TAX DIGESTS

FIRST BATCH

#1 CIR V BPI, GR 134062, April 17, 2007
Description:
Facts: The CIR made tax assessments for responden
ts deficiency percentage and documentary stamp ta
xes for the year 1986 in two notices dated October 2
8, 1988. Respondent replied stating that it was not in
formed of such assessments and there was no indica
tion on whether to pay or protest said assessments.
BPIs reply failed to qualify as a protest to said asses
sments because it stated that it shall inform the CIR
of the taxpayers decision on whether to pay or prote
st. Respondent filed reconsideration but CIR denied s
uch. Then a petition for review was sent to CTA after
the 30-day reglementary period from the decision of
the CIR which led to its dismissal for lack of jurisdict
ion since the subject assessments had become final
and unappealable.
The CA, on appeal, reversed the tax courts decision
and remanded the case to the CTA for a decision on t
he merits. It ruled that the assessments were not val
id for they did not inform the taxpayer of the legal an
d factual bases therefor the assessments not havin
g reasons for deficiencies but only a mere computati
on.

Issue: Is BPI liable for the tax assessments?

Decision: Yes. Under the law, the taxpayer shall be i
nformed in writing of the law and the facts on which
the assessment is made, otherwise the assessment i
s void. From the foregoing testimony, the examiners
themselves went to BPI and talked to them about the
issues. BPI was indeed aware of the nature and basi
s of the assessments and was given all the opportuni
ty to contest the same but ignored it despite the noti
ceconspicuously written on the assessments. Consid
ering that
such notices were valid assessments, the state will
be deprived, considering the amount of money, of the
taxes validly due it. Taxes are lifeblood of the gover
nment, for without taxes, the government can neithe
r exist nor endure.

#2 CIR v Pineda, GR L-22734, Sept. 15, 1967
Description:
Facts: After the estate proceedings of the inheritanc
e of one Atanasio Pineda, deceased, the CIR investig
ated the income tax liability of the estate for the yea
rs 1945-1948 and found out that returns for those yea
rs were not filed. Manuel, one of the heirs, received t
he assessments and protested the same which led it
to be appealed to the CTA only to the portion pertaini
ng to him as an heir. The CTA decided that the right t
o assess and collect the tax has prescribed. But this
Court decided that only the year 1947 has prescribed
within the five year prescription period and not 1945
-1946. The case was remanded back to CTA and deci
ded that the Respondent was liable for the whole am
ount of the income tax due. Pineda contested that as
an heir he is only liable up to the amount of his shar
e in the inheritance.

Issue: May the government collect the whole income
tax due of the inheritance from an heir - Pineda?

Decision: Yes. Manuel Pineda can be made liable for
the whole amount to the government however his lia
bility cannot exceed the amount of his share. As the
holder of the property, the government has a lien on t
he same as the estate is liable to it for unpaid taxes.
By virtue of such lien, the government can subject th
e property under Manuel Pineda to satisfy the taxes
due. This is one remedy of the government to collect
taxes for expediency. After paying the amount, Manu
el has the right of contribution from his co-heirs to a
chieve an adjustment of the proper share of each hei
r in the distributable estate.

#3 Vera v Fernandez, GR L-31364, March 30, 1979
Description:
Facts: This is an appeal for an order of payment of ta
xes by the government against the Estate of the late
Luis Tongoy for deficiency income taxes for the year
s 1963 and 1964.
The Administrator opposed such order of the CIR for
being barred by prescription under Rule 86, Section 5
of the Rules of Court All money claimsxxx and j
udgment for money against the decedent, must be fil
ed within the time limited in the notice, otherwise th
ey are barred foreverxxx. After finding that the opp
osition was well-founded, respondent judge dismisse
d the case. Hence this appeal.

Issue: Is the collection of taxes barred under the Rul
es of Court?

Decision: No. A perusal of the aforequoted provisions
shows that it makes no mention of claims for monet
ary obligation of the decedent created by law, such a
s taxes which is entirely of different character from t
he claims expressly enumerated therein. Under the s
tatutory construction of Expressio unius est exclusi
on alterius, taxes which are expressly not included
must by implication be excluded from its operation a
nd effect. This court overrules the defense of prescri
ption of the administrator. Taxes represent the claim
of the people at large and it must not be erroneously
denied.

#4 CIR v CTA, GR 106611, July 21, 1994
D e s c r i p t i o n :
Facts: This is a case wherein the CIR denied the clai
m of Citytrust Banking Corporation for an alleged ref
undable amount reflected in its 1983 income tax retu
rn on the ground of prescription.
Citytrust, after denial of the CIR, filed a petition with
the CTA claiming refunds of its income tax payments
for the years 1983-1985. In the answer, the Solicitor
General asserted that the right to claim the same ha
s prescribed with respect to income tax payments pr
ior to August 28, 1984, pursuant to Sections 292 and
295 of the National Internal Revenue Code of 1977, a
s amended, since the petition was filed only on Augu
st 28, 1986. The CTA ordered refund on the grounds t
hat no evidence against the correctness of the inco
me tax and not deficiency on the assessments.

Issue: Is Citytrust entitled for refund?

Decision: No. After a careful review of the records, it
is of this courts judgment that the BIR was denied a
day in court due to the postponements of its counsel,
the Solicitor General, due to unavailability of necess
ary records. It was under this predicament that the C
TA decided in favor of Citytrust. It is a long settled ru
le that the government is not bound by the errors co
mmitted by its agents. The State is not estopped by t
he neglect of its agents and officers. The grant of a r
efund is founded on the assumption that the tax retu
rn is valid, that is, the facts stated therein are true a
nd correct. The deficiency assessment, although not
yet final, created a doubt as to and constitutes a cha
llenge against the truth and accuracy of the facts sta
ted in said return which, by itself and without unques
tionable evidence, cannot be the basis for the grant
of the refund. The deficiency assessments should be
first determined. Case remanded to CTA.

#5 Commissioner v Algue, Inc., GR 28896, Feb 17, 19
88
Description:
Facts: Algue filed a petition to the CTA, which the lat
ter affirmed, regarding the disallowance of the CIR fo
r a legitimate business deduction in the amount of P
hp75,000. The amount was paid to the payees as pro
motional expenses by Algue as agent of PSEDC for in
ducing other persons to invest in the experimental e
nterprise of the latter. The CIR contended that claim
ed that the amount was paid fictitiously to most pay
ees the latter being members of the family in control
of Algue.

Issue: Was the disallowance of the CIR of the deduct
ion correct?

Decision: No. We agree with the CTA. The deduction
comes from a legitimate business which Algue under
took. We find that the onus has been discharged sati
sfactorily by the private respondent. It had proved th
e payment of the fees in light of the necessary and re
asonable efforts exerted by the payees in inducing in
vestors requiring millions of pesos. This was no mea
n feat and should be, as it was, sufficiently recompe
nsed. It is therefore, a requirement, in the collection
of taxes, in all democratic regimes that it be exercis
ed reasonably and in accordance with the prescribed
procedure. The CTAs decision is affirmed.

