Secretary of Finance v. Muñez, G.R. No. 212687.
July 20, 2022
Facts:
The Bureau of Internal Revenue issued Revenue Regulation No. 13-2013, redefining “raw sugar” for VAT
purposes so that only muscovado sugar would remain VAT-exempt, effectively subjecting most raw sugar to
value-added tax. Several sugar planters’ associations filed a petition for declaratory relief before the RTC of
Cadiz City, assailing the regulation as unconstitutional and contrary to the National Internal Revenue Code,
and sought injunctive relief. The RTC issued a writ of preliminary injunction enjoining the implementation of
RR 13-2013. The government, through the OSG, elevated the matter to the Supreme Court via certiorari,
invoking the “no injunction rule” in tax collection under Section 218 of the NIRC. While the case was pending,
the Department of Finance issued RR 8-2015, which amended the earlier regulation and restored the VAT-
exempt status of raw sugar.
Issue:
Whether the writ of preliminary injunction against the implementation of RR 13-2013 may still be reviewed
despite the subsequent issuance of RR 8-2015 restoring the VAT exemption of raw sugar.
Ruling:
The Supreme Court dismissed the petition on the ground of mootness. It held that the issuance of RR 8-2015,
which restored the VAT-exempt status of raw sugar previously withdrawn under RR 13-2013, constituted a
supervening event that rendered the main action for declaratory relief academic, and consequently rendered
moot the ancillary issues relating to the writ of preliminary injunction and the alleged violation of the “no
injunction rule” under Section 218 of the NIRC. Applying settled doctrine, the Court reiterated verbatim that “a
moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events,
so that a declaration thereon would be of no practical value,” and that courts decline jurisdiction over such
cases to avoid issuing advisory opinions. Since the controversy over the VAT imposition no longer existed, there
was no longer an actual case or controversy for judicial review. The Court further emphasized that injunctive
relief is merely ancillary to the principal action, and “for the spring cannot rise above its source,” such that
when the main case becomes moot, all incidents related thereto necessarily become moot as well. In taxation
context, the Court refused to rule on the scope of the “no injunction rule,” as doing so would amount to resolving
a hypothetical question divorced from an existing tax controversy.
• Angeles City v. Angeles Electric Corporation, 622 SCRA 43, 2010
Facts:
Angeles Electric Corporation, a holder of a legislative franchise to operate an electric utility in Angeles City, had long paid
franchise taxes under its franchise law and later under the National Internal Revenue Code. After the enactment of the Local
Government Code, Angeles City imposed and assessed local franchise and business taxes against AEC covering the years
1993 to 2004. AEC protested the assessment, invoking tax exemption, prescription, and double taxation, but the City
Treasurer denied the protest and proceeded to levy AEC’s properties and schedule them for public auction. While AEC’s
petition for declaratory relief questioning the assessment was pending before the RTC, it sought and obtained a writ of
preliminary injunction to stop the levy and auction. The city government challenged the injunction via certiorari, arguing
that courts cannot enjoin the collection of taxes.
Issue:
Whether the RTC gravely abused its discretion in issuing a writ of preliminary injunction to restrain the collection of local
taxes through levy and auction.
Ruling:
The Supreme Court dismissed the petition and upheld the writ of preliminary injunction. It ruled that the statutory
prohibition against injunctions to restrain tax collection applies only to national internal revenue taxes under the NIRC and
not to local taxes under the Local Government Code, which contains no express ban against such injunctions. The Court
reiterated the doctrine that “unlike the National Internal Revenue Code, the Local Tax Code does not contain any specific
provision prohibiting courts from enjoining the collection of local taxes,” clarifying that injunctions in local tax cases are not
absolutely prohibited but are disfavored and must strictly comply with Rule 58 of the Rules of Court. Applying this standard,
the Court found that the RTC acted within its discretion because AEC established a clear legal right over its properties and
demonstrated that the immediate levy and auction would cause serious and irreparable damage and render the pending tax
case moot. The Court further held that since AEC had timely appealed the denial of its protest under Section 195 of the
LGC, the disputed local tax assessment was not yet final, due, and demandable, making the collection by levy premature.
Thus, the injunction was properly issued to preserve the status quo while the validity of the local tax assessment was being
resolved, and no grave abuse of discretion attended the RTC’s action.
