Francia v Intermediate Appellate Court (1988)

Francia v Intermediate Appellate Court GR No L-67649, June 28, 1988

FACTS:
Engracio Francia was the registered owner of a house and lot located in Pasay City. A portion of such
property was
expropriated by the Republic of the Philippines in 1977. It appeared that Francia did not pay his real
estate taxes from 1963 to 1977. Thus, his property was sold in a public auction by the City Treasurer of
Pasay City. Francia filed a complaint to annual the auction sale. The lower court dismissed the complaint
and the Intermediate Appellate Court affirmed the decision of the lower court in toto. Hence, this petition
for review. Francia contends that his tax delinquency of P 2,400 has been extinguished by legal
compensation. He claims that the government owed him P 4,116 when a portion of his land was
expropriated on October 15, 1977.

ISSUE:
May the expropriation payment compensate for the real estate taxes due?

RULING:
No. There can be no offsetting of taxes against the claims that the taxpayer may have against the
government. A person
cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than
the tax being collected. The collection of a tax cannot await the results of a lawsuit against the
government. Internal revenue taxes cannot be the subject of compensation. The Government and the
taxpayer are not mutually creditors and debtors of each other under Article 1278 of the Civil Code and a
claim of taxes is not such a debt, demand, contract or judgment as is allowed to be set-off.

Moreover, the amount of P4,116 paid by the national government for the 125 square meter portion of his
lot was deposited with the Philippine National Bank long before the sale at public auction of his
remaining property. It would have been an easy matter to withdraw P 2,400 from the deposit so that he
could pay the tax obligation thus aborting the sale at public auction. Thus, the petition for review is
dismissed. The taxes assessed are the obligations of the taxpayer arising from law, while the money
judgment against the government is an obligation arising from contract, whether express or implied.

Domingo v Garlitos (1963)

Domingo v Garlitos
GR No L-18994, June 29, 1963

FACTS:
In the 1960 case of Domingo v Moscoso, the Supreme Court declared as final and executory the order for
the payment by the estate of the late Walter Scott Price of estate and inheritance taxes, charges and
penalties, amounting to P40,058.55 issued by the Court of First Instance – Leyte. The fiscal then
presented a petition for the execution of the judgment before the Court of First Instance – Leyte.

The petition was denied as the execution is not justifiable as the government is indebted to the estate
under administration in the amount of P 262,200. Hence, the present petition for certiorari and
mandamus.

ISSUE:
Is execution proper?

RULING:
No. The tax and the debt are compensated. The court having jurisdiction of the estate had found that the
claim of the estate against the government has been recognized and an amount of P262,200 has already
been appropriated by a corresponding law (RA 2700). Under the circumstances, both the claim of the
Government for the inheritance taxes and the claim of the intestate for services rendered have already
become overdue and demandable as well as fully liquidated.

Compensation, therefore, takes place by operation of law, in accordance with Article 1279 and 1290 of
the Civil Code, and both debts are extinguished to their concurrent amounts. If the obligation to pay taxes
and the taxpayer’s claim against the government are both overdue, demandable, as well as fully
liquidated, compensation takes place by operation of law and both obligations are extinguished to their
concurrent amounts.

GOMEZ v. PALOMAR
GR No. L-23645, October 29, 1968
25 SCRA 827

FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in San Fernando, Pampanga. It did not
bear
the special anti-TB stamp required by the RA 1635. It was returned to the petitioner. Petitioner now assails the
constitutionality of the statute claiming that RA 1635 otherwise known as the Anti-TB Stamp law is violative of
the equal protection clause because it constitutes mail users into a class for the purpose of the tax while leaving
untaxed the rest of the population and that even among postal patrons the statute discriminatorily grants
exemptions. The law in question requires an additional 5 centavo stamp for every mail being posted, and no mail
shall be delivered unless bearing the said stamp.

ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly violative of the equal protection clause?

