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G.R. No.

L-30232 July 29, 1988

REVENUE, respondents-appellees.
H. San Luis & V.L. Simbulan for petitioner-appellant.

This is a petition for review of the October 21, 1968
Decision + of the Court of Ta !ppeals in CT! Case "o.
1#8#, $%u&on 'tevedorin( Corporation v. )on. *a+on
Oben, Co++issioner, ,ureau of -nternal *evenue$, the various clai+s for ta refund/ and the
0ebruar. 21, 1969 *esolution of the sa+e court
the +otion for reconsideration.
)erein petitioner-appellant, in 1961 and 1962, for the
repair and +aintenance of its tu(boats, i+ported various
en(ine parts and other e2uip+ent for which it paid,
under protest, the assessed co+pensatin( ta. 3nable
to secure a ta refund fro+ the Co++issioner of -nternal
*evenue, on 4anuar. 2, 196#, it filed a 5etition for
*eview 6*ollo, pp. 1#-187 with the Court of Ta !ppeals,
doc8eted therein as CT! Case "o. 1#8#, a+on(
others, that it be (ranted the refund of the a+ount of
599,##2.19. The Court of Ta !ppeals, however, in a
Decision dated October 21, 1969 6Ibid., pp. 22-2:7,
denied the various clai+s for ta refund. The decretal
portion of the said decision reads;
<)=*=0O*=, findin( petitioner>s
various clai+s for refund a+ountin( to
599,##2.19 without sufficient le(al
?ustification, the said clai+s have to be,
as the. are hereb., denied. <ith costs
a(ainst petitioner.
On 4anuar. 2#, 1969, petitioner-appellant filed a @otion
for *econsideration 6Ibid., pp. 28-9#7, but the sa+e was
denied in a *esolution dated 0ebruar. 21, 1969 6Ibid., p.
9A7. )ence, the instant petition.
This Court, in a *esolution dated @arch 19, 1969, (ave
due course to the petition 6Ibid., p. #17. 5etitioner-
appellant raised three 697 assi(n+ents of error, to wit;
The lower court erred in holdin( that the
petitioner-appellant is en(a(ed in
business as stevedore, the wor8 of
unloadin( and loadin( of a vessel in
port, contrar. to the evidence on record.
The lower court erred in not holdin( that
the business in which petitioner-
appellant is en(a(ed, is part and parcel
of the shippin( industr..
The lower court erred in not allowin( the
refund sou(ht b. petitioner-appellant.
The instant petition is without +erit.
The pivotal issue in this case is whether or not
petitioner>s tu(boats$ can be interpreted to be included in
the ter+ $car(o vessels$ for purposes of the ta
ee+ption provided for in 'ection 191 of the "ational
-nternal *evenue Code, as a+ended b. *epublic !ct
"o. 91:6.
'aid law provides;
'ec. 191. Compensating tax. B ... !nd
5rovided further, That the ta i+posed
in this section shall not appl. to articles
to be used b. the i+porter hi+self in the
+anufacture or preparation of articles
sub?ect to specific ta or those for
consi(n+ent abroad and are to for+
part thereof or to articles to be used b.
the i+porter hi+self as passen(er
andCor car(o vessel, whether coastwise
or ocean(oin(, includin( en(ines and
spare parts of said vessel. ....
5etitioner contends that tugboats are e+braced and
included in the ter+ cargo vessel under the ta
ee+ption provisions of 'ection 191 of the *evenue
Code, as a+ended b. *epublic !ct. "o. 91:6. )e
ar(ues that in le(al conte+plation, the tu(boat and a
bar(e loaded with car(oes with the for+er towin( the
latter for loadin( and unloadin( of a vessel in part,
constitute a sin(le vessel. !ccordin(l., it concludes that
the en(ines, spare parts and e2uip+ent i+ported b. it
and used in the repair and +aintenance of its tu(boats
are ee+pt fro+ co+pensatin( ta 6*ollo, p. 297.
On the other hand, respondents-appellees counter that
petitioner-appellant>s $tu(boats$ are not $Car(o vessel$
because the. are neither desi(ned nor used for
andCor transportin( persons or (oods b. the+selves but
are +ainl. e+plo.ed for towin( and pullin( purposes. !s
such, it cannot be clai+ed that the tu(boats in 2uestion
are used in and transportin( passen(ers or
car(oes as a co++on carrier b. water, either coastwise
or ocean(oin( and, therefore, not within the purview of
'ection 191 of the Ta Code, as a+ended b. *epublic
!ct "o. 91:6 6,rief for *espondents-!ppellees, pp. #A7.
This Court has laid down the rule that $as the power of
taation is a hi(h prero(ative of soverei(nt., the
relin2uish+ent is never presu+ed and an. reduction or
di+unition thereof with respect to its +ode or its rate,
+ust be strictl. construed, and the sa+e +ust be
coached in clear and un+ista8able ter+s in order that it
+a. be applied.$ 68# C.4.'. pp. 6A9-8117, @ore
specificall. stated, the (eneral rule is that an. clai+ for
ee+ption fro+ the ta statute should be strictl.
construed a(ainst the 6!ctin( Co++issioner of
Custo+s v. @anila =lectric Co. et al., 69 'C*! #69
D19::E and Co++issioner of -nternal *evenue v. 5.4.
Fiener Co. %td., et al., 6A 'C*! 1#2 D19:AE7.
!s correctl. anal.&ed b. the Court of Ta !ppeals, in
order that the i+portations in 2uestion +a. be declared
ee+pt fro+ the co+pensatin( ta, it is indispensable
that the re2uire+ents of the a+endator. law be
co+plied with, na+el.; 617 the en(ines and spare parts
+ust be used b. the i+porter hi+self as a passen(er
andCor car(o, vessel/ and 627 the said passen(er andCor
car(o vessel +ust be used in coastwise or ocean(oin(
navi(ation 6Decision, CT! Case "o. 1#8#/ *ollo, p. 2#7.
!s pointed out b. the Court of Ta !ppeals, the
a+endator. provisions of *epublic !ct "o. 91:6 li+it ta
ee+ption fro+ the co+pensatin( ta to i+ported ite+s
to be used b. the i+porter hi+self as operator of
passen(er andCor car(o vessel 6Ibid., p. 2A7.
!s 2uoted in the decision of the Court of Ta !ppeals, a
tu(boat is defined as follows;
! tugboat is a stron(l. built, powerful
stea+ or power vessel, used for towin(
and, now, also used for attendance on
vessel. 6<ebster "ew -nternational
Dictionar., 2nd =d.7
! tugboat is a diesel or stea+ power
vessel desi(ned pri+aril. for +ovin(
lar(e ships to and fro+ piers for towin(
bar(es and li(hters in harbors, rivers
and canals. 6=nc.clopedia -nternational
Grolier, Hol. 18, p. 2A67.
! tug is a stea+ vessel built for towin(,
s.non.+ous with tu(boat. 6,ouvier>s
%aw Dictionar..7 6*ollo, p. 2#7.
3nder the fore(oin( definitions, petitioner>s tu(boats
clearl. do not fall under the cate(ories of passen(er
andCor car(o vessels. Thus, it is a cardinal principle of
statutor. construction that where a provision of law
spea8s cate(oricall., the need for interpretation is
obviated, no plausible pretense bein( entertained to
?ustif. non-co+pliance. !ll that has to be done is to appl.
it in ever. case that falls within its ter+s 6!llied
,ro8era(e Corp. v. Co++issioner of Custo+s, %-2:6#1,
#1 'C*! AAA D19:1E/ Iui?ano, etc. v. D,5, %-26#19, 9A
'C*! 2:1 D19:1E7.
!nd, even if construction and interpretation of the law is
insisted upon, followin( another funda+ental rule that
statutes are to be construed in the li(ht of purposes to
be achieved and the evils sou(ht to be re+edied
65eople v. 5urisi+a etc., et al., %-#21A1-66, 86 'C*!
A## D19:8E, it will be noted that the le(islature in
a+endin( 'ection 191 of the Ta Code b. *epublic !ct
91:6, as appearin( in the records, intended to provide
incentives and induce+ents to bolster the shippin(
industr. and not the business of stevedorin(, as
+anifested in the sponsorship speech of 'enator Gil 6*ollo, p. 267.
On anal.sis of petitioner-appellant>s transactions, the
Court of Ta !ppeals found that no evidence was
adduced b. petitioner-appellant that tu(boats are
passen(er andCor car(o vessels used in the shippin(
industr. as an independent business. On the contrar.,
petitioner-appellant>s own evidence supports the view
that it is en(a(ed as a stevedore, that is, the wor8 of
unloadin( and loadin( of a vessel in port/ and towin( of
bar(es containin( car(oes is a part of petitioner>s
underta8in( as a stevedore. -n fact, even its trade na+e
is indicative that its sole and principal business is
stevedorin( and li(htera(e, taed under 'ection 191 of
the "ational -nternal *evenue Code as a contractor, and
not an entit. which transports passen(ers or frei(ht for
hire which is taed under 'ection 192 of the sa+e Code
as a co++on carrier b. water 6Decision, CT! Case "o.
1#8#/ *ollo, p. 2A7.
3nder the circu+stances, there appears to be no
plausible reason to disturb the findin(s and conclusion of
the Court of Ta !ppeals.
!s a +atter of principle, this Court will not set aside the
conclusion reached b. an a(enc. such as the Court of
Ta !ppeals, which is, b. the ver. nature of its function,
dedicated eclusivel. to the stud. and consideration of
ta proble+s and has necessaril. developed an
epertise on the sub?ect unless there has been an abuse
or i+provident eercise of authorit. 6* v.
Co++issioner of -nternal *evenue, 2# 'C*! 199
D1981E7, which is not present in the instant case.
5*=@-'=' CO"'-D=*=D, the instant petition is
D-'@-''=D and the decision of the Court of Ta
!ppeals is !00-*@=D.
'O O*D=*=D.
Melencio-Herrera, adilla and Sarmiento, !!., concur.
.R. No. L-22,3- S'.%'/0'1 12, 193,
REVENUE, petitioner,
*ANUEL ). PINEDA, "4 o#' o5 %&' &'614 o5 $'7'"4'$
ATANASIO PINEDA, respondent.
"ffice of t#e Solicitor $eneral for petitioner.
Manuel %. ineda for and in #is o&n be#alf as

)ENGZON, J.P., J.:
On @a. 29, 19#A !tanasio 5ineda died, survived b. his
wife, 0elicisi+a ,a(tas, and 1A children, the eldest of
who+ is @anuel ,. 5ineda, a =state
proceedin(s were had in the Court of 0irst -nstance of
@anila 6Case "o. :11297 wherein the survivin( widow
was appointed ad+inistratri. The estate was divided
a+on( and awarded to the heirs and the proceedin(s
ter+inated on 4une 8, 19#8. @anuel ,. 5ineda>s share
a+ounted to about 52,A11.11.
!fter the estate proceedin(s were closed, the ,ureau of
-nternal *evenue investi(ated the inco+e ta liabilit. of
the estate for the .ears 19#A, 19#6, 19#: and 19#8 and
it found that the correspondin( inco+e ta returns were
not filed. Thereupon, the representative of the Collector
of -nternal *evenue filed said returns for the estate on
the basis of infor+ation and data obtained fro+ the
aforesaid estate proceedin(s and issued an assess+ent
for the followin(;
1. Deficienc. inco+e ta
19#A 519A.89
19#6 #96.9A
19#: 1,216.91 51,::9.69
!dd; AJ surchar(e 88.98
1J +onthl. interest fro+
"ove+ber 91, 19A9 to
!pril 1A, 19A: :21.::
Co+pro+ise for late filin( 81.11
Co+pro+ise for late
pa.+ent #1.11
Total a+ount due
!dditional residence ta for
9. *eal =state dealer>s ta for the
fourth 2uarter of 19#6 and the
whole .ear of 19#:
@anuel ,. 5ineda, who received the assess+ent,
contested the sa+e. 'ubse2uentl., he appealed to the
Court of Ta !ppeals alle(in( that he was appealin(
$onl. that proportionate part or portion pertainin( to hi+
as one of the heirs.$
!fter hearin( the parties, the Court of Ta !ppeals
rendered ?ud(+ent reversin( the decision of the
Co++issioner on the (round that his ri(ht to assess and
collect the ta has prescribed. The Co++issioner
appealed and this Court affir+ed the findin(s of the Ta
Court in respect to the assess+ent for inco+e ta for the
.ear 19#: but held that the ri(ht to assess and collect
the taes for 19#A and 19#6 has not prescribed. 0or
19#A and 19#6 the returns were filed on !u(ust 2#,
19A9/ assess+ents for both taable .ears were +ade
within five .ears therefro+ or on October 19, 19A9/ and
the action to collect the ta was filed within five .ears
fro+ the latter date, on !u(ust :, 19A:. 0or taable .ear
19#:, however, the return was filed on @arch 1, 19#8/
the assess+ent was +ade on October 19, 19A9, +ore
than five .ears fro+ the date the return was filed/ hence,
the ri(ht to assess inco+e ta for 19#: had prescribed.
