THE HONORABLE SECRETARY OF FINANCE VS. THE HONORABLE RICARDO M.

ILARDE and
CIPRIANO P. CABALUNA, JR
FACTS:
Private respondent failed to pay the land taxes on his parcels of land. Soon after private respondent
retired from his post as Regional Director of the Department of Finance, he filed a formal letter of protest
with the City Treasurer of Iloilo City wherein he contends that the City Treasurers computation of penalties
was erroneous since the rate of penalty applied exceeded twenty-four percent (24%) in contravention of
Section 66 of P.D. No. 464, otherwise known as the Real Property Tax Code, as amended. In response,
however, respondent Assistant City Treasurer, Rizalina F. Tulio, turned down private respondents protest,
citing Sec. 4(c) of Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 of the
then Ministry (now Department) of Finance. turned down private respondents protest, citing Sec. 4(c) of
Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 2-85 of the then Ministry (now
Department) of Finance, which, according to him, flouted Section 66 of P.D. No. 464 which fixed the
maximum penalty for delinquency in the payment of real estate taxes at 24% of the delinquent tax.
Respondent Judge rendered a decision declaring inter alia as null and void the questioned Assessment
Regulation and Treasury regulation. Petitioner appealed claiming inter alia that respondent judge erred
when he ignored the fact that private respondent was estopped to question the validity of the subject
regulation which he himself upheld and applied to other property owners while he was then the regional
director of finance for region vi.
ISSUE:
Whether respondent Judge erred in his decision.
RULING:
No. The subject Regulations must be struck down for being repugnant to Section 66 of P.D. No. 464
or the Real Property Tax Code, which is the law prevailing at the time material to this case. Section 66
provides that Failure to pay the real property tax before the expiration of the period for the payment without
penalty of the quarterly installments thereof shall subject the taxpayer to the payment of a penalty of two
per centum on the amount of the delinquent tax for each month of delinquency or fraction thereof, until the
delinquent tax shall be fully paid: Provided, That in no case shall the total penalty exceed twenty-four per
centum of the delinquent tax. Petitioner Secretary of Finance avers in his petition that the last paragraph of
Section 1, Joint Local Assessment/Treasury Regulations No. 2-86, explicitly provides for a 2% per month
penalty without any limitation as to the maximum amount thereof, which is entirely consistent with
the then existing Regulations, the now challenged Joint Assessment Regulations No. 1-85 and Local
Treasury Regulations No. 2-85.[13] Petitioner further asserts that inasmuch as Joint Local
Assessment/Treasury Regulations No. 2-86, which echoes the disputed Regulations, was issued to
implement E.O. No. 73, private respondents recourse is to file a case questioning the validity of Joint Local
Assessment/Treasury Regulations No. 2-86 in the same way that he has assailed Joint Assessment
Regulations No. 1-85 and Local Treasury Regulations No. 2-85. However, it is the validity of said
Regulations, not Joint Local Assessment/Treasury Regulations No. 2-86, that is sought to be resolved
herein and petitioner should not depart from the issue on hand. Petitioner further urges this Court that
inasmuch as Joint Local Assessment/Treasury Regulations No. 2-86 which was allegedly borne out of E.O.
No. 73 is consistent with the Joint Assessment Regulations No. 1-85 and Local Treasury Regulations No. 285 now under scrutiny, E.O. No. 73 had the effect of validating the latter. However, The underlying principle
behind E.O. No. 73, as gleaned from the whereas clauses and Section 1 thereof as quoted above, is to
advance the date of effectivity of the application of the Real Property Tax Values of 1984 from 01 January
1988, the original date it was intended by E.O. No. 1019 to take effect for purposes stated therein, to 01
January 1987. E.O. No. 73 did not, in any way, alter the structure of the real property tax assessments as
provided for in P.D. No. 464 or the Real Property Tax Code. Accordingly, the penalties imposed by
respondents City Treasurer and Assistant City Treasurer of Iloilo City on the property of private respondent
are valid only up to 24% of the delinquent taxes. The excess penalties paid by the private respondent
should, in view of that, be refunded by the latter. However, from 01 January 1992 onwards, the proper basis
for the computation of the real property tax payable, including penalties or interests, if applicable, must be
Rep. Act No. 7160, known as the Local Government Code, which took effect on the 1 st of January 1992,
inasmuch as Section 534 thereof had expressly repealed P.D. No. 464 or the Real Property Tax Code.

REPUBLIC OF THE PHILIPPINES, et al. vs. HON. RAMON S. CAGUIOA, et al.

