TAX 1 Case Digest Compilation (2013) : G.R. No. 192945, September 5, 2012

T A X 1 C a s e D i g e s t C o m p i l a t i o n ( 2 0 1 3 ) | 1
WESTERN MINDANAO POWER CORPORATION vs.

COMMISSIONER OF INTERNAL REVENUE, G.R. No.
181136, Jun 13, !"1!, !
n#
D$v$s$on, 6%! SCRA 3&"
Facts: WMPC is a corporation engaged in the production
and sale of electricity registered as a VAT taxpayer with
the BI! WMPC alleges that it sells solely to the "ational
Power Corporation and so pursuant to #ection $%&'() '*)
of the "ational Internal e+enue Code, its power
generation ser+ices to "PC is -ero.rated!
/nder #ection $$0'A) of the "IC, a VAT.registered
taxpayer 1ay, within two years after the close of the
taxa(le 2uarter, apply for the issuance of a tax credit or
refund of credita(le input tax due or paid and attri(uta(le
to -ero.rated or effecti+ely -ero.rated sales! 3ence
WMPC filed with the CI applications for a tax credit
certificate of its input VAT! The CI howe+er argued that
WMPC was not entitled to a tax refund in +iew of its
failure to co1ply with the in+oicing re2uire1ents
pro+ided in the ff! section:
#4CTI5" 6!$%&.$! In+oicing e2uire1ents 7 All VAT.
registered persons shall, for e+ery sale or lease of goods
or properties or ser+ices, issue duly registered receipts
or sales or co11ercial in+oices which 1ust show: xxx 8!
the word 9-ero rated9 i1printed on the in+oice co+ering
-ero.rated sales: and xxx
The CTA decided in fa+or of the CI and dis1issed
WMPC;s petition regarding his clai1 for Tax efunds!
Issue: Whether or not WMPC is entitled for a refund or
tax credit despite its non.co1pliance to the in+oicing
re2uire1ents .its 5fficial eceipts don;t contain the
phrase 9-ero.rated9! WMPC is not entitled!
uling: Being a derogation of the so+ereign authority, a
statute granting tax exe1ption is strictly construed
against the person or entity clai1ing the exe1ption!
When (ased on such statute, a clai1 for tax refund
parta<es of the nature of an exe1ption! 3ence, the sa1e
rule of strict interpretation against the taxpayer.clai1ant
applies to the clai1!
In a clai1 for tax refund or tax credit, the applicant 1ust
pro+e not only entitle1ent to the grant of the clai1 under
su(stanti+e law! It 1ust also show satisfaction of all the
docu1entary and e+identiary re2uire1ents for an
ad1inistrati+e clai1 for a refund or tax credit! The 1ere
appro+al of WMPC;s application for -ero.rating (y the
CI does not, (y itself, =ustify the grant of a refund or tax
credit! The taxpayer clai1ing the refund 1ust further
co1ply with the in+oicing and accounting re2uire1ents
1andated (y the "IC, as well as (y re+enue
regulations i1ple1enting the1!
/nder the "IC, a credita(le input tax should (e
e+idenced (y a VAT in+oice or official receipt, which 1ay
only (e considered as such when it co1plies with certain
re2uire1ents! #uch that 9'i)f the sale is su(=ect to -ero
percent '%>) +alue.added tax, the ter1 ?-ero.rated sale;
shall (e written or printed pro1inently on the in+oice or
receipt!9
In the case at (ar, WMPC failed to co1ply with the said
re2uire1ents, that (eing the case, it cannot (e entitled to
the tax refund or tax credits that it clai1s!
TEAM PACIFIC CORPORATION VS DA'A
GR NO. 16%%3! JUL( 11, !"1!
SECOND DIVISION )6%6 SCRA 8!*
FACT#: Petitioner, TPC, is a do1estic corporation
engaged in the (usiness of asse1(ling and exporting
se1iconductor de+ices! TPC had (een paying local
(usiness taxes assessed at @ rate pursuant to #ection
A8'c) of 5rdinance "o! 06.B*, otherwise <nown as the
Taguig e+enue Code! When it renewed its (usiness
license in 0%%6, TPC;s (usiness tax for the first 2uarter
of 0%%6 was assessed in the su1 of P0%&,$%B!AA!
espondent, in assessing the tax, applied the full +alue
of rates under #ection A8 of the Taguig e+enue Code
instead of the @ rate under paragraph 'c) of the sa1e
pro+ision! 5n Canuary $B, 0%%6, TPC paid the tax with
protest! #u(se2uent to its April $*, 0%%6 de1and for
refund or issuance of a tax credit, TPC filed on April $6,
0%%6 a petition for certiorari under ule D8 (efore the
TC! TPC alleged that no for1al action was ta<en
regarding its protest on or (efore March $B, 0%%6 or
within the period of D% days! TPC contended that it was
si1ply infor1ed that the assess1ent (ased at the full
rate was =ustified! The TC dis1issed the petition for
lac< of 1erit! 3ence, this petition on pure 2uestions of
law!
I##/4#: $!) Whether or not TPC a+ailed the correct
re1edy against respondent;s illegal assess1ent when it
appealed the lower court;s decision directly to the
#upre1e Court
34EF: Granted that a ule 68 petition for re+iew on
certiorari is the proper 1ode of appeal when the issues
raised are purely 2uestions of law, TPC lost sight of the
fact that, as a1ended (y A no! B0A0, paragraph c '0)
'a), #ection A of A "o! $$08 has +ested the Court of
Tax Appeals with the exclusi+e appellate =urisdiction
o+er, a1ong others, appeals fro1 the =udg1ents,
resolutions or orders of the TC in tax collection cases
originally decided (y the1 in their respecti+e territorial
=urisdiction!
As a1ended (y #ection B of A "o! B0&0,
#ection $$ of A "o! $$08 li<ewise re2uires that the
appeal (e perfected within thirty'*%) days after receipt of
the decision and shall (e 1ade (y filing a petition for
re+iew under a procedure analogous to that pro+ided for
under ule 60 of the $BBA ules of Ci+il Procedure!
To our 1ind, TPC;s erroneous a+ail1ent of the
wrong 1ode of appeal and direct resort to this Court
instead of the CTA (oth warrant the dis1issal of the
petition at (ench! The rule is settled that the perfection of
an appeal in the 1anner and within the period fixed (y
law is not only 1andatory (ut =urisdictional and non.
co1pliance with these legal re2uire1ents is fatal to a
party;s cause!
CIT( OF IRIGA v. CASURECO
G.R. No. 192945, September 5, 2012
#econd Fi+ision
D&% #CA 0*D
F+,-s. CA#/4C5 is an electric cooperati+e created
through PF 0DB and registered with the "ational
4lectrification Ad1inistration '"4A)! It distri(utes electric
power within the City of Iriga and the HinconadaI area!
In 0%%*, petitioner City of Iriga re2uired
CA#/4C5 to su(1it a report of its gross receipts for
the period $BBA.0%%0! 5n the (asis of the report
su(1itted, it was assessed and re2uired to pay franchise
taxes due for the period $BB&.0%%*! It refused to pay
said taxes on the ground that it is an electric cooperati+e
pro+isionally registered with the Cooperati+e
Fe+elop1ent Authority 'CFA), and therefore exe1pt
fro1 the pay1ent of local taxes! Thus, on March $8,
0%%6, petitioner filed a co1plaint for collection of local
taxes against CA#/4C5 (efore the TC! CA#/4C5
denied lia(ility for the assessed taxes, asserting that the
co1putation of the petitioner was erroneous (ecause it
included $) gross receipts fro1 ser+ice areas (eyond the
latter;s territorial =urisdiction: 0) taxes that had already
prescri(ed: and *) taxes during the period when it was
still exe1pt fro1 local go+ern1ent tax (y +irtue of its
then su(sisting registration with the CFA!
The TC ruled that CA#/4C5 is lia(le for
franchise taxes (ased on its gross receipts fro1 Iriga
City and the inconada area on the ground that the
Hsitus of taxation is the place where the pri+ilege is
exercised!I 5n Appeal (y CA#/4C5, CA relie+ed
CA#/4C5 fro1 lia(ility to pay franchise taxes! It
reasoned that CA#/4C5 is a non.profit entity: not a
H(usinesses en=oying a franchiseI pursuant to #ection
$*A of the EGC and, thus, exe1pt fro1 paying the
assessed franchise tax!
Issus. '$) Whether or not CA#/4C5 is lia(le for the
pay1ent of local franchise taxes: and
'0) Whether or not the situs of taxation is the
place where the franchise holder exercises its
franchise regardless of the place where its
ser+ices or products are deli+ered!
Ru/$n0. '$) Jes, CA#/4C5 is lia(le to pay the
assessed franchise tax! The Court held that the tax
exe1ption 'on pay1ent of 9all national go+ern1ent, local
go+ern1ent and 1unicipal taxes and fees, including
franchise, filing, recordation, license or per1it fees or
taxes) granted to electric cooperati+es under PF 0DB
was +alidly withdrawn (y su(se2uent laws 'A DB*& and
EGC) at the ti1e of the assess1ent! Thus, CA#/4C5
can no longer clai1 any exe1ption fro1 the pay1ent of
local taxes, including the su(=ect franchise tax!
Further, to (e lia(le for local franchise tax, the
following re2uisites should concur: '$) that one has a
9franchise9 in the sense of a secondary or special
franchise: and '0) that it is exercising its rights or
pri+ileges under this franchise within the territory of the
pertinent local go+ern1ent unit! By +irtue of PF 0DB,
"4A granted CA#/4C5 a franchise to operate an
electric light and power ser+ice for a period of fifty '8%)
years, and it is undisputed that CA#/4C5 operates
within Iriga City and the inconada area! It is, therefore,
lia(le to pay franchise tax notwithstanding its non.profit
nature!
In National Power Corporation v. City of
Cabanatuan, the Court declared that Ha franchise tax is a
tax on the pri+ilege of transacting (usiness in the state
and exercising corporate franchises granted (y the
state!I It is not le+ied on the corporation si1ply for
existing as a corporation, upon its property or its inco1e,
(ut on its exercise of the rights or pri+ileges granted to it
(y the go+ern1ent! It is within this context that the
phrase Htax on (usinesses en=oying a franchiseI in
#ection $*A of the EGC should (e interpreted and
understood!

