TAX I

Paseo Realty & Development Corporation v. Court of Appeals, GR

No. 119286, October 13, 2004

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.

Commissioner of Internal Revenue v. Fortune Tobacco Corporation,

559 SCRA 160 (2008)

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.

Mactan Cebu International Airport Authority v. Marcos, 261 SCRA

667 (1996)

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. FERTIPHIL CORPORATION,

G.R. No. 166006, March 14, 2008

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.

Commissioner of Internal Revenue v. SM Prime Holdings, Inc., 613

SCRA 774 (2010)

The power to tax is sometimes called the power to destroy. Therefore, it should be
exercised with caution to minimize injury to the proprietary rights of the taxpayer. It
must be exercised fairly, equally and uniformly, lest the tax collector kills the hen that
lays the golden egg.
MANILA MEMORIAL PARK, INC. AND LA FUNERARIA PAZ-SUCAT, INC.
vs. SECRETARY OF THE DSWD, G.R. No. 175356 (2013).

The 20% senior citizen 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 citizens
who, at their age, are less likely to be 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, 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 citizens 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
citizens. The State can employ police power measures to regulate the pricing of goods
and services, and, hence, the profitability of business establishments in order to
pursue legitimate State objectives for the common good, provided, the regulation does
not go too far as to amount to taking.

SOUTHERN CROSS CEMENT CORPORATION v. CEMENT

MANUFACTURERS ASSOCIATION OF THE PHILIPPINES, G.R. No.
158540, August 3, 2005

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

ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON

S. ALCANTARA and ED VINCENT S. ALBANO v. THE HONORABLE
EXECUTIVE SECRETARY EDUARDO ERMITA, G.R. No. 168056,
September 1, 2005

The expenses of government, having for their object the interest of all, should be
borne by everyone, and the more man enjoys the advantages of society, the more he
ought to hold himself honored in contributing to those expenses.

RENATO V. DIAZ and AURORA MA. F. TIMBOL v. THE SECRETARY OF

FINANCE, G.R. No. 193007, July 19, 2011
A tax is imposed under the taxing power of the government principally for the purpose
of raising revenues to fund public expenditures; toll fees, on the other hand, are
collected by private tollway operators as reimbursement for the costs and expenses
incurred in the construction, maintenance and operation of the tollways. Taxes may be
imposed only by the government under its sovereign authority, toll fees may be
demanded by either the government or private individuals or entities, as an attribute of
ownership.

PAMBANSANG KOALISYON NG MGA SAMAHANG MAGSASAKA AT

MANGGAGAWA SA NIYUGAN v. EXECUTIVE SECRETARY G.R. Nos.
147036-37 April 10, 2012

The Court was satisfied that the coco-levy funds were raised pursuant to law to
support a proper governmental purpose. They were raised with the use of the police
and taxing powers of the State for the benefit of the coconut industry and its farmers in
general.

GEROCHI v. DEPARTMENT OF ENERGY, 527 SCRA 696 (2007

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 OF INTERNAL REVENUE v. ALGUE, INC., and THE

COURT OF TAX APPEALS, G.R. No. L-28896, February 17, 1988

Despite the natural reluctance to surrender part of ones 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 OF INTERNAL REVENUE v. ROSEMARIE ACOSTA G.R.

No. 154068 August 3, 2007

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 Holmess
memorable metaphor, the price we pay for civilization, tax laws must be faithfully and
strictly implemented.

SWEDISH MATCH PHILIPPINES INC. v. THE TREASURER OF THE CITY

OF MANILA, G.R. No. 181277, July 3, 2013

Double taxation means taxing the same property twice when it should be taxed only
once; that is, taxing the same person twice by the same jurisdiction for the same
thing. There is indeed double taxation if a taxpayer is subjected to the taxes under
both Section 14 (Tax on Manufacturers, Assemblers and other Processors) and
Section 21 (Tax on Business Subject to the Excise, Value-Added or Percentage Taxes
under the NIRC) of the Tax Ordinance No. 7794.

SERAFICA v. CITY TREASURER OF ORMOC, G.R. No. L- 24813, April

28, 1968

Regulation and taxation are two different things, the first being an exercise of police
power, whereas the latter involves the exercise of the power of taxation. While R.A.
2264 provides that no city may impose taxes on forest products and although lumber
is a forest product, the tax in question is imposed not on the lumber but upon its sale;
thus, there is no double taxation and even if there was, it is not prohibited.

COMMISSIONER OF INTERNAL REVENUE v. S.C. JOHNSON AND SON,

INC. G.R. No. 127105 June 25, 1999
In negotiating tax treaties, the underlying rationale for reducing the tax rate is that the
Philippines will give up a part of the tax in the expectation that the tax given up for this
particular investment is not taxed by the other country. Thus, if the rates of tax are
lowered by the state of source, in this case, by the Philippines, 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.

DEUTSCHE BANK AG MANILA BRANCH v. COMMISSIONER OF

INTERNAL REVENUE, G.R. No. 188550, August 19, 2013

Tax conventions are drafted with a view towards the elimination of international
juridical double taxation, which is defined as the imposition of comparable taxes in two
or more states on the same taxpayer in respect of the same subject matter and for
identical periods. A corporation who has paid 15% Branch Profit Remittance Tax
(BPRT) has the right to avail (by way of refund ) of the benefit of a preferential tax rate
of 10% BPRT in accordance with the RP-Germany Tax Treaty despite non-compliance
with an application with ITAD at least 15 days before the transaction for the lower rate.
Bearing in mind the rationale of tax treaties, the requirements for the application for
availment of tax treaty relief as required by RMO No. 1-2000 should not operate to
divest entitlement to the relief as it would constitute a violation of the duty required by
good faith in complying with a tax treaty.

CBK Power Company Limited vs. Commissioner of Internal

Revenue/Commissioner of Internal Revenue vs. CBK Power
Company Limited, G.R. No. 193383-84/G.R. No. 193407-08 (January
14, 2015).

The Philippine Constitution provides for adherence to the general principles of

international law as part of the law of the land. The time-honored international principle
of pacta sunt servanda demands the performance in good faith of treaty obligations on
the part of the states that enter into the agreement. In this jurisdiction, treaties have
the force and effect of law. The obligation to comply with a tax treaty must take
precedence over the objective of RMO No. 1-2000. Logically, noncompliance with tax
treaties has negative implications on international relations, and unduly discourages
foreign investors. The objective of RMO No. 1-2000 in requiring the application for
treaty relief with the ITAD before a partys availment of the preferential rate under a tax
treaty is to avert the consequences of any erroneous interpretation and/or application
of treaty provisions, such as claims for refund/credit for overpayment of taxes, or
deficiency tax liabilities for underpayment. However, the underlying principle of prior
application with the BIR becomes moot in refund cases where the very basis of the
claim is erroneous or there is excessive payment arising from the non-availment of a
tax treaty relief at the first instance. CBK Power could not have applied for a tax treaty
relief 15 days prior to its payment of the final withholding tax on the interest paid to its
lenders precisely because it erroneously paid said tax on the basis of the regular rate
as prescribed by the NIRC, and not on the preferential tax rate provided under the
different treaties. The prior application requirement under RMO No. 1-2000 is not only
illogical, but is also an imposition that is not found at all in the applicable tax treaties.
BIR should not impose additional requirements that would negate the availment of the
reliefs provided for under international agreements, especially since said tax treaties
do not provide for any prerequisite at all for the availment of the benefits under said
agreements.

