1G.R. No.

L-59431 July 25, 1984

ANTERO M. SISON, JR., petitioner,
vs.
RUBEN B. ANCHETA,

FACTS:
The petitioner challenged the validity of BP 135 which further amend Sec. 21 of the National Internal
Revenue Code of 1977.

(The assailed provision provides for rates of tax on citizens or residents on (a) taxable compensation income, (b) taxable
net income, (c) royalties, prizes, and other winnings, (d) interest from bank deposits and yield or any other monetary
benefit from deposit substitutes and from trust fund and similar arrangements, (e) dividends and share of individual
partner in the net profits of taxable partnership, (f) adjusted gross income.)

Petitioner alleged that by virtue thereof, "he would be unduly discriminated against by the imposition of
higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are
imposed upon fixed income or salaried individual taxpayers.
He characterized the above section as arbitrary amounting to class legislation and oppressive in character.
Therefore, there was a transgression of both the equal protection and due process clauses of the
Constitution as well as of the rule requiring uniformity in taxation.
The respondent contended that "Batas Pambansa Big. 135 is a valid exercise of the State's power to tax.

ISSUE:
Whether or not the imposition of a higher tax rate on taxable net income derived from business or
profession than on compensation is constitutionally infirm.

HELD:
This Court ruled against the petitioner. The power to tax, an inherent prerogative, has to be availed of to
assure the performance of vital state functions. It is the source of the bulk of public funds. Taxes being
the lifeblood of the government, their prompt and certain availability is of the essence.

(Note: The power to tax moreover, to borrow from Justice Malcolm, "is an attribute of sovereignty. It is the strongest
of all the powers of of government." It is manifest that the field of state activity has assumed a much wider scope, The
reason was ‘"The areas which used to be left to private enterprise and initiative and which the government was better
equipped to administer for the public welfare than is any private individual or group of individuals)

(Note: However, There are restrictions. The Constitution sets forth such limits . Adversely affecting as it does properly
rights, both the due process and equal protection clauses may properly be invoked. “The power to tax is not the power to
destroy while this Court sits.”The Constitution as the fundamental law overrides any legislative or executive, act that
runs counter to it. In any case therefore where it can be demonstrated that the challenged statutory provision — as
petitioner here alleged — fails to abide by its command, then this Court must so declare and adjudge it null.)

The petitioner’s mere allegation of arbitrariness did not suffice. There must be a factual foundation of
such unconstitutional taint. This is merely to adhere to the authoritative doctrine that where the due
process and equal protection clauses are invoked, there is a need for of such persuasive character as
would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail.

(Note: It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no
support in the Constitution. An obvious example is where it can be shown to amount to the confiscation of property.
That would be a clear abuse of power. It then becomes the duty of this Court to say that such an arbitrary act amounted
to the exercise of an authority not conferred. It has also been held that where the assailed tax measure is beyond the
jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable,
it is subject to attack on due process grounds.)

If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the
same fashion, whatever restrictions cast on some in the group equally binding on the rest." That same
formulation applies as well to taxation measures. The Constitution does not require things which are
different in fact or opinion to be treated in law as though they were the same." Hence the constant
reiteration of the view that classification if rational in character is allowable.
(Lutz V. Araneta: this Court, ruled that"at any rate, it is inherent in the power to tax that a state be free
to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a
singling out of one particular class for taxation, or exemption infringe no constitutional limitation.”)

According to the Constitution: "The rule of taxation shall be uniform and equitable." The rule of
uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable."
Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class
shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural
classifications for purposes of taxation.

(Note: As clarified by Justice Tuason, where "the differentiation" complained of "conforms to the
practical dictates of justice and equity" it "is not discriminatory within the meaning of this clause and is
therefore uniform.")

The Petitioner failed to take into consideration the distinction between a tax rate and a tax base. There is
no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the
same time reducing the applicable tax rate.
Taxpayers may be classified into different categories. It is enough that the classification must rest upon
substantial distinctions that make real differences.
In the case of the gross income taxation embodied in Batas Pambansa Blg. 135, the, discernible basis of
classification is the susceptibility of the income to the application of generalized rules removing all
deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to
all of them.
Taxpayers who are recipients of compensation income are set apart as a class. As there is practically no
overhead expense, these taxpayers are not entitled to make deductions for income tax purposes because
they are in the same situation more or less.
On the other hand, in the case of professionals in the practice of their calling and businessmen, there is
no uniformity in the costs or expenses necessary to produce their income. It would not be just then to
disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike
the same tax rates on the basis of gross income. There is ample justification then for the Batasang
Pambansa to adopt the gross system of income taxation to compensation income, while continuing the
system of net income taxation as regards professional and business income.
Therefore, the petition was dismissed considering the (1) lack of factual foundation to show the arbitrary
character of the assailed provision; 31 (2) the force of controlling doctrines on due process, equal
protection, and uniformity in taxation and (3) the reasonableness of the distinction between compensation
and taxable net income of professionals and businessman certainly not a suspect classification.
G.R. No. L-28896 February 17, 1988
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
ALGUE, INC., and THE COURT OF TAX APPEALS, respondents.
CRUZ, J.:

FACTS:
The private respondent, a domestic corporation engaged in engineering and construction, received a letter
from the petitioner assessing it in the total amount of P83,183.85 as delinquency income taxes for the
years 1958 and 1959. Algue filed a protest or request for reconsideration. A warrant ot distraint and levy
was presented to the private respondent, through its counsel, who refused to receive it on the ground of
pending protest. He produced a copy of protest and gave it to the agent of CIR.

The counsel 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.Sixteen days later, Algue filed a petition for review of the
decision of the CIR.

The petitioner alleged that the claimed deduction of P75,000.00 was properly disallowed because it was
not an ordinary reasonable or necessary business expense.

The Court of Tax Appeals ruled against the respondent. It held that the said amount had been legitimately
paid by the private respondent for actual services rendered. The payment was 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.

According to CTA, the amount was earned through the joint efforts of the persons among whom it was
distributed. It has been established that the Philippine Sugar Estate Development Company had earlier
appointed Algue as its agent, authorizing it to sell its land, factories and oil manufacturing process.
Pursuant to such authority, Alberto and four other people (who were not respondent’s employees nor
shareholders) worked for the formation of the Vegetable Oil Investment Corporation, inducing other
persons to invest in it. Ultimately, after its incorporation largely through the promotion of the said
persons, this new corporation purchased the PSEDC properties. For this sale, Algue received as agent a
commission of P126,000.00, and it was from this commission that the P75,000.00 promotional fees were
paid to the aforenamed individuals.

The petitioner claimed that these payments were fictitious because most of the payees were members of
the same family in control of Algue. It was argued that no indication was made as to how such payments
were made, whether by check or in cash, and there was not enough substantiation of such payments. In
short, the petitioner suggested a tax dodge, an attempt to evade a legitimate assessment by involving an
imaginary deduction.

The respondent’s President and Accountant testified that the payments were not made in one lump sum
but periodically and in different amounts. The CTA considered the fact that this was a family corporation
where strict business procedures were not applied and immediate issuance of receipts was not required.
Even so, 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.

ISSUE:
1.Whether or not the appeal of the private respondent from the decision of the Collector of Internal
Revenue was made on time and in accordance with law.
2. Whether or not the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction
claimed by private respondent Algue as legitimate business expenses in its income tax returns.

HELD:
1. According to Rep. Act No. 1125, the appeal may be made within thirty days after receipt of the decision
or ruling challenged. It is true that as a rule the warrant of distraint and levy is "proof of the finality of
the assessment" and renders hopeless a request for reconsideration,"being "tantamount to an outright
denial thereof and makes the said request deemed rejected." But there is a special circumstance in the
case at bar that prevents application of this accepted doctrine.
Yes, The petition was filed seasonably. The Court of Tax Appelas ruled that the protest had the effect of
suspending the reglementary period which started on the date the assessment was received. The period
started running again only when the respondent was informed of the the implied rejection of the said
protest and the warrant was finally served.

2. According to SEC. 30. of Tax Code, in computing net income, there shall be allowed as deductions
such as 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.

(Note: Revenue Regulations No. 2, Section 70 (1), provides “Compensation for personal services.--Among the ordinary
and necessary expenses paid or incurred in carrying on any trade or business may be included a reasonable allowance for
salaries or other compensation for personal services actually rendered. The test of deductibility in the case of
compensation payments is whether they are reasonable and are, in fact, payments purely for service. This test and
deductibility in the case of compensation payments is whether they are reasonable and are, in fact, payments purely for
service. This test and its practical application may be any amount paid in the form of compensation, but not in fact as
the purchase price of services, is not deductible.)

Yes, The Court ruled that the claimed deduction by the private respondent was permitted under the
Internal Revenue Code and should therefore not have been disallowed by the petitioner.

The total commission paid by the Philippine Sugar Estate Development Co. to the private respondent
was P125,000.00. 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.

The Private respondent 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.

(Note: Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other
hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for
government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the
taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.)

(Note: Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. But
even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that
it 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. For all the awesome power of the tax collector, he may still be
stopped in his tracks.)
G.R. No. L-22074 April 30, 1965

THE PHILIPPINE GUARANTY CO., INC., petitioner,

vs.
THE COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS,
respondents.

FACTS:

The Philippine Guaranty Co., Inc., a domestic insurance company, entered into reinsurance contracts
with foreign insurance companies not doing business in the Philippines: thereby agreed to cede to the
foreign reinsurers a portion of the premiums on insurance it has originally underwritten in the Philippines.
Said insurance contracts were signed by in Manila Philippines, except the contract with Swiss
Reinsurance Company, which was signed in Switzerland. Although the said contract was signed in
Switzerland, the same specifically provided that its provision shall be construed according to the laws of
the Philippines, thereby manifesting a clear intention of the parties to subject themselves to Philippine
law.
Philippine Guaranty Co., Inc. was required to keep a register in Manila where the risks ceded to the
foreign reinsurers where entered, and entry therein was binding upon the reinsurers.
A proportionate amount of taxes on insurance premiums not recovered from the original assured were to
be paid for by the foreign reinsurers.
The foreign reinsurers further agreed, in consideration for managing or administering their affairs in the
Philippines, to compensate the Philippine Guaranty Co., Inc., in an amount equal to 5% of the reinsurance
premiums.
Said premiums were excluded by Philippine Guaranty Co., Inc. from its gross income when it file its
income tax returns. Furthermore, it did not withhold or pay tax on them.
Consequently, the Commissioner of Internal Revenue assessed against petitioner withholding tax on the
ceded reinsurance premiums.
The petitioner protested the assessment on the ground that reinsurance premiums ceded to foreign
reinsurers not doing business in the Philippines are not subject to withholding tax. Its protest was denied
and it appealed to the Court of Tax Appeals.
The Court of Tax Appeals ordered the petitioner to pay to the Commissioner of Internal Revenue the
total sum of P375,345.00 as withholding income taxes for the years 1953 and 1954, plus the statutory
delinquency penalties thereon.
Philippine Guaranty Co, Inc. has appealed, questioning the legality of the Commissioner of Internal
Revenue's assessment for withholding tax on the reinsurance premiums ceded in 1953 and 1954 to the
foreign reinsurers.
Petitioner maintained that the reinsurance premiums in question did not constitute income from sources
within the Philippines because the foreign reinsurers did not engage in business in the Philippines, nor
did they have office here.
Petitioner also contended that the reinsurance premiums are not income from sources within the
Philippines because they are not specifically mentioned in Section 37 of the Tax Code.
Petitioner Stressed at its reliance in good faith on the rulings of the Commissioner of Internal Revenue
requiring no withholding of the tax due on the reinsurance premiums in question relieved it of the duty
to pay the corresponding withholding tax thereon.

