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TAX CASE #1 (General Principles of Taxation)

NURSERY CARE CORPORATION, et al. v. THE CITY OF MANILA


G.R. No. 180651, July 30, 2014, BERSAMIN, J.:
Facts:

The City of Manila assessed and collected taxes from the individual petitioners pursuant
to Section 151 (Tax on Wholesalers, Distributors, or Dealers) and Section 172 (Tax on
Retailers) of the Revenue Code of Manila. At the same time, the City of Manila imposed
additional taxes upon the petitioners pursuant to Section 21 of the Revenue Code of Manila,
as amended, as a condition for the renewal of their respective business licenses for the year
1999.

To comply with the City of Manila’s assessment of taxes under Section 21, the
petitioners paid under protest corresponding to the first quarter of 1999. The petitioners
formally requested the Office of the City Treasurer for the tax credit or refund of the local
business taxes paid under protest. However, then City Treasurer denied the request.
Consequently, the petitioners filed their respective petitions for certiorari in the RTC of Manila.

The RTC perceives no proscribed double taxation in the strict, narrow, or obnoxious
sense. On appeal to the CA, the latter denied the petitioners’ appeal.

Issue:

Whether or not the collection of taxes under Section 21 of Ordinance No. 7794, as
amended, constitutes double taxation. (YES)

Ruling:

The appeal is meritorious. The collection of taxes pursuant to Section 21 of the Revenue
Code of Manila constituted double taxation.

Double taxation means taxing the same property twice when it should be taxed only
once; Otherwise described as "direct duplicate taxation," the two taxes must be imposed on
the same subject matter, for the same purpose, by the same taxing authority, within the same
jurisdiction, during the same taxing period; and the taxes must be of the same kind or
character.

Using the aforementioned test, the Court finds that there is indeed double taxation if
respondent is subjected to the taxes under both Sections 14 and 21 of Tax Ordinance No.
7794, since these are being imposed: (1) on the same subject matter – the privilege of doing
business in the City of Manila; (2) for the same purpose – to make persons conducting
business within the City of Manila contribute to city revenues; (3) by the same taxing authority

1 “SECTION 15. Tax on Wholesalers, Distributors, or Dealers. — There is hereby imposed a graduated tax on
wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature in accordance with the
following schedule: xxx”

2 “SECTION 17. Tax on Retailers. — A percentage tax is hereby imposed on retailers: xxx”
– petitioner City of Manila; (4) within the same taxing jurisdiction – within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods – per calendar year; and (6)
of the same kind or character - a local business tax imposed on gross sales or receipts of the
business.

“SECTION 14. Tax on Manufacturers, Assemblers and Other Processors. – There


is hereby imposed a graduated tax on manufacturers, assemblers,
repackers,processors, brewers, distillers, rectifiers, and compounders of liquors,
distilled spirits, and wines or manufacturers of any article of commerce of whatever
kind or nature, in accordance with any of the following schedule: x x x”

“SECTION 21. Tax on Businesses Subject to the Excise, Value-Added or


Percentage Taxes Under the NIRC. — On any of the following businesses and
articles of commerce subject to the excise, value-added or percentage taxes under
the National Internal Revenue Code hereinafter referred to as NIRC, as amended,
a tax of three percent (3%) per annum on the gross sales or receipts of the
preceding calendar year is hereby imposed:

A) On persons who sell goods and services in the course of trade or business; and
those who import goods whether for business or otherwise, as provided for in
sections 100 to 103 of the NIRC as administered and determined by the Bureau
of Internal Revenue pursuant to the pertinent provisions of the said code.”
(MANILA ORDINANCE NO. 7794 - AN ORDINANCE ENACTING A REVENUE CODE FOR
THE CITY OF MANILA)

The Court revisits Section 1433 of the LGC, the very source of the power of
municipalities and cities to impose a local business tax, and to which any local business tax
imposed by petitioner City of Manila must conform. It is apparent from a perusal thereof that
when a municipality or city has already imposed a business tax on manufacturers, etc. of
liquors, distilled spirits, wines, and any other article of commerce, pursuant to Section 143(a)
of the LGC, said municipality or city may no longer subject the same manufacturers, etc. to a
business tax under Section 143(h) of the same Code. In the same way, businesses such as
respondent’s, already subject to a local business tax under Section 14 of Tax Ordinance No.
7794 can no longer be made liable for local business tax under Section 21 of the same Tax
Ordinance.

Based on the foregoing reasons, petitioner should not have been subjected to taxes
under Section 21 of the Manila Revenue Code for the fourth quarter of 2001, considering that
it had already been paying local business tax under Section 14 of the same ordinance.
Hence, payments made under Section 21 must be refunded in favor of petitioner.

