1.NAPOCOR vs. City of CabanatuanFacts: City of Cabanatuan filed a collection suit against NAPOCOR, a government-owned and controlled corporation demanding that the latter pay the assessed franchise tax due, plus surcharge and interest. It alleged that NAPOCORs exemption from local taxes has already been withdrawn by the Local Government Code. NAPOCOR submitted that it is not liable to pay an annual franchise because the citys taxing power is limited to private entities that are engaged in trade or occupation for profit, and that the NAPOCOR Charter, being a valid exercise of police power, should prevail over the LGC.Issue: Whether NAPOCOR is liable to pay annual franchise tax to the City of CabanatuanHeld: Yes. The power to tax is no longer vested exclusively on Congress; local legislative bodies are now given direct authority to levy taxes, fees and other charges. Although as a general rule, LGUs cannot impose taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, this rule now admits of an exception, i.e., when specific provisions of the LGC authorize the LGUs to impose taxes, fees or charges on the aforementioned entities. Nothing prevents Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax.
A franchise is a privilege conferred by government authority, which does not belong to citizens of the country generally as a matter of common right. It may be construed in two senses: the right vested in the individuals composing the corporation and the right and privileges conferred upon the corporation. A franchise tax is understood in the second sense; it is not levied on the corporation simply for existing as a corporation but on its exercise of the rights or privileges granted to it by the government. NAPOCOR is covered by the franchise tax because it exercises a franchise in the second sense and it is exercising its rights or privileges under this franchise within the territory of the City.
2.Progressive Development Corporation vs. Quezon CityFacts: The City Council of QC passed an ordinance known as the Market Code of QC, which imposed a 5% supervision fee on gross receipts on rentals or lease of privately-owned market spaces in QC.In case of failure of the owners of the market spaces to pay the tax for three consecutive months, the City shall revoke the permit of the privately-owned market to operate.Progressive Development Corp, owner and operator of Farmers Market, filed a petition for prohibition against QC on the ground that the tax imposed by the Market Code was in reality a tax on income, which the municipal corporation was prohibited by law to impose.Issue: Whether or not the supervision fee is an income tax or a license fee.Held: It is a license fee. A LICENSE FEE is imposed in the exercise of the police power primarily for purposes of regulation, while TAX is imposed under the taxing power primarily for purposes of raising revenues.If the generating 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 incidentally, revenue is also obtained does not make the imposition a tax.To be considered a license fee, the imposition must relate to an occupation or activity that so engages the public interest in health, morals, safety, and development as to require regulation for the protection and promotion of such public interest; the imposition must also bear a reasonable relation to the probable expenses of regulation, taking into account not only the costs of direct regulation but also its incidental consequences. In this case, the Farmers Market is a privately-owned market established for the rendition of service to the general public. It warrants close supervision and control by the City for the protection of the health of the public by insuring the maintenance of sanitary conditions, prevention of fraud upon the buying public, etc.Since the purpose of the ordinance is primarily regulation and not revenue generation, the tax is a license fee. The use of the gross amount of stall rentals as basis for determining the collectible amount of license tax does not, by itself, convert the license tax into a prohibited tax on income.
Such basis actually has a reasonable relationship to the probable costs of regulation and supervision of Progressives kind of business, since ordinarily, the higher the amount of rentals, the higher the volume of items sold.The higher the volume of goods sold, the greater the extent and frequency of supervision and inspection may be required in the interest of the buying public.
3.Commissioner of Internal Revenue vs. Algue Inc.GR No. L-28896 | Feb. 17, 1988
Facts: Algue Inc. is a domestic corp engaged in engineering, construction and other allied activities On Jan. 14, 1965, the corp received a letter from the CIR regarding its delinquency income taxes from 1958-1959, amtg to P83,183.85 A letter of protest or reconsideration was filed by Algue Inc on Jan 18 On March 12, a warrant of distraint and levy was presented to Algue Inc. thru its counsel, Atty. Guevara, who refused to receive it on the ground of the pending protest Since the protest was not found on the records, a file copy from the corp was produced and given to BIR Agent Reyes, who deferred service of the warrant On April 7, Atty. Guevara was informed that the BIR was not taking any action on the protest and it was only then that he accepted the warrant of distraint and levy earlier sought to be served On April 23, Algue filed a petition for review of the decision of the CIR with the Court of Tax Appeals CIR contentions:- the claimed deduction of P75,000.00 was properly disallowed because it was not an ordinary reasonable or necessary business expense- payments are fictitious because most of the payees are members of the same family in control of Algue and that there is not enough substantiation of such payments CTA: 75K had been legitimately paid by Algue Inc. for actual services rendered in the form of promotional fees. These were collected by the Payees for their work in the creation of the Vegetable Oil Investment Corporation of the Philippines and its subsequent purchase of the properties of the Philippine Sugar Estate Development Company.