HELD: No. It is settled that the legislature has the inherent power to select the subjects of taxation and to grant
exemptions. This power has aptly been described as "of wide range and flexibility." Indeed, it is said that in the
field of taxation, more than in other areas, the legislature possesses the greatest freedom in classification. The
reason for this is that traditionally, classification has been a device for fitting tax programs to local needs and
usages in order to achieve an equitable distribution of the tax burden.
The classification of mail users is based on the ability to pay, the enjoyment of a privilege and on administrative
convenience. Tax exemptions have never been thought of as raising revenues under the equal protection clause.

Lutz v Araneta (1955)

Lutz v Araneta
GR No L-7859 December 22, 1955

FACTS:
Walter Lutz, as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, sought to
recover the sum of
P14,666.40 paid by the estate as taxes from the Commissioner under Section e of Commonwealth Act
567 or the Sugar Adjustment Act, alleging that such tax is unconstitutional as it levied for the aid and
support of the sugar industry exclusively, which is in his opinion not a public purpose.

ISSUE:
Is the tax valid?

HELD:
Yes. The tax is levied with a regulatory purpose, i.e. to provide means for the rehabilitation and
stabilization of the threatened sugar industry. The act is primarily an exercise of police power and is not a
pure exercise of taxing power.
As sugar production is one of the great industries of the Philippines and its promotion, protection and
advancement redounds greatly to the general welfare, the legislature found that the general welfare
demanded that the industry should be stabilized, and provided that the distribution of benefits had to
sustain.
Further, it cannot be said that the devotion of tax money to experimental stations to seek increase of
efficiency in sugar production, utilization of by-products, etc., as well as to the improvement of living and
working conditions in sugar mills and plantations without any part of such money being channeled
directly to private persons, constitute expenditure of tax money for private purposes.
Hence, the tax is valid.

TIO vs. VIDEOGRAM REGULATORY BOARD

Citation: 151 SCRA 208; G.R. No. L-75697; June 18, 1987
Ponente: Melencio-Herrera, J.

DOCTRINES:
Validity of law; title of bill – The Constitutional requirement that "every bill
shall embrace only one subject which shall be expressed in the title thereof"
is sufficiently complied with if the title be comprehensive enough to include
the general purpose which a statute seeks to achieve. It is not necessary
that the title express each and every end that the statute wishes to
accomplish. The requirement is satisfied if all the parts of the statute
are related, and are germane to the subject matter expressed in the
title, or as long as they are not inconsistent with or foreign to the
general subject and title.

Taxation; security against oppressive taxation – The power to impose taxes

is one so unlimited in force and so searching in extent, that the courts
scarcely venture to declare that it is subject to any restrictions whatever,
except such as rest in the discretion of the authority which exercises it. In
imposing a tax, the legislature acts upon its constituents. This is, in general,
a sufficient security against erroneous and oppressive taxation.

Taxation as a revenue and regulatory measure – The tax imposed by the

DECREE is not only a regulatory but also a revenue measure prompted by
the realization that earnings of videogram establishments of around P600
million per annum have not been subjected to tax, thereby depriving the
Government of an additional source of revenue. . . . The levy of the 30%
tax is for a public purpose. It was imposed primarily to answer the
need for regulating the video industry, particularly because of the
rampant film piracy, the flagrant violation of intellectual property
rights, and the proliferation of pornographic video tapes. And while it
was also an objective of the DECREE to protect the movie industry, the tax
remains a valid imposition.

Undue delegation of legislative power – The grant in Section 11 of the

DECREE of authority to the BOARD to "solicit the direct assistance of other
agencies and units of the government and deputize, for a fixed and limited
period, the heads or personnel of such agencies and units to perform
enforcement functions for the Board" is not a delegation of the power to
legislate but merely a conferment of authority or discretion as to its
execution, enforcement, and implementation. "The true distinction is
between the delegation of power to make the law, which necessarily involves
a discretion as to what it shall be, and conferring authority or discretion as
to its execution to be exercised under and in pursuance of the law. The first
cannot be done; to the latter, no valid objection can be made." Besides, in
the very language of the decree, the authority of the BOARD to solicit such
assistance is for a "fixed and limited period" with the deputized agencies
concerned being "subject to the direction and control of the BOARD." That
the grant of such authority might be the source of graft and corruption
would not stigmatize the DECREE as unconstitutional. Should the eventuality
occur, the aggrieved parties will not be without adequate remedy in law.

