Principles of cases

Paseo Realty and Dev Corp vs CA

Taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. And since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construedstrictissimi jurisagainst the taxpayer and liberally in favor of the taxing authority. A claim of refund or exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception.[32]

Chamber of Real Estate and Builders Assoc Inc vs Romulo

Taxation is an inherent attribute of sovereignty.[34]It is a power that is purely legislative.[35]Essentially, this means that in the legislature primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate), coverage (subjects) and situs (place) of taxation.[36]It has the authority to prescribe a certain tax at a specific rate for a particular public purpose on persons or things within its jurisdiction.In other words, the legislature wields the power to define what tax shall be imposed, why it should be imposed, how much tax shall be imposed, against whom (or what) it shall be imposed and where it shall be imposed.As a general rule, the power to tax is plenary and unlimited unlimited in its range, acknowledging in its very nature no limits, so that the principal check against its abuse is to be found only in the responsibility of the legislature (which imposes the tax) to its constituency who are to pay it.[37]Nevertheless, it is circumscribed by constitutional limitations.At the same time, like any other statute, tax legislation carries a presumption of constitutionality.For income to be taxable, the following requisites must exist:(1)there must be gain;(2)the gain must be realized or received and(3)the gain must not be excluded by law or treaty fromtaxation.[47]

CIR vs Fortune Tobacco

The power to tax is inherent in the State, such power being inherently legislative, based on the principle that taxes are a grant of the people who are taxed, and the grant must be made by the immediate representatives of the people; and where the people have laid the power, there it must remain and be exercised.10Tax exemption is a result of legislative grace. And he who claims an exemption from the burden of taxation must justify his claim by showing that the legislature intended to exempt him by words too plain to be mistaken.27The rule is that tax exemptions must be strictly construed such that the exemption will not be held to be conferred unless the terms under which it is granted clearly and distinctly show that such was the intention.28A claim for tax refund may be based on statutes granting tax exemption or tax refund. In such case, the rule of strict interpretation against the taxpayer is applicable as the claim for refund partakes of the nature of an exemption, a legislative grace, which cannot be allowed unless granted in the most explicit and categorical language. The taxpayer must show that the legislature intended to exempt him from the tax by words too plain to be mistaken.29Tax refunds (or tax credits), on the other hand, are not founded principally on legislative grace but on the legal principle which underlies all quasi-contracts abhorring a persons unjust enrichment at the expense of another.30The dynamic of erroneous payment of tax fits to a tee the prototypic quasi-contract, solutio indebiti, which covers not only mistake in fact but also mistake in law.31What is controlling in this case is the well-settled doctrine of strict interpretation in the imposition of taxes, not the similar doctrine as applied to tax exemptions. The rule in the interpretation of tax laws is that a statute will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously. A tax cannot be imposed without clear and express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by implication. In answering the question of who is subject to tax statutes, it is basic that in case of doubt, such statutes are to be construed most strongly against the government and in favor of the subjects or citizens because burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import.36As burdens, taxes should not be unduly exacted nor assumed beyond the plain meaning of the tax laws.37

Diaz vs Secretary of Finance ( Toll Fees vs Tax)

A tax is imposed under the taxing power of the government principally for the purpose of raising revenues to fund public expenditures.[27]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, as well as to assure them a reasonable margin of income. Although toll fees are charged for the use of public facilities, therefore, they are not government exactions that can be properly treated as a tax.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.[28]

DOUBLE TAXATION

CIR Vs SolidabankDouble taxationmeans taxing the same property twice when it should be taxed only once; that is,x x x taxing the same person twice by the same jurisdiction for the same thing.[117]It is obnoxiouswhen the taxpayer is taxed twice, when it should be but once.[118]Otherwise described as direct duplicate taxation,[119]the two taxes must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period; and they must be of the same kind or character.[120]First, the taxes herein are imposed on two different subject matters.The subject matter of the FWT is the passive income generated in the form of interest on deposits and yield on deposit substitutes, while the subject matter of the GRT is the privilege of engaging in the business of banking.A tax based on receipts is a tax on business rather than on the property; hence, it is an excise[121]rather than a property tax.[122]It is not an income tax, unlike the FWT.In fact, we have already held that one can be taxed for engaging in business and further taxed differently for the income derived therefrom.[123]Akin to our ruling inVelilla v. Posadas,[124]these two taxes are entirely distinct and are assessed under different provisions.Second, although both taxes are national in scope because they are imposed by the same taxing authority -- the national government under the Tax Code -- and operate within the same Philippine jurisdiction for the same purpose of raising revenues, the taxing periods they affect are different.The FWT is deducted and withheld as soon as the income is earned, and is paid after everycalendarquarter in which it is earned.On the other hand, the GRT is neither deducted nor withheld, but is paid only after everytaxablequarter in which it is earned.Third, these two taxes are of different kinds or characters.The FWT is an income tax subject to withholding, while the GRT is a percentage tax not subject to withholding.In short, there is no double taxation, because there is no taxing twice, by the same taxing authority, within the same jurisdiction, for the same purpose, in different taxing periods, some of the property in the territory.[125]Subjecting interest income to a 20% FWT and including it in the computation of the 5% GRT is clearly not showing double taxation.

CIR vs City Trust Investment Phils Inc

Double taxation means taxing for the same tax period the same thing or activity twice, when it should be taxed but once, for the same purpose and with the same kind of character of tax.[26]This is not the situation in the case at bar.The GRT is a percentage tax under Title V of the Tax Code ([Section 121], Other Percentage Taxes), while the FWT is an income tax under Title II of the Code (Tax on Income).The two concepts are different from each other.InSolidbank Corporation,[27]this Court defined that a percentage tax is a national tax measured by a certain percentage of the gross selling price or gross value in money of goods sold, bartered or imported; or of the gross receipts or earnings derived by any person engaged in the sale of services.It is not subject to withholding.An income tax, on the other hand, is a national tax imposed on the net or the gross income realized in a taxable year.It is subject to withholding.Thus, there can be no double taxation here as the Tax Code imposes two different kinds of taxes.Now, both Asianbank and Citytrust rely onManila Jockey Club[28]in support of their positions.We are not convinced.In said case, Manila Jockey Club paid amusement tax on its commission in the total amount of bets called wager funds from the period November 1946 to October 1950.But such payment did not include the 5 % of the funds which went to the Board on Races and to the owners of horses and jockeys.We ruled that the gross receipts of the Manila Jockey Club should not include the 5 % because although delivered to the Club, such money has been especially earmarked by law or regulation for other persons.Villanueva vs City Of Iloilo

While it is true that the plaintiffs-appellees are taxable under the aforesaid provisions of the National Internal Revenue Code as real estate dealers, and still taxable under the ordinance in question, the argument against double taxation may not be invoked. The same tax may be imposed by the national government as well as by the local government. There is nothing inherently obnoxious in the exaction of license fees or taxes with respect to the same occupation, calling or activity by both the State and a political subdivision thereof.21.The contention that the plaintiffs-appellees are doubly taxed because they are paying the real estate taxes and the tenement tax imposed by the ordinance in question, is also devoid of merit. It is a well-settled rule that a license tax may be levied upon a business or occupation although the land or property used in connection therewith is subject to property tax. The State may collect an ad valorem tax on property used in a calling, and at the same time impose a license tax on that calling, the imposition of the latter kind of tax being in no sensea double tax.22."In order to constitute double taxation in the objectionable or prohibited sense the same property must be taxed twice when it should be taxed but once; both taxes must be imposed on the same property or subject-matter, for the same purpose, by the same State, Government, or taxing authority, within the same jurisdiction or taxing district, during the same taxing period, and they must be the same kind or character of tax."23It has been shown that a real estate tax and the tenement tax imposed by the ordinance, although imposed by the sametaxing authority, are not of the same kind or character.At all events, there is no constitutional prohibition against double taxation in the Philippines.24It is something not favored, but is permissible, provided some other constitutional requirement is not thereby violated, such as the requirement that taxes must be uniform."25.International Double Taxation

