Power

 of  Taxation  
1.)  Pascual  vs.  Secretary  of  Publicworks  GR  No.  L-­‐10405,  December  29,  1960]  

FACTS:  Governor  Wenceslao  Pascual  of  Rizal  instituted  this  action  for  declaratory  relief,  with  injunction,  upon  the  ground  that  RA  No.  920  
("An  Act  Appropriating  Funds  for  Public  Works"),  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.  
ISSUES:  Whether  or  not  the  petitioner  has  the  standing  to  file  the  petition  
Whether  or  not  RA  #  920  is  unconstitutional.  
HELD:    1)  Petitioner  has  standing.  He  is  not  merely  a  taxpayer  but  the  governor  of  the  province  of  Rizal  which  is  considered  one  of  the  most  
populated  biggest  provinces  during  that  time,  its  taxpayers  bear  a  substantial  portion  of  the  burden  of  taxation  in  the  country  
2)  Public  funds  can  only  be  appropriated  for  a  public  purpose.  The  test  of  the  constitutionality  of  a  statute  requiring  the  use  of  public  funds  is  
whether  it  is  used  to  promote  public  interest.  Moreover,  the  validity  of  a  stature  depends  on  the  powers  of  the  Congress  at  the  time  of  its  
passage  or  approval,  not  upon  events  occurring,  or  acts  performed  subsequent  thereto,  unless  it  is  an  amendment  of  the  organic  law.  

2.)  Punsalan  vs.  Municipal  Board  of  Manila  [GR  No.  L-­‐4817.  May  26,  1954]  

FACTS:  Ordinance  3398  was  enacted  pursuant  to  paragraph  1  of  Section  18  ofthe  Revised  Charter  of  the  Cityof  Manila,  imposing  a  municipal  
occupation  tax  on  persons  exercising  various  professions  in  the  city.  Variousprofessionals  filed  suit  to  annul  the  ordinance  and  the  provision  
of  law  authorizing  the  enactment  of  theordinance,  and  to  call  for  the  refund  collected  taxes  under  the  ordinance.  
ISSUE:  Whether  the  Ordinance  violates  the  equal  protection  clause.  
HELD:  The  legislature  may,  in  its  discretion,  select  what  occupation  shall  be  taxed,  and  in  the  exercise  of  thatdiscretion  it  may  tax  all,  or  it  
may  select  for  taxation  certain  classes  and  leave  the  other  untaxed.  Manila,  asthe  seat  of  the  National  Government  and  with  a  population  and  
volume  of  trade  many  times  that  of  any  otherPhilippine  city  or  municipality,  offers  a  more  lucrative  field  for  the  practice  of  the  professions,  
so  that  it  is  butfair  that  the  professionals  in  Manila  be  made  to  pay  a  higher  occupation  tax  than  their  brethen  in  theprovinces.  The  ordinance  
imposes  the  tax  upon  every  person  “exercising”  or  “pursuing”  any  of  the  occupation  named  in  the  ordinance,  and  does  not  make  any  
distinction  between  professional  having  offices  in  Manila  andoutsiders  who  practice  their  profession  therein.  What  constitutes  exercise  or  
pursuit  of  a  profession  in  the  city  is  a  matter  of  judicial  determination.  The  Ordinance  does  not  violate  the  equal  protection  clause.  

 
Power  of  Taxation  
3.)  LIаdoc  vs.  Commissioner  of  Internal  Revenue  [GR  No.  L-­‐19201.  June  16,  1965]  

FACTS:  in  1957,  the  M.B.  Estate,  Inc.,  of  Bacolod  City,  donated  P10,000.00  in  cash  to  Rev.  Fr.  Crispin  Ruiz,  then  parish  priest  of  Victorias,  
Negros  Occidental,  and  predecessor  of  herein  petitioner,  for  the  construction  of  a  new  Catholic  Church  in  the  locality.  The  total  amount  was  
actually  spent  for  the  purpose  intended.  
On  March  3,  1958,  the  donor  M.B.  Estate,  Inc.,  filed  the  donor's  gift  tax  return.  Under  date  of  April  29,  1960,  the  respondent  Commissioner  of  
Internal  Revenue  issued  an  assessment  for  donee's  gift  tax  against  the  Catholic  Parish  of  Victorias,  Negros  Occidental,  of  which  petitioner  
was  the  priest.  The  tax  amounted  to  P1,370.00  including  surcharges,  interests  of  1%  monthly  from  May  15,  1958  to  June  15,  1960,  and  the  
compromise  for  the  late  filing  of  the  return.  
Rev.  Fr.  Casimiro  Lladoc  claimed,  among  others,  that  at  the  time  of  the  donation,  he  was  not  the  parish  priest  in  Victorias;  that  there  is  no  
legal  entity  or  juridical  person  known  as  the  "Catholic  Parish  Priest  of  Victorias,"  and,  therefore,  he  should  not  be  liable  for  the  donee's  gift  
tax.  It  was  also  asserted  that  the  assessment  of  the  gift  tax,  even  against  the  Roman  Catholic  Church,  would  not  be  valid,  for  such  would  be  a  
clear  violation  of  the  provisions  of  the  Constitution.  
ISSUE:  Whether  or  not  petitioner  should  be  liable  for  the  assessed  donee's  gift  tax.  
HELD:  The  decision  appealed  from  should  be,  as  it  is  hereby  affirmed  insofar  as  tax  liability  is  concerned;  it  is  modified,  in  the  sense  that  
petitioner  herein  is  not  personally  liable  for  the  said  gift  tax,  and  that  the  Head  of  the  Diocese,  herein  substitute  petitioner,  should  pay,  as  he  
is  presently  ordered  to  pay,  the  said  gift  tax,  without  special,  pronouncement  as  to  costs.  

4.)  Abra  Valley  College  vs.  Aquino  GR.  No.  L-­‐39086,  June  15,  1983  

FACTS:  Abra  Valley  College  rents  out  the  ground  floor  of  its  college  building  to  Northern  MarketingCorporation  while  the  second  floor  
thereof  is  used  by  the  Director  of  the  College  for  residential  purposes.  Themunicipal  and  provincial  treasurers  served  upon  the  College  a  
“notice  of  seizure”  and  later  a  “notice  of  sale”due  to  the  alleged  failure  of  the  College  to  pay  real  estate  taxes  and  penalties  thereon.  The  
school  filed  suit  toannul  said  notices,  claiming  that  it  is  tax-­‐exempt.  
ISSUE:  Whether  the  College  is  exempt  from  taxes.  
HELD:    While  the  Court  allows  a  more  liberal  and  non-­‐restrictive  interpretation  of  the  phrase  “exclusively  isedfor  educational  purposes,”  
reasonable  emphasis  has  always  been  made  that  exemption  extends  to  facilitieswhich  are  incidental  to  and  reasonably  necessary  for  the  
accomplishment  of  the  main  purposes.  While  thesecond  floor’s  use,  as  residence  of  the  director,  is  incidental  to  education;  the  lease  of  the  
first  floor  cannot  byany  stretch  of  imagination  be  considered  incidental  to  the  purposes  of  education.  The  test  of  exemption  fromtaxation  is  
the  use  of  the  property  for  purposes  mentioned  in  the  Constititution.  The  decision  of  the  Court  of  First  Instance  of  Abra,  Branch  I,  is  hereby  
AFFIRMED  subject  to  the  modification  that  half  of  the  assessed  tax  be  returned  to  the  petitioner.