Tax 1 Digest

Digests
Taxation Law I
Michael Vernon Guerrero Mendiola 2003 Shared under Creative Commons ttri!ution" #onCommercial"Share li$e 3%0 &hili''ines license%
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Ta!le o) Contents
Commissioner vs% lgue* G( L"2++,0* -. /e!ruar0 -,++ 1%%%%%%%%% Lu2on Stevedoring Cor'% vs% Court o) Tax ''eals* G( L"30232* 2, 3ul0 -,++ 1%%%%%%%%% Lut2 vs% raneta* G( L".+4,* 22 Decem!er -,44 1%%%%%%%%% 2 McCollough vs% Mar0land* -. 5S 3-6 7-+-,8 1%%%%%%%%% 2 &anhandle 9il vs% State o) Mississi''i* 2.. 5S 2-+ 7-,2+8 1%%%%%%%%% 3 Commissioner vs% Linga0en Gul) :lectric* G( L"23..-* ; ugust -,++ 1%%%%%%%%% ; #ational Develo'ment Co% vs% Commissioner* G( L"43,6-* 30 3une -,+. 1%%%%%%%%% ; Domingo vs% Garlitos* G( L"-+,,3* 2, 3une -,63 1%%%%%%%%% 4 Commissioner vs% Itogon"Su0oc Mines* G( L"242,,* 2, 3ul0 -,6, 1%%%%%%%%% 4 (e'u!lic vs% Mam!ulao Lum!er* G( L"-..24* 2+ /e!ruar0 -,62 1%%%%%%%%% 4 /rancia vs% Intermediate ''ellate Court* G( L"6.6;,* 2+ 3une -,++ 1%%%%%%%%% 6 Caltex &hili''ines vs% Commission on udit 7C9 8* G( ,24+4* + Ma0 -,,2 1%%%%%%%%% . Cu 5n<ieng vs% &atstone* G( -624;* 2- /e!ruar0 -,22 1%%%%%%%%% . Villegas vs* =iu Chiong Tsai &ao =o* G( L"2,6;6* -0 #ovem!er -,.+ 1%%%%%%%%%+ 'ostolic &re)ect o) Mountain &rovince vs% Cit0 Treasurer o) >aguio Cit0* G( ;.242* -+ 'ril -,;- 1%%%%%%%%% + &hili''ine irlines vs% :du* =( L";-3+3* -4 ugust -,++ 1%%%%%%%%% , &rogressive Develo'ment Cor'oration vs% ?ue2on Cit0* G( 360+-* 2; 'ril -,+, 1%%%%%%%%% , merican Mail Line vs% >asilan* G( L"-26;.* 3- Ma0 -,6- 1%%%%%%%%% -0 Saldana vs% Iloilo* G( L"-0;.0* 26 3une -,4+ 1%%%%%%%%% -0 Com'ania General de To!acos de /ili'inas vs% Manila* G( L"-66-,* 2, 3une -,63 1%%%%%%%%% -&hili''ine cet0lene Co% Inc% vs% Commissioner* G( L"-,.0.* -. ugust -,6. 1%%%%%%%%% -Commissioner vs% merican (u!!er* G( L"-,66.* 2, #ovem!er -,66 1%%%%%%%%% -2 Commissioner vs% Gotamco* G( L"3-0,2* 2. /e!ruar0 -,+. 1%%%%%%%%% -2 &ascual vs% Secretar0 o) &u!lic @or$s and Communications* G( L"-0;04* 2, Decem!er -,60 1%%%%%%%%% -3 (e'u!lic vs% >acolod"Murcia Milling Co%* G( L"-,+2;"26* , 3ul0 -,,, 1%%%%%%%%% -3 3-st In)antr0 &ost :xchange vs% &osadas* G( 33;03* ; Se'tem!er -,30 1%%%%%%%%% -; @ells /argo vs% Collector o) Internal (evenue* G( ;6.20* 2+ 3une -,;0 1%%%%%%%%% -4 &hili''ine Match Co% Ltd% vs% Ce!u Cit0* G( L"30.;4* -+ 3anuar0 -,.+ 1%%%%%%%%% -4 Commissioner vs% >ritish 9verseas irwa0s Cor'%* G( L"64..3".;* 30 'ril -,+. 1%%%%%%%%% -6 Commissioner vs% ir India* G( L".2;;3* 2, 3anuar0 -,++ 1%%%%%%%%% -6 llied Thread vs% Cit0 o) Manila* G( L";02,6* 2- #ovem!er -,+; 1%%%%%%%%% -. !ra vs% =ernando* G( L";,336* 3- ugust -,+- 1%%%%%%%%% -. ssociation o) Custom >ro$ers vs% Manila* G( L";3.6* 22 Ma0 -,43 1%%%%%%%%% -+ Aa'atiran ng mga #agliling$od sa &amahalaan vs% Tan* G( L"+-3--* 30 3une -,++ 1%%%%%%%%% -+ Sison vs% ncheta* G( L"4,;3-* 24 3ul0 -,+; 1%%%%%%%%% -, 3uan Luna Su!division vs% Sarmiento* G( L"343+* 2+ Ma0 -,42 1%%%%%%%%% -, Shell Co% vs% Vano* G( L"60,3* 2; /e!ruar0 -,4;1%%%%%%%%% 20 Victorias Milling Co% vs% Munici'alit0 o) Victorias* G( L"2--+3* 2. Se'tem!er -,6+ 1%%%%%%%%% 20 &unsalan vs% Manila* G( L";+-.* 26 Ma0 -,4; 1%%%%%%%%% 29rmoc Sugar vs% Treasurer o) 9rmoc Cit0* G( L"23.,;* -. /e!ruar0 -,6+ 1%%%%%%%%% 2&e'si"Cola >ottling Co% vs% Cit0 o) >utuan* G( L"22+-;* 2+ ugust -,6+ 1%%%%%%%%% 22 Vera vs% Cuevas* G( L"336,3",;* 3- Ma0 -,., 1%%%%%%%%% 22 merican >i!le Societ0 vs% Manila* G( L",63.* 30 'ril -,4. 1%%%%%%%%% 23 Caga0an :lectric &ower B Light Co% vs% Commissioner* G( L"60-26* 24 Se'tem!er -,+4 1%%%%%%%%% 23 Casanovas vs% =ord* G( L"3;.3* 22 March -,0. 1%%%%%%%%% 2; Churchill vs% Conce'cion* G( --4.2* 22 Se'tem!er -,-6 1%%%%%%%%% 2; Villanueva vs% Iloilo Cit0* G( L"2642-* 2+ Decem!er -,6+ 1%%%%%%%%% 24 :astern Theatrical Co% vs% l)onso* G( L"--0;* 3- Ma0 -,;; 1%%%%%%%%% 24 (e0es vs% lman2or* G( ;,+3,";6* 26 'ril -,,- 1%%%%%%%%% 26 !ra Valle0 College vs% Cuino* G( L"3,0+6* -4 3une -,++ 1%%%%%%%%% 26
=errera vs% ?ue2on Cit0 >oard o) ssessment ''eals* G( L"-42.0* 30 Se'tem!er -,6- 1%%%%%%%%% 2. Lladoc vs% Commissioner* G( L"-,20-* -6 3une -,64 1%%%%%%%%% 2. >isho' o) #ueva Segovia vs% &rovincial >oard o) Ilocos #orte* G( 2.4++* 3- Decem!er -,2. 1%%%%%%%%% 2+ Commisioner vs% >isho' o) Missioner0 District o) the &hili''ine Islands* G( L"-,;;4* 3- ugust -,64 1%%%%%%%%% 2+ =odges vs% Iloilo Cit0* G( L"-+-2,* 3- 3anuar0 -,631%%%%%%%%% 2, &rocter and Gam!le vs% 3agna* G( L"2;264* 2+ Decem!er -,., 1%%%%%%%%% 2, Commissioner vs% Lednic$0* G( L"-+-6,* 3- 3ul0 -,6; 1%%%%%%%%% 30 Commissioner vs% 3avier* G( .+,43* 3- 3ul0 -,,- 1%%%%%%%%% 30 Meralco vs% Vera* G( L"2,,+.* 22 9cto!er -,.4 1%%%%%%%%% 3Commissioner vs% Manila 3oc$e0 Clu!* G( L"+.44* 23 March -,46 1%%%%%%%%% 3SSS vs% >acolod Cit0* G( L"34.26* 2- 3ul0 -,+2 1%%%%%%%%% 32 #ita)an vs% Commissioner* G( L".+.+0* 23 3ul0 -,+. 1%%%%%%%%% 32 Commissioner vs% (o!ertson* G( L".0--6"-,* -2 ugust -,+6 1%%%%%%%%% 32 (eagan vs% Commissioner* G( L"263.,* 2. Decem!er -,6, 1%%%%%%%%% 33 Davao Light and &ower vs% Commissioner o) Customs* G( L"2+.3, and L"2+,02 1%%%%%%%%% 33 Surigao Consolidated Mining vs% Collector* G( L"-;+.+* 26 Decem!er -,63 1%%%%%%%%% 3; @onder Mechanical :ngineering vs% Court o) Tax ''eals* G( L"22+04 and L"2.+4+* 30 3une -,.4 1%%%%%%%%% 34 Visa0as Ce!u Terminal vs% Commissioner* G( L"-,430 and L"-,;;;* 2. /e!ruar0 -,64 1%%%%%%%%% 34 Lealda :lectric vs% Commissioner* G( L"-6;2+* 30 'ril -,63 1%%%%%%%%% 36 Misamis 9riental vs% Caga0an :lectric* G( ;4344* -2 3anuar0 -,,0 1%%%%%%%%% 36 =ilado vs% Collector* G( L",;0+* 3- 9cto!er -,46 1%%%%%%%%% 3. Commissioner vs% Court o) Tax ''eals* G( ;;00.* 20 March -,,- 1%%%%%%%%% 3. Maceda vs% Macaraig* G( ++2,-* 3- Ma0 -,,- 1%%%%%%%%% 3+ Commissioner vs% &hoenix ssurance* G( L"-,.2.* 20 Ma0 -,64 1%%%%%%%%% 3, Commissioner vs% Connel >ros% Co%* G( L"2..42"43* 30 ugust -,.- 1%%%%%%%%% 3, Commissioner vs% /iremanDs /und Insurance* G( L"306;;* , March -,+. 1%%%%%%%%% ;0 Commissioner vs% Ce!u &ortland Cement* G( L"2,04,* -4 Decem!er -,+. 1%%%%%%%%% ;0 (e'u!lic vs% Vda% de /ernande2* G( L",-;-* 24 Se'tem!er -,46 1%%%%%%%%% ;Tanada vs% Tuvera* G( L"63,-4* 2; 'ril -,+4 1%%%%%%%%% ;>agatsing vs% (amire2* G( L";-63-* -. Decem!er -,.6 1%%%%%%%%% ;2 Commissioner vs% >urroughs Ltd%* G( L"6643* -, 3une -,+6 1%%%%%%%%% ;2 Commissioner vs% Mega General Merchandise* G( L"6,-36* 30 Se'tem!er -,++ 1%%%%%%%%% ;3 Commissioner vs% Court o) Tax ''eals* G( -0+34+* 20 3anuar0 -,,4 1%%%%%%%%% ;3 Commissioner vs% Court o) ''eals* G( --,.6-* 2, ugust -,,6 1%%%%%%%%% ;; >S"C># >roadcating vs% Court o) Tax ''eals* G( L"42306* -2 9cto!er -,+- 1%%%%%%%%% ;; In (: Eialcita* M ,0"6"0-4"SC* -+ 9cto!er -,,0 1%%%%%%%%% ;4 Commissioner vs% Court o) ''eals* G( ,60-6* -. 9cto!er -,,- 1%%%%%%%%% ;4 >orromeo vs% Civil Service Commission* G( ,6032* 3- 3ul0 -,,- 1%%%%%%%%% ;6 :sso Standard :astern vs% Commissioner* G( 2+40+",* . 3ul0 -,+, 1%%%%%%%%% ;6 Guagua :lectric Light &lant Co% vs% Collector* G( L"236--* 2; 'ril -,6. 1%%%%%%%%% ;. (e'u!lic vs% Limaco and De Gu2man Commercial Co%* G( L"-30+-* 3- ugust -,62 1%%%%%%%%% ;. Inter'rovincial uto!us Co% vs% Collector o) Internal (evenue* G( L"6.;-* 3- 3anuar0 -,46 1%%%%%%%%% ;+ Tan Guan vs% Court o) Tax ''eals* G( L"236.6* 2. 'ril -,6. 1%%%%%%%%% ;, Da0rit vs% Cru2* G( L"3,,-0* 26 Se'tem!er -,++ 1%%%%%%%%% ;, Collector vs% >eni'a0o* G( L"-3646* 3- 3anuar0 -,62 1%%%%%%%%% 40 Meralco Securities Cor'% vs% Savellano* G( L"36-+-* 23 9cto!er -,+21%%%%%%%%% 40 Commissioner vs% !ad* G( L"-,62.* 2. 3une -,6+ 1%%%%%%%%% 4Commissioner vs% &rocter B Gam!le &hili''ines* G( L"66+3+* -4 'ril -,++ 1%%%%%%%%% 4Cit0 Lum!er vs% Domingo* G( L"-+6--* 30 3anuar0 -,6; 1%%%%%%%%% 42 Villamin vs% Court o) Tax ''eals* G( L"--436* 3- 9cto!er -,60 1%%%%%%%%% 42 S0 &o vs% Court o) Tax ''eals* G( L"+-;;6* -+ ugust -,++ 1%%%%%%%%% 43
This collection contains one hundred one (101) cases summarized in this format by Michael Vernon M. Guerrero (as a sophomore law student) during the irst !emester" school year #00$%#00& in the Ta'ation (aw ) class under *tty. +iogenes Villarubia at the *rellano ,ni-ersity !chool of (aw (*,!(). .ompiled as /+ " 0uly #011. 1erne Guerrero entered *,!( in 0une #00# and e-entually graduated from *,!( in #002. 3e passed the /hilippine bar e'aminations immediately after (*pril #004).
www%!erneguerrero%com
Digests (Berne Guerrero)
[1] Commissioner vs. Algue GRL-28890 1! "e#ru$r% 1988 First Division, Cruz (J); 4 concur "$&ts' The Philippine Sugar Estate Development Compan (PSEDC) appointe! "lgue #nc$ as its agent, authorizing it to sell its lan!, %actories, an! oil manu%acturing process$ The &egeta'le (il #nvestment Corporation (&(#CP) purchase! PSEDC properties$ For the sale, "lgue receive! a commission o% P)*+,,,, an! it -as %rom this commission that it pai! .uevara, et$ al$ organizers o% the &(#CP, P/+,,,, in promotional %ees$ #n )01+, "lgue receive! an assessment %rom the Commissioner o% #nternal 2evenue in the amount o% P34,)34$3+ as !elin5uenc income ta6 %or ears )0+3 am! )0+0$ "lgue %ile! a protest or re5uest %or reconsi!eration -hich -as not acte! upon ' the 7ureau o% #nternal 2evenue (7#2)$ The counsel %or "lgue ha! to accept the -arrant o% !istrant an! lev $ "lgue, ho-ever, %ile! a petition %or revie- -ith the Coourt o% Ta6 "ppeals$ (ssue' 8hether the assessment -as reasona'le$ )el*' Ta6es are the li%e'loo! o% the government an! so shoul! 'e collecte! -ithout unnecessar hin!rance$ Ever person -ho is a'le to pa must contri'ute his share in the running o% the government$ The .overnment, %or his part, is e6pecte! to respon! in the %orm o% tangi'le an! intangi'le 'ene%its inten!e! to improve the lives o% the people an! enhance their moral an! material values$ This s m'iotic relationship is the rationale o% ta6ation an! shoul! !ispel the erroneous notion that is an ar'itrar metho! o% e6action ' those in the seat o% po-er$ Ta6 collection, ho-ever, shoul! 'e ma!e in accor!ance -ith la- as an ar'itrariness -ill negate the ver reason %or government itsel%$ For all the a-esome po-er o% the ta6 collector, he ma still 'e stoppe! in his trac9s i% the ta6pa er can !emonstrate that the la- has not 'een o'serve!$ :erein, the claime! !e!uction (pursuant to Section 4, ;a< ;)< o% the Ta6 Co!e an! Section /, ;)< o% 2evenue 2egulation *= as to compensation %or personal services) ha! 'een legitimatel ' "lgue #nc$ #t has %urther proven that the pa ment o% %ees -as reasona'le an! necessar in light o% the e%%orts e6erte! ' the pa ees in in!ucing investors (in &(#CP) to involve themselves in an e6perimental enterprise or a 'usiness re5uiring millions o% pesos$ The assessment -as not reasona'le$ [2] Lu+on ,teve*oring Cor-. vs. Court o. /$0 A--e$ls GR L-10212 29 2ul% 1988 Secon! Division, Paras (J)= 4 concur "$&ts' >uzon Steve!oring Corp$ importe! various engine parts an! other e5uipment %or tug'oat repair an! maintenance in )01) an! )01*$ #t pai! the assesse! compensation ta6 un!er protest$ ?na'le to secure a ta6 re%un! %rom the Commissioner (%or the amount o% P44,44*$)4), it %ile! a petition %or revie- -ith the Court o% Ta6 "ppeals (CT")$ The CT" !enie! the petition, as -ell as the motion %or reconsi!eration %ile! therea%ter$ (ssue' 8hether the corporation is e6empt %rom the compensation ta6$ )el*' "s the po-er o% ta6ation is a high prerogative o% sovereignt , the relin5uishment o% such is never presume! an! an re!uction or !imunition thereo% -ith respect to its mo!e or its rate, must 'e strictl
/$0$tion L$3 ( 2004 ( 1 )
construe!, an! the same must 'e couche! in !ear an! unmista9a'le terms in or!er that it ma 'e applie!$ The corporation@s tug'oats !o not %all un!er the categories o% passenger or cargo vessels to avail o% the e6emption %rom compensation ta6 in Section )0, o% the Ta6 Co!e$ #t ma 'e %urther note! that the amen!ment o% Section )0, o% 2epu'lic "ct 4)/1 -as inten!e! to provi!e incentives an! in!ucements to 'olster the shipping in!ustr an! not the 'usiness o% steve!oring, in -hich the corporation is engage! in$ >uzon Steve!oring Corp$ is not e6empt %rom compensating ta6 un!er Section )0,, an! is thus not entitle! to re%un!$ [1] Lut+ vs. Ar$net$ GR L-!859 22 De&em#er 1955 First Division, 2e es J7> (J)= 3 concur "$&ts' "8alter >utz, as Ju!icial "!ministrator o% the #ntestate Estate o% "ntonio Ja me >e!esma, sought to recover the sum o% P)4,1111$4, pai! ' the estate as ta6es %rom the Commissioner un!er Section e o% Common-ealth "ct +1/ (the Sugar "!Austment "ct), alleging that such ta6 is unconstitutional as it levie! %or the ai! an! support o% the sugar in!ustr e6clusivel , -hich is in his opinion not a pu'lic purpose$ (ssue' 8hether the ta6 is vali! in supporting an in!ustr $ )el*' The ta6 is levie! -ith a regulator prupose, i$e$ to provi!e means %or the reha'ilitation an! sta'ilization o% the threatene! sugar in!ustr $ The act is primaril an e6ercise o% police po-er, an! is not a pure e6ercise o% ta6ing po-er$ "s sugar pro!uction is one o% the great in!ustries o% the Philippines; an! that its promotion, protection an! a!vancement re!oun!s greatl to the general -el%are, the legislature %oun! that the general -el%are !eman!e! that the in!ustr shoul! 'e sta'ilize!, an! provi!e! that the !istri'ution o% 'ene%its there%rom 'e rea!Auste! among its component to ena'le it to resist the a!!e! strain o% the increase in ta6 that it ha! to sustain$ Further, it cannot 'e sai! that the !evotion o% ta6 mone to e6perimental stations to see9 increase o% e%%icienc in sugar pro!uction, utilization o% ' Bpro!ucts, etc$, as -ell as to the improvement o% living an! -or9ing con!itions in sugar mills an! plantations, -ithout an part o% such mone 'eing channele! !iectl to private persons, constitute e6pen!iture o% ta6 mone %or private purposes$ The ta6 is vali!$ [4] 6&Colloug7 vs. 6$r%l$n* 1! 8, 119 (1819) 6$rs7$ll (C2) "$&ts' The ?nite! States Congress incorporate! a 'an9, the 7an9 o% the ?nite! States; an! esta'lishe! a 'ranch in the State o% Car lan!$ The State o% Car lan!, in turn, through its legislature, impose! a ta6 upon the 'an9$ (ssue' 8hether the State o% Car lan! can ta6 a %e!eral 'an9$ )el*' The .overnment o% the ?nite! States, though limite! in its po-ers, is supreme$ #ts la-s, -hen ma!e in pursuance o% the Constitution, %orm the supreme la- o% the lan!, Dan thing in the Constitution or la-s o% an State, to the contrar , not -ithstan!ing$E "mong the enumerate! po-ers o% the government are to la an! collect ta6es; to regulate commerce; to !eclare an! con!uct a -ar; an! to raise an! support armies an! navies$ Still, the po-er o% ta6ation is retaine! ' the States$ #t is not a'ri!ge! ' the grant o% a similar po-er to the
/$0$tion L$3 ( 2004 ( 2 )
.overnment o% the ?nion$ #t is to 'e concurrentl e6ercise! ' the t-o governments$ Consistentl -ith a %air construction o% the Constitutions= the po-er to ta6 involves the po-er to !estro ; the po-er to !estro ma !e%eat an! ren!er useless the po-er to create; an! there is a plain repugnance in con%erring on one government a po-er to control the constitutional measures o% another, -hich other, -ith respect to those ver measures, is !eclare! to 'e supreme over that -hcih e6erts the control$ Ta6ation !oes not necessaril an! unavoi!a'l !estro $ To carr it to the e6cess o% !estruction -oul! 'e an a'use, an! -oul! 'anish that con%i!ence -hich is essential to all government$ :ence, the States have no po-er to retar!, impe!e, 'ur!en, or in an manner control, the operations o% the constitutional la-s enacte! ' Congress to carr into e6ecution the po-ers veste! in the general government$ The la- passe! ' the legislature o% Car lan!, imposing a ta6 on the 7an9 o% the ?nite! States, is unconstitutional an! voi!$ [5] :$n7$n*le ;il vs. ,t$te o. 6ississi--i 2!! 8, 218 (1928) Butler (2) "$&ts' The la-s o% Cississippi provi!e! that Dan person engage! in the 'usiness o% !istri'utor o% gasoline, or retail !ealer in gasoline, shall pa an e6cise ta6 %or the privilege o% engaging in such 'usiness,E e6cept that sol! in interstate commerce or puchase! outsi!e the state an! 'rought in ' the consumer %or his o-n use$ Since )0*+, Panhan!le (il Co$ has 'een engage! in such 'usiness$ Su'se5uentl , the State sue! to recover ta6es claime! on account o% sales ma!e ' the compan to the ?nite! States %or the use o% its Coast .uar! %leet in service in the .ul% o% Ce6ico an! its &eteran@s :ospital at .ul%port$ The compan !e%en!e! on the groun! that Cississippi statutes relevant to the case, i% construe! to impose ta6es on such sales, are repugnant to the %e!eral constitution$ (ssue' 8hether Panhan!le (il Co$ is lia'le %or the e6cise ta6 impose! ' the State o% Cississippi$ )el*' The ?nite! States is empo-ere! ' the Constitution to maintain an! operate the %leet an! the hospital$ "uthorization an! la-s enacte! pursuant to the Constitution are supreme, an! in case o% con%lict, control state enactments$ The States ma not 'ur!en or inter%ere -ith the e6ertion o% national po-er, or ma9e it a source o% revenue or ta9e the %un!s raise! or ta6 the means %or %or the per%ormance o% %e!eral %unctions$ 8hile the State o% Cississippi ma impose charges upon the compan %or the privilege o% carr ing tra!e that is su'Aect to the po-er o% the State, it ma not la an ta6 upon transactions ' -hich the ?nite! States secures the things !esire! %or its governmental purposes$ The necessar operation o% the statutes -hen so construe! is !irectl to retar!, impe!e, an! 'ur!en the e6ertion ' the ?nite! States o% its constitutional po-ers to operate the %leet an! the hospital$ The e6actions !eman!e! in%ringe upon the right to have the Constitutional in!epen!ence o% the ?nite! States, in respect to such purchases, remain untrammele!$ Panhan!le (il Co$ is, thus, not lia'le %or the ta6es claime!$ ; <ote= #t is not in the main 'o! or !ecision, 'ut in the !issenting opinion o% Justice :olmes that the %ollo-ing !octrine -as enunciate!= D$$$ (The Court), so o%ten has !e%eate! the attempt to ta6 in certain -a s, can !e%eat an attempt to !iscriminate or other-ise go too %ar -ithout -holl a'olishing the po-er to ta6$ The po-er to ta6 is not the po-er to !estro -hile this Court sits$ The po-er to %i6 rates is the po-er to !estro i% unlimite!, 'ut this Court -hile it en!eavors to prevent con%iscation !oes not prevent the %i6ing o% rates$ " ta6 is not an unconstitutional regulation in ever case -here an a'solute prohi'ition o% sales -oul! 'e one$E < [9]
/$0$tion L$3 ( 2004 ( 1 )
Commissioner vs. Ling$%en Gul. =le&tri& GR L-21!!1 4 August 1988 En 7anc, Sarmiento (J)= )4 concur "$&ts' >inga en .ul% Electric Po-er operates an electric po-er plant serving the municipalities o% >inga en an! 7inmale , Pangaisnan, pursuant to municipal %ranchise grante! it ' the respective municipal councils$ The %ranchises provi!e! that the grantee shall pa 5uarterl to the Provincial Treasur o% Pangasinan )F o% the gross earnings o'taine! through the privilege %or the %irst *, ears (%rom )041), an! *F !uring the remaining )+ ears o% the li%e o% the %ranchise$ #n )043, the Philippine Presi!ent approve! the %ranchise (2" 4344)$ #n )0++, the 7#2 assesse! an! !eman!e! against the compan !e%icienc %ranchise ta6es an! surcharges %ro the ears )041 to )0+4 appl ing the %ranchise ta6 rate o% +F on gross receipts %rom )043 to )0+4$ The compan as9e! %or a reinvestigation, -hich -as !enie!$ (ssue [1]' 8hether the Court can in5uire into the -is!om o% the "ct$ )el* [1]' The Court !oes not have the authorit to in5uire into the -is!om o% the "ct$ Charters or special la-s grante! an! enacte! ' the >egislatur are in the nature o% private contracts$ The !o not contitute a part o% the machiner o% the general government$ The are usuall a!opte! a%ter care%ul consi!eration o% the private rights in relation -ith the resultant 'ene%its o% the State$ #n passing a special charter, the attention o% the >egislature is !irecte! to the %acts an! circumstances -hich the act or charter is inten!e! to meet$ The >egislature consi!ers an! ma9es provision %or all the circumstance o% the particular case$ The Court ought not to !istur' the ruling o% the Court o% Ta6 "ppeals on the constitutionalit o% the la- in 5uestion$ (ssue [2]' 8hether a rate 'elo- +F on gross income violate the uni%ormit o% ta6 clause in the Constitution$ )el* [2]' " ta6 is uni%orm -hen it operates -ith the same %orce an! e%%ect in ever place -here the su'Aect o% it is %oun!$ ?ni%ormit means that all propert 'elonging to the same class shall 'e ta6e! ali9e$ The legislature has the inherent po-er not onl to select the su'Aects o% ta6ation 'ut to grant e6emptions$ Ta6 e6emptions have never 'een !eeme! violateve o% the e5ual protection clause$ :erein, the +F %ranchise ta6 rate provi!e! in Section *+0 o% the Ta6 Co!e -as never inten!e! to have a universal application$ Section *+0 e6pressl allo-s the pa ment o% ta6es at rates lo-er than +F -hen the charter granting the %ranchise preclu!es the imposition o% a higher ta6$ 2" 4344 !i! not onl %i6 an! speci% a %ranchise ta6 o% *F on its gross receipts, 'ut ma!e it in lieu o% an an! all ta6es, all la-s to the contrar not-ithstan!ing$ D The compan , hence, is not lia'le %or !e%icienc ta6es$ [!] <$tion$l Develo-ment Co. vs. Commissioner GR L-51991 10 2une 198! En 7anc, Cruz (J)= )4 concur "$&ts' The Gational Development Co$ (GDC) entere! into contracts in To9 o -ith several Japanese ship'uil!ing companies %or the construction o% )* oceanBgoing vessels$ #nitial pa ments -ere ma!e in cash an! through irrevoca'le letters o% cre!it$ 8hen the vessels -ere complete! an! !elivere! to the GDC in To9 o, the latter remitte! to the ship'il!ers the amount o% ?SH 4,,11,+3,$/, as interest on the 'alance o% the purchase price$ Go ta6 -as -ithhel!$ The Commissioner then hel! GDC lia'le on such ta6 in the total amount o% P+,))+,*44$/4$ The 7ureau o% #nternal 2evenue serve! upon the GDC a -arrant o% !istraint an! lev a%ter negotiations %aile!$
/$0$tion L$3 ( 2004 ( 4 )
