PHILIPPINE AIRLINES, INC. v.

EDU
PHILIPPINE AIRLINES, INC. v. EDU
G.R. No. L- 41383, August 15, 1988
FACTS:
The Philippine Airlines (PAL) is a corporation engaged in the air transportation business
under a legislative franchise, Act No. 42739. Under its franchise, PAL is exempt from the
payment of taxes.
Sometime in 1971, however, Land Transportation Commissioner Romeo F. Elevate
(Elevate) issued a regulation pursuant to Section 8, Republic Act 4136, otherwise known as the
Land and Transportation and Traffic Code, requiring all tax exempt entities, among them PAL to
pay motor vehicle registration fees.
Despite PAL's protestations, Elevate refused to register PAL's motor vehicles unless the
amounts imposed under Republic Act 4136 were paid. PAL thus paid, under protest, registration
fees of its motor vehicles. After paying under protest, PAL through counsel, wrote a letter dated
May 19,1971, to Land Transportation Commissioner Romeo Edu (Edu) demanding a refund of
the amounts paid. Edu denied the request for refund. Hence, PAL filed a complaint against Edu
and National Treasurer Ubaldo Carbonell (Carbonell).
The trial court dismissed PAL's complaint. PAL appealed to the Court of Appeals which
in turn certified the case to the Supreme Court.
ISSUE:
Whether or not motor vehicle registration fees are considered as taxes.
RULING:
Yes. If the purpose is primarily revenue, or if revenue is, at least, one of the real and
substantial purposes, then the exaction is properly called a tax. Such is the case of motor vehicle
registration fees. The motor vehicle registration fees are actually taxes intended for additional
revenues of the government even if one fifth or less of the amount collected is set aside for the
operating expenses of the agency administering the program.

Lorenzo v. Posadas, G.R. No. L-43082 (64 PHIL 353) June 18, 1937

Facts: Herein petitioner Lorenzo, in his capacity as trustee of the estate of a certain Thomas
Hanley, deceased, brought an action against respondent Posadas, Collector of Internal
Revenue. Petitioner alleges the respondent to have exceeded in its tax collection, which, as
assessed by the former, should only be in the amount of PhP1,434.24 instead of PhP2,052.74.
Disregarding the allegation, respondent filed a motion in the CFI of Zamboanga praying that the
trustee be made to pay such tax. The motion was granted. Petitioner paid the amount in protest,
however notified the respondent that until a refund is prompted, suit would be bought for its
recovery. Respondent overruled the protest. Hence, the case at bar.

Issue/s:
1. Whether or not the provisions of Act No. 3606 (Tax Law) which is favorable to the taxpayer be
given retroactive effect?

Held and Reasoning: No. The respondent levied and assessed the inheritance tax
collected from the petitioner under the provisions of section 1544 of the Revised Administrative
Code as amended by Act No. 3606. However, the latter only enacted in 1930 not the law in
force when the testator died in 1922. Laws cannot be applied retroactively. The Court states that
it is a well-settled principle that inheritance taxation is governed by the statue in
force at the time of the death of the decendent. The Court also emphasized that
a statute should be considered as prospective in its operation, unless the language
of the statute clearly demands or expresses that it shall have retroactive
effect Act No. 3606 does not contain any provisions indicating a legislative intent to give it a
retroactive effect. Therefore, the provisions of Act No. 3606 cannot be applied to the case at bar.

NAPOCOR vs. City of Cabanatuan

Post under case digests, Taxation at Wednesday, February 08, 2012 Posted by Schizophrenic Mind
Facts: City of Cabanatuan filed a collection suit against NAPOCOR, a government-owned and controlled
corporation demanding that the latter pay the assessed franchise tax due, plus surcharge and interest. It
alleged that NAPOCORs exemption from local taxes has already been withdrawn by the Local
Government Code. NAPOCOR submitted that it is not liable to pay an annual franchise because the citys
taxing power is limited to private entities that are engaged in trade or occupation for profit, and that the
NAPOCOR Charter, being a valid exercise of police power, should prevail over the LGC.

