Case CIR v .

CTA, Citytrust

CIR v. Cebu Portland

Reyes v. Almanzor

Phil Guaranty v. CIR

Facts Case submitted for decision based solely on pleadings and evidence submitted by Citytrust due to failure of BIR to transmit the records of the case. CTA granted writ of execution filed by CPCC since the outstanding tax liability was sill being questioned. Land was assessed based on market value leading to increase in taxable income exceeding the annual income derived (Rental Freezing Law). Phil Guaranty excluded the premiums from gross income and did not withhold or pay tax on them. Algue wanted to deduct promotional fees from gross income to lower taxable income. Tax is assailed as it is levied for the aid and support of the sugar industry exclusively thus not a public purpose. Gomez is assailing the constitutionality of the Anti-TB Stamp Law because his letter not bearing the stamp was returned. PD providing for revision of real property assessment every 5 years was repealed by an EO which delayed payment. Chavez challenged the PD claiming that it will bring unreasonable increase in real property taxes. VAT in toll fees is challenged because: (1) it is a users tax; (2) it is a tax on public interest; (3) violates non-impairment clause; (4) not intended by Congress to be included in services Petitioners challenge an ordinance levying tax on all motor vehicles operating within the city. The proceeds shall accrue to the streets and bridges funds of the city.

Issue W/N the government is bound by the failure of CIR to present evidence? NO

Held Government not estopped in matters regarding tax Taxes are the lifeblood of the government

CIR v. Algue

Lutz v. Araneta

W/N assessment of taxes can be enforced even if there is a case contesting it? YES W the income approach or the comparable sales approach is the method to be used in assessment? Income Approach W/N insurance companies are required to withhold tax on reinsurance premiums ceded to foreign insurance companies? YES W/N an uncommon business expense be allowed as a proper deduction in computation of income taxes? NO W/N the tax is valid in supporting the sugar industry? YES

Injunction cant be granted to restrain tax collection Urgency to collect taxes (primary source of revenue) Tax collection should be in accordance with Consti and law Due process Reconcile conflicting interests Reinsurance premiums are afforded protection by government and the foreign insurers exercise rights and privileges Validity of tax cannot be assailed until after taxpayer has paid under protest Every person who is able to pay must contribute his share in the running of the government Government is expected to respond via benefits Promotion of sugar industry is a public concern It is inherent in the power to tax to select the subjects of taxation (Taxation may be made to implement police power) Legislature has inherent power to select the subjects of taxation and grant exemptions. Only benefit which taxpayer is constitutionally entitled is that derived from is enjoyment of the privileges in an organized society To continue collecting real property taxes based on valuations arrived at several years ago is not in consonance with a sound tax system. Fiscal adequacy requires that sources of revenue must be adequate to meet government expenditures. Every activity is a form of service rendered for a fee which should be included unless some provision of law specially excludes it. Non-observance of administrative feasibility will not render a tax imposition invalid except to the extent that specific constitutional/ statutory limitations are impaired. The ordinance imposes a license fee under the cloak of ad valorem tax to circumvent Motor Vehicle Law. Excise tax does not become property tax just because it is proportioned in the amount of the property used in connection with the act taxed Excise tax may be indirectly a tax upon property but if it is really imposed upon the performance of an act, it is considered an excise.

Gomez v. Palomar

W/N the Anti-TB Stamp Law violates the equal protection clause? NO

Chavez v. Ongpin

W/N EO 73 imposes unreasonable increase in real property taxes? NO

Diaz v. Secretary of Finance

W/N toll fees collected by tollway operators may be subjected to VAT? YES

Association of Customs Brokers v. City of Manila

W/N the tax levies a so-called property tax which in reality is a license tax beyond the power of the Municipal Board to impose? YES

Esso Standard v. CIR

Esso claimed as ordinary and necessary expenses margin fees (from profit remittances to its New York Office) it had paid to the Central Bank and sought to deduct them from gross income. Supervision fee on gross receipts on rentals of privately owned market spaces is assailed on the ground that it is in reality a tax on income the city cannot impose. PAL is challenging the motor vehicle registration fee it has been required to pay considering that it is a legislative franchise exempt from tax payment.

