G.R. No.

175356 December 3, 2013

MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC., Petitioners,

vs.
SECRETARY OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT and THE SECRETARY OF THE
DEPARTMENT OF FINANCE, Respondents.

Before us is a Petition for Prohibition2 under Rule 65 of the Rules of Court filed by petitioners Manila Memorial
Park, Inc. and La Funeraria Paz-Sucat, Inc., domestic corporations engaged in the business of providing funeral and
burial services, against public respondents Secretaries of the Department of Social Welfare and Development
(DSWD) and the Department of Finance (DOF).

On April 23, 1992, RA 7432 was passed into law, granting senior citizens the following privileges:

SECTION 4. Privileges for the Senior Citizens. The senior citizens shall be entitled to the following:

a) the grant of twenty percent (20%) discount from all establishments relative to utilization of transportation
services, hotels and similar lodging establishment[s], restaurants and recreation centers and purchase of
medicine anywhere in the country: Provided, That private establishments may claim the cost as tax credit;
b) 20% Discount offers that the business can claim it as tax credits

On August 23, 1993, Revenue Regulations (RR) No. 02-94 was issued to implement RA 7432. Sections 2(i) and 4 of
RR No. 02-94 provide:

The amount of 20% discount shall be deducted from the gross income for income tax purposes and from gross
sales of the business enterprise concerned for purposes of the VAT and other percentage taxes.

This means that it shall be considered as tax deductions and not as tax credits.

On February 26, 2004, RA 92578 amended certain provisions of RA 7432, to wit:

SECTION 4. Privileges for the Senior Citizens. The senior citizens shall be entitled to the following:

(a) the grant of twenty percent (20%) discount from all establishments relative to the utilization of services in
hotels and similar lodging establishments, restaurants and recreation centers, and purchase of medicines in all
establishments for the exclusive use or enjoyment of senior citizens, including funeral and burial services for the
death of senior citizens;

(i) Funeral parlors and similar establishments The beneficiary or any person who shall shoulder the funeral and
burial expenses of the deceased senior citizen shall claim the discount, such as casket, embalmment, cremation
cost and other related services for the senior citizen upon payment and presentation of [his] death certificate.

The new law adds extending that senior citizens will enjoy the discount even on funeral homes

The DSWD likewise issued its own Rules and Regulations Implementing RA 9257, to wit:

Provided, That the cost of the discount shall be allowed as deduction from gross income for the same taxable year
that the discount is granted; Provided, further, That the total amount of the claimed tax deduction net of value
added tax if applicable, shall be included in their gross sales receipts for tax purposes and shall be subject to
proper documentation and to the provisions of the National Internal Revenue Code, as amended; Provided, finally,
that the implementation of the tax deduction shall be subject to the Revenue Regulations to be issued by the
Bureau of Internal Revenue (BIR) and approved by the Department of Finance (DOF).

DSWD affirms that the claim for the 20% shall be considered as tax deductions and not tax crit.

Petitioners are arguing that they wanted a tax credit and not a tax deduction

Feeling aggrieved by the tax deduction scheme, petitioners filed the present recourse, praying that Section 4 of RA
7432, as amended by RA 9257, and the implementing rules and regulations issued by the DSWD and the DOF be
declared unconstitutional insofar as these allow business establishments to claim the 20% discount given to senior
citizens as a tax deduction; that the DSWD and the DOF be prohibited from enforcing the same; and that the tax
credit treatment of the 20% discount under the former Section 4 (a) of RA 7432 be reinstated.

Petitioners emphasize that they are not questioning the 20% discount granted to senior citizens but are only
assailing the constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules
and regulations issued by the DSWD and the DOF.10

What they want is the tax credit and not tax deductions.

ISSUES:

WHETHER SECTION 4 OF REPUBLIC ACT NO. 9257 AND X X X ITS IMPLEMENTING RULES AND REGULATIONS,
INSOFAR AS THEY PROVIDE THAT THE TWENTY PERCENT (20%) DISCOUNT TO SENIOR CITIZENS MAY BE CLAIMED
AS A TAX DEDUCTION BY THE PRIVATE ESTABLISHMENTS, ARE INVALID AND UNCONSTITUTIONAL. 9

Petitioners states that its unconstitutional, he also states that it is an act of eminent domain and thus just
compensation should be offered.

Wether or not the tax deduction is an exercise of police power or eminent domain.

Held:

The Supreme Court Denied the Petition

The Petition lacks merit.

Its constitutional The State "may interfere with personal liberty, property, lawful businesses and occupations to
promote the general welfare [as long as] the interference [is] reasonable and not arbitrary." 62

The Supreme Court held that Its a valid exerice of police power and not eminent domain

We, thus, found that the 20% discount as well as the tax deduction scheme is a valid exercise of the police power
of the State.

