Tuesday, July 9, 2013

Digested Cases in Labor Law

CALALANG v. WILLIAMS, 70 PHIL 726, GR No. 47800, December 2, 1940
FACTS:  The National Traffic Commission resolved that animal-drawn vehicles be prohibited from passing along some major streets such a Rizal Ave. in Manila for a period of one year from the date of the opening of the Colgante Bridge to traffic. The Secretary of Public Works approved the resolution on August 10,1940. The Mayor of Manila and the Acting Chief of Police of Manila have enforced the rules and regulation. As a consequence, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above mentioned to the detriment not only of their owners but of the riding public as well.
ISSUE:  Does the rule infringe upon the constitutional precept regarding the promotion of social justice? What is Social Justice?
HELD:  No. The regulation aims to promote safe transit and avoid obstructions on national roads in the interest and convenience of the public. Persons and property may be subject to all kinds of restraints and burdens in order to secure the general comfort, health, and prosperity of the State. To this fundamental aims of the government, the rights of the individual are subordinated.
Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may  at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principles of Salus Populi est Suprema Lex.(Justice Laurel)
FACTS:  Petitioner is resident physician in a hospital in Negros Oriental, who was diagnosed of a kidney disease. After having her kidney transplant, she filed a work-related sickness compensation claim with the respondent ECC through the GSIS, which denied the same, arguing that the disease she contracted is not listed among the occupational diseases determined by them to be compensable as work-related sickness. Petitioner appealed contending that the bacteria causing the disease was contracted while being employed in the hospital since symptoms have already manifested since 1994, and relying upon the theory that her employment poses an increased risk in contracting the diseases. 
ISSUE:  Is the contention of the petitioner correct?
HELD:  Yes. In determining whether an injury or sickness is work-related or not, what the law requires is reasonable work connection, not a direct causal connection. It is observed that the WCL has not ceased to be a social legislation, hence liberality of the law in the form of the workingman or woman still prevails.
FACTS:  While being an employee of the Philippine Ports Authority, respondent was inflicted with tuberculosis, hypertension and diabetes. He then filed with the petitioner Government Service Insurance System (GSIS) a claim for compensation benefits under PD No. 626. However, petitioner denied the respondent’s claim on the ground that the ailments are not considered occupational diseases, and there is no clear evidence, such as medical records, showing that he contracted the diseases during his work or his duties have increased the risk of contracting said ailments. Petitioner rejected respondent's contention that there is probability of contracting TB with the kind of job the respondent has.
ISSUE:  How should PD 626 be applied with respect to determining compensability of work-related diseases?
HELD:  A social legislation should interpreted liberally. In applying liberality in the interpretation of Workmen's Compensation Law, the degree of proof required by the law is such relevant evidence as a reasonable mind may accept to support a conclusion. Probability, not certainty, is the touchstone. Any doubt on this matter has to be interpreted in favor of the employees considering that PD 626 is a social legislation.
FACTS: Mayor Fuguso refused to grant the petitioner and his party a permit to hold a public meeting at Plaza Miranda, based on a city ordinance which grants the mayor the discretion to regulate such conduct of public assemblies, as a lawful exercise of police power.
ISSUE:  What is police power? How was it supposed to be exercised by the Manila City Officials?
HELD:  Police Power is the power of the State to enact laws and prescribe regulations that will promote the health, morals, education, good order, safety, and general welfare of the People. However, in the exercise of police power the council may, in its discretion, regulate the exercise of such rights in a reasonable manner, but cannot suppress them, directly or indirectly, by attempting to commit the power of doing so to the mayor or any other officer. The ordinance grants the mayor the power to regulate as to how, when and where a public assembly should be held, but not the discretion to refuse the grant of such permit to derogate the right of the petitioner to peaceably assemble and seek redress against the government.
FACTS:  The Department of Labor and Employment issued an order suspending the deployment of Filipino domestic and household workers, in view of the heightened abuses committed against OFWs abroad. The petitioner, a local recruitment agency, petitioned for the invalidation of such order for alleged violation of equal protection clause.
ISSUE:  Is the deployment ban a valid exercise of police power? What is police power?
HELD:  Yes, the deployment ban of domestic helpers is a valid exercise of police power. Police Power is the inherent power of the State to enact legislation that may interfere with personal liberty and property in order to promote the general welfare.
FACTS:  Petitioner closed its industrial service unit due to alleged loss and extinct demand resulting to the termination of the employment of the respondent. The latter filed an illegal dismissal case but the same was denied by the labor arbiter, and subsequently by the NLRC contending that the same is part of the management prerogative.
ISSUE:  Has employer the right to close its business even without basis resulting to the displacement of the worker?
HELD:  No. Employers are also accorded with rights and privileges to assure their self-determination and independence and reasonable return of capital. This mass of privileges is called management prerogatives. Although they may be broad and unlimited in scope, the State has the right to determine whether an employer's privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor.
FACTS:  Private respondent Estrada is a member of the respondent labor union. He did not report for work for 1 month due to a grave family problem as his wife deserted him and nobody was there to look after his children. He was required to explain. Finding his reasons to be unjustified, the petitioner terminated him, since according to company rules, absence for 6 consecutive days is considered abandonment of work.
ISSUE:  Should a worker be summarily dismissed relying on some company rules?
HELD:  No. While the employer is not precluded from prescribing rules and regulations to govern the conduct of his employees, these rules and their implementation must be fair, just and reasonable. No less than the Constitution looks with compassion on the workingman and protects his rights not only under a general statement of a state policy but under the Article on Social Justice and Human Rights, thus placing labor contracts on a higher plane and with greater safeguards. Verily, relations between labor and capital are not merely contractual. They are impressed with public interest and labor contracts must, perforce, yield to the common good.

FACTS:  Petitioners are cashiers of Isetann Department Store who were dismissed for having accumulated shortages. Petitioners admitted this in their affidavits. The labor arbiter ruled them having been illegally dismissed. The NLRC reversed the ruling.
ISSUE: Were the petitioners validly dismissed?
HELD:  Yes. The failure of the petitioners to report to the management the irregularities constitute "fraud or willful breach of the trust reposed in them by their employer or duly authorized representative"--one of the just causes of valid termination of employment. The employer cannot be compelled to retain employees who were guilty of malfeasance as their continued employment will be prejudicial to the former's best interest. The law, in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the employer.

FACTS:  Private respondent Silvestre Germane did not report for work because his wife delivered their first child. He did not however notify his employer, causing a disruption in the business of the latter. When the respondent returned to work he was surprised upon knowing that someone has been hired to take his place.
ISSUE:  Was there a case of illegal dismissal?
HELD:  Yes. It appeared that the respondent was illegally dismissed. While a prolonged absence without leave may constitute as a just cause for dismissal, its illegality stems from the non-observance of due process. Applying the WenPhil Doctrine by analogy, where dismissal was not preceded by the twin requirement of notice and hearing, the illegality of the dismissal in question, is under heavy clouds and therefore illegal.
FACTS:  Respondent filed 2 petitions with the CIR: 1.) to lay off its 44 employees on the ground that the company is losing its operations, and 2.) to lease its equipment to certain individuals. Judge Roldan of the CIR, after ocular inspection, approved the petitions, thereby leaving the petitioners, if not unemployed, having nothing to do because of absence of equipment in the studios. Petitioner assailed the ruling of the judge, and appealed to the CIR en banc.
ISSUE:  Should the court grant a petition for mass dismissal without hearing the side of the employees concerned?
HELD:  No. A worker cannot be deprived of his job or his wages without due process of law. The case was then remanded to CIR for proper hearing.
CALLANTA v. CARNATION PHILS., 145 SCRA 268, G.R. No. 70615 October 28, 1986
FACTS: Upon clearance approved by the MOLE Regional Office, respondent dismissed the petitioner in June 1979. On July 1982, petitioner filed an illegal dismissal case with claim for reinstatement with the Labor Arbiter, who granted it. On appeal, the NLRC reversed the judgment based on the contention that the action by the petitioner has already prescribed, since Art. 291 & 292 of the Labor Code is expressed that offenses penalized under the Code and all money claims arising from employer-employee relationships shall be filed within 3 years from when such cause of action arises, otherwise it will be barred.
ISSUE: Is ruling of the NLRC correct?
HELD: No. It is a principle well recognized in this jurisdiction, that one's employment, profession, trade or calling is a property right, and the wrongful interference therewith is an actionable wrong. The right is considered to be property within the protection of the Constitutional guarantee of due process of law.

