UST Civil Law As an incident of sovereignty, the

MUST READ CASES (LAW ON power to tax has been described as

TAXATION) unlimited in its range, acknowledging
in its very nature no limits, so that
security against its abuse is to be
AX I
found only in the responsibility of the
legislature which imposes the tax on
Paseo Realty & Development
the constituency who are to pay it.
Corporation v. Court of Appeals, GR
No. 119286, October 13, 2004
PLANTERS PRODUCTS, INC. v.
FERTIPHIL CORPORATION,
Taxation is described as a
G.R. No. 166006, March 14, 2008
destructive power which interferes
with the personal and property rights
It is a settled principle that the power
of the people and takes from them a
of taxation by the state is plenary.
portion of their property for the
Comprehensive and supreme, the
support of the government.
principal check upon its abuse
resting in the responsibility of the
Commissioner of Internal Revenue v.
members of the legislature to their
Fortune Tobacco Corporation, 559
constituents.
SCRA 160 (2008)

Commissioner of Internal Revenue v.

The power to tax is inherent in the
SM Prime Holdings, Inc., 613 SCRA
State, such power being inherently
774 (2010)
legislative, based on the principle
that taxes are a grant of the people
The power to tax is sometimes called
who are taxed, and the grant must be
the power to destroy. Therefore, it
made by the immediate
should be exercised with caution to
representative of the people, and
minimize injury to the proprietary
where the people have laid the
rights of the taxpayer. It must be
power, there it must remain and be
exercised fairly, equally and
exercised.
uniformly, lest the tax collector kills
the hen that lays the golden egg.
Mactan Cebu International Airport
Authority v. Marcos, 261 SCRA 667
MANILA MEMORIAL PARK, INC.
(1996)
AND LA FUNERARIA PAZ-SUCAT,
INC. vs. SECRETARY OF THE
DSWD, G.R. No. 175356 (2013).
The 20% senior citizen discount and
tax deduction scheme are valid
exercises of police power of the State
absent a clear showing that it is
arbitrary, oppressive or confiscatory.
The discount is intended to improve
the welfare of the senior citizens
who, at their age, are less likely to be
gainfully employed, more prone to
illnesses and other disabilities, and
thus, in need of subsidy in
purchasing commodities. As to its
nature an effects, although the
regulation affects the pricing, and,
hence, the profitability of a private
establishment, it does not purport to
appropriate or burden specific
properties, used in the operation or
conduct of the business of private
establishments, for the use or benefit
of the public, or senior citizens for
that matter, but merely regulates the
pricing of goods and services relative
to, and the amount of profits or
income/gross sales that such private
establishments may derive from,
senior citizens. The State can
employ police power measures to
regulate the pricing of goods and
services, and, hence, the profitability
of business establishments in order
to pursue legitimate State objectives
for the common good, provided, the
regulation does not go too far as to
amount to taking.
SOUTHERN CROSS CEMENT
CORPORATION v. CEMENT
MANUFACTURERS
ASSOCIATION OF THE
PHILIPPINES, G.R. No. 158540,
August 3, 2005
The motivation behind many taxation
measures is the implementation of
police power goals. Progressive
income taxes alleviate the margin
between rich and poor; the so-called
sin taxes on alcohol and tobacco
manufacturers help dissuade the
consumers from excessive intake of
these potentially harmful products.
ABAKADA GURO PARTY LIST
(Formerly AASJAS) OFFICERS
SAMSON S. ALCANTARA and ED
VINCENT S. ALBANO v. THE
HONORABLE EXECUTIVE
SECRETARY EDUARDO ERMITA,
G.R. No. 168056, September 1, 2005
The expenses of government, having
for their object the interest of all,
should be borne by everyone, and
the more man enjoys the advantages
of society, the more he ought to hold
himself honored in contributing to
those expenses.
RENATO V. DIAZ and AURORA
MA. F. TIMBOL v. THE
SECRETARY OF FINANCE, G.R.
No. 193007, July 19, 2011
A tax is imposed under the taxing
power of the government principally
for the purpose of raising revenues to
fund public expenditures; toll fees, on
the other hand, are collected by
private tollway operators as
reimbursement for the costs and
expenses incurred in the
construction, maintenance and
operation of the tollways. Taxes may
be imposed only by the government
under its sovereign authority, toll
fees may be demanded by either the
government or private individuals or
entities, as an attribute of ownership.
PAMBANSANG KOALISYON NG
MGA SAMAHANG MAGSASAKA
AT MANGGAGAWA SA NIYUGAN
v. EXECUTIVE SECRETARY G.R.
Nos. 147036-37 April 10, 2012
The Court was satisfied that the
coco-levy funds were raised
pursuant to law to support a proper
governmental purpose. They were
raised with the use of the police and
taxing powers of the State for the
benefit of the coconut industry and its
farmers in general.
GEROCHI v. DEPARTMENT OF
ENERGY, 527 SCRA 696 (2007
The theory behind the exercise of the
power to tax emanates from
necessity, without taxes, government
cannot fulfill its mandate of
promoting the general welfare and
well being of the people.
COMMISSIONER OF INTERNAL
REVENUE v. ALGUE, INC., and
THE COURT OF TAX APPEALS,
G.R. No. L-28896, February 17, 1988
Despite the natural reluctance to
surrender part of ones hard earned
income to the taxing authorities,
every person who is able to must
contribute his share in the running of
the government. The government for
its part is expected to respond in the
form of tangible and intangible
benefits intended to improve the lives
of the people and enhance their
moral and material values. This
symbiotic relationship is the rationale
of taxation and should dispel the
erroneous notion that it is an arbitrary
method of exaction by those in the
seat of power.
COMMISSIONER OF INTERNAL
REVENUE v. ROSEMARIE
ACOSTA G.R. No. 154068 August 3,
2007
As well said in a prior case, revenue
laws are not intended to be liberally
construed. Considering that taxes
are the lifeblood of the government
and in Holmess memorable
metaphor, the price we pay for
civilization, tax laws must be faithfully
and strictly implemented.
SWEDISH MATCH PHILIPPINES
INC. v. THE TREASURER OF THE
CITY OF MANILA, G.R. No. 181277,
July 3, 2013
Double taxation means taxing the
same property twice when it should
be taxed only once; that is, taxing
the same person twice by the same
jurisdiction for the same thing. There
is indeed double taxation if a
taxpayer is subjected to the taxes
under both Section 14 (Tax on
Manufacturers, Assemblers and
other Processors) and Section 21
(Tax on Business Subject to the
Excise, Value-Added or Percentage
Taxes under the NIRC) of the Tax
Ordinance No. 7794.
SERAFICA v. CITY TREASURER
OF ORMOC, G.R. No. L- 24813, April
28, 1968
Regulation and taxation are two
different things, the first being an
exercise of police power, whereas
the latter involves the exercise of the
power of taxation. While R.A. 2264
provides that no city may impose
taxes on forest products and
although lumber is a forest product,
the tax in question is imposed not on
the lumber but upon its sale; thus,
there is no double taxation and even
if there was, it is not prohibited.
COMMISSIONER OF INTERNAL
REVENUE v. S.C. JOHNSON AND
SON, INC. G.R. No. 127105 June 25,
1999
In negotiating tax treaties, the
underlying rationale for reducing the
tax rate is that the Philippines will
give up a part of the tax in the
expectation that the tax given up for
this particular investment is not taxed
by the other country. Thus, if the
rates of tax are lowered by the state
of source, in this case, by the
Philippines, there should be a
concomitant commitment on the part
of the state of residence to grant
some form of tax relief, whether this
be in the form of a tax credit or
exemption.
DEUTSCHE BANK AG MANILA
BRANCH v. COMMISSIONER OF
INTERNAL REVENUE, G.R. No.
188550, August 19, 2013
Tax conventions are drafted with a
view towards the elimination of
international juridical double
taxation, which is defined as the
imposition of comparable taxes in
two or more states on the same
taxpayer in respect of the same
subject matter and for identical
periods. A corporation who has paid
15% Branch Profit Remittance Tax
(BPRT) has the right to avail (by way
of refund ) of the benefit of a
preferential tax rate of 10% BPRT in
accordance with the RP-Germany
Tax Treaty despite non-compliance
with an application with ITAD at least
15 days before the transaction for the
lower rate. Bearing in mind the
rationale of tax treaties, the
requirements for the application for
availment of tax treaty relief as
required by RMO No. 1-2000 should
not operate to divest entitlement to
the relief as it would constitute a
violation of the duty required by good
faith in complying with a tax treaty.
CBK Power Company Limited vs.
Commissioner of Internal
Revenue/Commissioner of Internal
Revenue vs. CBK Power Company
Limited, G.R. No. 193383-84/G.R. No.
193407-08 (January 14, 2015).
