Sie sind auf Seite 1von 17

Commissioner of Internal Revenue v. Bank of Commerce, G.R. No. 180529. November 13, 2013.

FACTS: - In 1994 and 1995, respondent Bank of Commerce derived passive income in the form of interests or
discounts from its investments in government securities and private commercial papers.
- On several occasions during that period, it paid 5% gross receipts tax on its income. Included therein were the
respondent banks passive income from the said investments amounting to P85M+, which had already been
subjected to a final tax of 20% and furthered its claim by saying that the act in issue constitute double


HELD: NEGATIVE. there is no double taxation, because there is no taxing twice, by the same taxing authority,
within the same jurisdiction, for the same purpose, in different taxing periods, some of the property in the
territory. Subjecting interest income to a 20% FWT and including it in the computation of the 5% GRT is clearly
not double taxation.

Double taxation means taxing the same property twice when it should be taxed only once; that is, "xxx
taxing the same person twice by the same jurisdiction for the same thing." It is obnoxious when the taxpayer is
taxed twice, when it should be but 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 they must be of the same kind or character.

; June 25, 1999

Facts: SC. JOHNSON AND SON, INC., a domestic corporation organized and operating under the Philippine
laws, entered into a license agreement with SC Johnson and Son, United States of America (USA), a non-
resident foreign corporation was granted the right to use the trademark, patents and technology owned by
the latter including the right to manufacture, package and distribute the products. License Agreement was
duly registered with the Technology Transfer Board of the Bureau of Patents, Trade Marks and Technology
Respondent filed with the International Tax Affairs Division (ITAD) of the BIR a claim for refund of overpaid
withholding tax on royalties arguing that Since the agreement was approved by the Technology Transfer
Board, the preferential tax rate of 10% should apply hence royalties paid by the [respondent] to SC Johnson
and Son, USA is only subject to 10% withholding tax pursuant to the most-favored nation clause of the RP-US
Tax Treaty.
The Commissioner did not act on said claim for refund.

Issue: WON SC Johnson can refund.

Ruling: NO. The tax rates on royalties and the circumstances of payment thereof are the same for all the
recipients of such royalties and there is no disparity based on nationality in the circumstances of such
payment. 6

In the case at bar, the state of source is the Philippines because the royalties are paid for the right to use
property or rights, i.e. trademarks, patents and technology, located within the Philippines. 17 The United States
is the state of residence since the taxpayer, S. C. Johnson and Son, U. S. A., is based there. Under the RP-US
Tax Treaty, the state of residence and the state of source are both permitted to tax the royalties, with a
restraint on the tax that may be collected by the state of source.

JOHN HAY PEOPLES ALTERNATIVE COALITION vs lim [G. R. No. 119775. October 24, 2003]


R.A. No. 7227 otherwise known as the "Bases Conversion and Development Act of 1992," which was enacted
setting out the policy of the government to accelerate the sound and balanced conversion into alternative
productive uses of the former military bases under the 1947 Philippines-United States of America Military
Bases Agreement, namely, the Clark and Subic military reservations as well as their extensions including the
Camp John Hay Station in the City of Baguio. It created public respondent Bases Conversion and Development
Authority2 (BCDA), and the Subic Special Economic [and Free Port] Zone (Subic SEZ). Also the said law granted
the Subic SEZ incentives ranging from tax and duty-free importations, exemption of businesses therein from
local and national taxes.

On August 16, 1993, BCDA entered into a Memorandum of Agreement and Escrow Agreement with private
respondents Tuntex (B.V.I.) Co., Ltd (TUNTEX) and Asiaworld Internationale Group, Inc. (ASIAWORLD),
preparatory to the formation of a joint venture for the development of Poro Point in La Union and Camp John
Hay as premier tourist destinations and recreation centers. Four months later, BCDA, TUNTEX and ASIAWORD
executed a Joint Venture Agreement whereby they bound themselves to put up a joint venture company
known as the Baguio International Development and Management Corporation.

Meanwhile, the Baguio City government passed a number of resolutions in response to the actions taken by
BCDA in their MOA and as owner and administrator of Camp John Hay. One of which is Resolution No. 255,
seeking and supporting the issuance by then President Ramos of a presidential proclamation declaring an area
of 288.1 hectares of the camp as a SEZ in accordance with the provisions of R.A. No. 7227.

On July 5, 1994 then President Ramos issued Proclamation No. 420 which established a SEZ on a portion of
Camp John Hay, and in effect, granted tax exemptions pursuant to R.A. No. 7227 to Subic SEZ extends to other

The petitioners now allege that nowhere in R. A. No. 7227 is there a grant of tax exemption to SEZs yet to be
established in base areas, unlike the grant under Section 12 thereof of tax exemption and investment
incentives to the therein established Subic SEZ. The grant of tax exemption to the John Hay SEZ, petitioners
conclude, thus contravenes Article VI, Section 28 (4) of the Constitution which provides that "No law granting
any tax exemption shall be passed without the concurrence of a majority of all the members of Congress."

