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San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

91. Quinto CIR v COURT OF APPEALS Jan 20, 1995 FACTS: On 22 August 1986, during th ! riod "h n th #r sid nt o$ th % !u&'i( sti'' "i 'd d ' gis'ati) !o" rs, *+ (uti) Ord r ,o. -1 "as !ro.u'gat d d ('aring a on /ti. ta+ a.n st0 on un!aid in(o. ta+ s, 'at r a. nd d to in('ud stat and donor1s ta+ s and ta+ s on &usin ss, $or th ta+a&' 0 ars 1981 to 1985. A)ai'ing its '$ o$ th a.n st0, r s!ond nt %.O.2. Auto #rodu(ts #hi'i!!in s, 3n(., $i' d, in O(to& r 1986 and ,o) .& r 1986, its Ta+ A.n st0 % turn ,o. 4-/F/001-6/-1 and Su!!' . nta' Ta+ A.n st0 % turn ,o. 4-/F/001-6/6-/5, r s! (ti) '0, and !aid th (orr s!onding a.n st0 ta+ s du % s!ond nt 6h r in ! tition r Co..ission r7 $ai' d to !r s nt an0 (as or 'a" "hi(h !ro) s that an ss ss. nt (an "ithstand or n gat th $or( and $$ (ts o$ a ta+ a.n st0. This &urd n o$ !roo$ on th ! tition r 6h r in r s!ond nt ta+!a0 r7 "as (r at d &0 th (' ar and +!r ss t r.s o$ th + (uti) ord r1s int ntion 8 9ua'i$i d a)ai' rs o$ th a.n st0 .a0 !a0 an a.n st0 ta+ in 'i u o$ said un!aid ta+ s "hi(h ar $orgi) n 6S (tion 2, S (tion 5, *+ (uti) Ord r ,o. -1, as a. nd d7. :or s! (i$i(a''0, th !'ain !ro)isions in th statut granting ta+ a.n st0 $or un!aid ta+ s $or th ! riod Januar0 1, 1981 to ; ( .& r 41, 1985 shi$t d th &urd n o$ !roo$ on r s!ond nt to sho" ho" th issuan( o$ an ass ss. nt & $or th dat o$ th !ro.u'gation o$ th + (uti) ord r (ou'd ha) a r asona&' r 'ation "ith th o&< (ti) ! riods o$ th a.n st0, so as to .a= ! tition r sti'' ans" ra&' $or a ta+ 'ia&i'it0 "hi(h, through th statut , shou'd ha) & n ras d "ith th !ro! r a)ai'. nt o$ th a.n st0. 3SS>*: ?h th r or not said d $i(i n(0 ass ss. nts in 9u stion " r +tinguish d &0 r ason or !ri)at r s!ond nt1s a)ai'. nt o$ + (uti) ord r no. -1 as a. nd d &0 + (uti) ord r no. 6 %u'ing: Th ! riod o$ th a.n st0 "as 'at r +t nd d to 05 ; ( .& r 1986 $ro. 41 O(to& r 1986 &0 *+ (uti) Ord r ,o. 5-, dat d 0- ,o) .& r 1986, and, its (o) rag +!and d, und r *+ (uti) Ord r ,o. 6-, dat d 1@ ,o) .& r 1986, to in('ud stat and honors ta+ s and ta+ s on &usin ss. 3$, as th Co..ission r argu s, *+ (uti) Ord r ,o. -1 had not & n int nd d to in('ud 1981/1985 ta+ 'ia&i'iti s a'r ad0 ass ss d 6ad.inistrati) '07 !rior to 22 August 1986, th 'a" (ou'd ha) si.!'0 so !ro)id d in its +('usionar0 ('aus s. 3t did not. Th (on('usion is una)oida&' , and it is that th + (uti) ord r has & n d sign d to & in th natur o$ a g n ra' grant o$ ta+ a.n st0 su&< (t on'0 to th (as s specifically +( !t d &0 it. 3t .ight not & a.iss to r (a'' that th ta+a&' ! riods (o) r d &0 th a.n st0 in('ud th 0 ars i.. diat '0 !r ( ding th 1986 r )o'ution during "hi(h ti. th r had & n ! rsist nt (a''s, a'' too )i)id to & asi'0 $orgott n, $or (i)i' diso& di n( , .ost !arti(u'ar'0 in th !a0. nt o$ ta+ s, to th .artia' 'a" r gi. . 3t shou'd & und rstanda&' th n that thos "ho u'ti.at '0 too= o) r th r igns o$ go) rn. nt $o''o"ing th su(( ss$u' r )o'ution "ou'd !ro.!t'0 !ro)id $or a&road, and not a (on$in d, ta+ a.n st0. % 'ati) to th t"o oth r issu d rais d &0 th Co..ission r, " n -1 its '$A thus: d on'0 9uot $ro. *+ (uti) Ord r ,o.

#ag 1 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

S (. 6. 3..uniti s and #ri)i' g s. 8 >!on $u'' (o.!'ian( "ith th (onditions o$ th ta+ a.n st0 and th ru' s and r gu'ations issu d !ursuant to this *+ (uti) ord r, th ta+!a0 r sha'' n<o0 th $o''o"ing i..uniti s and !ri)i' g s: a7 Th ta+!a0 r sha'' & r 'i ) d o$ an0 in(o. ta+ 'ia&i'it0 on an0 unta+ d in(o. $ro. Januar0 1, 1981 to ; ( .& r 41, 1985, in('uding in(r . nts th r to and ! na'ti s on a((ount o$ th non/!a0. nt o$ th said ta+. Ci)i', (ri.ina' or ad.inistrati) 'ia&i'it0 arising $ro. th non/!a0. nt o$ th said ta+, "hi(h ar a(tiona&' und r th ,ationa' 3nt rna' % ) nu Cod , as a. nd d, ar 'i= "is d . d +tinguish d. &7 Th ta+!a0 r1s ta+ a.n st0 d ('aration sha'' not & ad.issi&' in )id n( in a'' !ro( dings & $or <udi(ia', quasi-judicial or ad.inistrati) &odi s, in "hi(h h is a d $ ndant or r s!ond nt, and th sa. sha'' not & +a.in d, in9uir d or 'oo= d into &0 an0 ! rson, go) rn. nt o$$i(ia', &ur au or o$$i( . (7 Th &oo=s o$ a((ount and oth r r (ords o$ th ta+!a0 r $or th ! riod $ro. Januar0 1, 1981 to ; ( .& r 41, 1985 sha'' not & +a.in d $or in(o. ta+ !ur!os s: Provided, That th Co..ission r o$ 3nt rna' % ) nu .a0 authoriB in "riting th +a.ination o$ th said &oo=s o$ a((ounts and oth r r (ords to ) ri$0 th )a'idit0 or (orr (tn ss o$ a ('ai. $or grant o$ an0 ta+ r $und, ta+ (r dit 6oth r than r $und on (r dit o$ "ithh 'd ta+ s on "ag s7, ta+ in( nti) s, andCor + .!tions und r +isting 'a"s. Th r is no !r t nsion that th ta+ a.n st0 r turns and du !a0. nts .ad &0 th ta+!a0 r did not (on$or. "ith th (onditions +!r ss d in th a.n st0 ord r. 92. Da(a! HILADO V CIR *:3D3O E. 23DA;O, ! tition r, )s. T2* CODD*CTO% OF 3,T*%,AD %*F*,>* and T2* CO>%T OF TAG A##*ADS, r s!ond nts. 5A>T3STA A,H*DO, J: Fa(ts: # tition r $i' d his in(o. ta+ r turn $or 1951 "h r in h ('ai. d th a.ount o$ #12,84@.65 as a d du(ti&' it . $ro. his gross in(o. !ursuant to H n ra' Cir(u'ar ,o. F/124 issu d &0 th Co'' (tor o$ 3nt rna' % ) nu . : an"hi' , th S (r tar0 o$ Finan( , through th Co'' (tor o$ 3nt rna' % ) nu , issu d H n ra' Cir(u'ar ,o. F/149 "hi(h not on'0 r )o= d and d ('ar d )oid his g n ra' Cir(u'ar ,o. F/ 124 &ut 'aid do"n th ru' that 'oss s o$ !ro! rt0 "hi(h o((urr d during th ! riod o$ ?or'd ?ar 33 $ro. $ir s, stor.s, shi!"r (= or oth r (asua't0, or $ro. ro&& r0, th $t, or .& BB' . nt ar d du(ti&' in th 0 ar o$ a(tua' 'oss or d stru(tion o$ said !ro! rt0. As a (ons 9u n( , th a.ount o$ #12,84@.65 "as disa''o" d as a d du(tion $ro. th gross in(o. o$ ! tition r $or 1951 and th Co'' (tor o$ 3nt rna' % ) nu d .and d $ro. hi. th !a0. nt o$ th su. o$ #4,5-6 as d $i(i n(0 in(o. ta+ $or said 0 ar. ?h n th ! tition $or r (onsid ration $i' d &0 ! tition r "as d ni d, h $i' d a ! tition $or r )i " "ith th Court o$ Ta+ A!! a's. 3n du ti. , this (ourt r nd r d d (ision a$$ir.ing th ass ss. nt .ad &0 r s!ond nt Co'' (tor o$ 3nt rna' % ) nu . 3ssu : ?h th r or not th ! tition r is ntit' d to ta+ d du(tion $or th 0 ar 1951 und r an rron ous (ir(u'ar 2 'd: ,o. An ad.inistrati) o$$i( r (annot (hang a 'a" na(t d &0 Congr ss. A r gu'ation that is . r '0 an int r!r tation o$ th statut "h n on( d t r.in d to ha) & n rron ous & (o. s nu''it0. An rron ous (onstru(tion o$ th 'a" &0 th Tr asur0 ; !art. nt or th (o'' (tor o$ int rna' r ) nu do s not !r ('ud or sto! th go) rn. nt $ro. (o'' (ting a ta+ "hi(h is ' ga''0 du . Th a.ount "ou'd not a'so & d du(ti&' as a 'oss in 1951 & (aus , said a.ount "ou'd at .ost & a !ro! r d du(tion $ro. his 1950 gross in(o. . 3n th s (ond !'a( , said a.ount (annot & (onsid r d as a I&usin ss ass tI "hi(h (an & d du(t d as a 'oss in (ont .!'ation o$ 'a" & (aus its (o'' (tion is not n$or( a&' as a .att r o$ right, &ut is d ! nd nt . r '0 u!on th g n rosit0 and .agnani.it0 o$ th >. S. go) rn. nt. #ag 2 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

# tition r1s (ont ntion that during th 'ast "ar and as a (ons 9u n( o$ n .0 o((u!ation in th #hi'i!!in s Ith r "as no ta+a&' 0 arI "ithin th . aning o$ our int rna' r ) nu 'a"s & (aus during that ! riod th 0 " r un n$or( a&' , is "ithout . rit. 3t is " '' =no"n that our int rna' r ) nu 'a"s ar not !o'iti(a' in natur and as su(h " r (ontinu d in $or( during th ! riod o$ n .0 o((u!ation and in $$ (t " r a(tua''0 n$or( d &0 th o((u!ation go) rn. nt. As a .att r o$ $a(t, in(o. ta+ r turns " r $i' d during that ! riod and in(o. ta+ !a0. nt " r $$ (t d and (onsid r d )a'id and ' ga'. Su(h ta+ 'a"s ar d . d to & th 'a"s o$ th o((u!i d t rritor0 and not o$ th o((u!0ing n .0. Da" on( sta&'ish d (ontinu s unti' (hang d &0 so. (o.! t nt ' gis'ati) !o" r. 3t is not (hang d . r '0 &0 (hang o$ so) r ignt0. Con9u st or (o'oniBation is i.!ot nt to &ring 'a" to an ndA ins!it o$ (hang o$ (onstitution, th 'a" (ontinu s un(hang d unti' th n " so) r ign &0 ' gis'ati) a(t (r at s a (hang . 94. Ca&ani''a MISAMIS ORIENTAL ASSOCIATION OF COCO TRADERS V DEP OF FINANCE 9-. A')ar B CIR V CA F & 6, 199@ 95. *st .& r COMMISSIONER VS. LINGAYEN GULF ELECTRIC H% D/24@@1, - August 1988 Sar.i nto 6J7: 14 (on(ur Fac !" Dinga0 n Hu'$ *' (tri( #o" r o! rat s an ' (tri( !o" r !'ant s r)ing th .uni(i!a'iti s o$ Dinga0 n and 5in.a' 0, #angaisnan, !ursuant to .uni(i!a' $ran(his grant d it &0 th r s! (ti) .uni(i!a' (oun(i's. Th $ran(his s !ro)id d that th grant sha'' !a0 9uart r'0 to th #ro)in(ia' Tr asur0 o$ #angasinan 1J o$ th gross arnings o&tain d through th !ri)i' g $or th $irst 20 0 ars 6$ro. 19-67, and 2J during th r .aining 15 0 ars o$ th 'i$ o$ th $ran(his . 3n 19-8, th #hi'i!!in #r sid nt a!!ro) d th $ran(his 6%A 48-47. 3n 1955, th 53% ass ss d and d .and d against th (o.!an0 d $i(i n(0 $ran(his ta+ s and sur(harg s $ro th 0 ars 19-6 to 195- a!!'0ing th $ran(his ta+ rat o$ 5J on gross r ( i!ts $ro. 19-8 to 195-. Th (o.!an0 as= d $or a r in) stigation, "hi(h "as d ni d. I!!#$ %1&" ?h th r th Court (an in9uir into th "isdo. o$ th A(t. H$'( %1&" Th Court do s not ha) th authorit0 to in9uir into th "isdo. o$ th A(t. Chart rs or s! (ia' 'a"s grant d and na(t d &0 th D gis'atur ar in th natur o$ !ri)at (ontra(ts. Th 0 do not (ontitut a !art o$ th .a(hin r0 o$ th g n ra' go) rn. nt. Th 0 ar usua''0 ado!t d a$t r (ar $u' (onsid ration o$ th !ri)at rights in r 'ation "ith th r su'tant & n $its o$ th Stat . 3n !assing a s! (ia' (hart r, th att ntion o$ th D gis'atur is dir (t d to th $a(ts and (ir(u.stan( s "hi(h th a(t or (hart r is int nd d to . t. Th D gis'atur (onsid rs and .a= s !ro)ision $or a'' th (ir(u.stan( o$ th !arti(u'ar (as . Th Court ought not to distur& th ru'ing o$ th Court o$ Ta+ A!! a's on th (onstitutiona'it0 o$ th 'a" in 9u stion. I!!#$ %2&" ?h th r a rat & 'o" 5J on gross in(o. )io'at th uni$or.it0 o$ ta+ ('aus in th Constitution. H$'( %2&" A ta+ is uni$or. "h n it o! rat s "ith th sa. $or( and $$ (t in ) r0 !'a( "h r th su&< (t o$ it is $ound. >ni$or.it0 . ans that a'' !ro! rt0 & 'onging to th sa. ('ass sha'' & ta+ d a'i= . Th ' gis'atur has th inh r nt !o" r not on'0 to s ' (t th su&< (ts o$ ta+ation &ut to grant + .!tions. Ta+ + .!tions ha) n ) r & n d . d )io'at ) o$ th 9ua' !rot (tion ('aus . 2 r in, th 5J $ran(his ta+ rat !ro)id d in S (tion 259 o$ th Ta+ Cod "as n ) r int nd d to ha) a uni) rsa' a!!'i(ation. S (tion 259 +!r ss'0 a''o"s th !a0. nt o$ ta+ s at rat s 'o" r than 5J "h n th (hart r granting th $ran(his !r ('ud s th #ag 3 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

i.!osition o$ a high r ta+. %A 48-4 did not on'0 $i+ and s! (i$0 a $ran(his ta+ o$ 2J on its gross r ( i!ts, &ut .ad it in 'i u o$ an0 and a'' ta+ s, a'' 'a"s to th (ontrar0 not"ithstanding. K Th (o.!an0, h n( , is not 'ia&' $or d $i(i n(0 ta+ s. 96. Arana A)S C)N )ROADCASTING CORP. VS CTA
G.R. NO. L-52306 OCTOBER 12, 1981; MELENCIO-HERRERA, J.

FACTS" / ;uring th ! riod ! rtin nt to this (as , ! tition r (or!oration "as ngag d in th &usin ss o$ t ' (asting 'o(a' as " '' as $or ign $i'.s a(9uir d $ro. $or ign (or!orations not ngag d in trad or &usin ss "ithin th #hi'i!!in s. $or "hi(h ! tition r !aid r nta's a$t r "ithho'ding in(o. ta+ o$ 40Jo$ on /ha'$ o$ th $i'. r nta's. 3n so $ar as th !ro)id : in(o. ta+ on non/r sid nt (or!orations is (on( rn d, s (. 2- 6&7o$ th ,3%C, us d to

6&7 Ta+ on $or ign (or!orations.8617 ,on/r sid nt (or!orations.8 Th r sha'' & ' )i d, (o'' (t d, and !aid $or a(h ta+a&' 0 ar, in 'i u o$ th ta+ i.!os d &0 th !r ( ding !aragra!h, u!on th a.ount r ( i) d &0 ) r0 $or ign (or!oration not ngag d in trad or &usin ss "ithin th #hi'i!!in s, $ro. an sour( s "ithin th #hi'i!!in s, as int r st, di)id nds, r nts, sa'ari s, "ag s, !r .iu.s, annuiti s, (o.! nsations, r .un rations, .o'u. nts, or oth r $i+ d or d t r.ina&' annua' or ! riodi(a' gains, !ro$its, and in(o. , a ta+ 9ua' to thirt0 ! r ( ntu. o$ su(h a.ount. /On A!ri' 12, 1961, in i.!' . ntation o$ th a$or 9uot d !ro)ision, th Co..ission r o$ 3nt rna' % ) nu issu d H n ra' Cir(u'ar ,o. F/44-, "h r in an in(o. ta+ 9ua' to 40J is ' )i d u!on th a.ount r ( i) d &0 ) r0 $or ign (or!oration not ngag d in trad or &usin ss "ithin th #hi'i!!in s $ro. a'' sour( s "ithin this (ountr0 and . Th 'o(a' distri&utor shou'd "ithho'd 40J o$ on /ha'$ o$ th $i'. r nta's !aid to th non/ r sid nt $or ign $i'. distri&utor and !a0 th sa. to this o$$i( in a((ordan( "ith 'a" un' ss th non/ r sid nt $or ign $i'. distri&utor .a= s a !rior s tt' . nt o$ its in(o. ta+ 'ia&i'it0 /! tition r duti$u''0 "ithh 'd and turn d o) r to th 5ur au o$ 3nt rna' % ) nu th a.ount o$ 40J o$ on /ha'$ o$ th $i'. r nta's !aid &0 it to $or ign (or!orations not ngag d in trad or &usin ss "ithin th #hi'i!!in s. Th 'ast 0 ar that ! tition r "ithh 'd ta+ s !ursuant to th $or going Cir(u'ar "as in 1968. /Th n, A(t ,o. 5-41 a. nd d S (tion 2- 6&7 o$ th Ta+ Cod in(r asing th ta+ rat $ro. 40 J to 45 J and r )ising th ta+ &asis $ro. Isu(h a.ountI r $ rring to r nts, t(. to Igross in(o. A th r a$t r, th Co..ission r o$ 3nt rna' % ) nu issu d % ) nu : .orandu. Cir(u'ar ,o. -/@1, r )o=ing H n ra' Cir(u'ar ,o. F/44-, and ho'ding that th 'att r "as I rron ous $or 'a(= o$ ' ga' &asis,I & (aus Ith ta+ th r in !r s(ri& d shou'd & &as d on gross in(o. / On th &asis o$ this n " Cir(u'ar, r s!ond nt Co..ission r o$ 3nt rna' % ) nu issu d against ! tition r a ' tt r o$ ass ss. nt and d .and dat d A!ri' 15, 19@1, &ut a'' g d'0 r ' as d &0 it and r ( i) d &0 ! tition r on A!ri' 12, 19@1, r 9uiring th . to !a0 d $i(i n(0 "ithho'ding in(o. ta+ on th r .itt d $i'. r nta's $or th 0 ars 1965 through 1968 and $i'. ro0a't0 as o$ th nd o$ 1968 / ! tition r r 9u st d $or a r (onsid ration and "ithdra"a' o$ th ass ss. nt. 2o" ) r, "ithout a(ting th r on, r s!ond nt, on A!ri' 6, 19@6, issu d a "arrant o$ distraint and ' )0 o) r ! tition r1s ! rsona' as " '' as r a' !ro! rti s. / ! tition r th n $i' d its # tition $or % )i " "ith th Court o$ Ta+ A!! a's &utth 'att r d ni d it

#ag 4 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

ISSUE" 3?h th r or not r s!ond nt (an a!!'0 H n ra' Cir(u'ar ,o. -/@1 r troa(ti) '0 and issu a d $i(i n(0 ass ss. nt against ! tition r in th a.ount o$ # 525,89@.06 as d $i(i n(0 "ithho'ding in(o. ta+ $or th 0 ars 1965, 1966, 196@ and 1968. HELD" NO S (. 448/A. ,on/r troa(ti)it0 o$ ru'ings. 8 An0 r )o(ation, .odi$i(ation, or r ) rsa' o$ and o$ th ru' s and r gu'ations !ro.u'gat d in a((ordan( "ith th !r ( ding s (tion or an0 o$ th ru'ings or (ir(u'ars !ro.u'gat d &0 th Co..ission r o$ 3nt rna' % ) nu sha'' not & gi) n r troa(ti) a!!'i(ation i$ th r 'o(ation, .odi$i(ation, or r ) rsa' "i'' & !r <udi(ia' to th ta+!a0 rs, +( !t in th $o''o"ing (as s: 6a7 "h r th ta+!a0 r d 'i& rat '0 .is/stat s or o.its .at ria' $a(ts $ro. his r turn or an0 do(u. nt r 9uir d o$ hi. &0 th 5ur au o$ 3nt rna' % ) nu : 6&7 "h r th $a(ts su&s 9u nt'0 gath r d &0 th 5ur au o$ 3nt rna' % ) nu ar .at ria''0 di$$ r nt $ro. th $a(ts on "hi(h th ru'ing is &as dA or 6(7 "h r th ta+!a0 r a(t d in &ad $aith. 6ita'i(s $or .!hasis7 3t is (' ar $ro. th $or going that ru'ings or (ir(u'ars !ro.u'gat d &0 th Co..ission r o$ 3nt rna' % ) nu ha) no r troa(ti) a!!'i(ation "h r to so a!!'0 th . "ou'd & !r <udi(ia' to ta+!a0 rs. Th !r <udi( to ! tition r o$ th r troa(ti) a!!'i(ation o$ : .orandu. Cir(u'ar ,o. -/@1 is & 0ond 9u stion. 3t "as issu d on'0 in 19@1, or thr 0 ars a$t r 1968, th 'ast 0 ar that ! tition r had "ithh 'd ta+ s und r H n ra' Cir(u'ar ,o. F/44-. Th ass ss. nt and d .and on ! tition r to !a0 d $i(i n(0 "ithho'ding in(o. ta+ "as a'so .ad thr 0 ars a$t r 1968 $or a ! riod o$ ti. (o.. n(ing in 1965. # tition r "as no 'ong r in a !osition to "ithho'd ta+ s du $ro. $or ign (or!orations & (aus it had a'r ad0 r .itt d a'' $i'. r nta's and no 'ong r had an0 (ontro' o) r th . "h n th n " Cir(u'ar "as issu d. And in so $ar as th nu. rat d +( !tions ar (on( rn d, ad.itt d'0, ! tition r do s not $a'' und r an0 o$ th .. / 3t !ro)id s that Ith r / na(t. nt o$ a statut su&stantia''0 un(hang d is ! rsuasi) ado!tion &0 Congr ss o$ a !rior + (uti) (onstru(tion. indi(ation o$ th

/ th Ho) rn. nt is n ) r sto!! d $ro. (o'' (ting ta+ s & (aus o$ .ista= s or rrors on th !art o$ its ag nts&ut this a'so ad.its o$ +( !tions in th int r st o$ <usti( and $air!'a0 9@. Fi''anu )a PHILIPPINE )AN* OF COMMUNICATIONS v CIR 98. Qu rido CIR V TO*YO SHIPPING CO.+ ' (
CIR v Tokyo Shipping Co, Ltd. Tokyo S !""!#$ !% & 'o()!$# *o("o(&+!o# ,()"()%)#+)- .y So(!&/o#+ S+)&/% !" A$)#*!)% !# + ) 0 !1!""!#)%2 3 !* o3#% &#- o")(&+)% +(&/")( 4)%%)1 M56 G&(-)#!&. I# 7)*)/.)( 1980, NAS8TRA * &(+)()- M56 G&(-)#!& +o 1o&- 16,500 /)+(!* +o#% o' (&3 %9$&( !# + ) 0 !1!""!#)%. M(. E-!1.)(+o L!%!#$, + ) o")(&+!o#% %9")(4!%o( o' So(!&/o#+ A$)#*y, "&!- + ) ():9!()- !#*o/) &#- *o//o# *&((!)(;% +&<)% +o+&11!#$ &.o9+ 010=k> .&%)- o# + ) )<")*+)- $(o%% ()*)!"+% o' + ) 4)%%)1. 8"o# &((!4!#$, o3)4)(, &+ G9!/&(&% 0o(+ o' I1o!1o, + ) 4)%%)1 'o9#- #o %9$&( 'o( 1o&-!#$. NAS8TRA &#- So(!&/o#+ /9+9&11y &$())- +o &4) + ) 4)%%)1 %&!1 'o( J&"&# 3!+ o9+ &#y *&($o. C1&!/!#$ + ) "()-"&y/)#+ o' !#*o/) &#- *o//o# *&((!)(;% +&<)% &% )((o#)o9% %!#*) #o ()*)!"+ 3&% ()&1!?)- '(o/ + ) * &(+)( &$())/)#+, Tokyo S !""!#$ !#%+!+9+)- & *1&!/ 'o( +&< *()-!+ o( ()'9#- o' 010=k> .)'o() CIR. CIR '&!1)- +o &*+ "(o/"+1y o# + ) *1&!/, %o Tokyo '!1)- & ")+!+!o# 'o( ()4!)3 .)'o() CTA. CTA (91)- !# '&4o9( o' Tokyo. CIR '!1)- & ")+!+!o# *o#+)#-!#$ + &+ Tokyo &- + ) .9(-)# o' "(oo' +o %9""o(+ !+% *1&!/ o' ()'9#-, Tokyo '&!1)- +o "(o4) + &+ !+ -!- #o+ ()&1!?) &#y ()*)!"+ '(o/ !+% * &(+)( &$())/)#+ &#- !+ %9""()%%)- )4!-)#*) 3 )# !+ -!- #o+ "()%)#+ !+% * &(+)( &$())/)#+. I@ A5# Tokyo !% )#+!+1)- +o & ()'9#- o( +&< *()-!+ 'o( &/o9#+% ()"()%)#+!#$ "()-"&y/)#+ o' !#*o/) &#- *o//o# *&((!)(;% +&<)% 9#-)( + ) NIRC R@ BES. CTA -)*!%!o# &''!(/)-. S)*2C ,.22 o' + ) NIRC "(o4!-)% + &+ & *o("o(&+!o# o($&#!?)- 9#-)( 'o()!$# 1&3 .9+ -o!#$ .9%!#)%% !# + ) 0 !1% % &11 .) +&<&.1) 9"o# + ) +o+&1 #)+ !#*o/) -)(!4)- !# + ) "()*)-!#$ +&<&.1) y)&( '(o/ &11 %o9(*)% 3!+ !# + ) 0 !1!""!#)%, 0RO6I7E7 + &+ !#+)(#&+!o#&1 *&((!)(% % &11 "&y & tax of 2 1/2% on their gross Phi ippine !i ings . ,DGross Philippine Billings" include gross revenue realized from uplifts anywhere in the world by any international carrier doing business in the Philippines of passage documents sold therein, whether for passenger, excess baggage or mail, provided the cargo or mail originates from the Philippines. The gross revenue realized from the said cargo or mail include the gross freight charge up to final destination .2 09(%9&#+ +o + !%, & ()%!-)#+ 'o()!$# *o("o(&+!o# )#$&$)- !# + ) +(&#%"o(+ o' *&($o !% 1!&.1) 'o( +&<)% -)")#-!#$ o# + ) &/o9#+ o' !#*o/) !+ -)(!4)% '(o/ %o9(*)% 3!+ !# + ) 0 !1!""!#)%.

#ag , o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.
TH8S, .)'o() %9* & +&< 1!&.!1!+y *&# .) )#'o(*)-, + ) +&<"&y)( /9%+ .) % o3# +o &4) )&(#)- !#*o/) %o9(*)- '(o/ + ) 0 !1!""!#)%. A *1&!/ 'o( ()'9#- !% !# + ) #&+9() o' & *1&!/ 'o( )<)/"+!o# &#- % o91- .) *o#%+(9)- !# strictissimi uris &$&!#%+ + ) +&<"&y)(. T ) +&<"&y)( &% + ) .9(-)# o' "(oo' +o % o3 + &+ ) !% )#+!+1)- +o ()'9#-. IN THIS CASE, + )() 3&% %9''!*!)#+ )4!-)#*) % o3# .y Tokyo + &+ !+ -)(!4)- #o ()*)!"+ '(o/ !+% * &(+)( &$())/)#+ 3!+ NAS8TRA.. 7o*9/)#+% "()%)#+)- 3)() + ) C1)&(&#*) 6)%%)1 +o & Eo()!$# 0o(+ !%%9)- .y + ) 7!%+(!*+ Co11)*+o( o' C9%+o/%, 0o(+ o' I1o!1o &#- + ) C)(+!'!*&+!o# .y + ) O''!*)(-!#-C &($), E<"o(+ 7!4!%!o# o' + ) B9()&9 o' C9%+o/% I1o!1o. T ) *o(()*+#)%% o' + ) *o#+)#+% o' + )%) -o*9/)#+% ()$91&(1y !%%9)- .y o''!*!&1% o' + ) B9()&9 o' C9%+o/% *&##o+ .) -o9.+)- &% !#-))-, + )y &4) #o+ .))# *o#+)%+)- .y + ) ")+!+!o#)(. T&<"&y)(% o3) o#)%+y +o $o4)(#/)#+ F9%+ &% $o4)(#/)#+ o3)% '&!(#)%% +o +&<"&y)(%. T ) *o9(+ .)3&!1% + ) 9#y!)1-!#$ %+&#*) +&k)# .y + ) $o4)(#/)#+ !# ()'9%!#$ +o ()'9#- + ) %9/ o' 010=,1C2.=5 )((o#)o9%1y "()"&!- .y "(!4&+) ()%"o#-)#+. The govern"ent de ayed its ref#nd for 1$ years and th#s rendered the ref#nd %#st &orth a da"aged ni'ke . T !% !% #o+ + ) k!#- o' %9**)%% + ) $o4)(#/)#+, )%")*!&11y + ) BIR, #))-% +o !#*()&%) !+% *o11)*+!o# o' +&<)%. E&!( -)&1 !% )<")*+)- .y o9( +&<"&y)(% '(o/ + ) BIR &#- + ) -9+y -)/&#-% + &+ BIR % o91- ()'9#- 3!+ o9+ &#y 9#()&%o#&.1) -)1&y 3 &+ !+ &% )((o#)o9%1y *o11)*+)-. I# !oxas v. "T#, + ) "o3)( o' +&<&+!o# !% %o/)+!/)% *&11)- &1%o + ) "o3)( +o -)%+(oy. T )()'o() !+ % o91- .) )<)(*!%)- 3!+ *&9+!o# +o /!#!/!?) !#F9(y +o + ) "(o"(!)+&(y (!$ +% o' & +&<"&y)(. I+ /9%+ .) )<)(*!%)- '&!(1y, ):9&11y &#- 9#!'o(/1y, 1)%+ + ) +&< *o11)*+o( k!11 + ) D )# + &+ 1&y% + ) $o1-)# )$$.D A#-, !# o(-)( +o /&!#+&!# + ) $)#)(&1 "9.1!*;% +(9%+ &#- *o#'!-)#*) !# + ) Go4)(#/)#+ + !% "o3)( /9%+ .) 9%)- F9%+1y &#- #o+ +()&* )(o9%1y.

