of transcendental importance; (b) Resolution were invalidly passed due to non-
LAND BANK OF PHILIPPINES v. EDUARDO M. CACAYURAN, GR No.
191667, 2015-04-22
Facts:
he instant case arose from two (2) loans entered into by the Municipality with LBP in
order to finance the Redevelopment Plan of the Agoo Public Plaza
Through Resolution, the Sangguniang Bayan authorized its then-Mayor Eufranio
Eriguel (Mayor Eriguel) to enter into a P4,000,000.00-loan with LBP, the proceeds of
which were used to construct ten (10) kiosks at the Public Plaza. Around a year later,
the SB issued Resolution this time authorizing Mayor Eriguel to obtain a
P28,000,000.00-loan from LBP for the construction of a commercial center named
"Agoo People's Center" within the premises of the Public Plaza.
In order to secure the Subject Loans, the Municipality used as collateral a 2,323.75-
square meter lot situated at the south eastern portion of the Public Plaza (Plaza Lot).
However, a group of residents, led by respondent Eduardo M. Cacayuran (Cacayuran),
opposed the redevelopment of the Public Plaza. Further, Cacayuran requested the
municipal officers to furnish him with the various documents relating to the Public
Plaza's redevelopment, which, however, went unheeded.
Thus, Cacayuran, invoking his right as a taxpayer, filed a complaint against LBP and
various officers of the Municipality, including Mayor Eriguel (but excluding the
Municipality itself as party-defendant), assailing the validity of the aforesaid loan
agreements and praying that the commercialization of the Public Plaza be enjoined.
LBP asserted that Cacayuran did not have any cause of action since he was not privy
to the loan agreements entered into by LBP and the Municipality.
During the pendency of the proceedings, the construction of the Agoo People's Center
was completed. Later on, the Sangguniang Bayan passed Municipal Ordinance
declaring the area where such building stood as patrimonial property of the
Municipality.
The RTC Ruling
Plaza Lot is a property for public use, it cannot be used as collateral for the Subject
Loans.
The CA Ruling
CA affirmed the ruling of the RTC
It held that: (a) Cacayuran had locus standi to file the instant complaint, considering
that he is a resident of the Municipality and the issue at hand involved public interest
compliance with certain provisions of Republic Act No. 7160, otherwise known as
the Local Government Code of 1991 (LGC); (c) the Plaza Lot is property of public
dominion, and thus, cannot be used as collateral; and (d) the procurement of the
Subject Loans were ultra vires acts for having been entered into without proper
authority and that the collaterals used therefor constituted improper disbursement of
public funds.
Issues:
whether or not the Municipality should be deemed as an indispensable party to the
instant case, and thus, be ordered impleaded herein.
Ruling:
a judicious review of the records reveals that Cacayuran's complaint against LBP and
the municipal officers primarily prays that the commercialization of the Public Plaza
be enjoined and also, that the Subject Loans be declared null and void for having been
unlawfully entered into by the said officers. However, Cacayuran failed to implead in
his complaint the Municipality, a real party-in-interest and an indispensable party that
stands to be directly affected by any judicial resolution on the case, considering that:
(a) the contracting parties to the Subject Loans are LBP and the Municipality; and (b)
the Municipality owns the Public Plaza as well as the improvements constructed
thereon, including the Agoo People's Center.
Indeed, [the Municipality! Ion whose lands stands and is found the Agoo Public Plaza,
where the Kiosks and Commercial Building were under construction and which
constructions were sought to be restrained] stands to be benefited or injured by the
judgment in the case so filed or the party entitled to the avails of the case and is,
therefore, the real party-in-interest.
Thus, as it has now come to the fore that any resolution of this case would not be
possible and, hence, not attain any real finality due to the non-joinder of the
Municipality, the Court is constrained to set aside all subsequent actuations of the
courts a quo in this case, including that of the Court's, and remand the case all the way
back to the RTC for the inclusion of all indispensable parties to the case and its
immediate disposition on the merits.
With this, the propriety of the Municipality's present intervention is now mooted.
Diaz vs Sec. of Finance
GR 193007, 19 July 2011
FACTS: Petitioners Renato V. Diaz and Aurora Ma. F. Timbol (petitioners) filed this
petition for declaratory relief assailing the validity of the impending imposition of
value-added tax (VAT) by the Bureau of Internal Revenue (BIR) on the collections of
tollway operators. Court treated the case as one of prohibition. Petitioners hold the
view that Congress did not, when it enacted the NIRC, intend to include toll fees
within the meaning of "sale of services" that are subject to VAT; that a toll fee is a
"user's tax," not a sale of services; that to impose VAT on toll fees would amount to
a tax on public service; and that, since VAT was never factored into the formula for
computing toll fees, its imposition would violate the non-impairment clause of the
constitution. The government avers that the NIRC imposes VAT on all kinds of
services of franchise grantees, including tollway operations; that the Court should
seek the meaning and intent of the law from the words used in the statute; and that the
imposition of VAT on tollway operations has been the subject as early as 2003 of
several BIR rulings and circulars. The government also argues that petitioners have
no right to invoke the non-impairment of contracts clause since they clearly have no
personal interest in existing toll operating agreements (TOAs) between the
government and tollway operators. At any rate, the non-impairment clause cannot
limit the State's sovereign taxing power which is generally read into contracts.