COMMISSIONER OF INTERNAL REVENUE v. PILIPINAS SHELL

PETROLEUM CORPORATION, G.R. No. 188497, February 19, 2014
Section 135(a) 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 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 OF INTERNAL REVENUE v. THE ESTATE OF BENIGNO

P. TODA, JR. G.R. No. 147188 September 14, 2004

Tax evasion connotes the integration of three factors: (1) the end to be achieved, i.e.,
the payment of less than that known by the taxpayer to be legally due, or the non-
payment of tax when it is shown that a tax is due; (2) an accompanying state of mind
which is described as being evil, in bad faith, willfull, or deliberate and not
accidental; and (3) a course of action or failure of action which is unlawful.
(FELS ENERGY, INC. v. PROVINCE OF BATANGAS, 516 SCRA 186
(2007))
Taxation is the rule and exemption is the exception.
BATANGAS POWER CORPORATION BATANGAS CITY and NATIONAL
POWER CORPORATION, G.R. No. 152675, April 28, 2004

This Court recognized the removal of the blanket exclusion of government

instrumentalities from local taxation as one of the most significant provisions of the
1991 LGC. Specifically, we stressed that Section 193 of the LGC, an express and
general repeal of all statutes granting exemptions from local taxes, withdrew the
sweeping tax privileges previously enjoyed by the NPC under its Charter.

ARTURO M. TOLENTINO v. THE SECRETARY OF FINANCE and THE

COMMISSIONER OF INTERNAL REVENUE, G.R. No. 115455, October
30, 1995

Since the law granted the press a privilege, the law could take back the privilege
anytime without offense to the Constitution. The reason is simple: by granting
exemptions, the State does not forever waive the exercise of its sovereign prerogative;
indeed, in withdrawing the exemption, the law merely subjects the press to the same
tax burden to which other businesses have long ago been subject.

MCIAA v. Marcos, G.R. No. 120082 September 11, 1996

Nevertheless, since taxation is the rule and exemption therefrom the exception, the
exemption may thus be withdrawn at the pleasure of the taxing authority. The only
exception to this rule is where the exemption was granted to private parties based on
material consideration of a mutual nature, which then becomes contractual and is thus
covered by the non-impairment clause of the Constitution.

SOUTH AFRICAN AIRWAYS v. COMMISSIONER OF INTERNAL

REVENUE, 612 SCRA 665 (2010)

Taxes cannot be subject to compensation for the simple reason that the Government
and the taxpayers are not creditors and debtors of each other, debts are due to the
Government in its corporate capacity, while taxes are due to the Government in its
sovereign capacity.
DOMINGO v. GARLITOS, 8 SCRA 443 (1963)

However, if the obligation to pay taxes and the taxpayers claim against the
government are both overdue, demandable, as well as fully liquidated, compensation
takes place by operation of law and both obligations are extinguished to their
concurrent amounts.

ASIA INTERNATIONAL AUCTIONEERS, INC. v. COMMISSIONER OF

INTERNAL REVENUE G.R. No. 179115 September 26, 2012
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.

FORT BONIFACIO DEVELOPMENT CORPORATION v. COMMISSIONER

OF INTERNAL REVENUE, G.R. No. 173425, September 4, 2012

While administrative agencies, such as the Bureau of Internal Revenue, 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. Hence, in case of discrepancy
between the basic law and an interpretative or administrative ruling, the basic law
prevails.

COMMISSIONER OF INTERNAL REVENUE v. SM PRIME HOLDINGS,

INC. 613 SCRA 774 (2010)

Revenue Memorandum Circulars (RMCs) 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 ENERGY CORPORATION (Formerly MIRANT PAGBILAO
CORPORATION) v. COMMISSIONER OF INTERNAL REVENUE, G.R. No.
197760, January 13, 2014

BIR Ruling No. DA-489-03 is a general interpretative rule because it is a response to a

query made, not by a particular taxpayer, but by a government agency tasked with
processing tax refunds and credits. Thus, all taxpayers can rely on BIR Ruling No. DA-
489-03 from the time of its issuance on 10 December 2003 up to its reversal by this
Court in Aichi on 6 October 2010, where this Court held that the 120+30 day periods
are mandatory and jurisdictional.

PLANTERS PRODUCTS, INC. v. FERTIPHIL CORPORATION, G.R. No.

166006, March 14, 2008)

It would be a robbery for the State to tax its citizens and use the funds generated for a
private purpose. When a tax law is only a mask to exact funds from the public when its
true intent is to give undue benefit and advantage to a private enterprise, that law will
not satisfy the requirement of public purpose.

ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON

S. ALCANTARA and ED VINCENT S. ALBANO v. THE HONORABLE
EXECUTIVE SECRETARY G.R. No. 168056 September 1, 2005
The powers which Congress is prohibited from delegating are those which are strictly,
or inherently and exclusively, legislative. Purely legislative power, which can never be
delegated, has been described as the authority to make a complete law complete as
to the time when it shall take effect and as to whom it shall be applicable and to
determine the expediency of its enactment.

NATIONAL POWER CORPORATION v. CITY OF CABANATUAN G.R. No.

149110 April 9, 2003

Taxation assumes even greater significance with the ratification of the 1987
Constitution. Thenceforth, the power to tax is no longer vested exclusively on
Congress; local legislative bodies are now given direct authority to levy taxes, fees
and other charges pursuant to Article X, section 5 of the 1987 Constitution.

QUEZON CITY, et al. v. ABS-CBN BROADCASTING CORPORATION,

G.R. No. 162015, March 6, 2006
Clearly then, while a new slant on the subject of local taxation now prevails in the
sense that the former doctrine of local government units delegated power to tax had
been effectively modified with Article X, Section 5 of the 1987 Constitution now in
place, the basic doctrine on local taxation remains essentially the same. For as the
Court stressed in Mactan, the power to tax is [still] primarily vested in the Congress.

SOUTHERN CROSS CEMENT CORPORATION v. CEMENT MANUFACTURERS

ASSOCIATION OF THE PHILIPPINES, G.R. No. 158540, August 3, 2005

Assuming that Section 28(2) Article VI did not exist, the enactment of the SMA
[Safeguard Measure Act] by Congress would be voided on the ground that it would
constitute an undue delegation of the legislative power to tax. The constitutional
provision shields such delegation from constitutional infirmity, and should be
recognized as an exceptional grant of legislative power to the President, rather than
the affirmation of an inherent executive power.

Alexander Howden & Co., Ltd. v. Collector of Internal Revenue as

cited in COMMISSIONER OF INTERNAL REVENUE v. JULIANE BAIER-
NICKEL, G.R. No. 153793, August 29, 2006

The reinsurance premiums remitted to appellants by virtue of the reinsurance

contracts, accordingly, had for their source the undertaking to indemnify
Commonwealth Insurance Co. against liability. Said undertaking is the activity that
produced the reinsurance premiums, and the same took place in the Philippines.

COMMISSIONER OF INTERNAL REVENUE v. JAPAN AIR LINES, INC.,

G.R. No. 60714, March 6, 1991
For the source of income to be considered as coming from the Philippines, it is
sufficient that the income is derived from activities within this country regardless of the
absence of flight operations within Philippine territory. Indeed, the sale of tickets is the
very lifeblood of the airline business, the generation of sales being the paramount
objective.