99. #a.&id REYES V ALMAN-OR H.%. ,os. D/-9849/-6 A!ri' 26, 1991 #A%AS, J. Fa(ts: # tition rs J.5.D. % 0 s, *d.undo and :i'agros % 0 s ar o"n rs o$ !ar( 's o$ 'and situat d in Tondo and Sta. CruB ;istri(ts, Cit0 o$ :ani'a, "hi(h ar ' as d and ntir '0 o((u!i d as d" ''ing sit s &0 t nants. Th ,ationa' D gis'atur na(t d % !u&'i( A(t ,o. 6459 !rohi&iting $or on 0 ar $ro. its $$ (ti)it0, an in(r as in .onth'0 r nta's o$ d" ''ing units or o$ 'ands on "hi(h anoth r1s d" ''ing is 'o(at d, "h r su(h r nta's do not +( d thr hundr d ! sos 6#400.007 a .onth &ut a''o"ing an in(r as in r nt &0 not .or than 10J th r a$t r. Th said A(t a'so sus! nd d !aragra!h 617 o$ Arti(' 16@4 o$ th Ci)i' Cod $or t"o 0 ars $ro. its $$ (ti)it0 th r &0 disa''o"ing th < (t. nt o$ ' ss s u!on th +!iration o$ th usua' ' ga' ! riod o$ ' as . #r sid ntia' ; (r ,o. 20 a. nd d %.A. ,o. 6459 &0 .a=ing a&so'ut th !rohi&ition to in(r as .onth'0 r nta's & 'o" #400.00 and &0 ind $init '0 sus! nding th a$or . ntion d !ro)ision o$ th Ci)i' Cod , +( !ting ' as s "ith a d $init ! riod. 3n 19@4, r s!ond nt Cit0 Ass ssor o$ :ani'a r /('assi$i d and r ass ss d th )a'u o$ th su&< (t !ro! rti s &as d on th s(h du' o$ .ar= t )a'u s du'0 r )i " d &0 th S (r tar0 o$ Finan( . # tition rs $i' d a : .orandu. o$ ;isagr . nt "ith th 5oard o$ Ta+ Ass ss. nt A!! a's. Th 5oard o$ Ta+ Ass ss. nt A!! a's, ho" ) r, (onsid r d th ass ss. nts )a'id. Th % 0 s s a!! a' d to th C ntra' 5oard o$ Ass ss. nt A!! a's "hi(h a$$ir. d th d (ision o$ 5TAA. 3ssu : ?O, th 2onora&' 5oard rr d in ado!ting th KCo.!ara&' Sa' s A!!roa(hL : thod in th ass ss d )a'u o$ a!! ''antMs !ro! rti s 2 'd: E s. ,ot ) n th $a(tors d t r.inant o$ th ass ss d )a'u o$ su&< (t !ro! rti s und r th I(o.!ara&' sa' s a!!roa(hI " r !r s nt d &0 th !u&'i( r s!ond nts, na. '0: 617 that th sa' .ust r !r s nt a &ona$id ar.1s ' ngth transa(tion & t" n a "i''ing s '' r and a "i''ing &u0 r and 627 th !ro! rt0 .ust & (o.!ara&' !ro! rt0. ,othing (an <usti$0 or su!!ort th ir )i " as it is o$ <udi(ia' noti( that $or !ro! rti s (o) r d &0 #.;. 20 s! (ia''0 during th ti. in 9u stion, th r " r hard'0 an0 "i''ing &u0 rs. As a g n ra' ru' , th r " r no ta= rs so that th r (an & no r asona&' &asis $or th (on('usion that th s !ro! rti s " r (o.!ara&' "ith oth r r sid ntia' !ro! rti s not &urd n d &0 #.;. 20. , ith r (an th gi) n (ir(u.stan( s & non(ha'ant'0 dis.iss d &0 !u&'i( r s!ond nts as i.!os d und r distr ss d (onditions (' ar'0 i.!'0ing that th sa. " r . r '0 t .!orar0 in (hara(t r. At this !oint in ti. , th $a'sit0 o$ su(h !r .is s (annot & .or (on)in(ing'0 d .onstrat d &0 th $a(t that th 'a" has +ist d $or around t" nt0 6207 0 ars "ith no nto it in sight. Cons 9u nt'0, it stands to r ason that ! tition rs "ho ar &urd n d &0 th go) rn. nt &0 its % nta' Fr Bing Da"s 6th n %.A. ,o. 6459 and #.;. 207 und r th !rin(i!' o$ so(ia' <usti( shou'd not no" & ! na'iB d &0 th sa. go) rn. nt &0 th i.!osition o$ +( ssi) ta+ s ! tition rs (an i'' a$$ord and ) ntua''0 r su't in th $or$ itur o$ th ir !ro! rti s #ag . o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

100. Cr s!o CIR V ALGUE H.%. ,o. D/28896 F &ruar0 1@, 1988 C%>N, J. Fa(ts: A'gu , 3n(., a do. sti( (or!oration ngag d in ngin ring, (onstru(tion and oth r a''i d a(ti)iti s, r ( i) d a ' tt r $ro. th ! tition r ass ssing it in th tota' a.ount o$ #84,184.85 as d 'in9u n(0 in(o. ta+ s $or th 0 ars 1958 and 1959. On Januar0 18, 1965, A'gu $i' d a ' tt r o$ !rot st or r 9u st $or r (onsid ration. On :ar(h 12, 1965, a "arrant o$ distraint and ' )0 "as !r s nt d to th !ri)at r s!ond nt, through its (ouns ', Att0. A'& rto Hu )ara, Jr., "ho r $us d to r ( i) it on th ground o$ th ! nding !rot st. A s ar(h o$ th !rot st in th do(= ts o$ th (as !ro) d $ruit' ss. Att0. Hu )ara !rodu( d his $i' (o!0 and ga) a !hotostat to 53% ag nt %a.on % 0 s, "ho d $ rr d s r)i( o$ th "arrant. - On A!ri' @, 1965, Att0. Hu )ara "as $ina''0 in$or. d that th 53% "as not ta=ing an0 a(tion on th !rot st and it "as on'0 th n that h a(( !t d th "arrant o$ distraint and ' )0 ar'i r sought to & s r) d. Si+t n da0s 'at r, on A!ri' 24, 1965, A'gu $i' d a ! tition $or r )i " o$ th d (ision o$ th Co..ission r o$ 3nt rna' % ) nu "ith th Court o$ Ta+ A!! a's. Th CTA $ound that th !rot st "as $i' d on ti. . 2 n( , C3% a!! a' d th d (ision o$ CTA. 3ssu : ?O, th ' tt r o$ !rot st "as $i' d on ti. 2 'd: E s. A((ording to % !. A(t ,o. 1125, th a!! a' .a0 & .ad "ithin thirt0 da0s a$t r r ( i!t o$ th d (ision or ru'ing (ha'' ng d. 3t is tru that as a ru' th "arrant o$ distraint and ' )0 is I!roo$ o$ th $ina'it0 o$ th ass ss. ntI and r nd rs ho! ' ss a r 9u st $or r (onsid ration,I & ing Itanta.ount to an outright d nia' th r o$ and .a= s th said r 9u st d . d r < (t d.I 5ut th r is a s! (ia' (ir(u.stan( in th (as at &ar that !r ) nts a!!'i(ation o$ this a(( !t d do(trin . Th !ro) n $a(t is that $our da0s a$t r th !ri)at r s!ond nt r ( i) d th ! tition r1s noti( o$ ass ss. nt, it $i' d its ' tt r o$ !rot st. This "as a!!ar nt'0 not ta= n into a((ount & $or th "arrant o$ distraint and ' )0 "as issu dA ind d, su(h !rot st (ou'd not & 'o(at d in th o$$i( o$ th ! tition r. 3t "as on'0 a$t r Att0. Hu )ara ga) th 53% a (o!0 o$ th !rot st that it "as, i$ at a'', (onsid r d &0 th ta+ authoriti s. ;uring th int r) ning ! riod, th "arrant "as !r .atur and (ou'd th r $or not & s r) d. As th Court o$ Ta+ A!! a's (orr (t'0 not d,I 11 th !rot st $i' d &0 !ri)at r s!ond nt "as not !ro $or.a and "as &as d on strong ' ga' (onsid rations. 3t thus had th $$ (t o$ sus! nding on Januar0 18, 1965, "h n it "as $i' d, th r g' . ntar0 ! riod "hi(h start d on th dat th ass ss. nt "as r ( i) d, )iB., Januar0 1-, 1965. Th ! riod start d running again on'0 on A!ri' @, 1965, "h n th !ri)at r s!ond nt "as d $init '0 in$or. d o$ th i.!'i d r < (tion o$ th said !rot st and th "arrant "as $ina''0 s r) d on it. 2 n( , "h n th a!! a' "as $i' d on A!ri' 24, 1965, on'0 20 da0s o$ th r g' . ntar0 ! riod had & n (onsu. d. Th a!! a' d d (ision o$ CTA is a$$ir. d. 101. %osa' <os PHILE/ MINING CORP VS CIR H.%. ,o. 125@0August 28, 1998 %O:*%O, J. Fa(ts: On August 5, 1992, th 53% s nt a ' tt r to #hi' + as=ing it to s tt' its ta+ 'ia&i'iti s $or th 2nd, 4rd and -th 9uart r o$ 1991 as " '' as th 1st and 2nd 9uart r o$ 1992 in th tota' a.ount o$ #124,821.982.52. #ag 7 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

#hi' + !rot st d th d .and $or !a0. nt o$ th ta+ 'ia&i'iti s stating that it has ! nding ('ai.s $or FAT in!ut (r ditCr $und $or th ta+ s it !aid $or th 0 ars 1989 to 1991 in th a.ount o$ #119,9@@,04@.02 !'us int r st. Th r $or th s ('ai.s $or ta+ (r ditCr $und shou'd & a!!'i d against th ta+ 'ia&i'iti s. 53% d ni d th d .and $or s t/o$$. #hi' + th n rais d th issu to CTA. 53% th n issu d a Ta+ Cr dit C rti$i(at r du(ing its ta+ 'ia&i'iti s. ; s!it th r du(tion o$ its ta+ 'ia&i'iti s, th CTA sti'' ord r d #hi' + to !a0 th r .aining &a'an( o$ #110,6@@,688.52 !'us int r st. #hi' + th n a!! a' d to th CA "hi(h dis.iss d its ! tition. 2o" ) r, a $ " da0s a$t r th d nia' o$ its .otion $or r (onsid ration, #hi' + "as a&' to o&tain its FAT in!ut (r ditCr $und not on'0 $or th ta+a&' 0 ar 1989 to 1991 &ut a'so $or 1992 and 199-. 3n )i " o$ th grant o$ its FAT in!ut (r ditCr $und, #hi' + no" (ont nds that th sa. shou'd, i!so <ur , o$$/s t its +(is ta+ 'ia&i'iti s sin( &oth had a'r ad0 & (o. Idu and d .anda&' , as " '' as $u''0 'i9uidat dAI h n( , ' ga' (o.! nsation (an !ro! r'0 ta= !'a( . 3ssu : ?O, th r (an & a )a'id s t/o$$ 2 'd: ,o. 3n s ) ra' instan( s !rior to th instant (as , " ha) a'r ad0 .ad th !ronoun( . nt that ta+ s (annot & su&< (t to (o.! nsation $or th si.!' r ason that th go) rn. nt and th ta+!a0 r ar not (r ditors and d &tors o$ a(h oth r. Th r is a .at ria' distin(tion & t" n a ta+ and d &t. ; &ts ar du to th Ho) rn. nt in its (or!orat (a!a(it0, "hi' ta+ s ar du to th Ho) rn. nt in its so) r ign (a!a(it0. ? $ind no (og nt r ason to d )iat $ro. th a$or . ntion d distin(tion. % ) nu ). 3togon/Su0o( :in s 3n(., "h r in " ru' d that a ! nding r $und .a0 & s t o$$ against an +isting ta+ 'ia&i'it0 ) n though th r $und has not 0 t & n a!!ro) d &0 th Co..ission r, 21 is no 'ong r "ithout an0 su!!ort in statutor0 'a". 3t is i.!ortant to not , that th !r .is o$ our ru'ing in th a$or . ntion d (as "as an(hor d on S (tion 51 6d7 o$ th ,ationa' % ) nu Cod o$ 1949. 2o" ) r, "h n th ,ationa' 3nt rna' % ) nu Cod o$ 19@@ "as na(t d, th sa. !ro)ision u!on "hi(h th 3togon/Su0o( !ronoun( . nt "as &as d "as o.itt d. 22 A((ording'0, th do(trin nun(iat d in 3togon/Su0o( (annot & in)o= d &0 #hi' +. 102. Cang(o FRANCIA VS. INTERMEDIATE APPELLATE COURT H.%. ,o. D/6@6-9. Jun 28, 1988 FACTS" *ngra(io Fran(ia is th r gist r d o"n r o$ a r sid ntia' 'ot and a t"o/stor0 hous &ui't u!on it situat d at #asa0 Cit0. Th 'ot, "ith an ar a o$ a&out 428 s9uar . t rs, is d s(ri& d and (o) r d &0 TCT -@49 64@@957 o$ th % gistr0 o$ ; ds o$ #asa0 Cit0. On O(to& r 15, 19@@, a 125 s9uar . t r !ortion o$ Fran(iaMs !ro! rt0 "as +!ro!riat d $or th su. o$ #-,116.00 r !r s nting th sti.at d a.ount 9ui)a' nt to th ass ss d )a'u o$ th a$or said !ortion. Sin( 1964 u! to 19@@ in('usi) , Fran(ia $ai' d to !a0 his r a' stat ta+ s. Thus, on ; ( .& r 5, 19@@, his !ro! rt0 "as so'd at !u&'i( au(tion &0 th Cit0 Tr asur r o$ #asa0 Cit0 !ursuant to S (tion @4 o$ #; -6- =no"n as th % a' #ro! rt0 Ta+ Cod in ord r to satis$0 a ta+ d 'in9u n(0 o$ #2,-00.00. 2o F rnand B "as th high st &idd r $or th !ro! rt0. Fran(ia "as not !r s nt during th au(tion sa' sin( h "as in 3'igan Cit0 at that ti. h '!ing his un(' shi! &ananas. On :ar(h 4, 19@9, Fran(ia r ( i) d a noti( o$ h aring o$ D%C Cas 1594/# K3n r : # tition $or *ntr0 o$ , " C rti$i(at o$ Tit' L $i' d &0 2o F rnand B, s =ing th (an( ''ation o$ his tit' and th issuan( in F rnad BM na. o$ a n " ( rti$i(at o$ tit' . >!on ) ri$i(ation through his 'a"0 r, Fran(ia dis(o) r d that a Fina' 5i'' o$ Sa' had & n issu d in $a)or o$ 2o F rnand B &0 th Cit0 Tr asur r on 11 ; ( .& r 19@8. Th au(tion sa' and th $ina' &i'' o$ sa' " r &oth annotat d at th &a(= o$ th tit' &0 th % gist r o$ ; ds. On :ar(h 20, 19@9, Fran(ia $i' d a (o.!'aint to annu' th au(tion sa' . Th 'o" r (ourt r nd r d a d (ision, dis.issing his (o.!'aint and ord ring th % gist r o$ ; ds o$ #asa0 Cit0 to issu a n " TCT in $a)or o$ F rnand B o) r th !ar( ' o$ 'and in('uding th i.!ro) . nts th r on. Th 3nt r. diat A!! ''at Court a$$ir. d th d (ision o$ th 'o" r (ourt. 2 n( , th # tition $or % )i ". 2 a'' g d that 3AC (o..itt d a gra) rror o$ 'a" in not ho'ding his o&'igation to !a0 #2,-00 $or su!!os d ta+ d 'in9u n(0 "as s t/o$$ &0 #ag 0 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

th a.ount o$ #-, 116 "hi(h th go) rn. nt is ind &t d to hi. "h n a !ortion o$ his 'and "as +!ro!riat d in 19@@. 2 n( , his ta+ o&'igation had & n s t/o$$ &0 o! ration o$ 'a" as o$ O(to& r 15, 19@@. ISSUE" ?h th r or not Fran(iaMs ta+ d 'in9u n(0 (an & s t o$$ "ith his ('ai. against th go) rn. nt. HELD" NO. Th Court ha) (onsist nt'0 ru' d that th r (an & no o$$/s tting o$ ta+ s against th ('ai.s that th ta+!a0 r .a0 ha) against th go) rn. nt. A ! rson (annot r $us to !a0 a ta+ on th ground that th go) rn. nt o" s hi. an a.ount 9ua' to or gr at r than th ta+ & ing (o'' (t d. Th (o'' (tion o$ a ta+ (annot a"ait th r su'ts o$ a 'a"suit against th go) rn. nt. Th r is no ' ga' &asis $or th (o.! nsation. 50 ' ga' (o.! nsation, o&'igations o$ ! rsons, "ho in th ir o"n right ar r (i!ro(a''0 d &tors and (r ditors o$ a(h oth r, ar +tinguish d 6Art. 12@8, Ci)i' Cod 7. Th (ir(u.stan( s o$ th (as do not satis$0 th r 9uir . nts !ro)id d &0 Arti(' 12@9, to "it: K617 that a(h on o$ th o&'igors & &ound !rin(i!a''0 and that h & at th sa. ti. a !rin(i!a' (r ditor o$ th oth rA +++ 647 that th t"o d &ts & du . 3n th (as o$ Repu lic v. !a" ulao #u" er Co. $% &CR' ())*+ th Court ru' d that 3nt rna' % ) nu Ta+ s (an not & th su&< (t o$ s t/o$$ or (o.! nsation. 3t stat d: KA ('ai. $or ta+ s is not su(h a d &t, d .and, (ontra(t or <udg. nt as is a''o" d to & s t/o$$ und r th statut s o$ s t/ o$$, "hi(h ar (onstru d uni$or.'0, in th 'ight o$ !u&'i( !o'i(0, to +('ud th r . d0 in an a(tion or an0 ind &t dn ss o$ th stat or .uni(i!a'it0 to on "ho is 'ia&' to th stat or .uni(i!a'it0 $or ta+ s. , ith r ar th 0 a !ro! r su&< (t o$ r (ou!. nt sin( th 0 do not aris out o$ th (ontra(t or transa(tion su d on. . . . . 680 C.J.S., @4/@-7. KTh g n ra' ru' &as d on grounds o$ !u&'i( !o'i(0 is " ''/s tt' d that no s t/o$$ ad.issi&' against d .ands $or ta+ s ' )i d $or g n ra' or 'o(a' go) rn. nta' !ur!os s. Th r ason on "hi(h th g n ra' ru' is &as d, is that ta+ s ar not in th natur o$ (ontra(ts & t" n th !art0 and !art0 &ut gro" out o$ dut0 to, and ar th !ositi) a(ts o$ th go) rn. nt to th .a=ing and n$or(ing o$ "hi(h, th ! rsona' (ons nt o$ indi)idua' ta+!a0 rs is not r 9uir d. . . .ML A ta+!a0 r (annot r $us to !a0 his ta+ "h n (a'' d u!on &0 th (o'' (tor & (aus h has a ('ai. against th go) rn. nta' &od0 not in('ud d in th ta+ ' )0. Th ru' "as r it rat d in th (as o$ Cordero v. ,onda $1- &CR' ..1* "h r th Court stat d that: K. . . int rna' r ) nu ta+ s (an not & th su&< (t o$ (o.! nsation & (aus th go) rn. nt and ta+!a0 r Oar not .utua''0 (r ditors and d &tors o$ a(h oth rM und r Arti(' 12@8 o$ th Ci)i' Cod and a K('ai. $or ta+ s is not su(h a d &t, d .and, (ontra(t or <udg. nt as is a''o" d to & s t/o$$.L Th ta+ "as du to th (it0 go) rn. nt "hi' th +!ro!riation "as $$ (t d &0 th nationa' go) rn. nt. :or o) r, th a.ount o$ #-,116.00 !aid &0 th nationa' go) rn. nt $or th 125 s9uar . t r !ortion o$ his 'ot "as d !osit d "ith th #hi'i!!in ,ationa' 5an= 'ong & $or th sa' at !u&'i( au(tion o$ his r .aining !ro! rt0. ,oti( o$ th d !osit dat d S !t .& r 28, 19@@ "as r ( i) d &0 th ! tition r on S !t .& r 40, 19@@. Th ! tition r ad.itt d in his t sti.on0 that h =n " a&out th #-,116.00 d !osit d "ith th &an= &ut h did not "ithdra" it. 3t "ou'd ha) & n an as0 .att r to "ithdra" #2,-00.00 $ro. th d !osit so that h (ou'd !a0 th ta+ o&'igation thus a&orting th sa' at !u&'i( au(tion. 104. Sio CIR V ITOGON-SUYOC MINES+ INC 10-. *s!inosa DOMINGO V GARLITOS 105. :angu&at RP V MAM)ULAO LUIM)ER COMPANY ANTI GRAFT LEAGUE OF THE PHILIPPINES V SAN 1UAN 106. ;inoso 1OYA V PCGG #ag 2 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

10@. % 0 s 1OSE MARI EULALIO C. LO-ADA a3( ROMEO ). IGOT v!. THE COMMISSION ON ELECTIONS H.%. ,O. 59068 Januar0 2@, 1984 ;* CAST%O, J.: FACTS" A ! tition $or .anda.us "as $i' d &0 Jos :ari *u'a'io C. DoBada and %o. o 5. 3got as a r !r s ntati) suit $or and in & ha'$ o$ thos "ho "ish to !arti(i!at in th ' (tion irr s! (ti) o$ !art0 a$$i'iation, to (o.! ' th r s!ond nt CO:*D*C to (a'' a s! (ia' ' (tion to $i'' u! +isting )a(an(i s nu.& ring t" ') 6127 in th 3nt ri. 5atasan #a.&ansa. # tition r DoBada ('ai.s that h is a ta+!a0 r and a &ona $id ' (tor o$ C &u Cit0 and a transi nt )ot r o$ Qu Bon Cit0, : tro :ani'a, "ho d sir s to run $or th !osition in th 5atasan #a.&ansaA "hi' ! tition r %o. o 5. 3got a'' g s that, as a ta+!a0 r, h has standing to ! tition &0 .anda.us th (a''ing o$ a s! (ia' ' (tion as .andat d &0 th 19@4 Constitution.Th r s!ond nt CO:*D*C, r !r s nt d &0 (ouns ', o!!os s th ! tition a'' ging, su&stantia''0, ! tition rs 'a(= standing to $i' th instant ! tition $or th 0 ar not th !ro! r !arti s to institut th a(tion. ISSUE" ?h th r or not th (as "i'' !ros! r as a ta+!a0 r suit HELD" ,o. As ta+!a0 rs, ! tition rs .a0 not $i' th instant ! tition, $or no"h r th r in is it a'' g d that ta+ .on 0 is & ing i'' ga''0 s! nt. Th a(t (o.!'ain d o$ is th ina(tion o$ th CO:*D*C to (a'' a s! (ia' ' (tion, as is a'' g d'0 its .inist ria' dut0 und r th (onstitutiona' !ro)ision a&o) (it d, and th r $or , in)o') s no +! nditur o$ !u&'i( $unds. 3t is on'0 "h n an a(t (o.!'ain d o$, "hi(h .a0 in('ud a ' gis'ati) na(t. nt or statut , in)o') s th i'' ga' +! nditur o$ !u&'i( .on 0 that th so/(a'' d ta+!a0 r suit .a0 & a''o" d. ?hat th (as at &ar s =s is on that ntai's +! nditur o$ !u&'i( $unds "hi(h .a0 & i'' ga' & (aus it "ou'd & s! nt $or a !ur!os /that o$ (a''ing a s! (ia' ' (tion/"hi(h, as "i'' & sho"n, has no authorit0 ith r in th Constitution or a statut . PCa')an CIR V S.C. 1OHNSON Ju'0 11, 2009 Fa(ts: S.C. JO2,SO, A,; SO,, 3,C., a do. sti( (or!oration organiB d and o! rating und r th #hi'i!!in 'a"s, nt r d into a 'i( ns agr . nt "ith SC Johnson and Son, >nit d Stat s o$ A. ri(a 6>SA7, a non/r sid nt $or ign (or!oration &as d in th >.S.A. For th us o$ th trad .ar= or t (hno'og0, Qr s!ond ntR "as o&'ig d to !a0 SC Johnson and Son, >SA ro0a'ti s &as d on a ! r( ntag o$ n t sa' s and su&< (t d th sa. to 25J "ithho'ding ta+ on ro0a't0 !a0. nts "hi(h Qr s!ond ntR !aid $or th ! riod (o) ring Ju'0 1992 to :a0 1994 in th tota' a.ount o$ #1,604,--4.00.% s!ond nt $i' d "ith th 3nt rnationa' Ta+ A$$airs ;i)ision 63TA;7 o$ th 53% a ('ai. $or r $und o$ o) r!aid "ithho'ding ta+ on ro0a'ti s. Th Co..ission r did not a(t on said ('ai. $or r $und. #ri)at r s!ond nt S.C. Johnson S Son, 3n(. 6S.C. Johnson7 th n $i' d a ! tition $or r )i " & $or th Court o$ Ta+ A!! a's 6CTA7.Th Court o$ Ta+ A!! a's r nd r d its d (ision in $a)or o$ S.C. Johnson and ord r d th Co..ission r o$ 3nt rna' % ) nu to issu a ta+ (r dit ( rti$i(at . Th Co..ission r o$ 3nt rna' % ) nu thus $i' d a ! tition $or r )i " "ith th Court o$ A!! a's "hi(h r nd r d th d (ision $inding no . rit in th ! tition and a$$ir.ing in toto th CTA ru'ing.Thus, this ! tition. 3ssu : #ag 10 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

?h th r th Court o$ A!! a's rr d in ru'ing that SC Johnson and Son, >SA is ntit' d to th K:ost Fa)or d ,ationL Ta+ rat o$ 10J on %o0a'ti s as !ro)id in th %#/>S Ta+ Tr at0 in r 'ation to th %#/? st H r.an0 Ta+ Tr at0T 2 'd: Th ro0a't0 in(o. o$ a H r.an r sid nt $ro. sour( s "ithin th #hi'i!!in s arising $ro. th us o$, or th right to us , an0 !at nt, trad .ar=, d sign or .od ', !'an, s (r t $or.u'a or !ro( ss, is ta+ d at 10J o$ th gross a.ount o$ said ro0a't0 und r ( rtain (onditions. Th rat o$ 10J is i.!os d i$ (r dit against th H r.an in(o. and (or!oration ta+ on said ro0a't0 is a''o" d in $a)or o$ th H r.an r sid nt. That . ans th rat o$ 10J is grant d to th H r.an ta+!a0 r i$ h is si.i'ar'0 grant d a (r dit against th in(o. and (or!oration ta+ o$ ? st H r.an0. Th (' ar int nt o$ th K.at(hing (r ditL is to so$t n th i.!a(t o$ dou&' ta+ation &0 di$$ r nt <urisdi(tions. Th %#/>S Ta+ Tr at0 (ontains no si.i'ar K.at(hing (r ditL as that !ro)id d und r th %#/? st H r.an0 Ta+ Tr at0. 2 n( , th ta+ on ro0a'ti s und r th %#/>S Ta+ Tr at0 is not !aid und r si.i'ar (ir(u.stan( s as thos o&taining in th %#/? st H r.an0 Ta+ Tr at0. Th r $or , th K.ost $a)or d nationL ('aus in th %#/? st H r.an0 Ta+ Tr at0 (annot & a)ai' d o$ in int r!r ting th !ro)isions o$ th %#/>S Ta+ Tr at0. CHAPTER V 1. Sa'a&sa& ST. STEPHEN4S ASSOCIATION V CIR ST. STEPHEN5S ASSOCIATION AND ST. STEPHEN GIRLS SCHOOL 6G78'!9 v!. CIR H.%. no. D/11248 21 August 1958 FACTS: # tition r is a non/sto(= du(ationa' s(hoo' $or Chin s (hi'dr n. A donation "as .ad &0 St. St !h n to Hir's "hi(h "as r (ord d in its &oo=s o$ a((ounts as donation. C3% s nt its ass ss. nt noti( "ith St. St !h n d .anding !a0. nt as donorMs and don Ms gi$t ta+ s in('uding sur(harg and int r st. # tition r "rot th Co'' (tor r 9u sting th (an( ''ation and "ithdra"a' o$ th ass ss. nt on th ground o$ rron ous ntr0 &0 th &oo= = ! rs as donation and su(h "as o&tain d &0 . ans o$ s.a'' (ontri&ution $ro. !u&'i( and a''o(at d $or its .aint nan( . C3% "rot &a(= insisting !a0. nt o$ th ta+. :% o$ ! tition r "as d ni d and su(h d (ision sha'' & $ina' "ithin 40 da0s un' ss an a!! a' "as .ad to CTA. CTA dis.iss d th ! tition $or 'a(= o$ <urisdi(tion in)o=ing that 4@ da0s had a'r ad0 'a!s d. Su(h "as (ount d $ro. th ti. th 0 ha) r ( i) d th ass ss. nt. 3SS>*: ?h th r or not th a!! a' is & 'at d'0 $i' d. 2*D;: ,O. Th ! riod $or a!! a' to th r s!ond nt (ourt in this (as .ust, th r $or , & (o.!ut d $ro. th ti. ! tition rs r ( i) d th d (ision o$ th r s!ond nt Co'' (tor o$ 3nt rna' % ) nu on th dis!ut d ass ss. nt, and not $ro. th ti. th 0 r ( i) d said ass ss. nt. Th n +t 9u stion no" is: "hi(h is th d (ision o$ th Co'' (tor on th dis!ut d ass ss. nt 8 his ' tt r o$ A!ri' 6, 1955, r ( i) d &0 ! tition rs on A!ri' 21, 1955, d n0ing th ir $irst r 9u st $or th "ithdra"a' and (an( ''ation o$ th ass ss. ntA or his ' tt r o$ Ju'0 11, 1955, r ( i) d &0 ! tition rs on Ju'0 25, 1955, d n0ing th ir s (ond r 9u st that th ass ss. nt & (an( '' d and "ithdra"n, and stating that: This d (ision & (o. s $ina' thirt0 da0s a$t r 0our r ( i!t h r o$ un' ss an a!! a' is ta= n to th Court o$ Ta+ A!! a's "ithin th sa. ! riod, in a((ordan( "ith th !ro)ision o$ % !u&'i( A(t ,o. 1125. #ag 11 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Fro. th a&o) /9uot d stat . nt a!! aring in his ' tt r o$ Ju'0 11, 1955, it is )id nt that th r s!ond nt Co'' (tor hi.s '$ (onsid r d said ' tt r as his $ina' d (ision in th (as , h n( his "arning that th sa. "ou'd & (o. $ina' in thirt0 da0s un' ss ! tition rs a!! a' d to th Court o$ Ta+ A!! a's "ithin th sa. ! riod. #rior to his ' tt r/d (ision o$ Ju'0 11, 1955, th n, th Co'' (tor .ust ha) h 'd th .att r und r ad)is . nt and (onsid r d his !r ( ding ru'ings as . r '0 t ntati) in (hara(t r, ! nding his $ina' d t r.ination and r so'ution o$ th . rits o$ th argu. nts o$ $a(t and 'a" su&.itt d &0 ! tition rs in su!!ort o$ th ir r 9u sts $or th (an( ''ation and "ithdra"a' o$ th ass ss. nt. This .ust ha) & n th r ason "h0, in said ' tt r/d (ision o$ Ju'0 11, 1955, th Co'' (tor in('ud d an +!r ss stat . nt that said d (ision "as to & (o. $ina' in thirt0 da0s un' ss a!! a' d $ro. "ithin th sa. ! riodA and it .ust a'so ha) & n $or this r ason that, throughout th !ro( dings in th r s!ond nt Co'' (tor n ) r ('ai. d that ! tition rs1 a!! a' "as $i' d out o$ ti. , and it "as th Ta+ Court that "otu proprio dis.iss d th ! tition & (aus it & 'i ) d it "as not $i' d "ithin th ! riod !ro)id d &0 % !u&'i( A(t ,o. 1125. % s!ond nts ass rt that th Co'' (tor o$ 3nt rna' % ) nu (an not n'arg or +t nd th ! riod $or a!! a' und r s (tion 11 o$ % !u&'i( A(t ,o. 1125. This is not, ho" ) r, a (as "h r th r s!ond nt Co'' (tor had n'arg d or +t nd d th ! riod $or a!! a' to th r s!ond nt CourtA this is si.!'0 a (as "h r th Co'' (tor did not r a(h a $ina' d (ision on th .att r ! nding & $or hi. unti' Ju'0 11, 1955, "h n h r ' as d his ' tt r/d (ision o$ th sa. dat . # tition rs ha)ing $i' d th ir a!! a' on th 19th da0 $ro. th r ( i!t o$ this d (ision, th ir a!! a' "as $i' d on ti. and th r s!ond nt Court rr d in dis.issing th sa. $or 'a(= o$ <urisdi(tion. ?h r $or , th r so'ution a!! a' d $ro. is r ) rs d, and th r (ords ar ord r d r .and d to th r s!ond nt (ourt $or d (ision on th . rits. ?ithout (osts.

