CHAVEZ v.
ONGPIN Issue/s:
Facts: Francisco Chavez is a tax payer and owner of 3 parcels of
land. Due to the implementation of EO 73, Chavez alleges that EO
73 accelerated the application of the general revision of
assessments, which would mandate an excessive increase to real
property tax by 100%-400%, challenging its constitutionality.
Furthermore, ROAP alleges that PD 464 is unconstitutional as it
imposes additional tax percentage on all property owners, the
General Revision of Assessments don’t meet the requirements of
due process, and the Joint Local Assessment is even more
oppressive and unconstitutional as it imposes successive increase
over the 1986 tax.
Issue: W/N EO 73 and PD 464 are unconstitutional.
Held: NO. The attack on EO 73 has no legal basis, as the general
revision of assessments is a continuing process mandated by PD
464. PD 464, however, provided the process in case of appeal, that
within 60 days from the date of receipt by him of the written
notice of assessment, appeal may be submitted along with
supporting documents such as tax declarations and affidavits.
DIAZ v. SEC. OF FINANCE
Facts: Renato Diaz and Aurora Timbol filed a petition for
declaratory relief, assailing the impending imposition of VAT on
the collections of toll fees. They allege that the Congress didn’t
intend to include toll fees within the definition of “sale of services”
which are subject to VAT, toll fee is user’s tax, not a sale of service;
the imposition of VAT on toll fees would amount to tax on public
service, and if VAT would be factored to the computation of toll
fees, it would violate the non-impairment clause of the
Constitution.
 W/N tollways are considered “franchise grantees”
 W/N toll fees are considered “user’s tax”
 W/N VAT can be imposed on toll fees.
Held: YES. NIRC stated that the term “sale or exchange of
services” means the performance of all kinds of services in the PH
for others for a fee, remuneration or consideration. The
enumeration of services in the said law is not exclusive, thus,
every activity that can be imagined as a form of “service” rendered
for a fee should be deemed included unless a provision from the
law excludes it. Tollway operators qualify to such service as they
operate at the operator’s expense, and they are allowed to collect
government-approved fees from motorists until operators can
fully recover their expenses and earn responsible returns from
the investments. Tollways are, therefore, considered “franchise
grantees” for the construction, operation, and maintenance of its
facilities are activities of public consequence that necessarily
require a special grant of authority by the state. NO. The Court said
that toll fees are not considered “user’s tax”, or tax in any sense,
for the proceeds of the tollways essentially end up as earnings of
the operators. The operators remain to be liable for the payment
of VAT, thru adding VAT onto the toll fee for the enjoyment of the
motorists of its service. YES. Tax exemptions must be justified by
clear statutory grant and based on the language of law. As no such
exemption was written concerning tollways, such is subject to
VAT.
GEROCHI v. DOE
Facts: Romeo Gerochi et al are assailing the constitutionality of
Sec. 24 of RA 9136, which imposes a Universal Charge and Rule 18
of the IRR which seeks to implement the said imposition, which
aims for payment on various sources of electricity and other
contract costs that would be collected from electricity end-users SMART v. MALVAR, BATANGAS
in a monthly basis. They assail that the power to tax is constrained
Facts: Smart constructed a telecommunications tower within the
only to the legislative branch, and the delegation of such to any
territorial jurisdiction of respondent, for receiving and
executive or administrative agency would be unconstitutional.
transmitting cellular communications within the covered area.
They also contend that the Universal Charge has the
Malvar passed an Ordinance concerning special projects. Smart
characteristics of a tax to be collected to fund the operations of the
received an assessment letter from the municipality with the
NPC. Respondents contend that the Universal Charge is levied for
schedule for its payment. Due to alleged arrears in payment, the
a specific regulatory purpose, to ensure the viability of the
Municipality ordered the closure notice on the tower. Smart filed
country’s electric power industry, seeing it as an exercise of police
a protest for lack of due process and the challenging the
power, rather than power of taxation.
constitutionality Ordinance No. 18.