!ccordin(l., <e re+anded the case to the Ta Court for
further appropriate proceedin(s.
-n the Ta Court, the parties sub+itted the case for
decision without additional evidence.
On "ove+ber 29, 1969 the Court of Ta !ppeals
rendered ?ud(+ent holdin( @anuel ,. 5ineda liable for
the pa.+ent correspondin( to his share of the followin(
Deficienc. inco+e ta
19#A 519A.89
19#6 #96.9A
*eal estate dealer>s
fied ta #th 2uarter of
19#6 and whole .ear
of 19#: 518:.A1
The Co++issioner of -nternal *evenue has appealed to
3s and has proposed to hold @anuel ,. 5ineda liable for
the pa.+ent of all the taes found b. the Ta Court to be
due fro+ the estate in the total a+ount of 5:61.28
instead of onl. for the a+ount of taes correspondin( to
his share in the estate.'a&p#(l.n)t
@anuel ,. 5ineda opposes the proposition on the
(round that as an heir he is liable for unpaid inco+e ta
due the estate onl. up to the etent of and in proportion
to an. share he received. )e relies on $overnment of
t#e #ilippine Islands v. amintuan
where <e held that
$after the partition of an estate, heirs and distributees are
liable individuall. for the pa.+ent of all lawful
outstandin( clai+s a(ainst the estate in proportion to the
a+ount or value of the propert. the. have respectivel.
received fro+ the estate.$
<e hold that the Govern+ent can re2uire @anuel ,.
5ineda to pa. the full a+ount of the taes assessed.
5ineda is liable for the assess+ent as an heir and as a
holder-transferee of propert. belon(in( to the !s an heir he is individuall. answerable
for the part of the ta proportionate to the share he
received fro+ the inheritance.
)is liabilit., however,
cannot eceed the a+ount of his share.
!s a holder of propert. belon(in( to the estate, 5ineda is
liable for he ta up to the a+ount of the propert. in his
possession. The reason is that the Govern+ent has a
lien on the 52,A11.11 received b. hi+ fro+ the estate as
his share in the inheritance, for unpaid inco+e
for which said estate is liable, pursuant to the last
para(raph of 'ection 91A of the Ta Code, which we
2uote hereunder;
-f an. person, corporation, partnership, ?oint-
account 6cuenta en participacion7, association,
or insurance co+pan. liable to pa. the inco+e
ta, ne(lects or refuses to pa. the sa+e after
de+and, the a+ount shall be a lien in favor of
the Govern+ent of the 5hilippines fro+ the ti+e
when the assess+ent was +ade b. the
Co++issioner of -nternal *evenue until paid
with interest, penalties, and costs that +a.
accrue in addition thereto upon all propert. and
ri(hts to propert. belon(in( to the; . . .
,. virtue of such lien, the Govern+ent has the ri(ht to
sub?ect the propert. in 5ineda>s possession, i.e., the
52,A11.11, to satisf. the inco+e ta assess+ent in the
su+ of 5:61.28. !fter such pa.+ent, 5ineda will have a
ri(ht of contribution fro+ his co-heirs,
to achieve an
ad?ust+ent of the proper share of each heir in the
distributable estate.
!ll told, the Govern+ent has two wa.s of collectin( the
ta in 2uestion. One, b. (oin( after all the heirs and
collectin( fro+ each one of the+ the a+ount of the ta
proportionate to the inheritance received. This re+ed.
was adopted in $overnment of t#e #ilippine Islands v.
amintuan, supra. -n said case, the Govern+ent filed an
action a(ainst all the heirs for the collection of the ta.
This action rests on the concept that hereditar. propert.
consists onl. of that part which re+ains after the
settle+ent of all lawful clai+s a(ainst the estate, for the
settle+ent of which the entire estate is first liable.
reason wh. in case suit is filed a(ainst all the heirs the
ta due fro+ the estate is levied proportionatel. a(ainst
the+ is to achieve thereb. two results; first, pa.+ent of
the ta/ and second, ad?ust+ent of the shares of each
heir in the distributed estate as lessened b* t#e tax.
!nother re+ed., pursuant to the lien created b. 'ection
91A of the Ta Code upon all propert. and ri(hts to
propert. belon(in( to the for unpaid inco+e
ta, is b. sub?ectin( said propert. of the estate which is
in the hands of an heir or transferee to the pa.+ent of
the ta due, the estate. This second re+ed. is the ver.
avenue the Govern+ent too8 in this case to collect the
ta. The ,ureau of -nternal *evenue should be (iven, in
instances li8e the case at bar, the necessar. discretion
to avail itself of the +ost epeditious wa. to collect the
ta as +a. be envisioned in the particular provision of
the Ta Code above 2uoted, because taes are the
lifeblood of (overn+ent and their pro+pt and certain
availabilit. is an i+perious need.
!nd as afore-stated in
this case the suit see8s to achieve onl. one ob?ective;
pa.+ent of the ta. The ad?ust+ent of the respective
shares due to the heirs fro+ the inheritance, as lessened
b. the ta, is left to await the suit for contribution b. the
heir fro+ who+ the Govern+ent recovered said ta.
<)=*=0O*=, the decision appealed fro+ is +odified.
@anuel ,. 5ineda is hereb. ordered to pa. to the
Co++issioner of -nternal *evenue the su+ of 5:61.28
as deficienc. inco+e ta for 19#A and 19#6, and real
estate dealer>s fied ta for the fourth 2uarter of 19#6
and for the whole .ear 19#:, without pre?udice to his
ri(ht of contribution for his co-heirs. "o costs. 'o
Concepcion, C.!., +e*es, !.%.L., ,i-on, Ma.alintal,
/aldivar, Sanc#e-, Castro, 0ngeles and 1ernando, !!.,
G.*. "o. %-:988, L@C! @anila v. Collector of -nternal
*epublic of the 5hilippines
=" ,!"C
*ANILA, plaintiff-appellant,
Haussermann, Co#n and 1is#er for appellant. Cit*
0ttorne* 2scaler for appellee.
The 2uestion at issue in this case is whether or not the
buildin( and (rounds of the Loun( @en>s Christian
!ssociation of @anila are sub?ect to taation, under
section #8 of the charter of the cit. of @anila 2uoted in
the footnote Ds.llabusE.
The cit. of @anila, contendin( that the propert. is
taable, assessed it and levied a ta thereon. -t was paid
under protest and this action be(un to recover it on the
(round that the propert. was ee+pt fro+ taation under
the charter of the cit. of @anila. The decision was for the
cit. and the association appealed.
The Loun( @en>s Christian !ssociation ca+e to the
5hilippine with the ar+. of occupation in 1898. <hen the
lar(e bod. of troops in @anila was re+oved to
per+anent 2uarters at 0ort <illia+ @cFinle. in
0ebruar., 191A, an independent association for @anila
was or(ani&ed under the direction of the !r+. and nav.
depart+ents. 'hortl. after the or(ani&ation of the
association the directors +ade a for+al re2uest to the
international co++ittee of the Loun( @en>s Christian
!ssociation in "ew Lor8 Cit. for the assistance and
cooperation of its forei(n depart+ent. - response to this
re2uest @r. 4ohn *. @ott, (eneral secretar. of the
forei(n depart+ent, visited @anila in 4anuar. 191:. !fter
a conference with the directors and interested friends it
was decided to conduct a ca+pai(n to secure funds for
an ade2uate and per+anent association. -n the na+e of
the international co++ittee and friends in !+erica @r.
@ott (uaranteed 51:1,111 for the construction of a
buildin( on condition that friend in the 5hilippines secure
the site and ade2uatel. furnish the buildin(. The
ca+pai(n for funds was be(un here on 0ebruar. 1A,
191:, and, b. the 1Ath of @arch followin(, 589,111 was
subscribed, nearl. one thousand different persons
contributin(. Thereupon the Loun( @en>s Christian
!ssociation of @anila was incorporated under the law of
the 5hilippine -slands and received its character in 4une,
! site for the new buildin( was selected on Calle
Concepcion, =r+ita, and the buildin( contract was let on
the 8th of 4anuar. followin(. The cornerstone was laid
with appropriate cere+onies on 4ul. 11, 1918, and the
buildin( was for+all. dedicated on October 21, 1919.
The buildin( is co+posed of three parts. The +ain
structure, located in the center, is three stories hi(h and
includes a reception hall, social hall and (a+e roo+s,
lecture roo+, librar., readin( roo+ and roo+in(
apart+ents. The s+all buildin( to the left of the
principal structure, as one faces the front fro+ Called
Concepcion, is the 8itchen and servant>s 2uarters. The
lar(e win( to the ri(ht is 8nown as the athletic buildin(,
where the bowlin( alle.s, swi++in( pool, loc8er roo+s
and (.+nasiu+-auditoriu+ are located. The
construction is of reinforced concrete with steel trussed
roof covered with interloc8in( red tiles.
The +ain or central portion of the buildin( is 1A1 b. #A
feet and stands 21 +eters bac8 fro+ the sidewal8. !n
iron canop., suspended b. brac8ets, pro?ects over the
drivewa. which lies in front and shelters the +ain
entrance. ! wide arched doorwa. opens into a lar(e
reception roo+, on the left of which is the public office
and the secretar.>s private office, while on the ri(ht is the
readin( and writin( roo+s, and be.ond that the librar.,
each about 91 feet s2uare. 0ro+ the reception roo+, on
the left, a broad concrete stairwa. leads to the second
5assin( out of the rear of the reception hall one enters
upon a veranda so+e 1A feet in width runnin( the full
len(th of the +ain structure which loo8s out on the
tennis courts and affords an ecellent place for loun(in(,
(a+es and (eneral social purposes. To the left of the
entrance hall and also openin( upon the veranda are
two lar(e roo+s of about the sa+e si&e as those on the
ri(ht of the reception hall, the first bein( the billiard roo+
and the other the restaurant. The athletic buildin( is
entered fro+ the rear veranda. -t is a two stor. win( 68
b. 8A feet. 5assin( fro+ the veranda into the athletic hall
one finds first, on the left, the toilet roo+, and be.ond
this, to the rear, the shower baths and loc8er roo+s. The
swi++in( pool is in the center of the athletic win( and is
61 b. 19 feet in si&e, lined with ce+ent. To the ri(ht of
the swi++in( pool are the bowlin( alle.s. ! wide
stairwa.s leads to the second floor. !bove the
swi++in(-pool and bowlin( alle. is a lar(e roo+ A1 b.
8A feet which is the (.+nasiu+ and also the auditoriu+
when occasion re2uires. !bout one-third of the roof
convertin( the athletic win( is used as a roof (arden.
The second and third floors of the +ain buildin( are
(iven over al+ost wholl. to roo+in( apart+ents and
baths. On the second floor over the entrance hall is a
+e+bers> parlor, fro+ which a s+all balcon. pro?ects
over the +ain entrance. The re+ainder of the second
floor and all to the third are co+posed of the livin(
roo+s. These apart+ents, of which there are 1# on the
second and 21 on the third floor are approi+atel. 18 b.
1# feet each. The. provide acco++odations for 6# +en.
