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151 SCRA 208 Political Law The Embrace of Only One Sb!ect

by a "ill

#ele$ation of Power #ele$ation to A%mini&trati'e "o%ie&

In 1985, Presidential Dedree No. 1987 entitled An Act Creating the

Videogram Reglator! "oard# $as enacted $hich ga%e &road 'o$ers to

the VR" to reglate and s'er%ise the %ideogram indstr!. (he said la$

soght to minimi)e the economic e*ects o+ 'irac!. (here $as a need to

reglate the sale o+ %ideograms as it has ad%erse e*ects to the mo%ie

indstr!. (he 'roli+eration o+ %ideograms has signicantl! lessened the

re%ene &eing ac-ired +rom the mo%ie indstr!, and that sch loss ma!

&e reco%ered i+ %ideograms are to &e taed. /ection 10 o+ the PD im'oses a

02 ta on the gross recei'ts 'a!a&le to the 34s.

In 1986, Valentin (io assailed the said PD as he a%erred that it is

nconstittional on the +ollo$ing gronds

1. /ection 10 thereo+, $hich im'osed the 02 ta on gross recei'ts, is a

rider and is not germane to the s&ect matter o+ the la$.

. (here is also nde delegation o+ legislati%e 'o$er to the VR", an

administrati%e &od!, &ecase the la$ allo$ed the VR" to de'ti)e, upon

its discretion, other go%ernment agencies to assist the VR" in en+orcing

the said PD.

ISSUE: :hether or not the Valentin (io;s argments are correct.

HELD: No.

1. (he Constittional re-irement that e%er! &ill shall em&race onl! one

s&ect $hich shall &e e'ressed in the title thereo+# is s

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Association $ere 'ermitted &! the /'reme Cort /CB to inter%ene in the

case o%er (io;s o''osition 'on the allegations that inter%ention $as

necessar! +or the com'lete 'rotection o+ their rights and that their

sr%i%al and %er! eistence is threatened &! the nreglated 'roli+eration

o+ lm 'irac!.#

Issues:

1B :hether or not /ection 10 o+ P.D. No. 1987, $hich im'oses a ta o+

thirt! 'ercent 02Bon the gross recei'ts 'a!a&le to the local

go%ernment is a rider and the same is not germane to the s&ect

thereo+

B :hether or not the ta im'osed is harsh, conscator!, o''ressi%e

andEor in nla$+l restraint o+ trade in %iolation o+ the de 'rocess o+

the Constittion and

B:hether or not there is nde delegation o+ 'o$er and athorit!

Rling

As to the rst isse, the /C held that (io;s contention that the ta 'ro%ision

o+ the

Decree is a rider is &ere+t and de%oid o+ merit &ecase the title o+ the

Decree, $hich is the creation o+ the Videogram Reglator! "oard VR"B

aimed at reglating and controlling the %ideo indstr!, is com'rehensi%e

enogh to inclde the 'r'oses e'ressed in its Pream&le and reasona&l!

co%ers all its 'ro%isions. oreo%er, it is nnecessar! to e'ress all those

o&ecti%es in the title or that the latter &e an inde to the &od! o+ the

decree. As to the second isse, the /C held that it is aiomatic that a tadoes not cease to &e %alid merel! &ecase it reglates, discorages, or

e%en denitel! deters the acti%ities taed. (he legislatre acts 'on its

constitents in im'osing a ta ths, in general, a s

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(he nreglated acti%ities o+ %ideogram esta&lishments ha%e also a*ected

the %ia&ilit! o+ the mo%ie indstr!.

Issues:

1B :hether or not ta im'osed &! the DGCRGG is a %alid eercise o+ 'olice

'o$er.

B :hether or nor the DGCRGG is constittional.

Held:

(aation has &een made the im'lement o+ the state;s 'olice 'o$er. (he

le%! o+ the 02 ta is +or a '&lic 'r'ose. It $as im'osed 'rimaril! to

ans$er the need +or reglating the %ideo indstr!, 'articlarl! &ecase o+

the ram'ant lm 'irac!, the Fagrant %iolation o+ intellectal 'ro'ert!

rights, and the 'roli+eration o+ 'ornogra'hic %ideo ta'es. And $hile it $as

also an o&ecti%e o+ the DGCRGG to 'rotect the mo%ie indstr!, the ta

remains a %alid im'osition.

:e nd no clear %iolation o+ the Constittion $hich $old sti+! s in

'rononcing Presidential Decree No. 1987 as nconstittional and %oid.

:hile the nderl!ing o&ecti%e o+ the DGCRGG is to 'rotect the mori&nd

mo%ie indstr!, there is no -estion that '&lic $el+are is at &ottom o+ its

enactment, considering the n+air com'etition 'osed &! ram'ant lm

'irac! the erosion o+ the moral &er o+ the %ie$ing '&lic &roght a&ot

&! the a%aila&ilit! o+ nclassied and nre%ie$ed %ideo ta'es containing

'ornogra'hic lms and lms $ith &rtall! %iolent se-ences and losses in

go%ernment re%enes de to the dro' in theatrical attendance, not to

mention the +act that the acti%ities o+ %ideo esta&lishments are %irtall!

ntaed since mere 'a!ment o+ a!or;s 'ermit and mnici'al license +eesare re-ired to engage in &siness.#

:LGRGK>RG, the instant Petition is here&! dismissed. No costs.

Facts:

1. Petitioner on his o$n &ehal+ and 'r'ortedl! on &ehal+ o+ other %ideogram

o'erators ad%ersel! a*ected assailed the constittionalit! o+ PD 1987entitled MAn Act Creating the Videogram Reglator! "oardM $ith &road

'o$ers to reglate and s'er%ise the %ideogram indstr!. (he Decree

'romlgated on >cto&er 5, 1985, too= e*ect on A'ril 10, 1986, +teen 15B

da!s a+ter com'letion o+ its '&lication in the >

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H

%ideos is e%ident +rom Pream&les and 5. (hose 'ream&les e'lain the

moti%es o+ the la$ma=er in 'resenting the measre.

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!o""issioner o# Internal $eenue s% &l'ue Inc%

($ )o% L*+889, - Fe.% 17/ 1988

Facts:

Alge Inc. is a domestic cor' engaged in engineering, constrction and

other allied acti%ities >n an. 1H, 1965, the cor' recei%ed a letter +rom the CIR regarding its

delin-enc! income taes +rom 1958J1959, amtg to P8,18.85

A letter o+ 'rotest or reconsideration $as led &! Alge Inc on an 18

>n arch 1, a $arrant o+ distraint and le%! $as 'resented to Alge

Inc. thr its consel, Att!. 4e%ara, $ho re+sed to recei%e it on the grond

o+ the 'ending 'rotest

/ince the 'rotest $as not +ond on the records, a le co'! +rom the

cor' $as 'rodced and gi%en to "IR Agent Re!es, $ho de+erred ser%ice o+

the $arrant

>n A'ril 7, Att!. 4e%ara $as in+ormed that the "IR $as not ta=ing an!action on the 'rotest and it $as onl! then that he acce'ted the $arrant o+

distraint and le%! earlier soght to &e ser%ed

>n A'ril , Alge led a 'etition +or re%ie$ o+ the decision o+ the CIR

$ith the Cort o+ (a A''eals

CIR contentions

J the claimed dedction o+ P75,000.00 $as 'ro'erl! disallo$ed &ecase it

$as not an ordinar! reasona&le or necessar! &siness e'ense

J 'a!ments are ctitios &ecase most o+ the 'a!ees are mem&ers o+ the

same +amil! in control o+ Alge and that there is not enogh s&stantiation

o+ sch 'a!ments

C(A 75O had &een legitimatel! 'aid &! Alge Inc. +or actal ser%ices

rendered in the +orm o+ 'romotional +ees. (hese $ere collected &! the

Pa!ees +or their $or= in the creation o+ the Vegeta&le >il In%estment

Cor'oration o+ the Phili''ines and its s&se-ent 'rchase o+ the

'ro'erties o+ the Phili''ine /gar Gstate De%elo'ment Com'an!.

Issue: :EN the Collector o+ Internal Re%ene correctl! disallo$ed the

P75,000.00 dedction claimed &! Alge as legitimate &siness e'enses in

its income ta retrns

$ulin':

(aes are the li+e&lood o+ the go%ernment and so shold &e collected

$ithot nnecessar! hindrance, made in accordance $ith la$.

RA 115 the a''eal ma! &e made $ithin thirt! da!s a+ter recei't o+

the decision or rling challenged

Dring the inter%ening 'eriod, the $arrant $as 'rematre and cold

there+ore not &e ser%ed. >riginall!, CIR claimed that the 75O 'romotional +ees to &e 'ersonal

holding com'an! income, &t later on con+ormed to the decision o+ C(A

(here is no dis'te that the 'a!ees dl! re'orted their res'ecti%e

shares o+ the +ees in their income ta retrns and 'aid the corres'onding

taes thereon. C(A also +ond, a+ter eamining the e%idence, that no

distri&tion o+ di%idends $as in%ol%ed

CIR sggests a ta dodge, an attem't to e%ade a legitimate

assessment &! in%ol%ing an imaginar! dedction

Alge Inc. $as a +amil! cor'oration $here strict &siness 'rocedres

$ere not a''lied and immediate issance o+ recei'ts $as not re-ired. atthe end o+ the !ear, $hen the &oo=s $ere to &e closed, each 'a!ee made

an acconting o+ all o+ the +ees recei%ed &! him or her, to ma=e ' the

total o+ P75,000.00. (his arrangement $as nderstanda&le in %ie$ o+ the

close relationshi' among the 'ersons in the +amil! cor'oration

(he amont o+ the 'romotional +ees $as not ecessi%e. (he total

commission 'aid &! the Phili''ine /gar Gstate De%elo'ment Co. to Alge

Inc. $as P15O. A+ter dedcting the said +ees, Alge still had a &alance o+

P50,000.00 as clear 'rot +rom the transaction. (he amont o+ P75,000.00

$as 602 o+ the total commission. (his $as a reasona&le 'ro'ortion,

considering that it $as the 'a!ees $ho did 'racticall! e%er!thing, +rom the

+ormation o+ the Vegeta&le >il In%estment Cor'oration to the actal

'rchase &! it o+ the /gar Gstate 'ro'erties.

/ec. 0 o+ the (a Code allo$ed dedctions in the net income

Expenses - All the ordinary and necessary expenses paid or incurred

during the taxable year in carrying on any trade or business, including a

reasonable allowance for salaries or other compensation for personal

services actually rendered xxx

the &rden is on the ta'a!er to 'ro%e the %alidit! o+ the claimed

dedction

In this case, Alge Inc. has 'ro%ed that the 'a!ment o+ the +ees $as

necessar! and reasona&le in the light o+ the e*orts eerted &! the 'a!ees

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in indcing in%estors and 'rominent &sinessmen to %entre in an

e'erimental enter'rise and in%ol%e themsel%es in a ne$ &siness

re-iring millions o+ 'esos.