FACTS:
Congress enacted R.A No. 7227 which created the Subic Special Economic and Freeport Zone
(SBF ) and the Subic Bay Metropolitan Authority (SBMA). Sec 12 thereof provides inter alia that movement
of goods and capital within, into and exported out of the Subic Special Economic Zone, shall be
provided incentives such as tax and duty-free importations of raw materials, capital and equipment.
Pursuant thereto, private respondents, which are all domestic corporations doing business at SBF, applied
for and were granted Certificates of Registration and Tax Exemption by the SBMA. However, Congress
subsequently passed R.A. No. 9334, which provides that the importation of cigars, etc. into the
Philippines, even if destined for tax and duty free shops, shall be subject to all applicable taxes, etc.
due thereon. Private respondent brought before the RTC a special civil action for declaratory relief to have
certain provisions of R.A. No. 9334 declared as unconstitutional. The court a quo granted private
respondents application for the issuance of a writ of preliminary injunction, ruling that private respondents
were entitled to enjoy the benefits of tax incentives under R.A. No. 7227, particularly the exemption from
local and national taxes under Section 12(c), R.A. No. 9334 is a general law that could not prevail over a
special statute like R.A. No. 7227 notwithstanding the fact that the assailed law is of later effectivity, and
that the repealing provision of Section 10 of R.A. No. 9334 does not expressly mention the repeal of R. A.
No. 7227, hence, its repeal can only be an implied repeal, which is not favored.
4

ISSUE:
Whether RA 9334 repealed RA 7227.
RULING:
Yes. It is beyond cavil that R.A. No. 7227 granted private respondents exemption from local and
national taxes, including excise taxes, on their importations of general merchandise, for which reason they
enjoyed tax-exempt status until the effectivity of R.A. No. 9334. By subsequently enacting R.A. No. 9334,
however, Congress expressed its intention to withdraw private respondents tax exemption privilege on their
importations of cigars, cigarettes, distilled spirits, fermented liquors and wines. Section 131, as amended by
R.A. No. 9334, now provides that such taxes, duties and charges, including excise taxes, shall apply to
importation of cigars and cigarettes, distilled spirits, fermented liquors and wines into the SBF. Every
presumption must be indulged in favor of the constitutionality of a statute. There is no vested right in a tax
exemption, more so when the latest expression of legislative intent renders its continuance doubtful. Being
a mere statutory privilege, a tax exemption may be modified or withdrawn at will by the granting
authority. To state otherwise is to limit the taxing power of the State, which is unlimited, plenary,
comprehensive and supreme. The power to impose taxes is one so unlimited in force and so searching in
extent, it is subject only to restrictions which rest on the discretion of the authority exercising it. As a general
rule, tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing
authority. The burden of proof rests upon the party claiming exemption to prove that it is in fact covered by
the exemption so claimed. In case of doubt, non-exemption is favored. The rights granted under the
Certificates of Registration and Tax Exemption of private respondents are not absolute and unconditional as
to constitute rights in esse those clearly founded on or granted by law or is enforceable as a matter of
law. These certificates granting private respondents a "permit to operate" their respective businesses are in
the nature of licenses, which the bulk of jurisprudence considers as neither a property nor a property right.
The licensee takes his license subject to such conditions as the grantor sees fit to impose, including its
revocation at pleasure. A license can thus be revoked at any time since it does not confer an absolute right.
Whatever right may have been acquired on the basis of the Certificates of Registration and Tax Exemption
must yield to the States valid exercise of police power.

CALTEX PHILIPPINES, INC. vs. THE HONORABLE COMMISSION ON AUDIT, HONORABLE

COMMISSIONER BARTOLOME C. FERNANDEZ and HONORABLE COMMISSIONER ALBERTO P.
CRUZ
FACTS:
The COA sent a letter to Caltex Philippines, Inc., directing the latter to remit to the OPSF its collection of the
additional tax on petroleum products authorized under the aforesaid Section 8 of P.D. No. 1956, and
informing it that, pending such remittance, all of its claims for reimbursement from the OPSF shall be held
in abeyance. Petitioner requested the COA for an early release of its reimbursement certificates from the
OPSF covering claims with the Office of Energy Affairs since June 1987 up to March 1989, invoking in
support thereof COA Circular No. 89-299 on the lifting of pre-audit of government transactions of national
government agencies and government-owned or controlled corporations. But, the COA denied petitioner's
request. Caltex submitted a proposal to COA for the payment and the recovery of claims. COA approved
the proposal but prohibited Caltex from further offsetting remittances and reimbursements for the current
and ensuing years. Petitioner filed an Omnibus Request for the Reconsideration of the decision. Petitioner
contends that Department of Finance issued Circular No. 4-88 allowing reimbursement .Denial of claim for reimbursement
would be inequitable. NCC (compensation) and Sec. 21, Book V, Title I-B of the Revised Administrative Code (Retention
of Money for Satisfaction of Indebtedness to Government) allows offsetting. Amounts due do not arise as a result of taxation
since PD 1956 did not create a source of taxation, it instead established a special fund. This lack of public purpose behind
OPSF exactions distinguishes it from tax.
ISSUE:
Whether the amounts due from Caltex to the OPSF may be off-setted against Caltexs outstanding
claims from said funds
RULING:
No. Taxation is no longer envisioned as a measure merely to raise revenue to support the existence
of government. Taxes may be levied with a regulatory purpose to provide means for the rehabilitation and
stabilization of a threatened industry which is affected with public interest as to be within the police power of
the State. It is settled that a taxpayer may not offset taxes due from the claims that he may have against the
government. Taxes cannot be subject of compensation because the government and taxpayer are not
mutually creditors and debtors of each other and a claim for taxes is not such a debt, demand, contract or
judgment as is allowed to be set-off. Technically, the oil companies merely act as agents for the Government in
the latters collection since the taxes are, in reality, passed unto the end-users the consuming public. Their
primary obligation is to account for and remit the taxes collection to the administrator of the OPSF. The oil industry is
greatly imbued with public interest as it vitally affects the general welfare. PD 1956, as amended by EO No. 137
explicitly provides that the source of OPSF is taxation.