CITY OF IRIGA v. CAMARINES SUR III ELECTRIC COOPERATIVE, INC.,

G.R. No. 192945, September 5, 2012

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 CASURECO III has its
principal office and from where it operates, regardless of the place where its services
or products are delivered.
COMMISSIONER OF INTERNAL REVENUE v.AMERICAN EXPRESS
INTERNATIONAL, INC. (PHILIPPINE BRANCH), G.R. No. 152609, June
29, 2005

As a general rule, the VAT system uses the destination principle as a basis for the
jurisdictional reach of the tax. Goods and services are taxed only in the country where
they are consumed; thus, exports are zero-rated, while imports are taxed.

PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY (PFDA) v.

CENTRAL BOARD OF ASSESSMENT APPEALS, G.R. No. 178030,
December 15, 2010

As property of public dominion, the Lucena Fishing Port Complex is owned by the
Republic of the Philippines and thus exempt from real estate tax.

KAPATIRAN NG MGA NAGLILINGKOD SA PAMAHALAAN NG

PILIPINAS, INC. v. HON. BIENVENIDO TAN, G.R. No. 81311, June 30,
1988

Equality and uniformity in taxation means that all taxable articles or kinds of property
of the same class shall be taxed at the same rate. The taxing power has the authority
to make reasonable and natural classifications for purposes of taxation; inequalities
which result from a singling out of one particular class for taxation or exemption
infringe no constitutional limitation.

LUNG CENTER OF THE PHILIPPINES v. QUEZON CITY, G.R. No.

144104, June 29, 2004

Even as we find that the petitioner is a charitable institution, we hold that those
portions of its real property that are leased to private entities are not exempt from real
property taxes as these are not actually, directly and exclusively used for charitable
purposes. On the other hand, the 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.

COMMISSIONER OF INTERNAL REVENUE v. ST. LUKES MEDICAL

CENTER, INC. G.R. No. 195909 September 26, 2012
Section 30(E) and (G) of the NIRC requires that an institution be operated
exclusively for charitable or social welfare purposes to be completely exempt from
income tax. An institution under Section 30(E) or (G) 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 30, is merely subject to income tax, previously at the
ordinary corporate rate but now at the preferential 10% rate pursuant to Section 27(B).

JOHN HAY PEOPLES ALTERNATIVE COALITION, et al. v. VICTOR LIM,

et al., G. R. No. 119775, October 24, 2003

The incentives under R.A. No. 7227 are exclusive only to the Subic SEZ, hence, the
extension of the same to the John Hay SEZ finds no support therein. The challenged
grant of tax exemption would circumvent the Constitutions imposition that a law
granting any tax exemption must have the concurrence of a majority of all the
members of Congress.

COMMISSIONER OF INTERNAL REVENUE v. MARUBENI

CORPORATION, G.R. No. 137377, December 18, 2001

A contractors tax is generally in the nature of an excise tax on the exercise of a

privilege of selling services or labor rather than a sale on products; and is directly
collectible from the person exercising the privilege. Being an excise tax, it can be
levied by the taxing authority only when the acts, privileges or business are done or
performed within the jurisdiction of said authority.

CITY OF IRIGA v. CAMARINES SUR III ELECTRIC COOPERATIVE, INC.,

G.R. No. 192945, September 5, 2012
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 OF

INTERNAL REVENUE G.R. No. 179115 September 26, 2012

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

ARTURO M. TOLENTINO v. THE SECRETARY OF FINANCE and THE

COMMISSIONER OF INTERNAL REVENUE, G.R. No. 115455, October
30, 1995
The Constitution does not really prohibit the imposition of indirect taxes which, like the
VAT, are regressive since what it simply provides is that Congress shall evolve a
progressive system of taxation. The constitutional provision has been interpreted to
mean simply that direct taxes are to be preferred [and] as much as possible, indirect
taxes should be minimized.

CHINA BANKING CORPORATION vs. COMMISSIONER OF INTERNAL

REVENUE, G.R. No. 175108 (2013).
The 20% final tax withheld on a banks passive income should be included in the
computation of the Gross Receipts Tax (GRT). Bureau of Internal Revenue (BIR) has
consistently ruled that the term gross receipts do not admit of any deduction. It
emphasized that interest earned by banks, even if subject to the final tax and excluded
from taxable gross income, forms part of its gross receipt for GRT purposes. The
interest earned refers to the gross interest without deduction, since the regulations do
not provide for any deduction. Absent a statutory definition of the term, the BIR had
consistently applied it in its ordinary meaning, i.e., without deduction.

TAN v. DEL ROSARIO, JR. 237 SCRA 324

Global treatment is a system where the tax treatment views indifferently the tax base
and generally treats in common all categories of taxable income of the taxpayer.
Schedular approach is a system employed where the income tax treatment varies and
made to depend on the kind or category of taxable income of the taxpayer.

CIR vs Isabela Cultural Corp., GR 172231, February 12, 2007

The accrual method relies upon the taxpayers right to receive amounts or its
obligation to pay them, in opposition to actual receipt or payment, which characterizes
the cash method of accounting. Amounts of income accrue where the right to receive
them become fixed, where there is created an enforceable liability. Similarly, liabilities
are accrued when fixed and determinable in amount, without regard to indeterminacy
merely of time of payment. For a taxpayer using the accrual method, the determinative
question is, when do the facts present themselves in such a manner that the taxpayer
must recognize income or expense? The accrual of income and expense is permitted
when the all-events test has been met. This test requires: (1) fixing of a right to income
or liability to pay; and (2) the availability of the reasonable accurate determination of
such income or liability.

Tomas Calasanz, et al. vs. Commissioner of Internal Revenue, et

al., G.R. No. L-26284, October 9, 1986
The proceeds from the inherited land of petitioners, which they subdivided into small
lots and in the process converted into a residential subdivision and given the name
Don Mariano Subdivision, is taxable as ordinary income. Property initially classified as
a capital asset may thereafter be treated as an ordinary asset if a combination of the
factors indubitably tend to show that the activity was in furtherance of or in the course
of the taxpayers trade or business; thus, a 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 salablehowever, if the inherited property is 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 heirs business.

CIR vs CA, G.R. No. 108576 January 20, 1999

Stock dividends, strictly speaking, represent capital and do not constitute income to its
recipient. So that the mere issuance thereof is not yet subject to income tax as they
are nothing but an enrichment through increase in value of capital investment.
However, the redemption or cancellation of stock dividends, depending on the time
and manner it was made, is essentially equivalent 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. Isabel T. Santos vs. Servier Phil., Inc., et al., G.R. No. 166377,
November 28, 2008

Respondent terminated petitioners 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 41
yrs old at the time of retirement and had rendered only 8 years of service; for these
benefits to be exempt from tax, the following requisites must concur: (1) a reasonable
private benefit plan is maintained by the employer; (2) the retiring official or employee
has been in the service of the same employer for at least ten (10) years; (3) the
 retiring official or employee is not less than fifty (50) years of age at the time of his
retirement; and (4) the benefit had been availed of only once.