The purposes of the association, as set forth in its
charter and constitution, are;
To develop the Christian character and usefulness of its
+e+bers, to i+prove the spiritual, intellectual, social and
ph.sical condition of .oun( +en, and to ac2uire, hold,
+ort(a(e, and dispose of the necessar. lands, buildin(s
and personal propert. for the use of said corporation
eclusivel. for reli(ious, charitable and educational
purposes, and not for invest+ent or profit.
The purposes of this association shall be eclusivel.
reli(ious, charitable and educational, in developin( the
Christian character and usefulness of its +e+bers and
in i+provin( the spiritual, +ental, social and ph.sical
condition of .oun( +en.
'pea8in( (enerall., the association clai+s ee+ption
fro+ taation on the (round that it is a reli(ious,
charitable and educational institution co+bined. That it
has an educational depart+ent is not denied. -t is
undisputed that the ai+ of this depart+ent is to furnish,
at +uch less than cost, instruction in sub?ects that will
(reatl. increase the +ental efficienc. and wa(e-earnin(
capacit. of .oun( +en, prepare the+ in special lines of
business and offer the+ special lines of stud.. !ttention
is (iven to sub?ects included in civil service and consular
ea+inations both here and in the 3nited 'tates. The
courses offer co++ercial sub?ects, as well as +an.
others, and include steno(raph. and t.pewritin(,
boo88eepin(, arith+etic, =n(lish co+position, forei(n
lan(ua(es, includin( ele+entar. and advanced 'panish
and Ta(alo(, special courses in 5hilippine histor., public
spea8in(,, horticulture, tropical dependencies,
and the (roup of sub?ects re2uired for entrance into the
consular services, such as political econo+., !+erican
and +odern histor.. Courses are also offered in law,
social, ethics, political econo+. and other sub?ects.
The institution has also its reli(ious depart+ent. -n that
depart+ent there are, (enerall. spea8in(, three +ain
lines of wor8 - ,ible stud., reli(ious +eetin(s and
special classes. Course are offered in the %ife of Christ
and the Old Testa+ent and in the lar(er social
si(nificance of the teachin(s of 4esus. @eetin(s are held
on 'unda. afternoons and several ti+es durin( the
wee8 and courses are offered in the stud. of +issions, in
the +ethod of teachin( the ,ible and 8indred sub?ects.
The at+osphere of the Loun( @en>s Christian
!ssociation is distinctl. reli(ious and there is constant
effort on the part of the officials to create a reli(ious
spirit/ and to that end there is continuous pressure to
induce +e+bers to attend not onl. the reli(ious services
of the association but also those of one or another of the
churches of @anila. <hile the association is
nonsectarian, it is pree+inentl. reli(ious/ and the
funda+ental basis and (roundwor8 is the Christian
reli(ion. !ll of the officials of the association are devoted
Christians, +e+bers of a church, and have dedicated
their lives to the spread of the Christian principles and
buildin( of Christian character.
The institution also has charitable features. -t +a8es no
profit on an. of its activities. The professors and
instructors in all depart+ents serve without pa. and
freel. (ive of their ti+e and abilit. to further the purposes
of the institution. The chief secretar. and his assistant
receive no salar. fro+ the institution. <hatever the. are
paid co+es fro+ the 3nited 'tates. -n esti+atin( the
cost of instruction in the various depart+ents, or of the
other thin(s for which pa. is received, no account is
ta8en of the interest on the +one. invested in the
(rounds and buildin(, of deterioration in value resultin(
fro+ the lapse of ti+e, or of the fact that the professors
and instructors and certain officials receive no pa.. <e
have, then, a buildin( and (rounds, professors and
instructors, and certain institution officials, furnished free
of char(e, and which +a8es no profit even on that basis.
This, it would see+, would lend so+e color to the clai+
that the association ta8es on so+e of the aspect of a
charitable institution. <hile it appears that the
association is not eclusivel. reli(ious or charitable or
educational, it is de+onstrated that it is a happ.
co+bination of all three, (ivin( to its +e+bership the
reli(ious opportunities of the church, the educational
opportunities of the school and the blessin(s of charit.
where needed without the recipient feelin( or even
8nowin( that he is the ob?ect of charit..
-t is clai+ed, however, that the institution is run as a
business in that it 8eeps a lod(in( and boardin( house.
-t +a. be ad+itted that there are 6# persons
roo+s in the +ain buildin( as lod(ers or roo+ers and
that the. ta8e their +eals at the restaurant below. These
facts, however, are far fro+ constitutin( a business in
ordinar. acceptation of the word. -n the first place, no
profit is reali&ed b. the association in an. sense. -n the
second place, it is undoubted, as it is undisputed, that
the purpose of the association is not, pri+aril., to obtain
the +one. which co+es fro+ the lod(ers and boarders.
The real purpose is to 8eep the +e+bership continuall.
within the sphere of influence of the institution/ and
thereb. to prevent, as far as possible, the opportunities
which vice president to .oun( +en in forei(n countries
who lac8 ho+e or other si+ilar influences. <e re(ard
this feature of the institution not as a business or +eans
of +a8in( +one., but, rather, as a ver. efficient +eans
of +aintainin( the influence of the institution over its
+e+bership. !s we held in the case of the Colu+bia
Club, reli(ious and +oral teachin(s do not alwa.s stop
with the spo8en word/ but to be effective in the hi(hest
de(ree the. +ust follow the .oun( +an throu(h as +an.
+o+ents of his life as possible. To this end the feature
of the Loun( @en>s Christian !ssociation to which
ob?ection is +ade lends itself with (reat effect/ and we
are, accordin(l., forced to re(ards this activit. of the
institution not as a business but as a +ethod b. which
the institution +aintains its influence and conserves the
benefits which its or(ani&ation was desi(ned to confer.
!s we have seen in the description alread. (iven of the
association buildin( and (rounds, no part is occupied for
an. but institutional purposes. 0ro+ end to end the
buildin( and (rounds are devoted eclusivel. to the
purposes stated in the constitution of the association.
The librar. and readin( roo+s, the (a+e and loun(in(
halls, the lecture roo+s, the auditoriu+, the baths, pools,
devices for ph.sical develop+ent, and the (rounds, are
all dedicated eclusivel. to the ob?ects and purpose of
the association - the buildin( of Christian character and
the creation of +oral senti+ent and fiber in +en. -t is the
belief of the Loun( @en>s Christian !ssociation that a
Christian +an, a +an of +oral senti+ent and fir+ +oral
fiber, is .et a better +an for bein( also all-round +an -
one who is sound not onl. accordin( to Christian
principles and the hi(hest +oral conceptions, but
ph.sicall. and +entall./ whose bod. and +ind act in
har+on. and within the li+its which the ri(hts of others
set/ who are (entle+an in ph.sical and +ental stru((les,
as well as in reli(ious service/ who have self-respect and
self-restraint/ who can hit hard and still 8indl./ who can
lose without env./ who can con(ratulate his con2ueror
with sincerit./ who can vie without te+per, contend
without +alice, concede without re(ret/ who can win and
still be (enerous, - in short, one who fi(hts hard but
s2uare. To the production of such +en the association
lends all its efforts, husbands all its resources.
<e are aware that there are +an. decisions holdin( that
institutions of this character are not ee+pt fro+
taation/ but, on investi(ation, we find that the +a?orit. of
the+ are based on statutes +uch narrower than the one
under consider and that in all probabilit. the decisions
would have been otherwise if the court had been
passin( on a statute si+ilar to ours. On the other hand,
there are +an. decisions of the courts in the 3nited
'tates founded on statutes li8e the 5hilippine statute
which hold that associations of this class are ee+pt
fro+ taation. <e have ea+ined all of the decisions,
both for and a(ainst, with care and deliberation, and we
are convinced that the wei(ht of authorit. sustains the
positions we ta8e in this case.
There is no doubt about the correctness of the
contention that an institution +ust devote itself
eclusivel. to one or the other of the purpose +entioned
in the statute before it can be ee+pt fro+ taation/ but
the statute does not sa. that it +ust be devoted
eclusivel. to an. one of the purposes therein
+entioned. -t +a. be a co+bination of two or three or
+ore of those purposes and still be entitled to ee+pt.
The Loun( @en>s Christian !ssociation of @anila cannot
be said to be an institution used eclusivel. for reli(ious
purposes, or an institution used eclusivel. for charitable
purposes, or an institution devoted eclusivel. to
educational purposes/ but we believe it can be truthfull.
said that it is an institution used eclusivel. for all three
purposes, and that, as such, it is entitled to be ee+pted
fro+ taation.
The ?ud(+ent appealed fro+ is reversed and the cause
re+anded with instructions to enter a ?ud(+ent a(ainst
the cit. of @anila and in favor of the Loun( @en>s
Christian !ssociation of @anila in the su+ of 56,221.9A.
<ithout costs in this instance. 'o ordered.
0rellano, C.!., 3orres, !o#nson and 0raullo, !!., concur.
Carson, dissents.
*"17o4 II ;4. CA
2,3 SCRA -, 199,
0erdinand @arcos -- assailed the decision of
the C! declarin( the deficienc. inco+e ta assess+ents
upon the estate and the properties of his late father final
despite the pendenc. of the probate proceedin(s of the
will of the late president. On the other hand, the ,-*
ar(ued that the state authorit. to collect taes is
-ssue; is the approval of the court +andator.
re2uire+ent in the collection of taesM
"o. the enforce+ent of ta laws and collection
of taes are of para+ount i+portance for the sustenance
of (overn+ent. Taes are the lifeblood of the
(overn+ent and should be collected without
unnecessar. hindrance. )owever, such collection should
be +ade in accordance with law as an. arbitrariness will
ne(ate the ver. reason for (overn+ent itself. -t is
therefore necessar. to reconcile the apparentl.
conflictin( interest of the authorities and the tapa.ers
so that the real purpose of taation, which is the
pro+otion of the co++on (ood, +a. be achieved.
60erdinand *. @arcos -- assailed the decision of
the Court of !ppeals declarin( the deficienc. inco+e ta
assess+ents and estate ta assess+ents upon the
estate and properties of his late father despite the
pendenc. of the probate proceedin(s of the will of the
late 5resident. On the other hand, the ,-* ar(ued that
the 'tateNs authorit. to collectinternal revenue taes is
5etitioner further ar(ues that $the nu+erous pendin(
court cases 2uestionin( the late president>s ownership or
interests in several properties 6both real and personal7
+a8e the total value of his estate, and the conse2uent
estate ta due, incapable of eact pecuniar.
deter+ination at this ti+e. Thus, respondents>
assess+ent of the estate ta and their issuance of the
"otices of %ev. and sale are pre+ature and oppressive.$
)e points out the pendenc. of 'andi( Civil
Case "os. 1111-119# and 11#1, which were filed b. the
(overn+ent to 2uestion the ownership and interests of
the late 5resident in real and personal properties located
within and outside the 5hilippines. 5etitioner, however,
o+its to alle(e whether the properties levied upon b. the
,-* in the collection of estate taes upon the decedent>s
estate were a+on( those involved in the said cases
pendin( in the 'andi( -ndeed, the court is at a
loss as to how these cases are relevant to the +atter at
issue. The +ere fact that the decedent has pendin(
cases involvin( ill-(otten wealth does not affect the
enforce+ent of ta assess+ents over the properties
indubitabl. included in his estate.
-ssue; -s the contention of @arcos correctM
)eld; "o. The approval of the court, sittin( in probate or
as a settle+ent tribunal over the deceasedNs estate, is
not a +andator. re2uire+ent in the collection of estate
There is nothin( in the Ta Code, and in the pertinent
re+edial laws that i+plies the necessit. of the probate or
estate settle+ent court>s approval of the state>s clai+ for
estate taes, before the sa+e can be enforced and
The enforce+ent of ta laws and the collection of taes
are of para+ount i+portance for the sustenance of
(overn+ent. Taes are the lifeblood of (overn+ent and
should be collected without unnecessar. hindrance.
)owever, such collection should be +ade in accordance
with law as an. arbitrariness will ne(ate the eistence of
(overn+ent itself.
