CASSANOVA VS HORDE NON IMPAIRMENT CLAUSE In January, 1897, the Spanish Government, in accordance with the provisions of the

e royal decree of the 14th of May, 1867, granted to the plaintiff certain mines in the said Province of Ambos Camarines, of which mines the plaintiff is now the owner. That there were valid perfected mining concessions granted prior to the 11th of April, 1899, is conceded. They were so considered by the Collector of Internal Revenue and were by him said to fall within the provisions of section 134 of Act No. 1189, known as the Internal Revenue Act. That section is as follows: SEC. 134. On all valid perfected mining concessions granted prior to April eleventh, eighteen hundred and ninetynine, there shall be levied and collected on the after January first, nineteen hundred and five, the following taxes: 2. (a) On each claim containing an area of sixty thousand square meters, an annual tax of one hundred pesos; (b) and at the same rate proportionately on each claim containing an area in excess of, or less than, sixty thousand square meters. 3. On the gross output of each an ad valorem tax equal to three per centum of the actual market value of such output. The defendant accordingly imposed upon these properties the tax mentioned in section 134, which tax, as has before been stated, plaintiff paid under protest. The only question in the case is whether this section 134 is void or valid. o. This is because it is violative of the provision of Sec. 5 of the Act of Congress of July 1, 1902, which provides that no law impairing the obligation of contracts shall be enacted. It seems that the Deed covering this particular miningconcessions constituted a contract between the Spanish government and the Plaintiff,the obligation of which was impaired by the enactment of Sec. 134 of the InternalRevenue Act, thereby infringing the provisions of said Act of Congress. Therefore, thesaid provision of law is void Our conclusion is that the concessions granted by the Government of Spain to the plaintiff, constitute contracts between the parties; that section 134 of the Internal Revenue Law impairs the obligation of these contracts, and is therefore void as to them. That nothing in this Act shall be construed to effect the rights of any person, partnership, or corporation, having a valid, perfected mining concession granted prior to April eleventh, eighteen hundred and ninety-nine, but all such concessions shall be conducted under the provisions of the law in force at the time they were granted, subject at all times to cancellation by reason of illegality in the procedure by which they were obtained, or for failure to comply with the conditions prescribed as requisite to their retention in the laws under which they were granted. This section seems to indicate that concessions, like those in question, can be canceled only by reason of illegality in the procedure by which they were obtained, or for failure to comply with the conditions prescribed as requisite for their retention in the laws under which they were granted. It was never alleged.

CAGAYAN valley power and light co vs CIR Non impairment clause The petitioner is the holder of a legislative franchise, Republic Act No. 3247, under which its payment of 3% tax on its gross earnings from the sale of electric current is "in lieu of all taxes and assessments of whatever authority upon privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted" (Sec. 3). We hold that Congress could impair petitioner's legislative franchise by making it liable for income tax from which heretofore it was exempted by virtue of the exemption provided for in section 3 of its franchise. The Constitution provides that a franchise is subject to amendment, alteration or repeal by the Congress when the public interest so requires (Sec. 8, Art. XIV, 1935 Constitution; Sec. 5, Art. XIV, 1973 Constitution),

