G.R. No. 163072 April 2, 2009 MANILA INTERNATIONAL AIRPORT AUTHORITY, Petitioner, vs.

CITY OF PASAY, SANGGUNIANG PANGLUNGSOD NG PASAY, CITY MAYOR OF PASAY, CITY TREASURER OF PASAY, and CITY ASSESSOR OF PASAY, Respondents. The Facts MIAA received Final Notices of Real Property Tax Delinquency from the City of Pasay for the taxable years 1992 to 2001. Thereafter, the City Mayor of Pasay threatened to sell at public auction the NAIA Pasay properties if the delinquent real property taxes remain unpaid. MIAA filed with the Court of Appeals a petition for prohibition and injunction with prayer for preliminary injunction or temporary restraining order Court of Appeals dismissed the petition and upheld the power of the City of Pasay to impose and collect realty taxes on the NAIA Pasay properties. MIAA filed a motion for reconsideration, which the Court of Appeals denied. Hence, this petition. The Issue The issue raised in this petition is whether the NAIA Pasay properties of MIAA are exempt from real property tax. The Courts Ruling The petition is meritorious. In ruling that MIAA is not exempt from paying real property tax, the Court of Appeals cited Sections 193 and 234 of the Local Government Code. The 2006 MIAA case and this case raised the same threshold issue: whether the local government can impose real property tax on the airport lands, consisting mostly of the runways, as well as the airport buildings, of MIAA. In the 2006 MIAA case, this Court held: To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA is a government instrumentality vested with corporate powers and performing essential public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the Local Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the Local Government Code. Such exception applies only if the beneficial use of real property owned by the Republic is given to a taxable entity. Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion. Properties of public dominion are owned by the State or the Republic. A close scrutiny of the definition of "government-owned or controlled corporation" in Section 2(13) will show that MIAA would not fall under such definition. MIAA is a government "instrumentality" that does not qualify as a "governmentowned or controlled corporation." As explained in the 2006 MIAA case: A government-owned or controlled corporation must be "organized as a stock or non-stock corporation." MIAA is not organized as a stock or non-stock corporation. MIAA is not a

stock corporation because it has no capital stock divided into shares. MIAA has no stockholders or voting shares. x x x MIAA is also not a non-stock corporation because it has no members. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with corporate powers. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers. Furthermore, the airport lands and buildings of MIAA are properties of public dominion intended for public use, and as such are exempt from real property tax under Section 234(a) of the Local Government Code. However, under the same provision, if MIAA leases its real property to a taxable person, the specific property leased becomes subject to real property tax.12 In this case, only those portions of the NAIA Pasay properties which are leased to taxable persons like private parties are subject to real property tax by the City of Pasay. WHEREFORE, we GRANT the petition.

