Lung Center of the Philippines vs. Quezon City [GR No.

144104 June 29, 2004]

Facts: Lung Center of the Philippines is a non-stock and non-profit entity established by virtue of PD
No. 1823. It is the registered owner of the land on which the Lung Center of the Philippines Hospital is
erected. A big space in the ground floor of the hospital 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. Also, a big portion on the right side of the hospital is being leased for commercial purposes to a
private enterprise known as the Elliptical Orchids and Garden Center.
When the City Assessor of Quezon City assessed both its land and hospital building for
real property taxes, the Lung Center of the Philippines filed a claim for exemption on its averment that
it is a charitable institution with a minimum of 60% of its hospital beds exclusively used for charity
patients and that the major thrust of itshospital operation is to serve charity patients. The claim for
exemption was denied, prompting a petition for the reversal of the resolution of the City Assessor
with the Local Board of Assessment Appeals of Quezon City, which denied the same. On appeal, the
Central Board of Assessment Appeals of Quezon City affirmed the local boards decision, finding that
Lung Center of the Philippines is not a charitable institution and that its properties were not actually,
directly and exclusively used for charitable purposes. Hence, the present petition for review with
averments that the Lung Center ofthe Philippines is a charitable institution under Section 28(3), Article
VI of the Constitution, notwithstanding that it accepts paying patients and rents out portions of
the hospital building to private individuals and enterprises.
Issue: Is the Lung Center of the Philippines a charitable
the Constitution, and therefore, exempt from real property tax?

institution

within

the

context

of

Held: The Lung Center of the Philippines is a charitable institution. To determine whether an enterprise
is a charitable institution 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, that character of the services rendered, the indefiniteness of the
beneficiaries and the use and occupation of the properties.
However, under the Constitution, in order to be entitled to exemption from real property tax, there
must be clear and unequivocal proof that (1) it is a charitable institution and (2)its real properties are
ACTUALLY, DIRECTLY and EXCLUSIVELY used for charitable purposes. While portions of the hospital are
used for 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 and enterprises.
Exclusive is defined as possessed and enjoyed to the exclusion of others, debarred from participation
or enjoyment. If real property is used for one or more commercial purposes, it is not exclusively used
for the exempted purposes but is subject to taxation.
Manila International Airport Authority vs CA GR No. 155650, July 20, 2006, 495 SCRA 591
Facts:
Manila International Airport Authority (MIAA) is the operator of the Ninoy International Airport located
at Paranaque City. The Offi cers of Paranaque City sent notices to MIAA due to real estate tax
delinquency. MIAA then settled some of the amount. When MIAA failed to settle the entire amount, the
offi cers of Paranaque city threatened to levy and subject to auction the land and buildings
of MIAA, which they did. MIAA sought for a Temporary Restraining Order from the CA but failed to do
so within the 60 days reglementary period, so the petition was dismissed. MIAA then sought for the
TRO with theSupreme Court a day before the public auction, MIAA was granted with the TRO but
unfortunately theTRO was received by the Paranaque City officers 3 hours after the public auction.
MIAA claims that although the charter provides that the title of the land and building are with MIAA
still the ownership is with the Republic of the Philippines. MIAA also contends that it is an