Verily, the dismissal without just cause of an employee from his employment constitutes a violation of the Labor Code and its implementing rules and regulations. Such violation, however, does not amount to an "offense" as understood under Article 291 of the Labor Code. In its broad sense, an offense is an illegal act which does not amount to a crime as defined in the penal law, but which by statute carries with it a penalty similar to those imposed by law for the punishment of a crime. The confusion arises over the use of the term "illegal dismissal" which creates the impression that termination of an employment without just cause constitutes an offense. It must be noted, however that unlike in cases of commission of any of the prohibited activities during strikes or lockouts under Article 265, unfair labor practices under Article 248, 249 and 250 and illegal recruitment activities under Article 38, among others, which the Code itself declares to be unlawful, termination of an employment without just or valid cause is not categorized as an unlawful practice.
DE LEON v. NLU, 100 PHIL 789
FACTS: The defendant-appellees had been picketing the Dalisay Theater owned by the plaintiff for the purpose of securing reinstatement to their respective jobs in the theater when it was run and operated by the Filipino Theatrical Enterprises (FTE), then a lessee of the parcel of land owned by plaintiff on which the theater was erected. The defendant-appellees lost their jobs upon termination of the lease contract between De Leon and the FTE, which turned over the rights  to the theater back to De Leon, the owner of the lot.
ISSUE: Has terminated employees the right to strike in this case?
HELD: Yes. Although the employees has no business with the owner of the establishment, they have nevertheless the right to peaceful picketing which applies also to cases where employer-employee relationship is absent. The picketing, a form of freedom of expression, is conducted not to disrupt the business of the owner but to appeal for a humanitarian consideration, after having been laid off due to the termination of the business of their previous employer.

FACTS: Petitioner labor union picketed against Metrobank, which is occupying an office space in the Wellington building. Wellington complained that the picketers were annoyingly blocking the common passageway of the building, the only ingress and egress being used by the occupants of the second to the sixth floors thereof as well as by their respective employees, clients and customers, so that the picket has caused a disruption of the business of Wellington as well as the other lessors in the building.
ISSUE: Does the court have the power to enjoin the picket, despite being peaceful?
HELD: Yes. The courts are vested with the power to limit the exercise of the right of peaceful picketing to parties involved in the labor dispute, or having a direct interest to the context of this issue. Wellington is a mere "innocent bystander" who is not involved in the labor dispute. Thus, they are entitled to seek protection of their rights from the courts and the courts may, accordingly, legally extend the same.

FACTS:  The picket held by defendant-appellant union against their employer prevented herein plaintiff-appellee's truck from loading and unloading of its products inside the premises of Permanent Concrete Products, where the plaintiff-appellee was occupying as a sub-lessee. Hence, the latter sought to enjoin the picket.
ISSUE:  May a picket be enjoined at the instance of a third party?
HELD:  Yes. Peaceful picketing, while being allowed as a phase of freedom of expression guaranteed by the Constitution and could not be curtailed even in the absence of employer-employee relationship, is not an absolute right. The courts are not without power to localize the sphere of demonstration, whose interest are foreign to the context of the dispute. Thus the right may be recognized at the instance of an "innocent bystander" who is not involved in the labor dispute if it appears that the result of the picketing is create an impression that a labor dispute exists between him and the picketing union.
FACTS:  Petitioner Ramos was suspended for writing the phrase "under protest" in the company payroll to object to the P1.0 deduction made by the respondent for allegedly getting P500 worth of lumber in 1964. The deduction started only in 1969, at the peak of union activities of the petitioner when several complaints of unfair labor practices were filed by the union against the respondent.
ISSUE: Is the action of the petitioner a lawful exercise of freedom of expression?
HELD: Yes. The freedom of expression is available to individual workers subject to legal limitation of industrial peace to air valid grievances. It is thus too clear from the foregoing that petitioner Ramos was justified in airing his grievances against the unauthorized and illegal deductions made by respondent company. By writing "under protest" on the company payroll, petitioner Ramos was well within the ambit of his constitutional freedom of expression as well as the right to petition against what was obviously a calculated undue harassment amounting to unfair labor practice perpetuated by respondent employer herein.
FACTS:  Stepping on the provisions of RA 3350 exempting members of religious sects which prohibit its members from joining associations, plaintiff-appellee, being of a faithful of Iglesia ni Cristo, withdrew his membership from the appellant union. The latter, who have pact a closed-shop provision in their collective bargaining agreement with respondent company sought the separation of the plaintiff-appellee. The trial court enjoined the supposed dismissal, prompting the union to assail the validity of RA 3350 particularly the provision granting exemption to members of above-mentioned sects.
ISSUE: Does the law infringe the right or freedom of labor to associate?
HELD: No. Freedom of association implies not only the right to join a labor union, but also the privilege of not joining one,  of selecting which union to join, and of disaffiliating from a union. It is clear that the assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and neither may the employer or labor union compel them to join.
FACTS:  Petitioner bank terminated private respondents for having written and published a "patently libelous letter tending to cause dishonor, discredit or contempt not only the officers and employees of the bank, but also their employer" by demanding the resignation of the bank president on grounds of immorality, nepotism and favoritism. CIR ruled that the petitioner's act constitutes an unfair labor practice.
ISSUE: Does the dismissal of employees airing their grievance against their employer constitute unfair labor practice?
HELD: Yes. Even assuming that respondents acted in their individual capacities when they wrote the letter, they were nonetheless protected for they were engaged in concerted activity, in the exercise of their right to self-organization that includes concerted activity for mutual aid and protection, interference with which constitutes unfair labor practice.

The petitioner should have allowed the respondents to air their grievances as a mechanism in a collective bargaining agreement. Collective bargaining... normally takes the form of negotiation when major conditions of employment to be written into an agreement are under consideration, and of grievance committee meetings and arbitration when questions arising from the administration of an agreement are at stake.
FACTS:  Petitioners went on strike after their employer SSS failed to act upon the union's demands concerning the implementation of their CBA. SSS filed an injunction contending that the petitioners are covered by Civil Service laws which prohibits employees of the government from staging a strike. SSSEA on the other hand, argued that the NLRC has the jurisdiction of the case by virtue of the provisions of the Labor Code.
ISSUE: Does the court have jurisdiction? Do employees covered by the Civil Service have the right to strike?
HELD:  On question of jurisdiction, yes. The RTC, in the exercise of its general jurisdiction under BP 129, has jurisdiction over petitioner's claim for damages and for the issuance of a writ of injunction to stop the strike, since the Labor Code do not apply to government employees.

On the right to strike of government workers, No. The Constitution provides guarantee among workers with the right to organize and conduct peaceful concerted activities. On the other hand, EO 180 provides that the Civil Service law and rules governing concerted activities in government service shall be observed subject to any legislation that may be enacted by Congress. Referring to Memo Circular No.6, s. 1987 of the CSC which states that prior to the enactment by Congress of applicable laws concerning strike by government employees, enjoins under pain of administrative sanctions, all government officials and employees from staging a strike, demonstrations, mass leaves, walk-outs and other forms of mass action which will result in temporary stoppage or disruption of public service, the court ruled that in the absence of any legislation allowing government employees to strike, they are therefore prohibited from doing so.

GARCIA v. PAL, GR 164856, Jan. 20, 2009

FACTS: PAL filed an administrative case against Garcia and Dumago after they were allegedly caught sniffing shabu at the PAL Tool Room. After due notice, they were dismissed for transgressing the PAL Code of Discipline. The petitioners filed a complaint for illegal dismissal. The Labor Arbiter decided in favor of petitioners with an immediate reinstatement. A writ was issued to such effect pending appeal with the NLRC.

ISSUE: Can the petitioners collect wages on the period of appeal from the Labor Arbiter’s order up to the final decision of the higher court?

HELD: Yes. The State forcefully and meaningfully underscore labor as a primary social and economic force. In short, with respect to decisions reinstating employees, the law itself has determined a sufficiently overwhelming reason for its execution pending appeal. Therefore, the petitioners can collect wages from the period of the execution of the decision of the labor arbiter to the time of the final decision of the higher court.

MORTERA v. CIR, GR L-1340, Oct. 13, 1947
FACTS: All laborers of Canlubang Sugar Estate were ordered to return to work immediately and stop the strike with the admonition that those who will fail to report will not only lose any concession but the company was authorized by the public respondent herein to employ new employees or laborers to take the places or positions of those who fail to report. The public respondent ordered that picketing under any guise or form, is entirely prohibited considering that the industry was into sugar, a very important and essential food, lack of supply would mean destruction of sugar centrals of many provinces.

ISSUE: Was there a  denial of the right to strike?
HELD: Yes. The order on prohibition to strike should be understood to cover only illegal picketing, that is, picketing through the use of illegal means. Peaceful picketing cannot be prohibited. It is part of the freedom of speech guaranteed by the Constitution. Petitioners have not shown reasons to annul the order. Petition dismissed.
FELIX UY v. COA, GR 130685, March 21, 2000

FACTS: Petitioners were among the more than 60 dismissed permanent employees of the Capitol of Agusan del Sur by the newly incumbent Governor Paredes. They contended that the dismissal was a political vengeance because he hired new employees. The Governor averred that the dismissal was not illegal because it was due to the reduction in work force due to lack of funds and it is a valid ground of terminating the services of the employees. The Merit System Protection Board held the dismissal illegal and ordered their reinstatement but Governor Paredes refused to abide from the order. The COA on the other hand affirmed the decision of the MSPB but denied the motion of the petitioners stating that it is the personal liability of Governor Paredes and not the Provincial Government of Agusan del Sur.

ISSUE: Can government employees receive backwages and other monetary benefits from the government?

