tax midterms reviewer - alagban

5
TAX v. LICENSE & REGULATOR Y FEE OSMENA v. ORBOS F: OPSF was created to reimburse the oil companies for cost increased in crude oil and imported petrol products. This fund was reclassified as trust liability account. H: While the funds collected may be referred to as taxes, they are exacted in the exercise of police power of the State. Moreover, that the OPSF is a special fund is plain from the special treatment given it by EO 137. It is segregated from the general fund; and while it is placed in what the law refers to as a “trust liability account,” the fund nonetheless remains subject to the scr utiny and review of the COA. PAL v. EDU F: PAL claims exemption from Motor Vehicle Registration Fees H: MVRF are actually taxes intended for additional revenue of government. If the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax. The nature of an exaction is to be determin ed by the purpose for which it is being exacted. PROGRESSIVE DEV’T v. QC I: Whether the tax imposed by QC Council on Progressive on gross receipts of stall rentals is an income tax or license fee H: License Fee. The Farmer’s Market and Shopping Center is a public market in the sense that it is open to the public, even if it is privately owned. The operation of a privately owned market is equivalent to or quite the same as the operation of a government-owned market as both as established for the rendition of service to the general public, which warrants close supervision and control by respondent City, for the protection of the health of the public. (SC differentiated a license fee fr om a tax) ***To be considered a license fee, the imposition must relate to an occupation or activity that so engages the public interest in health, morals, safety and development as to require regulation for the protection and promotion of such public interest. TOLENTINO v. SEC. OF FINANCE F: EVAT case H: The VAT is not a license tax. It is not a tax on the exercise of a privilege, much less a constitutional right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale or exchange of services and the lease of properties pu rely for revenue purpos es. To subject the press to its payment is not to burden the exercise of its right any more than to make the press pay income tax or subject it to general regulation is not to violate its freedom under the Constitution. TAX v. SPECIAL ASSESSMENT REPUBLIC v. MURCIA MILLING F: Charter of Philsugin imposes a levy on annual sugar production of sugar cane planters. The fund was supposedly for research work. The venture, however, failed. The 3 sugar centrals now claim for a refund of the amount they contributed. H: No refund. Neither a special assessment nor a tax. The contribution is not an exercise of the power of taxation nor the imposition of a special assessment but is an exercise of the police power for the general welfare of the country. It is an exercise of the sovereign power which no private citizen may lawfully resist. From its financiall y unsuccessful ventur e, the Philsugin cou ld very well have advanced in its appreciation of the problems of management faced by sugar centrals…Therefore, herein respondents are likewise benefited. TAX v. TARIFF and CUSTOMS DUTIES GARCIA v. EXEC SEC F: Garcia challenges the constitutionality of the imposition of 9% ad valorem duties on imported goods by virtue of an EO issued by the President. He challenges the authority of the President to impose duties. H: Constitutional. The Congress may by law authorize the President to fix tariff rates and other duties subject to certain limitations and restrictions. (see Sec. 28 (2), Art. VI of Consti). Customs duties assesse d at the prescribed tariff rates are very much like taxes which are frequently imposed for both revenue raising and for regulatory purposes. Custom duties are the name given to taxes on t he importation and exportation of commodities. OBLIGATION TO PAY TAX v. OBLIGATION TO PAY DEBT REPUBLIC v. MAMBULAO (MLC) F: MLC failed to pay forest charges. It wants the reforestation charges paid before (which were allegedly not used because forests are still denuded) to be applied to the forest charges it owed the government. H: Not allowed to offset. The amount paid by a licensee as reforestation charges is in the nature of a tax which forms a part of the Reforestation Fund, payable by him irrespective of whether the area covered by his license is reforested or not. Internal revenue taxes, such as the forest charges, cannot be the subject of set-off or compensation because taxes are not in the nature of contracts between parties but grow out of a duty to, and are the positive acts of the government, to the making and enforcing of which, the personal consent of individual taxpayers is not required. PHILEX MINING v. CIR F: Ph ilex wants to set off its claims for VAT input credit/refund for the excise taxes due from it. H: Not allowed to set-off. Parties are not creditor and debtor of each other. Debts are due to the government in corporate capacity while taxes are due to the government in its sovereign capacity. Taxes are compulsory and not a matter of bargain. CALTEX v. COA F: A petition questioning the authority of the COA in disallowing Caltex’s claim for reimbursement from the

Upload: aiken-gamboa-alagban

Post on 14-Apr-2018

218 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Tax Midterms Reviewer - Alagban

7/27/2019 Tax Midterms Reviewer - Alagban

http://slidepdf.com/reader/full/tax-midterms-reviewer-alagban 1/5

TAX v. LICENSE & REGULATORY FEE

OSMENA v. ORBOS F: OPSF was created to reimburse the oil companies for cost increased in crude oil and imported petrol

products. This fund was reclassified as trust liability account.

