PALS Bar Ops Pilipinas Must Read Cases TAXATION 2015 (1)

7/26/2019 PALS Bar Ops Pilipinas Must Read Cases TAXATION 2015 (1)

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Law on

MUST READ CASES (LAW ON TAXATION)

TAX I

Paseo Realty & Development Copoat!on v" Co#t o$ Appeals% R No" ''*+% O,to-e

'.% //0

Taxation is described as a destructive power which interferes with the personal and property

rights of the people and takes from them a portion of their property for the support of the

government.

Comm!ss!one o$ Intenal Reven#e v" 1ot#ne To-a,,o Copoat!on% 22 SCRA '+/ (//*)

The power to tax is inherent in the State, such power being inherently legislative, based on the

principle that taxes are a grant of the people who are taxed, and the grant must be made by the

immediate representative of the people, and where the people have laid the power, there it must

remain and be exercised.

Ma,tan Ce-# Intenat!onal A!pot A#t3o!ty v" Ma,os% +' SCRA ++4 ('+)

As an incident of sovereignty, the power to tax has been described as unlimited in its range,

acknowledging in its very nature no limits, so that security against its abuse is to be found only

in the responsibility of the legislature which imposes the tax on the constituency who are to pay

it.

PLANTERS PRODUCTS% INC" v" 1ERTIP5IL CORPORATION%

"R" No" '++//+% Ma,3 '0% //*

It is a settled principle that the power of taxation by the state is plenary. Comprehensive and

supreme, the principal check upon its abuse resting in the responsibility of the members of the

legislature to their constituents.

Comm!ss!one o$ Intenal Reven#e v" SM P!me 5ol6!n7s% In,"% +'. SCRA 440 (/'/)

The power to tax is sometimes called the power to destroy. Therefore, it should be exercised with

caution to minimie in!ury to the proprietary rights of the taxpayer. It must be exercised fairly,

e"ually and uniformly, lest the tax collector kills the #hen that lays the golden egg.$

MANILA MEMORIAL PAR8% INC" AND LA 1UNERARIA PA9:SUCAT% INC" vs"

SECRETAR; O1 T5E DSWD% "R" No" '42.2+ (/'.)"

The %&' senior citien discount and tax deduction scheme are valid exercises of police power of

the State absent a clear showing that it is arbitrary, oppressive or confiscatory. The discount is

intended to improve the welfare of the senior citiens who, at their age, are less likely to be


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Law on

gainfully employed, more prone to illnesses and other disabilities, and thus, in need of subsidy in

purchasing commodities. As to its nature an effects, although the regulation affects the pricing,


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and, hence, the profitability of a private establishment, it does not purport to appropriate or

burden specific properties, used in the operation or conduct of the business of private

establishments, for the use or benefit of the public, or senior citiens for that matter, but merely

regulates the pricing of goods and services relative to, and the amount of profits or income(gross

sales that such private establishments may derive from, senior citiens. The State can employpolice power measures to regulate the pricing of goods and services, and, hence, the profitability

of business establishments in order to pursue legitimate State ob!ectives for the common good,

provided, the regulation does not go too far as to amount to )taking.*

SOUT5ERN CROSS CEMENT CORPORATION v" CEMENT MANU1ACTURERS

ASSOCIATION O1 T5E P5ILIPPINES% "R" No" '2*20/% A#7#st .% //2

The motivation behind many taxation measures is the implementation of police power goals.

+rogressive income taxes alleviate the margin between rich and poor the so-called )sin taxes* on

alcohol and tobacco manufacturers help dissuade the consumers from excessive intake of these

potentially harmful products.

A" DIA9 an6 AURORA MA" 1" TIM


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The theory behind the exercise of the power to tax emanates from necessity, without taxes,

government cannot fulfill its mandate of promoting the general welfare and well being of the

people.

COMMISSIONER O1 INTERNAL RE>ENUE v" ALUE% INC"% an6 T5E COURT O1TAX APPEALS% "R" No" L:**+% 1e-#ay '4% '**

espite the natural reluctance to surrender part of one/s hard earned income to the taxing

authorities, every person who is able to must contribute his share in the running of the

government. The government for its part is expected to respond in the form of tangible and

intangible benefits intended to improve the lives of the people and enhance their moral and

material values. This symbiotic relationship is the rationale of taxation and should dispel the

erroneous notion that it is an arbitrary method of exaction by those in the seat of power.

COMMISSIONER O1 INTERNAL RE>ENUE v" ROSEMARIE ACOSTA "R" No"

'20/+* A#7#st .% //4

As well said in a prior case, revenue laws are not intended to be liberally construed. Considering

that taxes are the lifeblood of the government and in 0olmes$s memorable metaphor, the price

we pay for civiliation, tax laws must be faithfully and strictly implemented.

SWEDIS5 MATC5 P5ILIPPINES INC" v. T5E TREASURER O1 T5E CIT; O1

MANILA% "R" No" '*'44% =#ly .% /'.

ouble taxation means taxing the same property twice when it should be taxed only once that is,

)taxing the same person twice by the same !urisdiction for the same thing. There is indeed

double taxation if a taxpayer is sub!ected to the taxes under both Section 12 3Tax on

4anufacturers, Assemblers and other +rocessors5 and Section %1 3Tax on 6usiness Sub!ect to the

7xcise, 8alue-Added or +ercentage Taxes under the 9I:C5 of the Tax ;rdinance 9o.


