II. Constitutional Limitations Flashcards
pg. 27
Where do bills originate relating to
- appropriation,
- revenue, or tariff bills,
- bills authorizing increase of public debt,
- bills of local application, and
- private bills?
Art. 7 Sec. 24 of Constitution
REVENUE BILLS (not laws) must originate exclusively in the house but the Senate may propose amendments
Q: If the Senate drafted ahead in their own version, can that be done, like a tax law? Exactly what happened to the amended VAT law.
Yes, provided Congress had enrolled the bill already.
It is permissible that Senate has their own bill but the same shall be submitted to the bicameral committee. What is required is that date of official registration of the bill is ahead.
when can there be a law granting any tax exemptions?
Art. 6 Sec 28 Constitution
“No law granting any tax exemption shall be passed without the concurrence of a majority of all Members of the Congress
You have a parcel of land and
you’re not engaged in any charitable activities or any educational purposes. In that land you have a building since it’s a 10-storey building, you decided to rent it to INC. The 1st floor is a restaurant and up until the 4th floor are parking lots for members of INC. From 5th to 7th floors are used for worship. From the 8th-10th floors are quarters of the ministers of the INC.
Will your property be exempted from tax? Provided Constiuttional Basis
Yes, but only on the 1st floor.
The 1st floor will be taxed because it’s not used actually, directly, and exclusive for religious purposes
It’s not only facilities that are indispensable but also incidentally necessary for that purpose, hence parking lots are exempted because it’s incidental to the use for that purpose
[A6 S28]
Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries,
and all lands, buildings, and improvements, [ade] actually, directly, and exclusively used for [rce] religious, charitable, or educational purposes shall be exempt from taxation.
Petitioner, a non-stock, non-profit corporation, owns a parcel of land and a hospital building. It provides both paying and non-paying medical services, with a significant portion of its property leased out to private enterprises.
Is it taxable?
Insofar as the land the hospital is situated used for patients, it is exempt from tax.
Insofar as the portions of land or hospital leased out to private entities are not exempt form tax
LB: Lung Center v. Quezon City
[SC]
we hold that the portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are NOT exempt from such taxes.
On the other hand, the portions of the land occupied by the hospital and portions of the hospital used for its patients, whether paying or non-paying, are exempt from real property taxes.
Can a proprietary educational institution obtain a tax exemption even when the profits obtained are divided among its stock holders?
Yes, under certain conditions they may qualify for a tax preferential rate
If the school buys computers from abroad
and was imported here in the Philippines. Will they be subject to VAT, Customs duties, and excise tax?
It depends.
- if these computers will be used for actual, direct, and exclusively used for educational purposes then it’s exempted, such as, for computer labs for the students
- if bought locally, it is NOT exempted because who is being taxed for VAT here is the seller and the seller shifts the burden to the buyer. The statutory taxpayer is the seller and not the local store, hence the school cannot make that as an exemption.
knowledge check: Constitutional Provisions that provide for tax exemptions & their specific tax exemptions
Art. 6 Sec 28 (3) - real property tax
Art. 14, Sec 4 (3) (4) - income, import, duties, doner’s
pg. 33 “G”
B. Indirect Constitutional Limitations
pg .35
discuss the case of Chamber of Real Estate & Builders’ Association Inc. v. Romulo et. al.
[MCIT]
Let’s say a corporation sells property for ₱10 million, and the cost of the property (cost of sales) was ₱6 million. The gross income is:
Gross Income = ₱10 million (sales) - ₱6 million (cost of property) = ₱4 million.
Now, the MCIT is applied to the gross income:
MCIT = 2% of ₱4 million = ₱80,000.
Section 1, Art. III, 1987 Const. — […] nor shall any person be denied the equal protection of the laws.
on the topic of indirect constitutional limitations of taxation
knowledge check: It follows that the guarantee of the equal protection of the laws is not violated by legislation based on a reasonable classification. Classification, to be valid, must
- rest on substantial distinctions
- germane to the purpose of the law
- not limited to existing conditions only,
- apply equally to all members of the same class
Does it apply not only to existing condition, for example, if in Cebu City, there will be an ordinance taxing an astronaut, and you happen to be the only astronaut in the area, can you question the ordinance for being violative of the Constitutional limitation and equal protection of laws?
A: because there may be only one astronaut now but it doesn’t mean there won’t be more in the future. The imposition of the ordinance is not only for the current situation but for future conditions as well. As long as it’s not intended specifically for you, then it cannot be questioned to be violative of equal protection of laws.
valid classification > (1) substantial distinction >
what is compelling interest test?
as long as there is a compelling
governmental interest, then the distinction can be justified. It has to make a justification
imposing higher excise tax on sugar beverages
when enacting laws that protect children, VAWC, it does not violate equal protection of laws because of the principle of
constitutionally permissible state interest
Section 10, Art. III, 1987 Const. — No law impairing the obligation of contracts shall be passed
when does non-impairment of contracts apply to “Privileges”
As a privilege you cannot demand. So if it is granted to you then it can be taken away. The government can do that and there is no question
but if there is a substantial consideration in exchange for that privilege then it cannot just be taken by the government just like how it is with this investment promotion agency
Congress granted Omega Power Corp. a 25-year legislative franchise to operate as an electricity distributor, which included a tax exemption on certain revenues. After 15 years, a new law was passed removing all tax exemptions for power distributors. Omega Power Corp. argued that the removal of their tax exemption violates the non-impairment clause and demanded to retain their franchise under the original terms.
Issue: Can Omega Power Corp. demand to retain its tax exemption for the remaining 10 years of its franchise?
No, the non-impairment clause protects contracts but not government franchises
The SC said that franchise is always subject to change because the
Constitution provides that so this cannot be considered as violation of the non-impairment clause of the Constitution