HELD: Yes. If the MSPB found bad faith on the part of Governor Paredes, it would have categorically decreed his personal liability for the illegal dismissal of the petitioners. To be sure, even the petitioners did not proceed from the theory that their dismissal is the personal liability of Governor Paredes. Familiar learning is our ruling that bad faith cannot be presumed and he who alleges bad faith has the onus of proving it. In the case at bar, the decision of the MSPB by itself does not meet the quantum of proof necessary to overcome the presumption of good faith.
FACTS: The petitioner, a managerial employee who was holding a position of trust and confidence, was admonished by the latter of her improper handling of a situation involving a rank-and-file employee. She admitted having read a supposed confidential letter for the PET directors containing a  legal opinion of the respondent's counsel regarding the status of her employment. As a consequence, she was terminated for willful breach of trust reposed upon by her employer. She claimed having been denied of due process.
ISSUE: Was her dismissal justified?
HELD: Yes. The petitioner has given the respondent more than enough reasons to distrust her. The arrogance and hostility she has shown towards the company her stubborn uncompromising stance in almost all  instances justify the company's termination of her employment.
PANTRANCO v. PSC, GR 47065, June 26, 1940

FACTS: Petitioner wanted to have Sec. 1 of CA 454 be declared unconstitutional or that if constitutional be declared inapplicable to valid and subsisting certificates issued prior to its enactment. This arose from the time petitioner applied for ten additional trucks to comply with his existing certificates of public convenience issued before the enactment of the CA 454 because he was not agreeable with the conditions set forth by PSC. He contended that this Act violates the constitutional guarantee of non-impairment of contracts.
ISSUE: Was the constitutional guarantee of non-impairment of obligations and contracts violated?

HELD:  No. Statutes for the regulation of public utilities are a proper exercise by the state of its police power for the control and regulation of public utilities in order to protect the public. If one voluntarily placed his property in public service, he cannot complain of the regulation of the State through its police power. A regulation of public utilities applies not only to future but also to present contracts in operation. Such statutes are, therefore, not unconstitutional, either impairing the obligation of contracts, taking property without due process, or denying the equal protection of the laws, especially inasmuch as the question whether or not private property shall be devoted to a public and the consequent burdens assumed is ordinarily for the owner to decide.

FACTS:  Palmeria was employed by private respondent Coca-cola, which later entered into a contract of service with Lipercon Services. It was made to appear that the petitioner was an employee of Lipercon, before being dismissed by Coca-cola. Petitioner was able to prove his employment with Coca-cola, hence sought for reinstatement. The labor arbiter and NLRC ruled that reinstatement could not be availed of because of the vehement refusal of the respondent to accept back the petitioner.
ISSUE: Should the petition for reinstatement be granted despite the strained relations between employee and employer?
HELD: Yes. The importance of the remedy of reinstatement to an unjustly dismissed employee cannot be overstated. It is the remedy that most effectively restores the right of an employee to his employment and all its benefits before its violation by his employer. Yet despite all its virtues, reinstatement does not and cannot fully vindicate all of an employees injuries for reinstatement no more than compensates for his financial damages. It cannot make up for his other sufferings, intangible yet valuable xxx  It is a right which cannot be allowed to be devalued by the purchasing power of employers who are only too willing to bankroll the separation pay of their illegally dismissed employees to get rid of them.


FACTS:  Petitioners were among the 800 public school teachers who staged “mass actions” on September 17 to 19, 1990 to dramatize their grievances against the alleged failure of the government to implement measures intended for their material benefit. The Education Secretary issued a Return-to-Work Order but the petitioners failed to comply. Hence they were charged by the Secretary with several administrative cases leading to their dismissal from service.
ISSUE: Can government employees engage in a strike?
HELD:  No. As a general rule, even in the absence of express statutory prohibition like Memo Circ. No.6 public employees are denied the right to strike or engage in work stoppage against a public employer. The right of the sovereign to prohibit strikes or work stoppages public employees was clearly recognized at common law. To grant employees of the public sector the right to strike there must be a clear and direct legislative authority therefor. In the absence of any express legislation allowing government employees to strike, recognizing their right to do so, or regulating the exercise of the right, employees in the public service may not engage in strike, walk-outs and temporary work stoppage like workers in the private sector.
FACTS: During the pendency of the labor dispute between the petitioners and the respondents, the CIR managed to forge a voluntary agreement which results into a return-to-work order, and the respondents was prohibited to, among others, lay-off any of the petitioners. Barely 4 months the contract, petitioners again staged a strike, violating the condition of the agreement. The latter countered by assailing the Sec 19 of CA 103, the law upon which the voluntary agreement was based, arguing that the same results to involuntary servitude.
ISSUE: Should a voluntary agreement with a condition that workers must return to work be voided upon a ground of involuntary servitude?
HELD:  No. An employee entering into a contract of employment voluntarily accepts, among other conditions, those prescribed in Section 19 of CA 103. The voluntariness of the employee's entering into it or not--with such implied condition, negatives the possibility of involuntary servitude ensuing.
MABEZA v. NLRC, G.R. No. 118506 April 18, 1997

FACTS: The petitioner and her co-employees were asked by their employer to sign an instrument attesting to the latter’s compliance with minimum wage and other labor standard provision, and that they have no complaints against the management. The petitioner signed the affidavit but refused to go to the City’s Prosecutor’s Office to confirm the veracity and contents of the affidavit as instructed by management. That same day she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings in the hotel’s premises. She then filed a leave of absence which was denied by her employer. She attempted to return to work but the hotel’s cashier told her that she should not report to work and instead continue with her unofficial leave of absence. The management defended upon a ground of loss of confidence.
ISSUE: Was the dismissal of the petitioner valid?
HELD:  No. The pivotal question in any case where unfair labor practice on the part of the employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee’s right to institute concerted action for better terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standard provisions of the law when he might not have, together with the act of terminating or coercing those who refuse to cooperate with the employers’ scheme constitutes unfair labor practice.
FACTS: Supervisors  and managers in petitioner company formed a union separate from that of the rank-and-file union, petitioned for certification election, and staged a strike against the petitioner, prompting the latter to seek a permanent injunction.
ISSUE: Are supervisors or managers allowed by law to form a union?
HELD:  No. The supervisory employees of petitioner firm may not, under the law, form a supervisors union, separate and distinct from the existing bargaining unit (BEU), composed of the rank-and-file employees of the Bulletin Publishing Corporation. It is evident that most of the private respondents are considered managerial employees. xxx The rationale for this inhibition has been stated to be, because if these managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of evident conflict of interests. The Union can also become company- dominated with the presence of managerial employees in Union membership.

Thursday, August 30, 2012

Digested Cases in Taxation (on Assessment, Levy and Distraint, and Statute of Limitations)

CIR vs. CA, Atlas Consolidated
242 SCRA 289
GR No. 104151 March 10, 1995
"Assessments are prima facie presumed correct and made in good faith. So that, in the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed."
FACTS: The Commissioner of Internal Revenue served two notices and demand for payment of the respective deficiency ad valorem and buiness taxes for taxable years 1975 and 1976 against the respondent Atlas Consolidated Mining and Development Corporation (ACMDC). The latter protested both assessments but the same were denied, hence it filed two separate petitions for review in the Court of Tax Appeals. The CTA rendered a consolidated decision holding, inter alia, that ACMDC was not liable for deficiency ad valorem taxes on copper and silver for 1975 and 1976 thereby effectively sustaining the theory of ACMDC that in computing the ad valorem tax on copper mineral, the refining and smelting charges should be deducted, in addition to freight and insurance charges.
    However, the tax court held ACMDC liable for the amount consisting of 25% surcharge for late payment of the ad valorem tax and late filing of notice of removal of silver, gold and pyrite extracted during certain periods, and for alleged deficiency manufacturer's sales tax and such contractor's tax for leasing out of its personal properties. ACDMC elevated the matter to the Supreme Court claiming that the leasing out was a mere isolated transaction, hence should not be subjected to contractor's tax.
ISSUE: Is the claim of the private respondent, with respect to the contractor's tax, impressed with merit?
HELD: No. It is being held that ACMDC was not a manufacturer subject to the percentage tax imposed by Section 186 of the tax code. However such conclusion cannot be made with respect to the contractor's tax being imposed on ACMDC. It cannot validly claim that the leasing out of its personal properties was merely an isolated transaction. Its book of accounts shows that several distinct payments were made for the use of its personal properties such as its plane, motor boat and dump truck. The series of transactions engaged in by ACMDC for the lease of its aforesaid properties could also be deduced from the fact that during the period there were profits earned and reported therefor. The allegation of ACMDC that it did not realize any profit from the leasing out of its said personal properties, since its income therefrom covered only the costs of operation such as salaries and fuel, is not supported by any documentary or substantial evidence.
    Assessments are prima facie presumed correct and made in good faith. Contrary to the theory of ACMDC, it is the taxpayer and not the BIR who has the duty of proving otherwise. It is an elementary rule that in the absence of proof of any irregularities in the performance of official duties, an assessment will not be disturbed. All presumptions are in favor of tax assessments. Verily, failure to present proof of error in assessments will justify judicial affirmance of said assessment.