3THE LOCAL GOVERNMENT CODE OF 1991:


“Section 143. Tax on Business. – The municipality may impose taxes on the following businesses: xxx
(h) On any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned
may deem proper to tax: Provided, That on any business subject to the excise, value-added or percentage
tax under the National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent
(2%) of gross sales or receipts of the preceding calendar year.”xxx
TAX CASE #2
HAGONOY MARKET VENDOR ASSOCIATION, petitioner vs. MUNICIPALITY OF
HAGONOY, BULACAN, respondent
G.R. No. 137621, February 6, 2002, PUNO, J.:

Facts:

On October 1, 1996, the Sangguniang Bayan of Hagonoy, Bulacan, enacted an


ordinance, Kautusan Blg. 28, which increased the stall rentals of the market vendors in
Hagonoy. Then Acting Municipal Mayor Maria Garcia Santos approved the Ordinance on
October 7, 1996. After its approval, copies of the ordinance were given to the Municipal
Treasurer on the same day. The Sangguniang Panlalawigan approved the Ordinance on
November 9, 1996. It was posted during the period from November 4-25, 1996 in three (3)
public places, viz: in front of the municipal building, at the bulletin board of the Sta. Ana Parish
Church and on the front door of the Office of the Market Master in the public market.

Members of Hagonoy Market Vendor Association were personally given copies of the
approved Ordinance in the last week of November, 1997 and were informed that it shall be
enforced in January, 1998. On December 8, 1997, the petitioner’s President filed an appeal
with the Secretary of Justice. The Secretary of Justice dismissed the appeal on the ground
that it was filed out of time.

The petitioner filed a motion for reconsideration but it was denied, afterwards,
petitioner appealed to the Court of Appeals, unfortunately its petition for review was
dismissed. Undaunted, the petitioner moved for reconsideration but it was denied.

Issue:

The validity and constitutionality of the Ordinance is in question - no public hearing


conducted, no publication or posting.

Ruling:

The court hold that petition should be dismissed as the appeal of the petitioner with the
Secretary of Justice is already time-barred. The applicable law is Section 1874 of the 1991
Local Government Code.

4 “SEC. 187.  Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory
Public Hearings. -  The procedure for the approval of local tax ordinances and revenue measures shall be in
accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose
prior to the enactment thereof:  Provided, further,  That  any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to
the Secretary of Justice  who shall render a decision within sixty (60) days from the receipt of the
appeal:  Provided, however,  That  such appeal shall not have the effect of suspending the effectivity of the
ordinance and accrual and payment of the tax, fee or charge levied therein: Provided, finally, That within thirty
(30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting
upon the appeal, the aggrieved party may file appropriate proceedings.”
Also, in the contention of the petitioner that there were no public hearings conducted
prior to the passage of the ordinance, the court cited the evidence that there were hearings
conducted on February 6, July 15, and August 19, all in 1996 wherein various objections
raised by the association’s members showing beyond doubt that petitioners were aware and
even participated in the said public hearings.

In the issue that petitioner were not aware because there were no postings or
publications, the court did not agree. Section 1885 of the Local Government Code was cited in
which the municipality did not fail to post the said ordinance. Since there was no newspaper
of local circulation in the municipality of Hagonoy posting was validly made in three public
places mentioned, supra.

Based on the records gathered from both parties, the court dismissed the petition for
lack of merit.

5 “SEC. 188.  Publication of Tax Ordinance and Revenue Measures.  Within ten (10) days after their approval,
certified true copies of all provincial, city, and municipal tax ordinances or revenue measures shall be published
in full for three (3) consecutive days in a newspaper of local circulation; Provided, however, That in provinces,
cities and municipalities where there are no newspapers of local circulation, the same may be posted in at least
two (2) conspicuous and publicly accessible places. (emphasis supplied)”
TAX CASE #3
COMMISSIONER OF INTERNAL REVENUE v. YMCA
G.R. No. 124043 October 14, 1998, Panganiban, J.

Doctrine:

– Rental income derived by a tax-exempt organization from the lease of its properties,
real or personal, is not exempt from income taxation, even if such income is exclusively
used for the accomplishment of its objectives.
– A claim of statutory exemption from taxation should be manifest and unmistakable
from the language of the law on which it is based. Thus, it must expressly be granted in
a statute stated in a language too clear to be mistaken. Verba legis non est
recedendum — where the law does not distinguish, neither should we.
– The bare allegation alone that one is a non-stock, non-profit educational institution is
insufficient to justify its exemption from the payment of income tax. It must prove with
substantial evidence that (1) it falls under the classification non-stock, non-profit
educational institution; and (2) the income it seeks to be exempted from taxation is
used actually, directly, and exclusively for educational purposes.
– The Court cannot change the law or bend it to suit its sympathies and appreciations.
Otherwise, it would be overspilling its role and invading the realm of legislation. The
Court, given its limited constitutional authority, cannot rule on the wisdom or propriety
of legislation. That prerogative belongs to the political departments of government.

Facts:

Private Respondent YMCA is a non-stock, non-profit institution, which conducts various


programs and activities that are beneficial to the public, especially the young people, pursuant
to its religious, educational and charitable objectives.

YMCA earned income from leasing out a portion of its premises to small shop owners,
like restaurants and canteen operators, and from parking fees collected from non-members.
Petitioner issued an assessment to private respondent for deficiency taxes. Private
respondent formally protested the assessment. In reply, the CIR denied the claims of YMCA.

