Digested Tax I Cases

CHAMBER OF REAL ESTATES AND BUILDERS VS EXECUTIVE SECRETARY
ROMULO
GR NO. 160756 March 9, 2010
Facts:
Petitioner, association of real estate developers and builders, assails the validity of the
imposition of Minimum corporate Income Tax (MCIT) and Creditable Withholding Tax (CWT).
They assert that the MCIT violates due process clause because the government collects income tax
even when the net income has not yet been determined.
Issue:
W/N the MCIT is violative of the due process clause under the Constitution.
Held:
Petition dismissed.
MCITs primary purpose is to prevent tax evasion and minimizes tax avoidance scheme thru
sophisticated and artful manipulations. An income tax is arbitrary and confiscatory if it taxes capital
because capital is not income. In other words, it is income and not capital which is the subject to
income tax. However, the MCIT is not a tax on capital. It is imposed on gross income which is
derived at by deducting the capital spent by a corporation in the sale of its goods. Clearly the capital
is not being taxed.
SISON JR. VS ANCHETA
GR NO. L-59431 July 25, 1984
Facts:
Petitioner filed a petition assailing the validity of Section 1 of BP 135 upon a showing of its
constitutional infirmity. As taxpayer, petitioner alleges that he would be unduly discriminated by the
imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-
vis those which are imposed upon fixed income or salaries individual taxpayers. There is therefore, a
violation of equal protection clause.
Issue:
W/N the MCIT is violative of the equal protection clause under the Constitution.
Held:
Petition dismissed.
Equal protection and security shall be given to every person under circumstances which if
not identical, are analogous. If law be looked upon in terms of burden or charges, those that fall
whitin a class should be treated in the same fashion, whatever restrictions cast on some in the group
equally binding on the rest. That same formula applies as well to taxation measures. The equal
protection clause is, of course, inspired by the noble concept of approximating the ideal of the laws
benefits being available to all and the affairs of men being governed by that serene and impartial
uniformity, which is of the same very essence of idea of law.
Inequalities which result from a singling out of one particular class from taxation or
exemption thereof, infringe no constitutional limitations.
MAYOR ANTONIO VILLEGAS VS HIU CHIONG TSAI PAO HO
GR NO. L-29646 November 10, 1978
Facts:
Private respondent Ho filed a civil case with a prayer for Writ of Preliminary Injunction to
stop the enforcement of Ordinance No. 6537. The aforecited ordinance requires alien to secure
permit and pay Php 50.00 before engaging on being employed in any business or corporation. He
contends that it is discriminatory and violative of the rule of uniformity in taxation.
Respondent CFI Judge nullified the ordinance and making permanent the Writ of
Preliminary Injunction previously issued.
Issue:
W/N Ordinance No. 6537 is violative of the equal protection clause under the Constitution.
Held:
Appealed decision affirmed.
The ordinance is a tax. While it is true that the first part which requires that the alien shall
secure an employment permit from the mayor involves exercise of discretion and judgement in the
processing and approval or disapproval of applications for employment permits and therefore is,
regulatory in character, the second part which requires the payment of Php 50.00 is not regulatory
but revenue measure. There is no logic or justification in exacting the said amount from aliens who
have been cleared for employment. It is obvious that the purpose of the ordinance is to raise money
under the guise of regulation.
However, the Php 50.00 is unreasonable not only because it is excessive but because it fails
to consider valid substantial differences in situation among individual aliens who are required to pay
it. Although the equal protection clause of the Constitution does not forbid classification, it is
imperative that the classification should be based on real and substantial differences having a
reasonable relation to the subject of the particular legislation. The same amount is being collected
from every employed alien whether casual or [ermanent, part time or full time or whether he is lowly
employee or highly paid executive.
ORMOC SUGAR COMPANY VS TREASURER OF ORMOC
GR NO. 23794 February 17, 1968
Facts:
The City of Ormoc imposed upon appellant a municipal tax by passing Ordinance No. 4 s-
1964. Payments were made under protest. The appellant filed a complaint before CFI alleging that it
violates equal protection clause and the rule of uniformity of taxation. Defendant City asserted that
it is within its power to enact and that the same did not violate such constitutional limitation.
CFI upheld the constitutionality of the ordinance and declared the taxing power of the
defendant chartered city be broadened by the Local Autonomy Act to include all other forms of
taxes, licenses or fees not excluded in its charter.
Issue:
W/N the said ordinance is violative of the equal protection clause of the Constitution.
Held:
CFI decision reversed, ordinance declared unconstitutional.
We rule that the equal protection clause applies to persons and things identically situated and
does not bar a reasonable classification of the subject of legislation, and a classification is reasonable
where 1.) it is based on substantial distinctions which make real differences; 2.) germane to the
purpose of the law; 3.) classification applies not only to present conditions, but also to future
conditions which are substantially identical to those of the present; and 4.) classification applies oly
to those belong to the same class.
A perusal of the requisites instantly shows that the questioned ordinance does not meet
them, for it taxes only the centrifugal sugar produced and exported by the Ormoc Sugar Company
and no other.

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CHAMBER OF REAL ESTATES AND BUILDERS VS EXECUTIVE SECRETARY

Appealed decision affirmed.

CFI decision reversed, ordinance declared unconstitutional.

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