COMMISSIONER OF INTERNAL REVENUE v. MICHEL J. LHUILLIER PAWNSHOP, INC. G.R. No. 150947.

July
15, 2003
FACTS:

On 1991, the CIR issued Revenue Memorandum Order (RMO) No. 15-91, which was clarified by RMO No.
43-91 imposing a 5% lending investors tax on pawnshops. It held that the principal activity of
pawnshops is lending money at interest and incidentally accepting personal property as security for the
loan. Since pawnshops are considered as lending investors effective, they also become subject to
documentary stamp taxes.

On 1997, the Bureau of Internal Revenue (BIR) issued an Assessment Notice against Lhuillier demanding
payment of deficiency percentage.

Lhuillier filed an administrative protest with the Office of the Revenue Regional Director contending that
neither the Tax Code nor the VAT Law expressly imposes 5% percentage tax on the gross income of
pawnshops; that pawnshops are different from lending investors, which are subject to the 5%
percentage tax under the specific provision of the Tax Code; that RMO No. 15-91 is not implementing
any provision of the Internal Revenue laws but is a new and additional tax measure on pawnshops,
which only Congress could enact, and that it impliedly amends the Tax Code, and that it is a class
legislation as it singles out pawnshops.
On 1998, the BIR issued Warrant of Distraint and/or Levy against Lhuilliers property for the enforcement
and payment of the assessed percentage tax.

When Lhuiller's protest was not acted upon, they elevated it to the CIR which was also not acted upon.
Lhuiller filed a Notice and Memo on Appeal with the CTA.

On 2000, the CTA held the the RMOs were void and that the Assessment Notice should be cancelled.

The CIR filed a motion for review with the CA which only affirmed the CTA's decision thus this case in
bar.
ISSUE: Whether pawnshops included in the term lending investors for the purpose of imposing the 5%
percentage tax under the NIRC.
RULING:
No.
The held that even though the RMOs No were issued in accordance with the power of the CIR, they
cannot issue administrative rulings or circulars not consistent with the law sought to be applied. It
should remain consistent with the law they intend to carry out. Only Congress can repeal or amend the
law.
In the NIRC, the term lending investor includes all persons who make a practice of lending money for
themselves or others at interest. A pawnshop, on the other hand, is defined under Section 3 of P.D. No.
114 as a person or entity engaged in the business of lending money on personal property delivered as
security for loans.
While it is true that pawnshops are engaged in the business of lending money, they are not considered
lending investors for the purpose of imposing the 5% percentage taxes citing the following reasons:
1. Pawnshops and lending investors were subjected to different tax treatments as per the NIRC.
2. Congress never intended pawnshops to be treated in the same way as lending investors.
3. Section 116 of the NIRC of 1977, as amended by E.O. No. 273, subjects to percentage tax dealers in
securities and lending investors only. There is no mention of pawnshops.

4. The BIR had ruled several times prior to the issuance of the RMOs that pawnshops were not subject to
the 5% percentage tax imposed by Section 116 of the NIRC of 1977. As Section 116 of the NIRC of 1977
was practically lifted from Section 175 of the NIRC of 1986, and there being no change in the law, the
interpretation thereof should not have been altered.

“Menbasa kat ktdin adin FFFFFACEBOOK”

COMMISSIONER OF INTERNAL REVENUE v. HON. COURT OF APPEALS, HON. COURT OF TAX APPEALS and
FORTUNE TOBACCO CORPORATION. G.R. No. 119761. August 29, 1996]
FACTS:

Fortune Tobacco Corporation is engaged in the manufacture of different brands of cigarettes.

On various dates, the Philippine Patent Office issued to the corporation separate certificates of
trademark registration over "Champion," "Hope," and "More" cigarettes.

The CIR initially classified 'Champion,' 'Hope,' and 'More' as foreign brands since they were listed in the
World Tobacco Directory as belonging to foreign companies. However, Fortune changed the names of
'Hope' to Hope Luxury' and 'More' to 'Premium More,' thereby removing the said brands from the
foreign brand category. Fortune also submitted proof the BIR that 'Champion' was an original register
and therefore a local brand. Ad Valorem taxes were imposed on these brands.

RA 7654 was passed in it was provided that 55% ad valorem tax will be imposed on local brands carrying
a foreign name. Two days before the effectivity of RA 7654, the BIR issued Revenue Memorandum
Circular No. 37-93, in which Fortune was to be imposed 55% ad valorem tax on the three brands
classifying them as local brands carrying a foreign name.

Fortune filed a petition with the CTA which was granted finding the RMC as defective. The CIR filed a
motion for reconsideration with the CTA which was denied, then to the CA, an appeal, which was also
denied.

ISSUE: Whether the RMC was valid.

RULING:
NO. The RMC was made to place the three brands as locally made cigarettes bearing foreign brands and
to thereby have them covered by RA 7654. Specifically, the new law would have its amendatory
provisions applied to locally manufactured cigarettes which at the time of its effectivity were not so
classified as bearing foreign brands. Prior to the issuance of the RMC, the brands were subjected to 45%
ad valorem tax. In so doing, the BIR not simply interpreted the law but it legislated under its quasi-
legislative authority. The due observance of the requirements of notice, of hearing, and of publication
should not have been then ignored.

The Court is convinced that the hastily promulgated RMC 37-93 has fallen short of a valid and effective
administrative issuance.

