CIR VS. DASH ENGINEERING PHILIPPINES, INC.

G.R. NO. 184145, DEC. 11, 2013

FACTS: Respondent DASH ENGINEERING PHILIPPINES, INC. (DASH) filed its

monthly and quarterly value-added tax (VAT) returns for the period from
January 1, 2003 to June 30, 2003. On August 9, 2004, it filed a claim for tax
credit or refund in the amount of P2,149,684.88 representing unutilized input
VAT attributable to its zero-rated sales.
Because petitioner Commissioner of Internal Revenue (CIR) failed to act upon
the said claim, DASH was compelled to file a petition for review with the CTA
on May 5, 2005. The 120-day period within which the CIR should have acted
expired on December 7, 2004. 30 days from the lapse of the said period is on
January 6, 2005.
CONTENTION OF THE PETITIONER COMMISSIONER:
DASH's petition was filed out of time because following Section 112(C) of the
NIRC, it should have been filed on or before January 6, 2005. The 30-day
period to appeal under Section 112(C) is mandatory and jurisdictional.
Hence, the CTA had no jurisdiction to entertain it.
CONTENTION OF RESPONDENT DASH:
DASH argues that the petition was seasonably filed before the CTA according
to Section 112, in relation to Section 229. DASH argues that the taxpayer has
the option to appeal to the CTA within 30 days from receipt of the CIR's
denial and within the two-year period ORto appeal the unacted claim to the
CTA anytime after the 120-day period so long as it is within the two-year
period.
ISSUE: Whether or not respondents judicial claim for refund was filed within
the prescriptive period provided under the Tax Code.
HELD:
COMMISSIONERS PETITION IS MERITORIOUS.
Sec. 229 is inapplicable; two-year period in Sec. 112 refers only to
administrative claims.
Sections 204 and 229 of the NIRC pertain to the refund of erroneously or
illegally collected taxes. In Commissioner v. San Roque Power Corporation
(GR 187485, Feb. 12, 2013), the Court clarified that 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.Section 112
is the more specific and appropriate provision of law for claims for excess
input VAT.
The two-year prescriptive period referred to in Section 112(A) applies only to
the filing of administrative claims with the CIR and not to the filing of judicial
claims with the CTA. In other words, for as long as the administrative claim
is filed with the CIR within the two-year prescriptive period, the 30-day
period given to the taxpayer to file a judicial claim with the CTA need not fall
in the same two year period. At any rate, respondents compliance with the
two-year prescriptive period under Section 112(A) is not an issue. What is
being questioned in this case is DASHs failure to observe the requisite
120+30-day period as mandated by Section 112(C) of the NIRC.
The 120+30 day period under Sec. 112 is mandatory and jurisdictional.
(Aichi, G.R. NO. 184823, and San Roque, GR 187485)
In the present case, DASHs claim for refund was filed after the expiration of
the 30-day period from the failure of the Commissioner to make a decision
within 120 days from the submission of the documents in support of
respondents administrative claim. Hence, DASH's judicial claim for refund
must be denied for having been filed late. Although DASH filed its
administrative claim with the BIR on August 9, 2004 before the expiration of
the two-year period in Section l12(A), it undoubtedly failed to comply with
the 120+ 30-day period in Section l l2(C) which requires that upon the
inaction of the CIR for 120 days after the submission of the documents in
support of the claim, the taxpayer has to file its judicial claim within 30 days
after the lapse of the said period.
The 120 days granted to the CIR to decide the case ended on December 7,
2004.
Thus, DASH had 30 days therefrom, or until January 6, 2005, to file a petition
for review with the CTA. Unfortunately, DASH only sought judicial relief on
May 5, 2005 when it belatedly filed its petition to the CTA, despite having
had ample time to file the same, almost four months after the period allowed
by law. As a consequence of DASH's late filing, the CTA did not properly
acquire jurisdiction over the claim.
The Commissioners petition is GRANTED and DASHs judicial claim for refund
is DENIED.

FACTS: Respondent DEPI filed its monthly and quarterly value-added tax
(VAT) returns for the period from January 1, 2003 to June 30, 2003. On
August 9, 2004, it filed a claim for tax credit or refund for the unutilized input
VAT attributable to its zero-rated sales. Because petitioner Commissioner of
Internal Revenue (CIR) failed to act upon the said claim, respondent was
compelled to file a petition for review with the CTA on May 5, 2005. CTA ruled
in favor of DEPI. CIR elevated the case to CTA En Banc averring that the
claim was filed out of time. DEPI asserts that its petition was seasonably filed
before the CTA in keeping with the two-year prescriptive period provided for
in Sections 204(c) and 229 of the NIRC. CTA En Banc affirmed the CTA
division ruling.

ISSUE: Whether respondent DEPIs judicial claim was filed within

the prescriptive period under Sec. 112 of the Tax Code.

HELD NO. The two-year period in Sec. 112 refers only to administrative
claims. Sections 204 and 229 of the NIRC pertain to the refund of erroneously
or illegally collected taxes. 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. Hence, respondent cannot advance its
position by referring to Section 229 because Section 112 is the more specific
and appropriate provision of law for claims for excess input VAT. Petitioner is
entirely correct in its assertion that compliance with the periods provided for
in the above quoted provision is indeed mandatory and jurisdictional, as
affirmed in this Courts ruling in San Roque, where the Court En Banc settled
the controversy surrounding the application of the 120+30-day period
provided for in Section 112 of the NIRC and reiterated the Aichi doctrine that
the 120+30-day period is mandatory and jurisdictional.

Therefore, in accordance with San Roque, respondents judicial claim for

refund must be denied for having been filed late. Although respondent filed
its administrative claim with the BIR on August 9, 2004 before the expiration
of the two-year period in Section l 12(A), it undoubtedly failed to comply with
the 120+ 30-day period in Section l l 2(D) (now subparagraph C) which
requires that upon the inaction of the CIR for 120 days after the submission
of the documents in support of the claim, the taxpayer has to file its judicial
claim within 30 days after the lapse of the said period. The 120 days granted
to the CIR to decide the case ended on December 7, 2004. Thus, DEPI had 30
days therefrom, or until January 6, 2005, to file a petition for review with the
CTA. Unfortunately, DEPI only sought judicial relief on May 5, 2005 when it
belatedly filed its petition to the CTA, despite having had ample time to file
the same, almost four months after the period allowed by law. As a
consequence of DEPIs late filing, the CTA did not properly acquire
jurisdiction over the claim.
 FIRST LEPANTO TAISHO INSURANCE CORPORATION VS. CIR
[GR NO. 197117, APRIL 10, 2013]

FACTS: After submitting its corporate income tax return for taxable year
ending December 31, 1997, petitioner received a Letter of
Authority, dated October 30, 1998, from respondent Commissioner
of Internal Revenue (CIR) to allow it to examine their books of account and
other accounting records for 1997 and other unverified prior years.