'0) Jes, #ince it parta<es of the nature of an excise
tax the situs of taxation is the place where the pri+ilege is
exercised, in this case in the City of Iriga, where
CA#/4C5 has its principal office and fro1 where it
operates, regardless of the place where its ser+ices or
products are deli+ered! 3ence, franchise tax co+ers all
gross receipts fro1 Iriga City and the Hinconada area!I
The Court reiterates that a franchise tax is a tax
le+ied on the exercise (y an entity of the rights or
pri+ileges granted to it (y the go+ern1ent! In the
a(sence of a clear and su(sisting legal pro+ision
granting it tax exe1ption, a franchise holder, though
non.profit in nature, 1ay +alidly (e assessed franchise
tax (y a local go+ern1ent unit!
ASIA INTERNATIONAL AUCTIONEERS, INC. vs.CIR
G!! "o! $AB$$8, #epte1(er 0D, 0%$0, #upre1e Court
#econd Fi+ision, D&0 #CA 6B
FACTS. AIA operates within the #u(ic #pecial 4cono1ic
Kone! CI assessed it for deficiency +alue added tax
'VAT) and excise tax!Furing the pendency of the case in
0%%A, epu(lic Act B6&% 'A B6&%), otherwise <nown as
the Tax A1nesty Act of 0%%A, too< effect granting a tax
a1nesty to 2ualified taxpayers for all national internal
re+enue taxes for the taxa(le year 0%%8 and prior years,
with or without assess1ents duly issued therefor, that
ha+e re1ained unpaid as of Fece1(er *$, 0%%8! The
Tax A1nesty Progra1 under A B6&% 1ay (e a+ailed of
(y any person except those who are dis2ualified under
#ection &L'a) Withholding agents with respect to their
withholding tax lia(ilities: xxx!
ele+antly,AIA filed a Manifestation and Motion with
Eea+e of the 3onora(le Court to Fefer or #uspend
Further Proceedings on the ground that it a+ailed of the
Tax A1nesty Progra1 under A B6&%! It su(1itted to
the Court a Certification of Mualificationissued (y the BI
stating that AIA 9has a+ailed and is 2ualified for Tax
A1nesty for the Taxa(le Jear 0%%8 and Prior Jears9
pursuant to A B6&%!
The CI contends that AIA is dis2ualified under #ection
&'a) of A B6&% fro1 a+ailing itself of the Tax A1nesty
Progra1 (ecause it is 9dee1ed9 a withholding agent for
the deficiency taxes! The CI also argues that AIA,
(eing an accredited in+estorNtaxpayer situated at the
#u(ic #pecial 4cono1ic Kone, should ha+e a+ailed of
the tax a1nesty granted under A B*BB and not under
A B6&%!
ISSUE: $) W5" AIA is dis2ualified (ecause it is dee1ed
a withholding agent for the deficiency taxes! 0) W5" AIA
should ha+e a+ailed of the tax a1nesty granted under
A B*BB instead! "5!
RULING. $) "5, AIA is not a withholding agent! The CI
did not assess AIA as a withholding agent that failed to
withhold or re1it the deficiency VAT and excise tax to
the BI under rele+ant pro+isions of the Tax Code!
3ence, the argu1ent that AIA is 9dee1ed9 a withholding
agent for these deficiency taxes is fallacious!
Indirect taxes, li<e VAT and excise tax, are different fro1
withholding taxes! To distinguish, in indirect taxes, the
incidence of taxation falls on one person (ut the (urden
thereof can (e shifted or passed on to another person!
5n the other hand, in case of withholding taxes, the
incidence and (urden of taxation fall on the sa1e entity,
the statutory taxpayer! The (urden of taxation is not
shifted to the withholding agent who 1erely collects, (y
withholding, the tax due fro1 inco1e pay1ents to
entities arising fro1 certain transactionsand re1its the
sa1e to the go+ern1ent! Fue to this difference, the
deficiency VAT and excise tax cannot (e 9dee1ed9 as
withholding taxes 1erely (ecause they constitute indirect
taxes! Moreo+er, records support the conclusion that AIA
was assessed not as a withholding agent (ut, as the one
directly lia(le for the said deficiency taxes!
0) "5! AIA 1ay a+ail of A B6&%!A B*BB was passed
prior to the passage of A B6&%! A B*BB does not
preclude taxpayers within its co+erage fro1 a+ailing of
other tax a1nesty progra1s a+aila(le or enacted in
futuroli<e A B6&%! More so, A B6&% does not exclude
fro1 its co+erage taxpayers operating within special
econo1ic -ones! As long as it is within the (ounds of the
law, a taxpayer has the li(erty to choose which tax
a1nesty progra1 it wants to a+ail!
Eastly, the Court ta<es =udicial notice of the 9Certification
of Mualification9 issued (y 4duardo A! Baluyut, BI
e+enue Fistrict 5fficer, stating that AlA 9has a+ailed
and is 2ualified for Tax A1nesty for the Taxa(le Jear
0%%8 and Prior Jears9 pursuant to A B6&%! In the
a(sence of sufficient e+idence pro+ing that the
certification was issued in excess of authority, the
presu1ption that it was issued in the regular
perfor1ance of the re+enue district officerOs official duty
stands!
COMMISSIONER OF INTERNAL REVENUE v. SAN MIGUEL
CORPORATION
G.R. No. 1811!8
Nov234 !3, !"11
FACTS.
#an Miguel Corporation, a do1estic corporation engaged in the
1anufacture and sale of fer1ented li2uor, produces as one of its
products Hed 3orseI (eer which is sold in 8%%.1l! and $.liter (ottle
+ariants!
5n Canuary $, $BB&, epu(lic Act '!A!) "o! &606 or the Tax
efor1 Act of $BBA too< effect! It reproduced, as #ection $6* thereof,
the pro+isions of #ection $6% of the old "ational Internal e+enue Code
as a1ended (y !A! "o! &06% P0Q which (eca1e effecti+e on Canuary $,
$BBA! #ection $6* of the Tax efor1 Act of $BBA reads:
SC. 14!. "ermente# $i%uor. & '(ere )(all be levie#,
a))e))e# an# *olle*te# an e+*i)e ta+ on beer, la,er
beer, ale, porter an# ot(er fermente# li%uor) e+*ept
tuba, ba)i, tapuy an# )imilar #ome)ti* fermente# li%uor)
in a**or#an*e wit( t(e followin, )*(e#ule-
+ + +
'(e e+*i)e ta+ from any bran# of fermente# li%uor wit(in
t(e ne+t t(ree .!/ year) from t(e effe*tivity of Republi*
0*t No. 1240 )(all not be lower t(an t(e ta+ w(i*( wa)
#ue from ea*( bran# on 2*tober 1, 1993.
'(e rate) of e+*i)e ta+ on fermente# li%uor un#er
para,rap() .a/, .b/ an# .*/ (ereof )(all be in*rea)e# by
twelve per*ent .124/ on 5anuary 1, 2000.
Thereafter, on Fece1(er $D, $BBB, the #ecretary of Finance
issued e+enue egulations "o! $A.BB increasing the applica(le tax
rates on fer1ented li2uor (y $0>! This increase, howe+er, was 2ualified
(y the last paragraph of #ection $ of e+enue egulations "o! $A.BB
which reads:
Provi#e#, (owever, t(at t(e new )pe*ifi* ta+ rate for any e+i)tin,
bran# of *i,ar), *i,arette) pa*6e# by ma*(ine, #i)tille# )pirit),
wine) an# fermente# li%uor) )(all not be lower t(an t(e e+*i)e
ta+ t(at i) a*tually bein, pai# prior to 5anuary 1, 2000.
For the period Cune $, 0%%6 to Fece1(er *$, 0%%6, respondent
was assessed and paid excise taxes a1ounting to P0,0&D,6&&,&D$!8& for
the *0*,6%A,$B6 liters of ed 3orse (eer products re1o+ed fro1 its
plants! #aid a1ount was co1puted (ased on the tax rate of PA!%ANliter or
the tax rate which was (eing applied to its products prior to Canuary $,
0%%%, as the last paragraph of #ection $ of e+enue egulations "o! $A.
BB pro+ided that the new specific tax rate for fer1ented li2uors Hshall not
(e lower than the excise tax that is actually (eing paid prior to Canuary $,
0%%%!I espondent, howe+er, later contended that the said 2ualification
in the last paragraph of #ection $ of e+enue egulations "o! $A.BB has
no (asis in the plain wording of #ection $6*! espondent argued that
the applica(le tax rate was only the P D!&BNliter tax rate stated in
e+enue egulations "o! $A.BB, and that accordingly, its excise taxes
should ha+e (een only P0,00&,0A8,8DD!DD!
ISSUE.
WN" the pro+ision in the last paragraph of #ection $ of e+enue
egulations "o! $A.BB is an in+alid ad1inistrati+e interpretation of
#ection $6* of the Tax efor1 Act of $BBA
5ELD.
J4#! Furing the *.year transition period, #ection $6* pro+ides that Hthe
excise tax fro1 any (rand of fer1ented li2uorLshall not (e lower than
the tax which was due fro1 each (rand on 5cto(er $, $BBD!I After the
transitory period, #ection $6* pro+ides that the excise tax rate shall (e
the figures pro+ided under paragraphs 'a), '() and 'c) of #ection $6* (ut
increased (y $0>, without regard to whether such rate is lower or higher
than the tax rate that is actually (eing paid prior to Canuary $, 0%%% and
therefore, without regard to whether the re+enue collection starting
Canuary $, 0%%% 1ay turn out to (e lower than that collected prior to said
date! e+enue egulations "o! $A.BB, howe+er, created a new tax rate
when it added in the last paragraph of #ection $ thereof, the 2ualification
that the tax due after the $0> increase (eco1es effecti+e Hshall not (e
lower than the tax actually paid prior to Canuary $, 0%%%!I As there is
nothing in #ection $6* of the Tax efor1 Act of $BBA which clothes the
BI with the power or authority to rule that the new specific tax rate
should not (e lower than the excise tax that is actually (eing paid prior to
Canuary $, 0%%%, such interpretation is clearly an in+alid exercise of the
power of the #ecretary of Finance to interpret tax laws and to pro1ulgate
rules and regulations necessary for the effecti+e enforce1ent of the Tax
efor1 Act of $BBA! #aid 2ualification 1ust, perforce, (e struc< down as
in+alid and of no effect!
It (ears reiterating that tax (urdens are not to (e
i1posed, nor presu1ed to (e i1posed (eyond what the statute
expressly and clearly i1ports, tax statutes (eing construed )tri*ti))imi
7uri) against the go+ern1ent! In case of discrepancy (etween the (asic
law and a rule or regulation issued to i1ple1ent said law, the (asic law
pre+ails as said rule or regulation cannot go (eyond the ter1s and
pro+isions of the (asic law! It 1ust (e stressed that the o(=ecti+e of
issuing BI e+enue egulations is to esta(lish para1eters or
guidelines within which our tax laws should (e i1ple1ented, and not to
a1end or 1odify its su(stanti+e 1eaning and i1port!
SECOND DIVISION
G.R. No. 18"""6. S6-234 !8, !"11)6&8 SCRA !87*
COMMISSIONER OF INTERNAL REVENUE,
PETITIONER, VS.
FORTUNE TO8ACCO CORPORATION,
RESPONDENT.
F+,-s. Prior to Canuary $, $BBA, 1anufacturers of
cigarettes are su(=ect to pay excisetaxes on their
products in the for1 of ad +alore1 taxes! Beginning
Canuary $, $BBA, epu(lic Act "o! &06% too< effect and
a shift to specific taxes was 1ade! The $BAA Tax Code
was later repealed (y A &606, or the "ational Internal
e+enue Code of $BBA! To i1ple1ent the $0> increase
in specific taxes 1andated under #ection $68 of the
$BBA Tax Code and pursuant to its rule.1a<ing powers,
the CI issued $A.BB!
Fortune To(acco Corporation paid in ad+ance excise
taxes for the year 0%%* in the a1ount of P$$!$8 (illion,
and for the period co+ering Canuary $ to May *$, 0%%6 in
the a1ount of P6!B% (illion! In Cune 0%%6, Fortune
To(acco filed an ad1inistrati+e clai1 for tax refund with
the CI for erroneously andNor illegally collected taxes in
the a1ount of P6B$ 1illion! Without waiting for the CIOs
action on its clai1, Fortune To(acco filed with the CTA a
=udicial clai1 for tax refund!
Issu. Whether or not Fortune To(acco Corporation is
entitled to refund!
Ru/$n0. Jes, Fortune To(acco Corporation is entitled to
refund (ecause the pro+iso in #ection $ of $A.BB
was in+alid!
#ection $68 states that during the transition period, i.e.,
within the next three '*) years fro1 the effecti+ity of the
Tax Code, the excise tax fro1 any (rand of cigarettes
shall not (e lower than the tax due fro1 each (rand on $
5cto(er $BBD! This 2ualification, howe+er, is
conspicuously a(sent as regards the $0> increase
which is to (e applied on cigars and cigarettes pac<ed
(y 1achine, a1ong others, effecti+e on $ Canuary 0%%%!
The pro+iso in #ection $ of $A.BB clearly went
(eyond the ter1s of the law it was supposed to
i1ple1ent, and therefore entitles Fortune To(acco to
clai1 a refund of the o+erpaid excise taxes collected
pursuant to this pro+ision!
RATIONALE. T9 o2$ss$on $n -9 /+: $n ;+,-
4v+/s -9 /0$s/+-$v $n-n- no- -o +#o6- -9 <9$094
-+= 4u/<
The $BBA Tax CodeOs pro+isions on excise taxes ha+e
o1itted the adoption of certain tax 1easures! These
o1issions are telling indications of the intent of
Congress no- to adopt the o1itted tax 1easures: they
are not si1ply unintended lapses in the lawOs wording
that, as the CI clai1s, are ne+ertheless co+ered (y the
spirit of the law! 3ad the intention of Congress (een
solely to increase re+enue collection, a pro+ision si1ilar
to the third paragraph of #ection $68'c) would ha+e (een
incorporated in #ections $6$ and $60 of the $BBA Tax
Code! This, howe+er, is not the case! The Congress
was not unaware that the 9higher tax rule9 is a pro+iso
that should ideally apply to the increase after the
transition period 'as the CI e1(odied in the pro+iso in
#ection $ of $A.BB)!
This re1ar< notwithstanding, the final +ersion of the (ill
that (eca1e A B**6 contained no pro+ision si1ilar to
the pro+iso in #ection $ of $A.BB that i1posed the
tax due as of Fece1(er *$, $BBB if this tax is higher
than the new specific tax rates! Thus, it appears that
despite its awareness of the need to protect the increase
of excise taxes to increase go+ern1ent re+enue,
Congress ulti1ately decided against adopting the
9higher tax rule!
DIAGEO P5ILIPPINES, INC. v. COMMISSIONER OF
INTERNAL REVENUE
G!! "o! $&*88* : "o+e1(er $0, 0%$0
#econd Fi+ision
D&8 #CA $D&
FACTS Petitioner Fiageo Philippines, Inc!
'Fiageo) is pri1arily engaged in the (usiness of
i1porting, exporting, 1anufacturing, 1ar<eting,
distri(uting, (uying and selling, (y wholesale, all <inds of
(e+erages and li2uors! RSIt is registered with the Bureau
of Internal e+enue 'BI) as an excise tax taxpayer!
Fiageo purchased raw alcohol fro1 its supplier
for use in the 1anufacture of its (e+erage and li2uor
products! The supplier i1ported the raw alcohol and paid
the related excise taxes thereon (efore the sa1e were
sold to the petitioner! The purchase price for the raw
alcohol included, a1ong others, the excise taxes paid (y
the supplier!
Fiageo filed with the BI applications for tax
refundNissuance of tax credit certificates corresponding
to the excise taxes which its supplier paid (ut passed on
to it as part of the purchase price of the su(=ect raw
alcohol in+o<ing #ection $*%'F) of the Tax Code!
CI, CTA and CTA en (anc ruled that Fiageo is not the
proper party to clai1 a refund (ut the supplier!
ISSUE W5" Fiageo has the legal personality
to file a clai1 for refund or tax credit for the excise taxes
paid (y its supplier on the raw alcohol it purchased and
used in the 1anufacture of its exported goods!
5ELD "o! Fiageo has no legal personality to
file the clai1!
4xcise taxes parta<e of the nature of indirect
taxes! 4xcise taxes i1posed under Title VI of the Tax
Code are taxes on property which are i1posed on
9goods 1anufactured or produced in the Philippines for
do1estic sales or consu1ption or for any other
disposition and to things i1ported!9 Though excise taxes
are paid (y the 1anufacturer or producer (efore re1o+al
of do1estic products fro1 the place of production or (y
the owner or i1porter (efore the release of i1ported
articles fro1 the custo1s house, the sa1e parta<e of the
nature of indirect taxes when it is passed on to the
su(se2uent purchaser!
Indirect taxes are defined as those wherein the
lia(ility for the pay1ent of the tax falls on one person (ut
the (urden thereof can (e shifted to another person!
When the seller passes on the tax to his (uyer, he, in
effect, shifts the tax (urden, not the lia(ility to pay it, to
the purchaser as part of the price of goods sold or
ser+ices rendered!
Accordingly, when the excise taxes paid (y the
supplier were passed on to Fiageo, what was shifted is
not the tax per se (ut an additional cost of the goods
sold! Thus, the supplier re1ains the statutory taxpayer
e+en if Fiageo, the purchaser, actually shoulders the
(urden of tax!
The statutory taxpayer is the proper party to clai1 refund
of indirect taxes!
CAGA(AN ELECTRIC POWER AND LIG5T CO., INC.
vs CIT( OF CAGA(AN DE ORO
G.R. No. 1918319 November 14, 20129 Se*on# :ivi)ion,
315 SCR0 309
F+,-s. 5n Canuary $%, 0%%8, the #angguniang
Panlungsod of Cagayan de 5ro 'City Council) passed
5rdinance "o! B8%*.0%%8 i1posing a tax on the lease or
rental of electric andNor teleco11unication posts, poles
or towers (y pole owners to other pole users at ten
percent '$%>) of the annual rental inco1e deri+ed fro1
such lease or rental! C4PAEC5 filed a petition for
declaratory relief assailing the +alidity of the 5rdinance
(efore the TC on the ground that: $) the tax i1posed
(y the disputed ordinance is in reality a tax on inco1e
