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"Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.
Every person who is able to pay must contribute his share in the running of the government. The
Government, for his part, is expected to respond in the form of tangible and intangible benefits intended to
improve the lives of the people and enhance their moral and material values. This symbiotic relationship is
the rationale of taxation and should dispel the erroneous notion that is an arbitrary method of exaction by
those in the seat of power. Tax collection, however, should be made in accordance with law as any
arbitrariness will negate the very reason for government itself. For all the awesome power of the tax
collector, he may still be stopped in his tracks if the taxpayer can demonstrate that the law has not been
observed."
The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned decision. The trial court
ruled for the government, holding that the second floor of the building is being used by the director for residential purposes and
that the ground floor used and rented by Northern Marketing Corporation, a commercial establishment, and thus the property is
not being used exclusively for educational purposes. Instead of perfecting an appeal, petitioner availed of the instant petition for
review on certiorari with prayer for preliminary injunction before the Supreme Court, by filing said petition on 17 August 1974.
ISSUE: Whether or not the lot and building are used exclusively for educational purposes.
HELD: Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, expressly grants exemption from realty
taxes for cemeteries, churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used
exclusively for religious, charitable or educational purposes. Reasonable emphasis has always been made that the exemption
extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. The use of
the school building or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. In the case at bar, the
lease of the first floor of the building to the Northern Marketing Corporation cannot by any stretch of the imagination be
considered incidental to the purpose of education. The test of exemption from taxation is the use of the property for purposes
mentioned in the Constitution.
The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the assessed tax be returned to the
petitioner. The modification is derived from the fact that the ground floor is being used for commercial purposes (leased) and the
second floor being used as incidental to education (residence of the director)
void. The Court of First Instance dismissed his petition, thusthis appeal before the Supreme
Court.
Issue:
Whether or Not the tax levied under the Sugar Adjustment
Act( Commonwealth Act 567) is unconstitutional.
Held:
The tax levied under the Sugar Adjustment Act is
constitutional. The taxunder said Act is levied with a regulatory purpose, to provide means for
therehabilitation and stabilization of the threatened sugar industry. Since sugarproduction is one
of the great industries of our nation, its promotion, protection,
Commissioner vs. Lingayen Gulf ElectricGR L-23771, 4 August 1988En Banc, Sarmiento (J): 13
concur
Facts: Lingayen Gulf Electric Power operates an electric power plant serving the municipalities of Lingayen
and Binmaley, Pangaisnan, pursuant to municipal franchise granted it by the respective municipal councils.
The franchises provided that the grantee shall pay quarterly to the Provincial Treasury of Pangasinan 1% of
the gross earnings obtained through the privilege for the first 20 years (from 1946), and 2% during the
remaining 15 years of the life of the franchise. In 1948, the Philippine President approved the franchise (RA
3843). In 1955,the BIR assessed and demanded against the company deficiency franchise taxes and
surcharges fro the years 1946 to 1954applying the franchise tax rate of 5% on gross receipts from1948 to
1954. The company asked for a reinvestigation, which was denied.
Issue [1]
: Whether the Court can inquire into the wisdom of the Act.
Held [1]:
The Court does not have the authority to inquire into the wisdom of the Act. Charters or
special laws granted and enacted by the Legislature are in the nature of private contracts. They do not
constitute a part of the machinery of the general government. They are usually adopted after careful
consideration of the private rights in relation with the resultant benefits of the State. In passing a special
charter, the attention of the Legislature is directed to the facts and circumstances which the act or charter
is intended to meet. The
Legislature considers and makes provision for all the circumstance of the particular case. The Court ought
not to disturb the ruling of the Court of Tax Appeals on the constitutionality of the law in question.
Issue [2]: Whether a rate below 5% on gross income violate the uniformity of tax clause in the
Constitution.
Held [2]:
A tax is uniform when it operates with the same force and effect in every place where the
subject of it is found. Uniformity means that all property belonging to the same class shall be taxed alike.
The legislature has the inherent power not only to select the subjects of taxation but to grant exemptions.
Tax exemptions have never been deemed violative of the equal protection clause. Herein, the 5% franchise
tax rate provided in Section 259 of the Tax Code was never intended to have a universal application.
Section 259 expressly allows the payment of taxes at rates lower than 5% when the charter granting the
franchise precludes the imposition of a higher tax. RA 3843 did not only fix and specify a franchise tax of
2% on its gross receipts, but made it in lieu of any and all taxes, all laws to the contrary notwithstanding.
The company, hence, is not liable for deficiency taxes.