On the other hand, respondents contend that by extending to the John Hay SEZ economic incentives similar to
those enjoyed by the Subic SEZ which was established under R.A. No. 7227, the proclamation is merely
implementing the legislative intent of said law to turn the US military bases into hubs of business activity or
investment. They underscore the point that the government's policy of bases conversion can not be achieved
without extending the same tax exemptions granted by R.A. No. 7227 to Subic SEZ to other SEZs.


Whether or not Proclamation No. 420 (particularly Sec. 3) is unconstitutional since it provides for national and
local tax exemption and grants other economic incentives to the John Hay SEZ


Yes. The SC ruled in favor of the Petitioners.

It is clear that under Section 12 of R.A. No. 7227 it is only the Subic SEZ which was granted by Congress with
tax exemption, investment incentives and the like. There is no express extension of the aforesaid benefits to
other SEZs still to be created at the time via presidential proclamation.

While the grant of economic incentives may be essential to the creation and success of SEZs, free trade zones
and the like, the grant thereof to the John Hay SEZ cannot be sustained. The incentives under R.A. No. 7227
are exclusive only to the Subic SEZ, hence, the extension of the same to the John Hay SEZ finds no support
therein. Neither does the same grant of privileges to the John Hay SEZ find support in the other laws specified
under Section 3 of Proclamation No. 420, which laws were already extant before the issuance of the
proclamation or the enactment of R.A. No. 7227.

More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature,
unless limited by a provision of the state constitution, that has full power to exempt any person or corporation
or class of property from taxation, its power to exempt being as broad as its power to tax. Other than
Congress, the Constitution may itself provide for specific tax exemptions, or local governments may pass
ordinances on exemption only from local taxes.

The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any
tax exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the
other kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate
upon. If it were the intent of the legislature to grant to the John Hay SEZ the same tax exemption and
incentives given to the Subic SEZ, it would have so expressly provided in the R.A. No. 7227.

Thus, the second sentence of Section 3 of Proclamation No. 420 is hereby declared NULL AND VOID and is
accordingly declared of no legal force and effect.

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. HON. RAMON S. CAGUIOA. G.R. No. 168584October 15, 2007

Congress enacted, in 1992, R.A. No. 7227, otherwise known as "The BASES CONVERSION AND
DEVELOPMENT ACT OF 1992," which provided, among others, for the creation of the SSEFZ, as well as the
Subic Bay Metropolitan Authority (SBMA). Pursuant to this law, the SBMA granted the private respondents
Certificates of Registration and Tax Exemption. The certificates allowed them to engage in the business of
import and export of general merchandise (including alcohol and tobacco products) and uniformly granted
them tax exemptions for these importations.

On January 1, 2005, Congress passed R.A. No. 9334. Based on Section 6 of R.A. No. 9334, the SBMA
issued a Memorandum on February 7, 2005 directing its various departments to require importers in the
SSEFZ to pay the applicable duties and taxes on their importations of tobacco and alcohol products before
these importations are cleared and released from the freeport. The memorandum prompted the private
respondents to bring before the RTC their petition for declaratory relief. The petition sought to nullify the
implementation of Section 6 of Republic Act (R.A.) No. 9334, as unconstitutional.

ISSUE: WON private respondents are tax still tax exempted by virtue of the Certificates of Registration and Tax
Exemption previously granted by the SBMA.

HELD: NO It is beyond cavil that R.A. No. 7227 granted private respondents exemption from local and national
taxes, including excise taxes, on their importations of general merchandise, for which reason they enjoyed tax-
exempt status until the effectivity of R.A. No. 9334.

The rights granted under the Certificates of Registration and Tax Exemption of private respondents are
not absolute and unconditional as to constitute rights in esse those clearly founded on or granted by law or
is enforceable as a matter of law. These certificates granting private respondents a "permit to operate" their
respective businesses are in the nature of licenses, which the bulk of jurisprudence considers as neither a
property nor a property right. The licensee takes his license subject to such conditions as the grantor sees fit
to impose, including its revocation at pleasure. A license can thus be revoked at any time since it does not
confer an absolute right.

Whatever right may have been acquired on the basis of the Certificates of Registration and Tax
Exemption must yield to the States valid exercise of police power.It is well to remember that taxes may be
made the implement of the police power.

South African Airways vs CIR G.R. No. 180356 February 16, 2010

South African Airways, a foreign corporation with no license to do business in the Philippines, sells passage
documents for off-line flights through Aerotel Limited, general sales agent in the Philippines

On Feb 5, 2003: Petitioner filed a claim for refund erroneously paid tax on Gross Philippine Billing (GPB) for
the year 2010.

The CTA: denied the claim contending that petitioner is a resident foreign corp. engaged in trade or business
in the Philippines and therefore is NOT liable to pay tax on GPB under the Sec. 28 (A) (3) (a) of the 1997 NIRC
but cannot be allowed refund because it is liable for the 32% income tax from its sales of passage documents.

ISSUE: Is petitioners income sourced within the Philippines and is to be taxed at 32% of the gross billings?