H: While the funds collected may be referred to as taxes, they are exacted in the exercise of police power of 

the State. Moreover, that the OPSF is a special fund is plain from the special treatment given it by EO 137. It 

is segregated from the general fund; and while it is placed in what the law refers to as a “trust liability

account,” the fund nonetheless remains subject to the scrutiny and review of the COA.PAL v. EDU F: PAL claims exemption from Motor Vehicle Registration Fees

H: MVRF are actually taxes intended for additional revenue of government. If the purpose is primarily

revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly

called a tax. The nature of an exaction is to be determined by the purpose for which it is being exacted.

PROGRESSIVE DEV’T v.

QC

I: Whether the tax imposed by QC Council on Progressive on gross receipts of stall rentals is an income tax

or license fee

H: License Fee. The Farmer’s Market and Shopping Center is a public market in the sense that it is open to

the public, even if it is privately owned. The operation of a privately owned market is equivalent to or quite

the same as the operation of a government-owned market as both as established for the rendition of service

to the general public, which warrants close supervision and control by respondent City, for the protection of 

the health of the public. (SC differentiated a license fee from a tax)

***To be considered a license fee, the imposition must relate to an occupation or activity that so engages the

public interest in health, morals, safety and development as to require regulation for the protection and

promotion of such public interest.

TOLENTINO v. SEC. OFFINANCE

F: EVAT caseH: The VAT is not a license tax. It is not a tax on the exercise of a privilege, much less a constitutional right. It 

is imposed on the sale, barter, lease or exchange of goods or properties or the sale or exchange of services

and the lease of properties purely for revenue purposes. To subject the press to its payment is not to

burden the exercise of its right any more than to make the press pay income tax or subject it to general

regulation is not to violate its freedom under the Constitution.

TAX v. SPECIAL ASSESSMENT

REPUBLIC v. MURCIA

MILLING

F: Charter of Philsugin imposes a levy on annual sugar production of sugar cane planters. The fund was

supposedly for research work. The venture, however, failed. The 3 sugar centrals now claim for a refund of 

the amount they contributed.

H: No refund. Neither a special assessment nor a tax. The contribution is not an exercise of the power of 

taxation nor the imposition of a special assessment but is an exercise of the police power for the general

welfare of the country. It is an exercise of the sovereign power which no private citizen may lawfully

resist. From its financially unsuccessful venture, the Philsugin could very well have advanced in its

appreciation of the problems of management faced by sugar centrals…Therefore, herein respondents arelikewise benefited.

TAX v. TARIFF and CUSTOMS DUTIES

GARCIA v. EXEC SEC F: Garcia challenges the constitutionality of the imposition of 9% ad valorem duties on imported goods by

virtue of an EO issued by the President. He challenges the authority of the President to impose duties.

H: Constitutional. The Congress may by law authorize the President to fix tariff rates and other duties

subject to certain limitations and restrictions. (see Sec. 28 (2), Art. VI of Consti). Customs duties assessed at 

the prescribed tariff rates are very much like taxes which are frequently imposed for both revenue raising

and for regulatory purposes. Custom duties are the name given to taxes on the importation and exportation

of commodities.

OBLIGATION TO PAY TAX v. OBLIGATION TO PAY DEBT

REPUBLIC v. MAMBULAO

(MLC)

F: MLC failed to pay forest charges. It wants the reforestation charges paid before (which were allegedly not 

used because forests are still denuded) to be applied to the forest charges it owed the government.H: Not allowed to offset. The amount paid by a licensee as reforestation charges is in the nature of a tax

which forms a part of the Reforestation Fund, payable by him irrespective of whether the area covered by

his license is reforested or not. Internal revenue taxes, such as the forest charges, cannot be the subject of 

set-off or compensation because taxes are not in the nature of contracts between parties but grow out of a

duty to, and are the positive acts of the government, to the making and enforcing of which, the personal

consent of individual taxpayers is not required.

PHILEX MINING v. CIR F: Philex wants to set off its claims for VAT input credit/refund for the excise taxes due from it.