#6 YMCA v CIR, GR 124043, Oct 14, 1998
Description:
Facts: In 1980, YMCA, a non-stock, non-profit corpor
ation which conducts activities beneficial to the publ
ic especially young men with its religious, education
al and charitable objectives, leased out portion of its
premises to small shop owners like restaurants and
canteen operators and parking fees were collected fr
om non-members which amounted to P676,829.80 an
d P44,259 respectively. The CIR issued an assessme
nt to YMCA for deficiency income tax, deficiency exp
anded withholding taxes on rentals and professional
fees and deficiency withholding tax on wages. YMCA
protested which was denied by the CIR but its petiti
on for review to the CTA was favored stating that the
leasing of the spaces were reasonably necessary for
the attainment of YMCAs objectives.

Issue: Are welfare, charitable and non-profit corporat
ions subject to income tax?

Decision: No. In order to be exempted, the law itself
must expressly provide for its exemption. YMCAs co
ntention that the income from the property is used fo
r their educational, religious and charitable objective
s and therefore should not be taxed is unmeritorious.
The phrase any of their activities conducted for pro
fit does not qualify the word properties in the NIR
C. This makes the property regardless of how the inc
ome is used be taxable. Because of this, rent income
of the YMCA from its real property is taxable and the
Court is duty-bound to abide strictly by its literal me
aning and to refrain from resorting to any convoluted
attempt at construction.

#7 Davao Gulf Lumber Corp v CIR, GR 117359, July 2
3, 1998
Description:
Facts: Petitioner, a license forest concessionaire, fil
ed a petition for review with the CTA for the denial of
the CIR for its claim for refund representing 25% (Un
der Sec 5 of RA 1435) of the specific taxes actually p
aid on fuels and oils that were used by petitioner in it
s operation amounting to P120,825.11. The CTA gran
t the claim but it was computed based on rates deem
ed paid under RA 1435 amounting to P2,923.15 and n
ot on the higher rates actually paid by petitioner und
er the NIRC. The CA affirmed the decision of the CTA
stating that indeed the claim for refund must be bas
ed on the computation under Sec. 5 of RA 1435 and n
ot under the NIRC.

Issue: Is the petitioner entitled to the refund under th
e NIRC in which it invoked the provision of RA 1435?

Decision: No. The refunds under RA 1435 are for thos
e concessionaires who paid specific taxes on gasolin
e and fuel to a fund for the national highway. Since t
hey do not directly benefit from it, they are given suc
h refunds. The partial refund authorized under Sectio
n 5, RA 1435, is in the nature of a tax exemption, it m
ust be construed strictissimi Juris against the grante
e. Hence, the grant must be expressly granted in the
statute and RA 1435 does not express that it must b
e based on higher rates under the NIRC. Petition is h
ereby denied.



#8 Marcos II vs CA, GR 120880, June 5, 1997
Description:
Facts: Marcos II questioned the actuations of the CI
R in assessing and collecting through the summary r
emedy of Levy on Real Properties, estate and income
tax delinquencies upon the estate and properties of
his father despite the pendency of the proceedings o
n probate of the will of the late president. The CA, aft
er the protest being denied by the CIR, denied the pe
tition of the petitioner stating that the CIRs decision
has become final and unappealable and thus may be
enforced by summary remedy of levying upon the pr
operties of the late president.

Issue: Is the assessment and collection of taxes fro
m the estate of the deceased valid despite pendency
of the probate proceedings?

Decision: Yes. The enforcement of tax laws and the
collection of taxes, is of paramount importance for t
he sustenance of government. Thus, the pendency of
probate proceedings over the estate of the decease
d does not preclude the assessment and collection, t
hrough summary remedies, of estate taxes over the s
ame. These should be paid immediately. There is not
hing in the Tax Code, and in the pertinent remedial la
ws that implies the necessity of the probate or estat
e settlements courts approval of the states claim fo
r estate taxes, before the same can be enforced and
collected.

#9 Reyes v Almanzor, GR L-49839-46, April 26, 1991
Description:
Facts: Petitioner herein had dwelling sites occupied
by tenants which has the monthly rentals not exceed
ing three hundred pesos. PD No. 20 made an absolut
e prohibition to increase monthly rentals of places h
aving rents below P300 and indefinitely suspending t
he Civil Code provision of ejectment of lessees exce
pt those with a definite period. Consequently, respon
dent City Assessor of Manila re-classified and reasse
ssed the value of the subject properties. The revision
, as expected, entailed an increase in the correspond
ing tax rates prompting petitioner to file a Memorand
um of Disagreement with the Board of Tax Assessme
nt Appeals. Petitioner averred that the reassessment
s greatly exceeded the annual income derived from t
heir properties because instead of using the income
approach it used the comparable sales approach. Th
e Central Board of Assessments Appeals, on appeal
by the petitioner, affirmed the decision of the Board.

Issue: Did the method used in assessing the lands re
asonable as to not deprive the petitioner of their pro
perty?

Decision: No. The income approach should have bee
n more reasonable as it assessed the market rental t
han the comparable sales approach which derives it
valuation from the nearby property considering PD N
o. 20. Taxation is said to be equitable and is progres
sive that rates goes up depending on the resources o
f the person affected. The power to tax is an attribu
te of sovereignty but it is not unconfined as there ar
e restrictions. As Justice Holmes pen, thus: The po
wer to tax is not the power to destroy while this Cou
rt sits. So it is in the Philippines. By no strength of t
he imagination can the market value of properties co
vered by P.D. No. 20 be equated with the market valu
e of properties not so covered. The former has natur
ally a much lesser market value in view of the rental
restrictions.

#10 PBCom v CIR, GR 112024, Jan 28, 1999
Facts: PBCom declared losses at the end of the year
s I985-86 and thus be declared no tax payable for the
se years. During the first and second quarter of I985,
it paid income tax returns applying PBComs tax cred
it memos. Also during I985-86 it remitted withholding
creditable taxes for lessees from property rentals. P
etitioner, as per losses declared, claims for refunds o
n the first and second quarters of I985 and the withh
olding taxes from rentals on I985-86. Pending investi
gation of the CIR, petitioner filed a petition for revie
w with the CTA which denied the formers claim on t
he ground that it was filed beyond the two-year regle
mentary period provided by law. Petitioners claim fo
r refund in I986 was likewise denied on the assumpti
on that it will be automatically credited for its tax pa
yment in the succeeding year. The CA affirmed the d
ecision of the CTA in toto. Petitioner contended that
according to RM Circular, it relaxed the two-year regl
ementary period stating that overpaid income taxes
are not covered by such prescriptive period under th
e tax code and the taxpayer can claim refund within
t e n y e a r s u n d e r t h e N C C .

Issue: Did the tax claims for refund prescribed?

Decision: No. The petitioners contention is not warr
anted. The basic principle is that taxes are the lifebl
ood of the nation. With that perspective, claims for r
efund or tax credit should be exercised within time fi
xed by law. The RM Circular is an administrative ruli
ng which created a clear inconsistency with the prov
isions of the NIRC. Nevertheless, such interpretation
is not conclusive and will be ignored if judicially foun
d to be erroneous. The State cannot be stopped by th
e mistakes or errors of its agents or officials. So the i
nterpretation of the circular cannot be given weight
as it contradicts the NIRC.

#11 Phil Guaranty Co., Inc v CIR, GR L-22074, April 3
0, 1965
Description:
Facts: Petitioner, an insurance company, protested a
letter from CIR which assessed the former for withh
olding tax on the ceded reinsurance premiums. The p
etitioner contended that the foreign reinsurers do no
t have offices here in the Philippines. Said premiums
were excluded by the petitioner from its gross incom
e when it files its income tax because its reinsurers
are foreigners not doing business in the Philippines a
nd are therefore not subject to withholding tax. Its pr
otest was denied and appealed to the CTA.