1. Yes. Since it does not maintain flights to or from the Philippines, it is not taxable under Sec. 28(A)(3)(a) of
the 1997 NIRC. This much was also found by the CTA. But petitioner further posits the view that due to the
non-applicability of Sec. 28(A)(3)(a) to it, it is precluded from paying any other income tax for its sale of
passage documents in the Philippines. But, Sec. 28 (A)(1) of the 1997 NIRC does not exempt all international
air carriers from the coverage of Sec. 28 (A) (1) of the 1997 NIRC being a general rule. Petitioner, being an
international carrier with no flights originating from the Philippines, does not fall under the exception. As such,
petitioner must fall under the general rule. This principle is embodied in the Latin maxim, exception firmat
regulam in casibus non exceptis, which means, a thing not being excepted must be regarded as coming within
the purview of the general rule.

CIR v CTA GR No 106611, July 21, 1994


Citytrust BANKING CORPORATION (Citytrust) filed a petition with the Court of Tax Appeals claiming the refund
of its income tax overpayments for the years 1983, 1984 and 1985 in the total amount of P19,971,745. The CIR
could not present any evidence due to the repeated failure of the tax credit/refund division of the BIR to
transmit the records of the case and the investigation report to the Solicitor General. The case was decided in
favor of City Trust. Upon motion of reconsideration, petitioner alleged that through an inter-office
memorandum of the Tax Credit/Refund Division, dated August 8, 1991, he came to know only that Citytrust
had outstanding tax liabilities for 1984 in the amount of P56,588,740.91 representing deficiency income and
business taxes.

2. Whether the CTA erred in denying petitioners supplemental motion for reconsideration alleging bringing to
said courts attention the existence of deficiency income and business taxes


2. Yes. The fact of such deficiency assessment is intimately related and inextricably intertwined with the right
of the bank. The private respondent cannot be entitled to refund and at the same time be liable for a
deficiency tax assessment for the same year.

CS GARMENT v. CIR GR No. 182399, Mar 12, 2014 ]

Petitioner [CS Garment] is a domestic corporation duly organized and existing under and by virtue of the laws
of the Philippines and is registered with the Philippine Economic Zone Authority (PEZA). As such, it is engaged
in the business of manufacturing garments for sale abroad.

CS Garment received from respondent [CIR] Letter of Authority and subsequently, formal demand letters with
accompanying Assessment Notices from respondent, requiring it to pay the alleged deficiency VAT, Income,
DST and withholding tax assessments for taxable year 1998. It was subsequently assessed and was ordered to
pay the taxes due.

Petitioner then filed petition for review on certiorari, assailing the respective Decision and Resolution of the
Court of Tax Appeals (CTA) en banc in EB Case No. 287. These judgments in turn affirmed the Decision and the
Resolution of the CTA Second Division, which ordered the cancellation of certain items in the 1998 tax
assessments against petitioner. Accordingly, petitioner was directed to pay the Bureau of Internal Revenue
(BIR) the remaining portion of the tax assessments. However, while the present case was pending, CS Garment
filed a Manifestation and Motion stating that the latter had availed itself of the government's tax amnesty
program under RA 9480, or the 2007 Tax Amnesty Law.

ISSUE: WON petitioner can avail of the tax amnesty program under the Tax Amnesty Law.

HELD: YES. CS Garment has complied with all of the documentary requirements of the law and is now entitled
to invoke the immunities and privileges under Section 6 of the Tax amnesty law. Considering the completion of
the requirements, petitioner has successfully availed itself of the tax amnesty benefits granted under the Tax
Amnesty Law. CS Garment is now deemed to have been absolved of its obligations and is already immune
from the payment of taxes including the assessed deficiency in the payment of VAT, DST, and income tax as
affirmed by the CTA en banc as well as of the additions thereto. Furthermore, the tax amnesty benefits include
immunity from "the appurtenant civil, criminal, or administrative penalties under the NIRC of 1997, as
amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior


D E C I S I O FACTS: respondent Puregold a registered business enterprise operating within the Clark Special
Economic Zone (CSEZ).It enjoyed duty free importations and exemptions from local and national taxes under
EO 80, a privilege which extended to business enterprises operating within the CSEZ all the incentives granted
to enterprises within CSEZ by RA 7227. Hence, Puregold was repeatedly issued tax exemption certificates and
the BIR itself did not assess any deficiency taxes from the time the 1997 NIRC took effect in January 1998.
Subsequently petitioner was assessed of tax deficiencies. CIR contends that the national and local impositions
mentioned in RA 9399 or the Tax Amnesty Law, do not cover the deficiency taxes being assessed against

ISSUE: WON Puregold can avail the tax amnesty program under RA 9399.


