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Topic: Constitutional Limitations: Due Process Clause CREBA vs. THE SECRETARY OF A RAR!A" REFOR# Facts: T$e Secretar% o& A'rarian Re&orm issue( )Omni*us Rules an( Proce(ures overnin' Conversion o& A'ricultural Lan(s to "on+ A'ricultural ,ses-) .$ic$ consoli(ate( all e/istin' implementin' 'ui(elines relate( to lan( use conversion. T$e a&oresai( rules em*race( all private a'ricultural lan(s re'ar(less o& tenurial arran'ement an( commo(it% pro(uce(- an( all untitle( a'ricultural lan(s an( a'ricultural lan(s reclassi&ie( *% Local overnment ,nits 0L ,s1 into non+a'ricultural uses a&ter 23 4une 2566. Su*se7uentl%on 89 #arc$ 2555- t$e Secretar% o& A'rarian Re&orm issue( DAR AO "o. 92+55- entitle( )Revise( Rules an( Re'ulations on t$e Conversion o& A'ricultural Lan(s to "on+a'ricultural ,ses-) amen(in' an( up(atin' t$e previous rules on lan( use conversion. !ts covera'e inclu(es t$e &ollo.in' a'ricultural lan(s- to .it: 021 t$ose to *e converte( to resi(ential- commercial- in(ustrial- institutional an( ot$er non+ a'ricultural purposes: 0;1 t$ose to *e (evote( to anot$er t%pe o& a'ricultural activit% suc$ as livestoc<- poultr%- an( &is$pon( = t$e e&&ect o& .$ic$ is to e/empt t$e lan( &rom t$e Compre$ensive A'rarian Re&orm Pro'ram 0CARP1 covera'e: 081 t$ose to *e converte( to non+ a'ricultural use ot$er t$an t$at previousl% aut$ori>e(: an( 0?1 t$ose reclassi&ie( to resi(ential- commercial- in(ustrial- or ot$er non+ a'ricultural uses on or a&ter t$e e&&ectivit% o& Repu*lic Act "o. @@3A3 on 23 4une 2566 pursuant to Section ;9@ o& Repu*lic Act "o. A2@9A an( ot$er pertinent la.s an( re'ulations- an( are to *e converte( to suc$ uses. To a((ress t$e una*ate( conversion o& prime a'ricultural lan(s &or real estate (evelopment- t$e Secretar% o& A'rarian Re&orm &urt$er issue( #emoran(um "o. 66 on 23 April ;996- .$ic$ temporaril% suspen(e( t$e processin' an( approval o& all lan( use conversion applications. B% reason t$ereo&- petitioner claims t$at t$ere is an actual slo. (o.n o& $ousin' proBects- .$ic$- in turn- a''ravate( t$e $ousin' s$orta'eunemplo%ment an( ille'al s7uattin' pro*lems to t$e su*stantial preBu(ice not onl% o& t$e petitioner an( its mem*ers *ut more so o& t$e .$ole nation. !ssues: 2. CHETHER DDAR AO "O. 92+9;- AS A#E"DEDE F!OLATEDSE THE D,E PROCESS A"D EG,AL PROTECT!O" CLA,SEDSE OF THE CO"ST!T,T!O". ;. CHETHER #E#ORA"D,# "O. 66 !S A FAL!D EHERC!SE OF POL!CE POCER.5

ma(e t$erea&ter can *e t$e su*Bect o& DARIs conversion aut$orit%. Havin' reco'ni>e( t$e DARIs conversion aut$orit% over lan(s reclassi&ie( a&ter 23 4une 2566- it can no lon'er *e ar'ue( t$at t$e Secretar% o& A'rarian Re&orm .as .ron'&ull% 'iven t$e aut$orit% an( po.er to inclu(e )lan(s not reclassi&ie( as resi(ential- commercialin(ustrial or ot$er non+a'ricultural uses *e&ore 23 4une 2566) in t$e (e&inition o& a'ricultural lan(s. Suc$ inclusion (oes not un(ul% e/pan( or enlar'e t$e (e&inition o& a'ricultural lan(s: instea(- it ma(e clear .$at are t$e lan(s t$at can *e t$e su*Bect o& DARIs conversion aut$orit%- t$us- servin' t$e ver% purpose o& t$e lan( use conversion provisions o& Repu*lic Act "o. @@3A.!t is clear &rom t$e a&oresai( (istinction *et.een reclassi&ication an( conversion t$at a'ricultural lan(s t$ou'$ reclassi&ie( to resi(ential- commercial- in(ustrial or ot$er non+a'ricultural uses must still un(er'o t$e process o& conversion *e&ore t$e% can *e use( &or t$e purpose to .$ic$ t$e% are inten(e(. T$e petitionerIs ar'ument t$at DAR #emoran(um "o. 66 is unconstitutional- as it suspen(s t$e lan( use conversion .it$out an% *asis- stan(s on $ollo. 'roun(. !t *ears emp$asis t$at sai( #emoran(um "o. 66 .as issue( upon t$e instruction o& t$e Presi(ent in or(er to a((ress t$e una*ate( conversion o& prime a'ricultural lan(s &or real estate (evelopment *ecause o& t$e .orsenin' rice s$orta'e in t$e countr% at t$at time. Suc$ measure .as ma(e in or(er to ensure t$at t$ere are enou'$ a'ricultural lan(s in .$ic$ rice cultivation an( pro(uction ma% *e carrie( into. T$e issuance o& sai( #emoran(um "o. 66 .as ma(e pursuant to t$e 'eneral .el&are o& t$e pu*lic- t$us- it cannot *e ar'ue( t$at it .as ma(e .it$out an% *asis. F!LLE AS vs. H!, CH!O" FACTS: On ;; Fe*ruar% 25@6- Or(inance @38A .as passe( *% t$e #unicipal Boar( o& #anila an( si'ne( *% #anila #a%or Antonio 4. Fille'as on #arc$ ;A- 25@6. Or(inance @38A- entitle( JAn or(inance ma<in' it unla.&ul &or an% person not a citi>en o& t$e P$ilippines to *e emplo%e( in an% place o& emplo%ment or to *e en'a'e( in an% <in( o& tra(e*usiness or occupation .it$in t$e Cit% o& #anila .it$out &irst securin' an emplo%ment permit &rom t$e ma%or o& #anila: an( &or ot$er purposes.K La. pro$i*its aliens &rom emplo%ment an( tra(e in t$e Cit% o& #anila .it$out t$e re7uisite ma%orIs permit1. E/ceptions to la. are persons emplo%e( in t$e (iplomatic or consular missions o& &orei'n countries- or in t$e tec$nical assistance pro'rams o& *ot$ t$e P$ilippine overnment an( an% &orei'n 'overnment- an( t$ose .or<in' in t$eir respective $ouse$ol(s- an( mem*ers o& reli'ious or(ers or con're'ations- sect or (enomination- .$o are not pai( monetaril% or in <in(. Permit &ee is P39. Penalt% is imprisonment o& 8 to @ mont$s or &ine o& P299+;99- or *ot$. On ? #a% 25@6- HiuC$ion' Tsai Pao Ho- .$o .as emplo%e( in #anila&ile( a petition- .it$ t$e CF! #anila 0Civil Case A;A5A1- pra%in' &or 021 t$e issuance o& t$e .rit o& preliminar% inBunction an( restrainin' or(er to stop t$e implementation o& t$e or(inance- an( 0;1 Bu('ment to (eclare t$e or(inance null an( voi(. On ;? #a% 25@6- 4u('e Francisco Arca 0CF! #anila- Branc$ !1 issue( t$e .rit o& preliminar% inBunction an( on 2A Septem*er 25@6- t$e 4u('e ren(ere( a (ecision (eclarin' t$e or(inance null an( voi(- an( t$e preliminar% inBunction is ma(e permanent. #a%or Fille'as &ile( a petition &or certiorari to revie. t$e (ecision o& t$e CF!. !SS,ES: 2. C$et$er or not t$ere is a violation o& (ue process an( e7ual protection clausesL TSA! PAO HO

Rulin': T$e petition .as (ismisse(. T$e aut$orit% o& t$e Secretar% o& A'rarian Re&orm to inclu(e )lan(s not reclassi&ie( as resi(ential- commercialin(ustrial or ot$er non+a'ricultural uses *e&ore 23 4une 2566) in t$e (e&inition o& a'ricultural lan(s &in(s *asis in Burispru(ence. !n Ros v. Department o& A'rarian Re&orm-85 t$is Court $as enunciate( t$at a&ter t$e passa'e o& Repu*lic Act "o. @@3A- a'ricultural lan(s- t$ou'$ reclassi&ie(- $ave to 'o t$rou'$ t$e process o& conversion- Buris(iction over .$ic$ is veste( in t$e DAR. Ho.ever- a'ricultural lan(s- .$ic$ are alrea(% reclassi&ie( *e&ore t$e e&&ectivit% o& Repu*lic Act "o. @@3A .$ic$ is 23 4une 2566- are e/empte( &rom conversion.?9 !t *ears stressin' t$at t$e sai( (ate o& e&&ectivit% o& Repu*lic Act "o. @@3A serve( as t$e cut+o&& perio( &or automatic reclassi&ications or re>onin' o& a'ricultural lan(s t$at no lon'er re7uire an% DAR conversion clearance or aut$orit%.?2 !t necessaril% &ollo.s t$at an% reclassi&ication

;. C$et$er or not t$ere .as an ille'al (ele'ation o& le'islative po.ersL 8. C$et$er or not t$ere is a violation o& t$e principle o& ,ni&ormit% o& Ta/ationL R,L!" :

propert% in Ba'uio) (erivin' income t$ere&rom (urin' t$e perio( covere( *% t$e &irst 7uarter o& 2536 to t$e &ourt$ 7uarter o& 25@;. !SS,E: C$et$er or not t$e or(inance is vali(L R,L!" :

2. Due process an( e7ual protection clauses T$e or(inance is ar*itrar%- oppressive an( unreasona*le- *ein' applie( onl% to aliens .$o are t$us- (eprive( o& t$eir ri'$ts to li&eli*ert% an( propert% an( t$ere&ore- violates t$e (ue process an( e7ual protection clauses o& t$e Constitution. Re7uirin' a person- *e&ore $e can *e emplo%e(- to 'et a permit &rom t$e Cit% #a%or o& #anila- .$o ma% .it$$ol( or re&use it at .ill is tantamount to (en%in' $im t$e *asic ri'$t o& t$e people in t$e P$ilippines to en'a'e in a means o& liveli$oo(. Once an alien is a(mitte( *% t$e State .it$in its territor%- $e cannot *e (eprive( o& li&e .it$out (ue process o& la.- inclu(in' t$e means o& liveli$oo(. T$e s$elter o& protection un(er t$e (ue process an( e7ual protection clause is 'iven to all persons- *ot$ aliens an( citi>ens. ;. Police Po.er- ille'al (ele'ation o& le'islative po.ers T$e or(inance (oes not la% (o.n an% criterion or stan(ar( to 'ui(e t$e #a%or in t$e e/ercise o& $is (iscretion- t$us con&errin' upon t$e ma%or ar*itrar% an( unrestricte( po.ers. T$e or(inance (oes not provi(e a stan(ar( to 'ui(e or limit t$e ma%orIs action- e/presses no purpose to *e attaine( *% re7uirin' a permit- an( enumerates no con(itions &or its 'rant or re&usal. 8. ,ni&ormit% o& Ta/ation- (iscriminator% an( violative T$e or(inanceIs purpose is clearl% to raise mone% un(er t$e 'uise o& re'ulation *% e/actin' P39 &rom aliens .$o $ave *een cleare( &or emplo%ment. T$e amount is unreasona*le an( e/cessive *ecause it &ails to consi(er (i&&erences in situation amon' aliens re7uire( to pa% iti.e. *ein' casual- permanent- &ull+time- part+time- ran<+an(+&ile or e/ecutive. C!TY OF BA ,!O vs. DE LEO" FACTS: !n t$is appeal- a lo.er court (ecision up$ol(in' t$e vali(it% o& an or(inance 2 o& t$e Cit% o& Ba'uio imposin' a license &ee on an% person- &irm- entit% or corporation (oin' *usiness in t$e Cit% o& Ba'uio is assaile( *% (e&en(ant+appellant Fortunato (e Leon. He .as $el( lia*le as a real estate (ealer .it$ a propert% t$erein .ort$ more t$an P29-999- *ut not in e/cess o& P39-999- an( t$ere&ore o*li'ate( to pa% un(er suc$ or(inance t$e P39 annual &ee. T$at is t$e principal 7uestion. !n a((ition- t$ere $as *een a &irm an( un%iel(in' insistence *% (e&en(ant+appellant o& t$e lac< o& Buris(iction o& t$e Cit% Court o& Ba'uio- .$ere t$e suit ori'inate(- a complaint $avin' *een &ile( a'ainst $im *% t$e Cit% Attorne% o& Ba'uio &or $is &ailure to pa% t$e amount o& P899 as license &ee coverin' t$e perio( &rom t$e &irst 7uarter o& 2536 to t$e &ourt$ 7uarter o& 25@;- alle'e(l%- in spite o& repeate( (eman(s. "or .as (e&en(ant+appellant a'reea*le to suc$ a suit *ein' institute( *% t$e Cit% Treasurer .it$out t$e consent o& t$e #a%or- .$ic$ &or $im .as in(ispensa*le. T$e lo.er court .as o& a (i&&erent min(. !t (eclare( t$e a*ove or(inance as amen(e(- vali( an( su*sistin'- an( $el( (e&en(ant+ appellant lia*le &or t$e &ees t$erein prescri*e( as a real estate (ealer. Hence- t$is appeal. Assume t$e vali(it% o& suc$ or(inance- an( t$ere .oul( *e no 7uestion a*out t$e lia*ilit% o& (e&en(ant+appellant &or t$e a*ove license &ee- it *ein' s$o.n in t$e partial stipulation o& &acts- t$at $e .as )en'a'e( in t$e rental o& $is T$e c$allen'e( or(inance cannot *e consi(ere( ultra vires as t$ere is more t$an ample statutor% aut$orit% &or t$e enactment t$ereo&. "onet$eless- its vali(it% on constitutional 'roun(s is c$allen'e( *ecause o& t$e alle'ation t$at it impose( (ou*le ta/ation- .$ic$ is repu'nant to t$e (ue process clause- an( t$at it violate( t$e re7uirement o& uni&ormit%. Ce (o not vie. t$e matter t$us. As to .$% (ou*le ta/ation is not violative o& (ue process- 4ustice Holmes ma(e clear in t$is lan'ua'e: )T$e o*Bection to t$e ta/ation as (ou*le ma% *e lai( (o.n or one si(e. . . . T$e 2?t$ Amen(ment Dt$e (ue process clauseE no more &or*i(s (ou*le ta/ation t$an it (oes (ou*lin' t$e amount o& a ta/- s$ort o& con&iscation or procee(in's unconstitutional on ot$er 'roun(s.) Cit$ t$at (ecision ren(ere( at a time .$en American soverei'nt% in t$e P$ilippines .as reco'ni>e(- it possesses more t$an Bust a persuasive e&&ect. To some- it (elivere( t$e coup (e 'race to t$e *o'e% o& (ou*le ta/ation as a constitutional *ar to t$e e/ercise o& t$e ta/in' po.er. !t .oul( seem t$ou'$ t$at in t$e ,nite( States- as .it$ us- its '$ost- as note( *% an eminent criticstill stal<s t$e Buri(ical sta'e. !n a 25?A (ecision- $o.ever- 5 .e 7uote( .it$ approval t$is e/cerpt &rom a lea(in' American (ecision: 29 )C$ere- as $ere- Con'ress $as clearl% e/presse( its intention- t$e statute must *e sustaine( even t$ou'$ (ou*le ta/ation results.) At an% rate- it $as *een e/pressl% a&&irme( *% us t$at suc$ an )ar'ument a'ainst (ou*le ta/ation ma% not *e invo<e( .$ere one ta/ is impose( *% t$e state an( t$e ot$er is impose( *% t$e cit% . . .- it *ein' .i(el% reco'ni>e( t$at t$ere is not$in' in$erentl% o*no/ious in t$e re7uirement t$at license &ees or ta/es *e e/acte( .it$ respect to t$e same occupation- callin' or activit% *% *ot$ t$e state an( t$e political su*(ivisions t$ereo&. T$e a*ove .oul( clearl% in(icate $o. lac<in' in merit is t$is ar'ument *ase( on (ou*le ta/ation. "o.- as to t$e claim t$at t$ere .as a violation o& t$e rule o& uni&ormit% esta*lis$e( *% t$e Constitution. Accor(in' to t$e c$allen'e( or(inancea real estate (ealer .$o leases propert% .ort$ P39-999 or a*ove must pa% an annual &ee o& P299. !& t$e propert% is .ort$ P29-999 *ut not over P39-999- t$en $e pa%s P39 an( P;? i& t$e value is less t$an P29-999. On its &ace- t$ere&ore- t$e a*ove or(inance cannot *e assaile( as violative o& t$e constitutional re7uirement o& uni&ormit%. A ta/ is consi(ere( uni&orm .$en it operates .it$ t$e same &orce an( e&&ect in ever% place .$ere t$e su*Bect ma% *e &oun(.) !t is t$us apparent &rom t$e a*ove t$at in muc$ t$e same .a% t$at t$e plea o& (ou*le ta/ation is unavailin'- t$e alle'ation t$at t$ere .as a violation o& t$e principle o& uni&ormit% is in$erentl% lac<in' in persuasiveness. T$ere is no nee( to pass upon t$e ot$er alle'ations to assail t$e vali(it% o& t$e a*ove or(inance- it *ein' maintaine( t$at t$e license &ees t$erein impose( )is e/cessive- unreasona*le an( oppressive) an( t$at t$ere is a &ailure to o*serve t$e man(ate o& e7ual protection. A rea(in' o& t$e or(inance .ill rea(il% (isclose t$eir in$erent lac< o& plausi*ilit%. CO##!SS!O"ER OF !"TER"AL REFE",E vs. CA M FORT,"E TOBACCO CORP. FACTS: A tas< &orce .as create( on 4une 2- 2558 to investi'ate ta/ lia*ilities o& manu&acturers en'a'e( in ta/ evasion sc$emes. On 4ul% 2-

2558- t$e C!R issue( Rev. #emo Circ. "o. 8A+58 .$ic$ reclassi&ie( certain ci'arette *ran(s manu&acture( *% private respon(ent Fortune To*acco Corp. 0Fortune1 as &orei'n *ran(s su*Bect to a $i'$er ta/ rate. On Au'ust 8- 2558- Fortune 7uestione( t$e vali(it% o& sai( reclassi&ication as *ein' violative o& t$e ri'$t to (ue process an( e7ual protection o& la.s. T$e CTA- on Septem*er 6- 2558 resolve( t$at sai( reclassi&ication .as o& (ou*t&ul le'alit% an( enBoine( its en&orcement. !n t$e meantime- on Au'ust 8- 2558- Fortune .as assesse( (e&icienc% income- a( valorem an( FAT &or 255; .it$ pa%ment (ue .it$in 89 (a%s &rom receipt. On Septem*er 2;- 2558- private respon(ent move( &or reconsi(eration o& sai( assessment. #ean.$ile on Septem*er A- 2558- t$e Commissioner &ile( a complaint .it$ t$e DO4 a'ainst private respon(ent Fortune- its corporate o&&icers an( 5 ot$er corporations an( t$eir respective corporate o&&icers &or alle'e( &rau(ulent ta/ evasion &or non+pa%ment o& t$e correct income- a( valorem an( FAT &or 255;. T$e complaint .as re&erre( to t$e DO4 Tas< Force on revenue cases .$ic$ &oun( su&&icient *asis to &urt$er investi'ate t$e c$ar'es a'ainst Fortune. A su*poena .as issue( on Septem*er 6- 2558 (irectin' private respon(ent to su*mit t$eir counter+a&&i(avits. But it &ile( a veri&ie( motion to (ismiss or alternativel%- a motion to suspen( *ut .as (enie( an( t$us treate( as t$eir counter+a&&i(avit. All motions &ile( t$erea&ter .ere (enie(. On 4anuar% ?- 255?- private respon(ents &ile( a petition &or certiorari an( pro$i*ition .it$ pra%er &or preliminar% inBunction pra%in' t$e C!RIs complaint an( prosecutorIs or(ers *e (ismisse(Nset asi(e or alternativel%- t$at t$e preliminar% investi'ation *e suspen(e( pen(in' (etermination *% C!R o& FortuneIs motion &or reconsi(erationNreinvesti'ation o& t$e Au'ust 28- 2558 assessment o& ta/es (ue. T$e trial court 'rante( t$e petition &or a .rit o& preliminar% inBunction to enBoin t$e preliminar% investi'ation on t$e complaint &or ta/ evasion pen(in' *e&ore t$e DO4- rulin' t$at t$e ta/ lia*ilit% o& private respon(ents &irst *e settle( *e&ore an% complaint &or &rau(ulent ta/ evasion can *e initiate(. !SS,E: C$et$er or not t$e *asis o& private respon(entIs ta/ lia*ilit% s$oul( &irst *e settle( *e&ore an% complaint &or &rau(ulent ta/ evasion can *e initiate(L R,L!" : Frau( cannot *e presume(. !& t$ere .as &rau( on .ill&ul attempt to eva(e pa%ment o& a( valorem ta/es *% private respon(ent t$rou'$ t$e manipulation o& t$e re'istere( .$olesale price o& t$e ci'arettes- it must $ave *een .it$ t$e connivance o& cooperation o& certain B!R o&&icials an( emplo%ees .$o supervise( an( monitore( FortuneIs pro(uction activities to see to it t$at t$e correct ta/es .ere pai(. But t$ere is no alle'ation- muc$ less evi(ence- o& B!R personnelIs mal&easance at t$e ver% least- t$ere is t$e presumption t$at B!R personnel per&orme( t$eir (uties in t$e re'ular course in ensurin' t$at t$e correct ta/es .ere pai( *% Fortune. Be&ore t$e ta/ lia*ilities o& Fortune are &inall% (etermine(- it cannot *e correctl% asserte( t$at private respon(ents $ave .ill&ull% attempte( to eva(e or (e&eat an% ta/ un(er Secs. ;3? an( ;3@- 255A "!RC. T$e &act t$at a ta/ is (ue must &irst *e prove(. CO##!SS!O"ER OF !"TER"AL REFE",E vs. LH,!LL!ER PAC"SHOP- !"C.. FACTS:

C!R 4ose ,. On' issue( Revenue #emoran(um Or(er "o. 23+52 imposin' a 3O len(in' investorIs ta/ on pa.ns$ops: t$us: A restu(% o& P.D. D"o.E 22? s$o.s t$at t$e principal activit% o& pa.ns$ops is len(in' mone% at interest an( inci(entall% acceptin' a )pa.n) o& personal propert% (elivere( *% t$e pa.ner to t$e pa.nee as securit% &or t$e loan. Clearl%- t$is ma<es pa.ns$op *usiness a<in to len(in' investorIs *usiness activit% .$ic$ is *roa( enou'$ to encompass t$e *usiness o& len(in' mone% at interest *% an% person .$et$er natural or Buri(ical. Suc$ *ein' t$e case- pa.ns$ops s$all *e su*Bect to t$e 3O len(in' investorIs ta/ *ase( on t$eir 'ross income pursuant to Section 22@ o& t$e Ta/ Co(e- as amen(e(. T$is R#O .as clari&ie( *% Revenue #emoran(um Circular "o. ?8+52. Since pa.ns$ops are consi(ere( as len(in' investors- t$e% also *ecome su*Bect to (ocumentar% stamp ta/es prescri*e( in Title F!! o& t$e Ta/ Co(e. B!R Rulin' "o. 8;3+66 is $ere*% revo<e(. Pursuant to t$ese issuances- t$e B!R issue( Assessment "otice "o. 62+PT+28+5?+5A+5+226 a'ainst L$uillier (eman(in' pa%ment o& (e&icienc% percenta'e ta/ in t$e sum o& [email protected] &or 255? inclusive o& interest an( surc$ar'es. L$uillier &ile( an a(ministrative protest .it$ t$e O&&ice o& t$e Revenue Re'ional Director conten(in' t$at 021 neit$er t$e Ta/ Co(e nor t$e FAT La. e/pressl% imposes 3O percenta'e ta/ on t$e 'ross income o& pa.ns$ops: 0;1 pa.ns$ops are (i&&erent &rom len(in' investors- .$ic$ are su*Bect to t$e 3O percenta'e ta/ un(er t$e speci&ic provision o& t$e Ta/ Co(e: 081 R#O "o. 23+52 is not implementin' an% provision o& t$e !nternal Revenue la.s *ut is a ne. an( a((itional ta/ measure on pa.ns$ops- .$ic$ onl% Con'ress coul( enact: 0?1 R#O "o. 23+52 implie(l% amen(s t$e Ta/ Co(e an( is t$ere&ore ta/ation *% implication- .$ic$ is proscri*e( *% la.: an( 031 R#O "o. 23+52 is a )class le'islation) *ecause it sin'les out pa.ns$ops amon' ot$er len(in' an( &inancial operations. L$uillier- on t$e ot$er $an(- maintains t$at *e&ore an( a&ter t$e amen(ment o& t$e Ta/ Co(e *% E.O. "o. ;A8- .$ic$ too< e&&ect on 2 4anuar% 2566- pa.ns$ops an( len(in' investors .ere su*Becte( to (i&&erent ta/ treatments. Pa.ns$ops .ere re7uire( to pa% an annual &i/e( ta/ o& onl% P2-999- .$ile len(in' investors .ere su*Bect to a 3O percenta'e ta/ on t$eir 'ross income in a((ition to t$eir &i/e( annual ta/es. Accor(in'l%- (urin' t$e perio( &rom April 256; up to Decem*er 2559- t$e C!R consistentl% rule( t$at a pa.ns$op is not a len(in' investor an( s$oul( not t$ere&ore *e re7uire( to pa% percenta'e ta/ on its 'ross income. !SS,E: Are pa.ns$ops consi(ere( )len(in' investors) &or t$e purpose o& t$e imposition o& t$e len(in' investorIs ta/L R,L!" : R#O "o. 23+52 an( R#C "o. ?8+52 .ere issue( in accor(ance .it$ t$e po.er o& t$e C!R to ma<e rulin's an( opinions in connection .it$ t$e implementation o& internal revenue la.s- .$ic$ .as *esto.e( *% t$en Section ;?3 o& t$e "!RC o& 25AA- as amen(e( *% E.O. "o. ;A8.@ Suc$ po.er o& t$e C!R cannot *e controverte(. Ho.ever- t$e C!R cannot- in t$e e/ercise o& suc$ po.er- issue a(ministrative rulin's or circulars not consistent .it$ t$e la. sou'$t to *e applie(. !n(ee(a(ministrative issuances must not overri(e- supplant or mo(i&% t$e la.*ut must remain consistent .it$ t$e la. t$e% inten( to carr% out. Onl% Con'ress can repeal or amen( t$e la.. C$ile it is true t$at pa.ns$ops are en'a'e( in t$e *usiness o& len(in' mone%- t$e% are not consi(ere( )len(in' investors) &or t$e purpose o& imposin' t$e 3O percenta'e ta/es. T$e (e&inition o& len(in' investors &oun( in Section 23A 0u1 o& t$e "!RC o& 256@ is not &oun( in t$e "!RC o& 25AA- as amen(e( *% E.O. "o. ;A8- .$ere

Section 22@ invo<e( *% t$e C!R is &oun(. Ho.ever- *ot$ t$e "!RC o& 256@ an( t$e "!RC o& 25AA (ealt .it$ pa.ns$ops an( len(in' investors (i&&erentl%. Feril% t$en- it .as t$e intent o& Con'ress to (eal .it$ *ot$ su*Bects (i&&erentl%. Hence- .e must li<e.ise interpret t$e statute to con&orm .it$ suc$ le'islative intent. Furt$er- i& pa.ns$ops .ere covere( .it$in t$e term len(in' investor- t$ere .oul( $ave *een no nee( to intro(uce suc$ amen(ment to inclu(e o.ners o& pa.ns$ops. At an% rate- suc$ propose( amen(ment .as not a(opte(. !nstea(- t$e approve( *ill .$ic$ *ecame R.A. "o. AA2@repeale( Section 22@ o& "!RC o& 25AA- as amen(e(- .$ic$ .as t$e *asis o& R#O "o. 23+52 an( R#C "o. ?8+52. Since Section 22@ o& t$e "!RC o& 25AA- .$ic$ *reat$e( li&e on t$e 7uestione( a(ministrative issuances- $a( alrea(% *een repeale(- R#O 23+52 an( R#C ?8+52- .$ic$ (epen(e( upon it- are (eeme( automaticall% repeale(. Hence- even 'rantin' t$at pa.ns$ops are inclu(e( .it$in t$e term len(in' investors- t$e assessment &rom ;A #a% 255? on.ar( .oul( $ave no le' to stan( on. A((in' to t$e invali(it% o& t$e R#C "o. ?8+52 an( R#O "o. 23+52 is t$e a*sence o& pu*lication. C$ile t$e rule+ma<in' aut$orit% o& t$e C!R is not (ou*te(li<e an% ot$er 'overnment a'enc%- t$e C!R ma% not (isre'ar( le'al re7uirements or applica*le principles in t$e e/ercise o& 7uasi+ le'islative po.ers. A le'islative rule is in t$e nature o& su*or(inate le'islation(esi'ne( to implement a primar% le'islation *% provi(in' t$e (etails t$ereo&. An interpretative rule- on t$e ot$er $an(- is (esi'ne( to provi(e 'ui(elines to t$e la. .$ic$ t$e a(ministrative a'enc% is in c$ar'e o& en&orcin'. C$en an a(ministrative rule is merel% interpretative in nature- its applica*ilit% nee(s not$in' &urt$er t$an its *are issuance- &or it 'ives no real conse7uence more t$an .$at t$e la. itsel& $as alrea(% prescri*e(. C$en- on t$e ot$er $an(- t$e a(ministrative rule 'oes *e%on( merel% provi(in' &or t$e means t$at can &acilitate or ren(er least cum*ersome t$e implementation o& t$e la. *ut su*stantiall% increases t$e *ur(en o& t$ose 'overne(- it *e$ooves t$e a'enc% to accor( at least to t$ose (irectl% a&&ecte( a c$ance to *e $ear(- an( t$erea&ter to *e (ul% in&orme(- *e&ore t$at ne. issuance is 'iven t$e &orce an( e&&ect o& la.. R#O "o. 23+52 an( R#C "o. ?8+52 cannot *e vie.e( simpl% as implementin' rules or corrective measures revo<in' in t$e process t$e previous rulin's o& past Commissioners. Speci&icall%- t$e% .oul( $ave *een amen(ator% provisions applica*le to pa.ns$ops. Cit$out t$ese (ispute( C!R issuances- pa.ns$ops .oul( not *e lia*le to pa% t$e 3O percenta'e ta/- consi(erin' t$at t$e% .ere not speci&icall% inclu(e( in Section 22@ o& t$e "!RC o& 25AA- as amen(e(. !n so (oin'- t$e C!R (i( not simpl% interpret t$e la.. T$e (ue o*servance o& t$e re7uirements o& notice- $earin'- an( pu*lication s$oul( not $ave *een i'nore(. Topic: Constitutional Limitations: E7ual Protection Clause ABAPADA FACTS: Be&ore R.A. "o. 588A too< e&&ect- petitioners ABAPADA ,RO Part% List- et al.- &ile( a petition &or pro$i*ition on #a% ;A- ;993 7uestionin' t$e constitutionalit% o& Sections ?- 3 an( @ o& R.A. "o. 588A- amen(in' Sections 29@- 29A an( 296- respectivel%- o& t$e "ational !nternal Revenue Co(e 0"!RC1. Section ? imposes a 29O FAT on sale o& 'oo(s an( properties- Section 3 imposes a 29O FAT on importation o& 'oo(s- an( Section @ imposes a 29O FAT on sale o& services an( use or lease o& properties. T$ese 7uestione( provisions contain a uni&orm proviso aut$ori>in' t$e Presi(ent- upon recommen(ation o& t$e Secretar% o& Finance- to raise t$e FAT rate to 2;O- e&&ective 4anuar% 2- ;99@- a&ter speci&ie( con(itions $ave *een satis&ie(. Petitioners ar'ue t$at t$e la. is unconstitutional. uro Part% List vs. Ermita

!SS,ES: 2. C$et$er or not t$ere is a violation o& Article F!- Section ;? o& t$e Constitution. ;. C$et$er or not t$ere is un(ue (ele'ation o& le'islative po.er in violation o& Article F! Sec ;60;1 o& t$e Constitution. 8. C$et$er or not t$ere is a violation o& t$e (ue process an( e7ual protection un(er Article !!! Sec. 2 o& t$e Constitution. HELD: 2. Since t$ere is no 7uestion t$at t$e revenue *ill e/clusivel% ori'inate( in t$e House o& Representatives- t$e Senate .as actin' .it$in its constitutional po.er to intro(uce amen(ments to t$e House *ill .$en it inclu(e( provisions in Senate Bill "o. 2539 amen(in' corporate income ta/es- percenta'e- an( e/cise an( &ranc$ise ta/es. ;. T$ere is no un(ue (ele'ation o& le'islative po.er *ut onl% o& t$e (iscretion as to t$e e/ecution o& a la.. T$is is constitutionall% permissi*le. Con'ress (oes not a*(icate its &unctions or un(ul% (ele'ate po.er .$en it (escri*es .$at Bo* must *e (one- .$o must (o it- an( .$at is t$e scope o& $is aut$orit%: in our comple/ econom% t$at is &re7uentl% t$e onl% .a% in .$ic$ t$e le'islative process can 'o &or.ar(. 8. T$e po.er o& t$e State to ma<e reasona*le an( natural classi&ications &or t$e purposes o& ta/ation $as lon' *een esta*lis$e(. C$et$er it relates to t$e su*Bect o& ta/ation- t$e <in( o& propert%- t$e rates to *e levie(- or t$e amounts to *e raise(- t$e met$o(s o& assessment- valuation an( collection- t$e StateIs po.er is entitle( to presumption o& vali(it%. As a rule- t$e Bu(iciar% .ill not inter&ere .it$ suc$ po.er a*sent a clear s$o.in' o& unreasona*leness(iscrimination- or ar*itrariness. ASSOC!AT!O" OF C,STO#S BROPERS- !"C. vs. THE #,"!C!PAL BOARD FACTS: T$e (ispute( or(inance .as passe( *% t$e #unicipal Boar( o& t$e Cit% o& #anila un(er t$e aut$orit% con&erre( *% section 26 0p1 o& Repu*lic Act "o. ?95. Sai( section con&ers upon t$e municipal *oar( t$e po.er )to ta/ motor an( ot$er ve$icles operatin' .it$in t$e Cit% o& #anila t$e provisions o& an% e/istin' la. to t$e contrar% not.it$stan(in'.) !t is conten(e( t$at t$is po.er is *roa( enou'$ to con&er upon t$e Cit% o& #anila t$e po.er to enact an or(inance imposin' a propert% ta/ on motor ve$icles operatin' .it$in t$e cit% limits. T$e Association o& Customs Bro<ers- !nc.- .$ic$ is compose( o& all *ro<ers an( pu*lic service operators o& motor ve$icles in t$e Cit% o& #anila- an( . #anlapit- !nc.- a mem*er o& sai( association- also a pu*lic service operator o& truc<s in sai( Cit%- c$allen'e t$e vali(it% o& or(inance on t$e 'roun( t$at 021 .$ile it levies a so+calle( propert% ta/ it is in realit% a license ta/ .$ic$ is *e%on( t$e po.er o& t$e #unicipal Boar( o& t$e Cit% o& #anila: 0;1 sai( or(inance o&&en(s a'ainst t$e rule o& uni&ormit% o& ta/ation: an( 081 it constitutes (ou*le ta/ation. T$e respon(entsrepresente( *% t$e cit% &iscal- conten( on t$eir part t$at t$e c$allen'e( or(inance imposes a propert% ta/ .$ic$ is .it$in t$e po.er o& t$e Cit% o& #anila to impose un(er its Revise( C$arter DSection 26 0p1 o& Repu*lic Act "o. ?95E- an( t$at t$e ta/ in 7uestion (oes not violate t$e rule o& uni&ormit% o& ta/ation- nor (oes it constitute (ou*le ta/ation. !SS,E: C$et$er or not t$e or(inance violates t$e rule on uni&ormit%L R,L!" :

C$ile as a rule an a( valorem ta/ is a propert% ta/- an( t$is rule is supporte( *% some aut$orities- t$e rule s$oul( not *e ta<en in its a*solute sense i& t$e nature an( purpose o& t$e ta/ as 'at$ere( &rom t$e conte/t s$o. t$at it is in e&&ect an e/cise or a license ta/. T$us- it $as *een $el( t$at )!& a ta/ is in its nature an e/cise- it (oes not *ecome a propert% ta/ *ecause it is proportione( in amount to t$e value o& t$e propert% use( in connection .it$ t$e occupation- privile'e or act .$ic$ is ta/e(. Ever% e/cise necessaril% must &inall% &all upon an( *e pai( *% propert% an( so ma% *e in(irectl% a ta/ upon propert%: *ut i& it is reall% impose( upon t$e per&ormance o& an act- enBo%ment o& a privile'e- or t$e en'a'in' in an occupation- it .ill *e consi(ere( an e/cise.) !t $as also *een $el( t$at )T$e c$aracter o& a ta/ as a propert% ta/ or a license or occupation ta/ must *e (etermine( *% its inci(entsan( &rom t$e natural an( le'al e&&ect o& t$e lan'ua'e emplo%e( in t$e act or or(inance- an( not *% t$e name *% .$ic$ it is (escri*e(- or *% t$e mo(e a(opte( in &i/in' its amount. !& it is clearl% a propert% ta/- it .ill *e so re'ar(e(- even t$ou'$ nominall% an( in &orm it is a license or occupation ta/: an(- on t$e ot$er $an(- i& t$e ta/ is levie( upon persons on account o& t$eir *usiness- it .ill *e construe( as a license or occupation ta/- even t$ou'$ it is 'ra(uate( accor(in' to t$e propert% use( in suc$ *usiness- or on t$e 'ross receipts o& t$e *usiness.) T$e or(inance in 7uestion &alls un(er t$e &ore'oin' rules. C$ile it re&ers to propert% ta/ an( it is &i/e( a( valorem %et .e cannot reBect t$e i(ea t$at it is merel% levie( on motor ve$icles operatin' .it$in t$e Cit% o& #anila .it$ t$e main purpose o& raisin' &un(s to *e e/pen(e( e/clusivel% &or t$e repair- maintenance an( improvement o& t$e streets an( *ri('es in sai( cit%. T$is is precisel% .$at t$e #otor Fe$icleLa. inten(s to prevent- &or t$e reason t$at- un(er sai( Actmunicipal corporations alrea(% participate in t$e (istri*ution o& t$e procee(s t$at are raise( &or t$e same purpose o& repairin'- maintainin' an( improvin' *ri('es an( pu*lic $i'$.a%s. T$is pro$i*ition is inten(e( to prevent (uplication in t$e imposition o& &ees &or t$e same purpose. !t is &or t$is reason t$at .e *elieve t$at t$e or(inance in 7uestion merel% imposes a license &ee alt$ou'$ un(er t$e cloa< o& an a( valorem ta/ to circumvent t$e pro$i*ition a*ove a(verte( to. !t is also our opinion t$at t$e or(inance in&rin'es t$e rule o& uni&ormit% o& ta/ation or(aine( *% our Constitution. "ote t$at t$e or(inance e/acts t$e ta/ upon all motor ve$icles operatin' .it$in t$e Cit% o& #anila. !t (oes not (istin'uis$ *et.een a motor ve$icle &or $ire an( one .$ic$ is purel% &or private use. "eit$er (oes it (istin'uis$ *et.een a motor ve$icle re'istere( in t$e Cit% o& #anila an( one re'istere( in anot$er place *ut occasionall% comes to #anila an( uses its streets an( pu*lic $i'$.a%s. T$e (istinction is important i& .e note t$at t$e or(inance inten(s to *ur(en .it$ t$e ta/ onl% t$ose re'istere( in t$e Cit% o& #anila as ma% *e in&erre( &rom t$e .or( )operatin') use( t$erein. T$e .or( )operatin') (enotes a connotation .$ic$ is a<in to a re'istration- &or un(er t$e #otor Fe$icle La. no motor ve$icle can *e operate( .it$out previous pa%ment o& t$e re'istration &ees. T$ere is no pretense t$at t$e or(inance e7uall% applies to motor ve$icles .$o come to #anila &or a temporar% sta% or &or s$ort erran(s- an( it cannot *e (enie( t$at t$e% contri*ute in no small (e'ree to t$e (eterioration o& t$e streets an( pu*lic $i'$.a%s. T$e &act t$at t$e% are *ene&ite( *% t$eir use t$e% s$oul( also *e ma(e to s$are t$e correspon(in' *ur(en. An( %et suc$ is not t$e case. T$is is an ine7ualit% .$ic$ .e &in( in t$e or(inance- an( .$ic$ ren(ers it o&&ensive to t$e Constitution. SHELL vs. FAQO FACTS: T$e municipal council o& Cor(ova- Ce*u a(opte( Or(inance 29 025?@1 imposin' an annual ta/ o& P239 on occupation or t$e e/ercise o& t$e privile'e o& installation mana'er: Or(inance 5 025?A1 imposin' an annual ta/ o& P?9 &or local (eposits in (rums o& com*usti*le an( in&lamma*le materials an( an annual ta/ o& P;99 &or tin can &actories: an( Or(inance 22 025?61 imposin' an annual ta/ o& P239 on tin can &actories $avin' a ma/imum annual output capacit% o& 89-999 tin cans.

S$ell Co.- a &orei'n corporation- &ile( suit &or t$e re&un( o& t$e ta/es pai( *% it- on t$e 'roun( t$at t$e or(inances imposin' suc$ ta/es are ultra vires. !SS,E: C$et$er Or(inance 29 is (iscriminator% an( $ostile *ecause t$ere is no ot$er person in t$e localit% .$o e/ercise suc$ (esi'nation or occupation. R,L!" : "O. T$e mere &act t$at t$ere is no ot$er person in t$e localit% .$o e/ercises suc$ a J(esi'nationK or callin' (oes not ma<e t$e or(inance (iscriminator% an( $ostile- inasmuc$ as it is an( .ill *e applica*le to an% person or &irm .$o e/ercises suc$ callin' or occupation name( or (esi'nate( as Jinstallation mana'er.K Even i& an installation mana'er is a salarie( emplo%ee- still $is emplo%ment is an occupation- an( one occupation or line o& *usiness (oes not *ecome e/empt *% *ein' con(ucte( .it$ some ot$er occupation or *usiness &or .$ic$ suc$ ta/es $ave *een pai( an( t$e occupation ta/ must *e pai( *% eac$ in(ivi(ual in a callin' su*Bect t$ereto. PAPAT!RA" vs. TA" FACTS: ? petitions- .$ic$ $ave *een consoli(ate( *ecause o& t$e similarit% o& t$e main issues involve( t$erein- see< to nulli&% E/ecutive Or(er "o. ;A8- issue( *% t$e Presi(ent o& t$e P$ilippines on ;3 4ul% 256A- to ta<e e&&ect on 2 4anuar% 2566- an( .$ic$ amen(e( certain sections o& t$e "ational !nternal Revenue Co(e an( a(opte( t$e value+a((e( ta/ &or *ein' unconstitutional in t$at its enactment is not alle('e(l% .it$in t$e po.ers o& t$e Presi(ent: t$at t$e FAT is oppressive- (iscriminator%re'ressive- an( violates t$e (ue process an( e7ual protection clauses an( ot$er provisions o& t$e 256A Constitution. T$e Solicitor eneral pra%s &or t$e (ismissal o& t$e petitions on t$e 'roun( t$at t$e petitioners $ave &aile( to s$o. Busti&ication &or t$e e/ercise o& its Bu(icial po.ers- vi>. 021 t$e e/istence o& an appropriate case: 0;1 an interest- personal an( su*stantial- o& t$e part% raisin' t$e constitutional 7uestions: 081 t$e constitutional 7uestion s$oul( *e raise( at t$e earliest opportunit%: an( 0?1 t$e 7uestion o& constitutionalit% is (irectl% an( necessaril% involve( in a Busticia*le controvers% an( its resolution is essential to t$e protection o& t$e ri'$ts o& t$e parties. Accor(in' to t$e Solicitor eneral- onl% t$e t$ir( re7uisite R t$at t$e constitutional 7uestion s$oul( *e raise( at t$e earliest opportunit% R $as *een complie( .it$. He also 7uestions t$e le'al stan(in' o& t$e petitioners .$o- $e conten(s- are merel% as<in' &or an a(visor% opinion &rom t$e Court- t$ere *ein' no Busticia*le controvers% &or resolution. O*Bections to ta/pa%ersS suit &or lac< o& su&&icient personalit% stan(in'or interest are- $o.ever- in t$e main proce(ural matters. Consi(erin' t$e importance to t$e pu*lic o& t$e cases at *ar- an( in <eepin' .it$ t$e CourtSs (ut%- un(er t$e 256A Constitution- to (etermine .$et$er or not t$e ot$er *ranc$es o& 'overnment $ave <ept t$emselves .it$in t$e limits o& t$e Constitution an( t$e la.s an( t$at t$e% $ave not a*use( t$e (iscretion 'iven to t$em- t$e Court $as *rus$e( asi(e tec$nicalities o& proce(ure an( $as ta<en co'ni>ance o& t$ese petitions. !SS,E: C$et$er or not E.O. ;A8 violate( t$e e7ual protection clauseL

R,L!" : T$e sales ta/ a(opte( in EO ;A8 is applie( similarl% on all 'oo(s an( services sol( to t$e pu*lic- .$ic$ are not e/empt- at t$e constant rate o& 9O or 29O. T$e (ispute( sales ta/ is also e7uita*le. !t is impose( onl% on sales o& 'oo(s or services *% persons en'a'e in *usiness .it$ an a''re'ate 'ross annual sales e/cee(in' P;99-999.99. Small corner sari+sari stores are conse7uentl% e/empt &rom its application. Li<e.ise e/empt &rom t$e ta/ are sales o& &arm an( marine pro(ucts- spare( as t$e% are &rom t$e inci(ence o& t$e FAT- are e/pecte( to *e relativel% lo.er an( .it$in t$e reac$ o& t$e 'eneral pu*lic. T$e Court li<e.ise &in(s no merit in t$e contention o& t$e petitioner !nte'rate( Customs Bro<ers Association o& t$e P$ilippines t$at EO ;A8- more particularl% t$e ne. Sec. 298 0r1 o& t$e "ational !nternal Revenue Co(e- un(ul% (iscriminates a'ainst customs *ro<ers. T$e p$rase )e/cept customs *ro<ers) is not meant to (iscriminate a'ainst customs *ro<ers. !t .as inserte( in Sec. 2980r1 to complement t$e provisions o& Sec. 29; o& t$e Co(e- .$ic$ ma<es t$e services o& customs *ro<ers su*Bect to t$e pa%ment o& t$e FAT an( to (istin'uis$ customs *ro<ers &rom ot$er pro&essionals .$o are su*Bect to t$e pa%ment o& an occupation ta/ un(er t$e Local Ta/ Co(e. Cit$ t$e insertion o& t$e clari&icator% p$rase )e/cept customs *ro<ers) in Sec. 2980r1- a potential con&lict *et.een t$e t.o sections- 0Secs. 29; an( 2981- inso&ar as customs *ro<ers are concerne(- is averte(. At an% rate- t$e (istinction o& t$e customs *ro<ers &rom t$e ot$er pro&essionals .$o are su*Bect to occupation ta/ un(er t$e Local Ta/ Co(e is *ase( upon material (i&&erences- in t$at t$e activities o& customs *ro<ers parta<e more o& a *usiness- rat$er t$an a pro&ession an( .ere t$us su*Becte( to t$e percenta'e ta/ un(er Sec. 2A? o& t$e "ational !nternal Revenue Co(e prior to its amen(ment *% EO ;A8. EO ;A8 a*olis$e( t$e percenta'e ta/ an( replace( it .it$ t$e FAT. !& t$e petitioner Association (i( not protest t$e classi&ication o& customs *ro<ers t$en- t$e Court sees no reason .$% it s$oul( protest no.. !n an% event- i& petitioners seriousl% *elieve t$at t$e a(option an( continue( application o& t$e FAT are preBu(icial to t$e 'eneral .el&are or t$e interests o& t$e maBorit% o& t$e people- t$e% s$oul( see< recourse an( relie& &rom t$e political *ranc$es o& t$e 'overnment. T$e Court&ollo.in' t$e time+$onore( (octrine o& separation o& po.ers- cannot su*stitute its Bu('ment &or t$at o& t$e Presi(ent as to t$e .is(omBustice an( a(visa*ilit% o& t$e a(option o& t$e FAT. T$e Court can onl% loo< into an( (etermine .$et$er or not EO ;A8 .as enacte( an( ma(e e&&ective as la.- in t$e manner re7uire( *%- an( consistent .it$- t$e Constitution- an( to ma<e sure t$at it .as not issue( in 'rave a*use o& (iscretion amountin' to lac< or e/cess o& Buris(iction: an(- in t$is re'ar(- t$e Court &in(s no reason to impe(e its application or continue( implementation. TA" vs. DELROSAR!O FACTS: A special civil actions &or pro$i*ition c$allen'e t$e constitutionalit% o& Repu*lic Act "o. A?5@- also commonl% <no.n as t$e Simpli&ie( "et !ncome Ta/ation Sc$eme 0)S"!T)1- amen(in' certain provisions o& t$e "ational !nternal Revenue Co(e an(- in Petitioners claim to *e ta/pa%ers a(versel% a&&ecte( *% t$e continue( implementation o& t$e amen(ator% le'islation. Petitioner intimates t$at Repu*lic Act "o. A?5@ (esecrates t$e constitutional re7uirement t$at ta/ation )s$all *e uni&orm an( e7uita*le) in t$at t$e la. .oul( no. attempt to ta/ sin'le

proprietors$ips an( pro&essionals (i&&erentl% &rom t$e manner it imposes t$e ta/ on corporations an( partners$ips. !SS,E: C$et$er Repu*lic Act "o. A?5@ is unconstitutionalL