which appellee City of Cagayan de 5ro 1ay not i1pose,
the sa1e (eing expressly prohi(ited (y #ection $**'a) of
the Eocal Go+ern1ent Code 'EGC) 0) assu1ing the City
Council can enact the assailed ordinance, it is
ne+ertheless exe1pt fro1 the i1position (y +irtue of
epu(lic Act "o! B0&6 '!A! B0&6) pro+iding for its
franchise! The City, raised the following defences: $) the
enact1ent and i1ple1entation of the su(=ect ordinance
was a +alid and lawful exercise of its powers pursuant to
the $B&A Constitution, the Eocal Go+ern1ent Code, 0)
non.exe1ption of C4PAEC5 (ecause of the express
withdrawal of the exe1ption pro+ided (y #ection $B* of
the EGC: *) failure of respondent to exhaust
ad1inistrati+e re1edies under the Eocal Go+ern1ent
Code!
TC ruled in fa+our of the City of Cagayan de 5ro which
was affir1ed (y the CA!
Issus. $) WN" C4PAEC5 is tax exe1pt in the
i1position of the said ordinance! "5
0) WN" the said ordinance is in co1pliance with the
taxing li1itations in the EGC!"5
*) WN" failure of respondent to exhaust ad1inistrati+e
re1edies is fatal! "5
5/#. 1* CEPALCO>s ,/+$2 o; =26-$on 2us- ;+$/ $n
/$09- o; S,. 173 o; -9 LGC +n# S,.7 o; $-s o:n
;4+n,9$s.
The Eocal Go+ern1ent Code withdrew tax exe1ption
pri+ileges pre+iously gi+en to natural or =uridical persons,
and granted local go+ern1ent units the power to i1pose
franchise tax, thus SC. 19!. ;it(#rawal of 'a+
+emption Privile,e). < =nle)) ot(erwi)e provi#e# in
t(i) Co#e, ta+ e+emption) or in*entive) ,rante# to, or
pre)ently en7oye# by all per)on), w(et(er natural or
7uri#i*al, in*lu#in, ,overnment&owne# or *ontrolle#
*orporation), e+*ept lo*al water #i)tri*t), *ooperative)
#uly re,i)tere# un#er R.0. No. 39!1, non&)to*6 an# non&
profit (o)pital) an# e#u*ational in)titution), are (ereby
wit(#rawn upon t(e effe*tivity of t(i) Co#e.
A B0&6 pro+ides: SC. 9. 'a+ Provi)ion). '(e
,rantee, it) )u**e))or) or a))i,n), )(all be )ub7e*t to
t(e payment of all ta+e), #utie), fee) or *(ar,e) an#
ot(er impo)ition) appli*able to private ele*tri* utilitie)
un#er t(e National >nternal Revenue Co#e .N>RC/ of
1998, a) amen#e#, t(e $o*al Government Co#e an#
ot(er appli*able law)- Provi#e#, '(at not(in, (erein
)(all be *on)true# a) repealin, any )pe*ifi* ta+
e+emption), in*entive), or privile,e) ,rante# un#er any
relevant law- Provi#e#, furt(er, '(at all ri,(t), privile,e),
benefit) an# e+emption) a**or#e# to e+i)tin, an# future
private ele*tri* utilitie) by t(eir re)pe*tive fran*(i)e)
)(all li6ewi)e be e+ten#e# to t(e ,rantee.
'(e ,rantee )(all file t(e return wit( t(e *ity or provin*e
w(ere it) fa*ility i) lo*ate# an# pay t(e ta+e) #ue
t(ereon to t(e Commi))ioner of >nternal Revenue or (i)
#uly aut(ori?e# repre)entative in a**or#an*e wit( t(e
N>RC an# t(e return )(all be )ub7e*t to au#it by t(e
@ureau of >nternal Revenue.
Tax exe1ptions are strictly construed against the
clai1ant! It 1ust (e (ased on clear legal pro+ision! It
cannot arise (y 1ere i1plication!
!* C4PAEC5;s act of leasing for a consideration the use
of its posts, poles or towers to other people falls under
the EGC;s definition of (usiness! In relation to #ecs!
$*$'d) and $6*'h), the city 1ay i1pose taxes, fees and
charges on any (usiness which is not specified in
#ec!$6*'a) to 'g) and which the sanggunian concerned
1ay dee1 proper to tax! 3owe+er, -9 1"? -+= 4+-
$26os# 3@ O4#$n+n, ,/+4/@ v$o/+-s S,-$on
113)9* o; -9 LGC, as it states that 9on any (usiness
su(=ect to x x x +alue.added x x x tax under the "ational
Internal e+enue Code, as a1ended, the rate of tax
shall not exceed two percent '0>) of gross sales or
receipts of the preceding calendar year9 fro1 the lease
of goods or properties!
3* The law re2uires that the dissatisfied taxpayer who
2uestions the +alidity or legality of a tax ordinance 1ust
file his appeal to the #ecretary of Custice, within *%days
fro1 effecti+ity thereof! In case the #ecretary decides to
appeal, a period also of *% days is allowed for an
aggrie+ed party to go to court! But if the #ecretary does
not act thereon, after the lapse of D%days, a party could
already proceed to see< relief in court! In this case, the
ordinance too< effect on $B Fe(ruary 0%%8! C4PAEC5
filed its petition for declaratory relief (efore the TC on
*% #epte1(er *%%8, clearly (eyond the *%. day period
pro+ided in #ection $&A, EGC! It also did not appeal to
the #ecretary of Custice! 5o:v4, $n -9 64sn- ,+s,
-9 +66/$,+-$on o; -9 4u/s :+s 4/+=# $n v$: o;
-9 2o4 su3s-+n-$v 2+--4s!
ACCENTURE, INC. vs. COMMISSIONER OF
INTERNAL REVENUE
G!! "o! $B%$%0: #econd Fi+ision: Culy $$, 0%$0: DAD
#CA *08
FACTS. Accenture, Inc! is a corporation engaged in the
(usiness of pro+iding 1anage1ent consultation! It is a
duly registered VAT taxpayer or enterprise!
Accenture;s 1onthly and 2uarterly VAT returns for 0%%0
show that it has VAT tax credits a1ounting to
P*8,$A&,&66!0$! Thus, Accenture filed with the
Fepart1ent of Finance 'FoF) a clai1 for the refund or
the issuance of a Tax Credit Certificate 'TCC)!
The FoF did not act on the clai1 of Accenture! 3ence,
on August *$, 0%%6, Accenture filed a Petition for
e+iew with the First Fi+ision of the CTA!In its reply, the
CI opposed the grant of a tax refund or TCC (ecause
the sale (y Accenture of goods and ser+ices to its clients
are not -ero.rated transactions!
The $st di+ision of the CTA ruled against Accenture! It
reasoned that Accenture;s ser+ices would only 2ualify as
-ero.rated under the $BBA "IC if the recipient of the
ser+ices was doing (usiness outside of the Philippines!
This decision was su(se2uently upheld (y the CTA en
(anc!
Basically, Accenture argues in this case that it should (e
gi+en a refund (ecause #ection $%&'B) of the $BBA Tax
Code does not really re2uire that clients should (e doing
(usiness outside the Philippines for transactions to (e
considered -ero.rated! It cites the case of CI +!
A1erican 4xpress 'A1ex), where the #C supposedly
ruled the existence of a clear legislati+e intent not to
i1pose the condition of (eing 9consu1ed a(roadI as
2ualification for -ero.rated transactions! Moreo+er, it
argues that the only re2uire1ent under the said section
is that the consideration for ser+ices rendered (e in
foreign currency in accordance with the rules of the
Bang<o#entral!
ISSUE. Whether or not the recipient of the ser+ices
should (e 9doing (usiness outside the Philippines9 for
the transaction to 2ualify as -ero.rated under #ection
$%&'B)'0) of the $BBA Tax Code
RULING.J4#! The recipient of ser+ices 1ust (e doing
(usiness outside the Philippines for the transactions to
2ualify as -ero.rated! This can only (e the logical
interpretation of #ection $%0 '() '0)!
If the pro+ider and recipient of the 9other ser+ices9 are
(oth doing (usiness in the Philippines, the pay1ent of
foreign currency is irrele+ant! 5therwise, those su(=ect to
the regular VAT under #ection $%0 'a) can a+oid paying
the VAT (y si1ply stipulating pay1ent in foreign
currency inwardly re1itted (y the recipient of ser+ices!
To interpret #ection $%0 '() '0) to apply to a payer.
recipient of ser+ices doing (usiness in the Philippines is
to 1a<e the pay1ent of the regular VAT under #ection
$%0 'a) dependent on the generosity of the taxpayer!
The pro+ider of ser+ices can choose to pay the regular
VAT or a+oid it (y stipulating pay1ent in foreign
currency inwardly re1itted (y the payer.recipient! #uch
interpretation re1o+es #ection $%0 'a) as a tax 1easure
in the Tax Code, an interpretation this Court cannot
sanction! A tax is a 1andatory exaction, not a +oluntary
contri(ution!
Moreo+er, the #C clarified that the case of A1ex 1erely
declared that the section in issue does not re2uire that
the ser+ices (e consu1ed a(road to (e -ero.rated!
3owe+er, nowhere in that case did the #C discuss the
necessary 2ualification of the recipient of the ser+ice!
To co1e within the pur+iew of #ection $%&'B)'0), it is not
enough that the recipient of the ser+ice (e pro+en to (e
a foreign corporation: rather, it 1ust (e specifically
pro+en to (e a nonresident foreign corporation! In this
case, while Accenture 1ay ha+e esta(lished that its
clients are foreign, it failed to pro+e that the foreign
clients to who1 it rendered its ser+ices were clients
doing (usiness outside the Philippines or nonresident
foreign corporations!
GULF AIR COMPAN(, P5ILIPPINE 8RANC5
)GF*,petitioner, vs COMMISSIONER OF INTERNAL
REVENUE,respondent. G!! "o! $&0%68, $B
#4PT4MB4 0%$0, T3IF FIVI#I5", D&$ #CA *AA
FACTS. Petitioner Gulf Air was assessed for its
deficiency on percentage tax and it recei+ed a letter
denying its clai1 for tax credit or refund of excess
percentage tax re1ittance for the first, second and fourth
2uarters of 0%%%!
5n appeal, CTA ruled that "o! D.DD was the
applica(le rule, pro+iding that gross receipts should (e
co1puted (ased on the cost of the single one.way fare
as appro+ed (y the Ci+il Aeronautics Board 'CAB),
(ecause the period in+ol+ed in the assess1ent co+ered
the first, second and fourth 2uarters of 0%%% and the
a1ended percentage tax returns were filed on 5cto(er
08, 0%%$! e+enue egulations "o! $8.0%%0, which too<
effect on 5cto(er 0D, 0%%0, could not (e gi+en
retroacti+e effect (ecause it was declarati+e of a new
right as it pro+ided a different rule in deter1ining gross
receipts! In addition, it noted that GF failed to include in
its gross receipts the special co11issions on
passengers and cargo!
ISSUE. W5" the definition of Hgross receipts,I for
purposes of co1puting the *> Percentage Tax under
#ection $$&'A) of the $BBA "ational Internal e+enue
Code '"IC), should include special co11issions on
passengers and special co11issions on cargo (ased on
the rates appro+ed (y the CAB!
RULING. Jes! GF;s contention that gross receipts
should (e (ased on the HnetI a1ount 'the a1ount
actually recei+ed, deri+ed, collected, and reali-ed (y the
petitioner fro1 passengers, cargo and excess (aggage,
actually recei+ed) that has (een +alidated (y the
issuance of "o! $8.0%%0 which expressly
superseded the for1er, is without 1erit!
There is no dou(t that prior to the issuance of e+enue
egulations "o! $8.0%%0 which (eca1e effecti+e on
5cto(er 0D, 0%%0, the pre+ailing rule then for the
purpose of co1puting co11on carrier;s tax was "o!
D.DD! While the petitioner;s interpretation has (een
+indicated (y the new rules which co1pute gross
re+enues (ased on the actual a1ount recei+ed (y the
airline co1pany as reflected on the plane tic<et, -9$s
#os no- ,9+n0 -9 ;+,- -9+- #u4$n0 -9 4/v+n-
-+=+3/ 64$o# $nvo/v# $n -9$s ,+s, $- :+s Rvnu
R0u/+-$ons No. 6A66 -9+- :+s $n ;;,-. Tax laws,
including rules and regulations, operate prospecti+ely
unless otherwise legislati+ely intended (y express ter1s
or (y necessary i1plication!
GF is re1inded that rules and regulations interpreting
the tax code and pro1ulgated (y the #ecretary of
Finance, who has (een granted the authority to do so (y
#ection 066 of the "IC, Hdeser+e to (e gi+en weight
and respect (y the courts in +iew of the rule.1a<ing
authority gi+en to those who for1ulate the1 and their
specific expertise in their respecti+e fields!I As such,
a(sent any showing that "o! D.DD is inconsistent with
the pro+isions of the "IC, its stipulations shall (e
upheld and applied accordingly! This is in <eeping with
our pri1ary duty of interpreting and applying the law!
REPU8LIC OF T5E P5ILIPPINES vs. CIT( OF
PARANABUE
G.R. No. 1711"7 Ju/@ 18, !"1!C T5IRD DIVISIONC 6%%
SCRA !16
FACT#:A petition for re+iew on certiorari under ule 68
assailing the Canuary &, 0%$% 5rder of the TC, Branch
$B8, Parana2ue City, which ruled that petitioner
Philippine ecla1ation Authority 'PA) is a G5CC, a
taxa(le entity, and, therefore, not exe1pt fro1 pay1ent
of real property taxes!
The Pu(lic 4states Authority 'P4A) is a go+ern1ent
corporation created (y +irtue of PF "o! $%&6! By +irtue
of 4!5! "o! 808, P4A was designated as the agency
pri1arily responsi(le for integrating, directing and
coordinating all recla1ation pro=ects for and on (ehalf of
the "ational Go+ern1ent! Then President Arroyo issued
4!5! "o! *&% transfor1ing P4A into PA, which shall
perfor1 all the powers and functions of the P4A relating
to recla1ation acti+ities!
By +irtue of its 1andate, PA reclai1ed se+eral portions
of the foreshore and offshore areas of Manila Bay,
including those located in ParaTa2ue City! Then
ParaTa2ue City Treasurer Cara(eo issued Warrants of
Ee+y on PA;s reclai1ed properties 'Central Business
Par< and Barangay #an Fionisio) (ased on the
assess1ent for delin2uent real property taxes 1ade (y
then ParaTa2ue City Assessor #oledad Medina Cue for
tax years 0%%$ and 0%%0!
PA filed a Motion which sought to declare as null and
+oid the assess1ent for real property taxes, the le+y
(ased on the said assess1ent, the pu(lic auction sale
conducted on April A, 0%%*, and the Certificates of #ale
issued pursuant to the auction sale!
5n Canuary &, 0%$%, the TC rendered its decision
dis1issing PA;s petition! In ruling that PA was not
exe1pt fro1 pay1ent of real property taxes, the TC
reasoned out that it was a G5CC under #ection * of
P!F! "o! $%&6! It was organi-ed as a stoc< corporation
(ecause it had an authori-ed capital stoc< di+ided into
no par +alue shares!
Issue's): Whether or not PA is lia(le to pay real
property tax on the su(=ect reclai1ed
lands! No- /$+3/.
uling: The #upre1e Court is con+inced that PA is not
a G5CC either under #ection 0'*) of the Introductory
Pro+isions of the Ad1inistrati+e Code or under #ection
$D, Article UII of the $B&A Constitution! PA was not
organi-ed either as a stoc< or a non.stoc< corporation!
"either was it created (y Congress to operate
co11ercially and co1pete in the pri+ate 1ar<et!
Instead, PA is a go+ern1ent instru1entality +ested
with corporate powers and perfor1ing an essential
pu(lic ser+ice pursuant to #ection 0'$%) of the
Introductory Pro+isions of the Ad1inistrati+e Code!
8$n0 +n $n,o46o4+-# 0ov4n2n- $ns-4u2n-+/$-@, $-
$s =26- ;4o2 6+@2n- o; 4+/ 64o64-@ -+=.
Clearly, respondent has no +alid or legal (asis in taxing
the su(=ect reclai1ed lands 1anaged (y PA! 5n the
other hand, #ection 0*6'a) of the EGC, in relation to its
#ection $**'o), exe1pts PA fro1 paying realty taxes
and protects it fro1 the taxing powers of local
go+ern1ent units!
SC. 2!4. +emption) from Real Property 'a+ < '(e
followin, are e+empte# from payment of t(e real
property ta+-
.a/ Real property owne# by t(e Republi* of t(e
P(ilippine) or any of it) politi*al )ub#ivi)ion) e+*ept
w(en t(e benefi*ial u)e t(ereof (a) been ,rante#, for
*on)i#eration or ot(erwi)e, to a ta+able per)on.
SC. 1!!. Common $imitation) on t(e 'a+in, Power) of
$o*al Government =nit). < =nle)) ot(erwi)e provi#e#
(erein, t(e e+er*i)e of t(e ta+in, power) of provin*e),
*itie), muni*ipalitie), an# baran,ay) )(all not e+ten# to
t(e levy of t(e followin,-
+ + + + .o/ 'a+e), fee) or *(ar,e) of any 6in#) on t(e
National Government, it) a,en*ie) an# in)trumentalitie),
an# lo*al ,overnment unit).
It is clear fro1 #ection 0*6 that real property owned (y
the epu(lic is exe1pt fro1 real property tax unless the
(eneficial use thereof has (een granted to a taxa(le
person! In this case, there is no proof that PA granted
the (eneficial use of the su(=ect reclai1ed lands to a
taxa(le entity! There is no showing on record either that
PA leased the su(=ect reclai1ed properties to a pri+ate
taxa(le entity!
This exe1ption should (e read in relation to #ection
$**'o) of the sa1e Code, which prohi(its local
go+ern1ents fro1 i1posing 9taxes, fees or charges of
any <ind on the "ational Go+ern1ent, its agencies and
instru1entalities x x x!9 The Ad1inistrati+e Code allows
real property owned (y the epu(lic to (e titled in the
na1e of agencies or instru1entalities of the national
go+ern1ent! #uch real properties re1ain owned (y the
epu(lic and continue to (e exe1pt fro1 real estate tax!
COMMISSIONER OF INTERNAL REVENUE +s!
PETRON CORPORATION
G!! "o! $&88D&, March 0$, 0%$0, DD& #CA A*8,
'#4C5"F FIVI#I5")
T9 F+,-s. Furing the period co+ering the taxa(le years
$BB8 to $BB&, Petron had (een an assignee of se+eral
Tax Credit Certificates 'TCCs) fro1 +arious B5I.
registered entities for which Petron utili-ed in the
pay1ent of its excise tax lia(ilities! The transfers and
assign1ents of the said TCCs were appro+ed (y the
Fepart1ent of Finance;s 5ne #top #hop Inter.Agency
Tax Credit and Futy Fraw(ac< Center 'F5F Center)!
Petitioner;s acceptance and use of the TCCs as pay1ent
of its excise tax lia(ilities for the taxa(le years $BB8 to
