Villanueva vs City of Iloilo

G.R. No. L-26521; December 28, 1968

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Facts:
On September 30, 1946, the Municipal Board of Iloilo City enacted Ordinance 86 imposing license tax fees upon
tenement houses. The validity of such ordinance was challenged by Villanueva, owner of four tenement houses
containing 34 apartments. The Supreme Court held the ordinance to be ultra views. On January 15, 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, Villanueva assailed the ordinance anew.

Issue:
Whether or not Ordinance 11 violate the rule of uniformity of taxation.

Held:
No. The Court has ruled the 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 therein.
Perez vs CTA
GR L-10507; May 30, 1958

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Facts:
Petitioner was assessed by the Collector with deficiency tax due to its increase in net worth. In making the
deficiency assessments, the Collector employed what is known as the "net worth" technique and started by
determining the opening net worth of petitioner at the start of the year 1947 which he fixed at P936.72. The Court of
Tax Appeals declared the "net worth" method of determining understated income to have been validly and properly
applied; found that the consistent under declaration of income, unexplained acquisition of properties, and the fact of
petitioner's having claimed fictitious losses evidenced fraudulent intent, and ordered him to pay deficiency income
taxes and surcharges in the sum of P241,547.77.

Issue:
1. Whether the Collector of Internal Revenue is empowered by law to investigate appellant's (petitioner)
income tax returns for 1947, 1948, and1949 and to enforce collection of the alleged deficiency income
taxes for said years by summary proceedings of distraint and levy more than three years after the income
tax returns covering them were filed.
2. Whether the use of the "net worth" method by the respondent in computing appellant's net income is valid

Held:
1. No. Reiterating a long line of decisions to the effect that the three-year prescriptive period under section 51
(d) of the National InternalRevenue Code constituted a limitation to the right of the government to enforce
the collection of income taxes by summary proceedings of distraint and levy, though, it could proceed to
recover the taxes due by the institution of the corresponding civil action. Nevertheless, the appeal of the
taxpayer vested jurisdiction on the Court of Tax Appeals to review and determine his tax liability for the
aforesaid period.

2. Yes. This method of proving unreported income, according to the Court of TaxAppeals, is based upon the
general theory that money and other assets in excess of liabilities of a taxpayer (after an accurate and
proper adjustment of non- deductible items) not accounted for by his income tax returns, leads to the
inference that part of his income has not been reported. There is no question that the application of the "net
worth" method of determining the taxable income of a taxpayer has been an accepted practice.

In fine, we hold:
That section 38 of our National Internal Revenue Code authorizes the application of the Net Worth Method
in this jurisdiction.

That no civil cases, the Government need not prove the specific source of income (this is reasonable on the
basic assumption that most assets are derived from a taxable source and that when this is not true the
taxpayer is in a position to explain the discrepancy.

That the determination of the tax deficiency by the Government has prima facie validity and the burden
rests upon the taxpayer to overcome this presumption and to show to the satisfaction of the Tax Court that
the determination was not correct.

And finally, that no sufficient grounds exist to warrant a reversal of the findings of fraud of the lower court
as being "clearly erroneous"; on the contrary, we find them supported by reason.
Delpher Trades Corporation vs. Intermediate Appellate Court
G.R. No. L-69259; January 26, 1988

Facts:
Facts:
Delfin Pacheco and his sister, Pelagia Pacheco, were the owners of 27,169 square meters of real estate. The said co-
owners leased to Construction Components International Inc. the same property and providing that during the
existence or after the term of this lease the lessor should he decide to sell the property leased shall first offer the
same to the lessee and the letter has the priority to buy under similar conditions. On August 3, 1974, lessee
Construction Components International, Inc. assigned its rights and obligations under the contract of lease in favor
of Hydro Pipes Philippines, Inc. with the conformity and consent of lessors Delfin Pacheco and Pelagia Pacheco. On
January 3, 1976, a deed of exchange was executed between lessors Delfin and Pelagia Pacheco and defendant
Delpher Trades Corporation whereby the former conveyed to the latter the leased property together with another
parcel of land for 2,500 shares of stock of defendant corporation with a total value of P1,500,000.00.

On the ground that it was not given the first option to buy the property, respondent Hydro Pipes Philippines, Inc., a
complaint for reconveyance of Lot. No. 1095 in its’ favour.

Issue:
Whether or not Pacheco is guilty of tax evasion by taking refuge in the tax benefits of a corporation.

Held:
No, since an estate planning is an acknowledged legal means to decrease the amount of what otherwise could be the
heir’s taxes or to altogether avoid them.
Republic vs. IAC
G.R. No. 75042; November 29, 1988

Facts:
In 1979, the ROMAN CATHOLIC BISHOP of Lucena filed an application for confirmation of title to four (4)
parcels of land. As basis for the application, the applicant claimed title to the various properties through either
purchase or donation dating as far back as 1928.

