Digested Cases in Taxation Law (set 2)

TIO vs. VRB
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.

CITY OF BAGUIO vs. DE LEON
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.

BAGATSING vs. RAMIREZ
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.

PASCUAL vs. SECRETARY OF PUBLIC WORKS
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.

COMMISSIONER vs. BOAC
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.

ATLAS CONSOLIDATED MINING DEVT CORP vs. CIR
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.

BOARD OF ASSESSMENT APPEALS OF LAGUNA vs. CTA, NWSA
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.

PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs. CITY OF BUTUAN
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.

PEPSI-COLA BOTTLING CO. OF THE PHILS., INC. vs. MUNICIPALITY OF TANAUAN
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.

OSMEÑA vs. ORBOS
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.

VILLEGAS vs. HIU CHIONG
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.

ESSO STANDARD EASTERN, INC. vs. ACTING COMMISSIONER OF CUSTOMS
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.

Digested Cases in Wills and Succession

ATUN v. NUÑEZ
GR No.L-8018, October 26, 1955
87 PHIL 762

FACTS: Estefania Atun died without any issue leaving in the possession of the plaintiffs, her neices and nephews, a parcel of land. Such land was delivered by plaintiff Gil Atun to Silvestra Nuñez (sister of defendant-appellee Eusebio Nuñez) for cultivation, for which Silvestra paid the Atuns a part of the harvest as rental. In 1940, Silvestra turned over the land to defendant Eusebio Nuñez, who thereafter refused to recognize plaintiffs' ownership or to deliver their share of the produce. The defendant turn sold the land to his co-defendant Diego Belga, who took the property with the knowledge that it belonged, not to Nuñez, but to plaintiffs. There was no prior judicial declaration, however, that the plaintiffs were the legal heirs of the decedent.

ISSUE: Has plaintiffs the right to recover the property as a successor of the decedent?

HELD: Yes. In the instant case, as the land in question still stands registered in the name of Estefania Atun, now deceased, the present owners thereof would be her legal heirs. It is of record that Estefania Atun died without any issue or ascendants and left as her only surviving heirs the children of her brother Nicolas, plaintiffs herein; and the rule is settled that the legal heirs of a deceased may file an action arising out of a right belonging to their ancestor, without a separate judicial declaration of their status as such, provided there is no pending special proceeding for the settlement of the decedent's estate.

LEDESMA v. MCLACHLIN
GR No.L-44837, November 23, 1938
66 PHIL 547

FACTS: Lorenzo Quitco, died in 1930, leaving defendant Mclachlin and her children as heirs. Plaintiff Ana Ledesma, spurious/illegitimate child of Lorenzo Quitco, and her mother, sued to declare her as compulsory heir which the court however denied. Two years later, Lorenzo's father Eusebio died, and because he left some personal and real properties without a will, an intestate proceeding was instituted and a court order declaring his compulsory heirs did not of course include Ana as one. Following such court action, the plaintiff proceeded to collect the sum payable on a promissory note then issued in favor of her by Lorenzo by filing a claim in the intestate proceedings of Eusebio's Estate claiming that the sum be paid out of the properties inherited by the defendants represents that of the successional rights of Lorenzo as a compulsory heir of his father Eusebio.

ISSUE: Has plaintiff the right collect the sum promised by her father from her grandfather's estate?

HELD: No. The properties inherited by the defendants from their deceased grandfather by representation are not subject to the payment of debts and obligations of their deceased father, who died without leaving any property. While it is true that under the provisions of Articles 924 to 927 of the Civil Code, a child presents his father or mother who died before him in the properties of his grandfather or grandmother, this right of representation does not make the said child answerable for the obligations contracted by his deceased father or mother, because, as may be seen from the provisions of the Code of Civil Procedure referring to partition of inheritances, the inheritance is received with the benefit of inventory, that is to say, the heirs only answer with the properties received from their predecessor. The herein defendants, as heirs of Eusebio Quitco, in representation of their father Lorenzo M. Quitco, are not bound to pay the indebtedness of their father from whom they did not inherit anything.

LIMJOCO v. INTESTATE ESTATE OF PEDRO FRAGRANTE
GR No.L-770, April 27, 1948
80 PHIL 776

FACTS: Petitioner opposed the issuance by the Public Service Commission of a certificate of public convenience to install, maintain and operate an ice plant in San Juan to the respondent despite his demise, contending that the Commission erred in allowing the substitution of the legal representative of the estate of Pedro O. Fragante for the latter as party applicant in the case then pending before the commission, and in subsequently granting to said estate the certificate applied for, which is said to be in contravention of law.

ISSUE: Is the decision of the Commission correct and with basis?

HELD: Yes. If the respondent had not died, there can be no question that he would have had the right to prosecute his application before the commission to its final conclusion. No one would have denied him that right... The aforesaid right of respondent to prosecute said application to its conclusion was one which by its nature did not lapse through his death. Hence, it constitutes a part of the assets of his estate, for which right was a property despite the possibility that in the end the commission might have denied his application, although under the facts of the case, the commission granted the application in view of the financial ability of the estate to maintain and operate the ice plant.

USON v. DEL ROSARIO
GR No.L-4963, January 29, 1953
92 PHIL 530

FACTS: Faustino Nebreda died in 1945 leaving as an only heir his estranged wife Maria Uson, the petitioner. The latter sued to recover the ownership and possession of five parcels of land occupied by defendant Maria del Rosario, decedent's common-law-spouse and her children. As a defense, defendant presented a deed of separation agreed upon and signed Faustino and Uson containing among others an statement giving a parcel of land to Uson as an alimony and the latter renouncing her rights to any inheritance from Faustino.
  The defendant also contends that while it is true that the four minor defendants are illegitimate children of the decedent and under the old Civil Code are not entitled to any successional rights, however, under the new Civil Code they are given the status and rights of natural children and are entitled to the successional rights which the law accords to the latter (article 2264 and article 287, new Civil Code), and because these successional rights were declared for the first time in the new code, they shall be given retroactive effect even though the event which gave rise to them may have occurred under the prior legislation (Article 2253, new Civil Code).

ISSUE: Are the contentions of the defendants correct?