FACTS:
Valentin Tio is a videogram establishment operator adversely
affected by Presidential Decree No. 1987 entitled "An Act Creating
the Videogram Regulatory Board".

P.D. No. 1987 provides for the levy of a tax over each cassette
sold (Sec. 134) and a 30% tax on the gross receipts of a
videogram establishment, payable to the local government (Sec.
10). The rationale for this decree is set forth in its
preambulatory/whereas clauses to wit:

1. WHEREAS, the proliferation and unregulated circulation of videograms

including, among others, videotapes, discs, cassettes ... have greatly
prejudiced the operations of moviehouses and theaters, and have caused a
sharp decline in theatrical attendance by at least forty percent (40%) and a
tremendous drop in the collection of [taxes] thereby resulting in substantial
losses estimated at P450 Million annually in government revenues;
2. WHEREAS, videogram(s) establishments collectively earn around P600
Million per annum from rentals, sales and disposition of videograms, and
such earnings have not been subjected to tax, thereby depriving the
Government of approximately P180 Million in taxes each year;

3. WHEREAS, the unregulated activities of videogram establishments have

also affected the viability of the movie industry, ...;

5. WHEREAS, proper taxation of the activities of videogram establishments

will not only alleviate the dire financial condition of the movie industry ...,
but also provide an additional source of revenue for the Government, and at
the same time rationalize the heretofore uncontrolled distribution of
videograms;

6. WHEREAS, the rampant and unregulated showing of obscene videogram

features constitutes a clear and present danger to the moral and spiritual
well-being of the youth [READ: PORN], and impairs the mandate of the
Constitution for the State to support the rearing of the youth for civic
efficiency and the development of moral character and promote their
physical, intellectual, and social well-being;

8. WHEREAS, in the face of these grave emergencies corroding the moral

values of the people [AGAIN, READ: PORN] and betraying the national
economic recovery program, bold emergency measures must be adopted
with dispatch; (emphasis supplied and certain passages omitted)

ISSUES:
The petioner, among others, raised the following issues:

1. Whether or not the imposition of the 30% tax is a rider and the
same is not germane to the subject matter of the law.

2. Whether or not there is undue delegation of power and

authority; and

HELD:
1. No, the tax is not a rider and is germane to the purpose and
subject of the law.

The Constitutional requirement that "every bill shall embrace only

one subject which shall be expressed in the title thereof" is
sufficiently complied with if the title be comprehensive enough to
include the general purpose which a statute seeks to achieve. It
is not necessary that the title express each and every end that
the statute wishes to accomplish. The requirement is satisfied if
all the parts of the statute are related, and are germane to the
subject matter expressed in the title, or as long as they are not
inconsistent with or foreign to the general subject and title.

Reading section 10 of P.D. No. 1987 closely, one can see that the
foregoing provision is allied and germane to, and is reasonably
necessary for the accomplishment of, the general object of the
law, which is the regulation of the video industry through the
Videogram Regulatory Board as expressed in its title. The tax
provision is not inconsistent with, nor foreign to that general
subject and title. As a tool for regulation it is simply one of the
regulatory and control mechanisms scattered throughout the
decree.

Aside from revenue collection, tax laws may also be enacted for
the purpose of regulating an activity. At the same time, the
videogram industry is also an untapped source of revenue which
the government may validly tax. All of this is evident from
preambulatory clauses nos. 2, 5, 6 and 8, quoted in part above.

The levy of the 30% tax is also for a public purpose. It was
imposed primarily to answer the need for regulating the video
industry, particularly because of the rampant film piracy, the
flagrant violation of intellectual property rights, and the
proliferation of pornographic video tapes. And while it was also an
objective of the law to protect the movie industry, the tax
remains a valid imposition.