H: Not allowed to set-off. Parties are not creditor and debtor of each other. Debts are due to the government 

in corporate capacity while taxes are due to the government in its sovereign capacity. Taxes are compulsory

and not a matter of bargain.

CALTEX v. COA F: A petition questioning the authority of the COA in disallowing Caltex’s claim for reimbursement from the

Page 2: Tax Midterms Reviewer - Alagban

7/27/2019 Tax Midterms Reviewer - Alagban

http://slidepdf.com/reader/full/tax-midterms-reviewer-alagban 2/5

OPSF and seeking reversal of the COA’s decision preventing Caltex from exercising the right to offset its

remittances against its reimbursement from the OPSF

H: Not allowed to offset. A taxpayer may not offset taxes due from the claims that he might have against the

government. Taxes cannot be the subject of compensation because the government and taxpayer are not 

mutually creditors and debtors of each other and a claim for taxes is not such a debt, demand, contract or

judgment as is allowed to be set-off.

FRANCIA v. IAC F: A portion of Francia’s property was expropriated. However, he also failed to pay real estate taxes so it 

was sold to satisfy tax delinquency. He now asks for a set-off of the amount the government owed him for

the expropriation and the tax delinquency.H: Not allowed to offset. The collection of taxes can’t await results of a lawsuit. The obligation to pay taxes is

not a contract but a duty – a positive act of government wherein the consent of individuals is not required.

There is no mutual creditor and debtor relationship between the government and the taxpayer.

Furthermore, the tax being questioned was due to the city government but the expropriation was done by

the national government – two different taxing bodies.

THEORY AND BASIS OF TAXATION

LORENZO v. POSADAS F: Hanley died and left his property to his nephew Matthew; however, such property will only be given 10

years after his death

H: The obligation to pay taxes rests not upon the privileges enjoyed by a citizen but upon the necessity of 

money for the support of the state; for this reason, no one is allowed to object to or resist the payment of 

taxes solely because no personal benefit to him can be pointed out.

PURPOSES, OBJECTIVES OF TAXATION

 A. GENERAL, FISCAL, REVENUE

B. NON-REVENUE, SPECIAL OR REGULATORY 

TIO v. VRB F: 30% tax on gross receipts. PD 1987 (creating VRB) imposes tax on locally manufactured or imported

blank video tapes to sales tax.

H: Constitutional, hence a valid tax. Tax imposed is both REGULATORY and a REVENUE measure.

Revenue measure: earnings of videogram establishments of around P600M p.a. have not been subjected to

tax, thereby depriving the Government of an additional source of revenue

Regulatory measure: for regulating the video industry, particularly because of the rampant film piracy, the

flagrant violation of intellectual property rights, and the proliferation of pornographic video tapes.

LUTZ v. ARANETA F: Lutz is the administrator of an estate. He seeks to recover the P14, 000 paid under the Sugar Adjustment 

Act, alleging that such tax is unconstitutional and void, being levied for the aid and support of the sugar

industry exclusively, which in plaintiff’s opinion is not a public purpose for which a tax may be

constitutionally levied.

H: Tax is levied with a regulatory purpose, to provide means for the rehabilitation and stabilization of the

threatened sugar industry. The act is primarily an exercise of the police power.ESSO v. CIR F: Margin fees paid to Central Bank for remittances

H: Not a tax. Margin fee is not a tax but an exaction designed to curb the excessive demands upon

international reserves. It was imposed by the state in the exercise of police power.

Classification

a. As to scope of the tax

National taxes, local taxes

BENGUET v. CBAA Realty taxes are national taxes collected by LGUs. It is thus clear from the foregoing that it is the national

government, expressing itself through the legislative branch, that levies the real property tax. Consequently,

when local governments are required to fix the rates, they are merely constituted as agents of the national

government in the enforcement of the Real Property Tax Code. The delegation of taxing power is not even

involved here because the national government has already imposed realty tax in Sec. 38, leaving only the

enforcement to be done by local governments.

b. As to who shoulders the burden of the tax

Direct taxes, indirect taxes

PHILIPPINE ACETYLENE

v. CIR

F: Phil Acetylene had various sales to NPC (buyer). It claims refund from the percentage tax it paid because

its client, NPC is tax-exempt.