1. M. Hoskins & Co., Inc. vs. Commissioner of Internal Revenue,

G.R. No. L-24059, November 28, 1969

Payment by the taxpayer-corporation to its controlling stockholder (Hoskins) of 50% of

its supervision fees (paid by a client of the corporation for the latters services as
managing agent of a subdivision project) or the amount of P99,977.91 is not a
deductible ordinary and necessary expense because it does not pass the test of
reasonable compensation. If independently, a one-time P100,000.00-fee to plan and
lay down the rules for supervision of a subdivision project were to be paid to an
experienced realtor such as Hoskins, its fairness and deductibility by the taxpayer
could be conceded; however, the fee paid to Hoskins continued every year since 1955
up to 1963 and for as long as its contract with the subdivision owner subsisted,
regardless of whether services were actually rendered by Hoskins.

Philippine Refining Company vs. Court of Appeals, et al., G.R. No.

118794, May 8, 1996

In claiming deductions for bad debts, the only evidentiary support given by PRC was
the explanation posited by its accountant, whose allegations were not supported by
any documentary evidence. One of the requisites to qualify as bad debt is that the
debt must be actually 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 (1) sending of statement of accounts; (2) sending of collection letters; (3) giving the
account to a lawyer for collection; and (4) filing a collection case in court.

Consolidated Mines, Inc. vs. Court of Tax Appeals, et al., G.R. Nos.
L-18843 & 18844, August 29, 1974

Both 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 OF INTERNAL REVENUE vs. PHILIPPINE AIRLINES,

INC. (PAL), G.R. No. 179259 (2013).
A corporation like the Philippine Airlines who has a franchise of its own cannot be
subject to the minimum corporate income tax. The reason being- as provided in PD
1590, Section 13 of PALs franchise, its taxation shall be strictly governed by two
fundamental rules, to wit: (1) respondent shall pay the Government either the basic
corporate income tax or franchise tax, whichever is lower; and (2) 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 real property
tax.

Manila Banking Corp. v. CIR, 499 SCRA 782

The intent of Congress relative to the MCIT is to grant a 4 year suspension of tax
payment to newly formed corporations. Corporations still starting have to stabilize their
venture in order to obtain stronghold in the industry. It is not a surprise when many
corporations reported losses in their initial years of operations.

Commissioner of Internal Revenue vs. Court of Appeals, et al., G.R.

No. 124043, October 14, 1998

YMCA, a non-stock non-profit corporation with charitable objectives, claimed

exemption from payment of income tax by invoking the NIRC and the Constitution.
While the income received by the organizations enumerated in Section 26 of the NIRC
is, as a rule, exempted from the payment of tax in respect to income received by
them as such, the exemption does not apply to income derived from any of their
properties, real or personal, or from any of their activities conducted for profit,
regardless of the disposition made of such income; Moreover, charitable institutions
under Art. VI, sec. 28 of the Constitution are only exempted from property taxes, and
YMCA is not an educational institution under Article XIV, Section 4 of the Constitution.

Commissioner of Internal Revenue vs. Citytrust Investment Phils.,

Inc., G.R. Nos. 139786 & 140857, September 27, 2006

Citytrust and Asianbank are domestic corporations which paid gross receipts tax and
claimed a refund on the basis of a CTA ruling that the 20% FWT on a banks passive
income does not form part of the taxable gross receipts. The 20% FWT on a banks
interest income forms part of the taxable gross receipts because gross receipts
means the entire receipts without any deduction; moreover, the imposition of the
20% FWT and 5% GRT does not constitute double taxation because GRT is a
percentage tax while FWT is an income tax, and the two concepts are different from
each other.

COMMISSIONER OF INTERNAL REVENUE vs. TEAM (PHILIPPINES)

OPERATIONS CORPORATION, G.R. No. 185728 (2013).

For a taxpayer to be entitled to a tax credit or refund of creditable withholding tax, the
following requisites must be complied with: First, The claim must be filed with the CIR
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

GONZALO VILLANUEVA vs. SPOUSES FROILAN, G.R. No. 172804,

January 24, 2011

Post-mortem dispositions typically

(1) 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 (full or
naked) and control of the property while alive;
(2) That before the [donors] 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;
(3) That the transfer should be void if the transferor should survive the transferee;
[4] [T]he 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 causa;
[5] 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
(6) 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 subject of the deed.
ROMARICO G. VITUG vs. THE HONORABLE COURT OF APPEALS and
ROWENA FAUSTINO-CORONA, G.R. No. 82027, March 29, 1990

The conveyance in question is not, first of all, one of mortis causa, which should be
embodied in a will. In this case, the monies subject of savings account were in the
nature of conjugal funds. In the case relied on, Rivera v. Peoples Bank and Trust Co.,
we rejected claims that a survivorship agreement purports to deliver one partys
separate properties in favor of the other, but simply, their joint holdings.

RAFAEL ARSENIO S. DIZON vs. COURT OF TAX APPEALS, G.R. No.

140944, April 30, 2008
As held in Propstra v. U.S., where a lien claimed against the estate was certain and
enforceable on the date of the decedents death, the fact that the claimant
subsequently 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 OF INTERNAL REVENUE vs. COURT OF APPEALS,

G.R. No. 123206, March 22, 2000
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 United States to include all expenses essential
to the collection of the assets, payment of debts or the distribution of the property to
the persons entitled to it. 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. AGRIPINO GESTOPA and ISABEL SILARIO GESTOPA vs. COURT

OF APPEALS, G.R. No. 111904, October 5, 2000
The granting clause shows that Diego donated the properties out of love and affection
for the donee which is a mark of a donation inter vivos; second, the reservation of
lifetime usufruct indicates that the donor intended to transfer the naked ownership
over the properties; third, the donor reserved sufficient properties for his maintenance
in accordance with his standing in society, indicating that the donor intended to part
with the six parcels of land; lastly, the donee accepted the donation.

The Philippine American Life and General Insurance Company vs.

The Secretary of Finance and the Commissioner of Internal
Revenue, G.R. No. 210987 (November 24, 2014).
The absence of donative intent does not exempt the sales of stock transaction from
donors tax since Sec. 100 of the NIRC categorically states that the amount by which
the fair market value of the property exceeded the value of the consideration shall
be deemed a gift. Thus, even if there is no actual donation, the difference in price is
considered a donation by fiction of law. Moreover, Sec. 7(c.2.2) of RR 06-08 does not
alter Sec. 100 of the NIRC but merely sets the parameters for determining the fair
market value of a sale of stocks. Lastly, RMC 25-11, even if issued after the sale, was
not being applied retroactively since it merely called for the strict application of Sec.
100, which was already in force the moment the NIRC was enacted.

COMMISSIONER OF INTERNAL REVENUE vs. SONY PHILIPPINES,

INC., G.R. No. 178697, November 17, 2010

Thus, there must be a sale, barter or exchange of goods or properties before any VAT
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 GEOTHERMAL PARTNERSHIP vs. COMMISSIONER OF

INTERNAL REVENUE, G.R. No. 193301, March 11, 2013
Mindanao IIs sale of the Nissan Patrol is said to be an isolated transaction. However,
it does not follow that an isolated transaction cannot be an incidental transaction for
purposes of VAT liability. Indeed, a reading of Section 105 of the 1997 Tax Code would
show that a transaction in the course of trade or business includes transactions
incidental thereto.

