You are on page 1of 7

[2] The bond requirement was not properly issued. Section 11 of R.A.

POWER OF TAXATION 1125, as amended, indicates that the requirement of the bond as a
condition precedent to suspension of the collection applies only in cases
where the processes by which the collection sought to be made by
1. TRIDHARMA MARKETING CORPORATION, Petitioner, vs. COURT means thereof are carried out in consonance with the law, not when the
OF TAX APPEALS and the COMMISSIONER OF INTERNAL processes are in plain violation of the law that they have to be suspended
REVENUE, Respondents. (G.R. No. 215950; June 20, 2016) for jeopardizing the interests of the taxpayer.

FACTS: The Court is not in the position to rule on the correctness of the
BIR assessed T with various tax deficiencies amounting to more than deficiency assessment, which is a matter still pending in the CTA. The
4.640 billion pesos. Protest was filed. T paid 5.8 million pesos for its determination of whether the methods, employed by the CIR in its
assessment on WTC, DST and EWT and reiterated its interest to assessment, jeopardized the interests of a taxpayer for being patently in
compromise alleged IT and VAT deficiencies. FDDA was issued at 4.473 violation of the law is a question of fact that calls for the reception of
billion pesos. evidence.

T appealed the CIR's decision to the CTA 2D and moved for the 2. ABRA VALLEY COLLEGE, INC., v. HON. JUAN P. AQUINO
suspension of tax collection against it. However, the CTA 2D required T
to post bond equivalent to 150% of the assessment within 15 days from
[G.R. No. L-39086; June 15, 1988] Constitutional Law| Power of
notice. Hence, T was ordered to post 6.701 billion pesos as bond.
Taxation
FACTS:
T petitioned for certiorari.
Abra Valley College is an educational corporation and institution of higher
learning in Bangued, Abra. In 1974, the CFI ordered for the seizure and
ISSUES:
sale of the subject school property for non-payment of real estate taxes
[1] Did the CTA abuse its discretion in requiring bond that T is legally and
and penalties. Private respondents stated that the college lot and
physically incapable of procuring?
building in question are not only used for educational purposes of the
[2] Was the bond requirement properly issued considering T's allegation
college, but also as the permanent residence of the President and
of illegal collection?
Director, Mr. Pedro V. Borgonia, and his family including his in-laws and
HELD:
grandchildren; while the ground floor of the college building is being used
[1] Yes, the CTA abused its discretion. Although the Tax Code empowers
and rented by a commercial establishment.
the CTA to suspend tax collection by requiring either the (1) deposit of
the tax claimed or (2) surety bond for not more than double the amount, T
was able to show that it is not capable of producing the amount of 6.701 ISSUE:
billion pesos as its net worth is only almost 1 billion pesos. Plus, it is Whether or not the lot and building in question are used exclusively for
legally impossible to procure the bond from bonding companies that are educational purposes and thus exempted from paying taxes.
limited in their risk assumptions.
HELD:
What the CTA should have done is to conduct a preliminary hearing on
The 1935 Philippine Constitution, Art. VI, par. 3 Sec. 22, expressly
T's ability to deposit or procure bond. While there is legal justification for
grants exemption from realty taxes for “Cemeteries, churches and
the bond requirement, the power to tax is not the power to destroy. For
parsonages or convents appurtenant thereto, and all lands, buildings,
the bond to equal the deficiency assessment would practically deny to
and improvements used exclusively for religious, charitable
the petitioner the meaningful opportunity to contest the validity of the
or educational purposes….
assessments, and would likely even impoverish it as to force it out of
Relative thereto, CA No. 470 as amended by RA No. 409, Sec. 54,
business.
paragraph c otherwise known as the Assessment Law, provides:
The following are exempted from real property tax under the
Assessment Law: Self-Employed and Professionals Engaged in the Practice of their
(c) churches and parsonages or convents appurtenant thereto, and all Profession" (Petition in G.R. No. 109289) when the full text of the title
lands, buildings, and improvements used exclusively for religious, actually reads,
charitable, scientific or educational purposes. 'An Act Adopting the Simplified Net Income Taxation Scheme For The Self-
Thus, the use of the second floor of the main building for residential Employed and Professionals Engaged In The Practice of Their
purposes of the Director and his family, may find justification under the Profession, Amending Sections 21 and 29 of the National Internal
concept of incidental use, which is complimentary to the main or primary Revenue Code,' as amended. Petitioners also contend it violated due
purpose–educational. The lease of the first floor, however, by a process.
commercial establishment cannot be considered incidental to the
purpose of education. 5. The Solicitor General espouses the position taken by public respondents.
6. The Court has given due course to both petitions.
Under the 1935 Constitution, the trial court correctly arrived at the
ISSUE: Whether or not the tax law is unconstitutional for violating
conclusion that the school building as well as the lot where it is built,
due process
should be taxed, not because the second floor of the same is being used
by the Director and his family for residential purposes, but because the
NO. The due process clause may correctly be invoked only when there is
first floor thereof is being used for commercial purposes.
a clear contravention of inherent or constitutional limitations in the
exercise of the tax power. No such transgression is so evident in herein
3. TAN v DEL ROSARIO case.