ISSUE: May toll fees collected by tollway operators be subjected to VAT (Are
tollway operations a franchise and/or a service that is subject to VAT)?
RULING: When a tollway operator takes a toll fee from a motorist, the fee is in effect
for the latter's use of the tollway facilities over which the operator enjoys private
proprietary rights that its contract and the law recognize. In this sense, the tollway
operator is no different from the service providers under Section108 who allow others
to use their properties or facilities for a fee. Tollway operators are franchise grantees
and they do not belong to exceptions that Section 119 spares from the payment of
VAT. The word "franchise" broadly covers government grants of a special right to do
an act or series of acts of public concern. Tollway operators are, owing to the nature
and object of their business, "franchise grantees." The construction, operation, and
maintenance of toll facilities on public improvements are activities of public
consequence that necessarily require a special grant of authority from the state. A tax
is imposed under the taxing power of the government principally for the purpose of
raising revenues to fund public expenditures. Toll fees, on the other hand, are
collected by private tollway operators as reimbursement for the costs and expenses
incurred in the construction, maintenance and operation of the tollways, as well as to
assure them a reasonable margin of income. Although toll fees are charged for the use
of public facilities, therefore, they are not government exactions that can be properly
treated as a tax.
Taxes may be imposed only by the government under its sovereign authority, toll fees
may be demanded by either the government or private individuals or entities, as an
attribute of ownership.
ANGELES UNIVERSITY FOUNDATION v. CITY OF ANGELES, GR No.
189999, 2012-06-27
Facts:
Petitioner Angeles University Foundation (AUF) is an educational institution
established on 1962 and was converted into a non-stock, non-profit education
foundation under the provisions of Republic Act (R.A.) No. 6055 on 1975
Sometime in August 2005, petitioner filed with the Office of the City Building
Official an application for a building permit for the construction of an 11-storey
building of the Angeles University Foundation Medical Center in its main campus
Said office issued a Building Permit Fee Assessment in the amount of P126,839.20.
Zoning Administration Unit requiring petitioner to pay the sum of P238,741.64 as
Locational Clearance Fee.
In separate letters addressed to respondents City Treasurer Quinsaat and Acting City
Building Official Dizon, petitioner claimed that it is exempt from the payment of the
building permit and locational clearance fees, citing legal opinions rendered by the
Department of Justice (DOJ).
Petitioner also reminded the respondents that they have previously issued building
permits acknowledging such exemption from payment of building permit fees on the
construction of petitioner's 4-storey AUF Information Technology Center building
and the AUF Professional Schools building
Respondent City Treasurer referred the matter to the Department of Finance, which
in turn endorsed the query to the DOJ. Then Justice Gonzalez cited previous issuances
of his office declaring petitioner to be exempt from the payment of building permit
fees. stating further that Department of Finance, thru this Bureau, has no authority to
review the resolution or the decision of the DOJ."
Despite petitioner's plea, however, respondents refused to issue the building permits
for the construction of the AUF Medical Center
Consequently, petitioner paid under protest petitioner filed a Complaint before the
trial court seeking the refund of P826,662.99 plus interest
respondents asserted that Since the disputed assessments are regulatory in nature, they
are not taxes from which petitioner is exempt. As to the real property taxes imposed
on petitioner's property located in Marisol Village, respondents pointed out that said
premises will be used as a school dormitory which cannot be considered as a use
exclusively for educational activities.
In any case, petitioner pointed out that the Local Government Code of 1991 provides
in Sec. 193 that non-stock and non-profit educational institutions like petitioner
retained the tax exemptions or incentives which have been granted to them. Under
Sec. 8 of R.A. No. 6055 and applicable jurisprudence and DOJ rulings, petitioner is
clearly exempt from the payment of building permit fees.
court rendered judgment in favor of the petitioner respondents maintain that petitioner
is not exempt from the payment of building permit and related fees since the only
exemptions provided in the National Building Code are public buildings and
traditional indigenous family dwellings.