CIR vs SC Johson and Son

The RP-US Tax Treaty is just one of a number of bilateral treaties which the Philippines has entered into for the avoidance of double taxation.[9]The purpose of these international agreements is to reconcile the national fiscal legislations of the contracting parties in order to help the taxpayer avoid simultaneous taxation in two different jurisdictions.[10]More precisely, the tax conventions are drafted with a view towards the elimination ofinternational 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.[11], citing the Committee on Fiscal Affairs of the Organization for Economic Co-operation and Development (OECD).11The apparent rationale for doing away with double taxation is to encourage the free flow of goods and services and the movement of capital, technology and persons between countries, conditions deemed vital in creating robust and dynamic economies.[12]Foreign investments will only thrive in a fairly predictable and reasonable international investment climate and the protection against double taxation is crucial in creating such a climate.[13]Double taxation usually takes place when a person is resident of a contracting state and derives income from, or owns capital in, the other contracting state and both states impose tax on that income or capital.In order to eliminate double taxation, a tax treaty resorts to several methods.First, it sets out the respective rights to tax of the state of source or situs and of the state of residence with regard to certain classes of income or capital.In some cases, an exclusive right to tax is conferred on one of the contracting states; however, for other items of income or capital, both states are given the right to tax, although the amount of tax that may be imposed by the state of source is limited.[14]The second method for the elimination of double taxation applies whenever the state of source is given a full or limited right to tax together with the state of residence.In this case, the treaties make it incumbent upon the state of residence to allow relief in order to avoid double taxation.There are two methods of relief- the exemption method and the credit method.In the exemption method, the income or capital which is taxable in the state of source or situs is exempted in the state of residence, although in some instances it may be taken into account in determining the rate of tax applicable to the taxpayers remaining income or capital.On the other hand, in the credit method, although the income or capital which is taxed in the state of source is still taxable in the state of residence, the tax paid in the former is credited against the tax levied in the latter.The basic difference between the two methods is that in the exemption method, the focus is on the income or capital itself, whereas the credit method focuses upon the tax.[15]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.[16]Thus the petitioner correctly opined that the phrase royalties paid under similar circumstances in the most favored nation clause of the US-RP Tax Treaty necessarily contemplated circumstances that are tax-related.In the case at bar, the state of source is the Philippines because the royalties are paid for the right to use property or rights, i.e. trademarks, patents and technology, located within the Philippines.[17]The United States is the state of residence since the taxpayer, S. C. Johnson and Son, U. S. A., is based there.Under the RP-US Tax Treaty, the state of residence and the state of source are both permitted to tax the royalties, with a restraint on the tax that may be collected by the state of source.[18]Furthermore, the method employed to give relief from double taxation is the allowance of a tax credit to citizens or residents of the United States (in an appropriate amountbased upon the taxes paid or accrued to the Philippines) against the United States tax, but such amount shall not exceed the limitations provided by United States law for the taxable year.[19]Under Article 13 thereof, the Philippines may impose one of three rates- 25 percent of the gross amount of the royalties; 15 percent when the royalties are paid by a corporation registered with the Philippine Board of Investments and engaged in preferred areas of activities; or the lowest rate of Philippine tax that may be imposed on royalties of the same kind paid under similar circumstances to a resident of a third state.Given the purpose underlying tax treaties and the rationale for the most favored nation clause, the concessional tax rate of 10 percent provided for in the RP-Germany Tax Treaty should apply only if the taxes imposed upon royalties in the RP-US Tax Treaty and in the RP-Germany Tax Treaty are paid under similar circumstances.This would mean that private respondent must prove that the RP-US Tax Treaty grants similar tax reliefs to residents of the United States in respect of the taxes imposable upon royalties earned from sources within the Philippines as those allowed to their German counterparts under the RP-Germany Tax Treaty.The RP-US and the RP-West Germany Tax Treaties do not contain similar provisions on tax crediting.Article 24 of the RP-Germany Tax Treaty,supra, expressly allows crediting against German income and corporation tax of 20% of the gross amount of royalties paid under the law of the Philippines.On the other hand, Article 23 of the RP-US Tax Treaty, which is the counterpart provision with respect to relief for double taxation, does not provide for similar crediting of 20% of the gross amount of royalties paid.Article 23Relief from double taxationDouble taxation of income shall be avoided in the following manner:1)In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle thereof), the United States shall allow to a citizen or resident of the United States as a credit against the United States tax the appropriate amount of taxes paid or accrued to the Philippines and, in the case of a United States corporation owning at least 10 percent of the voting stock of a Philippine corporation from which it receives dividends in any taxable year, shall allow credit for the appropriate amount of taxes paid or accrued to the Philippines by the Philippine corporation paying such dividends with respect to the profits out of which such dividends are paid.Such appropriate amount shall be based upon the amount of tax paid or accrued to the Philippines, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the United States tax on income from sources within the Philippines or on income from sources outside the United States) provided by United States law for the taxable year.xxx.The reason for construing the phrase paid under similar circumstances as used in Article 13 (2) (b) (iii) of the RP-US Tax Treaty as referring to taxes is anchored upon a logical reading of the text in the light of the fundamental purpose of such treaty which is to grant an incentive to the foreign investor by lowering the tax and at the same time crediting against the domestic tax abroad a figure higher than what was collected in the Philippines.

As stated earlier, the ultimate reason for avoiding double taxation is to encourage foreign investors to invest in the Philippines - a crucial economic goal for developing countries.[23]The goal of double taxation conventions would be thwarted if such treaties did not provide for effective measures to minimize, if not completely eliminate, the tax burden laid upon the income or capital of the investor.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.[24]Otherwise, the tax which could have been collected by the Philippine government will simply be collected by another state, defeating the object of the tax treaty since the tax burden imposed upon the investor would remain unrelieved.If the state of residence does not grant some form of tax relief to the investor, no benefit would redound to the Philippines, i.e., increased investment resulting from a favorable tax regime, should it impose a lower tax rate on the royalty earnings of the investor, and it would be better to impose the regular rate rather than lose much-needed revenues to another country.At the same time, the intention behind the adoption of the provision on relief from double taxation in the two tax treaties in question should be considered in light of the purpose behind the most favored nation clause.The purpose of a most favored nation clause is to grant to the contracting party treatment not less favorable than that which has been or may be granted to the most favored among other countries.[25]The most favored nation clause is intended to establish the principle of equality of international treatment by providing that the citizens or subjects of the contracting nations may enjoy the privileges accorded by either party to those of the most favored nation.[26]The essence of the principle is to allow the taxpayer in one state to avail of more liberal provisions granted in another tax treaty to which the country of residence of such taxpayer is also a party provided that the subject matter of taxation, in this case royalty income, is the same as that in the tax treaty under which the taxpayer is liable.Both Article 13 of the RP-US Tax Treaty and Article 12 (2) (b) of the RP-West Germany Tax Treaty, above-quoted, speaks of tax on royalties for the use of trademark, patent, and technology.The entitlement of the 10% rate by U.S. firms despite the absence of a matching credit (20% for royalties) would derogate from the design behind the most favored nation clause to grant equality of international treatment since the tax burden laid upon the income of the investor is not the same in the two countries.The similarity in the circumstances of payment of taxes is a condition for the enjoyment of most favored nation treatment precisely to underscore the need for equality of treatment.We accordingly agree with petitioner that since the RP-US Tax Treaty does not give a matching tax credit of 20 percent for the taxes paid to the Philippines on royalties as allowed under the RP-West Germany Tax Treaty, private respondent cannot be deemed entitled to the 10 percent rate granted under the latter treaty for the reason that there is no payment of taxes on royalties under similar circumstances.It bears stress that tax refunds are in the nature of tax exemptions.As such they are regarded as in derogation of sovereign authority and to be construedstrictissimi jurisagainst the person or entity claiming the exemption.[27]The burden of proof is upon him who claims the exemption in his favor and he must be able to justify his claim by the clearest grant of organic or statute law.[28]Private respondent is claiming for a refund of the alleged overpayment of tax on royalties; however, there is nothing on record to support a claim that the tax on royalties under the RP-US Tax Treaty is paid under similar circumstances as the tax on royalties under the RP-West Germany Tax Treaty.