“Maawni nan koljacks”

CITY OF MANILA vs. COCA-COLA BOTTLERS PHILIPPINES, INC.- CTA, Double Taxation
FACTS:
Respondent paid the local business tax only as a manufacturers as it was expressly exempted from the
business tax under a different section and which applied to businesses subject to excise, VAT or
percentage tax under the Tax Code. The City of Manila subsequently amended the ordinance by deleting
the provision exempting businesses under the latter section if they have already paid taxes under a
different section in the ordinance. This amending ordinance was later declared by the Supreme Court
null and void. Respondent then filed a protest on the ground of double taxation. RTC decided in favor of
Respondent and the decision was received by Petitioner on April 20, 2007. On May 4, 2007, Petitioner
filed with the CTA a Motion for Extension of Time to File Petition for Review asking for a 15-day
extension or until May 20, 2007 within which to file its Petition. A second Motion for Extension was filed
on May 18, 2007, this time asking for a 10-day extension to file the Petition. Petitioner finally filed the
Petition on May 30, 2007 even if the CTA had earlier issued a resolution dismissing the case for failure to
timely file the Petition.

ISSUES:
(1) Has Petitioner’s the right to appeal with the CTA lapsed?
(2) Does the enforcement of the latter section of the tax ordinance constitute double taxation?

HELD:
(1) NO. Petitioner complied with the reglementary period for filing the petition. From April 20, 2007,
Petitioner had 30 days, or until May 20, 2007, within which to file their Petition for Review with the CTA.
The Motion for Extension filed by the petitioners on May 18, 2007, prior to the lapse of the 30-day
period on 20 May 2007, in which they prayed for another extended period of 10 days, or until 30 May
2007, to file their Petition for Review was, in reality, only the first Motion for Extension of petitioners.
Thus, when Petitioner filed their Petition via registered mail their Petition for Review on 30 May 2007,
they were able to comply with the period for filing such a petition.
(2) YES. There is indeed double taxation if respondent is subjected to the taxes under both Sections 14
and 21 of the tax ordinance since these are being imposed: (1) on the same subject matter — the
privilege of doing business in the City of Manila; (2) for the same purpose — to make persons
conducting business within the City of Manila contribute to city revenues; (3) by the same taxing
authority — petitioner City of Manila; (4) within the same taxing jurisdiction — within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods — per calendar year; and (6) of the
same kind or character — a local business tax imposed on gross sales or receipts of the business.

“Ohhhhh Colobbbbongggg”

City of Baguio vs. De Leon

CITY OF BAGUIO vs. DE LEON
25 SCRA 938
GR No. L-24756, October 31, 1968

"There is no double taxation where one tax is imposed by the state and the other is imposed by the
city."

FACTS: The City of Baguio passed an ordinance imposing a license fee on any person, entity or
corporation doing business in the City. The ordinance sourced its authority from RA No. 329, thereby
amending the city charter empowering it to fix the license fee and regulate businesses, trades and
occupations as may be established or practiced in the City. De Leon was assessed for P50 annual fee it
being shown that he was engaged in property rental and deriving income therefrom. The latter assailed
the validity of the ordinance arguing that it is ultra vires for there is no statury authority which expressly
grants the City of Baguio to levy such tax, and that there it imposed double taxation, and violates the
requirement of uniformity.

ISSUE: Are the contentions of the defendant-appellant tenable?

HELD: No. First, RA 329 was enacted amending Section 2553 of the Revised Administrative Code
empowering the City Council not only to impose a license fee but to levy a tax for purposes of revenue,
thus the ordinance cannot be considered ultra vires for there is more than ample statury authority for
the enactment thereof.
Second, an argument against double taxation may not be invoked where one tax is imposed by the
state and the other is imposed by the city, so that where, as here, Congress has clearly expressed its
intention, the statute must be sustained even though double taxation results.
And third, violation of uniformity is out of place it being widely recognized that there is nothing
inherently obnoxious in the requirement that license fees or taxes be exacted with respect to the same
occupation, calling or activity by both the state and the political subdivisions thereof.

“Yung Wipon at pototoy” Leal

ABAKADA GURO PARTY LIST (formerly AASJS)1 OFFICERS/MEMBERS SAMSON S. ALCANTARA, ED
VINCENT S. ALBANO, ROMEO R. ROBISO, RENE B. GOROSPE and EDWIN R. SANDOVAL, petitioners,
vs.
HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, HON. GUILLERMO L. PARAYNO, JR., in
his capacity as Commissioner of the Bureau of Internal Revenue, and HON. ALBERTO D. LINA, in his
Capacity as Commissioner of Bureau of Customs, respondents.

Facts:

Petitioners seeks to prevent respondents from implementing and enforcing Republic Act (RA) 9335. R.A.
9335 was enacted to optimize the revenue-generation capability and collection of the Bureau of Internal
Revenue (BIR) and the Bureau of Customs (BOC). The law intends to encourage BIR and BOC officials and
employees to exceed their revenue targets by providing a system of rewards and sanctions through the
creation of a Rewards and Incentives Fund (Fund) and a Revenue Performance Evaluation Board (Board).
It covers all officials and employees of the BIR and the BOC with at least six months of service, regardless
of employment status.

Petitioners, invoking their right as taxpayers filed this petition challenging the constitutionality of RA
9335, a tax reform legislation. They contend that, by establishing a system of rewards and incentives,
the law “transforms the officials and employees of the BIR and the BOC into mercenaries and bounty
hunters” as they will do their best only in consideration of such rewards. Thus, the system of rewards
and incentives invites corruption and undermines the constitutionally mandated duty of these officials
and employees to serve the people with utmost responsibility, integrity, loyalty and efficiency.

Petitioners also claim that limiting the scope of the system of rewards and incentives only to officials and
employees of the BIR and the BOC violates the constitutional guarantee of equal protection. There is no
valid basis for classification or distinction as to why such a system should not apply to officials and
employees of all other government agencies.

