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GENERAL PRINCIPLES
GOMEZ v. PALOMAR
GR No. L-23645, October 29, 1968
25 SCRA 827
FACTS:
Petitioner Benjamin Gomez mailed a
letter at the post office in San Fernando,
Pampanga. It did not bear the special anti-TB
stamp required by the RA 1635. It was returned
to the petitioner. Petitioner now assails the
constitutionality of the statute claiming that RA
1635 otherwise known as the Anti-TB Stamp law
is violative of the equal protection clause
because it constitutes mail users into a class for
the purpose of the tax while leaving untaxed the
rest of the population and that even among
postal patrons the statute discriminatorily grants
exemptions. The law in question requires an
additional 5 centavo stamp for every mail being
posted, and no mail shall be delivered unless
bearing the said stamp.
ISSUE:
Is
the
Anti-TB
Stamp
Law
unconstitutional, for being allegedly violative of
the equal protection clause?
HELD:
No. It is settled that the legislature has
the inherent power to select the subjects of
taxation and to grant exemptions. This power
has aptly been described as "of wide range and
flexibility." Indeed, it is said that in the field of
taxation, more than in other areas, the
legislature possesses the greatest freedom in
classification. The reason for this is that
traditionally, classification has been a device for
fitting tax programs to local needs and usages in
order to achieve an equitable distribution of the
tax burden. The classification of mail users is
based on the ability to pay, the enjoyment of a
privilege and on administrativeconvenience. Tax
exemptions have never been thought of as
raising revenues under the equal protection
clause.
PAL VS EDU
HR L-41383 August 15, 1988
Page |1
CIR v. PINEDA
21 SCRA 105
FACTS:
FACTS:
FRANCIA VS IAC
162 SCRA 753
FACTS:
Francia was the registered owner of a house
and lot in Pasay City. A portion of said property
was expropriated by the republic. It appeared
that Francia did not pay his real estate taxes
from 1963 to 1977. He contended that his tax
delinquency had been extinguished by legal
compensation since the government owed him
4,116 when a portion of his land was
expropriated.
ISSUE: can there be off-setting of debts and
taxes?
RULING:
No. there can be no off-setting of
taxes original the claims against the claims that
the taxpayer may have against the government.
Taxes cannot be the subject of compensation.
The government and the taxpayer are not
mutually creditor and debtors of each other and
a claim for each other and a claim for taxes is
not such a debt demand, contract or judgement
as is allowed to be set-off. Furthermore, the tax
was due to the city government. While the
GENERAL PRINCIPLES
expropriation
effected
by
the
national
government. In fact, the expropriation payment
was already deposited with the PNB long before
the sale at public auction of his property was
conducted.
DOMINGO VS GARLITOS
G.R. NO. 18993 June 29, 1963
Labrador, J.:
FACTS:
In Domingo vs. Moscoso, the Supreme
Court declared as final and executor the order of
the lower court for the payment of estate and
inheritance taxes, charges and penalties
amounting to Php 40,058.55 by the estate of the
of the late Walter Price. The petitioner for
execution filed by the fiscal was denied by the
lower court. The court held that the execution is
unjustified as the Government is indebted to the
estate for Php262,200 and ordered the amount
of inheritance taxes can be deducted from the
Governments indebtedness to the estate.
ISSUE: Whether or not a tax and a debt may be
compensated.
RULING:
The court having jurisdiction of the
Estate had found that the claim of the Estate
against the government has been recognized
and the amount has already been appropriated
by a corresponding law. Both the claim of the
Government for inheritance taxes and the claim
of the intestate for services rendered have
already become overdue and demandable is
well as fully liquidated. Compensation takes
place by operation of law and both debts are
extinguished to the concurrent amount.
Therefore the petitioner has no clear right to
execute the judgment for taxes against the
estate of the deceased Walter Price.