W/N margin fees may be considered as ordinary and necessary expense? NO

Esso has not shown that remittances to its head office of part of its profits were made in furtherance of its business. Margin fees not revenue measure but police power. They are imposed to curb excessive demand upon the international reserves in order to stabilize the currency. (not tax = not deductible business expense) The use of gross amount of rentals in computation does not convert the license fee to income tax: higher stall rentals = higher volume of goods. License fee regulation; Tax revenue generation While the MVRFs were originally intended for regulation, as motor vehicles became absolute necessities and vehicular traffic exploded in number, the registration of vehicles became a convenient way to raise revenues. Since its purpose is revenue generation, it is a tax (money collected accrues to the funds for construction and maintenance of public roads). Tax may be a mode to implement police power. The amount was too excessive and there was no justification in the exaction from aliens who have been cleared for employment. The purpose of the ordinance is to raise money under the guise of regulation. Taxes and license fees are legally distinct. One ordinance imposes a license fee to continue the privilege of selling liquor (subject to state regulation). Another ordinance makes Tabacalera iable for sales tax on general merchandise which involves liquor. Anchorage fees are not being charged for regulatory purposes but for revenue purposes. The power to regulate as an exercise of police power does not include the power to impose fees for revenue purposes. For fees to be regulatory in nature, the same must be no more than sufficient to cover the actual cost of inspection or examination. While the funds collected may be referred to as taxes, they are exacted in the exercise of police power. The main objective was not revenue but to stabilize the price of oil and petroleum products.

Progressive Development Corp v. QC

W/N the supervision fee/license tax is a tax on income? NO

PAL v. Edu

W/N motor vehicle registration fees are taxes which PAL is exempted to pay? YES

Villegas v. Hiu Chiong Tsai Pao Ho

Compania General de Tabacos de Filipinas v. City of Manila

An ordinance is challenged for requiring aliens to procure a mayors permit to be employed in the City of Manila. (cost: P50; penalty: imprisonment/fine/both). Tabacalera is demanding a refund claiming that since it already paid license fees, it was no longer bound to pay sales tax. American Mail Lines is questioning the validity if an ordinance imposing an anchorage fee on foreign vessels which anchor within its territorial waters.

W the ordinance imposes a regulatory fee/tax? TAX

W/N Tabacalera is liable for sales tax despite already having paid for its liquor license? YES

American Mail Lines v. City of Basilan

W/N the ordinance is a valid exercise of the citys police power and that the fees were for purely regulatory purposes? NO

Osmena v. Orbos

Republic of the Philippines v. BacolodMurcia Milling Co.

OPSF was created to reimburse oil companies for cost increases from exchange rate adjustments and increases in the world market prices of crude oil. It was later reclassified into a trust liability account and the grounds for reimbursement to oil companies was expanded. Osmena questioned the creation of the trust fund claiming that money collected is a special fund. Philsugin was authorized to collect a levy from sugar cane planters where

W the taxes collected for the OPSF are taxes or regulatory fees? REGULATORY FEES (W/N the creation of the trust fund was valid? YES. In order of the funds to fall under the prohibition, it must be shown that they were collected as taxes)

W the levy was a special assessment or a revenue measure? NEITHER

The levy was not so much an exercise of the power of taxation but the exercise of police power for the general welfare of the

Victorias Milling v. Municipality of Victorias

PCGG v. Cojuangco

CIR v. PLDT

the proceeds would go to a special fund to be used exclusively by Philsugin for research on the sugary industry. 3 sugar centrals refused to pay their contributions to the fund claiming that their obligation to pay subsisted only to the extent that they were benefited since the levy was merely a special assessment and not a tax. An ordinance enacted by the Municipality of Victorias on the ground that it required sugar centrals operating within the municipality to pay an annual municipal license tax thus imposing 40K on Victorias Milling as a sugar central and another 40K as a sugar refinery. COCOFED, Cojuanco were allowed to exercise their right to vote as owners of (sequestered) shares in UCPB for the election of the Board of Directors. Their exercise of their right to vote is assailed on the ground that the sequestered shares were purchased with coco levy funds which are claimed to be public in character. PLDT filed a claim for tax refund of VAT, compensating taxes and advance sales taxes on the ground that it was entitled to a tax exemption under RA 7802 wherein PLDT should pay a franchise tax in lieu of all taxes on the franchise or its earnings.

country (sugar industry). Special assessment finance improvement of particular properties, with the benefits accruing to those who pay the assessment. Ordinary tax provide the government with revenues needed for the financing of state affairs.