HELD: No. It is evident that when the decedent died in 1945 the five parcels of land he was seized of at the time passed from the moment of his death to his only heir, his widow Maria Uson (Article 657, old Civil Code). As this Court aptly said, "The property belongs to the heirs at the moment of the death of the ancestor as completely as if the ancestor had executed and delivered to them a deed for the same before his death" (Ilustre vs. Alaras Frondosa, 17 Phil., 321). From that moment, therefore, the rights of inheritance of Maria Uson over the lands in question became vested.
  The claim of the defendants that Uson had relinquished her right over the lands in question in view of her expressed renunciation to inherit any future property that her husband may acquire and leave upon his death in the deed of separation they had entered into cannot be entertained for the simple reason that future inheritance cannot be the subject of a contract nor can it be renounced.
  Nor does the contention that the provisions of the New Civil Code shall apply and be given retroactive effect. Article 2253 above referred to provides indeed that rights which are declared for the first time shall have retroactive effect even though the event which gave rise to them may have occurred under the former legislation, but this is so only when the new rights do not prejudice any vested or acquired right of the same origin... As already stated in the early part of this decision, the right of ownership of Maria Uson over the lands in question became vested in 1945 upon the death of her late husband and this is so because of the imperative provision of the law which commands that the rights to succession are transmitted from the moment of death (Article 657, old Civil Code). The new right recognized by the new Civil Code in favor of the illegitimate children of the deceased cannot, therefore, be asserted to the impairment of the vested right of Maria Uson over the lands in dispute.

LITONJUA v. MONTILLA
GR No.L-4170, January 31, 1952, 90PHIL757
90 PHIL 757

FACTS: Pedro Litonjua obtained a judgment against Claudio Montilla for the payment of a sum of P4,039. Failing to find or identify a property of Claudio to be levied, petitioner then proceeded to file a claim in the intestate proceeding of the estate of Agustin Montilla Sr, father of the deceased. The estate has not yet been properly probated.

ISSUE: Could the petitioner succeed in collecting the debt as against the estate of the debtor's deceased parent?

HELD:  No. In the case of Ortiga Brothers and Co. vs. Enage and Yap Tico, 18 Phil. 345, it was held that the creditor of the heirs of a deceased person is entitled to collect his claim out of the property which pertains by inheritance to said heirs, only after the debts of the testate or intestate have been paid and when the net assets that are divisible among the heirs are known, because the debts of the deceased must first be paid before his heirs can inherit. It was therein also held that a person who is not a creditor of a deceased, testate or intestate, has no right to intervene either in the proceedings brought in connection with the estate or in the settlement of the succession. The foregoing pronouncements are perfectly applicable to the case at bar, because the appellant is not a creditor of the deceased Agustin Montilla, Sr. and he seeks to collect his claim out of the inheritance of Claudio Montilla, an heir, before the net assets of the intestate estate have been determined.

DE GUZMAN vda. DE CARRILLO v. DE PAZ
GR No.L-4133, May 13, 1952
91 PHIL 265

FACTS: A lot had been mortgaged by spouses Severino Salak and Petra Garcia to Pedro Magat; the latter then assigned the mortgage to Honoria Salak. After the death Petra, Severino transferred 1/2 of his rights to the property to Honoria for the sum representing 1/2 of the consideratioin paid by her to the mortgagees Magat. Severino later died leaving the defendants as heirs. Honoria also died, with the plaintiff as heir. Intestate proceedings were instituted for the settlement and distribution of the estate of the deceased Severino and Petra, including the lot in question which was adjudicated, after proper proceedings in favor of the defendants. Plaintiff sued for reconveyance of the 1/2 of the portion of the lot in her favor as heir of Honoria.

ISSUE: May the petition prosper?

HELD: No. The property now sought to be recovered from the defendants was adjudicated in their favor after all claims, indebtedness and obligations chargeable against the intestate estate of the deceased Severino Salak and Petra Garcia had been all paid and accounted for out of the estate of the deceased; so that, in the eyes of the law, the properties now in the hands of the defendants are presumed to be free from all claims whatsoever. The claim of the plaintiff set up in the complaint should have been interposed during the pendency and progress of Special Proceeding No. 3; but plaintiff not having done so, she cannot now bring this action against the defendants, for it is clear that there exists no privity of contract between plaintiff and defendants upon which plaintiff can predicate her action against the present defendants.

IBARLE v. PO
GR No.L-5064, February 27, 1953
92 PHIL 721

FACTS: Leonardo Winstanley died leaving a parcel of land to his surviving spouse Catalina Navarro and some minor children. Catalina sold the entire parcel of land to Maria Canoy who later sold the same land to the plaintiff Bienvenido Ibarle. After some time, after her appointment as guardian of her minor children, Catalina again sold 1/2 of the land in question, which portion now belonged to the children as heirs, to herein defendant Esperanza Po.

ISSUE: Which sale was valid, and who has the rightful claim to the property?

HELD: The sale to defendant is valid. Article 657 of the old Civil Code provides: "The rights to the succession of a person are transmitted from the moment of his death." in a slightly different language, this article is incorporated in the new Civil Code as article 777.
  The above provision and comment make it clear that when Catalina Navarro Vda. de Winstanley sold the entire parcel to the Canoy spouses, one-half of it already belonged to the seller's children. No formal or judicial declaration being needed to confirm the children's title, it follows that the first sale was null and void in so far as it included the children's share.
  On the other hand, the sale to the defendant having been made by authority of the competent court was undeniably legal and effective. The fact that it has not been recorded is of no consequence. If registration were necessary, still the non-registration would not avail the plaintiff because it was due to no other cause than his own opposition.

OSORIO v. OSORIO
GR No.L-10474, March 29, 1916
41 PHIL 531

FACTS: Francisco Osorio y Garcia filed a written complaint alleging that he is a natural son of one Francisco Osorio y Reyes who died in 1896; and that he had been in continuous possession of the status of natural son of said Osorio y Reyes, as proven by direct acts of the latter and of his family; that the defendant Soledad Osorio, lawful daughter and lawful heir of said Osorio y Reyes, be ordered to recognize the plaintiff as a natural son of said Osorio y Reyes, and is entitled to share in his father's estate; and, furthermore, that said defendant be ordered to furnish subsistence to plaintiff in such amount as the court might deem proper to fix. The evidence offered relating to the fact of filiation of Osorio y Garcia to Osorio Reyes is strong and unimpeachable, so that the court found the legitimacy of claim of Osorio y Garcia to be properly established.

ISSUE: Has the plaintiff the right to be recognized as co-heir and be entitled to the rights appertaining to his deceased father's estate?