ISSUE:
Whether or not the reinsurance premiums ceded to foreign reinsures not doing business in the Philippines
are subject to tax.

HELD:
Yes, Section 24 of the Tax Code subjects foreign corporations to tax on their income from sources within
the Philippines. The word "sources" has been interpreted as the activity, property or service giving rise
to the income.
The reinsurance premiums were income created from the undertaking of the foreign reinsurance
companies to reinsure Philippine Guaranty Co., Inc., against liability for loss under original insurances.
Such undertaking, as explained above, took place in the Philippines. These insurance premiums,
therefore, came from sources within the Philippines and, hence, are subject to corporate income tax.

(Note:The foreign insurers' place of business should not be confused with their place of activity. Business
should not be continuity and progression of transactions while activity may consist of only a single
transaction. An activity may occur outside the place of business. Section 24 of the Tax Code does not
require a foreign corporation to engage in business in the Philippines in subjecting its income to tax. It
suffices that the activity creating the income is performed or done in the Philippines. What is controlling,
therefore, is not the place of business but the place of activity that created an income.)

The reinsurance contracts, however, show that the transactions or activities that constituted the
undertaking to reinsure Philippine Guaranty Co., Inc. against loses arising from the original insurances
in the Philippines were performed in the Philippines.

Section 37 is not an all-inclusive enumeration, for it merely directs that the kinds of income mentioned
therein should be treated as income from sources within the Philippines but it does not require that other
kinds of income should not be considered likewise.

The aforesaid petitioner’s defense of good faith might free from the payment of surcharges or penalties
imposed for failure to pay the corresponding withholding tax, but it certainly would not exculpate if from
liability to pay such withholding tax The Government is not estopped from collecting taxes by the
mistakes or errors of its agents.

(Note:The power to tax is an attribute of sovereignty. It is a power emanating from necessity. It is a

necessary burden to preserve the State's sovereignty and a means to give the citizenry an army to resist
an aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public
improvement designed for the enjoyment of the citizenry and those which come within the State's
territory, and facilities and protection which a government is supposed to provide.)

(Note: Considering that the reinsurance premiums in question were afforded protection by the
government and the recipient foreign reinsurers exercised rights and privileges guaranteed by our laws,
such reinsurance premiums and reinsurers should share the burden of maintaining the state.)

WHEREFORE, the court affirmed the decision of CTA.

G.R. No. L-22734 September 15, 1967

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
MANUEL B. PINEDA, as one of the heirs of deceased ATANASIO PINEDA, respondent.

FACTS:
Atanasio Pineda died, survived by his wife and 15 children, the eldest of whom is Manuel B. Pineda, a
lawyer. The estate was divided among and awarded to the heirs. Manuel B. Pineda's share amounted to
about P2,500.00.
After the estate proceedings were closed, the BIR investigated the income tax liability of the estate for
the past 4 years and it found that the corresponding income tax returns were not filed. Thereupon, the
representative of the Collector of Internal Revenue filed said returns for the estate and issued an
assessment.
Manuel B. Pineda, who received the assessment, appealed to the CTA and alleged that he was liable only
to the extent of his proportional share in the inheritance.
The Court of Tax Appeals ruled that Manuel B. Pineda was liable only for the payment corresponding to
his share in the estate.
The CIR has appealed to SC and has proposed to hold Manuel B. Pineda liable for the payment of all the
taxes found by the Tax Court to be due from the estate in the total amount of P760.28 instead of only for
the amount of taxes corresponding to his share in the estate.

(Note: Philippine Islands v. Pamintuan: “after the partition of an estate, heirs and distributees are liable
individually for the payment of all lawful outstanding claims against the estate in proportion to the
amount or value of the property they have respectively received from the estate.")

ISSUE:
Whether or not the BIR can collect the full amount of estate taxes from an heir's inheritance.

HELD:
Yes, the Government can require Manuel B. Pineda to pay the full amount of the taxes assessed.
Pineda is liable for the assessment as an heir and as a holder-transferee of property belonging to the
estate/taxpayer. As an heir he is individually answerable for the part of the tax proportionate to the share
he received from the inheritance.His liability, however, cannot exceed the amount of his share.t
As a holder of property belonging to the estate, Pineda is liable for he tax up to the amount of the property
in his possession.
The reason is that the Government has a lien on the P2,500.00 received by him from the estate as his
share in the inheritance, for unpaid income taxes for which said estate is liable.

(Note: Last paragraph of Section 315 of the Tax Code: If any person liable to pay the income tax, neglects
or refuses to pay the same after demand, the amount shall be a lien in favor of the Government of the
Philippines from the time when the assessment was made by the Commissioner of Internal Revenue until
paid with interest, penalties, and costs that may accrue in addition thereto upon all property and rights to
property belonging to the taxpayer:)

By virtue of such lien, the Government has the right to subject the property in Pineda's possession, the
P2,500.00, to satisfy the income tax assessment in the sum of P760.28.
After such payment, Pineda will have a right of contribution from his co-heirs, to achieve an adjustment
of the proper share of each heir in the distributable estate.

(Note: The government has two ways of collecting the tax in question.
1:By going after all the heirs and collecting from each one of them the amount of the tax proportionate
to the inheritance received. This action rests on the concept that hereditary property consists only of that
part which remains after the settlement of all lawful claims against the estate, for the settlement of which
the entire estate is first liable.
Purpose: To achieve two results: first, payment of the tax; and second, adjustment of the shares of each
heir in the distributed estate as lessened by the tax.
2. Lien created by Section 315 of the Tax Code upon all property and rights to property belonging to the
taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an
heir or transferee to the payment of the tax Odue, the estate. - applicable to this case.)

(Note: The BIR should be given the necessary discretion to avail itself of the most expeditious way to
collect the tax as may be envisioned in the provision of Tax Code.
Reasoning: Taxes are the lifeblood of government and their prompt and certain availability is an
imperious need. And as afore-stated in this case the suit seeks to achieve only one objective: payment of
the tax. The adjustment of the respective shares due to the heirs from the inheritance, as lessened by the
tax, is left to await the suit for contribution by the heir from whom the Government recovered said tax.)
WHEREFORE, the Court ordered Pineda to pay to the Commissioner of Internal Revenue the sum of
P760.28, without prejudice to his right of contribution for his co-heirs. No costs. So ordered.
G.R. No. L- 41383 August 15, 1988
PHILIPPINE AIRLINES, INC., plaintiff-appellant,
vs.
ROMEO F. EDU in his capacity as Land

FACTS
PAL is a corporation exempt from payment of taxes.
Sometime in 1971, Commissioner Romeo F. Elevate issued a regulation requiring all tax exempt entities
including PAL to pay motor vehicle registration fees.
Despite PAL's protestations, the Comissioner Romeo refused to register the appellant's motor vehicles
unless the aforesaid amount were paid. The appellant thus paid, under protest, the amount of P19,529.75
as registration fees of its motor vehicles.
After paying under protest, the Pal’s counsel, wrote to Commissioner Edu demanding a refund of the
amounts paid, invoking the ruling in Calalang vs Lorenzo where it was held that motor vehicle
registration fees are in reality taxes from the payment of which PAL is exempt by virtue of its legislative
franchise.
Respondent Edu denied the request for refund basing his action on the decision in Republic v. Philippine
Rabbit Bus Lines, Inc., where it was held that registration fees of motor vehicles are not taxes, but
regulatory fees imposed as an incident of the exercise of the police power of the stat, therefore, it does
not come within the exemption granted to PAL. Hence, PAL filed the complaint in the Court of First
Instance of Rizal. The trial Court ruled against the petitioner.

ISSUE:
Whether or not motor vehicle registration fees are considered taxes.

HELD:
(Calalang vs Lorenzo: It appears that the expenditures of the Motor Vehicle Office are but a small
portion—about 5 per centum—of the total collections from motor vehicle registration fees. And as proof
that the money collected is not intended for the expenditures of that office, the law itself provides that all
such money shall accrue to the funds for the construction and maintenance of public roads, streets and
bridges. It is thus obvious that the fees are not collected for regulatory purposes, that is to say, as an
incident to the enforcement of regulations governing the operation of motor vehicles on public highways,
for their express object is to provide revenue with which the Government is to discharge one of its
principal functions—the construction and maintenance of public highways for everybody's use. They are
veritable taxes, not merely fees.)

Yes, the Revised Motor Vehicle Law itself now regards those fees as taxes, for it provides that "no other
taxes or fees than those prescribed in this Act shall be imposed," thus implying that the charges therein
imposed—though called fees—are of the category of taxes.

It appeared clear from the provisions that the legislative intent and purpose behind the law requiring
owners of vehicles to pay for their registration is mainly to raise funds for the construction and
maintenance of highways and to a much lesser degree, pay for the operating expenses of the
administering agency.

(Note: If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial
purposes, then the exaction is properly called a tax. Such is the case of motor vehicle registration fees.)

(Reasoning: Vehicular traffic exploded in number and motor vehicles became absolute necessities
without which modem life as we know it would stand still, Congress found the registration of vehicles a
very convenient way of raising much needed revenues. Without changing the earlier deputy. of
registration payments as "fees," their nature has become that of "taxes.")

However, the respondent was not required to refund the amount stated in the complaint filed by the
petitioner. The Court ruled that any registration fees collected between June 27, 1968 and April 9, 1979,
were correctly imposed because the tax exemption in the franchise of PAL was repealed during the
period.

G.R. No. L-7859 December 22, 1955

WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased Antonio Jayme
Ledesma, plaintiff-appellant,
vs.
J. ANTONIO ARANETA, as the Collector of Internal Revenue, defendant-appellee.

FACTS:
Section 2 of Commonwealth Act 567 provides for an increase of the existing tax on the manufacture of
sugar on each picul of sugar manufactured; while section 3 levies on owners or persons in control of
lands devoted to the cultivation of sugar cane.
Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma,
sought to recover from the CIR the sum of P14,666.40 paid by the estate as taxes, under section 3 of the
Act,. He alleged that such tax is unconstitutional and void, being levied for the aid and support of the
sugar industry exclusively, which in plaintiff's opinion is not a public purpose for which a tax may be
constitutionally levied.
The Court of First Instance dismissed the action filed by the petitioner.

ISSUE:
Whether or not the tax imposition in the Commonwealth Act No. 567 is unconstitutional.

HELD
No, because it is inherent in the power to tax that a state be free to select the subjects of taxation, and it
has been repeatedly held that "inequalities which result from a singling out of one particular class for
taxation, or exemption infringe no constitutional limitation"
The aforesaid tax was levied with a regulatory purpose, to provide means for the rehabilitation and
stabilization of the threatened sugar industry. The act is primarily an exercise of the police power.
Taxation may be used to implement the state's police power.
If objective and methods are alike constitutionally valid, no reason is seen why the state may not levy
taxes to raise funds for their prosecution and attainment.
The protection and promotion of the sugar industry is a matter of public concern, it follows that the
Legislature may determine within reasonable bounds what is necessary for its protection and expedient
for its promotion.
The Court took judicial notice of the fact that sugar production is one of the great industries of our nation,;
that it gives employment to thousands of laborers in fields and factories; and that it is a great source of
the state's wealth. Its promotion, protection and advancement, therefore redounds greatly to the general
welfare. Hence it was competent for the legislature to find that the general welfare demanded that the
sugar industry should be stabilized in turn.

(Note: The protection of a large industry constituting one of the great sources of the state's wealth and
therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is
affected to such an extent by public interests as to be within the police power of the sovereign.)