(aes are $hat $e 'a! +or ci%ili)ation societ!. :ithot taes, the

go%ernment $old &e 'aral!)ed +or lac= o+ the moti%e 'o$er to acti%ate

and o'erate it. Lence, des'ite the natral relctance to srrender 'art o+oneQs hard earned income to the taing athorities, e%er! 'erson $ho is

a&le to mst contri&te his share in the rnning o+ the go%ernment. (he

go%ernment +or its 'art, is e'ected to res'ond in the +orm o+ tangi&le and

intangi&le &enets intended to im'ro%e the li%es o+ the 'eo'le and

enhance their moral and material %ales

(aation mst &e eercised reasona&l! and in accordance $ith the

'rescri&ed 'rocedre. I+ it is not, then the ta'a!er has a right to com'lain

and the corts $ill then come to his sccor

Alge Inc.;s a''eal +rom the decision o+ the CIR $as led on time $ith the

C(A in accordance $ith Re'. Act No. 115. And $e also nd that the

claimed dedction &! Alge Inc. $as 'ermitted nder the Internal Re%ene

Code and shold there+ore not ha%e &een disallo$ed &! the CIR.

Facts:

(he Phili''ine /gar Gstate De%elo'ment Com'an! P/GDCB a''ointed

Alge Inc. as its agent, athori)ing it to sell its land, +actories, and oil

man+actring 'rocess. (he Vegeta&le >il In%estment Cor'oration V>ICPB

'rchased P/GDC 'ro'erties. Kor the sale, Alge recei%ed a commission o+

P15,000 and it $as +rom this commission that it 'aid 4e%ara, et. al.

organi)ers o+ the V>ICP, P75,000in 'romotional +ees. In 1965, Alge

recei%ed an assessment +rom the Commissioner o+ Internal Re%ene in the

amont o+ P8,18.85 as delin-enc! income ta +or !ears 1958 amd

1959. Alge led a 'rotestor re-est +or reconsideration $hich $as not

acted 'on &! the "rea o+ Internal Re%ene "IRB. (he consel +or Alge

had to acce't the $arrant o+ distrant and le%!. Alge, ho$e%er, led a

'etition +or re%ie$ $ith the Coort o+ (a A''eals.

Issue::hether the assessment $as reasona&le.

Held:

(aes are the li+e&lood o+ the go%ernment and so shold &e collected

$ithot nnecessar! hindrance. G%er! 'erson $ho is a&le to 'a! mst

contri&te his share in the rnning o+ the go%ernment. (he 4o%ernment,

+or his 'art, is e'ected to res'ond in the +orm o+ tangi&le and intangi&le

&enets intended to im'ro%e the li%es o+ the 'eo'le and enhance their

moral and material %ales. (his s!m&iotic relationshi' is the rationale o+

taation and shold dis'el the erroneos notion that is an ar&itrar! methodo+ eaction &! those in the seat o+ 'o$er. (a collection, ho$e%er, shold

&e made in accordance $ith la$ as an! ar&itrariness $ill negate the %er!

reason +or go%ernment itsel+. Kor all the a$esome 'o$er o+ the ta

collector, he ma! still &e sto''ed in his trac=s i+ the ta'a!er can

demonstrate that the la$ has not &een o&ser%ed. Lerein, the claimed

dedction 'rsant to /ection 0?a@ ?1@ o+ the (a Code and /ection 70 ?1@

o+ Re%ene Reglation as to com'ensation +or 'ersonal ser%icesB had

&een legitimatel! &! Alge Inc. It has +rther 'ro%en that the 'a!ment o+

+ees $as reasona&le and necessar! in light o+ the e*orts eerted &! the

'a!ees in indcing in%estors in V>ICPB to in%ol%e themsel%es in an

e'erimental enter'rise or a &siness re-iring millions o+ 'esos. (he

assessment $as not reasona&le.

F&!0S:

Pri%ate res'ondent cor'oration Alge Inc. led its income ta retrns +or

1958 and 1959sho$ing dedctions, +or 'romotional +ees 'aid, +rom their

gross income, ths lo$ering their taa&le income. (he "IR assessed Alge

&ased on sch dedctions contending that the claimed dedction is

disallo$ed &ecase it $as not an ordinar!, reasona&le and necessar!

e'ense.

ISSUE:/hold an ncommon &siness e'ense &e disallo$ed as a 'ro'er

dedction in com'tation o+ income taes, corollar! to the doctrine that

taes are the li+e&lood o+ the go%ernment

HELD:

No. Pri%ate res'ondent has 'ro%ed that the 'a!ment o+ the +ees $asnecessar! and reasona&le in the light o+ the e*orts eerted &! the 'a!ees

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in indcing in%estors and 'rominent &sinessmen to %entre in an

e'erimental enter'rise and in%ol%e themsel%es in a ne$ &siness

re-iring millions o+ 'esos. (his $as no mean +eat and shold &e, as it $as,

s

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'art o+ oneQs hard earned income to the taing athorities, e%er! 'erson

$ho is a&le to mst contri&te his share in the rnning o+ the go%ernment.

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!I$ !0& 19923

!I$ !0&($ )o 14,,11/ 5ul6 +1/ 1992

F&!0S:

Cit!trst led a 'etition $ith the Cort o+ (a A''eals claiming the re+ndo+ its income ta o%er'a!ments +or the !ears 198, 198H and 1985 in thetotal amont o+ P19,971,7H5. (he CIR cold not 'resent an! e%idence deto the re'eated +ailre o+ the ta creditEre+nd di%ision o+ the "IR totransmit the records o+ the case and the in%estigation re'ort to the/olicitor 4eneral. (he case $as decided in +a%or o+ Cit! (rst. 'on motiono+ reconsideration, 'etitioner alleged that throgh an interJo

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(he errors o+ certain administrati%e o

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;Lut s% &raneta($ L*78

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alleging that sch enactment is not &eing le%ied +or a '&lic 'r'ose &t

solel! and eclsi%el! +or the aid and s''ort o+ the sgar indstr! ths

ma=ing it %oid and nconstittional.

(he sgar indstr! sitation at the time o+ the enactment $as in an

imminent threat o+ loss and needed to &e sta&ili)ed &! im'osition o+

emergenc! measres.

ISSUE:Is CA 567 constittional, des'ite its &eing allegedl! %iolati%e o+ the

e-al 'rotection clase, the 'r'ose o+ $hich is not +or the &enet o+ the

general '&lic &t +or the reha&ilitation onl! o+ the sgar indstr!

HELD:

Ses. (he 'rotection and 'romotion o+ the sgar indstr! is a matter o+

'&lic concern, it +ollo$s that the 3egislatre ma! determine $ithin

reasona&le &onds $hat is necessar! +or its 'rotection and e'edient +or

its 'romotion. Lere, the legislati%e discretion mst &e allo$ed to +ll! 'la!,

s&ect onl! to the test o+ reasona&leness and it is not contended that themeans 'ro%ided in the la$ &ear no relation to the o&ecti%e 'rsed or are

o''ressi%e in character. I+ o&ecti%e and methods are ali=e constittionall!

%alid, no reason is seen $h! the state ma! not le%! taes to raise +nds +or

their 'rosection and attainment. (aation ma! &e made the im'lement o+

the stateQs 'olice 'o$er.

F&!0S:

De to the threat to indstr! &! the imminent im'osition o+ e'ort taes

'on sgar as 'ro%ided in the (!dingsJcD*e Act, and the Me%ental loss

o+ its 're+erential 'osition in the nited /tates mar=etM the National

Assem&l! 'romlgated Common$ealth Act No. 567, other$ise =no$n as

the /gar Adstment Act Mto o&tain a readstment o+ the &enets deri%ed

+rom the sgar indstr! &! the com'onent elements thereo+M and Mto

sta&ili)e the sgar indstr! so as to 're'are it +or the e%entalit! o+ the

loss o+ its 're+erential 'osition in the nited /tates mar=et and the

im'osition o+ the e'ort taes.M Plainti*, :alter 3t), in his ca'acit! as

dicial Administrator o+ the Intestate Gstate o+ Antonio a!me 3edesma

challenged the legalit! o+ the taes im'osed &! the said Act. In 'lainti*Qs

o'inion sch ta is nconstittional and %oid, &eing le%ied +or the aid and

s''ort o+ the sgar indstr! eclsi%el!, $hich is not a '&lic 'r'ose +or

$hich a ta ma! &e constittionall! le%ied. (he action ha%ing &een

dismissed &! the Cort o+ Kirst Instance, the 'lainti* a''ealed the case

directl! to the /'reme Cort.

HELD:

(he &asic de+ect in the 'lainti*Qs 'osition is his assm'tion that the ta

'ro%ided +or in the said Act is a 're eercise o+ the taing 'o$er.

Lo$e%er, the ta is le%ied $ith a reglator! 'r'ose, to 'ro%ide means +or

the reha&ilitation and sta&ili)ation o+ the threatened sgar indstr!. In

other $ords, the act is 'rimaril! an eercise o+ the 'olice 'o$er. (he

'rotection and 'romotion o+ the sgar indstr! is a matter o+ '&lic

concern, it +ollo$s that the 3egislatre ma! determine $ithin reasona&le

&onds $hat is necessar! +or its 'rotection and e'edient +or its

'romotion. Lere, the legislati%e discretion mst &e allo$ed +ll! 'la!,

s&ect onl! to the test o+ reasona&leness and it is not contended that the

means 'ro%ided o+ the la$ &ear no relation to the o&ecti%e 'rsed or are

o''ressi%e in character. I+ o&ecti%e and methods are ali=e constittionall!

%alid, no reason is seen $h! the state ma! not le%! taes to raise +nds +or

their 'rosection and attainment. (aation ma! &e made the im'lement o+the stateQs 'olice 'o$er. (hat the ta to &e le%ied shold &rden the sgar

'rodcers themsel%es can hardl! &e a grond o+ com'laint indeed, it

a''ears rational that the ta &e o&tained 'recisel! +rom those $ho are to

&e &eneted +rom the e'enditre o+ the +nds deri%ed +rom it. (he

decision a''ealed +rom is a

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1H

(>?E@ % P&L>?&$

($ )o% L*+;,2cto.er +9/ 19,8

+< S!$& 8+7

F&!0S

Petitioner "enamin 4ome) mailed a letter at the 'ost o

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ISSUE::hether or not RA 165 as amended &! RA 61 and the +or

Administrati%e orders %iolates the e-al 'rotection clase o+ the

Constittion as $ell as the rle o+ ni+ormit! and e-alit! o+ taation

$ULI)(:

It is settled that the legislatre has the inherent 'o$er to select the

s&ects o+ taation and to grant eem'tions. (his 'o$er has a'tl! &een

descri&ed as Mo+ $ide range and Fei&ilit!. Indeed, it is said that in the eld

o+ taation, more than in other areas, the legislatre 'ossesses the

greatest +reedom in classication. (he reason +or this is that traditionall!,

classication has &een a de%ice +or tting ta 'rograms to local needs and

sages in order to achie%e an e-ita&le distri&tion o+ the ta &rden. (he

classication is &ased on considerations o+ administrati%e con%enience. Kor

it is no$ a settled 'rinci'le o+ la$ that consideration o+ 'ractical

administrati%e con%enience and cost in the administration o+ ta la$s

a*ord ade-ate grond +or im'osing a ta on a $ell recogni)ed anddened class. In the case o+ the antiJ(" stam's, ndo&tedl!, the single

most im'ortant and inFential consideration that led the legislatre to

select mail sers as s&ects o+ the ta is the relati%e ease and

con%enience o+ collecting the ta throgh the 'ost o

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!o""issioner s% !e.u Portland !e"ent($ L*+94cto&er 1957. (he com'an! mo%ed +or a $rit o+ eection, $hich $as

o''osed &! the Commissioner on the grond that the com'an! had an

otstanding sales ta lia&ilit! to $hich the dgment de&t had alread! &een

credited. (he Cort o+ (a A''eals held that the alleged sales ta lia&ilit!