The Philippine Constitution provides
for adherence to the general
principles of international law as part
of the law of the land. The time-
honored international principle of
pacta sunt servanda demands the
performance in good faith of treaty
obligations on the part of the states
that enter into the agreement. In this
jurisdiction, treaties have the force
and effect of law. The obligation to
comply with a tax treaty must take
precedence over the objective of
RMO No. 1-2000. Logically,
noncompliance with tax treaties has
negative implications on international
relations, and unduly discourages
foreign investors. The objective of
RMO No. 1-2000 in requiring the
application for treaty relief with the
ITAD before a partys availment of
the preferential rate under a tax
treaty is to avert the consequences of
any erroneous interpretation and/or
application of treaty provisions, such
as claims for refund/credit for
overpayment of taxes, or deficiency
tax liabilities for
underpayment. However, the
underlying principle of prior
application with the BIR
becomes moot in refund cases
where the very basis of the claim
is erroneous or there is excessive
payment arising from the non-
availment of a tax treaty relief at the
first instance. CBK Power could not
have applied for a tax treaty relief 15
days prior to its payment of the final
withholding tax on the interest paid to
its lenders precisely because it
erroneously paid said tax on the
basis of the regular rate as
prescribed by the NIRC, and not on
the preferential tax rate provided
under the different treaties. The prior
application requirement under RMO
No. 1-2000 is not only illogical, but is
also an imposition that is not found at
all in the applicable tax treaties. BIR
should not impose additional
requirements that would negate the
availment of the reliefs provided for
under international agreements,
especially since said tax treaties do
not provide for any prerequisite at all
for the availment of the benefits
under said agreements.
COMMISSIONER OF INTERNAL
REVENUE v. PILIPINAS SHELL
PETROLEUM CORPORATION,
G.R. No. 188497, February 19, 2014
Section 135(a) should be construed
as prohibiting the shifting of the
burden of the excise tax to the
international carriers who buy
petroleum products from the local
manufacturers. Said international
carriers are thus allowed to purchase
the petroleum products without the
excise tax component which
otherwise would have been added to
the cost or price fixed by the local
manufacturers or distributors/sellers.
COMMISSIONER OF INTERNAL
REVENUE v. THE ESTATE OF
BENIGNO P. TODA, JR. G.R. No.
147188 September 14, 2004
Tax evasion connotes the integration
of three factors: (1) the end to be
achieved, i.e., the payment of less
than that known by the taxpayer to be
legally due, or the non-payment of
tax when it is shown that a tax is due;
(2) an accompanying state of mind
which is described as being evil, in
bad faith, willfull, or deliberate
and not accidental; and (3) a course
of action or failure of action which is
unlawful.
(FELS ENERGY, INC. v.
PROVINCE OF BATANGAS, 516
SCRA 186 (2007))
Taxation is the rule and exemption is
the exception.
BATANGAS POWER
CORPORATION BATANGAS CITY
and NATIONAL POWER
CORPORATION, G.R. No. 152675,
April 28, 2004
This Court recognized the removal of
the blanket exclusion of government
instrumentalities from local taxation
as one of the most significant
provisions of the 1991 LGC.
Specifically, we stressed that Section
193 of the LGC, an express and
general repeal of all statutes granting
exemptions from local taxes,
withdrew the sweeping tax privileges
previously enjoyed by the NPC under
its Charter.
ARTURO M. TOLENTINO v. THE
SECRETARY OF FINANCE and
THE COMMISSIONER OF
INTERNAL REVENUE, G.R. No.
115455, October 30, 1995
Since the law granted the press a
privilege, the law could take back the
privilege anytime without offense to
the Constitution. The reason is
simple: by granting exemptions, the
State does not forever waive the
exercise of its sovereign prerogative;
indeed, in withdrawing the
exemption, the law merely subjects
the press to the same tax burden to
which other businesses have long
ago been subject.
MCIAA v. Marcos, G.R. No. 120082
September 11, 1996
Nevertheless, since taxation is the
rule and exemption therefrom the
exception, the exemption may thus
be withdrawn at the pleasure of the
taxing authority. The only exception
to this rule is where the exemption
was granted to private parties based
on material consideration of a mutual
nature, which then becomes
contractual and is thus covered by
the non-impairment clause of the
Constitution.
SOUTH AFRICAN AIRWAYS v.
COMMISSIONER OF INTERNAL
REVENUE, 612 SCRA 665 (2010)
Taxes cannot be subject to
compensation for the simple reason
that the Government and the
taxpayers are not creditors and
debtors of each other, debts are due
to the Government in its corporate
capacity, while taxes are due to the
Government in its sovereign
capacity.
DOMINGO v. GARLITOS, 8 SCRA
443 (1963)
However, if the obligation to pay
taxes and the taxpayers claim
against the government are both
overdue, demandable, as well as
fully liquidated, compensation takes
place by operation of law and both
obligations are extinguished to their
concurrent amounts.
ASIA INTERNATIONAL
AUCTIONEERS, INC. v.
COMMISSIONER OF INTERNAL
REVENUE G.R. No. 179115
September 26, 2012
A tax amnesty, much like a tax
exemption, is never favored or
presumed in law. The grant of a tax
amnesty, similar to a tax exemption,
must be construed strictly against the
taxpayer and liberally in favor of the
taxing authority.
FORT BONIFACIO
DEVELOPMENT CORPORATION
v. COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 173425,
September 4, 2012
While administrative agencies, such
as the Bureau of Internal Revenue,
may issue regulations to implement
statutes, they are without authority to
limit the scope of the statute to less
than what it provides, or extend or
expand the statute beyond its terms,
or in any way modify explicit
provisions of the law. Hence, in case
of discrepancy between the basic
law and an interpretative or
administrative ruling, the basic law
prevails.
COMMISSIONER OF INTERNAL
REVENUE v. SM PRIME
HOLDINGS, INC. 613 SCRA 774
(2010)
Revenue Memorandum Circulars
(RMCs) must not override, supplant,
or modify the law, but must remain
consistent and in harmony with the
law they seek to apply and
implement.
TEAM ENERGY CORPORATION
(Formerly MIRANT PAGBILAO
CORPORATION) v.
COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 197760, January
13, 2014
BIR Ruling No. DA-489-03 is a
general interpretative rule because it
is a response to a query made, not
by a particular taxpayer, but by a
government agency tasked with
processing tax refunds and credits.
Thus, all taxpayers can rely on BIR
Ruling No. DA-489-03 from the time
of its issuance on 10 December 2003
up to its reversal by this Court in Aichi
on 6 October 2010, where this Court
held that the 120+30 day periods are
mandatory and jurisdictional.
PLANTERS PRODUCTS, INC. v.
FERTIPHIL CORPORATION, G.R.
No. 166006, March 14, 2008)
It would be a robbery for the State to
tax its citizens and use the funds
generated for a private purpose.
When a tax law is only a mask to
exact funds from the public when its
true intent is to give undue benefit
and advantage to a private
enterprise, that law will not satisfy the
requirement of public purpose.
ABAKADA GURO PARTY LIST
(Formerly AASJAS) OFFICERS
SAMSON S. ALCANTARA and ED
VINCENT S. ALBANO v. THE
HONORABLE EXECUTIVE
SECRETARY G.R. No. 168056
September 1, 2005
The powers which Congress is
prohibited from delegating are those
which are strictly, or inherently and
exclusively, legislative. Purely
legislative power, which can never
be delegated, has been described as
the authority to make a complete law
complete as to the time when it
shall take effect and as to whom it
shall be applicable and to
determine the expediency of its
enactment.
NATIONAL POWER
CORPORATION v. CITY OF
CABANATUAN G.R. No. 149110
April 9, 2003
Taxation assumes even greater
significance with the ratification of
the 1987 Constitution. Thenceforth,
the power to tax is no longer vested
exclusively on Congress; local
legislative bodies are now given
direct authority to levy taxes, fees
and other charges pursuant to Article
X, section 5 of the 1987 Constitution.
QUEZON CITY, et al. v. ABS-CBN
BROADCASTING
CORPORATION, G.R. No. 162015,
March 6, 2006
Clearly then, while a new slant on the
subject of local taxation now prevails
in the sense that the former doctrine
of local government units delegated
power to tax had been effectively
modified with Article X, Section 5 of
the 1987 Constitution now in place,
the basic doctrine on local taxation
remains essentially the same. For as
the Court stressed in Mactan, the
power to tax is [still] primarily vested
in the Congress.
SOUTHERN CROSS CEMENT
CORPORATION v. CEMENT
MANUFACTURERS ASSOCIATION
OF THE PHILIPPINES, G.R. No.
158540, August 3, 2005
Assuming that Section 28(2) Article
VI did not exist, the enactment of the
SMA [Safeguard Measure Act] by
Congress would be voided on the
ground that it would constitute an
undue delegation of the legislative
power to tax. The constitutional
provision shields such delegation
from constitutional infirmity, and
should be recognized as an
exceptional grant of legislative power
to the President, rather than the
affirmation of an inherent executive
power.
Alexander Howden & Co., Ltd. v.
Collector of Internal Revenue as cited
in COMMISSIONER OF
INTERNAL REVENUE v. JULIANE
BAIER-NICKEL, G.R. No. 153793,
August 29, 2006
The reinsurance premiums remitted
to appellants by virtue of the
reinsurance contracts, accordingly,
had for their source the undertaking
to indemnify Commonwealth
Insurance Co. against liability. Said
undertaking is the activity that
produced the reinsurance premiums,
and the same took place in the
Philippines.
