[G.R. NO.

119286 : October 13, 2004]

PASEO REALTY & DEVELOPMENT

CORPORATION, Petitioner, v. COURT OF APPEALS, COURT
OF TAX APPEALS and COMMISSIONER OF INTERNAL
REVENUE, Respondents.

DECISION

TINGA, J.:

The changes in the reportorial requirements and payment

schedules of corporate income taxes from annual to quarterly
have created problems, especially on the matter of tax
refunds.1 In this case, the Court is called to resolve the
question of whether alleged excess taxes paid by a corporation
during a taxable year should be refunded or credited against
its tax liabilities for the succeeding year.

Paseo Realty and Development Corporation, a domestic

corporation engaged in the lease of two (2) parcels of land at
Paseo de Roxas in Makati City.

Petitioner filed with respondent a claim for "the refund of

excess creditable withholding and income taxes for the years
1989 and 1990 in the aggregate amount of P147,036.15."

over the actual income tax computed and shown in the

adjustment or final corporate income tax return shall either (a)
be refunded to the corporation, or (b) may be credited against
the estimated quarterly income tax liabilities for the quarters
of the succeeding taxable year. The corporation must signify in
its annual corporate adjustment return its intention whether to
request for refund of the overpaid income tax or claim for
automatic credit to be applied against its income tax liabilities
for the quarters of the succeeding taxable year by filling up the
appropriate box on the corporate tax return (B.I.R. Form No.
1702). [Emphasis supplied]
SEC. 76. Final Adjustment Return.'  Every corporation liable to
tax under Section 27 shall file a final adjustment return
covering the total taxable income for the preceding calendar or
fiscal year. If the sum of the quarterly tax payments made
during the said taxable year is not equal to the total tax due
on the entire taxable income of that year, the corporation shall
either:

(A) Pay the balance of the tax still due; or

(B) Carry-over the excess credit; or

(C) Be credited or refunded with the excess amount paid, as

the case may be.

In case the corporation is entitled to a tax credit or refund of

the excess estimated quarterly income taxes paid, the excess
amount shown on its final adjustment return may be carried
over and credited against the estimated quarterly income tax
liabilities for the taxable quarters of the succeeding taxable
years. Once the option to carry-over and apply the
excess quarterly income tax against income tax due for
the taxable quarters of the succeeding taxable years has
been made, such option shall be considered irrevocable
for that taxable period and no application for cash
refund or issuance of a tax credit certificate shall be
allowed therefore. [Emphasis supplied]
G.R. No. L-31156 February 27, 1976

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant,

vs.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant
appellees.

Sabido, Sabido & Associates for appellant.

Provincial Fiscal Zoila M. Redona & Assistant Provincial Fiscal Bonifacio R Matol and
Assistant Solicitor General Conrado T. Limcaoco & Solicitor Enrique M. Reyes for appellees.

MARTIN, J.:
Municipal Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25,
1962, levies and collects "from soft drinks producers and manufacturers a tai of one-
sixteenth (1/16) of a centavo for every bottle of soft drink corked."   For the purpose of 2

computing the taxes due, the person, firm, company or corporation producing soft drinks
shall submit to the Municipal Treasurer a monthly report, of the total number of bottles
produced and corked during the month.  3

1. — Is Section 2, Republic Act No. 2264 an undue delegation of power,

confiscatory and oppressive?

The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's
pretense, would not suffice to invalidate the said law as confiscatory and oppressive. In
delegating the authority, the State is not limited 6 the exact measure of that which is
exercised by itself. When it is said that the taxing power may be delegated to municipalities
and the like, it is meant that there may be delegated such measure of power to impose and
collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted
to tax subjects which for reasons of public policy the State has not deemed wise to tax for
more general purposes.   This is not to say though that the constitutional injunction against
10

deprivation of property without due process of law may be passed over under the guise of
the taxing power, except when the taking of the property is in the lawful exercise of the taxing
power, as when (1) the tax is for a public purpose; (2) the rule on uniformity of taxation is
observed; (3) either the person or property taxed is within the jurisdiction of the government
levying the tax; and (4) in the assessment and collection of certain kinds of taxes notice.

SO ORDERED.

G.R. No. L-28896 February 17, 1988

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
ALGUE, INC., and THE COURT OF TAX APPEALS, respondents.

CRUZ, J.:

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

The main issue in this case is whether or not the Collector of Internal Revenue correctly
disallowed the P75,000.00 deduction claimed by private respondent Algue as legitimate
business expenses in its income tax returns. The corollary issue is whether or not the appeal
of the private respondent from the decision of the Collector of Internal Revenue was made
on time and in accordance with law.

The private respondent, a domestic corporation engaged in engineering, construction and

other allied activities, received a letter from the petitioner assessing it in the total amount of
P83,183.85 as delinquency income taxes for the years 1958 and 1959.  On January 18, 1

1965, Algue flied a letter of protest or request for reconsideration, which letter was stamp
received on the same day in the office of the petitioner.   On March 12, 1965, a warrant of
2

distraint and levy was presented to the private respondent, through its counsel, Atty. Alberto
Guevara, Jr., who refused to receive it on the ground of the pending protest.   A search of the
3

protest in the dockets of the case proved fruitless. Atty. Guevara produced his file copy and
gave a photostat to BIR agent Ramon Reyes, who deferred service of the warrant.   On April
4

7, 1965, Atty. Guevara was finally informed that the BIR was not taking any action on the
protest and it was only then that he accepted the warrant of distraint and levy earlier sought
to be served.  Sixteen days later, on April 23, 1965, Algue filed a petition for review of the
5

decision of the Commissioner of Internal Revenue with the Court of Tax Appeals. 6

We find that these suspicions were adequately met by the private respondent when its
President, Alberto Guevara, and the accountant, Cecilia V. de Jesus, testified that the
payments were not made in one lump sum but periodically and in different amounts as each
payee's need arose.   It should be remembered that this was a family corporation where
19

strict business procedures were not applied and immediate issuance of receipts was not
required. Even so, at the end of the year, when the books were to be closed, each payee
made an accounting of all of the fees received by him or her, to make up the total of
P75,000.00.   Admittedly, everything seemed to be informal. This arrangement was
20

understandable, however, in view of the close relationship among the persons in the family
corporation.

1. We agree with the respondent court that the amount of the promotional fees was not
excessive. The total commission paid by the Philippine Sugar Estate Development
Co. to the private respondent was P125,000.00.   After deducting the said fees,
21

Algue still had a balance of P50,000.00 as clear profit from the transaction. The
amount of P75,000.00 was 60% of the total commission. This was a reasonable
proportion