• Republic v. Mambulao Lumber, G.R. No. L-17725, February 28, 1962
Facts:
Mambulao Lumber Company was assessed forest charges by the Republic of the Philippines amounting to
₱4,802.37, which liability it admitted. As a defense, it claimed that it had previously paid ₱9,127.50 as
reforestation charges under Republic Act No. 115 and argued that since these amounts were allegedly not used
to reforest the area covered by its license, the sums should either be refunded or applied by way of compensation
to its unpaid forest charges. The trial court rejected this defense and ordered payment of the forest charges,
prompting Mambulao Lumber Company to appeal.
Issue:
Whether reforestation charges paid by a timber concessionaire may be refunded or set off against unpaid forest
charges due to the government.
Ruling:
The Supreme Court affirmed the judgment and held that reforestation charges cannot be refunded nor applied
in compensation against forest charges. Applying Section 1 of Republic Act No. 115, the Court ruled that
reforestation charges form part of a special fund—the Reforestation Fund—to be used for reforestation and
afforestation of public forest lands as determined by the Director of Forestry, and not necessarily for the area
covered by the taxpayer’s license. The Court categorically characterized reforestation charges as taxes, holding
that “the amount paid by a licensee as reforestation charges is in the nature of a tax… payable by him
irrespective of whether the area covered by his license is reforested or not.” Consequently, the Court rejected
the application of legal compensation under Article 1278 of the Civil Code because the government and the
taxpayer are not mutual creditors and debtors. Citing settled doctrine, the Court emphasized that “no set-off is
admissible against demands for taxes levied for general or local governmental purposes,” explaining that taxes
are obligations arising from sovereign authority, not contractual debts, and allowing compensation would
disrupt government revenue collection. Thus, forest charges, being internal revenue taxes, cannot be offset by
claims for refund of reforestation charges, and full payment was properly required.
• Hilado v. Collector of Internal Revenue, G.R. No. L-9408, 1956
Facts:
The Philippine Bank of Commerce filed its 1950 income tax return showing no taxable income after deducting
war losses pursuant to then-prevailing BIR General Circular No. V-123. Years later, the Bureau of Internal
Revenue reversed its policy following the revocation of that circular and assessed the Bank a deficiency income
tax of ₱116,294.00. The Bank contested the assessment but eventually paid the basic tax while refusing to pay
the 5% surcharge and 1% monthly interest, arguing good faith reliance on the government’s earlier ruling. The
Court of First Instance ordered payment of the surcharge but limited the interest to six months. The State
appealed, questioning the reduction of interest.
Issue:
Whether the Bank is liable to pay the full 1% monthly interest on the deficiency income tax from the date of
delinquency despite its alleged good faith.
Ruling:
The Supreme Court held that the Bank is liable to pay the full 1% monthly interest from March 1, 1956 until
April 8, 1957 pursuant to Section 51(e) of the National Internal Revenue Code, as amended. The Court ruled
that the law is mandatory and “makes no distinctions nor does it establish exceptions” as to the imposition of
surcharge and interest once a tax becomes delinquent. It emphasized that interest and surcharge are imposed
not as penalties but as compensation to the State for the delay in the payment of taxes and the taxpayer’s
continued use of government funds, reiterating the doctrine that “the surcharge and interest charged are not
penal but compensatory in nature.” Good faith or reliance on an erroneous government interpretation does not
suspend the accrual of interest. Applying the statute strictly, the Court modified the lower court’s decision and
ordered the Bank to pay interest for the entire period of delay, underscoring the principle in taxation law that
taxes must be paid promptly and that equitable considerations cannot override clear statutory commands.
• Ongsiako v. Gamboa, G.R. No. L-1867, April 8, 1950
Facts:
The petitioner–landowner and the respondents–tenants entered into rice tenancy contracts in mid-1946 under
Act No. 4054, as amended by Commonwealth Act No. 178, providing for a 50-50 crop sharing scheme. Shortly
after, Republic Act No. 34 took effect, amending the Rice Share Tenancy Act by increasing the tenant’s share to
55% and declaring stipulations granting less as contrary to public policy. During the liquidation of the 1946–
1947 harvest, the tenants demanded application of Republic Act No. 34. The Tenancy Law Enforcement Division
and later the Court of Industrial Relations ruled that the new law applied and ordered a 55-45 crop division in
favor of the tenants, despite the earlier contracts.
Issue:
Whether Republic Act No. 34 applies to tenancy contracts executed before its effectivity without violating the
constitutional prohibition against impairment of contracts.
