TAXATION (COMPILED CASE DIGESTS).doc

7/25/2019 TAXATION (COMPILED CASE DIGESTS).doc

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TAXATION 1Case Digests

Professor: Atty. Jerry M. Catague, CPA, REB, REA

LLB 3


2/43

PHILIPPINE GUARANTY VS CIR

GR No. L-220!

"ACTS#The Philippine Guaranty Co., n!., a "o#esti! insuran!e !o#pany, entere" into reinsuran!e !ontra!ts, on $arious "ates, %ith foreign insuran!e!o#panies not "oing &usiness in the Philippines.Philippine Guaranty Co., n!., there&y agree" to !e"e to the foreign reinsurers a portion of the pre#iu#s on

insuran!e it has originally un"er%ritten in the Philippines, in !onsi"eration for the assu#ption &y the latter of lia&ility on an e'ui$alent portion of the ris(s

insure". )ai" reinsurran!e !ontra!ts %ere signe" &y Philippine Guaranty Co., n!. in Manila an" &y the foreign reinsurers outsi"e the Philippines, e*!ept the!ontra!t %ith )%iss Reinsuran!e Co#pany, %hi!h %as signe" &y &oth parties in )%it+erlan".

The reinsuran!e !ontra!ts #a"e the !o##en!e#ent of the reinsurers lia&ility si#ultaneous %ith that of Philippine Guaranty Co., n!. un"er the originalinsuran!e. Philippine Guaranty Co., n!. %as re'uire" to (eep a register in Manila %here the ris(s !e"e" to the foreign reinsurers %here entere", an" entry

therein %as &in"ing upon the reinsurers. A proportionate a#ount of ta*es on insuran!e pre#iu#s not re!o$ere" fro# the original assure" %ere to &e pai" for&y the foreign reinsurers. The foreign reinsurers further agree", in !onsi"eration for #anaging or a"#inistering their affairs in the Philippines, to !o#pensate

the Philippine Guaranty Co., n!., in an a#ount e'ual to - of the reinsuran!e pre#iu#s. Confli!ts an"/or "ifferen!es &et%een the parties un"er thereinsuran!e !ontra!ts %ere to &e ar&itrate" in Manila. Philippine Guaranty Co., n!. an" )%iss Reinsuran!e Co#pany stipulate" that their !ontra!t shall &e

!onstrue" &y the la%s of the Philippines.

Pursuant to the aforesai" reinsuran!e !ontra!ts, Philippine Guaranty Co., n!. !e"e" to the foreign reinsurers the follo%ing pre#iu#s:01-32

P45,466.70,in 01-42750,470.-. )ai" pre#iu#s %ere e*!lu"e" &y Philippine Guaranty Co., n!. fro# its gross in!o#e %hen it file its in!o#e ta* returnsfor 01-3 an" 01-4. 8urther#ore, it "i" not %ithhol" or pay ta* on the#. Conse'uently, per letter "ate" April 03, 01-1, the Co##issioner of nternal Re$enueassesse" against Philippine Guaranty Co., n!. %ithhol"ing ta* on the !e"e" reinsuran!e pre#iu#s,thus, in 01-3 has a total of P539,673.99 an" in 01-4 %as

P534,364.99 a##ount "ue an" "e#an"a&le. Philippine Guaranty Co., n!., proteste" the assess#ent on the groun" that reinsuran!e pre#iu#s !e"e" toforeign reinsurers not "oing &usiness in the Philippines are not su&e!t to %ithhol"ing ta*. Petitioner #aintain that the reinsuran!e pre#iu#s in 'uestion "i"

not !onstitute in!o#e fro# sour!es %ithin the Philippines &e!ause the foreign reinsurers "i" not engage in &usiness in the Philippines, nor "i" they ha$eoffi!e here. ts protest %as "enie" an" it appeale" to the Court of Ta* Appeals.CTA rule" in fa$our of the CR.

ISSUE: ;hether or not the Co##issioner of nternal Re$enues assess#ent for %ithhol"ing ta* on the reinsuran!e pre#iu#s in 01-3 an" 01-4 to the

foreign reinsurers is $ali".

HELD#


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!ession of the ris(s an" pre#iu#s an" assu#ption of the reinsuran!e un"erta(ing &y the foreign reinsurers.Ta*es on pre#iu#s i#pose" &y )e!tion 5-1 of

the Ta* Co"e for the pri$ilege of "oing insuran!e &usiness in the Philippines %ere paya&le &y the foreign reinsurers %hen the sa#e %ere not re!o$era&lefro# the original assure". The foreign reinsurers pai" Philippine Guaranty Co., n!. an a#ount e'ui$alent to - of the !e"e" pre#iu#s, in !onsi"eration for

a"#inistration an" #anage#ent &y the latter of the affairs of the for#er in the Philippines in regar" to their reinsuran!e a!ti$ities here.

The foreign insurers pla!e of &usiness shoul" not &e !onfuse" %ith their pla!e of a!ti$ity. Business shoul" not &e !ontinuity an" progression of

transa!tions 5 %hile a!ti$ity #ay !onsist of only a single transa!tion. An a!ti$ity #ay o!!ur outsi"e the pla!e of &usiness. )e!tion 54 of the Ta* Co"e "oesnot re'uire a foreign !orporation to engage in &usiness in the Philippines in su&e!ting its in!o#e to ta*. t suffi!es that the a!ti$ity !reating the in!o#e is

perfor#e" or "one in the Philippines.

;=ERE8>RE, in affir#ing the "e!ision appeale" fro#, the Philippine Guaranty Co., n!. is here&y or"ere" to pay to the Co##issioner of nternal

Re$enue the su#s of P595,015.99 an" P073,0-3.99, or a total a#ount of P37-,34-.99, as %ithhol"ing ta* for the years 01-3 an" 01-4, respe!ti$ely. f thea#ount of P37-,34-.99 is not pai" %ithin 39 "ays fro# the "ate this u"g#ent &e!o#es final, there shall &e !olle!te" a sur!harge" of - on the a#ount

unpai", plus interest at the rate of 0 a #onth fro# the "ate of "elin'uen!y to the "ate of pay#ent, pro$i"e" that the #a*i#u# a#ount that #ay &e!olle!te" as interest shall not e*!ee" the a#ount !orrespon"ing to a perio" of three ?3@ years.


4/43

VERA VS. "ERNANDE$

GR No. L-%1%&!

"ACTS: This is an appeal fro# t%o or"ers of the C8 entitle": ntestate Estate of Luis . Tongoy, the first "is#issing the Motion for Allo%an!e of Clai#an" for an >r"er of Pay#ent of Ta*es &y the Go$ern#ent of the Repu&li! of the Philippines against the Estate of the late Luis . Tongoy, for "efi!ien!y

in!o#e ta*es for the year 016320164 of "e!e"ent an" se!on" "enying the Motion for re!onsi"eration of the >r"er of "is#issal.

The !lai# represents the in"e&te"ness to the Go$ern#ent of the late Luis . Tongoy for "efi!ien!y in!o#e ta*es in the total su# of P3,5-4.9.TheA"#inistrator oppose" the #otion solely on the groun" that the !lai# %as &arre" un"er )e!tion -, Rule 6 of the Rules of Court %hi!h pro$i"es that all

!lai#s for #oney against the "e!e"ent, arising fro# !ontra!ts, e*press or i#plie", %hether the sa#e &e "ue, not "ue, or !ontingent, all !lai#s for funerale*penses an" e*penses for the last si!(ness of the "e!e"ent, an" u"g#ent for #oney against the "e!e"ent, #ust &e file" %ithin the ti#e li#ite" in the noti!e

other%ise they are &arre" fore$er.

8in"ing the opposition %ell2foun"e", the respon"ent Ju"ge, Jose 8. 8ernan"e+, "is#isse" the #otion for allo%an!e of !lai# file" &y herein petitioner,Regional ire!tor of the Bureau of nternal Re$enue. MoR %as file" &ut "enie", hen!e,this petiotion for !ertiorari.

ISSUE# oes the statute of non2!lai#s of the Rules of Court &ar the !lai# of the go$ern#ent for unpai" ta*esD

HELD#>. The reason for the #ore li&eral treat#ent of !lai#s for ta*es against a "e!e"ents estate in the for# of e*!eption fro# the appli!ation of thestatute of non2!lai#s, is not har" to fin". Ta*es are the life&loo" of the Go$ern#ent an" their pro#pt an" !ertain a$aila&ility are i#perious nee". Fponta*ation "epen"s the Go$ern#ent a&ility to ser$e the people for %hose &enefit ta*es are !olle!te". To safeguar" su!h interest, negle!t or o#ission of

go$ern#ent offi!ials entruste" %ith the !olle!tion of ta*es shoul" not &e allo%e" to &ring har# or "etri#ent to the people, in the sa#e #anner as pri$atepersons #ay &e #a"e to suffer in"i$i"ually on a!!ount of his o%n negligen!e, the presu#ption &eing that they ta(e goo" !are of their personal affairs. This

shoul" not hol" true to go$ern#ent offi!ials %ith respe!t to #atters not of their o%n personal !on!ern.

8urther#ore, as hel" in Co##issioner of nternal Re$enue $s. Pine"a, !iting the last paragraph of )e!tion 30- of the Ta* Co"e, pay#ent of in!o#e ta*shall &e a lien in fa$or of the Go$ern#ent of the Philippines fro# the ti#e the assess#ent %as #a"e &y the Co##issioner of nternal Re$enue until pai"

%ith interests, penalties, et!. By $irtue of su!h lien, this !ourt hel" that the property of the estate alrea"y in the han"s of an heir or transferee #ay &e su&e!tto the pay#ent of the ta* "ue the estate. . A fortiori &efore the inheritan!e has passe" to the heirs, the unpai" ta*es "ue the "e!e"ent #ay &e !olle!te", e$en

%ithout its ha$ing &een presente" un"er )e!tion 5 of Rule 6 of the Rules of Court. t #ay truly &e sai" that until the property of the estate of the "e!e"ent

has $este" in the heirs, the "e!e"ent, represente" &y his estate, !ontinues as if he %ere still ali$e, su&e!t to the pay#ent of su!h ta*es as %oul" &e !olle!ti&lefro# the estate e$en after his "eath.


5/43

CO''ISSIONER VS ALGUE

GR No. L-2(()&

"ACTS#The pri$ate respon"ent, a "o#esti! !orporation engage" in engineering, !onstru!tion an" other allie" a!ti$ities, re!ei$e" a letter fro# the petitioner

assessing it in the total a#ount of P3,03.- as "elin'uen!y in!o#e ta*es for the years 01- an" 01-1. >n January 0, 016- Algue flie" a letter of protest

or re'uest for re!onsi"eration, %hi!h letter %as sta#p re!ei$e" on the sa#e "ay in the offi!e of the petitioner.

>n Mar!h 05, 016-, a %arrant of "istraint an" le$y %as presente" to the pri$ate respon"ent, through its !ounsel, Atty. Al&erto Gue$ara, Jr., %ho refuse"

to re!ei$e it on the groun" of the pen"ing protest. >n April 7, 016-, Atty. Gue$ara %as finally infor#e" that the BR %as not ta(ing any a!tion on the protestan" it %as only then that he a!!epte" the %arrant of "istraint an" le$y earlier sought to &e ser$e". Algue file" a petition for re$ie% of the "e!ision of the

Co##issioner of nternal Re$enue %ith the Court of Ta* Appeals. The petitioner !onten"s that the !lai#e" "e"u!tion of P7-,999.99 %as properly "isallo%e"&e!ause it %as not an or"inary reasona&le or ne!essary &usiness e*pense. CA rule" in fa$or of Algue, it hel" that the sai" a#ount ha" &een legiti#ately pai"

&y the pri$ate respon"ent for a!tual ser$i!es ren"ere". The pay#ent %as in the for# of pro#otional fees. These %ere !olle!te" &y the Payees for their %or(in the !reation of the egeta&le >il n$est#ent Corporation of the Philippines an" its su&se'uent pur!hase of the properties of the Philippine )ugar Estate

e$elop#ent Co#pany.

ISSUE# ;hether the BR !orre!tly "isallo%e" the "e"u!tion.

HELD#>. ;e agree %ith the respon"ent !ourt that the a#ount of the pro#otional fees %as not e*!essi$e. The total !o##ission pai" &y the Philippine )ugar Estatee$elop#ent Co. to the pri$ate respon"ent %as P05-,999.99. 50After "e"u!ting the sai" fees, Algue still ha" a &alan!e of P-9,999.99 as !lear profit fro# the transa!tion.

