Caltex Philippines, Inc., vs The Honorable Commission On Audit, Honorable Commissioner Bartolome C.

Fernandez and Honorable Commissioner Alberto P. Cruz .!. "o. #$%&% 'a( &, )##$ Davide, JR., J.: Case Nature: Petition under Rule 44 of the Rules of Court Facts: The Commission on Audit ordered Caltex Phili ines to remit to the !il Price "ta#ili$ation Fund the collection of additional tax etroleum roducts created #% Presidential Decree &'() includin* the collection of tax for %ears &'+), &'+, and &'++ lus interests and surchar*es and *ave the advice that claims from the !il Price "ta#ili$ation Fund should #e not collected endin* the remittance. The Commission on Audit ordered the Caltex Phli ines to refrain from offsettin* the taxes collected a*ainst the endin* claims from &'+' and su#se-uent %ears. The Caltex Phili ines no. -uestions the authorit% of the Commission on Audit to disallo. the oil com an% from reim#ursement from the !il Price "ta#ili$ation Fund and as/ed for the reversal of said Commission0s decision den%in* its claims for recover% of financin* char*es from the Fund and reim#ursement of underrecover% arisin* from sales to the National Po.er Cor oration, Atlas Consolidated 1inin* and Develo ment Cor oration and 1arco er 1inin* Cor oration, reventin* it from exercisin* the ri*ht to offset its remittances a*ainst its reim#ursement vis2a2vis the !P"F and disallo.in* its claims .hich are still endin* resolution #efore the !ffice of 3ner*% Affairs and the De artment of Finance. 4ssue: 5hether or not the Commission on Audit has the authorit% to order Caltex Phili ines from roceedin* to the offsettin* of the collection of taxes 6eld: 7es. The Commission on Audit has the authorit% to order Caltex Phili ines from roceedin* to the offsettin* of the collection of taxes. A tax a%er ma% not offset taxes due from claims that he ma% have a*ainst the 8overnment. Taxes cannot #e the su#9ect of com ensation #ecause the 8overnment and the tax a%er are not mutuall% creditors and de#tors of each other and a claim for taxes is not a de#t, demand, contract or 9ud*ment that can #e set off. R.A. No. )'(: does not authori$e oil com anies to offset their claims a*ainst their contri#ution. Fallo: 563R3F!R3, in vie. of the fore*oin*, 9ud*ment is here#% rendered AFF4R14N8 the challen*ed decision of the Commission on Audit, exce t that ortion thereof disallo.in* etitioner0s claim for reim#ursement of underrecover% arisin* from sales to the National Po.er Cor oration, .hich is here#% allo.ed.

5ith costs a*ainst etitioner. "! !RD3R3D.

Philex 'inin* Corporation vs Commissioner O+ Internal !evenue, Court O+ Appeals, And The Court O+ Tax Appeals .!. "o. )$%,-. Au*ust $&, )##& Romero, J.: Case nature: A eal Facts: The ;ureau of 4nternal Revenue ordered Philex 1inin* Cor oration as/in* the minin* cor oration to settle its lia#ilities for second, third and fourth -uarters of &''& and of the first and second -uarters of &'':. Philex ar*ued that it has a endin* <AT in ut credit and refund for taxes aid in the %ears &'+' to &''&. The ;ureau of 4nternal Revenue did not acce t the ar*ument of Philex for no com ensation can ta/e lace. 4t demanded the a%ment of tax lia#ilities .ith interest .ithin => da%s from recei t. The Court of Tax A eals ordered Philex to a% the remainin* #alance o#li*ation from the issuance of ;ureau of 4nternal Revenue of credit as a lied to Philex? tax lia#ilities. 4t held that there can #e no le*al com ensation #et.een the li-uidated de#t to the 8overnment and unli-uidated claim of the Philex. Philex claimed that the rulin* in the Collector of 4nternal Revenue v 4to*on2"u%oc 1ines is a lica#le in the case for the credit and excise in the tax lia#ilities have #ecome demanda#le and full% li-uidated and le*al com ensation can ta/e lace. 4ssue: 5hether or not le*al com ensation can #e invo/ed #% Philex 6eld: No. Philex cannot invo/e le*al com ensation for taxes cannot #e su#9ect of set2off or com ensation. The 8overnment and the tax a%er are not creditors and de#tors of each other. There is material difference #et.een a de#t and tax. De#ts are due to the 8overnment in its cor orate ca acit% .hile the taxes are due to the 8overnment in its soverei*n ca acit%. The rulin* in Collector of 4nternal Revenue v 4to*on2"u%oc 1ines cannot #e invo/ed for the rulin* in this case is no lon*er su orted #% statutor% la.. Fallo: 563R3F!R3, in vie. of the fore*oin*, the instant etition is here#% D4"14""3D. The assailed decision of the Court of A eals dated A ril +, &'') is here#% AFF4R13D. "! !RD3R3D.

