Tolentino v.

SOF
G.R. No. 115455, October 30, 1995

FACTS:
Power of the Senate to propose amendments to revenue bills. Some of the petitioners
(Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and Chamber of Real Estate and Builders
Association (CREBA)) reiterate previous claims made by them that R.A. No. 7716 did not "originate
exclusively" in the House of Representatives as required by Art. VI, §24 of the Constitution. Although
they admit that H. No. 11197 was filed in the House of Representatives where it passed three
readings and that afterward it was sent to the Senate where after first reading it was referred to the
Senate Ways and Means Committee, they complain that the Senate did not pass it on second and
third readings. Instead what the Senate did was to pass its own version (S. No. 1630) which it
approved on May 24, 1994. Petitioner Tolentino adds that what the Senate committee should have
done was to amend H. No. 11197 by striking out the text of the bill and substituting it with the text
of S. No. 1630. That way, it is said, "the bill remains a House bill and the Senate version just becomes
the text (only the text) of the House bill."

ISSUE:
Whether or not RA 7716 violates Art. VI, Secs. 24 and 26(2) of the Constitution.

HELD:
No. The contention has no merit in this case. The enactment of S. No. 1630 is not the only
instance in which the Senate proposed an amendment to a House revenue bill by enacting its own
version of a revenue bill. On at least two occasions during the Eighth Congress, the Senate passed its
own version of revenue bills, which, in consolidation with House bills earlier passed, became the
enrolled bills.
On the other hand, the Ninth Congress passed revenue laws which were also the result of
the consolidation of House and Senate bills. These are the following, with indications of the dates on
which the laws were approved by the President and dates the separate bills of the two chambers of
Congress.
Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the
exercise of its power to propose amendments to bills required to originate in the House, passed its
own version of a House revenue measure. It is noteworthy that, in the particular case of S. No. 1630,
petitioners Tolentino and Roco, as members of the Senate, voted to approve it on second and third
readings.
On the other hand, amendment by substitution, in the manner urged by petitioner
Tolentino, concerns a mere matter of form. Petitioner has not shown what substantial difference it
would make if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead
enacted as a substitute measure, "taking into Consideration . . . H.B. 11197."
The next argument of the petitioners was that S. No. 1630 did not pass 3 readings on
separate days as required by the Constitution because the second and third readings were done on
the same day. But this was because the President had certified S. No. 1630 as urgent. The
presidential certification dispensed with the requirement not only of printing but also that of reading
the bill on separate days. That upon the certification of a bill by the President the requirement of 3
readings on separate days and of printing and distribution can be dispensed with is supported by the
weight of legislative practice.
Lung Center v. QC
G.R. No. 144104. June 29, 2004

FACTS:
The petitioner Lung Center of the Philippines is a non-stock and non-profit entity. It is the
registered owner of a parcel of land located at Quezon City. Erected in the middle of the aforesaid
lot is a hospital known as the Lung Center of the Philippines. A big space at the ground floor is being
leased to private parties, for canteen and small store spaces, and to medical or professional
practitioners who use the same as their private clinics for their patients whom they charge for their
professional services. Almost one-half of the entire area on the left side of the building along Quezon
Avenue is vacant and idle, while the other half is being leased for commercial purposes to a private
enterprise known as the Elliptical Orchids and Garden Center.
The petitioner accepts paying and non-paying patients. It also renders medical services to
out-patients, both paying and non-paying. Aside from its income from paying patients, the petitioner
receives annual subsidies from the government.
Both the land and the hospital building of the petitioner were assessed for real property
taxes in the amount of ₱4,554,860 by the City Assessor of Quezon City. The petitioner contends that
it is a charitable institution and, as such, is exempt from real property taxes. The QC-LBAA rendered
judgment dismissing the petition and holding the petitioner liable for real property taxes.
The QC-LBAA’s decision was, likewise, affirmed on appeal by the CBAA which ruled that the
petitioner was not a charitable institution and that its real properties were not actually, directly and
exclusively used for charitable purposes; hence, it was not entitled to real property tax exemption
under the constitution and the law. The petitioner sought relief from the Court of Appeals, which
rendered judgment affirming the decision of the CBAA.