HELD: Yes. Recognition of the child as a natural child must be made if he has been in continuous possession of his filiation, proven by the attendance of his father at his baptism, in the certificate in which his name and that of his mother appear, though the document contains errors, and by his father's statement to various friends that the boy was his natural son, and by his father's always having attended to the care, education and support of his son.
  So that the plaintiff, Francisco Osorio y Garcia, according to the facts proven in this case and the law on the subject, is entitled to have his half sister Soledad Osorio, a legitimate daughter of the father of both of them, recognize him as being the natural, recognized son of Francisco Osorio y Reyes and as entitled to the rights granted him by law in respect to his deceased father's estate, all of which is in possession of the defendant spouses.

RAMIREZ v. BALTAZAR
GR No.L-25049, August 30, 1968
22 SCRA 918

FACTS: Victoriana Eguaras, single, mortgaged a real estate to spouses Baltazar, defendants in this case. Upon demise of Victoriana, the mortgagees, as creditors of the deceased, filed a petition for the intestate proceedings of Victoriana's estate, alleging further that plaintiffs Felimon and Monica Ramirez are heirs of the deceased. Felimon was later appointed as adminstrator but did not qualify so that Artemio Diawan was appointed as judicial administrator of the estate. The mortgagees then filed a foreclosure of the property in question and succeeded, after Diawan failed to file an answer against the petition. The foreclosure sale ensued, the property was bought by the mortgagees themselves and the sale was confirmed by the court. Felimon sued for the annulment of the entire foreclosure proceedings, alleging among others the failure of the judicial administrator to protect their interests. Defendants contended that plaintiffs have no legal capacity to sue and hava no cause of action.

ISSUE: Have the plaintiffs the cause of action against the defendant?

HELD: Yes. There is no question that the rights to succession are automatically transmitted to the heirs from the moment of the death of the decedent. While, as a rule, the formal declaration or recognition to such successional rights needs judicial confirmation, this Court has, under special circumstances, protected these rights from encroachments made or attempted before the judicial declaration. In Pascual vs. Pascual, it was ruled that although heirs have no legal standing in court upon the commencement of testate or intestate proceedings, this rule admits of an exception as "when the administrator fails or refuses to act in which event the heirs may act in his place."

DE BORJA v. MENCIAS
GR No.L-20609, September 29, 1966
21 SCRA 1133

FACTS: Petitioners Juan De Borja et al. petitioned for the reversal of the order of Judge Mencias, denying their petition cause the sale of the properties levied upon to satisfy the money judgment in a civil case rendered in favor of petitioners against respondent Crisanto de Borja. Petitioners levied aganst the rights, interest and
participation which Crisanto de Borja had in certain real properties, as an heir of the decedents Josefa Tangco and Francisco de Borja, whose estates were then pending settlement in Special Proceedings Nos. F-7866 and 1955 of the aforementioned court, respectively.
this Court hereby holds that whatever interest, claim or right which Crisanto de Borja may have in the testate estate of Josefa Tangco and in the intestate estate of Francisco de Borja are subject to attachment and execution for the purpose of satisfying the money judgment rendered against the said heir

ISSUE: May the sale of the property levied for execution proceed?

HELD: The above question must be answered in the affirmative, provided it is understood that the sale shall be only of whatever rights, interest and participation may be adjudicated to said heir as a result of the final settlement of the estates, and that delivery thereof to the judgment creditor or to the purchaser at the public sale thereof shall be made only after the final settlement of the estates and in the manner provided by the legal provision mentioned above.

RODRIGUEZ v. DE BORJA
GR No.L-21993, June 21, 1966
17 SCRA 418

FACTS: Private respondents Apolonia Pangilinan and Adelaida Jacalan delivered to the Clerk of Court of Bulacan a purported last will and testament of Fr. Rodriguez, meanwhile the petitioners filed a petition before the court to examine the purported will but which was later withdrawn, and a petition for the settlement of the intestate estate of Fr. Rodriguez was subsequently field in a another court in Rizal. The petitioners now sought the dismissal of the special proceeding on the settlement of the decedent's estate based on the purported will, questioning therefore the jurisdiction of CFI Bulacan.

ISSUE: Does CFI Bulacan have jurisdiction to proceed with the testate proceedings?

HELD: Yes. The jurisdiction of the Court of First Instance of Bulacan became vested upon the delivery thereto of the will of the late Father Rodriguez, even if no petition for its allowance was filed until later, because upon the will being deposited the court could, motu proprio, have taken steps to fix the time and place for proving the will, and issued the corresponding notices conformably to what is prescribed by section 3, Rule 76, of the Revised Rules of Court. Moreover, aside from the rule that the Court first taking cognizance of the settlement of the estate of a decedent shall exercise jurisdiction to the exclusion of all other courts, intestate succession is only subsidiary or subordinate to the testate, since intestacy only takes place in the absence of a valid operative will.

CHAVEZ v. IAC
GR No. L-68282, November 8, 1990

FACTS: Manuela Buenavista assigned her paraphernal property in equal pro-diviso among her 6 children, while possession of such property still remains with her. Three of her children sold each their share to private respondent Concepcion, consolidating 4/6 portion thereof. Deeds of sale were therefor executed with the conformity of Manuela. Despite such transfers, the latter sold the entire property to one of the siblings, herein petitioner Raquel Chavez. Respondent sued for the annulment of the later sale to Raquel which was denied by the trail court but which later decision overturned by the Court of Appeals. On appeal, petitioner also contends that their mother has left a last will and this will supercedes the earlier transfers.

ISSUE: Is partition inter-vivos, and sale based on such partition valid? Does a last will supercede that of the partition inter-vivos?

HELD: Yes. When a person makes a partition by will, it is imperative that such partition must be executed in accordance with the provisions of the law on wills; however, when a person makes the partition of his estate by an act inter vivos, such partition may even be oral or written, and need not be in the form of a will, provided that the partition does not prejudice the legitime of compulsory heirs. xxx The Deeds of Sale are not contracts entered into with respect to future inheritance but a contract perfected and consummated during the lifetime of Manuela Buenavista who signed the same and gave her consent thereto. Such partition inter vivos, executed by the property owner herself, is valid.

It would be unjust and inequitable to allow Manuela Buenavista Vda. de Chavez to revoke the sales she herself authorized as well as the sale she herself executed in favor of her son only to execute a simulated sale in favor of her daughter Raquel who had already profited from the sale she made of the property she had received in the partition inter vivos.