Issue/s:
Issue/s:
 W/N the Universal Charge is a tax
 W/N the fees on the assessment by the Municipality are
 W/N there is undue legislative delegation to tax on the
taxes
part of ERC
 W/N the Ordinance exceeded its powers to impose taxes
Held: and fees

 NO. The Universal Charge is not a tax, but an exaction in Held:

the exercise of police power, for public welfare is surely
 NO. The Court found that the fees imposed under the
promoted. The EPIRA law states its regulatory purposes
Ordinance of the Municipality are not taxes, but rather,
which is to ensure the viability of the electric power
these fees are in order to regulate the construction of
industry of the country.
these special projects, in which telecommunication
 NO. The need to delegate to administrative bodies the
towers are included, and to condemn to remove such
ability to promulgate rules and regulations for
projects when found dangerous or hazardous to the
implementation of a given statute is allowed by law if (1)
welfare of the inhabitants. Thus, this Ordinance is
the regulation is germane to the objects and purposes of
primarily regulatory in nature, not revenue-raising.
the law and (2) the regulation is in conformity to the
 NO. The Municipality is empowered to impose taxes, fees,
standards prescribed by law. The Court finds that EPIRA
and charges. Even though it doesn’t appear in the LGC, the
is complete in all its essential terms and conditions and
Municipality has a wide latitude in imposing fees. As a
qualifies with the standards made by the law.
regulating ordinance, the Municipality exercises police
power.
PLANTERS PRODUCTS v. FERTIPHIL CORP.
Facts: Marcos implemented a LOI on the implementation of a
capital recovery component on the domestic sale of all grades of
fertilizer in the PH, requiring them to include not less than P10 per
bag of fertilizer. Fertiphil paid for P10 for ebery bag it sold on
domestic market, remitting the proceeds to Far East Bank and
Trust Company, the depositary bank of Planters. When EDSA I
broke out, FPA stopped the imposition of the P10 levy. When
democracy returned, Fertiphil demanded the refund for the
amounts it paid under the LOI, but Planters refused. Fertiphil
challenged the constitutionality of the LOI for being unjust and
oppressive and an unlawful imposition amounting to denial of due
process of law.
Issue/s:
 W/N Fertiphil has locus standi in the case
 W/N the P10 levy is an exercise of the power of taxation
 W/N the levy was used for public purpose
Held:
 YES. Fertiphil suffered direct injury or harm for the
enforcement of the LOI because it was compelled to factor
in its product the levy, and it rendered the fertilizers of the
sellers much more expensive. Such harm on Fertiphil’s
business is sufficient injury for it to have locus standi.
 YES. The LOI’s purpose is to assurance of the fertilizer
supply and distribution in the country and to benefit a
foundation created by law. The primary purpose of the
levy is revenue generation, thus, it qualifies as a tax.
 NO. The P10 levy is too much to serve a mere regulatory
purpose, as it was a big burden on the seller and the
consumer, as well. Also, the levy is imposed to benefit PPI
to raise revenue. Thus, it defeats the main purpose of tax
for it is not raised for public interest.
FERRER, JR v. BAUTISTA
Facts: QC Council enacted an Ordinance concerning the
imposition of Socialized Housing Tax. The revenue would be
utilized by the QC government on various projects fostering
the development of the city. Another Ordinance was made, in
which, proceeds collected from garbage fees on residential
properties shall be deposited solely and exclusively in a
special account to be utilized for garbage collections. The real
property tax and the garbage fees are to be paid
simultaneously not later than the first quarter installment. In
case the homeowner refuses to pay, a penalty of 25% of the
garbage fee due, plus a 2% interest per month or a fraction
thereof, will be added. Ferrer, a registered co-owner of a
residential property in QC, assails the validity of both
ordinances, saying that the QC government has no power to
impose the tax, the SHT provides burden for homeowners to
provide funds for housing of informal settlers, thus, the tax is
confiscatory and oppressive. Also, on the garbage fees, Ferrer
assails that it violates the rule on double taxation and violates
the rule of equality as the fee was collected only from the
domestic households and not from commercial
establishments that produce more garbage than residential
owners.
Issue/s: W/N the ordinances are valid
Held: YES. QC government has the power to impose taxes
within its municipality. The SHT is valid, for its purpose is to
fund the socialized housing programs and projects of the city.
Such imposition is for the overall improvement of the city,
enhancing the lives of the poor. The State is free to select the
subject of taxation and it must (1) rest on substantial
distinctions, (2) germane to the purpose of the law, (3) not be
limited to exiting conditions only, and (4) apply equally to all
members of the same class. Also, the SHT is consistent with
the tax rate being imposed on the UDHA, and the tax is being
imposed only on properties with assessed value exceeding
P100000. However, on the garbage fees, there was no
violation of double taxation, but only on violation of rule of
equity. The Court found that the fees are unjust and
inequitable because the same amount is being imposed
whether the resident is from a condo unit or a socialized
housing project, not looking on the household size, the
amount of waste produced, capacity to pay etc. Therefore, the
imposition of SHT is constitutional while the garbage fees are
in the reverse.