On 29 December 1999, CIR issued internal revenue tax assessments for

deficiency income, withholding, expanded withholding, final withholding,
value-added and documentary stamp taxes for taxable year 1997. On 24
February 2000, petitioner protested the said tax assessments.

ISSUE: Whether a stipulation between contending parties as to correct

withholding of taxes is sufficient evidence for deductibility of expense

RULING: As to service/contractors and purchases, petitioner contends that

both parties already stipulated that it correctly withheld the taxes due. Thus,
petitioner is of the belief that it is no longer required to present evidence to
prove the correct payment of taxes withheld. As correctly ruled by the CTA
Second Division and En Banc, however, stipulations cannot defeat the right
of the State to collect correct taxes due on an individual or juridical person
because taxes are the lifeblood of our nation so its collection should be
actively pursued without unnecessary impediment.
COMMISSIONER OF INTERNAL REVENUE vs. BANK OF THE PHILIPPINE
ISLANDS, as liquidator of PARAMOUNT ACCEPTANCE CORPORATION
[G.R. No. 135446. September 23, 2003.]
CORONA, J:
FACTS: Respondent Bank of the Philippine Islands (BPI) is the liquidator of
Paramount Acceptance Corporation (PAC), a financing corporation which was
dissolved on July 17, 1989. After the dissolution of the PAC, respondent BPI
learned that petitioner CIR filed certain criminal cases against Horacio V.
Poblador and Ramon A. Albert, former president and treasurer of PAC,
respectively, for willful failure to pay the corporation's final deficiency tax
assessments for the years 1981 and 1982.
Respondent informed petitioner that it was willing to compromise and pay
the deficiency tax. At the same time, respondent asked for the withdrawal of
the criminal cases against Poblador and Albert. The parties agreed to settle.
Respondent paid to the petitioner a total amount of P119,815.13.

However, in spite of the payment, petitioner continued to prosecute the

criminal cases against Poblador and Albert: Criminal Cases Nos. 91-5800, 91-
5801 and 91-5802, involving the 1981 assessments, before the Regional Trial
Court of Makati, Branch 150; and, Criminal Case No. 91-4007 involving the
1982 percentage tax deficiency, pending in the Regional Trial Court of
Makati, Branch 143.
Respondent, in a letter to petitioner, pointed out that the assessments were
not sent to the proper address and asked for the refund of the P119,815.13 it
paid under the compromise agreement since the criminal cases against
Poblador and Albert were not dropped as agreed upon.
ISSUE: Is PAC liable to pay the tax assessments?
HELD: NO. PAC is not liable. The RTC of Makati City, Branch 143,
rendered a decision in Criminal Case No. 91-4007 acquitting Poblador and
Albert of willful failure to pay the corporate percentage tax deficiency for
1982. Furthermore, a copy of the said decision was served on petitioner by
registered mail, prior to the submission of its memorandum in this case.
In its decision in Criminal Case No. 91-4007, the trial court ruled that the
prosecution failed to establish that PAC was in fact liable for deficiency taxes
prior to its liquidation. Assuming arguendo that there was a deficiency tax for
which PAC was liable, petitioners failed to make a valid assessment on it
since the notice of assessment was sent to the PAC's old (and therefore
improper) office address. PAC already indicated its new address in its 1986
tax return filed with the BIR's Makati office. This notwithstanding, petitioner
CIR sent the notice of assessment to PAC's old business address instead of its
new address, which was also BPI's (PAC's liquidator) office address.

Since there was a failure to effect a timely valid assessment, the period for
filing a criminal case for PAC's tax liabilities had prescribed by the time
petitioner instituted the criminal cases against PACs former officers.
 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.
MANUEL B. PINEDA, as one of the heirs of deceased ATANASIO
PINEDA, respondent.
G.R. No. L-22734 September 15, 1967
FACTS: Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15
children, the eldest of whom is Manuel B. Pineda, a lawyer. The estate was
divided among the heirs and Manuel B. Pineda's share amounted to about
P2,500.00. After the estate proceedings were closed, the BIR investigated the
income tax liability of the estate for the years 1945, 1946, 1947 and 1948
and it found that the corresponding income tax returns were not filed. The
representative of the Collector of Internal Revenue filed said returns for the
estate and issued an assessment. Manuel B. Pineda, who received the
assessment, contested the same. He appealed to the Court of Tax Appeals
alleging that he was appealing "only that proportionate part or portion
pertaining to him as one of the heirs." The Court of Tax Appeals rendered
judgment holding Manuel B. Pineda liable for the payment corresponding to
his share of the taxes. The Commissioner of Internal Revenue has appealed
to the SC and has proposed to hold Manuel B. Pineda liable for the payment
of all the taxes found by the Tax Court to be due from the estate instead of
only for the amount of taxes corresponding to his share in the estate. Manuel
B. Pineda opposes the proposition on the ground that as an heir he is liable
for unpaid income tax due the estate only up to the extent of and in
proportion to any share he received.
ISSUE: Can BIR collect the full amount of estate taxes from an heir's
inheritance
RULING: Yes. The Government can require Atty. Pineda to pay the full
amount of the taxes assessed. Pineda is liable for the assessment as an heir
and as a holder-transferee of property belonging to the estate/taxpayer. As
an heir he is individually answerable for the part of the tax proportionate to
the share he received from the inheritance. His liability, however, cannot
exceed the amount of his share. As a holder of property belonging to the
estate, Pineda is liable for he tax up to the amount of the property in his
possession. The reason is that the Government has a lien on the P2,500.00
received by him from the estate as his share in the inheritance, for unpaid
income taxes a for which said estate is liable.
All told, the Government has two ways of collecting the tax in
question. One, by going after all the heirs and collecting from each one of
them the amount of the tax proportionate to the inheritance received.
Another remedy, is by subjecting said property of the estate which is in the
hands of an heir or transferee to the payment of the tax due, the estate. This
second remedy is the very avenue the Government took in this case to
collect the tax. The Bureau of Internal Revenue should be given, in instances
like the case at bar, the necessary discretion to avail itself of the most
expeditious way to collect the tax as may be envisioned in the particular
provision of the Tax Code above quoted, because taxes are the lifeblood of
government and their prompt and certain availability is an imperious need.
And as afore-stated in this case the suit seeks to achieve only one objective:
payment of the tax. The adjustment of the respective shares due to the heirs
from the inheritance, as lessened by the tax, is left to await the suit for
contribution by the heir from whom the Government recovered said tax.
 VERA v. FERNANDEZ
GR No. L-31364 March 30, 1979
89 SCRA 199
FACTS: The BIR filed on July 29, 1969 a motion for allowance of claim and for
payment of taxes representing the estate's tax deficiencies in 1963 to 1964
in the intestate proceedings of Luis Tongoy. The administrator opposed
arguing that the claim was already barred by the statute of limitation,
Section 2 and Section 5 of Rule 86 of the Rules of Court which provides that
all claims for money against the decedent, arising from contracts, express or
implied, whether the same be due, not due, or contingent, all claims for
funeral expenses and expenses for the last sickness of the decedent, and
judgment for money against the decedent, must be filed within the time
limited in the notice; otherwise they are barred forever.
ISSUE: Does the statute of non-claims of the Rules of Court bar the claim of
the government for unpaid taxes?
HELD: No. The reason for the more liberal treatment of claims for taxes
against a decedent's estate in the form of exception from the application of
the statute of non-claims, is not hard to find. Taxes are the lifeblood of the
Government and their prompt and certain availability are imperious need.
(CIR vs. Pineda, 21 SCRA 105). Upon taxation depends the Government
ability to serve the people for whose benefit taxes are collected. To safeguard
such interest, neglect or omission of government officials entrusted with the
collection of taxes should not be allowed to bring harm or detriment to the
people, in the same manner as private persons may be made to suffer
individually on account of his own negligence, the presumption being that
they take good care of their personal affairs. This should not hold true to
government officials with respect to matters not of their own personal
concern. This is the philosophy behind the government's exception, as a
general rule, from the operation of the principle of estoppel.
 COMMISSIONER OF INTERNAL REVENUE VS. CTA, ET AL

