VillegasvHiuChiongTsaiPaoHo86scra270

Facts:
The Municipal Board of Manila enacted Ordinance 6537 requiring aliens (except those employed in the diplomatic
and consular missions of foreign countries,intechnicalassistanceprogramsofthe governmentandanother country,
and members of religious orders or congregations) to procure the requisite mayors permit so as tobe employed or
engage in tradeintheCityofManila.ThepermitfeeisP50,andthepenalty for theviolationoftheordinanceis3to6
monthsimprisonmentorafineofP100toP200,orboth.

Issue:WONtheordinanceimposesaregulatoryfeeoratax

Held:
The ordinances purpose is clearly to raise money under the guise of regulation by exacting P50 from aliens who
havebeenclearedforemployment.Theamountisunreasonableandexcessive becauseitfailstoconsiderdifference
in situation among aliens required to pay it, i.e. being casual, permanent, parttime, rankandfileorexecutive.[The
Ordinance was declared invalid as it is arbitrary, oppressive and unreasonable, beingapplied only to alienswhoare
thusdeprived of their rights to life, liberty and property and therefore violates the due process and equal protection
clausesof the Constitution. Further, the ordinance does not lay downany criterionorstandard to guidetheMayorin
theexerciseofhisdiscretion,thusconferringuponthemayorarbitraryandunrestrictedpowers.]

Reyesvs.Alamanzor
Facts:
Petitionerareownersofparcelsoflandleasedtotenants.RA6359wasenactedprohibitingforoneyearanincrease
inmonthlyrentalsofdwellingunitsandsaidActalsodisallowedejectmentoflesseesupontheexpirationoftheusual
periodoflease.CityassessorofManilaassessedthevalueofpetitionerspropertybasedonthescheduleofmarket
valuesdulyreviewedbytheSecretaryofFinance.Therevisionentailedanincreasetothetaxratesandpetitioners
averredthatthereassessmentimposeduponthemgreatlyexceededtheannualincomederivedfromtheirproperties.

Issue:
Whetherornotincomeapproachisthemethodtobeusedinthetaxassessmentandnotthecomparablesales
approach.

Ruling:
BynostretchoftheimaginationcanthemarketvalueofpropertiescoveredbyPD20beequatedwiththemarket
valueofpropertiesnotsocovered.Inthecaseatbar,notevenfactorsdeterminantoftheassessedvalueofsubject
propertiesunderthecomparablesalesapproachwerepresentedbyrespondentnamely:
1.Thatthesalemustrepresentabonafidearmslengthtransactionbetweenawillingsellerandawilling
buyer
2.Thepropertymustbecomparableproperty.

Asageneralrule,therewerenotakerssothattherecanbenoreasonablebasisfortheconclusionthatthese
propertiesarecomparable.

Taxesarelifebloodofgovernment,however,suchcollectionshouldbemadeinaccordancewiththelawand
thereforenecessarytoreconcileconflictinginterestsoftheauthoritiessothattherealpurposeoftaxation,promotion
ofthewelfareofcommongoodcanbeachieved.

GomezvPalomar(Topic:PresumedPublicPurpose)
Facts:

On September l5, 1963 the petitioner Benjamin P. Gomez mailed a letter at the post office in San Fernando,
Pampanga. Because this letter, addressed to a certain Agustin Aquino of 1014 Dagohoy Street, Singalong,Manila
didnotbearthespecialantiTBstamprequiredbythestatute,itwasreturnedtothepetitioner.

In view of this development, the petitioner brought suit for declaratory relief in the Court of First Instance of
Pampanga, to test the constitutionality of the statute, as well as the implementing administrative orders issued,
contending that it violates the equalprotectionclauseofthe Constitutionas wellasthe rule of uniformityandequality
oftaxation.

Thelowercourtdeclaredthestatuteandtheordersunconstitutional.

This appeal puts in issue the constitutionality of Republic Act 1635,as amended by Republic Act 2631,2 which
providesasfollows:
To helpraise funds for the Philippine Tuberculosis Society, the Director of Posts shall order for the period
fromAugustnineteentoSeptemberthirtyeveryyeartheprintingandissueofsemipostalstampsofdifferent
denominations with face value showing the regular postage charge plus the additional amount of five
centavos for the said purpose, and during the said period, no mail matter shall be accepted in the mails
unlessitbears such semipostal stamps: Provided, Thatnosuchadditionalchargeoffive centavos shallbe
imposed on newspapers. The additional proceeds realized from the sale of the semipostal stamps shall
constitute a special fund and be deposited with the National Treasury to be expended by the Philippine
TuberculosisSocietyincarryingoutitsnobleworktopreventanderadicatetuberculosis.