COMPANIA GENERAL DE TOBACOS v. MANILA
Facts: Compania General, or Tabacalera, allegedly overpaid
by its taxes on it wholesale and retail sales of liquor. It paid the
city fixed license fees prescribed by Ordinances in the city and
paid the sales taxes required, being a wholesale and retail
dealer of general merchandise. In its statement, it included its
liquor sales on the payment of its sales taxes, which were paid
in full. Tabacalera’s action for refund is rooted from its theory
that, in connection of liquor sales, it should only pay the
license fees but not the sales taxes, and since it has already
paid its license fees, the sales taxes are an overpayment made
by mistake, therefore, refundable. Manila contends that
Tabacalera must pay both the sales tax and license fees as per
their Ordinances, and it must not be entitled for refund
because it paid its fees voluntarily, such overpayment is
because of Tabacalera’s neglect of duty, such tax is added to
the amount of their merchandise sold, and the revenue was
already used by the city for improvements and services.
Issue/s: W/N Tabacalera’s overpayment is subject to refund
Held: NO. There is a distinction between a license fee and tax.
License fee is an exercise of police power for purposes of
regulation, while tax is imposed upon taxing power for raising
revenues. Ordinance 3358 aims to collect license fees for the
privilege to sell liquor and the Municipal Board of Manila is in
charge of fixing the license fee and regulate the sale of liquor.
As for the sales tax, they are revenue measures by virtue of the
government’s power to tax dealers for the sale of the
merchandise. Both the license fee and sales tax can be
imposed without violating the rule of double taxation.
ANGELES UNIVERSITY v. ANGELES
Facts: Angeles University filed an application for a building
permit for the construction of an 11-storey hospital in its main
campus. The Office of the City Building Official issued a
Building Permit Fee Assessment, as well as a Locational
Clearance Fee by the City Planning Dev’t Office, Zoning Admin.
Unit. Angeles University sent a letter saying that it is exempt
from the payment of building permit and locational clearance
fees. The City Treasurer endorsed the matter to DOJ, saying
that petitioner is exempt from paying the building permit fees.
Petitioner wrote the respondents to reverse the assessment,
but to no avail. Petitioner paid under protest the fees and was
then awarded the necessary permits. Petitioner formally
requested for refund, but to no avail as well.
Issue/s: W/N Angeles University is exempted for paying the
Building Permit Fee and Locational Clearance Fee.
Held: NO. RA 6055 exempted them on the income tax only
derived from its educational activities and the real property
used for educational purposes. As per the law, building permit
fees are not classified under “other charges” that was included
in the exemption. Building fees are not taxes or impositions
upon property, but rather, these are regulatory fees imposed
by a city for the activity of building or repairing of a structure.
Therefore, a foundation that is exempt from taxes is not
exempt from regulatory fees.
PROGRESSIVE DEV’T CORP. v. QC
Facts: QC has an ordinance, known as the Market Code of QC,
which imposes a supervision fee where privately owned and
operated public markets must pay 10% of gross receipts from
stall rentals to the City, and failure to comply will subject the
operators to penalties, which includes revocation to operate.
Progressive filed a petition for preliminary injunction
assailing the imposition of the supervision fee, saying that, in
reality, it is a tax or income the city cannot impose.
Issue/s: W/N the supervision fee is an income tax
Held: NO. Such is a license fee. The purpose of the ordinance
is primarily regulation and maintenance concerning public
health. The use of the gross amount of stall rentals as basis for
determining the collectible amount of the license fee does not
convert such into an income tax.
VILLEGAS v. HIU CHIONG TSAI PAO HO
Facts: An Ordinance is passed in Manila prohibiting aliens
from being employed or to engage or participate in any
position in any kind of occupation or business without
securing first an employment permit, except working in
diplomatic and consular missions of foreign countries.
Respondent filed a petition to stop the enforcement of such
Ordinance as well as declaring it null and void.
Issue/s: W/N the ordinance is constitutional
Held: YES. Such ordinance imposes a regulatory fee, with a
primary objective to raise money under the guise of the P50
from aliens upon clearance. However, the Ordinance is
unconstitutional as it is oppressive, arbitrary and
unreasonable, and also being applied only to aliens, depriving
them of life, liberty and property and equal protection under
the Constitution.
