CASES - A. TAXATION

Surigao Consolidated Mining Co., Inc. vs. Collector of Internal Revenue Taxation; Condonation of tax liability; Statutory construction; Not extended beyond plain meaning of terms.

The condonation of a tax liability is equivalent and is in the nature of tax exemption. Being so, it should be sustained only when expressed in explicit terms, and it cannot be extended beyond the plain meaning of those terms.

National Telecommunications Commission vs. Court of Appeals The proper basis for the computation of the supervision and regulation fee under Section 40(e) of the Public Service Act, as amended, is the capital stock subscribed or paid and not, alternatively, the property and equipment.

All things studiedly considered, and mindful of the aforesaid ruling of this Court in the case of Philippine Long Distance Telephone Company vs. Public Service Commission, it should be reiterated that the proper basis for the computation of subject fee under Section 40(e) of the Public Service Act, as amended by Republic Act No. 3792, is " the capital stock subscribed or paid and not, alternatively, the property and equipment."

Roxas vs. Court of Tax Appeals Contribution to a private entity that gives dividends to stockholders is not deductible.

Contribution to the chapel at a private university ground owned by an educational institution that gives dividends to its stockholders is not deductible from the gross income of the taxpayer for the reason that the net income of said university inures to the benefit of its stockholders.

Roxas vs. Court of Tax Appeals RULING

Is the gain derived from the sale of the Nasugbu farm lands an ordinary gain, hence 100% taxable? And is Roxas y Cia liable for the payment of deficiency income for the sale of Nasugbu farmlands? NO. The proposition of the CIR cannot be favorably accepted in this isolated transaction with its peculiar circumstances inspite of the fact that there were hundreds of vendees. Although they paid for their respective holdings in installment for the period of 10 years, it would nevertheless make the vendor Roxas y Cia. a real estate dealer during the 10-year amortization period. It should be borne in mind that the sale of the Nasugbu farmlands to the very farmers who tilled them for generations was not only in consonance with, but more in obedience to the request and pursuant to the policy of our Government to allocate lands to the landless. It was the bounden duty of the Government to pay the agreed compensation after it had persuaded Roxas y Cia. to sell its haciendas, and to subsequently subdivide them among the farmers at very reasonable terms and prices. However, the Government could not comply with its duty for lack of funds. Obligingly, Roxas y Cia. shouldered the Government's burden, went out of its way and sold lands directly to the farmers in the same way and under the same terms as would have been the case had the Government done it itself. For this magnanimous act, the municipal council of Nasugbu passed a resolution expressing the people's gratitude. In fine, Roxas y Cia. cannot be considered a real estate dealer for the sale in question. Hence, pursuant to section 34 of the Tax Code, the land sold to the farmers are capital assets, and the gain derived from the sale thereof is capital gain, taxable only to the extent of 50%. Are the deductions for business expenses and contributions deductible? Osmena and P28.00 for San Miguel beer given as gifts to various persons. The deduction were claimed as representation expenses. Representation expenses are deductible from gross income as expenditures incurred in carrying on a trade or business under Section 30(a) of the Tax Code provided the taxpayer proves that they are reasonable in amount, ordinary and necessary, and incurred in connection with his business. In the case at bar, the evidence does not show such link between the expenses and the business of Roxas y Cia. The findings of the Court of Tax Appeals must therefore be sustained (disallowed deduction). The petitioners also claim deductions for contributions to the Pasay City Police, Pasay City Firemen, and Baguio City Police Christmas funds, Manila Police Trust Fund, Philippines Herald's fund for Manila's neediest families and Our Lady of Fatima chapel at Far Eastern University. The contributions to the Christmas funds of the Pasay City Police, Pasay City Firemen and Baguio City Police are not deductible for the reason that the Christmas funds were not spent for public purposes but as Christmas gifts to the families of the members of said entities. Under Section 39(h), a contribution to a government entity is deductible when used exclusively for public purposes. For this reason, the disallowance must be sustained. On the other hand, the contribution to the Manila Police trust fund is an allowable deduction for said trust fund belongs to the Manila Police, a government entity, intended to be used exclusively for its public functions. The contributions to the Philippines Herald's fund for Manila's neediest families were disallowed on the ground that the Philippines Herald is not a corporation or an association contemplated in Section 30 (h) of the Tax Code. It should be noted however that the contributions were not made to the Philippines Herald but to a group of civic spirited citizens organized by the Philippines Herald solely for charitable purposes. There is no question that the members of this group of citizens do not receive profits, for all the funds they raised were for Manila's neediest families. Such a group of citizens may be classified as an association organized exclusively for charitable purposes mentioned in Section 30(h) of the Tax Code. Rightly, the Commissioner of Internal Revenue disallowed the contribution to Our Lady of Fatima chapel at the Far Eastern University on the ground that the said university gives dividends to its stockholders (it should be nonprofit institution. Located within the premises of the university, the chapel in question has not been shown to belong to the Catholic Church or any religious organization. On the other hand, the lower court found that it belongs to the Far Eastern University, contributions to which are not deductible under Section 30(h) of the Tax Code for the reason that the net income of said university injures to the benefit of its stockholders. The disallowance should be sustained.

Gerochi vs. Department of Energy FACTS

Petitioners Romeo P. Gerochi, Katulong Ng Bayan (KB), and Environmentalist Consumers Network, Inc. (ECN) (petitioners), come before this Court in this original action praying that Section 34 of Republic Act (RA) 9136, otherwise known as the "Electric Power Industry Reform Act of 2001" (EPIRA), imposing the Universal Charge, and Rule 18 of the Rules and Regulations (IRR) which seeks to implement the said imposition, be declared unconstitutional. SECTION 34. Universal Charge. — Within one (1) year from the effectivity of this Act, a universal charge to be determined, fixed and approved by the ERC, shall be imposed on all electricity endusers for the following purposes: (a) Payment for the stranded debts in excess of the amount assumed by the National Government and stranded contract costs of NPC and as well as qualified stranded contract costs of distribution utilities resulting from the restructuring of the industry; (b) Missionary electrification; (c) The equalization of the taxes and royalties applied to indigenous or renewable sources of energy vis-à-vis imported energy fuels; (d) An environmental charge equivalent to one-fourth of one centavo per kilowatt-hour (₱0.0025/kWh), which shall accrue to an environmental fund to be used solely for watershed rehabilitation and management. Said fund shall be managed by NPC under existing arrangements; and (e) A charge to account for all forms of cross-subsidies for a period not exceeding three (3) years. Petitioners contend that the Universal Charge has the characteristics of a tax and is collected to fund the operations of the NPC. They argue that the cases invoked by the respondents clearly show the regulatory purpose of the charges imposed therein, which is not so in the case at bench. In said cases, the respective funds were created in order to balance and stabilize the prices of oil and sugar, and to act as buffer to counteract the changes and adjustments in prices, peso devaluation, and other variables which cannot be adequately and timely monitored by the legislature. Thus, there was a need to delegate powers to administrative bodies. Petitioners posit that the Universal Charge is imposed not for a similar purpose. On the other hand, respondent PSALM through the Office of the Government Corporate Counsel (OGCC) contends that unlike a tax which is imposed to provide income for public purposes, such as support of the government, administration of the law, or payment of public expenses, the assailed Universal Charge is levied for a specific regulatory purpose, which is to ensure the viability of the country's electric power industry. Thus, it is exacted by the State in the exercise of its inherent police power. On this premise, PSALM submits that there is no undue delegation of legislative power to the ERC since the latter merely exercises a limited authority or discretion as to the execution and implementation of the provisions of the EPIRA. Respondents Department of Energy (DOE), ERC, and NPC, through the Office of the Solicitor General (OSG), share the same view that the Universal Charge is not a tax because it is levied for a specific regulatory purpose, which is to ensure the viability of the country's electric power industry, and is, therefore, an exaction in the exercise of the State's police power. Respondents further contend that said Universal Charge does not possess the essential characteristics of a tax, that its imposition would redound to the benefit of the electric power industry and not to the public, and that its rate is uniformly levied on electricity end-users, unlike a tax which is imposed based on the individual taxpayer's ability to pay. Moreover, respondents deny that there is undue delegation of legislative power to the ERC since the EPIRA sets forth sufficient determinable standards which would guide the ERC in the exercise of the powers granted to it. Lastly, respondents argue that the imposition of the Universal Charge is not oppressive and confiscatory since it is an exercise of the police power of the State and it complies with the requirements of due process.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. FACTS

The respondent is a corporation duly organized and existing under the laws of the Philippines. Being engaged in the sale of plastic products, it imports synthetic resin and other chemicals for the manufacture of its products. For this purpose, it is required to file an Import Entry and Internal Revenue Declaration (Consumption Entry) with the Bureau of Customs under Section 1301 of the Tariff and Customs Code. Sometime in 1989, Hantex was subjected to an audit and investigation after the Intelligence and Investigation Bureau (EIIB)received a confidential information that the respondent had imported synthetic resin amounting to P115,599,018.00 but only declared P45,538,694.57. According to the informer, based on photocopies of 77 Consumption Entries furnished by another informer, the 1987 importations of the respondent were understated in its accounting records. Subpoena duces tecum and ad testificandum were also issued for the president and general manager of the respondent to appear in a hearing and bring the records of the company. However, the respondent's president and general manager refused to comply with the subpoena, contending that its books of accounts and records of importation of synthetic resin and calcium bicarbonate had been investigated repeatedly by the Bureau of Internal Revenue (BIR) on prior occasions. Meanwhile, the Bureau of Customs could not authenticate the machine copies of the import entries as well, since the original copies of the said entries filed with the Bureau of Customs had apparently been eaten by termites. However, he issued a certification that the following enumerated entries were filed by the respondent which were processed and released from the Port of Manila after payment of duties and taxes. The IEIIB then conducted an investigation and relied on the certified copies of the respondent's Profit and Loss Statement for 1987 and 1988 on file with the SEC, the machine copies of the Consumption Entries, Series of 1987, submitted by the informer, as well as excerpts from the entries certified by the Bureau of Customs. EIIB Commissioner Almonte transmitted the entire docket of the case to the BIR and recommended the collection of the total tax assessment from the respondent. Thereafter, the petitioner, CIR, sent a Letter dated to the respondent demanding payment of its deficiency income tax of P13,414,226.40 and deficiency sales tax of P14,752,903.25, inclusive of surcharge and interest. However, respondent wrote to the CIR protesting the assessment. The respondent questioned the assessment on the ground that the EIIB representative failed to present the original, or authenticated, or duly certified copies of the Consumption and Import Entry Accounts, or excerpts thereof if the original copies were not readily available; or, if the originals were in the official custody of a public officer, certified copies thereof. The respondent requested anew that the income tax deficiency assessment and the sales tax deficiency assessment be set aside for lack of factual and legal basis. The CIR denied the letter-request for the dismissal of the assessments. The respondent forthwith filed a Petition for Review in the CTA of the Commissioner's Final Assessment Letter to which the CTA ruled deniying the petition and ordered Hantex to pay its deficiency income and sales taxes for the year 1987. On appeal, the CA granted the petition and reversed the decision of the CTA. The CA held that the income and sales tax deficiency assessments issued by the petitioner were unlawful and baseless since the copies of the import entries relied upon in computing the deficiency tax of the respondent were not duly authenticated by the public officer charged with their custody, nor verified under oath by the EIIB and the BIR investigators.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals RULING

Whether or not respondent CTA En Banc erred in dismissing for lack of merit the petition and accordingly affirmed the order of the CBAA to remand the case to the LBAA for further proceedings? (NO) The petition is denied. To begin with, Section 252 emphatically directs that the taxpayer/real property owner questioning the assessment should first pay the tax due before his protest can be entertained. As a matter of fact, the words "paid under protest" shall be annotated on the tax receipts. Consequently, only after such payment has been made by the taxpayer may he file a protest in writing (within thirty [30] days from said payment of tax) to the provincial, city, or municipal treasurer, who shall decide the protest within sixty (60) days from its receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid. Secondly, within the period prescribed by law, any owner or person having legal interest in the property not satisfied with the action of the provincial, city, or municipal assessor in the assessment of his property may file an appeal with the LBAA of the province or city concerned, as provided in Section 226 of RA No. 7160. Thereafter, within thirty (30) days from receipt, he may elevate, by filing a notice of appeal, the adverse decision of the LBAA with the CBAA, which exercises exclusive jurisdiction to hear and decide all appeals from the decisions, orders, and resolutions of the Local Boards involving contested assessments of real properties, claims for tax refund and/or tax credits, or overpayments of taxes. In the present case, the authority of the assessor is not being questioned. Despite petitioners' protestations, the petition filed before the court a quo primarily involves the correctness of the assessments, which are questions of fact, that are not allowed in a petition for certiorari, prohibition and mandamus. The court a quo is therefore precluded from entertaining the petition, and it appropriately dismissed the petition. Moreover, a claim for exemption from payment of real property taxes does not actually question the assessor's authority to assess and collect such taxes, but pertains to the reasonableness or correctness of the assessment by the local assessor, a question of fact which should be resolved, at the very first instance, by the LBAA. In other words, by providing that real property not declared and proved as tax-exempt shall be included in the assessment roll, Section 206 of RA No. 7160 implies that the local assessor has the authority to assess the property for realty taxes, and any subsequent claim for exemption shall be allowed only when sufficient proof has been adduced supporting the claim. To reiterate, the restriction upon the power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled. The right of local government units to collect taxes due must always be upheld to avoid severe erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of RA No. 7160 or the LGC of 1991 that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them effective partners in the attainment of national goals.

Marcos II vs. Court of Appeals RULING

Whether or not the proper avenues of assessment and collection of the said tax obligations were taken by the respondent Bureau? (NO) Taxes are the lifeblood of the government and should be collected without unnecessary hindrance. However, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. The pivotal question the court is tasked to resolve refers to the authority of the Bureau of Internal Revenue to collect by the summary remedy of levying upon, and sale of real properties of the decedent, estate tax deficiencies, without the cognition and authority of the court sitting in probate over the supposed will of the deceased. The nature of the process of estate tax collection has been described as follows: Strictly speaking, the assessment of an inheritance tax does not directly involve the administration of a decedent's estate, although it may be viewed as an incident to the complete settlement of an estate, and, under some statutes, it is made the duty of the probate court to make the amount of the inheritance tax a part of the final decree of distribution of the estate. It is not against the property of decedent, nor is it a claim against the estate as such, but it is against the interest or property right which the heir, legatee, devisee, etc., has in the property formerly held by decedent. Further, under some statutes, it has been held that it is not a suit or controversy between the parties, nor is it an adversary proceeding between the state and the person who owes the tax on the inheritance. However, under other statutes it has been held that the hearing and determination of the cash value of the assets and the determination of the tax are adversary proceedings. The proceeding has been held to be necessarily a proceeding in rem. In the Philippine experience, the enforcement and collection of estate tax, is executive in character, as the legislature has seen it fit to ascribe this task to the Bureau of Internal Revenue. Thus, it was in Vera vs. Fernandez that the court recognized the liberal treatment of claims for taxes charged against the estate of the decedent. Such taxes, we said, were exempted from the application of the statute of non-claims, and this is justified by the necessity of government funding, immortalized in the maxim that taxes are the lifeblood of the government. Vectigalia nervi sunt rei publicae — taxes are the sinews of the state. Such liberal treatment of internal revenue taxes in the probate proceedings extends so far, even to allowing the enforcement of tax obligations against the heirs of the decedent, even after distribution of the estate's properties. Thus, the Government has two ways of collecting the taxes in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received. Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all property and rights to property belong to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due the estate. From the foregoing, it is discernible that the approval of the court, sitting in probate, or as a settlement tribunal over the deceased is not a mandatory requirement in the collection of estate taxes. It cannot therefore be argued that the Tax Bureau erred in proceeding with the levying and sale of the properties allegedly owned by the late President, on the ground that it was required to seek first the probate court's sanction. There is nothing in the Tax Code, and in the pertinent remedial laws that implies the necessity of the probate or estate settlement court's approval of the state's claim for estate taxes, before the same can be enforced and collected. On the contrary, under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. This provision disproves the petitioner's contention that it is the probate court which approves the assessment and collection of the estate tax. If there is any issue as to the validity of the BIR's decision to assess the estate taxes, this should have been pursued through the proper administrative and judicial avenues provided for by law. Apart from failing to file the required estate tax return within the time required for the filing of the same, petitioner, and the other heirs never questioned the assessments served upon them, allowing the same to lapse into finality, and prompting the BIR to collect the said taxes by levying upon the properties left by President Marcos. The Notices of Levy upon real property were issued within the prescriptive period and in accordance with the provisions of the present Tax Code. The deficiency tax assessment, having already become final, executory, and demandable, the same can now be collected through the summary remedy of distraint or levy pursuant to Section 205 of the NIRC. The omission to file an estate tax return, and the subsequent failure to contest or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under the above-cited provision, in case of failure to file a return, the tax may be assessed at any time within ten years after the omission, and any tax so assessed may be collected by levy upon real property within three years following the assessment of the tax. Since the estate tax assessment had become final and unappealable by the petitioner's default as regards protesting the validity of the said assessment, there is now no reason why the BIR cannot continue with the collection of the said tax. Any objection against the assessment should have been pursued following the avenue paved in Section 229 of the NIRC on protests on assessments of internal revenue taxes. Petitioner argues that all the questioned Notices of Levy, however, must be nullified for having been issued without validly serving copies thereof to the petitioner. As a mandatory heir of the decedent, petitioner avers that he has an interest in the subject estate, and notices of levy upon its properties should have been served upon him. We do not agree. In the case of notices of levy issued to satisfy the delinquent estate tax, the delinquent taxpayer is the Estate of the decedent, and not necessarily, and exclusively, the petitioner as heir of the deceased. In the same vein, in the matter of income tax delinquency of the late president and his spouse, petitioner is not the taxpayer liable. Thus, it follows that service of notices of levy in satisfaction of these tax delinquencies upon the petitioner is not required by law. The foregoing notwithstanding, the record shows that notices of warrants of distraint and levy of sale were furnished the counsel of petitioner on April 7, 1993, and June 10, 1993, and the petitioner himself on April 12, 1993 at his office at the Batasang Pambansa. We cannot therefore, countenance petitioner's insistence that he was denied due process. Where there was an opportunity to raise objections to government action, and such opportunity was disregarded, for no justifiable reason, the party claiming oppression then becomes the oppressor of the orderly functions of government. He who comes to court must come with clean hands. Otherwise, he not only taints his name, but ridicules the very structure of established authority.

Diaz vs. Secretary of Finance RULING

Whether the government is unlawfully expanding VAT coverage by including tollway operators and tollway operations in the terms "franchise grantees" and "sale of services" under Section 108 of the Code. (NO) Section 108 of the NIRC imposes VAT on "all kinds of services" rendered in the Philippines for a fee, including those specified in the list. The enumeration of affected services is not exclusive. By qualifying "services" with the words "all kinds," Congress has given the term "services" an allencompassing meaning. The listing of specific services are intended to illustrate how pervasive and broad is the VAT's reach rather than establish concrete limits to its application. Thus, every activity that can be imagined as a form of "service" rendered for a fee should be deemed included unless some provision of law especially excludes it. When a tollway operator takes a toll fee from a motorist, the fee is in effect for the latter's use of the tollway facilities over which the operator enjoys private proprietary rights that its contract and the law recognize. In this sense, the tollway operator is no different from the service providers under Section 108 who allow others to use their properties or facilities for a fee. Tollway operators are franchise grantees and they do not belong to exceptions (the low-income radio and/or television broadcasting companies with gross annual incomes of less than ₱10 million and gas and water utilities) that Section 119 spares from the payment of VAT. The word "franchise" broadly covers government grants of a special right to do an act or series of acts of public concern. Tollway operators are, owing to the nature and object of their business, "franchise grantees." The construction, operation, and maintenance of toll facilities on public improvements are activities of public consequence that necessarily require a special grant of authority from the state. Indeed, Congress granted special franchise for the operation of tollways to the Philippine National Construction Company, the former tollway concessionaire for the North and South Luzon Expressways. Apart from Congress, tollway franchises may also be granted by the TRB, pursuant to the exercise of its delegated powers under P.D. 1112. The franchise in this case is evidenced by a "Toll Operation Certificate." Whether the imposition of VAT on tollway operators is not administratively feasible and cannot be implemented. (NO) Administrative feasibility is one of the canons of a sound tax system. It simply means that the tax system should be capable of being effectively administered and enforced with the least inconvenience to the taxpayer. Non-observance of the canon, however, will not render a tax imposition invalid "except to the extent that specific constitutional or statutory limitations are impaired." Thus, even if the imposition of VAT on tollway operations may seem burdensome to implement, it is not necessarily invalid unless some aspect of it is shown to violate any law or the Constitution. Here, it remains to be seen how the taxing authority will actually implement the VAT on tollway operations. Any declaration by the Court that the manner of its implementation is illegal or unconstitutional would be premature. Although the transcript of the August 12, 2010 Senate hearing provides some clue as to how the BIR intends to go about it,35 the facts pertaining to the matter are not sufficiently established for the Court to pass judgment on. Besides, any concern about how the VAT on tollway operations will be enforced must first be addressed to the BIR on whom the task of implementing tax laws primarily and exclusively rests. The Court cannot preempt the BIR's discretion on the matter, absent any clear violation of law or the Constitution. For the same reason, the Court cannot prematurely declare as illegal, BIR RMC 63-2010 which directs toll companies to record an accumulated input VAT of zero balance in their books as of August 16, 2010, the date when the VAT imposition was supposed to take effect. The issuance allegedly violates Section 111(A) of the Code which grants first time VAT payers a transitional input VAT of 2% on beginning inventory. In this connection, the BIR explained that BIR RMC 63-2010 is actually the product of negotiations with tollway operators who have been assessed VAT as early as 2005, but failed to charge VATinclusive toll fees which by now can no longer be collected. The tollway operators agreed to waive the 2% transitional input VAT, in exchange for cancellation of their past due VAT liabilities. Notably, the right to claim the 2% transitional input VAT belongs to the tollway operators who have not questioned the circular's validity. They are thus the ones who have a right to challenge the circular in a direct and proper action brought for the purpose.

Gaston vs. Republic Planters Bank RULING

Whether the stabilization fees collected from sugar planters and millers pursuant to Section 7 of P.D. No. 388 are public funds. (YES) The stabilization fees collected are in the nature of a tax, which is within the power of the State to impose for the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b], P.D. No. 388). The collections made accrue to a "Special Fund," a "Development and Stabilization Fund," almost Identical to the "Sugar Adjustment and Stabilization Fund" created under Section 6 of Commonwealth Act 567. The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for the stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the State (Lutz vs. Araneta, supra.). The protection of a large industry constituting one of the great sources of the state's wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign. The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special purpose — that of "financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market the fact that the State has taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they are held for a special purpose. Having been levied for a special purpose, the revenues collected are to be treated as a special fund, to be, in the language of the statute, "administered in trust' for the purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general funds of the Government. That is the essence of the trust intended. The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in pursuance of an appropriation made by law. That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from them since it is also they who are to be benefited from the expenditure of the funds derived from it. The investment in shares of respondent Bank is not alien to the purpose intended because of the Bank's character as a commodity bank for sugar conceived for the industry's growth and development. Furthermore, of note is the fact that one-half, (1/2) or PO.50 per picul, of the amount levied under P.D. No. 388 is to be utilized for the "payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees of PHILSUCOM" thereby immediately negating the claim that the entire amount levied is in trust for sugar, producers, planters and millers. To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization of the domestic market," including the foreign market the industry being of vital importance to the country's economy and to national interest.

Philippine Basketball Association vs. Court of Appeals A historical analysis of pertinent laws does reveal the legislative intent to place professional basketball games within the ambit of a national tax

A historical analysis of pertinent laws does reveal the legislative intent to place professional basketball games within the ambit of a national tax. The Local Tax Code, which became effective on June 28, 1973, allowed the province to collect a tax on admission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. OnJanuary 6, 1976, the operation of petitioner was placed under the supervision and regulation of the Games and Amusement Board by virtue of PD 871, with the proviso (Section 8) that "x x x all professional basketball games conducted by the Philippine Basketball Association shall only be subject to amusement tax of five per cent of the gross receipts from the sale of admission tickets." Then, on June 11, 1978, PD 1456 came into effect, increasing the amusement tax to ten per cent, with a categorical referral to PD 871, to wit, "[t]en percentum in the case of professional basketball games as envisioned in Presidential Decree No. 871 x x x." Later in 1984, PD 1959 increased the rate of amusement tax to fifteen percent by making reference also to PD 871. With the reference to PD 871 by PD 1456 and PD 1959, there is a recognition under the laws of this country that the amusement tax on professional basketball games is a national, and not a local, tax. Even up to the present, the category of amusement taxes on professional basketball games as a national tax remains the same. This is so provided under Section 125 of the 1997 National Internal Revenue Code. Section 140 of the Local Government Code of 1992 (Republic Act 7160), meanwhile, retained the areas (theaters, cinematographs, concert halls, circuses and other places of amusement) where the province may levy an amusement tax without including therein professional basketball games.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation Remedial Law; Civil Procedure; Appeals; Withdrawal of Appeals; When the case is deemed submitted for resolution, withdrawal of appeals made after the filing of the appellee's brief may still be allowed in the discretion of the court.

A perusal of the Revised Rules of the Court of Tax Appeals (RRCTA) reveals the lack of provisions governing the procedure for the withdrawal of pending appeals before the CTA. Hence, pursuant to Section 3, Rule 1 of the RRCTA, the Rules of Court shall suppletorily apply: Sec. 3. Applicability of the Rules of Court .—The Rules of Court in the Philippines shall apply suppletorily to these Rules. Rule 50 of the Rules of Court — an adjunct rule to the appellate procedure in the CA under Rules 42, 43, 44, and 46 of the Rules of Court which are equally adopted in the RRCTA — states that when the case is deemed submitted for resolution, withdrawal of appeals made after the filing of the appellee's brief may still be allowed in the discretion of the court.

Lozada vs. Commission on Elections FACTS

A petition for mandamus was filed by Jose Mari Eulalio C. Lozada and Romeo B. Igot as a representative suit for and in behalf of those who wish to participate in the election irrespective of party affiliation, to compel the respondent COMELEC to call a special election to fill up existing vacancies numbering twelve (12) in the Interim Batasan Pambansa. The petition is based on Section 5(2), Article VIII of the 1973 Constitution which reads: (2) In case a vacancy arises in the Batasang Pambansa eighteen months or more before a regular election, the Commission on Election shall call a special election to be held within sixty (60) days after the vacancy occurs to elect the Member to serve the unexpired term. Petitioner Lozada claims that he is a taxpayer and a bonafide elector of Cebu City and a transient voter of Quezon City, Metro Manila, who desires to run for the position in the Batasan Pambansa; while petitioner Romeo B. Igot alleges that, as a taxpayer, he has standing to petition by mandamus the calling of a special election as mandated by the 1973 Constitution. As reason for their petition, petitioners allege that they are "... deeply concerned about their duties as citizens and desirous to uphold the constitutional mandate and rule of law ...; that they have filed the instant petition on their own and in behalf of all other Filipinos since the subject matters are of profound and general interest. " The respondent COMELEC, opposes the petition alleging, substantially, that 1) petitioners lack of standing to file the instant petition for they are not the proper parties to institute the action; 2) this Court has no jurisdiction to entertain this petition; and 3) Section 5(2), Article VIII of the 1973 Constitution does not apply to the Interim Batasan Pambansa.

Roxas vs. Court of Tax Appeals Tax; Real estate dealer's tax; Real estate dealer defined.

A real estate dealer under Section 194 of the Tax Code includes owners of real estate receiving rentals of at least P3,000-00 a year without any qualification as to the persons paying the rental.

Asia International Auctioneers, Inc. vs. Commissioner of Internal Revenue Taxation; Tax Amnesty; A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of violating a tax law.

A tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of violating a tax law. It partakes of an absolute waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate.

Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue Tax exemption; Strict construction

A tax exemption must be strictly construed. An exemption will not be considered conferred unless the terms under which it is granted clearly and distinctly show that such was the intention of the parties.

Asian Transmission Corporation vs. Commissioner of Internal Revenue FACTS

ATC is a manufacturer of motor vehicle transmission component parts and engines of Mitsubishi vehicles. On January 3, 2003 and March 3, 2003, ATC filed its Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes and Annual Information Return of Creditable Income Taxed Withheld (Expanded)/Income Payments Exempt from Withholding Tax, respectively. On August 11, 2004, ATC received Letter of Authority [(LOA)] No. 200000003557 where [the CIR] informed ATC that its revenue officers from the Large Taxpayers Audit and Investigation Division II shall examine its books of accounts and other accounting records for the taxable year 2002. Thereafter, [the CIR] issued a Preliminary Assessment Notice (PAN) to ATC. Consequently, on various dates, ATC, through its Vice President for Personnel and Legal Affairs, Mr. Roderick M. Tan, executed several documents denominated as "Waiver of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code". Meanwhile, on February 28, 2008, ATC availed of the Tax Amnesty [P]rogram under Republic Act No. 9480. On July 15, 2008, ATC received a Formal Letter of Demand from [the] CIR for deficiency [WTC] in the amount of P[hp]62,977,798.02, [EWT] in the amount of P[hp]6,916,910.51, [FWT] in the amount of P[hp]501,077.72. On August 14, 2008, ATC filed its Protest Letter in regard thereto. Accordingly, on April 14, 2009, ATC received the Final Decision on Disputed Assessment where [the] CIR found ATC liable to pay deficiency tax in the amount of P[hp]75,696,616.75. Thus, on May 14, 2009, ATC filed an appeal letter/request for reconsideration with [the] CIR. On April 10, 2012, ATC received the Decision of [the] CIR dated November 15, 2011, denying its request for reconsideration. As such, on April 23, 2012, ATC filed the instant Petition for Review (with Application for Preliminary Injunction and Temporary Restraining Order). On November 28, 2014, the CTA in Division rendered its decision granting the petition for review of ATC. It held that ATC was not estopped from raising the invalidity of the waivers inasmuch as the Bureau of Internal Revenue (BIR) had itself caused the defects thereof. On August 9, 2016, the CTA En Banc promulgated the assailed decision reversing and setting aside the decision of the CTA in Division, and holding that the waivers were valid. It observed that the CIR's right to assess deficiency withholding taxes for CY 2002 against ATC had not yet prescribed.

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue Taxation; Deficiency Tax; According to Section 4 of Revenue Regulation (RR) No. 15-2006, after the taxpayer's payment of the assessed basic deficiency tax, the docket of the case shall be forwarded to the Commissioner of Internal Revenue (CIR), thru the Deputy Commissioner for Operations Group, for issuance of a termination letter.

According to Section 4 of RR No. 15-2006, after the taxpayer's payment of the assessed basic deficiency tax, the docket of the case shall forwarded to the CIR, thru the Deputy Commissioner for Operations Group, for issuance of a termination letter. However, as of this Resolution's writing, none of the parties have presented the said termination letter. Hence, the Court cannot outrightly dismiss the instant petition on the ground of mootness.

Chevron Philippines, Inc. vs. Bases Conversion Development Authority Administrative Law; Statutes; Administrative issuances have the force and effect of law—they benefit from the presumption of validity and constitutionality enjoyed by statutes.

Administrative issuances have the force and effect of law. They benefit from the same presumption of validity and constitutionality enjoyed by statutes. These two precepts place a heavy burden upon any party assailing governmental regulations. Petitioner's plain allegations are simply not enough to overcome the presumption of validity and reasonableness of the subject imposition.

Delpher Trades Corp. vs. Intermediate Appellate Court Corporation; After incorporation, one becomes a stockholder of a corporation by subscription or by purchasing stock directly from the corporation or from individual owners thereof. —

After incorporation, one becomes a stockholder of a corporation by subscription or by purchasing stock directly from the corporation or from individual owners thereof (Salmon, Dexter & Co. v. Unson, 47 Phil. 649, citing Bole v. Fulton [1912], 233 Pa., 609). In the case at bar, in exchange for their properties, the Pachecos acquired 2,500 original unissued no par value shares of stocks of the Delpher Trades Corporation. Consequently, the Pachecos became stockholders of the corporation by subscription. "The essence of the stock subscription is an agreement to take and pay for original unissued shares of a corporation, formed or to be formed." (Rohrlich 243, cited in Agbayani, Commentaries and Jurisprudence on the Commercial Laws of thePhilippines, Vol. III, 1980 Edition, p. 430) It is significant that the Pachecos took no par value shares in exchange for their properties.

Manufacturers Life Insurance Co. vs. Meer INSURANCE COMPANY; CLOSING OF BRANCH OFFICE IN THE PHILIPPINES DURING THE WAR, DlD NOT TERMINATE OPERATIONS OF THE COMPANY

Although the insurer was not open for new business because its Manila office was closed, yet if it was collecting premiums on its outstanding policies, incurring the risks and/or enjoying the benefits consequent thereto, it was operating in this country.

Commissioner of Internal Revenue vs. The Stanley Works Sales (Phils.), Incorporated A statute of limitations on the assessment and collection of internal revenue taxes was adopted to serve a purpose that would benefit both the taxpayer and the government.

Although we recognize that the power of taxation is deemed inherent in order to support the government, tax provisions are not all about raising revenue. Our legislature has provided safeguards and remedies beneficial to both the taxpayer, to protect against abuse; and the government, to promptly act forthe availability and recovery of revenues. A statute of limitations on the assessment and collection of internal revenue taxes was adopted to serve a purpose that would benefit both the taxpayer and the government.

Commissioner of Internal Revenue vs. Pineda Taxation; Income tax; Liability of an heir for tax.

An heir is liable for the assessment as an heir and as a holder-transferee of property belonging to the estate/taxpayer. As an heir, he is individually answerable for the part of the tax proportionate to the share he received from the inheritance. His liability, however, cannot exceed the amount of his share (Art. 1311, Civil Code). As a holder of the property belonging to the estate, he is liable for the tax up to the amount of the property in his possession. The reason is that the Government has a lien on such property. But after payment of such amount, he will have a right to contribution from his co-heirs.

Batangas Power Corporation vs. Batangas City Remedial Law; Estoppel; The fundamental rule is that a party cannot be allowed to participate in a judicial proceeding, submit the case for decision accept the judgment only if it is favorable to him but attack the jurisdiction of the court when it is adverse. —

Anent the second issue , the records disclose that petitioner NPC did not oppose BPC's conversion of the petition for declaratory relief to a petition for injunction or raise the issue of the alleged lack of jurisdiction of the Makati RTC over the petition for injunction before said court. Hence, NPC is estopped from raising said issue before us. The fundamental rule is that a party cannot be allowed to participate in a judicial proceeding, submit the case for decision, accept the judgment only if it is favorable to him but attack the jurisdiction of the court when it is adverse.

Sison, Jr. vs. Ancheta Taxpayers may be classified into different categories where it rests on real differences.

Apparently, what misled petitioner is his failure to take into consideration the distinction between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. Taxpayers may be classified into different categories. To repeat, it is enough that the classification must rest upon substantial distinctions that make real differences. In the case of the gross income taxation embodied in Batas Pambansa Blg. 135, the discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. Taxpayers who are recipients of compensation income are set apart as a class. As there is practically no overhead expense, these taxpayers are not entitled to make deductions for income tax purposes because they are in the same situation more or less. On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income. There is ample justification then for the Batasang Pambansa to adopt the gross system of income taxation to compensation income, while continuing the system of net income taxation as regards professional and business income.

Paseo Realty & Development Corporation vs. Court of Appeals Final Adjustment Return; As clearly seen from this provision, the taxpayer is allowed three (3) options if the sum of its quarterly tax payments made during the taxable year is not equal to the total tax due for that year.

As clearly seen from this provision, the taxpayer is allowed three (3) options if the sum of its quarterly tax payments made during the taxable year is not equal to the total tax due for that year: (a) pay the balance of the tax still due; (b) carry-over the excess credit; or (c) be credited or refunded the amount paid. If the taxpayer has paid excess quarterly income taxes, it may be entitled to a tax credit or refund as shown in its final adjustment return which may be carried over and applied against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. However, once the taxpayer has exercised the option to carry-over and to apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years, such option is irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed.

CIR vs. MERALCO Remedial Law; Evidence; Documentary Evidence; Given that the certification was issued by the Embassy of the Federal Republic of Germany in the regular performance of their official functions, and the due execution and authenticity thereof was not disputed when it was presented in trial, the same may be admitted as proof of the facts stated therein.

As correctly decided by the CTA En Banc, the certification issued by the Embassy of the Federal Republic of Germany, dated March 27, 2002, explicitly states that NORD/LB is owned by the State of Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania, and serves as a regional bank for the said states which offers support in the public sector financing, to wit: x x x x. Regarding your letter dated March 1, 2002, I can confirm the following: NORD/LB is owned by the State (Land) of Lower Saxony to the extent of 40%, by the States of [Saxony-]Anhalt and Mecklenburg-Western Pomerania to the extent of 10% each . The Lower Saxony Savings Bank and Central Savings Bank Association have a share of [26.66%]. The Savings Bank Association Saxony-Anhalt and the Savings Bank Association Mecklenburg-Western Pomerania have a share of [6.66%] each. As the regional bank for Lower Saxony, Saxony-Anhalt and Mecklenburg-Western Pomerania, NORD/LB offers support in public sector financing. It fulfills as Girozentrale the function of a central bank for the savings bank in these three states (Lander) . x x x Given that the same was issued by the Embassy of the Federal Republic of Germany in the regular performance of their official functions, and the due execution and authenticity thereof was not disputed when it was presented in trial, the same may be admitted as proof of the facts stated therein. Further, it is worthy to note that the Embassy of the Federal Republic of Germany was in the best position to confirm such information, being the representative of the Federal Republic of Germany here in the Philippines.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. The issuance of the correct assessment for deficiency income tax was well within the prescriptive period

As stated above, the prescriptive period to assess the correct taxes in case of false returns is ten years from the discovery of the falsity. The false return was filed on 15 April 1990, and the falsity thereof was claimed to have been discovered only on 8 March 1991. The assessment for the 1989 deficiency income tax of CIC was issued on 9 January 1995. Clearly, the issuance of the correct assessment for deficiency income tax was well within the prescriptive period.

Commissioner of lnternal Revenue vs. Algue, Inc. Protest filed, not pro forma, and was based on strong legal considerations; Case at bar.

As the Court of Tax Appeals correctly noted, the protest filed by private respondent was not pro forma and was based on strong legal considerations. It thus had the effect of suspending on January 18, 1965, when it was filed, the reglementary period which started on the date the assessment was received, viz., January 14,1965. The period started running again only on April 7, 1965, when the private respondent was definitely informed of the implied rejection of the said protest and the warrant was finally served on it. Hence, when the appeal was filed on April 23, 1965, only 20 days of the reglementary period had been consumed.

Manufacturers Life Insurance Co. vs. Meer PREMIUM PAID ON AUTOMATIC LOAN HELD SUBJECT TO TAX. —

As the insurer agreed to consider the premium paid on the strength of the automatic loan, which is taken out of the cash surrender value, the premium is therefore paid by means of a "note" or "credit" or "other substitute for money", and tax is due thereon under section 255 of the National Internal Revenue Code as amended.

Lutz vs. Araneta CONSTITUTIONAL LAW; TAXATION; POWER OF STATE TO LEVY TAX IN AID AND SUPPORT OF SUGAR INDUSTRY

As the protection and promotion of the sugar industry is a matter of public concern, the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion must be allowed full play, subject only to the test of reasonableness; and it is not contended that the means provided in section 6 of Commonwealth Act No. 567 bear no relation to the objective pursued or are oppressive in character. If objective and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the state's police power (Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. vs. Butler, 297 U.S. 1, 80 L. Ed.477; M'Culloch vs. Maryland, 4 Wheat. 316, 4 L. Ed. 579).

Sea-Land Service, Inc. vs. Court of Appeals When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings

Assuming arguendo that the issue of the right of petitioner to "devan" was not raised by it in the trial court, the fact remains that Assurance failed to object when the Bill ofLading (Exhibit 1-D, See Land) was presented in evidence. As a matter of fact, Assurance admitted the genuineness and due execution of said document in the partial stipulation of facts submitted to the trial court (Record on Appeal, p. 50; Rollo, p. 37). Likewise, Assurance did not object to the admissions of the evidence proving the steps taken by petitioner before removing the cargo from the container van. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they had been raised in the pleadings (Rule 10, Sec. 5, Revised Rules of Court; Lizarraga Hermanos v. Yap Tico, 24 Phil. 504; Molina v. Somes, 24 Phil. 49).

Commissioner of Internal Revenue vs. Pineda FACTS

Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15 children, the eldest of whom is Manuel B. Pineda, a lawyer. Estate proceedings were had in the Court of First Instance of Manila wherein the surviving widow was appointed administratrix. The estate was divided among and awarded to the heirs and the proceedings terminated on June 8, 1948. Manuel B. Pineda's share amounted to about P2, 500.00. After the estate proceedings were closed, the Bureau of Internal Revenue investigated the income tax liability of the estate for the years 1945, 1946, 1947 and 1948 and it found that the corresponding income tax returns were not filed. Thereupon, the representative of the Collector of Internal Revenue filed said returns for the estate on the basis of information and data obtained from the aforesaid estate proceedings and issued an assessment for deficiency taxes. Manuel B. Pineda, who received the assessment, contested the same. Subsequently, he appealed to the Court of Tax Appeals alleging that he was appealing "only that proportionate part or portion pertaining to him as one of the heirs." The Court of Tax Appeals rendered judgment reversing the decision of the Commissioner on the ground that his right to assess and collect the tax has prescribed. The Commissioner appealed and this Court affirmed the findings of the Tax Court in respect to the assessment for income tax for the year 1947 but held that the right to assess and collect the taxes for 1945 and 1946 has not prescribed. Accordingly, the case was remanded to the Tax Court for further appropriate proceedings. On November 29, 1963 the Court of Tax Appeals rendered judgment holding Manuel B. Pineda liable for the payment corresponding to his share of the deficiency taxes. The Commissioner of Internal Revenue has appealed this case before the SC and has proposed to hold Manuel B. Pineda liable for the payment of all the taxes found by the Tax Court to be due from the estate in the total amount of P760.28 instead of only for the amount of taxes corresponding to his share in the estate. Manuel B. Pineda opposes the proposition on the ground that as an heir he is liable for unpaid income tax due the estate only up to the extent of and in proportion to any share he received.

Ungab vs. Cusi, Jr. FACTS

BIR Examiner Ben Garcia examined the income tax returns filed by petitioner, Quirico P. Ungab, for the calendar year ending December 31, 1973. In the course of his examination, he discovered that the petitioner failed to report his income derived from sales of banana saplings. As a result, the BIR District Revenue Officer at Davao City sent a "Notice of Taxpayer" to the petitioner informing him that there is due from him (petitioner) the amount of P104,980.81, representing income, business tax and forest charges for the year 1973 and inviting petitioner to an informal conference where the petitioner, duly assisted by counsel, may present his objections to the findings of the BIR Examiner. Upon receipt of the notice, the petitioner wrote the BIR District Revenue Officer protesting the assessment, claiming that he was only a dealer or agent on commission basis in the banana sapling business and that his income, as reported in his income tax returns for the said year, was accurately stated. BIR Examiner Ben Garcia, however, was fully convinced that the petitioner had filed a fraudulent income tax return so that he submitted a "Fraud Referral Report," to the Tax Fraud Unit of the Bureau of Internal Revenue. After examining the records of the case, the Special Investigation Division of the Bureau of Internal Revenue found sufficient proof that the herein petitioner is guilty of tax evasion for the taxable year 1973. In a second indorsement to the Chief of the Prosecution Division, the Commissioner of Internal Revenue approved the prosecution of the petitioner. Thereafter, State Prosecutor Jesus Acebes who had been designated to assist all Provincial and City Fiscals throughout the Philippines in the investigation and prosecution, if the evidence warrants, of all violations of the National Internal Revenue Code, as amended, and other related laws, in Administrative Order No. 116 dated December 5, 1974, and to whom the case was assigned, conducted a preliminary investigation of the case, and finding probable cause, filed six (6) informations against the petitioner with the Court of First Instance of Davao City. Petitioner filed a motion to quash the informations upon the grounds that: (1) the informations are null and void for want of authority on the part of the State Prosecutor to initiate and prosecute the said cases; and (2) the trial court has no jurisdiction to take cognizance of the above-entitled cases in view of his pending protest against the assessment made by the BIR Examiner. However, the trial court denied the motion.

Ungab vs. Cusi, Jr. Prescription; Petition for reconsideration of assessment of deficiency taxes suspends the prescriptive period for the collection of taxes, not the prescriptive period of a criminal action for violation of law.

Besides, it has been ruled that a petition for reconsideration of an assessment may affect the suspension of the prescriptive period for the collection of taxes, but not the prescriptive period of a criminal action for violation of law. Obviously, the protest of the petitioner against the assessment of the District Revenue Officer cannot stop his prosecution for violation of the National Internal Revenue Code. Accordingly, the respondent Judge did not abuse his discretion in denying the motion to quash filed by the petitioner.

Province of Misamis Oriental vs. Cagayan Electric Power and Light Company, Inc. FACTS

Cagayan Electric Power and Light Company, Inc. (CEPALCO for short) was granted a franchise on June 17, 1961 under Republic Act No. 3247 to install, operate and maintain an electric light, heat and power system in the City of Cagayan de Oro and its suburbs. Said franchise was amended on June 21, 1963 by R.A. No. 3570 which added the municipalities of Tagoloan and Opol to CEPALCO's sphere of operation, and was further amended on August 4, 1969 by R.A. No. 6020 which extended its field of operation to the municipalities of Villanueva and Jasaan. The Provincial Treasurer of Misamis Oriental demanded payment of the provincial franchise tax from CEPALCO. The company refused to pay, alleging that it is exempt from all taxes except the franchise tax required by R.A. No. 6020. Nevertheless, in view of the opinion rendered by the Provincial Fiscal, upon CEPALCO's request, upholding the legality of the Revenue Ordinance, CEPALCO paid under protest on May 27, 1974 the sum of P 4,276.28 and appealed the fiscal's ruling to the Secretary of Justice who reversed it and ruled in favor of CEPALCO. On February 16, 1976, the Province filed in the Court of First Instance of Misamis Oriental a complaint for declaratory relief praying, among others, that the Court exercise its power to construe P.D. No. 231 in relation to the franchise of CEPALCO (R.A. No. 6020), and to declare the franchise as having been amended by P.D. No. 231. The Court dismissed the complaint and ordered the Province to return to CEPALCO the sum of P4,276.28 paid under protest.

Manufacturers Life Insurance Co. vs. Meer LIFE INSURANCE; CASH SURRENDER VALUE. —

Cash surrender value "as applied to a life insurance policy, is the amount of money the company agrees to pay to the holder of the policy if he surrenders it and releases his claims upon it. The more premiums the insured has paid the greater will be the surrender value; but the surrender value is always a lesser sum than the total amount of premiums paid." The cash value or cash surrender value is therefore an amount which the insurance company holds in trust for the insured to be delivered to him upon demand, and is a liability of the company to the insured.

Chamber of Real Estate and Builders' Associations, Inc. vs. Romulo FACTS

Chamber of Real Estate and Builders' Associations, Inc. (CREBA) is an association of real estate developers and builders in the Philippines. It impleaded former Executive Secretary Alberto Romulo, then acting Secretary of Finance Juanita D. Amatong and then Commissioner of Internal Revenue Guillermo Parayno, Jr. as respondents. CREBA assails the validity of the imposition of minimum corporate income tax (MCIT) on corporations and creditable withholding tax (CWT) on sales of real properties classified as ordinary assets. Section 27(E) of RA 8424 provides for MCIT on domestic corporations and is implemented by RR 9- 98. Petitioner argues that the MCIT violates the due process clause because it levies income tax even if there is no realized gain. CREBA also seeks to nullify Sections 2.57.2(J) (as amended by RR 6-2001) and 2.58.2 of RR 2-98, and Section 4(a)(ii) and (c)(ii) of RR 7-2003, all of which prescribe the rules and procedures for the collection of CWT on the sale of real properties categorized as ordinary assets. CREBA contends that these revenue regulations are contrary to law for two reasons: (1) they ignore the different treatment by RA 8424 of ordinary assets and capital assets; and (2), respondent Secretary of Finance has no authority to collect CWT, much less, to base the CWT on the gross selling price or fair market value of the real properties classified as ordinary assets. CREBA also asserts that the enumerated provisions of the subject revenue regulations violate the due process clause because, like the MCIT, the government collects income tax even when the net income has not yet been determined. They contravene the equal protection clause as well because the CWT is being levied upon real estate enterprises but not on other business enterprises, more particularly those in the manufacturing sector.

Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue Void revenue circular

Circular No, V-41 of the Bureau of Internal Revenue, insofar as it gives the exemptions in the Bases Agreement an expansive construction, is void.

Maceda vs. Macaraig, Jr. FACTS

Commonweath Act No. 120 was enacted creating the National Power Corporation (NPC), a public corporation, mainly to develop hydraulic power and the production of power from other sources in the Philippines. To facilitate payment of its indebtedness, the NPC was exempted from all taxes, duties, fees, imposts, charges and restrictions of the Republic of the Philippines, its provinces, cities and municipalities. The charter of the NPC was subsequently revised to give to it the power to carry out the policy of national electrification. PD No. 380 was issued and specified that NPC's tax exemption includes all taxes imposed directly and indirectly on all petroleum products used by NPC in its operation. Subsequently, PD No. 938 was enacted which integrated the tax exemption privilege of NPC in general terms. After a series of withdrawal and restoration of NPC's tax exemption, the Fiscal Incentives Review Board, possessing the power to restore tax exemptions issued Resolution 10-85 restoring NPC's exemption from June 11, 1984 to June 30, 1985. Since 1976, oil firms never paid excise or specific and ad valorem taxes for petroleum products sold and delivered to NPC. Such taxes were paid on their sales of oil products to NPC only in 1984. As such, NPC claimed for a refund of P468.58 Million and only a portion was approved and released. NPC moved for reconsideration, stating that all the deliveries of petroleum products to NPC are tax exempt. Petitioner contends that Presidential Decree No. 938 repealed the indirect tax exemption of NPC as Sec 10 thereof does not expressly include "indirect taxes".

Republic vs. Caguioa FACTS

Congress enacted Republic Act (R.A) No. 7227 or the Bases Conversion and Development Act of 1992 which created the Subic Special Economic and Freeport Zone (SBF) and the Subic Bay Metropolitan Authority (SBMA). Section 12 of R.A No. 7227 of the law provides that no taxes, local and national, shall be imposed within the Subic Special Economic Zone. Pursuant to the law, Indigo Distribution Corporation, et al., which are all domestic corporations doing business at the SBF, applied for and were granted Certificates of Registration and Tax Exemption by the SBMA. Congress subsequently passed R.A. No. 9334, which provides that all applicable taxes, duties, charges, including excise taxes due thereon shall be applied to cigars and cigarettes, distilled spirits, fermented liquors and wines brought directly into the duly chartered or legislated freeports of the Subic Economic Freeport Zone. On the basis of Section 6 of R.A. No. 9334, SBMA issued a Memorandum declaring that, all importations of cigars, cigarettes, distilled spirits, fermented liquors and wines into the SBF, shall be treated as ordinary importations subject to all applicable taxes, duties and charges, including excise taxes. Upon its implementation, Indigo et al., sought for a reconsideration of the directives on the imposition of duties and taxes, particularly excise taxes by the Collector of Customs and the SBMA Administrator. Their request was subsequently denied prompting them to file with the RTC of Olongapo City a special civil action for declaratory relief to have certain provisions of R.A. No. 9334 declared as unconstitutional. They prayed for the issuance of a writ of preliminary injunction and/or Temporary Restraining Order (TRO) and preliminary mandatory injunction. The same was subsequently granted by Judge Ramon Caguioa. The injunction bond was approved at One Million pesos (P1,000,000).

Roxas vs. Court of Tax Appeals Contribution to a government entity must be used exclusively for public purpose

Contributions to a government entity isdeductible when used exclusively for public purpose.

Roxas vs. Court of Tax Appeals FACTS

Don Pedro Roxas and Dona Carmen Ayala, Spanish subjects, transmitted to their grandchildren by hereditary succession several properties. To manage the above-mentioned properties, said children, namely, Antonio Roxas, Eduardo Roxas and Jose Roxas, formed a partnership called Roxas y Compania. At the conclusion of the WW2, the tenants who have all been tilling the lands in Nasugbu for generations expressed their desire to purchase from Roxas y Cia. the parcels which they actually occupied. For its part, the Government, in consonance with the constitutional mandate to acquire big landed estates and apportion them among landless tenant-farmers, persuaded the Roxas brothers to part with their landholdings. Conferences were held with the farmers in the early part of 1948 and finally the Roxas brothers agree to sell 13,500 hectares to the Government for distribution to actual occupants for a price of P2,079,048.47 plus P300,000 for survey and distribution expenses. It turned out however that the Government did not have funds to cover the purchase price, and so a special arrangement was made for the Rehabilitation Finance Corporation to advance to Roxas y Cia. the amount of P1,500,000.00 as loan. Collateral for such loan were the lands proposed to be sold to the farmers. Under the arrangement, Roxas y Cia. allowed the farmers to buy the lands for the same price but by installment, and contracted with the Rehabilitation Finance Corporation to pay its loan from the proceeds of the yearly amortizations paid by the farmers. The CIR demanded from Roxas y Cia. the payment of deficiency income taxes resulting from the inclusion as income of Roxas y Cia. of the unreported 50% of the net profits for 1953 and 1955 derived from the sale of the Nasugbu farmlands to the tenants, and the disallowance of deductions from gross income of various business expenses and contributions claimed by Roxas y Cia. and the Roxas brothers. For the reason that Roxas y CIa. subdivided its Nasugbu farmlands and sold them to the farmers on installment, the Commissioner considered the partnership as engaged in the business of real estate, hence, 100% of the profits derived there from was taxed. The Roxas brothers protested the assessment but inasmuch as said protest was denied, they instituted an appeal in the CTA which sustained the assessment. Hence, this appeal.