R,L!" : T$e (ue process clause ma% correctl% *e invo<e( onl% .$en t$ere is a clear contravention o& in$erent or constitutional limitations in t$e e/ercise o& t$e ta/ po.er. "o suc$ trans'ression is so evi(ent to us. T$e Court- &irst o& all- s$oul( li<e to correct t$e apparent misconception t$at 'eneral pro&essional partners$ips are su*Bect to t$e pa%ment o& income ta/ or t$at t$ere is a (i&&erence in t$e ta/ treatment *et.een in(ivi(uals en'a'e( in *usiness or in t$e practice o& t$eir respective pro&essions an( partners in 'eneral pro&essional partners$ips. T$e &act o& t$e matter is t$at a 'eneral pro&essional partners$ip- unli<e an or(inar% *usiness partners$ip 0.$ic$ is treate( as a corporation &or income ta/ purposes an( so su*Bect to t$e corporate income ta/1- is not itsel& an income ta/pa%er. T$e income ta/ is impose( not on t$e pro&essional partners$ip- .$ic$ is ta/ e/empt- *ut on t$e partners t$emselves in t$eir in(ivi(ual capacit% compute( on t$eir (istri*utive s$ares o& partners$ip pro&its. Section ;8 o& t$e Ta/ Co(e- .$ic$ $as not *een amen(e( at all *% Repu*lic Act A?5@- is e/plicit: Sec. ;8.Ta/ lia*ilit% o& mem*ers o& 'eneral pro&essional partners$ips. R 0a1 Persons e/ercisin' a common pro&ession in 'eneral partners$ip s$all *e lia*le &or income ta/ onl% in t$eir in(ivi(ual capacit%- an( t$e s$are in t$e net pro&its o& t$e 'eneral pro&essional partners$ip to .$ic$ an% ta/a*le partner .oul( *e entitle( .$et$er (istri*ute( or ot$er.ises$all *e returne( &or ta/ation an( t$e ta/ pai( in accor(ance .it$ t$e provisions o& t$is Title. 0*1 !n (eterminin' $is (istri*utive s$are in t$e net income o& t$e partners$ip- eac$ partner R 021 S$all ta<e into account separatel% $is (istri*utive s$are o& t$e partners$ipSs income- 'ain- loss- (e(uction- or cre(it to t$e e/tent provi(e( *% t$e pertinent provisions o& t$is Co(e- an( 0;1 S$all *e (eeme( to $ave electe( t$e itemi>e( (e(uctions- unless $e (eclares $is (istri*utive s$are o& t$e 'ross income un(iminis$e( *% $is s$are o& t$e (e(uctions. T$ere is- t$en an( no.- no (istinction in income ta/ lia*ilit% *et.een a person .$o practices $is pro&ession alone or in(ivi(uall% an( one .$o (oes it t$rou'$ partners$ip 0.$et$er re'istere( or not1 .it$ ot$ers in t$e e/ercise o& a common pro&ession. !n(ee(- outsi(e o& t$e 'ross compensation income ta/ an( t$e &inal ta/ on passive investment income- un(er t$e present income ta/ s%stem all in(ivi(uals (erivin' income &rom an% source .$atsoever are treate( in almost invaria*l% t$e same manner an( un(er a common set o& rules. OR#OC S, AR CO#PA"Y vs. TREAS,RER OF OR#OCC!TY FACTS: On ;5 4anuar% 25@?- t$e #unicipal Boar( o& Ormoc Cit% passe( Or(inance ?- Series o& 25@?- imposin' Jon an% an( all pro(uctions o& centri&u'al su'ar mille( at t$e Ormoc Su'ar Compan%- !nc.- in OrmocCit% a municipal ta/ e7uivalent to one per centum 02O1 per e/port sale to t$e ,nite( States o& America an( ot$er &orei'n countries.K Pa%ments &or sai( ta/ .ere ma(e- un(er protest- *% Ormoc Su'ar Compan%- !nc. on ;9 #arc$ 25@? &or PA-96A.39 an( on ;9 April 25@? &or P3-999.99- or a total o& P2;-96A.39.

On 2 4une 25@?- t$e compan% &ile( *e&ore t$e CF! Le%te- .it$ service o& a cop% upon t$e Solicitor eneral- a complaint a'ainst t$e Cit% o& Ormoc as .ell as its Treasurer- #unicipal Boar( an( #a%or 0Hon. Este*an C. ConeBos1- alle'in' t$at t$e or(inance is unconstitutional &or *ein' violative o& t$e e7ual protection clause 0Sec. 2D2E- Art. !!!Constitution1 an( t$e rule o& uni&ormit% o& ta/ation 0Sec. ;;D2E- Art.F!Constitution1- asi(e &rom *ein' an e/port ta/ &or*i((en un(er Section ;;6A o& t$e Revise( A(ministrative Co(e. !t &urt$er alle'e( t$at t$e ta/ is neit$er a pro(uction nor a license ta/ .$ic$ Ormoc Cit% un(er Section 23+<< o& its c$arter an( un(er Section ; o& RA ;;@?- ot$er.ise <no.n as t$e Local Autonom% Act- is aut$ori>e( to impose: an( t$at t$e ta/ amounts to a customs (ut%- &ee or c$ar'e in violation o& para'rap$ 2 o& Section ; o& RA ;;@? *ecause t$e ta/ is on *ot$ t$e sale an( e/port o& su'ar. A&ter pre+trial an( su*mission o& t$e case on memoran(a- t$e CF!- on @ Au'ust 25@?- ren(ere( a (ecision t$at up$el( t$e constitutionalit% o& t$e or(inance an( (eclare( t$e ta/in' po.er o& c$artere( cit% *roa(ene( *% t$e Local Autonom% Act to inclu(e all ot$er &orms o& ta/es- licenses or &ees not e/clu(e( in its c$arter. Appeal t$ere&rom .as (irectl% ta<en to t$e Supreme Court. !SS,E: C$et$er or not t$e or(inance is violative o& t$e e7ual protection o& la.sL R,L!" : T$e Constitution in t$e *ill o& ri'$ts provi(es: J. . . nor s$all an% person *e (enie( t$e e7ual protection o& t$e la.s.K 0Sec. 2D2E- Art. 2221 !n Fel.a v. Salas- t$e Court rule( t$at t$e e7ual protection clause applies onl% to persons or t$in's i(enticall% situate( an( (oes not *ar a reasona*le classi&ication o& t$e su*Bect o& le'islation- an( a classi&ication is reasona*le .$ere 021 it is *ase( on su*stantial (istinctions .$ic$ ma<e real (i&&erences: 0;1 t$ese are 'ermane to t$e purpose o& t$e la.: 081 t$e classi&ication applies not onl% to present con(itions *ut also to &uture con(itions .$ic$ are su*stantiall% i(entical to t$ose o& t$e present: 0?1 t$e classi&ication applies onl% to t$ose .$o *elon' to t$e same class. Classi&ication reasona*le s$oul( in terms applica*le to &uture con(itions as .ell T$e Or(inance ta/es onl% centri&u'al su'ar pro(uce( an( e/porte( *% t$e Ormoc Su'ar Compan% !nc. an( none ot$er. At t$e time o& t$e ta/in' or(inanceIs enactment- Ormoc Su'ar Compan%- it is true- .as t$e onl% su'ar central in t$e cit% o& Ormoc. Still- t$e classi&ication- to *e reasona*le- s$oul( *e in terms applica*le to &uture con(itions as .ell. T$e ta/in' or(inance s$oul( not *e sin'ular an( e/clusive as to e/clu(e an% su*se7uentl% esta*lis$e( su'ar central- o& t$e same class as t$e Central- &rom t$e covera'e o& t$e ta/. As it is no.- even i& later a similar compan% is set up- it cannot *e su*Bect to t$e ta/ *ecause t$e or(inance e/pressl% points onl% to Ormoc Su'ar Compan% as t$e entit% to *e levie( upon. !nterest on re&un( not (ue as collection .as not ar*itrar%: Or(inance constitutional until (eclare( ot$er.iseOrmoc Su'ar Compan%$o.ever- is not entitle( to interest on t$e re&un( *ecause t$e ta/es .ere not ar*itraril% collecte( 0Collector o& !nternal Revenue v. Binal*a'an1. At t$e time o& collection- t$e or(inance provi(e( a su&&icient *asis to preclu(e ar*itrariness- t$e same *ein' t$en presume( constitutional until (eclare( ot$er.ise. PH!L!PP!"E R,RAL ELECTR!C COOPERAT!FES ASSOC!AT!O"!"C.- vs. SECRETARY OF DEPART#E"T OF !"TER!OR A"D LOCAL OFER"#E"T FACTS:

On #a% ;8- ;998- a class suit .as &ile( *% petitioners in t$eir o.n *e$al& an( in *e$al& o& ot$er electric cooperatives or'ani>e( an( e/istin' un(er PD ;@5 .$ic$ are mem*ers o& petitioner P$ilippine Rural Electric Cooperatives Association- !nc. T$e ot$er petitionerselectric cooperatives o& A'usan(el "orte- !loilo 2- an( !sa*ela 2 are non+stoc<- non+pro&it electric cooperatives or'ani>e( an( e/istin' un(er PD ;@5- as amen(e(- an( re'istere( .it$ t$e "ational Electri&ication A(ministration. ,n(er Sec. 85 o& PD ;@5 electric cooperatives s$all *e e/empt &rom t$e pa%ment o& all "ational overnment- local 'overnment- an( municipal ta/es an( &ee- inclu(in' &ranc$ise- &lin' recor(ation- license or permit &ees or ta/es an( an% &ees- c$ar'es- or costs involve( in an% court or a(ministrative procee(in's in .$ic$ it ma% *e part%. From 25A2to 25A6- in or(er to &inance t$e electri&ication proBects envisione( *% PD ;@5- as amen(e(- t$e P$ilippine overnment- actin' t$rou'$ t$e "ational Economic council an( t$e "EA- entere( into si/ loan a'reements .it$ t$e 'overnment o& t$e ,nite( States o& Americat$rou'$ t$e ,nite( States A'enc% &or !nternational Development .it$ electric cooperatives as *ene&iciaries. T$e loan a'reements contain similarl% .or(e( provisions on t$e ta/ application o& t$e loan an( an% propert% or commo(it% ac7uire( t$rou'$ t$e procee(s o& t$e loan. Petitioners alle'e t$at .it$ t$e passa'e o& t$e Local overnment Co(e t$eir ta/ e/emptions $ave *een vali(l% .it$(ra.n. Particularl%- petitioners assail t$e vali(it% o& Sec. 258 an( ;8? o& t$e sai( co(e. Sec. 258 provi(es &or t$e .it$(ra.al o& ta/ e/emption privile'es 'rante( to all persons- .$et$er natural or Buri(ical- e/cept cooperatives (ul% re'istere( un(er RA @586- .$ile Sec. ;8? e/empts t$e same cooperatives &rom pa%ment o& real propert% ta/. !SS,E: Does t$e Local overnment Co(e violate t$e e7ual protection clause since t$e provisions un(ul% (iscriminate a'ainst petitioners .$o are (ul% re'istere( cooperatives un(er PD ;@5- as amen(e(- an( no un(er RA @586 or t$e Cooperatives Co(e o& t$e P$ilippinesL R,L!" : "o. T$e 'uarant% o& t$e e7ual protection clause is not violate( *% a la. *ase( on a reasona*le classi&ication. Classi&ication- to *e reasona*le must 0a1 rest on su*stantial classi&ications: 0*1 'ermane to t$e purpose o& t$e la.: 0c1 not limite( to t$e e/istin' con(itions onl%: an( 0(1 appl% e7uall% to all mem*ers o& t$e same class. Ce $ol( t$at t$ere is reasona*le classi&ication un(er t$e Local overnment Co(e to Busti&% t$e (i&&erent ta/ treatment *et.een electric cooperatives covere( *% PD ;@5 an( electric cooperatives un(er RA @586. First- su*stantial (istinctions e/ist *et.een cooperatives un(er PD ;@5 an( t$ose un(er RA @586. !n t$e &ormer- t$e 'overnment is t$e one t$at &un(s t$ose so+calle( electric cooperatives- .$ile in t$e latter- t$e mem*ers ma<e e7uita*le contri*ution as source o& &un(s. Secon(- t$e classi&ication o& ta/+e/empt entities in t$e Local overnment Co(e is 'ermane to t$e purpose o& t$e la.. T$e Constitutional man(ate t$at Jever% local 'overnment unit s$all enBo% local autonom%-K (oes not mean t$at t$e e/ercise o& t$e po.er *% t$e local 'overnments is *e%on( t$e re'ulation o& Con'ress. Sec. 258 o& t$e L C is in(icative o& t$e le'islative intent to vet *roa( ta/in' po.ers upon t$e local 'overnment units an( to limit e/emptions &rom local ta/ation to entities speci&icall% provi(e( t$erein. Finall%- Sec. 258 an( ;8? o& t$e L C permit reasona*le classi&ication as t$ese e/emptions are not limite( to e/istin' con(itions an( appl% e7uall% to all mem*ers o& t$e same class. !t is in'raine( in Burispru(ence t$at t$e constitutional pro$i*ition on t$e impairment o& t$e o*li'ations o& contracts (oes not pro$i*it ever%

c$an'e in e/istin' la.s. To &all .it$in t$e pro$i*ition- t$e c$an'e must not onl% impair t$e o*li'ation o& t$e e/istin' contract- *ut t$e impairment must *e su*stantial. #oreover- to constitute impairmentt$e la. must a&&ect a c$an'e in t$e ri'$ts o& t$e parties .it$ re&erence to eac$ ot$er an( not .it$ respect to non+parties. T$e 7uote( provision un(er t$e loan a'reement (oes not purport to 'rant an% ta/ e/emption in &avor o& an% part% to t$e contract- inclu(in' t$e *ene&iciaries t$ereo&. T$e provisions simpl% s$i&t t$e ta/ *ur(en- i& an%- on t$e transactions un(er t$e loan a'reements to t$e *orro.er an(Nor *ene&iciar% o& t$e loan. T$us- t$e .it$(ra.al *% t$e Local overnment Co(e un(er Sec. 258 an( ;8? o& t$e ta/ e/emptions previousl% enBo%e( *% petitioners (oes not impair t$e o*li'ation o& t$e *orro.er- t$e len(er or t$e *ene&iciar% un(er t$e loan a'reements asin &act- no ta/ e/emption is 'rante( t$erein.

or(er (en%in' a motion to 7uas$- *ein' interlocutor% is not imme(iatel% appeala*le- nor can it *e t$e su*Bect o& a petition &or certiorari. Suc$ or(er ma% onl% *e revie.e( in t$e or(inar% course o& la. *% an appeal &rom t$e Bu('ment a&ter trial. Topic: Free(om o& Reli'ion: Free E/ercise Clause A#ER!CA" B!BLE SOC!ETY vs. C!TY OF #A"!LA FACTS: Plainti&&Ss P$ilippine a'enc% $as *een (istri*utin' an( sellin' *i*les an(Nor 'ospel portions t$ereo& t$rou'$out t$e P$ilippines an( translatin' t$e same into several P$ilippine (ialects. On #a% ;5 2538t$e actin' Cit% Treasurer o& t$e Cit% o& #anila in&orme( plainti&& t$at it .as con(uctin' t$e *usiness o& 'eneral merc$an(ise since "ovem*er25?3- .it$out provi(in' itsel& .it$ t$e necessar% #a%orSs permit an( municipal license- in violation o& Or(inance "o. 8999- as amen(e(an( Or(inances "os. ;3;5- 89;6 an( 88@?- an( re7uire( plainti&& to secure- .it$in t$ree (a%s- t$e correspon(in' permit an( license &eesto'et$er .it$ compromise coverin' t$e perio( &rom t$e ?t$ 7uarter o& 25?3 to t$e ;n( 7uarter o& 2538- in t$e total sum o& P3-6;2.?3. Plainti&& proteste( a'ainst t$is re7uirement- *ut t$e Cit% Treasurer (eman(e( t$at plainti&& (eposit an( pa%s un(er protest t$e sum o& P3652.?3- i& suit .as to *e ta<en in court re'ar(in' t$e same. To avoi( t$e closin' o& its *usiness as .ell as &urt$er &ines an( penalties in t$e premises on Octo*er ;?- 2538- plainti&& pai( to t$e (e&en(ant un(er protest t$e sai( permit an( license &ees in t$e a&orementione( amount'ivin' at t$e same time notice to t$e Cit% Treasurer t$at suit .oul( *e ta<en in court to 7uestion t$e le'alit% o& t$e or(inances un(er .$ic$t$e sai( &ees .ere *ein' collecte( .$ic$ .as (one on t$e same (ate *% &ilin' t$e complaint t$at 'ave rise to t$is action. !n its complaint plainti&& pra%s t$at Bu('ment *e ren(ere( (eclarin' t$e sai( #unicipal Or(inance "o. 8999- as amen(e(- an( Or(inances "os. ;3;5- 89;6 an( 88@? ille'al an( unconstitutional- an( t$at t$e (e&en(ant *e or(ere( to re&un( to t$e plainti&& t$e sum o& P3- 652.?3 pai( un(er protest- to'et$er .it$ le'al interest t$ereon- an( t$e costs- plainti&& &urt$er pra%in' &or suc$ ot$er relie& an( reme(% as t$e court ma% (eem Bust e7uita*le. De&en(ant ans.ere( t$e complaint- maintainin' in turn t$at sai( or(inances .ere enacte( *% t$e #unicipal Boar( o& t$e Cit% o& #anila *% virtue o& t$e po.er 'rante( to it *% section ;???- su*section 0m+;1 o& t$e Revise( A(ministrative Co(e- superse(e( on 4une 26- 25?5- *% section 26- su*section 021 o& Repu*lic Act "o. ?95- <no.n as t$e Revise( C$arter o& t$e Cit% o& #anila. !SS,E: C$et$er or not t$e or(inances .ere unconstitutional an( provi(e &or reli'ious censors$ip an( restrain t$e &ree e/ercise an( enBo%ment o& its reli'ious pro&essionL R,L!" : Section 2- su*section 0A1 o& Article !!! o& t$e Constitution o& t$e Repu*lic o& t$e P$ilippines- provi(es t$at: "o la. s$all *e ma(e respectin' an esta*lis$ment o& reli'ion- or pro$i*itin' t$e &ree e/ercise t$ereo&- an( t$e &ree e/ercise an( enBo%ment o& reli'ious pro&ession an( .ors$ip- .it$out (iscrimination or pre&erence- s$all &orever *e allo.e(. "o reli'ion test s$all *e re7uire( &or t$e e/ercise o& civil or political ri'$ts. Article !!!- section 2- clause 0A1 o& t$e Constitution o& t$e P$ilippinesa&ore7uote(- 'uarantees t$e &ree(om o& reli'ious pro&ession an( .ors$ip. )Reli'ion $as *een spo<en o& as a pro&ession o& &ait$ to an active po.er t$at *in(s an( elevates man to its Creator).!t $as

SA"TOS vs. PEOPLE PF THE PH!L!PP!"ES FACTS: On 25 #a% ;993- t$en Bureau o& !nternal Revenue Commissioner uillermo L. Para%no- 4r. .rote to t$e Department o& 4ustice Secretar% Raul #. on>ales a letter re'ar(in' t$e possi*le &ilin' o& criminal c$ar'es a'ainst petitioner. Alle'e(l% petitioner- in $er Annual !ncome Ta/ Return &or ta/a*le %ear ;99; &ile( .it$ t$e B!R- (eclare( an income o& P6-988-88;.A9 (erive( &rom $er talent &ees solel% &rom ABS+ CB". !nitial (ocuments 'at$ere( &rom t$e B!R o&&ices an( t$ose 'iven *% petitionerSs accountant an( t$ir( parties- $o.ever- con&irme( t$at petitioner receive( in ;99; income in t$e amount o& at least P2?-A5@-;8?.A9- not onl% &rom ABS+CB"- *ut also &rom ot$er sourcessuc$ as movies an( pro(uct en(orsements. T$e estimate( ta/ lia*ilit% arisin' &rom petitionerSs un(er (eclaration amounte( to P2-A26-5;3.3;inclu(in' incremental penalties: t$e non+(eclaration *% petitioner o& an amount e7uivalent to at least 6?.26O o& t$e income (eclare( in $er return .as consi(ere( a su*stantial un(er (eclaration o& income- .$ic$ constitute( prima &acie evi(ence o& &alse or &rau(ulent return un(er Section ;?60B1 o& t$e "!RC- as amen(e(. !SS,E: C$et$er a resolution o& a CTA (ivision (en%in' a motion to 7uas$ is a proper su*Bect o& an appeal to t$e CTA E" BA"C un(er sec. 22 o& RA 5;6; amen(in' sec 26 o& RA 22;3L R,L!" : T$e court rule( in t$e ne'ative. Section 26 o& Repu*lic Act "o. 22;3- as amen(e( *% Repu*lic Act "o. 5;6;- provi(es: J"o civil procee(in's involvin' matters arisin' un(er t$e "ational !nternal Revenue Co(e- t$e Tari&& an( Customs Co(e or t$e Local overnment Co(e s$all *e maintaine(- e/cept as $erein provi(e(- until an( unless an appeal $as *een previousl% &ile( .it$ t$e CTA an( (ispose( o& in accor(ance .it$ t$e provisions o& t$is Act. A part% a(versel% a&&ecte( *% a resolution o& a Division o& t$e CTA on a motion &or reconsi(eration or ne. trial- ma% &ile a petition &or revie. .it$ t$e CTA en *anc.K T$e provision spea<s o& resolutions t$at constitutes &inal (isposition o& t$e case. As a eneral rule- t$e (enial o& a motion to 7uas$ is an interlocutor% or(er .$ic$ is not t$eproper su*Bect o& an appeal or a petition &or certiorari. T$ere is no (ispute t$at a court or(er (en%in' a motion to 7uas$ is interlocutor%. T$e (enial o& t$e motion to 7uas$ means t$at t$e criminal in&ormation remains pen(in' .it$ t$e court.$ic$ must procee( .it$ t$e trial to (etermine .$et$er t$e accuse( is 'uilt% o& t$e crime c$ar'e( t$erein. E7uall% settle( is t$e rule t$at an