$as still &eing -estioned and there+ore cannot &e setJo* against the

re+nd.

Issue::hether the assessment o+ sales ta l ia&ilit! ma! &e en+orced, i.e.

to set o* against the re+nd.

Held:

(he argment, that the assessment cannot as !et &e en+orced &ecase it is

still &eing contested, loss sight o+ the rgenc! o+ the need to collect taes

as the li+e &lood o+ the go%ernment.# I+ the 'a!ment o+ taes cold &e

'ost'oned &! sim'l! -estioning their %alidit!, the machiner! o+ the state

$old grind to a halt and all go%ernment +nctions $old &e 'aral!)ed. (o

re-ire the Commissioner to actall! re+nd to the com'an! the amont o+

the dgment de&t. :hich he $ill later ha%e the right to distrait +or

'a!ment o+ its sales ta lia&ilit!, is an idle rital.

Facts:

C(A decision ordered the 'etitioner CIR to re+nd to the Ce& Portland

Cement Com'an!, res'ondent, P 59,H08.98 re'resenting o%er'a!ments

o+ ad valorem taes on cement sold &! it. Gection o+ dgment $as

o''osed &! the 'etitioner citing that 'ri%ate res'ondent had an

otstanding sales ta lia&ilit! to $hich the dgment de&t had alread! &een

credited. In +act, there $as still a PH 'ls &alance the! o$ed. (he Cort

o+ (a A''eals, in holding that the alleged sales ta lia&ilit! o+ the 'ri%ate

res'ondent $as still &eing -estioned and there+ore cold not &e setJo*

against the re+nd, granted 'ri%ate res'ondentQs motion. (he 'ri%ate

res'ondent -estioned the assessed ta &ased on Article 186 o+ the (a

Code, contending that cement $as addged a mineral and not a

man+actred 'rodct and thsl! the! $ere not lia&le +or their alleged ta

decienc!. (here&!, 'etitioner led this 'etition +or re%ie$.

Issue :hether or not assessment o+ taes can &e en+orced e%en i+ there is

a case contesting it.

Held:

(he argment that the assessment cannot as !et &e en+orced &ecase it is

still &eing contested loses sight o+ the rgenc! o+ the need to collect taes

as Mthe li+e&lood o+ the go%ernment.M I+ the 'a!ment o+ taes cold &e

'ost'oned &! sim'l! -estioning their %alidit!, the machiner! o+ the state

$old grind to a halt and all go%ernment +nctions $old &e 'aral!)ed.

(hat is the reason $h!, sa%e +or the ece'tion in RA 115 , the (a Code

'ro%ides that innction is not a%aila&le to restrain collection o+ ta.

(here&!, $e hold that the res'ondent Cort o+ (a A''eals erred in its

order.

F&!0S

"! %irte o+ a decision o+ the C(A, as modied on a''eal &! the /'reme

Cort, the CIR $as ordered to re+nd to Ce& Portland Cement Com'an!the amont o+ P 59,H08.98, re'resenting o%er'a!ments o+ ad %alorem

taes on cement 'rodced and sold &! it. :hen res'ondent mo%ed +or a

$rit o+ eection, 'etitioner o''osed on the grond that the 'ri%ate

res'ondent had an otstanding sales ta lia&ilit! to $hich the dgment

de&t had alread! &een credited. In +act, it $as stressed, there $as still a

&alance o$ing on the sales taes in the amont o+ P H,789,79.85 'ls

82 srcharge. (he C(A granted the CIR;s motion.

(he CIR claims that the re+nd shold &e charged against the ta

decienc! o+ the 'ri%ate res'ondent on the sales o+ cement nder /ection

186 o+ the (a Code. Lis 'osition is that cement is a man+actred and not

a mineral 'rodct and there+ore not eem't +rom sales taes. (he

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17

'etitioner also denies that the sales ta assessments ha%e alread!

'rescri&ed &ecase the 'rescri'ti%e 'eriod shold &e conted +rom the

ling o+ the sales ta retrns, $hich had not !et &een done &! the 'ri%ate

res'ondent.

ean$hile, the 'ri%ate res'ondent disclaims lia&ilit! +or the sales taes, on

the grond that cement is not a man+actred 'rodct &t a mineral'rodct. As sch, it $as eem'ted +rom sales taes. Also, the alleged sales

ta decienc! cold not as !et &e en+orced against it &ecase the ta

assessment $as not !et nal, the same &eing still nder 'rotest and still to

&e denitel! resol%ed on the merits. "esides, the assessment had alread!

'rescri&ed, not ha%ing &een made $ithin the reglementar! %eJ!ear 'eriod

+rom the ling o+ the ta retrns.

ISSUE :hether or not sales ta $as 'ro'erl! im'osed 'on 'ri%ate

res'ondent.

HELD:

Ses, &ecase cement has al$a!s &een considered a man+actred 'rodct

and not a mineral 'rodct. (his matter $as etensi%el! discssed and

categoricall! resol%ed in Commissioner o+ Internal Re%ene %. Re'&lic

Cement Cor'oration, decided on Agst 10, 198, stating that cement -a

cement $as ne%er considered as a mineral 'rodct $ithin the meaning o+

/ection H6 o+ the (a Code, not$ithstanding that at least 802 o+ its

com'onents are minerals, +or the sim'le reason that cement is the 'rodct

o+ a man+actring 'rocess and is no longer the mineral 'rodct

contem'lated in the (a Code i.e. minerals s&ected to sim'le

treatmentsB +or the 'r'ose o+ im'osing the ad %alorem ta.

(he argment that the assessment cannot as !et &e en+orced &ecase it is

still &eing contested loses sight o+ the rgenc! o+ the need to collect taes

as Mthe li+e&lood o+ the go%ernment.M I+ the 'a!ment o+ taes cold &e

'ost'oned &! sim'l! -estioning their %alidit!, the machiner! o+ the state

$old grind to a halt and all go%ernment +nctions $old &e 'aral!)ed.

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18

!o""issioner o# Internal $eenue % !ourt o# &ppeals and A?!&

(%$%)o%L*1+242; >cto.er 12/ 1998

F&!0S:

Pri%ate Res'ondent SCA is a nonJstoc=, nonJ'rot instittion, $hich

condcts %arios 'rograms and acti%ities that are &enecial to the '&lic,es'eciall! the !ong 'eo'le, 'rsant to its religios, edcational and

charita&le o&ecti%es. In 1980, 'ri%ate res'ondent earned, among others,

an income o+ P676, 89.80 +rom leasing ot a 'ortion o+ its 'remises to

small sho' o$ners, li=e restarants and canteen o'erators, and PHH,59.00

+rom 'ar=ing +ees collected +rom nonJmem&ers. >n l! , 198H, the

Commissioner o+ Internal Re%ene CIRB issed an assessment to 'ri%ate

res'ondent, in the total amont o+ PH15,615.01 inclding srcharge and

interest, +or decienc! income ta, decienc! e'anded $ithholding taes

on rentals and 'ro+essional +ees and decienc! $ithholding ta on $ages.

Pri%ate res'ondent +ormall! 'rotested the assessment and, as a

s''lement to its &asic 'rotest, led a letter dated >cto&er 8,1985. Inre'l!, the CIR denied the claims o+ SCA. Contesting the denial o+ its

'rotest, the SCA led a 'etition +or re%ie$ at the Cort o+ (a A''eals on

arch 1H, 1989. In de corse, the C(A issed this rling in +a%or o+ the

SCA.

ISSUE: :hether or not the SCA is eem'ted +rom rental income deri%ed

+rom the leaseo+ its 'ro'erties

$ULI)(:

N>.

Petitioner arges that $hile the income recei%ed &! the organi)ations

enmerated in /ection 7 no$ /ection 6B o+ the NIRC is, as a rle,

eem'ted +rom the 'a!ment o+ ta Min res'ect to income recei%ed &! them

as sch,M the eem'tion does not a''l! to income deri%ed M +rom an! o+

their 'ro'erties, real or 'ersonal, or +rom an! o+ their acti%ities condcted

+or 'rot, regardless o+ the dis'osition made o+ sch income M. (he

Cort agrees $ith the commissioner. In the instant case, the eem'tion

claimed &! the SCA is e'ressl! disallo$ed &! the %er! $ording o+ the

last 'aragra'h o+ then /ection 7 o+ the NIRC $hich mandates that the

income o+ eem't organi)ations sch as the SCAB +rom an! o+ their

'ro'erties, real or 'ersonal, &e s&ect to the ta im'osed &! the same

Code.

!I$ % A?!&

($ )o% 1+242;/ >cto.er 12/ 1998

+98 S!$& 8;

F&!0S:

Pri%ate Res'ondent SCAJJa nonJstoc=, nonJ'rot instittion, $hich

condcts %arios 'rograms &enecial to the '&lic 'rsant to its religios,

edcational and charita&le o&ecti%esJJleases ot a 'ortion o+ its 'remises

to small sho' o$ners, li=e restarants and canteen o'erators, deri%ing

s&stantial income +or sch. /eeing this, the Commissioner o+ Internal

Re%ene CIRB issed an assessment to 'ri%ate res'ondent +or decienc!

income ta, decienc! e'anded $ithholding taes on rentals and

'ro+essional +ees and decienc! $ithholding ta on $ages. SCA o''osed

arging that its rental income is not s&ect to ta, mainl! &ecase o+ the'ro%isions o+ /ection 7 o+ NIRC $hich 'ro%ides that ci%ic leage or

organi)ations not organi)ed +or 'rot &t o'erate eclsi%el! +or 'romotion

o+ social $el+are and those organi)ed eclsi%el! +or 'leasre, recreation

and other nonJ'rota&le &sinesses shall not &e taed.

ISSUE Is the contention o+ SCA tena&le

HELD:

No. "ecase taes are the li+e&lood o+ the nation, the Cort has al$a!s

a''lied the doctrine o+ strict in inter'retation in constring ta eem'tions.

Krthermore, a claim o+ stattor! eem'tion +rom taation shold &e

mani+est and nmista=a&le +rom the langage o+ the la$ on $hich it is

&ased. (hs, the claimed eem'tion Mmst e'ressl! &e granted in a

statte stated in a langage too clear to &e mista=en.M

Doctrine:

Rental income deri%ed &! a taJeem't organi)ation +rom the lease o+ its

'ro'erties, real or 'ersonal, is not eem't +rom income taation, e%en i+sch income is eclsi%el! sed +or the accom'lishment o+ its o&ecti%es.

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A claim o+ stattor! eem'tion +rom taation shold &e mani+est and

nmista=a&le +rom the langage o+ the la$ on $hich it is &ased. (hs, i t

mst e'ressl! &e granted in a statte stated in a langage too clear to &e

mista=en. Ver&a legis non est recedendm $here the la$ does not

distingish, neither shold $e.

(he &are allegation alone that one is a nonJstoc=, nonJ'rot edcational

instittion is insther$ise, it $old &e o%ers'illing its role and in%ading the

realm o+ legislation. (he Cort, gi%en its limited constittional athorit!,

cannot rle on the $isdom or 'ro'riet! o+ legislation. (hat 'rerogati%e&elongs to the 'olitical de'artments o+ go%ernment.

Facts:

Pri%ate Res'ondent SCA is a nonJstoc=, nonJ'rot instittion, $hich

condcts %arios 'rograms and acti%ities that are &enecial to the '&lic,

es'eciall! the !ong 'eo'le, 'rsant to its religios, edcational and

charita&le o&ecti%es.