Issue: Are the reinsurance premiums subject to Phili
ppine tax?

Decision: Yes. The foreign insurers' place of busines
s should not be confused with their place of activity
. Business should not be continuity and progression
of transactions
2
while activity may consist of only a
single transaction. An activity may occur outside the
place of business. Section 24 of the Tax Code does
not require a foreign corporation to engage in busine
ss in the Philippines in subjecting its income to tax. I
t suffices that the activity creating the income is per
formed or done in the Philippines. What is controlling
, therefore, is not the place of business but the place
of activity that created an income. Considering that
the reinsurance premiums in question were afforded
protection by the government and the recipient forei
gn reinsurers exercised rights and privileges guaran
teed by our laws, such reinsurance premiums and rei
nsurers should share the burden of maintaining the s
tate.

#12 Philex Mining Corp v CIR, GR No. 125704, August
28, 1998
Description:
Facts: Philex protested the demand for payment of th
e tax liabilities stating that it has pending claims for
VAT input credit/refund for the taxes it paid for the p
ast years plus interest. Therefore, these claims for ta
x credit/refund should be applied against the tax liabi
lities. The BIR replied finding no merit on Philexs po
sition stating that said claims have not yet been dete
rmined with certainty therefore no legal presumption
can take place. The CTA ordered Philex to pay stati
ng that for legal compensation to take place both obl
igations must be liquidated and demandable also tax
es cannot be subject to set-off on compensation sinc
e claim for taxes is not a debt or contract.

Issue: Can taxes be set-off?


Decision: No. We have made the pronouncement that
taxes cannot be subject to compensation for the si
mple reason that the government and the taxpayer a
re not creditors and debtors of each other. There is a
material distinction between a tax and debt. Debts a
re due to the Government in its corporate capacity,
while taxes are due to the Government in its soverei
gn capacity. We find no cogent reason to deviate fro
m the aforementioned distinction. A person cannot r
efuse to pay a tax on the ground that the government
owes him an amount equal to or greater than the tax
being collected.

#13 North Camarines Lumber Co., Inc vs CIR, GR L-1
2353, Sept. 30, 1960
Description:
Facts: Petitioner, a lumber corporation, sold logs to
General Lumber Co. with the agreement that the latt
er would assume payment of the sales tax thereon. T
he CIR interposed no objection to the agreement pro
vided General Lumber Co. filed a bond to cover the s
ales tax liabilities. Upon default of General Lumber, t
he CIR required petitioner to pay the sales tax and in
cidental penalties. The CTA dismissed the case for la
ck of jurisdiction because the case was filed beyond
the 30-day period prescribed by Sec. 11 of RA 1125.


Issue: Was the petition for review filed beyond the re
glementary period required?

Decision: Yes. It was filed a total of 33 days after the
denial of the second request for reconsideration. We
cannot countenance that theory that would make th
e commencement of the statutory 30-day period sole
ly dependent on the will of the taxpayer and place th
e latter in a position to put off indefinitely and at his
convenience the finality of a tax assessment. Such a
n absurd procedure would be detrimental to the inter
est of the Government, for "taxes are the lifeblood of
the government, and their prompt and certain availa
bility an imperious need."

#14 Lutz v Araneta, GR L7859, Dec. 22, 1955
Description:
Facts: Section 2 of CA 567 provided an increase of th
e existing tax on the manufacture of sugar. This was
promulgated due to the threat to the sugar industry o
f its eventual loss of preferential position in the US m
arket and the imposition of export taxes and this will
ultimately insure the continued existence of the ind
ustry notwithstanding its preferential loss in the US
market. Plaintiff seeks to recover the estate taxes p
aid alleging that such tax is unconstitutional and voi
d being levied for the aid and support of the sugar in
dustry exclusively.
Issue: Was the tax levied against the sugar industry
exclusively valid?

Decision: Yes. This Court takes judicial notice that t
he sugar production is a vital industry of our nation.
The tax to be levied should burden the sugar produc
ers themselves can hardly be a ground of complaint;
indeed, it appears rational that the tax be obtained p
recisely from those who are to be benefited from the
expenditure of the funds derived from it. At any rate,
it is inherent in the power to tax that a state be free
to select the subjects of taxation, and it has been re
peatedly held that "inequalities which result from a s
ingling out of one particular class for taxation or exe
mption infringe no constitutional limitation".

#15 Gomez v Palomar, GR L-23645, October 29, 1968
Description:
Facts: This is a petition against the constitutionality
of RA 1635, as amended by RA 2631, which seeks to
help raise funds for the Philippine Tuberculosis Socie
ty by issuing semi-postal stamps stating that it violat
es the equal protection clause of the Constitution as
well as the rule of uniformity and equality of taxation
. Petitioner mailed a letter to Manila from Pampanga
not bearing the special anti-TB stamp as required an
d consequently it was returned to him.

Issue: Is RA 1635, as amended, violative of the Const
itutional provision of equal protection and rule of unif
ormity and equality of taxation?

Decision: No. To begin with, it is settled that the legi
slature 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 gr
eatest freedom in classification. Now, the classifica
tion of mail users is not without any reason. It is bas
ed on ability to pay, let alone the enjoyment of a privi
lege, and on administrative convenience. In the alloc
ation of the tax burden, Congress must have conclud
ed that the contribution to the anti-TB fund can be as
sured by those whose who can afford the use of the
mails.

#16 Punsalan v Municipal Board of Manila, GR L-4817
, May 26, 1954
Description:
Facts: This is a suit to annul City of Manila Ordinanc
e No. 3398 which imposes a municipal occupation ta
x on persons exercising various professions in the Ci
ty and penalizes non-payment of the tax. Plaintiffs co
ntended that the ordinance and the law authorizing it
constitute class legislation, are unjust and oppressi
ve, and authorize what amounts to double taxation. T
he plaintiffs cry of Class Legislation was that whil
e the law authorized the City of Manila to impose the
said tax, it has withheld that authority from other ch
artered cities, not to mention municipalities. On the
ground of double taxation, under the NIRC the said pr
ofessionals are already taxed for occupation tax to p
ractice in the Philippines and yet the ordinance subje
cts the said professionals to occupation tax to practi
ce in Manila.

Issue: Was there class legislation and double taxatio
n?

Decision: None. The case of class legislation the C
ourt has adjudged that it is within the domain of the
political departments and courts would do well not t
o encroach upon it. Moreover, as the seat of the Nati
onal Government, Manila, no doubt, offers a more luc
rative field for the practice of professions, so it is but
fair that professionals in Manila can be made to pay
a higher occupation tax than their brethren in the pro
vinces. In the case of double taxation, it is widely re
cognized that there is nothing inherently obnoxious i
n the requirement that license fees or taxes be exact
ed with respect to the same occupation, calling or a
ctivity by both the state and the political subdivision
s thereof.

