PCGG vs.

Cojuangco
Main point: Elements of Taxation: a) it is an enforced proportional
contribution from persons and properties; b) it is imposed by the State
by virtue of its sovereignty; and c) it is levied for the support of the
government.
FACTS: The PCGG issued and implemented numerous sequestrations, freeze
orders and provisional takeovers of allegedly ill-gotten companies, assets and
properties, real or personal. Among the properties sequestered by
the Commission were shares of stock in the United Coconut Planters Bank(UCPB)
registered in the names of the alleged "one million coconut farmers," the socalled Coconut Industry Investment Fund companies (CIIF companies) and
Private Respondent Eduardo Cojuangco Jr. On January 23, 1995, the trial court
rendered its final Decision nullifying and setting aside the Resolution of the
Sandiganbayan which lifted the sequestration of the subject UCPB shares.
ISSUE: Are the Coconut Levy Funds raised through the States police
and taxing powers?
RULING: Indeed, coconut levy funds partake of the nature of taxes which, in
general, are enforced proportional contributions from persons and properties,
exacted by the State by virtue of its sovereignty for the support of government
and for all public needs. Based on this definition, a tax has three elements,
namely: a) it is an enforced proportional contribution from persons and
properties; b) it is imposed by the State by virtue of its sovereignty; and c) it is
levied for the support of the government. Taxation is done not merely to raise
revenues to support the government, but also to provide means for the
rehabilitation and the stabilization of a threatened industry, which is so affected
with public interest as to be within the police power of the State.

CREBA v. Romulo
Main Point: Taxation is necessarily burdensome because, by its nature,
it adversely affects property rights. The party alleging the laws
unconstitutionality has the burden to demonstrate the supposed
violations in understandable terms.
Facts: CHAMBER assails the validity of the imposition of minimum corporate
income tax (MCIT) on corporations and creditable withholding tax (CWT) on sales
of real properties classified as ordinary assets. Chamber argues that the MCIT
violates the due process clause because it levies income tax even if there is no
realized gain.
MCIT scheme: (Section 27 (E). [MCIT] on Domestic Corporations.) A corporation,
beginning on its fourth year of operation, is assessed an MCIT of 2% of its gross
income when such MCIT is greater than the normal corporate income tax

imposed under Section 27(A) (Applying the 30% tax

rate to net income).
Any excess of the MCIT over the normal tax shall be carried forward and credited
against the normal income tax for the three immediately succeeding taxable
years.
CHAMBER claims that the MCIT under Section 27(E) of RA 8424 is
unconstitutional because it is highly oppressive, arbitrary and confiscatory which
amounts to deprivation of property without due process of law. It explains that
gross income as defined under said provision only considers the cost of goods
sold and other direct expenses; other major expenditures, such as administrative
and interest expenses which are equally necessary to produce gross income,
were not taken into account. Thus, pegging the tax base of the MCIT to a
corporations gross income is tantamount to a confiscation of capital because
gross income, unlike net income, is not "realized gain."
Issue: Whether or not the MCIT on domestic corporations is a deprivation of
property, thus making it unconstitutional.
Ruling: No. The MCIT is not a tax on capital. The MCIT is imposed on gross
income which is arrived at by deducting the capital spent by a corporation in the
sale of its goods, i.e., the cost of goods and other direct expenses from gross
sales. Clearly, the capital is not being taxed.
CHAMBER failed to support, by any factual or legal basis, its allegation that the
MCIT is arbitrary and confiscatory. It does not cite any actual, specific and
concrete negative experiences of its members nor does it present empirical data
to show that the implementation of the MCIT resulted in the confiscation of their
property.
Taxation is necessarily burdensome because, by its nature, it adversely affects
property rights. The party alleging the laws unconstitutionality has the burden to
demonstrate the supposed violations in understandable terms.

MMDA vs. Garin

Main Point: Police power as an inherent attribute of sovereignty
Facts: Respondent Garin was issued a traffic violation receipt and his drivers
license was confiscated for parking illegally. Garin wrote MMDA Chairman
Prospero Oreta requesting the return of his license and expressed his preference
for case to be filed in Court. Without an immediate reply from the reply from the
Chairman, Garin filed a complaint for preliminary injunction assailing among
other that Sec 5(+) of RA 7942 violates the constitutional prohibition against
undue delegation of legislative authority, allowing MMDA to fix and impose
unspecified and unlimited fines and penalties. RTC rules in his favor directing
MMDA to return Garins drivers license and for MMDA to desist from confiscating