(ssue' 8hether the GDC is lia'le %or !e%icienc ta6$ )el*' The Japanese ship'uil!ers -ere lia'le on the interest remitte! to them un!er Section 4/ o% the Ta6 Co!e$ The GDC is not the one ta6e!$ The imposition o% the !e%icienc ta6es on the GDS is a penalt %or its %ailure to -ithhol! the same %rom the Japanese ship'uil!ers$ Such lia'ilit is impose! ' Section +4(c) o% the Ta6 Co!e$ GDC -as remiss in the !ischarge o% its o'ligation o% its o'ligation as the -ithhol!ing agent o% the government an! so shoul! 'e lia'le %or its omission$ [8] Domingo vs. G$rlitos GR L-18991 29 2une 1991 En 7anc, >a'ra!or (J)= 3 concur, ) concur in result, ) too9 no part "$&ts' #nDomingo vs$ Coscoso (),1 P:#> ))43), the Supreme Court !eclare! as %inal an! e6ecutor the or!er o% the Court o% First #nstance o% >e te %or the pa ment o% estate an! inheritance ta6es, charges an! penalties amounting to P4,,,+3$++ ' the Estate o% the late 8alter Scott Price$ The petition %or e6ecution %ile! ' the %iscal, ho-ever, -as !enie! ' the lo-er court$ The Court hel! that the e6ecution is unAusti%ie! as the .overnment itsel% is in!e'te! to the Estate %or *1*,*,,; an! or!ere! the amount o% inheritance ta6es 'e !e!ucte! %rom the .overnment@s in!e'te!ness to the Estate$ (ssue' 8hether a ta6 an! a !e't ma 'e compensate!$ )el*' The court having Auris!iction o% the Estate ha! %oun! that the claim o% the Estate against the .overnment has 'een recognize! an! an amount o% P*1*,*,, has alrea! 'een appropriate! ' a correspon!ing la- (2" */,,)$ ?n!er the circumstances, 'oth the claim o% the .overnment %or inheritance ta6es an! the claim o% the intestate %or services ren!ere! have alrea! 'ecome over!ue an! !eman!a'le as -ell as %ull li5ui!ate!$ Compensation, there%ore, ta9es place ' operation o% la-, in accor!ance -ith "rticle )*/0 an! )*0, o% the Civil Co!e, an! 'oth !e'ts are e6tinguishe! to the concurrent amount$ [9] Commissioner vs. (togon-,u%o& 6ines GR L-25299 29 2ul% 1999 En 7anc, Fernan!o (J)= 0 concur, ) too9 no part "$&ts' #togonBSu oc Cines %ile! its income ta6 return %or the %iscal ear )0+0 to )01,$ Four months later, it %ile! an amen!e! income ta6 return, reporting a loss$ #t thus sought a re%un! %rom the Commissioner$ 8hen it %ile! its income ta6 return on the ne6t ear, it !e!ucte! an amount representing allege! ta6 cre!it %or overpa ment %or the prece!ing %iscal ear$ The Commissioner impose! an amount P),+)*$34 as )F monthl interest on the amount o% P)4,)++$*, %rom Januar to Decem'er )01*$ The 'asis %or such assessment -as allege!l the a'sence o% a legal right to !e!uct sai! amount 'e%ore the ta6 cre!it or re%un! is approve! ' the Commissioner$ (ssue' 8hether the assessment on interest -as Austi%ie!$ )el*' The Ta6 Co!e provi!es that interest upon the amount !etermine! as a !e%icienc shall 'e assesse! an! shall 'e pai! upon notice an! !eman! %rom the Commissioner at the rate therein speci%ie!$ #t ma!e clear, ho-ever, in an earlier provision %oun! in the same section that i% in an prece!ing ear, the ta6pa er -as entitle! to a re%un! o% an amount !ue as ta6, such amount, i% not re%un!e!, ma 'e !e!ucte! %rom the ta6 to
/$0$tion L$3 ( 2004 ( 5 )
'e pai!$ "lthough the imposition o% monthl interest !oes not constitute penalt 'ut a Aust compensation to the State %or the !ela in pa ing the ta6 an! %or the concomitant use ' the ta6pa er o% %un!s that right%ull shoul! 'e in government@s han!s; in light o% the overpa ment %or )0+0 an! )01,, it cannot 'e sai! that the ta6pa er -as guilt o% !ela ena'ling it to utilize the mone $ The compan is entitle! to re%un!$ [10] Re-u#li& vs. 6$m#ul$o Lum#er GR L-1!!25 28 "e#ru$r% 1992 En 7anc, 7arrera (J)= ), concur "$&ts' Cam'ulao >um'er Compan pai! the .overnment a total o% P0,)*/$+, as re%orestation charges$ :aving %oun! lia'le %or an aggregate amount o% P4,3,*$4/ %or %orest charges, it conten!e! that since the 2epu'lic (.overnment) has not ma!e use o% the re%orestation charges %or re%oresting the !enu!e! area o% the lan! covere! ' the compan @s license, the 2epu'lic shoul! re%un! sai! amount or, i% it cannot 'e re%un!e!, at least the compan shoul! 'e compensate! -ith -hat it o-e! the 2epu'lic %or re%orestation charges$ (ssue' 8hether ta6es ma 'e su'Aect o% setBo%% or compensation$ )el*' #nternal revenue ta6es, such as %orest charges, cannot 'e the su'Aect o% setBo%% or compensation$ " claim %or ta6es is not such a !e't, !eman!, contract or Au!gment as is allo-e! to 'e setBo%% un!er the statutes o% setB o%%, -hich are construe! uni%orml , in the light o% pu'lic polic , to e6clu!e the reme! in an action or an in!e'te!ness o% the State or municipalit to one -ho is lia'le to the State or municipalit %or ta6es$ Geither are the su'Aect o% recoupment since the !o not arise out o% the contract or transaction sue! on$ Ta6es are not in the nature o% contracts 'et-een the parties 'ut gro- out o% a !ut to, an! are the positive acts o% the government, to the ma9ing an! en%orcing o% -hich, the personal consent o% in!ivi!ual ta6pa ers is not re5uire!$ [11] "r$n&i$ vs. (nterme*i$te A--ell$te Court GR L-9!949 28 2une 1988 Thir! Division, .utierrez Jr$ (J)= 4 concur "$&ts' Engracio Francia -as the registere! o-ner o% a house an! lot locate! in Pasa Cit $ " portion o% such propert -as e6propriate! ' the 2epu'lic o% the Philippines in )0//$ #t appeare! that Francia !i! not pa his real estate ta6es %rom )014 to )0//$ Thus, his propert -as sol! in a pu'lic auction ' the Cit Treasurer o% Pasa Cit $ (ssue' 8hether the e6propriation pa ment ma compensate %or the real estate ta6es !ue$ )el*' There can 'e no o%%Bsetting o% ta6es against the claims that the ta6pa er ma have against the government$ " person canot re%use to pa a ta6 on the groun! that the government o-es him an amount e5ual to or greater than the ta6 'eing collecte!$ The collection o% a ta6 annot a-ait the results o% a la-suit agianst the government$ #nternal revenue ta6es cannot 'e the su'Aect o% compensation$ The .overnment an! the ta6pa er are not mutuall cre!itors an! !e'tors o% each other un!er "rticle )*/3 o% the Civil Co!e an! a claim o% ta6es is not such a !e't, !eman!, contract or Au!gment as is allo-e! to 'e setBo%%$
/$0$tion L$3 ( 2004 ( 9 )
; <ote= See 2epu'lic vs$ Cam'ulao, an! Cor!ero vs$ .on!a, as !octrine in sai! cases -ere merel reiterate!$ < [12] C$lte0 :7ili--ines vs. Commission on Au*it (C;A) GR 92585 8 6$% 1992 En 7anc, Davi!e (J)= )* concur, * too9 no part "$&ts' #n )030, C(" sent a letter to Calte6, !irecting it to remit its collection to the (il Price Sta'ilization Fun! ((PSF), e6clu!ing that unremitte! %or )031 an! )33 o% the a!!itional ta6 on petroleum pro!ucts authorize! un!er Section 3 o% PD )0+1; an! that pen!ing such remittance, all its claims %or reim'ursement %rom the (PSF shall 'e hel! in a'e ance$ Calte6 re5ueste! C(", not-ithstan!ing an earl release o% its reim'ursement certi%icates %rom the (PSF, -hich C(" !enie!$ (n 4) Ca )030, Calte6 su'mitte! a proposal to C(" %or the pa ment an! the recover o% claims$ C(" approve! the proposal 'ut prohi'ite! Calte6 %rom %urther o%%seting remittances an! reim'ursements %or the current an! ensuing ears$ Calte6 move! %or reconsi!eration$ (ssue' 8hether the amounts !ue %rom Calte6 to the (PSF ma 'e o%%sette! against Calte6@ outstan!ing claims %rom sai! %un!s$ )el*' Ta6ation is no longer envisione! as a measure merel to raise revenue to support the e6istence o% government; ta6es ma 'e levie! -ith a regulator purpose to provi!e means %or the reha'ilitation an! sta'ilization o% a threatene! in!ustr -hich is a%%ecte! -ith pu'lic interest as to 'e -ithin the police po-er o% the state$ PD )0+1, as amen!e! ' E( )4/, e6plicitl provi!es that the source o% (PSF is ta6ation$ " ta6pa er ma not o%%set ta6es !ue %rom the claims that he ma have against the government$ Ta6es cannot 'e the su'Aect o% compensation 'ecause the government an! ta6pa er are not mutuall cre!itors an! !e'tors o% each other an! a claim %or ta6es is not such a !e't, !eman!, contract or Au!gment as is allo-e! to 'e setBo%%$ [11] Cu 8n>ieng vs. :$tstone GR 19254 21 "e#ru$r% 1922 First Division, (stran! (J)= 4 concur, ) too9 no part "$&ts' .$ "$ Cu ?nAieng !esire! to erect a -arehouse in "zcarraga street -as !enie! a 'uil!ing permit until he shall have ma!e provision %or the construction o% an arca!e over the si!e-al9 in %ront o% the 'uil!ing, an! until he shall have %urther complie! -ith Section ) o% (r!inance 4,) o% the Cit o% Canila, i$e$ pa ment o% )I* o% the assesse! value o% the cit lan!$ CuunAieng %ile! a petition %or a -rit o% man!amus to compel the cit engineer to issue the permit$ (ssue' 8hether the %ee -as vali!l impose!$ )el*' The allo-a'le amount o% license %ee or ta6 !epen!s so much on the special circumstances o% each particular case$ "!Au!ications, ho-ever, appear to recognize 4 classes o% licenses (license %orregulation o% use%ul occupations or enterprises; licenses %or the regulation o% nonBuse%ul occupations or enterprises; an! licenses %or revenue onl ), -hich shoul! 'e ta9en into consi!eration in !etermining the reasona'leness o% the license %ee$ :erein, in imposing a %ee e5ual to )I* o% the assesse! value o% the portion o% the si!e-al9 covere! ' the arca!e, the municipal 'oar! e6cee!e! its po-ers$ The construction o% 'uil!ings is a use%ul enterprise an! the amount o% the license %ee shoul! there%ore 'e limite! to the cost o% licensing, regulating, an! surveillance$ "s it !oes not appear such cost -oul! materiall increase through the construction o% the arca!e,
/$0$tion L$3 ( 2004 ( ! )
the e6cess %ee is clearl impose! %or the purpose o% revenue$ There is nothing in the charter o% the Cit in!icating legislative intent to con%er tot the municipal 'oar! to impose a license ta6 %or revenue on the construction o% 'uil!ings$ "lthough the cit can re5uire the construction o% arca!es in certain circumstances, the license %ee prescri'e! ' (r!inance 4,) is illegal$ [14] ?illeg$s vs )iu C7iong /s$i :$o )o GR L-29949 10 <ovem#er 19!8 En 7anc, Fernan!ez (J)= 4 concur, 4 concur in result, ) too9 no part "$&ts' The Cunicipal 7oar! o% Canila enacte! (r!inance 1+4/ re5uiring aliens (e6cept those emplo e! in the !iplomatic an! consular missions o% %oreign countries, in technical assistance programs o% the government an! another countr , an! mem'ers o% religious or!ers or congregations) to procure the re5uisite ma or@s permit so as to 'e emplo e! or engage in tra!e in the Cit o% Canila$ The permit %ee is P+,, an! the penalt %or the violation o% the or!inance is 4 to 1 months imprisonment or a %ine o% P),, to P*,,, or 'oth$ (ssue' 8hether the or!inance imposes a regulator %ee or a ta6$ )el*' The or!inance@s purpose is clearl to raise mone un!er the guise o% regulation ' e6acting P+, %rom aliens -ho have 'een cleare! %or emplo ment$ The amount is unreasona'le an! e6cessive 'ecause it %ails to consi!er !i%%erence in situation among aliens re5uire! to pa it, i$e$ 'eing casual, permanent, partBtime, ran9B an!B%ile or e6ecutive$ ; The (r!inance -as !eclare! invali! as it is ar'itrar , oppressive an! unreasona'le, 'eing applie! onl to aliens -ho are thus !eprive! o% their rights to li%e, li'ert an! propert an! there%ore violates the !ue process an! e5ual protection clauses o% the Constitution$ Further, the or!inance !oes not la !o-n an criterion or stan!ar! to gui!e the Ca or in the e6ercise o% his !iscretion, thus con%erring upon the ma or ar'itrar an! unrestricte! po-ers$ < [15] A-ostoli& :re.e&t o. 6ount$in :rovin&e vs. Cit% /re$surer o. B$guio Cit% GR 4!252 18 A-ril 1941 En 7anc, #mperial (J)= 4 concur "$&ts' The "postolic Pre%ect is a corporation sole, o% religious character, organize! un!er the Philippine la-s, an! -ith resi!ence in 7aguio, The Cit impose! a special assessment against properties -ithin its territorial Auris!iction, inclu!ing those o% the "postolic Pre%ect, -hich 'ene%its %rom its !rainage an! se-erage s stem$ The "postolic Pre%ect conten!s that its properties shoul! 'e %ree o% ta6$ (ssue' 8hether the "postolic Pre%ect, as a religious entit , is e6empt %rom the pa ment o% the special assessment$ )el*' #n its 'roa! meaning, ta6 inclu!es 'oth general ta6es an! special assessment$ Jet actuall , there is a recognize! !istinction 'et-een them in that assessment is con%ine! to local impositions upon propert %or the pa ment o% the cost o% pu'lic improvements in its imme!iate vicinit an! levie! -ith re%erence to special 'ene%its to the propert assesse!$ " special assessment is not, strictl spea9ing, a ta6; an! neither the !ecree nor the Constitution e6empt the "postolic Pre%ect %rom pa ment o% sai! special assessment$ Furthermore, arguen!o that e6emption ma encompass such assessmen, the "postolic Pre%ect cannot claim e6emption as it
/$0$tion L$3 ( 2004 ( 8 )
has not proven the propert in 5uestion is use! e6clusivel %or religious purposes; 'ut that it appearsthat the same is 'eing use! to other nonBreligious purposes$ Thus, the "postolic Pre%ect is re5uire! to pa the special assessment$ [19] :7ili--ine Airlines vs. =*u )R L-41181 15 August 1988 En 7anc, .utierrez Jr$ (J)= )4 concur "$&ts' The Philippine "irlines (P">) is engage! in the air transportation 'usiness un!er a legislative %ranchise, "ct 4*/), -herein it is e6empt %rom the pa ment o% ta6es$ (n the strength o% an opinion o% the Secretar o% Justice ((pinion 4,/ o% )0+1), P"> -as !etermine! to have not 'een pa ing motor vehicle registration %ees since )0+1$ The >an! Transportation Commissioner re5uire! all ta6 e6empt entities, inclu!ing P">, to pa motor vehicle registration %ees$ P"> proteste!$ (ssue' 8hether registration %ees as to motor vehicles are ta6es to -hich Philippine "irlines is e6empt$ )el*' Ta6es are %or revenue, -hereas %ees are e6actions %or purposes o% regulation an! inspection, an! are %or that reason limite! in amount to -hat is necessar to cover the cost o% the services ren!ere! in that connection$ #t is the o'Aect o% the charge, an! not the name, that !etermines -hether a charge is a ta6 or a %ee$ The mone collecte! un!er the Cotor &ehicle >a- is not inten!e! %or the e6pen!itures o% the Cotor &ehicle (%%ice 'ut accrues to the %un!s %or the construction an! maintenance o% pu'lic roa!s, streets an! 'ri!ges$ "s the %ees are not collecte! %or regulator purposes as an inci!ent to the en%orcement o% regulations governing the operation o% motor vehicles on pu'lic high-a s, 'ut to provi!e revenue -ith -hich the .overnment is to construct an! maintain pu'lic high-a s %or ever one@s use, the are verita'le ta6es, not merel %ees$ P"> is, thus, e6empt %rom pa ing such %ees, e6cept %or the perio! 'et-een */ June )013 to 0 "pril )0/0, -here its ta6 e6eption in the %ranchise -as repeale!$ [1!] :rogressive Develo-ment Cor-or$tion vs. @ue+on Cit% GR 19081 24 A-ril 1989 Thir! Division, Feliciano (J)= 4 concur "$&ts' The Cit Council o% Kuezon Cit a!opte! (r!inance /00/ ()010) -here privatel o-ne! an! operate! pu'lic mar9ets to pa ),F o% the gross receipts %rom stall rentals to the Cit , as supervision %ee$ Such or!inance -as amen!e! ' (r!inance 0*41 ()0/*), -hich impose! a +F ta6 on gross receipts on rentals or lease o% space in privatel Bo-ne! pu'lic mar9ets in Kuezon Cit $ Progressive Development Corp$, o-ne! an! operator o% Farmer@s Car9et an! Shopping Center, %ile! a petition %or prohi'ition against the cit on the groun! that the supervision %ee or license ta6 impose! is in realit a ta6 on income the cit cannot impose$ (ssue' 8hether the supervision %ee I license ta6 is a ta6 on income$ )el*' The +F ta6 impose! in (r!inance 0*41 !oes not constitute a ta6 on income, nor a cit income ta6 (!istinguishe! %rom the national income ta6 ' the Ta6 Co!e) -ithin the meaning o% Section * (g) o% the >ocal "utonom "ct, 'ut rather a license ta6 or %ee %or the regulation o% 'usiness in -hich the compan is engage!$ To 'e consi!ere! a license %ee, the imposition must relate to an occupation or activit that so engages the pu'lic interest in health, morals, sa%et an! !evelopment as to re5uire regulations %or the protection an! promotion o% such pu'lic interest; the imposition must also 'ear a reasona'le relation to the pro'a'le
/$0$tion L$3 ( 2004 ( 9 )
e6penses o% the regulation, ta9ing into account not onl the costs o% !irect regulation 'ut also its inci!ental conse5uences as -ell$ The gross receipts %rom stall rentals have 'een use! onl as a 'asis %or computing the %ees or ta6es !ue to the cit to cover the latter@s a!ministrative e6penses$ The use o% the gross amount o% stall rentals, as 'asis %or the !etermination o% the collecti'le amount o% license ta6, !oes not ' itsel% convert or ren!er the license ta6 into a prohi'ite! cit ta6 on income$ For or!inaril , the higher the amount o% stall rentals, the higher the aggregate volume o% %oo!stu%%s an! relate! items sol! in the privatel o-ne! mar9et; an! the higher the volume o% goo!s sol! in such mar9et, the greater e6tent an! %re5uenc o% inspection an! supervision that ma 'e reasona'l re5uire! in the interest o% the 'u ing pu'lic$ [18] Ameri&$n 6$il Line vs. B$sil$n GR L-1294! 11 6$% 1991 En 7anc, Dizon (J)= 0 concur, ) too9 no part "$&ts' The Cit Council o% 7asilan Cit enacte! (r!inance )3, ()0++) imposing upon a %oreign vessel engage! in coast-ise tra!e -hich ma anchor -ithin the territorial -aters o% 7asilan Cit to pa an anchorage %ee o% hal% centavo per registere! gross ton o% the vessle %or the %irst *4 hours, provi!e! that the ma6imum charge shall not e6cee! P/+ per !a $ "s the cit treasurer assesse! an! attempte! to collect %rom "merican Cail >ine the anchorage %ees, the compan %ile! an action %or !eclarator relie% to have the courts !etermine the vali!it o% the or!inance$ (ssue' 8hether the anchorage %ees -ere %or regulator or revenue purposes$ )el*' The %ees re5uire! are inten!e! %or revenue purposes$ The %ees have no proper or reasona'le relation to the cost o% issuing the permits an! the cost o% inspection or surveillance; 'eing 'ase! upon the tonnage o% the vessels$ The %ees impose! on the vessels e6cee! even the har'or %ees impose! ' the Gational .overnment to raise revenues %or the Port 8or9s Fun!$ The Cit o% 7asilan -as not grante! a 'lan9et authorit or po-er o% ta6ation, 'ut merel given the po-ers to lev an! collect ta6es %or general an! special purposes in accor!ance -ith or as provi!e! ' la-$ The po-er to regulate as an e6ercise o% police po-er !oes not inclu!e the po-er to impose %ees %or revie- purposes$ The or!inance -as invali!$ [19] ,$l*$n$ vs. (loilo GR L-104!0 29 2une 1958 En 7anc, Contema or (J)= 3 concur "$&ts' #n )041, the Cit o% #loilo promulgate! (r!inance *3, -hich strictl prohi'its the transport o% %oo! suppl an! la'or animals outsi!e #loilo -ithout %irst o'taining the necessar license permit %rom the ma or$ ?n!er the or!inance, Sera%in Sal!ana ha! 'een pa ing, un!er protest, soBcalle! %ees on %ish 'ought in #loilo an! sent to Canila %rom )1 Septem'er to 1 Decem'er )041$ (ssue' 8hether the Dlicense %eeE -as vali!l impose!$ )el*' " license %ee represents the permission conce!e! to !o an act is in the main purpose o% police po-er, an! is not suppose! to 'e impose! %or revenue$ " propert ta6, on the other han!, is a ta6 in the or!inar sense, assessing accor!ing to the value o% propert $ Ju!ging %rom the amount o% %ees %i6e! in the or!inance, the soBcalle! %ees -ere in realit ta6es %or cit revenue$ "s such, the are unauthorize! ' the la- or the Cit
/$0$tion L$3 ( 2004 ( 10 )
Charter, an! are alson in contravention o% Sections **3/ an! *1*0 o% the 2evise! "!ministrative Co!e$ The prohi'ition against ta9ing animals an! articles outsi!e #loilo -ithout ma or@s permit is in restraint o% tra!e an! a curtailment o% the rights o% the o-ners o% sai! animals an! articles to %reel sell an! o% prospective purchasers to 'u an! !ispose o% them -ithout the cit limits in the or!inar course o% commerce an! tra!e$ The or!inance is ultra vires an!, thus, is null an! voi!$ [20] Com-$ni$ Gener$l *e /o#$&os *e "ili-in$s vs. 6$nil$ GR L-19919 29 2une 1991 En 7anc, Dizon (J)= 3 concur, * too9 no part "$&ts' Compania .eneral !e Ta'acos !e Filipinas (Ta'acalera) pai! the Cit o% Canila the %i6e! license %ees prescri'e! ' (r!inance 44+3 %or the ears )0+4 to )0+/$ #n )0+4, Cit (r!inance 4144 an! 43)1 -ere passe!; -here the term Dgeneral merchan!iseE %oun! therein inclu!e! all articles in Sections )*4 to )43 o% the Ta6 Co!e (thus, also li5uor un!er Se!ctions )44 to )4+)$ The Ta'acalera pai! its -holesaler@s an! retailer@s ta6es$ #n )0+4, the Cit Treasurer a!!resse! a letter to an accounting %irm, e6pressing the vie- that li5uor !ealers pa ing the annual -holesale an! retail %i6e! ta6 un!er (r!inance 44+3 are not su'Aect to the -holesale aan! retail !ea9lers@ ta6es prescri'e! ' Cit (r!inances 4144, 44,), an! 43)1$ The Ta'acalera, upon learning o% sai! stoppe! inclu!ing 5uarterl s-orn !eclaratons re5uire! ' the latter or!inances, an! in )0+/, !eman!e! re%un!e o% the allege! overpa ment$ The claim -as !isallo-e!$ (ssue' 8hether there is a !istinction 'et-een (r!inance 44+3 an! (r!inances 4144, 44,) an! 43)1, to prevent re%un! to the compan $ )el*' .enerall , the term Dta6E applies to all 9in!s o% e6actions -hich 'ecome pu'lic %un!s$ >egall , ho-ever, a license %ee is a legal concept 5uite !istinct %rom ta6= the %ormer is impose! in the e6ercise o% police po-er %or purposes o% regulation, -hile the latter is impose! un!er the ta6ing po-er %or the purpose o% raising revenues$ (r!inance 44+3 prescri'es municipal license %ees %or the privilege to engage in the 'usiness o% selling li5uor or alcohol 'everages; consi!ering that the sale o% into6icating li5uor is (potentiall ) harm%ul to pu'lic health an! morals, an! must 'e su'Aect to supervision or regulation ' the State an! ' cities an! municipalities authorize! to act in the premises$ (n the other han!, (r!inances 4144 , 44,) an! 43)1 impose! ta6es on the sales o% general merchan!ise, -holesale or retail, an! are revenue measures enacte! ' the Cunicipal 7oar! o% Canila$ 7oth a license %ee an! a ta6 ma 'e impose! on the same 'usiness or occupation, or %or selling the same article, -ithout it 'eing in violation o% the rule against !ou'le ta6ation$ The contrar vie- o% the Treasurer in its letter is o% no conse5uence as the government is not 'oun! ' the errors or mista9es committe! ' its o%%icers, speciall on matters o% la-$ The compan , thus, is not entitle! to re%un!$ [21] :7ili--ine A&et%lene Co. (n&. vs. Commissioner GR L-19!0! 1! August 199! En 7anc, Castro (J)= / concur, * too9 no part "$&ts' Philippine "cet lene Co$ #nc$ is engage! in the manu%acture an! sale o% o6 gen an! acet lene gases$ #t sol! its pro!ucts to the Gational Po-er Corporation (Gapocor), an agenc o% the Philippine .overnment, an! the &oice o% "merica (&("), an agenc o% the ?nite! States .overnment$ The Commissioner assesse!