Case #13. CHEVRON PHILIPPINES, INC., VS. COMMISSIONER OF THE BUREAU OF CUSTOMS,[G.R. No. 178759, August 11, 2008] TOPIC: TAX and Custom Duties Facts: Chevron Phils. Inc., is engaged in the business of importing, distributing and marketing of petroleum products in the Philippines. In 1996, the importations subject of this case arrived and were covered by 8 bills of lading. The shipments were unloaded from the carrying vessels onto petitioners oil tanks over a period of 3 days from the date of their arrival. Subsequently, the import entry declarations (IEDs) were filed and 90% of the total customs duties were paid. The import entry and internal revenue declarations (IEIRDs) of the shipments were thereafter filed. The importations were appraised at a duty rate of 3% as provided under RA 8180and petitioner paid the import duties amounting to P316,499,021. Prior to the effectivity of RA 8180 on April 16, 1996, the rate of duty on imported crude oil was 10%. Three years later, then Finance Secretary received a letter denouncing the deliberate concealment, manipulation and scheme employed by petitioner in the importation of crude oil, thereby resulting in huge losses of revenue for the government. This letter was endorsed to the Bureau of Customs (BOC) for investigation. On August 1, 2000, petitioner received a demand letter from the District Collector requiring the immediate settlement of the amount of P73,535,830 representing the difference between the 10% and 3% tariff rates on the shipments. Petitioner objected to the using of the 10% duty rate and insisted that the 3% tariff rate should instead be applied. Furthermore it raised the defense of prescription against the assessment pursuant to Section 1603 of the Tariff and Customs Code (TCC). Thus, it prayed that the assessment for deficiency customs duties be cancelled and the notice of demand be withdrawn. The Special Investigator found that there was an irregularity in the filing and acceptance of the import entries beyond the 30-day non-extendible period prescribed under Section 1301 of the TCC and in the release of the shipments after the same had already been deemed abandoned in favor of the government. Petitioner was then ordered to pay P1,180,170,769.21 representing the total dutiable value of the importations. The CTA en banc held that it was the filing of the IEIRDs that constituted entry under the TCC. Since these were filed beyond the 30-day period, they were not seasonably "entered" in accordance with Section 1301 in relation to Section 205 of the TCC. Consequently, they were deemed abandoned under Sections 1801 and 1802 of the TCC. It also ruled that the notice required under Customs Memorandum Orderwas not necessary in view of petitioner's actual knowledge of the arrival of the shipments. It likewise agreed with the CTA Division's finding that petitioner committed fraud when it failed to file the IEIRD within the 30-day period with the intent to "evade the higher rate." Petitioner was ordered to pay respondent the total dutiable value of the oil shipments amounting to P893,781,768.21. ISSUES: 1. Whether or not entry under Section 1301 in relation to Section 1801 of the TCC refers to the IED or the IEIRD; 2. Whether or not "entry" under Section 1301 in relation to whether fraud was perpetrated by petitioner and

Whether or not the importations can be considered abandoned under Section 1801. RULING: 1. The position of petitioner, that the import entry to be filed within the 30-day period refers to the IED and not the IEIRD, has no legal basis.Under the relevant provisions of the TCC, both the IED and IEIRD should be filed within 30 days from the date of discharge of the last package from the vessel or aircraft. The IED serves as basis for the payment of advance duties on importations whereas the IEIRD evidences the final payment of duties and taxes. The operative act that constitutes "entry" of the imported articles at the port of entry is the filing and acceptance of the "specified entry form" together with the other documents required by law and regulations. The "specified entry form" refers to the IEIRD. The word "entry" refers to the regular consumption entry (the IEIRD) and not the provisional entry (the IED). Evidence showed that petitioner bided its time to file the IEIRD so as to avail of a lower rate of duty. A clear indication of petitioner's deliberate intention to defraud the government was its non-disclosure of discrepancies on the duties declared in the IEDs (10%) and IEIRDs (3%) covering the shipments. Due to the presence of fraud, the prescriptive period of the finality of liquidation under Section 1603 was inapplicable. 3. Petitioner's failure to file the required entries within a non-extendible period of thirty days from date of discharge of the last package from the carrying vessel constituted implied abandonment of its oil importations. This means that from the precise moment that the nonextendible thirty-day period lapsed, the abandoned shipments were deemed the property of the government. Therefore, when petitioner withdrew the oil shipments for consumption, it appropriated for itself properties which already belonged to the government. Accordingly, it became liable for the total dutiable value of the shipments of imported crude oil amounting to P1,210,280,789.21 reduced by the total amount of duties paid amounting to P316,499,021.00 thereby leaving a balance of P893,781,768.21. Due notice was not necessary in this case.The purpose of posting an "urgent notice to file entry" is only to notify the importer of the "arrival of its shipment" and the details of said shipment. Since it already had knowledge of such, notice was superfluous. Notice to petitioner was unnecessary because it was fully aware that its shipments had in fact arrived. The oil shipments were discharged from the carriers docked in its private pier or wharf, into its shore tanks. From then on, petitioner had actual physical possession of its oil importations. It was thus incumbent upon it to know its obligation to file the IEIRD within the 30-day period prescribed by law. As a matter of fact, importers such as petitioner can, under existing rules and regulations, file in advance an import entry even before the arrival of the shipment to expedite the release of the same. However, it deliberately chose not to comply with its obligation under Section 1301.

3.

2.

PetitionDENIED. Petitioner Chevron Philippines, Inc. is ORDERED to payP893,781,768.21 plus six percent (6%) legal interest per annum accruing from the date of promulgation of this decision until its finality. Upon finality of this decision, the sum so awarded shall bear interest at the rate of twelve percent (12%) per annum until its full satisfaction.