In addition, petitioners assert that the law unduly delegates the power to fix revenue targets to the
President as it lacks a sufficient standard on that matter. While Section 7(b) and (c) of RA 9335 provides
that BIR and BOC officials may be dismissed from the service if their revenue collections fall short of the
target by at least 7.5%, the law does not, however, fix the revenue targets to be achieved. Instead, the
fixing of revenue targets has been delegated to the President without sufficient standards. It will
therefore be easy for the President to fix an unrealistic and unattainable target in order to dismiss BIR or
BOC personnel.

Finally, petitioners assail the creation of a congressional oversight committee on the ground that it
violates the doctrine of separation of powers. While the legislative function is deemed accomplished and
completed upon the enactment and approval of the law, the creation of the congressional oversight
committee permits legislative participation in the implementation and enforcement of the law
Issues: Whether or not the scope of the system of rewards and incentives limitation to officials and
employees of the BIR and the BOC violates the constitutional guarantee of equal protection.
-Whether or not there was an unduly delegation of power to fix revenue targets to the President.
-Whether or not the doctrine of separation of powers has been violated in the creation of a
congressional oversight committee.

Discussions:
The Court referred to the ruling of Victoriano v. Elizalde Rope Workers’ Union, which states that “the
guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon
all citizens of the State.
The equal protection of the laws clause of the Constitution allows classification. Classification in law, as
in the other departments of knowledge or practice, is the grouping of things in speculation or practice
because they agree with one another in certain particulars. A law is not invalid because of simple
inequality. The very idea of classification is that of inequality, so that it goes without saying that the
mere fact of inequality in no manner determines the matter of constitutionality.

The Court has held that the standard is satisfied if the classification or distinction is based on a
reasonable foundation or rational basis and is not palpably arbitrary. “

To determine the validity of delegation of legislative power, it needs the following: (1) the completeness
test and (2) the sufficient standard test. A law is complete when it sets forth therein the policy to be
executed, carried out or implemented by the delegate. It lays down a sufficient standard when it
provides adequate guidelines or limitations in the law to map out the boundaries of the delegate’s
authority and prevent the delegation from running riot. To be sufficient, the standard must specify the
limits of the delegate’s authority announce the legislative policy and identify the conditions under which
it is to be implemented. Based from the ruling under Macalintal v. Commission on Elections, it is clear
that congressional oversight is not unconstitutional per se, meaning, it neither necessarily constitutes an
encroachment on the executive power to implement laws nor undermines the constitutional separation
of powers. Rather, it is integral to the checks and balances inherent in a democratic system of
government. It may in fact even enhance the separation of powers as it prevents the over-accumulation
of power in the executive branch.

Rulings:
The equal protection clause recognizes a valid classification, that is, a classification that has a reasonable
foundation or rational basis and not arbitrary.22 With respect to RA 9335, its expressed public policy is
the optimization of the revenue-generation capability and collection of the BIR and the BOC.23 Since the
subject of the law is the revenue- generation capability and collection of the BIR and the BOC, the
incentives and/or sanctions provided in the law should logically pertain to the said agencies. Moreover,
the law concerns only the BIR and the BOC because they have the common distinct primary function of
generating revenues for the national government through the collection of taxes, customs duties, fees
and charges.
Both the BIR and the BOC principally perform the special function of being the instrumentalities through
which the State exercises one of its great inherent functions – taxation. Indubitably, such substantial
distinction is germane and intimately related to the purpose of the law. Hence, the classification and
treatment accorded to the BIR and the BOC under R.A. 9335 fully satisfy the demands of equal
protection.

R.A. 9335 adequately states the policy and standards to guide the President in fixing revenue targets and
the implementing agencies in carrying out the provisions of the law under Sec 2 and 4 of the said Act.
Moreover, the Court has recognized the following as sufficient standards: “public interest,” “justice and
equity,” “public convenience and welfare” and “simplicity, economy and welfare.”33 In this case, the
declared policy of optimization of the revenue-generation capability and collection of the BIR and the
BOC is infused with public interest.
The court declined jurisdiction on this case. The Joint Congressional Oversight Committee in RA 9335
was created for the purpose of approving the implementing rules and regulations (IRR) formulated by
the DOF, DBM, NEDA, BIR, BOC and CSC. On May 22, 2006, it approved the said IRR. From then on, it
became functus officio and ceased to exist. Hence, the issue of its alleged encroachment on the
executive function of implementing and enforcing the law may be considered moot and academic.

“If there is something strange in your neighborhood whom yah gonna call? MARO GANGA!!!

ASSOCIATION OF CUSTOM BROKERS, INC. vs. MUNICIPAL BOARDG.R. No. L-4376 May 22, 1953

FACTS: The Association of Customs Brokers, Inc., which is composed of all brokers and public service
operators of motor vehicles in the City of Manila challenge the validity Ordinance No. 3379 on the
ground that (1) while it levies a so-called property tax it is in reality a license tax which is beyond the
power of the Municipal Board of the City of Manila; (2) said ordinance offends against the rule of
uniformity of taxation; and (3) it constitutes double taxation.
The respondents contend on their part that the challenged ordinance imposes a property tax which is
within the power of the City of Manila to impose under its Revised Charter [Section 18 (p) of Republic
Act No. 409], and that the tax in question does not violate the rule of uniformity of taxation, nor does it
constitute double taxation.

ISSUE: Whether or not the ordinance is null and void

RULING: The ordinance infringes the rule of the uniformity of taxation ordained by our Constitution.
Note that the ordinance exacts the tax upon all motor vehicles operating within the City of Manila. It
does not distinguish between a motor vehicle for hire and one which is purely for private use. Neither
does it distinguish between a motor vehicle registered in the City of Manila nor one registered in
another place but occasionally comes to Manila and uses its streets and public highways. This is an
inequality which we find in the ordinance, and which renders it offensive to the Constitution.
Shell Company vs E.E. Vaño
In 1946, the municipal council of Cordova, Cebu issued an ordinance which imposed, among others, an
annual tax of P150.00 upon the occupation or the exercise of the privilege of an “installation manager”.

