Elnar, Jermae Vania D.

Case Digests for 27 Jan 2018

1. Hilado v CIR 100 Phil 288

 Our internal revenue laws are not political in nature and as such were continued in force
during the period of enemy occupation and in effect were actually enforced by the
occupation government.

2. Sison v Ancheta, 130 SCRA 654

 The due process clause may be invoked where a taxing statute is so arbitrary that it finds
no support in the Constitution. For equal protection, the applicable standard to avoid the
charge that there is a denial of this constitutional mandate whether the assailed act is in
the exercise of the police power or the power of eminent domain is to demonstrate “that
the governmental act assailed, far from being inspired by the attainment of the common
weal was prompted by the spirit of hostility, or at the very least, discrimination that finds
no support in reason.”

3. CIR v Pineda, 21 SCRA 105

 Government has two ways of collecting the tax in question. One, by going after all the
heirs and collecting from each one of them. Another remedy, pursuant to the lien created
by Section 315 of the Tax Code upon all property and rights to property belonging to the
taxpayer for unpaid income tax.

4. Phil. Guaranty v CIR, 13 SCRA 775

 Section 24 of the Tax Code subjects foreign corporations to tax on their income from
sources within the Philippines. The reinsurance premiums of Phil Guaranty were income
created from the undertaking of the foreign reinsurance companies to reinsure Philippine
Guaranty Co., Inc. against liability for loss under original insurances and took place in
the Philippines. These insurance premiums, therefore, came from sources within the
Philippines and, hence, are subject to corporate income tax.

5. Collector v Yuseco, 3 SCRA 313

 Under Sec 11 of RA 1125, the writ of prohibition or injunction that the CTA may issue to
suspend the collection of taxes, is merely ancillary to and in furtherance of its appellate
jurisdiction in the cases decided by the CIR which includes disputed assessments,
penalties imposed in relation thereto, or other matters arising under the National Internal
Revenue Code or other law or part of law administered by the Bureau of Internal
Revenue. The power to issue the writ exists only in cases appealed to it.

6. CIR v Algue, Inc., L28896, Feb. 17, 1988

 Private respondent Algue was correct in deducting 75,000 from its net income as it
proved that it was a necessary and ordinary expense from its 125,000 income. Sec. 30 of
the Tax Code states that “allowed deductions in the net income – Expenses - All the
ordinary and necessary expenses paid or incurred during the taxable year in carrying on
 any trade or business, including a reasonable allowance for salaries or other
compensation for personal services actually rendered xxx”

7. NPC v. Cabanatuan, GR 149110, April 19, 2003

 One of the most significant provisions of the Local Government Code is the removal of
the blanket exclusion of instrumentalities and agencies of the national government from
the coverage of local taxation. Although as a general rule, LGUs cannot impose taxes,
fees or charges of any kind on the National Government, its agencies and
instrumentalities, this rule now admits an exception, i.e., when specific provisions of the
LGC authorize the LGUs to impose taxes, fees or charges on the aforementioned entities.

8. Lorenzo v. Posadas, 64 Phil 353

 Taxes are essential to the very existence of government. The obligation to pay rests not
upon the privileges enjoyed by, or the protection afforded to, a citizen by the government,
but upon the necessity of money for the support of the state. For this reason, no one is
allowed to object to or resist the payment of taxes solely because no personal benefit to
him can be pointed out.

9. Commissioner v. Algue, supra

 Private respondent has proved that the payment of the fees was necessary and reasonable
in the light of the efforts exerted by the payees in inducing investors and prominent
businessmen to venture in an xperimental enterprise and involve themselves in a new
business requiring millions of pesos. This was no mean feat and should be, as it was,
sufficiently recompensed.

10. PAL v. Edu, 164 SCRA 320

 A charge fixed by statute for the service to be performed by an officer, where the charge
has no relation to the value of the services performed and where the amount collected
eventually finds its way into the treasury of the branch of the government whose officer
or officers collected the charge, is not a fee but a tax.
 PAL’s franchise is clear and specific that it is exempt from the payment of any tax, fee or
other charge on the registration and licensing of motor vehicles.

11. Tolentino v. Secretary of Finance, 235 SCRA 630; 249 SCRA 628
 Chamber of Real Estate and Builder’s Association, Inc. (CREBA) which specifically
assails the 10% value-added tax on the gross selling price of real properties, fails to
distinguish between a sale of real properties primarily held for sale to customers or held
for lease in the ordinary course of trade or business and isolated sales by individual real
property owners (Sec. 103[s]).

12. Osmena v. Orbos, 220 SCRA 703

 The collection of funds for the OPSF may be referred to as taxes however, they are
exacted in the exercise of the State’s police power because it aims to regulate petroleum
 product prices to secure the physical and economic survival and well being of the
community.