Batangas Power Corporation vs. Batangas City FACTS

Enron Power Development Corporation and petitioner NPC (National Power Corporation) entered into a Fast Track BOT Project. The BOI issued a certificate of registration to BPC (Batangas Power Corporation) as a pioneer enterprise entitled to a tax holiday for a period of 6 years. Batangas City sent a letter to BPC demanding payment of business taxes and penalties, commencing from the year 1994, BPC refused to pay, citing its tax-exempt status as a pioneer enterprise for six (6) years under Section 133 (g) of the Local Government Code (LGC). The city's tax claim was modified and demanded payment of business taxes from BPC only for the years 1998-1999. BPC still refused to pay the tax. It insisted that its 6-year tax holiday commenced from the date of its commercial operation on July 1993, not from the date of its BOI registration in September 1992. In the alternative, BPC asserted that the city should collect the tax from the NPC as the latter assumed responsibility for its payment under their BOT Agreement. While admitting assumption of BPCs tax obligations under their BOT Agreement, NPC refused to pay BPCs business tax as it allegedly constituted an indirect tax on NPC which is a tax-exempt corporation under its Charter.

Ericsson Telecommunications, Inc. vs. City of Pasig FACTS

Ericsson Telecommunications, Inc. (petitioner), a corporation with principal office in Pasig City, is engaged in the design, engineering, and marketing of telecommunication facilities/system. In an Assessment Notice dated October 25, 2000 issued by the City Treasurer of Pasig City, petitioner was assessed a business tax deficiency for the years 1998 and 1999 amounting to P9,466,885.00 and P4,993,682.00, respectively, based on its gross revenues as reported in its audited financial statements for the years 1997 and 1998. Petitioner filed a Protest dated December 21, 2000, claiming that the computation of the local business tax should be based on gross receipts and not on gross revenue. The City of Pasig (respondent) issued another Notice of Assessment to petitioner on November 19, 2001, this time based on business tax deficiencies for the years 2000 and 2001, amounting to P4,665,775.51 and P4,710,242.93, respectively, based on its gross revenues for the years 1999 and 2000. Again, petitioner filed a Protest on January 21, 2002, reiterating its position that the local business tax should be based on gross receipts and not gross revenue. Respondent denied petitioner's protest and gave the latter 30 days within which to appeal the denial. This prompted petitioner to file a Petition for Review with the Regional Trial Court (RTC) of Pasig, Branch 168, praying for the annulment and cancellation of petitioner's deficiency local business taxes totaling P17,262,205.66. Respondent and its City Treasurer filed a motion to dismiss on the grounds that the court had no jurisdiction over the subject matter and that petitioner had no legal capacity to sue. The RTC denied the motion in an Order dated December 3, 2002 due to respondents' failure to include a notice of hearing. Thereafter, the RTC declared respondents in default and allowed petitioner to present evidence ex-parte. The RTC canceled and set aside the assessments made by respondent and its City Treasurer. On appeal, the Court of Appeals (CA) sustained respondent's claim that the petition filed with the RTC should have been dismissed due to petitioner's failure to show that Atty. Maria Theresa B. Ramos (Atty. Ramos), petitioner's Manager for Tax and Legal Affairs and the person who signed the Verification and Certification of Non-Forum Shopping, was duly authorized by the Board of Directors. Its motion for reconsideration having been denied, petitioner now comes before the Court via a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

Commissioner of Internal Revenue vs. Botelho Shipping Corp. Nature of tax exemption

Every tax exemption implies a waiver of the right to collect what otherwise would be due to the government. In this sense, it is prejudicial thereto.

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation Taxation; Administrative Law; The proviso in Section 1 of RR 17-99 clearly went beyond the terms of the law it was supposed to implement, and therefore entitles the taxpayer to claim a refund of the overpaid excise taxes collected pursuant to this provision

Except for the tax period and the amounts involved, the case at bar presents the same issue that the Court already resolved in 2008 in CIR v. Fortune Tobacco Corporation , 559 SCRA 160 (2008). In the 2008 Fortune Tobacco case, the Court upheld the tax refund claims of Fortune Tobacco after finding invalid the proviso in Section 1 of RR 17-99. We ruled: "Section 145 states that during the transition period, i.e. , within the next three (3) years from the effectivity of the Tax Code, the excise tax from any brand of cigarettes shall not be lower than the tax due from each brand on 1 October 1996. This qualification, however, is conspicuously absent as regards the 12% increase which is to be applied on cigars and cigarettes packed by machine, among others, effective on 1 January 2000. Clearly and unmistakably, Section 145 mandates a new rate of excise tax for cigarettes packed by machine due to the 12% increase effective on 1 January 2000 without regard to whether the revenue collection starting from this period may turn out to be lower than that collected prior to this date." By adding the qualification that the tax due after the 12% increase becomes effective shall not be lower than the tax actually paid prior to 1 January 2000, Revenue Regulation No. 17-99 effectively imposes a tax which is the higher amount between the ad valorem tax being paid at the end of the three (3)-year transition period and the specific tax under paragraph C, sub-paragraph (1)-(4), as increased by 12%—a situation not supported by the plain wording of Section 145 of theTax Code. Following the principle of stare decisis, our ruling in the present case should no longer come as a surprise. The proviso in Section 1 of RR17-99 clearly went beyond the terms of the law it was supposed to implement, and therefore entitles Fortune Tobacco to claim a refund of the overpaid excise taxes collected pursuant to this provision.

Philippine Airlines, Inc. vs. Edu Taxes; The nature of an exaction is to be determined by the purpose for which it is being exacted e.g. if the purpose is primarily revenue, or if revenue is at least one of the substantial purposes, then the exaction is properly called a tax. —

Fees may be properly regarded as taxes even though they also serve as an instrument of regulation. As stated by a former presiding judge of the Court of Tax Appeals and writer on various aspects of taxes: "It is possible for an exaction to be both tax and regulation. License fees are often looked to as a source of revenue as well as a means of regulation. (Sonzinsky v. U.S., 300 U.S. 506) This is true, for example, of automobile license fees. In such case, the fees may properly be regarded as taxes even though they also serve as an instrument of regulation. 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. (1955 CCH Fed. Tax Course, Par. 3101, citing Cooley on Taxation (2nd Ed.) 592, 593; Calalang v. Lorenzo, 97 Phil. 212; Lutz v. Araneta, 98 Phil. 198.) These exactions are sometimes called regulatory taxes. (See Secs. 4701, 4711, 4741, 4801, 4811, 4851, and 4881, U.S. Internal Revenue Code of 1954, which classify taxes on tobacco and alcohol as regulatory taxes.)" (Umali, Reviewer in Taxation, 1980, pp. 12-13, citing Cooley on Taxation, 2nd Edition, 591-593).

Reyes vs. Almanzor Appraisal and Assessment of Real Property; The appraisal and assessment of real property for taxation purposes is that the property must be "appraised at its current and fair market value."

Finally under the Real Property Tax Code (P.D. 464 as amended), it is declared that the first Fundamental Principle to guide the appraisal and assessment of real property for taxation purposes is that the property must be "appraised at its current and fair market value."

Osmeña vs. Orbos Oils and Gas; No undue delegation of legislative power where Energy Regulatory Board authorized to impose additional amounts to augment the resources of the Fundd.

For a valid delegation of power, it is essential that the law delegating the power must be (1) complete in itself, that is it must set forth the policy to be executed by the delegate and (2) it must fix a standard—limits of which are sufficiently determinate or determinable—to which the delegate must conform.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. Fraud; Meaning of .

Fraud in its general sense, "is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable duty, trust or confidence justly reposed, resulting in the damage to another, or by which an undue and unconscionable advantage is taken of another."

Commissioner of Internal Revenue vs. Botelho Shipping Corp. Grant of tax exemptions to end-users

From the viewpoint of constitutional law, especially the equal protection clause, there is no difference between the grant of tax exemption to end-users who, after the approval of Republic Act No. 3079 on June 17, 1961 purchased reparations goods procured by the Commission and the extension of the grant to those whose contracts of purchase and sale were made before said date, or under the original Reparations Law.

Caltex Philippines, Inc. vs. Commission on Audit Tax exemptions as a general rule are construed strictly against the grantee and liberally in favor of the taxing authority. —

Furthermore, even granting arguendo that LOI 1416 has force and effect, petitioner's claim must still fail. Tax exemptions as a general rule are construed strictly against the grantee and liberally in favor of the taxing authority. The burden of proof rests upon the party claiming exemption to prove that it is in fact covered by the exemption so claimed. The party claiming exemption must therefore be expressly mentioned in the exempting law or at least be within its purview by clear legislative intent.

Heng Tong Textiles Co., Inc. vs. Com. of Internal Revenue Fraud must be proved by clear and convincing evidence; Case at bar. —

Held: The arrangement resorted to does not by itself alone justify the penalty imposed. Section 183(a), paragraph 3, of the Internal RevenueCode, as amended, speaks of willful neglect to fi le the return or willful making of a false or fraudulent return. An attempt to minimize one's tax does not necessarily constitute fraud. "The intention to minimize taxes, when used in the context of fraud, must be proved to exist by clear and convincing evidence amounting to more than mere preponderance, and cannot be justified by mere speculation. This is because fraud is never lightly presumed." (Yutivo Sons Hardware Co. vs. CTA, L-13203) No such evidence is shown by the record in the case of herein petitioner.

Osmeña vs. Orbos Constitutional Law; Taxation; Money named as a tax but actually collected in the exercise of police power may be placed in a special trust account —

Hence, it seems clear that while the funds collected may be referred to as taxes, they are exacted in the exercise of the police power of the State. Moreover, that the OPSF is a special fund is plain from the special treatment given it by E.O. 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. The Court is satisfied that these measures comply with the constitutional description of a "special fund." Indeed, the practice is not without precedent.

Philippine Airlines, Inc. vs. Edu Taxation; Registration fees of motor vehicles; Motor vehicle registration fees as at present exacted pursuant to the Land Transportation and Traffic Code 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 (Umali, ed. ) Such is the case of motor vehicle registration fees. The conclusions become inescapable in view of Section 70(b) of Rep. Act 587quoted in the Calalang case. The same provision appears as Section 59(b) in the Land Transportation Code. It is patent therefrom that the legislators had in mind a regulatory tax as the law refers to the imposition on the registration, operation or ownership of a motor vehicle as a "tax or fee." Though nowhere in Rep. Act 4136 does the law specifically state that the imposition is a tax, Section 59(b) speaks of "taxes or fees x x x for the registration or operation or on the ownership of any motor vehicle, or for the exercise of the profession of chauffeur x x x" making the intent to impose a tax more apparent. Thus, even Rep. Act 5448 cited by the respondents, speaks of an "additional tax," where the law could have referred to an original tax and not one in addition to the tax already imposed on the registration, operation, or ownership of a motor vehicle under Rep. Act4136. Simply put, if the exaction under Rep. Act 4136 were merely a regulatory fee, the imposition in Rep. Act 5448 need not be an "additional" tax. x x x In view of the foregoing, we rule that motor vehicle registration fees as at present exacted pursuant to the Land Transportation and Traffic Code are actually taxes intended for additional revenues of government even if one fifth or less of the amount collected is set aside for the operating expenses of the agency administering the program.

Heng Tong Textiles Co., Inc. vs. Com. of Internal Revenue FACTS

In 1952 the then Collector of Internal Revenue assessed against the petitioner deficiency sales taxes and surcharges for the year 1949 and the first four months of 1950 in the aggregate sum of P89,123.58. The deficiency taxes in question were assessed on importations of textiles from abroad. The goods were withdrawn from Customs by Pan-Asiatic Commercial Co., Inc., which paid, in the name of the petitioner, the corresponding advance sales tax under section 183(b) of the Internal Revenue Code. The assessment for the deficiency, however, was made against the petitioner, Heng Tong Textiles Co., Inc. (now Philip Manufacturing Corporation) on the ground that it was the real importer of the goods and did not pay the taxes due on the basis of the gross selling prices thereof. The Court of Tax Appeals based its decision of affirmance, finding the petitioner the importer of the goods, on a number of evidentiary circumstances. First, Heng Tong Textiles Co., Inc. and Pan-Asiatic Commercial were sister corporations. Second, the commercial documents covering the importations (shipping documents, insurance papers, and records of payment of the advance sales tax in the Bureau of Customs) were all in the name of the petitioner. Third, in connection with advance sales tax aforesaid, Pan-Asiatic Asiatic Commercial wrote the petitioner the following letter: In compliance with your request regarding the 5% Sales Tax that we paid for you for the year 1949 and the first quarter of 1950 against the goods that you ordered from various United States suppliers, through us, we attach hereto a list giving a breakdown of this 5% Sales Tax, together with the corresponding Official Receipt Numbers and other details relative to the orders covered by these payments. Petitioner excepts to the conclusion of the Court of Tax Appeals and avers that the importation papers were placed in the name of the petitioner only for purposes of accommodation, that is, to introduce the petitioner to textile suppliers abroad; and that the petitioner was not in a financial position to make the importations in question, valued at over a million pesos, since its paid-up capital was only P30,000.00. These circumstances show nothing but a private arrangement between the petitioner and Pan-Asiatic Commercial, which in no way affected the role of the petitioner as the importer as far as the Government and its right to collect the taxes were concerned. Pan-Asiatic Commercial might have furnished the necessary financing for the importations in question, but that did not militate against the petitioner's being the importer; nor did the idea of building up its reputation among textile suppliers abroad render it necessary for the withdrawal of the goods from customs and the payment of the advance sales tax to be made in the petitioner's name, these being purely local operations, or for Pan-Asiatic Commercial to affirm, in the private communication sent by it to the petitioner, that the latter was the one that ordered the goods from the United States.

Delpher Trades Corp. vs. Intermediate Appellate Court FACTS

In 1974, Delfin Pacheco and his sister, Pelagia Pacheco, were the owners of 27,169 square meters of real estate Identified as Lot. No. 1095, Malinta Estate, in the Municipality of Polo (now Valenzuela), Province of Bulacan (now Metro Manila) which is covered by Transfer Certificate of Title No. T- 4240 of the Bulacan land registry. On April 3, 1974, the said co-owners leased to Construction Components International Inc. the same property and providing that during the existence or after the term of this lease the lessor should he decide to sell the property leased shall first offer the same to the lessee and the letter has the priority to buy under similar conditions. On August 3, 1974, lessee Construction Components International, Inc. assigned its rights and obligations under the contract of lease in favor of Hydro Pipes Philippines, Inc. with the signed conformity and consent of lessors Delfin Pacheco and Pelagia Pacheco. The contract of lease, as well as the assignment of lease were annotated at he back of the title, as per stipulation of the parties. On January 3, 1976, a deed of exchange was executed between lessors Delfin and Pelagia Pacheco and defendant Delpher Trades Corporation whereby the former conveyed to the latter the leased property (TCT No.T-4240) together with another parcel of land also located in Malinta Estate, Valenzuela, Metro Manila (TCT No. 4273) for 2,500 shares of stock of defendant corporation with a total value of P1,500,000.00. On the ground that it was not given the first option to buy the leased property pursuant to the proviso in the lease agreement, respondent Hydro Pipes Philippines, Inc., filed an amended complaint for reconveyance of Lot. No. 1095 in its favor under conditions similar to those whereby Delpher Trades Corporation acquired the property from Pelagia Pacheco and Delphin Pacheco. After trial, the Court of First Instance of Bulacan ruled in favor of the plaintiff. The lower court's decision was affirmed on appeal by the Intermediate Appellate Court. Eduardo Neria, a certified public accountant and son-in-law of the late Pelagia Pacheco testified that Delpher Trades Corporation is a family corporation; that the corporation was organized by the children of the two spouses (spouses Pelagia Pacheco and Benjamin Hernandez and spouses Delfin Pacheco and Pilar Angeles) who owned in common the parcel of land leased to Hydro Pipes Philippines in order to perpetuate their control over the property through the corporation and to avoid taxes; that in order to accomplish this end, two pieces of real estate, including Lot No. 1095 which had been leased to Hydro Pipes Philippines, were transferred to the corporation; that the leased property was transferred to the corporation by virtue of a deed of exchange of property; that in exchange for these properties, Pelagia and Delfin acquired 2,500 unissued no par value shares of stock which are equivalent to a 55% majority in the corporation because the other owners only owned 2,000 shares; and that at the time of incorporation, he knew all about the contract of lease of Lot. No. 1095 to Hydro Pipes Philippines. In the petitioners' motion for reconsideration, they refer to this scheme as "estate planning." Under this factual backdrop, the petitioners contend that there was actually no transfer of ownership of the subject parcel of land since the Pachecos remained in control of the property. Thus, the petitioners allege: "Considering that the beneficial ownership and control of petitioner corporation remained in the hands of the original co-owners, there was no transfer of actual ownership interests over the land when the same was transferred to petitioner corporation in exchange for the latter's shares of stock. The transfer of ownership, if anything, was merely in form but not in substance. In reality, petitioner corporation is a mere alter ego or conduit of the Pacheco co-owners; hence the corporation and the co-owners should be deemed to be the same, there being in substance and in effect an Identity of interest. The petitioners maintain that the Pachecos did not sell the property. They argue that there was no sale and that they exchanged the land for shares of stocks in their own corporation. "Hence, such transfer is not within the letter, or even spirit of the contract. There is a sale when ownership is transferred for a price certain in money or its equivalent (Art. 1468, Civil Code) while there is a barter or exchange when one thing is given in consideration of another thing (Art. 1638, Civil Code. On the other hand, the private respondent argues that Delpher Trades Corporation is a corporate entity separate and distinct from the Pachecos. Thus, it contends that it cannot be said that Delpher Trades Corporation is the Pacheco's same alter ego or conduit; that petitioner Delfin Pacheco, having treated Delpher Trades Corporation as such a separate and distinct corporate entity, is not a party who may allege that this separate corporate existence should be disregarded. It maintains that there was actual transfer of ownership interests over the leased property when the same was transferred to Delpher Trades Corporation in exchange for the latter's shares of stock.

Villanueva vs. City of Iloilo Municipal corporation; Iloilo City; Local Autonomy Act; Section 2 of Rep. Act No. 2264, construed, applied, and scope defined; Municipal license tax imposed on tenement houses held valid and constitutional; "Tenement house" and "municipal license tax" defined; Case at bar. —

In City of Iloilo v. Villanueva, et al., L-12695, March 23, 1959, the Supreme Court adopted the definition of a "tenement house" as "any house or building, or portion thereof, which is rented, leased, or hired out to be occupied, or is occupied, as the home or residence of three families or more living independently of each other and doing their cooking in the premises, or by more than two families upon any floor, so living and cooking, but having a common right in the halls, stairways, yards, water-closets, or privies, or some of them. "Tenement houses, being necessarily offered for rent or lease by their very nature and essence, therefore constitute a distinct form of business or calling, similar to the hotel or motel business, or the operation of lodging houses or boarding houses. Tenement houses constitute a distinct class of property. A "municipal license tax" means an imposition or exaction on the right to use or dispose of property, to pursue a business, occupation, or calling, or to exercise a privilege (51 Am. Jur. 59-60; 33 Am. Jur. 325-326). It is now settled that the provisions of Section 2 of Republic Act No.2264 confer on local governments broad taxing authority which extends to almost "everything, excepting those which are mentioned therein," provided that the tax so levied is "for public purposes, just and uniform," and does not transgress any constitutional provision or is not repugnant to a controlling, statute (Nin Bay Mining Co. v. Mun. of Roxas, Prov. of Palawan, L-20125, July 20, 1965). Thus when a tax, levied under the authority of a city or municipal ordinance, is not within the exceptions and limitations aforementioned, the same comes within the ambit of the general rule, pursuant to the rules of expressio unius est exclusio alterius, and exceptio firmat regulum in casibus non excepti. Under the same provisions of Section 2 of the Local Autonomy Act, local governments may now tax any taxable subject matter or object not included in the enumeration of matters removed from the taxing power of local governments. Prior to the enactment of the Local Autonomy Act the taxes that could be legally levied by local governments were only those specifically authorized by law, and their power to tax was construed in strictissimi juris (Medina v. City of Baguio, L-4060, Aug. 29, 1952; Wa Wa Yu v. City of Lipa, L-9167, Sept. 27, 1956; Saldaña v. City of Iloilo, 104 Phil. 28; and the cases cited therein). In the case at bar, Ordinance No. 11, series of 1960, of the City of Iloilo, which imposed a municipal license tax on tenement houses, is valid and constitutional. The tax in question is not a real estate tax. The tax imposed by the ordinance in question does not possess the attributes of areal estate tax. It is not a tax on the land on which the tenement houses are erected, although both land and tenement houses may belong to the same owner. The tax is not a fixed proportion of the assessed value of the tenement houses, and does not require the intervention of assessors or appraisers. It is not payable at a designated time or date, and is not enforceable against the tenement houses either by sale or distraint. Clearly, therefore, the tax in question is not a real estate tax. While it is true that the plaintiff s-appellees are taxable under the provisions of the National Internal Revenue Code as real estate dealers, and still taxable under the ordinance in question, the argument against double taxation may not be invoked. The same tax may be imposed by the National Government as well as by the local government. There is nothing inherently obnoxious in the exaction of license fees or taxes with respect to the same occupation, calling or activity by both the State and a political subdivision thereof (Punsalan, et al. v. Mun. Board of the City of Manila, et al., L-4817, May 26, 1954, 95 Phil. 46). The contention that the plaintiffs-appellees are double taxed because they are paying the real estate taxes and the tenement tax imposed by the ordinance in question, is also devoid of merit. It is a well-settled rule that a license tax may be levied upon a business or occupation although the land or property used in connection therewith is subject to property tax. The State may collect an ad valorem tax on property used in a calling, and at the same time impose a license tax on that calling, the imposition of the latter kind of tax being in no sense a double tax (People v. Mendaros, et al., L-6975, May 27, 1955). The tax in question is not oppressive. The charter of Iloilo City (C. A.No. 158) empowers its municipal board to "fi x penalties for violations of ordinances, which shall not exceed a fine of two hundred pesos or six months' imprisonment, or both such fine and imprisonment for each offense" (Cf. Punsalan, et al. v. Mun. Board of Manila, supra). The f act that the owners of other classes of buildings in the City of Iloilo do not pay the taxes imposed by the ordinance in question is no argument at all against uniformity and equality of the tax imposition. Neither is the rule of equality and uniformity violated by the fact that tenement taxes are not imposed in other cities, for the same rule does not require that taxes for the same purpose should be imposed in different territorial subdivisions at the same time (51 Am. Jur. 203). So long as the burden of the tax falls equally and impartially on all owners or operations of tenement houses similarly classified or situated, equality and uniformity of taxation is accomplished (84 C.J.S. 77). The plaintiffs-appellees, as owners of tenement houses in the City of Iloilo, have not shown that the tax burden is not equally or uniformly distributed among them, to overthrow the presumption that tax statutes are intended to operate uniformly and equally (84 C.J.S.81).

Asian Transmission Corporation vs. Commissioner of Internal Revenue Taxation; Statute of Limitation; Waiver of Statute of Limitations; In Commissioner of Internal Revenue v. Next Mobile, Inc. , 776 SCRA 343 (2015), the Supreme Court (SC) declared that as a general rule a waiver that did not comply with the requisites for validity specified in Revenue Memorandum Order (RMO) No. 20-90 and Revenue Delegation Authority Order (RDAO) No. 01-05 was invalid and ineffective to extend the prescriptive period to assess the deficiency taxes.

In Commissioner of Internal Revenue v. Next Mobile, Inc. , 776 SCRA 343 (2015), the Court declared that as a general rule a waiver that did not comply with the requisites for validity specified in RMO 20-90 and RDAO 01-05 was invalid and ineffective to extend the prescriptive period to assess the deficiency taxes. However, due to peculiar circumstances obtaining, the Court treated the case as an exception to the rule, and considered the waivers concerned as valid.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. The intermediary transaction in this case constitutes one of tax evasion

In a nutshell, the intermediary transaction, i.e ., the sale of Altonaga, which was prompted more on the mitigation of tax liabilities than for legitimate business purposes constitutes one of tax evasion.

Surigao Consolidated Mining Co., Inc. vs. Collector of Internal Revenue Refund of Taxes; Burden of proof on taxpayer

In a suit for the recovery of the payment of taxes as having been illegally or erroneously collected, the burden is upon the taxpayer to establish the facts which show the illegality of the tax or that the determination thereof is erroneous.

North Camarines Lumber Co., Inc. vs. Collector ofInternal Revenue COURT OF TAX APPEALS; PERIOD FOR FILING PETITION FOR REVIEW; DECISION OF COLLECTOR OF INTERNAL REVENUE, WHAT CONSTITUTES

In computing the 30-day period fixed in Section 11 of Republic Act No. 1125 within which a taxpayer may file with the Court of Tax Appeals his petition for review of the decision of the Collector of Internal Revenue, the said Collector's letter of demand, not the letter denying the taxpayer's request for reconsideration, should be considered.

Caltex Philippines, Inc. vs. Commission on Audit Though LOI 1416 may suspend the payment of taxes by copper mining companies it does not give petitioner the same privilege with respect to the payment of OPSF dues.

In the case at bar, petitioner failed to prove that it is entitled, as a consequence of its sales to ATLAS and MARCOPPER, to claim reimbursement from the OPSF under LOI 1416. Though LOI 1416 may suspend the payment of taxes by copper mining companies, it does not give petitioner the same privilege with respect to the payment of OPSF dues.

Chevron Philippines, Inc. vs. Bases Conversion Development Authority Taxation; Local Taxation; Police Power; Statutes; In distinguishing tax regulation as a form of police power, the determining factor is the purpose of the implemented measure—if the purpose is primarily to raise revenue, then it will be deemed a tax even though the measure results in some form of regulation, on the other hand, if the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police power of the state, even though incidentally, revenue is generated .—

In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of the implemented measure. If the purpose is primarily to raise revenue, then it will be deemed a tax even though the measure results in some form of regulation. On the other hand, if the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police power of the state, even though incidentally, revenue is generated. Thus, in Gerochi v. Department of Energy , 527 SCRA 696 (2007), the Court stated: The conservative and pivotal distinction between these two (2) powers rests in the purpose for which the charge is made. If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make the imposition a tax.

Municipality of Makati vs. Court of Appeals FACTS

In lieu of an expropriation proceeding filed in court, petitioner Municipality of Makati opened a bank account with the PNB Buendia Branch under petitioner's name containing the sum of P417,510.00, pursuant to the provisions of Pres. Decree No. 42. After due hearing, the court fixed the amount of the property and ordered petitioner to pay such amount minus the advanced payments it has made. After this decision became final and executory, a writ of execution was issued and a Notice of Garnishment was served by respondent sheriff upon the manager of the PNB Buendia Branch. However, respondent sheriff was informed that a "hold code" was placed on the account of petitioner. Private respondent then filed a motion praying for the court to order the bank to deliver to the sheriff the unpaid balance, while petitioner also filed a motion to lift the garnishment. While these motions are pending, a "Manifestation" was filed, informing the court that private respondent was no longer the owner of the subject property and that ownership to this has been transferred to Philippine Savings Bank, Inc. A compromise agreement was made between private respondent and Philippine Savings Bank, Inc., which was then approved by the court. The court further ordered PNB Buendia Branch to immediately release to PSB the sum of P4,953,506.45 which corresponds to the balance of the appraised value of the subject property, from the garnished account of petitioner but the bank failed to comply as it was still waiting for proper authorization from the PNB head office enabling it to make a disbursement for the amount so ordered. As the case was in the Supreme Court, petitioner raised for the first time that it had two accounts with PNB Buendia Branch: one was made exclusively for the expropriation of the subject property, and the other is for statutory obligations and other purposes of the municipal government.

Villanueva vs. City of Iloilo Double taxation; When permissible and when prohibited; Equality and uniformity of taxation. —

In order to constitute double taxation in the objectionable or prohibited sense the same property must be taxed twice when it should be taxed but once; both taxes must be imposed on the same property or subject-matter, for the same purpose, by the same State, Government, or taxing authority, within the same jurisdiction or taxing district, during the same taxing period, and they must be the same kind or character of tax (84 C.J.S. 131-132). It has been shown that a real estate tax and the tenement tax imposed by the ordinance, although imposed by the same taxing authority, are not of the same kind or character. At all events, there is no constitutional prohibition against double taxation in the Philippines (Manufacturers' Life Ins. Co. v. Meer, L-2910,June 29, 1951; City of Manila v. Interisland Gas Service, L-8799, Aug. 31, 1956; Commissioner of Internal Revenue v. Hawaiian-Philippine Co., L-16315, May 30, 1964; Pepsi-Cola Bottling Co. of the Philippines v. City of Butuan, et al., L-22814, Aug. 28, 1968). Taxes are uniform and equal when imposed upon all property of the same class or character within the taxing authority (51 Am. Jur. 203). The fact that the owners of other classes of buildings in the City do not pay the taxes imposed by the ordinance in question is no argument at all against uniformity and equality of the tax imposition.

Chevron Philippines, Inc. vs. Bases Conversion Development Authority In relation to the regulatory purpose of the imposed fees, the Court in Progressive Development Corporation vs. Quezon City, stated that "the imposition questioned must relate to an occupation or activity that so engages the public interest, morals, safety and development as to require regulation for the protection and promotion of such public interest; the imposition must also bear a reasonable relation to the probable expenses of regulation, taking into account not only the costs of direct regulation but also its incidental consequences as well."

In relation to the regulatory purpose of the imposed fees, this Court in Progressive Development Corporation v. Quezon City , 172 SCRA 629(1989), stated that "x x x the imposition questioned 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; the imposition must also bear a reasonable relation to the probable expenses of regulation, taking into account not only the costs of direct regulation but also its incidental consequences as well."

Municipality of Makati vs. Court of Appeals Political Law; Eminent Domain; Just Compensation; Just compensation means not only the correct determination of the amount to be paid to the owner of the land expropriated, but also prompt payment thereof.

In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner. No appeal was taken therefrom. For three years now, petitioner has enjoyed possession and use of the subject property notwithstanding its inexcusable failure to comply with its legal obligation to pay just compensation. Petitioner has benefited from its possession of the property since the same has been the site of Makati West High School since the school year 19861987. This Court will not condone petitioner's blatant refusal to settle its legal obligation arising from expropriation proceedings it had in fact initiated. It cannot be over-emphasized that, within the context of the State's inherent power of eminent domain,. . . [j]ust compensation means not only the correct determination of the amount to be paid to the owner of the land but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss [Cosculluela v. The Honorable Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA 393,400. See also Provincial Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037,August 27, 1987, 153 SCRA 291.] The State's power of eminent domain should be exercised within the bounds of fair play and justice. In the case at bar, considering that valuable property has been taken, the compensation to be paid fixed and the municipality is in full possession and utilizing the property for public purpose, for three (3) years, the Court finds that the municipality has had more than reasonable time to pay full compensation.

CIR vs. MERALCO Judicial Admissions; A judicial admission binds the person who makes the same, and absent any showing that this was made thru palpable mistake, no amount of rationalization can offset it.

In the parties' Joint Stipulation of Facts, petitioner admitted the issuance of the aforesaid BIR Ruling and did not contest it as one of the admitted documentary evidence in Court. A judicial admission binds the person who makes the same, and absent any showing that this was made thru palpable mistake, no amount of rationalization can offset it. In Camitan v. Fidelity Investment Corporation , 551 SCRA 540 (2008), we sustained the judicial admission of petitioner's counsel for failure to prove the existence of palpable mistake, thus: x x x. A judicial admission is an admission, verbal or written, made by a party in the course of the proceedings in the same case, which dispenses with the need for proof with respect to the matter or fact admitted . It may be contradicted only by a showing that it was made through palpable mistake or that no such admission was made . x x x x Upon examination of the said exhibits on record, it appears that the alleged discrepancies are more imagined than real. Had these purported discrepancies been that evident during the preliminary conference, it would have been easy for petitioners' counsel to object to the authenticity of the owner's duplicate copy of the TCT presented by Fidelity. As shown in the transcript of the proceedings, there was ample opportunity for petitioners' counsel to examine the document, retract his admission, and point out the alleged discrepancies. But he chose not to contest the document. Thus, it cannot be said that the admission of the petitioners' counsel was made through palpable mistake .

Reyes vs. Almanzor Due process; When the due process clause of the constitution may be invoked.

In the same vein, the due process clause maybe invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown to amount to confiscation of property. That would be a clear abuse of power (Sison v. Ancheta, supra ).

National Telecommunications Commission vs. Court of Appeals Assessment made by the National Telecommunications Commission of the fee imposed by Section 40(e) of the Public Service Act, as amended, on the basis of the market value of the subscribed or paid-in capital stock is a deviation from the explicit language of the law.

In the same way that the Court in PLDT vs. PSC has rejected the "value of the property and equipment" as being the proper basis for the fee imposed by Section 40(e) of the Public Service Act, as amended by Republic Act No. 3792, so also must the Court disallow the idea of computing the fee on "the par value of [PLDT's] capital stock subscribed or paid excluding stock dividends, premiums, or capital in excess of par." Neither, however, is the assessment made by the National "1. Telecommunications Commission on the basis of the market value of the subscribed or paid-in capital stock acceptable since it is itself a deviation from the explicit language of the law.

Caltex Philippines, Inc. vs. Commission on Audit It is settled that a taxpayer may not affect taxes due from the claims that he may have against the government.

It is settled that a taxpayer may not offset taxes due from the claims that he may 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.

People v. Kintanar FACTS

In two (2) separate Informations, both dated February 7, 2006, they were charged with Violation of Section 255 of RA No. 8424. In CRIMINAL CASE NO. 0 -033 for failing to file her Income Tax Return (ITR) for the taxable year 2000 and in CRIMINAL CASE NO. 0 -034 for failing to file her Income Tax Return for the taxable year 2001. Spouses Benjamin Kintanar and GloriaV. Kintanar were distributors or independent contractors of Forever Living Products Phils. Inc (FLPPI). The Investigation Division of the BIR received confidential information of an alleged tax evasion scheme of the Spouses Kintanar. BIR issued a Letter of Authority to examine the books of accounts and other accounting records for taxable years 1999 to 2002. The LOA was received but Gloria Kintanar failed to submit the required documents. A Final Notice was issued by Chief Rosimo demanding from spouses Kintanar to present the needed documents for examination, and failure to comply therewith will cause the issuance of a subpoena duces tecum. Despite several notices, spouses Kintanar failed to submit the required documents; thus, on June 11, 2003 a subpoena duces tecum was issued. Again, spouses Kintanar failed to comply with said order. Kintanar filed a protest to the Letter of Demand andAssessment notices sent by the BIR. Photocopies of thespouses' joint income tax returns for the years 2000-2002 were attached to the protest. The BIR required the spouses to submit additional documents within 60days. Again, the spouses failed to comply with the said request; consequently, the assessment and the demand letter became final, executory and demandable. The prosecution proved that Gloria Kintanar failed to file her ITR's for the years 1999-2001 andfound her liable for deficiency income taxes arisingfrom income earned from FLPPI. Gloria Kintinar argued that she filed her ITR'sfor taxable years 2000-2001. Petitioner claims that she did not actively participate in the filing of her joint ITRs with her husband in the years 2000 and 2001 and entrusted the fulfillment of such duty to her husband; that her husband hired a certain Marina Mendoza, an accountant, who was tasked by her husband to handle the filing and payment of their tax obligations; thus, there was no voluntary, intentional, deliberate, or malicious failure to file a return on her part. The Former Second Division found GloriaKintanar guilty beyond reasonable doubt of Violation ofSection 255 of the NIRC of 1997. GloriaKintanar filed this instant petition before the CTA

Commissioner of Internal Revenue vs. Bank of the Philippine Islands FACTS

In two notices dated October 28, 1988, petitioner Commissioner of Internal Revenue (CIR) assessed respondent Bank of the Philippine Islands' (BPI's) deficiency percentage and documentary stamp taxes for the year 1986 in the total amount of ₱129,488,656.63. On July 6, 1991, BPI requested a reconsideration of the assessments stated in the CIR's letter but was denied. On February 18, 1992, BPI filed a petition for review in the CTA. In a decision, the CTA dismissed the case for lack of jurisdiction since the subject assessments had become final and unappealable. The CTA ruled that BPI failed to protest on time under Section 270 of the National Internal Revenue Code (NIRC) of 1986 and Section 7 in relation to Section 11 of RA 1125. It also denied reconsideration. On appeal, the CA reversed the tax court's decision and resolution and remanded the case to the CTA for a decision on the merits. It ruled that the notices were not valid assessments because they did not inform the taxpayer of the legal and factual bases therefor. It declared that the proper assessments were those contained in the May 8, 1991 letter which provided the reasons for the claimed deficiencies. Thus, it held that BPI filed the petition for review in the CTA on time. The CIR elevated the case to this Court.

Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc. Taxation; Section 228 of the Tax Code provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made .

Indeed, Section 228 of the Tax Code provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the assessment is void. To implement the aforesaid provision, Revenue Regulation No. 12-99 was enacted by the BIR, of which Section 3.1.4 thereof reads: 3.1.4. Formal Letter of Demand andAssessment Notice .—The formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. The letter of demand calling for payment of the taxpayer's deficiency taxor taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of demand and assessment notice shall be void. The same shall be sent to the taxpayer only by registered mail or by personal delivery. x x x It is clear from the foregoing that a taxpayer must be informed in writing of the legal and factual bases of the tax assessment made against him. The use of the word "shall" in these legal provisions indicates the mandatory nature of the requirements laid down therein.

Philippine Long Distance Telephone Company, Inc. vs. City of Davao The grant of taxing powers to local government units under the Constitution and the LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared national policy. —

Indeed, the grant of taxing powers to local government units under the Constitution and the LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared national policy. The legal effect of the constitutional grant to local governments simply means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of municipal corporations.

Asia International Auctioneers, Inc. vs. Commissioner of Internal Revenue "Indirect Taxes" and "Excise Taxes," Distinguished

Indirect taxes, like VAT and excise tax, are different from withholding taxes. To distinguish, in indirect taxes, the incidence of taxation falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. On the other hand, in case of withholding taxes, the incidence and burden of taxation fall on the same entity, the statutory taxpayer. The burden of taxation is not shifted to the withholding agent who merely collects, by withholding, the tax due from income payments to entities arising from certain transactions and remits the same to the government.

Chavez vs. Ongpin Intervention; Intervention is an ancillary proceeding and limited to the field of litigation open to the original parties.

Intervention is not an independent proceeding, but an ancillary and supplemental one which, in the nature of things, unless otherwise provided for by legislation (or Rules of Court), must be in subordination to the main proceeding, and it may be laid down as a general rule that an intervention is limited to the fi eld of litigation open to the original parties (59 Am. Jur. 950; Garcia, etc., et al. v. David, et al., 67 Phil. 279).

Villanueva vs. City of Iloilo RULING

Is Ordinance 11, series of 1960, of the City of Iloilo, illegal because it imposes double taxation? (NO) Obviously, what the trial court refers to as "income taxes" are the fixed taxes on business and occupation provided for in section 182, Title V, of the National Internal Revenue Code, by virtue of which persons engaged in "leasing or renting property, whether on their account as principals or as owners of rental property or properties," are considered "real estate dealers" and are taxed according to the amount of their annual income. While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the National Internal Revenue Code as real estate dealers, and still taxable under the ordinance in question, the argument against double taxation may not be invoked. The same tax may be imposed by the national government as well as by the local government. There is nothing inherently obnoxious in the exaction of license fees or taxes with respect to the same occupation, calling or activity by both the State and a political subdivision thereof. The contention that the plaintiffs-appellees are doubly taxed because they are paying the real estate taxes and the tenement tax imposed by the ordinance in question, is also devoid of merit. It is a well-settled rule that a license tax may be levied upon a business or occupation although the land or property used in connection therewith is subject to property tax. The State may collect an ad valorem tax on property used in a calling, and at the same time impose a license tax on that calling, the imposition of the latter kind of tax being in no sensea double tax. "In order to constitute double taxation in the objectionable or prohibited sense the same property must be taxed twice when it should be taxed but once; both taxes must be imposed on the same property or subject-matter, for the same purpose, by the same State, Government, or taxing authority, within the same jurisdiction or taxing district, during the same taxing period, and they must be the same kind or character of tax." It has been shown that a real estate tax and the tenement tax imposed by the ordinance, although imposed by the sametaxing authority, are not of the same kind or character. At all events, there is no constitutional prohibition against double taxation in the Philippines. It is something not favored, but is permissible, provided some other constitutional requirement is not thereby violated, such as the requirement that taxes must be uniform.

Surigao Consolidated Mining Co., Inc. vs. Collector of Internal Revenue RULING

Is Surigao Consolidated entitled to the refund of ad valorem tax? No, Surigao Consolidated is not entitled to the refund. R.A. 81 clearly refers to the condonation of unpaid taxes only. The condonation of a tax liability is equivalent and is in the nature of a tax exemption. Being so, it should be sustained only when expressed in explicit terms, and it cannot be extended beyond the plain meaning of those terms. It is the universal rule that he who claims an exemption from his share of the common burden of taxation must justify his claim by showing that the Legislature intended to exempt him by words too plain to be mistaken. Petitioner failed to point any portion of the law that explicitly provides for a refund of those taxpayers who had paid their taxes on the items and under circumstances mentioned in the RA 81. Thus Surigao Consolidated is not entitled to such exemption.

La Suerte Cigar v. CA RULING

Is the RR valid? Yes, valid. Under Section 3(h) of RR No. 17-67, entities that were issued by the Bureau of Internal Revenue with an L-7 permit refer to "manufacturers of tobacco products." Hence, the transferor and transferee of the stemmed leaf tobacco must be an L-7 tobacco manufacturer. The reason behind the tax exemption of stemmed leaf tobacco transferred between two L-7 manufacturers is that the same had already been previously-taxed when acquired by the L-7 manufacturer from dealers of tobacco. There is no new product when stemmed leaf tobacco is transferred between two L-7 permit holders. Thus, there can be no excise tax that will attach. The regulation, therefore, is reasonable and does not create a new statutory right. Moreover, although delegation is not allowed as a rule, the power to fill in the details and manner as to the enforcement and administration of a law may be delegated to various specialized administrative agencies.

Philippine Basketball Association vs. Court of Appeals RULING

Is the amusement tax on admission tickets to PBA games a national or local tax? Otherwise put, who between the national government and local government should petitioner pay amusement taxes? (NATIONAL) The laws on the matter are succinct and clear and need no elaborate disquisition. Section 13 of the Local Tax Code provides: "SECTION 13. Amusement tax on admission. — The province shall impose a tax on admission to be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement . . ." The foregoing provision of law in point indicates that the province can only impose a tax on admission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. The authority to tax professional basketball games is not therein included, as the same is expressly embraced in PD 1959, which amended PD 1456. It is clear that the "proprietor, lessee or operator of . . . professional basketball games" is required to pay an amusement tax equivalent to fifteen per centum (15%) of their gross receipts to the Bureau of Internal Revenue, which payment is a national tax. The said payment of amusement tax is in lieu of all other percentage taxes of whatever nature and description. While Section 13 of the Local Tax Code mentions "other places of amusement", professional basketball games are definitely not within its scope. Under the principle of ejusdem generis, where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned. Thus, in determining the meaning of the phrase "other places of amusement", one must refer to the prior enumeration of theaters, cinematographs, concert halls and circuses with artistic expression as their common characteristic. Professional basketball games do not fall under the same category as theaters, cinematographs, concert halls and circuses as the latter basically belong to artistic forms of entertainment while the former caters to sports and gaming. Likewise erroneous is the stance of petitioner that respondent Commissioner's issuance of BIR Ruling No. 231-86 and BIR Revenue Memorandum Circular No. 8-88 — both upholding the authority of the local government to collect amusement taxes — should bind the government or that, if there is any revocation or modification of said rule, the same should operate prospectively. It bears stressing that the government can never be in estoppel, particularly in matters involving taxes. It is a well-known rule that erroneous application and enforcement of the law by public officers do not preclude subsequent correct application of the statute, and that the Government is never estopped by mistake or error on the part of its agents. All things studiedly considered, the Court rules that the petitioner is liable to pay amusement tax to the national government, and not to the local government, in accordance with the rates prescribed by PD 1959.

Reyes vs. Almanzor RULING

Is the approach adopted by the City Assessor appropriate in assessing the property? No. The taxing power is an attribute of sovereignty. However, the power to tax is not unconfined as there are restrictions. The due process and equal protection clauses of the Constitution limit this power. The laws should operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different both in the privileges conferred and the liabilities imposed. The market value of properties covered by P.D. No. 20 cannot be equated with the market value of properties not covered. The former has naturally a much lesser market value in view of the rental restrictions. Consequently, the use of the Comparable Sales Approach in the assessment of the properties on the ground of uniformity is unreasonable.

Osmeña vs. Orbos RULING

Is there an undue delegation of the legislative power of taxation? None. It seems clear that while the funds collected may be referred to as taxes, they are exacted in the exercise of the police power of the State. Moreover, that the OPSF as a special fund is plain from the special treatment given it by E.O. 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. The Court is satisfied that these measures comply with the constitutional description of a "special fund." With regard to the alleged undue delegation of legislative power, the Court finds that the provision conferring the authority upon the ERB to impose additional amounts on petroleum products provides a sufficient standard by which the authority must be exercised. In addition to the general policy of the law to protect the local consumer by stabilizing and subsidizing domestic pump rates, P.D. 1956 expressly authorizes the ERB to impose additional amounts to augment the resources of the Fund.

John Hay Peoples Alternative Coalition vs. Lim RULING

Is this constitutional? (NO) While the grant of economic incentives may be essential to the creation and success of SEZs, free trade zones and the like, the grant thereof to the John Hay SEZ cannot be sustained. The incentives under R.A. No. 7227 are exclusive only to the Subic SEZ, hence, the extension of the same to the John Hay SEZ finds no support therein. Neither does the same grant of privileges to the John Hay SEZ find support in the other laws specified under Section 3 of Proclamation No. 420, which laws were already extant before the issuance of the proclamation or the enactment of R.A. No. 7227. More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature, unless limited by a provision of the state constitution, that has full power to exempt any person or corporation or class of property from taxation, its power to exempt being as broad as its power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions,or local governments may pass ordinances on exemption only from local taxes. The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon. Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation should be manifest and unmistakable from the language of the law on which it is based; it must be expressly granted in a statute stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must be categorically and unmistakably expressed. If it were the intent of the legislature to grant to the John Hay SEZ the same tax exemption and incentives given to the Subic SEZ, it would have so expressly provided in the R.A. No. 7227. This Court no doubt can void an act or policy of the political departments of the government on either of two grounds-infringement of the Constitution or grave abuse of discretion. This Court then declares that the grant by Proclamation No. 420 of tax exemption and other privileges to the John Hay SEZ is void for being violative of the Constitution.

John Hay SEZ v. Lim RULINGG

Is this constitutional? (NO) While the grant of economic incentives may be essential to the creation and success of SEZs, free trade zones and the like, the grant thereof to the John Hay SEZ cannot be sustained. The incentives under R.A. No. 7227 are exclusive only to the Subic SEZ, hence, the extension of the same to the John Hay SEZ finds no support therein. Neither does the same grant of privileges to the John Hay SEZ find support in the other laws specified under Section 3 of Proclamation No. 420, which laws were already extant before the issuance of the proclamation or the enactment of R.A. No. 7227. More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature, unless limited by a provision of the state constitution, that has full power to exempt any person or corporation or class of property from taxation, its power to exempt being as broad as its power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions,or local governments may pass ordinances on exemption only from local taxes. The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon. Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation should be manifest and unmistakable from the language of the law on which it is based; it must be expressly granted in a statute stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must be categorically and unmistakably expressed. If it were the intent of the legislature to grant to the John Hay SEZ the same tax exemption and incentives given to the Subic SEZ, it would have so expressly provided in the R.A. No. 7227. This Court no doubt can void an act or policy of the political departments of the government on either of two grounds-infringement of the Constitution or grave abuse of discretion. This Court then declares that the grant by Proclamation No. 420 of tax exemption and other privileges to the John Hay SEZ is void for being violative of the Constitution.

John Hay SEZ vs. Lim RULINGGG

Is this constitutional? (NO) While the grant of economic incentives may be essential to the creation and success of SEZs, free trade zones and the like, the grant thereof to the John Hay SEZ cannot be sustained. The incentives under R.A. No. 7227 are exclusive only to the Subic SEZ, hence, the extension of the same to the John Hay SEZ finds no support therein. Neither does the same grant of privileges to the John Hay SEZ find support in the other laws specified under Section 3 of Proclamation No. 420, which laws were already extant before the issuance of the proclamation or the enactment of R.A. No. 7227. More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature, unless limited by a provision of the state constitution, that has full power to exempt any person or corporation or class of property from taxation, its power to exempt being as broad as its power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions,or local governments may pass ordinances on exemption only from local taxes. The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon. Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation should be manifest and unmistakable from the language of the law on which it is based; it must be expressly granted in a statute stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must be categorically and unmistakably expressed. If it were the intent of the legislature to grant to the John Hay SEZ the same tax exemption and incentives given to the Subic SEZ, it would have so expressly provided in the R.A. No. 7227. This Court no doubt can void an act or policy of the political departments of the government on either of two grounds-infringement of the Constitution or grave abuse of discretion. This Court then declares that the grant by Proclamation No. 420 of tax exemption and other privileges to the John Hay SEZ is void for being violative of the Constitution.

National Telecommunications Commission vs. Court of Appeals Police Power; Eminent Domain; Taxation; Since Congress has the power to exercise the State's inherent powers of Police Power, Eminent Domain and Taxation, the distinction between police power and the power to tax, which could be significant if the exercising authority were mere political subdivisions (since delegation by it to such political subdivisions of one power does not necessarily include the other), would not be of any moment when Congress itself exercises the power.

It bears stressing that it is not the NTC that imposed such a fee. It is the legislature itself. Since Congress has the power to exercise the State's inherent powers of Police Power, Eminent Domain and Taxation, the distinction between police power and the power to tax, which could be significant if the exercising authority were mere political subdivisions (since delegation by it to such political subdivisions of one power does not necessarily include the other), would not be of any moment when, as in the case under consideration, Congress itself exercises the power. All that is to be done would be to apply and enforce the law when sufficiently definitive and not constitutionally infirm.

Philippine Basketball Association vs. Court of Appeals Taxation; Public Officers; Estoppel; The government can never be in estoppel, particularly in matters involving taxes—erroneous application and enforcement of the law by public officers do not preclude subsequent correct application of the statute, and the Government is never estopped by mistake or error on the part of its agents

It bears stressing that the government can never be in estoppel, particularly in matters involving taxes. It is a well-known rule that erroneous application and enforcement of the law by public officers do not preclude subsequent correct application of the statute, and that the Government is never estopped by mistake or error on the part of its agents.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation Taxation; In matters of taxation, the government cannot be estopped by the mistakes, errors or omissions of its agents for upon it depends the ability of the government to serve the people for whose benefit taxes are collected

It deserves mentioning that the CIR is not estopped from assailing the validity of the July 27, 2011 Tax Credit Certificate which was issued by her subordinates in the BIR. In matters of taxation, the government cannot be estopped by the mistakes, errors or omissions of its agents for upon it depends the ability of the government to serve the people for whose benefit taxes are collected.

Commissioner of lnternal Revenue vs. Algue, Inc. Rationale of taxation. —

It is said that taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Hence, despite the natural reluctance to surrender part of one's hard-earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. The government, for its part, is expected to respond in the form of tangible and intangible benefits intended to improve the lives of the people and enhance their moral and material values, This symbiotic relationship is the rationale of taxation and should dispel the erroneous notion that it is an arbitrary method of exaction by those in the seat of power.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals The duty to declare the true value of real property for taxation purposes is imposed upon the owner, or administrator, or their duly authorized representatives.

It is an accepted principle in taxation that taxes are paid by the person obliged to declare the same for taxation purposes. As discussed above, the duty to declare the true value of real property for taxation purposes is imposed upon the owner, or administrator, or their duly authorized representatives. They are thus considered the taxpayers. Hence, when these persons fail or refuse to make a declaration of the true value of their real property within the prescribed period, the provincial or city assessor shall declare the property in the name of the defaulting owner and assess the property for taxation. In this wise, the taxpayer assumes the character of a defaulting owner, or defaulting administrator, or defaulting authorized representative, liable to pay back taxes. For that reason, since petitioner herein is the declared owner of the subject buildings being assessed for real property tax, it is therefore presumed to be the person with the obligation to shoulder the burden of paying the subject tax in the present case; and accordingly, in questioning the reasonableness or correctness of the assessment of real property tax, petitioner is mandated by law to comply with the requirement of payment under protest of the tax assessed, particularly Section 252 of RA No. 7160 or the LGC of 1991.

Gomez vs. Palomar Constitutional law; Statutory construction; Anti-TB Stamp Law; Not violative of equal protection clause of the Constitution

It is claimed that Republic Act 1635, as amended, otherwise known as the Anti-TB Stamp Law, is violative of the equal protection clause of the Constitution because it constitutes mail users into a class for the purpose of the tax while leaving untaxed the rest of the population and that even among postal patrons the statute discriminatorily grants exemptions. Held: It is settled that the legislature has the inherent power to select the subjects of taxation and to grant exemptions. The classification of mail users is based on the ability to pay, the enjoyment of a privilege and on administrative convenience. Tax exemptions have never been thought of as raising issues under the equal protection clause.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals Payment Under Protest; The requirement of "payment under protest" is a condition sine qua non before a protest or an appeal questioning the correctness of an assessment of real property tax may be entertained.

It is clear that the requirement of "payment under protest" is a condition sine qua non before a protest or an appeal questioning the correctness of an assessment of real property tax may be entertained. Moreover, a claim for exemption from payment of real property taxes does not actually question the assessor's authority to assess and collect such taxes, but pertains to the reasonableness or correctness of the assessment by the local assessor, a question of fact which should be resolved, at the very first instance, by the LBAA.

Lutz vs. Araneta POWER OF STATE TO SELECT SUBJECT OF TAXATION. —

It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities which result from a singling out of one particular class for taxation or exemption infringe 110 constitutional limitation (Carmichael vs. Southern Coal & Coke Co., 301 U.S.495, 81 L. Ed. 1245, citing numerous authorities, at 1251).

Punsalan, et al. vs. Municipal Board of Manila, et al. TAXATION; LEGISLATIVE DEPARTMENT DETERMINES WHAT ENTITIES SHOULD BE EMPOWERED TO IMPOSE OCCUPATION TAX.

It is not for the courts to judge what particular cities or municipalities should be empowered to impose occupation taxes in addition to those imposed by the National Government. That matter is peculiarly within the domain of the political departments and the courts would do well not to encroach upon it.

Commissioner of lnternal Revenue vs. Algue, Inc. Warrant of distraint and levy; Rule that the warrant of distraint and levy is proof of the finality of the assessment; Exception is where there is a letter of protest after receipt of notice of assessment.