The a#ount of P7-,999.99 %as 69 of the total !o##ission. This %as a reasona&le proportion, !onsi"ering that it %as the payees %ho "i" pra!ti!ally e$erything, fro# thefor#ation of the egeta&le >il n$est#ent Corporation to the a!tual pur!hase &y it of the )ugar Estate properties.

This fin"ing of the respon"ent !ourt is in a!!or" %ith the follo%ing pro$ision of the Ta* Co"e:

)EC. 39. e"u!tions fro# gross in!o#e.22n !o#puting net in!o#e there shall &e allo%e" as "e"u!tions , E*penses: n general.22All the or"inary an" ne!essarye*penses pai" or in!urre" "uring the ta*a&le year in !arrying on any tra"e or &usiness, in!lu"ing a reasona&le allo%an!e for salaries or other !o#pensation for personalser$i!es a!tually ren"ere"...

t is sai" that ta*es are %hat %e pay for !i$ili+ation so!iety. ;ithout ta*es, the go$ern#ent %oul" &e paraly+e" for la!( of the #oti$e po%er to a!ti$ate an" operate it.

=en!e, "espite the natural relu!tan!e to surren"er part of ones har" earne" in!o#e to the ta*ing authorities, e$ery person %ho is a&le to #ust !ontri&ute his share in therunning of the go$ern#ent. The go$ern#ent for its part, is e*pe!te" to respon" in the for# of tangi&le an" intangi&le &enefits inten"e" to i#pro$e the li$es of the peoplean" enhan!e their #oral an" #aterial $alues. This sy#&ioti! relationship is the rationale of ta*ation an" shoul" "ispel the erroneous notion that it is an ar&itrary #etho" of


6/43

e*a!tion &y those in the seat of po%er.

CIR *s. PINEDA

G.R. No. L-22%!+ Se,tee/ 1+ 1)&

"ats# Estate pro!ee"ings %ere ha" to settle the estate of Atanasio Pine"a. After sai" pro!ee"ings %ere !lose", the BR foun" out that the in!o#e ta* lia&ilityof the estate "uring the pen"en!y of the estate pro!ee"ings %ere not pai". The Court of Ta* Appeals ren"ere" u"g#ent hol"ing Manuel B. Pine"a, the el"est

son of the "e!ease", lia&le for the pay#ent !orrespon"ing to his share of the estate. The Co##issioner of nternal Re$enue has appeale" to )C an" propose"to hol" Manuel B. Pine"a lia&le for the pay#ent of all the ta*es foun" &y the Ta* Court to &e "ue fro# the estate instea" of only for the a#ount of ta*es

!orrespon"ing to his share in the estate.

Isse# ;hether or not the Go$ern#ent !an re'uire Pine"a to pay the full a#ount of the ta*es assesse"D

He34#Pine"a is lia&le for the assess#ent as an heir an" as a hol"er2transferee of property &elonging to the estate/ta*payer. As a hol"er of property &elongingto the estate, Pine"a is lia&le for the ta* up to the a#ount of the property in his possession. The reason is that the Go$ern#ent has a lien on %hat he re!ei$e"

fro# the estate as his share in the inheritan!e for unpai" in!o#e ta*es for %hi!h sai" estate is lia&le.

By $irtue of su!h lien, the Go$ern#ent has the right to su&e!t the property in Pine"as possession, to satisfy the in!o#e ta* assess#ent in the su# ofP769.5. After su!h pay#ent, Pine"a %ill ha$e a right of !ontri&ution fro# his !o2heirs, to a!hie$e an a"ust#ent of the proper share of ea!h heir in the

"istri&uta&le estate.

The Go$ern#ent has t%o %ays of !olle!ting the ta* in 'uestion. >ne, &y going after all the heirs an" !olle!ting fro# ea!h one of the# the a#ount of

the ta* proportionate to the inheritan!e re!ei$e". The reason %hy a !ase suit is file" against all the heirs for the ta* "ue fro# the estate is to a!hie$e there&yt%o results: first, pay#ent of the ta* an" se!on", a"ust#ent of the shares of ea!h heir in the "istri&ute" estate as lessened by the tax.

Another re#e"y is &y su&e!ting sai" property of the estate %hi!h is in the han"s of an heir or transferee to the pay#ent of the ta* "ue. This se!on"

re#e"y is the $ery a$enue the Go$ern#ent too( in this !ase to !olle!t the ta*. The BR shoul" &e gi$en the ne!essary "is!retion to a$ail itself of the #ost

e*pe"itious %ay to !olle!t the ta* &e!ause ta*es are the life&loo" of go$ern#ent an" their pro#pt an" !ertain a$aila&ility is an i#perious nee". Thea"ust#ent of the respe!ti$e shares "ue to the heirs fro# the inheritan!e, as lessene" &y the ta*, is left to a%ait the suit for !ontri&ution &y the heir fro#%ho# the Go$ern#ent re!o$ere" sai" ta*.


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Natio5a3 Po6e/ Co/,o/atio5 *s Cit7 o8 Caa5ata5

G.R. No. 1!)110

"ACTS#8or #any years no%, ational Po%er Corporation ?petitioner@,a go$ern#ent2o%ne" an" !ontrolle" !orporation, sells ele!tri! po%er to the resi"ents

of Ca&anatuan City. City of Ca&anatuan ?respon"ent@ assesse" the petitioner a fran!hise ta* a#ounting. Petitioner refuse" to pay the ta* assess#ent arguingthat the respon"ent has no authority to i#pose ta* on go$ern#ent entities an" !onten"e" that as a non2profit organi+ation, it is e*e#pte" fro# the pay#ent ofall for#s of ta*es, !harges, "uties or fees in a!!or"an!e %ith se!. 03 of Rep. A!t o. 631-, as a#en"e".

Respon"ent file" a !olle!tion suit. Respon"ent allege" that petitionerHs e*e#ption fro# lo!al ta*es has &een repeale" &y se!tion 013 of the LGC. RTC

uphel" PCHs ta* e*e#ption. >n appeal the CA re$erse" the trial !ourtHs >r"er on the groun" that se!tion 013, in relation to se!tions 037 an" 0-0 of theLGC, e*pressly %ith"re% the e*e#ptions grante" to the petitioner.

ISSUE# ;/ the respon"ent !ity go$ern#ent has the authority to issue >r"inan!e o. 06-215 an" i#pose an annual ta* on I&usinesses enoying a fran!hise

HELD#


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e*!ee"ing -9 of 0 of the gross annual re!eipts for the pre!e"ing !alen"ar &ase" on the in!o#ing re!eipts reali+e" %ithin its territorial uris"i!tion. The

legislati$e purpose to %ith"ra% ta* pri$ileges enoye" un"er e*isting la% or !harter is !learly #anifeste" &y the language use" on ?si!@ )e!tions 037 an" 013!ategori!ally %ith"ra%ing su!h e*e#ption su&e!t only to the e*!eptions enu#erate". )in!e it %oul" &e not only te"ious an" i#pra!ti!al to atte#pt to

enu#erate all the e*isting statutes pro$i"ing for spe!ial ta* e*e#ptions or pri$ileges, the LGC pro$i"e" for an e*press, al&eit general, %ith"ra%al of su!he*e#ptions or pri$ileges. o #ore une'ui$o!al language !oul" ha$e &een use".

The po%er to ta* is the #ost effe!ti$e instru#ent to raise nee"e" re$enues to finan!e an" support #yria" a!ti$ities of the lo!al go$ern#ent units for the"eli$ery of &asi! ser$i!es essential to the pro#otion of the general %elfare an" the enhan!e#ent of pea!e, progress, an" prosperity of the people. As thisCourt o&ser$e" in the Ma!tan !ase, Ithe original reasons for the %ith"ra%al of ta* e*e#ption pri$ileges grante" to go$ern#ent2o%ne" or !ontrolle"

!orporations an" all other units of go$ern#ent %ere that su!h pri$ilege resulte" in serious ta* &ase erosion an" "istortions in the ta* treat#ent of si#ilarlysituate" enterprises. ;ith the a""e" &ur"en of "e$olution, it is e$en #ore i#perati$e for go$ern#ent entities to share in the re'uire#ents of "e$elop#ent,

fis!al or other%ise, &y paying ta*es or other !harges "ue fro# the#.


9/43

CRE9A *s. Ro3o

G.R. No. 1&0&

"ats# Petitioner Cha#&er of Real Estate an" Buil"ersH Asso!iations, n!. ?CREBA@, an asso!iation of real estate "e$elopers an" &uil"ers in the Philippines, 'uestione" the$ali"ity of )e!tion 57?E@ of the Ta* Co"e %hi!h i#poses the #ini#u# !orporate in!o#e ta* ?MCT@ on !orporations.

Fn"er the Ta* Co"e, a !orporation !an &e!o#e su&e!t to the MCT at the rate of 5 of gross in!o#e, &eginning on the 4th ta*a&le year i##e"iately follo%ing theyear in %hi!h it !o##en!e" its &usiness operations, %hen su!h MCT is greater than the nor#al !orporate in!o#e ta*. f the regular in!o#e ta* is higher than the MCT,the !orporation "oes not pay the MCT.

CREBA argue", a#ong others, that the use of gross in!o#e as MCT &ase a#ounts to a !onfis!ation of !apital &e!ause gross in!o#e, unli(e net in!o#e, is notreali+e" gain.

CREBA also sought to in$ali"ate the pro$isions of RR o. 521, as a#en"e", other%ise (no%n as the Consoli"ate" ;ithhol"ing Ta* Regulations, %hi!h pres!ri&e therules an" pro!e"ures for the !olle!tion of C;T on sales of real properties !lassifie" as or"inary assets, on the groun"s that these regulations:

Fse gross selling pri!e ?G)P@ or fair #ar(et $alue ?8M@ as &asis for "eter#ining

the in!o#e ta* on the sale of real estate !lassifie" as or"inary assets, instea" of the entityHs net ta*a&le in!o#e as pro$i"e" for un"er the Ta* Co"e

Man"ate the !olle!tion of in!o#e ta* on a per transa!tion &asis, !ontrary to the Ta* Co"e pro$ision %hi!h i#poses in!o#e ta* on net in!o#e at the en" of theta*a&le perio"

Go against the "ue pro!ess !lause &e!ause the go$ern#ent !olle!ts in!o#e ta* e$en %hen the net in!o#e has not yet &een "eter#ine" gain is ne$er assure" &y

#ere re!eipt of the selling pri!e an" Contra$ene the e'ual prote!tion !lause &e!ause the C;T is &eing !harge" upon real estate enterprises, &ut not on other &usiness enterprises, #ore parti!ularly,

those in the #anufa!turing se!tor, %hi!h "o &usiness si#ilar to that of a real estate enterprise.

Isses#?0@ s the i#position of MCT !onstitutionalD ?5@ s the i#position of C;T on in!o#e fro# sales of real properties !lassifie" as or"inary assets !onstitutionalD

He34# :0@


10/43

i##e"iately follo%ing the year in %hi!h the !orporation !o##en!e" its operations.

)e!on"ly, the la% allo%s the !arry2for%ar" of any e*!ess of the MCT pai" o$er the nor#al in!o#e ta* %hi!h shall &e !re"ite" against the nor#al in!o#e ta* for the threei##e"iately su!!ee"ing years.

Thir"ly, sin!e !ertain &usinesses #ay &e in!urring genuine repeate" losses, the la% authori+es the )e!retary of 8inan!e to suspen" the i#position of MCT if a !orporationsuffers losses "ue to prolonge" la&or "ispute, for!e #aeure an" legiti#ate &usiness re$erses.

?5@ n the allege" $iolation of the e'ual prote!tion !lause, the ta*ing po%er has the authority to #a(e reasona&le !lassifi!ations for purposes of ta*ation. ne'ualities %hi!hresult fro# singling out a parti!ular !lass for ta*ation, or e*e#ption, infringe no !onstitutional li#itation. The real estate in"ustry is, &y itself, a !lass an" !an &e $ali"lytreate" "ifferently fro# other &usiness enterprises.

