Maceda v Macaraig (1991)

Maceda v Macaraig
GR No 88291, May 31, 1991

FACTS:

Commonwealth Act 120 created NAPOCOR as a public corporation to undertake the

development of hydraulic power and the production of power from other sources. RA
358 granted NAPOCOR tax and duty exemption privileges. RA 6395 revised the charter
of the NAPOCOR, tasking it to carry out the policy of the national electrification and
provided in detail NAPOCOR’s tax exceptions. PD 380 specified that NAPOCOR’s
exemption includes all taxes, etc. imposed “directly or indirectly.” PD 938 dated May 27,
1976 further amended the aforesaid provision by integrating the tax exemption in
general terms under one paragraph.

ISSUE:
Whether or not NPC has ceased to enjoy indirect tax and duty exemption with the
enactment of PD 938 on May 27, 1976 which amended PD 380 issued on January 11,
1974

RULING:
No, it is still exempt.
NAPOCOR is a non-profit public corporation created for the general good and welfare,
and wholly owned by the government of the Republic of the Philippines. From the very
beginning of the corporation’s existence, NAPOCOR enjoyed preferential tax treatment
“to enable the corporation to pay the indebtedness and obligation” and effective
implementation of the policy enunciated in Section 1 of RA 6395.

From the preamble of PD 938, it is evident that the provisions of PD 938 were not
intended to be interpreted liberally so as to enhance the tax exempt status of
NAPOCOR.

It is recognized that the rule on strict interpretation does not apply in the case of
exemptions in favor of government political subdivision or instrumentality. In the case of
property owned by the state or a city or other public corporations, the express exception
should not be construed with the same degree of strictness that applies to exemptions
contrary to the policy of the state, since as to such property “exception is the rule and
taxation the exception.”

Kapatiran ng mga Naglilingkod sa Pamahalaan v Tan (1988)

Kapatiran ng mga Naglilingkod sa Pamahalaan v Tan GR No 81311 June 30, 1988

FACTS:
EO 372 was issued by the President of the Philippines which amended the Revenue
Code, adopting the value-added tax (VAT) effective January 1, 1988. Four petitions
assailed the validity of the VAT Law from being beyond the President to enact; for being
oppressive, discriminatory, regressive and violative of the due process and equal
protection clauses, among others, of the Constitution. The Integrated Customs Brokers
Association particularly contend that it unduly discriminate against customs brokers
(Section 103r) as the amended provision of the Tax Code provides that “service
performed in the exercise of profession or calling (except custom brokers) subject to
occupational tax under the Local Tax Code and professional services performed by
registered general professional partnerships are exempt from VAT.

ISSUE:
Whether the E-VAT law is void for being discriminatory against customs brokers

RULING:
No. The phrase “except custom brokers” is not meant to discriminate against custom
brokers but to avert a potential conflict between Sections 102 and 103 of the Tax Code,
as amended. The distinction of the customs brokers from the other professionals who
are subject to occupation tax under the Local Tax Code is based on material differences,
in that the activities of customs partake more of a business, rather than a profession and
were thus subjected to the percentage tax under Section 174 of the Tax Code prior to its
amendment by EO 273. EO 273 abolished the percentage tax and replaced it with the
VAT. If the Association did not protest the classification of customs brokers then, there is
no reason why it should protest now.

ABAKADA v Ermita (Taxation)

G.R. No. 168056 September 1, 2005

ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S.
ALCANTARA and ED VINCENT S. ALBANO, Petitioners, vs. THE HONORABLE
EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE SECRETARY OF THE
DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE
COMMISSIONER OF INTERNAL REVENUE GUILLERMO PARAYNO,
JR., Respondent.