(Note: Even if the Act is a pure tax measure, it cannot be said that the devotion of tax money to
experimental stations to seek increase of efficiency in sugar production, utilization of by-products and
solution of allied problems, as well as to the improvements of living and working conditions in sugar
mills or plantations, without any part of such money being channeled directly to private persons,
constitutes expenditure of tax money for private purposes)
G.R. No. L-75697
VALENTIN TIO doing business under the name and style of OMI ENTERPRISES, petitioner,
vs.
VIDEOGRAM REGULATORY BOARD, MINISTER OF FINANCE, METRO MANILA
COMMISSION, CITY MAYOR and CITY TREASURER OF MANILA, respondents.

FACTS
The petitioner assailed the constitutionality of Presidential Decree No. 1987 entitled "An Act Creating
the Videogram Regulatory Board" with broad powers to regulate and supervise the videogram industry.

(Note: Province shall collect a tax of thirty percent (30%) of the purchase price or rental rate, as the case
may be, for every sale, lease or disposition of a videogram containing a reproduction of any motion
picture or audiovisual program. Fifty percent (50%) of the proceeds of the tax collected shall accrue to
the province, and the other fifty percent (50%) shall acrrue to the municipality where the tax is collected)

The Greater Manila Theaters Association, Integrated Movie Producers, Importers and Distributors
Association of the Philippines, and Philippine Motion Pictures Producers Association were permitted by
the Court to intervene in the case upon the allegations that their "survival and very existence is threatened
by the unregulated proliferation of film piracy."

(Note: The rationale behind the enactment of the DECREE, is set out in its preambular clauses as follows:
1. The proliferation and unregulated circulation of videograms have greatly prejudiced the
operations of moviehouses and theaters, and have caused a sharp decline in theatrical attendance by at
least forty percent (40%) and a tremendous drop in the collection of sales, contractor's specific,
amusement and other taxes, thereby resulting in substantial losses estimated at P450 Million annually in
government revenues;
2. Videogram(s) establishments collectively earn around P600 Million per annum from rentals,
sales and disposition of videograms, and such earnings have not been subjected to tax, thereby depriving
the Government of approximately P180 Million in taxes each year;
3. The unregulated activities of videogram establishments have also affected the viability of the movie
industry, particularly the more than 1,200 movie houses and theaters throughout the country, and
occasioned industry-wide displacement and unemployment due to the shutdown of numerous
moviehouses and theaters;
4. In order to ensure national economic recovery, it is imperative for the Government to create an
environment conducive to growth and development of all business industries, including the movie
industry which has an accumulated investment of about P3 Billion;
5. Proper taxation of the activities of videogram establishments will not only alleviate the dire
financial condition of the movie industry upon which more than 75,000 families and 500,000 workers
depend for their livelihood, but also provide an additional source of revenue for the Government, and at
the same time rationalize the heretofore uncontrolled distribution of videograms;
6. The rampant and unregulated showing of obscene videogram features constitutes a clear and
present danger to the moral and spiritual well-being of the youth, and impairs the mandate of the
Constitution for the State to support the rearing of the youth for civic efficiency and the development of
moral character and promote their physical, intellectual, and social well-being)

Petitioner attacked the constitutionality of the DECREE on the ground that the tax imposed was harsh,
confiscatory, oppressive and/or in unlawful restraint of trade in violation of the due process clause of the
Constitution;

ISSUE:
Whether or not the tax imposed was harsh, confiscatory, oppressive and/or in unlawful restraint of trade
in violation of the due process clause of the Constitution;

HELD:
No, a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters
the activities taxed.
It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been
repeatedly held that "inequities which result from a singling out of one particular class for taxation or
exemption infringe no constitutional limitation". Taxation has been made the implement of the state's
police power.
The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for
regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of
intellectual property rights, and the proliferation of pornographic video tapes. And while it was also an
objective of the DECREE to protect the movie industry, the tax remains a valid imposition.
The tax imposed by the DECREE is not only a regulatory but also a revenue measure prompted by the
realization that earnings of videogram establishments of around P600 million per annum have not been
subjected to tax, thereby depriving the Government of an additional source of revenue.
The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose
the tax was to favor one industry over another.

(Note: The power to impose taxes is one so unlimited in force and so searching in extent, that the courts
scarcely venture to declare that it is subject to any restrictions whatever, except such as rest in the
discretion of the authority which exercises it.)

(Note: The Constitutional requirement that "every bill shall embrace only one subject which shall be
expressed in the title thereof" is sufficiently complied with if the title be comprehensive enough to include
the general purpose which a statute seeks to achieve. It is not necessary that the title express each and
every end that the statute wishes to accomplish. The requirement is satisfied if all the parts of the statute
are related, and are germane to the subject matter expressed in the title, or as long as they are not
inconsistent with or foreign to the general subject and title)

(Note: The grant in Section 11 of the DECREE of authority to the BOARD is not a delegation of the
power to legislate but merely a conferment of authority or discretion as to its execution, enforcement,
and implementation.)

(Note: Only congressional power or competence, not the wisdom of the action taken, may be the basis
for declaring a statute invalid
GR. No. 76778
June 6, 1990
FRANCISCO I. CHAVEZ, petitioner,
vs.
JAIME B. ONGPIN, in his capacity as Minister of Finance and FIDELINA CRUZ, in her capacity as
Acting Municipal Treasurer of the Municipality of Las Piñas, respondents, REALTY OWNERS
ASSOCIATION OF THE PHILIPPINES, INC., petitioner-intervenor.

FACTS:
The petitioner, Francisco I. Chavez, as a taxpayer and an owner of three parcels of land alleged the
following: that Executive Order No. 73 mandated an excessive increase in real property taxes by 100%
to 400% on improvements, and up to 100% on land; and that any increase in the value of real property
brought about by the revision of real property values and assessments would necessarily lead to a
proportionate increase in real property taxes.
The Realty Owners Association of the Philippines, Inc. also assailed the constitutionality of the said law
only insofar as the revision of the assessments and the effectivity thereof are concerned.

HELD:
Certainly, 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.
The government recognized the financial burden to the taxpayers that would result from an increase in
real property taxes. Hence, Executive Order No. 1019 was issued on April 18, 1985, deferring the
implementation of the increase in real property taxes resulting from the revised real property assessments,
from January 1, 1985 to January 1, 1988.
G.R. No. 193007
RENATO V. DIAZ
vs
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE,

May toll fees collected by tollway operators be subjected to value- added tax?

FACTS:
Petitioners assailed the validity of the impending imposition of value-added tax (VAT) by the Bureau of
Internal Revenue (BIR) on the collections of tollway operators.
Petitioners claimed that, since the VAT would result in increased toll fees, they have an interest as regular
users of tollways in stopping the BIR action.
Petitioners hold the view that Congress did not intend to include toll fees within the meaning of sale of
services that are subject to VAT; that a toll fee is a users tax, not a sale of services; and that to impose
VAT on toll fees would amount to a tax on public service.
The government averred that the NIRC imposes VAT on all kinds of services of franchise grantees,
including tollway operations; and that the imposition of VAT on tollway operations has been the subject
as early as 2003 of several BIR rulings and circulars.

(Note: Petitioners had no right to invoke the non-impairment of contracts clause since they clearly have
no personal interest in existing toll operating agreements between the government and tollway operators.
At any rate, the non-impairment clause cannot limit the States sovereign taxing power which is generally
read into contracts.)

The government contended that the non-inclusion of VAT in the parametric formula for computing toll
rates cannot exempt tollway operators from VAT. Further, the imposition of VAT on toll fees would
have very minimal effect on motorists using the tollways.

ISSUE:

1. Whether or not the government is unlawfully expanding VAT coverage by including tollway operators
and tollway operations in the terms franchise grantees and sale of services under Section 108 of the Code;
and

2. Whether or not the imposition of VAT on tollway operators a) amounts to a tax on tax and not a tax
on services; and (b) is not administratively feasible and cannot be implemented.

HELD:
1. No, the law imposes VAT on all kinds of services rendered in the Philippines for a fee, including those
specified in the list. The enumeration of affected services is not exclusive.
By qualifying services with the words all kinds, Congress has given the term services an all-
encompassing meaning. Thus, every activity that can be imagined as a form of service rendered for a fee
should be deemed included unless some provision of law especially excludes it.

The Toll Operation Decree establishes the legal basis for the services that tollway operators render.
Essentially, tollway operators construct, maintain, and operate expressways, also called tollways, at the
operators expense. In consideration for constructing tollways at their expense, the operators are allowed
to collect government-approved fees from motorists using the tollways until such operators could fully
recover their expenses and earn reasonable returns from their investments.
When a tollway operator takes a toll fee from a motorist, the fee is in effect for the latters use of the
tollway facilities over which the operator enjoys private proprietary rights.

(Note:Section 108 subjects to VAT all kinds of services rendered for a fee regardless of whether or not
the performance thereof calls for the exercise or use of the physical or mental faculties. This means that
services to be subject to VAT need not fall under the traditional concept of services, the personal or
professional kinds that require the use of human knowledge and skills.)

2. A The Court ruled that tollway fees are not taxes. Indeed, they are not assessed and collected by the
BIR and do not go to the general coffers of the government.
The fees paid by the public to tollway operators for use of the tollways, are not taxes in any sense.
(Note: A tax is imposed under the taxing power of the government principally for the purpose of raising
revenues to fund public expenditures. Toll fees, on the other hand, are collected by private tollway
operators as reimbursement for the costs and expenses incurred in the construction, maintenance and
operation of the tollways, as well as to assure them a reasonable margin of income.)

Although toll fees are charged for the use of public facilities, therefore, they are not government exactions
that can be properly treated as a tax. Taxes may be imposed only by the government under its sovereign
authority, toll fees may be demanded by either the government or private individuals or entities, as an
attribute of owners.

VAT on tollway operations is not really a tax on the tollway user, but on the tollway operator. Under
Section 105 of the Code,

(Note: VAT is imposed on any person who, in the course of trade or business, sells or renders services
for a fee. In other words, the seller of services, who in this case is the tollway operator, is the person
liable for VAT. The latter merely shifts the burden of VAT to the tollway user as part of the toll fees.
For this reason, VAT on tollway operations cannot be a tax on tax even if toll fees were deemed as a
users tax. VAT is assessed against the tollway operators gross receipts and not necessarily on the toll
fees. Although the tollway operator may shift the VAT burden to the tollway user, it will not make the
latter directly liable for the VAT. The shifted VAT burden simply becomes part of the toll fees that one
has to pay in order to use the tollways.)

(Note: The seller remains directly and legally liable for payment of the VAT, but the buyer bears its
burden since the amount of VAT paid by the former is added to the selling price. Once shifted, the VAT
ceases to be a tax and simply becomes part of the cost that the buyer must pay in order to purchase the
good, property or service.)

B. Petitioners asserted that the substantiation requirements for claiming input VAT make the VAT on
tollway operations impractical and incapable of implementation. They claimed input VAT, the name,
address and tax identification number of the tollway user must be indicated in the VAT receipt or invoice.
The manner by which the BIR intends to implement the VAT by rounding off the toll rate and putting
any excess collection in an escrow account was also illegal, while the alternative of giving change to
thousands of motorists in order to meet the exact toll rate would be a logistical nightmare. Thus,
according to them, the VAT on tollway operations is not administratively feasible.

(Note: Administrative feasibility is one of the canons of a sound tax system. It simply means that the tax
system should be capable of being effectively administered and enforced with the least inconvenience to
the taxpayer. Non-observance of the canon, however, will not render a tax imposition invalid except to
the extent that specific constitutional or statutory limitations are impaired. Thus, even if the imposition
of VAT on tollway operations may seem burdensome to implement, it is not necessarily invalid unless
some aspect of it is shown to violate any law or the Constitution.)

