1. Pascual vs. Secretary of Public Works

In 1953, Republic Act No. 920 was passed. This law appropriated P85,000.00 “for the construction, reconstruction, repair, extension and improvement Pasig feeder road terminals”. Wenceslao Pascual, then governor of Rizal, assailed the validity of the law. He claimed that the appropriation was actually going to be used for private use for the terminals sought to be improved were part of the Antonio Subdivision. The said Subdivision is owned by Senator Jose Zulueta who was a member of the same Senate that passed and approved the same RA. Pascual claimed that Zulueta misrepresented in Congress the fact that he owns those terminals and that his property would be unlawfully enriched at the expense of the taxpayers if the said RA would be upheld. Pascual then  prayed that the Secretary of Public Works and Communications be restrained from releasing funds for such purpose. Zulueta, on the other hand, perhaps as an afterthought, donated the said property to the City of Pasig.

ISSUE: Whether or not the appropriation is valid.

HELD: No, the appropriation is void for being an appropriation for a private purpose. The subsequent donation of the property to the government to make the property public does not cure the constitutional defect. The fact that the law was passed when the said property was still a private property cannot be ignored. “In accordance with the rule that the taxing power must be exercised for public purposes only, money raised by taxation can be expanded only for public purposes and not for the advantage of private individuals.”  Inasmuch as the land on which the projected feeder roads were to be constructed belonged then to Zulueta, the result is that said appropriation sought a private purpose, and, hence, was null and void.

2. Punzalan vs. Municipal Board of Manila

Facts: Petitioners, who are professionals in the city, assail Ordinance No. 3398 together with the law authorizing it (Section 18 of the Revised Charter of the City of Manila). The ordinance imposes a municipal occupation tax on persons exercising various professions in the city and penalizes non-payment of the same. The law authorizing said ordinance empowers the Municipal Board of the city to impose a municipal occupation tax on persons engaged in various professions. Petitioners, having already paid their occupation tax under section 201 of the National Internal Revenue Code, paid the tax under protest as imposed by Ordinance No. 3398. The lower court declared the ordinance invalid and affirmed the validity of the law authorizing it.

Issue: Whether or Not the ordinance and law authorizing it constitute class legislation, and authorize what amounts to double taxation.

Held: The Legislature may, in its discretion, select what occupations shall be taxed, and in its discretion may tax all, or select classes of occupation for taxation, and leave others untaxed. It is not for the courts to judge which cities or municipalities should be empowered to impose occupation taxes aside from that imposed by the National Government. That matter is within the domain of political departments. The argument against double taxation may not be invoked if one tax is imposed by the state and the other is imposed by the city. It is widely recognized that there is nothing inherently terrible in the requirement that taxes be exacted with respect to the same occupation by both the state and the political subdivisions thereof. Judgment of the lower court is reversed with regards to the ordinance and affirmed as to the law authorizing it.

3. Lladoc vs. Commissioner of Internal Revenue

Facts: In 1957, the MB Estate Inc. of Bacolod City donated P10,000 in cash to the parish priest of Victorias, Negros Occidental; the amount spent for the construction of a new Catholic Church in the locality,m as intended. In1958, MB Estate filed the donor’s gift tax return. In 1960, the Commissioner issued an assessment for donee’s gift tax against the parish. The priest lodged a protest to the assessment and requested the withdrawal thereof.

Issue: Whether the Catholic Parish is tax exempt.

Held: The phrase “exempt from taxation” should not be interpreted to mean exemption from all kinds of taxes. The exemption is only from the payment of taxes assessed on such properties as property taxes as contradistinguished from excise taxes. A donee’s gift tax is not a property tax but an excise tax imposed on the transfer of property by way of gift inter vivos. It does not rest upon general ownership, but an excise upon the use made of the properties, upon the exercise of the privilege of receiving the properties. The imposition of such excise tax on property used for religious purpose do not constitute an impairment of the Constitution.

The tax exemption of the parish, thus, does not extend to excise taxes.

4. Abra Valley College vs. Aquino

Petitioner, an educational corporation and institution of higher learning duly incorporated with the Securities and Exchange Commission in 1948, filed a complaint to annul and declare void the “Notice of Seizure’ and the “Notice of Sale” of its lot and building located at Bangued, Abra, for non-payment of real estate taxes and penalties amounting to P5,140.31. Said “Notice of Seizure” by respondents Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the said taxes thereon.