Ruling:
The Supreme Court held that Republic Act No. 34 governs even tenancy contracts executed prior to its effectivity
and does not violate the non-impairment clause. The Court ruled that the constitutional prohibition against
impairment of contracts is not absolute and does not bar legislation enacted pursuant to the State’s police
power, especially social justice legislation. It emphasized that Republic Act No. 34 is remedial in nature and
intended to promote equitable crop sharing consistent with the constitutional mandate on social justice. The
Court categorically declared that a stipulation whereby “the tenant shall receive less than 55 per cent of the net
produce” is against public policy, rendering contrary contractual provisions void. Applying settled doctrine, the
Court stressed that contracts must yield to laws enacted for public welfare and that parties cannot, by
agreement, place their relations beyond legislative regulation. Consequently, the 55-45 crop sharing scheme
mandated by Republic Act No. 34 was properly applied notwithstanding prior contracts, and the findings of the
Court of Industrial Relations were sustained.
• Villanueva v. City of Iloilo, G.R. No. L-26521, December 28, 1968
Facts:
The City of Iloilo enacted Ordinance No. 11, series of 1960, pursuant to the Local Autonomy Act (Republic Act
No. 2264), imposing a municipal license tax on persons engaged in the business of operating tenement houses.
The ordinance was enacted after an earlier ordinance imposing a similar tax had been declared ultra vires for
lack of authority under the city charter. The plaintiffs, owners of tenement houses, paid the tax but later
challenged the ordinance, claiming it was beyond the city’s taxing power, constituted double or treble taxation,
was oppressive due to penal sanctions, and violated the constitutional rule of uniformity. The Court of First
Instance declared the ordinance illegal and ordered a refund, prompting the City to appeal.
Issue:
Whether Ordinance No. 11, series of 1960, imposing a license tax on the business of operating tenement houses,
is a valid exercise of local taxing power under the Local Autonomy Act.
Ruling:
The Supreme Court reversed the lower court and upheld the validity of the ordinance. Applying Section 2 of
Republic Act No. 2264, the Court ruled that chartered cities are granted broad authority to impose license taxes
on persons engaged in any occupation or business, except those expressly excluded by law, and that the
operation of tenement houses is not among the prohibited subjects of local taxation. The Court held that the
tax imposed is not a real estate tax but a license or excise tax on the business of operating tenement houses,
emphasizing that “the character of a tax is not to be fixed by any isolated words… but the true character is to
be deduced from the nature and essence of the subject.” Addressing double taxation, the Court categorically
stated, word for word, that “there is no constitutional prohibition against double taxation in the Philippines,”
explaining that a license tax may be imposed on a business even if the property used therein is already subject
to real estate tax or the business is taxed under the National Internal Revenue Code, since the taxes are of
different kinds and imposed on different subjects. The Court further ruled that the ordinance does not violate
the rule of uniformity, reiterating that “taxes are uniform and equal when imposed upon all property of the
same class or character within the taxing authority,” and that territorial differences among cities do not offend
uniformity. Finally, the penal clause was upheld, the Court stressing that a tax is not a debt within the
constitutional prohibition against imprisonment for non-payment of debt. Thus, the ordinance was declared a
valid exercise of local taxing power under the Local Autonomy Act, and the complaint for refund was dismissed.
• Nursery Care Corporation v. Acevedo, G.R. No. 180651, July 30, 2014
Facts:
The City of Manila assessed and collected local business taxes from several corporate taxpayers under Sections 15
and 17 of the Manila Revenue Code, covering wholesalers, distributors, dealers, and retailers. At the same time, as a
شرطfor the renewal of their business licenses in 1999, the City imposed and collected an additional tax under Section
21 of the same Code, which levied a percentage tax on gross sales of businesses already subject to VAT, excise, or
percentage taxes under the NIRC. The taxpayers paid the Section 21 tax under protest and sought a refund, arguing
that they were already paying local business taxes under Sections 15 and 17. The City Treasurer denied the refund,
and the RTC dismissed their petitions, ruling that Section 21 was an indirect tax on consumers and did not constitute
double taxation. The Court of Appeals dismissed the appeal on procedural grounds for raising only questions of law.
The taxpayers elevated the case to the Supreme Court.
Issue:
Whether the imposition and collection of business taxes under Section 21 of the Manila Revenue Code, in addition to
those under Sections 15 and 17, constituted double taxation.