COMMISSIONER OF INTERNAL
REVENUE v. JAPAN AIR LINES,
INC., G.R. No. 60714, March 6, 1991
For the source of income to be
considered as coming from the
Philippines, it is sufficient that the
income is derived from activities
within this country regardless of the
absence of flight operations within
Philippine territory. Indeed, the sale
of tickets is the very lifeblood of the
airline business, the generation of
sales being the paramount objective.
CITY OF IRIGA v. CAMARINES
SUR III ELECTRIC
COOPERATIVE, INC., G.R. No.
192945, September 5, 2012
Since it partakes of the nature of an
excise tax, the situs of taxation is the
place where the privilege is
exercised, in this case in the City of
Iriga, where CASURECO III has its
principal office and from where it
operates, regardless of the place
where its services or products are
delivered.
COMMISSIONER OF INTERNAL
REVENUE v.AMERICAN EXPRESS
INTERNATIONAL, INC.
(PHILIPPINE BRANCH), G.R. No.
152609, June 29, 2005
As a general rule, the VAT system
uses the destination principle as a
basis for the jurisdictional reach of
the tax. Goods and services are
taxed only in the country where they
are consumed; thus, exports are
zero-rated, while imports are taxed.
PHILIPPINE FISHERIES
DEVELOPMENT AUTHORITY
(PFDA) v. CENTRAL BOARD OF
ASSESSMENT APPEALS, G.R. No.
178030, December 15, 2010
As property of public dominion, the
Lucena Fishing Port Complex is
owned by the Republic of the
Philippines and thus exempt from
real estate tax.
KAPATIRAN NG MGA
NAGLILINGKOD SA
PAMAHALAAN NG PILIPINAS,
INC. v. HON. BIENVENIDO TAN,
G.R. No. 81311, June 30, 1988
Equality and uniformity in taxation
means that all taxable articles or
kinds of property of the same class
shall be taxed at the same rate. The
taxing power has the authority to
make reasonable and natural
classifications for purposes of
taxation; inequalities which result
from a singling out of one particular
class for taxation or exemption
infringe no constitutional limitation.
LUNG CENTER OF THE
PHILIPPINES v. QUEZON CITY,
G.R. No. 144104, June 29, 2004
Even as we find that the petitioner is
a charitable institution, we hold that
those portions of its real property that
are leased to private entities are not
exempt from real property taxes as
these are not actually, directly and
exclusively used for charitable
purposes. On the other hand, the
portions of the land occupied by the
hospital and portions of the hospital
used for its patients, whether paying
or non-paying, are exempt from real
property taxes.
COMMISSIONER OF INTERNAL
REVENUE v. ST. LUKES
MEDICAL CENTER, INC. G.R. No.
195909 September 26, 2012
Section 30(E) and (G) of the NIRC
requires that an institution be
operated exclusively for charitable
or social welfare purposes to be
completely exempt from income tax.
An institution under Section 30(E) or
(G) does not lose its tax exemption if
it earns income from its for-profit
activities. Such income from for-profit
activities, under the last paragraph of
Section 30, is merely subject to
income tax, previously at the
ordinary corporate rate but now at
the preferential 10% rate pursuant to
Section 27(B).
JOHN HAY PEOPLES
ALTERNATIVE COALITION, et al.
v. VICTOR LIM, et al., G. R. No.
119775, October 24, 2003
The incentives under R.A. No. 7227
are exclusive only to the Subic SEZ,
hence, the extension of the same to
the John Hay SEZ finds no support
therein. The challenged grant of tax
exemption would circumvent the
Constitutions imposition that a law
granting any tax exemption must
have the concurrence of a majority of
all the members of Congress.
COMMISSIONER OF INTERNAL
REVENUE v. MARUBENI
CORPORATION, G.R. No. 137377,
December 18, 2001

A contractors tax is generally in the
nature of an excise tax on the
exercise of a privilege of selling
services or labor rather than a sale
on products; and is directly
collectible from the person exercising
the privilege. Being an excise tax, it
can be levied by the taxing authority
only when the acts, privileges or
business are done or performed
within the jurisdiction of said
authority.
CITY OF IRIGA v. CAMARINES
SUR III ELECTRIC
COOPERATIVE, INC., G.R. No.
192945, September 5, 2012
A franchise tax is a tax on the
privilege of transacting business in
the state and exercising corporate
franchises granted by the state. It is
not levied on the corporation simply
for existing as a corporation, upon its
property or its income, but on its
exercise of the rights or privileges
granted to it by the government.
ASIA INTERNATIONAL
AUCTIONEERS, INC. v.
COMMISSIONER OF INTERNAL
REVENUE G.R. No. 179115
September 26, 2012
Indirect taxes, like VAT and excise
tax, are different from withholding
taxes: To distinguish, in indirect
taxes, the incidence of taxation falls
on one person but the burden thereof
can be shifted or passed on to
another person, such as when the
tax is imposed upon goods before
reaching the consumer who
ultimately pays for it. On the other
hand, in case of withholding taxes,
the incidence and burden of taxation
fall on the same entity, the statutory
taxpayer. The burden of taxation is
not shifted to the withholding agent
who merely collects, by withholding,
the tax due from income payments to
entities arising from certain
transactions and remits the same to
the government.
ARTURO M. TOLENTINO v. THE
SECRETARY OF FINANCE and
THE COMMISSIONER OF
INTERNAL REVENUE, G.R. No.
115455, October 30, 1995
The Constitution does not really
prohibit the imposition of indirect
taxes which, like the VAT, are
regressive since what it simply
provides is that Congress shall
evolve a progressive system of
taxation. The constitutional
provision has been interpreted to
mean simply that direct taxes are to
be preferred [and] as much as
possible, indirect taxes should be
minimized.
CHINA BANKING CORPORATION
vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No.
175108 (2013).
The 20% final tax withheld on a
banks passive income should be
included in the computation of the
Gross Receipts Tax (GRT). Bureau
of Internal Revenue (BIR) has
consistently ruled that the term gross
receipts do not admit of any
deduction. It emphasized that
interest earned by banks, even if
subject to the final tax and excluded
from taxable gross income, forms
part of its gross receipt for GRT
purposes. The interest earned refers
to the gross interest without
deduction, since the regulations do
not provide for any deduction.
Absent a statutory definition of the
term, the BIR had consistently
applied it in its ordinary meaning, i.e.,
without deduction.
TAN v. DEL ROSARIO, JR. 237
SCRA 324
Global treatment is a system where
the tax treatment views indifferently
the tax base and generally treats in
common all categories of taxable
income of the taxpayer. Schedular
approach is a system employed
where the income tax treatment
varies and made to depend on the
kind or category of taxable income of
the taxpayer.
CIR vs Isabela Cultural Corp., GR
172231, February 12, 2007
The accrual method relies upon the
taxpayers right to receive amounts
or its obligation to pay them, in
opposition to actual receipt or
payment, which characterizes the
cash method of accounting. Amounts
of income accrue where the right to
receive them become fixed, where
there is created an enforceable
liability. Similarly, liabilities are
accrued when fixed and
determinable in amount, without
regard to indeterminacy merely of
time of payment. For a taxpayer
using the accrual method, the
determinative question is, when do
the facts present themselves in such
a manner that the taxpayer must
recognize income or expense? The
accrual of income and expense is
permitted when the all-events test
has been met. This test requires: (1)
fixing of a right to income or liability
to pay; and (2) the availability of the
reasonable accurate determination
of such income or liability.
Tomas Calasanz, et al. vs.
Commissioner of Internal Revenue, et
al., G.R. No. L-26284, October 9, 1986
The proceeds from the inherited land
of petitioners, which they subdivided
into small lots and in the process
converted into a residential
subdivision and given the name Don
Mariano Subdivision, is taxable as
ordinary income. Property initially
classified as a capital asset may
thereafter be treated as an ordinary
asset if a combination of the factors
indubitably tend to show that the
activity was in furtherance of or in the
course of the taxpayers trade or
business; thus, a sale of inherited
real property usually gives capital
gain or loss even though the property
has to be subdivided or improved or
both to make it salablehowever, if
the inherited property is substantially
improved or very actively sold or both
it may be treated as held primarily for
sale to customers in the ordinary
course of the heirs business.
CIR vs CA, G.R. No. 108576 January
20, 1999
Stock dividends, strictly speaking,
represent capital and do not
constitute income to its recipient. So
that the mere issuance thereof is not
yet subject to income tax as they are
nothing but an enrichment through
increase in value of capital
investment. However, the
redemption or cancellation of stock
dividends, depending on the time
and manner it was made, is
essentially equivalent to a
distribution of taxable dividends,
making the proceeds thereof taxable
income to the extent it represents
profits. The exception was designed
to prevent the issuance and
cancellation or redemption of stock
dividends, which is fundamentally
not taxable, from being made use of
as a device for the actual distribution
of cash dividends, which is taxable.
Ma. Isabel T. Santos vs. Servier Phil.,
Inc., et al., G.R. No. 166377,
November 28, 2008
Respondent terminated petitioners
services due to her illness, rendering
her incapable of continuing to work,
and gave her retirement benefits but
withheld the tax due thereon. The
retirements benefits are taxable
because the petitioner was only 41
yrs old at the time of retirement and
had rendered only 8 years of service;
for these benefits to be exempt from
tax, the following requisites must
concur: (1) a reasonable private
benefit plan is maintained by the
employer; (2) the retiring official or
employee has been in the service of
the same employer for at least ten
(10) years; (3) the retiring official or
employee is not less than fifty (50)
years of age at the time of his
retirement; and (4) the benefit had
been availed of only once.