It is true that as a rule the warrant of distraint and levy is "proof of the finality of the assessment" and "renders hopeless a request for reconsideration," being "tantamount to an outright denial thereof and makes the said request deemed rejected." But there is a special circumstance in the case at bar that prevents application of this accepted doctrine. The proven fact is that four days after the private respondent received the petitioner's notice of assessment, it filed its letter of protest. This was apparently not taken into account before the warrant of distraint and levy was issued; indeed, such protest could not be located in the office of the petitioner. It was only after Atty. Guevara gave the BIR a copy of the protest that it was, if at all, considered by the tax authorities. During the intervening period, the warrant was premature and could therefore not be served.

Sea-Land Service, Inc. vs. Court of Appeals Remedial Law; Civil Procedure; Pleadings; Under the rules on pleading, a party is not required to specify the provisions of the law or contract relied upon by the pleader. The rules only require the allegations of the ultimate facts

It is true that petitioner did not specifically cite the provisions of Section 15 of the Bill of Lading (Exh. 1-D, Sea-Land) as the authority to support its right to "devan" the insured cargo, but under the rules on pleading, a party is not required to specify the provisions of the law or contract relied upon by the pleader. The rules only require the allegations of the ultimate facts. The rules on appellate procedure do not even require the parties to adhere to their position in minute detail but only to abide by the general position adopted by them in the trial court (Fisk v. Honario, 14Ore, 29). Neither do the rules prevent the parties from putting up additional grounds to support their position (Sons v. Yangco Steamship Co., 34 Phil.597).

Gomez vs. Palomar The issuance of administrative orders by the Postmaster General with the approval of the Secretary of Public Works and Communications to implement the Anti-TB Stamp Law does not amount to undue delegation of legislative power.

It is true that the law does not expressly authorize the collection of five centavos except through the sale of anti-TB stamps, but such authority may be implied in so far as it may be necessary to prevent a failure of the undertaking. The authority given to the Postmaster General to raise funds through the mails must be liberally construed, consistent with the principle that where the end is required the appropriate means is given.

Sison, Jr. vs. Ancheta Due process clause may be invoked where a tax statute is so arbitrary as to find no support in Constitution

It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown to amount to the confiscation of property. That would be a clear abuse of power. It then becomes the duty of this Court to say that such an arbitrary act amounted to the exercise of an authority not conferred. That properly calls for the application of the Holmes dictum. It has also been held that where the assailed tax measure is beyond the jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it is subject to attack on due process grounds.

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue While official receipts are not the only pieces of evidence which can prove deductible expenses, if presented, they shall be subjected to examination.—

It is, thus, clear that Section 29 of the 1977 NIRC does not exempt the taxpayer from substantiating claims for deductions. While official receipts are not the only pieces of evidence which can prove deductible expenses, if presented, they shall be subjected to examination. PMFC submitted official receipts as among its evidence, and the CTA doubted their veracity. PMFC was, however, unable to persuasively explain and prove through other documents the discrepancies in the said receipts. Consequently, the CTA disallowed the deductions claimed, and in its ruling, invoked Section 238 of the 1977 NIRC considering that official receipts are matters provided for in the said section.

Land Transportation Office vs. City of Butuan The power of LGUs to regulate the operation of tricycles and to grant franchises for the operation thereof is still subject to the guidelines prescribed by the Department of Transportation and Communications.

It may not be amiss to state, nevertheless, that under Article 458 (a)[3-VI] of the Local Government Code, the power of LGUs to regulate the operation of tricycles and to grant franchises for the operation thereof is still subject to the guidelines prescribed by the DOTC. In compliance therewith, the Department of Transportation and Communications ("DOTC") issued "Guidelines to Implement the Devolution of LTFRBs Franchising Authority over Tricycles-For-Hire to Local Government units pursuant to the Local Government Code."

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation Assessment is deemed made only when the collector of internal revenue releases, mails or sends such notice to the taxpayer

It should also be stressed that the said document is a notice duly sent to the taxpayer. Indeed, an assessment is deemed made only when the collector of internal revenue releases, mails or sends such notice to the taxpayer. In the present case, the revenue officers' Affidavit merely contained a computation of respondents' tax liability. It did not state a demand or a period for payment. Worse, it was addressed to the justice secretary, not to the taxpayers.

Reyes vs. Almanzor FACTS

J.B.L Reyes, et al., petitioners, owners of parcels of land in Tondo and Sta. Cruz Districts, City of Manila which are leased by tenants for a monthly rentals not exceeding three hundred pesos (P300.00) in July 1971. Around that time, a law was passed prohibiting the increase of rentals of properties leased for rentals not exceeding P300.00 monthly and ejecting lessees after the expiration of the usual legal period of lease. In 1973, respondent City Assessor of Manila re-classified and reassessed the value of the subject properties based on the schedule of market values which entailed an increase in the acorresponding tax rates prompting petitioners to file a Memorandum of Disagreement with the Board of Tax Assessment Appeals. They averred that the reassessments made were "excessive, unwarranted, inequitable, confiscatory and unconstitutional" considering that the taxes imposed upon them greatly exceeded the annual income derived from their properties. They argued that the income approach should have been used in determining the land values instead of the comparable sales approach which the City Assessor adopted.

Land Transportation Office vs. City of Butuan LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof. —

LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof. "To regulate" means to fix, establish, or control; to adjust by rule, method, or established mode; to direct by rule or restriction; or to subject to governing principles or laws. A franchise is defined to be a special privilege to do certain things conferred by government on an individual or corporation, and which does not belong to citizens generally of common right. On the other hand, "to register" means to record formally and exactly, to enroll, or to enter precisely in a list or the like, and a "driver's license" is the certificate or license issued by the government which authorizes a person to operate a motor vehicle.

Caltex Philippines, Inc. vs. Commission on Audit Civil Law; Taxation; LOI 1416 has no binding force or effect as it was never published in the Official Gazette after its issuance or at anytime after the decision in the above-mentioned cases.

LOI 1416 has, therefore, no binding force or effect as it was never published in the Official Gazette after its issuance or at any time after the decision in the abovementioned cases.

Province of Misamis Oriental vs. Cagayan Electric Power andLight Company, Inc. The franchise tax provided in the Local Tax Code (PD No. 231, Sec. 9) may only be imposed on companies with franchises that do not contain the exempting clause.

Local Tax Regulation No. 3-75 issued by the Secretary of Finance on June 26, 1976, has made it crystal clear that the franchise tax provided in the Local Tax Code (P.D. No. 231,Sec. 9) may only be imposed on companies with franchises that do not contain the exempting clause. Thus it provides: "The franchise tax imposed under local tax ordinance pursuant to Section 9 of the Local Tax Code, as amended, shall be collected from businesses holding franchise but not from business establishments whose franchise contain the 'in-lieu-of-all-taxes-proviso.' "

Mactan Cebu International Airport Authority vs. Marcos FACTS

Mactan Cebu International Airport Authority (MCIAA) was created by virtue of Republic Act 6958. Since the time of its creation, MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with Section 14 of its Charter. However on 11 October 1994, the Office of the Treasurer of Cebu, demanded for the payment of realty taxes on several parcels of land belonging to the petitioner. Petitioner objected to such demand for payment as baseless and unjustified and asserted that it is an instrumentality of the government performing governmental functions, which puts limitations on the taxing powers of local government units. The City refused to cancel and set aside petitioner's realty tax account, insisting that the MCIAA is a government controlled corporation whose tax exemption privilege has been withdrawn by virtue of Sections 193 and 234 of the Local Government Code (LGC), and not an instrumentality of the government but merely a government owned corporation performing proprietary functions. MCIAA paid its tax account "under protest" when City is about to issue a warrant of levy against the MCIAA's properties. MCIAA filed a Petition of Declaratory Relief with the RTC contending that the taxing power of local government units do not extend to the levy of taxes or fees on an instrumentality of the national government. It contends that by the nature of its powers and functions, it has the footing of an agency or instrumentality of the national government; which claim the City rejects. The trial court dismissed the petition, citing that close reading of the LGC provides the express cancellation and withdrawal of tax exemptions of Government Owned and Controlled Corporations.

Mactan Cebu International Airport Authority vs. Marcos FACTSS

Mactan Cebu International Airport Authority (MCIAA) was created by virtue of Republic Act 6958. Since the time of its creation, MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with Section 14 of its Charter. However on 11 October 1994, the Office of the Treasurer of Cebu, demanded for the payment of realty taxes on several parcels of land belonging to the petitioner.Petitioner objected to such demand for payment as baseless and unjustified and asserted that it is an instrumentality of the government performing governmental functions, which puts limitations on the taxing powers of local government units. The City refused to cancel and set aside petitioner's realty tax account, insisting that the MCIAA is a government controlled corporation whose tax exemption privilege has been withdrawn by virtue of Sections 193 and 234 of the Local Government Code (LGC), and not an instrumentality of the government but merely a government owned corporation performing proprietary functions. MCIAA paid its tax account "under protest" when City is about to issue a warrant of levy against the MCIAA's properties. MCIAA filed a Petition of Declaratory Relief with the RTC contending that the taxing power of local government units do not extend to the levy of taxes or fees on an instrumentality of the national government. It contends that by the nature of its powers and functions, it has the footing of an agency or instrumentality of the national government; which claim the City rejects. The trial court dismissed the petition, citing that close reading of the LGC provides the express cancellation and withdrawal of tax exemptions of Government Owned and Controlled Corporations.

The Anti-Graft League of the Philippines, Inc. vs. San Juan FACTS

Marcos issued a decree establishing the Technological Colleges of Rizal. It directed the Board to provide funds for the purchase of 4 parcels of land which belonged to Ortigas &Co. For 12 yrs, the land was idle and construction did not materialize so the Board authorized the selling of the lot. This was sold to Valley View Realty. Ortigas filed for rescission of contract contending that it violated the terms of the contract by selling such lot to Valley View. The Board made a Resolution providing for the rescission of the deed of sale to Valley View. Valley View filed a case against the Province of Rizal for specific performance but was dismissed. Thereafter, a compromise agreement was executed between Province and Ortigas to reconvey the lots to Ortigas. The Anti-Graft League of the Philippines is a non-government organization, constituted to protect the interest of the Republic and its instrumentalities and political subdivisions against abuses its public official and employees, claims the instant petition for certiorari is a taxpayer's suit because the Provincial Board of Rizal allegedly illegally disbursed public funds in transactions involving the land.

Joya vs. Presidential Commission on Good Government FACTS

Mateo Caparas, then Chairman of the PCGG, through the authority granted by then Pres. Aquino, signed a Consignment Agreement allowing Christie's of New York to auction off Old Masters Paintings and the 18th and 19th century silverware alleged to be part of the ill-gotten wealth of Pres. Marcos, his relatives, and cronies, for and in behalf of RP. 35 petitioners in this Special Civil Action for Prohibition and Mandamus with Prayer for Preliminary Injunction and/or Restraining Order sought to enjoin PCGG from proceeding with the auction sale which nevertheless proceeded on schedule. Petitioners claim that, as Filipino citizens, taxpayers, and artists deeply concerned with the preservation and protection of the country's artistic wealth and that the paintings and silverware are public properties collectively owned by them and the people in general to view and enjoy as great works of art alleging that they have been deprived of their right to public property without due process of law, they have the legal personality to restrain the respondents who are acting contrary to their public duty to conserve the artistic creations as mandated by Sec. 14-18 of Art. XIV of the Constitution and RA 4846.

Municipality of Makati vs. Court of Appeals Mandamus; Where a municipality fails without justifiable cause to pay a final money judgment against it, the claimant may avail of mandamus to compel the enactment and approval of the necessary appropriation ordinance and the corresponding disbursement of municipal funds therefor. —

Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where a municipality fails or refuses, without justifiable reason, to effect payment of a fi nal money judgment rendered against it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of the necessary appropriation ordinance, and the corresponding disbursement of municipal funds therefor [See Viuda De Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v. Gonzales, 108 Phil. 247 (1960)].

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation FACTS

Nippon is a domestic corporation duly organized and existing under Philippine laws which is engaged in the business of freight forwarding in the international and domestic air and sea freight and cargo forwarding, hauling, carrying, handling, distributing, loading, and unloading general cargoes and all classes of goods, wares, and merchandise, and the operation of container depots, warehousing, storage, hauling, and packing facilities. It is a Value-Added Tax (VAT) registered entity with Tax Identification No./VAT Registration No. As such, it filed its quarterly VAT returns for the year 2002 on April 25, 2002, July 25, 2002, October 25, 2002, and January 27, 2003, respectively. It maintained that during the said period it incurred input VAT attributable to its zero-rated sales in the amount of 28,405,167.60, from which only P3,760,660.74 was applied as tax credit, thus, reflecting refundable excess input VAT in the amount of P24,644,506.86. On April 22, 2004, Nippon filed an administrative claim for refund of its unutilized input VAT in the amount of P24,644,506.86 for the year 2002 before the Bureau of Internal Revenue (BIR). A day later, it filed a judicial claim for tax refund, by way of petition for review, before the CTA. For its part, petitioner the Commissioner of Internal Revenue (CIR) asserted that the amounts being claimed by Nippon as unutilized input VAT were not properly documented, hence, should be denied. Proceedings Before the CTA Division The CTA Division partially granted Nippon's claim for tax refund, and thereby ordered the CIR to issue a tax credit certificate in the reduced amount of P2,614,296.84. It found that while Nippon timely filed its administrative and judicial claims within the two (2)-year prescriptive period, it, however, failed to show that the recipients of its services - which, in this case, were mostly Philippine Economic Zone Authority registered enterprises - were non-residents "doing business outside the Philippines." It concluded that Nippon's purported sales could not qualify as zero-rated sales, hence, the reduction in the amount of tax credit certificate claimed. Nippon filed a motion to withdraw. Separately, the CIR moved for reconsideration. The CTA En Banc Ruling CTA En Banc affirmed the July 31, 2012 Resolution of the CTA Division granting Nippon's motion to withdraw. Noting that RMC No. 49-03 did not expressly require a taxpayer to inform the BIR of its assent nor prescribe a definite period for filing a motion to withdraw. It also observed that the CIR did not deny the existence and issuance of the July 27, 2011 Tax Credit Certificate.

Gaston vs. Republic Planters Bank Implied Trust; No implied trust in favor of the sugar producers either can be deduced from the imposition of the levy.

No implied trust in favor of the sugar producers either can be deduced from the imposition of the levy. "The essential idea of an implied trust involves a certain antagonism between the cestui que trust and the trustee even when the trust has not arisen out of fraud nor out of any transaction of a fraudulent or immoral character (65 CJ 222). It is not clearly shown from the statute itself that the PHILSUCOM imposed on itself the obligation of holding the stabilization fund for the benefit of the sugar producers, It must be categorically demonstrated that the very administrative agency which is the source of such regulation would place a burden on itself.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte A municipal tax on soft drinks is not a specific tax.

Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified articles, such as distilled spirits, wines, x x x cigars and cigarettes, matches, x x x bunker fuel oil, diesel fuel oil, cinematographic films, playing cards, saccharine, opium and other habit-forming drugs. Soft drinks is not one of those specified.

CIR vs. MERALCO Administrative Agencies; Court of Tax Appeals; It has been a long-standing policy and practice of the Supreme Court (SC) to respect the conclusions of quasi-judicial agencies such as the Court of Tax Appeals (CTA), a highly specialized body specifically created for the purpose of reviewing tax cases.

Oft repeated is the rule that the Court will not lightly set aside the conclusions reached by the CTA which, by the very nature of its function of being dedicated exclusively to the resolution of tax problems, has accordingly developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority. This Court recognizes that the CTA's findings can only be disturbed on appeal if they are not supported by substantial evidence, or there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to the contrary, this Court must presume that the CTA rendered a decision which is valid in every respect. It has been a long-standing policy and practice of the Court to respect the conclusions of quasi-judicial agencies such as the CTA, a highly specialized body specifically created for the purpose of reviewing tax cases.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte FACTS

On 14 February 1963, Pepsi-Cola Bottling Company of the Philippines, Inc., commenced a complaint with preliminary injunction before the Court of First Instance of Leyte for that court to declare Section 2 of Republic Act No. 2264. otherwise known as the Local Autonomy Act, unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos. 23 and 27, series of 1962, of the municipality of Tanauan, Leyte, null and void. On 23 July 1963, the parties entered into a Stipulation of Facts, the material portions of which state that, first, both Ordinances Nos. 23 and 27 embrace or cover the same subject matter and the production tax rates imposed therein are practically the same, and second, that on January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte, as per his letter addressed to the Manager of the Pepsi-Cola Bottling Plant in said municipality, sought to enforce compliance by the latter of the provisions of said Ordinance No. 27, series of 1962. Municipal Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25, 1962, levies and collects "from soft drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo for every bottle of soft drink corked." For the purpose of computing the taxes due, the person, firm, company or corporation producing soft drinks shall submit to the Municipal Treasurer a monthly report, of the total number of bottles produced and corked during the month. On the other hand, Municipal Ordinance No. 27, which was approved on October 28, 1962, levies and collects "on soft drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity." For the purpose of computing the taxes due, the person, fun company, partnership, corporation or plant producing soft drinks shall submit to the Municipal Treasurer a monthly report of the total number of gallons produced or manufactured during the month. The tax imposed in both Ordinances Nos. 23 and 27 is denominated as "municipal production tax.' CFI: dismissed the complaint and upheld the constitutionality of R.A. 2264 declaring Ordinance No. 23 and 27 legal and constitutional. (Pepsi-Cola appealed; certified by CA)

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. FACTS

On 2 March 1989, CIC authorized Benigno P. Toda, Jr., President and owner of 99.991% of its outstanding capital stock, to sell the Cibeles Building. On 30 August 1989, Toda purportedly sold the property for P100 million to Rafael A. Altonaga, who, in turn, sold the same property on the same day to Royal Match Inc. (RMI) for P200 million. Three and a half years later Toda died. On 29 March 1994, the BIR sent an assessment notice and demand letter to the CIC for deficiency income tax for the year 1989. On 27 January 1995, the Estate of Benigno P. Toda, Jr., represented by special coadministrators Lorna Kapunan and Mario Luza Bautista, received a Notice of Assessment from the CIR for deficiency income tax for the year 1989. The Estate thereafter filed a letter of protest. The Commissioner dismissed the protest. On 15 February 1996, the Estate filed a petition for review with the CTA. In its decision the CTA held that the Commissioner failed to prove that CIC committed fraud to deprive the government of the taxes due it. It ruled that even assuming that a preconceived scheme was adopted by CIC, the same constituted mere tax avoidance, and not tax evasion. Hence, the CTA declared that the Estate is not liable for deficiency of income tax. The Commissioner filed a petition for review with the Court of Appeals. The Court of Appeals affirmed the decision of the CTA, hence, this recourse.

FELS Energy, Inc. vs. Province of Batangas FACTS

On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement, was for a period of five years. Article 10 states that NPC shall be responsible for the payment of taxes. (other than (i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees and other similar fees and charges. Polar Energy then assigned its rights under the Agreement to Fels despite NPC's initial opposition. FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of Batangas City. FELS referred the matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any conference regarding the real property assessment of the Provincial Assessor. NPC filed a petition with the LBAA. The LBAA ordered Fels to pay the real estate taxes. The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed out that the owner of the barges-FELS, a private corporation-is the one being taxed, not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time. Fels appealed to the CBAA. The CBAA reversed and ruled that the power barges belong to NPC; since they are actually, directly and exclusively used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax exemption in accordance with Section 206 of R.A. No. 7160. Upon MR, the CBAA reversed itself.

CIR vs. MERALCO FACTS

On July 6, 1998, respondent Manila Electric Company (MERALCO) obtained a loan from Norddeutsche Landesbank Girozentrale (NORD/LB) Singapore Branch in the amount of USD120,000,000.00 with ING Barings South East Asia Limited (ING Barings) as the Arranger. On September 4, 2000, respondent MERALCO executed another loan agreement with NORD/LB Singapore Branch for a loan facility in the amount of USD100,000,000.00 with Citicorp International Limited as Agent. Under the foregoing loan agreements, the income received by NORD/LB, by way of MERALCO's interest payments, shall be paid in full without deductions, as MERALCO shall bear the obligation of paying/remitting to the BIR the corresponding ten percent (10%) final withholding tax. Pursuant thereto, MERALCO paid/remitted to the Bureau of Internal Revenue (BIR) the said withholding tax on its interest payments to NORD/LB Singapore Branch, covering the period from January 1999 to September 2003 in the aggregate sum of P264,120,181.44. However, sometime in 2001, MERALCO discovered that NORD/LB Singapore Branch is a foreign government-owned financing institution of Germany. Thus, on December 20, 2001, MERALCO filed a request for a BIR Ruling with petitioner Commissioner of Internal Revenue (CIR) with regard to the tax exempt status of NORD/LB Singapore Branch, in accordance with Section 32(B)(7)(a) of the 1997 National Internal Revenue Code (Tax Code), as amended. On October 7, 2003, the BIR issued Ruling No. DA-342-2003 declaring that the interest payments made to NORD/LB Singapore Branch are exempt from the ten percent (10%) final withholding tax, since it is a financing institution owned and controlled by the foreign government of Germany. Consequently, on July 13, 2004, relying on the aforesaid BIR Ruling, MERALCO filed with CIR a claim for tax refund or issuance of tax credit certificate in the aggregate amount of P264,120,181.44, representing the erroneously paid or overpaid final withholding tax on interest payments made to NORD/LB Singapore Branch. On November 5, 2004, respondent MERALCO received a letter from petitioner denying its claim for tax refund on the basis that the same had already prescribed under Section 204 of the Tax Code, which gives a taxpayer/claimant a period of two (2) years from the date of payment of tax to file a claim for refund before the BIR. Aggrieved, MERALCO filed a Petition for Review with the Court of Tax Appeals (CTA) on December 6, 2004. After trial on the merits, the CTA-First Division rendered a Decision partially granting respondent MERALCO's Petition for Review. On November 2, 2006, CIR filed its Motion for Reconsideration with the CTA-First Division, while on November 7, 2006, MERALCO filed its Partial Motion for Reconsideration. Finding no justifiable reason to overturn its Decision, the CTA-First Division denied both the petitioner's Motion for Reconsideration and MERALCO's Partial Motion for Reconsideration in a Resolution dated January 11, 2007. Unyielding to the Decision of the CTA, both CIR and MERALCO filed their respective Petitions for Review before the Court of Tax Appeals En Banc (CTA En Banc) docketed as C.T.A. EB Nos. 264 and 262, respectively. In its Decision dated October 15, 2007, the CTA En Banc denied both petitions and upheld in toto the Decision of the CTA-First Division. In the same vein, the motions for reconsideration filed by the respective

Philippine Basketball Association vs. Court of Appeals FACTS

On June 21, 1989, the petitioner received an assessment letter from the Commissioner of Internal Revenue (respondent Commissioner) for the payment of deficiency amusement tax. Petitioner contested the assessment by filing a protest with respondent Commissioner who denied the same. Petitioner filed a petition for review with the Court of Tax Appeals (respondent CTA) questioning the denial by respondent Commissioner of its tax protest. Respondent CTA dismissed petitioner's petition. Petitioner appealed the CTA decision to the Court of Appeals. The Court of Appeals rendered its questioned Decision, affirming the decision of the CTA and dismissing petitioner's appeal. Petitioner contends that PD 231, otherwise known as the Local Tax Code of 1973, transferred the power and authority to levy and collect amusement taxes from the sale of admission tickets to places of amusement from the national government to the local governments. Petitioner cited BIR Memorandum Circular No. 49-73 providing that the power to levy and collect amusement tax on admission tickets was transferred to the local governments by virtue of the Local Tax Code; and BIR Ruling No. 231-86 which held that "the jurisdiction to levy amusement tax on gross receipts from admission tickets to places of amusement was transferred to local governments under P.D. No. 231, as amended." Further, petitioner opined that even assuming arguendo that respondent Commissioner revoked BIR Ruling No. 231-86, the reversal, modification or revocation cannot be given retroactive effect since even as late as 1988 (BIR Memorandum Circular No. 8-88), respondent Commissioner still recognized the jurisdiction of local governments to collect amusement taxes.

Chevron Philippines, Inc. vs. Bases Conversion Development Authority FACTS

On June 28, 2002, the Board of Directors of respondent Clark Development Corporation (CDC) issued and approved Policy Guidelines on the Movement of Petroleum Fuel to and from the Clark Special Economic Zone. The policy guidelines were implemented effective July 27, 2002. On October 1, 2002, CDC sent a letter to herein petitioner Chevron Philippines, Inc. (formerly Caltex Philippines, Inc.), a domestic corporation which has been supplying fuel to Nanox Philippines, a locator inside the CSEZ since 2001, informing the petitioner that a royalty fee of ₱0.50 per liter shall be assessed on its deliveries to Nanox Philippines effective August 1, 2002. Thereafter, on October 21, 2002 a Statement of Account was sent by CDC billing the petitioner for royalty fees in the amount of ₱115,000.00 for its fuel sales from Coastal depot to Nanox Philippines from August 1-31 to September 3-21, 2002. Claiming that nothing in the law authorizes CDC to impose royalty fees or any fees based on a per unit measurement of any commodity sold within the special economic zone, petitioner sent a letter dated October 30, 2002 to the President and Chief Executive Officer of CDC, Mr. Emmanuel Y. Angeles, to protest the assessment for royalty fees. Petitioner argues that CDC does not have any power to impose royalty fees on sale of fuel inside the CSEZ on the basis of purely income generating functions and its exclusive right to market and distribute goods inside the CSEZ. Such imposition of royalty fees for revenue generating purposes would amount to a tax, which the respondents have no power to impose. Petitioner stresses that the royalty fee imposed by CDC is not regulatory in nature but a revenue generating measure to increase its profits and to further enhance its exclusive right to market and distribute fuel in CSEZ. On the part of the respondents, they argue that the purpose of the royalty fees is to regulate the flow of fuel to and from the CSEZ. Such being its main purpose, and revenue (if any) just an incidental product, the imposition cannot be considered a tax. It is their position that the regulation is a valid exercise of police power since it is aimed at promoting the general welfare of the public. They claim that being the administrator of the CSEZ, CDC is responsible for the safe distribution of fuel products inside the CSEZ.

Marcos II vs. Court of Appeals FACTS

On September 29, 1989, former President Ferdinand Marcos died in Honolulu, Hawaii, USA. On June 27, 1990, a Special Tax Audit Team was created to conduct investigations and examinations of the tax liabilities and obligations of the late president, as well as that of his family, associates and "cronies". Said audit team concluded its investigation with a Memorandum dated July 26, 1991. The investigation disclosed that the Marcoses failed to file a written notice of the death of the decedent, an estate tax returns, as well as several income tax returns covering the years 1982 to 1986, — all in violation of the National Internal Revenue Code (NIRC). The Commissioner of Internal Revenue thereby caused the preparation and filing of the Estate Tax Return for the estate of the late president, the Income Tax Returns of the Spouses Marcos for the years 1985 to 1986, and the Income Tax Returns of petitioner Ferdinand "Bongbong" Marcos II for the years 1982 to 1985. On July 26, 1991, the BIR issued the following: (1) Deficiency estate tax assessment no. FAC-2-89- 91-002464 (against the estate of the late president Ferdinand Marcos in the amount of P23, 293,607,638.00 Pesos); (2) Deficiency income tax assessment no. FAC-1-85-91-002452 and Deficiency income tax assessment no. FAC-1-86-91-002451 (against the Spouses Ferdinand and Imelda Marcos in the amounts of P149,551.70 and P184,009,737.40 representing deficiency income tax for the years 1985 and 1986); (3) Deficiency income tax assessment nos. FAC-1-82-91-002460 to FAC-1-85-91-002463 (against petitioner Ferdinand "Bongbong" Marcos II in the amounts of P258.70 pesos; P9,386.40 Pesos; P4,388.30 Pesos; and P6,376.60 Pesos representing his deficiency income taxes for the years 1982 to 1985). The deficiency tax assessments were not protested administratively, by Mrs. Marcos and the other heirs of the late president, within 30 days from service of said assessments. On February 22, 1993, the BIR Commissioner issued twenty-two notices of levy on real property against certain parcels of land owned by the Marcoses — to satisfy the alleged estate tax and deficiency income taxes of Spouses Marcos. On May 20, 1993, four more Notices of Levy on real property were issued for the purpose of satisfying the deficiency income taxes. On May 26, 1993, additional four (4) notices of Levy on real property were again issued. The foregoing tax remedies were resorted to pursuant to Sections 205 and 213 of the National Internal Revenue Code (NIRC). On June 25, 1993, petitioner Ferdinand "Bongbong" Marcos II filed the instant petition for certiorari and prohibition under Rule 65 of the Rules of Court, with prayer for temporary restraining order and/or writ of preliminary injunction. It has been repeatedly observed, and not without merit, that the enforcement of tax laws and the collection of taxes, is of paramount importance for the sustenance of government.

Villanueva vs. City of Iloilo FACTS

On September 30, 1946 the municipal board of Iloilo City enacted Ordinance 86, imposing license tax fees as follows: (1) tenement house (casa de vecindad), P25.00 annually; (2) tenement house, partly or wholly engaged in or dedicated to business in the streets of J.M. Basa, Iznart and Aldeguer, P24.00 per apartment; (3) tenement house, partly or wholly engaged in business in any other streets, P12.00 per apartment. The validity and constitutionality of this ordinance were challenged by the spouses Eusebio Villanueva and Remedies Sian Villanueva, owners of four tenement houses containing 34 apartments. This Court, in City of Iloilo vs. Remedios Sian Villanueva and Eusebio Villanueva, L-12695, March 23, 1959, declared the ordinance ultra vires, "it not appearing that the power to tax owners of tenement houses is one among those clearly and expressly granted to the City of Iloilo by its Charter." On January 15, 1960 the municipal board of Iloilo City, believing, obviously, that with the passage of Republic Act 2264, otherwise known as the Local Autonomy Act, it had acquired the authority or power to enact an ordinance similar to that previously declared by this Court as ultra vires, enacted Ordinance 11, series of 1960. In Iloilo City, the appellees Eusebio Villanueva and Remedios S. Villanueva are owners of five tenement houses, aggregately containing 43 apartments, while the other appellees and the same Remedios S. Villanueva are owners of ten apartments. Each of the appellees' apartments has a door leading to a street and is rented by either a Filipino or Chinese merchant. The first floor is utilized as a store, while the second floor is used as a dwelling of the owner of the store. Eusebio Villanueva owns, likewise, apartment buildings for rent in Bacolod, Dumaguete City, Baguio City and Quezon City, which cities, according to him, do not impose tenement or apartment taxes. By virtue of the ordinance in question, the appellant City collected from spouses Eusebio Villanueva and Remedios S. Villanueva, for the years 1960-1964, the sum of P5,824.30, and from the appellees Pio Sian Melliza, Teresita S. Topacio, and Remedios S. Villanueva, for the years 1960-1964, the sum of P1,317.00. Eusebio Villanueva has likewise been paying real estate taxes on his property. On July 11, 1962 and April 24, 1964, the plaintiffs-appellees filed a complaint, and an amended complaint, respectively, against the City of Iloilo, in the aforementioned court, praying that Ordinance 11, series of 1960, be declared "invalid for being beyond the powers of the Municipal Council of the City of Iloilo to enact, and unconstitutional for being violative of the rule as to uniformity of taxation and for depriving said plaintiffs of the equal protection clause of the Constitution," and that the City be ordered to refund the amounts collected from them under the said ordinance. The trial court condemned the ordinance as constituting "not only double taxation but treble at that," because "buildings pay real estate taxes and also income taxes as provided for in Sec. 182 (A) (3) (s) of the National Internal Revenue Code, besides the tenement tax under the said ordinance."

Nursery Care Corporation vs. Acevedo Taxation; Double Taxation; On the basis of the rulings in City of Manila v. Coca-Cola Bottlers Philippines, Inc., 595 SCRA 299 (2009) and Swedish Match Philippines, Inc. v. The Treasurer of the City of Manila, 700 SCRA 428 (2013), the Court now holds that all the elements of double taxation concurred upon the City of Manila's assessment on and collection from the petitioners of taxes for the first quarter of 1999 pursuant to Section 21 of the Revenue Code of Manila.

On the basis of the rulings in City of Manila v. Coca-Cola Bottlers Philippines, Inc. , 595 SCRA 299 (2009) and Swedish Match Philippines, Inc. v. The Treasurer of the City of Manila , 700 SCRA 428 (2013), the Court now holds that all the elements of double taxation concurred upon the City of Manila's assessment on and collection from the petitioners of taxes for the first quarter of 1999 pursuant to Section 21 of the Revenue Code of Manila. Firstly , because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold goods and services in the course of trade or business based on a certain percentage of his gross sales or receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed the tax on a person who sold goods and services in the course of trade or business but only identified such person with particularity, namely, the wholesaler, distributor or dealer (Section 15), and the retailer (Section 17), all the taxes — being imposed on the privilege of doing business in the City of Manila in order to make the taxpayers contribute to the city's revenues — were imposed on the same subject matter and for the same purpose. Secondly , the taxes were imposed by the same taxing authority (the City of Manila) and within the same jurisdiction in the same taxing period ( i.e . , per calendar year). Thirdly , the taxes were all in the nature of local business taxes.

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue Deductible Expenses; As long as the expense is: (a) both ordinary and necessary; (b) incurred in carrying a business or trade; and (c) paid or incurred within the taxable year, then, it shall be allowed as a deduction from the gross income.

PMFC cites Atlas Consolidated Mining & Dev. Corp. v. CIR , 102 SCRA 246 (1981), to contend that the statutory test , as provided in Section 29 of the 1977 NIRC, is sufficient to allow the deductibility of a business expense from the gross income. As long as the expense is: (a) both ordinary and necessary; (b) incurred in carrying a business or trade; and (c) paid or incurred within the taxable year, then, it shall be allowed as a deduction from the gross income.

Paseo Realty & Development Corporation vs. Court of Appeals Taxation; Tax Reform Act of 1997; Tax Credits; The availment of the remedy of tax credit is not absolute and mandatory. —

Parenthetically, while a taxpayer is given the choice whether to claim for refund or have its excess taxes applied as tax credit for the succeeding taxable year, such election is not final. Prior verification and approval by the Commissioner of InternalRevenue is required. The availment of the remedy of tax credit is not absolute and mandatory. It does not confer an absolute right on the taxpayer to avail of the tax credit scheme if it so chooses. Neither does it impose a duty on the part of the government to sit back and allow an important facet of tax collection to be at the sole control and discretion of the taxpayer.

Paseo Realty & Development Corporation vs. Court of Appeals FACTS

Paseo Realty and Development Corporation, a domestic corporation engaged in the lease of two parcels of land at Paseo de Roxas in Makati City. Petitioner filed its Income Tax Return for the CY 1989 with an income tax due thereon in the amount of P27,653.00, prior year's excess credit of P146,026.00, and creditable taxes withheld in 1989 of P54,104.00. He later filed with CTA for a refund of excess creditable taxes withheld and income taxes for the years 1989 and 1990 in the aggregate amount of P147,036.15. CTA rendered decision in favor of the petitioner. However, CIR filed a Motion for Reconsideration alleging that the amount sought to be refunded "has already been included in the 172, 447 which the petitioner applied as tax credit for the succeeding taxable year 1990. In a resolution CTA reconsidered its decision for review, stating that it had overlooked the fact that the petitioner's 1989 Corporate Income Tax Return indicated that the amount of P54,104.00 subject of petitioner's claim for refund had already been included as part of the P172,477.00 which the petitioner automatically applied as tax credit for the succeeding taxable year 1990. Petitioner filed a Petition for Review dated April 3, 1994 with the CTA. Resolving the twin issues of whether petitioner is entitled to a refund of P54,104.00 representing creditable taxes withheld in 1989 and whether petitioner applied such creditable taxes withheld to its 1990 income tax liability. The CTA held that petitioner is not entitled to a refund because it had already elected to apply the total amount of P172,447.00, which includes the P54,104.00 refund claimed, against its income tax liability for 1990.

Commissioner of Internal Revenue vs. Pineda Taxes are the lifeblood of the government.

Taxes are the lifeblood of government and their prompt and certain availability is an imperious need.

Philippine Long Distance Telephone Company, Inc. vs. City of Davao FACTS

Petitioner Philippine Long Distance Telephone Co., Inc. (PLDT) applied for a Mayors Permit to operate its Davao Metro Exchange. Respondent City of Davao withheld action on the application pending payment by petitioner of the local franchise tax in the amount of P3,681,985.72 for the first to the fourth quarter of 1999. Petitioner protested. Petitioner justifies its claim of tax exemption under R.A. No. 7925, otherwise known as the Public Telecommunications Policy Act of the Philippines, 23 of which reads: SEC. 23. Equality of Treatment in the Telecommunications Industry. Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises: Provided, however, That the foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning territory covered by the franchise, the life span of the franchise, or the type of service authorized by the franchise.

Western Minolco Corporation vs. Commissioner of Internal Revenue Tax exemptions are looked upon with disfavor. —

Petitioner Western Minolco Corporation has failed to justify its claimed exemption from the 35% transaction tax. The decision of the Commissioner of Internal Revenue denying the petitioner's claim for refund is affirmed. It bears repeating that the law looks with disfavor on tax exemptions and he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted.

The Anti-Graft League of the Philippines, Inc. vs. San Juan Remedial Law; Action; Parties; Two requisites to constitute a taxpayer's suit. —

Petitioner and respondents agree that to constitute a taxpayer's suit, two requisites must be met, namely, that public funds are disbursed by a political subdivision or instrumentality and in doing so, a law is violated or some irregularity is committed, and that the petitioner is directly affected by the alleged ultra vires act.

Heng Tong Textiles Co., Inc. vs. Com. of Internal Revenue Taxation; Deficiency sales taxes must be paid by real importer; Case at bar. —

Petitioner avers that the importation papers were placed in its name only for purposes of accommodation and that it was not in a financial position to make the importation in question. Held: These circumstances show nothing but a private arrangement between the petitioner and Pan Asiatic Commercial, which in no way affected the role of the petitioner as the importer as far as the right of the Government to collect the taxes were concerned; the petitioner was the real importer and hence must shoulder the tax burden.

Western Minolco Corporation vs. Commissioner of Internal Revenue FACTS

Petitioner is a domestic corporation engaged in mining, particularly copper concentrates for export mined from mineral lands in Atok and Kibungan, Benguet. In October 1972, upon application for tax exemption filed with the Bureau of Mines, the petitioner was granted Certificate of Qualification for Tax Exemption No. 34. On December 24, 1976, the petitioner was also granted by the Securities and Exchange Commission, under Certificate of Renewal No. R-1056, authority to borrow money and issue commercial papers. Pursuant to this authority, the petitioner borrowed funds from several financial institutions from June, 1977 to October 1977 and paid the corresponding 35% transaction tax due thereon in the amount of P1,317,801.03, The tax was paid pursuant to Section 210 (b) of the National Internal Revenue Code of 1977. On February 16, 1978, the petitioner applied for the refund of the P1,317,801.03 alleging that it was not liable to pay the 35% transaction tax under its Certificate of Qualification for Tax Exemption No. 34 issued by the Secretary of Agriculture and Natural Resources, and pursuant to Section 79-A of Commonwealth Act No. 137, otherwise known as The Mining Act and Presidential Decree No. 463, the Mineral Resources Development Decree of 1974, as implemented by Consolidated Mines Administrative Order of the Secretary of Natural Resources dated May 17, 1974. On February 19, 1979, the respondent Commissioner of internal Revenue denied the petitioner's claim for refund. On May 29, 1979, the petitioner filed a petition for review with the respondent Court of Tax Appeals. After due hearing but before the respondent court could render its decision, the petitioner filed a pleading entitled "Request for Judicial Notice and Request for Admission" alleging that the subject tax was paid in the nature of a business tax, that petitioner's claim for refund is based on its exemption from business taxes, and that its exemption is protected by existing tax exemptions granted it under the mining law. On January 29, 1982, the respondent court denied the petitioner's "Request for Judicial Notice and Request for Admission. On May 21, 1982, the respondent court rendered its decision dismissing the petition for review for lack of merit.

Asia International Auctioneers, Inc. vs. Commissioner of Internal Revenue FACTS

Petitioner is a duly organized corporation operating within the Subic Special Economic Zone (SSEZ). It is engaged in the importation of used motor vehicles and heavy equipment which it sells to the public through auction. BIR assessed it with deficiency VAT and excise taxes. During the pendency of the case, petitioner availed of the amnesty program under Republic Act No. 9480. The BIR argues that petitioner is disqualified under Section 8(a) of RA 9480 from availing the Tax Amnesty Program because it is "deemed" a withholding agent for the deficiency taxes. The BIR likewise argues that petitioner, as an accredited investor/taxpayer situated at the SSEZ, should have availed of the tax amnesty granted under RA 9399 and not under RA 9480.

CIR vs. MERALCO Tax Refunds; The Tax Code, a special law, explicitly provides for a mandatory period for claiming a refund for taxes erroneously paid. —

Petitioner is misguided when it relied upon the six (6)-year prescriptive period for initiating an action on the ground of quasi-contract or solutio indebiti under Article 1145 of the New Civil Code. There is solutio indebiti where: (1) payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause. Here, there is a binding relation between petitioner as the taxing authority in this jurisdiction and respondent MERALCO which is bound under the law to act as a withholding agent of NORD/LB Singapore Branch, the taxpayer. Hence, the first element of solutio indebiti is lacking. Moreover, such legal precept is inapplicable to the present case since the Tax Code, a special law, explicitly provides for a mandatory period for claiming a refund for taxes erroneously paid.

Sison, Jr. vs. Ancheta Uniformity in taxation quite similar to the standard of equal protection.

Petitioner likewise invoked the kindred concept of uniformity. According to the Constitution: "The rule of taxation shall be uniform and equitable." This requirement is met according to Justice Laurel in Philippine Trust Company v. Yatco, decided in 1940, when the tax"operates with the same force and effect in every place where the subject may be found." He likewise added: "The rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable." The problem of classification did not present itself in that case. It did not arise until nine years later, when the Supreme Court held: "Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation, * * *. As clarified by Justice Tuason, where "the differentiation"complained of "conforms to the practical dictates of justice and equity" it "is not discriminatory within the meaning of this clause and is therefore uniform." There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar situation."

Western Minolco Corporation vs. Commissioner of Internal Revenue Taxation; The 35% transactions tax on interest income is a tax on income. —

Petitioner submits that inasmuch as taxes in general constitute allowable deductions from gross income in the determination of taxable net income, the 35% transaction tax is a business tax and not an income tax because the Revenue Code itself classifies it as "Business Tax" under Title V, and that P.D. No. 1154 expressly states that the transaction tax shall be allowed as a deductible item for purposes of determining the borrower's taxable income. The petitioner's contentions deserve scant consideration. The 35% transaction tax is imposed on interest income from commercial papers issued in the primary money market. Being a tax on interest, it is a tax on income.

Yutivo Sons Hardware Co. vs. Court of Tax Appeals FACTS

Petitioner was engaged, prior to the last world war, in the importation and sale of hardware supplies and equipment. After the liberation, it resumed its business and bought a number of cars and trucks from General Motors Overseas, an American corporation licensed to do business in the Philippines. As importer, GM paid sales tax prescribed by sections 184, 185 and 186 of the Tax Code on the basis of its selling price to Yutivo. Said tax being collected only once on original sales, Yutivo paid no further sales tax on its sales to the public. On June 13, 1946, the Southern Motors, Inc. (SM) was organized to engage in the business of selling cars, trucks and spare parts. Its original authorized capital stock was P1,000,000 divided into 10,000 shares with a par value of P100 each. After the incorporation of SM and until the withdrawal of GM from the Philippines in the middle of 1947, the cars and tracks purchased by Yutivo from GM were sold by Yutivo to SM which, in turn, sold them to the public in the Visayas and Mindanao. When General Motors Overseas Corporation (GM) decided to withdraw from the Philippines in the middle of 1947, the U.S. manufacturer of GM cars and trucks appointed Yutivo as importer for the Visayas and Mindanao, and Yutivo continued its previous arrangement of selling exclusively to Southern Motors, Inc. (SM). In the same way that GM used to pay sales taxes based on its sales to Yutivo, the latter, as importer, paid sales tax prescribed on the basis of its selling price to SM, and since such sales tax, as already stated, is collected only once on original sales, SM paid no sales tax on its sales to the public. The Collector of Internal Revenue made an assessment upon Yutivo and demanded from the latter P1,804,769.85 as deficiency sales tax plus surcharge. The assessment was disputed by the petitioner.

Commissioner of Internal Revenue vs. The Stanley Works Sales (Phils.), Incorporated The statute of limitations imposed by the Tax Code precisely intends to protect the taxpayer from prolonged and unreasonable assessment and investigation by the Bureau of Internal Revenue (BIR). —

Petitioner's reliance on CIR v. Suyoc , 104 Phil. 819 (1958), (Suyoc) is likewise misplaced. In Suyoc , the BIR was induced to extend the collection of tax through repeated requests for extension to pay and for reinvestigation, which were all denied by the Collector. Contrarily, herein respondent filed only one Protest over the assessment, and petitioner denied it 10 years after. The subsequent letters of respondent cannot be construed as inducements to extend the period of limitation, since the letters were intended to urge petitioner to act on the Protest, and not to persuade the latter to delay the actual collection. Petitioner cannot take refuge in BPI v. CIR , 473 SCRA205 (2005), either, considering that respondent and BPI are similarly situated. Similar to BPI , this is a simple case in which the BIR Commissioner and other BIR officials failed to act promptly in resolving and denying the request for reconsideration filed by the taxpayer and in enforcing the collection on the assessment. Both in BPI and in this case, the BIR presented no reason or explanation as to why it took many years to address the Protest of the taxpayer. The statute of limitations imposed by the Tax Code precisely intends to protect the taxpayer from prolonged and unreasonable assessment and investigation by the BIR.

Diaz vs. Secretary of Finance FACTS

Petitioners Renato V. Diaz and Aurora Ma. F. Timbol filed this petition for declaratory relief assailing the validity of the impending imposition of value-added tax (VAT) by the Bureau of Internal Revenue (BIR) on the collections of tollway operators. However, the Court treated the case as one of prohibition. Petitioners hold the view that Congress did not, when it enacted the NIRC, intend to include toll fees within the meaning of "sale of services" that are subject to VAT; that a toll fee is a "user's tax," not a sale of services; that to impose VAT on toll fees would amount to a tax on public service; and that, since VAT was never factored into the formula for computing toll fees, its imposition would violate the non-impairment clause of the constitution. On August 23, 2010 the Office of the Solicitor General filed the government's comment. The government avers that the NIRC imposes VAT on all kinds of services of franchise grantees, including tollway operations, except where the law provides otherwise; that the Court should seek the meaning and intent of the law from the words used in the statute; and that the imposition of VAT on tollway operations has been the subject as early as 2003 of several BIR rulings and circulars. Finally, the government contends that the non-inclusion of VAT in the parametric formula for computing toll rates cannot exempt tollway operators from VAT. In any event, it cannot be claimed that the rights of tollway operators to a reasonable rate of return will be impaired by the VAT since this is imposed on top of the toll rate. Further, the imposition of VAT on toll fees would have very minimal effect on motorists using the tollways.

Gaston vs. Republic Planters Bank FACTS

Petitioners are sugar producers, sugarcane planters and millers, who have come to this Court in their individual capacities and in representation of other sugar producers, planters and millers, said to be so numerous that it is impracticable to bring them all before the Court. Respondent Philippine Sugar Commission (PHILSUCOM, for short) was formerly the government office tasked with the function of regulating and supervising the sugar industry until it was superseded by its co-respondent Sugar Regulatory Administration (SRA, for brevity) under Executive Order No. 18 on May 28, 1986. Although said Executive Order abolished the PHILSUCOM, its existence as a juridical entity was mandated to continue for three (3) more years "for the purpose of prosecuting and defending suits by or against it and enables it to settle and close its affairs, to dispose of and convey its property and to distribute its assets." Respondent Republic Planters Bank (briefly, the Bank) is a commercial banking corporation. Petitioners and Intervenors have come to the Supreme Court praying for a Writ of mandamus commanding respondents to implement and accomplish the privatization of Republic Planters Bank by the transfer and distribution of the shares of stock in the said bank to the sugar producers, planters and millers who are the true beneficial owners. The said investment having been funded by the deduction from sugar proceeds of the sugar producers as stabilization fund pursuant to P.D. # 388. Respondents PHILSUCOM and SRA, for their part, squarely traverse the petition arguing that no trust results from Section 7 of P.D. No. 388; that the stabilization fees collected are considered government funds under the Government Auditing Code; that the transfer of shares of stock from PHILSUCOM to the sugar producers would be irregular, if not illegal; and that this suit is barred by laches.

Manila Memorial Park, Inc. v. Secretary of the Department of Social Welfare and Development FACTS

Petitioners assail the constitutionality of Section 4 of Republic Act (RA) No. 7432, as amended by RA 9257, and the implementing rules and regulations issued by the DSWD and DOF insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax deduction. Feeling aggrieved by the tax deduction scheme, petitioners filed the present recourse, praying that Section 4 of RA 7432, as amended by RA 9257, and the implementing rules and regulations issued by the DSWD and the DOF be declared unconstitutional insofar as these allow business establishments to claim the 20% discount given to senior citizens as a tax deduction; that the DSWD and the DOF be prohibited from enforcing the same; and that the tax credit treatment of the 20% discount under the former Section 4 (a) of RA 7432 be reinstated. Petitioners emphasize that they are not questioning the 20% discount granted to senior citizens but are only assailing the constitutionality of the tax deduction scheme prescribed under RA 9257 and the implementing rules and regulations issued by the DSWD and the DOF. Petitioners posit that the tax deduction scheme contravenes Article III, Section 9 of the Constitution, which provides that: "[p]rivate property shall not be taken for public use without just compensation."

Tañada vs. Angara FACTS

Petitioners prayed for the nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization (WTO Agreement, for brevity) and for the prohibition of its implementation and enforcement through the release and utilization of public funds, the assignment of public officials and employees, as well as the use of government properties and resources by respondent-heads of various executive offices concerned therewith. They contended that WTO agreement violates the mandate of the 1987 Constitution to "develop a self-reliant and independent national economy effectively controlled by Filipinos x x x (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino labor, domestic materials and locally produced goods" as (1) the WTO requires the Philippines "to place nationals and products of member-countries on the same footing as Filipinos and local products" and (2) that the WTO "intrudes, limits and/or impairs" the constitutional powers of both Congress and the Supreme Court.

Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation FACTS

Petron filed for a tax refund for the excise taxes it paid for petroleum products sold to international carriers of foreign registry for their use or consumption outside the Philippines. Petron claims that it is entitled to a tax refund because those petroleum products it sold to international carriers are not subject to excise tax as provided for in Section 135 (a), hence the excise taxes it paid upon withdrawal of those products were erroneously or illegally collected and should not have been paid in the first place. Petron argues that since the excise tax exemption attached to the petroleum products themselves, the manufacturer or producer is under no duty to pay the excise tax thereon.

Philippine Airlines, Inc. vs. Edu FACTS

Philippine Airlines (PAL) is a corporation engaged in the air transportation business under a legislative franchise, Act No. 42739. Under its franchise, PAL is exempt from the payment of taxes.It was determined that PAL has not been paying motor vehicle registrations fees since 1956. In 1971, Commissioner Romeo F. Elevate issued a regulation requiring all tax exempt entities, including PAL, to pay motor vehicle registration fees. PAL protested, but the appellee (Land Transportation) refused to register their motor vehicles unless the fees amount to P19,529.75 were paid. Thus PAL paid the registration fees under protest. After paying, PAL wrote a letter to Commissioner Edu demanding a refund of the amounts paid mentioning the ruling in Calalang vs. Lorenzo where it stated that motor vehicle registration fees are in reality taxes, and PAL is exempted from the payment by virtue of its legislative franchise. Commissioner Edu denied the request for refund basing his action on the decision in Republic vs. Philippine Rabbit Bus Lines, Inc. to the effect that motor vehicle registration fees are regulatory and exceptional thus do not come within the exemption granted to PAL.

Philippine Airlines, Inc. vs. Edu The purpose behind the law requiring owners of vehicles to pay their registration is mainly to raise revenue for the construction and maintenance of highways. —

Presently, Sec. 61 of the Land Transportation and Traffic Code provides: "Sec. 61. Disposal of Monies Collected. Monies collected under the provisions of this Act shall be deposited in a special trust account in the National Treasury to constitute the Highway Special Fund, which shall be apportioned and expended in accordance with the provisions of the 'Philippine Highway Act of 1935.' Provided, however, That the amount necessary to maintain and equip the Land Transportation Commission but not to exceed twenty percent of the total collection during one year, shall be set aside for the purpose. (As amended by RA 6374, approved August 6, 1971)." It appears clear from the above provisions that the legislative intent and purpose behind the law requiring owners of vehicles to pay for their registration is mainly to raise funds for the construction and maintenance of highways and to a much lesser degree, pay for the operating expenses of the administering agency.

Chavez vs. Ongpin FACTS

President Corazon Aquino issued Executive Order No. 73 stating that beginning January 1, 1987, the 1984 assessments shall be the basis of real property taxes. The petitioner, Francisco I. Chavez, is a taxpayer and an owner of three parcels of land. He alleges the following: that Executive Order No. 73 accelerated the application of the general revision of assessments to January 1, 1987 thereby mandating an excessive increase in real property taxes by 100% to 400% on improvements, and up to 100% on land; that any increase in the value of real property brought about by the revision of real property values and assessments would necessarily lead to a proportionate increase in real property taxes; that sheer oppression is the result of increasing real property taxes at a period of time when harsh economic conditions prevail; and that the increase in the market values of real property as reflected in the schedule of values was brought about only by inflation and economic recession. The intervenor Realty Owners Association of the Philippines, Inc. (ROAP), which is the national association of owners-lessors, joins Chavez in his petition to declare unconstitutional Executive Order No. 73. The Office of the Solicitor General argued against the petition.

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation FACTS

Prior to January 1, 1997, the excises taxes on cigarettes were in the form of ad valorem taxes, pursuant to Section 142 of the 1977 National Internal Revenue Code (1977 Tax Code). Beginning January 1, 1997, RA 8240 took effect and a shift from ad valorem to specific taxes was made. A portion of Section 142(c) of the 1977 Tax Code, as amended by RA 8240, reads in part: "The specific tax from any brand of cigarettes within the next three (3) years of effectivity of this Act shall not be lower than the tax [which] is due from each brand on October 1, 1996. xxx The rates of specific tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000." To implement the 12% increase in specific taxes mandated under Section 145 of the 1997 Tax Code and again pursuant to its rule-making powers, the CIR issued RR 17- 99, which reads partly: "Provided, however, that the new specific tax rate for any existing brand of cigars [and] cigarettes packed by machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000." Pursuant to these laws, respondent Fortune Tobacco Corporation paid in advance excise taxes and filed an administrative claim for tax refund with the CIR for erroneously and/or illegally collected taxes in the amount of P491 million. In its decision, the CTA First Division ruled in favor of Fortune Tobacco and granted its claim for refund. The CTA First Divisions ruling was upheld on appeal by the CTA en banc. The CIR's motion for reconsideration of the CTA en banc's decision was denied in a resolution.