re&erence to oneSs vie.s o& $is relations to His Creator an( to t$e o*li'ations t$e% impose o& reverence to His *ein' an( c$aracter- an( o*e(ience to His Cill. T$e constitutional 'uarant% o& t$e &ree e/ercise an( enBo%ment o& reli'ious pro&ession an( .ors$ip carries .it$ it t$e ri'$t to (isseminate reli'ious in&ormation. An% restraints o& suc$ ri'$t can onl% *e Busti&ie( li<e ot$er restraints o& &ree(om o& e/pression on t$e 'roun(s t$at t$ere is a clear an( present (an'er o& an% su*stantive evil .$ic$ t$e State $as t$e ri'$t to prevent). !n t$e case at *ar t$e license &ee $erein involve( is impose( upon appellant &or its (istri*ution an( sale o& *i*les an( ot$er reli'ious literature. !t ma% *e true t$at in t$e case at *ar t$e price as<e( &or t$e *i*les an( ot$er reli'ious pamp$lets .as in some instances a little *it $i'$er t$an t$e actual cost o& t$e same *ut t$is cannot mean t$at appellant .as en'a'e( in t$e *usiness or occupation o& sellin' sai( )merc$an(ise) &or pro&it. For t$is reason- .e *elieve t$at t$e provisions o& Cit% o& #anila Or(inance "o. ;3;5- as amen(e(- cannot *e applie( to appellant- &or in (oin' so it .oul( impair its &ree e/ercise an( enBo%ment o& its reli'ious pro&ession an( .ors$ip as .ell as its ri'$ts o& (issemination o& reli'ious *elie&s. Cit$ respect to Or(inance "o. 8999- as amen(e(- .$ic$ re7uires t$e #a%orSs permit *e&ore an% person can en'a'e in an% o& t$e *usinesses- tra(es or occupations enumerate( t$erein- .e (o not &in( t$at it imposes an% c$ar'e upon t$e enBo%ment o& a ri'$t 'rante( *% t$e Constitution- nor ta/ t$e e/ercise o& reli'ious practices. !t seems clear- t$ere&ore- t$at Or(inance "o. 89990ma%orIs permit1 cannot *e consi(ere( unconstitutional- even i& applie( to plainti&& Societ%. But as Or(inance "o. ;3;50 license &ee1 o& t$e Cit% o& #anilaas amen(e(- is not applica*le to plainti&&+appellant an( (e&en(ant+ appellee is po.erless to license or ta/ t$e *usiness o& plainti&& Societ% involve( $erein &or- as state( *e&ore- it .oul( impair plainti&&Ss ri'$t to t$e &ree e/ercise an( enBo%ment o& its reli'ious pro&ession an( .ors$ipas .ell as its ri'$ts o& (issemination o& reli'ious *elie&s- Ce &in( t$at Or(inance "o. 8999- as amen(e( is also inapplica*le to sai( *usinesstra(e or occupation o& t$e plainti&&. TOLE"T!"O vs. THE SECRETARY OF F!"A"CE FACTS: T$e value(+a((e( ta/ is levie( on t$e sale- *arter or e/c$an'e o& 'oo(s an( properties as .ell as on t$e sale or e/c$an'e o& services. !t is e7uivalent to 29O o& t$e 'ross sellin' price or 'ross value in mone% o& 'oo(s or properties sol(- *artere( or e/c$an'e( or o& t$e 'ross receipts &rom t$e sale or e/c$an'e o& services. Repu*lic Act "o. AA2@ see<s to .i(en t$e ta/ *ase o& t$e e/istin' FAT s%stem an( en$ance its a(ministration *% amen(in' t$e "ational !nternal Revenue Co(e. !SS,ES: a. C$et$er or not t$e la. violates t$e provision o& t$e constitution re'ar(in' t$e &ree(om o& reli'ion an( its e/ercise t$ereo&L *. C$et$er or not t$e la. violates t$e provisions o& t$e constitution re'ar(in' t$e ,ni&ormit%- E7uita*ilit% an( Pro'ressivit% o& Ta/ationL R,L!" : a. Claims o& Free(om o& T$ou'$t an( Reli'ious Free(om

on #ur(oc< v. Penns%lvania in .$ic$ it .as $el( t$at- as a license &ee is &i/e( in amount an( unrelate( to t$e receipts o& t$e ta/pa%er- t$e license &ee- .$en applie( to a reli'ious sect- .as actuall% *ein' impose( as a con(ition &or t$e e/ercise o& t$e sectSs ri'$t un(er t$e Constitution. For t$at reason- it .as $el(- t$e license &ee )restrains in a(vance t$ose constitutional li*erties o& press an( reli'ion an( inevita*l% ten(s to suppress t$eir e/ercise.) But- in t$is case- t$e &ee in alt$ou'$ a &i/e( amount 0P2-9991- is not impose( &or t$e e/ercise o& a privile'e *ut onl% &or t$e purpose o& (e&ra%in' part o& t$e cost o& re'istration. T$e re'istration re7uirement is a central &eature o& t$e FAT s%stem. !t is (esi'ne( to provi(e a recor( o& ta/ cre(its *ecause an% person .$o is su*Bect to t$e pa%ment o& t$e FAT pa%s an input ta/- even as $e collects an output ta/ on sales ma(e or services ren(ere(. T$e re'istration &ee is t$us a mere a(ministrative &ee- one not impose( on t$e e/ercise o& a privile'e- muc$ less a constitutional ri'$t. For t$e &ore'oin' reasons- .e &in( t$e attac< on Repu*lic Act "o. AA2@ on t$e 'roun( t$at it o&&en(s t$e &ree speec$- press an( &ree(om o& reli'ion 'uarantees o& t$e Constitution to *e .it$out merit. For t$e same reasons- .e &in( t$e claim o& t$e P$ilippine E(ucational Pu*lis$ers Association 0PEPA1 in .R. "o. 223582 t$at t$e increase in t$e price o& *oo<s an( ot$er e(ucational materials as a result o& t$e FAT .oul( violate t$e constitutional man(ate to t$e 'overnment to 'ive priorit% to e(ucation- science an( tec$nolo'% 0Art. !!- sec. 2A1 to *e untena*le. *. Claims o& Pro'ressivit%- Denial o& Due Process- E7ual Protection- an( !mpairment o& Contracts T$ere is *asis &or passin' upon claims t$at on its &ace t$e statute violates t$e 'uarantees o& &ree(om o& speec$- press an( reli'ion. T$e possi*le )c$illin' e&&ect) .$ic$ it ma% $ave on t$e essential &ree(om o& t$e min( an( conscience an( t$e nee( to assure t$at t$e c$annels o& communication are open an( operatin' importunatel% (eman( t$e e/ercise o& t$is CourtSs po.er o& revie.. T$ere is- $o.ever- no Busti&ication &or passin' upon t$e claims t$at t$e la. also violates t$e rule t$at ta/ation must *e pro'ressive an( t$at it (enies petitionersS ri'$t to (ue process an( t$e e7ual protection o& t$e la.s. T$e reason &or t$is (i&&erent treatment $as *een co'entl% state( *% an eminent aut$orit% on constitutional la. t$us: )C$en &ree(om o& t$e min( is imperile( *% la.- it is &ree(om t$at comman(s a moments o& respect: .$en propert% is imperile( it is t$e la.ma<ersS Bu('ment t$at comman(s respect. T$is (ual stan(ar( ma% not precisel% reverse t$e presumption o& constitutionalit% in civil li*erties cases- *ut o*viousl% it (oes set up a $ierarc$% o& values .it$in t$e (ue process clause.) C$at Con'ress is re7uire( *% t$e Constitution to (o is to )evolve a pro'ressive s%stem o& ta/ation.) T$is is a (irective to Con'ress- Bust li<e t$e (irective to it to 'ive priorit% to t$e enactment o& la.s &or t$e en$ancement o& $uman (i'nit% an( t$e re(uction o& socialeconomic an( political ine7ualities or &or t$e promotion o& t$e ri'$t to )7ualit% e(ucation). T$ese provisions are put in t$e Constitution as moral incentives to le'islation- not as Bu(iciall% en&orcea*le ri'$ts. To sum it all up- .e $ol( t$at t$e proce(ural re7uirements o& t$e Constitution $ave *een complie( .it$ *% Con'ress in t$e enactment o& t$e statute: t$at Bu(icial in7uir% .$et$er t$e &ormal re7uirements &or t$e enactment o& statutes + *e%on( t$ose prescri*e( *% t$e Constitution + $ave *een o*serve( is preclu(e( *% t$e principle o& separation o& po.ers: t$at t$e la. (oes not a*ri('e &ree(om o& speec$- e/pression or t$e press- nor inter&ere .it$ t$e &ree e/ercise o& reli'ion- nor (en% to an% o& t$e parties t$e ri'$t to an e(ucation: an( t$at- in vie. o& t$e a*sence o& a &actual &oun(ation o& recor(- claims t$at t$e la. is re'ressive- oppressive an( con&iscator% an( t$at it

T$e case o& American Bi*le Societ% v. Cit% o& #anila is cite( *% *ot$ t$e PBS an( t$e PP! in support o& t$eir contention t$at t$e la. imposes censors$ip. T$ere- t$is Court $el( t$at an or(inance o& t$e Cit% o& #anila- .$ic$ impose( a license &ee on t$ose en'a'e( in t$e *usiness o& 'eneral merc$an(ise- coul( not *e applie( to t$e appellantSs sale o& *i*les an( ot$er reli'ious literature. T$is Court relie(

violates veste( ri'$ts protecte( un(er t$e Contract Clause are prematurel% raise( an( (o not Busti&% t$e 'rant o& prospective relie& *% .rit o& pro$i*ition. Topic: Constitutional Limitations: ,ni&ormit%- E7uita*ilit%- Pro'ressivit% o& Ta/ation C!TY OF BA ,!O vs. DE LEO" r. "o. ;?A3@ Octo*er 82- 25@6 FACTS: !n t$is appeal- a lo.er court (ecision up$ol(in' t$e vali(it% o& an or(inance 2 o& t$e Cit% o& Ba'uio imposin' a license &ee on an% person- &irm- entit% or corporation (oin' *usiness in t$e Cit% o& Ba'uio is assaile( *% (e&en(ant+appellant Fortunato (e Leon. He .as $el( lia*le as a real estate (ealer .it$ a propert% t$erein .ort$ more t$an P29-999- *ut not in e/cess o& P39-999- an( t$ere&ore o*li'ate( to pa% un(er suc$ or(inance t$e P39 annual &ee. T$at is t$e principal 7uestion. !n a((ition- t$ere $as *een a &irm an( un%iel(in' insistence *% (e&en(ant+appellant o& t$e lac< o& Buris(iction o& t$e Cit% Court o& Ba'uio- .$ere t$e suit ori'inate(- a complaint $avin' *een &ile( a'ainst $im *% t$e Cit% Attorne% o& Ba'uio &or $is &ailure to pa% t$e amount o& P899 as license &ee coverin' t$e perio( &rom t$e &irst 7uarter o& 2536 to t$e &ourt$ 7uarter o& 25@;- alle'e(l%- in spite o& repeate( (eman(s. "or .as (e&en(ant+appellant a'reea*le to suc$ a suit *ein' institute( *% t$e Cit% Treasurer .it$out t$e consent o& t$e #a%or- .$ic$ &or $im .as in(ispensa*le. T$e lo.er court .as o& a (i&&erent min(. !t (eclare( t$e a*ove or(inance as amen(e(- vali( an( su*sistin'- an( $el( (e&en(ant+ appellant lia*le &or t$e &ees t$erein prescri*e( as a real estate (ealer. Hence- t$is appeal. Assume t$e vali(it% o& suc$ or(inance- an( t$ere .oul( *e no 7uestion a*out t$e lia*ilit% o& (e&en(ant+appellant &or t$e a*ove license &ee- it *ein' s$o.n in t$e partial stipulation o& &acts- t$at $e .as )en'a'e( in t$e rental o& $is propert% in Ba'uio) (erivin' income t$ere&rom (urin' t$e perio( covere( *% t$e &irst 7uarter o& 2536 to t$e &ourt$ 7uarter o& 25@;. !SS,E: C$et$er or not t$e or(inance is vali(L R,L!" : T$e c$allen'e( or(inance cannot *e consi(ere( ultra vires as t$ere is more t$an ample statutor% aut$orit% &or t$e enactment t$ereo&. "onet$eless- its vali(it% on constitutional 'roun(s is c$allen'e( *ecause o& t$e alle'ation t$at it impose( (ou*le ta/ation- .$ic$ is repu'nant to t$e (ue process clause- an( t$at it violate( t$e re7uirement o& uni&ormit%. Ce (o not vie. t$e matter t$us. As to .$% (ou*le ta/ation is not violative o& (ue process- 4ustice Holmes ma(e clear in t$is lan'ua'e: )T$e o*Bection to t$e ta/ation as (ou*le ma% *e lai( (o.n or one si(e. . . . T$e 2?t$ Amen(ment Dt$e (ue process clauseE no more &or*i(s (ou*le ta/ation t$an it (oes (ou*lin' t$e amount o& a ta/- s$ort o& con&iscation or procee(in's unconstitutional on ot$er 'roun(s.) Cit$ t$at (ecision ren(ere( at a time .$en American soverei'nt% in t$e P$ilippines .as reco'ni>e(- it possesses more t$an Bust a persuasive e&&ect. To some- it (elivere( t$e coup (e 'race to t$e *o'e% o& (ou*le ta/ation as a constitutional *ar to t$e e/ercise o& t$e ta/in' po.er. !t .oul( seem t$ou'$ t$at in t$e ,nite( States- as .it$ us- its '$ost- as note( *% an eminent criticstill stal<s t$e Buri(ical sta'e. !n a 25?A (ecision- $o.ever- 5 .e 7uote( .it$ approval t$is e/cerpt &rom a lea(in' American (ecision: 29 )C$ere- as $ere- Con'ress $as clearl% e/presse( its intention- t$e statute must *e sustaine( even t$ou'$ (ou*le ta/ation results.)

At an% rate- it $as *een e/pressl% a&&irme( *% us t$at suc$ an )ar'ument a'ainst (ou*le ta/ation ma% not *e invo<e( .$ere one ta/ is impose( *% t$e state an( t$e ot$er is impose( *% t$e cit% . . .- it *ein' .i(el% reco'ni>e( t$at t$ere is not$in' in$erentl% o*no/ious in t$e re7uirement t$at license &ees or ta/es *e e/acte( .it$ respect to t$e same occupation- callin' or activit% *% *ot$ t$e state an( t$e political su*(ivisions t$ereo&. T$e a*ove .oul( clearl% in(icate $o. lac<in' in merit is t$is ar'ument *ase( on (ou*le ta/ation. "o.- as to t$e claim t$at t$ere .as a violation o& t$e rule o& uni&ormit% esta*lis$e( *% t$e Constitution. Accor(in' to t$e c$allen'e( or(inancea real estate (ealer .$o leases propert% .ort$ P39-999 or a*ove must pa% an annual &ee o& P299. !& t$e propert% is .ort$ P29-999 *ut not over P39-999- t$en $e pa%s P39 an( P;? i& t$e value is less t$an P29-999. On its &ace- t$ere&ore- t$e a*ove or(inance cannot *e assaile( as violative o& t$e constitutional re7uirement o& uni&ormit%. A ta/ is consi(ere( uni&orm .$en it operates .it$ t$e same &orce an( e&&ect in ever% place .$ere t$e su*Bect ma% *e &oun(.) !t is t$us apparent &rom t$e a*ove t$at in muc$ t$e same .a% t$at t$e plea o& (ou*le ta/ation is unavailin'- t$e alle'ation t$at t$ere .as a violation o& t$e principle o& uni&ormit% is in$erentl% lac<in' in persuasiveness. T$ere is no nee( to pass upon t$e ot$er alle'ations to assail t$e vali(it% o& t$e a*ove or(inance- it *ein' maintaine( t$at t$e license &ees t$erein impose( )is e/cessive- unreasona*le an( oppressive) an( t$at t$ere is a &ailure to o*serve t$e man(ate o& e7ual protection. A rea(in' o& t$e or(inance .ill rea(il% (isclose t$eir in$erent lac< o& plausi*ilit%. TOP!C:Pro$i*ition a'ainst impairment o& o*li'ation o& contracts CASSA"OFA vs. HORD FACTS: On 4anuar% 265A- t$e Spanis$ 'overnment 'rante( to t$e Plainti&& certain mines in t$e Province o& Am*os- Camarines- o& .$ic$ mines t$e Plainti&& is no. t$e o.ner. T$e sai( mines .ere 'rante( *% virtue o& t$e ro%al (ecree o& t$e 2?t$ o& #a%- 25@A .$ic$ provi(e( amon' ot$ers- t$at t$e 'rantee s$all pa% annuall% a &i/e( ta/ o& ?9 escu(os an( a &urt$er ta/ o& 8O on t$e 'ross earnin's. Furt$ermoret$e (ecree also provi(e( t$at no ot$er ta/es t$an t$ose mentione( s$all *e impose( upon minin' an( metallur'ical in(ustries. Ho.ever- t$e (e&en(ant Collector o& !nternal Revenueconsi(ere( t$e 7uestione( minin' concessions to &all .it$in t$e provisions o& Sec. 28? o& t$e !nternal Revenue Act .$ic$ imposes on all vali( per&ecte( minin' concessions 'rante( prior to April 22- 2655an annual ta/ o& P299 an( an a( valorem ta/ e7ual to 8O o& t$e actual mar<et value o& t$e 'ross output. T$e (e&en(ant accor(in'l% impose( upon t$ese properties t$e ta/ mentione( an( t$erea&ter t$e plainti&& pai( un(er protest. T$e plainti&& *rou'$t t$is action a'ainst t$e (e&en(ant to recover t$e sum pai( un(er protest. 4u('ment .as ren(ere( in &avor o& t$e (e&en(ant an( &rom t$at Bu('ment plainti&& appeale(. !SS,E: C$et$er or not Sec. 28? o& t$e !nternal Revenue Act is vali(. HELD: "o. T$is is *ecause it is violative o& t$e provision o& Sec. 3 o& t$e Act o& Con'ress o& 4ul% 2- 259;- .$ic$ provi(es t$at no la. impairin' t$e o*li'ation o& contracts s$all *e enacte(. !t seems t$at t$e Dee( coverin' t$is particular minin' concessions constitute( a contract *et.een t$e Spanis$ 'overnment an( t$e Plainti&&- t$e o*li'ation o& .$ic$ .as impaire( *% t$e enactment o& Sec. 28? o& t$e

!nternal Revenue Act- t$ere*% in&rin'in' t$e provisions o& sai( Act o& Con'ress. T$ere&ore- t$e sai( provision o& la. is voi(. Topic: "on+impairment Clause CA AYA" ELECTR!C POCER M L! HT CO.- !"C. vs CO##!SS!O"ER OF !"TER"AL REFE",E FACTS: T$e petitioner is t$e $ol(er o& a le'islative &ranc$ise- Repu*lic Act "o. 8;?A- un(er .$ic$ its pa%ment o& 8O ta/ on its 'ross earnin's &rom t$e sale o& electric current is )in lieu o& all ta/es an( assessments o& .$atever aut$orit% upon privile'es- earnin's- income- &ranc$ise- an( poles- .ires- trans&ormers- an( insulators o& t$e 'rantee- &rom .$ic$ ta/es an( assessments t$e 'rantee is $ere*% e/pressl% e/empte() On 4une ;A- 25@6- Repu*lic Act "o. 3?82 amen(e( section ;? o& t$e Ta/ Co(e *% ma<in' lia*le &or income ta/ all corporate ta/pa%ers not speci&icall% e/empt un(er para'rap$ 0c1 021 o& sai( section an( section ;A o& t$e Ta/ Co(e not.it$stan(in' t$e )provisions o& e/istin' special or 'eneral la.s to t$e contrar%). T$us- &ranc$ise companies .ere su*Becte( to income ta/ in a((ition to &ranc$ise ta/. Ho.ever- in petitionerSs case- its &ranc$ise .as amen(e( *% Repu*lic Act "o. @9;9- e&&ective Au'ust ?- 25@5- *% aut$ori>in' t$e petitioner to &urnis$ electricit% to t$e municipalities o& Fillanueva an( 4asaan#isamis Oriental in a((ition to Ca'a%an (e Oro Cit% an( t$e municipalities o& Ta'oloan an( Opol. T$e amen(ment reenacte( t$e ta/ e/emption in its ori'inal c$arter or neutrali>e( t$e mo(i&ication ma(e *% Repu*lic Act "o. 3?82 more t$an a %ear *e&ore. B% reason o& t$e amen(ment to section ;? o& t$e Ta/ Co(e- t$e Commissioner o& !nternal Revenue in a (eman( letter (ate( Fe*ruar% 23- 25A8 re7uire( t$e petitioner to pa% (e&icienc% income ta/es &or 25@6+to 25A2. T$e petitioner conteste( t$e assessments. T$e Commissioner cancelle( t$e assessments &or 25A9 an( 25A2 *ut insiste( on t$ose &or 25@6 an( 25@5. !SS,E: C$et$er or not t$e imposin' o& t$e &ranc$ise ta/ is vali(L R,L!" : Ce $ol( t$at Con'ress coul( impair petitionerSs le'islative &ranc$ise *% ma<in' it lia*le &or income ta/ &rom .$ic$ $ereto&ore it .as e/empte( *% virtue o& t$e e/emption provi(e( &or in section 8 o& its &ranc$ise. T$e Constitution provi(es t$at a &ranc$ise is su*Bect to amen(mentalteration or repeal *% t$e Con'ress .$en t$e pu*lic interest so re7uires. Section 2 o& petitionerSs &ranc$ise- Repu*lic Act "o. 8;?A- provi(es t$at it is su*Bect to t$e provisions o& t$e Constitution an( to t$e terms an( con(itions esta*lis$e( in Act "o. 8@8@ .$ose section 2; provi(es t$at t$e &ranc$ise is su*Bect to amen(ment- alteration or repeal *% Con'ress. Repu*lic Act "o. 3?82- in amen(in' section ;? o& t$e Ta/ Co(e *% su*Bectin' to income ta/ all corporate ta/pa%ers not e/pressl% e/empte( t$erein an( in section ;A o& t$e Co(e- $a( t$e e&&ect o& .it$(ra.in' petitionerSs e/emption &rom income ta/. T$e Ta/ Court acte( correctl% in $ol(in' t$at t$e e/emption .as restore( *% t$e su*se7uent enactment on Au'ust ?- 25@5 o& Repu*lic Act "o. @9;9 .$ic$ reenacte( t$e sai( ta/ e/emption. Hence- t$e petitioner is lia*le onl% &or t$e income ta/ &or t$e perio( &rom 4anuar% 2 to Au'ust 8- 25@5 .$en its ta/ e/emption .as mo(i&ie( *% Repu*lic Act "o. 3?82.