YES. the only exclusions that RA 9399 and its implementing rules mention are those taxes on goods that are
taken out of the special economic zone. Yet, the petitioner herself admits that the assessment against
Puregold does not involve such goods, but only those that were imported by Puregold into the CSEZ. If
Congress intended Sec.131 of the 1997 NIRC to be an exception to the general grant of amnesty given under
RA 9399, it could have easily so provided in either the law itself, or even the implementing rules. In
implementing tax amnesty laws, the CIR cannot now insert an exception where there is none under the law.
And this Court cannot sanction such action. It is a basic precept of statutory construction that the express
mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim
expressio unius est exclusio alterius

. Hence, not being excepted, the taxes imposed under Sec. 131(A) of the 1997 NIRC must be regarded as
coming within the purview of the general amnesty granted by RA 9399, expressed in the maxim: exceptio
firmat regulam in casibus non exceptis

CONRADO TIU VS CA G.R. 127410 | January 20, 1999

FACTS: Petitioners assail the CA decision and resolution that upheld the constitutionality and validity of EO 97-
A, according to which the grant and enjoyment of the tax and duty incentives authorized under RA 7227 (An
Act Accelerating the Conversion of Military Reservations Into Other Productive Uses, Creating the Bases
Conversion and Development Authority for this Purpose, Providing Funds Therefor and for Other Purposes)
were limited to the business enterprises and residents within the fenced-in area of the Subic Special Economic
Zone (SSEZ).

Respondent Court held that there is no substantial difference between the provisions of EO 97-A and Section
12 of RA 7227. The appellate court concluded that such being the case, petitioners could not claim that EO 97-
A is unconstitutional, while at the same time maintaining the validity of RA 7227.

Issue: W/N EO 37-A is constitutionalHELD:

Said Order is not violative of the equal protection clause; neither is it discriminatory. There are real and
substantive distinctions between the circumstances obtaining inside and those outside the Subic Naval Base,
thereby justifying a valid and reasonable classification and does not violate the equal protection clause.

The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable
classification. If the groupings are characterized by substantial distinctions that make real differences, one
class may be treated and regulated differently from another. The classification must also be germane to the
purpose of the law and must apply to all those belonging to the same class.

Classification, to be valid, must (1) rest on substantial distinctions, (2) be germane to the purpose of the law,
(3) not be limited to existing conditions only, and (4) apply equally to all members of the same class.

PAGCOR VS BIR G.R. No. 172087 March 15, 2011

The Philippine Amusement and Gaming Corporation (PAGCOR) was created by P.D. No. 1067-A in 1977.
Obviously, it is a government owned and controlled corporation (GOCC).

In 1998, R.A. 8424 or the National Internal Revenue Code of 1997 (NIRC) became effective. Section 27 thereof
provides that GOCCs are NOT EXEMPT from paying income taxation but it exempted the following GOCCs:
2. SSS

But in May 2005, R.A. 9337, a law amending certain provisions of R.A. 8424, was passed. Section 1 thereof
excluded PAGCOR from the exempt GOCCs hence PAGCOR was subjected to pay income taxation. In
September 2005, the Bureau of Internal Revenue issued the implementing rules and regulations (IRR) for R.A.
9337. In the said IRR, it identified PAGCOR as subject to a 10% value added tax (VAT) upon items covered by
Section 108 of the NIRC (Sale of Services and Use or Lease of Properties).

PAGCOR questions the constitutionality of Section 1 of R.A. 9337 as well as the IRR. PAGCOR avers that the
said provision violates the equal protection clause. PAGCOR argues that it is similarly situated with SSS, GSIS,
PCSO, and PHILHEALTH, hence it should not be excluded from the exemption.

ISSUE: Whether or not PAGCOR should be subjected to income taxation.

HELD: Yes. Section 1 of R.A. 9337 is constitutional. It was the express intent of Congress to exclude PAGCOR
from the exempt GOCCs hence PAGCOR is now subject to income taxation.

PAGCORs contention that the law violated the constitution is not tenable. The equal protection clause
provides that all persons or things similarly situated should be treated alike, both as to rights conferred and
responsibilities imposed.

The general rule is, ALL GOCCs are subject to income taxation. However, certain classes of GOCCs may be
exempt from income taxation based on the following requisites for a valid classification under the principle of
equal protection:

1) It must be based on substantial distinctions.

2) It must be germane to the purposes of the law.

3) It must not be limited to existing conditions only.

4) It must apply equally to all members of the class.

When the Supreme Court looked into the records of the deliberations of the lawmakers when R.A. 8424 was
being drafted, the SC found out that PAGCORs exemption was not really based on substantial distinctions. In
fact, the lawmakers merely exempted PAGCOR from income taxation upon the request of PAGCOR itself. This
was changed however when R.A. 9337 was passed and now PAGCOR is already subject to income taxation.

Anent the issue of the imposition of the 10% VAT against PAGCOR, the BIR had overstepped its authority.
Nowhere in R.A. 9337 does it state that PAGCOR is subject to VAT. Therefore, that portion of the IRR issued by
the BIR is void. In fact, Section 109 of R.A. 9337 expressly exempts PAGCOR from VAT. Further, PAGCORs
charter exempts it from VAT.

To recapitulate, PAGCOR is subject to income taxation but not to VAT.


ABS-CBN was granted a franchise which provides that it shall pay a 3% franchise tax and the said percentage
tax shall be in lieu of all taxes on this franchise or earnings thereof. Abs cbn had been paying local franchise
tax imposed by Quezon City however& in view of the provision in Ra 9766 that it shall pay a franchise tax in
lieu of all taxes and the corporation developed the opinion that it is not liable to pay the local franchise tax
imposed by Quezon City. It thus filed a complaint against the imposition of local franchise tax.