Purpose of Taxation

COCOFED VS Republic

We have ruled time and again that taxes are imposed only for a public purpose.[111]They cannot be used for purely private purposes or for the exclusive benefit of private persons.[112]When a law imposes taxes or levies from the public, with the intent to give undue benefit or advantage to private persons, or the promotion of private enterprises, that law cannot be said to satisfy the requirement of public purpose.[113]

[116]The Court amply reasoned that the Stabilization Fund must be utilized for the benefit of theentire sugar industry, and all its components, stabilization of the domestic market including foreign market, the industry being of vital importance to the countrys economy and to national interest.[117]Similarly in this case, the coconut levy funds were sourced from forced exactions decreed under P.D. Nos. 232, 276 and 582, among others,[118]with the end-goal of developing the entire coconut industry.[119]Clearly, to hold therefore, even by law, that the revenues received from the imposition of the coconut levies be used purely for private purposes to be owned by private individuals in their private capacity and for their benefit, would contravene the rationale behindthe imposition oftaxes or levies.In this case, the coconut levy funds were being exacted from copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other coconut products.[122]Likewise so, the funds here were channeled to the purchase of the shares of stock in UCPB.Drawing a clear parallelism betweenGastonand this case, the fact that the coconut levy funds were collected from the persons or entities in the coconut industry, among others, does not and cannot entitle them to be beneficial owners of the subject funds or more bluntly, owners thereof in their private capacity.Parenthetically, the said private individuals cannot own the UCPB shares of stocks so purchased using the said special funds of the government.[123]

Planters vs Products Inc v Fertphil

One of the inherent limitations is that a tax may be levied only for public purposes:The power to tax can be resorted to only for a constitutionally valid public purpose.By the same token, taxes may not be levied for purely private purposes, for building up of private fortunes, or for the redress of private wrongs.They cannot be levied for the improvement of private property, or for the benefit, and promotion of private enterprises, except where the aid is incident to the public benefit.It is well-settled principle of constitutional law that no general tax can be levied except for the purpose of raising money which is to be expended for public use.Funds cannot be exacted under the guise of taxation to promote a purpose that is not of public interest.Without such limitation, the power to tax could be exercised or employed as an authority to destroy the economy of the people.A tax, however, is not held void on the ground of want of public interest unless the want of such interest is clear.(71 Am. Jur. pp. 371-372)In the case at bar, the plaintiff paid the amount ofP6,698,144.00 to the Fertilizer and Pesticide Authority pursuant to theP10 per bag of fertilizer sold imposition under LOI 1465 which, in turn, remitted the amount to the defendant Planters Products, Inc. thru the latters depository bank, Far East Bank and Trust Co.Thus, by virtue of LOI 1465 the plaintiff, Fertiphil Corporation, which is a private domestic corporation, became poorer by the amount ofP6,698,144.00 and the defendant, Planters Product, Inc., another private domestic corporation, became richer by the amount ofP6,698,144.00.CIR vs Central Luzon Drug Corp

Besides, the taxation power can also be used as an implement for the exercise of the power of eminent domain.[80]Tax measures are but enforced contributions exacted on pain of penal sanctions[81]and clearly imposed for apublic purpose.[82] In recent years, the power to tax has indeed become a most effective tool to realize social justice,public welfare, and the equitable distribution of wealth.[83] While itis a declared commitment under Section 1 of RA 7432, social justice cannot be invoked to trample on the rights of property owners who under our Constitution and laws are also entitled to protection. The social justice consecrated in our [C]onstitution [is] not intended to take away rights from a person and give them to another who is not entitled thereto.[84] For this reason, a just compensation for income that is taken away from respondent becomes necessary. It is in thetax creditthat our legislators find support to realize social justice, and no administrative body can alter that fact.To put it differently, a private establishment that merely breaks even[85]-- without the discounts yet -- will surely start to incur losses because of such discounts. The same effect is expected if its mark-up is less than 20 percent, and if all its sales come from retail purchases by senior citizens. Aside from the observation we have already raised earlier, it will also be grossly unfair to an establishment if the discounts will be treated merely as deductions from either itsgross incomeor itsgross sales. Operating at a loss through no fault of its own, it will realize that thetax creditlimitation under RR 2-94 is inutile, if not improper. Worse, profit-generating businesses will be put in a better position if they avail themselves oftax creditsdenied those that are losing, because no taxes are due from the latter.

Republic vs COCOFED

Based on this definition, a tax has three elements, namely: a) it is an enforced proportional contribution from persons and properties; b) it is imposed by the State by virtue of its sovereignty; and c) it is levied for the support of the government.The coconut levy funds fall squarely into these elements for the following reasons:

(a) They were generated by virtue of statutory enactments imposed on the coconut farmers requiring the payment of prescribed amounts.Thus, PD No. 276, which created the Coconut Consumer Stabilization Fund (CCSF), mandated the following:a. A levy, initially, ofP15.00 per 100 kilograms of copra resecada or its equivalent in other coconut products, shall be imposed on every first sale, in accordance with the mechanics established under RA 6260, effective at the start of business hours on August 10, 1973.The proceeds from the levy shall be deposited with the Philippine National Bank or any other government bank to the account of the Coconut Consumers Stabilization Fund, as a separate trust fund which shall not form part of the general fund of the government.[50]The coco levies were further clarified in amendatory laws, specifically PD No. 961[51]and PD No. 1468[52]-- in this wise:The Authority (Philippine Coconut Authority) is hereby empowered to impose and collect a levy, to be known as the Coconut Consumers Stabilization Fund Levy, on every one hundred kilos of copra resecada, or its equivalent in other coconut products delivered to, and/or purchased by, copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other coconut products.The levy shall be paid by such copra exporters, oil millers, desiccators and other end-users of copra or its equivalent in other coconut products under such rules and regulations as the Authority may prescribe.Until otherwise prescribed by the Authority, the current levy being collected shall be continued.[53]Like other tax measures, they were not voluntary payments or donations by the people.They were enforced contributions exacted on pain of penal sanctions, as provided under PD No. 276:3. Any person or firm who violates any provision of this Decree or the rules and regulations promulgated thereunder, shall, in addition to penalties already prescribed under existing administrative and special law, pay a fine of not less thanP2,500 or more thanP10,000, or suffer cancellation of licenses to operate, or both, at the discretion of the Court.[54]Such penalties were later amended thus:Whenever any person or entity willfully and deliberately violates any of the provisions of this Act, or any rule or regulation legally promulgated hereunder by the Authority, the person or persons responsible for such violation shall be punished by a fine of not more thanP20,000.00 and by imprisonment of not more than five years.If the offender be a corporation, partnership or a juridical person, the penalty shall be imposed on the officer or officers authorizing, permitting or tolerating the violation.Aliens found guilty of any offenses shall, after having served his sentence, be immediately deported and, in the case of a naturalized citizen, his certificate of naturalization shall be cancelled.[55](b) The coconut levies were imposed pursuant to the laws enacted by the proper legislative authorities of the State. Indeed, the CCSF was collected under PD No. 276, issued by former President Ferdinand E. Marcos who was then exercising legislative powers.[56](c) They were clearly imposed for a public purpose.There is absolutely no question that they were collected to advance the governments avowed policy of protecting the coconut industry.This Court takes judicial notice of the fact that the coconut industry is one of the great economic pillars of our nation, and coconuts and their byproducts occupy a leading position among the countrys export products; that it gives employment to thousands of Filipinos; that it is a great source of the States wealth; and that it is one of the important sources of foreign exchange needed by our country and, thus, pivotal in the plans of a government committed to a policy of currency stability.Taxation is done not merely to raise revenues to support the government, but also to provide means for the rehabilitation and the stabilization of a threatened industry, which is so affected with public interest as to be within the police power of the State, as held inCaltex Philippines v. COA[57]andOsmea v. Orbos.[58]Even if the money is allocated for a special purpose and raised by special means, it is still public in character.In the case before us, the funds were even used to organize and finance State offices.InCocofedv. PCGG,[59]the Court observed that certain agencies or enterprises were organized and financed with revenues derived from coconut levies imposed under a succession of laws of the late dictatorship x x x with deposed Ferdinand Marcos and his cronies as the suspected authors and chief beneficiaries of the resulting coconut industry monopoly.[60]The Court continued: x x x.It cannot be denied that the coconut industry is one of the major industries supporting the national economy.It is, therefore, the States concern to make it a strong and secure source not only of the livelihood of a significant segment of the population, but also of export earnings the sustained growth of which is one of the imperatives of economic stability.x x x.[61]