;hat "istinguishes the real estate &usiness fro# other #anufa!turing enterprises, for purposes of the i#position of the C;T, is not their pro"u!tion pro!esses &ut thepri!es of their goo"s sol" an" the nu#&er of transa!tions in$ol$e". The in!o#e fro# the sale of a real property is &igger an" its fre'uen!y of transa!tion li#ite", #a(ing itless !u#&erso#e for the parties to !o#ply %ith the %ithhol"ing ta* s!he#e. >n the other han", ea!h #anufa!turing enterprise #ay ha$e tens of thousan"s of transa!tions%ith se$eral thousan" !usto#ers e$ery #onth in$ol$ing &oth #ini#al an" su&stantial a#ounts.


11/43

Goe; *s. Pa3oa/

GR No. L-2%&!

"ats# Petitioner Bena#in Go#e+ #aile" a letter that "i" not &ear the spe!ial anti2t& sta#p re'uire" &y the statute, it %as returne" to the petitioner. n $ie%

of this "e$elop#ent, the petitioner &rought suit for "e!laratory relief in the Court of 8irst nstan!e of Pa#panga, to test the !onstitutionality of the statute, as%ell as the i#ple#enting a"#inistrati$e or"ers issue", !onten"ing that it $iolates the e'ual prote!tion !lause of the Constitution as %ell as the rule ofunifor#ity an" e'uality of ta*ation. The lo%er !ourt "e!lare" the statute an" the or"ers un!onstitutional hen!e this appeal &y the respon"ent postal

authorities.

Isse# ;/ the statue is $iolati$e of the rule on unifor#ity an" e'uality of ta*ation.

He34# t is settle" that the legislature has the inherent po%er to sele!t the su&e!ts of ta*ation an" to grant e*e#ptions.4 This po%er has aptly &een "es!ri&e"as of %i"e range an" fle*i&ility.- n"ee", it is sai" that in the fiel" of ta*ation, #ore than in other areas, the legislature possesses the greatest free"o# in

!lassifi!ation.6 The reason for this is that tra"itionally, !lassifi!ation has &een a "e$i!e for fitting ta* progra#s to lo!al nee"s an" usages in or"er to a!hie$ean e'uita&le "istri&ution of the ta* &ur"en.

The !lassifi!ation is li(e%ise &ase" on !onsi"erations of a"#inistrati$e !on$enien!e. 8or it is no% a settle" prin!iple of la% that !onsi"eration of

pra!ti!al a"#inistrati$e !on$enien!e an" !ost in the a"#inistration of ta* la%s affor" a"e'uate groun" for i#posing a ta* on a %ell re!ogni+e" an" "efine"!lass.1 n the !ase of the anti2TB sta#ps, un"ou&te"ly, the single #ost i#portant an" influential !onsi"eration that le" the legislature to sele!t #ail users as

su&e!ts of the ta* is the relati$e ease an" !on$enien!e of !olle!ting the ta* through the post offi!es. The s#all a#ount of fi$e !enta$os "oes not ustify thegreat e*pense an" in!on$enien!e of !olle!ting through the regular #eans of !olle!tion. >n the other han", &y pla!ing the "uty of !olle!tion on postal

authorities the ta* %as #a"e al#ost self2enfor!ing, %ith as little !ost an" as little in!on$enien!e as possi&le.


12/43

Lo/e5;o *s. Posa4as

GR No. L-!%0(2

"ats#This is an appeal fro# a "e!ision of the lo%er !ourt "is#issing an a!tion !o##en!e" &y plaintiff in his !apa!ity as trustee of the estate of Tho#as

=anley, "e!ease", against the "efen"ant Colle!tor of nternal Re$enue, for the refun" of an inheritan!e ta* on the estate of the "e!ease" pai" &yplaintiff un"er protest an" for !olle!tion of interest thereon. t appears that on May 7, 0155, Tho#as =anley "ie", lea$ing a %ill an" so#e personal an" realproperties. The %ill %hi!h %as "uly a"#itte" to pro&ate, pro$i"es a#ong other things, that all properties of the testator shall pass to his nephe%, Matthe%

=anley.=o%e$er,it also pro$i"es that all real estate shall &e pla!e" un"er the #anage#ent of the e*e!utors for a perio" of ten years, after the e*piration of%hi!h the properties shall &e gi$en to the sai" Matthe% =anley. The plaintiff !onten"s that the inheritan!e ta* shoul" &e &ase" upon the $alue of the estate at

the e*piration of the perio" of ten years after %hi!h a!!or"ing to the testatorHs %ill, the property !oul" &e an" %as to &e "eli$ere" to the institute" heir, an"not upon the $alue thereof at the ti#e of the "eath of the testator.

Isse# ;/ inheritan!e is ta*a&le at the ti#e of pre"e!essors "eath

He34#In$o(ing the pro$ision of Art. 6-7 ?no% Art. 777@ of the Ci$il Co"e, ;hate$er #ay &e the ti#e %hen a!tual trans#ission of the inheritan!e ta(espla!e, su!!ession ta(es pla!e in any e$ent at the #o#ent of the "e!e"entHs "eath. Tho#as =anley ha$ing "ie" on May 57, 0155, the inheritan!e ta* a!!rue"

as of that "ate. If "eath is the generating sour!e fro# %hi!h the po%er of the state to i#pose inheritan!e ta*es ta(es its &eing an" if, upon the "eath of the"e!e"ent, su!!ession ta(es pla!e an" the right of the state to ta* $ests instantly, the ta* shoul" &e #easure" &y the $alue of the estate as it stoo" at the ti#e of

the "e!e"entHs "eath, regar"less of any su&se'uent !ontingen!y affe!ting $alue or any su&se'uent in!rease or "e!rease in $alue.IConse'uently, %e hol" that atrans#ission &y inheritan!e is ta*a&le at the ti#e of the pre"e!essorHs "eath, not%ithstan"ing the postpone#ent of the a!tual possession or enoy#ent of the

estate &y the &enefi!iary, an" the ta* is #easure" &y the $alue of the property trans#itte" at the ti#e regar"less of its appre!iation or "epre!iation.


13/43

Ia/4 *s Cit7 o8 9agio

GR No. L-12(1

"ats# The City of Baguio has ena!te" the follo%ing or"inan!es:

0. o. 62$, pro$i"ing a#ong other things for an a#use#ent ta* of P9.59 for e$ery person entering a night !lu& li!ense" to "o &usiness in the !ity

5. o. 002, pro$i"ing for a property ta* on #otor $ehi!les (ept an" operate" in the !ity an"

3. o. 052, i#posing a gra"uate" li!ense fee on e$ery a"#ission ti!(et sol" &y enterprises enu#erate" in sai" or"inan!e a#ong the#, !ine#atographs.

Conten"ing that the or"inan!e a&o$e #entione" are unust an" ultra $ires, petitioner &rought the present a!tion for "e!laratory relief to ha$e the sai"or"inan!e "e!lare" $oi" an" also for the refun" of the su# of P5-4,9 %hi!h he has pai" to the !ity un"er protest.

Isse#s the City of Baguio e#po%ere" to le$y a property ta* on #otor an" an a#use#ent ta* on night !lu&sD

He34#t is settle" that a #uni!ipal !orporation unli(e a so$ereign state is !lothe" %ith no inherent po%er of ta*ation, the !harter or statute #ust plainly sho%

an intent to !onfer that po%er. The !ity of Baguio #ay i#pose ta*es only in those !ases spe!ifi!ally pro$i"e" in any la%. n other %or"s for authority to le$ya ta* on spe!ifi! su&e!ts one #ust loo( else%here in the statute &oo(. 8or ha" the pro$ision &een #eant as a &lan(et authority to le$y ta*es, their %oul"ha$e &een no nee" for the phrase as pro$i"e" &y la%. The insertion of that phrase &e spea(s the legislati$e intent to ha$e the !ity e*er!ise the la% #ay

pro$i"e.!ities #ay, un"er a general pro$ision of their !harters, le$y ta*es only as the la% authori+es, the a&sen!e of a si#ilar e*press grant in the !ase of the!ity of Baguio is proof that the po%er to le$y this parti!ular ta* has &een intentionally %ithhel" fro# it.


14/43

CIR *s "o/t5e Toao

GR Nos. 1&2!-

"ats: Respon"ent 8TC is a "o#esti! !orporation that #anufa!tures !igarettes pa!(e" &y #a!hine un"er se$eral &ran"s. Prior to January 0, 0117, )e!tion045 of the 0177 Ta* Co"e su&e!te" sai" !igarette &ran"s to a" $alore# ta*. Anne* of R.A. o. 459 pres!ri&e" the !igarette &ran"sH ta* !lassifi!ation

rates &ase" on their net retail pri!e. >n January 0, 0117, R.A. o. 549 too( effe!t. )e!. 04- thereof no% su&e!ts the !igarette &ran"s to spe!ifi! ta* an" alsopro$i"es that: ?0@ the e*!ise ta* fro# any &ran" of !igarettes %ithin the ne*t three ?3@ years fro# the effe!ti$ity of R.A. o. 549 shall not &e lo%er than the

ta*, %hi!h is "ue fro# ea!h &ran" on >!to&er 0, 0116 ?5@ the rates of e*!ise ta* on !igarettes enu#erate" therein shall &e in!rease" &y 05 on January 0,5999 an" ?3@ the !lassifi!ation of ea!h &ran" of !igarettes &ase" on its a$erage retail pri!e as of >!to&er 0, 0116, as set forth in Anne* shall re#ain in

for!e until re$ise" &y Congress. The )e!retary of 8inan!e issue" RR o. 07211 to i#ple#ent the pro$ision for the 05 e*!ise ta* in!rease. RR o. 07211a""e" the 'ualifi!ation that Ithe ne% spe!ifi! ta* rate *** shall not &e lo%er than the e*!ise ta* that is a!tually &eing pai" prior to January 0, 5999. n effe!t,

it pro$i"e" that the 05 ta* in!rease #ust &e &ase" on the e*!ise ta* a!tually &eing pai" prior to January 0, 5999 an" not on their a!tual net retail pri!e. 8TCfile" 5 separate !lai#s for refun" or ta* !re"it of its purporte"ly o$erpai" e*!ise ta*es for the #onth of January 5999 an" for the perio" January 02e!e#&er

30, 5995. t assaile" the $ali"ity of RR o. 07211 in that it enlarges )e!tion 04- &y pro$i"ing the aforesai" 'ualifi!ation. n this petition, petitioner CRalleges that the literal interpretation gi$en &y the CTA an" the CA of )e!tion 04- %oul" lea" to a lo%er ta* i#posa&le on 0 January 5999 than that i#posa&le

"uring the transition perio", %hi!h is !ontrary to the legislati$e intent to raise re$enue.

Isse# )houl" the 05 ta* in!rease &e &ase" on the net retail pri!e of the !igarettes in the #ar(et as outline" in )e!tion 04- of the 0117 Ta* Co"eD

He34#


15/43

VALENTIN TIO Vs. VIDEOGRA' REGULATORY 9OARD+G.R. o. L27-617, June 0, 017

"ats# This is a !ase %here&y petitioner assaile" the !onstitutionality of P 017 ?An A!t Creating the i"eogra# Regulatory Boar"@.

The purpose of the la% is to regulate the !ir!ulation of $i"eogra#s in!lu"ing, a#ong others, $i"eotapes, "is!s, !assettes or any te!hni!al i#pro$e#ent or

$ariation thereof. n!lu"e" in its e!ree is the ta* i#pose" ?39@ on the gross re!eipts paya&le to the lo!al go$ern#ent.

Petitioner allege" that the ta* i#pose" is harsh, !onfis!atory, oppressi$e an"/or in unla%ful restraint of tra"e in $iolation of the "ue pro!ess !lause of theConstitution an" the 39 ta* i#pose" on the gross re!eipts paya&le to the lo!al go$ern#ent is a RER an" the sa#e is not ger#ane to the su&e!t #atter

thereof.

ISSUE#

.;hether or not the ta* pro$ision in!onsistent %ith the !onstitution.

. ;hether or not the ta* i#pose" is harsh, oppressi$e, !onfis!atory an" unla%ful restraint of tra"e.

RULING# o. The ta* pro$ision is not in!onsistent %ith, nor foreign to that general su&e!t an" title. As a tool for regulation it is si#ply one of theregulatory an" !ontrol #e!hanis#s s!attere" throughout the ECREE. The e*press purpose of the ECREE to in!lu"e ta*ation of the $i"eo in"ustry in

or"er to regulate an" rationali+e the heretofore un!ontrolle" "istri&ution of $i"eogra#s is e$i"ent fro# Prea#&les 5 an" -, supra. Those prea#&les e*plainthe #oti$es of the la%#a(er in presenting the #easure. The title of the ECREE, %hi!h is the !reation of the i"eogra# Regulatory Boar", is!o#prehensi$e enough to in!lu"e the purposes e*presse" in its Prea#&le an" reasona&ly !o$ers all its pro$isions. t is unne!essary to e*press all those

o&e!ti$es in the title or that the latter &e an in"e* to the &o"y of the ECREE.

