tax cases (digested)

8/10/2019 Tax Cases (digested)

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MANILA RACE HORSE TRAINERS ASSOCIATION, INC vs.

MANUEL DE LA FUENTE

G.R. No. L-2947 January 11, 1951

Facts:

Manila Race Horses Trainers Association, Inc., a non-stock corporation, alleged that they are owners of

boarding stables for race horses and that their rights as such are affected by Ordinance No. 3065 of the

City of Manila. They pleaded that said ordinance be declared invalid as it is violative under the

Constitution.

On appeal, it is upheld that the ordinance is a tax on race horses as distinct from boarding stables.

Under Ordinance No. 3065, the tax is assessed not on the owners of the horses but on the owners of the

stables, as counsel admitted in their brief. It is ordinary that the number of horses is used in the

assessment purely as a method of fixing an equitable and practical distribution of the burden imposed by

the measure.

Issue:

Weather or not the Ordinance is constitutional and valid as has been enacted in accordance with the

powers of the Municipal Board granted by the Charter of the City of Manila.

Held:

The Court did not believe that the Ordinance made arbitrary classification. There is equality and

uniformity in taxation if all articles or kinds of property of the same class are taxed at the same rate. Thus,

it was held that, the fact that some places of amusement are not taxed while others are taxed, is not

argument at all against the equality and uniformity of tax imposition." In applying this to the case, there

would be discrimination if some boarding stables of the same class used for the same number of horses

were not taxed or were made to pay less or more than others.

SILVESTER M. PUNSALAN, ET AL., vs.

THE MUNICIPAL BOARD OF THE CITY OF MANILA, ET AL.

G.R. No. L-4817 May 26, 1954

Facts:

Ordinance No. 3398 of the City of Manila was enacted to impose a municipal occupation tax on persons

exercising various professions in the city pursuant to paragraph 1 of Section 18 of the Revised Charter of

the City of Manila. Various professionals filed a suit to the Court of First Instance of Manila to annul the

ordinance and the provision of the Manila charter authorizing it and the refund of taxes collected under

the ordinance but paid under protest.

Issue:

Whether or not the Ordinance violates the Equal Protection Clause.

Held:The Court held that the Ordinance does not violate the Equal Protection Clause.

The legislature may select what occupation shall be taxed, and in the exercise of that discretion it may tax

all, or it may select for taxation certain classes and leave the other untaxed. Furthermore, a professional

who has paid the occupation tax under the NIRC Code should be allowed to practice in Manila even

without paying the similar tax imposed by Ordinance No. 3398. The City cannot give what said

professional already has. This would not say that the Ordinance is invalid, but that only one tax should be

imposed upon a practitioner in Manila.


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CITY OF BAGUIO vs.

FORTUNATO DE LEON

G.R. No. L-24756 October 31, 1968

FACTS:

Fortunato de Leon, the defendant-appellant, assailed the lower court decision upholding the validity of an

ordinance of the City of Baguio imposing a license fee on any person, entity or corporation doing business

in the City. The ordinance sourced its authority from RA No. 329, thereby amending the city charter

empowering it to fix the license fee and regulate businesses, trades and occupations as may be

established or practiced in the City. De Leon was assessed for P50 annual fee it being shown that he was

engaged in property rental and deriving income therefrom. He argued that it is ultra vires for there is no

statury authority which expressly grants the City of Baguio to levy such tax, and that there it imposed

double taxation, and violates the requirement of uniformity.

ISSUE: Weather or not the arguments of the defendant-appellant are reasonable.

HELD:

The arguments are not reasonable. The court emphasized that RA 329 was enacted empowering the City

Council not only to impose a license fee but to levy a tax for purposes of revenue, thus the ordinance

cannot be considered ultra vires for there is more than ample statury authority for the enactment thereof.

In addition, an argument against double taxation may not be invoked where one tax is imposed by the

state and the other is imposed by the city, so that where, as here, Congress has clearly expressed its

intention, the statute must be sustained even though double taxation results.

And finally, violation of uniformity is out of place it being widely recognized that there is nothing

inherently obnoxious in the requirement that license fees or taxes be exacted with respect to the same

occupation, calling or activity by both the state and the political subdivisions thereof.

ANTERO M. SISON, JR., vs.

RUBEN B. ANCHETA

G.R. No. L-59431 July 25, 1984

Facts:

Sison, as taxpayer, alleged that the provision under Section 21 of the National Internal Revenue Code of

1977 unduly discriminated against him by the imposition of higher rates upon his income as a

professional, that it amounts to class legislation, and that it transgresses against the equal protection and

due process clauses of the Constitution as well as the rule requiring uniformity in taxation. The success of

the challenge posed in this suit for declaratory relief or prohibition proceeding on the validity of Section I

of Batas Pambansa Blg. 135 depends upon a showing of its constitutional infirmity.

Issue:

Whether BP 135 violates the due process and equal protection clauses, and the rule on uniformity in

taxation.

Held:

The court held that the petitioner has no cause of action for prohibition. While the tax rates for

compensation income are lower than those for net income, such circumstance does not necessarily result

in lower tax payments for this receiving compensation income. There is a need for proof of such

persuasive character as would lead to a conclusion that there was a violation of the due process and equal

protection clauses. The presumption of validity must prevail. 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. Where the

differentiation conforms to the practical dictates of justice and equity, similar to the standards of equal

protection, it is not discriminatory within the meaning of the clause and is therefore uniform.


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JUAN LUNA SUBDIVISION, INC.

vs.

