SORIANO ET AL., vs.

SECRETARY OF FINANCE and the COMMISSIONER OF

INTERNAL REVENUE
G.R. No. 184450, January 24, 2017
EN BANC, SERENO, CJ
FACTS:

Jaime N. Soriano et al. primarily assail Section 3 of RR 10-2008 providing for the
prorated application of the personal and additional exemptions for taxable
year 2008 to begin only effective 6 July 2008 for being contrary to Section 4 of
Republic Act No. 9504.

Secretary of Finance and the Commissioner of Internal Revenue argue that

the prorated application of the personal and additional exemptions under RR
10-2008 is not "the legislative intendment in this jurisdiction. They stress that
Congress has always maintained a policy of "full taxable year treatment" as
regards the application of tax exemption laws. They allege further that R.A.
9504 did not provide for a prorated application of the new set of personal
and additional exemptions.

ISSUE: Whether the increased personal and additional exemptions provided

by R.A. 9504 should be applied to the entire taxable year 2008 or prorated,
considering that R.A. 9504 took effect only on 6 July 2008.

DECISION: The personal and additional exemptions established by R.A. 9504

should be applied to the entire taxable year 2008

The prorated application of the new set of personal and additional

exemptions for the year 2008, which was introduced by respondents, cannot
even be justified under the exception to the canon of non-delegability; that
is, when Congress makes a delegation to the executive branch. The
delegation would fail the two accepted tests for a valid delegation of
legislative power; the completeness test and the sufficient standard test. The
first test requires the law to be complete in all its terms and conditions, such
that the only thing the delegate will have to do is to enforce it. The sufficient
standard test requires adequate guidelines or limitations in the law that map
out the boundaries of the delegate's authority and canalize the delegation.

In this case, respondents went beyond enforcement of the law, given the
absence of a provision in R.A. 9504 mandating the prorated application of
the new amounts of personal and additional exemptions for 2008. Further,
even assuming that the law intended a prorated application, there are no
parameters set forth in R.A. 9504 that would delimit the legislative power
surrendered by Congress to the delegate. In contrast, Section 23(d) of the
1939 Tax Code authorized not only the prorating of the exemptions in case of
change of status of the taxpayer, but also authorized the Secretary of
Finance to prescribe the corresponding rules and regulations.
 SOUTHERN LUZON DRUG CORPORATION VS. THE DEPARTMENT OF SOCIAL
WELFARE AND DEVELOPMENT, ET AL.
G.R. No. 199669, April 25, 2017
EN BANC, REYES, J
FACTS:

On February 26, 2004, then President Gloria Macapagal-Arroyo signed R.A.

No. 9257, amending some provisions of R.A. No. 7432. The new law retained
the 20% discount on the purchase of medicines but removed the annual
income ceiling thereby qualifying all senior citizens to the privileges under the
law. Further, R.A. No. 9257 modified the tax treatment of the discount granted
to senior citizens, from tax credit to tax deduction from gross income,
computed based on the net cost of goods sold or services rendered.

The Southern Luzon Drug Corporation argues that R.A. Nos. 9257 and 9442
are violative of the equal protection clause in that it failed to distinguish
between those who have the capacity to pay and those who do not, in
granting the 20% discount. R.A. No. 9257, in particular, removed the income
qualification in R.A. No. 7432 of'₱60,000.00 per annum before a senior citizen
may be entitled to the 20o/o discount.

ISSUE:

Whether the CA seriously erred on a question of substance when it ruled that

the 20°/o sales discount for senior citizens and PWDs does not violate the
petitioner's right to equal protection of the law.

DECISION:

"The equal protection clause is not infringed by legislation which applies only
to those persons falling within a specified class. If the groupings are
characterized by substantial distinctions that make real differences, one class
may be treated and regulated differently from another." For a classification
to be valid, (1) it must be based upon substantial distinctions, (2) it must be
germane to the purposes of the law, (3) it must not be limited to existing
conditions only, and (4) it must apply equally to all members of the same
class.