Page |2
CALTEX PHILIPPINES VS CA
G.R. 925585 MAY 8, 1992
FACTS:
In 1989, COA sent a letter to Caltex
directing it to remit to OPSF its collection of the
additional tax on petroleum authorized under PD
1956 and pending such remittance, all of its
claims from the OPSF shall be held in
abeyance. Petitioner requested COA for the
early release of its reimbursement certificates
from the OPSF covering claims with the Office of
Energy Affairs. COA denied the same.
ISSUE: Whether or not petitioner can avail of the
right to offset any amount that it may be required
under the law to remit to the OPSF against any
amount that it may receive by way of
reimbursement.
RULING:
It is a settled rule that a taxpayer may
not offset taxes due from the claims that he may
have against the government. Taxes cannot be
the subject of compensation because the
government and taxpayer are not mutually
debtors and creditors of each other and a claim
for taxes is not such a debt, demand, contract or
judgment as is allowed to be set-off.
The oil companies merely acted as agents for
the government in the latters collection since
taxes are passed unto the end-users, the
consuming public.
GENERAL PRINCIPLES
VERA v. FERNANDEZ
GR No. L-31364 March 30, 1979
89 SCRA 199
Page |3
FACTS:
The BIR filed on July 29, 1969 a motion
for allowance of claim and for payment of taxes
representing the estate's tax deficiencies in 1963
to 1964 in the intestate proceedings of Luis
Tongoy. The administrator opposed arguing that
the claim was already barred by the statute of
limitation, Section 2 and Section 5 of Rule 86 of
the Rules of Court which provides that all claims
for money against the decedent, arising from
contracts, express or implied, whether the same
be due, not due, or contingent, all claims for
funeral expenses and expenses for the last
sickness of the decedent, and judgment for
money against the decedent, must be filed
within the time limited in the notice; otherwise
they are barred forever.
ISSUE: Does the statute of non-claims of the
Rules of Court bar the claim of the government
for unpaid taxes?
HELD:
No. The reason for the more liberal
treatment of claims for taxes against a
decedent's estate in the form of exception from
the application of the statute of non-claims, is
not hard to find. Taxes are the lifeblood of the
Government and their prompt and certain
availability are imperious need. (CIR vs. Pineda,
21 SCRA 105). Upon taxation depends the
Government ability to serve the people for
whose benefit taxes are collected. To safeguard
such interest, neglect or omission of government
officials entrusted with the collection of taxes
should not be allowed to bring harm or detriment
to the people, in the same manner as private
persons may be made to suffer individually on
account of his own negligence, the presumption
being that they take good care of their personal
LUTZ VS ARANETA
95 PHIL 148
FACTS:
Commonwealth Act No. 567, otherwise
known as Sugar Adjustment Act was
promulgated in 1940 to stabilize the sugar
industry so as to prepare it for the eventuality of
the loss of its preferential position in the United
States market and the imposition of export
taxes. Plaintiff, Walter Lutz, in his capacity as
Judicial Administrator of the Intestate Estate of
Antonio Jayme Ledesma, seeks to recover from
the Collector of Internal Revenue the sum of
P14,666.40 paid by the estate as taxes, under
Sec.3 of the Act, alleging that such tax is
unconstitutional and void, being levied for the
aid and support of the sugar industry
exclusively, which in plaintiffs opinion is not a
public purpose for which a tax may be
constitutionally levied. The action has been
dismissed by the Court of First Instance.
Issue: Whether or not the tax imposed is
constitutional.
Held:
Yes. The act is primarily an exercise of
the police power. It is shown in the Act that the
tax is levied with a regulatory purpose, to
provide means for the rehabilitation and
stabilization of the threatened sugar industry.
It is inherent in the power to tax that a state be
free to select the subjects of taxation, and it has
been repeatedly held that inequalities which
result from a singling out of one particular class
for taxation or exemption infringe no
constitutional limitation.