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation Section 222 states that an assessment is not necessary before a criminal charge can be filed.

Private respondents insist that Section 222 should be read in relation to Section 255 of the NIRC, which penalizes failure to fi le a return. They add that a tax assessment should precede a criminal indictment. We disagree. To reiterate, said Section 222 states that an assessment is not necessary before a criminal charge can be filed. This is the general rule. Private respondents failed to show that they are entitled to an exception. Moreover, the criminal charge need only be supported by a prima facie showing of failure to fi le a required return. This fact need not be proven by an assessment.

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation Section 222 of the NIRC specifically states that in cases of failure to file a return, proceedings in court may be commenced without an assessment. —

Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment. This is incorrect, because Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to fi le a return such as this case, proceedings in court may be commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. In Ungab v. Cusi , petitioner therein sought the dismissal of the criminal Complaints for being premature, since his protest to the CTA had not yet been resolved. The Court held that such protests could not stop or suspend the criminal action which was independent of the resolution of the protest in the CTA. This was because the commissioner of internal revenue had, in such tax evasion cases, discretion on whether to issue an assessment or to fi le a criminal case against the taxpayer or to do both.

Lutz v. Araneta FACTS

Promulgated in 1940, the law in question opens (section 1) with a declaration of emergency, due to the threat to our industry by the imminent imposition of export taxes upon sugar as provided in the Tydings-McDuffe Act, and the "eventual loss of its preferential position in the United States market"; wherefore, the national policy was expressed "to obtain a readjustment of the benefits derived from the sugar industry by the component elements thereof" and "to stabilize the sugar industry so as to prepare it for the eventuality of the loss of its preferential position in the United States market and the imposition of the export taxes." In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the manufacture of sugar, on a graduated basis, on each picul of sugar manufactured; while section 3 levies on owners or persons in control of lands devoted to the cultivation of sugar cane and ceded to others for a consideration, on lease or otherwise — a tax equivalent to the difference between the money value of the rental or consideration collected and the amount representing 12 per centum of the assessed value of such land. Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-1950; 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.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. Prescriptions; The period within which to assess tax in cases of fraudulent returns, false returns and failure to file a return is ten years from discovery of the fraud, falsification or omission.

Put differently, in cases of (1) fraudulent returns; (2) false returns with intent to evade tax; and (3) failure to file a return, the period within which to assess tax is ten years from discovery of the fraud, falsification or omission, as the case may be.

Commissioner of Internal Revenue vs. Botelbo Shipping Corp. FACTS

Reparations Commission of the Philippines sold to Botelho the vessel "M/S Maria Rosello" for the amount of P6,798,888.88. The former likewise sold to General Shipping the vessel "M/S General Lim" at the price of P6,951,666.66. Upon arrival at the port of Manila, the Bureau of Customs placed the same under custody and refused to give due course [to applications for registration], unless the aforementioned sums of P483,433 and P494,824 be paid as compensating tax. The buyers subsequently filed with the CTA their respective petitions for review. Pending the case, Republic Act No. 3079 amended Republic Act No. 1789 — the Original Reparations Act, under which the aforementioned contracts with the Buyers had been executed — by exempting buyers of reparations goods acquired from the Commission, from liability for the compensating tax. Invoking [section 20 of the RA 3079], the Buyers applied, for the renovation of their utilizations contracts with the Commission, which granted the application, and, then, filed with the Tax Court, their supplemental petitions for review. The CTA ruled in favor of the buyers. [On appeal, the CIR and COC maintain that such proviso should not be applied retroactively], upon the ground that a tax exemption must be clear and explicit; that there is no express provision for the retroactivity of the exemption, established by Republic Act No. 3079, from the compensating tax; that the favorable provisions, which are referred to in section 20 thereof, cannot include the exemption from compensating tax; and, that Congress could not have intended any retroactive exemption, considering that the result thereof would be prejudicial to the Government.

Roxas vs. Court of Tax Appeals Income tax; Deductions; Representation expenses; Deductible only if incurred in carrying a trade or business

Representation expenses are deductible from gross income as expenditures incurred in carrying on a business or trade provided that they are reasonable in amount, ordinary and necessary, and incurred in connection with the taxpayer's business.

Province of Misamis Oriental vs. Cagayan Electric Power andLight Company, Inc. The presumption is that the special statutes are exceptions to the general law (PD No. 231) because they pertain to a special charter granted to meet a particular set of conditions and circumstances. —

Republic Acts Nos. 3247, 3570 and 6020 are special laws applicable only to CEPALCO, while P.D. No. 231 is a general tax law. The presumption is that the special statutes are exceptions to the general law (P.D. No. 231) because they pertain to a special charter granted to meet a particular set of conditions and circumstances.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals FACTS

Respondent City Assessor of Baguio City notified petitioner about the issuance against it of real property tax assessment. In response, petitioner questioned the assessments for lack of legal. The City Assessor replied that the subject RPT was issued on the basis of the approved building permits and pursuant to Sections 201 to 206 of RA No. 7160. Consequently, petitioner filed with the Board of Tax Assessment Appeals (BTAA) an appeal. BTAA enjoined petitioner to first comply as to the payment under protest of the subject real property taxes before the hearing of its appeal. Aggrieved, petitioner elevated the case before the CBAA. The CBAA denied petitioner's appeal and remanded the case to the LBAA for further proceedings subject to a full and up-to-date payment of the realty taxes on subject properties. Undaunted by the pronouncements in the abovementioned Resolutions, petitioner appealed to the CTA En Banc. The CTA En Banc found that petitioner has indeed failed to comply with Section 252 of RA No. 7160. Hence, it dismissed the petition and affirmed the subject Resolutions of the CBAA. Moreover, adopting the CBAA's position, the court a quo ruled that it could not resolve the issue on whether petitioner is liable to pay real property tax or whether it is indeed a tax-exempt entity considering that the LBAA has not decided the case on the merits.

Commissioner of Internal Revenue vs. Marubeni Corporation FACTS

Respondent Marubeni Corporation is a foreign corporation organized and existing under the laws of Japan and is duly registered in the Philippines. Petitioner found that respondent has undeclared income from its 2 contracts. Its gross income from the said contracts was P967,269,811.14 subject to internal revenue taxes. Respondent filed 2 petitions with CTA on 26 Sept 1986 questioning the: (1) deficiency income, branch profit remittance and contractor's tax assessments; and (2) deficiency commercial broker's assessment. Meanwhile, EO No.41 was issued on 22 Aug 1986 declaring a one-time amnesty covering unpaid income taxes. Taxpayer who wished to avail of the income tax amnesty should file it on or before 31 Oct 1986. Respondent filed its tax amnesty return. Later on, EO No.64 expanded EO No.41. Subsequently, respondent filed a supplemental tax amnesty return under EO No.64. In 1996, CTA ordered CIR to desist from collecting the 1985 deficiency income, branch profit remittance and contractor's taxes from respondent after finding the latter to have properly availed of the tax amnesty under EOs Nos. 41 and 64, as amended. On appeal, CA affirmed CTA's decision. Hence, this petition. Petitioner claimed that respondent is disqualified from availing of the said amnesties because the latter falls under the exception in Sec.4(b) of E.O. No. 41.

Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc. FACTS

Respondent a domestic corporation organized and operating under the Philippine laws, entered into a license agreement with SC Johnson and Son, United States of America (USA), a non-resident foreign corporation based in the U.S.A. pursuant to which the [respondent] was granted the right to use the trademark, patents and technology owned by the latter including the right to manufacture, package and distribute the products covered by the Agreement and secure assistance in management, marketing and production from SC Johnson and Son, U. S. A. For the use of the trademark or technology, [respondent] was obliged to pay SC Johnson and Son, USA royalties based on a percentage of net sales and subjected the same to 25% withholding tax on royalty payments which [respondent] paid for the period covering July 1992 to May 1993 in the total amount of P1,603,443.00 On October 29, 1993, [respondent] filed with the International Tax Affairs Division (ITAD) of the BIR a claim for refund of overpaid withholding tax on royalties arguing that, "the antecedent facts attending [respondent's] case fall squarely within the same circumstances under which said MacGeorge and Gillete rulings were issued. The Commissioner did not act on said claim for refund. Private respondent S.C. Johnson & Son, Inc. (S.C. Johnson) then filed a petition for review before the Court of Tax Appeals (CTA to claim a refund of the overpaid withholding tax on royalty payments from July 1992 to May 1993. The Court of Tax Appeals rendered its decision in favor of S.C. Johnson and ordered the Commissioner of Internal Revenue. The Commissioner of Internal Revenue thus filed a petition for review with the Court of Appeals which rendered the decision finding no merit in the petition and affirming in toto the CTA ruling.

Land Transportation Office vs. City of Butuan FACTS

Respondent city of Butuan asserts that one of the salient provisions introduced by the local government code is in the area of local taxation which allows LGUs to collect registration fees or charges along with, its view, the corresponding issuance of all kinds of licenses or permits for the driving of tricycles. Relying on the provisions of the local government code, the sangguniang panlungsod of Butuan, on August 16, 1992 passed SP Ordinance no. 916-42 entitled "An Ordinance Regulating The Operation Of Tricycles-For-Hire, Providing Mechanism For The Issuance of Franchise, Registration and Permit and Imposing Penalties For Violations Thereof and for Other Purposes." The ordinance provided for among other things, the payment of franchise fees for the grant of the franchise of tricyles-for-hire, fees for the registration of the vehicle, and fees for the issuance of a permit for the driving thereof. Petitioner LTO explains that one of the functions of the national government that, indeed, has been transferred to local government units is the franchising authority over tricycles-for-hire of the land transportation franchising and regulatory board but not, it asseverates, the authority.

Commissioner of Internal Revenue vs. The Stanley Works Sales (Phils.), Incorporated FACTS

Respondent is a domestic corporation duly organized and existing under Philippine laws and duly registered with the Securities and Exchange Commission. On March 19, 1993, the BIR issued to Stanley Works a Pre-Assessment Notice No. 002523 for 1989 deficiency income tax. It was received by the corporation on April 21, 1993. On May 19, 1993, Stanley Works through its external auditors Punongbayan & Araullo, filed a protest letter and requested reconsideration and cancellation of the assessment. On November 16, 1993, a certain Mr. John Ang, on behalf of the corporation, executed a "Waiver of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code" (Waiver). The Waiver was not signed by Stanley Works or any of its authorized representatives and did not state the date of acceptance as prescribed under Revenue Memorandum Order No. 20-90. Under the terms of the Waiver, Stanley Works waived its right to raise the defense of prescription under Section 223 of the NIRC of 1977 insofar as the assessment and collection of any deficiency taxes for the year ended December 31, 1989, but not after June 30, 1994. On March 4, 2002, Stanley Works submitted a Supplemental Memorandum alleging that CIR's right to collect the alleged deficiency income tax has prescribed. The CTA Division ruled that the request for reconsideration did not suspend the running of the prescriptive period to collect deficiency income tax. This decision was affirmed by the CTA en banc. CIR rendered a Decision denying respondent's request for reconsideration and ordering respondent to pay the deficiency income tax plus interest that may have accrued. Stanley Works assailed the decision before the Court of Tax Appeals Division which ordered the cancellation of the assessment ruling that although the assessment was made within the prescribed period, the period within which petitioner may collect deficiency income taxes had already lapsed. Upon appeal, the CTA En Banc affirmed the CTA First Division Decision.

Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc. FACTS

Respondent is engaged in the business of sub-contracting work for service contractors engaged in petroleum operations in the Philippines. During the taxable years in question, it had entered into various contracts and/or sub-contracts with several petroleum service contractors, such as Shell Philippines Exploration, B.V. and Alorn Production Philippines for the supply of service vessels. In the course of respondent's operations, petitioner found respondent liable for deficiency income tax, withholding tax, value-added tax (VAT) and documentary stamp tax (DST) for taxable years 1992,1994, 1997 and 1998. Particularly, petitioner, through BIR officials, issued demand letters with attached assessment notices for withholding tax on compensation (WTC) and expanded withholding tax (EWT) for taxable years 1992, 1994 and 1998. On January 29, 1998 and October 24, 2001, USTP filed administrative protests against the 1994 and 1998 EWT assessments, respectively. On February 21, 2003, USTP appealed by way of Petition for Review before the Court in action (which was thereafter raffled to the CTA-Special First Division) alleging that the Notices of Assessment are bereft of any facts, law, rules and regulations or jurisprudence; thus, the assessments are void and the right of the government to assess and collect deficiency taxes from it has prescribed on account of the failure to issue a valid notice of assessment within the applicable period. During the pendency of the proceedings, USTP moved to withdraw the aforesaid Petition because it availed of the benefits of the Tax Amnesty Program under Republic Act (R.A.) No. 9480. Having complied with all the requirements therefor, the CTA-Special First Division partially granted the Motion to Withdraw and declared the issues on income tax, VAT and DST deficiencies closed and terminated in accordance with the pronouncement in Philippine Banking Corporation v. Commissioner of Internal Revenue. Consequently, the case was submitted for decision covering the remaining issue on deficiency EWT and WTC, respectively, for taxable years 1992, 1994 and 1998. The CTA-Special First Division held that the Preliminary Assessment Notices (PANs) for deficiency EWT for taxable years 1994 and 1998 were not formally offered; hence, pursuant to Section 34, Rule 132 of the Revised Rules of Court, the Court shall neither consider the same as evidence nor rule on their validity. As regards the Final Assessment Notices (FANs) for deficiency EWT for taxable years 1994 and 1998, the CTA-Special First Division held that the same do not show the law and the facts on which the assessments were based. Said assessments were, therefore, declared void for failure to comply with Section 228 of the 1997 National Internal Revenue Code (Tax Code). From the foregoing, the only remaining valid assessment is for taxable year 1992. Nevertheless, the CTA-Special First Division declared that the right of petitioner to collect the deficiency EWT and WTC, respectively, for taxable year 1992 had already lapsed pursuant to Section 203 of the Tax Code. Thus, in ruling for USTP, the CTA-Special First Division cancelled Assessment Notice Nos. 25-1-00546-92 and 25-1-000545-92, both dated January 9, 1996 and covering the period of 1992. Petitioner moved to reconsider the aforesaid ruling however it was denied the same for lack of merit. Upon appeal, the CTA En Banc affirmed with modification the of the CTA-Special First Division. The CTA En Banc upheld the 1998 EWT assessment. In addition to the basic EWT deficiency of ₱14,496.79, USTP is ordered to pay surcharge, annual deficiency interest, and annual delinquency interest from the date due until full payment pursuant to Section 249 of the 1997 NIRC.

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue Statutes; Liberal Construction; Revenue laws are not intended to be liberally construed.

Revenue laws are not intended to be liberally construed. Taxes are the lifeblood of the government and in Holmes' memorable metaphor, the price we pay for civilization; hence, laws relative thereto must be faithfully and strictly implemented. While the 1977 NIRC required substantiation requirements for claimed deductions to be allowed, PMFC insists on leniency, which is not warranted under the circumstances.

Tan vs. Del Rosario, Jr. FACTS

Rufino R. Tan seeks declaration of unconstitutionality of RA 7496 (also known as Simplified Net Income Taxation) due to violation of the following constitutional provision: 1. Article VI, Section 26(1) - Every bill passed by the Congress shall embrace only one subject which shall be expressed in the title thereof. 2. Article VI, Section 28(1) - The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation. 3. Article III, Section 1 - No person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws. The SNIT contained changes in the tax schedules and different treatment in the professionals which petitioners assail as unconstitutional for being violative of the equal protection clause of the Constitution.

Sea-Land Service, Inc. vs. Court of Appeals FACTS

Sea Land Service, Inc. (SEA-LAND) is an American international shipping company licensed by the Securities and Exchange Commission to do business in the Philippines. SEA-LAND entered into a contract with the United States Government to transport military household goods and effects of U. S. military personnel assigned to the Subic Naval Base In this contract, SEA-LAND derived an income for the taxable year 1984 amounting to P58,006,207.54. During this taxable year, SEA-LAND filed with BIR, its corporate Income Tax Return (ITR), and paid the income tax due thereon of 1.5% as required in Section 25 (a) (2) of the National Internal Revenue Code (NIRC) in relation to Article 9 of the RP-US Tax Treaty, amounting to P870,093.12. SEA-LAND then claimed refund with the BIR on April 1987, claiming that it had paie said income tax by mistake. Before this claim for refund could be acted upon by CIR, Sea-Land had already filed a petition for review with the CTA to judicially pursue its claim for refund and to stop the 2-year prescriptive period under Section 243 of the NIRC. CTA denied SEA-LAND claim for refund of the income tax it paid. As such, SEA-LAND appealed this decision to the CA. CA likewise dismissed the petition (basically affirming in toto, CTA's decision). Thus, this petition.

Sison, Jr. vs. Ancheta FACTS

Section 1 of BP Blg 135 amended the Tax Code and petitioner Antero M. Sison, as taxpayer, alleges that, "he would be unduly discriminated against by the imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual taxpayers." He characterizes the above section as arbitrary amounting to class legislation, oppressive and capricious in character.For petitioner, therefore, there is a transgression of both the equal protection and due process clauses of the Constitution as well as of the rule requiring uniformity in taxation.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals The burden of proving exemption from local taxation is upon whom the subject real property is declared; thus, said person shall be considered by law as the taxpayer thereof

Section 206 of RA No. 7160 or the LGC of 1991, categorically provides that every person by or for whom real property is declared, who shall claim exemption from payment of real property taxes imposed against said property , shall file with the provincial, city or municipal assessor sufficient documentary evidence in support of such claim. Clearly, the burden of proving exemption from local taxation is upon whom the subject real property is declared; thus, said person shall be considered by law as the taxpayer thereof. Failure to do so, said property shall be listed as taxable in the assessment roll.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals Taxation; Local Taxation; Local Government Code of 1991 (R.A. No. 7160); Section 252 of the Local Government Code emphatically directs that the taxpayer/real property owner questioning the assessment should first pay the tax due before his protest can be entertained.

Section 252 of the Local Government Code emphatically directs that the taxpayer/real property owner questioning the assessment should fi rst pay the tax due before his protest can be entertained. As a matter of fact, the words "paid under protest" shall be annotated on the tax receipts. Consequently, only after such payment has been made by the taxpayer may he file a protest in writing (within thirty [30] days from said payment of tax) to the provincial, city, or municipal treasurer, who shall decide the protest within sixty (60) days from its receipt. In no case is the local treasurer obliged to entertain the protest unless the tax due has been paid.

Gaston vs. Republic Planters Bank Civil Law; Trust; Doctrine of resulting trust is founded on the presumed intention of the parties

Section 7 of P.D. No. 388 does provide that the stabilization fees collected "shall be administered in trust by the Commission." However, while the element of an intent to create a trust is present, a resulting trust in favor of the sugar producers, millers and planters cannot be said to have ensued because the presumptive intention of the parties is not reasonably ascertainable from the language of the statute itself." The doctrine of resulting trusts is founded on the presumed intention of the parties; and as a general rule, it arises where, and only where such may be reasonably presumed to be the intention of the parties, as determined from the facts and circumstances existing at the time of the transaction out of which it is sought to be established (89 C.J.S. 947)."

Osmeña vs. Orbos FACTS

Senator John Osmeña assails the constitutionality of paragraph 1c of PD 1956, as amended by EO 137, empowering the Energy Regulatory Board (ERB) to approve the increase of fuel prices or impose additional amounts on petroleum products which proceeds shall accrue to the Oil Price Stabilization Fund (OPSF) established for the reimbursement to ailing oil companies in the event of sudden price increases. The petitioner avers that the collection on oil products establishments is an undue and invalid delegation of legislative power to tax. Further, the petitioner points out that since a 'special fund' consists of monies collected through the taxing power of a State, such amounts belong to the State, although the use thereof is limited to the special purpose/objective for which it was created. It thus appears that the challenge posed by the petitioner is premised primarily on the view that the powers granted to the ERB under P.D. 1956, as amended, partake of the nature of the taxation power of the State.

Chavez vs. Ongpin Appeal; Decision of Local Board of Assessment Appeals, appeallable to the Central Board of Assessment Appeals within thirty days from receipt.

Simply stated, within sixty days from the date of receipt of the written notice of assessment, any owner who doubts the assessment of his property, may appeal to the Local Board of Assessment Appeals. In case the owner or administrator of the property or the assessor is not satisfied with the decision of the Local Board of Assessment Appeals, he may, within thirty days from the receipt of the decision, appeal to the Central Board ofAssessment Appeals. The decision of the Central Board of Assessment Appeals shall become final and executory after the lapse of fifteen days from the date of receipt of the decision.

Province of Misamis Oriental vs. Cagayan Electric Power andLight Company, Inc. Franchise; As a charter is in the nature of a private contract, the imposition of another franchise tax on the corporation by the local authority would constitute an impairment of the contract between the government and the corporation.

So was the exemption upheld in favor of the Carcar Electric and Ice Plant Company when it was required to pay the corporate franchise tax under Section 259 of the Internal Revenue Code, as amended by R.A. No. 39 (Carcar Electric & Ice Plant vs. Collector of Internal Revenue, 53 O.G. [No. 4] 1068). This Court pointed out that such exemption is part of the inducement for the acceptance of the franchise and the rendition of public service by the grantee. As a charter is in the nature of a private contract, the imposition of another franchise tax on the corporation by the local authority would constitute an impairment of the contract between the government and the corporation.

National Telecommunications Commission vs. Court of Appeals FACTSS

Sometime in 1988, the National Telecommunications Commission (NTC) served on the Philippine Long Distance Telephone Company (PLDT) the assessment notices and demands for payment. The assessment for supervision and regulation fee under Section 40(e) made by NTC for 1988, was computed at P0.50 per 100 of PLDTs outstanding capital stock. In its two letter-protests dated February 23, 1988 and July 14, 1988, and position papers dated November 8, 1990 and March 12, 1991, respectively, the PLDT challenged the aforesaid assessments, theorizing inter alia that: (a) The assessments were being made to raise revenues and not as mere reimbursements for actual regulatory expenses in violation of the doctrine in PLDT vs. PSC, 66 SCRA 341 [1975]; (b) The assessment under Section 40 (e) should only have been on the basis of the par values of private respondents outstanding capital stock; (c) Petitioner has no authority to compel private respondents payment of the assessed fees under Section 40 (f) for the increase of its authorized capital stock since petitioner did not render any supervisory or regulatory activity and incurred no expenses in relation thereto.

National Telecommunications Commission vs. Court of Appeals FACTS

Sometime in 1988, the National Telecommunications Commission (NTC) served on the Philippine Long Distance Telephone Company (PLDT) the assessment notices and demands for payment. The assessment for supervision and regulation fee under Section 40(e) made by NTC for 1988, was computed at P0.50 per 100 of PLDTs outstanding capital stock. In its two letter-protests dated February 23, 1988 and July 14, 1988, and position papers dated November 8, 1990 and March 12, 1991, respectively, the PLDT challenged the aforesaid assessments, theorizing inter alia that: (a) The assessments were being made to raise revenues and not as mere reimbursements for actual regulatory expenses in violation of the doctrine in PLDT vs. PSC, 66 SCRA 341 [1975]; (b) The assessment under Section 40 (e) should only have been on the basis of the par values of private respondents outstanding capital stock; (c) Petitioner has no authority to compel private respondents payment of the assessed fees under Section 40 (f) for the increase of its authorized capital stock since petitioner did not render any supervisory or regulatory activity and incurred no expenses in relation thereto.

CIR vs. MERALCO Though the Tax Code recognizes the right of taxpayers to request the return of such excess / erroneous payments from the government, they must do so within a prescribed period.

Tax refunds are based on the general premise that taxes have either been erroneously or excessively paid. Though the Tax Code recognizes the right of taxpayers to request the return of such excess/erroneous payments from the government, they must do so within a prescribed period. Further, "a taxpayer must prove not only his entitlement to a refund, but also his compliance with the procedural due process as nonobservance of the prescriptive periods within which to file the administrative and the judicial claims would result in the denial of his claim."

Land Transportation Office vs. City of Butuan The newly delegated powers pertain to the franchising and regulatory powers theretofore exercised by the Land Transportation Franchising and Regulatory Board and not to the functions of the Land Transportation Office relative to the registration of motor vehicles and issuance of licenses for the driving thereof.

Such as can be gleaned from the explicit language of the statute, as well as the corresponding guidelines issued by DOTC, the newly delegated powers pertain to the franchising and regulatory powers theretofore exercised by the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and issuance of licenses for the driving thereof. Clearly unaffected by the Local Government Code are the powers of LTO under R.A. No. 4136 requiring the registration of all kinds of motor vehicles "used or operated on or upon any public highway" in the country.

Paseo Realty & Development Corporation vs. Court of Appeals Strictissimi Juris; Elsewise stated, taxation is the rule, exemption therefrom is the exception . —

Taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. And since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A claim of refund or exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception.

Surigao Consolidated Mining Co., Inc. vs. Collector of Internal Revenue FACTS

Surigao Consolidated Mining Company had its principal office in the City of Iloilo, and was operating its mining concessions in Mainit, Surigao. Pursuant to section 246 of the Internal Revenue Code, it filed a bond and had been regularly filing its returns for minerals removed from its mines during each calendar quarter and paying ad valorem tax thereon within 20 days after the close of every quarter. In each case, computation of the ad valorem tax was based on the market value of the minerals set forth in the returns. Due to the interruption of the communications due to the outbreak of the war, the principal office of Surigao Consolidated lost contact with its mines and never received the production reports for the fourth quarter of 1941. In order to avoid incurring any tax penalty, it deposited a check amount of P27,000.00 payable to and indorsed in favor of the City Treasurer (of Iloilo) in payment of the ad valorem taxes for the fourth quarter of 1941. After the termination of the war, Commonwealth Act No. 722 was enacted, which provided for the filing of returns for minerals removed during the last quarter of 1941 up to December 31, 1945 and the payment of ad valorem tax on said minerals to February 28, 1946. Surigao Consolidated in its final submission filed its tax returns with a request for refund amounting to P17,051.14 for the paid taxes during the war, invoking Republic Act No. 81 which provided for tax condonation of unpaid taxes during the course of the war. It argues that since the law condones the taxes due from taxpayers who failed to pay their taxes, it would be unfair to deny this benefit to those taxpayers who had been prompt in paying theirs. CIR denied the request for the refundon the ground that the money already paid as ad valorem tax was legally due to the Government. The Court of Tax Appeals, likewise rendered its decision denying the claim for refund.

Terminal Facilities and Services Corporation vs. Philippine Ports Authority FACTS

TEFASCO is a domestic corporation organized and existing under the laws of the Philippines with principal place of business at Barrio Ilang, Davao City. It is engaged in the business of providing port and terminal facilities as well as arrastre, stevedoring and other port-related services at its own private port at Barrio Ilang. Sometime in 1975, TEFASCO submitted to PPA a proposal for the construction of a specialized terminal complex with port facilities and a provision for port services in Davao City. To ease the acute congestion in the government ports at Sasa and Sta. Ana, Davao City, PPA welcomed the proposal and organized an inter-agency committee to study the plan. On April 21, 1976 the PPA Board of Directors passed Resolution No. 7 accepting and approving TEFASCO's project proposal. TEFASCO contracted dollar loans from private commercial institutions abroad to construct its specialized terminal complex with port facilities and thereafter poured millions worth of investments in the process of building the port. Long after TEFASCO broke ground with massive infrastructure work, the PPA Board curiously passed on October 1, 1976 Resolution No. 50 under which TEFASCO, without asking for one, was compelled to submit an application for construction permit. Without the consent of TEFASCO, the application imposed additional significant conditions. Two (2) years after the completion of the port facilities and the commencement of TEFASCO's port operations, or on June 10, 1978, PPA again issued to TEFASCO another permit, designated as Special Permit No. CO/CO-1-067802, under which more onerous conditions were foisted on TEFASCO's port operations. In the purported permit appeared for the first time the contentious provisions for ten percent (10%) government share out of arrastre and stevedoring gross income and one hundred percent (100%) wharfage and berthing charges. Subsequent exactions of PPA included: (a) Admin. Order 09-81, s. 1981, notifying all arrastre and stevedoring operators, whether they do business in government owned port facilities, that special services income be subjected to "government share" equivalent to ten percent (10%) thereof; and, (b) Memo. Circ. 36-82, s. 1982, mandating an assessment of one hundred percent (100%) wharfage dues on commercial and third-party cargoes regardless of extent of use of private port facilities and one hundred percent (100%) berthing charges on every foreign vessel docking at private wharves loading or discharging commercial or third-party cargoes. TEFASCO repeatedly asked PPA for extensions to pay these additional obligations and for reduction in the rates. But the PPA's response was final and non-negotiable statements of arrears and current accounts and threats of business closure in case of failure to pay them.

Taganito Mining v. CIR FACTS

Taganito Mining Corporation (TMC) is a domestic corporation expressly granted a permit by the government via an operating contract to explore, develop and utilize mineral deposits found in a specified portion of a mineral reservation area located in Surigao del Norte and owned by the government. In exchange, TMC is obliged to pay royalty to the government over and above other taxes. During July to December 1989, TMC removed, shipped and sold substantial quantities of Beneficiated Nickel Silicate ore and Chromite ore and paid excise taxes in the amount of Php6,277,993.65 in compliance with Sec.151(3) of the Tax Code. The 5% excise tax was based on the amount and weight shown in the provisional invoice issued by TMC. The metallic minerals are then shipped abroad to Japanese buyers where the minerals were analyzed allegedly by independent surveyors upon unloading at its port of destination. Analysis abroad would oftentimes reveal a different value for the metallic minerals from that indicated in the temporary/provisional invoice submitted by TMC. Variance is in the "market values" in the provisional invoice and that indicated in the final calculation sheet presented by the buyers. Variances occur in the weight of the shipment or the price of the metallic minerals per kilogram and sometimes in their metallic content resulting in discrepancies in the total selling price. It is always the price indicated in the final invoice that is determinative of the amount that the buyers will eventually pay TMC. TMC contended that is entitled to a refund because the actual market value that should be made the basis of the taxes is the amount specified in the independent surveyor abroad.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. Taxation; Tax Avoidance Distinguished from Tax Evasion. —

Tax avoidance and tax evasion are the two most common ways used by taxpayers in escaping from taxation. Tax avoidance is the tax saving device within the means sanctioned by law. This method should be used by the taxpayer in good faith and at arms length. Tax evasion, on the other hand, is a scheme used outside of those lawful means and when availed of, it usually subjects the taxpayer to further or additional civil or criminal liabilities.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. Factors to Determine Tax Evasion.

Tax evasion connotes the integration of three factors: (1) the end to be achieved, i.e., the payment of less than that known by the taxpayer to be legally due, or the non-payment of tax when it is shown that a tax is due; (2) an accompanying state of mind which is described as being "evil," in "bad faith," "willfull,"or "deliberate and not accidental"; and (3) a course of action or failure of action which is unlawful.

Commissioner of lnternal Revenue vs. Algue, Inc. Taxation; Nature of taxes; Purpose of taxation; Collection of taxes should be made in accordance with law. —

Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation Statutory Construction; That RA 8240 (incorporated as Section 145 of the 1997 Tax Code) was enacted to raise government revenues is a given fact, but this is not the sole and only objective of the law— congressional deliberations show that the shift from ad valorem to specific taxes introduced by the law was also intended to curb the corruption that became endemic to the imposition of ad valorem taxes

That RA 8240 (incorporated as Section 145 of the 1997 Tax Code) was enacted to raise government revenues is a given fact, but this is not the sole and only objective of the law. Congressional deliberations show that the shift from ad valorem to specific taxes introduced by the law was also intended to curb the corruption that became endemic to the imposition of ad valorem taxes. Since ad valorem taxes were based on the value of the goods, the prices of the goods were often manipulated to yield lesser taxes. The imposition of specific taxes, which are based on the volume of goods produced, would prevent price manipulation and also cure the unequal tax treatment created by the skewed valuation of similar goods.

Delpher Trades Corp. vs. Intermediate Appellate Court Contracts; Deed of Exchange between the Pachecos and Delpher Trades Corporation cannot be considered a contract of sale because there was not transfer of actual ownership to third party.

The "Deed of Exchange" of property between the Pachecos and Delpher Trades Corporation cannot be considered a contract of sale. There was no transfer of actual ownership interests by the Pachecos to a third party. The Pacheco family merely changed their ownership from one form to another. The ownership remained in the same hands. Hence, the private respondent has no basis for its claim of a right of first refusal under the lease contract.

National Telecommunications Commission vs. Court of Appeals " Trust Fund" Doctrine, Explained. —

The "Trust Fund" doctrine considers this subscribed capital as a trust fund for the payment of the debts of the corporation, to which the creditors may look for satisfaction. Until the liquidation of the corporation, no part of the subscribed capital may be returned or released to the stockholder (except in the redemption of redeemable shares) without violating this principle. Thus, dividends must never impair the subscribed capital; subscription commitments cannot be condoned or remitted; nor can the corporation buy its own shares using the subscribed capital as the consideration therefor.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. Taxation; National Internal Revenue Code; The "best evidence" envisaged in Section 16 of the 1977 NIRC, as amended, includes the corporate and accounting records of the taxpayer who is the subject of the assessment process, the accounting records of other taxpayers engaged in the same line of business, including their gross profit and net profit sales. —

The "best evidence" envisaged in Section 16 of the 1977 NIRC, as amended, includes the corporate and accounting records of the taxpayer who is the subject of the assessment process, the accounting records of other taxpayers engaged in the same line of business, including their gross profit and net profit sales. Such evidence also includes data, record, paper, document or any evidence gathered by internal revenue officers from other taxpayers who had personal transactions or from whom the subject taxpayer received any income; and record, data, document and information secured from government offices or agencies, such as the SEC, the Central Bank of the Philippines, the Bureau of Customs, and the Tariff and Customs Commission.

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation The omissions of certain tax measures in the 1997 Tax Code's provisions on excise taxes are telling indications of the intent of Congress not to adopt the omitted tax measures—they are not simply unintended lapses in the law's wording

The 1997 Tax Code's provisions on excise taxes have omitted the adoption of certain tax measures. To our mind, these omissions are telling indications of the intent of Congress not to adopt the omitted tax measures; they are not simply unintended lapses in the law's wording that, as the CIR claims, are nevertheless covered by the spirit of the law. Had the intention of Congress been solely to increase revenue collection, a provision similar to the third paragraph of Section 145(c) would have been incorporated in Sections 141 and 142 of the 1997 TaxCode. This, however, is not the case.

Western Minolco Corporation vs. Commissioner of Internal Revenue The 35% transactions tax is a tax on the interest income of the lender and, therefore, a mining company who borrowed money, and withheld and paid said tax on interest paid to the lender cannot claim exemption therefrom even if it has a tax exemption certificate — as a mining company.

The 35% transaction tax is an income tax on interest earnings of the lenders or placers. The latter are actually the taxpayers. Therefore, the tax cannot be a tax imposed upon the petitioner. In other words, the petitioner who borrowed funds from several financial institutions by issuing commercial papers merely withheld the 35% transaction tax before paying to the financial institutions the interests earned by them and later remitted the same to the respondent Commissioner of Internal Revenue. The tax could have been collected by a different procedure but the statute chose this method. Whatever collecting procedure is adopted does not change the nature of the tax.

Alhambra Cigar v. Collector FACTS

The Alhambra Cigar and Cigarette Manufacturing Co. filed its income tax returns for the years 1949, 1950, 1951, 1952 and 1953, and paid the income taxes computed in accordance with said returns. Upon subsequent verification thereof, on November 27, 1954, the Collector of Internal Revenue assessed and demanded from the company, by way of deficiency taxes for said years, the sums of P26,369.04, P42,653.00, P61,308.00, P58,404.00 and P51,826.00, respectively, or the aggregate sum of P240.560.04, plus 5% surcharge and 1% monthly interest from January 15, 1955. The Company appealed through the CTA and rendered a decision reducing the deficiency income taxes to P14,458.05, P20,176.00, P27,010.00, P21,759.00 and P20,201.00, respectively, or a total of P103,604.05.

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation FACTS

The BIR examine the books of accounts and other accounting records of Pascor Realty and Development Corporation. (PRDC) for the years ending 1986, 1987 and 1988 by virtue of a Letter of Authority. The said examination resulted in a recommendation for the issuance of an assessment in the amounts of P7,498,434.65 and P3,015,236.35 for the years 1986 and 1987. On March 1, 1995, the CIR filed a criminal complaint before the Department of Justice against the PRDC, its President Rogelio A. Dio, and its Treasurer Virginia S. Dio, alleging evasion of taxes in the total amount of P10,513,671 .00. Private respondents PRDC, et. al. filed an Urgent Request for Reconsideration/Reinvestigation disputing the tax assessment and tax liability. Subsequently, private respondents received a subpoena from the DOJ in connection with the criminal complaint filed by the Commissioner of Internal Revenue (BIR) against them. The CIR denied the urgent request for reconsideration/reinvestigation of the private respondents on the ground that no formal assessment of the has as yet been issued by the Commissioner. Private respondents then elevated the Decision of the CIR to the Court of Tax Appeals on a petition for review, to which the CIR sough to dismiss on the ground that the CTA has no jurisdiction over the subject matter of the petition, as there was no formal assessment issued against the petitioners. The CTA denied the said motion to dismiss and ordered the CIR to file an answer but did not file an answer nor did she move to reconsider the resolution. Instead, the CIR filed before the Court of Appeals a petition alleging that respondent Court of Tax Appeals acted with grave abuse of discretion and without jurisdiction in considering the affidavit/report of the revenue officer and the indorsement of said report to the secretary of justice as assessment which may be appealed to the Court of Tax Appeals. The CA sustained the CTA and dismissed the petition.

Nursery Care Corporation vs. Acevedo FACTS

The City of Manila assessed and collected taxes from the individual petitioners pursuant to Section 15 (Tax on Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the Revenue Code of Manila. At the same time, the City of Manila imposed additional taxes upon the petitioners pursuant to Section 21 of the Revenue Code of Manila, as amended, as a condition for the renewal of their respective business licenses for the year 1999. Section 21 of the Revenue Code of Manila stated: Section 21. Tax on Business Subject to the Excise, Value-Added or Percentage Taxes under the NIRC - On any of the following businesses and articles of commerce subject to the excise, value-added or percentage taxes under the National Internal Revenue Code, hereinafter referred to as NIRC, as amended, a tax of FIFTY PERCENT (50%) OF ONE PERCENT (1%) per annum on the gross sales or receipts of the preceding calendar year is hereby imposed: A) On person who sells goods and services in the course of trade or businesses; x x x PROVIDED, that all registered businesses in the City of Manila already paying the aforementioned tax shall be exempted from payment thereof. To comply with the City of Manila's assessmentof taxes under Section 21, supra, the petitioners paid under protest the following amounts corresponding to the first quarter of 1999. By letter, the petitioners formally requested the Office of the City Treasurer for the tax credit or refund of the local business taxes paid under protest. However, then City Treasurer Anthony Acevedo (Acevedo) denied the request as well as the reconsideration. Thereafter, petitioners filed their respective petitions for certiorari in the Regional Trial Court (RTC) in Manila which dismissed the petitions. Upon appeal, the Court of Appeals dismissed the instant petition for lack of jurisdiction. The petitioners moved for reconsideration, but the CA denied their motion.

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation Uniformity in taxation requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities

The Constitution requires that taxation should be uniform and equitable. Uniformity in taxation requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities. This requirement, however, is unwittingly violated when the proviso in Section 1 of RR 17-99 is applied in certain cases.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation Pleadings and Practice; Prescription; Although prescription was not raised as an issue, it is well-settled that if the pleadings or the evidence on record show that the claim is barred by prescription, the Court may motu proprio order its dismissal on said ground

The Court has observed that based on the records, Nippon's administrative claim for the first taxable quarter of 2002 which closed on March 31, 2002 was already time-barred for being filed on April 22, 2004 , or beyond the two (2)-year prescriptive period pursuant to Section 112(A) of the National Internal Revenue Code of 1997. Although prescription was not raised as an issue, it is well-settled that if the pleadings or the evidence on record show that the claim is barred by prescription, the Court may motu proprio order its dismissal on said ground.

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue Courts; Court of Tax Appeals; In the absence of any clear and convincing proof to the contrary, the Supreme Court (SC) must presume that the Court of Tax Appeals (CTA) rendered a decision which is valid in every respect.

The Court recognizes that the CTA, which by the very nature of its function is dedicated exclusively to the consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Such findings can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the tax court. In the absence of any clear and convincing proof to the contrary, the Court must presume that the CTA rendered a decision which is valid in every respect.

Osmeña vs. Orbos Statutory construction; Reimbursement of financing charges is not authorized by P.D. 1956; but payment of inventory losses and cost under recoveries from sales of oil to NPC are permitted to be made by Energy Regulatory Board.

The Court thus holds, that the reimbursement of financing charges is not authorized by paragraph 2 of § 8of P.D. 1956, for the reason that they were not incurred as a result of the reduction of domestic prices of petroleum products. Under the same provision, however, the payment of inventory losses is upheld as valid, being clearly a result of domestic price reduction, when oil companies incur a cost under recovery for yet unsold stocks of oil in inventory acquired at a higher price. Reimbursement for cost under recovery from the sales of oil to the National Power Corporation is equally permissible, not as coming within the provisions of P.D. 1956, but in virtue of other laws and regulations as held in Caltex and which have been pointed to by the Solicitor General. At any rate, doubts about the propriety of such reimbursements have been dispelled by the enactment of R.A. 6952, establishing the Petroleum Price Standby Fund, § 2 of which specifically authorizes the reimbursement of"cost under recovery incurred as a result of fuel oil sales to the National Power Corporation."

Land Transportation Office vs. City of Butuan Local Government; Land Transportation and Traffic Code; Registration and licensing functions are vested in the Land Transportation Office while franchising and regulatory responsibilities had been vested in the Land Transportation Franchising and Regulatory Board.

The Department of Transportation and Communications ("DOTC"), through the LTO and the LTFRB, has since been tasked with implementing laws pertaining to land transportation. The LTO is a line agency under the DOTC whose powers and functions, pursuant to Article III, Section 4 (d)[1], of R.A. No. 4136, otherwise known as Land Transportation and Traffic Code, as amended, deal primarily with the registration of all motor vehicles and the licensing of drivers thereof. The LTFRB, upon the other hand, is the governing body tasked by E.O. No. 202, dated 19 June 1987, to regulate the operation of public utility or "for hire" vehicles and to grant franchises or certificates of public convenience ("CPC"). Finely put, registration and licensing functions are vested in the LTO while franchising and regulatory responsibilities had been vested in the LTFRB.

Commissioner of Internal Revenue vs. Pineda Ways available to government to collect the tax. —

The Government has two ways of collecting the taxes in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received, Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all property and rights to property belong to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due the estate.

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue RULING

The Honorable CTA First Division deprived PMFC of due process of law and the CTA assumed an executive function when it substituted a legal basis other than that stated in the assessment and pleading of the CIR, contrary to law. Since the legal basis cited by the CTA supporting the validity of the assessment was never raised by the CIR, was PMFC deprived of its constitutional right to be apprised of the legal basis of the assessment. The Court affirms but modifies the herein assailed decision and resolution. Due process was not violated. CIR and PMFC both agreed that among the issues for resolution was "whether or not the P5,895,694.66 purchases of raw materials are unsupported. CIR had stated the material facts and the law upon which they were based. The CTA is not bound to rule solely on the basis of the laws cited by the CIR. Were it otherwise, the tax court's appellate power of review shall be rendered useless. PMFC was at the outset aware that the lack of inadequacy of supporting documents to justify the deductions claimed from the gross income was among the issues raised for resolution before the CTA. The Court recognizes that the CTA, which by the very nature of its function is dedicated exclusively to the consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. MODIFICATION thereof, the legal interest of six percent (6%) per annum reckoned from the finality of this Resolution until full satisfaction, is here imposed upon the amount of P2,804,920.36 to be paid by Pilmico-Mauri Foods Corporation to the Commissioner of Internal Revenue. NOTE: when a taxpayer claims a deduction, he must point to some specific provision of the statute in which that deduction is authorized and must be able to prove that he is entitled to the deduction which the law allows. Statutory test of deductibility where it is axiomatic that to be deductible as a business expense, three conditions are imposed, namely: (1) the expense must be ordinary and necessary; (2) it must be paid or incurred within the taxable year, and (3) it must be paid or incurred in carrying on a trade or business. In addition, not only must the taxpayer meet the business test, he must substantially prove by evidence or records the deductions claimed under the law, otherwise, the same will be disallowed. The mere allegation of the taxpayer that an item of expense is ordinary and necessary does not justify its deduction.

Caltex Philippines, Inc. vs. Commission on Audit FACTS

The Oil Price Stabilization Fund (OPSF) was created under Sec. 8, PD 1956, as amended by EO 137 for the purpose of minimizing frequent price changes brought about by exchange rate adjustments. It will be used to reimburse the oil companies for cost increase and possible cost underrecovery incurred due to reduction of domestic prices. COA sent a letter to Caltex directing the latter to remit to the OPSF its collection. Caltex requested COA for an early release of its reimbursement certificates which the latter denied. COA disallowed recover of financing charges, inventory losses and sales to marcopper and atlas but allowed the recovery of product sale or those arising from export sales. Petitioner's Contention: Department of Finance issued Circular No. 4-88 allowing reimbursement. Denial of claim for reimbursement would be inequitable. NCC (compensation) and Sec. 21, Book V, Title I-B of the Revised Administrative Code (Retention of Money for Satisfaction of Indebtedness to Government) allows offsetting. Amounts due do not arise as a result of taxation since PD 1956 did not create a source of taxation, it instead established a special fund. This lack of public purpose behind OPSF exactions distinguishes it from tax. Respondent's Contention: Based on Francia v. IAC, there's no offsetting of taxes against the the claims that a taxpayer may have against the government, as taxes do not arise from contracts or depend upon the will of the taxpayer, but are imposed by law.

Basco vs. Phil. Amusements and Gaming Corporation FACTS

The Philippine Amusements & Gambling Corporation (PAGCOR) was created by virtue of P.D. 1067-A & was granted a franchise under P.D. 1067-B "to establish, operate & maintain gambling casinos on land or water within the territorial jurisdiction of the Philippines."The operation was considered a success for it proved to be a potential source of revenue to fund infrastructure & socio-economic projects. It is reported that PAGCOR is the 3rd largest source of government revenue, next to the BIR & the Bureau of Customs. It sponsored socio-cultural & charitable projects on its own or in cooperation with various government agencies & other private associations & organizations. Atty. Humberto Basco & other Petitioners were practicing lawyers & Basco being the Chairman of the Committee on Laws of the City Council of Manila, filed the instant petition seeking to annul the PAGCOR Charter, P.D. 1869, because it allegedly contrary to morals, public policy & public order, & because: (A) It waived the Manila City government's right to impose taxes & license fees, which is recognized by law; & (B) That the law has intruded into the local government's right to impose local taxes and license fees which is in contravention of the constitutionally enshrined principle of local autonomy.

Commissioner of lnternal Revenue vs. Algue, Inc. FACTSS

The Philippine Sugar Estate Development Company had earlier appointed Algue Inc., as its agent, authorizing it to sell its land, factories and oil manufacturing process. As such,the corporation worked for the formation of the Vegetable Oil Investment Corporation, until they were able to purchased the PSEDC properties. For this sale, Algue Inc., received as agent a commission of P126, 000.00, and it was from this commission that the P75, 000.00 promotional fees were paid to Alberto Guevara, Jr., Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and Pablo Sanchez. Commissioner of Internal Revenue contends that the claimed deduction is not allowed because it was not an ordinary reasonable or necessary business expense. The Court of Tax Appeals had seen it differently. Agreeing with Algue Inc., it held that the said amount had been legitimately paid by the private respondent for actual services rendered. The payment was in the form of promotional fees.

Commissioner of lnternal Revenue vs. Algue, Inc. FACTS

The Philippine Sugar Estate Development Company had earlier appointed Algue Inc., as its agent, authorizing it to sell its land, factories and oil manufacturing process. As such,the corporation worked for the formation of the Vegetable Oil Investment Corporation, until they were able to purchased the PSEDC properties. For this sale, Algue Inc., received as agent a commission of P126, 000.00, and it was from this commission that the P75, 000.00 promotional fees were paid to Alberto Guevara, Jr., Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and Pablo Sanchez. Commissioner of Internal Revenue contends that the claimed deduction is not allowed because it was not an ordinary reasonable or necessary business expense. The Court of Tax Appeals had seen it differently. Agreeing with Algue Inc., it held that the said amount had been legitimately paid by the private respondent for actual services rendered. The payment was in the form of promotional fees.

Nursery Care Corporation vs. Acevedo Remedial Law; Civil Procedure; Appeals; Modes of Appeal from the Decisions and Final Orders of the Regional Trial Court (RTC).

The Rules of Court provides three modes of appeal from the decisions and final orders of the RTC, namely: (1) ordinary appeal or appeal by writ of error under Rule 41, where the decisions and final orders were rendered in civil or criminal actions by the RTC in the exercise of original jurisdiction; (2) petition for review under Rule 42, where the decisions and final orders were rendered by the RTC in the exercise of appellate jurisdiction; and (3) petition for review on certiorari to the Supreme Court under Rule 45. The first mode of appeal is taken to the CA on questions of fact, or mixed questions of fact and law. The second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of fact and law. The third mode of appeal is elevated to the Supreme Court only on questions of law.

Gomez vs. Palomar Anti-TB Stamp Law; Money raised from the sales of the anti-TB stamps not for the benefit of the Philippine Tuberculosis Society

The Society is not really the beneficiary but only the agency through which the State acts in carrying out what is essentially a public function. The money is treated as a special fund and as such need not be appropriated by law.

Commissioner of lnternal Revenue vs. Algue, Inc. Burden on taxpayer to prove validity of the claimed deduction, successfully discharged; Payment of the fees was necessary and reasonable. —

The Solicitor General is correct when he says that the burden is on the taxpayer to prove the validity of the claimed deduction. In the present case, however, we find that the onus has been discharged satisfactorily. The private respondent has proved that the payment of the fees was necessary and reasonable in the light of the efforts exerted by the payees in inducing investors and prominent businessmen to venture in an experimental enterprise and involve themselves in a new business requiring millions of pesos. This was no mean feat and should be, as it was, sufficiently recompensed.

Asia International Auctioneers, Inc. vs. Commissioner of Internal Revenue Tax Amnesty Program (R.A. No. 9480); The Tax Amnesty Program under RA 9480 may be availed of by any person except those who are disqualifi ed under Section 8 thereof

The Tax Amnesty Program underRA 9480 may be availed of by any person except those who are disqualified under Section 8 thereof, to wit: Section 8. Exceptions.―The tax amnesty provided in Section 5 hereof shall not extend to the following persons or cases existing as of the effectivity of this Act: (a) Withholding agents with respect to their withholding tax liabilities ; (b)Those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government; (c) Those with pending cases involving unexplained or unlawfully acquired wealth or under the Anti-Graft and Corrupt Practices Act; (d) Those with pending cases fi led in court involving violation of the Anti-Money Laundering Law; (e) Those with pending criminal cases for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code; and (f) Tax cases subject of final and executory judgment by the courts.

Commissioner of lnternal Revenue vs. Algue, Inc. Appeal; Appeal from a decision of the Commissioner of Internal Revenue with the Court of Tax Appeals is 30 days from receipt thereof. —

The above chronology shows that the petition was filed seasonably. According to Rep. Act No. 1125, the appeal may be made within thirty days after receipt of the decision or ruling challenged.

Roxas vs. Court of Tax Appeals Tax; Real estate dealer's tax; Sale of property by landowner to tenants under government policy to allocate lands to the landless not subject to real estate dealer's tax.

The act of subdividing a farm land and selling them to the farmers-occupants on installment in response to the Government's policy to allocate lands to the landless is not subject to real estate dealer's tax. The business activity of the landowner in selling the land involves an isolated transaction with its peculiar circumstances and not to be considered as an act of a dealer even though there were hundreds of vendees.

Commissioner of Internal Revenue vs. Botelho Shipping Corp. Rationale of tax exemption.

The avowed purpose of a tax exemption is some public benefit or interest, which the lawmaking body considers sufficient to offset the monetary loss entailed in the grant of the exemption.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. The best evidence obtainable under Section 16 of the 1977 NIRC, as amended, does not include mere photocopies of records/documents.

The best evidence obtainable under Section 16 of the 1977 NIRC, as amended, does not include mere photocopies of records/documents. The petitioner, in making a preliminary and final tax deficiency assessment against a taxpayer, cannot anchor the said assessment on mere machine copies of records/documents. Mere photocopies of the Consumption Entries have no probative weight if offered as proof of the contents thereof. The reason for this is that such copies are mere scraps of paper and are of no probative value as basis for any deficiency income or business taxes against a taxpayer.

Surigao Consolidated Mining Co., Inc. vs. Collector of Internal Revenue Ad valorem mining taxes; Actual market value of minerals shipped; Best evidence thereof are the smelter returns; Presumption on non-production. —

The best evidence of the actual market value of the minerals shipped abroad are the smelter returns to support the statement of adjustment of ad valorem mining taxes paid under Sec. 246 of the Tax Code. Their unexplained non-production in evidence will give rise to the presumption that if produced they will be adverse to the petitioner.

Philippine Airlines, Inc. vs. Edu Tax Exemptions; Sec. 24 of RA 5431 dated June 27, 1968 repealed all earlier tax exemptions of corporate taxpayers found in legislative franchises. —

The claim for refund is made for payments given in 1971. It is not clear from the records as to what payments were made in succeeding years. We have ruled that Section 24 of Rep. Act No. 5431, dated June 27, 1968, repealed all earlier tax exemptions of corporate taxpayers found in legislative franchises similar to that invoked by PAL in this case. In Radio Communications of the Philippines, Inc. v. Court of Tax Appeals, et al. (G.R. No. 60547, July 11, 1985), this Court ruled: x x x "An examination of Section 24 of the Tax Code as amended shows clearly that the law intended all corporate taxpayers to pay income tax as provided by the statute. There can be no doubt as to the power of Congress to repeal the earlier exemption it granted. Article XIV, Section 8 of the 1935 Constitution and Article XIV, Section 5of the Constitution as amended in 1973 expressly provide that no franchise shall be granted to any individual, fi rm, or corporation except under the condition that it shall be subject to amendment, alteration, or repeal by the legislature when the public interest so requires. There is no question as to the public interest involved. The country needs increased revenues. The repealing clause is clear and unambiguous. There is a listing of entities entitled to tax exemption. The petitioner is not covered by the provision. Considering the foregoing, the Court Resolved to DENY the petition for lack of merit. The decision of the respondent court is affirmed."

