax imposed on billboards, signs and spaces void?

RULING: NO.

1. There is no lack of uniformity because the tax imposition is applied to every sign,
billboard etc. Wherever found in the Philippines Islands hence the taxation is uniform
through out the Islands.
2. There is no double taxation because the land is taxed per unit while the billboards are
ltaxed as per square meters does not constitute double taxation.
3. Classification is based on reasonable grounds for there is a presumption that the
legisltaure selected the signs and billboards as subject for taxation having full knowledge
of the situation.

PHILIPPINE TRUST COMPANY VS YATCO

- TAX is considered UNIFORM if it operates with the same force and effect in every place
where the subject may be found.
- The rule of uniformity does not call for perfect uniformity or perfect eqaulity because it is
hardly attainable.
- Philippine trust comp et al. Challenged the constitution of sec. 1499 of the revised
administrative code as amended by act. No 1399 on the ground that IT VIOLATES THE
RULE ON UNIFORMITY OF TAXATION, it is discriminatory and thus violative of the
equal protection clause.
- Although this rule is applicable to all banks it became discriminatory when it exempted
the national city bank of new york which violates the uniformity in taxation.
ISSUE: W/N sesc. 1499 of the revised administrative code amended by Act 1399 VIOLATES
THE UNIFORMITY OF TAXATION.
RULING: NO. Tax is considered uniform when it operates with the same force and effect in
every place where the subject may be found. Section 1499 of the Revised Administrative Code,
as amended, applies uniformly to, and operates on, all banks in the Philippines without
distinction and discrimination, and if the National City Bank of New York is exempted from its
operation because it is a federal instrumentality subject only to the authority of Congress.

Further a state may impose a different tax rate upon a foreign corporation for the privilege of
doing business within the state than it applies to its own corporations upon the franchise which
the state grants in creating them.

SISON VS ANCHETA
 - Taxation shall be uniform and equitable, this means that all taxable articles or kind of
property of the same class shall be taxed at the same rate.
- Taxing power has the authority to make reasonable and natural classifications for
purposes of taxation.
- SISON challenged the constitutionalit of sec. 1 BP 135 amending sec. 21 of the NIRC
which provides for rates of tax on citizens or residents on taxable compensation, income,
net income, royalties etc.
- SISON claimed that he would be discriminated against the imposition of higher tax rates
upon his income arising from the exercise of his profession than those imposed upon
having fixed income or salaried individual tax payer.
- There is the transgression of both equal protection and due process clauses.
ISSUE: W/N there is a violation of the equal protection and due process clause?
RULIN: NO.

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.
Taxing power has the authority to make reasonable and natural classifications for purposes of
taxation.

Why are professionals have higher tax rates? This is because in their practice or business there is
NO UNIFORMITY in the costs or expenses necessary to produce their income compared to tose
whose income is set. Hence it would be unjust to disregard the disparities by giving all of them 0
deduction and indiscriminately impose on all alike the same tax rates on the basis of gross
income.

CIR VS LINGAYEN GULF

- Legislature has the inherent power not only to select the subjects of taxation but to grant
exemptions. Tax exemptions have never been deemed violative of the equal protection
clause.
- Lingayen Gulf Electric power is an electric power plant that was granted a franchise to
serve the municipalites of lingayen and binmaley.
- In the franchise the grantee shall pay to the provincial treasury 1% of the gross earnings
obtained for the first 20 years (from 1946) and 2% in the remaining 15 years.
- BIR made an assessment for deficiency franchise tax for the years 1946 to 1955 applying
the tax rate of 5% on gross receipts.
ISSUE: W/N the rate below 5% violates the uniformity clause of the constitution.
RULING: NO.

The legislature has the power to select those subject to taxation and grant exemptions.
The 5% franchise tax under sec 259 of the tax code never intended to have universal application.
This section allows the payment of taxes at rates lower thn 5%when the charter granting the
franchise precludes the imposition of a higher tax.
RA 3843, the law granting the franchise, did not only fix and specify a franchise tax of 2% on its
gross receipts but made it in lieu of any and all taxes, all laws to the contrary notwithstanding.
The company, hence, is not liable for deficiency taxes.