There is no taking

The State "may interfere with personal liberty, property, lawful businesses and occupations to promote the
general welfare [as long as] the interference [is] reasonable and not arbitrary." 62

The 20% senior citizen discount is an exercise of police power.

The 20% senior citizen discount has not been shown to be unreasonable, oppressive or confiscatory.

WHEREFORE, the Petition is hereby DISMISSED for lack of merit.

G.R. No. 85714 November 29, 1991

HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner,

vs.
THE COURT OF APPEALS, THE PROVINCIAL GOVERNMENT OF ISABELA, THE MUNICIPALITY OF RAMON, ISABELA
and THE NATIONAL IRRIGATION ADMINISTRATION, respondents.

This is a petition for certiorari, treated as a petition for review on certiorari of the decision ** of the Court of
Appeals, dated 30 October 1987, in CA-G.R. SP Case No. 09196, affirming the Order dated 6 August 1983 of the
Regional Trial Court of Echague, Isabela, Branch 24, in CV No. XXIV-0106 (re-docketed as Civil Case No. 0093,
before the Regional Trial Court, Santiago, Isabela, Branch XXI). ***

The petitioner is a contractor who was supposed to build muti purpose river project at Ramon, Isabela

Public respondent National Irrigation Administration (or "NIA") and petitioner Hydro Resources Contractors
Corporation (or "Hydro") entered into a contract whereby the latter undertook to construct for the former the
Magat River Multi-Purpose Project situated at Ramon, Isabela. 1

In June 1982, the Provincial Government of Isabela, its provincial treasurer, the Municipality of Ramon, Isabela,
and its assistant treasurer, as plaintiffs, filed a civil case against herein petitioner Hydro, docketed as Civil Case No.
XXIV-0106, with the Regional Trial Court of Echague, Isabela, Branch 24, for collection of taxes over certain real
properties which Hydro allegedly acquired, possessed and used in connection with the construction of the said
Magat River Multi-Purpose Project. 2

Respondent filed a case for collection of taxes for the petitioner acquired real properties for the construction.

After hearing, the Regional Trial Court, Echague, Br. 24, on 6 August 1983, issued an order in favor of the plaintiffs,
finding defendant Hydro (now petitioner) liable to pay realty taxes over the properties it had constructed in
connection with Magat River Multi-Purpose Project, but that the amount thereof was to be determined in further
proceedings of the court a quo, dispositive part of which order reads:

RTC ruled that petitioner are liable to pay taxes but the amount was to be determined in another proceeding

Civil Case No. XXIV-0106 was thereafter transferred to the Regional Trial Court, Branch XXI, of Santiago, Isabela,
and redocketed as Civil Case No. 0093.

The case was transferred to RTC Isabela

On 4 November 1983, now before the Regional Trial Court of Santiago, Isabela, Br. XXI, Hydro through counsel filed
a motion for leave to file third-party complaint, dated 21 October 1983, against NIA, attaching to the motion the
proposed third-party complaint (for reimbursement from the NIA); and a motion to admit amended answer,
accompanying the same with the proposed amended answer. 4 On the same date (4 November 1983), the
Regional Trial Court, Santiago, Isabela admitted Hydro's third-party complaint; however, as to its motion for leave
to file amended answer, plaintiffs were given ten (10) days to file their opposition and Hydro was also given ten
(10) days from receipt of such opposition to file its reply. 5
On 12 December 1983, before the court a quo could resolve Hydro's motion for leave to file amended answer,
plaintiffs filed their reply to Hydro's amended answer. NIA also filed its answer to Hydro's third-party complaint. 7

In an order of 7 February 1983, the court a quo then ordered the parties to file their respective memorandum, in
this wise:

The parties did not filed their memoranda except Hydro which complied. 9

On 20 May 1985, the court a quo ruled that the order dated 6 August 1983 (issued by the Regional Trial Court,
Echague, Isabela) was final and executory, disposing that:

Petitioner is arguing that the decision is interlocutory in nature and not final

On 14 October 1985, the court a quo denied Hydro's motion for reconsideration of the order dated 20 May
1985: 12

On 15 January 1986, Hydro filed with the Supreme Court a Petition, docketed G.R. No. 72849, 13 which (petition)
was referred by this Court (First Division) to the Court of Appeals for proper action and disposition. In a resolution
dated 21 May 1986 14 said petition was re-docketed in the Court of Appeals as CA-G.R. SP No. 09196.