Walter Lutz vs J Antonio Araneta

That the tax to be levied should burden the sugar producers themselves can hardly be a ground of complaint; indeed, it appears rational that the tax be obtained precisely from those who are to be benefited from the expenditure of the funds derived from it. At any rate, 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" (Carmichael vs. Southern Coal & Coke Co., 301 U. S. 495, 81 L. Ed. 1245, citing numerous authorities, at p. 1251).From the point of view we have taken it appears of no moment that the funds raised under the Sugar Stabilization Act, now in question, should be exclusively spent in aid of the sugar industry, since it is that very enterprise that is being protected. It may be that other industries are also in need of similar protection; that the legislature is not required by the Constitution to adhere to a policy of "all or none." As ruled in Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied;" and that "the legislative authority, exerted within its proper field, need not embrace all the evils within its reach" (N. L. R. B. vs. Jones & Laughlin Steel Corp. 301 U. S. 1, 81 L. Ed. 893).

Sison Jr. Vs Ancheta

The petition must be dismissed.1. It is manifest that the field of state activity has assumed a much wider scope, The reason was so clearly set forth by retired Chief Justice Makalintal thus: "The areas which used to be left to private enterprise and initiative and which the government was called upon to enter optionally, and only 'because it was better equipped to administer for the public welfare than is any private individual or group of individuals,' continue to lose their well-defined boundaries and to be absorbed within activities that the government must undertake in its sovereign capacity if it is to meet the increasing social challenges of the times."11Hence the need for more revenues. The power to tax, an inherent prerogative, has to be availed of to assure the performance of vital state functions. It is the source of the bulk of public funds. To praphrase a recent decision, taxes being the lifeblood of the government, their prompt and certain availability is of the essence.122. The power to tax moreover, to borrow from Justice Malcolm, "is an attribute of sovereignty. It is the strongest of all the powers of of government."13It is, of course, to be admitted that for all its plenitude 'the power to tax is not unconfined. There are restrictions. The Constitution sets forth such limits . Adversely affecting as it does properly rights, both the due process and equal protection clauses inay properly be invoked, all petitioner does, to invalidate in appropriate cases a revenue measure. if it were otherwise, there would -be truth to the 1803 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy."14In a separate opinion inGraves v. New York,15Justice Frankfurter, after referring to it as an 1, unfortunate remark characterized it as "a flourish of rhetoric [attributable to] the intellectual fashion of the times following] a free use of absolutes."16This is merely to emphasize that it is riot and there cannot be such a constitutional mandate. Justice Frankfurter could rightfully conclude: "The web of unreality spun from Marshall's famous dictum was brushed away by one stroke of Mr. Justice Holmess pen: 'The power to tax is not the power to destroy while this Court sits."17So it is in the Philippines.3. This Court then is left with no choice. The Constitution as the fundamental law overrides any legislative or executive, act that runs counter to it. In any case therefore where it can be demonstrated that the challenged statutory provision as petitioner here alleges fails to abide by its command, then this Court must so declare and adjudge it null. The injury thus is centered on the question of whether the imposition of a higher tax rate on taxable net income derived from business or profession than on compensation is constitutionally infirm.4, The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here. does not suffice. There must be a factual foundation of such unconstitutional taint. Considering that petitioner here would condemn such a provision as void or its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that were the due process and equal protection clauses are invoked, considering that they arc not fixed rules but rather broad standards, there is a need for of such persuasive character as would lead to such a conclusion. Absent such a showing, the presumption of validity must prevail.185. It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown to amount to the confiscation of property. That would be a clear abuse of power. It then becomes the duty of this Court to say that such an arbitrary act amounted to the exercise of an authority not conferred. That properly calls for the application of the Holmes dictum. It has also been held that where the assailed tax measure is beyond the jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it is subject to attack on due process grounds.196. Now for equal protection. The applicable standard to avoid the charge that there is a denial of this constitutional mandate whether the assailed act is in the exercise of the lice power or the power of eminent domain is to demonstrated that the governmental act assailed, far from being inspired by the attainment of the common weal was prompted by the spirit of hostility, or at the very least, discrimination that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumtances which if not Identical are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest."20That same formulation applies as well to taxation measures. The equal protection clause is, of course, inspired by the noble concept of approximating the Ideal of the laws benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the Idea of law. There is, however, wisdom, as well as realism in these words of Justice Frankfurter: "The equality at which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, address to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same."21Hence the constant reiteration of the view that classification if rational in character is allowable. As a matter of fact, in a leading case of Lutz V. Araneta,22this Court, through Justice J.B.L. Reyes, went so far as to hold "at any rate, 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.'"237. Petitioner likewise invoked the kindred concept of uniformity. According to the Constitution: "The rule of taxation shag be uniform and equitable."24This requirement is met according to Justice Laurel inPhilippine Trust Company v. Yatco,25decided in 1940, when the tax "operates with the same force and effect in every place where the subject may be found. "26He likewise added: "The rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable."27The problem of classification did not present itself in that case. It did not arise until nine years later, when the Supreme Court held: "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, ... .28As clarified by Justice Tuason, where "the differentiation" complained of "conforms to the practical dictates of justice and equity" it "is not discriminatory within the meaning of this clause and is therefore uniform."29There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar situation."308. Further on this point. Apparently, what misled petitioner is his failure to take into consideration the distinction between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate. Taxpayers may be classified into different categories. To repeat, it. is enough that the classification must rest upon substantial distinctions that make real differences. In the case of the gross income taxation embodied in Batas Pambansa Blg. 135, the, discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. Taxpayers who are recipients of compensation income are set apart as a class. As there is practically no overhead expense, these taxpayers are e not entitled to make deductions for income tax purposes because they are in the same situation more or less. On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income. There is ample justification then for the Batasang Pambansa to adopt the gross system of income taxation to compensation income, while continuing the system of net income taxation as regards professional and business income.

Philippine Bank vs Communication vs CIR

Basic is the principle that taxes are the lifeblood of the nation.The primary purpose is to generate funds for the State to finance the needs of the citizenry and to advance the common weal.[13]Due process of law under the Constitution does not require judicial proceedings in tax cases.This must necessarily be so because it is upon taxation that the government chiefly relies to obtain the means to carry on its operations and it is of utmost importance that the modes adopted to enforce the collection of taxes levied should be summary and interfered with as little as possible.[14]

CIR vs Algue

Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved.

CIR Vs BF GoodrichFor the purpose of safeguarding taxpayers from any unreasonable examination, investigation or assessment, our tax law provides a statute of limitations in the collection of taxes.Thus, the law on prescription, being a remedial measure, should be liberally construed in order to afford such protection.[12]As a corollary, the exceptions to the law on prescription should perforce be strictly construed.Section 15 of the NIRC, on the other hand, provides that [w]hen a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by law or regulation, or when there is reason to believe that any such report is false, incomplete, or erroneous, the Commissioner of Internal Revenue shall assess the proper tax on the best evidence obtainable.Clearly, Section 15 does not provide an exception to the statute of limitations on the issuance of an assessment, by allowing the initial assessment to be made on the basis of the best evidence available.Having made its initial assessment in the manner prescribed, the commissioner could not have been authorized to issue, beyond the five-year prescriptive period, the second and the third assessments under consideration before us.

CIR vs Gonzalez

For the crime of tax evasion in particular, compliance by the taxpayer with such subpoena, if any had been issued, is irrelevant.As we held inUngab v. Cusi, Jr.,[41][t]he crime is complete when the [taxpayer] has x x x knowingly and willfully filed [a] fraudulent [return] with intent to evade and defeat x x x the tax.