13. Caltex v. COA, 208 SCRA 755

 The Bureau of Customs has jurisdiction over the special import tax under Republic Act
No. 1394, any issue involving liability for, or exemption from, said tax as well as the
procedure on protests and appeals should be governed by the pertinent provisions of the
Tariff and Customs Code.

14. Chavez v Ongpin, 186 SCRA 331

 This case is about the constitutionality of EO 73 providing for the collection of real
property taxes based on the 1984 real property values.
 To continue collecting real property taxes based on valuations arrived at several years
ago, in disregard of the increases in the value of real properties that have occurred since
then, is not in consonance with a sound tax system.

15. Taganito Mining v. CIR, CTA Case 4702, April 28, 1995
 Taganito,a mining corporation, filed an application for refund of its excess input VAT
paid on its domestic purchases of taxable goods and services and importation of goods
(P4,447,651.32), CIR alleged that it filed its case prematurely.
 The general rule is that the 120+30 day period is mandatory and jurisdictional from the
effectivity of the 1997 NIRC on January 1, 1998, up to the present. As an exception,
judicial claims filed from December 10, 2003 to October 6, 2010 need not wait for the
exhaustion of the 120-day period. Hence, Taganito timely filed their refund.

16. Roxas v. CTA, 23 SCRA 276

 The sale of the farmlands to the very farmers who tilled them for generations was not
only in consonance with, but more in obedience to the request and pursuant to the policy
of our Government to allocate lands to the landless.
 The power of taxation is sometimes called also the power to destroy. It does not conform
with our sense of justice in the instant case for the Government to persuade the taxpayer
to lend it a helping hand and later on to penalize him for duly answering the urgent call.

17. Tanada v. Angara, GR 118295, May 2, 1997

 This is a case petition by Sen. Wigberto Tanada, together with other lawmakers,
taxpayers, and various NGO’s to nullify the Philippine ratification of the World Trade
Organization (WTO) Agreement.
 By theirinherent nature, treaties really limit or restrict the absoluteness of sovereignty. By
their voluntary act, nations may surrender some aspects of their state power in exchange
for greater benefits granted by or derived from a convention or pact. After all, states, like
individuals, live with coequals, and in pursuit of mutually covenanted objectives and
benefits, they also commonly agree to limit the exercise of their otherwise absolute
rights.

18. LTO v. City of Butuan, GR 131512, Jan. 20, 2000

  LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and
to grant franchises for the operation thereof. Nevertheless, under Article 458 (a)[3-VI] of
the Local Government Code, the power of LGUs to regulate the operation of tricycles
and to grant franchises for the operation thereof is still subject to the guidelines
prescribed by the DOTC.
 However, to construe the tax provisions of Section 133(1) indistinctively would result in
the repeal to that extent of LTO’s regulatory power which evidently has not been
intended.

19. Phil Match Co. v. Cebu, 81 SCRA 99

 This case is about the legality of the tax collected by the City of Cebu on sales of matches
stored by the Philippine Match Co., Ltd. in Cebu City but delivered to customers outside
of the city.
 The city can validly tax the sales of matches to customers outside of the city as long as
the orders were booked and paid for in the company's branch office in the city. Those
matches can be regarded as sold in the city, as contemplated in the ordinance, because the
matches were delivered to the carrier in Cebu City. Generally, delivery to the carrier is
delivery to the buyer.

20. Matalin v Mun. Council of Malabang, 143 SCRA 404

 Although denominated as “police inspection fee,” the amount collected under the
ordinance partakes of the nature of a tax since its undeniable purpose is to raise revenue.
However, it was ruled that said tax was imposed by the ordinance is excessive and
confiscatory.

21. Lutz v. Araneta, 98 Phil 48

 Analysis of the Act, and particularly of section 6, will show that the tax is levied with a
regulatory purpose, to provide means for the rehabilitation and stabilization of the
threatened sugar industry. In other words, the act is primarily an exercise of the police
power not purely an exercise of taxing power.

22. NTC v. CA, 311 SCRA 508

 The basis for computation of the fee to be charged by NTC on PLDT, is “the capital stock
subscribed or paid and not, alternatively, the property and equipment.

23. Tan v. Del Rosario, 237 SCRA 324

 Petitioner intimates that Republic Act No. 7496 desecrates the constitutional requirement
that taxation “shall be uniform and equitable” in that the law would now attempt to tax
single proprietorships and professionals differently from the manner it imposes the tax on
corporations and partnerships. This was held to be constitutional. With the legislature
primarily lies the discretion to determine the nature (kind), object (purpose), extent (rate),
coverage (subjects) and situs (place) of taxation. This court cannot freely delve into those
matters which, by constitutional fiat, rightly rest on legislative judgment.
24. CIR v. Santos, GR 119252, Aug. 18, 1997
 Tax rates of other countries cannot be used as a yardstick in determining what may be the
proper subjects of taxation in our own country. It should be pointed out that in imposing
the aforementioned taxes and duties, the State, acting through the legislative and
executive branches, is exercising its sovereign prerogative. It is inherent in the power to
tax that the State be free to select the subjects of taxation, and it has been repeatedly held
that “inequalities which result from a singling out of one particular class for taxation, or
exemption, infringe no constitutional limitation.”