SECOND BATCH

Tax Digests:
#1: Tio v VRB, GR L-75697, June 18, 1987
Facts: On April 10, 1986, PD No. 1987 took effect whi
ch created the Videogram Regulatory Board with bro
ad powers to regulated and supervise the videogram
industry. A month after the promulgation of PD 1987,
PD No. 1994 amended the NIRC. Petitioners, Valentin
o Tio and in behalf of other videogram operators, att
acked the legality of Sec. 10 of the said decree impo
sing a tax of 30% on the gross receipts payable to th
e local government. Petitioners contended that said t
ax imposed was harsh, confiscatory, oppressive and/
or unlawful restraint of trade; therefore not for public
purpose because it favors one industry over others.
Issue: Was the tax imposed for public purpose?
Decision: Yes. The public purpose of a tax may legall
y exist even if the motive which impelled the legislat
ure to impose the tax was to favor one industry over
another. Inequities which result from a singling out o
f one particular class for taxation or exemption infrin
ge no constitutional limitation. The tax imposed by t
he decree is not only regulatory but also a revenue m
easure prompting the earnings of Php600M per annu
m of the industry which the government is deprived.
The regulatory purpose is to regulate said industry b
ecause of the rampant film piracy and proliferation of
pornographic video tapes.

#2City of Baguio v De Leon, GR L-24756, Oct. 31, 196
8
Facts: Ordinance No. 99 was passed by the City of B
aguio Council imposing a license fee on any person, f
irm, entity or corporation doing business in the said
city. De Leon was held liable as a real estate dealer
with a property in the Baguio City worth more than P
10,000 but not exceeding P50,000 for P300 from 195
8-1960. Defendant assailed said ordinance for being
excessive, unreasonable and oppressive and being ul
tra vires for lack of statutory authority for the city to
impose such license fee. But was declared valid and
subsisting by the City Court of Baguio and ordered th
e former to pay and hence this appeal.
Issue: Was the ordinance issued an ultra vires?
Decision: No. The source of authority for the challen
ged ordinance is supplied by Republic Act No. 329, a
mending the city charter of Baguio
2
empowering it to
fix the license fee and regulate "businesses, trades
and occupations as may be established or practiced
in the City." The city council of Baguio, therefore, ha
s now the power to tax, to license and to regulate pr
ovided that the subjects affected be one of those inc
luded in the charter. In this sense, the ordinance und
er consideration cannot be considered ultra vires wh
ether its purpose be to levy a tax or impose a license
fee because of the amendment of the statutory provi
sion.

#3 Bagatsing v Ramirez, GR L-41631, Dec. 17, 1976
Facts: On June 12, 1974, Mayor Ramon D. Bagatsing
approved Ordinance No. 7522 regulating the operatio
n of public markets and prescribing fees for the renta
ls of stalls and providing penalties for violation there
of and for other purposes. Private respondent bewail
s that the market stall fees imposed in the disputed
ordinance are diverted to the exclusive private use o
f the Asiatic Integrated Corporation since the collect
ion of said fees are collected by the said corporation.
Issue: Did the collection of the private corporation of
the market stall fees devoid the public purpose of th
e ordinance?
Decision: No. The fees collected do not go direct to t
he private corporation. The Ordinance was made to r
aise revenue for the city and not for the corporation.
So long as the purpose is public, it does not matter w
hether the agency through which the money is dispe
nsed is public or private. The right to tax depends up
on the ultimate use, purpose and object for which th
e fund is raised. It is not dependent on the nature or
character of the person or corporation whose interm
ediate agency is to be used in applying it.

#4 Pascual v Sec. of Public Works and Communicatio
ns, GR L10405, Dec. 29, 1960
Facts: Petitioner Pascual prayed for RA 902, which a
ppropriated funds for the construction, reconstructio
n, repair, extension and improvement of the Pasig fe
eder road, to be declared void ab initio stating that s
uch legislative enactment leads to a promotion of a p
rivate enterprise. The proponent of the said RA was
ex-Sen. Jose Zulueta which was then a senator of th
e Philippines upon the passage of the said law and w
hich said construction will benefit Antonio subdivisio
n owned by the said senator. It is therefore an appro
priation not for public purpose. Zulueta, while he was
senator, however, donated the said property to the
Government of the Philippines making it public prope
rty by his act of liberality.
Issue: Is the appropriation for public purpose?
Decision: No. Inasmuch as the land on which the pro
jected feeder roads were to be constructed belonged
then to respondent Zulueta, the result is that said a
ppropriation sought a private purpose, and hence, wa
s null and void. The donation to the Government, ove
r five (5) months after the approval and effectivity of
said Act, made, according to the petition, for the pur
pose of giving a "semblance of legality", or legalizing
, the appropriation in question, did not cure its afore
mentioned basic defect. Description The land in wh
ich the project was to be constructed belonged to a
private individual who is a public officer resulted in t
he appropriation being for private purpose and hence
null and void.

#5 CIR v BOAC, GR L-65773-74, April 30, 1987
Facts: BOAC is a 100% British Government-owned co
rporation and existing under the UK laws. It maintain
ed a general sales agent in the Philippines Wamer
Barnes and Company, Ltd., and later Qantas Airways
which was responsible for selling BOAC tickets co
vering passengers and cargoes. The CIR assessed B
OAC for deficiency income taxes for said selling of ti
ckets from its sales agency in the Philippines. BOAC
protested but was denied by the CIR. BOAC then file
d an appeal with the CTA and the latter decided in fa
vor of BOAC stating that the proceeds of sales of BO
AC passage tickets in the by its agents do not consti
tute income from Philippine sources "since no servic
e of carriage of passengers or freight was performed
by BOAC within the Philippines" and, therefore, said i
ncome is not subject to Philippine income tax. Issue:
Was the income taxable?
Decision: Yes. The source of an income is the proper
ty, activity or service that produced the income. For
the source of income to be considered as coming fro
m the Philippines, it is sufficient that the income is d
erived from activity within the Philippines. Unquestio
nably, the passage documentations in these cases w
ere sold in the Philippines and the revenue therefrom
was derived from a activity regularly pursued within
the Philippines. And even if the BOAC tickets sold co
vered the "transport of passengers and cargo to and
from foreign cities", it cannot alter the fact that inco
me from the sale of tickets was derived from the Phil
ippines.

#6 Atlas Consolidated Mining v CIR, GR Nos. 141104
& 148763, June 8, 2007
Facts: Petitioner, a mining company, sells its outputs
to Philippine Smelting and Refining Corporation (PAS
AR), Philippine Phosphate, Inc. (PHILPHOS) and Expo
rt Processing Zone Authority (EPZA). Petitioner filed
a claim for refund/credit of its input VAT on its purch
ases of capital goods and on its zero-rated sales with
the BIR. Petitioner contended that it is a zero-rated
VAT person which means that its sales to those exp
ort processing zones entitles it for such credit/refund
on its input VAT purchases. The BIR, CTA and CA de
nied the claim of the petitioner hence this appeal.
Issue: Is the petitioner entitled for refund/credit for V
AT payment?
Decision: Yes. Such tax treatment of goods brought i
nto the export processing zones is only consistent wi
th the Destination Principle and Cross Border Doctrin
e to which the Philippine VAT system adheres. Accor
ding to the Destination Principle,
22
goods and service
s are taxed only in the country where these are cons
umed. In connection with the said principle, the Cros
s Border Doctrine
23
mandates that no VAT shall be im
posed to form part of the cost of the goods destined f
or consumption outside the territorial border of the t
axing authority. Hence, actual export of goods and s
ervices from the Philippines to a foreign country mus
t be free of VAT, while those destined for use or cons
umption within the Philippines shall be imposed with
10% VAT.
24
Export processing zones
25
are to be mana
ged as a separate customs territory from the rest of t
he Philippines and, thus, for tax purposes, are effecti
vely considered as foreign territory. For this reason,
sales by persons from the Philippine customs territor
y to those inside the export processing zones are alr
eady taxed as exports. The credit/refund of input VA
T should only apply to EPZA-registered enterprises a
nd not to PASAR and PHILPHOS which are BOI-regist
ered enterprises.