Commissioner o+ Internal !evenue vs Al*ue, Inc., and The Court o+ Tax Appeals .!. "o. /0$&&#1 Februar( ),, )#&& Cru$, J. Case nature: A eal Facts: Al*ue, 4nc. a domestic cor oration en*a*ed in en*ineerin*, construction and other allied activities, received a letter from the etitioner assessin* it in the total amount of P+=,&+=.+( as delin-uenc% income taxes for the %ears &'(+ and &'('. Att%. 8uevara .as finall% informed that the ;4R .as not ta/in* an% action on the rotest and it .as onl% then that he acce ted the .arrant of distraint and lev% earlier sou*ht to #e served. Four da%s after the rivate res ondent received the etitioner0s notice of assessment, it filed its letter of rotest. The Commissioner of 4nternal Revenue contends that the claimed deduction of P,(,>>>.>> .as ro erl% disallo.ed #ecause it .as not an ordinar% reasona#le or necessar% #usiness ex ense. The Court of Tax A eals had seen it differentl%. A*reein* .ith Al*ue, it held that the said amount had #een le*itimatel% aid #% the Al*ue for actual services rendered. The a%ment .as in the form of romotional fees. The Commissioner of 4nternal Revenue claimed that these a%ments are fictitious #ecause most of the a%ees are mem#ers of the same famil% in control of Al*ue. 4t is ar*ued that there .as an attem t to evade a le*itimate assessment #% involvin* an ima*inar% deduction. 4ssue: 5hether or not the claimed deduction of Al*ue, 4nc. .as valid 6eld: 7es. The claimed deduction of Al*ue .as valid. 3ven as .e concede the inevita#ilit% and indis ensa#ilit% of taxation, it is a re-uirement in all democratic re*imes that it #e exercised reasona#l% and in accordance .ith the rescri#ed rocedure. 4f it is not, then the tax a%er has a ri*ht to com lain and the courts .ill then come to his succor. For all the a.esome o.er of the tax collector, he ma% still #e sto ed in his trac/s if the tax a%er can demonstrate, as it has here, that the la. has not #een o#served. 5e hold that the a eal of the rivate res ondent from the decision of the etitioner .as filed on time .ith the res ondent court in accordance .ith Re . Act No. &&:(. And .e also find that the claimed deduction #% the rivate res ondent .as ermitted under the 4nternal Revenue Code and should therefore not have #een disallo.ed #% the etitioner.

Fallo: ACC!RD4N8@7, the a ealed decision of the Court of Tax A toto, .ithout costs. "! !RD3R3D.

eals is AFF4R13D in

2ean 3ose 3o(a, Carmen uerrero "a4pil, Armida 5i*uion !e(na, Pro+. !icarte '. Puru*anan, et al vs Presidential Commission On ood overnment 6Pc**7, Catalino 'acarai*, 3r., In His O++icial Capacit(, and8or The 9xecutive 5ecretar(, And Chairman 'ateo A.T. Caparas .!. "o. #1%.) Au*ust $., )##: ;ellosillo, J.: Case nature: Petition for rohi#ition and mandamus Facts: Petitioners .ho are luminaries in the local art scene filed for a etition of rohi#ition and mandamus see/in* to en9oin the Presidential Commission on 8ood 8overnment from roceedin* on the auction sale #% Christie?s of Ne. 7or/ of the !ld 1asters Paintin* seixed from the 1alacaAan* and 1etro olitan 1useum of 1anila and laced under custod% of Central ;an/. The% ar*ued that the said art.or/s .ere historical relics .ith cultural si*nificance .hose dis osal is ille*al. The PC88 ar*ued on the other hand that the aintin*s .ere art of the ill2 *otten .ealth of 1arcos and did not fall .ithin the classification of rotected cultural ro erties of the Fili ino cultural herita*e. 4ssue: 5hether or not the tax a%er?s suit can roceed 6eld: No. The tax a%er suit cannot roceed. Not ever% action filed #% the tax a%er can -ualif% to challen*e the le*alit% of official acts done #% the 8overnment. A tax a%er0s suit can ros er onl% if the *overnmental acts #ein* -uestioned involve dis#ursement of u#lic funds u on the theor% that the ex enditure of u#lic funds #% an officer of the state for the ur ose of administerin* an unconstitutional act constitutes a misa lication of such funds, .hich ma% #e en9oined at the re-uest of a tax a%er. etitioners are not challen*in* an% ex enditure involvin* u#lic funds #ut the dis osition of .hat the% alle*e to #e u#lic ro erties. 4t is .orth% to note that etitioners admit that the aintin*s and anti-ue silver.are .ere ac-uired from rivate sources and not .ith u#lic mone%. Fallo: 563R3F!R3, for lac/ of merit, the is D4"14""3D. "! !RD3R3D. etition for rohi#ition and mandamus