To recognize all senior citizens as a group, without distinction as to income, is

a valid classification. The Constitution itself considered the elderly as a class
of their own and deemed it a priority to address their needs. When the
Constitution declared its intention to prioritize the predicament of the
underprivileged sick, elderly, disabled, women, and children, it did not make
any reservation as to income, race, religion or any other personal
circumstances. It was a blanket privilege afforded the group of citizens in the
enumeration in view of the vulnerability of their class.
 VISAYAS GEOTHERMAL POWER COMPANY v. COMMISSIONER OF INTERNAL
REVENUE
G.R. No. 205279, April 26, 2017
THIRD DIVISION, REYES, J.

FACTS:
The VISAYAS GEOTHERMAL POWER COMPANY is a special purpose limited
partnership established primarily to "invest in, acquire, finance, complete,
construct, develop, improve, operate, maintain and hold that certain
partially constructed power production geothermal electrical generating
facility in Malitbog, Leyte Province, Philippines (the "Project"), and other
property incidental thereto, for the production and sale of electricity from
geothermal resources, to sell or otherwise dispose of the Project and such
other property."
On February 13, 2009, the petitioner filed with the BIR an administrative claim
for refund of unutilized input VAT covering the taxable year 2007 in the
amount of P11,902,576.07. On March 30, 2009, it proceeded to immediately
file a petition for review with the CTA, as it claimed that the BIR failed to act
upon the claim for refund.

ISSUE: Whether the CTA erred in ruling that the petitioner's judicial claim was
prematurely filed.

DECISION:

In a line of cases, the Court has underscored the need to strictly comply with
the 120+30-day periods provided in Section 112 of the 1997 NIRC, Sec.
112. Refunds or Tax Credits of Input Tax. - (A) Zero-Rated or Effectively Zero-
Rated Sales. - Any VAT-registered person, whose sales are zero-rated or
effectively zero-rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such
sales (C) Period within which Refund or Tax Credit of Input Taxes shall be
Made. - In proper cases, the Commissioner shall grant a refund or issue the
tax credit certificate for creditable input taxes within one hundred twenty
(120) days from the date of submission of complete documents in support of
the application filed in accordance with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the
failure on the part of the Commissioner to act on the application within the
period prescribed above, the taxpayer affected may, within thirty (30) days
from the receipt of the decision denying the claim or after the expiration of
the one hundred twenty-day period, appeal the decision or the unacted
claim with the Court of Tax Appeals.
 ALLIANCE OF QUEZON CITY HOMEOWNERS' ASSOCIATION, INC. vs.THE
QUEZON CITY GOVERNMENT
G.R. No. 230651, September 17, 2018
EN BANC, PERLAS-BERNABE, J.
Facts: In 2010, the Department of Interior and Local Government and the
Department of Finance (DOF) issued Joint Memorandum Circular No. 2010-
01, directing all local government units to implement Section 219 of the LGC,
which requires assessors to revise the real property assessments in their
respective jurisdictions every three (3) years.

On December 5, 2016, the Sangguniang Panlungsod of QC enacted the

assailed 2016 Ordinance, which: (a) approved the revised schedule of FMVs
of all lands and Basic Unit Construction Cost for buildings and other structures,
whether for residential, commercial, and industrial uses;[9] and (b) set the
new assessment levels at five percent (5%) for residential and fourteen
percent (14%) for commercial and industrial classifications.[10] The revised
schedule increased the FMVs indicated in the 1995 Ordinance to supposedly
reflect the prevailing market price of real properties in QC.

On April 7, 2017, Alliance of Quezon City Homeowners' Association, Inc.

