Tan vs.

Del Rosario
Facts:
Petitioners challenge the constitutionality of RA 7496 or the simplified income
taxation scheme (SNIT) under Arts (26) and (28) and III (1). The SNIT contained changes in the
tax schedules and different treatment in the professionals which petitioners assail as
unconstitutional for being isolative of the equal protection clause in the constitution.
Issue:
Is the contention meritorious?
Ruling:
No. uniformity of taxation, like the hindered concept of equal protection, merely
require that all subjects or objects of taxation similarly situated are to be treated alike both
privileges and liabilities. Uniformity, does not offend classification as long as it rest on
substantial distinctions, it is germane to the purpose of the law. It is not limited to existing only
and must apply equally to all members of the same class.
The legislative intent is to increasingly shift the income tax system towards the
scheduled approach in taxation of individual taxpayers and maintain the present global treatment
on taxable corporations. This classification is neither arbitrary nor inappropriate.

ABAKADA Guro Party List vs. Ermita

G.R. No. 168056 September 1, 2005

FACTS:
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al., filed a
petition for prohibition on May 27, 2005 questioning the constitutionality of Sections 4, 5 and 6
of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the National Internal
Revenue Code (NIRC). Section 4 imposes a 10% VAT on sale of goods and properties, Section 5
imposes a 10% VAT on importation of goods, and Section 6 imposes a 10% VAT on sale of
services and use or lease of properties. These questioned provisions contain a uniformp ro v is o
authorizing the President, upon recommendation of the Secretary of Finance, to raise the VAT
rate to 12%, effective January 1, 2006, after specified conditions have been satisfied. Petitioners
argue that the law is unconstitutional.
ISSUES:
1. Whether or not there is a violation of Article VI, Section 24 of the Constitution.
2. Whether or not there is undue delegation of legislative power in violation of Article VI Sec
28(2) of the Constitution.
3. Whether or not there is a violation of the due process and equal protection under Article III
Sec. 1 of the Constitution.
RULING:
1. Since there is no question that the revenue bill exclusively originated in the House of
Representatives, the Senate was acting within its constitutional power to introduce amendments
to the House bill when it included provisions in Senate Bill No. 1950 amending corporate
income taxes, percentage, and excise and franchise taxes.
2. There is no undue delegation of legislative power but only of the discretion as to the execution
of a law. This is constitutionally permissible. Congress does not abdicate its functions or unduly
delegate power when it describes what job must be done, who must do it, and what is the scope
of his authority; in our complex economy that is frequently the only way in which the legislative
process can go forward.
3. The power of the State to make reasonable and natural classifications for the purposes of
taxation has long been established. Whether it relates to the subject of taxation, the kind of
property, the rates to be levied, or the amounts to be raised, the methods of assessment, valuation
and collection, the States power is entitled to presumption of validity. As a rule, the judiciary
will not interfere with such power absent a clear showing of unreasonableness, discrimination, or
arbitrariness.

Tolentino v. Secretary of Finance

Facts:
The value-added tax (VAT) is levied on the sale, barter or exchange of goods and properties as
well as on the sale or exchange of services. RA 7716 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 challenging the constitutionality of RA 7716 on various grounds.
One contention is that RA 7716 did not originate exclusively in the House of Representatives as
required by Art. VI, Sec. 24 of the Constitution, because it is in fact the result of the
consolidation of 2 distinct bills, H. No. 11197 and S. No. 1630. There is also a contention that S.
No. 1630 did not pass 3 readings as required by the Constitution.
Issue:
Whether or not RA 7716 violates Art. VI, Secs. 24 and 26(2) ofthe Constitution
Held:
The argument that RA 7716 did not originate exclusively in the House of Representatives as
required by Art. VI, Sec. 24 of the Constitution will not bear analysis. To begin with, it is not the
law but the revenue bill which is required by the Constitution to originate exclusively in the
House of Representatives. 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 Senates power not only to concur with amendments but also to
propose amendments. Indeed, what the Constitution simply means is that the initiative for filing
revenue, tariff or tax bills, bills authorizing an increase of the public debt, private bills and bills
of local application must come from the House of Representatives on the theory that, elected as
they are from the districts, the members of the House can be expected to be more sensitive to the
local needs and problems. Nor does the Constitutionprohibit the filing in the Senate of a
substitute bill in anticipation of its receipt of the bill from the House, so long as action by the
Senate as a body is withheld pending receipt of the House bill.
The next argument of the petitioners was that S. No. 1630 did not pass 3 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. That upon the certification of a billby the President the
requirement of 3 readings on separate days and of printing and distribution can be dispensed with
is supported by the weightof legislative practice.

