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#1 CIR V BPI, GR 134062, April 17, 2007

Description:
Facts: The CIR made tax assessments for responden
ts deficiency percentage and documentary stamp ta
xes for the year 1986 in two notices dated October 2
8, 1988. Respondent replied stating that it was not in
formed of such assessments and there was no indica
tion on whether to pay or protest said assessments.
BPIs reply failed to qualify as a protest to said asses
sments because it stated that it shall inform the CIR
of the taxpayers decision on whether to pay or prote
st. Respondent filed reconsideration but CIR denied s
uch. Then a petition for review was sent to CTA after
the 30-day reglementary period from the decision of t
he CIR which led to its dismissal for lack of jurisdicti
on since the subject assessments had become final
and unappealable.
The CA, on appeal, reversed the tax courts decision
and remanded the case to the CTA for a decision on t
he merits. It ruled that the assessments were not val
id for they did not inform the taxpayer of the legal an
d factual bases therefor the assessments not havin
g reasons for deficiencies but only a mere computati
on.

Issue: Is BPI liable for the tax assessments?

Decision: Yes. Under the law, the taxpayer shall be i
nformed in writing of the law and the facts on which
the assessment is made, otherwise the assessment i
s void. From the foregoing testimony, the examiners
themselves went to BPI and talked to them about the
issues. BPI was indeed aware of the nature and basi
s of the assessments and was given all the opportuni
ty to contest the same but ignored it despite the noti
ceconspicuously written on the assessments. Consid
ering that
such notices were valid assessments, the state will
be deprived, considering the amount of money, of the
taxes validly due it. Taxes are lifeblood of the govern
ment, for without taxes, the government can neither
exist nor endure.

#2 CIR v Pineda, GR L-22734, Sept. 15, 1967
Description:
Facts: After the estate proceedings of the inheritanc
e of one Atanasio Pineda, deceased, the CIR investig
ated the income tax liability of the estate for the yea
rs 1945-1948 and found out that returns for those yea
rs were not filed. Manuel, one of the heirs, received t
he assessments and protested the same which led it
to be appealed to the CTA only to the portion pertaini
ng to him as an heir. The CTA decided that the right t
o assess and collect the tax has prescribed. But this
Court decided that only the year 1947 has prescribed
within the five year prescription period and not 1945-
1946. The case was remanded back to CTA and deci
ded that the Respondent was liable for the whole am
ount of the income tax due. Pineda contested that as
an heir he is only liable up to the amount of his share
in the inheritance.

Issue: May the government collect the whole income
tax due of the inheritance from an heir - Pineda?

Decision: Yes. Manuel Pineda can be made liable for
the whole amount to the government however his lia
bility cannot exceed the amount of his share. As the
holder of the property, the government has a lien on t
he same as the estate is liable to it for unpaid taxes.
By virtue of such lien, the government can subject th
e property under Manuel Pineda to satisfy the taxes
due. This is one remedy of the government to collect
taxes for expediency. After paying the amount, Manu
el has the right of contribution from his co-heirs to a
chieve an adjustment of the proper share of each hei
r in the distributable estate.

#3 Vera v Fernandez, GR L-31364, March 30, 1979
Description:
Facts: This is an appeal for an order of payment of ta
xes by the government against the Estate of the late
Luis Tongoy for deficiency income taxes for the year
s 1963 and 1964.
The Administrator opposed such order of the CIR for
being barred by prescription under Rule 86, Section 5
of the Rules of Court All money claimsxxx and j
udgment for money against the decedent, must be fil
ed within the time limited in the notice, otherwise th
ey are barred foreverxxx. After finding that the opp
osition was well-founded, respondent judge dismisse
d the case. Hence this appeal.

Issue: Is the collection of taxes barred under the Rul
es of Court?

Decision: No. A perusal of the aforequoted provisions
shows that it makes no mention of claims for moneta
ry obligation of the decedent created by law, such as
taxes which is entirely of different character from th
e claims expressly enumerated therein. Under the st
atutory construction of Expressio unius est exclusio
n alterius, taxes which are expressly not included m
ust by implication be excluded from its operation and
effect. This court overrules the defense of prescripti
on of the administrator. Taxes represent the claim of
the people at large and it must not be erroneously de
nied.