FACTS:
RA 9337, an act amending certain sections of the National Internal Revenue Code of
1997, is questioned by petitioners for being unconstitutional. Procedural issues raised by
petitioners are the legality of the bicameral proceedings, exclusive origination of revenue
measures and the power of the Senate concomitant thereto. Also, an issue was raised
with regard to the undue delegation of legislative power to the President to increase the
rate of value-added tax to 12%.
Petitioners also argue that the increase to 12%, as well as the 70% limitation on the
creditable input tax, the 60- month amortization on the purchase or importation of capital
goods exceeding P1,000,000.00, and the 5% final withholding tax by government
agencies, is arbitrary, oppressive, and confiscatory, and that it violates the constitutional
principle on progressive taxation, among others.

ISSUE:
Whether RA 9337 is constitutional

RULING:
Yes. Mounting budget deficit, revenue generation, inadequate fiscal allocation for
education, increased emoluments for health workers, and wider coverage for full value-
added tax benefits ... these are the reasons why Republic Act No. 9337 (R.A. No. 9337)
was enacted. Reasons, the wisdom of which, the Court even with its extensive
constitutional power of review, cannot probe.
It has been said that taxes are the lifeblood of the government. In this case, it is just an
enema, a first-aid measure to resuscitate an economy in distress. The Court is neither
blind nor is it turning a deaf ear on the plight of the masses. But it does not have the
panacea for the malady that the law seeks to remedy. As in other cases, the Court
cannot strike down a law as unconstitutional simply because of its yokes.

MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS, INC. v. DEPARTMENT OF

FINANCE SECRETARY, COMMISSIONER OF THE BUREAU OF INTERNAL
REVENUE (BIR), AND REVENUE DISTRICT OFFICER, BIR MISAMIS ORIENTAL,
G.R. No. 108524. November 10, 1994
FACTS:

Petitioner is engaged in the buying and selling of copra in Misamis Oriental. The
petitioner questions Revenue Memorandum Circular 47-91 issued by the respondent, in
which copra was classified as agricultural non-food product effectively removing copra
as one of the exemptions under Section 103 of the NIRC.

Section 103a of the NIRC states that the sale of agricultural non-food products in their
original state is exempt from VAT only if the sale is made by the primary producer or
owner of the land from which the same are produced and not by any other person or
entity. Section 103b states the sale of agricultural food products in their original state is
exempt from VAT at all stages of production or distribution regardless of who the seller is
- which the petitioner enjoys. The reclassification had the effect of denying to the
petitioner this exemption when copra was classified as an agricultural food product.

Petitioner filed a motion for prohibition.

ISSUE: Whether the Circular is valid.

RULING:

Yes. The Court first stated that the CIR gave the circular a strict construction consistent
with the rule that tax exemptions must be strictly construed against the taxpayer and
liberally in favor of the state.

The Court also stated that the Circular is not discriminatory and in violation of the equal
protection clause. Petitioner likened copra farmers / producers, who are exempted from
VAT and copra traders, which the Court disagreed.
Lastly, petitioners argued that the Circular was counterproductive which the Court
answers that it is a question of wisdom or policy which should be addressed to
respondent officials and to Congress.

CIR vs Seagate Technology (Philippines) G.R. No. 153866, 11 February 2005

Facts:

Seagate Technology was claiming a refund for the input tax it paid on the unutilized capit
al goods purchased. It asserted that it is exempt from all internal revenue taxes including
VAT since it is registered in and operating from the Special Economic Zone in Naga, Ce
bu.

Issue:
Whether or not an entity registered and operating within an ecozone is exempt from all r
evenue taxes including VAT.

Ruling:
Yes. Ecozone is considered by law as a separate customs authority. It means that in suc
h zone is created the legal fiction of foreign authority although it is a geographical territor
y of the Philippines.
Under the cross-
border principle of the VAT system, no VAT shall be imposed to form part of the cost of t
he goods destined for consumption outside of the territorial border of the taxing authority
. If exports of goods and services from the Philippines to a foreign authority are free of V
AT, then the same rule holds for such exports from the national territory to an ecozone.
This is to encourage foreign investments in order to win international markets and to pro
mote sustainable economic growth.