SCA earned income +rom leasing ot a 'ortion o+ its 'remises to small

sho' o$ners, li=e restarants and canteen o'erators, and +rom 'ar=ing

+ees collected +rom nonJmem&ers. Petitioner issed an assessment to

'ri%ate res'ondent +or decienc! taes. Pri%ate res'ondent +ormall!

'rotested the assessment. In re'l!, the CIR denied the claims o+ SCA.

Issue: :hether or not the income deri%ed +rom rentals o+ real 'ro'ert!

o$ned &! SCA s&ect to income ta

Held:

Ses. Income o+ $hate%er =ind and character o+ nonJstoc= nonJ'rot

organi)ations +rom an! o+ their 'ro'erties, real or 'ersonal, or +rom an! o+

their acti%ities condcted +or 'rot, regardless o+ the dis'osition made o+

sch income, shall &e s&ect to the ta im'osed nder the NIRC.

Rental income deri%ed &! a taJeem't organi)ation +rom the lease o+ its

'ro'erties, real or 'ersonal, is not eem't +rom income taation, e%en i+

sch income is eclsi%el! sed +or the accom'lishment o+ its o&ecti%es.

"ecase taes are the li+e&lood o+ the nation, the Cort has al$a!s a''lied

the doctrine o+ strict in inter'retation in constring ta eem'tions

Commissioner o+ Internal Re%ene %. Cort o+ A''eals, 71 /CRA 605,

61, A'ril 18, 1997B. Krthermore, a claim o+ stattor! eem'tion +rom

taation shold &e mani+est and nmista=a&le +rom the langage o+ the

la$ on $hich it is &ased. (hs, the claimed eem'tion mst e'ressl! &e

granted in a statte stated in a langage too clear to &e mista=en# Da%ao

4l+ 3m&er Cor'oration %. Commissioner o+ Internal Re%ene and Cort o+

A''eals, 4.R. No. 11759, '. 15 l! , 1998B.

Ver&a legis non est recedendm. (he la$ does not ma=e a distinction. (he

rental income is taa&le regardless o+ $hence sch income is deri%ed andho$ it is sed or dis'osed o+. :here the la$ does not distingish, neither

shold $e.

Pri%ate res'ondent also in%o=es Article TIV, /ection H, 'ar. o+ the

Constittion, claiming that it is a nonJstoc=, nonJ'rot edcational

instittion $hose re%enes and assets are sed actall!, directl! and

eclsi%el! +or edcational 'r'oses so it is eem't +rom taes on its

'ro'erties and income.# (his is $ithot merit since the eem'tion 'ro%ided

lies on the 'a!ment o+ 'ro'ert! ta, and not on the income ta on the

rentals o+ its 'ro'ert!. (he &are allegation alone that one is a nonJstoc=,

nonJ'rot edcational instittion is ins

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0

and a''reciations. >ther$ise, it $old &e o%ers'illing its role and in%ading

the realm o+ legislation. (he Cort regrets that, gi%en its limited

constittional athorit!, it cannot rle on the $isdom or 'ro'riet! o+

legislation. (hat 'rerogati%e &elongs to the 'olitical de'artments o+

go%ernment.

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1

BE$& % FE$)&)DE@

($ )o% L*;1;,2 ?arch ;4/ 1979

89 S!$& 199

F&!0S:

(he "IR led on l! 9, 1969 a motion +or allo$ance o+ claim and +or

'a!ment o+ taes re'resenting the estateQs ta deciencies in 196 to

196H in the intestate 'roceedings o+ 3is (ongo!. (he administrator

o''osed arging that the claim $as alread! &arred &! the statte o+

limitation, /ection and /ection 5 o+ Rle 86 o+ the Rles o+ Cort $hich

'ro%ides that all claims +or mone! against the decedent, arising +rom

contracts, e'ress or im'lied, $hether the same &e de, not de, or

contingent, all claims +or +neral e'enses and e'enses +or the last

sic=ness o+ the decedent, and dgment +or mone! against the decedent,mst &e led $ithin the time limited in the notice other$ise the! are

&arred +ore%er.

ISSUE:Does the statte o+ nonJclaims o+ the Rles o+ Cort &ar the claim

o+ the go%ernment +or n'aid taes

HELD:

No. (he reason +or the more li&eral treatment o+ claims +or taes against a

decedentQs estate in the +orm o+ ece'tion +rom the a''lication o+ the

statte o+ nonJclaims, is not hard to nd. (aes are the li+e&lood o+ the

4o%ernment and their 'rom't and certain a%aila&ilit! are im'erios need.

CIR %s. Pineda, 1 /CRA 105B. 'on taation de'ends the 4o%ernment

a&ilit! to ser%e the 'eo'le +or $hose &enet taes are collected. (o

sa+egard sch interest, neglect or omission o+ go%ernment o

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D&B&> (ULF LU?=E$ !>$P>$&0I>)/ petitioner/

s%

!>??ISSI>)E$ >F I)0E$)&L $EBE)UE and !>U$0 >F &PPE&LS/

respondents.

F&!0S:

Da%ao 4l+ is a concessionaire $ith (3A granted &! the DGNR. (he!

'rchase mineral oils and diesel +rom %arios oil com'anies $hich the! se

in their e'loitation and o'eration. >il com'anies 'aid their s'ecic taes

'ro%ided /ections 15 and 156 o+ the NIRC $hich $ere e%entall! 'assed

to their consmer Da%ao 4l+. Petitioner led a claim +or re+nd &e+ore the

CIR in the amont o+ P10,85.11, re'resenting 52 o+ the s'ecic taes

actall! 'aid on the a&o%eJmentioned +els and oils that $ere sed &!

'etitioner in its o'erations as +orest concessionaire. Da%ao 4l+ contended

that /ection 5 o+ RA 1H5'ro%ides that $hene%er an! oils mentioned a&o%e

are sed &! miners or +orest concessionaires in their o'erations, t$ent!J

%e 'er centm o+ the s'ecic ta 'aid thereon shall &e re+nded &! the

Collector o+Internal Re%ene 'on s&mission o+ 'roo+ o+ actal se o+

oilsU. (he re+nd $as denied &! the CIR,hence, Da%ao led a 'etition +or

re%ie$ &e+ore the C(A $hich granted the 'etitioner a 'artial re+nd &ased

on the on rates deemed 'aid nder RA 1H5, and not on the higher rates

actall! 'aid &! 'etitioner nder Art. 15 and 156 o+ the NIRC. Da%ao led

an a''eal &e+ore the CA $hich ather$ise stated, an! eem'tion +rom the 'a!ment o+

a ta mst &e clearl! stated in the langage o+ the la$ it cannot &e merel!

im'lied there+rom.A ta cannot &e im'osed nless it is s''orted &! the

clear and e'ress langage o+ a statte on the other hand, once the ta is

n-estiona&l! im'osed, M?a@ claim o+ eem'tion +rom ta 'a!ments mst

&e clearl! sho$n and &ased on langage in the la$ too 'lain to &e

mista=en.M /ince the 'artial re+nd athori)ed nder /ection 5, RA 1H5, is

in the natre o+ a ta eem'tion, it mst &e constred strictissimi risagainst the grantee. Lence, 'etitionerQs claim o+ re+nd on the &asis o+ the

s'ecic taes it actall! 'aid mst e'ressl! &e granted in a statte stated

in a langage too clear to &e mista=en. :LGRGK>RG, the 'etition is here&!

DGNIGD and the assailed Decision o+ the Cort o+ A''eals is AKKIRGD.

F&!0S:

Re'&lic Act No. 1H5 entitles miners and +orest concessioners to the

re+nd o+ 52 o+ the s'ecic taes 'aid &! the oil com'anies, $hich $ere

e%entall! 'assed on to the serJJthe 'etitioner in this caseJJin the

'rchase 'rice o+ the oil 'rodcts. Petitioner led &e+ore res'ondent

Commissioner o+ Internal Re%ene CIRB a claim +or re+nd in the amont

re'resenting 52 o+ the s'ecic taes actall! 'aid on the a&o%eJ

mentioned +els and oils that $ere sed &! 'etitioner in its o'erations.

Lo$e%er 'etitioner asserts that e-it! and stice demands that the re+nd

shold &e &ased on the increased rates o+ s'ecic taes $hich it actall!

'aid, as 'rescri&ed in /ections 15 and 156 o+ the NIRC. P&lic res'ondent,

on the other hand, contends that it shold &e &ased on s'ecic taesdeemed 'aid nder /ections 1 and o+ RA 1H5.

ISSUE /hold the 'etitioner &e entitled nder Re'&lic Act No. 1H5 to

the re+nd o+ 52 o+ the amont o+ s'ecic taes it actall! 'aid on

%arios rened and man+actred mineral oils and other oil 'rodcts, and

not on the taes deemed 'aid and 'assed on to them, as endJsers, &! the

oil com'anies

HELD:

No. According to an eminent athorit! on taation, Mthere is no ta

eem'tion solel! on the grond o+ e-it!.M (hs, the ta re+nd shold &e

&ased on the taes deemed 'aid. "ecase taes are the li+e&lood o+ the

nation, stattes that allo$ eem'tions are constred strictl! against the

grantee and li&erall! in +a%or o+ the go%ernment. >ther$ise stated, an!

eem'tion +rom the 'a!ment o+ a ta mst &e clearl! stated in the

langage o+ the la$ it cannot &e merel! im'lied there+rom.

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Facts

"atas Pam&ansa 15 $as enacted. /ison, as ta'a!er, alleged that its

'ro%ision /ection 1B ndl! discriminated against him &! the im'osition o+

higher rates 'on his income as a 'ro+essional, that it amonts to class

legislation, and that it transgresses against the e-al 'rotection and de

'rocess clases o+ the Constittion as $ell as the rle re-iring ni+ormit!

in taation.

Issue::hether "P 15 %iolates the de 'rocess and e-al 'rotection

clases, and the rle on ni+ormit! in taation.

Held:

(here is a need +or 'roo+ o+ sch 'ersasi%e character as $old lead to a

conclsion that there $as a %iolation o+ the de 'rocess and e-al

'rotection clases. A&sent sch sho$ing, the 'resm'tion o+ %alidit! mst

're%ail. G-alit! and ni+ormit! in taation means that all taa&le articles

or =inds o+ 'ro'ert! o+ the same class shall &e taed at the same rate. (he

taing 'o$er has the athorit! to ma=e reasona&le and natral

classications +or 'r'oses o+ taation. :here the di*erentiation con+orms

to the 'ractical dictates o+ stice and e-it!, similar to the standards o+

e-al 'rotection, it is not discriminator! $ithin the meaning o+ the clase

and is there+ore ni+orm. (a'a!ers ma! &e classied into di*erent

categories, sch as reci'ients o+ com'ensation income as against

'ro+essionals. Reci'ients o+ com'ensation income are not entitled to ma=e

dedctions +or income ta 'r'oses as there is no 'racticall! no o%erhead

e'ense, $hile 'ro+essionals and &sinessmen ha%e no ni+orm costs or

e'enses necessar! to 'rodce their income. (here is am'le stication to

ado't the gross s!stem o+ income taation to com'ensation income, $hile

contining the s!stem o+ net income taation as regards 'ro+essional and&siness income.

Facts:

/ection 1 o+ "P "lg 15 amended the (a Code and 'etitioner Antero .