Lung Center of the Philippines vs Quezon City

Constitutional Law - Article VI: Legislative Department; Taxation
FACTS:
Petitioner is a non-stock, non-profit entity established by virtue of PD No. 1823, seeks
exemption from real property taxes when the City Assessor issued Tax Declarations for the land
and the hospital building. Petitioner predicted on its claim that it is a charitable institution. The
request was denied, and a petition hereafter filed before the Local Board of Assessment Appeals
of Quezon City (QC-LBAA) for reversal of the resolution of the City Assessor. Petitioner
alleged that as a charitable institution, is exempted from real property taxes under Sec 28(3) Art
VI of the Constitution. QC-LBAA dismissed the petition and the decision was likewise affirmed
on appeal by the Central Board of Assessment Appeals of Quezon City. The Court of Appeals
affirmed the judgment of the CBAA.

ISSUES:
1. Whether or not petitioner is a charitable institution within the context of PD 1823 and the 1973
and 1987 Constitution and Section 234(b) of RA 7160.
2. Whether or not petitioner is exempted from real property taxes.
RULINGS:
1. Yes. The Court hold that the petitioner is a charitable institution within the context of the 1973
and 1987 Constitution. Under PD 1823, the petitioner is a non-profit and non-stock corporation
which, subject to the provisions of the decree, is to be administered by the Office of the President
with the Ministry of Health and the Ministry of Human Settlements. The purpose for which it
was created was to render medical services to the public in general including those who are poor
and also the rich, and become a subject of charity. Under PD 1823, petitioner is entitled to
receive donations, even if the gift or donation is in the form of subsidies granted by the
government.
2. Partly No. Under PD 1823, the lung center does not enjoy any property tax exemption
privileges for its real properties as well as the building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of the Constitution of the property taxes
only. This provision was implanted by Sec.243 (b) of RA 7160.which provides that in order to be
entitled to the exemption, the lung center must be able to prove that: it is a charitable institution
and; its real properties are actually, directly and exclusively used for charitable purpose.
Accordingly, the portions occupied by the hospital used for its patients are exempt from real
property taxes while those leased to private entities are not exempt from such taxes.

G.R. No. 124043 October 14, 1998

COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
COURT OF APPEALS, COURT OF TAX APPEALS and YOUNG MEN'S CHRISTIAN
ASSOCIATION OF THE PHILIPPINES, INC., respondents.

Facts: YMCA, a non-stock non-profit organization earned an income of P676,829.80 from