Petitioner also suits that the thirty per!ent ?39@ ta* i#pose" is harsh an" oppressi$e, !onfis!atory, an" in restraint of tra"e. =o%e$er, it is &eyon" serious 'uestionthat a ta* "oes not !ease to &e $ali" #erely &e!ause it regulates, "is!ourages, or e$en "efinitely "eters the a!ti$ities ta*e". The po%er to i#pose ta*es is one so unli#ite"in for!e an" so sear!hing in e*tent, that the !ourts s!ar!ely $enture to "e!lare that it is su&e!t to any restri!tions %hate$er, e*!ept su!h as rest in the "is!retion of theauthority %hi!h e*er!ises it. n i#posing a ta*, the legislature a!ts upon its !onstituents. This is, in general, a suffi!ient se!urity against erroneous an" oppressi$e ta*ation.

The le$y of the 39 ta* is for a pu&li! purpose. t %as i#pose" pri#arily to ans%er the nee" for regulating the $i"eo in"ustry, parti!ularly &e!ause of the ra#pant fil#pira!y, the flagrant $iolation of intelle!tual property rights, an" the proliferation of pornographi! $i"eo tapes. An" %hile it %as also an o&e!ti$e of the ECREE to prote!t

the #o$ie in"ustry, the ta* re#ains a $ali" i#position.

The pu&li! purpose of a ta* #ay legally e*ist e$en if the #oti$e %hi!h i#pelle" the legislature to i#pose the ta* %as to fa$or one in"ustry o$er another.


16/43

t is inherent in the po%er to ta* that a state &e free to sele!t the su&e!ts of ta*ation, an" it has &een repeate"ly hel" that ine'uities %hi!h result fro# a singlingout of one parti!ular !lass for ta*ation or e*e#ption infringe no !onstitutional li#itation. Ta*ation has &een #a"e the i#ple#ent of the states poli!e po%er.

'ERALCO Vs. Yato+ G.R. o. 4-617, o$e#&er 0, 0131

"ACTS# n 013-, plaintiff Manila Ele!tri! Co#pany, a !orporation organi+e" an" e*isting un"er the la%s of the Philippines, %ith its prin!ipal offi!e an"

pla!e of &usiness in the City of Manila, insure" %ith the !ity of e%


17/43

PHILIPPINE AIRLINES+ INC. Vs. RO'EO ". EDU a54 U9ALDO CAR9ONELL+ G.R. o. L2 4033 August 0-, 01

"ACTS# The Philippine Airlines ?PAL@ is a !orporation organi+e" an" e*isting un"er the la%s of the Philippines an" engage" in the air transportation

&usiness un"er a legislati$e fran!hise, A!t o. 45731, as a#en"e" &y Repu&li! A!t os. 5-@. an" 561.0 Fn"er its fran!hise, PAL is e*e#pt fro# the pay#entof ta*es.

)o#eti#e in 0170, appellee Co##issioner Ro#eo 8. Ele$ate issue" a regulation re'uiring all ta* e*e#pt entities, a#ong the# PAL to pay #otor

$ehi!le registration fees.

espite PALs protestations, the appellee refuse" to register the appellants #otor $ehi!les unless the a#ounts i#pose" un"er Repu&li! A!t 4036 %erepai". The appellant thus pai", un"er protest, the a#ount of P01,-51.7- as registration fees of its #otor $ehi!les.

PAL %rote a letter through their legal !ounsel "e#an"ing a refun" of the a#ount pai" an" in$o(e the ruling in the !ase of Calalang s. Loren+o %here it

%as hel" that #otor $ehi!le registration fees are in reality ta*es fro# the pay#ent of %hi!h PAL is e*e#pt &y $irtue of its legislati$e fran!hise.

E"u "enie" the re'uest for refun" &asing his a!tion on the "e!ision in

Repu&li! $. Philippine Ra&&it Bus Lines, n!., to the effe!t that #otor $ehi!le

registration fees are regulatory e*!eptional an" not re$enue #easures an", therefore, "o not !o#e %ithin the e*e#ption grante" to PAL.

ISSUE# ;hat is the nature of #otor $ehi!le registration feesD Are they ta*es or regulatory feesD

RULING# The !ourt sai" that I8ees #ay &e properly regar"e" as ta*es e$en though they also ser$e as an instru#ent of regulation.

the fees #ay properly &e regar"e" as ta*es e$en though they also ser$e as an instru#ent of regulation. I8 t


18/43

regulatory ta* as the la% refers to the i#position on the registration, operation or o%nership of a #otor $ehi!le as a ta* or fee. Though no%here in Rep. A!t

4036 "oes the la% spe!ifi!ally state that the i#position is a ta*, )e!tion -102-13 spea(s of ta*es or fees ... for the registration or operation or on theo%nership of any #otor $ehi!le, or for the e*er!ise of the profession of !hauffeur ... #a(ing the intent to i#pose a ta* #ore apparent.

t is 'uite apparent that $ehi!le registration fees %ere originally si#ple e*!eptional, inten"e" only for rigi"ly purposes in the e*er!ise of the )tates

poli!e po%ers. >$er the years, ho%e$er, as $ehi!ular traffi! e*plo"e" in nu#&er an" #otor $ehi!les &e!a#e a&solute ne!essities %ithout %hi!h #o"ern lifeas %e (no% it %oul" stan" still, Co5g/ess 8o54 t


19/43

LUT$ *s. ARANETA

G.R. No. L-()Deee/ 22+ 1)

"ACTS# Pro#ulgate" in 0149, the la% in 'uestion opens ?se!tion 0@ %ith a "e!laration of e#ergen!y, "ue to the threat to our in"ustry &y the i##inenti#position of e*port ta*es upon sugar as pro$i"e" in the Ty"ings2M!uffie A!t, an" the e$entual loss of its preferential position in the Fnite" )tates

#ar(et %herefore, the national poli!y %as e*presse" to o&tain a rea"ust#ent of the &enefits "eri$e" fro# the sugar in"ustry &y the !o#ponent ele#entsthereof an" to sta&ili+e the sugar in"ustry so as to prepare it for the e$entuality of the loss of its preferential position in the Fnite" )tates #ar(et an" the

i#position of the e*port ta*es.

n se!tion 5, Co##on%ealth A!t -67 pro$i"es for an in!rease of the e*isting ta* on the #anufa!ture of sugar, on a gra"uate" &asis, on ea!h pi!ul ofsugar #anufa!tures %hile se!tion 3 le$ies on o%ners or persons in !ontrol of lan"s "e$ote" to the !ulti$ation of sugar !ane an" !e"e" to others for a

!onsi"eration, on lease or other%ise.

Plaintiff, ;alter Lut+, in his !apa!ity as Ju"i!ial A"#inistrator of the ntestate Estate of Antonio Jay#e Le"es#a, see(s to re!o$er fro# the Colle!torof nternal Re$enue the su# of P04,666.49 pai" &y the estate as ta*es, un"er se!tion 3 of the A!t, for the !rop years 01420141 an" 0141201-9 alleging that

su!h ta* is un!onstitutional an" $oi", &eing le$ie" for the ai" an" support of the sugar in"ustry e*!lusi$ely, %hi!h in plaintiffs opinion is not a pu&li!purpose for %hi!h a ta* #ay &e !onstitutionally le$ie". The a!tion ha$ing &een "is#isse" &y the Court of 8irst nstan!e, the plaintiffs appeale" the !ase

"ire!tly to this Court

ISSUE# ;hether or not ta*es i#pose" &y Co##on%ealth A!t o. -67, other%ise (no%n as the )ugar A"ust#ent A!t is legalD

RULING# As the prote!tion an" pro#otion of the sugar in"ustry is a #atter of pu&li! !on!ern the Legislature #ay "eter#ine %ithin reasona&le &oun"s %hat

is ne!essary for its prote!tion an" e*pe"ient for its pro#otion. =ere, the legislati$e #ust &e allo%e" full play, su&e!t only to the test of reasona&leness an"it is not !onten"e" that the #eans pro$i"e" in se!tion 6 of Co##on%ealth A!t o. -67 &ear no relation to the o&e!ti$e pursue" or are oppressi$e in

!hara!ter. f o&e!ti$e an" #etho"s are ali(e !onstitutionally $ali", no reason is seen %hy the state #ay not le$y ta*es to raise fun"s for their prose!ution an"attain#ent. Ta*ation #ay &e #a"e the i#ple#ent of the states poli!e po%er.

t is inherent in the po%er to ta* that a state &e free to sele!t the su&e!ts of ta*ation, an" it has &een repeate"ly hel" that ine'ualities %hi!h result fro#

a singling out of one parti!ular !lass for ta*ation or e*e#ption infringe no !onstitutional li#itation


20/43

'a5i3a 'eo/ia3 Pa/@ *s. DS>D

GR. 1%&

"ats# >n April 53, 0115, RA 7435 %as passe" into la%, granting senior !iti+ens the follo%ing pri$ileges: )ECT> 4. Pri$ileges for the )enior Citi+ens. The senior !iti+ens shall &e entitle" to the follo%ing:

a@ the grant of t%enty per!ent ?59@ "is!ount fro# all esta&lish#ents relati$e to utili+ation of transportation ser$i!es, hotels an" si#ilar lo"ging

esta&lish#entNsO, restaurants an" re!reation !enters an" pur!hase of #e"i!ine any%here in the !ountry: Pro$i"e", That pri$ate esta&lish#ents #ay !lai# the!ost as ta* !re"it

&@ a #ini#u# of t%enty per!ent ?59@ "is!ount on a"#ission fees !harge" &y theaters, !ine#a houses an" !on!ert halls, !ir!uses, !arni$als an" other si#ilarpla!es of !ulture, leisure, an" a#use#ent

***

>n August 53, 0113, Re$enue Regulations ?RR@ o. 9514 %as issue" to i#ple#ent RA 7435. )e!tions 5?i@ an" 4 of RR o. 9514 pro$i"e:

Sec. 2. DEFINITIONS. For purposes of these regulations i. Tax !redit refers to the a"ount representing the 2#$ discount granted to a %ualified senior

citi&en by all establish"ents relati'e to their utili&ation of transportation ser'ices( hotels and si"ilar lodging establish"ents( restaurants( drugstores(recreation centers( theaters( cine"a houses( concert halls( circuses( carni'als and other si"ilar places of culture( leisure and a"use"ent( )hich discount

shall be deducted by the said establish"ents fro" their gross inco"e for inco"e tax purposes and fro" their gross sales for 'alueadded tax or otherpercentage tax purposes.

>n 8e&ruary 56, 5994, RA 15-7 a#en"e" !ertain pro$isions of RA 7435, to %it:)ECT> 4. Pri$ileges for the )enior Citi+ens. The senior !iti+ensshall &e entitle" to the follo%ing:?a@ the grant of t%enty per!ent ?59@ "is!ount fro# all esta&lish#ents relati$e to the utili+ation of ser$i!es in hotels an"

si#ilar lo"ging esta&lish#ents, restaurants an" re!reation !enters, an" pur!hase of #e"i!ines in all esta&lish#ents for the e*!lusi$e use or enoy#ent ofsenior !iti+ens, in!lu"ing funeral an" &urial ser$i!es for the "eath of senior !iti+ens

****

The esta&lish#ent #ay !lai# the "is!ounts grante" un"er ?a@, ?f@, ?g@ an" ?h@ as ta* "e"u!tion &ase" on the net !ost of the goo"s sol" or ser$i!esren"ere": Pro$i"e", That the !ost of the "is!ount shall &e allo%e" as "e"u!tion fro# gross in!o#e for the sa#e ta*a&le year that the "is!ount is grante".Pro$i"e", further, That the total a#ount of the !lai#e" ta* "e"u!tion net of $alue a""e" ta* if appli!a&le, shall &e in!lu"e" in their gross sales re!eipts for ta*


21/43

purposes an" shall &e su&e!t to proper "o!u#entation an" to the pro$isions of the ational nternal Re$enue Co"e, as a#en"e".