VIVENCIO V. JUMAMIL vs. JOSE J. CAFE, et al.

FACTS:
Petitioner Jumamil questioned the constitutionality of Municipal Resolution No. 7 and 49, which
provided for allotted appropriations for the construction of stalls. Petitioner alleges that Resolution Nos. 7
and 49 were unconstitutional because they were passed for the business, occupation, enjoyment and
benefit of private respondents who deposited the amount of P40,000.00 for each stall, and with whom also
the mayor had a prior contract to award the would be constructed stalls to all private respondents. Both the
RTC and the CA dismissed the case on the ground of petitioners lack of legal standing and the parties
agreement to be bound by the decision in CA G.R. SP. No. 20424. The CA held that petitioner had no
standing to challenge the two resolutions/ordinances because he suffered no wrong under their terms.
Consequently, it ruled that petitioner, who was not a party to the lease contracts, had no standing to file the
petition for declaratory relief and seek judicial interpretation of the agreements.
ISSUE:
Whether petitioner had the legal standing to bring the petition for declaratory relief.
RULING:
No. Although Petitioner brought the petition in his capacity as taxpayer of the Municipality of
Panabo, Davao del Norte and not in his personal capacity and was questioning the official acts of the public
respondents in passing the ordinances and entering into the lease contracts with private respondents, a
taxpayer not being needed to be a party to the contract to challenge its validity, Petitioner did not
seasonably allege his interest in preventing the illegal expenditure of public funds or the specific injury to
him as a result of the enforcement of the questioned resolutions and contracts. But, even if we relaxed
petitioners lack of legal standing, this petition must still fail, because Petitioner failed to prove the subject
ordinances and agreements to be discriminatory. Considering that he was asking this Court to nullify the
acts of the local political department, he should have clearly established that such ordinances operated
unfairly against those who were not notified and who were thus not given the opportunity to make their
deposits. His unsubstantiated allegation that the public was not notified did not suffice. Furthermore, there
was the time-honored presumption of regularity of official duty, absent any showing to the contrary.

Randolf David vs President Gloria Macapagal-Arroyo

FACTS:
President Gloria Macapagal-Arroyo (GMA) issued Presidential Proclamation 1017 (PP1017) and is
to be implemented by General Order No. 5 (GO 5). The said law was aimed to suppress lawlessness and
the connivance of extremists to bring down the government. Pursuant to such PP, GMA cancelled all plans
to celebrate EDSA I and at the same time revoked all permits issued for rallies and other public
organization/meeting. Notwithstanding the cancellation of their rally permit, Kilusang Mayo Uno (KMU)
head Randolf David proceeded to rally which led to his arrest. In March, GMA issued PP 1021 which
declared that the state of national emergency ceased to exist. David and some opposition Congressmen
averred that PP1017 is unconstitutional for it has no factual basis and it cannot be validly declared by the
president for such power is reposed in Congress. In the interim, seven (7) petitions challenging the
constitutionality of PP 1017 and G.O. No. 5 were filed with the SC. Three (3) of these petitions impleaded
President Arroyo as respondent. In respondents Consolidated Comment, the Solicitor General countered
inter alia that petitioners in G.R. Nos. 171400 (ALGI), 171424 (Legarda), 171483 (KMU et al.), 171485
(Escudero et al.) and 171489 (Cadiz et al.) have no legal standing