#7 Board of Assessment Appeals, Province of Laguna
v CTA, GR L-18125, May 31, 1963
Facts: Petitioner Provincial Assessor of Laguna asse
ssed for purposes of real estate taxes, the property o
f the NWSA, a public corporation created by RA 1383
and owned by the Government of the Philippines, in
Cabuyao-Sta. Rosa-Bian. NWSA contended that und
er the statute that created it, it is exempted from the
payment of real estate taxes in view of the nature a
nd kind of said property and its functions and activiti
es. Respondent, however, claimed that although said
properties belong to the Republic of the Philippines,
the same holds it, not in its governmental, political o
r sovereign capacity, but in a private, proprietary or
patrimonial character, which, allegedly, is not covere
d by the exemption. The CTA reversed the decision o
f the Board and hence this appeal.
Issue: Is the property owned by the public corporatio
n subject to real estate taxes?
Decision: No. Taxes are financial burdens imposed fo
r the purpose of raising revenues with which to defra
y the cost of the operation of the Government, and a
tax on property of the Government, whether national
or local, would merely have the effect of taking mone
y from one pocket to put it in another pocket. What i
s more, it would tend to defeat it, on account of the p
aper work, time and consequently, expenses it would
entail.

#8 Pepsi-Cola Bottling v City of Butuan, GR L-22814,
August 28, 1968
Facts: Plaintiff, a domestic corporation with place of
business in Quezon City, seeks to recover the sums p
aid by it to the City of Butuan under Municipal Ordina
nce No. 110, as amended, which the former assails a
s null and void and therefore prevent its enforcement
because it constituted an undue delegation of legisl
ative power to the latter for imposition of taxes on th
e formers products.
Issue: Was the Ordinance issued constituted an undu
e delegation of legislative power of taxation?
Decision: No. The general principle against delegatio
n of legislative powers, in consequence of the theory
of separation of powers is subject to one well-establ
ished exception, namely: legislative powers may be
delegated to local governments.

#9 Pepsi-Cola Bottling v Municipality of Tanauan, Ley
te, GR L-31156, February 27, 1976
Facts: Petitioner filed a complaint to declare Ordinan
ce Nos. 23 and 27, denominated as municipal produ
ction tax, as unconstitutional and therefore null and
void for being an undue delegation of taxing authorit
y to the Municipality of Tanauan, Leyte. Ordinance N
o. 23 levies and collects from soft drinks producers a
nd manufacturers a tai of 1/6
th
of a centavo for every
bottle of soft drink corked while Ordinance No. 27 le
vies and collects on soft drinks produced or manufac
tured within the territorial jurisdiction of this municip
ality a tax of P0.01 on each gallon of volume capacit
y.
Issue: Did the ordinances constitute an undue delega
tion of taxing power?
Decision: It is a power that is purely legislative and
which the central legislative body cannot delegate ei
ther to the executive or judicial department of the go
vernment without infringing upon the theory of separ
ation of powers. The exception to this non-delegatio
n principle, however, lies in the case of municipal co
rporations, to which, said theory does not apply. Legi
slative powers may be delegated to local governmen
ts in respect of matters of local concern.

#10 Osmea v Orbos, GR 99886, March 31, 1993
Facts: PD No. 1956, as amended, created a Special A
ccount in the General Fund designated as the Oil Pri
ce Stabilization Fund (OPSF) for reimbursement to oil
companies for possible cost underrecovery incurred
as a result of the reduction of domestic prices of pet
roleum products, the amount of the recovery being le
ft for determination of the Ministry of Finance. The p
etition alleges that the delegation of legislative auth
ority to ERB violated Sec. 28 (2) Art. VI inasmuch as
the delegation relates to the exercise of the power o
f taxation, the limits, limitations and restrictions mus
t be quantitative, that is, the law must not only speci
fy how to tax, who shall be taxed and what the tax is
for, but also impose a specific limit on how much to
tax. It thus appears that the challenge posed by the
petitioner is premised primarily on the view that the
powers granted to the ERB under P.D. 1956, as amen
ded, partake of the nature of the taxation power of th
e State.
Issue: Was there illegality in the delegation of author
ity?
Decision: None. It seems clear that while the funds c
ollected may be referred to as taxes; they are exacte
d in the exercise of the police power of the State. Th
e Court finds that the provision conferring the author
ity upon the ERB to impose additional amounts on pe
troleum products provides a sufficient standard by w
hich the authority must be exercised. Although the p
rovision authorizing the ERB to impose additional am
ounts could be construed to refer to the power of tax
ation, it cannot be overlooked that the overriding con
sideration is to enable the delegate to act with expe
diency in carrying out the objectives of the law whic
h are embraced by the police power of the State.

#11 Villegas v Hui Chiong Tsai Pao Ho, GR L-29646,
November 10, 1978
Facts: Respondent Hui Chiong Tsai Pao Ho was empl
oyed in Manila and filed a petition with the CFI-Manil
a to declare Ordinance 6537 null and void because it
is discriminatory and unconstitutional violating the f
undamental principle of delegation of legislative pow
ers. Said ordinance prohibits aliens from being emplo
yed or to engage or participate in any position or bus
iness whether permanent, temporary, or casual with
out first securing an employment permit from the Ma
yor of Manila. The CFI-Manila rendered judgment decl
aring the said ordinance null and void.
Issue: Is the ordinance void in view of the illegal dele
gation of legislative power?
Decision: Yes. Ordinance No. 6537 does not lay down
any criterion or standard to guide the Mayor in the e
xercise of his discretion. It has been held that where
an ordinance of a municipality fails to state any poli
cy or to set up any standard to guide or limit the may
or's action, expresses no purpose to be attained by r
equiring a permit, enumerates no conditions for its gr
ant or refusal, and entirely lacks standard, thus conf
erring upon the Mayor arbitrary and unrestricted pow
er to grant or deny the issuance of building permits,
such ordinance is invalid, being an undefined and unl
imited delegation of power to allow or prevent an act
ivity per se lawful. Description: The ordinance that d
oes not have standard for the granting and refusal to
issue permits but rather gives the Mayor the full disc
retion is invalid being an undefined and unlimited del
egation of power.

#12 ESSO Standard Eastern v Acting Commissioner o
f Customs, GR L-21841, Oct. 28, 1966
Facts: Petitioner, engaged in processing gasoline an
d manufacturing lubricating oil, grease and tin contai
ners, claimed for refund for special import tax on pu
mp parts imported by it. Petitioners ground was that
imported articles consist of equipment and spare pa
rts for its own exclusive use therefore were exempte
d from special import tax as per Sec. 6, RA 1394. The
Collector of Customs, Respondent Acting Commissio
ner of Customs and the CTA decided to reject said cl
aim by the petitioner.
Issue: Were the imported articles subject to such sp
ecial import tax?
Decision: Yes. What was exempted in Sec. 6 RA 1394
were inter alia: machinery, equipment, accessories,
and spare parts, for the use of industries, miners, mi
ning enterprises, planters and farmers. Petitioner o
wns gasoline stations with pumps, which are leased
to and operated by gasoline dealers. It sells gasoline
to these dealers. These pump parts, in other words,
are used in the sale at retail of gasoline not by pet
itioner but by lessees of gasoline stations. In this fac
tual environment, it is quite evident that the pump pa
rts are not used in petitioner's industry of processing
gasoline, or manufacturing lubricating oil, grease an
d tin containers. Exemption from taxation is not favo
red,

and that exemptions in tax statutes are never pr
esumed.