CHEVRON v. BCDA
Facts: Clark Dev’t Corp. issued a Policy Guidelines on the
Movement of Petroleum Fuel to and from the Clark Special
Economic Zone, providing fees and charges allowing such
activity. CDC sent a letter to Chevron, informing the addition
of royalty fee to be assessed on deliveries of fuel to Nanox
Philippines. Chevron claims that CDC has no authority to
impose such fees, but nevertheless, paid the royalty fees under
protest. CDC once again wrote Chevron of yet another unpaid
royalty fees, but the latter reiterated its rejection and asked
for the refund of the amount paid under protest, but to no
avail. Chevron raised the issue to BDCA arguing that the
royalty fees have no relation whatsoever to the probable
expenses and such fees are akin to a tax, but to no avail as well.
Issue/s: W/N the imposition made by CDC is a valid power of
taxation
Held: NO. Such imposition by CDC is a valid exercise of police
power, as the royalty fees are considered as regulatory fees.
The Guidelines were imposed to ensure the safety, security
and good quality of the petroleum industry within the CSEZ.
Such fees ensure the “free flow of movement” of fuel to and
from the CSEZ.
REPUBLIC v. BACOLOD-MURCIA MILLING
Facts: This is a joint appeal of 3 sugar centrals, including
Bacolod-Murcia Milling assailing a provision of RA 632, which
seeks to conduct research, improve existing methods of
manufacturing, all for the development of the sugar industry.
In order to achieve such, the law prescribes an imposition of
P0.10 tax on each picul of sugar to be collected for 5 years. The
respondents have unpaid balances corresponding to the
imposed tax of the said law. Respondents also assail the
validity of the purchase of Insular Sugar Refinery from the
fund where the taxes go and contend that RA 632 doesn’t
allow the sale to happen, and that the continued operation of
the refinery is inimical to their interest.
Issue/s: W/N the milling companies are liable for non-
payment of the P0.10 tax
Held: YES. The imposed levy of P0.10 is an exercise of police
power which is for the general welfare of the country, in this
case, the continuing development of the country’ sugar
industry. Therefore, respondents must comply with the
special assessment.
DIAZ v. SECRETARY OF FINANCE
(REFER TO EARLIER CASE)
CIR v. PLDT
Facts: PLDT is a grantee of a franchise under RA 7082 to
install, operate and maintain telecommunications system
throughout the Philippines. PLDT paid the BIR of its taxes for
equipment, machineries, and spare parts it imported for its
business. PLDT sent a letter to BIR informing its tax exemption
under RA 7082, seeking a refund from all of its taxes paid in
connection with its importation of various equipment,
machineries and spare parts needed for its operation.
Issue/s: W/N the grant of 3% franchise tax grants PLDT
exemption from paying VAT and other taxes
Held: NO. The “in lieu with all taxes” recognized by RA 7082
refers to the exemption to pay “direct taxes only”, which are
taxes imposed from the very person who, it is intended or
desired, should pay them; and it doesn’t cover “indirect taxes”,
which are those demanded or paid by one person in the
expectation and intention that he can shift the burden to
someone else. The taxes PLDT pays are under the
classification of indirect tax, thus, not under the exemption of
the law.
PASCUAL v. SECRETARY OF PUBLIC WORKS
Facts: Pascual filed an action for declaratory relief with
injunction assailing RA 920, or “An Act Appropriating Funds
for Public Works”, because the law appropriated P85000 “for
the construction, reconstruction, repair, extension, and
improvement of the Pasig feeder road terminals”. He claims
that the fund would be of private use because the lands on
which the said feeder roads were to be constructed
(particularly Antonio Subdivision) is owned by Sen. Antonio
Zulueta, who was the member of the Senate and passed RA
920. In turn, Zulueta’s land would be unlawfully enriched at
the people’s expense when the project would be upheld.
Pascual then prayed that RA 920 be considered null and void,
and a writ of injunction enjoining the Sec. of Public Works and
Sen. Zulueta from ordering and allowing them to continue the
project. As an afterthought, Zulueta donated the property to
Pasig City.
Issue/s: W/N the appropriation was valid
Held: NO. Such appropriation is void for being used for private
purposes. Not even the act of Sen. Zulueta of donating the
property to Pasig City would cure the constitutional defect. In
accordance for the taxing power of the state, it must be used
for public purposes only, not to be used for any private
purpose. It cannot defeat the fact that Zulueta owned the lands
in question where the projected feeder road terminals will be
made, using the fund for private purpose, making RA 920 null
and void.