!t is relevant to note t$at &ranc$ise companies- li<e t$e P$ilippine Lon' Distance Telep$one Compan%- $ave *een pa%in' income ta/ in a((ition to t$e &ranc$ise ta/. Ho.ever- it cannot *e (enie( t$at t$e sai( 25@5 assessment appears to *e $i'$l% controversial. T$e Commissioner at t$e outset .as not certain as to petitionerSs income ta/ lia*ilit%. !t $a( reason not to pa% income ta/ *ecause o& t$e ta/ e/emption in its &ranc$ise. For t$is reason- it s$oul( *e lia*le onl% &or ta/ proper an( s$oul( not *e $el( lia*le &or t$e surc$ar'e an( interest. #ERALCO vsPROF!"CE OF LA ,"A FACTS: On various (ates certain #unicipalities o& t$e Province o& La'una issue( resolutions 'rantin' &ranc$ise in &avor o& petitioner #ERALCO &or t$e suppl% o& electric li'$t $eat an( po.er .it$in t$eir concerne( areas. "ational Electri&ication A(ministration on 4anuar% li'$t an( po.er service in t$e #unicipalit% o& Calam*a La'una. Pursuant to t$e Provisions o& t$e L C o& 2552 t$e respon(ent province enacte( JLa'una Provincial Or(inance no. 92+5; e&&ective 4anuar% 2 2558- provin': Jsec. ;.95 Franc$ise Ta/+ t$ere is $ere*% impose( a ta/ on *usinesses enBo%in' a &ranc$ise- at a rate o& 39O o& 2O o& t$e 'ross annual receipts .$ic$ s$all inclu(e *ot$ cas$ sales an( sales on account reali>e( (urin' t$e prece(in' calen(ar %ear .it$in t$is province inclu(in' t$e territorial limits on an% cit% locate( in t$e provinceK. On t$e *asis o& t$is or(inance respon(ent provincial Treasurer sent a (eman( letter to #ERALCO &or its correspon(in' ta/ pa%ment. ,n(er protest #ERALCO pai( t$e ta/ in t$e amount o& 25 #illion Pesos. A claim &or re&un( .as t$erea&ter sent *% #eralco to Provincial Treasurer o& La'una claimin' t$at t$e &ranc$ise ta/ t$at it $as pai( an( continue( to pa% to t$e "ational overnment pursuant to PD 332 alrea(% inclu(e( &ranc$ise ta/ impose( *% t$e Provincial Ta/ Or(inance. #ERALCO conten(e( t$at t$e imposition o& a &ranc$ise ta/ un(er Sec ;.95 o& LPO 92+5; contravene( t$e provisions o& section 2 o& PD 332. !SS,E: C$et$er t$e imposition o& a &ranc$ise ta/ un(er sec ;.95 o& LPO 92+5; is violative o& t$e non+impairment clause o& t$e Constitution an( sec 2 o& PD 332L R,L!" : ,n(er t$e no. prevailin' Constitution- .$ere t$ere is neit$er a 'rant nor a pro$i*ition *% statute- t$e ta/ po.er must *e (eeme( to e/ist alt$ou'$ Con'ress ma% provi(e statutor% limitations an( 'ui(elines. T$e *asic rationale &or t$e current rule is to sa&e'uar( t$e via*ilit% an( sel&+su&&icienc% o& local 'overnment units *% (irectl% 'rantin' t$em 'eneral an( *roa( ta/ po.ers. "evert$eless- t$e &un(amental la. (i( not inten( t$e (ele'ation to *e a*solute an( uncon(itional: t$e constitutional o*Bective o*viousl% is to ensure t$at.$ile t$e local 'overnment units are *ein' stren't$ene( an( ma(e more autonomous-t$e le'islature must still see to it t$at 0a1 t$e ta/pa%er .ill not *e over+*ur(ene( or sa((le( .it$ multiple an( unreasona*le impositions: 0*1 eac$ local 'overnment unit .ill $ave its &air s$are o& availa*le resources: 0c1 t$e resources o& t$e national

'overnment .ill not *e un(ul% (istur*e(: an( 0(1 local ta/ation .ill *e &air- uni&orm- an( Bust. C$ile t$e Court $as- not too in&re7uentl%- re&erre( to ta/ e/emptions containe( in special &ranc$ises as *ein' in t$e nature o& contracts an( a part o& t$e in(ucement &or carr%in' on t$e &ranc$ise- t$ese e/emptions- nevert$eless- are &ar &rom *ein' strictl% contractual in nature. Contractual ta/ e/emptions- in t$e real sense o& t$e term an( .$ere t$e non+impairment clause o& t$e Constitution can ri'$tl% *e invo<e(- are t$ose a'ree( to *% t$e ta/in' aut$orit% in contracts- suc$ as t$ose containe( in 'overnment *on(s or (e*entures- la.&ull% entere( into *% t$em un(er ena*lin' la.s in .$ic$ t$e 'overnmentactin' in its private capacit%- s$e(s its cloa< o& aut$orit% an( .aives its 'overnmental immunit%. Trul%- ta/ e/emptions o& t$is <in( ma% not *e revo<e( .it$out impairin' t$e o*li'ations o& contracts. T$ese contractual ta/ e/emptions- $o.ever- are not to *e con&use( .it$ ta/ e/emptions 'rante( un(er &ranc$ises. A &ranc$ise parta<es t$e nature o& a 'rant .$ic$ is *e%on( t$e purvie. o& t$e non+impairment clause o& t$e Constitution. !n(ee(- Article H!!- Section 22- o& t$e 256A Constitution- li<e its precursor provisions in t$e 2583 an( t$e 25A8 Constitutions- is e/plicit t$at no &ranc$ise &or t$e operation o& a pu*lic utilit% s$all *e 'rante( e/cept un(er t$e con(ition t$at suc$ privile'e s$all *e su*Bect to amen(ment- alteration or repeal *% Con'ress as an( .$en t$e common 'oo( so re7uires. RAD!O CO##,"!CAT!O"S OF THE PH!L!PP!"ES- !"C. vs.PROF!"C!AL ASSESOR OF SO,TH COTABATO FACTS: !n 253A- Repu*lic Act "o. ;98@ 'rante( RCP! a &i&t%+%ear &ranc$ise. T$erea&ter- t$e municipal treasurer o& Tupi- Sout$ Cota*ato assesse( RCP! real propert% ta/es &rom 2562 to 2563. T$e municipal treasurer (eman(e( t$at RCP! pa% P2@@-629 as real propert% ta/ on its ra(io station *uil(in' in Baran'a% Pa*lon- as .ell as on its mac$iner% s$e(- ra(io rela% station to.er an( its accessories- an( 'eneratin' sets- *ase( on t$e &ollo.in' ta/ (eclarations. RCP! proteste( t$e assessment *e&ore t$e Local Boar( o& Assessment Appeals. RCP! claime( t$at all its assesse( properties are personal properties an( t$us e/empt &rom t$e real propert% ta/. Assumin' t$at t$e assesse( properties are real propert%- t$e% are still e/empt &rom real propert% ta/es. Section 8 o& Presi(ential Decree "o. ?@? states t$at to *e ta/a*le- t$e mac$iner% s$oul( *e attac$e( to t$e real estate an( essential &or manu&acturin'- commercial- minin'- in(ustrial- or a'ricultural purposes. RCP! claime( t$at t$e assesse( properties are not use( &or manu&acturin'- commercial- minin'- in(ustrial- or a'ricultural purposes. Besi(es- t$e assesse( properties are attac$e( to a *uil(in' on a lot not o.ne( *% RCP!. RCP! also pointe( out t$at its &ranc$ise e/empts RCP! &rom Jpa%in' an% an( all ta/es o& an% <in(- nature or (escription in e/c$an'e &or its pa%ment o& ta/ e7ual to one an( one+$al& per cent on all 'ross receipts &rom t$e *usiness con(ucte( un(er its &ranc$ise.K RCP! &urt$er claime( t$at an% (eviation &rom its &ranc$ise .oul( violate t$e non+ impairment o& contract clause o& t$e Constitution. Finall%- RCP! state( t$at t$e value o& t$e properties assesse( $as (epreciate( since t$eir ac7uisition in t$e 25@9s. !SS,E: C$et$er or not t$e assessment o& t$e Provincial assessor .as violative o& t$e non+impairment clauseL R,L!" : As &oun( *% t$e appellate court- RCP!Is ra(io rela% station to.er- ra(io station *uil(in'- an( mac$iner% s$e( are real properties

an( are t$us su*Bect to t$e real propert% ta/. Section 2? o& RA ;98@as amen(e( *% RA ?93?- states t$at Jin consi(eration o& t$e &ranc$ise an( ri'$ts $ere*% 'rante( an( an% provision o& la. to t$e contrar% not.it$stan(in'- t$e 'rantee s$all pa% t$e same ta/es as are no. or ma% $erea&ter *e re7uire( *% la. &rom ot$er in(ivi(ualscopartners$ips- private- pu*lic or 7uasi+pu*lic associationscorporations or Boint stoc< companies- on real estate- *uil(in's an( ot$er personal propert%K T$e clear lan'ua'e o& Section 2? states t$at RCP! s$all pa% t$e real estate ta/. T$e Jin lieu o& all ta/esK clause in Section 2? o& RA ;98@- as amen(e( *% RA ?93?- cannot e/empt RCP! &rom t$e real estate ta/ *ecause t$e same Section 2? e/pressl% states t$atRCP! Js$all pa% t$e same ta/es / //onreal estate- *uil(in's / //.K T$e Jin lieu o& all ta/esK clause in t$e t$ir( sentence o& Section 2? cannot ne'ate t$e &irst sentence o& t$e same Section 2?- .$ic$ imposes t$e real estate ta/ on RCP!. T$e Court must 'ive e&&ect to *ot$ provisions o& t$e same Section 2?. T$is means t$at t$e real estate ta/ is an e/ception to t$e Jin lieu o& all ta/esK clause. Su*se7uent le'islations $ave ra(icall% amen(e( t$e Jin lieu o& all ta/esK clause in &ranc$ises o& pu*lic utilities. As RCP! correctl% o*serves- t$e Local overnment Co(e o& 2552 J.it$(re. all t$e ta/ e/emptions e/istin' at t$e time o& its passa'e R inclu(in' t$at o& RCP!IsK .it$ respect to local ta/es li<e t$e real propert% ta/. AlsoRepu*lic Act "o. AA2@ a*olis$e( t$e &ranc$ise ta/ on telecommunications companies e&&ective 2 4anuar% 255@. To replace t$e &ranc$ise ta/- RA AA2@ impose( a 29 percent value+a((e(+ta/ on telecommunications companies un(er Section 29; o& t$e "ational !nternal Revenue Co(e. THE C!TY OFER"#E"T OF G,ETO" C!TYvs BAYA"TEL 2@;923 #arc$ @- ;99@ FACTS: Ba%antel is a le'islative &ranc$ise $ol(er un(er Repu*lic Act "o. 8;35to esta*lis$ an( operate ra(io stations &or (omestic telecommunications- ra(iop$one- *roa(castin' an( telecastin'. On 4ul% ;9- 255;- *arel% &e. mont$s a&ter t$e L C too< e&&ect- Con'ress enacte( Rep. Act "o. A@88- amen(in' Ba%antelIs ori'inal &ranc$ise. !t is un(ispute( t$at .it$in t$e territorial *oun(ar% o& Gue>on Cit%Ba%antel o.ne( several real properties on .$ic$ it maintaine( various telecommunications &acilities. !n 2558- t$e 'overnment o& Gue>on Cit%pursuant to t$e ta/in' po.er veste( on local 'overnment units *% Section 3- Article H o& t$e 256A Constitution- in&ra- in relation to Section ;8; o& t$e L C- supra- enacte( Cit% Or(inance "o. SP+52- S+58ot$er.ise <no.n as t$e Gue>on Cit% Revenue Co(e imposin'- un(er Section 3 t$ereo&- a real propert% ta/ on all real properties in Gue>on Cit%- an(- reiteratin' in its Section @- t$e .it$(ra.al o& e/emption &rom real propert% ta/ un(er Section ;8? o& t$e L C. Con&orma*l% .it$ t$e Cit%Is Revenue Co(e- ne. ta/ (eclarations &or Ba%antelIs real properties in Gue>on Cit% .ere issue( *% t$e Cit% Assessor an( .ere receive( *% Ba%antel on Au'ust 28- 2556. !SS,E: C$et$er or not t$e Gue>on Cit% Revenue Co(e violate( t$e non+impairment o& contractsL R,L!" : T$e po.er to ta/ is primaril% veste( in t$e Con'ress: $o.ever- in our Buris(iction- it ma% *e e/ercise( *% local le'islative *o(ies- no lon'er merel% *e virtue o& a vali( (ele'ation as *e&ore- *ut pursuant to (irect aut$orit% con&erre( *% Section 3- Article H o& t$e Constitution. ,n(er .R. "o.

t$e latter- t$e e/ercise o& t$e po.er ma% *e su*Bect to suc$ 'ui(elines an( limitations as t$e Con'ress ma% provi(e .$ic$- $o.ever- must *e consistent .it$ t$e *asic polic% o& local autonom%. !n(ee(- t$e 'rant o& ta/in' po.ers to local 'overnment units un(er t$e Constitution an( t$e L C (oes not a&&ect t$e po.er o& Con'ress to 'rant e/emptions to certain persons- pursuant to a (eclare( national polic%. T$e le'al e&&ect o& t$e constitutional 'rant to local 'overnments simpl% means t$at in interpretin' statutor% provisions on municipal ta/in' po.ers- (ou*ts must *e resolve( in &avor o& municipal corporations. As .e see it- t$en- t$e issue in t$is case no lon'er (.ells on .$et$er Con'ress $as t$e po.er to e/empt Ba%antelIs properties &rom realt% ta/es *% its enactment o& Rep. Act "o. A@88 .$ic$ amen(e( Ba%antelIs ori'inal &ranc$ise. T$e more (ecisive 7uestion turns on .$et$er Con'ress actuall% (i( e/empt Ba%antelIs properties at all *% virtue o& Section 22 o& Rep. Act "o. A@88. A(mitte(l%- Rep. Act "o. A@88 .as enacte( su*se7uent to t$e L C. Per&ectl% a.are t$at t$e L C $as alrea(% .it$(ra.n Ba%antelIs &ormer e/emption &rom realt% ta/es- Con'ress opte( to pass Rep. Act "o. A@88 usin'- un(er Section 22 t$ereo&- e/actl% t$e same (e&inin' p$rase )e/clusive o& t$is &ranc$ise) .$ic$ .as t$e *asis &or Ba%antelIs e/emption &rom realt% ta/es prior to t$e L C. !n plain lan'ua'eSection 22 o& Rep. Act "o. A@88 states t$at )t$e 'rantee- its successors or assi'ns s$all *e lia*le to pa% t$e same ta/es on t$eir real estate- *uil(in's an( personal propert%- e/clusive o& t$is &ranc$iseas ot$er persons or corporations are no. or $erea&ter ma% *e re7uire( *% la. to pa%.) T$e Court vie.s t$is su*se7uent piece o& le'islation as an e/press an( real intention on t$e part o& Con'ress to once a'ain remove &rom t$e L CIs (ele'ate( ta/in' po.er- all o& t$e &ranc$iseeIs 0Ba%antelIs1 properties t$at are actuall%- (irectl% an( e/clusivel% use( in t$e pursuit o& its &ranc$ise.

contra(istin'uis$e( &rom e/cise ta/es. A (oneeIs 'i&t ta/ is not a propert% ta/ *ut an e/cise ta/ impose( on t$e trans&er o& propert% *% .a% o& 'i&t inter vivos. !t (oes not rest upon 'eneral o.ners$ip- *ut an e/cise upon t$e use ma(e o& t$e properties- upon t$e e/ercise o& t$e privile'e o& receivin' t$e properties. T$e imposition o& suc$ e/cise ta/ on propert% use( &or reli'ious purpose (o not constitute an impairment o& t$e Constitution. T$e ta/ e/emption o& t$e paris$- t$us- (oes not e/ten( to e/cise ta/es. Topic: Constitutional Limitations: Ta/ E/emption o& tra(itional E/emptees A*ra Falle% Colle'e v. A7uino R L+8596@ 23 4une 2566 FACTS:Petitioner- an e(ucational corporation an( institution o& $i'$er learnin' (ul% incorporate( .it$ t$e Securities an( E/c$an'e Commission in 25?6- &ile( a complaint to annul an( (eclare voi( t$e J"otice o& Sei>ureI an( t$e J"otice o& SaleK o& its lot an( *uil(in' locate( at Ban'ue(- A*ra- &or non+pa%ment o& real estate ta/es an( penalties amountin' to P3-2?9.82. Sai( J"otice o& Sei>ureK *% respon(ents #unicipal Treasurer an( Provincial Treasurer- (e&en(ants *elo.- .as issue( &or t$e satis&action o& t$e sai( ta/es t$ereon. T$e parties entere( into a stipulation o& &acts a(opte( an( em*o(ie( *% t$e trial court in its 7uestione( (ecision. T$e trial court rule( &or t$e 'overnment- $ol(in' t$at t$e secon( &loor o& t$e *uil(in' is *ein' use( *% t$e (irector &or resi(ential purposes an( t$at t$e 'roun( &loor use( an( rente( *% "ort$ern #ar<etin' Corporation- a commercial esta*lis$ment- an( t$us t$e propert% is not *ein' use( e/clusivel% &or e(ucational purposes. !nstea( o& per&ectin' an appeal- petitioner availe( o& t$e instant petition &or revie. on certiorari .it$ pra%er &or preliminar% inBunction *e&ore t$e Supreme Court- *% &ilin' sai( petition on 2A Au'ust 25A?. !SS,E:C$et$er or not t$e lot an( *uil(in' are use( e/clusivel% &or e(ucational purposes. HELD: "O.Section ;;- para'rap$ 8- Article F!- o& t$e t$en 2583 P$ilippine Constitution- e/pressl% 'rants e/emption &rom realt% ta/es &or cemeteries- c$urc$es an( parsona'es or convents appurtenant t$ereto- an( all lan(s- *uil(in's- an( improvements use( e/clusivel% &or reli'ious- c$arita*le or e(ucational purposes. Reasona*le emp$asis $as al.a%s *een ma(e t$at t$e e/emption e/ten(s to &acilities .$ic$ are inci(ental to an( reasona*l% necessar% &or t$e accomplis$ment o& t$e main purposes. T$e use o& t$e sc$ool *uil(in' or lot &or commercial purposes is neit$er contemplate( *% la.- nor *% Burispru(ence. !n t$e case at *ar- t$e lease o& t$e &irst &loor o& t$e *uil(in' to t$e "ort$ern #ar<etin' Corporation cannot *% an% stretc$ o& t$e ima'ination *e consi(ere( inci(ental to t$e purpose o& e(ucation. T$e test o& e/emption &rom ta/ation is t$e use o& t$e propert% &or purposes mentione( in t$e Constitution. T$e (ecision o& t$e CF! A*ra 0Branc$ !1 is a&&irme( su*Bect to t$e mo(i&ication t$at $al& o& t$e assesse( ta/ *e returne( to t$e petitioner. T$e mo(i&ication is (erive( &rom t$e &act t$at t$e 'roun( &loor is *ein' use( &or commercial purposes 0lease(1 an( t$e secon( &loor *ein' use( as inci(ental to e(ucation 0resi(ence o& t$e (irector1. Topic: Constitutional Limitations: Ta/ E/emption o& tra(itional E/emptees Herrera vs. T$e Gue>on Cit% Boar( O& Assessment Appeals FACTS: Petitioners 4ose an( Ester Herrera .ere aut$ori>e( *% t$e Director o& t$e Bureau o& Hospitals to esta*lis$ an( operate t$e St.

Lla(oc vs. Commissioner R L+25;92- 2@ 4une 25@3 En Banc- Pare(es 041: 5 concur- 2 too< no part Facts: !n 253A- t$e #B Estate !nc. o& Bacolo( Cit% (onate( P29-999 in cas$ to t$e paris$ priest o& Fictorias-"e'ros Occi(ental: t$e amount spent &or t$e construction o& a ne. Cat$olic C$urc$ in t$e localit%- as inten(e(. !n2536- #B Estate &ile( t$e (onorIs 'i&t ta/ return. !n 25@9t$e Commissioner issue( an assessment &or (oneeIs 'i&t ta/ a'ainst t$e paris$. T$e priest lo('e( a protest to t$e assessment an( re7ueste( t$e .it$(ra.al t$ereo&. !ssue: C$et$er t$e Cat$olic Paris$ is ta/ e/empt. Hel(: T$e p$rase Je/empt &rom ta/ationK s$oul( not *e interprete( to mean e/emption &rom all <in(s o& ta/es. T$e e/emption is onl% &rom t$e pa%ment o& ta/es assesse( on suc$ properties as propert% ta/es as

Cat$erineSs Hospital. !n 2538- t$e petitioners sent a letter to t$e Gue>on Cit% Assessor re7uestin' e/emption &rom pa%ment o& real estate ta/ on t$e lot- *uil(in' an( ot$er improvements comprisin' t$e $ospital statin' t$at t$e same .as esta*lis$e( &or c$arita*le an( $umanitarian purposes an( not &or commercial 'ain .$ic$ .as 'rante( e&&ective t$e %ears 2538 to 2533. Su*se7uentl%- $o.ever- in a letter (ate( Au'ust 29- 2533 t$e Gue>on Cit% Assessor noti&ie( t$e petitioners t$at t$e a&oresai( properties .ere re+classi&ie( &rom e/empt to )ta/a*le) an( t$us assesse( &or real propert% ta/es e&&ective 253@. T$e petitioners appeale( t$e assessment to t$e Gue>on Cit% Boar( o& Assessment Appeals- .$ic$- a&&irme( t$e (ecision o& t$e Cit% Assessor. A motion &or reconsi(eration t$ereo& .as (enie(. From t$is (ecision- t$e petitioners institute( t$e instant appeal. T$e *uil(in' involve( in t$is case is principall% use( as a $ospital. From t$e evi(ence presente( *% petitioners- it is ma(e to appear t$at t$ere are t.o <in(s o& c$arit% patients 0a1 t$ose .$o come &or consultation onl% 0)out+c$arit% patients)1: an( 0*1 t$ose .$o remain in t$e $ospital &or treatment 0)l%in'+in+patients)1. Petitioners also operate .it$in t$e premises o& t$e $ospital t$e )St. Cat$erineSs Sc$ool o& #i(.i&er%) .$ic$ .as 'rante( 'overnment reco'nition *% t$e Secretar% o& E(ucation. T$e stu(ents practice in t$e St. Cat$erineSs Hospital- as .ell as in t$e St. #ar%Ss Hospital- .$ic$ is also o.ne( *% t$e petitioners. A separate set o& accountin' *oo<s is maintaine( *% t$e sc$ool &or mi(.i&er% (istinct &rom t$at <ept *% t$e $ospital. Ho.ever- t$e petitioners $ave re&use( to su*mit a separate statement o& accounts o& t$e sc$ool. !SS,E: C$et$er or not t$e sai( properties are use( e/clusivel% &or c$arita*le or e(ucational purposes .$ic$ are e/empt &rom real propert% ta/ HELD: YES. T$e Court o& Ta/ Appeals (eci(e( t$e issue in t$e ne'ative- upon t$e 'roun( t$at t$e St. Cat$erineSs Hospital $as a pa% .ar( &or ... pa%+ patients- .$o are c$ar'e( &or t$e use o& t$e private rooms- operatin' room- la*orator% room- (eliver% room- etc.- li<e ot$er $ospitals operate( &or pro&it an( t$at petitioners an( t$eir &amil% occup% a portion o& t$e *uil(in' &or t$eir resi(ence. !t s$oul( *e note(- $o.ever- t$at- accor(in' to t$e ver% statement o& &acts ma(e in t$e (ecision appeale( &rom- o& t$e t$irt%+t.o 08;1 *e(s in t$e $ospital- t.ent% 0;91 are &or c$arit%+patients: t$at t$e income reali>e( &rom pa%+patients is spent &or improvement o& t$e c$arit% .ar(s: an( t$at petitioners- Dr. Ester Oc$an'co Herrera- as (irectress o& sai( $ospital- (oes not receive an% salar%- alt$ou'$ its resi(ent p$%sician 'ets a mont$l% salar% o& P2A9.99. !t is .ell settle(in t$is connection- t$at t$e a(mission o& pa%+patients (oes not (etract &rom t$e c$arita*le c$aracter o& a $ospital- i& all its &un(s are (evote( e/clusivel% to t$e maintenance o& t$e institution as a pu*lic c$arit%. !n ot$er .or(s- .$ere ren(erin' c$arit% is its primar% o*Bect- an( t$e &un(s (erive( &rom pa%ments ma(e *% patients a*le to pa% are (evote( to t$e *enevolent purposes o& t$e institution- t$e mere &act t$at a pro&it $as *een ma(e .ill not (eprive t$e $ospital o& its *enevolent c$aracter. #oreover- t$e e/emption in &avor o& propert% use( e/clusivel% &or c$arita*le or e(ucational purposes is not limite( to propert% actuall% in(ispensa*le t$ere&or *ut e/ten(s to &acilities .$ic$ are inci(ental to an( reasona*l% necessar% &or t$e accomplis$ment o& sai( purposessuc$ as- in t$e case o& $ospitals- a sc$ool &or trainin' nurses- a nursesS $ome- propert% use to provi(e $ousin' &acilities &or interns- resi(ent

(octors- superinten(ents- an( ot$er mem*ers o& t$e $ospital sta&&- an( recreational &acilities &or stu(ent nurses- interns an( resi(ents. Cit$in t$e purvie. o& t$e Constitutional e/emption &rom ta/ation- t$e St. Cat$erineSs Hospital is- t$ere&ore- a c$arita*le institution- an( t$e &act t$at it a(mits pa%+patients (oes not *ar it &rom claimin' t$at it is (evote( e/clusivel% to *enevolent purposes- it *ein' a(mitte( t$at t$e income (erive( &rom pa%+patients is (evote( to t$e improvement o& t$e c$arit% .ar(s- .$ic$ represent almost t.o+t$ir(s 0;N81 o& t$e *e( capacit% o& t$e $ospital- asi(e &rom )out+c$arit% patients) .$o come onl% &or consultation. Bis$op o& "ueva Se'ovia vs. Provincial Boar( o& !locos "orte FACTS: T$e Roman Cat$olic Apostolic C$urc$ is t$e o.ner o& a parcel o& lan( in San "icolas- !locos "orte. On t$e sout$ si(e is a part o& t$e C$urc$ %ar(- t$e convent an( an a(Bacent lost use( &or a ve'eta*le 'ar(en in .$ic$ t$ere is a sta*le an( a .ell &or t$e use o& t$e convent. !n t$e center is t$e remain(er o& t$e c$urc$%ar( an( t$e C$urc$. On t$e nort$ si(e is an ol( cemeter% .it$ its t.o .alls still stan(in'- an( a portion .$ere &ormerl% stoo( a to.er. T$e provincial *oar( assesse( lan( ta/ on lots comprisin' t$e nort$ an( sout$ si(e- .$ic$ t$e c$urc$ pai( un(er protest. T$e plainti&& &ile( t$is action &or t$e recover% o& t$e sum pai( *% to t$e (e&en(ants *% .a% o& lan( ta/- alle'in' t$at t$e collection o& t$is ta/ is ille'al. T$e lo.er court a*solve( t$e (e&en(ants &rom t$e complaint in re'ar( to t$e lot a(Boinin' convent an( (eclare( t$at t$e ta/ collecte( on t$e lot- .$ic$ &ormerl% .as t$e cemeter% an( on t$e portion .$ere t$e lo.er stoo(- .as ille'al. Bot$ parties appeale( &rom t$is Bu('ment. !SS,E: C$et$er or not t$e su*Bect lots are e/empte( &rom ta/ation. HELD:YES.T$e e/emption in &avor o& t$e convent in t$e pa%ment o& lan( ta/ re&ers to t$e $ome o& t$e priest .$o presi(es over t$e c$urc$ an( .$o $as to ta<e care o& $imsel& in or(er to (isc$ar'e $is (uties. T$e e/emption inclu(es not onl% t$e lan( actuall% occupie( *% t$e C$urc$ *ut also t$e a(Bacent 'roun( (estine( to t$e or(inar% inci(ental uses o& man. A ve'eta*le 'ar(en- t$us- .$ic$ *elon's to a convent.$ere its use is limite( to t$e necessit% o& t$e priest- comes un(er t$e e/emption. Furt$er- lan( use( as a lo('in' $ouse *% t$e people .$o participate in reli'ious &estivities- .$ic$ constitutes an inci(ental use in reli'ious &unctions- li<e.ise comes .it$in t$e e/emption. !t cannot *e ta/e( accor(in' to its &ormer use- i.e. a cemeter%. T$e Bu('ment appeale( &rom is reverse( in all it parts an( it is $el( t$at *ot$ lots are e/empt &rom lan( ta/ an( t$e (e&en(ants are or(ere( to re&un( to plainti&& .$atever .as pai( as suc$ ta/- .it$out an% special pronouncement as to costs. L," CE"TER OF THE PH!L!PP!"ES vs. G,ETO" C!TY