W/N the ordinance is invalid considering a municipality cannot impose a tax for revenue in the guise of a police measure? NO

The ordinance was promulgated not in the exercise of the municipalitys regulatory power but as a revenue measure as authorized by Commonwealth Act 472. License tax has no fixed meaning. It is often used indiscriminately to designate impositions exacted for the exercise of various privileges. license tax = revenue; license fee = regulation It is the government who rightly owned the UCPB shares since these were bought using the coco levy fund, which was generated by enforced contributions intended for the rehabilitation and stabilization of the coconut industry. The government should be the one to vote. 3 elements of tax: (1) enforced proportional contribution; (2) imposed by the State; (3) support of the government The clause In lieu of all taxes is immediately followed by a qualifying clause on this franchise or earnings thereof, suggesting that the exemption is limited to taxes imposed directly on PLDT. Advance sales taxes (importer can shift to purchaser) and VAT (imposed on importers) are indirect taxes outside the purview of the exemption while compensating tax (also imposed on importers) is an excise tax. Direct tax liability and burden on one person Indirect tax liability on one person but the burden can be shifted or passed on to another. Universal charges are regulatory fees levied to ensure the viability of the countrys electric power industry. Taxing power may be used to implement police power. Distinction between taxing power and police power: purpose Power to tax incident of sovereignty, unlimited, necessity Police power promote public welfare, regulation

W/N the coco levy funds partake of the nature of taxes and W/N they constitute public funds? YES (to both)

W/N PLDT is exempt from payment of VAT and other taxes by virtue of the provision in its franchise? NO

Gerochi v. DOE

Planters Products, Inc. v. Fertiphil Corporation

EPIRA was enacted imposing a universal charge on all end users of electricity for the purpose of funding NAPOCORs projects. Gerochi and other end users are assailing it on the ground that it is oppressive and confiscatory and amounts to taxation which could not be delegated to an administrative agency like ERC. Fertiphil demanded a refund of payments made in light of Marcos LOI which imposed P10 per bag of

W/N the universal charge is a tax? NO

W/N the issuance of the LOI was an exercise of police power? NO W/N the levy was for a public

The primary purpose of the levy was revenue generation hence it is a tax. P10 per bag is too excessive to serve a mere regulatory

fertilizer in order to make PPI financially viable. Chevron Philippines, Inc. v. Bases Conversion Development Authority Chevron questioning imposition of royalty fees (assessed on deliveries to Nanox) on the ground that they have no relation to the expenses of regulation and that its imposition per unit of measurement of fuel sales was for revenue purposes, thus akin to a tax. AUF seeks the reversal of an assessment from an application of a building permit claiming that it is exempted under RA 6055 since it is a non-stock, non-profit education foundation. AIA filed a manifestation claiming that it availed of the tax amnesty program because it received a letter of demand from CIR containing an assessment of deficiency VAT and excise tax for auction sales.

purpose? NO

W/N the royalty fees are for regulation? YES

purpose. The purpose is to support a private company hence the levy was invalid for not serving a public purpose. In distinguishing tax and regulation as a form of police power, the determining factor is the purpose. The purpose of the levy was to ensure free flow or movement of petroleum fuel to and from Clark. It is imposed on a per liter basis because higher volume of fuel would lead to greater supervision and inspection

AUF v. City of Angeles

W/N AUF is exempt from payment of building permit and related fees imposed under the National Building Code? NO

Asia International Auctioneers, Inc. v. CIR

W/N AIA is liable to pay despite tax amnesty? NO

Pascual v. Secretary of Public Works

Pepsi-Cola Bottling Company v.Municipality of Tanauan

MIAA v. City of Paranaque

Provincial governor of Rizal filed an injunction on the appropriation for the construction of Pasig feeder road terminals on the ground that at the time of the passage of the Act, these are not connected to any government property or highway and are privately owned by Senator Zulueta. The Local Autonomy Act, which grants municipalities, the authority to impose municipal taxes upon persons engaged in any occupation or business within their jurisdiction and two municipal ordinances of Tanauan, which impose manufacturers tax are assailed (one per bottle, another on each gallon of volume). MIAA charter transferred to MIAA land including runways and buildings and was assessed real estate tax on the belief that the local government code withdrew its exemption.