#4 CIR v CTA, GR 106611, July 21, 1994
Description:
Facts: This is a case wherein the CIR denied the clai
m of Citytrust Banking Corporation for an alleged ref
undable amount reflected in its 1983 income tax retu
rn on the ground of prescription.
Citytrust, after denial of the CIR, filed a petition with
the CTA claiming refunds of its income tax payments
for the years 1983-1985. In the answer, the Solicitor
General asserted that the right to claim the same ha
s prescribed with respect to income tax payments pr
ior to August 28, 1984, pursuant to Sections 292 and
295 of the National Internal Revenue Code of 1977, a
s amended, since the petition was filed only on Augu
st 28, 1986. The CTA ordered refund on the grounds t
hat no evidence against the correctness of the inco
me tax and not deficiency on the assessments.

Issue: Is Citytrust entitled for refund?

Decision: No. After a careful review of the records, it
is of this courts judgment that the BIR was denied a
day in court due to the postponements of its counsel,
the Solicitor General, due to unavailability of necess
ary records. It was under this predicament that the C
TA decided in favor of Citytrust. It is a long settled ru
le that the government is not bound by the errors co
mmitted by its agents. The State is not estopped by t
he neglect of its agents and officers. The grant of a r
efund is founded on the assumption that the tax retu
rn is valid, that is, the facts stated therein are true a
nd correct. The deficiency assessment, although not
yet final, created a doubt as to and constitutes a cha
llenge against the truth and accuracy of the facts sta
ted in said return which, by itself and without unques
tionable evidence, cannot be the basis for the grant
of the refund. The deficiency assessments should be
first determined. Case remanded to CTA.

#5 Commissioner v Algue, Inc., GR 28896, Feb 17, 19
88
Description:
Facts: Algue filed a petition to the CTA, which the lat
ter affirmed, regarding the disallowance of the CIR fo
r a legitimate business deduction in the amount of P
hp75,000. The amount was paid to the payees as pro
motional expenses by Algue as agent of PSEDC for in
ducing other persons to invest in the experimental e
nterprise of the latter. The CIR contended that claim
ed that the amount was paid fictitiously to most pay
ees the latter being members of the family in control
of Algue.

Issue: Was the disallowance of the CIR of the deduct
ion correct?

Decision: No. We agree with the CTA. The deduction
comes from a legitimate business which Algue under
took. We find that the onus has been discharged sati
sfactorily by the private respondent. It had proved th
e payment of the fees in light of the necessary and re
asonable efforts exerted by the payees in inducing in
vestors requiring millions of pesos. This was no mea
n feat and should be, as it was, sufficiently recompe
nsed. It is therefore, a requirement, in the collection
of taxes, in all democratic regimes that it be exercis
ed reasonably and in accordance with the prescribed
procedure. The CTAs decision is affirmed.

#6 YMCA v CIR, GR 124043, Oct 14, 1998
Description:
Facts: In 1980, YMCA, a non-stock, non-profit corpor
ation which conducts activities beneficial to the publ
ic especially young men with its religious, education
al and charitable objectives, leased out portion of its
premises to small shop owners like restaurants and
canteen operators and parking fees were collected fr
om non-members which amounted to P676,829.80 an
d P44,259 respectively. The CIR issued an assessme
nt to YMCA for deficiency income tax, deficiency exp
anded withholding taxes on rentals and professional
fees and deficiency withholding tax on wages. YMCA
protested which was denied by the CIR but its petitio
n for review to the CTA was favored stating that the l
easing of the spaces were reasonably necessary for
the attainment of YMCAs objectives.

Issue: Are welfare, charitable and non-profit corporat
ions subject to income tax?

Decision: No. In order to be exempted, the law itself
must expressly provide for its exemption. YMCAs co
ntention that the income from the property is used fo
r their educational, religious and charitable objective
s and therefore should not be taxed is unmeritorious.
The phrase any of their activities conducted for prof
it does not qualify the word properties in the NIRC
. This makes the property regardless of how the inco
me is used be taxable. Because of this, rent income
of the YMCA from its real property is taxable and the
Court is duty-bound to abide strictly by its literal mea
ning and to refrain from resorting to any convoluted
attempt at construction.

#7 Davao Gulf Lumber Corp v CIR, GR 117359, July 2
3, 1998
Description:
Facts: Petitioner, a license forest concessionaire, fil
ed a petition for review with the CTA for the denial of
the CIR for its claim for refund representing 25% (Un
der Sec 5 of RA 1435) of the specific taxes actually p
aid on fuels and oils that were used by petitioner in it
s operation amounting to P120,825.11. The CTA gran
t the claim but it was computed based on rates deem
ed paid under RA 1435 amounting to P2,923.15 and n
ot on the higher rates actually paid by petitioner und
er the NIRC. The CA affirmed the decision of the CTA
stating that indeed the claim for refund must be base
d on the computation under Sec. 5 of RA 1435 and no
t under the NIRC.