FACTS: T$e petitioner- a non+stoc< an( non+pro&it entit% is t$e re'istere( o.ner o& a parcel o& lan( .$ere erecte( in t$e mi((le o& t$e a&oresai( lot is a $ospital <no.n as t$e Lun' Center o& t$e P$ilippines. A *i' space at t$e 'roun( &loor is *ein' lease( to private parties- &or canteen an( small store spaces- an( to me(ical or pro&essional practitioners .$o use t$e same as t$eir private clinics &or t$eir patients .$om t$e% c$ar'e &or t$eir pro&essional services. Almost one+$al& o& t$e entire area on t$e le&t si(e o& t$e *uil(in' alon' Gue>on Avenue is vacant an( i(le- .$ile a *i' portion on t$e ri'$t si(e- at t$e corner o& Gue>on Avenue an( Elliptical Roa(- is *ein' lease( &or commercial purposes

to a private enterprise <no.n as t$e Elliptical Orc$i(s an( Center.

ar(en

R,L!" : "O.Petitioner ar'ues t$at .$ile t$e income receive( *% t$e or'ani>ations enumerate( in Section ;A 0no. Section ;@1 o& t$e "!RC is- as a rule- e/empte( &rom t$e pa%ment o& ta/ )in respect to income receive( *% t$em as suc$-) t$e e/emption (oes not appl% to income (erive( )/// &rom an% o& t$eir properties- real or personal- or &rom an% o& t$eir activities con(ucte( &or pro&it- re'ar(less o& t$e (isposition ma(e o& suc$ income ///). T$e Court a'rees .it$ t$e commissioner. !n t$e instant case- t$e e/emption claime( *% t$e Y#CA is e/pressl% (isallo.e( *% t$e ver% .or(in' o& t$e last para'rap$ o& t$en Section ;A o& t$e "!RC .$ic$ man(ates t$at t$e income o& e/empt or'ani>ations 0suc$ as t$e Y#CA1 &rom an% o& t$eir properties- real or personal- *e su*Bect to t$e ta/ impose( *% t$e same Co(e. Topic: Constitutional Limitations: Ori'in o& Revenue- Appropriation an( Tarri&& Bills ABAPADA FACTS: Be&ore R.A. "o. 588A too< e&&ect- petitioners ABAPADA ,RO Part% List- et al.- &ile( a petition &or pro$i*ition on #a% ;A- ;993 7uestionin' t$e constitutionalit% o& Sections ?- 3 an( @ o& R.A. "o. 588A- amen(in' Sections 29@- 29A an( 296- respectivel%- o& t$e "ational !nternal Revenue Co(e 0"!RC1. Section ? imposes a 29O FAT on sale o& 'oo(s an( properties- Section 3 imposes a 29O FAT on importation o& 'oo(s- an( Section @ imposes a 29O FAT on sale o& services an( use or lease o& properties. T$ese 7uestione( provisions contain a uni&orm proviso aut$ori>in' t$e Presi(ent- upon recommen(ation o& t$e Secretar% o& Finance- to raise t$e FAT rate to 2;O- e&&ective 4anuar% 2- ;99@- a&ter speci&ie( con(itions $ave *een satis&ie(. Petitioners ar'ue t$at t$e la. is unconstitutional. !SS,ES: uro Part% List vs. Ermita

On 4une A- 2558- *ot$ t$e lan( an( t$e $ospital *uil(in' o& t$e petitioner .ere assesse( &or real propert% ta/es in t$e amount o& P?33?-6@9 *% t$e Cit% Assessor o& Gue>on Cit% *ut t$e &ormer &ile( a Claim &or E/emption &rom real propert% ta/es .it$ t$e Cit% Assessorpre(icate( on its claim t$at it is a c$arita*le institution. !SS,E: C$et$er or not t$e petitionerIs real properties are e/empte( &rom realt% ta/ e/emptions. HELD: Even i& t$e petitioner is a c$arita*le institution- t$ose portions o& its real propert% t$at are lease( to private entities are not e/empt &rom real propert% ta/es as t$ese are not actuall%- (irectl% an( e/clusivel% use( &or c$arita*le purposes. C$at is meant *% actual- (irect an( e/clusive use o& t$e propert% &or c$arita*le purposes is t$e (irect an( imme(iate an( actual application o& t$e propert% itsel& to t$e purposes &or .$ic$ t$e c$arita*le institution is or'ani>e(. Hence- a claim &or e/emption &rom ta/ pa%ments must *e clearl% s$o.n an( *ase( on lan'ua'e in t$e la. too plain to *e mista<en. ,n(er Section ; o& Presi(ential Decree "o. 26;8- t$e petitioner (oes not enBo% an% propert% ta/ e/emption privile'es &or its real properties as .ell as t$e *uil(in' constructe( t$ereon. !& t$e intentions .ere ot$er.ise- t$e same s$oul( $ave *een amon' t$e enumeration o& ta/ e/empt privile'es un(er Section ;. Accor(in'l%- t$e portions occupie( *% t$e $ospital use( &or its patients are e/empt &rom real propert% ta/es .$ile t$ose lease( to private entities are not e/empt &rom suc$ ta/es.

Topic: Constitutional Limitations: Ta/ E/emption o& "on+stoc< non+ pro&it E(ucational !nstitutions Commissioner o& !nternal Revenue v. Court o& Appeals an( Y#CA FACTS:

C$et$er or not t$ere is a violation o& Article F!- Section ;? o& t$e Constitution. C$et$er or not t$ere is un(ue (ele'ation o& le'islative po.er in violation o& Article F! Sec ;60;1 o& t$e Constitution. R,L!" :

Private Respon(ent Y#CA is a non+stoc<- non+pro&it institution- .$ic$ con(ucts various pro'rams an( activities t$at are *ene&icial to t$e pu*lic- especiall% t$e %oun' people- pursuant to its reli'iouse(ucational an( c$arita*le o*Bectives. !n 2569- private respon(ent earne(- amon' ot$ers- an income o& P@A@- 6;5.69 &rom leasin' out a portion o& its premises to small s$op o.ners- li<e restaurants an( canteen operators- an( P??-;35.99 &rom par<in' &ees collecte( &rom non+mem*ers. On 4ul% ;- 256?- t$e Commissioner o& !nternal Revenue 0C!R1 issue( an assessment to private respon(ent- in t$e total amount o& [email protected] inclu(in' surc$ar'e an( interest- &or (e&icienc% income ta/- (e&icienc% e/pan(e( .it$$ol(in' ta/es on rentals an( pro&essional &ees an( (e&icienc% .it$$ol(in' ta/ on .a'es. Private respon(ent &ormall% proteste( t$e assessment an(- as a supplement to its *asic protest- &ile( a letter (ate( Octo*er 6- 2563. !n repl%- t$e C!R (enie( t$e claims o& Y#CA. Contestin' t$e (enial o& its protest- t$e Y#CA &ile( a petition &or revie. at t$e Court o& Ta/ Appeals on #arc$ 2?2565. !n (ue course- t$e CTA issue( t$is rulin' in &avor o& t$e Y#CA. !SS,E: C$et$er or not t$e Y#CA is e/empte( &rom rental income (erive( &rom t$e lease o& its properties

2. Since t$ere is no 7uestion t$at t$e revenue *ill e/clusivel% ori'inate( in t$e House o& Representatives- t$e Senate .as actin' .it$in its constitutional po.er to intro(uce amen(ments to t$e House *ill .$en it inclu(e( provisions in Senate Bill "o. 2539 amen(in' corporate income ta/es- percenta'e- an( e/cise an( &ranc$ise ta/es. ;. T$ere is no un(ue (ele'ation o& le'islative po.er *ut onl% o& t$e (iscretion as to t$e e/ecution o& a la.. T$is is constitutionall% permissi*le. Con'ress (oes not a*(icate its &unctions or un(ul% (ele'ate po.er .$en it (escri*es .$at Bo* must *e (one- .$o must (o it- an( .$at is t$e scope o& $is aut$orit%: in our comple/ econom% t$at is &re7uentl% t$e onl% .a% in .$ic$ t$e le'islative process can 'o &or.ar(. 8. T$e po.er o& t$e State to ma<e reasona*le an( natural classi&ications &or t$e purposes o& ta/ation $as lon' *een esta*lis$e(. C$et$er it relates to t$e su*Bect o& ta/ation- t$e <in( o& propert%- t$e rates to *e levie(- or t$e amounts to *e raise(- t$e met$o(s o& assessment- valuation an( collection- t$e StateIs po.er is entitle( to presumption o& vali(it%. As a rule- t$e Bu(iciar% .ill not inter&ere .it$ suc$ po.er a*sent a clear s$o.in' o& unreasona*leness(iscrimination- or ar*itrariness.

Topic: Forms o& Escape &rom Ta/ation REP,BL!C OF THE PH!L!PP!"ES vs. HE!RS OF CESAR 4ALA"DO"!- ET AL. FACTS: !sa*el Le(esma (ie( intestate leavin' real properties situate( in t$e provinces o& "e'ros Occi(ental an( Ri>al an( in t$e cities o& #anila an( Ba'uio- an( personal properties consistin' o& s$ares o& stoc< in various (omestic corporations. S$e le&t as $eirs $er $us*an( Bernar(ino an( t$ree c$il(ren- namel%- Cesar- An'eles an( Del&in. Cesar- one o& t$e $eirs- &ile( an estate an( in$eritance ta/ return an( t$is return also s$o.s t$at no testamentar% or intestate procee(in's .ere institute(. On t$e *asis o& t$is return t$e Bureau o& !nternal Revenue ma(e an assessment as estate an( in$eritance ta/esrespectivel%- statin' t$erein t$at t$e assessment .as )to *e consi(ere( partial pen(in' investi'ation o& t$e return.) T$ese sums .ere pai( *% Cesar. A&ter a preliminar% investi'ation .as ma(e o& t$e properties reporte( in t$e a*ovementione( return- a secon( assessment .as ma(e *% t$e Bureau o& !nternal Revenue as (e&icienc% estate an( in$eritance ta/es- respectivel%- &or .$ic$ reason a (eman( .as ma(e on Bernar(ino statin' t$erein t$at t$e same .as still )to *e consi(ere( partial pen(in' &urt$er investi'ation o& t$e return-) .$ic$ amounts .ere pai( *% Bernar(ino. T$e t$ir( assessment .as ma(e a'ainst t$e estate .$erein t$e $eirs .ere re7uire( to pa% t$e amounts o& P;5-553.89 an( P?5-6?;.93 as (e&icienc% estate an( in$eritance ta/es- respectivel%- inclu(in' accrue( interests- .it$ t$e .arnin' t$at &ailure on t$eir part to pa% t$e same .oul( su*Bect t$em to t$e pa%ment o& surc$ar'e- interest- an( penalt% &or late pa%ment o& t$e ta/. !SS,E: C$et$er or not t$e $eirs o& t$e (ecease( $ave committe( an% act in(icative o& an intention to eva(e t$e pa%ment o& t$e in$eritance or estate ta/es (ue t$e 'overnment HELD: Recor( s$o.s t$at t$e t$ree lots alle'e( to $ave *een e/clu(e( in t$e return .ere alrea(% (eclare( in t$e earlier return su*mitte( *% Bernar(ino 4alan(oni as part o& $is propert% an( $is .i&e &or purposes o& income ta/- t$ere is reason to *elieve t$at t$eir omission &rom t$e return su*mitte( *% Cesar 4alan(oni .as merel% (ue to an $onest mista<e or ina(vertence as properl% e/plaine( *% appellants. Ce can $ar(l% (ispute t$is conclusion as it .oul( *e stretc$in' too muc$ t$e ima'ination i& .e .oul( &in( t$at- *ecause o& suc$ ina(vertence- .$ic$ appears to *e inconse7uential- t$e $eirs o& t$e (ecease( (eli*eratel% omitte( &rom t$e return t$e t$ree lots .it$ t$e onl% purpose o& (e&rau(in' t$e 'overnment a&ter (eclarin' t$erein as asset o& t$e estate propert% .ort$ P2-8;?-333.69. T$e same t$in' ma% *e sai( .it$ re'ar( to t$e alle'e( un(ervaluation o& certain su'ar an( rice lan(s reporte( *% Cesar 4alan(oni &or t$e same can at most *e consi(ere( as t$e result o& an $onest (i&&erence o& opinion an( not necessaril% an intention to commit &rau(. Finall%- SC &in(s it unreasona*le to impute .it$ re'ar( to t$e appraisal ma(e *% appellants o& t$e s$ares o& stoc< o& t$e (ecease( simpl% *ecause Cesar 4alan(oni place( in $is return an a''re'ate mar<et value instea( o& mentionin' t$e *oo< value (eclare( *% sai( corporations in t$e returns &ile( *% t$em .it$ t$e Bureau o& !nternal Revenue. T$e &act t$at t$e value 'iven in t$e returns (i( not tall% .it$ t$e *oo< value appearin' in t$e corporate *oo<s is not in itsel& in(icative o& &rau( especiall% .$en it is ta<en into consi(eration t$e circumstance t$at sai( *oo< value onl% *ecame <no.n several mont$s a&ter t$e (eat$ o& t$e (ecease(. #oreover- it is a <no.n &act t$at stoc<

securities &re7uentl% &luctuate in value an( a mere (i&&erence o& opinion in relation t$ereto cannot serve as proper *asis &or assessin' an intention to (e&rau( t$e 'overnment. Havin' reac$e( t$e conclusion t$at t$e $eirs o& t$e (ecease( $ave not committe( an% act in(icative o& an intention to eva(e t$e pa%ment o& t$e in$eritance or estate ta/es (ue t$e 'overnment- as evi(ence( *% t$eir .illin'ness in t$e past to pa% all t$e ta/es properl% assesse( a'ainst t$em- it is evi(ent t$at t$e instant claim o& appellee $as alrea(% prescri*e( un(er Section 882 o& t$e "ational !nternal Revenue Co(e. An( .it$ t$is conclusion- a (iscussion o& t$e ot$er errors assi'ne( *% appellants .oul( seem to *e unnecessar%. Topic: Forms o& Escape &rom Ta/ation Y,T!FO SO"S HARDCARE CO#PA"Y vs. CO,RT OF TAH APPEALS FACTS: Petitioner .as en'a'e(- prior to t$e last .orl( .ar- in t$e importation an( sale o& $ar(.are supplies an( e7uipment. A&ter t$e li*eration- it resume( its *usiness an( *ou'$t a num*er o& cars an( truc<s &rom eneral #otors Overseas- an American corporation license( to (o *usiness in t$e P$ilippines. As importer- # pai( sales ta/ prescri*e( *% sections 26?- 263 an( 26@ o& t$e Ta/ Co(e on t$e *asis o& its sellin' price to Yutivo. Sai( ta/ *ein' collecte( onl% once on ori'inal sales- Yutivo pai( no &urt$er sales ta/ on its sales to t$e pu*lic. On 4une 28- 25?@- t$e Sout$ern #otors- !nc. 0S#1 .as or'ani>e( to en'a'e in t$e *usiness o& sellin' cars- truc<s an( spare parts. !ts ori'inal aut$ori>e( capital stoc< .as P2-999-999 (ivi(e( into 29-999 s$ares .it$ a par value o& P299 eac$. A&ter t$e incorporation o& S# an( until t$e .it$(ra.al o& # &rom t$e P$ilippines in t$e mi((le o& 25?A- t$e cars an( trac<s purc$ase( *% Yutivo &rom # .ere sol( *% Yutivo to S# .$ic$- in turn- sol( t$em to t$e pu*lic in t$e Fisa%as an( #in(anao. C$en eneral #otors Overseas Corporation 0 #1 (eci(e( to .it$(ra. &rom t$e P$ilippines in t$e mi((le o& 25?A- t$e ,.S. manu&acturer o& # cars an( truc<s appointe( Yutivo as importer &or t$e Fisa%as an( #in(anao- an( Yutivo continue( its previous arran'ement o& sellin' e/clusivel% to Sout$ern #otors- !nc. 0S#1. !n t$e same .a% t$at # use( to pa% sales ta/es *ase( on its sales to Yutivo- t$e latter- as importer- pai( sales ta/ prescri*e( on t$e *asis o& its sellin' price to S#- an( since suc$ sales ta/- as alrea(% state(- is collecte( onl% once on ori'inal sales- S# pai( no sales ta/ on its sales to t$e pu*lic. T$e Collector o& !nternal Revenue ma(e an assessment upon Yutivo an( (eman(e( &rom t$e latter [email protected] as (e&icienc% sales ta/ plus surc$ar'e. T$e assessment .as (ispute( *% t$e petitioner. !SS,ES: 2. ;. C$et$er or not &rau( is present. C$et$er or not imposition o& 3O &rau( surc$ar'e is correct.

8. C$et$er or not sales ta/ alrea(% pai( *% Yutivo s$oul( &irst *e (e(ucte( &rom t$e sellin' price o& S# in computin' t$e sales ta/ (ue on eac$ ve$icle HELD: 2. "O. T$e Court incline( to rule t$at t$e Court o& Ta/ Appeals .as not Busti&ie( in &in(in' t$at S# .as or'ani>e( &or no ot$er purpose t$an to (e&rau( t$e overnment o& its la.&ul revenues. !n t$e &irst place- t$is corporation .as or'ani>e( in 4une- 25?@ .$en it coul( not

$ave cause( Yutivo an% ta/ savin's. T$e sales ta/ lia*ilit% o& Yutivo (i( not arise until 4ul% 2- 25?A .$en it *ecame t$e importer an( simpl% continue( its practice o& sellin' to S#. T$e (ecision- t$ere&ore- o& t$e Ta/ Court t$at S# .as or'ani>e( purposel% as a ta/ evasion (evice runs counter to t$e &act t$at t$ere .as no ta/ to eva(e. !n t$e secon( place- S# .as or'ani>e( an( it operate(- un(er circumstance t$at *elie( an% intention to eva(e sales ta/es. T$e transactions *et.een Yutivo an( S#- $o.ever- $ave al.a%s *een in t$e open- em*o(ie( in private an( pu*lic (ocuments- constantl% su*Bect to inspection *% t$e ta/ aut$orities. !n t$e t$ir( place- sections 26? to 26@ o& t$e sai( Co(e provi(es t$at t$e sales ta/ s$all *e collecte( )once onl% on ever% ori'inal sale- *arter- e/c$an'e . . - to *e pai( *% t$e manu&acturerpro(ucer or importer.) !n t$is connection- it s$oul( *e state( t$at a ta/pa%er $as t$e le'al ri'$t to (ecrease t$e amount o& .$at ot$er.ise .oul( *e $is ta/es or alto'et$er avoi( t$em *% means .$ic$ t$e la. permits. ;. "O. T$e Court &oun( merit in petitionerSs contention t$at t$e Court o& Ta/ Appeals erre( in t$e imposition o& t$e 3O &rau( surc$ar'e *ecause no element o& &rau( is present. Pursuant to Section 268 o& t$e "ational !nternal Revenue Co(e t$e 39O surc$ar'e s$oul( *e a((e( to t$e (e&icienc% sales ta/ )in case a &alse or &rau(ulent return is .ill&ull% ma(e.) Alt$ou'$ t$e sales ma(e *% S# are in su*stance *% Yutivo t$is (oes not necessaril% esta*lis$ &rau( nor t$e .ill&ul &ilin' o& a &alse or &rau(ulent return. 8. "O. T$e Court li<e.ise &oun( t$at t$e Ta/ Court erre( in computin' t$e alle'e( (e&icienc% sales ta/ on t$e sellin' price o& S# .it$out previousl% (e(uctin' t$ere&rom t$e sales ta/ (ue t$ereon. T$e sales ta/ provisions impose a ta/ on ori'inal sales measure( *% )'ross sellin' price) or )'ross value in mone%). T$ese terms- as interprete( *% t$e respon(ent Collector- (o not inclu(e t$e amount o& t$e sales ta/- i& invoice( separatel%. T$is is t$e e/act amount .$ic$- accor(in' to Presi(in' 4u('e "a*le o& t$e Court o& Ta/ Appeals- Yutivo .oul( pa%e/clusive o& t$e surc$ar'es. Topic: Forms o& Escape &rom Ta/ation CO##!SS!O"ER OF !"TER"AL REFE",E vs. "ORTO" an( HARR!SO" CO#PA"Y FACTS: ,n(er (ate o& 4ul% ;A- 25?6. "orton an( 4ac<*ilt entere( into an a'reement .$ere*% "orton .as ma(e t$e sole an( e/clusive (istri*utor o& concrete *loc<s manu&acture( *% 4ac<*ilt. Pursuant to t$is a'reement- .$enever an or(er &or concrete *loc<s .as receive( *% t$e "orton M Harrison Co. &rom a customer- t$e or(er .as transmitte( to 4ac<*ilt .$ic$ (elivere( t$e merc$an(ise (irect to t$e customer. Pa%ment &or t$e 'oo(s is- $o.ever- ma(e to "orton- .$ic$ in turn pa%s 4ac<*ilt t$e amount c$ar'e( t$e customer less a certain amount- as its compensation or pro&it. !n t$e case o& t$e sale o& ?;9 pieces o& concrete *loc<s to t$e American Buil(ers on April 2- 253;t$e purc$aser pai( to "orton t$e sum o& P265.99 t$e purc$ase price. Out o& t$is amount "orton pai( 4ac<*ilt [email protected] t$e (i&&erence o*viousl% *ein' its compensation. As per recor(s o& 4ac<*ilt- t$e transaction .as consi(ere( a sale to "orton. !t .as un(er t$is proce(ure t$at t$e sale o& concrete *loc<s manu&acture( *% 4ac<*ilt .as con(ucte( until #a% 2- 2538- .$en t$e a'enc% a'reement .as terminate( an( a mana'ement a'reement *et.een t$e parties .as entere( into. T$e mana'ement a'reement provi(e( t$at "orton .oul( sell concrete *loc<s &or 4ac<*ilt- &or a &i/e( mont$l% &ee o& P;-999.99.$ic$ .as later increase( to P3-999.99. T$e Commissioner o& !nternal Revenue- a&ter con(uctin' an investi'ation- assesse( t$e respon(ent "orton M Harrison &or (e&icienc% sales ta/ an( surc$ar'es in t$e amount o& P8;-@@;.59ma<in' as *asis t$ereo& t$e sales o& "orton to t$e Pu*lic. !n ot$er

.or(s- t$e Commissioner consi(ere( t$e sale o& "orton to t$e pu*lic as t$e ori'inal salean( not t$e transaction &rom 4ac<*ilt. !SS,E: C$et$er t$e *asis o& t$e computation o& t$e (e&icienc% sales ta/ s$oul( *e t$e sale o& t$e *loc<s to t$e pu*lic an( not to "orton. HELD: !& t$e income o& "orton s$oul( *e consi(ere( separate &rom t$e income o& 4ac<*ilt- t$en eac$ .oul( (eclare suc$ earnin' separatel% &or income ta/ purposes an( t$us pa% lesser income ta/. T$e com*ine( ta/a*le "orton+4ac<*ilt income .oul( su*Bect "orton to a $i'$er ta/. Base( upon t$e 253?+2533 income ta/ return o& "orton an( 4ac<*ilt - an( assumin' t$at *ot$ o& t$em are operatin' on t$e same &iscal *asis an( t$eir returns are accurate- .e .oul( $ave t$e &ollo.in' result: 4ac<*ilt (eclare( a ta/a*le net income o& P2@2-;9;.82 in .$ic$ t$e income ta/ (ue .as compute( at P8A-28A.99: .$ereas "orton (eclare( as ta/a*le- a net income o& P2;9-292.35- on .$ic$ t$e income ta/ (ue .as compute( at P;3-@;6.99. T$e total o& t$ese lia*ilities is P39-A@?.6?. On t$e ot$er $an(- i& t$e net ta/a*le earnin's o& *ot$ corporations are com*ine(- (urin' t$e same ta/a*le %ear- t$e ta/ (ue on t$eir total .$ic$ is P;62-898.59 .oul( *e PA9-A@?.99. So t$at- even on t$e 7uestion o& income ta/ alone- it .oul( *e to t$e a(vanta'es o& "orton t$at t$e corporations s$oul( *e re'ar(e( as separate entities. PH!L!PP!"E ACETYLE"E CO.- !"C. vs. C!R an( CO,RT OF TAH APPEALS FACTS: T$e petitioner is a corporation en'a'e( in t$e manu&acture an( sale o& o/%'en an( acet%lene 'ases. !t ma(e various sales o& its pro(ucts to t$e "ational Po.er Corporation an( to t$e Foice o& America an a'enc% o& t$e ,nite( States overnment. T$e sales to t$e "PC amounte( to P2?3- 6@@.A9- .$ile t$ose to t$e FOA amounte( to P2-@68- on account o& .$ic$ t$e respon(ent Commission o& !nternal Revenue assesse( a'ainst- an( (eman(e( &rom- t$e petitioner t$e pa%ment o& P2;-529.@9 as (e&icienc% sales ta/ an( surc$ar'e- pursuant to t$e Sec.26@ o& t$e "ational !nternal Revenue Co(e. T$e petitioner (enie( lia*ilit% &or t$e pa%ment o& t$e ta/ on t$e 'roun( t$at *ot$ t$e "PC an( t$e FOA are e/empt &rom ta/ation. !SS,E: C$et$er or not petitioner is e/empt &rom pa%in' ta/ on sales it ma(e to t$e: 21 ;1 HELD: 21 "O. "PC FOA

SC $ol(s t$at t$e ta/ impose( *% section 26@ o& t$e "ational !nternal Revenue Co(e is a ta/ on t$e manu&acturer or pro(ucer an( not a ta/ on t$e purc$aser e/cept pro*a*l% in a ver% remote an( inconse7uential sense. Accor(in'l% its lev% on t$e sales ma(e to ta/+e/empt entities li<e t$e "PC is permissi*le. ;1 "O.