;apatiran "* '*a "a*lilin*4od 5a Pamahalaan "* Pilipinas, Inc., Hermini*ildo C. 2umlao, eronimo <. <uadra, And 'ario C. =illanueva vs Hon. Bienvenido Tan, As Commissioner O+ Internal !evenue .!. "o. &):)) 3une :-, )#&& Padilla, J. Case nature: A eal Facts: There are four B4C etitions see/ to nullif% 3xecutive !rder No. :,= issued #% the President of the Phili ines, and .hich amended certain sections of the National 4nternal Revenue Code and ado ted the value2added tax, for #ein* unconstitutional in that its enactment is not alle*edl% .ithin the o.ers of the PresidentD that the <AT is o ressive, discriminator%, re*ressive, and violates the due rocess and e-ual rotection clauses and other rovisions of the &'+, Constitution. The <AT is a tax levied on a .ide ran*e of *oods and services. 4t is a tax on the value, added #% ever% seller, .ith a**re*ate *ross annual sales of articles andEor services, exceedin* P:>>,>>.>>, to his urchase of *oods and services, unless exem t. <AT is com uted at the rate of >F or &>F of the *ross sellin* rice of *oods or *ross recei ts reali$ed from the sale of services. The <AT is said to have eliminated rivile*e taxes, multi le rated sales tax on manufacturers and roducers, advance sales tax, and com ensatin* tax on im ortations. The framers of 3! :,= that it is rinci all% aimed to rationali$e the s%stem of taxin* *oods and servicesD sim lif% tax administrationD and ma/e the tax s%stem more e-uita#le, to ena#le the countr% to attain economic recover%. The <AT is not entirel% ne.. 4t .as alread% in force, in a modified form, #efore 3! :,= .as issued. As ointed out #% the "olicitor 8eneral, the Phili ine sales tax s%stem, rior to the issuance of 3! :,=, .as essentiall% a sin*le sta*e value added tax s%stem com uted under the Gcost su#traction methodG or Gcost deduction methodG and .as im osed onl% on ori*inal sale, #arter or exchan*e of articles #% manufacturers, roducers, or im orters. "u#se-uent sales of such articles .ere not su#9ect to sales tax. 6o.ever, .ith the issuance of PD &''& on =& !cto#er &'+(, a =F tax .as im osed on a second sale, .hich .as reduced to &.(F u on the issuance of PD :>>) on =& Decem#er &'+(, to ta/e effect & Januar% &'+). Reduced sales taxes .ere im osed not onl% on the second sale, #ut on ever% su#se-uent sale, as .ell. 3! :,= merel% increased the <AT on ever% sale to &>F, unless $ero2rated or exem t.

4ssue: 5hether or not 3! :,= is unconstitutional 6eld: No, the 3xecutive !rder :,= is not unconstitutional. Petitioners have failed to sho. that 3! :,= .as issued ca riciousl% and .himsicall% or in an ar#itrar% or des otic manner #% reason of assion or ersonal hostilit%. 4t a ears that a com rehensive stud% of the <AT had #een extensivel% discussed #% this framers and other *overnment a*encies involved in its im lementation, even under the ast administration. As the "olicitor 8eneral correctl% sated. GThe si*nin* of 3.!. :,= .as merel% the last sta*e in the exercise of her le*islative o.ers. The le*islative rocess started lon* #efore the si*nin* .hen the data .ere *athered, ro osals .ere .ei*hed and the final .ordin*s of the measure .ere drafted, revised and finali$ed. As the Court sees it, 3! :,= satisfies all the re-uirements of a valid tax. 4t is uniform. A tax is considered uniform .hen it o erates .ith the same force and effect in ever% lace .here the su#9ect ma% #e found.G The sales tax ado ted in 3! :,= is a lied similarl% on all *oods and services sold to the u#lic, .hich are not exem t, at the constant rate of >F or &>F.

Fallo: 563R3F!R3, the etitions are D4"14""3D. 5ithout ronouncement as to costs. "! !RD3R3D.