149 SCRA 351
GR No. L-38540 April 30, 1987
"The follow-up letter reiterating demand for payment could be considered a notice of assessment in itself if duly received by the taxpayer."
FACTS: The petitioner sought the review on certiorari of the decision of the respondent Court of Appeals reversing the decision of the then Court of First Instance of Manila which ordered private respondent Nielson & Co., Inc. to pay the Government the amount of P11,496.00 as ad valorem tax, occupation fees, additional residence tax and 25% surcharge for late payment, for the years 1949 to 1952. Petitioner claims that the demand letter of 16 July 1955 showed an imprint indicating that the original thereof was released and mailed on 4 August 1955 by the Chief, Records Section of the Bureau of Internal Revenue, and that the original letter was not returned to said Bureau; thus, said demand letter must be considered to have been received by the private respondent. According to petitioner, if service is made by ordinary mail, unless the actual date of receipt is shown, service is deemed complete and effective upon the expiration of five (5) days after mailing. As the letter of demand dated 16 July 1955 was actually mailed to private respondent, there arises the presumption that the letter was received by private respondent in the absence of evidence to the contrary. More so, where private respondent did not offer any evidence, except the self-serving testimony of its witness, that it had not received the original copy of the demand letter dated 16 July 1955.
ISSUE: Was notice of assessment or demand properly served to the respondent? Should the receipt by the respondent of the succeeding follow-up demand notices be construed as receipt of the original demand?
HELD: As to the first issue, no. As correctly observed by the respondent court in its appealed decision, while the contention of petitioner is correct that a mailed letter is deemed received by the addressee in the ordinary course of mail, still this is merely a disputable presumption, subject to controversion, and a direct denial of the receipt thereof shifts the burden upon the party favored by the presumption to prove that the mailed letter was indeed received by the addressee. Since petitioner has not adduced proof that private respondent had in fact received the demand letter of 16 July 1955, it can not be assumed that private respondent received said letter.       As to the second issue, Yes. Records show that petitioner wrote private respondent a follow-up letter dated 19 September 1956, reiterating its demand for the payment of taxes as originally demanded in petitioner's letter dated 16 July 1955. This follow-up letter is considered a notice of assessment in itself which was duly received by private respondent in accordance with its own admission. And consequently, under Section 7 of Republic Act No. 1125, the assessment is appealable to the Court of Tax Appeals within thirty (30) days from receipt of the letter. The taxpayer's failure to appeal in due time, as in the case at bar, makes the assessment in question final, executory and demandable. Thus, private respondent is now barred from disputing the correctness of the assessment or from invoking any defense that would reopen the question of its liability on the merits.

102 PHIL 1165
GR No. L-9675, September 28, 1957
"The property levied by a competent court may, with the consent thereof, be distrained, subject to the prior lien of the attachment creditor."
FACTS: The Collector of Internal Revenue sent a warrant of distraint and levy against the properties of Restituto Codiñera for collection of certain deficiency specific tax. However, it could not be effected in view of the attachment of the said properties of the CFI-Manila of another case. After seven years, the Collector of Internal Revenue issued a warrant of distraint and levy commanding the City Treasurer of Cebu City to distrain the goods, chattels, or effects and other personal property of whatever character, and levy upon the real property and interest in or rights to real property of the estate of the deceased. The heirs of the deceased filed the action with the CTA barring the government to collect said deficiency on the ground of prescription therefore praying to declare null and void, and of no legal force and effect the warrant of distraint and levy which the respondent issued on March 7, 1955.
ISSUE: Does the attachment made by a court in a civil case over certain properties of a taxpayer bar the government from enforcing a warrant of distraint and levy over the aforesaid properties in order to collect the taxes due?
HELD: No. There may be a valid reason for non-distraint of the property which was due to the attachment of the CFI-Manila in another case. However, such property levied by a competent court may, with the consent thereof, be subsequently distrained, subject to the prior lien of the attachment creditor. The attachment merely deprives the Collector of Internal Revenue the power to divest the Court of its jurisdiction over said property but it does not impair such rights as the Government may have for the collection of taxes.

GR No. 502, January 29, 1946
"The taxpayer should at least be apprised of the exact date of the proceeding by which she is to lose her property. Failure of the taxpayer to accordingly correct or change name in the assessment record cannot supplant such absence of notice."
FACTS: The Provincial Treasurer of Tayabas issued a notice for the sale at public auction of the real properties of Nemesio Cabrera forfeited for tax delinquency on December 15, 1940. The letter sent to Nemesio Cabrera was returned marked “Unclaimed” for the latter was already dead in 1935. The land was actually sold in a rescheduled public auction sale on May 1941 to Catigbac and was finalized in May 1942. Basilia Cabrera, the registered owner of the land subject to attachment, filed a complaint with the CFI-Tayabas against the Provincial Treasurer and Catigbac attacking the validity of the sale on the grounds that she was not notified, even though the property had remained in the assessment book in the name of Nemesio Cabrera, because she became the registered owner thereof since 1934 when a Torrens Title was issued to her by the Register of Deeds of Tayabas.
ISSUE: Is there a need for new notices if the land was not sold on the date specified in the previous notice?
HELD: Yes. Under the law, even if the notice state that the sale would take place on a specified date and every day thereafter, it is a general and indefinite notice. In order to protect the taxpayer’s rights, the taxpayer should at least be apprised of the exact date of the proceeding by which she is to lose her property. Besides, the appellee admittedly being not notified also vitiates the proceeding. She is the registered owner of the land and had become liable for taxes thereon. For all purposes, she is the delinquent taxpayer "against whom the taxes were assessed." It cannot be Nemesio for the latter's obligation to pay ended where Basilia's liability began.
   Basilia may be criticized for failure to have changed the name in the assessment record. However, such circumstance, nevertheless, cannot supplant the absence of notice.

132 SCRA 1
GR No. L-37061, September 5, 1984
"Forest charges are internal revenue taxes and the BIR has the sole power and duty to collect them. Thus, an assessment made by the Bureau of Forestry cannot be considered an assessment made by the BIR."
FACTS: The Bureau of Forestry sent a demand letter dated January 15, 1949 to Mambulao Lumber Co. demanding for the payment of forest charges and surcharges. Mambulao protested the assessment. On August 29,1958, the BIR likewise wrote a letter to the company demanding payment, which subsequently requested reinvestigation. The BIR gave the company twenty (20) days from receipt within which to submit the results of its verification of payments. For failure to comply and failure to pay its tax liability despite demands, CIR filed a complaint for collection with CFI-Manila on August 25, 1961. The CFI-Manila and Court of Appeals decided against Mambulao ordering it to pay the tax liability. Petitioner argued that the collection is barred by the statute of limitations under Sections 332 of the NIRC. As stated, the collection should be made within the five (5) year period. From 1949 (date when the Bureau of Forestry assessed and demand payment as forestry charges and surcharges) up to 1961 (date of filing of complaint), it is already more than five years.
ISSUE: Has the period of filing of collection complaint prescribed?
HELD: No. The action for collection is not barred by prescription. The basis of the complaint filed on August 1961 was the demand letter made by the CIR on August 29, 1958 and not the demand letter of the Bureau of Forestry on January 1949. So that the reckoning date of the 5-year period should be from the date of the BIR letter and not that of the Bureau of Forestry. This must be so because forest charges are internal revenue taxes and the BIR has the sole power and duty to collect them.

29 SCRA 552
GR No. No. L-21551, September 30, 1969
"The filing of an answer to taxpayer's petition for review is considered as institution of judicial action."
FACTS: The Commissioner of Internal Revenue assessed the petitioner investment corporation of deficiency income taxes for the years 1950 to 1954 and for 1957. There were two conflicting dates of assessment, which are vital to the compliance with the statute of limitations, based on each claim of the petitioner and the respondent; the Commisioner's record of date of assesment is February 27, 1956 while the petitioner believes the demand was made on December 27, 1955 so that, as the petitioner corporation claims, the Commissioner's action to recover its tax liability should be deemed to have prescribed for failure on the part of the Commissioner to file a complaint for collection against it in an appropriate civil action.
ISSUE: Has the action for collection prescribed?
HELD: No. It has been held that "a judicial action for the collection of a tax is begun by the filing of a complaint with the proper court of first instance, or where the assessment is appealed to the Court of Tax Appeals, by filing an answer to the taxpayer's petition for review wherein payment of the tax is prayed for." This is but logical for where the taxpayer avails of the right to appeal the tax assessment to the Court of Tax Appeals, the said Court is vested with the authority to pronounce judgment as to the taxpayer's liability to the exclusion of any other court. In the present case, regardless of whether the assessments were made on February 24 and 27, 1956, as claimed by the Commissioner, or on December 27, 1955 as claimed by the taxpayer, the government's right to collect the taxes due has clearly not prescribed, as the taxpayer's appeal or petition for review was filed with the Tax Court on May 4, 1960, with the Commissioner filing on May 20, 1960 his Answer with a prayer for payment of the taxes due, long before the expiration of the five-year period to effect collection by judicial action counted from the date of assessment.

2 SCRA 144
GR No. L-14142, May 30, 1961
"Where the tax obligation is secured by a bond, the prescriptive period for the action for the forfeiture of the bond is governed by the Civil Code."
FACTS: The Solicitor General, in behalf of the Republic of the Philippines, filed before CFI of Manila an action against the defendant Araneta, as principals, and Manila Surety, as surety, to recover the internal revenue taxes including surcharges, the payment of which was guaranteed by a bond executed when the first extrajudicial demand for payment was made. The appellant-taxpayers contend that the appellee's cause of action has prescribed, because the action for recovery of internal revenue taxes and surcharge due brought on 22 February 1957, was not commenced within the period of five years after the assessment dated 15 May 1948 had been made, as provided for in Section 331 of the Tax Code.
ISSUE: Has the action to recover the taxes due from the taxpayer and the surety already prescribed?
HELD: No. The appellant-taxpayers cannot invoke prescription under the provisions of Section 331 of the NIRC because the government is suing on the bond executed and filed by them to guarantee payment in 6 monthly installments of the tax liability due from 1946 to 1948, which is a separate and distinct obligation of the parties thereto. The action to enforce the obligation on the bond executed on March 18, 1949, having been filed in court on February 22, 1957, was within the 10-year prescriptive period to enforce a written contractual obligation, as set by the Civil Code.