The respondent Postmaster General, in implementation of the law, thereafter issued four (4) administrative orders
numbered 3 (June 20, 1958), 7 (August 9, 1958), 9 (August 28, 1958), and 10 (July 15, 1960). All these
administrative orders were issued with the approval of the respondent Secretary of Public Works and
Communications.

Issue: Whether or not RA 1635 as amended by RA 2631 and the four Administrative orders violates the equal
protectionclauseoftheConstitutionaswellastheruleofuniformityandequalityoftaxation?

Held:
Itis settledthat thelegislaturehastheinherentpowertoselect thesubjectsoftaxationandtogrant exemptions.This
powerhas aptly been described as "of wide range and flexibility. Indeed, it is said that in the field oftaxation,more
than in other areas, the legislature possesses the greatest freedom in classification. The reason for this is that
traditionally, classification has beenadeviceforfittingtaxprogramstolocal needsandusagesinordertoachievean
equitabledistributionofthetaxburden.

The classification is based on considerations of administrative convenience. For it is now a settled principle of law
that consideration of practical administrative convenience and cost in the administration of taxlawsaffordadequate
groundforimposingataxonawellrecognizedanddefinedclass. In thecase of theantiTBstamps,undoubtedly,the
single most important andinfluentialconsiderationthatled thelegislaturetoselectmailusers assubjectsofthetaxis
therelative ease and convenience of collecting the tax through the post offices. The small amount of five centavos
does not justify the great expense and inconvenience of collecting through the regular means of collection.Onthe
other hand, byplacingthedutyofcollectiononpostalauthoritiesthetaxwasmadealmost selfenforcing,withaslittle
costandaslittleinconvenienceaspossible.
The eradication of a dreaded disease is a public purpose, but if by public purpose the petitioner
means benefit toa taxpayer as a return for what he pays, then itissufficientanswertosaythatthe
onlybenefit which the taxpayer is constitutionally entitled is that derived fromhisenjoymentofthe
privileges of livingin an organized society, establishedandsafeguardedbythedevotionoftaxesto
publicpurposes.

CagayanElectricvs.Commissioner
Facts:
CagayanElectricPower&LightCo.,Incistheholderofalegislativefranchise,RepublicActNo.3247,underwhich
itspaymentof3%taxonitsgrossearningsfromthesaleofelectriccurrentis"inlieuofalltaxesandassessmentsof
whateverauthorityuponprivileges,earnings,income,franchise,andpoles,wires,transformers,andinsulatorsofthe
grantee,fromwhichtaxesandassessmentsthegranteeisherebyexpresslyexempted.OnJune27,1968,Republic
ActNo.5431amendedsection24oftheTaxCodebymakingliableforincometaxallcorporatetaxpayersnot
specificallyexemptunderparagraph(c)(1)ofsaidsectionandsection27oftheTaxCodenotwithstandingthe
"provisionsofexistingspecialorgenerallawstothecontrary".Thus,franchisecompaniesweresubjectedtoincome
taxinadditiontofranchisetax.OnAugust4,1969,petitionersfranchisewasamendedtherebyreenactingthetax
exemptioninitsoriginalcharter.Byreasonoftheamendmenttosection24oftheTaxCode,theCommissionerof
InternalRevenuerequiredthepetitionertopaydeficiencyincometaxesfor1968to1971.Thepetitionercontested
theassessments.TheCommissionercancelledtheassessmentsfor1970and1971butinsistedonthosefor1968
and1969.ThepetitionerfiledapetitionforreviewwiththeTaxCourt,whichonFebruary26,1982heldthepetitioner
liableonlyfortheincometaxfortheperiodfromJanuary1toAugust3,1969orbeforethepassageofRepublicAct
No.6020whichreiterateditstaxexemption.ThepetitionerappealedtotheSupremeCourt.

Issue:WONCagayanElectricisliableforincometax(asidefromfranchisetax)fromJanuarytoAugust1969.

Held:
No,thepetitionersexemptionwasrestoredbythesubsequentenactmentofRepublicActNo.6020onAugust4,
1969.TheTaxCourtthusactedcorrectlyinholdingpetitionerliableforincometaxfromJanuary1toAugust3,1969,
theperiodwhenitstaxexemptionwasmodifiedbyRepublicActNo.5431.TheSChowevernotedthatthe1969
assessmentwashighlycontroversial.TheCommissionerattheoutsetwasnotcertainastopetitioner'sincometax
liability.Forthisreason,theCourtheldthatCagayanElectricshouldbeliableonlyfortaxproperandshouldnotbe
heldliableforthesurchargeandinterest.

MERALCOvs.CityGovernmentofSanPablo

Tolentinovs.SecretaryofFinance
Facts:
RA7716,otherwiseknownastheExpandedValueAddedTaxLaw,isanactthatseekstowidenthetaxbaseofthe
existingVATsystemandenhanceitsadministrationbyamendingtheNationalInternalRevenueCode.Thereare
varioussuitsquestioningandchallengingtheconstitutionalityofRA7716onvariousgrounds.