An*eles >niversit( Foundation vs Cit( o+ An*eles .!. "o. )&#### 3une $,, $-)$ =illarama, 3r. 3? Case nature? Petition for Revie. on Certiorari under Rule 4( Facts: An*eles Hniversit% Foundation BAHFC a lied .ith the !ffice of the Cit% ;uildin* !fficial for a #uildin* ermit for the construction of the An*eles Hniversit% Foundation 1edical Center in its main cam us located in Pam an*a.The office issued a ;uildin* Permit Fee Assessment. AHF claimed that it .as exem t from the a%ment of the #uildin* ermit and locational clearance fees as #uildin* ermits *rantin* the exem tion .ere reviousl% issued. After o#tainin* a favora#le o inion from "ecretar% Raul 8on$ales, AHF a ealed to the ma%or #ut did not receive an% res onse. AHF aid under rotest the total sum of Ph +:),)):.''. AHF .as issued the corres ondin* ;uildin* Permit, 5irin* Permit, 3lectrical Permit and "anitar% ;uildin* Permit. The Cit% Treasurer denied the AHF?s formal re-uest for a refund of it a%ment made under rotest. 4ssue: 5hether or not An*eles Hniversit% Foundation is exem t from the a%ment of #uildin* ermit and related fees im osed under theNational ;uildin* 6eld: No. An*eles Hniversit% Foundation is not exem t from the a%ment of the #uildin* ermit and related fees. 3xem ted from the a%ment of #uildin* ermit fees are: B&C u#lic #uildin*s and B:C traditional indi*enous famil% d.ellin*s. Not #ein* ex ressl% included in the enumeration of structures to .hich the #uildin* ermit fees do not a l%, AHF?s claim for exem tion rests solel% on its inter retation of the term Iother char*es im osed #% the National 8overnmentJ in the tax exem tion clause of R.A. No. )>((. That Ichar*esJ in its ordinar% meanin* a ears to #e a *eneral term .hich could cover a s ecific IfeeJ does not su ort etitioner?s osition that #uildin* ermit fees are amon* those Iother char*esJ from .hich it .as ex ressl% exem ted. Note that the Iother char*esJ mentioned in "ec. + of R.A. No. )>(( is -ualified #% the .ords Iim osed #% the 8overnmenton all ro ert% used exclusivel% for the educational activities of the foundation.J ;uildin* ermit fees are not im ositions on ro ert% #ut on the activit% su#9ect of *overnment re*ulation. Fallo: 563R3F!R3, the etition is D3N43D. The Decision dated Jul% :+, :>>' and Resolution dated !cto#er &:, :>>' of the Court of A eals in CA28.R. C< No. '>('& are AFF4R13D.

No ronouncement as to costs. "! !RD3R3D

Commissioner o+ Internal !evenue vs The 9state O+ Beni*no P. Toda, 3r., !epresented B( 5pecial Co0Administrators /orna ;apunan And 'ario /uza Bautista .!. "o. ).,)&& 5eptember )., $--. Davide, Jr. J.: Case nature: A eal Facts: Ce#iles 4nsurance Cor oration BC4CC authori$ed ;eni*no Toda, Jr., President and o.ner of ''.''F of its issued and outstandin* ca ital stoc/, to sell the Ci#eles ;uildin* and the t.o arcels of land on .hich the #uildin* stands for an amount of not less than Ph '>, >>>, >>>. Toda intentionall% sold the ro ert% for Ph &>>, >>>, >>> to Rafael Altona*a. 6o.ever, Altona*a in turn, sold the same ro ert% on the same da% to Ro%al 1atch 4nc. for Ph :>>, >>>, >>>. These t.o transactions .ere evidenced #% Deeds of A#solute "ale notari$ed on the same da% #% the same notar% u#lic. For the sale of the ro ert% to Ro%al Dutch, Altona*a aid ca ital *ains tax )F in the amount of Ph &> million.

4ssue: 5hether or not the scheme em lo%ed #% Ci#elis 4nsurance Com an% constitutes tax evasion 6eld: 7es, the scheme em lo%ed constitutes tax evasion. The scheme, ex lained the Court, resorted to #% C4C in ma/in* it a ear that there .ere t.o sales of the su#9ect ro erties, such as from C4C to Altona*a, and then from Altona*a to R14 cannot #e considered a le*itimate tax lannin*. "uch scheme is tainted .ith fraud. Fraud in its *eneral sense, Iis deemed to com rise an%thin* calculated to deceive, includin* all acts, omissions, and concealment involvin* a #reach of le*al or e-uita#le dut%, trust or confidence 9ustl% re osed, resultin* in the dama*e to another, or #% .hich an undue and unconsciona#le advanta*e is ta/en of another.J 4t is o#vious that the o#9ective of the sale to Altona*a .as to reduce the amount of tax to #e aid es eciall% that the transfer from him to R14 .ould then su#9ect the income to onl% (F individual ca ital *ains tax, and not the =(F cor orate income tax. The sale to him .as merel% a tax lo%, a sham, and .ithout #usiness ur ose and economic su#stance. Dou#tless, the

execution of the t.o sales .as calculated to mislead the ;4R .ith the end in vie. of reducin* the conse-uent income tax lia#ilit%. Fallo: 563R3F!R3, in vie. of all the fore*oin*, the etition is here#% 8RANT3D. The decision of the Court of A eals of =& Januar% :>>& in CA28.R. "P No. (,,'' is R3<3R"3D and "3T A"4D3, and another one is here#% rendered orderin* res ondent 3state of ;eni*no P. Toda Jr. to a% P,',>'','''.:: as deficienc% income tax of Ci#eles 4nsurance Cor oration for the %ear &'+', lus le*al interest from & 1a% &''4 until the amount is full% aid. Costs a*ainst res ondent. "! !RD3R3D.