1. Uniformity of taxation, like the concept of equal protection, merely requires


Facts:
that all subjects or objects of taxation, similarly situated, are to be treated
alike both in privileges and liabilities. Uniformity does not violate
classification as long as: (1) the standards that are used therefor are
1. Two consolidated cases assail the validity of RA 7496 or the Simplified substantial and not arbitrary, (2) the categorization is germane to achieve
Net Income Taxation Scheme ("SNIT"), which amended certain the legislative purpose, (3) the law applies, all things being equal, to both
provisions of the NIRC, as well as the Rules and Regulations present and future conditions, and (4) the classification applies equally
promulgated by public respondents pursuant to said law. well to all those belonging to the same class.

2. Petitioners posit that RA 7496 is unconstitutional as it allegedly violates 2. What is apparent from the amendatory law is the legislative intent to
the following provisions of the Constitution: increasingly shift the income tax system towards the schedular
approach in the income taxation of individual taxpayers and to maintain,
-Article VI, Section 26(1) — Every bill passed by the Congress shall by and large, the present global treatment on taxable corporations. The
embrace only one subject which shall be expressed in the title thereof. Court does not view this classification to be arbitrary and inappropriate.
- Article VI, Section 28(1) — The rule of taxation shall be uniform and
equitable. The Congress shall evolve a progressive system of taxation. ISSUE 2: Whether or not public respondents exceeded their
- Article III, Section 1 — No person shall be deprived of . . . property authority in promulgating the RR
without due process of law, nor shall any person be denied the equal
protection of the laws. No. There is no evident intention of the law, either before or after the
amendatory legislation, to place in an unequal footing or in significant
3. Petitioners contended that public respondents exceeded their rule-making variance the income tax treatment of professionals who practice their
authority in applying SNIT to general professional partnerships. Petitioner respective professions individually and of those who do it through a
contends that the title of HB 34314, progenitor of RA 7496, is deficient for general professional partnership.
being merely entitled, "Simplified Net Income Taxation Scheme for the
4. OBILLOS v. CIR canteen operators and 44,259 from parking fees collected from non-
members. On July 2, 1984, the CIR issued an assessment to YMCA for
Facts: In 1973, Jose Obillos completed payment on two lots located in deficiency taxes which included the income from lease of YMCA’s real
Greenhills, San Juan. The next day, he transferred his rights to his four property. YMCA formally protested the assessment but the CIR denied
children for them to build their own residences. The Torrens title would the claims of YMCA. On appeal, the CTA ruled in favor of YMCA and
show that they were co-owners of the two lots. However, the petitioners excluded income from lease to small shop owners and parking fees.
resold them to Walled City Securities Corporation and Olga Cruz Canda However, the CA reversed the CTA but affirmed the CTA upon motion for
for P313k or P33k for each of them. They treated the profit as capital reconsideration.
gains and paid an income tax of P16,792.00
ISSUE:
The CIR requested the petitioners to pay the corporate income tax of Whether the rental income of YMCA is taxable
their shares, as this entire assessment is based on the alleged
partnership under Article 1767 of the Civil Code; simply because they RULING:
contributed each to buy the lots, resold them and divided the profits Yes. The exemption claimed by YMCA is expressly disallowed by the
among them. very wording of then Section 27 of the NIRC which mandates that the
income of exempt organizations (such as the YMCA) from any of their
But as testified by Obillos, they have no intention to form the partnership properties, real or personal, be subject to the tax imposed by the same
and that it was merely incidental since they sold the said lots due to high Code. While the income received by the organizations enumerated in
demand of construction. Naturally, when they sell them as co-partners, it Section 26 of the NIRC is, as a rule, exempted from the payment of tax in
will result to the share of profits. Further, their intention was to divide the respect to income received by them as such, the exemption does not
lots for residential purposes. apply to income derived from any of their properties, real or personal or
from any of their activities conducted for profit, regardless of the
Issue: Was there a partnership, hence, they are subject to corporate disposition made of such income.
income taxes?
6. SISON v. ANCHETA (1984)
Court Ruling:
Not necessarily. As Article 1769 (3) of the Civil Code provides: the Facts: Batas Pambansa 135 was enacted. Sison, as taxpayer, alleged
sharing of gross returns does not in itself establish a partnership, whether that its provision (Section 1) unduly discriminated against him by the
or not the persons sharing them have a joint or common right or interest imposition of higher rates upon his income as a professional, that it
in any property from which the returns are derived. There must be an amounts to class legislation, and that it transgresses against the equal
unmistakeable intention to form a partnership or joint venture. protection and due process clauses of the Constitution as well as the rule
requiring uniformity in taxation.
In this case, the Commissioner should have investigated if the
father paid donor's tax to establish the fact that there was really no Issue: Whether BP 135 violates the due process and equal protection
partnership. clauses, and the rule on uniformity in taxation.