instrumentality of the government and as such exempted from real estate tax. That the land and
buildings of MIAA are of public dominion therefore cannot be subjected to levy and auction
sale. On the other hand, the officers of Paranaque City claim that MIAA is a government owned and
controlled corporation therefore not exempted to real estate tax.
Issues:
Whether or not MIAA is an instrumentality of the government and not a government owned and
controlled corporation and as such exempted from tax.
Whether or not the land and buildings of MIAA are part of the public dominion and thus cannot be the
subject of levy and auction sale.
Ruling:
Under the Local
government code, government owned and controlled corporations are notexempted
from
real estate tax. MIAA is not a government owned and controlled corporation, for to become
one MIAA should either be a stock or non stock corporation. MIAA is not a stock corporation for its
capital is not divided into shares. It is not a non stock corporation since it has no members. MIAA is an
instrumentality of the government vested with corporate powers and government functions. Under the
civil code, property may either be under public dominion or private ownership. Those under public
dominion are owned by the State and are utilized for public use, public service and for the
development of national wealth. The ports included in the public dominion pertain either to seaports
or airports.
When properties under public dominion cease to be for public use and service, they form part
of the patrimonial property of the State. The court held that the land and buildings of MIAA are part of
the public dominion. Since the airport is devoted for public use, for the domestic and international
travel and transportation. Even if MIAA charge fees, this is for support of its operation and
for regulation and does not change the character of the land and buildings of MIAA as part of the public
dominion. As part of the public dominion the land and buildings of MIAA are outside the commerce of
man. To subject them to levy and public auction is contrary to public policy. Unless the President issues
a proclamation withdrawing the airport land and buildings from public use, these properties remain to
be of public dominion and are inalienable. As long as the land and buildings are for public use the
ownership is with the Republic of the Philippines.
Planters Products Inc vs Fertiphil Corp G.R. No. 166006 March 14, 2008
FACTS:
Petitioner PPI and respondent Fertiphil are private corporations incorporated under Philippine laws,
both engaged in the importation and distribution of fertilizers, pesticides and agricultural chemicals.
Marcos issued Letter of Instruction (LOI) 1465, imposing a capital recovery component of Php10.00 per
bag of fertilizer. The levy was to continue until adequate capital was raised to make PPI financially
viable. Fertiphil remitted to the Fertilizer and Pesticide Authority (FPA), which was then remitted the
depository bank of PPI. Fertiphil paid P6,689,144 to FPA from 1985 to 1986.After the 1986
Edsa Revolution, FPA voluntarily stopped the imposition of the P10 levy. Fertiphil demanded from PPI a
refund of the amount it remitted, however PPI refused. Fertiphil filed a complaint for collection and
damages, questioning the constitutionality of LOI 1465, claiming that it was unjust, unreasonable,
oppressive, invalid and an unlawful imposition that amounted to a denial of due process.PPI argues
that Fertiphil has no locus standi to question the constitutionality of LOI No. 1465 because itdoes not
have a "personal and substantial interest in the case or will sustain direct injury as a result of its
enforcement." It asserts that Fertiphil did not suffer any damage from the imposition because
"incidence of the levy fell on the ultimate consumer or the farmers themselves, not on the seller
fertilizer company.
ISSUE:

Whether or not Fertiphil has locus standi to question the constitutionality of LOI No. 1465.
What is the power of taxation?
RULING:
Fertiphil has locus standi because it suffered direct injury; doctrine of standing is a mere procedural
technicality which may be waived. The imposition of the levy was an exercise of the taxation power of
the state. While it is true that the power to tax can be used as an implement of police power, the
primary purpose of the levy was revenue generation. If the purpose is primarily revenue, or if revenue
is, at least, one of the real and substantial purposes, then the exaction is properly called a tax. Police
power and the power of taxation are inherent powers of the State. These powers are distinct and have
different tests for validity. Police power is the power of the State to enact legislation that may interfere
with personal liberty or property in order to promote the general welfare, while the power of taxation is
the power to levy taxes to be used for public purpose. The main purpose of police power is the
regulation of a behaviour or conduct, while taxation is revenue generation. The "lawful subjects" and
"lawful means" tests are used to determine the validity of a law enacted under the police power. The
power of taxation, on the other hand, is circumscribed by inherent and constitutional limitations.
Mactan Cebu International Airport Authority v. Marcos 261 SCRA 667 (1996)
Facts:
Petitioner Mactan Cebu International Airport Authority was created by virtue of R.A. 6958, mandated to
principally undertake the economical, efficient, and effective control, management, and supervision of
the Mactan International Airport and Lahug Airport, and such other airports as may be established in
Cebu.
Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment of
realty taxes in accordance with Section 14 of its charter. However, on October 11, 1994, Mr. Eustaquio
B. Cesa, Officer in Charge, Office of the Treasurer of the City of Cebu, demanded payment from realty
taxes in the total amount of P2229078.79. Petitioner objected to such demand for payment as baseless
and unjustified claiming in its favor the afore cited Section 14 of R.A. 6958. It was also asserted that it
is an instrumentality of the government performing governmental functions, citing Section 133 of the
Local Government Code of 1991.
Section 133. Common limitations on the Taxing Powers of Local Government Units.
The exercise of the taxing powers of the provinces, cities, barangays, municipalities shall not extend to
the levi of the following:
xxx Taxes, fees or charges of any kind in the National Government, its agencies and instrumentalities,
and LGUs. xxx
Respondent City refused to cancel and set aside petitioners realty tax account, insisting that the
MCIAA is a government-controlled corporation whose tax exemption privilege has been withdrawn by
virtue of Sections 193 and 234 of Labor Code that took effect on January 1, 1992.
Issue:
Whether or not the petitioner is a taxable person
Rulings:
Taxation is the rule and exemption is the exception. MCIAAs exemption from payment of taxes is
withdrawn by virtue of Sections 193 and 234 of Labor Code. Statutes granting tax exemptions shall be
strictly construed against the taxpayer and liberally construed in favor of the taxing authority.
The petitioner cannot claim that it was never a taxable person under its Charter. It was only
exempted from the payment of realty taxes. The grant of the privilege only in respect of this tax is

conclusive proof of the legislative intent to make it a taxable person subject to all taxes, except real
property tax.
J. CASANOVAS, plaintiff-appellant, vs. JNO. S. HORD, defendant-appellee. F.G. Waite for
appellant.
Attorney-General Araneta for appellee