Onl% sales ma(e )&or e/clusive use in t$e construction- maintenanceoperation or (e&ense o& t$e *ases-) in a .or(- onl% sales to t$e

7uartermaster- are e/empt un(er Article F &rom ta/ation. Sales o& 'oo(s to an% ot$er part% even i& it *e an a'enc% o& t$e ,nite( Statessuc$ as t$e FOA- or even to t$e 7uartermaster *ut &or a (i&&erent purpose- are not &ree &rom t$e pa%ment o& t$e ta/. Commissioner vs. American Ru**er FACTS: American Ru**er Compan% sol( its ru**er pro(ucts locall% an( as prescri*e( *% t$e CommissionerIs re'ulation- t$e compan% (eclare( t$e same &or ta/ purposes in .$ic$ t$e Commissioner accor(in'l% assesse(. T$e compan% pai( un(er protest t$e correspon(in' sales ta/es t$ereon- claimin' e/emption un(er Section 266 0*1 o& t$e Ta/ Co(e- an( su*se7uentl% claime( re&un(. Cit$ t$e Commissioner re&usin' to (o so- t$e case .as *rou'$t *e&ore t$e Court o& Ta/ Appeals- .$ic$ up$el( t$e CommissionerIs stan( t$at t$e compan% is not entitle( to recover t$e sales ta/ t$at $a( *een separatel% *ille( to its customers- an( pai( *% t$e latter. !SS,E: C$et$er t$e compan% can recover t$e sales ta/ pai(. HELD: "O. T$e sales ta/ is *% la. impose( (irectl%- not on t$e t$in' sol(- *ut on t$e act 0sale1 o& t$e manu&acturer- pro(ucer- or importer- .$o is e/clusivel% ma(e lia*le &or its timel% pa%ment. C$ere t$e ta/ mone% pai( *% t$e compan% came &rom is reall% no concern o& t$e overnment- *ut solel% a matter *et.een t$e compan% an( its customers. Once recovere(- t$e compan% must $ol( t$e re&un(e( ta/es in trust &or t$e in(ivi(ual purc$asers .$o a(vance( pa%ment t$ereo&- an( .$ose names must appear in compan% recor(s. Hereint$e compan% sales *et.een ;? Au'ust 253@ 0approval o& RA 2@2;1 to ;; 4une 253A 0.$en RA 263@ restore( t$e e/emption o& a'ricultural pro(ucts J.$et$er in t$eir ori'inal &orm or notK1 .ere properl% ta/e(. Suc$ amount correspon(in' to t$e perio( is not recovera*le. CO##!SS!O"ER OF !"TER"AL REFE",E vs. 4OH" SO"S- !"C. an( THE CO,RT OF TAH APPEALS FACTS: T$e Corl( Healt$ Or'ani>ation 0CHO &or s$ort1 is an international or'ani>ation .$ic$ $as a re'ional o&&ice in #anila. An a'reement .as entere( into *et.een t$e Repu*lic o& t$e P$ilippines an( t$e sai( Or'ani>ation on 4ul% ;;- 2532. Section 22 o& t$at A'reement provi(esinter alia- t$at )t$e Or'ani>ation- its assets- income an( ot$er properties s$all *e: 0a1 e/empt &rom all (irect an( in(irect ta/es.K T$e CHO (eci(e( to construct a *uil(in' to $ouse its o.n o&&ices- as .ell as t$e ot$er ,nite( "ations o&&ices statione( in #anila. A *i((in' .as $el( &or t$e *uil(in' construction. T$e CHO in&orme( t$e *i((ers t$at t$e *uil(in' to *e constructe( *elon'e( to an international or'ani>ation e/empte( &rom t$e pa%ment o& all &ees- licenses- an( ta/es- an( t$at t$ere&ore t$eir *i(s )must ta<e t$is into account an( s$oul( not inclu(e items &or suc$ ta/es- licenses an( ot$er pa%ments to overnment a'encies.) T$erea&ter- t$e construction contract .as a.ar(e( to 4o$n otamcoM Sons- !nc. 0 otamco &or s$ort1. Su*se7uentl%- t$e Commissioner o& !nternal Revenue sent a letter o& (eman( to otamco (eman(in' pa%ment o& &or t$e 8O contractorSs ta/ plus surc$ar'es on t$e 'ross receipts it receive( &rom t$e CHO in t$e construction o& t$e latterSs *uil(in'. CHO. T$e CHO issue( a certi&ication t$at t$e *i( o& 4o$n otamcoMSons- s$oul( *e e/empte( &rom an% ta/es in connection .it$ t$e construction o& t$e Corl( Healt$ Or'ani>ation o&&ice *uil(in' *ecause suc$ can *e consi(ere( as an in(irect ta/ to OTA#CO M

CHO. Ho.ever- T$e Commissioner o& !nternal Revenue conten(s t$at t$e 8O contractorSs ta/ is not a (irect nor an in(irect ta/ on t$e CHO*ut a ta/ t$at is primaril% (ue &rom t$e contractor- an( t$us not covere( *% t$e ta/ e/emption a'reement. !SS,E: C$et$er or not t$e sai( 8O contractorIs ta/ impose( upon petitioner is covere( *% t$e J(irect an( in(irect ta/ e/emptionK 'rante( to CHO *% t$e 'overnment. ELD: YES. T$e 8O contractorIs ta/ impose( upon petitioner is covere( *% t$e J(irect an( in(irect ta/ e/emptionK 'rante( to CHO. Hence- petitioner cannot *e $el( lia*le &or suc$ contractorIs ta/. T$e Supreme Court e/plaine( t$at (irect ta/es are t$ose t$at are (eman(e( &rom t$e ver% person .$o- it is inten(e( or (esire(- s$oul( pa% t$em: .$ile in(irect ta/es are t$ose t$at are (eman(e( in t$e &irst instance &rom one person in t$e e/pectation an( intention t$at $e can s$i&t t$e *ur(en to someone else. C$ile it is true t$at t$e contractorSs ta/ is pa%a*le *% t$e contractor- Ho.ever in t$e last anal%sis it is t$e o.ner o& t$e *uil(in' t$at s$oul(ers t$e *ur(en o& t$e ta/ *ecause t$e same is s$i&te( *% t$e contractor to t$e o.ner as a matter o& sel&+preservation. T$us- it is an in(irect ta/ a'ainst t$e CHO *ecause- alt$ou'$ it is pa%a*le *% t$e petitioner- t$e latter can s$i&t its *ur(en on t$e CHO. !t is t$e CHO t$at .ill pa% t$e ta/ in(irectl% t$rou'$ t$e contractor an( it certainl% cannot *e sai( t$at St$is ta/ $as no *earin' upon t$e Corl( Healt$ Or'ani>ation. Accor(in'l%- &in(in' no reversi*le error committe( *% t$e respon(ent Court o& Ta/ Appeals- t$e Supreme Court a&&irme( t$e appeale( (ecision. #ACEDA vs. #ACARA! - 4R.- et al. FACTS: Common.ealt$ Act "o. 2;9 create( t$e "PC as a pu*lic corporation to un(erta<e t$e (evelopment o& $%(raulic po.er an( t$e pro(uction o& po.er &rom ot$er sources. Several la.s .ere enacte( 'rantin' "PC ta/ an( (ut% e/emption privile'es suc$ as ta/es- (uties- &ees- impostsc$ar'es an( restrictions o& t$e Repu*lic o& t$e P$ilippines- its provinces- cities an( municipalities )(irectl% or in(irectl%-) on all petroleum pro(ucts use( *% "PC in its operation. Ho.ever P.D. "o. 2582 .it$(re. all ta/ e/emption privile'es 'rante( in &avour o& 'overnment+o.ne( or controlle( corporations inclu(in' t$eir su*si(iaries *ut empo.ere( t$e Presi(ent an(Nor t$e t$en #inister o& Finance- upon recommen(ation o& t$e F!RB to restore- partiall% or totall%- t$e e/emption .it$(ra.n. B!R rule( t$at t$e e/emption privile'e enBo%e( *% "PC un(er sai( section covers onl% ta/es &or .$ic$ it is (irectl% lia*le an( not on ta/es .$ic$ are onl% s$i&te( to it. !n 256@- B!R Commissioner Tan- 4r. states t$at all (eliveries o& petroleum pro(ucts to "PC are ta/ e/empt- re'ar(less o& t$e perio( o& (eliver%. T$erea&ter- t$e F!RB issue( several Resolutions in (i&&erent occasions restorin' t$e ta/ an( (ut% e/emption privile'es o& "PC in(e&inite perio( (ue to t$e restoration o& t$e ta/ e/emption privile'es o& "PC- "PC applie( .it$ t$e B!R &or a )re&un( o& Speci&ic Ta/es pai( on petroleum pro(ucts. On Au'ust @- 256A- t$e Secretar% o& 4usticeOpinion opine( t$at )t$e po.er con&erre( upon Fiscal !ncentives Revie. Boar( constitute un(ue (ele'ation o& le'islative po.er an(t$ere&ore- unconstitutional. Ho.ever- respon(ents Finance Secretar% an( t$e E/ecutive Secretar% (eclare( t$at )"PC un(er t$e provisions o& its Revise( C$arter retains its e/emption &rom (uties an( ta/es impose( on t$e petroleum pro(ucts purc$ase( locall% an( use( &or t$e 'eneration o& electricit%. T$erea&ter investi'ations .ere ma(e &or t$e re&un( o& t$e ta/ pa%ments o& t$e "PC .$ic$ inclu(es #illions o& pesos

Ta/ re&un(. Petitioner- as mem*er o& t$e P$ilippine Senate intro(uce( as Resolution Directin' t$e Senate Blue Ri**on Committee- !n Ai( o& Le'islation- to con(uct a Formal an( E/tensive !n7uir% into t$e Reporte( #assive Ta/ #anipulations an( Evasions *% Oil Companiesparticularl% Calte/ 0P$ils.1 !nc.- Pilipinas S$ell an( Petrop$il- C$ic$ Cere #a(e Possi*le B% T$eir Availin' o& t$e "on+E/istin' E/emption o& "ational Po.er Corporation 0"PC1 &rom !n(irect Ta/es- Resultin' Recentl% in T$eir O*tainin' A Ta/ Re&un( Totallin' P2.33 Billion From t$e Department o& Finance. !SS,E: C$et$er or not respon(ent "PC is le'all% entitle( to t$e 7uestione( ta/ an( (ut% re&un(s. HELD: YES. !n .R. "o. "o. 66;52 t$e Supreme Court rule( in &avour o& e/emptin' "PC to t$e sai( ta/es. Also in .R. "o. "o. 66;52 t$e Supreme Court rule( in &avour o& respon(ents. "PC un(er t$e provisions o& its Revise( C$arter retains its e/emption &rom (uties an( ta/es impose( on t$e petroleum pro(ucts purc$ase( locall% an( use( &or t$e 'eneration o& electricit%. Presi(ential Decree "o. 586 amen(e( t$e ta/ e/emption o& "PC *% simpli&%in' t$e same la. in 'eneral terms. !t succinctl% e/empts "PC &rom )all &orms o& ta/es- (uties- &ees- imposts- as .ell as costs an( service &ees inclu(in' &ilin' &ees- appeal *on(s- superse(eas *on(s- in an% court or a(ministrative procee(in's.) t$e "PC electric po.er rates (i( not carr% t$e ta/es an( (uties pai( on t$e &uel oil it use(. T$e point is t$at .$ile t$ese levies .ere in &act pai( to t$e 'overnment- no part t$ereo& .as recovere( &rom t$e sale o& electricit% pro(uce(. As a conse7uence- as o& our most recent in&ormation- some P2.33 B in claims represents amounts &or .$ic$ t$e oil suppliers an( "PC are )out+o&+poc<et. T$ere .oul( $ave to *e speci&ic or(er to t$e Bureaus concerne( &or t$e resumption o& t$e processin' o& t$ese claims. CO##!SS!O"ER OF !"TER"AL REFE",E vs. PLDT FACTS: PLDT is a 'rantee o& a &ranc$ise un(er Repu*lic Act 0R.A.1 "o. A96; to install- operate an( maintain a telecommunications s%stem t$rou'$out t$e P$ilippines.For e7uipment- mac$ineries an( spare parts it importe( &or its *usiness on (i&&erent (ates &rom Octo*er 2- 255; to #a% 82- 255?- PLDT pai( t$e B!R t$e amount o& P2@?-329-538.99*ro<en (o.n as &ollo.s: 0a1 compensatin' ta/ o& P2;@-A28-98A.99: a(vance sales ta/ o& P2;-?@9-;25.99 an( ot$er internal revenue ta/es o& P;[email protected]. For similar importations ma(e *et.een #arc$ 255? to #a% 82- 255?- PLDT pai( P22@-9?2-888.99 value+a((e( ta/ 0FAT1. PLDT &ile( on Decem*er ;- 255? a claim&or ta/ cre(itNre&un( o& t$e FAT- compensatin' ta/es- a(vance sales ta/es an( ot$er ta/es it $a( *een pa%in' Jin connection .it$ its importation o& various e7uipmentmac$ineries an( spare parts nee(e( &or its operationsK. Cit$ its claim not $avin' *een acte( upon *% t$e B!R- PLDT &ile( .it$ t$e CTA a petition &or revie. t$erein see<in' a re&un( o&- or t$e issuance o& a ta/ cre(it certi&icate in- t$e amount o& P;69-33;-;[email protected] representin' compensatin' ta/es- a(vance sales ta/es- FAT an( ot$er internal revenue ta/es alle'e( to $ave *een erroneousl% pai( on its importations &rom Octo*er 255; to #a% 255?. T$e CTA 'rante( t$e PLDTIs petition. T$e CA (ismisse( t$e B!RIs petition- t$ere*% e&&ectivel% a&&irmin' t$e CTAIs Bu('ment. !SS,E:

C$et$er or not respon(ent is e/empt &rom t$e pa%ment o& FAT- compensatin' ta/es- a(vance sales ta/es an( ot$er B!R ta/es on its importations *% virtue o& t$e provision in its &ranc$ise t$at t$e 8O &ranc$ise ta/ on its 'ross receipts s$all *e in lieu o& all ta/es on its &ranc$ise or earnin's t$ereo&. HELD: "O. T$ere can *e no serious ar'ument t$at PLDT- vis+U+vis its pa%ment o& internal revenue ta/es on its importations in 7uestion- is e&&ectivel% claimin' e/emption &rom ta/es not &allin' un(er t$e cate'or% o& (irect ta/es. T$e claim covers FAT- a(vance sales ta/ an( compensatin' ta/. !t *ears to stress t$at t$e lia*ilit% &or t$e pa%ment o& t$e in(irect ta/es lies onl% .it$ t$e seller o& t$e 'oo(s or services- not in t$e *u%er t$ereo&. T$us- one cannot invo<e oneIs e/emption privile'e to avoi( t$e passin' on or t$e s$i&tin' o& t$e FAT to $im *% t$e manu&acturersNsuppliers o& t$e 'oo(s $e purc$ase(. Hence- it is important to (etermine i& t$e ta/ e/emption 'rante( to a ta/pa%er speci&icall% inclu(es t$e in(irect ta/ .$ic$ is s$i&te( to $im as part o& t$e purc$ase price- ot$er.ise it is presume( t$at t$e ta/ e/emption em*races onl% t$ose ta/es &or .$ic$ t$e *u%er is (irectl% lia*le. As ma% *e note(- t$e clause Jin lieu o& all ta/esK in Section 2; o& RA A96; is imme(iatel% &ollo.e( *% t$e limitin' or 7uali&%in' clause Jon t$is &ranc$ise or earnin's t$ereo&K- su''estin' t$at t$e e/emption is limite( to ta/es impose( (irectl% on PLDT since ta/es pertainin' to PLDTIs &ranc$ise or earnin's are its (irect lia*ilit%. Accor(in'l%- in(irect ta/es- not *ein' ta/es on PLDTIs &ranc$ise or earnin's- are outsi(e t$e purvie. o& t$e Jin lieuK provision. All tol(- t$e Court &ails to see $o. Section 2; o& RA A96; operates as 'rantin' PLDT *lan<et e/emption &rom pa%ment o& in(irect ta/es- .$ic$- in t$e ultimate anal%sis- are not ta/es on its &ranc$ise or earnin's. PLDT $as not s$o.n its eli'i*ilit% &or t$e (esire( e/emption. S!LPA!R 0S!" APORE1 PTE- LTD. vs.CO##!SS!O"ER OF !"TER"AL REFE",E FACTS: Petitioner- Sil<air 0Sin'apore1 Pte. Lt(. 0Sil<air1- a corporation or'ani>e( un(er t$e la.s o& Sin'apore .$ic$ $as a P$ilippine representative o&&ice- is an online international air carrier operatin' t$e Sin'apore+Ce*u+Davao+Sin'apore- Sin'apore+Davao+Ce*u+ Sin'apore- an( Sin'apore+Ce*u+Sin'apore routes. On Decem*er 25;992- Sil<air &ile( .it$ t$e Bureau o& !nternal Revenue 0B!R1 a .ritten application &or t$e re&un( o& P?-3@A-?39.A5 e/cise ta/es it claime( to $ave pai( on its purc$ases o& Bet &uel &rom Petron Corporation &rom 4anuar% to 4une ;999. As t$e B!R $a( not %et acte( on t$e application as o& Decem*er ;@;992- Sil<air &ile( a Petition &or Revie.*e&ore t$e CTA. B% Decision o& #a% ;A- ;993- t$e CTA (enie( Sil<airIs petition on t$e 'roun( t$at as t$e e/cise ta/ .as impose( on Petron Corporation as t$e manu&acturer o& petroleum pro(ucts- an% claim &or re&un( s$oul( *e &ile( *% t$e latter: an( .$ere t$e *ur(en o& ta/ is s$i&te( to t$e purc$aser- t$e amount passe( on to it is no lon'er a ta/ *ut *ecomes an a((e( cost o& t$e 'oo(s purc$ase(. !SS,E: C$et$er or not petitioner is t$e proper part% to claim &or re&un( or ta/ cre(it HELD:

"O. T$e proper part% to 7uestion- or see< a re&un( o&- an in(irect ta/ is t$e statutor% ta/pa%er- t$e person on .$om t$e ta/ is impose( *% la. an( .$o pai( t$e same even i& $e s$i&ts t$e *ur(en t$ereo& to anot$er. Section 289 0A1 0;1 o& t$e "!RC provi(es t$at )DuEnless ot$er.ise speci&icall% allo.e(- t$e return s$all *e &ile( an( t$e e/cise ta/ pai( *% t$e manu&acturer or pro(ucer *e&ore removal o& (omestic pro(ucts &rom place o& pro(uction.) T$us- Petron Corporation- not Sil<air- is t$e statutor% ta/pa%er .$ic$ is entitle( to claim a re&un( *ase( on Section 283 o& t$e "!RC o& 255A an( Article ?0;1 o& t$e Air Transport A'reement *et.een RP an( Sin'apore. Even i& Petron Corporation passe( on to Sil<air t$e *ur(en o& t$e ta/t$e a((itional amount *ille( to Sil<air &or Bet &uel is not a ta/ *ut part o& t$e price .$ic$ Sil<air $a( to pa% as a purc$aser. T$e e/emption 'rante( un(er Section 283 0*1 o& t$e "!RC o& 255A an( Article ?0;1 o& t$e Air Transport A'reement *et.een RP an( Sin'apore cannot- .it$out a clear s$o.in' o& le'islative intent- *e construe( as inclu(in' in(irect ta/es. Statutes 'rantin' ta/ e/emptions must *e construe( in strictissimiBuris a'ainst t$e ta/pa%er an( li*erall% in &avor o& t$e ta/in' aut$orit%- an( i& an e/emption is &oun( to e/ist- it must not *e enlar'e( *% construction. CO"TEH CORPORAT!O" vs. CO##!SS!O"ER OF !"TER"AL REFE",E FACTS: Petitioner is a (ul% re'istere( .it$ t$e Su*ic Ba% #etropolitan Aut$orit% 0SB#A1 as a Su*ic Ba% Freeport Enterprise- pursuant to t$e provisions o& Repu*lic Act "o. A;;A. As an SB#A+re'istere( &irm- petitioner is e/empt &rom all local an( national internal revenue ta/es e/cept &or t$e pre&erential ta/ provi(e( &or in Section 2; 0c1 o& Rep. Act "o. A;;A. Petitioner also re'istere( .it$ t$e Bureau o& !nternal Revenue 0B!R1 as a non+FAT ta/pa%er. From 4anuar% 2- 255A to Decem*er 82- 2556- petitioner purc$ase( various supplies an( materials necessar% in t$e con(uct o& its manu&acturin' *usiness. T$e suppliers o& t$ese 'oo(s s$i&te( unto petitioner t$e 29O FAT on t$e purc$ase( items- .$ic$ le( t$e petitioner to pa% input ta/es in t$e amounts o& P385-?22.66 an( P39?-93A.?5 &or 255A an( 2556- respectivel%. Actin' on t$e *elie& t$at it .as e/empt &rom all national an( local ta/es- inclu(in' FATpursuant to Rep. Act "o. A;;A- petitioner &ile( t.o applications &or ta/ re&un( or ta/ cre(it o& t$e FAT it pai(- .$ic$ .ere (enie(. ,n&a>e( *% t$e (enial- it &ile( anot$er application &or ta/ re&un(Ncre(it. C$en no response .as &ort$comin' &rom t$e B!R Re'ional Director- petitioner t$en elevate( t$e matter to t$e Court o& Ta/ Appeals- .$ic$ 'rante( t$e petitioner a partial re&un(. T$e Court o& Appeals reverse( t$e (ecision o& t$e CTA. !SS,E: C$et$er or not petitioner is entitle( to a ta/ cre(it or ta/ re&un( o& t$e FAT pai( on its purc$ases o& supplies an( ra. materials &or t$e %ears 255A an( 2556. HELD: "O. C$ile it is true t$at t$e petitioner s$oul( not $ave *een lia*le &or t$e FAT ina(vertentl% passe( on to it *% its supplier since suc$ is a >ero+ rate( sale on t$e part o& t$e supplier- t$e petitioner is not t$e proper part% to claim suc$ FAT re&un(. Since t$e transaction is (eeme( a >ero+rate( sale- petitionerIs supplier ma% claim an !nput FAT cre(it .it$ no correspon(in' Output FAT lia*ilit%. Con'ruentl%- no Output FAT ma% *e passe( on to t$e petitioner.