$BB&, had (een continuously appro+ed (y the F5F as
well as the BI;s Collection Progra1 Fi+ision!
5n Canuary *%, 0%%0, CI issued the assailed
Assess1ent against Petron for deficiency excise taxes
for the taxa(le years $BB8 to $BB&, in the total a1ount
of P A*B,%%*,%*D!*0, inclusi+e of surcharges and
interests, (ased on the ground that the TCCs utili-ed (y
Petron in its pay1ent of excise taxes ha+e (een
cancelled (y the F5F for ha+ing (een fraudulently
issued and transferred, pursuant to its 4UC5M
esolution "o! %*.%8.BB!
The CTA #econd Fi+ision held Petron lia(le for
deficiency excise taxes on the ground that the
cancellation (y the F5F of the TCCs pre+iously issued
to and utili-ed (y respondent to settle its tax lia(ilities
had the effect of nonpay1ent of the latter;s excise taxes!
The CTA 4n Banc re+ersed and set aside the decision of
the #econd Fi+ision!
T9 Issu: Whether or not Petron is lia(le for its tax
lia(ilities fro1 $BB8 to $BB&!
T9 Ru/$n0. Petron cannot (e held lia(le for the tax
deficiencies!
Petron is a transferee in good faith and for +alue of the
su(=ect TCCs! Petron has not (een shown or pro+en to
ha+e participated in the alleged fraudulent acts in+ol+ed
in the transfer and utili-ation of the su(=ect TCCs!
The Eia(ility Clause of the TCCs reads: Both the
TA"#F45 and the TA"#F444 shall (e =ointly
and se+erally lia(le for any fraudulent act or +iolation of
the pertinent laws, rules and regulations relating to the
transfer of this TAU C4FIT C4TIFICAT4!
The a(o+e clause clearly pro+ides only for the solidary
lia(ility relati+e to the transfer of the TCCs fro1 the
original grantee to a transferee! There is nothing in the
a(o+e clause that pro+ides for the lia(ility of the
transferee in the e+ent that the +alidity of the TCC issued
to the original grantee (y the Center is i1pugned or
where the TCC is declared to ha+e (een fraudulently
procured (y the said original grantee! Any fraud or
(reach of law or rule relating to the issuance of the TCC
(y the Center to the transferor or the original grantee is
the latterOs responsi(ility and lia(ility! The transferee in
good faith and for +alue 1ay not (e un=ustly pre=udiced
(y the fraud co11itted (y the clai1ant or transferor in
the procure1ent or issuance of the TCC fro1 the
Center! It is not only un=ust (ut well.nigh +iolati+e of the
constitutional right not to (e depri+ed of oneOs property
without due process of law! Thus, a re.assess1ent of tax
lia(ilities pre+iously paid through TCCs (y a transferee in
good faith and for +alue is utterly confiscatory, 1ore so
when surcharges and interests are li<ewise assessed!
A transferee in good faith and for +alue of a TCC who
has relied on the CenterOs representation of the
genuineness and +alidity of the TCC transferred to it 1ay
not (e legally re2uired to pay again the tax co+ered (y
the TCC which has (een (elatedly declared null and
+oid! A TCC is +alid and effecti+e upon its issuance and
is not su(=ect to a post.audit! Petron has the right to rely
on the +alidity and effecti+ity of the TCCs that were
assigned to it!
Therefore, the court finds Petron to (e an innocent
transferee for +alue of the su(=ect TCCs! Conse2uently,
the Tax eturns it filed for the years $BB8 to $BB& are
not considered fraudulent! 3ence, the CI had no legal
(asis to assess the excise taxes or any penalty
surcharge or interest thereon, as respondent had already
paid the appropriate excise taxes using the su(=ect
TCCs!
DELA LLANA v. C5AIRPERSON, COA G! ! "o!
$&%B&B N Fe(ruary A, 0%$0 N 4" BA"C N DD8 #CA $AD
FACTS: C5A issued C5A Circular "o! &B.0BB which
lifted its syste1 of pre.audit of go+ern1ent financial
transactions! #ection *!0 thereof pro+ides: Hwhene+er
circu1stances warrant, such as where the internal
control syste1 of a go+ern1ent agency is inade2uate,
C5A 1ay reinstitute pre.audit or adopt such other
control 1easures, including te1porary or special pre.
audit, as are necessary and appropriate to protect the
funds and property of the agency!I
FelaElana, as a taxpayer, wrote to C5A regarding the
reco11endation of the #enate Co11ittee on
Agriculture and Food that the Fepart1ent of Agriculture
set up an internal pre.audit ser+ice! The C5A replied to
FelaElana infor1ing hi1 of the prior issuance of Circular
"o! &B. 0BB which pro+ides that whene+er the
circu1stances warrant, the C5A 1ay reinstitute pre.
audit or adopt such other control 1easures as necessary
and appropriate to protect the funds and property of an
agency!
FelaElana filed a petition for *ertiorari alleging that the
pre.audit duty on the part of the C5A cannot (e lifted (y
a 1ere circular, considering that the pre.audit is a
constitutional 1andate enshrined in #ection 0 of Article
IU.F of the $B&A Constitution! 3e further clai1s that,
(ecause of the lac< of pre. audit (y C5A, serious
irregularities in go+ern1ent transactions ha+e (een
co11itted, such as the PA0&.1illion fertili-er fund sca1,
irregularities in the P88%.1illion call center la(oratory
pro=ect of the Co11ission on 3igher 4ducation, and
1any others!
I##/4#: 1. WON D/+L/+n+ 9+s s-+n#$n0 -o ;$/
-9 64sn- su$- +s + -+=6+@4. (ES
0! W5" petition for *ertiorari filed (y
FelaElana is proper! "5
*! W5" it is the constitutional duty of
C5A to conduct a pre.audit (efore the
consu11ation of go+ern1ent
transaction! "5
DelaLlana has standing to file the present suit as a
taxpayer. This Petition has (een filed as a taxpayer;s
suit!A taxpayer is dee1ed to ha+e the standing to raise a
constitutional issue when it is esta(lished that pu(lic
funds fro1 taxation ha+e (een dis(ursed in alleged
contra+ention of the law or the Constitution!Petitioner
clai1s that the issuance of Circular "o! &B.0BB has led
to the dissipation of pu(lic funds through nu1erous
irregularities in go+ern1ent financial transactions! These
transactions ha+e allegedly (een left unchec<ed (y the
lifting of the pre.audit perfor1ed (y C5A, which,
petitioner argues, is its Constitutional duty! Thus,
petitioner has standing to file this suit as a taxpayer,
since he would (e ad+ersely affected (y the illegal use of
pu(lic 1oney!
The petition for certiorari filed by DelaLlana is not
proper. FelaElana is correct in that decisions and orders
of the C5A are re+iewa(le (y the Court +ia a petition for
*ertiorari! 3owe+er, these refer to decisions and orders
which were rendered (y the C5A in its 2uasi.=udicial
capacity! Circular "o! &B.0BB was pro1ulgated (y
theC5A under its 2uasi.legislati+e or rule.1a<ing
powers! 3ence, Circular "o! &B.0BB is not re+iewa(le (y
*ertiorari!Nonet(ele)), t(e Court #e*i#e) to re)olve t(e
petition #e)pite t(e improper reme#y, in view of t(e
publi* importan*e of t(e i))ue) rai)e#.
It is not the constitutional duty of the COA to
conduct a pre-audit. FelaElana clai1ed that the
constitutional duty of C5A includes the duty to conduct
pre.audit! A pre.audit is an exa1ination of financial
transactions (efore their consu1ption or pay1ent! It
see<s to deter1ine whether the following conditions are
present: '$) the proposed expenditure co1plies with an
appropriation law or other specific statutory authority: '0)
sufficient funds are a+aila(le for the purpose: '*) the
proposed expenditure is not unreasona(le or
extra+agant, and the unexpended (alance of
appropriations to which it will (e charged is sufficient to
co+er the entire a1ount of the expenditure: and '6) the
transaction is appro+ed (y the proper authority and the
clai1 is duly supported (y authentic underlying
e+idence! It could, a1ong others, identify go+ern1ent
agency transactions that are suspicious on their face
prior to their i1ple1entation and prior to the
dis(urse1ent of funds!
FelaElana;s allegations find no support in the #ection 0
of Article IU.F of the $B&A Constitution! There is nothing
in the said pro+ision that re2uires the C5A to conduct a
pre.audit of all go+ern1ent transactions and for all
go+ern1ent agencies! 3ence, the conduct of a pre.audit
is not a 1andatory duty of C5A! This discretion on its
part is in line with the constitutional pronounce1ent that
the C5A has the exclusi+e authority to define the scope
of its audit and exa1ination!
EASTERN TELECOMMUNICATIONS P5ILIPPINES,
INC., vs T5E COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 1688&6, Au0us- !7, !"1!, T5IRD
DIVISION, 6%7 SCRA 3"&
FACTS. Petitioner 4astern Teleco11unications
Philippines, Inc! '4TPI) generates foreign currency
re+enues fro1 transactions to non.resident foreign
teleco11unications co1panies which are inwardly
re1itted in accordance with the rules and regulations of
the Bang<o #entral ng Pilipinas! Belie+ing that it is
entitled to a refund for the unutili-ed input VAT
attri(uta(le to its -ero.rated sales, 4TPI filed with the
Bureau of Internal e+enue 'BI) an ad1inistrati+e
clai1 for refund andNor tax credit in the a1ount of P
0*,%A%,B$$!A8 representing excess input VAT deri+ed
fro1 its -ero.rated sales for the period fro1 Canuary
$BBB to Fece1(er $BBB! The Fi+ision of the CTA denied
the petition for lac< of 1erit, finding that 4TPI failed to
i1print the word 9-ero.rated9 on the face of its VAT
in+oices or receipts, in +iolation of e+enue egulations
"o! A.B8! In addition, 4TPI failed to su(stantiate its
taxa(le and exe1pt sales, the +erification of which was
not included in the exa1ination of the co11issioned
independent certified pu(lic accountant!
ISSUES.
$! W5" I1printing of the word 9-ero.rated9 on the
in+oices or receipts is re2uired! (ES 0! W5" 4TPI;s
failure to i1print the word 9-ero.rated9 on its in+oices or
receipts is fatal to its clai1 for tax refund or tax credit for
excess input VAT! (ES
RULING.
$!I1printing of the word 9-ero.rated9 on the in+oices or
receipts is re2uired! #ection 066 of the "IC explicitly
grants the #ecretary of Finance the authority to
pro1ulgate the necessary rules and regulations for the
effecti+e enforce1ent of the pro+isions of the tax code!
#uch rules and regulations 9deser+e to (e gi+en weight
and respect (y the courts in +iew of the rule.1a<ing
authority gi+en to those who for1ulate the1 and their
specific expertise in their respecti+e fields! In the case of
sale of real property su(=ect to VAT and where the -onal
or 1ar<et +alue is higher than the actual consideration,
the VAT shall (e separately indicated in the in+oice or
receipt! 5nly VAT.registered persons are re2uired to
print their TI" followed (y the word 9VAT9 in their
in+oices or receipts and this shall (e considered as a
9VAT in+oice!9 All purchases co+ered (y in+oices other
than a 9VAT In+oice9 shall not gi+e rise to any input tax!
The need for taxpayers to indicate in their in+oices and
receipts the fact that they are -ero.rated or that its
transactions are -ero.rated (eca1e 1ore apparent upon
the integration of the a(o+e2uoted pro+isions of
e+enue egulations "o! A.B8 in #ection $$* of the
"IC enu1erating the in+oicing re2uire1ents of VAT.
registered persons when the tax code was a1ended (y
epu(lic Act '!A!) "o! B**A! A conse2uence of failing
to co1ply with the in+oicing re2uire1ents is the denial of
the clai1 for tax refund or tax credit, as stated in
e+enue Me1orandu1 Circular "o! 60.0%%*, to wit:
0!Tax refunds are strictly construed against the taxpayer:
4TPI failed to su(stantiate its clai1!
4TPI should (e re1inded of the well.esta(lished rule
that tax refunds, which are in the nature of tax
exe1ptions, are construed strictly against the taxpayer
and li(erally in fa+or of the go+ern1ent! This is (ecause
taxes are the life(lood of the nation! Thus, the (urden of
proof is upon the clai1ant of the tax refund to pro+e the
factual (asis of his clai1! /nfortunately, 4TPI failed to
discharge this (urden! The CI is correct in pointing out
that 4TPI is engaged in 1ixed transactions and, as a
result, its clai1 for refund co+ers not only its -ero.rated
sales (ut also its taxa(le do1estic sales and exe1pt
sales! Therefore, it is only reasona(le to re2uire 4TPI to
present e+idence in order to su(stantiate its clai1 for
input VAT!
Considering that 4TPI reported in its annual return its
-ero.rated sales, together with its taxa(le and exe1pt
sales, the CTA ruled that 4TPI should ha+e presented
the necessary papers to +alidate all the entries in its
return! 5nly its -ero.rated sales, howe+er, were
acco1panied (y supporting docu1ents! With respect to
its taxa(le and exe1pt sales, 4TPI failed to su(stantiate
these with the appropriate docu1entary
e+idence! "oteworthy also is the fact that the
co11issioned independent certified pu(lic account did
not include in his exa1ination the +erification of such
transactions!
LVM Cons-4u,-$on vs. F.T. S+n,9D G.R.
No. 181761
P4o2u/0+-#. D,234 &, !"11 SCRA.
661 6+0, &31
Facts: Petitioner EVM Construction Corporation 'EVM) is
a duly licensed construction fir1 pri1arily engaged in the
construction of roads and (ridges for the Fepart1ent of
Pu(lic Wor<s and 3ighways 'FPW3)! Awarded the
construction of the Arterial oad Ein< Fe+elop1ent
Pro=ect in #outhern Eeyte 'the Pro=ect), EVM su(.
contracted approxi1ately *%> of the contract a1ount
with the Coint Venture co1posed of respondents F!T!
#anche- Corporation 'FT#C), #ocor Construction
Corporation '#CC) and Vi1wa Construction
Fe+elop1ent Corporation'VCFC)! The #u(.Contract
Agree1ent executed (y the parties pertinently pro+ided
as follows: H6) Ten percent '$%>) retention to (e
deducted for e+ery (illing of su(.contractor as prescri(ed
under the Tender Focu1ents!I For wor< rendered in the
pre1ises, the Coint Venture sent EVM a total of
0A Billings! In a letter dated $D May 0%%$, howe+er,
EVM apprised the Coint Venture of the fact that its
auditors ha+e (elatedly disco+ered that no deductions
for 4.VAT had (een 1ade fro1 its pay1ents on Billing
"os! $ to 0D and that it was, as a conse2uence, going to
deduct the &!8> pay1ents for said tax fro1 the a1ount
still due in the pre1ises! In its $6 Cune 0%%$ eply, the
Coint Venture clai1ed that, ha+ing issued 5fficial
eceipts for e+ery pay1ent it recei+ed, it was lia(le to
pay $%> VAT thereon and that EVM can, in turn, clai1
therefro1 an e2ui+alent input tax of $%>! 5n 0D April
0%%D, the CIAC rendered its decision granting the Coint
Venture;s clai1s, discounting the contractual and legal
(ases for EVM;s clai1 that it had the right to offset its 4.
VAT pay1ents fro1 the retention 1oney still in its
possession! The CIAC;s decision was affir1ed in toto (y
the CA!
Issue: WN" espondents; lia(ility to pay Value Added
Tax need not (e stated in the su( contract agree1ent!
: WN" a set off (etween the supposed 4.Vat
Pay1ents of EVM and the retention 1oney de1anded
(y the Coin Venture is +alid!
#C uling: It needs to (e stated and the set.off is not
+alid! For lac< of any stipulation regarding the sa1e in
the parties; #u(.Contract Agree1ent, we find that the CA
correctly (rushed aside EVM;s insistence on deducting
its supposed 4.VAT pay1ents fro1 the retention 1oney
de1anded (y the Coint Venture! Indeed, a contract
constitutes the law (etween the parties who are,
therefore, (ound (y its stipulations which, when couched
in clear and plain language, should (e applied according
to their literal tenor! That there was no agree1ent
regarding the offsetting urged (y EVM! Precisely,
#anche-, under the contract was re2uired to issue
official receipts registered with the BI for e+ery
pay1ent EVM 1a<es for the progress (illings, which it
did! For these official receipts issued (y #anche- to
EVM, #anche- already paid $%> VAT to the BI, thus:
?The VAT Eaw is +ery clear! 4+eryone 1ust pay $%>
VAT (ased on their issued official receipts! These
receipts 1ust (e official receipts and registered with the
BI! espondent 'EVM) 1ust pay its output Vat (ased
on its receipts! Co1plainant '#anche-) 1ust also pay
output VAT (ased on its receipts!
LASCONA LAND CO. INC. v. CIR 'G!! "o! $A$08$:
March 8, 0%$0: T3IF FIVI#I5": DDA #CA 688)
FACTS.
5n March 0A, $BB&, CI issued Assess1ent against
Eascona Eand Co!, Inc!, infor1ing the latter of its alleged
deficiency inco1e tax for the year $BB* in the a1ount
of PA8*,0DD!8D!
5n April 0%, $BB&, Eascona filed a letter
protest, (ut was denied (y "or(erto !
5dulio, 5IC, egional Firector, BI for
that Hreason that the case was not
elevated to the Court of Tax Appeals
as andated by the provisions of the
last paragraph of !ection ""# of the
Tax Code. By +irtue thereof, the said
assess1ent notice has (eco1e final,
executory and de1anda(le!I