CIR v. SM Prime Holdings, Inc. and First Asia Realty Development

Corp., G.R. No. 183505, February 26, 2010

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 VAT on persons already
covered by the amusement tax and this holds true even in the case of cinema/theater
operators taxed under the LGC of 1991 precisely because the VAT law was intended
to replace the percentage tax on certain services.

ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION

vs. COMMISSIONER OF INTERNAL REVENUE, G.R. Nos. 141104 &
148763, June 8, 2007
According to the Destination Principle, goods and services are taxed only in the
country where these are consumed. In connection with the said principle, the Cross
Border Doctrine mandates that no VAT shall be imposed to form part of the cost of the
goods destined for consumption outside the territorial border of the taxing authority.
Hence, actual export of goods and services from the Philippines to a foreign country
must be free of VAT, while those destined for use or consumption within the
Philippines shall be imposed with 10% VAT.

CIR v. Seksui Jushi Phils, Inc. G.R. No. 149671, July 21, 2006

While an ecozone is geographically within the Philippines, it is deemed a separate

customs territory and is regulated in laws as foreign soul. Sales by supplies outside
the borders of ecozone to this separate customs territory are deemed exports and
treated as export sales.
PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) vs.
THE BUREAU OF INTERNAL REVENUE, G.R. No. 172087, March 15,
2011
The rationale for the exemption from indirect taxes provided for in P.D. 1869 and the
extension of such exemption to entities or individuals dealing with PAGCOR in casino
operations are best elucidated from the 1987 case of Commissioner of Internal
Revenue v. John Gotamco & Sons, Inc., where the absolute tax exemption of the
World Health Organization (WHO) upon an international agreement was upheld. We
held in said case that the exemption of contractee WHO should be implemented to
mean that the entity or person exempt is the contractor itself who constructed the
building owned by contractee WHO, and such does not violate the rule that tax
exemptions are personal because the manifest intention of the agreement is to
exempt the contractor so that no contractors tax may be shifted to the contractee
WHO.

LUZON HYDRO CORPORATION vs. COMMISSION ON INTERNAL

REVENUE, G.R. No. 188260 (2013).
Even though the sale of electricity by a power generation company is subject to zero-
rated VAT, its claim for refund or tax credit cannot be granted where no VAT official
receipts and VAT returns have been presented to prove that it actually made zero-
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 requirements for
evidentiary substantiation of its claim before the administrative official concerned.
CBK POWER COMPANY LIMITED vs. COMMISSIONER OF INTERNAL
REVENUE, G.R. Nos. 198729-30 (2014).

Under Section 112(A) of the NIRC, for VAT-registered persons whose sales are zero-
rated or effectively zero-rated, a claim for the refund or credit of creditable input tax
that is due or paid, and that is attributable to zero-rated or effectively zero-rated sales,
must be filed within two years after the close of the taxable quarter when such sales
were made. The reckoning frame would always be the end of the quarter when the
pertinent sale or transactions were made, regardless of when the input VAT was paid.
Also, in the filing of judicial claims, the 30-day period to appeal to the CTA is
dependent on the 120-day period, compliance with both periods is jurisdictional. The
period of 120 days is a prerequisite for the commencement of the 30-day period to
appeal to the CTA.

COMMISSIONER OF INTERNAL REVENUE vs. MINDANAO II

PARTNERSHIP, G.R. No. 191498 (2014).
Section 112(D) speaks of two periods: the period of 120 days, which serves as a
waiting period to give time for the CIR to act on the administrative claim for refund or
credit, and the period of 30 days, which refers to the period for interposing an appeal
with the CTA. The 30-day period applies not only to instances of actual denial by the
CIR of the claim for refund or tax credit, but to cases of inaction by the CIR as well.
Therefore, notwithstanding the timely filing of administrative claims, the CTA does not
have jurisdiction over the case where the taxpayers judicial claim was filed beyond
the 30 day period, the nature of such time requirement being mandatory.

Commissioner of Internal Revenue vs. Silicon Philippines, Inc.

(formerly Intel Philippines Manufacturing, Inc.), G.R. No. 169778
(March 12, 2014).

Prior to seeking judicial recourse before the CTA, a VATregistered person may apply
for the issuance of a tax credit certificate or refund of creditable input tax attributable
to zerorated or effectively zerorated sales within two (2) years after the close of
taxable quarter when the sales or purchases were made. Additionally, under
paragraph (D) of Section 112, Tax Code, the Commissioner of Internal Revenue is
given a 120day period, from submission of complete documents in support of the
administrative claim within which to act on claims for refund/applications for issuance
of the tax credit certificate. Upon denial of the claim or application, or upon expiration
of the 120day period, the taxpayer only has 30 days within which to appeal said
adverse decision or unacted claim before the CTA.
Taganito Mining Corporation vs. Commissioner of Internal Revenue,
G.R. No. 197591 (June 18, 2014).
The 2010 Aichi case instructs that once the administrative claim is filed within the
prescriptive period, the claimant must wait for the 120-day period to end and,
thereafter, he is given a 30-day period to file his judicial claim before the CTA, even if
said 120-day and 30-day periods would exceed the aforementioned two (2)-year
prescriptive period.

Taganito Mining Corporation vs. Commissioner of Internal Revenue,

G.R. No. 201195 (November 26, 2014).

The 2-year period under Section 229 does not apply to appeals before the CTA in
relation to claims for a refund or tax credit for unutilized creditable input VAT. Section
229 pertains to the recovery of taxes erroneously, illegally, or excessively
collected. Input VAT is not excessively collected as understood under Section 229
because, at the time the input VAT is collected, the amount paid is correct and proper.
It is, therefore, Section 112 which applies specifically with regard to claiming a refund
or tax credit for unutilized creditable input VAT.

FORT BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER

OF INTERNAL REVENUE, G.R. No. 173425, January 22, 2013

Prior payment of taxes is not necessary before a taxpayer could avail of the 8%
transitional input tax credit: first, it was never mentioned in Section 105 of the old
NIRC [now Sec. 111] that prior payment of taxes is a requirement; second, since the
law (Section 105 of the NIRC) does not provide for prior payment of taxes, to require it
now would be tantamount to judicial 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 VAT 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
required in order to avail of a tax credit.

COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE TECHNOLOGY

(PHILIPPINES), G.R. No. 153866, February 11, 2005
Having determined that respondents purchase transactions are subject to a zero VAT
rate, the tax refund or credit is in order. To repeat, the VAT 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 VAT payments made in excess
of the zero rate that is imposable may certainly be refunded or credited.
CIR vs Pascor Realty and Development Corp., GR no. 128315, June
29, 1999

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 against the taxpayer. To enable the taxpayer to determine his
remedies thereon, due process requires 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 questioned before the Court of Tax Appeals.

SMI-ED Philippine Technology, Inc. vs. Commissioner of Internal

Revenue, G.R. No. 175410 (November 12, 2014)

The power and duty to assess national internal revenue taxes are lodged with the BIR.
The Court of Tax Appeals has no power to make an assessment at the first instance.
On matters such as tax collection, tax refund, and others related to the national
internal revenue taxes, the Court of Tax Appeals jurisdiction is appellate in nature.
However, because Republic Act No. 1125 also vests the Court of Tax Appeals with
jurisdiction over the BIRs inaction on a taxpayers refund claim, there may be
instances when the Court of Tax Appeals has to take cognizance of cases that have
nothing to do with the BIRs assessments or decisions. If the BIR fails to act on the
request for refund, the taxpayer may bring the matter to the Court of Tax Appeals.

