Manila Race Horse v.
Dela Fuente discrimination if some boarding stables of the
same class used for the same number of horses
Facts: were not taxed or were made to pay less or
more than others.
This action was instituted for a declaratory
relief by the Manila Race Horses Trainers From the viewpoint of economics and public
Association, Inc., a non-stock corporation duly policy the taxing of boarding stables for race
organized and existing under and by virtue of horses to the exclusion of boarding stables for
the laws of the Philippines, who allege that they horses dedicated to other purposes is not
are owners of boarding stables for race horses indefensible.
and that their rights as such are affected by
Ordinance No. 3065 of the City of Manila The owners of boarding stables for race horses
approved on July 1, 1947.1 They made the and, for that matter, the race horse owners
Mayor of Manila defendant and prayed that themselves, who in the scheme of shifting may
said ordinance be declared invalid as violative carry the taxation burden, are a class by
of the Philippine Constitution. themselves and appropriately taxed where
owners of other kinds of horses are taxed less
The case was submitted on the pleadings, and or not at all, considering that equity in taxation
the decision was that the ordinance in question is
"is constitutional and valid and has been generally conceived in terms of ability to pay in
enacted in accordance with the powers of the relation to the benefits received by the
Municipal Board granted by the Charter of the taxpayer and by the public from the business or
City of Manila." property
taxed. Race horses are devoted to gambling if
Issue: WON the ordinance makes an arbitrary legalized, their owners derive fat income and
classification--- thus being violative of the the public hardly any profit from horse racing,
constitution. and this business demands relatively heavy
police supervision.
Held: Taking everything into account, the
differentiation against which the plaintiffs
In taxing only boarding stables for race horses, complain conforms to the practical dictates of
we do not believe that the ordinance, makes justice and equity and is not discrimatory within
arbitrary classification. In the case of Eastern the meaning of the Constitution.
Theatrical Co. Inc., vs. Alfonso, it was said 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 in that case, that "the fact that
some places of amusement are not taxed while
others, such as cinematographs, theaters,
vaudeville companies, theatrical shows, and
boxing exhibitions and other kinds of
amusements or places of amusement are taxed,
is not argument at all against the equality and
uniformity of tax imposition." Applying this
criterion to the present case, there would be
2. Eastern Theatrical Co. vs. Alfonso 3. Shell Co. vs. Vano
Facts: Facts:
The municipal board of Manila enacted The municipal council of Cordova, Cebu
Ordinance 2958 (series of 1946) imposing a fee adopted Ordinance 10 (1946) imposing an
on the price of every admission ticket sold by annual tax of P150 on occupation or the
cinematograph theaters, vaudeville companies, exercise of the privilege of installation manager;
theatrical shows and boxing exhibitions, in
addition to fees imposed under Sections 633 Ordinance 9 (1947) imposing an annual
and 778 of Ordinance 1600. tax of P40 for local deposits in drums of
combustible and inflammable materials
Eastern Theatrical Co., among others, question and an annual tax of P200 for tin can
the validity of ordinance, on the ground that it factories; and Ordinance 11 (1948)
is unconstitutional for being contrary to the imposing an annual tax of P150 on tin
provisions on uniformity and equality of can factories having a maximum annual
taxation and the equal protection of the laws output capacity of 30,000 tin cans.
inasmuch as the ordinance does not tax other
kinds of amusement, such as race tracks, Shell Co., a foreign corporation, filed suit for the
cockpits, cabarets, concert halls, circuses, and refund of the taxes paid by it, on the ground
other places of amusement. that the ordinances imposing such taxes are
ultra vires.
Issue: Whether the ordinance violates the rule
on uniformity and equality of taxation. Issue: Whether Ordinance 10 is discriminatory
and hostile because there is no other person in
Held: the locality who exercise such designation or
occupation.
Equality and uniformity in taxation means that
all taxable articles or kinds of property of the Held:
same class shall be taxed at the same rate.
