#1

G.R. No. L-7859 December 22, 1955

WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased Antonio Jayme
Ledesma, plaintiff-appellant,
vs.
J. ANTONIO ARANETA, as the Collector of Internal Revenue, defendant-appellee.

FACTS:

This case was initiated in the Court of First Instance of Negros Occidental to test the legality of the taxes
imposed by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment Act. Plaintiff Walter
Lutz, in his capacity as judicial administrator of the intestate estate of Antonio Ledesma, sought to
recover from the CIR the sum of P14,666.40 paid by the estate as taxes, under section 3 of the CA 567 or
the Sugar Adjustment Act thereby assailing its constitutionality, for it provided for an increase of the
existing tax on the manufacture of sugar, alleging that such enactment is not being levied for a public
purpose but solely and exclusively for the aid and support of the sugar industry thus making it void and
unconstitutional. The sugar industry situation at the time of the enactment was in an imminent threat of
loss and needed to be stabilized by imposition of emergency measures.

ISSUE: Is CA 567 constitutional, despite its being allegedly violative of the equal protection clause, the
purpose of which is not for the benefit of the general public but for the rehabilitation only of the sugar
industry?

HELD: Yes. The protection and promotion of the sugar industry is a matter of public concern, it follows
that the Legislature may determine within reasonable bounds what is necessary for its protection and
expedient for its promotion. Here, the legislative discretion must be allowed to fully play, subject only to
the test of reasonableness; and it is not contended that the means provided in the law bear no relation
to the objective pursued or are oppressive in character. If objective and methods are alike
constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their
prosecution and attainment. Taxation may be made the implement of the state's police power.
#2

G.R. No. L-28896 February 17, 1988

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
ALGUE, INC., and THE COURT OF TAX APPEALS, respondents.

Facts:

The Philippine Sugar Estate Development Company had earlier appointed Algue Inc., as its agent,
authorizing it to sell its land, factories and oil manufacturing process.As such,the corporation worked for
the formation of the Vegetable Oil Investment Corporation, until they were able to purchased the PSEDC
properties. For this sale, Algue Inc., received as agent a commission of P126, 000.00, and it was from this
commission that the P75, 000.00 promotional fees were paid to Alberto Guevara, Jr., Eduardo Guevara,
Isabel Guevara, Edith, O'Farell, and Pablo Sanchez.

Commissioner of Internal Revenue contends that the claimed deduction is not allowed because it was
not an ordinary reasonable or necessary business expense. The Court of Tax Appeals had seen it
differently. Agreeing with Algue Inc., it held that the said amount had been legitimately paid by the
private respondent for actual services rendered. The payment was in the form of promotional fees.

Issue:

Whether or not the Collector of Internal Revenue correctly disallowed the P75, 000.00 deduction
claimed by private respondent Algue Inc., as legitimate business expenses in its income tax returns.

Ruling:

No, The Supreme Court agrees with the respondent court that the amount of the promotional fees was
not excessive. The P75,000.00 was 60% of the total commission. This was a reasonable proportion,
considering that it was the payees who did practically everything, from the formation of the Vegetable
Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties.

The claimed deduction by the private respondent was permitted under the Internal Revenue Code and
should therefore not have been disallowed by the petitioner.
#3

G.R. No. L-21183 September 27, 1968

VICTORIAS MILLING CO., INC., plaintiff-appellant,

vs.
THE MUNICIPALITY OF VICTORIAS, PROVINCE OF NEGROS OCCIDENTAL, defendant-appellant.

FACTS: Ordinance 1 was approved by the municipal Council of Victorias on September 22, 1956 by way
of an amendment to two municipal ordinances separately imposing license taxes on operators of sugar
centrals and sugar refineries.