G.R. NO. 115349 APRIL 18, 1997

FACTS: Ateneo de Manila is an educational institution with auxiliary units

and branches all over the Philippines. One such auxiliary unit is the Institute
of Philippine Culture (IPC), which has no legal personality separate and
distinct from that of private respondent. The IPC is a Philippine unit engaged
in social science studies of Philippine society and culture. Occasionally, it
accepts sponsorships for its research activities from international
organizations, private foundations and government agencies.

On July 8, 1983, private respondent received from petitioner Commissioner

of Internal Revenue a demand letter dated June 3, 1983, assessing private
respondent the sum of P174,043.97 for alleged deficiency contractor's tax
the value of which was later on, upon private respondents request for
reinvestigation, reduced to P46,516.41, Unsatisfied, Private respondent filed
in the Court of Tax Appeals a petition for review of the said letter-decision of
the petitioner which rendered a decision in its favor and ordered the tax
assessment cancelled.

ISSUE: Is Ateneo de Manila University, through its auxiliary unit or branch

the Institute of Philippine Culture performing the work of an independent
contractor and, thus, subject to the three percent contractor's tax levied by
then Section 205 of the National Internal Revenue Code?

RULING: No, The Supreme Court held that Ateneo de Manila University is not
subject to the contractors tax. It explained that to fall under its coverage,
Section 205 of the National Internal Revenue Code requires that the
independent contractor be engaged in the business of selling its services.
The Court, however, found no evidence that Ateneo's Institute of Philippine
Culture ever sold its services for a fee to anyone or was ever engaged in a
business apart from and independently of the academic purposes of the
university.
Moreover, the Court of Tax Appeals accurately and correctly declared that
the funds received by the Ateneo de Manila University are technically not a
fee. They may however fall as gifts or donations which are tax-exempt" as
shown by private respondent's compliance with the requirement of Section
123 of the National Internal Revenue Code providing for the exemption of
such gifts to an educational institution.

CIR v. CA, CITY TRUST BANKING CORP.

GR No. 86785, November 21, 1991
234 SCRA 348

FACTS: Respondent corporation Citytrust filed a refund of overpaid taxes

with the BIR by which the latter denied on the ground of prescription.
Citytrust filed a petition for review before the CTA. The case was submitted
for decision based solely on the pleadings and evidence submitted by the
respondent because the CIR could not present any evidence by reason of the
repeated failure of the Tax Credit/Refud Division of the BIR to transmit the
records of the case, as well as the investigation report thereon, to the
Solicitor General. CTA rendered the decision ordering BIR to grant the
respondent's request for tax refund amounting to P 13.3 million.

ISSUE: Failure of the CIR to present evidence to support the case of the
government, should the respondent's claim be granted?

HELD: Not yet. It is a long and firmly settled rule of law that the Government
is not bound by the errors committed by its agents. In the performance of its
governmental functions, the State cannot be estopped by the neglect of its
agent and officers. Although the Government may generally be estopped
through the affirmative acts of public officers acting within their authority,
their neglect or omission of public duties as exemplified in this case will not
and should not produce that effect.

Nowhere is the aforestated rule more true than in the field of taxation. It is
axiomatic that the Government cannot and must not be estopped
particularly in matters involving taxes. Taxes are the lifeblood of the nation
through which the government agencies continue to operate and with which
the State effects its functions for the welfare of its constituents. The errors of
certain administrative officers should never be allowed to jeopardize the
Government's financial position, especially in the case at bar where the
amount involves millions of pesos the collection whereof, if justified, stands
to be prejudiced just because of bureaucratic lethargy. Thus, it is proper that
the case be remanded back to the CTA for further proceedings and reception
of evidence.

COMMISSIONER v. ALGUE, INC.

GR No. L-28896, February 17, 1988

FACTS: Private respondent corporation Algue Inc filed its income tax returns
for 1958 and 1959showing deductions, for promotional fees paid, from their
gross income, thus lowering their taxable income. The BIR assessed Algue
based on such deductions contending that the claimed deduction is
disallowed because it was not an ordinary, reasonable and necessary
expense.

