Taxation Cases

Tan v Del Rosario

Facts:

1. Two consolidated cases assail the validity of RA 7496 or the Simplified Net Income Taxation
Scheme ("SNIT"), which amended certain provisions of the NIRC, as well as the Rules and
Regulations promulgated by public respondents pursuant to said law.

2. Petitioners posit that RA 7496 is unconstitutional as it allegedlyviolates the following provisions

of the Constitution:

-Article VI, Section 26(1) every bill passed by the Congress shall embrace only one subject
which shall be expressed in the title thereof.
- Article VI, Section 28(1) the rule of taxation shall be uniform and equitable. The Congress
shall evolve a progressive system of taxation.
- Article III, Section 1 No person shall be deprived of . . . property without due process of law,
nor shall any person be denied the equal protection of the laws.

3. Petitioners contended that public respondents exceeded their rule-making authority in applying
SNIT to general professional partnerships. Petitioner contends that the title of HB 34314,
progenitor of RA 7496, is deficient for being merely entitled, "Simplified Net Income Taxation
Scheme for the Self-Employed and Professionals Engaged in the Practice of their
Profession" (Petition in G.R. No. 109289) when the full text of the title actually reads,
'An Act Adopting the Simplified Net Income Taxation Scheme For The Self-Employed and
Professionals Engaged In The Practice of Their Profession, Amending Sections 21 and 29 of the
National Internal Revenue Code,' as amended. Petitioners also contend it violated due process.

5. The Solicitor General espouses the position taken by public respondents.

6. The Court has given due course to both petitions.

ISSUE: Whether or not the tax law is unconstitutional for violating due process

NO. The due process clause may correctly be invoked only when there is a clear contravention of
inherent or constitutional limitations in the exercise of the tax power. No such transgression is so
evident in herein case.

1. Uniformity of taxation, like the concept of equal protection, merely requires that all subjects or
objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities.
Uniformity does not violate classification as long as: (1) the standards that are used therefor are
substantial and not arbitrary, (2) the categorization is germane to achieve the legislative purpose,
(3) the law applies, all things being equal, to both present and future conditions, and (4) the
classification applies equally well to all those belonging to the same class.
2. What is apparent from the amendatory law is the legislative intent to increasingly shift the income
tax system towards the schedular approach in the income taxation of individual taxpayers and to
maintain, by and large, the present global treatment on taxable corporations. The Court does not
view this classification to be arbitrary and inappropriate.

ISSUE 2: Whether or not public respondents exceeded their authority in promulgating the
RR

No. There is no evident intention of the law, either before or after the amendatory legislation, to
place in an unequal footing or in significant variance the income tax treatment of professionals
who practice their respective professions individually and of those who do it through a general
professional partnership.

***XXX***
LLADOC VS. COMMISSIONER OF INTERNAL REVENUE [14 SCRA 292; NO.L-19201; 16
JUN 1965]
Saturday, January 31, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Political Law

Facts: Sometime in 1957, M.B. Estate Inc., of Bacolod City, donated 10,000.00 pesos in cash to
Fr. Crispin Ruiz, the parish priest of Victorias, Negros Occidental, and predecessor of Fr. Lladoc,
for the construction of a new Catholic church in the locality. The donated amount was spent for
such purpose.

On March 3, 1958, the donor M.B. Estate filed the donor's gift tax return. Under date of April 29,
1960. Commissioner of Internal Revenue issued an assessment for the donee's gift tax against the
Catholic Parish of Victorias of which petitioner was the parish priest.

Issue: Whether or not the imposition of gift tax despite the fact the Fr. Lladoc was not the Parish
priest at the time of donation, Catholic Parish priest of Victorias did not have juridical personality
as the constitutional exemption for religious purpose is valid.

Held: Yes, imposition of the gift tax was valid, under Section 22(3) Article VI of the Constitution
contemplates exemption only from payment oftaxes assessed on such properties as Property
taxes contra distinguished from Excise taxes The imposition of the gift tax on the property used
for religious purpose is not a violation of the Constitution. A gift tax is not a property by way of
gift inter vivos.

The head of the Diocese and not the parish priest is the real party in interest in the imposition of
the donee's tax on the property donated to thechurch for religious purpose.

***XXX***

Gerochi v. DOE GR No. 159796 17 July 2007 Nachura, J.

Facts:

RA 9136, otherwise known as the Electric Power Industry Reform Act of 2001 (EPIRA), which
sought to impose a universal charge on all end-users of electricity for the purpose of funding
NAPOCORs projects, was enacted and took effect in 2001.

Petitioners contest the constitutionality of the EPIRA, stating that the imposition of the universal
charge on all end-users is oppressive and confiscatory and amounts to taxation without
representation for not giving the consumers a chance to be heard and be represented.

Issue: W/N the universal charge is a tax.

Held:

NO. The assailed universal charge is not a tax, but an exaction in the exercise of the States police
power. That public welfare is promoted may be gleaned from Sec. 2 of the EPIRA, which
enumerates the policies of the State regarding electrification. Moreover, the Special Trust Fund
feature of the universal charge reasonably serves and assures the attainment and perpetuity of the
purposes for which the universal charge is imposed (e.g. to ensure the viability of the countrys
electric power industry), further boosting the position that the same is an exaction primarily in
pursuit of the States police objectives.

Doctrine:

If generation of revenue is the primary purpose and regulation is merely incidental, the imposition
is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does
not make the imposition a tax.

The taxing power may be used as an implement of police power.

The theory behind the exercise of the power to tax emanates from necessity; without taxes,
government cannot fulfill its mandate of promoting the general welfare and well-being of the
people.

***XXX***

MIAA VS. CITY OF PASAY April 02, 2009 G.R. No. 163072

FACTS:

Petitioner Manila International Airport Authority (MIAA) operates and administers the Ninoy
Aquino International Airport (NAIA) Complex under Executive Order No. 903 (EO
903),3otherwise known as the Revised Charter of the Manila International Airport Authority,
issued by then President Ferdinand E. Marcos. The NAIA Complex is located along the border
between Pasay City and Paraaque City. MIAA received Final Notices of Real Property Tax
Delinquency from the City of Pasay for the taxable years 1992 to 2001. The Court of
Appeals upheld the power of the City of Pasay to impose and collect realty taxes on the NAIA
Pasay properties. MIAA filed a motion for reconsideration, which the Court of Appeals denied.

ISSUE:

The issue raised in this petition is whether the NAIA Pasay properties of MIAA are exempt from
real property tax.

RULING:

The Supreme Court held that the Airport Lands and Buildings of MIAA are properties devoted to
public use and thus are properties of public dominion. Properties of public dominion are owned
by the State or the Republic. Article 420 of the Civil Code provides:

Art. 420. The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth.

The term "ports x x x constructed by the State" includes airports and seaports. The Airport Lands
and Buildings of MIAA are intended for public use, and at the very least intended for public
service. Whether intended for public use or public service, the Airport Lands and Buildings
are properties of public dominion. As properties of public dominion, the Airport Lands and
Buildings are owned by the Republic and thus exempt from real estate tax under Section 234(a) of
the Local Government Code.