(Alliance), allegedly a non-stock, non-profit corporation, filed the present
petition. Alliance argued that the 2016 Ordinance should be declared
unconstitutional for violating substantive due process, considering that the
increase in FMVs, which resulted in an increase in the taxpayer's base, and
ultimately, the taxes to be paid, was unjust, excessive, oppressive, arbitrary,
and confiscatory as proscribed under Section 130 of the LGC.

Issue: Whether the status of its authorized representative, Liwanag, as a

taxpayer and resident of QC, is sufficient to correct the procedural lapse.

Decision:
In Association of Flood Victims (AFV) v. Commission on Elections, the
court dismissed the petition for certiorari and/or mandamus because the
petitioner therein - being an unincorporated association - had no capacity to
sue in its own name and accordingly, its representative who filed the petition
in its behalf, had no personality to bring an action in court. Moreover,
in Duenas v. Santos Subdivision Homeowners Association, the Court held that
the complaint filed by an unregistered association cannot be treated as a
suit by the persons who signed it.
On these scores, the fact that Liwanag, a natural person, signed and
verified the petition did not cure Alliance's lack of legal capacity to file this
case. By the same logic, the signatures of the supposed trustees in the
Authorization Letter did not confer Alliance with a separate juridical
personality required to pursue this case.
 ASIAN TRANSMISSION CORPORATION v. COMMISSIONER OF INTERNAL
REVENUE
G.R. No. 230861, September 19, 2018
FIRST DIVISION, BERSAMIN, J.
Facts: Asian Transmission Corporation (ATC) is a corporation duly
organized and existing under Philippine Laws and with business address at
Carmelray Industrial Park, Canlubang, Calamba City, Laguna. ATC is a
manufacturer of motor vehicle transmission component parts and engines of
Mitsubishi vehicles. It was organized and registered with the Securities and
Exchange Commission on August 29, 1973 as evidenced by its Certificate of
Incorporation. On January 3, 2003 and March 3, 2003, ATC filed its Annual
Information Return of Income Taxes Withheld on Compensation and Final
Withholding Taxes and Annual Information Return of Creditable Income
Taxed Withheld (Expanded)/Income Payments Exempt from Withholding Tax,
respectively. On August 11, 2004, ATC received Letter of Authority [(LOA)] No.
200000003557 where [the CIR] informed ATC that its revenue officers from the
Large Taxpayers Audit and Investigation Division II shall examine its books of
accounts and other accounting records for the taxable year 2002.
Thereafter, [the CIR] issued a Preliminary Assessment Notice (PAN) to ATC.

Issue: Whether the waivers executed by Asian Transmission Corporation are

valid

Decision:

In this case, the CTA in Division noted that the eight waivers of ATC contained
the following defects, to wit: 1.) The notarization of the Waivers was not in
accordance with the 2004 Rules on Notarial Practice; 2.) Several waivers
clearly failed to indicate the date of acceptance by the Bureau of Internal
Revenue; 3.) The Waivers were not signed by the proper revenue officer; and
4.) The Waivers failed to specify the type of tax and the amount of tax due.

We agree with the holding of the CTA En Banc that ATC's case was similar to
the case of the taxpayer involved in Commissioner of Internal Revenue v.
Next Mobile Inc. The foregoing defects noted in the waivers of ATC were not
solely attributable to the CIR. Indeed, although RDAO 01-05 stated that the
waiver should not be accepted by the concerned BIR office or official unless
duly notarized, a careful reading of RDAO 01-05 indicates that the proper
preparation of the waiver was primarily the responsibility of the taxpayer or its
authorized representative signing the waiver. Such responsibility did not
pertain to the BIR as the receiving party. Consequently, ATC was not correct
in insisting that the act or omission giving rise to the defects of the waivers
should be ascribed solely to the respondent CIR and her subordinates.
 AVON PRODUCTS MANUFACTURING, INC. v. COMMISSIONER OF INTERNAL
REVENUE
G.R. No. 222480, November 07, 2018
FIRST DIVISION, TIJAM, J.