Does the in lieu of all taxes provision in ABS-CBNs franchise exempt it from payment of the local franchise

NO. The right to exemption from local franchise tax must be clearly established beyond reasonable doubt and
cannot be made out of inference or implications.
The uncertainty over whether the in lieu of all taxes provision pertains to exemption from local or national
taxes, or both, should be construed against Respondent who has the burden to prove that it is in fact covered
by the exemption claimed. Furthermore, the in lieu of all taxes clause in Respondents franchise has become
ineffective with the abolition of the franchise tax on broadcasting companies with yearly gross receipts
exceeding P10 million as they are now subject to the VAT.

CIR VS PLDT G.R. No. 140230 December 15, 2005


PLDT is a grantee of a franchise under Republic Act (R.A.) No. 7082 to install, operate and maintain a
telecom system throughout the Philippines.

It imports various equipment, machineries and spare parts for its business on different occasion from
1992 to 1994.

PLDT on several occasions paid the BIR for compensating tax, advance sales tax, other internal revenue
taxes and value-added tax (VAT).

On March 15, 1994, PLDT addressed a letter to the BIR seeking a confirmatory ruling on its tax
exemption privilege under Section 12 of R.A. 7082, with a provision that: the grantee, shall pay a franchise tax
equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications
businesses transacted under this franchise by the grantee, its successors or assigns, and the said percentage
shall be in lieu of all taxes on this franchise or earnings thereof.

ISSUE: WON the 3% franchise tax exempts the PLDT from paying all other taxes, including indirect taxes.

HELD: NO. The clause in lieu of all taxes in Section 12 of RA 7082 is immediately followed by the qualifying
clause on this franchise or earnings thereof, suggesting that the exemption is limited to taxes imposed
directly on PLDT since taxes pertaining to PLDTs franchise or earnings are its direct liability. Accordingly,
indirect taxes, not being taxes on PLDTs franchise or earnings, are not included in the exemption provision.
The liability for the payment of the indirect taxes lies with the seller of the goods or services, not in the
buyer thereof. Thus, one cannot invoke ones exemption privilege to avoid the passing on or the shifting of the
VAT to him by the manufacturers/suppliers of the goods he purchased. Hence, it is important to determine if
the tax exemption granted to a taxpayer specifically includes the indirect tax which is shifted to him as part of
the purchase price, otherwise it is presumed that the tax exemption embraces only those taxes for which the
buyer is directly liable. Since RA 7082 did not specifically include indirect taxes in the exemption granted to
PLDT, the latter cannot claim exemption from VAT, advance sales tax and compensating tax.

Direct taxes are those exacted from the very person who, it is intended or desired, should pay them.
They are impositions for which a taxpayer is directly liable on the transaction or business he is engaged in.

Indirect taxes are taxes wherein the liability for the payment of the tax falls on one person but the
burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods
before reaching the consumer who ultimately pays for it.

The NIRC classifies VAT as an indirect tax the amount of which may be shifted or passed on to the
buyer, transferee or lessee of the goods. The 10% VAT on importation of goods is in the nature of an excise
tax levied on the privilege of importing articles. It is imposed on all taxpayers who import goods. It is not a tax
on the franchise of a business enterprise or on its earnings, as stated in Section 2 of RA 7082.

Advance sales tax has the attributes of an indirect tax because the tax-paying importer of goods for
sale or of raw materials to be processed into merchandise can shift the tax or lay the economic burden of the
tax on the purchaser by subsequently adding the tax to the selling price of the imported article or finished

Compensating tax also partakes of the nature of an excise tax payable by all persons who import
articles, whether in the course of business or not.

PLDTs allegation that the Bureau of Customs assessed the company for advance sales tax and
compensating tax for importations entered between October 1, 1992 and May 31, 1994 when the value-
added tax system already replaced, if not totally eliminated, advance sales and compensating taxes, is with
merit. Pursuant to Executive Order No. 273, a multi-stage value-added tax was put into place to replace the
tax on original and subsequent sales tax. Therefore, compensating tax and advance sales tax were no longer
collectible internal revenue taxes under the NIRC when the Bureau of Customs made the assessments in
question and collected the corresponding tax. Stated a bit differently, PLDT was no longer under legal
obligation to pay compensating tax and advance sales tax on its importation from 1992 to 1994. A refund of
the amounts paid as such taxes is thus proper.

90 June 23, 1988

Facts: : Private respondent Caltex filed with the public respondent Energy Regulatory Board (ERB) an
Application formally seeking a provisional increase in the prices of its petroleum products. Similar applications
for provisional price increases were submitted by Petrophil Corporation and Shell. Public respondent Board
issued Orders in the ERB cases authorizing the increase of the prices of their petroleum products. A part of this
increase in the value of P0.311 per liter shall paid to the the OPSF. Petitioners filed a petition seeking to enjoin
enforcement of that portion directing private respondent oil companies to pay P0.311 out of the price
increases granted to the OPSF. Petitioner assailed the constitutionality of both the OPSF and the laws
establishing said fund.