/ison, as ta'a!er, alleges that Mhe $old &e ndl! discriminated against

&! the im'osition o+ higher rates o+ ta 'on his income arising +rom the

eercise o+ his 'ro+ession %isJaJ%is those $hich are im'osed 'on ed

income or salaried indi%idal ta'a!ers. Le characteri)es said 'ro%ision as

ar&itrar! amonting to class legislation, o''ressi%e and ca'ricios in

character. It there+ore %iolates &oth the e-al 'rotection and de 'rocess

clases o+ the Constittion as $ell as o+ the rle re-iring ni+ormit! in

taation.

Issue: :hether or not the assailed 'ro%ision %iolates the e-al 'rotection

and de 'rocess clases o+ the Constittion $hile also %iolating the rle

that taes mst &e ni+orm and e-ita&le.

Held

(he 'etition is $ithot merit.

>n de 'rocess J it is ndo&ted that it ma! &e in%o=ed $here a taing

statte is so ar&itrar! that it nds no s''ort in the Constittion. An

o&%ios eam'le is $here it can &e sho$n to amont to the conscation o+

'ro'ert! +rom a&se o+ 'o$er. Petitioner alleges ar&itrariness &t his mere

allegation does not sn e-al 'rotection J it sn the matter that the rle o+ taation shall &e ni+orm and e-ita&le J this

re-irement is met $hen the ta o'erates $ith the same +orce and e*ect

in e%er! 'lace $here the s&ect ma! &e +ond.M Also, the rle o+

ni+ormit! does not call +or 'er+ect ni+ormit! or 'er+ect e-alit!, &ecase

this is hardl! nattaina&le.M :hen the 'ro&lem o+ classication &ecame o+

isse, the Cort said MG-alit! and ni+ormit! in taation means that all

taa&le articles or =inds o+ 'ro'ert! o+ the same class shall &e taed the

same rate. (he taing 'o$er has the athorit! to ma=e reasona&le and

natral classications +or 'r'oses o+ taation...M As 'ro%ided &! this Cort,$here Mthe di*erentationM com'lained o+ Mcon+orms to the 'ractical

dictates o+ stice and e-it!M it Mis not discriminator! $ithin the meaning

o+ this clase and is there+ore ni+orm.M

Facts:

Petitioners challenged the constittionalit! o+ /ection 1 o+ "atas Pam&ansa

"lg. 15. It amended /ection 1 o+ the National Internal Re%ene Code o+

1977, $hich 'ro%ides +or rates o+ ta on citi)ens or residents on aB taa&le

com'ensation income, &B taa&le net income, cB ro!alties, 'ri)es, and

other $innings, dB interest +rom &an= de'osits and !ield or an! other

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H

monetar! &enet +rom de'osit s&stittes and +rom trst +nd and

similar arrangements, eB di%idends and share o+ indi%idal 'artner in the

net 'rots o+ taa&le 'artnershi', +B adsted gross income.

Petitioner as ta'a!er alleged that Mhe $old &e ndl! discriminated

against &! the im'osition o+ higher rates o+ ta 'on his income arising

+rom the eercise o+ his 'ro+ession %isJaJ%is those $hich are im'osed 'on

ed income or salaried indi%idal ta'a!ers.M Le characteri)es the a&o%e

section as ar&itrar! amonting to class legislation, o''ressi%e and

ca'ricios in character.

Kor 'etitioner, there+ore, there is a transgression o+ &oth the e-al

'rotection and de 'rocess clases o+ the Constittion as $ell as o+ the

rle re-iring ni+ormit! in taation.

(he >/4 'ra!ed +or dismissal o+ the 'etition de to lac= o+ merit.

Issue::hether the im'osition o+ a higher ta rate on taa&le net income

deri%ed +rom &siness or 'ro+ession than on com'ensation is

constittionall! inrm.

:>N there is a transgression o+ &oth the e-al 'rotection and de 'rocess

clases o+ the Constittion as $ell as o+ the rle re-iring ni+ormit! in

taationB

Held:

No. Petition dismissed

$atio:

(he need +or more re%enes is rationali)ed &! the go%ernmentQs role to ll

the ga' not done &! '&lic enter'rise in order to meet the needs o+ the

times. It is &etter e-i''ed to administer +or the '&lic $el+are. (he 'o$er

to ta, an inherent 'rerogati%e, has to &e a%ailed o+ to assre the

'er+ormance o+ %ital state +nctions. It is the sorce o+ the &l= o+ '&lic

+nds.

(he 'o$er to ta is an attri&te o+ so%ereignt! and the strongest 'o$er o+

the go%ernment. (here are restrictions, ho$e%er, di%ersel! a*ecting as it

does 'ro'ert! rights, &oth the de 'rocess and e-al 'rotection clases

ma! 'ro'erl! &e in%o=ed, as 'etitioner does, to in%alidate in a''ro'riate

cases a re%ene measre. I+ it $ere other$ise, taation $old &e a

destrcti%e 'o$er.

(he 'etitioner +ailed to 'ro%e that the statte ran conter to the

Constittion. Le sed ar&itrariness as &asis $ithot a +actal +ondation.

(his is merel! to adhere to the athoritati%e doctrine that $here the de

'rocess and e-al 'rotection clases are in%o=ed, considering that the!

are not ed rles &t rather &road standards, there is a need +or 'roo+ o+

sch 'ersasi%e character as $old lead to sch a conclsion.

It is ndo&ted that the de 'rocess clase ma! &e in%o=ed $here a taing

statte is so ar&itrar! that it nds no s''ort in the Constittion. An

o&%ios eam'le is $here it can &e sho$n to amont to the conscation o+

'ro'ert!. (hat $old &e a clear a&se o+ 'o$er.

It has also &een held that $here the assailed ta measre is &e!ond the

risdiction o+ the state, or is not +or a '&lic 'r'ose, or, in case o+ a

retroacti%e statte is so harsh and nreasona&le, it is s&ect to attac= on

de 'rocess gronds.

Kor e-al 'rotection, the a''lica&le standard to determine $hether this

$as denied in the eercise o+ 'olice 'o$er or eminent domain $as the

'resence o+ the 'r'ose o+ hostilit! or nreasona&le discrimination.

It s

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5

are analogos. I+ la$ &e loo=s 'on in terms o+ &rden or charges, those

that +all $ithin a class shold &e treated in the same +ashion, $hate%er

restrictions cast on some in the gro' e-all! &inding on the rest.

(he e-al 'rotection clase is, o+ corse, ins'ired &! the no&le conce't o+

a''roimating the ideal o+ the la$sQs &enets &eing a%aila&le to all and the

a*airs o+ men &eing go%erned &! that serene and im'artial ni+ormit!,

$hich is o+ the %er! essence o+ the idea o+ la$.

(he e-alit! at $hich the Qe-al 'rotectionQ clase aims is not a

disem&odied e-alit!. (he Korteenth Amendment enoins Qthe e-al

'rotection o+ the la$s,Q and la$s are not a&stract 'ro'ositions. (he! do not

relate to a&stract nits A, " and C, &t are e'ressions o+ 'olic! arising ot

o+ s'ecic di

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6

the im'osition o+ higher rates o+ ta 'on his income arising +rom the

eercise o+ his 'ro+ession %isJJ%is those $hich are im'osed 'on ed

income or salaried indi%idal ta'a!ers.

ISSUE::hether "P 15 transgresses &oth the e-al 'rotection and de

'rocess clases o+ the Constittion as $ell as o+ the rle re-iring

ni+ormit! in taation

$ULI)(:

No. (he 'resm'tion o+ %alidit! mst 're%ail. (he taing 'o$er has the

athorit! to ma=e reasona&le and natral

classications +or 'r'oses o+ taation. Reci'ients o+ com'ensation income

are not entitled to ma=e dedctions +or income ta 'r'oses as there is

'racticall! no o%erhead e'ense, $hile 'ro+essionals and &sinessmen

ha%e no ni+orm costs or e'enses necessar! to 'rodce their income.

(here is am'le stication to ado't the gross s!stem o+ income taation to

com'ensation income, $hile contining the s!stem o+ net income taationas regards 'ro+essional and &siness income.

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7

=a'atsin' % $a"ire

(%$% )o% L*21,;1 Dece".er 17/ 197,3

F&!0S:

(he nici'al "oard o+ anila enacted >rdinance No. 75, An

>rdinance Reglating the >'eration o+ P&lic ar=ets and Prescri&ing Kees+or the Rentals o+ /talls and Pro%iding Penalties +or Violation thereo+ and +or

other Pr'oses.# Res'ondent $ere see=ing the declaration o+ nllit! o+ the

>rdinance +or the reason that aB the '&lication re-irement nder the

Re%ised Charter o+ the Cit! o+ anila has not &een com'lied $ith, &B the

ar=et Committee $as not gi%en an! 'artici'ation in the enactment, cB

/ec. eB o+ the AntiJ4ra+t and Corr't Practices Act has &een %iolated, and

dB the ordinance $old %iolate P.D. 7 'rescri&ing the collection o+ +ees and

charges on li%estoc= and animal 'rodcts.

ISSUE:

:hat la$ shall go%ern the '&lication o+ ta ordinance enacted &!

the nici'al "oard o+ anila, the Re%ised Cit! Charter or the 3ocal (a

Code.

HELD:

(he +act that one is a s'ecial la$ and the other a general la$ creates

the 'resm'tion that the s'ecial la$ is to &e considered an ece'tion to

the general. (he Re%ised Charter o+ anila s'ea=s o+ ordinance# in

general $hereas the 3ocal (a Code relates to ordinances le%!ing or

im'osing taes, +ees or other charges# in 'articlar. In regard there+ore,

the 3ocal (a Code controls.

=a'atsin' $a"ire($ )o L*21,;1/ Dece".er 17/ 197,

F&!0S:

In 197H, the nici'al "oard o+ anila enacted >rdinance 75, reglatingthe o'eration o+ '&lic mar=ets and 'rescri&ing +ees +or the rentals o+ stallsand 'ro%iding 'enalties +or %iolation thereo+. (he Kederation o+ anila

ar=et Vendors Inc. assailed the %alidit! o+ the ordinance, alleging amongothers the noncom'liance to the '&lication re-irement nder the

Re%ised Charter o+ the Cit! o+ anila. CKIJanila declared the ordinance%oid. (hs, the 'resent 'etition.

ISSUE:

1. :hat la$ shold go%ern the '&lication o+ a ta ordinance, theRe%ised Cit! Charter, $hich re-ires '&lication o+ theordinance &e+ore its enactment and a+ter its a''ro%al, or the 3ocal(a Code, $hich onl! demands '&lication a+tera''ro%al

. Is the ordinance %alid

$ULI)(:

1. (he 3ocal (a Code 're%ails. (here is no -estion that the Re%isedCharter o+ the Cit! o+ anila is a s'ecial act since it relates onl! to

the Cit! o+ anila $hereas the 3ocal (a Code is a general la$&ecase it a''lies ni%ersall! to all local go%ernments. (he +actthat one is s'ecial and the other general creates a 'resm'tionthat the s'ecial is to &e considered as remaining an ece'tion o+the general, one as a general la$ o+ the land, the other as the la$o+ a 'articlar case. Lo$e%er, the rle readil! !ields to a sitation$here the s'ecial statte re+ers to a s&ect in general, $hich thegeneral statte treats in 'articlar. (he Re%ised Charter o+ the Cit!'rescri&es a rle +or the '&lication o+ ordinance# in general, $hilethe 3ocal (a Code esta&lishes a rle +or the '&lication o+ordinance le%!ing or im'osing taes +ees or other charges# in'articlar.