The Court ruled that any concern about how the VAT on tollway operations will be enforced must first
be addressed to the BIR on whom the task of implementing tax laws primarily and exclusively rests. The
Court cannot preempt the BIRs discretion on the matter, absent any clear violation of law or the
Constitution.

(Note: Users tax means taxing those among the public who actually use a public facility instead of taxing
all the public including those who never use the particular public facility. A users tax is more equitable
a principle of taxation mandated in the 1987 Constitution.)

(Note: Airport lands and buildings are properties of public dominion and that the collection of terminal
fees for their use does not make them private properties. Someone must pay for the maintenance of the
road, either the public indirectly through the taxes they pay the government, or only those among the
public who actually use the road through the toll fees they pay upon using the road. The tollway system
is even a more efficient and equitable manner of taxing the public for the maintenance of public roads.)

(Note: The charging of fees to the public does not determine the character of the property whether it is
for public dominion or not. Article 420 of the Civil Code defines property of public dominion as one
intended for public use. Even if the government collects toll fees, the road is still intended for public use
if anyone can use the road under the same terms and conditions as the rest of the public.)
(Note: Although the petition does not strictly comply with the requirements of Rule 65, the Court has
ample power to waive such technical requirements when the legal questions to be resolved are of great
importance to the public. The same may be said of the requirement of locus standi which is a mere
procedural requisite.)

(Note: The grant of tax exemption is a matter of legislative policy that is within the exclusive prerogative
of Congress.)
[G. R. No. 131512. January 20, 2000]

LAND TRANSPORTATION OFFICE [LTO], represented by Assistant Secretary Manuel F. Bruan,

LTO Regional Office, Region X represented by its Regional Director, Timoteo A. Garcia; and LTO
Butuan represented by Rosita G. Sadiaga, its Registrar, petitioners,
vs.
CITY OF BUTUAN, represented in this case by Democrito D. Plaza II, City Mayor, respondents.

FACTS
The RTC held that the authority to register tricycles, the grant of the corresponding franchise, the
issuance of tricycle drivers' license, and the collection of fees therefore had all been vested in the LGU.
The adverse rulings of both the court a quo and the appellate court prompted the LTO to file the instant
petition for review.
Respondent asserted that one of the salient provisions introduced by the LGC is in the area of local
taxation which allows LGUs to collect registration fees or charges along with the corresponding issuance
of all kinds of licenses or permits for the driving of tricycles.

(Note:The 1987 Constitution provides:"Each local government unit shall have the power to create its
own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations
as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and
charges shall accrue exclusively to the local governments.)

Relying on the aforesaid provision, the Sangguniang Panglungsod passed an ordinance provided for 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 explained hat one of the functions of the national government that 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 the authority of LTO to register all motor vehicles
and to issue to qualified persons of licenses to drive such vehicles.

(Note: Territorial and political subdivisions of the State shall enjoy genuine and meaningful local
autonomy in order to enable them to attain their fullest development as self-reliant communities and
make them more effective partners in the attainment of national goals.

HELD
The newly delegated powers pertain to the franchising and regulatory powers theretofore 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.

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)
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.
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.
G.R. No. L-25043 April 26, 1968
ANTONIO ROXAS, EDUARDO ROXAS and ROXAS Y CIA., in their own respective behalf and as
judicial co-guardians of JOSE ROXAS, petitioners,
vs.
COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE, respondents.

FACTS:
Don Pedro Roxas and Dona Carmen Ayala, Spanish subjects, transmitted to their grandchildren several
properties. To manage the said properties formed a partnership called Roxas y Compania.
The tenants who have all been tilling the lands in Nasugbu for generations expressed their desire to
purchase from the petitioners.
The Government, in consonance with the constitutional mandate to acquire big landed estates and
apportion them among landless tenants-farmers, persuaded the Roxas brothers to part with their
landholdings.
It turned out however that the Government did not have funds to cover the purchase price,
However, the petitioner allowed the tenants to buy the land for the said purchase price, but by installment.
The Commissioner of Internal Revenue demanded from the petitioners the payment of real estate dealer's
tax for 1952.
The assessment for real estate dealer's tax was based on the fact that petitioners received house rentals
from Jose Roxas in the amount of P8,000.00.

(Note: Pursuant to Sec. 194 of the Tax Code, an owner of a real estate who derives a yearly rental income
therefrom in the amount of P3,000.00 or more is considered a real estate dealer and is liable to pay the
corresponding fixed tax.)

The CIR justified his demand for the fixed tax on the fact that said partnership made profits from the
purchase and sale of securities. For the reason that petitioners subdivided its Nasugbu farm lands and
sold them to the farmers on installment, the CIR considered the partnership as engaged in the business
of real estate, hence, 100% of the profits derived therefrom was taxed.

The Petitioners protested the assessment but such protest was denied. The CTA sustained the said
assessment.

HELD:
It should be borne in mind that the sale of the Nasugbu farm lands to the very farmers who tilled them
for generations was not only in consonance with, but more in obedience to the request and pursuant to
the policy of our Government to allocate lands to the landless. It was the bounden duty of the Government
to pay the agreed compensation after it had persuaded Roxas y Cia. to sell its haciendas, and to
subsequently subdivide them among the farmers at very reasonable terms and prices.
However, the Government could not comply with its duty for lack of funds.
Obligingly, Roxas y Cia. shouldered the Government's burden, went out of its way and sold lands directly
to the farmers in the same way and under the same terms as would have been the case had the Government
done it itself.

In fine, Roxas y Cia. cannot be considered a real estate dealer for the sale in question. Hence, pursuant
to Section 34 of the Tax Code the lands sold to the farmers are capital assets, and the gain derived from
the sale thereof is capital gain, taxable only to the extent of 50%.

(Note: Real estate dealer includes any person engaged in the business of buying, selling, exchanging,
leasing or renting property on his own account as principal and holding himself out as a full or part-time
dealer in real estate or as an owner of rental property or properties rented or offered to rent for an
aggregate amount of three thousand pesos or more a year - without any qualification as to the persons
paying the rentals.)

(Note: The power of taxation is sometimes called also the power to destroy. Therefore it should be
exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised
fairly, equally and uniformly, lest the tax collector kill the "hen that lays the golden egg". And, in order
to maintain the general public's trust and confidence in the Government this power must be used justly
and not treacherously. It does not conform with Our sense of justice in the instant case for the
Government to persuade the taxpayer to lend it a helping hand and later on to penalize him for duly
answering the urgent call.)
G.R. No. L-67649 June 28, 1988
ENGRACIO FRANCIA, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and HO FERNANDEZ, respondents.

FACTS:
Engracio Francia is the registered owner of a residential lot and a two-story house built upon it situated
at Pasay City, Metro Manila.
On October 15, 1977, a 125 square meter portion of Francia's property was expropriated by the Republic
of the Philippines for the sum of P4,116.00.
Since 1963 up to 1977 inclusive, Francia failed to pay his real estate taxes.
Thus, on December 1977, his property was sold at public auction by the City Treasurer of Pasay City in
order to satisfy a tax delinquency of P2,400.00. Ho Fernandez was the highest bidder for the property.
Francia was not present during the auction sale since he was in Iligan City.
On March 3, 1979, Francia received a notice of petition filed by Ho Fernandez, seeking the issuance in
his name of a new certificate of title.
Upon verification through his lawyer, Francia discovered that a Final Bill of Sale had been issued in
favor of Ho Fernandez by the City Treasurer.
Francia filed a complaint to annul the auction sale.
The lower court ordered the Register of Deeds of Pasay City to issue a new Transfer Certificate of Title
in favor of the defendant Ho Fernandez over the parcel of land.
The Intermediate Appellate Court affirmed the decision of the lower court in toto.
The petitioner contented that his tax delinquency of P2,400.00 has been extinguished by legal
compensation. He claimed that the government owed him P4,116.00 when a portion of his land was
expropriated. Hence, his tax obligation had been set-off by operation of law.

Issue:
Whether or not the petitioner’s obligation to pay 2,400 for supposed tax delinquency can be off-set by
the amount of 4,116 which the government is indebted to the former.

Held:
No, The Court ruled that there was no legal basis for petitioner’s contention.

(Note: By legal compensation, obligations of persons, who in their own right are reciprocally debtors and
creditors of each other, are extinguished (Art. 1278, Civil Code). The circumstances of the case do not
satisfy the requirements provided by Article 1279, to wit:
(1) that each one of the obligors be bound principally and that he be at the same time a principal
creditor of the other; (3) that the two debts be due.)

The Court consistently ruled that there can be no off-setting of taxes against the claims that the taxpayer
may have against the government. A person cannot refuse to pay a tax on the ground that the government
owes him an amount equal to or greater than the tax being collected. The collection of a tax cannot await
the results of a lawsuit against the government.

(Note: Republic v. Mambulao Lumber Co: 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. Neither are they a proper subject of
recoupment since they do not arise out of the contract or transaction sued on.

(Note: The general rule based on grounds of public policy is well-settled that no set-off admissible against
demands for taxes levied for general or local governmental purposes. The reason on which the general
rule is based, is that taxes are not in the nature of contracts between the party and party but grow out of
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.)

(Note: A taxpayer cannot refuse to pay his tax when called upon by the collector because he has a claim
against the governmental body not included in the tax levy.)

(Note: Corders v. Gonda: Internal revenue taxes can not be the subject of compensation: Reason:
government and taxpayer are not mutually creditors and debtors of each other' under Article 1278 of the
Civil Code and a "claim for taxes is not such a debt, demand, contract or judgment as is allowed to be
set-off.")
There are other factors which compel us to rule against the petitioner. The tax was due to the city
government while the expropriation was effected by the national government.

Moreover, the amount of P4,116.00 paid by the national government for the 125 square meter portion of
his lot was deposited with the PNB long before the sale at public auction of his remaining property.
The petitioner admitted in his testimony that he knew about the P4,116.00 deposited with the bank but
he did not withdraw it. It would have been an easy matter to withdraw P2,400.00 from the deposit so that
he could pay the tax obligation thus aborting the sale at public auction.

(Note: Due process of law to be followed in tax proceedings must be established by proof and the general
rule is that the purchaser of a tax title is bound to take upon himself the burden off showing the regularity
of all proceedings leading up to the sale.There is no presumption of the regularity of any administrative
action which results in depriving a taxpayer of his property through a tax sale. This is actually an
exception to the rule that administrative proceedings are presumed to be regular.)

(Note: As a general rule, gross inadequacy of price is not material when the law gives the owner the right
to redeem as when a sale is made at public auction, upon the theory that the lesser the price, the easier it
is for the owner to effect redemption It is notorious that the prices habitually paid by purchasers at tax
sales are grossly out of proportion to the value of the land.)

WHEREFORE, IN VIEW OF THE FOREGOING, the petition for review is DISMISSED.

G.R. No. 125704. August 28, 1998]

PHILEX MINING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE,

COURT OF APPEALS, and THE COURT OF TAX APPEALS, respondents.

Facts:
The BIR sent a letter to Philex asking it to settle its tax liabilities in the total amount of P123,821,982.52.
The petitioner protested the demand for payment of the tax liabilities stating that it has pending claims
for VAT input credit/refund for the taxes it paid in the amount of P119,977,037.02 plus interest.
Therefore, these claims for tax credit/refund should be applied against the tax liabilities.
The BIR insisted that the pending claims have not yet been established or determined with certainty, it
follows that no legal compensation can take place.
The Court of Tax Appeals ruled that taxes cannot be subject to set-off on compensation since claim for
taxes is not a debt or contract. The Court of Appeals affirmed the Court of Tax Appeals observation.