ISSUE: Should an uncommon business expense be disallowed as a proper

deduction in computation of income taxes, corollary to the doctrine that
taxes are the lifeblood of the government?

HELD: No. Private respondent has proved that the payment of the fees was
necessary and reasonable in the light of the efforts exerted by the payees in
inducing investors and prominent businessmen to venture in an xperimental
enterprise and involve themselves in a new business requiring millions of
pesos. This was no mean feat and should be, as it was, sufficiently
recompensed.

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

But even as we concede the inevitability and indispensability of taxation, it is

a requirement in all democratic regimes that it be exercised reasonably and
in accordance with the prescribed procedure. If it is not, then the taxpayer
has a right to complain and the courts will then come to his succor. For all
the awesome power of the tax collector, he may still be stopped in his tracks
if the taxpayer can demonstrate, as it has here, that the law has not been
observed.

COMMISSIONER OF INTERNAL REVENUE vs.

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

FACTS: The Philippine Sugar Estate Development Company had earlier

appointed Algue as its agent, authorizing it to sell its land, factories and oil
manufacturing process. Pursuant to such authority, Alberto Guevara, Jr.,
Eduardo Guevara, Isabel Guevara, Edith, O'Farell, and Pablo Sanchez, worked
for the formation of the Vegetable Oil Investment Corporation, inducing other
persons to invest in it. Ultimately, after its incorporation largely through the
promotion of the said persons, this new corporation purchased the PSEDC
properties. For this sale, Algue received as agent a commission of
P126,000.00, and it was from this commission that the P75,000.00
promotional fees were paid to the aforenamed individuals.
The petitioner contends that the claimed deduction of P75,000.00 was
properly disallowed because it was not an ordinary reasonable or necessary
business expense. The Court of Tax Appeals had seen it differently. Agreeing
with Algue, it held that the said amount had been legitimately paid by the
private respondent for actual services rendered. The payment was in the
form of promotional fees.
ISSUE: Whether or not the Collector of Internal Revenue correctly disallowed
the P75,000.00 deduction claimed by private respondent Algue as legitimate
business expenses in its income tax returns.
RULING: The Supreme Court agrees with the respondent court that the
amount of the promotional fees was not excessive. The amount of
P75,000.00 was 60% of the total commission. This was a reasonable
proportion, considering that it was the payees who did practically everything,
from the formation of the Vegetable Oil Investment Corporation to the actual
purchase by it of the Sugar Estate properties.
It is said that taxes are what we pay for civilization society. Without taxes,
the government would be paralyzed for lack of the motive power to activate
and operate it. Hence, despite the natural reluctance to surrender part of
one's hard earned income to the taxing authorities, every person who is able
to must contribute his share in the running of the government.

COMMISSIONER OF INTERNAL REVENUE V. COURT OF APPEALS

AND YMCA
G.R.NO.L-124043 OCTOBER 14, 1998

FACTS: Private Respondent YMCA is a non-stock, non-profit institution, which

conducts various programs and activities that are beneficial to the public,
especially the young people, pursuant to its religious, educational and
charitable objectives.
In 1980, private respondent earned, among others, an income of
P676,829.80 from leasing out a portion of its premises to small shop owners,
like restaurants and canteen operators, and P44,259.00 from parking fees
collected from non-members. On July 2, 1984, the commissioner of internal
revenue (CIR) issued an assessment to private respondent, in the total
amount of P415,615.01 including surcharge and interest, for deficiency
income tax, deficiency expanded withholding taxes on rentals and
professional fees and deficiency withholding tax on wages. Private
respondent formally protested the assessment and, as a supplement to its
basic protest, filed a letter dated October 8, 1985. In reply, the CIR denied
the claims of YMCA.
Contesting the denial of its protest, the YMCA filed a petition for review at
the Court of Tax Appeals (CTA) on March 14, 1989. In due course, the CTA
issued this ruling in favor of the YMCA:
ISSUE: Whether or not the YMCA is exempted from rental income derived
from the lease of its properties
RULING Petitioner argues that while the income received by the
organizations enumerated in Section 27 (now 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 "xxx 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 xxx"
We agree with the commissioner.
In the instant case, the exemption claimed by the YMCA is expressly
disallowed by the very wording of the last paragraph of then Section 27 of
the NIRC which mandates that the income of exempt organizations (such as
the YMCA) from any of their properties, real or personal, be subject to the tax
imposed by the same Code.

CIR vs CA and YMCA

298 SCRA 83

FACTS: The main question in this case is: is the income derived from rentals
of real property owned by Young Mens Christian Association of the
Philippines (YMCA) established as a welfare, educationaland charitable
non-profit corporation subject to income tax under the NIRC and the
Constitution? In 1980, YMCA earned an income of P676,829 from leasing out
a portion of its premises to small shop owners, like restaurants and canteen
operators and P44k form parking fees.

ISSUE: Is the rental income of the YMCA taxable?

HELD: Yes. The exemption claimed by the YMCA is expressly disallowed by

the very wording of the last paragraph of then Sec. 27 of the NIRC; court is
duty-bound to abide strictly by its literal meaning and to refrain from
resorting to any convoluted attempt at construction. The said provision
mandates that the income of exempt organizations (such as YMCA) from any
of their properties, real or personal, be subject to the tax imposed by the
same Code. Private respondent is exempt from the payment of property tax,
but nit income tax on rentals from its property.
 DAVAO GULF LUMBER CORP v. CIR
GR No. 117359, July 23, 1998
293 SCRA 77

FACTS: Republic Act No. 1435 entitles miners and forest concessioners to
the refund of 25% of the specific taxes paid by the oil companies, which were
eventually passed on to the user--the petitioner in this case--in the purchase
price of the oil products. Petitioner filed before respondent Commissioner of
Internal Revenue (CIR) a claim for refund in the amount representing 25% of
the specific taxes actually paid on the above-mentioned fuels and oils that
were used by petitioner in its operations. However petitioner asserts that
equity and justice demands that the refund should be based on the increased
rates of specific taxes which it actually paid, as prescribed in Sections 153
and 156 of the NIRC. Public respondent, on the other hand, contends that it
should be based on specific taxes deemed paid under Sections 1 and 2 of RA
1435.

ISSUE: Should the petitioner be entitled under Republic Act No. 1435 to the
refund of 25% of the amount of specific taxes it actually paid on various
refined and manufactured mineral oils and other oil products, and not on the
taxes deemed paid and passed on to them, as end-users, by the oil
companies?