2. No. There was no undue delegation of law making authority.

Petitioner was concerned that Section 11 of P.D. No. 1987 stating

that the videogram board (Board) has authority to "solicit the
direct assistance of other agencies and units of the government
and deputize, for a fixed and limited period, the heads or
personnel of such agencies and units to perform enforcement
functions for the Board" is an undue delegation of legislative
power.

This is not a delegation of the power to legislate but merely a

conferment of authority or discretion as to its execution,
enforcement, and implementation. "The true distinction is
between the delegation of power to make the law, which
necessarily involves a discretion as to what it shall be, and
conferring authority or discretion as to its execution to be
exercised under and in pursuance of the law. The first cannot be
done; to the latter, no valid objection can be made." Besides, in
the very language of the decree, the authority of the Board to
solicit such assistance is for a "fixed and limited period" with the
deputized agencies concerned being "subject to the direction and
control of the Board."

The petition was DISMISSED.

City of Baguio vs. De Leon

CITY OF BAGUIO vs. DE LEON
25 SCRA 938
GR No. L-24756, October 31, 1968

"There is no double taxation where one tax is imposed by the state and the other is imposed by the city."

FACTS: The City of Baguio passed an ordinance imposing a license fee on any person, entity or corporation
doing business in the City. The ordinance sourced its authority from RA No. 329, thereby amending the city
charter empowering it to fix the license fee and regulate businesses, trades and occupations as may be established
or practiced 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 statury 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: Are the contentions of the defendant-appellant tenable?

HELD: No. 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 statury authority 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 is imposed by the city, so that where, as here, Congress has clearly expressed its intention, the statute
must be sustained even though double taxation results.
And third, violation of uniformity is out of place it being widely recognized that there is nothing inherently
obnoxious in the requirement that license fees or taxes be exacted with respect to the same occupation, calling
or activity by both the state and the political subdivisions thereof.
Bagatsing v Ramirez (1976)

Bagatsing v Ramirez
GR No L-41631, December 17, 1976

FACTS:
In 1974, the Municipal Board of Manila enacted Ordinance 7522, regulating the operation of public
markets and prescribing fees for the rentals of stalls and providing penalties for violation thereof. The
Federation of Manila Market Vendors Inc. assailed the validity of the ordinance, alleging among others
the noncompliance to the publication requirement under the Revised Charter of the City of Manila. CFI-
Manila declared the ordinance void. Thus, the present petition.

ISSUE:

1. What law should govern the publication of a tax ordinance, the Revised City Charter, which
requires publication of the
ordinance before its enactment and after its approval, or the Local Tax Code, which only
demands publication after
approval?
2. Is the ordinance valid?

RULING:

1. The Local Tax Code prevails. There is no question that the Revised Charter of the City of Manila
is a special act since it relates only to the City of Manila whereas the Local Tax Code is a general
law because it applies universally to all local governments. The fact that one is special and the
other general creates a presumption that the special is to be considered as remaining an exception
of the general, one as a general law of the land, the other as the law of a particular case. However,
the rule readily yields to a situation where the special statute refers to a subject in general, which
the general statute treats in particular. The Revised Charter of the City prescribes a rule for the
publication of “ordinance” in general, while the Local Tax Code establishes a rule for the
publication of “ordinance levying or imposing taxes fees or other charges” in particular.

2. The ordinance is valid.

 Commissioner vs. BOAC
COMMISSIONER vs. BOAC
149 SCRA 395
GR No. L-65773-74 April 30, 1987

"The source of an income is the property, activity or service that produced the income. For such source to be
considered as coming from the Philippines, it is sufficient that the income is derived from activity within the
Philippines."