Issue: Whether NAPOCOR is liable to pay annual franchise tax to the City of Cabanatuan

Held: Yes. The power to tax is no longer vested exclusively on Congress; local legislative bodies are now
given direct authority to levy taxes, fees and other charges. Although as a general rule, LGUs cannot
impose taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities,
this rule now admits of an exception, i.e., when specific provisions of the LGC authorize the LGUs to
impose taxes, fees or charges on the aforementioned entities. Nothing prevents Congress from decreeing
that even instrumentalities or agencies of the government performing governmental functions may be
subject

to

tax.

A franchise is a privilege conferred by government authority, which does not belong to citizens of the
country generally as a matter of common right. It may be construed in two senses: the right vested in the
individuals composing the corporation and the right and privileges conferred upon the corporation. A
franchise tax is understood in the second sense; it is not levied on the corporation simply for existing as a
corporation but on its exercise of the rights or privileges granted to it by the government. NAPOCOR is
covered by the franchise tax because it exercises a franchise in the second sense and it is exercising its
rights or privileges under this franchise within the territory of the City.

TOLENTINO VS SEC OF FINANCE

FACTSAArturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the
Expanded Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill did not exclusively
originate from the House of Representatives as required by Section 24, Article 6 of the Constitution. Even
though RA 7716 originated as HB 11197 and that it passed the 3 readings in the HoR, the same did not
complete the 3 readings in Senate for after the 1 st reading it was referred to the Senate Ways & Means
Committee thereafter Senate passed its own version known as Senate Bill 1630. Tolentino averred that
what Senate could have done is amend HB 11197 by striking out its text and substituting it with the text of
SB 1630 in that way the bill remains a House Bill and the Senate version just becomes the text (only the
text) of the HB. (Its ironic however to note that Tolentino and co-petitioner Raul Roco even signed the
said Senate Bill.)

ISSUE: Whether or not the EVAT law is procedurally infirm.

HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was
consistent with the power of the Senate to propose or concur with amendments to the version originated
in the HoR. What the Constitution simply means, according to the 9 justices, is that the initiative must
come from the HoR. Note also that there were several instances before where Senate passed its own
version rather than having the HoR version as far as revenue and other such bills are concerned. This
practice of amendment by substitution has always been accepted. The proposition of Tolentino concerns
a mere matter of form. There is no showing that it would make a significant difference if Senate were to
adopt his over what has been done.

LTO vs. City of Butuan; Power of LGU

07/10/2013
0 Comments

G. R. No. 131512.

January 20, 2000

Facts:
Relying on the fiscal autonomy granted to LGU's by the Constittuion and the provisons of the
Local Government Code, the Sangguniang Panglunsod of the City of Butuan enacted an ordinance
"Regulating the Operation of Tricycles-for-Hire, providing mechanism for the issuance of
Franchise, Registration and Permit, and Imposing Penalties for Violations thereof and for other
Purposes." The ordinance provided for, among other things, the payment of franchise fees for
the grant of the franchise of tricycles-for-hire, fees for the registration of the vehicle, and fees for
the issuance of a permit for the driving thereof.
Petitioner LTO explains that one of the functions of the national government that, indeed, has
been transferred to local government units is the franchising authority over tricycles-for-hire of
the Land Transportation Franchising and Regulatory Board ("LTFRB") but not, it asseverates, the
authority of LTO to register all motor vehicles and to issue to qualified persons of licenses to drive
such vehicles.
The RTC and CA ruled that the power to give registration and license for driving tricycles has
been devolved to LGU's.
Issue:
Whether or not, the registration of tricycles was given to LGU's, hence the ordinance is a valid
exercise of police power.
Ruling:
No, based on the-"Guidelines to Implement the Devolution of LTFRBs Franchising Authority
over Tricycles-For-Hire to Local Government units pursuant to the Local Government Code"- the
newly delegated powers to LGU's pertain to the franchising and regulatory powers exercised by
the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and
issuance of licenses for the driving thereof. Corollarily, the exercised of a police power must be
through a valid delegation. In this case the police power of registering tricycles was not delegated
to the LGUs, but remained in the LTO.
Clearly unaffected by the Local Government Code are the powers of LTO under R.A. No.4136