leasing out a portion of its premises to small shop owners, like restaurants and canteen operators,
and P44,259.00 from parking fees collected from non-members. CIR issued an assessment to
YMCA amounting to P415,615.01 as deficiency on income tax, expanded withholding tax and
withholding tax on wage. YMCA filed a letter of protest but it was denied by the CIR.YMCA
filed a petition for review before CTA contending that the income generated by the rents and
parking fees were used to cover its operation and maintenance. CTA ruled that the leasing of the
property and parking fees collected are reasonably incidental to and reasonably necessary for the
accomplishment of the objectives of the YMCA. An appeal by the CIR to CA reversed the
decision of CTA. YMCA filed a motion for reconsideration before the CA which reversed its
earlier decision. Hence this petition.
Issue: Whether or not income derived from rentals of real property owned by YMCA is subject
to income tax
Ruling: Sec. 27 (NIRC). Exemptions from tax on corporations. The following organizations
shall not be taxed under this Title in respect to income received by them as such
xxx xxx xxx
(g) Civic league or organization not organized for profit but operated exclusively for the
promotion of social welfare;
(h) Club organized and operated exclusively for pleasure, recreation, and other non-profitable
purposes, no part of the net income of which inures to the benefit of any private stockholder or
member;
xxx xxx xxx
Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties, real or personal, or from
any of their activities conducted for profit, regardless of the disposition made of such income,
shall be subject to the tax imposed under this Code. (as amended by Pres. Decree No. 1457)
Because taxes are the lifeblood of the nation, the Court has always applied the doctrine of strict
in interpretation in construing tax exemptions. Furthermore, a claim of statutory exemption from
taxation should be manifest and unmistakable from the language of the law on which it is based.
Thus, the claimed exemption "must expressly be granted in a statute stated in a language too
clear to be mistaken."
The phrase "any of their activities conducted for profit" does not qualify the word "properties."
This makes from the property of the organization taxable, regardless of how that income is
used whether for profit or for lofty non-profit purposes. Verba legis non est recedendum,
Where the law does not distinguish, neither should we.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated
September 28, 1995 and February 29, 1996 are hereby REVERSED and SET ASIDE.

Pepsi Cola Bottiling Co. vs City of Butuan (1968)

Facts: Ordinance 110 was enacted by the City of Butuan imposing a tax of P0.10 per case of 24
bottles of softdrinks or carbonated drinks. The tax was imposed upon dealers engeged in selling
softdrinks or carbonated drinks. When Ordinance 110, the tax was imposed upon an agent or
consignee of any person, association, partnership, company or corporation engaged in selling
softdrinks or carbonated drinks, with agent or consignee being particularly defined on the
inserted provision Section 3-A. In effect, merchants engaged in the sale of softdrinks, etc. are not
subject to the tax unless they are agents or consignees of another dealer who must be one
engaged in business outside the City. Pepsi-Cola Bottling Co. filed suit to recover sums paid by
it to the city pursuant to the Ordinance, which it claims to be null and void.
Issue: Whether the Ordinance is discriminatory.
Held: The Ordinance, as amended, is discriminatory since only sales by agents or consignees
of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf
of other merchants, regardless of the volume of their sales , and even if the same exceeded those
made by said agents or consignees of producers or merchants established outside the city, would
be exempt from the tax. The classification made in the exercise of the authority to tax, to be valid
must be reasonable, which would be satisfied if the classification is based upon substantial
distinctions which makes real differences; these are germane to the purpose of legislation or
ordinance; the classification applies not only to present conditions but also to future conditions
substantially identical to those of the present; and the classification applies equally to all those
who belong to the same class. These conditions are not fully met by the ordinance in question.

American Bible Society vs. City of Manila

American Bible Society vs. City of Manila
GR No. L-9637 | April 30, 1957
Facts:
American Bible Society is a foreign, non-stock, non-profit, religious, missionary corporation
duly registered and doing business in the Philippines through its Philippine agency established in
Manila in November, 1898

City of Manila is a municipal corporation with powers that are to be exercised in conformity
with the provisions of Republic Act No. 409, known as the Revised Charter of the City of Manila

American Bible Society has been distributing and selling bibles and/or gospel portions
throughout the Philippines and translating the same into several Philippine dialect

City Treasurer of Manila informed American Bible Society that it was violating several
Ordinances for operating without the necessary permit and license, thereby requiring the
corporation to secure the permit and license fees covering the period from 4Q 1945-2Q 1953

To avoid closing of its business, American Bible Society paid the City of Manila its permit
and license fees under protest

American Bible filed a complaint, questioning the constitutionality and legality of the
Ordinances 2529 and 3000, and prayed for a refund of the payment made to the City of Manila.
They contended:
a.
They had been in the Philippines since 1899 and were not required to pay any license fee or
sales tax
b.
it never made any profit from the sale of its bibles