Sison, Jr. vs. Ancheta A bare allegation that Batas 135, which sets different income tax schedules for fixed income earners and business or professional income earners, is arbitrary does not suffice to invalidate said tax statute. —

The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here, does not suffice. There must be a factual foundation of such unconstitutional taint. Considering that petitioner here would condemn such a provision as void on its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that where the due process and equal protection clauses are invoked, considering that they are not fixed rules but rather broad standards, there is a need for proof of such persuasive character as would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail.

Nursery Care Corporation vs. Acevedo "Questions of Law" and "Questions of Fact," Distinguished. —

The distinction between a question of law and a question of fact is well-established. On the one hand, a question of law arises when there is doubt as to what the law is on a certain state of facts; on the other, there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. According to Leoncio v. De Vera , 546 SCRA 180 (2008) : x x x For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.

Sison, Jr. vs. Ancheta The State is free to select the subjects of taxation and inequalities consequent to its exercise infringe no constitutional limitation

The equal protection clause is, of course, inspired by the noble concept of approximating the ideal of the laws's benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the idea of law. There is, however, wisdom, as well as realism, in these words of Justice Frankfurter: "The equality at which the 'equal protection' clause aims is not a disembodied equality. TheFourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, addressed to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same." Hence the constant reiteration of the view that classification if rational in character is allowable. As a matter of fact, in a leading case of Lutz V. Araneta, this Court, through Justice J.B.L. Reyes, went so far as to hold "at any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.' "

Gomez vs. Palomar Passed for a public purpose.

The eradication of a dreaded disease is a public purpose, but if by public purpose the petitioner means benefit to a taxpayer as a return for what he pays, then it is sufficient answer to say that the only benefit to which the taxpayer is constitutionally entitled is that derived from his enjoyment of the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes.

Commissioner of Internal Revenue vs. Botelho Shipping Corp. Tax exemption for end-users who purchased reparations goods before June 17, 1961; Retroactive effect of favorable provisions of section 20 of Republic Act No. 3079.

The exemption from compensating tax, provided for in Republic Act No. 3079, which took effect on June 17, 1961, may be availed of by end-users who voluntarily assume all the new obligations provided for in said law. To enjoy the exemption, the end-users, who acquired reparations goods before June 17, 1961, should apply for the renovation of their utilization contracts. Said end-users, on complying with that requirement would be treated in like manner and to the same extent as an end-user filing his application after June 17, 1961. The favorable provisions of Republic Act No. 3079 would retroactively apply to them. The purpose of the new law is to place persons who acquired reparations goods before the enactment of the amendatory law on the same footing as those who acquired reparations goods after its enactment. Where two vessels were acquired as reparations goods before June 17, 1961 and later their purchasers applied for the renovation of their utilization contracts and the Reparations Commission granted their applications, said vessels are not subject to compensating tax, although they were taxable before the passage of the amendatory act.

Gomez vs. Palomar Five centavo charge levied by Republic Act 1635 an excise tax.

The five centavo charge levied by Republic Act 1635, as amended, is in the nature of an excise tax, laid upon the exercise of a privilege, the privilege of using the mails.

Municipality of Makati vs. Court of Appeals Civil Procedure; Attachment; Execution; Administrative Law; Public Funds; Properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Public funds are not subject to levy and execution.

The funds deposited in the second PNB Account No. S/A 263-530850-7 are public funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise provided for by statute [Republic v. Palacio, supra.; The Commissioner ofPublic Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31SCRA 616]. More particularly, the properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for the purpose of financing the governmental activities and functions of the Municipality, are exempt from execution [See Viuda De Tan Toco v. The Municipal Council of Iloilo, 49Phil. 52 (1926); The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (1950); Municipality of San Miguel, Bulacan v. Fernandez, G.R.No. 61744, June 25, 1984, 130 SCRA 56]. The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte Taxation; A municipal ordinance which imposes a tax of P0.01 for every gallon of soft drinks produced in the municipality does not partake of a percentage tax.

The imposition of "a tax of one centavo (P0.01) on each gallon (128 fl ued ounces, U.S.) of volume capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on the products, but there is no set ratio between the volume of sales and the amount of the tax.

Gomez vs. Palomar Imposition of flat rate does not violate rule of uniformity and equality of taxation. —

The imposition of a flat rate rather than a graduated tax does not infringe the rule of uniformity and equality of taxation. A tax need not be measured by the weight of the mail or the extent of the service rendered. Considerations of administrative convenience and cost afford an adequate ground for classification. The same considerations may induce the legislature to impose a flat tax which in effect is a charge for the transaction, operating equally on all persons with the class regardless of the amount involved.

Commissioner of Internal Revenue vs. Bank of the Philippine Islands Clearly, the legislature intended to insert a new provision regarding the form and substance of assessments issued by the CIR. The taxpayer's failure to protest the assessments within the 30-day period provided in the former Section 270 meant that they became final and unappealable—there arose a presumption of correctness when the taxpayer failed to protest the assessments. —

The inevitable conclusion is that BPI's failure to protest the assessments within the 30-day period provided in the former Section 270 meant that they became final and unappealable. Thus, the CTA correctly dismissed BPI's appeal for lack of jurisdiction. BPI was, from then on, barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits. Not only that. There arose a presumption of correctness when BPI failed to protest the assessments: Tax assessments by tax examiners are presumed correct and made in good faith. The taxpayer has the duty to prove otherwise. In the absence of proof of any irregularities in the performance of duties, an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. All presumptions are in favor of the correctness of tax assessments.

Manufacturers Life Insurance Co. vs. Meer TAXATION; COMPANIES ENGAGED IN BUSINESS IN THE PHILIPPINES, LlABLE TO TAX; PAYMENT OF PREMIUMS IN A FOREIGN COUNTRY, DOES NOT EXEMPT

The issuance company claims that as the advances of premiums were made in Toronto, such premiums are deemed to have been paid there—not in the Philippines—and therefore those payments are not subject to local taxation. Held: The loans are made to policy-holders in the Philippines, who in turn pay therewith the premiums to the insurer through the Manila Branch, and are therefore taxable locally.

Chavez vs. Ongpin Executive Order No. 73 changed the date of implementation of the increase in real property taxes. —

The issuance of Executive Order No. 73 which changed the date of implementation of the increase in real property taxes from January 1, 1988 to January 1, 1987 and therefore repealed Executive Order No. 1019, also finds ample justification in its "whereas" clauses, as follows: "WHEREAS, the collection of real property taxes based on the 1984 real property values was deferred to take effect on January 1, 1988 instead of January 1, 1985, thus depriving the local government units of an additional source of revenue; WHEREAS, there is an urgent need for local governments to augment their financial resources to meet the rising cost of rendering effective services to the people."

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation Courts; Taxation; National Internal Revenue Code; Section 203 of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to file the return.

The issuance of an assessment is vital in determining the period of limitation regarding its proper issuance and the period within which to protest it. Section 203 of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to fi le the return. Section 222, on the other hand, specifies a period of ten years in case a fraudulent return with intent to evade was submitted or in case of failure to fi le a return. Also,Section 228 of the same law states that said assessment may be protested only within thirty days from receipt thereof. Necessarily, the taxpayer must be certain that a specific document constitutes an assessment. Otherwise, confusion would arise regarding the period within which to make an assessment or to protest the same, or whether interest and penalty may accrue thereon.

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation A criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is notified that a criminal case had been fi led against him, not that the commissioner has issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

Philippine Basketball Association vs. Court of Appeals Pleadings and Practice; Appeals; Issues not raised in the court a quo cannot be raised for the fi rst time on appeal

The last issue for resolution concerns the liability of petitioner for the payment of surcharge and interest on the deficiency amount due. Petitioner contends that it is not liable, as it acted in good faith, having relied upon the issuances of the respondent Commissioner. This issue must necessarily fail as the same has never been posed as an issue before the respondent court. Issues not raised in the court a quo cannot be raised for the first time on appeal.

National Telecommunications Commission vs. Court of Appeals Administrative Law; Public Service Act; Public Utilities; Statutory Construction; Where the law is clear and categorical, there is no room for construction, only application.

The law in point is clear and categorical. There is no room for construction. It simply calls for application. To repeat, the fee in question is based on the capital stock subscribed or paid, nothing less nothing more.

Philippine Basketball Association vs. Court of Appeals Taxation; Local Tax Code; Local Government Units; Amusement Tax; Professional Sports; The province can only impose tax on admission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement, and has no authority to tax professional basketball games.

The laws on the matter are succinct and clear and need no elaborate disquisition. Section 13 of the Local Tax Code provides: "Sec. 13. Amusement tax on admission.—The province shall impose a tax on admission to be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement x x x." The foregoing provision of law in point indicates that the province can only impose a tax on admission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. The authority to tax professional basketball games is not therein included, as the same is expressly embraced in PD 1959, which amended PD 1456.

Western Minolco Corporation vs. Commissioner of Internal Revenue Location of tax provision in the Tax Code does not determine its nature. A tax is a tax on income even if located on the Code's provisions on business taxes.

The location of the 35% tax in the Tax Code does not necessarily determine its nature. Again, we agree with the Solicitor General that the legislative body must have realized later that the subject tax was inappropriately included among the taxes on business because Section 210 of the Tax Code has been repealed by Presidential Decree No. 1739, which now imposes a tax of 20% on interests from deposits and yields from deposit substitutes such as commercial papers issued in the primary market as principal instrument and provides for them in Section 24(cc) under Chapter III, Tax on Corporations, Title II—Income Tax.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte Licenses; Municipalities are empowered to impose not only municipal license but just and uniform taxes for public purposes.

The municipal license tax of P1,000.00 per corking machine with five but not more than ten crowners x x x imposed on manufacturers, producers, importers and dealers of soft drinks and/or mineral waters x x x appears not to affect the resolution of the validity of Ordinance No. 27. Municipalities are empowered to impose, not only municipal license taxes upon persons engaged in any business or occupation but also to levy for public purposes, just and uniform taxes. The ordinance in question (Ordinance No. 27) comes within the second power of a municipality.

Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue Taxation; Sales tax; Tax exemption; Percentage tax in section 186 of Tax Code is due from the manufacturer

The percentage tax on sales of merchandise, imposed in section 186 of the Tax Code, is due from the manufacturer and not from the buyer. Thus, the manufacturer or producer of oxygen and acetylene gases sold to the National Power Corporation cannot claim exemption from the payment of sales tax simply because its buyer, the National Power Corporation, is exempt from taxation.

Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue FACTS

The petitioner is a corporation engaged in the manufacture and sale of oxygen and acetylene gases. During the period from June 2, 1953 to June 30, 1958, it made various sales of its products to the National Power Corporation, an agency of the Philippine Government, and to the Voice of America an agency of the United States Government. The sales to the NPC amounted to P145,866.70, while those to the VOA amounted to P1,683, on account of which the respondent Commission of Internal Revenue assessed against, and demanded from, the petitioner the payment of P12,910.60 as deficiency sales tax and surcharge, pursuant to the provisions of the National Internal Revenue Code. The petitioner denied liability for the payment of the tax on the ground that both the NPC and the VOA are exempt from taxation. It asked for a reconsideration of the assessment and, failing to secure one, appealed to the Court of Tax Appeals. The court ruled that the tax on the sale of articles or goods in section 186 of the Code is a tax on the manufacturer and not on the buyer with the result that the "petitioner Philippine Acetylene Company, the manufacturer or producer of oxygen and acetylene gases sold to the National Power Corporation, cannot claim exemption from the payment of sales tax simply because its buyer — the National Power Corporation — is exempt from the payment of all taxes." With respect to the sales made to the VOA, the court held that goods purchased by the American Government or its agencies from manufacturers or producers are exempt from the payment of the sales tax under the agreement between the Government of the Philippines and that of the United States, provided the purchases are supported by certificates of exemption, and since purchases amounting to only P558, out of a total of P1,683, were not covered by certificates of exemption, only the sales in the sum of P558 were subject to the payment of tax. Accordingly, the assessment was revised and the petitioner's liability was reduced from P12,910.60, as assessed by the respondent commission, to P12,812.16. The petitioner appealed to this Court. Its position is that it is not liable for the payment of tax on the sales it made to the NPC and the VOA because both entities are exempt from taxation. The NPC enjoys tax exemption by virtue of an act of Congress. It is contended that the immunity thus given to the NPC would be impaired by the imposition of a tax on sales made to it because while the tax is paid by the manufacturer or producer, the tax is ultimately shifted by the latter to the former. The petitioner invokes in support of its position a 1954 opinion of the Secretary of Justice which ruled that the NPC is exempt from the payment of all taxes "whether direct or indirect."

North Camarines Lumber Co., Inc. vs. Collector of Internal Revenue FACTS

The petitioner, North Camarines Lumber Co., Inc., is a domestic corporation engaged in the lumber business. On June 19, 1951 and July 31, 1951, it sold a total of 2,164,863 board feet of logs to the General Lumber Co., Inc., with the agreement that the latter would assume responsibility for the payment of the sales tax thereon in the amount of P7, 768.51. After being consulted on the matter, the respondent CIR, in his letters advised the petitioner that he was interposing no objection to the arrangement, provided the General Lumber Co., Inc. would file the corresponding bonds to cover the sales tax liabilities. The General Lumber Co., Inc. complied with the condition. In view, however, of its failure and that of the surety to pay the tax liabilities, the respondent Collector, in his letter dated August 30, 1955, required the petitioner to pay the total amount of P9, 598.72 as sales tax and incidental penalties in the sale of logs to the General Lumber Co., Inc. Although the date of receipt by petitioner of this letter does not appear in the records, it may be presumed to be September 9, 1955, when the petitioner addressed a letter to the respondent Collector, which was received on September 12, 1955, wherein the petitioner acknowledged receipt of the letter of demand and at the same time requested for the reconsideration of the assessment. This was denied by the respondent Collector. The respondent Collector having denied the second request for, which the petitioner received, the latter, filed a petition for review with the Court of Tax Appeals. The Court, after a preliminary hearing on respondent Collector's motion to dismiss, ruled that, as the petition was filed beyond the 30-day period prescribed by Section 11 of Republic Act No. 1125, it has no jurisdiction to try the same. Accordingly, the case was dismissed.

Manufacturers Life Insurance Co. vs. Meer FACTS

The plaintiff, the Manufacturer Life Insurance Company in a corporation duly organized in Canada with head office at Toronto. It is duly registered and licensed to engage in life insurance business in the Philippines, and maintains a branch office in Manila. It was engaged in such business in the Philippines for more than five years before and including the year 1941. But due to the exigencies of the war it closed the branch office at Manila during 1942 up to September 1945. In the course of its operations before the war, plaintiff issued a number of life insurance policies in the Philippines containing stipulations referred to as non-forfeiture clauses. From January 1, 1942 to December 31, 1946 for failure of the insured under the above policies to pay the corresponding premiums for one or more years, the plaintiff's head office of Toronto, applied the provision of the automatic premium loan clauses; and the net amount of premiums so advanced or loaned totalled P1,069,254.98. On this sum the defendant Collector of Internal Revenue assessed P17,917.12 — which plaintiff paid supra protest —. The assessment was made pursuant to section 255 of the National Internal Revenue Code as amended. which partly provides: SEC. 255. Taxes on insurance premiums. — There shall be collected from every person, company, or corporation (except purely cooperative companies or associations) doing business of any sort in the Philippines a tax of one per centum of the total premiums collected .. whether such premiums are paid in money, notes credits, or any substitute for money but premiums refunded within six months after payment on account of rejection of risk or returned for other reason to person insured shall not be included in the taxable receipts . . . It is the plaintiff's contention that when it made premium loans or premium advances, as above stated, by virtue of the non-forfeiture clauses, it did not collect premiums within the meaning of the above sections of the law, and therefore it is not amendable to the tax therein provided.

Roxas vs. Court of Tax Appeals Taxation; Power of taxation to be exercised with caution.

The power of taxation is sometimes called also the power to destroy. Therefore it should be exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill the "hen that lays the golden egg".

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte Taxation; Delegation of Powers; Power of taxation may be delegated to local governments on matters of local concern

The power of taxation xx x may be delegated to local governments in respect of matters of local concern. This is sanctioned by immoral practice. By necessary implication, the legislative power to create political corporations for purposes of local self-government carries with it the power to confer on such local governmental agencies the power to tax. x x x The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense, would not suffice to invalidate the said law as confiscatory and oppressive. In delegating the authority, the State is not limited to the exact measure of that which is exercised by itself. When it is said that the taxing power may be delegated to municipalities and the like, it is meant taxes there may be delegated such measure of power to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes.

Reyes vs. Almanzor Political Law; Taxation; The power to tax is the strongest of all the powers of the government. —

The power to tax "is an attribute of sovereignty". In fact, it is the strongest of all the powers of government. But for all its plenitude, the power to tax is not unconfined as there are restrictions. Adversely effecting as it does property rights, both the due process and equal protection clauses of the Constitution may properly be invoked to invalidate in appropriate cases a revenue measure. If it were otherwise, there would be truth to the 1903 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy." The web or unreality spun from Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmes' pen, thus: "The power to tax is not the power to destroy while this Court sits." "So it is in the Philippines." (Sison, Jr. v. Ancheta, 130 SCRA 655 [1984]; Obillos, Jr. v. Commissioner of Internal Revenue, 139 SCRA 439 [1985]).

Sison, Jr. vs. Ancheta Taxation; Constitutional Law; The Constitution sets forth the restrictions to the power to tax

The power to tax moreover, to borrow from Justice Malcolm, "is an attribute of sovereignty. It is the strongest of all the powers of government." It is, of course, to be admitted that for all its plenitude, the power to tax is not unconfined. There are restrictions. The Constitution sets forth such limits. Adversely affecting as it does property rights, both the due process and equal protection clauses may properly be invoked, as petitioner does, to invalidate in appropriate cases a revenue measure. If it were otherwise, there would be truth to the 1803 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy." In a separate opinion in Graves v. New York, Justice Frankfurter, after referring to it as an "unfortunate remark," characterized it as "a flourish of rhetoric [attributable to] the intellectual fashion of the times [allowing] a free use of absolutes." This is merely to emphasize that it is not and there cannot be such a constitutional mandate. Justice Frankfurter could rightfully conclude: "The web of unreality spun from Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmes's pen: 'The power to tax is not the power to destroy while this Court sits.' " So it is in the Philippines.

CIR vs. MERALCO The Bureau of Internal Revenue (BIR) is tasked only to confirm what is provided under the Tax Code on the matter of tax exemptions as well as the period within which to file a claim for refund.

The prescriptive period provided is mandatory regardless of any supervening cause that may arise after payment. It should be pointed out further that while the prescriptive period of two (2) years commences to run from the time that the refund is ascertained, the propriety thereof is determined by law (in this case, from the date of payment of tax), and not upon the discovery by the taxpayer of the erroneous or excessive payment of taxes. The issuance by the BIR of the Ruling declaring the tax-exempt status of NORD/LB, if at all, is merely confirmatory in nature. As aptly held by the CTA-First Division, there is no basis that the subject exemption was provided and ascertained only through BIR Ruling No. DA-342-2003, since said ruling is not the operative act from which an entitlement of refund is determined. In other words, the BIR is tasked only to confirm what is provided under the Tax Code on the matter of tax exemptions as well as the period within which to file a claim for refund.

Gomez vs. Palomar Declaratory relief; Remedy cannot be availed of if there has been breach of statute before filing of action.

The prime specification of an action for declaratory relief is that it must be brought "before breach or violation" of the statute has been committed. Rule 64, section 1 so provides. Section 6 of the same rule, which allows the court to treat an action for declaratory relief as an ordinary action, applies only if the breach or violation occurs after the filing' of the action but before the termination thereof. If there has been a breach of the statute before the filing of the action, the remedy of declaratory relief cannot be availed of, much less can the suit be converted into an ordinary action.

Delpher Trades Corp. vs. Intermediate Appellate Court Taxation; Tax Avoidance; The legal right of a taxpayer to decrease the amount of what otherwise could be his taxes or altogether avoid them, by means which the law permits, cannot be doubted.

The records do not point to anything wrong or objectionable about this "estate planning" scheme resorted to by the Pachecos. "The legal right of a taxpayer to decrease the amount of what otherwise could be his taxes or altogether avoid them, by means which the law permits, cannot be doubted." (Liddell& Co., Inc. v. The Collector of Internal Revenue, 2 SCRA 632 citing Gregory v. Halvering, 293 U.S. 465, 7 L. ed. 596)

Commissioner of Internal Revenue vs. Philippine Associated Smelting and Refining Corporation FACTS

The respondent Philippine Associated Smelting and Refining Corporation (PASAR) is a domestic corporation engaged in the business of processing, smelting, refining and exporting refined copper cathodes and other copper products, and a registered Zone Export Enterprise with the Export Processing Zone Authority (EPZA). PASAR uses petroleum products for its manufacturing and other processes, and purchases it from local distributors, which import the same and pay the corresponding excise taxes. The excise taxes paid are then passed on by the local distributors to its purchasers. In this particular case, Petron passed on to PASAR the excise taxes it paid on the petroleum products bought by the latter during the period of January 2005 to October 2005, totalling eleven million six hundred eighty-seven thousand four hundred sixty-seven 62/100 (P11,687,467.62). In December 2006, PASAR filed a claim for refund and/or tax credit with the Office of the Regional Director of Region XIV, which denied the same in a letter dated January 3, 2007. PASAR then filed a petition for review which was contested by the petitioner. The petitioner also filed a motion to preliminarily resolve whether PASAR is the proper party to ask for a refund. Thereafter, the parties agreed to the following stipulation of issues: 1. Whether or not petroleum products purchased from Petron and delivered to PASAR to be used in its operation in LIDE are exempt from excise taxes under Section 17 of P.D. No. 66 and thus entitled to a refund or issuance of a tax credit certificate; and 2. Whether or not PASAR is the proper party to claim for refund or issuance of tax credit certificate for excise taxes paid. In granting PASAR's petition for review, the CTA En Banc ruled that it is the proper party to claim the refund/credit. According to the CTA, since PASAR is a PEZA-registered entity enjoying tax exemption privilege under Presidential Decree (P.D.) No. 66 and subsequently, Republic Act (R.A.) No. 7916, it is exempt from payment of excise taxes on petroleum products. And following the Court's ruling in the Philippine Phosphate Fertilizer Corporation, PASAR, therefore, may seek refund.

Ungab vs. Cusi, Jr. Criminal Procedure; Taxation; National Internal Revenue Code; Preliminary investigation; Authority of State Prosecutor to investigate and prosecute violations of the National Internal Revenue Code independently of the City Fiscal; Case at bar

The respondent State Prosecutor, although believing that he can proceed independently of the City Fiscal in the investigation and prosecution of these cases, fi rst sought permission from the City Fiscal of Davao City before he started the preliminary investigation of these cases, and the City Fiscal, after being shown Administrative Order No. 116, dated December 5, 1974, designating the said State Prosecutor to assist all Provincial and City fiscals throughout the Philippines in the investigation and prosecution of all violations of the National Internal Revenue Code, as amended, and other related laws, graciously allowed the respondent State Prosecutor to conduct the investigation of said cases, and in fact, said investigation was conducted in the office of the City Fiscal.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals The right of local government units to collect taxes due must always be upheld to avoid severe erosion.

The restriction upon the power of courts to impeach tax assessment without a prior payment, under protest, of the taxes assessed is consistent with the doctrine that taxes are the lifeblood of the nation and as such their collection cannot be curtailed by injunction or any like action; otherwise, the state or, in this case, the local government unit, shall be crippled in dispensing the needed services to the people, and its machinery gravely disabled. The right of local government units to collect taxes due must always be upheld to avoid severe erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of RA No. 7160 or the LGC of 1991 that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them effective partners in the attainment of national goals.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation; Rule does not apply where the estimation is arrived at arbitrarily and capriciously. —

The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation. The petitioner is not required to compute such tax liabilities with mathematical exactness. Approximation in the calculation of the taxes due is justified. To hold otherwise would be tantamount to holding that skillful concealment is an invincible barrier to proof. However, the rule does not apply where the estimation is arrived at arbitrarily and capriciously.

Commissioner of Internal Revenue vs. Philippine Associated Smelting and Refining Corporation Taxation; Tax Refunds; If the law confers an exemption from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applied to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim

The rule that it is the statutory taxpayer which has the legal personality to fi le a claim for refund finds no applicability in this case. In Philippine Airlines, Inc. v. Commissioner of Internal Revenue , 700 SCRA 322 (2013), the Court distinguished between the kinds of exemption enjoyed by a claimant in order to determine the propriety of a tax refund claim. " If the law confers an exemption from both direct or indirect taxes , a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax . On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to fi le the refund claim." In PASAR's case, Section 17 of P.D.No. 66, as affirmed in Commissioner of Customs v. Philippine Phosphate Fertilizer Corp ., 437 SCRA 452 (2004), specifically declared that supplies, including petroleum products, whether used directly or indirectly, shall not be subject to internal revenue laws and regulations. Such exemption includes the payment of excise taxes, which was passed on to PASAR by Petron. PASAR, therefore, is the proper party to file a claim for refund.

Commissioner of Internal Revenue vs. Bank of the Philippine Islands The amendment introduced by RA 8424 in renumbered Section 228 of the National Internal Revenue Code was not an affirmation of what the law required under the former Section 270 . —

The sentence "[t]he taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void" was not in the old Section 270 but was only later on inserted in the renumbered Section 228 in 1997. Evidently, the legislature saw the need to modify the former Section 270 by inserting the aforequoted sentence. The fact that the amendment was necessary showed that, prior to the introduction of the amendment, the statute had an entirely different meaning. Contrary to the submission of BPI, the inserted sentence in the renumbered Section 228 was not an affirmation of what the law required under the former Section 270. The amendment introduced by RA 8424 was an innovation and could not be reasonably inferred from the old law.

Gala vs. Ellice Agro-Industrial Corporation FACTS

The spouses Manuel and Alicia Gala and their children Guia Domingo, Ofelia Gala, Raul Gala and Rita Benson, and their encargados (rough translation; representatives) VirgilioGaleon and Julian Jader, formed and organized Ellice Agro Industrial Corporation (Ellice). As payment for their subscriptions the Spouses Gala transferred several parcles of land to Ellice. Subsequently, the children and the encargados formed and organized another corporation, Margo Management and Development Corporation (Margo). The father, Manuel Gala, sold his shares in Ellice to Margo. Subsequently, Alicia transferred her shares to Margo. In 1990, a special stockholder's meeting of Margo was held where a new board of directors was elected. Raul Gala was elected as chairman, president, and general manager. During the meeting, the board approved the commencement of proceeding to annul the dispositions of Margos's property made by Alicia Gala. Similarity, a special stockholder's meeting was held in Ellice. A new board was elected and Raul Gala also became chairman, president and GM of Ellice, Raul Gala along with the respondents filed a case against the petitiones in the SEC for accounting and restitution for alleged mismanagement of funds of Ellice. In turn the petitioners filed in the SEC a petition for the nullification of the election of directors of officers of both Margo and Ellice. Essentially, petitioners sought to disregard the separate juridical personalities of two corporations, namely, Ellice Agro-Industrial Corporation and Margo Management and Development Corporation, for the purpose of treating all property purportedly owned by said corporations as properly solely owned by the Gala Spouses. Among their arguments were: (1) said corporations were organized for purpose of exempting the property the property of the Gala Spouses from the coverage of land reform laws, and (2) the two corporations were meant to be used as mere tools for the avoidance of estate taxes.

Gaston vs. Republic Planters Bank Taxation; Levy; The stabilization fees collected are in the nature of a tax which is within the power of the state to impose for the promotion of the sugar industry; The levy is primarily in the exercise of the police power of the state. —

The stabilization fees collected are in the nature of a tax, which is within the power of the State to impose for the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec.7[b], P.D, No. 388). The collections made accrue to a "Special Fund," a "Development and Stabilization Fund," almost identical to the "SugarAdjustment and Stabilization Fund" created under Section 6 of Commonwealth Act 567, The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for the stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the State (Lutz vs. Araneta, supra ).

Gaston vs. Republic Planters Bank The stabilization fees are levied by the state for the special purpose of financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market; Revenues collected treated as special fund to be administered in trust for the purpose intended

The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special purpose—that of "financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market." The fact that the State has taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they are held for a special purpose (Lawrence vs. American Surety Co,, 263 Mich 586, 249 ALR 535, cited in 42 Am. Jur. Sec. 2, p. 718), Having been levied for a special purpose, the revenues collected are to be treated as a special fund, to be , in the language of the statute, "administered in trust" for the purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general funds of the Government. That is the essence of the trust intended.

Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc. The statute of limitations on assessment and collection of national internal revenue taxes was shortened from five (5) years to three (3) years by virtue of Batas Pambansa (B.P.) Blg. 700 .

The statute of limitations on assessment and collection of national internal revenue taxes was shortened from five (5) years to three (3) years by virtue of Batas Pambansa Blg . 700. Thus, petitioner has three (3) years from the date of actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for the collection thereof without an assessment. However, when it validly issues an assessment within the three(3)-year period, it has another three (3) years within which to collect the tax due by distraint, levy, or court proceeding. The assessment of the tax is deemed made and the three (3)-year period for collection of the assessed tax begins to run on the date the assessment notice had been released, mailed or sent to the taxpayer.

Commissioner of Internal Revenue vs. The Stanley Works Sales (Phils.), Incorporated Taxation; Assessment; Statute of Limitations; The period to assess and collect deficiency taxes may be extended only upon a written agreement between the Commissioner of Internal Revenue (CIR) and the taxpayer prior to the expiration of the three (3)-year prescribed period in accordance with Section 222(b) of the National Internal Revenue Code (NIRC).

The statute of limitations on the right to assess and collect a tax means that once the period established by law for the assessment and collection of taxes has lapsed, the government's corresponding right to enforce that action is barred by provision of law. The period to assess and collect deficiency taxes maybe extended only upon a written agreement between the CIR and the taxpayer prior to the expiration of the three-year prescribed period in accordance with Section 222(b) of the NIRC. In relation to the implementation of this provision, the CIR issued Revenue Memorandum Order (RMO) No. 20-90 on 4 April 1990 to provide guidelines on the proper execution of the Waiver of the Statute of Limitations.

Philippine Long Distance Telephone Company, Inc. vs. City of Davao Tax exemption must be expressed in the statute in clear language; The exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.

The tax exemption must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte A municipal tax of P0.01 on each gallon of soft drinks produced is not unfair or oppressive.

The tax of one centavo (P0.01) on each gallon(128 fluid ounces, U.S.) of volume capacity on all soft drinks, produced or manufactured, or an equivalent of 1½ centavos per case, cannot be considered unjust and unfair. An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Municipal corporations are allowed much discretion in determining the rates of imposable taxes. This is in line with the constitutional policy of according the widest possible autonomy to local governments in matters of local taxation, an aspect that is given expression in the Local Tax Code (PD No. 231, July 1, 1973). Unless the amount is so excessive as to be prohibitive, courts will go slow in writing off an ordinance as unreasonable.

National Telecommunications Commission vs. Court of Appeals Corporation Law; Words and Phrases; "Capital," Explained.

The term "capital" and other terms used to describe the capital structure of a corporation are of universal acceptance, and their usages have long been established in jurisprudence. Briefly, capital refers to the value of the property or assets of a corporation. The capital subscribed is the total amount of the capital that persons (subscribers or shareholders) have agreed to take and pay for, which need not necessarily be, and can be more than, the par value of the shares. In fine, it is the amount that the corporation receives, inclusive of the premiums if any, inconsideration of the original issuance of the shares. In the case of stock dividends, it is the amount that the corporation transfers from its surplus profit account to its capital account. It is the same amount that can loosely be termed as the "trust fund" of the corporation.

Philippine Long Distance Telephone Company, Inc. vs. City of Davao Taxation; Tax Code; The Tax Code provision withdrawing the tax exemption was not construed as prohibiting future grants of exemptions from all taxes. —

The trial court held that, under these provisions, all exemptions granted to all persons, whether natural and juridical, including those which in the future might be granted, are withdrawn unless the law granting the exemption expressly states that the exemption also applies to local taxes. We disagree. Sec. 137 does not state that it covers future exemptions. In Philippine Airlines, Inc. v. Edu, where a provision of the Tax Code enacted on June 27, 1968 (R.A. 5431) withdrew the exemption enjoyed by PAL, it was held that a subsequent amendment of PAL's franchise, exempting it from all other taxes except that imposed by its franchise, again entitled PAL to exemption from the date of the enactment of such amendment. The Tax Code provision withdrawing the tax exemption was not construed as prohibiting future grants of exemptions from all taxes.

John Hay Peoples Alternative Coalition vs. Lim FACTS

Then President Ramos issued Proclamation No. 420 which created the John Hay Special Economic Zone pursuant to Republic Act No. 7227 entitled Bases and Development Act of 1992. Republic Act No. 7227 created the Subic Special Economic Zone and granted it exemptions from local and national taxes. Proclamation No. 420 also grants tax exemptions similar to that which is granted to the Subic SEZ by RA 7227.

John Hay SEZ v. Lim FACTSS

Then President Ramos issued Proclamation No. 420 which created the John Hay Special Economic Zone pursuant to Republic Act No. 7227 entitled Bases and Development Act of 1992. Republic Act No. 7227 created the Subic Special Economic Zone and granted it exemptions from local and national taxes. Proclamation No. 420 also grants tax exemptions similar to that which is granted to the Subic SEZ by RA 7227.

John Hay SEZ vs. Lim FACTSSS

Then President Ramos issued Proclamation No. 420 which created the John Hay Special Economic Zone pursuant to Republic Act No. 7227 entitled Bases and Development Act of 1992. Republic Act No. 7227 created the Subic Special Economic Zone and granted it exemptions from local and national taxes. Proclamation No. 420 also grants tax exemptions similar to that which is granted to the Subic SEZ by RA 7227.

Caltex Philippines, Inc. vs. Commission on Audit Administrative Law; Commission on Audit; The audit power of the Auditor General under the 1935 Constitution and the Commission on Audit under the 1973 Constitution authorized them to disallow illegal expenditures of funds or uses of funds and property.

There can be no doubt, however, that the audit power of the Auditor General under the 1935 Constitution and the Commission on Audit under the 1973 Constitution authorized them to disallow illegal expenditures of funds or uses of funds and property. Our present Constitution retains that same power and authority, further strengthened by the definition of the COA's general jurisdiction in Section 26 of the Government Auditing Code of the Philippines and Administrative Code of 1987. Pursuant to its power to promulgate accounting and auditing rules and regulations for the prevention of irregular, unnecessary, excessive or extravagant expenditures or uses of funds, the COA promulgated on 29 March 1977 COA Circular No. 77-55. Since the COA is responsible for the enforcement of the rules and regulations, it goes without saying that failure to comply with them is aground for disapproving the payment of the proposed expenditure.

Punsalan, et al. vs. Municipal Board of Manila, et al. DOUBLE TAXATION

There is double taxation where one tax is imposed by the state and the other is imposed by the city, it being widely recognized that there is nothing inherently obnoxious in the requirement that license fees or taxes be enacted with respect to the same occupation, calling or activity by both the state and the political subdivisions thereof. (Citing 1 Cooley on Taxation, 4th ed., p. 492 and 51 Am. Jur., 341.)

Commissioner of Internal Revenue vs. Botelho Shipping Corp. Constitutional Law; Constitution does not bar tax exemptions

There is no constitutional injunction against granting tax exemptions to particular persons. It is not unusual to grant to specific individuals or entities legislative franchise with tax exemptions. What the fundamental law forbids is the denial of equal protection, such as through unreasonable discrimination or classification.

Province of Misamis Oriental vs. Cagayan Electric Power andLight Company, Inc. Taxation; Statutory Construction; The rule is that a special and local statute applicable to a particular case is not repealed by a later statute which is general in its terms, provisions and application even if the terms of the general act are broad enough to include the cases in the special law unless there is manifest intent to repeal or alter the special law. —

There is no provision in P.D. No. 231 expressly or impliedly amending or repealing Section 3 of R.A. No. 6020. The perceived repugnancy between the two statutes should be very clear before the Court may hold that the prior one has been repealed by the latter, since there is no express provision to that effect (Manila Railroad Co. vs. Rafferty, 40 Phil. 224). The rule is that a special and local statute applicable to a particular case is not repealed by a later statute which is general in its terms, provisions and application even if the terms of the general act are broad enough to include the cases in the special law (id.) unless there is manifest intent to repeal or alter the special law.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte Delegation of powers; Delegation of taxing power to local governments may not be assailed on the ground of double taxation. —

There is no validity to the assertion that the delegated authority can be declared unconstitutional on the theory of double taxation. It must be observed that the delegating authority specifies the limitations and enumerates the taxes over which local taxation may not be exercised. x x x Moreover, double taxation, in general, is not forbidden by our fundamental law, since We have not adopted as part thereof the injunction against double taxation found in the Constitution of the United States and some states of the Union. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the city of municipality.

La Suerte Cigar v. CA FACTS

These cases involve the taxability of stemmed leaf tobacco imported and locally purchased by cigarette manufacturers for use as raw material in the manufacture of their cigarettes. Under the Tax Code, if it is to be exported or to be used in the manufacture of cigars, cigarettes, or other tobacco products on which the excise tax will eventually be paid on the finished product. La Suerte was assessed by the BIR for excise tax deficiency amounting to more than 34 million pesos. La Suerte protested invoking the Tax Code which allows the sale of stemmed leaf tobacco as raw material by one manufacturer directly to another without payment of the excise tax. However, the CIR insisted that stemmed leaf tobacco is subject to excise tax "unless there is an express grant of exemption from [the] payment of tax." La Suerte petitioned for review before the CTA which cancelled the assessment. The CIR appealed to the CA which reversed the CTA. The CIR invoked a revenue regulation (RR) which limits the exemption from payment of specific tax on stemmed leaf tobacco to sales transactions between manufacturers classified as L-7 permittees.

Gomez vs. Palomar FACTS

This appeal puts in issue the constitutionality of Republic Act 1635,1 as amended by Republic Act 2631,2 which provides as follows: To help raise funds for the Philippine Tuberculosis Society, the Director of Posts shall order for the period from August nineteen to September thirty every year the printing and issue of semi-postal stamps of different denominations with face value showing the regular postage charge plus the additional amount of five centavos for the said purpose, and during the said period, no mail matter shall be accepted in the mails unless it bears such semi-postal stamps: Provided, That no such additional charge of five centavos shall be imposed on newspapers. The additional proceeds realized from the sale of the semi-postal stamps shall constitute a special fund and be deposited with the National Treasury to be expended by the Philippine Tuberculosis Society in carrying out its noble work to prevent and eradicate tuberculosis. The respondent Postmaster General Enrico Palomar, in implementation of the law, issued four (4) administrative orders numbered 3 (June 20, 1958), 7 (August 9, 1958), 9 (August 28, 1958), and 10 (July 15, 1960). All these administrative orders were issued with the approval of the respondent Secretary of Public Works and Communications. On September l5, 1963 the petitioner Benjamin P. Gomez mailed a letter at the post office in San Fernando, Pampanga. Because this letter, addressed to a certain Agustin Aquino of 1014 Dagohoy Street, Singalong, Manila did not bear the special anti-TB stamp required by the statute, it was returned to the petitioner. In view of this development, the petitioner brought suit for declaratory relief in the Court of First Instance of Pampanga, to test the constitutionality of the statute, as well as the implementing administrative orders issued, contending that it violates the equal protection clause of the Constitution as well as the rule of uniformity and equality of taxation. The lower court declared the statute and the orders unconstitutional; hence this appeal by the respondent postal authorities.

Lutz vs. Araneta FACTS

This case was initiated in the Court of First Instance of Negros Occidental to test the legality of the taxes imposed by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment Act. Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme Leddesma sought to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-1950. He alleged 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.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte Due process; Taking of property without due process of law may not be passed over under the guise of taxing power, except when the latter is exercised lawfully. —

This is not to say though that the constitutional injunction against deprivation of property without due process of law may be passed over under the guise of the taxing power, except when the taking of the property is in the lawful exercise of the taxing power, as when (1) the tax is for a public purpose; (2) the rule on uniformity of taxation is observed; (3) either the person or property taxed is within the jurisdiction of the government levying the tax; and (4) in the assessment and collection of certain kinds of taxes notice and opportunity for hearing are provided.

Punsalan, et al. vs. Municipal Board of Manila, et al. FACTS

This suit was commenced in the Court of First Instance of Manila by two lawyers, a medical practitioner, a public accountant, a dental surgeon and a pharmacist, purportedly "in their own behalf and in behalf of other professionals practising in the City of Manila who may desire to join it." Object of the suit is the annulment of Ordinance No. 3398 of the City of Manila together with the provision of the Manila charter authorizing it and the refund of taxes collected under the ordinance but paid under protest. The ordinance in question, which was approved by the municipal board of the City of Manila on July 25, 1950, imposes a municipal occupation tax on persons exercising various professions in the city and penalizes non-payment of the tax "by a fine of not more than two hundred pesos or by imprisonment of not more than six months, or by both such fine and imprisonment in the discretion of the court." Among the professions taxed were those to which plaintiffs belong. The ordinance was enacted pursuant to paragraph (1) of section 18 of the Revised Charter of the City of Manila (as amended by Republic Act No. 409), which empowers the Municipal Board of said city to impose a municipal occupation tax, not to exceed P50 per annum, on persons engaged in the various professions above referred to. Having already paid their occupation tax under section 201 of the National Internal Revenue Code, plaintiffs, upon being required to pay the additional tax prescribed in the ordinance, paid the same under protest and then brought the present suit for the purpose already stated.

Chavez vs. Ongpin Constitutional Law; Taxation; Attack on Executive Order No. 73 has no legal basis as the general revision of assessments is a continuing process. —

Thus, We agree with the Office of the Solicitor General that the attack on Executive Order No. 73 has no legal basis as the general revision of assessments is a continuing process mandated by Section 21 of Presidential Decree No. 464. If at all, it is Presidential Decree No. 464 which should be challenged as constitutionally infirm. However, Chavez failed to raise any objection against said decree. It was ROAP which questioned the constitutionality thereof.

Camp John Hay Development Corporation vs. Central Board of Assessment Appeals Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception.

Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. Thus applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, this Court holds that petitioner is considered a taxable entity in this case.

Commissioner of Internal Revenue vs. The Stanley Works Sales (Phils.), Incorporated A waiver of the statute of limitations, whether on assessment or collection, should not be construed as a waiver of the right to invoke the defense of prescription but, rather, an agreement between the taxpayer and the Bureau of Internal Revenue (BIR) to extend the period to a date certain, within which the latter could still assess or collect taxes due. —

To emphasize, the Waiver was not a unilateral act of the taxpayer; hence, the BIR must act on it, either by conforming to or by disagreeing with the extension. A waiver of the statute of limitations, whether on assessment or collection, should not be construed as a waiver of the right to invoke the defense of prescription but, rather, an agreement between the taxpayer and the BIR to extend the period to a date certain, within which the latter could still assess or collect taxes due. The waiver does not imply that the taxpayer relinquishes the right to invoke prescription unequivocally.

Gaston vs. Republic Planters Bank Revenues derived from tax cannot be used for purely private purposes or for the exclusive benefit of private persons.

To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization of the domestic market including the foreign market," the industry being of vital importance to the country's economy and to national interest.

People vs. Castañeda, Jr. FACTS

Two informants submitted sworn information under RA 2338 (An Act to Provide for Reward to Informers of Violations of the Internal Revenue and Customs Laws) to the BIR concerning alleged violations of provisions of the Internal Revenue Code committed by the private respondents. Following an investigation and examination by the BIR, the State Prosecutor filed with the CFI several information against private respondents. Respondents were charged with various violations of the NIRC including possession of counterfeit internal revenue labels, possession of liquors and spirits whose specific taxes have not been paid, and manufacture of alcoholic products without paying the privilege tax therefor. After arraignment, accused Valencia filed a Motion to Quash upon the ground that the information had been filed without conducting the necessary preliminary investigation and that he was entitled to the benefits of the tax amnesty provided by PD No. 370. The prosecutor argued that Valencia was not entitled to avail himself of the benefits of PD No. 370 since his tax cases were the subject of valid information submitted. The trial court judge granted the Motion to Quash. The co-accused also filed Motions to Quash on the theory that the dismissal of the action as to Valencia inured to their benefit. Such motions were also granted by the respondent judge.

The Anti-Graft League of the Philippines, Inc. vs. San Juan Petitioner has absolutely no cause of action and consequently no locus standi in the instant case. —

Undeniably, as a taxpayer, petitioner would somehow be adversely affected by an illegal use of public money. When, however, no such unlawful spending has been shown, as in the case at bar, petitioner, even as a taxpayer, cannot question the transaction validly executed by and between the Province and Ortigas for the simple reason that it is not privy to said contract. In other words, petitioner has absolutely no cause of action, and consequently no locus standi , in the instant case.

Commissioner of Internal Revenue vs. Botelho Shipping Corp. Reparations Law; Taxation; Compensating tax.

Under Republic Act No. 1789 reparations goods obtained by private parties are subject to compensating tax since section 14 of said law exempts them only from customs duties, consular fees and the special import tax.

Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc. Court of Tax Appeals; Jurisdiction; The Court of Tax Appeals (CTA) shall have the power to promulgate rules and regulations for the conduct of its business, and as may be needed, for the uniformity of decisions within its jurisdiction .—

Under Section 8 of Republic Act (R.A.) No. 1125, the CTA is categorically described as a court of record. As such, it shall have the power to promulgate rules and regulations for the conduct of its business, and as may be needed, for the uniformity of decisions within its jurisdiction. Moreover, as cases filed before it are litigated de novo, party-litigants shall prove every minute aspect of their cases. Thus, no evidentiary value can be given the pieces of evidence submitted by the BIR, as the rules on documentary evidence require that these documents must be formally offered before the CTA. Pertinent is Section 34, Rule 132 of the Revised Rules on Evidence which reads: SEC. 34. Offer of evidence .—The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified.

Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue Sales to federal agencies. —

Under the Bases Agreement sales made for exclusive use in the construction, maintenance, operation or defense of the bases, or sales to the quartermaster, are exempt from taxation. Sales of goods to any other party, even if it be an agency of the United States, such as the Voice of America, or even to the quartermaster but for a different purpose, are not exempt from taxation. Sales made within the base by commissaries and the like are exempt from sales tax in accordance with the rule that a sales tax is a tax on the seller and not on the purchaser.

Philippine Basketball Association vs. Court of Appeals Amusement Tax; Gross Receipts; Income from the cession of streamer and advertising spaces is subject to amusement tax

Untenable is the contention that income from the cession of streamer and advertising spaces to VEI is not subject to amusement tax. The questioned proviso may be found in Section 1 of PD 1456 which states: "SECTION 1. Section 268 of the National Internal Revenue Code of 1977, as amended, is hereby further amended to read as follows: 'Sec. 268. Amusement taxes. —There shall be collected from the proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai, race tracks and bowling alleys, a tax equivalent to: x x x xx x x x x of their gross receipts, irrespective of whether or not any amount is charged or paid for admission. For the purpose of the amusement tax, the term gross receipts' embraces all the receipts of the proprietor, lessee or operator of the amusement place. Said gross receipts also include income from television, radio and motion picture rights, if any. (A person, or entity or association conducting any activity subject to the tax herein imposed shall be similarly liable for said tax with respect to such portion of the receipts derived by him or it.)" (italics ours) The foregoing definition of gross receipts is broad enough to embrace the cession of advertising and streamer spaces as the same embraces all the receipts of the proprietor, lessee or operator of the amusement place. The law being clear, there is no need for an extended interpretation.

Reyes vs. Almanzor Taxes; Collection of taxes should be made in accordance with law as any arbitrariness will negate the very reason for government itself. —

Verily, taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. However, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxations, which is the promotion of the common good, may be achieved (Commissioner of Internal Revenue v. Algue, Inc., et al.,158 SCRA 9 [1988]). Consequently, it stands to reason that petitioners who are burdened by the government by its Rental Freezing Laws (then R.A. No.6359 and P.D. 20) under the principle of social justice should not now be penalized by the same government by the imposition of excessive taxes petitioners can ill afford and eventually result in the forfeiture of their properties.

Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation RULING

W/N manufacturers or producers of petroleum products are exempt from the payment of excise tax on petroleum sold to international carriers No. The intent of Section 135 is to grant excise tax exemption to international carriers and exempt entities as buyers of petroleum products and not to the manufacturers or producers of said goods. Since the excise taxes are collected from manufacturers or producers before removal of the domestic products from the place of production, Petron paid the excise taxes as manufacturer or producer of the petroleum products pursuant to Sec. 148 of the NIRC. Thus, regardless of who the buyer/purchaser is, the excise tax on petroleum products attached to the said goods before their sale or delivery to international carriers. Sec. 135 (a) and (c) granting exemption from the payment of excise tax on petroleum products can only be interpreted to mean that Petron cannot pass on to international carriers and exempt agencies the excise taxes it paid as a manufacturer or producer. Hence, Petron is not entitled to a refund of the excise taxes it paid for the petroleum products sold to international carriers.

Lozada vs. Commission on Elections RULING

W/N the petition for mandamus will proceed? NO. As taxpayers, petitioners may not file the instant petition, for nowhere therein is it alleged 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. It is only when an act complained of, which may include a legislative enactment or statute, involves the illegal expenditure of public money that the so-called taxpayer suit may be allowed. What the case at bar seeks is one that entails expenditure of public funds which may be illegal because it would be spent for a purpose that of calling a special election which, as will be shown, has no authority either in the Constitution or a statute. As voters, neither have petitioners the requisite interest or personality to qualify them to maintain and prosecute the present petition. The unchallenged rule is that the person who impugns the validity of a statute must have a personal and substantial interest in the case such that he has sustained, or will sustain, direct injury as a result of its enforcement. In the case at bar, the alleged inaction of the COMELEC to call a special election to fill-up the existing vacancies in the Batasan Pambansa, standing alone, would adversely affect only the generalized interest of all citizens. Petitioners' standing to sue may not be predicated upon an interest of the kind alleged here, which is held in common by all members of the public because of the necessarily abstract nature of the injury supposedly shared by all citizens. Concrete injury, whether actual or threatened, is that indispensable element of a dispute which serves in part to cast it in a form traditionally capable of judicial resolution. When the asserted harm is a "generalized grievance" shared in substantially equal measure by all or a large class of citizens, that harm alone normally does not warrant exercise of jurisdiction. Petitioners have not demonstrated any permissible personal stake, for petitioner Lozada's interest as an alleged candidate and as a voter is not sufficient to confer standing. Petitioner Lozada does not only fail to inform the Court of the region he wants to be a candidate but makes indiscriminate demand that special election be called throughout the country. Even his plea as a voter is predicated on an interest held in common by all members of the public and does not demonstrate any injury specially directed to him in particular.

The Anti-Graft League of the Philippines, Inc. vs. San Juan RULING

W/N this is a case of taxpayer's suit. To constitute a taxpayer's suit, two requisites: (1) that public funds are disbursed by a political subdivision or instrumentality and (2) in doing so, a law is violated or some irregularity is committed, and that the petitioner is directly affected by the alleged ultra vires act. In the case at bar, petitioner's standing should not even be made an issue here since standing is a concept in constitutional law and here no constitutional question is actually involved. The disbursement of public funds was only made when the Province bought the lands from Ortigas. Petitioner never referred to such purchase as an illegal disbursement of public funds but focused on the alleged fraudulent reconveyance of said property to Ortigas because the price paid was lower than the prevailing market value of neighboring lots. As a taxpayer, petitioner would somehow be adversely affected by an illegal use of public money. But when no such unlawful spending has been shown petitioner, even as a taxpayer, cannot question the transaction executed by the Province and Ortigas for the reason that it is not privy to said contract.

Batangas Power Corporation vs. Batangas City RULING

WON BPC's claim of tax-exemption on Section 133 (o) of the LGC which exempts government instrumentalities from taxes imposed by local government units (LGUs), citing in support thereof the case of Basco v. PAGCOR valid. Considered as the most revolutionary piece of legislation on local autonomy, the Local Government Code effectively deals with the fiscal constraints faced by LGUs. It widens the tax base of LGUs to include taxes which were prohibited by previous laws. Batangas Power cannot rely for exemption on the Basco case as this was decided prior to the effectivity of the LGC (Local Government Code), when there was still no law empowering local government units to tax instrumentalities of the national government.

Caltex Philippines, Inc. vs. Commission on Audit RULING

WON Caltex is entitled to offsetting NO. COA AFFIRMED. It is settled that a taxpayer may not offset taxes due from the claims that he may have against the government. Taxes cannot be 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 setoff. Technically, the oil companies merely act as agents for the Government in the latter's collection since the taxes are, in reality, passed unto the end-users - the consuming public. Their primary obligation is to account for and remit the taxes collection to the administrator of the OPSF. There is not merit in Caltex's contention that the OPSF contributions are not for a public purpose because they go to a special fund of the government. Taxation is no longer envisioned as a measure merely to raise revenue to support the existence of the government; taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry which is affected with public interest as to be within the police power of the State. The oil industry is greatly imbued with public interest as it vitally affects the general welfare. PD 1956, as amended by EO No. 137 explicitly provides that the source of OPSF is taxation.