5n April $0, $BBB, Eascona appealed the decision
(efore the CTA! Eascona alleged that the egional
Firector erred in ruling that the failure to appeal to the
CTA within thirty '*%) days fro1 the lapse of the $&%.day
period rendered the assess1ent final and executory!

5n Canuary 6, 0%%%, the CTA, in its Fecision: nullified
the su(=ect assess1ent! It held that in cases of inaction
(y the CI on the protested assess1ent$ !ection ""#
of the %I&C provided two options for the taxpayer'
()* appeal to the CTA within thirty (+,* days fro the
lapse of the one hundred eighty ()#,*-day period$ or
("* wait until the Coissioner decides on his
protest before he elevates the case! CI 1o+ed for
reconsideration (ut the sa1e was denied (y the CTA!
The CTA held that &evenue &egulations %o. )"---
ust confor to !ection ""# of the %I&C!
Fissatisfied, the CI filed an appeal (efore the CA! The
Court of Appeals granted the CIOs petition! 3ence, this
petition!
ISSUE. Whether the su(=ect assess1ent has (eco1e
final, executory and de1anda(le!
RULING. NO! #ection 00& of the "IC is instructional
as to the re1edies of a taxpayer in case of the inaction
of the Co11issioner on the protested assess1ent, to
wit:
SEC. !!8. .rotesting of
Assessent. E = = =