The changes were: with respect to sugar centrals, by increasing the rates of license taxes; and as to
sugar refineries, by increasing the rates of license taxes as well as the range of graduated schedule of
annual output capacity. Plaintiff Victorias Milling Co. filed a suit to ask for judgment declaring the said
Ordinance null and void as it is discriminatory since it singles out plaintiff which is the only operator of a
sugar central and a sugar refinery within the jurisdiction of defendant municipality; and that it
constitutes double taxation.

ISSUES:

1) Whether Ordinance 1 is discriminatory.

2) Whether Ordinance 1 constitutes double taxation.

RULING:

1) No. The ordinance does not single out Victorias as the only object of the ordinance. Said ordinance is
made to apply to any sugar central or sugar refinery which may happen to operate in the municipality.
The fact that plaintiff is actually the sole operator of a sugar central and a sugar refinery does not make
the ordinance discriminatory. Not even the name of plaintiff herein was ever mentioned in the
ordinance now disputed.

2) No. First, the two taxes cover two different objects. Section 1 of the ordinance taxes a person
operating sugar centrals or engaged in the manufacture of centrifugal sugar. While under Section2,
those taxed are the operators of sugar refinery mills. One occupation or business is different from the
other. Second, the disputed taxes are imposed on occupation or business. Both taxes are not on sugar.
The amount thereof depends on the annual output capacity of the mills concerned, regardless of the
actual sugar milled. Plaintiff's argument perhaps could make out a point if the object of taxation here
were the sugar it produces, not the business of producing it.
#4

G.R. No. L-26521 December 28, 1968

EUSEBIO VILLANUEVA, ET AL., plaintiff-appellee,

vs.a
CITY OF ILOILO, defendants-appellants.

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.
#5

G.R. No. L-4817 May 26, 1954

SILVESTER M. PUNSALAN, ET AL., plaintiffs-appellants,

vs.
THE MUNICIPAL BOARD OF THE CITY OF MANILA, ET AL., defendants-appellants.

FACTS: The plaintiffs--two lawyers, medical practitioner, a dental surgeon, a CPA, and a pharmacist--
sought the annulment of Ordinance No.3398 of the City of Manila which imposes a municipal
occupation tax on persons exercising various professions in the city and penalizes non-payment of the
tax, contending in substance that this ordinance and the law authorizing it constitute class legislation,
are unjust and oppressive, and authorize what amounts to double taxation. The burden of plaintiffs'
complaint is not that the professions to which they respectively belong have been singled out for the
imposition of this municipal occupation tax, but that while the law has authorized the City of Manila to
impose the said tax, it has withheld that authority from other chartered cities, not to mention
municipalities.

ISSUE: Does the law constitute a class legislation? Is it for the Court to determine which political unit
should impose taxes and which should not?

HELD: No. It is not for the courts to judge what particular cities or municipalities should be empowered
to impose occupation taxes in addition to those imposed by the National Government. That matter is
peculiarly within the domain of the political departments and the courts would do well not to encroach
upon it. Moreover, as the seat of the National Government and with a population and volume of trade
many times that of any other Philippine city or municipality, Manila, no doubt, offers a more lucrative
field for the practice of the professions, so that it is but fair that the professionals in Manila be made to
pay a higher occupation tax than their brethren in the provinces.
#6

G.R. No. 99886 March 31, 1993

JOHN H. OSMEÑA, petitioner,

vs.
OSCAR ORBOS, in his capacity as Executive Secretary; JESUS ESTANISLAO, in his capacity as Secretary
of Finance; WENCESLAO DELA PAZ, in his capacity as Head of the Office of Energy Affairs; REX V.
TANTIONGCO, and the ENERGY REGULATORY BOARD, respondents.

FACTS: Senator John Osmeña assails the constitutionality of paragraph 1c of PD 1956, as amended by EO
137, empowering the Energy Regulatory Board (ERB) to approve the increase of fuel prices or impose
additional amounts on petroleum products which proceeds shall accrue to the Oil Price Stabilization
Fund (OPSF) established for the reimbursement to ailing oil companies in the event of sudden price
increases. The petitioner avers that the collection on oil products establishments is an undue and invalid
delegation of legislative power to tax. Further, the petitioner points out that since a 'special fund'
consists of monies collected through the taxing power of a State, such amounts belong to the State,
although the use thereof is limited to the special purpose/objective for which it was created. It thus
appears that the challenge posed by the petitioner is premised primarily on the view that the powers
granted to the ERB under P.D. 1956, as amended, partake of the nature of the taxation power of the
State.