Shell Company assailed the validity of the said ordinance on the ground that it violates the equal
protection clause. It appears that only Shell had, at that time, an installation manager. In short, there is
only one installation manager in Cordova, Cebu. So Shell felt like the tax ordinance was merely targeting
Shell. Shell now wants the Treasurer of Cordova, E.E. Vaño to be enjoined from implementing the law.

ISSUE: Whether or not the tax ordinance is not valid for being violative of the equal protection clause.

HELD: No. The fact that there is no other person or company with a position for an installation manager
does not make the ordinance discriminatory. The law is and will be applicable to any person or firm who
exercises such calling or occupation named or designated as “installation manager”. In short, the law is
applicable to present and future conditions.

Note again the requisites for a valid classification (not mentioned in this particular case but mentioned
in other relevant cases):

1. must rest on substantial distinctions;

2. must be germane to the purposes of the law;
3. must not be limited to existing conditions only; and
4. must apply equally to all members of the same class.

CHAMBER OF REAL ESTATE AND BUILDERS’ ASSOCIATION, INC. vs. EXECUTIVE SECRETARY- Minimum
Corporate Income Tax

FACTS:
CREBA assails the imposition of the minimum corporate income tax (MCIT) as being violative of the due
process clause as it levies income tax even if there is no realized gain. They also question the creditable
withholding tax (CWT) on sales of real properties classified as ordinary assets stating that (1) they ignore
the different treatment of ordinary assets and capital assets; (2) the use of gross selling price or fair
market value as basis for the CWT and the collection of tax on a per transaction basis (and not on the
net income at the end of the year) are inconsistent with the tax on ordinary real properties; (3) the
government collects income tax even when the net income has not yet been determined; and (4) the
CWT is being levied upon real estate enterprises but not on other enterprises, more particularly those in
the manufacturing sector.

ISSUE:
Are the impositions of the MCIT on domestic corporations and CWT on income from sales of real
properties classified as ordinary assets unconstitutional.
HELD:
NO. MCIT does not tax capital but only taxes income as shown by the fact that the MCIT is arrived at by
deducting the capital spent by a corporation in the sale of its goods, i.e., the cost of goods and other
direct expenses from gross sales. Besides, there are sufficient safeguards that exist for the MCIT: (1) it is
only imposed on the 4th year of operations; (2) the law allows the carry forward of any excess MCIT paid
over the normal income tax; and (3) the Secretary of Finance can suspend the imposition of MCIT in
justifiable instances.

The regulations on CWT did not shift the tax base of a real estate business’ income tax from net income
to GSP or FMV of the property sold since the taxes withheld are in the nature of advance tax payments
and they are thus just installments on the annual tax which may be due at the end of the taxable year.
As such the tax base for the sale of real property classified as ordinary assets remains to be the net
taxable income and the use of the GSP or FMV is because these are the only factors reasonably known
to the buyer in connection with the performance of the duties as a withholding agent.
Neither is there violation of equal protection even if the CWT is levied only on the real industry as the
real estate industry is, by itself, a class on its own and can be validly treated different from other
businesses.

“DACAWI IS GOD”

COMMISSIONER OF CUSTOMS AND THE DISTRICT COLLECTOR OF THE PORT OF SUBIC, PETITIONERS, VS.
HYPERMIX FEEDS CORPORATION, RESPONDENT.
Facts:

On 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003. Under the
Memorandum, for tariff purposes, wheat was classified according to the following: (1) importer or
consignee; (2) country of origin; and (3) port of discharge.[5] The... regulation provided an exclusive list
of corporations, ports of discharge, commodity descriptions and countries of origin. Depending on these
factors, wheat would be classified either as food grade or feed grade. The corresponding tariff for food
grade wheat was 3%, for feed... grade, 7%.

CMO 27-2003 further provided for the proper procedure for protest or Valuation and Classification
Review Committee (VCRC) cases. Under this procedure, the release of the articles that were the subject
of protest required the importer to post a cash bond to cover the tariff... differential.[6]

A month after the issuance of CMO 27-2003, on 19 December 2003, respondent filed a Petition for
Declaratory Relief[7] with the Regional Trial Court (RTC) of Las Piñas City. It anticipated the
implementation of the regulation on its imported and perishable
Chinese milling wheat in transit from China.[8] Respondent contended that CMO 27-2003 was issued
without following the mandate of the Revised Administrative Code on public participation, prior notice,
and publication or registration with the University of... the Philippines Law Center.

Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without
the benefit of prior assessment and examination; thus, despite having imported food grade wheat, it
would be subjected to the 7% tariff upon the arrival of the shipment, forcing... them to pay 133% more
than was proper.

Furthermore, respondent claimed that the equal protection clause of the Constitution was violated
when the regulation treated non-flour millers differently from flour millers for no reason at all.

Lastly, respondent asserted that the retroactive application of the regulation was confiscatory in nature.

Issues: discuss the propriety of an action for declaratory relief.

Ruling:
The requirements of an action for declaratory relief are as follows: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and

(4) the issue involved must be ripe for judicial determination.[15] We find that the Petition filed by
respondent before the lower court meets these requirements.

First, the subject of the controversy is the constitutionality of CMO 27-2003 issued by petitioner
Commissioner of Customs.

Second, the controversy is between two parties that have adverse interests. Petitioners are summarily
imposing a tariff rate that respondent is refusing to pay.