GENERAL PRINCIPLES
still a private property cannot be ignored. In
accordance with the rule that the taxing power
must be exercised for public purposes only,
money raised by taxation can be expanded only
for public purposes and not for the advantage of
private individuals. Inasmuch as the land on
which the projected feeder roads were to be
constructed belonged then to Zulueta, the result
is that said appropriation sought a private
purpose, and, hence, was null and void.
PEPSI VS BUTUAN
24 SCRA 789
FACTS:
In 1953, Republic Act No. 920 was
passed. This law appropriated P85,000.00 for
the
construction,
reconstruction,
repair,
extension and improvement Pasig feeder road
terminals. WenceslaoPascual, then governor of
Rizal, assailed the validity of the law. He claimed
that the appropriation was actually going to be
used for private use for the terminals sought to
be improved were part of the Antonio
Subdivision. The said Subdivision is owned by
Senator Jose Zulueta who was a member of the
same Senate that passed and approved the
same RA. Pascual claimed that Zulueta
misrepresented in Congress the fact that he
owns those terminals and that his property
would be unlawfully enriched at the expense of
the taxpayers if the said RA would be upheld.
Pascual then prayed that the Secretary of Public
Works and Communications be restrained from
releasing funds for such purpose. Zulueta, on
the other hand, perhaps as an afterthought,
donated the said property to the City of Pasig.
the
Ordinance
is
HELD:
No, the appropriation is void for being
an appropriation for a private purpose. The
subsequent donation of the property to the
government to make the property public does
not cure the constitutional defect. The fact that
the law was passed when the said property was
FACTS:
Page |4
PEPSI VS TANAUN
69 SCRA 460
FACTS:
Pepsi Cola has a bottling plant in the
Municipality of Tanauan, Leyte. In September
1962, the Municipality approved Ordinance No.
23 which levies and collects from soft drinks
producers and manufacturers a tai of onesixteenth (1/16) of a centavo for every bottle of
soft drink corked.In December 1962, the
Municipality also approved Ordinance No. 27
which levies and collects on soft drinks
produced or manufactured within the territorial
jurisdiction of this municipality a tax of one
centavo P0.01) on each gallon of volume
capacity.
Pepsi Cola assailed the validity of the
ordinances as it alleged that they constitute
double taxation in two instances: a) double
taxation because Ordinance No. 27 covers the
same subject matter and impose practically the
same tax rate as with Ordinance No. 23, b)
double taxation because the two ordinances
impose percentage or specific taxes.
Pepsi Cola also questions the constitutionality of
Republic Act 2264 which allows for the
delegation of taxing powers to local government
GENERAL PRINCIPLES
State has exclusively reserved the same for its
own prerogative. Moreover, double taxation, in
general, is not forbidden by our fundamental law
unlike in other jurisdictions. Double taxation
becomes obnoxious only where the taxpayer is
taxed twice for the benefit of the same
governmental entity or by the same jurisdiction
for the same purpose, but not in a case where
one tax is imposed by the State and the other by
the city or municipality.
or
(ii) National
as
ABAKADA VS ERMITA
government deficit
ISSUE:
1. Whether or not there is undue delegation of
taxing powers.
2. Whether or not there is double taxation.
HELD:
Page |5
FACTS:
sale
or
exchange
of goods
and
tribute
government
of petitions for
certiorari
and
prohibition
payable
upon
and
merchandise
usually
to
imposed
the
on
rate,
especially
recommendatory
on
account
power
of
the
granted
to
the Secretary of
of Gross
Domestic
Product (GDP)
of
the
HELD:
Finance,
constitutes
undue
powers
which
GENERAL PRINCIPLES
Congress
Page |6
is
idea of discretion.