W/N Congress appropriated public funds for the construction of feeder roads that were, at the time the law was passed, private property? YES

Building permit fees are not impositions on property but on the activity subject of government regulation. They are actually imposed on certain activities the owner may conduct (build/repair/demolish) A charge which bears no relation to cost of inspection and regulation is a tax. Tax Amnesty Program specifically excludes withholding agents with respect to their withholding tax liabilities from those who can avail. However, CIR did not assess AIA as a withholding agent. (assessed as directly liable) VAT and excise tax are different from withholding taxes. Former incidence on one person but burden can be shifted to another Latter incidence and burden on same entity statutory tax payer; withholding agent merely collects burden not shifted to him. The right of the legislature to appropriate public funds is correlative with its right to tax. Taxing power must be exercised for public purposes so no appropriation of state funds can be made other than for a public purpose. (allowed: incidental advantage to individuals)

W/N the Local Autonomy Act constitutes undue delegation of power? NO W/N the MOs are valid? YES

Power of taxation may be delegated to local governments with respect to matters of public concern Taking of property is in the lawful exercise of taxing power when: (1) public purpose; (2) uniformity; (3) within the jurisdiction; (4) opportunity to be heard Tax rates imposed by the ordinances are reasonable and not unfair or oppressive.

W/N the airport lands and buildings of MIAA are exempt from real estate taxes? YES

GOCC is not exempt from real estate tax but MIAA is government instrumentality. Express provision of LGC exempts from real estate tax any real property owned by the National Government, its agencies and instrumentalities.

Sea-Lang Services Inc. v. CA

31 Infantry Post Exchange v. Posadas

st

Sea-Land, an American shipping company of household goods is invoking tax exemption under the RPUS Military Bases Agreement which exempts from tax any profit derived by a US national under a contract with the US government in connection with the construction, maintenance, operation, and defense of the bases. st 31 Infantry Post exchange is claiming that the merchants which are selling goods to them should be exempt from tax because it was driving up the prices of goods and that the revenue law provides that no specific tax shall be collected on any goods sold and delivered directly to the US Army for their actual use

W/N Sea-Land falls within the coverage of the tax exemption? NO

Property of MIAA is of pubic dominion devoted to public use. Portions of property that MIAA leases to private entities not exempt. The shipment of household goods of US military personnel is not included in construction, maintenance, operation, and defense of the bases. It does not contribute to the defense and security of the Philippines.

W/N the merchants are exempt from sales tax? NO

Reagan v. CIR

Reagan, an American citizen assigned to Clark is claiming income tax exemption in the sale of his Cadillac car which he imported tax free.

W/N Clark Air Base is foreign territory and this beyond the governments jurisdictional power to tax? NO

CIR v. Mitsubishi Metal Corporation

Mitsubishi is invoking tax exemption on interest income withheld by Atlas on the ground that it was merely acting as an agent of Eximbank since NIRC provides that income received from loans n the Philippines extended by financing institutions of foreign governments are exempt from tax.

W/N the interest income from loans extended to Atlas by Mitsubishi is excluded from gross income taxation and therefore excluded from withholding tax? NO

CIR v. Marubeni Coroporation

Marubeni was found liable for contractors tax on the offshore portion (all materials and equipment were manufactured and completed in Japan) for 2 projects on turn-key basis (construct until readiness for occupancy) in Leyte.

W/N income of Marubeni is taxable even if it claims that it was earned outside of the Philippines? NO

The goods are sold for resale to individuals belonging to the Army and not to the Army itself. Tax exemption covers those that are sold directly to the Army. Only those agencies through which the Federal government immediately and directly exercises its sovereign powers are exempt from tax. The limitations upon taxing power must receive a practical construction which does not seriously impair the taxing power of the government imposing the tax. The effect of the tax upon the functions of the government and the nature of the governmental agency determine finaly the extent of the exemption. Bases under lease to the US under the Military Bases Agreement remain part of the Philippine territory. It is not foreign territory for the purposes of income tax legislation. The power to tax has been preserved except for those matters where an appropriate exemption was provided for. Mitsubishi is not a mere agent of Eximbank as it entered into the agreement with Atlas in its own independent capacity. There were 2 separate and distinct transactions. What was subject of the withholding tax is not the interest income paid by Mitsubishi to Eximbank but the interest income earned by Mitsubishi from Atlas. The exemption that would have been applicable to Eximbank does not apply. Scrupulous care must be taken when international comity is invoked on the representation that funds involved in the loans are those of a foreign government to avoid violation of our tax laws. Contractors tax is an excise tax on the exercise of a privilege of selling services which cannot be levied if performed outside the jurisdiction of the taxing authority. The services made and completed in Japan are not subject to contractors tax as they were rendered outside the taxing jurisdiction of the Philippines.