I; -9 64o-s- $s #n$# $n :9o/
o4 $n 6+4-, o4 $s no- +,-# u6on :$-9$n
on 9un#4# $09-@ )18"* #+@s ;4o2
su32$ss$on o; #o,u2n-s, -9 -+=6+@4
+#v4s/@ +;;,-# 3@ -9 #,$s$on o4
$n+,-$on 2+@ +66+/ -o -9 Cou4- o; T+=
A66+/s :$-9$n )3"* #+@s ;4o2 4,$6- o;
-9 s+$# #,$s$on, o4 ;4o2 -9 /+6s o;
-9 on 9un#4# $09-@ )18"*A#+@ 64$o#F
o-94:$s -9 #,$s$on s9+// 3,o2
;$n+/, =,u-o4@ +n# #2+n#+3/
Therefore, as in #ection 00&, when the law
pro+ided for the re1edy to appeal the inaction of
the CI, it did not intend to li1it it to a single
re1edy of filing of an appeal after the lapse of the
$&%.day prescri(ed period! Precisely, when a
taxpayer protested an assess1ent, he naturally
expects the CI to decide either positi+ely or
negati+ely! A taxpayer cannot (e pre=udiced if he
chooses to wait for the final decision of the CI on
the protested assess1ent! More so, (ecause the
law and =urisprudence ha+e always conte1plated
a scenario where the CI will decide on the
protested assess1ent!