People v. Kintanar RULING

WON Kintanar willfully violated Section 225 for her failure to file her returns (YES) Kintanar was charged with the violation of Section 225. Section 255 of the NIRC of 1997, as amended, contemplates four different situations punishable by law, each of which constitutes failure to perform in a timely manner, an obligation imposed by the NIRC of 1997, 1) To pay any tax; 2) To make a return; 3) To keep any record; and 4) To supply correct and accurate information. In the case at bench, petitioner is being charged under said provision for failure to make or file a return. The elements of Violation of Section 255 of the NIRC of 1997, as amended, for failure to make or file a return, are, as follows: 1) The accused is a person required to make or file a return; 2) The accused failed to make or file the return at the time required by law; and 3) That failure to make or file the return was willful. As proven by the prosecution, all the aforementioned present in this case. As to the 1st element, Gloria Kintanar is dutybound to make or file a return under Section 51 of theNIRC. Considering that the she earned a substantial income as distributor of FLPP. As to the 2nd element, Kintanar failed to make or file her ITRs for taxable years 2000 and 2001. The prosecution has established that petitioner was a resident of No.2 Granada St., Merville Park Subdivision, Paranaque, for the years 2000 and 2001. Therefore, petitioner should have filed her ITRs in Paranaque City. However, there is no record of filing of the required ITRs. In fact, a Certification dated September 17, 2002 was issued by Carmelita R. Bacod, Revenue District Officer of RDO No. 52 of Paranaque City, stating that petitioner has no record on file for the years 1999 to 2001. As to the 3rd element of "willfulness", it has been sufficiently proven beyond reasonable doubt that petitioner deliberately failed to make or file a return. Willful in the tax crimes statutes means voluntary, intentional violation of a known legal duty, and bad faith or bad purpose need not be shown . An act or om1sswn 1s "willfully" done if done voluntarily and intentionally and with specific intent to do something the law forbids, or with specific intent to fail to do something the law requires to be done; that is, with bad purpose to either disobey or disregard the law. A willful act may be described as one done intentionally, knowingly and purposely, without justifiable excuse. Petitioner's claim that that she did not actively participate in the filing of her joint ITRs with her husband in the years 2000 and 2001 and thus, there was no voluntary, intentional, deliberate, or malicious failure to file a return on her part, was not sustained by the SC. First, the prosecution has clearly established that under the law, petitioner and her husband, as manied individuals, who do not derive income purely from compensation, are obliged to file their ITRs for taxable years 2000 and 2001 for the income they earned, as distributors/independent contractors of FLPPI. Thus, petitioner's sole reliance on her husband to file their ITRs is not a valid reason to justify her non-filing, considering that she knew from the start that she and her husband are mandated by law to file their ITRS. Second, being an experienced businesswoman, and having been an independent distributor/contractor of FLPPI since 1996, petitioner ought to know and understand all the matters concerning her business. This includes knowledge and awareness of her tax obligation in connection with her business. Petitioner should know how much are her tax dues, the details stated on the ITRs, where the same are filed, and other important facts related to the filing of her ITRs; after all, these matters concern her finances. Furthermore, the Court finds no affirmative acts on the part of the petitioner to make sure that her obligation to file her ITRs had been fully complied with. Petitioner testified that she does not even know how much was her tax obligation, nor did she bother to inquire or determine the facts surrounding the filing of her ITRs. Such neglect or omission, as aptly found by the Former Second Division, is tantamount to "deliberate ignorance" or "conscious avoidance". Thus, the CTA is convinced that the prosecution has established the guilt of petitioner beyond reasonable doubt.

Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue RULING

WON petitioner is not liable for the payment of tax on the sales it made to the NPC and the VOA because both entities are exempt from taxation. (NO) We begin with an analysis of the nature of the percentage (sales) tax imposed by section 186 of the Code. Is it a tax on the producer or on the purchaser? Statutes of the type under consideration, which impose a tax on sales, have been described as "act[s] with schizophrenic symptoms," as they apparently have two faces — one that of a vendor tax, the other, a vendee tax. Fortunately for us the provisions of the Code throw some light on the problem. The Code states that the sales tax "shall be paid by the manufacturer or producer,"who must "make a true and complete return of the amount of his, her or its gross monthly sales, receipts or earnings or gross value of output actually removed from the factory or mill warehouse and within twenty days after the end of each month, pay the tax due thereon." But it is argued that a sales tax is ultimately passed on to the purchaser, and that, so far as the purchaser is an entity like the NPC which is exempt from the payment of "all taxes, except real property tax," the tax cannot be collected from sales. A claim of exemption from sales tax resting on statutory grant cannot command assent. 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 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. But 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. We therefore hold that the tax imposed by section 186 of the National Internal Revenue Code is a tax on the manufacturer or producer and not a tax on the purchaser except probably in a very remote and inconsequential sense. Accordingly its levy on the sales made to tax-exempt entities like the NPC is permissible. This conclusion should dispose of the same issue with respect to sales made to the VOA, except that a claim is here made that the exemption of such sales from taxation rests on stronger grounds. Even the Court of Tax Appeals appears to share this view as is evident from the following portion of its decision: With regard to petitioner's sales to the Voice of America, it appears that the petitioner and the respondent are in agreement that the Voice of America is an agency of the United States Government and as such, all goods purchased locally by it directly from manufacturers or producers are exempt from the payment of the sales tax under the provisions of the agreement between the Government of the Philippines and the Government of the United States, The circular referred to reads: Goods purchased locally by U.S. civilian agencies directly from manufacturers, producers or importers shall be exempt from the sales tax. It was issued purportedly to implement the Agreement between the Republic of the Philippines and the United States of America Concerning Military Bases, but we find nothing in the language of the Agreement to warrant the general exemption granted by that circular. Only sales made "for exclusive use in the construction, maintenance, operation or defense of the bases," in a word, only sales to the quartermaster, are exempt under article V from taxation. Sales of goods to any other party even if it be an agency of the United States, such as the VOA, or even to the quartermaster but for a different purpose, are not free from the payment of the tax. On the other hand, article XVIII exempts from the payment of the tax sales made within the base by (not sales to) commissaries and the like in recognition of the principle that a sales tax is a tax on the seller and not on the purchaser. It is a familiar learning in the American law of taxation that tax exemption must be strictly construed and that the exemption will not be held to be conferred unless the terms under which it is granted clearly and distinctly show that such was the intention of the parties. Hence, in so far as the circular of the Bureau of Internal Revenue would give the tax exemptions in the Agreement an expansive construction it is void. We hold, therefore, that sales to the VOA are subject to the payment of percentage taxes under section 186 of the Code.

Commissioner of Internal Revenue vs. Marubeni Corporation RULING

WON respondent's deficiency tax liabilities were extinguished upon respondent's availment of tax amnesty under Executive Orders Nos. 41 and 64. NO, respondent was disqualified to avail amnesty for income tax under EO Nos.41 and 64. A tax amnesty is 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. It is an absolute forgiveness or waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate. A tax amnesty, much like a tax exemption, is never favored nor presumed in law. If granted, its terms must be construed strictly against the taxpayer and liberally in favor of the State. For the right of taxation is inherent in government. In this case, EO Nos. 41 and 64 are tax amnesty issuances. Sec.4(b) of E.O. No. 41 is very clear that taxpayers "with income tax cases already filed in court as of the effectivity hereof" are exceptions from tax amnesty. The basis is the effectivity date of E.O. No. 41 which is 22 Aug 1986. Income tax cases must be filed in court before and as of the date of its effectivity. Here, CTA case was filed on 26 Sept 1986. When the order became effective, CTA Case had not yet been filed. Respondent did not fall under the said exception in Sec.4(b), hence, qualified from availing the amnesty for income tax. However, the vagueness in Sec 4(b) brought about by E.O. No. 64 should be construed strictly against the taxpayer. The term "income tax cases" should be read as to refer to estate and donor's taxes and taxes on business while "hereof," to E.O. No. 64. Since EO No. 64 took effect on 17 Nov 1986, consequently, the date of effectivity referred to in Sec.4(b) of E.O. No. 41 should be 17 Nov 1986. When E.O. No. 64 took effect on 17 Nov 1986, CTA Case was already filed and pending in court. By the time respondent filed its supplementary tax amnesty return on 15 Dec 1986, respondent already fell under the exception in Sec. 4(b) of E.O. Nos. 41 and 64. Thus, it is disqualified from availing of the business tax amnesty granted therein. DISPOSITIVE: PETITION DENIED.

FELS Energy, Inc. vs. Province of Batangas RULING

WON the petitioner may be assessed real property taxes. (YES) The CBAA and LBAA power barges are real property and are thus subject to real property tax. This is also the inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving otherwise. [48] Besides, factual findings of administrative bodies, which have acquired expertise in their field, are generally binding and conclusive upon the Court; we will not assume to interfere with the sensible exercise of the judgment of men especially trained in appraising property. Where the judicial mind is left in doubt, it is a sound policy to leave the assessment undisturbed. We find no reason to depart from this rule in this case. In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the city's motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation. Moreover, Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast" are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work. Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by petitioner NPC, a government- owned and controlled corporation engaged in the supply, generation, and transmission of electric power. We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS, which in fine, is the entity being taxed by the local government. As stipulated under Section 2.11, Article 2 of the Agreement: OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings, machinery and equipment on the Site used in connection with the Power Barges which have been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity. It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed, the law states that the machinery must be actually, directly and exclusively used by the government owned or controlled corporation; nevertheless, petitioner FELS still cannot find solace in this provision because Section 5.5, Article 5 of the Agreement provides: OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7. It is a basic rule that obligations arising from a contract have the force of law between the parties. Not being contrary to law, morals, good customs, public order or public policy, the parties to the contract are bound by its terms and conditions. Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, we hold that FELS is considered a taxable entity. The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant is between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas. It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local government's deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay for it. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of the Local Government Code that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them effective partners in the attainment of national goals. In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

Gomez vs. Palomar RULING

WON the statute is violative of the equal protection clause of the Constitution. More specifically the claim is made that it constitutes mail users into a class for the purpose of the tax while leaving untaxed the rest of the population and that even among postal patrons the statute discriminatorily grants exemption to newspapers while Administrative Order 9 of the respondent Postmaster General grants a similar exemption to offices performing governmental functions. HELD: The five centavo charge levied by Republic Act 1635, as amended, is in the nature of an excise tax, laid upon the exercise of a privilege, namely, the privilege of using the mails. As such the objections levelled against it must be viewed in the light of applicable principles of taxation. To begin with, it is settled that the legislature has the inherent power to select the subjects of taxation and to grant exemptions. This power has aptly been described as "of wide range and flexibility." Indeed, it is said that in the field of taxation, more than in other areas, the legislature possesses the greatest freedom in classification. The reason for this is that traditionally, classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden. It is not accurate to say that the statute constituted mail users into a class. Mail users were already a class by themselves even before the enactment of the statue and all that the legislature did was merely to select their class. Legislation is essentially empiric and Republic Act 1635, as amended, no more than reflects a distinction that exists in fact. As Mr. Justice Frankfurter said, "to recognize differences that exist in fact is living law; to disregard [them] and concentrate on some abstract identities is lifeless logic." As for the Government and its instrumentalities, their exemption rests on the State's sovereign immunity from taxation. The State cannot be taxed without its consent and such consent, being in derogation of its sovereignty, is to be strictly construed.12 Administrative Order 9 of the respondent Postmaster General, which lists the various offices and instrumentalities of the Government exempt from the payment of the anti-TB stamp, is but a restatement of this well-known principle of constitutional law. It is never a requirement of equal protection that all evils of the same genus be eradicated or none at all. As this Court has had occasion to say, "if the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied." ACCORDINGLY, the judgment a quo is reversed, and the complaint is dismissed, without pronouncement as to costs.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. The general rule is that administrative agencies such as the BIR are not bound by the technical rules of evidence.

We agree with the contention of the petitioner that the best evidence obtainable may consist of hearsay evidence, such as the testimony of third parties or accounts or other records of other taxpayers similarly circumstanced as the taxpayer subject of the investigation, hence, inadmissible in a regular proceeding in the regular courts. Moreover, the general rule is that administrative agencies such as the BIR are not bound by the technical rules of evidence. It can accept documents which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed. It can choose to give weight or disregard such evidence, depending on its trustworthiness.

Asian Transmission Corporation vs. Commissioner of Internal Revenue Waiver of Statute of Limitations; Although Revenue Delegation Authority Order (RDAO) No. 01-05 stated that the waiver should not be accepted by the concerned Bureau of Internal Revenue (BIR) office or official unless duly notarized, a careful reading of RDAO No. 01-05 indicates that the proper preparation of the waiver was primarily the responsibility of the taxpayer or its authorized representative signing the waiver.

We agree with the holding of the CTA En Banc that ATC's case was similar to the case of the taxpayer involved in Commissioner of Internal Revenue v. Next Mobile, Inc . The foregoing defects noted in the waivers of ATC were not solely attributable to the CIR. Indeed, although RDAO 01-05 stated that the waiver should not be accepted by the concerned BIR office or official unless duly notarized, a careful reading of RDAO 01-05 indicates that the proper preparation of the waiver was primarily the responsibility of the taxpayer or its authorized representative signing the waiver. Such responsibility did not pertain to the BIR as the receiving party. Consequently, ATC was not correct in insisting that the act or omission giving rise to the defects of the waivers should be ascribed solely to the respondent CIR and her subordinates. Moreover, the principle of estoppel was applicable. The execution of the waivers was to the advantage of ATC because the waivers would provide to ATC the sufficient time to gather and produce voluminous records for the audit. It would really be unfair, therefore, were ATC to be permitted to assail the waivers only after the final assessment proved to be adverse.

Chavez vs. Ongpin Sound tax system; Fiscal adequacy requires that sources of revenues must be adequate to meet government expenditures and their variations.

We agree with the observation of the Office of the Solicitor General that without Executive Order No. 73, the basis for collection of real property taxes will still be the 1978 revision of property values. Certainly, to continue collecting real property taxes based on valuations arrived at several years ago, in disregard of the increases in the value of real properties that have occurred since then, is not inconsonance with a sound tax system. Fiscal adequacy, which is one of the characteristics of a sound tax system, requires that sources of revenues must be adequate to meet government expenditures and their variations.

Commissioner of lnternal Revenue vs. Algue, Inc. Amount of promotional fees, not excessive.

We agree with the respondent court that the amount of the promotional fees was not excessive. The total commission paid by the Philippine Sugar Estate Development Co. to the private respondent was P125,000.00. After deducting the said fees, Algue still had a balance of P50,000.00 as clear profit from the transaction. The amount of P75,000.00 was 60% of the total commission. This was a reasonable proportion, considering that it was the payees who did practically everything, from the formation of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties.

CIR vs. MERALCO Taxation; Gross Income; Tax Exemptions; The following item shall not be included in gross income and shall be exempt from taxation under this title: Income derived from investments in the Philippines in loans, stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments, (ii) financing institutions owned, controlled, or enjoying refinancing from foreign governments, and (iii) international or regional financial institutions established by foreign governments. —

We are of the considered view that respondent MERALCO has shown clear and convincing evidence that NORD/LB is owned, controlled or enjoying refinancing from the Federal Republic of Germany, a foreign government, pursuant to Section 32(B)(7)(a) of the Tax Code, as amended, which provides that: Section 32 . Gross Income .—x x x x. (B) Exclusions from Gross Income.— The following items shall not be included in gross income and shall be exempt from taxation under this title: x x x x (7) Miscellaneous Items .—(a) Income Derived by Foreign Government .— Income derived from investments in the Philippines in loans , stocks, bonds or other domestic securities, or from interest on deposits in banks in the Philippines by (i) foreign governments, (ii) financing institutions owned, controlled, or enjoying refinancing from foreign governments , and(iii) international or regional financial institutions established by foreign governments.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. Appeals; Motions for Reconsideration; A motion for reconsideration of the decision of the CA is not a condition sine qua non for the fi ling of a petition for review under Rule 45.

We do not agree with the contention of the respondent that a motion for reconsideration ought to have been filed before the filing of the instant petition. A motion for reconsideration of the decision of the CA is not a condition sine qua non for the filing of a petition for review under Rule 45.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. Remedial Law; Forum Shopping; A verification and certification against forum shopping signed by the Regional Director constitutes sufficient compliance with the requirements of Sections 4 and 5, Rule 7 of the Rules of Court. —

We find and so rule that the petition is sufficient in form. A verification and certification against forum shopping signed by theRegional Director constitutes sufficient compliance with the requirements ofSections 4 and 5, Rule 7 of the Rules of Court. Under Section 10 of the NIRC of 1997, the Regional Director has the power to administer and enforce internal revenue laws, rules and regulations, including the assessment and collection of all internal revenue taxes, charges and fees. Such power is broad enough to vest the Revenue Regional Director with the authority to sign the verification and certification against forum shopping in behalf of theCommissioner of Internal Revenue. There is no other person in a better position to know the collection cases filed under his jurisdiction than theRevenue Regional Director.

Commissioner of lnternal Revenue vs. Algue, Inc. Income Tax; Payments in promotional fees, not fictitious; Claimed deduction of P75,000 proper; Strict business procedures not applied in a family corporation.

We find that these suspicions were adequately met by the private respondent when its President, Alberto Guevara, and the accountant, Cecilia v. de Jesus, testified that the payments were not made in one lump sum but periodically and in different amounts as each payee's need arose. It should be remembered that this was a family corporation where strict business procedures were not applied and immediate issuance of receipts was not required. Even so, at the end of the year, when the books were to be closed, each payee made an accounting of all of the fees received by him or her, to make up the total of P75,000.00. Admittedly, everything seemed to be informal. This arrangement was understandable, however, in view of the close relationship among the persons in the family corporation.

Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc. While taxes are the lifeblood of the government, the power to tax has its limits, in spite of all its plenitude

We ought to reiterate our earlier teachings that "in balancing the scales between the power of the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a citizen's right is amply protected by the Bill of Rights under the Constitution." Thus, while "taxes are the lifeblood of the government," the power to tax has its limits, in spite of all its plenitude. Even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. After all, the statute of limitations on the collection of taxes was also enacted to benefit and protect the taxpayers, as elucidated in the case of Commissioner of Internal Revenue v. Philippine Global Communication, Inc. , 506 SCRA 427 (2006).

Ungab vs. Cusi, Jr. Jurisdiction of the Court of First Instance over criminal prosecution for violations of the National Internal Revenue Code; Computation and assessment of deficiency taxes is not a pre-requisite for criminal prosecution under the Code. —

What is involved here is not the collection of taxes where the assessment of the Commissioner of Internal Revenue may be reviewed by the Court of Tax Appeals, but a criminal prosecution for violations of the National Internal Revenue Code which is within the recognizance of Courts of First Instance. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code.

Commissioner of Internal Revenue vs. Bank of the Philippine Islands Taxation; Assessments; Statutory Construction; Nothing in the old law required a written statement to the taxpayer of the law and the facts on which the assessments were based—the Court cannot read into the law what obviously was not intended by Congress.

When the assessments were made pursuant to the former Section 270, the only requirement was for the CIR to "notify" or inform the taxpayer of his "findings." Nothing in the old law required a written statement to the taxpayer of the law and facts on which the assessments were based. The Court cannot read into the law what obviously was not intended by Congress. That would be judicial legislation, nothing less. Jurisprudence, on the other hand, simply required that the assessments contain a computation of tax liabilities, the amount the taxpayer was to pay and a demand for payment within a prescribed period. Everything considered, there was no doubt the October 28, 1988 notices sufficiently met the requirements of a valid assessment under the old law and jurisprudence.

Surigao Consolidated Mining Co., Inc. vs. Collector of Internal Revenue Condonation of unpaid taxes not extended to refund of paid taxes

Where the law clearly refers to the condonation of unpaid taxes, it is held that it cannot be extended to authorize the refund of paid taxes.

Lutz vs. Araneta RULING

Whether CA 567 is unconstitutional. Yes, CA 567 is constitutional. The tax is levied with a regulatory purpose, to provide means for the rehabilitation and stabilization of the threatened sugar industry. In other words, the act is primarily an exercise of the police power. The protection and promotion of the sugar industry is a matter of public concern, it follows that the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion must be allowed fully play, subject only to the test of reasonableness; and it is not contended that the means provided in section 6 of the law (above quoted) bear no relation to the objective pursued or are oppressive in character. If objective and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the state's police power. That the tax to be levied should burden the sugar producers themselves can hardly be a ground of complaint; indeed, it appears rational that the tax be obtained precisely from those who are to be benefited from the expenditure of the funds derived from it. At any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation"

Chavez vs. Ongpin RULING

Whether Executive Order No. 73 is unconstitutional. (NO) Executive Order No. 73 does not impose new taxes nor increase taxes. Indeed, the government recognized the financial burden to the taxpayers that will result from an increase in real property taxes. Hence, Executive Order No. 1019 was issued on April 18, 1985, deferring the implementation of the increase in real property taxes resulting from the revised real property assessments, from January 1, 1985 to January 1, 1988. Section 5 thereof is quoted herein as follows: "SEC. 5. The increase in real property taxes resulting from the revised real property assessments as provided for under Section 21 of Presidential Decree No. 464, as amended by Presidential Decree No. 1 621, shall be collected beginning January 1, 1988 instead of January 1, 1985 in order to enable the Ministry of Finance and the Ministry of Local Government to establish the new systems of tax collection and assessment provided herein and in order to alleviate the condition of the people, including real property owners, as a result of temporary economic difficulties." (Emphasis supplied) The issuance of Executive Order No. 73 which changed the date of implementation of the increase in real property taxes from January 1, 1988 to January 1, 1987 and therefore repealed Executive Order No. 1019, also finds ample justification in its "whereas" clauses, as follows: "WHEREAS, the collection of real property taxes based on the 1984 real property values was deferred to take effect on January 1, 1988 instead of January 1, 1985, thus depriving the local government units of an additional source of revenue; "WHEREAS, there is an urgent need for local governments to augment their financial resources to meet the rising cost of rendering effective services to the people; (Emphasis supplied) The Court agreed with the observation of the Office of the Solicitor General that without Executive Order No. 73, the basis for collection of real property taxes will still be the 1978 revision of property values. Certainly, to continue collecting real property taxes based on valuations arrived at several years ago, in disregard of the increases in the value of real properties that have occurred since then, is not in consonance with a sound tax system. Fiscal adequacy, which is one of the characteristics of a sound tax system, requires that sources of revenues must be adequate to meet government expenditures and their variations.

Commissioner of Internal Revenue vs. Philippine Associated Smelting and Refining Corporation RULING

Whether PASAR has the legal personality to file the claim for the refund of the excise taxes passed on by Petron. (YES) PASAR is a business enterprise registered with the EPZA pursuant to P.D. No. 66. There is no dispute as regards its use of fuel and petroleum products for the processing, smelting and refining of its export copper products, and that Petron, from which PASAR purchased its fuel and petroleum, products, passed on the excise taxes paid to the latter. In ruling that PASAR is the proper party to file the claim for the refund/credit, the CTA En Bane chiefly relied on the Court's rulings in Commissioner of Customs v. Philippine Phosphate Fertilizer Corp. and Philippine Phosphate Fertilizer Corporation v. Commissioner of Internal Revenue. Commissioner of Customs involved a claim for refund by Philippine Phosphate Fertilizer Corporation (Philphos) of the customs duties it indirectly paid on fuel and petroleum products purchased from Petron Corporation for the period of October 1991 until June 1992. This was opposed by the Commissioner of Customs. One of the issues raised in the case was the legal basis for Philphos' exemption from duties and taxes, it being an EPZA-registered company. While it may be true that Commissioner of Customs involved the refund of customs duties paid on petroleum products, it was nevertheless correctly applied by the CTA En Banc. Notably, in Commissioner of Customs, the Court squarely interpreted the exemption granted under Section 17 of P.D. No. 66 as applicable to both customs duties and internal revenue taxes, The incentives offered to enterprises duly registered with the PEZA consist, among others, of tax exemptions, x x x Section 17 of the EPZA Law particularizes the tax benefits accorded to duly registered enterprises. It states: SEC. 17. Tax Treatment of Merchandize in the Zone. - (1) Except as otherwise provided in this Decree, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the Zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with foreign or domestic merchandise or used whether directly or indirectly in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the following provisions of law to the contrary notwithstanding. The cited provision certainly covers petroleum supplies used, directly or indirectly, by Philphos to facilitate its production of fertilizers, subject to the minimal requirement that these supplies are brought into the zone. The supplies are not subject to customs and internal revenue laws and regulations, nor to local tax ordinances. It is clear that Section 17(1) considers such supplies exempt even if they are used indirectly, as they had been in this case. Thus, the Court affirmed the refund of customs duties granted by the CTA and in closing, stated that "[t]he grant of exemption under Section 17(1) is clear and unambiguous, x x x." Philphos, meanwhile, involved Philphos' claim for refund of excise taxes passed on by Petron. One of the issues identified by the Court in the case was whether the CTA should have granted the claim for refund. In resolving said issue, the Court ruled that the CTA erred when it disallowed the petitioner's claim due to its failure to present invoices as there is nothing in CTA Circular No. 1-95 that requires its presentation. The issue of whether the petitioner was entitled to exemption from payment of excise taxes was not lengthily discussed by the Court because it was already undisputed. Thus, the Court stated: In this case, there is no dispute that petitioner is entitled to exemption from the payment of excise taxes by virtue of its being an EPZA registered enterprise. As stated by the CTA, the only thing left to be determined is whether or not petitioner is entitled to the amount claimed for refund. xxxx Since it is not disputed that petitioner is entitled to tax exemption, it should not be precluded from presenting evidence to substantiate the amount of refund it is claiming on mere technicality especially in this case, where the failure to present invoices at the first instance was adequately explained by petitioner. Applying the foregoing rulings in this case, it is therefore undeniable that PASAR is exempted from payment of excise taxes. The next pivotal question then that must be resolved is whether PASAR has the legal personality to file the claim for the refund of the excise taxes passed on by Petron. The petitioner insists that PASAR is not the proper party to seek a refund of an indirect tax, such as an excise tax or Value Added Tax, because it is not the statutory taxpayer. The petitioner's argument, however, has no merit. The rule that it is the statutory taxpayer which has the legal personality to file a claim for refund finds no applicability in this case. In Philippine Airlines, Inc. v. Commissioner of Internal Revenue, the Court distinguished between the kinds of exemption enjoyed by a claimant in order to determine the propriety of a tax refund claim. "If the law confers an exemption from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim. In PASAR's case, Section 17 of P.D. No. 66, as affirmed in Commissioner of Customs, specifically declared that supplies, including petroleum products, whether used directly or indirectly, shall not be subject to internal revenue laws and regulations. Such exemption includes the payment of excise taxes, which was passed on to PASAR by Petron. PASAR, therefore, is the proper party to file a claim for refund.

Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc. RULING

Whether SC Johnson and Son, USA is entitled to the "Most Favored Nation" tax rate of 10% as provided in the RP-US Tax Treaty in relation to the RP-West Germany Tax Treaty. (NO) Unlike the RP-US Tax Treaty, the RP-Germany Tax Treaty allows a tax credit of 20 percent of the gross amount of such royalties against German income and corporation tax for the taxes payable in the Philippines on such royalties where the tax rate is reduced to 10 or 15 percent under such treaty. The RP-US Tax Treaty contains no similar "matching credit" as that provided under the RP-West Germany Tax Treaty. Hence, the tax on royalties under the RP-US Tax Treaty is not paid under similar circumstances as those obtaining in the RP-West Germany Tax Treaty. Therefore, the "most favored nation" clause in the RP-West Germany Tax Treaty cannot be availed of in interpreting the provisions of the RP-US Tax Treaty. We are unable to sustain the position of the Court of Tax Appeals, which was upheld by the Court of Appeals, that the phrase "paid under similar circumstances in Article 13 (2) (b), (iii) of the RP-US Tax Treaty should be interpreted to refer to payment of royalty, and not to the payment of the tax, for the reason that the phrase "paid under similar circumstances" is followed by the phrase "to a resident of a third state". The respondent court held that "Words are to be understood in the context in which they are used", and since what is paid to a resident of a third state is not a tax but a royalty "logic instructs" that the treaty provision in question should refer to royalties of the same kind paid under similar circumstances. The above construction is based principally on syntax or sentence structure but fails to take into account the purpose animating the treaty provisions in point. To begin with, we are not aware of any law or rule pertinent to the payment of royalties, and none has been brought to our attention, which provides for the payment of royalties under dissimilar circumstances. The tax rates on royalties and the circumstances of payment thereof are the same for all the recipients of such royalties and there is no disparity based on nationality in the circumstances of such payment. On the other hand, a cursory reading of the various tax treaties will show that there is no similarity in the provisions on relief from or avoidance of double taxation as this is a matter of negotiation between the contracting parties. As will be shown later, this dissimilarity is true particularly in the treaties between the Philippines and the United States and between the Philippines and West Germany. In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the Philippines will give up a part of the tax in the expectation that the tax given up for this particular investment is not taxed by the other country. Thus the petitioner correctly opined that the phrase "royalties paid under similar circumstances" in the most favored nation clause of the US-RP Tax Treaty necessarily contemplated "circumstances that are tax-related". In the case at bar, the state of source is the Philippines because the royalties are paid for the right to use property or rights, i.e. trademarks, patents and technology, located within the Philippines. The United States is the state of residence since the taxpayer, S. C. Johnson and Son, U. S. A., is based there. Under the RP-US Tax Treaty, the state of residence and the state of source are both permitted to tax the royalties, with a restraint on the tax that may be collected by the state of source. Furthermore, the method employed to give relief from double taxation is the allowance of a tax credit to citizens or residents of the United States (in an appropriate amount based upon the taxes paid or accrued to the Philippines) against the United States tax, but such amount shall not exceed the limitations provided by United States law for the taxable year. Under Article 13 thereof, the Philippines may impose one of three rates — 25 percent of the gross amount of the royalties; 15 percent when the royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred areas of activities; or the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar circumstances to a resident of a third state. Given the purpose underlying tax treaties and the rationale for the most favored nation clause, the concessional tax rate of 10 percent provided for in the RP-Germany Tax Treaty should apply only if the taxes imposed upon royalties in the RP-US Tax Treaty and in the RP-Germany Tax Treaty are paid under similar circumstances. This would mean that private respondent must prove that the RP-US Tax Treaty grants similar tax reliefs to residents of the United States in respect of the taxes imposable upon royalties earned from sources within the Philippines as those allowed to their German counterparts under the RP-Germany Tax Treaty. The RP-US and the RP-West Germany Tax Treaties do not contain similar provisions on tax crediting. Article 24 of the RP-Germany Tax Treaty, supra, expressly allows crediting against German income and corporation tax of 20% of the gross amount of royalties paid under the law of the Philippines. On the other hand, Article 23 of the RP-US Tax Treaty, which is the counterpart provision with respect to relief for double taxation, does not provide for similar crediting of 20% of the gross amount of royalties paid. The purpose of a most favored nation clause is to grant to the contracting party treatment not less favorable than that which has been or may be granted to the "most favored" among other countries. 25 The most favored nation clause is intended to establish the principle of equality of international treatment by providing that the citizens or subjects of the contracting nations may enjoy the privileges accorded by either party to those of the most favored nation. 26 The essence of the principle is to allow the taxpayer in one state to avail of more liberal provisions granted in another tax treaty to which the country of residence of such taxpayer is also a party provided that the subject matter of taxation, in this case royalty income, is the same as that in the tax treaty under which the taxpayer is liable. Both Article 13 of the RP-US Tax Treaty and Article 12 (2) (b) of the RP-West Germany Tax Treaty, above-quoted, speaks of tax on royalties for the use of trademark, patent, and technology. The entitlement of the 10% rate by U.S. firms despite the absence of a matching credit (20% for royalties) would derogate from the design behind the most grant equality of international treatment since the tax burden laid upon the income of the investor is not the same in the two countries. The similarity in the circumstances of payment of taxes is a condition for the enjoyment of most favored nation treatment precisely to underscore the need for equality of treatment.

Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte RULING

Whether Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive No; The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent government, without being expressly conferred by the people. It is a power that is purely legislative and which the central legislative body cannot delegate either to the executive or judicial department of the government without infringing upon the theory of separation of powers. The exception, however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative powers may be delegated to local governments in respect of matters of local concern. This is sanctioned by immemorial practice. By necessary implication, the legislative power to create political corporations for purposes of local self-government carries with it the power to confer on such local governmental agencies the power to tax. Under the New Constitution (1973), local governments are granted the autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides: "Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law." Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of local taxation. When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be delegated such measure of power to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes. This is not to say though that the constitutional injunction against deprivation of property without due process of law may be passed over under the guise of the taxing power, except when the taking of the property is in the lawful exercise of the taxing power, as when (1) the tax is for a public purpose; (2) the rule on uniformity of taxation is observed; (3) either the person or property taxed is within the jurisdiction of the government levying the tax; and (4) in the assessment and collection of certain kinds of taxes notice and opportunity for hearing are provided. Due process is usually violated where the tax imposed is for a private as distinguished from a public purpose; a tax is imposed on property outside the State, i.e., extraterritorial taxation; and arbitrary or oppressive methods are used in assessing and collecting taxes. But, a tax does not violate the due process clause, as applied to a particular taxpayer, although the purpose of the tax will result in an injury rather than a benefit to such taxpayer. Due process does not require that the property subject to the tax or the amount of tax to be raised should be determined by judicial inquiry, and a notice and hearing as to the amount of the tax and the manner in which it shall be apportioned are generally not necessary to due process of law. Whether Ordinances Nos. 23 and 27 constitute double taxation and impose percentage or specific taxes Double Taxation Double taxation, in general, is not forbidden by our fundamental law, since we have not adopted as part thereof the injunction against double taxation found in the Constitution of the United States and some states of the Union. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the city or municipality. It shows that only Ordinance No. 27, series of 1962 is being enforced by defendantsappellees. Even the Provincial Fiscal, counsel for defendants-appellees admits in his brief "that Section 7 of Ordinance No. 27, series of 1962 clearly repeals Ordinance No. 23 as the provisions of the latter are inconsistent with the provisions of the former." Percentage Tax and Specific Tax The limitation applies, particularly, to the prohibition against municipalities and municipal districts to impose "any percentage tax or other taxes in any form based thereon nor impose taxes on articles subject to specific tax except gasoline, under the provisions of the National Internal Revenue Code." For purposes of this particular limitation, a municipal ordinance which prescribes a set ratio between the amount of the tax and the volume of sale of the taxpayer imposes a sales tax and is null and void for being outside the power of the municipality to enact. But, the imposition of "a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on the products, but there is not set ratio between the volume of sales and the amount of the tax. Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified articles, such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and cigarettes, matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel oil, cinematographic films, playing cards, saccharine, opium and other habit-forming drugs. Soft drink is not one of those specified. Whether Ordinances Nos. 23 and 27 unjust and unfair The tax of one (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity on all softdrinks, produced or manufactured, or an equivalent of 1-½ centavos per case, cannot be considered unjust and unfair. An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Dispositive Portion: ACCORDINGLY, the constitutionality of Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, as amended, is hereby upheld and Municipal Ordinance No. 27 of the Municipality of Tanauan, Leyte, series of 1962, re-pealing Municipal Ordinance No. 23, same series, is hereby declared of valid and legal effect. Costs against petitioner-appellant. Concurring Opinion: Fernando - "Where Congress has clearly expressed its intuition, the statute must be sustained EVEN THOUGH double taxation results.

CIR vs. MERALCO RULING

Whether or not MERALCO is entitled to a tax refund/credit relative to its payment of final withholding taxes on interest payments made to NORD/LB from January 1999 to September 2003. (YES) We find that MERALCO has discharged the requisite burden of proof in establishing the factual basis for its claim for tax refund. However, we uphold the ruling of the CTA En Banc that the claim for tax refund in the aggregate amount of Thirty-Nine Million Three Hundred Fifty-Nine Thousand Two Hundred Fifty-Four Pesos and Seventy-Nine Centavos (P39,359,254.79) pertaining to the period from January 1999 to July2002 must fail since the same has already prescribed under Section 229 of the Tax Code, to wit: Section 229. Recovery of Tax Erroneously or Illegally Collected. − No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. As can be gleaned from the foregoing, the prescriptive period provided is mandatory regardless of any supervening cause that may arise after payment. It should be pointed out further that while the prescriptive period of two (2) years commences to run from the time that the refund is ascertained, the propriety thereof is determined by law (in this case, from the date of payment of tax), and not upon the discovery by the taxpayer of the erroneous or excessive payment of taxes. The issuance by the BIR of the Ruling declaring the tax-exempt status of NORD/LB, if at all, is merely confirmatory in nature. As aptly held by the CTA-First Division, there is no basis that the subject exemption was provided and ascertained only through BIR Ruling No. DA-342-2003, since said ruling is not the operative act from which an entitlement of refund is determined. In other words, the BIR is tasked only to confirm what is provided under the Tax Code on the matter of tax exemptions as well as the period within which to file a claim for refund. Tax refunds are based on the general premise that taxes have either been erroneously or excessively paid. Though the Tax Code recognizes the right of taxpayers to request the return of such excess/erroneous payments from the government, they must do so within a prescribed period. Further, "a taxpayer must prove not only his entitlement to a refund, but also his compliance with the procedural due process as non-observance of the prescriptive periods within which to file the administrative and the judicial claims would result in the denial of his claim." In the case at bar, MERALCO had ample opportunity to verify on the tax-exempt status of NORD/LB for purposes of claiming tax refund. Even assuming that MERALCO could not have emphatically known the status of NORD/LB, its supposition of the same was already confirmed by the BIR Ruling which was issued on October 7, 2003. Nevertheless, it only filed its claim for tax refund on July 13, 2004, or ten (10) months from the issuance of the aforesaid Ruling. We agree with the CTA-First Division, therefore, that respondent MERALCO's claim for refund in the amount of Two Hundred Twenty-Four Million Seven Hundred Sixty Thousand Nine Hundred Twenty-Six Pesos and Sixty- Five Centavos (P224,760,926.65) representing erroneously paid and remitted final income taxes for the period January 1999 to July 2002 should be denied on the ground of prescription.

Basco vs. Phil. Amusements and Gaming Corporation RULING

Whether or not P.D. 1869, the Charter of the PAGCOR, is unconstitutional as it violates the principle of local autonomy as well as it is contrary to morals? No. The contentions stated above are without merit. The City of Manila, being a mere Municipal Corporation has no inherent right to impose taxes. Its power to tax must always yield to a legislative act which is superior having been passed upon by the State itself which has the "inherent power to tax". It should be stressed that "municipal corporations are mere creatures of Congress" which has the power to "create & abolish municipal corporations" due to its "general legislative powers." Congress, therefore, has the power of control over Local Governments. And if Congress can grant the City of Manila the power to tax certain matters, it can also provide for exemptions or even take back the power. The City of Manila's power to impose license fees on gambling has long been revoked as early as 1975 which was withdrawn by P.D. No.771 and was vested exclusively on the National Government. Furthermore, gambling is generally immoral, & this is precisely so when the gambling resorted to is excessive. This excessiveness depends not only on the financial resources of the gambler & his family but also on his mental, social, & spiritual outlook on life. The mere fact that some persons may have lost their material fortunes, mental control, physical health, or even their lives does not necessarily mean that the same are directly attributable to gambling. Gambling may have been the antecedent, but certainly not necessarily the cause. For the same consequences could have been the preceded by an overdose of food, drink, exercise, work and even sex. Every law has in its favor the presumption of constitutionality. Therefore, for P.D. No. 1869 to be nullified, it must be shown that there is a clear & unequivocal breach of the Constitution.

Philippine Long Distance Telephone Company, Inc. vs. City of Davao RULING

Whether or not PLDT is exempted from franchise tax imposed by City of Davao. PLDT is not exempt from franchise tax imposed by City of Davao. R.A. No. 7925 is a legislative enactment designed to set the national policy on telecommunications and provide the structures to implement it to keep up with the technological advances in the industry and the needs of the public. The thrust of the law is to promote gradually the deregulation of the entry, pricing, and operations of all public telecommunications entities and thus promote a level playing field in the telecommunications industry. There is nothing in the language of 23 nor in the proceedings of both the House of Representatives and the Senate in enacting R.A. No. 7925 which shows that it contemplates the grant of tax exemptions to all telecommunications entities, including those whose exemptions had been withdrawn by the LGC. The tax exemption must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. In this case, the word exemption in 23 of R.A. No. 7925 could contemplate exemption from certain regulatory or reporting requirements, bearing in mind the policy of the law.

Commissioner of Internal Revenue vs. Pineda RULING

Whether or not Pineda can be held liable for the payment of all the taxes found by the Tax Court to be due from the estate of his deceased father? (YES) We hold that the Government can require Manuel B. Pineda to pay the full amount of the taxes assessed. Pineda is liable for the assessment as an heir and as a holder-transferee of property belonging to the estate/taxpayer. As an heir he is individually answerable for the part of the tax proportionate to the share he received from the inheritance. His liability, however, cannot exceed the amount of his share. As a holder of property belonging to the estate, Pineda is liable for the tax up to the amount of the property in his possession. The reason is that the Government has a lien on the P2, 500.00 received by him from the estate as his share in the inheritance, for unpaid income taxes for which said estate is liable, pursuant to the last paragraph of Section 315 of the Tax Code. By virtue of such lien, the Government has the right to subject the property in Pineda's possession, i.e., the P2, 500.00, to satisfy the income tax assessment in the sum of P760.28. After such payment, Pineda will have a right of contribution from his co-heirs, to achieve an adjustment of the proper share of each heir in the distributable estate. All told, the Government has two ways of collecting the tax in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received. This remedy was adopted in Government of the Philippine Islands v. Pamintuan, supra. In said case, the Government filed an action against all the heirs for the collection of the tax. This action rests on the concept that hereditary property consists only of that part which remains after the settlement of all lawful claims against the estate, for the settlement of which the entire estate is first liable. The reason why in case suit is filed against all the heirs the tax due from the estate is levied proportionately against them is to achieve thereby two results: first, payment of the tax; and second, adjustment of the shares of each heir in the distributed estate as lessened by the tax. Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all property and rights to property belonging to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due, the estate. This second remedy is the very avenue the Government took in this case to collect the tax. The Bureau of Internal Revenue should be given, in instances like the case at bar, the necessary discretion to avail itself of the most expeditious way to collect the tax as may be envisioned in the particular provision of the Tax Code above quoted, because taxes are the lifeblood of government and their prompt and certain availability is an imperious need. And as afore-stated in this case the suit seeks to achieve only one objective: payment of the tax. The adjustment of the respective shares due to the heirs from the inheritance, as lessened by the tax, is left to await the suit for contribution by the heir from whom the Government recovered said tax.

Tan vs. Del Rosario, Jr. RULING

Whether or not RA 7496 is unconstitutional. NO. Article VI, Section 26(1) Article VI, Section 26(1), of the Constitution has been envisioned so as: (a) to prevent log-rolling legislation intended to unite the members of the legislature who favor any one of unrelated subjects in support of the whole act, (b) to avoid surprises or even fraud upon the legislature, and (c) to fairly apprise the people, through such publications of its proceedings as are usually made, of the subjects of legislation. The above objectives of the fundamental law appear to us to have been sufficiently met. Anything else would be to require a virtual compendium of the law which could not have been the intendment of the constitutional mandate. Petitioner intimates that Republic Act No. 7496 desecrates the constitutional requirement that taxation "shall be uniform and equitable" in that the law would now attempt to tax single proprietorships and professionals differently from the manner it imposes the tax on corporations and partnerships. The contention clearly forgets, however, that such a system of income taxation has long been the prevailing rule even prior to Republic Act No. 7496. Article VI, Section 28(1) Uniformity of taxation, like the kindred concept of equal protection, merely requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities (Juan Luna Subdivision vs. Sarmiento, 91 Phil. 371). Uniformity does not forfend classification as long as: (1) the standards that are used therefor are substantial and not arbitrary, (2) the categorization is germane to achieve the legislative purpose, (3) the law applies, all things being equal, to both present and future conditions, and (4) the classification applies equally well to all those belonging to the same class (Pepsi Cola vs. City of Butuan, 24 SCRA 3; Basco vs. PAGCOR, 197 SCRA 52). What may instead be perceived to be apparent from the amendatory law is the legislative intent to increasingly shift the income tax system towards the schedular approach in the income taxation of individual taxpayers and to maintain, by and large, the present global treatment on taxable corporations. We certainly do not view this classification to be arbitrary and inappropriate. Article III, Section 1 Petitioner gives a fairly extensive discussion on the merits of the law, illustrating, in the process, what he believes to be an imbalance between the tax liabilities of those covered by the amendatory law and those who are not. With the legislature primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs (place) of taxation. This court cannot freely delve into those matters which, by constitutional fiat, rightly rest on legislative judgment. Of course, 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. This stage, however, has not been demonstrated to have been reached within any appreciable distance in this controversy before us. Having arrived at this conclusion, the plea of petitioner to have the law declared unconstitutional for being violative of due process must perforce fail. The due process clause may correctly be invoked only when there is a clear contravention of inherent or constitutional limitations in the exercise of the tax power. No such transgression is so evident to us.

Sison, Jr. vs. Ancheta RULING

Whether or not Section 1 of BP Blg 135 violates the due process and equal protection clauses of the Constitution, while also violating the rule that taxes must be uniform and equitable No. Assuming that said amount represents a portion of the 75% of his war damage claim which was not paid, the same would not be deductible as a loss in 1951 because, according to petitioner, the last installment he received from the War Damage Commission, together with the notice that no further payment would be made on his claim, was in 1950. In the circumstance, said amount would at most be a proper deduction from his 1950 gross income. In the second place, said amount cannot be considered as a "business asset" which can be deducted as a loss in contemplation of law because its collection is not enforceable as a matter of right, but is dependent merely upon the generosity and magnanimity of the U. S. government. As of the end of 1945, there was absolutely no law under which petitioner could claim compensation for the destruction of his properties during the battle for the liberation of the Philippines. And under the Philippine Rehabilitation Act of 1946, the payments of claims by the War Damage Commission merely depended upon its discretion to be exercised in the manner it may see lit, but the non-payment of which cannot give rise to any enforceable right. Yes. It is well known that our internal revenue laws are not political in nature and as such were continued in force during the period of enemy occupation and in effect were actually enforced by the occupation government. As a matter of fact, income tax returns were filed during that period and income tax payment were effected and considered valid and legal. Such tax laws are deemed to be the laws of the occupied territory and not of the occupying enemy.

Commissioner of Internal Revenue vs. Fortune Tobacco Corporation RULING

Whether or not Section 1 of RR 17-99 is an unauthorized administrative legislation on the part of the CIR. Yes. The proviso in Section 1 of RR 17-99 clearly went beyond the terms of the law it was supposed to implement, and therefore entitles Fortune Tobacco to claim a refund of the overpaid excise taxes collected pursuant to this provision. The rule on uniformity of taxation is violated by the proviso in Section 1, RR 17-99. Uniformity in taxation requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities. Although the brands all belong to the same category, the proviso in Section 1, RR 17-99 authorized the imposition of different (and grossly disproportionate) tax rates. It effectively extended the qualification stated in the third paragraph of Section 145(c) of the 1997 Tax Code that was supposed to apply only during the transition period. In the process, the CIR also perpetuated the unequal tax treatment of similar goods that was supposed to be cured by the shift from ad valorem to specific taxes. The Court further said that the omission in the law in fact reveals the legislative intent not to adopt the higher tax rule. It appears that despite its awareness of the need to protect the increase of excise taxes to increase government revenue, Congress ultimately decided against adopting the higher tax rule.

Taganito Mining v. CIR RULING

Whether or not TMC is entitled to refund. NO. Tax refund partake of the nature of an exemption, and as such, tax exemption cannot be allowed unless granted in the most explicit and categorical language. Taxes are what we pay for civilized society. Without taxes, the government would be paralyzed for lack of the motive power to activate and operate it. Whether or not the actual market value that should be used should be the market value after the assessment abroad was conducted. NO. Use market value right after removal from the bed or mines. Sec. 151(3) of the Tax Code 1: on all metallic minerals, a tax of five percent (5%) based on the actual market value of the gross output thereof at the time of removal, in the case of those locally extracted or produced: or the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax, in case of importation. The law refers to the actual market value of the minerals at the time these minerals were moved away from the position it occupied, i.e. Philippine valuation and analysis because it is in this country where these minerals were extracted, removed and eventually shipped abroad. To reckon the actual market value at the time of removal is also consistent with the essence of an excise tax. It is a charge upon the privilege of severing or extracting minerals from the earth, and is due and payable upon removal of the mineral products from its bed or mines (Republic Cement vs. Comm, 23 SCRA 967)

Province of Misamis Oriental vs. Cagayan Electric Power andLight Company, Inc. RULING

Whether or not a corporation whose franchise expressly provides that the payment of the "franchise tax of three per centum of the gross earnings shall be in lieu of all taxes and assessments of whatever authority upon privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee." is exempt from paying a provincial franchise tax. (YES) There is no provision in P.D. No. 231 expressly or impliedly amending or repealing Section 3 of R.A. No. 6020. The perceived repugnancy between the two statutes should be very clear before the Court may hold that the prior one has been repealed by the later, since there is no express provision to that effect (Manila Railroad Co. vs. Rafferty, 40 Phil. 224). The rule is that a special and local statute applicable to a particular case is not repealed by a later statute which is general in its terms, provisions and application even if the terms of the general act are broad enough to include the cases in the special law (id.) unless there is manifest intent to repeal or alter the special law. Republic Acts Nos. 3247, 3570 and 6020 are special laws applicable only to CEPALCO, while P.D. No. 231 is a general tax law. The presumption is that the special statutes are exceptions to the general law (P.D. No. 231) because they pertain to a special charter granted to meet a particular set of conditions and circumstances. The franchise of respondent CEPALCO expressly exempts it from payment of "all taxes of whatever authority" except the three per centum (3%) tax on its gross earnings. This Court pointed out that such exemption is part of the inducement for the acceptance of the franchise and the rendition of public service by the grantee. As a charter is in the nature of a private contract, the imposition of another franchise tax on the corporation by the local authority would constitute an impairment of the contract between the government and the corporation. Local Tax Regulation No. 3-75 issued by the Secretary of Finance on June 26, 1976, has made it crystal clear that the franchise tax provided in the Local Tax Code (P.D. No. 231, Sec. 9) may only be imposed on companies with franchises that do not contain the exempting clause. Thus it provides: The franchise tax imposed under local tax ordinance pursuant to Section 9 of the Local Tax Code, as amended, shall be collected from businesses holding franchise but not from business establishments whose franchise contain the "in-lieu-of-all-taxes-proviso". Manila Electric Company vs. Vera, 67 SCRA 351, cited by the petitioner, is not applicable here because what the Government sought to impose on Meralco in that case was not a franchise tax but a compensating tax on the poles, wires, transformers and insulators which it imported for its use.

Alhambra Cigar v. Collector RULING

Whether or not the expenses claimed by the company are allowable deductions. (YES) Under Section 30 of the Tax Code, whenever a controversy arises on the deductibility, for purposes of income tax, of certain items for alleged compensation of officers of the taxpayer, two questions become material, namely: (a) Have "personal services" been "actually rendered" by said officers? (b) In the affirmative case, what is the "reasonable allowance" therefor? When the Collector disallowed the fees, bonuses and commissions aforementioned, and the company appealed there from, it became necessary for the lower court to determine whether said officer had correctly applied section 30 of the Tax Code, and this, in turn, required the consideration of the two questions already adverted to. In the circumstances surrounding the case, the lower court has correctly construed and applied said provision.

Philippine Airlines, Inc. vs. Edu RULING

Whether or not motor vehicle registration fees are taxes to which Philippine Airlines is exempt. Taxes are for revenue, whereas fees are collected for purposes of regulation and inspection, and are for that reason limited in amount to what is necessary to cover the cost of the services rendered in that connection. It is the object of the charge, and not the name, that determines whether a charge is a tax or a fee. The money collected under the Motor Vehicle Law is not intended for the expenditures of the Motor Vehicle Office but accrues to the funds for the construction and maintenance of public roads, streets and bridges. As the fees are not collected for regulatory purposes as an incident to the enforcement of regulations governing the operation of motor vehicles on public highways, but to provide revenue with which the Government is to construct and maintain public highways for everyone's use, they are veritable taxes, not merely fees. PAL is, thus, exempt from paying such fees, except for the period between 27 June 1968 to 9 April 1979, where its tax exemption in the franchise was repealed

Heng Tong Textiles Co., Inc. vs. Com. of Internal Revenue RULING

Whether or not petitioner was guilty of fraud so as to warrant the imposition of a penalty of 50% on the deficiency. (NO) We perceive in the entire set-up an arrangement through which the sales taxes due could be minimized, by having Pan-Asiatic Commercial, as indorsee of the goods, withdraw the same from Customs upon payment of the advance sales tax and then execute a sale thereof to Heng Tong Textiles at cost, or at a negligible profit. As it turned out, according to the Court of Tax Appeals, "the goods were made to appear as having (thus) been sold ... so that no sales tax was paid by petitioner upon the sales of such goods ... (and) neither, was any sales tax paid on the supposed sales of said goods by the Pan-Asiatic Commercial to the petitioner as the sales were made apparently at cost." This is so because "during the period in question," the Court of Tax Appeals added, "the sales tax on sales of imported articles was based on the gross selling price thereof, the advance sales tax paid upon removal of the goods from the customhouse being credited against the tax on the actual gross selling price paid by the importer. In our opinion, however, the arrangement resorted to does not by itself alone justify the penalty imposed. Section 183 (a), paragraph 3, of the Internal Revenue Code, as amended by Republic Act No. 253, speaks of willful neglect to file the return or willful making of a false or fraudulent return. An attempt to minimize one's tax does not necessarily constitute fraud. It is a settled principle that a taxpayer may diminish his liability by any means which the law permits. "The intention to minimize taxes, when used in the context of fraud, must be proved to exist by clear and convincing evidence amounting to more than mere preponderance, and cannot, be justified by mere speculation. This is because fraud is never lightly to be presumed." (Yutivo Sons Hardware Co. vs. CTA, G.R. No. L-13203, and cases cited). No such evidence is shown by the record in the case of the herein petitioner. Its actuation is not incompatible with good faith on its part, that is, with a genuine belief that by indorsing the goods to Pan-Asiatic Commercial so that the latter could, as it did, take delivery thereof, Pan-Asiatic Commercial would in law be considered the importer. It may even be true, as the petitioner insists, that it was Pan-Asiatic Commercial that financed the importations but placed them in the name of the petitioner as a matter of accommodation, in which case the element of fraud would be ruled out, although from the legal viewpoint and as far as the right of the Government to collect the taxes was concerned the petitioner was the real importer and hence must shoulder the tax burden.