Issue: WON the OPSF and the laws which establish it should be declared unconstitutional.
Held: NO, it is not unconstitutional. The OPSF is a trust account "which was established "for the

purpose of minimizing frequent price changes brought about by exchange rate adjustment and/or changes in
World market prices of crude oil and imported petroleum products." The fact that the world market prices of
oil vary from day to day is of judicial notice. These fluctuations in world market prices and in tanker rates and
foreign exchange rates would in a completely free market translate into corresponding adjustments in
domestic prices of oil and petroleum products with sympathetic frequency. But domestic prices which vary
from day to day or even only from week to week would result in a chaotic market with unpredictable effects
upon the country's economy in general

The establishment and maintenance of the OPSF is a public purpose, for the OPSF was created precisely to
protect local consumers from the adverse effects of frequent oil price adjustments on our economy.

British American Tobacco Corporation v. Finance Secretary Camacho, G.R. No. 163583 August 20, 2008


British American Tobacco filed a Motion for Reconsideration for the Courts decision in 2008

Petitioner interposes that the assailed provisions:

(1) violate the equal protection and uniformity of taxation clauses of the Constitution,

(2) contravene Section 19,[1] Article XII of the Constitution on unfair competition, and

(3) infringe the constitutional provisions on regressive and inequitable taxation.

Petitioner further argues that assuming the assailed provisions are constitutional, it is entitled to a
downward reclassification of Lucky Strike from the premium-priced to the high-priced tax bracket.

Lucky Strike reiterates in its MR that the classification freeze provision violates the equal protection
and uniformity of taxation clauses because older brands are taxed based on their 1996 net retail prices while
new brands are taxed based on their present day net retail prices.

HELD: Petition is denied

Without merit and a rehash of petitioners previous arguments before this Court

The rational basis test was properly applied to gauge the constitutionality of the assailed law in the
face of an equal protection challenge

The classification is considered valid and reasonable provided that: (1) it rests on substantial distinctions; (2) it
is germane to the purpose of the law; (3) it applies, all things being equal, to both present and future
conditions; and (4) it applies equally to all those belonging to the same class.

The classification freeze provision was inserted in the law for reasons of practicality and expediency.

o since a new brand was not yet in existence at the time of the passage of RA 8240, then Congress
needed a uniform mechanism to fix the tax bracket of a new brand.

o The current net retail price, similar to what was used to classify the brands under Annex D as of
October 1, 1996, was thus the logical and practical choice
The classification freeze provision was in the main the result of Congresss earnest efforts to improve
the efficiency and effectivity of the tax administration over sin products while trying to balance the same with
other State interests.

REPUBLIC v. COCOFED, G.R. No. 147062-64, December 14, 2001 (Coconut levy funds are prima facie public
funds which should be subjected to COA audit)

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 so-called 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.


Are the Coconut Levy Funds raised through the States police and taxing



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.

Smart Communications, Inc. vs. Municipality of Malvar G.R. No. 204429 February 18, 2014


The Municipality of Malvar imposed Ordinance No.18 where it aims to regulate the establishment of special
projects. It assessed Smart an amount of 389,950.00 for the telecommunications tower that the latter
constructed in Malvar. Smart contends that the same is a tax, and is unduly oppressive and ultra vires. CTA
dismissed the case for lack of jurisdiction because the same is NOT a tax. Court agreed with CTA, and held that
LGUs have the power to impose fees


1. WON the fees are taxes.


1. NO. The fees are NOT taxes.

Issue #1

Since the main purpose of Ordinance No. 18 is to regulate certain construction activities of the identified
special projects, which included "cell sites" or telecommunications towers, the fees imposed in Ordinance No.
18 are primarily regulatory in nature, and not primarily revenue-raising. While the fees may contribute to the
revenues of the Municipality, this effect is merely incidental. Thus, the fees imposed in Ordinance No. 18 are
not taxes.

Ordinance No. 18 expressly provides for the standards which Smart must satisfy prior to the issuance of the
specified permits, clearly indicating that the fees are regulatory in nature.



On June 28, 2002, the Board of Directors of respondent Clark Development Corporation (CDC) issued and
approved Policy Guidelines on the Movement of Petroleum Fuel to and from the Clark Special Economic Zone.
In one of its provisions, it levied royalty fees to suppliers delivering Coastal fuel from outside sources for
Php0.50 per liter for those delivering fuel to CSEZ locators not sanctioned by CDC and Php1.00 per litter for
those bringing-in petroleum fuel from outside sources. The policy guidelines were implemented effective July
27, 2002.

The petitioner Chevron Philippines Inc (formerly Caltex Philippines Inc) who is a fuel supplier to Nanox
Philippines, a locator inside the CSEZ, received a Statement of Account from CDC billing them to pay the
royalty fees amounting to Php115,000 for its fuel sales from Coastal depot to Nanox Philippines from August 1
to September 21, 2002.

Petitioner, contending that nothing in the law authorizes CDC to impose royalty fees based on a per unit
measurement of any commodity sold within the special economic zone, protested against the CDC and Bases
Conversion Development Authority (BCDA). They alleged that the royalty fees imposed had no reasonable
relation to the probably expenses of regulation and that the imposition on a per unit measurement of fuel
sales was for a revenue generating purpose, thus, akin to a tax.

