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Sison vs Ancheta
Whether or not Section 1 of BP Blg 135 violates the due process and
GR No. L-59431, 25 July 1984
equal protection clauses of the Constitution, while also violating the
rule that taxes must be uniform and equitable

Facts: Section 1 of BP Blg 135 amended the Tax Code and petitioner
Antero M. Sison, as taxpayer, alleges that "he would be unduly Ruling:

discriminated against by the imposition of higher rates of tax upon his

income arising from the exercise of his profession vis-a-vis those which are 1. No. Assuming that said amount represents a portion of the 75%
imposed upon fixed income or salaried individual taxpayers. He of his war damage claim which was not paid, the same would not be
deductible as a loss in 1951 because, according to petitioner, the last
characterizes said provision as arbitrary amounting to class legislation, installment he received from the War Damage Commission, together
oppressive and capricious in character. It therefore violates both the equal with the notice that no further payment would be made on his claim,
was in 1950. In the circumstance, said amount would at most be a
protection and due process clauses of the Constitution as well asof the proper deduction from his 1950 gross income. In the second place,
rule requiring uniformity in taxation. said amount cannot be considered as a "business asset" which can be
deducted as a loss in contemplation of law because its collection is
not enforceable as a matter of right, but is dependent merely upon
Issue: Whether or not the assailed provision violates the equal protection the generosity and magnanimity of the U. S. government. As of the
end of 1945, there was absolutely no law under which petitioner
and due process clauses of the Constitution while also violating the rule could claim compensation for the destruction of his properties during
that taxes must be uniform and equitable. the battle for the liberation of the Philippines. And under the
Philippine Rehabilitation Act of 1946, the payments of claims by the
War Damage Commission merely depended upon its discretion to be
Held: The petition is without merit. exercised in the manner it may see lit, but the non-payment of which
cannot give rise to any enforceable right.
On due process - it is undoubted that it may be invoked where a taxing
statute is so arbitrary that it finds no support in the Constitution. An
obvious example is where it can be shown to amount to the confiscation
of property from abuse of power. Petitioner alleges arbitrariness but his 2. Yes. It is well known that our internal revenue laws are not
political in nature and as such were continued in force during the
mere allegation does not suffice and there must be a factual foundation of period of enemy occupation and in effect were actually enforced by
such unconsitutional taint. the occupation government. As a matter of fact, income tax returns
were filed during that period and income tax payment were effected
On equal protection - it suffices that the laws operate equally and and considered valid and legal. Such tax laws are deemed to be the
uniformly on all persons under similar circumstances, both in the laws of the occupied territory and not of the occupying enemy.