Commissioner of Internal Revenue vs. The Stanley Works Sales (Phils.), Incorporated RULING

Whether or not petitioner's right to collect the deficiency income tax of respondent for taxable year 1989 has prescribed. (YES) The statute of limitations on the right to assess and collect a tax means that once the period established by law for the assessment and collection of taxes has lapsed, the government's corresponding right to enforce that action is barred by provision of law. The period to assess and collect deficiency taxes may be extended only upon a written agreement between the CIR and the taxpayer prior to the expiration of the three-year prescribed period in accordance with Section 222 (b) of the NIRC. Furthermore, jurisprudence is replete with requisites of a valid waiver: 1. The waiver must be in the proper form prescribed by RMO 20-90. The phrase "but not after ______ 19 ___", which indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription, should be filled up. 2. The waiver must be signed by the taxpayer himself or his duly authorized representative. In the case of a corporation, the waiver must be signed by any of its responsible officials. In case the authority is delegated by the taxpayer to a representative, such delegation should be in writing and duly notarized. 3. The waiver should be duly notarized. 4. The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver. The date of such acceptance by the BIR should be indicated. However, before signing the waiver, the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form, duly notarized, and executed by the taxpayer or his duly authorized representative. 5. Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed. 6. The waiver must be executed in three copies, the original copy to be attached to the docket of the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver. The fact of receipt by the taxpayer of his/her file copy must be indicated in the original copy to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement. In Philippine Journalist, Inc. v. Commissioner of Internal Revenue, the Court categorically stated that a Waiver must strictly conform to RMO No. 20-90. The mandatory nature of the requirements set forth in RMO No. 20-90, as ruled upon by this Court, was recognized by the BIR itself in the latter's subsequent issuances, namely, Revenue Memorandum Circular (RMC) Nos. 6-200513 and 29- 2012.14 Thus, the BIR cannot claim the benefits of extending the period to collect the deficiency tax as a consequence of the Waiver when, in truth it was the BIR's inaction which is the proximate cause of the defects of the Waiver. The BIR has the burden of ensuring compliance with the requirements of RMO No. 20-90, as they have the burden of securing the right of the government to assess and collect tax deficiencies. This right would prescribe absent any showing of a valid extension of the period set by the law. To emphasize, the Waiver was not a unilateral act of the taxpayer; hence, the BIR must act on it, either by conforming to or by disagreeing with the extension. A waiver of the statute of limitations, whether on assessment or collection, should not be construed asa waiver of the right to invoke the defense of prescription but, rather, an agreement between the taxpayer and the BIR to extend the period to a date certain, within which the latter could still assess or collect taxes due. The waiver does not imply that the taxpayer relinquishes the right to invoke prescription unequivocally. Although we recognize that the power of taxation is deemed inherent in order to support the government, tax provisions are not all about raising revenue. Our legislature has provided safeguards and remedies beneficial to both the taxpayer, to protect against abuse; and the government, to promptly act for the availability and recovery of revenues. A statute of limitations on the assessment and collection of internal revenue taxes was adopted to serve a purpose that would benefit both the taxpayer and the government. This Court has expounded on the significance of adopting a statute of limitation on tax assessment and collection in this case: The provision of law on prescription was adopted in our statute books upon recommendation of the tax commissioner of the Philippines which declares: Under the former law, the right of the Government to collect the tax does not prescribe. However, in fairness to the taxpayer, the Government should be estopped from collecting the tax where it failed to make the necessary investigation and assessment within 5 years after the filing of the return and where it failed to collect the tax within 5 years from the date of assessment thereof. Just as the government is interested in the stability of its collection, so alsoare the taxpayers entitled to an assurance that they will not be subjected to further investigation for tax purposes after the expiration of a reasonable period of time. (Vol. II, Report of the Tax Commission of the Philippines, pp. 321-322) The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to its citizens; to the Government because tax officers would be obliged to act promptly in the making of assessment, and to citizens because after the lapse of the period of prescription citizens would havea feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers, not to determine the latter's real liability, but to take advantage of every opportunity to molest peaceful, law-abiding citizens. Without such legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax agents. The law on prescription being a remedial measure should be interpreted in a way conducive to bringing about the beneficient purpose of affording protection to the taxpayer within the contemplation of the Commission which recommends the approval of the law.

Republic vs. Caguioa RULING

Whether or not public respondent judge committed grave abuse of discretion amounting to lack or excess in jurisdiction in peremptorily and unjustly issuing the injunctive writ in favor of private respondents despite the absence of the legal requisites for its issuance One such case of grave abuse obtained in this case when Judge Caguioa issued his Order of May 4, 2005 and the Writ of Preliminary Injunction on May 11, 2005 despite the absence of a clear and unquestioned legal right of private respondents. In holding that the presumption of constitutionality and validity of R.A. No. 9334 was overcome by private respondents for the reasons public respondent cited in his May 4, 2005 Order, he disregarded the fact that as a condition sine qua non to the issuance of a writ of preliminary injunction, private respondents needed also to show a clear legal right that ought to be protected. That requirement is not satisfied in this case. To stress, the possibility of irreparable damage without proof of an actual existing right would not justify an injunctive relief. Indeed, Sections 204 and 229 of the NIRC provide for the recovery of erroneously or illegally collected taxes which would be the nature of the excise taxes paid by private respondents should Section 6 of R.A. No. 9334 be declared unconstitutional or invalid. The Court finds that public respondent had also ventured into the delicate area which courts are cautioned from taking when deciding applications for the issuance of the writ of preliminary injunction. Having ruled preliminarily against the prima facie validity of R.A. No. 9334, he assumed in effect the proposition that private respondents in their petition for declaratory relief were duty bound to prove, thereby shifting to petitioners the burden of proving that R.A. No. 9334 is not unconstitutional or invalid. In the same vein, the Court finds Judge Caguioa to have overstepped his discretion when he arbitrarily fixed the injunction bond of the SBF enterprises at only P1million. Rule 58, Section 4(b) provides that a bond is executed in favor of the party enjoined to answer for all damages which it may sustain by reason of the injunction. The purpose of the injunction bond is to protect the defendant against loss or damage by reason of the injunction in case the court finally decides that the plaintiff was not entitled to it, and the bond is usually conditioned accordingly. Whether this Court must issue the writ of prohibition, suffice it to stress that being possessed of the power to act on the petition for declaratory relief, public respondent can proceed to determine the merits of the main case. Moreover, lacking the requisite proof of public respondent's alleged partiality, this Court has no ground to prohibit him from proceeding with the case for declaratory relief. For these reasons, prohibition does not lie.

Land Transportation Office vs. City of Butuan RULING

Whether or not respondent city of Butuan may issue license and permit and collect fees for the operation of tricycle. No, based on the-"Guidelines to Implement the Devolution of LTFRBs Franchising Authority over Tricycles-For-Hire to Local Government units pursuant to the Local Government Code"- the newly delegated powers to LGU's pertain to the franchising and regulatory powers exercised by the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and issuance of licenses for the driving thereof. Corollarily, the exercised of a police power must be through a valid delegation. In this case the police power of registering tricycles was not delegated to the LGU's, but remained in the LTO. Clearly unaffected by the Local Government Code are the powers of LTO under R.A. No.4136 requiring the registration of all kinds of motor vehicles "used or operated on or upon any public highway" in the country.A 7160). To construe the tax provisions of Section 133 (1) of the LGC indistinctively would result in the repeal to that extent of LTO's regulatory power which evidently has not been intended. If it were otherwise, the law could have just said so in Section 447 and 458 of Book III of the Local Government Code in the same manner that the specific devolution of LTFRB's power on franchising of tricycles has been provided. Repeal by implication is not favored. The power over tricycles granted under Section 458(a)(3)(VI) of the Local Government Code to LGUs is the power to regulate their operation and to grant franchises for the operation thereof. The exclusionary clause contained in the tax provisions of Section 133 (1) of the Local Government Code must not be held to have had the effect of withdrawing the express power of LTO to cause the registration of all motor vehicles and the issuance of licenses for the driving thereof. These functions of the LTO are essentially regulatory in nature, exercised pursuant to the police power of the State, whose basic objectives are to achieve road safety by insuring the road worthiness of these motor vehicles and the competence of drivers prescribed by R. A. 4136. Not insignificant is the rule that a statute must not be construed in isolation but must be taken in harmony with the extant body of laws. LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof, and not to issue registration. Ergo, the ordinance being repugnant to a statute is void and ultra vires.

Yutivo Sons Hardware Co. vs. Court of Tax Appeals RULING

Whether or not sales tax already paid by Yutivo should first be deducted from the selling price of SM in computing the sales tax due on each vehicle. No. The Court likewise found that the Tax Court erred in computing the alleged deficiency sales tax on the selling price of SM without previously deducting therefrom the sales tax due thereon. The sales tax provisions impose a tax on original sales measured by "gross selling price" or "gross value in money". These terms, as interpreted by the respondent Collector, do not include the amount of the sales tax, if invoiced separately. This is the exact amount which, according to Presiding Judge Nable of the Court of Tax Appeals, Yutivo would pay, exclusive of the surcharges

Chamber of Real Estate and Builders' Associations, Inc. vs. Romulo RULING

Whether or not the imposition of the MCIT on domestic corporations is unconstitutional. NO. The MCIT on domestic corporations is a new concept introduced by RA 8424 to the Philippine taxation system. It was devised as a relatively simple and effective revenue-raising instrument compared to the normal income tax which is more difficult to control and enforce. It is a means to ensure that everyone will make some minimum contribution to the support of the public sector. Domestic corporations owe their corporate existence and their privilege to do business to the government. They also benefit from the efforts of the government to improve the financial market and to ensure a favorable business climate. It is therefore fair for the government to require them to make a reasonable contribution to the public expenses. Congress intended to put a stop to the practice of corporations which, while having large turnovers, report minimal or negative net income resulting in minimal or zero income taxes year in and year out, through under-declaration of income or over-deduction of expenses otherwise called tax shelters. Certainly, an income tax is arbitrary and confiscatory if it taxes capital because capital is not income. In other words, it is income, not capital, which is subject to income tax. However, the MCIT is not a tax on capital. The MCIT is imposed on gross income which is arrived at by deducting the capital spent by a corporation in the sale of its goods, i.e., the cost of goods and other direct expenses from gross sales. Clearly, the capital is not being taxed. Furthermore, the MCIT is not an additional tax imposition. It is imposed in lieu of the normal net income tax, and only if the normal income tax is suspiciously low. The MCIT merely approximates the amount of net income tax due from a corporation, pegging the rate at a very much reduced 2% and uses as the base the corporation's gross income. Besides, there is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. Statutes taxing the gross "receipts," "earnings," or "income" of particular corporations are found in many jurisdictions. Tax thereon is generally held to be within the power of a state to impose; or constitutional, unless it interferes with interstate commerce or violates the requirement as to uniformity of taxation. Whether or not the imposition of CWT on income from sales of real properties classified as ordinary assets under RRs 2-98, 6-2001 and 7-2003, is unconstitutional. NO. RR 9-98, in declaring that MCIT should be imposed whenever such corporation has zero or negative taxable income, merely defines the coverage of Section 27(E). This means that even if a corporation incurs a net loss in its business operations or reports zero income after deducting its expenses, it is still subject to an MCIT of 2% of its gross income. This is consistent with the law which imposes the MCIT on gross income notwithstanding the amount of the net income. But the law also states that the MCIT is to be paid only if it is greater than the normal net income. Obviously, it may well be the case that the MCIT would be less than the net income of the corporation which posts a zero or negative taxable income. On the other hand, the withholding tax system is a procedure through which taxes (including income taxes) are collected. Under Section 57 of RA 8424, the types of income subject to withholding tax are divided into three categories: (a) withholding of final tax on certain incomes; (b) withholding of creditable tax at source and (c) tax-free covenant bonds. Petitioner is concerned with the second category (CWT) and maintains that the revenue regulations on the collection of CWT on sale of real estate categorized as ordinary assets are unconstitutional. We have long recognized that the method of withholding tax at source is a procedure of collecting income tax which is sanctioned by our tax laws. The withholding tax system was devised for three primary reasons: first, to provide the taxpayer a convenient manner to meet his probable income tax liability; second, to ensure the collection of income tax which can otherwise be lost or substantially reduced through failure to file the corresponding returns and third, to improve the government's cash flow. This results in administrative savings, prompt and efficient collection of taxes, prevention of delinquencies and reduction of governmental effort to collect taxes through more complicated means and remedies. Respondent Secretary has the authority to require the withholding of a tax on items of income payable to any person, national or juridical, residing in the Philippines. Such authority is derived from Section 57(B) of RA 8424. Furthermore, the taxes withheld are in the nature of advance tax payments by a taxpayer in order to extinguish its possible tax obligation. They are installments on the annual tax which may be due at the end of the taxable year. Under RR 2-98, the tax base of the income tax from the sale of real property classified as ordinary assets remains to be the entity's net income imposed under Section 24 (resident individuals) or Section 27 (domestic corporations) in relation to Section 31 of RA 8424, i.e. gross income less allowable deductions. The CWT is to be deducted from the net income tax payable by the taxpayer at the end of the taxable year. Precisely, Section 4(a)(ii) and (c)(ii) of RR 7-2003 reiterate that the tax base for the sale of real property classified as ordinary assets remains to be the net taxable income. It is stressed that the CWT is creditable against the tax due from the seller of the property at the end of the taxable year. The seller will be able to claim a tax refund if its net income is less than the taxes withheld. Nothing is taken that is not due so there is no confiscation of property repugnant to the constitutional guarantee of due process. More importantly, the due process requirement applies to the power to tax. The CWT does not impose new taxes nor does it increase taxes. It relates entirely to the method and time of payment.

Western Minolco Corporation vs. Commissioner of Internal Revenue RULING

Whether or not the petitioner is exempt from the 35% transaction tax. (NO) The statutory provisions on tax exemptions clearly exclude the 35% transaction tax. Section 1 of Presidential Decree No. 237 on Compensating Tax, Section I of P.D. No. 238 on Conditionally Free Importations, and Section 53 of P.D. No. 463 all refer to tax exemptions for importations of machineries, tools for production, plants to convert mineral ores into saleable form, spare parts, supplies, materials, accessories, explosives, chemicals and transportation and communication facilities, to be used in mining operations. Section 53 of P.D. No. 463 likewise refers to tax exemptions for mining claims and improvements thereon, and mineral products, except income tax. The petitioner's Certificate of Qualification for Tax Exemption No. 34 exempts "... from payment of all taxes except income tax, payable by him in the conduct of his business and in the importation of machineries, spare parts and or equipment listed in the stamped "Annex I " which are considered to be indispensable in the operation and will be used by said operator lessee exclusively in the mineral land mentioned above. Clearly, the transaction tax of P1,317,801.03 paid by the petitioner was not actually imposed upon it in the conduct of its mining business or in the importation of machinery, spare parts and or equipment listed in the stamped "ANNEX I" of its certificate of qualification for tax exemption and which are indespensable in the operation and used exclusively on petitioner's mineral land. Petitioner submits that inasmuch as taxes in general constitute allowable deductions from gross income in the determination of taxable net income, the 35% transaction tax is a business tax and not an income tax because the Revenue Code itself classifies it as "Business Tax" under Title V, and that P. D. No. 1154 expressly states that the transaction tax shall be allowed as a deductible item for purposes of determining the borrower's taxable income. The petitioner's contentions deserve scant consideration, The 35%, transaction tax is imposed on interest income from commercial papers issued in the primary money market. Being a tax on interest, it is a tax on income. The 35% transaction tax is an income tax on interest earnings to the lenders or placers The latter are actually the taxpayers. Therefore, the tax cannot be a tax imposed upon petitioner. In other words, the petitioner who borrowed funds from several financial institutions by issuing commercial papers merely withheld the 35% transaction tax before paying to the financial institutions the interests earned by them and later remitted the same to the respondent Commissioner of Internal Revenue. The tax could have been collected by a different procedure but the statute chose this method. Whatever collecting procedure is adopted does not change the nature of the tax. Furthermore, whether or not certain taxes are on income is not necessarily determined by their deductibility or non-deductibility from gross income. As correctly observed by the Solicitor General, income in the form of dividends, capital gains on real property pursuant to Batas Pambansa Blg, 37, shares of stock pursuant to Presidential Decree 1739, and interests on savings in bank accounts, for instance, are incomes, yet they are not includible in the gross income when income taxes are paid because these are subject to final withholding taxes. The petitioner also submits that the 35% transaction tax is a business tax because it is imposed under Title V, entitled -,Taxes on Business" and classified specially under Chapter II, entitled "Tax on Business." The location of the 35%, tax in the Tax Code does not necessarily determine its nature, Again, we agree with the Solicitor General that the legislative body must have realized later that. the subject tax was inappropriately included among the taxes on business because Section 210 of the Tax Code has been repealed by Presidential Decree No. 1739, which now imposes a tax of 20% on interests from deposits and yields from deposit substitutes such as commercial papers issued in the primary market as principal instrument and provides for them in Section 24(cc) under Chapter III, Tax on Corporations, Title II-Income. Tax. Petitioner Western Minolco Corporation has failed to justify its claimed exemption from the 35,7c, transaction tax. The decision of the Commissioner of Internal Revenue denying the petitioner's claim for refund is affirmed. It bears repeating that the law looks with disfavor on tax exemptions and he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted.

North Camarines Lumber Co., Inc. vs. Collector ofInternal Revenue RULING

Whether or not the CTA erred in dismissing the case on the ground of lack of jurisdiction for being filed out of time? (NO) In contending that the Court of Tax Appeals erred, the petitioner points out that Section 7, and not Section 11, of Republic Act No. 1125 confers and determines the jurisdiction of the respondent court, and that Section 11 refers merely to the prescriptive period for filing appeals. While the petitioner is correct as to the attribute of Section 7, it should be remembered that, for the respondent court to have jurisdiction over any case, the party seeking redress must first invoke its exercise in the manner and within the time prescribed by the law. Thus Section 7, which enumerates the specific cases falling within the jurisdiction of the Court of Tax Appeals, must be read together with Section 11, which fixes the time for invoking said jurisdiction. There is no question that petitioner's case is covered by Section 7 and, therefore, comes within the jurisdiction of the respondent court. But was said jurisdiction invoked by toe petitioner within the period prescribed by Section 11? As the petitioner had consumed thirty-three days, its appeal was clearly filed out of time. It is argued, however, that in computing the 30-day period fixed in Section 11 of Republic Act No. 1125, the letter of the respondent Collector dated January 30, 1956, denying the second request for reconsideration, should be considered as the final decision contemplated in Section 7, and not the letter of demand dated August 30, 1955. This contention is untenable. We cannot countenance the theory that would make the commencement of the statutory 30-day period solely dependent on the will of the taxpayer and place the latter in a position to put off indefinitely and at his convenience the finality of a tax assessment. Such an absurd procedure would be detrimental to the interest of the Government, for "taxes are the lifeblood of the government, and their prompt and certain availability an imperious need."

Commissioner of lnternal Revenue vs. Algue, Inc. RULING

Whether or not the Collector of Internal Revenue correctly disallowed the P75, 000.00 deduction claimed by private respondent Algue Inc., as legitimate business expenses in its income tax returns. No, The Supreme Court agrees with the respondent court that the amount of the promotional fees was not excessive. The P75,000.00 was 60% of the total commission. This was a reasonable proportion, considering that it was the payees who did practically everything, from the formation of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties. The claimed deduction by the private respondent was permitted under the Internal Revenue Code and should therefore not have been disallowed by the petitioner.

Commissioner of lnternal Revenue vs. Algue, Inc. RULINGG

Whether or not the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction claimed by private respondent Algue Inc., as legitimate business expenses in its income tax returns. No, The Supreme Court agrees with the respondent court that the amount of the promotional fees was not excessive. The P75,000.00 was 60% of the total commission. This was a reasonable proportion, considering that it was the payees who did practically everything, from the formation of the Vegetable Oil Investment Corporation to the actual purchase by it of the Sugar Estate properties. The claimed deduction by the private respondent was permitted under the Internal Revenue Code and should therefore not have been disallowed by the petitioner.

Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc. RULING

Whether or not the Expanded Withholding Tax Assessments issued by petitioner against the respondent for taxable year 1994 was without any factual and legal basis; In order to determine whether the requirement for a valid assessment is duly complied with, it is important to ascertain the governing law, rules and regulations and jurisprudence at the time the assessment was issued. In the instant case, the PANs and FANs pertaining to the deficiency EWT for taxable years 1994 and 1998, respectively, were issued on January 19, 1998, when the Tax Code was already in effect, as correctly found by the CTA En Banc: The date of issuance of the notice of assessment determines which law applies- the 1997 NIRC or the old Tax Code. The case of Commissioner of Internal Revenue v. Bank of Philippine Islands is instructive: In merely notifying BPI of his findings, the CIR relied on the provisions of the former Section 270 prior to its amendment by RA 8424 (also known as the Tax Reform Act of 1997). In CIR v. Reyes, we held that: In the present case, Reyes was not informed in writing of the law and the facts on which the assessment of estate taxes had been made. She was merely notified of the findings by the CIR, who had simply relied upon the provisions of former Section 229 prior to its amendment by [RA] 8424, otherwise known as the Tax Reform Act of 1997. First, RA 8424 has already amended the provision of Section 229 on protesting an assessment. The old requirement of merely notifying the taxpayer of the CIR's findings was changed in 1998to informing the taxpayer of not only the law, but also of the facts on which an assessment would be made; otherwise, the assessment itself would be invalid. It was on February 12, 1998, that a preliminary assessment notice was issued against the estate. On April 22, 1998, the final estate tax assessment notice, as well as demand letter, was also issued. During those dates, RA 8424 was already in effect. The notice required under the old law was no longer sufficient under the new law. In the instant case, the 1997 NIRC covers the 1994 and 1998 EWT FANs because there were issued on January 19, 1998 and September 21, 2001, respectively, at the time of the effectivity of the 1997 NIRC. Clearly, the assessments are governed by the law. Indeed, Section 228 of the Tax Code provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the assessment is void. To implement the aforesaid provision, Revenue Regulation No. 12-99was enacted by the BIR, of which Section 3.1.4 thereof reads: 3.1.4. Formal Letter of Demand and Assessment Notice. -The formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. The letter of demand calling for payment of the taxpayer's deficiency tax or taxes shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of demand and assessment notice shall be void. The same shall be sent to the taxpayer only by registered mail or by personal delivery. x x x44 It is clear from the foregoing that a taxpayer must be informed in writing of the legal and factual bases of the tax assessment made against him. The use of the word "shall" in these legal provisions indicates the mandatory nature of the requirements laid down therein. In the present case, a mere perusal of the FAN for the deficiency EWT for taxable year 1994 will show that other than a tabulation of the alleged deficiency taxes due, no further detail regarding the assessment was provided by petitioner. Only the resulting interest, surcharge and penalty were anchored with legal basis.45 Petitioner should have at least attached a detailed notice of discrepancy or stated an explanation why the amount of ₱48,461.76 is collectible against respondent46 and how the same was arrived at. Any short-cuts to the prescribed content of the assessment or the process thereof should not be countenanced. The law requires that the legal and factual bases of the assessment be stated in the formal letter of demand and assessment notice. Thus, such cannot be presumed. Otherwise, the express provisions of Article 228 of the NIRC and RR No. 12-99 would be rendered nugatory. The alleged "factual bases" in the advice, preliminary letter and "audit working papers" did not suffice. There was no going around the mandate of the law that the legal and factual bases of the assessment be stated in writing in the formal letter of demand accompanying the assessment notice. We note that the old law merely required that the taxpayer be notified of the assessment made by the CIR. This was changed in 1998 and the taxpayer must now be informed not only of the law but also of the facts on which the assessment is made. Such amendment is in keeping with the constitutional principle that no person shall be deprived of property without due process. In view of the absence of a fair opportunity for Enron to be informed of the legal and factual bases of the assessment against it, the assessment in question was void.

Paseo Realty & Development Corporation vs. Court of Appeals RULING

Whether or not the alleged excess taxes paid by a corporation during a taxable year should be refunded or credited against its tax liabilities for the succeeding year. No. Petitioner's 1989 tax return indicates an aggregate creditable tax of P172,477.00, representing its 1988 excess credit of P146,026.00 and 1989 creditable tax of P54,104.00 less tax due for 1989, which it elected to apply as tax credit for the succeeding taxable year. According to petitioner, it successively utilized this amount when it obtained refunds in CTA Case No. 4439 and CTA Case No. 4528 and applied its1990 tax liability, leaving a balance of P54,104.00, the amount subject of the instant claim for refund. The confusion as to petitioner's entitlement to a refund could altogether have been avoided had it presented its tax return for 1990. Such return would have shown whether petitioner actually applied its 1989 tax credit of P172,477.00, which includes the P54,104.00 creditable taxes withheld for 1989 subject of the instant claim for refund, against its 1990 tax liability as it had elected in its 1989 return, or at least, whether petitioner's tax credit of P172,477.00 was applied to its approved refunds as it claims. The law provides that in case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding year. The carrying forward of any excess or overpaid income tax for a given taxable year is limited to the succeeding taxable year only. Taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. And since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A claim of refund or exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken. Else wise stated, taxation is the rule, exemption therefrom is the exception.

Commissioner of Internal Revenue vs. Bank of the Philippine Islands RULING

Whether or not the assessments issued to BPI for deficiency percentage and documentary stamp taxes for 1986 had already become final and unappealable. (YES) The present Section 228 of the NIRC provides: Sec. 228. Protesting of Assessment. — When the [CIR] or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however, That a preassessment notice shall not be required in the following cases: xxx xxx xxx The taxpayer shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. xxx xxx xxx (emphasis supplied) The sentence "[t]he taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void" was not in the old Section 270 but was only later on inserted in the renumbered Section 228 in 1997. Evidently, the legislature saw the need to modify the former Section 270 by inserting the aforequoted sentence. The fact that the amendment was necessary showed that, prior to the introduction of the amendment, the statute had an entirely different meaning. Indeed, the underlying reason for the law was the basic constitutional requirement that "no person shall be deprived of his property without due process of law." The Supreme Court however, noted what the CTA had to say: xxx xxx xxx From the foregoing testimony, it can be safely adduced that not only was [BPI] given the opportunity to discuss with the [CIR] when the latter issued the former a Pre-Assessment Notice (which [BPI] ignored) but that the examiners themselves went to [BPI] and "we talk to them and we try to [thresh] out the issues, present evidences as to what they need." Now, how can [BPI] and/or its counsel honestly tell this Court that they did not know anything about the assessments? Not only that. To further buttress the fact that [BPI] indeed knew beforehand the assessments[,] contrary to the allegations of its counsel[,] was the testimony of Mr. Jerry Lazaro, Assistant Manager of the Accounting Department of [BPI]. He testified to the fact that he prepared worksheets which contain his analysis regarding the findings of the [CIR's] examiner, Mr. San Pedro and that the same worksheets were presented to Mr. Carlos Tan, Comptroller of [BPI]. xxx xxx xxx From all the foregoing discussions, the Court conclueded that [BPI] was indeed aware of the nature and basis of the assessments, and was given all the opportunity to contest the same but ignored it despite the notice conspicuously written on the assessments which states that "this ASSESSMENT becomes final and unappealable if not protested within 30 days after receipt." Counsel resorted to dilatory tactics and dangerously played with time. Unfortunately, such strategy proved fatal to the cause of his client. The CA never disputed these findings of fact by the CTA: [T]his Court recognizes that the [CTA], which by the very nature of its function is dedicated exclusively to the consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Such findings can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the [CTA]. Under the former Section 270, there were two instances when an assessment became final and unappealable: (1) when it was not protested within 30 days from receipt and (2) when the adverse decision on the protest was not appealed to the CTA within 30 days from receipt of the final decision: Sec. 270. Protesting of assessment. xxx xxx xxx Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such form and manner as may be prescribed by the implementing regulations within thirty (30) days from receipt of the assessment; otherwise, the assessment shall become final and unappealable. If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the decision on the protest may appeal to the [CTA] within thirty (30) days from receipt of the said decision; otherwise, the decision shall become final, executory and demandable. Implications Of A Valid Assessment Considering that the October 28, 1988 notices were valid assessments, BPI should have protested the same within 30 days from receipt thereof. The December 10, 1988 reply it sent to the CIR did not qualify as a protest since the letter itself stated that "[a]s soon as this is explained and clarified in a proper letter of assessment, we shall inform you of the taxpayer's decision on whether to pay or protest the assessment." Hence, by its own declaration, BPI did not regard this letter as a protest against the assessments. As a matter of fact, BPI never deemed this a protest since it did not even consider the October 28, 1988 notices as valid or proper assessments. The inevitable conclusion is that BPI's failure to protest the assessments within the 30-day period provided in the former Section 270 meant that they became final and unappealable. Thus, the CTA correctly dismissed BPI's appeal for lack of jurisdiction. BPI was, from then on, barred from disputing the correctness of the assessments or invoking any defense that would reopen the question of its liability on the merits. Not only that. There arose a presumption of correctness when BPI failed to protest the assessments: Tax assessments by tax examiners are presumed correct and made in good faith. The taxpayer has the duty to prove otherwise. In the absence of proof of any irregularities in the performance of duties, an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. All presumptions are in favor of the correctness of tax assessments.

Municipality of Makati vs. Court of Appeals RULING

Whether or not the balance of the appraised value of the subject property may be levied upon the second account of petitioner municipality. In this jurisdiction, well-settled is the rule that public funds are not subject to levy and execution, unless otherwise provided for by statute. More particularly, the properties of a municipality, whether real or personal, which are necessary for public use cannot be attached and sold at execution sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses and market fees, and which are intended primarily and exclusively for the purpose of financing the governmental activities and functions of the municipality, are exempt from execution. The foregoing rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed an ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decision dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy under execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263- 530850-7. WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to immediately pay Philippine Savings Bank, Inc. and private respondent the amount of P4,953,506.45. Petitioner is hereby required to submit to this Court a report of its compliance with the foregoing order within a non-extendible period of SIXTY (60) DAYS from the date of receipt of this resolution.

Manufacturers Life Insurance Co. vs. Meer RULING

Whether or not the collection of the alleged deficiency premium taxes constitutes double taxation. (NO) In any event there is no constitutional prohibition against double taxation. The appellant takes the position that as advances of premiums were made in Toronto, such premiums are deemed to have been paid there — not in the Philippines — and therefore those payments are not subject to local taxation. The thesis overlooks the actual fact that the loans are made to policyholders in the Philippines, who in turn pay therewith the premium to the insurer thru the Manila branch. Approval of appellants position will enable foreign insurers to evade the tax by contriving to require that premium payments shall be made at their head offices. What is important, the law does not contemplate premiums collected in the Philippines. It is enough that the insurer is doing insurance business in the Philippines, irrespective of the place of its organization or establishment.

Commissioner of Internal Revenue vs. Botelho Shipping Corp. RULING

Whether or not the tax exemption can be applied retroactively YES. The inherent weakness of the last ground becomes manifest when we consider that, if true, there could be no tax exemption of any kind whatsoever, even if Congress should wish to create one, because every such exemption implies a waiver of the right to collect what otherwise would be due to the Government, and, in this sense, is prejudicial thereto. It may not be amiss to add that no tax exemption — like any other legal exemption or exception — is given without any reason therefor. In much the same way as other statutory commands, its avowed purpose is some public benefit or interest, which the law-making body considers sufficient to offset the monetary loss entitled in the grant of the exemption. Indeed, section 20 of Republic Act No. 3079 exacts a valuable consideration for the retroactivity of its favorable provisions, namely, the voluntary assumption, by the end-user who bought reparations goods prior to June 17, 1961 of "all the new obligations provided for in" said Act. Furthermore, Section 14 of the Law on Reparations, as amended, exempts from the compensating tax, not particular persons, but persons belonging to a particular class. Indeed, appellants do not assail the constitutionality of said section 14, insofar as it grants exemptions to end-users who, after the approval of Republic Act No. 3079, on June 17, 1961, purchased reparations goods procured by the Commission. From the viewpoint of Constitutional Law, especially the equal protection clause, there is no difference between the grant of exemption to said end-users, and the extension of the grant to those whose contracts of purchase and sale mere made before said date, under Republic Act No. 1789.

Commissioner of Internal Revenue vs. Estate of Benigno P. Toda, Jr. RULING

Whether or not this is a case of tax evasion or tax avoidance. CIC committed tax evasion. Tax avoidance and Tax evasion are the two most common ways used by taxpayers in escaping from taxation. Tax avoidance is the tax saving device within the means sanctioned by law. This method should be used by the taxpayer in good faith and at arm's length. Tax evasion, on the other hand, is a scheme used outside of those lawful means and when availed of, it usually subjects the taxpayer to further or additional civil of criminal liabilities. Tax evasion connotes the integration of three factors: (1) the end to be achieved, i.e. the payment of less than that known by the taxpayer to be legally due, or the non-payment of tax when it is shown that a tax is due; (2) an accompanying state of mind which is described as being "evil," in "bad faith," "willfull," or "deliberate and not accidental"; and (3) a course of action or failure of action which is unlawful. All these factors are present in the instant case. The scheme resorted to by CIC in making it appear that there were two sales of the subject properties, i.e. from CIC to Altonaga, and then from Altonaga to RMI cannot be considered a legitimate tax planning. Such scheme is tainted with fraud. Altonaga's sole purpose of acquiring and transferring title of the subject properties on the same day was to create a tax shelter. The sale to him was merely a tax ploy, a sham, and without business purpose and economic substance. Doubtless, the execution of the two sales was calculated to mislead the BIR with the end in view of reducing the consequent income tax liability.

Asia International Auctioneers, Inc. vs. Commissioner of Internal Revenue RULING

Whether petitioner is entitled to the tax amnesty program. (YES) VAT and excise taxes are not withholding taxes. The CIR did not assess the petitioner as a withholding agent that failed to withhold or remit the deficiency VAT and excise tax to the BIR under the relevant provisions of the Tax Code. Hence, the argument that AIA is "deemed" a withholding agent for the said deficiency taxes is fallacious. Indirect taxes, like VAT and excise tax, are different from withholding taxes. To distinguish, in indirect taxes, the incidence of taxation falls on one person but the burden thereof can be shifted or passed on to another person such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. On the other hand, in case of withholding taxes, the incidence and burden of taxation fall on the same entity, the statutory taxpayer. The burden of taxation is not shifted to the withholding agent who merely collects, by withholding, the tax due from income payments to entities arising from certain transactions and remits the same to the government. Due to this difference, the deficiency VAT and excise tax cannot be "deemed" as withholding taxes merely because they constitute indirect taxes. Moreover, records support the conclusion that AIA was assessed not as a withholding agent but as the one directly liable for the said deficiency taxes. Petitioner is not prohibited from availing tax amnesty under RA 9399. RA 9399 was passed prior to the passage of RA 9480. RA 9399 does not preclude taxpayers within its coverage from availing of other tax amnesty programs available or enacted in the future like RA 9480. RA 9480, on the other hand, does not exclude from its coverage taxpayers operating within special economic zones. As long as it is within the bounds of the law, a taxpayer has the liberty to choose which tax amnesty program it wants to avail. The Court also took judicial notice of the "Certification of Qualification" issued by Eduardo A. Baluyut, BIR Revenue District Officer, stating that AlA has availed and is qualified for Tax Amnesty for the Taxable Year 2005 and Prior Years pursuant to RA 9480. In the absence of sufficient evidence proving that the certification was issued in excess of authority, the presumption that it was issued in the regular performance of the revenue district officer's official duty stands.

People vs. Castañeda, Jr. RULING

Whether private respondents are entitled to the benefits of the tax amnesty. (NO) PD 370 provides for a tax amnesty in broad terms: "A tax amnesty is hereby granted to any person, natural or juridical, xxx failed to include all that were required to be declared therein if he now voluntarily discloses under this decree all his previously untaxed income and/or wealth such as earnings, receipts, gifts, bequests or any other acquisitions from any source whatsoever which are or were previously taxable under the National Internal Revenue Code, realized here or abroad by condoning all internal revenue taxes including the increments or penalties on account of non-payment as well as all civil, criminal or administrative liabilities, under the National Internal Revenue Code, the Revised Penal Code, the Anti-Graft and Corrupt Practices Act, the Revised Administrative Code, the Civil Service Laws and Regulations, laws and regulations on Immigration and Deportation, or any other applicable law or proclamation, as it is hereby condoned, provided a tax of fifteen (15%) per centum on such previously untaxed income and/or wealth is imposed subject to the following conditions: a. Such previously untaxed income and/or wealth must have been earned or realized prior to 1973, except the following: xxx e. Tax cases which are the subject of a valid information under Republic Act No. 2338 as of December 31, 1973; and xxx" The amnesty provides for the extinction of all liability arising from such acts such as those of the respondents. Thus, the amnesty also eliminates the criminal liabilities attendant to the acts. However, to avail of the benefits of the amnesty, it is required that the claimant must have voluntarily disclosed of his untaxed income or wealth. Where the disclosure of such previously untaxed income or wealth was not voluntary but rather the accompaniment or result of tax cases or tax assessments already pending as of December 31, 1973, the claimant is not entitled to the benefits of PD No. 370. In the case at bar, the violations of the National Internal Revenue Code with which the respondent accused were charged had already been discovered by the BIR when PD No. 370 took effect on January 9, 1974. Thus, the provisions of the amnesty are not available to the private respondents. The fact that the agents of the BIR had already accepted Valencia's application for tax amnesty and his payment of the required 15% special tax cannot be ground for estoppel on the part of the State. The State is not bound by the mistakes of its agents. Still further, a tax amnesty, much like to a tax exemption, is never favored nor presumed in law and if granted by statute, the terms of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority.

Tañada vs. Angara RULING

Whether provisions of the Agreement Establishing the World Trade Organization unduly limit, restrict and impair Philippine sovereignty specifically the legislative power which, under Sec. 2, Article VI, 1987 Philippine Constitution is 'vested in the Congress of the Philippines. No, the WTO agreement does not unduly limit, restrict, and impair the Philippine sovereignty, particularly the legislative power granted by the Philippine Constitution. The Senate was acting in the proper manner when it concurred with the President's ratification of the agreement. While sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the rest of the world. In its Declaration of Principles and State Policies, the Constitution "adopts the generally accepted principles of international law as part of the law of the land, and adheres to the policy of peace, equality, justice, freedom, cooperation and amity, with all nations." By the doctrine of incorporation, the country is bound by generally accepted principles of international law, which are considered to be automatically part of our own laws. One of the oldest and most fundamental rules in international law is pacta sunt servanda — international agreements must be performed in good faith. "A treaty engagement is not a mere moral obligation but creates a legally binding obligation on the parties x x x. A state which has contracted valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of the obligations undertaken." By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender some aspects of their state power in exchange for greater benefits granted by or derived from a convention or pact. After all, states, like individuals, live with coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of their otherwise absolute rights. Thus, treaties have been used to record agreements between States concerning such widely diverse matters as, for example, the lease of naval bases, the sale or cession of territory, the termination of war, the regulation of conduct of hostilities, the formation of alliances, the regulation of commercial relations, the settling of claims, the laying down of rules governing conduct in peace and the establishment of international organizations. The sovereignty of a state therefore cannot in fact and in reality be considered absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put by John F. Kennedy, "Today, no nation can build its destiny alone. The age of self-sufficient nationalism is over. The age of interdependence is here." The WTO reliance on "most favored nation," "national treatment," and "trade without discrimination" cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on "equality and reciprocity," the fundamental law encourages industries that are "competitive in both domestic and foreign markets," thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy of laissez faire. WHEREFORE, the petition is DISMISSED for lack of merit.

Manila Memorial Park, Inc. v. Secretary of the Department of Social Welfare and Development RULING

Whether the 20% discount given to senior citizens is an exercise of the power of eminent domain, thus, requiring the payment of just compensation. (NO) The privilege enjoyed by senior citizens does not come directly from the State, but rather from the private establishments concerned. Accordingly, the tax credit benefit granted to these establishments can be deemed as their just compensation for private property taken by the State for public use. The concept of public use is no longer confined to the traditional notion of use by the public, but held synonymous with public interest, public benefit, public welfare, and public convenience. The discount privilege to which our senior citizens are entitled is actually a benefit enjoyed by the general public to which these citizens belong. The discounts given would have entered the coffers and formed part of the gross sales of the private establishments concerned, were it not for RA 7432. The permanent reduction in their total revenues is a forced subsidy corresponding to the taking of private property for public use or benefit. As a result of the 20 percent discount imposed by RA 7432, respondent becomes entitled to a just compensation. This term refers not only to the issuance of a tax credit certificate indicating the correct amount of the discounts given, but also to the promptness in its release. Equivalent to the payment of property taken by the State, such issuance — when not done within a reasonable time from the grant of the discounts — cannot be considered as just compensation. In effect, respondent is made to suffer the consequences of being immediately deprived of its revenues while awaiting actual receipt, through the certificate, of the equivalent amount it needs to cope with the reduction in its revenues. Besides, the taxation power can also be used as an implement for the exercise of the power of eminent domain. Tax measures are but "enforced contributions exacted on pain of penal sanctions" and "clearly imposed for a public purpose." In recent years, the power to tax has indeed become a most effective tool to realize social justice, public welfare, and the equitable distribution of wealth. While it is a declared commitment under Section 1 of RA 7432, social justice "cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection. The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto." For this reason, a just compensation for income that is taken away from respondent becomes necessary. It is in the tax credit that our legislators find support to realize social justice, and no administrative body can alter that fact. To put it differently, a private establishment that merely breaks even — without the discounts yet — will surely start to incur losses because of such discounts. The same effect is expected if its mark-up is less than 20 percent, and if all its sales come from retail purchases by senior citizens. Aside from the observation we have already raised earlier, it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either its gross income or its gross sales. Operating at a loss through no fault of its own, it will realize that the tax credit limitation under RR 2-94 is inutile, if not improper. Worse, profit-generating businesses will be put in a better position if they avail themselves of tax credits denied those that are losing, because no taxes are due from the latter. This, notwithstanding, we went on to rule in Carlos Superdrug Corporation that the 20% discount and tax deduction scheme is a valid exercise of the police power of the State. The present case, thus, affords an opportunity for us to clarify the above-quoted statements in Central Luzon Drug Corporation and Carlos Superdrug Corporation. First, we note that the above-quoted disquisition on eminent domain in Central Luzon Drug Corporation is obiter dicta and, thus, not binding precedent. As stated earlier, in Central Luzon Drug Corporation, we ruled that the BIR acted ultra vires when it effectively treated the 20% discount as a tax deduction, under Sections 2.i and 4 of RR No. 2-94, despite the clear wording of the previous law that the same should be treated as a tax credit. We were, therefore, not confronted in that case with the issue as to whether the 20% discount is an exercise of police power or eminent domain. Second, although we adverted to Central Luzon Drug Corporation in our ruling in Carlos Superdrug Corporation, this referred only to preliminary matters. A fair reading of Carlos Superdrug Corporation would show that we categorically ruled therein that the 20% discount is a valid exercise of police power. Thus, even if the current law, through its tax deduction scheme (which abandoned the tax credit scheme under the previous law), does not provide for a peso for peso reimbursement of the 20% discount given by private establishments, no constitutional infirmity obtains because, being a valid exercise of police power, payment of just compensation is not warranted. We have carefully reviewed the basis of our ruling in Carlos Superdrug Corporation and we find no cogent reason to overturn, modify or abandon it. We also note that petitioners' arguments are a mere reiteration of those raised and resolved in Carlos Superdrug Corporation. Thus, we sustain Carlos Superdrug Corporation.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation RULING

Whether the CTA properly granted Nippon's motion to withdraw. The petition is meritorious. The CTA Division allowed the withdrawal of Nippon's appeal thereby ordering the case closed and terminated, notwithstanding the fact that the said motion was filed after the promulgation of its August 10, 2011 Decision. As pointed out by Associate Justice Teresita J. Leonardo-De Castro during the deliberations on this case, the massive discrepancy alone between the administrative and judicial determinations of the amount to be refunded to Nippon should have already raised a red flag to the CTA Division. Clearly, the interest of the government, and, more significantly, the public, will be greatly prejudiced by the erroneous grant of refund - at a substantial amount at that - in favor of Nippon. Hence, under these circumstances, the CTA Division should not have granted the motion to withdraw. In this relation, it deserves mentioning that the CIR is not estopped from assailing the validity of the July 27, 2011 Tax Credit Certificate which was issued by her subordinates in the BIR. In matters of taxation, the government cannot be estopped by the mistakes, errors or omissions of its agents for upon it depends the ability of the government to serve the people for whose benefit taxes are collected. The petition is GRANTED.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. RULING

Whether the December 10, 1991 final assessment of the petitioner against the respondent for deficiency income tax and sales tax for the latter's 1987 importation of resins and calcium bicarbonate is based on competent evidence and the law. (NO) Section 16 of the NIRC of 1977, as amended, which provides that the Commissioner of Internal Revenue has the power to make assessments and prescribe additional requirements for tax administration and enforcement. Among such powers are those provided in paragraph (b) thereof, which states: (b) Failure to submit required returns, statements, reports and other documents. 'When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by law or regulation or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable. However, the best evidence obtainable under Section 16 of the 1977 NIRC, as amended, does not include mere photocopies of records/documents. The petitioner, in making a preliminary and final tax deficiency assessment against a taxpayer, cannot anchor the said assessment on mere machine copies of records/documents. Mere photocopies of the Consumption Entries have no probative weight if offered as proof of the contents thereof. The reason for this is that such copies are mere scraps of paper and are of no probative value as basis for any deficiency income or business taxes against a taxpayer. Indeed, in United States v. Davey, the U.S. Court of Appeals (2nd Circuit) ruled that where the accuracy of a taxpayer's return is being checked, the government is entitled to use the original records rather than be forced to accept purported copies which present the risk of error or tampering. In Collector of Internal Revenue v. Benipayo, the Court ruled that the assessment must be based on actual facts. The rule assumes more importance in this case since the xerox copies of the Consumption Entries furnished by the informer of the EIIB were furnished by yet another informer. While the EIIB tried to secure certified copies of the said entries from the Bureau of Customs, it was unable to do so because the said entries were allegedly eaten by termites. The Court can only surmise why the EIIB or the BIR, for that matter, failed to secure certified copies of the said entries from the Tariff and Customs Commission or from the National Statistics Office which also had copies thereof. It bears stressing that under Section 1306 of the Tariff and Customs Code, the Consumption Entries shall be the required number of copies as prescribed by regulations.76 The Consumption Entry is accomplished in sextuplicate copies and quadruplicate copies in other places. In Manila, the six copies are distributed to the Bureau of Customs, the Tariff and Customs Commission, the Declarant (Importer), the Terminal Operator, and the Bureau of Internal Revenue. Inexplicably, the Commissioner and the BIR personnel ignored the copy of the Consumption Entries filed with the BIR and relied on the photocopies supplied by the informer of the EIIB who secured the same from another informer. The BIR, in preparing and issuing its preliminary and final assessments against the respondent, even ignored the records on the investigation made by the District Revenue officers on the respondent's importations for 1987. The original copies of the Consumption Entries were of prime importance to the BIR. This is so because such entries are under oath and are presumed to be true and correct under penalty of falsification or perjury. Admissions in the said entries of the importers' documents are admissions against interest and presumptively correct. In fine, then, the petitioner acted arbitrarily and capriciously in relying on and giving weight to the machine copies of the Consumption Entries in fixing the tax deficiency assessments against the respondent. The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation. The petitioner is not required to compute such tax liabilities with mathematical exactness. Approximation in the calculation of the taxes due is justified. To hold otherwise would be tantamount to holding that skillful concealment is an invincible barrier to proof. However, the rule does not apply where the estimation is arrived at arbitrarily and capriciously. As a general rule, tax assessments by tax examiners are presumed correct and made in good faith. All presumptions are in favor of the correctness of a tax assessment. It is to be presumed, however, that such assessment was based on sufficient evidence. Upon the introduction of the assessment in evidence, a prima facie case of liability on the part of the taxpayer is made. If a taxpayer files a Petition for Review in the CTA and assails the assessment, the prima facie presumption is that the assessment made by the BIR is correct, and that in preparing the same, the BIR personnel regularly performed their duties. This rule for tax initiated suits is premised on several factors other than the normal evidentiary rule imposing proof obligation on the petitioner-taxpayer: the presumption of administrative regularity; the likelihood that the taxpayer will have access to the relevant information; and the desirability of bolstering the record-keeping requirements of the NIRC. However, the prima facie correctness of a tax assessment does not apply upon proof that an assessment is utterly without foundation, meaning it is arbitrary and capricious. Where the BIR has come out with a "naked assessment," i.e., without any foundation character, the determination of the tax due is without rational basis. In such a situation, the U.S. Court of Appeals ruled that the determination of the Commissioner contained in a deficiency notice disappears. Hence, the determination by the CTA must rest on all the evidence introduced and its ultimate determination must find support in credible evidence.

Mactan Cebu International Airport Authority vs. Marcos RULINGG

Whether the MCIAA is exempted from realty taxes. (NO) As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay it. Nevertheless, effective limitations thereon may be imposed by the people through their Constitutions. Our Constitution, for instance, provides that the rule of taxation shall be uniform and equitable and Congress shall evolve a progressive system of taxation. So potent indeed is the power that it was once opined that "the power to tax involves the power to destroy." Verily, taxation is a destructive power which interferes with the personal and property for the support of the government. Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the taxpayer. But since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayers and liberally in favor of the taxing authority. A claim of exemption from tax payment must be clearly shown and based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception. However, if the grantee of the exemption is a political subdivision or instrumentality, the rigid rule of construction does not apply because the practical effect of the exemption is merely to reduce the amount of money that has to be handled by the government in the course of its operations. The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy of local autonomy. There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the payment of realty taxes imposed by the National Government or any of its political subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only exception to this rule is where the exemption was granted to private parties based on material consideration of a mutual nature, which then becomes contractual and is thus covered by the nonimpairment clause of the Constitution. The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the exercise by local government units of their power to tax, the scope thereof or its limitations, and the exemption from taxation.Section 133 of the LGC prescribes the common limitations on the taxing powers of local government units as follows: Sec. 133. Common Limitations on the Taxing Power of Local Government Units. — Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: (o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE NATIONAL GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS. Needless to say the last item (item o) is pertinent in this case. The "taxes, fees or charges" referred to are "of any kind", hence they include all of these, unless otherwise provided by the LGC. The term "taxes" is well understood so as to need no further elaboration, especially in the light of the above enumeration. The term "fees" means charges fixed by law or Ordinance for the regulation or inspection of business activity, while "charges" are pecuniary liabilities such as rents or fees against person or property.Among the "taxes" enumerated in the LGC is real property tax, which is governed by Section 232. It reads as follows: Sec. 232. Power to Levy Real Property Tax. — A province or city or a municipality within the Metropolitan Manila Area may levy on an annual ad valorem tax on real property such as land, building, machinery and other improvements not hereafter specifically exempted.Section 234 of LGC provides for the exemptions from payment of real property taxes and withdraws previous exemptions therefrom granted to natural and juridical persons, including government owned and controlled corporations, except as provided therein. It provides: Sec. 234. Exemptions from Real Property Tax. — The following are exempted from payment of the real property tax: (a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof had been granted, for reconsideration or otherwise, to a taxable person; (b) Charitable institutions, churches, parsonages or convents appurtenants thereto, mosques nonprofits or religious cemeteries and all lands, building and improvements actually, directly, and exclusively used for religious charitable or educational purposes; (c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; (d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and; (e) Machinery and equipment used for pollution control and environmental protection. Except as provided herein, any exemptions from payment of real property tax previously granted to or presently enjoyed by, all persons whether natural or juridical, including all government owned or controlled corporations are hereby withdrawn upon the effectivity of his Code. These exemptions are based on the ownership, character, and use of the property. Thus; (a) Ownership Exemptions. Exemptions from real property taxes on the basis of ownership are real properties owned by: (i) the Republic, (ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi) registered cooperatives. (b) Character Exemptions. Exempted from real property taxes on the basis of their character are: (i) charitable institutions, (ii) houses and temples of prayer like churches, parsonages or convents appurtenant thereto, mosques, and (iii) non profit or religious cemeteries. (c) Usage exemptions. Exempted from real property taxes on the basis of the actual, direct and exclusive use to which they are devoted are: (i) all lands buildings and improvements which are actually, directed and exclusively used for religious, charitable or educational purpose; (ii) all machineries and equipment actually, directly and exclusively used or by local water districts or by government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; and (iii) all machinery and equipment used for pollution control and environmental protection. To help provide a healthy environment in the midst of the modernization of the country, all machinery and equipment for pollution control and environmental protection may not be taxed by local governments. 2. Other Exemptions Withdrawn. All other exemptions previously granted to natural or juridical persons including government-owned or controlled corporations are withdrawn upon the effectivity of the Code.Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It provides: Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned, or controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non stock and non profit hospitals and educational constitutions, are hereby withdrawn upon the effectivity of this Code.On the other hand, the LGC authorizes local government units to grant tax exemption privileges. Thus, Section 192 thereof provides: Sec. 192. Authority to Grant Tax Exemption Privileges. — Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary. The foregoing sections of the LGC speaks of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the exceptions thereto. The use of exceptions of provisos in these section, as shown by the following clauses: (1) "unless otherwise provided herein" in the opening paragraph of Section 133; (2) "Unless otherwise provided in this Code" in section 193; (3) "not hereafter specifically exempted" in Section 232; and(4) "Except as provided herein" in the last paragraph of Section 234. Thus, reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133 the taxing powers of local government units cannot extend to the levy of inter alia, "taxes, fees, and charges of any kind of the National Government, its agencies and instrumentalities, and local government units"; however, pursuant to Section 232, provinces, cities, municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial used thereof has been granted, for consideration or otherwise, to a taxable person", as provided in item (a) of the first paragraph of Section 234. As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government-owned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non stock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234, which enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption in so far as the real property taxes are concerned by limiting the retention only to those enumerated there-in; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as the real property is owned by the Republic of the Philippines, or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such property has been granted to taxable person for consideration or otherwise. Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from real property taxes granted to natural or juridical persons, including governmentowned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of its charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section is qualified by Section 232 and 234.Accordingly, the position taken by the petitioner is untenable. Reliance on Basco vs. Philippine Amusement and Gaming Corporation is unavailing since it was decided before the effectivity of the LGC. Besides, nothing can prevent Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.