Samar-I Electric Cooperative vs. Commissioner of Internal Revenue,

G.R. No. 193100 (December 10, 2014).
Our 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 situations into three different classes, namely falsity, fraud and
omission. That there is a difference between false return and fraudulent return
cannot be denied. While 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 Hantex Trading Co., GR no. 136975, March 31, 2005

The rule is that in the absence of the accounting records of a taxpayer, his tax liability
may be determined by estimation. The petitioner is not required to compute such tax
liabilities with mathematical exactness. Approximation in the calculation of the taxes
due is justified. To hold otherwise would be tantamount to holding that skillful
concealment is an invincible barrier to proof. However, the rule does not apply where
the estimation is arrived at arbitrarily and capriciously. In fine, then, the petitioner acted
arbitrarily and capriciously in relying on and giving weight to the machine copies of the
Consumption Entries in fixing the tax deficiency assessments against the respondent.

PHILIPPINE AIRLINES, INC. vs. COMMISSIONER OF INTERNAL

REVENUE, G.R. No. 198759 (2013).
Section 204(c) of the NIRC 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 135, 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 its economic burden. However, 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, PALs franchise
grants it an exemption from both direct and indirect taxes on its purchase of petroleum
products. Hence, PAL has the legal personality to file the claim for refund for the
passed on excise taxes because of its franchise.

CIR vs Primetown Property Group Inc., GR 162155, August 28, 2007

Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the
Administrative Code of 1987 deal with the same subject matter the computation of
legal periods. Under the Civil Code, a year is equivalent to 365 days whether it be a
regular year or a leap year. Under the Administrative Code of 1987, however, a year is
composed of 12 calendar months. Needless to state, under the Administrative Code of
1987, the number of days is irrelevant. There obviously exists a manifest
incompatibility in the manner of computing legal periods under the Civil Code and the
Administrative Code of 1987. For this reason, we hold that Section 31, Chapter VIII,
Book I of the Administrative Code of 1987, being the more recent law, governs the
computation of legal periods.

CIR vs Phoenix Assurance Co., L-19127, May 20, 1965

Considering that the deficiency assessment was based on the amended return which,
as aforestated, is substantially different from the original return, the period of limitation
of the right to issue the same should be counted from the filing of the amended
income tax return. We believe that to hold otherwise, we would be paving the way for
taxpayers to evade the payment of taxes by simply reporting in their original return
heavy losses and amending the same more than five years later when the
Commissioner of Internal Revenue has lost his authority to assess the proper tax
thereunder. The object of the Tax Code is to impose taxes for the needs of the
Government, not to enhance tax avoidance to its prejudice.

CIR v. Metro Star Superama, Inc. 637 SCRA 633

Sec. 228 of the Tax Code clearly requires that the taxpayer must be informed that he
is liable for deficiency taxes through the sending of a Preliminary Assessment Notice.
The sending of a PAN to the taxpayer is to inform him of the assessment made is but
part of due process requirement in the issuance of a deficiency tax assessment, the
absence of which renders nugatory any assessment made by the tax authorities.

CIR v. Enron Subic Power Corp. 575 SCRA 212

A taxpayer must be informed in writing of the legal and factual bases of the tax
assessment made against him. This is a mandatory requirement. The advice of a tax
deficiency given by the CIR to an employee of Enron as well as the preliminary 5-day
letter notice, were not valid substitutes for the mandatory notice in writing of the legal
and factual bases of the assessment. Sec. 228 of the NIRC requires that the legal and
factual bases be stated in the formal letter of demand and assessment notice.
Otherwise the law and RR 12-99 would be rendered nugatory. In view of the absence
of a fair opportunity for Enron to be informed of the bases of the assessment, the
assessment was void. This is a requirement of due process.

CIR vs First Express Pawnshop Company, GR 172045-46, June 16,

2009
Petitioner cannot insist on the submission of proof of DST payment because such
document does not exist as respondent claims that it is not liable to pay, and has not
paid, the DST 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 BIR can only
inform the taxpayer to submit additional documents. The BIR cannot demand what
type of supporting documents should be submitted. Otherwise, a taxpayer will be at
the mercy of the BIR, which may require the production of documents that a taxpayer
cannot submit.

Allied Banking Corporation vs CIR, G.R. No. 175097, February 5,

2010
Records show that petitioner disputed the PAN but not the Formal Letter of Demand
with Assessment Notices. Nevertheless, we cannot blame petitioner for not filing a
protest against the Formal Letter of Demand with Assessment Notices since the
language used and the tenor of the demand letter indicate that it is the final decision of
the respondent on the matter. We have time and again reminded the CIR to indicate,
in a clear and unequivocal language, whether his action on a disputed assessment
constitutes his final determination thereon in order for the taxpayer concerned to
determine when his or her right to appeal to the tax court accrues. Viewed in the light
of the foregoing, respondent is now estopped from claiming that he did not intend the
Formal Letter of Demand with Assessment Notices to be a final decision.

CIR vs Union Shipping Corporation, GR L-66160, May 21, 1990

The request for reinvestigation and reconsideration was in effect considered denied by
petitioner when the latter filed a civil suit for collection of deficiency income. Under the
circumstances, the Commissioner of Internal Revenue, not having clearly signified his
final action on the disputed assessment, legally the period to appeal has not
commenced to run. Thus, it was only when private respondent received the summons
on the civil suit for collection of deficiency income on December 28, 1978 that the
period to appeal commenced to run.

CIR vs Kudos Metal Corp., GR 178087, May 5, 2010

While we may agree with the Court of Tax Appeals that a mere request for
reexamination or reinvestigation may not have the effect of suspending the running of
the period of limitation for in such case there is need of a written agreement to extend
the period between the Collector and the taxpayer, there are cases however where a
taxpayer may be prevented from setting up the defense of prescription even if he has
not previously waived it in writing as when by his repeated requests or positive acts
the Government has been, for good reasons, persuaded to postpone collection to
make him feel that the demand was not unreasonable or that no harassment or
injustice is meant by the Government.

CIR vs Philippine Global Communication, GR 167146, October 31,

2006
The running of the prescription period where the acts of the taxpayer did not prevent
the government from collecting the tax. Partial payment would not prevent the
government from suing the taxpayer. Because, 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 injustice is meant.
Bank of Philippine Islands (Formerly Far East Bank and Trust
Company) v. Commissioner of Internal Revenue, G. R. No. 174942,
March 7, 2008
The law prescribing a limitation of actions for the collection of the income tax is
beneficial both to the Government and to its citizens; to the Government because tax
officers would be obliged to act promptly in the making of assessment, and to citizens
because after the lapse of the period of prescription citizens would have a feeling of
security against unscrupulous tax agents who will always find an excuse to inspect the
books of taxpayers, not to determine the latters real liability, but to take advantage of
every opportunity to molest peaceful, law-abiding citizens. Without such a legal
defense taxpayers would furthermore be under obligation to always keep their books
and keep them open for inspection subject to harassment by unscrupulous tax agents.

