Greenfield v.

Meer (Exemption from Taxation) Facts

Since the year 1933, the plaintiff has been continuously engaged in the embroidery business. In 1935, the plaintiff began engaging in buying and selling mining stocks and securities for his own exclusive account and not for the account of others. The plaintiff has not been a dealer in securities as defined in section 84 (t) of Commonwealth Act No. 466; he has no established place of business for the purchase and sale of mining stocks and securities; and he was never a member of any stock exchange. The plaintiff filed an income tax return where he claims a deduction of P67,307.80 representing the net loss sustained by him in mining stocks securities during the year 1939. The defendant disallowed said item of deduction on the ground that said losses were sustained by the plaintiff from the sale of mining stocks and securities which are capital assets, and that the loss arising from the sale of the same should be allowed only to the extent of the gains from such sales, which gains were already taken into consideration in the computation of the alleged net loss of P67,307.80. Issue Whether the personal and additional exemptions granted by section 23 of Commonwealth Act No. 466 should be considered as a credit against or be deducted from the net income, or whether it is the tax on such exemptions that should be deducted from the tax on the total net income. Held/Ratio Personal and additional exemptions claimed by appellant should be credited against or deducted from the net income. "Exception is an immunity or privilege; it is freedom from a charge or burden to which others are subjected." (If the amounts of personal and additional exemptions fixed in section 23 are exempt from taxation, they should not be included as part of the net income, which is taxable. There is nothing in said section 23 to justify the contention that the tax on personal exemptions (which are exempt from taxation) should first be fixed, and then deducted from the tax on the net income.

SSS vs. Bacolod City GR L-35726, 21 July 1982 Second Division, Escolin (J): 5 concur Facts: The Social Security System (SSS) is a government agency created under RA 1161. In pursuance of its operations, SSS maintains a

number of regional offices, one of which is a 5-storey building occupying 4 parcels of land in Bacolod City. Said building and lands were assessed for taxation. For failure to pay the realty taxes thereon, the city levid upon said properties. SSS sought reconsideration on the ground that SSS is a government-owned and -controlled corporation and is exempt from payment of real estate taxes. Issue: Whether SSS property in Bacolod City is tax-exempt. Held: The distinction whether the government-owned or controlled corporation exercises ministrant or proprietory function is of no relevance as the exemption does not relate to legal fees but on realty taxes. The Charter of Bacolod City does not contain any qualification whatsoever in providing fro the exemption from real estate taxes of lands and building owned by the Government/ It is axiomatic that when public property is involved, exemption is the rule and taxation is the exception. PD 24, amending the Social Security Act of 1954, has already removed all doubts as to the exemption of the SS from taxation (Section 16).
1. CIR and Commissioner of Customs vs. Botelho Shipping Corp. & General Shipping Co., Inc. G.R. Nos. L-21633-34 June 29, 1967 FACTS: Reparations Commission of the Philippines sold to Botelho the vessel "M/S Maria Rosello" for the amount of P6,798,888.88. The former likewise sold to General Shipping the vessel "M/S General Lim" at the price of P6,951,666.66. Upon arrival at the port of Manila, the Bureau of Customs placed the same under custody and refused to give due course [to applications for registration], unless the aforementioned sums of P483,433 and P494,824 be paid as compensating tax. The buyers subsequently filed with the CTA their respective petitions for review. Pending the case, Republic Act No. 3079 amended Republic Act No. 1789 the Original Reparations Act, under which the aforementioned contracts with the Buyers had been executed by exempting buyers of reparations goods acquired from the Commission, from liability for the compensating tax. Invoking [section 20 of the RA 3079], the Buyers applied, for the renovation of their utilizations contracts with the Commission, which granted the application, and, then, filed with the Tax Court, their supplemental petitions for review. The CTA ruled in favor of the buyers. [On appeal, the CIR and COC maintain that such proviso should not be applied retroactively], upon the ground that a tax exemption must be clear and explicit; that there is no express provision for the retroactivity of the exemption, established by Republic Act No. 3079, from the compensating tax; that the favorable provisions, which

are referred to in section 20 thereof, cannot include the exemption from compensating tax; and, that Congress could not have intended any retroactive exemption, considering that the result thereof would be prejudicial to the Government. ISSUE: Whether or not the tax exemption can be applied retroactively HELD: YES. The inherent weakness of the last ground becomes manifest when we consider that, if true, there could be no tax exemption of any kind whatsoever, even if Congress should wish to create one, because every such exemption implies a waiver of the right to collect what otherwise would be due to the Government, and, in this sense, is prejudicial thereto. It may not be amiss to add that no tax exemption like any other legal exemption or exception is given without any reason therefor. In much the same way as other statutory commands, its avowed purpose is some public benefit or interest, which the law-making body considers sufficient to offset the monetary loss entitled in the grant of the exemption. Indeed, section 20 of Republic Act No. 3079 exacts a valuable consideration for the retroactivity of its favorable provisions, namely, the voluntary assumption, by the end-user who bought reparations goods prior to June 17, 1961 of "all the new obligations provided for in" said Act. Furthermore, Section 14 of the Law on Reparations, as amended, exempts from the compensating tax, not particular persons, but persons belonging to a particular class. Indeed, appellants do not assail the constitutionality of said section 14, insofar as it grants exemptions to end-users who, after the approval of Republic Act No. 3079, on June 17, 1961, purchased reparations goods procured by the Commission. From the viewpoint of Constitutional Law, especially the equal protection clause, there is no difference between the grant of exemption to said end-users, and the extension of the grant to those whose contracts of purchase and sale mere made before said date, under Republic Act No. 1789.