2. Castronu )o ADVERTISING ASSOCIATES V CA H.%. ,o. D/59@58 ; ( .& r 26, 198AQ>3,O, J.: FACTS" 3n th instant (as , Ad) rtising Asso(iat s a'' g d that it so'd in 19-9 its ad) rtising ag n(0 &usin ss to #hi'i!!in Ad) rtising Couns ''ors, that its &usin ss is 'i.it d to th .a=ing, (onstru(tion and insta''ation o$ &i''&oards and ' (tri( signs and .a=ing and !rinting o$ !ost rs, signs, hand&i''s, t(. 6101 tsn7. 3t (ont nds that it is a . dia (o.!an0, not an ad) rtising (o.!an0, 3t !aid sa' s ta+ s $or s ''ing &i''&oards, ' (tri( signs, (a' ndars, !ost rs, t(., r a't0 d a' r1s ta+ $or ' asing &i''&oards and ' (tri( signs and 4J (ontra(tor1s ta+ $or r !airing ' (tri( signs. Th &i''&oards and ' (tri( signs .anu$a(tur d &0 it ar ith r so'd or ' as d, As a'r ad0 stat d, th Co..ission r o$ 3nt rna' % ) nu su&< (t d to 4J (ontra(tor1s ta+ its r nta' in(o. $ro. &i''&oards and ' (tri( signs. Th Co..ission r r 9uir d Ad) rtising Asso(iat s to !a0 #29@,92@.06 and #8-,@@4.10 as (ontra(tor1s ta+ $or 196@/19@1 and 19@2, r s! (ti) '0, in('uding 25J sur(harg 6th 'att r a.ount in('ud s int r st7 on its in(o. $ro. &i''&oards and n on signs. Th &asis o$ th ass ss. nt is th $a(t that th ta+!a0 r1s arti(' s o$ in(or!oration !ro)id that its !ri.ar0 !ur!os is to ngag in g n ra' ad) rtising &usin ss. 3ts in(o. ta+ r turns indi(at that its &usin ss "as ad) rtising. Ad) rtising Asso(iat s (ont st d th ass ss. nts in its 1' tt rs o$ Jun 25, 19@4 6$or th 196@/@1 d $i(i n(0 ta+ s7 and :ar(h @, 19@- 6$or th 19@2 d $i(i n(07. Th Co..ission r r it rat d th ass ss. nts in his ' tt rs o$ Ju'0 12 and S !t .& r 16,19@- 6!. 4, %o''o7. Th ta+!a0 r r 9u st d th (an( ''ation o$ th ass ss. nts in its ' tt rs o$ S !t .& r 14 and ,o) .& r 21, 19@- 6!. 4, %o''o7. /nexplica ly+ for a out four years t0ere 1as no "ove"ent in t0e case. Th n, on :ar(h 41, 19@8, th Co..ission r r sort d to th su..ar0 r . d0 o$ issuing t"o "arrants o$ distraint, dir (ting th (o'' (tion n$or( . nt di)ision to ' )0 on th ta+!a0 r1s ! rsona' !ro! rti s as "ou'd & su$$i(i nt to satis$0 th d $i(i n(0 ta+ s 6!!. -, 29 and 40, %o''o7. Th "arrants " r s r) d u!on th ta+!a0 r on A!ri' 18 and :a0 25, 19@8. #ag 12 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

:or than a 0 ar 'at r, A(ting Co..ission r *$r n 3. #'ana "rot a ' tt r dat d :a0 24, 19@9 in ans" r to th r 9u sts o$ th ta+!a0 r $or th (an( ''ation o$ th ass ss. nts and th 1it0dra1al of t0e 1arrants of distraint 6Ann + C o$ # tition, !!. 41/42, %o''o7. 2 <usti$i d th ass ss. nts &0 stating that th r nta' in(o. o$ Ad) rtising Asso(iat s $ro. &i''&oards and n on signs (onstitut d $ s or (o.! nsation $or its ad) rtising s r)i( s. 2 r 9u st d th ta+!a0 r to !a0 th d $i(i n(0 ta+ s "ithin t n da0s $ro. r ( i!t o$ th d .andA oth r"is , th 5ur au "ou'd n$or( th "arrants o$ distraint. 2 ('os d his d .and ' tt r "ith this !aragra!h: This (onstitut s our $ina' d (ision on th .att r. 3$ 0ou ar not agr a&' , 0ou .a0 a!! a' to th Court o$ Ta+ A!! a's "ithin 40 da0s $ro. r ( i!t o$ this ' tt r. Ad) rtising Asso(iat s r ( i) d that ' tt r on Jun 18, 19@9. ,in t n da0s 'at r or on Ju'0 @, it $i' d its ! tition $or r )i ". 3n its r so'ution o$ August 28, 19@9, th Ta+ Court enjoined t0e enforce"ent of t0e 1arrants of distraint. Th Ta+ Court did not r so') th (as on th . rits. 3t ru' d that th "arrants o$ distraint " r th Co..ission r1s appeala le decisions. Sin( Ad) rtising Asso(iat s a!! a' d $ro. th d (ision o$ :a0 24, 19@9, th ! tition $or r )i " "as $i' d out o$ ti. . 3t "as dis.iss d. Th ta+!a0 r a!! a' d to this Court. ISSUE" 617 ?h th r th (o'' (tion o$ th ta+ had a'r ad0 !r s(ri& d. 627 ?h th r th ! tition $or r )i " "as $i' d "ithin th r g' . ntar0 ! riod. RULING" 617 S (tion 442 o$ th 1949 Ta+ Cod , no" s (tion 419 o$ th 19@@ Ta+ Cod , #r sid ntia' ; (r ,o. 1158, $$ (ti) on Jun 4, 19@@, !ro)id s that th ta+ .a0 & (o'' (t d &0 distraint or ' )0 or &0 a <udi(ia' !ro( ding & gun 1"ithin $i) 0 ars a$t r th ass ss. nt o$ th ta+I. Th ta+!a0 r r ( i) d on Jun 18, 19@4 and :ar(h 5, 19@- th d $i(i n(0 ass ss. nts h r in. Th "arrants o$ distraint " r s r) d u!on it on A!ri' 18 and .a0 25,19@8 or "ithin $i) 0 ars a$t r th ass ss. nt o$ th ta+. O&)ious'0, th "arrants " r issu d to int rru!t th $i) /0 ar !r s(ri!ti) ! riod. 3ts n$or( . nt "as not i.!' . nt d & (aus o$ th ! nding !rot sts o$ th ta+!a0 r and its r 9u sts $or "ithdra"a' o$ th "arrants "hi(h " r ) ntua''0 r so') d in Co..ission r #'ana1s ' tt r o$ :a0 24, 19@9. 3t shou'd & not d that th Co..ission r did not institut an0 <udi(ia' !ro( ding to (o'' (t th ta+. 2 r 'i d on th "arrants o$ distraint to int rru!t th running o$ th statut o$ 'i.itations. 2 ga) th ta+!a0 r a.!' o!!ortunit0 to (ont st th ass ss. nts &ut at th sa. ti. sa$ guard d th Ho) rn. nt1s int r st &0 . ans o$ th "arrants o$ distraint. 627 ? ho'd that th ! tition $or r )i " "as $i' d on ti. . Th r )i "a&' d (ision is that (ontain d in Co..ission r #'ana1s ' tt r o$ :a0 24, 19@9 and not th "arrants o$ distraint. ,o a.ount o$ 9ui&&'ing or so!histr0 (an &'in= th $a(t that said ' tt r, as its t nor sho"s, .&odi s th Co..ission r1s $ina' d (ision "ithin th . aning o$ s (tion @ o$ % !u&'i( A(t ,o. 1125. Th Co..ission r said so. 2 ) n dir (t d th ta+!a0 r to a!! a' it to th Ta+ Court. That "as th sa. situation in &t. &tep0en2s 'ssociation and &t. &tep0en2s C0inese ,irl2s &c0ool vs. Collector of /nternal Revenue+ 10- #hi'. 41-, 41@/418. Th dir (ti) is in (onsonan( "ith this Court1s di(tu. that th Co..ission r shou'd a'"a0s indi(at to th ta+!a0 r in (' ar and un 9ui)o(a' 'anguag "hat (onstitut s his $ina' d t r.ination o$ th dis!ut d ass ss. nt. That !ro( dur is d .and d &0 th !r ssing n d $or $air !'a0, r gu'arit0 and ord r'in ss in ad.inistrati) a(tion 6Surigao *' (tri( Co., 3n(. )s. Court o$ Ta+ A!! a's, D/25289, Jun 28, 19@-, 5@ SC%A 5247. 4. Ho( CIR V ISA)ELA CULTURAL CORPORATION H.%. ,o. 145210 Ju'0 11, 2001 #A,HA,35A,, J. Fa(ts: #ag 13 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

3n an in) stigation (ondu(t d on th 1986 &oo=s o$ a((ount o$ r s!ond nt, ! tition r had th !r 'i.inar0 $inding that r s!ond nt in(urr d a tota' in(o. ta+ d $i(i n(0 o$ #9,985,492.15, in('usi) o$ in(r . nts. >!on !rot st &0 Qr s!ond nt1sR (ouns ', th said !r 'i.inar0 ass ss. nt "as r du( d to th a.ount o$ #425,869.--. A d .and "as r ( i) d &0 r s!ond nt. % s!ond nt th n $i' d a r 9u st $or in) stigation. Atta(h d " r ( rtain do(u. nts su!!orti) o$ its !rot st, as " '' as a ?ai) r o$ Statut o$ Di.itation, dat d A!ri' 1@, 1990, "h r it "as indi(at d that Q! tition rR "ou'd on'0 ha) unti' A!ri' 5, 1991 "ithin "hi(h to ass s and (o'' (t th ta+ s that .a0 & $ound du $ro. Qr s!ond ntR a$t r th r /in) stigation. On F &ruar0 9, 1995, Qr s!ond ntR r ( i) d $ro. Q! tition rR a Fina' ,oti( 5 $or S iBur , dat d ; ( .& r 22, 199-. % s!ond ntR (onsid r d said $ina' noti( o$ s iBur as Q! tition r1sR $ina' d (ision. 2 n( , th instant ! tition $or r )i " $i' d "ith this Court on :ar(h 9, 1995. CTA dis.iss d th ! tition. CA r ) rs d CTAMs d (ision. 3ssu : ?O, th Fina' ,oti( 5 $or S iBur dat d F &ruar0 9, 1995 sign d &0 A(ting Chi $ % ) nu Co'' (tion O$$i( r :i'agros A( ) do against 3CC (onstitut s th $ina' d (ision o$ th C3% a!! a'a&' to th CTA 2 'd: E s. Th Fina' ,oti( 5 $or S iBur (annot &ut & (onsid r d as th (o..ission r1s d (ision dis!osing o$ th r 9u st $or r (onsid ration $i' d &0 r s!ond nt, "ho r ( i) d no oth r r s!ons to its r 9u st. ,ot on'0 "as th ,oti( th on'0 r s!ons r ( i) dA its (ont nt and t nor su!!ort d th th or0 that it "as th C3%1s $ina' a(t r garding th r 9u st $or r (onsid ration. Th ) r0 tit' +!r ss'0 indi(at d that it "as a $ina' noti( !rior to s iBur o$ !ro! rt0. Th ' tt r its '$ (' ar'0 stat d that r s!ond nt "as & ing gi) n Ithis DAST O##O%T>,3TEI to !a0A oth r"is , its !ro! rti s "ou'd & su&< (t d to distraint and ' )0

-. Huro SURIGAO ELECTRIC CO. AND LUMANLAN V MUNICIPALITY OF SURIGAO H.%. ,o. D/22@66 August 40, 1968 F*%,A,;O, J. Fa(ts: On Jun 18, 1960, Congr ss $urth r a. nd d th #u&'i( S r)i( A(t, on o$ th (hang s introdu( d doing a"a0 "ith th r 9uir . nt o$ a ( rti$i(at o$ !u&'i( (on) ni n( and n ( ssit0 $ro. th #u&'i( S r)i( Co..ission $or I!u&'i( s r)i( s o"n d or o! rat d &0 go) rn. nt ntiti s or go) rn. nt/o"n d or (ontro'' d (or!orations,I &ut at th sa. ti. a$$ir.ing its !o" r o$ r gu'ation. A ! tition $or r )i " "as $i' d on th &asis o$ th ord r o$ #u&'i( S r)i( Co..ission. Th issu , a((ording to r s!ond nt Co..ission, I&oi's do"n to "h th r or not a .uni(i!a' go) rn. nt (an dir (t'0 .aintain and o! rat an ' (tri( !'ant "ithout o&taining a s! (i$i( $ran(his $or th !ur!os and "ithout a ( rti$i(at o$ !u&'i( (on) ni n( and n ( ssit0 du'0 issu d &0 th #u&'i( S r)i( Co..ission.I 3ssu : ?O, 'o(a' go) rn. nts ar rat s 2 'd: ? ha) to as( rtain th int nt o$ Congr ss in introdu(ing th a&o) a. nd. nts, .or s! (i$i(a''0, in 'i.inating th r 9uir . nt o$ th ( rti$i(at o$ !u&'i( (on) ni n( and n ( ssit0 & ing o&tain d &0 go) rn. nt ntiti s, or &0 go) rn. nt/o"n d or (ontro'' d (or!orations o! rating !u&'i( s r)i( s. 2 r , th #ag 14 o$ 47 + .!t d $ro. th <urisdi(tion o$ #SC +( !t "ith r s! (t to $i+ing o$

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

:uni(i!a'it0 o$ Surigao is not a go) rn. nt/o"n d or (ontro'' d (or!oration. 3t (annot & said, ho" ) r, that it is not a go) rn. nt ntit0. 3t "ou'd, th r $or , & to rod th t r. Igo) rn. nt ntiti sI o$ its . aning i$ " ar to r ) rs th #u&'i( S r)i( Co..ission and to ho'd that a .uni(i!a'it0 is to & (onsid r d outsid its s(o! . 3t .a0 & ad.itt d that th r "ou'd & no a.&iguit0 at a'' had th t r. I.uni(i!a' (or!orationsI & n .!'o0 d. Our $un(tion, ho" ) r, is to !ut . aning to ' gis'ati) "ords, not to d nud th . o$ th ir (ont nts. 5. *s(a'ona YA)ES V FLOGO H.%. ,o. D/-695Ju'0 20, 1982 CO,C*#C3O, J%., J. Fa(ts: ;orot o Ea& s o$ Ca'a.aniugan Caga0an, an +('usi) d a' r o$ !rodu(ts o$ th 3nt rnationa' 2ar) st r :a(' od, 3n(., r ( i) d a ' tt r $ro. th Co..ission r o$ 3nt rna' % ) nu , d .anding !a0. nt o$ th a.ount o$ #15,9@6.81, as (o.. r(ia' &ro= r1s $i+ d and ! r( ntag ta+ s !'us sur(harg s and th su. o$ #2,540 as (o.!ro.is ! na't0 a'' g d'0 du $ro. Ea& s $or th 0 ars 1956/1960. Ea& s $i' d a !rot st. Th Court o$ Ta+ A!! a's ru' d that agr . nts nt r d into &0 Constantino "ith th 3nt rnationa' 2ar) st r :a(' od, 3n(. " r o$ !ur(has and sa' , and not o$ ag n(0, h n( no (o.. r(ia' &ro= r1s $i+ d and ! r( ntag $ s (ou'd & (o'' (t d $ro. th said ta+!a0 r. This Court r ) rs d th d (ision o$ CTA and ru' d in $a)or o$ C3%. A$t r a 'a!s o$ 5 0 ars, th h irs o$ ! tition r $i' d a r )is d "ai) r $urth r +t nding th ! riod o$ !r s(ri!tion to ; ( .& r 41, 19@0. On Januar0 20, 19@1, ! tition rs as h irs o$ th d ( as d ;orot o Ea& s r ( i) d th su..ons and a (o!0 o$ th (o.!'aint $i' d &0 th Co..ission r on ; ( .& r -, 19@0 "ith th Court o$ First 3nstan( o$ Caga0an "hi(h s =s to (o'' (t $ro. th ! tition rs th su. o$ # 15,9@6.82, as d $i(i n(0 (o.. r(ia' &ro= r1s $i+ d and ! r( ntag ta+ s, in('uding sur(harg s and int r st th r on. # tition r $i' d a ! tition "ith CTA d s!it th ! nd n(0 o$ a (o'' (tion !ro( ding in th tria' (ourt. Th tria' (ourt d ni d th .otion to dis.iss &0 th ! tition r. CTA, on th oth r hand, a'so d ni d th Co..ission rMs .otion to dis.iss. 2 n( , this ! tition. 3ssu : ?O, th ass ss. nt .ad &0 th Co..ission r o$ 3nt rna' % ) nu against th d ( as d ta+!a0 r ;orot o Ea& s, as (ontain d in th ' tt r dat d :ar(h 2@, 1962, has & (o. $ina', + (utor0 and in(ont sta&' , a$t r ;orot o Ea& s had r ( i) d th Co..ission r1s ' tt r dat d August 4, 1962, d n0ing th 'att r1s !rot st against th said ass ss. nt on S !t .& r 18, 1962 and his $ai'ur to a!! a' th r $ro. "ithin th 40/da0 ! riod (ont .!'at d und r S (tion 11, o$ % !u&'i( A(t 1125 2 'd: E s. Th r is no r ason $or >s to disagr $ro. or r ) rs th Court o$ Ta+ A!! a's1 (on('usion that und r th (ir(u.stan( s o$ this (as , "hat .a0 & (onsid r d as $ina' d (ision or ass ss. nt o$ th Co..ission r is th $i'ing o$ th (o.!'aint $or (o'' (tion in th r s!ond nt Court o$ First 3nstan( o$ Caga0an, th su..ons o$ "hi(h "as s r) d on ! tition rs on Januar0 20, 19@1, and that th r $or th a!! a' "ith th Court o$ Ta+A!! a's in CTA Cas ,o. 2216 "as $i' d on ti. . 6. Fi''a.or CIR V UNION SHIPPING CORP COMMISSIONER OF INTERNAL REVENUE+ :$ 7 7;3$8+ v!. ALGUE+ INC.+ a3( THE COURT OF TA/ APPEALS+ 8$!:;3($3 !. G.R. N;. L-2002.. F$<8#a8= 17+ 1200 Fac !: #ag 1, o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th r (ord sho"s that on Januar0 1-, 1965, th !ri)at r s!ond nt, a do. sti( (or!oration ngag d in ngin ring, (onstru(tion and oth r a''i d a(ti)iti s, r ( i) d a ' tt r $ro. th ! tition r ass ssing it in th tota' a.ount o$ #84,184.85 as d 'in9u n(0 in(o. ta+ s $or th 0 ars 1958 and 1959. On Januar0 18, 1965, A'gu $i' d a ' tt r o$ !rot st or r 9u st $or r (onsid ration, "hi(h ' tt r "as sta.!/r ( i) d on th sa. da0 in th o$$i( o$ th ! tition r. On :ar(h 12, 1965, a "arrant o$ distraint and ' )0 "as !r s nt d to th !ri)at r s!ond nt, through its (ouns ', Att0. A'& rto Hu )ara, Jr., "ho r $us d to r ( i) it on th ground o$ th ! nding !rot st. A s ar(h o$ th !rot st in th do(= ts o$ th (as !ro) d $ruit' ss. Att0. Hu )ara !rodu( d his $i' (o!0 and ga) a !hotostat to 53% ag nt %a.on % 0 s, "ho d $ rr d s r)i( o$ th "arrant. On A!ri' @, 1965, Att0. Hu )ara "as $ina''0 in$or. d that th 53% "as not ta=ing an0 a(tion on th !rot st and it "as on'0 th n that h a(( !t d th "arrant o$ distraint and ' )0 ar'i r sought to & s r) d. Si+t n da0s 'at r, on A!ri' 24, 1965, A'gu $i' d a ! tition $or r )i " o$ th d (ision o$ th Co..ission r o$ 3nt rna' % ) nu "ith th Court o$ Ta+ A!! a's. I!!#$: ?h th r or not th a!! a' o$ th !ri)at r s!ond nt $ro. th d (ision o$ th Co'' (tor o$ 3nt rna' % ) nu "as .ad on ti. and in a((ordan( "ith 'a". H$'(: A((ording to % !. A(t ,o. 1125, th a!! a' .a0 & .ad "ithin thirt0 da0s a$t r r ( i!t o$ th d (ision or ru'ing (ha'' ng d. 3t is tru that as a ru' th "arrant o$ distraint and ' )0 is I!roo$ o$ th $ina'it0 o$ th ass ss. ntI and Ir nd rs ho! ' ss a r 9u st $or r (onsid ration,I & ing Itanta.ount to an outright d nia' th r o$ and .a= s th said r 9u st d . d r < (t d.I 5ut th r is a s! (ia' (ir(u.stan( in th (as at &ar that !r ) nts a!!'i(ation o$ this a(( !t d do(trin . Th !ro) n $a(t is that $our da0s a$t r th !ri)at r s!ond nt r ( i) d th ! tition r1s noti( o$ ass ss. nt, it $i' d its ' tt r o$ !rot st. This "as a!!ar nt'0 not ta= n into a((ount & $or th "arrant o$ distraint and ' )0 "as issu dA ind d, su(h !rot st (ou'd not & 'o(at d in th o$$i( o$ th ! tition r. 3t "as on'0 a$t r Att0. Hu )ara ga) th 53% a (o!0 o$ th !rot st that it "as, i$ at a'', (onsid r d &0 th ta+ authoriti s. ;uring th int r) ning ! riod, th "arrant "as !r .atur and (ou'd th r $or not & s r) d. @. 5 nit B CIR V ALGUE G.R. N;. L-2002. F$<8#a8= 17+ 1200 CRU-+ J.: Fac !" A'gu 3n(., a do. sti( (or!oration ngag d in ngin ring, (onstru(tion and oth r a''i d a(ti)iti s, r ( i) d a ' tt r $ro. th C3% ass ssing it in th tota' a.ount o$ #84,184.85 as d 'in9u n(0 in(o. ta+ s $or th 0 ars 1958 and 1959. A'gu $i' d a ' tt r o$ !rot st or r 9u st $or r (onsid ration. A "arrant o$ distraint and ' )0 "as !r s nt d to th !ri)at r s!ond nt, through its (ouns ', Att0. A'& rto Hu )ara, Jr., "ho r $us d to r ( i) it on th ground o$ th ! nding !rot st. A s ar(h o$ th !rot st in th do(= ts o$ th (as !ro) d $ruit' ss. Att0. Hu )ara !rodu( d his $i' (o!0 and ga) a !hotostat to 53% ag nt %a.on % 0 s, "ho d $ rr d s r)i( o$ th "arrant. Att0. Hu )ara "as $ina''0 in$or. d that th 53% "as not ta=ing an0 a(tion on th !rot st and it "as on'0 th n that h a(( !t d th "arrant o$ distraint and ' )0 ar'i r sought to & s r) d. Si+t n da0s 'at r, A'gu $i' d a ! tition $or r )i " o$ th d (ision o$ th Co..ission r o$ 3nt rna' % ) nu "ith th Court o$ Ta+ A!! a's. I!!#$" 617 ?h th r or not th Co'' (tor o$ 3nt rna' % ) nu (orr (t'0 disa''o" d th #@5,000.00 d du(tion ('ai. d &0 !ri)at r s!ond nt A'gu as ' giti.at &usin ss +! ns s in its in(o. ta+ r turns. 627 ?h th r or not th a!! a' o$ th !ri)at r s!ond nt $ro. th d (ision o$ th Co'' (tor o$ 3nt rna' % ) nu "as .ad on ti. and in a((ordan( "ith 'a".

#ag 1. o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

H$'(: 617 ,O. Th Court o$ Ta+ A!! a's, agr ing "ith A'gu , h 'd that th said a.ount had & n ' giti.at '0 !aid &0 th !ri)at r s!ond nt $or a(tua' s r)i( s r nd r d. Th !a0. nt "as in th $or. o$ !ro.otiona' $ s. Th s " r (o'' (t d &0 th #a0 s $or th ir "or= in th (r ation o$ th F g ta&' Oi' 3n) st. nt Cor!oration o$ th #hi'i!!in s and its su&s 9u nt !ur(has o$ th !ro! rti s o$ th #hi'i!!in Sugar *stat ; ) 'o!. nt Co.!an0. 3n $a(t, as th said (ourt $ound, th a.ount "as arn d through th <oint $$orts o$ th ! rsons a.ong "ho. it "as distri&ut d 3t has & n sta&'ish d that th #hi'i!!in Sugar *stat ; ) 'o!. nt Co.!an0 had ar'i r a!!oint d A'gu as its ag nt, authoriBing it to s '' its 'and, $a(tori s and oi' .anu$a(turing !ro( ss. #ursuant to su(h authorit0, A'& rto Hu )ara, Jr., *duardo Hu )ara, 3sa& ' Hu )ara, *dith, O1Far '', and #a&'o San(h B, "or= d $or th $or.ation o$ th F g ta&' Oi' 3n) st. nt Cor!oration, indu(ing oth r ! rsons to in) st in it. >'ti.at '0, a$t r its in(or!oration 'arg '0 through th !ro.otion o$ th said ! rsons, this n " (or!oration !ur(has d th #S*;C !ro! rti s. For this sa' , A'gu r ( i) d as ag nt a (o..ission o$ #126,000.00, and it "as $ro. this (o..ission that th #@5,000.00 !ro.otiona' $ s " r !aid to th a$or na. d indi)idua's. Th r is no dis!ut that th !a0 s du'0 r !ort d th ir r s! (ti) shar s o$ th $ s in th ir in(o. ta+ r turns and !aid th (orr s!onding ta+ s th r on. Th Court o$ Ta+ A!! a's a'so $ound, a$t r +a.ining th )id n( , that no distri&ution o$ di)id nds "as in)o') d. ? agr "ith th r s!ond nt (ourt that th a.ount o$ th !ro.otiona' $ s "as not +( ssi) . Th tota' (o..ission !aid &0 th #hi'i!!in Sugar *stat ; ) 'o!. nt Co. to th !ri)at r s!ond nt "as #125,000.00. A$t r d du(ting th said $ s, A'gu sti'' had a &a'an( o$ #50,000.00 as (' ar !ro$it $ro. th transa(tion. Th a.ount o$ #@5,000.00 "as 60J o$ th tota' (o..ission. This "as a r asona&' !ro!ortion, (onsid ring that it "as th !a0 s "ho did !ra(ti(a''0 ) r0thing, $ro. th $or.ation o$ th F g ta&' Oi' 3n) st. nt Cor!oration to th a(tua' !ur(has &0 it o$ th Sugar *stat !ro! rti s. This $inding o$ th r s!ond nt (ourt is in a((ord "ith th $o''o"ing !ro)ision o$ th Ta+ Cod . Th So'i(itor H n ra' is (orr (t "h n h sa0s that th &urd n is on th ta+!a0 r to !ro) th )a'idit0 o$ th ('ai. d d du(tion. 3n th !r s nt (as , ho" ) r, " $ind that th onus has & n dis(harg d satis$a(tori'0. Th !ri)at r s!ond nt has !ro) d that th !a0. nt o$ th $ s "as n ( ssar0 and r asona&' in th 'ight o$ th $$orts + rt d &0 th !a0 s in indu(ing in) stors and !ro.in nt &usin ss. n to ) ntur in an +! ri. nta' nt r!ris and in)o') th .s ') s in a n " &usin ss r 9uiring .i''ions o$ ! sos. *) n as " (on( d th in )ita&i'it0 and indis! nsa&i'it0 o$ ta+ation, it is a r 9uir . nt in a'' d .o(rati( r gi. s that it & + r(is d r asona&'0 and in a((ordan( "ith th !r s(ri& d !ro( dur . 3$ it is not, th n th ta+!a0 r has a right to (o.!'ain and th (ourts "i'' th n (o. to his su((or. For a'' th a" so. !o" r o$ th ta+ (o'' (tor, h .a0 sti'' & sto!! d in his tra(=s i$ th ta+!a0 r (an d .onstrat , as it has h r , that th 'a" has not & n o&s r) d. 627 E*S Th a&o) (hrono'og0 sho"s that th ! tition "as $i' d s asona&'0. A((ording to % !. A(t ,o. 1125, th a!! a' .a0 & .ad "ithin thirt0 da0s a$t r r ( i!t o$ th d (ision or ru'ing (ha'' ng d. 3t is tru that as a ru' th "arrant o$ distraint and ' )0 is I!roo$ o$ th $ina'it0 o$ th ass ss. ntI and r nd rs ho! ' ss a r 9u st $or r (onsid ration,I & ing Itanta.ount to an outright d nia' th r o$ and .a= s th said r 9u st d . d r < (t d.I 5ut th r is a s! (ia' (ir(u.stan( in th (as at &ar that !r ) nts a!!'i(ation o$ this a(( !t d do(trin . Th !ro) n $a(t is that $our da0s a$t r th !ri)at r s!ond nt r ( i) d th ! tition r1s noti( o$ ass ss. nt, it $i' d its ' tt r o$ !rot st. As th Court o$ Ta+ A!! a's (orr (t'0 not d,I th !rot st $i' d &0 !ri)at r s!ond nt "as not pro for"a and "as &as d on strong ' ga' (onsid rations. 3t thus had th $$ (t o$ sus! nding th r g' . ntar0 ! riod "hi(h start d on th dat th ass ss. nt "as r ( i) d. Th ! riod start d running again on'0 "h n th !ri)at r s!ond nt "as d $init '0 in$or. d o$ th i.!'i d r < (tion o$ th said !rot st and th "arrant "as $ina''0 s r) d on it. 2 n( , "h n th a!! a' "as $i' d on'0 20 da0s o$ th r g' . ntar0 ! riod had & n (onsu. d. ;uring th int r) ning ! riod, th "arrant "as !r .atur and (ou'd th r $or not & s r) d. 8. :a(ara g #ag 17 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

PHIL 1OURNALISTS INC+ V CIR YNARES-SANTIAGO+ J." FACTS" Th (as aros $ro. th Annua' 3n(o. Ta+ % turn $i' d &0 ! tition r $or th (a' ndar 0 ar nd d ; ( .& r 41, 199- "hi(h !r s nt d a n t in(o. o$ #40,8@@,48@.00 and th ta+ du o$ #10,80@,086.00. A$t r d du(ting ta+ (r dits $or th 0 ar, ! tition r !aid th a.ount o$ #10,2-@,48-.00. On August 10, 1995, % ) nu ;istri(t O$$i( ,o. 44 o$ th 5ur au o$ 3nt rna' % ) nu 653%7 issu d D tt r o$ Authorit0 ,o. 8@120- $or % ) nu O$$i( r F d ri(o d F ra, Jr. and Hrou! Su! r)isor Fi) n(io Ha!asin to +a.in ! tition rMs &oo=s o$ a((ount and oth r a((ounting r (ords $or int rna' r ) nu ta+ s $or th ! riod Januar0 1, 199- to ; ( .& r 41, 199-. Fro. th +a.ination, th ! tition r "as to'd that th r " r d $i(i n(0 ta+ s, in('usi) int r st and (o.!ro.is ! na't0 a.ounting to # 12@,980,-44.20. o$ sur(harg s,