NERI v. AKUTIN
GR No.L-47799, May 21, 1943
74 PHIL 185

FACTS: This is a case where the testator Agripino Neri in his will left all his property by universal title to the children by his second marriage, the herein respondents, with omission of the children by his first marriage, the herein petitioner. The omission of the heirs in the will was contemplated by the testator with the belief that he had already given each of the children portion of the inheritance, particularly a land he had abandoned was occupied by the respondents over which registration was denied for it turned out to be a public land, and an aggregate amount of money which the respondents were indebted to their father.

ISSUE: Should there be cancellation of the will, in view of the omission of heirs? Is there disinheritance in this case?

HELD: Yes. The Court annulled the institution of heirs and declared a total intestacy on the ground that testator left all his property by universal title to the children by his second marriage, without expressly disinheriting the children by his first marriage but upon the erroneous belief that he had given them already more shares in his property than those given to the children by his second marriage.  Disinheritance made without a statement of the cause, if contested, shall annul the institution of heirs in so far as it is prejudicial to the disinherited person. This is but a case of preterition which annuls the institution of heirs.

BARANDA v. BARANDA
GR No.73275 May 20, 1987

FACTS: Paulina Baranda died without issue, but before her demise, two of her supposed heirs, the herein respondents Evangelina and Elisa Baranda, have already taken possession of 6 parcels of land and caused the transfer of such by virtue of questionable sales which the late widow had also sought the reconveyance which did not however materialized. The petitioners, siblings of the decedent, now sought the annulment of the supposed sale or transfers. Respondents question the petitioners legal standing, them being not a party-in-interest in the deed of sale.

ISSUE: Can the petitioners impugn the validity of the sales?

HELD: This Court has repeatedly held that "the legal heirs of a decedent are the parties in interest to commence ordinary actions arising out of the rights belonging to the deceased, without separate judicial declaration as to their being heirs of said decedent, provided that there is no pending special proceeding for the settlement of the decedent's estate.

There being no pending special proceeding for the settlement of Paulina Baranda's estate, the petitioners, as her intestate heirs, had the right to sue for the reconveyance of the disputed properties, not to them, but to the estate itself of the decedent, for distribution later in accordance with law. Otherwise, no one else could question the simulated sales and the subjects thereof would remain in the name of the alleged vendees, who would thus have been permitted to benefit from their deception, In fact, even if it were assumed that those suing through attorneys-in-fact were not properly represented, the remaining petitioners would still have sufficed to impugn the validity of the deeds of sale.

BALAIS v. BALAIS
GR No.L-33924, March 18, 1988
159 SCRA 47

FACTS: On an action for recovery of real property filed by the respondents, spurious children of the late Escolastico Balais who died in 1948, against the petitioners, legitimate children of the deceased, the trial court decreed reconveyance of the portion of the property belonging to the legitime and further declaring partition that sent 1/4 portion of the legitime to the respondents. Petitioners come now questioning the partition and seeking the reconveyance of the 1/4 share that went to the spurious children, relying on the provisions of the old civil code, and thereby questioning the competence and jurisdiction of the trial court,

ISSUE: Is the court competent to decree the partition, without it being asked in the complaint? Could the provisions of the new civil code be applied over a case which occurs prior to its effectivity?

HELD: 1. Yes. The court acquired jurisdiction by estoppel. It must be noted that, in spite of the broad challenge the appellants present against the jurisdiction of the trial court to order the distribution of the property, they, in reality, question only that part of the decision awarding a one-fourth part of the property to the illegitimate children of the deceased, upon the ground that under the old Civil Code illegitimate children other than natural enjoyed no successionary rights. They do not contest the delivery of the estate to the deceased's widow or to themselves in the proportions decreed by the court.
2. No. The court erred in applying the provisions of the new code. But as stated, the error of the court notwithstanding, the case is a closed chapter, the decision having been rendered by a court of competent jurisdiction, have become final and executory. A decision, no matter how erroneous, becomes the law of the case between the parties upon attaining finality.

CONDE v. ABAYA
GR No.L-4275, March 23, 1909
13 PHIL 249

FACTS: Casiano Abaya died unmarried however leaving two unaknowledged children by herein plaintiff-appellee Paula Conde. The latter, as a ascendant heir of her children, sued for the settlement of the intestate estate of Casiano along with the acknowledgment of the two as natural children of the deceased. The trial court, with the opposition of the defendant-appellant Roman Abaya, brother of the deceased, rendered judgment bestowing the estate of Casiano to Conde as legitimate heir of the decedent's natural children.

ISSUE: May the mother of a natural child now deceased, bring an action for the acknowledgment of the natural filiation in favor of such child in order to appear in his behalf to receive the inheritance from the deceased natural father.

HELD: The right of action that devolves upon the child to claim his legitimacy lasts during his whole life, while the right to claim the acknowledgment of a natural child lasts only during the life of his presumed parents. An action for the acknowledgment of a natural child may, as an exception, be exercised against the heirs of the presumed parents in two cases: first, in the event of the death of the latter during the minority of the child, and second, upon the discovery of some instrument of express acknowledgment of the child, executed by the father or mother, the existence of which was unknown during the life of the latter.

But such action for the acknowledgment of a natural child can only be exercised by him. It cannot be transmitted to his descendants, or his ascendants.

REIRA v. PALMAROLI
GR No.14851, September 13, 1919
40 PHIL 105

FACTS: Antonia Reira, widow of Juan Pons who was at the time of the latter's death residing at Palma de Mallorca, sought the annulment of the order of the trial court admitting the probate of a purported will of her husband. The purported will was submitted to be admitted to probate by respondent Consul General Palmaroli. The petitioner contends that the probate of the will, in view of her absence, deprived her of her right to contest the original application.

ISSUE: Should the probated will yield to the rights of the decedent's heir?

HELD: Yes. A will is nothing more than a species of conveyance whereby a person is permitted, with the formalities prescribed by law, to control in a certain degree the disposition of his property after his death. Out of consideration for the important interests involved the execution and proof of wills has been surrounded by numerous safeguards, among which is the provision that after death of the testator his will may be judicially established in court. xxx The probate of a will, while conclusive as to its due execution, in no wise involves the intrinsic validity of its provisions. If, therefore, upon the distribution of the estate of the decedent, it should appear that any provision of his will is contrary to the law applicable to his case, the will must necessarily yield upon that point and the disposition made by law must prevail.