It 1ust (e e1phasi-ed, howe+er, that in case of
the inaction of the CI on the protested assess1ent,
while we reiterate W the taxpayer has two options, either:
.1/ file a petition for review wit( t(e C'0 wit(in !0 #ay)
after t(e e+piration of t(e 110&#ay perio#9 or .2/ await
t(e final #e*i)ion of t(e Commi))ioner on t(e #i)pute#
a))e))ment an# appeal )u*( final #e*i)ion to t(e C'0
wit(in !0 #ay) after t(e re*eipt of a *opy of )u*(
#e*i)ion, -9s o6-$ons +4 2u-u+//@ =,/us$v +n#
4so4- -o on 3+4s -9 +66/$,+-$on o; -9 o-94!

Accordingly, considering that Eascona opted to
await the final decision of the Co11issioner on the
protested assess1ent, it then has the right to appeal
such final decision to the Court (y filing a petition for
re+iew within thirty days after receipt of a copy of such
decision or ruling, e+en after the expiration of the $&%.
day period fixed (y law for the Co11issioner of Internal
e+enue to act on the disputed assess1ents!
P$AQ
Thus,
Eascona, when it filed an appeal on April $0,
$BBB (efore the CTA, after its receipt of the
Eetter
P$&Q
dated March *, $BBB on March $0, $BBB, the
appeal was ti1ely 1ade as it was filed within *% days
after receipt of the copy of the decision!
Sou-94n P9$/$66$ns Po:4 Co46o4+-$on v. CIR
G!! "o! $ABD*0 '5cto(er $B, 0%$$), Third Fi+ision
D8B #CA D8&
F+,-s.
Petitioner #outhern Philippines Power
Corporation '#PP), a power co1pany generating and
selling electricity to the "ational Power Corporation,
applied with the Bureau of Internal e+enue for -ero.
rating of its transactions under #ection $%& 'B)'*) of the
"ational Internal e+enue Code! The BI appro+ed said
application for taxa(le years $BBB and 0%%%!
#u(se2uently, it filed clai1s with respondent
Co11issioner of Internal e+enue 'CI) for a
P8,%&*,*A$!8A tax credit or refund for $BBB and
PD,00$,%A&!66 for 0%%%! The a1ounts represented
unutili-ed input VAT attri(uta(le to #PP;s -ero.rated sale
of electricity to "PC! The CI 1aintained that #PP is not
entitled to tax credit or refund!
The #econd Fi+ision denied #PP;s clai1s and
held that its -ero.rated official receipts did not
correspond to the 2uarterly VAT returns! Moreo+er, the
receipts do not (ear the words H-ero.ratedI in +iolation of
A.B8! 5n appeal, the CTA 4n Banc affir1ed the
#econd Fi+ision;s decision! #PP;s 1otion for
reconsideration was also denied!
Issu. W5" the CTA correctly ruled that #PP was not
entitled to a tax refund or credit!
5/#.
"IC #ection $$% 'A!$) pro+ides that the input
tax su(=ect of tax refund is to (e e+idenced (y a VAT
in+oice HorI official receipt issued in accordance with
#ection $$*! It did not distinguish (etween an in+oice
and a receipt when used as e+idence of a -ero.rated
transaction! Conse2uently, the CTA should ha+e
accepted either or (oth of these docu1ents as e+idence
of #PP;s -ero.rated transactions!
#ection 0*A of the "IC also 1a<es no
distinction (etween receipts and in+oices as e+idence of
a co11ercial transaction! As held in Seaoil Petroleum
Corporation v. 0uto*orp Group, (usiness for1s li<e
sales in+oices are recogni-ed in the co11ercial world as
+alid (etween the parties and ser+e as 1e1orials of
their (usiness transactions! #uch docu1ents ha+e
pro(ati+e +alue! Further1ore, the CTA also did not
accept #PP;s official receipts for not (earing the words
H-ero.ratedI on it! But #ection 6!$%&!$ re2uires the
printing of H-ero.ratedI only on in+oices, not on official
receipts!
CTA 4n Banc;s Culy *$, 0%%A decision is set
aside! Case is re1anded to the CTA #econd Fi+ision for
further hearing and deter1ination of whether or not #PP
has co1plied with other re2uisites!
5EIRS OF LUIS A. LUNA vs. AFA8LE ,G.R. No.
188!77, J+nu+4@ !3, !"13, !n# D$v$s$on, 687 SCRA
!"%
FACTS.
Petitioners are co.owners of a parcel of land located in
Barangay Guino(atan, Calapan City, 5riental
Mindoro!$%%!0&8D hectares of the landholding was
su(=ected to co1pulsory ac2uisition under the
Co1prehensi+e Agrarian efor1 Progra1 'CAP)!
espondents were identified (y the FA as 2ualified
far1er.(eneficiaries: hence, the corresponding
Certificates of Eand 5wnership Award 'CE5As) were
generated, issued to the1!
5n 0$ 5cto(er $BB&, petitioners filed (efore the FA
Ad=udication Board 'FAAB) 5riental Mindoro a Petition
for 9Cancellation of CE5As, e+ocation of "otice of
Valuation and Ac2uisition and /pholding and Affir1ing
the Classification of #u(=ect Property and Feclaring the
sa1e outside the pur+iew of A "o! DD8A!

