FERRER V BAUTISTA (2015)

FACTS: The City of Quezon passed two ordinances namely: (1) Socialized Housing Tax of QC
allowing the imposition of special assessment (1/2 of the assessed valued of land in excess of
P100k) and (2)Ordinance No. SP-2235, S-2013 on Garbage Collection Fees imposing fees
depending on the amount of the land or floor area. Jose Ferrer, as a property in Quezon City
questioned the validity of the city ordinance. The city has no power to impose the tax and it
violates the rule on equality as it burdens real property owners with expenses to provide funds
for the housing of informal settlers. While the validity of the garbage fees imposition violates the
rule on double taxation and it violates the rule on equality because the fees are collected from
only domestic households and not from commercial dining places that spew garbage.

ISSUES: WON the ordinances were valid.

RULING: 1st ordinance: Socialized Housing Tax of Quezon City is valid. Cities have the power
to tax It must be noted that local government units such as cities has the power to tax. The
collection for the socialized housing tax is valid. It must be noted that the collections were made
to accrue to the socialized housing programs and projects of the city.

The imposition was for a public purpose (exercise of power of taxation + police power)
Removing slum areas in Quezon City is not only beneficial to the underprivileged and homeless
constituents but advantageous to the real property owners as well.

There is no violation of the rule on equality. It is inherent in the power to tax that a State is free
to select the subjects of taxation. An ordinance based on reasonable classification does not
violate the constitutional guaranty of the equal protection of the law. The requirements for a
valid and reasonable classification are: (1) it must rest on substantial distinctions; (2) it must be
germane to the purpose of the law; (3) it must not be limited to existing conditions only; and (4)
it must apply equally to all members of the same class.

2nd ordinance: The imposition of garbage fee is invalid. Note: There was no violation of double
taxation but there was a violation of the rule on equity. There is no violation of double taxation:
the garbage fees are not taxes In Progressive Development Corporation v. Quezon City, the
Court declared that: "if the generating of revenue is the primary purpose and regulation is merely
incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that
incidentally revenue is also obtained does not make the imposition a tax."

There is a violation of the rule on equality: no substantial distinction There is no substantial

distinction between an occupant of a lot, on one hand, and an occupant of a unit in a
condominium, socialized housing project or apartment, on the other hand. Most likely, garbage
output produced by these types of occupants is uniform and does not vary to a large degree; thus,
a similar schedule of fee is both just and equitable.
BATANGAS V PILIPINAS SHELL (2015)

PELIZLOY REALTY CORPORATION, vs. THE PROVINCE OF BENGUET (2013)

FACTS: Petitioner ("Pelizloy") owns Palm Grove Resort , which is designed for recreation and
which has facilities like swimming pools, a spa and function halls. The Provincial Board of the
Province of Benguet approved Provincial Tax Ordinance No. 05-107, otherwise known as the
Benguet Revenue Code of 2005. Section 59, Article X of the Tax Ordinance levied a ten percent
(10%) amusement tax on gross receipts from admissions fees. Pelizloy's position that the Tax
Ordinance's imposition is an ultra vires act on the part of the Province of Benguet that such
percentage tax is in violation of the limitation on the taxing powers of LGUs under Section 133
(i) of the LGC. Province of Benguet argued Article 220 (b) of the LGC defines "amusement" as
"pleasurable diversion and entertainment x x x synonymous to relaxation, avocation, pastime, or
fun."

ISSUES: Whether or not provinces are authorized to impose amusement taxes on admission
fees to resorts, swimming pools, bath houses, hot springs, and tourist spots for being
"amusement places" under the Local Government Code.

RULING:

Section 140 of the LGC provides: Amusement Tax - (a) The province may levy an amusement
tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent
(30%) of the gross receipts from admission fees.

It is clear that resorts, swimming pools, bath houses, hot springs and tourist spots cannot be
considered venues primarily "where one seeks admission to entertain oneself by seeing or
viewing the show or performances". While it is true that they may be venues where people are
visually engaged, they are not primarily venues for their proprietors or operators to actively
display, stage or present shows and/or performances. It follows that they cannot be considered as
among the ‘other places of amusement’ contemplated by Section 140 of the LGC and which may
properly be subject to amusement taxes.

11. CIR V PILIPINAS

Facts: Shell filed a claim for refund for excise taxes it paid on sales of gas and fuel oils to various
international carriers. The Court initially denied the claims but the respondent filed a Motion for
Reconsideration.

ISSUE:Whether or not Shell is entitled to refund for payment of the excise taxes

RULING: Yes. Section 135 is concerned with the exemption of the article itself and not the
ostensible exemption of the international carrier-buyer. In addition, the failure to grant exemption
will cause adverse impact on the domestic oil industry (similar to the practice of “tankering”) as
well as result to violations of international agreements on aviation. Thus, respondent, as the
statutory taxpayer who is directly liable to pay the excise tax, is entitled to a refund or credit for
taxes paid on products sold to international carriers.

