Meralco vs. Vera (1975) (Taxation Law)

Meralco vs. Vera | G.R. No. L-29987 | October 22, 1975

Facts: Meralco is the holder of a franchise to construct, maintain, and operate an electric light, heat, and power system in the City of Manila and its suburbs. In 1962 and 1963, Meralco imported and received from abroad copper wires, transformers, and insulators for use in the operation of its business.  The Collector of Customs, as deputy of the Commissioner of Internal Revenue, levied and collected a compensating tax.  Meralco claimed for refund for the said years, but such claims were either not acted upon or denied by the Commissioner.

Issue: Whether or not Meralco is exempt from payment of a compensating tax on poles, wires, transformers and insulators imported by it for use in the operation of its electric light, heat, and power system.

Held: Meralco is not exempt from paying the compensation tax provided for in Section 190 of the Tax Code, the purpose of which is to “place casual importers, who are not merchants on equal footing with established merchants who pay sales tax on articles imported by them.” Meralco’s claim for exemption from payment of  the compensating tax is not clear or expressed, contrary to the rule that “exemptions from taxation are highly disfavored in law,  and he who claims exemption must be able to justify his claim by the clearest grant of organic or statute law.”  Tax exemption are strictly construed against the taxpayer, they being highly disfavored and may almost be said to be “odious to the law.” When exemption is claimed, it must be shown indubitably to exist, for every presumption is against it, and a well-founded doubt is fatal to the claim.

Valley Trading Co. vs. CFI of Isabela, et al. (1989) (Taxation Law)

Valley Trading Co. vs. CFI of Isabela, et al. | G.R. No. L-49529 | March 31, 1989

Facts: Petitioner Valley Trading filed a complaint with CFI of Isabela seeking a declaration of nullity of a local ordinance which imposed a graduated tax on retailers, independent wholesalers and distributors. Petitioner likewise prayed for issuance of writ of preliminary injunction to stop collection of said tax. Petitioner takes the position that said ordinance imposes a "graduated fixed tax based on Sales" that "in effect imposes a sales tax in contravention of Sec. 5, Charter I, par. (L) of P.D. 231 amended by P.D. 426 otherwise known as the Local Tax Code " which prohibits a municipality from imposing a percentage tax on sales.

Respondents, on the other hand, claim in their answer that the tax is an annual fixed business tax, not a percentage tax on sales, imposable by a municipality under Section 19(A-1) of the Local Tax Code. They cited the ruling of the Acting Secretary of Finance, in his letter of April 14, 1977, upholding the validity of said tax on the ground that the same is an annual graduated fixed tax imposed on the privilege to engage in business, and not a percentage tax on sales which consists of a fixed percentage of the proceeds realized out of every sale transaction of taxable items sold by the taxpayer.

CFI denied the prayer for a writ of preliminary injunction on the ground that the collection of taxes cannot be enjoined.

Issue: Whether or not the enforcement of said ordinance may be enjoined?

Held: Circumstances required for the writ to issue do not obtain in the case at bar. The damage that may be caused to the petitioner will not, of course, be irreparable; where so indicated by subsequent events favorable to it, whatever it shall have paid is easily refundable. Besides, the damage to its property rights must perforce take a back seat to the paramount need of the State for funds to sustain governmental functions. Compared to the damage to the State which may be caused by reduced financial resources, the damage to petitioner is negligible. The policy of the law is to discountenance any delay in the collection of taxes because of the oft-repeated but unassailable consideration that taxes are the lifeblood of the Government and their prompt and certain availability is an imperious need.

In the present case, it is evident that the only ground relied upon for injunction relief is the alleged patent nullity of the ordinance. If the court should issue the desired writ, premised on that sole justification therefor of petitioner, it would be a virtual acceptance of his claim that the imposition is patently invalid or, at the very least, that the ordinance is of doubtful validity. There would, in effect, be a prejudgment of the main case and a reversal of the rule on the burden of proof since it would assume the proposition which the petitioner is inceptively duty bound to prove.

Furthermore, such action will run counter to the well settled rule that laws are presumed to be valid unless and until the courts declare the contrary in clear and unequivocal terms. A court should issue a writ of preliminary injunction only when the petitioner assailing a statute has made out a case of unconstitutionality or invalidity strong enough to overcome, in the mind of the judge, the presumption of validity, aside from a showing of a clear legal right to the remedy sought. This case presents no features sufficient to overcome such presumption. This must have been evident to the trial court from the answer of the respondents and the well reasoned ruling of the Acting Secretary of Finance. The mere fact that a statute is alleged to be unconstitutional or invalid will not entitle a party to have its enforcement enjoined.

Good thing we have RJ De Guzman to keep the balance in law school, ever magnanimous...

What is the coverage of the law on termination? (Labor Law)

The law on termination under the Labor Code applies to all establishments or undertakings whether for profit or not. The purpose of the law is to extend the same rights and benefits enjoyed by employees in profit establishments to employees in non-profit entities (Art. 284, LC).