Third, it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-
2003. Respondent has adequately shown that, as a regular importer of wheat, on 14 August 2003, it has
actually made shipments of wheat from China to Subic.

Finally, the issue raised by respondent is ripe for judicial determination, because litigation is
inevitable[19] for the simple and uncontroverted reason that respondent is not included in the
enumeration of flour millers classified as food grade wheat... importers. Thus, as the trial court stated, it
would have to file a protest case each time it imports food grade wheat and be subjected to the 7%
tariff.
It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of
the case.

When an administrative rule is merely interpretative in nature, its applicability needs nothing further
than its bare issuance, for it gives no real consequence more than what the law itself has already
prescribed. When, on the other hand, the administrative rule goes beyond... merely providing for the
means that can facilitate or render least cumbersome the implementation of the law but substantially
increases the burden of those governed, it behooves the agency to accord at least to those directly
affected a chance to be heard, and thereafter to be... duly informed, before that new issuance is given
the force and effect of law.

Because petitioners failed to follow the requirements enumerated by the Revised Administrative Code,
the assailed regulation must be struck down.

Going now to the content of CMO 27-3003, we likewise hold that it is unconstitutional for being violative
of the equal protection clause of the Constitution.

The equal protection clause means that no person or class of persons shall be deprived of the same
protection of laws enjoyed by other persons or other classes in the same place in like circumstances.
Thus, the guarantee of the equal protection of laws is not violated if there... is a reasonable
classification. For a classification to be reasonable, it must be shown that (1) it rests on substantial
distinctions; (2) it is germane to the purpose of the law; (3) it is not limited to existing conditions only;
and (4) it applies equally to all members... of the same class.

Unfortunately, CMO 27-2003 does not meet these requirements. We do not see how the quality of
wheat is affected by who imports it, where it is discharged, or which country it came from.

The regulation, therefore, does not become disadvantageous to respondent only, but even to the state.

It is also not clear how the regulation intends to "monitor more closely wheat importations and thus
prevent their misclassification."

Petitioner Commissioner of Customs also went beyond his powers when the regulation limited the
customs officer's duties mandated by Section 1403 of the Tariff and Customs Law, as amended.

The provision mandates that the customs officer must first assess and determine the classification of the
imported article before tariff may be imposed. Unfortunately, CMO 23-2007 has already classified the
article even before the customs officer had the chance to examine it. In... effect, petitioner
Commissioner of Customs diminished the powers granted by the Tariff and Customs Code with regard to
wheat importation when it no longer required the customs officer's prior examination and assessment
of the proper classification of the wheat.
It is well-settled that rules and regulations, which are the product of a delegated power to create new
and additional legal provisions that have the effect of law, should be within the scope of the statutory
authority granted by the legislature to the administrative agency. It... is required that the regulation be
germane to the objects and purposes of the law; and that it be not in contradiction to, but in conformity
with, the standards prescribed by law.

In summary, petitioners violated respondent's right to due process in the issuance of CMO 27-2003
when they failed to observe the requirements under the Revised Administrative Code. Petitioners
likewise violated respondent's right to equal protection of laws when they provided... for an
unreasonable classification in the application of the regulation. Finally, petitioner Commissioner of
Customs went beyond his powers of delegated authority when the regulation limited the powers of the
customs officer to examine and assess imported articles.

SANTOS VS PEOPLE OF THE PHILIPPINES and BUREAU OF INTERNAL REVENUE

G.R. No. 173176
JUDY ANNE L. SANTOS, Petitioner,
Vs.
PEOPLE OF THE PHILIPPINESand BUREAU OF INTERNAL REVENUE, Respondents

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court filed
by petitioner Judy Anne L. Santos (Santos) seeking the reversal and setting aside of the Resolution, dated
19 June 2006, of the Court of Tax Appeals (CTA) en banc in C.T.A. EB. CRIM. No. 001 which denied
petitioner’s Motion for Extension of Time to File Petition for Review. Petitioner intended to file the
Petition for Review with the CTA en banc to appeal the Resolutions dated 23 February 2006 and 11 May
2006 of the CTA First Division in C.T.A. Crim. Case No. 0-012 denying, respectively, her Motion to Quash
the Information filed against her for violation of Section 255, in relation to Sections 254 and 248(B) of
the National Internal Revenue Code (NIRC), as amended; and her Motion for Reconsideration.

On 19 May 2005, then Bureau of Internal Revenue (BIR) Commissioner Guillermo L. Parayno, Jr. wrote to
the Department of Justice (DOJ) Secretary Raul M. Gonzales a letter regarding the possible filing of
criminal charges against petitioner. BIR Commissioner Parayno began his letter with the following
statement:

I have the honor to refer to you for preliminary investigation and filing of an information in court if
evidence so warrants, the herein attached Joint Affidavit of RODERICK C. ABAD, STIMSON P. CUREG,
VILMA V. CARONAN, RHODORA L. DELOS REYES under Group Supervisor TEODORA V. PURINO, of the
National Investigation Division, BIR National Office Building, BIR Road, Diliman, Quezon City,
recommending the criminal prosecution of MS. JUDY ANNE LUMAGUI SANTOS for substantial under
declaration of income, which constitutes as prima facie evidence of false or fraudulent return under
Section 248(B) of the NIRC and punishable under Sections 254 and 255 of the Tax Code.
In said letter, BIR Commissioner Parayno summarized the findings of the investigating BIR officers that
petitioner, in her Annual Income Tax Return for taxable year 2002 filed with the BIR, declared an income
of P8,033,332.70 derived from her talent fees solely from ABS-CBN; initial documents gathered from
the BIR offices and those given by petitioner’s accountant and third parties, however, confirmed that
petitioner received in 2002 income in the amount of at least P14,796,234.70, not only from ABS-CBN,
but also from other sources, such as movies and product endorsements; the estimated tax liability
arising from petitioner’s under declaration amounted to P1,718,925.52, including incremental penalties;
the non-declaration by petitioner of an amount equivalent to at least 84.18% of the income declared in
her return was considered a substantial under declaration of income, which constituted prima facie
evidence of false or fraudulent return under Section 248(B) of the NIRC, as amended; and petitioner’s
failure to account as part of her income the professional fees she received from sources other than ABS-
CBN and her under declaration of the income she received from ABS-CBN amounted to manifest
violations of Sections 254 and 255, as well as Section 248(B) of the NIRC, as amended.