1. Based on substantial distinctions which make real differences

2. Germane to the purpose of the law
3. Classification must be applicable to present and future conditions that are substantially
identical to those of the present
4. Classification applies only to those who belong to the same class

DLSU case
Abra case
Ymca case

JOHN HAY PEOPLE’S ALTERNATIVE COALITION VS LIM

- Tax exemption is not implied it must be unmistakably expressed.

- General rule it is the legislature that has the full power to grant tax exemption. The
constitution may also provide for specific tax exemptions or local gov’t may pass
ordinances on exemption only from local taxes.
- RA 7227 or the Bases Conversion and Development Act was enacted which accelerates
the conversion of the military reservations into other productive uses and creates the
Bases Conversion and Development Authority.
- Under RA 7227 it created the Subic Special Economic Zone whichgranted incentives like
tax and duty-free importations
- BCDA then entered into a JVA with Tuntex and Asia world thus creating the Baguio
International Development Management to lease areas within CJH in Baguio and La
Union.
- Pres. Ramos issued Proc. 420 granting BCDA the authority to implement necessary
policies, rules and regulations including incentives in the Camp John hay area.
ISSUE: W/N Proc. 420 is unconstitutional for providing national and local tax exemption?
RULING: YES. Sec. 12 of RA 7227 tax exemption only applies to SUBIC SEZ and there is no
express extension of the benefits to other SEZ’s that is to be created. Only the legislature unless
limited by the constitution has the full power to exempt any person, corporation or class from
tax.

ART. 6 SEC. 28 of the 1987 constitution states that no law granting any tax exemption shall be
passed without the concurrence of a majority of all members of congress. In this case Proc. 420
extends the tax exemption to other economic zones which the court declared as void because it
granted tax exemption and other privileges to the John Hay SEZ.

COCONUT OIL REFINERS VS TORRES

- No law shall be passed granting tax exemption without the concurrence of a majority of
all the members of Congress.
 - RA 7227 was enacted so that a sound and balances conversion of the Clark and Subic
military reservations in the form of special economic zones in order to promote
economic and social evelopment of Cetnral Luzon.
- Pres. Fidel Ramos then issues E.O No. 80 which declared Clark shall have the applicable
incentives granted to the Subic Special Economic Free Port Zone.
ISSUE: Whether EO 80 was void?
RULING: YES. The EO is one of tax exemption. While Section 12 of Republic Act No. 7227
expressly provides for the grant of incentives to the SSEZ, it fails to make any similar grant
in favor of other economic zones, including the CSEZ. Tax and duty-free incentives being in
the nature of tax exemptions, the basis thereof should be categorically and unmistakably
expressed from the language of the statute. Consequently, in the absence of any express grant
of tax and duty-free privileges to the CSEZ in Republic Act No. 7227, there would be no
legal basis to uphold the privileges.

ORMOC SUGAR VS TREASURER

- No law shall be passed granting tax exemption without the concurrence of a majority of
all the members of Congress.
- Municipal Board of Ormoc City passed Ordinance No. 4 which passed a municipal tax of
1% per export sale on all centrifugal sugar milled at the ORMOC Sugar Company Inc.
- ORMOC Sugar Co. alleged that the ordinance is unconstitutional because it violated the
equal protection clause and rule of uniformity of taxation, export tax is forbidden,
ORMOC City’s charter only authorizes the imposition of production or license tax.
ISSUE: W/N the equal protection clause and rule of uniformity of taxation were infringed?
RULING: yes.

The equal protection clause applies only to persons or things identically situated and does not bar
a reasonable classification of the subject of legislation, and a classification is reasonable where:
(1) it is based on substantial distinctions which make real differences.
(2) these are germane to the purpose of the law.
(3) the classification applies not only to present conditions but also to future conditions which
are substantially identical to those of the present.
(4) the classification applies only to those who belong to the same class.