To i#ple#ent the ta* pro$isions of RA 15-7, the )e!retary of 8inan!e issue" RR o. 45996, the pertinent pro$ision of %hi!h pro$i"es:

SE!. *. +,+I-ENT /0 EST+/-IS1ENTS OF S+-ES DIS!ONTS +S DED!TION F3O 43OSS IN!OE. Establish"ents enu"erated in

subparagraph 567 hereunder granting sales discounts to senior citi&ens on the sale of goods and8or ser'ices specified thereunder are entitled to deduct thesaid discount fro" gross inco"e sub9ect to the follo)ing conditions

:xx

To i#ple#ent the ta* pro$isions of RA 15-7, the )e!retary of 8inan!e issue" RR o. 45996, the pertinent pro$ision of %hi!h pro$i"es:

SE!. *. +,+I-ENT /0 EST+/-IS1ENTS OF S+-ES DIS!ONTS +S DED!TION F3O 43OSS IN!OE. Establish"ents enu"erated in

subparagraph 567 hereunder granting sales discounts to senior citi&ens on the sale of goods and8or ser'ices specified thereunder are entitled to deduct thesaid discount fro" gross inco"e sub9ect to the follo)ing conditions

:xx

8eeling aggrie$e" &y the ta* "e"u!tion s!he#e, petitioners file" the present re!ourse, praying that )e!tion 4 of RA 7435, as a#en"e" &y RA 15-7, an"the i#ple#enting rules an" regulations issue" &y the ); an" the >8 &e "e!lare" un!onstitutional insofar as these allo% &usiness esta&lish#ents to

!lai# the 59 "is!ount gi$en to senior !iti+ens as a ta* "e"u!tion that the ); an" the >8 &e prohi&ite" fro# enfor!ing the sa#e an" that the ta*!re"it treat#ent of the 59 "is!ount un"er the for#er )e!tion 4 ?a@ of RA 7435 &e reinstate".

Isse# ;=ET=ER )ECT> 4 >8 REPFBLC ACT >. 15-7 A T) MPLEMETG RFLE) A REGFLAT>), )>8AR A) T=EE T=AT T=E T;ET< PERCET ?59@ )C>FT T> )E>R CTE) MA< BE CLAME A) A TAQ EFCT> B< T=EPRATE E)TABL)=MET), ARE AL A FC>)TTFT>AL.

R3i5g#o. Base" on the afore2state" >8 >pinion, the ta* "e"u!tion s!he#e "oes not fully rei#&urse petitioners for the "is!ount pri$ilege a!!or"e" to

senior !iti+ens. This is &e!ause the "is!ount is treate" as a "e"u!tion, a ta*2"e"u!ti&le e*pense that is su&tra!te" fro# the gross in!o#e an" results in a lo%erta*a&le in!o#e. Being a ta* "e"u!tion, the "is!ount "oes not re"u!e ta*es o%e" on a peso for peso &asis &ut #erely offers a fra!tional re"u!tion in ta*es

o%e". Theoreti!ally, the treat#ent of the "is!ount as a "e"u!tion re"u!es the net in!o#e of the pri$ate esta&lish#ents !on!erne". The "is!ounts gi$en %oul"ha$e entere" the !offers an" for#e" part of the gross sales of the pri$ate esta&lish#ents, %ere it not for R.A. o. 15-7. The per#anent re"u!tion in their total

re$enues is a for!e" su&si"y !orrespon"ing to the ta(ing of pri$ate property for pu&li! use or &enefit. This !onstitutes !o#pensa&le ta(ing for %hi!hpetitioners %oul" or"inarily &e!o#e entitle" to a ust !o#pensation. Just !o#pensation is "efine" as the full an" fair e'ui$alent of the property ta(en fro# its


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o%ner &y the e*propriator. The #easure is not the ta(ers gain &ut the o%ners loss. The %or" ust is use" to intensify the #eaning of the %or" !o#pensation,

an" to !on$ey the i"ea that the e'ui$alent to &e ren"ere" for the property to &e ta(en shall &e real, su&stantial, full an" a#ple.

A ta* "e"u!tion "oes not offer full rei#&urse#ent of the senior !iti+en "is!ount. As su!h, it %oul" not #eet the "efinition of ust !o#pensation. =a$ingsai" that, this raises the 'uestion of %hether the )tate, in pro#oting the health an" %elfare of a spe!ial group of !iti+ens, !an i#pose upon pri$ate

esta&lish#ents the &ur"en of partly su&si"i+ing a go$ern#ent progra#. The Court &elie$es so.

The )enior Citi+ens A!t %as ena!te" pri#arily to #a*i#i+e the !ontri&ution of senior !iti+ens to nation2&uil"ing, an" to grant &enefits an" pri$ileges tothe# for their i#pro$e#ent an" %ell2&eing as the )tate !onsi"ers the# an integral part of our so!iety.

The priority gi$en to senior !iti+ens fin"s its &asis in the Constitution as set forth in the la% itself.

As a for# of rei#&urse#ent, the la% pro$i"es that &usiness esta&lish#ents e*ten"ing the t%enty per!ent "is!ount to senior !iti+ens #ay !lai# the

"is!ount as a ta* "e"u!tion. The la% is a legiti#ate e*er!ise of poli!e po%er %hi!h, si#ilar to the po%er of e#inent "o#ain, has general %elfare for itso&e!t.

;hile the Constitution prote!ts property rights, petitioners #ust a!!ept the realities of &usiness an" the )tate, in the e*er!ise of poli!e po%er, !an

inter$ene in the operations of a &usiness %hi!h #ay result in an i#pair#ent of property rights in the pro!ess.

Fn"enia&ly, the su!!ess of the senior !iti+ens progra# rests largely on the support i#parte" &y petitioners an" the other pri$ate esta&lish#ents!on!erne". This &eing the !ase, the #eans e#ploye" in in$o(ing the a!ti$e parti!ipation of the pri$ate se!tor, in or"er to a!hie$e the purpose or o&e!ti$e of

the la%, is reasona&ly an" "ire!tly relate". ;ithout suffi!ient proof that )e!tion 4 ?a@ of R.A. o. 15-7 is ar&itrary, an" that the !ontinue" i#ple#entation ofthe sa#e %oul" &e un!ons!iona&ly "etri#ental to petitioners, the Court %ill refrain fro# 'uashing a legislati$e a!t. Carlos )uper"rug Corp $. );, --3

Phil. 059 ?5997@.

;hen %e rule" that petitioners in Carlos )uper"rug !ase faile" to pro$e that the 59 "is!ount is ar&itrary, oppressi$e or !onfis!atory. ;e note" that noe$i"en!e, su!h as a finan!ial report, to esta&lish the i#pa!t of the 59 "is!ount on the o$erall profita&ility of petitioners %as presente" in or"er to sho% that

they %oul" &e operating at a loss "ue to the su&e!t regulation or that the !ontinue" i#ple#entation of the la% %oul" &e un!ons!iona&ly "etri#ental to the&usiness operations of petitioners.

n the !ase at &ar, petitioners pro!ee"e" %ith a hypotheti!al !o#putation of the allege" loss that they %ill suffer si#ilar to %hat the petitioners in Carlos

)uper"rug Corporation"i".


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;e, thus, foun" that the 59 "is!ount as %ell as the ta* "e"u!tion s!he#e is a $ali" e*er!ise of the poli!e po%er of the )tate. Thus, it is !onstitutional.

CARLOS SUPERDRUG CORP.+ ET. AL. *s. DS>D

G.R. No. 1&&!)! 5e 2)+ 200

"ACTS# Petitioners are "o#esti! !orporations an" proprietors operating "rugstores in the Philippines. Mean%hile, A> 070 or the ;olicies and 4uidelines to

I"ple"ent the 3ele'ant ;ro'isions of 3epublic +ct ( other)ise ?no)n as the @Expanded Senior !iti&ens +ct of 2##AB %as issue" &y the >=,pro$i"ing the grant of t%enty per!ent ?59@ "is!ount in the pur!hase of un&ran"e" generi! #e"i!ines fro# all esta&lish#ents "ispensing #e"i!ines for the

e*!lusi$e use of the senior !iti+ens.

>= issue" A"#inistrati$e >r"er o 077 a#en"ing A.>. o. 070. Fn"er A.>. o. 077, the t%enty per!ent "is!ount shall not &e li#ite" to thepur!hase of un&ran"e" generi! #e"i!ines only, &ut shall e*ten" to &oth pres!ription an" non2pres!ription #e"i!ines %hether &ran"e" or generi!. Thus, it

state" that INtOhe grant of t%enty per!ent ?59@ "is!ount shall &e pro$i"e" in the pur!hase of #e"i!ines fro# all esta&lish#ents "ispensing #e"i!ines for thee*!lusi$e use of the senior !iti+ens.

Petitioners assert that )e!tion 4?a@ of the la% is un!onstitutional &e!ause it !onstitutes "epri$ation of pri$ate property. Co#pelling "rugstore o%ners

an" esta&lish#ents to grant the "is!ount %ill result in a loss of profit an" !apital &e!ause 0@ "rugstores i#pose a #ar(2up of only - to 09 on &ran"e"#e"i!ines an" 5@ the la% faile" to pro$i"e a s!he#e %here&y "rugstores %ill &e ustly !o#pensate" for the "is!ount.

RULING# The per#anent re"u!tion in their total re$enues is a for!e" su&si"y !orrespon"ing to the ta(ing of pri$ate property for pu&li! use or &enefit. This!onstitutes !o#pensa&le ta(ing for %hi!h petitioners %oul" or"inarily &e!o#e entitle" to a ust !o#pensation.

Just !o#pensation is "efine" as the full an" fair e'ui$alent of the property ta(en fro# its o%ner &y the e*propriator. The #easure is not the ta(erHs

gain &ut the o%nerHs loss. The %or" Bst is use" to intensify the #eaning of the %or" o,e5satio5, an" to !on$ey the i"ea that the e'ui$alent to &eren"ere" for the property to &e ta(en shall &e real, su&stantial, full an" a#ple.

A ta* "e"u!tion "oes not offer full rei#&urse#ent of the senior !iti+en "is!ount. As su!h, it %oul" not #eet the "efinition of ust !o#pensation.

=a$ing sai" that, this raises the 'uestion of %hether the )tate, in pro#oting the health an" %elfare of a spe!ial group of !iti+ens, !an i#pose upon

pri$ate esta&lish#ents the &ur"en of partly su&si"i+ing a go$ern#ent progra#.

The Court &elie$es so.


24/43

The la% grants a t%enty per!ent "is!ount to senior !iti+ens for #e"i!al an" "ental ser$i!es, an" "iagnosti! an" la&oratory fees a"#ission fees

!harge" &y theaters, !on!ert halls, !ir!uses, !arni$als, an" other si#ilar pla!es of !ulture, leisure an" a#use#ent fares for "o#esti! lan", air an" sea tra$elutili+ation of ser$i!es in hotels an" si#ilar lo"ging esta&lish#ents, restaurants an" re!reation !enters an" pur!hases of #e"i!ines for the e*!lusi$e use or

enoy#ent of senior !iti+ens. As a for# of rei#&urse#ent, the la% pro$i"es that &usiness esta&lish#ents e*ten"ing the t%enty per!ent "is!ount to senior!iti+ens #ay !lai# the "is!ount as a ta* "e"u!tion.

The la% is a legiti#ate e*er!ise of poli!e po%er %hi!h, si#ilar to the po%er of e#inent "o#ain, has general %elfare for its o&e!t. Poli!e po%er is not

!apa&le of an e*a!t "efinition, &ut has &een purposely $eile" in general ter#s to un"ers!ore its !o#prehensi$eness to #eet all e*igen!ies an" pro$i"e enoughroo# for an effi!ient an" fle*i&le response to !on"itions an" !ir!u#stan!es, thus assuring the greatest &enefits. A!!or"ingly, it has &een "es!ri&e" as Ithe

#ost essential, insistent an" the least li#ita&le of po%ers, e*ten"ing as it "oes to all the great pu&li! nee"s. t is INtOhe po%er $este" in the legislature &y the!onstitution to #a(e, or"ain, an" esta&lish all #anner of %holeso#e an" reasona&le la%s, statutes, an" or"inan!es, either %ith penalties or %ithout, not

repugnant to the !onstitution, as they shall u"ge to &e for the goo" an" %elfare of the !o##on%ealth, an" of the su&e!ts of the sa#e.

8or this reason, %hen the !on"itions so "e#an" as "eter#ine" &y the legislature, property rights #ust &o% to the pri#a!y of poli!e po%er &e!auseproperty rights, though sheltere" &y "ue pro!ess, #ust yiel" to general %elfare.