The fact that there is no other person in the
The taxing power has the authority to make locality who exercises such a “designation” or
reasonable and natural classifications for calling does not make the ordinance
purposes of taxation; and the theater discriminatory and hostile, inasmuch as it is and
companies cannot point out what places of will be applicable to any person or firm who
amusement taxed by the ordinance do not exercises such calling or occupation named or
constitute a class by themselves and which can designated as “installation manager.”
be confused with those not included in the
ordinance.
The fact that somew places of amusement are
not taxed while others, like the ones herein, are
taxed is no argument at all against the equality
and uniformity of the tax imposition.
4. Commissioner of Customs and the District This is within the scope of judicial power, which
Collector of the Port of Subic vs. Hypermix includes the authority of the courts to
Feeds Corporation determine the validity of the acts of the political
departments.
The determination of whether a specific rule or
set of rules issued by an administrative agency Also, Section 1403 of the Tariff and customs law
contravenes the law or the constitution is mandates that the customs officer must first
within the jurisdiction of the regular courts. assess and determine the classification of the
imported article before tariff may be imposed.
It is well-settled that rules and regulations, Unfortunately, CMO 23-2007 has already
which are the product of a delegated power to classified the article even before the customs
create new and additional legal provisions that officer had the chance to examine it. In effect,
have the effect of law, should be within the petitioner Commissioner of Customs diminished
scope of the statutory authority granted by the the powers granted by the Tariff and Customs
legislature to the administrative agency. Code with regard to wheat importation when it
no longer required the customs officer’s prior
Facts: examination and assessment of the proper
classification of the wheat.
Petitioner issued Customs Memorandum Order
(CMO) No. 27-2003 prescribing guidelines, for It is well-settled that rules and regulations,
tariff purposes, in the applicable to importation which are the product of a delegated power to
of wheat. create new and additional legal provisions that
have the effect of law, should be within the
Respondent filed a Petition for Declaratory scope of the statutory authority granted by the
Relief with the Regional Trial Court (RTC) of Las legislature to the administrative agency.
Pinas City. Petitioner filed a Motion to Dismiss
and alleged that the RTC did not have It is required that the regulation be germane to
jurisdiction over the subject matter of the case the objects and purposes of the law; and that it
because respondent was asking for a judicial be not in contradiction to, but in conformity
determination of the classification of wheat, with, the standards prescribed by law
thus, action for declaratory relief is improper.
Held:
The Supreme Court held that the determination
of whether a specific rule or set of rules issued
by an administrative agency contravenes the
law or the constitution is within the jurisdiction
of the regular courts.
Indeed, the Constitution vests the power of
judicial review or the power to declare a law,
treaty, international or executive agreement,
presidential decree, order, instruction,
ordinance, or regulation in the courts, including
the regional trial courts.
5. Casanovas vs. Hord it unnecessary to consider the claim in view of
the result at which the Court has arrived.
Facts:
In 1897, the Spanish Government, in
accordance with the provisions of the royal
decree of 14 may 1867, granted J. Casanovas
certain mines in the province of Ambos
Camarines, of which mines the latter is now the
owner.
That these were validly perfected mining
concessions granted to prior to 11 April 1899 is
conceded.
They were so considered by the Collector of
Internal Revenue and were by him said to fall
within the provisions of Section 134 of Act 1189
(Internal Revenue Act).
The Commissioner, JNO S. Hord, imposed upon
these properties the tax mentioned in Section
134, which Casanovas paid under protest.
Issue: Whether Section 134 of Act 1189 is valid.
Held:
The deed constituted a contract between the
Spanish Government and Casanovas.
The obligation in the contract was impaired by
the enactment of Section 134 of the Internal
Revenue La, thereby infringing the provisions of
Section 5 of the Act of Congress of 1 July 1902.
Furthermore, the section conflicts with Section
60 of the Act of Congress of 1 July 1902, which
indicate that concessions can be cancelled only
by reason of illegality in the procedure by which
they were obtained, or for failure to comply
with the conditions prescribed as requisites for
their retention in the laws under which they
were granted.