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this case, by the +hilippines, there should be a concomitant commitment on the part of the state

of residence to grant some form of tax relief, whether this be in the form of a tax credit or

exemption.


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DEUTSC5E


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Section 1E@3a5 should be construed as prohibiting the shifting of the burden of the excise tax to

the international carriers who buy petroleum products from the local manufacturers. Said


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international carriers are thus allowed to purchase the petroleum products without the excise tax

component which otherwise would have been added to the cost or price fixed by the local

manufacturers or distributors(sellers.

COMMISSIONER O1 INTERNAL RE>ENUE v" T5E ESTATE O1


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SOUT5 A1RICAN AIRWA;S v" COMMISSIONER O1 INTERNAL RE>ENUE% +'

SCRA ++2 (/'/)


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Taxes cannot be sub!ect to compensation for the simple reason that the overnment and the

taxpayers are not creditors and debtors of each other, debts are due to the overnment in its

corporate capacity, while taxes are due to the overnment in its sovereign capacity.

DOMINO v" ARLITOS% * SCRA 00. ('+.)

0owever, if the obligation to pay taxes and the taxpayer$s claim against the government are both

overdue, demandable, as well as fully li"uidated, compensation takes place by operation of law

and both obligations are extinguished to their concurrent amounts.

ASIA INTERNATIONAL AUCTIONEERS% INC" v" COMMISSIONER O1 INTERNAL

RE>ENUE "R" No" '4''2 Septem-e +% /'

A tax amnesty, much like a tax exemption, is never favored or presumed in law. The grant of a

tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer and

liberally in favor of the taxing authority.

1ORT ELOPMENT CORPORATION v" COMMISSIONER O1

INTERNAL RE>ENUE% "R" No" '4.02% Septem-e 0% /'

>hile administrative agencies, such as the 6ureau of Internal :evenue, may issue regulations to

implement statutes, they are without authority to limit the scope of the statute to less than what it

provides, or extend or expand the statute beyond its terms, or in any way modify explicit

provisions of the law. 0ence, in case of discrepancy between the basic law and an interpretative

or administrative ruling, the basic law prevails.

COMMISSIONER O1 INTERNAL RE>ENUE v" SM PRIME 5OLDINS% INC" +'.

SCRA 440 (/'/)

:evenue 4emorandum Circulars 3:4Cs5 must not override, supplant, or modify the law, but

must remain consistent and in harmony with the law they seek to apply and implement.

TEAM ENER; CORPORATION (1omely MIRANT PA


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It would be a robbery for the State to tax its citiens and use the funds generated for a private

purpose. >hen a tax law is only a mask to exact funds from the public when its true intent is to


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give undue benefit and advantage to a private enterprise, that law will not satisfy the re"uirement

of Gpublic purpose.G

A


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against liability. Said undertaking is the activity that produced the reinsurance premiums, and the

same took place in the +hilippines.


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COMMISSIONER O1 INTERNAL RE>ENUE v" =APAN AIR LINES% INC"% "R" No"

+/4'0% Ma,3 +% ''

Kor the source of income to be considered as coming from the +hilippines, it is sufficient that the

income is derived from activities within this country regardless of the absence of flight

operations within +hilippine territory. Indeed, the sale of tickets is the very lifeblood of the

airline business, the generation of sales being the paramount ob!ective.

CIT; O1 IRIA v" CAMARINES SUR III ELECTRIC COOPERATI>E% INC"% "R" No"

'02% Septem-e 2% /'

Since it partakes of the nature of an excise tax, the situs of taxation is the place where the

privilege is exercised, in this case in the City of Iriga, where CASN:7C; III has its principal

office and from where it operates, regardless of the place where its services or products aredelivered.

COMMISSIONER O1 INTERNAL RE>ENUE v"AMERICAN EXPRESS

INTERNATIONAL% INC" (P5ILIPPINE


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portions of the land occupied by the hospital and portions of the hospital used for its patients,

whether paying or non-paying, are exempt from real property taxes.


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COMMISSIONER O1 INTERNAL RE>ENUE v" ST" LU8ES MEDICAL CENTER% INC"

"R" No" '2/ Septem-e +% /'

Section E&375 and 35 of the 9I:C re"uires that an institution be Goperated exclusivelyG for

charitable or social welfare purposes to be completely exempt from income tax. An institution

under Section E&375 or 35 does not lose its tax exemption if it earns income from its for-profit

activities. Such income from for-profit activities, under the last paragraph of Section E&, is

merely sub!ect to income tax, previously at the ordinary corporate rate but now at the preferential

1&' rate pursuant to Section %E COALITION% et al" v" >ICTOR LIM% et al"% " R"

No" ''442% O,to-e 0% //.

The incentives under :.A. 9o. ENUE v" MARUE% INC"% "R" No"

'02% Septem-e 2% /'

A franchise tax is a tax on the privilege of transacting business in the state and exercising

corporate franchises granted by the state. It is not levied on the corporation simply for existing as

a corporation, upon its property or its income, but on its exercise of the rights or privileges

granted to it by the government.