CIR vs Estate of Benigno Toda

Is this a case of tax evasion or tax avoidance?Tax avoidance (also tax minimization)andtax evasionare the two most common ways used by taxpayers in escaping from taxation. Tax avoidance is the tax saving device within the means sanctioned by law. This method should be used by the taxpayer in good faith and at arms length. Tax evasion, on the other hand, is a scheme used outside of those lawful means and when availed of, it usually subjects the taxpayer to further or additional civil or criminal liabilities.[23]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 (means) or failure of action which is unlawful.[24]All these factors are present in the instant case. It is significant to note that as early as 4 May 1989, prior to the purported sale of the Cibeles property by CIC to Altonaga on 30 August 1989, CIC receivedP40 million from RMI,[25]and not from Altonaga. ThatP40 million was debited by RMI and reflected in its trial balance[26]as other inv. Cibeles Bldg. Also, as of 31 July 1989, anotherP40 million was debited and reflected in RMIs trial balance as other inv. Cibeles Bldg. This would show that the real buyer of the properties was RMI, and not the intermediary Altonaga.The investigation conducted by the BIR disclosed that Altonaga was a close business associate and one of the many trusted corporate executives of Toda. This information was revealed by Mr. Boy Prieto, the assistant accountant of CIC and an old timer in the company.[27]But Mr. Prieto did not testify on this matter, hence, that information remains to be hearsay and is thus inadmissible in evidence.

Tax Amnesty vs. Tax Exemption (2001)Distinguish a tax amnesty from a tax exemption. (3%)SUGGESTED ANSWER:Tax amnesty is an immunity from all criminal, civil and administrative liabilities arising from nonpayment of taxes. It is a general pardon given to all taxpayers. It applies only to past tax periods, hence of retroactive application. (People v. Costonedo, G.R. No. L-46881, 1988).(there will be a waiver signed, and would constitute to have retroactive amnesty)Tax exemption is an immunity from the civil liability only. It is an immunity or privilege, a freedom from a charge or burden to which others are subjected. (Florer v. Sheridan, 137 Ind. 28, 36 ME 365). It is generally prospective in application.(prospective Ex: you are exempted from income tax)Strictissimi Juris

Atlas Consolidated Mining and Development Corp vs Province of Quezon

Taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government. And, since taxes are what we pay for civilized society, or are the lifeblood of the nation, the law frowns against exemptions from taxation and statutes granting tax exemptions are thus construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. A claim of refund or exemption from tax payments must be clearly shown and be based on language in the law too plain to be mistaken. Elsewise stated, taxation is the rule, exemption therefrom is the exception.[21]

CIR Vs San Miguel Corp

It bears reiterating that tax burdens are not to be imposed, nor presumed to be imposed beyond what the statute expressly and clearly imports, tax statutes being construed strictissimi juris against the government.[17]In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails as said rule or regulation cannot go beyond the terms and provisions of the basic law.[18] It must be stressed that the objective of issuing BIR Revenue Regulations is to establish parameters or guidelines within which our tax laws should be implemented, and not to amend or modify its substantive meaning and import. As held in Commissioner of Internal Revenue v. Fortune Tobacco Corporation,[19]x x x The rule in the interpretation of tax laws is that a statute will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously. A tax cannot be imposed without clear and express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by implication. x x x As burdens, taxes should not be unduly exacted nor assumed beyond the plain meaning of the tax laws.[20] Hence, while it may be true that the interpretation advocated by petitioner CIR is in furtherance of its desire to raise revenues for the government, such noble objective must yield to the clear provisions of the law, particularly since, in this case, the terms of the said law are clear and leave no room for interpretation.

COMPENSATION AND SET OFF

Philex Mining vs CIR (INCLUDING FRANCIA VS IAC)

We see no merit in this contention.In several instances prior to the instant case, we have already made the pronouncement that taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other.[17]There is a material distinction between a tax and debt.Debts are due to the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity.[18]We find no cogent reason to deviate from the aforementioned distinction.Prescinding from this premise, inFrancia v. Intermediate Appellate Court,[19]we categorically held that taxes cannot be subject to set-off or compensation, thus:We have consistently ruled that there can be no off-setting of taxesagainstthe claims that the taxpayer may have against the government.A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected.The collection of tax cannot await the results of a lawsuit against the government.Domingo vs Garlitos

The legal basis for such a procedure is the fact that in the testate or intestate proceedings to settle the estate of a deceased person, the properties belonging to the estate are under the jurisdiction of the court and such jurisdiction continues until said properties have been distributed among the heirs entitled thereto. During the pendency of the proceedings all the estate is incustodia legisand the proper procedure is not to allow the sheriff, in case of the court judgment, to seize the properties but to ask the court for an order to require the administrator to pay the amount due from the estate and required to be paid.Another ground for denying the petition of the provincial fiscal is the fact that the court having jurisdiction of the estate had found that the claim of the estate against the Government has been recognized and an amount of P262,200 has already been appropriated for the purpose by a corresponding law (Rep. Act No. 2700). Under the above circumstances, 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, therefore, takes place by operation of law, in accordance with the provisions of Articles 1279 and 1290 of the Civil Code, and both debts are extinguished to the concurrent amount, thus:ART. 1200. When all the requisites mentioned in article 1279 are present, compensation takes effect by operation of law, and extinguished both debts to the concurrent amount, eventhough the creditors and debtors are not aware of the compensation.