ISSUE/S:

1. Whether or not the petitioner is a charitable institution within the context of

Presidential Decree No. 1823 and the 1973 and 1987 Constitutions and Section 234(b) of
Republic Act No. 7160; and
2. Whether or not the real properties of the petitioner are exempt from real property
taxes.

HELD:

1ST ISSUE:
Yes, the Court ruled that the petitioner is a charitable institution within the context of the
1973 and 1987 Constitutions. To determine whether an enterprise is a charitable institution/entity
or not, the elements which should be considered include the statute creating the enterprise, its
corporate purposes, its constitution and by-laws, the methods of administration, the nature of the
actual work performed, the character of the services rendered, the indefiniteness of the
beneficiaries, and the use and occupation of the properties. The word “charitable” is not restricted
to relief of the poor or sick. The test of a charity and a charitable organization are in law the same.
The test whether an enterprise is charitable or not is whether it exists to carry out a purpose
reorganized in law as charitable or whether it is maintained for gain, profit, or private advantage.
In this case, the petitioner adduced substantial evidence that it spent its income, including
the subsidies from the government for its patients and for the operation of the hospital.
2nd ISSUE:
No. The court answered in the negative. Portions of its real property that are leased to
private entities are not exempt from real property taxes as these are not actually, directly and
exclusively used for charitable purposes.
The settled rule in this jurisdiction is that laws granting exemption from tax are construed
strictissimi juris against the taxpayer and liberally in favor of the taxing power.
It is plain as day that under the decree, the petitioner does not enjoy any property tax
exemption privileges for its real properties as well as the building constructed thereon. If the
intentions were otherwise, the same should have been among the enumeration of tax exempt
privileges.
The petitioner failed to discharge its burden to prove that the entirety of its real property is
actually, directly and exclusively used for charitable purposes. While portions of the hospital are
used for the treatment of patients and the dispensation of medical services to them, whether paying
or non-paying, other portions thereof are being leased to private individuals for their clinics and a
canteen.
Abakada Guro Party List v. Ermita
G.R. No. 168056, September 1, 2005

FACTS:
A bill to amend the provision in the NIRC was filed in the House of Representatives. On the
other hand a bill was filed in the Senate to amend NIRC. The two bills were consolidated and
submitted to the Senate where the latter amended and consolidated the bill which resulted in a
different bill and was subsequently approved into law (RA 9337). Said law was questioned as being
unconstitutional being as it did not originate from the House of Representatives.

ISSUE:
Whether or not R.A. No. 9337 is in violation of Article VI, Sec. 24 and Sec. 26 (2) of the
Constitution.

HELD:
No. The Law is constitutional. The SC interpreted the meaning of may concur or propose
amendment said phase does not mean changing only a word a sentence or a section. Such phrase
may include the entire overhauling of the bill or even substitution of the whole bill which originated
from the House of Representatives. If Senate wouldn’t be allowed it would be equivalent to a
deprivation of co-equality of legislative power.
Art. VI, Sec. 24 provides that “… shall originate exclusively in the House of Representatives”
means that it must be initiated in the HOR but that doesn’t mean the bill must be identical until it is
passed into law. Therefore, a bill may undergo an extensive amendment which is contemplated in
the outcome of the Senate version.
Petitioners’ argument that the practice where a bicameral conference committee is allowed
to add or delete provisions in the House bill and the Senate bill after these had passed three
readings is in effect a circumvention of the "no amendment rule" (Sec. 26 (2), Art. VI of the 1987
Constitution), fails to convince the Court to deviate from its ruling in the Tolentino case.
The Court reiterates here that the "no-amendment rule" refers only to the procedure to be
followed by each house of Congress with regard to bills initiated in each of said respective houses,
before said bill is transmitted to the other house for its concurrence or amendment.
CIR v. CA
G.R. No. 124043, October 14, 1998

FACTS:

In 1980, YMCA earned an income of 676,829.80 from leasing out a portion of its premises to
small shop owners, like restaurants and canteen operators and 44,259 from parking fees collected
from non-members. On July 2, 1984, the CIR issued an assessment to YMCA for deficiency taxes
which included the income from lease of YMCA’s real property. YMCA formally protested the
assessment but the CIR denied the claims of YMCA. On appeal, the CTA ruled in favor of YMCA and
excluded income from lease to small shop owners and parking fees. However, the CA reversed the
CTA but affirmed the CTA upon motion for reconsideration.
Contesting the denial of its protest, the YMCA filed a petition for review at the Court of Tax
Appeals (CTA). Dissatisfied with the CTA ruling, the CIR elevated the case to the Court of Appeals
(CA). In its Decision CA initially decided in favor of the CIR and disposed of the appeal but the same is
AFFIRMED in all other respect.
Finding merit in the Motion for Reconsideration filed by the YMCA, the CA reversed itself.
The internal revenue commissioner's own Motion for Reconsideration was denied by Respondent
Court. Hence, this petition for review under Rule 45 of the Rules of Court.

ISSUE:

Whether or not the income derived from rentals of real property owned by the Young Men's
Christian Association of the Philippines, Inc. (YMCA) — established as "a welfare, educational and
charitable non-profit corporation" — subject to income tax under the National Internal Revenue
Code (NIRC) and the Constitution?

HELD:
Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind
and character of the foregoing organizations from any of their properties, real or personal, or from
any of their activities conducted for profit, regardless of the disposition made of such income, shall
be subject to the tax imposed under this Code.
In the instant case, the exemption claimed by the YMCA is expressly disallowed by the very
wording of the last paragraph of then Section 27 of the NIRC which mandates that the income of
exempt organizations (such as the YMCA) from any of their properties, real or personal, be subject to
the tax imposed by the same Code. Because the last paragraph of said section unequivocally subjects
to tax the rent income of the YMCA from its real property, 20 the Court is duty-bound to abide
strictly by its literal meaning and to refrain from resorting to any convoluted attempt at
construction.
CIR v. St. Luke’s Medical Center
G.R. No. 195909, September 26, 2012

FACTS:
St. Luke's Medical Center, Inc. (St. Luke's) is a hospital organized as a non-stock and non-
profit corporation. BIR assessed St. Luke's deficiency taxes comprised of deficiency income tax,
value-added tax, withholding tax on compensation and expanded withholding tax.
St. Luke's filed an administrative protest with the BIR against the deficiency tax assessments.
The BIR did not act on the protest within the 180-day period under Section 228 of the NIRC. Thus, St.
Luke's appealed to the CTA.
The BIR argued before the CTA that Section 27(B) of the NIRC, which imposes a 10%
preferential tax rate on the income of proprietary non-profit hospitals, should be applicable to St.
Luke's. According to the BIR, Section 27(B), introduced in 1997, "is a new provision intended to
amend the exemption on non-profit hospitals that were previously categorized as non-stock, non-
profit corporations under Section 26 of the 1997 Tax Code x x x." It is a specific provision which
prevails over the general exemption on income tax granted under Section 30(E) and (G) for non-
stock, non-profit charitable institutions and civic organizations promoting social welfare.

ISSUE:

Whether or not St. Luke's is liable for deficiency income tax in 1998 under Section 27(B) of
the NIRC, which imposes a preferential tax rate of 10% on the income of proprietary non-profit
hospitals.

HELD:

The CTA held that Section 27(B) of the present NIRC does not apply to St. Luke's. 24 The CTA
explained that to apply the 10% preferential rate, Section 27(B) requires a hospital to be "non-
profit." On the other hand, Congress specifically used the word "non-stock" to qualify a charitable
"corporation or association" in Section 30(E) of the NIRC. According to the CTA, this is unique in the
present tax code, indicating an intent to exempt this type of charitable organization from income
tax. Section 27(B) does not require that the hospital be "non-stock." The CTA stated, "it is clear that
non-stock, non-profit hospitals operated exclusively for charitable purpose are exempt from income
tax on income received by them as such, applying the provision of Section 30(E) of the NIRC of 1997,
as amended."
The income of whatever kind and character of the foregoing organizations from any of their
properties, real or personal, or from any of their activities conducted for profit regardless of the
disposition made of such income, shall be subject to tax imposed under this Code.
There is no dispute that St. Luke's is organized as a non-stock and non-profit charitable
institution. However, this does not automatically exempt St. Luke's from paying taxes. This only
refers to the organization of St. Luke's. Even if St. Luke's meets the test of charity, a charitable
institution is not ipso facto tax exempt. To be exempt from real property taxes, Section 28(3), Article
VI of the Constitution requires that a charitable institution use the property "actually, directly and
exclusively" for charitable purposes. To be exempt from income taxes, Section 30(E) of the NIRC
requires that a charitable institution must be "organized and operated exclusively" for charitable
purposes. Likewise, to be exempt from income taxes, Section 30(G) of the NIRC requires that the
institution be "operated exclusively" for social welfare.
The Court finds that St. Luke's is a corporation that is not "operated exclusively" for
charitable or social welfare purposes insofar as its revenues from paying patients are concerned.
This ruling is based not only on a strict interpretation of a provision granting tax exemption.
 St. Luke's fails to meet the requirements under Section 30(E) and (G) of the NIRC to be
completely tax exempt from all its income. However, it remains a proprietary non-profit hospital
under Section 27(B) of the NIRC as long as it does not distribute any of its profits to its members and
such profits are reinvested pursuant to its corporate purposes. St. Luke's, as a proprietary non-profit
hospital, is entitled to the preferential tax rate of 10% on its net income from its for-profit activities.
Silkair (Singapore) v. CIR
G.R. No. 173594,February 6, 2008

FACTS:
Petitioner, Silkair (Singapore) Pte. Ltd. (Silkair), a corporation organized under the laws of
Singapore which has a Philippine representative office, is an online international air carrier. Silkair
filed with the Bureau of Internal Revenue (BIR) a written application for the refund of P4,567,450.79
excise taxes it claimed to have paid on its purchases of jet fuel from Petron Corporation from
January to June 2000.
As the BIR had not yet acted on the application as of December 26, 2001, Silkair filed a
Petition for Review2 before the CTA following Commissioner of Internal Revenue v. Victorias Milling
Co., Inc., et al.
Respondent Commissioner on Internal Revenue (CIR) opposed the petition. Second Division
of the CTA denied Silkair’s petition on the ground that as the excise tax was imposed on Petron
Corporation as the manufacturer of petroleum products, any claim for refund should be filed by the
latter; and where the burden of tax is shifted to the purchaser, the amount passed on to it is no
longer a tax but becomes an added cost of the goods purchased.
Silkair filed a Motion for Reconsideration. CTA Second Division denied Silkair’s motion for
reconsideration.

ISSUE:

Whether or not the petitioner can claim for refund or tax credit.

HELD:

The Court ruled on the negative. Silkair bases its claim for refund or tax credit on Section 135
(b) of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between the Government of
the Republic of the Philippines and the Government of the Republic of Singapore (Air Transport
Agreement between RP and Singapore).
The proper party to question, or seek a refund of, an indirect tax is the statutory taxpayer,
the person on whom the tax is imposed by law and who paid the same even if he shifts the burden
thereof to another.37 Section 130 (A) (2) of the NIRC provides that "[u]nless otherwise specifically
allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before
removal of domestic products from place of production." Thus, Petron Corporation, not Silkair, is the
statutory taxpayer which is entitled to claim a refund based on Section 135 of the NIRC of 1997 and
Article 4(2) of the Air Transport Agreement between RP and Singapore.
Even if Petron Corporation passed on to Silkair the burden of the tax, the additional amount
billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a purchaser.
The exemption granted under Section 135 (b) of the NIRC of 1997 and Article 4(2) of the Air
Transport Agreement between RP and Singapore cannot, without a clear showing of legislative
intent, be construed as including indirect taxes. Statutes granting tax exemptions must be construed
in strictissimi juris against the taxpayer and liberally in favor of the taxing authority, 43 and if an
exemption is found to exist, it must not be enlarged by construction.
Philippine Acetylene v. CIR
No. L-19707. August 17, 1967