H: Taxable, No refund, Seller not exempt, Percentage tax is tax on manufacturer (seller)It may indeed be that the economic burden of the tax finally falls on the purchaser; when it does the tax

becomes a part of the price which the purchaser must pay. It does not matter that an additional amount is

billed as tax to the purchaser. The method of listing the price and the tax separately and defining taxable

Page 3: Tax Midterms Reviewer - Alagban

7/27/2019 Tax Midterms Reviewer - Alagban

http://slidepdf.com/reader/full/tax-midterms-reviewer-alagban 3/5

gross receipts as the amount received less the amount of the tax added, merely avoids payment by the seller

of a tax on the amount of the tax. The effect is still the same, namely, that the purchaser does not pay the tax.

He pays or may pay the seller more for the goods because of the seller's obligation, but that is all and the

amount added because of the tax is paid to get the goods and for nothing else. Notice that the tax burden

may not even be shifted to the purchaser at all. A decision to absorb the burden of the tax is largely a matter

of economics. Then it can no longer be contended that a sales tax is a tax on the purchaser.

MACEDA v. MACARAIG F: NPC is exempt from direct and indirect tax. But the oil companies are not. By the very nature of indirect 

taxation, the economic burden of such taxation is expected to be passed on through the channels of 

commerce to the user or consumer of the goods sold. Because, however, the NPC has been exempted fromboth direct and indirect taxation, the NPC must be held exempted from absorbing the economic burden of 

indirect taxation. This means, on the one hand, that the oil companies which wish to sell to NPC absorb all

or part of the economic burden of the taxes previously paid to BIR, which they could shift to NPC if NPC did

not enjoy exemption from indirect taxes. This means also, on the other hand, that the NPC may refuse to pay

the part of the "normal" purchase price of bunker fuel oil which represents all or part of the taxes

previously paid by the oil companies to BIR.

CIR v. GOTAMCO F: Contractor of WHO, a tax-exempt organization, claims refund of contractor‘s tax

H: Exempt. The contractor's tax is payable by the contractor but in the last analysis it is the owner of the

building that shoulders the burden of the tax because the same is shifted by the contractor to the owner as a

matter of self-preservation. Thus, it is an indirect tax. And it is an indirect tax on the WHO because, although

it is payable by the petitioner, the latter can shift its burden on the WHO. In the last analysis it is the WHO

that will pay the tax indirectly through the contractor and it certainly cannot be said that this tax has no

bearing upon the World Health Organization. Philippine Acetylene does not apply because that involves a

sales tax, not a contractor‘s tax.

c. As to the object or subject matter of the tax

VILLANUEVA v. CITY OF

ILOILO

F: Tax on tenement houses

H: license tax, valid

A real estate tax is a direct tax on the ownership of lands and buildings or other improvements thereon, not 

specially exempted, and is payable regardless of whether the property is used or not, although the value

may vary in accordance with such factor. The tax is usually single or indivisible, although the land and

building or improvements erected thereon are assessed separately, except when the land and building or

improvements belong to separate owners. It is a fixed proportion of the assessed value of the property

taxed, and requires, therefore, the intervention of assessors. It is collected or payable at appointed times,

and it constitutes a superior lien on and is enforceable against the property subject to such taxation, and

not by imprisonment of the owner.

The tax imposed by the ordinance does not possess the aforestated attributes. On the contrary, it is plain

from the context of the ordinance that the intention is to impose a license tax on the operation of tenement 

houses, which is a form of business or calling.

CIR v. CA, ATLAS MINING F: Manufacturer and Contractor tax

H: Not liable for manufacturer‘s tax but liable to contractor‘s taxManufacturer‘s tax and contractor‘s tax are governed by Sec. 186 and Sec. 191, respectively. These sections

are under Title V of the tax code, entitled "Privilege Taxes on Business and Occupation." These "privilege

taxes on business" are taxes imposed upon the privilege of engaging in business. They are essentially excise

taxes. To be held liable for the payment of a privilege tax, the person or entity must be engaged in business,

as shown by the fact that the drafters of the tax code had purposely grouped said provisions under the

general heading adverted to above. "To engage" is to embark on a business or to employ oneself therein.

The word "engaged" connotes more than a single act or a single transaction; it involves some continuity of 

action. "To engage in business" is uniformly construed as signifying an employment or occupation which

occupies one's time, attention, and labor for the purpose of a livelihood or profit. The expressions "engage

in business," "carrying on business" or "doing business" do not have different meanings, but separately or

connectedly convey the idea of progression, continuity, or sustained activity. "Engaged in business" means

occupied or employed in business; carrying on business" does not mean the performance of a single

disconnected act, but means conducting, prosecuting, and continuing business by performing progressively

all the acts normally incident thereto; while "doing business" conveys the idea of business being done, not 

from time to time, but all the time. The foregoing notwithstanding, it has likewise been ruled that one act 

may be sufficient to constitute carrying on a business according to the intent with which the act is done.