M. SARMIENTO, ET AL.

G.R. No. L-3538 May 28, 1952

Facts:

Plaintiff-appellee Juan Luna Subdivision is a local corporation that issued a check to the City Treasurer of

Manila for amount to be applied to its land tax for the second semester of 1941. The records of the City

Treasurer do not show what was done with the check. After WWII, the City Treasurer refused to refund

the corporations deposit or apply it to such future taxes as might be found due, while the Philippine Trust

Corp., to which the check was presented, was unwilling to reverse its debit entry against Juan Luna Subd.

Said amount is also subject of another disagreement between the corporation and the City Treasure, with

the corporation claiming that the whole amount of the check for the taxes for the last semester of 1941

have been remitted by Commonwealth Act 703 of 1945.

Issue:Whether or not the provision allowing the remission covers taxes paid before the enactment of

Commonwealth Act 703 or taxes that were still unpaid.

Held:

The Court held that the law is clear in which it applies to taxes and penalties due and payable. The

remission of taxes due and payable to the exclusion of taxes already collected does not constitute unfair

discrimination. Each set of taxes is a class by itself, and the law would be open to attack as classlegislation only if all taxpayers belonging to one class were not treated alike. To refund those taxes with

restored currency would be unduly enrich many of the payers at a greater expense to the people at large.

Association of Custom Brokers vs.

The Municipality Board of the City of Manila

GR L-4376 May 22, 1953

Facts:

The Association of Customs Brokers, which is composed of all brokers and public service operators of

motor vehicles in the City of Manila, challenged the validity of Ordinance No. 3379 of Manila on the

grounds: 1) that while it levies a so-called property tax, it is in reality a license tax which is beyond thepower of the Manila Municipal Board; 2) that said ordinance offends against the rule on uniformity of

taxes; and 3) that it constitutes double taxation.

Issue: Whether or not the Ordinance 3379 is contradictory on the rule on uniformity of taxes as ordained

by the Constitution.

Held:

The Court ruled that Ordinance 3379 is null and void. There is an inequality in the ordinance that renders

it offensive to the Constitution.

While the tax in the Ordinance refers to property tax and it is fixed ad valorem, it is merely levied on all

motor vehicles operating within Manila with the main purpose of raising funds to be expended

exclusively for the repair, maintenance and improvement of the streets and bridges in said city. Theordinance imposes a license fee although under the cloak of an ad valorem tax to circumvent the

prohibition in the Motor Vehicle Law.

The distinction is necessary if he ordinance intends to burden with tax only those registered in Manila as

may be inferred from the word operating used therein.


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Ormoc Sugar Company, Inc. vs.

Treasurer of Ormoc City

G.R. No. 23794 February 17, 1968

Facts:

On January 29, 1964, the Municipal Board of Ormoc City passed Ordinance No. 4 (1964), imposing "on

any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City a

municipal tax equivalent to one per centum (1%) per export sale to the United States of America and

other foreign countries." Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc.

Ormoc Sugar Company, Inc. filed a complaint against the City of Ormoc alleging that the ordinance is

unconstitutional for being violative of the equal protection clause and the rule of uniformity of taxation.

Issue: Whether or not the equal protection clause and rule of uniformity of taxation were infringed?

Held:

The Court reversed the decision appealed. The challenged ordinance is declared unconstitutional because

the Equal Protection clause and Rule of Uniformity of taxation were violated. Equal protection clause

applies only to persons or things identically situated and do not bar a reasonable classification of the

subject of legislation. A perusal of the requisites shows that the questioned ordinance does not meet

them, for it taxes only centrifugal sugar produced and exported by the Ormoc Sugar Company, Inc. and

none other. The taxing ordinance should not be singular and exclusive as to exclude any subsequentlyestablished sugar central for the coverage of the tax.

The defendants-appellees are hereby ordered to refund the P12,087.50 plaintiff-appellant paid under

protest.

Jose B. L.

vs.

Pedro Almanzor

G.R. Nos. L-49839-46 April 26, 1991

FACTS:

J.B.L. Reyes, Edmundo and Milagros Reyes, petitioners, owned a parcel of land in Tondo that are leased

and occupied as dwelling units by tenants who were paying monthly rentals of not exceeding P300. In1971 the Rental Freezing Law was passed prohibiting for one year from its effectivity, an increase in

monthly rentals of dwelling units where rentals do not exceed three hundred pesos (P300.00), so that the

Reyeses were precluded from raising the rents and from ejecting the tenants. In 1973, respondent City

Assessor of Manila re-classified and reassessed the value of the subject properties based on the schedule

of market values, which entailed an increase in the corresponding tax rates prompting petitioners to file a

Memorandum of Disagreement averring that the reassessments made were "excessive, unwarranted,

inequitable, confiscatory and unconstitutional" considering that the taxes imposed upon them greatly

exceeded the annual income derived from their properties. They argued that the income approach should

have been used in determining the land values instead of the comparable sales approach which the City

Assessor adopted.

ISSUE:Weather or not the approach on tax assessment used by the City Assessor reasonable?

HELD:

The Court granted the petition. The decisions of public respondents are reversed and set aside and the

respondents are ordered to make a new assessment by the income approach method to guarantee a fairer

and more realistic basis of computation.

It was held that the tax assessment used is reasonable. The law operates equally and uniformly on all

persons under similar circumstances or that all persons must be treated in the same manner.

Consequently, it stands to reason that petitioners who are burdened by the government by its Rental

Freezing Laws under the principle of social justice should not now be penalized by the same government

by the imposition of excessive taxes petitioners can ill afford and eventually result in the forfeiture of

their properties.

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