THIRD BATCH

Tax Digests:

#1 Ungab vs Cusi, GR. L-41919-24, May 30, 1980
Facts: BIR examined the income tax returns filed by
herein petitioner and discovered that the latter failed
to report his income derived from sales of banana sa
plings. As a result, BIR informed petitioner of the am
ount due to the former in the amount of P104, 980.81
, representing income, business tax and forest charg
es. Petitioner wrote a protest against the assessmen
t of the BIR claiming he was only a dealer or agent o
n commission basis in the banana sapling business a
nd that his income was accurately reported. Unconvi
nced, BIR filed a fraud report and charged petitioner
for tax evasion and recommended for his prosecution
after due investigation of the BIR Division Fraud U
nit. The State Prosecutor found probable cause after
conducting a preliminary investigation and filed the c
ase against petitioner with the CFI-Davao. Petitioner
filed a motion contending the court has no jurisdictio
n against the criminal action pending protest against
the assessment. The CFI-Davao, however, denied th
e motion hence this petition.
Issue: Can the court take cognizance of the criminal
action (tax evasion) against petitioner pending prote
st against the assessment made by the BIR?
Decision: Yes. What are resolved in tax evasion case
s are violations of the NIRC which is within the cogni
zance of the CFIs. There is no requirement for the pr
ecise computation and assessment of the tax before
there can be a criminal prosecution under the NIRC.
A crime is complete when the violator has knowingly
and willfully filed a fraudulent return with intent to e
vade and defeat the tax. The perpetration of the crim
e is grounded upon knowledge on the part of the tax
payer that he has made an inaccurate return, and the
government's failure to discover the error and promp
tly to assess has no connections with the commissio
n of the crime. The petition is hereby dismissed.

#2 CIR vs CA, GR No. 119322, June 4, 1996
Facts: Fortune Tobacco, respondent, received a lette
r from CIR an assessment in the amount of P7,685,94
2,221.66 representing the total amount of deficiency
income, ad valorem and VAT for the year 1992 with
a request to pay such within thirty (30) days upon re
ceipt thereof. Respondent moved to protest of the as
sessments. CIR filed a complaint with the DOJ again
st respondent for alleged fraudulent tax evasion for s
upposed non-payment by the latter of the correct am
ount of the taxes for the said year. The fraudulent sc
heme allegedly adopted by respondents was to make
fictitious sales to non-existing corporate individuals
and persons only for the purpose of lowering the who
lesale prices which are required for determination of
the correct taxes. Respondent filed a motion to dismi
ss on the grounds that the CTA still have to determin
e respondents tax liability for 1992 for without any t
ax liability, there can be no tax evasion.
Issue: Is the determination of the tax liability still pe
nding bars the criminal prosecution?
Decision: Yes. Before Fortune could be prosecuted fo
r tax evasion, the fact of the deficiency should first b
e established. In plain words, before one is prosecut
ed for willful attempt to evade or defeat any tax unde
r Sections 253 and 255 of the Tax code, the fact that
a tax is due must first be proved. In Fortune's situati
on that the registered wholesale price of the goods,
approved by the BIR, is presumed to be the actual w
holesale price, therefore, not fraudulent and unless a
nd until the BIR has made a final determination of wh
at is supposed to be the correct taxes, the taxpayer
should not be placed in the crucible of criminal prose
cution. Fraud cannot be presumed and if there was it
must have been with the connivance of certain BIR
officials.

#3 CIR vs. PASCOR, GR 128315, June 29, 1999
Facts: Pascor Realty Development Corporation (PRD
C)s books and accounting records were examined b
y the CIR which resulted in a recommendation for iss
uance of an assessment for deficiencies in declarati
on of taxes. The CIR filed a criminal case with the D
OJ for tax evasion against PRDC but the latter disput
ed the tax assessment and tax liabilities. PRDC elev
ated the case to the CTA, which was disputed by CIR
on the grounds of lack of jurisdiction, decided in fav
or of PRDC stating that it can take cognizance over t
he case because the filing of the criminal complaint
amounts to an assessment which is properly appeala
ble to said court. PRDC maintains as well that the fili
ng of the criminal charge must be preceded by an as
sessment.
Issue: Can a criminal complaint for tax evasion be co
nstrued as an assessment for the CTA to take cogniz
ance of the case? And is an assessment necessary b
efore a criminal charge for tax evasion is instituted?
Decision: On the first issue, the answer is no. An ass
essment is deemed made only when the collector of i
nternal revenue releases, mails or sends such notice
to the taxpayer with computations and demand for p
ayment within a specified period. In the case, the affi
davit only contained a computation of PRDCs tax lia
bility and it was not even addressed to the taxpayers
but to the Secretary of Justice. The letter addressed
to the Secretary of Justice meant only that CIRs int
ent was to file a criminal complaint for tax evasion a
nd not to issue an assessment. On the second issue,
assessment is not necessary. The criminal charge is
filed directly with the DOJ. Thereafter, the taxpayer i
s notified that a criminal case had been filed against
him, not that the commissioner has issued an assess
ment. It must be stressed that a criminal complaint i
s instituted not to demand payment, but to penalize t
he taxpayer for violation of the Tax Code.

#4 Maceda vs. Macaraig, GR 88291, June 8, 1993
Facts: NAPOCOR (NPC) was granted some indirect a
nd direct tax exemptions by the legislature. A tax cr
edit memo was issued by the BIR in favor of the NPC
which were allegedly for erroneously paid specific
and ad valorem taxes during the period of October 19
84-April 1985. Petitioner asks to declare said tax me
mo illegal as the NPC did not have indirect tax exem
ptions with the enactment of PD. 938. Petitioner cont
ends that PD 938, repealed the indirect tax exemptio
n of NPC as the phrase all forms of taxes, etc., in it
s section 10, amending Section 13 of RA 6395, as am
ended by PD 380, does not expressly include indirec
t taxes.
Issue: Does petitioner have the right to sue as a taxp
ayer in the case at bar where the issue is on indirect
taxes in which NPC has been exempted?
Decision: Yes. As a taxpayer, he has the right to sue
where the . It is crystal clear, therefore, that NPC ha
d been granted tax exemption privileges for both dire
ct and indirect taxes under P.D. No. 938.

#5 Gonzales vs Marcos, GR L-31685, July 31, 1975
Facts: Ramon Gonzales filed a petition where the iss
ue was centered on the validity of the creation in Ex
ecutive Order No. 30 of a trust for the benefit of the F
ilipino people under the name and style of the Cultur
al Center of the Philippines with Board of Trustees to
be appointed by the President. The Center having as
its estate the real and personal property vested in it
as well as donations received financial commitments
that could thereafter be collected, and gifts that ma
y be forthcoming in the future. It was likewise allege
d that the Board of Trustees did accept donations fro
m the private sector and did secure from the Chemic
al Bank of New York a loan of $5 million guaranteed
by the National Investment & Development Corporati
on as well as $3.5 million received from President Jo
hnson of the United States in the concept of war da
mage funds, all intended for the construction of the
Cultural Center building estimated to cost P48 millio
n. Respondents contended that petitioner did not have legal p
ersonality to sue because the funds, not one centavo, were not
raised by taxation.
Issue: Does the petitioner have legal personality to s
ue as a taxpayer?
Decision: None. One valid reason is that the funding
was not raised from taxation but through donations.
There is that want of the requisite which is the pecu
niary interest or monetary interest as a taxpayer to c
ontest the validity of the Executive Order. It is only t
o make a clear that petitioner, judged by orthodox le
gal learning, and has not satisfied the elemental requ
isite for a taxpayers suit.