FACTS:
The petitioner is a corporation engaged in the manufacture and sale of oxygen and
acetylene gases. During the period from June 2, 1953 to June 30, 1958, it made various sales of its
products to the National Power Corporation, an agency of the Philippine Government, and to the
Voice of America an agency of the United States Government. The sales to the NPC amounted to
P145,866.70, while those to the VOA amounted to P1,683, on account of which the respondent
Commission of Internal Revenue assessed against, and demanded from, the petitioner the payment
of P12,910.60 as deficiency sales tax and surcharge, pursuant to the National Internal Revenue Code.
The petitioner denied liability for the payment of the tax on the ground that both the NPC
and the VOA are exempt from taxation. It asked for a reconsideration of the assessment and, failing
to secure one, appealed to the Court of Tax Appeals.
The petitioner appealed to this Court.

ISSUE:
Whether or not the petitioner is not liable for the payment of tax on the sales it made to the
NPC and the VOA because both entities are exempt from taxation.

HELD:

Yes. Sales tax are paid by the manufacturer or producer who must make a true and complete
return of the amount of his, her or its gross monthly sales, receipts or earnings or gross value of
output actually removed from the factory or mill, warehouse and to pay the tax due thereon. The tax
imposed by Section 186 of the Tax Code is a tax on the manufacturer or producer and not a tax on
the purchaser except probably in a very remote and inconsequential sense. Accordingly, its levy on
the sales made to tax- exempt entities like the Napocor is permissible.

On the other hand, there is nothing in the language of the Military Bases Agreement to
warrant the general exemption granted by General Circular V-41 (1947). Thus, the expansive
construction of the tax exemption is void; and the sales to the VOA are subject to the payment of
percentage taxes under Section 186 of the Tax Code. Therefore, tax exemption is strictly construed
and exemption will not be held to conferred unless the terms under which it is granted clearly and
distinctly show that such was the intention.
PAL v. CIR
G.R. No. 198759, July 1, 2013

FACTS:

Caltex sold imported Jet A-1 fuel to PAL for the latter’s domestic operations. Consequently,
Caltex electronically filed with the Bureau of Internal Revenue (BIR) its Excise Tax Returns for
Petroleum Products.
PAL, through a letter-request dated October 15, 2004 addressed to respondent
Commissioner of Internal Revenue (CIR), sought a refund of the excise taxes passed on to it by
Caltex. It hinged its tax refund claim on its operating franchise, i.e., Presidential Decree No. 15907
issued on June 11, 1978 (PAL’s franchise), which conferred upon it certain tax exemption privileges
on its purchase and/or importation of aviation gas, fuel and oil, including those which are passed on
to it by the seller and/or importer thereof. Further, PAL asserted that it had the legal personality to
file the aforesaid tax refund claim.
CTA Second Division denied PAL’s petition on the ground that only a statutory taxpayer
(referring to Caltex in this case) may seek a refund of the excise taxes it paid. It added that even if
the tax burden was shifted to PAL, the latter cannot be deemed a statutory taxpayer.
CTA En Banc affirmed the ruling of the CTA Second Division. PAL moved for reconsideration,
but the same was denied in a Resolution, prompting it to elevate the matter to the CTA En Banc.
Aggrieved, PAL filed a motion for reconsideration which was denied. Hence,the instant
petition.

ISSUE:
Whether or not PAL has sufficiently proved its entitlement to refund.

HELD:
Yes. It is hornbook principle that the Court is not a trier of facts and often, remands cases to
the lower courts for the determination of questions of such character. However, when the trial court
had already received all the evidence of the parties, the Court may resolve the case on the merits
instead of remanding them in the interest of expediency and to better serve the ends of justice.
Applying these principles, the Court finds that the evidence on record shows that PAL was
able to sufficiently prove its entitlement to the subject tax refund.
Section 22950 of the NIRC provides that the claim for refund should be filed within two (2)
years from the date of payment of the tax.
PAL filed its administrative claim for refund on October 29, 200451 and its judicial claim with
the CTA on July 25, 2006.52 In this regard, PAL’s claims for refund were filed on time in accordance
with the 2-year prescriptive period.
Thus, finding that PAL has sufficiently proved its entitlement to a tax refund of the excise
taxes subject of this case, the Court hereby grants its petition and consequently, annuls the assailed
CTA resolutions.