3n a ' tt r dat d August 29, 199@, % ) nu ;istri(t O$$i( r Jai. Con( !(ion in)it d ! tition r to s nd a r !r s ntati) to an in$or.a' (on$ r n( on S !t .& r 15, 199@ $or an o!!ortunit0 to o&< (t and !r s nt do(u. ntar0 )id n( r 'ati) to th !ro!os d ass ss. nt. On S !t .& r 22, 199@, ! tition rMs Co.!tro'' r, Dor nBa To' ntino, + (ut d a I?ai) r o$ th Statut o$ Di.itation >nd r th ,ationa' 3nt rna' % ) nu Cod 6,3%C7I.5 Th do(u. nt I"ai) QdR th running o$ th !r s(ri!ti) ! riod !ro)id d &0 S (tions 224 and 22- and oth r r ' )ant !ro)isions o$ th ,3%C and (ons ntQ dR to th ass ss. nt and (o'' (tion o$ ta+ s "hi(h .a0 & $ound du a$t r th +a.ination at an0 ti. a$t r th 'a!s o$ th ! riod o$ 'i.itations $i+ d &0 said S (tions 224 and 22- and oth r r ' )ant !ro)isions o$ th ,3%C, unti' th (o.!' tion o$ th in) stigationI.6 On Ju'0 2, 1998, % ) nu O$$i( r ; F ra su&.itt d his audit r !ort r (o.. nding th issuan( o$ an ass ss. nt and $inding that ! tition r had d $i(i n(0 ta+ s in th tota' a.ount o$ #146,952,-08.9@. On O(to& r 5, 1998, th Ass ss. nt ;i)ision o$ th 53% issu d #r /Ass ss. nt ,oti( s "hi(h in$or. d ! tition r o$ th r su'ts o$ th in) stigation. Thus, 53% % ) nu % gion ,o. 6, Ass ss. nt ;i)isionC5i''ing S (tion, issu d Ass ss. ntC; .and ' tt r. On :ar(h 16, 1999, a #r 'i.inar0 Co'' (tion D tt r "as s nt &0 ; !ut0 Co..ission r %o. o S. #angani&an to th ! tition r to !a0 th ass ss. nt "ithin t n 6107 da0s $ro. r ( i!t o$ th ' tt r. On ,o) .& r 10, 1999, a Fina' ,oti( 5 $or S iBur 8 "as issu d &0 th sa. d !ut0 (o..ission r gi)ing th ! tition r t n 6107 da0s $ro. r ( i!t to !a0. # tition r r ( i) d a (o!0 o$ th $ina' noti( on ,o) .& r 2-, 1999. 50 ' tt rs dat d ,o) .& r 26, 1999, ! tition r as= d to & ('ari$i d ho" th ta+ 'ia&i'it0 o$ #111,291,21-.-6 "as r a(h d and r 9u st d an +t nsion o$ thirt0 6407 da0s $ro. r ( i!t o$ th ('ari$i(ation "ithin "hi(h to r !'0.9 Th 53% r ( i) d a $o''o"/u! ' tt r $ro. th ! tition r ass rting that its 6#J37 r (ords do not sho" r ( i!t o$ Ta+ Ass ss. ntC; .and ,o. 44/1/000@5@/9-.10 # tition r a'so (ont st d that th ass ss. nt had no $a(tua' and ' ga' &asis. On :ar(h 28, 2000, a ?arrant o$ ;istraint andCor D )0 ,o. 44/06/0-6 11 sign d &0 ; !ut0 Co..ission r %o. o #angani&an $or th 53% "as r ( i) d &0 th ! tition r. # tition r $i' d a # tition $or % )i " 12 "ith th Court o$ Ta+ A!! a's 6CTA7and grant d th ! tition. A$t r th .otion $or r (onsid ration o$ th Co..ission r o$ 3nt rna' % ) nu "as d ni d &0 th CTA in a % so'ution dat d August 2, 2002, an a!! a' "as $i' d "ith th Court o$ A!! a's on August 12, 2002. 3n its d (ision dat d August 5, 2004, th Court o$ A!! a's disagr ! tition d "ith th ru'ing o$ th CTA. 2 n( this

#ag 10 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

ISSUE" ?O, th ?ai) r o$ th Statut o$ Di.itations is )a'id and &inding on th ! tition r RULING" Th ,3%C, und r S (tions 204 and 222,19 !ro)id s $or a statut o$ 'i.itations on th ass ss. nt and (o'' (tion o$ int rna' r ) nu ta+ s in ord r to sa$ guard th int r st o$ th ta+!a0 r against unr asona&' in) stigation.20 >nr asona&' in) stigation (ont .!'at s (as s "h r th ! riod $or ass ss. nt +t nds ind $init '0 & (aus this d !ri) s th ta+!a0 r o$ th assuran( that it "i'' no 'ong r & su&< (t d to $urth r in) stigation $or ta+ s a$t r th +!iration o$ a r asona&' ! riod o$ ti. . A "ai) r o$ th statut o$ 'i.itations und r th ,3%C, to a ( rtain +t nt, is a d rogation o$ th ta+!a0 rsM right to s (urit0 against !ro'ong d and uns(ru!u'ous in) stigations and .ust th r $or & (ar $u''0 and stri(t'0 (onstru d.24 T>$ ?a7v$8 ;@ >$ ! a # $ ;@ '7A7 a 7;3! 7! 3; a ?a7v$8 ;@ >$ 87B> ; 73v;C$ >$ ($@$3!$ ;@ :8$!c87: 7;3 a! $88;3$;#!'= >$'( <= >$ C;#8 ;@ A::$a'!. I 7! a3 aB8$$A$3 <$ ?$$3 >$ aD:a=$8 a3( >$ )IR >a >$ :$87;( ; 7!!#$ a3 a!!$!!A$3 a3( c;''$c >$ aD$! (#$ 7! $D $3($( ; a (a $ c$8 a73. Th "ai) r do s not . an that th ta+!a0 r r 'in9uish s th right to in)o= !r s(ri!tion un 9ui)o(a''0 !arti(u'ar'0 "h r th 'anguag o$ th do(u. nt is 9ui)o(a'. For th !ur!os o$ sa$ guarding ta+!a0 rs $ro. an0 unr asona&' +a.ination, in) stigation or ass ss. nt, our ta+ 'a" !ro)id s a statut o$ 'i.itations in th (o'' (tion o$ ta+ s. Thus, th 'a" on !r s(ri!tion, & ing a r . dia' . asur , shou'd & 'i& ra''0 (onstru d in ord r to a$$ord su(h !rot (tion. As a (oro''ar0, th +( !tions to th 'a" on !r s(ri!tion shou'd ! r$or( & stri(t'0 (onstru d.2- %:O ,o. 20/90 +!'ains th rationa' o$ a "ai) r: ... Th !hras I&ut not a$t r UUUUUUUUU 19UUUI shou'd & $i'' d u!. This indi(at s th +!ir0 dat o$ th ! riod agr d u!on to ass ssC(o'' (t th ta+ a$t r th r gu'ar thr /0 ar ! riod o$ !r s(ri!tion. T>$ :$87;( aB8$$( #:;3 !>a'' c;3! 7 # $ >$ 7A$ ?7 >73 ?>7c> ; $@@$c >$ a!!$!!A$3 Ec;''$c 7;3 ;@ >$ aD 73 a((7 7;3 ; >$ ;8(73a8= :8$!c87: 7v$ :$87;(. 6*.!hasis su!!'i d7 As $ound &0 th CTA, th ?ai) r o$ Statut o$ Di.itations, sign d &0 ! tition rMs (o.!tro'' r on S !t .& r 22, 199@ is not )a'id and &inding & (aus it do s not (on$or. "ith th !ro)isions o$ %:O ,o. 20/90. 3t did not s! (i$0 a d $init agr d dat & t" n th 53% and ! tition r, "ithin "hi(h th $or. r .a0 ass ss and (o'' (t r ) nu ta+ s. Thus, ! tition rMs "ai) r & (a. un'i.it d in ti. , )io'ating S (tion 2226&7 o$ th ,3%C. Th "ai) r is a'so d $ (ti) $ro. th go) rn. nt sid & (aus it "as sign d on'0 &0 a r ) nu distri(t o$$i( r, not th Co..ission r, as .andat d &0 th ,3%C and %:O ,o. 20/90. Th "ai) r is not a uni'at ra' a(t &0 th ta+!a0 r or th 53%, &ut is a &i'at ra' agr . nt & t" n t"o !arti s to +t nd th ! riod to a dat ( rtain. Th (on$or.it0 o$ th 53% .ust & .ad &0 ith r th Co..ission r or th % ) nu ;istri(t O$$i( r. This (as in)o') s ta+ s a.ounting to .or than On :i''ion # sos 6#1,000,000.007 and + (ut d a'.ost s ) n .onths & $or th +!iration o$ th thr /0 ar !r s(ri!tion ! riod. For this, %:O ,o. 20/90 r 9uir s th Co..ission r o$ 3nt rna' % ) nu to sign $or th 53%. 3n th sa. .ann r, ?arrant o$ ;istraint andCor D )0 ,o. 44/06/0-6 "hi(h ! tition r r ( i) d on :ar(h 28, 2000 is a'so nu'' and )oid $or ha)ing & n issu d !ursuant to an in)a'id ass ss. nt. 9.F d rio CIR V PHILIPPINE GLO)AL COMMUNICATIONS+ INC. FACTS: #hi'i!!in H'o&a' Co..uni(ation, 3n(. 6#HC7 $i' d its Annua' 3n(o. Ta+ % turn on 15 A!ri' 1991. On 14 A!ri' 1992, th Co..ission r o$ 3nt rna' % ) nu 6C3%7 issu d a D tt r o$ Authorit0, authoriBing 5ur au o$ 3nt rna' % ) nu 653%7 o$$i(ia's to +a.in #HCMs a((ounting r (ords. On 22 A!ri' 1992, th 53% r 9u st d #HC to !r s nt $or +a.ination ( rtain r (ords and do(u. nts, &ut #HC $ai' d to !r s nt an0 do(u. nt. On 22 A!ri' 199-, #HC r ( i) d a For.a' Ass ss. nt ,oti( dat d 1- A!ri' 199-, $or d $i(i n(0 in(o. ta+ in th tota' a.ount o$ #118,2@1,6@2.

#ag 12 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

3n :a0 199-, #HC $i' d 2 ' tt rs o$ !rot st r 9u sting $or th (an( ''ation o$ th ta+ ass ss. nt a'' ging that th sa. "as in)a'id $or 'a(= o$ $a(tua' and ' ga' &asis. On 16 O(to& r 2002, .or than 8 0 ars a$t r th ass ss. nt "as !r su.a&'0 issu d, #HC r ( i) d $ro. th C3% a Fina' ; (ision d n0ing th !rot sts. On 15 ,o) .& r 2002, #HC $i' d a # tition $or % )i " "ith th CTA "hi(h d (id d in $a)or o$ #HC. Th CTA, on th !ri.ar0 issu o$ !r s(ri!tion, d (id d that th !rot st ' tt rs $i' d &0 #HC (annot (onstitut a r 9u st $or r in) stigation, h n( , th 0 (annot to'' th running o$ th !r s(ri!ti) ! riod to (o'' (t th ass ss d d $i(i n(0 in(o. ta+. Thus, sin( .or than 4 0 ars had 'a!s d $ro. th ti. th Ass ss. nt ,oti( "as issu d in 199-, th C3%Ms right to (o'' (t th sa. has !r s(ri& d. 3SS>*: "h th r or not C3%Ms right to (o'' (t is &arr d &0 !r s(ri!tionT 2*D;: E s. Th 'a" !r s(ri& d a ! riod o$ 4 0 ars $ro. th dat th r turn "as a(tua''0 $i' d or $ro. th 'ast dat !r s(ri& d &0 'a" $or th $i'ing o$ su(h r turn, "hi(h ) r (a. 'at r, "ithin "hi(h th 53% .a0 ass ss a nationa' int rna' r ) nu ta+. 2o" ) r, th th !r s(ri!ti) ! riod to ass ss or to & gin a (ourt !ro( ding $or th (o'' (tion "ithout an ass ss. nt is 10 0 ars "h n a $a's or $raudu' nt r turn "as $i' d "ith th int nt o$ )ading th ta+ or "h n no r turn "as $i' d at a''. 3n su(h (as s, th 10/0 ar ! riod & gan to run on'0 $ro. th dat o$ dis(o) r0 &0 th 53% o$ th $a'sit0, $raud or o.ission. 3$ th 53% issu d this ass ss. nt "ithin th 4/0 ar ! riod or th 10/0 ar ! riod, th 'a" !ro)id d anoth r 4 0 ars a$t r th ass ss. nt $or th (o'' (tion o$ th ta+ through th ad.inistrati) !ro( ss o$ distraint andCor ' )0 or through <udi(ia' !ro( dings. Th 4/ 0 ar ! riod $or (o'' (tion o$ th ass ss d ta+ & gan to run on th dat th ass ss. nt noti( had & n r ' as d, .ai' d or s nt &0 th 53%. in this (as , Th ass ss. nt "as !r su.a&'0 issu d on 1- A!ri' 199-. Thus, th 53% had unti' 14 A!ri' 199@. 2o" ) r, as th r "as no ?arrant o$ ;istraint or D )0 s r) d on #HC nor an0 <udi(ia' !ro( dings initiat d &0 th 53%, th ar'i st att .!t o$ th 53% to (o'' (t th ta+ du &as d on this ass ss. nt "as "h n it $i' d its Ans" r in th CTA Cas on 9 Januar0 2004, "hi(h "as s ) ra' 0 ars & 0ond th 4/0 ar !r s(ri!ti) ! riod. Thus, th C3% is no" !r s(ri& d $ro. (o'' (ting th ass ss d ta+. Th Ta+ Cod o$ 19@@ !ro)id s instan( s "h n th running o$ th statut o$ 'i.itations on th ass ss. nt and (o'' (tion o$ nationa' int rna' r ) nu ta+ s (ou'd & sus! nd d, ) n in th a&s n( o$ a "ai) r, on o$ "hi(h is ?>$3 >$ aD:a=$8 8$F#$! ! @;8 a 8$73v$! 7Ba 7;3 ?>7c> 7! B8a3 $( <= >$ C;AA7!!7;3$8. This +( !tion do s not a!!'0 to this (as sin( #HC n ) r r 9u st d $or a r in) stigation. th C3% (ou'd not ha) (ondu(t d a r in) stigation "h r #HC r $us d to su&.it an0 n " )id n( . A((ording to th #ro( dur Ho) rning Ad.inistrati) #rot sts o$ Ass ss. nt o$ th 53%, a Request for reconsideration r $ rs to a !' a $or a r / )a'uation o$ an ass ss. nt on th &asis o$ +isting r (ords "ithout n d o$ additiona' )id n( . 3t .a0 in)o') &oth a 9u stion o$ $a(t or o$ 'a" or &oth. On th oth r hand, a Request for reinvestigation r $ rs to a !' a $or r / )a'uation o$ an ass ss. nt on th &asis o$ n "'0/ dis(o) r d )id n( or additiona' )id n( that a ta+!a0 r int nds to !r s nt in th in) stigation. 3t .a0 a'so in)o') a 9u stion o$ $a(t or 'a" or &oth. Th .ain di$$ r n( & t" n th s t"o t0! s o$ !rot sts 'i s in th r (ords or )id n( to & +a.in d &0 int rna' r ) nu o$$i( rs, "h th r th s ar +isting r (ords or n "'0 dis(o) r d or additiona' )id n( . A r / )a'uation o$ +isting r (ords "hi(h r su'ts $ro. a r 9u st $or r (onsid ration do s not to'' th running o$ th !r s(ri!tion ! riod $or th (o'' (tion o$ an ass ss d ta+. S (. 2@1 distin(t'0 'i.its th sus! nsion o$ th running o$ th statut o$ 'i.itations to instan( s "h n r in) stigation is r 9u st d &0 a ta+!a0 r and is grant d &0 th C3%. Th rationa' "h0 a r 9u st $or r in) stigation, and not a r 9u st $or r (onsid ration, int rru!ts th running o$ th statut o$ 'i.itations on th (o'' (tion o$ th ass ss d ta+ is that a r in) stigation, "hi(h ntai's th r ( !tion and )a'uation o$ additiona' )id n( , "i'' ta= .or ti. than a #ag 20 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

r (onsid ration o$ a ta+ ass ss. nt, "hi(h "i'' & 'i.it d to th )id n( a'r ad0 at handA this <usti$i s "h0 th $or. r (an sus! nd th running o$ th statut o$ 'i.itations on (o'' (tion o$ th ass ss d ta+, "hi' th 'att r (annot. 3n th !r s nt (as , th s !arat ' tt rs o$ !rot st ar r 9u sts $or r (onsid ration. Th C3%Ms a'' gation that th r "as a r 9u st $or r in) stigation is in(on( i)a&' sin( #HC (onsist nt'0 and (at gori(a''0 r $us d to su&.it n " )id n( and (oo! rat in an0 r in) stigation !ro( dings. Thus, th thr /0 ar statut o$ 'i.itations on th (o'' (tion o$ an ass ss d ta+ .ust & gi) n $$ (t. 3n !ro)iding $or +( !tions to su(h ru' , th 'a" stri(t'0 'i.its th sus! nsion o$ th running o$ th !r s(ri!tion ! riod to, a.ong oth r instan( s, !rot sts "h r in th ta+!a0 r r 9u sts $or a r in) stigation. 3n this (as , "h r th ta+!a0 r . r '0 $i' d 2 !rot st ' tt rs r 9u sting $or a r (onsid ration, and "h r th 53% (ou'd not ha) (ondu(t d a r in) stigation & (aus no n " or additiona' )id n( "as su&.itt d, th running o$ statut o$ 'i.itations (annot & int rru!t d. Th ta+ "hi(h is th su&< (t o$ th ; (ision issu d &0 th C3% a$$ir.ing th For.a' Ass ss. nt issu d on 1- A!ri' 199- (an no 'ong r & th su&< (t o$ an0 !ro( ding $or its (o'' (tion. Cons 9u nt'0, th right o$ th go) rn. nt to (o'' (t th a'' g d d $i(i n(0 ta+ is &arr d &0 !r s(ri!tion. 10. T (son RC)C V CIR FACTS: On 5C25C2001 %C5C r ( i) d a For.a' D tt r o$ ; .and $ro. th C3% $or its ta+ 'ia&i'iti s $or 199@ $or Hross Onshor Ta+ 6#54,998,-28.297 and ;o(u. ntar0 Sta.! Ta+ $or its S! (ia' Sa)ings #'a( . nts 6#-6,@1@,952.@67. On @C20C2001 %C5C $i' d a !rot st ' tt rCr 9u st $or r (onsid rationCr in) stigation !ursuant to S (tion 228 o$ th ,3%C. Th !rot st "as not a(t d u!on so %C5C $i' d a ! tition $or r )i " "ith th CTA $or th (an( ''ation o$ th ass ss. nts. On @C15C2004 th C3% $i' d a .otion to r so') $irst th issu o$ CTAMs <urisdi(tion, "hi(h "as grant d &0 th CTA in a % so'ution dat d 9C10C2004. Th ! tition $or r )i " "as dis.iss d & (aus it "as $i' d & 0ond th 40/da0 ! riod $o''o"ing th 'a!s o$ 180 da0s $ro. %C5CMs su&.ission o$ do(u. nts in su!!ort o$ its !rot st, as !ro)id d und r S (. 228 o$ th ,3%C and S (. 11 o$ %A 1125. %C5C did not $i' a .otion $or r (onsid ration or an a!! a' to th CTA 3n 4anc $ro. th dis.issa' o$ its ! tition $or r )i ". Cons 9u nt'0, th % so'ution & (a. $ina' and + (utor0 and *ntr0 o$ Judg. nt "as .ad on 12C1C2004. Th r a$t r, C3% s nt a ; .and D tt r to %C5C $or th !a0. nt o$ th d $i(i n(0 ta+ ass ss. nts. On 2C20C200-, %C5C $i' d a Petition for Relief fro" 5udg"ent on th ground o$ +(usa&' n g'ig n( o$ its (ouns 'Ms s (r tar0 "ho a'' g d'0 .is$i' d and 'ost th 9C10C2004 % so'ution. Th CTA 2 nd ;i)ision s t th (as $or h aring during "hi(h %C5CMs (ouns ' "as !r s nt. C3% $i' d an O!!osition "hi' %C5C su&.itt d its :ani$ station and Count r/:otion. Th CTA 2nd ;i)ision d ni d %C5CMs # tition $or % 'i $ $ro. Judg. nt. 3t 'i= "is d ni d %C5CMs .otion $or r (onsid ration h n( it $i' d a ! tition $or r )i " "ith th CTA 3n 4anc, "hi(h a$$ir. d th assai' d % so'utions. 2 n( , this ! tition $or r )i ". %C5C argu s that it "as d ni d du !ro( ss "h n it "as not gi) n th o!!ortunit0 to & h ard to !ro) that its $ai'ur to $i' a .otion $or r (onsid ration or a!! a' $ro. th dis.issa' o$ its ! tition $or r )i " "as du to th $ai'ur o$ its .!'o0 to $or"ard th (o!0 o$ th S !t .& r 10, 2004 % so'ution "hi(h (onstitut s +(usa&' n g'ig n( . 3SS>*: ?O, %C5C "as d ni d du !ro( ssT ?O, !r s(ri!tion has s t inT 2*D;: ,o. % 'i $ (annot & grant d on th $'i.s0 +(us that th $ai'ur to a!! a' "as du to th n g' (t o$ %C5CMs (ouns '. Oth r"is , a'' that a 'osing !art0 "ou'd do to sa')ag his (as "ou'd & to in)o= n g' (t or .ista= o$ his (ouns ' as a ground $or r ) rsing or s tting asid th ad) rs <udg. nt, th r &0 !utting no nd to 'itigation. , g'ig n( to & I +(usa&' I .ust & on "hi(h ordinar0 di'ig n( and !rud n( (ou'd not ha) guard d against and &0 r ason o$ "hi(h th rights o$ an aggri ) d !art0 ha) !ro&a&'0 & n #ag 21 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

i.!air d. %C5CMs $or. r (ouns 'Ms o.ission (ou'd hard'0 & (hara(t riB d as +(usa&' , .u(h ' ss una)oida&' . A!!ar nt'0, %C5CMs (ouns ' "as not on'0 r .iss in (o.!'0ing "ith this ad.onition &ut h a'so $ai' d to (h (= ! riodi(a''0, as an a(t o$ !rud n( and di'ig n( , th status o$ th ! nding (as & $or th CTA 2nd ;i)ision. 3n +( !tiona' (as s, "h n th .ista= o$ (ouns ' is so !a'!a&' that it a.ounts to gross n g'ig n( , this Court a$$ords a !art0 a s (ond o!!ortunit0 to )indi(at his right. 5ut this o!!ortunit0 is una)ai'ing in th (as at &ar, s! (ia''0 sin( %C5C had s9uand r d th )arious o!!ortuniti s a)ai'a&' to it at th di$$ r nt stag s o$ this (as . #u&'i( int r st d .ands an nd to ) r0 'itigation and a & 'at d $$ort to r o! n a (as that has a'r ad0 attain d $ina'it0 "i'' s r) no !ur!os oth r than to d 'a0 th ad.inistration o$ <usti( . E s. Assu.ing, that th n g'ig n( o$ %C5CMs (ouns ' is +(usa&' , sti'' th ! tition $or r 'i $ $ro. <udg. nt "ou'd not & grant d, sin( %C5COs a(tion $or th (an( ''ation o$ its ass ss. nts had a'r ad0 !r s(ri& d. #ursuant to S (. 228 o$ th ,3%C, &uc0 assess"ent "ay e protested ad"inistratively y filing a request for reconsideration or reinvestigation 1it0in t0irty $.6* days fro" receipt of t0e assess"ent in suc0 for" and "anner as "ay e prescri ed y i"ple"enting rules and regulations. 7it0in $(6* days fro" filing of t0e protest+ all relevant supporting docu"ents s0all 0ave een su "itted8 ot0er1ise+ t0e assess"ent s0all eco"e final. /f t0e protest is denied in 10ole or in part+ or is not acted upon 1it0in 1-6 days fro" su "ission of docu"ents+ t0e taxpayer adversely affected y t0e decision or inaction "ay appeal to t0e CT' 1it0in $.6* days fro" receipt of t0e said decision+ or fro" t0e lapse of t0e $1-6*-day period8 ot0er1ise t0e decision s0all eco"e final, executory and demandable. Th CTA S (ond ;i)ision h 'd: Fro. Ju'0 20, 2001 6dat o$ %C5CMs $i' d !rot st7, it had 60 da0s or unti' S !t .& r 18, 2001 to su&.it r ' )ant do(u. nts. And $ro. S !t .& r 18, 2001, th Co..ission r had unti' :ar(h 1@, 2002 to issu his d (ision. As ad.itt d &0 %C5C, th !rot st r .ain d una(t d &0 th C3%. Th r $or , it had unti' A!ri' 16, 2002 6 .6 days fro" lapse of 1-6 day period7 "ithin "hi(h to ' )at th (as to th CTA. T>#!+ ?>$3 RC)C @7'$( 7 ! P$ 7 7;3 @;8 R$v7$? ;3 A:87' 30+ 2002+ >$ !aA$ ?a! ;# !7($ >$ 30 (a= :$87;(. As !ro)id d in S (tion 228, th $ai'ur o$ a ta+!a0 r to a!! a' $ro. an ass ss. nt on ti. r nd r d th ass ss. nt $ina', + (utor0 and d .anda&' . Cons 9u nt'0, %C5C is !r ('ud d $ro. dis!uting th (orr (tn ss o$ th ass ss. nt. ?hi' th right to a!! a' a d (ision o$ th C3% to th CTA is . r '0 a statutor0 r . d0, n ) rth ' ss th r 9uir . nt that it .ust & &rought "ithin 40 da0s is <urisdi(tiona' and $ai'ur to (o.!'0 th r "ith .a0 & rais d in a .otion to dis.iss. 3n $in , th $ai'ur to (o.!'0 "ith th 40/da0 statutor0 ! riod "ou'd &ar th a!! a' and d !ri) th CTA o$ its <urisdi(tion to nt rtain and d t r.in th (orr (tn ss o$ th ass ss. nt. 11. Ca0a&an OCEANIC GIRELESS v. COMMISSIONER OF INTERNAL REVENUE H% ,O. 1-8480, ; ( .& r 9, 2005 ANC>,A, 5. On :ar(h 1@, 1988, ! tition r r ( i) d $ro. th 5ur au o$ 3nt rna' % ) nu 653%7 d $i(i n(0 ta+ ass ss. nts $or th ta+a&' 0 ar 198- in th tota' a.ount o$ #8,6--,998.@1. # tition r $i' d its !rot st against th ta+ ass ss. nts and r 9u st d a r (onsid ration or (an( ''ation o$ th sa. in a ' tt r to th 53% Co..ission r. A(ting in & ha'$ o$ th 53% Co..ission r, th n Chi $ o$ th 53% A((ounts % ( i)a&' and 5i''ing ;i)ision, :r. S ) rino 5. 5uot, r it rat d th ta+ ass ss. nts "hi' d n0ing ! tition rMs r 9u st $or r in) stigation. Said ' tt r 'i= "is r 9u st d ! tition r to !a0 "ithin 10 da0s $ro. r ( i!t th r o$, oth r"is th (as sha'' & r $ rr d to th Co'' (tion *n$or( . nt ;i)ision o$ th 53% ,ationa' O$$i( $or th issuan( o$ a "arrant o$ distraint and ' )0 "ithout $urth r noti( . >!on ! tition rMs $ai'ur to !a0 th su&< (t ta+ ass ss. nts "ithin th !r s(ri& d ! riod, th Assistant Co..ission r $or Co'' (tion, a(ting $or th Co..ission r o$ 3nt rna' % ) nu , issu d th (orr s!onding "arrants o$ distraint andCor ' )0 and garnish. nt. #ag 22 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

# tition r $i' d a # tition $or % )i " "ith th Court o$ Ta+ A!! a's 6CTA7 to (ont st th issuan( o$ th "arrants to n$or( th (o'' (tion o$ th ta+ ass ss. nts. Th CTA dis.iss d th ! tition $or 'a(= o$ <urisdi(tion. # tition r $i' d a :otion $or % (onsid ration arguing that th d .and ' tt r (annot & (onsid r d as th $ina' d (ision o$ th Co..ission r o$ 3nt rna' % ) nu on its !rot st & (aus th sa. "as sign d &0 a . r su&ordinat and not &0 th Co..ission r hi.s '$. ?ith th d nia' o$ its .otion $or r (onsid ration, ! tition r (ons 9u nt'0 $i' d a # tition $or % )i " "ith th Court o$ A!! a's (ont nding that th r "as no $ina' d (ision to s! a= o$ & (aus th Co..ission r had 0 t to .a= a ! rsona' d t r.ination as r gards th . rits o$ ! tition rMs (as . Th Court o$ A!! a's d ni d th ! tition. ISSUE: ?h th r th d .and ' tt r $or ta+ d $i(i n(0 issu d and sign d &0 a su&ordinat o$$i( r "ho "as a(ting in & ha'$ o$ th C3% is d . d $ina' and + (utor and su&< (t to an a!! a' to th CTA. HELD" E*S. A d .and ' tt r $or !a0. nt o$ d 'in9u nt ta+ s .a0 & (onsid r d a d (ision on a dis!ut d or !rot st d ass ss. nt. Th d t r.ination on "h th r or not a d .and ' tt r is $ina' is (ondition d u!on th 'anguag us d or th t nor o$ th ' tt r & ing s nt to th ta+!a0 r. 3n this (as , th ' tt r o$ d .and, un9u stiona&'0 (onstitut s th $ina' a(tion ta= n &0 th 5ur au o$ 3nt rna' % ) nu on ! tition rMs r 9u st $or r (onsid ration "h n it r it rat d th ta+ d $i(i n(0 ass ss. nts du $ro. ! tition r, and r 9u st d its !a0. nt. Fai'ur to do so "ou'd r su't in th Kissuan( o$ a "arrant o$ distraint and ' )0 to n$or( its (o'' (tion "ithout $urth r noti( .L 3n addition, th ' tt r (ontain d a notation indi(ating that ! tition rMs r 9u st $or r (onsid ration had & n d ni d $or 'a(= o$ su!!orting do(u. nts. Th d .and ' tt r r ( i) d &0 ! tition r ) ri'0 signi$i d a (hara(t r o$ $ina'it0. Th r $or , it "as tanta.ount to a r < (tion o$ th r 9u st $or r (onsid ration. This no" &rings us to th (ru+ o$ th .att r as to "h th r said d .and ' tt r ind d attain d $ina'it0 d s!it th $a(t that it "as issu d and sign d &0 th Chi $ o$ th A((ounts % ( i)a&' and 5i''ing ;i)ision inst ad o$ th 53% Co..ission r. Th g n ra' ru' is that th Co..ission r o$ 3nt rna' % ) nu .a0 d ' gat an0 !o" r ) st d u!on hi. &0 'a" to ;i)ision Chi $s or to o$$i(ia's o$ high r ran=. 2 (annot, ho" ) r, d ' gat th $our !o" rs grant d to hi. und r th ,ationa' 3nt rna' % ) nu Cod 6,3%C7 nu. rat d in S (tion @. As a. nd d &0 % !u&'i( A(t ,o. 8-2-, S (tion @ o$ th Cod authoriB s th 53% Co..ission r to d ' gat th !o" rs ) st d in hi. und r th ! rtin nt !ro)isions o$ th Cod to an0 su&ordinat o$$i(ia' "ith th ran= 9ui)a' nt to a di)ision (hi $ or high r, +( !t th $o''o"ing: 6a7 Th !o" r to r (o.. nd th !ro.u'gation o$ ru' s and r gu'ations &0 th S (r tar0 o$ Finan( A

6&7 Th !o" r to issu ru'ings o$ $irst i.!r ssion or to r ) rs , r )o= or .odi$0 an0 +isting ru'ing o$ th 5ur auA

#ag 23 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

6(7 Th !o" r to (o.!ro.is or a&at und r S (tion 20-6A7 and 657 o$ this Cod , an0 ta+ d $i(i n(0: #ro)id d, ho" ) r+ that ass ss. nts issu d &0 th % giona' O$$i( s in)o')ing &asi( d $i(i n(0 ta+ s o$ $i) hundr d thousand ! sos 6#500,0007 or ' ss, and .inor (ri.ina' )io'ations as .a0 & d t r.in d &0 ru' s and r gu'ations to & !ro.u'gat d &0 th S (r tar0 o$ Finan( , u!on th r (o.. ndation o$ th Co..ission r, dis(o) r d &0 r giona' and distri(t o$$i(ia's, .a0 & (o.!ro.is d &0 a r giona' )a'uation &oard "hi(h sha'' & (o.!os d o$ th % giona' ;ir (tor as Chair.an, th Assistant % giona' ;ir (tor, h ads o$ th D ga', Ass ss. nt and Co'' (tion ;i)isions and th % ) nu ;istri(t O$$i( r ha)ing <urisdi(tion o) r th ta+!a0 r, as . .& rsA and 6d7 Th !o" r to assign or r assign int rna' r ) nu o$$i( rs to sta&'ish. nts "h r su&< (t to +(is ta+ ar !rodu( d or = !t. arti(' s

3t is (' ar $ro. th a&o) !ro)ision that th a(t o$ issuan( o$ th d .and ' tt r &0 th Chi $ o$ th A((ounts % ( i)a&' and 5i''ing ;i)ision do s not $a'' und r an0 o$ th +( !tions that ha) & n . ntion d as non/ d ' ga&' . Thus, th authorit0 to .a= ta+ ass ss. nts .a0 & d ' gat d to su&ordinat o$$i( rs. Said ass ss. nt has th sa. $or( and $$ (t as that issu d &0 th Co..ission r hi.s '$, i$ not r )i " d or r )is d &0 th 'att r su(h as in this (as . 12. Santos FISHGEALTH V CIR
G.R. No. 1=93C3 J&#9&(y 21, 2010

FACTS: Th C3%, &0 D tt r o$ Authorit0 dat d :a0 16, 2000, ord r d th +a.ination o$ th int rna' r ) nu ta+ s $or th ta+a&' 0 ar 1999 o$ Fish" a'th. Th in) stigation dis('os d that ! tition r "as 'ia&' in th a.ount o$ #2,495,826.88 r !r s nting in(o. ta+, )a'u add d ta+ 6FAT7, "ithho'ding ta+ d $i(i n(i s and oth r .is( ''an ous d $i(i n(i s. # tition r ) ntua''0 s tt' d th s o&'igations on August 40, 2000. Th C3% th n r in) stigat d ! tition rMs &oo=s o$ a((ounts and oth r r (ords o$ int rna' r ) nu ta+ s (o) ring th sa. ! riod $or th !ur!os o$ "hi(h it issu d a su&!o na du( s t (u. r 9uiring ! tition r to su&.it its r (ords and &oo=s o$ a((ounts. As ! tition r did not h d th su&!o na, r s!ond nt th r a$t r $i' d a (ri.ina' (o.!'aint against ! tition r $or )io'ation o$ S (tions 5 6(7 and 266 o$ th 199@ 3nt rna' % ) nu Cod , "hi(h (o.!'aint "as dis.iss d $or insu$$i(i n(0 o$ )id n( . % s!ond nt s nt, on August 6, 2004, ! tition r a FA, o$ in(o. ta+ and FAT d $i(i n(i s tota'ing #6@,59@,446.@5 $or th ta+a&' 0 ar 1999, "hi(h ass ss. nt ! tition r (ont st d &0 ' tt r o$ S !t .& r 24, 2004. % s!ond nt th r a$t r issu d a Fina' ; (ision on ;is!ut d Ass ss. nt dat d August 2, 2005, "hi(h ! tition r r ( i) d on August -, 2005, d n0ing its ' tt r o$ !rot st, a!!rising it o$ its in(o. ta+ and FAT 'ia&i'iti s in th a.ounts o$ I#15,496,905.2- and #64,688,-4-.-0 Qsi(R, r s! (ti) '0, $or th ta+a&' 0 ar 1999,I and r 9u sting th i.. diat !a0. nt th r o$. I3! $a( ;@ a::$a'73B ; >$ CTA, ! tition r $i' d a D tt r o$ % (onsid ration "ith th C3%. 50 a #r 'i.inar0 Co'' (tion D tt r dat d S !t .& r 6, 2005, r s!ond nt d .and d !a0. nt o$ ! tition rMs ta+ 'ia&i'iti s.