ASIA INTERNATIONAL AUCTIONEERS% INC" v" COMMISSIONER O1 INTERNAL

RE>ENUE "R" No" '4''2 Septem-e +% /'

Indirect taxes, like 8AT and excise tax, are different from withholding taxesF To distinguish, in

indirect taxes, the incidence of taxation falls on one person but the burden thereof can be shifted

or passed on to another person, such as when the tax is imposed upon goods before reaching the

consumer who ultimately pays for it. ;n the other hand, in case of withholding taxes, the

incidence and burden of taxation fall on the same entity, the statutory taxpayer. The burden of

taxation is not shifted to the withholding agent who merely collects, by withholding, the tax due


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from income payments to entities arising from certain transactions and remits the same to the

government.


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ARTURO M" TOLENTINO v" T5E SECRETAR; O1 1INANCE an6 T5E

COMMISSIONER O1 INTERNAL RE>ENUE% "R" No" ''2022% O,to-e ./% '2

The Constitution does not really prohibit the imposition of indirect taxes which, like the 8AT, are

regressive since what it simply provides is that Congress shall Gevolve a progressive system of

taxation.G The constitutional provision has been interpreted to mean simply that Gdirect taxes are

to be preferred LandM as much as possible, indirect taxes should be minimied.G

C5INA


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sale of inherited real property usually gives capital gain or loss even though the property has to

be subdivided or improved or both to make it salable--however, if the inherited property is


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substantially improved or very actively sold or both it may be treated as held primarily for sale to

customers in the ordinary course of the heir/s business.

CIR vs CA% "R" No" '/*24+ =an#ay /% '

Stock dividends, strictly speaking, represent capital and do not constitute income to its recipient.

So that the mere issuance thereof is not yet sub!ect to income tax as they are nothing but an

enrichment through increase in value of capital investment. 0owever, the redemption or

cancellation of stock dividends, depending on the time and manner it was made, is essentially

e"uivalent to a distribution of taxable dividends, making the proceeds thereof taxable income to

the extent it represents profits. The exception was designed to prevent the issuance and

cancellation or redemption of stock dividends, which is fundamentally not taxable, from being

made use of as a device for the actual distribution of cash dividends, which is taxable.

Ma" Isa-el T" Santos vs" Sev!e P3!l"% In,"% et al"% "R" No" '++.44% Novem-e *% //*

:espondent terminated petitioner$s services due to her illness, rendering her incapable of

continuing to work, and gave her retirement benefits but withheld the tax due thereon. The

retirements benefits are taxable because the petitioner was only 21 yrs old at the time of

retirement and had rendered only H years of service for these benefits to be exempt from tax, the

following re"uisites must concurF 315 a reasonable private benefit plan is maintained by the

employer 3%5 the retiring official or employee has been in the service of the same employer for

at least ten 31&5 years 3E5 the retiring official or employee is not less than fifty 3@&5 years of age

at the time of his retirement and 325 the benefit had been availed of only once.

C" M" 5os!ns & Co"% In," vs" Comm!ss!one o$ Intenal Reven#e% "R" No" L:0/2%

Novem-e *% '+

+ayment by the taxpayer-corporation to its controlling stockholder 30oskins5 of @&' of its

supervision fees 3paid by a client of the corporation for the latter/s services as managing agent of

a subdivision pro!ect5 or the amount of +==,=


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ascertained to be worthless and uncollectible during the taxable year, and the taxpayer must

prove that he exerted diligent efforts to collect the debts by 315 sending of statement of accounts


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3%5 sending of collection letters 3E5 giving the account to a lawyer for collection and 325 filing a

collection case in court.

Consol!6ate6 M!nes% In," vs" Co#t o$ TaB Appeals% et al"% "R" Nos" L:'**0. & '**00%

A#7#st % '40

6oth depletion and depreciation are predicated on the same basic promise of avoiding a tax on

capital. The allowance for depletion is based on the theory that the extraction of minerals

gradually exhausts the capital investment in the mineral deposit. The purpose of the depiction

deduction is to permit the owner of a capital interest in mineral in place to make a tax-free

recovery of that depleting capital asset. A depletion is based upon the concept of the exhaustion

of a natural resource whereas depreciation is based upon the concept of the exhaustion of the

property, not otherwise a natural resource, used in a trade or business or held for the production

of income. Thus, depletion and depreciation are made applicable to different types of assets. And

a taxpayer may not deduct that which the Code allows as of another.

COMMISSIONER O1 INTERNAL RE>ENUE vs" P5ILIPPINE AIRLINES% INC" (PAL)%

"R" No" '42 (/'.)"

A corporation like the +hilippine Airlines who has a franchise of its own cannot be sub!ect to the

minimum corporate income tax. The reason being- as provided in + 1@=&, Section 1E of +AB/s

franchise, its taxation shall be strictly governed by two fundamental rules, to witF 315 respondent

shall pay the overnment either the basic corporate income tax or franchise tax, whichever is

lower and 3%5 the tax paid by respondent, under either of these alternatives, shall be in lieu of all

other taxes, duties, royalties, registration, license, and other fees and charges, except only realproperty tax.