Thus, where the end sought is to make a profit, the act constitutes "doing- business." This is not without 

basis. The term "business," as used in the law imposing a license tax on business, trades, and so forth,

ordinarily means business in the trade or commercial sense only, carried on with a view to profit or

livelihood; It is thus restricted to activities or affairs where profit is the purpose, or livelihood is the motive.

Since the term "business" is being used without any qualification in our aforesaid tax code, it shouldtherefore be therefore be construed in its plain and ordinary meaning, restricted to activities for profit or

livelihood.

Manufacturer‘s Tax A person can hardly be considered as occupied or employed in the sale, barter or

exchange of personal property when he has made one purchase and sale only

Contractor‘s tax It cannot validly claim that the leasing out of its personal properties was merely an

isolated transaction. Its book of accounts shows that several distinct payments were made for the use of its

Page 4: Tax Midterms Reviewer - Alagban

7/27/2019 Tax Midterms Reviewer - Alagban

http://slidepdf.com/reader/full/tax-midterms-reviewer-alagban 4/5

personal properties such as its plane, motor boat and dump truck. The series of transactions engaged in by

ACMDC for the lease of its aforesaid properties could also be deduced from the fact that for the tax years

1975 and 1976 there were profits earned and reported therefor.

ASSOCIATION OF

CUSTOMS BROKERS v.

MUNICIPAL BOARD

F: Ordinance No. 3379 passed by the Mun. Board of the City of Manila “An Ordinance Levying a Prop erty Tax

on all Motor Vehicles operating within the City of Manila” 

H: License tax. While as a rule an ad valorem tax is a property tax, the rule should not be taken in its

absolute sense if the nature and purpose of the tax as gathered from the context show that it is in effect an

excise or a license tax. Thus, it has been held that "If a tax is in its nature an excise, it does not become a

property tax because it is proportioned in amount to the value of the property used in connection with theoccupation, privilege or act which is taxed The main purpose of the tax is revenue for repair, maintenance

and improvement of streets and bridges in the city. This is precisely what the Motor Vehicle law prohibits

for it already impose fees for exactly the same purpose.

Extent of the legislative power to tax

TAN v. DEL ROSARIO Simplified Net Income Taxation

H: Valid. With the legislature primarily lies the discretion to determine the nature (kind), object (purpose),

extent (rate), coverage (subjects) and situs (place) of taxation. The court cannot freely delve into those

matters which, by constitutional fiat, rightly rest on legislative judgment. But, where a tax measure becomes

so unconscionable and unjust as to amount to confiscation of property, courts will not hesitate to strike it 

down, for, despite all its plenitude, the power to tax cannot override constitutional proscriptions.

CIR v. SANTOS It is inherent in the power to tax that the State be free to select the subjects of taxation. Inequalities which

result from a singling out of one particular class for taxation or exemption, does not infringe constitutional

limitation.

SC held that it is within the power of the legislature to tax jewelry or not. With the legislative primarily lies

the discretion to determine the nature, object, extent, coverage, and situs of taxation.

SISON v. ANCHETA Income tax. The higher tax rate on income arising from exercise of profession as opposed to those with

an inherent prerogative of the state in its sovereign capacity exercised through the legislative branch of 

government However, the power to tax is not unconfined but has restrictions provided for in the

Constitution. The due process and equal protection clauses may be invoked to strike down invalid revenue

measures as they affect property rights. When any legislative measure violates the fundamental law, the

former must be declared null. The taxing power has the authority to make reasonable and natural

classifications for the purposes of taxation. That taxpayers who are recipients of income compensation as

opposed to those in business or professions are classified separately is a reasonable classification that the

legislature may so prescribe without violating the fundamental law.

KAPATIRAN v. TAN F: EO 273 increased the VAT on every sale to 10% unless zero-rated or exempt.

H: The president, under provisional constitution, had legislative authority. Taxes should be capable of being

effectively enforced. Hence, it must not lay down obstacles to business growth and economic development.

The VAT law could be cited as an “example of administrative simplicity”.REYES v. ALMANZOR F: JBL Reyes assailed reclassification and assessments made by the City Assessor of Manila. Petition was

granted.