#6 Abaya vs. Ebdane, GR 167919, February 14, 2007
Facts: The Government of Japan and the Governmen
t of the Philippines have reached an understanding c
oncerning Japanese loans to be extended to the Phili
ppines for economic stabilization and development e
fforts mainly for road projects. After such agreement,
bidding for the projects began and subsequently Chi
na Road & Bridge Corporation won in the process. Pe
titioners seek to nullify the DPWH Resolution which r
ecommended the award to China Road & Bridge Corp
oration and also the contract entered into by and bet
ween the same entities because the ceiling made by
ABC (Approved Budget for the Contract) was only ap
proximately Php 700 Million but the said corporation
s bid was Php 900 Million which is clearly overpriced
by Php 200 Million as per RA 9184. DPWH filed to dis
miss the petition on the ground that the petitioners h
ave no locus standi and establish the contracts enter
ed into by DPWH and China is valid for they are not e
ven a party to the contract.
Issue: Does the petitioners have to be a party to the
contract in the present case to acquire locus standi t
o contest the validity of the Resolution?
Decision: Yes. As taxpayers, they possess locus stan
di over the case. The prevailing doctrine in taxpayer
s suits is to allow taxpayers to question contracts en
tered into by the national government or government
- owned or controlled corporations allegedly in contr
avention of law. A taxpayer is allowed to sue where t
here is a claim that public funds are illegally disburs
ed, or that public money is being deflected to any im
proper purpose, or that there is wastage of public fun
ds through the enforcement of an invalid or unconstit
utional law. Significantly, a taxpayer need not be a p
arty to the contract to challenge its validity. The mer
e fact that the contract will be funded by taxes gives
the taxpayer a pecuniary interest over it.

FOURTH BATCH

TAX DIGESTS:
#1 CIR VS CA, GR. 104151, MARCH 10, 1995
Facts: The CIR, acting on the basis of the report of th
e examiners of the BIR, caused the service of two as
sessment notices and demand for payment for defici
ency ad valorem percentage and fixed taxes, and ad
valorem taxes and business taxes respectively on ye
ars 1975 and 1976 against ACMDC (Atlas). Atlas prot
ested but was denied which caused the latter to elev
ate the case to the CTA which rendered a partly favo
rable judgment except on the lease of its personal pr
operty (such as its plane, motor boat and dump truck
) which the CTA upheld the collection of the assessm
ent. The ACMDC contended that said properties did n
ot realize any profit from the lease since its income c
overed only the costs of its operation. The CA, when
brought by the parties to its jurisdiction, affirmed the
CTAs decision with that of the lease of personal pro
perty and dismissing the petition of the CIR hence th
e latter filed this petition before us.
Issue: Is the judgment for collection of tax on the lea
se of personal properties of ACMDC proper?
Decision: Yes. ACMDC cannot claim that the leasing
out of its personal properties was merely an isolated
transaction because the books showed several paym
ents made for its use. Tax statutes are to receive a r
easonable construction with a view to carrying out t
heir purpose and intent. They should not be construe
d as to permit the taxpayer to easily evade the paym
ent of tax. Assessments are prima facie presumed co
rrect and made in good faith. It is the taxpayer, not t
he BIR, who has the duty to prove otherwise. All pres
umptions are in favor of tax assessments.

#2 Republic of the Philippines vs Nielson, GR L-38540
Facts: CIR assessed private respondent Nielson & Co
mpany Inc. and issued a demand letter for deficiency
taxes for the years 1949-1952 totaling Php 14,449. S
aid demand was reiterated several times and Nielson
did not contest the assessments in the CTA. On the
theory that the said assessments had become final a
nd executory, petitioner filed a complaint for collecti
on of the said amount. Nielson contended that they d
id not receive said assessment sent on 16
th
July 195
5. According to petitioner, if service is made by ordi
nary mail, unless the actual date of receipt is shown,
service is deemed complete and effective upon the
expiration of five (5) days after mailing. As the letter
of demand dated 16 July 1955 was actually mailed to
private respondent, there arises the presumption th
at the letter was received by private respondent in th
e absence of evidence to the contrary.
Issue: Was the presumption that the private respond
ent received the demand letter correct?
Decision: Yes. However, even though the petitioner i
s correct that a mailed letter is deemed received by t
he addressee in the ordinary course of mail, still it is
merely a disputable presumption subject to controve
rsy and a direct denial of the receipt thereof shifts th
e burden upon the party favored by the presumption t
o prove that the mailed letter was indeed received b
y the addressee. In the case, even though there is a
direct denial of the demand letter on 16 July 1955, th
e other demand letter sent was admitted to have bee
n received by Nielson therefore, without appeal, mak
es the assessment in question final, executory and d
emandable.

#3 Collector of Internal Revenue vs Heirs of Codiera
Facts: On November 23, 1948, the Collector of Intern
al Revenue sent a warrant of distraint and levy again
st the properties of Restituto Codiera for collection
of deficiency specific tax on 38 boxes of playing card
s (poker) of 144 packs to a box but it could not be eff
ected in view of the attachment of the said propertie
s of the CFI-Manila of another case. On March 7, 195
5, after seven (7) years, the Collector of Internal Rev
enue issued a warrant of distraint and levy command
ing the City Treasurer of Cebu City to distrain the go
ods, chattels, or effects and other personal property
of whatever character, and levy upon the real proper
ty and interest in or rights to real property of the est
ate of the deceased. The Heirs of the deceased filed
the action with the CTA barring the government to c
ollect said deficiency on the ground of prescription t
herefore praying to declare null and void, and of no le
gal force and effect the warrant of distraint and levy
which the respondent issued on March 7, 1955.
Issue: Is the government barred from collecting the d
eficiency specific tax?
Decision: No. There was a valid reason for non-distra
int of the property which was due to the attachment
of the CFI-Manila in another case. The said case was
decided only on November 1, 1951 less that to Marc
h 7, 1955 therefore there was only an aggregate of th
ree (3) years and sixty (60) days which is less than th
e five (5) year limitation. The attachment merely dep
rives the Collector of Internal Revenue the power to
divest the Court of its jurisdiction over said property
but it does not impair such rights as the Government
may have for the collection of taxes.