As regards petitioner’s second ground in her intended Petition for Review with the CTA en banc, she
asserts that she has been denied due process and equal protection of the laws when similar charges for
violation of the NIRC, as amended, against Regina Encarnacion A. Velasquez (Velasquez) were dismissed
by the DOJ in its Resolution dated 10 August 2005 in I.S. No. 2005-330 for the reason that Velasquez’s
tax liability was not yet fully determined when the charges were filed.

Issue: WON petitioner was denied of equal protection of law.

Held:

Petitioner cannot claim denial of due process when she was given the opportunity to file her affidavits
and other pleadings and submit evidence before the DOJ during the preliminary investigation of her case
and before the Information was filed against her. Due process is merely an opportunity to be heard. In
addition, preliminary investigation conducted by the DOJ is merely inquisitorial. It is not a trial of the
case on the merits. Its sole purpose is to determine whether a crime has been committed and whether
the respondent therein is probably guilty of the crime. It is not the occasion for the full and exhaustive
display of the parties’ evidence. Hence, if the investigating prosecutor is already satisfied that he can
reasonably determine the existence of probable cause based on the parties’ evidence thus presented,
he may terminate the proceedings and resolve the case.

The equal protection clause exists to prevent undue favor or privilege. It is intended to eliminate
discrimination and oppression based on inequality. Recognizing the existence of real differences among
men, the equal protection clause does not demand absolute equality. It merely requires that all persons
shall be treated alike, under like circumstances and conditions, both as to the privileges conferred and
liabilities enforced.

Petitioner was not able to duly establish to the satisfaction of this Court that she and Velasquez were
indeed similarly situated, i.e., that they committed identical acts for which they were charged with the
violation of the same provisions of the NIRC; and that they presented similar arguments and evidence in
their defense - yet, they were treated differently.

“I BELIEVE”- Jason Dingcog

AMERICAN BIBLE SOCIETY vs CITY OF MANILA

Facts: American Bible Society is a foreign, non-stock, non-profit, religious, missionary corporation duly
registered and doing business in the Philippines. In the course of its ministry, plaintiff’s Philippine agency
has been distributing and selling bibles and/or gospel portions thereof. The acting City Treasurer of the
City of Manila informed plaintiff that it was conducting the business of general merchandise without
providing itself with the necessary Mayor’s permit and municipal license, in violation of Ordinance No.
3000 (permit) and Ordinances Nos. 2529 (payment of fees) and required plaintiff to secure the
corresponding permit and license fees.

Issue: Whether or not the selling of bible by the Society should be taxed?

Decision: Decision reversed. Ordinance 2529 restrains the free exercise and enjoyment of religious
profession and worship. The constitutional guaranty of the free exercise and enjoyment of religious
profession and worship carries with it the right to disseminate religious information. Any restraints of
such right can only be justified like other restraints of freedom of expression on the grounds that there
is a clear and present danger of any substantive evil which the State has the right to prevent.

Ordinance 3000 – It may be true that in the case at bar the price asked for the bibles and other religious
pamphlets was in some instances a little bit higher than the actual cost of the same but this cannot
mean that appellant was engaged in the business or occupation of selling said “merchandise” for profit.
For this reason We believe that the provisions of City of Manila Ordinance No. 2529, as amended,
cannot be applied to appellant, for in doing so it would impair its free exercise and enjoyment of its
religious profession and worship as well as its rights of dissemination of religious beliefs.

ANGELES UNIVERSITY vs. CITY OF ANGELES. JULIET G. QUINSAATG.R. No. 189999, June 27, 2012
Facts:
Angeles University was converted into a non-stock, non-profit education foundation under the
provisions of Republic Act (R.A.) No. 6055. 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 the said office issue a Building permit fee and Locational
Clearance Fee. Petitioner made a letter to respondent to City Treasurer t and City Building Official,
alleging that it is exempted from payment of the building permit and locational clearance fee. Petitioner
also reminded the respondent that they have previously issued building permit acknowledging such
exemption from payment of building permit fees. The DOJ and trial court render decision in favor to
petitioner for exempting in payment. But the CA reversed the decision of court in favor to respondent.
Petitioner filed a MR but it was denied by CA.
Issue:
WON the Angeles University is exempted in Building permit fee and Locational Clearance Fee

Ruling: No. Under R.A. No. 6055, petitioner was granted exemption only from income tax derived from
its educational activities and real property used exclusively for educational purposes. Regardless of the
repealing clause in the National Building Code, the CA held that petitioner is still not exempt because a
building permit cannot be considered as the other “charges” mentioned in Sec. 8 of R.A. No. 6055 which
refers to impositions in the nature of tax, import duties, assessments and other collections for revenue
purposes, following the ejusdem generis rule. The CA further stated that petitioner has not shown that
the fees collected were excessive and more than the cost of surveillance, inspection and regulation. And
while petitioner may be exempt from the payment of real property tax, petitioner in this case merely
alleged that “the subject property is to be used actually, directly and exclusively for educational
purposes,” declaring merely that such premises is intended to house the sports and other facilities of
the university but by reason of the occupancy of informal settlers on the area, it cannot yet utilize the
same for its intended use. Thus, the CA concluded that petitioner is not entitled to the refund of building
permit and related fees, as well as real property tax it paid under protest. 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 on all income derived from or property, real or personal, used exclusively for the
educational activities of the Foundation. (Emphasis supplied.)
A “charge” is broadly defined as the “price of, or rate for, something,” while the word “fee” pertains
to a “charge fixed by law for services of public officers or for use of a privilege under control of
government.”
As used in the Local Government Code of 1991 (R.A. No. 7160), charges refers to pecuniary liability, as
rents or fees against persons or property, while fee means a charge fixed by law or ordinance for the
regulation or inspection of a business or activity.