Issues:
(1) whether petitioner is exempt from the payment of building permit and related fees
imposed under the National Building Code - NO
(2) whether the parcel of land owned by petitioner which has been assessed for real
property tax is likewise exempt. - NO
Ruling:
R.A. No. 6055 granted tax exemptions to educational institutions like petitioner which
converted to non-stock, non-profit educational foundations. Section 8 of said law
provides:
SECTION 8. The Foundation shall be exempt from the payment of all taxes,
import duties, assessments, and other charges imposed by the Government
onall income derived from or property, real or personal, used exclusively
for the educational activities of the Foundation.(Emphasis supplied.)
a building permit fee is a regulatory imposition is highlighted by the fact that in
processing an application for a building permit, the Building Official shall see to it
that the applicant satisfies and conforms with approved standard requirements on
zoning and land use, lines and grades, structural design, sanitary and sewerage,
environmental health, electrical and mechanical safety as well as with other rules and
regulations implementing the National Building Code.
Thus, ancillary permits such as electrical permit, sanitary permit and zoning clearance
must also be secured and the corresponding fees paid before a building permit may be
issued. And as can be gleaned from the implementing rules and regulations of the
National Building Code, clearances from various government authorities exercising
and enforcing regulatory functions affecting buildings/structures, like local
government units, may be further required before a building permit may be issued.
Since building permit fees are not charges on property, they are not impositions from
which petitioner is exempt.
As to petitioner's argument that the building permit fees collected by respondents are
in reality taxes because the primary purpose is to raise revenues for the local
government unit, the same does not hold water.
Concededly, in the case of building permit fees imposed by the National Government
under the National Building Code, revenue is incidentally generated for the benefit of
local government units
Petitioner's reliance on Sec. 193 of the Local Government Code of 1991 is likewise
misplaced petitioner's claim that it is exempted from the payment of real property tax
assessed against its real property presently occupied by informal settlers.
Section 28(3), Article VI of the 1987 Constitution provides: x x x x
(3) Charitable institutions, churches and parsonages or convents
appurtenant thereto, mosques, non-profit cemeteries, and all lands,
buildings, and improvements, actually, directly and exclusively used for
religious, charitable or educational purposes shall be exempt from taxation.
Petitioner failed to discharge its burden to prove that its real property is actually,
directly and exclusively used for educational purposes. While there is no allegation
or proof that petitioner leases the land to its present occupants, still there is no
compliance with the constitutional and statutory requirement that said real property is
actually, directly and exclusively used for educational purposes. The respondents
correctly assessed the land for real property taxes for the taxable period during which
the land is not being devoted solely to petitioner's educational activities.
Tolentino vs Sec. of Finance
GR 115455, 30 October 1995
FACTS: The Value Added Tax (VAT) is levied on the sale, barter, or exchange of
goods as well as on the sale or exchange of services. It is equivalent to 10% of the
gross selling price or gross value in money of goods or properties sold, bartered or
exchanged or of the gross receipts from the sale or exchange of services. Republic Act
No 7716 seeks to widen the tax base of the existing VAT system and enhance its
administration by amending the National Internal Revenue Code.
Among the petitioners was the Philippine Press which claims RA 7716 violates their
press freedom and liberty having removed them from the exemption to pay Value
Added Tax. They maintain that by withdrawing the exemption granted to print media
transactions involving printing, publication, importation or sale of newspapers, R.A.
No. 7716 is a license tax which singled out the press for discriminatory treatment and
that within the class of mass media the law discriminates against print media by giving
broadcast media favoured treatment.
ISSUE: Whether or not the purpose of the VAT is similar to a license tax.
RULING: No. A license tax, unlike any ordinary tax, is mainly for regulation. Its
imposition on the press is unconstitutional because it lays a prior restraint on the
exercise of its 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 Jehovah'
s Witnesses, in connection with the latter' s sale of religious books and pamphlets, is
unconstitutional. As the U.S. Supreme Court put it, "it is one thing to impose a tax on
income or property of a preacher. I t is quite another thing to ex act a tax on him for
delivering a sermon." In withdrawing the exemption, the law merely subjects the press
to the same tax burden to which other businesses have long ago been subject.
The VAT is, however, different. It is not a license tax, it is not a tax on the exercise
of a privilege, much less than a constitutional right. It is imposed on the sale, barter,
lease, or exchange of goods or properties or the sale or exchange of services and the
lease of properties purely for revenue purposes. To subject the press to its pay its
income tax or subject it to general regulation is not to violate its freedom under the
Constitution.
The exemption of the press was a privilege granted by the State, which has the right
to revoke it by including the Press under the VAT system without offending press
freedom under the Constitution.
“Equality and uniformity of taxation” means that all taxable articles or kinds of
property of the same class be taxed at the same rate. The taxing power has the
authority to make reasonable and natural classifications for purposes of taxation. To
satisfy this requirement it is enough that the statute or ordinance applies equally to
all persons, forms and corporations placed in similar situation.