Issue: Is the petitioner entitled to the refund under th
e NIRC in which it invoked the provision of RA 1435?

Decision: No. The refunds under RA 1435 are for thos
e concessionaires who paid specific taxes on gasolin
e and fuel to a fund for the national highway. Since t
hey do not directly benefit from it, they are given suc
h refunds. The partial refund authorized under Sectio
n 5, RA 1435, is in the nature of a tax exemption, it m
ust be construed strictissimi Juris against the grante
e. Hence, the grant must be expressly granted in the
statute and RA 1435 does not express that it must b
e based on higher rates under the NIRC. Petition is h
ereby denied.



#8 Marcos II vs CA, GR 120880, June 5, 1997
Description:
Facts: Marcos II questioned the actuations of the CI
R in assessing and collecting through the summary r
emedy of Levy on Real Properties, estate and income
tax delinquencies upon the estate and properties of
his father despite the pendency of the proceedings o
n probate of the will of the late president. The CA, aft
er the protest being denied by the CIR, denied the pe
tition of the petitioner stating that the CIRs decision
has become final and unappealable and thus may be
enforced by summary remedy of levying upon the pro
perties of the late president.

Issue: Is the assessment and collection of taxes fro
m the estate of the deceased valid despite pendency
of the probate proceedings?

Decision: Yes. The enforcement of tax laws and the
collection of taxes, is of paramount importance for t
he sustenance of government. Thus, the pendency of
probate proceedings over the estate of the deceased
does not preclude the assessment and collection, thr
ough summary remedies, of estate taxes over the sa
me. These should be paid immediately. There is nothi
ng in the Tax Code, and in the pertinent remedial law
s that implies the necessity of the probate or estate
settlements courts approval of the states claim for
estate taxes, before the same can be enforced and c
ollected.

#9 Reyes v Almanzor, GR L-49839-46, April 26, 1991
Description:
Facts: Petitioner herein had dwelling sites occupied
by tenants which has the monthly rentals not exceed
ing three hundred pesos. PD No. 20 made an absolut
e prohibition to increase monthly rentals of places h
aving rents below P300 and indefinitely suspending t
he Civil Code provision of ejectment of lessees exce
pt those with a definite period. Consequently, respon
dent City Assessor of Manila re-classified and reasse
ssed the value of the subject properties. The revision
, as expected, entailed an increase in the correspond
ing tax rates prompting petitioner to file a Memorand
um of Disagreement with the Board of Tax Assessme
nt Appeals. Petitioner averred that the reassessment
s greatly exceeded the annual income derived from t
heir properties because instead of using the income
approach it used the comparable sales approach. Th
e Central Board of Assessments Appeals, on appeal
by the petitioner, affirmed the decision of the Board.

Issue: Did the method used in assessing the lands re
asonable as to not deprive the petitioner of their pro
perty?

Decision: No. The income approach should have bee
n more reasonable as it assessed the market rental t
han the comparable sales approach which derives it
valuation from the nearby property considering PD N
o. 20. Taxation is said to be equitable and is progres
sive that rates goes up depending on the resources o
f the person affected. The power to tax is an attribu
te of sovereignty but it is not unconfined as there ar
e restrictions. As Justice Holmes pen, thus: The po
wer to tax is not the power to destroy while this Cou
rt sits. So it is in the Philippines. By no strength of t
he imagination can the market value of properties co
vered by P.D. No. 20 be equated with the market valu
e of properties not so covered. The former has natur
ally a much lesser market value in view of the rental
restrictions.

