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La Carlota Sugar Central v.

Jimenez
GR L-12436, 31 May 1961 (2 SCRA 295)

Facts: Sometime in September, 1955 La Carlota Sugar Central, which was under the administration of Elizalde, imported 500
short tons of ammonium sulphate and 350 short tons of ammonium phosphate. When the fertilizers arrived in the Philippines,
the Central Bank imposed 17% exchange tax from the Central in accordance with the provisions of Republic Act 601. On 18
November 1955 the Central filed, through the Hongkong & Shanghai Banking Corporation, a petition for the refund of the
P20,872.09paid (the 17% tax), claiming that it had imported the fertilizers mentioned heretofore upon request and for the
exclusive use of 5 haciendas owned and managed by Elizalde, and therefore the importation was exempt from the 17%
exchange tax in accordance with Section 2, RA 601, as amended by RA 1375.On 2 July 1956, the Auditor of the Central Bank
denied the petition. The Central requested the Auditor to reconsider his ruling, but after a re-examination of all pertinent
papers the reconsideration was denied. The Central then appealed to the Auditor General of the Philippines. On 18 January
1957, the Auditor General affirmed the ruling of the Auditor of the Central Bank upon the ground that the importation of the
fertilizers does not fall within the scope of the exempting provisions of Section 2 of RA 601, as amended by RA 1375; and thus
affirming the decision of the Auditor, Central Bank of the Philippines. The Central and Elizalde filed the petition for review in
the Supreme Court.
Issue: Whether upon the importation of the fertilizers are covered by the exemption (provided by Section 1 and 2 of Republic
Act No. 601, as amended by Republic Acts 1175, 1197 and 1375).
Held: The law is, therefore, clear that imported fertilizers are exempt from the payment of the 17%tax only if the same
were imported by planters or farmers directly or through their cooperatives. The exemption covers exclusively fertilizers
imported by planters or farmers directly or through their cooperatives. The word directly has been interpreted to mean
without anything intervening. Consequently, an importation of fertilizers made by a farmer or planter through an
agent, other than his cooperative, is not imported directly as required by the exemption. When the issue is whether or not the
exemption from a tax imposed by law is applicable, the rule is that the exempting provision is to be construed liberally in favor
of the taxing authority and strictly against exemption from tax liability, the result being that statutory provisions for the refund
of taxes are strictly construed in favor of the State and against the taxpayer. Exempting from the 17% tax all fertilizers
imported by planters or farmers through any agent other than their cooperatives, this would be rendering useless the only
exception expressly established in the case of fertilizers imported by planters or farmers through their cooperatives
COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALS
G.R. No. 115349 April 18, 1997
Facts:
ADMU Institute of Philippine Culture is engaged in social science studies of Philippine society and culture. Occasionally, it
accepts sponsorships for its research activities from international organizations, private foundations and government agencies.
On July 1983, CIR sent a demand letter assessing the sum of P174,043.97 for alleged deficiency contractors tax. Accdg to CIR,
ADMU falls under the purview of independent contractor pursuant to Sec 205 of Tax Code and is also subject to 3%
contractors tax under Sec 205 of the same code. (Independent Contractor means any person whose activity consists
essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the
exercise or use of the physical or mental faculties of such contractors or their employees.)
Issue:
according to petitioner, Ateneo has the burden of proof to show its exemption from the coverage of the law.
We disagree. Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without first
applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously both illogical and impractical
to determine who are exempted without first determining who are covered by the aforesaid provision. The Commissioner
should have determined first if private respondent was covered by Section 205, applying the rule of strict interpretation of
laws imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom. The Court
takes this occasion to reiterate the hornbook doctrine in the interpretation of tax laws that (a) statute will not be construed as
imposing a tax unless it does so clearly, expressly, and unambiguously. x x x (A) tax cannot be imposed without clear and
express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes
applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by
implication.[8] Parenthetically, in answering the question of who is subject to tax statutes, it is basic that in case of doubt,
such statutes are to be construed most strongly against the government and in favor of the subjects or citizens because
burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import. [9]

To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be
engaged in the business of selling its services. Hence, to impose the three percent contractors tax on Ateneos Institute of
Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit
of an independent business. And it is only after private respondent has been found clearly to be subject to the provisions of
Sec. 205 that the question of exemption therefrom would arise. Only after such coverage is shown does the rule of
construction -- that tax exemptions are to be strictly construed against the taxpayer -- come into play, contrary to petitioners
position. This is the main line of reasoning of the Court of Tax Appeals in its decision, [10] which was affirmed by the CA.