It was
anchored 1ainly on the reclassification of the land in
2uestion into a light intensity industrial -one pursuant to
Municipal 5rdinance "o! 0$, enacted (y the
#angguniang Bayan of Calapan, there(y excluding the
sa1e fro1 the co+erage of the agrarian law!
The FAAB found that petitioners; property is exe1pt
fro1 the CAP! The records of the case indicate that
su(=ect parcel of land was classified as within the
residential, co11ercial and industrial -one (y the
#angguniang Bayan of Calapan, 5riental Mindoro
through esolution "o! $*B, #eries of $B&$, enacted on
$6 April $B&$! Moreo+er, the 5ffice of the City Assessor
has also classified the property as residential,
co11ercial and industrial in use under the tax
declaration co+ering the sa1e! Fepart1ent of Custice
'F5C) 5pinion "o! 66, #eries of $BB%, pro+ides that a
parcel of land is considered non.agricultural and,
therefore, (eyond the co+erage of the CAP, if it had
(een classified as residential, co11ercial, or industrial
in the city or 1unicipality where the Eand /se Plan or
-oning ordinance has (een appro+ed (y the 3ousing
and Eand /se egulatory Board '3E/B) (efore $8
Cune $B&&, the date of effecti+ity of A "o! DD8A!
3owe+er, the Central 5ffice of the FAAB found that its
local office in Calapan City erred in declaring petitioners;
property outside the co+erage of the CAP! It
concluded, the issue of whether or not petitioners; land is
indeed exe1pt fro1 CAP co+erage is still an
ad1inistrati+e 1atter to (e deter1ined exclusi+ely (y the
FA #ecretary or his authori-ed representati+e! In short,
an exe1ption clearance fro1 the FA is still re2uired!
'CA) It was further held that the fact that the
#angguniang Panlungsod of the City of Calapan later on
enacted esolution "o! $8$ as City 5rdinance "o! D on
0* Cune $BB&, declaring the whole area of Barangay
Guino(atan as residential, co11ercial and institutional
areas and site of the new City Go+ern1ent Center for
the City of Calapan does not auto1atically con+ert the
property into a non.agricultural land exe1pt fro1 the
co+erage of the agrarian law! It (ears stressing that the
$BB& 5rdinance was enacted after the effecti+ity of the
CAE and, in order to (e exe1pt fro1 CAP co+erage,
the land 1ust ha+e (een classified as
industrialNresidential (efore $8 Cune $B&&!
The Issue
At the core of the present contro+ersy is esolution "o!
$*B which re+ised the co1prehensi+e -oning regulations
of the Municipality of Calapan!
WN" the land su(=ect of this case had (een reclassified
as non.agricultural as early as $B&$, that is, prior to the
effecti+ity of the CAE and, therefore, exe1pt fro1 its
co+erage!
34EF: The land is outside the co+erage of the agrarian
refor1 progra1! It is undenia(le that local go+ern1ents
ha+e the power to reclassify agricultural into non.
agricultural lands! #ection * of A "o! 00D6 'The Eocal
Autono1y Act of $B8B) specifically e1powers 1unicipal
andNor city councils to adopt -oning and su(di+ision
ordinances or regulations! It 1ay, therefore, (e
reasona(ly presu1ed that when city and 1unicipal
(oards and councils appro+ed an ordinance delineating
an area or district in their cities or 1unicipalities as
residential, co11ercial, or industrial -one pursuant to
the power granted to the1 under #ection * of the Eocal
Autono1y Act of $B8B, they were, at the sa1e ti1e,
reclassifying any agricultural lands within the -one for
non.agricultural use: hence, ensuring the i1ple1entation
of and co1pliance with their -oning ordinances!
The regulation (y local legislatures of land use in their
respecti+e territorial =urisdiction through -oning and
reclassification is an exercise of police power!
6B
The
power to esta(lish -ones for industrial, co11ercial and
residential uses is deri+ed fro1 the police power itself
and is exercised for the protection and (enefit of the
residents of a locality!
8%
5rdinance "o! 0$ of the
#angguniang Bayan of Calapan was issued pursuant to
#ection * of the Eocal Autono1y Act of $B8B and is,
conse2uently, a +alid exercise of police power (y the
local go+ern1ent of Calapan!
Fo4- 8on$;+,$o Dv/o62n- Co46o4+-$on vs. CIR
G.R. No. 1%31!&
J+nu+4@ !!, !"13
En 8+n,
687 SCRA %6
F+,-s. This case resol+es the Motion for
econsideration filed (y the respondents! More
i1portantly, the #upre1e Court;s decision in the
pre+ious case was dissented (y Custice Carpio on the
ground that petitioner is not entitled to any refund of
input PValue.added taxQ VAT,since the sale (y the
national go+ern1ent of the Glo(al City land to petitioner
was not su(=ect to any input VAT: second, the Tax Code
specifically sections $$% and $$0 does not allow any
cash refund of input VAT, only a tax credit and that e+en
for -ero.rated or effecti+ely -ero.rated VATregistered
taxpayers, the Tax Code does not allow any cash refund
or credit of transitional input tax!
T9 $ssus o; -9$s ,+s +4 -9 ;o//o:$n0.
$! Whether or not petitioner is not entitled to any
refund of input VAT
0! Whether or not the "IC does not allow any
cash refund of input VAT, only tax credit
As to the first issue, the #upere1e Court ruled in the
negati+e! It was argued that prior pay1ent of taxes is a
prere2uisite (efore a taxpayer could a+ail of the
transitional input tax credit! 3owe+er, the Court ruled that
prior pay1ent of taxes is not necessary (efore a
taxpayer could a+ail ofthe &> transitional input tax credit!
Moreo+er, since #ection $%8 of the "IC does not
pro+ide for prior pay1ent of taxes, to re2uire it now
would (e tanta1ount to =udicial legislation which, to state
the o(+ious, is not allowed! It should (e noted that a
transitional input tax credit is not a tax refund per se (ut
a tax credit! Eogically, prior pay1ent of taxes is not
re2uired (efore a taxpayer could a+ail of transitional
input tax credit!HPTQax credit is not synony1ous to tax
refund! Tax refund is defined as the 1oney that a
taxpayer o+erpaid and is thus returned (y the taxing
authority! Tax credit, on the other hand, is an a1ount
su(tracted directly fro1 one;s total tax lia(ility! It is any
a1ount gi+en to a taxpayer as a su(sidy, a refund, or an
incenti+e to encourage in+est1ent!I
As to the second issue, the also ruled also in the
negati+e! #ection $$0 of the Tax Code spea<s of -ero.
rated or effecti+ely -erorated sales! "ota(ly, the
transaction in+ol+ed in this case is not -ero.rated or
effecti+ely -ero.rated sales! A careful reading of #ection
$$0 of the Tax Code would show that it allows either a
cash refund or a tax credit for input VAT on -ero.rated or
effecti+ely -ero.rated sales! #ection $$0 of the Tax Code
does not prohi(it cash refund or tax credit of transitional
input tax in the case of -ero.rated or effecti+ely -ero.
rated VAT registered taxpayers, who do not ha+e any
output VAT! The phrase Hexcept transitional input taxI in
#ection $$0 of the Tax Code was inserted to distinguish
credita(le input tax fro1 transitional input tax credit!
Transitional input tax credits are input taxes on a
taxpayer;s (eginning in+entory of goods, 1aterials, and
supplies e2ui+alent to &> 'then 0>) or the actual VAT
paid on such goods, 1aterials and supplies, whiche+er is
higher! It 1ay only (e a+ailed of once (y first.ti1e VAT
taxpayers! Credita(le input taxes, on the other hand, are
input taxes of VAT taxpayers in the course of their trade
or (usiness, which should (e applied within two years
after the close of the taxa(le 2uarter when the sales
were 1ade! As regards #ection $$%, while the law only
pro+ides for a tax credit, a taxpayer who erroneously or
excessi+ely pays his output tax is still entitled to reco+er
the pay1ents he 1ade either as a tax credit or a tax
refund! In this case, since petitioner still has a+aila(le
transitional input tax credit, it filed a clai1 for refund to
reco+er the output VAT it erroneously or excessi+ely
paid for the $st 2uarter of $BBA! Thus, there is no reason
for denying its clai1 for tax refundNcredit! Clearly, the
CI has the option to return the a1ount clai1ed either in
the for1 of tax credit or refund!
#econd Fi+ision G!! "o!
$DB&BB Fe(ruary %D, 0%$*
P5ILACOR CREDIT CORPORATION vs. CIR
Facts:
Through retail financing, a prospecti+e (uyer of a ho1e
appliance X with neither cash nor any credit card X 1ay
purchase appliances on install1ent (asis fro1 an
appliance dealer! After Philacor conducts a credit
in+estigation and appro+es the (uyer;s application, the
(uyer executes a unilateral pro1issory note in fa+or of
the appliance dealer! The sa1e pro1issory note is
su(se2uently assigned (y the appliance dealer to
Philacor!6
e+enue 5fficer Celestino Me=ia exa1ined Philacor;s
(oo<s of accounts and other accounting records for the
fiscal year August $, $BB0 to Culy *$, $BB*! It was found
to ha+e deficiencies in its inco1e tax, percentage tax,
and docu1entary sta1p tax!
After series of appeals, Philacor was ad=udged to (e only
lia(le for docu1entary sta1p tax which is the issue of
this case!
Issue: whether or not Philacor is lia(le for docu1entary
sta1p tax!
3eld! "o, Philacor is not lia(le for the F#T on the
issuance of the pro1issory notes!
"either party 2uestions that the issuances of pro1issory
notes are transactions which are taxa(le under the F#T!
The $B&D Tax Code clearly states that:
#ection $&%! #ta1p tax on pro1issory notes, (ills of
exchange, drafts, certificates of deposit, de(t
instru1ents used for deposit su(stitutes and others not
paya(le on sight or de1and!75n all (ills of exchange
'(etween points within the Philippines), drafts, or
certificates of deposits, de(t instru1ents used for deposit
su(stitutes or orders for the pay1ent of any su1 of
1oney otherwise than at sight or on de1and, on all
pro1issory notes, whether negotia(le or non.negotia(le
except (an< notes issued for circulation, and on each
renewal of any such note, there shall (e collected a
docu1entary sta1p tax of twenty centa+os on each two
hundred pesos, or fractional part thereof, of the face
+alue of any such (ill of exchange, draft certificate of
deposit, de(t instru1ent, or note! #ection $A* of the
$BBA "ational Internal e+enue Code '$BBA "IC)
na1es those who are pri1arily lia(le for the F#T and
those who would (e secondarily lia(le:
#ection $A*! #ta1p taxes upon docu1ents, instru1ents,
and papers! X /pon docu1ents, instru1ents, and
papers, and upon acceptances, assign1ents, sales, and
transfers of the o(ligation, right, or property incident
thereto, there shall (e le+ied, collected and paid for, and
in respect of the transaction so had or acco1plished, the
corresponding docu1entary sta1p taxes prescri(ed in
the following sections of this Title, (y the person 1a<ing,
signing, issuing, accepting, or transferring the sa1e, and
at the sa1e ti1e such act is done or transaction
had:Pro+ided, that where+er one party to the taxa(le
docu1ent en=oys exe1ption fro1 the tax herein
i1posed, the other party thereto who is not exe1pt shall
(e the one directly lia(le for the tax! Pe1phases supplied:
underscores oursQ
The persons pri1arily lia(le for the pay1ent of the F#T
are the person '$) 1a<ing: '0) signing: '*) issuing: '6)
accepting: or '8) transferring the taxa(le docu1ents,
instru1ents or papers! #hould these parties (e
exe1pted fro1 paying tax, the other party who is not
exe1pt would then (e lia(le!
Philacor did not 1a<e, sign, issue, accept or transfer the
pro1issory notes! The acts of 1a<ing, signing, issuing
and transferring are una1(iguous! The (uyers of the
appliances 1ade, signed and issued the docu1ents
su(=ect to tax, while the appliance dealer transferred
these docu1ents to Philacor which li<ewise indisputa(ly
recei+ed or 9accepted9 the1! 9Acceptance,9 howe+er, is
an act that is not e+en applica(le to pro1issory notes,
(ut only to (ills of exchange! /nder #ection $*0 of the
"egotia(le Instru1ents Eaw 'which pro+ides for how
acceptance should (e 1ade), the act of acceptance
refers solely to (ills of exchange! Its o(=ect is to (ind the
drawee of a (ill and 1a<e hi1 an actual and (ound party
to the instru1ent!
The settled rule is that in case of dou(t, tax laws 1ust (e
construed strictly against the #tate and li(erally in fa+or
of the taxpayer! The reason for this ruling is not hard to
grasp taxes, as (urdens which 1ust (e endured (y the
taxpayer, should not (e presu1ed to go (eyond what the
law expressly and clearly declares! That such strict
construction is necessary in this case is e+idenced (y
the change in the su(=ect pro+ision as presently worded,
which now expressly le+ies the tax on shares of stoc< as
against the pri+ilege of issuing certificates of stoc< as
for1erly pro+ided!
C+s T$-/ : C5MMI##I5"4 5F I"T4"AE 4V4"/4
+s! #T! E/V4;# M4FICAE C4"T4, I"C!,
G!! "o! $B8B%B: #epte1(er 0D, 0%$0: D&0 #CA DD
#upre1e Court #econd Fi+ision
F+,-s.
#t! Eu<e;s Medical Center, Inc! '#t! Eu<e;s) is a
hospital organi-ed as a non.stoc< and non.profit
corporation!
In 0%%0, the Bureau of Internal e+enue 'BI)
assessed #t! Eu<e;s deficiency taxes co1prised of
deficiency inco1e tax, +alue.added tax, withholding tax
on co1pensation and expanded withholding tax! #t!
Eu<e;s filed an ad1inistrati+e protest with the BI
against the deficiency tax assess1ents! The BI did not
act on the protest within the $&%.day period under
#ection 00& of the "IC! Thus, #t! Eu<e;s appealed to
the CTA!
The BI argued that #ection 0A'B) of the
"IC,which i1poses a $%> preferential tax rate on the
inco1e of proprietary non.profithospitals, should (e
applica(le to #t! Eu<e;s! According to the BI,#ection
0A'B), introduced in $BBA, His a new pro+ision intended
to a1endthe exe1ption on non.profit hospitals that were
pre+iously categori-ed asnon.stoc<, non.profit
corporations under #ection 0D of the $BBA Tax CodeI It
is a specific pro+ision which pre+ails o+er the general
exe1ptionon inco1e tax granted under #ection *%'4)
and 'G) for non.stoc<, non.profitcharita(le institutions
and ci+ic organi-ations pro1oting social welfare!The BI
clai1ed that #t! Eu<e;s was actually operating for profit
in$BB& (ecause only $*> of its re+enues ca1e fro1
charita(le purposes!Moreo+er, the hospital;s (oard of
trustees, officers and e1ployees directly(enefit fro1 its
profits and assets!
#t! Eu<e;s contended on the other hand, that the
BI should not consider its totalre+enues, (ecause its
free ser+ices to patients was D8!0%>of its $BB&
operating inco1e 'i.e., total re+enues less operating
expenses)!#t! Eu<e;s also clai1ed that its inco1e does
not inure to the(enefit of any indi+idual!It 1aintained that
it is a non.stoc< and non.profit institutionfor charita(le
and social welfare purposes under #ection *%'4) and 'G)
ofthe "IC! It argued that the 1a<ing of profit per )e
does not destroy itsinco1e tax exe1ption!
Issu.
Whether or not the enact1ent of#ection 0A'B)
ta<es proprietary non.profit hospitals out of the inco1e
taxexe1ption under #ection *% of the "IC and instead,
i1poses a preferentialrate of $%> on their taxa(le
inco1e!
5/#.
"5! The #upre1e Court held that #ection 0A'B)
of the "IC does not re1o+e theinco1e tax exe1ption
of proprietary non.profit hospitals under #ection*%'4)
and 'G)! #ection 0A'B) and #ection *%'4) and 'G) can (e
construed together without the re1o+al of such
taxexe1ption! The effect of the introduction of #ection
0A'B) is to su(=ect thetaxa(le inco1e of two specific
institutions, na1ely, proprietary non.profiteducational
institutions and proprietary non.profit hospitals, a1ong
theinstitutions co+ered (y #ection *%, to the $%>
preferential rate under#ection 0A'B) instead of the
ordinary *%> corporate rate under the lastparagraph of
#ection *% in relation to #ection 0A'A)'$)!#ection 0A'B)
of the "IC i1poses a $%> preferential tax rate on the
inco1e of '$) proprietary non.profit educational
institutions and '0) proprietary non.profit hospitals! The
only 2ualifications for hospitals arethat, they 1ust (e
proprietary and non.profit! HP4o64$-+4@I 1eans pri+ate,
following the definition of a Hproprietary educational
institutionI as Hany pri+ateschool 1aintained and
ad1inistered (y pri+ateindi+iduals or groupsI with a
go+ern1ent per1it! HNonA64o;$-I 1eans no net inco1e
or asset accrues to or (enefits any 1e1(er or specific
person, with all the net inco1e or asset de+oted to the
institution;s purposes and all its acti+ities conducted not
for profit! H"on.profitI does not necessarily 1ean
Hcharita(le!I
There is no dispute that #t! Eu<e;s is organi-ed
as a non.stoc< andnon.profit charita(le institution!
3owe+er, this does not auto1aticallyexe1pt #t! Eu<e;s
fro1 paying taxes! #t! Eu<e;s is therefore lia(le for
deficiency inco1e tax in $BB& under #ection 0A'B) of the
"IC!
CASE TITLE. E#u+4#o M. CoGu+n0,o, J4. vs.
R6u3/$, o; -9 P9$/$66$ns
G.R. No. $&%A%8
DATE OF PROMULGATION. "o+e1(er 0A, 0%$0
DIVISION. 4n Banc
SCRA REPORT. D&D #CA 6A0
FACTS.
The declaration of 1artial law in #epte1(er
$BA0 saw the issuance of se+eral presidential decrees
purportedly designed to i1pro+e the coconut industry
through the collection and use of the coconut le+y fund!
5ne of the issuances was P!F! no! A88 which authori-ed
Philippine Coconut Ad1inistration 'HPCAI) to utili-e the
Coconut Consu1ers #ta(ili-ation Fund 'HCC#FI) and
Coconut Industry Fe+elop1ent Fund 'HCIFFI) to ac2uire
a co11ercial (an< to pro+ide coco far1ers with Hreadily
a+aila(le credit facilities at preferential rate!I
ele+ant to the present petition is the ac2uisition
of the First /nited Ban< 'HF/BI), which was
su(se2uently rena1ed as /nited Coconut Planters Ban<
'H/CPBI)! It would appear that F/B was the (an< of
choice which Pedro Co=uangco;s group had control of!
The plan, then, was for PCA to (uy all of Pedro
Co=uangco;s shares in F/B! 3owe+er, a si1ple direct
sale fro1 the seller 'Pedro) to PCA did not ensue as it
was 1ade to appear that Petitioner Co=uangco had the
exclusi+e option to ac2uire the for1er;s F/B controlling
interests! 41erging fro1 this arrange1ent were two
deeds! The first one was si1ply deno1inated as
0,reement, dated May $BA8, entered into (y and
(etween Co=uangco for and in his (ehalf and in (ehalf of
H*ertain ot(er buyer)A, and Pedro Co=uangco in which
the for1er was purportedly accorded the option to (uy
A0!0> of F/B;s outstanding capital stoc<, or $*A,&DD
shares at PhP 0%% per share! The second (ut related
contract, was deno1inated as 0,reement for t(e
0*%ui)ition of a Commer*ial @an6 for t(e @enefit of t(e
Co*onut "armer) of t(e P(ilippine)! It had PCA, for itself
and for the (enefit of the coconut far1ers, purchase fro1
Co=uangco the shares of stoc< su(=ect of the First
Agree1ent! As additional consideration for PCA;s (uy.
out of what Co=uangco would later clai1 to (e his
exclusi+e and personal option, it was stipulated that,
fro1 PCA, Co=uangco shall recei+e e2uity in F/B
a1ounting to $%>, or A!00>, of the A0!0> or fully paid
shares!
As found (y the #andigan(ayan, the PCA
appropriated, out of its own fund and a1ount for the
purchase of the said A0!0> e2uity, al(eit it would later
rei1(urse itself fro1 the coconut le+y fund! The #B
declared that the A!00> F/B shares transferred to
Co=uangco, plus the other shares paid (y the PCA as
conclusi+ely owned (y the epu(lic!
ISSUE. W5" Co=uangco is entitled to the F/B shares
which were (ought with pu(lic fundsY
RULING. NO.
As the coconut le+y funds parta<e of the nature
of taxes and can only (e used for pu(lic purpose, and
i1portantly, for the purpose for which it was exacted,
i.e., the de+elop1ent, reha(ilitation and sta(ili-ation of
the coconut industry, they cannot (e used to (enefit X
whether directly or indirectly X pri+ate indi+iduals, (e it (y
way of a co11ission, or as the su(=ect Agree1ent
interestingly words it, co1pensation! Conse2uently,
Co=uangco cannot stand to (enefit (y recei+ing, in his
pri+ate capacity, A!00> of the F/B shares without
+iolating the constitutional ca+eat that pu(lic funds can
only (e used for pu(lic purpose! Accordingly, the A!00>
F/B shares that were gi+en to Co=uangco shall (e
returned to the Go+ern1ent, to (e used Honly for the
(enefit of all coconut far1ers and for the de+elop1ent of
the coconut industry!I
G.R. Nos. 11%"36A3% A64$/ 1", !"1!
P+23+ns+n0Ho+/$s@on vs E=,-$v S,4-+4@
FACTS.
The raising of 1oney (y le+y on coconut far1 production
(egan in $BA$ (y +irtue of A D0D% which esta(lished a
Coconut In+est1ent Fund for the purpose of de+eloping
the coconut industry and pro1oting the interest of
coconut far1ers!
The use of the fund was expanded in $BA*,(y +irtue of
P!F! 0AD, which esta(lished a Coconut Consu1ers
#ta(ili-ation Fund 'CC# Fund), to include the
sta(ili-ation of the do1estic 1ar<et for coconut.(ased
consu1er goods: and also (y P!F! 8&0, creating a
per1anent fund called the Coconut Industry
Fe+elop1ent Fund 'CIF Fund) in $BA6 to di+ert part of
the funds for o(taining direct (enefit to coconut far1ers!
After fi+e years or in $BAD, howe+er, P!F! BD$ declared
the coco.le+y funds pri+ate property of the far1ers! P!F!
$6D& reiterated this declaration in $BA&! But neither
presidential decree actually turned o+er possession or
control of the funds to the far1ers in their pri+ate
capacity! The go+ern1ent continued to wield
undi1inished authority o+er the 1anage1ent and
disposition of those funds!
PetionerPa1(ansangVoalisyon "g
Mga#a1ahangMagsasa<a At Manggagawa#a"iyugan
'PV#MM") and other coconut far1er organi-ations
assail the constitutionality of #ection 0 of P!F! A88 for
disregarding the pu(lic character of coco.le+y
funds! 3ence, the 2uestion whether the coco.le+y funds
are in the nature of taxes as to constitute pu(lic funds is
raised!
ISSUE. Whether or not the coco.le+y funds are taxes
5ELD. The coco.le+y funds are in the nature of taxes
and can only (e used for pu(lic purpose!
Taxes are enforced proportional contri(utions fro1
persons and property, le+ied (y the #tate (y +irtue of its
so+ereignty for the support of the go+ern1ent and for all
its pu(lic needs!
The Court has also recently declared in Philippines +!
C5C5F4Fthat the coco.le+y funds, that are i1posed
pursuant to !A! D0D% and P!F! 0AD,are in the nature of
taxes and can only (e used for pu(lic purpose The funds
were collected and 1anaged (y the PCA, an
independent go+ern1ent corporation directly under the
President! And, the a(o+e1entioned laws used the ter1
le+y,which 1eans to tax, in descri(ing the exaction!
Although !A! D0D% and P!F! 0AD did not raise 1oney to
(oost the go+ern1ent;s general funds, they are to
pro+ide 1eans for the reha(ilitation and sta(ili-ation of a
threatened industry, the coconut industry, which is so
affected with pu(lic interest as to (e within the police
power of the #tate!The funds sought to support the
coconut industry, one of the 1ain econo1ic (ac<(ones
of the country, and to secure econo1ic (enefits for the
coconut far1ers and far1 wor<ers! The su(=ect laws are
a<in to the sugar liens i1posed (y #ec! A'() of P!F!
*&&, and the oil price sta(ili-ation funds under P!F!
$B8D, as a1ended (y 4!5! $*A!
Also, the coco.le+y funds are special funds!The fees
were le+ied for a special purpose and, therefore,
constituted special fund when collected! In Ga)ton v.
Republi* Planter) @an6, the Court held that the #tate
collected sta(ili-ation fees fro1 sugar 1illers, planters,
and producers for a special purpose: to finance the
growth and de+elop1ent of the sugar industry and all its
co1ponents! In 2)meBa v. 2rbo), the Court held that
the oil price sta(ili-ation fund was a special fund 1ainly
(ecause this was segregated fro1 the general fund and
placed in what the law referred to as a trust account! Jet
it re1ained su(=ect to C5A scrutiny and re+iew! The
Court finds no su(stantial distinction (etween these
funds and the coco.le+y funds, except as to the industry
they each support!
CASE TITLE. COMMISSIONER OF
CUSTOMS +n# -9 DISTRICT
COLLECTOR OF T5E PORT
OF SU8IC vs. 5(PERMII
FEEDS CORPORATION
GR NO. G!! "o! $AB8AB
DATE. Fe(ruary $, 0%$0
DIVISION. #upre1e Court 0
"F
Fi+ision
SCRA REPORT. DD6 #CA DDD
FACTS. Co11issioner of Custo1s
issued CM5 0A.0%%* which, for tariff purposes,
classified wheat according to the following: '$) i1porter
or consignee: '0) country of origin: and '*) port of
discharge! Fepending on these factors, wheat would (e
classified either as food grade or feed grade! The
corresponding tariff for food grade wheat was *>, for
feed grade, A>!
espondent filed a Petition for Feclaratory elief! 3e
contended that CM5 0A.0%%* was issued without
following the 1andate of the e+ised Ad1inistrati+e
Code on pu(lic participation, prior notice, and pu(lication
or registration with the /ni+ersity of the Philippines Eaw
Center! Further1ore, respondent clai1ed that the e2ual
protection clause of the Constitution was +iolated when
the regulation treated non.flour 1illers differently fro1
flour 1illers for no reason at all!
ISSUES +n# RULINGS.
$! Whether or not respondent;s right to due
process was +iolated!
J4#! espondent has a legal and su(stanti+e interest in
the i1ple1entation of CM5 0A.0%%*! espondent has
ade2uately shown that, as a regular i1porter of wheat, it
has actually 1ade ship1ents of wheat fro1 China to
#u(ic! The ship1ent, upon its arri+al, would (e
su(=ected to the conditions of CM5 0A.0%%*! The
regulation calls for the i1position of different tariff rates,
depending on the factors enu1erated therein! Thus,
respondent alleged that it would (e 1ade to pay the A>
tariff applied to feed grade wheat, instead of the *> tariff
on food grade wheat
When an ad1inistrati+e rule is 1erely interpretati+e in
nature, its applica(ility needs nothing further than its
(are issuance, for it gi+es no real conse2uence 1ore
than what the law itself has already prescri(ed! When,
on the other hand, the ad1inistrati+e rule goes (eyond
1erely pro+iding for the 1eans that can facilitate or
render least cu1(erso1e the i1ple1entation of the law
(ut su(stantially increases the (urden of those
go+erned, it (ehoo+es the agency to accord at least to
those directly affected a chance to (e heard, and
thereafter to (e duly infor1ed, (efore that new issuance
is gi+en the force and effect of law!
0! Whether or not respondent;s right to e2ual
protection of laws was +iolated!
J4#! The guarantee of the e2ual protection of laws is
not +iolated if there is a reasona(le classification! For a
classification to (e reasona(le, it 1ust (e shown that '$)
it rests on su(stantial distinctions: '0) it is ger1ane to the
purpose of the law: '*) it is not li1ited to existing
conditions only: and '6) it applies e2ually to all 1e1(ers
of the sa1e class!
/nfortunately, CM5 0A.0%%* does not 1eet these
re2uire1ents! We do not see how the 2uality of wheat is
affected (y who i1ports it, where it is discharged, or
which country it ca1e fro1!
Thus, on the one hand, e+en if other 1illers excluded
fro1 CM5 0A.0%%* ha+e i1ported food grade wheat, the
product would still (e declared as feed grade wheat, a
classification su(=ecting the1 to A> tariff! 5n the other
hand, e+en if the i1porters listed under CM5 0A.0%%*
ha+e i1ported feed grade wheat, they would only (e
1ade to pay *> tariff, thus depri+ing the state of the
taxes due! The regulation, therefore, does not (eco1e
disad+antageous to respondent only, (ut e+en to the
state!
Case Title: SILHAIR )SINGAPORE* PTE. LTD. ver)u)
COMMISSIONER OF INTERNAL REVENUE
G.R. No. 16618!
Fate of Pro1ulgation: J+nu+4@ !&, !"1!
661 SCRA 33
Ponente: Asso,$+- Jus-$, M+4-$n S.
V$//+4+2+, J4.
/acts' #il<air '#ingapore) Pte! Etd! is a foreign
corporation duly licensed (y the #4C to do (usiness in
the Phil! as an on.line international carrier operating the
Ce(u.#ingapore.Ce(u and Fa+ao.#ingapore.Fa+ao
routes! #il<air then purchased a+iation fuel fro1, paying
the excise taxes thereon in the su1 of P8, %%A,%6*!*B!
The pay1ent was ad+anced (y #ingapore Airlines, Etd!
on (ehalf of #il<air!
- #u(se2uently, #il<air filed an ad1inistrati+e
clai1 for refund of the a1ount representing
excise taxes on the purchase of =et fuel fro1
Petron, which it alleged to ha+e (een
erroneously paid! The clai1 is (ased on S,-$on
13& )+* +n# )3* o; -9 177% T+= Co#, which
pro+ides:
#4C! $*8! .etroleu .roducts !old
to International Carriers and 0xept
0ntities or Agencies. X Petroleu1
products sold to the following are
exe1pt fro1 excise tax:
'a) International carriers of .hilippine or
foreign regis-4@ on their use or
consu1ption outside the
Philippines: Provi#e#, That the petroleu1
products sold to these international carriers
shall (e stored in a bonded storage
tan1 and 1ay (e disposed of only in
accordance with the rules and regulations to
(e prescri(ed (y the #ecretary of Finance,
upon reco11endation of the Co11issioner:
'() 4xe1pt entities or agencies co+ered (y tax
treaties$ conventions and other international
agreeents for their use or consu1ption: Provi#e#,
(owever, That the country of said foreign
international carrier or exe1pt entities or agencies
exe1pts fro1 si1ilar taxes petroleu1 products sold
to Philippine carriers, entities or agencies!
. In addition, #il<air also in+o<ed A4-$,/ 1)!* o;
-9 A$4 T4+ns6o4- A042n- (etween the
Go+ern1ent of the epu(lic of the Philippines
and the Go+ern1ent of the epu(lic of
#ingapore
*
'Air Transport Agree1ent (etween
P and #ingapore) which reads:
0R'. 4 .2/. "uel, lubri*ant), )pare part),
re,ular e%uipment an# air*raft )tore)
intro#u*e# into, or ta6en on boar#
air*raft in t(e territory of one Contra*tin,
Party by, or on be(alf of, a #e)i,nate#
airline of t(e ot(er Contra*tin, Party
an# inten#e# )olely for u)e in t(e
operation of t(e a,ree# )ervi*e) )(all,
wit( t(e e+*eption of *(ar,e)
*orre)pon#in, to t(e )ervi*e performe#,
be e+empt from t(e )ame *u)tom)
#utie), in)pe*tion fee) an# ot(er #utie)
or ta+e) impo)e# in t(e territory of t(e
fir)t Contra*tin, Party, even w(en t(e)e
)upplie) are to be u)e# on t(e part) of
t(e 7ourney performe# over t(e territory
of t(e Contra*tin, Party in w(i*( t(ey
are intro#u*e# into or ta6en on boar#.
'(e material) referre# to above may be
re%uire# to be 6ept un#er *u)tom)
)upervi)ion an# *ontrol.
Issue' Whether or not #il<air has the legal
personality to clai1 for a refund on the excise
taxY
&uling' No. In three pre+ious cases in+ol+ing
the sa1e parties, the #C has already settled the
issue of whether petitioner is the proper party to
see< the refund of excise taxes paid on its
purchase of a+iation fuel fro1 a local
1anufacturerNseller! Following the principle
of stare decisis, the present petition 1ust
therefore (e #n$#.
- The proper party to 2uestion, or see< a refund
of, an indirect tax is the statutory taxpayer, the
person on who1 the tax is i1posed (y law and
who paid the sa1e e+en if he shifts the (urden
thereof to another! #ection $*% 'A) '0) of the
"IC pro+ides that HPuQnless otherwise
specifically allowed, the return shall (e filed and
the excise tax paid (y the 1anufacturer or
producer (efore re1o+al of do1estic products
fro1 place of production!I Thus, P-4on
Co46o4+-$on, no- S$/J+$4, $s -9 s-+-u-o4@
-+=6+@4 :9$,9 $s n-$-/# -o ,/+$2 + 4;un#
3+s# on S,-$on 13& o; -9 NIRC o; 177%
+n# A4-$,/ 1)!* o; -9 A$4 T4+ns6o4-
A042n- 3-:n RP +n# S$n0+6o4.
- 4+en if Petron Corporation passed on to #il<air
the (urden of the tax, the additional a1ount
(illed to #il<air for =et fuel is not a tax (ut part of
the price which #il<air had to pay as a
purchaser! 4+en if the tax is shifted (y Petron to
its custo1ers and e+en if the tax is (illed as a
separate ite1 in the a+iation deli+ery receipts
and in+oices issued to its custo1ers, P-4on
42+$ns -9 -+=6+@4 3,+us -9 =,$s -+=
$s $26os# #$4,-/@ on P-4on +s -9
2+nu;+,-u44. 5n,, P-4on, +s -9
s-+-u-o4@ -+=6+@4, $s -9 64o64 6+4-@ -9+-
,+n ,/+$2 -9 4;un# o; -9 =,$s -+=s 6+$#
-o -9 8IR.

TAX 1 Case Digest Compilation (2013) : G.R. No. 192945, September 5, 2012

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

TAX 1 Case Digest Compilation (2013) : G.R. No. 192945, September 5, 2012

Загружено:

Авторское право:

Доступные форматы

T A X 1 C a s e D i g e s t C o m p i l a t i o n ( 2 0 1 3 ) | 1

WESTERN MINDANAO POWER CORPORATION vs.

Вам также может понравиться