1. M. Hoskins & Co., Inc. vs.
Commissioner of Internal Revenue,
G.R. No. L-24059, November 28, 1969
Payment by the taxpayer-corporation
to its controlling stockholder
(Hoskins) of 50% of its supervision
fees (paid by a client of the
corporation for the latters services
as managing agent of a subdivision
project) or the amount of P99,977.91
is not a deductible ordinary and
necessary expense because it does
not pass the test of reasonable
compensation. If independently, a
one-time P100,000.00-fee to plan
and lay down the rules for
supervision of a subdivision project
were to be paid to an experienced
realtor such as Hoskins, its fairness
and deductibility by the taxpayer
could be conceded; however, the fee
paid to Hoskins continued every year
since 1955 up to 1963 and for as long
as its contract with the subdivision
owner subsisted, regardless of
whether services were actually
rendered by Hoskins.
Philippine Refining Company vs.
Court of Appeals, et al., G.R. No.
118794, May 8, 1996
In claiming deductions for bad debts,
the only evidentiary support given by
PRC was the explanation posited by
its accountant, whose allegations
were not supported by any
documentary evidence. One of the
requisites to qualify as bad debt is
that the debt must be actually
ascertained to be worthless and
uncollectible during the taxable year,
and the taxpayer must prove that he
exerted diligent efforts to collect the
debts by (1) sending of statement of
accounts; (2) sending of collection
letters; (3) giving the account to a
lawyer for collection; and (4) filing a
collection case in court.
Consolidated Mines, Inc. vs. Court of
Tax Appeals, et al., G.R. Nos. L-18843
& 18844, August 29, 1974
Both depletion and depreciation are
predicated on the same basic
promise of avoiding a tax on capital.
The allowance for depletion is based
on the theory that the extraction of
minerals gradually exhausts the
capital investment in the mineral
deposit. The purpose of the depiction
deduction is to permit the owner of a
capital interest in mineral in place to
make a tax-free recovery of that
depleting capital asset. A depletion is
based upon the concept of the
exhaustion of a natural resource
whereas depreciation is based upon
the concept of the exhaustion of the
property, not otherwise a natural
resource, used in a trade or business
or held for the production of income.
Thus, depletion and depreciation are
made applicable to different types of
assets. And a taxpayer may not
deduct that which the Code allows as
of another.
COMMISSIONER OF INTERNAL
REVENUE vs. PHILIPPINE
AIRLINES, INC. (PAL), G.R. No.
179259 (2013).
A corporation like the Philippine
Airlines who has a franchise of its
own cannot be subject to the
minimum corporate income tax. The
reason being- as provided in PD
1590, Section 13 of PALs franchise,
its taxation shall be strictly governed
by two fundamental rules, to wit: (1)
respondent shall pay the
Government either the basic
corporate income tax or franchise
tax, whichever is lower; and (2) the
tax paid by respondent, under either
of these alternatives, shall be in lieu
of all other taxes, duties, royalties,
registration, license, and other fees
and charges, except only real
property tax.
Manila Banking Corp. v. CIR, 499
SCRA 782
The intent of Congress relative to the
MCIT is to grant a 4 year suspension
of tax payment to newly formed
corporations. Corporations still
starting have to stabilize their
venture in order to obtain stronghold
in the industry. It is not a surprise
when many corporations reported
losses in their initial years of
operations.
Commissioner of Internal Revenue vs.
Court of Appeals, et al., G.R. No.
124043, October 14, 1998
YMCA, a non-stock non-profit
corporation with charitable
objectives, claimed exemption from
payment of income tax by invoking
the NIRC and the Constitution. While
the income received by the
organizations enumerated in Section
26 of the NIRC is, as a rule,
exempted from the payment of tax in
respect to income received by them
as such, the exemption does not
apply to income derived from any of
their properties, real or personal, or
from any of their activities conducted
for profit, regardless of the
disposition made of such income;
Moreover, charitable institutions
under Art. VI, sec. 28 of the
Constitution are only exempted from
property taxes, and YMCA is not an
educational institution under Article
XIV, Section 4 of the Constitution.
Commissioner of Internal Revenue vs.
Citytrust Investment Phils., Inc., G.R.
Nos. 139786 & 140857, September 27,
2006

Citytrust and Asianbank are
domestic corporations which paid
gross receipts tax and claimed a
refund on the basis of a CTA ruling
that the 20% FWT on a banks
passive income does not form part of
the taxable gross receipts. The 20%
FWT on a banks interest income
forms part of the taxable gross
receipts because gross receipts
means the entire receipts without
any deduction; moreover, the
imposition of the 20% FWT and 5%
GRT does not constitute double
taxation because GRT is a
percentage tax while FWT is an
income tax, and the two concepts are
different from each other.
COMMISSIONER OF INTERNAL
REVENUE vs. TEAM
(PHILIPPINES) OPERATIONS
CORPORATION, G.R. No. 185728
(2013).
For a taxpayer to be entitled to a tax
credit or refund of creditable
withholding tax, the following
requisites must be complied with:
First, The claim must be filed with the
CIR within the two-year period from
the date of payment of the tax;
Second, It must be shown on the
return of the recipient that the income
received was declared as part of the
gross income; and Third, The fact of
withholding is established by a copy
of the statement duly issued by the
payor to the payee showing the
amount paid and the amount of tax
withheld.
TAX II
GONZALO VILLANUEVA vs.
SPOUSES FROILAN, G.R. No.
172804, January 24, 2011
Post-mortem dispositions typically
(1) Convey no title or ownership to
the transferee before the death of the
transferor; or, what amounts to the
same thing, that the transferor
should retain the ownership (full or
naked) and control of the property
while alive;
(2) That before the [donors] death,
the transfer should be revocable by
the transferor at will, ad nutum; but
revocability may be provided for
indirectly by means of a reserved
power in the donor to dispose of the
properties conveyed;
(3) That the transfer should be void if
the transferor should survive the
transferee;
[4] [T]he specification in a deed of the
causes whereby the act may be
revoked by the donor indicates that
the donation is inter vivos, rather
than a disposition mortis causa;
[5] That the designation of the
donation as mortis causa, or a
provision in the deed to the effect that
the donation is to take effect at the
death of the donor are not
controlling criteria; such statements
are to be construed together with the
rest of the instrument, in order to give
effect to the real intent of the
transferor; and
(6) That in case of doubt, the
conveyance should be deemed
donation inter vivos rather than
mortis causa, in order to avoid
uncertainty as to the ownership of the
property subject of the deed.
ROMARICO G. VITUG vs. THE
HONORABLE COURT OF
APPEALS and ROWENA
FAUSTINO-CORONA, G.R. No.
82027, March 29, 1990
The conveyance in question is not,
first of all, one of mortis causa, which
should be embodied in a will. In this
case, the monies subject of savings
account were in the nature of
conjugal funds. In the case relied on,
Rivera v. Peoples Bank and Trust
Co., we rejected claims that a
survivorship agreement purports to
deliver one partys separate
properties in favor of the other, but
simply, their joint holdings.
RAFAEL ARSENIO S. DIZON vs.
COURT OF TAX APPEALS, G.R.
No. 140944, April 30, 2008
As held in Propstra v. U.S., where a
lien claimed against the estate was
certain and enforceable on the date
of the decedents death, the fact that
the claimant subsequently settled for
lesser amount did not preclude the
estate from deducting the entire
amount of the claim for estate tax
purposes. These pronouncements
essentially confirm the general
principle that post-death
developments are not material in
determining the amount of the
deduction.
COMMISSIONER OF INTERNAL
REVENUE vs. COURT OF
APPEALS, G.R. No. 123206, March
22, 2000
Administration expenses, as an
allowable deduction from the gross
estate of the decedent for purposes
of arriving at the value of the net
estate, have been construed by the
federal and state courts of the United
States to include all expenses
essential to the collection of the
assets, payment of debts or the
distribution of the property to the
persons entitled to it. In other words,
the expenses must be essential to
the proper settlement of the estate
and expenditures incurred for the
individual benefit of the heirs,
devisees or legatees are not
deductible.
SPS. AGRIPINO GESTOPA and
ISABEL SILARIO GESTOPA vs.
COURT OF APPEALS, G.R. No.
111904, October 5, 2000
The granting clause shows that
Diego donated the properties out of
love and affection for the donee
which is a mark of a donation inter
vivos; second, the reservation of
lifetime usufruct indicates that the
donor intended to transfer the naked
ownership over the properties; third,
the donor reserved sufficient
properties for his maintenance in
accordance with his standing in
society, indicating that the donor
intended to part with the six parcels
of land; lastly, the donee accepted
the donation.
The Philippine American Life and
General Insurance Company vs. The
Secretary of Finance and the
Commissioner of Internal Revenue,
G.R. No. 210987 (November 24, 2014).
The absence of donative intent does
not exempt the sales of stock
transaction from donors tax since
Sec. 100 of the NIRC categorically
states that the amount by which the
fair market value of the property
exceeded the value of the
consideration shall be deemed a gift.