On 30 October 1987, the Court of Appeals rendered a decision (now assailed) denying (dismissing) the petition

ISSUES:

On 2 November 1988, the Court of Appeals denied petitioner's motion for reconsideration of the said decision.
Hence, the present petition for review, raising the following issues:

I. Whether or not the appellate court has acted without or in excess of its jurisdiction or
with grave abuse of discretion in not finding that the order issued by the court a quo on
August 6, 1983 is merely interlocutory and/or provisional in character and could not be
considered as a final determination of the merits of Civil Case No. 0093.

The issue here is wether or not the appellate courts decision can be final and
executory for determining the amount of taxes that should be paid.

HELD:

We grant the petition.

Both the petitioner and the respondents agree that the main issue in the case at bar is whether or not the assailed
order of the court a quo, dated 6 August 1983, is interlocutory in nature or a final judgment.

We hold that the complaint at bar has failed to state the ultimate facts, 20 which failure is violative of Section 3,
Rule 17 of the Rules of Court. 21

Section 82 of the Presidential Decree No. 464 (Real Property Tax Code) states that "the delinquent real property
tax shall constitute a lawful indebtedness of the taxpayer to the province or city." Under P.D. 464, the process of
collecting real property taxes involve the acts or methods of appraisal and assessment of the real property subject
to tax; 22 the imposition of real property tax 23 and the collection thereof. 24
Section 82 of P.D. 464 provides that the collection of delinquent real property taxes may be enforced in any
court of competent jurisdiction.

The amount of taxes sought to be collected is therefore determinable, yet the complaint at bar did not plead the
same. In the order of the court a quo, dated 7 February 1984, one of the issues submitted was whether it s proper
for the plaintiffs to amend their complaint and plead therein the amount of tax sought to be collected. 25 But this
issue was deemed abandoned when the court a quo issued an order dated 20 May 1985, which held that the order
dated 6 August 1983 was final and executory.

The court stated that the declaration of the judgment as final and executory was invalid. It cited the ff case

As held in Dela Cruz vs. Paras, 30 a court order is final in character if it puts an end to the particular matter
resolved or settles definitely the matter therein disposed of, such that no further questions can come before the
court except the execution of the order; that on the other hand, a court order is merely interlocutory in character
if it is provisional and leaves substantial proceeding to be had in connection with its subject.

So only if it puts an end to the controversy can it be final and executory.

Clearly, the order of 6 August 1983 is interlocutory. We fail to see how it could or did put an end to the controversy
when the court a quo still had to determine the amount of realty taxes to be collected by plaintiffs from petitioner-
defendant, and to make findings of fact on certain issues, which could still affect the very liability to pay such taxes.

Cannot be end as the amount of taxes were not yet determined

WHEREFORE, petition is GRANTED, the decision of the Court of Appeals, dated 30 October 1987 in CA-G.R. SP. No.
09196 is hereby SET ASIDE, and a new one entered ordering the complaint in Civil Case No. 0093 before the
Regional Trial Court of Santiago, Isabela, Branch XXI, DISMISSED without prejudice. Without pronouncement as to
costs.

G.R. No. L-43082 June 18, 1937

PABLO LORENZO, as trustee of the estate of Thomas Hanley, deceased, plaintiff-appellant,

vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.

On October 4, 1932, the plaintiff Pablo Lorenzo, in his capacity as trustee of the estate of Thomas Hanley,
deceased, brought this action in the Court of First Instance of Zamboanga against the defendant, Juan Posadas, Jr.,
then the Collector of Internal Revenue, for the refund of the amount of P2,052.74, paid by the plaintiff as
inheritance tax on the estate of the deceased, and for the collection of interst thereon at the rate of 6 per cent per
annum, computed from September 15, 1932, From the decision of the Court of First Instance of Zamboanga
dismissing both the plaintiff's complaint and the defendant's counterclaim, both parties appealed to this court.

It appears that on May 27, 1922, one Thomas Hanley died in Zamboanga, Zamboanga, leaving a will and
considerable amount of real and personal properties.

Thomas Hanley Died.

On june 14, 1922, proceedings for the probate of his will and the settlement and distribution of his estate were
begun in the Court of First Instance of Zamboanga. The will was admitted to probate.
Probate proceedings were held in CFI of Zamboanga

The Court of First Instance of Zamboanga considered it proper for the best interests of ther estate to appoint a
trustee to administer the real properties which, under the will, were to pass to Matthew Hanley ten years after the
two executors named in the will, was, on March 8, 1924, appointed trustee. Moore took his oath of office and gave
bond on March 10, 1924. He acted as trustee until February 29, 1932, when he resigned and the plaintiff herein
was appointed in his stead.

CFI appointed Moore as the Trustee of the Estate. He resigned and then Pablo Lorenzo became the trustee
administrator.