HELD: No. According to an eminent authority on taxation, "there is no tax

exemption solely on the ground of equity." Thus, the tax refund should be
based on the taxes deemed paid. Because taxes are the lifeblood of the
nation, statutes that allow exemptions are construed strictly against the
grantee and liberally in favor of the government. Otherwise stated, any
exemption from the payment of a tax must be clearly stated in the language
of the law; it cannot be merely implied therefrom.
 MARCOS II vs. CA
273 SCRA 47
GR No. 120880, June 5, 1997

"The approval of the court sitting in probate is not a mandatory requirement

in the collection of estate taxes."
"In case of failure to file a return, the tax may be assessed at anytime within
10 years after the omission."

FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of
Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos
to cover the payment of his tax delinquencies during the period of his exile in
the US. The Marcos family was assessed by the BIR after it failed to file
estate tax returns. However the assessment were not protested
administratively by Mrs. Marcos and the heirs of the late president so that
they became final and unappealable after the period for filing of opposition
has prescribed. Marcos contends that the properties could not be levied to
cover the tax dues because they are still pending probate with the court, and
settlement of tax deficiencies could not be had, unless there is an order by
the probate court or until the probate proceedings are terminated.

Petitioner also pointed out that applying Memorandum Circular No. 38-68,
the BIR's Notices of Levy on the Marcos properties were issued beyond the
allowed period, and are therefore null and void.

ISSUE: Are the contentions of Bongbong Marcos correct?

HELD: No. The deficiency income tax assessments and estate tax
assessment are already final and unappealable -and-the subsequent levy of
real properties is a tax remedy resorted to by the government, sanctioned by
Section 213 and 218 of the National Internal Revenue Code. This summary
tax remedy is distinct and separate from the other tax remedies (such as
Judicial Civil actions and Criminal actions), and is not affected or precluded
by the pendency of any other tax remedies instituted by the government.

The approval of the court, sitting in probate, or as a settlement tribunal over

the deceased's estate is not a mandatory requirement in the collection of
estate taxes. On the contrary, under Section 87 of the NIRC, it is the probate
or settlement court which is bidden not to authorize the executor or judicial
administrator of the decedent's estate to deliver any distributive share to
any party interested in the estate, unless it is shown a Certification by the
Commissioner of Internal Revenue that the estate taxes have been paid. This
provision disproves the petitioner's contention that it is the probate court
which approves the assessment and collection of the estate tax.

On the issue of prescription, the omission to file an estate tax return, and the
subsequent failure to contest or appeal the assessment made by the BIR is
fatal to the petitioner's cause, as under Sec.223 of the NIRC, in case of failure
to file a return, the tax may be assessed at anytime within 10 years after the
omission, and any tax so assessed may be collected by levy upon real
property within 3 years (now 5 years) following the assessment of the tax.
Since the estate tax assessment had become final and unappealable by the
petitioner's default as regards protesting the validity of the said assessment,
there is no reason why the BIR cannot continue with the collection of the said
tax.
 REYES v. ALMANZOR
GR Nos. L-49839-46, April 26, 1991
196 SCRA 322

FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo which are
leased and occupied as dwelling units by tenants who were paying monthly
rentals of not exceeding P300. Sometimes in 1971 the Rental Freezing Law
was passed prohibiting for one year from its effectivity, an increase in
monthly rentals of dwelling units where rentals do not exceed three hundred
pesos (P300.00), so that the Reyeses were precluded from raising the rents
and from ejecting the tenants. In 1973, respondent City Assessor of Manila
re-classified and reassessed the value of the subject properties based on the
schedule of market values, which entailed an increase in the corresponding
tax rates prompting petitioners to file a Memorandum of Disagreement
averring that the reassessments made were "excessive, unwarranted,
inequitable, confiscatory and unconstitutional" considering that the taxes
imposed upon them greatly exceeded the annual income derived from their
properties. They argued that the income approach should have been used in
determining the land values instead of the comparable sales approach which
the City Assessor adopted.

ISSUE: Is the approach on tax assessment used by the City Assessor

reasonable?

HELD: No. The taxing power has the authority to make a reasonable and
natural classification for purposes of taxation but the government's act must
not be prompted by a spirit of hostility, or at the very least discrimination
that finds no support in reason. It suffices then that the laws operate equally
and uniformly on all persons under similar circumstances or that all persons
must be treated in the same manner, the conditions not being different both
in the privileges conferred and the liabilities imposed.
Consequently, it stands to reason that petitioners who are burdened by the
government by its Rental Freezing Laws (then R.A. No. 6359 and P.D. 20)
under the principle of social justice should not now be penalized by the same
government by the imposition of excessive taxes petitioners can ill afford
and eventually result in the forfeiture of their properties.

REYES V. ALMONZOR
G.R. NOS. L-49839 46. APRIL 26, 1991

FACTS: The National legislature enacted R.A. 6359 which prohibits an

increase in monthly rentals of dwelling unit or land on which anothers
dwelling is located, where the rental does not exceed Php300.00. The act
also suspended article 1673 of the Civil Code thereby disallowing ejectment
of lessees. These prohibitions were made absolute by the filing of
Presidential Decree 20. Consequently, petitioners herein are precluded from
increasing monthly rentals and in ejecting the lessees.
The respondent city assessor of Manila reassessed the value of the
petitioners properties based on the scheduled market value thereof. This
entailed an increase in the tax rates prompting petitioners to file a
Memorandum of Disagreement with the Board of Tax Assessment Appeals
averring that the reassessment was excessive, unwarranted, inequitable,
confiscatory and unconstitutional considering that the tax imposed upon
them is greater than the annual income derived from the property. They also
argued that the income approach should have been used in determining the
land values instead of the comparable sales approach. The Board of tax
Assessment Appeals considered the assessment valid and the same was
affirmed by the Central Board of Assessment appeals, hence this petition.
ISSUE: Did the board err in adopting the comparable sales approach in fixing
the assessed value of the properties?
RULING: The petition is impressed with merit.
It is unquestionable that both the Comparable Sales Approach and the
Income Approach are generally acceptable methods of appraisal for taxation
purposes. However, it is conceded that the proprietary of one, as against the
other would depend on several factors. Hence, as early as 1923, it has been
stressed that the assessors , in finding the value of the property, have to
consider all the circumstances and elements of value and must exercise a
prudent discretion in reaching conclusions.
 PHIL. BANK OF COMMUNICATIONS v. CIR
GR No. 112024, January 28, 1999
302 SCRA 250