TAX AMNESTY

CS GARMENT INC VS CIR

Tax amnesty refers to the articulation of the absolute waiver by a sovereign of its right to collect taxes and power to impose penalties on persons or entities guilty of violating a tax law.14Tax amnesty aims to grant a general reprieve to tax evaders who wish to come clean by giving them an opportunity to straighten out their records.15In 2007, Congress enacted R.A. 9480, which granted a tax amnesty covering "all national internal revenue taxes for the taxable year 2005 and prior years, with or without assessments duly issued therefor, that have remained unpaid as of December 31, 2005."16These national internal revenue taxes include (a) income tax; (b) VAT; (c) estate tax; (d) excise tax; (e) donors tax; (f) documentary stamp tax; (g) capital gains tax; and (h) other percentage taxes.17Pursuant to Section 6 of the 2007 Tax Amnesty Law, those who availed themselves of the benefits of the law became "immune from the payment of taxes, as well as additions thereto, and the appurtenant civil, criminal or administrative penalties under the National Internal Revenue Code of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years."Amnesty taxpayers may immediately enjoy the privileges and immunities under the 2007 Tax Amnesty Law, as soon as they fulfill the suspensive conditions imposed thereinA careful scrutiny of the 2007 Tax Amnesty Law would tell us that the law contains two types of conditions one suspensive, the other resolutory. Borrowing from the concepts under our Civil Code, a condition may be classified as suspensive when the fulfillment of the condition results in the acquisition of rights. On the other hand, a condition may be considered resolutory when the fulfillment of the condition results in the extinguishment of rights. In the context of tax amnesty, the rights referred to are those arising out of the privileges and immunities granted under the applicable tax amnesty law.The imposition of a suspensive condition under the 2007 Tax Amnesty Law is evident from the following provisions of the law:2007 Tax Amnesty Law Republic Act No. 9480SECTION 2. Availment of the Amnesty. Any person, natural or juridical, who wishes to avail himself of the tax amnesty authorized and granted under this Act shall file with the Bureau of Internal Revenue (BIR) a notice and Tax Amnesty Return accompanied by a Statement of Assets, Liabilities and Networth (SALN) as of December 31, 2005, in such form as may be prescribed in the implementing rules and regulations (IRR) of this Act, and pay the applicable amnesty tax within six months from the effectivity of the IRR.SECTION 4. Presumption of Correctness of the SALN. The SALN as of December 31, 2005 shall be considered as true and correct except where the amount of declared networth is understated to the extent of thirty percent (30%) or more as may be established in proceedings initiated by, or at the instance of, parties other than the BIR or its agents: Provided, That such proceedings must be initiated within one year following the date of the filing of the tax amnesty return and the SALN. Findings of or admission in congressional hearings, other administrative agencies of government, and/or courts shall be admissible to prove a thirty percent (30%) under-declaration.SECTION 6. Immunities and Privileges. Those who availed themselves of the tax amnesty under Section 5 hereof, and have fully complied with all its conditions shall be entitled to the following immunities and privileges:(a) The taxpayer shall be immune from the payment of taxes, as well as additions thereto, and the appurtenant civil, criminal or administrative penalties under the National Internal Revenue Code of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years.(b) The taxpayers Tax Amnesty Return and the SALN as of December 31, 2005 shall not be admissible as evidence in all proceedings that pertain to taxable year 2005 and prior years, insofar as such proceedings relate to internal revenue taxes, before judicial, quasi-judicial or administrative bodies in which he is a defendant or respondent, and except for the purpose of ascertaining the networth beginning January 1, 2006, the same shall not be examined, inquired or looked into by any person or government office. However, the taxpayer may use this as a defense, whenever appropriate, in cases brought against him.(c) The books of accounts and other records of the taxpayer for the years covered by the tax amnesty availed of shall not be examined: Provided, That the Commissioner of Internal Revenue may authorize in writing the examination of the said books of accounts and other records to verify the validity or correctness of a claim for any tax refund, tax credit (other than refund or credit of taxes withheld on wages), tax incentives, and/or exemptions under existing laws.All these immunities and privileges shall not apply where the person failed to file a SALN and the Tax Amnesty Return, or where the amount of networth as of December 31, 2005 is proven to be understated to the extent of thirty percent (30%) or more, in accordance with the provisions of Section 3 hereof.SECTION 7. When and Where to File and Pay. The filing of the Tax Amnesty Return and the payment of the amnesty tax for those availing themselves of the tax amnesty shall be made within six months starting from the effectivity of the IRR. It shall be filed at the office of the Revenue District Officer which has jurisdiction over the legal residence or principal place of business of the filer. The Revenue District Officer shall issue an acceptance of payment form authorizing an authorized agent bank, or in the absence thereof, the collection agent or municipal treasurer concerned, to accept the amnesty tax payment.Department of Finance Order No. 29-07: Rules and Regulations to Implement R.A. 9480SECTION 6. Method of Availment of Tax Amnesty. x x x x3. Payment of Amnesty Tax and Full Compliance. Upon filing of the Tax Amnesty Return in accordance with Sec. 6 (2) hereof, the taxpayer shall pay the amnesty tax to the authorized agent bank or in the absence thereof, the Collection Agent or duly authorized Treasurer of the city or municipality in which such person has his legal residence or principal place of business.The RDO shall issue sufficient Acceptance of Payment Forms, as may be prescribed by the BIR for the use of or to be accomplished by the bank, the collection agent or the Treasurer, showing the acceptance of the amnesty tax payment. In case of the authorized agent bank, the branch manager or the assistant branch manager shall sign the acceptance of payment form.The Acceptance of Payment Form, the Notice of Availment, the SALN, and the Tax Amnesty Return shall be submitted to the RDO, which shall be received only after complete payment. The completion of these requirements shall be deemed full compliance with the provisions of R.A. 9480. (Emphases supplied)In availing themselves of the benefits of the tax amnesty program, taxpayers must first accomplish the following forms and prepare them for submission: (1) Notice of Availment of Tax Amnesty Form; (2) Tax Amnesty Return Form (BIR Form No. 2116); (3) Statement of Assets, Liabilities and Net worth (SALN) as of December 31, 2005; and (4) Tax Amnesty Payment Form (Acceptance of Payment Form or BIR Form No. 0617).18The taxpayers must then compute the amnesty tax due in accordance with the rates provided in Section 5 of the law,19using as tax base their net worth as of 31 December 2005 as declared in their SALNs. At their option, the revenue district office (RDO) of the BIR may assist them in accomplishing the forms and computing the taxable base and the amnesty tax due.20The RDO, however, is disallowed from looking into, questioning or examining the veracity of the entries contained in the Tax Amnesty Return, SALN, and other documents they have submitted.21Using the Tax Amnesty Payment Form, the taxpayers must make a complete payment of the computed amount to an authorized agent bank, a collection agent, or a duly authorized treasurer of the city or municipality.22Thereafter, the taxpayers must file with the RDO or an authorized agent bank the (1) Notice of Availment of Tax Amnesty Form; (2) Tax Amnesty Return Form (BIR Form No. 2116); (3) SALN; and (4) Tax Amnesty Payment Form.23The RDO shall only receive these documents after complete payment is made, as shown in the Tax Amnesty Payment Form.24It must be noted that the completion of these requirements "shall be deemed full compliance with the provisions of R.A. 9480."25In our considered view, this rule means that amnesty taxpayers may immediately enjoy the privileges and immunities under the 2007 Tax Amnesty Law as soon as the aforementioned documents are duly received.The OSG has already confirmed26to this Court that CS Garment has complied with all of the documentary requirements of the law. Consequently, and contrary to the assertion of the OSG, no further assessment by the BIR is necessary. CS Garment is now entitled to invoke the immunities and privileges under Section 6 of the law.Similarly, we reject the contention of OSG that the BIR was given a one-year period to contest the correctness of the SALN filed by CS Garment, thus making petitioners motion premature. Neither the 2007 Tax Amnesty Law nor Department of Finance (DOF) Order No. 29-07 (Tax Amnesty Law IRR) imposes a waiting period of one year before the applicant can enjoy the benefits of the Tax Amnesty Law. It can be surmised from the cited provisions that the law intended the immediate enjoyment of the immunities and privileges of tax amnesty upon fulfilment of the requirements. Further, a reading of Sections 4 and 6 of the 2007 Tax Amnesty Law shows that Congress has adopted a "no questions asked" policy, so long as all the requirements of the law and the rules are satisfied. The one-year period referred to in the law should thus be considered only as a prescriptive period within which third parties, meaning "parties other than the BIR or its agents," can question the SALN not as a waiting period during which the BIR may contest the SALN and the taxpayer prevented from enjoying the immunities and privileges under the law.This clarification, however, does not mean that the amnesty taxpayers would go scot-free in case they substantially understate the amounts of their net worth in their SALN. The 2007 Tax Amnesty Law imposes a resolutory condition insofar as the enjoyment of immunities and privileges under the law is concerned. Pursuant to Section 4 of the law, third parties may initiate proceedings contesting the declared amount of net worth of the amnesty taxpayer within one year following the date of the filing of the tax amnesty return and the SALN. Section 6 then states that "All these immunities and privileges shall not apply x x x where the amount of networth as of December 31, 2005 is proven to be understated to the extent of thirty percent (30%) or more, in accordance with the provisions of Section 3 hereof." Accordingly, Section 10 provides that amnesty taxpayers who willfully understate their net worth shall be (a) liable for perjury under the Revised Penal Code; and (b) subject to immediate tax fraud investigation in order to collect all taxes due and to criminally prosecute those found to have willfully evaded lawful taxes due.Nevertheless, in this case we note that the OSG has already Indicated27that the CIR had not filed a case relative to the tax amnesty application of CS Garment, from the time the documents were filed in March 2008. Neither did the OSG mention that a third party had initiated proceedings challenging the declared amount of net worth of the amnesty taxpayer within the one-year period.Taxpayers with pending tax cases are still qualified to avail themselves of the tax amnesty program.With respect to its last assertion, the OSG quotes the following guidelines under BIR RMC 19-2008 to establish that CS Garment is disqualified from availing itself of the tax amnesty program:28