ISSUE:
Whether petitioners have legal standing.
RULING:
This Court holds that all the petitioners herein have locus standi. Locus standi is defined as a right
of appearance in a court of justice on a given question. In private suits, standing is governed by the realparties-in interest rule as contained in Section 2, Rule 3 of the Rules of Court. Succinctly put, the plaintiffs

standing is based on his own right to the relief sought. Succinctly put, the plaintiffs standing is based on his
own right to the relief sought. Case law in most jurisdictions now allows both citizen and taxpayer standing
in public actions. The distinction was first laid down in Beauchamp v. Silk, where it was held that the
plaintiff in a taxpayers suit is in a different category from the plaintiff in a citizens suit. In the former, the
plaintiff is affected by the expenditure of public funds, while in the latter, he is but the mere
instrument of the public concern. Being a mere procedural technicality, the requirement of locus
standi may be waived by the Court in the exercise of its discretion. This was done in the 1949 Emergency
Powers Cases, Araneta v. Dinglasan, where the transcendental importance of the cases prompted the
Court to act liberally. It cannot be doubted that the validity of PP No. 1017 and G.O. No. 5 is a judicial
question which is of paramount importance to the Filipino people. To paraphrase Justice Laurel, the whole
of Philippine society now waits with bated breath the ruling of this Court on this very critical matter. The
petitions thus call for the application of the transcendental importance doctrine, a relaxation of the
standing requirements for the petitioners in the PP 1017 cases.

CIR vs. CENTRAL LUZON DRUG CORPORATION

FACTS:
Respondent is a domestic corporation engaged in the retailing of medicines and other pharmaceutical products. From
January to December 1996 respondent granted 20% sales discount to qualified senior citizens on their purchases of
medicines pursuant to RA 7432. On April 15, 1997, respondent filed its annual ITR for taxable year 1996 declaring therein
net losses. On Jan. 16, 1998 respondent filed with petitioner a claim for tax refund/credit of 904,769.00 allegedly
arising from the 20% sales discount. Unable to obtain affirmative response from petitioner, respondent elevated its
claim to the CTA via Petition for Review. CTA dismissed the same but on MR, CTA reversed its earlier ruling and ordered

petitioner to issue a Tax Credit Certificate in favor of respondent citing CAGR SP No. 60057 (May 31, 2001, Central Luzon
Drug Corp. vs. CIR) citing that Sec.229 of RA 7432 deals exclusively with illegally collected or erroneously paid taxes but that
there are other situations which may warrant a tax credit/refund.CA affirmed CTA decision reasoning that RA 7432 required
neither a tax liability nor a payment of taxes by private establishments prior to the availment of a tax credit. Moreover, such
credit is not tantamount to an unintended benefit from the law, but rather a just compensation for the taking of private property
for public use.
ISSUE:
W/N respondent, despite incurring a net loss, may still claim the 20% sales discount as a tax credit.
RULING:
Yes, it is clear that Sec. 4a of RA 7432 grants to senior citizens the privilege of obtaining a 20% discount on their purchase of
medicine from any private establishment in the country. The latter may then claim the cost of the discount as a
tax credit. Such credit can be claimed even if the establishment operates at a loss. A tax credit generally refers to an
amount that is subtracted directly from ones total tax liability. It is an allowance against the tax itself or
a deduction from what is owed by a taxpayer to the government. A tax credit should be understood in relation
to other tax concepts. One of these is tax deduction which is subtraction from income for tax purposes,
or an amount that is allowed by law to reduce income prior to the application of the tax rate to compute the
amount of tax which is due. In other words, whereas a tax credit reduces the tax due, tax deduction reduces the
income subject to tax in order to arrive at the taxable income. Since a tax credit is used to reduce directly the tax that is due,
there ought to be a tax liability before the tax credit can be applied. Without that liability, any tax credit application will be
useless. There will be no reason for deducting the latter whenthere is, to begin with, no existing obligation to
the government. However, as will be presented shortly, the existence of a tax credit or its grant by law is not the same as
the availment or use of such credit. While the grant is mandatory, the availment or useis not.If a net loss is reported by,
and no other taxes are currently due from, a businessestablishment, there will obviously be no tax liability against which any
tax credit can be applied. For the establishment to choose the immediate availment of a tax credit will be premature and
impracticable. Nevertheless, the irrefutable fact remains that, under RA7432, Congress has granted without conditions a tax
credit benefit to all covered establishments. However, for the losing establishment to immediately apply such credit,where no
tax is due, will be an improvident usance. In addition, while a tax liability is essential to the availment or use of any tax
credit, priortax payments are not. On the contrary, for the existence or grant solely of such credit, neither a tax liability nor
a prior tax payment is needed. The Tax Code is in fact repletewith provisions granting or allowing tax credits, even though
no taxes have been previously paid Petition is denied.