FACTS: Petitioner CIR seeks a review of the CTA's decision setting aside petitioner's assessment of deficiency
income taxes against respondent British Overseas Airways Corporation (BOAC) for the fiscal years 1959 to
1971. BOAC is a 100% British Government-owned corporation organized and existing under the laws of the
United Kingdom, and is engaged in the international airline business. During the periods covered by the disputed
assessments, it is admitted that BOAC had no landing rights for traffic purposes in the Philippines. Consequently,
it did not carry passengers and/or cargo to or from the Philippines, although during the period covered by the
assessments, it maintained a general sales agent in the Philippines — Wamer Barnes and Company, Ltd., and
later Qantas Airways — which was responsible for selling BOAC tickets covering passengers and cargoes. The
CTA sided with BOAC citing that the proceeds of sales of BOAC tickets do not constitute BOAC income from
Philippine sources since no service of carriage of passengers or freight was performed by BOAC within the
Philippines and, therefore, said income is not subject to Philippine income tax. The CTA position was that
income from transportation is income from services so that the place where services are rendered determines the
source.

ISSUE: Are the revenues derived by BOAC from sales of ticket for air transportation, while having no landing
rights here, constitute income of BOAC from Philippine sources, and accordingly, taxable?

HELD: Yes. The source of an income is the property, activity or service that produced the income. For the source
of income to be considered as coming from the Philippines, it is sufficient that the income is derived from activity
within the Philippines. In BOAC's case, the sale of tickets in the Philippines is the activity that produces the
income. The tickets exchanged hands here and payments for fares were also made here in Philippine currency.
The site of the source of payments is the Philippines. The flow of wealth proceeded from, and occurred within,
Philippine territory, enjoying the protection accorded by the Philippine government. In consideration of such
protection, the flow of wealth should share the burden of supporting the government.

Atlas Consolidated vs. CIR

ATLAS CONSOLIDATED MINING DEVT CORP vs. CIR
524 SCRA 73, 103
GR Nos. 141104 & 148763, June 8, 2007

"The taxpayer must justify his claim for tax exemption or refund by the clearest grant of organic or statute law
and should not be permitted to stand on vague implications."
"Export processing zones (EPZA) are effectively considered as foreign territory for tax purposes."

FACTS: Petitioner corporation, a VAT-registered taxpayer engaged in mining, production, and sale of various
mineral products, filed claims with the BIR for refund/credit of input VAT on its purchases of capital goods and
on its zero-rated sales in the taxable quarters of the years 1990 and 1992. BIR did not immediately act on the
matter prompting the petitioner to file a petition for review before the CTA. The latter denied the claims on the
grounds that for zero-rating to apply, 70% of the company's sales must consists of exports, that the same were
not filed within the 2-year prescriptive period (the claim for 1992 quarterly returns were judicially filed only on
April 20, 1994), and that petitioner failed to submit substantial evidence to support its claim for refund/credit.
The petitioner, on the other hand, contends that CTA failed to consider the following: sales to PASAR and
PHILPOS within the EPZA as zero-rated export sales; the 2-year prescriptive period should be counted from the
date of filing of the last adjustment return which was April 15, 1993, and not on every end of the applicable
quarters; and that the certification of the independent CPA attesting to the correctness of the contents of the
summary of suppliers’ invoices or receipts examined, evaluated and audited by said CPA should substantiate its
claims.

ISSUE: Did the petitioner corporation sufficiently establish the factual bases for its applications for refund/credit
of input VAT?

HELD: No. Although the Court agreed with the petitioner corporation that the two-year prescriptive period for
the filing of claims for refund/credit of input VAT must be counted from the date of filing of the quarterly VAT
return, and that sales to PASAR and PHILPOS inside the EPZA are taxed as exports because these export
processing zones are to be managed as a separate customs territory from the rest of the Philippines, and thus, for
tax purposes, are effectively considered as foreign territory, it still denies the claims of petitioner corporation for
refund of its input VAT on its purchases of capital goods and effectively zero-rated sales during the period
claimed for not being established and substantiated by appropriate and sufficient evidence.
Tax refunds are in the nature of tax exemptions. It is regarded as in derogation of the sovereign authority, and
should be construed in strictissimi juris against the person or entity claiming the exemption. The taxpayer who
claims for exemption must justify his claim by the clearest grant of organic or statute law and should not be
permitted to stand on vague implications.