Constitution
under Constitution
Congress
does
not
abdicate
its
and
it
fix
defines
to apply it.
the Secretary of
law.
one
astandard.
sufficient standard is
must
which
power
BUT
delegation
of
Finance,
by
legislative
President.
is
no
undue
delegation
of
GENERAL PRINCIPLES
FACTS:
Page |7
HELD:
No. Although the Court agreed with the
petitioner corporation that the two-year
prescriptive period for the filing of claims for
refund/credit of input VAT must be counted from
the date of filing of the quarterly VAT return, and
that sales to PASAR and PHILPOS inside the
EPZA are taxed as exports because these
export processing zones are to be managed as
a separate customs territory from the rest of the
Philippines, and thus, for tax purposes, are
effectively considered as foreign territory, it still
denies the claims of petitioner corporation for
refund of its input VAT on its purchases of
capital goods and effectively zero-rated sales
during the period claimed for not being
established and substantiated by appropriate
and
sufficient
evidence.
Tax refunds are in the nature of tax
exemptions. It is regarded as in derogation of
the sovereign authority, and should be
construed in strictissimijuris against the person
or entity claiming the exemption. The taxpayer
who claims for exemption must justify his claim
by the clearest grant of organic or statute law
and should not be permitted to stand on vague
implications.
NDC VS CIR
GENERAL PRINCIPLES
FACTS:
FACTS:
The National Development Co. (NDC)
entered into contracts in Tokyo with several
Japaneseshipbuilding
companies
for
the
construction of 12 ocean-going vessels. Initial
payments were made in cashand through
irrevocable letters of credit. When the vessels
were completed and delivered to the NDC
inTokyo, the latter remitted to the shipbilders the
amount of US$ 4,066,580.70 as interest on the
balance of thepurchase price. No tax was
withheld. The Commissioner then held NDC
liable on such tax in the total amountof
P5,115,234.74. The Bureau of Internal Revenue
served upon the NDC a warrant of distraint and
levy afternegotiations failed.
ISSUE: Whether the NDC is liable for deficiency
tax.
HELD:
The Japanese shipbuilders were liable
on the interest remitted to them under Section
37 of the TaxCode. The NDC is not the one
taxed. The imposition of the deficiency taxes on
the NDS is a penalty for itsfailure to withhold the
same from the Japanese shipbuilders. Such
liability is imposed by Section 53(c) of theTax
Code. NDC was remiss in the discharge of its
obligation of its obligation as the withholding
agent of thegovernment and so should be liable
for its omission.
Page |8
GENERAL PRINCIPLES
HELD:
The SC finds that National Development
Company (NDC) is exempt from real estate tax
on the reserved land but liable for the
warehouse erected thereon. The land The
Republic, like any individual, may form a
corporation with personality and existence
distinct from its own.The separate personality
allows a GOCC to hold and possess properties
in its own name and, thus, permit greater
independence and flexibility in its operations. It
may, therefore, be stated that tax exemption of
property owned by the Republic of the
Philippines "refers to properties owned by the
Government and by its agencies which do not
have separate and distinct personalities
(unincorporated entities).To come within the
ambit of the exemption provided in Art. 3, par.
(a), of the Assessment Law, it is important to
establish that the property is owned by the
government or its unincorporated agency, and
once government ownership is determined, the
nature of the use of the property, whether for
proprietary or sovereign purposes. The land
remains absolute property of the government."
The government "does not part with its title by
reserving them (lands), but simply gives notice
to all theworld that it desires them for a certain
purpose." As its title remains with the Republic,
the reserved land is clearly recovered by the tax
exemption provision. The warehouse As
regards the warehouse constructed on a public
reservation, a different rule should apply
because "[t]he exemption of public property from
taxation does not extend to improvements on
the
public
lands
made
by
preemptioners,homesteaders and other claimants,
or occupants, at their own expense, and these
are taxable by the state . . ." Consequently, the
warehouse constructed on the reserved land by
NWC (now under administration by NDC),
indeed, should properly be assessed real estate
tax as such improvement does not appear to
belong to the Republic.
Page |9
ISSUE:
Are the impositions of the MCIT on domestic
corporations and
CWT on income from sales
of real properties classified as
ordinary assets
unconstitutional?