On March 15, 1932, the defendant filed a motion in the testamentary proceedings pending before the Court of
First Instance of Zamboanga (Special proceedings No. 302) praying that the trustee, plaintiff herein, be ordered to
pay to the Government the said sum of P2,052.74. The motion was granted. On September 15, 1932, the plaintiff
paid said amount under protest, notifying the defendant at the same time that unless the amount was promptly
refunded suit would be brought for its recovery. The defendant overruled the plaintiff's protest and refused to
refund the said amount hausted, plaintiff went to court with the result herein above indicated.

They Stated that the petitioner was liable for inheritance tax.

Issues:

The following are the principal questions to be decided by this court in this appeal: (a) When does the inheritance
tax accrue and when must it be satisfied? When does inheritance tax take effect?

(b) Should the inheritance tax be computed on the basis of the value of the estate at the time of the testator's
death, or on its value ten years later?

(c) In determining the net value of the estate subject to tax, is it proper to deduct the compensation due to
trustees?

(d) What law governs the case at bar? Should the provisions of Act No. 3606 favorable to the tax-payer be given
retroactive effect?

(e) Has there been delinquency in the payment of the inheritance tax? If so, should the additional interest claimed
by the defendant in his appeal be paid by the estate? Other points of incidental importance, raised by the parties
in their briefs, will be touched upon in the course of this opinion.

HELD:

(a) The tax is upon transmission or the transfer or devolution of property of a decedent, made effective by his
death. The accrual of the inheritance tax is distinct from the obligation to pay the same. Section 1536 as
amended, of the Administrative Code, imposes the tax upon "every transmission by virtue of inheritance,
devise, bequest, gift mortis causa, or advance in anticipation of inheritance, devise, or bequest."
(b) The tax should be based at the time of his death.

B ) From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the obligation to pay
the tax arose as of the date. The time for the payment on inheritance tax is clearly fixed by section 1544 of the
Revised Administrative Code as amended by Act No. 3031
But whatever may be the rule in other jurisdictions, we hold that a transmission by inheritance is taxable at the
time of the predecessor's death, notwithstanding the postponement of the actual possession or enjoyment of the
estate by the beneficiary, and the tax measured by the value of the property transmitted at that time regardless of
its appreciation or depreciation.

Its taxable on the value of the estate at the time of the death of the decedent.

C. )

There is no statute in the Philippines which requires trustees' commissions to be deducted in determining the net
value of the estate subject to inheritance tax (61 C. J., p. 1705). Furthermore, though a testamentary trust has
been created, it does not appear that the testator intended that the duties of his executors and trustees should be
separated

No. There is no law that deducts the compensation for trustees.

D.)

(d) The defendant levied and assessed the inheritance tax due from the estate of Thomas Hanley under the
provisions of section 1544 of the Revised Administrative Code, as amended by section 3 of Act No. 3606. But Act
No. 3606 went into effect on January 1, 1930. It, therefore, was not the law in force when the testator died on May
27, 1922. The law at the time was section 1544 above-mentioned, as amended by Act No. 3031, which took effect
on March 9, 1922.

). Revenue laws, generally, which impose taxes collected by the means ordinarily resorted to for the collection of
taxes are not classed as penal laws, although there are authorities to the contrary.

.) Article 22 of the Revised Penal Code is not applicable to the case at bar, and in the absence of clear legislative
intent, we cannot give Act No. 3606 a retroactive effect.

E. ) As stated by this court, "the mere failure to pay one's tax does not render one delinqent until and unless the
entire period has eplased within which the taxpayer is authorized by law to make such payment without being
subjected to the payment of penalties for failure to pay his taxes within the prescribed period." (U. S. vs. Labadan,
26 Phil., 239.) He is only liable after the entire period has elapsed

The mere fact that the estate of the deceased was placed in trust did not remove it from the operation of our
inheritance tax laws or exempt it from the payment of the inheritance tax. The corresponding inheritance tax
should have been paid on or before March 10, 1924, to escape the penalties of the laws. This is so for the reason
already stated that the delivery of the estate to the trustee was in esse delivery of the same estate to the cestui
que trust, the beneficiary in this case

It results that the estate which plaintiff represents has been delinquent in the payment of inheritance tax and,
therefore, liable for the payment of interest and surcharge provided by law in such cases.

The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. The interest due
should be computed from that date and it is error on the part of the defendant to compute it one month later. The
provisions cases is mandatory (see and cf. Lim Co Chui vs. Posadas, supra), and neither the Collector of Internal
Revenue or this court may remit or decrease such interest, no matter how heavily it may burden the taxpayer.

G.R. No. L-29059 December 15, 1987

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
CEBU PORTLAND CEMENT COMPANY and COURT OF TAX APPEALS, respondents.