Poli!e po%er as an attri&ute to pro#ote the !o##on goo" %oul" &e "ilute" !onsi"era&ly if on the #ere plea of petitioners that they %ill suffer loss of

earnings an" !apital, the 'uestione" pro$ision is in$ali"ate". Moreo$er, in the a&sen!e of e$i"en!e "e#onstrating the allege" !onfis!atory effe!t of thepro$ision in 'uestion, there is no &asis for its nullifi!ation in $ie% of the presu#ption of $ali"ity %hi!h e$ery la% has in its fa$or.

Gi$en these, it is in!orre!t for petitioners to insist that the grant of the senior !iti+en "is!ount is un"uly oppressi$e to their &usiness, &e!ause

petitioners ha$e not ta(en ti#e to !al!ulate !orre!tly an" !o#e up %ith a finan!ial report, so that they ha$e not &een a&le to sho% properly %hether or not theta* "e"u!tion s!he#e really %or(s greatly to their "isa"$antage.

The Court is not o&li$ious of the retail si"e of the phar#a!euti!al in"ustry an" the !o#petiti$e pri!ing !o#ponent of the &usiness. ;hile the

Constitution prote!ts property rights, petitioners #ust a!!ept the realities of &usiness an" the )tate, in the e*er!ise of poli!e po%er, !an inter$ene in theoperations of a &usiness %hi!h #ay result in an i#pair#ent of property rights in the pro!ess.

Moreo$er, the right to property has a so!ial "i#ension. ;hile Arti!le Q of the Constitution pro$i"es the pre!ept for the prote!tion of property,

$arious la%s an" urispru"en!e, parti!ularly on agrarian refor# an" the regulation of !ontra!ts an" pu&li! utilities, !ontinuously ser$e as a re#in"er that theright to property !an &e relin'uishe" upon the !o##an" of the )tate for the pro#otion of pu&li! goo".


25/43

PLANTERS * "ERTIPHIL

G.R. No. 1&&00& 'a/< 1!+ 200(

"ACTS#

Ta* su&e!t: 8ERTP=L, engage" in the i#port an" "istri&ution of fertili+ers, pesti!i"es, an" agri !he#i!als.Ta* la%: Letter of nstru!tion 046- issue" &y Mar!os in 01-

Ta*: 09 peso le$y per &ag of fertili+erTa*ing Authority: the 8ertili+er Pesti!i"e Authority ?8PA@

8PA %oul" !olle!t the ta* an" re#it the a#ounts to the 8ar East &an( a!!ount of Planters Pro"u!ts n!. 8ro# 01- to 016, 8ertiphil pai" a&out 6#. After

the E)A Re$olution, 8ertiphil 'uestione" the !onstitutionality of L> 046- a#ong other groun"s, that the ta* !olle!te" solely fa$ore" PP, a pri$atelyo%ne" !orporation.

ISSUE# ;> L> 046- %as un!onstitutional.

HELD#


26/43

fun!tions, su!h as &uil"ing roa"s an" "eli$ery of &asi! ser$i!es, &ut also in!lu"es those purposes "esigne" to pro#ote so!ial usti!e. Thus, pu&li! #oney #ay

no% &e use" for the relo!ation of illegal settlers, lo%2!ost housing an" ur&an or agrarian refor#.

-OI C6= ga'e undue benefit to ;;I.

The L> e*pressly pro$i"e" that the le$y &e i#pose" to &enefit PP, a pri$ate !o#pany. The purpose is e*pli!it fro# Clause 3 of the la%:

A. The +d"inistrator of the Fertili&er ;esticide +uthority to include in its fertili&er pricing for"ula a capital contribution co"ponent of not less than;C# per bag. This capital contribution shall be collected until ade%uate capital is raised to "a?e ;;I 'iable.

Ensuring the !ontinue" supply an" "istri&ution of fertili+er in the !ountry is an un"erta(ing i#&ue" %ith pu&li! interest. =o%e$er, the #etho" &y %hi!h L>

046- sought to a!hie$e this is &y no #eans a #easure that %ill pro#ote the pu&li! %elfare. The go$ern#entHs !o##it#ent to support the su!!essfulreha&ilitation an" !ontinue" $ia&ility of PP, a pri$ate !orporation, is an un#ista(a&le atte#pt to #as( the su&e!t statuteHs i#partiality. There is no %ay to

treat the self2interest of a fa$ore" entity, li(e PP, as i"enti!al %ith the general interest of the !ountryHs far#ers or e$en the 8ilipino people in general.

PP %as or"ere" to refun" 8ertiphil


27/43

Ge/o the uni$ersal !harge un"er )e! 34 of EPRA is a ta* on the part of the ERC.

He34#>. )e! 34 is not a ta*. The po%er to ta* is an in!i"ent of so$ereignty an" is unli#ite" in its range, a!(no%le"ging in its $ery nature no li#its, so that

se!urity against the a&use is to &e foun" only in the responsi&ility of the legislature %hi!h i#poses the ta on the !onstituen!y that is to pay it. t is &ase" onthe prin!iple that ta*es are the l ife&loo" of the go$ern#ent an" their pro#pt an" !ertain a$aila&ility is an i#perious nee".

>n the other han" poli!e po%er is the po%er of the %elfare &y restraining an" regulating the use of li&erty an" property. The "istin!tion &et%een these

t%o po%ers rests in the purpose for %hi!h the !harge is #a"e. f the generation of re$enue is the pri#ary purpose an" regulation is #erely in!i"ental, thei#position is a ta*, &ut if regulation is the pri#ary purpose, the fa!t that re$enue is in!i"entally raise" "oes not #a(e the i#position a ta*.

Fni$ersal !harge e*er!ise" &y EPRA is not a ta* &ut an e*e!ution in the e*er!ise of the )tateHs poli!e po%er. Pu&li! %elfare is surely pro#ote".


28/43

9/itis< Toao *. Caar#o!)ugar Co#pany, an" e*!lu"e" any su&se'uently esta&lishe" sugar !entral fro# its !o$erage. Thus, the or"inan!e %as foun" un!onstitutional on e'ual

prote!tion groun"s &e!ause its ter#s "o not apply to future !on"itions as %ell. This is not the !ase here. The !lassifi!ation free+e pro$ision unifor#ly appliesto all !igarette &ran"s %hether e*isting or to &e intro"u!e" in the #ar(et at so#e future ti#e. t "oes not purport to e*e#pt any &ran" fro# its operation nor


29/43

single out a &ran" for the purpose of i#position of e*!ise ta*es.

Ta5 *. De3 Rosa/io

GR Nos. 10)2() 10)!!&

"ats#Petitioners 'uestione" the !onstitutionality of RA 7416 of the )i#plifie" et n!o#e Ta*ation )!he#e ?)T@. t allege"ly $iolate" the follo%ing

pro$isions of the Constitution:

Art , )e!. 56?0@KE$ery &ill passe" &y the Congress shall e#&ra!e only one su&e!t %hi!h shall &e e*presse" in the title thereof. Art. i, )e!. 5?0@KThe rule on ta*ation shall &e unifor# an" e'uita&le. The Congress shall e$ol$e a progressi$e syste# of ta*ation.

Art , )e!. 0Ko person shall &e "epri$e" of life, li&erty an" property %ithout "ue pro!ess of la%, nor shall any person &e "enie" e'ual prote!tion of

la%s.

They also allege" that respon"ents e*!ee"e" their rule #a(ing authority in applying sai" la% to general professional partnerships.

Isse#;> the ta* la% is un!onstitutional for $iolating "ue pro!ess.

He34#>. The "ue pro!ess !lause #ay !orre!tly in$o(e only %hen there is a !lear !ontra$ention of inherent or !onstitutional li#itations in the e*er!ise ofthe ta* po%er. o su!h transgression is e$i"ent in this !ase. Fnifor#ity of ta*ation li(e the !on!ept of e'ual prote!tion, #erely re'uires that all su&e!ts or

o&e!ts of ta*ation, si#ilarly situate", are to &e treate" ali(e &oth in pri$ileges an" lia&ilities. Fnifor#ity "oes not $iolate !lassifi!ation as long as:

0. The stan"ar"s that are use" therefor are su&stantial an" not ar&itrary,5. The !ategori+ation is ger#ane to a!hie$e the legislati$e purpose,

3. The la% applies, all things &eing e'ual, to &oth present an" future !on"itions,4. The !lassifi!ation applies e'ually %ell to the sa#e !lass.

;hat is apparent fro# the la% is the legislati$e intent to in!reasingly shirt the in!o#e ta* syste# to%ar"s the s!he"uler approa!h in the in!o#e ta*ation

of in"i$i"ual ta*payers an" #aintain, &y an" large, the present glo&al treat#ent on ta*a&le !orporations. The Court "oes not $ie% this !lassifi!ation to &ear&itrary an" inappropriate.


30/43

PASEO REALTY AND DEVELOP'ENT CORP. Vs. COURT O" APPEALS

G.R. No. 11)2(&+ Otoe/ 1%+ 200!

"ACTS#Paseo Realty an" e$elop#ent Corporation, a "o#esti! !orporation engage" in the lease of t%o par!els of lan" at Paseo "e Ro*as in Ma(ati City.

>n April 06, 0119, petitioner file" its n!o#e Ta* Return for the !alen"ar year 011 "e!laring a gross in!o#e of P0,--,999.99, "e"u!tions ofP0,77-,110.99, net in!o#e of P71,991.99, an in!o#e ta* "ue thereon in the a#ount of P57,6-3.99, prior yearHs e*!ess !re"it of P046,956.99, an" !re"ita&le

ta*es %ithhel" in 011 of P-4,094.99 or a total ta* !re"it of P599,039.99 an" !re"it &alan!e of P075,477.99.

n a resolution "ate" >!to&er 50, 0113 Respon"ent Court re!onsi"ere" its "e!ision of July 51, 0113 an" "is#isse" the petition for re$ie%, stating that ithas Io$erloo(e" the fa!t that the petitionerHs 011 Corporate n!o#e Ta* Return ?E*h. IA@ in"i!ate" that the a#ount of P-4,094.99 su&e!t of petitionerHs

!lai# for refun" has alrea"y &een in!lu"e" as part an" par!el of the P075,477.99 %hi!h the petitioner auto#ati!ally applie" as ta* !re"it for the su!!ee"ingta*a&le year 0119. Petitioner file" a Motion for Re!onsi"eration %hi!h %as "enie" &y respon"ent Court on Mar!h 09, 0114.

Petitioner file" a Petition for Re$ie% "ate" April 3, 0114%ith the Court of Appeals. Resol$ing the t%in issues of %hether petitioner is entitle" to a refun"

of P-4,094.99 representing !re"ita&le ta*es %ithhel" in 011 an" %hether petitioner applie" su!h !re"ita&le ta*es %ithhel" to its 0119 in!o#e ta* lia&ility,the appellate !ourt hel" that petitioner is not entitle" to a refun" &e!ause it ha" alrea"y ele!te" to apply the total a#ount of P075,447.99, %hi!h in!lu"es the

P-4,094.99 refun" !lai#e", against its in!o#e ta* lia&ility for 0119. The appellate !ourt elu!i"ate" on the reason for its "is#issal of petitionerHs !lai# forrefun".

ISSUE#;hether or not the allege" e*!ess ta*es pai" &y a !orporation "uring a ta*a&le year shoul" &e refun"e" or !re"ite" against its ta* lia&ilities for the

su!!ee"ing yearD

RULING# The petition #ust &e "enie". As a #atter of prin!iple, it is not a"$isa&le for this Court to set asi"e the !on!lusion rea!he" &y an agen!y su!h asthe CTA %hi!h is, &y the $ery nature of its fun!tions, "e"i!ate" e*!lusi$ely to the stu"y an" !onsi"eration of ta* pro&le#s an" has ne!essarily "e$elope" an

e*pertise on the su&e!t, unless there has &een an a&use or i#pro$i"ent e*er!ise of its authority.

This inter"i!tion fin"s parti!ular appli!ation in this !ase sin!e the CTA, after !areful !onsi"eration of the #erits of the Co##issioner of nternalRe$enueHs #otion for re!onsi"eration, re!onsi"ere" its earlier "e!ision %hi!h or"ere" the latter to refun" the a#ount of P-4,094.99 to petitioner. ts

resolution !annot &e su!!essfully assaile" &ase", as it is, on the pertinent la%s as applie" to the fa!ts.