TIO v. VIDEOGRAM
Facts: Tio, on behalf of other videogram operators, assails the
constitutionality of PD 1987, making a Videogram Regulatory
Board, as an organization which would regulate and supervise
the videogram industry. In lieu with that, VRB, as a need to
regulate the sale of videograms and to help the movie industry
recover lost revenue, the videograms to be sold must be taxed,
as it imposes 30% tax on gross receipts to be payable to LGUs.
He said that the 30% tax is not germane to the subject matter
of the law and there was undue delegation, on the part of VRB,
to impose such tax.
Issue/s: W/N PD 1994 is constitutional
Held: YES. The tax being imposed on the decree is not only
regulatory but also revenue measure as well, on the regulation
of both the videogram and movie industry. The questioned
taxation is allied and germane, and is reasonably necessary for
the objective of the PD. Furthermore, there was no undue
delegation granted to VRB, as it is only tasked to seek
assistance the execution, enforcement, and implementation of
the law.
PEPSI-COLA v. TANAUAN
Facts: Tanauan, Leyte approved an Ordinance which levies
and collects “from softdrinks producers and manufacturers a
tax of 1/6th of a centavo for every bottle of soda corked”.
Another Ordinance was passed, which levies “on softdrink
produced or manufactured within its territorial jurisdiction a
tax of P0.01 on each gallon of volume capacity”. Pepsi-Cola,
owning a bottling plant in Tanauan, assails the
constitutionality of RA 2264, or Local Autonomy Act, and
declare the taxing Ordinances null and void. The company
contends that there is double taxation concerning both
Ordinances as it imposes practically the same tax rate and
covers the same subject matter, and both ordinances impose
percentage or specific taxes. There was also undue delegation
on the part of the Municipality on allowing the delegation of
taxing powers, allowing them to tax companies is oppressive
and confiscatory. The Municipality argued that the latter
Ordinance amended the former, thus, there was no double
taxation.
Issue/s: W/N there was undue delegation to the Municipality
and there was double taxation
Held: NO. There is no undue delegation on the part of LGUs as
it is allowed by the Constitution, granting them the power to
tax for the purpose of self-sustaining its municipality. Also,
there was no double taxation as the argument of the
Municipality is valid, that the latter Ordinance served as an
amendment to the former, hence, no double taxation.
MIA v. CA
Facts: MIAA operates NAIA under EO 903 issued by then Pres.
Marcos. Subsequent EOs amended EO 903. As its operator, it
administers the land, equipment, and facilities of the NAIA
complex. Later, OGCC issued Opinion 061, which withdrew the
exemption of MIA’s real estate tax. Even though it paid its real
estate taxes, the Municipality of Paranaque sent Final Notices
of Real Estate Tax Delinquencies, furthermore, issued notices
and warrants of levy on the airport lands and buildings. OGCC
issued Opinion 147, which requires persons exempt of real
estate tax to show proof of exemption, showing Section 21 of
the MIAA Charter as proof. MIAA filed a petition to restrain
Paranaque City from imposing the real estate tax, but it was
dismissed by the CA. MIA contends that the government can’t
tax on itself as a justification of its exemption for its lands and
buildings are devoted for public use and purpose, therefore it
is owned by the Republic of PH. Paranaque assails that GOCCs,
like MIAA, are not exempt from taxes as per the LGC.
Issue/s: W/N MIAA is subject to tax exemption
Held: YES. The LGC has other provisions, particularly Sec. 243
(a) and 133 (o), pointing out that real estate tax, or any tax in
any form, is exempted on any real property owned by the
Republic of PH. The local government cannot tax its own
government. MIAA is not a GOCC, but an instrumentality of the
Government.
CBK POWER v. CIR
Facts: CBK Power has limited partnership duly recognized
under the laws of the country, engaged in the development
and operation of various hydroelectric power plants. To help
finance the project, CBK Power obtained a syndicated loan
from several foreign banks, with one of the banks (Fuji Bank,
later Mizuho Bank due to merger) having a branch here in the
PH. CBK allegedly withheld final taxes from said payments
with corresponding rate from each bank. However, under
relevant tax treaties, the interest income derived from each
banks must be subject only to the preferential tax rate of 10%.
CBK filed for a refund of its excess final withholding taxes
which were erroneously collected. CTA partially granted the
refunds, with one of them was disallowed because CBK hasn’t
obtained an ITAD ruling with its transactions to Fortis-
Netherlands.
Issue/s: W/N BIR may add a requirement not found in the
income tax treaties
Held: NO. The obligation to comply with a tax treaty must take
precedence over the objective of RMO 1-2000. The period of
availment of tax treaty relief should not operate to divet
entitlement to the relief as it would constitute a violation of
the good faith required in complying the tax treaty. Non-
compliance would have negative impliations on int’l relations
and unduly discourages foreign investors.