13. Destination Principle/ Cross Border Doctrine

As a general rule, the VAT system uses the destination principle as a basis for the jurisdictional reach of
the tax. Goods and services are taxed only in the country where they are consumed. Thus, exports are
zero-rated, while imports are taxed.

Exception: The law clearly provides for an exception to the destination principle; that is, for a zero percent
VAT rate for services that are performed in the Philippines, "paid for in acceptable foreign currency and
accounted for in accordance with the rules and regulations of the [BSP]."

The “Cross Border Doctrine” is also known as the destination principle. Hence, actual or constructive
export of goods and services from the Philippines to a foreign country must be zero-rated for VAT; while,
those destined for use or consumption within the Philippines shall be imposed the twelve percent (12%)
VAT.

14. COMMUNITY TAX

Article Six. - Community Tax

SECTION 156. Community Tax. - Cities or municipalities may levy a community tax in accordance with
the provisions of this Article.

SECTION 157. Individuals Liable to Community Tax. - Every inhabitant of the Philippines eighteen (18)
years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30)
consecutive working days during any calendar year, or who is engaged in business or occupation, or who
owns real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or
who is required by law to file an income tax return shall pay an annual community tax of Five pesos
(P5.00) and an annual additional tax of One peso (P1.00_ for every One thousand pesos (P1,000.00) of
income regardless of whether from business, exercise of profession or from property which in no case
shall exceed Five thousand pesos (P5,000.00).

In the case of husband and wife, the additional tax herein imposed shall be based upon the total
property owned by them and the total gross receipts or earnings derived by them.

SECTION 158. Juridical Persons Liable to Community Tax. - Every corporation no matter how created or
organized, whether domestic or resident foreign, engaged in or doing business in the Philippines shall
pay an annual community tax of Five hundred pesos (P500.00) and an annual additional tax, which, on
no case, shall exceed Ten thousand pesos (P10,000.00) in accordance with the following schedule:

(1) For every Five thousand pesos (P5,000.00) worth of real property in the Philippines owned by it
during the preceding year based on the valuation used for the payment of the real property tax under
existing laws, found in the assessment rolls of the city or municipality where the real property is situated
- Two pesos (P2.00); and (2) For every Five thousand pesos (P5,000.00) of gross receipts or earnings
derived by it from its business in the Philippines during the preceding year - Two pesos (P2.00).
The dividends received by a corporation from another corporation however shall, for the purpose of the
additional tax, be considered as part of the gross receipts or earnings of said corporation.
SECTION 159. Exemption. - The following are exempt from the community tax:
(1) Diplomatic and consular representatives; and
(2) Transient visitors when their stay in the Philippines does not exceed three (3) months.

Who are liable to pay community tax:

1. Individuals who are:
 18 years and above, and who is regularly employed for at least 30 consecutive working days
during any calendar year or
 is engaged in a business or occupation or
 owns real property worth more than P1000 (assessed value), or
 required to file an income tax return
2. Corporations

Who are exempt:

1. Diplomats and consular reps
2. Transient visitors who don’t stay more than 3 months

SECTION 160. Place of Payment. - The community tax shall be paid in the place of residence of the
individual, or in the place where the principal office of the juridical entity is located.

SECTION 161. Time for Payment; Penalties for Delinquency. - (a) The community tax shall accrue on the
first (1st) day of January of each year which shall be paid not later than the last day of February of each
year. If a person reaches the age of eighteen (18) years or otherwise loses the benefit of exemption on
or before the last day of June, he shall be liable for the community tax on the day he reaches such age or
upon the day the exemption ends. However, if a person reaches the age of eighteen (18) years or loses
the benefit of exemption on or before the last day of June, he shall be liable for the community tax on
the day he reaches such age or upon the day the exemption ends. However, if a person reaches the age
of eighteen (18) years or loses the benefit of exemption on or before the last day of March, he shall have
twenty (20) days to pay the community tax without becoming delinquent.

Persons who come to reside in the Philippine or reach the age of eighteen (18) years on or after the first
(1st) day of July of any year, or who cease to belong to an exempt class on or after the same date, shall
not be subject to the community tax for that year.

(b)Corporation established and organized on or before the last day of June shall be liable for the
community tax for that year. But corporations established and organized on or before the last day of
March shall have twenty (20) days within which to pay the community tax without becoming delinquent.
Corporations established and organized on or after the first day of July shall not be subject to the
community tax for that year. If the tax is not paid within the time prescribed above, there shall be added
to the unpaid amount an interest of twenty-four percent (24%) per annum from the due date until it is
paid.

SECTION 162. Community Tax Certificate. - A community tax certificate shall be issued to every person
or corporation upon payment of the community tax. A community tax certificate may also be issued to
any person or corporation not subject to the community tax upon payment of One peso (P1.00).