PetitionerHs 011 ta* return in"i!ates an aggregate !re"ita&le ta* of P075,477.99, representing its 01 e*!ess !re"it of P046,956.99 an" 011 !re"ita&leta* of P-4,094.99 less ta* "ue for 011, %hi!h it ele!te" to apply as ta* !re"it for the su!!ee"ing ta*a&le year.01 A!!or"ing to petitioner, it su!!essi$ely


31/43

utili+e" this a#ount %hen it o&taine" refun"s in CTA Case o. 4431 an" CTA Case o. 4-5 an" applie" its 0119 ta* lia&ility, lea$ing a &alan!e of

P-4,094.99, the a#ount su&e!t of the instant !lai# for refun".

The !onfusion as to petitionerHs entitle#ent to a refun" !oul" altogether ha$e &een a$oi"e" ha" it presente" its ta* return for 0119. )u!h return %oul"ha$e sho%n %hether petitioner a!tually applie" its 011 ta* !re"it of P075,477.99, %hi!h in!lu"es the P-4,094.99 !re"ita&le ta*es %ithhel" for 011 su&e!t

of the instant !lai# for refun", against its 0119 ta* lia&ility as it ha" ele!te" in its 011 return, or at least, %hether petitionerHs ta* !re"it of P075,477.99 %asapplie" to its appro$e" refun"s as it !lai#s.

As !learly sho%n fro# the a&o$e2'uote" pro$isions, in !ase the !orporation is entitle" to a refun" of the e*!ess esti#ate" 'uarterly in!o#e ta*es pai",

the refun"a&le a#ount sho%n on its final a"ust#ent return #ay &e !re"ite" against the esti#ate" 'uarterly in!o#e ta* lia&ilities for the ta*a&le 'uarters ofthe su!!ee"ing year. The !arrying for%ar" of any e*!ess or o$erpai" in!o#e ta* for a gi$en ta*a&le year is li#ite" to the su!!ee"ing ta*a&le year only.

Ta*ation is a "estru!ti$e po%er %hi!h interferes %ith the personal an" property rights of the people an" ta(es fro# the# a portion of their property for

the support of the go$ern#ent. An" sin!e ta*es are %hat %e pay for !i$ili+e" so!iety, or are the life&loo" of the nation, the la% fro%ns against e*e#ptionsfro# ta*ation an" statutes granting ta* e*e#ptions are thus !onstrue" stri!tly against the ta*payer an" li&erally in fa$or of the ta*ing authority. A !lai# of

refun" or e*e#ption fro# ta* pay#ents #ust &e !learly sho%n an" &e &ase" on language in the la% too plain to &e #ista(en. Else %ise state", ta*ation is therule, e*e#ption therefro# is the e*!eption


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Ro=as *s. CTA

GR No. L-20!%+ A,/i3 2&+ 1)&(

8a!ts: on Pe"ro Ro*as an" ona Car#en Ayala, &oth )panish, trans#itte" to their gran"!hil"ren &y here"itary su!!ession the follo%ing properties:

a. Agri!ultural lan"s %ith a total area of 01,999 he!tares in asug&u, Batangas

Tenants %ho ha$e &een tilling the lan"s e*presse" their "esire to pur!hase fro# Ro*as y Cia, the par!els %hi!h they a!tually o!!upie"

The go$t, in line %ith the !onstitutional #an"ate to a!'uire &ig lan"e" estates an" apportion the# a#ong lan"less tenants2far#ers, persua"e"

the Ro*as &rothers to part %ith their lan"hol"ings

The &rothers agree" to sell 03,-99 he! to the go$t for P5.971Mn, plus 399S sur$ey an" su&"i$ision e*penses

Fnfortunately, the go$t "i" not ha$e fun"s

A spe!ial arrange#ent %as #a"e %ith the Reha&ilitation 8inan!e Corporation to a"$an!e to Ro*as y Cia the a#ount of P0.-Mn as loan

Fn"er the arrange#ent, Ro*as y Cia. allo%e" the far#ers to &uy the lan"s for the sa#e pri!e &ut &y install#ent, an" !ontra!te" %ith the R8C to

pay its loan fro# the pro!ee"s of the yearly a#orti+ations pai" &y the far#ers

n 01-3 an" 01--, Ro*as y Cia. "eri$e" fro# sai" install#ent pay#ents a net gain of P45,49.3 an" P51,-99.70. -9 of sai" net gain %as

reporte" for in!o#e ta* purposes as gain on the sale of !apital asset hel" for #ore than one year pursuant to )e!. 34 of the Ta* Co"e

&. Resi"ential house an" lot at ;right )t., Malate, Manila

After the #arriage of Antonio an" E"uar"o, Jose li$e" in the house %here he pai" rentals of S/year to Ro*as y Cia

!. )hares of sto!(s in "ifferent !orporations

To #anage the properties, Antonio Ro*as, E"uar"o Ro*as an" Jose Ro*as, the !hil"ren, for#e" a partnership !alle" Ro*as y Co#pania

>n 01-, CR "e#an"e" fro# Ro*as y Cia the pay#ent of real estate "ealers ta* for 01-5 a#tg to P0-9.99 plus P09.99 !o#pro#ise penalty

for late pay#ent, an" P0-9.99 ta* for "ealers of se!urities plus P09.99 !o#pro#ise penalty for late pay#ent.

Basis: house rentals re!ei$e" fro# Jose, pursuant to Art. 014 of the Ta* Co"e stating that an o%ner of a real estate %ho "eri$es a yearly rental

in!o#e therefro# in the a#ount of P3,999.99 or #ore is !onsi"ere" a real estate "ealer an" is lia&le to pay the !orrespon"ing fi*e" ta*

The Co##issioner further assesse" "efi!ien!y in!o#e ta*es against the &rothers for 01-3 an" 01--, resulting fro# the in!lusion as in!o#e ofRo*as y Cia of the unreporte" -9 of the net profits "eri$e" fro# the sale of the asug&u far# lan"s to the tenants, an" the "isallo%an!e of


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"e"u!tions fro# gross in!o#e of $arious &usiness e*penses an" !ontri&utions !lai#e" &y Ro*as y Cia an" the Ro*as &rothers

The &rothers proteste" the assess#ent &ut %as "enie", thus appealing to the CTA

CTA "e!ision: sustaine" the assess#ent e*!ept the "e#an" for the pay#ent of the fi*e" ta* on "ealer of se!urities an" the "isallo%an!e of the

"e"u!tions for !ontri&utions to the Philippine Air 8or!e Chapel an" =ias "e Jesus Retiro "e Manresa

Isse# )houl" Ro*as y Cia &e !onsi"ere" a real estate "ealer &e!ause it engage" in the &usiness of selling real estate

R3i5g#>, &eing an isolate" transa!tion

Real estate "ealer: any person engage" in the &usiness of &uying, selling, e*!hanging, leasing or renting property on his o%n a!!ount as prin!ipal an"

hol"ing hi#self out as a full or part2ti#e "ealer in real estate or as an o%ner of rental property or properties rente" or offere" to rent for an aggregate

a#ount of three thousan" pesos or #ore a year:

)e!tion 014 of the Ta* Co"e, in !onsi"ering as real estate "ealers o%ners of real estate re!ei$ing rentals of at least P3,999.99 a year, "oes not pro$i"e

any 'ualifi!ation as to the persons paying the rentals

The fa!t that there %ere hun"re"s of $en"ees an" the# &eing pai" for their respe!ti$e hol"ings in install#ent for a perio" of ten years, it %oul"

ne$ertheless not #a(e the $en"or Ro*as y Cia. a real estate "ealer "uring the 092year a#orti+ation perio"

The sale of the asug&u far# lan"s to the $ery far#ers %ho tille" the# for generations %as not only in !onsonan!e %ith, &ut #ore in o&e"ien!e to the

re'uest an" pursuant to the poli!y of our Go$ern#ent to allo!ate lan"s to the lan"less

t %as the "uty of the Go$ern#ent to pay the agree" !o#pensation after it ha" persua"e" Ro*as y Cia. to sell its ha!ien"as, an" to su&se'uently

su&"i$i"e the# a#ong the far#ers at $ery reasona&le ter#s an" pri!es. But "ue to the la!( of fun"s, Ro*as y Cia. shoul"ere" the Go$ern#ents &ur"en,%ent out of its %ay an" sol" lan"s "ire!tly to the far#ers in the sa#e %ay an" un"er the sa#e ter#s as %oul" ha$e &een the !ase ha" the Go$ern#ent

"one it itself

The po%er of ta*ation is so#eti#es !alle" also the po%er to "estroy. Therefore it shoul" &e e*er!ise" %ith !aution to #ini#i+e inury to the proprietary

rights of a ta*payer. t #ust &e e*er!ise" fairly, e'ually an" unifor#ly

Therefore, Ro*as y Cia. !annot &e !onsi"ere" a real estate "ealer for the sale in 'uestion. =en!e, pursuant to )e!tion 34 of the Ta* Co"e the lan"s sol" to

the far#ers are !apital assets, an" the gain "eri$e" fro# the sale thereof is !apital gain, ta*a&le only to the e*tent of -9

As to the "e"u!tions

a. ;# tic?ets to a ban%uet gi'en in honor of Sergio Os"ena and ;2* San iguel beer gi'en as gifts to 'arious persons representation expenses

Representation e*penses: "e"u!ti&le fro# gross in!o#e as e*pen"itures in!urre" in !arrying on a tra"e or &usiness n this !ase, the e$i"en!e "oes not sho% su!h lin( &et%een the e*penses an" the &usiness of Ro*as y Cia


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b. !ontributions to the ;asay police and fire depart"ent and other police depart"ents as !hrist"as funds

Contri&utions to the Christ#as fun"s are not "e"u!ti&le for the reason that the Christ#as fun"s %ere not spent for pu&li! purposes &ut as Christ#as

gifts to the fa#ilies of the #e#&ers of sai" entities

Fn"er )e!tion 31?h@, a !ontri&ution to a go$ern#ent entity is "e"u!ti&le %hen use" e*!lusi$ely for pu&li! purposes

As to the !ontri&ution to the Manila Poli!e trust fun", su!h is an allo%a&le "e"u!tion for sai" trust fun" &elongs to the Manila Poli!e, a go$ern#ent

entity, inten"e" to &e use" e*!lusi$ely for its pu&li! fun!tions.

c. !ontributions to the ;hilippines 1eralds fund for anilas neediest fa"ilies

The !ontri&utions %ere not #a"e to the Philippines =eral" &ut to a group of !i$i! spirite" !iti+ens organi+e" &y the Philippines =eral" solely for

!harita&le purposes

There is no 'uestion that the #e#&ers of this group of !iti+ens "o not re!ei$e profits, for all the fun"s they raise" %ere for Manilas nee"iest

fa#ilies. )u!h a group of !iti+ens #ay &e !lassifie" as an asso!iation organi+e" e*!lusi$ely for !harita&le purposes #entione" in )e!tion 39?h@ of

the Ta* Co"e

d. !ontribution to Our -ady of Fati"a chapel at the FE

Fni$ersity gi$es "i$i"en"s to its sto!(hol"ers

Lo!ate" %ithin the pre#ises of the uni$ersity, the !hapel in 'uestion has not &een sho%n to &elong to the Catholi! Chur!h or any religious

organi+ation. The !ontri&utions &elongs to the 8ar Eastern Fni$ersity, !ontri&utions to %hi!h are not "e"u!ti&le un"er )e!tion 39?h@ of the Ta* Co"e for the

reason that the net in!o#e of sai" uni$ersity inures to the &enefit of its sto!(hol"ers

o "efi!ien!y in!o#e ta* is "ue for 01-3 fro# Antonio Ro*as, E"uar"o Ro*as an" Jose Ro*as. 8or 01-- they are lia&le to pay "efi!ien!y in!o#e ta* in the

su# of P091.99, P10.99 an" P41.99, respe!ti$ely.


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APATIRAN NG 'GA NAGLILINGOD SA PA'AHALAAN *s. TAN

G.R. No. (1%11 5e %0+ 1)((

"ACTS# This petition see(s to nullify E*e!uti$e >r"er o. 573 ?E> 573, for short@, issue" &y the Presi"ent of the Philippines on 5- July 017, to ta(e effe!ton 0 January 01, an" %hi!h a#en"e" !ertain se!tions of the ational nternal Re$enue Co"e an" a"opte" the $alue2a""e" ta* ?AT, for short@, for &eing

un!onstitutional in that its ena!t#ent is not alle"ge"ly %ithin the po%ers of the Presi"ent that the AT is oppressi$e, "is!ri#inatory, regressi$e, an" $iolatesthe "ue pro!ess an" e'ual prote!tion !lauses an" other pro$isions of the 017 Constitution.