Issue:
Whether or not the petitioner’s VAT input credit/refund should off-set its excise tax liabilities.

Held:
No, the Court made the pronouncement that taxes cannot be subject to compensation for the simple
reason that the government and the taxpayer are not creditors and debtors of each other.
There is a material distinction between a tax and debt. Debts are due to the Government in its corporate
capacity, while taxes are due to the Government in its sovereign capacity.

(Note: We have consistently ruled that there can be no off-setting of taxes against the claims that the
taxpayer may have against the government. A person cannot refuse to pay a tax on the ground that the
government owes him an amount equal to or greater than the tax being collected. The collection of tax
cannot await the results of a lawsuit against the government.)

We fail to see the logic of Philexs claim for this is an outright disregard of the basic principle in tax law
that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance.
Evidently, to countenance Philexs whimsical reason would render ineffective our tax collection system.

(Note: We cannot allow Philex to refuse the payment of its tax liabilities on the ground that it has a
pending tax claim for refund or credit against the government which has not yet been granted. It must be
noted that a distinguishing feature of a tax is that it is compulsory rather than a matter of bargain.[25]
Hence, a tax does not depend upon the consent of the taxpayer. If any payer can defer the payment of
taxes by raising the defense that it still has a pending claim for refund or credit, this would adversely
affect the government revenue system. A taxpayer cannot refuse to pay his taxes when they fall due
simply because he has a claim against the government or that the collection of the tax is contingent on
the result of the lawsuit it filed against the government.)

(Note: Despite our concern with the lethargic manner by which the BIR handled Philex's tax claim, it is
a settled rule that in the performance of governmental function, the State is not bound by the neglect of
its agents and officers. Nowhere is this more true than in the field of taxation. Again, while we understand
Philex's predicament, it must be stressed that the same is not valid reason for the non- payment of its tax
liabilities. The adage "no one should take the law into his own hands" should have guided Philex's action.)

(Note: First, if the BIR takes time in acting upon the taxpayer's claims for refund, the latter can seek
judicial remedy before the Court of Tax Appeals in the manner prescribed by law. Second, if the inaction
can be characterized as willful neglect of duty, then recourse under the Civil Code (Art. 27) and the Tax
Code (Section 269) an also be availed of.

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED.

G.R. No. L-21183 September 27, 1968

VICTORIAS MILLING CO., INC., plaintiff-appellant,
vs.
THE MUNICIPALITY OF VICTORIAS, PROVINCE OF NEGROS OCCIDENTAL, defendant-
appellant.

Facts:
The disputed ordinance, approved by the municipal Council of Victorias, imposes license tax on
operators of sugar centrals.

(Note: Sugar Refinery with mill having a capacity of producing an annual output of from 1,750,001 bags
of 100 lbs. or more shall be required to pay an annual municipal license tax of — P40,000.00.)

The petitioner sought the nullity of the said ordinance and ordered the refund of all license taxes paid.
The reasons put forth by plaintiff were that: (a) the ordinance is discriminatory since it singles out
plaintiff which is the only operator of a sugar central and a sugar refinery within the jurisdiction of
defendant municipality; (b) it constitutes double taxation; and (c) the national government has preempted
the field of taxation with respect to sugar centrals or refineries.

The trial court ruled that said license taxes in dispute were unreasonable, and held that: "If the defendant
has the power to tax the plaintiff for purposes of revenue, it may do so by proper municipal legislation,
but not in the guise of a license tax."The Court declared the invalidity of the said ordinance and ordered
the respondent to refund to the plaintiff the license taxes paid.
Court is not, however, prepared to order the refund of all the license taxes paid by the plaintiff under to
the plaintiff any and all such license taxes paid under protest after notice of this decision.
Both plaintiff and defendant appealed direct to this Court.

Issue:
1. Whether or not the ordinance was passed by the defendant’s municipal council as a revenue measure.
2. Whether or not the ordinance is discriminatory since it singles out plaintiff which is the only operator
of a sugar central and a sugar refinery within the jurisdiction of the defendant municipality.
3. Whether or not the said ordinance constitutes double taxation.

Held:
1. Yes, the big amount of maximum annual tax set forth in the ordinance, P40,000.00 for sugar centrals,
and P40,000.00 for sugar refineries, convineed the Court that the license tax was really a revenue tax.
Nothing in the ordinance which would indicate that the tax imposed was merely for police inspection,
supervision or regulation.

(Note: The term "license tax" has not acquired a fixed meaning. It is often "used indiscriminately to
designate impositions exacted for the exercise of various privileges." It does not refer solely to a license
for regulation. In many instances, it refers to "revenue-raising exactions on privileges or activities." On
the other hand, license fees are commonly called taxes. But, legally speaking, the latter are "for the
purpose of raising revenues," in contrast to the former which are imposed "in the exercise of police power
for purposes of regulation.")

(Note: The designation given by the municipal authorities does not decide whether the imposition is
properly a license tax or a license fee. The determining factors are the purpose and effect of the imposition
as may be apparent from the provisions of the ordinance. Thus, When no police inspection, supervision,
or regulation is provided, nor any standard set for the applicant to establish, but any and all persons
engaged in the business designated, without qualification, may come, and a license on payment of the
stipulated sum will issue, to do business, subject to no prescribed rule of conduct, the presumption is
strong that the power of taxation, and not the police power, is being exercised.”)

(Note: A municipality is authorized to impose three kinds of licenses: (1) license for regulation of useful
occupations or enterprises; (2) license for restriction or regulation of non-useful occupations or
enterprises; and (3) license for revenue. The first two easily fall within the broad police power granted
under the general welfare clause. The third class, however, is for revenue purposes. It is not a license fee,
properly speaking, and yet it is generally so termed. It rests on the taxing power. That taxing power must
be expressly conferred by statute upon the municipality.)

The Court ruled that the said ordinance was promulgated not in the exercise of the municipality's
regulatory power but as a revenue measure — a tax on occupation or business. The authority to imMepose
such tax is backed by the express grant of power.
(Note: An ordinance carries with it the presumption of validity. The question of reasonableness though
is open to judicial inquiry. Much should be left thus to the discretion of municipal authorities. Courts
will go slow in writing off an ordinance as unreasonable unless the amount is so excessive as to be
prohibitive, arbitrary, unreasonable, oppressive, or confiscatory. A rule which has gained acceptance is
that factors relevant to such an inquiry are the municipal conditions as a whole and the nature of the
business made subject to imposition.)

(Note: For, "if the charge exceeds the expense of issuance of a license and costs of regulation, it is a tax."
And if it is, and it is validly imposed, as in this case, "the rule that license fees for regulation must bear
a reasonable relation to the expense of the regulation has no application.")

2. No, the ordinance does not single out Victorias as the only object of the ordinance. Said ordinance is
made to apply to any sugar central or sugar refinery which may happen to operate in the municipality.
The fact that plaintiff is actually the sole operator of a sugar central and a sugar refinery does not make
the ordinance discriminatory.

3. (Petitioner’s contention: That in computing the amount of taxes to be paid by the sugar refinery the
cost of the raw sugar coming from the sugar central is not deducted; ergo, plaintiff is taxed twice on the
raw sugar.)

(Note: Double taxation has been otherwise described as "direct duplicate taxation." For double taxation
to exist, "the same property must be taxed twice, when it should be taxed but once." Double taxation has
also been "defined as taxing the same person twice by the same jurisdiction for the same thing."

No, the Court ruled that the sid ordinance does not constitute double taxation.
First. The two taxes cover two different objects. Section 1 of the ordinance taxes a person operating sugar
centrals or engaged in the manufacture of centrifugal sugar. While under Section 2, those taxed are the
operators of sugar refinery mills. One occupation or business is different from the other.
Second. The disputed taxes are imposed on occupation or business. Both taxes are not on sugar. The
amount thereof depends on the annual output capacity of the mills concerned, regardless of the actual
sugar milled.

G.R. No. L-16254 February 21, 1922

G.A. CUUNJIENG, plaintiff-appellee,

vs.
FRED L. PATSTONE, engineer of the city of Manila, defendant-appellant.

Facts:
The Petitioner planned to build a warehouse on Azcarraga Street, but the respondent refused to issue a
building permit on the ground that the former failed to comply with the ordinance.
The said ordinance requires any person who desires to build establishments shall pay one-half of the
assessed value of the city land as license fee for the use and occupation of said land and shall construct
arcades on the street.
The petitioner refused to comply with the ordinance in question on the grounds that the arcade was
unnecessary and unsuitable for his warehouse; and that the ordinance in exacting the payment of a fee of
one-half of the assessed value of the city of land covered by the arcade, was in excess of the legislative
powers of the Municipal Board and, therefore, unconstitutional.

Issue:
Whether or not under the charter, the city of Manila may, under the guise of a licence fee and as a
prerequisite for the issuance for a building permit, exact the payment of one-half of the assessed value
of the portion of the sidewalk covered by the arcade.

Held:
No, the Court ruled that imposing a fee equal to one-half of the assessed value of the portion of the
sidwalk covered by the arcade in question, the Municipal Board of the city of Manila exceeded its powers.
The construction of buildings is a useful enterprises and the amount of the license fee should therefore
be limited to the cost of licensing, regulating, and suverveillance.
It appears that without the arcade the normal fee for the building permit would have been about P31, with
the arcade the fee exacted is P525.60. It does not appear tha the cost of licensing, regulaitng, and
surveillance would be materially increased through the construction of the arcade, and it is therefore clear
that the excess fee is imposed for the purpose of revenue.
There is nothing in the character of the city of Manila indicating an intention on the part of the Legislature
to confer power on the Municipal Board to impose a license tax for revenue on the construction of
buildings.
The power conferred in relation to such construction is considered merely as police power from which,
as we have seen, taxing power is not inferred.
Under the circumstances, to hold the validity would amount to judicial legislation.

(Note: We must bear in mind that legislative powers in regard to taxes and licences are not inherent in
municipal corporations but must be granted by statute either expressly or by necessary
implication.Section 2444 authorizing the fixing of fees for building permits and that if the charge in
question possesses any validity whatever it must be as a license fee under that subsection.)

(Note: The charge of one-half of the assessed value imposed on applicants for building permits can
therefore, not beconsidered as rent, and to be valid must either be a tax or a licence fee.)

(Note: The allowable amount of a license fee or tax depends so much on the special circumstances of
each particular case, but the adjudications appear to recognize three classes been taken into consideration
in determining the reasonableness of the license fee:
First, license for the regulation of useful occupation or enterprises.
Second, license for the regulation or restriction of non-useful occupation or enterprises.
Third, license for revenue only.)

(Note: The first two of these classes is based on the exercise of the police power. The conferred power
to regulate and to issue such licenses carries with it the right to fix a license fee.)

(Cooley on Constitutional Limitations: A right to license an employment does not imply a right to charge
a license fee therefore with a view to revenue, unless such seems to be the manifest purpose of the power;
but the authority of the corporation will be limited to such a charge for the license as will cover the
necessary expenses of issuing it, and the additional labor of officers and other expenses thereby imposed.

(Note: Licenses for non-useful occupations are also incidental to the police power and the right to exact
a fee may be implied from the power to license regulate, but in fixing the amount of the license fees the
municipal corporations are allowed a much wider discretion in this class of cases than in the former, and
aside from applying the well-known legal principle that muncipal ordinances must not be unreasonable,
oppressive, or tyrannical, courts have, as a general rule, declined to interfere with such discretion. Hence
license fees clearly in the nature of privilege taxes for revenue have frequently been upheld, especially
in cases of licenses for the sale of liquors.)