BCDA denied the protest. The Office of the President dismissed the appeal as well for lack of merit.

Upon appeal, CA dismissed the case. CA held that in imposing the royalty fees, CDC was exercising its right to
regulate the flow of fuel into CSEZ under the vested exclusive right to distribute fuel within CSEZ pursuant to
its Joint Venture Agreement (JVA) with Subic Bay Metropolitan Authority (SBMA) and Coastal Subic Bay
Terminal, Inc. (CSBTI) dated April 11, 1996. The appellate court also found that royalty fees were assessed on
fuel delivered, not on the sale, by petitioner and that the basis of such imposition was petitioners delivery
receipts to Nanox Philippines. The fact that revenue is incidentally also obtained does not make the imposition
a tax as long as the primary purpose of such imposition is regulation.

When elevated in SC, petitioner argued that: 1) CDC has no power to impose fees on sale of fuel inside CSEZ
on the basis of income generating functions and its right to market and distribute goods inside the CSEZ as this
would amount to tax which they have no power to impose, and that the imposed fee is not regulatory in
nature but rather a revenue generating measure; 2) even if the fees are regulatory in nature, it is
unreasonable and are grossly in excess of regulation costs.

Respondents contended that the purpose of royalty fees is to regulate the flow of fuel to and from the CSEZ
and revenue (if any) is just an incidental product. They viewed it as a valid exercise of police power since it is
aimed at promoting the general welfare of public; that being the CSEZ administrator, they are responsible for
the safe distribution of fuel products inside the CSEZ.


Whether the act of CDC in imposing royalty fees can be considered as valid exercise of the police power.


Yes. SC held that CDC was within the limits of the police power of the State when it imposed royalty fees.

In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of the
implemented measure. If the purpose is primarily to raise revenue, then it will be deemed a tax even though
the measure results in some form of regulation. On the other hand, if the purpose is primarily to regulate,
then it is deemed a regulation and an exercise of the police power of the state, even though incidentally,
revenue is generated.

In this case, SC held that the subject royalty fee was imposed for regulatory purposes and not for generation
of income or profits. The Policy Guidelines was issued to ensure the safety, security, and good condition of the
petroleum fuel industry within the CSEZ. The questioned royalty fees form part of the regulatory framework to
ensure free flow or movement of petroleum fuel to and from the CSEZ. The fact that respondents have the
exclusive right to distribute and market petroleum products within CSEZ pursuant to its JVA with SBMA and
CSBTI does not diminish the regulatory purpose of the royalty fee for fuel products supplied by petitioner to its
client at the CSEZ.

However, it was erroneous for petitioner to argue that such exclusive right of respondent CDC to market and
distribute fuel inside CSEZ is the sole basis of the royalty fees imposed under the Policy Guidelines. Being the
administrator of CSEZ, the responsibility of ensuring the safe, efficient and orderly distribution of fuel products
within the Zone falls on CDC. Addressing specific concerns demanded by the nature of goods or products
involved is encompassed in the range of services which respondent CDC is expected to provide under Sec. 2 of
E.O. No. 80, in pursuance of its general power of supervision and control over the movement of all supplies
and equipment into the CSEZ.

There can be no doubt that the oil industry is greatly imbued with public interest as it vitally affects the
general welfare. Fuel is a highly combustible product which, if left unchecked, poses a serious threat to life
and property. Also, the reasonable relation between the royalty fees imposed on a per liter basis and the
regulation sought to be attained is that the higher the volume of fuel entering CSEZ, the greater the extent
and frequency of supervision and inspection required to ensure safety, security, and order within the Zone.

Respondents submit that the increased administrative costs were triggered by security risks that have recently
emerged, such as terrorist strikes. The need for regulation is more evident in the light of 9/11 tragedy
considering that what is being moved from one location to another are highly combustible fuel products that
could cause loss of lives and damage to properties.

As to the issue of reasonableness of the amount of the fees, SC held that no evidence was adduced by the
petitioner to show that the fees imposed are unreasonable. Administrative issuances have the force and effect
of law. They benefit from the same presumption of validity and constitutionality enjoyed by statutes. These
two precepts place a heavy burden upon any party assailing governmental regulations. Petitioners plain
allegations are simply not enough to overcome the presumption of validity and reasonableness of the subject
WHEREFORE, the petition is DENIED for lack of merit and the Decision of the Court of Appeals dated
November 30, 2005 in CA-G.R. SP No. 87117 is hereby AFFIRMED.

Angeles university vs city of angeles G.R. No. 189999 June 27, 2012

FACTS: Petitioner is a non-stock, non-profit educational foundation. It received a building permit fee
assessment for the construction of the AUF Medical Center but claimed exemption from the same as well as
from other permits and fees by virtue of Republic Act No. 6055. Respondent disputed the claimed exemption
by stating that the impositions are regulatory in nature and not taxes from which petitioner is exempt under
the said law.

ISSUE: Is the building permit fee a tax from which petitioner is exempt?