“ROCKY <3 VannY,Ruthy,charity from Monro BAR”

LUNG CENTER OF THE PHILIPPINES VS QUEZON CITY
Posted by kaye lee on 5:15 PM
G.R. No. 144104, June 29, 2004 [Constitutional Law - Article VI: Legislative Department; Taxation ]

FACTS:
Petitioner is a non-stock, non-profit entity established by virtue of PD No. 1823, seeks exemption from
real property taxes when the City Assessor issued Tax Declarations for the land and the hospital building.
Petitioner predicted on its claim that it is a charitable institution. The request was denied, and a petition
hereafter filed before the Local Board of Assessment Appeals of Quezon City (QC-LBAA) for reversal of
the resolution of the City Assessor. Petitioner alleged that as a charitable institution, is exempted from
real property taxes under Sec 28(3) Art VI of the Constitution. QC-LBAA dismissed the petition and the
decision was likewise affirmed on appeal by the Central Board of Assessment Appeals of Quezon City.
The Court of Appeals affirmed the judgment of the CBAA.

ISSUE:
1. Whether or not petitioner is a charitable institution within the context of PD 1823 and the 1973 and
1987 Constitution and Section 234(b) of RA 7160.

2. Whether or not petitioner is exempted from real property taxes.

RULING:
1. Yes. The Court hold that the petitioner is a charitable institution within the context of the 1973 and
1987 Constitution. Under PD 1823, the petitioner is a non-profit and non-stock corporation which,
subject to the provisions of the decree, is to be administered by the Office of the President with the
Ministry of Health and the Ministry of Human Settlements. The purpose for which it was created was to
render medical services to the public in general including those who are poor and also the rich, and
become a subject of charity. Under PD 1823, petitioner is entitled to receive donations, even if the gift
or donation is in the form of subsidies granted by the government.

2. Partly No. Under PD 1823, the lung center does not enjoy any property tax exemption privileges for its
real properties as well as the building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of the Constitution of the property taxes only. This
provision was implanted by Sec.243 (b) of RA 7160.which provides that in order to be entitled to the
exemption, the lung center must be able to prove that: it is a charitable institution and; its real
properties are actually, directly and exclusively used for charitable purpose. Accordingly, the portions
occupied by the hospital used for its patients are exempt from real property taxes while those leased to
private entities are not exempt from such taxes.

“Charyl Colobong Mangiwet”

Abra Valley College vs Aquino (G.R. No. L-39086)

FACTS: Petitioner, an educational corporation and institution of higher learning duly incorporated with
the Securities and Exchange Commission in 1948, filed a complaint to annul and declare void the “Notice
of Seizure’ and the “Notice of Sale” of its lot and building located at Bangued, Abra, for non-payment of
real estate taxes and penalties amounting to P5,140.31. Said “Notice of Seizure” by respondents
Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the
said taxes thereon.

The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned
decision. The trial court ruled for the government, holding that the second floor of the building is being
used by the director for residential purposes and that the ground floor used and rented by Northern
Marketing Corporation, a commercial establishment, and thus the property is not being used exclusively
for educational purposes. Instead of perfecting an appeal, petitioner availed of the instant petition for
review on certiorari with prayer for preliminary injunction before the Supreme Court, by filing said
petition on 17 August 1974.

ISSUE: Whether or not the lot and building are used exclusively for educational purposes.

HELD: Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, expressly grants
exemption from realty taxes for cemeteries, churches and parsonages or convents appurtenant thereto,
and all lands, buildings, and improvements used exclusively for religious, charitable or educational
purposes. Reasonable emphasis has always been made that the exemption extends to facilities which
are incidental to and reasonably necessary for the accomplishment of the main purposes. The use of the
school building or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. In
the case at bar, the lease of the first floor of the building to the Northern Marketing Corporation cannot
by any stretch of the imagination be considered incidental to the purpose of education. The test of
exemption from taxation is the use of the property for purposes mentioned in the Constitution.

The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the assessed
tax be returned to the petitioner. The modification is derived from the fact that the ground floor is being
used for commercial purposes (leased) and the second floor being used as incidental to education
(residence of the director).

“Adi kuma mendumdumog si Mario, he might stab himself”

Sison vs Ancheta
GR No. L-59431, 25 July 1984

Facts: Section 1 of BP Blg 135 amended the Tax Code and petitioner Antero M. Sison, as taxpayer,
alleges that "he would be unduly discriminated against by the imposition of higher rates of tax upon his
income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income
or salaried individual taxpayers. He characterizes said provision as arbitrary amounting to class
legislation, oppressive and capricious in character. It therefore violates both the equal protection and
due process clauses of the Constitution as well asof the rule requiring uniformity in taxation.

Issue: Whether or not the assailed provision violates the equal protection and due process clauses of the
Constitution while also violating the rule that taxes must be uniform and equitable.

Held: The petition is without merit.