#10 PBCom v CIR, GR 112024, Jan 28, 1999
Facts: PBCom declared losses at the end of the year
s I985-86 and thus be declared no tax payable for the
se years. During the first and second quarter of I985,
it paid income tax returns applying PBComs tax cred
it memos. Also during I985-86 it remitted withholding
creditable taxes for lessees from property rentals. P
etitioner, as per losses declared, claims for refunds o
n the first and second quarters of I985 and the withh
olding taxes from rentals on I985-86. Pending investi
gation of the CIR, petitioner filed a petition for revie
w with the CTA which denied the formers claim on t
he ground that it was filed beyond the two-year regle
mentary period provided by law. Petitioners claim fo
r refund in I986 was likewise denied on the assumpti
on that it will be automatically credited for its tax pa
yment in the succeeding year. The CA affirmed the d
ecision of the CTA in toto. Petitioner contended that
according to RM Circular, it relaxed the two-year regl
ementary period stating that overpaid income taxes
are not covered by such prescriptive period under th
e tax code and the taxpayer can claim refund within
ten years under the NCC.

Issue: Did the tax claims for refund prescribed?

Decision: No. The petitioners contention is not warr
anted. The basic principle is that taxes are the lifebl
ood of the nation. With that perspective, claims for r
efund or tax credit should be exercised within time fi
xed by law. The RM Circular is an administrative ruli
ng which created a clear inconsistency with the prov
isions of the NIRC. Nevertheless, such interpretation
is not conclusive and will be ignored if judicially foun
d to be erroneous. The State cannot be stopped by th
e mistakes or errors of its agents or officials. So the i
nterpretation of the circular cannot be given weight
as it contradicts the NIRC.

#11 Phil Guaranty Co., Inc v CIR, GR L-22074, April 3
0, 1965
Description:
Facts: Petitioner, an insurance company, protested a
letter from CIR which assessed the former for withho
lding tax on the ceded reinsurance premiums. The pe
titioner contended that the foreign reinsurers do not
have offices here in the Philippines. Said premiums
were excluded by the petitioner from its gross incom
e when it files its income tax because its reinsurers
are foreigners not doing business in the Philippines a
nd are therefore not subject to withholding tax. Its pr
otest was denied and appealed to the CTA.

Issue: Are the reinsurance premiums subject to Phili
ppine tax?

Decision: Yes. The foreign insurers' place of busines
s should not be confused with their place of activity
. Business should not be continuity and progression
of transactions
2
while activity may consist of only a
single transaction. An activity may occur outside the
place of business. Section 24 of the Tax Code does n
ot require a foreign corporation to engage in busines
s in the Philippines in subjecting its income to tax. It
suffices that the activity creating the income is perfo
rmed or done in the Philippines. What is controlling, t
herefore, is not the place of business but the place o
f activity that created an income. Considering that th
e reinsurance premiums in question were afforded pr
otection by the government and the recipient foreign
reinsurers exercised rights and privileges guarantee
d by our laws, such reinsurance premiums and reinsu
rers should share the burden of maintaining the state
.

#12 Philex Mining Corp v CIR, GR No. 125704, August
28, 1998
Description:
Facts: Philex protested the demand for payment of th
e tax liabilities stating that it has pending claims for
VAT input credit/refund for the taxes it paid for the p
ast years plus interest. Therefore, these claims for ta
x credit/refund should be applied against the tax liabi
lities. The BIR replied finding no merit on Philexs po
sition stating that said claims have not yet been dete
rmined with certainty therefore no legal presumption
can take place. The CTA ordered Philex to pay statin
g that for legal compensation to take place both obli
gations must be liquidated and demandable also tax
es cannot be subject to set-off on compensation sinc
e claim for taxes is not a debt or contract.

Issue: Can taxes be set-off?


Decision: No. We have made the pronouncement that
taxes cannot be subject to compensation for the sim
ple reason that the government and the taxpayer are
not creditors and debtors of each other. There is a m
aterial distinction between a tax and debt. Debts are
due to the Government in its corporate capacity, whi
le taxes are due to the Government in its sovereign c
apacity. We find no cogent reason to deviate from th
e aforementioned distinction. A person cannot refuse
to pay a tax on the ground that the government owes
him an amount equal to or greater than the tax being
collected.

#13 North Camarines Lumber Co., Inc vs CIR, GR L-1
2353, Sept. 30, 1960
Description:
Facts: Petitioner, a lumber corporation, sold logs to
General Lumber Co. with the agreement that the latt
er would assume payment of the sales tax thereon. T
he CIR interposed no objection to the agreement pro
vided General Lumber Co. filed a bond to cover the s
ales tax liabilities. Upon default of General Lumber, t
he CIR required petitioner to pay the sales tax and in
cidental penalties. The CTA dismissed the case for la
ck of jurisdiction because the case was filed beyond
the 30-day period prescribed by Sec. 11 of RA 1125.


Issue: Was the petition for review filed beyond the re
glementary period required?