(Note: The fee in the third class of cases, those for revenue purposes, is not a license fee properly speaking
but is generally so termed. It rests upon the taxing power as distinguished from the police power, and the
power of the municipality to exact such fees must be expressly granted by character or statute and is not
to be implied from the conferred power to license and regulate merely.

(Judge Cooley: A license is issued under the police power; but the exaction of a license fee with a view
to revenue would be an exercise of the power of taxation; and the character must plainly show an intent
to confer that power, or the municipal corporation cannot assume it.)

The judgment of the Court of First Instance holding that the city of Manila has the power to require the
construction of arcades in certain circumstances but that the license fee prescribed by city ordinance was
illegal, was therefore hereby affirmed.

G.R. No. L-22356 July 21, 1967

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant,

vs.
PEDRO B. PATANAO, defendant-appellee.
Facts:
The respondent was the holder of an ordinary timber license with concession at Esperanza, Agusan, and
as such was engaged in the business of producing logs and lumber for sale.
He failed to file income tax returns for 1953 and 1954, and although he filed income tax returns for 1951,
1952 and 1955, the same were false and fraudulent because he did not report substantial income earned
by him from his business.
The petitioner, through the Deputy Commissioner of Internal Revenue, sent a letter of demand with
enclosed income tax assessment to the defendant requiring him to pay the said amount.
Despite the repeated demands the defendant refused, failed and neglected to pay said taxes. Thus,
assessment for the payment of the taxes in question has become final, executory and demandable, because
it was not contested before the Court of Tax Appeal.
The respondent moved to dismiss the complaint on two grounds, namely: (1) that the action was barred
by prior judgment, defendant having been acquitted in criminal cases, which were prosecutions for failure
to file income tax returns and for non-payment of income taxes; and (2) that the action has prescribed.
The trial court ruled that the accused once acquitted is exempt from both criminal and civil responsibility
because when a criminal action is instituted, civil action arising from the same offense is impliedly
instituted unless the offended party expressly waives the civil action or reserves the right to file it
separately. In this case, there was no waiver or reservation to file a separate civil case. Thus, the failure
to obtain conviction on a charge of non-payment of income taxes is fatal to any civil action to collect the
payment of said taxes.
The petitioner assailed the ruling as erroneous.

Issue:
Whether or not the acquittal of the taxpayer in the criminal proceeding does not necessarily entail
exoneration from his liability to pay the taxes.

Held:
(Note: Civil liability to pay taxes arises from the fact, for instance, that one has engaged himself in
business, and not because of any criminal act committed by him. The criminal liability arises upon failure
of the debtor to satisfy his civil obligation.)

Yes, the acquittal in the said criminal cases cannot operate to discharge defendant appellee from the duty
of paying the taxes which the law requires to be paid, since that duty is imposed by statute.
Said obligation is not a consequence of the felonious acts charged in the criminal proceeding, nor is it a
mere civil liability arising from crime that could be wiped out by the judicial declaration of non-existence
of the criminal acts charged.

Wherefore, the order appealed from is hereby set aside. The records of this case was remanded to the
court of origin for further proceeding.

G.R. No. L-41631 December 17, 1976

HON. RAMON D. BAGATSING, as Mayor of the City of Manila; ROMAN G. GARGANTIEL, as
Secretary to the Mayor; THE MARKET ADMINISTRATOR; and THE MUNICIPAL BOARD OF
MANILA, petitioners,
vs.
HON. PEDRO A. RAMIREZ, in his capacity as Presiding Judge of the Court of First Instance of Manila,
Branch XXX and the FEDERATION OF MANILA MARKET VENDORS, INC., respondents.

Facts:
The Municipal Board of Manila enacted an ordinance regulating the operation of public markets and
prescribing fees and rentals of stalls.
Respondent Federation of Manila Market Vendors sought the declaration of nullity of the said ordinance.
They bewailed that the market stall fees imposed in the disputed ordinance were diverted to the exclusive
private use of the Asiatic Integrated Corporation since the collection of said fees had been let by the City
of Manila to the said corporation in a "Management and Operating Contract."
The respondent judge rendered its decision, declaring the nullity of the said ordinance on the primary
ground of non-compliance with the requirement of publication under the Revised City Charter.
Forthwith, petitioners brought the matter to the SC through the present petition for review on certiorari.

Held:
The assumption was of course saddled on erroneous premise. The fees collected did not go direct to the
private coffers of the corporation.
Ordinance No. 7522 was not made for the corporation but for the purpose of raising revenues for the city.
That is the object it serves. The entrusting of the collection of the fees does not destroy the public purpose
of the ordinance.
So long as the purpose is public, it does not matter whether the agency through which the money is
dispensed is public or private. The right to tax depends upon the ultimate use, purpose and object for
which the fund is raised. It is not dependent on the nature or character of the person or corporation whose
intermediate agency is to be used in applying it. The people may be taxed for a public purpose, although
it be under the direction of an individual or private corporation.
Wherefore, the Court upheld the validity of the said ordinance.

(Note: A charter provision may be impliedly modified or superseded by a later statute. A subsequent
general law similarly applicable to all cities prevails over any conflicting charter provision, for the reason
that a charter must not be inconsistent with the general laws and public policy of the state. Otherwise
stated, a charter must yield to the constitution and general laws of the state.)

(General Rule: Section 47 of the Local Tax Code provides that any question or issue raised against the
legality of any tax ordinance, or portion thereof, shall be referred for opinion to the city fiscal in the case
of tax ordinance of a city. The opinion of the city fiscal is appealable to the Secretary of Justice, whose
decision shall be final and executory unless contested before a competent court within thirty days.)
(Exception: Where the question litigated upon is purely a legal one, the rule does not apply. The principle
may also be disregarded when it does not provide a plain, speedy and adequate remedy.)

(Note: Local governments may collect fees or rentals for the occupancy or use of public markets and
premises. They can provide for and regulate market stands, stalls and privileges, and, also, the sale, lease
or occupancy thereof. They can license, or permit the use of, lease, sell or otherwise dispose of stands,
stalls or marketing privileges.)

(Note: The function of the committee is purely recommendatory as the underscored phrase suggests, its
recommendation is without binding effect on the Municipal Board and the City Mayor.The native power
of the Municipal Board to legislate remains undisturbed even in the slightest degree. It can move in its
own initiative and the Market Committee cannot demur.)

G.R. No. L-10405 December 29, 1960

WENCESLAO PASCUAL, in his official capacity as Provincial Governor of Rizal, petitioner-appellant,

vs.
THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL., respondents-
appellees.
Facts:
Petitioner Wenceslao Pascual, as Provincial Governor of Rizal, claimed that at the time of the passage
and approval of Republic Act 920 (which appropriates funds for Public Work), at the aforementioned
feeder roads were "nothing but projected and planned subdivision roads, not yet constructed; and that the
aforementioned Antonio Subdivision as well as the lands on which said feeder roads were to be construed
were private properties of Jose C. Zulueta, who, at the time of the passage and approval of said Act, was
a member of the Senate of the Philippines.
He also alleged that Zulueta, addressed a letter to the Municipal Council of Pasig, Rizal, offering to
donate said projected feeder roads to the municipality of Pasig, Rizal. Thus, such donation said violated
the provision of our fundamental law prohibiting members of Congress from being directly or indirectly
financially interested in any contract with the Government.
Therefore, inasmuch as the projected feeder roads in question were private property at the time of the
passage and approval of, the appropriation of P85,000.00 therein made, for the construction,
reconstruction, repair, was illegal and, therefore, void ab initio.
Respondents moved to dismiss the petition upon the ground that petitioner had "no legal capacity to sue".
The lower court rendered its decision, holding that, since public interest is involved in this case, the
Petitioner have the requisite personalities" to question the constitutionality of the aforesaid Republic
Act; that "the legislature is without power appropriate public revenues for anything but a public purpose;
and that the instructions and improvement of the feeder roads in question, if such roads where private
property, would not be a public purpose.

Issue:
Whether or not the appropriation in question was "clearly for a private, not a public purpose.”.

Held:
Yes.
Referring to the P85,000.00 appropriation for the projected feeder roads in question, the legality thereof
depended upon whether said roads were public or private property when the bill was approved by the
President and the disbursement of said sum became effective.
Inasmuch as the land on which the projected feeder roads were to be constructed belonged then to
respondent Zulueta, the result was that said appropriation sought a private purpose, and hence, was null
and void.
The donation to the Government, over five (5) months after the approval and effectivity of said Act,
made, for the purpose of legalizing the appropriation in question, did not cure its aforementioned basic
defect. Consequently, a judicial nullification of said donation need not precede the declaration of
unconstitutionality of said appropriation.

(Note: Legislature must only appropriate public revenue for public purpose. It is the essential character
of the direct object of the expenditure which must determine its validity as justifying a tax, and not the
magnitude of the interest to be affected nor the degree to which the general advantage of the community,
and thus the public welfare, may be ultimately benefited by their promotion. Incidental to the public or
to the state, which results from the promotion of private interest and the prosperity of private enterprises
or business, does not justify their aid by the use public money.)
(Reason: Public funds may be used only for public purpose.)

(General rule: The validity of a statute depends upon the powers of Congress at the time of its passage
or approval, not upon events occurring, or acts performed.
Exception: When thee latter consists of an amendment of the organic law, removing, with retrospective
operation, the constitutional limitation infringed by said statute.)

Wherefore, the decision appealed from is hereby reversed, and the records are remanded to the lower
court for further proceedings not inconsistent with this decision.

G.R. No. L-31156 February 27, 1976

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant,

vs.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant appellees.

Facts:
Petitioner Pepsi-Cola Bottling Company of the Philippines, Inc sought the declaration of
unconstitutionality of Section 2 of Republic Act No. 2264 on the ground of undue delegation of taxing
power as well as ordinances nos. 23 and 27 for the reason of double taxation.
Municipal Ordinance No. 23 levies and collects from soft drinks producers and manufacturers a tax of
one-sixteenth (1/16) of a centavo for every bottle of soft drink corked."
On the other hand, Municipal Ordinance No. 27 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.
The tax imposed in both Ordinances Nos. 23 and 27 is denominated as "municipal production tax.'
The Court of First Instance of Leyte rendered judgment "upholding the constitutionality of [Section 2,
Republic Act No. 2264 and ordinances Nos. 23 and 27; and ordering the plaintiff to pay the taxes due
under the said ordinances.
From this judgment, the plaintiff Pepsi-Cola Bottling Company appealed to the Court of Appeals which
in turn elavated the case to the SC.

Issue:
1. Whether or not Section 2 of Republic Act 2264 was an undue delegation of power, confiscatory,and
oppressive.
2. Whether or not ordinances Nos. 23 and 27:
A. constitute double taxation for the reason that these two ordinances cover the same subject matter and
impose practically the same tax rate.
B. impose percentage or specific taxes.

Held:
(Note: : The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter
of right to every independent government, without being expressly conferred by the people.)
(General rule: It is a power that is purely legislative and which the central legislative body cannot delegate
either to the executive or judicial department of the government without infringing upon the theory of
separation of powers.
(Exception: In the case of municipal corporations. Legislative powers may be delegated to local
governments in respect of matters of local concern.)

1. 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.
No, 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.
The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense, would
not suffice to invalidate the said law as confiscatory and oppressive.

(Note: When it is said that the taxing power may be delegated to municipalities and the like, it is meant
that there may be delegated such measure of power to impose and collect taxes as the legislature may
deem expedient.)