. (he ordinance is %alid.

=&(&0SI)(

s%

$&?I$E@72 S!$& ;4,(%$% )o% L*21,;1 Dece".er 17/ 197,?&$0I)/

Facts:

nici'al "oard o+ anila enacted >rdinance No. 75, MAN >RDINANCG

RG43A(IN4 (LG>PGRA(I>N >K P"3IC AROG(/ AND PRG/CRI"IN4 KGG/

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8

K>R (LG RGN(A3/ >K /(A33/AND PR>VIDIN4 PGNA3(IG/ K>R VI>3A(I>N

(LGRG>K AND K>R >(LGR PRP>/G/.M

(he 'etitioner Cit! a!or, Ramon D. "agatsing, a''ro%ed the ordinance.

Res'ondent Kederation o+ anila ar=et Vendors, Inc. commenced a Ci%il

Case &e+ore the CKI &! res'ondent dge, see=ing the declaration o+ nllit!

o+ >rdinance No. 75 +or the reason that aBthe '&lication re-irement

nder the Re%ised Charter o+ the Cit! o+ anila has not &een com'lied

$ith &B the ar=et Committee $as not gi%en an! 'artici'ation in the

enactment o+ the ordinance, as en%isioned &! Re'&lic Act 609 cB

/ection eB o+ the AntiJ4ra+t and Corr't Practices Act has &een %iolated

and dB the ordinance $old %iolate Presidential Decree No. 7 o+ /e'tem&er

0, 197'rescri&ing the collection o+ +ees and charges on li%estoc= and

animal 'rodcts. Pri%ate res'ondent also &e$ails that the mar=et stall +ees

im'osed in the dis'ted ordinance are di%erted to the eclsi%e 'ri%ate

se o+ the Asiatic Integrated Cor'oration since the collection o+ said +ees

had &een let &! the Cit! o+ anila to the said cor'oration in a

Management and >'erating Contract.MResol%ing the accom'an!ing 'ra!er

+or the issance o+ a $rit o+ 'reliminar! innction, res'ondent dge issedan order den!ing the 'lea +or +ailre o+ the res'ondent Kederation o+ anila

ar=et Vendors, Inc. to ehast the administrati%e remedies otlined in the

3ocal (a Code. A+ter de hearing on the merits, res'ondent dge

rendered another decision, declaring the nllit! o+ >rdinance No. 75 o+

the Cit! o+ anila on the 'rimar! grond o+ nonJcom'liance $ith the

re-irement o+ '&lication nder the Re%ised Cit! Charter. Petitioners

mo%ed +or reconsideration o+ the ad%erse decision, stressing that aB onl! a

'ostJ'&lication is re-ired &! the 3ocal (a Code and &B 'ri%ate

res'ondent +ailed to ehast all administrati%e remedies &e+ore institting

an action in cort. Res'ondent dge denied the motion. Lence 'etitioners

&roght the matter to the /'reme Cort throgh the a 'etition +or re%ie$

on certiorari.

Issue::hat la$ shall go%ern the '&lication o+ a ta ordinance enacted &!

the nici'al "oard o+ anila, the Re%ised Cit! Charter R.A. H09, as

amendedB, $hich re-ires '&lication o+ the ordinance &e+ore its

enactment and a+ter its a''ro%al, or the 3ocal (a Code P.D. No. 1B,

$hich onl! demands '&lication a+ter a''ro%al.

Held:

(here is no -estion that the Re%ised Charter o+ the Cit! o+ anila is a

s'ecial act since it relates onl! to the Cit! o+ anila, $hereas the 3ocal (a

Code is a general la$ &ecase it a''lies ni%ersall! to all local

go%ernments. "lac=stone denes general la$ as a ni%ersal rle a*ecting

the entire commnit! and s'ecial la$ as one relating to 'articlar 'ersons

or things o+ a class. And the rle commonl! said is that a 'rior s'ecial la$

is not ordinaril! re'ealed &! a s&se-ent general la$. (he +act that one is

s'ecial and the other general creates a 'resm'tion that the s'ecial is to

&e considered as remaining an ece'tion o+ the general, one as a general

la$ o+ the land, the other as the la$ o+ a 'articlar case. Lo$e%er, the rlereadil! !ields to a sitation $here the s'ecial statte re+ers to a s&ect in

general, $hich the general statte treats in 'articlar. (he eactl! is the

circmstance o&taining in the case at &ar. /ection 17 o+ the Re%ised

Charter o+ the Cit! o+ anila s'ea=s o+ MordinanceM in general, i.e.,

irres'ecti%e o+ the natre and sco'e thereo+, $hereas, /ectionH o+ the

3ocal (a Code relates to Mordinances le%!ing or im'osing taes, +ees or

other chargesM in 'articlar.

In regard, there+ore, to ordinances in general, the Re%ised Charter o+ the

Cit! o+ anila is do&tless dominant, &t, that dominant +orce loses its

continit! $hen it a''roaches the realm o+ Mordinances le%!ing or im'osing

taes, +ees or other chargesM in 'articlar. (here, the 3ocal (a Codecontrols. Lere, as al$a!s, a general 'ro%ision mst gi%e $a! to a 'articlar

'ro%ision. /'ecial 'ro%ision go%erns. (his is es'eciall! tre $here the la$

containing the 'articlar 'ro%ision $as enacted later than the one

containing the general 'ro%ision. (he Cit! Charter o+ anila $as

'romlgated on ne 18, 19H9 as against the 3ocal (a Code $hich $as

decreed on ne 1, 197.(he la$Jma=ing 'o$er cannot &e said to ha%e

intended the esta&lishment o+ conFicting and hostile s!stems 'on the

same s&ect, or to lea%e in +orce 'ro%isions o+ a 'rior la$ &! $hich the

ne$ $ill o+ the legislating 'o$er ma! &e th$arted and o%erthro$n. /ch a

reslt $old render legislation a seless and Idle ceremon!, and s&ect

the la$ to the re'roach o+ ncertaint! and nintelligi&ilit!. It is maintained

&! 'ri%ate res'ondent that the s&ect ordinance is not a Mta ordinance,M

&ecase the im'osition o+ rentals, 'ermit +ees, tolls and other +ees is not

strictl! a taing 'o$er &t a re%eneJraising +nction, so that the

'rocedre +or '&lication nder the 3ocal (a Code nds no a''lication.

(he 'retense &ears its o$n mar=s o+ +allac!. Precisel!, the raising o+

re%enes is the 'rinci'al o&ect o+ taation. nder /ection 5, Article TI o+

the Ne$ Constittion, MGach local go%ernment nit shall ha%e the 'o$er to

create its o$n sorces o+ re%ene and to le%! taes, s&ect to sch

'ro%isions as ma! &e 'ro%ided &! la$.M And one o+ those sorces o+

re%ene is $hat the 3ocal (a Code 'oints to in 'articlar M3ocal

go%ernments ma! collect +ees or rentals +or the occ'anc! or se o+ '&lic

mar=ets and 'remises W W W.M

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9

1H

(he! can 'ro%ide +or and reglate mar=et stands, stalls and 'ri%ileges, and,

also, the sale, lease or occ'anc! thereo+. (he! can license, or 'ermit the

se o+, lease, sell or other$ise dis'ose o+ stands, stalls or mar=eting

'ri%ileges. Pri%ate res'ondent &e$ails that the mar=et stall +ees im'osed in

the dis'ted ordinance are di%erted to the eclsi%e 'ri%ate se o+ the

Asiatic Integrated Cor'oration since the collection o+ said +ees had &een let

&! the Cit! o+ anila to the said cor'oration in a Management and

>'erating Contract.M(he assm'tion is o+ corse saddled on erroneos

'remise. (he +ees collected do not go direct to the 'ri%ate co*ers o+ the

cor'oration. >rdinance No. 75 $as not made +or the cor'oration &t +or

the 'r'ose o+ raising re%enes +or the cit!. (hat is the o&ect it ser%es. (he

entrsting o+ the collection o+ the +ees does not destro! the '&lic 'r'ose

o+ the ordinance. /o long as the 'r'ose is '&lic, it does not matter

$hether the agenc! throgh $hich the mone! is dis'ensed is '&lic or

'ri%ate. (he right to ta de'ends 'on the ltimate se, 'r'ose and

o&ect +or $hich the +nd is raised. It is not de'endent on the natre or

character o+ the 'erson or cor'oration $hose intermediate agenc! is to &esed in a''l!ing it. (he 'eo'le ma! &e taed +or a '&lic 'r'ose,

althogh it &e nder the direction o+ an indi%idal or 'ri%ate cor'oration.

ACC>RDIN43S, the decision o+ the cort &elo$ is here&! re%ersed and set

aside. >rdinance No.75 is held %alidl! enacted.

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0

0>LE)0I)> BS% 0HE SE!$E0&$A >F FI)&)!E !ase Di'est

&$0U$> ?% 0>LE)0I)> BS% 0HE SE!$E0&$A >F FI)&)!E and 0HE

!>??ISSI>)E$ >FI)0E$)&L $EBE)UE1992 &u' +

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1

(he argment that RA 7716 did not originate eclsi%el! in the Lose o+

Re'resentati%es as re-ired &! Art. VI, /ec. H o+ the Constittion $ill not

&ear anal!sis. (o &egin $ith, it is not the la$ &t the re%ene &ill $hich is

re-ired &! the Constittion to originate eclsi%el! in the Lose o+

Re'resentati%es. (o insist that a re%ene statte and not onl! the &ill $hich

initiated the legislati%e 'rocess clminating in the enactment o+ the la$

mst s&stantiall! &e the same as the Lose &ill $old &e to den! the/enate;s 'o$er not onl! to concr $ith amendments &t also to 'ro'ose

amendments. Indeed, $hat the Constittion sim'l! means is that the

initiati%e +or ling re%ene, tari* or ta &ills, &ills athori)ing an increase o+

the '&lic de&t, 'ri%ate &ills and &ills o+ local a''lication mst come +rom

the Lose o+ Re'resentati%es on the theor! that, elected as the! are +rom

the districts, the mem&ers o+ the Lose can &e e'ected to &e more

sensiti%e to the local needs and 'ro&lems. Nor does the Constittion

'rohi&it the ling in the /enate o+ a s&stitte &ill in antici'ation o+ its

recei't o+ the &ill +rom the Lose, so long as action &! the /enate as a

&od! is $ithheld 'ending recei't o+ the Lose &ill. (he net argment o+

the 'etitioners $as that /. No. 160 did not 'ass readings on se'arate

da!s as re-ired &! the Constittion &ecase the second and thirdreadings $ere done on the same da!. "t this $as &ecase the President

had certied /. No. 160 as rgent. (he 'residential certication dis'ensed

$ith the re-irement not onl! o+ 'rinting &t also that o+ reading the &ill on

se'arate da!s. (hat 'on the certication o+ a &ill &! the President the

re-irement o+ readings on se'arate da!s and o+ 'rinting and distri&tion

can &e dis'ensed $ith is s''orted &! the $eight o+ legislati%e 'ractice

Facts:

(hese are motions see=ing reconsideration o+ or decision dismissing the

'etitions led in these cases +or the declaration o+ nconstittionalit! o+

R.A. No. 7716, other$ise =no$n as the G'anded ValeJAdded (a 3a$.No$ it is contended &! the PPI that &! remo%ing the eem'tion o+ the 'ress

+rom the VA( $hile maintaining those granted to others, the la$

discriminates against the 'ress. At an! rate, it is a%erred, Me%en

nondiscriminator! taation o+ constittionall! garanteed +reedom is

nconstittional.M

Issue Does sales ta on &i&le sales %iolati%e o+ religios +reedom

Held

No. (he Cort $as s'ea=ing in that case o+ a license ta, $hich, nli=e an

ordinar! ta, is mainl! +or reglation. Its im'osition on the 'ress is

nconstittional &ecase it la!s a 'rior restraint on the eercise o+ its right.