Section 1 of petitioner's franchise, Republic Act No. 3247, provides that it is subject to the provisions of the Constitution and to the terms and conditions established in Act No. 3636 whose section 12 provides that the franchise is subject to amendment, alteration or repeal by Congress. Republic Act No. 5431, in amending section 24 of the Tax Code by subjecting to income tax all corporate taxpayers not expressly exempted therein and in section 27 of the Code, had the effect of withdrawing petitioner's exemption from income tax. The Tax Court acted correctly in holding that the exemption was restored by the subsequent enactment on August 4, 1969 of Republic Act No. 6020 which reenacted the said tax exemption. Hence, the petitioner is liable only for the income tax for the period from January 1 to August 3, 1969 when its tax exemption was modified by Republic Act No. 5431. MERALCO vs PROVINCE of LAGUNA Non impairment clause respondent province enacted Laguna Provincial Ordinance No. 01-92, effective 01 January 1993, imposing a tax on businesses enjoying a franchise, at a rate of fifty percent (50%) of one percent (1%) of the gross annual receipts While the Court has, not too infrequently, referred to tax exemptions contained in special franchises as being in the nature of contracts and a part of the inducement for carrying on the franchise, these exemptions, nevertheless, are far from being strictly contractual in nature. Contractual tax exemptions, in the real sense of the term and where the non-impairment clause of the Constitution can rightly be invoked, are those agreed to by the taxing authority in contracts, such as those contained in government bonds or debentures, lawfully entered into by them under enabling laws in which the government, acting in its private capacity, sheds its cloak of authority and waives its governmental immunity. Truly, tax exemptions of this kind may not be revoked without impairing the obligations of contracts. These contractual tax exemptions, however, are not to be confused with tax exemptions granted under franchises. A franchise partakes the nature of a grant which is beyond the purview of the non-impairment clause of the Constitution.i[15] Indeed, Article XII, Section 11, of the 1987 Constitution, like its precursor provisions in the 1935 and the 1973 Constitutions, is explicit that no franchise for the operation of a public utility shall be granted except under the condition that such privilege shall be subject to amendment, alteration or repeal by Congress as and when the common good so requires.

RCPI vs Provincial Assessor of South Cotabato RA 2036 - In consideration of the franchise and rights hereby granted and any provision of law to the contrary notwithstanding, the grantee shall pay the same taxes as are now or may hereafter be required by law from other individuals, copartnerships, private, public or quasi-public associations, corporations or joint stock companies, on real estate, buildings and other personal property except radio equipment, machinery and spare parts needed in connection with the business of the grantee, which shall be exempt from customs duties, tariffs and other taxes, as well as those properties declared exempt in this section. In consideration of the franchise, a tax equal to one and one-half per centum of all gross receipts from the business transacted under this franchise by the grantee shall be paid to the Treasurer of the Philippines each year, within ten days after the audit and approval of the accounts as prescribed in this Act. Said tax shall be in lieu of any and all taxes of any kind, nature or description levied, established or collected by any authority whatsoever, municipal, provincial or national, from which taxes the grantee is hereby expressly exempted. First, Congress passed the Local Government Code that withdrew all the tax exemptions existing at the time of its passageincluding that of RCPIs.

Second, Congress enacted the franchise of telecommunications companies, such as Islacom, Bell, Island Country, IslaTel, TeleTech, Major Telecoms, and Smart, with the in lieu of all taxes proviso. Third, Congress passed RA 7925 entitled An Act to Promote and Govern the Development of Philippine Telecommunications and the Delivery of Public Telecommunications Services which, through Section 23, mandated the equality of treatment of service providers in the telecommunications industry.[18] Subsequent legislations have radically amended the in lieu of all taxes clause in franchises of public utilities. As RCPI correctly observes, the Local Government Code of 1991 withdrew all the tax exemptions existing at the time of its passage including that of RCPIs with respect to local taxes like the real property tax. Also, Republic Act No. 7716 (RA 7716) abolished the franchise tax on telecommunications companies effective 1 January 1996. To replace the franchise tax, RA 7716 imposed a 10 percent value-added-tax on telecommunications companies under Section 102[20] of the National Internal Revenue Code City GOVT OF QC Vs BAYANTEL Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the LGC has already withdrawn Bayantels former exemption from realtytaxes, Congress opted to pass Rep. Act No. 7633 using, under Section 11 thereof,exactly the same defining phrase "exclusive of this franchise" which was the basis forBayantels exemption from realty taxes prior to the LGC. In plain language, Section 11of Rep. Act No. 7633 states that "the grantee, its successors or assigns shall be liable topay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be requiredby law to pay." The Court views this subsequent piece of legislation as an express and real intention on the part of Congress to once again remove from the LGCs delegatedtaxing power, all of the franchisees (Bayantels) properties that are actually, directly and exclusively used in the pursuit of its franchise.