BENJAMIN P. GOMEZ, petitioner-appellee,
vs.
ENRICO PALOMAR, in his capacity as Postmaster General, HON. BRIGIDO R.
VALENCIA, in his capacity as Secretary of Public Works and Communications, and
DOMINGO GOPEZ, in his capacity as Acting Postmaster of San Fernando, Pampanga,
respondent-appellants.
[G.R. No. L-23645 October 29, 1968]
Facts: Republic Act 1635, as amended by Republic Act 2631 was enacted as a way to raise
funds for the Philippine Tuberculosis Society by printing and issue of semi-postal stamps of
different denominations with face value showing the regular postage charge plus the additional
amount of five centavos for the said purpose and during the said period, no mail matter shall be
accepted in the mails unless it bears such semi-postal stamps. The respondent Postmaster
General, in implementation of the law, thereafter issued four (4) administrative orders numbered
3, 7, 9, and 10. On September l5, 1963 the petitioner Benjamin P. Gomez mailed a letter at the
post office in San Fernando, Pampanga. Because this letter, addressed to a certain Agustin
Aquino of 1014 Dagohoy Street, Singalong, Manila did not bear the special anti-TB stamp
required by the statute, it was returned to the petitioner.
Issue: Whether or not the tax in question is invalid, first, because it is not levied for a public
purpose as no special benefits accrue to mail users as taxpayers, and second, because it violates
the rule of uniformity in taxation
Ruling: The eradication of a dreaded disease is a public purpose, but if by public purpose the
petitioner means benefit to a taxpayer as a return for what he pays, then it is sufficient answer to
say that the only benefit to which the taxpayer is constitutionally entitled is that derived from his
enjoyment of the privileges of living in an organized society, established and safeguarded by the
devotion of taxes to public purposes. Any other view would preclude the levying of taxes except
as they are used to compensate for the burden on those who pay them and would involve the
abandonment of the most fundamental principle of government — that it exists primarily to
provide for the common good. Nor is the rule of uniformity and equality of taxation infringed by
the imposition of a flat rate rather than a graduated tax. A tax need not be measured by the
weight of the mail or the extent of the service rendered. We have said that considerations of
administrative convenience and cost afford an adequate ground for classification. The same
considerations may induce the legislature to impose a flat tax which in effect is a charge for the
transaction, operating equally on all persons within the class regardless of the amount involved.
As Mr. Justice Holmes said in sustaining the validity of a stamp act which imposed a flat rate of
two cents on every $100 face value of stock transferred:
One of the stocks was worth $30.75 a share of the face value of $100, the other $172. The
inequality of the tax, so far as actual values are concerned, is manifest. But, here again equality
in this sense has to yield to practical considerations and usage. There must be a fixed and
indisputable mode of ascertaining a stamp tax. In another sense, moreover, there is equality.
When the taxes on two sales are equal, the same number of shares is sold in each case; that is to
say, the same privilege is used to the same extent. Valuation is not the only thing to be
considered. As was pointed out by the court of appeals, the familiar stamp tax of 2 cents on
checks, irrespective of income or earning capacity, and many others, illustrate the necessity and
practice of sometimes substituting count for weight ...
According to the trial court, the money raised from the sales of the anti-TB stamps is spent for
the benefit of the Philippine Tuberculosis Society, a private organization, without appropriation
by law. But as the Solicitor General points out, the Society is not really the beneficiary but only
the agency through which the State acts in carrying out what is essentially a public function. The
money is treated as a special fund and as such need not be appropriated by law
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.
[G.R. No. L-7859 December 22, 1955]
Facts: During the 1940s, Commonwealth Act No. 567, or the Sugar Adjustment Act was
promulgated as to combat the susceptible loss in the sugar industry because of the export taxes
imposed upon sugar exports to the United States. This tax was based on each picul of sugar
manufactured and to owners or persons in control of lands devoted to the cultivation of sugar
cane. Walter Lutz, plaintiff, seeks to recover from the Collector of Internal Revenue the sum of
14,666.40 Php as taxes from 1948-1949 and 1949-1950.
Issue: Whether or not the sugar producers can exclusively be levied taxes
Ruling: That the tax to be levied should burden the sugar producers themselves can hardly be a
ground of complaint; indeed, it appears rational that the tax be obtained precisely from those who
are to be benefited from the expenditure of the funds derived from it. 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.” From the point of view, we have taken it
appears of no moment that the funds raised under the Sugar Stabilization Act, now in question,
should be exclusively spent in aid of the sugar industry, since it is that very enterprise that is
being protected. It may be that other industries are also in need of similar protection; that the
legislature is not required by the Constitution to adhere to a policy of "all or none." As ruled in
Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law
presumably hits the evil where it is most felt, it is not to be overthrown because there are other
instances to which it might have been applied;" and that "the legislative authority, exerted within
its proper field, need not embrace all the evils within its reach."
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
MITSUBISHI METAL CORPORATION, ATLAS CONSOLIDATED MINING AND
DEVELOPMENT CORPORATION and the COURT OF TAX APPEALS, respondents.