Man!la


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institutions under Art. 8I, sec. %H of the Constitution are only exempted from property taxes, and

R4CA is not an educational institution under Article JI8, Section 2 of the Constitution.


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Comm!ss!one o$ Intenal Reven#e vs" C!tyt#st Investment P3!ls"% In,"% "R" Nos" '.4*+

& '0/*24% Septem-e 4% //+

Citytrust and Asianbank are domestic corporations which paid gross receipts tax and claimed a

refund on the basis of a CTA ruling that the %&' K>T on a bank$s passive income does not form

part of the taxable gross receipts. The %&' K>T on a bank$s interest income forms part of the

taxable gross receipts because )gross receipts* means )the entire receipts without any

deduction* moreover, the imposition of the %&' K>T and @' :T does not constitute double

taxation because :T is a percentage tax while K>T is an income tax, and the two concepts are

different from each other.

COMMISSIONER O1 INTERNAL RE>ENUE vs" TEAM (P5ILIPPINES)

OPERATIONS CORPORATION% "R" No" '*24* (/'.)"

Kor a taxpayer to be entitled to a tax credit or refund of creditable withholding tax, the followingre"uisites must be complied withF Kirst, The claim must be filed with the CI: within the two-

year period from the date of payment of the tax Second, It must be shown on the return of the

recipient that the income received was declared as part of the gross income and Third, The fact

of withholding is established by a copy of the statement duly issued by the payor to the payee

showing the amount paid and the amount of tax withheld.

TAX II

ON9ALO >ILLANUE>A vs" SPOUSES 1ROILAN% "R" No" '4*/0% =an#ay 0% /''

+ost-mortem dispositions typically

315 Convey no title or ownership to the transferee before the death of the transferor or, what

amounts to the same thing, that the transferor should retain the ownership 3full or naked5 and

control of the property while alive3%5 That before the Ldonor$sM death, the transfer should be revocable by the transferor at will, ad

nutum but revocability may be provided for indirectly by means of a reserved power in the

donor to dispose of the properties conveyed

3E5 That the transfer should be void if the transferor should survive the transfereeL2M LTMhe specification in a deed of the causes whereby the act may be revoked by the donor

indicates that the donation is inter vivos, rather than a disposition mortis causaL@M That the designation of the donation as mortis causa, or a provision in the deed to the effect

that the donation is )to take effect at the death of the donor* are not controlling criteria such

statements are to be construed together with the rest of the instrument, in order to give effect to

the real intent of the transferor and

3?5 That in case of doubt, the conveyance should be deemed donation inter vivos rather than

mortis causa, in order to avoid uncertainty as to the ownership of the property sub!ect of the

deed.


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ROMARICO " >ITU vs" T5E 5ONORA


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The conveyance in "uestion is not, first of all, one of mortis causa, which should be embodied in

a will. In this case, the monies sub!ect of savings account were in the nature of con!ugal funds. In

the case relied on, :ivera v. +eople/s 6ank and Trust Co., we re!ected claims that a survivorship

agreement purports to deliver one party/s separate properties in favor of the other, but simply,

their !oint holdings.

RA1AEL ARSENIO S" DI9ON vs" COURT O1 TAX APPEALS% "R" No" '0/00% Ap!l ./%

//*

As held in +ropstra v. N.S., where a lien claimed against the estate was certain and enforceable

on the date of the decedent/s death, the fact that the claimant subse"uently settled for lesser

amount did not preclude the estate from deducting the entire amount of the claim for estate tax

purposes. These pronouncements essentially confirm the general principle that post-death

developments are not material in determining the amount of the deduction.

COMMISSIONER O1 INTERNAL RE>ENUE vs" COURT O1 APPEALS% "R" No"

'./+% Ma,3 % ///

Administration expenses, as an allowable deduction from the gross estate of the decedent for

purposes of arriving at the value of the net estate, have been construed by the federal and state

courts of the Nnited States to include all expenses Gessential to the collection of the assets,

payment of debts or the distribution of the property to the persons entitled to it.G In other words,

the expenses must be essential to the proper settlement of the estate and expenditures incurred

for the individual benefit of the heirs, devisees or legatees are not deductible.

SPS" ARIPINO ESTOPA an6 ISA


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COMMISSIONER O1 INTERNAL RE>ENUE vs" SON; P5ILIPPINES% INC"% "R" No"

'4*+4% Novem-e '4% /'/


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Thus, there must be a sale, barter or exchange of goods or properties before any 8AT may be

levied. Certainly, there was no such sale, barter or exchange in the subsidy given by SIS to Sony

it was but a dole out by SIS and not in payment for goods or properties sold, bartered or

exchanged by Sony.

MINDANAO II EOT5ERMAL PARTNERS5IP vs" COMMISSIONER O1 INTERNAL

RE>ENUE% "R" No" '../'% Ma,3 ''% /'.