Ruling:
The Supreme Court granted the petition and held that the collection of taxes under Section 21 constituted double
taxation, ordering a refund. Applying Section 143 of the Local Government Code and settled jurisprudence, the Court
ruled that double taxation exists when the same taxpayer is taxed twice by the same authority, for the same purpose,
within the same jurisdiction and taxing period, and where the taxes are of the same kind or character. Quoting
jurisprudence verbatim, the Court reiterated that double taxation is “obnoxious when the taxpayer is taxed twice,
when it should be but once,” and that it occurs when there is “direct duplicate taxation,” meaning the concurrence
of all its elements. The Court found that Sections 15, 17, and 21 all imposed local business taxes on the privilege of
doing business in Manila, for the same revenue purpose, by the same taxing authority, within the same city and the
same taxable year. Rejecting the RTC’s view that Section 21 was merely an indirect tax on consumers, the Court
stressed that the legal incidence of the tax under Section 21 still fell on the business establishments, as it was
computed based on their gross sales or receipts. Consistent with City of Manila v. Coca-Cola Bottlers Philippines,
Inc. and Swedish Match Philippines, Inc. v. Treasurer of Manila, the Court held that once a business is already taxed
under specific provisions of the ordinance pursuant to Section 143(a) of the LGC, it can no longer be subjected to
another local business tax under Section 143(h) and its ordinance counterpart. Thus, the assessment and collection
under Section 21 amounted to prohibited double taxation, and the taxes paid thereunder for the first quarter of 1999
were ordered refunded.
CIR v. Solid Bank, GR No. 148191, 2003
Facts: For the year 1995, the respondent bank included in its gross receipts ₱350,807,875.15 from passive income
already subjected to a 20% final withholding tax (FWT) and sought a refund of the alleged overpayment of the 5%
gross receipts tax (GRT) on that portion. The bank argued that including the FWT in the GRT computation would
result in double taxation, since the income had already been taxed. The government, through the BIR, contended
that the 20% FWT, although withheld at source, was constructively received by the bank and formed part of its gross
receipts, and that the FWT and GRT are distinct taxes on different subjects and therefore inclusion of the FWT in the
GRT computation does not constitute double taxation.
Issue: Whether the 20% final withholding tax on a bank’s interest income forms part of the taxable gross receipts for
purposes of computing the 5% gross receipts tax.
Ruling: The Supreme Court granted the petition, ruling that the 20% FWT constitutes part of the bank’s gross receipts
for computing the 5% GRT. The Court explained that although the FWT is withheld at source, it is constructively
received by the bank and forms part of its earnings. The Court emphasized that the 5% GRT and 20% FWT are distinct
taxes: the GRT is a percentage tax on the privilege of doing business, while the FWT is an income tax on passive
income. Applying Section 7(c) of Revenue Regulations (RR) 17-84, the Court held that interest income constructively
received, even if subject to withholding, is included in gross receipts. The earlier RR 12-80, which limited the GRT
base to income actually received, was impliedly repealed by RR 17-84. The Court distinguished this case from
Commissioner of Internal Revenue v. Manila Jockey Club, noting that amounts withheld for taxes are not “earmarked”
for another person but remain the property of the bank until remitted. The Court further ruled that including the
FWT in the GRT computation does not constitute double taxation, as the taxes are imposed on different subjects,
during different periods, and of different characters. The Court concluded that “statutes should receive a sensible
construction, such as will give effect to the legislative intention and so as to avoid an unjust or an absurd conclusion,”
and found no valid exemption from GRT for the FWT. Consequently, the CA decision was reversed and set aside.
• Yutivo Sons Hardware v. CTA, G.R. No. L-13203, January 28, 1961
Facts:
Yutivo Sons Hardware Co., a domestic corporation, was assessed deficiency sales taxes with surcharges by the
Collector of Internal Revenue on the theory that its wholly controlled affiliate, Southern Motors, Inc. (SM), was a mere
instrumentality or alter ego used to evade sales taxes, such that the taxable base should be SM’s retail sales to the
public rather than Yutivo’s wholesale sales to SM. The Court of Tax Appeals sustained the assessment, disregarded
SM’s separate corporate personality, imposed surcharges, and affirmed the Collector’s computation, prompting Yutivo
to seek review before the Supreme Court.
Issue:
Whether Southern Motors’ separate corporate personality may be disregarded for sales tax purposes and whether
Yutivo is liable for deficiency sales tax and surcharges based on SM’s retail sales.