AB50CB" Broadcastin* Corporation vs Court O+ Tax Appeals And The Commissioner O+ Internal !evenue .!. "o. /0%$:-1 October )$, )#&) 1elencio26errera, J.: Case Nature: Petition for Revie. on Certiorari Facts: A;"2C;N ;roadcastin* Cor oration .as en*a*ed in the #usiness of telecastin* local as .ell as forei*n films ac-uired from forei*n cor orations not en*a*ed in trade or #usiness .ithin the Phili ines for .hich A;"2C;N ;roadcastin* Cor oration aid rentals after .ithholdin* income tax of =>Fof one2half of the film rentals. 4n im lementin* "ection 4B#C of the Tax Code, the Commissioner issued 8eneral Circular <2==4. Pursuant thereto, A;"2C;N ;roadcastin* Cor . dutifull% .ithheld and turned over to the ;4R =>F of K of the film rentals aid #% it to forei*n cor orations not en*a*ed in trade or #usiness in the Phili ines. The last %ear that the com an% .ithheld taxes ursuant to the Circular .as in &')+. !n :, June &'>+, RA (4=& amended "ection :4 B#C of the Tax Code increasin* the tax rate from =>F to =(F and revisin* the tax #asis from Isuch amountJ referrin* to rents, etc. to I*ross income.J 4n &',&, the Commissioner issued a letter of assessment and demand for deficienc% .ithholdin* income tax for %ears &')( to &')+. The com an% re-uested for reconsideration .here the Commissioner did not act u on. 4ssue: 5hether Revenue 1emorandum Circular 42,& ca #e retroactivel% a lied 6eld: No. Rulin*s or circulars romul*ated #% the Commissioner have no retroactive a lication .here to so a l% them .ould #e re9udicial to tax a%ers. The re9udice the com an% of the retroactive a lication of 1emorandum Circular 42,& is #e%ond -uestion. 4t .as issued onl% in &',&, or three %ears after &')+, the last %ear that etitioner had .ithheld taxes under 8eneral Circular No. <2==4. The assessment and demand on etitioner to a% deficienc% .ithholdin* income tax .as also made three %ears after &')+ for a eriod of time commencin* in &')(. The com an% .as no lon*er in a osition to .ithhold taxes due from forei*n cor orations #ecause it had alread% remitted all film rentals and had no lon*er control over them .hen the ne. circular .as issued. 4nsofar as the enumerated exce tions are concerned, the com an% does not fall under an% of them. Fallo: 563R3F!R3, the 9ud*ment of the Court of Tax A -uestioned assessment set aside. No costs. "! !RD3R3D. eals is here#% reversed, and the

The Commissioner o+ Internal !evenue vs 9nri@ue Avelino .!. "o. /0).&., 5eptember )#, )#1) Conce cion, J.: Case nature: A eal Facts: Assessment .as made on the net.orth method #ased u on an investment in the sum of Ph )>,>>> made ##% 3nri-ue Avelino in the National @ivestoc/ Produce Cor oration. For failure to file an income tax return for that %ear the said amount .as considered as unre orted income. Avelino ar*ud that the said sum of Ph )>,>>> had #een lent to him #% a naturali$ed Fili ino named "everino "a%-ue .ho returned in China and had not #een heard from since then. 4ssue: 5hether or not the defense resented #% Avelino .as reasona#le 6eld: No. The defense of Avelino .as not acce ted #% the "u reme Court. Avelino failed to resent the romissor% note .hen he .as intervie.ed #% revenue a*ents in connection .ith said investment. "a%-ue, the alle*ed creditor, .as not in a financial osition to extend the loan. 4t is incredi#le that "a%-ue should *ive a loan of P)>,>>>.>> .ithout re-uirin* a solid securit% to *uarantee its return and a%ment Fallo: 563R3F!R3, the decision of the Court of Tax A eals is here#% reversed and another one shall #e entered affirmin* that of the Commissioner of 4nternal Revenue, exce t as to the com romise enalties, a**re*atin* P+>,>>>, im osed #% said officer, .hich should #e eliminated.