/$0$tion L$3 ( 2004 ( 11 )
!e%icienc sales ta6 an! surcharges against the compan $ The compan !enie! lia'ilit %or the pa ment o% ta6 on the groun! that 'oth Gapocor an! &(" are e6empt %rom ta6es$ (ssue' 8hether Philippine "cet lene Co$ is e6empt %rom the ta6$ )el*' Sales ta6 are pai! ' the manu%acturer or pro!ucer -ho must ma9e a true an! complete return o% the amount o% his, her or its gross monthl sales, receipts or earnings or gross value o% output actuall remove! %rom the %actor or mill, -arehouse an! to pa the ta6 !ue thereon$ The ta6 impose! ' Section )31 o% the Ta6 Co!e is a ta6 on the manu%acturer or pro!ucer an! not a ta6 on the purchaser e6cept pro'a'l in a ver remote an! inconse5uential sense$ "ccor!ingl , its lev on the sales ma!e to ta6Be6empt entities li9e the Gapocor is permissi'le$ (n the other han!, there is nothing in the language o% the Cilitar 7ases "greement to -arrant the general e6emption grante! ' .eneral Circular &B4) ()04/)$ Thus, the e6pansive construction o% the ta6 e6emption is voi!; an! the sales to the &(" are su'Aect to the pa ment o% percentage ta6es un!er Section )31 o% the Ta6 Co!e$ There%ore, ta6 e6emption is strictl construe! an! e6emption -ill n'ot 'e hel! to 'e con%erre! unless the terms un!er -hich it is grante! clearl an! !istinctl sho- that such -as the intention$ [22] Commissioner vs. Ameri&$n Ru##er GR L-1999! 29 <ovem#er 1999 En 7anc, 2e es J7> (J)= 3 concur "$&ts' "merican 2u''er Compan sol! its ru''er pro!ucts locall an! as prescri'e! ' the Commissioner@s regulation, the compan !eclare! the same %or ta6 purposes in -hich the Commissioner accor!ingl assesse!$ The compan pai! un!er protest the correspon!ing sales ta6es thereon, claiming e6emption un!er Section )33 (') o% the Ta6 Co!e, an! su'se5uentl claime! re%un!$ 8ith the Commissioner re%using to !o so, the case -as 'rought 'e%ore the Court o% Ta6 "ppeals, -hich uphel! the Commissioner@s stan! that the compan is not entitle! to recover the sales ta6 that ha! 'een separatel 'ille! to its customers, an! pai! ' the latter$ (ssue' 8hether the compan can recover the sales ta6 pai!$ )el*' The sales ta6 is ' la- impose! !irectl , not on the thing sol!, 'ut on the act (sale) o% the manu%acturer, pro!ucer, or importer, -ho is e6clusivel ma!e lia'le %or its timel pa ment$ 8here the ta6 mone pai! ' the compan came %rom is reall no concern o% the .overnment, 'ut solel a matter 'et-een the compan an! its customers$ (nce recovere!, the compan must hol! the re%un!e! ta6es in trust %or hte in!ivi!ual purchasers -ho a!vance! pa ment thereo%, an! -hose names must appear in compan recor!s$ :erein, the compan sales 'et-een *4 "ugust )0+1 (approval o% 2" )1)*) to ** June )0+/ (-hen 2" )3+1 restore! the e6emption o% agricultural pro!ucts D-hether in their original %orm or notE) -ere properl ta6e!$ Such amount correspon!ing to the perio! are not recovera'le$ [21] Commissioner vs. Got$m&o GR L-11092 2! "e#ru$r% 198! First Division, Jap (J)> 1 concur "$&ts' The 8orl! Tra!e (rganization (8:() !eci!e! to construct a 'uil!ing to house its o%%ices, as -ell as the other ?nite! Gations (%%ices in Canila$ #n inviting 'i!s %or the construction o% the 'uil!ing, the 8:( in%orme! the 'i!!ers o% its ta6 e6emptions$ The contract -as a-ar!e! to John .otamco an! Sons$ The Commissioner opine! that a 4F contractor@s ta6 shoul! 'e !ue %rom the contractor$ The 8:( issue! a
/$0$tion L$3 ( 2004 ( 12 )
certi%ication that .otamco shoul! 'e e6empte!, 'ut the Commissioner insiste! on the ta6$ 2aise! in the Court o% Ta6 "ppeals, the court rule! in %avor o% .otamco$ (ssue' 8hether .otamco is li9e-ise %rom the contractor@s ta6 in lieu o% 8:(@s e6emption %rom in!irect ta6es$ )el*' Direct ta6es are those that are !eman!e! %rom the ver person -ho, it is inten!e! or !esire!, shoul! pa them; -hile in!irect ta6es are those that are !eman!e! in the %irst instance %rom one person in the e6pectation an! intention that he can shi%t the 'ur!en to someone else$ :erein, the contractor@s ta6 is pa a'le ' the contractor 'ut it is the o-ner o% the 'uil!ing that shoul!ers the 'ur!en o% the ta6 'ecause the same is shi%te! ' the contractor to the o-ner as a matter o% sel%Bpreservation$ Such ta6 is an Din!irect ta6E on the organization, as the pa ment thereo% or its inclusion in the 'i! price -oul! have meant an increase in the construction cost o% the 'uil!ing$ :ence, the Contractee@s (8:() e6emption %rom Din!irect ta6esE implies that contractor (.otamco) is e6empt %rom contractor@s ta6$ [24] :$s&u$l vs. ,e&ret$r% o. :u#li& AorBs $n* Communi&$tions GR L-10405 29 De&em#er 1990 En 7anc, Concepcion (J)= ), concur "$&ts' 2" 0*, ("ct appropriating %un!s %or pu'lic -or9s) -as enacte! in )0+4 containing an item (Section ) c;a<) %or the construction, reconstruction, repair, e6tension an! improvement o% Pasig %ee!er roa! terminals (the proAecte! an! planne! su'!ivision roa!s, -hich -ere not et constructe!, -ithin "ntonio Su'!ivision o-ne! ' Senator Jose C$ Lulueta)$ Lulueta D!onate!E sai! parcels o% lan! to the .overnment + months a%ter the enactment o% 2" 0*,, on the con!ition that i% the .overnment violates such con!ition the lan!s -oul! revert to Lulueta$ The provincial governor o% 2izal, 8enceslao Pascual, 5uestione! the vali!it o% the !onation an! the Constitutionalit o% the item in 2" 0*,, it 'eing not %or a pu'lic purpose$ (ssue' 8hether the item in the appropriation is vali!$ )el*' The right o% the legislature to appropriate %un!s is correlative -ith its right to ta6, un!er constitutional provisions against ta6ation e6cept %or pu'lic purposes an! prohi'iting the collection o% a ta6 %or one purpose an! the !evotion thereo% to another purpose, no appropriation o% state %un!s can 'e ma!e %or other than a pu'lic purpose$ The vali!it o% a statute !epen!s upon the po-ers o% Congress at the time o% its passage or approval, not upon events occup ing, or acts per%orme!, su'se5uentl thereto, unless the latter consist o% an amen!ment o% the organic la-, removing, -ith retrospective operation, the constitutional limitation in%ringe! ' sai! statute$ :erein, inasmuch as the lan! on -hich the proAecte! %ee!er roa!s -ere to 'e constructe! 'elonge! to Senator Lulueta at the time 2" 0*, -as passe! ' Congress, or approve! ' the Presi!ent, an! the !is'ursement o% sai! sum 'ecame e%%ective on *, June )0+4 pursuant to Section )4 o% the "ct, the result is that the appropriating sough a private purpose an! hence, null an! voi!$ [25] Re-u#li& vs. B$&olo*-6ur&i$ 6illing Co. GR L-19824-29 9 2ul% 1999 En 7anc, 2egala (J)= / concur, ) too9 no part "$&ts' 2" 14* create! the Philippine Sugar #nstitute, a semiBpu'lic corporation$ #n )0+), the #nstitute
/$0$tion L$3 ( 2004 ( 11 )
ac5uire! the #nsular Sugar 2e%iner %or P4$,/ million pa a'le in installments %rom the procee!s o% the sugar ta6 to 'e collecte! un!er 2" 14*$ The operation o% the re%iner %or )0+4 to )0+/ -as !isastrous as the #nstitute su%%ere! tremen!ous losses$ Conten!ing that the purchase o% the re%iner -ith mone %rom the #nstitute@s %un! -as not authorize! un!er 2" 14*, an! that the continue! operation o% the re%iner is inimical to their interest, 7acolo!BCurcia Cilling Co$, CaBao Sugar Central, Talisa BSila Cilling Co$ an! the Central "zucarera !el Danao re%use! to continue -ith their contri'ution to sai! %un!$ The trial court %oun! them lia'le un!er 2" 14*$ (ssue' 8hether the ta6pa ers ma re%use to pa the special assessment, allege!l !istinct %rom an or!inar ta6 -hich no one can re%use to pa $ )el*' The nature o% a Dspecial assessmentE similar to the case has 'een !iscusse! an! e6plaine! in >utz vs$ "raneta$ The special assessment or lev %or the Philippine Sugar #nstitute (Philsugin) Fun! is not so much an e6ercise o% the po-er o% ta6ation, nor the imposition o% a special assessment, 'ut the e6ercise o% police po-er %or the general -el%are o% the entire countr $ #t is, there%ore, an e6ercise o% a sovereign po-er -hich no private citizen ma la-%ull resist$ Section *a o% the Charter authorizing Philsugin to Dcon!uct research -or9 %or the sugar in!ustr in all its phases, either agricultural or in!ustrial, %or the purpose o% intro!ucing into the sugar in!ustr such practices or processes that -ill re!uce the cost o% pro!uction an! achieve greater e%%icienc in the in!ustr , Austi%ies the ac5uisition o% the re%iner in 5uestion$ The %inancial loss resulting %rom the operation thereo% is no means an in!e6 that the in!ustr !i! not pro%it there%rom, as other gains o% a !i%%erent nature (such as e6perience) ma have 'een realize!$ [29] 11st (n.$ntr% :ost =0&7$nge vs. :os$*$s GR 11401 4 ,e-tem#er 1910 En 7anc, Calcolm (J)= + concur "$&ts' The 4)st #n%antr Post E6change is a post e6change constitute! in accor!ance -ith "rm regulations an! the la-s o% the ?nite! States$ in the course o% its !ul authorize! 'usiness transactions, the E6change ma!e man purchases o% various an! !iverse commo!ities, goo!s, -ares an! merchan!ise %rom various merchants in the Philippines$ The Commissioner collecte! a sales ta6 o% ) )I* F o%the gross value o% the commo!ities, etc$ %rom the merchants -ho sol! sai! commo!ities to the E6change$ " %ormal protest -as lo!ge! ' the E6change$ (ssue' 8hether the E6change is e6empt %rom the sales ta6 impose! against its suppliers$ )el*' Ta6es have 'een collecte! %rom merchants -ho ma!e sales to "rm Post E6changes since )0,4 ("ct ))30, Section )40)$ Similar ta6es are pai! ' those -ho sell merchan!ise to the Philippine .overnment, an! ' those -ho !o 'usiness -ith the ?S "rm an! Gav in the Philippines$ :erein, the merchants -ho e%%ecte! the sales to the Post E6change are the ones -ho pai! the ta6; an! it is the o%%icers, sol!iers, an! civilian emplo ees an! their %amilites -ho are 'ene%ite! ' the post e6change to -hom the ta6 is ultimatel shi%te!$ The ta6 lai! upon the merchants -ho sell to the "rm Post E6changes !oes not inter%ere -ith the supremac o% the ?S .overnment, nor -ith the operations o% its instrumentalities, such as the ?S "rm , to such e6tent or in such a manner as to ren!er the ta6 illegal$ The ta6 !oes not !eprive the "rm o% the po-er to serve the .overnment as it -as inten!e! to serve it, or hin!er the e%%icient e6ercise o% its po-er$ "n "rm Post E6change, although an agenc -ithin the ?S "rm , cannot secure e6emption %rom ta6ation %or merchants -ho ma9e sales to the Post E6change$ [2!]
/$0$tion L$3 ( 2004 ( 14 )
Aells "$rgo vs. Colle&tor o. (ntern$l Revenue GR 49!20 28 2une 1940 First Division, Coran (J)= 4 concur, ) concur in result "$&ts' 7ir!ie >illian E e !ie! on )1 Septem'er )04*, at >os "ngeles, Cali%ornia, the place o% her allege! last resi!ence an! !omicile$ "mong the properties she le%t -as her )I* conAugal shares o% stoc9 in the 7enguet Consoli!ate! Cining Co$, an anon mous partnership (socie!a! anonima), organize! un!er the la-s o% the Philippines$ She le%t a -ill !ul a!mitte! to pro'ate in Cali%ornia -here her estate -as a!ministere! an! settle!$ 8ells Fargo 'an9 an! ?nion Trust Co$ -as !ul appointe! trustee o% the trust ' the sai! -ill$ The Fe!eral an! Cali%ornia State@s inheritance ta6es !ue thereon have 'een !ul pai!$ The Collector o% #nternal 2evenue in the Philippines, ho-ever, sought to su'Aect the shares o% stoc9 to inheritance ta6, to -hich 8ells Fargo o'Aecte!$ (ssue' 8hether the shares o% stoc9 are su'Aect to Philippine inheritance ta6 consi!ering that the !ece!ent -as !omicile! in Cali%ornia$ )el*' (riginall , the settle! la- in the ?nite! States is that intangi'les have onl one situs %or the purpose o% inheritance ta6, an! such situs is in the !omicile o% the !ece!ent at the time o% his or her !eath$ 7ut the rule has 'een rela6e!$ The ma6im Dmo'ila se5uuntur personam,E upon -hich the rule rests, has 'een !ecrie! as a mere D%iction o% la- having its origin in consi!erations o% general convenience an! pu'lic polic , an! cannot 'e applie! to limit or control teh right o% the State to ta6 propert -ithin its Auris!ictionE an! must D iel! to esta'lishe! %act o% legal o-nership, actual presence an! control else-here, an! cannot 'e applie! i% to !o so -houl! result in inescapa'le an! patent inAustice$E The rela6ation o% the original rule rests on either o% t-o %un!amental consi!erations= ()) upon the recognition o% the inherent po-er o% each government to ta6 persons, properties, an! rights -ithin its Auris!iction an! enAo ing, thus, the protection o% its la-s; an! (*) upon the principle that as to intangi'les, a single location in space is har!l possi'le, consi!ering the multiple, !istinct relationships -hich ma 'e entere! into -ith respect thereto$ :erein, the actual situs o% the shares o% stoc9 is in the Philippines, the corporation 'eing !omicile! therein$ The certi%icates o% stoc9 remaine! in the Philippines up to the time -hen the !ecease! !ie! in Cali%ornia, an! the -ere in possession o% one S rena CcMee, secretar o% the corporation, to -hom the have 'een !elivere! an! in!orse! in 'lan9$ CcMee ha! the legal title to the certi%icates o% stoc9 hel! in trust %or the true o-ner thereo%$ The o-ner resi!ing in Cali%ornia has e6ten!e! here her activities -ith respect to her intangi'les so as to avail heresel% o% the protection an! 'ene%it o% Philippine la-s$ "ccor!ingl , the Auris!iction o% the Philippine .overnment to ta6 must 'e uphel!$ [28] :7ili--ine 6$t&7 Co. Lt*. vs. Ce#u Cit% GR L-10!45 18 2$nu$r% 19!8 Secon! Division, "5uino (J)= 4 concur, ) on leave "$&ts' Ce'u Cit impose! a 5uarterl ta6 (sales ta6 o% )F) on gross sales or receipts o% merchants, !ealers, importers an! manu%acturers or an commo!it !oing 'usiness in Ce'u Cit , through (r!inance */0$ Section 0 o% the (r!inance provi!e! that, %or the purpose o% the ta6, Dall !eliveries o% goo!s or commo!ities store! in Ce'u Cit , or i% not store! are soll! in that cit sahll 'e consi!ere! as sales in the cit an! shall 'e ta6a'le$E Philippine Catch Co$ >t!$, -ith principal o%%ice in Canila, 5uestione! the legalit o% the ta6 collecte! ' the Cit o% Ce'u on sales o% matches store! ' the compan in Ce'u Cit 'ut !elivere! to customers outsi!e the cit $
/$0$tion L$3 ( 2004 ( 15 )
(ssue' 8hether the Cit o% Ce'u can ta6 sales o% matches -hich -ere per%ecte! an! pai! %or in Ce'u Cit 'ut -here the matches -ere !elivere! to customers outsi!e the cit $ )el*' The cit can vali!l ta6 the sales o% matches to customers outsi!e o% the cit as long as the or!ers -ere 'oo9e! an! pai! %or in the compan @s 'ranch o%%ice in the cit $ Those matches can 'e regar!e! as sol! in the cit , as contemplate! in the or!inance, 'ecause the matches -ere !elvere! to the carrier in Ce'u Cit $ .enerall , !eliver to the carrier is !eliver to the 'u er ("rticle )+*4, Civil Co!e)$ " !i%%erent interpretation -oul! !e%eat the ta6 or!inance in 5uestion or encourage ta6 evasion through the simple e6pe!ient o% arranging %or the !eliver o% the matches at the outs9irts o% the cit though the purchases -ere e%%ecte! an! pai! %or in the compan @s 'ranch o%%ice in the cit $ The municipal 'oar! o% the cit is empo-ere! to provi!e %or the lev an! collection o% ta6es %or general an! special purposes in accor!ance -ith la-$ [29] Commissioner vs. Britis7 ;verse$s Air3$%s Cor-. GR L-95!!1-!4 10 A-ril 198! En 7anc, CelencioB:errera (J)= / concur, ) too9 no part "$&ts' 7ritish (verseas "ir-a s Corp$ (7("C) is a ),,F 7ritis .overnmentBo-ne! corporation engage! in international airline 'usiness an! is a mem'er o% the #nterline "ir Transport "ssociation, an! thus, it operates air transportation service an! sells transportation tic9ets over the routes o% the other airline mem'ers$ From )0+0 to )0/*, 7("C ha! no lan!ing rights %or tra%%ic purposes in the Philippines an! thus !i! not carr passengers an!Ior cargo to or %rom the Philippines 'ut maintaine! a general sales agent in the Philippines BB 8arner 7arnes N Co$ >t!$, an! later, Kantas "ir-a us BB -hich -as responsi'le %or selling 7("C tic9ets covering passengers an! cargoes$ The Commissioner o% #nternal 2evenue assesse! !e%icienc income ta6es against 7("C$ (ssue' 8hether the revenue !erive! ' 7("C %rom tic9et sales in the Philippines %or air transportation, -hile having no lan!ing rights in the Philippines, constitute income o% 7("C %rom Philippine sources, an! accor!ingl , ta6a'le$ )el*' The source o% an income is the propert , activit or service that pro!uce! the income$ For the source o% income to 'e consi!ere! as coming %rom the Philippines, it is su%%icient that the income is !erive! %rom activit -ithin the Philippines$ :erein, the sale o% tic9ets in the Philippines is the activit that pro!uce! the income$ The tic9ets e6change! han!s here an! pa ments %or %ares -ere also ma!e here in Philippine currenc $ The situs o% the source o% pa ments is the Philippines$ The %lo- o% -ealth procee!e! %rom, an! occure! -ithin, Philippine territor , enAo ing the protection accor!e! ' the Philippine .overnment$ #n consi!eration o% such protection, the %lo- o% -ealth shoul! share the 'ur!en o% supporting the government$ PD 13, in relation to PD )4++, ensures that international airlines are ta6e! on their income %rom Philippine sources$ The * )I* Fta6 on gross 'illings is an income ta6$ #% it ha! 'een inten!e! as an e6cise or percentage ta6, it -oul! have 'een place! un!er Title & o% the Ta6 Co!e covering ta6es on 'usiness$ [10] Commissioner vs. Air (n*i$ GR L-!2441 29 2$nu$r% 1988 First Division, .anca co (J)= 4 concur "$&ts' "ir #n!ia is a %oreign corporation an! an o%%Bline international carrier not engage! in the 'usiness o% air transporation in the Philippines$ "ir #n!ia sells airplane tic9ets in the Philippines trhough its general sales agent, Philippine "irlines$ Sai! tic9ets are service! ' "ir #n!ia outsi!e the Philippines$ The Commissioner o%
/$0$tion L$3 ( 2004 ( 19 )
#nternal 2evenue assesse! against "ir #n!ia the amount o% P)4*,4/)$13 representing *$++ income ta6 on its gross Philippine 'illngs pursuant to Section *4 (') (*) o% the Ta6 Co!e, as amen!e!, inclusive o% th e+,F surcharge an! interest %or -ill%ul neglect to %ile a return as provi!e! un!er Section /* o% the same Co!e$ "ir #n!ia appeale! to the Court o% Ta6 "ppeals$ (ssue' 8hether the revenue !erive! ' an international air carrier %rom sles o% tic9ets in the Philippines %or air transportation, -hile having no lan!ing rights in the countr , constitutes income o% sai! carrier %rom Philippine sources, an! thus ta6a'le un!er Section *4 (') (*) o% the Ta6 Co!e$ )el*' 7ase! on the !octrine enunciate! in 7ritish (verseas "ir-a s Corp$, the revenue !erive! ' "ir #n!ia %rom the sales o% airplane tic9ets, through its agent in the Philippines, must 'e consi!ere! ta6a'le income$ "s correctl assesse! ' the Commissioner, such income is su'Aect to a *$+F ta6 pursuant to PD )4++, amen!ing section *4 (') (*) o% the Ta6 Co!e$ [11] Allie* /7re$* vs. Cit% o. 6$nil$ GR L-40299 21 <ovem#er 1984 En 7anc, "'a! Santos (J)= ), concur, * too9 no part "$&ts' "llie! Threa! Co$ #nc$ is engage! in the 'usiness o% manu%acturing se-ing threa! an! arn$ #t operates its %actor an! maintains an o%%ice in Pasig, 2izal$ #n or!er to sell its pro!ucts in Canila an! in other parts o% the Philippines, it engage! the services o% a sales 'ro9er, Mer N Co$ >t!$, the latter !eriving commissions %rom ever sale ma!e %or its principal$ The Cit o% Canila enacte! (r!inance /+)1 imposing 'usiness ta6es 'ase! on gross sales on a gra!uate! 'asis on manu%acturers, importers or pro!ucers !oing 'usiness in Canila$ "llie! Threa! an! Mer N Co$ allege! that sai! or!inance is invali! %or 'eing contrar to Section +4 o% PD 4*1$ (ssue' 8hether "llei! Threa! is properl ta6e! in Canila$ )el*' (r!inance /+)1, as amen!e!, imposes a 'usiness ta6 on manu%acturers, importers or pro!ucers !oing 'usiness in Canila$ The ta6 imposition is upon the per%ormance o% an act, enAo ment o% a privilege, or the engaging in an occupation, an! hence is in the nature o% an e6cise ta6$ The po-er to lev an e6cise upon the per%orance o% an act or the engaging in an occupation !oes not !epen! upon the !omicile o% the person su'Aect tot he e6cise, nor upon the ph sical location o% the propert an! in connection -ith the act or occupation ta6e!, 'ut !epen!s upon the place in -hich the act is per%orme! or occupation engage! in$ Thus, since "llie! Threa! sells its pro!ucts in the Cit o% Canila through its 'ro9er, Mer N Co$, it cannot escapte the ta6 lia'ilit impose! ' (r!inance /+)1, as amen!e!$ [12] A#r$ vs. )ern$n*o GR L-49119 11 August 1981 Secon! Division, Fernan!o (J)= 4 concur, ) concur in result, ) on leave "$&ts' The provincial assessor ma!e a ta6 assessment on the properties o% the 2oman Catholic 7ishop o% 7angue!$ The 'ishop claims ta6 e6emption %rom real estate ta6, through an action %or !eclarator relie%$ " summar Au!gment -as ma!e granting the e6emption -ithout hearing the si!e o% the Province o% "'ra$ (ssue' 8hether the properties o% the 7ishop o% 7angue! are ta6Be6empt$
/$0$tion L$3 ( 2004 ( 1! )
)el*' The )04+ an! the )0/4 Constitutions !i%%er in language as to the e6emption o% religious propert %rom ta6es as teh shoul! not onl 'e De6clusivel E 'ut also Dactuall E an! D!irectl E use! %or religious purposes$ :erein, the Au!ge accepte! at its %ace the allegation o% the 7ishop instea! o% !emonstrating that there is compliance -ith the constitutional provision that allo-s an e6emption$ There -as an allegation o% lac9 o% Auris!iction an! o% lac9 o% cause o% action, -hich shoul! have compelle! the Au!ge to accor! a hearing to the province rather than !eci!ing the case imme!iatel in %avor o% the 7ishop$ E6emption %rom ta6ation is not %avore! an! is never presume!, so that i% grante!, it must 'e strictl construe! against the ta6pa er$ There must 'e proo% o% the actual an! !irect use o% the lan!s, 'uil!ings, an! improvements %or religious (or charita'le) purposes to 'e e6empte! %rom ta6ation$ The case -as reman!e! to the lo-er court %or a trial on merits$ [11] Asso&i$tion o. Custom BroBers vs. 6$nil$ GR L-41!9 22 6$% 1951 En 7anc, 7autistaB"ngelo (J)= 4 concur, 4 concur in result "$&ts' The "ssociation o% Customs 7ro9ers, -hich is compose! o% all 'ro9ers an! pu'lic service operators o% motor vehicles in the Cit o% Canila, challenges the vali!it o% (r!inance 44/0 on the groun!s ()) that -hile it levies a soBcalle! propert ta6, it is in realit a license ta6 -hich is 'e on! the po-er o% the Canila Cunicipal 7oar!; (*) that sai! or!inance o%%en!s against the rule on uni%ormit o% ta6es; an! (4) that it constitutes !ou'le ta6ation$ (ssue' 8hether the or!inance in%ringes on the rule on uni%ormit o% ta6es as or!aine! ' the Constitution$ )el*' 8hile the ta6 in the (r!inance re%ers to propert ta6 an! it is %i6e! a! valorem, it is merel levie! on all motor vehicles operating -ithin Canila -ith the main purpose o% raising %un!s to 'e e6pen!e! e6clusivel %or the repair, maintenance an! improvement o% the streets an! 'ri!ges in sai! cit $ The or!inance imposes a license %ee although un!er the cloa9 o% an a! valorem ta6 to circumvent the prohi'ition in the Cotor &ehicle >a-$ Further, it !oes not !istinguish 'et-een a motor vehicle %or hire an! one -hich is purel %or private use$ Geither !oes it !istinguish 'et-een a motor vehicle registere! in Canila an! one registere! in another place 'ut occasionall comes to Canila an! uses its streets an! pu'lic high-a s$ The !istinction is necessar i% he or!inance inten!s to 'ur!en -ith ta6 onl those registere! in Canila as ma 'e in%erre! %rom the -or! DoperatingE use! therein$ There is an ine5ualit in the or!inance -hich ren!ers it o%%ensive to the Constitution$ [14] C$-$tir$n ng mg$ <$glilingBo* s$ :$m$7$l$$n vs. /$n GR L-81111 10 2une 1988 En 7anc, Pa!illa (J)= )* concur, * on leave "$&ts' E( */4 -as issue! ' the Presi!ent o% the Philippines -hich amen!e! the 2evenue Co!e, a!opting the valueBa!!e! ta6 (&"T) e%%ective ) Januar )033$ Four petitions assaile! the vali!it o% the &"T >a- %ro 'eing 'e on! the Presi!ent to enact; %or 'eing oppressive, !iscriminator , regressive, an! violative o% the !ue process an! e5ual protection clauses, among others, o% the Constitution$ The #ntegrate! Customs 7ro9ers "ssociation particularl conten! that it un!ul !iscriminate against customs 'ro9ers (Section ),4 ;r<) as the amen!e! provision o% the Ta6 Co!e provi!es that Dservice per%orme! in the e6ercise o% pro%ession or calling (e6cept custom 'ro9ers) su'Aect to occupational ta6 un!er the >ocal Ta6 Co!e, an! pro%essional services
/$0$tion L$3 ( 2004 ( 18 )
per%orme! ' registere! general pro%essional partnerships are e6empt %rom &"T$ (ssue' 8hether the EB&"T la- !iscriminates against customs 'ro9ers$ )el*' The phrase De6cept custom 'ro9ersE is not meant to !iscriminate against custom 'ro9ers 'ut to avert a potential con%lict 'et-een Sections ),* an! ),4 o% the Ta6 Co!e, as amen!e!$ The !istinction o% the customs 'ro9ers %rom the other pro%essionals -ho are su'Aect to occupation ta6 un!er the >ocal Ta6 Co!e is 'ase! upon material !i%%erences, in that the activities o% customs 'ro9ers parta9e more o% a 'usiness, rather than a pro%ession an! -ere thus su'Aecte! to the percentage ta6 un!er Section )/4 o% the Ta6 Co!e prior to its amen!ment ' E( */4$ E( */4 a'olishe! the percentage ta6 an! replace! it -ith the &"T$ #% the "ssociation !i! not protest the classi%ication o% customs 'ro9ers then, there is no reason -h it shoul! protest no-$ [15] ,ison vs. An&7et$ GR L-59411 25 2ul% 1984 En 7anc, Fernan!o (J)= 0 concur, * concur in result, ) concur in separate opinion, ) too9 no part "$&ts' 7atas Pam'ansa )4+ -as enacte!$ Sison, as ta6pa er, allege! that its provision (Section )) un!ul !iscriminate! against him ' the imposition o% higher rates upon his income as a pro%essional, that it amounts to class legislation, an! that it transgresses against the e5ual protection an! !ue process clauses o% the Constitution as -ell as the rule re5uiring uni%ormit in ta6ation$ (ssue' 8hether 7P )4+ violates the !ue process an! e5ual protection clauses, an! the rule on uni%ormit in ta6ation$ )el*' There is a nee! %or proo% o% such persuasive character as -oul! lea! to a conclusion that there -as a violation o% the !ue process an! e5ual protection clauses$ "'sent such sho-ing, the presumption o% vali!it must prevail$ E5ualit an! uni%ormit in ta6ation means that all ta6a'le articles or 9in!s o% propert o% the same class shall 'e ta6e! at the same rate$ The ta6ing po-er has the authorit to ma9e reasona'le an! natural classi%ications %or purposes o% ta6ation$ 8here the !i%%erentitation con%orms to the practical !ictates o% Austice an! e5uit , similar to the stan!ar!s o% e5ual protection, it is not !iscriminator -ithin the meaning o% the clause an! is there%ore uni%orm$ Ta6pa ers ma 'e classi%ie! into !i%%erent categories, such as recipients o% compensation income as against pro%essionals$ 2ecipients o% compensation income are not entitle! to ma9e !e!uctions %or income ta6 purposes as there is no practicall no overhea! e6pense, -hile pro%essionals an! 'usinessmen have no uni%orm costs or e6penses necessar h to pro!uce their income$ There is ample Austi%ication to a!opt the gross s stem o% income ta6ation to compensation income, -hile continuing the s stem o% net income ta6ation as regar!s pro%essional an! 'usiness income$ [19] 2u$n Lun$ ,u#*ivision vs. ,$rmiento GR L-1518 28 6$% 1952 En 7anc, Tuason (J)= / concur "$&ts' Juan >una Su'!ivision is a local corporation -hich issue! a chec9 to the Cit Treasurer o% Canila %or amount to 'e applie! to its lan! ta6 %or the secon! semester o% )04)$ The recor!s o% the Cit Treasurer !o not sho- -hat -as !one -ith the chec9 (#t appears that it -as !eposite! -ith the Philippine Gational 7an9 ;PG7<)$ "%ter li'eration (88##), the Cit Treasurer re%use! to re%un! the corporation@s !eposit or appl it to such %uture ta6es as might 'e %oun! !ue, -hile the Philippine Trust Co (to -hich the chec9 -as presente!) -as un-illing to reverse its !e'it entr against Juan >una Su'!$ Sai! amount is also su'Aect o% another