273 SCRA 47
GR No. 120880, June 5, 1997
"The approval of the court sitting in probate is not a mandatory requirement in the collection of estate taxes."
"In case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission."
FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos to cover the payment of his tax delinquencies during the period of his exile in the US. The Marcos family was assessed by the BIR after it failed to file estate tax returns. However the assessment were not protested administratively by Mrs. Marcos and the heirs of the late president so that they became final and unappealable after the period for filing of opposition has prescribed. Marcos contends that the properties could not be levied to cover the tax dues because they are still pending probate with the court, and settlement of tax deficiencies could not be had, unless there is an order by the probate court or until the probate proceedings are terminated.
    Petitioner also pointed out that applying Memorandum Circular No. 38-68, the BIR's Notices of Levy on the Marcos properties were issued beyond the allowed period, and are therefore null and void.
ISSUE: Are the contentions of Bongbong Marcos correct?
HELD: No. The deficiency income tax assessments and estate tax assessment are already final and unappealable -and-the subsequent levy of real properties is a tax remedy resorted to by the government, sanctioned by Section 213 and 218 of the National Internal Revenue Code. This summary tax remedy is distinct and separate from the other tax remedies (such as Judicial Civil actions and Criminal actions), and is not affected or precluded by the pendency of any other tax remedies instituted by the government.
  The approval of the court, sitting in probate, or as a settlement tribunal over the deceased's estate is not a mandatory requirement in the collection of estate taxes. On the contrary, under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. This provision disproves the petitioner's contention that it is the probate court which approves the assessment and collection of the estate tax.
   On the issue of prescription, the omission to file an estate tax return, and the subsequent failure to contest or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under Sec.223 of the NIRC, in case of failure to file a return, the tax may be assessed at anytime within 10 years after the omission, and any tax so assessed may be collected by levy upon real property within 3 years (now 5 years) following the assessment of the tax. Since the estate tax assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said assessment, there is no reason why the BIR cannot continue with the collection of the said tax.

320 SCRA 574
GR No. 130430, December 13, 1999
"A request for reconsideration of the tax assessment does not effectively suspend the running of the precriptive period if the same is filed after the assessment had become final and unappealable."
FACTS: On July 18, 1986, the BIR issued to respondent Salud V. Hizon a deficiency income tax assessment covering the fiscal year 1981-1982. Respondent not having contested the assessment, petitioner BIR, on January 12, 1989, served warrants of distraint and levy to collect the tax deficiency. However, for reasons not known, it did not proceed to dispose of the attached properties.
    More than three years later, the respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. The BIR, in a letter dated August 11, 1994, denied the request. On January 1, 1997, it filed a case with the RTC to collect the tax deficiency. Hizon moved to dismiss the case on two grounds: (1) that the complaint was not filed upon authority of the BIR Commissioner as required by Sec. 221 of the NIRC, and (2) that the action had already prescribed. Over petitioner's objection, the trial court granted the motion and dismissed the complaint.
    BIR on the other hand contends that respondent's request for reinvestigation of her tax deficiency assessment on November 1992 effectively suspended the running of the period of prescription.
ISSUE: Has the action for collection of the tax prescribed?
HELD: Yes. Sec. 229 of the NIRC mandates that a request for reconsideration must be made within 30 days from the taxpayer's receipt of the tax deficiency assessment, otherwise the assessment becomes final, unappealable and, therefore, demandable. The notice of assessment for respondent's tax deficiency was issued by petitioner on July 18, 1986. On the other hand, respondent made her request for reconsideration thereof only on November 3, 1992, without stating when she received the notice of tax assessment. Hence, her request for reconsideration did not suspend the running of the prescriptive period provided under Sec. 223(c). Although the Commissioner acted on her request by eventually denying it on August 11, 1994, this is of no moment and does not detract from the fact that the assessment had long become demandable.

22 SCRA 3
GR No. L-23988, January 2, 1968
"What may be the subject of a judicial review is the decision of the Commissioner on the protest against assessment, not the assessment itself."
FACTS: The spouses Villa filed joint income tax returns for the years 1951 to 1956. The BIR issued assessments for deficiency of income tax for the said years. Without contesting the said assessments with the CIR, they filed a petition for review with the CTA. The CTA took cognizance of the of the appeal and rendered favorable judgment to the spouses. The CIR appealed to the SC questioning the jurisdiction of the CTA.
ISSUE: Is an appeal to the CTA proper in this case? Is the CTA vested with jurisdiction?
HELD: No. The rule is that where a taxpayer questions an assessment and asks the Collector to reconsider or cancel the same because he (the taxpayer) believes he is not liable therefor, the assessment becomes a "disputed assessment" that the Collector must decide, and the taxpayer can appeal to the Court of Tax Appeals only upon receipt of the decision of the Collector on the disputed assessment.  Since in the instant case the taxpayer appealed the assessment of the Commissioner of Internal Revenue without previously contesting the same, the appeal was premature and the Court of Tax Appeals had no jurisdiction to entertain said appeal. For, as stated, the jurisdiction of the Tax Court is to review by appeal decisions of Internal Revenue on disputed assessments. The Tax Court is a court of special jurisdiction. As such, it can take cognizance only of such matters as are clearly within its jurisdiction.

Sunday, August 26, 2012

Word of the Week

"The letter killeth, but the spirit giveth life."
The quote from 2 Corinthians 3:6 if taken scholarly would normally be understood as referring to the way scriptures, canons, and statutes are to be read, interpreted and explained.
Literally, this "word," the "word of the week," its letters as well as its spirit does not only kill, does not only claim life, but burry you deep underground. Alas, this has been killing me softly, and its spirit has been diggin' my grave. This has been a habit and i want it out as badly as i want it to be. hahayzz..
The work files up, the opportunities have been pounding doors, but as usual, the very last minute of the day is the sweetest time to move your hands and swiftly grind away the heap.
Dictionary.com defines the "word" as brief as this..


[proh-kras-tuh-ney-shuhn, pruh]  (noun) - the act or habit of procrastinating, or putting off or delaying, especially something requiring immediate attention: She was smart, but her constant procrastination led her to be late with almost every assignment.
Meanwhile, wikipedia defines it this way...
In psychology, procrastination refers to the act of replacing high-priority actions with tasks of lower priority, or doing something from which one derives enjoyment, and thus putting off important tasks to a later time. In accordance with Freud, the Pleasure principle may be responsible for procrastination; humans do not prefer negative emotions, and handing off a stressful task until a further date is enjoyable. The concept that humans work best under pressure provides additional enjoyment and motivation to postponing a task. Some psychologists cite such behavior as a mechanism for coping with the anxiety associated with starting or completing any task or decision. Other psychologists indicate that anxiety is just as likely to get people to start working early as late and the focus should be impulsiveness. That is, anxiety will cause people to delay only if they are impulsive.
Schraw, Wadkins, and Olafson have proposed three criteria for a behavior to be classified as procrastination: it must be counterproductive, needless, and delaying. Similarly, Steel (2007) reviews all previous attempts to define procrastination, indicating it is "to voluntarily delay an intended course of action despite expecting to be worse off for the delay."
Procrastination may result in stress, a sense of guilt and crisis, severe loss of personal productivity, as well as social disapproval for not meeting responsibilities or commitments. These feelings combined may promote further procrastination. While it is regarded as normal for people to procrastinate to some degree, it becomes a problem when it impedes normal functioning. Chronic procrastination may be a sign of an underlying psychological disorder. Such procrastinators may have difficulty seeking support due to social stigma and the belief that task-aversion is caused by laziness, low willpower or low ambition.
Luckily for me, this has been working for quite some time, with of course some few good results. But i know this is wrong, and bad, and ugly.. and this should be arrested, and killed, and burried, and forgotten...

Tuesday, August 21, 2012

Digested Cases in Taxation (on criminal prosecution and taxpayers' suits)

97 SCRA 877
GR No. L-41919-24 May 30, 1980
"An assessment of a deficiency is not necessary to a criminal prosecution for wilful attempt to defeat and evade the income tax."

FACTS: The BIR filed six criminal charges against Quirico Ungab, a banana saplings producer, for allegedly evading payment of taxes and other violations of the NIRC. Ungab, subsequently filed a motion to quash on the ground that (1) the information are null and void for want of authority on the part of the State Prosecutor to initiate and prosecute the said cases; and (2)that the trial court has no jurisdiction to take cognizance of the case in view of his pending protest against the assessment made by the BIR examiner. The trial court denied the motion prompting the petitioner to file a petition for certiorari and prohibition with preliminary injunction and restraining order to annul and set aside the information filed.

ISSUE: Is the contention that the criminal prosecution is premature since the CIR has not yet resolved the protest against the tax assessment tenable?

