16. Borja vs.

Gella

FACTS: Jose de Borja has been delinquent in the payment of his real estate taxes since 1958 for
properties located in the City of Manila and Pasay City and has offered to pay them with two negotiable
certificates of indebtedness. The certificates were rejected by the city treasurers of both Manila and
Pasay cities on the ground of their limited negotiability. The Treasurer opined that the negotiable
certificates cannot be accepted as payment of real estate taxes inasmuch as the law provides for their
acceptance from their backpay holder only or the original applicant himself, but not his
assignee. Borja filed an action against the treasurers of both the City of Manila and Pasay City, as well as
the Treasurer of the Philippines, to compel them to execute an act which the law allegedly requires
them to perform, to wit: to accept the above-mentioned certificates of indebtedness considering that
they were already due and redeemable so as not to deprive him illegally of his privilege to pay his
obligation to the government thru such means.

ISSUE: May backpay certificates be used in payment of tax?

RULING: Generally, tax is a pecuniary burden payable in money, but backpay certificates may be used in
payment of tax. However, the right to use the backpay certificate in settlement of taxes is given only to
an applicant and not to any holder of any negotiable certificate. Here appellee is not himself the
applicant of the certificate in question. He is merely an assignee thereof, or a subsequent holder whose
right is at most to have it discounted upon maturity or to negotiate it in the meantime. A fortiori it may
be concluded that, not having the right to use said certificates to pay his taxes, appellee cannot compel
appellants to accept them as he requests in the present petition for mandamus. As a consequence,
we can not but hold that mandamus does not lie against appellants because they have in no way
neglected to perform an act enjoined upon them by law as a duty, nor have they unlawfully
excluded appellee from the use or enjoyment of a right to which he is entitled.
22. Tan Tiong Bio vs CIR

Facts:

Central Syndicate a corporation organized under the laws of the Philippines sent a letter to the
Collector of Internal Revenue requesting a refund for alleged excess payment of sales tax due to the
adjustment and reduction of the purchase price of goods obtained from Dee Hong Lue but was denied.

The Central Syndicate elevated the case to the Court of Tax Appeals (CTA). The Collector filed a motion
requiring the syndicate to file a bond to guarantee the payment of the tax assessed against it.

COURT OF TAX APPEALS DECISION: (1) Denied Collector’s motion. On the ground that cannot be legally
done it appearing that the syndicate is already a non-existing entity due to the expiration of its
corporate existence (2) dismissing syndicate’s appeal primarily on the ground that the Central Syndicate
has no personality to maintain the action then pending before it. From this order the syndicate
appealed to the Supreme Court wherein it intimated that the appeal should not be dismissed because it
could be substituted by its successors-in-interest.

The syndicate was later substituted by its officers and directors (petitioners herein). Court of Tax
Appeals proceeded to hear the case.

COURT OF TAX APPEALS DECISION: Petitioners ordered to pay jointly and severally, to the Collector of
Internal Revenue deficiency sales tax and surcharge on the surplus goods purchased by them from the
Foreign Liquidation Commission. Petitioners filed appeal.

Issue:

Whether or not the sales tax in question of a corporation having already been dissolved can be
enforced against its successors-in-interest.

Held:

Yes.

Stockholders may be held liable for the unpaid taxes of a dissolved corporation, if it appears that
the corporate assets have passed into their hands. Likewise, when stockholders have unpaid
subscriptions to the capital of the corporation, they can be made liable for unpaid taxes of the
corporation to the extent of their unpaid subscriptions.

It should be stated at the outset that it was petitioners themselves who caused their substitution
as parties in the present case, being the successors-in-interest of the defunct syndicate, when they
appealed this case to the Supreme Court. In fact, because of this directive their substitution was
effected. They cannot, therefore, be now heard to complain if they are made responsible for the tax
liability of the defunct syndicate whose representation they assumed and whose assets were distributed
among them.