SEA-LAND SERVICES v. CA
Facts: Sea-Land Services, an American international shipping
company licensed by SEC to do business in the PH, entered
into a contract with the US Government to transport military
household goods to its personnel on the Subic Naval Base.
During its taxable year, Sea-Land filed a corresponding ITR
and paid its income tax due thereon. However, realizing it paid
the income tax by mistake, Sea-Land wrote to the BIR to claim
its refund for the mistaken income tax, but before BIR can act
upon it, Sea-Land already filed a petition for review before the
CTA to pursue its claim for refund and to stop the 2-year
prescriptive period as per the NIRC.
Issue/s: W/N the income tax paid by Sea-Land falls within the
exemption by the RP-US Military Bases Agreement
Held: NO. The Agreement only exempts the income tax with
connection to the “construction, maintenance, operation and
defense of the bases”. The transport of household goods and
effects doesn’t qualify to the aforementioned criteria, thus
subject to income tax.
MITSUBISHI v. CIR
Facts: NPC contracted the services of Mitsubishi for the
engineering, supply, construction, installation, testing, and
commission of a steam generator, auxiliaries and associated
civil works for the Project (Calaca Power Plant). Its foreign
currency portion was funded by the OECF loans due to the
Exchange of Notes by PH and Japan, and under the contract,
NPC would pay any and all forms of taxes it may accrue. When
the project was finished, 5 years later, Mitsubishi filed to CIR
an administrative claim for refund corresponding the income
tax funded by the project. To suspend the two year
prescriptive period of filing a judicial claim, petitioner filed a
petition for review to CTA for its claim of refund. However
granted, CTA en banc ruled in reverse for Mitsubishi failed to
establish that its tax payments were “erroneous” to justify the
refund; the Exchange of Notes cannot be read as a treaty with
the lack of Senate concurrence, and the proper remedy must
be that petitioner would recover the subject taxes from NPC,
not from CIR.
Issue/s: W/N Mitsubishi is entitled to a refund
Held: YES. Sec. 204, par. C of the NIRC grants CIR the authority
to credit or refund erroneously collected taxes by the
Government, and by virtue of the Exchange of Notes, an
executive agreement, the Government has already assumed
the obligation to pay such. Also, the CIR has the authority in
cases of recovery of erroneously collected taxes as the
government executing agency on such matter.
REAGAN v. CIR
Facts: Reagan disputed the payment of income tax assessed to
him by CIR on an amount realized by him on a sale of his
automobile (1960 Cadillac) to a member of US Marine Corps,
the transaction took place in Clark Air Base. His contention is
that the transaction was done outside PH territory, therefore,
it is beyond its jurisdiction to tax. Also, he cited the Military
Bases Agreement, in which he pointed out that his nature of
employment is exempt from PH taxation.
Issue/s: W/N the sale is considered done in a foreign soil, thus
exempted for tax
Held: NO. The Base has not become foreign soil or territory.
Not even the Military Bases Agreement stated anything to
prove his assertion. Although he is employed under USAF and
his income is derived from the US, the income derived from
the sale is not of US source, thus, it is taxable by PH laws.
MANILA ELECTRIC COMPANY v. YATCO
Facts: Manila Electric insured with two US based insurance
companies certain real and personal properties situated in the
PH. The insurance was entered into in behalf of the plaintiff by
its broker in New York. The policies of the insurance
companies, not doing any business in PH, contained
provisions about settlement and payment of losses upon
occurrence of any risk insured against. MCC, through its
broker, paid premiums onto the insurance companies. The
CIR assessed the value and levied 1% tax on the said
premiums, in which MCC paid under protest.
Issue/s: W/N CIR exceeded its taxing powers over MCC’s paid
premium
Held: NO. Substantial elements of the contract are situated
inside the territory of the PH as to give the Government to
exercise its power to tax. Even if the tax imposed upon the
insured will ultimately be passed on to the insurer, therefore
constituting an indirect tax on the foreign company, by
stipulations of its contract, has subjected itself to taxing
jurisdiction of the PH.