drivers license without first giving the driver to opportunity to be heard in an

appropriate proceeding.
Issue: Whether or not Sec 5(+) of RA 7942 which authorizes MMDA to confiscate
and suspend or revoke drivers license in the enforcement of traffic
constitutional.
Ruling: The MMDA is not vested with police power. It was concluded that MMDA
is not a local government unit or a public corporation endowed with legislative
power and it has no power to enact ordinances for the welfare of the community.
Police power as an inherent attribute of sovereignty is the power vested in the
legislative to make, ordain and establish all manner of wholesome and
reasonable laws, statutes and ordinances either with penalties or without, not
repugnant to the constitution, as they shall judge to be for the good and welfare
of the commonwealth, and for subjects of the same.
CIR vs. Central Luzon Drug Corporation
Main Point:
Facts: Respondent is a domestic corporation engaged in the retailing of
medicines and other pharmaceutical products. In 1996 it operated six (6)
drugstores under the business name and style Mercury Drug. From January to
December 1996 respondent granted 20% sales discount to qualified senior
citizens on their purchases of medicines pursuant to RA 7432. For said period
respondent granted a total of 904,769. Subsequently, respondent filed its
annual ITR for taxable year 1996 declaring therein net losses. On Jan. 16, 1998
respondent filed with petitioner a claim for tax refund/credit of 904,769.00
allegedly arising from the 20% sales discount. Unable to obtain affirmative
response from petitioner, respondent elevated its claim to the CTA via Petition for
review.
Issue: W/N respondent, despite incurring a net loss, may still claim the 20%
sales discount as a tax credit.
Ruling: Yes, it is clear that Sec. 4a of RA 7432 grants to senior citizens the
privilege of obtaining a 20% discount on their purchase of medicine from any
private establishment in the country. The latter may then claim the cost of the
discount as a tax credit. Such credit can be claimed even if the establishment
operates at a loss.
Tax credit is explicitly provided for in Sec4 of RA 7432. The discount given
toSenior citizens is a tax credit, not a deduction from the gross sales of the
establishmentconcerned. The tax credit that is contemplated under this Act is a
form of justcompensation, not a remedy for taxes that were erroneously or
illegally assessed andcollected. In the same vein, prior payment of any tax
liability is a pre-condition before ataxable entity can benefit from tax credit. The
credit may be availed of upon payment, if
any. Where there is no tax liability or

where a private establishment reports a net loss forthe period, the tax credit can
be availed of and carried over to the next taxable year.
Nevertheless, the irrefutable fact remains that, under RA7432, Congress has
granted without conditions a tax credit benefit to all covered establishments.
However, for the losing establishment to immediately apply such credit, where
no tax is due, will be an improvident nuisance.
Talento vs. Escalada jr
CIR vs. Solidbank Corporation
Main point:
Facts: Solidbank filed its Quarterly Percentage Tax Returns reflecting gross
receipts amounting to P1,474,693.44. It alleged that the total included
P350,807,875.15 representing gross receipts from passive income which was
already subjected to 20%final withholding tax (FWT).
The Court of Tax Appeals (CTA) held in Asian Ban Corp. v Commissioner, that the
20% FWT should not form part of its taxable gross receipts for purposes of
computing the tax.
Solidbank, relying on the strength of this decision, filed with the BIR a letterrequest for the refund or tax credit. It also filed a petition for review with the CTA
where the it ordered the refund.
The CA ruling, however, stated that the 20% FWT did not form part of the taxable
gross receipts because the FWT was not actually received by the bank but was
directly remitted to the government.
Issue: Whether or not there is double taxation.
Ruling: No. Subjecting interest income to a 20% FWT and including it in the
computation of the 5% GRT is not double taxation. First, the taxes are imposed
on two different subject matters. The subject matter of the FWT is the passive
income generated in the form of interest on deposits and yield on deposit
substitutes, while the subject matter of the GRT is the privilege of engaging in
the business of banking. A tax based on receipts is a tax on business rather than
on the property; it is an excise rather than a property tax. It is not an income tax,
unlike the FWT.
Second, although both taxes are national in scope because they are imposed by
the same taxing authority the national government under the Tax Code and
operate within the same Philippine jurisdiction for the same purpose of raising
revenues, the taxing periods they affect are different. The FWT is deducted and
withheld as soon as the income is earned, and is paid after every calendar
quarter in which it is earned. On the other hand, the GRT is neither deducted nor
withheld, but is paid only after every taxable quarter in which it is earned.

Lastly, these two taxes are of different kinds or characters. The FWT is an income
tax subject to withholding, while the GRT is a percentage tax not subject to
withholding.