Thus, even if there is no actual
donation, the difference in price is
considered a donation by fiction of
law. Moreover, Sec. 7(c.2.2) of RR
06-08 does not alter Sec. 100 of the
NIRC but merely sets the parameters
for determining the fair market
value of a sale of stocks. Lastly,
RMC 25-11, even if issued after the
sale, was not being applied
retroactively since it merely called for
the strict application of Sec. 100,
which was already in force the
moment the NIRC was enacted.
COMMISSIONER OF INTERNAL
REVENUE vs. SONY PHILIPPINES,
INC., G.R. No. 178697, November 17,
2010
Thus, there must be a sale, barter or
exchange of goods or properties
before any VAT may be levied.
Certainly, there was no such sale,
barter or exchange in the subsidy
given by SIS to Sony; it was but a
dole out by SIS and not in payment
for goods or properties sold, bartered
or exchanged by Sony.
MINDANAO II GEOTHERMAL
PARTNERSHIP vs.
COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 193301, March
11, 2013
Mindanao IIs sale of the Nissan
Patrol is said to be an isolated
transaction. However, it does not
follow that an isolated transaction
cannot be an incidental transaction
for purposes of VAT liability. Indeed,
a reading of Section 105 of the 1997
Tax Code would show that a
transaction in the course of trade or
business includes transactions
incidental thereto.
CIR v. SM Prime Holdings, Inc. and
First Asia Realty Development Corp.,
G.R. No. 183505, February 26, 2010
Among those included in the
enumeration is the lease of motion
picture films, films, tapes and discs.
This, however, is not the same as the
showing or exhibition of motion
pictures or films. The legislative
intent is not to impose VAT on
persons already covered by the
amusement tax and this holds true
even in the case of cinema/theater
operators taxed under the LGC of
1991 precisely because the VAT law
was intended to replace the
percentage tax on certain services.
ATLAS CONSOLIDATED MINING
AND DEVELOPMENT
CORPORATION vs.
COMMISSIONER OF INTERNAL
REVENUE, G.R. Nos. 141104 &
148763, June 8, 2007
According to the Destination
Principle, goods and services are
taxed only in the country where these
are consumed. In connection with
the said principle, the Cross Border
Doctrine mandates that no VAT shall
be imposed to form part of the cost of
the goods destined for consumption
outside the territorial border of the
taxing authority. Hence, actual
export of goods and services from
the Philippines to a foreign country
must be free of VAT, while those
destined for use or consumption
within the Philippines shall be
imposed with 10% VAT.
CIR v. Seksui Jushi Phils, Inc. G.R.
No. 149671, July 21, 2006
While an ecozone is geographically
within the Philippines, it is deemed a
separate customs territory and is
regulated in laws as foreign soul.
Sales by supplies outside the
borders of ecozone to this separate
customs territory are deemed
exports and treated as export sales.
PHILIPPINE AMUSEMENT AND
GAMING CORPORATION
(PAGCOR) vs. THE BUREAU OF
INTERNAL REVENUE, G.R. No.
172087, March 15, 2011
The rationale for the exemption from
indirect taxes provided for in P.D.
1869 and the extension of such
exemption to entities or individuals
dealing with PAGCOR in casino
operations are best elucidated from
the 1987 case of Commissioner of
Internal Revenue v. John Gotamco &
Sons, Inc., where the absolute tax
exemption of the World Health
Organization (WHO) upon an
international agreement was upheld.
We held in said case that the
exemption of contractee WHO
should be implemented to mean that
the entity or person exempt is the
contractor itself who constructed the
building owned by contractee WHO,
and such does not violate the rule
that tax exemptions are personal
because the manifest intention of the
agreement is to exempt the
contractor so that no contractors tax
may be shifted to the contractee
WHO.
LUZON HYDRO CORPORATION
vs. COMMISSION ON INTERNAL
REVENUE, G.R. No. 188260 (2013).
Even though the sale of electricity by
a power generation company is
subject to zero-rated VAT, its claim
for refund or tax credit cannot be
granted where no VAT official
receipts and VAT returns have been
presented to prove that it actually
made zero-rated sales of electricity.
An entity claiming for refund or tax
credit carries with it the burden of
proving that not only is it entitled
under the substantive law to the
allowance of its claim for refund or
tax credit but also that it met all the
requirements for evidentiary
substantiation of its claim before the
administrative official concerned.
CBK POWER COMPANY LIMITED
vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. Nos.
198729-30 (2014).
Under Section 112(A) of the NIRC,
for VAT-registered persons whose
sales are zero-rated or effectively
zero-rated, a claim for the refund or
credit of creditable input tax that is
due or paid, and that is attributable to
zero-rated or effectively zero-rated
sales, must be filed within two years
after the close of the taxable quarter
when such sales were made. The
reckoning frame would always be the
end of the quarter when the pertinent
sale or transactions were made,
regardless of when the input VAT
was paid. Also, in the filing of judicial
claims, the 30-day period to appeal
to the CTA is dependent on the 120-
day period, compliance with both
periods is jurisdictional. The period of
120 days is a prerequisite for the
commencement of the 30-day period
to appeal to the CTA.
COMMISSIONER OF INTERNAL
REVENUE vs. MINDANAO II
PARTNERSHIP, G.R. No. 191498
(2014).
Section 112(D) speaks of two
periods: the period of 120 days,
which serves as a waiting period to
give time for the CIR to act on the
administrative claim for refund or
credit, and the period of 30 days,
which refers to the period for
interposing an appeal with the CTA.
The 30-day period applies not only to
instances of actual denial by the CIR
of the claim for refund or tax credit,
but to cases of inaction by the CIR as
well. Therefore, notwithstanding the
timely filing of administrative claims,
the CTA does not have jurisdiction
over the case where the taxpayers
judicial claim was filed beyond the 30
day period, the nature of such time
requirement being mandatory.
Commissioner of Internal Revenue vs.
Silicon Philippines, Inc. (formerly
Intel Philippines Manufacturing,
Inc.), G.R. No. 169778 (March 12,
2014).
Prior to seeking judicial recourse
before the CTA, a VATregistered
person may apply for the issuance of
a tax credit certificate or refund of
creditable input tax attributable to
zerorated or effectively zerorated
sales within two (2) years after the
close of taxable quarter when the
sales or purchases were made.
Additionally, under paragraph (D) of
Section 112, Tax Code, the
Commissioner of Internal Revenue is
given a 120day period, from
submission of complete documents
in support of the administrative
claim within which to act on claims
for refund/applications for issuance
of the tax credit certificate. Upon
denial of the claim or application,
or upon expiration of the 120day
period, the taxpayer only has 30 days
within which to appeal said adverse
decision or unacted claim before the
CTA.
Taganito Mining Corporation vs.
Commissioner of Internal Revenue,
G.R. No. 197591 (June 18, 2014).
The 2010 Aichi case instructs that
once the administrative claim is filed
within the prescriptive period, the
claimant must wait for the 120-day
period to end and, thereafter, he is
given a 30-day period to file his
judicial claim before the CTA, even if
said 120-day and 30-day periods
would exceed the aforementioned
two (2)-year prescriptive period.
Taganito Mining Corporation vs.
Commissioner of Internal Revenue,
G.R. No. 201195 (November 26, 2014).
The 2-year period under Section 229
does not apply to appeals before the
CTA in relation to claims for a refund
or tax credit for unutilized creditable
input VAT. Section 229 pertains to
the recovery of taxes erroneously,
illegally, or excessively
collected. Input VAT is not
excessively collected as understood
under Section 229 because, at the
time the input VAT is collected, the
amount paid is correct and proper. It
is, therefore, Section 112 which
applies specifically with regard to
claiming a refund or tax credit for
unutilized creditable input VAT.
FORT BONIFACIO
DEVELOPMENT CORPORATION
vs. COMMISSIONER OF
INTERNAL REVENUE, G.R. No.
173425, January 22, 2013
Prior payment of taxes is not
necessary before a taxpayer could
avail of the 8% transitional input tax
credit: first, it was never mentioned in
Section 105 of the old NIRC [now
Sec. 111] that prior payment of taxes
is a requirement; second, since the
law (Section 105 of the NIRC) does
not provide for prior payment of
taxes, to require it now would be
tantamount to judicial legislation
which, to state the obvious, is not
allowed; third, a transitional input tax
credit is not a tax refund per se but a
tax credit; fourth, if the intent of the
law were to limit the input tax to
cases where actual VAT was paid, it
could have simply said that the tax
base shall be the actual value-added
tax paid; and fifth, this Court had
already declared that prior payment
of taxes is not required in order to
avail of a tax credit.
COMMISSIONER OF INTERNAL
REVENUE vs. SEAGATE
TECHNOLOGY (PHILIPPINES),
G.R. No. 153866, February 11, 2005
Having determined that respondents
purchase transactions are subject to
a zero VAT rate, the tax refund or
credit is in order. To repeat, the VAT
is a tax imposed on consumption, not
on business. Although respondent as
an entity is exempt, the transactions
it enters into are not necessarily so.
The VAT payments made in excess
of the zero rate that is imposable may
certainly be refunded or credited.