City of Manila prayed that the complaint be dismissed, reiterating the constitutionality of the
Ordinances in question

Trial Court dismissed the complaint

American Bible Society appealed to the Court of Appeals

Issue: WON American Bible Society liable to pay sales tax for the distribution and sale of bibles
Ruling: NO

Under Sec. 1 of Ordinance 3000, one of the ordinance in question, person or entity engaged
in any of the business, trades or occupation enumerated under Sec. 3 must obtain a Mayors
permit and license from the City Treasurer. American Bible Societys business is not among
those enumerated

However, item 79 of Sec. 3 of the Ordinance provides that all other businesses, trade or
occupation not mentioned, except those upon which the City is not empowered to license or to
tax P5.00

Therefore, the necessity of the permit is made to depend upon the power of the City to license
or tax said business, trade or occupation.

2 provisions of law that may have bearing on this case:

a.
Chapter 60 of the Revised Administrative Code, the Municipal Board of the City of Manila
is empowered to tax and fix the license fees on retail dealers engaged in the sale of books
b.
Sec. 18(o) of RA 409: to tax and fix the license fee on dealers in general merchandise,
including importers and indentors, except those dealers who may be expressly subject to the
payment of some other municipal tax. Further, Dealers in general merchandise shall be classified
as (a) wholesale dealers and (b) retail dealers. For purposes of the tax on retail dealers, general
merchandise shall be classified into four main classes: namely (1) luxury articles, (2) semiluxury articles, (3) essential commodities, and (4) miscellaneous articles. A separate license shall
be prescribed for each class but where commodities of different classes are sold in the same
establishment, it shall not be compulsory for the owner to secure more than one license if he pays
the higher or highest rate of tax prescribed by ordinance. Wholesale dealers shall pay the license
tax as such, as may be provided by ordinance

The only difference between the 2 provisions is the limitation as to the amount of tax or
license fee that a retail dealer has to pay per annum

As held in Murdock vs. Pennsylvania, The power to impose a license tax on the exercise of
these freedoms provided for in the Bill of Rights, is indeed as potent as the power of censorship
which this Court has repeatedly struck down. It is not a nominal fee imposed as a regulatory
measure to defray the expenses of policing the activities in question. It is in no way apportioned.
It is flat license tax levied and collected as a condition to the pursuit of activities whose
enjoyment is guaranteed by the constitutional liberties of press and religion and inevitably tends

to suppress their exercise. That is almost uniformly recognized as the inherent vice and evil of
this flat license tax.
Further, the case also mentioned that the power to tax the exercise of a privilege is the power
to control or suppress its enjoyment. Those who can tax the exercise of this religious practice can
make its exercise so costly as to deprive it of the resources necessary for its maintenance. Those
who can tax the privilege of engaging in this form of missionary evangelism can close all its
doors to all those who do not have a full purse
Under Sec. 27(e) of Commonwealth Act No. 466 or the National Internal Revenue Code,
Corporations or associations organized and operated exclusively for religious, charitable, . . . or
educational purposes, . . .: Provided, however, That the income of whatever kind and character
from any of its properties, real or personal, or from any activity conducted for profit, regardless
of the disposition made of such income, shall be liable to the tax imposed under this Code shall
not be taxed
The price asked for the bibles and other religious pamphlets was in some instances a little bit
higher than the actual cost of the same but this cannot mean that American Bible Society was
engaged in the business or occupation of selling said "merchandise" for profit
Therefore, the Ordinance cannot be applied for in doing so it would impair American Bible
Societys free exercise and enjoyment of its religious profession and worship as well as its rights
of dissemination of religious beliefs.
Wherefore, and on the strength of the foregoing considerations, We hereby reverse the
decision appealed from, sentencing defendant return to plaintiff the sum of P5,891.45
unduly collected from it