BENJAMIN P. GOMEZ, petitioner-appellee, v.

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.
2
DAVAO GULF LUMBER CORPORATION, petitioner, v. COMMISSIONER OF
INTERNAL REVENUE and COURT OF APPEALS, respondents.
3
ENGRACIO FRANCIA, petitioner, v. INTERMEDIATE APPELLATE COURT and HO
FERNANDEZ, respondents.
5
COMMISSIONER OF INTERNAL REVENUE, petitioner, v. COURT OF APPEALS,
COURT OF TAX APPEALS and YOUNG MENS CHRISTIAN ASSOCIATION OF THE
PHILIPPINES, INC., respondents.
6
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, v. 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.
8
COMMISSIONER OF INTERNAL REVENUE, petitioner, v. MICHEL J. LHUILLIER
PAWNSHOP, INC., respondent.
10

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BENJAMIN P. GOMEZ, petitioner-appellee, v. 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.
GR No. L-23645, October 29, 1968

25 SCRA 827

CASTRO, J.:

FACTS:
Petitioner Benjamin Gomez mailed a letter at the post oce in San Fernando,
Pampanga. It did not bear the special anti-TB stamp required by the RA 1635. It was
returned to the petitioner. Petitioner now assails theconstitutionality of the statute
claiming that RA 1635 otherwise known as the Anti-TB Stamp law is violative ofthe
equal protection clause because it constitutes mail users into a class for the purpose of
the tax while leaving

untaxed the rest of the population and that even among postal patrons the statute
discriminatorily grantsexemptions. The law in question requires an additional 5
centavo stamp for every mail being posted, and no mailshall be delivered unless
bearing the said stamp.

ISSUE:
Whether or not the Anti-TB Stamp Law unconstitutional, for being allegedly
violative of the equal protection clause.

HELD:
No, it is settled that the legislature has the inherent power to select the subjects
of taxation and to grantexemptions. This power has aptly been described as "of wide
range and flexibility." Indeed, it is said that in thefield of taxation, more than in other
areas, the legislature possesses the greatest freedom in classification. Thereason for
this is that traditionally, classification has been a device for fitting tax programs to local
needs andusages in order to achieve an equitable distribution of the tax burden.

The classification of mail users is based on the ability to pay, the enjoyment of a
privilege and on administrativeconvenience. Tax exemptions have never been thought
of as raising revenues under the equal protection clause.

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DAVAO GULF LUMBER CORPORATION, petitioner, v. COMMISSIONER OF

INTERNAL REVENUE and COURT OF APPEALS, respondents.
G.R. No. 117359, July 23, 1998

PANGANIBAN, J.:

FACTS:
Davao Gulf Lumber Co. claimed a refund on the taxes paid from its use of fuel
oils used in its operations. It argued that under RA 1435, Sec. 5, it was entitled to a
refund 25% of the specific taxes it paid from the use of fuel oils. The CIR denied the
claim, arguing that RA 1435, Sec. 5 was in connection with the Philippine Highway
Fund that since the heavy equipment used by the lumber concessionaires rarely used
the public highways, they were entitled to the refund. But since the Philippine Highway
Fund was abolished, there was no longer any reason for the refund. Furthermore,
subsequent statutes increasing the taxes for fuel oils did not contain any provision
similar to RA 1435, Sec. 5, hence it cannot be said that the refund still subsists.

ISSUE:
Whether or not Davao Gulf was entitled to a refund.

RULING:
No, a tax cannot be imposed unless it is supported by the clear and express
language of a statute; on the other hand, once the tax is unquestionably imposed, a
claim of exemption from tax payments must be clearly shown and based on language
in the law too plain to be mistaken. Since the partial refund authorised under RA 1435,
Sec. 5 is in the nature of a tax exemption, it must be construed strictissimi juris against
the grantee. Hence, Davao Gulf's claim of refund on the basis of the specific taxes it
actually paid must expressly be granted in a statute stated in a language too clear to
be mistaken.

The Court carefully scrutinised RA 1435 and the subsequent pertinent statutes
and found no expression of a legislative will authorising a refund based on the higher
rates claimed by petitioner. The mere fact that the privilege of refund was included in
Section 5, and not in Section 1, is insucient to support petitioner's claim. When the
law itself does not explicitly provide that a refund under RA 1435 may be based on
higher rates which were nonexistent at the time of its enactment, this Court cannot
presume otherwise. A legislativelacuna cannot be filled by judicial fiat.