FACTS: Petitioner PBCom filed its first and second quarter income tax
returns, reported profits, and paid income taxes amounting to P5.2M in 1985.
However, at the end of the year PBCom suffered losses so that when it filed
its Annual Income Tax Returns for the year-ended December 31, 1986, the
petitioner likewise reported a net loss of P14.1 M, and thus declared no tax
payable for the year. In 1988, the bank requested from CIR for a tax credit
and tax refunds representing overpayment of taxes. Pending investigation of
the respondent CIR, petitioner instituted a Petition for Review before the
Court of Tax Appeals (CTA). CTA denied its petition for tax credit and refund
for failing to file within the prescriptive period to which the petitioner belies
arguing the Revenue Circular No.7-85 issued by the CIR itself states that
claim for overpaid taxes are not covered by the two-year prescriptive period
mandated under the Tax Code.

ISSUE: Is the contention of the petitioner correct? Is the revenue circular a

valid exemption to the NIRC?

HELD: No. The relaxation of revenue regulations by RMC 7-85 is not

warranted as it disregards the two-year prescriptive period set by law. Basic
is the principle that "taxes are the lifeblood of the nation." The primary
purpose is to generate funds for the State to finance the needs of the
citizenry and to advance the common weal. Due process of law under the
Constitution does not require judicial proceedings in tax cases. This must
necessarily be so because it is upon taxation that the government chiefly
relies to obtain the means to carry on its operations and it is of utmost
importance that the modes adopted to enforce the collection of taxes levied
should be summary and interfered with as little as possible.
From the same perspective, claims for refund or tax credit should be
exercised within the time fixed by law because the BIR being an
administrative body enforced to collect taxes, its functions should not be
unduly delayed or hampered by incidental matters.

PHILIPPINE BANK OF COMMERCE (PBCOM) V. COMMISSIONER OF

INTERNAL REVENUE (CIR)
G.R. NO. 112024. JANUARY 28, 1999

FACTS: Petitioner PBcom paid its quarterly income tax for the first and
second quarters of 1985 totalling to Php5, 016,954.00. Subsequently, PBcom
suffered losses so that when it filed its Annual Income Tax for the year- ended
December 31, 1986, it reported a net loss and declared no tax payable for
the year. Petitioner also earned rental income for both 1985 and 1986 and
the corresponding tax thereof was with held and remitted by the lessees to
the BIR.

On August 7, 1987 or after more than two years from payment of taxes,
PBcom filed for a tax refund. Pending investigation of the BIR, petitioner filed
a petition for review with the Court of Tax Appeals. The CTA denied the tax
refund on the ground that application for refund must be made within two
years from the payment of tax as provided by the National Internal Revenue
Code. Petitioner contended that the two year period has been changed to ten
years upon a memorandum issued by the Commissioner of Internal Revenue.
The Court of Appeal affirmed in toto the ruling of the CTA.

ISSUE: Did the CTA erred in denying the plea for tax refund on the ground of
prescription?

RULING: No. The relaxation of revenue regulation by a memorandum issued

by the BIR is not warranted as it disregards the two year period set by law.
Section 230 of the National Internal Revenue Code of 1977 provides for the
two year period for filing a claim for refund or credit. When the Acting
Commissioner of Internal Revenue issued a memorandum changing the
prescriptive period of two years to ten years, such circular created a clear
inconsistency with the provision of Section 230 of NIRC. In so doing, the BIR
did not simply interpret the law, rather it legislated guidelines contrary to the
statute passed by the congress.
 PHIL. GUARANTY CO., INC. v. CIR
GR No. L-22074, April 30, 1965
13 SCRA 775

FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance

company, entered into reinsurance contracts with foreign insurance
companies not doing business in the country, thereby ceding to foreign
reinsurers a portion of the premiums on insurance it has originally
underwritten in the Philippines. The premiums paid by such companies were
excluded by the petitioner from its gross income when it file its income tax
returns for 1953 and 1954. Furthermore, it did not withhold or pay tax on
them. Consequently, the CIR assessed against the petitioner withholding
taxes on the ceded reinsurance premiums to which the latter protested the
assessment on the ground that the premiums are not subject to tax for the
premiums did not constitute income from sources within the Philippines
because the foreign reinsurers did not engage in business in the Philippines,
and CIR's previous rulings did not require insurance companies to withhold
income tax due from foreign companies.

ISSUE: Are insurance companies not required to withhold tax on reinsurance

premiums ceded to foreign insurance companies, which deprives the
government from collecting the tax due from them?

HELD: No. The power to tax is an attribute of sovereignty. It is a power

emanating from necessity. It is a necessary burden to preserve the State's
sovereignty and a means to give the citizenry an army to resist an
aggression, a navy to defend its shores from invasion, a corps of civil
servants to serve, public improvement designed for the enjoyment of the
citizenry and those which come within the State's territory, and facilities and
protection which a government is supposed to provide. Considering that the
reinsurance premiums in question were afforded protection by the
government and the recipient foreign reinsurers exercised rights and
privileges guaranteed by our laws, such reinsurance premiums and
reinsurers should share the burden of maintaining the state.
The petitioner's defense of reliance of good faith on rulings of the CIR
requiring no withholding of tax due on reinsurance premiums may free the
taxpayer from the payment of surcharges or penalties imposed for failure to
pay the corresponding withholding tax, but it certainly would not exculpate it
from liability to pay such withholding tax. The Government is not estopped
from collecting taxes by the mistakes or errors of its agents.
PHILEX MINING CORP. v. CIR
GR No. 125704, August 28, 1998
294 SCRA 687

FACTS: Petitioner Philex Mining Corp. assails the decision of the Court of
Appeals affirming the Court of Tax Appeals decision ordering it to pay the
amount of P110.7 M as excise tax liability for the period from the 2nd quarter
of 1991 to the 2nd quarter of 1992 plus 20% annual interest from 1994 until
fully paid pursuant to Sections 248 and 249 of the Tax Code of 1977. Philex
protested the demand for payment of the tax liabilities stating that it has
pending claims for VAT input credit/refund for the taxes it paid for the years
1989 to 1991 in the amount of P120 M plus interest. Therefore these claims
for tax credit/refund should be applied against the tax liabilities.