MONTINOLA v. HERBOSA

FACTS: Montinola filed an action against the heirs of Dr. Jose Rizal for recovery of possession of personal property (the RIZAL RELICS) allegedly sold to him by Doña Trinidad Rizal. The trial court held that neither party is entitled to the possession of such property, relying principally on the fact that in Rizal's Mi Ultimo Adios, there is a line where Rizal bequeathed all his property to the Filipino people. The court argued that the handwritten work of Rizal constitutes a holographic will giving the State all his property.

ISSUE: Does Mi Ultimo Adios constitute a last will?

HELD: No. An instrument which merely expresses a last wish as a thought or advice but does not contain a disposition of property, and executed without Animus Standi cannot be legally considered a will. Rizal's Mi Ultimo Adios is but a literary piece of work, and was so intended. It may be considered a will in a grammatical sense but not in a legal or juridical sense. Moreover, it also lacks the requirements of a holographic will such as a statement of the year month and day of its execution and his signature.

MERZA v. PORRAS
GR No.L-4888, May 25, 1953
93 PHIL 142

FACTS: Pilar Montealegre died leaving a will (Exhibit A) and a so-called codicil (Exhibit B), disinheriting her husband Pedro Porras and some of her relatives. The two documents were submitted to probate but were denied by the trial court, upon the grounds such as the defect of the attestation clause on Exh. A and that Exh. cannot be considered a codicil for it was executed by the testator a day before Exhibit A, thus  it cannot be included in the probate proceedings.

ISSUE: Should a document, expressly disinheriting certain heirs, executed by the testator prior to a supposed last will, be probated?

HELD: Yes. The trial court and the CA is correct that Exhibit B having been executed one day before Exhibit A could not be considered as a codicil "because a codicil, as the word implies, is only an addition to, or modification of, the will." The Court of Appeals added that "the contents of Exhibit B are couched in the language ordinarily used in a simple affidavit and as such, may not have the legal effect and force to a testamentary disposition."
However,  Exhibit B does partake of the nature of a will. A will is defined in article 667 of the Civil code of Spain as "the act by which a person dispose of all his property or a portion of it," and in article 783 of the new Civil Code as "an act whereby a person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of his estate, to take effect after his death. Exhibit B comes within this definition.

CASTAÑEDA v. ALEMANY
GR No.1439, March 19, 1904
3 PHIL 426

FACTS: Appellant constested the validity of the will of Doña Juana Moreno upon the ground that although the attestation clause in the will states that the testator signed the will in the presence of three witnesses who also each signed in each presence, the will was not actually written by the testator.

ISSUE: Is it necessary that a will be written by the testator herself?

HELD: No. Section 618 of the Civil Code requires (1) that the will be in writing and (2) either that the testator sign it himself or, if he does not sign it, that it be signed by some one in his presence and by his express direction. Who does the mechanical work of writing the will is a matter of indifference. The fact, therefore, that in this case the will was typewritten in the office of the lawyer for the testratrix is of no consequence.

MICIANO v. BRIMO
GR No.L-22595, November 1, 1927
50 PHIL 867

FACTS: Joseph Brimo, a Turkish national, died leaving a will which one of the clauses states that the law of the Philippines shall govern the partition and not the law of his nationality, and that legatees have to respect the will, otherwise the dispositions accruing to them shall be annulled. By virtue of such condition, his brother, Andre Brimo, an instituted heir was thus excluded because, by his action of having opposed the partition scheme, he did not respect the will. Andre sued contending that the conditions are void being contrary to law which provides that the will shall be probated according to the laws of the nationality of the decedent.

ISSUE: Is the condition as set by the testator valid?

HELD: No. A foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those matters that Article 10 of the Civil Code states said national law should govern. Said condition then, in the light of the legal provisions above cited, is considered unwritten, and the institution of legatees in said will is unconditional and consequently valid and effective even as to the herein oppositor.

BELLIS v. BELLIS
GR No.L-23678, June 6, 1967
20 SCRA 358

FACTS: Amos G. Bellis, a native of Texas and US national, executed a will in the Philippines that specifies legacies for his first wife and three illegitimate children, and the residue estate be divided among his legitimate children. When he died, the executor administered the will but his illegitimate children opposed the partition claiming that aside from the legacies, they should still have a share from the legitime as complusory heirs of the decedent. Texas law, however, does not provide for the legitime.

ISSUE: Are the decedent's illegitimate children entitled to such portion of the legitime? What law shall govern the decendent's will?

HELD: No. The parties admit that the decedent was a citizen of the State of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of the provision of the will and the amount of successional rights are to be determined under Texas law, the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis. Hence, the illegitimate children of the decedent has no claim to the inheritance aside from those expressly provided legacies.

Digested Cases in Taxation Law

CIR v. PINEDA
GR No. L-22734, September 15, 1967
21 SCRA 105

FACTS: Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15 children, the eldest of whom is Atty. Manuel Pineda. Estate proceedings were had in Court so that the estate was divided among and awarded to the heirs. Atty Pineda's share amounted to about P2,500.00. After the estate proceedings were closed, the BIR investigated the income tax liability of the estate for the years 1945, 1946, 1947 and 1948 and it found that the corresponding income tax returns were not filed. Thereupon, the representative of the Collector of Internal Revenue filed said returns for the estate issued an assessment and charged the full amount to the inheritance due to Atty. Pineda who argued that he is liable only to extent of his proportional share in the inheritance.

ISSUE: Can BIR collect the full amount of estate taxes from an heir's inheritance.

HELD: Yes. The Government can require Atty. Pineda to pay the full amount of the taxes assessed.
The reason is that the Government has a lien on the P2,500.00 received by him from the estate as his share in the inheritance, for unpaid income taxes for which said estate is liable. By virtue of such lien, the Government has the right to subject the property in Pineda's possession to satisfy the income tax assessment. After such payment, Pineda will have a right of contribution from his co-heirs, to achieve an adjustment of the proper share of each heir in the distributable estate.
  All told, the Government has two ways of collecting the tax in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received; and second, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due. This second remedy is the very avenue the Government took in this case to collect the tax. The Bureau of Internal Revenue should be given, in instances like the case at bar, the necessary discretion to avail itself of the most expeditious way to collect the tax as may be envisioned in the particular provision of the Tax Code above quoted, because taxes are the lifeblood of government and their prompt and certain availability is an imperious need.