Board of Assessment Appeals vs. CTA

BOARD OF ASSESSMENT APPEALS OF LAGUNA vs. CTA, NWSA
8 SCRA 224
GR No. L-18125, May 31, 1963

"A tax on property of the Government, whether national or local, would merely have the effect of taking money
from one pocket to put it in another pocket."
FACTS: National Waterworks and Sewerage Authority (NWSA), a public corporation owned by the
Government of the Philippines as well as all property comprising waterworks and sewerage systems placed
under it, took over the Cabuyao-Sta. Rosa-Biñan Waterworks System in 1956. It was assessed by the Provincial
Assessor of Laguna, for purposes of real estate taxes, on the real properties owned by Cabuyao Waterworks. The
respondent protested claiming it is exempted from the payment of real estate taxes in view of the nature and kind
of said property and functions and activities of petitioner. The petitioner denied the protest arguing that such real
properties are subject to real estate tax because although said properties belong to the Republic of the Philippines,
the same holds it, not in its governmental, political or sovereign capacity, but in a private, proprietary or
patrimonial character, which, allegedly, is not covered by the exemption contained in section 3(a) of Republic
Act No. 470.

ISSUE: Are the real properties owned by the respondent public corporation subject to real estate tax?

HELD: No. Republic Act No. 470 makes no distinction between property held in a sovereign, governmental or
political capacity and those possessed in a private, proprietary or patrimonial character. And where the law does
not distinguish neither may we, unless there are facts and circumstances clearly showing that the lawmaker
intended the contrary, but no such facts and circumstances have been brought to our attention. Indeed, the noun
"property" and the verb "owned" used in said section 3(a) strongly suggest that the object of exemption is
considered more from the view point of dominion, than from that of domain.
Moreover, taxes are financial burdens imposed for the purpose of raising revenues with which to defray the
cost of the operation of the Government, and a tax on property of the Government, whether national or local,
would merely have the effect of taking money from one pocket to put it in another pocket. Hence, it would not
serve, in the final analysis, the main purpose of taxation. What is more, it would tend to defeat it, on account of
the paper work, time and consequently, expenses it would entail.

Pepsi-Cola vs. City of Butuan

PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs. CITY OF BUTUAN
24 SCRA 789
GR No. L-22814, August 28, 1968

"The classification made in the exercise of power to tax, to be valid, must be reasonable ."

FACTS: Plaintiff-appellant Pepsi-Cola sought to recover the sums paid by it under protest, to the City of Butuan,
and collected by the latter, pursuant to its Municipal Ordinance No. 110 which plaintiff assails as null and void
because it partakes of the nature of an import tax, amounts to double taxation, highly unjust and discriminatory,
excessive, oppressive and confiscatory, and constitutes an invlaid delegation of the power to tax. The ordinance
imposes taxes for every case of softdrinks, liquors and other carbonated beverages, regardless of the volume of
sales, shipped to the agents and/or consignees by outside dealers or any person or company having its actual
business outside the City.

ISSUE: Does the tax ordinance violate the uniformity requirement of taxation?
HELD: Yes. The tax levied is discriminatory. Even if the burden in question were regarded as a tax on the sale
of said beverages, it would still be invalid, as discriminatory, and hence, violative of the uniformity required by
the Constitution and the law therefor, 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 of Butuan, would be exempt from the disputed tax.
It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or
equality under all circumstances, or negate the authority to classify the objects of taxation. The classification
made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not
deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are
germane to the purpose of the legislation or ordinance; (3) the classification applies, not only to present
conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification
applies equally to all those who belong to the same class.

Pepsi-Cola vs. Municipality of Tanauan

PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs. MUNICIPALITY OF TANAUAN
69 SCRA 460
GR No. L-31156, February 27, 1976

"Legislative power to create political corporations for purposes of local self-government carries with it the power
to confer on such local governmental agencies the power to tax.