On due process - it is undoubted that it may be invoked where a taxing statute is so arbitrary that it finds
no support in the Constitution. An obvious example is where it can be shown to amount to the
confiscation of property from abuse of power. Petitioner alleges arbitrariness but his mere allegation
does not suffice and there must be a factual foundation of such unconsitutional taint.
On equal protection - it suffices that the laws operate equally and uniformly on all persons under similar
circumstances, both in the privileges conferred and the liabilities imposed.
On the matter that the rule of taxation shall be uniform and equitable - this requirement is met when
the tax operates with the same force and effect in every place where the subject may be found." Also,
:the rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly
unattainable." When the problem of classification became of issue, the Court said: "Equality and
uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed
the same rate. The taxing power has the authority to make reasonable and natural classifications for
purposes of taxation..." As provided by this Court, where "the differentation" complained of "conforms
to the practical dictates of justice and equity" it "is not discriminatory within the meaning of this clause
and is therefore uniform."

“amok crush mo metlang ni Shirley”

Ormoc Sugar Company Inc. vs Ormoc City et al
“Equal Protection”

In 1964, Ormoc City passed a bill which read: “There shall be paid to the City Treasurer on any and all
productions of centrifugal sugar milled at the Ormoc Sugar Company Incorporated, in Ormoc City a
municipal tax equivalent to one per centum (1%) per export sale to the United States of America and
other foreign countries.” Though referred to as a “production tax”, the imposition actually amounts to a
tax on the export of centrifugal sugar produced at Ormoc Sugar Company, Inc. For production of sugar
alone is not taxable; the only time the tax applies is when the sugar produced is exported. Ormoc Sugar
paid the tax (P7,087.50) in protest averring that the same is violative of Sec 2287 of the Revised
Administrative Code which provides: “It shall not be in the power of the municipal council to impose a
tax in any form whatever, upon goods and merchandise carried into the municipality, or out of the
same, and any attempt to impose an import or export tax upon such goods in the guise of an
unreasonable charge for wharfage, use of bridges or otherwise, shall be void.” And that the ordinance is
violative to equal protection as it singled out Ormoc Sugar As being liable for such tax impost for no
other sugar mill is found in the city.

ISSUE: Whether or not there has been a violation of equal protection.

HELD: The SC held in favor of Ormoc Sugar. The SC noted that even if Sec 2287 of the RAC had already
been repealed by a latter statute (Sec 2 RA 2264) which effectively authorized LGUs to tax goods and
merchandise carried in and out of their turf, the act of Ormoc City is still violative of equal protection.
The ordinance is discriminatory for it taxes only centrifugal sugar produced and exported by the Ormoc
Sugar Company, Inc. and none other. At the time of the taxing ordinance’s enactment, Ormoc Sugar
Company, Inc., it is true, was the only sugar central in the city of Ormoc. Still, the classification, to be
reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not
be singular and exclusive as to exclude any subsequently established sugar central, of the same class as
plaintiff, from the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be
subject to the tax because the ordinance expressly points only to Ormoc Sugar Company, Inc. as the
entity to be levied upon.
Villegas vs Hiu Chiong Tsai Pao Ho (1978)
Facts: The Municipal Board of Manila enacted Ordinance 6537 requiring aliens (except those employed
in the diplomatic and consular missions of foreign countries, in technical assistance programs of the
government and another country, and members of religious orders or congregations) to procure the
requisite mayor’s permit so as to be employed or engage in trade in the City of Manila. The permit fee is
P50, and the penalty for the violation of the ordinance is 3 to 6 months imprisonment or a fine of P100
to P200, or both.

Issue: Whether the ordinance imposes a regulatory fee or a tax.

Held: The ordinance’s purpose is clearly to raise money under the guise of regulation by exacting P50
from aliens who have been cleared for employment. The amount is unreasonable and excessive because
it fails to consider difference in situation among aliens required to pay it, i.e. being casual, permanent,
part-time, rank-and-file or executive.

[ The Ordinance was declared invalid as it is arbitrary, oppressive and unreasonable, being applied only
to aliens who are thus deprived of their rights to life, liberty and property and therefore violates the due
process and equal protection clauses of the Constitution. Further, the ordinance does not lay down any
criterion or standard to guide the Mayor in the exercise of his discretion, thus conferring upon the
mayor arbitrary and unrestricted powers. ]

TOLENTINO VS Sec.of Finance

235 SCRA 630 (1994) – 249 SCRA 635 (1995) – Political Law – Origination of Revenue Bills – EVAT –
Amendment by Substitution

Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the
Expanded Value Added Tax (EVAT) Law. Tolentino averred that this revenue bill did not exclusively
originate from the House of Representatives as required by Section 24, Article 6 of the Constitution.
Even though RA 7716 originated as HB 11197 and that it passed the 3 readings in the HoR, the same did
not complete the 3 readings in Senate for after the 1st reading it was referred to the Senate Ways &
Means Committee thereafter Senate passed its own version known as Senate Bill 1630. Tolentino
averred that what Senate could have done is amend HB 11197 by striking out its text and substituting it
with the text of SB 1630 in that way “the bill remains a House Bill and the Senate version just becomes
the text (only the text) of the HB”. (It’s ironic however to note that Tolentino and co-petitioner Raul
Roco even signed the said Senate Bill.)

ISSUE: Whether or not the EVAT law is procedurally infirm.

HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was
consistent with the power of the Senate to propose or concur with amendments to the version
originated in the HoR. What the Constitution simply means, according to the 9 justices, is that the
initiative must come from the HoR. Note also that there were several instances before where Senate
passed its own version rather than having the HoR version as far as revenue and other such bills are
concerned. This practice of amendment by substitution has always been accepted. The proposition of
Tolentino concerns a mere matter of form. There is no showing that it would make a significant
difference if Senate were to adopt his over what has been done.