25. Caltex v COA, 208 SCRA 726

 Taxes cannot be the subject of compensation because the government and taxpayer are
not mutually creditors and debtors of each other and a claim for taxes is not such a debt,
demand, contract or judgment as is allowed to be set-off.

26. Francia v IAC, 162 SCRA 735

 There can be no off-setting of taxes against the claims that the taxpayer may have against
the government. A person cannot refuse to pay a tax on the ground that the government
owes him an amount equal to or greater than the tax being collected.

27. RP v Ericta and Sampaguita Pictures, 172 SCRA 653

 Legal compensation cannot take place against the Government with respect to taxes, fees,
duties and similar forced contributions due to it

28. Republic v. Mambulao Lumber Company, 4 SCRA 622

 If the taxpayer can properly refuse to pay his tax when called upon by the Collector,
because he has a claim against the governmental body which is not included in the tax
levy, it is plain that some legitimate and necessary expenditure must be curtailed.

29. Philex Mining v. CIR, GR 125704, August 28, 1998

 There is a material distinction between a tax and debt. Debts are due to the Government
in its corporate capacity, while taxes are due to the Government in its sovereign capacity.

30. Domingo v Carlitos, 8 SCRA 443

 Compensation, therefore, takes place by operation of law, in accordance with the
provisions of Articles 1279 and 1290 of the Civil Code, and both debts are extinguished
to the concurrent amount. the petitioner has no clear right to execute the judgment for
taxes against the estate of the deceased Walter Scott Price.

31. Progressive Dev. Corp. v QC, 172 SCRA 629

 The imposition is a tax, if its primary purpose is to generate revenue, and regulation is
merely incidental; but if regulation is the primary purpose, the fact that incidentally
revenue is also obtained does not make the imposition a tax.

32. PAL v Edu, 164 SCRA 320

  Fees may be properly regarded as taxes even though they also serve as an instrument of
regulation. Taxation may be made the implement of the state’s police power.

33. ESSO v CIR, 175 SCRA 149

 For an item to be deductible as a business expense, the expense must be ordinary and
necessary; it must be paid or incurred within the taxable year; and it must be paid or
incurred in carrying on a trade or business. In addition, the taxpayer must substantially
prove by evidence or records the deductions claimed under law, otherwise, the same will
be disallowed.
 ESSO has not shown that the remittance to the head office of part of its profits was made
in furtherance of its own trade or business. The petitioner merely presumed that all
corporate expenses are necessary and appropriate in the absence of a showing that they
are illegal or ultra vires.

34. Apostolic Prefect v Treasurer of Baguio, 71 Phil. 547

 The test of exemption from taxation is the use of the property for purposes mentioned in
the Constitution. APMP cannot claim exemption because the assessment is not taxation
per se but rather a system for the benefits of the inhabitants of the city.

35. NDC v CIR 151, SCRA 472

 The petitioner also forgets that it is not the NDC that is being taxed. The tax was due on
the interests earned by the Japanese shipbuilders. It was the income of these companies
and not the Republic of the Philippines that was subject to the tax the NDC did not
withhold. In effect, therefore, the imposition of the deficiency taxes on the NDC is a
penalty for its failure to withhold the same from the Japanese shipbuilders. Such liability
is imposed by Section 53(c) of the Tax Code.

36. Republic v. Gonzales, 13 SCRA 633

 A Filipino concessionaire in an American Air Base is subject to Philippine Income Tax
laws under the United States-Philippine Military Bases Agreement. Public utility
operators, like operators of freight and bus services, as well as furniture manufacturers,
are included in the term “concessionaires” under the U.S.-P.I. Military Bases Agreement.

37. Delpher Traders v. IAC, 157 SCRA 349

 The records do not point to anything wrong or objectionable about this “estate planning”
scheme resorted to by the Pachecos. “The legal right of a taxpayer to decrease the amount
of what otherwise could be his taxes or altogether avoid them, by means which the law
permits, cannot be doubted.”

38. CIR v. Lincoln Philippine Life, GR 119176, Mar. 19, 2002

 While tax avoidance schemes and arrangements are not prohibited, tax laws cannot be
circumvented in order to evade the payment of just taxes. In the case at bar, to claim that
the increase in the amount insured (by virtue of the automatic increase clause
incorporated into the policy at the time of issuance) should not be included in the
computation of the documentary stamp taxes due on the policy would be a clear evasion
 of the law requiring that the tax be computed on the basis of the amount insured by the
policy.

39. Asturias Sugar Central v Comm., 29 SCRA 617

 The one-year period prescribed in section 23 of Philippine Tariff Act of 1909 is non-
extendible and compliance therewith is mandatory.