Lence, althogh its a''lication to others, sch those selling goods, is %alid,

its a''lication to the 'ress or to religios gro's, sch as the eho%ahQs

:itnesses, in connection $ith the latterQs sale o+ religios &oo=s and

'am'hlets, I nconstittional. As the ./. /'reme Cort 't it, Mit is one

thing to im'ose a ta on income or 'ro'ert! o+ a 'reacher. It is -ite

another thing to eact a ta on him +or deli%ering a sermon.M(he VA( is,ho$e%er, di*erent. It is not a l icense ta. It is not a ta on the eercise o+ a

'ri%ilege, mch less a constittional right. It is im'osed on the sale, &arter,

lease or echange o+ goods or 'ro'erties or the sale or echange o+

ser%ices and the lease o+ 'ro'erties 'rel! +or re%ene 'r'oses. (o

s&ect the 'ress to its 'a!ment is not to &rden the eercise o+ its right

an! more than to ma=e the 'ress 'a! income ta or s&ect it to general

reglation isnot to %iolate its +reedom nder the Constittion.

F&!0S:

Petitioners (olentino, Oilos&a!an, Inc., Phili''ine Airlines, Roco, and

Cham&er o+ Real Gstate and "ilders AssociationB see= reconsideration o+

the Cort;s 're%ios rling dismissing the 'etitions led +or the declaration

o+ nconstittionalit! o+ R.A. No. 7716, the G'anded ValeJAdded (a 3a$.

Petitioners contend that the R.A. did not originate eclsi%el!# in the LoR

as re-ired &! Article 6, /ection H o+ the Constittion. (he /enate

allegedl! did not 'ass it on second and third readings, instead 'assing its

o$n %ersion. Petitioners contend that it shold ha%e amended the Lose

&ill &! stri=ing ot the tet o+ the &ill and s&stitting it $ith the tet o+ its

o$n &ill, so as to con+orm $ith the Constittion.

ISSUE::EN the R.A. is nconstittional +or ha%ing originated# +rom the

/enate, and not the LoR.

HELD:

Petition is nmeritorios. (he enactment o+ the /enate &ill has not &een

the rst instance $here the /enate, in the eercise o+ its 'o$er to 'ro'ose

amendments to &ills re-ired to originate in the LoseB, 'assed its o$n

%ersion. An amendment &! s&stittion stri=ing ot the tet and

s&stitting itB, as rged &! 'etitioners, concerns a mere matter o+ +orm,

and considering the 'etitioner has not sho$n $hat s&stantial di*erence it$old ma=e i+ /enate a''lied sch s&stittion in the case, it cannot &e

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a''lied to the case at &ar. :hile the a+orementioned Constittional

'ro%ision states that &ills mst originate eclsi%el! in the LoR,# it also

adds, &t the /enate ma! 'ro'ose or concr $ith amendments.# (he

/enate ma! then 'ro'ose an entirel! ne$ &ill as a s&stitte measre.

Petitioners erred in assming the /enate %ersion to &e an inde'endent and

distinct &ill. :ithot the Lose &ill, /enate cold not ha%e enacted the

/enate &ill, as the latter $as a mere amendment o+ the +ormer. As sch, it

did not ha%e to 'ass the /enate on second and third readings. Petitioners

-estion the signing o+ the President on &oth &ills, to s''ort their

contention that sch are se'arate and distinct. (he President certied the

&ills se'aratel! onl! &ecase the certication had to &e made o+ the

%ersion o+ the same re%ene &ill $hich A( (LG >GN( $as &eing

considered. Petitioners -estion the 'o$er o+ the Con+erence Committee to

insert ne$ 'ro%isions. (he risdiction o+ the con+erence committee is not

limited to resol%ing di*erences &et$een the /enate and the Lose. It ma!

'ro'ose an entirel! ne$ 'ro%ision, gi%en that sch are germane to the

s&ect o+ the con+erence, and that the res'ecti%e hoses o+ Congress

s&se-entl! a''ro%e its re'ort. Petitioner PA3 contends that the

amendment o+ its +ranchise &! the $ithdra$al o+ its eem'tion +rom VA( isnot e'ressed in the title o+ the la$, there&! %iolating the Constittion. (he

Cort &elie%es that the title o+ the R.A. satises the Constittional

Re-irement.

Petitioners claim that the R.A. %iolates their 'ress +reedom and religios

li&ert!, ha%ing remo%ed them +rom the eem'tion to 'a! VA(. /

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Facts:

(he %aleJadded ta VA(B is le%ied on the sale, &arter or echange o+

goods and 'ro'erties as $ell as on the sale or echange o+ ser%ices. RA

7716 see=s to $iden the ta &ase o+ the eisting VA( s!stem and enhance

its administration &! amending the National Internal Re%ene Code. (here

are %arios sits challenging the constittionalit! o+ RA 7716 on %arios

gronds.

>ne contention is that RA 7716 did not originate eclsi%el! in the Lose

o+ Re'resentati%es as re-ired &! Art. VI, /ec. H o+ the Constittion,

&ecase it is in +act the reslt o+ the consolidation o+ distinct &ills, L. No.

11197 and /. No. 160. (here is also a contention that /. No. 160 did not

'ass readings as re-ired &! the Constittion.

Issue:

:hether or not RA 7716 %iolates Art. VI, /ecs. H and 6B o+the

Constittion

Held:

(he argment that RA 7716 did not originate eclsi%el! in the Lose o+

Re'resentati%es as re-ired &! Art. VI, /ec. H o+ the Constittion $ill not

&ear anal!sis. (o &egin $ith, it is not the la$ &t the re%ene &ill $hich is

re-ired &! the Constittion to originate eclsi%el! in the Lose o+

Re'resentati%es. (o insist that a re%ene statte and not onl! the &ill $hich

initiated the legislati%e 'rocess clminating in the enactment o+ the la$

mst s&stantiall! &e the same as the Lose &ill $old &e to den! the

/enate;s 'o$er not onl! to concr $ith amendments &t also to 'ro'ose

amendments. Indeed, $hat the Constittion sim'l! means is that the

initiati%e +or ling re%ene, tari* or ta &ills, &ills athori)ing an increase o+

the '&lic de&t, 'ri%ate &ills and &ills o+ local a''lication mst come +rom

the Lose o+ Re'resentati%es on the theor! that, elected as the! are +rom

the districts, the mem&ers o+ the Lose can &e e'ected to &e more

sensiti%e to the local needs and 'ro&lems. Nor does the Constittion

'rohi&it the ling in the /enate o+ a s&stitte &ill in antici'ation o+ its

recei't o+ the &ill +rom the Lose, so long as action &! the /enate as a

&od! is $ithheld 'ending recei't o+ the Lose &ill.

(he net argment o+ the 'etitioners $as that /. No. 160 did not 'ass

readings on se'arate da!s as re-ired &! the Constittion &ecase the

second and third readings $ere done on the same da!. "t this $as&ecase the President had certied /. No. 160 as rgent. (he 'residential

certication dis'ensed $ith the re-irement not onl! o+ 'rinting &t also

that o+ reading the &ill on se'arate da!s. (hat 'on the certication o+ a

&ill&! the President the re-irement o+ readings on se'arate da!s and o+

'rinting and distri&tion can &e dis'ensed $ith is s''orted &! the

$eighto+ legislati%e 'ractice.

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H

+;< S!$& ,;4 19923 +29 S!$& ,;< 199ri'ination o# $eenue =ills EB&0 &"end"ent .6 Su.stitution

Artro (olentino et al are -estioning the constittionalit! o+ RA 7716

other$ise =no$n as the G'anded Vale Added (a GVA(B 3a$. (olentino

a%erred that this re%ene &ill did not eclsi%el! originate +rom the Lose

o+ Re'resentati%es as re-ired &! /ection H, Article 6 o+ the Constittion.

G%en thogh RA 7716 originated as L" 11197 and that it 'assed the

readings in the LoR, the same did not com'lete the readings in /enate

+or a+ter the 1st reading it $as re+erred to the /enate :a!s X eans

Committee therea+ter /enate 'assed its o$n %ersion =no$n as /enate "ill

160. (olentino a%erred that $hat /enate cold ha%e done is amend L"

11197 &! stri=ing ot its tet and s&stitting it $ith the tet o+ /" 160 in

that $a! the &ill remains a Lose "ill and the /enate %ersion st

&ecomes the tet onl! the tetB o+ the L"#. It;s ironic ho$e%er to note

that (olentino and coJ'etitioner Ral Roco e%en signed the said /enate

"ill.B

ISSUE::hether or not the GVA( la$ is 'rocedrall! inrm.

HELD:

No. "! a 9J6 %ote, the /'reme Cort reected the challenge, holding that

sch consolidation $as consistent $ith the 'o$er o+ the /enate to 'ro'ose

or concr $ith amendments to the %ersion originated in the LoR. :hat the

Constittion sim'l! means, according to the 9 stices, is that the initiati%e

mst come +rom the LoR. Note also that there $ere se%eral instances

&e+ore $here /enate 'assed its o$n %ersion rather than ha%ing the LoR

%ersion as +ar as re%ene and other sch &ills are concerned. (his 'ractice

o+ amendment &! s&stittion has al$a!s &een acce'ted. (he 'ro'osition

o+ (olentino concerns a mere matter o+ +orm. (here is no sho$ing that it$old ma=e a signicant di*erence i+ /enate $ere to ado't his o%er $hat

has &een done.

RA 7716, other$ise =no$n as the G'anded ValeJAdded (a 3a$, is an act

that see=s to $iden the ta &ase o+ the eisting VA( s!stem and enhance

its administration &! amending the National Internal Re%ene Code. (here

are %arios sits -estioning and challenging the constittionalit! o+ RA

7716 on %arios gronds.

(olentino contends that RA 7716 did not originate eclsi%el! +rom the

Lose o+ Re'resentati%es &t is a mere consolidation o+ L". No. 11197 and

/". No. 160 and it did not 'ass three readings on se'arate da!s on the

/enate ths %iolating Article VI, /ections H and 6B o+ the Constittion,

res'ecti%el!.

Art. VI, /ection H All a''ro'riation, re%ene or tari* &ills, &ills athori)ing

increase o+ the '&lic de&t, &ills o+ local a''lication, and 'ri%ate &ills shall

originate eclsi%el! in the Lose o+ Re'resentati%es, &t the /enate ma!'ro'ose or concr $ith amendments.

Art. VI, /ection 6B No &ill 'assed &! either Lose shall &ecome a la$

nless it has 'assed three readings on se'arate da!s, and 'rinted co'ies

thereo+ in its nal +orm ha%e &een distri&ted to its em&ers three da!s

&e+ore its 'assage, ece't $hen the President certies to the necessit! o+

its immediate enactment to meet a '&lic calamit! or emergenc!. 'on

the last reading o+ a &ill, no amendment thereto shall &e allo$ed, and the

%ote thereon shall &e ta=en immediatel! therea+ter, and the !eas and na!s

entered in the ornal.