The VAT is “regressive,” because it is indirect—in other words, its imposition may
be transferred to a person other than it is directed to. In comparison, income tax is
“progressive,” because it is direct—it is imposed directly on a person and his ability
to pay, which accordingly puts him in the proper bracket on a previously-fixed scale.
ARTURO M. TOLENTINO v. SECRETARY OF FINANCE, GR No. 115455, 1994-
08-25
Facts:
The value-added tax (VAT) is levied on the sale, barter or exchange of goods and
properties as well as on the sale or exchange of services. It is equivalent to 10% of the
gross selling price or gross value in money of goods or properties sold, bartered or
exchanged or of the gross receipts from the sale or exchange of services. Republic Act
No. 7716 seeks to widen the tax base of the existing VAT system and enhance its
administration by amending the National Internal Revenue Code.
These are various suits for certiorari and prohibition, challenging the constitutionality
of Republic Act No. 7716 on various grounds summarized as follows:
The contention of petitioners is that in enacting Republic Act No. 7716, Congress
violated the Constitution because, although H. No. 11197 had originated in the House
of Representatives, it was not passed by the Senate but was simply consolidated with
the Senate version that because Republic Act No. 7716 was passed in this manner, it
did not originate in the House of Representatives and it has not thereby become a law
The Philippine Press Institute (PPI), petitioner in G.R. No. 115544, is a nonprofit
organization of newspaper publishers established for the improvement of journalism
in the Philippines. On the other hand, petitioner in G.R. No. 115781, the Philippine
Bible Society (PBS), is a nonprofit organization engaged in the printing and
distribution of bibles and other religious articles. Both petitioners claim violations of
their rights under §§ 4 and 5 of the Bill of Rights as a result of the enactment of the
VAT Law.
The PPI questions the law insofar as it has withdrawn the exemption previously
granted to the press under § 103 (f) of the NIRC. Although the exemption was
subsequently restored by administrative regulation with respect to the circulation
income of newspapers, the PPI presses its claim because of the possibility that the
exemption may still be removed by mere revocation of the regulation of the Secretary
of Finance. On the other hand, the PBS goes so far as to question the Secretary's power
to grant exemption for two reasons: (1) The Secretary of Finance has no power to
grant tax exemption because this is vested in Congress and requires for its exercise
the vote of a majority of all its members and (2) the Secretary's duty is to execute the
law
What it contends is that by withdrawing the exemption previously granted to print
media transactions involving printing, publication, importation or sale of newspapers,
Republic Act No. 7716 has singled out the press for discriminatory treatment and that
within the class of mass media the law discriminates against print media by giving
broadcast media favored treatment.
Issues:
Ruling:
This argument will not bear analysis. To begin with, it is not the law but the revenue
bill which is required by the Constitution to "originate exclusively" in the House of
Representatives. It is important to emphasize this, because a bill originating in the
House may undergo such extensive changes in the Senate that the result may be a
rewriting of the whole. The possibility of a third version by the conference committee
will be discussed later. At this point, what is important to note is that, as a result of
the Senate action, a distinct bill may be produced. To insist that a revenue statute and
not only the bill which initiated the legislative process culminating in the enactment
of the law must substantially be the same as the House bill would be to deny the
Senate's power not only to "concur with amendments" but also to "propose
amendments." It would be to violate the coequality of legislative power of the two
houses of Congress and in fact make the House superior to the Senate.

Indeed, what the Constitution simply means is that the initiative for filing revenue,
tariff, or tax bills, bills authorizing an increase of the public debt, private bills and
bills of local application must come from the House of Representatives on the theory
that, elected as they are from the districts, the members of the House can be expected
to be more sensitive to the local needs and problems. On the other hand, the senators,
who are elected at large, are expected to approach the same problems from the national
perspective. Both views are thereby made to bear on the enactment of such laws.

Nor does the Constitution prohibit the filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, so long as action by the Senate
as a body is withheld pending receipt of the House bill.

the press is not immune from general regulation by the State

The publisher of a newspaper has no immunity from the application of general laws.
He has no special privilege to invade the rights and liberties of others. He must answer
for libel. He may be punished for contempt of court. . . . Like others, he must pay
equitable and nondiscriminatory taxes on his business the fee a fixed amount (P1,000),
is not imposed for the exercise of a privilege but only for the purpose of defraying
part of the cost of registration. The registration requirement is a central feature of the
VAT system. It is designed to provide a record of tax credits because any person who
is subject to the payment of the VAT pays an input tax, even as he collects an output
tax on sales made or services rendered. The registration fee is thus a mere
administrative fee, one not imposed on the exercise of a privilege, much less a
constitutional right.

For the foregoing reasons, we find the attack on Republic Act No. 7716 on the ground
that it offends the free speech, press and freedom of religion guarantees of the
Constitution to be without merit.