Issue: W/N the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction claimed by Algue as legitimate business expenses in its income tax returns
Ruling: Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance, made in accordance with law. RA 1125: the appeal may be made within thirty days after receipt of the decision or ruling challenged During the intervening period, the warrant was premature and could therefore not be served. Originally, CIR claimed that the 75K promotional fees to be personal holding company income, but later on conformed to the decision of CTA There is no dispute that the payees duly reported their respective shares of the fees in their income tax returns and paid the corresponding taxes thereon. CTA also found, after examining the evidence, that no distribution of dividends was involved CIR suggests a tax dodge, an attempt to evade a legitimate assessment by involving an imaginary deduction Algue Inc. was a family corporation where strict business procedures were not applied and immediate issuance of receipts was not required. at the end of the year, when the books were to be closed, each payee made an accounting of all of the fees received by him or her, to make up the total of P75,000.00. This arrangement was understandable in view of the close relationship among the persons in the family corporation The amount of the promotional fees was not excessive. The total commission paid by the Philippine Sugar Estate Development Co. to Algue Inc. was P125K. After deducting the said fees, Algue still had a balance of P50,000.00 as clear profit from the transaction. The amount of P75,000.00 was 60% of the total commission. This was a reasonable proportion, considering that it was the payees who did practically everything, from the formation of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties. Sec. 30 of the Tax Code: allowed deductions in the net income Expenses - All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered xxx the burden is on the taxpayer to prove the validity of the claimed deduction In this case, Algue Inc. has proved that the payment of the fees was necessary and reasonable in the light of the efforts exerted by the payees in inducing investors and prominent businessmen to venture in an experimental enterprise and involve themselves in a new business requiring millions of pesos. Taxes are what we pay for civilization society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one's hard earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. The government for its 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 Taxation must be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the courts will then come to his succor
Algue Inc.s appeal from the decision of the CIR was filed on time with the CTA in accordance with Rep. Act No. 1125. And we also find that the claimed deduction by Algue Inc. was permitted under the Internal Revenue Code and should therefore not have been disallowed by the CIR
4.GOMEZ v. PALOMARGR No. L-23645, October 29, 196825 SCRA 827FACTS:Petitioner Benjamin Gomez mailed a letter at the post office in San Fernando, Pampanga. It did not bearthe special anti-TB stamp required by the RA 1635. It was returned to the petitioner. Petitioner now assails theconstitutionality of the statute claiming that RA 1635 otherwise known as the Anti-TB Stamp law is violative ofthe equal protection clause because it constitutes mail users into a class for the purpose of the tax while leavinguntaxed the rest of the population and that even among postal patrons the statute discriminatorily grantsexemptions. The law in question requires an additional 5 centavo stamp for every mail being posted, and no mailshall be delivered unless bearing the said stamp.ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly violative of the equal protection clause?HELD: No. It is settled that the legislature has the inherent power to select the subjects of taxation and to grantexemptions. This power has aptly been described as "of wide range and flexibility." Indeed, it is said that in thefield of taxation, more than in other areas, the legislature possesses the greatest freedom in classification. Thereason for this is that traditionally, classification has been a device for fitting tax programs to local needs andusages in order to achieve an equitable distribution of the tax burden. The classification of mail users is based on the ability to pay, the enjoyment of a privilege and on administrativeconvenience. Tax exemptions have never been thought of as raising revenues under the equal protection clause.