-t is not the Depart+ent of 4ustice which is the
(overn+ent a(enc. tas8ed to deter+ine the a+ount of
taes due upon the sub?ect estate, but the ,ureau of
-nternal *evenue whose deter+inations and
assess+ents are presu+ed correct and +ade in (ood
faith. The has the dut. of provin( otherwise. -n
the absence of proof of an. irre(ularities in the
perfor+ance of official duties, an assess+ent will not be
disturbed. =ven an assess+ent based on esti+ates
is prima facie valid and lawful where it does not appear
to have been arrived at arbitraril. or capriciousl.. The
burden of proof is upon the co+plainin( part. to show
clearl. that the assess+ent is erroneous. 0ailure to
present proof of error in the assess+ent will ?ustif. the
?udicial affir+ance of said assess+ent. -n this instance,
petitioner has not pointed out one sin(le provision in the
@e+orandu+ of the 'pecial !udit Tea+ which (ave rise
to the 2uestioned assess+ent, which bears a trace of
falsit.. -ndeed, the petitioner>s attac8 on the assess+ent
bears +ainl. on the alle(ed i+probable and
unconscionable a+ount of the taes char(ed. ,ut +ere
rhetoric cannot suppl. the basis for the char(e of
i+propriet. of the assess+ents +ade.7
*epublic of the 5hilippines
=" ,!"C
G.R. No. L-182,3 J"#u"1y 12, 193,
C. N. (ODGES, petitioner-appellee,
(o#o1"0l' Ro$ol5o G"#=o#, 6# &64 7"."76%y "4 C6%y
*"yo1 o5 %&' C6%y o5 Ilo6lo< "#$ %&' CIT8 O
ILOILO, respondents-appellants.
Cit* 1iscal 1. +. Consolacion and 0ssistant Cit* 1iscal
2. I. Soriano, !r. for respondents-appellants.
Leon . $ellada and 4orberto !. osecion for petitioner-
"-aeta, $ibbs & "-aeta for administrator CI %an..
The respondents, on appeal b. writ of error, as8 3s to
review a ?ud(+ent of the Court of 0irst, -nstance of -loilo,
in an action for declarator. relief, annullin( ordinance 91,
series of 1961, of the Cit. of -loilo and orderin( the said
Cit. to rei+burse to the petitioner C. ". )od(es
whatever a+ounts he had paid to the for+er b. reason
of the operation of the ordinance.
The parties are a(reed on the antecedent facts. On 4une
:, 1961, invo8in( *epublic !ct 226#, otherwise 8nown
as the %ocal !utono+. !ct, the +unicipal board of the
Cit. of -loilo enacted ordinance 91, entitled $!n
Ordinance -+posin( @unicipal Ta On The 'ale of *eal
5ropert. 'ituated -n The Cit. of -loilo$, which ordains
that $!n. person, fir+, association or corporation who
shall sell real propert. situated in the Cit. of -loilo shall
pa. a real propert. sales ta of one-half 6O7 of one
percent 61J7 of the contract price andCor consideration
before such sale could be re(istered and the ownership
thereof transferred in the Office of the *e(ister of Deeds
of -loilo$ 6section 17 -t is therein epressl. provided that
the ta is to be paid to the cit. treasurer $within five 6A7
da.s fro+ the sale$, sub?ect to the pa.+ent of a
surchar(e of 21J of the ta due in case of default, and
such pa.+ent, the receipt whereof is +ade part of the
docu+ents on the sale, $shall be a re2uire+ent for the
re(istration ... of the sale in the Office of the *e(ister of
Deeds or the Office of the Cit. Treasurer of the Cit. of
-loilo$ 6sections 9 and #7. 5enal sanction consistin( of a
fine of not less than fift. pesos 65A17 nor +ore than two
hundred pesos 652117 or i+prison+ent of not less than
five 6A7 da.s nor +ore than thirt. 6917 da.s, at the
discretion of the court, is prescribed for an. infraction of
the said ordinance 6section :7. ,. its ter+s, the
ordinance too8 effect on 4ul. 1, 1961.
The petitioner C. ". )od(es, who was en(a(ed in the
business of and sellin( real estate in the cit. and
the 5rovince of -loilo, stood to be sub?ected to the ta
thus i+posed. Contendin( that the ordinance was
be.ond the corporate powers of the respondent Cit., he
instituted on 4une 28, 1961 B prior to the effectivit. date
of the ordinance B an action for declarator. relief to test
the validit. thereof. @eanwhile after the ordinance
beca+e effective, the petitioner paid taes i+posed
under the authorit. thereof upon sales of real estate
+ade b. hi+. )e accordin(l. a+ended his petition to
include the Cit. itself as a part.-respondent, as well as
to incorporate therein a for the rei+burse+ent to
hi+ of the a+ounts thus far paid b. hi+ pursuant to the
-n their return to the petition, the respondents ?ustified
the enact+ent of the ordinance not onl. under the cit.
charter but also upon the authorit. vested in the
respondent Cit. b. section 2 of the %ocal !utono+. !ct.
,. wa. of special defense, the. contended that the
petition states no cause of action for declarator. relief.
'ubscribin( to the position assu+ed b. the petitioner,
the trial court ruled as heretofore stated.
)ence, the present recourse.
The preli+inar. procedural issue of non-ehaustion of
ad+inistrative re+edies is raised b. the appellants, but
the verte of the present controvers. is whether or not
the 2uestioned ordinance is ultra vires views vis-a-
vis the corporate powers of the appellant Cit..
1. On the preli+inar. issue, the appellants ar(ue that the
court a 5uo ac2uired no ?urisdiction over the case
because the appellee failed to ehaust ad+inistrative
re+edies, +ore particularl. that indicated in the
penulti+ate and last para(raphs of section 2 of the %ocal
!utono+. !ct, to wit;
! ta ordinance shall (o into effect on the
fifteenth da. after its passa(e, unless the
ordinance shall provide
otherwise; rovided, #o&ever, That the
'ecretar. of 0inance shall have authorit. to
suspend the effectivit. of an. ordinance within
one hundred and twent. da.s after its passa(e,
if, in his opinion, the ta or fee therein levied or
i+posed is un?ust, ecessive oppressive or
confiscator., and when, the said secretar.
eercises this authorit. the effectivit. of such
ordinance shall be suspended.
-n such event the +unicipal board or cit. council
in the case of cities and the +unicipal council or
+unicipal district council in the case of
+unicipalities and +unicipal districts +a. appeal
the decision of the 'ecretar. of 0inance to the
court durin( the pendenc. of which case the ta
levied shall be considered as paid under protest.
"othin( in the fore(oin( 2uotation even re+otel. applies
to the situation at hand. The authorit. vested in the
'ecretar. of 0inance to suspend the effectivit. of a ta
ordinance is li+ited to cases wherein the ta or fee
thereb. levied is $un?ust, ecessive, oppressive or
confiscator.$. "owhere in the pleadin(s below was the
ta i+posed b. the 2uestioned ordinance challen(ed b.
the appellee upon an. of these specific bases. )e chose
to prosecute his case upon the (round that the
ordinance was be.ond the corporate powers of the
appellant Cit. to enact. This is a purel. le(al 2uestion/
no relief of an ad+inistrative nature is or would have
been available to the appellee fro+ the 'ecretar. of
0inance 65ascual vs. 5rovincial ,oard of "ueva =ci?a,
G.*. %-119A9, October 91, 19A9/ citin(, @ondaPo vs.
'ilvosa, A1 Off. Ga&., p. 288#7. ,esides, it does not
appear fro+ the afore2uoted le(al precept that it is the
+andator. dut. of a part. adversel. affected, assu+in(
that the +atter co+es within the purview of the law, to
invo8e the suspension authorit. of the 'ecretar. of
0inance. The said 'ecretar., fro+ the tet of the law,
+a. eercise the prero(ative vested in hi+ upon his own
initiative, i.e $if, in his opinion$ the ta or fee levied
suffers fro+ an. of the infir+ities enu+erated.
!ccordin(l., it cannot be said that recourse to the
'ecretar. of 0inance is a prere2uisite to an action in
court. !nd the rule re2uirin( ehaustion of ad+inistrative
re+edies applies onl. $when there is an epress le(al
provision re2uirin( ehaustion of ad+inistrative step as a
condition precedent to ta8in( action in court$ 6!&uelo vs.
!rnaldo, et al., A8 O.G., "o. 26, pp. #:98, #:#17. !t all
events, even assu+in( that the recourse indicated b.
the appellants were indeed a re2uire+ent, the sa+e
does not appear to be eclusive. -t is discretionar. upon
the court to per+it an a((rieved part. to institute a court
action without first resortin( to an ad+inistrative re+ed.
for the purpose 6)os8.ns vs. "ational Cit. ,an8 of "ew
Lor8, et al., 8A 5hil. 2117. 0indin(, as <e do, after
readin( the record, that there eists here a ?usticiable
controvers. between real parties assertin( adverse le(al
interests which is ripe for ?udicial deter+ination 6Calte
5hilippines, -nc. vs. 5alo+ar, G.*. %-196A1, 'epte+ber
29, 19667, the recourse to the courts was in no wa.
pre+ature. There is, therefore, no roo+ for the
application of the doctrine of ehaustion of ad+inistrative
re+edies to the case at bar.
5rescindin( fro+ the fore(oin(, it see+s necessar. to
correct the i+pression of the appellants that failure to
ehaust ad+inistrative re+edies (oes into the
?urisdiction of the trial court. The fact of the +atter is that
such discrepanc., if an., +erel. i+plies absence of a
cause of action 65ineda vs. Court of 0irst -nstance of
Davao, et al., A9 O.G., "o. 99, pp. A266, A2:1/ !tlas
Consolidated @inin( and Develop+ent Corporation vs.
@endo&a, et al., A9 O.G., "o. 11, pp. 1:29, 1:997. This
point speciall. ac2uires pertinence when it is noted that
while the appellants set up in their answer the defense of
want of a cause of action, the sa+e was based upon the
alle(ed ineistence of a ?usticiable controvers.. The
absence of a cause of action upon the (round of non-
ehaustion of ad+inistrative re+edies does not appear
to have been posed in issue below. -t is thus li8ewise too
late to invo8e it at this sta(e. )ence, the result stands
the sa+e.
2. "o special difficult. attends the resolution of, the +ain
issue. )eretofore, <e have announced the doctrine that
the (rant of the power to ta to chartered cities under
section 2 of the %ocal !utono+. !ct is sufficientl.
plenar. to cover $ever*t#ing, eceptin( those which are
+ention$ therein, sub?ect onl. to the li+itation that the
ta so levied is for $public purposes, ?ust and unifor+$
6"in ,a. @inin( Co+pan. vs. @unicipalit. of *oas,
5rovince of 5alawan G.*. %-2112A, 4ul. 21, 196A7.
There is no showin(, and <e do not believe it is possible
to show, that the ta levied, called b. an. na+e B
percenta(e ta or sales ta B co+es under an. of the
specific eceptions listed in section 2 of the %ocal
!utono+. !ct. "ot bein( ecepted, it +ust be re(arded
as co+in( within the purview of the (eneral rule. !s the
+ai+ (oes, 2xceptio firmat regulam in casibus non
exceptis$. 'ince its public purpose, ?ustness and
unifor+it. of application are not disputed, the ta so
levied +ust be sustained as valid.
"or is this without precedent. On all fours to the case at
bar is C.". )od(es vs. The @unicipal ,oard of the Cit.
of -loilo, et al., G.*. %- 18129, 4anuar. 91, 1969, which,
si(nificantl. enou(h, not onl. involved the sa+e parties
but as well concerned another ordinance of the appellant
Cit., ordinance 99, series of 1961, enacted barel. si
da.s after the enact+ent of the ordinance now under
scrutin., that is, on 4une 19, 1961. Ordinance 99, si+ilar
to the one now in controvers., levied as sales ta of one-
half 6O7 of one percent 61J7 of the sellin( price of an.