CIR vs Pascor Realty and
Development Corp., GR no. 128315,
June 29, 1999
An assessment contains not only a
computation of tax liabilities, but also
a demand for payment within a
prescribed period. It also signals the
time when penalties and protests
begin to accrue against the taxpayer.
To enable the taxpayer to determine
his remedies thereon, due process
requires that it must be served on
and received by the taxpayer.
Accordingly, an affidavit, which was
executed by revenue officers stating
the tax liabilities of a taxpayer and
attached to a criminal complaint for
tax evasion, cannot be deemed an
assessment that can be questioned
before the Court of Tax Appeals.
SMI-ED Philippine Technology, Inc.
vs. Commissioner of Internal
Revenue, G.R. No. 175410 (November
12, 2014)
The power and duty to assess
national internal revenue taxes are
lodged with the BIR.
The Court of Tax Appeals has no
power to make an assessment at the
first instance. On matters such as
tax collection, tax refund, and others
related to the national internal
revenue taxes, the Court of Tax
Appeals jurisdiction is appellate in
nature. However, because Republic
Act No. 1125 also vests the Court of
Tax Appeals with jurisdiction over the
BIRs inaction on a taxpayers refund
claim, there may be instances when
the Court of Tax Appeals has to take
cognizance of cases that have
nothing to do with the BIRs
assessments or decisions. If the
BIR fails to act on the request for
refund, the taxpayer may bring the
matter to the Court of Tax Appeals.
Samar-I Electric Cooperative vs.
Commissioner of Internal Revenue,
G.R. No. 193100 (December 10, 2014).
Our stand that the law should be
interpreted to mean a separation of
the three different situations of false
return, fraudulent return with intent to
evade tax, and failure to file a return
is strengthened immeasurably by the
last portion of the provision which
segregates the situations into three
different classes, namely falsity,
fraud and omission. That there is
a difference between false return
and fraudulent return cannot be
denied. While the first merely implies
deviation from the truth, whether
intentional or not, the second implies
intentional or deceitful entry with
intent to evade the taxes due.
CIR vs Hantex Trading Co., GR no.
136975, March 31, 2005
The rule is that in the absence of the
accounting records of a taxpayer, his
tax liability may be determined by
estimation. The petitioner is not
required to compute such tax
liabilities with mathematical
exactness. Approximation in the
calculation of the taxes due is
justified. To hold otherwise would be
tantamount to holding that skillful
concealment is an invincible barrier
to proof. However, the rule does not
apply where the estimation is arrived
at arbitrarily and capriciously. In fine,
then, the petitioner acted arbitrarily
and capriciously in relying on and
giving weight to the machine copies
of the Consumption Entries in fixing
the tax deficiency assessments
against the respondent.
PHILIPPINE AIRLINES, INC. vs.
COMMISSIONER OF INTERNAL
REVENUE, G.R. No. 198759 (2013).
Section 204(c) of the NIRC provides
that it is the statutory taxpayer which
has the legal personality to file a
claim for refund. Accordingly, in
cases involving excise tax
exemptions on petroleum products
under Section 135, the Court has
consistently held that it is the
statutory taxpayer who is entitled to
claim a tax refund based thereon and
not the party who merely bears its
economic burden. However, the
abovementioned rule should not
apply to instances where the law
clearly grants the party to which the
economic burden of the tax is shifted
an exemption from both direct and
indirect taxes. In which case, the
latter must be allowed to claim a tax
refund even if it is not considered as
the statutory taxpayer under the law.
In this case, PALs franchise grants it
an exemption from both direct and
indirect taxes on its purchase of
petroleum products. Hence, PAL has
the legal personality to file the claim
for refund for the passed on excise
taxes because of its franchise.
CIR vs Primetown Property Group
Inc., GR 162155, August 28, 2007
Both Article 13 of the Civil Code and
Section 31, Chapter VIII, Book I of
the Administrative Code of 1987 deal
with the same subject matter the
computation of legal periods. Under
the Civil Code, a year is equivalent to
365 days whether it be a regular year
or a leap year. Under the
Administrative Code of 1987,
however, a year is composed of 12
calendar months. Needless to state,
under the Administrative Code of
1987, the number of days is
irrelevant. There obviously exists a
manifest incompatibility in the
manner of computing legal periods
under the Civil Code and the
Administrative Code of 1987. For this
reason, we hold that Section 31,
Chapter VIII, Book I of the
Administrative Code of 1987, being
the more recent law, governs the
computation of legal periods.
CIR vs Phoenix Assurance Co., L-
19127, May 20, 1965
Considering that the deficiency
assessment was based on the
amended return which, as
aforestated, is substantially different
from the original return, the period of
limitation of the right to issue the
same should be counted from the
filing of the amended income tax
return. We believe that to hold
otherwise, we would be paving the
way for taxpayers to evade the
payment of taxes by simply reporting
in their original return heavy losses
and amending the same more than
five years later when the
Commissioner of Internal Revenue
has lost his authority to assess the
proper tax thereunder. The object of
the Tax Code is to impose taxes for
the needs of the Government, not to
enhance tax avoidance to its
prejudice.
CIR v. Metro Star Superama, Inc. 637
SCRA 633
Sec. 228 of the Tax Code clearly
requires that the taxpayer must be
informed that he is liable for
deficiency taxes through the sending
of a Preliminary Assessment Notice.
The sending of a PAN to the taxpayer
is to inform him of the assessment
made is but part of due process
requirement in the issuance of a
deficiency tax assessment, the
absence of which renders nugatory
any assessment made by the tax
authorities.
CIR v. Enron Subic Power Corp. 575
SCRA 212
A taxpayer must be informed in
writing of the legal and factual bases
of the tax assessment made against
him. This is a mandatory
requirement. The advice of a tax
deficiency given by the CIR to an
employee of Enron as well as the
preliminary 5-day letter notice, were
not valid substitutes for the
mandatory notice in writing of the
legal and factual bases of the
assessment. Sec. 228 of the NIRC
requires that the legal and factual
bases be stated in the formal letter of
demand and assessment notice.
Otherwise the law and RR 12-99
would be rendered nugatory. In view
of the absence of a fair opportunity
for Enron to be informed of the bases
of the assessment, the assessment
was void. This is a requirement of
due process.
CIR vs First Express Pawnshop
Company, GR 172045-46, June 16,
2009
Petitioner cannot insist on the
submission of proof of DST payment
because such document does not
exist as respondent claims that it is
not liable to pay, and has not paid,
the DST on the deposit on
subscription. The term relevant
supporting documents should be
understood as those documents
necessary to support the legal basis
in disputing a tax assessment as
determined by the taxpayer. The BIR
can only inform the taxpayer to
submit additional documents. The
BIR cannot demand what type of
supporting documents should be
submitted. Otherwise, a taxpayer will
be at the mercy of the BIR, which
may require the production of
documents that a taxpayer cannot
submit.
Allied Banking Corporation vs CIR,
G.R. No. 175097, February 5, 2010
Records show that petitioner
disputed the PAN but not the Formal
Letter of Demand with Assessment
Notices. Nevertheless, we cannot
blame petitioner for not filing a
protest against the Formal Letter of
Demand with Assessment Notices
since the language used and the
tenor of the demand letter indicate
that it is the final decision of the
respondent on the matter. We have
time and again reminded the CIR to
indicate, in a clear and unequivocal
language, whether his action on a
disputed assessment constitutes his
final determination thereon in order
for the taxpayer concerned to
determine when his or her right to
appeal to the tax court accrues.
Viewed in the light of the foregoing,
respondent is now estopped from
claiming that he did not intend the
Formal Letter of Demand with
Assessment Notices to be a final
decision.
CIR vs Union Shipping Corporation,
GR L-66160, May 21, 1990
The request for reinvestigation and
reconsideration was in effect
considered denied by petitioner
when the latter filed a civil suit for
collection of deficiency income.
Under the circumstances, the
Commissioner of Internal Revenue,
not having clearly signified his final
action on the disputed assessment,
legally the period to appeal has not
commenced to run. Thus, it was only
when private respondent received
the summons on the civil suit for
collection of deficiency income on
December 28, 1978 that the period to
appeal commenced to run.
CIR vs Kudos Metal Corp., GR
178087, May 5, 2010
While we may agree with the Court of
Tax Appeals that a mere request for
reexamination or reinvestigation may
not have the effect of suspending the
running of the period of limitation for
in such case there is need of a
written agreement to extend the
period between the Collector and the
taxpayer, there are cases however
where a taxpayer may be prevented
from setting up the defense of
prescription even if he has not
previously waived it in writing as
when by his repeated requests or
positive acts the Government has
been, for good reasons, persuaded
to postpone collection to make him
feel that the demand was not
unreasonable or that no harassment
or injustice is meant by the
Government.
CIR vs Philippine Global
Communication, GR 167146, October
31, 2006
The running of the prescription
period where the acts of the taxpayer
did not prevent the government from
collecting the tax. Partial payment
would not prevent the government
from suing the taxpayer. Because, by
such act of payment, the government
is not thereby persuaded to
postpone collection to make him feel
that the demand was not
unreasonable or that no harassment
or injustice is meant.
Bank of Philippine Islands (Formerly
Far East Bank and Trust Company) v.