5.Chavez vs. OngpinFacts: Chavez, owner of some number of parcels of land challenges the constitutionality of EO 73, which increased the assessment for real property taxes. Intervenor Realty Owners Association of the Phil (ROAP) also challenged the constitutionality of EO 73 and EO 464, the latter order having been the basis for the enactment of EO 73.Issue: Whether EO 73 imposes unreasonable increase in real property taxes, thus, should be declared unconstitutional.Held: Negative.The attack on Executive Order No. 73 has no legal basis as the general revision of assessments is a continuing process mandated by Section 21 of Presidential Decree No. 464. If at all, it is Presidential Decree No. 464 which should be challenged as constitutionally infirm. However, Chavez failed to raise any objection against said decree. It was ROAP, the intervenor, which questioned the constitutionality thereof.To continue collecting real property taxes based on valuations arrived at several years ago, in disregard of the increases in the value of real properties that have occurred since then, is not in consonance with a sound tax system. Fiscal adequacy, which is one of the characteristics of a sound tax system, requires that sources of revenues must be adequate to meet government expenditures and their variations.
6.CIR vs. John Gotamco and Sons, et.al.[G.R. No. No. L-31092 February 27, 1987]Facts: The World Health Organization (WHO for short) is an international organization which has a regional office in Manila. An agreement was entered into between the Republic of the Philippines and the said Organization on July 22, 1951. Section 11 of that Agreement provides, inter alia, that "the Organization, its assets, income and other properties shall be: (a) exempt from all direct and indirect taxes. The WHO decided to construct a building to house its own offices, as well as the other United Nations offices stationed in Manila. A bidding was held for the building construction. The WHO informed the bidders that the building to be constructed belonged to an international organization exempted from the payment of all fees, licenses, and taxes, and that therefore their bids "must take this into account and should not include items for such taxes, licenses and other payments to Government agencies." Thereafter, the construction contract was awarded to John Gotamco & Sons, Inc. (Gotamco for short). Subsequently, the Commissioner of Internal Revenue sent a letter of demand to Gotamco demanding payment of for the 3% contractor's tax plus surcharges on the gross receipts it received from the WHO in the construction of the latter's building. WHO. The WHO issued a certification that the bid of John Gotamco & Sons, should be exempted from any taxes in connection with the construction of the World Health Organization office building because such can be considered as an indirect tax to WHO. However, The Commissioner of Internal Revenue contends that the 3% contractor's tax is not a direct nor an indirect tax on the WHO, but a tax that is primarily due from the contractor, and thus not covered by the tax exemption agreement Issue: Whether or not the said 3% contractors tax imposed upon petitioner is covered by the direct and indirect tax exemption granted to WHO by the government. Held: Yes. The 3% contractors tax imposed upon petitioner is covered by the direct and indirect tax exemption granted to WHO. Hence, petitioner cannot be held liable for such contractors tax. The Supreme Court explained that direct taxes are those that are demanded from the very person who, it is intended or desired, should pay them; while indirect taxes are those that are demanded in the first instance from one person in the expectation and intention that he can shift the burden to someone else. While it is true that the contractor's tax is payable by the contractor, However in the last analysis it is the owner of the building that shoulders the burden of the tax because the same is shifted by the contractor to the owner as a matter of self-preservation. Thus, it is an indirect tax against the WHO because, although it is payable by the petitioner, the latter can shift its burden on the WHO.
