VERAv.

FERNANDEZ
GRNo.L31364March30,1979
89SCRA199
FACTS:TheBIRfiledonJuly29,1969amotionforallowanceofclaim
andforpaymentoftaxesrepresentingtheestate'staxdeficienciesin1963to
1964 in the intestate proceedings of Luis Tongoy. The administrator
opposed arguing that the claim was already barred by the statute of
limitation,Section2andSection5ofRule86oftheRulesofCourtwhich
provides that all claims for money against the decedent, arising from
contracts, express or implied, whether the same be due, not due, or
contingent,allclaimsforfuneralexpensesandexpensesforthelastsickness
ofthedecedent,andjudgmentformoneyagainstthedecedent,mustbefiled
withinthetimelimitedinthenotice;otherwisetheyarebarredforever.
ISSUE:DoesthestatuteofnonclaimsoftheRulesofCourtbartheclaimof
thegovernmentforunpaidtaxes?
HELD:No.Thereasonforthemoreliberaltreatmentofclaimsfortaxes
againstadecedent'sestateintheformofexceptionfromtheapplicationof
thestatuteofnonclaims,isnothardtofind.Taxesarethelifebloodofthe
Governmentandtheirpromptandcertainavailabilityareimperiousneed.
(CIRvs.Pineda,21SCRA105).UpontaxationdependstheGovernment
ability to serve the people for whose benefit taxes are collected. To
safeguard such interest, neglect or omission of government officials
entrustedwiththecollectionoftaxesshouldnotbeallowedtobringharmor
detrimenttothepeople,inthesamemannerasprivatepersonsmaybemade
tosufferindividuallyonaccountofhisownnegligence,thepresumption
beingthattheytakegoodcareoftheirpersonalaffairs.Thisshouldnothold
truetogovernmentofficialswithrespecttomattersnotoftheirownpersonal
concern. This is the philosophy behind the government's exception, as a
generalrule,fromtheoperationoftheprincipleofestoppel.

REYESv.ALMANZOR
GRNos.L4983946,April26,1991
196SCRA322

FACTS:PetitionersJBLReyesetal.ownedaparceloflandinTondowhich
areleasedandoccupiedasdwelling
unitsbytenantswhowerepayingmonthlyrentalsofnotexceedingP300.
Sometimesin1971theRental
FreezingLawwaspassedprohibitingforoneyearfromitseffectivity,an
increaseinmonthlyrentalsofdwelling
unitswhererentalsdonotexceedthreehundredpesos(P300.00),sothatthe
Reyeseswereprecludedfrom
raisingtherentsandfromejectingthetenants.In1973,respondentCity
AssessorofManilareclassifiedand
reassessed the value of the subject properties based on the schedule of
marketvalues,whichentailedan
increase in the corresponding tax rates prompting petitioners to file a
MemorandumofDisagreementaverring
that the reassessments made were "excessive, unwarranted, inequitable,
confiscatoryandunconstitutional"
consideringthatthetaxesimposeduponthemgreatlyexceededtheannual
incomederivedfromtheir
properties.Theyarguedthattheincomeapproachshouldhavebeenusedin
determiningthelandvaluesinstead
ofthecomparablesalesapproachwhichtheCityAssessoradopted.
ISSUE: Is the approach on tax assessment used by the City Assessor
reasonable?
HELD:No.Thetaxingpowerhastheauthoritytomakeareasonableand
naturalclassificationforpurposesof
taxation but the government's act must not be prompted by a spirit of
hostility,orattheveryleastdiscrimination
thatfindsnosupportinreason.Itsufficesthenthatthelawsoperateequally
anduniformlyonallpersonsunder
similarcircumstancesorthatallpersonsmustbetreatedinthesamemanner,
theconditionsnotbeingdifferent
bothintheprivilegesconferredandtheliabilitiesimposed.
Consequently,itstandstoreasonthatpetitionerswhoareburdenedbythe
governmentbyitsRentalFreezing
Laws(thenR.A.No.6359andP.D.20)undertheprincipleofsocialjustice