FACTS: Plaintiff-appellant Pepsi-Cola commenced a complaint with preliminary injunction to declare Section
2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, unconstitutional as an undue
delegation of taxing authority as well as to declare Ordinances Nos. 23 and 27 denominated as "municipal
production tax" of the Municipality of Tanauan, Leyte, null and void. Ordinance 23 levies and collects from soft
drinks producers and manufacturers a tax of one-sixteenth (1/16) of a centavo for every bottle of soft drink
corked, and Ordinance 27 levies and collects on soft drinks produced or manufactured within the territorial
jurisdiction of this municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of
volume capacity. Aside from the undue delegation of authority, appellant contends that it allows double taxation,
and that the subject ordinances are void for they impose percentage or specific tax.

ISSUE: Are the contentions of the appellant tenable?

HELD: No. On the issue of undue delegation of taxing power, it is settled that the power of taxation is an essential
and inherent attribute of sovereignty, belonging as a matter of right to every independent government, without
being expressly conferred by the people. It is a power that is purely legislative and which the central legislative
body cannot delegate either to the executive or judicial department of the government without infringing upon
the theory of separation of powers. The exception, however, lies in the case of municipal corporations, to which,
said theory does not apply. Legislative powers may be delegated to local governments in respect of matters of
local concern. By necessary implication, the legislative power to create political corporations for purposes of
local self-government carries with it the power to confer on such local governmental agencies the power to tax.
 Also, there is no validity to the assertion that the delegated authority can be declared unconstitutional on the
theory of double taxation. It must be observed that the delegating authority specifies the limitations and
enumerates the taxes over which local taxation may not be exercised. The reason is that the State has exclusively
reserved the same for its own prerogative. Moreover, double taxation, in general, is not forbidden by our
fundamental law, so that double taxation becomes obnoxious only where the taxpayer is taxed twice for the
benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where
one tax is imposed by the State and the other by the city or municipality.
On the last issue raised, the ordinances do not partake of the nature of a percentage tax on sales, or other taxes
in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The
volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the
tax rate on the products, but there is not set ratio between the volume of sales and the amount of the tax.

Osmeña vs. Orbos

OSMEÑA vs. ORBOS
220 SCRA 703
GR No. 99886, March 31, 1993

" To avoid the taint of unlawful delegation of the power to tax, there must be a standard which implies that the
legislature determines matter of principle and lays down fundamental policy."

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.

VILLEGAS VS. HIU CHIONG [86 SCRA 270; NO.L-29646; 10

NOV 1978]
Sunday, February 01, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: The controverted Ordinance no. 6537 was passed by the Municipal
Board of Manila on February 22, 1968 and signed by Mayor Villegas. It is an
ordinance making it unlawful for any person not a citizen of the Philippines to
be employed in any place of employment or to be engaged in any kind of trade
business or occupation within the city of Manila without securing an
employment permit from the Mayor of Manila and for other purposes.

Hiu Chiong Tsai Pao Ho, who was employed in Manila filed a petition praying for
the writ of preliminary injunction and restraining order to stop the enforcement of
said ordinance.

Issue: Whether or Not Ordinance no.6537 violates the due process and equal
protection clauses of the Constitution.

Held: It is a revenue measure. The city ordinance which imposes a fee of 50.00
pesos to enable aliens generally to be employed in the city of Manila is not only
for the purpose of regulation.

While it is true that the first part which requires the alien to secure an
employment permit from the Mayor involves the exercise of discretion and
judgment in processing and approval or disapproval of application is regulatory
in character, the second part which requires the payment of a sum of 50.00 pesos
is not a regulatory but a revenue measure.

Ordinance no. 6537 is void and unconstitutional. This is tantamount todenial of

the basic human right of the people in the Philippines to engaged in a means of
livelihood. While it is true that the Philippines as a state is not obliged to admit
aliens within it's territory, once an alien is admitted he cannot be deprived of life
without due process of law. This guarantee includes the means of livelihood. Also
it does not lay down any standard to guide the City Mayor in the issuance
or denial of an alien employmentpermit fee.