ISSUE: Can there be an off-setting between the tax liabilities vis-a-vis claims
of tax refund of the petitioner?

HELD: No. Philex's claim is an outright disregard of the basic principle in tax
law that taxes are the lifeblood of the government and so should be collected
without unnecessary hindrance. Evidently, to countenance Philex's whimsical
reason would render ineffective our tax collection system. Too simplistic, it
finds no support in law or in jurisprudence.

To be sure, Philex cannot be allowed to refuse the payment of its tax

liabilities on the ground that it has a pending tax claim for refund or credit
against the government which has not yet been granted.Taxes cannot be
subject to compensation for the simple reason that the government and the
taxpayer are not creditors and debtors of each other. There is a material
distinction between a tax and debt. Debts are due to the Government in its
corporate capacity, while taxes are due to the Government in its sovereign
capacity. xxx There can be no off-setting of taxes against the claims that the
taxpayer may have against the government. 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. The collection of a tax cannot await the
results of a lawsuit against the government.

NORTH CAMARINES LUMBER CO., INC. v. CIR

GR No. L-12353, September 30, 1960
109 PHIL 511

FACTS: The petitioner sold more than 2M boardfeet of logs to General

Lumber Co. with the agreement that the latter would pay the sales taxes.
The CIR, upon consultation officially advised the parties that the bureau
interposes no objection so long as the tax due shall be covered by a surety.
General Lumber complied, but later failed, with the surety, to pay the tax
liabilities, and so the respondent collector required the petitioner to pay thru
a letter dated August 30, 1955. Twice did the petitioner filed a request for
reconsideration before finally submitting the denied request for appeal
before the Court of Tax Appeals. The CTA dismissed the appeal as it was
clearly filed out of time. The petitioner had consumed thirty-three days from
the receipt of the demand, before filing the appeal. Petitioner argued that in
computing the 30-day period in perfecting the appeal the letter of the
respondent Collector dated January 30, 1956, denying the second request for
reconsideration, should be considered as the final decision contemplated in
Section 7, and not the letter of demand dated August 30, 1955.

ISSUE: Is the contention of the petitioner tenable?

HELD: No. This contention is untenable. We cannot countenance that theory

that would make the commencement of the statutory 30-day period solely
dependent on the will of the taxpayer and place the latter in a position to put
off indefinitely and at his convenience the finality of a tax assessment. Such
an absurd procedure would be detrimental to the interest of the Government,
for "taxes are the lifeblood of the government, and their prompt and certain
availability is an imperious need."
 LUTZ v. ARANETA
GR No. L-7859, December 22, 1955
98 PHIL 148

FACTS: Plaintiff Walter Lutz, in his capacity as judicial administrator of the

intestate estate of Antionio Ledesma, sought to recover from the CIR the sum
of P14,666.40 paid by the estate as taxes, under section 3 of the CA 567 or
the Sugar Adjustment Act thereby assailing its constitutionality, for it
provided for an increase of the existing tax on the manufacture of sugar,
alleging that such enactment is not being levied for a public purpose but
solely and exclusively for the aid and support of the sugar industry thus
making it void and unconstitutional. The sugar industry situation at the time
of the enactment was in an imminent threat of loss and needed to be
stabilized by imposition of emergency measures.

ISSUE: Is CA 567 constitutional, despite its being allegedly violative of the

equal protection clause, the purpose of which is not for the benefit of the
general public but for the rehabilitation only of the sugar industry?

HELD: Yes. The protection and promotion of the sugar industry is a matter of
public concern, it follows that the Legislature may determine within
reasonable bounds what is necessary for its protection and expedient for its
promotion. Here, the legislative discretion must be allowed to fully play,
subject only to the test of reasonableness; and it is not contended that the
means provided in the law bear no relation to the objective pursued or are
oppressive in character. If objective and methods are alike constitutionally
valid, no reason is seen why the state may not levy taxes to raise funds for
their prosecution and attainment. Taxation may be made the implement of
the state's police power.
 LUTZ vs. ARANETA
G.R. No. L-7859 December 22, 1955

FACTS: Promulgated in 1940, the law in question opens (section 1) with a

declaration of emergency, due to the threat to our industry by the imminent
imposition of export taxes upon sugar as provided in the Tydings-McDuffie
Act, and the "eventual loss of its preferential position in the United States
market"; wherefore, the national policy was expressed "to obtain a
readjustment of the benefits derived from the sugar industry by the
component elements thereof" and "to stabilize the sugar industry so as to
prepare it for the eventuality of the loss of its preferential position in the
United States market and the imposition of the export taxes."
In section 2, Commonwealth Act 567 provides for an increase of the existing
tax on the manufacture of sugar, on a graduated basis, on each picul of
sugar manufactures; while section 3 levies on owners or persons in control of
lands devoted to the cultivation of sugar cane and ceded to others for a
consideration, on lease or otherwise.
Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate
Estate of Antonio Jayme Ledesma, seeks to recover from the Collector of
Internal Revenue the sum of P14,666.40 paid by the estate as taxes, under
section 3 of the Act, for the crop years 1948-1949 and 1949-1950; alleging
that such tax is unconstitutional and void, being levied for the aid and
support of the sugar industry exclusively, which in plaintiff's opinion is not a
public purpose for which a tax may be constitutionally levied. The action
having been dismissed by the Court of First Instance, the plaintiffs appealed
the case directly to this Court
ISSUE: Whether or not taxes imposed by Commonwealth Act No. 567,
otherwise known as the Sugar Adjustment Act is legal?
RULING: As the protection and promotion of the sugar industry is a matter
of public concern the Legislature may determine within reasonable bounds
what is necessary for its protection and expedient for its promotion. Here,
the legislative must be allowed full play, subject only to the test of
reasonableness; and it is not contended that the means provided in section 6
of Commonwealth Act No. 567 bear no relation to the objective pursued or
are oppressive in character. If objective and methods are alike
constitutionally valid, no reason is seen why the state may not levy taxes to
raise funds for their prosecution and attainment. Taxation may be made the
implement of the state's police power.
It is inherent in the power to tax that a state be free to select the subjects of
taxation, and it has been repeatedly held that "inequalities which result from
a singling out of one particular class for taxation or exemption infringe no
constitutional limitation
 GOMEZ v. PALOMAR
GR No. L-23645, October 29, 1968
25 SCRA 827

FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in San
Fernando, Pampanga. It did not bear the special anti-TB stamp required by
the RA 1635. It was returned to the petitioner. Petitioner now assails the
constitutionality of the statute claiming that RA 1635 otherwise known as the
Anti-TB Stamp law is violative of the equal protection clause because it
constitutes mail users into a class for the purpose of the tax while leaving
untaxed the rest of the population and that even among postal patrons the
statute discriminatorily grants exemptions. The law in question requires an
additional 5 centavo stamp for every mail being posted, and no mail shall be
delivered unless bearing the said stamp.

ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly

violative of the equal protection clause?

HELD: No. It is settled that the legislature 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 greatest
freedom in classification. The reason for this is that traditionally,
classification has been a device for fitting tax programs to local needs and
usages in order to achieve an equitable distribution of the tax burden.
The classification of mail users is based on the ability to pay, the enjoyment
of a privilege and on administrative convenience. Tax exemptions have never
been thought of as raising revenues under the equal protection clause.
 GOMEZ vs. PALOMAR
G.R. No. L-23645 October 29, 1968

FACTS: On September l5, 1963 the petitioner Benjamin P. Gomez mailed a

letter at the post office in San Fernando, Pampanga. Because this letter,
addressed to a certain Agustin Aquino of 1014 Dagohoy Street, Singalong,
Manila did not bear the special anti-TB stamp required by the statute, it was
returned to the petitioner.
In view of this development, the petitioner brought suit for declaratory relief
in the Court of First Instance of Pampanga, to test the constitutionality of the
statute, as well as the implementing administrative orders issued,
contending that it violates the equal protection clause of the Constitution as
well as the rule of uniformity and equality of taxation.
The lower court declared the statute and the orders unconstitutional.
This appeal puts in issue the constitutionality of Republic Act 1635,as
amended by Republic Act 2631,2 which provides as follows:
To help raise funds for the Philippine Tuberculosis Society, the Director
of Posts shall order for the period from August nineteen to September thirty
every year the printing and issue of semi-postal stamps of different
denominations with face value showing the regular postage charge plus the
additional amount of five centavos for the said purpose, and during the said
period, no mail matter shall be accepted in the mails unless it bears such
semi-postal stamps: Provided, That no such additional charge of five
centavos shall be imposed on newspapers. The additional proceeds realized
from the sale of the semi-postal stamps shall constitute a special fund and
be deposited with the National Treasury to be expended by the Philippine
Tuberculosis Society in carrying out its noble work to prevent and eradicate
tuberculosis.
The respondent Postmaster General, in implementation of the law, thereafter
issued four (4) administrative orders numbered 3 (June 20, 1958), 7 (August
9, 1958), 9 (August 28, 1958), and 10 (July 15, 1960). All these
administrative orders were issued with the approval of the respondent
Secretary of Public Works and Communications.
ISSUE: Whether or not RA 1635 as amended by RA 2631 and the four
Administrative orders violates the equal protection clause of the Constitution
as well as the rule of uniformity and equality of taxation?
RULING: It is settled that the legislature 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 greatest
freedom in classification. The reason for this is that traditionally,
classification has been a device for fitting tax programs to local needs and
usages in order to achieve an equitable distribution of the tax burden.
The classification is based on considerations of administrative convenience.
For it is now a settled principle of law that consideration of practical
administrative convenience and cost in the administration of tax laws afford
adequate ground for imposing a tax on a well recognized and defined class.
In the case of the anti-TB stamps, undoubtedly, the single most important
and influential consideration that led the legislature to select mail users as
subjects of the tax is the relative ease and convenience of collecting the tax
through the post offices. The small amount of five centavos does not justify
the great expense and inconvenience of collecting through the regular
means of collection. On the other hand, by placing the duty of collection on
postal authorities the tax was made almost self-enforcing, with as little cost
and as little inconvenience as possible.
The eradication of a dreaded disease is a public purpose, but if by public
purpose the petitioner means benefit to a taxpayer as a return for what he
pays, then it is sufficient answer to say that the only benefit to which the
taxpayer is constitutionally entitled is that derived from his enjoyment of the
privileges of living in an organized society, established and safeguarded by
the devotion of taxes to public purposes. Any other view would preclude the
levying of taxes except as they are used to compensate for the burden on
those who pay them and would involve the abandonment of the most
fundamental principle of government that it exists primarily to provide for
the common good.
Nor is the rule of uniformity and equality of taxation infringed by the
imposition of a flat rate rather than a graduated tax. A tax need not be
measured by the weight of the mail or the extent of the service rendered. We
have said that considerations of administrative convenience and cost afford
an adequate ground for classification. The same considerations may induce
the legislature to impose a flat tax which in effect is a charge for the
transaction, operating equally on all persons within the class regardless of
the amount involved.
 PUNSALAN v. MUN. BOARD OF CITY OF MANILA
GR No. L-23645, October 29, 1968
95 PHIL 46

FACTS: The plaintiffs--two lawyers, medical practitioner, a dental surgeon, a

CPA, and a pharmacist--sought the annulment of Ordinance No.3398 of the
City of Manila which imposes a municipal occupation tax on persons
exercising various professions in the city and penalizes non-payment of the
tax, contending in substance that this ordinance and the law authorizing it
constitute class legislation, are unjust and oppressive, and authorize what
amounts to double taxation. The burden of plaintiffs' complaint is not that
the professions to which they respectively belong have been singled out for
the imposition of this municipal occupation tax, but that while the law has
authorized the City of Manila to impose the said tax, it has withheld that
authority from other chartered cities, not to mention municipalities.

ISSUE: Does the law constitute a class legislation? Is it for the Court to
determine which political unit should impose taxes and which should not?

HELD: No. It is not for the courts to judge what particular cities or
municipalities should be empowered to impose occupation taxes in addition
to those imposed by the National Government. That matter is peculiarly
within the domain of the political departments and the courts would do well
not to encroach upon it. Moreover, as the seat of the National Government
and with a population and volume of trade many times that of any other
Philippine city or municipality, Manila, no doubt, offers a more lucrative field
for the practice of the professions, so that it is but fair that the professionals
in Manila be made to pay a higher occupation tax than their brethren in the
provinces.

SOURCE: http://memoirsofthecolony.blogspot.com/2012/07/digested-cases-
in-taxation-law.html (CIR VS PINEDA to PUNSALAN VS MUN BOARD OF
MANILA)