The Solicitor General filed an opposition on the following grounds:

1. Article XIV, Section 11 of the New Constitution(1973) disqualifies a private corporation from acquiring
alienable lands for the public domain.
2. In the case at bar the application was filed after the effectivity on the New Constitution on January 17,
1973.

Issue:
Whether or not the Roman Catholic Bishop of Lucena, as a corporation sole is qualified to apply for confirmation of
its title to the four (4) parcels of land subject of this case.

Held:
The questioned posed before this Court has been settled in the case of DIRECTOR OF LANDS vs. Intermediate
Appellate Court (146 SCRA 509 [1986]), this Court stated that a determination of the character of the lands at the
time of institution of the registration proceedings must be made. If they were then still part of the public domain, it
must be answered in the negative.

If, on the other hand, they were already private lands, the constitutional prohibition against their acquisition by
private corporation or association obviously does not apply. In affirming the Decision of the Intermediate Appellate
Court in said case, this Court adopted the doctrine that open, exclusive and undisputed possession of alienable public
land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite
period ipso jure and without the need of judicial or other sanction, ceases to be public land and becomes' private
property.

In solving the problem thus submitted to our consideration, We can say the following: A corporation sole is a special
form of corporation usually associated with the clergy. Conceived and introduced into the common law by sheer
necessity, this legal creation which was referred to as "that unhappy freak of English Law" was designed to facilitate
the exercise of the functions of ownership carried on by the clerics for and on behalf of the church which was
regarded as the property owner.

A corporation sole consists of one person only, and his successors (who will always be one at a time), in some
particular station, who are incorporated by law in order to give them some legal capacities and advantages,
particulary that of perpetuity, which in their natural persons they could not have had. In this sense, the King is a sole
corporation; so is a bishop, or deans distinct from their several chapters.

There is no doubt that a corporation sole by the nature of its Incorporation is vested with the right to purchase and
hold real estate and personal property. It need not therefore be treated as an ordinary private corporation because
whether or not it be so treated as such, the Constitutional provision involved will, nevertheless, be not applicable.
Juan Luna Subdivision, Inc. vs. Sarmiento
G.R. No. L-3538; May 28, 1952

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Facts:
Plaintiff issued to the City Treasurer of Manila checks amounting for P2,210.52 drawn upon the Philippine Trust
Company.
This check was to be applied to plaintiff’s land tax, the exact amount of which was yet undetermined. The City after
liberation from Japanese to refund the plaintiff’s deposit or apply it to such future taxes as might be found due.
Plaintiff, however, claims that the whole amount of the check contending that taxes during period have been
remitted by Commonwealth Act No. 703.

Issue:
Does CA 703 cover taxes paid before its enactment as the plaintiff maintains and the courts below held, or does it
refer, as the City Treasurer believes, only to taxes which were still unpaid?

Held:
The law is clear that it applies to “taxes and penalties due and payable”, i.e. taxes owed and owing. The remission of
taxes due and payable to the exclusion of taxes already collected does not constitute unfair discrimination. The
taxpayers who paid their taxes before liberation and those who had not were not on the same footing on the need of
material relief. Taxpayers who had been in arrears in their obligation would have to satisfy their liability with
genuine currency, while the taxes paid during the occupation had been satisfied in Japanese War Notes, many of
them at a time when those notes were well-nigh worthless. To refund those taxes with restored currency would
unduly enrich many of the payers at a greater expense to the people at large.
Republic vs. Mambulao Lumber Company
G.R. No. L-17725; February 28, 1962

Facts:
Mambulao Lumber Company paid the Government a total of P 9,127.50 as reforestation charges for the years 1947
to
1956. Having found liable for an aggregate amount of P4,802.37 for forest charges, it contended that since the
Republic (Government) has not made use of the reforestation charges for reforesting the denuded area of the land
covered by the company’s license, the Republic should refund said amount or, if it cannot be refunded, at least the
company should be compensated with what it owed the Republic for reforestation charges.

Issue: Whether the set-off or compensation is proper.

Held:
No. There is nothing in the law which requires that the amount collected as reforestation charges should be used
exclusively for the reforestation of the area covered by the license of a licensee or concessionaire, and that if not so
used, the same shall be refunded to him.

The conclusion seems to be that the amount paid by a licensee as reforestation charges is in the nature of a tax which
forms part of the Forestation Fund, payable by him irrespective of whether the area covered by his license is
reforested or not.

Said fund, as the law expressly provides, shall be expended in carrying out the purposes provided for thereunder,
namely, the reforestation or afforestation, among others, of denuded areas needing reforestation or afforestation.

The weight of authority is to the effect that internal revenue taxes, such as the forest charges in question is
not subject to set-off or compensation. Taxes are not in the nature of contracts between the parties but grow
out of a duty to, and are positive acts of the government, to the making and enforcing of which, the personal
consent of the individual taxpayers is not required.

With respect to the forest charges which the company has paid to the government, they are in the coffers of the
government as tax collected, and the government does not owe anything. It is crystal clear that the Republic of the
Philippines and the Mambulao Lumber Company are not creditors and debtors of each other, because compensation
refers to mutual debts.