VERA v. FERNANDEZ
GR No. L-31364 March 30, 1979
89 SCRA 199

FACTS: The BIR filed on July 29, 1969 a motion for allowance of claim and for payment of taxes representing the estate's tax deficiencies in 1963 to 1964 in the intestate proceedings of Luis Tongoy. The administrator opposed arguing that the claim was already barred by the statute of limitation, Section 2 and Section 5 of Rule 86 of the Rules of Court which provides that all claims for money against the decedent, arising from contracts, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and expenses for the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred forever.

ISSUE: Does the statute of non-claims of the Rules of Court bar the claim of the government for unpaid taxes?

HELD: No. The reason for the more liberal treatment of claims for taxes against a decedent's estate in the form of exception from the application of the statute of non-claims, is not hard to find. Taxes are the lifeblood of the Government and their prompt and certain availability are imperious need. (CIR vs. Pineda, 21 SCRA 105). Upon taxation depends the Government ability to serve the people for whose benefit taxes are collected. To safeguard such interest, neglect or omission of government officials entrusted with the collection of taxes should not be allowed to bring harm or detriment to the people, in the same manner as private persons may be made to suffer individually on account of his own negligence, the presumption being that they take good care of their personal affairs. This should not hold true to government officials with respect to matters not of their own personal concern. This is the philosophy behind the government's exception, as a general rule, from the operation of the principle of estoppel.

CIR v. CA, CITY TRUST BANKING CORP.
GR No. 86785, November 21, 1991
234 SCRA 348

FACTS:  Respondent corporation Citytrust filed a refund of overpaid taxes with the BIR by which the latter denied on the ground of prescription. Citytrust filed a petition for review before the CTA. The case was submitted for decision based solely on the pleadings and evidence submitted by the respondent because the CIR could not present any evidence by reason of the repeated failure of the Tax Credit/Refud Division of the BIR to transmit the records of the case, as well as the investigation report thereon, to the Solicitor General. CTA rendered the decision ordering BIR to grant the respondent's request for tax refund amounting to P 13.3 million.

ISSUE:  Failure of the CIR to present evidence to support the case of the government, should the respondent's claim be granted?

HELD: Not yet. It is a long and firmly settled rule of law that the Government is not bound by the errors committed by its agents.  In the performance of its governmental functions, the State cannot be estopped by the neglect of its agent and officers. Although the Government may generally be estopped through the affirmative acts of public officers acting within their authority, their neglect or omission of public duties as exemplified in this case will not and should not produce that effect.
  Nowhere is the aforestated rule more true than in the field of taxation. It is axiomatic that the Government cannot and must not be estopped particularly in matters involving taxes. Taxes are the lifeblood of the nation through which the government agencies continue to operate and with which the State effects its functions for the welfare of its constituents. The errors of certain administrative officers should never be allowed to jeopardize the Government's financial position, especially in the case at bar where the amount involves millions of pesos the collection whereof, if justified, stands to be prejudiced just because of bureaucratic lethargy. Thus, it is proper that the case be remanded back to the CTA for further proceedings and reception of evidence.

COMMISSIONER v. ALGUE, INC.
GR No. L-28896, February 17, 1988

FACTS: Privaterespondent corporation Algue Ince filed its income tax returns for 1958 and 1959showing deductions, for promotional fees paid, from their gross income, thus lowering their taxable income. The BIR assessed Algue based on such deductions contending that the claimed deduction is disallowed because it was not an ordinary, reasonable and necessary expense.

ISSUE: Should an uncommon business expense be disallowed as a proper deduction in computation of income taxes, corollary to the doctrine that taxes are the lifeblood of the government?

HELD: No. Private respondent has proved that the payment of the fees was necessary and reasonable in the light of the efforts exerted by the payees in inducing investors and prominent businessmen to venture in an xperimental enterprise and involve themselves in a new business requiring millions of pesos. This was no mean feat and should be, as it was, sufficiently recompensed.
  It is well-settled that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.
  But even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. If it is not, then the taxpayer has a right to complain and the courts will then come to his succor. For all the awesome power of the tax collector, he may still be stopped in his tracks if the taxpayer can demonstrate, as it has here, that the law has not been observed.

CIR v. YMCA
GR No. 124043, October 14, 1998
298 SCRA 83

FACTS: Private Respondent YMCA--a non-stock, non-profit institution, which conducts various programs beneficial to the public pursuant to its religious, educational and charitable objectives--leases out a portion of its premises to small shop owners, like restaurants and canteen operators, deriving substantial income for such. Seeing this, the commissioner of internal revenue (CIR) issued an assessment to private respondent for deficiency income tax, deficiency expanded withholding taxes on rentals and professional fees and deficiency withholding tax on wages. YMCA opposed arguing that its rental income is not subject to tax, mainly because of the provisions of Section 27 of NIRC which provides that civic league or organizations not organized for profit but operate exclusively for promotion of social welfare and those organized exclusively for pleasure, recreation and other non-profitble businesses shall not be taxed.

ISSUE: Is the contention of YMCA tenable?

HELD: No. Because taxes are the lifeblood of the nation, the Court has always applied the doctrine of strict in interpretation in construing tax exemptions. Furthermore, a claim of statutory exemption from taxation should be manifest and unmistakable from the language of the law on which it is based. Thus, the claimed exemption "must expressly be granted in a statute stated in a language too clear to be mistaken.

DAVAO GULF LUMBER CORP v. CIR
GR No. 117359, July 23, 1998
293 SCRA 77

FACTS: Republic Act No. 1435 entitles miners and forest concessioners to the refund of 25% of the specific taxes paid by the oil companies, which were eventually passed on to the user--the petitioner in this case--in the purchase price of the oil products. Petitioner filed before respondent Commissioner of Internal Revenue (CIR) a claim for refund in the amount representing 25% of the specific taxes actually paid on the above-mentioned fuels and oils that were used by petitioner in its operations. However petitioner asserts that equity and justice demands that the refund should be based on the increased rates of specific taxes which it actually paid, as prescribed in Sections 153 and 156 of the NIRC. Public respondent, on the other hand, contends that it should be based on specific taxes deemed paid under Sections 1 and 2 of RA 1435.