#ag 24 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Thus, ! tition r $i' d on O(to& r 20, 2005 a # tition $or % )i " & $or th CTA. 3n his Ans" r, r s!ond nt argu d, a.ong oth r things, that th ! tition "as $i' d out o$ ti. "hi(h argu. nt th First ;i)ision o$ th CTA u!h 'd and a((ording'0 dis.iss d th ! tition. # tition r $i' d a :otion $or % (onsid ration "hi(h "as d ni d. Th % so'ution d n0ing its .otion $or r (onsid ration "as r ( i) d &0 ! tition r on O(to& r 41, 2006. On ,o) .& r 21, 2006, ! tition r $i' d a ! tition $or r )i " & $or th CTA *n 5an( "hi(h, &0 ; (ision o$ Ju'0 5, 200@, h 'd that th ! tition & $or th First ;i)ision, as " '' as that & $or it, "as $i' d out o$ ti. . 3SS>*: ?h th r or not th D tt r o$ % (onsid ration $i' d "ith th C3% to'' d th ! riod to a!! a' "ith th CTA. 2*D;: ,o. S (tion 228 o$ th 199@ Ta+ Cod !ro)id s that an ass ss. nt: + + + .a0 & !rot st d ad.inistrati) '0 &0 $i'ing a r 9u st $or r (onsid ration or r in) stigation "ithin thirt0 6407 da0s $ro. r ( i!t o$ th ass ss. nt in su(h $or. and .ann r as .a0 & !r s(ri& d &0 i.!' . nting ru' s and r gu'ations. ?ithin si+t0 6607 da0s $ro. $i'ing o$ th !rot st, a'' r ' )ant su!!orting do(u. nts sha'' ha) & n su&.itt dA oth r"is , th ass ss. nt sha'' & (o. $ina'. 3$ th !rot st is d ni d in "ho' or in !art, or is not a(t d u!on "ithin on hundr d ight0 61807 da0s $ro. su&.ission o$ do(u. nts, th ta+!a0 r ad) rs '0 a$$ (t d &0 th d (ision or ina(tion .a0 a!! a' to th Court o$ Ta+ A!! a's "ithin thirt0 6407 da0s $ro. r ( i!t o$ th said d (ision, or $ro. th 'a!s o$ th on hundr d ight0 61807/da0 ! riodA oth r"is , th d (ision sha'' & (o. $ina', + (utor0 and d .anda&' . 6und rs(oring su!!'i d7 3n th (as at &ar, ! tition rMs ad.inistrati) !rot st "as d ni d &0 Fina' ; (ision on ;is!ut d Ass ss. nt dat d August 2, 2005 issu d &0 r s!ond nt and "hi(h ! tition r r ( i) d on August -, 2005. >nd r th a&o) /9uot d S (tion 228 o$ th 199@ Ta+ Cod , ! tition r had 40 da0s to a!! a' r s!ond ntMs d nia' o$ its !rot st to th CTA. Sin( ! tition r r ( i) d th d nia' o$ its ad.inistrati) !rot st on August -, 2005, it had unti' S !t .& r 4, 2005 to $i' a ! tition $or r )i " & $or th CTA ;i)ision. 3t $i' d on , ho" ) r, on O(to& r 20, 2005, h n( , it "as $i' d out o$ ti. . For a .otion $or r (onsid ration o$ th d nia' o$ th ad.inistrati) !rot st do s not to'' th 40/da0 ! riod to a!! a' to th CTA. DOCAD TAGAT3O, a. Quinto LUNG CENTER OF THE PHILIPPINES V HC Dung C nt r o$ th #hi'i!!in s is a non/sto(= and non/!ro$it ntit0. 3t is th r gist r d o"n r o$ a !ar( ' o$ 'and, 'o(at d at Qu Bon Cit0. A &ig s!a( at th ground $'oor is & ing ' as d to !ri)at !arti s, $or (ant n and s.a'' stor s!a( s, and to . di(a' or !ro$ ssiona' !ra(tition rs "ho us th sa. as th ir !ri)at ('ini(s $or th ir !ati nts "ho. th 0 (harg $or th ir !ro$ ssiona' s r)i( s. A'.ost on /ha'$ o$ th ntir ar a on th ' $t sid o$ th &ui'ding a'ong Qu Bon A) nu is )a(ant and id' , "hi' a &ig !ortion on th right sid , at th (orn r o$ Qu Bon A) nu and *''i!ti(a' %oad, is & ing ' as d $or (o.. r(ia' !ur!os s to a !ri)at nt r!ris =no"n as th *''i!ti(a' Or(hids and Hard n C nt r. #ag 2, o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th ! tition r a(( !ts !a0ing and non/!a0ing !ati nts. 3t a'so r nd rs . di(a' s r)i( s to out/ !ati nts, &oth !a0ing and non/!a0ing. Asid $ro. its in(o. $ro. !a0ing !ati nts, th ! tition r r ( i) s annua' su&sidi s $ro. th go) rn. nt. On Jun @, 1994, &oth th 'and and th hos!ita' &ui'ding o$ th ! tition r " r ass ss d $or r a' !ro! rt0 ta+ s in th a.ount o$ #-,55-,860 &0 th Cit0 Ass ssor o$ Qu Bon Cit0. A((ording'0, Ta+ ; ('aration ,os. " r issu d $or th 'and and th hos!ita' &ui'ding, r s! (ti) '0.- On August 25, 1994, th ! tition r $i' d a C'ai. $or *+ .!tion5 $ro. r a' !ro! rt0 ta+ s "ith th Cit0 Ass ssor, !r di(at d on its ('ai. that it is a (harita&' institution. Th ! tition rMs r 9u st "as d ni d, and a ! tition "as, th r a$t r, $i' d & $or th Do(a' 5oard o$ Ass ss. nt A!! a's o$ Qu Bon Cit0 6QC/D5AA, $or &r )it07 $or th r ) rsa' o$ th r so'ution o$ th Cit0 Ass ssor. Th ! tition r a'' g d that und r S (tion 28, !aragra!h 4 o$ th 198@ Constitution, th !ro! rt0 is + .!t $ro. r a' !ro! rt0 ta+ s. 3t a) rr d that a .ini.u. o$ 60J o$ its hos!ita' & ds ar +('usi) '0 us d $or (harit0 !ati nts and that th .a<or thrust o$ its hos!ita' o! ration is to s r) (harit0 !ati nts. Th ! tition r (ont nds that it is a (harita&' institution and, as su(h, is + .!t $ro. r a' !ro! rt0 ta+ s. Th QC/D5AA r nd r d <udg. nt dis.issing th ! tition and ho'ding th ! tition r 'ia&' $or r a' !ro! rt0 ta+ s.6 3SS>*: a7 "h th r th ! tition r is a (harita&' institution "ithin th (ont +t o$ #r sid ntia' ; (r ,o. 1824 and th 19@4 and 198@ Constitutions and S (tion 24-6&7 o$ % !u&'i( A(t ,o. @160A and 6&7 "h th r th r a' !ro! rti s o$ th ! tition r ar + .!t $ro. r a' !ro! rt0 ta+ s. %>D3,H: As a g n ra' !rin(i!' , a (harita&' institution do s not 'os its (hara(t r as su(h and its + .!tion $ro. ta+ s si.!'0 & (aus it d ri) s in(o. $ro. !a0ing !ati nts, "h th r out/!ati nt, or (on$in d in th hos!ita', or r ( i) s su&sidi s $ro. th go) rn. nt, so 'ong as th .on 0 r ( i) d is d )ot d or us d a'tog th r to th (harita&' o&< (t "hi(h it is int nd d to a(hi ) A and no .on 0 inur s to th !ri)at & n $it o$ th ! rsons .anaging or o! rating th institution. QARn institution do s not 'os its (harita&' (hara(t r, and (ons 9u nt + .!tion $ro. ta+ation, &0 r ason o$ th $a(t that thos r (i!i nts o$ its & n $its "ho ar a&' to !a0 ar r 9uir d to do so, "h r no !ro$it is .ad &0 th institution and th a.ounts so r ( i) d ar a!!'i d in $urth ring its (harita&' !ur!os s, and thos & n $its ar r $us d to non on a((ount o$ ina&i'it0 to !a0 th r $or. Th $unda. nta' ground u!on "hi(h a'' + .!tions in $a)or o$ (harita&' institutions ar &as d is th & n $it (on$ rr d u!on th !u&'i( &0 th ., and a (ons 9u nt r 'i $, to so. +t nt, o$ th &urd n u!on th stat to (ar $or and ad)an( th int r sts o$ its (itiB ns &.Da(a! PHILIPPINE RURAL ELECTRIC COOPERATIVES V DILG SE,O#S3S Fa(ts: # tition rs assai' d th (onstitutiona'it0 o$ S (tions 194 and 24- o$ %.A. ,o. @160, oth r"is =no"n as th Do(a' Ho) rn. nt Cod , $or & ing )io'ati) o$ th 9ua' !rot (tion ('aus and non/ i.!air. nt ('aus o$ th Constitution & (aus o$ th "ithdra"a' &0 th said Cod o$ th ta+ + .!tions !r )ious'0 n<o0 d &0 ! tition rs. 2 'd: Th Su!r . Court ru' d that th r "as no )io'ation o$ th 9ua' !rot (tion ('aus . Th 9ua' !rot (tion ('aus und r th Constitution . ans that no ! rson or ('ass o$ ! rsons sha'' & d !ri) d o$ th sa. !rot (tion o$ 'a"s "hi(h is n<o0 d &0 oth r ! rsons or oth r ('ass s in th sa. !'a( in 'i= (ir(u.stan( s. Th guarant0 o$ th 9ua' !rot (tion o$ 'a"s is not )io'at d &0 a 'a" &as d on r asona&' ('assi$i(ation. C'assi$i(ation, to & r asona&' , .ust 617 r st on su&stantia' distin(tionsA 627 & g r.an to th !ur!os o$ th 'a"A 647 not & 'i.it d to +isting (onditions on'0A and 6-7 a!!'0 9ua''0 to a'' . .& rs o$ th sa. ('ass. Th Court h 'd that th r is r asona&' ('assi$i(ation und r th Do(a' Ho) rn. nt #ag 2. o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Cod to <usti$0 th di$$ r nt ta+ tr at. nt & t" n ' (tri( (oo! rati) s (o) r d &0 #.;. ,o. 269, as a. nd d, and ' (tri( (oo! rati) s und r %.A. ,o. 6948. Th Court 'i= "is ru' d that th r "as no )io'ation o$ th non/i.!air. nt ('aus . Th (onstitutiona' !rohi&ition on th i.!air. nt o$ th o&'igation o$ (ontra(ts do s not !rohi&it ) r0 (hang in +isting 'a"s. To $a'' "ithin th !rohi&ition, th (hang .ust not on'0 i.!air th o&'igation o$ th +isting (ontra(t, &ut th i.!air. nt .ust & su&stantia'. :A3, T*GT Fa(ts: A ('ass suit "as $i' d &0 ! tition rs in th ir o"n & ha'$ and in & ha'$ o$ oth r ' (tri( (oo! rati) s organiB d and +isting und r #.;. ,o. 269 "ho ar . .& rs o$ ! tition r #hi'i!!in %ura' *' (tri( Coo! rati) s Asso(iation, 3n(. 6#23D%*CA7. S (tion 49 o$ #.;. ,o. 269 !ro)id s $or th ta+ in( nti) s to ' (tri( (oo! rati) s. Fro. 19@1 to 19@8, in ord r to $inan( th ' (tri$i(ation !ro< (ts n)ision d &0 #.;. ,o. 269, as a. nd d, th #hi'i!!in Ho) rn. nt, a(ting through th ,ationa' *(ono.i( Coun(i' nt r d into si+ 667 'oan agr . nts "ith th go) rn. nt o$ th >nit d Stat s o$ A. ri(a. # tition rs (ont nd that !ursuant to th !ro)isions o$ #.;. ,o. 269, and a !ro)ision in th 'oan agr . nts, th 0 ar + .!t $ro. !a0. nt o$ 'o(a' ta+ s, in('uding !a0. nt o$ r a' !ro! rt0 ta+. ?ith th !assag o$ th Do(a' Ho) rn. nt Cod , ho" ) r, th 0 a'' g that th ir ta+ + .!tions ha) & n in)a'id'0 "ithdra"n. 3n !arti(u'ar, ! tition rs assai' S (tions 194 and 24- o$ th Do(a' Ho) rn. nt Cod on th ground that th said !ro)isions dis(ri.inat against th ., in )io'ation o$ th 9ua' !rot (tion ('aus . Furth r, th 0 su&.it that th said !ro)isions ar un(onstitutiona' & (aus th 0 i.!air th o&'igation o$ (ontra(ts & t" n th #hi'i!!in Ho) rn. nt and th >nit d Stat s Ho) rn. nt. 3ssu : ?h th r th "ithdra"a' o$ ta+ + .!tion o$ ! tition rs und r th Do(a' Ho) rn. nt Cod )io'at s th (onstitution 2 'd: ,o. T>$8$ 7! N; V7;'a 7;3 ;@ >$ EF#a' P8; $c 7;3 C'a#!$ Th 9ua' !rot (tion ('aus und r th Constitution . ans that Ino ! rson or ('ass o$ ! rsons sha'' & d !ri) d o$ th sa. !rot (tion o$ 'a"s "hi(h is n<o0 d &0 oth r ! rsons or oth r ('ass s in th sa. !'a( and in 'i= (ir(u.stan( s.I Thus, th guarant0 o$ th 9ua' !rot (tion o$ th 'a"s is not )io'at d &0 a 'a" &as d on r asona&' ('assi$i(ation. C'assi$i(ation, to & r asona&' , .ust 617 r st on su&stantia' distin(tionsA 627 & g r.an to th !ur!os s o$ th 'a"A 647 not & 'i.it d to +isting (onditions on'0A and 6-7 a!!'0 9ua''0 to a'' . .& rs o$ th sa. ('ass. 9 Th r is r asona&' ('assi$i(ation und r th Do(a' Ho) rn. nt Cod to <usti$0 th di$$ r nt ta+ tr at. nt & t" n ' (tri( (oo! rati) s (o) r d &0 #.;. ,o. 269, as a. nd d, and ' (tri( (oo! rati) s und r %.A. ,o. 6948. First, su&stantia' distin(tions +ist & t" n (oo! rati) s und r #.;. ,o. 269, as a. nd d, and (oo! rati) s und r %.A. ,o. 6948. Th s distin(tions ar .ani$ st in at ' ast t"o .at ria' r s! (ts "hi(h go into th natur o$ (oo! rati) s n)ision d &0 %.A. ,o. 6948 and "hi(h (hara(t risti(s ar not !r s nt in th t0! o$ (oo! rati) asso(iations (r at d und r #.;. ,o. 269, as a. nd d. a. Ca!ita' Contri&utions &0 : .& rs &. *+t nt o$ Ho) rn. nt Contro' o) r Coo! rati) s S (ond, th ('assi$i(ation o$ ta+/ + .!t ntiti s in th Do(a' Ho) rn. nt Cod is g r.an to th !ur!os o$ th 'a". Th Constitutiona' .andat that ) r0 'o(a' go) rn. nt unit sha'' n<o0 'o(a' autono.0, do s not . an that th + r(is o$ !o" r &0 'o(a' go) rn. nts is & 0ond r gu'ation &0 Congr ss. Thus, "hi' a(h go) rn. nt unit is grant d th !o" r to (r at its o"n sour( s o$ r ) nu , Congr ss, in 'ight o$ its &road !o" r to ta+, has th dis(r tion to d t r.in th +t nt o$ th ta+ing !o" rs o$ 'o(a' go) rn. nt units (onsist nt "ith th !o'i(0 o$ 'o(a' autono.0. Fina''0, S (tions 194 and 24- o$ th Do(a' Ho) rn. nt Cod ! r.it r asona&' ('assi$i(ation as th s + .!tions ar not 'i.it d to +isting (onditions and a!!'0 9ua''0 to a'' . .& rs o$ th sa. ('ass. *+ .!tions $ro. 'o(a' ta+ation, in('uding r a' !ro! rt0 ta+, ar grant d to a'' (oo! rati) s (o) r d &0 %.A. ,o. 6948 and su(h + .!tions +ist $or as 'ong as th Do(a' Ho) rn. nt Cod and th !ro)isions th r in on 'o(a' ta+ation r .ain good 'a". 33 Th r is ,o Fio'ation o$ th ,on/3.!air. nt C'aus #ag 27 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

3t is ingrain d in <uris!rud n( that th (onstitutiona' !rohi&ition on th i.!air. nt o$ th o&'igation o$ (ontra(ts do s not !rohi&it ) r0 (hang in +isting 'a"s. To $a'' "ithin th !rohi&ition, th (hang .ust not on'0 i.!air th o&'igation o$ th +isting (ontra(t, &ut th i.!air. nt .ust & su&stantia'. A 'a" "hi(h (hang s th t r.s o$ a ' ga' (ontra(t & t" n !arti s, ith r in th ti. or .od o$ ! r$or.an( , or i.!os s n " (onditions, or dis! ns s "ith thos +!r ss d, or authoriB s $or its satis$a(tion so. thing di$$ r nt $ro. that !ro)id d in its t r.s, is 'a" "hi(h i.!airs th o&'igation o$ a (ontra(t and is th r $or nu'' and )oid. :or o) r, to (onstitut i.!air. nt, th 'a" .ust a$$ (t a (hang in th rights o$ th !arti s "ith r $ r n( to a(h oth r and not "ith r s! (t to non/!arti s. A !'ain r ading o$ th 'oan agr . nt r adi'0 sho"s that it do s not grant an0 ta+ + .!tion in $a)or o$ th &orro" r or th & n $i(iar0 ith r on th !ro( ds o$ th 'oan its '$ or th !ro! rti s a(9uir d through th said 'oan. 3t si.!'0 stat s that th 'oan !ro( ds and th !rin(i!a' and int r st o$ th 'oan, u!on r !a0. nt &0 th &orro" r, sha'' & "ithout d du(tion o$ an0 ta+ or $ that .a0 & !a0a&' und r #hi'i!!in 'a" as su(h ta+ or $ "i'' & a&sor& d &0 th &orro" r "ith $unds oth r than th 'oan !ro( ds. (.Ca&ani''a CITY ASSESOR OF CE)Y CITY V ASSOCIATION OF )ENEVOLA DE CE)U H.%. ,o. 15290Jun 8, 200@ F*DASCO, J%., J. Fa(ts: 3n th 'at 1990Ms, r s!ond nt (onstru(t d th C22 : di(a' Arts C nt r 6C22:AC7. Th r a$t r, an A!ri' 1@, 1998 C rti$i(at o$ O((u!an(0 "as issu d to th ( nt r "ith a ('assi$i(ation o$ KCo.. r(ia' QC'ini(R.L # tition r Cit0 Ass ssor o$ C &u Cit0 ass ss d th C22:AC &ui'ding as K(o.. r(ia'L "ith a .ar= t )a'u o$ #h# 28,060,520 and an ass ss d )a'u o$ #h# 9,821,180 at th ass ss. nt ' ) ' o$ 45J $or (o.. r(ia' &ui'dings, and not at th 10J s! (ia' ass ss. nt (urr nt'0 i.!os d $or C22 and its oth r s !arat &ui'dings 8th C22Ms ;i tar0 and % (ords ; !art. nts. % s!ond nt $i' d a ! tition in D5AA. D5AA ru' d in $a)or o$ r s!ond nt. C5AA a$$ir. d th d (ision o$ D5AA. CA a'so a$$ir. d C5AAMs d (ision. 3ssu : ?O, th n " &ui'ding is 'ia&' to !a0 th 45J ass ss. nt ' ) ' 2 'd: ,o. ? so ho'd that C22:AC is an int gra' !art o$ C22. 5as d on th s !ro)isions, th s !h0si(ians ho'ding o$$i( s or ('ini(s in C22:AC, du'0 a!!oint d or a((r dit d &0 C22, !r (is '0 $u'$i'' and (arr0 out th ir ro' s in th hos!ita'Ms s r)i( s $or its !ati nts through th C22:AC. Th $a(t that th 0 ar ho'ding o$$i( in a s !arat &ui'ding, 'i= at C22:AC, do s not ta= a"a0 th ss n( and natur o$ th ir s r)i( s )is/V/)is th o) r/a'' o! ration o$ th hos!ita' and th & n $its to th hos!ita'Ms !ati nts. F ri'0, & ing an int gra' !art o$ C22, C22:AC shou'd & und r th sa. s! (ia' ass ss. nt ' ) ' o$ as that o$ th $or. r. Th C22:AC $a(i'it0 is d $init '0 in(id nta' to and r asona&'0 n ( ssar0 $or th o! rations o$ Chong 2ua 2os!ita'. d.A')ar B CITY GOV OF SAN PA)LO V HON. )IENVENIDO REYES H.%. ,o. 12@@08 :ar(h 25, 1999 HO,NAHA/%*E*S, J. Fa(ts: #ag 20 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

A(t ,o. 46-8 grant d th *s(ud ro *' (tri( S r)i( Co.!an0 a ' gis'ati) $ran(his to .aintain and o! rat an ' (tri( 'ight and !o" r s0st . in th Cit0 o$ San #a&'o and n ar&0 .uni(i!a'iti s. *s(ud ro1s $ran(his "as trans$ rr d to th !'ainti$$ 6h r in r s!ond nt7 :*%ADCO und r % !u&'i( A(t ,o. 24-0. % !u&'i( A(t ,o. @160, oth r"is =no"n as th IDo(a' Ho) rn. nt Cod o$ 1991I 6h r ina$t r r $ rr d to as DHC7 too= $$ (t on Januar0 1, 1992. Th said Cod authoriB s th !ro)in( C(it0 to i.!os a ta+ on &usin ss n<o0ing a $ran(his at a rat not +( ding $i$t0 ! r( nt 650J7 o$ on ! r( nt 61J7 o$ th gross annua' r ( i!ts $or th !r ( ding (a' ndar 0 ar r a'iB d "ithin its <urisdi(tion. Th Sangguniang #ang'unsod o$ San #a&'o Cit0 na(t d Ordinan( ,o. 56, oth r"is =no"n as th % ) nu Cod o$ th Cit0 o$ San #a&'o i.!osing a rat o$ $i$t0 ! r( nt 650J7 o$ on ! r( nt 61J7 o$ th (ross annua' r ( i!ts to thos &usin ss s n<o0ing $ran(his . Fro. 199- to 1996, !ri)at r s!ond nt !aid Iund r !rot stI a tota' a.ount o$ #1,85@,@11.6@. Th n, it $i' d a ! tition to d ('ar said ordinan( )oid. Th tria' (ourt ru' d in $a)or o$ : ra'(o. Thus, ! tition r $i' d a ! tition und r %u' -5 & $or th SC. 3ssu : "h th r th Cit0 o$ San #a&'o .a0 i.!os a 'o(a' $ran(his ta+ !ursuant to th DHC u!on th :ani'a *' (tri( Co.!an0 "hi(h !a0s a ta+ 9ua' to t"o ! r( nt o$ its gross r ( i!ts in 'i u o$ a'' ta+ s and ass ss. nts o$ "hat ) r natur i.!os d &0 an0 nationa' or 'o(a' authorit0 on sa)ings or in(o. . 2 'd: E s. ?as th r an i.!'i d r ! a' &0 % !u&'i( A(t ,o. @160 o$ th :*%ADCO $ran(his inso$ar as th 'att r i.!os s a 2J ta+ Iin 'i u o$ a'' ta+ s and ass ss. nts o$ "hat ) r natur IT E s. 3t is our )i " that ! titions (orr (t'0 r '0 on th !ro)isions o$ S (tions 14@ and 194 o$ th DHC to su!!ort th ir !osition that :*%ADCOWs ta+ + .!tion has & n "ithdra"n. Th +!'i(it 'anguag o$ S (tion 14@ "hi(h authoriB s th !ro)in( to i.!os $ran(his ta+ Inot"ithstanding an0 + .!tion grant d &0 an0 'a" or oth r s! (ia' 'a"I is a''/ n(o.!assing and (' ar. Th $ran(his ta+ is i.!osa&' d s!it an0 + .!tion n<o0 d und r s! (ia' 'a"s. 50 stating that un' ss oth r"is !ro)id d in this Cod , ta+ + .!tions or in( nti) s grant d to or !r s nt'0 n<o0 d &0 a'' ! rsons "h th r natura' or <uridi(a', in('uding go) rn. nt/o"n d or (ontro'' d (or!orations +( !t 17 'o(a' "at r distri(ts, 27 (oo! rati) s du'0 r gist r d und r %.A. 6948, 647 non/sto(= and non/!ro$it hos!ita's and du(ationa' institutions, ar "ithdra"n u!on th $$ (ti)it0 o$ this (od , th o&)ious i.!ort is to 'i.it th + .!tions to th thr nu. rat d ntiti s. 3n th a&s n( o$ an0 !ro)ision o$ th Cod to th (ontrar0, and " $ind no oth r !ro)ision in !oint, an0 +isting ta+ + .!tion or in( nti) n<o0 d &0 :*%ADCO und r +isting 'a" "as (' ar'0 int nd d to & "ithdra"n. .*st .& r FIRST PHILIPPINE INDUSTRIAL COPRORATION VS CA H.%. ,o. 1259-8 ; ( .& r 29, 1999 :A%T3,*N, J. Fa(ts: # tition r is a grant o$ a !i! 'in (on( ssion und r % !u&'i( A(t ,o. 48@, as a. nd d, to (ontra(t, insta'' and o! rat oi' !i! 'in s. Th origina' !i! 'in (on( ssion "as grant d in 196@ and r n " d &0 th *n rg0 % gu'ator0 5oard in 1992. # tition r a!!'i d $or a .a0or1s ! r.it "ith th O$$i( o$ th :a0or o$ 5atangas Cit0. 2o" ) r, & $or th .a0or1s ! r.it (ou'd & issu d, th r s!ond nt Cit0 Tr asur r r 9uir d ! tition r to !a0 a 'o(a' ta+ &as d on its gross r ( i!ts $or th $is(a' 0 ar 1994 !ursuant to th Do(a' Ho) rn. nt Cod . 3n ord r not to ha.! r its o! rations, ! tition r !aid th ta+ und r !rot st in th a.ount o$ #249,019.01 $or th $irst 9uart r o$ 1994. Th r s!ond nt Cit0 Tr asur r d ni d th !rot st (ont nding that ! tition r (annot & (onsid r d ngag d in trans!ortation &usin ss, thus it (annot ('ai. + .!tion und r S (tion 144 6<7 o$ th Do(a' Ho) rn. nt Cod . Th tria' (ourt dis.iss d th ('ai. $or r $und $i' d &0 ! tition r. CA a$$ir. d th tria' (ourtMs d (ision. 2 n( , this ! tition. 3ssu : #ag 22 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

?O, ! tition r is a (o..on (arri r and is + .!t $ro. 'o(a' ta+ s 2 'd: Th r is no dou&t that ! tition r is a (o..on (arri r. 3t is ngag d in th &usin ss o$ trans!orting or (arr0ing goods, i. . ! tro' u. !rodu(ts, $or hir as a !u&'i( .!'o0. nt. 3t und rta= s to (arr0 $or a'' ! rsons indi$$ r nt'0, that is, to a'' ! rsons "ho (hoos to .!'o0 its s r)i( s, and trans!orts th goods &0 'and and $or (o.! nsation. Th $a(t that ! tition r has a 'i.it d ('i nt ' do s not +('ud it $ro. th d $inition o$ a (o..on (arri r. :or o) r, und r th # tro' u. A(t o$ th #hi'i!!in s 6% !u&'i( A(t 48@7, ! tition r is (onsid r d a I(o..on (arri r.I Thus, & ing a (o..on (arri r, ! tition r is + .!t $ro. 'o(a' ta+ as !ro)id d $or in S (. 1446<7 o$ th DHC. $.Arana MANILA ELECTRIC COMPANY V PROVINCE OF LAGUNA H% ,o. 141459 :a0 5, 1999 Fitug, J. Fa(ts: :ani'a *' (tri( Co.!an0 6K:*%ADCOL7 "as grant d a $ran(his $or th su!!'0 o$ ' (tri( 'ight, h at and !o" r. Su&s 9u nt'0, % !u&'i( A(t ,o. @160, oth r"is =no"n as th KDo(a' Ho) rn. nt Cod o$ 1991,L "as na(t d to ta= $$ (t on 01 Januar0 1992 n<oining 'o(a' go) rn. nt units to (r at th ir o"n sour( s o$ r ) nu and to ' )0 ta+ s, $ s and (harg s, su&< (t to th 'i.itations +!r ss d th r in, (onsist nt "ith th &asi( !o'i(0 o$ 'o(a' autono.0. #ursuant to th !ro)isions o$ th Cod , r s!ond nt !ro)in( na(t d Daguna #ro)in(ia' Ordinan( ,o. 01/92, $$ (ti) 01 Januar0 1994. % s!ond nt #ro)in(ia' Tr asur r s nt a d .and ' tt r to :*%ADCO $or th (orr s!onding ta+ !a0. nt. # tition r :*%ADCO !aid th ta+, "hi(h th n a.ount d to #19,520,628.-2, und r !rot st. A $or.a' ('ai. $or r $und "as th r a$t r s nt &0 :*%ADCO to th #ro)in(ia' Tr asur r o$ Daguna ('ai.ing that th $ran(his ta+ it had !aid and (ontinu d to !a0 to th ,ationa' Ho) rn. nt !ursuant to #.;. 551 a'r ad0 in('ud d th $ran(his ta+ i.!os d &0 th #ro)in(ia' Ta+ Ordinan( . Th ('ai. $or r $und "as d ni d &0 th Ho) rnor. # tition r th n $i' d a (o.!'aint $or r $und in %TC "hi(h "as dis.iss d. 2 n( , this ! tition. 3ssu : ?O, th 'o(a' go) rn. nt has th !o" r i.!os $ran(his ta+ on :*%ADCO 2 'd: E s. 3ndi(ati) o$ th ' gis'ati) int nt to (arr0 out th Constitutiona' .andat o$ ) sting &road ta+ !o" rs to 'o(a' go) rn. nt units, th Do(a' Ho) rn. nt Cod has $$ (ti) '0 "ithdra"n und r S (tion 194 th r o$, ta+ + .!tions or in( nti) s th r to$or n<o0 d &0 ( rtain ntiti s. Th s !o'i(0 (onsid rations ar (onsist nt "ith th Stat !o'i(0 to nsur autono.0 to 'o(a' go) rn. nts and th o&< (ti) o$ th DHC that th 0 n<o0 g nuin and . aning$u' 'o(a' autono.0 to na&' th . to attain th ir $u'' st d ) 'o!. nt as s '$/ r 'iant (o..uniti s and .a= th . $$ (ti) !artn rs in th attain. nt o$ nationa' goa's. Th !o" r to ta+ is th .ost $$ (ti) instru. nt to rais n d d r ) nu s to $inan( and su!!ort .0riad a(ti)iti s o$ 'o(a' go) rn. nt units $or th d 'i) r0 o$ &asi( s r)i( ss ntia' to th !ro.otion o$ th g n ra' " '$ar and th nhan( . nt o$ ! a( , !rogr ss, and !ros! rit0 o$ th ! o!' . 3t .a0 a'so & r ' )ant to r (a'' that th origina' r asons $or th "ithdra"a' o$ ta+ + .!tion !ri)i' g s grant d to go) rn. nt/o"n d and (ontro'' d (or!orations and a'' oth r units o$ go) rn. nt " r that su(h !ri)i' g r su't d in s rious ta+ &as rosion and distortions in th ta+ tr at. nt o$ si.i'ar'0 situat d nt r!ris s, and th r "as a n d $or th s ntiti s to shar in th r 9uir . nts o$ d ) 'o!. nt, $is(a' or oth r"is , &0 !a0ing th ta+ s and oth r (harg s du $ro. th ..L g.Fi''anu )a G.R. N;. 112122 A#B#! 0+ 2000 #ag 30 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