Facts: The Bureau of Internal Revenue (BIR) issued a Permit to Buy/Use

Denatured Alcohol5 to Avon dated January 7, 2008. The permit provides that
as long as denatured alcohol is used solely in the production of the latter's
products, it will be exempted from excise tax. However, the BIR permit
imposed a condition6 that in the event the volume of denatured alcohol
purchased by Avon from its suppliers is more than or less than the volume of
denatured alcohol actually received by Avon, the latter will be assessed
excise tax due on the difference. From January to December 2008, Avon
made various purchases of denatured alcohol from its suppliers amounting to
1,309,000 liters.7 In accordance with Section 134 of the National Internal
Revenue Code (NIRC) and the BIR Permit, such purchases were not
subjected to excise tax. However, during transit, marginal quantities of the
purchased denatured alcohol evaporated. As such, the BIR issued a Formal
Letter of Demand finding Avon liable for deficiency excise tax on distilled
spirits on the evaporated denatured alcohol in the amount of
Php1,135,500.85. The BIR alleged that from the 1,309,000 liters of denatured
alcohol purchased by Avon from January to December 2008, there were
shortages of 21,163.48 liters. Avon protested the assessment.

Issue: Whether Avon should be assessed deficiency excise tax over the
shortages of denatured alcohol which evaporated during transit before its
processing, rectification or distillation.

Decision: Section 134 of the NIRC provides that denatured alcohol of not
less than 180° degrees proof or ninety-percent (90%) absolute alcohol shall,
when suitably denatured and rendered unfit for oral intake, be exempt from
excise tax as provided for under Section 141 of the NIRC. Denatured alcohol
is completely exempted from excise tax, unless: 1) the denatured alcohol is
less than 180° proof or 90% absolute alcohol, when suitably denatured 33 and
rendered unfit for oral intake; or, when 2) the denatured alcohol previously
unfit for oral intake underwent fermentation, dilution, purification, or other
similar process, in both instances, the denatured alcohol will be subjected to
excise tax. Thus, to resolve the question of whether the evaporated
denatured alcohol subject in the present case should be subjected to excise
tax, We must determine whether the denatured alcohol is less than 180° proof
or 90% absolute alcohol or, whether it underwent reprocess, rectification,
fermentation, dilution, purification, or other similar process to render it fit for
oral intake.

To reiterate, excise tax is applied only if the denatured alcohol is reprocessed

to a distilled spirit.
 BASES CONVERSION AND DEVELOPMENT AUTHORITY v. COMMISSIONER OF
INTERNAL REVENUE,
G.R. No. 205925, June 20, 2018
SECOND DIVISION, REYES, JR., J

FACTS:

On October 8, 2010, Bases Conversion And Development Authority (BCDA)

filed a petition for review with the CTA in order to preserve its right to pursue
its claim for refund of the Creditable Withholding Tax (CWT) in the amount of
Php122,079,442.53, which was paid under protest from March 19, 2008 to
October 8, 2008. The CWT which BCDA paid under protest was in connection
with its sale of the BCDA-allocated units as its share in the Serendra Project
pursuant to the Joint Development Agreement with Ayala Land, Inc.

The petition for review was filed with a Request for Exemption from the
Payment of Filing Fees in the amount of Php1,209,457.90. The CTA First Division
denied BCDA's Request for Exemption and ordered it to pay the filing fees
within five days from notice.

Issue: Whether the CTA en banc erred in affirming the CTA first division's ruling
that BCDA is not a government instrumentality, hence, not exempt from
payment of legal fees.

Decision: BCDA is a government instrumentality vested with corporate

powers. As such, it is exempt from the payment of docket fees.

At the crux of the present pet1t1on is the issue of whether or not BCDA is a
government instrumentality or a government-owned and – controlled
corporation (GOCC). [fit is an instrumentality, it is exempt from the payment
of docket fees. lf it is a GOCC, it is not exempt and as such non-payment
thereof would mean that the tax court did not acquire jurisdiction over the
case and properly dismissed it for BCDA's failure to settle the fees on time.