Held: There is a need for proof of such persuasive character as would


lead to a conclusion that there was a violation of the due process and
5. CIR v CA & YMCA equal protection clauses. Absent such showing, the presumption of
GR No 124043, October 14, 1998 validity must prevail. Equality and uniformity in taxation means that all
taxable articles or kinds of property of the same class shall be taxed at
FACTS: the same rate. The taxing power has the authority to make reasonable
In 1980, YMCA earned an income of 676,829.80 from leasing out a and natural classifications for purposes of taxation. Where the
portion of its premises to small shop owners, like restaurants and differentitation conforms to the practical dictates of justice and equity,
similar to the standards of equal protection, it is not discriminatory within It is undisputed that within the territorial boundary of Quezon City,
the meaning of the clause and is therefore uniform. Taxpayers may be Bayantel owned several real properties on which it maintained various
classified into different categories, such as recipients of compensation telecommunications facilities.
income as against professionals. Recipients of compensation income are
not entitled to make deductions for income tax purposes as there is no government of Quezon City,... enacted City Ordinance... imposing... a
practically no overhead expense, while professionals and businessmen real property tax on all real properties in Quezon City, and, reiterating in
have no uniform costs or expenses necessaryh to produce their income. its Section 6, the withdrawal of exemption from real... property tax under
There is ample justification to adopt the gross system of income taxation Section 234 of the LGC
to compensation income, while continuing the system of net income Bayantel wrote the office of the City Assessor seeking the exclusion of its
taxation as regards professional and business income. real properties in the city from the roll of taxable real properties. With its
request having been denied, Bayantel interposed an appeal with the
7. CITY GOVERNMENT OF QUEZON CITY v. BAYAN Local Board of Assessment Appeals
TELECOMMUNICATIONS, GR NO. 162015, 2006-03-06
(LBAA). And, evidently on its firm belief of its exempt status, Bayantel did
Facts: not pay the real property taxes assessed against it by the Quezon City
Respondent Bayan Telecommunications, Inc. government.

(Bayantel) is a legislative franchise holder under Republic Act (Rep. Act) Quezon City Treasurer sent out notices of delinquency... followed by the
No. 3259... to establish and operate radio stations for domestic issuance of several warrants of levy against Bayantel's properties
telecommunications, radiophone, broadcasting and... telecasting. preparatory to their sale at a public auction