ISSUE# ;hether or not E> 573 %as ena!te" &y the presi"ent %ith gra$e a&use of "is!retion an" %hether or not su!h la% is un!onstitutional.

RULING# Petitioners ha$e faile" to sho% that E> 573 %as issue" !apri!iously an" %hi#si!ally or in an ar&itrary or "espoti! #anner &y reason of passion or

personal hostility. t appears that a !o#prehensi$e stu"y of the AT ha" &een e*tensi$ely "is!usse" &y this fra#ers an" other go$ern#ent agen!ies in$ol$e"in its i#ple#entation, e$en un"er the past a"#inistration. The petitioners ha$e faile" to a"e'uately sho% that the AT is oppressi$e, "is!ri#inatory or

unust. Petitioners #erely rely upon ne%spaper arti!les %hi!h are a!tually hearsay an" ha$e e$i"entiary $alue. To ustify the nullifi!ation of a la%, there #ust&e a !lear an" une'ui$o!al &rea!h of the Constitution, not a "ou&tful an" argu#entati$e i#pli!ation. The "ispute" sales ta* is also e'uita&le. t is i#pose"

only on sales of goo"s or ser$i!es &y persons engage in &usiness %ith an aggregate gross annual sales e*!ee"ing P599,999.99. )#all !orner sari2sari storesare !onse'uently e*e#pt fro# its appli!ation.


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To3e5ti5o *s Se/eta/7. G.R. No. 11!

"ats o8 t


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The AT is, ho%e$er, "ifferent. t is not a li!ense ta*. t is not a ta* on the e*er!ise of a pri$ilege, #u!h less a !onstitutional right. t is i#pose" on the sale,

&arter, lease or e*!hange of goo"s or properties or the sale or e*!hange of ser$i!es an" the lease of properties purely for re$enue purposes. To su&e!t thepress to its pay#ent is not to &ur"en the e*er!ise of its right any #ore than to #a(e the press pay in!o#e ta* or su&e!t it to general regulation is not to

$iolate its free"o# un"er the Constitution.

REPU9LIC O" THE PHILIPPINES$s. INTER'EDIATE APPELLATE COURT a54 SPOUSES ANTONIO a54 CLARA PASTOR.

"ats#The Repu&li! of the Philippines, through the Bureau of nternal Re$enue, !o##en!e" an a!tion to !olle!t fro# the spouses Antonio Pastor an" Clara

Reyes2Pastor "efi!ien!y in!o#e ta*es for the years 01-- to 01-1 in the a#ount of P07,007.9 %ith a - sur!harge an" 0 #onthly interest, an" !osts. Thepetitioners a"#itte" that there %as an assess#ent #a"e against the# &ut "enie" lia&ility thereof. They !onten"e" that they ha" a$aile" of the ta* a#nesty

un"er P..s os. 53, 503 an" 379 an" ha" pai" the !orrespon"ing a#nesty ta*es. Conse'uently, the Go$ern#ent is in estoppel to "e#an" an" !o#pel furtherpay#ent of in!o#e ta*es &y the#.

The Go$ern#ent file" an a!tion against the spouses ten ?09@ years after the assess#ent of the in!o#e ta* "efi!ien!y %as #a"e. The trial !ourt ren"ere" a

u"g#ent hol"ing that the "efen"ant spouses %ere alrea"y a&le to settle their in!o#e ta* "efi!ien!y un"er P 503 an" that &y a!!epting the pay#ent #a"e&y the "efen"ants, the Go$ern#ent %ai$e" its right to further re!o$er "efi!ien!y in!o#e ta*es.An appeal %as #a"e &ut the CA affir#e" the pre$ious"e!ision.

Isse# ;hether or not the the ta* a#nesty pay#ents #a"e &y the pri$ate respon"ents &ar an a!tion for re!o$ery of "efi!ien!y in!o#e ta*es.

He34#


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a5 L5a S4i*isio5 *s Sa/ie5to

"ats o8 t


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S/igao Co5so3i4ate4 'i5i5g *s. Co33eto/

GR L-1!((+ 2& Deee/ 1)&%

8a!ts:Before the out&rea( of the ;ar, the )urigao Consoli"ate" Mining Co. %as operating its #ining !on!essions in Mainit, )urigao. ue to the interruption of

!o##uni!ations at the out&rea( of the %ar, the !o#pany lost !onta!t %ith its #ines an" ne$er re!ei$e" the pro"u!tion reports for the 4th'uarter of 0140.Toa$oi" in!urring any ta* lia&ility or penalty, it "eposite" of !he!( paya&le to an" in"orse" in fa$or of the City Treasurer, in pay#ent of a" $alore# ta*es

for the sai" perio". After the %ar, the !o#pany file" its a" $alore#ta* for the sai" perio" pursuant to Co##on%ealth A!t 775. ts return %as re$ise", untile$entually the !o#pany !lai#e" a refun" of P07,0-.90. The !olle!tor of nternal Re$enue "enie" the re'uest for refun".

ssue: ;hether )urigao Consoli"ate" #ay re!o$er its ta* pay#ent in light of the !on"onation #a"e un"er a su&se'uent la%, RA 0.

=el":RA 0, )e!tion 0?"@ pro$i"e" that Iall unpai" royalties, a" $alore# or spe!ifi! ta*es on all #inerals #ine" fro# #ining !lai#s or !on!essions e*isting

an "in for!e on 0 January 0145, an" %hi!h #inerals %ere lost &y reason of %ar, of !ir!u#stan!e arising therefro# are !on"one" The pro$ision refers tothe!on"onation of unpai" ta*es only. The !on"onation of a ta* lia&ility is e'ui$alent an" is in the nature of ta* e*e#ption. Being so, it shoul" &e sustaine"

only %hen e*presse" in e*pli!it ter#s, an" it !annot &e e*ten"e" &eyon" the plain #eaning of those ter#s. =e %ho !lai#s an e*e#ption fro# his share ofthe !o##on &ur"en of ta*ation #ust ustify his !lai# &y sho%ing t hat the Legislature inten"e" to e*e#pt hi#. The !o#pany faile" to sho% any portion of

the la% that e*pli!itly pro$i"e" for a refun" of those ta*payers %ho ha" pai" their ta*es on the ite#s.


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'ata5 Ce I5te/5atio5a3 Ai/,o/t Atffi!er in Charge, >ffi!e of the Treasurer of the City of Ce&u, "e#an"e"

pay#ent fro# realty ta*es in the total a#ount of P555197.71. Petitioner o&e!te" to su!h "e#an" for pay#ent as &aseless an" unustifie" !lai#ing in its

fa$or the afore !ite" )e!tion 04 of R.A. 61-. t %as also asserte" that it is an instru#entality of the go$ern#ent perfor#ing go$ern#ental fun!tions, !iting

)e!tion 033 of the Lo!al Go$ern#ent Co"e of 0110.

Section CAA. !o""on li"itations on the Taxing ;o)ers of -ocal 4o'ern"ent nits.

The exercise of the taxing po)ers of the pro'inces( cities( barangays( "unicipalities shall not extend to the le'i of the follo)ing

xxx Taxes( fees or charges of any ?ind in the National 4o'ern"ent( its agencies and instru"entalities( and -4s. xxx

Respon"ent City refuse" to !an!el an" set asi"e petitionerHs realty ta* a!!ount, insisting that the MCAA is a go$ern#ent2!ontrolle" !orporation %hose ta*

e*e#ption pri$ilege has &een %ith"ra%n &y $irtue of )e!tions 013 an" 534 of La&or Co"e that too( effe!t on January 0, 0115.

Isse# ;hether or not the petitioner is a Ita*a&le person

R3i5gs# Ta*ation is the rule an" e*e#ption is the e*!eption. MCAAHs e*e#ption fro# pay#ent of ta*es is %ith"ra%n &y $irtue of )e!tions 013 an" 534 of

La&or Co"e. )tatutes granting ta* e*e#ptions shall &e stri!tly !onstrue" against the ta*payer an" li&erally !onstrue" in fa$or of the ta*ing authority.

The petitioner !annot !lai# that it %as ne$er a Ita*a&le person un"er its Charter. t %as only e*e#pte" fro# the pay#ent of realty ta*es. The grant of the

pri$ilege only in respe!t of this ta* is !on!lusi$e proof of the legislati$e intent to #a(e it a ta*a&le person su&e!t to all ta*es, e*!ept real property ta*.


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CO''ISSIONER O" INTERNAL REVENUE *s. PILIPINAS SHELL PETROLEU' CORPORATION

G.R. No. 1((!) "e/a/7 1)+ 201!

"ACTS# )hell file" a !lai# for refun" for e*!ise ta*es it pai" on sales of gas an" fuel oils to $arious international !arriers. The Court initially "enie" the!lai#s &ut the respon"ent file" a Motion for Re!onsi"eration.

ISSUE# ;hether or not )hell is entitle" to refun" for pay#ent of the e*!ise ta*es

RULING#


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CO''ISSIONER O" INTERNAL REVENUE *s. THE ESTATE O" 9ENIGNO P. TODA+ R.+ Re,/ese5te4 7 S,eia3 Co-a4i5ist/ato/s Lo/5a

a,5a5 a54 'a/io L;a 9atistaG.R. No. 1!1((. Se,tee/ 1!+ 200!

8a!ts: Ce&iles nsuran!e Corporation authori+e" Benigno P. To"a, Jr., Presi"ent an" o%ner of 11.110 of its issue" an" outstan"ing !apital sto!(, to sell the

Ci&eles Buil"ing an" the t%o par!els of lan" on %hi!h the &uil"ing stan"s for an a#ount of not less than P19 #illion. To"a purporte"ly sol" the property forP099 #illion to Rafael A. Altonaga. =o%e$er, Altonaga in turn, sol" the sa#e property on the sa#e "ay to Royal Mat!h n!. for P599 #illion. These t%o

transa!tions %ere e$i"en!e" &y ee"s of A&solute )ale notari+e" on the sa#e "ay &y the sa#e notary pu&li!. 8or the sale of the property to Royal ut!h,Altonaga pai" !apital gains ta* N6O in the a#ount of P09 #illion.

ssue: ;hether or not the s!he#e e#ploye" &y Ci&elis nsuran!e Co#pany !onstitutes ta* e$asion.

Ruling:


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&e transfor#e" for ta* purposes into a sale &y another &y using the latter as a !on"uit through %hi!h to pass title. To per#it the true nature of the transa!tion to &e"isguise" &y #ere for#alis#s, %hi!h e*ist solely to alter ta* lia&ilities, %oul" seriously i#pair the effe!ti$e a"#inistration of the ta* poli!ies of Congress.

To allo% a ta*payer to "eny ta* lia&ility on the groun" that the sale %as #a"e through another an" "istin!t entity %hen it is pro$e" that the latter %as #erely a !on"uit isto san!tion a !ir!u#$ention of our ta* la%s. =en!e, the sale to Altonaga shoul" &e "isregar"e" for in!o#e ta* purposes. The t%o sale transa!tions shoul" &e treate" as asingle "ire!t sale &y CC to RM.

DELPHER TRADES CORPORATION *s. IAC

G.R. No. L-&)2) a5a/7 2&+ 1)((

"ats# elfin Pa!he!o an" sister Pelagia %ere the o%ners of a par!el of lan" in Polo ?no% alen+uela@. >n April 3, 0174, they lease" to Constru!tionCo#ponents nternational n!. the property an" pro$i"ing for a right of first refusal shoul" it "e!i"e to &uy the sai" property.

Constru!tion Co#ponents nternational, n!. assigne" its rights an" o&ligations un"er the !ontra!t of lease in fa$or of =y"ro Pipes Philippines, n!. %ith

the signe" !onfor#ity an" !onsent of elfin an" Pelagia. n 0176, a "ee" of e*!hange %as e*e!ute" &et%een lessors elfin an" Pelagia Pa!he!o an""efen"ant elpher Tra"es Corporation %here&y the Pa!he!os !on$eye" to the latter the lease" property together %ith another par!el of lan" also lo!ate" in

Malinta Estate, alen+uela for 5,-99 shares of sto!( of "efen"ant !orporation %ith

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