[G.R. No. L-54908 January 22, 1990]
Facts: Atlas entered into a Loan and Sales Contract with Mitsubishi for the purpose of projected
expansion of the mines of the former in Toledo, Cebu. Mitsubishi agreed to the loan of
$20,000,000.00 for the installation of a new concentrator for copper production, in return, Atlas
is to sell the products of the concentrator to Mitsubishi. Mitsubishi thereafter applied for a loan
with the Eximbank of Japan and was approved after for the purpose of using the loan as a loan to
Atlas. Private respondents then filed a claim for tax credit requesting that the sum of
P1,971,595.01, the 15% of the g P13,143,966.79 worth of interest payments, be applied against
their existing and future tax liabilities. On April 18, 1980, respondent court promulgated its
decision ordering petitioner to grant a tax credit in favor of Atlas in the amount of
P1,971,595.01.
Issue: Whether or not the interest income from the loans extended to Atlas by Mitsubishi is
excludible from gross income taxation pursuant to Section 29 b) (7) (A) of the tax code and,
therefore, exempt from withholding tax.
Ruling: The selling of the copper concentrate to MITSUBISHI within the specified term was the
consideration of the granting of the amount of $20 million to ATLAS. MITSUBISHI, in order to
fulfill its part of the contract, had to obtain funds. Hence, it had to secure a loan or loans from
other sources. And from what sources, it is immaterial as far as ATLAS in concerned. In this
case, MITSUBISHI obtained the $20 million from the EXIMBANK, of Japan and the
consortium of Japanese banks financed through the EXIMBANK, of Japan. When MITSUBISHI
therefore secured such loans, it was in its own independent capacity as a private entity and not as
a conduit of the consortium of Japanese banks or the EXIMBANK of Japan. While the loans
were secured by MITSUBISHI primarily "as a loan to and in consideration for importing copper
concentrates from ATLAS," the fact remains that it was a loan by EXIMBANK of Japan to
MITSUBISHI and not to ATLAS. Thus, the transaction between MITSUBISHI and
EXIMBANK of Japan was a distinct and separate contract from that entered into by
MITSUBISHI and ATLAS. Surely, in the latter contract, it is not EXIMBANK, that was
intended to be benefited. It is MITSUBISHI which stood to profit. Besides, the Loan and Sales
Contract cannot be any clearer. The only signatories to the same were MITSUBISHI and
ATLAS. Nowhere in the contract can it be inferred that MITSUBISHI acted for and in behalf of
EXIMBANK, of Japan nor of any entity, private or public, for that matter.
THE ROMAN CATHOLIC BISHOP OF NUEVA SEGOVIA, as representative of the
Roman Catholic Apostolic Church, plaintiff-appellant,
vs.
THE PROVINCIAL BOARD OF ILOCOS NORTE, ET AL., defendants-appellants.
G.R. No. L-27588 December 31, 1927
Facts: The plaintiff possesses and is the owner of a parcel of land in the municipality of San
Nicolas, Ilocos Norte. On the south side is a part of the churchyard, the convent and an adjacent
lot used for a vegetable garden.In the center is the remainder of the churchyard and the church.
On the north is an old cemetery with two of its walls still standing, and a portion where formerly
stood a tower, the base of which still be seen, containing a total area of 8,955 square meters. As
required by the defendants, on July 3, 1925 the plaintiff paid, under protest, the land tax on the
lot adjoining the convent and the lot which formerly was the cemetery with the portion where the
tower stood.
Issue: Whether or not the land adjoining the convent, the cemetery, and the vegetable garden of
the church exempted from taxation.
Ruling: The exemption in favor of the convent in the payment of the land tax (sec. 344 [c]
Administrative Code) refers to the home of the parties who presides over the church and who has
to take care of himself in order to discharge his duties. In therefore must, in the sense, include
not only the land actually occupied by the church, but also the adjacent ground destined to the
ordinary incidental uses of man. Except in large cities where the density of the population and
the development of commerce require the use of larger tracts of land for buildings, a vegetable
garden belongs to a house and, in the case of a convent, its use is limited to the necessities of the
priest, which comes under the exemption.
In regard to the lot which formerly was the cemetery, while it is no longer used as such, neither
is it used for commercial purposes and, according to the evidence, is now being used as a lodging
house by the people who participate in religious festivities, which constitutes an incidental use in
religious functions, which also comes within the exemption
PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant,
vs.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL.,
defendant appellees.
G.R. No. L-31156 February 27, 1976
Facts: On July 23, 1963, the parties entered into a Stipulation of Facts, the material portions of
which state that, first, both Ordinances Nos. 23 and 27 embrace or cover the same subject matter
and the production tax rates imposed therein are practically the same, and second, that on
January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte, as per his letter addressed
to the Manager of the Pepsi-Cola Bottling Plant in said municipality, sought to enforce
compliance by the latter of the provisions of said Ordinance No. 27, series of 1962. Municipal
Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25, 1962, levies and
collects "from soft drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo
for every bottle of soft drink corked. On the other hand, Municipal Ordinance No. 27, which was
approved on October 28, 1962, 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 (128 fluid ounces, U.S.) of volume capacity.
Issue: Is Section 2, Republic Act No. 2264 an undue delegation of power
Ruling: 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. 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. The exception, however, lies in the case of municipal
corporations, to which, said theory does not apply. Legislative powers may be delegated to local
governments in respect of matters of local concern. This is sanctioned by immemorial practice.
By necessary implication, the legislative power to create political corporations for purposes of
local self-government carries with it the power to confer on such local governmental agencies the
power to tax. Under the New Constitution, local governments are granted the autonomous
authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides:
"Each local government unit shall have the power to create its sources of revenue and to levy
taxes, subject to such limitations as may be provided by law." Withal, it cannot be said that
Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to
enact and vest in local governments the power of local taxation.