Rep. Act No. 7160, otherwise known as the "Local Government Code of Bayantel... filed with the RTC of Quezon City a petition for prohibition with
1991" (LGC), took effect. Section 232 of the Code grants local an urgent application for a temporary restraining order (TRO)
government units within the Metro Manila Area the power to levy tax on Issues:
real properties... the same Code... withdrew any exemption from realty
tax heretofore granted to or enjoyed by all persons, natural or juridica... [I]n declaring the real properties of respondent exempt from real property
barely few months after the LGC took effect, Congress enacted Rep. Act taxes notwithstanding the fact that the tax exemption granted to Bayantel
No. 7633, amending Bayantel's original franchise. in its original franchise had been withdrawn by the [LGC]
contained the following tax provision: Whether or not Bayantel's real properties in Quezon City are exempt from
real property taxes under its legislative f... ranchise;
SEC. 11. The grantee, its successors or assigns shall be liable to pay the
same taxes on their real estate, buildings and personal property, Bayantel's franchise being national in character, the "exemption" thus
exclusive of this franchise, as other persons or corporations are now or granted under Section 14 of Rep. Act No. 3259 applies to all its real or
hereafter may be required by law to pay. personal properties found anywhere within the Philippine archipelago.
In addition thereto, the grantee, its successors or assigns shall pay a Ruling:
franchise tax equivalent to three percent (3%) of all gross receipts of the
telephone or other telecommunications businesses transacted under this real properties of Bayantel, save those exclusive of its franchise, are
franchise by the grantee, its successors or assigns and the... said subject to realty taxes. Ultimately, therefore, the inevitable result was that
percentage shall be in lieu of all taxes on this franchise or earnings all realties which are actually,... directly and exclusively used in the
thereof. Provided, That the grantee, its successors or assigns shall operation of its franchise are "exempted" from any property tax.
continue to be liable for income taxes payable under Title II of the Bayantel's franchise being national in character, the "exemption" thus
National Internal Revenue Code .... xxx. [Emphasis... supplied] granted under Section 14 of Rep. Act No. 3259 applies to all its real or
personal properties found anywhere within the Philippine archipelago.
However, with the LGC's taking effect... the realty tax exemption...
heretofore enjoyed by Bayantel under its original franchise, but
subsequently withdrawn by force of Section 234 of the LGC, has been
restored by Section 14 of Rep. Act No. 7633.
Bayantel... is only "liable to pay the same taxes, as any other persons or
corporations on all its real or personal properties, exclusive of its
franchise."... there can really be no dispute that the power of the Quezon
City Government to tax is limited by Section 232 of the LGC which
expressly provides that "a province or city or municipality within the
Metropolitan Manila Area may levy an annual... ad valorem tax on real
property such as land, building, machinery, and other improvement not
hereinafter specifically exempted." Under this law, the Legislature
highlighted its power to thereafter exempt certain realties from the taxing
power of local... government units. An interpretation denying Congress
such power to exempt would reduce the phrase "not hereinafter
specifically exempted" as a pure jargon, without meaning whatsoever.
Needless to state, such absurd situation is unacceptable.
dmittedly, Rep. Act No. 7633 was enacted subsequent to the LGC.
Perfectly aware that the LGC has already withdrawn Bayantel's former
exemption from realty taxes, Congress opted to pass Rep. Act No. 7633
using... exactly the same defining phrase
"exclusive of this franchise" which was the basis for Bayantel's exemption
from realty taxes prior to the LGC.
In plain language, Section 11 of Rep. Act No. 7633 states that "the
grantee, its successors or assigns shall be liable to pay 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
required by 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 LGC's delegated taxing power, all of the
franchisee's (Bayantel's) properties that are actually, directly and
exclusively used in the pursuit of its franchise.
8. TOLENTINO vs. SEC. OF FINANCE/ G.R. No. 115455 October 30, 9. ABAKADA GURO PARTY LIST vs. ERMITA
1995
Facts:
FACTS: ABAKADA GURO Party List, et al., filed a petition for prohibition o
questioning the constitutionality of Sections 4, 5 and 6 of R.A. No. 9337,
amending Sections 106, 107 and 108, respectively, of the National
These are motions seeking reconsideration of our decision dismissing the Internal Revenue Code (NIRC).
petitions filed in these cases for the declaration of unconstitutionality of Section 4 imposes a 10% VAT on sale of goods and properties;
R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law. Section 5 imposes a 10% VAT on importation of goods; and
Now it is contended by the Philippine Press Institute (PPI) that by Section 6 imposes a 10% VAT on sale of services and use or lease of
removing the exemption of the press from the VAT while maintaining properties;
those granted to others, the law discriminates against the press. At any
rate, it is averred, “even nondiscriminatory taxation of constitutionally These provisions contain a provision which authorizing the President,
guaranteed freedom is unconstitutional.” upon recommendation of the Secretary of Finance, to raise the VAT rate
to 12%, effective January 1, 2006, after specified conditions have been
ISSUE: satisfied.