The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned decision. The trial court ruled for the government, holding that the second floor of the building is being used by the director for residential purposes and that the ground floor used and rented by Northern Marketing Corporation, a commercial establishment, and thus the property is not being used exclusively for educational purposes. Instead of perfecting an appeal, petitioner availed of the instant petition for review on certiorari with prayer for preliminary injunction before the Supreme Court, by filing said petition on 17 August 1974.

Issue:

                whether or not the lot and building are used exclusively for educational purposes

Held:

                Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, expressly grants exemption from realty taxes for cemeteries, churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious, charitable or educational purposes.ﾝ Reasonable emphasis has always been made that the exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. The use of the school building or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. In the case at bar, the lease of the first floor of the building to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of education. The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution.

                The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the assessed tax be returned to the petitioner. The modification is derived from the fact that the ground floor is being used for commercial purposes (leased) and the second floor being used as incidental to education (residence of the director).

5. Planter Products vs. Fertiphil Corporation

Planters Products, Inc. purchased from Mitsubishi International Corporation 9,329.7069 metric tons of Urea 46% fertilizer, which the latter shipped aboard the cargo vessel M/V Sun Plum on June 16, 1974. Prior to its voyage, a time-charter party was entered into between Mitsubishi as shipper, and Kyosei Kisen Kabushiki Kaisha as shipowner. Before loading the fertilizer aboard the vessel, four of her holds were presumably inspected by the charterer’s representative and found it fit to take the load. After loading the cargo, the steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin then tied with steel bonds. It remained sealed throughout the entire voyage.

Upon arrival of the vessel, petitioner unloaded the cargo, which took 11 days. A private marine and cargo surveyor, Cargo Superintendents Company, Inc. (CSCI) was hired by petitioner to determine the outturn of the cargo shipped. CSCI reported shortage of 106.726 metric tons, and contamination of 18 metric tons due to dirt. PPI sent a claim letter against Soriamont Steamship Agencies, the resident agent of KKKK. The request was denied, hence, PPI filed an action for damages before the CFI Manila. The lower court sustained the petitioner’s claim, but such decision was reversed by the appellate court, which absolved the carrier from liability. The appellate court ruled that the vessel was a private carrier and not a common carrier by reason of the charter party.

Issues:

(1) Whether a common carrier becomes a private carrier by reason of a charter party

(2) Whether the ship owner was able to prove the exercise of the diligence required under the circumstances

Held:

(1) A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants. Contract of affreightment may either be time charter, wherein the vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage.

Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The definition extends to carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or both for compensation as a public employment and not as a casual occupation. The distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a part of the general business or occupation, although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier. Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should observe extraordinary diligence in the vigilance over the goods they carry. In the case of private carriers, however, the exercise of ordinary diligence in the carriage of goods will suffice. Moreover, in case of loss, destruction or deterioration of the goods, common carriers are presumed to have been at fault or to have acted negligently, and the burden of proving otherwise rests on them. On the contrary, no such presumption applies to private carriers, for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the carrier.

When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned.

(2) In an action for recovery of damages against a common carrier on the goods shipped, the shipper or consignee should first prove the fact of shipment and its consequent loss or damage while the same was in the possession, actual or constructive, of the carrier. Thereafter, the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence required by law or that the loss, damage or deterioration of the cargo was due to fortuitous event, or some other circumstances inconsistent with its liability. To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence.

Before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ship's holds, the

steel pontoon hatches were closed and sealed with iron lids, then covered with three (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom. It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel. When M/V "Sun Plum" docked at its berthing place, representatives of the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspected the condition of the hull of the vessel. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis.

The period during which private respondent was to observe the degree of diligence required of it as a public carrier began from the time the cargo was unconditionally placed in its charge after the vessel's holds were duly inspected and passed scrutiny by the shipper, up to and until the vessel reached its destination and its hull was re-examined by the consignee, but prior to unloading. A shipowner is liable for damage to the cargo resulting from improper stowage only when the stowing is done by stevedores employed by him, and therefore under his control and supervision, not when the same is done by the consignee or stevedores under the employ of the latter.

Common carriers are not responsible for the loss, destruction or deterioration of the goods if caused by the character of the goods or defects in the packaging or in the containers. The primary cause of these spillages is the clamped shell which does not seal very tightly. Also, the wind tends to blow away some of the materials during the unloading process. The probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of equipment used in transporting and hauling it. If there was loss or contamination of the cargo, it was more likely to have occurred while the same was being transported from the ship to the dump trucks and finally to the consignee's warehouse.

Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage, more so, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was

adduced by the petitioner showing that the carrier was remiss in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.