shouldnotnowbepenalizedbythe
samegovernmentbytheimpositionofexcessivetaxespetitionerscanill
affordandeventuallyresultinthe
forfeitureoftheirproperties.
LUTZ v. ARANETA
GR No. L-7859, December 22, 1955
98 PHIL 148
Facts: Commonwealth Act No. 567, otherwise known as Sugar
Adjustment Act was promulgated in 1940 to stabilize the sugar
industry so as to prepare it for the eventuality of the loss of its
preferential position in the United States market and the imposition of
export taxes. Plaintiff, Walter Lutz, in his capacity as Judicial
Administrator of the Intestate Estate of Antonio Jayme Ledesma, seeks
to recover from the Collector of Internal Revenue the sum of
P14,666.40 paid by the estate as taxes, under Sec.3 of the Act,
alleging that such tax is unconstitutional and void, being levied for the
aid and support of the sugar industry exclusively, which in plaintiffs
opinion is not a public purpose for which a tax may be constitutionally
levied. The action has been dismissed by the Court of First Instance.

ISSUE:IsCA567constitutional,despiteitsbeingallegedlyviolativeofthe
equalprotectionclause,thepurposeof
whichisnotforthebenefitofthegeneralpublicbutfortherehabilitation
onlyofthesugarindustry?
HELD:Yes.Theprotectionandpromotionofthesugarindustryisamatter
ofpublicconcern,itfollowsthatthe
Legislaturemaydeterminewithinreasonableboundswhatisnecessaryfor
itsprotectionandexpedientforits
promotion.Here,thelegislativediscretionmustbeallowedtofullyplay,
subjectonlytothetestof
reasonableness;anditisnotcontendedthatthemeansprovidedinthelaw
bearnorelationtotheobjective
pursuedorareoppressiveincharacter.Ifobjectiveandmethodsarealike
constitutionallyvalid,noreasonisseen
whythestatemaynotlevytaxestoraisefundsfortheirprosecutionand
attainment.Taxationmaybemadethe
implementofthestate'spolicepower.

PUNSALAN VS. MUNICIPAL BOARD OF MANILA

95 PHIL 46; NO.L-4817; 26 MAY 1954
Facts: Petitioners, who are professionals in the city, assail Ordinance
No. 3398 together with the law authorizing it (Section 18 of the
Revised Charter of the City of Manila). The ordinance imposes a
municipal occupation tax on persons exercising various professions in
the city and penalizes non-payment of the same. The law authorizing
said ordinance empowers the Municipal Board of the city to impose a
municipal occupation tax on persons engaged in various professions.
Petitioners, having already paid their occupation tax under section 201
of the National Internal Revenue Code, paid the tax under protest as
imposed by Ordinance No. 3398. The lower court declared the
ordinance invalid and affirmed the validity of the law authorizing it.
Issue: Whether or Not the ordinance and law authorizing it constitute
class legislation, and authorize what amounts to double taxation.
Held: The Legislature may, in its discretion, select what occupations
shall be taxed, and in its discretion may tax all, or select classes of
occupation for taxation, and leave others untaxed. It is not for the
courts to judge which cities or municipalities should be empowered to
impose occupation taxes aside from that imposed by the National
Government. That matter is within the domain of political departments.
The argument against double taxation may not be invoked if one tax is
imposed by the state and the other is imposed by the city. It is widely
recognized that there is nothing inherently terrible in the requirement
that taxes be exacted with respect to the same occupation by both the
state and the political subdivisions thereof. Judgment of the lower court
is reversed with regards to the ordinance and affirmed as to the law
authorizing it.
DOMINGO VS GARLITOS
G.R. NO. 18993 June 29, 1963
FACTS:
In Domingo vs. Moscoso, the Supreme Court declared as final and
executor the order of the lower court for the payment of estate and
inheritance taxes, charges and penalties amounting to Php 40,058.55
by the estate of the of the late Walter Price. The petitioner for
execution filed by the fiscal was denied by the lower court. The court
held that the execution is unjustified as the Government is indebted to
the estate for Php262,200 and ordered the amount of inheritance taxes
can be deducted from the Governments indebtedness to the estate.