CIR v. MARUBENI
Facts: Marubeni, a Japanese corporation, engaged in general
import and export trading, financing and construction, is duly
registered in the PH. CIR examined petitioner’s book of
accounts and discovered undeclared income from contracts
with NDC and Philphos on a “turn-key” basis. CIR sent a letter
to Marubeni of its assessment for several deficiency taxes. CIR
claimed that its income is derived from PH sources, thus
subject to internal revenue taxes. Earlier that year, EO 41
declared a tax amnesty on unpaid income taxes in which
Marubeni is qualified, and filed for the tax amnesty. 3 months
later, EO 64 was implemented, expanding the scope of the
former to include estate and donor’s taxes and extended the
deadline. Marubeni filed a supplemental tax amnesty return in
accordance to the EO.
Issue/s: W/N Marubeni is exempted from paying tax
Held: YES. When EO 41 became effective, the case had not yet
been filed, disregarding CIR’s argument of Marubeni’s
disqualification to the tax amnesty. Marubeni is qualified and
doesn’t fall to the exception of the said EO. As for the two turn
key projects, the situs of both projects is in the Philippines,
and the materials used and rendered services were all done
inside the territorial jurisdiction of PH. Therefore, the total
gross receipts must fall or be subjected to contractor’s tax.
However, Marubeni proved that not all the work is done inside
PH jurisdiction, therefore, not subject to contractor’s tax.
TIU v. CA
Facts: Congress passed RA 7227, or the Bases Conversion and
Development Act, aiming to accelerate the conversion of
military reservations into other productive uses, creating the
bases conversion and dev’t authority for this purpose,
providing funds therefore and other purposes, which also
created the SSEZ. Furthermore, an Order was implemented in
which it narrowed down the special privileges in the SSEZ. Tiu
et al assail the constitutionality of the Order, claiming that
they were excluded from the benefits of RA 7227 without any
reasonable standards, violating the equal protection clause of
the Constitution.
Issue/s: W/N EO 97 violates the equal protection clause of the
Constitution
Held: NO. The Court held that the classification of the law is
based on valid and reasonable standards. Classifications, to be
valid, must: (1) rest on substantial distinctions, (2) be
germane to the purpose of the law, (3) not be limited to
existing conditions only, and (4) apply equally to all members
of the same class. The President has the authority to delimit
the application of some incentives in the confines of the SSEZ.
The Government wants it to be a self-sustaining industrial and
commercial zone for big foreign and local investors to use for
their business and industries that can spur economic growth
for the country’s benefit.
CIR v. LINGAYEN GULF
Facts: Lingayen Gulf operates an electric power plant
pursuant to the municipal franchise granted by its municipal
council, saying that the said power plant must pay quarterly
1% of its gross earnings to the Provincial Treasury of
Pangasinan for the first 20 years, then 2% for the remaining
15 years of the franchise. BIR assessed against and demanded
LGEC to pay its deficiency franchise taxes and surcharges.
LGEC sought for an investigation that it might be an
overpayment of the franchise taxes, but BIR denied its
request.
Issue/s: W/N Sec. 4 of RA 3843 is unconstitutional being
violative of the “uniformity and equality of taxation” clause of
the Constitution
Held: NO. The legislative branch has the inherent power on
selecting the subjects of taxation and also to grant exceptions.
Tax exemptions have never been violative of the equal
protection clause. The law (RA 3843) didn’t onl fix and specify
a franchise tax of 2% on its gross receipts but made it in lieu
of any and all taxes, thus, the company is not liable for the
deficiency taxes.
AMERICAN BIBLE SOCIETY v. MANILA
Facts: Petitioner has been distributing and selling Bibles
and/or gospel portions thereof throughout the PH and
translating such into different PH dialects. The actibg City
Treasurer of Manila informed the Ministry that they are
conducting business of general merchandise without
providing the necessary Mayor’s permit to conduct business
and municipal license as well, in violation of an Ordinance to
the City. The society paid under protest the necessary fees and
filed a suit to question the legality of the ordinances under
which the fees were collected.
Issue/s:
 W/N the Ordinances requiring the plaintiff to pay the
necessary fees are constitutional
 W/N The provisions of the said ordinances are
applicable to the case at bar
Held:
 YES. The Ordinances doesn’t deprive the Society to
freely exercise and enjoy their religious beliefs and
worship. The Ordinances are constitutional even if
applied to the plaintiffs.
 NO. The act of distribution of Bibles is purely religious
in character and does not fall in the qualifications laid
down by law. Thus, the Ordinances are not applicable.