ISSUE: :hether or not RA 7716 %iolated Art. VI, /ection H and Art. VI,

/ection 6B o+ the Constittion.

HELD:

No. (he 'hrase originate eclsi%el!# re+ers to the re%ene &ill and not to

the re%ene la$. It is s

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Facts:

Antonio, Gdardo and ose Roas, &rothers and at the same time 'artners

o+ the Roas ! Com'ania, inherited +rom their grand'arents se%eral

'ro'erties $hich inclded +armlands $ith a total area o+ 19,000 hectares

Nasg& KarmlandsB. (he tenantstherein e'ressed their desire to

'rchase +rom the &rothers the 'arcels $hich the! actall! occ'ied so the

go%ernment, 'rsant to the constittional mandate to ac-ire &ig landed

estate and a''ortion them among landless tenants, 'ersaded the

&rothers sell the same. Roas ! Cia. then agreed to sell 1, 500 hectares o+

the lands &t the go%ernment, ho$e%er, did not ha%e enogh +nds, so the

+ormer allo$ed the +armers to &! the lands +or the same 'rice &t &!

installment. /&se-entl!, the CIR demanded +rom the &rothers the

'a!ment o+ decienc! income taes reslting +rom the sale o+ the

+armlands and considered the 'artnershi' as engaged in the &siness o+

real estate, hence, 1002 o+ the 'rots deri%ed there+rom $as taed. (he

&rothers 'rotested the assessment &t the same $as denied. >n a''eal,

the Cort o+ (a A''eals sstained the assessment. Lence, this a''eal.

Issue: Is Roas ! Cia. lia&le +or the 'a!ment o+ decienc! income +or the

sale o+ the +armlands

$ulin':

No. Althogh the! +armersE %endeesB 'aid +or their res'ecti%e holdings in

installment +or a 'eriod o+ 10 !ears, it $old ne%ertheless not ma=e the

%endor Roas ! Cia. a real estate dealer dring the 10J!ear amorti)ation

'eriod. It shold &e &orne in mind that the sale o+ the Nasg& +arm lands

to the %er! +armers $ho tilled them +or generations $as not onl! in

consonance $ith, &t more in o&edience to the re-est and 'rsant to

the 'olic! o+ or 4o%ernment to allocate lands to the landless. Lo$e%er,the 4o%ernment cold not com'l! $ith its dt! +or lac= o+ +nds so Roas !

Cia. /holdered the 4o%ernmentQs &rden, $ent ot o+ its $a! and sold

lands directl! to the +armers in the same $a! and nder the same terms as

$old ha%e &een the case had the 4o%ernment done it itsel+. Kor this

magnanimos act, the mnici'al concil o+ Nasg& 'assed a resoltion

e'ressing the 'eo'leQs gratitde. (he 'o$er o+ taation is sometimes

called also the 'o$er to destro!. (here+ore it shold &e eercised $ith

cation to minimi)e inr! to the 'ro'rietar! rights o+ a ta'a!er. It mst

&e eercised +airl!, e-all! and ni+orml!, lest the ta collector =ill the Mhen

that la!s the golden eggM. And, in order to maintain the general '&licQs

trst and condence in the 4o%ernment this 'o$er mst &e sed stl! and

not treacherosl!. It does not con+orm $ith >r sense o+ stice in the

instant case +or the 4o%ernment to 'ersade the ta'a!er to lend it a

hel'ing hand and later on to 'enali)e him +or dl! ans$ering the rgent

call. In ne, Roas ! Cia. cannot &e considered a real estate dealer +or the

sale in-estion. Lence, 'rsant to/ection H o+ the (a Code the lands

sold to the +armers are ca'ital assets, and the gain deri%ed +rom the sale

thereo+ is ca'ital gain, taa&le onl! to the etent o+ 502.

F&!0S:

Antonio, Gdardo and ose Roas, &rothers and at the same time 'artners

o+ the Roas ! Com'ania, inherited +rom their grand'arents se%eral

'ro'erties $hich inclded +armlands. (he tenants e'ressed their desire to

'rchase the +armland. (he tenants, ho$e%er, did not ha%e enogh +nds,

so the Roases agreed to a 'rchase &! installment. /&se-entl!, the CIR

demanded +rom the &rothers the 'a!ment o+ decienc! income taes

reslting +rom the sale, 1002 o+ the 'rots deri%ed there+rom $as taed.

(he &rothers 'rotested the assessment &t the same $as denied. >n

a''eal, the Cort o+ (a A''eals sstained the assessment. Lence, this'etition.

ISSUE Is Roas lia&le

$ULI)(

No. It shold &e &orne in mind that the sale o+ the +armlands to the %er!

+armers $ho tilled them +or generations $as not onl! in consonance $ith,

&t more in o&edience to the re-est and 'rsant to the 'olic! o+ or

4o%ernment to allocate lands to the landless.

In order to maintain the general '&lic;s trst and condence in the

4o%ernment this 'o$er mst &e sed stl! and not treacherosl!. It does

not con+orm $ith the sense o+ stice +or the 4o%ernment to 'ersade the

ta'a!er to lend it a hel'ing hand and later on 'enali)e him +or dl!

ans$ering the rgent call.

In ne, Roas cannot &e considered a real estate dealer and is not lia&le +or

1002 o+ the sale. Prsant to /ection H o+ the (a Code, the lands sold to

the +armers are ca'ital assets and the gain deri%ed +rom the sale thereo+ is

ca'ital gain, taa&le onl! to the etent o+ 502.

Facts:

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Y Don Pedro Roas and Dona Carmen A!ala, &oth /'anish, transmitted

to their grandchildren &! hereditar! sccession the +ollo$ing 'ro'erties

a. Agricltral lands $ith a total area o+ 19,000 hectares in Nasg&,

"atangas

J (enants $ho ha%e &een tilling the lands e'ressed their desire to

'rchase +rom Roas ! Cia, the 'arcels $hich the! actall! occ'ied

J (he go%t, in line $ith the constittional mandate to ac-ire &ig

landed estates and a''ortion them among landless tenantsJ+armers,

'ersaded the Roas &rothers to 'art $ith their landholdings

J (he &rothers agreed to sell 1,500 hec to the go%t +or P.079n,

'ls 00O sr%e! and s&di%ision e'enses

J n+ortnatel!, the go%t did not ha%e +nds

J A s'ecial arrangement $as made $ith the Reha&ilitation Kinance

Cor'oration to ad%ance to Roas ! Cia the amont o+ P1.5n as loan

J nder the arrangement, Roas ! Cia. allo$ed the +armers to &! the

lands +or the same 'rice &t &! installment, and contracted $ith the RKC to

'a! its loan +rom the 'roceeds o+ the !earl! amorti)ations 'aid &! the

+armers

J In 195 and 1955, Roas ! Cia. deri%ed +rom said installment

'a!ments a net gain o+ PH,H80.8 and P9,500.71. 502 o+ said net gain

$as re'orted +or income ta 'r'oses as gain on the sale o+ ca'ital asset

held +or more than one !ear 'rsant to /ec. H o+ the (a Code

&. Residential hose and lot at :right /t., alate, anila

J A+ter the marriage o+ Antonio and Gdardo, ose li%ed in the hose

$here he 'aid rentals o+ 8OE!ear to Roas ! Cia

c. /hares o+ stoc=s in di*erent cor'orations

Y (o manage the 'ro'erties, Antonio Roas, Gdardo Roas and ose

Roas, the children, +ormed a 'artnershi' called Roas ! Com'ania

Y >n 1958, CIR demanded +rom Roas ! Cia the 'a!ment o+ real estate

dealerQs ta +or 195 amtg to P150.00 'ls P10.00 com'romise 'enalt! +or

late 'a!ment, and P150.00 ta +or dealers o+ secrities 'ls P10.00com'romise 'enalt! +or late 'a!ment.

J "asis hose rentals recei%ed +rom ose, 'rsant to Art. 19H o+ the

(a Code stating that an o$ner o+ a real estate $ho deri%es a !earl! rental

income there+rom in the amont o+ P,000.00 or more is considered a real

estate dealer and is lia&le to 'a! the corres'onding ed ta

Y (he Commissioner +rther assessed decienc! income taes against

the &rothers +or 195 and 1955, reslting +rom the inclsion as income o+

Roas ! Cia o+ the nre'orted 502 o+ the net 'rots deri%ed +rom the sale

o+ the Nasg& +arm lands to the tenants, and the disallo$ance o+

dedctions +rom gross income o+ %arios &siness e'enses and

contri&tions claimed &! Roas ! Cia and the Roas &rothers

Y (he &rothers 'rotested the assessment &t $as denied, ths

a''ealing to the C(A

Y C(A decision sstained the assessment ece't the demand +or the

'a!ment o+ the ed ta on dealer o+ secrities and the disallo$ance o+ the

dedctions +or contri&tions to the Phili''ine Air Korce Cha'el and Lias de

essQ Retiro de anresa

Issue:/hold Roas ! Cia &e considered a real estate dealer &ecase it

engaged in the &siness o+ selling real estate

$ulin':

N>, &eing an isolated transaction

Y Real estate dealer an! 'erson engaged in the &siness o+ &!ing,selling, echanging, leasing or renting 'ro'ert! on his o$n accont as

'rinci'al and holding himsel+ ot as a +ll or 'artJtime dealer in real estate

or as an o$ner o+ rental 'ro'ert! or 'ro'erties rented or o*ered to rent +or

an aggregate amont o+ three thosand 'esos or more a !ear

Y /ection 19H o+ the (a Code, in considering as real estate dealers

o$ners o+ real estate recei%ing rentals o+ at least P,000.00 a !ear, does

not 'ro%ide an! -alication as to the 'ersons 'a!ing the rentals

Y (he +act that there $ere hndreds o+ %endees and them &eing 'aid

+or their res'ecti%e holdings in installment +or a 'eriod o+ ten !ears, it

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$old ne%ertheless not ma=e the %endor Roas ! Cia. a real estate dealer

dring the 10J!ear amorti)ation 'eriod

Y the sale o+ the Nasg& +arm lands to the %er! +armers $ho tilled

them +or generations $as not onl! in consonance $ith, &t more in

o&edience to the re-est and 'rsant to the 'olic! o+ or 4o%ernment to

allocate lands to the landless

Y It $as the dt! o+ the 4o%ernment to 'a! the agreed com'ensation

a+ter it had 'ersaded Roas ! Cia. to sell its haciendas, and to

s&se-entl! s&di%ide them among the +armers at %er! reasona&le terms

and 'rices. "t de to the lac= o+ +nds, Roas ! Cia. sholdered the

4o%ernmentQs &rden, $ent ot o+ its $a! and sold lands directl! to the

+armers in the same $a! and nder the same terms as $old ha%e &een

the case had the 4o%ernment done it itsel+

Y (he 'o$er o+ taation is sometimes called also the 'o$er to destro!.

(here+ore it shold &e eercised $ith cation to minimi)e inr! to the

'ro'rietar! rights o+ a ta'a!er. It mst &e eercised +airl!, e-all! and

ni+orml!

Y (here+ore, Roas ! Cia. cannot &e considered a real estate dealer +or

the sale in -estion. Lence, 'rsant to /ection H o+ the (a Code the

lands sold to the +armers are ca'ital assets, and the gain deri%ed +rom the

sale thereo+ is ca'ital gain, taa&le onl! to the etent o+ 502

As to the dedctions

a. PH0