H: The taxing power has the authority to make a reasonable and natural classification for purposes of 

taxation but the government’s act must not be prompted by a spirit of hostility, at the very least,

discrimination that finds no support in reason. Such collection should be made in accordance with law as

any arbitrariness will negate the very reason for the government itself.

WHO MAY QUESTION THE VALIDITY OF A TAX MEASURE OR EXPENDITURE OF TAXES

LOZADA v. COMELEC F: action for mandamus in the hopes of compelling COMELEC to call a special election to fill up existing

vacancies in the Interim Batasang Pambansa.

H: No standing

As taxpayers, petitioners may not file the instant petition, for nowhere therein is it a lleged that tax money is

being illegally spent. The act complained of is the inaction of the COMELEC to call a special election, as is

allegedly its ministerial duty under the constitutional provision above cited, and therefore, involves no

expenditure of public funds.GONZALES v. MARCOS F: E.O. 130 creates a trust for the benefit of the Filipino People in the name of the Cultural Center of the

Philippines. CCP is funded by loan/donation from US. Not a single centavo comes from taxes.

H: No standing. A taxpayer has no legal standing to question executive acts that do not involve the use of 

public funds. The funds here administered by the executive department came from donations/contributions

and not by taxation. Accordingly, there was that absence of the ―requisite pecuniary or monetary interest,

which is a suit to be allowed to be brought in the name of a taxpayer must involve the legality of any act of 

government which involves the use/disbursement of public funds

PURPOSE MUST BE PUBLIC IN NATURE

PASCUAL v. SEC OF F: Appropriation for feeder roads on a land owned by Senator Zulueta.

Page 5: Tax Midterms Reviewer - Alagban

7/27/2019 Tax Midterms Reviewer - Alagban

http://slidepdf.com/reader/full/tax-midterms-reviewer-alagban 5/5

PUBLIC WORKS H: Unconstitutional. The legislature has no power to appropriate public revenue for anything but public

purpose. The test of the constitutionality of a statute requiring the use of public funds is whether the

statute is designed to promote the public interests, as opposed to the furtherance of the advantage, of 

individuals, although each advantage to individuals might incidentally serve the public. In this case, the

property was private at the time the law was passed. The donation which gave the law a semblance of 

legality cannot cure the defect 

GASTON v. RPB F: Stabilization fund A class suit by sugar producers, sugarcane planters and millers claiming ownership of 

the stocks of the Republic Planters Bank. Such investment was funded by the deduction of Php1.00 per

picul from the proceeds of the sugar producers as the Stabilization Fund collected by Philsucom. The sugarproducers argue the stabilization fees collected from them are funds in trust for them

H: Tax, Not a fund held in trust for the sugar producers, planters and millers The stabilization fees are in the

nature of the tax which is within the power of the State to impose for the promotion of the entire sugar

industry. This is within the public purpose limitation of taxation and the purpose is this: to protect thesugar industry which constitutes one of the nation‘s great sources of wealth which directly and indirectly

affects the welfare of so great a portion of the population of the State.

LIMITATION OF TERRITORIAL JURISDICTION

CIR v. BRITISH

OVERSEAS AIRWAYS

CORP.

F: Sales agent of a International Carrier with no landing rights in the Philippines but only sells tickets here.

H:Taxable. The sale of tickets in the Philippines is the activity that produced the income. The tickets

exchanged hands here and payments for fares were also made here in Philippine currency. The situs of the

source of payments is the Philippines. The flow of wealth proceeded from, and occurred within, Philippine

territory, enjoying the protection accorded by the Philippine Government. In consideration of such

protection, the flow of wealth should share the burden of supporting the government 

ILOILO BOTTLERS v. CITYOF ILOILO

F: Municipal license tax City enacted Ordinance No. 5 imposing a municipal license tax on: 1) distributors of softdrinks, 2) manufacturers of softdrinks, and 3) bottlers of softdrinks within its territorial jurisdiction.

Bottlers which initially had its plant in Iloilo City transferred its bottling plant at Pavia, Iloilo. City

H: Taxable. Where the manufacturer enters into sales transactions and invoices the sales at its main office

where purchase orders are received and approved before delivery orders are sent to the company's

warehouses where actual deliveries are made, there is no separate business of selling. In a case, however,

where sales transactions are entered into and perfected at stores or warehouses maintained by the

company, the entity is considered engaged in the separate business of selling. Bottlers fall under the second

category as the delivery trucks it employ also serve as ―rolling stores.