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Petitioner is an association of real estate developers and builders in the Philippines. It assails the validity of the imposition of minimum corporate income tax (MCIT) petitioner also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause. %espondents aver that there is no actual case calling for the exercise of judicial po"er and it is not yet ripe for adjudication.
Petitioner is an association of real estate developers and builders in the Philippines. It assails the validity of the imposition of minimum corporate income tax (MCIT) petitioner also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause. %espondents aver that there is no actual case calling for the exercise of judicial po"er and it is not yet ripe for adjudication.
Petitioner is an association of real estate developers and builders in the Philippines. It assails the validity of the imposition of minimum corporate income tax (MCIT) petitioner also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause. %espondents aver that there is no actual case calling for the exercise of judicial po"er and it is not yet ripe for adjudication.
Mar! "# $010 EN BANC FACTS AS TO %ET&T&ONER Petitioner is an association of real estate developers and builders in the Philippines. Petitioner assails the validity of the imposition of minimum corporate income tax (MCIT) on corporations. Petitioner also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause because li!e the MCIT the government collects income tax even "hen the net income has not yet been determined. They contravene the e#ual protection clause as "ell because the C$T is being levied upon real estate enterprises but not on other business enterprises more particularly those in the manufacturing sector. FACTS AS TO RES%ON'ENT %espondents aver that there is no actual case calling for the exercise of judicial po"er and it is not yet ripe for adjudication because &petitioner' did not allege that C%()* as a corporate entity or any of its members has been assessed by the )I% for the payment of &MCIT' or &C$T' on sales of real property. +either did petitioner allege that its members have shut do"n their businesses as a result of the payment of the MCIT. %espondents also argue that petitioner has no legal standing to sue. &SSUES RA&SE' B( %ET&T&ONER ,. Petitioner argues that they have legal standing -. Petitioner also argues that the imposition of MCIT violates due process .. Petitioner further argues that the imposition of C$T on real estate businesses violates the e#ual protection clause. &SSUES RA&SE' B( RES%ON'ENT ,. %espondent contends that petitioner has no legal standing -. %espondent argues that the MCIT does not violate due process. .. %espondent also argues that the C$T on real estate businesses does not violate e#ual protection clause. RUL&NG OF THE SU%REME COURT ,. *s to the issue "hether petitioners have legal standing to sue the /C ruled in their favor finding that the #uestioned MCIT and C$T affect not only petitioners but practically all domestic corporate taxpayers in our country. The transcendental importance of the issues raised and their overreaching significance to society ma!e it proper for the court to ta!e cogni0ance of this petition. -. *s to the issue "hether the imposition of the MCIT "ould violate due process the /C ruled in favor of respondents. Taxes are the lifeblood of the government. $ithout taxes the government can neither exist nor endure. Congress has the po"er to condition limit or deny deductions from gross income in order to arrive at the net that it chooses to tax. 12 This is because deductions are a matter of legislative grace. *bsent any other valid objection the assignment of gross income instead of net income as the tax base of the MCIT ta!en "ith the reduction of the tax rate from .-3 to -3 is not constitutionally objectionable. .. *s to the issue "hether the imposition of the C$T on real estate businesses "ould violate e#ual protection clause the /C ruled in favor of respondent. The taxing po"er has the authority to ma!e reasonable classifications for purposes of taxation. 45 Ine#ualities "hich result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation. 44 The real estate industry is by itself a class and can be validly treated differently from other business enterprises. The income from the sale of a real property is bigger and its fre#uency of transaction limited ma!ing it less cumbersome for the parties to comply "ith the "ithholding tax scheme. 6n the other hand each manufacturing enterprise may have tens of thousands of transactions "ith several thousand customers every month involving both minimal and substantial amounts. To re#uire the customers of manufacturing enterprises at present to "ithhold the taxes on each of their transactions "ith their tens or hundreds of suppliers may result in an inefficient and unmanageable system of taxation and may "ell defeat the purpose of the "ithholding tax system. %ERSONAL EN' NOTES. The e#ual protection clause under the Constitution means that 7no person or class of persons shall be deprived of the same protection of la"s "hich is enjoyed by other persons or other classes in the same place and in li!e circumstances.7 41 /tated differently all persons belonging to the same class shall be taxed ali!e. It follo"s that the guaranty of the e#ual protection of the la"s is not violated by legislation based on a reasonable classification. Classification to be valid must (,) rest on substantial distinctions8 (-) be germane to the purpose of the la"8 (.) not be limited to existing conditions only and (9) apply e#ually to all members of the same class. 42