7.Iloilo Bottlers v City of Iloilo 164 SCRA 607Topic: Situs of Taxation and Double Taxation FACTS: Iloilo Bottlers Inc., a company in the business of bottling and selling soft drinks, was demanded by the City of Iloilo to pay an amount of 59,505 in the form of an license tax the city claims were due to it under an ordinance which was enacted on January 11, 1960 known as Ordinance No. 5, Series of 1960; which provides that manufacturers, bottlers, and distributers of soft drinks in Iloilo are subject to a municipal license tax of 10 centavos per case of 24 bottles. Iloilo Bottling Inc asserted however that since their plant base has moved to municipality of Pavia shortly after the aforementioned ordinance was enacted, they are not liable for any taxes. The city however, still demanded taxes and also demanded back taxes under the claim that Iloilo Bottlers is still distributing in the city of Iloilo since its transfer. Iloilo Bottlers paid the demanded license tax and back taxes under protest. After bringing the case to court, the courts ruled in favor of Iloilo Bottlers and declared that Iloilo Bottlers is free from liability. The city of Iloilo then appealed this ruling, hence this case.ISSUE: Whether or not the courts were correct in their initial ruling that Iloilo Bottlers Inc. Is free from liability and directing the city of Iloilo to refund the tax money.HELD: No, the courts were not correct. The ruling was reversed in favor of the City of Iloilo and Iloilo Bottlers is deemed liable for the aforementioned taxes. RATIO: Situs of taxation (place of taxation) depends on various factors including the nature of the tax and subject matter thereof both of which must be scrutinized to reach a fair decision. The tax ordinance enacted by the City of Iloilo imposes a tax on persons, firms, and corporations engaged in the business of distribution of soft-drinks, manufacture of soft-drinks, and bottling of soft drinks within the territorial jurisdiction of the City of Iloilo. There is no question that Iloilo Bottlers has moved out of Iloilo Citys jurisdiction and into the municipality of Pavia where its plant now stands therefore, the latter two conditions for taxation are no longer applicable. The ruling now depends upon whether or not Iloilo Bottlers can be considered as distributing its products within Iloilo city. Iloilo Bottlers disclaims liability, saying that it does not independently distribute but rather actively sells directly to its consumers. Distribution is therefore only incidental to its business. However, the courts find that Iloilo Bottlers is indeed considered as distributing since while the manufacturing and bottling occurs outside of Iloilo city, the drinks are sold in Iloilo city to consumers in a moving store fashion. The transactions are considered to occur within the city. The tax imposed under Ordinance No. 5 is an excise tax. By its nature, the power to levy an excise tax depends upon the place where the business is done ,or the occupation is engaged in, or where the transaction took place. In this case, it is a tax on the privilege of distributing, manufacturing or bottling soft drinks. Even though the base of operations is at Pavia, the areas of transactions where it conducts its business are within Iloilo city limits. The Situs for excise tax is the area of transaction, not necessarily base of operation.
10.Republic of the Philippines vs. Cocofed[GRs 147062-64, 14 December 2001]Facts: Immediately after the 1986 EDSA Revolution, then President Corazon C. Aquino issued Executive Orders 1, 5 2 6 and 14. On the explicit premise that vast resources of the government have been amassed by former President Ferdinand E. Marcos, his immediate family, relatives, and close associates both here and abroad, the Presidential Commission on Good Government (PCGG) was created by Executive Order 1 to assist the President in the recovery of the ill-gotten wealth thus accumulated whether located in the Philippines or abroad. Executive Order 2 stated that the ill-gotten assets and properties are in the form of bank accounts, deposits, trust accounts, shares of stocks, buildings, shopping centers, condominiums, mansions, residences, estates, and other kinds of real and personal properties in the Philippines and in various countries of the world. Executive Order 14, on the other hand, empowered the PCGG, with the assistance of the Office of the Solicitor General and other government agencies, inter alia, to file and prosecute all cases investigated by it under EOs 1 and 2. Pursuant to these laws, the PCGG issued and implemented numerous sequestrations, freeze orders and provisional takeovers of allegedly ill-gotten companies, assets and properties, real or personal.