TolentinocontendsthatRA7716didnotoriginateexclusivelyfromtheHouseofRepresentativesbutisamere
consolidationofHB.No.11197andSB.No.1630anditdidnotpassthreereadingsonseparatedaysontheSenate
thusviolatingArticleVI,Sections24and26(2)oftheConstitution,respectively.

Art.VI,Section24:Allappropriation,revenueortariffbills,billsauthorizingincreaseofthepublicdebt,bills
oflocalapplication,andprivatebillsshalloriginateexclusivelyintheHouseofRepresentatives,butthe
Senatemayproposeorconcurwithamendments.

Art.VI,Section26(2):NobillpassedbyeitherHouseshallbecomealawunlessithaspassedthree
readingsonseparatedays,andprintedcopiesthereofinitsfinalformhavebeendistributedtoitsMembers
threedaysbeforeitspassage,exceptwhenthePresidentcertifiestothenecessityofitsimmediate

enactmenttomeetapubliccalamityoremergency.Uponthelastreadingofabill,noamendmentthereto
shallbeallowed,andthevotethereonshallbetakenimmediatelythereafter,andtheyeasandnaysentered
intheJournal.

Issue:WhetherornotRA7716violatedArt.VI,Section24andArt.VI,Section26(2)oftheConstitution.

Held:No.
Thephraseoriginateexclusivelyreferstotherevenuebillandnottotherevenuelaw.ItissufficientthattheHouse
ofRepresentativesinitiatedthepassageofthebillwhichmayundergoextensivechangesintheSenate.
SB.No.1630,havingbeencertifiedasurgentbythePresidentneednotmeettherequirementnotonlyofprintingbut
alsoofreadingthebillonseparatedays.

ProvinceofAbravs.Hernandez
Facts:
TheProvinceofAbrasoughttotaxthepropertiesoftheRomanCatholicBishop,Inc.ofBangued.JudgeHarold
HernandodismissedthepetitionofAbrawithouthearingitsside.Hernandoruledthatthereisnoquestionthatthe
realpropertiessoughttobetaxedbytheProvinceofAbraarepropertiesoftherespondentRomanCatholicBishopof
Bangued,Inc.Likewise,thereisnodisputethatthepropertiesincludingtheirproduceareactually,directlyand
exclusivelyusedbytheRomanCatholicBishopofBangued,Inc.forreligiousorcharitablepurposes.

Issue:Whetherornotthepropertiesofthechurch(inthiscase)isexemptfromtaxes.

Held:
No,theyarenottaxexempt.ItistruethattheConstitutionprovidesthatcharitableinstitutions,mosques,and
nonprofitcemeteriesarerequiredthatfortheexemptionoflands,buildings,andimprovements,theyshouldnot
onlybeexclusivelybutalsoactuallyanddirectlyusedforreligiousorcharitablepurposes.Theexemptionfrom
taxationisnotfavoredandisneverpresumed,sothatifgranteditmustbestrictlyconstruedagainstthetaxpayer.
However,inthiscase,thereisnoshowingthatthesaidpropertiesareactuallyanddirectlyusedforreligiousor
charitableuses

AbraValleyCollegevs.Hon.Aquino
Facts:
AbraValleyCollege,aneducationalcorporationandinstitutionofhigherlearningdulyincorporatedwiththeSecurities
andExchangeCommissionin1948,filedacomplainttoannulanddeclarevoidthe"NoticeofSeizure'andthe
"NoticeofSale"ofitslotandbuildinglocatedatBangued,Abra,fornonpaymentofrealestatetaxesandpenalties.
Said"NoticeofSeizure"wasissuedforthesatisfactionofthesaidtaxesthereon.Itwasfoundduringtrialthat:1.)the
elementarypupilsarehousedinatwostoreybuildingacrossthestreet2.)thatthehighschoolandcollegestudents
arehousedinthemainbuilding3.)thattheDirectorwithhisfamilyisinthesecondfloorofthemainbuildingand4.)
thattheannualgrossincomeoftheschoolreachesmorethanonehundredthousandpesos.