Republic vs Enriquez, GR 78391, October 21, 1988

It is settled that the claim of the government predicated on a tax lien is superior to the
claim of a private litigant predicated on a judgment. The tax lien attaches not only from
the service of the warrant of distraint of personal property but from the time the tax
became due and payable. Besides, the distraint on the subject properties of Maritime
Company of the Philippines as well as the notice of their seizure were made by
petitioner, through the Commissioner of Internal Revenue, long before the writ of
execution was issued by the Regional Trial Court.

Commissioner of Internal Revenue vs. Manila Electric Company,

G.R. No. 181459 (June 9, 2014).
The claim for tax refund in the aggregate amount must fail since the same has already
prescribed under Section 229 of the Tax Code. The prescriptive period of two (2) years
commences to run from the time that the refund is ascertained, the propriety thereof is
determined by law (in this case, from the date of payment of tax), and not upon the
discovery by the taxpayer of the erroneous or excessive payment of taxes. The
issuance by the BIR of the Ruling declaring the tax-exempt status of NORD/LB, if at
all, is merely confirmatory in nature. BIR Ruling No. DA-342-2003 is not the operative
act from which an entitlement of refund is determined.

Systra Philippines vs CIR, GR 176290, September 21, 2007

A corporation entitled to a tax credit or refund of the excess estimated quarterly
income taxes paid has two options: (1) to carry over the excess credit or (2) to apply
for the issuance of a tax credit certificate or to claim a cash refund. If the option to
carry over the excess credit is exercised, the same shall be irrevocable for that taxable
period. This is known as the irrevocability rule and is embodied in the last sentence of
Section 76 of the Tax Code.

Philippine Phosphate Fertilizer Corp. vs CIR, GR 141973, June 28,

2005

In cases before tax courts, Rules 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 objective of securing a just, 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 technicality especially in this case, where the
failure to present invoices at the first instance was adequately explained by petitioner.

ACCRA Investments vs CA, G.R. No. 96322, December 20, 1991

For 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 adjusted final tax
return. The rationale in computing the two-year prescriptive period with respect to the
petitioner corporations claim for refund from the time it filed its final adjustment return
is the fact that it was only then that ACCRAIN could ascertain whether it made profits
or incurred losses in its business operations.

Silkair vs CIR, G.R. Nos. 171383 & 172379, November 14, 2008
The proper party to question, 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. Even if Petron Corporation passed on to
Silkair the burden of the tax, the additional amount billed to Silkair for jet fuel is not a
tax but part of the price which Silkair had to pay as a purchaser.

Angeles City vs. Angeles City Electric Corp., GR 166134, June 29,
2010

The National Internal Revenue Code of 1997 (NIRC) expressly provides that no court
shall have the authority to grant an injunction 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 LGC prohibiting courts from issuing an injunction to restrain local governments
from collecting taxes. Such statutory lapse or intent, however it may be viewed, may
have allowed preliminary injunction where local taxes are involved but cannot negate
the procedural rules and requirements under Rule 58.

PNOC vs CA, G.R. No. 109976, April 26, 2005

Compromise may be the favored method to settle disputes, but when it involves taxes,
it may be subject to closer scrutiny by the courts. A compromise agreement involving
taxes would affect not just the taxpayer and the BIR, but also the whole nation, the
ultimate beneficiary of the tax revenues collected.

People vs Sandiganbayan, GR 152532, August 16, 2005

The BIR 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 involved do not justify the collection of the amount due. No mutual
concessions need be made, because an excessive or erroneous tax is not
compromised; it is abated or canceled. Only correct taxes should be paid.

PELIZLOY REALTY CORPORATION vs. THE PROVINCE OF BENGUET,

G.R. No. 183137 (2013).
Amusement taxes are percentage taxes. Provinces are not barred from levying
amusement taxes even if amusement taxes are a form of percentage taxes. Section
140 of the LGC expressly allows for the imposition by provinces of amusement taxes
on the proprietors, lessees, or operators of theatres, cinemas, concert halls, circuses,
boxing stadia, and other places of amusement. Theatres, cinemas, concert halls,
circuses, and boxing stadia are bound by a common typifying characteristic in that
they are all venues primarily for the staging of spectacles or the holding of public
shows, exhibitions, performances, and other events meant to be viewed by an
audience. Accordingly, other places of amusement must be interpreted in light of the
typifying characteristic of being venues where one seeks admission to entertain
oneself by seeing or viewing the show or performances or being venues primarily
used to stage spectacles or hold public shows, exhibitions, performances, and other
events meant to be viewed by an audience. Thus, resorts, swimming pools, bath
houses, hot springs and tourist spots do not belong to the same category or class as
theatres, cinemas, concert halls, circuses, and boxing stadia. It follows that they
cannot be considered as among the other places of amusement contemplated by
Section 140 of the LGC and which may properly be subject to amusement taxes.

National Power Corporation v. City of Cabanatuan, G.R. No.

149110, April 09, 2003
As commonly used, a franchise tax is a tax on the privilege of transacting business in
the state and exercising corporate franchises granted by the state. To determine
whether the petitioner is covered by franchise tax, the following requisites should
concur: (1) that petitioner has a franchise in the sense of a secondary or special
franchise; and (2) that it is exercising its rights or privileges under this franchise within
the territory of the respondent city government.

Municipality of San Fernando, La Union v. Sta. Romana, G.R. No. L-

30159, March 31, 1987

Under the Local Tax Code. there is no question that the authority to impose the license
fees collected from the hauling of sand and gravel excavated properly belongs to the
province concerned and not to the municipality where they are found which is
specifically prohibited under Section 22 of the same Code from levying taxes, fees
and charges that the province or city is authorized to levy in this Code.

Province of Cagayan v. Lara, G.R. No. 188500, July 24, 2013

In order for an entity to legally undertake a quarrying business, he must first comply
with all the requirements imposed not only by the national government, but also by the
local government unit where his business is situated. Particularly, Section 138 (2) of
RA 7160 requires that such entity must first secure a governors permit prior to the
start of his quarrying operations

City of Manila v. Coca-Cola Bottlers Philippines, Inc., G.R. No.

181845, August 04, 2009
When a municipality or city has already imposed a business tax on manufacturers,
etc. of liquors, distilled spirits, wines, and any other article of commerce, pursuant to
Section 143 (a) of the LGC, said municipality or city may no longer subject the same
manufacturers, etc. to a business tax under Section 143 (h) of the same Code.
Section 143 (h) may be imposed only on businesses that are subject to excise tax,
VAT, or percentage tax under the NIRC, and that are not otherwise specified
in preceding paragraphs.

Ericsson Telecoms vs. City of Pasig. G.R. NO. 176667, November 22,
2007

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 petitioners gross revenue will inevitably
result in the constitutionally proscribed double taxation taxing of the same person
twice by the same jurisdiction for the same thing inasmuch as petitioners 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 Corp. v. Municipality of Malangas, G.R. No.

152492, October 16, 2003
Section 133(e) of RA No. 7160 prohibits the imposition, in the guise of wharfage, of
fees as well as all other taxes or charges in any form whatsoever on goods or
merchandise. It is therefore irrelevant if the fees imposed are actually for police
surveillance on the goods, because any other form of imposition on goods passing
through the territorial jurisdiction of the municipality is clearly prohibited by Section
133(e).

Jardine Davies Insurance Brokers Inc. v. Aliposa, G.R. No. 118900,

February 27, 2003
As a general precept, a taxpayer may file a complaint assailing the validity of the
ordinance and praying for a refund of its perceived overpayments without first filing a
protest to the payment of taxes due under the ordinance.