requiring the registration of all kinds of motor vehicles "used or operated on or upon any public
highway" in the country.
The Commissioner of Land Transportation and his deputies are empowered at anytime to
examine and inspect such motor vehicles to determine whether said vehicles are registered, or
are unsightly, unsafe, improperly marked or equipped, or otherwise unfit to be operated on
because of possible excessive damage to highways, bridges and other infrastructures. The LTO is
additionally charged with being the central repository and custodian of all records of all motor
vehicles.
Adds the Court, the reliance made by respondents on the broad taxing power of local
government units, specifically under Section 133 of the Local Government Code, is tangential.
Police power and taxation, along with eminent domain, are inherent powers of sovereignty
which the State might share with local government units by delegation given under a
constitutional or a statutory fiat. All these inherent powers are for a public purpose and legislative
in nature but the similarities just about end there. The basic aim of police power is public good
and welfare. Taxation, in its case, focuses on the power of government to raise revenue in order
to support its existence and carry out its legitimate objectives. Although correlative to each other
in many respects, the grant of one does not necessarily carry with it the grant of the other. The
two powers are, by tradition and jurisprudence, separate and distinct powers, varying in their
respective concepts, character, scopes and limitations.
To construe the tax provisions of Section 133 (1) of the LGC indistinctively would result in the
repeal to that extent of LTO's regulatory power which evidently has not been intended. If it were
otherwise, the law could have just said so in Section 447 and 458 of Book III of the Local
Government Code in the same manner that the specific devolution of LTFRB's power on
franchising of tricycles has been provided. Repeal by implication is not favored.
The power over tricycles granted under Section 458(a)(3)(VI) of the Local Government Code to
LGUs is the power to regulate their operation and to grant franchises for the operation thereof.
The exclusionary clause contained in the tax provisions of Section 133 (1) of the Local
Government Code must not be held to have had the effect of withdrawing the express power of
LTO to cause the registration of all motor vehicles and the issuance of licenses for the driving
thereof. These functions of the LTO are essentially regulatory in nature, exercised pursuant to the
police power of the State, whose basic objectives are to achieve road safety by insuring the road
worthiness of these motor vehicles and the competence of drivers prescribed by R. A. 4136. Not
insignificant is the rule that a statute must not be construed in isolation but must be taken in
harmony with the extant body of laws.
LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to
grant franchises for the operation thereof, and not to issue registration.
Ergo, the ordinance being repugnant to a statute is void and ultra vires.

Tanada v. Angara
Facts
On April 15, 1994, the Philippine Government represented by its Secretary of the Department of Trade and Industry
signed the Final Act binding the Philippine Government to submit to its respective competent authorities the WTO
(World Trade Organization) Agreements to seek approval for such. On December 14, 1994, Resolution No. 97 was
adopted by the Philippine Senate to ratify the WTO Agreement.
This is a petition assailing the constitutionality of the WTO agreement as it violates Sec 19, Article II, providing for the
development of a self reliant and independent national economy, and Sections 10 and 12, Article XII, providing for the
Filipino first policy.
Issue
Whether or not the Resolution No. 97 ratifying the WTO Agreement is unconstitutional
Ruling
The Supreme Court ruled the Resolution No. 97 is not unconstitutional. While the constitution mandates a bias in
favor of Filipino goods, services, labor and enterprises, at the same time, it recognizes the need for business
exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino interests
only against foreign competition and trade practices that are unfair. In other words, the Constitution did not intend to
pursue an isolationalist policy. Furthermore, the constitutional policy of a self-reliant and independent national
economy does not necessarily rule out the entry of foreign investments, goods and services. It contemplates neither
economic seclusion nor mendicancy in the international community.
The Senate, after deliberation and voting, gave its consent to the WTO Agreement thereby making it a part of the law
of the land. The Supreme Court gave due respect to an equal department in government. It presumes its actions as
regular and done in good faith unless there is convincing proof and persuasive agreements to the contrary. As a
result, the ratification of the WTO Agreement limits or restricts the absoluteness of sovereignty. A treaty engagement
is not a mere obligation but creates a legally binding obligation on the parties. A state which has contracted valid
international obligations is bound to make its legislations such modifications as may be necessary to ensure the
fulfillment of the obligations undertaken.