Commissioner + Internal !evenue vs 'etro 5tar 5uperama, Inc. .!. "o. )&%:,) 2ecember &, $-)1endo$a, J.: Case nature: Petition for Revie. on Certiorari under Rule 4( of the Rules of Court Facts: A revenue officer .as authori$ed to examine the #oo/s of accounts of 1etro "tar "u erama, 4nc. on Januar% :>>&. !n A ril :>>:, after the audit revie., the revenue district officer issued a formal assessment notice a*ainst 1etro "tar advisin* the latter that it is lia#le to a% Ph :':,+,4.&) as deficienc% taxes. 1etro "tar -uestioned the issuance of the formal assessment notice as it ar*ued that due rocess .as not o#served .hen it .as not issued a re2 assessment notice. Nevertheless, the Commissioner of 4nternal Revenue authori$ed the issuance of a 5arrant of Distraint andEor @ev% a*ainst the ro erties of 1etro "tar. 1etro "tar then a ealed to the Court of Tax A eals. The CTA ruled in favor of 1etro "tar. 4ssue: 5hether or not there .as denial of due rocess #rou*ht #% the failure of C4R to issue Pre2 Assessment Notice 6eld: 7es. There .as denial of due rocess for failure to issue Pre2Assessment Notice. There is a resum tion that the tax assessment .as dul% issued. 6o.ever, this resum tion is disre*arded if the tax a%er denies ever havin* received a tax assessment from the ;ureau of 4nternal Revenue. 4n such cases, it is incum#ent u on the ;4R to rove #% com etent evidence that such notice .as indeed received #% the tax a%er. The #urden .as no. shifted to the ;4R to rove #% contrar% evidence that the 1etro "tar received the assessment in the due course of mail. 4n the case at #ar, the C4R merel% alle*ed that 1etro "tar received the re2assessment notice in Januar% :>>:. The C4R could have sim l% resented the re*istr% recei t or the certification from the ostmaster that it mailed the re2assessment notice, #ut it failed. Neither did it offer an% ex lanation on .h% it failed to com l% .ith the re-uirement of service of the re2assessment notice. The "u reme Court em hasi$ed that the sendin* of a re2assessment notice is art of the due rocess re-uirement in the issuance of a deficienc% tax assessment,J the a#sence of .hich renders nu*ator% an% assessment made #% the tax authorities. Taxes are the life#lood of the *overnment and so should #e collected .ithout unnecessar% hindrance. ;ut even so, it is a re-uirement in all democratic re*imes that it #e exercised reasona#l% and in accordance .ith the rescri#ed rocedure.

Fallo: 563R3F!R3, the etition is D3N43D.

!izal Commercial Ban4in* Corporation vs Commissioner O+ Internal !evenue .!. "o. ),-$%, 5eptember ,, $-)) 1endo$a, J.: Case Nature: Petition for Revie. on Certiorari under Rule 4( Facts: Ri$al Commercial ;an/in* Cor oration BRC;CC is a cor oration en*a*ed in *eneral #an/in* o erations. !n Au*ust &(, &''), RC;C received @etter of Authorit% issued #% then Commissioner of 4nternal Revenue BC4RC authori$in* a s ecial audit team to examine the #oo/s of accounts and other accountin* records for all internal revenue taxes from Januar% &, &''4 to Decem#er =&, &''(. !n Januar% :=, &'',, RC;C executed t.o 5aivers of the Defense of Prescri tion Hnder the "tatute of @imitations of the National 4nternal Revenue Code coverin* the internal revenue taxes due for the %ears &''4 and &''(, effectivel% extendin* the eriod of the ;ureau of 4nternal Revenue B;4RC to assess u to Decem#er =&, :>>>. !n Januar% :,, :>>>, RC;C received a Formal @etter of Demand to*ether .ith Assessment Notices from the ;4R for the deficienc% tax assessments. Disa*reein* .ith the said deficienc% tax assessment, RC;C filed a rotest on Fe#ruar% :4, :>>> and su#mitted the relevant documentar% evidence to su ort it. RC;C ar*ued that the .aivers of the "tatute of @imitations .hich it executed on Januar% :=, &'', .ere not valid #ecause the same .ere not si*ned or conformed to #% the res ondent C4R as re-uired under "ection :::B#C of the Tax Code. RC;C ar*ued that #ecause the onshore tax .as collected in the form of a final .ithholdin* tax, it .as the #orro.er, constituted #% la. as the .ithholdin* a*ent, that .as rimaril% lia#le for the remittance of the said tax.