PHILIPPINE )AS*ET)ALL ASSOCIATION+ ! tition r, )s. COURT OF APPEALS+ COURT OF TA/ APPEALS+ AND COMMISSIONER OF INTERNAL REVENUE+ r s!ond nts. #>%3S3:A, 5.: Fa(ts: ! tition r r ( i) d an ass ss. nt ' tt r $ro. r s!ond nt Co..ission r $or th !a0. nt o$ d $i(i n(0 a.us . nt ta+. ! tition r (ont st d th ass ss. nt &0 $i'ing a !rot st "ith r s!ond nt Co..ission r "ho d ni d th sa. . ! tition r $i' d a ! tition $or r )i " 2 "ith th Court o$ Ta+ A!! a's, "hi(h dis.iss d ! tition rMs ! tition. ! tition r a!! a' d th CTA d (ision to th Court o$ A!! a's, "hi(h a$$ir. d th d (ision o$ th CTA. 2 n( , this ! tition. # tition r (ont nds that #; 241, oth r"is =no"n as th Do(a' Ta+ Cod o$ 19@4, trans$ rr d th !o" r and authorit0 to ' )0 and (o'' (t a.us . nt ta+ s $ro. th sa' o$ ad.ission ti(= ts to !'a( s o$ a.us . nt $ro. th nationa' go) rn. nt to th 'o(a' go) rn. nts, thus <urisdi(tion to (o'' (t a.us . nt ta+ s o$ #5A ga. s is not ) st d in th nationa' go) rn. nt to th +('usion o$ th 'o(a' go) rn. nts. 3ssu : ?h th r or not th a.us . nt ta+ on ad.ission ti(= ts to #5A ga. s a nationa' or 'o(a' ta+. 2 'd: Th Court is not ! rsuad d &0 ! tition r1s ass ) rations. S (tion 14 o$ th Do(a' Ta+ Cod indi(at s that th !ro)in( (an on'0 i.!os a ta+ on ad.ission $ro. th !ro!ri tors, ' ss s, or o! rators o$ t0eaters+ cine"atograp0s+ concert 0alls+ circuses and oth r !'a( s o$ a.us . nt. Th authorit0 to ta+ !ro$ ssiona' &as= t&a'' ga. s is not th r in in('ud d, as th sa. is +!r ss'0 .&ra( d in #; 1959, "hi(h a. nd d #; 1-56. Fro. a r ading o$ S*CT3O, --. S (tion 268 o$ th said (od , it is (' ar that th I!ro!ri tor, ' ss or o! rator o$ . . . !ro$ ssiona' &as= t&a'' ga. sI is r 9uir d to !a0 an a.us . nt ta+ 9ui)a' nt to $i$t n ! r ( ntu. 615J7 o$ th ir gross r ( i!ts to th 5ur au o$ 3nt rna' % ) nu , "hi(h !a0. nt is a nationa' ta+. Th said !a0. nt o$ a.us . nt ta+ is in 'i u o$ a'' oth r ! r( ntag ta+ s o$ "hat ) r natur and d s(ri!tion. ?hi' S (tion 14 o$ th Do(a' Ta+ Cod . ntions Ioth r !'a( s o$ a.us . ntI, !ro$ ssiona' &as= t&a'' ga. s ar d $init '0 not "ithin its s(o! . in d t r.ining th . aning o$ th !hras Ioth r !'a( s o$ a.us . ntI, on .ust r $ r to th !rior nu. ration o$ th at rs, (in .atogra!hs, (on( rt ha''s and (ir(us s "ith artisti( +!r ssion as th ir (o..on (hara(t risti(. #ro$ ssiona' &as= t&a'' ga. s do not $a'' und r th sa. (at gor0 as th at rs, (in .atogra!hs, (on( rt ha''s and (ir(us s as th 'att r &asi(a''0 & 'ong to artisti( $or.s o$ nt rtain. nt "hi' th $or. r (at rs to s!orts and ga.ing. h. Qu rido MIAA v! CA a3( >$ CITY ;@ PARANAHUE H.%. ,o. 155650 Ju'0 20, 2006 CA%#3O, J. Fa(ts: *+ (uti) Ord r ,o. 904 "as issu d on 21 Ju'0 1984 &0 th n #r sid nt F rdinand *. :ar(os. Su&s 9u nt'0, *+ (uti) Ord r ,os. 9091 and 2982 a. nd d th :3AA Chart r. As o! rator o$ th int rnationa' air!ort, :3AA ad.inist rs th 'and, i.!ro) . nts and 9ui!. nt "ithin th ,A3A Co.!' +. Th :3AA Chart r trans$ rr d to :3AA a!!ro+i.at '0 600 h (tar s o$ 'and,4 in('uding th run"a0s and &ui'dings 6IAir!ort Dands and 5ui'dingsI7 th n und r th 5ur au o$ Air Trans!ortation. Th O$$i( o$ th Ho) rn. nt Cor!orat Couns ' 6OHCC7 issu d O!inion ,o. 061. Th OHCC o!in d that th Do(a' Ho) rn. nt Cod o$ 1991 "ithdr " th + .!tion $ro. r a' stat ta+ grant d to :3AA und r S (tion 21 o$ th :3AA Chart r. Thus, :3AA n gotiat d "ith r s!ond nt Cit0 o$ #araXa9u to !a0 th r a' stat ta+ i.!os d &0 th Cit0. :3AA th n !aid so. o$ th r a' stat ta+ a'r ad0 du . Th :a0or o$ th Cit0 o$ #araXa9u thr at n d to s '' at !u&'i( au(tion th Air!ort Dands and 5ui'dings shou'd :3AA $ai' to !a0 th r a' stat ta+ d 'in9u n(0. :3AA thus sought a ('ari$i(ation o$ OHCC O!inion ,o. 061. Th OHCC o!in d that S (tion 21 o$ th :3AA Chart r is th !roo$ that :3AA is + .!t $ro. r a' stat ta+. :3AA $i' d "ith th Court o$ A!! a's a ! tition #ag 31 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

sought to r strain th Cit0 o$ #araXa9u $ro. i.!osing r a' stat ta+ on, ' )0ing against, and au(tioning $or !u&'i( sa' th Air!ort Dands and 5ui'dings. CA d ni d th ! tition. A da0 & $or th !u&'i( au(tion, or on 6 F &ruar0 2004, at 5:10 !..., :3AA $i' d & $or this Court an >rg nt *+/#art and % it rator0 :otion $or th 3ssuan( o$ a T .!orar0 % straining Ord r "hi(h "as grant d. 2o" ) r, r s!ond nts r ( i) d th T%O on'0 at 1:25 !... or thr hours a$t r th (on('usion o$ th !u&'i( au(tion. 2 n( , this ! tition. 3ssu : ?O, :3AA is + .!t $ro. r a' stat ta+ s 2 'd: E s. ? ru' that :3AA1s Air!ort Dands and 5ui'dings ar + .!t $ro. r a' stat ta+ i.!os d &0 'o(a' go) rn. nts. First, :3AA is not a go) rn. nt/o"n d or (ontro'' d (or!oration &ut an instru. nta'it0 o$ th ,ationa' Ho) rn. nt and thus + .!t $ro. 'o(a' ta+ation. S (ond, th r a' !ro! rti s o$ :3AA ar o"n d &0 th % !u&'i( o$ th #hi'i!!in s and thus + .!t $ro. r a' stat ta+. i. #a.&id PROVINCE OF )ULACAN v! CA H.%. ,o. 126242 ,o) .& r 2@, 1998 %O:*%O, J. Fa(ts: Th Sangguniang #an'a'a"igan o$ 5u'a(an !ass d #ro)in(ia' Ordinan( ,o. 4, =no"n as IAn Ordinan( *na(ting th % ) nu Cod o$ th 5u'a(an #ro)in( .I "hi(h "as to ta= $$ (t on Ju'0 1, 1992. #ursuant th r to, th #ro)in(ia' Tr asur r o$ 5u'a(an, ass ss d !ri)at r s!ond nt % !u&'i( C . nt Cor!oration 6h r a$t r % !u&'i( C . nt7 #2,52-,692.14 $or +tra(ting 'i. ston , sha' and si'i(a $ro. s ) ra' !ar( 's o$ !ri)at 'and in th !ro)in( during th third 9uart r o$ 1992 unti' th s (ond 9uart r o$ 1994. % !u&'i( C . nt $or.a''0 (ont st d "hi(h "as ho" ) r d ni d. 3t $i' d a ! tition $or d ('arator0 r 'i $ in %TC "hi(h "as dis.iss d &0 th 'att r. CA d ('ar d that th #ro)in(ia' Ordinan( ,o. 4 "as )oid. 2 n( , it $i' d a ! tition $or ( rtiorari in SC. 3ssu : ?O, !ro)in( s ha) authorit0 to i.!os r sour( s +tra(t d $ro. !ri)at 'ands ta+ s on ston s, sand, gra) ', arth and oth r 9uarr0

2 'd: ,o. Th Court o$ A!! a's rr d in ru'ing that a !ro)in( (an i.!os on'0 th ta+ s s! (i$i(a''0 . ntion d und r th Do(a' Ho) rn. nt Cod . As (orr (t'0 !oint d out &0 ! tition rs, S (tion 186 a''o"s a !ro)in( to ' )0 ta+ s oth r than thos s! (i$i(a''0 nu. rat d und r th Cod , su&< (t to th (onditions s! (i$i d th r in. This $inding, n ) rth ' ss, a$$ords (o'd (o.$ort to ! tition rs as th 0 ar sti'' !rohi&it d $ro. i.!osing ta+ s on ston s, sand, gra) ', arth and oth r 9uarr0 r sour( s +tra(t d $ro. !ri)at 'ands. Th ta+ i.!os d &0 th #ro)in( o$ 5u'a(an is an +(is ta+, & ing a ta+ u!on th ! r$or.an( , (arr0ing on, or + r(is o$ an a(ti)it0. Th ,ationa' 3nt rna' % ) nu Cod ' )i s a ta+ on a'' 9uarr0 r sour( s, r gard' ss o$ origin, "h th r +tra(t d $ro. !u&'i( or !ri)at 'and. Thus, a !ro)in( .a0 not ordinari'0 i.!os ta+ s on ston s, sand, gra) ', arth and oth r 9uarr0 r sour( s, as th sa. ar a'r ad0 ta+ d und r th ,ationa' 3nt rna' % ) nu Cod . Th !ro)in( (an, ho" ) r, i.!os a ta+ on ston s, sand, gra) ', arth and oth r 9uarr0 r sour( s +tra(t d $ro. !u&'i( 'and & (aus it is +!r ss'0 .!o" r d to do so und r th Do(a' Ho) rn. nt Cod . As to ston s, sand, gra) ', arth and oth r 9uarr0 r sour( s +tra(t d $ro. !ri)at 'and, ho" ) r, it .a0 not do so, & (aus o$ th 'i.itation !ro)id d &0 S (tion 144 o$ th Cod in r 'ation to S (tion 151 o$ th ,ationa' 3nt rna' % ) nu Cod . <. Cr s!o #ag 32 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

DRILON v LIM H.%. ,o. 112-9@ August -, 199C%>N, J. Fa(ts: Th S (r tar0 o$ Justi( had, on a!! a' to hi. o$ $our oi' (o.!ani s and a ta+!a0 r, d ('ar d Ordinan( ,o. @@9-, oth r"is =no"n as th :ani'a % ) nu Cod , nu'' and )oid $or non/(o.!'ian( "ith th !r s(ri& d !ro( dur in th na(t. nt o$ ta+ ordinan( s and $or (ontaining ( rtain !ro)isions (ontrar0 to 'a" and !u&'i( !o'i(0. 3n a ! tition $or ( rtiorari $i' d &0 th Cit0 o$ :ani'a, th % giona' Tria' Court o$ :ani'a r )o= d th S (r tar01s r so'ution and sustain d th ordinan( , ho'ding int r a'ia that th !ro( dura' r 9uir . nts had & n o&s r) d. :or i.!ortant'0, it d ('ar d S (tion 18@ o$ th Do(a' Ho) rn. nt Cod as un(onstitutiona' & (aus o$ its ) stur in th S (r tar0 o$ Justi( o$ th !o" r o$ (ontro' o) r 'o(a' go) rn. nts in )io'ation o$ th !o'i(0 o$ 'o(a' autono.0 .andat d in th Constitution and o$ th s! (i$i( !ro)ision th r in (on$ rring on th #r sid nt o$ th #hi'i!!in s on'0 th !o" r o$ su! r)ision o) r 'o(a' go) rn. nts. 2 n( , a ! tition "as $i' d to th SC. 3ssu : ?O, S ( 18@ o$ DHC is )a'id 2 'd: E s. S (tion 18@ authoriB s th S (r tar0 o$ Justi( to r )i " on'0 th (onstitutiona'it0 or ' ga'it0 o$ th ta+ ordinan( and, i$ "arrant d, to r )o= it on ith r or &oth o$ th s grounds. ?h n h a't rs or .odi$i s or s ts asid a ta+ ordinan( , h is not a'so ! r.itt d to su&stitut his o"n <udg. nt $or th <udg. nt o$ th 'o(a' go) rn. nt that na(t d th . asur . S (r tar0 ;ri'on did s t asid th :ani'a % ) nu Cod , &ut h did not r !'a( it "ith his o"n ) rsion o$ "hat th Cod shou'd & . 2 did not !ronoun( th ordinan( un"is or unr asona&' as a &asis $or its annu'. nt. 2 did not sa0 that in his <udg. nt it "as a &ad 'a". ?hat h $ound on'0 "as that it "as i'' ga'. A'' h did in r )i "ing th said . asur "as d t r.in i$ th ! tition rs " r ! r$or.ing th ir $un(tions in a((ordan( "ith 'a", that is, "ith th !r s(ri& d !ro( dur $or th na(t. nt o$ ta+ ordinan( s and th grant o$ !o" rs to th (it0 go) rn. nt und r th Do(a' Ho) rn. nt Cod . As " s it, that "as an a(t not o$ (ontro' &ut o$ . r su! r)ision. %*AD #%O#*%TE a.%osa' <os DAVAO SAGMILL CO. v CASTILLO H.%. ,o. D/-0-11 August @, 1945 :ADCOD:, J. Fa(ts: Th ;a)ao Sa" :i'' Co., 3n(., is th ho'd r o$ a 'u.& r (on( ssion $ro. th Ho) rn. nt o$ th #hi'i!!in 3s'ands. 2o" ) r, th 'and u!on "hi(h th &usin ss "as (ondu(t d & 'ong d to anoth r ! rson. On th 'and th sa".i'' (o.!an0 r (t d a &ui'ding "hi(h hous d th .a(hin r0 us d &0 it. So. o$ th i.!' . nts thus us d " r (' ar'0 ! rsona' !ro! rt0, th (on$'i(t (on( rning .a(hin s "hi(h " r !'a( d and .ount d on $oundations o$ ( . nt. 3t shou'd $urth r & +!'ain d that th ;a)ao Sa" :i'' Co., 3n(., has on a nu.& r o$ o((asions tr at d th .a(hin r0 as ! rsona' !ro! rt0 &0 + (uting (hatt ' .ortgag s in $a)or o$ third ! rsons. On o$ su(h ! rsons is th a!! '' &0 assign. nt $ro. th origina' .ortgag s. 3ssu : ?O, th .a(hin ri s ar i..o)a&' !ro! rti s #ag 33 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

2 'd: ,o. 3t is !'ain, &oth und r th !ro)isions o$ th #orto %i(an Da" and o$ th Cod ,a!o' on, that .a(hin r0 "hi(h is .o)a&' in its natur on'0 & (o. s i..o&i'iB d "h n !'a( d in a !'ant &0 th o"n r o$ th !ro! rt0 or !'ant. Su(h r su't "ou'd not & a((o.!'ish d, th r $or , &0 th !'a(ing o$ .a(hin r0 in a !'ant &0 a t nant or a usu$ru(tuar0 or an0 ! rson ha)ing on'0 a t .!orar0 right. Th distin(tion r sts, as !oint d out &0 ; .o'o.& , u!on th $a(t that on on'0 ha)ing a t .!orar0 right to th !oss ssion or n<o0. nt o$ !ro! rt0 is not !r su. d &0 th 'a" to ha) a!!'i d .o)a&' !ro! rt0 & 'onging to hi. so as to d !ri) hi. o$ it &0 (ausing it &0 an a(t o$ i..o&i'iBation to & (o. th !ro! rt0 o$ anoth r. &.Cang(o CITY OF )AGUIO v!. FERNANDO )USUEGO H.%. ,o. D/29@@2 S !t .& r 18, 1980 FACTS" On August 11, 1959, 5usu go and HS3S nt r d into a Contra(t to S '' o) r a !ro! rt0 o"n d &0 th 'att r. >nd r th (ontra(t, th tit' r .ains "ith HS3S unti' $u'' !a0. nt o$ 5usu go o$ th !ur(has !ri( a'though a(tua''0 th !oss ssion and us th r o$ has a'r ad0 & n trans$ rr d to 5usu go. :or o) r, #aragra!h 2 o$ th said (ontra(t .ani$ sts 5usu goMs "i''ingn ss at th signing th r o$ to !a0 and shou'd r a'' ta+ s and ass ss. nts on th su&< (t !ro! rt0 and insuran( th r on during th t r. o$ th said (ontra(t. 2o" ) r, 5usu go, a$t r ha)ing )o'untari'0 !aid ta+ s du on th !ro! rt0 in th a.ount o$ #28@.00 $or th 0 ar 1964 &a(= d out o$ his und rta=ing u!on dis(o) ring that s (tion 286(7 o$ Co..on" a'th A(t 186 + .!ts th HS3S $ro. th !a0. nt o$ ta+ s. 2is th or0 is that "hi' tit' to th !ro! rt0 has not !ass d to hi., ! r !aragra!h - o$ th (ontra(t, and o"n rshi! r .ains "ith HS3S, th r (ou'd not & an0 o&'igation to !a0 ta+ s on th !ro! rt0 that shou'd & assu. d &0 hi. as !ur(has r, sin( th o"n r/s '' r, in "ho. tit' r .ains, is + .!t $ro. ta+ s. 2 n( , a ta+ (o'' (tion suit "as institut d &0 th Cit0 o$ 5aguio against 5usu go $or un!aid r a't0 ta+ s $ro. 0 ar 1962 to 1966 a.ounting to #1, 656. ISSUE" ?h th r or not 5usu go is 'ia&' to !a0 th r a' stat ta+ a'though th tit' th r o$ r .ain d "ith an ntit0 6HS3S7 + .!t $ro. !a0. nt o$ su(h ta+. HELD" YES. ?h n 5usu go agr d to th (ontra(tua' sti!u'ation Ito !a0 and shou'd r a'' ta+ s and ass ss. nts on th 'ot and &ui'ding or i.!ro) . nts th r on and insuran( during th t r. o$ th (ontra(t, h is no" sto!! d to d n0 his 'ia&i'it0 to !a0 th ta+ s. And, on th oth r hand, "h n th HS3S so'd th !ro! rt0 and i.!os d said (ondition, th ag n(0 a'though + .!t $ro. th !a0. nt o$ ta+ s (' ar'0 indi(at d that th !ro! rt0 & (a. ta+a&' u!on its d 'i) r0 to th !ur(has r and that th so' d t r.inati) $a(tor $or + .!tion $ro. r a't0 ta+ s is th Ius I to "hi(h th !ro! rt0 is d )ot d. And "h r Ius I is th t st, th o"n rshi! is i..at ria'. 3n th instant (as , a'though th !ro! rt0 "as sti'' in th na. o$ th HS3S ! nding th !a0. nt o$ th $u'' !ri( its, us and !oss ssion "as a'r ad0 trans$ rr d to 5usu go. Su(h (ontra(tua' sti!u'ation that th !ur(has r on insta''. nts !a0s th r a' stat ta+ s ! nding (o.!' tion o$ !a0. nts, a'though th s '' r "ho r tain d tit' is + .!t $ro. su(h ta+ s, is )a'id and &inding, a&s nt an0 'a" to th (ontrar0 and non has & n (it d &0 5usu go. Thus, th d 'i) r0 o$ !oss ssion &0 th s '' r HS3S to th !ur(has r "as (' ar'0 "ith th int ntion o$ !assing to th 'att r th !oss ssion, us o$ and (ontro' o) r said !ro! rt0, and a'' th oth r attri&ut s o$ o"n rshi!, short o$ th na= d o"n rshi! su(h that it in('ud d in said trans$ r th in(id nta' o&'igation to !a0 th ta+ s th r on, $or nothing .or "as ' $t to th HS3S +( !t its right to r ( i) $u'' !a0. nt o$ th !ur(has !ri( . Th $a(t that in th (ontra(t to s '' th HS3S, a'though a"ar o$ its o"n + .!tion $ro. ta+ation sti!u'at d and +a(t d $ro. th !ur(has r th !a0. nt o$ ta+ s a.ounts to an int r!r tation on its !art that su(h an i..unit0 "as not to & trans.itt d to a !ri)at ! rson "ho & (o. s th & n $i(ia' o"n r and us r o$ th !ro! rt0. #ag 34 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th !osition ta= n &0 th HS3S is &ut in (on$or.it0 "ith S (tion -06a7 o$ #r sid ntia' ; (r ,o. -6ntit' d Th % a' #ro! rt0 Ta+ Cod !ro.u'gat d on :a0 20, 19@- "hi(h r ads as $o''o"s: S (. -0., *+ .!tions $ro. % a' #ro! rt0 Ta+. 8 Th + .!tions sha'' & as $o''o"s: 6a7 % a' !ro! rt0 o"n d &0 th % !u&'i( o$ th #hi'i!!in s or an0 o$ its !o'iti(a' su&di)isions and an0 go) rn. nt/o"n d (or!oration so + .!t &0 its (hart rA #ro)id d, ho" ) r, That this + .!tion sha'' not a!!'0 to r a' !ro! rt0 o$ th a&o) /na. d ntit' s th & n $i(ia' us o$ "hi(h has & n grant d, $or (onsid ration or oth r"is , to a ta+a&' ! rson. Thus und r this !ro)ision, "hi' th HS3S .a0 & + .!t $ro. r a' stat ta+ th + .!tion do s not (o) r !ro! rt0 & 'onging to it I"h r th & n $i(ia' us th r o$ has & n grant d $or (onsid ration or oth r"is to a ta+a&' ! rson.I Th r (an & no dou&t that und r th !ro)isions o$ th (ontra(t in 9u stion, th !ur(has r to "hos !oss ssion th !ro! rt0 had & n trans$ rr d "as grant d & n $i(ia' us th r o$. 3t $o''o"s on th str ngth o$ th !ro)ision s (. -06a7 o$ #; -6- that th said !ro! rt0 is not + .!t $ro. th r a' !ro! rt0 ta+. ?hi' this d (r <ust (it d "as sti'' in +ist nt at th ti. th ta+ s at issu " r ass ss d on th h r in a!! ''ant, ind d its a&o) 9uot d !ro)ision sh ds 'ight u!on th ' gis'ati) int nt & hind th !ro)ision o$ Co..on" a'th A(t 186, ! rtaining to + .!tion o$ th HS3S $ro. ta+ s. (.Sio REYES V ALMAN-OR H.%. ,os. D/-9849/-6 A!ri' 26, 1991 #A%AS, J. Fa(ts: # tition rs J.5.D. % 0 s, *d.undo and :i'agros % 0 s ar o"n rs o$ !ar( 's o$ 'and situat d in Tondo and Sta. CruB ;istri(ts, Cit0 o$ :ani'a, "hi(h ar ' as d and ntir '0 o((u!i d as d" ''ing sit s &0 t nants. Th ,ationa' D gis'atur na(t d % !u&'i( A(t ,o. 6459 !rohi&iting $or on 0 ar $ro. its $$ (ti)it0, an in(r as in .onth'0 r nta's o$ d" ''ing units or o$ 'ands on "hi(h anoth r1s d" ''ing is 'o(at d, "h r su(h r nta's do not +( d thr hundr d ! sos 6#400.007 a .onth &ut a''o"ing an in(r as in r nt &0 not .or than 10J th r a$t r. Th said A(t a'so sus! nd d !aragra!h 617 o$ Arti(' 16@4 o$ th Ci)i' Cod $or t"o 0 ars $ro. its $$ (ti)it0 th r &0 disa''o"ing th < (t. nt o$ ' ss s u!on th +!iration o$ th usua' ' ga' ! riod o$ ' as . #r sid ntia' ; (r ,o. 20 a. nd d %.A. ,o. 6459 &0 .a=ing a&so'ut th !rohi&ition to in(r as .onth'0 r nta's & 'o" #400.00 and &0 ind $init '0 sus! nding th a$or . ntion d !ro)ision o$ th Ci)i' Cod , +( !ting ' as s "ith a d $init ! riod. 3n 19@4, r s!ond nt Cit0 Ass ssor o$ :ani'a r /('assi$i d and r ass ss d th )a'u o$ th su&< (t !ro! rti s &as d on th s(h du' o$ .ar= t )a'u s du'0 r )i " d &0 th S (r tar0 o$ Finan( . # tition rs $i' d a : .orandu. o$ ;isagr . nt "ith th 5oard o$ Ta+ Ass ss. nt A!! a's. Th 5oard o$ Ta+ Ass ss. nt A!! a's, ho" ) r, (onsid r d th ass ss. nts )a'id. Th % 0 s s a!! a' d to th C ntra' 5oard o$ Ass ss. nt A!! a's "hi(h a$$ir. d th d (ision o$ 5TAA. 3ssu : ?O, th 2onora&' 5oard rr d in ado!ting th ass ss d )a'u o$ a!! ''antMs !ro! rti s 2 'd: E s. ,ot ) n th $a(tors d t r.inant o$ th ass ss d )a'u o$ su&< (t !ro! rti s und r th I(o.!ara&' sa' s a!!roa(hI " r !r s nt d &0 th !u&'i( r s!ond nts, na. '0: 617 that th sa' .ust r !r s nt a &ona$id ar.1s ' ngth transa(tion & t" n a "i''ing s '' r and a "i''ing &u0 r and 627 th !ro! rt0 .ust & (o.!ara&' !ro! rt0. ,othing (an <usti$0 or su!!ort th ir )i " as it is o$ <udi(ia' noti( that $or !ro! rti s (o) r d &0 #.;. 20 s! (ia''0 during th ti. in 9u stion, th r " r hard'0 an0 "i''ing &u0 rs. As a g n ra' ru' , th r " r no ta= rs so that th r (an & no r asona&' &asis $or th (on('usion that th s !ro! rti s " r (o.!ara&' "ith oth r r sid ntia' !ro! rti s not &urd n d &0 #.;. 20. , ith r (an th gi) n (ir(u.stan( s & non(ha'ant'0 dis.iss d &0 !u&'i( r s!ond nts as i.!os d und r distr ss d (onditions #ag 3, o$ 47 KCo.!ara&' Sa' s A!!roa(hL : thod in th