#4 Cabrera vs Catigbac, GR 502
Facts: The Provincial Treasurer of Tayabas issued a
notice for the sale at public auction of the real prope
rties of Nemesio Cabrera forfeited for tax delinquenc
y on December 15, 1940. The letter sent to Nemesio
Cabrera was returned marked Unclaimed for the lat
ter was already dead in 1935. The land was actually
sold to Catigbac in the said public auction which wa
s finalized in May 1942. Basilia Cabrera filed a compl
aint with the CFI-Tayabas against Provincial Treasur
er and Catigbac attacking the validity of the sale on t
he grounds that she was not notified, even though th
e property had remained in the assessment book in t
he name of Nemesio Cabrera, because she became t
he registered owner of the land after the death of Ne
mesio evidenced by a Torrens Title issued by the Re
gister of Deeds of Tayabas.
ISSUE: Is there a need for new notices if the land wa
s not sold on the date specified in the previous notic
e?
Decision: Yes. Under the law, even if the notice state
that the sale would take place on a specified date a
nd every day thereafter, it is a general and indefinite
notice. To protect the taxpayers rights, the taxpayer
should at least be appraised of the exact date of the
proceeding by which he would lose his property. Bes
ides, Government should have been notified that the
new registered owner was Basilia and not Nemesio b
ecause of its issuance of the Torrens Title in favor of
Basilia. Basilia may be criticized for failure to have c
hanged the name in the assessment record. The circ
umstance, nevertheless, cannot supplant the absenc
e of notice.

#5 Mambulao vs Republic of the Philippines, GR L-37
061
Facts: BIR conducted an examination of the books of
accounts of herein petitioner Mambulao for the purp
ose of determining said taxpayers forest charges an
d percentage tax liabilities. The petitioner requested
for reinvestigation. The CIR sent a letter giving petit
ioner twenty (20) days from receipt to submit the res
ults of its verification of payments. For failure to com
ply and failure to pay its tax liability despite demand
s, CIR filed a complaint for collection from CFI-Manil
a. The CFI-Manila and Court of Appeals decided agai
nst Mambulao ordering it to pay the tax liability. Peti
tioner argued that the collection is barred by the stat
ute of limitations under Sections 332 of the NIRC. As
stated, the collection should be made within the five
(5) year period. From 1949 (date when the Bureau of
Forestry assessed and demand payment as forestry
charges and surcharges) up to 1961 (date of filing of
complaint), it is already more than five years.
Issue: Was the collection barred by statute of limitati
ons?
Decision: No. The petitioners argument lacks merit.
The counting of the period is from the letter of dema
nd by the CIR dated August 1958 and not the demand
letter of the Bureau of Forestry date January 1949. T
his must be so because forest charges are internal r
evenue taxes and the BIR has the sole power and dut
y to collect them.

#6 Hermanos vs CIR, GR
Facts: Fernandez Hermanos, Inc., a domestic invest
ment company, was assessed by the CIR for alleged
deficiency income taxes for the periods of 1950 to 19
54 and for the year 1957. The contention of the petiti
oner is that the CIRs action to recover has already p
rescribed for failure on its part to file a complaint for
collection against petitioner in an appropriate civil a
ction. When elevated to the tax court, the latter deci
ded partly in favor of the petitioner. Both parties app
ealed to this Court.
Issue: Did the governments right to collect the defici
ency income taxes in question prescribed?
Decision: No. A judicial action for the collection of a
tax is begun by the filing of a complaint with the pro
per court of first instance, or where the assessment i
s appealed to the Court of Tax Appeals, by filing an a
nswer to the taxpayer's petition for review wherein p
ayment of the tax is prayed for. In the present case, r
egardless of whether the assessments were made on
February 24 and 27, 1956, as claimed by the Commis
sioner, or on December 27, 1955 as claimed by the ta
xpayer, the government's right to collect the taxes d
ue has clearly not prescribed, as the taxpayer's appe
al or petition for review was filed with the Tax Court
on May 4, 1960, with the Commissioner filing on May
20, 1960 his Answer with a prayer for payment of the
taxes due, long before the expiration of the five-year
period to effect collection by judicial action counted
from the date of assessment.

#7 Republic of the Philippines vs Araneta, GR L-1414
2
Facts:
Issue:
Decision:

#8 Marcos II vs CA, GR 120880
Facts: The CIR assessed and collected through the s
ummary remedy of Levy on Real Properties, estate a
nd income tax delinquencies upon the estate and pro
perties of petitioners father, despite the pendency of
the proceedings on probate of the will of the late pre
sident. When the case was elevated to the CA, it rule
d that the assessments upon the petitioner and the e
state of the deceased President Marcos have already
become final and unappealable and can be enforced
by summary remedy of levying upon the properties. P
etitioner averred that said remedy is precluded since
the properties are in custodia legis of the probate co
urt to the exclusion of all other courts.
Issue: Was the summary remedy of levying for tax de
ficiencies proper even when the probate proceeding i
s pending?
Decision: Yes. It is discernible that the approval of th
e court, sitting in probate, or as a settlement tribunal
over the deceased is not a mandatory requirement i
n the collection of estate taxes. There is nothing in t
he Tax Code, and in the pertinent remedial laws that
implies the necessity of the probate or estate settle
ment court's approval of the state's claim for estate
taxes, before the same can be enforced and collecte
d. On the contrary, under Section 87 of the NIRC, it is
the probate or settlement court which is bidden not
to authorize the executor or judicial administrator of
the decedent's estate to deliver any distributive shar
e to any party interested in the estate, unless it is sh
own a Certification by the Commissioner of Internal
Revenue that the estate taxes have been paid.

#9 Republic of the Philippines vs Hizon, GR 130430
Facts: In July 1986, the BIR issued an assessment to
Hizon for deficiency of income tax and petitioner, no
t having contested the same, was served warrants of
distraint and levy to collect the tax deficiency. How
ever, for reasons unknown, it did not proceed to disp
ose of the attached properties. On November 1992, a
fter more than three years, Hizon wrote a request to
the BIR for reconsideration of tax deficiency assess
ment but said request was denied and BIR filed a cas
e against respondent Hizon. Hizon moved to dismiss
the case on the ground of prescription and the trial c
ourt granted the same. Petitioner contended that the
request for reinvestigation of Hizons tax deficiency
assessment on November 1992 effectively suspende
d the running of the period of prescription such that t
he government could still file a case for tax collectio
n.
Issue: Was the collection barred by statute of limitati
on?
Decision: Yes. The contention of the petitioner has n
o merit. The notice of assessment was issued by peti
tioner on July 18, 1986 and the reconsideration of re
spondent was only on November 3, 1992. Her request
was nonetheless filed late since she made it more t
han 30 days thereafter. Her request for reconsiderati
on did not suspend the running of the prescriptive pe
riod. When the warrants of distraint and levy were se
rved on respondent on January 12, 1989 and then wh
en respondent made her request for reinvestigation o
f the tax deficiency assessment on November 3, 199
2, the three-year prescriptive period must have com
menced running again sometime after the service of
the warrants of distraint and levy. Petitioner, howeve
r, does not state when or why this took place and, in
deed, there appears to be no reason for such.

#10 CIR vs Villa, GR L-23988
Facts: The Villa spouses filed a joint income tax retu
rns for the years 1951-1956. The BIR issued assessm
ents for deficiency of income tax for the said years.
Without contesting the said assessments in the BIR,
they filed a petition for review in the CTA. The CTA t
ook cognizance and it rendered favorable judgment t
o the spouses. The CIR appealed to the SC questioni
ng jurisdiction of the CTA.
Issue: In the case at bar, is the CTA conferred with j
urisdiction to hear and decide the case?
Decision: None. The word decision in the RA 1125
meant decision of the CIR on the protest of the taxpa
yer against the assessment. Definitely, said word do
es not signify the assessment itself. Since the taxpa
yer appealed the assessment of the CIR to the CTA, t
he appeal was premature and the CTA has no jurisdi
ction to entertain said appeal. For, as stated, the juri
sdiction of the CTA is to review by appeal decisions
of the Internal Revenue on disputed assessments an
d not on the assessments itself.