Commissioner of Internal Revenue, G.
R. No. 174942, March 7, 2008
The law prescribing a limitation of
actions for the collection of the
income tax is beneficial both to the
Government and to its citizens; to the
Government because tax officers
would be obliged to act promptly in
the making of assessment, and to
citizens because after the lapse of
the period of prescription citizens
would have a feeling of security
against unscrupulous tax agents who
will always find an excuse to inspect
the books of taxpayers, not to
determine the latters real liability, but
to take advantage of every
opportunity to molest peaceful, law-
abiding citizens. Without such a legal
defense taxpayers would
furthermore be under obligation to
always keep their books and keep
them open for inspection subject to
harassment by unscrupulous tax
agents.
Republic vs Enriquez, GR 78391,
October 21, 1988
It is settled that the claim of the
government predicated on a tax lien
is superior to the claim of a private
litigant predicated on a judgment.
The tax lien attaches not only from
the service of the warrant of distraint
of personal property but from the
time the tax became due and
payable. Besides, the distraint on the
subject properties of Maritime
Company of the Philippines as well
as the notice of their seizure were
made by petitioner, through the
Commissioner of Internal Revenue,
long before the writ of execution was
issued by the Regional Trial Court.
Commissioner of Internal Revenue vs.
Manila Electric Company, G.R. No.
181459 (June 9, 2014).
The claim for tax refund in the
aggregate amount must fail since the
same has already prescribed under
Section 229 of the Tax Code. The
prescriptive period of two (2) years
commences to run from the time that
the refund is ascertained, the
propriety thereof is determined by
law (in this case, from the date of
payment of tax), and not upon the
discovery by the taxpayer of the
erroneous or excessive payment of
taxes. The issuance by the BIR of the
Ruling declaring the tax-exempt
status of NORD/LB, if at all, is merely
confirmatory in nature. BIR Ruling
No. DA-342-2003 is not the operative
act from which an entitlement of
refund is determined.
Systra Philippines vs CIR, GR 176290,
September 21, 2007
A corporation entitled to a tax credit
or refund of the excess estimated
quarterly income taxes paid has two
options: (1) to carry over the excess
credit or (2) to apply for the issuance
of a tax credit certificate or to claim a
cash refund. If the option to carry
over the excess credit is exercised,
the same shall be irrevocable for that
taxable period. This is known as the
irrevocability rule and is embodied in
the last sentence of Section 76 of the
Tax Code.
Philippine Phosphate Fertilizer Corp.
vs CIR, GR 141973, June 28, 2005
In cases before tax courts, Rules of
Court applies only by analogy or in a
suppletory character and whenever
practicable and convenient shall be
liberally construed in order to
promote its objective of securing a
just, speedy and inexpensive
disposition of every action and
proceeding. Since it is not disputed
that petitioner is entitled to tax
exemption, it should not be
precluded from presenting evidence
to substantiate the amount of refund
it is claiming on mere technicality
especially in this case, where the
failure to present invoices at the first
instance was adequately explained
by petitioner.
ACCRA Investments vs CA, G.R. No.
96322, December 20, 1991
For corporations, the two-year
prescriptive period within which to
claim a refund commences to run, at
the earliest, on the date of the filing
of the adjusted final tax return. The
rationale in computing the two-year
prescriptive period with respect to
the petitioner corporations claim for
refund from the time it filed its final
adjustment return is the fact that it
was only then that ACCRAIN could
ascertain whether it made profits or
incurred losses in its business
operations.
Silkair vs CIR, G.R. Nos. 171383 &
172379, November 14, 2008
The proper party to question, or seek
a refund of an indirect tax is the
statutory taxpayer, the person on
whom the tax is imposed by law and
who paid the same even if he shifts
the burden thereof to another. Even
if Petron Corporation passed on to
Silkair the burden of the tax, the
additional amount billed to Silkair for
jet fuel is not a tax but part of the
price which Silkair had to pay as a
purchaser.
Angeles City vs. Angeles City Electric
Corp., GR 166134, June 29, 2010
The National Internal Revenue Code
of 1997 (NIRC) expressly provides
that no court shall have the authority
to grant an injunction to restrain the
collection of any national internal
revenue tax, fee or charge imposed
by the code. The situation, however,
is different in the case of the
collection of local taxes as there is no
express provision in the LGC
prohibiting courts from issuing an
injunction to restrain local
governments from collecting taxes.
Such statutory lapse or intent,
however it may be viewed, may have
allowed preliminary injunction where
local taxes are involved but cannot
negate the procedural rules and
requirements under Rule 58.
PNOC vs CA, G.R. No. 109976, April
26, 2005
Compromise may be the favored
method to settle disputes, but when
it involves taxes, it may be subject to
closer scrutiny by the courts. A
compromise agreement involving
taxes would affect not just the
taxpayer and the BIR, but also the
whole nation, the ultimate beneficiary
of the tax revenues collected.
People vs Sandiganbayan, GR 152532,
August 16, 2005
The BIR may therefore abate or
cancel the whole or any unpaid
portion of a tax liability, inclusive of
increments, if its assessment is
excessive or erroneous; or if the
administration costs involved do not
justify the collection of the amount
due. No mutual concessions need be
made, because an excessive or
erroneous tax is not compromised; it
is abated or canceled. Only correct
taxes should be paid.
PELIZLOY REALTY
CORPORATION vs. THE
PROVINCE OF BENGUET, G.R. No.
183137 (2013).
Amusement taxes are percentage
taxes. Provinces are not barred from
levying amusement taxes even if
amusement taxes are a form of
percentage taxes. Section 140 of the
LGC expressly allows for the
imposition by provinces of
amusement taxes on the proprietors,
lessees, or operators of theatres,
cinemas, concert halls, circuses,
boxing stadia, and other places of
amusement. Theatres, cinemas,
concert halls, circuses, and boxing
stadia are bound by a common
typifying characteristic in that they
are all venues primarily for the
staging of spectacles or the holding
of public shows, exhibitions,
performances, and other events
meant to be viewed by an audience.
Accordingly, other places of
amusement must be interpreted in
light of the typifying characteristic of
being venues where one seeks
admission to entertain oneself by
seeing or viewing the show or
performances or being venues
primarily used to stage spectacles or
hold public shows, exhibitions,
performances, and other events
meant to be viewed by an audience.
Thus, resorts, swimming pools, bath
houses, hot springs and tourist spots
do not belong to the same category
or class as theatres, cinemas,
concert halls, circuses, and boxing
stadia. It follows that they cannot be
considered as among the other
places of amusement contemplated
by Section 140 of the LGC and which
may properly be subject to
amusement taxes.
National Power Corporation v. City of
Cabanatuan, G.R. No. 149110, April
09, 2003
As commonly used, a franchise tax is
a tax on the privilege of transacting
business in the state and exercising
corporate franchises granted by the
state. To determine whether the
petitioner is covered by franchise tax,
the following requisites should
concur: (1) that petitioner has a
franchise in the sense of a
secondary or special franchise; and
(2) that it is exercising its rights or
privileges under this franchise within
the territory of the respondent city
government.
Municipality of San Fernando, La
Union v. Sta. Romana, G.R. No. L-
30159, March 31, 1987
Under the Local Tax Code. there is
no question that the authority to
impose the license fees collected
from the hauling of sand and gravel
excavated properly belongs to the
province concerned and not to the
municipality where they are found
which is specifically prohibited under
Section 22 of the same Code from
levying taxes, fees and charges that
the province or city is authorized to
levy in this Code.
Province of Cagayan v. Lara, G.R. No.
188500, July 24, 2013
In order for an entity to legally
undertake a quarrying business, he
must first comply with all the
requirements imposed not only by
the national government, but also by
the local government unit where his
business is situated. Particularly,
Section 138 (2) of RA 7160 requires
that such entity must first secure a
governors permit prior to the start of
his quarrying operations
City of Manila v. Coca-Cola Bottlers
Philippines, Inc., G.R. No. 181845,
August 04, 2009
When a municipality or city has
already imposed a business tax on
manufacturers, etc. of liquors,
distilled spirits, wines, and any other
article of commerce, pursuant to
Section 143 (a) of the LGC, said
municipality or city may no longer
subject the same manufacturers, etc.
to a business tax under Section 143
(h) of the same Code. Section 143
(h) may be imposed only on
businesses that are subject to excise
tax, VAT, or percentage tax under
the NIRC, and that are not otherwise
specified in preceding paragraphs.
Ericsson Telecoms vs. City of Pasig.
G.R. NO. 176667, November 22, 2007
Tax should be computed based on
gross receipts; the right to receive
income, and not the actual receipt,
determines when to include the
amount in gross income. The
imposition of local business tax
based on petitioners gross revenue
will inevitably result in the
constitutionally proscribed double
taxation taxing of the same person
twice by the same jurisdiction for the
same thing inasmuch as
petitioners revenue or income for a
taxable year will definitely include its
gross receipts already reported
during the previous year and for
which local business tax has already
been paid.
Palma Development Corp. v.
Municipality of Malangas, G.R. No.
