Case Digest - Taxation

GRN 144256 June 8, 2005
Carpio-Morales, J.:

In the year 2000, the GAA appropriated PhP 111,778,000,000.00 of IRA as programmed fund. It appropriated a separate amount of P10B of IRA under the classification of unprogrammed fund, the latter amount to be released only upon th occurrence of the conditions stated in the GAA.

Whether or not the questioned provision violate the constitutional injunction that the just share of local governments in the national taxes of the IRA shall be automatically released.

Article X Section 6 of the Constitution provides: “LGUs shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.” While automatice release implies that the just share should be released to them as a matter of course, withholding its release pending an event contravened the constitutional mandate.


GRN 9637 April 30, 1957
Felix, J.:

Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary corporation and in the course of its ministry, it has been selling bible and or gospel portions throughout the country and translating the same into several Philippine dialects. The City of Manila considered appellant as conducting the business of general merchandize and required it to secure the necessary permit and license fees.

Whether or not appellant if engaged in business as a religious corporation and thus be made to pay fees or taxes.

It may be true that the price of bibles and pamphlets was a bit higher than the actual cost of the same, but this could not mean that appellant is engaged in business for profit. For this reason, we believe that the ordinance requiring them to pay fees or taxes would impair its free exercise of its religious freedom thru distribution of pamphlets.

GRN L-65773-74 April 30, 1987
En Banc, Melecio-Herrera, J.:

British Overseas Airways is a 100% British Government-owned corporation engaged in international airline business and is a member of the Interline Air Transport Association and thus it operates air transportation service and sells transportation tickets over the routes of the other airline members. From 1959 to 1972, BOAC had no landing rights for traffic purposes in the Philippines but maintained a general sales agent in the country. Warner Barnes was responsible for selling BOAC tickets covering passengers of and cargos. The CIR assessed deficiency income taxes against BOAC.

Whether or not the revenue derived by BOAC from ticket sales in the Philippines for its transportation constitute income from Philippine sources and accordingly taxable.

The source of an income is the property, activity or service that produced the income. For the source of income to be considered as coming from the Philippines, it is sufficient that the income is derived from activity within the Philippines. Herein, the sale of tickets is the activity that produced the income. The tickets exchanged hands here and payment for fares were also made here in the Philippine currency. The situs or the source of the payment is the Philippines. The flow of wealth proceeded from, and occurred within, Philippine territory, enjoying the protection accorded by Philippine government. In consideration of such protection, the flow of wealth should share the burden of supporting the government. PD 68, in relation to PD1355, ensures that international airlines are taxed on their income from Philippine sources. The 2.5% tax on gross billings is an income tax. If it had been intended as an excise tax, it would have been placed under Title V of the Tax Code covering taxes on business.

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