Petitionercontendsthattheprimaryuseofthelotandbuildingforeducationalpurposes,andnottheincidentaluse
thereof,determinesandexemptionfrompropertytaxesunderSection22(3),ArticleVIofthe1935Constitution.
Hence,theseizureandsaleofsubjectcollegelotandbuilding,whicharecontrarytheretoaswellastotheprovision
ofCommonwealthActNo.470,otherwiseknownastheAssessmentLaw,arewithoutlegalbasisandtherefore
void.Ontheotherhand,privaterespondentsmaintainthatthecollegelotandbuildinginquestionwhichwere
subjectedtoseizureandsaletoanswerfortheunpaidtaxareused:(1)fortheeducationalpurposesofthecollege
(2)asthepermanentresidenceofthePresidentandDirectorthereof,Mr.PedroV.Borgonia,andhisfamilyincluding
theinlawsandgrandchildrenand(3)forcommercialpurposesbecausethegroundfloorofthecollegebuildingis

beingusedandrentedbyacommercialestablishment,theNorthernMarketingCorporation

Issue:Whetherornottheschoolisusedexclusivelyforeducationalpurposesandarethereforeexemptfromtaxes?

Held:No.
Butonlythefirstfloorleasedoutforcommercialpurposesshouldbetaxed.Therestisexemptedincludingthe
secondfloorwherethedirectorandhisfamilyresidesbecauseitisconsideredasincidentalusethereof.

WhiletheCourtallowsamoreliberalandnonrestrictiveinterpretationofthephrase"exclusivelyusedforeducational
purposes"asprovidedforinArticleVI,Section22,paragraph3ofthe1935PhilippineConstitution,reasonable
emphasishasalwaysbeenmadethatexemptionextendstofacilitieswhichareincidentaltoandreasonably
necessaryfortheaccomplishmentofthemainpurposes.Otherwisestated,theuseoftheschoolbuildingorlotfor
commercialpurposesisneithercontemplatedbylaw,norbyjurisprudence.Thus,whiletheuseofthesecondfloorof
themainbuildinginthecaseatbarforresidentialpurposesoftheDirectorandhisfamily,mayfindjustificationunder
theconceptofincidentaluse,whichiscomplimentarytothemainorprimarypurposeeducational,theleaseofthe
firstfloorthereoftotheNorthernMarketingCorporationcannotbyanystretchoftheimaginationbeconsidered
incidentaltothepurposeofeducation.Underthe1935Constitution,thetrialcourtcorrectlyarrivedattheconclusion
thattheschoolbuildingaswellasthelotwhereitisbuilt,shouldbetaxed,notbecausethesecondfloorofthesame
isbeingusedbytheDirectorandhisfamilyforresidentialpurposes,butbecausethefirstfloorthereofisbeingused
forcommercialpurposes.However,sinceonlyaportionisusedforpurposesofcommerce,itisonlyfairthathalfof
theassessedtaxbereturnedtotheschoolinvolved.

NOTE:Othercasescited:exclusivelyusedforeducationalpurposes"wasclarifiedbytheCourtin
thecasesofHerreravs.QuezonCityBoardofassessmentAppeals,3SCRA186[1961]and
CommissionerofInternalRevenuevs.BishopoftheMissionaryDistrict,14SCRA991[1965],
Moreover,theexemptioninfavorofpropertyusedexclusivelyforcharitableoreducational
purposesis'notlimitedtopropertyactuallyindispensable'therefor(CooleyonTaxation,Vol.2,p.
1430),butextendstofacilitieswhichareincidentaltoandreasonablynecessaryforthe
accomplishmentofsaidpurposes,suchasinthecaseofhospitals,"aschoolfortrainingnurses,a
nurses'home,propertyusetoprovidehousingfacilitiesforinterns,residentdoctors,
superintendents,andothermembersofthehospitalstaff,andrecreationalfacilitiesforstudent
nurses,interns,andresidents'(84CJS6621),suchas"Athleticfields"including"afirmusedforthe
inmatesoftheinstitution.(CooleyonTaxation,Vol.2,p.1430).NuevaSegoviav.ProvincialBoard
ofIlocosNorte,Itwasclarifiedthattheterm"usedexclusively"considersincidentalusealso.

LungCentervs.QuezonCity
Facts:
Thelungcenterisacharitableinstitutionwithinthecontextof1973and1987constitutions.Theelementsconsidered
indeterminingacharitableinstitutionare:a)thestatuecreatingtheenterpriseb)itscorporatepurposesc)
constitutionandbylaws,d)methodsofadministration,e)natureofactualworkperformed,e)characterofthe
servicesrendered,f)indefinitenessofthebeneficiaries,andg)theuseoccupationofproperties.Asagen.principle,a
charitableinstitutiondoenotloseitscharacterassuchanditsexemptionformtaxessimplybecauseitderives
incomefrompayingpatients,orreceivessubsidiesfromgovernmentandnomoneyinsurestotheprivatebenefitof
thepersonsmanagingoroperatingtheinstitution.

Issue:
Whetherornottherealpropertiesofthelungcenterareexemptfromrealpropertytaxes.

