MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA) vs CITY

OF LAPU-LAPU
GR. No. 181756, June 15, 2015
Digested by : Renz Angelo P. Umambong

ISSUE: Whether MCIAA is exempt from payment of local taxes.

RULING: YES. Section 133 of the Local Government Code of 1991 provides for the
common limitations on the taxing powers of Local Government Units (LGUs). It stated
that such power of the LGUs shall not extend, among others, to the levy of taxes, fees or
charges of any kind on the national government, its agencies and instrumentalities.
Therefore, MCIAA, a national government instrumentality vested with corporate powers
and performing essential public services, is exempt from the imposition of real property
taxes by the City of Lapu-Lapu.
When LGUs invoke the power to tax on national government instrumentalities,
such power is construed strictly against local governments. Any doubt whether a person,
article or activity is taxable is resolved against taxation. The rule applies greater force
LGUs seek to tax the national government instrumentalities.

CHEVRON PHILIPPINES INC vs COMMISSIONER OF INTERNAL

REVENUE
GR. No. 210836, September 1, 2015
Digested by : Renz Angelo P. Umambong

ISSUE: Whether Chevron is entitled to the refund or credit of the excise taxes it paid on
petroleum products sold to Clark Development Corporation, a tax-exempt entity under
Section 135 (c) of NIRC
RULING: YES. Excise tax on petroleum products is essentially a tax on property, the
direct liability for which pertains to the statutory taxpayer such as the manufacturer,
producer or importer. Any excise tax paid by the statutory tax payer on petroleum
products sold to any of the entities or agencies named in Section 135 of the NIRC, which
are exempt from excise tax, is deemed illegal or erroneous. As such, it should be credited
or refunded to the payor pursuant to Section 204 of NIRC. The Court ruled that this is
because the exemption granted under Section 135 of NIRC must be construed in favor of
the property itself, that is the petroleum products.
In cases involving excise tax exemptions on petroleum products under Section 135, it has
been consistently held that it is the statutory taxpayer, not the party who bears only the
economic burden, who is entitled to claim of tax refund or tax credit. However, the Court
also clarified that this rule does not apply where the law grants the party to whom
economic burden of tax is shifted by virtue of an exemption both direct and indirect taxes.
In which case, such party must be allowed to claim the tax refund or tax credit even if it is
not considered the statutory taxpayer.