The grounds were not shown or claimed in the
case. As to the allegation that the section
violates uniformity of taxation, the Court found
6. TOLENTINO VS. THE SECRETARY OF FINANCE protecting contracts against impairment
presupposes the maintenance of a government
Facts: which retains adequate authority to secure the
peace and good order of society. In truth, the
The valued-added tax (VAT) is levied on the Contract Clause has never been thought as a
sale, barter or exchange of goods and limitation on the exercise of the State's power
properties as well as on the sale or exchange of of taxation save only where a tax exemption has
services. been granted for a valid consideration.
It is equivalent to 10% of the gross selling price Such is not the case of PAL in G.R. No. 115852,
or gross value in money of goods or properties and the Court does not understand it to make
sold, bartered or exchanged or of the gross this claim. Rather, its position, as discussed
receipts from the sale or exchange of services. above, is that the removal of its tax exemption
Republic Act No. 7716 seeks to widen the tax cannot be made by a general, but only by a
base of the existing VAT system and enhance its specific, law.
administration by amending the National
Internal Revenue Code. Further, the Supreme Court held the validity of
Republic Act No. 7716 in its formal and
The Chamber of Real Estate and Builders substantive aspects as this has been raised in
Association (CREBA) contends that the the various cases before it. To sum up, the
imposition of VAT on sales and leases by virtue Court holds:
of contracts entered into prior to the effectivity
of the law would violate the constitutional (1) That the procedural requirements of the
provision of “non-impairment of contracts.” Constitution have been complied with by
Congress in the enactment of the statute;
Issue: Whether R.A. No. 7716 is
unconstitutional on ground that it violates the (2) That judicial inquiry whether the formal
contract clause under Art. III, sec 10 of the Bill requirements for the enactment of statutes -
of Rights. beyond those prescribed by the Constitution -
have been observed is precluded by the
Held: principle of separation of powers;
No. The Supreme Court the contention of (3) That the law does not abridge freedom of
CREBA, that the imposition of the VAT on the speech, expression or the press, nor interfere
sales and leases of real estate by virtue of with the free exercise of religion, nor deny to
contracts entered into prior to the effectivity of any of the parties the right to an education; and
the law would violate the constitutional
provision of non-impairment of contracts, is (4) That, in view of the absence of a factual
only slightly less abstract but nonetheless foundation of record, claims that the law is
hypothetical. It is enough to say that the parties regressive, oppressive and confiscatory and that
to a contract cannot, through the exercise of it violates vested rights protected under the
prophetic discernment, fetter the exercise of Contract Clause are prematurely raised and do
the taxing power of the State. For not only are not justify the grant of prospective relief by writ
existing laws read into contracts in order to fix of prohibition.
obligations as between parties, but the
reservation of essential attributes of sovereign WHEREFORE, the petitions are DISMISSED.
power is also read into contracts as a basic
postulate of the legal order. The policy of
7. American Bible Society vs. Manila necessarily mean it is already engaged in
business for profit.
Facts:
Ordinance 2529 and 3000 are not applicable to
In the course of its ministry, the Philippine the Society.
agency of the American Bible Society has been
distributing and selling bibles and/or gospel
portions thereof throughout the Philippines and
translating the same into several Philippine
dialets.
The acting City Treasurer of Manila required the
society to secure the corresponding Mayor’s
permit and municipal license fees, together
with compromise covering the period from the
4th quarter of 1945 to the 2nd quarter of 1953.
The society paid such under protest, and filed
suit questioning the legality of the ordinances
under which the fees are being collected.
Issue: Whether the municipal ordinances
violate the freedom of religious profession and
worship.
Held:
A tax on the income of one who engages in
religious activities is different from a tax on
property used or employed in connection with
those activities.
It is one thing to impose a tax on the income or
property of a preacher, and another to exact a
tax for him for the privilege of delivering a
sermon.