Held:

PartlyNo.Thoseportionsofitsrealpropertythatareleasedtoprivateentitiesarenotexemptfromactually,direct
andexclusivelyusedforcharitablepurpose.UnderPD1823,thelungcenterdoesnotenjoyanypropertytax
exemptionprivilegesforitsrealpropertiesaswellasthebuildingconstructedthereon.
ThepropertytaxexemptionunderSec.28(3),Art.Viofthepropertytaxesonly.Thisprovisionwasimplantedby
Sec.243(b)ofRA7160.whichprovidesthatinordertobeentitledtotheexemption,thelungcentermustbeableto
provethat:itisacharitableinstitutionanditsrealpropertiesareactually,directlyandexclusivelyusedforcharitable
purpose.Accordingly,theportionsoccupiedbythehospitalusedforitspatientsareexemptfromrealpropertytaxes
whilethoseleasedtoprivateentitiesarenotexemptfromsuchtaxes.

CIRvs.BishopoftheMissionaryDistrictofthePhilippines
Facts:
RespondentBishopisacorporationsoledulyregisteredwiththeSecuritiesandExchangeCommission.Heisin
chargeoftheadministrationofthetemporalitiesandthemanagementoftheestatesandpropertiesinthePhilippines
oftheDomesticandForeignMissionarySocietyoftheProtestantEpiscopalChurchintheUnitedStates(Missionary
Society).Ontheotherhand,theMissionaryDistrictofthePhilippineIslandsoftheProtestantEpiscopalChurchof
theU.S.A.(MissionaryDistrict)isadulyincorporatedandestablishedreligioussociety.ItownsandoperatestheSt.
Luke'sHospitalinQuezonCity,theBrentHospitalinZamboangaCityandtheSt.Stephen'sHighSchoolinManila.

Ondifferentdatesin1957,1958and1959,theMissionaryDistrictinthePhilippinesreceivedfromtheMissionary
SocietyintheUnitedStatesvariousshipmentsofmaterials,supplies,equipmentandotherarticlesintendedforusein
theconstructionandoperationofthenewSt.Luke'sHospitalinQuezonCityandtheBrentHospitalandSt.
Stephen'sHighSchool.TheMissionaryDistrictalsoreceivedfromacertainWilliamMinnisofCanadaastoveforthe
useoftheBrentHospital.Ontheseshipments,theCommissionerofInternalRevenueleviedandcollectedthetotal
amountofP118,847ascompensatingtax.

TheBishopoftheMissionaryDistrictfiledclaimsforrefundoftheamounthehadpaidonthegroundthatunder
RepublicActNo.1916,thematerialsandarticlesreceivedbyhimwereexemptfromthepaymentofcompensating
tax.Asthe2yearperiodforrecoveryoftaxwasabouttoexpire,theBishopoftheMissionaryDistrictfiledapetition
forreviewintheCourtofTaxAppeals,withoutawaitingactiononhisclaimforrefund.Subsequently,healsofiledtwo
supplementalpetitionsforreviewcoveringothershipmentsreceivedbyhimandonwhichhehadpaidcompensating
taxes.

TheCommissionerdeniedrespondent'sclaimforrefundonthegroundthatSt.Luke'sHospitalwasnotacharitable
institutionand,therefore,wasnotexemptunderthelaw.Aftertrial,theTaxCourtrenderedadecisionholdingthe
shipmentsexemptfromtaxationorderingthepetitionertorefundtotherespondenttheamountofP118,847.Itdenied
amotionforreconsiderationofitsdecision,promptingpetitionertointerposethisappeal.

Issue:WhetherornottheshipmentsforSt.LukesHospitalaretaxexempt.

Held:YES.
Thefollowingrequisitesmustconcurinorderthatataxpayermayclaimexemptionunderthelaw(1)theimported
articlesmusthavebeendonated(2)thedoneemustbeadulyincorporatedorestablishedinternationalcivic
organization,religiousorcharitablesociety,orinstitutionforcivicreligiousorcharitablepurposesand(3)thearticles
soimportedmusthavebeendonatedfortheuseoftheorganization,societyorinstitutionorforfreedistributionand
notforbarter,saleorhire.

Inthisappeal,thepetitionercontendsthattheimportationsinquestioncannotbeconsidered"donations"becausethe
MissionarySociety,whichmadetheshipments,andtheMissionaryDistrictinthePhilippinesarenotdifferentpersons
butratherareoneandthesame,thelatterbeingamerebranchoftheformer.Bystipulationoftheparties,the

respondentBishopisadmittedtobeacorporationsoledulyregisteredwiththeSecuritiesandExchangeCommission
andthattheMissionaryDistrictisa"dulyincorporatedandestablishedreligioussociety."Theyare,therefore,entities
separateanddistinctfromtheMissionarySocietywhoseaddressNewYork10,U.S.A.ThefactthattheMissionary
District,ofwhichrespondentistheBishop,isabranchoftheMissionarySocietyisofnomoment.Forthatmatter,so
istheRomanCatholicChurchinthePhilippinesabranchoftheUniversalRomanCatholicApostolicChurch,butit
isabranchonlyinreligiousmatters,inmattersoffaithanddogma.Inotherrespects,itisindependent.