Valley Trading Co., Inc. v. CFI of Isabela, Branch II, G.R. No. L-
49529, March 31, 1989
Unlike the National Internal Revenue Code, the Local Tax Code does not contain any
specific provision prohibiting courts from enjoining the collection of local taxes. Such
Statutory lapse or intent, however it may be viewed, may have allowed preliminary
injunction where local taxes are involved but cannot negate the procedural rules and
requirements under Rule 58.

Manila International Airport Authority v. Court of Appeals, G.R. No.

155650, July 20, 2006
Under Section 234(a), real property owned by the Republic is exempt from real estate
tax except when the government gives the beneficial use of the real property to a
taxable entity. The justification for the exception to the exemption is that the real
property, although owned by the Republic, is not devoted to public use or public
service but devoted to the private gain of a taxable person.

Allied Banking Corporation, etc., v. Quezon City Government, et al.,

G. R. No. 154126, October 11, 2005
Real 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.

Heirs of Tajonera v. Court of Appeals, G.R. No. L-26677, March 27,

1981
It is `the duty of each person acquiring 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 had been assessed in the name
of its actual owner.

Spouses Hu v. Spouses Unico, G.R. No. 146534, September 18,

2009
With 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 delinquent taxpayer, a
local treasurer cannot rely solely on the tax declaration but must verify with the
Register of Deeds who the registered owner of the particular property is.

Ty v. Trampe, G.R. No. 117577, December 01, 1995

The protest contemplated under Sec. 252 of R.A. 7160 is needed where there is a
question as to the reasonableness of the amount assessed. Hence, if a taxpayer
disputes the reasonableness of an increase in a real estate tax assessment, he is
required to first pay the tax under protest; otherwise, the city or municipal treasurer
will not act on his protest.

Davao Oriental Electric Coop vs. Prov. Dvo. of Oriental, 576 SCRA
645

Under then Sec. 30 of PD 464 [now under Sec. 226, LGC], having failed to appeal the
real property assessments to the LBAA, taxpayer now cannot assail the validity of the
tax assessment before the courts. For failure to exhaust administrative remedies, the
assessment became final. Under Sec. 64 of PD 464 [now under Sec. 252, LGC), the
taxpayer must first pay under protest and then assail the validity of the assessment.
Fels Energy, Inc. v. Province of Batangas, G.R. No. 168557, 170628,
February 16, 2007
Under Section 226 of R.A. No 7160, the last action of the local assessor on a
particular assessment shall be the notice of assessment; it is this last action which
gives the owner of the property the right to appeal to the LBAA. The procedure
likewise does not permit the property owner the remedy of filing a motion for
reconsideration before the local assessor.

Nestle Philippines, Inc. v. Court of Appeals, G.R. No. 134114, July

06, 2001
Customs duties is the name given to taxes on the importation and exportation of
commodities, the tariff or tax assessed upon merchandise imported from, or exported
to, a foreign country.

Feeder International Line, Pte., Ltd. v. Court of Appeals, G.R. No.

94262, May 31, 1991
Section 1202 of the Tariff and Customs Code provides that importation begins when
the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to
unload therein. It is clear from the provision of the law that mere intent to unload is
sufficient to commence an importation and intent, being a state of mind, is rarely
susceptible of direct proof, but must ordinarily be inferred from the facts, and therefore
can only be proved by unguarded, expressions, conduct and circumstances generally.

Jardeleza v. People, G.R. No. 165265, February 06, 2006

Smuggling is committed by any person who: (1) fraudulently imports or brings into the
Philippines any article contrary to law; (2) assists in so doing any article contrary to
law; or (3) 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.

Carrara Marble Phil., Inc. v. Commissioner of Customs, G.R. No.

129680, September 01, 1999
The Tariff and Customs law subjects 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. Before forfeiture proceedings are instituted the law
requires the presence of probable cause; once established, the burden of proof is
shifted to the claimant.

People v. Court of First Instance of Rizal, G.R. No. L-41686,

November 17, 1980
It is quite clear that seizure 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 3601 of the Code. As can be
gleaned from Section 2533 of the code, seizure 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.

Subic Bay Metropolitan Authority v. Rodriguez, G.R. No. 160270,

April 23, 2010

Regional trial courts are devoid of any competence to pass upon the validity or
regularity of seizure and forfeiture proceedings conducted by the BOC and to enjoin or
otherwise interfere with these proceedings. Regional trial courts are precluded from
assuming cognizance over such matters even through petitions for certiorari,
prohibition or mandamus.

Jao v. Court of Appeals, G.R. No. 104604, 111223, October 06, 1995

Even if the seizure by the Collector of Customs were illegal, which has yet to be
proven, we have said that such act does not deprive the Bureau of Customs of
jurisdiction thereon. The allegations of petitioners regarding the propriety of the
seizure should properly be ventilated before the Collector of Customs.
Transglobe International, Inc. v. Court of Appeals, G.R. No. 126634,
January 25, 1999
A forfeiture proceeding is in the nature of a proceeding in rem, i.e., directed against
the res or imported articles and entails a determination of the legality of their
importation. In this proceeding, it is in legal contemplation the property itself which
commits the violation and is treated as the offender, without reference whatsoever to
the character or conduct of the owner.

Commr. v. Hambretch & Quist Philippines, Inc., G.R. No. 169225,

November 17, 2010
The appellate jurisdiction of the CTA is not limited to cases which involve decisions of
the CIR on matters relating to assessments or refunds. Section 7 of Republic Act No.
1125 covers other cases that arise out of the National Internal Revenue Code (NIRC)
or related laws administered by the Bureau of Internal Revenue (BIR).

Duty Free Philippines vs. Bureau of Internal Revenue, G.R. No.

197228 (October 8, 2014).
This Court has had a long-standing rule that a courts jurisdiction over the subject
matter of an action is conferred only by the Constitution or by statute. In this regard,
petitioners direct appeal to this Court is fatal to its claim. Section 2, Rule 4 of the
Revised Rules of the CTA reiterates the exclusive appellate jurisdiction of the CTA en
banc relative to the review of the court divisions decisions or resolutions on motion for
reconsideration or new trial in cases arising from administrative agencies such as the
BIR. Clearly, this Court is without jurisdiction to review decisions rendered by a
division of the CTA, exclusive appellate jurisdiction over which is vested in the CTA en
banc.

Yaokasin v. Commissioner of Customs, G.R. No. 84111, December

22, 1989
Without the automatic review by the Commissioner of Customs and the Secretary of
Finance, a collector in any of our countrys far-flung ports, would have absolute and
unbridled discretion to determine whether goods seized by him are locally produced,
hence, not dutiable, or of foreign origin, and therefore subject to payment of customs
duties and taxes. His decision, unless appealed by the aggrieved party (the owner of
the goods), would become final with no one the wiser except himself and the owner of
the goods.

Rizal Commercial Banking Corp. v. Commr., G.R. No. 168498, June

16, 2006
If the protest is denied in whole or in part, or is not acted upon within one hundred
eighty (180) days from submission of documents, the taxpayer adversely affected by
the decision or inaction may appeal to the Court of Tax Appeals within (30) days from
receipt of the said decision, or from the lapse of the one hundred eighty (180)-day
period; otherwise the decision shall become final, executory and demandable.