REPUBLIC v. CAGUIOA
Facts: Congress passed RA 7227, or the Bases Conversion and
Development Act, aiming to accelerate the conversion of
military reservations into other productive uses, creating the
bases conversion and dev’t authority for this purpose,
providing funds therefore and other purposes, which also
created the SSEZ and the SBMA. Sec 12 of the law provides that
no taxes shall be imposed within the SSEZ. Indigo Distribution
Corp. et al are doing business at the SBFZ and was granted
certificates of registration and tax exemption. Subsequently,
Congress passed RA 9334, where all taxes and charges will be
applied to cigars, cigarettes, distilled spirits liquors, and the
like brought directly to the chartered freeport zone. Indigo et
al sought for reconsideration for them to be exempt of the
taxes and charges to be applied on their products, but SBMA
denied their request. Indigo et al filed a civil action for
declaratory relief, assailing certain provisions of RA 9334 as
unconstitutional. Judge Caguioa presided, and heeded the
injunction, amounting to P1million.
Issue/s: W/N Judge Caguioa committed grave abuse of
discretion amounting to lack or excess in jurisdiction for
issuance of the injunction
Held: YES. The respondent judge overstepped its juridical
boundaries on the issuance of the writ of preliminary
injunction, thus shifting the burden of the plaintiff to prove the
constitutionality of RA 9334. One more factor of overstepping
the judicial boundaries is that the judge himself fixed the
injunction bond, for the bond must be usually conditioned
accordingly.
CAGAYAN ELECTRIC v. CIR
Facts: CEPALCO is a holder of a legislative franchise, and via
RA 3247, plaintiff is required for the payment of 3% tax on its
gross earnings from the sale of electric current. Subsequently,
RA 5431 made all corporate taxpayers liable for income tax
notwithstanding the “provisions of exiting special or general
laws to the contrary”, making franchise companies to pay
income and a franchise tax as well. In petitioner’s case, RA
6020, the law that made it a franchise was amended,
reenacting the tax exemption in its original charter. CIR sent a
demand letter to CEPALCO to pay its deficiency taxes on the
intervening period between the implementation of RA 5431
and RA 6020.
Issue/s: W/N CEPALCO is liable of the tax
Held: YES. A franchise is subject for amendment, alteration or
repeal by the Congress when public interest so requires.
CEPALCO had the reason not to pay its income tax because of
its tax exemption. For this reason, it should be liable only of
the tax proper and not of the surcharge and interest.
MANILA ELECTRIC v. LAGUNA
Facts: MERALCO was granted franchise for supply of electric
light, heat, and power by certain municipalities in Laguna,
particularly in Calamba, Laguna. RA 7160, or the LGC, was
enacted enjoining local gov’t units to generate their own
source of income and revenue consistent with the basic policy
of local autonomy. With that, Laguna implemented an
Ordinance on the payment of franchise tax on the rate of 50%
of 1% of the gross annual receipts. The Provincial Treasurer
sent a demand letter for the payment of its deficiency taxes, in
which MERALCO paid. A formal claim of refund was made by
MERALCO claiming that the franchise tax that it had paid PD Held: NO. RA 329 empowers the City not only to impose a
551 provided that 2% of the gross receipts are to be paid to license fee, but also to levy a tax for the City’s revenue, so such
the CIR, but to no avail. is not ultra vires, for there is more than ample statutory
authority for its enactment. There is no double taxation
Issue/s: W/N the imposition of the franchise tax is violative
because one tax is imposed by the State and another is
of the non-impairment clause of the Constitution
imposed by the City, hence, both taxes can be simultaneously
Held: NO. The local government don’t have the inherent imposed without the possibility of double taxation. The
power to tax except to the extent that such power might be imposition of the license fee doesn’t constitute a violation of
delegated to them either by the basic law or statute. In the uniformity for it is an activity imposed by the State and its
prevailing Constitution today, the tax power must be deemed political subdivisions.
to exist although Congress may provide statutory limitations
or guidelines, aiming to foster the self-sufficiency of the LGUs
by granting them general and broad tax powers. Although
there is autonomy, the tax to be imposed must not be too
oppressive or confiscatory to the taxpayer, LGU has its own
share of available resources, national government’s resources
would not be disturbed, and local taxation would be fair,
uniform, and just.

BAGUIO v. DE LEON
Facts: Baguio City passed an Ordinance aiming to impose a
license fee on any person, entity, or corporation that would do
business in the City, coming from RA 329, fixing the license fee
and regulate businesses, trades and occupations that may be
established by the City. Respondent was assessed with a P50
annual fee due to his business as a real estate dealer. De Leon
assailed the validity of the of the Ordinance arguing that the
City has no statutory authority to grant levy or tax, the City
imposed double taxation and it violates the requirement of
uniformity.
Issue/s: W/N De Leon’s arguments are tenable