Ruling:
The Supreme Court held that while SM was indeed a mere subsidiary, adjunct, or alter ego of Yutivo whose corporate
personality may be disregarded to determine the true sales tax liability, the assessment and surcharges imposed by
the CTA were partly erroneous. Applying Sections 184 to 186 of the National Internal Revenue Code, which provide
that sales tax is collected “once only on every original sale” and paid by the manufacturer, producer, or importer, the
Court ruled that Yutivo, as importer, was properly taxable on the original sale, but the computation must exclude
sales tax already separately billed, in accordance with BIR General Circulars Nos. 431 and 440, since otherwise it
would result in a prohibited “tax on a tax.” The Court emphasized that piercing the corporate veil is allowed “when
the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime,” and
when a corporation is a “mere alter ego or business conduit,” but it categorically rejected the finding of fraud,
reiterating word for word that “fraud is never lightly to be presumed” and that “a taxpayer may diminish his liability
by any means which the law permits.” The Court further ruled that mere tax avoidance does not amount to fraud
and does not justify the imposition of fraud surcharges absent clear and convincing evidence. Consequently, the
Court modified the CTA decision by reducing the deficiency sales tax to the amount properly computed after deducting
taxes already paid and disallowed the fraud surcharge, sustaining only the 25% surcharge for late payment under
the Tax Code.
• CIR v. Estate of Benigno Toda, G.R. No. 147188, September 2004
Facts:
Cibeles Insurance Corporation, almost wholly owned and controlled by Benigno P. Toda, Jr., authorized him to
sell its Makati property known as the Cibeles Building. On the same day, the property was made to appear as
sold first by CIC to Rafael Altonaga for ₱100 million and immediately thereafter by Altonaga to Royal Match,
Inc. for ₱200 million, with Altonaga paying only the 5% capital gains tax applicable to individuals. CIC then
declared a much lower taxable gain in its 1989 corporate income tax return. The BIR later assessed a deficiency
income tax against CIC, asserting that the two sales were simulated and constituted a single sale by CIC to RMI
subject to the 35% corporate income tax. The CTA and the Court of Appeals ruled for the Estate of Toda, holding
that the scheme was mere tax avoidance and that the assessment had prescribed, prompting the Commissioner
to elevate the case to the Supreme Court.
Issue:
Whether the transaction constituted tax evasion justifying the assessment of deficiency corporate income tax
and the consequent liability of the Estate.
Ruling:
The Supreme Court reversed the CTA and the Court of Appeals and held that the scheme constituted tax
evasion, not tax avoidance, and that the assessment was valid. Applying Sections 24 and 269 of the NIRC of
1986, the Court ruled that taxation is governed by the substance of a transaction, not its form, stressing that
“a sale by one person cannot be transformed for tax purposes into a sale by another by using the latter as a
conduit,” and that to allow formalisms designed solely to alter tax liabilities “would seriously impair the effective
administration of the tax laws.” The Court found that the intermediary sale to Altonaga was a sham without
business purpose or economic substance, intended solely to reduce the applicable tax from the 35% corporate
income tax to the 5% capital gains tax, and thus met all the elements of tax evasion, namely, the intent to pay
less tax than legally due, bad faith, and unlawful conduct. Because the return filed by CIC was false and
fraudulent, the ten-year prescriptive period under Section 269 applied, making the 1995 assessment timely.
The Court further held that while a corporation has a separate juridical personality, the Estate was liable
because Toda had contractually undertaken to hold CIC and the buyer of his shares free from income tax
liabilities for 1989. Accordingly, the Court sustained the deficiency income tax assessment and ordered the
Estate of Benigno P. Toda, Jr. to pay ₱79,099,999.22 plus interest.
• PLDT v. City of Davao, G.R. No. 143867, March 25, 2003
Facts:
PLDT paid a 3% franchise tax under its charter “in lieu of all taxes.” This exemption was withdrawn by the Local
Government Code (LGC), which authorized local governments to impose franchise taxes. The City of Davao
collected local franchise tax from PLDT. PLDT claimed that its exemption was revived by Section 23 of R.A. No.
7925, arguing that tax privileges granted to Globe and Smart should automatically apply to it, and sought
exemption from local franchise tax and refund of payments.
Issue:
Whether R.A. No. 7925 revived PLDT’s tax exemption, particularly its liability to indirect taxes such as VAT and
local franchise tax.