4indanao II$s sale of the 9issan +atrol is said to be an isolated transaction. 0owever, it does not

follow that an isolated transaction cannot be an incidental transaction for purposes of 8AT

liability. Indeed, a reading of Section 1&@ of the 1==< Tax Code would show that a transaction

Gin the course of trade or businessG includes Gtransactions incidental thereto.G

CIR v" SM P!me 5ol6!n7s% In," an6 1!st As!a Realty Development Cop"% "R" No"

'*.2/2% 1e-#ay +% /'/

Among those included in the enumeration is the )lease of motion picture films, films, tapes and

discs.* This, however, is not the same as the showing or exhibition of motion pictures or films.

The legislative intent is not to impose 8AT on persons already covered by the amusement tax and

this holds true even in the case of cinema(theater operators taxed under the BC of 1==1

precisely because the 8AT law was intended to replace the percentage tax on certain services.

ATLAS CONSOLIDATED MININ AND DE>ELOPMENT CORPORATION vs"

COMMISSIONER O1 INTERNAL RE>ENUE% "R" Nos" '0''/0 & '0*4+.% =#ne *% //4

According to the estination +rinciple, goods and services are taxed only in the country where

these are consumed. In connection with the said principle, the Cross 6order octrine mandates

that no 8AT shall be imposed to form part of the cost of the goods destined for consumption

outside the territorial border of the taxing authority. 0ence, actual export of goods and services

from the +hilippines to a foreign country must be free of 8AT, while those destined for use or

consumption within the +hilippines shall be imposed with 1&' 8AT.

CIR v" Ses#! =#s3! P3!ls% In," "R" No" '0+4'% =#ly '% //+

>hile an ecoone is geographically within the +hilippines, it is deemed a separate customsterritory and is regulated in laws as foreign soul. Sales by supplies outside the borders of ecoone

to this separate customs territory are deemed exports and treated as export sales.

P5ILIPPINE AMUSEMENT AND AMIN CORPORATION (PACOR) vs" T5E

ENUE% "R" No" '4/*4% Ma,3 '2% /''

The rationale for the exemption from indirect taxes provided for in +.. 1H?= and the extension

of such exemption to entities or individuals dealing with +AC;: in casino operations are best

elucidated from the 1=H< case of Commissioner of Internal :evenue v. Pohn otamco Sons,

Inc., where the absolute tax exemption of the >orld 0ealth ;rganiation 3>0;5 upon an


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international agreement was upheld. >e held in said case that the exemption of contractee >0;

should be implemented to mean that the entity or person exempt is the contractor itself who

constructed the building owned by contractee >0;, and such does not violate the rule that tax


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exemptions are personal because the manifest intention of the agreement is to exempt the

contractor so that no contractor/s tax may be shifted to the contractee >0;.

LU9ON 5;DRO CORPORATION vs" COMMISSION ON INTERNAL RE>ENUE% "R"

No" '**+/ (/'.)"7ven though the sale of electricity by a power generation company is sub!ect to ero-rated 8AT,

its claim for refund or tax credit cannot be granted where no 8AT official receipts and 8AT

returns have been presented to prove that it actually made ero-rated sales of electricity. An

entity claiming for refund or tax credit carries with it the burden of proving that not only is it

entitled under the substantive law to the allowance of its claim for refund or tax credit but also

that it met all the re"uirements for evidentiary substantiation of its claim before the

administrative official concerned.

CENUE vs" MINDANAO II PARTNERS5IP% "R"

No" ''0* (/'0)"

Section 11%35 speaks of two periodsF the period of 1%& days, which serves as a waiting period

to give time for the CI: to act on the administrative claim for refund or credit, and the period of

E& days, which refers to the period for interposing an appeal with the CTA. The E&-day period

applies not only to instances of actual denial by the CI: of the claim for refund or tax credit, but

to cases of inaction by the CI: as well. Therefore, notwithstanding the timely filing of

administrative claims, the CTA does not have !urisdiction over the case where the taxpayer$s

!udicial claim was filed beyond the E& day period, the nature of such time re"uirement being

mandatory.

Comm!ss!one o$ Intenal Reven#e vs" S!l!,on P3!l!pp!nes% In," ($omely Intel P3!l!pp!nes

Man#$a,t#!n7% In,")% "R" No" '+44* (Ma,3 '% /'0)"

+rior to seeking !udicial recourse before the CTA, a 8ATregistered person may apply for the

issuance of a tax credit certificate or refund of creditable input tax attributable to erorated or

effectively erorated sales within two 3%5 years after the close of taxable "uarter when the sales


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or purchases were made. Additionally, under paragraph 35 of Section 11%, Tax Code, the

Commissioner of Internal :evenue is given a 1%&day period, from submission of complete

documents in support of the administrative claim within which to act on claims for


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refund(applications for issuance of the tax credit certificate. Npon denial of the claim or

application, or upon expiration of the 1%&day period, the taxpayer only has E& days within

which to appeal said adverse decision or unacted claim before the CTA.

Ta7an!to M!n!n7 Copoat!on vs" Comm!ss!one o$ Intenal Reven#e% "R" No" '42'(=#ne '*% /'0)"

The %&1& Aichi case instructs that once the administrative claim is filed within the prescriptive

period, the claimant must wait for the 1%&-day period to end and, thereafter, he is given a E&-day

period to file his !udicial claim before the CTA, even if said 1%&-day and E&-day periods would

exceed the aforementioned two 3%5-year prescriptive period.

