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G.R. No.

- versus -

FACTS: Petitioner PPI and private respondent Fertiphil are both engaged in the importation and
distribution of fertilizers, pesticides and agricultural chemicals. President Ferdinand Marcos,
exercising his legislative powers, issued LOI No. 1465 which provided, among others, for the
imposition of a capital recovery component (CRC) on the domestic sale of all grades of fertilizers in
thePhilippines. Pursuant to the LOI, Fertiphil paid P10 for every bag of fertilizer it sold in the
domestic market to the Fertilizer and Pesticide Authority (FPA). FPA then remitted the amount
collected to the Far East Bank and Trust Company, the depositary bank of PPI. Fertiphil
paid P6,689,144 to FPA from July 8, 1985 to January 24, 1986. After the 1986 Edsa Revolution, FPA
voluntarily stopped the imposition of the P10 levy. With the return of democracy, Fertiphil
demanded from PPI a refund of the amounts it paid under LOI No. 1465, but PPI refused to accede to
the demand. Fertiphil filed a complaint for collection and damages against FPA and PPI with the RTC
in Makati. It questioned the constitutionality of LOI No. 1465 for being unjust, unreasonable,
oppressive, invalid and an unlawful imposition that amounted to a denial of due process of
law. Fertiphil alleged that the LOI solely favored PPI, a privately owned corporation, which used the
proceeds to maintain its monopoly of the fertilizer industry. In its Answer, FPA, through the Solicitor
General, countered that the issuance of LOI No. 1465 was a valid exercise of the police power of the
State in ensuring the stability of the fertilizer industry in the country. It also averred that Fertiphil
did not sustain any damage from the LOI because the burden imposed by the levy fell on the ultimate
consumer, not the seller. The RTC rendered judgment in favor of Fertiphil.

ISSUE: WON LOI No. 1465 is valid.

HELD: No. The P10 levy under LOI No. 1465 is too excessive to serve a mere regulatory purpose. The
levy, no doubt, was a big burden on the seller or the ultimate consumer. It increased the price of a
bag of fertilizer by as much as five percent. A plain reading of the LOI also supports the conclusion
that the levy was for revenue generation. The LOI expressly provided that the levy was
imposed until adequate capital is raised to make PPI viable. Taxes are exacted only for a public
purpose. The P10 levy is unconstitutional because it was not for a public purpose. The levy was
imposed to give undue benefit to PPI. The LOI expressly provided that the levy be imposed to benefit
PPI, a private company. It is a basic rule of statutory construction that the text of a statute should be
given a literal meaning. In this case, the text of the LOI is plain that the levy was imposed in order to
raise capital for PPI. The framers of the LOI did not even hide the insidious purpose of the law. They
were cavalier enough to name PPI as the ultimate beneficiary of the taxes levied under the LOI. We
find it utterly repulsive that a tax law would expressly name a private company as the ultimate
beneficiary of the taxes to be levied from the public. This is a clear case of crony capitalism. Second,
the LOI provides that the imposition of the P10 levy was conditional and dependent upon PPI
becoming financially viable. This suggests that the levy was actually imposed to benefit PPI. The LOI
notably does not fix a maximum amount when PPI is deemed financially viable. Worse, the liability
of Fertiphil and other domestic sellers of fertilizer to pay the levy is made indefinite. They are
required to continuously pay the levy until adequate capital is raised for PPI. Third, the RTC and the
CA held that the levies paid under the LOI were directly remitted and deposited by FPA to Far East
Bank and Trust Company, the depositary bank of PPI. This proves that PPI benefited from the LOI. It
is also proves that the main purpose of the law was to give undue benefit and advantage to PPI.
Fourth, the levy was used to pay the corporate debts of PPI. It is clear from the Letter of
Understanding that the levy was imposed precisely to pay the corporate debts of PPI. The Court
cannot agree with PPI that the levy was imposed to ensure the stability of the fertilizer industry in
the country. The letter of understanding and the plain text of the LOI clearly indicate that the levy
was exacted for the benefit of a private corporation.

G.R. No. L-10405

WENCESLAO PASCUAL, in his official capacity as Provincial Governor of Rizal, petitioner-

FACTS: Governor Wenceslao Pascual of Rizal instituted this action for declaratory relief, with
injunction, upon the ground that RA No. 920, which apropriates funds for public works particularly
for the construction and improvement of Pasig feeder road terminals. Some of the feeder roads,
however, as alleged and as contained in the tracings attached to the petition, were nothing but
projected and planned subdivision roads, not yet constructed within the Antonio Subdivision,
belonging to private respondent Zulueta, situated at Pasig, Rizal; and which projected feeder roads
do not connect any government property or any important premises to the main highway. The
respondents' contention is that there is public purpose because people living in the subdivision will
directly be benefitted from the construction of the roads, and the government also gains from the
donation of the land supposed to be occupied by the streets, made by its owner to the government.

ISSUE: WON RA No. 920 is valid.

HELD: No. It is a general rule that the legislature is without power to appropriate public revenue for
anything but a public purpose. It is the essential character of the direct object of the expenditure
which must determine its validity as justifying a tax, and not the magnitude of the interest to be
affected nor the degree to which the general advantage of the community, and thus the public welfare,
may be ultimately benefited by their promotion. Incidental to the public or to the state, which results
from the promotion of private interest and the prosperity of private enterprises or business, does not
justify their aid by the use public money. The validity of a statute depends upon the powers of
Congress at the time of its passage or approval, not upon events occurring, or acts performed,
subsequently thereto, unless the latter consists of an amendment of the organic law, removing, with
retrospective operation, the constitutional limitation infringed by said statute. Referring to the
P85,000.00 appropriation for the projected feeder roads in question, the legality thereof depended
upon whether said roads were public or private property when the bill, which, latter on, became
Republic Act 920, was passed by Congress, or, when said bill was approved by the President and the
disbursement of said sum became effective. Inasmuch as the land on which the projected feeder roads
were to be constructed belonged then to respondent Zulueta, the result is that said appropriation
sought a private purpose, and hence, was null and void. The donation to the Government, over five
(5) months after the approval and effectivity of said Act, made, according to the petition, for the
purpose of giving a "semblance of legality", or legalizing, the appropriation in question, did not cure
its aforementioned basic defect. Consequently, a judicial nullification of said donation need not
precede the declaration of unconstitutionality of said appropriation.

G.R. Nos. 70116-19


FACTS: the petitioners are citizens of the United States; holders of American passports and admitted
as Special Temporary Visitors under Section 9 (a) visa of the Philippine Immigration Act of 1940, as
amended; civilian employees in the U.S. Military Base in the Philippines in connection with its
construction, maintenance, operation, and defense; and incomes are solely derived from salaries
from the U.S. government by reason of their employment in the U.S. Bases in the Philippines." They
all filed with the Court of Tax Appeal for the cancellation of the assessments for deficiency income
tax for taxable years 1969-1972, inclusive of interests and penalties. They alleged that under the
scope of the tax exemption provision in Article XII, Par. 2, of the RP-US Military Bases Agreement of
1947, which provides that No national of the United States serving in or employed in the Philippines
in connection with the construction, maintenance, operation or defense of the bases and residing in
the Philippines by reason only of such employment, or his spouse and minor children and dependent
parents of either spouse, shall be liable to pay income tax in the Philippines except in respect of
income derived from Philippine sources or sources other than the United States sources. The Court
a quo after due hearing, rendered its judgment in favor of respondents cancelling and setting aside
the assessments for deficiency income taxes of respondents for the taxable years 1969-1972,
inclusive of interests and penalties.

ISSUE: WON the petitioners are tax exempt.

HELD: Yes. In order to avail oneself of the tax exemption under the RP-US Military Bases Agreement:
he must be a national of the United States employed in connection with the construction,
maintenance, operation or defense, of the bases, residing in the Philippines by reason of such
employment, and the income derived is from the U.S. Government (Art. XII par. 2 of PI-US Military
Bases Agreement of 1947). Said circumstances are all present in the case at bar. It bears repeating as
so disclosed in the records that the petitioners together with families upon repatriation in 1945 had
since acquired domicile and residency in the United States. And, obtained employment with the
United States Federal Service. Not until after several years of a hiatus, petitioners did return to the
Philippines not so much of honoring a pledge nor of sentimental journey but by reason of taking up
assigned duties with the United States military bases in the Philippines where they were gainfully
employed by the U.S. Federal Government. The situation of the petitioners is of no different mold as
of the rest of the U.S. civilian employees who continued to enjoy the benefits of tax exemption under
the Agreement, Petitioners' circumstances before the questioned ruling remained obtaining thru the
taxable years 1969-1972. It appears too much of a stretch to hold petitioners straight-jacketed to an
irreversible situs of birth constraint and by reason thereof deny altogether any opportunity to a
serendipitous enjoyment of a tax relief accorded in the Agreement. Such a random quirk of pirouette
in the tax treatment fags sharply at odds with the shared expectations of the high contracting
parties. This Court will not deem itself authorized to depart from the plain meaning of the tax exemption
provision so explicit in terms and so searching in extent.(Emphasis supplied) This does not however
foreclose the possibility of petitioners' coming to roost in the country contingent upon the
termination of their tour of duty, but only then may the bridge be crossed for tax purposes.

G.R. No. 188550


FACTS: In accordance with Section 28(A)(5) of the National Internal Revenue Code (NIRC) of 1997,
petitioner withheld and remitted to respondent the amount of PHP 67,688,553.51, which
represented the fifteen percent (15%) branch profit remittance tax (BPRT) on its regular banking
unit (RBU) net income remitted to Deutsche Bank Germany (DB Germany) for 2002 and prior taxable
years. Believing that it made an overpayment of the BPRT, petitioner filed with the BIR Large
Taxpayers Assessment and Investigation Division an administrative claim for refund or issuance of
its tax credit certificate in the total amount of PHP 22,562,851.17. On the same date, petitioner
requested from the International Tax Affairs Division (ITAD) a confirmation of its entitlement to the
preferential tax rate of 10% under the RP-Germany Tax Treaty. Alleging the inaction of the BIR on its
administrative claim, petitioner filed a Petition for Review with the CTA. Petitioner reiterated its
claim for the refund or issuance of its tax credit certificate for the amount of PHP 22,562,851.17
representing the alleged excess BPRT paid on branch profits remittance to DB Germany. The claim of
petitioner for a refund was denied by the CTA Second Division on the ground that the application for
a tax treaty relief was not filed with ITAD prior to the payment by the former of its BPRT and actual
remittance of its branch profits to DB Germany, or prior to its availment of the preferential rate of
ten percent (10%) under the RP-Germany Tax Treaty provision. The court a quo held that petitioner
violated the fifteen (15) day period mandated under Section III paragraph (2) of Revenue
Memorandum Order (RMO) No. 1-2000. The CTA En Banc affirmed the CTA Second Divisions
ISSUE: WON Deutsche Bank is entitled to tax refund.

HELD: tax treaties are entered into to minimize, if not eliminate the harshness of international
juridical double taxation, which is why they are also known as double tax treaty or double tax
agreements. "A state that has contracted valid international obligations is bound to make in its
legislations those modifications that may be necessary to ensure the fulfillment of the obligations
undertaken." Thus, laws and issuances must ensure that the reliefs granted under tax treaties are
accorded to the parties entitled thereto. The BIR must not impose additional requirements that
would negate the availment of the reliefs provided for under international agreements. More so,
when the RP-Germany Tax Treaty does not provide for any pre-requisite for the availment of the
benefits under said agreement. Likewise, it must be stressed that there is nothing in RMO No. 1-2000
which would indicate a deprivation of entitlement to a tax treaty relief for failure to comply with the
15-day period. We recognize the clear intention of the BIR in implementing RMO No. 1-2000, but the
CTAs outright denial of a tax treaty relief for failure to strictly comply with the prescribed period is
not in harmony with the objectives of the contracting state to ensure that the benefits granted under
tax treaties are enjoyed by duly entitled persons or corporations. Bearing in mind the rationale of tax
treaties, the period of application for the availment of tax treaty relief as required by RMO No. 1-2000
should not operate to divest entitlement to the relief as it would constitute a violation of the duty
required by good faith in complying with a tax treaty. The denial of the availment of tax relief for the
failure of a taxpayer to apply within the prescribed period under the administrative issuance would
impair the value of the tax treaty. At most, the application for a tax treaty relief from the BIR should
merely operate to confirm the entitlement of the taxpayer to the relief. The obligation to comply with
a tax treaty must take precedence over the objective of RMO No. 1-2000. Logically, noncompliance
with tax treaties has negative implications on international relations, and unduly discourages foreign
investors. While the consequences sought to be prevented by RMO No. 1-2000 involve an
administrative procedure, these may be remedied through other system management processes, e.g.,
the imposition of a fine or penalty. But we cannot totally deprive those who are entitled to the benefit
of a treaty for failure to strictly comply with an administrative issuance requiring prior application
for tax treaty relief.

G.R. No. L-4376

MAYOR, all of the City of Manila, respondents-appellees.

FACTS: The Association of Customs Brokers, Inc., which is composed of all brokers and public service
operators of motor vehicles in the City of Manila, and G. Manlapit, Inc., a member of said association,
also a public service operator of the trucks in said City, challenge the validity of Ordinance No. 3379
passed by the Municipal Board of the City of Manila on the ground that (1) while it levies a so-called
property tax it is in reality a license tax which is beyond the power of the Municipal Board of the City
of Manila; (2) said ordinance offends against the rule of uniformity of taxation; and (3) it constitutes
double taxation. The respondents, represented by the city fiscal, contend on their part that the
challenged ordinance imposes a property tax which is within the power of the City of Manila to
impose under its Revised Charter [Section 18 (p) of Republic Act No. 409], and that the tax in question
does not violate the rule of uniformity of taxation, nor does it constitute double taxation. The Court
of First Instance of Manila sustained the validity of the ordinance and dismissed the petition.

ISSUE: WON the ordinance is valid.

RULING: No. The ordinance infringes the rule of the uniformity of taxation ordained by our
Constitution. Note that the ordinance exacts the tax upon all motor vehicles operating within the City
of Manila. It does not distinguish between a motor vehicle for hire and one which is purely for private
use. Neither does it distinguish between a motor vehicle registered in the City of Manila and one
registered in another place but occasionally comes to Manila and uses its streets and public highways.
The distinction is important if we note that the ordinance intends to burden with the tax only those
registered in the City of Manila as may be inferred from the word "operating" used therein. The word
"operating" denotes a connotation which is akin to a registration, for under the Motor Vehicle Law
no motor vehicle can be operated without previous payment of the registration fees. There is no
pretense that the ordinance equally applies to motor vehicles who come to Manila for a temporary
stay or for short errands, and it cannot be denied that they contribute in no small degree to the
deterioration of the streets and public highway. The fact that they are benefited by their use they
should also be made to share the corresponding burden. And yet such is not the case. This is an
inequality which we find in the ordinance, and which renders it offensive to the Constitution.

G.R. No. 101273

CONGRESSMAN ENRIQUE T. GARCIA (Second District of Bataan), petitioner,

FACTS: The President issued Executive Order No. 438 which imposed, in addition to any other duties,
taxes and charges imposed by law on all articles imported into the Philippines, an additional duty of
five percent (5%) ad valorem. This additional duty was imposed across the board on all imported
articles, including crude oil and other oil products imported into the Philippines. This additional duty
was subsequently increased from five percent (5%) ad valorem to nine percent (9%) ad valorem by
the promulgation of Executive Order No. 443. The Department of Finance requested the Tariff
Commission to initiate the process required by the Tariff and Customs Code for the imposition of a
specific levy on crude oil and other petroleum products, covered by HS Heading Nos. 27.09, 27.10
and 27.11 of Section 104 of the Tariff and Customs Code as amended. Accordingly, the Tariff
Commission, following the procedure set forth in Section 401 of the Tariff and Customs Code,
scheduled a public hearing to give interested parties an opportunity to be heard and to present
evidence in support of their respective positions. Meantime, Executive Order No. 475 was issued by
the President reducing the rate of additional duty on all imported articles from nine percent (9%) to
five percent (5%) ad valorem, except in the cases of crude oil and other oil products which continued
to be subject to the additional duty of nine percent (9%) ad valorem. Upon completion of the public
hearings, the Tariff Commission submitted to the President a "Report on Special Duty on Crude Oil
and Oil Products" for consideration and appropriate action. Subsequently, the President issued
Executive Order No. 478, which levied (in addition to the aforementioned additional duty of nine
percent (9%) ad valorem and all other existing ad valorem duties) a special duty of P0.95 per liter or
P151.05 per barrel of imported crude oil and P1.00 per liter of imported oil products.

ISSUE: WON EO No. 475 & 478 is valid.

RULING: Yes. Under Section 24, Article VI of the Constitution, the enactment of appropriation,
revenue and tariff bills, like all other bills is, of course, within the province of the Legislative rather
than the Executive Department. It does not follow, however, that therefore Executive Orders Nos. 475
and 478, assuming they may be characterized as revenue measures, are prohibited to the President,
that they must be enacted instead by the Congress of the Philippines. There is an explicit
constitutional permission to Congress to authorize the President "subject to such limitations and
restrictions is [Congress] may impose" to fix "within specific limits" "tariff rates . . . and other duties
or imposts . . ." The relevant congressional statute is the Tariff and Customs Code of the Philippines,
and Sections 104 and 401, the pertinent provisions thereof. These are the provisions which the
President explicitly invoked in promulgating Executive Orders Nos. 475 and 478.

Customs duties which are assessed at the prescribed tariff rates are very much like taxes which are
frequently imposed for both revenue-raising and for regulatory purposes. Thus, it has been held that
"customs duties" is "the name given to taxes on the importation and exportation of commodities, the
tariff or tax assessed upon merchandise imported from, or exported to, a foreign country." The
levying of customs duties on imported goods may have in some measure the effect of protecting local
industries where such local industries actually exist and are producing comparable goods.
Simultaneously, however, the very same customs duties inevitably have the effect of producing
governmental revenues. Customs duties like internal revenue taxes are rarely, if ever, designed to
achieve one policy objective only. Most commonly, customs duties, which constitute taxes in the
sense of exactions the proceeds of which become public funds have either or both the generation
of revenue and the regulation of economic or social activity as their moving purposes and frequently,
it is very difficult to say which, in a particular instance, is the dominant or principal objective. In the
instant case, since the Philippines in fact produces ten (10) to fifteen percent (15%) of the crude oil
consumed here, the imposition of increased tariff rates and a special duty on imported crude oil and
imported oil products may be seen to have some "protective" impact upon indigenous oil production.
For the effective, price of imported crude oil and oil products is increased. At the same time, it cannot
be gainsaid that substantial revenues for the government are raised by the imposition of such
increased tariff rates or special duty.

G.R. No. 152904

- versus -

FACTS: Association of Benevola de Cebu, Inc. is a non-stock, non-profit organization organized under
the laws of the Republic of the Philippines and is the owner of Chong Hua Hospital (CHH)
in Cebu City. Respondent constructed the CHH Medical Arts Center (CHHMAC) and thereafter,
an Certificate of Occupancy was issued to the center with a classification of Commercial [Clinic].
Petitioner City Assessor of Cebu City assessed the CHHMAC building under Tax Declaration (TD) No.
97 GR-04-024-02529 as commercial with a market value of PhP 28,060,520 and an assessed value of
PhP 9,821,180 at the assessment level of 35% for commercial buildings, and not at the 10% special
assessment currently imposed for CHH and its other separate buildings the CHHs Dietary and
Records Departments. Thus, respondent filed its letter-petition with the Cebu City LBAA for
reconsideration, asserting that CHHMAC is part of CHH and ought to be imposed the same special
assessment level of 10% with that of CHH.

ISSUE: WON the center built by the hospital to house its doctors is a separate commercial
establishment or an appurtenant to the hospital.

RULING: Chong Hua Hospital Medical Arts Center is an integral part of Chong Hua Hospital. It is
undisputed that the doctors and medical specialists holding clinics in CHHMAC are those duly
accredited by CHH, that is, they are consultants of the hospital and the ones who can treat CHHs
patients confined in it. This fact alone takes away CHHMAC from being categorized as commercial
since a tertiary hospital like CHH is required by law to have a pool of physicians who comprises the
required medical departments in various medical fields. These physicians holding offices or clinics in
CHHMAC, duly appointed or accredited by CHH, precisely fulfill and carry out their roles in the
hospitals services for its patients through the CHHMAC. The fact that they are holding office in a
separate building, like at CHHMAC, does not take away the essence and nature of their services vis--
vis the over-all operation of the hospital and the benefits to the hospitals patients. Given what the
law requires, it is clear that CHHMAC is an integral part of CHH. These accredited physicians normally
hold offices within the premises of the hospital; in which case there is no question as to the conduct
of their business in the ambit of diagnosis, treatment and/or confinement of patients. This was the
case before 1998 and before CHHMAC was built. Verily, their transfer to a more spacious and,
perhaps, convenient place and location for the benefit of the hospitals patients does not remove them
from being an integral part of the overall operation of the hospital. The CHHMAC facility, while
seemingly not indispensable to the operations of CHH, is definitely incidental to and reasonably
necessary for the operations of the hospital.

G.R. No. 103524

AL., petitioners,
HON. FRANKLIN N. DRILON, in his capacity as Executive Secretary, HON. GUILLERMO
CARAGUE, in his capacity as Secretary of Department of Budget and Management, and HON.
ROSALINA CAJUCOM, in her capacity as National Treasurer, respondents.

FACTS: In 1990, Congress sought to reenact some old laws that were repealed during the time of
former President Ferdinand Marcos. These old laws provided certain retirement benefits to retired
judges, justices, and members of the constitutional commissions. Congress felt a need to restore these
laws in order to standardize retirement benefits among government officials. However, President
Corazon Aquino vetoed the bill (House Bill No. 16297) on the ground that the law should not give
preferential treatment to certain or select government officials. Meanwhile, a group of retired judges
and justices filed a petition with the Supreme Court asking the court to readjust their pensions. They
pointed out that RA 1797 was never repealed (by P.D. No. 644) because the said PD was one of those
unpublished PDs which were subject of the case of Taada v. Tuvera. Hence, the repealing law never
existed due to non publication and in effect, RA 1797 was never repealed. The Supreme Court then
readjusted their pensions.
Congress took notice of the readjustment and son in the General Appropriations Bill (GAB) for 1992,
Congress allotted additional budget for pensions of retired justices. Congress however did the
allotment in the following manner: Congress made an item entitled: General Fund Adjustment;
included therein are allotments to unavoidable obligations in different brances of the government;
among such obligations is the allotment for the pensions of retired justices of the judiciary. However,
President Aquino again vetoed the said lines which provided for the pensions of the retired justices
in the judiciary in the GAB. She explained that that portion of the GAB is already deemed vetoed when
she vetoed H.B. 16297. This prompted Cesar Bengzon and several other retired judges and justices
to question the constitutionality of the veto made by the President. The President was represented
by then Executive Secretary Franklin Drilon.

ISSUE: Whether or not the veto of the President on that portion of the General Appropriations bill is

HELD: No. The Justices of the Court have vested rights to the accrued pension that is due to them in
accordance to Republic Act 1797 which was never repealed. The president has no power to set aside
and override the decision of the Supreme Court neither does the president have the power to enact
or amend statutes promulgated by her predecessors much less to the repeal of existing laws. The
Supreme Court also explained that the veto is unconstitutional since the power of the president to
disapprove any item or items in the appropriations bill does not grant the authority to veto part of
an item and to approve the remaining portion of said item. It appears that in the same item, the
Presidents vetoed some portion of it and retained the others. This cannot be done. The rule is: the
Executive must veto a bill in its entirety or not at all; the Executive must veto an entire line item in
its entirety or not at all. In this case, the president did not veto the entire line item of the general
adjustment fund. She merely vetoed the portion which pertained to the pensions of the justices but
did not veto the other items covering obligations to the other departments of the government.

G.R. No. 115455

ARTURO M. TOLENTINO, petitioner,

FACTS: RA 7716, otherwise known as the Expanded Value-Added Tax Law, is an act that seeks to
widen the tax base of the existing VAT system and enhance its administration by amending the
National Internal Revenue Code. There are various suits questioning and challenging the
constitutionality of RA 7716 on various grounds.
Tolentino contends that RA 7716 did not originate exclusively from the House of Representatives
but is a mere consolidation of HB. No. 11197 and SB. No. 1630 and it did not pass three readings
on separate days on the Senate thus violating Article VI, Sections 24 and 26(2) of the Constitution,

ISSUE: WON RA 7716 violated Article VI, Sections 24 and 26(2) of the Constitution

RULING: No. It is not the law but the revenue bill which is required by the Constitution to
"originate exclusively" in the House of Representatives. It is important to emphasize this, because a
bill originating in the House may undergo such extensive changes in the Senate that the result may
be a rewriting of the whole. The possibility of a third version by the conference committee will be
discussed later. At this point, what is important to note is that, as a result of the Senate action, a
distinct bill may be produced. To insist that a revenue statute and not only the bill which initiated
the legislative process culminating in the enactment of the law must substantially be the same as
the House bill would be to deny the Senate's power not only to "concur with amendments" but also
to "propose amendments." It would be to violate the coequality of legislative power of the two houses
of Congress and in fact make the House superior to the Senate. The contention that the constitutional
design is to limit the Senate's power in respect of revenue bills in order to compensate for the grant
to the Senate of the treaty-ratifying power and thereby equalize its powers and those of the House
overlooks the fact that the powers being compared are different. We are dealing here with the
legislative power which under the Constitution is vested not in any particular chamber but in the
Congress of the Philippines, consisting of "a Senate and a House of Representatives." The exercise of
the treaty-ratifying power is not the exercise of legislative power. It is the exercise of a check on the
executive power. There is, therefore, no justification for comparing the legislative powers of the
House and of the Senate on the basis of the possession of such nonlegislative power by the Senate.

The next argument of petitioners that S. No. 1630 did not pass three readings on separate days as
required by the Constitution because the second and third readings were done on the same day. But
this was because the President had certified S. No. 1630 as urgent. The presidential certification
dispensed with the requirement not only of printing but also that of reading the bill on separate days.
The phrase "except when the President certifies to the necessity of its immediate enactment, etc." in
Art. VI, 26(2) qualifies the two stated conditions before a bill can become a law: (i) the bill has
passed three readings on separate days and (ii) it has been printed in its final form and distributed
three days before it is finally approved. That upon the certification of a bill by the President the
requirement of three readings on separate days and of printing and distribution can be dispensed
with is supported by the weight of legislative practice.

G.R. No. 119252

HON. APOLINARIO B. SANTOS, in his capacity as Presiding Judge of the Regional Trial Court,

FACTS: Guild of Philippine Jewelers, Inc., is an association of Filipino jewelers engaged in the
manufacture of jewelers and allied undertakings. Among its members are Hans Brumann, Inc.,
Miladay Jewels Inc., Mercelles, Inc., Solid Gold International Traders inc., Diagem Trading
Corporation, and Private respondent Jewelry by Marco & Co., Inc. Private respondent Antonio M.
Marco is the President of the Guild. Felicidad L. Viray, then Regional Director, Region No. 4-A of the
Bureau of Internal Revenue, acting for and in behalf of the Commissioner of Internal Revenue, issued
Regional Mission Order No. 109-88 to BIR officers, led by Eliseo Corcega, to conduct surveillance,
monitoring, and inventory of all imported articles of Hans Brumann, Inc., and place the same under
preventive embargo. Pursuant to the aforementioned Mission Order, the BIR officers proceeded to
the establishment of Hans Brumann, Inc., served the Mission Order, and informed the establishment
that they were going to make an inventory of the articles involved to see if the proper taxes thereon
have been paid. They then made an inventory of the articles displayed in the cabinets with the
assistance of an employee of the establishment. They listed down the articles, which list was signed
by the assistant employee. They also requested the presentation of proof of necessary payments for
excise tax and value-added tax on said articles. The BIR officers requested the establishment not to
sell the articles until it can be proven that the necessary taxes thereon have been paid. Accordingly,
Mr. Hans Brumann, the owner of the establishment, signed a receipt for Goods, Articles, and Things
Seized under Authority of the National Internal Revenue Code, acknowledging that the articles
inventoried have been seized and left in his possession, and promising not to dispose of the same
without authority of the Commissioner of Internal Revenue pending investigation. Subsequently, BIR
officer Eliseo Corcega submitted to his superiors a report of the inventory conducted and a
computation of the value-added tax and ad valorem tax on the articles for evaluation and disposition.
Mr. Hans Brumann, the owner of the establishment, never filed a protest with the BIR on the
preventive embargo of the articles. A Letter of Authority No. 0020596 was issued by Deputy
Commissioner Eufracio D. Santos to BIR officers to examine the books of accounts and other
accounting records of Hans Brumann, Inc., for stocktaking investigation for excise tax purposes for
the period January 1, 1988 to present. In a letter, in connection with the physical count of the
inventory (stocks on hand) pursuant to said Letter of Authority, Hans Brumann, Inc. was requested
to prepare and make available to the BIR the documents indicated therein. Hans Brumann, inc., did
not produce the documents requested by the BIR.

ISSUE: WON the provisions of the Tariff and Customs Code are oppressive and confiscatory
RULING: Yes. The respondents presented an exhaustive study on the tax rates on jewelry levied by
different Asian countries. This is meant to convince the Court that compared to other countries, the
tax rates imposed on said industry in the Philippines is oppressive and confiscatory. The Supreme
Court, however, cannot subscribe to the theory that the tax rates of other countries should be used
as a yardstick in determining what may be the proper subjects of taxation in our own country. It
should be pointed out that in imposing the aforementioned taxes and duties, the State, acting through
the legislative and executive branches, is exercising its sovereign prerogative. It is inherent in the
power to tax that the State be free to select the subjects of taxation, and it has been repeatedly held
that inequalities which result from singling out of one particular class for taxation, or exemption,
infringe no constitutional limitation.

G.R. No. 158540


FACTS: The case centers on the interpretation of the provisions of Republic Act No. 8800, the
Safeguard Measures Act (SMA), which was one of the laws enacted by Congress soon after the
Philippines ratified the General Agreement on Tariff and Trade (GATT) and the World Trade
Organization (WTO) Agreement. The SMA provides for the structure and mechanics for the
imposition of emergency measures, including tariffs, to protect domestic industries and
producers from increased imports which inflict or could inflict serious injury on them. Philcemcor
filed with the Department of Trade and Industry (DTI) a petition seeking for the imposition of
safeguard measures on Gray Portland cement, in accordance with the SMA. After the DTI issued a
provisional safeguard measure, the application was referred to the Tariff Commission for a
formal investigation pursuant to Section 9 of the SMA and its Implementing Rules and Regulations,
in order to determine whether or not to impose a definitive safeguard measure on imports of
gray Portland cement. After public hearings and conducting its own investigation, the Tariff
Commission came out with a negative finding. Notwithstanding such finding, the DTI sought the
opinion of the Secretary of Justice whether it could still impose a definitive safeguard measure. The
Secretary of Justice opined that the DTI could not do so under the SMA, and so the DTI Secretary
then promulgated a Decision wherein he expressed the DTIs disagreement with the conclusions
of the Tariff Commission, but at the same time, ultimately denying Philcemcors application for
safeguard measures on the ground that the he was bound to do so in light of the Tariff Commissions
negative findings. Philcemcor filed with the Court of Appeals a Petition for Certiorari, Prohibition and
Mandamus seeking to set aside the DTI Decision, as well as the Tariff Commissions Report.
Philcemcor argued that the DTI Secretary, vested as he is under the law with the power of review, is
not bound to adopt the recommendations of the Tariff Commission; and, that the Report is void, as it
is predicated on a flawed framework, inconsistent inferences and erroneous methodology. The CA
held that the DTI Secretary was not bound by the factual findings of the Tariff Commission since such
findings are merely recommendatory and they fall within the ambit of the Secretarys discretionary
review. It determined that the legislative intent is to grant the DTI Secretary the power to make a
final decision on the Tariff Commissions recommendation.

ISSUE: WON the delegation of the power to the DTI Secretary is valid.

RULING: Yes. The Court recognizes that the authority delegated to the President under Section 28(2),
Article VI may be exercised, in accordance with legislative sanction, by the alter egos of the President,
such as department secretaries. Indeed, for purposes of the Presidents exercise of power to impose
tariffs under Article VI, Section 28(2), it is generally the Secretary of Finance who acts as alter ego of
the President. The SMA provides an exceptional instance wherein it is the DTI or Agriculture
Secretary who is tasked by Congress, in their capacities as alter egos of the President, to impose such
measures. Certainly, the DTI Secretary has no inherent power, even as alter ego of the President, to
levy tariffs and imports. When Congress tasks the President or his/her alter egos to impose safeguard
measures under the delineated conditions, the President or the alter egos may be properly deemed
as agents of Congress to perform an act that inherently belongs as a matter of right to the legislature.
It is basic agency law that the agent may not act beyond the specifically delegated powers or
disregard the restrictions imposed by the principal. In short, Congress may establish the procedural
framework under which such safeguard measures may be imposed, and assign the various offices in
the government bureaucracy respective tasks pursuant to the imposition of such measures, the task
assignment including the factual determination of whether the necessary conditions exists to
warrant such impositions. Under the SMA, Congress assigned the DTI Secretary and the Tariff
Commission their respective functions in the legislatures scheme of things. There is only one viable
ground for challenging the legality of the limitations and restrictions imposed by Congress under
Section 28(2) Article VI, and that is such limitations and restrictions are themselves violative of the
Constitution. Thus, no matter how distasteful or noxious these limitations and restrictions may seem,
the Court has no choice but to uphold their validity unless their constitutional infirmity can be

G.R. No. 195909


FACTS: The Bureau of Internal Revenue (BIR) assessed St. Luke's deficiency taxes amounting
toP76,063,116.06 for 1998, comprised of deficiency income tax, value-added tax, withholding tax on
compensation and expanded withholding tax. The BIR reduced the amount to P63,935,351.57 during
trial in the First Division of the CTA. St. Luke's filed an administrative protest with the BIR against
the deficiency tax assessments. The BIR did not act on the protest within the 180-day period under
Section 228 of the NIRC. Thus, St. Luke's appealed to the CTA. The BIR argued before the CTA that
Section 27(B) of the NIRC, which imposes a 10% preferential tax rate on the income of proprietary
non-profit hospitals, should be applicable to St. Luke's. It is a specific provision which prevails over
the general exemption on income tax granted under Section 30(E) and (G) for non-stock, non-profit
charitable institutions and civic organizations promoting social welfare.The BIR claimed that St.
Luke's was actually operating for profit in 1998 because only 13% of its revenues came from
charitable purposes. Moreover, the hospital's board of trustees, officers and employees directly
benefit from its profits and assets. St. Luke's had total revenues of P1,730,367,965 or
approximately P1.73 billion from patient services in 1998. St. Luke's contended that the BIR should
not consider its total revenues, because its free services to patients wasP218,187,498 or 65.20% of
its 1998 operating income (i.e., total revenues less operating expenses) ofP334,642,615. St. Luke's
also claimed that its income does not inure to the benefit of any individual. St. Luke's maintained that
it is a non-stock and non-profit institution for charitable and social welfare purposes under Section
30(E) and (G) of the NIRC. It argued that the making of profit per se does not destroy its income tax

ISSUE: WON St. Lukes is exempt from income tax.

RULING: No. The Court finds that St. Lukes is a corporation that is not operated exclusively for
charitable or social welfare purposes insofar as its revenues from paying patients are concerned. This
ruling is based not only on a strict interpretation of a provision granting tax exemption, but also on
the clear and plain text of Section 30(E) and (G). Section 30(E) and (G) of the NIRC requires that an
institution be operated exclusively for charitable or social welfare purposes to be completely
exempt from income tax. An institution under Section 30(E) or (G) does not lose its tax exemption if
it earns income from its for-profit activities. Such income from for-profit activities, under the last
paragraph of Section 30, is merely subject to income tax, previously at the ordinary corporate rate
but now at the preferential 10% rate pursuant to Section 27(B). St. Lukes fails to meet the
requirements under Section 30(E) and (G) of the NIRC to be completely tax exempt from all its
income. However, it remains a proprietary non-profit hospital under Section 27(B) of the NIRC as
long as it does not distribute any of its profits to its members and such profits are reinvested pursuant
to its corporate purposes. St. Lukes, as a proprietary non-profit hospital, is entitled to the preferential
tax rate of 10% on its net income from its for-profit activities. St. Lukes is therefore liable for
deficiency income tax in 1998 under Section 27(B) of the NIRC. However, St. Lukes has good reasons
to rely on the letter dated 6 June 1990 by the BIR, which opined that St. Lukes is a corporation for
purely charitable and social welfare purposes and thus exempt from income tax.