Petitioner'sotherpointisthatSt.Luke'sHospitalisnotacharitableinstitutionconsideringthatitadmits
payingpatients.Indeed,itwasonthisgroundthatpetitionerdeniedrespondent'sclaimforrefund.Itis
arguedthatpursuanttothelastprovisoofRepublicActNo.1916,theSecretaryofFinanceissued
DepartmentOrderNo.18onOctober20,1958,statingthatHospitalsthatadmitpaypatientsandcharity
patients...arenotcharitableinstitutionsforpurposesofRepublicActNo1916.

Again,itshouldbeenoughtopointoutthattheadmissionofpaypatientsdoesnotdetractfromthe
charitablecharacterofahospital,if,asinthecaseofSt.Luke'sHospital,itsfundsaredevotedexclusivelyto
theMaintenanceoftheinstitution.TheSecretaryofFinancecannotlimitorotherwisequalifytheenjoyment
ofthisexemptiongrantedunderRepublicActNo.1916inimplementingthelaw.

syllabusindicatesadifferentdate(April14)butthisistheonlycasethatIcouldfindwiththistitleIn1957to
1959,theMissionaryDistrictreceivedvariousshipmentsofmaterials,supplies,equipmentandotherarticles
intendedforuseintheconstructionandoperationofthenewSt.LukesHospital.Ontheseshipments,the
Commissionercollectedcompensationtax.TheMissionaryDistrictfiledclaimsforrefund,butwhichwas
deniedbytheCommissioneronthegroundthatSt.LukesHospitalwasnotacharitableinstitutionand
thereforewasnotexemptfromtaxesbecauseitadmitspaypatients.

CIRvs.CA
FACTS:
In1980,YMCAearnedanincomeof676,829.80fromleasingoutaportionofitspremisestosmallshopowners,like
restaurantsandcanteenoperatorsand44,259fromparkingfeescollectedfromnonmembers.OnJuly2,1984,the
CIRissuedanassessmenttoYMCAfordeficiencytaxeswhichincludedtheincomefromleaseofYMCAsreal
property.YMCAformallyprotestedtheassessmentbuttheCIRdeniedtheclaimsofYMCA.Onappeal,theCTA
ruledinfavorofYMCAandexcludedincomefromleasetosmallshopownersandparkingfees.However,theCA
reversedtheCTAbutaffirmedtheCTAuponmotionforreconsideration.

Issue:WhethertherentalincomeofYMCAistaxable

Ruling:
Yes.TheexemptionclaimedbyYMCAisexpresslydisallowedbytheverywordingofthenSection27oftheNIRC
whichmandatesthattheincomeofexemptorganizations(suchastheYMCA)fromanyoftheirproperties,realor
personal,besubjecttothetaximposedbythesameCode.Whiletheincomereceivedbytheorganizations
enumeratedinSection26oftheNIRCis,asarule,exemptedfromthepaymentoftaxinrespecttoincomereceived
bythemassuch,theexemptiondoesnotapplytoincomederivedfromanyoftheirproperties,realorpersonalor
fromanyoftheiractivitiesconductedforprofit,regardlessofthedispositionmadeofsuchincome.

YMCAvs.CollectorofInternalRevenue
Facts:
TheYoungMen'sChristianAssociationofManilawasincorporatedunderthelawofthePhilippineIslands
andreceiveditscharacterinJune1907.Thepurposesofthisassociationwereexclusivelyforreligious,

charitableandeducational,indevelopingtheChristiancharacterandusefulnessofitsmembersandin
improvingthespiritual,mental,socialandphysicalconditionofyoungmen.

ThecityofManilaassessedandleviedataxontheproperty,contendingthatthepropertyistaxable.YMCA
paidthetaxesunderprotest.Thereafter,theyfiledanactiontorecoveritonthegroundthattheproperty
wasexemptfromtaxationunderthecharterofthecityofManila.Theassociationclaimedexemptionfrom
taxationonthegroundsthatitisareligious,charitableandeducationalinstitutionscombined.The
decisionwasforthecityandtheassociationappealed.

Issue:WhetherornotthebuildingandgroundsoftheYoungMen'sChristianAssociationofManilaare
subjecttotaxation

Held:
TheSupremeCourtruledthatthelodgingandboardinghousesranbytheassociationdonotconstitutea
business.Firstly,noprofitisrealizedbytheassociationinanysense.Secondly,thepurposeofthe
associationisnot,primarily,toobtainthemoneywhichcomesfromthelodgersandboarders.Thereal
purposeistokeepthemembershipcontinually.TheCourtregardedthisfeatureoftheinstitutionnotasa
businessormeansofmakingmoney,but,rather,asaveryefficientmeansofmaintainingtheinfluenceof
theinstitutionoveritsmembership.

Itisstatedthataninstitutionmustdevoteitselfexclusivelytooneortheotherofthepurposementioned
inthestatutebeforeitcanbeexemptfromtaxationbutthestatutedoesnotsaythatitmustbedevoted
exclusivelytoanyoneofthepurposesmentioned.Itmaybeacombinationoftwoorthreeormoreofthose
purposesandstillbeentitledtoexempt.YMCAcannotbesaidtobeaninstitutionusedexclusivelyfor
religiouspurposes,oraninstitutionusedexclusivelyforcharitablepurposes,oraninstitutiondevoted
exclusivelytoeducationalpurposes.Itis,rather,aninstitutionusedexclusivelyforallthreepurposes,and
that,assuchitisentitledtobeexemptedfromtaxation.

Sisonvs.Ancheta
Facts:
SisonassailsthevalidityofBP135w/cfurtheramendedSec21oftheNationalInternalRevenueCodeof1977.The
lawprovidesthattheredbeahighertaximpostagainstincomederivedfromprofessionalincomeasopposedto
regularincomeearners.Sison,asaprofessionalbusinessman,andastaxpayerallegesthatbyvirtuethereof,he
wouldbeundulydiscriminatedagainstbytheimpositionofhigherratesoftaxuponhisincomearisingfromthe
exerciseofhisprofessionvisavisthosewhichareimposeduponfixedincomeorsalariedindividualtaxpayers.He
characterizestheabovesectionasarbitraryamountingtoclasslegislation,oppressiveandcapriciousincharacter.
ThereisatransgressionofboththeequalprotectionanddueprocessclausesoftheConstitutionaswellasofthe
rulerequiringuniformityintaxation.

Issue:Whethertheimpositionofahighertaxrateontaxablenetincomederivedfrombusinessorprofessionthanon
compensationisconstitutionallyinfirm.

Held:
TheSCruledagainstSison.Thepowertotax,aninherentprerogative,hastobeavailedoftoassurethe
performanceofvitalstatefunctions.Itisthesourceofthebulkofpublicfunds.Taxes,beingthelifebloodofthe
government,theirpromptandcertainavailabilityisoftheessence.AccordingtotheConstitution:Theruleoftaxation
shallbeuniformandequitable.However,theruleofuniformitydoesnotcallforperfectuniformityorperfectequality,
becausethisishardlyattainable.Equalityanduniformityintaxationmeansthatalltaxablearticlesorkindsof
propertyofthesameclassshallbetaxedatthesamerate.Thetaxingpowerhastheauthoritytomakereasonable

andnaturalclassificationsforpurposesoftaxation.Wherethedifferentiationcomplainedofconformstothe
practicaldictatesofjusticeandequityitisnotdiscriminatorywithinthemeaningofthisclauseandistherefore
uniform.Thereisquiteasimilaritythentothestandardofequalprotectionforallthatisrequiredisthatthetax
appliesequallytoallpersons,firmsandcorporationsplacedinsimilarsituation.

OrmocSugarCompanyvs.TheTreasurerofOrmocCity
Facts:
January29,1964,themunicipalboardofOrmocCitypassedOrdinanceNo.4Seriesof1964imposingamunicipal
taxforallproductionsofcentrifugalsugarmilledequivalentto1%perexportsaletoUSAandotherforeigncountries.
PaymentsweremadeunderprotestbyOrmocsugarCompany.

SugarCompanyfiledbeforeCFIofLeyteacomplaintagainsttheCityofOrmocallegingthattheordinanceis
unconstitutionalforbeingviolativeoftheequalprotectionclauseandtheruleofuniformityoftaxation.Inresponse,
defendantsassertedthatthetaxordinancewaswithinthecity'spowertoenactunderLocalAutonomyActandthe
samedidnotviolateconstitutionallimitations.

Afterpretrialandsubmissionofcasememoranda,CFIdeclaredtheordinanceconstitutional,thatitiswithinthe
charterofthecity.

AppealwasthentakentoSCbytheOrmocSugarCompanyallegingthesamestatutoryandconstitutionalviolations.
AppellantquestionstheauthorityoftheMunicipalBoardtolevysuchtaxinviewoftheReviseddministrativeCode
whichdeniesmunicipalcouncilstoimposeexporttax.

Issue:Whetherconstitutionallimitsonthepoweroftaxation,andequalprotectionclauseandruleofuniformtaxation
wereinfringed?

Held:
Weruledthattheequalprotectionclauseappliesonlytopersonsorthingsidenticallysituatedanddoesnotbara
reasonableclassificationofthesubjectoflegislation,andaclassificationisreasonablewhere(1)itisbasedon
substantialdistinctionswhichmakerealdifferences(2)thesearegermanetothepurposeofthelaw(3)the
classificationappliesnotonlytopresentconditionsbutalsotofutureconditionswhicharesubstantiallyidenticalto
thoseofthepresent(4)theclassificationappliesonlytothosewhobelongtothesameclass.

Aperusaloftherequisitesinstantlyshowsthatthequestionedordinancedoesnotmeetthem,forittaxesonly
centrifugalsugarproducedandexportedbytheOrmocSugarCompany,Inc.andnoneother.Atthetimeofthetaxing
ordinance'senactment,OrmocSugarCompany,Inc.,itistrue,wastheonlysugarcentralinthecityofOrmoc.Still,
theclassification,tobereasonable,shouldbeintermsapplicabletofutureconditionsaswell.Thetaxingordinance
shouldnotbesingularandexclusiveastoexcludeanysubsequentlyestablishedsugarcentral,ofthesameclassas
plaintiff,forthecoverageofthetax.Asitisnow,eveniflaterasimilarcompanyissetup,itcannotbesubjecttothe
taxbecausetheordinanceexpresslypointsonlytoOrmocCitySugarCompany,Inc.astheentitytobeleviedupon.

Lladocvs.CommissionerofInternalRevenue
Facts:
Sometimein1957,M.B.EstateInc.,ofBacolodCity,donated10,000.00pesosincashtoFr.CrispinRuiz,theparish
priestofVictorias,NegrosOccidental,andpredecessorofFr.Lladoc,fortheconstructionofanewCatholicchurchin
thelocality.Thedonatedamountwasspentforsuchpurpose.

OnMarch3,1958,thedonorM.B.Estatefiledthedonor'sgifttaxreturn.UnderdateofApril29,1960.Commissioner

ofInternalRevenueissuedanassessmentforthedonee'sgifttaxagainsttheCatholicParishofVictoriasofwhich
petitionerwastheparishpriest.

Issue:WhetherornottheimpositionofgifttaxdespitethefacttheFr.LladocwasnottheParishpriestatthetimeof
donation,CatholicParishpriestofVictoriasdidnothavejuridicalpersonalityastheconstitutionalexemptionfor
religiouspurposeisvalid.

Held:
Yes,impositionofthegifttaxwasvalid,underSection22(3)ArticleVIoftheConstitutioncontemplatesexemption
onlyfrompaymentoftaxesassessedonsuchpropertiesasPropertytaxescontradistinguishedfromExcisetaxes
TheImpositionofthegifttaxonthepropertyusedforreligiouspurposeisnotaviolationoftheConstitution.Agifttax
isnotapropertybywayofgiftintervivos.

TheheadoftheDioceseandnottheparishpriestistherealpartyininterestintheimpositionofthedonee'staxon
thepropertydonatedtothechurchforreligiouspurpose

BishopofNuevaSegoviavs.ProvincialBoardofIlocosNorte
Facts:
TheRomanCatholicApostolicChurchistheownerofaparceloflandinSanNicolas,IlocosNorte.Onthesouthside
isapartoftheChurchyard,theconventandanadjacentlotsusedforavegetablegardeninwhichthereisastable
andawellfortheuseoftheconvent.InthecenteristheremainderofthechurchyardandtheChurch.Onthenorth
sideisanoldcemeterywithitstwowallsstillstanding,andaportionwhereformerlystoodatower.Theprovincial
boardassessedlandtaxonlotscomprisingthenorthandsouthside,whichthechurchpaidunderprotest.Itfiledsuit
torecovertheamount,allegingthatthecollectionofthistaxisillegal.

Issue:WhetherornotthelotsarecoveredbytheChurchstaxexemption

Held:
Theexemptioninfavoroftheconventinthepaymentoflandtaxreferstothehomeofthepriestwhopresidesover
thechurchandwhohastotakecareofhimselfinordertodischargehisduties.TheExemptionincludesnotonlythe
landactuallyoccupiedbytheChurchbutalsotheadjacentgrounddestinedtotheordinaryincidentalusesof
man.Avegetablegarden,thus,whichbelongstoaconvent,whereitsuseislimitedtothenecessityofthe
priest,comesundertheexemption.Inregardtothelotwhichformerlywasthecemeterywasneitherusedforany
commercialpurpose.Thelandwasusedasalodginghousebythepeoplewhoparticipateinreligiousfestivities,
whichconstituteanincidentaluseinreligiousfunctions.Likewiseitcomeswithintheexemption.