/$0$tion L$3 ( 2004 ( 19 )
!isagreement 'et-een the corporation an! the Cit Treasure, -ith the corporation claiming that the -holeamount o% the chec9 %or the ta6es %or the last semester o% )04) have 'een remitte! ' Common-ealth "ct /,4 ()04+)$ (ssue' 8hether the provision allo-ing the remission covers ta6es pai! 'e%ore the enactment o% Common-ealth "ct /,4, or ta6es -hich -ere still unpai!$ )el*' The la- is clear that it applies to Dta6es an! penalties !ue an! pa a'le,E i$e$ ta6es o-e! or o-ing$ The remission o% ta6es !ue an! pa a'le to the e6clusion og ta6es alrea! collecte! !oes not constitute un%air !iscrimination$ Each set o% ta6es is a class ' itsel%, an! the la- -oul! 'e open to attac9 as class legislation onl i% all ta6pa ers 'elonging to one class -ere not treate! ali9e$ :erein, the are not$ The ta6pa ers -ho pai! their ta6es 'e%ore li'eration an! those -ho ha! not -ere not on the same %ooting on the nee! o% material relie%$ Ta6pa ers -ho ha! 'een in arrears in their o'ligation -houl! have to satis% their lia'ilit -ith genuine currenc , -hile the ta6es pai! !uring the occupation ha! 'een satis%ie! in Japanese 8ar Gotes, man o% them at a time -hen those notes -ere -ellBnigh -orthless$ To re%un! those ta6es -ith restore! currenc -oul! 'e un!ul enrich man o% the pa ers at a greater e6pense to the people at large$ [1!] ,7ell Co. vs. ?$no GR L-9091 24 "e#ru$r% 1954 En 7anc, Pa!illa (J)= ), concur "$&ts' The municipal council o% Cor!ova, Ce'u a!opte! (r!inance ), ()041) imposing an annual ta6 o% P)+, on occupation or the e6ercise o% the privilege o% installation manager; (r!inance 0 ()04/) imposing an annual ta6 o% P4, %or local !eposits in !rums o% com'usti'le an! in%lamma'le materials an! an annual ta6 o% P*,, %or tin can %actories; an! (r!inance )) ()043) imposing an annual ta6 o% P)+, on tin can %actories having a ma6imum annual output capacit o% 4,,,,, tin cans$ Shell Co$, a %oreign corporation, %ile! suit %or the re%un! o% the ta6es pai! ' it, on the groun! that the or!inances imposing such ta6es are ultra vires$ (ssue' 8hether (r!inance ), is !iscriminator an! hostile 'ecause there is no other person in the localit -ho e6ercise such !esignation or occupation$ )el*' The %act that there is no other person in the localit -ho e6ercises such a D!esignationE or calling !oes not ma9e the or!inance !iscriminator an! hostile, inasmuch as it is an! -ill 'e applica'le to an person or %irm -ho e6ercises such calling or occupation name! or !esignate! as Dinstallation manager$E [18] ?i&tori$s 6illing Co. vs. 6uni&i-$lit% o. ?i&tori$s GR L-21181 2! ,e-tem#er 1998 En 7anc, Sanchez (J)= 0 concur "$&ts' (r!inance ) ()0+1) -as approve! ' the municipal council o% &ictorias ' -a o% an amen!ment to * municipal or!inances separatel imposing license ta6es on operators o% sugar centrals an! sugar re%ineries$ The changes -ere= ()) -ith respect to sugar centrals, ' increasing the rates o% license ta6es; an! (*) as to sugar re%ineries, ' increasing the rates o% license ta6es as -ell as teh range o% gra!uate! sche!ule o% annual output capacit $ &ictorias Cilling 5uestione! the vali!it o% (r!inance ) as it, among others, allege!l single! out &ictorias Cilling Co$ since it is the onl operator o% a sugar central an! a sugar re%iner -ithin the Auris!iction o% the municipalit $
/$0$tion L$3 ( 2004 ( 20 )
(ssue' 8hether (r!inance ) is !iscriminator $ )el*' The or!inance !oes not single out &ictorias as the onl o'Aect o% the or!inance 'ut is ma!e to appl to an sugar central or sugar re%iner -hich ma happen to operate in the municipalit $ The %act that &ictorias Cilling is actuall the sole operator o% a sugar central an! a sugar re%iner !oes not ma9e the or!inance !iscriminator $ The or!inance is unli9e that in (rmoc Sugar Compan vs$ Cunicipal 7oar! o% (rmoc Cit , -hich speci%icall spelle! out (rmoc Sugar as the su'Aect o% the ta6ation, the name o% the compan herein -as never mentione! in the or!inance$ [19] :uns$l$n vs. 6$nil$ GR L-481! 29 6$% 1954 En 7anc, 2e es (J)= / concur "$&ts' (r!inance 4403 -as enacte! pursuant to paragraph ) o% Section )3 o%the 2evise! Charter o% the Cit o% Canila, imposing a municipal occupation ta6 on persons e6ercising various pro%essions in the cit $ &arious pro%essionals %ile! suit to annul the or!inance an! the provision o% la- authorizing the enactment o% the or!inance, an! to call %or the re%un! collecte! ta6es un!er the or!inance$ (ssue' 8hether the (r!inance violates the e5ual protection clause$ )el*' The legislature ma , in its !iscretion, select -hat occupation shall 'e ta6e!, an! in the e6ercise o% that !iscretion it ma ta6 all, or it ma select %or ta6ation certain classes an! leave the other unta6e!$ Canila, as the seat o% the Gational .overnment an! -ith a population an! volume o% tra!e man times that o% an other Philippine cit or municipalit , o%%ers a more lucrative %iel! %or the practice o% the pro%essions, so that it is 'ut %air that the pro%essionals in Canila 'e ma!e to pa a higher occupation ta6 than their 'rethen in the provinces$ The or!inance imposes the ta6 upon ever person De6ercisingE or DpursuingE an o% the occupation name! in the or!inance, an! !oes not ma9e an !istinction 'et-een pro%essional having o%%ices in Canila an! outsi!ers -ho practice their pro%ession therein$ 8hat constitutes e6ercise or pursuit o% a pro%ession in the cit is a matter o% Au!icial !etermination$ The (r!inance !oes not violate the e5ual protection clause$ [40] ;rmo& ,ug$r vs. /re$surer o. ;rmo& Cit% GR L-21!94 1! "e#ru$r% 1998 En 7anc, 7angzon JP (J)= 0 concur "$&ts' #n )014, the Cunicipal 7oar! o% (rmoc Cit passe! (r!inance 4, imposing on an an! all pro!uctions o% centri%uga sugar mille! at the (rmoc Sugar Co$ #nc$ in (rmoc Cit a municpal ta6 e5uivalent to )F per e6port sale to the ?nite! States an! other %oreign countries$ The compan pai! the sai! ta6 un!er protest$ #t su'se5uentl %ile! a case see9ing to invali!ate the or!inance %or 'eing unconstitutional$ (ssue' 8hether the or!inance violates the e5ual protection clause$ )el*' The (r!inance ta6es onl centri%ugal sugar pro!uce! an! e6porte! ' the (rmoc Sugar Co$ #nc$ an! none other$ "t the time o% the ta6ing or!inance@s enacte!, the compan -as the onl sugar central in (rmoc Cit $ The classi%ication, to 'e reasona'le, shoul! 'e in terms applica'le to %uture con!itions as -ell$ The ta6ing or!inance shoul! not 'e singular an! e6clusive as to e6clu!e an su'se5uentl esta'lishe! sugar
/$0$tion L$3 ( 2004 ( 21 )
central, o% the same class as the present compan , %rom the coverage o% the ta6$ "s it is no-, even i% later a similar compan is set up, it cannot 'e su'Aect to the ta6 'ecause the or!inance e6pressl points onl to the compan as the entit to 'e levie! upon$ [41] :e-si-Col$ Bottling Co. vs. Cit% o. Butu$n GR L-22814 28 August 1998 En 7anc, Concepcion (J)= + concur "$&ts' (r!inance )), -as enacte! ' the Cit o% 7utuan imposing a ta6 o% P,$), per case o% *4 'ottles o% so%t!rin9s or car'onate! !rin9s$ The ta6 -as impose! upon !ealers engege! in selling so%t!rin9s or car'onate! !rin9s$ 8hen (r!inance )),, the ta6 -as impose! upon an agent or consignee o% an person, association, partnership, compan or corporation engage! in selling so%t!rin9s or car'onate! !rin9s, -ith Dagent or consigneeE 'eing particularl !e%ine! on the inserte! provision Section 4B"$ #n e%%ect, merchants engage! in the sale o% so%t!rin9s, etc$ are not su'Aect to the ta6 unless the are agents or consignees o% another !ealer -ho must 'e one engage! in 'usiness outsi!e the Cit $ PepsiBCola 7ottling Co$ %ile! suit to recover sums pai! ' it to the cit pursuant to the (r!inance, -hich it claims to 'e null an! voi!$ (ssue' 8hether the (r!inance is !iscriminator $ )el*' The (r!inance, as amen!e!, is !iscriminator since onl sales ' Dagents or consigneesE o% outsi!e !ealers -oul! 'e su'Aect to the ta6$ Sales ' local !ealers, not acting %or or on 'ehal% o% other merchants, regar!less o% the volume o% their sales , an! even i% the same e6cee!e! those ma!e ' sai! agents or consignees o% pro!ucers or merchants esta'lishe! outsi!e the cit , -oul! 'e e6empt %rom the ta6$ The classi%ication ma!e in the e6ercise o% the authorit to ta6, to 'e vali! must 'e reasona'le, -hich -oul! 'e satis%ie! i% the classi%ication is 'ase! upon su'stantial !istinctions -hich ma9es real !i%%erences; these are germane to the purpose o% legislation or or!inance; the classi%ication applies not onl to present con!itions 'ut also to %uture con!itions su'stantiall i!entical to those o% the present; an! the classi%ication applies e5uall to all those -ho 'elong to the same class$ These con!itions are not %ull met ' the or!inance in 5uestion$ [42] ?er$ vs. Cuev$s GR L-11991-94 11 6$% 19!9 First Division, De Castro (J)= 4 concur, ) too9 no part "$&ts' Consoli!ate! Philippines #nc$, .eneral Cil9 Co$ (Phil$) #nc$, an! Cil9 #n!ustries #nc$ are engage! in the manu%acture, sale an! !istri'ution o% %ille! mil9 pro!ucts throughout the Philippines$ The #nstitute o% Evaporate! Fulle! Cil9 Canu%acturers o% the Philippines is a corporation organize! to uphol! an! maintain the highest stan!ar!s o% local %ille! mil9 in!ustries, o% -hich the companies are mem'ers$ The Commissioner re5uire! the companies to -ith!ra- %rom the mar9et all o% their %ille! mil9 pro!ucts -hich !o not 'ear the inscription re5uire! ' Section )10 (#nscription to 'e place! on s9imme! mil9) o% the Ta6 Co!e -ithin )+ !a s %rom receipt o% or!er -ith e6plicit -arning o% prosection %or nonBcompliance$ The companies %ile! an action %or prohi'ition an! inAunction$ (ssue' 8hether Section )10 o% theTa6 Co!e can 'e en%orce! against the companies$ )el*' 8ith Section )4) (speci%ic ta6 impose! on s9imme! mil9) an! Section )// (penalt on sale o% s9imme! mil9 -ithout pa ment o% speci%ic ta6 an! legen! re5uire! in Section )10) repeale! ' 2" 444 an! 2" 414, respectivel ; Section )10 has lost its ta6 purpose, an! thus the Commissioner necessar lost his
/$0$tion L$3 ( 2004 ( 22 )
authorit to en%orce the same$ Further, Section )10 applies to s9imme! mil9, -hich is !i%%erent to %ille! mil9$ Furthermore, Section )10 is onl 'eing en%orce! against the respon!ent companies na! not against manu%acturers, !istri'utors or sellers o% con!ense! s9imme! mil9 such as S#C#>"C, SC", 72EC#>, EGF"C#>, an! (>"C$ Such 9in! o% en%orcement amounts to an unconstitutional !enial o% the e5ual protection o% the la-s, %or the la-, i% not e5uall en%orce! to persons similarl situate!, -oul! o%%en! against the Constitution$ [41] Ameri&$n Bi#le ,o&iet% vs. 6$nil$ GR L-991! 10 A-ril 195! Secon! Division, Feli6 (J)= / concur, ) concur in result "$&ts' #n the course o% its ministr , the Philippine agenc o% the "merican 7i'le Societ has 'een !istri'uting an! selling 'i'les an!Ior gospel portions thereo% throughout the Philippines an! translating the same into several Philippine !ialets$ The acting Cit Treasurer o% Canila re5uire! the societ to secure the correspon!ing Ca or@s permit an! municipal license %ees, together -ith compromise covering the perio! %rom the 4th 5uarter o% )04+ to the *n! 5uarter o% )0+4$ The societ pai! such un!er protest, an! %ile! suit 5uestioning the legalit o% the or!inances un!er -hich the %ees are 'eing collecte!$ (ssue' 8hether the municipal or!inances violate the %ree!om o% religious pro%ession an! -orship$ )el*' " ta6 on the income o% one -ho engages in religious activities is !i%%erent %rom a ta6 on propert use! or emplo e! in connection -ith those activities$ #t is one thing to impose a ta6 on the income or propert o% a preacher, an! another to e6act a ta6 %or him %or the privilege o% !elivering a sermon$ The po-er to ta6 the e6ercise o% a privilege is the po-er to control or suppress its enAo ment$ Even i% religious groups an! the press are not altogether %ree %rom the 'ur!ens o% the government, the act o% !istri'uting an! selling 'i'les is purel religious an! !oes not %all un!er Section */ (e) o% the Ta6 Co!e (C" 411)$ The %act that the price o% 'i'les, etc$ are a little higher than actual cost o% the same !oes not necessaril mean it is alrea! engage! in 'usiness %or pro%it$ (r!inance *+*0 an! 4,,, are not applica'le to the Societ $ [44] C$g$%$n =le&tri& :o3er D Lig7t Co. vs. Commissioner GR L-90129 25 ,e-tem#er 1985 Secon! Division, "5uino (J)= + concur "$&ts' Caga an Electric is a hol!er o% a legislative %ranchise un!er 2epu'lic "ct 4*4/ -here pa ment o% 4F ta6 on gross earnings is in lieu o% all ta6es an! assessments upon privileges, etc$ #n )013, 2" +44) amen!e! the %ranchise ' ma9ing all corporate ta6pa ers lia'le %or income ta6 e6cept those in!icate! in paragraph (c) ()) o% Section *4 o% the Ta6 Co!e$ #n )010, through 2" 1,*,, its %ranchise -as e6ten!e! to t-o other to-ns an! the ta6 e6emption -as reenacte!$ #n )0/4, the Commissioner re5uire! the compan to pa !e%icienc income ta6es %or )013 to )0/)$ (ssue' 8hether the -ith!ra-al o% the %ranchise@s ta6 e6emption violates the nonBimpairment clause o% the Constitution$ )el*' Congress coul! impair the compan @s legislative %ranchise ' ma9ing it lia'le %or income ta6$ The Constitution provi!es that a %ranchise is su'Aect to amen!ment, alteration or repeal ' the Congress -hen the pu'lic interest so re5uires$ 2" 4*4/ itsel% provi!es that the %ranchise is su'Aect to amen!ment, etc$ ' Congress$ The enactment o% 2" +44) ha! the e%%ect o% -ith!ra-ing the compan @s e6emption %rom income
/$0$tion L$3 ( 2004 ( 21 )
ta6$ The e6emption -as restore! ' the enactment o% 2" 1,*,$ The compan is lia'le onl %or the income ta6 %pr the perio! o% ) Januar to 4 "ugust )010$ [45] C$s$nov$s vs. )or* GR L-14!1 22 6$r&7 190! First Division, 8illar! (J)= 4 concur, ) !issents "$&ts' #n )30/, the Spanish .overnment, in accor!ance -ith the provisions o% the ro al !ecree o% )4 ma )31/, grante! J$ Casanovas certain mines in the province o% "m'os Camarines, o% -hich mines the latter is no- the o-ner$ That these -ere vali!l per%ecte! mining concessions grante! to prior to )) "pril )300 is conce!e!$ The -ere so consi!ere! ' the Collector o% #nternal 2evenue an! -ere ' him sai! to %all -ithin the provisions o% Section )44 o% "ct ))30 (#nternal 2evenue "ct)$ The Commissioner, JG( S$ :or!, impose! upon these properties the ta6 mentione! in Section )44, -hich Casanovas pai! un!er protest$ (ssue' 8hether Section )44 o% "ct ))30 is vali!$ )el*' The !ee! constitute! a contract 'et-een the Spanish .overnment an! Casanovas$ The o'ligation in the contract -as impaire! ' the enactment o% Section )44 o%the #nternal 2evenue >a, there' in%ringing the provisions o% Section + o% the "ct o% Congress o% ) Jul )0,*$ Furthermore, the section con%licts -ith Section 1, o% the "ct o% Congress o% ) Jul )0,*, -hich in!icate that concessions can 'e cancelle! onl ' reason o% illegalit in the proce!ure ' -hich the -er o'taine!, or %or %ailure to compl -ith the con!itions prescri'e! as re5uisites %or their retention in the la-s un!er -hich the -er grante!$ The groun!s -ere not sho-n or claime! in the case$ "s to the allegation that the section violates uni%ormit o% ta6ation, the Court %oun! it unnecessar to consi!er the claim in vie- o% the result at -hich the Court has arrive!$ [49] C7ur&7ill vs. Con&e-&ion GR 115!2 22 ,e-tem#er 1919 Secon! Division, Trent (J)= 4 concur "$&ts' Section ),, o% "ct *440 (promulgate! )0)4) impose! an annual ta6 o% P4 per s5uare meter upon electric signs, 'ill'oar!s, an! spaces use! %or posting or !ispla ing temporar signs, an! all signs !ispla e! on premises not occupie! ' 'uil!ings$ The section -as amen!e! ' "ct *44*, re!ucing the ta6 to P* per s5uare meter$ The ta6es impose! ' "ct *44* -ere rati%ie! ' the ?S Congress on 4 Carch )0)+$ Francis "$ Churchill an! Ste-art Tait, coBpartners in Cercantile "!vertising "genc , o-e! a 'ill'oar! to -hich the -ere ta6e! at P),4$ The ta6 -as pai! un!er protest$ Churchill an! Tait institute! the action to recover the amount$ (ssue' 8hether the statute or ta6 is voi! %or lac9 o% uni%ormit $ )el*' ?ni%ormit in ta6ation means that all ta6a'le articles or 9in!s o% propert , o% the same class, shall 'e ta6e! at the same rate$ #t !oes not mean that lan!s, chattels, securities, incomes, occupations, %ranchises, privileges, necessities, an! lu6uries shall all 'e assesse! at the same rate$ Di%%erent articles ma 'e ta6e! at !i%%erent amounts provi!e! the rate is uni%orm on the same class ever -here, -ith all people, at all times$ :erein, the "ct imposes a ta6 o% P* per s5uare meter or a %raction thereo% upon ever electric sign, 'ill'oar!, etc$, -herever %oun! in the Philippine #slan!s$ The rule o% ta6ation upon such signs is uni%orm throughout the islan!s$ The rule !oes not re5uire ta6es to 'e gra!e! accor!ing to the value o% the su'Aect(s) upon -hich the are impose!, especiall those levie! as privilege or occupation ta6es$
/$0$tion L$3 ( 2004 ( 24 )
[4!] ?ill$nuev$ vs. (loilo Cit% GR L-29521 28 De&em#er 1998 En 7anc, Castro (J)= 3 concur "$&ts' (n 4, Septem'er )041, the Cunicipal 7oar! o% #loilo Cit enacte! (r!inance 31 imposing license ta6 %ees upon tenement house (P*+); tenemen house partl engage! or -holl engage! in an! !e!icate! to 'usiness in 7aza, #znart, an! "l!eguer Streets (P*4 per apartment); an! tenement house, pa!tl or -holl engage! in 'usiness in other streets (P)* per apartment)$ The vali!it o% such or!inance -as challenge! ' Euse'io an! 2eme!ios &illanueva, o-ners o% %our tenement houses containing 44 apartments$ The Supreme Court hel! the or!inance to 'e ultra vires$ (n )+ Januar )01,, ho-ever, the municipal 'oar!, 'elieving that it ac5uire! authorit to enact an or!inance o% the same nature pursuant to the >ocal "utonom "ct, enacte! (r!inance )) (series o% )01,), Euse'io an! 2eme!ios &illaniueva assaile! the or!inance ane-$ (ssue' 8hether (r!inance )) violate the rule o% uni%ormit o% ta6ation$ )el*' The Court has rule! that tenement houses constitute a !istinct class o% propert ; an! that ta6es are uni%orm an! e5ual -hen impose! upon all propert o% the same class or character -ithin the ta6ing authorit $ The %act that the o-ners o% the other classes o% 'uil!ings in #loilo are not impose! upon ' the or!inance, or that tenement ta6es are impose! in other cities !o not violate the rule o% e5ualit an! uni%ormit $ The rule !oes not re5uire that ta6es %or the same purpose shoul! 'e impose! in !i%%erent territorial su'!ivisions at the same time$ So long as the 'ur!en o% ta6 %alls e5uall an! impartiall on all o-ners or operators o% tenement houses similarl classi%ie! or situate!, e5ualit an! uni%ormit is accomplishe!$ The presumption that ta6 statutes are inten!e! to operate uni%orml an! e5uall -as not overthro-n herein$ [48] =$stern /7e$tri&$l Co. vs. Al.onso GR L-1104 11 6$% 1944 Secon! Division, Per%ecto (J)= + concur "$&ts' The municipal 'oar! o% Canila enacte! (r!inance *0+3 (series o% )041) imposing a %ee on the price o% ever a!mission tic9et sol! ' cinematograph theaters, vau!eville companies, theatrical sho-s an! 'o6ing e6hi'itions, in a!!ition to %ees impose! un!er Sections 144 an! //3 o% (r!inance )1,,$ Eastern Theatrical Co$, among others, 5uestion the vali!it o% or!inance, on the groun! that it is unconstitutional %or 'eing contrar to the provisions on uni%ormit an! e5ualit o% ta6ation an! the e5ual protection o% the la-s inasmuch as the or!inance !oes not ta6 other 9in!s o% amusement, such as race trac9s, coc9pits, ca'arets, concert halls, circuses, an! other places o% amusement$ (ssue' 8hether the or!inance violates the rule on uni%ormit an! e5ualit o% ta6ation$ )el*' E5ualit an! uni%ormit in ta6ation means that all ta6a'le articles or 9in!s o% propert o% the same class shall 'e ta6e! at the same rate$ The ta6ing po-er has the authorit to ma9e reasona'le an! natural classi%ications %or purposes o% ta6ation; an! the theater companies cannot point out -hat places o% amusement ta6e! ' the or!inance !o not constitute a class ' themselves an! -hich can 'e con%use! -ith those not inclu!e! in the or!inance$ The %act that some- places o% amusement are not ta6e! -hile others, li9e the ones herein, are ta6e! is no argument at all against the e5ualit an! uni%ormit o% the ta6 imposition$ [49]
/$0$tion L$3 ( 2004 ( 25 )
Re%es vs. Alm$n+or GR 49819-49 29 A-ril 1991 En 7anc, Paras (J)= )+ concur "$&ts' J7>, E!mun!o an! Cilagros 2e es are o-ners o% parcels o% lan! in Canila -hich are lease! an! occupie! as !-elling sites ' tenants$ #n )0/), 2" 14+0 -as passe! prohi'iting an increase o% monthl rentals o% !-elling units or o% lan! on -hich another !-elling is locate! %or one ear a%ter e%%ectivit %or rentals not e6cee!ing P4,, 'ut allo-ing an increase o% rent therea%ter ' not more than ),F$ The "ct also suspen!e! the operation o% "rticle )1/4 o% the Civil Co!e (eAectment o% lessess)$ PD *, amen!e! 2" 14+0 ' a'solutel prohi'iting the increase an! in!e%initel suspen!ing "rticle )1/4$ The 2e eses, thus, -ere preclu!e! %rom raising the rentals an! %rom eAecting the tenants$ #n )0/4, the Cit "ssessor o% Canila reclassi%ie! an! reassesse! the value o% the properties 'ase! on the sche!ule o% mar9et values !ul revie-e! ' the Secretar o% Finance$ "s it entaile! an increase o% the correspon!ing ta6 rates, the 2e eses %ile! a memoran!um o% !isagreement -ith the 7oar! o% Ta6 "ssessment "ppeals an! averring therein that the reassessments -ere e6cessive, un-arrante!, une5uita'le, con%iscator an! unconstitutional inasmuch as the ta6es impose! e6cee!e! the annual income !erive! %rom their properties; an! that the income approach shoul! have 'een use! in !etermining lan! values instea! o% the comparative sales approach -hich the assessor a!opte!$ (ssue' 8hether the reassessment is une5uita'le$ )el*' Ta6ation is e5uita'le -hen its 'ur!en %alls on those 'etter a'le to pa $ Ta6ation is progressive -hen its rate goes up !epen%ing on the resources o% the person a%%ecte!$ Ta6es are uni%orm -hen all ta6a'le articles or 9in!s o% propert o% the same class are ta6e! at the same rate$ The ta6ing po-er has the authorit to ma9e reasona'le an! natural classi%ication %or purposes o% ta6ation$ >a-s shoul! operate e5uall an! uni%orml , ho-ever, on all persons un!er similar circumstances or that all persons mus t 'e treate! in the same manner, the con!itiions not 'eing !i%%erent 'oth in the privileges con%erre! an! lia'ilities impose!$ Finall , un!er the 2eal Propert Ta6 Co!e (PD 414), propert must 'e appraise! at its cuurent an! %air mar9et value$ The mar9et value o% the properties covere! ' PD *,, thus cannot 'e e5uate! -ith the mar9et value o% properties not so covere!$ Shcu propert covere! ' PD *, has naturall a much lesser mar9et value in vie- o% the rental restrictions$ "lthough ta6es are the li%e'loo! o% the government an! shoul! 'e collecte! -ithout unnecessar hin!rance, such collection shoul! 'e ma!e in accor!ance -ith la- as an ar'itrariness -ill negate the ver reason %or government itsel%$ "s teh 2e eses are 'ur!ene! ' the 2ent Freeze >a-s (2" 14+0 an! PD *,), the shoul! not 'e penalize! ' the same government ' the imposition o% e6cessive ta6es the cancan ill a%%or! an! -oul! eventuall result in the %or%eiture o% their properties, un!er the principle o% social Austice$ [50] A#r$ ?$lle% College vs. AEuino GR L-19089 15 2une 1988 Secon! Division, Paras (J)= 4 concur "$&ts' "'ra &alle College rents out the groun! %loor o% its college 'uil!ing to Gorthern Car9eting Corporation -hile the secon! %loor thereo% is use! ' the Director o% the College %or resi!ential purposes$ The municipal an! provincial treasurers serve! upon the College a Dnotice o% seizureE an! later a Dnotice o% saleE !ue to the allege! %ailure o% the College to pa real estate ta6es an! penalties thereon$ The school %ile! suit to annul sai! notices, claiming that it is ta6Be6empt$ (ssue' 8hether the College is e6empt %rom ta6es$
/$0$tion L$3 ( 2004 ( 29 )