In this case the ordinance passes does not meet the requirements for it taxes only centrifugal
sugar produced and exported by the ORMOC Sugar Co. and NONE OTHER.

The taxing ordinance should not be singular and exclusive that would exclusive any sugar central
of the same class as plaintiff for the coverage of tax.

TOLENTINO VS SECRETARY
- The power of the Senate to propose amendments must be understood to be full, plenary
and complete "as on other Bills."
 - Revenue bills are required to originate exclusively in the House of Representatives, the
Senate cannot enact revenue measures of its own without such bills.
- After a revenue bill is passed and sent over to it by the House, however, the Senate
certainly can pass its own version on the same subject matter. This follows from the
coequality of the two chambers of Congress.
- The provision "but the Senate may propose or concur with amendments" means the
Senate may propose an entirely new bill as a substitute measure. To except from the
procedure (Re: bill referred to a committee) the amendment of bills which are required to
originate in the House by prescribing that the number of the House bill and its other parts
up to the enacting clause must be preserved although the text of the Senate amendment
may be incorporated in place of the original body of the bill is to insist on a mere
technicality.
- TOLENTINO filed a petition for certiorari because he argued that the RA 7716 or the
Expanded Value-Added tax as unconstitutional on the ground that the bill did not
originate exclusively in the HR as required by the Constitution as it was a version
proposed by the Senate.
- TOLENTINO argued that the Bill must retain the essence of House Bill no. 11197 to
comply with the Constitution.
- They argued that the bill was not passed on the 2nd and 3rd reading from the senate and
just passed its own version.
- The bill remains a house bill and the senate version becomes the text of the house bill.
ISSUE: W/N, based on the aforementioned grounds of the petitioners, the Expanded Value-
Added Tax Law should be declared unconstitutional.

RULING: NO. the power of the Senate to propose amendments must be understood to
be full, plenary and complete "as on other Bills." Thus, because revenue bills are
required to originate exclusively in the House of Representatives, the Senate cannot
enact revenue measures of its own without such bills. This follows from the coequality of
the two chambers of Congress.

The power of the senate to propose or concur with amendments is without any
restriction. So the senate can re-write a bill that came from the HR and leave only a trace
of the original bill.

In the exercise of its power the senate may propose an entirely a new bill as substitute
measure.

A committee to which a bill is referred may do any of the following:

(1) to endorse the bill without changes;

(2) to make changes in the bill omitting or adding sections or altering its language;
(3) to make and endorse an entirely new bill as a substitute, in which case it will be
known as a committee bill; or
(4) to make no report at all.

SC said that TOLENTINO treated S No. 1630 as an independent and distinct bill. That is
why they concluded that RA 7716 originated both in the House and Senate and that it is
the product of 2 half-baked bills because neither H. No. 11197 not S N. 1630 was
passed by both Houses of Congress.

Sc ruled that S NO. 1630 clearly appear to be mere amendments of the provision of H
No. 11197 the provisions of the senate bill were precisely intended to be amendment to
the House Bill. ❛ Without H. No. 11197, the Senate could not have enacted S. No. 1630.
Because the Senate bill was a mere amendment of the House bill, H. No. 11197 in its
original form did not have to pass the Senate on second and third readings. It was
enough that after it was passed on first reading it was referred to the Senate Committee
on Ways and Means. Neither was it required that S. No. 1630 be passed by the House of
Representatives before the two bills could be referred to the Conference Committee. ❜

In withdrawing the exemption, the law merely subjects the press to the same tax burden
to which other businesses have long ago been subject. The VAT is not a license tax. It is
imposed purely for revenue purposes.

The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege,
much less a constitutional right. It is imposed on the sale, barter, lease or exchange of goods or
properties or the sale or exchange of services and the lease of properties purely for revenue
purposes. To subject the press to its payment is not to burden the exercise of its right any more
than to make the press pay income taxor subject it to general regulation is not to violate its
freedom under the Constitution.