Facts: The Spanish Govt. by virtue of a royal decree granted the plaintiffcertain mines. The plaintiff is
now the owner of those mines. The Collectorof Internal Revenue imposed tax on the properties,
contending that they were valid perfected mine concessions and it falls within the provisions of
sec.134 of Act No. 1189 known as Internal Revenue Act. The plaintiff paid under protest. He brought an
action against the defendant Collector ofInternal Revenue to recover the sum of Php. 9, 600 paid by
him as taxes.Judgment was rendered in favor of the defendant, so the plaintiff appealed.
Issue: Whether or Not Sec. 164 is void or valid.
Held: The deed constituted a contract between the Spanish Government and the plaintiff.
The obligation of which contract was impaired by the enactment of sec. 134 of the Internal
Revenue Law infringing sec. 5 of the Act of Congress which provides that no law impairing
the obligation of contracts shall be enacted. Sec. 134 of the Internal Revenue Law of 1904 is void
because it impairs the obligation of contracts contained in the concessions of mine made by the
Spanish Government. Judgment reversed.
GEROCHI, KATULONG NG BAYAN (KB) and ENVIRONMENTALIST CONSUMERS NETWORK, INC.
(ECN),
-versusDEPARTMENT OF ENERGY (DOE), ENERGY REGULATORY COMMISSION (ERC), NATIONAL
POWER CORPORATION (NPC), POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT
GROUP (PSALM Corp.), STRATEGIC POWER UTILITIES GROUP (SPUG), and PANAYELECTRIC
COMPANY INC. (PECO),
Facts: RA 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), which
sought to impose a universal charge on all end-users of electricity for the purpose
of fundingNAPOCORs projects, was enacted and took effect in 2001.
Petitioners contest the constitutionality of the EPIRA, stating that theimposition of the universal charge
on all end-users is oppressive and confiscatory and amounts to taxation without representation for not
giving the consumers a chance to be heard and be represented.
Issue: Whether or not the universal charge is a tax.
Held: NO. The assailed universal charge is not a tax, but anexaction in the exercise of the States
police power. That public welfare is promoted may be gleaned from Sec. 2 of the EPIRA, which
enumerates the policies of the State regarding electrification. Moreover, the Special Trust Fund feature
of the universal charge reasonably serves and assures the attainment and perpetuity of the purposes
for which the universal charge is imposed (e.g. to ensure the viability of the countrys electric
power industry), further boosting the position that the same is an exaction primarily in pursuit of the
States police objectives

If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a
tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make
the imposition a tax.
The taxing power may be used as an implement of police power. The theory behind the exercise of the
power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of
promoting the general welfare and well-being of the people.

Punsalan vs Municipal Board of Manila GR 4817 26 May 1954

Facts: Petitioners, who are professionals in the city, assail Ordinance No. 3398 together with the law
authorizing it (Section 18 of the Revised Charter of the City of Manila). The ordinance imposes a
municipal occupation tax onpersons exercising various professions in the city and penalizes nonpayment of the same. The law authorizing said ordinance empowers the Municipal Board of the city to
impose a municipal occupation tax on personsengaged in various professions. Petitioners, having
already paid theiroccupation tax under section 201 of the National Internal Revenue Code, paid the tax
under protest as imposed by Ordinance No. 3398. The lower court declared the ordinance invalid and
affirmed
the
validity
of
the
law
authorizing
it.

Issue: Whether or Not the ordinance and law authorizing it constitute class legislation, and authorize
what amounts to
double
taxation.

Held: The Legislature may, in its discretion, select what occupations shall be taxed, and in its
discretion may tax all, or select classes of occupation for taxation, and leave others untaxed. It is not
for the courts to judge which cities or municipalities should be empowered to impose occupation taxes
aside from that imposed by the National Government. That matter is within the domain of political
departments. The argument against double taxation may not be invoked if one tax is imposed by the
state and the other is imposed by the city. It is widely recognized that there is nothing inherently
terrible in the requirement that taxes be exacted with respect to the sameoccupation by both the state
and the political subdivisions thereof. Judgment of the lower court is reversed with regards to the
ordinance and affirmed as to the law authorizing it.