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WENCESLAO PASCUAL, in his ocial capacity as Provincial Governor of Rizal,

petitioner-appellant, v.
THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL.,
respondents-appellees.
G.R. No. L-10405, December 29, 1960
En Banc

Concepcion, J.:

FACTS:
RA 920 (Act appropriating funds for public works) was enacted in 1953
containing an item (Section 1 c[a]) for the construction, reconstruction, repair, extension
and improvement of Pasig feeder road terminals (the projected and planned
subdivision roads, which were not yet constructed, within Antonio Subdivision owned
by Senator Jose C. Zulueta). Zulueta donated said parcels of land to the Government
5 months after the enactment of RA 920, on the condition that if the Government
violates such condition the lands would revert to Zulueta. The provincial governor of
Rizal, Wenceslao Pascual, questioned the validity of the donation and the
Constitutionality of the item in RA 920, it being not for a public purpose.

ISSUE:
Whether or not the item in the appropriation is valid.

RULING:
No, the item in the appropriation bill is not valid. The right of the legislature to
appropriate funds is correlative with its right to tax, under constitutional provisions
against taxation except for public purposes and prohibiting the collection of a tax for
one purpose and the devotion thereof to another purpose, no appropriation of state
funds can be made for other than a public purpose. The validity of a statute depends
upon the powers of Congress at the time of its passage or approval, not upon events
occupying, or acts performed, subsequently thereto, unless the latter consist of an
amendment of the organic law, removing, with retrospective operation, the
constitutional limitation infringed by said statute. Herein, inasmuch as the land on
which the projected feeder roads were to be constructed belonged to Senator Zulueta
at the time RA 920 was passed by Congress, or approved by the President, and the
disbursement of said sum became eective on 20 June 1953 pursuant to Section 13 of
the Act, the result is that the appropriating sough a private purpose and hence, null and
void.

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ENGRACIO FRANCIA, petitioner, v. INTERMEDIATE APPELLATE COURT and HO

FERNANDEZ, respondents.
G.R. No. L-67649, June 28, 1988

Gutierrez Jr., J.:

FACTS:
Engracio Francia was the registered owner of a house and lot located in Pasay
City. A portion of such property was expropriated by the Republic of the Philippines in
1977. It appeared that Francia did not pay his real estate taxes from 1963 to 1977.
Thus, his property was sold in a public auction by the City Treasurer of Pasay City.

ISSUE:
Whether or not the expropriation payment may compensate for the real estate
taxes due.

RULING:
No, there can be no o-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.
Internal revenue taxes cannot be the subject of compensation. The Government and
the taxpayer are not mutually creditors and debtors of each other under Article 1278 of
the Civil Code and a claim of taxes is not such a debt, demand, contract or judgment
as is allowed to be set-o.

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COMMISSIONER OF INTERNAL REVENUE, petitioner, v. COURT OF APPEALS,

COURT OF TAX APPEALS and YOUNG MENS CHRISTIAN ASSOCIATION OF THE
PHILIPPINES, INC., respondents.
G.R. No. 124043, October 14, 1998

PANGANIBAN, J.:

FACTS:
YMCA is a non-stock, non-profit institution, which conducts various programs
and activities that are beneficial to the public, especially the young people, pursuant to
its religious, educational and charitable objectives.

In 1980, private respondent earned, among others, an income of from leasing

out a portion of its premises to small shop owners, like restaurants and canteen
operators, and from parking fees collected from non-members. On July 2, 1984, the
commissioner of internal revenue (CIR) issued an assessment to private respondent,
including surcharge and interest, for deficiency income tax, deficiency expanded
withholding taxes on rentals and professional fees and deficiency withholding tax on
wages. Private respondent formally protested the assessment and, as a supplement to
its basic protest, filed a letter dated October 8, 1985. In reply, the CIR denied the
claims of YMCA.

Contesting the denial of its protest, the YMCA filed a petition for review at the
Court if Tax Appeals (CTA) on March 14, 1989. In due course, the CTA issued this
ruling in favour of the YMCA stating to that, the leasing of facilities to businesses and
the operation of the parking lot are reasonably incidental and necessary for the
objectives of YMCA. The activities are not profit oriented because the rental rates and
parking fees are very minimal and are used mainly for operations and maintenance; the
income from membership dues are not enough to cover the costs of maintenance and
operations. Thus the CTA dismissed the case.

ISSUES:
1. Whether or not YMCAs rental income is taxable.

2. Whether or not YMCA in an educational institution and therefore exempt

form tax.

Page 6 of 11

RULING:
1. Yes the the rental income of YMCA is taxable. The exemption claimed by
the YMCA is expressly disallowed by the very wording of the last paragraph of then
Section 27 of the NIRC which mandates that the income of exempt organisations
(such as the YMCA) from any of their properties, real or personal, be subject to the
imposed by the same Code. Because the last paragraph of said section
unequivocally subjects to tax the rent income of the YMCA from its rental property,
the Court is duty-bound to abide strictly by its literal meaning and to refrain from
resorting to any convoluted attempt at construction.