Issue:

Whether or not the income derived from rentals of real property owned by YMCA
subject to income tax

Held:

Yes. Income of whatever kind and character of non-stock non-profit 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
the NIRC.
Rental income derived by a tax-exempt organization from the lease of its properties,
real or personal, is not exempt from income taxation, even if such income is exclusively used
for the accomplishment of its objectives.
Because taxes are the lifeblood of the nation, the Court has always applied the
doctrine of strict in interpretation in construing tax exemptions (Commissioner of Internal
Revenue v. Court of Appeals, 271 SCRA 605, 613, April 18, 1997). 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” (Davao Gulf Lumber Corporation v.
Commissioner of Internal Revenue and Court of Appeals, G.R. No. 117359, p. 15 July 23,
1998).

Verba legis non est recedendum. The law does not make a distinction. The rental
income is taxable regardless of whence such income is derived and how it is used or
disposed of. Where the law does not distinguish, neither should we.

Private respondent also invokes Article XIV, Section 4, par. 3 of the Constitution,
claiming that it “is a non-stock, non-profit educational institution whose revenues and assets
are used actually, directly and exclusively for educational purposes so it is exempt from taxes
on its properties and income.” This is without merit since the exemption provided lies on the
payment of property tax, and not on the income tax on the rentals of its property. The bare
allegation alone that one is a non-stock, non-profit educational institution is insufficient to
justify its exemption from the payment of income tax.

For the YMCA to be granted the exemption it claims under the above provision, it must
prove with substantial evidence that (1) it falls under the classification non-stock, non-profit
educational institution; and (2) the income it seeks to be exempted from taxation is used
actually, directly, and exclusively for educational purposes. Unfortunately for respondent, the
Court noted that not a scintilla of evidence was submitted to prove that it met the said
requisites.

The Court appreciates the nobility of respondent’s cause. However, the Court’s power
and function are limited merely to applying the law fairly and objectively. It cannot change the
law or bend it to suit its sympathies and appreciations. Otherwise, it would be overspilling its
role and invading the realm of legislation. The Court regrets that, given its limited
constitutional authority, it cannot rule on the wisdom or propriety of legislation. That
prerogative belongs to the political departments of government.
REPORT #1
Preliminary Considerations in Legal Research
i. Introduction
ii. Importance of Legal Research
iii. Flexibility of Legal Research

REPORT #2: “Authority in Research and Legal Writing”

LEGAL AUTHORITY

The purpose of legal research is to find the “authority” that will aid in finding a solution
to a legal problem. In particular, it is the concept of authority that drives much of legal
research. Whether searching in print or online, the challenges of legal research are usually:

a. selecting appropriate legal authorities, and


b. selecting sppropriate search terms to find the legal rules in the resource that is being
searched.

The process of legal research and legal analysis requires a determination of what law
applies to a legal question and how it applies. In order to engage in the process, it is
necessary to have an understanding of the law and the basic doctrines and principles that
govern and guide the analysis of the law. Legal research is complicated by the fact that all
these types of law may function at various governmental levels.

TYPES OF LEGAL AUTHORITIES

A. PRIMARY LEGAL AUTHORITIES

Primary Legal Authorities are authorized statements of law issued by governmental


bodies. These are official pronouncements of the law by the legislative branch (constitution
and statutes), judicial branch (cases), and executive branch (treaties, executive orders,
administrative rules and regulations, ordinances).

Primary authorities can be either mandatory (binding) or persuasive (non-binding). But


as a rule, primary authorities are usually mandatory or binding.

Mandatory statutory authority must be followed; mandatory judicial authority must be


followed under the principle of Stare Decisis, unless the court decides that changed
circumstances warrant a different outcome. The Doctrine of Stare Decisis encourages stability
of the legal system and provides mechanisms for individuals to predict the outcome of their
behavior. However, this goal is counterbalanced by the need for responsiveness to change.
The result is a system that places a high premium on following established judicial
precedents, but one that allows for change if it is necessary or desirable.

Persuasive primary authority can include court decisions of other jurisdictions, which
do not have to be followed but which may be used as examples of good reasoning.

Hierarchy of Laws
A hierarchy of authority exists between the two primary sources of law: enacted law
and common law. When a question arises concerning which source applies in a case or there
is a conflict between sources, a hierarchy governs which source will apply.

In general, the constitution is the highest authority, followed by the other enacted law
(legislative and administrative law), and then the common or case law. This means that
legislative acts and court decisions must not conflict with the provisions of the constitution. A
court decision may interpret a legislative act, but it cannot overrule an act unless it is
determined that the act violates the constitution (Putman, 2004).

B. SECONDARY LEGAL AUTHORITIES

If a legal authority does not fall within one of the previously mentioned categories
under primary authorities, it is a secondary authority. Secondary legal authorities are
descriptions of, or commentary on, the law. This category includes law review articles,
treatises, Restatements of the Law, legal encyclopedias and other similar items. Secondary
sources vary widely in their relative weight as persuasive authority.

REPORT #3
Approaches
i. Generalized Approach
ii. Specialized Approach