BCDA is a government instrumentality vested with corporate powers. As such,

it is exempt from the payment of docket fees required under Section 21, Rule
141 of the Rules or Court, to wit:

SEC. 1. Payment of fees. – Upon the filing of the pleading or other application
which initiates an action or proceeding, the fees prescribed therefor shall be
paid in full.

SEC. 21. Government exempt. – The Republic of the Philippines, its agencies
and instrumentalities, are exempt from paying the legal fees provided in this
rule. Local governments and government-owned or controlled corporations
with or without independent charters are not exempt from paying such fees.
 BUREAU OF INTERNAL REVENUE, v. HON. ERNESTO D. ACOSTA, ET AL.
G.R. No. 195320, April 23, 2018
SECOND DIVISION, REYES, JR., J

FACTS: On October 7, 2004, Chevron Philippines, Inc. (Chevron) filed an

administrative claim for refund or credit with the BIR under Claim No. 2004-XP-
11/03. The claim in the aggregate amount of P131,175,480.18 represented
alleged overpayment of excise taxes on imported finished unleaded
premium gasoline and diesel fuel withdrawn from its refinery in San Pascual,
Batangas for the month of November 2003.

The BIR, however, did not act on Chevron's claim. Thus, on the basis of
Section7 of Republic Act (R.A.) No.1125, as amended by R.A. No.
9282, Chevron elevated the case to the CTA-Special First Division on October
28, 2005 via a petition for review. on January 11, 2011, Chevron moved for the
issuance of a Writ of Execution20 of the CTA-Special First Division's Decision
dated July 12, 2010.

In response, the BIR filed a Motion to Lift Entry of Judgment before the CTA-
Special First Division on the ground that it intended to exhaust the remedy of
filing a Petition for Certiorari before the Supreme Court under Rule 65 of the
Revised Rules of Court.

ISSUE: Whether a Special Civil Action for Certiorari under Rule 65 of the Rules
of Court is available as a remedy to the BIR

DECISION:

A petition for certiorari under Rule 65 of the Rules of Court covers errors of
jurisdiction or grave abuse of discretion amounting to excess or lack of
jurisdiction. Errors of jurisdiction refer to acts done by the court without or in
excess of its jurisdiction, and which error is correctible only by the
extraordinary writ of certiorari. The abuse of discretion must be so patent and
gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform a duty enjoined by law or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason
of passion or hostility. The petitioner, or the BIR in this case, bears the burden
to prove not merely reversible error, but grave abuse of discretion on the part
of the public respondent, absent which in the exercise of judicial power a
petition for certiorari cannot prosper.

In this case, the BIR was unable to show that the resolutions of the CTA-
Special First Division were patent and gross to warrant striking them down
through a petition for certiorari. No argument was advanced to establish that
the CTA-Special First Division exercised its judgment capriciously, whimsically,
arbitrarily, or despotically by reason of passion and hostility.
 BUREAU OF CUSTOMS (BOC) VS. HON. PAULINO Q. GALLEGOS, ET AL.
G.R. No. 220832, February 28, 2018
FIRST DIVISION, TIJAM, J

FACTS:

On December 20, 2006, the Association of Southeast Asian Nation

(ASEAN) member-countries, including the Philippines, signed the Protocol to
Establish and Implement the ASEAN Single Window (ASW Protocol), under
which the member-countries agreed to develop and implement their
National Single Windows (NSW) based on international standards and best
practices as established in international agreements and conventions
concerning trade facilitation and modernization of customs techniques and
practices.