Mactan Cebu (MCIAA) vs. Marcos


GR 120082 September 11, 1996 261 SCRA 667
FACTS:
Mactan Cebu International Airport Authority (MCIAA) was created to principally undertake to economical, efficient and
effective control, management and supervision of the Mactan International Airport and such other airports as may be
established in the province of Cebu Section 14 of its charter excempts the Authority from payment of realty taxes but in
1994, the City Treasurer demanded payment for realty taxes on several parcels of land belonging to the other. MCIAA filed a
petition in RTC contending that, by nature of its powers and functions, it has the same footing of an agency or instrumentality
of the national government. The RTC dismissed the petition based on Section 193 & 234 of the local Government Code or R.A.
7160. Thus this petition.
ISSUE:
Whether or not the MCIAA is excempted from realty taxes?
RULING:
With the repealing clause of RA 7160 the tax exemption provided. All general and special in the charter of the MCIAA has
been expressly repeated. It state laws, acts, City Charters, decrees, executive orders, proclamations and administrative
regulations, or part of parts thereof which are inconsistent with any of the provisions of the Code are hereby repeated or
modified accordingly. Therefore the SC affirmed the decision and order of the RTC and herein petitioner has to pay the
assessed realty tax of its properties effective January 1, 1992 up to the present.

Serfino v. CA GR L-40858, 15 September 1987


Facts: On 25 August 1937, a parcel of land was patented in the name of Pacifico Casamayor (OCT1839). On 14 December
1945, he sold said land in favor of Nemesia D. Balatazar (TCT No. 57-N, 18January 1946). OCT 1839 was lost during the war
and upon petition of Nemesia Baltazar, the Court of First Instance of Negros Occidental ordered the reconstitution thereof.
Pursuant thereto, OCT 14-R(1839) was issued on 18 January 1946 in the name of Pacifico Casamayor. On that same day,
TCT57-N was issued in the name of Nemesia Baltazar but after the cancellation of OCT 14-R (1839). On15 August 1951,
Nemesia Baltazar, sold said property to Lopez Sugar Central Mill Co., and the latter did not present the documents for
registration until 17 December 1964 to the Office of the Registry of Deeds. Said office refused registration upon its discovery
that the same property was covered by another certificate of title, TCT 38985, in the name of Federico Serfino. On 19
November 1964, the spouses Serfinos mortgaged the land to the Philippine National Bank (PNB) to secure a loan in the
amount of P5,000.00; which was inscribed in TCT No. 38985.The Lopez Sugar Central instituted an action to recover said land;
and the lower court rendered a decision ordering the cancellation of TCT No. 38985; issuance of a new TCT in the name of
plaintiff; and the payment of the plaintiff PNB the loan of spouses Serfinos secured by said land. Both parties appealed from
this decision of the trial court. Ruling on the assignment of errors, the appellate court affirmed the judgment of the trial court
with modification in its decision setting aside the decision of the trial court declaring plaintiff liable to PNB for payment,
however, ordering the plaintiff to reimburse the Serfino spouses of the sum P1,839.49, representing the unpaid taxes and
penalties paid by the latter when they repurchased the property. Hence, the appeal by the spouses Serfino and PNB to the
Supreme Court.
Issue: Whether the auction sale of the disputed property was null and void.
Held: The assailed decision of the appellate court declares that the prescribed procedure in auction sales of property for tax
delinquency being in derogation of property rights should be followed punctiliously. Strict adherence to the statutes governing
tax sales is imperative not only for the protection of the tax payers, but also to allay any possible suspicion of collusion
between the buyer and the public officials called upon to enforce such laws. Notice of sale to the delinquent land owners and

to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale. In
the present case, Lopez Sugar Central was not entirely negligent in its payment of land taxes. The record shows that taxes
were paid for the years 1950 to 1953 and a receipt therefor was obtained in its name. The sale therefore by the Province of
Negros Occidental of the land in dispute to the spouses Serfinos was void since the Province of Negros Occidental was not the
real owner of the property thus sold. In turn, the spouses Serfinos title which has been derived from that of the Province of
Negros Occidental is likewise void. However, the fact that the public auction sale of the disputed property was not valid cannot
in any way be attributed to the mortgagees fault. The inability of the Register of Deeds to notify the actual owner or Lopez
Sugar Central of the scheduled public auction sale was partly due to the failure of Lopez Sugar Central to declare the land in
its name for a number of years and to pay the complete taxes thereon. PNB is therefore entitled to the payment of the
mortgage loan as ruled by the trial court and exempted from the payment of costs. The Supreme Court affirmed the assailed
decision, with modification that PNB mortgage credit must be paid by Lopez Sugar Central.