!t ma% not *e amiss to re+emp$asi>e t$at t$e petitioner is re'istere( as a "O"+FAT ta/pa%er an( t$us- is e/empt &rom FAT. As an e/empt FAT ta/pa%er- it is not allo.e( an% ta/ cre(it on FAT 0input ta/1 previousl% pai(. !n &ine- even i& assumin' t$at e/emption &rom t$e *ur(en o& FAT on petitionerIs purc$ases (i( e/ist- petitioner is still not entitle( to an% ta/ cre(it or re&un( on t$e input ta/ previousl% pai( as petitioner is an e/empt FAT ta/pa%er. Rat$er- it is t$e petitionerIs suppliers .$o are t$e proper parties to claim t$e ta/ cre(it an( accor(in'l% re&un( t$e petitioner o& t$e FAT erroneousl% passe( on to t$e latter. CO##!SS!O"ER OF !"TER"AL REFE",E vs. SEA ATE TECH"OLO Y 0PH!L!PP!"ES1 FACTS: Respon(ent is re'istere( .it$ t$e P$ilippine E/port Tone Aut$orit% 0PETA1 an( $as *een issue( PETA Certi&icate "o. 5A+9?? pursuant to Presi(ential Decree "o. @@- as amen(e(- to en'a'e in t$e manu&acture o& recor(in' components primaril% use( in computers &or e/port. Suc$ re'istration .as ma(e on @ 4une 255A. !t is also a FAT+ re'istere( entit% an( FAT returns &or t$e perio( 2 April 2556 to 89 4une 2555 $ave *een &ile(. An a(ministrative claim &or re&un( o& FAT input ta/es in t$e amount o& P;6-8@5-;;@.86 .it$ supportin' (ocuments .as &ile( on ? Octo*er 2555. "o &inal action $as *een receive( *% respon(ent &rom petitioner on its claim &or FAT re&un(. T$e Court o& Ta/ Appeals ren(ere( a (ecision 'rantin' t$e claim &or re&un(. T$e CA a&&irme( t$e Decision o& t$e CTA 'rantin' t$e claim &or re&un( or issuance o& a ta/ cre(it certi&icate 0TCC1 in &avor o& respon(ent in t$e re(uce( amount o& P2;-2;;-5;;.@@. T$is sum represente( t$e unutili>e( *ut su*stantiate( input FAT pai( on capital 'oo(s purc$ase( &or t$e perio( coverin' April 2- 2556 to 4une 892555. !SS,E: C$et$er or not respon(ent is entitle( to t$e re&un( or issuance o& Ta/ Cre(it Certi&icate in t$e amount o& P2;-2;;-5;;.@@ representin' alle'e( unutili>e( input FAT pai( on capital 'oo(s purc$ase( &or t$e perio( April 2- 2556 to 4une 89- 2555. HELD: YES. "o (ou*t- as a PETA+re'istere( enterprise .it$in a special economic >one- respon(ent is entitle( to t$e &iscal incentives an( *ene&its provi(e( &or in eit$er PD @@ or EO ;;@. !t s$all- moreover- enBo% all privile'es- *ene&its- a(vanta'es or e/emptions un(er *ot$ Repu*lic Act "os. 0RA1 A;;A an( A6??. From t$e a*ove+cite( la.s- it is imme(iatel% clear t$at petitioner enBo%s pre&erential ta/ treatment. !t is not su*Bect to internal revenue la.s an( re'ulations an( is even entitle( to ta/ cre(its. T$e FAT on capital 'oo(s is an internal revenue ta/ &rom .$ic$ petitioner as an entit% is e/empt. Alt$ou'$ t$e transactions involvin' suc$ ta/ are not e/emptpetitioner as a FAT+re'istere( person- $o.ever- is entitle( to t$eir cre(its. To summari>e- special la.s e/pressl% 'rant pre&erential ta/ treatment to *usiness esta*lis$ments re'istere( an( operatin' .it$in an eco>one- .$ic$ *% la. is consi(ere( as a separate customs territor%. As suc$- respon(ent is e/empt &rom all internal revenue ta/esinclu(in' t$e FAT- an( re'ulations pertainin' t$ereto. !t $as opte( &or t$e income ta/ $oli(a% re'ime- instea( o& t$e 3 percent pre&erential ta/ re'ime. As a matter o& la. an( proce(ure- its re'istration status entitlin' it to suc$ ta/ $oli(a% can no lon'er *e 7uestione(. !ts sales

transactions inten(e( &or e/port ma% not *e e/empt- *ut li<e its purc$ase transactions- t$e% are >ero+rate(. "o prior application &or t$e e&&ective >ero ratin' o& its transactions is necessar%. Bein' FAT+ re'istere( an( $avin' satis&actoril% complie( .it$ all t$e re7uisites &or claimin' a ta/ re&un( o& or cre(it &or t$e input FAT pai( on capital 'oo(s purc$ase(- respon(ent is entitle( to suc$ FAT re&un( or cre(it. CO##!SS!O"ER OF !"TER"AL REFE",E vs. THE ESTATE OF BE"! "O P. TODA- 4R FACTS: C!C aut$ori>e( Beni'no P. To(a- 4r.- Presi(ent an( o.ner o& 55.552O o& its issue( an( outstan(in' capital stoc<- to sell t$e Ci*eles Buil(in' an( t$e t.o parcels o& lan( on .$ic$ t$e *uil(in' stan(s &or an amount o& not less t$an P59 million an( su*se7uentl% sol( t$e propert% &or P299 million to Ra&ael A. Altona'a- .$o- in turn- sol( t$e same propert% on t$e same (a% to Ro%al #atc$ !nc. 0R#!1 &or P;99 million. T$e B!R sent an assessment noticean( (eman( letter to t$e C!C &or (e&icienc% income ta/ &or t$e %ear 2565 in t$e amount o& PA5-955-555.;;. T$e ne. C!C as<e( &or a reconsi(eration- assertin' t$at t$e assessment s$oul( *e (irecte( a'ainst t$e ol( C!C- an( not a'ainst t$e ne. C!C- .$ic$ is o.ne( *% an entirel% (i&&erent set o& stoc<$ol(ers: moreover- To(a $a( un(erta<en to $ol( t$e *u%er o& $is stoc<$ol(in's an( t$e C!C &ree &rom all ta/ lia*ilities &or t$e &iscal %ears 256A+2565. T$e CTA $el( t$at t$e Commissioner &aile( to prove t$at C!C committe( &rau( to (eprive t$e 'overnment o& t$e ta/es (ue it. T$e Court o& Appeals a&&irme( t$e (ecision o& t$e CTA- reasonin' t$at t$e CTA- *ein' more a(vanta'eousl% situate( an( $avin' t$e necessar% e/pertise in matters o& ta/ation- is )*etter situate( to (etermine t$e correctness- propriet%- an( le'alit% o& t$e income ta/ assessments assaile( *% t$e To(a Estate.) !SS,E: C$et$er or not respon(ent committe( &rau( .it$ intent to eva(e t$e ta/ on t$e sale o& t$e properties o& Ci*eles !nsurance Corporation. HELD: YES. Ta/ evasion connotes t$e inte'ration o& t$ree &actors: 021 t$e en( to *e ac$ieve(- i.e.- t$e pa%ment o& less t$an t$at <no.n *% t$e ta/pa%er to *e le'all% (ue- or t$e non+pa%ment o& ta/ .$en it is s$o.n t$at a ta/ is (ue: 0;1 an accompan%in' state o& min( .$ic$ is (escri*e( as *ein' )evil-) in )*a( &ait$-) ).ill&ull-) or )(eli*erate an( not acci(ental): an( 081 a course o& action or &ailure o& action .$ic$ is unla.&ul.All t$ese &actors are present in t$e instant case. Here- it is o*vious t$at t$e o*Bective o& t$e sale to Altona'a .as to re(uce t$e amount o& ta/ to *e pai( especiall% t$at t$e trans&er &rom $im to R#! .oul( t$en su*Bect t$e income to onl% 3O in(ivi(ual capital 'ains ta/- an( not t$e 83O corporate income ta/. Altona'aIs sole purpose o& ac7uirin' an( trans&errin' title o& t$e su*Bect properties on t$e same (a% .as to create a ta/ s$elter. Altona'a never controlle( t$e propert% an( (i( not enBo% t$e normal *ene&its an( *ur(ens o& o.ners$ip. T$e sale to $im .as merel% a ta/ plo%- a s$am- an( .it$out *usiness purpose an( economic su*stance. Dou*tless- t$e e/ecution o& t$e t.o sales .as calculate( to mislea( t$e B!R .it$ t$e en( in vie. o& re(ucin' t$e conse7uent income ta/ lia*ilit%. C!C is t$ere&ore lia*le to pa% a 83O corporate ta/ &or its ta/a*le net income in 2565. T$e 3O in(ivi(ual capital 'ains ta/ provi(e( &or in Section 8? 0$1 o& t$e "!RC o& 256@83 0no. @O un(er Section ;? 0D1 021 o& t$e Ta/ Re&orm Act o& 255A1 is inapplica*le. Hence- t$e

assessment &or t$e (e&icienc% income ta/ issue( *% t$e B!R must *e up$el(. 4OH" HAY vs. L!# FACTS: On #arc$ 28- 255;- Repu*lic Act "o. A;;A- ot$er.ise <no.n as t$e )Bases Conversion an( Development Act o& 255;-) .as enacte( .it$ t$e (eclare( polic% o& acceleratin' )t$e soun( an( *alance( conversion into alternative pro(uctive uses o& t$e Clar< an( Su*ic militar% reservations an( t$eir e/tensions) +inclu(in' t$e 4o$n Ha% Station. To t$is en(- R.A. "o. A;;A create( pu*lic respon(ent BCDA-t$e Su*ic SET an( t$e Su*ic Ba% #etropolitan Aut$orit%. On 4ul% 3- 255?- t$en Presi(ent Ramos- on t$e re7uest o& t$e San''unian'Panlun'so( o& Ba'uio Cit%- issue( Proclamation "o. ?;9 esta*lis$in' t$e 4o$n Ha% SET. On April ;3- 2553- petitioners &ile( t$eir Petition &or pro$i*ition- man(amus an( (eclarator% relie& assailin' 021 t$e constitutionalit% o& Proclamation "o. ?;9 an( 0;1 t$e le'alit% o& t$e #emoran(um o& A'reement an( 4oint Fenture A'reement previousl% entere( into *et.een pu*lic respon(ent BCDA an( private respon(ents Tunte/ 0B.F.!.1 Co.- Lt(. 0T,"TEH1 an( Asia.orl(!nternationale roup- !nc. 0AS!ACORLD1. !SS,E: C$et$er or not 4o$n Ha% Special Economic Tone enBo%s e/emption &or ta/es as .ell as ot$er &inancial incentives 'rante( to t$e Su*ic Special Economic Tone. HELD: !t is clear t$at un(er Section 2; o& R.A. "o. A;;A it is onl% t$e Su*ic SET .$ic$ .as 'rante( *% Con'ress .it$ ta/ e/emption- investment incentives an( t$e li<e. T$ere is no e/press e/tension o& t$e a&oresai( *ene&its to ot$er SETs still to *e create(at t$e time via presi(ential proclamation. C$ile t$e 'rant o& economic incentives ma% *e essential to t$e creation an( success o& SETs- &ree tra(e >ones an( t$e li<e- t$e 'rant t$ereo& to t$e 4o$n Ha% SET cannot *e sustaine(. T$e incentives un(er R.A. "o. A;;A are e/clusiveonl% to t$e Su*ic SET- $ence- t$e e/tension o& t$e same to t$e 4o$n Ha% SET &in(s no support t$erein. #ore importantl%- t$e nature o& most o& t$e assaile( privile'es is one o& ta/ e/emption. !t is t$e le'islature- unless limite( *% a provision o& t$e state constitution t$at $as &ull po.er to e/empt an% person or corporation or class o& propert% &rom ta/ation- its po.er to e/empt *ein' as *roa( as its po.er to ta/. T$e c$allen'e( 'rant o& ta/ e/emption .oul( circumvent t$e ConstitutionIs imposition t$at a la. 'rantin' an% ta/ e/emption must $ave t$e concurrence o& a maBorit% o& all t$e mem*ers o& Con'ress. Topic: A(ministrative !ssuance *% t$e B!R Commissioner o& !nternal Revenue vs. Courts o& Ta/ Appeal- et al FACTS: Ateneo (e #anila is an e(ucational institution .it$ au/iliar% units an( *ranc$es all over t$e P$ilippines. One suc$ au/iliar% unit is t$e !nstitute o& P$ilippine Culture 0!PC1- .$ic$ $as no le'al personalit% separate an( (istinct &rom t$at o& private respon(ent. T$e !PC is a P$ilippine unit en'a'e( in social science stu(ies o& P$ilippine societ% an( culture. Occasionall%- it accepts sponsors$ips &or its researc$ activities &rom international or'ani>ations- private &oun(ations an( 'overnment a'encies.

On 4ul% 6- 2568- private respon(ent receive( &rom petitioner Commissioner o& !nternal Revenue a (eman( letter (ate( 4une 82568- assessin' private respon(ent t$e sum o& P2A?-9?8.5A &or alle'e( (e&icienc% contractorSs ta/ t$e value o& .$ic$ .as later onupon private respon(entIs re7uest &or reinvesti'ation- re(uce( to P?@-32@.?2. ,nsatis&ie(- Private respon(ent &ile( in t$e Court o& Ta/ Appeals a petition &or revie. o& t$e sai( letter+(ecision o& t$e petitioner .$ic$ ren(ere( a (ecision in its &avour an( or(ere( t$e ta/ assessment cancelle(. !SS,E: C$et$er or not Ateneo (e #anila ,niversit%- t$rou'$ its au/iliar% unit or *ranc$ R t$e !nstitute o& P$ilippine Culture R is per&ormin' t$e .or< o& an in(epen(ent contractor an(- t$us- su*Bect to t$e t$ree percent contractorSs ta/ levie( *% t$en Section ;93 o& t$e "ational !nternal Revenue Co(e HELD: "O. T$e Supreme Court $el( t$at Ateneo (e #anila ,niversit% is not su*Bect to t$e contractorIs ta/. !t e/plaine( t$at to &all un(er its covera'e- Section ;93 o& t$e "ational !nternal Revenue Co(e re7uires t$at t$e in(epen(ent contractor *e en'a'e( in t$e *usiness o& sellin' its services. T$e Court- $o.ever- &oun( no evi(ence t$at AteneoSs !nstitute o& P$ilippine Culture ever sol( its services &or a &ee to an%one or .as ever en'a'e( in a *usiness apart &rom an( in(epen(entl% o& t$e aca(emic purposes o& t$e universit%. #oreover- t$e Court o& Ta/ Appeals accuratel% an( correctl% (eclare( t$at t$e J&un(s receive( *% t$e Ateneo (e #anila ,niversit% are tec$nicall% not a &ee. T$e% ma% $o.ever &all as 'i&ts or (onations .$ic$ are ta/+e/empt) as s$o.n *% private respon(entSs compliance .it$ t$e re7uirement o& Section 2;8 o& t$e "ational !nternal Revenue Co(e provi(in' &or t$e e/emption o& suc$ 'i&ts to an e(ucational institution. Topic: Constitutional Limitations: Ori'in o& Revenue- Appropriation an( Tarri&& Bills ABAPADA FACTS: #otions &or Reconsi(eration &ile( *% petitioners- ABAPADA uro part% List O&&icer an( et al.- insist t$at t$e *icameral con&erence committee s$oul( not even $ave acte( on t$e no pass+on provisions since t$ere is no (isa'reement *et.een House Bill "os. 8A93 an( 8333 on t$e one $an(- an( Senate Bill "o. 2539 on t$e ot$er- .it$ re'ar( to t$e no pass+on provision &or t$e sale o& service &or po.er 'eneration *ecause *ot$ t$e Senate an( t$e House .ere in a'reement t$at t$e FAT *ur(en &or t$e sale o& suc$ service s$all not *e passe( on to t$e en(+ consumer. As to t$e no pass+on provision &or sale o& petroleum pro(ucts- petitioners ar'ue t$at t$e &act t$at t$e presence o& suc$ a no pass+on provision in t$e House version an( t$e a*sence t$ereo& in t$e Senate Bill means t$ere is no con&lict *ecause Ja House provision cannot *e in con&lict .it$ somet$in' t$at (oes not e/ist.K Escu(ero- et. al.- also conten( t$at Repu*lic Act "o. 588A 'rossl% violates t$e constitutional imperative on e/clusive ori'ination o& revenue *ills un(er Section ;? o& Article F! o& t$e Constitution .$en t$e Senate intro(uce( amen(ments not connecte( .it$ FAT. Petitioners Escu(ero- et al.- also reiterate t$at R.A. "o. 588AIs stan(+ *% aut$orit% to t$e E/ecutive to increase t$e FAT rate- especiall% on account o& t$e recommen(ator% po.er 'rante( to t$e Secretar% o& Finance- constitutes un(ue (ele'ation o& le'islative po.er. T$e% su*mit t$at t$e recommen(ator% po.er 'iven to t$e Secretar% o& ,RO PARTY L!ST vs. ER#!TA

Finance in re'ar( to t$e occurrence o& eit$er o& t.o events usin' t$e ross Domestic Pro(uct 0 DP1 as a *enc$mar< necessaril% an( in$erentl% re7uire( e/ten(e( anal%sis an( evaluation- as .ell as polic% ma<in'. Petitioners also reiterate t$eir ar'ument t$at t$e input ta/ is a propert% or a propert% ri'$t. Petitioners also conten( t$at even i& t$e ri'$t to cre(it t$e input FAT is merel% a statutor% privile'e- it $as alrea(% evolve( into a veste( ri'$t t$at t$e State cannot remove. !SS,E: C$et$er or not t$e R.A. "o. 588A or t$e Fat Re&orm Act is constitutionalL R,L!" : T$e Court is not persua(e(. Article F!- Section ;? o& t$e Constitution provi(es t$at All appropriation- revenue or tari&& *ills- *ills aut$ori>in' increase o& t$e pu*lic (e*t- *ills o& local application- an( private *ills s$all ori'inate e/clusivel% in t$e House o& Representatives- *ut t$e Senate ma% propose or concur .it$ amen(ments. T$e Court reiterates t$at in ma<in' $is recommen(ation to t$e Presi(ent on t$e e/istence o& eit$er o& t$e t.o con(itions- t$e Secretar% o& Finance is not actin' as t$e alter e'o o& t$e Presi(ent or even $er su*or(inate. He is actin' as t$e a'ent o& t$e le'islative (epartment- to (etermine an( (eclare t$e event upon .$ic$ its e/presse( .ill is to ta<e e&&ect. T$e Secretar% o& Finance *ecomes t$e means or tool *% .$ic$ le'islative polic% is (etermine( an( implemente(- consi(erin' t$at $e possesses all t$e &acilities to 'at$er (ata an( in&ormation an( $as a muc$ *roa(er perspective to properl% evaluate t$em. His &unction is to 'at$er an( collate statistical (ata an( ot$er pertinent in&ormation an( veri&% i& an% o& t$e t.o con(itions lai( out *% Con'ress is present. !n t$e same *reat$- t$e Court reiterates its &in(in' t$at it is not a propert% or a propert% ri'$t- an( a FAT+re'istere( personIs entitlement to t$e cre(ita*le input ta/ is a mere statutor% privile'e. As t$e Court state( in its Decision- t$e ri'$t to cre(it t$e input ta/ is a mere creation o& la.. #ore importantl%- t$e assaile( provisions o& R.A. "o. 588A alrea(% involve le'islative polic% an( .is(om. So lon' as t$ere is a pu*lic en( &or .$ic$ R.A. "o. 588A .as passe(- t$e means t$rou'$ .$ic$ suc$ en( s$all *e accomplis$e( is &or t$e le'islature to c$oose so lon' as it is .it$in constitutional *oun(s. REF. FR. CAS!#!RO LLADOC vs. CO##!SS!O"ER OF !"TER"AL FACTS: Sometime in 253A- t$e #.B. Estate- !nc.- o& Bacolo(Cit%- (onate( P29-999.99 in cas$ to Rev. Fr. Crispin Rui>- t$en paris$ priest o& Fictorias- "e'ros Occi(ental- an( pre(ecessor o& $erein petitioner- &or t$e construction o& a ne. Cat$olic C$urc$ in t$e localit%. T$e total amount .as actuall% spent &or t$e purpose inten(e(. On #arc$ 8- 2536- t$e (onor #.B. Estate- !nc.- &ile( t$e (onorSs 'i&t ta/ return. ,n(er (ate o& April ;5- 25@9- t$e respon(ent Commissioner o& !nternal Revenue issue( an assessment &or (oneeSs 'i&t ta/ a'ainst t$e Cat$olic Paris$ o& Fictorias- "e'ros Occi(ental- o& .$ic$ petitioner .as t$e priest. T$e ta/ amounte( to P2-8A9.99 inclu(in' surc$ar'esinterests o& 2O mont$l% &rom #a% 23- 2536 to 4une 23- 25@9- an( t$e compromise &or t$e late &ilin' o& t$e return. Petitioner lo('e( a protest to t$e assessment an( re7ueste( t$e .it$(ra.al t$ereo&. T$e protest an( t$e motion &or reconsi(eration presente( to t$e Commissioner o& !nternal Revenue .ere (enie(. T$e petitioner appeale( to t$e Court o& Ta/ Appeals on "ovem*er ;- 25@9. !n t$e petition &or revie.- t$e Rev. Fr. CasimiroLla(oc claime(- amon'

ot$ers- t$at at t$e time o& t$e (onation- $e .as not t$e paris$ priest in Fictorias: t$at t$ere is no le'al entit% or Buri(ical person <no.n as t$e )Cat$olic Paris$ Priest o& Fictorias-) an(- t$ere&ore- $e s$oul( not *e lia*le &or t$e (oneeSs 'i&t ta/. !t .as also asserte( t$at t$e assessment o& t$e 'i&t ta/- even a'ainst t$e Roman Cat$olic C$urc$- .oul( not *e vali(- &or suc$ .oul( *e a clear violation o& t$e provisions o& t$e Constitution. !SS,E: C$et$er or not petitioner s$oul( *e lia*le &or t$e assesse( (oneeSs 'i&t ta/ on t$e P29-999.99 (onate( &or t$e construction o& t$e FictoriasParis$C$urc$L R,L!" : T$e Constitution o& t$e P$ilippines- e/empts &rom ta/ation cemeteriesc$urc$es an( parsona'es or convents- appurtenant t$ereto- an( all lan(s- *uil(in's- an( improvements use( e/clusivel% &or reli'ious purposes. T$e e/emption is onl% &rom t$e pa%ment o& ta/es assesse( on suc$ properties enumerate(- as propert% ta/es- as contra (istin'uis$e( &rom e/cise ta/es. !n t$e present case- .$at t$e Collector assesse( .as a (oneeSs 'i&t ta/: t$e assessment .as not on t$e properties t$emselves. !t (i( not rest upon 'eneral o.ners$ip: it .as an e/cise upon t$e use ma(e o& t$e properties- upon t$e e/ercise o& t$e privile'e o& receivin' t$e properties. A 'i&t ta/ is not a propert% ta/- *ut an e/cise ta/ impose( on t$e trans&er o& propert% *% .a% o& 'i&t inter vivos- t$e imposition o& .$ic$ on propert% use( e/clusivel% &or reli'ious purposes(oes not constitute an impairment o& t$e Constitution. As .ell o*serve( *% t$e learne( respon(ent Court- t$e p$rase )e/empt &rom ta/ation-) as emplo%e( in t$e Constitution s$oul( not *e interprete( to mean e/emption &rom all <in(s o& ta/es. An( t$ere *ein' no clear- positive or e/press 'rant o& suc$ privile'e *% la.- in &avor o& petitioner- t$e e/emption $erein must *e (enie(.