Mactan Cebu International Airport Authority vs. Marcos RULING

Whether the MCIAA is exempted from realty taxes. (NO) As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay it. Nevertheless, effective limitations thereon may be imposed by the people through their Constitutions. Our Constitution, for instance, provides that the rule of taxation shall be uniform and equitable and Congress shall evolve a progressive system of taxation. So potent indeed is the power that it was once opined that "the power to tax involves the power to destroy." Verily, taxation is a destructive power which interferes with the personal and property for the support of the government. Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the taxpayer. But since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayers and liberally in favor of the taxing authority. A claim of exemption from tax payment must be clearly shown and based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception. However, if the grantee of the exemption is a political subdivision or instrumentality, the rigid rule of construction does not apply because the practical effect of the exemption is merely to reduce the amount of money that has to be handled by the government in the course of its operations. The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy of local autonomy. There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the payment of realty taxes imposed by the National Government or any of its political subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The only exception to this rule is where the exemption was granted to private parties based on material consideration of a mutual nature, which then becomes contractual and is thus covered by the nonimpairment clause of the Constitution. The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the exercise by local government units of their power to tax, the scope thereof or its limitations, and the exemption from taxation. Section 133 of the LGC prescribes the common limitations on the taxing powers of local government units as follows: Sec. 133. Common Limitations on the Taxing Power of Local Government Units. — Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: (o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE NATIONAL GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS. Needless to say the last item (item o) is pertinent in this case. The "taxes, fees or charges" referred to are "of any kind", hence they include all of these, unless otherwise provided by the LGC. The term "taxes" is well understood so as to need no further elaboration, especially in the light of the above enumeration. The term "fees" means charges fixed by law or Ordinance for the regulation or inspection of business activity, while "charges" are pecuniary liabilities such as rents or fees against person or property. Among the "taxes" enumerated in the LGC is real property tax, which is governed by Section 232. It reads as follows: Sec. 232. Power to Levy Real Property Tax. — A province or city or a municipality within the Metropolitan Manila Area may levy on an annual ad valorem tax on real property such as land, building, machinery and other improvements not hereafter specifically exempted. Section 234 of LGC provides for the exemptions from payment of real property taxes and withdraws previous exemptions therefrom granted to natural and juridical persons, including government owned and controlled corporations, except as provided therein. It provides: Sec. 234. Exemptions from Real Property Tax. — The following are exempted from payment of the real property tax: (a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof had been granted, for reconsideration or otherwise, to a taxable person; (b) Charitable institutions, churches, parsonages or convents appurtenants thereto, mosques nonprofits or religious cemeteries and all lands, building and improvements actually, directly, and exclusively used for religious charitable or educational purposes; (c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; (d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and; (e) Machinery and equipment used for pollution control and environmental protection. Except as provided herein, any exemptions from payment of real property tax previously granted to or presently enjoyed by, all persons whether natural or juridical, including all government owned or controlled corporations are hereby withdrawn upon the effectivity of his Code. These exemptions are based on the ownership, character, and use of the property. Thus; (a) Ownership Exemptions. Exemptions from real property taxes on the basis of ownership are real properties owned by: (i) the Republic, (ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi) registered cooperatives. (b) Character Exemptions. Exempted from real property taxes on the basis of their character are: (i) charitable institutions, (ii) houses and temples of prayer like churches, parsonages or convents appurtenant thereto, mosques, and (iii) non profit or religious cemeteries. (c) Usage exemptions. Exempted from real property taxes on the basis of the actual, direct and exclusive use to which they are devoted are: (i) all lands buildings and improvements which are actually, directed and exclusively used for religious, charitable or educational purpose; (ii) all machineries and equipment actually, directly and exclusively used or by local water districts or by government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power; and (iii) all machinery and equipment used for pollution control and environmental protection. To help provide a healthy environment in the midst of the modernization of the country, all machinery and equipment for pollution control and environmental protection may not be taxed by local governments. 2. Other Exemptions Withdrawn. All other exemptions previously granted to natural or juridical persons including government-owned or controlled corporations are withdrawn upon the effectivity of the Code. Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It provides: Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned, or controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non stock and non profit hospitals and educational constitutions, are hereby withdrawn upon the effectivity of this Code. On the other hand, the LGC authorizes local government units to grant tax exemption privileges. Thus, Section 192 thereof provides: Sec. 192. Authority to Grant Tax Exemption Privileges. — Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary. The foregoing sections of the LGC speaks of: (a) the limitations on the taxing powers of local government units and the exceptions to such limitations; and (b) the rule on tax exemptions and the exceptions thereto. The use of exceptions of provisos in these section, as shown by the following clauses: (1) "unless otherwise provided herein" in the opening paragraph of Section 133; (2) "Unless otherwise provided in this Code" in section 193; (3) "not hereafter specifically exempted" in Section 232; and (4) "Except as provided herein" in the last paragraph of Section 234 Thus, reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133 the taxing powers of local government units cannot extend to the levy of inter alia, "taxes, fees, and charges of any kind of the National Government, its agencies and instrumentalties, and local government units"; however, pursuant to Section 232, provinces, cities, municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial used thereof has been granted, for consideration or otherwise, to a taxable person", as provided in item (a) of the first paragraph of Section 234. As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government-owned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC, except upon the effectivity of the LGC, except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non stock and non-profit hospitals and educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234, which enumerates the properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption in so far as the real property taxes are concerned by limiting the retention only to those enumerated there-in; all others not included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as the real property is owned by the Republic of the Philippines, or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such property has been granted to taxable person for consideration or otherwise. Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from real property taxes granted to natural or juridical persons, including governmentowned or controlled corporations, except as provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its exemption from such tax granted it in Section 14 of its charter, R.A. No. 6958, has been withdrawn. Any claim to the contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section 234, but not under Section 133, as it now asserts, since, as shown above, the said section is qualified by Section 232 and 234. Accordingly, the position taken by the petitioner is untenable. Reliance on Basco vs. Philippine Amusement and Gaming Corporation is unavailing since it was decided before the effectivity of the LGC. Besides, nothing can prevent Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.

Maceda vs. Macaraig, Jr. RULING

Whether the National Power Corporation still possessed indirect tax exemption after the repeal made in PD 938. (YES) NPC laws show that it has been the lawmaker's intention that the NPC was to be completely tax exempt from all forms of taxes - direct and indirect. One common theme in all the laws above is that the NPC must be able to pay its indebtedness which, as of PD No. 938, was P12 Billion in total domestic indebtedness, at any one time, and US$4 Billion in total foreign loans at any one time. The NPC must be and has to be exempt from all forms of taxes if this goal is to be achieved. In addition to this, the then President Marcos mandated that P200 million be appropriated annually to NPC which amount to be taken from the general fund of the government. It does not stand to reason that the then President would order the said amount to be taken partially or totally from the tax money to be used to pay the government subscription in the NPC on one hand and order NPC to pay its indirect tax. It must also be noted that Section 10 of PD 938 was intended to be in its general form. President Marcos must have considered all the NPC statutes. When construing a series of statutes, they shall be taken and construed together as in statutes in pari materia. Moreover, repeal by implication is not favored unless it is manifest that the legislature so intended.

Gerochi vs. Department of Energy RULING

Whether the Universal Charge imposed under Sec. 34 of the EPIRA is in exercise of the state's taxing power. (NO) The power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency that is to pay it. It is based on the principle that taxes are the lifeblood of the government, and their prompt and certain availability is an imperious need. Thus, the theory behind the exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people. On the other hand, police power is the power of the state to promote public welfare by restraining and regulating the use of liberty and property. It is the most pervasive, the least limitable, and the most demanding of the three fundamental powers of the State. The justification is found in the Latin maxims salus populi est suprema lex (the welfare of the people is the supreme law) and sic utere tuo ut alienum non laedas (so use your property as not to injure the property of others). As an inherent attribute of sovereignty which virtually extends to all public needs, police power grants a wide panoply of instruments through which the State, as parens patriae, gives effect to a host of its regulatory powers. We have held that the power to "regulate" means the power to protect, foster, promote, preserve, and control, with due regard for the interests, first and foremost, of the public, then of the utility and of its patrons. The conservative and pivotal distinction between these two powers rests in the purpose for which the charge is made. If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make the imposition a tax. In exacting the assailed Universal Charge through Sec. 34 of the EPIRA, the State's police power, particularly its regulatory dimension, is invoked. Such can be deduced from Sec. 34 which enumerates the purposes for which the Universal Charge is imposed and which can be amply discerned as regulatory in character. The EPIRA resonates such regulatory purposes, thus: SECTION 2. Declaration of Policy. — It is hereby declared the policy of the State: (a) To ensure and accelerate the total electrification of the country; (b) To ensure the quality, reliability, security and affordability of the supply of electric power; (c) To ensure transparent and reasonable prices of electricity in a regime of free and fair competition and full public accountability to achieve greater operational and economic efficiency and enhance the competitiveness of Philippine products in the global market; (d) To enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors; (e) To ensure fair and non-discriminatory treatment of public and private sector entities in the process of restructuring the electric power industry; (f) To protect the public interest as it is affected by the rates and services of electric utilities and other providers of electric power; (g) To assure socially and environmentally compatible energy sources and infrastructure; (h) To promote the utilization of indigenous and new and renewable energy resources in power generation in order to reduce dependence on imported energy; (i) To provide for an orderly and transparent privatization of the assets and liabilities of the National Power Corporation (NPC); (j) To establish a strong and purely independent regulatory body and system to ensure consumer protection and enhance the competitive operation of the electricity market; and (k) To encourage the efficient use of energy and other modalities of demand side management. From the aforementioned purposes, it can be gleaned that the assailed Universal Charge is not a tax, but an exaction in the exercise of the State's police power. Public welfare is surely promoted. Moreover, it is a well-established doctrine that the taxing power may be used as an implement of police power. In Valmonte v. Energy Regulatory Board, et al. and in Gaston v. Republic Planters Bank, this Court held that the Oil Price Stabilization Fund (OPSF) and the Sugar Stabilization Fund (SSF) were exactions made in the exercise of the police power. The doctrine was reiterated in Osmeña v. Orbos with respect to the OPSF. Thus, we disagree with petitioners that the instant case is different from the aforementioned cases. With the Universal Charge, a Special Trust Fund (STF) is also created under the administration of PSALM. The STF has some notable characteristics similar to the OPSF and the SSF, viz.: 1) In the implementation of stranded cost recovery, the ERC shall conduct a review to determine whether there is under-recovery or over recovery and adjust (true-up) the level of the stranded cost recovery charge. In case of an over-recovery, the ERC shall ensure that any excess amount shall be remitted to the STF. A separate account shall be created for these amounts which shall be held in trust for any future claims of distribution utilities for stranded cost recovery. At the end of the stranded cost recovery period, any remaining amount in this account shall be used to reduce the electricity rates to the end-users. 2) With respect to the assailed Universal Charge, if the total amount collected for the same is greater than the actual availments against it, the PSALM shall retain the balance within the STF to pay for periods where a shortfall occurs. 3) Upon expiration of the term of PSALM, the administration of the STF shall be transferred to the DOF or any of the DOF attached agencies as designated by the DOF Secretary. The OSG is in point when it asseverates: Evidently, the establishment and maintenance of the Special Trust Fund, under the last paragraph of Section 34, R.A. No. 9136, is well within the pervasive and non-waivable power and responsibility of the government to secure the physical and economic survival and well-being of the community, that comprehensive sovereign authority we designate as the police power of the State. This feature of the Universal Charge further boosts the position that the same is an exaction imposed primarily in pursuit of the State's police objectives. The STF reasonably serves and assures the attainment and perpetuity of the purposes for which the Universal Charge is imposed, i.e., to ensure the viability of the country's electric power industry.

Nursery Care Corporation vs. Acevedo RULING

Whether the additional business tax under Section 21 of Ordinance No. 7794 is constitutive of double taxation. (YES) Double taxation means taxing the same property twice when it should be taxed only once; that is, "taxing the same person twice by the same jurisdiction for the same thing." It is obnoxious when the taxpayer is taxed twice, when it should be but once. Otherwise described as "direct duplicate taxation," the two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or character. Using the aforementioned test, the Court finds that there is indeed double taxation if respondent is subjected to the taxes under both Sections 14 and 21 of Tax Ordinance No. 7794, since these are being imposed: (1) on the same subject matter - the privilege of doing business in the City of Manila; (2) for the same purpose - to make persons conducting business within the City of Manila contribute tocity revenues; (3) by the same taxing authority - petitioner Cityof Manila; (4) within the same taxing jurisdiction - within the territorial jurisdiction of the City of Manila; (5) for the same taxing periods - per calendar year; and (6) of the same kind or character - a local business tax imposed on gross sales or receipts of the business. The distinction petitioners attempt to make between the taxes under Sections 14 and 21 of Tax Ordinance No. 7794 is specious. The Court revisits Section 143 of the LGC, the very source of the power of municipalities and cities to impose a local business tax, and to which any local business tax imposed by petitioner City of Manila must conform. It is apparent from a perusal thereof that when a municipality or city has already imposed a business tax on manufacturers, etc.of liquors, distilled spirits, wines, and any other article of commerce, pursuant to Section 143(a) of the LGC, said municipality or city may no longer subject the same manufacturers, etc.to a business tax under Section 143(h) of the same Code. Section 143(h) may be imposed only on businesses that are subject to excise tax, VAT, or percentagetax under the NIRC, and that are "not otherwise specified in preceding paragraphs." In the same way, businesses such as respondent's, already subject to a local business tax under Section 14 of Tax Ordinance No. 7794 [which is based on Section 143(a) of the LGC], can no longer be made liable for local business tax under Section 21 of the same Tax Ordinance [which is based on Section 143(h) of the LGC]. Based on the foregoing reasons, petitioner should not have been subjected to taxes under Section 21 of the ManilaRevenue Code for the fourth quarter of 2001, considering thatit had already been paying local business tax under Section 14 of the same ordinance. x x x x Accordingly, respondent's assessment under both Sections 14 and 21 had no basis. Petitioner is indeed liable to pay business taxes to the City of Manila; nevertheless, considering that the former has already paid these taxes under Section 14 of the Manila Revenue Code, it is exempt from the same payments under Section 21 of the same code. Hence, payments made under Section 21 must be refunded in favor of petitioner. On the basis of the rulings in Coca-Cola Bottlers Philippines, Inc. and Swedish Match Philippines, Inc., the Court now holds that all the elements of double taxation concurred upon the City of Manila's assessment on and collection from the petitioners of taxes for the first quarter of 1999 pursuant to Section 21 of the Revenue Code of Manila. Firstly, because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold goods and services in the course of trade or business based on a certain percentage ofhis gross sales or receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed the tax on a person who sold goods and services in the course of trade or business but only identified such person with particularity, namely, the wholesaler, distributor or dealer (Section 15), and the retailer (Section 17), all the taxes - being imposed on the privilege of doing business in the City of Manila in order to make the taxpayers contribute to the city's revenues - were imposed on the same subject matter and for the same purpose. Secondly, the taxes were imposed by the same taxing authority (the City of Manila) and within the same jurisdiction in the same taxing period (i.e., per calendar year). Thirdly, the taxes were all in the nature of local business taxes. We note that although Coca-Cola Bottlers Philippines, Inc. and Swedish Match Philippines, Inc. involved Section 21 vis-à-vis Section 14 (Tax on Manufacturers, Assemblers and Other Processors) 39 of the Revenue Code of Manila, the legal principles enunciated therein should similarly apply because Section 15 (Tax on Wholesalers, Distributors, or Dealers)and Section 17 (Tax on Retailers) of the Revenue Code of Manila imposed the same nature of tax as that imposed under Section 14, i.e., local business tax, albeit on a different subject matter or group of taxpayers. In fine, the imposition of the tax under Section 21 of the Revenue Code of Manila constituted double taxation, and the taxes collected pursuant thereto must be refunded.

Punsalan, et al. vs. Municipal Board of Manila, et al. RULING

Whether the assailed provisions are constitutional (YES) In raising the hue and cry of "class legislation", the burden of plaintiffs' complaint is not that the professions to which they respectively belong have been singled out for the imposition of this municipal occupation tax; and in any event, the Legislature may, in its discretion, select what occupations shall be taxed, and in the exercise of that discretion it may tax all, or it may select for taxation certain classes and leave the others untaxed. (Cooley on Taxation, Vol. 4, 4th ed., pp. 3393- 3395.) Plaintiffs' complaint is that while the law has authorized the City of Manila to impose the said tax, it has withheld that authority from other chartered cities, not to mention municipalities. We do not think it is for the courts to judge what particular cities or municipalities should be empowered to impose occupation taxes in addition to those imposed by the National Government. That matter is peculiarly within the domain of the political departments and the courts would do well not to encroach upon it. Moreover, as the seat of the National Government and with a population and volume of trade many times that of any other Philippine city or municipality, Manila, no doubt, offers a more lucrative field for the practice of the professions, so that it is but fair that the professionals in Manila be made to pay a higher occupation tax than their brethren in the provinces. Plaintiffs brand the ordinance unjust and oppressive because they say that it creates discrimination within a class in that while professionals with offices in Manila have to pay the tax, outsiders who have no offices in the city but practice their profession therein are not subject to the tax. Plaintiffs make a distinction that is not found in the ordinance. The ordinance imposes the tax upon every person "exercising" or "pursuing" — in the City of Manila naturally — any one of the occupations named, but does not say that such person must have his office in Manila. What constitutes exercise or pursuit of a profession in the city is a matter of judicial determination. The argument against double taxation may not be invoked where one tax is imposed by the state and the other is imposed by the city (1 Cooley on Taxation, 4th ed., p. 492), it being widely recognized that there is nothing inherently obnoxious in the requirement that license fees or taxes be exacted with respect to the same occupation, calling or activity by both the state and the political subdivisions thereof. (51 Am. Jur., 341.)

National Telecommunications Commission vs. Court of Appeals RULINGG

Whether the fee under Section 40 (e) should be based on the market value of PLDTs outstanding capital stock inclusive of stock dividends and premium, and not on the par value of PLDTs capital stock excluding stock dividends and premium, as contended by PLDT. (NO) Succinct and clear is the ruling of this Court in the case of Philippine Long Distance Telephone Company vs. Public Service Commission, 66 SCRA 341, that the basis for computation of the fee to be charged by NTC on PLDT, is the capital stock subscribed or paid and not, alternatively, the property and equipment. The law in point is clear and categorical. There is no room for construction. It simply calls for application. To repeat, the fee in question is based on the capital stock subscribed or paid, nothing less nothing more. It bears stressing that it is not the NTC that imposed such a fee. It is the legislature itself. Since Congress has the power to exercise the State inherent powers of Police Power, Eminent Domain and Taxation, the distinction between police power and the power to tax, which could be significant if the exercising authority were mere political subdivisions (since delegation by it to such political subdivisions of one power does not necessarily include the other), would not be of any moment when, as in the case under consideration, Congress itself exercises the power. All that is to be done would be to apply and enforce the law when sufficiently definitive and not constitutional infirm. The term capital and other terms used to describe the capital structure of a corporation are of universal acceptance, and their usages have long been established in jurisprudence. Briefly, capital refers to the value of the property or assets of a corporation. The capital subscribed is the total amount of the capital that persons (subscribers or shareholders) have agreed to take and pay for, which need not necessarily be, and can be more than, the par value of the shares. In fine, it is the amount that the corporation receives, inclusive of the premiums if any, in consideration of the original issuance of the shares. In the case of stock dividends, it is the amount that the corporation transfers from its surplus profit account to its capital account. It is the same amount that can loosely be termed as the trust fund of the corporation. The Trust Fund doctrine considers this subscribed capital as a trust fund for the payment of the debts of the corporation, to which the creditors may look for satisfaction. Until the liquidation of the corporation, no part of the subscribed capital may be returned or released to the stockholder (except in the redemption of redeemable shares) without violating this principle. Thus, dividends must never impair the subscribed capital; subscription commitments cannot be condoned or remitted; nor can the corporation buy its own shares using the subscribed capital as the consideration therefor. In the same way that the Court in PLDT vs. PSC has rejected the value of the property and equipment as being the proper basis for the fee imposed by Section 40(e) of the Public Service Act, as amended by Republic Act No. 3792, so also must the Court disallow the idea of computing the fee on the par value of [PLDTs] capital stock subscribed or paid excluding stock dividends, premiums, or capital in excess of par. Neither, however, is the assessment made by the National Telecommunications Commission on the basis of the market value of the subscribed or paid-in capital stock acceptable since it is itself a deviation from the explicit language of the law. All things studiedly considered, and mindful of the aforesaid ruling of this Court in the case of Philippine Long Distance Telephone Company vs. Public Service Commission, it should be reiterated that the proper basis for the computation of subject fee under Section 40(e) of the Public Service Act, as amended by Republic Act No. 3792, is the capital stock subscribed or paid and not, alternatively, the property and equipment.

National Telecommunications Commission vs. Court of Appeals RULING

Whether the fee under Section 40 (e) should be based on the market value of PLDTs outstanding capital stock inclusive of stock dividends and premium, and not on the par value of PLDTs capital stock excluding stock dividends and premium, as contended by PLDT. (NO) Succinct and clear is the ruling of this Court in the case of Philippine Long Distance Telephone Company vs. Public Service Commission, 66 SCRA 341, that the basis for computation of the fee to be charged by NTC on PLDT, is the capital stock subscribed or paid and not, alternatively, the property and equipment. The law in point is clear and categorical. There is no room for construction. It simply calls for application. To repeat, the fee in question is based on the capital stock subscribed or paid, nothing less nothing more. It bears stressing that it is not the NTC that imposed such a fee. It is the legislature itself. Since Congress has the power to exercise the State inherent powers of Police Power, Eminent Domain and Taxation, the distinction between police power and the power to tax, which could be significant if the exercising authority were mere political subdivisions (since delegation by it to such political subdivisions of one power does not necessarily include the other), would not be of any moment when, as in the case under consideration, Congress itself exercises the power. All that is to be done would be to apply and enforce the law when sufficiently definitive and not constitutional infirm. The term capital and other terms used to describe the capital structure of a corporation are of universal acceptance, and their usages have long been established in jurisprudence. Briefly, capital refers to the value of the property or assets of a corporation. The capital subscribed is the total amount of the capital that persons (subscribers or shareholders) have agreed to take and pay for, which need not necessarily be, and can be more than, the par value of the shares. In fine, it is the amount that the corporation receives, inclusive of the premiums if any, in consideration of the original issuance of the shares. In the case of stock dividends, it is the amount that the corporation transfers from its surplus profit account to its capital account. It is the same amount that can loosely be termed as the trust fund of the corporation. The Trust Fund doctrine considers this subscribed capital as a trust fund for the payment of the debts of the corporation, to which the creditors may look for satisfaction. Until the liquidation of the corporation, no part of the subscribed capital may be returned or released to the stockholder (except in the redemption of redeemable shares) without violating this principle. Thus, dividends must never impair the subscribed capital; subscription commitments cannot be condoned or remitted; nor can the corporation buy its own shares using the subscribed capital as the consideration therefor. In the same way that the Court in PLDT vs. PSC has rejected the value of the property and equipment as being the proper basis for the fee imposed by Section 40(e) of the Public Service Act, as amended by Republic Act No. 3792, so also must the Court disallow the idea of computing the fee on the par value of [PLDTs] capital stock subscribed or paid excluding stock dividends, premiums, or capital in excess of par. Neither, however, is the assessment made by the National Telecommunications Commission on the basis of the market value of the subscribed or paid-in capital stock acceptable since it is itself a deviation from the explicit language of the law. All things studiedly considered, and mindful of the aforesaid ruling of this Court in the case of Philippine Long Distance Telephone Company vs. Public Service Commission, it should be reiterated that the proper basis for the computation of subject fee under Section 40(e) of the Public Service Act, as amended by Republic Act No. 3792, is the capital stock subscribed or paid and not, alternatively, the property and equipment.

Ungab vs. Cusi, Jr. RULING

Whether the filing of the informations was precipitate and premature since the Commissioner of Internal Revenue has not yet resolved petitioner's protests against the assessment of the Revenue District Officer. (NO) The contention is without merit. What is involved here is not the collection of taxes where the assessment of the Commissioner of Internal Revenue may be reviewed by the Court of Tax Appeals, but a criminal prosecution for violations of the National Internal Revenue Code which is within the cognizance of courts of first instance. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed, there is no requirement for the precise computation and assessment of the tax before there can be a criminal prosecution under the Code. The contention is made, and is here rejected, that an assessment of the deficiency tax due is necessary before the taxpayer can be prosecuted criminally for the charges preferred. The crime is complete when the violator has, as in this case, knowingly and willfully filed fraudulent returns with intent to evade and defeat a part or all of the tax. An assessment of a deficiency is not necessary to a criminal prosecution for willful attempt to defeat and evade the income tax. A crime is complete when the violator has knowingly and willfuly filed a fraudulent return with intent to evade and defeat the tax. The perpetration of the crime is grounded upon knowledge on the part of the taxpayer that he has made an inaccurate return, and the government's failure to discover the error and promptly to assess has no connections with the commission of the crime. Besides, it has been ruled that a petition for reconsideration of an assessment may affect the suspension of the prescriptive period for the collection of taxes, but not the prescriptive period of a criminal action for violation of law. Obviously, the protest of the petitioner against the assessment of the District Revenue Officer cannot stop his prosecution for violation of the National Internal Revenue Code. Accordingly, the respondent Judge did not abuse his discretion in denying the motion to quash filed by the petitioner.

Terminal Facilities and Services Corporation vs. Philippine Ports Authority RULING

Whether the imposition by PPA of ten percent government share out of arrastre and stevedoring gross income of TEFASCO valid. (NO) Fourthly, we also declare void the imposition by PPA of ten percent (10%), later reduced to six percent (6%), government share out of arrastre and stevedoring gross income of TEFASCO. This exaction was never mentioned in the contract, much less is it a binding prestation, between TEFASCO and PPA. What was clearly stated in the terms and conditions appended to PPA Resolution No. 7 was for TEFASCO to pay and/or secure from the proper authorities "all fees and/or permits pertinent to the construction and operation of the proposed project." The government share demanded and collected from the gross income of TEFASCO from its arrastre and stevedoring activities in TEFASCO's wholly owned port is certainly not a fee or in any event a proper condition in a regulatory permit. Rather it is an onerous "contractual stipulation" which finds no root or basis or reference even in the contract aforementioned. We stress that the cause of the contract between TEFASCO and PPA was, on the part of the former, to engage in the business of operating its privately owned port facilities, and for the latter, to decongest port traffic in Davao City and concomitantly to enhance regional trade. The records of the project acceptance made by PPA indicate that the contract was executed not to earn income for PPA or the government as justification for the subsequent and unfair imposition of government share in the arrastre and stevedoring gross income of TEFASCO. Hence this charge was obviously an afterthought conceived by PPA only after the TEFASCO port had already begun its operations. The sharing scheme only meant that PPA would piggy back unreasonably on the substantial investment and labor of TEFASCO. As the scheme was subsequently stipulated on percentage of gross income, it actually penalized TEFASCO for its hand work and substantial capital expenditures in the TEFASCO port and terminal. Moreover, PPA is bereft of any authority to impose whatever amount it pleases as government share in the gross income of TEFASCO from its arrastre and stevedoring operations. As an elementary principle of law, license taxation must not be "so unreasonable to show a purpose to prohibit a business which is not itself injurious to public health or morals." In the case at bar, the absurd and confiscatory character of government share is convincingly proved by PPA's decision itself to abandon the disadvantageous scheme through Administrative Order No. 06-95 dated 4 December 1995, Liberalized Regulation on Private Ports Construction, Development, and Operation. The PPA issuance scrapped government share in the income of private ports where no government facilities had been installed and in place thereof imposed a onetime privilege fee of ₱20,000.00 per annum for commercial ports and ₱10,000.00 yearly for noncommercial ports. In passing, we believe that this impost is more in consonance with the description of government share as consideration for the "supervision inherent in the upgrading and improvement of port operations, of which said services are an integral part." We do not also agree that TEFASCO subsequently acceded to paying the government share in its gross income from its arrastre and stevedoring operations, and in recognizing arrears for such charge. The Memorandum of Agreement (MOA) which it subsequently signed with PPA did not give TEFASCO any benefit so that we cannot conclude that there was indeed a voluntary settlement between them. Rather it could be described aptly as an imposition under actual threats of closure of TEFASCO's port. Verily the MOA was meant to cloak semblance of validity upon that particular charge since there was nothing in the original TEFASCO-PPA contract authorizing the PPA to collect any share in the gross income of TEFASCO in its arrastre and stevedoring operations. The MOA is invalid for want of consideration and consent. As such, it is an invalid novation of the original agreement between TEFASCO and PPA as embodied in the inter-agency committee report, PPA Resolution No. 7 and PPA letter dated May 7, 1976 and its enclosure. Truly, the MOA was a set of stipulations executed under undue pressure on TEFASCO of permanent closure of its port and terminal. As the TEFASCO investment was worth millions of dollars in loans and equities, PPA's posture of prohibiting it from engaging in the bulk of its business presented it with no reasonable freedom of choice but to accept and sign the MOA. Furthermore, the MOA suffers from utter want of consideration since nothing more could have been stipulated in the agreement when every detail of port operation had already been previously spelled out and sanctioned in the original contract. The belated MOA citations of PPA's recognition of TEFASCO's facility as a private port and provision of arrastre and stevedoring and repair services were all part of the agreement from 1976 when the project proposal was approved by the PPA Board. Under these circumstances, it cannot be said that TEFASCO embraced voluntarily the unfair imposition in the MOA that inevitably would cause, as it did, its own bankruptcy. In sum, TEFASCO is entitled to Five Million Ninety-Five Thousand Thirty Pesos and Seventeen Centavos (₱5,095,030.17) for reimbursement of what PPA illegally collected as "government share" in the gross income of TEFASCO's arrastre and stevedoring operations for 1977 to 1991.

Sea-Land Service, Inc. vs. Court of Appeals RULING

Whether the income that SEA_LAND derived from services in transporting the household goods and effects of U. S. military personnel falls within the tax exemption provided in Article XII, paragraph 4 of the RP-US Military Bases Agreement. Petition Denied for lack of merit. RP-US Military Bases Agreement provides: "No national of the United States, or corporation organized under the laws of the United States, resident in the United States, shall be liable to pay income tax in the Philippines in respect of any profits derived under a contract made in the United States with the government of the United States in connection with the construction, maintenance, operation and defense of the bases, or any tax in the nature of a license in respect of any service or work for the United States in connection with the construction, maintenance, operation and defense of the bases." SEA-LAND earned income during taxable year 1984 amounting to P58,006,207.54, and paid income tax thereon of 1.5% amounting to P870,093.12. At the crux of this case is whether said corporation is exempted from the payment of income tax on its revenue earned from the transport or shipment of household goods and effects of US personnel assigned at Subic Naval Base. It is an elementary rule that laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. Taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. RP-US Military Bases agreement clearly speaks of construction, maintenance, operation and defense of the bases. The transport or shipment of household goods and effects of US personnel assigned at Subiv Naval Base does not fall under such clear wording of the law. Neither could the performance of this service to the U. S. government be interpreted as directly related to the defense and security of the Philippine territories. When the law speaks in clear and categorical language, there is no reason for interpretation or construction, but only for application. The avowed purpose of tax exemption is some public benefit or interest, which the lawmaking body considers sufficient to offset the monetary loss entailed in the grant of the exemption. The Supreme Court will not set aside lightly the conclusion reached by the Court of Tax Appeals which, by the very nature of its function, is dedicated exclusively to the consideration of tax problems and has necessarily developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority. DOCTRINE: Laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. Taxation is the general rule and exemption is the exception. The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical too be misinterpreted.

Ericsson Telecommunications, Inc. vs. City of Pasig RULING

Whether the local business tax on contractors should be based on gross receipts. (YES) Respondent assessed deficiency local business taxes on petitioner based on the latter's gross revenue as reported in its financial statements, arguing that gross receipts is synonymous with gross earnings/revenue, which, in turn, includes uncollected earnings. Petitioner, however, contends that only the portion of the revenues which were actually and constructively received should be considered in determining its tax base. Respondent is authorized to levy business taxes under Section 143 in relation to Section 151 of the Local Government Code. The law is clear. Gross receipts include money or its equivalent actually or constructively received in consideration of services rendered or articles sold, exchanged or leased, whether actual or constructive. In Commissioner of Internal Revenue v. Bank of Commerce, the Court interpreted gross receipts as including those which were actually or constructively received, viz.: Actual receipt of interest income is not limited to physical receipt. Actual receipt may either be physical receipt or constructive receipt. When the depository bank withholds the final tax to pay the tax liability of the lending bank, there is prior to the withholding a constructive receipt by the lending bank of the amount withheld. From the amount constructively received by the lending bank, the depository bank deducts the final withholding tax and remits it to the government for the account of the lending bank. Thus, the interest income actually received by the lending bank, both physically and constructively, is the net interest plus the amount withheld as final tax. The concept of a withholding tax on income obviously and necessarily implies that the amount of the tax withheld comes from the income earned by the taxpayer. Since the amount of the tax withheld constitutes income earned by the taxpayer, then that amount manifestly forms part of the taxpayer's gross receipts. Because the amount withheld belongs to the taxpayer, he can transfer its ownership to the government in payment of his tax liability. The amount withheld indubitably comes from income of the taxpayer, and thus forms part of his gross receipts. Further elaboration was made by the Court in Commissioner of Internal Revenue v. Bank of the Philippine Islands, in this wise: Revenue Regulations No. 16-2005 dated September 1, 2005 defined and gave examples of "constructive receipt", to wit: SEC. 4. 108-4. Definition of Gross Receipts. - - x x x "Constructive receipt" occurs when the money consideration or its equivalent is placed at the control of the person who rendered the service without restrictions by the payor. The following are examples of constructive receipts: (1) deposit in banks which are made available to the seller of services without restrictions; (2) issuance by the debtor of a notice to offset any debt or obligation and acceptance thereof by the seller as payment for services rendered; and (3) transfer of the amounts retained by the payor to the account of the contractor. There is, therefore, constructive receipt, when the consideration for the articles sold, exchanged or leased, or the services rendered has already been placed under the control of the person who sold the goods or rendered the services without any restriction by the payor. In contrast, gross revenue covers money or its equivalent actually or constructively received, including the value of services rendered or articles sold, exchanged or leased, the payment of which is yet to be received. This is in consonance with the International Financial Reporting Standards,21 which defines revenue as the gross inflow of economic benefits (cash, receivables, and other assets) arising from the ordinary operating activities of an enterprise (such as sales of goods, sales of services, interest, royalties, and dividends), which is measured at the fair value of the consideration received or receivable. As aptly stated by the RTC: "[R]evenue from services rendered is recognized when services have been performed and are billable." It is "recorded at the amount received or expected to be received." (Section E [17] of the Statements of Financial Accounting Standards No. 1). In petitioner's case, its audited financial statements reflect income or revenue which accrued to it during the taxable period although not yet actually or constructively received or paid. This is because petitioner uses the accrual method of accounting, where income is reportable when all the events have occurred that fix the taxpayer's right to receive the income, and the amount can be determined with reasonable accuracy; the right to receive income, and not the actual receipt, determines when to include the amount in gross income. The imposition of local business tax based on petitioner's gross revenue will inevitably result in the constitutionally proscribed double taxation - taxing of the same person twice by the same jurisdiction for the same thing - inasmuch as petitioner's revenue or income for a taxable year will definitely include its gross receipts already reported during the previous year and for which local business tax has already been paid. Thus, respondent committed a palpable error when it assessed petitioner's local business tax based on its gross revenue as reported in its audited financial statements, as Section 143 of the Local Government Code and Section 22(e) of the Pasig Revenue Code clearly provide that the tax should be computed based on gross receipts.

Joya vs. Presidential Commission on Good Government RULING

Whether the petition complies with the legal requisites for the Court to exercise its power of judicial review over this case. NO. Petitioners failed to show that they have the legal standing, i.e. a personal and substantial interest in the case such that they have sustained or would sustain direct injury as a result of the governmental act that is being challenged, because they are not the legal owners of the artworks/silverwares or that the valued pieces have become publicly owned since such artworks are in fact owned by the Metropolitan Museum of Manila Foundation, a non-profit, non-stock corporation established to promote non-Philippine arts and the silverwares were in fact gifts to the Marcos couple on their silver wedding anniversary. The mandamus suit cannot prosper because what the petitioners seek is the enjoining of an official act because it is constitutionally infirmed not because they are after the fulfilment of a positive duty required of the respondent public officials which is the only ground for a writ of mandamus to be issued. The taxpayers' suit cannot prosper as well since the items in question were acquired from private sources and not with public money. For a court to exercise its power of adjudication, there must be an actual controversy - one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. A case becomes moot and academic when its purpose has become stale, such as this case. Since the purpose of this petition for prohibition is to enjoin the respondents from holding the auction sale of the artworks on a particular date which had long past, the issues raised have become moot and academic. Nevertheless, the Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an actual case or legal standing when paramount public interest is involved. However, there is no such justification in this petition. Petition dismissed.Whether the petition complies with the legal requisites for the Court to exercise its power of judicial review over this case. Held: NO. Petitioners failed to show that they have the legal standing, i.e. a personal and substantial interest in the case such that they have sustained or would sustain direct injury as a result of the governmental act that is being challenged, because they are not the legal owners of the artworks/silverwares or that the valued pieces have become publicly owned since such artworks are in fact owned by the Metropolitan Museum of Manila Foundation, a non-profit, non-stock corporation established to promote non-Philippine arts and the silverwares were in fact gifts to the Marcos couple on their silver wedding anniversary. The mandamus suit cannot prosper because what the petitioners seek is the enjoining of an official act because it is constitutionally infirmed not because they are after the fulfilment of a positive duty required of the respondent public officials which is the only ground for a writ of mandamus to be issued. The taxpayers' suit cannot prosper as well since the items in question were acquired from private sources and not with public money. For a court to exercise its power of adjudication, there must be an actual controversy - one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution; the case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. A case becomes moot and academic when its purpose has become stale, such as this case. Since the purpose of this petition for prohibition is to enjoin the respondents from holding the auction sale of the artworks on a particular date which had long past, the issues raised have become moot and academic. Nevertheless, the Court has the discretion to take cognizance of a suit which does not satisfy the requirements of an actual case or legal standing when paramount public interest is involved. However, there is no such justification in this petition. Petition dismissed.

Commissioner of Internal Revenue vs. Pascor Realty and Development Corporation RULING

Whether the revenue officers' Affidavit-Report, which was attached to criminal revenue Complaint filed the Department of Justice, constituted an assessment that could be questioned before the Court of Tax Appeals. (NO) Neither the NIRC nor the regulations governing the protest of assessments provide a specific definition or form of an assessment. However, the NIRC defines the specific functions and effects of an assessment. To consider the affidavit attached to the Complaint as a proper assessment is to subvert the nature of an assessment and to set a bad precedent that will prejudice innocent taxpayers. True, as pointed out by the private respondents, an assessment informs the taxpayer that he or she has tax liabilities. But not all documents coming from the BIR containing a computation of the tax liability can be deemed assessments. To start with, an assessment must be sent to and received by a taxpayer, and must demand payment of the taxes described therein within a specific period. Thus, the NIRC imposes a 25 percent penalty, in addition to the tax due, in case the taxpayer fails to pay deficiency tax within the time prescribed for its payment in the notice of assessment. Likewise, an interest of 20 percent per annum, or such higher rates as may be prescribed by rules and regulations, is to be collected form the date prescribed for its payment until the full payment. The issuance of an assessment is vital in determining, the period of limitation regarding its proper issuance and the period within which to protest it. Section 203 of the NIRC provides that internal revenue taxes must be assessed within three years from the last day within which to file the return. Section 222, on the other hand, specifies a period of ten years in case a fraudulent return with intent to evade was submitted or in case of failure to file a return. Also, Section 228 of the same law states that said assessment may be protested only within thirty days from receipt thereof. Necessarily, the taxpayer must be certain that a specific document constitutes an assessment. Otherwise, confusion would arise regarding the period within which to make an assessment or to protest the same, or whether interest and penalty may accrue thereon. It should also be stressed that the said document is a notice duly sent to the taxpayer. Indeed, an assessment is deemed made only when the collector of internal revenue releases, mails or sends such notice to the taxpayer. In the present case, the revenue officers' Affidavit merely contained a computation of respondents' tax liability. It did not state a demand or a period for payment. Worse, it was addressed to the justice secretary, not to the taxpayers. The fact that the Complaint itself was specifically directed and sent to the Department of Justice and not to private respondents shows that the intent of the commissioner was to file a criminal complaint for tax evasion, not to issue an assessment. Although the revenue officers recommended the issuance of an assessment, the commissioner opted instead to file a criminal case for tax evasion. What private respondents received was a notice from the DOJ that a criminal case for tax evasion had been filed against them, not a notice that the Bureau of Internal Revenue had made an assessment. In addition, what private respondents sent to the commissioner was a motion for a reconsideration of the tax evasion charges filed, not of an assessment, as shown thus: This is to request for reconsideration of the tax evasion charges against my client, PASCOR Realty and Development Corporation and for the same to be referred to the Appellate Division in order to give my client the opportunity of a fair and objective hearing. Additional Issues: Assessment Not Necessary Before Filing of Criminal Complaint Whether an assessment is necessary before filing of criminal complaint. (NO) Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case, proceedings in court may be commenced without an assessment. Furthermore, Section 205 of the same Code clearly mandates that the civil and criminal aspects of the case may be pursued simultaneously. In Ungab v. Cusi, petitioner therein sought the dismissal of the criminal Complaints for being premature, since his protest to the CTA had not yet been resolved. The Court held that such protests could not stop or suspend the criminal action which was independent of the resolution of the protest in the CTA. This was because the commissioner of internal revenue had, in such tax evasion cases, discretion on whether to issue an assessment or to file a criminal case against the taxpayer or to do both. Private respondents insist that Section 222 should be read in relation to Section 255 of the NLRC, which penalizes failure to file a return. They add that a tax assessment should precede a criminal indictment. We disagree. To reiterate, said Section 222 states that an assessment is not necessary before a criminal charge can be filed. This is the general rule. Private respondents failed to show that they are entitled to an exception. Moreover, the criminal charge need only be supported by a prima facie showing of failure to file a required return. This fact need not be proven by an assessment. The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code.

Chevron Philippines, Inc. vs. Bases Conversion Development Authority RULING

Whether the royalty fees are in the nature of taxes. (NO) In distinguishing tax and regulation as a form of police power, the determining factor is the purpose of the implemented measure. If the purpose is primarily to raise revenue, then it will be deemed a tax even though the measure results in some form of regulation. On the other hand, if the purpose is primarily to regulate, then it is deemed a regulation and an exercise of the police power of the state, even though incidentally, revenue is generated. Thus, in Gerochi v. Department of Energy, the Court stated: The conservative and pivotal distinction between these two (2) powers rests in the purpose for which the charge is made. If generation of revenue is the primary purpose and regulation is merely incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that revenue is incidentally raised does not make the imposition a tax. In the case at bar, we hold that the subject royalty fee was imposed primarily for regulatory purposes, and not for the generation of income or profits as petitioner claims. The Policy Guidelines on the Movement of Petroleum Fuel to and from the Clark Special Economic Zone provides: DECLARATION OF POLICY It is hereby declared the policy of CDC to develop and maintain the Clark Special Economic Zone (CSEZ) as a highly secured zone free from threats of any kind, which could possibly endanger the lives and properties of locators, would-be investors, visitors, and employees. It is also declared the policy of CDC to operate and manage the CSEZ as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the CSEZ. From the foregoing, it can be gleaned that the Policy Guidelines was issued, first and foremost, to ensure the safety, security, and good condition of the petroleum fuel industry within the CSEZ. The questioned royalty fees form part of the regulatory framework to ensure "free flow or movement" of petroleum fuel to and from the CSEZ. The fact that respondents have the exclusive right to distribute and market petroleum products within CSEZ pursuant to its JVA with SBMA and CSBTI does not diminish the regulatory purpose of the royalty fee for fuel products supplied by petitioner to its client at the CSEZ.

Gala vs. Ellice Agro-Industrial Corporation RULING

Whether the separate juridical personalities of Ellice and Margo could be disregard on the grounds that they were meant to be tools to avoid land reform laws and estate taxes. (NO) A perusal of the Articles of Incorporation of Ellice and Margo shows no sign of the allegedly illegal purposes that petitioners are complaining of. And even assuming that the petitioner's allegations were true, the legality of the purposes for which the two corporations were formed should be first threshed out in an administrative case before the Securities and Exchange Commission. We cannot address here their concerns regarding circumvention of land reform laws, for the doctrine of primary jurisdiction precludes a court from arrogating unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. Since primary jurisdiction over any violation of Section 13 of Republic Act No. 3844 that may have been committed is vested in the Department of Agrarian Reform Adjudication Board (DARAB), then it is with said administrative agency that the petitioners must first plead their case. Moreover, on the contention that Ellice and Margo were meant to be tools for the avoidance of estate taxes, the court said that "...the legal right of a taxpayer to reduce the amount of what otherwise could be his taxes or altogether avoid them, by means which the law permits, cannot be doubted.

Lutz v. Araneta RULING

Whether the support of the sugar industry is a public purpose to which a tax may be constitutionally levied. (YES) The basic defect in the plaintiff's position is his assumption that the tax provided for in Commonwealth Act No. 567 is a pure exercise of the taxing power. Analysis of the Act, and particularly of section 6, will show that the tax is levied with a regulatory purpose, to provide means for the rehabilitation and stabilization of the threatened sugar industry. In other words, the act is primarily an exercise of the police power. This Court can take judicial notice of the fact that sugar production is one of the great industries of our nation, sugar occupying a leading position among its export products; that it gives employment to thousands of laborers in fields and factories; that it is a great source of the state's wealth, is one of the important sources of foreign exchange needed by our government, and is thus pivotal in the plans of a regime committed to a policy of currency stability. Its promotion, protection and advancement, therefore redounds greatly to the general welfare. Hence it was competent for the legislature to find that the general welfare demanded that the sugar industry should be stabilized in turn; and in the wide field of its police power, the lawmaking body could provide that the distribution of benefits therefrom be readjusted among its components to enable it to resist the added strain of the increase in taxes that it had to sustain. As stated in Johnson vs. State ex rel. Marey, with reference to the citrus industry in Florida — The protection of a large industry constituting one of the great sources of the state's wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign. Once it is conceded, as it must, that the protection and promotion of the sugar industry is a matter of public concern, it follows that the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion must be allowed fully play, subject only to the test of reasonableness; and it is not contended that the means provided in section 6 of the law bear no relation to the objective pursued or are oppressive in character. If objective and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the state's police power. That the tax to be levied should burden the sugar producers themselves can hardly be a ground of complaint; indeed, it appears rational that the tax be obtained precisely from those who are to be benefited from the expenditure of the funds derived from it. At any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation". From the point of view we have taken it appears of no moment that the funds raised under the Sugar Stabilization Act, now in question, should be exclusively spent in aid of the sugar industry, since it is that very enterprise that is being protected. It may be that other industries are also in need of similar protection; that the legislature is not required by the Constitution to adhere to a policy of "all or none." As ruled in Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied;" and that "the legislative authority, exerted within its proper field, need not embrace all the evils within its reach". Even from the standpoint that the Act is a pure tax measure, it cannot be said that the devotion of tax money to experimental stations to seek increase of efficiency in sugar production, utilization of by-products and solution of allied problems, as well as to the improvements of living and working conditions in sugar mills or plantations, without any part of such money being channeled directly to private persons, constitutes expenditure of tax money for private purposes.

Commissioner of Internal Revenue vs. Hantex Trading Co., Inc. While Rule 45 of the Rules of Court provides that only questions of law may be raised by the petitioner and resolved by the Court, under exceptional circumstances, the Court may take cognizance thereof and resolve questions of fact

While Rule 45 of the Rules of Court provides that only questions of law may be raised by the petitioner and resolved by the Court, under exceptional circumstances, the Court may take cognizance thereof and resolve questions of fact. In this case, the findings and conclusion of the CA are inconsistent with those of the CTA, not to mention those of the Commissioner of Internal Revenue. The issues raised in this case relate to the propriety and the correctness of the tax assessments made by the petitioner against the respondent, as well as the propriety of the application of Section 16, paragraph (b) of the 1977 NIRC, as amended by Pres. Decree Nos. 1705, 1773, 1994 and Executive Order No. 273, in relation to Section 3, Rule 132 of the Rules of Evidence.

Philippine Basketball Association vs. Court of Appeals Statutory Construction; Ejusdem Generis; While Section 13 of the Local Tax Code mentions "other places of amusement," professional basketball games are definitely not within its scope—under the principle of ejusdem generis, where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned.

While Section 13 of the Local TaxCode mentions "other places of amusement," professional basketball games are definitely not within its scope. Under the principle of ejusdem generis ,where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same kind or class as those specifically mentioned. Thus, in determining the meaning of the phrase "other places of amusement," one must refer to the prior enumeration of theaters, cinematographs, concert halls and circuses with artistic expression as their common characteristic. Professional basketball games do not fall under the same category as theaters, cinematographs, concert halls and circuses as the latter basically belong to artistic forms of entertainment while the former caters to sports and gaming.

Osmeña vs. Orbos Oils and Gas; No undue delegation of legislative power where Energy Regulatory Board authorized to impose additional amounts to augment the resources of the Fund.

With regard to the alleged undue delegation of legislative power, the Court finds that the provision conferring the authority upon the ERB to impose additional amounts on petroleum products provides a sufficient standard by which the authority must be exercised. In addition to the general policy of the law to protect the local consumer by stabilizing and subsidizing domestic pump rates, § 8(c) of P.D.1956 expressly authorizes the ERB to impose additional amounts to augment the resources of the "Fund.

Asian Transmission Corporation vs. Commissioner of Internal Revenue RULING

WoN the waivers executed by ATC are valid YES. In this case, the CTA in Division noted that the eight waivers of ATC contained the following defects, to wit: 1. The notarization of the Waivers was not in accordance with the 2004 Rules on Notarial Practice; 2. Several waivers clearly failed to indicate the date of acceptance by the Bureau of Internal Revenue; 3. The Waivers were not signed by the proper revenue officer; and 4. The Waivers failed to specify the type of tax and the amount of tax due. o We agree with the holding of the CTA En Banc that ATC's case was similar to the case of the taxpayer involved in Commissioner of Internal Revenue v. Next Mobile Inc. The foregoing defects noted in the waivers of ATC were not solely attributable to the CIR. Indeed, although RDAO 01- 05 stated that the waiver should not be accepted by the concerned BIR office or official unless duly notarized, a careful reading of RDAO 01-05 indicates that the proper preparation of the waiver was primarily the responsibility of the taxpayer or its authorized representative signing the waiver. Such responsibility did not pertain to the BIR as the receiving party. Consequently, ATC was not correct in insisting that the act or omission giving rise to the defects of the waivers should be ascribed solely to the respondent CIR and her subordinates. Moreover, the principle of estoppel was applicable. The execution of the waivers was to the advantage of ATC because the waivers would provide to ATC the sufficient time to gather and produce voluminous records for the audit. It would really be unfair, therefore, were ATC to be permitted to assail the waivers only after the final assessment proved to be adverse. Thus, the CTA En Banc did not err in ruling that ATC, after having benefitted from the defective waivers, should not be allowed to assail them. In short, the CTA En Banc properly applied the equitable principles of in pari delicto, unclean hands, and estoppel as enunciated in Commissioner of Internal Revenue v. Next Mobile case. NOTES: Petition for review on certiorari DENIED

Pilmico-Mauri Foods Corp. vs. Commissioner of Internal Revenue FACTS

[PMFC] is a corporation, organized and existing under the laws of the Philippines, with principal place of business at Aboitiz Corporate Center, Banilad, Cebu City. The books of accounts of [PMFC] pertaining to 1996 were examined for deficiency income, value-added [tax] (VAT) and withholding tax liabilities. The foregoing Assessment Notices were all received by [PMFC]. On December 29, 1998, [PMFC] filed a protest letter against the aforementioned deficiency tax assessments. In a final decision of the [CIR], the deficiency tax liabilities of [PMFC] were reduced from P9,761,750.02 to P3,020,259.30. PMFC filed its Petition for Review. After trial, the [CTA] affirmed the assessments but in the reduced amount of P2,804,920.36 (inclusive of surcharge and deficiency interest) representing [PMFC's] Income, VAT and Withholding Tax deficiencies for the taxable year 1996 plus 20% delinquency interest per annum until fully paid. From the total purchases of P5,893,694.64 which have been disallowed, it seems that a portion thereof amounting to P1,280,268.19 (729,663.64 + 550,604.55) has no supporting sales invoices because of [PMFC's] failure to present said invoices. The sales invoices contain alterations particularly in the name of the purchaser giving rise to serious doubts regarding their authenticity and if they were really issued to [PMFC]. Besides, [PMFC] should have presented the following vital documents, namely, 1) Written Offsetting Agreement; 2) proof of payment by [PMFC] to Pilmico Foods Corporation; and 3) Financial Statements for the year 1996 of Pilmico Foods Corporation to establish the fact that Pilmico Foods Corporation did not deduct the amount of raw materials being claimed by [PMFC]. Considering that the official receipts and sales invoices presented by [PMFC] failed to comply with the requirements of Section 238 of the NIRC of 1977, the disallowance by the [CIR] of the claimed deduction for raw materials is proper. PMFC] filed a Motion for Partial Consideration but PMFC's Motion for Reconsideration was denied for lack of merit. PMFC then filed a petition for review before the CTA en banc which denied the motion for reconsideration

Delpher Trades Corp. vs. Intermediate Appellate Court RULING

whether or not the "Deed of Exchange" of the properties executed by the Pachecos on the one hand and the Delpher Trades Corporation on the other was meant to be a contract of sale which, in effect, prejudiced the private respondent's right of first refusal over the leased property included in the "deed of exchange." (NO) After incorporation, one becomes a stockholder of a corporation by subscription or by purchasing stock directly from the corporation or from individual owners thereof (Salmon, Dexter & Co. v. Unson, 47 Phil, 649, citing Bole v. Fulton [1912], 233 Pa., 609). In the case at bar, in exchange for their properties, the Pachecos acquired 2,500 original unissued no par value shares of stocks of the Delpher Trades Corporation. Consequently, the Pachecos became stockholders of the corporation by subscription "The essence of the stock subscription is an agreement to take and pay for original unissued shares of a corporation, formed or to be formed." (Rohrlich 243, cited in Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. III, 1980 Edition, p. 430) It is significant that the Pachecos took no par value shares in exchange for their properties. Moreover, there was no attempt to state the true or current market value of the real estate. Land valued at P300.00 a square meter was turned over to the family's corporation for only P14.00 a square meter. It is to be stressed that by their ownership of the 2,500 no par shares of stock, the Pachecos have control of the corporation. Their equity capital is 55% as against 45% of the other stockholders, who also belong to the same family group. In effect, the Delpher Trades Corporation is a business conduit of the Pachecos. What they really did was to invest their properties and change the nature of their ownership from unincorporated to incorporated form by organizing Delpher Trades Corporation to take control of their properties and at the same time save on inheritance taxes. The records do not point to anything wrong or objectionable about this "estate planning" scheme resorted to by the Pachecos. "The legal right of a taxpayer to decrease the amount of what otherwise could be his taxes or altogether avoid them, by means which the law permits, cannot be doubted." The "Deed of Exchange" of property between the Pachecos and Delpher Trades Corporation cannot be considered a contract of sale. There was no transfer of actual ownership interests by the Pachecos to a third party. The Pacheco family merely changed their ownership from one form to another. The ownership remained in the same hands. Hence, the private respondent has no basis for its claim of a light of first refusal under the lease contract