G.R. No. L-66838 December 2, 1991 (204 SCRA 377) CIR vs. PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORP and CTA FACTS: For the taxable year 1974 ending on 30 June 1974, and the taxable year 1975 ending 30 June 1975, Procter and Gamble Philippines declared dividends payable to its parent company and sole stockholder, P& USA, from which dividends the amount of P8,457,731.21 representing the thirty-five percent (35%) withholding tax at source was deducted. It subsequently filed a claim with the CIR for a refund or tax credit, claiming that pursuant to Section 24(b)(1) of the NIRC, as amended by PD No. 369, the applicable rate of withholding tax on the dividends remitted was only 15%. There being no responsive action on the part of the Commissioner, P&G-Phil., on 13 July 1977, filed a petition for review with the CTA . On 31 January 1984, the CTA rendered a decision ordering the CIR to refund or grant the tax credit in the amount of P4,832,989.00. On appeal, the SC, through its 2nd Division, reversed the CTAs decision. Hence, the present motion for reconsideration. ISSUE: Whether or not P&G Philippines is entitled to the refund or tax credit. RULING: YES. P&G Philippines is entitled to refund or tax credit. The motion for reconsideration is granted and the CTAs decision is reinstated. RATIO: Sec 24 (b) (1) of the NIRC states that the ordinary 35% tax rate applicable to dividend remittances to non-resident corporate stockholders of a Philippine corporation, goes down to 15% if the country of domicile of the foreign stockholder corporation "shall allow" such foreign corporation a tax credit for "taxes deemed paid in the Philippines," applicable against the tax payable to the domiciliary country by the foreign stockholder corporation. In other words, in the instant case, the reduced 15% dividend tax rate is applicable if the USA "shall allow" to P&GUSA a tax credit for "taxes deemed paid in the Philippines" applicable against the US taxes of P&G-USA. The NIRC specifies that such tax credit for "taxes deemed paid in the Philippines" must, as a minimum, reach an amount equivalent to 20% points which represents the difference between the regular 35% dividend tax rate and the preferred 15% dividend tax rate. US law (Section 901, Tax Code) grants P&G-USA a tax credit for the amount of the dividend tax actually paid (i.e., withheld) from the dividend remittances to P&G-USA; and US law (Section 902, US Tax Code) grants to P&G-USA a "deemed paid' tax credit 8 for a proportionate part of the corporate income tax actually paid to the Philippines by P&G-Phil. The parent-corporation P&G-USA is "deemed to have paid" a portion of the Philippine corporate income tax although that tax was actually paid by its Philippine subsidiary, P&G-Phil., not by P&G-USA. This "deemed paid" concept merely reflects economic reality, since the Philippine corporate income tax was in fact paid and deducted from revenues earned in the Philippines, thus reducing the amount remittable as dividends to P&G-USA. In other words, US tax law treats the Philippine corporate income tax as if it came out of the pocket, as it were, of P&G-USA as a part of the economic cost of carrying on business operations in the Philippines through the medium of P&G-Phil. and here earning profits. Under Section 30 (c) (3) (a), NIRC, the BIR must give a tax credit to a Philippine corporation for taxes actually paid by it to the US government. This Section of the NIRC is the equivalent of Section 901 of the US Tax Code. Section 30 (c) (8), NIRC, is practically identical with Section 902 of the US Tax Code,

wherein the BIR must give a tax credit to a Philippine parent corporation for taxes "deemed paid" by it, that is, e.g., for taxes paid to the US by the US subsidiary of a Philippine-parent corporation. The Philippine parent or corporate stockholder is "deemed" under our NIRC to have paid a proportionate part of the US corporate income tax paid by its US subsidiary , although such US tax was actually paid by the subsidiary and not by the Philippine parent. Clearly, the "deemed paid" tax credit which, under Section 24 (b) (1), NIRC, must be allowed by US law to P&G-USA, is the same "deemed paid" tax credit that Philippine law allows to a Philippine corporation with a wholly- or majority-owned subsidiary in (for instance) the US.