ISSUE: Is there an undue delegation of the legislative power of taxation?

HELD: None. It seems clear that while the funds collected may be referred to as taxes, they are exacted
in the exercise of the police power of the State. Moreover, that the OPSF as a special fund is plain from
the special treatment given it by E.O. 137. It is segregated from the general fund; and while it is placed
in what the law refers to as a "trust liability account," the fund nonetheless remains subject to the
scrutiny and review of the COA. The Court is satisfied that these measures comply with the
constitutional description of a "special fund." With regard to the alleged undue delegation of
legislative power, the Court finds that the provision conferring the authority upon the ERB to impose
additional amounts on petroleum products provides a sufficient standard by which the authority must
be exercised. In addition to the general policy of the law to protect the local consumer by stabilizing and
subsidizing domestic pump rates, P.D. 1956 expressly authorizes the ERB to impose additional amounts
to augment the resources of the Fund.
#7

G.R. No. 3473 March 22, 1907

J. CASANOVAS, plaintiff-appellant,
vs.
JNO. S. HORD, defendant-appellee.

Facts: The Spanish Govt. by virtue of a royal decree granted the plaintiff certain mines. The plaintiff is
now the owner of those mines. The Collector of Internal Revenue imposed tax on the properties,
contending that they were valid perfected mine concessions and it falls within the provisions of sec.134
of Act No. 1189 known as Internal Revenue Act. The plaintiff paid under protest. He brought an action
against the defendant Collector of Internal Revenue to recover the sum of Php. 9, 600 paid by him as
taxes. Judgment was rendered in favor of the defendant, so the plaintiff appealed.

Issue: Whether or Not Sec. 164 is void or valid.

Held: The deed constituted a contract between the Spanish Government and the plaintiff. The obligation
of which contract was impaired by the enactment of sec. 134 of the Internal Revenue Law infringing sec.
5 of the Act of Congress which provides that “no law impairing the obligation of contracts shall be
enacted”. Sec. 134 of the Internal Revenue Law of 1904 is void because it impairs the obligation of
contracts contained in the concessions of mine made by the Spanish Government. Judgment reversed.
#8

G.R. No. L-19201 June 16, 1965

REV. FR. CASIMIRO LLADOC, petitioner,

vs.
The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS, respondents.

Facts: Sometime in 1957, M.B. Estate Inc., of Bacolod City, donated 10,000.00 pesos in cash to Fr. Crispin
Ruiz, the parish priest of Victorias, Negros Occidental, and predecessor of Fr. Lladoc, for
the construction of a new Catholic church in the locality. The donated amount was spent for such
purpose.

On March 3, 1958, the donor M.B. Estate filed the donor's gift tax return. Under date of April 29, 1960.
Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the Catholic
Parish of Victorias of which petitioner was the parish priest.

Issue: Whether or not the imposition of gift tax despite the fact the Fr. Lladoc was not the Parish priest
at the time of donation, Catholic Parish priest of Victorias did not have juridical personality as the
constitutional exemption for religious purpose is valid.

Held: Yes, imposition of the gift tax was valid, under Section 22(3) Article VI of
the Constitution contemplates exemption only from payment of taxes assessed on such properties
as Property taxes contradistinguished from Excise taxes The imposition of the gift tax on the property
used for religious purpose is not a violation of the Constitution. A gift tax is not a property by way of gift
inter vivos.