A BASIC GUIDE ON THE TAX AMNESTY ACT OF 2007The following is a basic guide for taxpayers who wish to avail of tax amnesty pursuant of Republic Act No. 9480 (Tax Amnesty Act of 2007).Who may avail of the amnesty?x x x xEXCEPT:[x] Withholding agents with respect to their withholding tax liabilities[x] Those with pending cases: Under the jurisdiction of the PCGG Involving violations of the Anti-Graft and Corrupt Practices Act Involving violations of the Anti-Money Laundering Law For tax evasion and other criminal offenses under the NIRC and/or the RPC[x]Issues and cases which were ruled by any court (even without finality) in favor of the BIR prior to amnesty availment of the taxpayer.(e.g. Taxpayers who have failed to observe or follow BOI and/or PEZA rules on entitlement to Income Tax Holiday Incentives and other incentives)[x] Cases involving issues ruled with finality by the Supreme Court prior to the effectivity of R.A. 9480 (e.g. DST on Special Savings Account)[x] Taxes passed-on and collected from customers for remittance to the BIR[x] Delinquent Accounts/Accounts Receivable considered as assets of the BIR/Government, including self-assessed tax (Emphasis supplied)To resolve the matter, we refer to the basic text of the Tax Amnesty Law and its implementing rules and regulations, viz:Republic Act No. 9480SECTION 8. Exceptions. The tax amnesty provided in Section 5 hereof shall not extend to the following persons or cases existing as of the effectivity of this Act:x x x x(f) Tax cases subject of final and executory judgment by the courts.DOF Order No. 29-07: Rules and Regulations to Implement R.A. 9480SECTION 5. Exceptions. The tax amnesty shall not extend to the following persons or cases existing as of the effectivity of R.A. 9480:x x x x7. Tax cases subject of final and executory judgment by the courts. (Emphases supplied)We cull from the aforementioned provisions that neither the law nor the implementing rules state that a court ruling that has not attained finality would preclude the availment of the benefits of the Tax Amnesty Law. Both R.A. 9480 and DOF Order No. 29-07 are quite precise in declaring that"[t]ax cases subject of final and executory judgment by the courts" are the ones excepted from the benefits of the law. In fact, we have already pointed out the erroneous interpretation of the law in Philippine Banking Corporation (Now: Global Business Bank, Inc.) v. Commissioner of Internal Revenue, viz:The BIRs inclusion of "issues and cases which were ruled by any court (even without finality) in favor of the BIR prior to amnesty availment of the taxpayer" as one of the exceptions in RMC 19-2008 is misplaced. RA 9480 is specifically clear that the exceptions to the tax amnesty program include "tax cases subject of final and executory judgment by the courts." The present case has not become final and executory when Metrobank availed of the tax amnesty program.29(Emphasis supplied)While tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer and liberally in favor of the taxing authority,30it is also a well-settled doctrine31that the rule-making power of administrative agencies cannot be extended to amend or expand statutory requirements or to embrace matters not originally encompassed by the law.1wphi1Administrative regulations should always be in accord with the provisions of the statute they seek to carry into effect, and any resulting inconsistency shall be resolved in favor of the basic law. We thus definitively declare that the exception "[i]ssues and cases which were ruled by any court (even without finality) in favor of the BIR prior to amnesty availment of the taxpayer" under BIR RMC 19-2008 is invalid, as the exception goes beyond the scope of the provisions of the 2007 Tax Amnesty Law.32Considering the completion of the aforementioned requirements, we find that petitioner has successfully availed itself of the tax amnesty benefits granted under the Tax Amnesty Law. Therefore, we no longer see any need to further discuss the issue of the deficiency tax assessments. CS Garment is now deemed to have been absolved of its obligations and is already immune from the payment of taxes including the assessed deficiency in the payment of VAT, DST, and income tax as affirmed by the CTA en banc as well as of the additions thereto (e.g., interests and surcharges). Furthermore, the tax amnesty benefits include immunity from "the appurtenant civil, criminal, or administrative penalties under the NIRC of 1997, as amended, arising from the failure to pay any and all internal revenue taxes for taxable year 2005 and prior years."33CIR VS MARUBENI

Moreover, E.O. Nos. 41 and 64 are tax amnesty issuances. A tax amnesty is a general pardon or intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of evasion or violation of a revenue or tax law.[15]It partakes of an absolute forgiveness or waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate.[16]A tax amnesty, much like a tax exemption, is never favored nor presumed in law.[17]If granted, the terms of the amnesty, like that of a tax exemption, must be construed strictly against the taxpayer and liberally in favor of the taxing authority.[18]For the right of taxation is inherent in government. The State cannot strip itself of the most essential power of taxation by doubtful words. He who claims an exemption (or an amnesty) from the common burden must justify his claim by the clearest grant of organic or state law. It cannot be allowed to exist upon a vague implication. If a doubt arises as to the intent of the legislature, that doubt must be resolved in favor of the state.[19]

CIR VS GONZALEZ

Tax amnesty is a general pardon to taxpayers who want to start a clean tax slate. It also gives the government a chance to collect uncollected tax from tax evaders without having to go through the tedious process of a tax case.[51]Even assumingarguendothat the issuance of RR No. 2-99 is in the nature of tax amnesty, it bears noting that a tax amnesty, much like a tax exemption, is never favored nor presumed in law and if granted by statute, the terms of the amnesty like that of a tax exemption must be construed strictly against the taxpayer and liberally in favor of the taxing authority.[52]

ASIA INTERNATIONAL AUCTIONEERS INC VS CIR

Issue Before the CourtBoth parties discussed the legal bases for AIAs tax liability, unmindful of the fact that this case stemmed from the CTAs dismissal of AIAs petition for review for failure to file a timely protest, without passing upon the substantive merits of the case.Relevantly, on January 30, 2008, AIA filed a Manifestation and Motion with Leave of the Honorable Court to Defer or Suspend Further Proceedings20rllon the ground that it availed of the Tax Amnesty Program under Republic Act 948021rll(RA 9480), otherwise known as the Tax Amnesty Act of 2007. On February 13, 2008, it submitted to the Court a Certification of Qualification22rllissued by the BIR on February 5, 2008 stating that AIA "has availed and is qualified for Tax Amnesty for the Taxable Year 2005 and Prior Years" pursuant to RA 9480.With AIAs availment of the Tax Amnesty Program under RA 9480, the Court is tasked to first determine its effects on the instant petition.Ruling of the CourtA tax amnesty is a general pardon or the intentional overlooking by the State of its authority to impose penalties on persons otherwise guilty of violating a tax law. It partakes of an absolute waiver by the government of its right to collect what is due it and to give tax evaders who wish to relent a chance to start with a clean slate.23rllA 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.24rllIn 2007, RA 9480 took effect granting a tax amnesty to qualified taxpayers for all national internal revenue taxes for the taxable year 2005 and prior years, with or without assessments duly issued therefor, that have remained unpaid as of December 31, 2005.25rllThe Tax Amnesty Program under RA 9480 may be availed of by any person except those who are disqualified under Section 8 thereof, to wit:chanroblesvirtuallawlibrarySection 8. Exceptions. The tax amnesty provided in Section 5 hereof shall not extend to the following persons or cases existing as of the effectivity of this Act:(a)Withholding agents with respect to their withholding tax liabilities;(b) Those with pending cases falling under the jurisdiction of the Presidential Commission on Good Government;(c) Those with pending cases involving unexplained or unlawfully acquired wealth or under the Anti-Graft and Corrupt Practices Act;(d) Those with pending cases filed in court involving violation of the Anti-Money Laundering Law;(e) Those with pending criminal cases for tax evasion and other criminal offenses under Chapter II of Title X of the National Internal Revenue Code of 1997, as amended, and the felonies of frauds, illegal exactions and transactions, and malversation of public funds and property under Chapters III and IV of Title VII of the Revised Penal Code; and(f) Tax cases subject of final and executory judgment by the courts.(Emphasis supplied)The CIR contends that AIA is disqualified under Section 8(a) of RA 9480 from availing itself of the Tax Amnesty Program because it is "deemed" a withholding agent for the deficiency taxes. This argument is untenable.The CIR did not assess AIA as a withholding agent that failed to withhold or remit the deficiency VAT and excise tax to the BIR under relevant provisions of the Tax Code. Hence, the argument that AIA is "deemed" a withholding agent for these deficiency taxes is fallacious.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.26rllOn 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 transactions27and remits the same to the government. Due to this difference, the deficiency VAT and excise tax cannot be "deemed" as withholding taxes merely because they constitute indirect taxes. Moreover, records support the conclusion that AIA was assessed not as a withholding agent but, as the one directly liable for the said deficiency taxes.28rllThe CIR also argues that AIA, being an accredited investor/taxpayer situated at the Subic Special Economic Zone, should have availed of the tax amnesty granted under RA 939929rlland not under RA 9480. This is also untenable.RA 9399 was passed prior to the passage of RA 9480. RA 9399 does not preclude taxpayers within its coverage from availing of other tax amnesty programs available or enactedin futurolike RA 9480. More so, RA 9480 does not exclude from its coverage taxpayers operating within special economic zones. As long as it is within the bounds of the law, a taxpayer has the liberty to choose which tax amnesty program it wants to avail.CONSTITUTIONAL LIMITATIONS