Utilizing the funds appropriated by Congress in the General Appropriations

Act (GAA) for calendar year (CY) 2010 and for CY 2012, petitioner BOC,
through its procuring entity, petitioner Department of Budget and
Management-Procurement Service (DBM-PS), issued on October 15, 2014 a
Request for Expression of Interest (RFEI), inviting prospective bidders
(consultants) in the eligibility screening and to be shortlisted for the
competitive bidding of the PNSW 2 project with a total approved budget for
the contract of P650 Million. Among the bidders that submitted the eligibility
documents were: (1) Joint Venture of Omniprime Marketing, Inc. and Intrasoft
International, Inc. (private respondent); and (2) E-Konek & ILS & FS JV, whose
biggest shareholder is petitioner BOC Commissioner Alberto D. Lina
(Commissioner Lina).

ISSUE: Whether Judge Paulino Q. Gallegos gravely abused in his discretion

when he issued the omnibus order and the injunctive writ.

DECISION:

Courts cannot direct government agencies entrusted with the function to

accept or reject bid and awards contract, to do a particular act or to enjoin
such act within its prerogative. Consequently, the bidder has no cause to
complain. However, jurisprudence has carved out an exception, i.e., when
said government agency used its discretion or prerogative as a shield to a
fraudulent award; or an unfairness or injustice is shown; or when in the
exercise of its authority, it gravely abuses or exceeds its jurisdiction. To restate,
the cancellation of an ongoing public bidding is not reasonable if it will cause
unfairness or injustice to the bidder concerned or if it is attended by
arbitrariness, fraudulent acts or grave abuse of discretion on the part of the
government agencies entrusted with that function.
 CITY OF MANILA VS. ALEJANDRO ROCES PRIETO, ET AL.
G.R. NO. 221366, JULY 8, 2019
SECOND DIVISION, REYES, J. JR., J.

Facts:
On January 19, 2004, the City Council of Manila enacted Ordinance
No. 8070 that authorized the City Mayor to acquire certain parcels of land
belonging to Alejandro Roces Prieto, et al to be used for the City of Manila's
Land-For-The-Landless Program. Initially, petitioner attempted to acquire the
subject lots by negotiated sale, offering the amount of P2,000.00 per square
meter, which Alejandro Roces Prieto, et al. refused to accept on the ground
that their respective properties are worth more than that.

Invoking Section 2, Rule 67 of the Rules of Court, City of Manila sought

the issuance of a writ of possession for it to be able to immediately take
possession of the subject properties. City of Manila manifested that it had
already deposited the sum of P4,812,920.00 in the bank, representing more
than (100%) of the assessed value of the properties as shown in the
declarations of real property.
On February 2, 2005, the RTC issued an Order denying the issuance of a
writ of possession pending the deposit of the additional amount of
?852,519.00. Instead of the general provisions on expropriation under Rule 67
of the Rules of Court, the RTC applied the provisions of the Local Government
Code (LGC), mandating the deposit of 15% of the fair market value of the
properties subject of expropriation, for City of Manila immediate possession
thereof.

Issue: Whether the power to expropriate had complied with the provisions of
the Constitution and pertinent laws in the exercise thereof.

Decision:
Several requisites must concur before a local government unit can
exercise the power of eminent domain, to wit: (1) an ordinance is enacted
by the local legislative council authorizing the local chief executive, in behalf
of the local government unit, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private property; (2) the
power of eminent domain is exercised for public use, purpose or welfare, or
for the benefit of the poor and the landless; (3) there is payment of just
compensation, as required under Section 9, Article III of the Constitution, and
other pertinent laws; and ( 4) a valid and definite offer has been previously
made to the owner of the property sought to be expropriated, but said offer
was not accepted.
R.A. No. 7279 is such pertinent law in this case as it governs the local
expropriation of properties for purposes of urban land reform and housing.
Thus, the rules and limitations set forth therein cannot be disregarded.
 UNIVERSIDAD DE MANILA
COLLEGE OF LAW

Case Digest on
Taxation Law Review

Submitted to:
ATTY. PETER M. MANZANO
Professor

Submitted by:
JEMIMAH R.RIBON
16-MJD-050