ISSUE: Should the petitioner be entitled under Republic Act No. 1435 to the refund of 25% of the amount of specific taxes it actually paid on various refined and manufactured mineral oils and other oil products, and not on the taxes deemed paid and passed on to them, as end-users, by the oil companies?

HELD: No. According to an eminent authority on taxation, "there is no tax exemption solely on the ground of equity." Thus, the tax refund should be based on the taxes deemed paid. Because taxes are the lifeblood of the nation, statutes that allow exemptions are construed strictly against the grantee and liberally in favor of the government. Otherwise stated, any exemption from the payment of a tax must be clearly stated in the language of the law; it cannot be merely implied therefrom.

MARCOS II v. CA
GR No. 120880, June 5, 1997
293 SCRA 77

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, and notices were constructively served to the Marcoses, 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.

ISSUE: Is the contention 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 is not a mandatory requirement in the collection of estate taxes. It cannot therefore be argued that the Tax Bureau erred in proceeding with the levying and sale of the properties allegedly owned by the late President, on the ground that it was required to seek first the probate court's sanction. There is nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's approval of the state's claim for estate taxes, before the same can be enforced and collected.
  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.

REYES v. ALMANZOR
GR Nos. L-49839-46, April 26, 1991
196 SCRA 322

FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo which are leased and occupied as dwelling units by tenants who were paying monthly rentals of not exceeding P300. Sometimes in 1971 the Rental Freezing Law was passed prohibiting for one year from its effectivity, an increase in monthly rentals of dwelling units where rentals do not exceed three hundred pesos (P300.00), so that the Reyeses were precluded from raising the rents and from ejecting the tenants. In 1973, respondent City Assessor of Manila re-classified and reassessed the value of the subject properties based on the schedule of market values, which entailed an increase in the corresponding tax rates prompting petitioners to file a Memorandum of Disagreement averring that the reassessments made were "excessive, unwarranted, inequitable, confiscatory and unconstitutional" considering that the taxes imposed upon them greatly exceeded the annual income derived from their properties. They argued that the income approach should have been used in determining the land values instead of the comparable sales approach which the City Assessor adopted.

ISSUE: Is the approach on tax assessment used by the City Assessor reasonable?

HELD: No. The taxing power has the authority to make a reasonable and natural classification for purposes of taxation but the government's act must not be prompted by a spirit of hostility, or at the very least discrimination that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different both in the privileges conferred and the liabilities imposed.
  Consequently, it stands to reason that petitioners who are burdened by the government by its Rental Freezing Laws (then R.A. No. 6359 and P.D. 20) under the principle of social justice should not now be penalized by the same government by the imposition of excessive taxes petitioners can ill afford and eventually result in the forfeiture of their properties.

PHIL. BANK OF COMMUNICATIONS v. CIR
GR No. 112024, January 28, 1999
302 SCRA 250

FACTS: Petitioner PBCom filed its first and second quarter income tax returns, reported profits, and paid income taxes amounting to P5.2M in 1985. However, at the end of the year PBCom suffered losses so that when it filed its Annual Income Tax Returns for the year-ended December 31, 1986, the petitioner likewise reported a net loss of P14.1 M, and thus declared no tax payable for the year. In 1988, the bank requested from CIR for a tax credit and tax refunds representing overpayment of taxes. Pending investigation of the respondent CIR, petitioner instituted a Petition for Review before the Court of Tax Appeals (CTA). CTA denied its petition for tax credit and refund for failing to file within the prescriptive period to which the petitioner belies arguing the Revenue Circular No.7-85 issued by the CIR itself states that claim for overpaid taxes are not covered by the two-year prescriptive period mandated under the Tax Code.

ISSUE: Is the contention of the petitioner correct? Is the revenue circular a valid exemption to the NIRC?

HELD: No. The relaxation of revenue regulations by RMC 7-85 is not warranted as it disregards the two-year prescriptive period set by law.
  Basic is the principle that "taxes are the lifeblood of the nation." The primary purpose is to generate funds for the State to finance the needs of the citizenry and to advance the common weal. Due process of law under the Constitution does not require judicial proceedings in tax cases. This must necessarily be so because it is upon taxation that the government chiefly relies to obtain the means to carry on its operations and it is of utmost importance that the modes adopted to enforce the collection of taxes levied should be summary and interfered with as little as possible.
  From the same perspective, claims for refund or tax credit should be exercised within the time fixed by law because the BIR being an administrative body enforced to collect taxes, its functions should not be unduly delayed or hampered by incidental matters.

PHIL. GUARANTY CO., INC. v. CIR
GR No. L-22074, April 30, 1965
13 SCRA 775

FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance company, entered into reinsurance contracts with foreign insurance companies not doing business in the country, thereby ceding to foreign reinsurers a portion of the premiums on insurance it has originally underwritten in the Philippines. The premiums paid by such companies were excluded by the petitioner from its gross income when it file its income tax returns for 1953 and 1954. Furthermore, it did not withhold or pay tax on them. Consequently, the CIR assessed against the petitioner withholding taxes on the ceded reinsurance premiums to which the latter protested the assessment on the ground that the premiums are not subject to tax for the premiums did not constitute income from sources within the Philippines because the foreign reinsurers did not engage in business in the Philippines, and CIR's previous rulings did not require insurance companies to withhold income tax due from foreign companies.

ISSUE: Are insurance companies not required to withhold tax on reinsurance premiums ceded to foreign insurance companies, which deprives the government from collecting the tax due from them?

HELD: No. The power to tax is an attribute of sovereignty. It is a power emanating from necessity. It is a necessary burden to preserve the State's sovereignty and a means to give the citizenry an army to resist an aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public improvement designed for the enjoyment of the citizenry and those which come within the State's territory, and facilities and protection which a government is supposed to provide. Considering that the reinsurance premiums in question were afforded protection by the government and the recipient foreign reinsurers exercised rights and privileges guaranteed by our laws, such reinsurance premiums and reinsurers should share the burden of maintaining the state.
  The petitioner's defense of reliance of good faith on rulings of the CIR requiring no withholding of tax due on reinsurance premiums may free the taxpayer from the payment of surcharges or penalties imposed for failure to pay the corresponding withholding tax, but it certainly would not exculpate it from liability to pay such withholding tax. The Government is not estopped from collecting taxes by the mistakes or errors of its agents.