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

(' ar'0 i.!'0ing that th sa. " r . r '0 t .!orar0 in (hara(t r. At this !oint in ti. , th $a'sit0 o$ su(h !r .is s (annot & .or (on)in(ing'0 d .onstrat d &0 th $a(t that th 'a" has +ist d $or around t" nt0 6207 0 ars "ith no nto it in sight. Cons 9u nt'0, it stands to r ason that ! tition rs "ho ar &urd n d &0 th go) rn. nt &0 its % nta' Fr Bing Da"s 6th n %.A. ,o. 6459 and #.;. 207 und r th !rin(i!' o$ so(ia' <usti( shou'd not no" & ! na'iB d &0 th sa. go) rn. nt &0 th i.!osition o$ +( ssi) ta+ s ! tition rs (an i'' a$$ord and ) ntua''0 r su't in th $or$ itur o$ th ir !ro! rti s. d.*s!inosa PECSON v! CA H.%. ,o. 105460 :a0 25, 1994 Q>3ASO,, J. Fa(ts: 3n Ci)i' Cas ,o. Q/-1-@1, ! tition r $i' d a (o.!'aint to annu' th sa' at a !u&'i( au(tion (ondu(t d &0 r s!ond nt, Ans '.o O. % gis, 6Cit0 Tr asur r o$ Qu Bon Cit07 o$ ! tition r1s !ro! rt0 $or non/!a0. nt o$ r a' stat ta+ s, a'' ging that th sa' "as .ad "ithout !rior noti( to hi.. Th tria' (ourt u!h 'd th )a'idit0 o$ th !u&'i( au(tion, sa0ing that th noti( s o$ th au(tion sa' !u&'ish d in a n "s!a! r o$ g n ra' (ir(u'ation " r noti( s in r .. # tition rMs ! tition to th CA "as d ni d. 2 n( , h $i' d this ! tition und r %u' -5. 3ssu : ?O, th !u&'i( au(tion o$ his !ro! rt0 $or non/!a0. nt o$ ta+ s on th ground that th noti( s to hi. " r s nt to th "rong !osta' addr ss "as )a'id 2 'd: E s. ,oti( s o$ th sa' o$ th !u&'i( au(tion .a0 & s nt to th d 'in9u nt ta+!a0 r, ith r 6i7 at th addr ss as sho"n in th ta+ ro''s or !ro! rt0 ta+ r (ord (ards o$ th .uni(i!a'it0 or (it0 "h r th !ro! rt0 is 'o(at d or 6ii7 at his r sid n( , i$ =no"n to su(h tr asur r or &arrio (a!tain. # tition r do s not ('ai. that th noti( s issu d $ro. 1980 to 1984 shou'd ha) & n s nt to hi. at his r sid n( in I,o. @9 Ya.ias %oad, Qu Bon Cit0,I his r sid n( sin( 1965 and "h r th !ro! rt0 in 'itigation is 'o(at d. ?hat h ('ai.s is that th noti( s shou'd ha) & n s nt to hi. at his addr ss at I,o. 1009 #a9uita St., Sa.!a'o(I ) n i$ h "as no 'ong r r siding th r & (aus ' tt rs s nt to hi. at th said addr ss " r $or"ard d to hi. &0 th o((u!ants o$ his $or. r hous . As $ound &0 th Court o$ A!! a's, "hat a!! ar d in th r (ords o$ th O$$i( o$ th Cit0 Tr asur r o$ Qu Bon Cit0 as th addr ss o$ ! tition r "as I1009 #a9uita, :ani'a,I and & 'o" th nu.& r 1009 "as th nu.& r I@9I. Fro. this ntr0, on (an d du( that th ta+!a0 r had trans$ rr d his r sid n( to I,o. @9 #a9uita, Sa.!a'o(, :ani'aI $ro. I,o. 1009 #a9uita, Sa.!a'o(, :ani'aI. 3n th r gist r $or th ta+ 0 ars starting $ro. 1982 6*+h. SA a'so *+h. 47, th addr ss o$ ! tition r "as r (ord d as I@9 #a9uita, :'a.I Th Court o$ A!! a's ad)an( d th th or0 that th nu.& r I@9I "as $urnish d &0 ! tition r hi.s '$, &asing its (on('usion on th addr ss gi) n &0 ! tition r in his (o.!'aint, "hi(h "as I,o. @9 Ya.ias %oad, Qu Bon Cit0.I . :angu&at MATHAY 1R+ v MACALINGCAG H.%. ,o. 9@618 ; ( .& r 16, 1994 ,ar)asa, C.J. Fa(ts: :atha0, Jr., d s(ri&ing hi.s '$ as Ia . .& r o$ Congr ss, and r gist r d o"n r o$ 'ands in Qu Bon Cit0 and r sid nt o$ : tro :ani'a,I institut d in this Court a s! (ia' (i)i' a(tion o$ !rohi&ition against Fi(tor :a(a'in(ag, th n th >nd rs (r tar0 o$ Finan( , th Cit0 Ass ssor and th Cit0 Tr asur r o$ Qu Bon Cit0. #ag 3. o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th ss ntia' $oundation o$ th ! tition r1s th sis o$ th nu''it0 o$ th s(h du' o$ .ar= t )a'u s is that it "as !r !ar d &0 th r s!ond nt Cit0 Ass ssor a'on , ind ! nd nt'0 o$ th oth r Cit0 Ass ssors "ithin th : tro!o'itan :ani'a Ar a, this & ing in !at nt )io'ation o$ th +!'i(it r 9uir . nt o$ S (tion 9 o$ #r sid ntia' d (r ,o. 921. Si+ 667 da0s 'at r, a si.i'ar a(tion "as initiat d in this Court &0 %u$ino S. Ja)i r on th sa. ground. Th SC r $ rr d th (as to C5AA and issu d T%O and ( as and d sist ord rs. 3ssu : ?h th r th S(h du' o$ :ar= t Fa'u s "as )a'id 2 'd: ,o. Hranting $or th sa= o$ argu. nt, that *.O. ,o. 492 "as a )a'id r ! a'ing a(t that a&o'ish d th : tro!o'itan :ani'a Co..ission, 0 t th said *+ (uti) Ord r did not in an0 .ann r a$$ (t th 'i$ o$ #.;. 921 nor th ass ss. nt distri(ts and (o..itt (r at d th r in und r S (tion 9 th r o$ nor its !ro)ision r garding th !r !aration o$ s(h du' o$ .ar= t )a'u s $or r a' !ro! rti s "ithin th : tro!o'itan :ani'a Ar a. So that, "h th r it is na. d : tro :ani'a Co..ission or : tro :ani'a Authorit0, #.;. 921 r .ains $$ (ti) unti' )a'id'0 r ! a' d &0 su&s 9u nt ' gis'ation through Congr ss. This 5oard (onsid rs unt na&' th a'' gation in this Co.. nt su&.itt d to th Su!r . Court $or % s!ond nt 2on. >nd rs (r tar0Fi(tor C. :a(a'in(ag, that th % s!ond nt Cit0 Ass ssor has authorit0 to !r !ar a'on th 9u stion d S(h du' o$ :ar= t Fa'u s $or th r ason that S (tion 9 o$ #.;. 921 r $ rs to a g n ra' r )ision and has no a!!'i(ation to s ' (ti) r )a'uation or ass ss. nt o$ !ro! rti s in a ( rtain 'o(a' go) rn. nt unit. Th r is nothing in th !ro)ision o$ S (tion 9 "h r " shou'd distinguish & t" n a g n ra' r )ision or r )a'uation or r ass ss. nt in th !r !aration o$ th S(h du' o$ :ar= t Fa'u s $or : tro!o'itan :ani'a, as &asis $or th a!!raisa' and ass ss. nt o$ ta+ation !ur!os s o$ r a' !ro! rti s 'o(at d in th ar a. $. ;inoso PATALINHUG V CA H.%. ,o. 10-@86 Januar0 2@, 199%O:*%O, J. Fa(ts: Th Sangguniang #an'ungsod o$ ;a)ao Cit0 na(t d Ordinan( ,o. 464, oth r"is =no"n as th I*+!and d Noning Ordinan( o$ ;a)ao Cit0.I # tition r (o.. n( d th (onstru(tion o$ his $un ra' !ar'or a$t r o&taining a &ui'ding ! r.it. S ) ra' r sid nts o$ 5aranga0 Agdao, ;a)ao Cit0 $i' d a (o.!'aint and a'' g d that th (onstru(tion o$ ! tition r1s $un ra' !ar'or )io'at d Ordinan( ,o. 464, sin( it "as a'' g d'0 situat d "ithin a 50/. t r radius $ro. th 3g' sia ni Yristo Cha! ' and s ) ra' r sid ntia' stru(tur s. Sangguniang #an'ungsod (ondu(t d an in) stigation and $ound that Ith n ar st r sid ntia' stru(tur , o"n d &0 ?i'$r d H. T !oot is on'0 8 in(h s to th south. # tition r sti'' !ro( d d "ith its (onstru(tion d s!it th in) stigation. Th 'o" r (ourt ho" ) r dis.iss d th (o.!'aint. #ri)at r s!ond nts a!! a' d to CA "hi(h r ) rs d th d (ision o$ th 'o" r (ourt. 2 n( , ! tition r $i' d a ! tition to SC. 3ssu : "h th r or not ! tition r1s o! ration o$ a $un ra' ho. (onstitut s ! r.issi&' us "ithin a !arti(u'ar distri(t or Bon in ;a)ao Cit0. 2 'd: 2 'd: E s. 3n th (as at &ar, th t sti.on0 o$ Cit0 Coun(i'or F rgara sho"s that :r. T !oot1s &ui'ding "as us d $or a dua' !ur!os &oth as a d" ''ing and as a !'a( "h r a 'aundr0 &usin ss "as (ondu(t d. 5ut #ag 37 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

"hi' its (o.. r(ia' as! (t has & n sta&'ish d &0 th !r s n( o$ .a(hin ri s and 'aundr0 !ara!h rna'ia, its us as a r sid n( , oth r than & ing d ('ar d $or ta+ation !ur!os s as su(h, "as not $u''0 su&stantiat d. Th r ) rsa' &0 th Court o$ A!! a's o$ th tria' (ourt1s d (ision "as &as d on T !oot1s &ui'ding & ing d ('ar d $or ta+ation !ur!os s as r sid ntia'. 3t is our (onsid r d )i ", ho" ) r, that a ta+ d ('aration is not (on('usi) o$ th natur o$ th !ro! rt0 $or Boning !ur!os s. A !ro! rt0 .a0 ha) & n d ('ar d &0 its o"n r as r sid ntia' $or r a' stat ta+ation !ur!os s &ut it .a0 " '' & "ithin a (o.. r(ia' Bon . A dis(r !an(0 .a0 thus +ist in th d t r.ination o$ th natur o$ !ro! rt0 $or r a' stat ta+ation !ur!os s )is/a/)is th d t r.ination o$ a !ro! rt0 $or Boning !ur!os s. g. % 0 s ALE1ANDRO ). TY AND MVR PICTURE TU)E+ INC+ v!. THE HON. AURELIO C. TRAMPE H.%. ,o. 11@5@@ ; ( .& r 1, 1995 #A,HA,35A,, J.: Fac !" # tition r A' <andro 5. T0 is a r sid nt o$ and r gist r d o"n r o$ 'ands and &ui'dings in th :uni(i!a'it0 o$ #asig, "hi' ! tition r :F% #i(tur Tu& , 3n(. is a (or!oration du'0 organiB d and +isting und r #hi'i!!in 'a"s and is 'i= "is a r gist r d o"n r o$ 'ands and &ui'dings in said :uni(i!a'it0. On Januar0 6 199-, r s!ond nt Ass ssor s nt a noti( o$ ass ss. nt r s! (ting ( rtain r a' !ro! rti s o$ ! tition rs 'o(at d in #asig, : tro :ani'a. 3n a ' tt r dat d :ar(h 18 199-, ! tition rs through (ouns ' r 9u st d th :uni(i!a' Ass ssor to r (onsid r th su&< (t ass ss. nts. ,ot satis$i d, ! tition rs on :ar(h 29 199- $i' d "ith th % giona' Tria' Court a # tition $or #rohi&ition "ith !ra0 r $or a r straining ord r andCor "rit o$ !r 'i.inar0 in<un(tion to d ('ar nu'' and )oid th n " ta+ ass ss. nts and to n<oin th (o'' (tion o$ r a' stat ta+ s &as d on said ass ss. nts. % s!ond nt Judg d ni d th ! tition $or 'a(= o$ . rit .Su&s 9u nt'0, ! tition rs1 :otion $or % (onsid ration "as a'so d ni d &0 r s!ond nt Judg . % &u$$ d &0 said ; (ision and Ord r, ! tition rs $i' d this !r s nt # tition $or % )i " dir (t'0 & $or this Court, raising !ur 9u stions o$ 'a". I!!#$" ?h th r ! tition rs ar r 9uir d to +haust ad.inistrati) r . di s !rior to s =ing <udi(ia' r 'i $ H$'(" ,o. A'though as a ru' , ad.inistrati) r . di s .ust $irst & +haust d & $or r sort to Judi(ia' a(tion (an !ros! r, th r is a " ''/s tt' d +( !tion in (as s "h r th (ontro) rs0 do s not in)o') 9u stions o$ $a(t &ut on'0 o$ 'a". 3n th !r s nt (as , th !arti s, ) n during th !ro( dings in th 'o" r (ourt on 11 A!ri' 199-, a'r ad0 agr d Ithat th issu s in th ! tition ar ' ga',I and thus, no )id n( "as !r s nt d in said (ourt. 3n 'a0ing do"n th !o" rs o$ th Do(a' 5oard o$ Ass ss. nt A!! a's, %.A. @160 !ro)id s in S (. 229 6&7 that I6t7h !ro( dings o$ th 5oard sha'' & (ondu(t d so' '0 $or th !ur!os o$ as( rtaining th $a(ts + + +I. 3t $o''o"s that a!! a's to this 5oard .a0 & $ruit$u' on'0 "h r 9u stions o$ $a(t ar in)o') d. Again, th !rot st (ont .!'at d und r S (. 252 o$ %.A. @160 is n d d "h r th r is a 9u stion as to th r asona&' n ss o$ th a.ount ass ss d. 2 n( , i$ a ta+!a0 r dis!ut s th r asona&' n ss o$ an in(r as in a r a' stat ta+ ass ss. nt, h is r 9uir d to I$irst !a0 th ta+I und r !rot st. Oth r"is , th (it0 or .uni(i!a' tr asur r "i'' not a(t on his !rot st. 3n th (as at & n(h ho" ) r, th ! tition rs ar 9u stioning th ) r0 authorit0 and !o" r o$ th ass ssor, a(ting so' '0 and ind ! nd nt'0, to i.!os th ass ss. nt and o$ th tr asur r to (o'' (t th ta+. Th s ar not 9u stions . r '0 o$ a.ounts o$ th in(r as in th ta+ &ut atta(=s on th ) r0 )a'idit0 o$ an0 in(r as . h. Ca')an
(.R. )o. 12**+2 Septe"!er 11, 1,,-

#ag 30 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on. ./CT/) C012 I)T0R)/TI3)/L /IRP3RT /2T43RIT5, ")+!+!o#)(, 4%.43). 60R7I)/)7 8. ./RC3S, in his 'apa'ity as the Presiding 8#dge of the Regiona Tria Co#rt, 1ran'h 2*, Ce!# City, T40 CIT5 36 C012, represented !y its .ayor 43). T3./S R. 3S.09/, and 02ST/:2I3 1. C0S/, ()%"o#-)#+%. EACTS@ 0)+!+!o#)( M&*+&# C).9 I#+)(#&+!o#&1 A!("o(+ A9+ o(!+y ,MCIAA2 3&% *()&+)- .y 4!(+9) o' R)"9.1!* A*+ No. 6958, /&#-&+)- +o D"(!#*!"&11y 9#-)(+&k) + ) )*o#o/!*&1, )''!*!)#+ &#- )'')*+!4) *o#+(o1, /&#&$)/)#+ &#%9")(4!%!o# o' + ) M&*+&# I#+)(#&+!o#&1 A!("o(+ !# + ) 0(o4!#*) o' C).9 &#- + ) L& 9$ A!("o(+ !# C).9 C!+y, . . . &#%9* o+ )( A!("o(+% &% /&y .) )%+&.1!% )- !# + ) 0(o4!#*) o' C).9 . . . ,S)*. 3, RA 69582. S!#*) + ) +!/) o' !+% *()&+!o#, ")+!+!o#)( MCIAA )#Foy)- + ) "(!4!1)$) o' )<)/"+!o# '(o/ "&y/)#+ o' ()&1+y +&<)% !# &**o(-&#*) 3!+ S)*+!o# 1C o' !+% C &(+)(. S)*. 1C. T&< E<)/"+!o#%. G T ) &9+ o(!+y % &11 .) )<)/"+ '(o/ ()&1+y +&<)% !/"o%)- .y + ) N&+!o#&1 Go4)(#/)#+ o( &#y o' !+% "o1!+!*&1 %9.-!4!%!o#%, &$)#*!)% &#- !#%+(9/)#+&1!+!)% . . . O# O*+o.)( 11, 199C, o3)4)(, M(. E9%+&:9!o B. C)%&, O''!*)(-!#-C &($), O''!*) o' + ) T()&%9()( o' + ) C!+y o' C).9, -)/&#-)- "&y/)#+ 'o( ()&1+y +&<)% o# %)4)(&1 "&(*)1% o' 1&#- .)1o#$!#$ +o + ) ")+!+!o#)(. 0)+!+!o#)( o.F)*+)- +o %9* -)/&#- 'o( "&y/)#+ &% .&%)1)%% &#- 9#F9%+!'!)-, *1&!/!#$ !# !+% '&4o( + ) &'o()*!+)- S)*+!o# 1C o' RA 6958 3 !* )<)/"+ !+ '(o/ "&y/)#+ o' ()&1+y +&<)%. I+ 3&% &1%o &%%)(+)- + &+ !+ !% &# !#%+(9/)#+&1!+y o' + ) $o4)(#/)#+ ")('o(/!#$ $o4)(#/)#+&1 '9#*+!o#%, *!+!#$ %)*+!o# 133 o' + ) Lo*&1 Go4)(#/)#+ Co-) o' 1991 3 !* "9+% 1!/!+&+!o#% o# + ) +&<!#$ "o3)(% o' 1o*&1 $o4)(#/)#+ 9#!+%. ISS8E@ AON THE CITB OE CEB8 HAS THE 0OAER TO TAH THE 0ETITIONER R8LING@ 0)+!+!o#)( *o#+)#-% + &+ .)!#$ &# !#%+(9/)#+&1!+y o' + ) N&+!o#&1 Go4)(#/)#+, ()%"o#-)#+ C!+y o' C).9 &% #o "o3)( #o( &9+ o(!+y +o !/"o%) ()&1+y +&<)% 9"o# !+ !# &**o(-&#*) 3!+ + ) &'o()%&!- S)*+!o# 133 o' + ) LGC. T ) "o3)( +o +&< !% "(!/&(!1y 4)%+)- !# + ) Co#$()%%; o3)4)(, !# o9( F9(!%-!*+!o#, !+ /&y .) )<)(*!%)- .y 1o*&1 1)$!%1&+!4) .o-!)%, #o 1o#$)( /)()1y .y 4!(+9) o' & 4&1!- -)1)$&+!o# &% .)'o(), .9+ "9(%9&#+ +o -!()*+ &9+ o(!+y *o#')(()- .y S)*+!o# 5, A(+!*1) H o' + ) Co#%+!+9+!o#. 22 8#-)( + ) 1&++)(, + ) )<)(*!%) o' + ) "o3)( /&y .) %9.F)*+ +o %9* $9!-)1!#)% &#- 1!/!+&+!o#% &% + ) Co#$()%% /&y "(o4!-) 3 !* , o3)4)(, /9%+ .) *o#%!%+)#+ 3!+ + ) .&%!* "o1!*y o' 1o*&1 &9+o#o/y. T )() *&# .) #o :9)%+!o# + &+ 9#-)( S)*+!o# 1C o' R.A. No. 6958 + ) ")+!+!o#)( !% )<)/"+ '(o/ + ) "&y/)#+ o' ()&1+y +&<)% !/"o%)- .y + ) N&+!o#&1 Go4)(#/)#+ o( &#y o' !+% "o1!+!*&1 %9.-!4!%!o#%, &$)#*!)%, &#- !#%+(9/)#+&1!+!)%. N)4)(+ )1)%%, %!#*) +&<&+!o# !% + ) (91) &#- )<)/"+!o# + )()'(o/ + ) )<*)"+!o#, + ) )<)/"+!o# /&y + 9% .) 3!+ -(&3# &+ + ) "1)&%9() o' + ) +&<!#$ &9+ o(!+y. T ) o#1y )<*)"+!o# +o + !% (91) !% 3 )() + ) )<)/"+!o# 3&% $(&#+)+o "(!4&+) "&(+!)% .&%)- o# /&+)(!&1 *o#%!-)(&+!o# o' & /9+9&1 #&+9(), 3 !* + )# .)*o/)% *o#+(&*+9&1 &#- !% + 9% *o4)()- .y + ) #o#-!/"&!(/)#+ *1&9%) o' + ) Co#%+!+9+!o#. 23 T ) LGC, )#&*+)- "9(%9&#+ +o S)*+!o# 3, A(+!*1) H o' + ) *o#%+!+9+!o# "(o4!-)% 'o( + ) )<)(*!%) .y 1o*&1 $o4)(#/)#+ 9#!+% o' + )!( "o3)( +o +&<, + ) %*o") + )()o' o( !+% 1!/!+&+!o#%, &#- + ) )<)/"+!o# '(o/ +&<&+!o#. S)*+!o# 133 o' + ) LGC "()%*(!.)% + ) *o//o# 1!/!+&+!o#% o# + ) +&<!#$ "o3)(% o' 1o*&1 $o4)(#/)#+ 9#!+% &% 'o11o3%@ S)*. 133. Co//o# L!/!+&+!o#% o# + ) T&<!#$ 0o3)( o' Lo*&1 Go4)(#/)#+ 8#!+%. G 8#1)%% o+ )(3!%) "(o4!-))()!#, + ) )<)(*!%) o' + ) +&<!#$ "o3)(% o' "(o4!#*)%, *!+!)%, /9#!*!"&1!+!)%, &#- .&(&#$&y% % &11 #o+ )<+)#- +o + ) 1)4y o' + ) 'o11o3!#$@ HHH ,o2 TAHES, EEES, OR CHARGES OE ANB IIN7 ON THE NATIONAL GO6ERNMENT, ITS AGENCIES AN7 INSTR8MENTALITIES, AN7 LOCAL GO6ERNMENT 8NITS. ,)/" &%!% %9""1!)-2 HHH /o#$ + ) D+&<)%D )#9/)(&+)- !# + ) LGC !% ()&1 "(o")(+y +&<, 3 !* !% $o4)(#)- .y S)*+!o# 232. I+ ()&-% &% 'o11o3%@ S)*. 232. 0o3)( +o L)4y R)&1 0(o")(+y T&<. G A "(o4!#*) o( *!+y o( & /9#!*!"&1!+y 3!+ !# + ) M)+(o"o1!+&# M&#!1& A()& /&y 1)4y o# &# &##9&1 &- 4&1o()/ +&< o# ()&1 "(o")(+y %9* &% 1&#-, .9!1-!#$, /&* !#)(y &#- o+ )( !/"(o4)/)#+% #o+ )()&'+)( %")*!'!*&11y )<)/"+)-. S)*+!o# 23C o' LGC "(o4!-)% 'o( + ) )<)/"+!o#% '(o/ "&y/)#+ o' ()&1 "(o")(+y +&<)% &#- 3!+ -(&3% "()4!o9% )<)/"+!o#% + )()'(o/ $(&#+)- +o #&+9(&1 &#- F9(!-!*&1 ")(%o#%, !#*19-!#$ $o4)(#/)#+ o3#)- &#- *o#+(o11)-

#ag 32 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on. *o("o(&+!o#%, )<*)"+ &% "(o4!-)- + )()!#. I+ "(o4!-)%@ S)*. 23C. E<)/"+!o#% '(o/ R)&1 0(o")(+y T&<. G T ) 'o11o3!#$ &() )<)/"+)- '(o/ "&y/)#+ o' + ) ()&1 "(o")(+y +&<@ HHH E<*)"+ &% "(o4!-)- )()!#, &#y )<)/"+!o#% '(o/ "&y/)#+ o' ()&1 "(o")(+y +&< "()4!o9%1y $(&#+)- +o o( "()%)#+1y )#Foy)- .y, &11 ")(%o#% 3 )+ )( #&+9(&1 o( F9(!-!*&1, !#*19-!#$ &11 $o4)(#/)#+ o3#)- o( *o#+(o11)- *o("o(&+!o#% &() )().y 3!+ -(&3# 9"o# + ) )'')*+!4!+y o' !% Co-). HHH T 9%, ()&-!#$ +o$)+ )( S)*+!o# 133, 232 &#- 23C o' + ) LGC, 3) *o#*19-) + &+ &% & $)#)(&1 (91), &% 1&!-o3# !# S)*+!o# 133 + ) +&<!#$ "o3)(% o' 1o*&1 $o4)(#/)#+ 9#!+% *&##o+ )<+)#- +o + ) 1)4y o' !#+)( &1!&, D+&<)%, '))%, &#- * &($)% o' &#y k!#- o' + ) N&+!o#&1 Go4)(#/)#+, !+% &$)#*!)% &#- !#%+(9/)#+&1+!)%, &#- 1o*&1 $o4)(#/)#+ 9#!+%D; o3)4)(, "9(%9&#+ +o S)*+!o# 232, "(o4!#*)%, *!+!)%, /9#!*!"&1!+!)% !# + ) M)+(o"o1!+&# M&#!1& A()& /&y !/"o%) + ) ()&1 "(o")(+y +&< )<*)"+ o#, !#+)( &1!&, D()&1 "(o")(+y o3#)- .y + ) R)"9.1!* o' + ) 0 !1!""!#)% o( &#y o' !+% "o1!+!*&1 %9.-!4!%!o#% )<*)"+ 3 )# + ) .)#)'!*!&1 9%)- + )()o' &% .))# $(&#+)-, 'o( *o#%!-)(&+!o# o( o+ )(3!%), +o & +&<&.1) ")(%o#D, &% "(o4!-)- !# !+)/ ,&2 o' + ) '!(%+ "&(&$(&" o' S)*+!o# 23C. A% +o +&< )<)/"+!o#% o( !#*)#+!4)% $(&#+)- +o o( "()%)#+1y )#Foy)- .y #&+9(&1 o( F9(!-!*&1 ")(%o#%, !#*19-!#$ $o4)(#/)#+-o3#)- &#- *o#+(o11)- *o("o(&+!o#%, S)*+!o# 193 o' + ) LGC "()%*(!.)% + ) $)#)(&1 (91), 4!?., + )y &() 3!+ -(&3# 9"o# + ) )'')*+!4!+y o' + ) LGC, )<*)"+ 9"o# + ) )'')*+!4!+y o' + ) LGC, )<*)"+ + o%) $(&#+)- +o 1o*&1 3&+)( -!%+(!*+%, *oo")(&+!4)% -91y ()$!%+)()- 9#-)( R.A. No. 6938, #o# %+o*k &#- #o#-"(o'!+ o%"!+&1% &#- )-9*&+!o#&1 !#%+!+9+!o#%, &#- 9#1)%% o+ )(3!%) "(o4!-)- !# + ) LGC. T ) 1&++)( "(o4!%o *o91- ()')( +o S)*+!o# 23C, 3 !* )#9/)(&+)% + ) "(o")(+!)% )<)/"+ '(o/ ()&1 "(o")(+y +&<. B9+ + ) 1&%+ "&(&$(&" o' S)*+!o# 23C '9(+ )( :9&1!'!)% + ) ()+)#+!o# o' + ) )<)/"+!o# !# %o '&( &% + ) ()&1 "(o")(+y +&<)% &() *o#*)(#)- .y 1!/!+!#$ + ) ()+)#+!o# o#1y +o + o%) )#9/)(&+)- + )()-!#; &11 o+ )(% #o+ !#*19-)- !# + ) )#9/)(&+!o# 1o%+ + ) "(!4!1)$) 9"o# + ) )'')*+!4!+y o' + ) LGC. Mo()o4)(, )4)# &% + ) ()&1 "(o")(+y !% o3#)- .y + ) R)"9.1!* o' + ) 0 !1!""!#)%, o( &#y o' !+% "o1!+!*&1 %9.-!4!%!o#% *o4)()- .y !+)/ ,&2 o' + ) '!(%+ "&(&$(&" o' S)*+!o# 23C, + ) )<)/"+!o# !% 3!+ -(&3# !' + ) .)#)'!*!&1 9%) o' %9* "(o")(+y &% .))# $(&#+)- +o +&<&.1) ")(%o# 'o( *o#%!-)(&+!o# o( o+ )(3!%). S!#*) + ) 1&%+ "&(&$(&" o' S)*+!o# 23C 9#):9!4o*&11y 3!+ -()3, 9"o# + ) )'')*+!4!+y o' + ) LGC, )<)/"+!o#% '(o/ ()&1 "(o")(+y +&<)% $(&#+)- +o #&+9(&1 o( F9(!-!*&1 ")(%o#%, !#*19-!#$ $o4)(#/)#+-o3#)- o( *o#+(o11)*o("o(&+!o#%, )<*)"+ &% "(o4!-)- !# + ) %&!- %)*+!o#, &#- + ) ")+!+!o#)( !%, 9#-o9.+)-1y, & $o4)(#/)#+-o3#)*o("o(&+!o#, !+ #)*)%%&(!1y 'o11o3% + &+ !+% )<)/"+!o# '(o/ %9* +&< $(&#+)- !+ !# S)*+!o# 1C o' !+% * &(+)(, R.A. No. 6958, &% .))# 3!+ -(&3#. A#y *1&!/ +o + ) *o#+(&(y *&# o#1y .) F9%+!'!)- !' + ) ")+!+!o#)( *&# %))k ()'9$) 9#-)( &#y o' + ) )<*)"+!o#% "(o4!-)- !# S)*+!o# 23C, .9+ #o+ 9#-)( S)*+!o# 133, &% !+ #o3 &%%)(+%, %!#*), &% % o3# &.o4), + ) %&!- %)*+!o# !% :9&1!'!)- .y S)*+!o# 232 &#- 23C.

i. Sa'a&sa& SES)REIO v!. CENTRAL )OARD OF ASSESSMENT AND APPEALS H.%. no. 106588 2:ar(h 199@ FACTS: # tition r !ur(has d $ro. Tan t"o 627 !ar( 's o$ 'and )id n( d &0 a TCT issu d &0 th %; o$ C &u. 3t in('ud d th r sid ntia' hous o$ strong .at ria's (onstru(t d on th said 'ots. So, ! tition r d ('ar d th r a' !ro! rt0 (onstru(t d on th said 'ots, $or !ur!os s o$ ass ss. nt, a r sid ntia' hous o$ strong .at ria's. 3n 1980 su(h "as ass ss d &0 th r s!ond nt Cit0 Ass ssor at th .ar= t )a'u o$ #h! 60,000 and an ass ss d )a'u o$ #h! 46,900. ?h n a ta+ .a!!ing o! ration "as (ondu(t d in F & 1989, it "as dis(o) r d that su(h !ro! rt0 "as a(tua''0 a r sid ntia' &ui'ding (onsisting o$ - stor 0s "ith a $i$th stor 0 us d a roo$d (=. Th .at ria's us d "as t0! 2/A .at ria's. Finding " r (on$ir. d &0 th 5oard o$ Co..ission rs. 5as d on su(h $inding th Cit0 Ass ssor (an( '' d th $irst ass ss. nt and ass ss d su(h !ro! rt0 $or #h! 4@-,900. # tition r !rot st d th n " ass ss. nt $or & ing +( ssi) and un(ons(iona&' . 2 9u stion d su(h & $or th Do(a' 5oard o$ Ass ss. nt A!! a's &ut it "as dis.iss d. So, ! tition r ' )at d th (as C ntra' 5oard o$ Ass ss. nt A!! a's 6C5AA7. Th 'att r .odi$i d th !r )ious d (ision. ,ot satis$i d ! tition r $i' d an :%. ;uring th h aring ! tition rs su&.itt d a (o.!ro.is agr . nt and su(h "as a(( !t d. On o$ th (ont nts o$ th agr . nt is that S (tion 24 o$ #r sid ntia' ; (r ,o. -6- 'PP#/3& #ag 40 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

to this (as (onsid ring that th a!! '' has ,OT E*T S>5:3TT*; th r 9uir d C3RT/9/C'T/:; to th S (r tar0 o$ Finan( to th $$ (t that th ,3;3R'# R3</&/:; :9 PR:P3RT= '&&3&&!3;T& 9:R C34> C/T= 2AS 433; 9/;/&?3D. S (. 24 o$ #.;. -6- us s th CO,J>,CT3F* ?O%; IA,;I & t" n th !hras s: IASS*SS:*,TS &?'## 43C:!3 3993CT/<3 and ITAG*S S2ADD ACC%>* A,; 5* #AEA5D*.I 3SS>*: 617 ?h th r or not C5AA shou'd not ha) a!!'i d S (. 2- o$ #; -6- in th (as at &ar. 627 ?h th r or not C5AA shou'd ha) (o.!ut d th ass ss d )a'u o$ th !ro! rt0 &as d on its .ar= t )a'u as d $in d in !aragra!h n, S (tion 4 o$ #; -6-. 647 ?h th r or not C5AA rr d in r $using to a!!'0 S (tion 24 o$ #; -6-. 6-7 3s C5AAMs ass ss. nt un(onstitutiona'. 2*D;: 617 # tition r1s argu. nt is not no) '. 3n #ope@ vs. Cro1 "hi(h in)o') d th int r!r tation o$ S (tion 12 o$ A(t 2248, a !ro)ision si.i'ar to S (tion 25 o$ #; -6-, th Court r < (t d a !ara'' ' argu. nt that th said !ro)ision Ir $ rs so' '0 to r a' stat d ('ar d $or th $irst ti. and do s not a!!'0 to th ar a "hi(h, u!on r )ision, has & n sho"n to & in +( ss o$ that "hi(h "as $or. r'0 d ('ar d.I Th Court h 'd that th ar a in +( ss o$ that d ('ar d &0 th ta+!a0 r "as d . d d ('ar d $or th $irst ti. u!on its dis(o) r0. 3t ratio(inat d thus: . . . it is neit0er just t0at anot0er lando1ner s0ould e per"itted y an involuntary "istaAe or t0roug0 ot0er causes+ not to say ad fait0+ to state an area far less t0an t0at actually contained in 0is land and pay to t0e &tate a tax far elo1 t0at 10ic0 0e s0ould really pay . This "as on o$ th o&< (ts o$ th D gis'atur in ord ring th r )ision, so that a'' r a' stat shou'd !a0 th ta+ s that ' ga''0 .ust a((ru to th Stat . ?h r $or , ) n ta=ing th S!anish t +t o$ th !hras in 6S7 (tion 12 o$ A(t ,o. 2248 that Ir a' !ro! rt0 d ('ar d $or th $irst ti. sha'' ha) ta+ s ass ss d against it, t(.,I it s0ould not e understood to apply only to real estate t0at 0ave $sic* never een declared A as 1it0in t0e "eaning of suc0 p0rase+ t0e excess areas resulting fro" t0e revision "ust e understood as never 0aving een declared efore A & (aus on'0 that ar a .ust & d . d as d ('ar d "hi(h is stat d in th d ('aration sh t, and th ar a o) r and a&o) that (an not & (onsid r d as ) r ha)ing & n d ('ar d. S (tion 2- . r '0 'a0s do"n th g n ra' ru' that ass ss. nts und r #; -6- ar to & gi) n !ros! (ti) a!!'i(ation. 3t (annot & (onstru d in su(h a .ann r as to 'i.inat th i.!osition o$ &a(= ta+ s. 3$ S (tion 2-, inst ad o$ S (tion 25, " r .ad to a!!'0 as sugg st d &0 ! tition r, h "ou'd in $$ (t & +(us d $ro. th !a0. nt o$ &a(= ta+ s on th und ('ar d +( ss ar a o$ his !ro! rt0. Th Court, (' ar'0, (annot a''o" a ta+!a0 r )ad his o&'igation to th go) rn. nt &0 ' tting hi. !a0 ta+ s on !ro! rt0 &as d on its gross und r)a'uation at #60,000.00, "h n th sa. had th n a (urr nt .ar= t )a'u o$ #--9,860.00. A(( !ting th ! tition r1s !osition "i'' n ( ssari'0 !r <udi( th !u&'i( int r st, $or th go) rn. nt is th r &0 d !ri) d o$ &a(= ta+ s "hi(h ought to ha) & n !aid in th $irst !'a( . This "i'' ( rtain'0 su&) rt th raison d2etre o$ th 'a" "hi(h is to rais ta+ s, th 'i$ &'ood o$ th go) rn. nt. 627 ? (annot sustain ! tition r1s (ont ntion. Th (it d !ro)ision . r '0 d $in s I.ar= t )a'u .I 3t do s not in an0 "a0 dir (t that th .ar= t )a'u as d $in d th r in shou'd & us d as &asis in d t r.ining th )a'u o$ a !ro! rt0 $or !ur!os s o$ r a' !ro! rt0 ta+ation. On th oth r hand, S (tion 5 o$ #; -6!ro)id s un 9ui)o(a''0 that I6a7'' r a' !ro! rt0, "h th r ta+a&' or + .!t, sha'' & a!!rais d at th current and fair "arAet )a'u !r )ai'ing in th 'o(a'it0 "h r th !ro! rt0 is situat d.I Contrar0 to ! tition r1s (ont ntion, a(9uisition (ost (annot & and is not th so' &asis o$ th (urr nt and $air .ar= t )a'u o$ a !ro! rt0. Th (urr nt )a'u o$ 'i= !ro! rti s and th ir a(tua' or !ot ntia' us s, a.ong oth rs, ar a'so (onsid r d. 3t is a .att r o$ !'ain (o..on s ns that a &ui'ding "ith .or $'oors has a high r .ar= t )a'u than on "ith $ " r $'oors, !ro)id d that &oth ar o$ th sa. .at ria's. 2 n( , th ta+ d ('aration o$ th &ui'ding in 9u stion shou'd ha) a((urat '0 r $' (t d its a(tua' ar a and nu.& r o$ $'oors, th s & ing n ( ssar0 $or th a((urat )a'uation th r o$. #ag 41 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