4ssueEs: &. 5hether RC;C is esto ed from -uestionin* the validit% of the said .aivers .ith res ect to the assessment of deficienc% onshore tax. :. 5hether etitioner, as a%ee2#an/, can #e held lia#le for deficienc% onshore tax, .hich is mandated #% la. to #e collected at source in the form of a final .ithholdin* tax. 6eld: &. 7es, RC;C is sto ed from -uestionin* the validit% of the .aivers. 3sto el is clearl% a lica#le to the case at #ench. RC;C, throu*h its artial a%ment of the revised assessments issued .ithin the extended eriod as rovided for in the -uestioned .aivers, im liedl% admitted the validit% of those .aivers. 6ad etitioner trul% #elieved that the .aivers .ere invalid and that the assessments .ere issued #e%ond the rescri tive eriod, then it should not have aid the reduced amount of taxes in the revised assessment. RC;C0s su#se-uent action effectivel% #elies its insistence that the .aivers are invalid.

:. . 4n Cham#er of Real 3state and ;uilders0 Associations, 4nc. v. The 3xecutive "ecretar%, the Court has ex lained that the ur ose of the .ithholdin* tax s%stem is three2fold: B&C to rovide the tax a%er .ith a convenient .a% of a%in* his tax lia#ilit%D B:C to ensure the collection of tax, and B=C to im rove the *overnment0s cashflo.. Hnder the .ithholdin* tax s%stem, the a%or is the tax a%er u on .hom the tax is im osed, .hile the .ithholdin* a*ent sim l% acts as an a*ent or a collector of the *overnment to ensure the collection of taxes. 4t is, therefore, indis uta#le that the .ithholdin* a*ent is merel% a tax collector and not a tax a%er, as elucidated #% this Court in the case of Commissioner of 4nternal Revenue v. Court of A eals, to .it: 4n the o eration of the .ithholdin* tax s%stem, the .ithholdin* a*ent is the a%or, a se arate entit% actin* no more than an a*ent of the *overnment for the collection of the tax in order to ensure its a%mentsD the a%er is the tax a%er 2 he is the erson su#9ect to tax im osed #% la.D and the a%ee is the taxin* authorit%. 4n other .ords, the .ithholdin* a*ent is merel% a tax collector, not a tax a%er. Hnder the .ithholdin* s%stem, ho.ever, the a*ent2 a%or #ecomes a a%ee #% fiction of la.. 6is Ba*entC lia#ilit% is direct and inde endent from the tax a%er, #ecause the income tax is still im osed on and due from the latter. The a*ent is not lia#le for the tax as no .ealth flo.ed into him 2 he earned no income. The Tax Code onl% ma/es the a*ent ersonall% lia#le for the tax arisin* from the #reach of its le*al dut% to .ithhold as distin*uished from its dut% to a% tax since: Gthe *overnment0s cause of action a*ainst the .ithholdin* a*ent is not for the collection of income tax, #ut for the enforcement of the .ithholdin* rovision of "ection (= of the Tax Code, com liance .ith .hich is im osed on the .ithholdin* a*ent and not u on the tax a%er.G ;ased on the fore*oin*, the lia#ilit% of the .ithholdin* a*ent is inde endent from that of the tax a%er. The former cannot #e made lia#le for the tax due #ecause it is the latter .ho earned the income su#9ect to .ithholdin* tax. The .ithholdin* a*ent is lia#le onl% insofar as he failed to erform his dut% to .ithhold the tax and remit the same to the *overnment. The lia#ilit% for the tax, ho.ever, remains .ith the tax a%er #ecause the *ain .as reali$ed and received #% him. Fallo: 563R3F!R3, the etition is D3N43D. "! !RD3R3D.

'ambulao /umber Compan( vs !epublic o+ the Philippines !. "o. /0:,-1) 5eptember %, )#&. Cuevas, J.: Case nature: A eal #% Certiorari Facts: A*ent Nestor ;an$uela of the ;ureau of 4nternal Revenue, conducted an examination of the #oo/s of accounts of herein 1am#ulao num#er Com an% for determinin* said tax a%er0s forest char*es and ercenta*e tax lia#ilities. The ;ureau of Forestr% sent a demand letter dated Januar% &(, &'4' to 1am#ulao @um#er Co. demandin* for the a%ment of forest char*es and surchar*es. 1am#ulao rotested the assessment. !n Au*ust :',&'(+, the ;4R li/e.ise .rote a letter to the com an% demandin* a%ment, .hich su#se-uentl% re-uested reinvesti*ation. The ;4R *ave the com an% t.ent% B:>C da%s from recei t .ithin .hich to su#mit the results of its verification of a%ments. For failure to com l% and failure to a% its tax lia#ilit% des ite demands, C4R filed a com laint for collection .ith CF421anila on Au*ust :(, &')&. The CF42 1anila and Court of A eals decided a*ainst 1am#ulao orderin* it to a% the tax lia#ilit%. Petitioner ar*ued that the collection is #arred #% the statute of limitations under "ections ==: of the N4RC. As stated, the collection should #e made .ithin the five B(C %ear eriod. From &'4' Bdate .hen the ;ureau of Forestr% assessed and demand a%ment as forestr% char*es and surchar*esC u to &')& Bdate of filin* of com laintC, it is alread% more than five %ears. 4ssue: 5hether or not the eriod of filin* of collection com laint had alread% rescri#ed 6eld: No. The eriod of filin* of collection of the com laint has not %et rescri#ed. The #asis of the com laint filed on Au*ust &')& .as the demand letter made #% the C4R on Au*ust :', &'(+ and not the demand letter of the ;ureau of Forestr% on Januar% &'4'. "o that the rec/onin* date of the (2%ear eriod should #e from the date of the ;4R letter and not that of the ;ureau of Forestr%. This must #e so #ecause forest char*es are internal revenue taxes and the ;4R has the sole o.er and dut% to collect them Fallo: 563R3F!R3, the decision a ealed from is here#% AFF4R13D and the D4"14""3D. No costs. "! !RD3R3D. etition