Ruling:
The Supreme Court denied PLDT’s claim and held that R.A. No. 7925 did not restore any tax exemption
withdrawn by the LGC. The Court ruled that tax exemptions, including “in lieu of all taxes” clauses which
operate as exemptions from indirect taxes like VAT and local taxes, must be granted only by a clear and
unequivocal law. Section 23 of R.A. No. 7925, which uses the terms “advantage, favor, privilege, exemption, or
immunity,” was not intended to grant tax exemption but merely to ensure regulatory equality in the
telecommunications industry. The Court applied the doctrine that tax exemptions are strictly construed against
the taxpayer and liberally in favor of the taxing authority, emphasizing that “tax exemptions should be granted
only by clear and unequivocal provision of law, expressed in language too plain to be mistaken.” Since no law
expressly restored PLDT’s exemption from indirect taxes after the LGC, PLDT remained subject to local franchise
tax and, by implication, to VAT and other indirect taxes not expressly exempted.
• CIR v. Transfield Philippines, G.R. No. 211449, January 16, 2019
Facts:
The Commissioner of Internal Revenue assessed Transfield Philippines, Inc. for deficiency income tax, expanded
withholding tax, and VAT for fiscal year July 1, 2001 to June 30, 2002. While its protest was pending, Transfield
availed of the tax amnesty under R.A. No. 9480 by filing the required documents and paying the amnesty tax.
Despite this, the BIR denied the amnesty based on a revenue circular and issued a Warrant of Distraint and/or
Levy to collect the assessed taxes. Transfield challenged the collection before the CTA, which ruled that the tax
liabilities were already extinguished by the valid availment of tax amnesty.
Issue:
Whether Transfield’s valid availment of tax amnesty under R.A. No. 9480 extinguished its VAT and other
internal revenue tax liabilities, thereby barring further collection by the BIR.
Ruling:
The Supreme Court denied the petition and upheld the CTA, ruling that Transfield’s full compliance with the
requirements of R.A. No. 9480 immediately entitled it to immunity from the payment of all internal revenue
taxes, including VAT, for the covered years. Applying Sections 1 and 6 of R.A. No. 9480, the Court held that tax
amnesty covers “all national internal revenue taxes… with or without assessments duly issued therefor” and
grants immunity from “the payment of taxes, as well as additions thereto.” The Court reiterated the
jurisprudence that “a tax amnesty operates as a general pardon or intentional overlooking by the State of its
authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law,” and that
while tax amnesty is strictly construed against the taxpayer, administrative issuances cannot add
disqualifications not found in the law. Thus, the BIR’s reliance on RMC No. 19-2008 was invalid because “in
case there is a discrepancy between the law and a regulation issued to implement the law, the law prevails.”
Since Transfield had complied with all statutory conditions, its VAT and other deficiency taxes were deemed
settled, and the issuance of the warrant of distraint and levy was void.
• Lozada and Igot v. COMELEC, G.R. No. L-59068, January 27, 1983
Facts:
Petitioners Jose Mari Eulalio C. Lozada and Romeo B. Igot filed a representative petition for mandamus to
compel the Commission on Elections (COMELEC) to call special elections to fill twelve vacancies in the Interim
Batasan Pambansa. They claimed standing as taxpayers and voters concerned with upholding constitutional
duties under Section 5(2), Article VIII of the 1973 Constitution, which mandates the holding of special elections
when vacancies arise eighteen months or more before a regular election. COMELEC opposed the petition,
arguing that petitioners lacked standing, that the Court lacked jurisdiction, and that the constitutional
provision did not apply to the Interim Batasan Pambansa.
Issue:
Whether petitioners have the legal standing and right to compel COMELEC to call special elections for vacancies
in the Interim Batasan Pambansa.
Ruling:
The Supreme Court dismissed the petition, ruling that petitioners lacked standing as taxpayers because the act
complained of—the alleged failure to call a special election—did not involve illegal expenditure of public funds.
Their interest as voters was also insufficient, as it constituted only a generalized grievance shared by all citizens,
and the Court emphasized that a concrete and particularized injury is required to maintain a mandamus
petition. The Court further explained that its jurisdiction over COMELEC is limited to reviewing decisions,
orders, or rulings by certiorari, and petitioners failed to show that COMELEC had unlawfully neglected any
ministerial duty. Additionally, the constitutional provision cited applies only to the regular Batasan Pambansa,
not the Interim Batasan Pambansa, whose members were already adequately represented and whose
composition was transitory. The Court noted that the power to appropriate funds for special elections lies solely
with the legislative body and cannot be compelled through mandamus. The Court cited the principle that a
word or phrase in the Constitution should have the same meaning throughout unless context dictates
otherwise, concluding that Section 5(2), Article VIII of the 1973 Constitution applies only to the regular Batasan
Pambansa. Accordingly, the petition was dismissed.