)el*' 8hile the Court allo-s a more li'eral an! nonBrestrictive interpretation o% the phrase De6clusivel ise! %or e!ucational purposes,E reasona'le emphasis has al-a s 'een ma!e that e6emption e6ten!s to %acilities -hich are inci!ental to an! reasona'l necessar %or the accomplishment o% the main purposes$ 8hile the secon! %loor@s use, as resi!ence o% the !irector, is inci!ental to e!ucation; the lease o% the %irst %loor cannot ' an stretch o% imagination 'e consi!ere! inci!ental to the purposes o% e!ucation$ The test o% e6emption %rom ta6ation is the use o% the propert %or purposes mentione! in the Constititution$ [51] )errer$ vs. @ue+on Cit% Bo$r* o. Assessment A--e$ls GR L-152!0 10 ,e-tem#er 1991 First Division, Concepcion (J)= 1 concur "$&ts' #n )0+*, the Director o% the 7ureau o% :ospitals authorize! Jose &$ :errera an! Ester (changco :errera to esta'lish an! operate the St$ Catherine@s :ospital$ #n )0+4, the :erreras sent a letter to the Kuezon Cit "ssessor re5uesting e6emption %rom pa ment o% real estate ta6 on the hospital, stating that the same -as esta'lishe! %or charita'le an! humanitarian purposes an! not %or commercial gain$ The e6emption -as grante! e%%ective ears )0+4 to )0++$ #n )0++, ho-ever, the "ssessor reclassi%ie! the properties %rom De6emptE to Dta6a'leE e%%ective )0+1, as it -as ascertaine! that out 4* 'e!s in the hospital, )* o% -hich are %or pa Bpatients$ " school o% mi!-i%er is also operate! -ithin the premises o% the hospital$ (ssue' 8hether St$ Catherine@s :ospital is e6empt %rom reallt ta6$ )el*' The a!mission o% pa Bpatients !oes not !etract %rom the charita'le character o% a hospital, i% all its %un!s are !evote! e6clusivel to the maintenance o% the institution as a pu'lic charit $ The e6emption in %avor o% propert use! e6clusivel %or charita'le or e!ucational purpose is not limite! to propert actuall in!ispensa'le there%ore, 'ut e6ten!s to %acilities -hich are inci!ental to an! reasona'l necessar %or the accomplishment o% sai! purpose, such as in the case o% hospitals BB a school %or training nurses; a nurses@ home; propert use! to provi!e housing %acilities %or interns, resi!ent !octors, superinten!ents an! otehr mem'ers o% the hospital sta%%; an! recreational %acilities %or stu!ent nurses, interns an! resi!ents$ 8ithin the purvie- o% the Constitution, St$ Catherine@s :ospital is a charita'le institution e6empt %rom ta6ation$ [52] Ll$*o& vs. Commissioner GR L-19201 19 2une 1995 En 7anc, Pare!es (J)= 0 concur, ) too9 no part "$&ts' #n )0+/, the C7 Estate #nc$ o% 7acolo! Cit !onate! P),,,,, in cash to the parish priest o% &ictorias, Gegros (cci!ental; the amount spent %or the construction o% a ne- Catholic Church in the localit ,m as inten!e!$ #n)0+3, C7 Estate %ile! the !onor@s gi%t ta6 return$ #n )01,, the Commissioner issue! an assessment %or !onee@s gi%t ta6 against the parish$ The priest lo!ge! a protest to the assessment an! re5ueste! the -ith!ra-al thereo%$ (ssue' 8hether the Catholic Parish is ta6 e6empt$ )el*' The phrase De6empt %rom ta6ationE shoul! not 'e interprete! to mean e6emption %rom all 9in!s o% ta6es$ The e6emption is onl %rom the pa ment o% ta6es assesse! on such properties as propert ta6es as contra!istinguishe! %rom e6cise ta6es$ " !onee@s gi%t ta6 is not a propert ta6 'ut an e6cise ta6 impose! on the trans%er o% propert ' -a o% gi%t inter vivos$ #t !oes not rest upon general o-nership, 'ut an e6cise upon the use ma!e o% the properties, upon the e6ercise o% the privilege o% receiving the properties$ The imposition o%
/$0$tion L$3 ( 2004 ( 2! )
such e6cise ta6 on propert use! %or religious purpose !o not constitute an impairment o% the Constitution$ The ta6 e6emption o% the parish, thus, !oes not e6ten! to e6cise ta6es$ [51] Bis7o- o. <uev$ ,egovi$ vs. :rovin&i$l Bo$r* o. (lo&os <orte GR 2!588 11 De&em#er 192! En 7anc, "vancena (J)= + concur "$&ts' The 2oman Catholic "postolic Church is the o-ner o% a parcel o% lan! in San Gicolas, #locos Gorte$ (n the south si!e is a part o% the Church ar!, the convent an! an a!Aacent lost use! %or a vegeta'le gar!en in -hich there is a sta'le an! a -ell %or the use o% the convent$ #n the center is the remain!er o% the church ar! an! the Church$ (n the north si!e is an ol! cemeter -ith its t-o -alls still stan!ing, an! a portion -here %ormerl stoo! a to-er$ The provincial 'oar! assesse! lan! ta6 on lots comprising the north an! south si!e, -hich the church pai! un!er protest$ #t %ile! suit to recover the amount$ (ssue' 8hether the lots are covere! ' the Church@s ta6 e6emption$ )el*' The e6emption in %avor o% the convent in the pa ment o% lan! ta6 re%ers to the home o% the priest -ho presi!es over the church an! -ho has to ta9e care o% himsel% in or!er to !ischarge his !uties$ The e6emption inclu!es not onl the lan! actuall occupie! ' the Church 'ut also the a!Aacent groun! !estine! to the or!inar inci!ental uses o% man$ " vegeta'le gar!en, thus, -hich 'elongs to a convent, -here its use is limite! to the necessit o% the priest, comes un!er the e6emption$ Further, lan! use! as a lo!ging house ' the people -ho participate in religious %estivities, -hich constitutes an inci!ental use in religious %unctions, li9e-ise comes -ithin the e6emption$ #t cannot 'e ta6e! accor!ing to its %ormer use, i$e$ a cemeter $ [54] Commisioner vs. Bis7o- o. 6issioner% Distri&t o. t7e :7ili--ine (sl$n*s GR L-19445 11 August 1995 En 7anc, 2egala (J)= / concur, ) too9 no part "$&ts' The Cissioner District o% the Philippine #slan!s, o% the Protestant Episcopal Church in the ?nite! States, o-ns an! operates the St$ >u9e@s :ospital in Kuezon Cit , the 7rent :ospital in Lam'oanga Cit , an! the St$ Stephen@s :igh School in Canila$ #n )0+/ to )0+0, the Cissionar District receive! various shipments o% materials, supplies, e5uipment an! other articles inten!e! %or use in the construction an! operation o% the ne- St$ >u9e@s :ospital$ (n these shipments, the Commissioner collecte! compensation ta6$ The Cissionar District %ile! claims %or re%un!, 'ut -hich -as !enie! ' the Commissioner on the groun! that St$ >u9e@s :ospital -as not a charita'le institution an! there%ore -as not e6empt %rom ta6es$ (ssue' 8hether the shipments %or St$ >u9e@s :ospital are ta6Be6empt$ )el*' ?n!er 2" )0)1, -hich covers ta6es on !onations in an %orm an! all articles importe! into the Philippines, re5uires that the importe! articles ush have 'een !onate!, the !onee must 'e a !ul incorporate! or esta'lishe! international civic organization, religious or charita'le societ or institution %or civic, religious or charita'le purposes; an! the articles must have 'een !onate! %or the use o% the organization, societ or institution; or %or %ree !istri'ution an! not %or sale, 'arter or hire$ "s the la- !oes not !istinguish or 5uali% the enAo ment or the e6emption (as the Secretar o% Finance !i! in Departent (r!er )3, series o% )0+3), the a!mission o% pa patients !oes not !etract %rom the charita'le character o% a hospital, i% its %un!s are !evote! e6clusivel to the maintenance o% the institution$ Thus, the shipments are ta6 e6empt$
/$0$tion L$3 ( 2004 ( 28 )
[55] )o*ges vs. (loilo Cit% GR L-18129 11 2$nu$r% 1991 En 7anc, 7autista "ngelo (J)= / concur, * a%%irm, ) too9 no part "$&ts' #n )01,, the Cunicipal 7oar! o% #loilo enacte! (r!inance 44 re5uiring the pa ment o% a sales ta6 o% )I* o% )F o% the selling price o% an motor vehicle an! prohi'iting the registration o% the sale involving sai! vehicle in the Cotors &ehicle (%%ice o% #loilo unless the tas has 'een pai!$ #t also e6pressl re5uire! that the pa ment o% the municipal ta6 shall 'e a re5uirement %or registration an! trans%er o% o-nership$ CG :o!ges, engage! in 'u ingBan!Bselling o% secon! han! motor vehicles in the cit , assaile! the or!inance as invali! %or 'eing passe! in e6cesso% the authorit con%erre! ' la- upon the municipal 'oar!$ (ssue' 8hether the Cit o% #loilo is empo-ere! to impose the ta6$ )el*' The Cit o% #loilo is empo-ere! to impose municipal licenses, ta6es or %ees upon an person engage! in an occupation or 'usiness, or e6ercising an privilege in the Cit ; to regulate an! impose reasona'le %ees %or services ren!ere! con!ucte! -ithin the cit , an! to lev %or pu'lic purposes Aust an! uni%orm ta6es, licenses, or %ees$ The ta6 in 5uestion is in the %orm o% percentage ta6 on the procee!s o% the sale o% a motor vehicle$ The prohi'ition against such ta6 re%er onl to municipalities an! municipal !istricts an! !oes not comprehen! chartere! cities as the Cit o% #loilo$ [59] :ro&ter $n* G$m#le vs. 2$gn$ GR L-24295 28 De&em#er 19!9 First Division, Celencio :errera (J)= 3 concur "$&ts' Procter an! .am'le Philippines Canu%acturing Corp$ is a consoli!ate! corporation o% Procter an! .am'le Tra!ing Compan $ #t is engage! in the manu%acture o% soap, e!i'le oil, margarine an! otehr similar pro!ucts; an! maintains a D'o!egaE in the municipalit o% Jagna, -here it stores copra purchase! in the municipalit an! there%rom ships the same %or its manu%acturing an! other operations$ #n )0+4, the Cunicipal Council enacte! (r!inance 4, imposing storage %ees o% all e6porta'le copra !eposite in the 'o!ega -ithin the Auris!iction o% the municipalit o% Jagna, 7ohol$ From )0+3 to )014, the compan pai! the municipalit , allege!l un!er protest, storage %ees$ #n )014, it %ile! suit, -herein it pra e! that the (r!inance 'e !eclare! inapplica'le to it, an! i% not, that it 'e !eclare! ultra vires an! voi!$ (ssue' 8hether the (r!inance i s voi!, as it amounts to !ou'le ta6ation$ )el*' The vali!it o% the (r!inance must 'e uphel! pursuant to the 'roa! authorit con%erre! upon municipalites ' Common-ealth "ct 4/* (promulgate! )040), -hich -as the prevailing la- -hen the (r!inance is actuall a municipal license ta6 or %ee on persons, %irms an! corporations e6ercising the privilege o% storing copra -ithin the municipalit @s territorial Auris!iction$ Such %ees impose! !o not amount to !ou'le ta6ation$ For !ou'le ta6ation to e6ist, the same propert must 'e ta6e! t-ice, -hen it shoul! 'e ta6e! 'ut once$ " ta6 on the compan @s pro!ucs is !i%%erent %rom the ta6 on the privilege o% storing copra in a 'o!ega situate! -ithin the territorial 'oun!ar o% the municipalit $ [5!] Commissioner vs. Le*ni&B%
/$0$tion L$3 ( 2004 ( 29 )
GR L-18199 L-18289 L-21414F 11 2ul% 1994 En 7anc, 2e es J7> (J)= 3 concur "$&ts' Spouses &E an! Caria &alero >e!nic9 are "merican citizens resi!ing in the Philippines, an! have !erive! all their income %rom Philippine sources since )04/$ #n )0++, the spouses %ile! -ith the ?S #nternal 2evenue agent in Canila their Fe!eral income ta6 return %or )04/, )0+) to )0+4 on income %rom Philippine sources$ From )0+1 to )0+3, the %ile! their !omesic income ta6 returns in compliance -ith local la-s$ The amen!e! their ta6 returns in )0+0 to inclu!e their ta6es pai! to the ?S Fe!eral .overnment, interests, an! e6change an! 'an9 charges$ The %ile! their claims %or re%un!$ (ssue' 8hether income ta6 pai! to %oreign governments can 'e !e!ucte! %rom the gross income or as a ta6 cre!it$ )el*' The la-@s intent is that the right to !e!uct income ta6es pai! to %oreign government %rom the ta6pa er@s gross income is given onl as an alternative or su'stitute to his right to claim a ta6 cre!it %or sich %oreign income ta6es; so that unless the alien resi!ent has a right to claim such ta6 cre!it i% he so chooses, he is preclu!e! %rom !e!ucting the %oreign income ta6es %rom his gross income$ The prupose o% the la- is to prevent the ta6pa er %rom claiming t-ice the 'ene%its o% his pa ment o% %oreign ta6es, ' !e!uction %rom gross income an! ' ta6 cre!it$ To allo- an alien resi!ent to !e!uct %rom his gross income -hatever ta6es he pa s to his o-n government amounts to con%er on the latter po-er to re!uce the ta6 income o% the Philippine .overnment$ Such result is incompati'le -ith the status o% the Philippines as an in!epen!ent an! sovereign state$ "n relie% %rom the allege! !ou'le ta6ation shoul! come %rom the ?nite! States, since its right to 'ur!en the ta6pa er is solel pre!icate! on the ta6pa er@s citizenship, -ithout contri'uting to the pro!uction o% the -ealth that is 'eing ta6e!$ [58] Commissioner vs. 2$vier GR !8951 11 2ul% 1991 Secon! Division, Sarmiento (J)= 4 concur, )too9 no part "$&ts' #n )0//, &ictoria Javier (-i%e o% Celchor), receive! %rom the Pru!ential 7an9 an! Trust Co$ ?SH000,0/4$/, remitte! ' her sister, Dolores &entosa, through some 'an9s in the ?nite! States, among them Cellon 7an9 G"$ Cellon 7an9 %ile! suit to recover the e6cess amount o% ?SH0000,,,, as the remittance o% ?SH ) million -as a clerical error an! shoul! have 'een ?S H),,,, onl (Compare %acts in Cellon 7an9 vs$ Cagsino, .2 /)4/0, )3 (cto'er )00,)$ #n )0/3, Celchor Javier %ile! his income ta6 return %or )0//sho-ing a gross income o% P+4,,+4$43 an! a net income o% P43,,+4$43 an! stating in the %ootnote o% the return that Dta6pa er -as recepient o% some mone receive! %rom a'roa! -hich he presume! to 'e a gi%t 'ut turne! out to 'e an error an! is no- su'Aect o% litigation$ #n )03,, the Commissioner assesse! an! !eman!e! %rom Javier !e%icienc assessment o% P0,*3/,*0/$+) %or )0//$ Javier proteste! such assessment, -here the Commissioner in turn impose! a +,F %rau! penalt against Javier$ (ssue' 8hether Javier is lia'le %or the +,F %rau! penalt $ )el*' ?n!er the then Section /* o% the Ta6 Co!e, a ta6pa er -ho %iles a %alse return is lia'le to pa the %rau! penalt o% +,F o% the ta6 !ue %rom him or o% the !e%icienc ta6 in case pa ment has 'een ma!e on the 'asis o% the return %ile! 'e%ore the !iscover o% the %alsit or %rau!$ The %rau! contemplate! ' la- is actual an! not constructive$ #t must 'e intentional %rau!, consisting o% !eception -ill%ull an! !eli'eratel !one or resorte! to in or!er to in!uce another to give up some legal right$ Frau! is never impute! an! the courts never sustain %in!ings o% %rau! upon circumstances -hich, at most create! onl suspicion$ " %rau!ulent return is al-a s an attempt to eva!e a ta6, 'ut a merel %alse return ma not 'e$ :erein, there -as no actual an! intentional %rau!
/$0$tion L$3 ( 2004 ( 10 )
through -ill%ul an! !eli'erate mislea!ing o% the government agenc concerne! (7#2) committe! ' Javire$ Javier !i! not conceal an thing to in!uce the government to give some legal right an! place itsel% at a !isa!vantage$ Error or mista9e o% la- is not %rau!$ "s rule! ' the Court o% Ta6 "ppeals, the +,F surcharge impose! as %rau! penalt in the !e%icienc assessment shoul! 'e !elete!$ [59] 6er$l&o vs. ?er$ GR L-2998! 22 ;&to#er 19!5 First Division, Cunoz Palma (J)= 4 concur, ) too9 no part "$&ts' Ceralco is the hol!er o% a %ranchise to construct, maintain, an! operate an electric light, heat , an! po-er s stem in the Cit o% Canila an! its su'ur's$ #n )01* an! )014, Ceralco importe! an! receive! %rom a'roa! copper -ires, trans%ormers, an! insulators %or use in the operation o% its 'usiness$ The Collector o% Customs, as !eput o% the Commissioner o% #nternal 2evenue, levie! an! collecte! a compensating ta6$ Ceralco claime! %or re%un! %or the sai! eares, 'ut such claims -ere either not acte! upon or !enie! ' the Commissioner$ (ssue' 8hether Ceralco is e6empt %rom pa ment o% a compensating ta6 on poles, -ires, trans%ormers an! insulators importe! ' it %or use in the operation o% its electric light, heat, an! po-er s stem$ )el*' Ceralco is not e6empt %rom pa ing the compensationg ta6 provi!e! %or in Section )0, o% the Ta6 Co!e, the prupose o% -hich is to Dplace casual importers, -ho are not merchants on e5ual %orring -ith esta'lishe! merchants -ho pa sales ta6 on articles importe! ' them$E Ceralco@s claim %or e6emption %rom pa ment o% the compensating ta6 is not clear or e6presse!, contrar to the rule that De6emptions %rom ta6ation are highl !is%avore! in la-, an! he -ho claims e6emption must 'e a'le to Austi% his claim ' the clearest grant o% organic or statute la-$E Ta6 e6emptiion are strictl construe! against the ta6pa er, the 'eing highl !is%avore! an! ma almost 'e sai! to 'e Do!ious to the la-$E 8hen e6emption is claime!, it must 'e sho-n in!u'ita'l to e6ist, %or ever presumption is against it, an! a -ellB%oun!e! !ou't is %atal to the claim$ [90] Commissioner vs. 6$nil$ 2o&Be% Clu# GR L-8!55 21 6$r&7 1959 First Division, 7autista "ngelo (J)= 0 concur "$&ts' The Canila Joc9e Clu' is the o-ner o% the San >azaro :ippo!rome, -hich is use! %or hol!ing horse races either ' the clu' itsel% or ' the Philippine Charit S-eepsta9es (%%ice (PCS() or other charita'le institutions authorize! ' la- to hol! horse races$ (n )0+) an! )0+*, the PCS( hel! 'ene%it races %or charita'le, relie% an! civic purposes in -hich the Clu' -as pai! in the %orm o% rentals, -hich -as inclu!e! in its !eclare! income ta6es in its return %or sai! ears$ The Clu' claime! %or re%un! o% the sum collecte! ' the Commissioner as to the rentals, conten!ing that it is e6empt un!er Section 4 o% 2" /0$ (ssue' 8hether the Clu' is e6empt %rom income !erive! %rom the PCS( races$ )el*' The e6emption !oes not re%er to an income ta6 that ma 'e impose! on the rentals that ma 'e pai! %or the use o% racing trac9s an! other paraphernalia$ The income earne! ' the Clu' herein !i! not come %rom the horse races hel! ' sai! clu' 'ut it came to it as rentals pai! %or the use o% its propert $ The ta6 pai! %or such income cannot 'e consi!ere! as one connecte! -ith those races -ithin the purvie- o% the e6emption clause in 2" /0$ 7 its ver nature, the la- that e6empts one %rom ta6 must 'e clearl e6presse! 'ecause the e6emption must 'e a'le to Austi% his claim ' the clearest grant o% organic or statute la-$
/$0$tion L$3 ( 2004 ( 11 )
[91] ,,, vs. B$&olo* Cit% GR L-15!29 21 2ul% 1982 Secon! Division, Escolin (J)= + concur "$&ts' The Social Securit S stem (SSS) is a government agenc create! un!er 2" ))1)$ #n pursuance o% its operations, SSS maintains a num'er o% regional o%%ices, one o% -hich is a +Bstore 'uil!ing occup ing 4 parcels o% lan! in 7acolo! Cit $ Sai! 'uil!ing an! lan!s -ere assesse! %or ta6ation$ For %ailure to pa the realt ta6es thereon, the cit levi! upon sai! properties$ SSS sought reconsi!eration on the groun! that SSS is a governmentBo-ne! an! Bcontrolle! corporation an! is e6empt %rom pa ment o% real estate ta6es$ (ssue' 8hether SSS propert in 7acolo! Cit is ta6Be6empt$ )el*' The !istinction -hether the governmentBo-ne! or controlle! corporation e6ercises ministrant or proprietor %unction is o% no relevance as the e6emption !oes not relate to legal %ees 'ut on realt ta6es$ The Charter o% 7acolo! Cit !oes not contain an 5uali%ication -hatsoever in provi!ing %ro the e6emption %rom real estate ta6es o% lan!s an! 'uil!ing o-ne! ' the .overnmentI #t is a6iomatic that -hen pu'lic propert is involve!, e6emption is the rule an! ta6ation is the e6ception$ PD *4, amen!ing the Social Securit "ct o% )0+4, has alrea! remove! all !ou'ts as to the e6emption o% the SS %rom ta6ation (Section )1)$ [92] <it$.$n vs. Commissioner GR L-!8!80 21 2ul% 198! 2esolution En 7anc, CelencioB:errera (J)= )* concur, ) on leave "$&ts' The Chie% Justice has previousl issue! a !irective to the Fiscal Canagement an! 7u!get (%%ice to continue to !e!uct -ithhol!ing ta6es %rom the salaries o% the Justices o% the Supreme Court an! other mem'ers o% the Au!iciar $ This -as a%%irme! ' the Supreme Court En 7anc on 4 Decem'er )03/$ 2TC Au!ges see9 to prohi'it or enAoin the Commissioner o% the #nternal 2evenue an! the Financial (%%icer o% the Supreme Court %rom ma9ing an !e!uction o% -ithhol!ing ta6es %rom their salaries$ (ssue' 8hether the salaries o% Au!ges are su'Aect to ta6$ )el*' The salaries o% mem'ers o% the Ju!iciar are su'Aect to the general income ta6 applie! to all ta6pa ers$ "lthough such intent -as somehoe an! ina!vertentl not clearl set %orth in the %inal te6t o% the )03/ Constitution, the !eli'erations o% the )031 Constitutional Commission negate the contention that the intent o% the %ramers is to revert to the original concept o% DnonB!iminutionE o% salaries o% Au!icial o%%icers$ :ence, the !octrine in Per%ecto v$ Ceere an! En!encia vs$ Davi! !o not appl an more$ Justices an! Au!ges are not onl the citizens -hose income have 'een re!uce! in accepting service in government an! et su'Aecte to income ta6$ Such is true also o% Ca'inet mem'ers an! all other emplo ees$ [91] Commissioner vs. Ro#ertson GR L-!0119-19 12 August 1989 Secon! Division, Paras (J)= 4 concur
/$0$tion L$3 ( 2004 ( 12 )
"$&ts' Fran9 an! James 2o'ertson, 2o'ert Cathe , an! John .arrison are citizens o% the ?nite! States, hol!ers o% "merican passports, an! a!mitte! as Special Termporar &isitors un!er Section 0 (a) visa o% the Philippine #mmigration "ct o% )04,, an! are civilian emplo ees in a ?S Cilitar 7ase in the Philippines in connection -ith its construction, maintenance, operation an! !e%ense (The 2o'erstons an! .arrison -ere 'orn in the Philippines)$ Their incomes are solel !erive! %rom salaries %rom the ?S .overnment ' reason o% their emplo ment in the ?S 7ases in the Philippines$ The Commissioner o% #nternal 2evenue assesse! !e%icienc income ta6 against them %rom ta6a'le ears )010 to )0/*$ (ssue' 8hether 2o'ertson, et$ al$, are e6empte! %rom ta6$ )el*' #n or!er to avail onesel% o% the ta6 e6emption un!er the 2PB?S Cilitar 7ases "greement ("rticle O###, Paragraph a), one must 'e a national o% the ?nite! States emplo e! in connection -ith the construction, maintenance, operation or !e%ense, o% the 'ases, resi!ing in the Philippines ' reason o% such emplo ment, an! the income !erive! is %rom the ?S .overnment$ Sai! circumstances are all present in the present case$ The 'asic inten!ment is to e6empt all ?S citizens -or9ing in the militar 'ases %rom the 'ur!en o% pa ing Philippine #ncome Ta6 -ithout !istinction as to those 'orn locall or 'orn in their countr o% origin$ 8here the la- !oes not !istinguish, one must not !istinguish$ Ubi lex non ditinguit nec nos tinguere debemos. [94] Re$g$n vs. Commissioner GR L-291!9 2! De&em#er 1999 En 7anc, Fernan!o (J)= / concur, ) concur in result, ) too9 no part "$&ts' 8illiam 2eagan importe! a ta6B%ree )01, Ca!illac car -ith accessories value! at ?S H 1,444$34, inclu!ing %reight, insurance an! other charges$ "%ter ac5uiring a permit to sell the car %rom the 'ase comman!er o% Clar9 "ir 7ase, 2eagan sol! the car to a certain 8illie Johnson Jr$ o% the ?S Carine Corps statione! in Sangle Point, Cavite %or ?SH 1,1,,$ Johnson sol! the same, on the same !a to Fre! Ceneses, a Filipino$ "s a result o% the transaction, the Commissioner ren!ere! 2eagan lia'le %or income ta6 in the sum o% P*,0/,$ 2eagan claime! that he -as e6empt as the transaction occurre! in Clar9 "ir 7ase, Da 'ase outsi!e the Philippines$E (ssue' 8hether 2eagan -as ta6Be6empt$ )el*' The Philippines, as an in!epen!ent an! sovereign countr , e6ercises its authorit over its entire !omain$ "n state ma , ho-ever, ' its consent, e6press or implie!, su'mit to a restriction o% its sovereign rights$ #t ma allo- another po-er to participate in the e6ercise o% Auris!ictional right over certain portions o% its territor $ 7 !oing so, it ' no means %ollo-s that such areas 'ecome impresse! -ith an alien character$ The areas retain their status as native soil$ Clar9 "ir 7ase is -ithin Philippine territorial Auris!iction to ta6, an! thus, 2eagan -as lia'le %or the income ta6 arising %rom the sale o% his automo'ile in Clar9$ The la- !oes not loo9 -ith %avor on ta6 e6emptions an! that he -ho -oul! see9 to 'e thus privilege! must Austi% it ' -or!s too plain to 'e mista9en an! too categorical to 'e misinterprete!$ 2eagan has not !one so, an! cannot !o so$ [95] D$v$o Lig7t $n* :o3er vs. Commissioner o. Customs GR L-28!19 $n* L-28902 First Division, 2e es J7> (J)= 0 concur
/$0$tion L$3 ( 2004 ( 11 )
"$&ts' Davao >ight is a grantee o% a legislative %ranchise to install, operate an! maintain an electric light, heat an! po-er plant in the cit o% Davao, %or +, ears$ (n t-o occasions, it importe! electrical supplies, materials an! e5uipment %or installation in its po-er plant$ The importations arrive! in the port o% Ce'u Cit , -here the Collector impose! custom !uties an! ta6es amounting to P0,0*3$ Davao >ight pai! un!er protest, claiming it is similarl ta6Be6empte! as the Gational Po-er Corporation, -hich is allege!l posing as competition to Davao >ight in its 'usiness$ (ssue' 8hether Davao >ight is similarl ta6Be6empt as Gapocor$ )el*' Davao >ight@s purpose in securing a %ranchise to esta'lish an! operate an electric plant an! po-er stations -as to engage in a 'usiness or pro%itBma9ing venture, -hile Gapocor -as speci%icall create! to un!erta9e the !evelopment o% h !raulic po-er nation-i!e an! the pro!uction o% po-er %rom other sources, %or use o% the government an! the general pu'lic$ #n isolate! sale o% electric po-er to one governmentBo-ne! plant (Gational Development Co$, in Davao) -oul! not 'e enough to classi% the Gapocor as a DcompetingE concern to Davao >ight@s enterprise$ Gapocor@s ta6 e6emption (2" 4+3) -as grante! in or!er to %acilitate the li5ui!ation ' sai! corporation o% its lia'ilities, an! the conse5uential release ' the government itsel% %ro its o'ligation in the transactions entere! into ' the Presi!ent on 'ehal% o% Gapocor$ Davao >ight is not entitle! to the same e6emption privileges enAo e! ' another operator -ithout an e6press provision o% the la- to that e%%ect$ E6emption %rom ta6ation is never presume!$ For ta6 e6emption to 'e recognize!, the grant must 'e clear an! e6press$ #t cannot 'e ma!e to rest on vague implications$ [99] ,urig$o Consoli*$te* 6ining vs. Colle&tor GR L-148!8 29 De&em#er 1991 En 7anc, 2agala (J)= ), concur "$&ts' 7e%ore the out'rea9 o% the 8ar, the Surigao Consoli!ate! Cining Co$ -as operating its mining concessions in Cainit, Surigao$ Due to the interruption o% communications at the out'rea9 o% the -ar, the th compan lost contact -ith its mines an! never receive! the pro!uction reports %or the 4 5uarter o% )04)$ To avoi! incurring an ta6 lia'ilit or penalt , it !eposite! o% chec9 pa a'le to an! in!orse! in %avor o% the Cit Treasurer, in pa ment o% a! valorem ta6es %or the sai! perio!$ "%ter the -ar, the compan %ile! its a! valorem ta6 %or the sai! perio! pursuant to Common-ealth "ct //*$ #ts return -as revise!, until eventuall the compan claime! a re%un! o% P)/,)+3$,)$ The collector o% #nternal 2evenue !enie! the re5uest %or re%un!$ (ssue' 8hether Surigao Consoli!ate! ma recover its ta6 pa ment in light o% the con!onation ma!e un!er a su'se5uent la-, 2" 3)$ )el*' 2" 3), Section )(!) provi!e! that Dall unpai! ro alties, a! valorem or speci%ic ta6es on all minerals mine! %rom mining claims or concessions e6isting an !in %orce on ) Januar )04*, an! -hich minerals -ere lost ' reason o% -ar, o% circumstance arising there%rom are con!one!PE The provision re%ers to the con!onation o% unpai! ta6es onl $ The con!onation o% a ta6 lia'ilit is e5uivalent an! is in the nature o% ta6 e6emption$ 7eing so, it shoul! 'e sustaine! onl -hen e6presse! in e6plicit terms, an! it cannot 'e e6ten!e! 'e on! the plain meaning o% those terms$ :e -ho claims an e6emption %rom his share o% the common 'ur!en o% ta6ation must Austi% his claim ' sho-ing t hat the >egislature inten!e! to e6empt him$ The compan %aile! to sho- an portion o% the la- that e6plicitl provi!e! %or a re%un! o% those ta6pa ers -ho ha! pai! their ta6es on the items$ [9!]