Among the properties sequestered by the Commission were shares of stock in the United Coconut Planters Bank (UCPB) registered in the names of the alleged one million coconut farmers, the so-called Coconut Industry Investment Fund companies (CIIF companies) and Eduardo Cojuangco Jr. In connection with the sequestration of the said UCPB shares, the PCGG, on 31 July 1987, instituted an action for reconveyance, reversion, accounting, restitution and damages (Case 0033) in the Sandiganbayan. On 15 November 1990, upon Motion of COCOFED, the Sandiganbayan issued a Resolution lifting the sequestration of the subject UCPB shares on the ground that COCOFED and the so-called CIIF companies had not been impleaded by the PCGG as parties-defendants in its 31 July 1987 Complaint for reconveyance, reversion, accounting, restitution and damages. The Sandiganbayan ruled that the Writ of Sequestration issued by the Commission was automatically lifted for PCGGs failure to commence the corresponding judicial action within the six-month period ending on 2 August 1987 provided under Section 26, Article XVIII of the 1987 Constitution. The anti-graft court noted that though these entities were listed in an annex appended to the Complaint, they had not been named as parties-respondents. The Sandiganbayan Resolution was challenged by the PCGG in a Petition for Certiorari (GR 96073) in the Supreme Court. Meanwhile, upon motion of Cojuangco, the anti-graft court ordered the holding of elections for the Board of Directors of UCPB. However, the PCGG applied for and was granted by this Court a Restraining Order enjoining the holding of the election. Subsequently, the Court lifted the Restraining Order and ordered the UCPB to proceed with the election of its board of directors. Furthermore, it allowed the sequestered shares to be voted by their registered owners. The victory of the registered shareholders was fleeting because the Court, acting on the solicitor generals Motion for Clarification/Manifestation, issued a Resolution on 16 February 1993, declaring that the right of COCOFED, et. al. to vote stock in their names at the meetings of the UCPB cannot be conceded at this time. That right still has to be established by them before the Sandiganbayan. Until that is done, they cannot be deemed legitimate owners of UCPB stock and cannot be accorded the right to vote them. On 23 January 1995, the Court rendered its final Decision in GR 96073, nullifying and setting aside the 15 November 1990 Resolution of the Sandiganbayan which lifted the sequestration of the subject UCPB shares.
A month thereafter, the PCGG pursuant to an Order of the Sandiganbayan subdivided Case 0033 into eight Complaints (Cases 0033-A to 0033-H). Six years later, on 13 February 2001, the Board of Directors of UCPB received from the ACCRA Law Office a letter written on behalf of the COCOFED and the alleged nameless one million coconut farmers, demanding the holding of a stockholders meeting for the purpose of, among others, electing the board of directors. In response, the board approved a Resolution calling for a stockholders meeting on 6 March 2001 at 3 p.m. On 23 February 2001, COCOFED, et al. and Ballares, et al. filed the Class Action Omnibus Motion in Sandiganbayan Civil Cases 0033-A, 0033-B and 0033-F, asking the Sandiganbayan to enjoin the PCGG from voting the UCPB shares of stock registered in the respective names of the more than one million coconut farmers; and to enjoin the PCGG from voting the SMC shares registered in the names of the 14 CIIF holding companies including those registered in the name of the PCGG. On 28 February 2001, the Sandiganbayan, after hearing the parties on oral argument, issued the Order, authorizing COCOFED, et. al. and Ballares, et. al. as well as Cojuangco, as are all other registered stockholders of the United Coconut Planters Bank, until further orders from the Court, to exercise their rights to vote their shares of stock and themselves to be voted upon in the United Coconut Planters Bank (UCPB) at the scheduled Stockholders Meeting on 6 March 2001 or on any subsequent continuation or resetting thereof, and to perform such acts as will normally follow in the exercise of these rights as registered stockholders. The Republic of the Philippines represented by the PCGG filed the petition for certiorari. Issue: Whether the PCGG can vote the sequestered UCPB shares. Held: The registered owner of the shares of a corporation exercises the right and the privilege of voting. This principle applies even to shares that are sequestered by the government, over which the PCGG as a mere conservator cannot, as a general rule, exercise acts of dominion. On the other hand, it is authorized to vote these sequestered shares registered in the names of private persons and acquired with allegedly ill-gotten wealth, if it is able to satisfy the two-tiered test devised by the Court in Cojuangco v. Calpo and PCGG v. Cojuangco Jr. Two clear public character exceptions under which the government is granted the authority to vote the shares exist (1) Where government shares are taken over by private persons or entities who/which registered them in their own names, and (2) Where the capitalization or shares that were acquired with public funds somehow landed in private hands. The exceptions are based on the common-sense principle that legal fiction must yield to truth; that public property registered in the names of non-owners is affected with trust relations; and that the prima facie beneficial owner should be given the privilege of enjoying the rights flowing from the prima facie fact of ownership. In short, when sequestered shares registered in the names of private individuals or entities are alleged to have been acquired with ill-gotten wealth, then the two-tiered test is applied. However, when the sequestered shares in the name of private individuals or entities are shown, prima facie, to have been (1) originally government shares, or (2) purchased with public funds or those affected with public interest, then the two-tiered test does not apply. Rather, the public character exceptions in Baseco v. PCGG and Cojuangco Jr. v. Roxas prevail; that is, the government shall vote the shares. Herein, the money used to purchase the sequestered UCPB shares came from the Coconut Consumer Stabilization Fund (CCSF), otherwise known as the coconut levy funds. The sequestered UCPB shares are confirmed to have been acquired with coco levies, not with alleged ill-gotten wealth. As the coconut levy funds are not only affected with public interest, but are in fact prima facie public funds, the Court believes that the government should be allowed to vote the questioned shares, because they belong to it as the prima facie beneficial and true owner. The Sandiganbayan committed grave abuse of discretion in grossly contradicting and effectively reversing existing jurisprudence, and in depriving the government of its right to vote the sequestered UCPB shares which are prima facie public in character.