Ta7an!to M!n!n7 Copoat!on vs" Comm!ss!one o$ Intenal Reven#e% "R" No" /''2

(Novem-e +% /'0)"

The %-year period under Section %%= does not apply to appeals before the CTA in relation toclaims for a refund or tax credit for unutilied creditable input 8AT. Section %%= pertains to the

recovery of taxes erroneously, illegally, or excessively collected. Input 8AT is not #excessively$

collected as understood under Section %%= because, at the time the input 8AT is collected, the

amount paid is correct and proper. It is, therefore, Section 11% which applies specifically with

regard to claiming a refund or tax credit for unutilied creditable input 8AT.

1ORT ELOPMENT CORPORATION vs" COMMISSIONER O1

INTERNAL RE>ENUE% "R" No" '4.02% =an#ay % /'.

+rior payment of taxes is not necessary before a taxpayer could avail of the H' transitional input

tax creditF first, it was never mentioned in Section 1&@ of the old 9I:C Lnow Sec. 111M that prior

payment of taxes is a re"uirement second, since the law 3Section 1&@ of the 9I:C5 does not

provide for prior payment of taxes, to re"uire it now would be tantamount to !udicial legislation

which, to state the obvious, is not allowed third, a transitional input tax credit is not a tax refund

per se but a tax credit fourth, if the intent of the law were to limit the input tax to cases where

actual 8AT was paid, it could have simply said that the tax base shall be the actual value-added

tax paid and fifth, this Court had already declared that prior payment of taxes is not re"uired in

order to avail of a tax credit.

COMMISSIONER O1 INTERNAL RE>ENUE vs" SEAATE TEC5NOLO;

(P5ILIPPINES)% "R" No" '2.*++% 1e-#ay ''% //2

0aving determined that respondent/s purchase transactions are sub!ect to a ero 8AT rate, the tax

refund or credit is in order. To repeat, the 8AT is a tax imposed on consumption, not on business.

Although respondent as an entity is exempt, the transactions it enters into are not necessarily so.

The 8AT payments made in excess of the ero rate that is imposable may certainly be refunded

or credited.

CIR vs Pas,o Realty an6 Development Cop"% R no" '*.'2% =#ne % '


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An assessment contains not only a computation of tax liabilities, but also a demand for payment

within a prescribed period. It also signals the time when penalties and protests begin to accrue


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against the taxpayer. To enable the taxpayer to determine his remedies thereon, due process

re"uires that it must be served on and received by the taxpayer. Accordingly, an affidavit, which

was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a

criminal complaint for tax evasion, cannot be deemed an assessment that can be "uestioned

before the Court of Tax Appeals.

SMI:ED P3!l!pp!ne Te,3nolo7y% In," vs" Comm!ss!one o$ Intenal Reven#e% "R" No"

'420'/ (Novem-e '% /'0)

The power and duty to assess national internal revenue taxes are lodged with the 6I:.

The Court of Tax Appeals has no power to make an assessment at the first instance. ;n matters

such as tax collection, tax refund, and others related to the national internal revenue taxes, the

Court of Tax Appeals$ !urisdiction is appellate in nature. 0owever, because :epublic Act 9o.

11%@ also vests the Court of Tax Appeals with !urisdiction over the 6I:$s inaction on a

taxpayer$s refund claim, there may be instances when the Court of Tax Appeals has to take

cogniance of cases that have nothing to do with the 6I:$s assessments or decisions. If the 6I:

fails to act on the re"uest for refund, the taxpayer may bring the matter to the Court of Tax

Appeals.

Sama:I Ele,t!, Coopeat!ve vs" Comm!ss!one o$ Intenal Reven#e% "R" No" '.'//

(De,em-e '/% /'0)"

;ur stand that the law should be interpreted to mean a separation of the three different situations

of false return, fraudulent return with intent to evade tax, and failure to file a return is

strengthened immeasurably by the last portion of the provision which segregates the situationsinto three different classes, namely )falsity,* )fraud* and )omission.* That there is a difference

between )false return* and )fraudulent return* cannot be denied. >hile the first merely implies

deviation from the truth, whether intentional or not, the second implies intentional or deceitful

entry with intent to evade the taxes due.

CIR vs 5anteB Ta6!n7 Co"% R no" '.+42% Ma,3 .'% //2

The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be

determined by estimation. The petitioner is not re"uired to compute such tax liabilities with

mathematical exactness. Approximation in the calculation of the taxes due is !ustified. To hold

otherwise would be tantamount to holding that skillful concealment is an invincible barrier to

proof. 0owever, the rule does not apply where the estimation is arrived at arbitrarily and

capriciously. In fine, then, the petitioner acted arbitrarily and capriciously in relying on and

giving weight to the machine copies of the Consumption 7ntries in fixing the tax deficiency

assessments against the respondent.

P5ILIPPINE AIRLINES% INC" vs" COMMISSIONER O1 INTERNAL RE>ENUE% "R"

No" '*42 (/'.)"