HELD: No. The contention is without merit. What is involved here is not the collection of taxes where the assessment of the Commissioner of Internal Revenue may be reviewed by the Court of Tax Appeals, but a criminal prosecution for violations of the National Internal Revenue Code which is within the cognizance of courts of first instance. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code.
   An assessment of a deficiency is not necessary to a criminal prosecution for wilful attempt to defeat and evade the income tax. A crime is complete when the violator has knowingly and wilfully filed a fraudulent return with intent to evade and defeat the tax. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return, and the government's failure to discover the error and promptly to assess has no connections with the commission of the crime.

CIR vs. CA
257 SCRA 200
GR No. 119322 June 4, 1996
"Before one is prosecuted for willful attempt to evade or defeat any tax, the fact that a tax is due must first be proved."

FACTS: The CIR assessed Fortune Tobacco Corp for 7.6 Billion Pesos representing deficiency income, ad valorem and value-added taxes for the year 1992 to which Fortune moved for reconsideration of the assessments. Later, the CIR filed a complaint with the Department of Justice against the respondent Fortune, its corporate officers, nine (9) other corporations and their respective corporate officers for alleged fraudulent tax evasion for supposed non-payment by Fortune of the correct amount of taxes, alleging among others the fraudulent scheme of making simulated sales to fictitious buyers declaring lower wholesale prices, as allegedly shown by the great disparity on the declared wholesale prices registered in the "Daily Manufacturer's Sworn Statements" submitted by the respondents to the BIR. Such documents when requested by the court were not however presented by the BIR, prompting the trial court to grant the prayer for preliminary injuction sought by the respondent upon the reason that tax liabiliity must be duly proven before any criminal prosecution be had. The petitioner relying on the Ungab Doctrine sought the lifting of the writ of preliminary mandatory injuction issued by the trial court.

ISSUE: Whose contention is correct?

HELD: In view of the foregoing reasons, misplaced is the petitioners' thesis citing Ungab v. Cusi, that the lack of a final determination of Fortune's exact or correct tax liability is not a bar to criminal prosecution, and that while a precise computation and assessment is required for a civil action to collect tax deficiencies, the Tax Code does not require such computation and assessment prior to criminal prosecution.
    Reading Ungab carefully, the pronouncement therein that deficiency assessment is not necessary prior to prosecution is pointedly and deliberately qualified by the Court with following statement quoted from Guzik v. U.S.: "The crime is complete when the violator has knowingly and wilfully filed a fraudulent return with intent to evade and defeat a part or all of the tax." In plain words, for criminal prosecution to proceed before assessment, there must be a prima facie showing of a wilful attempt to evade taxes. There was a wilful attempt to evade tax in Ungab because of the taxpayer's failure to declare in his income tax return "his income derived from banana sapplings." In the mind of the trial court and the Court of Appeals, Fortune's situation is quite apart factually since the registered wholesale price of the goods, approved by the BIR, is presumed to be the actual wholesale price, therefore, not fraudulent and unless and until the BIR has made a final determination of what is supposed to be the correct taxes, the taxpayer should not be placed in the crucible of criminal prosecution. Herein lies a whale of difference between Ungab and the case at bar.

309 SCRA 402
GR No. 128315 June 29, 1999
 "An assessment is not necessary before a criminal charge can be filed."

FACTS: The BIR examined the books of account of Pascor Realty and Devt Corp for years 1986, 1987 and 1988, from which a tax liability of 10.5 Million Pesos was found. Based on the recommendations of the examiners, the CIR filed an information with the DOJ for tax evasion against the officers of Pascor. Upon receipt of the subpoena, the latter filed an urgent request for reconsideration/reinvestigation with the CIR, which was immediately denied upon the ground that no formal assessment has yet been issued by the Commisioner. Pascor elevated the CIR's decision to the CTA on a petition for review. The CIR filed a Motion to Dismiss on the ground of lack of jurisdiction of CTA as there was no formal assessment made against the respondents. The CTA dismissed the motion, hence this petition.

ISSUE: Is a formal assessment necessary in the filing of a criminal complaint?

HELD: No. Section 222 of the NIRC states that an assessment is not necessary before a criminal charge can be filed. This is the general rule. Private respondents failed to show that they are entitled to an exception. Moreover, the criminal charge need only be supported by a prima facie showing of failure to file a required return. This fact need not be proven by an assessment.
    The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

197 SCRA 771
GR No. 88291 May 31, 1991
"A taxpayer may question the legality of a law or regulation when it involves illegal expenditure of public money."

FACTS: Senator Ernesto Maceda sought to nullify certain decisions, orders, rulings, and resolutions of respondents Executive Secretary, Secretary of Finance, Commissioner of Internal Revenue, Commissioner of Customs and the Fiscal Incentives Review Board FIRB for exempting the National Power Corporation (NPC) from indirect tax and duties. RA 358, RA 6395 and PD 380 expressly grant NPC exemptions from all taxes whether direct or indirect. In 1984, however, PD 1931 and EO 93 withdrew all tax exemptions granted to all GOCCs including the NPC but granted the President and/or the Secretary of Finance by recommendation of the FIRB the power to restore certain tax exemptions. Pursuant to the latter law, FIRB issued a resolution restoring the tax and duty exemption privileges of the NPC. The actions of the respondents were thus questioned by the petitioner by this petition for certiorari, prohibition and mandamus with prayer for a writ of preliminary injunction and/or restraining order. To which public respondents argued, among others, that petitioner does not have the standing to challenge the questioned orders and resolution because he was not in any way affected by such grant of tax exemptions.

ISSUE: Has a taxpayer the capacity to question the legality of the resolution issued by the FIRB restoring the tax exemptions?

HELD: Yes. In this petition it is alleged that petitioner is "instituting this suit in his capacity as a taxpayer and a duly-elected Senator of the Philippines." Public respondent argues that petitioner must show that he has sustained direct injury as a result of the action and that it is not sufficient for him to have a mere general interest common to all members of the public. The Court however agrees with the petitioner that as a taxpayer he may file the instant petition following the ruling in Lozada when it involves illegal expenditure of public money. The petition questions the legality of the tax refund to NPC by way of tax credit certificates and the use of said assigned tax credits by respondent oil companies to pay for their tax and duty liabilities to the BIR and Bureau of Customs.

65 SCRA 624
GR No. L-31685 July 31, 1975
"With the absence of any pecuniary or monetary interest owing from the public, a taxpayer may not have the right to question the legality of an issuance creating a trust for the benefit of the people but purely funded by charity."

FACTS: The petitioner questioned the validity of EO No. 30 creating the Cultural Center of the Philippines, having as its estate the real and personal property vested in it as well as donations received, financial commitments that could thereafter be collected, and gifts that may be forthcoming in the future. It was likewise alleged that the Board of Trustees did accept donations from the private sector and did secure from the Chemical Bank of New York a loan of $5 million guaranteed by the National Investment & Development Corporation as well as $3.5 Million received from President Johnson of the United States in the concept of war damage funds, all intended for the construction of the Cultural Center building estimated to cost P48 million. The petition was denied by the trial court arguing that with not a single centavo raised by taxation, and the absence of any pecuniary or monetary interest of petitioner that could in any wise be prejudiced distinct from those of the general public.

ISSUE: Has a taxpayer the capacity to question the validity of the issuance in this case?

HELD: No. It was therein pointed out as "one more valid reason" why such an outcome was unavoidable that "the funds administered by the President of the Philippines came from donations [and] contributions [not] by taxation." Accordingly, there was that absence of the "requisite pecuniary or monetary interest." The stand of the lower court finds support in judicial precedents. This is not to retreat from the liberal approach followed in Pascual v. Secretary of Public Works, foreshadowed by People v. Vera, where the doctrine of standing was first fully discussed. It is only to make clear that petitioner, judged by orthodox legal learning, has not satisfied the elemental requisite for a taxpayer's suit. Moreover, even on the assumption that public funds raised by taxation were involved, it does not necessarily follow that such kind of an action to assail the validity of a legislative or executive act has to be passed upon. This Court, as held in the recent case of Tan v. Macapagal, "is not devoid of discretion as to whether or not it should be entertained." The lower court thus did not err in so viewing the situation.

515 SCRA 720
GR No. 167919,  February 14, 2007
"A taxpayer need not be a party to the contract to challenge its validity."

FACTS: The petitioners, Plaridel M. Abaya who claims that he filed the instant petition as a taxpayer, former lawmaker, and a Filipino citizen, and Plaridel C. Garcia likewise claiming that he filed the suit as a taxpayer, former military officer, and a Filipino citizen, mainly seek to nullify a DPWH resolution which recommended the award to private respondent China Road & Bridge Corporation of the contract for the implementation of the civil works known as Contract Package No. I (CP I). They also seek to annul the contract of agreement subsequently entered into by and between the DPWH and private respondent China Road & Bridge Corporation pursuant to the said resolution.

ISSUE: Has petitioners the legal standing to file the instant case against the government?