Decision: Yes. It was filed a total of 33 days after the
denial of the second request for reconsideration. We
cannot countenance that theory that would make th
e commencement of the statutory 30-day period sole
ly dependent on the will of the taxpayer and place th
e latter in a position to put off indefinitely and at his
convenience the finality of a tax assessment. Such a
n absurd procedure would be detrimental to the inter
est of the Government, for "taxes are the lifeblood of
the government, and their prompt and certain availab
ility an imperious need."

#14 Lutz v Araneta, GR L7859, Dec. 22, 1955
Description:
Facts: Section 2 of CA 567 provided an increase of th
e existing tax on the manufacture of sugar. This was
promulgated due to the threat to the sugar industry o
f its eventual loss of preferential position in the US m
arket and the imposition of export taxes and this will
ultimately insure the continued existence of the indu
stry notwithstanding its preferential loss in the US m
arket. Plaintiff seeks to recover the estate taxes pai
d alleging that such tax is unconstitutional and void
being levied for the aid and support of the sugar indu
stry exclusively.

Issue: Was the tax levied against the sugar industry
exclusively valid?

Decision: Yes. This Court takes judicial notice that t
he sugar production is a vital industry of our nation
. The tax to be levied should burden the sugar produ
cers themselves can hardly be a ground of complaint
; indeed, it appears rational that the tax be obtained
precisely from those who are to be benefited from th
e expenditure of the funds derived from it. At any rat
e, it is inherent in the power to tax that a state be fre
e to select the subjects of taxation, and it has been r
epeatedly held that "inequalities which result from a
singling out of one particular class for taxation or ex
emption infringe no constitutional limitation".

#15 Gomez v Palomar, GR L-23645, October 29, 1968
Description:
Facts: This is a petition against the constitutionality
of RA 1635, as amended by RA 2631, which seeks to
help raise funds for the Philippine Tuberculosis Socie
ty by issuing semi-postal stamps stating that it violat
es the equal protection clause of the Constitution as
well as the rule of uniformity and equality of taxation
. Petitioner mailed a letter to Manila from Pampanga
not bearing the special anti-TB stamp as required an
d consequently it was returned to him.

Issue: Is RA 1635, as amended, violates the Constitu
tional provision of equal protection and rule of unifor
mity and equality of taxation?

Decision: No. To begin with, it is settled that the legi
slature has the inherent power to select the subjects
of taxation and to grant exemptions.

This power has
aptly been described as "of wide range and flexibility
. Indeed, it is said that in the field of taxation, more
than in other areas, the legislature possesses the gr
eatest freedom in classification. Now, the classifica
tion of mail users is not without any reason. It is bas
ed on ability to pay, let alone the enjoyment of a privi
lege, and on administrative convenience. In the alloc
ation of the tax burden, Congress must have conclud
ed that the contribution to the anti-TB fund can be as
sured by those whose who can afford the use of the
mails.
`
#16 Punsalan v Municipal Board of Manila, GR L-4817
, May 26, 1954
Description:
Facts: This is a suit to annul City of Manila Ordinanc
e No. 3398 which imposes a municipal occupation ta
x on persons exercising various professions in the Ci
ty and penalizes non-payment of the tax. Plaintiffs co
ntended that the ordinance and the law authorizing it
constitute class legislation, are unjust and oppressiv
e, and authorize what amounts to double taxation. T
he plaintiffs cry of Class Legislation was that whil
e the law authorized the City of Manila to impose the
said tax, it has withheld that authority from other ch
artered cities, not to mention municipalities. On the
ground of double taxation, under the NIRC the said pr
ofessionals are already taxed for occupation tax to p
ractice in the Philippines and yet the ordinance subje
cts the said professionals to occupation tax to practi
ce in Manila.

Issue: Was there class legislation and double taxatio
n?

Decision: None. The case of class legislation the C
ourt has adjudged that it is within the domain of the
political departments and courts would do well not t
o encroach upon it. Moreover, as the seat of the Nati
onal Government, Manila, no doubt, offers a more luc
rative field for the practice of professions, so it is but
fair that professionals in Manila can be made to pay
a higher occupation tax than their brethren in the pro
vinces. In the case of double taxation, it is widely re
cognized that there is nothing inherently obnoxious i
n the requirement that license fees or taxes be exac
ted with respect to the same occupation, calling or a
ctivity by both the state and the political subdivision
s thereof.

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