GENERAL PRINCIPLES
HELD:
NO. MCIT does not tax capital but only
taxes income as shown by the fact that the
MCIT is arrived at by deducting the capital spent
by a corporation in the sale of its goods, i.e., the
cost of goods and other direct expenses from
gross sales. Besides, there are sufficient
safeguards that exist for the MCIT: (1) it is only
imposed on the 4th year of operations; (2) the
law allows the carry forward of any excess MCIT
paid over the normal income tax; and (3) the
Secretary of Finance can suspend the
imposition of MCIT in justifiable instances.
The regulations on CWT did not shift the
tax base of a real estate business income tax
from net income to GSP or FMV of the property
sold since the taxes withheld are in the nature of
advance tax payments and they are thus just
installments on the annual tax which may be due
at the end of the taxable year. As such the tax
base for the sale of real property classified as
ordinary assets remains to be the net taxable
income and the use of the GSP or FMV is
because these are the only factors reasonably
known to the buyer in connection with the
performance of the duties as a withholding
agent.
Neither is there violation of equal protection
even if the CWT is levied only on the real
industry as the real estate industry is, by itself, a
class on its own and can be validly treated
different from other businesses.
Page |
10
GENERAL PRINCIPLES
FACTS:
Arturo Tolentino et al are questioning
the constitutionality of RA 7716 otherwise known
as the Expanded Value Added Tax (EVAT) Law.
Tolentino averred that this revenue bill did not
exclusively originate from the House of
Representatives as required by Section 24,
Article 6 of the Constitution. Even though RA
7716 originated as HB 11197 and that it passed
the 3 readings in the HoR, the same did not
complete the 3 readings in Senate for after the
1st reading it was referred to the Senate Ways &
Means Committee thereafter Senate passed its
own version known as Senate Bill 1630.
Tolentino averred that what Senate could have
done is amend HB 11197 by striking out its text
and substituting it with the text of SB 1630 in
that way the bill remains a House Bill and the
Senate version just becomes the text (only the
text) of the HB. (Its ironic however to note that
Tolentino and co-petitioner Raul Roco even
signed the said Senate Bill.)
ISSUE: Whether or not the EVAT law is
procedurally infirm.
HELD:
No. By a 9-6 vote, the Supreme Court
rejected the challenge, holding that such
consolidation was consistent with the power of
the Senate to propose or concur with
amendments to the version originated in the
HoR. What the Constitution simply means,
according to the 9 justices, is that the initiative
must come from the HoR. Note also that there
were several instances before where Senate
Page |
11
HELD:
Under Section 24, Article VI of the
Constitution, the enactment of appropriation,
revenue and tariff bills, like all other bills is, of
course, within the province of the Legislative
rather than the Executive Department. It does
not follow, however, that therefore Executive
Orders Nos. 475 and 478, assuming they may
be characterized as revenue measures, are
prohibited to the President, that they must be
enacted instead by the Congress of the
Philippines. Section 28(2) of Article VI of the
Constitution provides as follows: "(2) The
Congress may, by law, authorize the President
to fix within specified limits, and subject to such
limitations and restrictions as it may impose,
tariff rates, import and export quotas, tonnage
and wharfage dues, and other duties or imposts
within the framework of the national
development program of the Government."
There is thus explicit constitutional permission to
Congress to authorize the President "subject to
such limitations and restrictions as [Congress]
may impose" to fix "within specific limits" "tariff
rates . . . and other duties or imposts . . . ."
OSMEA VS ORBOS
FACTS:
Senator John Osmea assails the
constitutionality of paragraph 1c of PD 1956, as
amended by EO 137, empowering the Energy
Regulatory Board (ERB) to approve the increase
of fuel prices or impose additional amounts on
petroleum products which proceeds shall accrue
to the Oil Price Stabilization Fund (OPSF)
established for the reimbursement to ailing oil
companies in the event of sudden price
increases. The petitioner avers that the
collection on oil products establishments is an
undue and invalid delegation of legislative power
GENERAL PRINCIPLES
Page |
12