• Diaz v. Secretary of Finance and CIR, G.R. No. 193007, July 19, 2011
Facts:
Petitioners Renato V. Diaz and Aurora Ma. F. Timbol filed a petition for declaratory relief to stop the Bureau of
Internal Revenue (BIR) from imposing value-added tax (VAT) on toll fees collected by tollway operators.
Petitioners argued that toll fees are user fees, not services, and that imposing VAT would violate the non-
impairment clause of contracts and create administrative difficulties. Diaz claimed legislative experience in
enacting the VAT law, while Timbol cited past service with the Toll Regulatory Board. The petition followed the
BIR’s revival of VAT collection on toll fees in 2010, which petitioners claimed would unfairly burden motorists
and operators. The Court initially issued a temporary restraining order against the VAT imposition.
Issue:
Whether toll fees collected by tollway operators are subject to value-added tax under Section 108 of the National
Internal Revenue Code.
Ruling:
The Supreme Court dismissed the petition, ruling that tollway operators are subject to VAT as “franchise
grantees” rendering “services for a fee” under Section 108 of the NIRC. The Court emphasized that the law
imposes VAT on all kinds of services rendered for a fee, and tollway operators collect fees for the use of facilities
they construct, operate, and maintain at their own expense, making them service providers akin to lessors,
common carriers, or other franchise grantees listed in Section 108. The Court rejected petitioners’ arguments
that toll fees are user taxes, not services, clarifying that VAT is an indirect tax imposed on the operator, who
may shift the burden to users, but the tax liability rests on the operator. Claims of impaired contractual rights
and administrative impracticality were deemed speculative and premature. The Court held that tax exemptions
must be explicitly provided by law, and since the statute does not exempt tollway operations, VAT applies. It
stressed that the executive branch has discretion in implementing tax laws, and the judiciary’s role is to apply
the law as written. Consequently, the Court denied the petition and lifted the temporary restraining order,
reaffirming that toll fees collected by private tollway operators are subject to VAT.
Mamba v. Lara, G.R. No. 165109, 2009
Facts: The case arose when petitioners, including a congressional representative and members of the
Sangguniang Panlalawigan of Cagayan, filed a Petition for Annulment of Contracts and Injunction against
Governor Edgar R. Lara, members of the provincial board, and several corporations involved in the bond
flotation and construction of the New Cagayan Town Center. The petition challenged various agreements,
including the engagement of Preferred Ventures Corporation as financial advisor, contracts for bond issuance,
and the award of construction to Asset Builders Corporation, alleging illegal disbursement of public funds,
overpricing, and lack of proper bidding and consultation. The Regional Trial Court initially dismissed the
petition, ruling that petitioners lacked legal standing and that the matter involved a political question beyond
judicial review. The court also denied the admission of an amended petition and rejected the motion for
reconsideration.
Issue: Whether petitioners, as taxpayers, have legal standing to challenge the validity of contracts and
expenditures by the provincial government involving public funds.
Ruling: The Supreme Court ruled that petitioners have legal standing as taxpayers to question contracts and
expenditures involving public funds, emphasizing that a taxpayer need not be a party to a contract to challenge
its validity when public money derived from taxation is at stake. The Court applied the principle that a taxpayer
may sue where there is a claim of illegal disbursement of public funds, citing that the provincial government
would spend substantial amounts, including ₱187 million for interest payments on bonds, and thus the
controversy is of paramount public importance. The Court clarified that the issues raised concern the legality,
not wisdom, of the acts and are therefore justiciable. It affirmed that the denial of the Motion to Admit Amended
Petition was proper since including the provincial government as a petitioner would create an absurd situation
of a government suing itself. The Court also held that procedural defects in the Motion for Reconsideration were
cured as respondents were adequately notified, noting that procedural rules serve justice and technical lapses
should not bar the adjudication of substantial rights. Consequently, the Supreme Court partially granted the
petition, reversed and set aside the RTC’s dismissal, and remanded the case for further proceedings,
establishing that taxpayers may invoke judicial review to prevent illegal disbursement of public funds.