647 This ('ai. 'a(=s . rit. As $ound &0 % s!ond nt C5AA, th 9u stion d ass ss. nt had not & n i.!os d !ursuant to a general r )ision o$ !ro! rt0 ass ss. nts that had not 0 t ta= n $$ (t. # tition r, $or his !art, has $ai' d to !ro) that this $inding (onstitut s a gra) a&us o$ dis(r tion tanta.ount to 'a(= or +( ss o$ <urisdi(tion. 657 *9ua''0 un. ritorious is ! tition r1s (ont ntion that th i.!osition o$ &a(= ta+ s on his !ro! rt0 is un(onstitutiona' $or & ing )io'ati) o$ S (tion 22, Arti(' 333 o$ th 198@ Constitution. ?h n &oth #u&'i( % s!ond nts C5AA and Cit0 Ass ssor i.!os d &a(= ta+ s on ! tition r1s !ro! rt0, th 0 did not )io'at th ru' that 'a"s sha'' ha) on'0 !ros! (ti) a!!'i(a&i'it0. % s!ond nts " r on'0 a!!'0ing #; -6- "hi(h had & n in $$ (t sin( 19@-. 5 sid s, S (tion 25 o$ #; -6- is not ! na' in (hara(t rA h n( , it .a0 not & (onsid r d as an ex post facto 'a". <.Castronu )o LOPE- v CITY OF MANILA H.%. ,o. 12@149 F &ruar0 19, 1999 Q>3S>:53,H, J. Fa(ts: :rs. Dourd s Dad ras, th n "'0 a!!oint d Cit0 Ass ssor o$ :ani'a, r ( i) d : .orandu. Cir(u'ar ,o. 0-/95 dat d :ar(h 20, 1995, $ro. th 5ur au o$ Do(a' Ho) rn. nt Finan( , ; !art. nt o$ Finan( . This . .orandu. r 'at s to th $ai'ur o$ .ost o$ th (iti s and .uni(i!a'iti s o$ : tro!o'itan :ani'a, in('uding th Cit0 o$ :ani'a, to (ondu(t th g n ra' r )ision o$ r a' !ro! rt0. 3n th 0 ar 1995, th in(r as in )a'uation o$ r a' !ro! rti s (o.!ar d to th 0 ar/19@9 .ar= t )a'u s rang s $ro. 600J to 4,440J, &ut th Cit0 Ass ssor1s o$$i( initia''0 $i+ d th g n ra' a) rag o$ in(r as to 1,@00J. :rs. Dad ras $ 't that th in(r as .a0 ha) ad) rs r a(tions $ro. th !u&'i(, h n( , sh nd d u! r du(ing th in(r as in th )a'uation o$ r a' !ro! rti s to 1,020J. Th !ro!os d ordinan( "ith th s(h du' o$ $air .ar= t )a'u s o$ r a' !ro! rti s "as !u&'ish d. ?ith th i.!' . ntation o$ :ani'a Ordinan( ,o. @89-, th ta+ on th 'and o"n d &0 th ! tition r "as in(r as d &0 $i) hundr d ight0 ! r( nt 6580J7. ?ith r s! (t to th i.!ro) . nt on ! tition r1s !ro! rt0, th ta+ in(r as d &0 t"o hundr d $i$t0 ! r( nt 6250J7. # tition r $i' d a ! tition to d ('ar said ordinan( )oid a'' ging that it "as Iun<ust, +( ssi) , o!!r ssi) or (on$is(ator0.I :ani'a Ordinan( ,o. @905 - too= $$ (t, r du(ing &0 $i$t0 ! r( nt 650J7 th ass ss. nt ' ) 's. As a r su't, :ani'a Ordinan( ,o. @905 r du( d th ta+ in(r as o$ ! tition r1s r sid ntia' 'and to on hundr d $i$t0/$i) ! r( nt 6155J7, "hi' th ta+ in(r as $or r sid ntia' i.!ro) . nt "as ight0/t"o ! r( nt 682J7. ; s!it th r du(tion, th tria' !ro( d d. Th tria' (ourt dis.iss d th (o.!'aint. 3ssu : ?O, ! tition r $ai' d to +haust ad.inistrati) r . di s 2 'd: As a g n ra' ru' , "h r th 'a" !ro)id s $or th r . di s against th a(tion o$ an ad.inistrati) &oard, &od0, or o$$i( r, r 'i $ to (ourts (an & sought on'0 a$t r +hausting a'' r . di s !ro)id d. Th r ason r sts u!on th !r su.!tion that th ad.inistrati) &od0, i$ gi) n th (han( to (orr (t its .ista= or rror, .a0 a. nd its d (ision on a gi) n .att r and d (id it !ro! r'0. Th r $or , "h r a r . d0 is a)ai'a&' "ithin th ad.inistrati) .a(hin r0, this shou'd & r sort d to & $or r sort (an & .ad to th (ourts, not on'0 to gi) th ad.inistrati) ag n(0 th o!!ortunit0 to d (id th .att r &0 its '$ (orr (t'0, &ut a'so to !r ) nt unn ( ssar0 and !r .atur r sort to (ourts. This ru' , ho" ) r, ad.its ( rtain +( !tions. ?ith r gard to 9u stion on th ' ga'it0 o$ a ta+ ordinan( , th r . di s a)ai'a&' to th ta+!a0 rs ar !ro)id d und r S (tion 18@, 226, and 252 o$ %.A. @160. S (. 18@ o$ %.A. @160 !ro)id s, that th ta+!a0 r .a0 9u stion th (onstitutiona'it0 or ' ga'it0 o$ ta+ ordinan( on a!! a' "ithin thirt0 6407 da0s $ro. $$ (ti)it0 #ag 42 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

th r o$, to th S (r tar0 o$ Justi( . Shou'd th ta+!a0 rs 9u stion th +( ssi) n ss o$ th a.ount o$ ta+, h .ust $irst !a0 th a.ount du , in a((ordan( "ith S (tion 252 o$ %.A. @160. =. Ho( CAGAYAN RO)INA SUGAR MILLING CO.+ v! CA H% ,o. 122-51 O(to& r 12, 2000 Quisu.&ing, J. Fa(ts: 3n 1990, th Ass ts #ri)atiBation Trust 6A#T7 o$$ r d $or sa' a'' th ass ts and !ro! rti s o$ th Caga0an Sugar Cor!oration 6CAS>CO7, "hi(h had & n $or ('os d and trans$ rr d to A#T &0 th ; ) 'o!. nt 5an= o$ th #hi'i!!in s. # tition r, as th high st &idd r, a(9uir d th a$or said !ro! rti s $or a tota' !ri( o$ #-6-,000,000.00. A.ong th !ro! rti s &ought &0 ! tition r " r sugar .i'' .a(hin ri s. Th #ro)in(ia' Ass ssor o$ Caga0an issu d a I,oti( o$ Ass ss. nt o$ % a' #ro! rt0I to ! tition r (o) ring th .a(hin ri s insta'' d at th CAS>CO .i''sit . # tition r a!! a' d th ass ss. nt to th D5AA, on th ground that it "as +( ssi) , rron ous, and un<ust. Th D5AA r so') d that th &asis o$ th .ar= t )a'u $or ass ss. nt !ur!os s o$ th !ro! rti s a(9uir d &0 ! tition r shou'd & th A#T $'oor &id !ri( o$ #455,000,000.00. 50 $urth r d du(ting th )a'u o$ .a(hin ri s not su&< (t to r a' !ro! rt0 ta+, th D5AA $i+ d th .ar= t )a'u o$ th ! tition r1s .a(hin ri s at #260,42@,060.00 $or ass ss. nt !ur!os s. # tition r th n a!! a' d to C5AA. Th C5AA dis.iss d ! tition r1s a!! a' on th ground that it "as ti. / &arr d. # tition r a!! a' d to th CA "hi(h "as again d ni d &0 th 'att r. Thus, a ! tition "as $i' d to th SC. 3ssu : ;id th Court o$ A!! a's rr in $inding th ass ss. nt o$ ! tition r1s .a(hin ri s !ro! r and (orr (t und r th % a' #ro! rt0 Ta+ Cod T 2 'd: ? not that th r a' !ro! rt0 ta+ & ing ass ss d and (o'' (t d against ! tition r1s .a(hin ri s is $or 1990. 2 n( , in this (as , th a!!'i(a&' 'a" is th % a' #ro! rt0 Ta+ Cod 6#.;. ,o. -6-7, and not th Do(a' Ho) rn. nt Cod o$ 1991 6%.A. ,o. @1607. ? agr "ith ! tition r that S (tion 28 o$ th % a' #ro! rt0 Ta+ Cod !ro)id s $or a $or.u'a $or (o.!uting th (urr nt .ar= t )a'u o$ .a(hin ri s. 2o" ) r, S (tion 28 .ust & r ad in (onsonan( "ith S (tion 4 6n7Q8R o$ th said 'a", "hi(h d $in s I.ar= t )a'u .I >nd r th 'att r !ro)ision, th D5AA and C5AA " r not !r ('ud d $ro. ado!ting )arious a!!roa(h s to )a'u d t r.ination, in('uding ado!ting th A#T I$'oor &id !ri( I $or ! tition r1s !ro! rti s. 3n th instant (as , ! tition r $ai' d to sho" that th us &0 th D5AA and C5AA o$ th A#T $'oor &id !ri( , !ursuant to S (tion 4 6n7 o$ th % a' #ro! rt0 Ta+ Cod "as in(orr (t and don in &ad $aith. Th . thod us d &0 th D5AA and C5AA (annot & d . d rron ous sin( th r is no rigid ru' $or th )a'uation o$ !ro! rt0, "hi(h is a$$ (t d &0 a .u'titud o$ (ir(u.stan( s and "hi(h ru' s (ou'd not $or s nor !ro)id $or. '. Huro LIGHT RAIL TRANSIT AUTHORITY v C)AA C2A#T*% G33 1.*s(a'ona 1AO v COURT OF APPEALS 2. Fi''a.or #ag 43 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

TRANSGLO)E INTERNATIONAL+ INC.+ :$ 7 7;3$8+ v!. COURT OF APPEALS a3( COMMISSIONER OF CUSTOMS+ 8$!:;3($3 !. H.%. ,o. 12664-. Januar0 25, 1999. Fac !" On A!ri' 2@, 1992, a shi!. nt $ro. 2ong=ong arri) d in th !ort o$ :ani'a on &oard th SCS S a ;ragon. A(ting on in$or.ation that th shi!. nt )io'at d ( rtain !ro)isions o$ th Tari$$ and Custo.s Cod , ag nts o$ th *(ono.i( 3nt ''ig n( and in) stigation 5ur au s iB d th shi!. nt "hi' in transit to th Trans Ori nt 0ard/(ontain r station. On :a0 21, 1992, ;istri(t Co'' (tor o$ Custo.s *..a :. %os9u ta issu d th (orr s!onding "arrant o$ s iBur and d t ntion. A((ording'0, th (as "as s t $or h aring &ut h r in ! tition r $ai' d to a!! ar and "as d ('ar d in d $au't. Th (as "as su&.itt d $or d (ision and on August 26, 1992, ;istri(t Co'' (tor %os9u ta d (r d th $or$ itur o$ th shi!. nt in $a)or o$ th go) rn. nt to & dis!os d o$ in a((ordan( "ith 'a". Th r a$t r, ! tition r $i' d a ! tition $or r d .!tion o$ th shi!. nt "hi(h "as, ho" ) r, d ni d &0 r s!ond nt Co..ission r #ara0no Jr. Th (as "as &rought to th Court o$ Ta+ A!! a's 6CTA7 "hi(h ru' d that sin( no $raud "as $ound on th !art o$ th r d .!tion r, ! tition r & a''o" d to r d . th shi!. nt u!on !a0. nt o$ its (o.!ut d do. sti( .ar= t )a'u . 2o" ) r, r s!ond nt Court o$ A!! a's sustain d th d nia' o$ th r d .!tion &0 r s!ond nt Co..ission r o$ Custo.s and s t asid th ru'ing o$ th CTA. 2 n( , this ! tition. I!!#$" ?h th r or not th ! tition r is a''o" d to r d H$'(" Th Court $ound th ! tition i.!r ss d "ith . rit. Th r s!ond nt Court o$ A!! a's (o..itt d r ) rsi&' rror in r nd ring th assai' d d (ision r garding th $indings o$ th r s!ond nt Co..ission r o$ Custo.s "hi(h !ro)id d th &as s $or d n0ing ! tition r1s o$$ r o$ r d .!tion " r his o"n, not o$ th *335, and " r . r '0 stat d in his 1st ndors . nt "ith no )id n( "hatso ) r to su&stantiat th .. :or o) r, ta=ing into (onsid ration th (ir(u.stan( s o&taining in th !r s nt (as , na. '0, th a&s n( o$ $raud, th i.!ortation is not a&so'ut '0 !rohi&it d and th r ' as o$ th !ro! rt0 "ou'd not & (ontrar0 to 'a", th Court d . d it !ro! r to a''o" th r d .!tion o$ th $or$ it d shi!. nt &0 ! tition r u!on !a0. nt o$ its (o.!ut d do. sti( .ar= t )a'u . ;oing so is d $init '0 in = !ing "ith th t"o/"a0 int nt o$ *.O. 48. A((ording'0, th ! tition "as grant d and th d (ision o$ r s!ond nt CA "as s t asid . 4. 5 nit B ACTING COMMISSIONER OF CUSTOMS v CA FACTS" On 20 F &ruar0 1980, Andru'is r !r s nting hi.s '$ as an A. ri(an &usin ss.an Ion <oint ) ntur s "ith his Fi'i!ino (ount r!artsI, arri) d in :ani'a and (h (= d in at th C ntur0 #ar= Sh raton 2ot '. T"o da0s 'at r, h ' $t th hot ' surr !titious'0 "ithout !a0ing $or his &i''s. Chi $ S (urit0 O$$i( r o$ th 2ot ', ti. '0 dis(o) r d th s(h du' d d !artur o$ Andru'is on that sa. da0, and i.. diat '0 ti!! d/o$$ th Custo.s authoriti s on Andru'is1 int ntion to a&s(ond. At th :ani'a 3nt rnationa' Air!ort 6:3A7, th Custo.s authoriti s 'oo= d $or Andru'is. Andru'is $ina''0 0i 'd d to th authoriti s and surr nd r d th 'uggag h "as (arr0ing "hi(h, "h n o! n d &0 th authoriti s, (ontain d )arious $or ign (urr n(i s (onsisting o$ >SZ59,649.00A 54,100 3ndon sian %u!iah, and Singa!or Z408.00. A (ri.ina' (harg "as $i' d $or )io'ation o$ th C ntra' 5an= Cir(u'ar &ut th Fis(a' dis.iss d th (harg on th rationa'iBation that th Ho) rn. nt had $ai' d to !r s nt )id n( that th (urr n(i s " r not &rought in &0 Andru'is. . th shi!. nt

#ag 44 o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th A(ting ;istri(t Co'' (tor o$ Custo.s $ound Andru'is gui't0. 2o" ) r, on a!! a' to th Court o$ Ta+ A!! a's, it r ) rs d th a!! a' d ; (ision on th th or0 that th ' ga' !r su.!tion o$ o"n rshi! has to & a((ord d th !oss ssor o$ th res+ "ho n d not & o&'ig d to sho" or !ro) it. Th ! tition r $i' d a :otion $or % (onsid ration on th ground that CTA had $ai' d to (onsid r that ('ai.ant Andru'is had th &urd n o$ !roo$ to sho" that th $or ign (urr n(i s s iB d $ro. hi. " r &rought into th #hi'i!!in s &0 hi.. #ri)at r s!ond nt s =s r $ug & hind th +( !tion in th a$or 9uot d C5 Cir(u'ar ,o. 54- gi)ing tourists th right to ta= out o$ th #hi'i!!in s th ir o"n $or ign +(hang &rought in &0 th .. ISSUE" ?ho has th &urd n o$ !roo$ in s iBur or $or$ itur !ro( dingsT

HELD" Th ('ai.ant. >!on th $a(ts o$ th (as , th r 9uir . nt o$ th 'a" that th +ist n( o$ !ro&a&' (aus shou'd $irst & sho"n & $or $iring o$ th $or$ itur !ro( dings, had & n $u''0 . t. ?h n Andru'is "as a!!r h nd d at th :3A and "as $ound to ha) in his !oss ssion th )arious $or ign (urr n(i s, h (ou'd not !rodu( th r 9uir d C ntra' 5an= authoriBation a''o"ing hi. to &ring th . out o$ th (ountr0. This (onstitut d pri"a facie )id n( o$ in$ring . nt o$ th !ro)isions o$ C5 Cir(u'ar ,o. 54- and !ro)id d su$$i(i nt &asis $or th s iBur 1o$ th said $or ign +(hang . #ro&a&' (aus ha)ing & n sho"n, th &urd n o$ !roo$ "as u!on Andru'is to sta&'ish that h $ '' "ithin th !ur)i " o$ th +( !tion !r s(ri& d in th s (ond !aragra!h o$ th a$or 9uot d S (tion 4 o$ C5 Cir(u'ar ,o. 54- in that h a(tua''0 &rought into th (ountr0 th $or ign (urr n(i s and "as <ust ta=ing th . out. Th ' ga' !r su.!tion in S (tion 56<7, %u' 141 o$ th %u' s o$ Court and Arti(' 5-1 o$ th Ci)i' Cod , r 'i d u!on &0 r s!ond nt Court, ar o$ a g n ra' (hara(t r and (annot !r )ai' o) r th s! (i$i( !ro)isions o$ th Tari$$ and Custo.s Cod .

-. :a(ara g CHEVRON PHILIPPINES+ INC. v!. COMMISSIONER OF THE )UREAU OF CUSTOMS GR N;. 1707,2 A#B#! 11+ 2000

FACTS # tition r Ch )ron is ngag d in th &usin ss o$ i.!orting, distri&uting and .ar= ting o$ ! tro' u. !rodu(ts in th #hi'i!!in s. 3n 1996, th i.!ortations su&< (t o$ th !r s nt (as arri) d and " r (o) r d &0 ight &i''s o$ 'ading. Th shi!. nts " r un'oad d $ro. th (arr0ing ) ss 's onto th oi' tan=s o$ th ! tition r o) r a ! riod o$ thr da0s $ro. th dat o$ th ir arri)a'. Su&s 9u nt'0, th i.!ort ntr0 d ('arations 63*;s7 " r $i' d and 90J o$ th tota' (usto.s duti s " r !aid. Th i.!ort ntr0 and int rna' r ) nu d ('arations 63*%;s7 o$ th shi!. nts " r th r a$t r $i' d. Th i.!ortations " r a!!rais d at a dut0 rat o$ 4J, as !ro)id d und r %A 8180, and ! tition r !aid th (orr s!onding i.!ort duti s a.ounting to #416,-99,021. #rior th $$ (ti)it0 o$ %A 8180, th rat o$ dut0 on i.!ort d (rud oi' "as 10J. Thr 0 ars 'at r, th n Finan( S (r tar0 *dgardo *s!iritu r ( i) d a ' tt r $ro. a ( rtain A'$onso A. Oriost d noun(ing th d 'i& rat (on( a'. nt, .ani!u'ation and s(h . .!'o0 d &0 ! tition r and #i'i!inas Sh '' in th i.!ortation o$ (rud oi', th r &0 r su'ting in hug 'oss s o$ r ) nu $or th go) rn. nt. # tition r r ( i) d a d .and ' tt r r 9uiring th i.. diat s tt' . nt o$ th a.ount o$ #@4,545,840 r !r s nting th di$$ r n( & t" n th 10J and 4J tari$$ rat s on th shi!. nts. # tition r o&< (t d to th d .and $or !a0. nt o$ (usto.s duti s using th 10J dut0 rat and r it rat d its !osition that th 4J tari$$ rat shou'd inst ad & a!!'i d. 3t 'i= "is rais d th d $ ns o$ !r s(ri!tion against th ass ss. nt !ursuant to S (tion 1604 o$ th Tari$$ and Custo.s Cod 6TCC7. Thus, it !ra0 d that th ass ss. nt $or d $i(i n(0 (usto.s duti s & (an( '' d and th noti( o$ d .and & "ithdra"n. #ag 4, o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th 3n) stigation and #ros (ution ;i)ision, Custo.s 3nt ''ig n( and 3n) stigation S r)i( 63#;/ C33S7 issu d a $inding dat d F &ruar0 2, 2001 that th i.!ort ntri s " r $i' d & 0ond th 40/da0 non/ +t ndi&' ! riod !r s(ri& d und r S (tion 1401 o$ th TCC. Th 0 (on('ud d that th i.!ortations " r a'r ad0 (onsid r d a&andon d in $a)or o$ th go) rn. nt. Th 0 a'so $ound that $raud "as (o..itt d &0 ! tition r in (o''usion "ith th $or. r ;istri(t Co'' (tor. Th r a$t r, r s!ond nt Co..ission r "rot ! tition r on O(to& r 29, 2001 in$or.ing it o$ th $indings o$ irr gu'arit0 in th $i'ing and a(( !tan( o$ th i.!ort ntri s & 0ond th ! riod r 9uir d &0 (usto.s 'a" and in th r ' as o$ th shi!. nts a$t r th sa. had a'r ad0 & n d . d a&andon d in $a)or o$ th go) rn. nt. # tition r "as ord r d to !a0 th a.ount o$ #1,180,1@0,@69.21 r !r s nting th tota' dutia&' )a'u o$ th i.!ortations. # tition r $i' d a ! tition $or r )i " in th CTA First ;i)ision on ,o) .& r 28, 2001, as=ing $or th r ) rsa' o$ th d (ision o$ r s!ond nt. Th CTA ru' d that r s!ond nt "as (orr (t "h n h a$$ir. d th $indings o$ th 3#;/C33S on th +ist n( o$ $raud. Th r $or , !r s(ri!tion "as not a!!'i(a&' . 3roni(a''0, ho" ) r, it a'so h 'd that ! tition r did not a&andon th shi!. nts. Th shi!. nts shou'd & su&< (t to th 10J rat !r )ai'ing at th ti. o$ th ir "ithdra"a' $ro. th (ustod0 o$ th 5OC !ursuant to S (tions 20-, 205 and 1-08 o$ th TCC. # tition r "as th r $or 'ia&' $or d $i(i n(0 (usto.s duti s in th a.ount o$ #105,899,569.05. S =ing r (onsid ration, th CTA en anc h 'd that it "as th $i'ing o$ th 3*3%;s that (onstitut d ntr0 und r th TCC. Sin( th s " r $i' d & 0ond th 40/da0 ! riod, th 0 " r not s asona&'0 K nt r dL in a((ordan( "ith S (tion 1401 in r 'ation to S (tion 205 o$ th TCC. Cons 9u nt'0, th 0 " r d . d a&andon d und r S (tions 1801 and 1802 o$ th TCC. 3t a'so ru' d that th noti( r 9uir d und r Custo.s : .orandu. Ord r ,o. 15/9- 6C:O 15/9-7 "as not n ( ssar0 in )i " o$ ! tition rMs a(tua' =no"' dg o$ th arri)a' o$ th shi!. nts. 3t 'i= "is agr d "ith th CTA ;i)isionMs $inding that ! tition r (o..itt d $raud "h n it $ai' d to $i' th 3*3%; "ithin th 40/da0 ! riod "ith th int nt to K )ad th high r rat .L Thus, ! tition r "as ord r d to !a0 r s!ond nt th tota' dutia&' )a'u o$ th oi' shi!. nts a.ounting to#894,@81,@68.21. ISSUESERULING" a9 "h th r K ntr0L und r S (tion 1401 in r 'ation to S (tion 1801 o$ th TCC r $ rs to th 3*; or th 3*3%; K*,T%EL 3, S*CT3O,S 1401 A,; 1801 OF T2* TCC %*F*%S TO 5OT2 T2* 3*; A,; 3*3%; >nd r S (tion 1401 o$ th TCC, i.!ort d arti(' s .ust & nt r d "ithin a non/ +t ndi&' ! riod o$ 40 da0s $ro. th dat o$ dis(harg o$ th 'ast !a(=ag $ro. a ) ss '. Oth r"is , th 5OC "i'' d . th i.!ort d goods i.!'i d'0 a&andon d und r S (tion 1801. On th oth r hand, S (tion 1801, an i.!ort d arti(' is d . d a&andon d "h n th o"n r, i.!ort r, (onsign or int r st d !art0 a$t r du noti( , $ai's to $i' an ntr0 "ithin thirt0 6407 da0s, "hi(h sha'' not & +t ndi&' , $ro. th dat o$ dis(harg o$ th 'ast !a(=ag $ro. th ) ss ' or air(ra$t, or ha)ing $i' d su(h ntr0, $ai's to ('ai. his i.!ortation "ithin $i$t n 6157 da0s, "hi(h sha'' not 'i= "is & +t ndi&' , $ro. th dat o$ !osting o$ th noti( to ('ai. su(h i.!ortation. Th t r. K ntr0L in (usto.s 'a" has a tri!' . aning. 3t . ans 617 th do(u. nts $i' d at th (usto.s hous A 627 th su&.ission and a(( !tan( o$ th do(u. nts and 647 th !ro( dur o$ !assing goods through th (usto.s hous . Th 3*; s r) s as &asis $or th !a0. nt o$ ad)an( duti s on i.!ortations "h r as th 3*3%; )id n( s th $ina' !a0. nt o$ duti s and ta+ s. C' ar'0, th o! rati) a(t that (onstitut s K ntr0L o$ th i.!ort d arti(' s at th !ort o$ ntr0 is th $i'ing and a(( !tan( o$ th Ks! (i$i d ntr0 $or.L tog th r "ith th oth r do(u. nts r 9uir d &0 'a" and r gu'ations. Th r is no dis!ut that th Ks! (i$i d ntr0 $or.L r $ rs to th 3*3%;. S (tion 205 d $in s th !r (is .o. nt "h n th i.!ort d arti(' s ar d . d K nt r d.L Th "ord K ntr0L r $ rs to th r gu'ar (onsu.!tion ntr0 6"hi(h, in our (urr nt t r.ino'og0, is th 3*3%;7 and not th !ro)isiona' ntr0 6th 3*;7. #ag 4. o$ 47

San Beda College of Law|CLASS 3C-2010-2011 Taxation 1 Case Digest Case no. 91 and so on.

Th $i'ing o$ th 3*3%;s has s ) ra' i.!ortant !ur!os s: to as( rtain th )a'u o$ th i.!ort d arti(' s, (o'' (t th (orr (t and $ina' a.ount o$ (usto.s duti s and a)oid s.ugg'ing o$ goods into th (ountr0. # tition rMs int r!r tation "ou'd ha) an a&surd i.!'i(ation: th 40/da0 ! riod a!!'i s on'0 to th 3*; "hi' no d ad'in is s! (i$i d $or th su&.ission o$ th 3*3%;. Strong issu s o$ !u&'i( !o'i(0 .i'itat against ! tition rMs int r!r tation. 3t is th 3*3%; "hi(h a((o.!ani s th $ina' !a0. nt o$ duti s and ta+ s. Th s duti s and ta+ s .ust & !aid in $u'' & $or th 5OC (an a''o" th r ' as o$ th i.!ort d arti(' s $ro. its (ustod0. >nd r th r ' )ant !ro)isions o$ th TCC, &oth th 3*; and 3*3%; shou'd & $i' d "ithin 40 da0s $ro. th dat o$ dis(harg o$ th 'ast !a(=ag $ro. th ) ss ' or air(ra$t. As a r su't, th !osition o$ ! tition r, that th i.!ort ntr0 to & $i' d "ithin th 40/da0 ! riod r $ rs to th 3*; and not th 3*3%;, has no ' ga' &asis. 2. ?h th r th i.!ortations (an & (onsid r d a&andon d und r S (tion 1801. T2* 3:#O%TAT3O,S ?*%* A5A,;O,*; 3, FAFO% OF T2* HOF*%,:*,T Th 'a" is (' ar and +!'i(it. 3t gi) s a non/ +t ndi&' ! riod o$ 40 da0s $or th i.!ort r to $i' th ntr0 "hi(h " ha) a'r ad0 ru' d ! rtains to &oth th 3*; and 3*3%;. Thus und r S (tion 1801 in r 'ation to S (tion 1401, "h n th i.!ort r $ai's to $i' th ntr0 "ithin th said ! riod, h Ksha'' & d . d to ha) r noun( d a'' his int r sts and !ro! rt0 rightsL to th i.!ortations and th s sha'' & (onsid r d i.!'i d'0 a&andon d in $a)or o$ th go) rn. nt. A((ording to ! tition r, th shi!. nts shou'd not & (onsid r d i.!'i d'0 a&andon d & (aus non o$ its o) rt a(ts 6$i'ing o$ th 3*;s and !a0ing ad)an( duti s7 r ) a' d an0 int ntion to a&andon th i.!ortations. >n$ortunat '0 $or ! tition r, it "as th 'a" its '$ "hi(h (onsid r d th i.!ortation a&andon d "h n it $ai' d to $i' th 3*3%;s "ithin th a''ott d ti. . Th r is an i.!'i d a&andon. nt "h n th o"n r, i.!ort r, (onsign or int r st d !art0 a$t r du noti( , $ai's to $i' an ntr0 "ithin thirt0 6407 da0s, "hi(h sha'' not & +t ndi&' , $ro. th dat o$ dis(harg o$ th 'ast !a(=ag $ro. th ) ss '. Fro. th "ording o$ th a. nd. nt, %A @651 no 'ong r r 9uir s that th r & oth r a(ts or o.issions "h r an int nt to a&andon (an & in$ rr d. 3t is nough that th i.!ort r $ai's to $i' th r 9uir d i.!ort ntri s "ithin th r g' . ntar0 ! riod.

#ag 47 o$ 47

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