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Tax 7 11
Tax 7 11
QUEZON CITY
Facts:
After the land and the building were assessed for real property taxes,
petitioner filed a Claim of Exemption from real property taxes with the
City Assessor, stating that it is a charitable institution.
The petition was denied. Hence, this case.
Respondents aver that petitioner’s real property is not exempt from the
payment of real estate taxes under P.D. No. 1823 and even under the 1987
Constitution because it failed to prove that it is a charitable institution and
that the said property is actually, directly and exclusively used for
charitable purposes.
Issue:
1. Whether the petitioner is a charitable institution within the context of
Presidential Decree No. 1823 and the 1973 and 1987 Constitutions
1
Section 28
x x x 3. Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit
cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious,
charitable, or educational purposes shall be exempt from taxation.
2. Whether the real properties of the petitioner are exempt from real
property taxes.
Ruling:
2. Yes, the property is exempted from real property tax BUT ONLY
PARTIALLY. Those portions of its real property that are leased to
private entities are not exempt from real property taxes as these are
not actually, directly and exclusively used for charitable purposes.
In this case, under PD 1823, the petitioner does not enjoy any tax
exemption privileges for its real properties as well as the building
constructed thereon. If the intention were to include such tax
privileges, the decree would have expressly stated so. Moreover, the
petitioner failed to prove that the entirety of its real property is
actually, directly and exclusively used for charitable purposes. While
portions of the hospital are used for the treatment of patients and the
dispensation of medical services to them, whether paying or non-
paying, other portions thereof are being leased to private individuals
for their clinics and a canteen.
Dispositive:
FACTS:
• BIR issued to DLSU Letter of Authority (LOA) No. 2794 authorizing its
revenue officers to examine the latter's books of accounts and other
accounting records for all internal revenue taxes for the period Fiscal
Year Ending 2003 and Unverified Prior Years
• May 19, 2004, BIR issued a Preliminary Assessment Notice (PAN) to
DLSU.
• August 18, 2004, the BIR through a Formal Letter of Demand assessed
DLSU the following deficiency taxes: (1) income tax on rental earnings
from restaurants/canteens and bookstores operating within the
campus;
(2) value-added tax (VAT) on business income; and
(3) documentary stamp tax (DST) on loans and lease contracts.
• The BIR demanded the payment of P17,303,001.12, inclusive of
surcharge, interest and penalty for taxable years 2001, 2002 and 2003.
• DLSU protested the assessment. The Commissioner failed to act on the
protest; thus, DLSU filed petition for review with the CTA Division
CTA Division and CTA En Banc: DST assessment on the loan transactions
but retained other deficiency taxes. CTA En Banc ruled the ff:
ISSUE : Whether DLSU's income and revenues proved to have been used
actually, directly and exclusively for educational purposes are exempt from
duties and taxes
CIR’s Arguments:
DLSU's rental income is taxable regardless of how such income is derived,
used or disposed of. Section 30 (H) of the Tax Code, which states among
others, that the income of whatever kind and character of a non-stock and
non-profit educational institution from any of its properties, real or
personal, or from any of its activities conducted for profit regardless of the
disposition made of such income, shall be subject to tax. Commissioner
posits that a tax-exempt organization like DLSU is exempt only from
property tax but not from income tax on the rentals earned from property.
DLSU’s Arguments:
Article XIV, Section 4 (3) of the Constitution is clear that all assets and
revenues of non-stock, non-profit educational institutions used actually,
directly and exclusively for educational purposes are exempt from taxes
and duties.
Article XIV, Section 4 (3) does not require that the revenues and income
must have also been sourced from educational activities or activities
related to the purposes of an educational institution. The phrase all
revenues is unqualified by any reference to the source of revenues. Thus,
so long as the revenues and income are used actually, directly and
exclusively for educational purposes, then said revenues and income
shall be exempt from taxes and duties.
Court laid down the requisites for availing the tax exemption under
Article XIV, Section 4 (3), namely:
(1) the taxpayer falls under the classification non-stock, non-profit
educational institution; and
(2) the income it seeks to be exempted from taxation is used actually,
directly and exclusively for educational purposes.
FACTS:
1. Young Men’s Christian Association of the Philippines, Inc. is a non-
stock, non-profit institution which conducts various programs and
activities that are beneficial to the public, especially the young
people, pursuant to its religious, educational and charitable
objectives.
5. CIR then filed motion for reconsideration which was denied by CA.
ISSUE:
WON the income derived from the rentals of real property owned by
YMCA (a welfare, educational and charitable non-profit corporation) is
subject to income tax under NIRC and the constitution.