The head of the Diocese and not the parish priest is the real party in interest in the imposition of the
donee's tax on the property donated to the church for religious purpose.
#9

G.R. No. L-10448 August 30, 1957

IN THE MATTER OF A PETITION FOR DECLARATORY JUDGMENT REGARDING THE VALIDITY OF

MUNICIPAL ORDINANCE NO. 3659 OF THE CITY OF MANILA. PHYSICAL THERAPY ORGANIZATION OF
THE PHILIPPINES, INC., petitioner-appellant,
vs.
THE MUNICIPAL BOARD OF THE CITY OF MANILA and ARSENIO H. LACSON, as Mayor of the City of
Manila, respondents-appellees.

Facts: Municipal Board of Manila enacted Ordinance 3659 regulating the operations of massage clinics in
Manila penalizing and enforcing permit fee for its operation. Petitioner appealed for the dismissal of the
ordinance. They contend that City of Manila is without authority to regulate the operation of massagists
and the operation of massage clinics and that the fee is unreasonable and unconscionable. Trial court
dismissed the petition.

Issue: Whether or not license fee enforced by the Municipal Board is valid?

Decision: Decision affirmed. The end sought to be attained in the Ordinance is to prevent the
commission of immorality and the practice of prostitution in an establishment masquerading as a
massage clinic where the operators thereof offer to massage or manipulate superficial parts of the
bodies of customers for hygienic and aesthetic purposes. The permit fee is made payable by the
operator of a massage clinic who may not be a massagist himself. Compared to permit fees required in
other operations, P100.00 may appear to be too large and rather unreasonable. Manila Municipal Board
considered the practice of hygienic and aesthetic massage not as a useful and beneficial occupation
which will promote and is conducive to public morals, and consequently, imposed the said permit fee
for its regulation.
#10

G.R. No. L-16619 June 29, 1963

COMPAÑIA GENERAL DE TABACOS DE FILIPINAS, plaintiff-appellee,

vs.
CITY OF MANILA, ET AL., defendants-appellants.

Facts: Compania General de Tabacos de Filipinas (Tabacalera) paid the City of Manila the fixed license
fees prescribed by Ordinance 3358 for the years 1954 to 1957. In 1954, City Ordinance 3634 and 3816
were passed; where the term “general merchandise” found therein included all articles in Sections 123
to 148 of the Tax Code (thus, also liquor under Sections 133 to 135). The Tabacalera paid its wholesaler’s
and retailer’s taxes. In 1954, the City Treasurer addressed a letter to an accounting firm, expressing the
view that liquor dealers paying the annual wholesale and retail fixed tax under Ordinance 3358 are not
subject to the wholesale and retail deaklers’ taxes prescribed by City Ordinances 3634, 3301, and 3816.
The Tabacalera, upon learning of said stopped including quarterly sworn declarations required by the
latter ordinances, and in 1957, demanded refund of the alleged overpayment. The claim was disallowed.

Issue: Whether there is a distinction between Ordinance 3358 and Ordinances 3634, 3301 and 3816, to
prevent refund to the company

Held: Yes. Generally, the term “tax” applies to all kinds of exactions which become public funds. Legally,
however, a license fee is a legal concept quite distinct from tax: the former is imposed in the exercise of
police power for purposes of regulation, while the latter is imposed under the taxing power for the
purpose of raising revenues. Ordinance 3358 prescribes municipal license fees for the privilege to
engage in the business of selling liquor or alcohol beverages; considering that the sale of intoxicating
liquor is (potentially) harmful to public health and morals, and must be subject to supervision or
regulation by the State and by cities and municipalities authorized to act in the premises. On the other
hand, Ordinances 3634, 3301 and 3816 imposed taxes on the sales of general merchandise, wholesale or
retail, and are revenue measures enacted by the Municipal Board of Manila.

Both a license fee and a tax may be imposed on the same business or occupation, or for selling the same
article, without it being in violation of the rule against double taxation. The contrary view of the
Treasurer in its letter is of no consequence as the government is not bound by the errors or mistakes
committed by its officers, especially on matters of law. The company, thus, is not entitled to refund.