HELD: Petitioners, as taxpayers, possess locus standi to file the present suit. Briefly stated, locus standi is a right of appearance in a court of justice on a given question. More particularly, it is a party’s personal and substantial interest in a case such that he has sustained or will sustain direct injury as a result of the governmental act being challenged.  Locus standi, however, is merely a matter of procedure and it has been recognized that in some cases, suits are not brought by parties who have been personally injured by the operation of a law or any other government act but by concerned citizens, taxpayers or voters who actually sue in the public interest. Consequently, the Court, in a catena of cases, has invariably adopted a liberal stance on locus standi, including those cases involving taxpayers.
    The prevailing doctrine in taxpayer’s suits is to allow taxpayers to question contracts entered into by the national government or government- owned or controlled corporations allegedly in contravention of law. A taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed, or that public money is being deflected to any improper purpose, or that there is a wastage of public funds through the enforcement of an invalid or unconstitutional law. Significantly, a taxpayer need not be a party to the contract to challenge its validity.

Sunday, July 8, 2012

Digested Cases in Taxation Law (set 2)

151 SCRA 208
GR No. L-75697, June 18, 1987
"The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose the tax was to favor one industry over another."

FACTS: The petitioner assails the validity of PD 1987 entitled an "Act creating the Videogram Regulatory Board," citing especially Section 10 thereof, which imposes a tax of 30% on the gross receipts payable to the local government. Petitioner contends that aside from its being a rider and not germane to the subject matter thereof, and such imposition was being harsh, confiscatory, oppressive and/or unlawfully restraints trade in violation of the due process clause of the Constitution.

ISSUE: Is PD 1987 a valid exercise of taxing power of the state?

HELD: Yes. It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. The power to impose taxes is one so unlimited in force and so searching in extent, that the courts scarcely venture to declare that it is subject to any restrictions whatever, except such as those rest in the discretion of the authority which exercises it. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation.
   The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the video industry, particularly because of the rampant film piracy, the flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes. And while it was also an objective of the DECREE to protect the movie industry, the tax remains a valid imposition.
   The public purpose of a tax may legally exist even if the motive which impelled the legislature to impose the tax was to favor one industry over another.

25 SCRA 938
GR No. L-24756, October 31, 1968
"There is no double taxation where one tax is imposed by the state and the other is imposed by the city."

FACTS: The City of Baguio passed an ordinance 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. The latter assailed the validity of the ordinance arguing 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: Are the contentions of the defendant-appellant tenable?

HELD: No. First, RA 329 was enacted amending Section 2553 of the Revised Administrative Code 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.
   Second, 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 third, 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.

74 SCRA 306
GR No. L-41631, December 17, 1976
"The entrusting of the tax collection to private entities does not destroy the public purpose of a tax ordinance."

FACTS: Aside from the issue on publication, private respondent bewails that the market stall fees imposed in the disputed City Ordinance No. 7522, which regulates public markets and prescribes fees for rentals of stalls, are diverted to the exclusive private use of the 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."

ISSUE: Does the delegation of the collection of taxes to a private entity invalidates a tax ordinance and defeats its public purpose?

HELD: No. The assumption is of course saddled on erroneous premise. The fees collected do not go direct to the private coffers of the corporation. Ordinance No. 7522 was not made for the corporation but for the purpose of raising revenues for the city. That is the object it serves. The entrusting of the collection of the fees does not destroy the public purpose of the ordinance. 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.

110 PHIL 331
GR No. L-10405, December 29, 1960
"A law appropriating the public revenue is invalid if the public advantage or benefit, derived from such expenditure, is merely incidental in the promotion of a particular enterprise."

FACTS: Governor Wenceslao Pascual of Rizal instituted this action for declaratory relief, with injunction, upon the ground that RA No. 920, which apropriates funds for public works particularly for the construction and improvement of Pasig feeder road terminals. Some of the feeder roads, however, as alleged and as contained in the tracings attached to the petition, were nothing but projected and planned subdivision roads, not yet constructed within the Antonio Subdivision, belonging to private respondent Zulueta, situated at Pasig, Rizal; and which projected feeder roads do not connect any government property or any important premises to the main highway. The respondents' contention is that there is public purpose because people living in the subdivision will directly be benefitted from the construction of the roads, and the government also gains from the donation of the land supposed to be occupied by the streets, made by its owner to the government.

ISSUE: Should incidental gains by the public be considered "public purpose" for the purpose of justifying an expenditure of the government?

HELD: No. It is a general rule that the legislature is without power to appropriate public revenue for anything but a public purpose. It is the essential character of the direct object of the expenditure which must determine its validity as justifying a tax, and not the magnitude of the interest to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. Incidental to the public or to the state, which results from the promotion of private interest and the prosperity of private enterprises or business, does not justify their aid by the use public money.
   The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interest, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals might incidentally serve the public.

149 SCRA 395
GR No. L-65773-74 April 30, 1987
"The source of an income is the property, activity or service that produced the income. For such source to be considered as coming from the Philippines, it is sufficient that the income is derived from activity within the Philippines."

FACTS: Petitioner CIR seeks a review of the CTA's decision setting aside petitioner's assessment of deficiency income taxes against respondent British Overseas Airways Corporation (BOAC) for the fiscal years 1959 to 1971. BOAC is a 100% British Government-owned corporation organized and existing under the laws of the United Kingdom, and is engaged in the international airline business. During the periods covered by the disputed assessments, it is admitted that BOAC had no landing rights for traffic purposes in the Philippines. Consequently, it did not carry passengers and/or cargo to or from the Philippines, although during the period covered by the assessments, it maintained a general sales agent in the Philippines — Wamer Barnes and Company, Ltd., and later Qantas Airways — which was responsible for selling BOAC tickets covering passengers and cargoes. The CTA sided with BOAC citing that the proceeds of sales of BOAC tickets do not constitute BOAC income from Philippine sources since no service of carriage of passengers or freight was performed by BOAC within the Philippines and, therefore, said income is not subject to Philippine income tax. The CTA position was that income from transportation is income from services so that the place where services are rendered determines the source.

ISSUE: Are the revenues derived by BOAC from sales of ticket for air transportation, while having no landing rights here, constitute income of BOAC from Philippine sources, and accordingly, taxable?

HELD: Yes. The source of an income is the property, activity or service that produced the income. For the source of income to be considered as coming from the Philippines, it is sufficient that the income is derived from activity within the Philippines. In BOAC's case, the sale of tickets in the Philippines is the activity that produces the income. The tickets exchanged hands here and payments for fares were also made here in Philippine currency. The site of the source of payments is the Philippines. The flow of wealth proceeded from, and occurred within, Philippine territory, enjoying the protection accorded by the Philippine government. In consideration of such protection, the flow of wealth should share the burden of supporting the government.

524 SCRA 73, 103
GR Nos. 141104 & 148763, June 8, 2007
"The taxpayer must justify his claim for tax exemption or refund by the clearest grant of organic or statute law and should not be permitted to stand on vague implications."
"Export processing zones (EPZA) are effectively considered as foreign territory for tax purposes."

FACTS:  Petitioner corporation, a VAT-registered taxpayer engaged in mining, production, and sale of various mineral products, filed claims with the BIR for refund/credit of input VAT on its purchases of capital goods and on its zero-rated sales in the taxable quarters of the years 1990 and 1992. BIR did not immediately act on the matter prompting the petitioner to file a petition for review before the CTA. The latter denied the claims on the grounds that for zero-rating to apply, 70% of the company's sales must consists of exports, that the same were not filed within the 2-year prescriptive period (the claim for 1992 quarterly returns were judicially filed only on April 20, 1994), and that petitioner failed to submit substantial evidence to support its claim for refund/credit.
   The petitioner, on the other hand, contends that CTA failed to consider the following: sales to PASAR and PHILPOS within the EPZA as zero-rated export sales; the 2-year prescriptive period should be counted from the date of filing of the last adjustment return which was April 15, 1993, and not on every end of the applicable quarters; and that the certification of the independent CPA attesting to the correctness of the contents of the summary of suppliers’ invoices or receipts examined, evaluated and audited by said CPA should substantiate its claims. 

ISSUE: Did the petitioner corporation sufficiently establish the factual bases for its applications for refund/credit of input VAT?

HELD:  No. Although the Court agreed with the petitioner corporation that the two-year prescriptive period for the filing of claims for refund/credit of input VAT must be counted from the date of filing of the quarterly VAT return, and that sales to PASAR and PHILPOS inside the EPZA are taxed as exports because these export processing zones are to be managed as a separate customs territory from the rest of the Philippines, and thus, for tax purposes, are effectively considered as foreign territory, it still denies the claims of petitioner corporation for refund of its input VAT on its purchases of capital goods and effectively zero-rated sales during the period claimed for not being established and substantiated by appropriate and sufficient evidence. 
   Tax refunds are in the nature of tax exemptions.  It is regarded as in derogation of the sovereign authority, and should be construed in strictissimi juris against the person or entity claiming the exemption.  The taxpayer who claims for exemption must justify his claim by the clearest grant of organic or statute law and should not be permitted to stand on vague implications.

8 SCRA 224
GR No. L-18125, May 31, 1963
"A tax on property of the Government, whether national or local, would merely have the effect of taking money from one pocket to put it in another pocket."