152492, October 16, 2003
Section 133(e) of RA No. 7160
prohibits the imposition, in the guise
of wharfage, of fees as well as all
other taxes or charges in any form
whatsoever on goods or
merchandise. It is therefore
irrelevant if the fees imposed are
actually for police surveillance on the
goods, because any other form of
imposition on goods passing through
the territorial jurisdiction of the
municipality is clearly prohibited by
Section 133(e).
Jardine Davies Insurance Brokers
Inc. v. Aliposa, G.R. No. 118900,
February 27, 2003
As a general precept, a taxpayer may
file a complaint assailing the validity
of the ordinance and praying for a
refund of its perceived overpayments
without first filing a protest to the
payment of taxes due under the
ordinance.
Valley Trading Co., Inc. v. CFI of
Isabela, Branch II, G.R. No. L-49529,
March 31, 1989
Unlike the National Internal Revenue
Code, the Local Tax Code does not
contain any specific provision
prohibiting courts from enjoining the
collection of local taxes. Such
Statutory lapse or intent, however it
may be viewed, may have allowed
preliminary injunction where local
taxes are involved but cannot negate
the procedural rules and
requirements under Rule 58.
Manila International Airport
Authority v. Court of Appeals, G.R.
No. 155650, July 20, 2006
Under Section 234(a), real property
owned by the Republic is exempt
from real estate tax except when the
government gives the beneficial use
of the real property to a taxable
entity. The justification for the
exception to the exemption is that the
real property, although owned by the
Republic, is not devoted to public use
or public service but devoted to the
private gain of a taxable person.
Allied Banking Corporation, etc., v.
Quezon City Government, et al., G. R.
No. 154126, October 11, 2005
Real properties shall be appraised at
the current and fair market value
prevailing in the locality where the
property is situated and classified for
assessment purposes on the basis of
its actual use.
Heirs of Tajonera v. Court of Appeals,
G.R. No. L-26677, March 27, 1981
It is `the duty of each person
acquiring real estate in the city to
make a new declaration thereof, with
the advertence that failure to do so
shall make the assessment in the
name of the previous owner valid
and binding on all persons
interested, and for all purposes, as
though the same had been assessed
in the name of its actual owner.
Spouses Hu v. Spouses Unico, G.R.
No. 146534, September 18, 2009
With regard to determining to whom
the notice of sale should have been
sent, settled is the rule that, for
purposes of real property taxation,
the registered owner of the property
is deemed the taxpayer. Thus, in
identifying the real delinquent
taxpayer, a local treasurer cannot
rely solely on the tax declaration but
must verify with the Register of
Deeds who the registered owner of
the particular property is.
Ty v. Trampe, G.R. No. 117577,
December 01, 1995
The protest contemplated under Sec.
252 of R.A. 7160 is needed where
there is a question as to the
reasonableness of the amount
assessed. Hence, if a taxpayer
disputes the reasonableness of an
increase in a real estate tax
assessment, he is required to first
pay the tax under protest; otherwise,
the city or municipal treasurer will not
act on his protest.
Davao Oriental Electric Coop vs.
Prov. Dvo. of Oriental, 576 SCRA 645
Under then Sec. 30 of PD 464 [now
under Sec. 226, LGC], having failed
to appeal the real property
assessments to the LBAA, taxpayer
now cannot assail the validity of the
tax assessment before the courts.
For failure to exhaust administrative
remedies, the assessment became
final. Under Sec. 64 of PD 464 [now
under Sec. 252, LGC), the taxpayer
must first pay under protest and then
assail the validity of the assessment.
Fels Energy, Inc. v. Province of
Batangas, G.R. No. 168557, 170628,
February 16, 2007
Under Section 226 of R.A. No 7160,
the last action of the local assessor
on a particular assessment shall be
the notice of assessment; it is this
last action which gives the owner of
the property the right to appeal to the
LBAA. The procedure likewise does
not permit the property owner the
remedy of filing a motion for
reconsideration before the local
assessor.
Nestle Philippines, Inc. v. Court of
Appeals, G.R. No. 134114, July 06,
2001
Customs duties is the name given
to taxes on the importation and
exportation of commodities, the tariff
or tax assessed upon merchandise
imported from, or exported to, a
foreign country.
Feeder International Line, Pte., Ltd. v.
Court of Appeals, G.R. No. 94262,
May 31, 1991
Section 1202 of the Tariff and
Customs Code provides that
importation begins when the carrying
vessel or aircraft enters the
jurisdiction of the Philippines with
intention to unload therein. It is clear
from the provision of the law that
mere intent to unload is sufficient to
commence an importation and
intent, being a state of mind, is
rarely susceptible of direct proof, but
must ordinarily be inferred from the
facts, and therefore can only be
proved by unguarded, expressions,
conduct and circumstances
generally.
Jardeleza v. People, G.R. No. 165265,
February 06, 2006
Smuggling is committed by any
person who: (1) fraudulently imports
or brings into the Philippines any
article contrary to law; (2) assists in
so doing any article contrary to law;
or (3) receives, conceals, buys, sells
or in any manner facilitate the
transportation, concealment or sale
of such goods after importation,
knowing the same to have been
imported contrary to law.
Carrara Marble Phil., Inc. v.
Commissioner of Customs, G.R. No.
129680, September 01, 1999
The Tariff and Customs law subjects
to forfeiture any article which is
removed contrary to law from any
public or private warehouse under
customs supervision, or released
irregularly from Customs custody.
Before forfeiture proceedings are
instituted the law requires the
presence of probable cause; once
established, the burden of proof is
shifted to the claimant.
People v. Court of First Instance of
Rizal, G.R. No. L-41686, November
17, 1980
It is quite clear that seizure and
forfeiture proceedings under the tariff
and customs laws are not criminal in
nature as they do not result in the
conviction of the offender nor in the
imposition of the penalty provided for
in section 3601 of the Code. As can
be gleaned from Section 2533 of the
code, seizure proceedings, such as
those instituted in this case, are
purely civil and administrative in
character, the main purpose of which
is to enforce the administrative fines
or forfeiture incident to unlawful
importation of goods or their
deliberate possession.
Subic Bay Metropolitan Authority v.
Rodriguez, G.R. No. 160270, April 23,
2010
Regional trial courts are devoid of
any competence to pass upon the
validity or regularity of seizure and
forfeiture proceedings conducted by
the BOC and to enjoin or otherwise
interfere with these proceedings.
Regional trial courts are precluded
from assuming cognizance over
such matters even through petitions
for certiorari, prohibition or
mandamus.
Jao v. Court of Appeals, G.R. No.
104604, 111223, October 06, 1995
Even if the seizure by the Collector of
Customs were illegal, which has yet
to be proven, we have said that such
act does not deprive the Bureau of
Customs of jurisdiction thereon. The
allegations of petitioners regarding
the propriety of the seizure should
properly be ventilated before the
Collector of Customs.
Transglobe International, Inc. v.
Court of Appeals, G.R. No. 126634,
January 25, 1999
A forfeiture proceeding is in the
nature of a proceeding in rem, i.e.,
directed against the res or imported
articles and entails a determination
of the legality of their importation. In
this proceeding, it is in legal
contemplation the property itself
which commits the violation and is
treated as the offender, without
reference whatsoever to the
character or conduct of the owner.
Commr. v. Hambretch & Quist
Philippines, Inc., G.R. No. 169225,
November 17, 2010
The appellate jurisdiction of the CTA
is not limited to cases which involve
decisions of the CIR on matters
relating to assessments or refunds.
Section 7 of Republic Act No. 1125
covers other cases that arise out of
the National Internal Revenue Code
(NIRC) or related laws administered
by the Bureau of Internal Revenue
(BIR).
Duty Free Philippines vs. Bureau of
Internal Revenue, G.R. No. 197228
(October 8, 2014).
This Court has had a long-standing
rule that a courts jurisdiction over the
subject matter of an action is
conferred only by the Constitution or
by statute. In this regard, petitioners
direct appeal to this Court is fatal to
its claim. Section 2, Rule 4 of the
Revised Rules of the CTA reiterates
the exclusive appellate jurisdiction of
the CTA en banc relative to the
review of the court divisions
decisions or resolutions on motion
for reconsideration or new trial in
cases arising from administrative
agencies such as the BIR. Clearly,
this Court is without jurisdiction to
review decisions rendered by a
division of the CTA, exclusive
appellate jurisdiction over which is
vested in the CTA en banc.
Yaokasin v. Commissioner of
Customs, G.R. No. 84111, December
22, 1989
Without the automatic review by the
Commissioner of Customs and the
Secretary of Finance, a collector in
any of our countrys far-flung ports,
would have absolute and unbridled
discretion to determine whether
goods seized by him are locally
produced, hence, not dutiable, or of
foreign origin, and therefore subject
to payment of customs duties and
taxes. His decision, unless appealed
by the aggrieved party (the owner of
the goods), would become final with
no one the wiser except himself and
the owner of the goods.

Rizal Commercial Banking Corp. v.

Commr., G.R. No. 168498, June 16,
2006
If the protest is denied in whole or in
part, or is not acted upon within one
hundred eighty (180) days from
submission of documents, the
taxpayer adversely affected by the
decision or inaction may appeal to
the Court of Tax Appeals within (30)
days from receipt of the said
decision, or from the lapse of the one
hundred eighty (180)-day period;
otherwise the decision shall become
final, executory and demandable.