/$0$tion L$3 ( 2004 ( 14 )
Aon*er 6e&7$ni&$l =ngineering vs. Court o. /$0 A--e$ls GR L-22805 $n* L-2!858 10 2une 19!5 First Division, Esguerra (J)= 4 concur "$&ts' 8on!er Cechanical Engineering Corp$ -as grante! ta6 e6emption privilege un!er 2" 4+ in respect to the Dmanu%acture o% machines %or ma9ing cigarette papers, pails, -ashers, rivets, nails, can!ies, chairs, etc$E The ta6 e6emption e6pire! on 4, Ca )0+)$ #n )0+4, the compan applie! -ith the secretar o% Finance %or the reinstatement o% the e6emption privilege un!er the provisions o% 2" 0,), the reinstatement to commence on the !ate 2" 0,) too9 e%%ect$ The compan -as given a Certi%icate o% Ta6 E6emption on / Jul )0+4, e6emption it similarl as in 2" 4+ until 4) Decem'er )0+3, -ith !iminishing e6emption until *, June )0++$ The Commissioner assesse! sales ta6 on gross sales o% articles manu%acture! ' it, inclu!ing steel chairs$ The compan appeale! to the Court o% Ta6 "ppeals$ (ssue' 8hether the compan is e6empte! %rom the ta6 impose! on the manu%acture an! sale o% articles, such as steel chairs$ )el*' The compan -as grante! ta6 e6emption in the manu%acture an! sale o% Dmachines %or ma9ing cigarette paper, pails, etc$E 'ut not %or the manu%acture an! sale o% articles pro!uce! ' those machines$ The manu%acture o% steel chairs, Aeep parts, an! other articles not constituting machines %or ma9ing certain pro!ucts -oul! not %all un!er the classi%ication o% Dne- an! necessar E in!ustries envisione! in 2" 4+ an! 0,) as to entitle the compan to ta6 e6emption$ E6emptions are highl !is%avore! in la- an! he -ho claims ta6 e6emption must 'e a'le to Austi% his claim or right thereto ' the clearest grant o% organic or statute la-$ Ta6 e6emption must 'e clearl e6presse! an! cannot 'e esta'lishe! ' implication$ [98] ?is$%$s Ce#u /ermin$l vs. Commissioner GR L-19510 $n* L-19444 2! "e#ru$r% 1995 En 7anc, Pare!es (J)= 3 concur, * too9 no part "$&ts' &isa an Ce'uTerminal Co$ -as appointe! the sole manager o% the #rrastre Service at the Port o% Ce'u, a%ter a pu'lic 'i!!ing in )0+/, covering import cargoes, inclu!ing transit import cargoes$ #n )0+3, the 7ureau o% #nternal 2evenue (Canila) !eman!e! the pa ment o% percentage ta6es an! penalties !ue to the .overnment$ Su'se5uentl , ho-ever, 7#2 e6aminers state! that the compan -as not su'Aecte! o% the 4F percentage ta6, it has 'een pa ing *3F o% the gross receipts to the 7ureau o% Customs$ (ssue' 8hether &isa as Ce'u Terminal Co$ #n c$ is e6empte! %rom the percentage ta6$ )el*' The compan is an arrastre contractor an! is covere! ' Section )0) o% the Ta6 Co!e$ Section )0) o% the Ta6 Co!e !oes not esta'lish an !istinction 'et-een an arrastre operator -ho han!les onl importe! cargo in its arrastre operations , pursuant to 2" )4,, an! those han!ling interislan! cargo, so as to e6empt the compan %rom the percentage ta6$ #t is a -ell settle! rule that he -ho claim s e6emption shoul! prove ' convincing proo%s that he is e6empte!$ The compan %aile! to present such proo%s$ Further, the recommen!ation o% the e6aminers are su'Aect to the revie- o% their superiors, -ho ma counterman! or a%%irm them$ The government is never estoppe! to collect legitimate ta6es 'ecause o% the error committe! ' its agents$ :o-ever, as the compan pa s *3F o% the total monthl gross receipts !erive! %rom the arrastre service to the 7ureau o% Customs, to hol! the compan lia'le %or the pa ment o% percentage ta6 is unAust an! not contemplate! ' Section )0) o% the Ta6 Co!e$
/$0$tion L$3 ( 2004 ( 15 )
[99] Le$l*$ =le&tri& vs. Commissioner GR L-19428 10 A-ril 1991 En 7anc, Dizon (J)= 3 concur, ) too9 no part "$&ts' #n )0)+, Julian >ocsin "nson -as grante! a %ranchise to operate an electric light an! po-er plant in >egaspi an! Daraga, in "l'a province$ :e sol! the %ranchise, the certi%icate o% pu'lic convenience, an! electric plant to Saturnino 7enito; -ho in turn sol! the same to >eal!a Electric (a partnership %orme! ' the 7enitos an! other parties in )0+))$ Since )0)+, the original grantee an! its successorsBinBinterest pai! a %ranchise ta6 o% *F on the gross earnings or receipts %rom the 'usiness un!er the %ranchise, until )041 -hen 2" 40 amen!e! Section *+0 o% the Ta6 Co!e, increasingl the %ranchise ta6 to +F$ >eal!a Electric maintains it is onl lia'le to *F %ranchise ta6, an! not +F$ (ssue' 8hether >eal!a Electric is e6empte! %rom the ta6 increase in light o% its %ranchise$ )el*' >eal!a Electric@s %ranchise !oes not speci%icall state that the rate o% the %ranchise ta6 to 'e pai! shall 'e *F o% its gross earnings or receipts$ The intent o% the legislature -as to impose upon the grantee (an! its successors), the o'ligation to pa the same %ranchise ta6 impose! upon other grantee or %ranchise hol!ers at the time its %ranchise ("ct*4/+) -as enacte!$ >eal!a@s charter contains an e6press provision to the e%%ect that the same ma 'e altere! or repeale! ' Congress, an! !oes not contain an provision provi!ing that the %ranchise ta6 -ere re5uire! to pa -as to 'e Din lieu o% all ta6es o% an 9in! levie!, esta'lishe!, or collecte! ' an authorit -hatsoever, no- or in the %utureE or in lieu o% all ta6es o% ever name an! natureQ municipal, provincial or central,,,E Ta6 e6emptions are not to 'e presume!$ [!0] 6is$mis ;rient$l vs. C$g$%$n =le&tri& GR 45155 12 2$nu$r% 1990 First Division, .rino "5uino (J)= 4 concur "$&ts' Caga an Electric Po-er an! light Co, #nc$ (CEP">C() -as grante! a %ranchise in )01) un!er 2" 4*4/ to install, operate an! maintain an electric light, heat an! po-er s stem in Caga an !e (ro an! its su'ur's$ #n )0/4, the >ocal Ta6 Co!e (PD *4)) -as promulgate!, -here Section 0 thereo% provi!ing %or a %ranchise ta6$ Pursuant thereto, the province o% Cisamis (riental enacte! Provincial 2evenue (r!inance )0, -hose Section )* also provi!es %or a %ranchise ta6$ The Provincial Treasurer !eman!e! pa ment o% the provincial %ranchise ta6 %rom CEP">C($ CEP">C( pai! un!er protest$ (ssue' 8hether CEP">C( is e6empt %rom the provincial %ranchise ta6$ )el*' >ocal Ta6 2egulation 4B/+ issue! ' the Secretar o% Finance in )0/1 ma!e it clear that the %ranchise ta6 provi!e! in the >ocal Ta6 Co!e ma onl 'e impose! on companies -ith %ranchise that !o not contain the e6empting clause, i$e$ DinBlieuBo%BallBta6esBproviso$E CEP">C(@s %ranchise i$e$ 2" 4*4/, 4+/) an! 1,*, (Section 4 thereo%), uni%orml provi!es that Din consi!eration o% the %ranchise an! rights here' grante!, the grantee shall pa a %ranchise ta6 e5ual to 4F o% the gross earnings %or electric current sol! un!er the %ranchise, o% -hich *F goes to the national Treasur an! )F goes into the treasur o% the municipalities o% Tagoloan, (pol, &illanueva, Jasaan, an! Caga an !e (ro, as the case ma 'e= Provi!e!, that the sai! %ranchise ta6 o% 4F o% the gross earnings shall 'e in lieu o% all ta6es an! assessments o% -hatever authorit upon privileges, earnings, income, %ranchise an! poles, -ires, trans%ormers, an! insulators o% the grantee %rom -hich ta6es an! assessments the grantee is here' e6pressl e6empte!$
/$0$tion L$3 ( 2004 ( 19 )
[!1] )il$*o vs. Colle&tor GR L-9408 11 ;&to#er 1959 En 7anc, 7autista "ngelo (J)= 3 concur "$&ts' "$&ts' Emilio :ila!o %ile! his income ta6 return %or )0+) -ith the treasurer o% 7acolo! Cit , claiming a !e!ucti'le item o% P)*,34/$1+ %rom his gross income pursuant to .eneral Circular &B)*4 issue! ' the Collector o% #nternal 2evenue$ The Secretar o% Finance, through the Collector, issue! .eneral Circular &B )40 -hich revo9e! an! !eclare! voi! Circular &B)*4; an! lai! !o-n the rule;s< that losses o% propert -hich occurre! in 8orl! 8ar ## %rom %ires, storms, ship-rec9 or other casualt , or %rom ro''er , the%t, or em'ezzlement are !e!ucti'le in the ear o% actual loss or !estruction o% sai! propert $ The !e!uctions -ere !isallo-e!$ (ssue' 8hether #nternal 2evenue >a-s -ere en%orce! !uring the -ar an! -hether :ila!o can claim compensation %or !estruction o% his propert !uring the -ar$ )el*' Philippines #nternal 2evenue >a-s are not political in nature an! as such -ere continue! in %orce !uring the perio! o% enem occupation an! in e%%ect -ere actuall en%orce! ' the occupation government$ Such ta6 la-s are !eeme! to 'e la-s o% the occupie! territor an! not o% the occup ing enem $ "s o% the en! o% )04+, there -as no la- -hich :ila!o coul! claim %or the !estruction o% his properties !uring the 'attle %or the li'eration o% the Philippines$ ?n!er the Philippine 2eha'ilitation "ct o% )043, the pa ment o% claims ' the 8ar Damage Commission !epen!e! upon its !iscretions nonBpa ment o% -hich !oes not give rise to an en%orcea'le right$ "ssuming that the loss (!e!ucti'le item) represents a portion o% the /+F o% his -ar !amage claim, the amount -oul! 'e at most a proper !e!uction o% his )0+, gross income (not on his )0+) gross income) as the last installment an! notice o% !iscontinuation o% pa ment ' the 8ar Damage Commission -as ma!e in )0+,$ [!2] Commissioner vs. Court o. /$0 A--e$ls GR 4400! 20 6$r&7 1991 First Division, Ce!ial!ea (J)= 4 concur, ) on leave "$&ts' "$&ts' Eastern E6tension "ustralasia an! China Telegraph Co$ ( a %oreign corporation) -as given a concession %or the construction, operation an! maintenance o% su'marine telegraph ca'le %rom :ong Mong to Canila on 4, Carch )303 ' a 2o al Decree o% the Spanish .overnment$ 8hen the concession e6pire! in )0+*, 2" 3,3 -as approve!, giving the compan a legislative %ranchise Dto lan!, construct, maintain an! operate a su'marine telegraph ca'le connecting Canila to :ong MongE, an! a ta6 e6ception %rom the pa ment o% all ta6es e6cept a %ranchise ta6 o% +F o% the gross earnings an! the ta6 on its real propert $ The Commissioner, ho-ever, assesse! !e%icienc income ta6 (inclusive o% surcharges, interests an! penalties thereon %or ears )01+B)0/,) against the compan on the 'elie% that the %ranchise is inoperative %or %ailure to con%orm -ith the constitutional re5uirement that %ranchise hol!ers shoul! 'e organize! un!er Philippine >a-s an! that 3,F o% its capital o-ne! ' Filipinos (ssue' 8hether the %ranchise is inoperative, ren!ering the compan lia'le %or !e%icienc income ta6$ )el*' " la- is presume! constitutional as it is suppose! to have 'een care%ull stu!ie! an! !etermine! to constitutional 'e%ore it -as %inall enacte! ' Congress an! approve! ' the Chie% E6ecutive$ Go constitutional 5uestion -oul! 'e resolve! unless the re5uisites o% a Au!icial in5uir are present; i$e$ the e6istence o% an appropriate case, an interest personal an! su'stantial ' the part raising the constitutional
/$0$tion L$3 ( 2004 ( 1! )
5uestion, the plea that the %unction 'e e6ercise! at the earliest opportunit , an! the necessit that the constitutional 5uestion 'e passe! in or!er to !eci!e the case$ :erein, the last criterion is missing; an! accor!ingl , the Court gives high respect %or the acts o% the other !epartments o% the government an!, as much as possi'le, avoi!s !eci!ing the constitutional 5uestion$ The compan !ul complie! -ith the con!itions set %orth in the legislative %ranchise$ #t has also complie! -ith the ta6 re5uirement ' pa ing to the 2epu'lic a ta6 o% +F o% the gross earnings %rom Philippines operations regularl since its creation$ "s a legislative %ranchise parta9es o% the nature o% a contract; the %ranchise is the la- 'et-een the parties an! the are 'oun! ' the terms thereo%$ The government agenc cannot !eclare the %ranchise as Dine%%ective an! unen%orcea'leE merel ' stating that the compan %aile! to compl -ith the re5uirements o% the general statutes (e$g$ Pu'lic Service "ct an! the Corporation la-) -hich are not mentione! in 2" 3,3$ Still, a reman! o% the case to the Court o% Ta6 "ppeals is necessar to !etermine the income ta6 lia'ilit o% the compan correspon!ing to its income 'e on! the scope o% 2" 3,3$ [!1] 6$&e*$ vs. 6$&$r$ig GR 88291 11 6$% 1991 En 7anc, .anca co (J)= 1 concur, * too9 no part, ) !issents "$&ts' Common-ealth "ct )*, create! G"P(C(2 as a pu'lic corporation to un!erta9e the !evelopment o% h !raulic po-er an! the pro!uction o% po-er %rom other sources$ 2" 4+3 ()040) grante! G"P(C(2 ta6 an! !ut e6emption privileges$ 2" 140+ ()0/)) revise! the charter o% the G"P(C(2, tas9ing it to carr out the polic o% the national electri%ication, an! provi!e! in !etail G"P(C(2@s ta6 e6ceptions$ PD 43, ()0/4) speci%ie! that G"P(C(2@s e6emption inclu!es all ta6es, etc$ impose! D!irectl or in!irectl $E PD 043 integrate! the e6emptions in %avor o% .(CCs inclu!ing their su'si!iaries; ho-ever, empo-ering the Presi!ent or the Cinister o% Finance, upon recommen!ation o% the Fiscal #ncentives 2evie- 7oar! (F#27) to restore, partiall or completel , the e6emptions -ith!ra-n or revise!$ The F#27 issue! 2esolution ),B3+ (/ Fe'ruar )03+) restoring the !ut an! ta6 e6emptions privileges o% G"P(C(2 %or perio! )) June )034B 4, June )03+$ 2esolution )B31 ()Januar )031) restore! such e6emption in!e%initel e%%ective ) Jul )03+$ E( 04 ()03/) again -ith!re- the e6emption$ F#27 issue! 2esolution )/B3/ (*4 June )03/) restoring G"P(C(2@s e6emption, -hich -as approve! ' the Presi!ent on + (cto'er )03/$ Since )0/1, oil %irms never pai! e6cise or speci%ic an! a! valorem ta6es %or petroleum pro!ucts sol! an! !elivere! to G"P(C(2$ (il companies starte! to pa speci%ic an! a! valorem ta6es on their sales o% oil pro!ucts to G"P(C(2 onl in )034$ G"P(C(2 claime! %or a re%un! (P413$+3 million)$ (nl portion thereo%, correspon!ing to Calte6, -as approve! an! release! ' -a o% a ta6 cre!it memo$ The claim %or re%un! o% ta6es pai! ' PetroPhil, Shell an! Calte6 amounting to P4),$+3 million -as !enie!$ G"P(C(2 move! %or reconsi!eration, starting that all !eliveries o% petroleum pro!ucts to G"P(C(2 are ta6 e6empt, regar!less o% the perio! o% !eliver $ (ssue' 8hether G"P(C(2 cease to enAo e6emption %rom in!irect ta6 -hen PD 043 state! the e6emption in general terms$ )el*' G"P(C(2 is a nonBpro%it pu'lic corporation create! %or the general goo! an! -el%are, an! -holl o-ne! ' the government o% the 2epu'lic o% the Philippines$ From the ver 'eginning o% the corporation@s e6istence, G"P(C(2 enAo e! pre%erential ta6 treatment Dto ena'le the corporation to pa the in!e'tness an! o'ligationE an! e%%ective implementation o% the polic enunciate! in Section ) o% 2" 140+$ From the pream'le o% PD 043, it is evi!ent that the provisions o% PD 043 -ere not inten!e! to 'e strictl construe! against G"P(C(2$ (n the contrar , the la- man!ates that it shoul! 'e interprete! li'erall so as to enhance the ta6 e6empt status o% G"P(C(2$ #t is recognize! principle that the rule on strict interpretation !oes not
/$0$tion L$3 ( 2004 ( 18 )
appl in the case o% e6emptions in %avor o% government political su'!ivision or instrumentalit $ #n the case o% propert o-ne! ' the state or a cit or other pu'lic corporations, the e6press e6ception shoul! not 'e construe! -ith the same !egree o% strictness that applies to e6emptions contrar to the polic o% the state, since as to such propert De6ception is the rule an! ta6ation the e6ception$E [!4] Commissioner vs. :7oeni0 Assur$n&e GR L-19!2! 20 6$% 1995 En 7anc, 7engzon JP (J)= ), concur "$&ts' Phoeni6 assurance is a %oreign insurance corporation organize! un!er the la-s o% .reat 7ritain, license! to !o 'usiness in the Philippines$ Through its hea! o%%ice in >on!on, it entere! into -orl!-i!e reinsurance treaties -ith various %oreign insurance companies$ #t agree! to ce!e a portion o% premiums receive! on original insurances un!er-ritten ' its hea! o%%ice, su'si!iaries, an! 'ranch o%%ices aroun! the -orl!, in consi!eration %or assumption ' the %oreign insurance companies o% n e5uivalent portion o% the lia'ilit %orm such original insurances$ Pursuant to such treaties, the compan ce!e! portions o% its premiums it earne! %rom its un!er-riting 'usiness in the Philippines, upon -hich assesse! -ithhol!ing ta6$ The compan therea%ter amen!e! its ta6 returns ()0+,B)0+4) e6clu!ing reinsurance premium an! items o% !e!uction attri'uta'le to such premium$ The Commissioner assesse! !e%icienc income ta6 against the compan $ (ssue' 8hether the Commissioner is Austi%ie! in the assessment o% !e%icienc ta6$ )el*' The changes an! alteration em'o!ie! in the amen!e! ta6 return consiste! o% the e6clusion o% reinsurance premium receive! %rom !omestic insurance companies ' the compan @s hea! o%%ice, reinsurance premium ce!e! to %oreign insurers not !oing 'usiness in the Philippines an! various items o% !e!uctions attri'uta'le to such e6clu!e! reinsurance premiums, there' su'stantiall mo!i% ing the original return$ "s amen!e! return is su'stantiall !i%%erent %rom the original return, the perio! o% limitation o% the right to issue the same shoul! 'e counte! %rom the %iling o% the amen!e! income ta6 return$ The right o% the Commissioner to assess the !e%icienc ta6 on the amen!e! return has not prescri'e!$ To hol! other-ise -oul! pave the -a %or ta6pa er to eva!e the pa ment o% ta6es simpl reporting in their original return heav losses an! amen!ing the same more than + ears later -hen the Commissioner has lost his authorit to assess the proper ta6 there un!er$ The o'Aect o% the ta6 co!e is to impose ta6es %or the nee!s o% the government, not to enhance ta6 avoi!ance to its preAu!ice$ [!5] Commissioner vs. Connel Bros. Co. GR L-2!!52-51 10 August 19!1F =n B$n& Re%es 2r.(2).' 10 &on&ur "$&ts' The Commissioner !isallo-e! the !e!uctions %or 'a! !e'ts, !epreciation, an! e6cess in valuation o% leasehol! improvements ' Connel 7ros$ Co$ in its income ta6 return %or ta6a'le ear )0+4 an! )0++$ The Commissioner thus assesse! against the compan !e%icienc ta6es or assessments %or sai! ears$ The Court o% Ta6 "ppeals mo!i%ie! the assessment ' inclu!ing the correspon!ing interest an! surcharges pursuant to Section +) o% the Ta6 Co!e$ (ssue' 8hether the interest an! surcharges on !elin5uents ta6 pa ments are chargea'le$ )el*' Delin5uenc in!icates nonBpa ment o% the correct an! collecti'le ta6, an! such state o% !elin5uenc e6ists not %rom the assessment o% the !e%icienc 'ut %rom the ver time the ta6pa er %aile! to pa the correct
/$0$tion L$3 ( 2004 ( 19 )
amount !ue %rom him$ :erein, the !elin5uenc ta6es 'ecame !ue an! the assessment there%ore -ere ma!e 'e%ore the amen!ment o% Section +) on * June )0+0; an! thus, the compan @s lia'ilit shoul! 'e !etermine! pursuant to the ol! Section (e) o% the Ta6 co!e$ ?n!er the ol! Section, a !elin5uent ta6 pa er -oul! have to pa , in a!!ition to the unpai! ta6, a +F surcharge thereon compute! %rom the time the ta6 'ecame !ue, plus interest on the -hole unpai! amount at the rate o% )F a month$ ?n!er 2" *444, the !elin5uent ta6pa er shall pa at the rate o% 1F per annum compute! %rom the !ate prescri'e! %or pa ment o% the income ta6 up to the assessment o% the !elin5uenc ta6, 'ut -hich shall not e6cee! the amount correspon!ing to a perio! o% 4 ears$ Section )4 o% the amen!ator act shoes that there is no intent to ma9e 2" *444 retroactive$ [!9] Commissioner vs. "irem$nGs "un* (nsur$n&e GR L-10944 9 6$r&7 198! Secon! Division, Paras (J)= + concur, ) on leave "$&ts' Fireman@s Fun!s #nsurance is a resi!ent %oreign insurance corporation organize! un!er the la-s o% the ?nite! States, authorize! an! !ul license! to !o 'usiness in the Philippines$ From )0+*B)0+3, the compan entere! into various insurance contracts involving causalit , %ire an! marine ris9s, %or -hich the correspon!ing insurance policies -ere issue!$ From )0+*B)0+1, !ocumentar stamps -ere 'ought an! a%%i6e! to the correspon!ing pages o% the polic register, instea! o% on the insurance policies issue!$ The Commissioner assesse! an! !eman!e! %rom the compan the pa ment o% !ocumentar stamps %or the ears )0+*B)0+3, plus compromise penalties$ (ssue' 8hether the a%%i6ture o% !ocumentar tantamount to %ailure to pa the same$ stamp on pages other than those authorize! ' la- is
)el*' "lthough the !ocumentar stamps -ere a%%i6e! to papers other than those authorize! ' la-, it is not tantamount to %ailure to pa the same as the compan purchase! an! pai! the !ocumentar stamps correspon!ing to the various insurance policies$ Sections *),, *4*, **), *4/ an! *40 o% the Ta6 Co!e have the overri!ing purpose to collect ta6es, an! the steps involving !ocumentar ta6es (purchase, a%%i6ture, an! cancellation) are 'ut a means to that en!$ "lthough the insurance policies -ith the correspon!ing !ocumentar stamps a%%i6e! are the 'est evi!ence to prove pa ment o% sai! !ocumentar stamp ta6, it !oes not preclu!e the a!missi'ilit o% other proo%s -hich are uncontra!icte! an! consi!era'le -eight$ Still, -henever the interpretation o% statute lev ing ta6es or !uties are in !ou't, such statutes are to 'e construe! most strongl against the government an! in %avor o% the su'Aects or citizens, 'ecause 'ur!ens are not to 'e impose!, nor presume! to 'e impose! 'e on! -hat statutes e6pressl an! clearl import$ There is no Austi%ication %or the government -hich has alrea! realize! the revenue, -hich is the o'Aect o% the imposition o% the su'Aect stamp ta6, to re5uire pa ment o% the same ta6 %or the same !ocuments$ [!!] Commissioner vs. Ce#u :ortl$n* Cement GR L-29059 15 De&em#er 198! "irst Division Cru+ (2)' 4 &on&ur "$&ts' 7 virtue o% a !ecision o% the Court o% Ta6 "ppeals, mo!i%ie! ' the Supreme Court, the Commissioner -as or!ere! to re%un! overpa ments o% a! valorem ta6es on cement pro!uce! an! sol! ' the compan a%ter (cto'er )0+/$ The compan move! %or a -rit o% e6ecution, -hich -as oppose! ' the Commissioner on the groun! that the compan ha! an outstan!ing sales ta6 lia'ilit to -hich the Au!gment !e't ha! alrea! 'een cre!ite!$ The Court o% Ta6 "ppeals hel! that the allege! sales ta6 lia'ilit -as still 'eing 5uestione! an! there%ore cannot 'e setBo%% against the re%un!$
/$0$tion L$3 ( 2004 ( 40 )