privileges conferred and the liabilities imposed. REYES v. ALMANZOR

GR Nos. L-49839-46, April 26, 1991
On the matter that the rule of taxation shall be uniform and equitable -
196 SCRA 322
this requirement is met when the tax operates with the same force and
FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo which
effect in every place where the subject may be found." Also, :the rule of
are leased and occupied as dwelling
uniformity does not call for perfect uniformity or perfect equality, because units by tenants who were paying monthly rentals of not exceeding P300.
Sometimes in 1971 the Rental
this is hardly unattainable." When the problem of classification became of
Freezing Law was passed prohibiting for one year from its effectivity, an
issue, the Court said: "Equality and uniformity in taxation means that all increase in monthly rentals of dwelling
units where rentals do not exceed three hundred pesos (P300.00), so that
taxable articles or kinds of property of the same class shall be taxed the
the Reyeses were precluded from
same rate. The taxing power has the authority to make reasonable and raising the rents and from ejecting the tenants. In 1973, respondent City
Assessor of Manila re-classified and
natural classifications for purposes of taxation..." As provided by this Court,
reassessed the value of the subject properties based on the schedule of
where "the differentation" complained of "conforms to the practical market values, which entailed an
increase in the corresponding tax rates prompting petitioners to file a
dictates of justice and equity" it "is not discriminatory within the meaning
Memorandum of Disagreement averring
of this clause and is therefore uniform." that the reassessments made were "excessive, unwarranted, inequitable,
confiscatory and unconstitutional"
Issue:
considering that the taxes imposed upon them greatly exceeded the
annual income derived from their
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properties. They argued that the income approach should have been used constructed thereon.
in determining the land values instead The property tax exemption under Sec. 28(3), Art. VI of the Constitution of
of the comparable sales approach which the City Assessor adopted. the property taxes only. This provision was implanted by Sec.243 (b) of RA
7160.which provides that in order to be entitled to the exemption, the
ISSUE: Is the approach on tax assessment used by the City Assessor lung center must be able to prove that: it is a charitable institution and; its
reasonable? real properties are actually, directly and exclusively used for charitable
purpose. Accordingly, the portions occupied by the hospital used for its
HELD: No. The taxing power has the authority to make a reasonable and patients are exempt from real property taxes while those leased to private
natural classification for purposes of entities are not exempt from such taxes.
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
NATIONAL POWER CORPORATION, petitioner,
equally and uniformly on all persons under
vs.
similar circumstances or that all persons must be treated in the same
CITY OF CABANATUAN, respondent.
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 FACTS: Petitioner is a government-owned and controlled corporation
the government by its Rental Freezing created under Commonwealth Act No. 120, as amended.
Laws (then R.A. No. 6359 and P.D. 20) under the principle of social justice
should not now be penalized by the For many years now, petitioner sells electric power to the residents of
same government by the imposition of excessive taxes petitioners can ill Cabanatuan City, posting a gross income of P107,814,187.96 in 1992.7
afford and eventually result in the Pursuant to section 37 of Ordinance No. 165-92,8 the respondent
forfeiture of their properties. assessed the petitioner a franchise tax amounting to P808,606.41,
representing 75% of 1% of the latter’s gross receipts for the preceding
year.
Lung CENTER

Petitioner refused to pay the tax assessment arguing that the respondent
has no authority to impose tax on government entities. Petitioner also
FACTS:
contended that as a non-profit organization, it is exempted from the
Petitioner is a non-stock, non-profit entity established by virtue of PD No.
payment of all forms of taxes, charges, duties or fees in accordance with
1823, seeks exemption from real property taxes when the City Assessor
sec. 13 of Rep. Act No. 6395, as amended.
issued Tax Declarations for the land and the hospital building. Petitioner
predicted on its claim that it is a charitable institution. The request was
denied, and a petition hereafter filed before the Local Board of The respondent filed a collection suit in the RTC, demanding that
Assessment Appeals of Quezon City (QC-LBAA) for reversal of the petitioner pay the assessed tax due, plus surcharge. Respondent alleged
resolution of the City Assessor. Petitioner alleged that as a charitable that petitioner’s exemption from local taxes has been repealed by section
institution, is exempted from real property taxes under Sec 28(3) Art VI of 193 of the LGC, which reads as follows:
the Constitution. QC-LBAA dismissed the petition and the decision was
likewise affirmed on appeal by the Central Board of Assessment Appeals “Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise
of Quezon City. The Court of Appeals affirmed the judgment of the CBAA. provided in this Code, tax exemptions or incentives granted to, or
presently enjoyed by all persons, whether natural or juridical, including
ISSUE: government owned or controlled corporations, except local water districts,
1. Whether or not petitioner is a charitable institution within the context cooperatives duly registered under R.A. No. 6938, non-stock and
of PD 1823 and the 1973 and 1987 Constitution and Section 234(b) of RA non-profit hospitals and educational institutions, are hereby withdrawn
7160. upon the effectivity of this Code.”