Commissioner O+ Internal !evenue vs B.F. oodrich Phils., Inc. 6"oA 5ime 2arb( International Tire Co., Inc.7 And The Court o+ Appeals .!. "o. )-.),) Februar( $., )### Pan*ani#an, J.: Case Nature: Petition for Revie. on Certiorari Facts: ;F 8oodrich Phili ines 4nc. .as an American cor oration rior to Jul% =, &',4. As a condition for a rovin* the manufacture of tires and other ru##er roducts, rivate res ondent .as re-uired #% the Central ;an/ to develo a ru##er lantation. 4n com liance there.ith, rivate res ondent #ou*ht from the *overnment certain arcels of land in Tuma9u#on* ;asilan, in &')& under the Pu#lic @and Act and the Parit% Amendment to the &'=( constitution, and there develo ed a ru##er lantation. The Justice "ecretar% rendered an o inion that o.nershi ri*hts of Americans over Pu#lic a*ricultural lands, includin* the ri*ht to dis ose or sell their real estate, .ould #e lost u on ex iration on Jul% =, &',4 of the Parit% Amendment on Au*ust :, &',=,. Thus, rivate res ondent sold its ;asilan land holdin* to "ilto.n Realt% Phil. 4nc., B"ilto.nC for P(>>,>>> on Januar% :&, &',4. Hnder the terms of the sale, "ilto.n .ould lease the ro ert% to rivate res ondent for :( %ears .ith an extension of :( %ears at the o tion of rivate res ondent. Private res ondent #oo/s of accounts .ere examined #% ;4R for ur oses of determinin* its tax lia#ilit% for &',4. This examination resulted in the A ril :=, &',( assessment of rivate res ondent for deficienc% income tax .hich it dul% aid. "ilto.n?s #oo/s of accounts .ere also examined, and on the #asis thereof, on !cto#er &>, &'+>, the Collector of 4nternal Revenue assessed deficienc% donor?s tax of P&,>:>,+(> in relation to said sale of the ;asilan landholdin*s. Private res ondent contested this assessment on Novem#er :4, &'+>. Another assessment dated 1arch &), &'+&, increasin* the amount demanded for the alle*ed deficienc% donor?s tax, surchar*e, interest and com romise enalt% and .as received #% rivate res ondent on A ril ', &'+&. !n a eal, CTA u held the assessment. !n revie., CA reversed the decision of the court findin* that the assessment .as made #e%ond the (2%ear rescri tive eriod in "ection ==& of the Tax Code. 4ssue: 5hether or not the ri*ht of Commissioner of 4nternal Revenue has alread% rescri#ed

6eld: 7es, the Commissioner of 4nternal Revenue has alread% rescri#ed. A l%in* then "ec. ==&, N4RC Bno. "ec. :>=, &'', N4RC .hich rovides a =2%ear rescri tive eriod for ma/in* assessmentsC, it is clean that the !cto#er &), &'+> and 1arch &), &'+& assessments .ere issued #% the ;4R #e%ond the (2%ear statute of limitations. The court thorou*hl% studied the records of this case and found no #asis to disre*ard the (2%ear eriod of rescri tion, ex ressl% set under "ec. ==& of the Tax Code, the la. then in force. For the ur ose of safe*uardin* tax a%ers from an% unreasona#le examination, investi*ation or assessment, our tax la. rovides a statute of limitations in the collection of taxes. Thus, the la. or rescri tion, #ein* a remedial measure, should #e li#erall% construed in order to afford such rotection. As a corollar%, the exce tions to the la. on rescri tion should erforce #e strictl% construed. Fallo: 563R3F!R3, the Petition for Revie. is D3N43D and the assailed Decision of the Court of A eals is AFF4R13D. No costs. "! !RD3R3D.