ISSUE:
Whether of not a tax and a debt may be compensated.
RULING:
The court having jurisdiction of the Estate had found that the claim of
the Estate against the government has been recognized and the
amount has already been appropriated by a corresponding law. Both
the claim of the Government for inheritance taxes and the claim of the
intestate for services rendered have already become overdue and
demandable is well as fully liquidated. Compensation takes place by
operation of law and both debts are extinguished to the concurrent
amount. Therefore the petitioner has no clear right to execute the
judgment for taxes against the estate of the deceased Walter Price.
Davao Gulf Lumber Corporation vs. Commissioner of InternalRevenue
G.R. No. 117359July 23, 1998
Facts:
Petitioner is a licensed forest concessionaire possessing a Timber
License Agreement granted by the Ministry of Natural Resources (now
DENR). From July 1, 1980 to January 31, 1982petitioner purchased,
from various oil companies, refined and manufactured mineral oils as
well as motor and diesel fuels, which it used exclusively for the
exploitation and operation of its forest concession. Said oil companies
paid the specific tax imposed, under Sec. 153 and 156 of the 1977
National Internal Revenue Code (NIRC),on the sale of said products.
Being included in the purchase price of the oil products, the specific
taxed paid by the oil companies were eventually passed on to the user,
the petitioner in this case. Petitioner filed before the respondent
Commissioner of Internal Revenue (CIR) aclaim for refund in the
amount of P120,825.11 representing 25% of the specific tax actually
paid on the above-mentioned fuels and oils that were used by
petitioner in its operations as forest concessionaire. The claim was
based on
Insular Lumber Co. vs. CTA
and Sec. 5 of RA 1435which provides:
whenever any oils mentioned are used by miners or forest
concessionaires in their operation, 25% of the specific tax paid thereon
shall be refunded by the CIR upon submission of proof of actual use.
Petitioner complied with the procedure for refund, including submission
of proof of the actual use of the aforementioned oils on its forest
concession as required by law. Petitioner filed at the CTA a petition to
review, CTA rendered that petitioner is entitled to a partial refund of
specific taxes it paid in the reduced amount of P2,923.15. CTA granted

the claim but computed the refund based on rates deemed paid under
RA 1435, and not on the higher rates actually paid by petitioner under
NIRC. Insisting that the basis for computing the refund should be the
increased rates prescribed in Secs. 153 and 156 of NIRC, petitioner
elevated the matter to the CA with affirmed CTAs decision, hence this
petition.
Issue:
W/N the petitioner is entitled to the refund under RA 1435 of tax paid
under Sec. 154 and 156 of NIRC.
Held:
No. Petitioner is entitled only to a partial refund under Sec. 5 of RA
1435, which was enacted to provide means for increasing the Highway
Special Fund. The rationale of partial refund of specific taxes paid on
purchase of manufactured diesel and fuel oils rests on the character of
the Highway Special Fund. The specific taxes collected accrue to the
Fund, which is to be used for the construction and maintenance of the
highway system. But because the gasoline and fuel purchased by
mining and logging concessionaires are used within their own
compounds and roads, and their vehicles seldom use national
highways, they do not directly benefit from the Fund and its use; hence
the tax refund gives mining and logging concessionaires a measure of
relief in light of their peculiar situation. Petitioner argues that the
statutory grant of the refund privilege is clear and unambiguous
enough to require construction or qualificationt hereof. A tax cannot be
imposed unless it is supported by the clear and express language of a
statute; on the other hand, once the tax is unquestionably imposed,
claim of exemption from tax payments must clearly show and based on
the language in the law too plain to be mistaken. Since the partial
refund authorized under Sec. 5, RA 1435, is in the nature of a tax
exemption, it must be construed strictly against the grantee. Hence,
petitioners claim of refund on the basis of the specific taxes it actually
paid must expressly be granted in a statute stated in a language too
clear to be mistaken. After scrutinizing RA1435, the Court founds no
expression of a legislative will authorizing are fund based on the higher
rates claimed by petitioner. Hence, petitioners claim of refund on the
basis of the specific taxes it actually paid must expressly be granted in
a statute stated in a language too clear to be mistaken. Wherefore,
petition is denied and decision by the CA is affirmed.

