VERA vs.

FERNANDEZ
GR No. L-31364 March 30, 1979
89 SCRA 199
FACTS: The BIR filed on July 29, 1969 a motion for allowance
of claim and for payment of taxes representing the estate's tax
deficiencies in 1963 to 1964 in the intestate proceedings of Luis
Tongoy. The administrator opposed arguing that the claim was
already barred by the statute of limitation, Section 2 and Section 5
of Rule 86 of the Rules of Court which provides that all claims
for money against the decedent, arising from contracts, express or
implied, whether the same be due, not due, or contingent, all
claims for funeral expenses and expenses for the last sickness of
the decedent, and judgment for money against the decedent, must
be filed within the time limited in the notice; otherwise they are
barred forever.
ISSUE: Does the statute of non-claims of the Rules of Court bar
the claim of the government for unpaid taxes?
HELD: No. The reason for the more liberal treatment of claims
for taxes against a decedent's estate in the form of exception from
the application of the statute of non-claims, is not hard to find.
Taxes are the lifeblood of the Government and their prompt and
certain availability are imperious need. (CIR vs. Pineda, 21 SCRA
105). Upon taxation depends the Government ability to serve the
people for whose benefit taxes are collected. To safeguard such
interest, neglect or omission of government officials entrusted
with the collection of taxes should not be allowed to bring harm
or detriment to the people, in the same manner as private persons
may be made to suffer individually on account of his own
negligence, the presumption being that they take good care of
their personal affairs. This should not hold true to government
officials with respect to matters not of their own personal
concern. This is the philosophy behind the government's
exception, as a general rule, from the operation of the principle of
estoppel.
REYES v. ALMANZOR
GR Nos. L-49839-46, April 26, 1991
196 SCRA 322
FACTS: Petitioners JBL Reyes et al. owned a parcel of land in
Tondo which are leased and occupied as dwelling units by tenants
who were paying monthly rentals of not exceeding P300.
Sometimes in 1971 the Rental Freezing Law was passed
prohibiting for one year from its effectivity, an increase in
monthly rentals of dwelling units where rentals do not exceed
three hundred pesos (P300.00), so that the Reyeses were
precluded from raising the rents and from ejecting the tenants. In
1973, respondent City Assessor of Manila re-classified and
reassessed the value of the subject properties based on the
schedule of market values, which entailed an increase in the
corresponding tax rates prompting petitioners to file a
Memorandum of Disagreement averring that the reassessments
made were "excessive, unwarranted, inequitable, confiscatory and
unconstitutional" considering that the taxes imposed upon them
greatly exceeded the annual income derived from their properties.
They argued that the income approach should have been used in
determining the land values instead of the comparable sales
approach which the City Assessor adopted.
ISSUE: Is the approach on tax assessment used by the City
Assessor reasonable?

HELD: No. The taxing power has the authority to make a

reasonable and natural classification for purposes of taxation but
the government's act must not be prompted by a spirit of hostility,
or at the very least discrimination that finds no support in reason.
It suffices then that the laws operate equally and uniformly on all
persons under similar circumstances or that all persons must be
treated in the same manner, the conditions not being different
both in the privileges conferred and the liabilities imposed.
Consequently, it stands to reason that petitioners who are
burdened by the government by its Rental Freezing Laws (then
R.A. No. 6359 and P.D. 20) under the principle of social justice
should not now be penalized by the same government by the
imposition of excessive taxes petitioners can ill afford and
eventually result in the forfeiture of their properties.

LUTZ v. ARANETA
GR No. L-7859, December 22, 1955
98 PHIL 148
FACTS: Plaintiff Walter Lutz, in his capacity as judicial
administrator of the intestate estate of Antionio Ledesma, sought
to recover from the CIR the sum of P14,666.40 paid by the estate
as taxes, under section 3 of the CA 567 or the Sugar Adjustment
Act thereby assailing its constitutionality, for it provided for an
increase of the existing tax on the manufacture of sugar, alleging
that such enactment is not being levied for a public purpose but
solely and exclusively for the aid and support of the sugar
industry thus making it void and unconstitutional. The sugar
industry situation at the time of the enactment was in an imminent
threat of loss and needed to be stabilized by imposition of
emergency measures.
ISSUE: Is CA 567 constitutional, despite its being allegedly
violative of the equal protection clause, the purpose of which is
not for the benefit of the general public but for the rehabilitation
only of the sugar industry?
HELD: Yes. The protection and promotion of the sugar industry is
a matter of public concern, it follows that the Legislature may
determine within reasonable bounds what is necessary for its
protection and expedient for its promotion. Here, the legislative
discretion must be allowed to fully play, subject only to the test of
reasonableness; and it is not contended that the means provided in
the law bear no relation to the objective pursued or are oppressive
in character. If objective and methods are alike constitutionally
valid, no reason is seen why the state may not levy taxes to raise
funds for their prosecution and attainment. Taxation may be made
the implement of the state's police power.

PUNSALAN v. MUN. BOARD OF CITY OF MANILA

GR No. L-23645, October 29, 1968
95 PHIL 46
FACTS: The plaintiffs--two lawyers, medical practitioner, a
dental surgeon, a CPA, and a pharmacist--sought the annulment of
Ordinance No.3398 of the City of Manila which imposes a
municipal occupation tax on persons exercising various
professions in the city and penalizes non-payment of the tax,
contending in substance that this ordinance and the law
authorizing it constitute class legislation, are unjust and
oppressive, and authorize what amounts to double taxation. The

burden of plaintiffs' complaint is not that the professions to

which they respectively belong have been singled out for the
imposition of this municipal occupation tax, but that while the
law has authorized the City of Manila to impose the said tax, it
has withheld that authority from other chartered cities, not to
mention municipalities.
ISSUE: Does the law constitute a class legislation? Is it for the
Court to determine which political unit should impose taxes and
which should not?
HELD: No. It is not for the courts to judge what particular cities
or municipalities should be empowered to impose occupation
taxes in addition to those imposed by the National Government.
That matter is peculiarly within the domain of the political
departments and the courts would do well not to encroach upon it.
Moreover, as the seat of the National Government and with a
population and volume of trade many times that of any other
Philippine city or municipality, Manila, no doubt, offers a more
lucrative field for the practice of the professions, so that it is but
fair that the professionals in Manila be made to pay a higher
occupation tax than their brethren in the provinces.
DOMINGO vs GARLITOS
GR L-18993
29 June 1963
FACTS:
In Domingo vs. Moscoso (106 PHIL 1138), the Supreme Court
declared as final and executory the order of the Court of First
Instance of Leyte for the payment of estate and inheritance taxes,
charges and penalties amounting to P40,058.55 by the Estate of
the late Walter Scott Price. The petition for execution filed by the
fiscal, however, was denied by the lower court. The Court held
that the execution is unjustified as the Government itself is
indebted to the Estate for 262,200; and ordered the amount of
inheritance taxes be deducted from the Governments
indebtedness to the Estate.
ISSUE:
Whether a tax and a debt may be compensated.
HELD:
The court having jurisdiction of the Estate had found that the
claim of the Estate against the Government has been recognized
and an amount of P262,200 has already been appropriated by a

corresponding law (RA 2700). Under the circumstances, both the

claim of the Government for inheritance taxes and the claim of
the intestate for services rendered have already become overdue
and demandable as well as fully liquidated. