1.

Gaston vs Republic Planter’s Bank 158 SCRA 622

Facts:
Petitioners are sugar producers and planters and millers filed a MANDAMUS to implement the
privatization of Republic Planters Bank, and for the transfer of the shares in the government bank to sugar
producers and planters. (because they are allegedly the true beneficial owners of the bank since they pay
P1.00 per picul of sugar from the proceeds of sugar producers as STABILIZATION FEES)

The shares are currently held by Philsucom / Sugar Regulatory Admin.

The Solgen countered that the stabilization fees are considered government funds and that the transfer of
shares to from Philsucom to the sugar producers would be irregular.

Issue:

1. What is the nature of the P1.00 stabilization fees collected from sugar producers?
2. Are they funds held in trust for them, or are they public funds?
3. Are the shares in the bank (paid using these fees) owned by the government Philsucom or
privately by the different sugar
planters from whom such fees were collected?

Ruling:
PUBLIC FUNDS. While it is true that the collected fees were used to buy shares in RPB, it did not collect
said fees for the account of sugar producers. The stabilization fees were charged on sugar produced and
milled which ACCRUED TO PHILSUCOM, under PD 338.

The fees collected ARE IN THE NATURE OF A TAX., which is within the power of the state to impose
FOR THE PROMOTION OF THE SUGAR INDUSTRY. They constitute sugar liens. The collections
accrue to a SPECIAL FUNDS. It is levied not purely for taxation, but for regulation, to provide means
TO STABILIZE THE SUGAR INDUSTRY. The levy is primarily an exercise of police powers.

The fact that the State has taken money pursuant to law is sufficient to constitute them as STATE
FUNDS, even though held for a special purpose. Having been levied for a special purpose, the revenues
are treated as a special fund, administered in trust for the purpose intended. Once the purpose has been
fulfilled or abandoned, the balance will be transferred to the general funds of gov’t.

It is a special fund since the funds are deposited in PNB, not in the National Treasury.

The sugar planters are NOT BENEFICIAL OWNERS. The money is collected from them only because
they it is also they who are to be benefited from the expenditure of funds derived from it. The investing of
the funds in RPB is not alien to the purpose since the Bank is a commodity bank for sugar, conceived for
the sugar industry’ growth and development.

Revenues derived from taxes cannot be used purely for private purposes or for the exclusive benefit of
private persons. The Stabilization Fund is to be utilized for the benefit of the ENTIRE SUGAR
INDUSTRY, and all its components, stabilization of domestic and foreign markets, since the sugar
industry is of vital importance to the country’s economy and national interest.
 2. Philex Mining Corporation v CIR (1998)

Philex Mining Corporation v CIR GR No 125704, August 28, 1998

FACTS:
BIR sent a letter to Philex asking it to settle its tax liabilities amounting to P124 million. Philex protested
the demand for payment stating that it has pending claims for VAT input credit/refund amounting to P120
million. Therefore, these claims for tax credit/refund should be applied against the tax liabilities.
In reply the BIR found no merit in Philex’s position. On appeal, the CTA reduced the tax liability of
Philex.

ISSUES:

1. Whether legal compensation can properly take place between the VAT input credit/refund and the
excise tax liabilities of
Philex Mining Corp;
2. Whether the BIR has violated the NIRC which requires the refund of input taxes within 60 days
3. Whether the violation by BIR is sufficient to justify non-payment by Philex

RULING:

1. No, legal compensation cannot take place. The government and the taxpayer are not creditors and
debtors of each other.
2. Yes, the BIR has violated the NIRC. It took five years for the BIR to grant its claim for VAT
input credit. Obviously, had the
BIR been more diligent and judicious with their duty, it could have granted the refund
3. No, despite the lethargic manner by which the BIR handled Philex’s tax claim, it is a settled rule
that in the performance of
government function, the State is not bound by the neglect of its agents and officers. It must be
stressed that the same is not a valid reason for the non-payment of its tax liabilities.
 3 Sison vs Ancheta (1984)
February 15, 2013 markerwins Tax Law

Facts: Batas Pambansa 135 was enacted. Sison, as taxpayer, alleged

that its provision (Section 1) unduly discriminated against him by the
imposition of higher rates upon his income as a professional, that it
amounts to class legislation, and that it transgresses against the equal
protection and due process clauses of the Constitution as well as the
rule requiring uniformity in taxation.
Issue: Whether BP 135 violates the due process and equal protection
clauses, and the rule on uniformity in taxation.
Held: There is a need for proof of such persuasive character as would
lead to a conclusion that there was a violation of the due process and
equal protection clauses. Absent such showing, the presumption of
validity must prevail. Equality and uniformity in taxation means that
all taxable articles or kinds of property of the same class shall be taxed
at the same rate. The taxing power has the authority to make
reasonable and natural classifications for purposes of taxation. Where
the differentitation conforms to the practical dictates of justice and
equity, similar to the standards of equal protection, it is not
discriminatory within the meaning of the clause and is therefore
uniform. Taxpayers may be classified into different categories, such as
recipients of compensation income as against professionals.
Recipients of compensation income are not entitled to make
deductions for income tax purposes as there is no practically no
overhead expense, while professionals and businessmen have no
uniform costs or expenses necessaryh to produce their income. There
is ample justification to adopt the gross system of income taxation to
compensation income, while continuing the system of net income
taxation as regards professional and business income.
 4. PAL v Edu (1988)

Philippine Airlines v Edu

GR No L-41383, August 15, 1988

FACTS:
PAL is engaged in the air transportation business under a legislative franchise (Act 4271), wherein it is
exempt from the
payment of taxes. On the strength of an opinion of the Secretary of Justice, PAL was determined to have
not been paying motor vehicle registration fees since 1956. The Land Transportation Commissioner
required all tax-exempt entities, including PAL, to pay motor vehicle registration fees. PAL protested.
The trial court dismissed PAL’s complaint. Hence, this petition.

ISSUE:
Are motor vehicle registration fees taxes or regulatory taxes?

RULING:
They are taxes. Tax are for revenue, whereas fees are exactions for purposes of regulation and inspection,
and are for that reason limited in amount to what is necessary to cover the cost of the services rendered in
that connection.
It is the object of the charge, and not the name, that determines whether a charge is a tax or a fee. The
money collected under the Motor Vehicle Law is not intended for the expenditures of the Motor Vehicle
Law is not intended for the expenditures of the Motor Vehicles Office but accrues to the funds for the
construction and maintenance of public roads, streets and bridges.
As the fees are not collected for regulatory purposes as an incident to the enforcement of regulations
governing the operation of motor vehicles on public highways, but to provide revenue with which the
Government is to construct and maintain public highways for everyone’s use, they are veritable taxes, not
merely fees.
PAL is, thus, exempt from paying such fees, except for the period between June 27, 1968 to April 9,
1979, where its tax exception in the franchise was repealed.
 G.R. No. 173863 September 15, 2010
5. CHEVRON PHILIPPINES, INC. (Formerly CALTEX PHILIPPINES, INC.), Petitioner,
vs.
BASES CONVERSION DEVELOPMENT AUTHORITY and CLARK DEVELOPMENT
CORPORATION, Respondents
Facts:
On June 28, 2002, the Board of Directors of respondent Clark Development Corporation (CDC)
issued and approved Policy Guidelines on the Movement of Petroleum Fuel to and from the
Clark Special Economic Zone. In one of its provisions, it levied royalty fees to suppliers
delivering Coastal fuel from outside sources for Php0.50 per liter for those delivering fuel to
CSEZ locators not sanctioned by CDC and Php1.00 per litter for those bringing-in petroleum
fuel from outside sources. The policy guidelines were implemented effective July 27, 2002.

The petitioner Chevron Philippines Inc (formerly Caltex Philippines Inc) who is a fuel supplier to
Nanox Philippines, a locator inside the CSEZ, received a Statement of Account from CDC billing
them to pay the royalty fees amounting to Php115,000 for its fuel sales from Coastal depot to
Nanox Philippines from August 1 to September 21, 2002.

Petitioner, contending that nothing in the law authorizes CDC to impose royalty fees based on a
per unit measurement of any commodity sold within the special economic zone, protested
against the CDC and Bases Conversion Development Authority (BCDA). They alleged that the
royalty fees imposed had no reasonable relation to the probably expenses of regulation and that
the imposition on a per unit measurement of fuel sales was for a revenue generating purpose,
thus, akin to a “tax”.

BCDA denied the protest. The Office of the President dismissed the appeal as well for lack of
merit.

Upon appeal, CA dismissed the case. CA held that in imposing the royalty fees, CDC was
exercising its right to regulate the flow of fuel into CSEZ under the vested exclusive right to
distribute fuel within CSEZ pursuant to its Joint Venture Agreement (JVA) with Subic Bay
Metropolitan Authority (SBMA) and Coastal Subic Bay Terminal, Inc. (CSBTI) dated April 11,
1996. The appellate court also found that royalty fees were assessed on fuel delivered, not on
the sale, by petitioner and that the basis of such imposition was petitioner’s delivery receipts to
Nanox Philippines. The fact that revenue is incidentally also obtained does not make the
imposition a tax as long as the primary purpose of such imposition is regulation.

When elevated in SC, petitioner argued that: 1) CDC has no power to impose fees on sale of
fuel inside CSEZ on the basis of income generating functions and its right to market and
distribute goods inside the CSEZ as this would amount to tax which they have no power to
impose, and that the imposed fee is not regulatory in nature but rather a revenue generating
measure; 2) even if the fees are regulatory in nature, it is unreasonable and are grossly in
excess of regulation costs.

Respondents contended that the purpose of royalty fees is to regulate the flow of fuel to and
from the CSEZ and revenue (if any) is just an incidental product. They viewed it as a valid
exercise of police power since it is aimed at promoting the general welfare of public; that being
the CSEZ administrator, they are responsible for the safe distribution of fuel products inside the
CSEZ.
Issue:
Whether the act of CDC in imposing royalty fees can be considered as valid exercise of the
police power.
Held:
Yes. SC held that CDC was within the limits of the police power of the State when it imposed
royalty fees.
In distinguishing tax and regulation as a form of police power, the determining factor is the
purpose of the implemented measure. If the purpose is primarily to raise revenue, then it will be
deemed a tax even though the measure results in some form of regulation. On the other hand, if
the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police
power of the state, even though incidentally, revenue is generated.

In this case, SC held that the subject royalty fee was imposed for regulatory purposes and not
for generation of income or profits. The Policy Guidelines was issued to ensure the safety,
security, and good condition of the petroleum fuel industry within the CSEZ. The questioned
royalty fees form part of the regulatory framework to ensure “free flow or movement” of
petroleum fuel to and from the CSEZ. The fact that respondents have the exclusive right to
distribute and market petroleum products within CSEZ pursuant to its JVA with SBMA and
CSBTI does not diminish the regulatory purpose of the royalty fee for fuel products supplied by
petitioner to its client at the CSEZ.

However, it was erroneous for petitioner to argue that such exclusive right of respondent CDC to
market and distribute fuel inside CSEZ is the sole basis of the royalty fees imposed under the
Policy Guidelines. Being the administrator of CSEZ, the responsibility of ensuring the safe,
efficient and orderly distribution of fuel products within the Zone falls on CDC. Addressing
specific concerns demanded by the nature of goods or products involved is encompassed in the
range of services which respondent CDC is expected to provide under Sec. 2 of E.O. No. 80, in
pursuance of its general power of supervision and control over the movement of all supplies and
equipment into the CSEZ.

There can be no doubt that the oil industry is greatly imbued with public interest as it vitally
affects the general welfare. Fuel is a highly combustible product which, if left unchecked, poses
a serious threat to life and property. Also, the reasonable relation between the royalty fees
imposed on a “per liter” basis and the regulation sought to be attained is that the higher the
volume of fuel entering CSEZ, the greater the extent and frequency of supervision and
inspection required to ensure safety, security, and order within the Zone.

Respondents submit that the increased administrative costs were triggered by security risks that
have recently emerged, such as terrorist strikes. The need for regulation is more evident in the
light of 9/11 tragedy considering that what is being moved from one location to another are
highly combustible fuel products that could cause loss of lives and damage to properties.

As to the issue of reasonableness of the amount of the fees, SC held that no evidence was
adduced by the petitioner to show that the fees imposed are unreasonable. Administrative
issuances have the force and effect of law. They benefit from the same presumption of validity
and constitutionality enjoyed by statutes. These two precepts place a heavy burden upon any
party assailing governmental regulations. Petitioner’s plain allegations are simply not enough to
overcome the presumption of validity and reasonableness of the subject imposition.
 6. Macabingkil v Yatco

Macabingkil v Yatco 21 SCRA 150

FACTS:
The principal legal question posed by this original petition for a writ of certiorari and prohibition with
preliminary injunction
is one of procedural due process. It arose from the applicability of an order for demolition of April 18,
1964 to the house of petitioner. Petitioner contends that she has not been a party to such a case and was
denied a change to intervene therein.

ISSUE:
Whether petitioner was denied due process

RULING:
Yes. The separate and collective effect of the writ of execution and order of demolition and the
respondent Provincial
Sheriff’s threat to enforce the same is to work unwarranted hardship to petitioner. The following
conditions must be present:

1. There must be a court or tribunal clothed with judicial power to hear and determine the matter
before it;
2. Jurisdiction must be lawfully acquired;
3. Defendant must be given an opportunity to be heard;
4. Judgment must be rendered upon lawful hearing.

Thus, petition for certiorari is granted.

 7. City of Baguio v De Leon (1968)

City of Baguio v De Leon

GR No. L-24756, October 31, 1968

FACTS:
The City of Baguio passed a license fee on any person, entity or corporation doing business in the City.
The ordinance
sourced its authority from RA 329, thereby amending the city charter empowering it to fix the license fee
and regulate businesses, trades and occupation as may be established in the City. De Leon was assessed
for P50 annual fee it being shown that he was engaged in property rental and deriving income therefrom.
The latter assailed the validity of the ordinance arguing that it is ultra vires for there is no statutory
authority which expressly grants the City of Baguio to levy such tax and that there it imposed double
taxation and violates the requirement of uniformity.

ISSUE:
Is the ordinance valid?

RULING:
Yes. First, RA 329 was enacted amending Section 2553 of the Revised Administrative Code empowering
the City Council not only to impose a license fee but to levy a tax for purposes of revenue, thus the
ordinance cannot be considered ultra vires for there is more than ample statutory for the enactment
thereof.
Second, an argument against double taxation may not be invoked where one tax is imposed by the state
and the other imposed by the City.
Third, violation of uniformity is out of place it being widely recognized that there is nothing inherently
obnoxious in the requirement that license fees of taxes be enacted with respect to the same occupation,
calling or activity by both the state and the political subdivision thereof.
 8. Villanueva v City of Iloilo (1968)

Villanueva v City v Iloilo

GR No L-26521, December 28, 1968

FACTS:
On September 30, 1946, the Municipal Board of Iloilo City enacted Ordinance 86 imposing license tax
fees upon
tenement houses. The validity of such ordinance was challenged by Eusebio and Remedios Villanueva,
owners of four tenement houses containing 34 apartments. The Supreme Court held the ordinance to be
ultra views. On January 15, 1960, however, the municipal board, believing that it acquired authority to
enact an ordinance of the same nature pursuant to the Local Autonomy Act, enacted Ordinance 11,
Eusebio and Remedios Villanueva assailed the ordinance anew.

ISSUE:
Does Ordinance 11 violate the rule of uniformity of taxation?

RULING:
No. The Court has ruled the tenement houses constitute a distinct class of property and that taxes are
uniform and equal when imposed upon all property of the same class or character within the taxing
authority.
The fact that the owners of the other classes of buildings in Iloilo are not imposed upon by the ordinance,
or that tenement taxes are imposed in other cities do not violate the rule of equality and uniformity. The
rule does not require that taxes for the same purpose should be imposed in different territorial
subdivisions at the same time. So long as the burden of tax falls equally and impartially on all owners or
operators of tenement houses similarly classified or situated, equality and uniformity is accomplished.
The presumption that tax statutes are intended to operate uniformly and equally was not overthrown
therein.
 9. ASSOCIATION OF CUSTOM BROKERS, INC. vs.
MUNICIPAL BOARD

ASSOCIATION OF CUSTOM BROKERS, INC. vs. MUNICIPAL BOARD

G.R. No. L-4376 May 22, 1953

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 challenge the validity Ordinance No. 3379 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 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.

ISSUE:
Whether or not the ordinance is null and void

RULING:
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. This is an inequality which we find in the ordinance, and which renders it
offensive to the Constitution.
 10. Vera v. Cuevas
Full Text: http://www.lawphil.net/judjuris/juri1979/may1979/gr_l_33693_1979.html

Facts:
Private respondents herein, are engaged in the manufacture, sale and distribution of filled milk
products throughout the Philippines. The products of private respondent, Consolidated Philippines
Inc. are marketed and sold under the brand Darigold whereas those of private respondent, General
Milk Company (Phil.), Inc., under the brand "Liberty;" and those of private respondent, Milk Industries
Inc., under the brand "Dutch Baby." Private respondent, Institute of Evaporated Filled Milk
Manufacturers of the Philippines, is a corporation organized for the principal purpose of upholding
and maintaining at its highest the standards of local filled milk industry, of which all the other private
respondents are members.
CIR required the respondents to withdraw from the market all of their filled milk products which do
not bear the inscription required by Section 169 of the Tax Code within fifteen (15) days from receipt
of the order. Failure to comply will result to penalties. Section 169 talks of the inscription to be placed
in skimmed milk wherein all condensed skimmed milk and all milk in whatever form, from which the
fatty part has been removed totally or in part, sold or put on sale in the Philippines shall be clearly
and legibly marked on its immediate containers, and in all the language in which such containers are
marked, with the words, "This milk is not suitable for nourishment for infants less than one year of
age," or with other equivalent words.
The CFI Manila ordered the CIR to perpetually restrain from requiring the respondents to print on the
labels of their product the words "This milk is not suitable for nourishment for infants less than one
year of age.". Also, it ordered the Fair Trade Board to perpetually restrain from investigating the
respondents related to the manufacture/sale of their filled milk products.

Issue:
Whether or not skimmed milk is included in the scope of Section 169 of the Tax Code.

Held:
No, Section 169 of the Tax Code is not applicable to filled milk. The use of specific and qualifying
terms "skimmed milk" in the headnote and "condensed skimmed milk" in the text of the cited
section, would restrict the scope of the general clause "all milk, in whatever form, from which the
fatty pat has been removed totally or in part." In other words, the general clause is restricted by the
specific term "skimmed milk" under the familiar rule of ejusdem generis that general and unlimited
terms are restrained and limited by the particular terms they follow in the statute.
The difference, therefore, between skimmed milk and filled milk is that in the former, the fatty part
has been removed while in the latter, the fatty part is likewise removed but is substituted with refined
coconut oil or corn oil or both. It cannot then be readily or safely assumed that Section 169 applies
both to skimmed milk and filled milk. It cannot then be readily or safely assumed that Section 169
applies both to skimmed milk and filled milk. Also, it has been found out that "the filled milk products
of the petitioners (now private respondents) are safe, nutritious, wholesome and suitable for feeding
infants of all ages" (p. 44, Rollo) and that "up to the present, Filipino infants fed since birth with filled
milk have not suffered any defects, illness or disease attributable to their having been fed with filled
milk."
Hence, applying Section 169 to it would cause a deprivation of property without due process of law.
 11. ( 12) Shell Co. vs Vano (1954)

Facts:The municipal council of Cordova, Cebu adopted Ordinance 10 (1946) imposing an annual
tax of P150 on occupation or the exercise of the privilege of installation manager; Ordinance 9
(1947) imposing an annual tax of P40 for local deposits in drums of combustible and
inflammable materials and an annual tax of P200 for tin can factories; and Ordinance 11 (1948)
imposing an annual tax of P150 on tin can factories having a maximum annual output capacity of
30,000 tin cans. Shell Co., a foreign corporation, filed suit for the refund of the taxes paid by it,
on the ground that the ordinances imposing such taxes are ultra vires. Shell Company assailed
the validity of the said ordinance on the ground that it violates the equal protection clause. It
appears that only Shell had, at that time, an installation manager. In short, there is only one
installation manager in Cordova, Cebu. So Shell felt like the tax ordinance was merely targeting
Shell. Shell now wants the Treasurer of Cordova, E.E. Vaño to be enjoined from implementing the
law.

ISSUE 1: Whether or not the tax ordinance is not valid for being violative of the equal protection
clause.

HELD 1: No. The fact that there is no other person or company with a position for an installation
manager does not make the ordinance discriminatory. The law is and will be applicable to any
person or firm who exercises such calling or occupation named or designated as “installation
manager”. In short, the law is applicable to present and future conditions.Note again the
requisites for a valid classification (not mentioned in this particular case but mentioned in other
relevant cases):
1. must rest on substantial distinctions;
2. must be germane to the purposes of the law;
3. must not be limited to existing conditions only; and
4. must apply equally to all members of the same class.Issue

2:Whether Ordinance 10 is discriminatory and hostile because there is no other person in the
locality who exercise such designation or occupation.

Held 2:The fact that there is no other person in the locality who exercises such a “designation” or
calling does not make the ordinance discriminatory and hostile, inasmuch as it is and will be
applicable to any person or firm who exercises such calling or occupation named or designated
as “installation manager.”
Shell Co. vs Vano (1954)
February 15, 2013 markerwins Tax Law

Facts: The municipal council of Cordova, Cebu adopted Ordinance 10

(1946) imposing an annual tax of P150 on occupation or the exercise of
the privilege of installation manager; Ordinance 9 (1947) imposing an
annual tax of P40 for local deposits in drums of combustible and
inflammable materials and an annual tax of P200 for tin can factories;
and Ordinance 11 (1948) imposing an annual tax of P150 on tin can
factories having a maximum annual output capacity of 30,000 tin
cans. Shell Co., a foreign corporation, filed suit for the refund of the
taxes paid by it, on the ground that the ordinances imposing such
taxes are ultra vires.

Issue: Whether Ordinance 10 is discriminatory and hostile because

there is no other person in the locality who exercise such designation
or occupation.
Held: The fact that there is no other person in the locality who
exercises such a “designation” or calling does not make the ordinance
discriminatory and hostile, inasmuch as it is and will be applicable to
any person or firm who exercises such calling or occupation named or
designated as “installation manager.”