ATLAS CONSOLIDATED MINING DEVT CORP vs. CIR

524 SCRA 73, 103

GR Nos. 141104 & 148763, June 8, 2007

FACTS: Petitioner corporation, a VAT-registered taxpayer engaged in
mining, production, and sale of various mineral products, filed claims
with the BIR for refund/credit of input VAT on its purchases of capital
goods and on its zero-rated sales in the taxable quarters of the years
1990 and 1992. BIR did not immediately act on the matter prompting
the petitioner to file a petition for review before the CTA. The latter
denied the claims on the grounds that for zero-rating to apply, 70% of
the company's sales must consists of exports, that the same were not
filed within the 2-year prescriptive period (the claim for 1992 quarterly
returns were judicially filed only on April 20, 1994), and that petitioner
failed to submit substantial evidence to support its claim for
refund/credit.
The petitioner, on the other hand, contends that CTA failed to
consider the following: sales to PASAR and PHILPOS within the EPZA as
zero-rated export sales; the 2-year prescriptive period should be
counted from the date of filing of the last adjustment return which was
April 15, 1993, and not on every end of the applicable quarters; and
that the certification of the independent CPA attesting to the
correctness of the contents of the summary of suppliers invoices or
receipts examined, evaluated and audited by said CPA should
substantiate its claims.
ISSUE: Did the petitioner corporation sufficiently establish the factual
bases for its applications for refund/credit of input VAT?
HELD: No. Although the Court agreed with the petitioner corporation
that the two-year prescriptive period for the filing of claims for
refund/credit of input VAT must be counted from the date of filing of
the quarterly VAT return, and that sales to PASAR and PHILPOS inside
the EPZA are taxed as exports because these export processing zones
are to be managed as a separate customs territory from the rest of the
Philippines, and thus, for tax purposes, are effectively considered as
foreign territory, it still denies the claims of petitioner corporation for
refund of its input VAT on its purchases of capital goods and effectively
zero-rated sales during the period claimed for not being established
and substantiated by appropriate and sufficient evidence.
Tax refunds are in the nature of tax exemptions. It is regarded as in
derogation of the sovereign authority, and should be construed in
strictissimi juris against the person or entity claiming the exemption.
The taxpayer who claims for exemption must justify his claim by the
clearest grant of organic or statute law and should not be permitted to
stand on vague implications.

CIR vs. Fortune Tobacco Corporation

G.R. Nos. 167274-75, July 21, 2008
Facts: Respondent FTC is a domestic corporation that manufactures
cigarettes packed by machine under several brands. Prior to January 1,
1997, Section 142 of the 1977 Tax Code subjected said cigarette
brands to ad valorem tax. Annex D of R.A. No. 4280 prescribed the
cigarette brands tax classification rates based on their net retail price.
On January 1, 1997, R.A. No. 8240 took effect. Sec. 145 thereof now
subjects the cigarette brands to specific tax and also provides that: (1)
the excise tax from any brand of cigarettes within the next three (3)
years from the effectivity of R.A. No. 8240 shall not be lower than the
tax, which is due from each brand on October 1, 1996; (2) the rates of
excise tax on cigarettes enumerated therein shall be increased by 12%
on January 1, 2000; and (3) the classification of each brand of
cigarettes based on its average retail price as of October 1, 1996, as
set forth in Annex D shall remain in force until revised by Congress.
The Secretary of Finance issued RR No. 17-99 to implement the
provision for the 12% excise tax increase. RR No. 17-99 added the
qualification that the new specific tax rate xxx shall not be lower than
the excise tax that is actually being paid prior to January 1, 2000. In
effect, it provided that the 12% tax increase must be based on the
excise tax actually being paid prior to January 1, 2000 and not on their
actual net retail price.
FTC filed 2 separate claims for refund or tax credit of its purportedly
overpaid excise taxes for the month of January 2000 and for the period
January 1-December 31, 2002. It assailed the validity of RR No. 17-99
in that it enlarges Section 145 by providing the aforesaid qualification.
In this petition, petitioner CIR alleges that the literal interpretation
given by the CTA and the CA of Section 145 would lead to a lower tax
imposable on 1 January 2000 than that imposable during the transition
period, which is contrary to the legislative intent to raise revenue.
Issue: Should the 12% tax increase be based on the net retail price of
the cigarettes in the market as outlined in Section 145 of the 1997 Tax
Code?
Held: YES. Section 145 is clear and unequivocal. It states that during
the transition period, i.e., within the next 3 years from the effectivity of
the 1997 Tax Code, the excise tax from any brand of cigarettes shall
not be lower than the tax due from each brand on 1 October 1996. This