FACTS: National Waterworks and Sewerage Authority (NWSA), a public corporation owned by the Government of the Philippines as well as all property comprising waterworks and sewerage systems placed under it, took over  the Cabuyao-Sta. Rosa-Biñan Waterworks System in 1956. It was assessed by the Provincial Assessor of Laguna, for purposes of real estate taxes, on the real properties owned by Cabuyao Waterworks. The respondent protested claiming it is exempted from the payment of real estate taxes in view of the nature and kind of said property and functions and activities of petitioner. The petitioner denied the protest arguing that such real properties are subject to real estate tax because although said properties belong to the Republic of the Philippines, the same holds it, not in its governmental, political or sovereign capacity, but in a private, proprietary or patrimonial character, which, allegedly, is not covered by the exemption contained in section 3(a) of Republic Act No. 470.

ISSUE: Are the real properties owned by the respondent public corporation subject to real estate tax?

HELD: No. Republic Act No. 470 makes no distinction between property held in a sovereign, governmental or political capacity and those possessed in a private, proprietary or patrimonial character. And where the law does not distinguish neither may we, unless there are facts and circumstances clearly showing that the lawmaker intended the contrary, but no such facts and circumstances have been brought to our attention. Indeed, the noun "property" and the verb "owned" used in said section 3(a) strongly suggest that the object of exemption is considered more from the view point of dominion, than from that of domain.
   Moreover, taxes are financial burdens imposed for the purpose of raising revenues with which to defray the cost of the operation of the Government, and a tax on property of the Government, whether national or local, would merely have the effect of taking money from one pocket to put it in another pocket. Hence, it would not serve, in the final analysis, the main purpose of taxation. What is more, it would tend to defeat it, on account of the paper work, time and consequently, expenses it would entail.

24 SCRA 789
GR No. L-22814, August 28, 1968
"The classification made in the exercise of power to tax, to be valid, must be reasonable ."

FACTS:  Plaintiff-appellant Pepsi-Cola sought to recover the sums paid by it under protest, to the City of Butuan, and collected by the latter, pursuant to its Municipal Ordinance No. 110 which plaintiff assails as null and void because it partakes of the nature of an import tax, amounts to double taxation, highly unjust and discriminatory, excessive, oppressive and confiscatory, and constitutes an invlaid delegation of the power to tax. The ordinance imposes taxes for every case of softdrinks, liquors and other carbonated beverages, regardless of the volume of sales, shipped to the agents and/or consignees  by outside dealers or any person or company having its actual business outside the City.

ISSUE: Does the tax ordinance violate the uniformity requirement of taxation?

HELD: Yes. The tax levied is discriminatory. Even if the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as discriminatory, and hence, violative of the uniformity required by the Constitution and the law therefor, since only sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers, not acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded those made by said agents or consignees of producers or merchants established outside the City of Butuan, would be exempt from the disputed tax.
   It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the objects of taxation. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are germane to the purpose of the legislation or ordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification applies equally to all those who belong to the same class.

69 SCRA 460
GR No. L-31156, February 27, 1976
"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.

FACTS: Plaintiff-appellant Pepsi-Cola commenced a complaint with preliminary injunction to declare Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos. 23 and 27 denominated as "municipal production tax" of the Municipality of Tanauan, Leyte, null and void. Ordinance 23 levies and collects from soft drinks producers and manufacturers a tax of one-sixteenth (1/16) of a centavo for every bottle of soft drink corked, and Ordinance 27 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. Aside from the undue delegation of authority, appellant contends that it allows double taxation, and that the subject ordinances are void for they impose percentage or specific tax.

ISSUE: Are the contentions of the appellant tenable?

HELD: No. On the issue of undue delegation of taxing power, it is settled that 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. 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.
   Also, there is no validity to the assertion that the delegated authority can be declared unconstitutional on the theory of double taxation. It must be observed that the delegating authority specifies the limitations and enumerates the taxes over which local taxation may not be exercised. The reason is that the State has exclusively reserved the same for its own prerogative. Moreover, double taxation, in general, is not forbidden by our fundamental law, so that double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the city or municipality.
   On the last issue raised, the ordinances do not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on the products, but there is not set ratio between the volume of sales and the amount of the tax.

220 SCRA 703
GR No. 99886, March 31, 1993
" To avoid the taint of unlawful delegation of the power to tax, there must be a standard which implies that the legislature determines matter of principle and lays down fundamental policy."

FACTS: Senator John Osmeña assails the constitutionality of paragraph 1c of PD 1956, as amended by EO 137, empowering the Energy Regulatory Board (ERB) to approve the increase of fuel prices or impose additional amounts on petroleum products which proceeds shall accrue to the Oil Price Stabilization Fund (OPSF) established for the reimbursement to ailing oil companies in the event of sudden price increases. The petitioner avers that the collection on oil products establishments is an undue and invalid delegation of legislative power to tax. Further, the petitioner points out that since a 'special fund' consists of monies collected through the taxing power of a State, such amounts belong to the State, although the use thereof is limited to the special purpose/objective for which it was created. It thus appears that the challenge posed by the petitioner is premised primarily on the view that the powers granted to the ERB under P.D. 1956, as amended, partake of the nature of the taxation power of the State.

ISSUE: Is there an undue delegation of the legislative power of taxation?

HELD: None. It seems clear that while the funds collected may be referred to as taxes, they are exacted in the exercise of the police power of the State. Moreover, that the OPSF as a special fund is plain from the special treatment given it by E.O. 137. It is segregated from the general fund; and while it is placed in what the law refers to as a "trust liability account," the fund nonetheless remains subject to the scrutiny and review of the COA. The Court is satisfied that these measures comply with the constitutional description of a "special fund."    With regard to the alleged undue delegation of legislative power, the Court finds that the provision conferring the authority upon the ERB to impose additional amounts on petroleum products provides a sufficient standard by which the authority must be exercised. In addition to the general policy of the law to protect the local consumer by stabilizing and subsidizing domestic pump rates, P.D. 1956 expressly authorizes the ERB to impose additional amounts to augment the resources of the Fund.

86 SCRA 270
GR No. L-29646, November 10, 1978
"A tax law should be declared invalid if it fails to lay down standards to guide or limit the actions of the taxing authority."

FACTS: The Municipal Board of Manila enacted Ordinance No. 6537 which prohibits aliens from being employed or to engage or participate in any position or occupation or business, without first securing an employment permit from the Mayor of Manila and paying the permit fee of P50.00. The respondent challenged the validity of the ordinance upon the contention that it does not qualify as a valid exercise of the power to tax for, as a revenue measure imposed on aliens employed in the City of Manila, the ordinance is discriminatory and violative of the rule of the uniformity in taxation, and as a police power measure, it makes no distinction between useful and non-useful occupations, imposing a fixed P50.00 employment permit, which is out of proportion to the cost of registration and that it fails to prescribe any standard to guide and/or limit the action of the Mayor, thus, violating the fundamental principle on delegation of legislative powers:

ISSUE: Is there a valid exercise of the taxing power of the local government?

HELD: None. First, the ordinance is not a regulatory or police power measure; it is but a revenue measure guised in a police power measure. Second, the P50.00 fee is unreasonable not only because it is excessive but because it fails to consider valid substantial differences in situation among individual aliens who are required to pay it. Although the equal protection clause of the Constitution does not forbid classification, it is imperative that the classification should be based on real and substantial differences having a reasonable relation to the subject of the particular legislation. The same amount of P50.00 is being collected from every employed alien whether he is casual or permanent, part time or full time or whether he is a lowly employee or a highly paid executive.
   On the illegal delegation part of the argument, Ordinance No. 6537 is void for it does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion. It has been held that where an ordinance of a municipality fails to state any policy or to set up any standard to guide or limit the mayor's action, expresses no purpose to be attained by requiring a permit, enumerates no conditions for its grant or refusal, and entirely lacks standard, thus conferring upon the Mayor arbitrary and unrestricted power to grant or deny the issuance of permits, such ordinance is invalid, being an undefined and unlimited delegation of power to allow or prevent an activity per se lawful.

18 SCRA 488
GR No. L-21841, October 28, 1966
"Exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority."

FACTS: Petitioner, engaged in the industry of processing gasoline, oils etc., claims for the refund of special import taxes paid pursuant to the provision of RA 1394 which imposed a special import tax "on all goods, articles or products imported or brought into the Philippines." Exempt from this tax, by express mandate of Section 6 of the same law are "machinery, equipment, accessories, and spare parts, for the use of industries, miners, mining enterprises, planters and farmers". Petitioner argued that the importation it made of gas pumps used by their gasoline station operators should fall under such exemptions, being directly used in its industry. The Collector of Customs of Manila rejected the claim, and so as the Court on Tax Appeals. The CTA noted that the pumps imported were not used in the processing of gasoline and other oil products but by the gasoline stations, owned by the petitioner, for pumping out, from underground barrels, gasoline sold on retail to customers.

ISSUE: Is the contention of the petitioner tenable? Does the subject imports fall into the exemptions?

HELD: No. The contention runs smack against the familiar rules that exemption from taxation is not favored, and that exemptions in tax statutes are never presumed. Which are but statements in adherence to the ancient rule that exemptions from taxation are construed in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tested by this precept, we cannot indulge in expansive construction and write into the law an exemption not therein set forth. Rather, we go by the reasonable assumption that where the State has granted in express terms certain exemptions, those are the exemptions to be considered, and no more. Since the law states that, to be tax-exempt, equipment and spare parts should be "for the use of industries", the coverage herein should not be enlarged to include equipment and spare parts for use in dispensing gasoline at retail.