+otor vehicle sold in the Cit. of -loilo, i+posin( the
pa.+ent of the said ta as a condition to the re(istration
of the sale in the @otor Hehicles Office as well as the
transfer of ownership of the vehicle sold. -n an action
si+ilar to the case at bar, the appellee herein, invo8in(
(rounds and advancin( ar(u+ents si+ilar to those
herein relied upon, also challen(ed the validit. of the
ordinance. 3pholdin( the validit. thereof and affir+in(
the corporate power of the appellant Cit. to enact the
sa+e, this Court +ade the followin( pronounce+ent;
-t would appear that the Cit. of -loilo, thru its
+unicipal board, is e+powered 6a7 to i+pose
+unicipal licenses, taes or fees upon an.
person en(a(ed in an. occupation or business,
or eercisin( an. privile(e, in the cit./ 6b7 to
re(ulate and i+pose reasonable fees for
services rendered in connection with an.
business, profession or occupation conducted
within the cit./ and 6c7 to lev. for public purposes
?ust and unifor+ taes, licenses and fees. -t
would also appear that +unicipalities and
+unicipal districts are prohibited fro+ i+posin(
an. percenta(e ta on sales, or other taes in
an. for+ on articles sub?ect to specific ta,
ecept (asoline, under the provisions of the
"ational -nternal *evenue Code.
0ro+ a cursor. anal.sis of the provisions above-
stated <e can readil. draw the conclusion that
the Cit. of -loilo has the authorit. and power to
approve the ordinance in 2uestion for it +erel.
i+poses a percenta(e ta on the sale of a
second-hand +otor vehicle that +a. be carried
out within the cit. b. an. person, fir+,
association or corporation ownin( or dealin(
with it who +a. co+e within its ?urisdiction.
-ndeed, it cannot be disputed that a sales ta of
O of 1J of the sellin( price of a second-hand
+otor vehicle co+es within the purview of the
provisions of 'ection 2 of *epublic !ct 226#. -t
is true that the ta in 2uestion is in the for+ of a
percenta(e ta on the proceeds of the sale of a
second-hand +otor vehicle which co+es within
the prohibition of the section above adverted to/
but the prohibition onl. refers to +unicipalities
and +unicipal districts and does not
co+prehend chartered cities as the Cit. of -loilo.
<e perceive no overridin( reason to depart fro+ the
doctrine thus laid down.
9. The 2uestioned ordinance, however, does +ore than
+erel. lev. a ta. -t co++ands that $The pa.+ent of this
+unicipal ta shall be a re2uire+ent for the
re(istration ... of said sale in the Office of the *e(ister of
Deeds or the Office of the Cit. Treasurer of the Cit. of
-loilo$ and, for purposes of which, de+ands that $the ta
receipt shall be +ade a part of the docu+ents to be
presented for re(istration$ 6section 97. Challen(in( this
re2uire+ent, the appellee contended and the trial court
a(reed that, in effect, it i+poses a condition to the
re(istration of the deed of conve.ance not otherwise
called for b. the (eneral statutor. law on the +atter and,
to that etent, a+ounts to a+endin( or the
applicable statute, which, it is ar(ued, is not within the
co+petence of the appellant +unicipal board of -loilo
Cit. to do.
-n the C.". )od(es vs. The @unicipal ,oard of the Cit.
of -loilo case hereinbefore cited, this Court confronted
with a si+ilar 2uestion in so far as the re(istration of
vehicles under the ordinance there involved was
concerned, too8 the view that the i+position of the
pa.+ent of the ta levied as a prere2uisite to the
re(istration of the sale in the @otor Hehicles Office was
$+erel. a coercive +easure to +a8e the enforce+ent of
the conte+plated sales ta +ore effective$ and,
accordin(l., sustained the sa+e under the principle of
i+plication, that is, that bein( a +easure reasonabl.
necessar. to carr. out the power epressl. (ranted, it
was considered i+pliedl. included in the (rant of the
epress power.
)owever, after carefull. re-ea+inin( the rulin( thus
enunciated, <e are persuaded to sa. that, while <e find
no cause to doubt the validit. there of as a (eneral
principle, the sa+e cannot b. an. +eans be re(arded as
a hard-and-fast rule. !pplied to specific cases, the broad
sweep thereof +ust be li+ited or 2ualified dependin(
upon the particular attendant circu+stances. !nd <e
declare that the (eneralit. of the rule +a. not prevail
when, in its application, it runs counter to or tends to
i+pair a specific le(al +andate of a superior authorit..
5ut another wa., the rule should be that the appellant
+unicipal board +a. resort to all +eans reasonabl.
necessar. and proper to (ive effect to the powers
epressl. conferred upon it, provided, however, that said
+eans are not otherwise contrar. to an. statutor. or
other +ore authoritative provision on the sub?ect.
The re(istration with the re(istr. of deeds of voluntar.
conve.ances of real propert. under the Torrens s.ste+
is, in this ?urisdiction, +ainl. controlled b. the %and
*e(istration !ct, !ct #96, as a+ended. !+on(st others,
this statute provides that $... The act of re(istration shall
be the operative act to conve. and affect the land, and in
all cases under this !ct the re(istration shall be +ade in
the office of the re(ister of deeds for the province or
provinces or cit. where the land lies$ 6section A17. The
re2uire+ents for deeds or other voluntar. instru+ents of
conve.ance to be re(istrable thereunder are specified in
the law 6section A#7 and, for purposes of re(istration,
$The production of the owner>s duplicate certificate
whenever an. voluntar. instru+ent is presented for
re(istration shall be conclusive authorit. fro+ the
re(istered owner to the re(ister of deeds to enter a new
certificate or to +a8e a +e+orandu+ of re(istration in
accordance with such instru+ent, and the new certificate
or +e+orandu+ $shall be bindin( upon the re(istered
owner and upon all persons clai+in( under hi+, in favor
of ever. purchaser for value and in (ood faith ...$
6section AA, par. 27. The schedule of fees to be paid
upon such re(istration is li8ewise therein set forth
6section 11#, sub-section C, as a+ended b. *epublic
!ct 9287. -n addition, *epublic !ct #A6 also re2uires that
$"o voluntar. docu+ent b. which real propert. or an
interest therein is sold, transferred, assi(ned, +ort(a(ed
or leased shall be re(istered in the re(istr. of propert.,
unless the real estate taes levied and actuall. due
thereon shall have been full. paid$ 6section 17/ and, that
$=ver. docu+ent of transfer or alienation of real propert.
filed with the *e(ister of Deeds shall be acco+panied
with an etra cop. of the sa+e which cop. shall be
trans+itted b. said officer to the cit. or provincial
assessor ... 6section 27. !s it thus results, the %e(islature
appears to have specified the +ini+u+ re2uire+ents for
the re(istration of conve.ances of real propert.. 3pon
satisfaction of the said re2uire+ents, it beco+es the
le(al dut. of the re(istrar to +a8e the re(istration
re2uested. "o entit., it see+s clear enou(h, ecept the
%e(islature itself, +a. add to or detract fro+ or
otherwise alter or a+end the re2uire+ents it has so
enu+erated B and then onl. b. the correspondin(
a+end+ent of the eistin( statutes or the enact+ent of
new ones.
-n this posture, to sanction the condition to re(istration
i+posed b. the ordinance under ea+ination would
virtuall. allow the appellant +unicipal board to add new
re2uire+ents for re(istration not otherwise provided b.
applicable statutor. law on the +atter. -n effect, it (ives
power to the said appellant to a+end or +odif. the law
B a power which, definitel., is not vested in it. <e
therefore conclude that the condition thus i+posed b.
the ordinance in 2uestion is ultra vires. Considerin( that
this portion is severable fro+ the rest of the provisions
thereof without affectin( the inte(rit. of the re+ainin(
portions as a co+plete set of provisions on the +atter
standin( b. the+selves, the sa+e +a. properl. be
nullified while the rest of the ordinance not otherwise
infir+ +a. be sustained. -n passin(, it should be
understood that to the etent that this rule conflicts with
that laid down in C. ". )od(es vs. The @unicipal ,oard
of the Cit. of -loilo, G.*. "o. %-18129, 4anuar. 91, 1969,
the latter +ust be ta8en to be pro tanto so 2ualified.
!ccordin(l., the ?ud(+ent a 5uo is hereb. +odified in
the sense that Ordinance 91, series of 1961, of the Cit.
of -loilo, is declared valid as bein( within the corporate
powers of the said Cit. to adopt, with the eception of
the portion thereof which prescribes pa.+ent of the ta
therein levied as a re2uire+ent for the transfer of
ownership and the re(istration of the sale in the office of
the *e(ister of Deeds, in reference to which the
?ud(+ent appealed fro+ is hereb. affir+ed. "o costs.
Concepcion, C.!., +e*es, !.%.L., ,i-on, +egala,
Ma.alintal, %eng-on, !.., /aldivar and Sanc#e-, !!.,
'ee also; The Cit. of ,acolod, etc. vs. Gruet
etc., G.*. %-18291, 4anuar. 91, 1969.
!bra Halle. Colle(e vs !2uino 6G.*. "o. %-991867
5osted; 4ul. 2A, 2111 in C"4' D6>'4%4
ACTS: 5etitioner, an educational corporation and
institution of hi(her learnin( dul. incorporated with the
'ecurities and =chan(e Co++ission in 19#8, filed a
co+plaint to annul and declare void the Q"otice of
'ei&ureN and the Q"otice of 'aleR of its lot and buildin(
located at ,an(ued, !bra, for non-pa.+ent of real estate
taes and penalties a+ountin( to 5A,1#1.91. 'aid
Q"otice of 'ei&ureR b. respondents @unicipal Treasurer
and 5rovincial Treasurer, defendants below, was issued
for the satisfaction of the said taes thereon.
The parties entered into a stipulation of facts adopted
and e+bodied b. the trial court in its 2uestioned
decision. The trial court ruled for the (overn+ent,
holdin( that the second floor of the buildin( is bein(
used b. the director for residential purposes and that the
(round floor used and rented b. "orthern @ar8etin(
Corporation, a co++ercial establish+ent, and thus the
propert. is not bein( used eclusivel. for educational
purposes. -nstead of perfectin( an appeal, petitioner
availed of the instant petition for review on certiorari with for preli+inar. in?unction before the 'upre+e
Court, b. filin( said petition on 1: !u(ust 19:#.
ISSUE: <hether or not the lot and buildin( are used
eclusivel. for educational purposes.
(ELD: 'ection 22, para(raph 9, !rticle H-, of the then
199A 5hilippine Constitution, epressl. (rants ee+ption
fro+ realt. taes for ce+eteries, churches and
parsona(es or convents appurtenant thereto, and all
lands, buildin(s, and i+prove+ents used eclusivel. for
reli(ious, charitable or educational purposes.
*easonable e+phasis has alwa.s been +ade that the
ee+ption etends to facilities which are incidental to
and reasonabl. necessar. for the acco+plish+ent of the
+ain purposes. The use of the school buildin( or lot for
co++ercial purposes is neither conte+plated b. law,
nor b. ?urisprudence. -n the case at bar, the lease of the
first floor of the buildin( to the "orthern @ar8etin(
Corporation cannot b. an. stretch of the i+a(ination be
considered incidental to the purpose of education. The
test of ee+ption fro+ taation is the use of the propert.
for purposes +entioned in the Constitution.
"7%4: 5etitioners are su(ar producers and planters and
+illers filed a @!"D!@3' to i+ple+ent the
privati&ation of *epublic 5lanters ,an8, and for the
transfer of the shares in the (overn+ent ban8 to su(ar
producers and planters. 6because the. are alle(edl. the
true beneficial owners of the ban8 since the. pa. 51.11
per picul of su(ar fro+ the proceeds of su(ar producers
as 'T!,-%-S!T-O" 0=='7
The shares are currentl. held b. 5hilsuco+ C 'u(ar
*e(ulator. !d+in.
The 'ol(en countered that the stabili&ation fees are
considered (overn+ent funds and that the transfer of
shares to fro+ 5hilsuco+ to the su(ar producers would
be irre(ular.