American Bible Society vs. City of Manila

GR No. L-9637 | April 30, 1957
Facts:

American Bible Society is a foreign, non-stock, non-profit, religious, missionary corporation duly
registered and doing business in the Philippines through its Philippine agency established in Manila in
November, 1898

City of Manila is a municipal corporation with powers that are to be exercised in conformity with the
provisions of Republic Act No. 409, known as the Revised Charter of the City of Manila

American Bible Society has been distributing and selling bibles and/or gospel portions throughout
the Philippines and translating the same into several Philippine dialect

City Treasurer of Manila informed American Bible Society that it was violating several Ordinances for
operating without the necessary permit and license, thereby requiring the corporation to secure the
permit and license fees covering the period from 4Q 1945-2Q 1953

To avoid closing of its business, American Bible Society paid the City of Manila its permit and license
fees under protest

American Bible filed a complaint, questioning the constitutionality and legality of the Ordinances
2529 and 3000, and prayed for a refund of the payment made to the City of Manila. They contended:

a.

They had been in the Philippines since 1899 and were not required to pay any license fee or sales
tax

b.

it never made any profit from the sale of its bibles

City of Manila prayed that the complaint be dismissed, reiterating the constitutionality of the
Ordinances in question

Trial Court dismissed the complaint

American Bible Society appealed to the Court of Appeals

Issue: WON American Bible Society liable to pay sales tax for the distribution and sale of bibles
Ruling: NO

Under Sec. 1 of Ordinance 3000, one of the ordinance in question, person or entity engaged in
any of the business, trades or occupation enumerated under Sec. 3 must obtain a Mayors permit and
license from the City Treasurer. American Bible Societys business is not among those enumerated

However, item 79 of Sec. 3 of the Ordinance provides that all other businesses, trade or occupation
not mentioned, except those upon which the City is not empowered to license or to tax P5.00

Therefore, the necessity of the permit is made to depend upon the power of the City to license or tax
said business, trade or occupation.

a.

2 provisions of law that may have bearing on this case:

Chapter 60 of the Revised Administrative Code, the Municipal Board of the City of Manila is
empowered to tax and fix the license fees on retail dealers engaged in the sale of books

b.

Sec. 18(o) of RA 409: to tax and fix the license fee on dealers in general merchandise, including
importers and indentors, except those dealers who may be expressly subject to the payment of some
other municipal tax. Further, Dealers in general merchandise shall be classified as (a) wholesale
dealers and (b) retail dealers. For purposes of the tax on retail dealers, general merchandise shall be
classified into four main classes: namely (1) luxury articles, (2) semi-luxury articles, (3) essential
commodities, and (4) miscellaneous articles. A separate license shall be prescribed for each class but
where commodities of different classes are sold in the same establishment, it shall not be compulsory
for the owner to secure more than one license if he pays the higher or highest rate of tax prescribed by
ordinance. Wholesale dealers shall pay the license tax as such, as may be provided by ordinance

The only difference between the 2 provisions is the limitation as to the amount of tax or license fee
that a retail dealer has to pay per annum

As held in Murdock vs. Pennsylvania, The power to impose a license tax on the exercise of these
freedoms provided for in the Bill of Rights, is indeed as potent as the power of censorship which this
Court has repeatedly struck down. It is not a nominal fee imposed as a regulatory measure to defray
the expenses of policing the activities in question. It is in no way apportioned. It is flat license tax
levied and collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the
constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is
almost uniformly recognized as the inherent vice and evil of this flat license tax.

Further, the case also mentioned that the power to tax the exercise of a privilege is the power to
control or suppress its enjoyment. Those who can tax the exercise of this religious practice can make
its exercise so costly as to deprive it of the resources necessary for its maintenance. Those who can

tax the privilege of engaging in this form of missionary evangelism can close all its doors to all those
who do not have a full purse

Under Sec. 27(e) of Commonwealth Act No. 466 or the National Internal Revenue
Code,Corporations or associations organized and operated exclusively for religious, charitable, . . . or
educational purposes, . . .: Provided, however, That the income of whatever kind and character from
any of its properties, real or personal, or from any activity conducted for profit, regardless of the
disposition made of such income, shall be liable to the tax imposed under this Code shall not be taxed

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 American Bible Society was engaged in the
business or occupation of selling said "merchandise" for profit

Therefore, the Ordinance cannot be applied for in doing so it would impair American Bible Societys
free exercise and enjoyment of its religious profession and worship as well as its rights of
dissemination of religious beliefs.
Wherefore, and on the strength of the foregoing considerations, We hereby reverse the
decision appealed from, sentencing defendant return to plaintiff the sum of P5,891.45
unduly collected from it

Abra Valley College v. Aquino

G.R. No. L-39086 June 15, 1988
Paras, J.
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 nonpayment 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).