The power to tax the exercise of a privilege is
the power to control or suppress its enjoyment.
Even if religious groups and the press are not
altogether free from the burdens of the
government, the act of distributing and selling
bibles is purely religious and does not fall under
Section 27 (e) of the Tax Code (CA 466).
The fact that the price of bibles, etc. are a little
higher than actual cost of the same does not
8. Gaston vs. Republic Planters Bank They constitute sugar liens. The collections
accrue to a SPECIAL FUNDS. It is levied not
Facts: purely for taxation, but for regulation, to
provide means TO STABILIZE THE SUGAR
Petitioners are sugar producers and planters INDUSTRY.
and millers filed a MANDAMUS to implement
the privatization of Republic Planters Bank, and The levy is primarily an exercise of police
for the transfer of the shares in the government powers.
bank to sugar producers and planters- Because
they are allegedly the true beneficial owners of The fact that the State has taken money
the bank since they pay P1.00 per picul of sugar pursuant to law is sufficient to constitute them
from the proceeds of sugar producers as as STATE FUNDS, even though held for a special
STABILIZATION FEES) purpose.
The shares are currently held by Philsucom / Having been levied for a special purpose, the
Sugar Regulatory Admin. revenues are treated as a special fund,
administered in trust for the purpose intended.
The Solgen countered that the stabilization fees Once the purpose has been fulfilled or
are considered government funds and that the abandoned, the balance will be transferred to
transfer of shares to from Philsucom to the the general funds of gov’t.
sugar producers would be irregular.
It is a special fund since the funds are deposited
Issue: What is the nature of the P1.00 in PNB, not in the National Treasury.
stabilization fees collected from sugar
producers? Are they funds held in trust for The sugar planters are NOT BENEFICIAL
them, or are they public funds? Are the shares OWNERS. The money is collected from them
in the bank (paid using these fees) owned by only because they it is also they who are to be
the government Philsucom or privately by the benefited from the expenditure of funds
different sugar planters from whom such fees derived from it. The investing of the funds in
were collected? RPB is not alien to the purpose since the Bank is
a commodity bank for sugar, conceived for the
Held: sugar industry’ growth and development.
PUBLIC FUNDS. While it is true that the Revenues derived from taxes cannot be used
collected fees were used to buy shares in RPB, it purely for private purposes or for the exclusive
did not collect said fees for the account of sugar benefit of private persons. The Stabilization
producers. Fund is to be utilized for the benefit of the
ENTIRE SUGAR INDUSTRY, and all its
The stabilization fees were charged on sugar components, stabilization of domestic and
produced and milled which ACCRUED TO foreign markets, since the sugar industry is of
PHILSUCOM, under PD 338. vital importance to the country’s economy and
national interest.
The fees collected ARE IN THE NATURE OF A
TAX., which is within the power of the state to
impose FOR THE PROMOTION OF THE SUGAR
INDUSTRY.
9. Abra Valley College vs. Aquino
Facts:
Abra Valley College rents out the ground floor
of its college building to Northern Marketing
Corporation while the second floor thereof is
used by the Director of the College for
residential purposes.
The municipal and provincial treasurers served
upon the College a “notice of seizure” and later
a “notice of sale” due to the alleged failure of
the College to pay real estate taxes and
penalties thereon.
The school filed suit to annul said notices,
claiming that it is tax-exempt.
Issue: Whether the College is exempt from
taxes.
Held:
While the Court allows a more liberal and non-
restrictive interpretation of the phrase
“exclusively for educational purposes,”
reasonable emphasis has always been made
that exemption extends to facilities which are
incidental to and reasonably necessary for the
accomplishment of the main purposes.
While the second floor’s use, as residence of
the director, is incidental to education; the
lease of the first floor cannot by any stretch of
imagination be considered incidental to the
purposes of education.
The test of exemption from taxation is the use
of the property for purposes mentioned in the
Constititution.