I44u'; <hat is the nature of the 51.11 stabili&ation fees
collected fro+ su(ar producersM !re the. funds held in
trust for the+, or are the. public fundsM !re the shares
in the ban8 6paid usin( these fees7 owned b. the
(overn+ent 5hilsuco+ or privatel. b. the different su(ar
planters fro+ who+ such fees were collectedM
('l$; 53,%-C 03"D'. <hile it is true that the collected
fees were used to bu. shares in *5,, it did not collect
said fees for the account of su(ar producers. The
stabili&ation fees were char(ed on su(ar produced and
+illed which !CC*3=D TO 5)-%'3CO@, under 5D
The fees collected !*= -" T)= "!T3*= O0 ! T!T.,
which is within the power of the state to i+pose 0O*
T)= 5*O@OT-O" O0 T)= '3G!* -"D3'T*L. The.
constitute su(ar liens. The collections accrue to a
'5=C-!% 03"D'. -t is levied not purel. for taation, but
for re(ulation, to provide +eans TO 'T!,-%-S= T)=
'3G!* -"D3'T*L. The lev. is pri+aril. an eercise of
police powers.
The fact that the 'tate has ta8en +one. pursuant to law
is sufficient to constitute the+ as 'T!T= 03"D', even
thou(h held for a special purpose. )avin( been levied
for a special purpose, the revenues are treated as a
special fund, ad+inistered in trust for the purpose
intended. Once the purpose has been fulfilled or
abandoned, the balance will be transferred to the
(eneral funds of (ovNt.
-t is a special fund since the funds are deposited in 5",,
not in the "ational Treasur..
The su(ar planters are "OT ,="=0-C-!% O<"=*'.
The +one. is collected fro+ the+ onl. because the. it is
also the. who are to be benefited fro+ the ependiture
of funds derived fro+ it. The investin( of the funds in
*5, is not alien to the purpose since the ,an8 is
aco++odit. ban8 for su(ar, conceived for the su(ar
industr.N (rowth and develop+ent.
*evenues derived fro+ taes cannot be used purel. for
private purposes or for the eclusive benefit of private
persons. The 'tabili&ation 0und is to be utili&ed for the
benefit of the ="T-*= '3G!* -"D3'T*L, and all its
co+ponents, stabili&ation of do+esticand forei(n
+ar8ets, since the su(ar industr. is of vital i+portance to
the countr.Ns econo+. and national interest.
"7%4: Co++onwealth !ct "o. A6:, otherwise 8nown as
'u(ar !d?ust+ent !ct was pro+ul(ated in 19#1 Qto
stabili&e the su(ar industr. so as to prepare it for the
eventualit. of the loss of its preferential position in the
3nited 'tates +ar8et and the i+position of eport taes.R
5laintiff, <alter %ut&, in his capacit. as 4udicial
!d+inistrator of the -ntestate =state of !ntonio 4a.+e
%edes+a, see8s to recover fro+ the Collector of -nternal
*evenue the su+ of 51#,666.#1 paid b. the estate as
taes, under 'ec.9 of the !ct, alle(in( that such ta is
unconstitutional and void, bein( levied for the aid and
support of the su(ar industr. eclusivel., which in
plaintiffNs opinion is not a public purpose for which a ta
+a. be constitutionall. levied. The action has been
dis+issed b. the Court of 0irst -nstance.
I44u': <hether or not the ta i+posed is constitutional.
('l$: Les. The act is pri+aril. an eercise of the police
power. -t is shown in the !ct that the ta is levied with a
re(ulator. purpose, to provide +eans for the
rehabilitation and stabili&ation of the threatened su(ar
-t is inherent in the power to ta that a state be free to
select thesub?ects of taation, and it has been repeatedl.
held that Qine2ualities which result fro+ a sin(lin( out of
one particular class for taation or ee+ption infrin(e no
constitutional li+itation.R
The funds raised under the !ct should be eclusivel.
spent in aid of the su(ar industr., since it is that ver.
enterprise that is bein( protected. -t +a. be that
other industries are also in need of si+ilar protection/ but
the le(islature is not re2uired b. the Constitution to
adhere to a polic. of Qall or none.R
Ro?"4 ;4. CTA
GR No. L-220-3 @ A.16l 23, 1938
U Don 5edro *oas and Dona Car+en !.ala, both
'panish, trans+itted to their (randchildren b. hereditar.
succession the followin( properties;
a. !(ricultural lands with a total area of 19,111
hectares in "asu(bu, ,atan(as
- Tenants who have been tillin( the
lands epressed their desire to purchase fro+ *oas .
Cia, the parcels which the. actuall. occupied
- The (ovt, in line with the constitutional +andate
to ac2uire bi( landed estates and apportion the+ a+on(
landless tenants-far+ers, persuaded the *oas brothers
to part with their landholdin(s
- The brothers a(reed to sell 19,A11 hec to the
(ovt for 52.1:9@n, plus 911F surve. and subdivision
- 3nfortunatel., the (ovt did not have funds
- ! special arran(e+ent was +ade with the
*ehabilitation 0inance Corporation to advance to *oas
. Cia the a+ount of 51.A@n as loan
- 3nder the arran(e+ent, *oas . Cia. allowed the
far+ers to bu. the lands for the sa+e price but b.
install+ent, and contracted with the *0C to pa. its loan
fro+ the proceeds of the .earl. a+orti&ations paid b. the
- -n 19A9 and 19AA, *oas . Cia. derived fro+ said
install+ent pa.+ents a net (ain of 5#2,#81.89 and
529,A11.:1. A1J of said net (ain was reported for
inco+e ta purposes as (ain on the sale of capital asset
held for +ore than one .ear pursuant to 'ec. 9# of the
Ta Code
b. *esidential house and lot at <ri(ht 't., @alate,
- !fter the +arria(e of !ntonio and =duardo, 4ose
lived in the house where he paid rentals of 8FC.ear to
*oas . Cia
c. 'hares of stoc8s in different corporations
U To +ana(e the properties, !ntonio *oas,
=duardo *oas and 4ose *oas, the children, for+ed a
partnership called *oas . Co+pania
U On 19A8, C-* de+anded fro+ *oas . Cia the
pa.+ent of real estate dealer>s ta for 19A2 a+t( to
51A1.11 plus 511.11 co+pro+ise penalt. for late
pa.+ent, and 51A1.11 ta for dealers of securities plus
511.11 co+pro+ise penalt. for late pa.+ent.
- ,asis; house rentals received fro+ 4ose,
pursuant to !rt. 19# of the Ta Code statin( that an
o&ner of a real estate &#o derives a *earl* rental
income t#erefrom in t#e amount of 6,777.77 or more is
considered a real estate dealer and is liable to pa* t#e
corresponding fixed tax
U The Co++issioner further assessed deficienc.
inco+e taes a(ainst the brothers for 19A9 and 19AA,
resultin( fro+ the inclusion as inco+e of *oas . Cia of
the unreported A1J of the net profits derived fro+ the
sale of the "asu(bu far+ lands to the tenants, and the
disallowance of deductions fro+ (ross inco+e of various
business epenses and contributions clai+ed b. *oas
. Cia and the *oas brothers
U The brothers protested the assess+ent but was
denied, thus appealin( to the CT!
U CT! decision; sustained the assess+ent ecept
the de+and for the pa.+ent of the fied ta on dealer of
securities and the disallowance of the deductions for
contributions to the 5hilippine !ir 0orce Chapel and
)i?as de 4esus> *etiro de @anresa
I44u': 'hould *oas . Cia be considered a real estate
dealer because it en(a(ed in the business of sellin( real
Rul6#>: "O, bein( an isolated transaction
U R'"l '4%"%' $'"l'1; an. person en(a(ed in the
business of, sellin(, echan(in(, leasin( or
rentin( propert. on his own account as principal and
holdin( hi+self out as a full or part-ti+e dealer in real
estate or as an o&ner of rental propert* or properties
rented or offered to rent for an aggregate amount of
t#ree t#ousand pesos or more a *ear;
U 'ection 19# of the Ta Code, in considerin( as
real estate dealers owners of real estate receivin(
rentals of at least 59,111.11 a .ear, does not provide
an. 2ualification as to the persons the rentals
U The fact that there were hundreds of vendees and
the+ bein( paid for their respective holdin(s in
install+ent for a period of ten .ears, it would
nevertheless not +a8e the vendor *oas . Cia. a real
estate dealer durin( the 11-.ear a+orti&ation period
U the sale of the "asu(bu far+ lands to the ver.
far+ers who tilled the+ for (enerations was not onl. in
consonance with, but +ore in obedience to the re2uest
and pursuant to the polic. of our Govern+ent to allocate
lands to the landless
U -t was the dut. of the Govern+ent to pa. the
a(reed co+pensation after it had persuaded *oas .
Cia. to sell its haciendas, and to subse2uentl. subdivide
the+ a+on( the far+ers at ver. reasonable ter+s and
prices. ,ut due to the lac8 of funds, *oas . Cia.
shouldered the Govern+ent>s burden, went out of its
wa. and sold lands directl. to the far+ers in the sa+e
wa. and under the sa+e ter+s as would have been the
case had the Govern+ent done it itself
U The power of taation is so+eti+es called also the
power to destro.. Therefore it should be eercised with
caution to +ini+i&e in?ur. to the proprietar. ri(hts of a -t +ust be eercised fairl., e2uall. and
U Therefore, *oas . Cia. cannot be considered a
real estate dealer for the sale in 2uestion. )ence,
pursuant to 'ection 9# of the Ta Code the lands sold to
the far+ers are capital assets, and the (ain derived fro+
the sale thereof is capital (ain, taable onl. to the etent
of A1J
As to the deductions
a. 5#1 tic8ets to a ban2uet (iven in honor of 'er(io
Os+ena and 528 'an @i(uel beer (iven as (ifts to
various persons V representation epenses
U *epresentation epenses; deductible fro+ (ross
inco+e as ependitures incurred in on a trade
or business
U -n this case, the evidence does not show such lin8
between the epenses and the business of *oas . Cia
b. Contributions to the 5asa. police and fire
depart+ent and other police depart+ents as Christ+as
U Contributions to the Christ+as funds are not
deductible for the reason that the Christ+as funds were
not spent for public purposes but as Christ+as (ifts to
the fa+ilies of the +e+bers of said entities
U 3nder 'ection 996h7, a contribution to a
(overn+ent entit. is deductible when used eclusivel.
for public purposes
U !s to the contribution to the @anila 5olice trust
fund, such is an allowable deduction for said trust fund
belon(s to the @anila 5olice, a (overn+ent entit.,
intended to be used eclusivel. for its public functions.
c. Contributions to the 5hilippines )erald>s fund for
@anila>s neediest fa+ilies
U The contributions were not +ade to the
5hilippines )erald but to a (roup of civic spirited citi&ens
or(ani&ed b. the 5hilippines )erald solel. for charitable
U There is no 2uestion that the +e+bers of this
(roup of citi&ens do not receive profits, for all the funds
the. raised were for @anila>s neediest fa+ilies. 'uch a
(roup of citi&ens +a. be classified as an association
or(ani&ed eclusivel. for charitable purposes +entioned
in 'ection 916h7 of the Ta Code
d. Contribution to Our %ad. of 0ati+a chapel at the
U 3niversit. (ives dividends to its stoc8holders
U %ocated within the pre+ises of the universit., the
chapel in 2uestion has not been shown to belon( to the
Catholic Church or an. reli(ious or(ani&ation
U The contributions belon(s to the 0ar =astern
3niversit., contributions to which are not deductible
under 'ection 916h7 of the Ta Code for the reason that
the net inco+e of said universit. in?ures to the benefit of
its stoc8holders
"o deficienc. inco+e ta is due for 19A9 fro+ !ntonio
*oas, =duardo *oas and 4ose *oas. 0or 19AA the.
are liable to pa. deficienc. inco+e ta in the su+ of
5119.11, 591.11 and 5#9.11, respectivel.
'ison vs !ncheta
GR No. L-29-31, 22 July 198-
"7%4: 'ection 1 of ,5 ,l( 19A a+ended the Ta Code
and petitioner !ntero @. 'ison, as, alle(es that
$he would be undul. discri+inated a(ainst b. the
i+position of hi(her rates of ta upon his inco+e arisin(
fro+ the eercise of his profession vis-a-vis those which
are i+posed upon fied inco+e or salaried individual
tapa.ers. )e characteri&es said provision as arbitrar.
a+ountin( to class le(islation, oppressive and capricious
in character. -t therefore violates both the e2ual
protection and due process clauses of the Constitution
as well asof the rule re2uirin( unifor+it. in taation.