(General Rule: The constitutional injunction against deprivation of property without due process of law
may be passed over under the guise of the taxing power.)
(Exception: When the taking of the property is in the lawful exercise of the taxing power, as when
(1) the tax is for a public purpose;
(2) the rule on uniformity of taxation is observed;
(3) either the person or property taxed is within the jurisdiction of the government levying the tax; and
(4) in the assessment and collection of certain kinds of taxes notice and opportunity for hearing are
provided.

(Note: Due process is usually violated where the tax imposed is for a private as distinguished from a
public purpose; a tax is imposed on property outside the State, i.e., extraterritorial taxation; and arbitrary
or oppressive methods are used in assessing and collecting taxes. But, a tax does not violate the due
process clause, as applied to a particular taxpayer, although the purpose of the tax will result in an injury
rather than a benefit to such taxpayer.)
(Note: Due process does not require that the property subject to the tax or the amount of tax to be raised
should be determined by judicial inquiry, and a notice and hearing as to the amount of the tax and the
manner in which it shall be apportioned are generally not necessary to due process of law.)
(Note: The delegated authority cannot be declared unconstitutional on the theory of double taxation.
It must be observed that the delegating authority specifies the limitations and enumerates the taxes over
which local taxation may not be exercised. Moreover, double taxation, in general, is not forbidden by
our fundamental law. 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.)

2. A. No, there is difference between the two ordinances which clearly lies in the tax rate of the soft
drinks produced: in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked; in Ordinance No.
27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity.
The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it was
intended as a plain substitute for the prior Ordinance No. 23, and operates as a repeal of the latter.
Petrioner in its brief admitted that respondent were only seeking to enforce Ordinance No. 27, series of
1962. Even the stipulation of facts confirms the fact that the Acting Municipal Treasurer of Tanauan,
Leyte sought to compel compliance by the petitioner of the provisions of said Ordinance No. 27, series
of 1962. The aforementioned admission shows that only Ordinance No. 27, series of 1962 was being
enforced by respondents.

B. (Note: The taxing authority conferred on local governments under Section 2, Republic Act No. 2264,
is broad enough as to extend to almost "everything, accepting those which are mentioned therein." As
long as the text levied under the authority of a city or municipal ordinance is not within the exceptions
and limitations in the law. The limitation applies, particularly, to the prohibition against municipalities
and municipal districts to impose on articles subject to specific tax except gasoline, under the provisions
of the National Internal Revenue Code.")

No, The imposition of "a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume
capacity" on all soft drinks produced or manufactured under Ordinance No. 27 did not partake of the
nature of a percentage tax on sales, or other taxes in any form based thereon.
The tax is levied on the produce (whether sold or not) and not on the sales.

Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified articles,
such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and cigarettes,
matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel oil,
cinematographic films, playing cards, saccharine, opium and other habit-forming drugs. Soft drink is not
one of those specified.

(Note: An increase in the tax alone would not support the claim that the tax is oppressive, unjust and
confiscatory. Municipal corporations are allowed much discretion in determining the reates of imposable
taxes. This is in line with the constutional policy of according the widest possible autonomy to local
governments in matters of local taxation. Unless the amount is so excessive as to be prohibitive, courts
will go slow in writing off an ordinance as unreasonable.)

G.R. No. L-28271 July 25, 1975

SMITH, BELL AND CO. (PHIL.), INC., petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, respondent
Facts:
The Petitioner imported 119 cases of "Chatteau Gay" wine which it declared as "still wine" and paid
thereon the specific tax of P1.00 per liter of volume capacity. To determine the correct amount of the
specific tax due on the petitioner's importation, the respondent ordered it tested and analyzed in its
Laboratory.
The analyst who conducted the laboratory test reported that Chatteau Gay "is a delicate table wine, and
concluded that it should be classified as "sparkling wine."
The Commissioner assessed the petitioner a deficiency specific tax on the 119 cases of imported Chatteau
Gay in the sum of P11,713.90 under Section 134(a) of the Tax Code which imposes a specific tax of
P12.00 per liter of volume capacity on sparkling wines.
The petitioner contended that the assessment was unconstitutional because Section 134(a) of the Tax
Code lays down an insufficient and hazy standard by which the policy and purpose of the law may be
ascertained and as well gives the Commissioner blanket authority to decide what is or is not the meaning
of "sparkling wines." He claimed that there was an abdication of legislative power violative of the
established doctrine, delegata potestas non potest delegate, and the due process clause of the Constitution.
The respondent disagreed on the ground that Tax Code specifies the articles subject to specific taxes,
classify wines in several categories, and prescribe the corresponding amounts of tax to be paid.
The Commissioner's position was sustained by the Court of Tax Appeals.

(Note: Section 134 of the Tax Code provides: There shall be collected, per liter of volume capacity, the
following taxes:
(a) Sparkling wines, regardless of proof, twelve pesos.
(b) Still wines containing fourteen per centum of alcohol or less, except those produced from casuy
and duhat, one peso.
(c) Still wines containing more than fourteen per centum of alcohol, two pesos.
Imitation wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits.)

Held:
There can be no uncertainty that the purpose of the abovequoted provision is to impose a specific tax on
wines and imitation wines.
The sole object of the sub-enumeration that follows is to prescribe the amount of the tax specifically to
be paid for each type of wine and/or imitation wine so classified and described.
The section therefore clearly and indubitably discloses the legislative will, leaving to the officers charged
with implementation and execution by determining whether a particular kind of wine or imitation wine
falls in one class or another.
In the performance of this function, the internal revenue officers are demonstrably guided by the sound
established practices and technology of the wine industry, an industry as aged and widely dispersed as
one can care to know.
On the basis of the test made, the Commissioner ordered the corresponding deficiency assessment to be
issued. Having chosen to engage in the wine trading business, the petitioner was bound to know the kinds
of wine it deals in, particularly insofar as such knowledge may be relevant to the proper appreciation of
its tax liabilities, and cannot take comfort in its pretended ignorance of what sparkling wine is.
ACCORDINGLY, the decision of the Court of Tax Appeals was affirmed.

G.R. No. L-29646 November 10, 1978

MAYOR ANTONIO J. VILLEGAS, petitioner,
vs.
HIU CHIONG TSAI PAO HO and JUDGE FRANCISCO ARCA, respondents.

Facts:
Ordinance No. 6537 was passed by the Municipal Board of Manila which prohibits aliens from being
employed or to engage in any occupation or business, whether permanent, temporary or casual, without
first securing an employment permit from the Mayor of Manila and paying the permit fee of P50.00.
Private respondent Hiu Chiong Tsai Pao Ho who was employed in Manila, sought the declaration of
unconstitutionality of the said ordinance on the following grounds:
1. As a police power measure, it fails to prescribe any standard to guide and/or limit the action of the
Mayor, thus, violating the fundamental principle on illegal delegation of legislative powers:
2. It is arbitrary, oppressive and unreasonable, being applied only to aliens who are thus, deprived of
their rights to life, liberty and property and therefore, violates the due process and equal protection
clauses of the Constitution.
Petitioner argued that such ordinance cannot be declared null and void on the ground that it violated the
rule on uniformity of taxation because the rule on uniformity of taxation applies only to purely tax or
revenue measures and that Ordinance No. 6537 is not a tax or revenue measure but is an exercise of the
police power of the state, it being principally a regulatory measure in nature.
However, Respondent judge declared the said ordinance as null and void.

Issue:
1. Whether or not the said ordinance violated the ff:
A. Principle against undue delegation of legislative power
B. Due process and equal protection clauses.

Held:
(Note: The contention that Ordinance No. 6537 is purely tax and noy revenue measure. While it is true
that the first part which requires that the alien shall secure an employment permit from the Mayor
involves the exercise of discretion and judgment in the processing of applications for such permits and
therefore is regulatory in character, the second part which requires the payment of P50.00 as employee's
fee is not regulatory but a revenue measure. It is obvious that the purpose of the ordinance is to raise
money under the guise of regulation.)

A. Yes, because it does not contain or suggest any standard or criterion to guide the mayor in the exercise
of the power.
It has been held that where an ordinance of a municipality fails to state any policy or to set up any
standard to guide or limit the mayor's action, expresses no purpose to be attained by requiring a permit,
enumerates no conditions for its grant or refusal, and entirely lacks standard, such ordinance is invalid,
being an undefined and unlimited delegation of power to allow or prevent an activity per se lawful.

(Note:Authority and discretion to grant and refuse permits of all classes conferred upon the id not
uncontrolled discretion but legal discretion to be exercised within the limits of the law.)

B. Yes, The ordinance in question violates the due process of law and equal protection rule of the
Constitution.
Requiring a person before he can be employed to get a permit from the City Mayor of Manila who may
withhold or refuse it at will is tantamount to denying him the basic right of the people in the Philippines
to engage in a means of livelihood.
While it is true that the Philippines as a State is not obliged to admit aliens within its territory, once an
alien is admitted, he cannot be deprived of life without due process of law. This guarantee includes the
means of livelihood. The shelter of protection under the due process and equal protection clause is given
to all persons, both aliens and citizens.

(Note: P50.00 fee was unreasonable not only because it is excessive but because it fails to consider valid
substantial differences in situation among individual aliens who are required to pay it.
Although the equal protection clause of the Constitution does not forbid classification, it is imperative
that the classification should be based on real and substantial differences having a reasonable relation to
the subject of the particular legislation.)

G.R. No. L-46720 June 28, 1940

WELLS FARGO BANK & UNION TRUST COMPANY, petitioner-appellant,

vs.
THE COLLECTOR OF INTERNAL REVENUE

Facts:
Birdie Lillian Eye, wife of Clyde Milton Eye, died at Los Angeles, California, the place of her alleged
last residence and domicile.
Among the properties she left her one-half conjugal share in 70,000 shares of stock in the Benguet
Consolidated Mining Company organized and existing under the laws of the Philippines, with its
principal office in the City of Manila.
The petitioner, Wells Fargo Bank & Union Trust Company, was duly appointed trustee of by the will.
The Federal and State of California's inheritance taxes due on said shares have been duly paid.
Respondent CIR sought to subject anew the aforesaid shares of stock to the Philippine inheritance tax,
to which petitioner objected.
The petitioner filed a declaratory judgment in the lower court with the statement that such transmission
by will of the said 35,000 stock should not be subject to Philippine inheritance tax.
The Court of First Instance of Manila ruled against the petitioner.
Petitioner appealed and alleged that the Philippine inheritance tax is not a tax property, but upon
transmission by inheritance,; and that, as to intangibles, like the shares of stock in question, their situs is
in the domicile of the owner thereof, and, therefore, their transmission by death necessarily takes place
under his domiciliary laws.

Issue:
Whether or not the Philippine government has the power to tax the said 35,000 stock.

Held:
(Note: In cases where the owner of intangibles confines his activity to the place of his domicile, then it
is the identify owner at his domicile which gives jurisdiction to tax.
But when the taxpayer extends his activities with respect to his intangibles, so as to avail himself of the
protection and benefit of the laws of another state, in such a way as to bring his person or properly within
the reach of the tax gatherer there, the reason for a single place of taxation no longer obtains.)

Yes.
The actual situs of the shares of stock is in the Philippines, the corporation being domiciled therein. And
besides, the certificates of stock have remained in this country up to the time when the deceased died in
California, and they were in possession of one Syrena McKee, secretary of the Benguet Consolidated
Mining Company, to whom they have been delivered and indorsed in blank.
For all practical purposes, then, Syrena McKee had the legal title to the certificates of stock held in trust
for the true owner thereof.
In other words, the owner residing in California has extended here her activities with respect to her
intangibles so as to avail herself of the protection and benefit of the Philippine laws. Accordingly, the
jurisdiction of the Philippine Government to tax must be upheld.