LIWAYWAY VINZONS CHATO VS FORTUNE TOBACCO

In the case ofBagatsing v. Ramirez,24the issue was which law should govern the publication of a tax ordinance, the City Charter of Manila, a special act which treats ordinances in general and which requires their publication before enactment and after approval, or the Tax Code, a general law, which deals in particular with "ordinances levying or imposing taxes, fees or other charges," and which demands publication only after approval. In holding that it is the Tax Code which should prevail, the Court elucidated that:There is no question that the Revised Charter of the City of Manila is a special act since it relates only to the City of Manila, whereas the Local Tax Code is a general law because it applies universally to all local governments. Blackstone defines general law as a universal rule affecting the entire community and special law as one relating to particular persons or things of a class. And the rule commonly said is that a prior special law is not ordinarily repealed by a subsequent general law. The fact that one is special and the other general creates a presumption that the special is to be considered as remaining an exception of the general, one as a general law of the land, the other as the law of a particular case.However, the rule readily yields to a situation where the special statute refers to a subject in general, which the general statute treats in particular. Th[is] exactly is the circumstance obtaining in the case at bar. Section 17 of the Revised Charter of the City of Manila speaks of "ordinance" in general, i.e., irrespective of the nature and scope thereof, whereas, Section 43 of the Local Tax Code relates to "ordinances levying or imposing taxes, fees or other charges" in particular. In regard, therefore, to ordinances in general, the Revised Charter of the City of Manila is doubtless dominant, but, that dominant force loses its continuity when it approaches the realm of "ordinances levying or imposing taxes, fees or other charges" in particular. There, the Local Tax Code controls.Here, as always, a general provision must give way to a particular provision. Special provision governs.

FACTS:

This is a case for damages under Article 32 of the Civil Code filed by Fortune against Liwayway as CIR.

On June 10, 1993, the legislature enacted RA 7654, which provided that locally manufactured cigarettes which are currently classified and taxed at 55% shall be charged an ad valorem tax of 55% provided that the maximum tax shall not be less than Five Pesos per pack. Prior to effectivity of RA 7654, Liwayway issued a rule, reclassifying Champion, Hope, and More (all manufactured by Fortune) as locally manufactured cigarettes bearing foreign brand subject to the 55% ad valorem tax. Thus, when RA 7654 was passed, these cigarette brands were already covered.

In a case filed against Liwayway with the RTC, Fortune contended that the issuance of the rule violated its constitutional right against deprivation of property without due process of law and the right to equal protection of the laws.

For her part, Liwayway contended in her motion to dismiss that respondent has no cause of action against her because she issued RMC 37-93 in the performance of her official function and within the scope of her authority. She claimed that she acted merely as an agent of the Republic and therefore the latter is the one responsible for her acts. She also contended that the complaint states no cause of action for lack of allegation of malice or bad faith.

The order denying the motion to dismiss was elevated to the CA, who dismissed the case on the ground that under Article 32, liability may arise even if the defendant did not act with malice or bad faith.

Hence this appeal.

ISSUES:

Whether or not a public officer may be validly sued in his/her private capacity for acts done in connection with the discharge of the functions of his/her office Whether or not Article 32, NCC, should be applied instead of Sec. 38, Book I, Administrative Code

HELD:

On the first issue, the general rule is that a public officer is not liable for damages which a person may suffer arising from the just performance of his official duties and within the scope of his assigned tasks. An officer who acts within his authority to administer the affairs of the office which he/she heads is not liable for damages that may have been caused to another, as it would virtually be a charge against the Republic, which is not amenable to judgment for monetary claims without its consent. However, a public officer is by law not immune from damages in his/her personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity for official actions.

Specifically, under Sec. 38, Book I, Administrative Code, civil liability may arise where there is bad faith, malice, or gross negligence on the part of a superior public officer. And, under Sec. 39 of the same Book, civil liability may arise where the subordinate public officers act is characterized by willfulness or negligence. In Cojuangco, Jr. V. CA, a public officer who directly or indirectly violates the constitutional rights of another, may be validly sued for damages under Article 32 of the Civil Code even if his acts were not so tainted with malice or bad faith.

Thus, the rule in this jurisdiction is that a public officer may be validly sued in his/her private capacity for acts done in the course of the performance of the functions of the office, where said public officer: (1) acted with malice, bad faith, or negligence; or (2) where the public officer violated a constitutional right of the plaintiff.

On the second issue, SC ruled that the decisive provision is Article 32, it being a special law, which prevails over a general law (the Administrative Code).

Article 32 was patterned after the tort in American law. A tort is a wrong, a tortious act which has been defined as the commission or omission of an act by one, without right, whereby another receives some injury, directly or indirectly, in person, property or reputation. There are cases in which it has been stated that civil liability in tort is determined by the conduct and not by the mental state of the tortfeasor, and there are circumstances under which the motive of the defendant has been rendered immaterial. The reason sometimes given for the rule is that otherwise, the mental attitude of the alleged wrongdoer, and not the act itself, would determine whether the act was wrongful. Presence of good motive, or rather, the absence of an evil motive, does not render lawful an act which is otherwise an invasion of anothers legal right; that is, liability in tort in not precluded by the fact that defendant acted without evil intent.

NON RESIDENT ALIEN

CIR VS BAKER NICKEL

Pertinent portion of the National Internal Revenue Code (NIRC), states:SEC. 25. Tax on Nonresident Alien Individual. (A) Nonresident Alien Engaged in Trade or Business Within the Philippines. (1) In General. A nonresident alien individual engaged in trade or business in the Philippines shall be subject to an income tax in the same manner as an individual citizen and a resident alien individual, on taxable income received from all sources within the Philippines. A nonresident alien individual who shall come to the Philippines and stay therein for an aggregate period of more than one hundred eighty (180) days during any calendar year shall be deemed a nonresident alien doing business in the Philippines, Section 22(G) of this Code notwithstanding.x x x x(B) Nonresident Alien Individual Not Engaged in Trade or Business Within the Philippines. There shall be levied, collected and paid for each taxable year upon the entire income received from all sources within the Philippines by every nonresident alien individual not engaged in trade or business within the Philippines x x x a tax equal to twenty-five percent (25%) of such income. x x xPursuant to the foregoing provisions of the NIRC, non-resident aliens, whether or not engaged in trade or business, are subject to Philippine income taxation on their income received from all sources within the Philippines. Thus, the keyword in determining the taxability of non-resident aliens is the incomes "source." In construing the meaning of "source" in Section 25 of the NIRC, resort must be had on the origin of the provision.CO HEIRS

OBILLOS JR VS CIR

** This view is supported by the following rulings of respondent Commissioner:Co-owership distinguished from partnership.We find that the case at bar is fundamentally similar to the De Leon case. Thus, like the De Leon heirs, the Longa heirs inherited the 'hacienda' in questionpro-indivisofrom their deceased parents; they did not contribute or invest additional ' capital to increase or expand the inherited properties; they merely continued dedicating the property to the use to which it had been put by their forebears; they individually reported in their tax returns their corresponding shares in the income and expenses of the 'hacienda', and they continued for many years the status of co-ownership in order, as conceded by respondent, 'to preserve its (the 'hacienda') value and to continue the existing contractual relations with the Central Azucarera de Bais for milling purposes. Longa vs. Aranas, CTA Case No. 653, July 31, 1963).All co-ownerships are not deemed unregistered pratnership.Co-Ownership who own properties which produce inco