PHILEX MINING CORP. v. CIR
GR No. 125704, August 28, 1998
294 SCRA 687

FACTS: Petitioner Philex Mining Corp. assails the decision of the Court of Appeals affirming the Court of Tax Appeals decision ordering it to pay the amount of P110.7 M as excise tax liability for the period from the 2nd quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from 1994 until fully paid pursuant to Sections 248 and 249 of the Tax Code of 1977. Philex protested the demand for payment of the tax liabilities stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P120 M plus interest. Therefore these claims for tax credit/refund should be applied against the tax liabilities.

ISSUE: Can there be an off-setting between the tax liabilities vis-a-vis claims of tax refund of the petitioner?

HELD: No. Philex's claim is an outright disregard of the basic principle in tax law that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. Evidently, to countenance Philex's whimsical reason would render ineffective our tax collection system. Too simplistic, it finds no support in law or in jurisprudence.
  To be sure, Philex cannot be allowed to refuse the payment of its tax liabilities on the ground that it has a pending tax claim for refund or credit against the government which has not yet been granted.Taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. There is a material distinction between a tax and debt. Debts are due to the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity. xxx There can be no off-setting of taxes against the claims that the taxpayer may have against the government. A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected. The collection of a tax cannot await the results of a lawsuit against the government.

NORTH CAMARINES LUMBER CO., INC. v. CIR
GR No. L-12353, September 30, 1960
109 PHIL 511

FACTS: The petitioner sold more than 2M boardfeet of logs to General Lumber Co. with the agreement that the latter would pay the sales taxes. The CIR, upon consultation officially advised the parties that the bureau interposes no objection so long as the tax due shall be covered by a surety. General Lumber complied, but later failed, with the surety, to pay the tax liabilities, and so the respondent collector required the petitioner to pay thru a letter dated August 30, 1955. Twice did the petitioner filed a request for reconsideration before finally submitting the denied request for appeal before the Court of Tax Appeals. The CTA dismissed the appeal as it was clearly filed out of time. The petitioner had consumed thirty-three days from the receipt of the demand, before filing the appeal. Petitioner argued that in computing the 30-day period in perfecting the appeal the letter of the respondent Collector dated January 30, 1956, denying the second request for reconsideration, should be considered as the final decision contemplated in Section 7, and not the letter of demand dated August 30, 1955.

ISSUE: Is the contention of the petitioner tenable?

HELD: No. This contention is untenable. We cannot countenance that theory that would make the commencement of the statutory 30-day period solely dependent on the will of the taxpayer and place the latter in a position to put off indefinitely and at his convenience the finality of a tax assessment. Such an absurd procedure would be detrimental to the interest of the Government, for "taxes are the lifeblood of the government, and their prompt and certain availability is an imperious need."

LUTZ v. ARANETA
GR No. L-7859, December 22, 1955
98 PHIL 148

FACTS: Plaintiff Walter Lutz, in his capacity as judicial administrator of the intestate estate of Antionio Ledesma, sought to recover from the CIR the sum of P14,666.40 paid by the estate as taxes, under section 3 of the CA 567 or the Sugar Adjustment Act thereby assailing its constitutionality, for it provided for an increase of the existing tax on the manufacture of sugar, alleging that such enactment is not being levied for a public purpose but solely and exclusively for the aid and support of the sugar industry thus making it void and unconstitutional. The sugar industry situation at the time of the enactment was in an imminent threat of loss and needed to be stabilized by imposition of emergency measures.

ISSUE: Is CA 567 constitutional, despite its being allegedly violative of the equal protection clause, the purpose of which is not for the benefit of the general public but for the rehabilitation only of the sugar industry?

HELD: Yes. The protection and promotion of the sugar industry is a matter of public concern, it follows that the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion must be allowed to fully play, subject only to the test of reasonableness; and it is not contended that the means provided in the law bear no relation to the objective pursued or are oppressive in character. If objective and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the state's police power.

GOMEZ v. PALOMAR
GR No. L-23645, October 29, 1968
25 SCRA 827

FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in San Fernando, Pampanga. It did not bear the special anti-TB stamp required by the RA 1635. It was returned to the petitioner. Petitioner now assails the constitutionality of the statute claiming that RA 1635 otherwise known as the Anti-TB Stamp law is violative of the equal protection clause because it constitutes mail users into a class for the purpose of the tax while leaving untaxed the rest of the population and that even among postal patrons the statute discriminatorily grants exemptions. The law in question requires an additional 5 centavo stamp for every mail being posted, and no mail shall be delivered unless bearing the said stamp.

ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly violative of the equal protection clause?

HELD: No. It is settled that the legislature has the inherent power to select the subjects of taxation and to grant exemptions. This power has aptly been described as "of wide range and flexibility." Indeed, it is said that in the field of taxation, more than in other areas, the legislature possesses the greatest freedom in classification. The reason for this is that traditionally, classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden.
  The classification of mail users is based on the ability to pay, the enjoyment of a privilege and on administrative convenience. Tax exemptions have never been thought of as raising revenues under the equal protection clause.

PUNSALAN v. MUN. BOARD OF CITY OF MANILA
GR No. L-23645, October 29, 1968
95 PHIL 46

FACTS: The plaintiffs--two lawyers, medical practitioner, a dental surgeon, a CPA, and a pharmacist--sought the annulment of Ordinance No.3398 of the City of Manila which imposes a municipal occupation tax on persons exercising various professions in the city and penalizes non-payment of the tax, contending in substance that this ordinance and the law authorizing it constitute class legislation, are unjust and oppressive, and authorize what amounts to double taxation. The burden of plaintiffs' complaint is not that the professions  to which they respectively belong have been singled out for the imposition of this municipal occupation tax, but that while the law has authorized the City of Manila to impose the said tax, it has withheld that authority from other chartered cities, not to mention municipalities.

ISSUE: Does the law constitute a class legislation? Is it for the Court to determine which political unit should impose taxes and which should not?

HELD: No. It is not for the courts to judge what particular cities or municipalities should be empowered to impose occupation taxes in addition to those imposed by the National Government. That matter is peculiarly within the domain of the political departments and the courts would do well not to encroach upon it. Moreover, as the seat of the National Government and with a population and volume of trade many times that of any other Philippine city or municipality, Manila, no doubt, offers a more lucrative field for the practice of the professions, so that it is but fair that the professionals in Manila be made to pay a higher occupation tax than their brethren in the provinces.