11.Republic vs. Mambulao Lumber GR L-17725 28 February 1962FACTS: Mambulao Lumber Company paid the Government a total of P9,127.50 as reforestation charges. Having found liable for an aggregate amount of P4,802.37 for forest charges, it contended that since the Republic (Government) has not made use of the reforestation charges for reforesting the denuded area of the land covered by the companys license, the Republic should refund said amount or, if it cannot be refunded, at least the company should be compensated with what it owed the Republic for reforestation charges.ISSUE:Whether taxes may be subject of set-off or compensation.HELD:Internal revenue taxes, such as forest charges, cannot be the subject of set-off or compensation. A claim for taxes is not such a debt, demand, contract or judgment as is allowed to be set-off under the statutes of set-off, which are construed uniformly, in the light of public policy, to exclude the remedy in an action or any indebtedness of the State or municipality to one who is liable to the State or municipality for taxes. Neither are they subject of recoupment since they do not arise out of the contract or transaction sued on.Taxes are not in the nature of contracts between the parties but grow out of a duty to, and are the positive acts of the government, to the making and enforcing of which, the personal consent of individual taxpayers is not required.
12.Pepsi Cola Bottling Company vs Municipality of Tanauan69 SCRA 460 Taxation Delegation to Local Governments Double Taxation Facts:Pepsi Cola has a bottling plant in the Municipality of Tanauan, Leyte. In September 1962, the Municipality approved Ordinance No. 23 which levies and collects from soft drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo for every bottle of soft drink corked.In December 1962, the Municipality also approved Ordinance No. 27 which levies and collects on soft drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of one centavo P0.01) on each gallon of volume capacity.Pepsi Cola assailed the validity of the ordinances as it alleged that they constitute double taxation in two instances: a) double taxation because Ordinance No. 27 covers the same subject matter and impose practically the same tax rate as with Ordinance No. 23, b) double taxation because the two ordinances impose percentage or specific taxes.Pepsi Cola also questions the constitutionality of Republic Act 2264 which allows for the delegation of taxing powers to local government units; that allowing local governments to tax companies like Pepsi Cola is confiscatory and oppressive.The Municipality assailed the arguments presented by Pepsi Cola. It argued, among others, that only Ordinance No. 27 is being enforced and that the latter law is an amendment of Ordinance No. 23, hence there is no double taxation.ISSUE: Whether or not there is undue delegation of taxing powers. Whether or not there is double taxation.HELD: No. There is no undue delegation. The Constitution even allows such delegation. Legislative powers may be delegated to local governments in respect of matters of local concern. By necessary implication, the legislative power to create political corporations for purposes of local self-government carries with it the power to confer on such local governmental agencies the power to tax. Under the New Constitution, local governments are granted the autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides: Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law. Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of local taxation.
There is no double taxation. The argument of the Municipality is well taken. Further, Pepsi Colas assertion that the delegation of taxing power in itself constitutes double taxation cannot be merited. It must be observed that the delegating authority specifies the limitations and enumerates the taxes over which local taxation may not be exercised. The reason is that the State has exclusively reserved the same for its own prerogative. Moreover, double taxation, in general, is not forbidden by our fundamental law unlike in other jurisdictions. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the city or municipality.