Petitioners are therefore the beneficiaries of the defunct corporation and as such should be held
liable to pay the taxes in question. However, there being no express provision requiring the
stockholders of the corporation to be solidarily liable for its debts which liability must be express and
cannot be presumed, petitioners should be held to be liable for the tax in question only in proportion to
their shares in the distribution of the assets of the defunct corporation.
43. San Miguel Brewery vs. City of Cebu

Facts: Plaintiff San Miguel Brewery, Inc. — hereinafter referred to as SMB — assails the validity of
Ordinance No. 298, as amended by Ordinance No. 300, both series of 1960, of the City of Cebu,
providing that "(t)here shall be collected on any sale or disposal of liquor or intoxicating beverages of
any form in the City of Cebu by manufacturers and wholesalers for purposes of a municipal
tax. Pursuant to said ordinance, the SMB which is engaged in the manufacture, bottling, distribution and
sale of beer throughout the Philippines, including the defendant Cebu City, paid thereto, under protest,
on April 20, 1961, the sum of P29,874.69, the refund of which is prayed for in the complaint herein,
upon the ground that said ordinance is ultra vires, for imposing a sales tax, which is allegedly beyond
defendant's power to levy, apart from resulting in illegal double taxation, since SMB already pays the
defendant a business license tax of P600 per annum

Issue: Whether said ordinance is ultra vires, for imposing a sales tax, which is allegedly beyond
defendant's power to levy, apart from resulting in illegal double taxation

Ruling: The tax on the sale or disposal of every "bottle or container" of "liquor intoxicating beverages,"
and, as such, is a typical tax or revenue measure, whereas the sum of P600 it pays annually is for a
"second-class wholesale liquor license," which is a license to engage in the business of wholesale liquor
in Cebu City, and, accordingly, constitutes a regulatory measure, in the exercise of the police power.
69. Lupangco v CA

Facts: Oct. 6, 1986 - Professional Regulation Commission (PRC) issued Resolution No. 105 as part of its "Additional
Instructions to Examinees" for those taking the licensure exams in accountancy. o The Resolution reads in part,
"No examinee shall attend any review class, briefing, conference or the like conducted by, or shall receive any
hand-out, review material, or any tip from any school, college or university, or any review center or the like or
any reviewer, lecturer, instructor official or employee of any of the aforementioned or similar institutions during
the three days immediately preceding every examination day including the examination day." o Purpose: "To
preserve the integrity and purity of the licensure examinations." • Oct. 16 - Petitioners, all reviewees preparing to
take the exams on Oct. 25 and Nov. 2, filed a complaint for injunction with a prayer for the issuance of a writ of
preliminary injunction against to restrain PRC from enforcing the resolution, and to declare it unconstitutional. o
PRC filed a motion to dismiss on the ground that the RTC had no jurisdiction. o RTC declared that it had
jurisdiction, and it enjoined PRC from enforcing and giving effect to Resolution No. 105 which it found to be
unconstitutional. • PRC filed a petition for the nullification of the above Order. o CA declared the Order null and
void and directed the RTC to dismiss the civil case for want of jurisdiction, being co-equal with PRC. It relied on
NEA v. Mendoza where the SC held that a CFI cannot interfere with the orders of the SEC, the two being co-equal
bodies.

Issue: W/N Resolution No. 105 is valid

Ruling: No.

1. UNREASONABLE. On its face, it can be readily seen that it is unreasonable in that an examinee cannot even
attend any review class, briefing, conference, etc. The unreasonableness is more obvious in that one who is
caught committing the prohibited acts even without any ill motives will be barred from taking future
examinations conducted by the respondent PRC. Furthermore, it is inconceivable how PRC can manage to have a
watchful eye on each and every examinee during the three days before the examination period. 2. ARBITRARY. It
is an axiom in administrative law that administrative authorities should not act arbitrarily and capriciously in the
issuance of rules and regulations. To be valid, such rules and regulations must be reasonable and fairly adapted to
secure the end in view. If shown to bear no reasonable relation to the purposes for which they are authorized to
be issued, then they must be held to be invalid. 3. INFRINGES ON EXAMINEES' RIGHT TO LIBERTY. PRC has no
authority to dictate on the reviewees as to how they should prepare themselves for the exams. They should be
allowed to enjoy their freedom to acquire useful knowledge that will promote their personal growth. o Liberty:
Means more than mere freedom from physical restraint or the bounds of a prison. It means freedom to go where
one may choose and to act in such a manner not inconsistent with the equal rights of others, as his judgment may
dictate for the promotion of his happiness, to pursue such callings and vocations as may be most suitable to
develop his capacities, and give to them their highest enjoyment. (Munn vs. Illinois) 4. VIOLATES SCHOOLS'
ACADEMIC FREEDOM. PRC cannot interfere with the conduct of review that review schools and centers believe
would best enable their enrolees to meet the standards required before becoming a full-pledged public
accountant. • The enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the licensure
examinations will be eradicated or at least minimized. What is needed to be done by the respondent is to find out
the source of such leakages and stop it right there.