Issues:
Does sales tax on bible sales violative of religious and press freedom? Whether or not there is a violation of Article VI, Section 24 of the
Constitution.
RULING:
Whether or not there is undue delegation of legislative power in violation
of Article VI Sec 28(2) of the Constitution.
No. The Court was speaking in that case of a license tax, which, unlike
an ordinary tax, is mainly for regulation. Its imposition on the press is Whether or not there is a violation of the due process and equal
unconstitutional because it lays a prior restraint on the exercise of its protection of the Constitution.
right. Hence, although its application to others, such those selling goods,
is valid, its application to the press or to religious groups, such as the Ruling:
Jehovah’s Witnesses, in connection with the latter’s sale of religious No, the revenue bill exclusively originated in the House of
books and pamphlets, is unconstitutional. As the U.S. Supreme Court put Representatives, the Senate was acting within its constitutional power to
it, “it is one thing to impose a tax on income or property of a preacher. It introduce amendments to the House bill when it included provisions in
is quite another thing to exact a tax on him for delivering a sermon.” Senate Bill No. 1950 amending corporate income taxes, percentage, and
excise and franchise taxes.
The VAT is, however, different. It is not a license tax. It is not a tax on the No, there is no undue delegation of legislative power but only of the
exercise of a privilege, much less a constitutional right. It is imposed on discretion as to the execution of a law. This is constitutionally permissible.
the sale, barter, lease or exchange of goods or properties or the sale or Congress does not abdicate its functions or unduly delegate power when
exchange of services and the lease of properties purely for revenue it describes what job must be done, who must do it, and what is the
purposes. To subject the press to its payment is not to burden the scope of his authority; in our complex economy that is frequently the only
exercise of its right any more than to make the press pay income tax or way in which the legislative process can go forward. In this case, it is not
subject it to general regulation is not to violate its freedom under the a delegation of legislative power but a delegation of ascertainment of
Constitution. facts upon which enforcement and administration of the increased rate
under the law is contingent.
No, the power of the State to make reasonable and natural classifications and therefore it cannot be considered as tax, but an execution of the
for the purposes of taxation has long been established. Whether it relates states police power thru regulation.
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 Moreover, the amount collected is not made certain by the ERC, but by
collection, the State’s power is entitled to presumption of validity. As a the legislative parameters provided for in the law (RA 9136) itself, it
rule, the judiciary will not interfere with such power absent a clear therefore cannot be understood as a rule solely coming from the ERC.
showing of unreasonableness, discrimination, or arbitrariness. The ERC in this case is only a specialized administrative agency which is
tasked of executing a subordinate legislation issued by congress; which
before execution must pass both the completeness test and the
sufficiency of standard test. The court in appreciating Section 34 of RA
10. ROMEO P. GEROCHI, KATULONG NG BAYAN (KB) and 9136 in its entirety finds the said law and the assailed portions free from
ENVIRONMENTALIST CONSUMERS NETWORK, INC. any constitutional defect and thus deemed complete and sufficient in
(ECN), petitioners form.
vs
DEPARTMENT OF ENERGY (DOE), ENERGY REGULATORY
COMMISSION (ERC), NATIONAL POWER CORPORATION (NPC),
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT GROUP
(PSALM Corp.), STRATEGIC POWER UTILITIES GROUP (SPUG), and
PANAY ELECTRIC COMPANY INC. (PECO), respondents.
FACTS:
On June 8, 2001 Congress enacted RA 9136 or the Electric Power
Industry Act of 2001. Petitioners Romeo P. Gerochi and company assail
the validity of Section 34 of the EPIRA Law for being an undue delegation
of the power of taxation. Section 34 provides for the imposition of a
“Universal Charge” to all electricity end users after a period of (1) one
year after the effectively of the EPIRA Law. The universal charge to be
collected would serve as payment for government debts, missionary
electrification, equalization of taxes and royalties applied to renewable
energy and imported energy, environmental charge and for a charge to
account for all forms of cross subsidies for a period not exceeding three
years. The universal charge shall be collected by the ERC on a monthly
basis from all end users and will then be managed by the PSALM Corp.
through the creation of a special trust fund.

ISSUE:
Whether or not there is an undue delegation of the power to tax on the
part of the ERC

HELD:
No, the universal charge as provided for in section 34 is not a tax but an
exaction of the regulatory power (police power) of the state. The
universal charge under section 34 is incidental to the regulatory duties of
the ERC, hence the provision assailed is not for generation of revenue

You might also like