2. Whether or not petitioner is exempted from real property taxes.

RTC upheld NPC’s tax exemption. On appeal the CA reversed the trial
RULING: court’s Order on the ground that section 193, in relation to sections 137
1. Yes. The Court hold that the petitioner is a charitable institution within and 151 of the LGC, expressly withdrew the exemptions granted to the
the context of the 1973 and 1987 Constitution. Under PD 1823, the petitioner.
petitioner is a non-profit and non-stock corporation which, subject to the
provisions of the decree, is to be administered by the Office of the ISSUE: W/N the respondent city government has the authority to issue
President with the Ministry of Health and the Ministry of Human Ordinance No. 165-92 and impose an annual tax on “businesses enjoying a
Settlements. The purpose for which it was created was to render medical franchise
services to the public in general including those who are poor and also the
rich, and become a subject of charity. Under PD 1823, petitioner is
HELD: YES. Taxes are the lifeblood of the government, for without taxes,
entitled to receive donations, even if the gift or donation is in the form of
the government can neither exist nor endure. A principal attribute of
subsidies granted by the government.
sovereignty, the exercise of taxing power derives its source from the very
existence of the state whose social contract with its citizens obliges it to
2. Partly No. Under PD 1823, the lung center does not enjoy any property
promote public interest and common good. The theory behind the
tax exemption privileges for its real properties as well as the building
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exercise of the power to tax emanates from necessity;32 without taxes, enterprises.” With the added burden of devolution, it is even more
government cannot fulfill its mandate of promoting the general welfare imperative for government entities to share in the requirements of
and well-being of the people. development, fiscal or otherwise, by paying taxes or other charges due
from them.
Section 137 of the LGC clearly states that the LGUs can impose franchise
tax “notwithstanding any exemption granted by any law or other special
law.” This particular provision of the LGC does not admit any exception.
In City Government of San Pablo, Laguna v. Reyes,74 MERALCO’s
exemption from the payment of franchise taxes was brought as an issue
before this Court. The same issue was involved in the subsequent case
of Manila Electric Company v. Province of Laguna.75 Ruling in favor of the
local government in both instances, we ruled that the franchise tax in
question is imposable despite any exemption enjoyed by MERALCO under
special laws, viz:

“It is our view that petitioners correctly rely on provisions of Sections 137
and 193 of the LGC to support their position that MERALCO’s tax
exemption has been withdrawn. The explicit language of section 137
which authorizes the province to impose franchise tax ‘notwithstanding
any exemption granted by any law or other special law’ is
all-encompassing and clear. The franchise tax is imposable despite any
exemption enjoyed under special laws.

Section 193 buttresses the withdrawal of extant tax exemption

privileges. By stating that unless otherwise provided in this Code, tax
exemptions or incentives granted to or presently enjoyed by all persons,
whether natural or juridical, including government-owned or controlled
corporations except (1) local water districts, (2) cooperatives duly
registered under R.A. 6938, (3) non-stock and non-profit hospitals and
educational institutions, are withdrawn upon the effectivity of this code,
the obvious import is to limit the exemptions to the three enumerated
entities. It is a basic precept of statutory construction that the express
mention of one person, thing, act, or consequence excludes all others as
expressed in the familiar maxim expressio unius est exclusio alterius. In the
absence of any provision of the Code to the contrary, and we find no other
provision in point, any existing tax exemption or incentive enjoyed by
MERALCO under existing law was clearly intended to be withdrawn.

Reading together sections 137 and 193 of the LGC, we conclude that under
the LGC the local government unit may now impose a local tax at a rate
not exceeding 50% of 1% of the gross annual receipts for the preceding
calendar based on the incoming receipts realized within its territorial
jurisdiction. The legislative purpose to withdraw tax privileges enjoyed
under existing law or charter is clearly manifested by the language used on
(sic) Sections 137 and 193 categorically withdrawing such exemption
subject only to the exceptions enumerated. Since it would be not only
tedious and impractical to attempt to enumerate all the existing statutes
providing for special tax exemptions or privileges, the LGC provided for an
express, albeit general, withdrawal of such exemptions or privileges. No
more unequivocal language could have been used.”76 (emphases supplied)

Doubtless, the power to tax is the most effective instrument to raise

needed revenues to finance and support myriad activities of the local
government units for the delivery of basic services essential to the
promotion of the general welfare and the enhancement of peace,
progress, and prosperity of the people. As this Court observed in the
Mactan case, “the original reasons for the withdrawal of tax exemption
privileges granted to government-owned or controlled corporations and
all other units of government were that such privilege resulted in serious
tax base erosion and distortions in the tax treatment of similarly situated