13.LTO vs. City of Butuan; Power of LGU G. R. No. 131512. January 20, 2000
Facts: Relying on the fiscal autonomy granted to LGU's by the Constittuion and the provisons of the Local Government Code, the Sangguniang Panglunsod of the City of Butuan enacted an ordinance "Regulating the Operation of Tricycles-for-Hire, providing mechanism for the issuance of Franchise, Registration and Permit, and Imposing Penalties for Violations thereof and for other Purposes." The ordinance provided for, among other things, the payment of franchise fees for the grant of the franchise of tricycles-for-hire, fees for the registration of the vehicle, and fees for the issuance of a permit for the driving thereof. Petitioner LTO explains that one of the functions of the national government that, indeed, has been transferred to local government units is the franchising authority over tricycles-for-hire of the Land Transportation Franchising and Regulatory Board ("LTFRB") but not, it asseverates, the authority of LTO to register all motor vehicles and to issue to qualified persons of licenses to drive such vehicles. The RTC and CA ruled that the power to give registration and license for driving tricycles has been devolved to LGU's.Issue: Whether or not, the registration of tricycles was given to LGU's, hence the ordinance is a valid exercise of police power.Ruling: No, based on the-"Guidelines to Implement the Devolution of LTFRBs Franchising Authority over Tricycles-For-Hire to Local Government units pursuant to the Local Government Code"- the newly delegated powers to LGU's pertain to the franchising and regulatory powers exercised by the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and issuance of licenses for the driving thereof. Corollarily, the exercised of a police power must be through a valid delegation. In this case the police power of registering tricycles was not delegated to the LGUs, but remained in the LTO. Clearly unaffected by the Local Government Code are the powers of LTO under R.A. No.4136 requiring the registration of all kinds of motor vehicles "used or operated on or upon any public highway" in the country.
The Commissioner of Land Transportation and his deputies are empowered at anytime to examine and inspect such motor vehicles to determine whether said vehicles are registered, or are unsightly, unsafe, improperly marked or equipped, or otherwise unfit to be operated on because of possible excessive damage to highways, bridges and other infrastructures. The LTO is additionally charged with being the central repository and custodian of all records of all motor vehicles. Adds the Court, the reliance made by respondents on the broad taxing power of local government units, specifically under Section 133 of the Local Government Code, is tangential. Police power and taxation, along with eminent domain, are inherent powers of sovereignty which the State might share with local government units by delegation given under a constitutional or a statutory fiat. All these inherent powers are for a public purpose and legislative in nature but the similarities just about end there. The basic aim of police power is public good and welfare. Taxation, in its case, focuses on the power of government to raise revenue in order to support its existence and carry out its legitimate objectives. Although correlative to each other in many respects, the grant of one does not necessarily carry with it the grant of the other. The two powers are, by tradition and jurisprudence, separate and distinct powers, varying in their respective concepts, character, scopes and limitations. To construe the tax provisions of Section 133 (1) of the LGC indistinctively would result in the repeal to that extent of LTO's regulatory power which evidently has not been intended. If it were otherwise, the law could have just said so in Section 447 and 458 of Book III of the Local Government Code in the same manner that the specific devolution of LTFRB's power on franchising of tricycles has been provided. Repeal by implication is not favored. The power over tricycles granted under Section 458(a)(3)(VI) of the Local Government Code to LGUs is the power to regulate their operation and to grant franchises for the operation thereof. The exclusionary clause contained in the tax provisions of Section 133 (1) of the Local Government Code must not be held to have had the effect of withdrawing the express power of LTO to cause the registration of all motor vehicles and the issuance of licenses for the driving thereof. These functions of the LTO are essentially regulatory in nature, exercised pursuant to the police power of the State, whose basic objectives are to achieve road safety by insuring the road worthiness of these motor vehicles and the competence of drivers prescribed by R. A. 4136. Not insignificant is the rule that a statute must not be construed in isolation but must be taken in harmony with the extant body of laws. LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof, and not to issue registration. Ergo, the ordinance being repugnant to a statute is void and ultra vires.