(ssue' 8hether the assessment o% sales ta6 lia'ilit ma 'e en%orce!, i$e$ to set o%% against the re%un!$ )el*' The argument, that the assessment cannot as et 'e en%orce! 'ecause it is still 'eing conteste!, loss sight o% the urgenc o% the nee! to collect ta6es as Dthe li%e 'loo! o% the government$E #% the pa ment o% ta6es coul! 'e postpone! ' simpl 5uestioning their vali!it , the machiner o% the state -oul! grin! to a halt an! all government %unctions -oul! 'e paral ze!$ To re5uire the Commissioner to actuall re%un! to the compan the amount o% the Au!gment !e't$ 8hich he -ill later have the right to !istrait %or pa ment o% its sales ta6 lia'ilit , is an i!le ritual$ [!8] Re-u#li& vs. ?*$. *e "ern$n*e+ GR L-9141 25 ,e-tem#er 1959 =n B$n& L$#r$*or (2)' ! &on&ur "$&ts' (limpio Fernan!ez an! his -i%e "ngelina (asan ha! a net -orth o% P3, ,,, on 3 Decem'er )04)$ During the Japanese occupation, the spouses ac5uire! several real properties$ "t the time o% the hus'an!@s !eath in )04+, he ha! a net -orth o% P4),430$ The Collector o% #nternal 2evenue assesse! a -ar pro%its ta6 (2" ++) on the estate o% the !ecease! at P/, 1)4$,,, -hich -as a!ministrative re%use! to pa $ The vali!it o% 2" ++ -as 5uestione!, as -ell as the vali!it an! the legalit o% the assessment$ (ssue' 8hether the 8ar Pro%its ta6 >a- ma 'e retroactivel applie! -ithout violating the Constitution (especiall the provision on e6Bpost %acto la-s)$ )el*' The prohi'ition against the e6 %acto la-s applies onl to criminal or penal matters, an! not to la-s -hich concern civil matters or procee!ings generall , or -hich a%%ect or regulate civil or private right$ E6 post %acto is con%ine! to la-s respecting criminal punishments, an! ha! no relation -hatever to retrospective legislation o% an other !escription$ 2etrospective la-s, -hen not o% a criminal nature, !o not come in con%lict -ith the Constitution, unless o'no6ious to its provisions on other groun!s than their respective character$ The la- ma not 'e consi!ere! harsh an! oppressive 'ecause o% the %orce o% its impact %ell on those -ho ha! amasse! -ealth or increase! their -ealth !uring the -ar, 'ut !i! not touch the less %ortunate$ The polic %ollo-e! is the same as that -hich un!erlies the #ncome Ta6 >a-, imposing the 'ur!en upon those -ho have an! relieving those -ho have not$ [!9] /$n$*$ vs. /uver$ GR L-91915 24 A-ril 1985 =n B$n& =s&olin (2)' 1 &on&ur 2 &on&ur 3it7 reserv$tion 1 on le$ve 1 tooB no -$rt "$&ts' #nvo9ing the people@s right to 'e in%orme! on matters o% pu'lic concern as -ell as the principle that la-s to 'e vali! an! en%orcea'le must 'e pu'lishe! in the (%%icial .azette or other-ise e%%ectivel promulgate!, TaRa!a, et$al$ see9 a -rit o% man!amus to compel pu'lic o%%icials to pu'lish presi!ential !ecrees, letters o% instructions, general or!ers, proclamation, e6ecutive or!ers, letter o% implementation an! a!ministrative or!ers$ (ssue' 8hether the unpu'lishe! la-s have 'in!ing %orce an! e%%ect$ )el*' The pu'lication in the (%%icial .azette is re5uire! to give the general pu'lic a!e5uate notice o% the various la-s -hich are to regulate their actins an! con!uct as citizens$ Pu'lication is necessar to apprise the
/$0$tion L$3 ( 2004 ( 41 )
pu'lic o% the contents o% regulations an! ma9e penalties 'in!ing on the person a%%ecte! there' $ The pu'lication o% all presi!ential issuances o% a Dpu'lic natureE or Do% general applica'ilit E is a man!ate! ' la-, an! is a re5uirement o% !ue process$ Presi!ential !ecrees that provi!e %or %ines, %or%eitures or penalties %or their violation or other-ise impose a 'ur!en on the people, such as ta6 an! revenue measures %all -ithin this categor $ 7e%ore a person ma 'e 'oun! ' la-, he must 'e %irst 'e o%%iciall an! speci%icall in%orme! o% its contents$ 8hen not pu'lishe!, such shall have no %orce an! e%%ect$ :o-ever, the implementationIen%orcement o% the presi!ential !ecrees prior to their pu'lication in the .azette is an operative %acts, -hich ma have conse5uences -hich cannot 'e Austl ignore!$ (<ote' The aspect o% Doperative %actsE -as !roppe! in su'se5uent resolution$) [80] B$g$tsing vs. R$mire+ GR L-41911 1! De&em#er 19!9 =n B$n& 6$rtin (2)' ! &on&ur 1 &on&ur 3it7 Eu$li.i&$tion 1 reserve* vote "$&ts' #n )0/4, the Cunicipal 7oar! o% Canila enacte! (r!inance /+**, regulating the operation o% pu'lic mar9ets an! prescri'ing %ees %or the rentals o% stalls an! provi!ing penalties %or violation thereo%$ The Fe!eration o% Canila Car9et &en!ors #nc$ assaile! the vali!it o% the or!inance, alleging among others the nonBcompliance to the pu'lication re5uirement un!er the 2evise! Charter o% the Cit o% Canila$ (ssue' 8hether the pu'lication re5uirement -as complie! -ith$ )el*' The 2evise! Charter o% the Cit o% Canila is a special act since it relates onl to the Cit o% Canila, -hereas the >ocal Ta6 Co!e i! a general la- 'ecause it applies universall to all local governments$ Section )/ o% the Charter spea9s o% Dor!inanceE in general$ 8hereas, Section 44 o% the >ocal Ta6 Co!e relates to Dor!inances lev ing or imposing ta6es, %ees or other chargesE in particular$ 8hile the Charter re5uires pu'lication, 'e%ore the enactment o% the or!inance an! a%ter approval thereo%, in t-o !ail ne-spapers o% the general circulation in the cit , the >ocal Ta6 Co!e onl prescri'es %or pu'lication -i!el circulate! -ithin the Auris!iction o% the local government or ' posting the or!inance in the local legislative hall or premises an! in t-o other conspicuous places -ithin the territorial Auris!iction o% the local government$ 7eing a general la-ith a special provision applica'le in the case, the >ocal Ta6 Co!e prevails$ [81] Commissioner vs. Burroug7s Lt*. GR L-9951 19 2une 1989 ,e&on* Division :$r$s (2)' 4 &on&ur "$&ts' 7urroughs >t! is a %oreign corporation authorize! to engage in 'usiness in the Philippines$ #ts 'ranch o%%ice in Ca9ati applie! -ith the Central 7an9 %or authorit to remit to its parent compan a'roa!, 'ranch pro%its$ #t pai! )+F 'ranch pro%it remittance ta6$ The 'ranch, ho-ever, later claime! %or a re%un! or cre!it conten!ing that the 'ranch pro%it remittance ta6 pursuant to a 7#2 ruling o% *) Januar )03,$ The Court o% Ta6 "ppeals grante! the compan @s petition$ The Commissioner %ile! a petition %or certiorari, claiming Cemoran!um Circular 3B3* ()/ Carch )03*) shoul! appl $ (ssue' 8hether the Cemoran!um Circular 3B3* shoul! 'e retroactivel applie!$ )el*' 2evenue 2uling o% *) Januar )03, remains to appl in the case as the compan pai! the ta6 on )4 Carch )0/0$ Cemoran!um Circular 3B3* cannot 'e given retroactive e%%ect in the light o% Section 4*/ (nonB
/$0$tion L$3 ( 2004 ( 42 )
retroactivel o% rulings) o% the ta6 co!e$ The retroactive application o% the Circular -oul! !eprive the compan the su'stantial amount o% P)/*,,+3$0,$ The misstates or omits material %acts %rom his return or # an !ocument re5uire! o% him ' the 7#2, or -here the %acts su'se5uentl gathere! ' the 7#2 are materiall !i%%erent %rom the %acts on -hich the ruling is 'ase!, or -here the ta6pa er acte! in 'a! %aith to allo- the retroactive application o% the circular$ [82] Commissioner vs. 6eg$ Gener$l 6er&7$n*ise GR L-99119 10 ,e-tem#er 1988 "$&ts' Prior to the promulgation o% PD 40*, all importations o% para%%in -a6, irrespective o% 9in! an! nature, -ere su'Aect to /F a!vance sales ta6 on lan!e! costs plus *+F mar9up (Section )34;'< in relation to Section )31 o% the Ta6 Co!e$ 8ith the promulgation o% PD 40*, e%%ective )3 Fe'ruar )0/4, all importation o% para%%in -a6 -ere su'Aect to the speci%ic ta6 impose! un!er Section )4* (i) o% the Ta6 Co!e, instea! o% the %ormer /F sales ta6$ 8hen the issue D-hether importe! cru!e para%%in -a6 -as su'Aect to the speci%ic ta6E -as 'rought to the 7#2 %or clari%ication, then Commissioner &era rule! that onl -a6 use! as high pressure lu'ricant an! microBcr stalline is su'Aect to speci%ic ta6, -hile the rest are su'Aect to the sales ta6$ Thus, Cega .eneral Cerchan!ise %ile! claims %or ta6 re%un! or ta6 cre!it$ "cting Commissioner Plana !enie! the claims in *3 Januar )0//$ (n )) Januar )0/3, ho-ever, Plana grante! the corporation@s claim %or re%un! or cre!it pertaining to the importation ma!e )3 "pril )0/+$ The Corporation proteste! the ta6 assessment o% 3 Ca )0/3, -hich -as !enie! ' the Commissioner$ (ssue' 8hether the )) Januar )0/3 grant (letter) revo9e! the ruling !ate! *3 Januar )0//$ )el*' The letter !ate! )) Januar )0/3 !i! not in an -a revo9e the ruling !ate! *3 Januar )0//, -hich ruling applie! the speci%ic ta6 to -as -ithout !istinction$ The reason Plana remove! in )0/3 the compan @s lia'ilit %or speci%ic ta6 -as 'ecause he -ante! to revo9e his ruling o% *3 Januar )0// 'ut 'ecause the ta6 re%erre! to an importation ma!e 'e%ore *3 Januar )0// (i$e$ )3 "pril )0/+), -hich -as still covere! ' the ruling o% Commissioner &era (ruling o% )4 Ca )0/+)$ [81] Commissioner vs. Court o. /$0 A--e$ls GR 108158 20 2$nu$r% 1995 /7ir* Division ?itug (2)' 4 &on&ur "$&ts' (n ** "ugust )031, E6ecutive (r!er 4) -as promulgate! !eclaring a oneBtime ta6 amnest on unpai! income ta6es, later amen!e! to inclu!e estate an! !onor@s ta6es an! ta6es on 'usiness %or the ta6a'le ears )03) to )003+$ "vailing itsel% o% the amnest , 2(: "utoparts Philippines #nc$ %ile! its Ta6 "mnest 2eturn an! pai! the correspon!ing amnest ta6es !ue$ The Compan re5ueste! that the !e%icienc ta6 notice ()4 "ugust )031) 'e cancelle! an! -ith!ra-n as it has availe! o% the ta6 amnest $ The Commissioner !enie! the re5uest, construing that the amnest coverage inclu!e onl assessments issue! ' the 7#2 a%ter the promulgation o% E(4) an! not to assessments thereto%ore ma!e$ (ssue' 8hether the assessment can -ithstan! e%%ects o% ta6 amnest $ )el*' " ta6 amnest , 'eing a general par!on or intentional overloo9ing ' the state its authorit to impose penalties on persons other-ise guilt o% evasion or violation o% a revenue or ta6 la-, parta9es o% an a'solute %orgiveness or -aiver ' the government itsel% o% its right to collect -hat other-ise -oul! 'e !ue it, an! in this sense, preAu!icial thereto, to give ta6 eva!ers, -ho -ish to relent an! are -illing to re%orm a chance to %or
/$0$tion L$3 ( 2004 ( 41 )
so an! there' 'ecome a part o% the ne- societ -ith a clean slate$ Section 4 o% E( 4) enumerate!, in no uncertain terms, ta6pa ers -ho ma not avail to the amnest grante!$ The compan !oes not %all un!er an o% the e6ceptions$ The a!!e! e6ception urge! ' the Commissioner 'ase! on 2evenue Cemoran!um (r!er 4B3/, %urther restricting the scope o% the amnest , -or9 against the raison !@etre o% E( 4) an! clearl amounts to an alt o% a!ministrative legislation contrar to the man!ate o% the la- -hich the regulation ought to implement$ The rule in the or!er that onl assessments issue! a%ter *) "ugust )031 shall 'e a'ate! is 'e on! the contemplation o% the la-$ [84] Commissioner vs. Court o. A--e$ls GR 119!91 29 August 1999 "irst Division ?itug (2)' 2 &on&ur "$&ts' Fortune To'acco is engage! in the manu%acture o% !i%%erent 'ran!s o% cigarettes, speci%icall DChampionE, D:ope4E, an! DCoreE (-hich are %oreign 'ran!s liste! in the 8orl! To'acco Director as 'elonging to %oreign companies$ Fortune To'acco, ho-ever, change! names o% D:opeE to D>u6ur E an! DCoreE to DPremium CoreE there' removing sai! 'ran!s %rom the %oreign 'ran! categor $ Proo% -as also ma!eI su'mitte! to the 7#2 that DChampionE -as an original Fortune To'acco Corp$ register an! thus a local 'ran!$ 2" /1+4 -as enacte! on ), June )004, lev ing a P+ minimum ta6 on locall manu%acture! cigarettes ta6e! at ++F or e6portation o% -hich is not authorize! ' contract, an! P* minimum ta6 per pac9 on other locall manu%acture! cigarette$ The 7#2 sent the Compan a month later a cop 2evenue Cemoran!um Circular 4/B04 !eclaring D:opeE, DCoreE an! DChampionE as %oreign 'ran!s, an! thus su'Aecting them to ++F as valorem ta6, a revie- o% 2CC 4/B04 -as !enie!$ (ssue' 8hether the 'ran!s ma 'e place! -ithin the scope o% the amen!ator la- (2" /1+4) an! su'Aect then to an increase!, through 2CC 4/B04$ )el*' Prior to the issuance o% 2CC 4/B04, the 'ran!s -ere in the categor o% locall manu%acture! cigarettes not 'earing %oreign 'ran!s, su'Aect to 4+F a! valorem ta6$ 8ithout 2CC 4/B04, the enactment o% 2"/1+4 -oul! not have ne- ta6 rate conse5uences on the compan @s pro!ucts$ #n issuing 2CC 4/B04, the 7#2 legislate! un!er its 5uasiBlegislative authorit an! not simpl interprete! the la-$ 8hen an a!ministrative rule goes 'e on! merel provi!ing %or the means that can %acilitate or ren!er least cum'ersome the implementation o% the la- 'ut su'stantiall a!!s to or increases the 'ur!en o% those governe!$ #t 'ehooves the agenc to accor! at least to those !irectl a%%ecte! a chance to 'e hear!, an! there' 'e !ul in%orme!, 'e%ore that ne- issuance is given the %orce an! e%%ect o% la-$ [85] AB,-CB< Bro$*&$ting vs. Court o. /$0 A--e$ls GR L-52109 12 ;&to#er 1981 "irst Division 6elen&io )errrer$ (2)' 4 &on&ur "$&ts' #n implementing Section 4(') o% the Ta6 Co!e, the Commissioner issue! .eneral Circular &B444$ Pursuant thereto, "7SBC7G 7roa!casting Corp$ !uti%ull -ithhel! an! turne! over to the 7#2 4,F o% S o% the %ilm rentals pai! ' it to %oreign corporations not engage! in tra!e or 'usiness in the Philippines$ The last ear that the compan -ithhel! ta6es pursuant to the Circular -as in )013$ (n */ June )0,3, 2" +44) amen!e! Section *4 (') o% the Ta6 Co!e increasing the ta6 rate %rom 4,F to 4+F an! revising the ta6 'asis %rom Dsuch amountE re%erring to rents, etc$ to Dgross income$E #n )0/), the Commissioner issue! a letter o% assessment an! !eman! %or !e%icienc -ithhol!ing income ta6 %or ears )01+ to )013$ The compan re5ueste! %or reconsi!eration; -here the Commissioner !i! not act upon$
/$0$tion L$3 ( 2004 ( 44 )
(ssue' 8hether 2evenue Cemoran!um Circular 4B/), revo9ing .eneral Circular &B444, ma 'e retroactivel applie!$ )el*' 2ulings or circulars promulgate! ' the Commissioner have no retroactive application -here to so appl them -oul! 'e preAu!icial to ta6pa ers$ :erein ,the preAu!ice the compan o% the retroactive application o% Cemoran!um Circular 4B/) is 'e on! 5uestion$ The compan -as no longer in a position to -ithhol! ta6es !ue %rom %oreign corporations 'ecause it ha! alrea! remitte! all %ilm rentals an! ha! no longer control over them -hen the ne- circular -as issue!$ #nso%ar as the enumerate! e6ceptions are concerne!, the compan !oes not %all un!er an o% them$ [89] (n R= Hi$l&it$ A6 90-9-015-,C 18 ;&to#er 1990 En 7anc, .utierrez Jr$ (J)= )4 concur, ) on leave "$&ts' "mounts -ere claime! ' "tt $ 7ernar!o F$ Lialcit on the occasion o% his retirement$ (n *4 "ugust )00,, a resolution -as issue! ' the Court En 7anc stating that the terminal leave pa o% "tt $ Lialcita receive! ' virtue o% his compulsor retirement can never 'e consi!ere! a part o% his salar su'Aect to the pa ment o% income ta6 'ut %alls un!er the phrase Dother 'ene%its receive! ' retiring emplo ees an! -or9ers,E -ithin the meaning o% Section ) o% PD **, an! is thus e6empt %rom the pa ment o% income ta6$ That the mone value o% his accrue! leave cre!its is not part o% his salar is 'uttesse! ' Section 4 o% PD 03+, -hich it ma9es it clear that the actual service is the perio! o% time %or -hich pa has 'een receive!, e6clu!ing the perio! covere! ' terminal leave$ The Commissioner %ile! a motion %or reconsi!eration$ (ssue' 8hether terminal leave pa is e6empt %rom ta6; as -ell as other amounts claime! herein$ )el*' "ppl ing Section )* (c) o% Common-ealth "ct )31, as incorporate! into 2" 11,, an! Section *3 (c) o% the %ormer la-, the amount receive! ' "tt $ Lialcita as a result o% the converson o% unuse! leave cre!its, commonl 9no-n as terminal leave, is applie! %or ' an o%%icer or emplo ee -ho retires, resigns, or is separate! %rom the service through no %ault o% his o-n$ Since the terminal leave is applie! %or a%ter the severance o% the emplo ment, terminal pa is no longer compensation %or services ren!ere!$ #t cannot 'e vie-e! as salar $ Further, the terminal leave pa ma also 'e consi!ere! as a retirement gratuit , -hich is also another e6clusion %rom gross income as provi!e! %or in Section *3 ('), / (%) o% the Ta6 Co!e$ The *4 "ugust 2esolution ("C 0,B1B,)+BSC), ho-ever, speci%icall applies onl to emplo ees o% the Ju!iciar -ho retire, resign or are separate! through no %ault o% their o-n$ The resolution cannot 'e ma!e to appl to otehr government emplo ees, a'sent an actual case or controvers , as that -oul! 'e in principle an a!visor opinion$ [8!] Commissioner vs. Court o. A--e$ls GR 99019 1! ;&to#er 1991 Secon! Division, Pa!illa (J)= * concur, ) on leave "$&ts' E%ren Castane!a retire! %rom government service as 2evenue "trtache in the Philippine Em'ass in >on!on, Englan! on ), Decem'er )03* un!er the provisiions o% Section )* (c) o% Common-ealth "ct )31, as amen!e!$ ?pon retirement, he receive!, among other 'ene%its, terminal leave pa %rom -hich the Commissioner -ithhel! P)*,++/$)4, allege!l representing income ta6 thereon$ Castane!a claime! %or a
/$0$tion L$3 ( 2004 ( 45 )
re%un!$ (ssue' 8hether terminal leave pa is su'Aect to -ithhol!ing income ta6$ )el*' Terminal >eave Pa receive! ' a government o%%icial or emplo ee is not su'Aect to -ithhol!ing income ta6$ #n the e6ercise o% soun! personnel polic , the .overnment encourages unuse! leaves to 'e accumulate!$ The .overnment recognizes that retirement pa %or pu'lic servants is less than generous, i% not meager or scrimp $ Terminal leave pa ments are given thus not onl at the same time 'ut also %oor the same polic consi!erations governing retirement 'ene%its$ Got 'eing part o% the gross salar or income o% a government o%%icial or emplo ee 'ut a retirement 'ene%it, terminal leave pa is not su'Aect to income ta6$ [88] Borromeo vs. Civil ,ervi&e Commission GR 99012 11 2ul% 1991 En 7anc, .utierrez Jr$ (J)= )+ concur "$&ts' Jesus G$ 7orromeo -as the Chairman o% the Civil Service Commission until his retirement on ) "pril )031$ #n )033, he -rote the Commission on "u!it re5uesting an opinion -hether the mone value o% the terminal leave o% retire! Constitutional Commission mem'ers shoul! inclu!e the allo-ances receive! at the time o% retirement$ 7orromeo re5ueste! %or the pa ment o%terminal leave !i%%erential representing the unpai! Cost o% >iving "llo-ance (C(>") an! 2epresentation an! Transportation "llo-nace (2"T") amounting to P))),**0$,4$ The Department o% 7u!get an! Canagement !enie! the re5uest$ (ssue' 8hether the terminal leave pa o% the %ormer CSC Chairman shoul! 'e compute! on the 'asis o% the highest monthl salar plus C(>" an! 2"T", or solel on the 'asis o% highest monthl salar -ithout sai! allo-ances$ )el*' "n application %or terminal leave is an application %or a Dcommutation o% leave cre!itsE an! not a Dcommutation o% salar E as the o%%icer or emplo ee has alrea! severe! his conncection -ith his emplo er an! is no longer -or9ing$ The cash value o% his accumulate! leave cre!its shoul! not 'e treate! as compensation %or services ren!ere! at that time$ #nasmuch as terminal leave pa ments are given not onl at teh same time 'ut also %or the same polic consi!erations governing retirement 'ene%its, the pa ments there%ore shoul! inclu!e C(>" an! 2"T"$ Section *31 o% the 2evise! "!ministrative Co!e is not applica'le$ #t cannot 'e construe! as limiting the 'asis o% the computation o% terminal leave pa to monthl salar onl $ [89] =sso ,t$n*$r* =$stern vs. Commissioner GR 28508-9 ! 2ul% 1989 First Division, Cruz (J)= 4 concur "$&ts' ESS( !e!ucte! %rom its gross income %or )0+0, as part o% its or!inar an! necessar 'usiness e6penses, the amount it ha! spent %or !rilling an! e6ploration o% its petroleum conscessions$ The Commissioner !isallo-e! the claim on the groun! that the e6penses shoul! 'e capitalize! an! might 'e -ritten o%% as a loss onl -hen a D!r holeE shoul! result$ :ence, ESS( %ile! an amen!e! return -here it as9e! %or the re%un! o% P4*4,*/, ' reason o% its a'an!onment, as !r holes, o% several o% its oil -ells$ #t also claime! as or!inar an! necessar e6penses in the same return amount representing margin %ees it ha! pai! to the Central 7an9 on its pro%it remittances to its Ge- Jor9 (%%ice$ (ssue' 8hether the margin %ees ma 'e consi!ere! or!inar an! necessar e6penses -hen pai!$
/$0$tion L$3 ( 2004 ( 49 )