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Section %&23c5 of the 9I:C provides that it is the statutory taxpayer which has the legal

personality to file a claim for refund. Accordingly, in cases involving excise tax exemptions on

petroleum products under Section 1E@, the Court has consistently held that it is the statutory

taxpayer who is entitled to claim a tax refund based thereon and not the party who merely bears


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its economic burden. 0owever, the abovementioned rule should not apply to instances where the

law clearly grants the party to which the economic burden of the tax is shifted an exemption

from both direct and indirect taxes. In which case, the latter must be allowed to claim a tax

refund even if it is not considered as the statutory taxpayer under the law. In this case, +AB$s

franchise grants it an exemption from both direct and indirect taxes on its purchase of petroleumproducts. 0ence, +AB has the legal personality to file the claim for refund for the passed on

excise taxes because of its franchise.

CIR vs P!meto?n Popety o#p In,"% R '+'22% A#7#st *% //4

6oth Article 1E of the Civil Code and Section E1, Chapter 8III, 6ook I of the Administrative

Code of 1=H< deal with the same sub!ect matter the computation of legal periods. Nnder the

Civil Code, a year is e"uivalent to E?@ days whether it be a regular year or a leap year. Nnder the

Administrative Code of 1=H


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the 9I:C re"uires that the legal and factual bases be stated in the formal letter of demand and

assessment notice. ;therwise the law and :: 1%-== would be rendered nugatory. In view of the


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absence of a fair opportunity for 7nron to be informed of the bases of the assessment, the

assessment was void. This is a re"uirement of due process.

CIR vs 1!st EBpess Pa?ns3op Company% R '4/02:0+% =#ne '+% //

+etitioner cannot insist on the submission of proof of ST payment because such document doesnot exist as respondent claims that it is not liable to pay, and has not paid, the ST on the deposit

on subscription. The term )relevant supporting documents* should be understood as those

documents necessary to support the legal basis in disputing a tax assessment as determined by

the taxpayer. The 6I: can only inform the taxpayer to submit additional documents. The 6I:

cannot demand what type of supporting documents should be submitted. ;therwise, a taxpayer

will be at the mercy of the 6I:, which may re"uire the production of documents that a taxpayer

cannot submit.

All!e6


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CIR vs P3!l!pp!ne lo-al Comm#n!,at!on% R '+4'0+% O,to-e .'% //+


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The running of the prescription period where the acts of the taxpayer did not prevent the

government from collecting the tax. +artial payment would not prevent the government from

suing the taxpayer. 6ecause, by such act of payment, the government is not thereby )persuaded

to postpone collection to make him feel that the demand was not unreasonable or that no

harassment or in!ustice is meant.*


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P3!l!pp!ne P3osp3ate 1et!l!e Cop" vs CIR% R '0'4.% =#ne *% //2


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In cases before tax courts, :ules of Court applies only by analogy or in a suppletory character

and whenever practicable and convenient shall be liberally construed in order to promote its

ob!ective of securing a !ust, speedy and inexpensive disposition of every action and proceeding.

Since it is not disputed that petitioner is entitled to tax exemption, it should not be precluded

from presenting evidence to substantiate the amount of refund it is claiming on mere technicalityespecially in this case, where the failure to present invoices at the first instance was ade"uately

explained by petitioner.

ACCRA Investments vs CA% "R" No" +.% De,em-e /% ''

Kor corporations, the two-year prescriptive period within which to claim a refund commences to

run, at the earliest, on the date of the filing of the ad!usted final tax return. The rationale in

computing the two-year prescriptive period with respect to the petitioner corporation/s claim for

refund from the time it filed its final ad!ustment return is the fact that it was only then that

ACC:AI9 could ascertain whether it made profits or incurred losses in its business operations.

S!la! vs CIR% "R" Nos" '4'.*. & '4.4% Novem-e '0% //*

The proper party to "uestion, or seek a refund of an indirect tax is the statutory taxpayer, the

person on whom the tax is imposed by law and who paid the same even if he shifts the burden

thereof to another. 7ven if +etron Corporation passed on to Silkair the burden of the tax, the

additional amount billed to Silkair for !et fuel is not a tax but part of the price which Silkair had

to pay as a purchaser.

An7eles C!ty vs" An7eles C!ty Ele,t!, Cop"% R '++'.0% =#ne % /'/

The 9ational Internal :evenue Code of 1==< 39I:C5 expressly provides that no court shall have

the authority to grant an in!unction to restrain the collection of any national internal revenue tax,

fee or charge imposed by the code. The situation, however, is different in the case of the

collection of local taxes as there is no express provision in the BC prohibiting courts from

issuing an in!unction to restrain local governments from collecting taxes. Such statutory lapse or

intent, however it may be viewed, may have allowed preliminary in!unction where local taxes are

involved but cannot negate the procedural rules and re"uirements under :ule @H.

PNOC vs CA% "R" No" '/4+% Ap!l +% //2

Compromise may be the favored method to settle disputes, but when it involves taxes, it may be

sub!ect to closer scrutiny by the courts. A compromise agreement involving taxes would affect

not !ust the taxpayer and the 6I:, but also the whole nation, the ultimate beneficiary of the tax

revenues collected.