qualification, however, is conspicuously absent as regards the 12%

increase which is to be applied on cigars and cigarettes packed by
machine, among others, effective on 1 January 2000.
Clearly, Section 145 mandates a new rate of excise tax for cigarettes
packed by machine due to the 12% increase effective on 1 January
2000 without regard to whether the revenue collection starting from
this period may turn out to be lower than that collected prior to this
date.
The qualification added by RR No. 17-99 imposes a tax which is the
higher amount between the ad valorem tax being paid at the end of
the 3-year transition period and the specific tax under Section 145, as
increased by 12%a situation not supported by the plain wording of
Section 145 of the 1997 Tax Code. Administrative issuances must not
override, supplant or modify the law, but must remain consistent with
the law they intend to carry out.
Revenue generation is not the sole purpose of the passage of the 1997
Tax Code. The shift from the ad valorem system to the specific tax
system in the Code is likewise meant to promote fair competition
among the players in the industries concerned and to ensure an
equitable distribution of the tax burden.

GOMEZ v. PALOMAR
GR No. L-23645, October 29, 1968
25 SCRA 827
FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in
San Fernando, Pampanga. It did not bear
the special anti-TB stamp required by the RA 1635. It was returned to
the petitioner. Petitioner now assails the
constitutionality of the statute claiming that RA 1635 otherwise known
as the Anti-TB Stamp law is violative of

the equal protection clause because it constitutes mail users into a

class for the purpose of the tax while leaving
untaxed the rest of the population and that even among postal patrons
the statute discriminatorily grants
exemptions. The law in question requires an additional 5 centavo
stamp for every mail being posted, and no mail
shall be delivered unless bearing the said stamp.
ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly
violative of the equal protection clause?
HELD: No. It is settled that the legislature has the inherent power to
select the subjects of taxation and to grant
exemptions. This power has aptly been described as "of wide range
and flexibility." Indeed, it is said that in the
field of taxation, more than in other areas, the legislature possesses
the greatest freedom in classification. The
reason for this is that traditionally, classification has been a device for
fitting tax programs to local needs and
usages in order to achieve an equitable distribution of the tax burden.
The classification of mail users is based on the ability to pay, the
enjoyment of a privilege and on administrative
convenience. Tax exemptions have never been thought of as raising
revenues under the equal protection clause.

ASSOCIATION OF CUSTOM BROKERS, INC. vs. MUNICIPAL BOARD

G.R. No. L-4376 May 22, 1953
FACTS:
The Association of Customs Brokers, Inc., which is composed of all
brokers and public service operators of motor vehicles in the City of
Manila challenge the validity Ordinance No. 3379 on the ground that
(1) while it levies a so-called property tax it is in reality a license tax
which is beyond the power of the Municipal Board of the City of Manila;

(2) said ordinance offends against the rule of uniformity of taxation;