(Note: Two fundamental considerations:

(1) upon the recognition of the inherent power of each government to tax persons, properties and rights
within its jurisdiction; and
(2) As to intangibles, the government has the power to impose an inheritance tax upon transmission, by
death of a non-resident, of shares of stock in a domestic corporation, regardless of the situs of their
corresponding certificates.

(Note: Shares or corporate stock be taxed at the domicile of the shareholder and also at that of the
corporation which the taxing state has created and controls; and income may be taxed both by the state
where it is earned and by the state of the recipient's domicile. protection, benefit, and power over the
subject matter are not confined to either state.)

G.R. No. L-65773-74 April 30, 1987

COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
BRITISH OVERSEAS AIRWAYS CORPORATION and COURT OF TAX APPEALS, respondents.
Quasha, Asperilla, Ancheta, Peña, Valmonte & Marcos for respondent British Airways.

Facts:
BOAC, a 100% British Government-owned corporation, is engaged in the international airline business.
Consequently, it did not carry passengers and/or cargo to or from the Philippines, although during the
period covered by the assessments, it maintained a general sales agent in the Philippines — Wamer
Barnes and Company, Ltd., and later Qantas Airways — which was responsible for selling BOAC tickets
covering passengers and cargoes.
BOAC was assessed deficiency income taxes, interests, and penalty for the fiscal years 1968-1969 to
1970-1971 in the aggregate amount of P549,327.43, and the additional amounts of P1,000.00 and
P1,800.00 as compromise penalties for violation of Section 46.
BOAC requested that the assessment be countermanded and set aside.
However, the CIR not only denied the BOAC request for refund in the but also re-issued the said
deficiency income tax assessment.
The Tax Court held that the proceeds of sales of BOAC passage tickets in the Philippines by Warner
Barnes and Company did not constitute BOAC income from Philippine sources "since no service of
carriage of passengers or freight was performed by BOAC within the Philippines" and, therefore, said
income is not subject to Philippine income tax.

Issue:
1. Whether or not the revenue derived by private respondent from sales of tickets in the Philippines for
air transportation, while having no landing rights here, constitute income of BOAC from Philippine
sources, and, accordingly, taxable.
2. Whether or not during the fiscal years in question BOAC s a resident foreign corporation doing
business in the Philippines or has an office or place of business in the Philippines.

Held:
1. Yes.
For the source of income to be considered as coming from the Philippines, it is sufficient that the income
is derived from activity within the Philippines.
In BOAC's case, the sale of tickets in the Philippines is the activity that produces the income. The tickets
exchanged hands here and payments for fares were also made here in Philippine currency. The site of the
source of payments is the Philippines. The flow of wealth proceeded from, and occurred within,
Philippine territory, enjoying the protection accorded by the Philippine government. In consideration of
such protection, the flow of wealth should share the burden of supporting the government.

(Note:Section 37(a) of the Tax Code, which enumerates items of gross income from sources within the
Philippines, namely: (1) interest, (21) dividends, (3) service, (4) rentals and royalties, (5) sale of real
property, and (6) sale of personal property, does not mention income from the sale of tickets for
international transportation.
However, that does not render it less an income from sources within the Philippines. Section 37, by its
language, does not intend the enumeration to be exclusive. It merely directs that the types of income
listed therein be treated as income from sources within the Philippines.)

(Note: The absence of flight operations to and from the Philippines is not determinative of the source of
income or the site of income taxation.)

BOAC was an off-line international airline at the time pertinent to this case. The test of taxability is the
"source"; and the source of an income is that activity ... which produced the income. Unquestionably, the
passage documentations in these cases were sold in the Philippines and the revenue therefrom was
derived from a activity regularly pursued within the Philippines. It cannot alter the fact that income from
the sale of tickets was derived from the Philippines. The word "source" conveys one essential idea, that
of origin, and the origin of the income herein is the Philippines.

2. Yes, BOAC is a resident foreign corporation.

(Note: There is no specific criterion as to what constitutes "doing" or "engaging in" or "transacting"
business. The term implies a continuity of commercial dealings and arrangements, and contemplates the
performance of acts or works or the exercise of some of the functions normally incident to, and in
progressive prosecution of commercial gain

(Note: In order that a foreign corporation may be regarded as doing business within a State, there must
be continuity of conduct and intention to establish a continuous business, such as the appointment of a
local agent, and not one of a temporary character.)

BOAC, during the periods covered by the subject - assessments, maintained a general sales agent in the
Philippines, That general sales agent was engaged in (1) selling and issuing tickets; (2) breaking down
the whole trip into series of trips (3) receiving the fare from the whole trip; and (4) consequently
allocating to the various airline companies.
Those activities were in exercise of the functions which are normally incident to the purpose and object
of its organization as an international air carrier. In fact, the regular sale of tickets, its main activity, is
the very lifeblood of the airline business, the generation of sales being the paramount objective. There
should be no doubt then that BOAC was "engaged in" business in the Philippines through a local agent
during the period.

(Note: Under Section 20 of the 1977 Tax Code:

(h) the term resident foreign corporation engaged in trade or business within the Philippines or
having an office or place of business therein.
(i) The term "non-resident foreign corporation" applies to a foreign corporation not engaged in trade
or business within the Philippines and not having any office or place of business therein.)

(Note: A transportation ticket is not a mere piece of paper. When issued by a common carrier, it
constitutes the contract between the ticket-holder and the carrier. It gives rise to the obligation of
the purchaser of the ticket to pay the fare and the corresponding obligation of the carrier to transp
ort the passenger upon the terms and conditions set forth thereon.)

(Note: A common carrier's tax is an excise tax, being a tax on the activity of transporting, conveying or
removing passengers and cargo from one place to another. It purports to tax the business of
transportation. Being an excise tax, the same can be levied by the State only when the acts, privileges or
businesses are done or performed within the jurisdiction of the Philippines.)

[G.R. No. 137377. December 18, 2001]

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MARUBENI CORPORATION,

respondent.

Facts:
Respondent Marubeni Corporation, a foreign corporation existing under the laws of Japan is engaged in
general import and export trading, financing and the construction business.
It is duly registered to engage in such business in the Philippines and maintains a branch office in Manila.
Petitioner examined the books of accounts of the Manila branch office of respondent corporation and
found that the latter have undeclared income from two (2) contracts in the Philippines, both of which
were completed in 1984.
Petitioners recommended an assessment for deficiency income. Respondent received a letter from
petitioner assessing respondent several deficiency taxes.
Petitioner found that the NDC and Philphos contracts (which were executed in the philippines) were for
a piece of work and since the projects called for the construction and installation of facilities in the
Philippines, the entire income therefrom constituted income from Philippine sources, hence, subject to
internal revenue taxes.
The respondent filed petitions questioning the deficiency income.
Executive Order (E.O.) No. 41 declaring a one-time amnesty covering unpaid income taxes for the years
1981 to 1985 was issued. In accordance with the terms of E.O. No. 41, respondent filed its tax amnesty
return.
The CTA found that respondent had properly availed of the tax amnesty under E.O. and declared the
deficiency taxes subject of said case as deemed cancelled and withdrawn.
Petitioner challenged the decision of the tax court in the CA. The latter dismissed the petition and
affirmed the decision of the CTA.

Held:
The situs of the two projects is in the Philippines, and the materials provided and services rendered were
all done and completed within the territorial jurisdiction of the Philippines. Accordingly, respondents
entire receipts from the contracts, including its receipts from the Offshore Portion, constitute income
from Philippine sources. The total gross receipts covering both labor and materials should be subjected
to contractors tax in accordance with the ruling in Commissioner of Internal Revenue v. Engineering
Equipment & Supply Co.
While the construction and installation work were completed within the Philippines, the evidence is clear
that some pieces of equipment and supplies were completely designed and engineered in Japan. All
services for the design, fabrication, engineering and manufacture of the materials and equipment under
Japanese Yen Portion I were made and completed in Japan. These services were rendered outside the
taxing jurisdiction of the Philippines and are therefore not subject to contractors tax.

(Note: A tax amnesty is a general pardon or intentional overlooking by the State of its authority to impose
penalties on persons otherwise guilty of evasion or violation of a revenue or tax law.
It partakes of an absolute forgiveness or waiver by the government of its right to collect what is due it
and to give tax evaders who wish to relent a chance to start with a clean slate.
A tax amnesty, much like a tax exemption, is never favored nor presumed in law.
If granted, the terms of the amnesty, like that of a tax exemption, must be construed strictly against the
taxpayer and liberally in favor of the taxing authority. For the right of taxation is inherent in government.
The State cannot strip itself of the most essential power of taxation by doubtful words. If a doubt arises
as to the intent of the legislature, that doubt must be resolved in favor of the state.)

(Note: Contractors tax is a tax imposed upon the privilege of engaging in business.[45] It is generally in
the nature of an excise tax on the exercise of a privilege of selling services or labor rather than a sale on
products.)

G.R. No. L-40296 November 21, 1984

ALLIED THREAD CO., INC., and KER & COMPANY, LTD., petitioners,
vs.
HON. CITY MAYOR OF MANILA, HON. CITY TREASURER OF MANILA, HON. LORENZO
RELOVA, in his capacity as Presiding Judge, Branch II, CFI of Manila, respondents.

Facts:
Municipal Board of the City of Manila enacted Ordinance No. 7516 imposing on manufacturers, importer
porters or producers, doing business in the City of Manila, business taxes based on gross sales on a
graduated basis.
Petitioner Allied Id Co., inc. is engaged in the business of manufacturing sewing thread and yarn under
duly registered marks and labels. It operates its factory and maintains an office in Pasig, Rizal. In order
to sell its products in Manila and in other parts of the Philippines, Petitioner Allied engaged the services
of a sales broker, Ker & Company, Ltd.,the latter deriving commissions from every sale made for its
principal.
Having been affected by the aforementioned Ordinance, being manufacturers and sales brokers, the
petitioners sought the declaration of the unconstitutionality of the said ordinance.
Petitioner Allied Thread Co claimed that it should not be subjected to the said Ordinance, because it does
not operate or maintain a branch office in Manila and that its principal office and factory are located in
Pasig, Rizal.
The Court of First Instance of Manila upheld the validity of the said ordinance and found petitioner Allied
to be the proper subject thereto.

Issue:
Whether or not the Petitioner Allied should not be subjected to the said ordinance on the ground that it
did not maintain office or branch office in the City of Manila.

Held:
No, Allied Thread Co., Inc. admitted that it does business in the City of Manila through a broker or agent,
Ker & Company, Ltd.
Doing business in the City of Manila is all that is required to fall within the coverage of the Ordinance.
It should be noted that Ordinance No. 7516 as amended imposes a business tax on manufacturers,
importers or producers doing business in the City of Manila. The tax imposition here is upon the
performance of an act, enjoyment of a privilege, or the engaging in an occupation, and hence is in the
nature of an excise tax.
The power to levy an excise upon the performance of an act or the engaging in an occupation does not
depend upon the domicile of the person subject to the excise nor upon the physical location of the
property and in connection with the act or occupation taxed, but depends upon the place in which the act
is performed or occupation engaged in.
Thus, the gauge for taxability under the said Ordinance No. 7516 as amended does not depend on the
location of the office, but attaches upon the place where the respective sale transaction(s) is perfected
and consummated.
WHEREFORE, the petition is hereby dismissed for lack of merit.