2. No, YMCA is not an educational institutionsuch term refers to schools.

The school system is synonymous with formal education, which refers to the
hierarchically structured and chronological graded learnings organised and
provided by the formal school system and for which certification is required in order
for the learner to progress through the grades or move to the higher levels. The
Court has examined the Amended Articles of Incorporation and By-Laws of the
YMCA, but found nothing in them that even hints that it is a school or an
educational institution.

Page 7 of 11

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

MARTIN, J.:

FACTS:
On June 12, 1974, the Municipal Board of Manila enacted Ordinance No. 7522,
"AN ORDINANCE REGULATING THE OPERATION OF PUBLIC MARKETS AND
PRESCRIBING FEES FOR THE RENTALS OF STALLS AND PROVIDING PENALTIES
FOR VIOLATION THEREOF AND FOR OTHER PURPOSES." The petitioner City Mayor,
Ramon D. Bagatsing, approved the ordinance on June 15, 1974.

On February 17, 1975, respondent Federation of Manila Market Vendors, Inc.

commenced Civil Case before the Court of First Instance of Manila seeking the
declaration of nullity of Ordinance No. 7522 for the alleging among others that, the levy
in said ordinance is a fee and not a tax and that the levy was for the benefit of a private
corporation, 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."

ISSUES:
1. Whether or not the levy is a tax despite the denomination of fee in the
ordinance.

2. Whether or not the levy is for public purposes.

RULING:
1. Yes, the levy is a tax. The raising of revenues is the principal object of
taxation. Under Section 5, Article XI of the New Constitution, "Each local
government unit shall have the power to create its own sources of revenue and to
levy taxes, subject to such provisions as may be provided by law. The sources of
said revenue is the subject of the local tax code.

2. Yes, the levy is for a public purpose. Ordinance No. 7522 was not made for
the corporation but for the purpose of raising revenues for the city. The entrusting
of the collection of the fees does not destroy the public purpose of the ordinance.
Page 8 of 11

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.

Page 9 of 11

COMMISSIONER OF INTERNAL REVENUE, petitioner, v. MICHEL J. LHUILLIER

PAWNSHOP, INC., respondent.
G.R. No. 150947. July 15, 2003

406 SCRA 178

DAVIDE, JR., C.J.:

FACTS:
Revenue Memorandum Orders (RMOs) were issued imposing a 5% lending
investors tax on pawnshop. Pursuant to this, the BIR issued an assessment against
Michel J. Lhuillier Pawnshop, Inc. (Lhuillier) demanding payment of deficiency
percentage tax. Lhuillier filed an administrative protest, contending, inter alia, that
pawnshops are dierent from lending investors, which are subject to the 5%
percentage tax under the specific provision of the Tax Code. Its protest having been
not acted upon, Lhuillier with the CTA which declared the RMOs in question null and
void insofar as they classify pawnshops as lending investors subject to 5% percentage
tax.

ISSUES:
1. Whether or not pawnshops included in the term lending investors for the
purpose of imposing the 5% percentage tax under then Section 116 of the NIRC.

2. Whether or not the RMOs in question are valid.

RULING:
1. No, and while it is true that pawnshops are engaged in the business of
lending money, they are not considered lending investors for the purpose of
imposing the 5% percentage taxes since: (1) prior to its amendment the NIRC,
pawnshops and lending investors were subjected to dierent tax treatments; (2)
Congress never intended pawnshops to be treated in the same way as lending
investors, since the amendment of the NIRC treated both tax subjects
dierently (3) Under the maxim expressio unius est exclusio alterius, the mention of
one thing implies the exclusion of another thing not mentioned, Sec. 116 subjects
to percentage tax dealers in securities and lending investors only.

2. No, there are two kinds of administrative issuances: the legislative rule and
the interpretative rule. A legislative rule is in the nature of subordinate legislation,
designed to implement a primary legislation by providing the details thereof. An
interpretative rule, on the other hand, is designed to provide guidelines to the law
which the administrative agency is in charge of enforcing

When an administrative rule is merely interpretative in nature, its applicability

needs nothing further than its bare issuance, for it gives no real consequence more
Page 10 of 11

than what the law itself has already prescribed. When, on the other hand, the
administrative rule goes beyond merely providing for the means that can facilitate or
render least cumbersome the implementation of the law but substantially increases the
burden of those governed, it behooves the agency to accord at least to those directly
aected a chance to be heard, and thereafter to be duly informed, before that new
issuance is given the force and eect of law.

RMO No. 15-91 and RMC No. 43-91 cannot be viewed simply as implementing
rules or corrective measures revoking in the process the previous rulings of past
Commissioners. Specifically, they would have been amendatory provisions applicable
to pawnshops. Without these disputed CIR issuances, pawnshops would not be liable
to pay the 5% percentage tax, considering that they were not specifically included in
Section 116 of the NIRC of 1977, as amended. In so doing, the CIR did not simply
interpret the law. The due observance of the requirements of notice, hearing, and
publication should not have been ignored.



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