I44u': <hether or not the assailed provision violates the
e2ual protection and due process clauses of the
Constitution while also violatin( the rule that taes +ust
be unifor+ and e2uitable.
('l$: The petition is without +erit.
On due process - it is undoubted that it +a. be invo8ed
where a tain( statute is so arbitrar. that it finds no
support in the Constitution. !n obvious ea+ple is where
it can be shown to a+ount to the confiscation of propert.
fro+ abuse of power. 5etitioner alle(es arbitrariness but
his +ere alle(ation does not suffice and there +ust be a
factual foundation of such unconsitutional taint.
On e2ual protection - it suffices that the laws operate
e2uall. and unifor+l. on all persons under si+ilar
circu+stances, both in the privile(es conferred and the
liabilities i+posed.
On the +atter that the rule of taation shall be unifor+
and e2uitable - this re2uire+ent is +et when the ta
operates with the sa+e force and effect in ever. place
where the sub?ect +a. be found.$ !lso, ;the rule of
unifor+it. does not call for perfect unifor+it. or perfect
e2ualit., because this is hardl. unattainable.$ <hen the
proble+ of classification beca+e of issue, the Court
said; $=2ualit. and unifor+it. in taation +eans that all
taable articles or 8inds of propert. of the sa+e class
shall be taed the sa+e rate. The tain( power has the
authorit. to +a8e reasonable and natural classifications
for purposes of taation...$ !s provided b. this Court,
where $the differentation$ co+plained of $confor+s to the
practical dictates of ?ustice and e2uit.$ it $is not
discri+inator. within the +eanin( of this clause and is
therefore unifor+.$
5ascual v. 'ecretar. of 5ublic <or8s and
Co++unications 6G.*. "o. %-11#1A7
5osted; 4ul. 2A, 2111 in C"4' D6>'4%4
ACTS: 5ascual, in his official capacit. as the 5rovincial
Governor of *i&al, petitioned for a writ of certiorari
a(ainst the dis+issal of the case and dissolvin( of the
preli+inar. in?unction held b. the Court of the 0irst
-nstance. 5etitioner pra.ed for that *! W921 be declared
null and void, that the alle(ed Deed of Donation +ade b.
Sulueta be declared unconstitutional. 5etitioner also
pra.ed for an in?unction en?oinin( 'ecretar. of 5ublic
<or8s and Co++unications, Director of 5ublic <or8s
and )i(hwa.s and the disbursin( officers of the latter
depart+ent fro+ +a8in( and securin( an. further
release of funds for the said road pro?ect. *!W 921
contained an ite+ appropriatin( 58A,111.11 which the
petitioner alle(ed that it was for the construction of roads
i+provin( the private propert. of 4ose Suleta, a +e+ber
of the 'enate.
1. <hether or not *! W 921 is unconstitutional.
2. <hether or not 5ascual has the le(al capacit. or to
1. *! W921 is unconstitutional because the Con(ress is
without power to appropriate public revenue for an.thin(
but public purpose.
2. 5ascual has the personalit. to sue as a
reco(ni&in( the ri(ht of the to assail the
constitutionalit. of a le(islation appropriatin( public
N"%6o#"l PoA'1 Co1.o1"%6o# BNAPOCORC ;4.
P1o;6#7' o5 Al0"y B1990C
5ost under case di(ests, Taation at Tuesda., 0ebruar.
21, 2112 5osted b. 'chi&ophrenic @ind
"7%4: "ewspapers published in @arch 1989 carried
respondentsN 65rovince of !lba., !lba. Governor, !lba.
5rovincial Treasurer7 notice for auction sale of
"!5OCO* properties 6buildin(s, +achines, and si+ilar
i+prove+ents7 standin( on their Tiwi offices. The
proceeds fro+ the sale were supposed to be applied to
the real propert. taes "!5OCO* alle(edl. owed the
!lba. provincial (overn+ent fro+ 4une 198# to @arch
"!5OCO* opposed the sale, citin(
*esolution "o. 1:-8: of the 0iscal -ncentives *eview
,oard 60-*,7, which stated QThat the ta and dut.
ee+ption privile(es of the D"!5OCO*E, includin( those
pertainin( to its do+estic purchases of petroleu+ and
petroleu+ products, (ranted under the ter+s and
conditions of Co++onwealth !ct "o. 121 6Creatin( the
D"!5OCO*E, definin( its powers, ob?ectives and
functions, and for other purposes7, as a+ended, are
restored effective @arch 11, 198:.R "ote; several 0-*,
*esolutions 6"os. 11-8A and 1-867 prior to this one
purportedl. (ranted ta ee+ptions to "!5OCO* for
certain periods
The @e+orandu+ of the =ecutive 'ecretar., which
provided, Q5ursuant to 'ections 1 6f7 and 2 6e7
of =ecutive Order "o. 99, series of 1986, 0-*,
*esolution "o. 1:-8:, series of 198:, restorin(,sub?ect
to certain conditions prescribed therein, the ta and dut.
ee+ption privile(es of "5C as provided
under Co++onwealth !ct "o. 121, as
a+ended, effective @arch 11, 198:, is hereb. confir+ed
and approved.R
The Court issued a T*O on the auction sale. )owever, it
appearsthe order did not reach the !lba. 5rovincial
Govern+ent before the scheduled biddin(, so the event
pushed throu(h. The 5rovince of !lba. was the hi(hest
I44u': <hether or not the 0-*, issuances (rantin( ta
ee+ption are an undue dele(ation of the tain( power
and thus, unconstitutional
('l$: L='. 5D ::6, which created the 0-*,, provided
that the ,oardNs power was +erel. to $reco++end to the
5resident of the 5hilippines and for reasons of
co+patibilit. with the declared econo+ic polic., the
withdrawal, +odification, revocation or suspension of the
enforceabilit. of an. of the above-cited statutor.
subsidies or ta ee+ption (rants, ecept those (ranted
b. the Constitution.$ -t has no authorit. to i+pose taes
or revo8e eistin( ones, which, after all, under the
Constitution, onl. the le(islature +a. acco+plish.
The 0-*, +a. onl. reco++end ta ee+ptions. ,.
itself, it could not have validl. prescribed ee+ptions or
restore taabilit.. )ence, as of 4une 11, 198#
6pro+ul(ation of 5D 19917, "!5OCO* had ceased to
en?o. ta ee+ption privile(es. The fact that under =O
99, the 0-*, has been (iven the prero(ative to $restore
ta andCor dut. ee+ptions withdrawn hereunder in
whole or in part,$ and $i+pose conditions for ... ta
andCor dut. ee+ption$ is of no +o+ent.
Theseprovisions are prospective in character and can
not affect the ,oard>s past acts.
-t is to be stressed that the provincial (overn+ent of
!lba. ad+its that as of @arch 11, 198: 6the date
*esolution "o. 1:-8: was affir+ed b. the @e+orandu+
of the Office of the 5resident, dated October A, 198:7,
"!5OCO*>s ee+ption had been validl. restored. <hat
it 2uestions is "!5OCO*>s liabilit. in the interre(nu+
between 4une 11, 198#, the date its ta privile(es were
withdrawn, and @arch 11, 198:, the date the. were
purportedl. restored. To be sure, it ob?ects to =ecutive
Order "o. 99 as alle(edl. a dele(ation of le(islative
power, but onl. insofar as its 6"!5OCO*>s7 4une 11,
198# to @arch 11, 198: ta accu+ulation is concerned.
<e therefore leave the issue of $dele(ation$ to the future
and its constitutionalit. when the proper case arises. 0or
the nonce, we leave =ecutive Order "o. 99 alone, and
so also, its validit. as far as it (rants ta ee+ptions
6throu(h the 0-*,7 be(innin( Dece+ber 1:, 1986, the
date of its pro+ul(ation.
"!5OCO* +ust then be held liable for the stated
intervenin( .ears. 'o it has been held;

The last issue to be resolved is whether or not the
private-respondent is liable for the fied and deficienc.
percenta(e taes in the a+ount of 59,12A.96 6i.e. for the
period fro+ 4anuar. 1, 19#6 to 0ebruar. 29, 19#87
before the approval of its +unicipal franchises. !s
aforestated, the franchises were approved b. the
5resident onl. on 0ebruar. 2#, 19#8. Therefore, before
the said date, the private respondent was liable for the
pa.+ent of percenta(e and fied taes as seller of li(ht,
heat, and power which, as the petitioner clai+s,
a+ounted to 59,12A.96. The le(islative franchise 6*.!.
"o. 98#97 ee+pted the (rantee fro+ all 8inds of taes
other than the 2J ta fro+ the date the ori(inal franchise
was (ranted. The ee+ption, therefore, did not cover the
period before the franchise was (ranted, i.e. before
0ebruar. 2#, 19#8. ...
!ctuall., the 'tate has no reason to decr. the taation of
"!5OCO*>s properties, as and b. wa. of real propert.
taes. *eal propert. taes, after all, for+ part and parcel
of the financin( apparatus of the Govern+ent in
develop+ent and nation-buildin(, particularl. in the local
(overn+ent level. To all intents and purposes, real
propert. taes are funds ta8en b. the 'tate with one
hand and (iven to the other. -n no +easure can the
Govern+ent be said to have lost an.thin(.
!s a rule, clai+s of ta ee+ption are construed stron(l.
a(ainst the clai+ant. The. +ust also be shown to eist
clearl. and cate(oricall., and supported b. clear
le(al provisions.
G.R. No. L--0-3 *"y 23, 1922
CENON S. CERVANTES, petitioner,
T(E AUDITOR GENERAL, respondent.
Cenon Cervantes in #is o&n be#alf.
"ffice of t#e Solicitor $eneral ompe*o ,ia- and
Solicitor 1elix V. Ma.asiar for respondent.
RE8ES, J.:
This is a petition to review a decision of the !uditor
General petitioner>s clai+ for 2uarters allowance
as +ana(er of the "ational !baca and Other 0ibers
Corporation, otherwise 8nown as the "!0CO.
-t appears that petitioner was in 19#9 the +ana(er of the
"!0CO with a salar. of 51A,111 a .ear. ,. a resolution
of the ,oard of Directors of this corporation approved on
4anuar. 19 of that .ear, he was (ranted 2uarters
allowance of not eceedin( 5#11 a +onth effective the
first of that +onth. 'ub+itted the Control Co++ittee of
the Govern+ent =nterprises Council for approval, the
said resolution was on !u(ust 9, 19#9, disapproved b.
the said Co++ittee on stren(ht of the reco++endation
of the "!0CO auditor, concurred in b. the !uditor
General, 617 that 2uarters allowance constituted
additional co+pensation prohibited b. the charter of the
"!0CO, which fies the salar. of the (eneral +ana(er
thereof at the su+ not to eceed 51A,111 a .ear, and 627
that the precarious financial condition of the corporation
did not warrant the (rantin( of such allowance.
On @arch 16, 19#9, the petitioner as8ed the Control
Co++ittee to reconsider its action and approve his clai+
for allowance for 4anuar. to 4une 1A, 19#9, a+ountin(
to 51,6A1. The clai+ was a(ain referred b. the Control
Co++ittee to the auditor General for co++ent. The
latter, in turn referred it to the "!0CO auditor, who
reaffir+ed his previous reco++endation and
e+phasi&ed that the fact that the corporation>s finances
had not i+proved. -n view of this, the auditor General
also reiterated his previous opinion a(ainst the (rantin(
of the petitioner>s clai+ and so infor+ed both the Control
Co++ittee and the petitioner. ,ut as the petitioner
insisted on his clai+ the !uditor General -nfor+ed hi+
on 4une 19, 19A1, of his refusal to +odif. his decision.
)ence this petition for review.
The "!0CO was created b. the Co++onwealth !ct "o.
992, approved on 4une 18, 1999, with a capital stoc8 of
521,111,111, A1 per cent of which was to be able to be
subscribed b. the "ational Govern+ent and the
re+ainder to be offered to provincial, +unicipal, and the
cit. (overn+ents and to the (eneral public. The
+ana(e+ent the corporation was vested in a board of
directors of not +ore than A +e+bers appointed b. the
president of the 5hilippines with the consent of the
Co++ission on !ppoint+ents. ,ut the corporation was
+ade sub?ect to the provisions of the corporation law in
so far as the. were co+patible with the provisions of its
charter and the purposes of which it was created and
was to en?o. the (eneral powers +entioned in the
corporation law in addition to those (ranted in its charter.