HELD:
YES. The exemption claimed by YMCA is expressly disallowed by the very
wording of the last paragraph of the then section 27 of the NIRC which
mandates that the income of exempt organizations (such as the YMCA)
from any of their properties, real or personal, be subject to the tax imposed
by the same Code. The last paragraph of said section unequivocally
subjects to tax the rent income of the YMCA from its real property. Thus
the Court is duty-bound to abide strictly by its literal meaning and to
refrain from resorting to any convoluted attempt at construction.
YMCA is only exempt from payment of property tax, but not income tax on
the rentals from its property. Laws allowing tax exemptions are construed
strictissimi juris as taxes are the lifeblood of the government.
(g) Civic league organization not organized for profit but operated
exclusively for the promotion of social welfare
(h) club organized and operated exclusively for pleasure, recreation, and
other non-profittable purposes, no part of the net income of which inures to
the benefit of any private stockholder or member
Notwithstanding the provisions in the preceding paragraphs, the income of
whatever kind and character of the foregoing organization from any of
their properties, real or personal, or from any of their activities conducted
for profit, regardless of the disposition made of such income, shall be
subject to the tax imposed under this code.
Issue:
Is the production and selling of the International Eucharistic Congress
commemorative stamps violation of the separation of Church and State
and Art. VI, Sec. 23 (3)?
Ruling:
No, we are much impressed with the vehement appeal of counsel for the
petitioner to maintain inviolate the complete separation of church and state
and curb any attempt to infringe by indirection a constitutional inhibition.
Indeed, in the Philippines, once the scene of religious intolerance and
prescription, care should be taken that at this stage of our political
development nothing is done by the Government or its officials that may
lead to the belief that the Government is taking sides or favoring a
particular religious sect or institution. But, upon very serious reflection,
examination of Act No. 4052, and scrutiny of the attending circumstances,
we have come to the conclusion that there has been no constitutional
infraction in the case at bar, Act No. 4052 grants the Director of Posts, with
the approval of the Secretary of Public Works and Communications,
discretion to misuse postage stamps with new designs "as often as may be
deemed advantageous to the Government.”
I. FACTS
The petitioners challenged the constitutionality of Republic Act No. 9337
(VAT Reform Act). They question the constitutionality of Sections 4, 5 and
6 of R.A. No. 9337, amending Sections 106, 107 and 108, respectively, of the
National Internal Revenue Code (NIRC). Section 4 imposes a 10% VAT on
sale of goods and properties, Section 5 imposes a 10% VAT on importation
of goods, and Section 6 imposes a 10% VAT on sale of services and use or
lease of properties. These questioned provisions contain a
uniform proviso authorizing the President, upon recommendation of the
Secretary of Finance, to raise the VAT rate to 12%, effective January 1, 2006,
after any of the following conditions have been satisfied, to wit:
(i) Value-added tax collection as a percentage of Gross Domestic
Product (GDP) of the previous ye3ar exceeds two and four-fifth
percent (2 4/5%); or
(ii) National government deficit as a percentage of GDP of the
previous year exceeds one and one-half percent (1 %).
The following are the arguments raised by the Petitioners:
1. The law is unconstitutional, as it constitutes abandonment by Congress
of its exclusive authority to fix the rate of taxes under Article VI, Section
28(2) of the 1987 Philippine Constitution;
2. VAT is a tax levied on the sale or exchange of goods and services and
cannot be included within the purview of tariffs under the exemption
delegation since this refers to customs duties, tolls or tribute payable upon
merchandise to the government and usually imposed on
imported/exported goods;
3. No guiding standards are made by law as to how the Secretary of
Finance will make the recommendation. The President has powers to
cause, influence or create the conditions provided by law to bring about the
conditions precedent. Any recommendation of the Secretary of Finance can
easily be brushed aside by the President since the former is a mere alter ego
of the latter.
II. ISSUES
Whether or not there was an undue delegation of legislative power in
violation of Article VI Sec 28 Par 1 and 2 of the Constitution.
III. RULING
No. There is no undue delegation of legislative power but only of the
discretion as to the execution of a law. This is constitutionally permissible.
Congress does not abdicate its functions or unduly delegate power when it
describes what job must be done, who must do it, and what is the scope of
his authority; in our complex economy that is frequently the only way in
which the legislative process can go forward. The Secretary if Finance
becomes the means or tool by which Legislative policy is determined and
implemented, considering that he possesses all the facilities to gather data
and information. In making his recommendation, the Secretary of Finance
is not acting as the alter ego of the President, but as the agent of the
Legislative department, to determine and declare the event upon which its
expressed will is to take effect.