)el*' For an item to 'e !e!ucti'le as a 'usiness e6pense, the e6pense must e'e or!inar an! necessar ; it must 'e pai! or incurre! -ithin the ta6a'le ear; an! it must 'e pai! or incurre! in carr ing on a tra!e or 'usiness$ #n a!!ition, the ta6pa rer must su'stantiall prove ' evi!ence or recor!s teh !e!uctions claime! un!er la-, other-ise, the same -ill 'e !isallo-e!$ There has 'een no attempt to !e%ine Dor!inar an! necessar E -ith precision$ :o-ever, as gui!ing principle in the proper a!Au!ication o% con%licting claims, an e6penses is consi!ere! necessar -here the e6pen!iture is appropriate an! help!ul in the !evelopment o% the ta6pa er@s 'usiness$ #t is or!inar -hen it connotes a pa ment -hich is normal in relation to the 'usiness o% the ta6pa er an! the surroun!ing circumstances$ "ssuming that the e6pen!iture is or!inar an! necessar in the operation o% the ta6pa er@s 'usiness; the e6pen!iture, to 'e an allo-a'le !e!uction as a 'usiness e6pense, must 'e !etermine! %rom the nature o% the e6pen!iture itsel%, an! on the e6tent an! permanenc o% the -or9 accomplishe! ' the e6pen!iture$ :erein, ESS( has not sho-n that the remittance to the hea! o%%ice o% part o% its pro%its -as ma!e in %urtherance o% its o-n tra!e or 'usiness$ The petitioner merel presume! that all corporate e6penses are necessar an! appropriate in the a'sence o% a sho-ing that the are illegal or ultra vires; -hich is erroneous$ Claims %or !e!uctions are a matter o% legislative grace an! !o not turn on mere e5uita'le consi!erations$ [90] Gu$gu$ =le&tri& Lig7t :l$nt Co. vs. Colle&tor GR L-21911 24 A-ril 199! En 7anc, 7engzon JP (J)= 3 concur "$&ts' .uagua Electric >ight Plant Co$ is a grantee o% municipal %ranchises ' the municpal councils o% .uagua an! Se6moan, Pampanga$ #t reporte! a gross income o% P),)44,,,4$44 %or )04/ go )0+1 an! pai! thereon a %ranchise ta6 o% P+1,114$0/ compute! at +F in accor!ance -ith Section *+0 o% the Ta6 Co!e$ 7elieving that it shoul! pa a lo-er %ranchise ta6 as provi!e! ' its %ranchises, it %ile! a claim %or re%un! on *+ Carch )0+/ %or overpa ment$ The Commissioner !enie! the re%un! o% %ranchise ta6 %or the perio! prior to the 4th 5uarter o% )0+) on the groun! that the right to re%un! has prescri'e!$ The Commissioner allo-e! the re%un! o% P)1,+04$3/$ >ater ho-ever, !ue to the hol!ing in :oa :in Co$ vs$ Davi!, the Commissioner assesse! against the compan !e%icienc %ranchise ta6 su'Aect to a *+F surcharge, an! there' inclu!ing the amount previousl allo-e! ' the Commissioner to 'e re%un!e!$ (ssue' 8hether the ta6 Dre%un!e! erroneousl E shoul! 'e impose! against the compan , or i% the right to recover has prescri'e!$ )el*' .uagua Electric -oul! 'e pa ing the same !e%icienc ta6 %or the perio! o% ) Januar to 4, Govem'er )0+1 i% it is re5uire! to pa P)1,+04$3/ in a!!ition to the sum o% P)0,043$)*, the !i%%erence 'et-een the ta6 compute! at +F pursuant to Section *+0 o% the Ta6 Co!e an! the %ranchise ta6 pai! at )F an! *F un!er the %ranchise$ Further, ' insisting on the pa ment o% P)1,+04$3/ (Septem'er )0+) to Govem'er )0+1), the Commissioner is tr ing to collect the same !e%icienc ta6 -here the right to assess the same, accor!ing to him, has 'een lost ' prescription$ The !eman! on the ta6pa er to pa the sum o% P)1,+04$3/ is in e%%ecct an assessment o% !e%icienc %ranchise ta6$ The right to assess, thus, an! to collect is governe! ' Section 44) o% the Ta6 Co!e rather than ' "rticle ))4+ o% the Civil Co!e, as a special la- prevails over a general la-$ .uagua Electric is a'solve! %rom the pa ment o% P)1,+04$3/$ [91] Re-u#li& vs. Lim$&o $n* De Gu+m$n Commer&i$l Co. GR L-11081 11 August 1992 En 7anc, Pare!es (J)= 3 concur, * too9 no part
/$0$tion L$3 ( 2004 ( 4! )
"$&ts' #n )041, >imaco N De .uzman Co$ -as engage! in the importation o% cigarettes$ To guarantee pa ment o% revenue ta6es, the compan an! the &isa an Suret an! #nsurance Corp$$ as suret , e6ecute! * importer 'on!s$ (n */ June )041, the compan %ile! -ith the 7ureau o% Customs entr papers covering shipment o% * million DSpu!E cigarettes it ha! importe! %rom Ge- Jor9$ the speci%ic ta6 !ue thereon amounte! to P1,,,,$ The compan , through its agentI'ro9er J$ ($ :iponia, pai! the 7ureau o% Customs the ta6 -ith P),,, in cash an! P+,,,, in a PG7 Chec9 on )+ Jul )041$ The cigarettes -ere release! to the compan 'ut the chec9 'ounce!$ (n )/ June )043, the Collector o% #nternal 2evenue !eman!e! the pa ment o% the !e%icienc speci%ic ta6$ The amount remaine! unpai!$ (n )+ "pril )0+), the compan re5ueste! that action 'e !e%erre! as it inten!s to settle the matter amica'l -ith the 7#2$ The 2epu'lic %ile! a complaint %or the %or%eiture o% the 'on!s, an! the pa ment o% the sum o% P+,,,, plus interest$ The compan invo9e! the !e%ense o% estoppel an! prescription$ (ssue' 8hether the action has prescri'e!$ )el*' ?n!er Section 44* (c) o% the Ta6 Co!e, the collection o% the ta6 ' summar metho! or ' Au!icial action shall 'e e%%ecte! -ithin + ears a%ter the assessment o% the ta6$ To assess means to impose a ta6; to charge -ith a ta6; to !eclare a ta6 to 'e pa a'le; to apportion a ta6 to 'e pai! or contri'ute!; to %i6 a rate, to %i6 or settle a sum to 'e pai! ' -a o% ta6; to set, %i6 or charge a certain sum to each ta6pa er; to settle, !etermine or %i6 the amount o% ta6 to 'e pai!$ :erein, the assessment -as ma!e on )/ June )043 (-hen a letter o% !eman! %or the amount o% the ru''er chec9 -as sent to the compan ) an! not on )+ Jne )041 (the !ate o% pa ment)$ Even assuming that the latter !ate is the !ate o% assessment, the action is still not 'arre! ' the statute o% limitations as teh statute -as suspen!e! -hen the compan ac9no-le!ge! the !e't in -riting in "pril )0+), an! re5ueste! the !e%erment o% the Au!icial action to 'e ta9en ' the .overnment to-ar!s the collection o% the o'ligation, so that the compan coul! ma9e representations -ith the C(llector to settle the matter amica'l $ Prescription has not set in$ [92] (nter-rovin&i$l Auto#us Co. vs. Colle&tor o. (ntern$l Revenue GR L-9!41 11 2$nu$r% 1959 First Division, >a'ra!or (J)= 3 concur "$&ts' #nterprovincial "uto'us Co$ is a common carrier engage! in transporting passengers an! %reight ' means o% TP? 'uses in Cisamis (cci!ental an! Gorthern Lam'oanga$ The compan -as not a'le to preserve the receipt stu's %rom )041 to )043 'ut -as a'le to preserve those %or )040 an! )04,$ The provincial revenue agent %or Cisamis (cci!ental ascertaine! the num'er o% receipts ' re%erring to the con!uctor@s !ail report %or the sai! perio! )041 to )043$ From there, the ta6 assesse! amounte! to P/,//1$*4, -hich -as collecte! %rom the compan @s !eposit in Philippine Gational 7an9$ The compan !eman!e! the re%un! o% the sai! amount, 'ut -hich -as !enie!$ (ssue' 8hether the %reight receipts -ere actuall issue! %or more than P+ each, to -arrant the assesse! ta6 o% P/,//1$*4$ )el*' 2eceipts must have 'een issue! %or valua'le cargo to insure against the loss o% -hich, unli9e cargo han!carrie! ' to-n%ol9s an! %armers -here the latter avoi! to secure receipts thereto$ Such %in!ing ' the revenue agent -as not controverte!$ #n actions %ro the recover o% ta6es assesse! an! collecte!, the ta6pa er has the 'ur!en o% proving that the assessment is illegal as all presumptions are in %avor o% the correctness o% ta6 assessments$ The goo! %aith o% ta6 assessors an! the vali!it o% their actions are presume!$ "s such rule, on the 'ur!en o% proo%, has not 'een complie! -ith, the action %or recover must 'e !enie!$
/$0$tion L$3 ( 2004 ( 48 )
[91] /$n Gu$n vs. Court o. /$0 A--e$ls GR L-219!9 2! A-ril 199! En 7anc, 7engzon JP (J)= 3 concur "$&ts' #n )04/, Tan .uan an! Sia >in, Chinamen, organize! an! registere! the Philippine Surplus Compan , a general partnership$ " general partnership is e6empt %rom income ta6 although it is re5uire! to %ile an income ta6 return$ Pro%its, -hether !istri'ute! or not, are consi!ere! income o% the partners$ "cting upon a con%i!ential report, ho-ever, that the compan poste! %ictitious e6pesnes in its 'oo9s to avoi! ta6es, the 7#2 investigate! in )0+4 the 'oo9s o% the partnership an! !iscovere! that the e6penses -ere not covere! ' receipts, that the names o% pa ees -ere erase!, an! that the pa ees !i! not report the sums in 5uestion in their income ta6$ The 7#2 !isallo-e! e6pense !e!uctions %or the ear )043 amounting to P*,1,43, %or 'eing %ictitious$ Sai! sum -as treate! as income o% the in!ivi!ual partners, an! thus, the 7#2 assesse! P+,,0+1$+/ as !e%icienc income ta6 against Tan .uan$ Tan .uan appeale!$ (ssue' 8hether the !e!uction claime! ' the compan as 'usiness income shoul! 'e allo-e!, an! thus a'solve Tan .uan o% the assesse! ta6 lia'ilit $ )el*' The Commissioner@s %in!ing on the %acts constituting %rau!, proven, an! %oun! esta'lishe! ' the Court o% Ta6 "ppeals, -as not re'utte! ' the ta6pa er$ Tan .uan !i! not present an evi!ence to !isprove the %in!ings that the e6penses are %ictitious; consi!ering that the investigation on Tan .uan@s lia'ilit -as ma!e prior to the e6piration o% the +B ear perio! to preserve an! 9eep receipts as set %gorth in Section 44/ o% the Ta6 Co!e$ "s the !etermination o% the Commissioner is presume! correct, it 'ehooves the ta6pa ers to re'ut such presumption$ For %ailure to overcome the 'ur!en, Tan .uan or the compan cannot claim the e6penses as !e!uction %rom gross income$ [94] D$%rit vs. Cru+ GR L-19910 29 ,e-tem#er 1988 First Division, .anca co (J)= 4 concur, ) too9 no part "$&ts' Cecilia Teo!oro Da rit, Tori'ia Teo!oro Castane!a, Pru!encio Teo!or, Francisco Teo!oro an! Jose%ina Teo!oro Tiongson are legitimate chil!ren an! heirs o% the !ecease! spouses Carta an! Tori'io Teo!oro -ho !ie! intestate on ) Jul )01+ an! 4, "ugust )01+$ The heirs separatel %ile! estate an! inheritance ta6 returns %or the estates o% the spouses -ith the 7#2$ #n )0/*, the 7#2 issue! !e%icienc estate an! inheritance ta6 assessments %or P),11*,,/*,44 an! P),/4/,/0,$04 respectivel %or the Estate o% Dona Carta an! P),+4*,*04$,) am! P+)3,4+3$/*, respectivel %or the Estate o% Don Tori'io$ The heirs as9e! %or reconsi!eration as the assessment -as allege!l contrar to la- an! not supporte! ' su%%icient evi!ence$ #n a ta6 return !ate! 4) Carch )0/4, Da rit !eclare! an a!!itional amount o% P4,1++,+0+$/3 as part o% the estates o% the Teo!oro spouses$ The 7#2 issue! ta6 pa ment acceptance or!ers, as the heirs an! estate have pai! a total o% P*3+,,41$33$ #n )0/4, the Commissioner %ile! a motion %or allo-ance o% claim against the estates, an! %or an or!er o% pa ment o% ta6es 'e%ore the trial court, pra ing that Da rit 'e or!ere! to pa the 7#2 the sum o% P1,4/,,40)$0) plus surcharges an! interest$ Da rit %ile! oppositions conten!ing that the ta6es have 'een settle! accor!ing to the provisions o% PD *4, as amen!e! ' PD 1/$ (ssue' 8hether the assessment is %inal, e6ecutor , an! !eman!a'le$ )el*' The act o% the Commissioner, in %iling an action %or allo-ance o% the claim %or estate an! inheritance ta6es, ma 'e construe! as a !enial o% the ta6pa ers@ re5uest %or reconsi!eration$ From the !ate o% receipt o%
/$0$tion L$3 ( 2004 ( 49 )
the cop o% the Commissioner@s letter %or collection o% ta6es, the ta6pa ers must contest an! !ispute the same, an! upon !enial thereo%, the have a perio! o% 4, !a s to appeal the case to the Court o% Ta6 "ppeals$ Ta6 assessment ma!e ' ta6 e6aminers are presume! correct an! ma!e in goo! %aith$ " ta6pa er has to prove other-ise$ Failure o% the ta6pa ers to appeal to the Court o% Ta6 "ppeals in !ue time ma!e the assessments %ina, e6ecutor an! !eman!a'le$ [95] Colle&tor vs. Beni-$%o GR L-11959 11 2$nu$r% 1992 En 7anc, Dizon (J)= 3 concur, ) too9 no part "$&ts' "l'erto 7enipa o is the o-ner o% the >ucena Theater in >ucena, Kuezon$ #n )0+4, the internal revenue agent investigate! 7enipa o@s ta6 lia'ilit %or the perio! o% "ugust )0+* to Septem'er )0+4$ The e6aminer recommen!e! a !e%icienc ta6 assessment in the sum o% P)),)04$4+ inclusive o% *+F surcharge plus a suggeste! compromise penalt o% P0,,$,, 'ase! on the conclusion that 7enipa o sol! * ta6B%ree *,c ticlets %rau!ulentl in or!er to avoi! pa ment o% amusement ta6 prescri'e! ' Section *1, o% the Ta6 Co!e ('ase! on a reverse ratio o% a!ult to chil!ren; 4=) in )040 to )0+), an! )=4 %or perio! in 5uestion; an! average atten!ance %or the past ears)$ 7enipa o proteste!, claiming that the %in!ings o% the e6aminers are mrere presumptions an! conclusions, !evoi! o% %in!ings o% %act o% allege! %rau!ulent practices ' him$ (ssue' 8hether there is evi!ence in the recor! to sho- 7enipa o committe! the allege! act to cheat or !e%rau! the .overnment$ )el*' "n assessment %i6es an! !etermines the ta6 lia'ilit o% a ta6pa er$ #n or!er to stan! the test o% Au!icial scrutin , the assessment must 'e 'ase! on actual %acts$ The presumption o% correctness o% assessment, 'eing a mere presumption, cannot 'e ma!e to rest on another presumption, no matter ho- reasona'le or logical such ma 'e; i$e$ that the circumstances in )0+* an! )0+4 are presume! to 'e the same as those e6isting in )040 to )0+), an! Jul )0++$ There are no su'stantial %acts to support the assessment in 5uestion$ Geither -as there an proo% o% the %rau! allege!l committe!$ Frau! is a serious charge, an! to 'e sustaine!, it must also 'e supporte! ' clear an! convincing proo%$ [99] 6er$l&o ,e&urities Cor-. vs. ,$vell$no GR L-19181 21 ;&to#er 1982 First Division, Teehan9ee (J)= 4 concur, ) too9 no part "$&ts' #n )01/, the late Juan .$ Caniago su'mitte! to the Commissioner con%i!ential !enunciation against the Ceralco Securities Corp$ %or ta6 evasion %or not having pai! income ta6 on *+F o% the !ivi!en!s it receive! %rom the Canila Electric Co$ %or ears )01* to )011$ The Commissioner cause! the investigation o% the !enunciation an! %oun! that no !e%icienc corporate ta6 -as !ue %rom Ceralco Securities$ Caniago -as in%orme! o% the %in!ings$ The Secretar o% Finance sustaine! the Commissioner@s action$ Caniago %ile! a petition %or man!amus against the Commissioner so as to compel it to impose the allege! !e%icienc ta6 assessment against Ceralco Securities an! to a-ar! him the correspon!ing in%ormer@s a-ar!$ (ssue' 8hether the Commissioner ma 'e compelle! to impose the allege! !e%icienc ta6 assessment$ )el*' Can!amus onl lies to en%orce the per%ormance o% a ministerial act or !ut an! not to control the per%ormance o% !iscretionar po-er$ Can!amus ma not 'e ma!e against teh Commissioner to compel him to impose a ta6 assessment not %oun! ' him to 'e !ue or proper, %or that -oul! 'e tantamount to a usurpation o%
/$0$tion L$3 ( 2004 ( 50 )
e6ecutive %unctions$ Purel a!ministrative an! !iscretionar %unctions ma not 'e inter%ere! -ith ' the Courts$ The !iscretionar po-er veste! in the proper e6ecutive o%%icial, in the a'sence o% ar'itrariness or grave a'use so as to go 'e on% the statutor authorit , is not su'Aect to the contrar Au!gment or control o% others$ [9!] Commissioner vs. A#$* GR L-1992! 2! 2une 1998 En 7anc, Castro (J)= 3 concur "$&ts' "rman!o "'a! (2epu'lic "lcohol Distiller ) is a manu%acturer an! seller o% !enature! alcohol$ (n )4 "ugust )0+3, he applie! %or the !enaturation o% 44,,,, gauge liters o% recti%ie! alcohol$ (n *) "ugust )0+3, a !enaturing committee %rom the 7#2 supervise! the !enaturation o% the alcohol in "'a!@s -arehouse in Caloocan, 2izal $The alcohol -as certi%ie! to 'e !enature! ' the Committee$ Domestic alcohol, -hen !enature! an! use! %or in!ustrial purposes, is e6empt %rom pa ment o% speci%ic ta6$ #n a surprise inspection on *+ "ugust )0+3, ho-ever, the 7#2 inspectors %oun! that the alcohol has not 'een completel !enature! an! still ma 'e use! %or compoun!ing li5uors$ The team also !iscovere! that onl ),,43, gauge liters -ere le%t$ "'a! -as ma!e lia'le %or speci%ic ta6$ (ssue' 8hether the government is estoppe! ' mista9es o% its agents$ )el*' The 7#2 !enaturing committe! remisse! in its per%ormance o% its !uties as it certi%ie! the alcohol to 'e !enature!, -here it -as %oun! in a su'se5uent e6amination that it is not completel !enature!$ #t is a settle! rule in the per%ormance o% its governmental %unctions, the State cannot 'e estoppe! ' the neglect or omission o% its agents$ For i% other-ise hel!, it -oul! 'e eas %or manu%acturers to eva!e lia'ilit on the prete6t that some government o%%icial has certi%ie! to the 5ualit o% their pro!ucts (an! possi'l the ta6 e6emption resulting there%rom) an! that the have ever right to rel on this certi%icate$ "'a! -as or!ere! to pa P)0,4,*$*, as speci%ic ta6, -ith interest thereon %rom the !ate o% last sale$ [98] Commissioner vs. :ro&ter D G$m#le :7ili--ines GR L-99818 15 A-ril 1988 Secon! Division, Paras (J) "$&ts' Procter an! .am'le Philippines is a -holl o-ne! su'si!iar o% Procter an! .am'le ?S" (PCCB ?S"), a nonBresi!ent %oreign corporation in the Philippines, not engage! in tra!e an! 'usiness therein$ PCCB ?S" is the sole sharehol!er o% PCC Philippines an! is entitle! to receive income %rom PCC Philippines in the %orm o% !ivi!en!s, i% not rents or ro alties$ For the ta6a'le ears )0/4 an! )0/+, PCC Philippines %ile! its income ta6 return an! also !eclare! !ivi!en!s in %avor o% PCCB?S"$ #n )0//, PCC Philippines, invo9ing the ta6Bsparing provision o% Section *4 (') as the -ithhol!ing agent o% the Philippine .overnment -ith respect to !ivi!en! ta6es pai! ' PCCB?S", %ile! a claim %or the re%un! o% *, percentage point portion o% the 4+ percentage -hole ta6 pai! -ith the Commissioner o% #nternal 2evenue$ (ssue' 8hether PCC Philippines is entitle! to the )+F pre%erential ta6 rate on !ivi!en!s !eclare! an! remitte! to its parent corporation$ )el*' The issue raise! is one ma!e %or the %irst time 'e%ore the Supreme Court$ ?n!er the same un!erl ing principle o% prior e6haustion o% a!ministrative reme!ies, on the Au!icial level, issues not raise! in the lo-er court cannot 'e generall raise! %or the %irst time on appeal$ Gonetheless, it is a6iomatic that the state can
/$0$tion L$3 ( 2004 ( 51 )
never 'e allo-e! to Aeopar!ize the government@s %inancial position$ The su'mission o% the Commissioner that PCC Philippines is 'ut a -ithhol!ing agent o% the government an! there%ore cannot claim reim'ursement o% allege! overpai! ta6es, is completel meritorious$ The real part in interest is PCCB?S", -hich shoul! prove that it is entitle! un!er the ?S Ta6 Co!e to a ?S Foreign Ta6 Cre!it e5uivalent to at least *, percentage points spare! or -aive! as other-ise consi!ere! or !eeme! pai! ' the .overnment$ :erein, the claimant %aile! to sho- or Austi% the ta6 return o% the !ispute! )+F as it %aile! to sho- the actual amount cre!ite! ' the ?S .overnment against the income ta6 !ue %rom PCCB?S" on the !ivi!en!s receive! %rom PCC Philippines; to present the income ta6 return o% PCCB?S" %or )0/+ -hen the !ivi!en!s -ere receive!; an! to su'mit !ul authenticate! !ocument sho-ing that the ?S government cre!ite! teh *,F ta6 !eeme! pai! in the Philippines$ [99] Cit% Lum#er vs. Domingo GR L-18911 10 2$nu$r% 1994 En 7anc, >a'ra!or (J)= 3 concur, * too9 no part "$&ts' The Commissioner assesse! on an a!!itional income against Cit >un'er #nc$, representing minor !e!uctions %rom allege! e6penses on un!isclose! sales o% pl -oo!, nails, an! .# sheets amounting to P/,0,*$,/ an! on a cash cre!it 'alance o% P/,301$3,$ The compan claims that the pl -oo! an! the .# sheets -ere actuall lost in a %ire occuring in the cit an! thatthe cre!it cash 'alance is a loan secure! ' it$ #t appears that the regional !irector revie-ing the case re!uce! the assessment %rom P+,,*3$,, to P)/1$ Still, the compan allege! that the assessment is violative o% Cemoran!um (r!er &B144 (o% 4 Jul )0+1), issue! ' the Commissioner, granting 2egional Directors authorit to close ta6 cases involving !e%icienc assessments not e6cee!ing P),,,,, in ta6es an! penalties$ (ssue' 8hether the assessment violates Cemoran!um (r!er &B144$ )el*' The or!er in 5uestion -as applica'le onl to su'or!inace o%%icers o% the 7#2 an! coul! not 'in! the Commissioner himsel%, -ho has 'een entruste! ' la- to ma9e %inal assessments$ The Commissioner cannot !elegate this po-er to ma9e a %inal assessment to his su'or!inate$ Delegatus nor potest !elegare; i$e$ the peroson to -hom an o%%ice or !ut is !elegate! cannot la-%ull !evolve the !ut on another$ [100] ?ill$min vs. Court o. /$0 A--e$ls GR L-11519 11 ;&to#er 1990 Secon! Division, 7autista "ngelo (J)= / concur, ) concur in result "$&ts' "n assessment -as issue! ' the Provincial 2evenue agent o% (riental Cin!oro against Tomas 7$ &illamin$ #n )0++, &illamin re5ueste! reconsi!eration o% the assessment, 'ut -hich -as !enie! ' the Collector o% #nternal 2evenue, through the "cting Chie% o% the "ssessment Department on / June )0++$ (ssue' 8hether the letter signe! ' contemplate! ' la-$ the "cting Chie% o% the "ssessment Department is the !ecision
)el*' The issue is o% no moment consi!ering that Cemoran!um (r!er &B1,4 ()+ Carch )0+1) o% the 7ureau o% #nternal 2evenue, -hich authorizes sai! o%%icial ("cting Chie% o% "ssessment Department) to sign letters o% !eman! involving assessment in 'ehal! o% the Collector o% #nternal 2evenue$ Coreover, the su'se5uent letters signe! ' the Collector a%%irming an! uphol!ing the correctness o% the assessment ma!e ' his "ssessment
/$0$tion L$3 ( 2004 ( 52 )
Department constitutes evi!ent proo% that the o%%icial -ho signe! the letter o% / June )0++ -as !ul authorize! to !o so$ [101] ,% :o vs. Court o. /$0 A--e$ls GR L-81449 18 August 1988 Secon! Division, Sarmiento (J)= 4 concur "$&ts' 7oni%acio S Po is the -i!o- o% the late Po 7ien Sing, (-ho !ie! on / Septem'er )03,)$ #n the ta6a'le ears )014 to )0/*, the !ecease! Po 7ien Sing -as the sole proprietor o% Silver Cup 8ine Factor (Talisa , Ce'u), an! -as engage! in the 'usiness o% manu%acture an! sale o% compoun!e! li5uors, using alcohol an! other ingre!ients as ra- materials$ (n the 'asis o% a !enunciation against Silver Cup, the Secretar o% Finance !irecte! the FinanceB7#2BG7# team to investigate$ Silver Cup -as re5uire! to pro!uce accounting recor!s an! other relate! !ocuments %or the e6amination o% the team$ Po 7ien Sing %aile! to !o so$ This prompte! the team to enter the %actor 'o!ega o% Silver Cup an! seize !i%%erent 'ran!s, consisting o% ),+++ cases o% alcohol pro!ucts$ (n the 'asis o% the team@s report o% investigation, the Commissioner assesse! Po 7ien Sing !e%icienc income ta6 %or )011 to )0/, in thhe amount o% P/,)+4,13+$)1 an! %or !e%icienc speci%ic ta6 %or * Januar )014 to )0 Januar )0/* in the amount o% P+,+0+,,,4$13$ Po 7ien Sing proteste! the assessment$ (ssue' 8hether the assessment have vali! an! legal 'ases$ )el*' Section )1 (') o% the Gational #nternal 2evenue Co!e o% )0// is speci%ic an! clear$ The rule on the D'est evi!ence o'taina'leE applies -hen a ta6 report re5uire! ' la- %or the purpose o% assessment is not availa'le or -hen the ta6 report is incomplete or %rau!ulent$ :erein, the persistent %ailure o% Po 7ien Sing an! 7oni%acia S Po to present their 'oo9s o% accounts %or e6amination %or the ta6a'le ears involve! le%t the Commissioner no other legal option e6cept to resort to the po-er con%erre! upon him un!er Section )1 o% the Ta6 Co!e$
/$0$tion L$3 ( 2004 ( 51 )

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