The +e+bers of the board were to receive each a per
diem of not to eceed 591 for each da. of +eetin(
actuall. attended, ecept the chair+an of the board, who
was to be at the sa+e ti+e the (eneral +ana(er of the
corporation and to receive a salar. not to eceed
51A,111 per annu+.
On October #, 19#6, *epublic !ct "o. A1 was approved
authori&in( the 5resident of the 5hilippines, a+on( other
thin(s, to effect such refor+s and chan(es in
(overn+ent owned and controlled corporations for the
purpose of pro+otin( si+plicit., econo+. and efficienc.
in their operation 5ursuant to this authorit., the
5resident on October #, 19#:, pro+ul(ated =ecutive
Order "o. 99 creatin( the Govern+ent =nterprises
Council to be co+posed of the 5resident of the
5hilippines as chair+an, the 'ecretar. of Co++erce
and -ndustr. as vice-chair+an, the chair+an of the
board of directors and +ana(in( heads of all such
corporations as e-officio +e+bers, and such additional
+e+bers as the 5resident +i(ht appoint fro+ ti+e to
ti+e with the consent of the Co++ission on
!ppoint+ents. The council was to advise the 5resident
in the ecercise of his power of supervision and control
over these corporations and to for+ulate and adopt such
polic. and +easures as +i(ht be necessar. to
coordinate their functions and activities. The =ecutive
Order also provided that the council was to have a
Control Co++ittee co+posed of the 'ecretar. of
Co++erce and -ndustr. as chair+an, a +e+ber to be
desi(nated b. the 5resident fro+ a+on( the +e+bers
of the council as vice-chair+an and the secretar. as ex-
officio +e+ber, and with the power, a+on( others B
617 To supervise, for and under the direction of
the 5resident, all the corporations owned or
controlled b. the Govern+ent for the purpose of
insurin( efficienc. and econo+. in their
627 To pass upon the pro(ra+ of activities and
the .earl. bud(et of ependitures approved b.
the respective ,oards of Directors of the said
corporations/ and
697 To carr. out the policies and +easures
for+ulated b. the Govern+ent =nterprises
Council with the approval of the 5resident. 6'ec.
9, =ecutive Order "o. 99.7
<ith its controllin( stoc8 owned b. the Govern+ent and
the power of appointin( its directors vested in the
5resident of the 5hilippines, there can be no 2uestion
that the "!0CO is Govern+ent controlled corporation
sub?ect to the provisions of *epublic !ct "o. A1 and the
eecutive order 6"o. 997 pro+ul(ated in accordance
therewith. Conse2uentl., it was also sub?ect to the
powers of the Control Co++ittee created in said
eecutive order, a+on( which is the power of
supervision for the purpose of insurin( efficienc. and
econo+. in the operations of the corporation and also
the power to pass upon the pro(ra+ of activities and the
.earl. bud(et of ependitures approved b. the board of
directors. -t can hardl. be 2uestioned that under these
powers the Control Co++ittee had the ri(ht to pass
upon, and conse2uentl. to approve or disapprove, the
resolution of the "!0CO board of directors (rantin(
2uarters allowance to the petitioners as such allowance
necessaril. constitute an ite+ of ependiture in the
corporation>s bud(et. That the Control Co++ittee had
(ood (rounds for disapprovin( the resolution is also
clear, for, as pointed out b. the !uditor General and the
"!0CO auditor, the (rantin( of the allowance a+ounted
to an ille(al increase of petitioner>s salar. be.ond the
li+it fied in the corporate charter and was further+ore
not ?ustified b. the precarious financial condition of the
-t is ar(ued, however, that =ecutive Order "o. 99 is null
and void, not onl. because it is based on a law that is
unconstitutional as an ille(al dele(ation of le(islature
power to eecutive, but also because it was pro+ul(ated
be.ond the period of one .ear li+ited in said law.
The second (round i(nores the rule that in the
co+putation of the ti+e for doin( an act, the first da. is
ecluded and the last da. included 6'ection 19 *ev. !d.
Code.7 !s the act was approved on October #, 19#6,
and the 5resident was (iven a period of one .ear within
which to pro+ul(ate his eecutive order and that the
order was in fact pro+ul(ated on October #, 19#:, it is
obvious that under the above rule the said eecutive
order was pro+ul(ated within the period (iven.
!s to the first (round, the rule is that so lon( as the
%e(islature $la.s down a polic. and a standard is
established b. the statute$ there is no undue dele(ation.
611 !+. 4ur. 9A:7. *epublic !ct "o. A1 in authori&in( the
5resident of the 5hilippines, a+on( others, to +a8e
refor+s and chan(es in (overn+ent-controlled
corporations, la.s down a standard and polic. that the
purpose shall be to +eet the ei(encies attendant upon
the establish+ent of the free and independent
(overn+ent of the 5hilippines and to pro+ote si+plicit.,
econo+. and efficienc. in their operations. The standard
was set and the polic. fied. The 5resident had to carr.
the +andate. This he did b. pro+ul(atin( the eecutive
order in 2uestion which, tested b. the rule above cited,
does not constitute an undue dele(ation of le(islative
-t is also contended that the 2uarters allowance is not
co+pensation and so the (rantin( of it to the petitioner
b. the "!0CO board of directors does not contravene
the provisions of the "!0CO charter that the salar. of
the chair+an of said board who is also to be (eneral
+ana(er shall not eceed 51A,111 per anu+. ,ut
re(ardless of whether 2uarters allowance should be
considered as co+pensation or not, the resolution of the
board of the directors authori&in( pa.+ent thereof to the
petitioner cannot be (iven effect since it was
disapproved b. the Control Co++ittee in the eercise of
powers (ranted to it b. =ecutive Order "o. 99. !nd in
an. event, petitioner>s contention that 2uarters allowance
is not co+pensation, a proposition on which !+erican
authorities appear divided, cannot be insisted on behalf
of officers and e+plo.ees wor8in( for the Govern+ent of
the 5hilippines and its -nstru+entalities, includin(,
naturall., (overn+ent-controlled corporations. This is so
because =ecutive Order "o. 992 of 19#1, which
prohibits the pa.+ent of additional co+pensation to
those wor8in( for the Govern+ent and its
-nstru+entalities, includin( (overn+ent-controlled
corporations, was in 19#A a+ended b. =ecutive Order
"o. :: b. epressl. ee+ptin( fro+ the prohibition the
pa.+ent of 2uarters allowance $in favor of local
(overn+ent officials and e+plo.ees entitled to this
under eistin( law.$ The a+end+ent is a clear indication
that 2uarters allowance was +eant to be included in the
ter+ $additional co+pensation$, for otherwise the
a+end+ent would not have epressl. ecepted it fro+
the prohibition. This bein( so, we hold that, for the
purpose of the eecutive order ?ust +entioned, 2uarters
allowance is considered additional co+pensation and,
therefore, prohibited.
-n view of the fore(oin(, the petition for review is
dis+issed, with costs.
CO@@-''-O"=* O0 -* H' C="T*!% %3SO" D*3G
G* 1#8A12 4une 26, 2116
!&cuna, 4.;
This is a petition for review under *ule #A of *ules of
Court see8in( the nullification of C! decision (rantin(
respondentNs clai+ for ta e2ual to the a+ount of the
21J that it etended to senior citi&ens on the latterNs
purchases pursuant to 'enior Citi&ens !ct. *espondent
deducted the total a+ount of 5hp219,::8 fro+ its (ross
inco+e for the taable .ear 199A whereb. respondent
did not pa. ta for that .ear reportin( a net loss of
5hp21,969 in its corporate inco+e ta. -n 1996, clai+in(
that the 5hp219,::8 should be applied as a ta credit,
respondent clai+ed for refund in the a+ount of 5hp1A1,
<hether or not the 21J discount (ranted b. the
respondent to 2ualified senior citi&ens +a. be clai+ed
as ta credit or as deduction fro+ (ross salesM
QTa creditR is eplicitl. provided for in 'ec# of *! :#92.
The discount (iven to 'enior citi&ens is a ta credit, not
a deduction fro+ the (ross sales of the establish+ent
concerned. The ta credit that is conte+plated under this
!ct is a for+ of ?ust co+pensation, not a re+ed. for
taes that were erroneousl. or ille(all. assessed and
collected. -n the sa+e vein, prior pa.+ent of an. ta
liabilit. is a pre-condition before a taable entit. can
benefit fro+ ta credit. The credit +a. be availed of
upon pa.+ent, if an.. <here there is no ta liabilit. or
where a private establish+ent reports a net loss for the
period, the ta credit can be availed of and carried over
to the net taable .ear.
5=5'--CO%! ,OTT%-"G CO. O0 T)= 5)-%'., -"C. vs.
@3"-C-5!%-TL O0 T!"!3!"
69 'C*! #61
G* "o. %-911A6, 0ebruar. 2:, 19:6
$%e(islative power to create political corporations for
purposes of local self-(overn+ent carries with it the
power to confer on such local (overn+ental a(encies
the power to ta.
0!CT'; 5laintiff-appellant 5epsi-Cola co++enced a
co+plaint with preli+inar. in?unction to declare 'ection 2
of *epublic !ct "o. 226#, otherwise 8nown as the %ocal
!utono+. !ct, unconstitutional as an undue dele(ation
of tain( authorit. as well as to declare Ordinances "os.
29 and 2: deno+inated as $+unicipal production ta$ of
the @unicipalit. of Tanauan, %e.te, null and void.
Ordinance 29 levies and collects fro+ soft drin8s
producers and +anufacturers a ta of one-siteenth
61C167 of a centavo for ever. bottle of soft drin8 cor8ed,
and Ordinance 2: levies and collects on soft drin8s
produced or +anufactured within the territorial
?urisdiction of this +unicipalit. a ta of O"= C="T!HO
651.117 on each (allon 6128 fluid ounces, 3.'.7 of
volu+e capacit.. !side fro+ the undue dele(ation of
authorit., appellant contends that it allows double
taation, and that the sub?ect ordinances are void for
the. i+pose percenta(e or specific ta.
-''3=; !re the contentions of the appellant tenableM
)=%D; "o. On the issue of undue dele(ation of tain(
power, it is settled that the power of taation is an
essential and inherent attribute of soverei(nt., belon(in(
as a +atter of ri(ht to ever. independent (overn+ent,
without bein( epressl. conferred b. the people. -t is a
power that is purel. le(islative and which the central
le(islative bod. cannot dele(ate either to the eecutive
or ?udicial depart+ent of the (overn+ent without
infrin(in( upon the theor. of separation of powers. The
eception, however, lies in the case of +unicipal
corporations, to which, said theor. does not appl..
%e(islative powers +a. be dele(ated to local
(overn+ents in respect of +atters of local concern. ,.
necessar. i+plication, the le(islative power to create
political corporations for purposes of local self-
(overn+ent carries with it the power to confer on such
local (overn+ental a(encies the power to ta.
!lso, there is no validit. to the assertion that the
dele(ated authorit. can be declared unconstitutional on
the theor. of double taation. -t +ust be observed that
the dele(atin( authorit. specifies the li+itations and
enu+erates the taes over which local taation +a. not
be eercised. The reason is that the 'tate has
eclusivel. reserved the sa+e for its own prero(ative.
@oreover, double taation, in (eneral, is not forbidden
b. our funda+ental law, so that double taation
beco+es obnoious onl. where the is taed
twice for the benefit of the sa+e (overn+ental entit. or
b. the sa+e ?urisdiction for the sa+e purpose, but not in
a case where one ta is i+posed b. the 'tate and the
other b. the cit. or +unicipalit..
On the last issue raised, the ordinances do not parta8e
of the nature of a percenta(e ta on sales, or other taes
in an. for+ based thereon. The ta is levied on the
produce 6whether sold or not7 and not on the sales. The
volu+e capacit. of the>s production of soft
drin8s is considered solel. for purposes of deter+inin(
the ta rate on the products, but there is not set ratio
between the volu+e of sales and the a+ount of the ta.