People vs San6!7an-ayan% R '22.% A#7#st '+% //2

The 6I: may therefore abate or cancel the whole or any unpaid portion of a tax liability,

inclusive of increments, if its assessment is excessive or erroneous or if the administration costs


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involved do not !ustify the collection of the amount due. 9o mutual concessions need be made,

because an excessive or erroneous tax is not compromised it is abated or canceled. ;nly correct

taxes should be paid.


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PELI9LO; REALT; CORPORATION vs" T5E PRO>INCE O1


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C!ty o$ Man!la v" Co,a:Cola hen a municipality or city has already imposed a business tax on manufacturers, etc. of li"uors,distilled spirits, wines, and any other article of commerce, pursuant to Section 12E 3a5 of the


46/52

BC, said municipality or city may no longer sub!ect the same manufacturers, etc. to a business

tax under Section 12E 3h5 of the same Code. Section 12E 3h5 may be imposed only on businesses

that are sub!ect to excise tax, 8AT, or percentage tax under the 9I:C, and that are Gnot

ot3e?!se spe,!$!e6 !n pe,e6!n7 paa7ap3sG.

E!,sson Tele,oms vs" C!ty o$ Pas!7" "R" NO" '4+++4% Novem-e % //4

Tax should be computed based on gross receipts the right to receive income, and not the actual

receipt, determines when to include the amount in gross income. The imposition of local

business tax based on petitioner$s gross revenue will inevitably result in the constitutionally

proscribed double taxation taxing of the same person twice by the same !urisdiction for the

same thing inasmuch as petitioner$s revenue or income for a taxable year will definitely

include its gross receipts already reported during the previous year and for which local business

tax has already been paid.

Palma Development Cop" v" M#n!,!pal!ty o$ Malan7as% "R" No" '20% O,to-e '+% //.

Section 1EE3e5 of :A 9o.


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:eal properties shall be appraised at the current and fair market value prevailing in the locality

where the property is situated and classified for assessment purposes on the basis of its actual

use.


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5e!s o$ TaGonea v" Co#t o$ Appeals% "R" No" L:++44% Ma,3 4% '*'

It is Uthe duty of each person/ ac"uiring real estate in the city to make a new declaration thereof,

with the advertence that failure to do so shall make the assessment in the name of the previous

owner /valid and binding on all persons interested, and for all purposes, as though the same hadbeen assessed in the name of its actual owner./

Spo#ses 5# v" Spo#ses Un!,o% "R" No" '0+2.0% Septem-e '*% //

>ith regard to determining to whom the notice of sale should have been sent, settled is the rule

that, for purposes of real property taxation, the registered owner of the property is deemed the

taxpayer. Thus, in identifying the real delin"uent taxpayer, a local treasurer cannot rely solely on

the tax declaration but must verify with the :egister of eeds who the registered owner of the

particular property is.

Ty v" Tampe% "R" No" ''4244% De,em-e /'% '2

The protest contemplated under Sec. %@% of :.A.


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ordinarily be inferred from the facts, and therefore can only be proved by unguarded,

expressions, conduct and circumstances generally.

=a6elea v" People% "R" No" '+2+2% 1e-#ay /+% //+


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Smuggling is committed by any person whoF 315 fraudulently imports or brings into the

+hilippines any article contrary to law 3%5 assists in so doing any article contrary to law or 3E5

receives, conceals, buys, sells or in any manner facilitate the transportation, concealment or sale

of such goods after importation, knowing the same to have been imported contrary to law.

Caaa Ma-le P3!l"% In," v" Comm!ss!one o$ C#stoms% "R" No" '+*/% Septem-e /'%

'

The Tariff and Customs law sub!ects to forfeiture any article which is removed contrary to law

from any public or private warehouse under customs supervision, or released irregularly from

Customs custody. 6efore forfeiture proceedings are instituted the law re"uires the presence of

probable cause once established, the burden of proof is shifted to the claimant.

People v" Co#t o$ 1!st Instan,e o$ R!al% "R" No" L:0'+*+% Novem-e '4% '*/

It is "uite clear that seiure and forfeiture proceedings under the tariff and customs laws are not

criminal in nature as they do not result in the conviction of the offender nor in the imposition of

the penalty provided for in section E?&1 of the Code. As can be gleaned from Section %@EE of the

code, seiure proceedings, such as those instituted in this case, are purely civil and administrative

in character, the main purpose of which is to enforce the administrative fines or forfeiture

incident to unlawful importation of goods or their deliberate possession.

S#-!,


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cases that arise out of the 9ational Internal :evenue Code 39I:C5 or related laws administered

by the 6ureau of Internal :evenue 36I:5.


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D#ty 1ee P3!l!pp!nes vs" ithout the automatic review by the Commissioner of Customs and the Secretary of Kinance, a

collector in any of our country/s far-flung ports, would have absolute and unbridled discretion to

determine whether goods seied by him are locally produced, hence, not dutiable, or of foreign

origin, and therefore sub!ect to payment of customs duties and taxes. 0is decision, unless

appealed by the aggrieved party 3the owner of the goods5, would become final with no one the

wiser except himself and the owner of the goods.

R!al Comme,!al

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