and (3) it constitutes double taxation.
The respondents contend on their part that the challenged ordinance
imposes a property tax which is within the power of the City of Manila
to impose under its Revised Charter [Section 18 (p) of Republic Act No.
409], and that the tax in question does not violate the rule of
uniformity of taxation, nor does it constitute double taxation.
ISSUE:
Whether or not the ordinance is null and void
RULING:
The ordinance infringes the rule of the uniformity of taxation ordained
by our Constitution. Note that the ordinance exacts the tax upon all
motor vehicles operating within the City of Manila. It does not
distinguish between a motor vehicle for hire and one which is purely
for private use. Neither does it distinguish between a motor vehicle
registered in the City of Manila and one registered in another place but
occasionally comes to Manila and uses its streets and public highways.
This is an inequality which we find in the ordinance, and which renders
it offensive to the Constitution.
Ormoc Sugar Company, Inc. v. Treasurer of Ormoc City
G.R. No. 23794 February 17, 1968
Facts: The Municipal Board of Ormoc City passed Ordinance No. 4
imposing on any and all productions of centrifugal sugar milled at the
Ormoc Sugar Company, Inc., in Ormoc City a municipal tax equivalent
to one per centum (1%) per export sale to USA and other foreign
countries. Payments for said tax were made, under protest, by Ormoc
Sugar Company, Inc. Ormoc Sugar Company, Inc. filed before the Court
of First Instance of Leyte a complaint against the City of Ormoc as well
as its Treasurer, Municipal Board and Mayor alleging that the ordinance
is unconstitutional for being violative of the equal protection clause
and the rule of uniformity of taxation. The court rendered a decision
that upheld the constitutionality of the ordinance. Hence, this appeal.
Issue: Whether or not constitutional limits on the power of taxation,
specifically the equal protection clause and rule of uniformity of
taxation, were infringed?
Held: Yes. Equal protection clause applies only to persons or things
identically situated and does not bar a reasonable classification of the
subject of legislation, and a classification is reasonable where 1) it is

based upon substantial distinctions; 2) these are germane to the

purpose of the law; 3) the classification applies not only to present
conditions, but also to future conditions substantially identical to those
present; and 4) the classification applies only to those who belong to
the same class. A perusal of the requisites shows that the questioned
ordinance does not meet them, for it taxes only centrifugal sugar
produced and exported by the Ormoc Sugar Company, Inc. and none
other. The taxing ordinance should not be singular and exclusive as to
exclude any subsequently established sugar central for the coverage of
the tax.
Tolentino v Sec. of Finance
235 SCRA 630
Facts:
House of Rep. filed House Bill 11197 (An Act Restructuring the
VAT System to Widen its Tax Base and Enhance its Admin., Amending
for these Purposes)
Upon receipt of Senate, Senate filed another bill completely
different from that of the House Bill
Senate finished debates on the bill and had the 2nd and 3rd
reading of the Bill on the same day
Bill was deliberated upon in the Conference Committee and
become enrolled bill which eventually became the EVAT law.
This case was filed by PAL because before the EVAT Law, they were
exempt from taxes. After the passage of EVAT, they were already
included. PAL contended that neither the House or Senate bill provided
for the removal of the exemption from taxes of PAL and that it was inly
made after the meeting of the Conference Committee w/c was not
expressed in the title of RA 7166
Procedural Issue:
(1) Whether or not RA 7716 originated exclusively from the House of
Rep. in accordance with sec 24, art 6 of Constitution
(2) Whether or not the Senate bill violated the three readings on
separate days requirement of the Constitution
(3) Whether or not RA 7716 violated sec 26(1), art 6 - one subject,
one title rule.
Held:
(1) YES! Court said that it is not the law which should originate from
the House of Rep, but the revenue bill which was required to originate
from the House of Rep. The inititiative must ocme from the Lower

House because they are elected in the district level meaning they are
expected to be more sensitive to the needs of the locality.
Also, a bill originating from the Lower House may undergo extensive
changes while in the Senate. Senate can introduce a separate and
distinct bill other than the one the Lower House proposed. The
Constitution does not prohibit the filing in the Senate of a substitute bill
in anticipation of its receipt of the House bill, so long as action by
Senate is withheld pending the receipt of the House bill.
(2) NO. The Pres. certified that the Senate bill was urgent.
Presidential certification dispensed the requirement not only of printing
but also reading the bill in 3 separate days. In fact, the Senate
accepted the Pres. certification
(3) No. Court said that the title states that the purpose of the statute
is to expand the VAT system and one way of doing this is to widen its
base by withdrawing some of the exemptions granted before. It is also
in the power of Congress to amend, alter, repeal grant of franchises for
operation of public utility when the common good so requires.
One subject rule is intended to prevent surprise upon Congress
members and inform people of pending legislation. In the case of PAL,
they did not know of their situation not because of any defect in title
but because they might have not noticed its publication until some
event calls attention to its existence.