RULING: No. It is a regulatory fee. The DPWH has in fact issued implementing rules which provide the bases for
assessment of fees and petitioner has failed to show that they were arbitrarily determined or unrelated to the
activity being regulated. Neither has there been proof that the fee was unreasonable or in excess of the cost
of regulation or inspection. The Court added that even if there was incidental revenue, the same is deemed
not to change the nature of the charge. Thus, the City of Angeles was justified in its assessment.

MANILA G.R. No. L-10448 August 30, 1957

FACTS: Petitioner-appellant is an association of registered massagists and licensed operators of massage

clinics in the City of Manila and other parts of the country. They filed an action in the Court of First Instance of
Manila questioning the validity of the Municipal Ordinance No. 3659 which regulates the operation of
massage clinics in the City of Manila and providing penalties for its violations. They also protested that the
license fee of P100 is unreasonable. The trial court dismissed their petition. Hence, they appealed to the
Supreme Court. On its appeal, the petitioner contends that the City of Manila is without authority to regulate
the operation of massagists and the operation of massage clinics within its jurisdiction.

ISSUE: Whether Municipal Ordinance No. 3659 is valid

HELD: YES. The purpose of the Ordinance is not to regulate the practice of massage, much less to restrict the
practice of licensed and qualified massagists of therapeutic massage in the Philippines. Rather, the end sought
to be attained in the Ordinance is to prevent the commission of immorality and the practice of prostitution in
an establishment masquerading as a massage clinic. As to the authority of the City Board to enact the
Ordinance in question, General Welfare Clause, is a delegation in statutory form of the police power, under
which municipal corporations, are authorized to enact ordinances to provide for the health and safety, and
promote the morality, peace and general welfare of its inhabitants. Therefore, the Court recognizes Municipal
Ordinance No. 3659 as valid.

The amount of the fee or charge is properly considered in determining whether it is a tax or an exercise of the
police power. There is a marked distinction between license fees imposed upon useful and beneficial
occupations which the sovereign wishes to regulate but not restrict, and those which are inimical and
dangerous to public health, morals or safety. In the latter case the fee may be very large without necessarily
being a tax. Manila Municipal Board considered the practice of hygienic and aesthetic massage not as a useful
and beneficial occupation which will promote and is conducive to public morals, and consequently, imposed
the said permit fee for its regulation.

EXXONMOBIL Petroleum and Chemical Holdings, Inc., Phil. Branch vs Commissioner of Internal Revenue,
G.R. No. 180909, January 19, 2011

Petitioner Exxon is a foreign corporation duly organized and existing under the laws of the State of Delaware,
United States of America. It is authorized to do business in the Philippines through its Philippine Branch. Exxon
is engaged in the business of selling petroleum products to domestic and international carriers. In pursuit of its
business, Exxon purchased from Caltex Philippines, Inc. (Caltex) and Petron Corporation (Petron) Jet A-1 fuel
and other petroleum products, the excise taxes on which were paid for and remitted by both Caltex and
Petron. Said taxes, however, were passed on to Exxon which ultimately shouldered the excise taxes on the fuel
and petroleum products.

Exxon filed administrative claims for refund with the Bureau of Internal Revenue (BIR).

Exxon filed a petition for review with the CTA claiming a refund or tax of excise taxes paid on Jet A-1 fuel and
other petroleum products it sold to international carriers from November 2001 to June 2002.

During Exxons preparation of evidence, the CIR filed a motion dated January 28, 2005 to first resolve the issue
of whether or not Exxon was the proper party to ask for a refund. Exxon filed its opposition to the motion

Issue: Whether or not petitioner is the proper party to ask for refund?


Exxon argues that having paid the excise taxes on the petroleum products sold to international carriers, it is a
real party in interest consistent with the rules and jurisprudence.

It reasons out that the subject of the exemption is neither the seller nor the buyer of the petroleum products,
but the products themselves, so long as they are sold to international carriers for use in international flight
operations, or to exempt entities covered by tax treaties, conventions and other international agreements for
their use or consumption, among other conditions.

Thus, as the exemption granted under Section 135 attaches to the petroleum products and not to the seller,
the exemption will apply regardless of whether the same were sold by its manufacturer or its distributor for
two reasons. First, Section 135 does not require that to be exempt from excise tax, the products should be
sold by the manufacturer or producer. Second, the legislative intent was precisely to make Section 135
independent from Sections 129 and 130 of the NIRC, stemming from the fact that unlike other products
subject to excise tax, petroleum products of this nature have become subject to preferential tax treatment by
virtue of either specific international agreements or simply of international reciprocity.

The CTA En Banc, thus, held that:

The determination of who is the taxpayer plays a pivotal role in claims for refund because the same law
provides that it is only the taxpayer who has the legal personality to ask for a refund in case of erroneous
payment of taxes. Section 204 (C) of the 1997 NIRC, [provides] in part, as follows:

SEC. 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. The
Commissioner may
(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority,
refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and,
in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer
files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of
the tax or penalty: Provided, however, That a return showing an overpayment shall be considered as a written
claim for credit or refund.

Therefore, as Exxon is not the party statutorily liable for payment of excise taxes under Section 130, in relation
to Section 129 of the NIRC, it is not the proper party to claim a refund of any taxes erroneously paid.