15.De la LLana v Alba GR No. L-57883 March 12, 1982
FACTS:(1) Petitioners sought to bolster their claim by imputing lack of good faith in its enactment and characterizing as an undue delegation of legislative power to the President his authority to fix the compensation and allowances of the Justices and judges thereafter appointed and the determination of the date when the reorganization shall be deemed completed ISSUE:Whether or not BP 129 entitled "An act reorganizing the Judiciary, Appropriating Funds Therefor and for Other Purposes" is constitutional HELD:WHEREFORE, the unconstitutionality of Batas Pambansa Blg 129 not having been shown, this petition is dismissed. No costs. RATIO:(1) Petitioners have convincingly shown that in their capacity as tax payers, their standing to sue has been amply demonstrated.(2) Confronted with what appears to be a crisis situation that calls for a remedy, the Batasang Pambansa had no choice. It had to act, before the ailment became even worse. Time was of the essence, and yet it did not hesitate to be duly mindful, as it ought to be, of the extent of its coverage before enacting Batas Pambansa Blg. 129. (3) There is no denying, therefore, the need for "institutional reforms," characterized in the Report as "both pressing and urgent."(4) Cabinet Bill No. 42, which later became the basis of Batas Pambansa Blg. 129, was introduced. Stress was laid by the sponsor that the enactment of such Cabinet Bill would, firstly, result in the attainment of more efficiency in the disposal of cases. Secondly, the improvement in the quality of justice dispensed by the courts is expected as a necessary consequence of the easing of the court's dockets. Thirdly, the structural changes introduced in the bill, together with the reallocation of jurisdiction and the revision of the rules of procedure, are designated to suit the court system to the exigencies of the present day Philippine society, and hopefully, of the foreseeable future."(5) Nothing is bettersettled in our law than that the abolition of an office within the competence of a legitimate body if done in good faith suffers from no infirmity. This conclusion flows from the fundamental proposition that the legislature may abolish courts inferior to the Supreme Court and therefore may reorganiz e them territorially or otherwise thereby necessitating new appointments and commissions. Section 11. The Members of the Supreme Court and judges of lower courts shall hold office during good behavior until they reach the age of seventy years or become incapacitated to discharge the duties of their office. The Supreme Courten banc shall have the power to discipline judges of lower courts, or order their dismissal by a vote of a majority of the Members who actually took part in the deliberations on the issues in the case and voted thereon. (6) The challenged statute creates an intermediate appellate court, regional trial courts, metropolitan trial courts of the national capital region, and other metropolitan trial courts, municipal trial courts in cities, as well as in municipalities, and municipal circuit trial courts. There is even less reason then to doubt the fact that ex isting inferior courts were abolished. For the Batasang Pambansa, the establishment of such new inferior courts was the appropriate response to the grave and urgent problems that pressed for solution. Certainly, there could be differences of opinion as to the appropriate remedy. (7) I t is likewise undeniable that the Batasang Pambansa retains its full authority to enact whatever legislation may be necessary to carryout national policy as usually formulated in a caucus of the majority party. It is understandable then why in Fortun v . Labang it was stressed that with the provision transferring to the Supreme Court administrative supervision over the Judiciary, there is a greater need "to preserve unimpaired the independence of the judiciary, especially so at present, where to all intents and purposes, there is a fusion between the executive and the legislative branches." (8) To be more specific, petitioners contend that the abolition of the existing inferior courts collides with the security of tenure enjoyed by incumbent Justices and judges under Article X , Section 7 of the Constitution. Removal is, of course, to be distinguished from termination by virtue of the abolition of the office. There can be no tenure to a non-existent office. After the abolition, there is in law no occupant. I n case of removal, there is an office with an occupant who would thereby lose his position. It is in that sense that from the standpoint of strict law, the question of any impairment of security of tenure does not arise (9) To be specific, the Batasang Pambansa is expressly vested with the authority to re organize inferior courts and in the process to abolish ex isting ones.(10) Petitioners would characterize as an undue delegation of legislative power to the President the grant of authority to fix the compensation and the allowances of the Justices and judges thereafter appointed. The language of the statute is quite clear. The questioned provisions reads as follows: "Intermediate Appellate Justices, Regional Trial Judges, Metropolitan Trial Judges, municipal Trial Judges, and Municipal Circuit Trial Judges shall receive such receive such compensation and allowances as may be authorized by the President along the guidelines set forth in Letter of Implementation No. 93 pursuant to Presidential Decree No. 985, as amended by Presidential Decree No. 1597." The existence of a standard is thus clear.(11) The challenged legislation is entirely the product of the efforts of the legislative body. The work of justices was limited, as set forth in the Executive Order, to submitting alternative plan for reorganization. That is more in the nature of scholarly studies.
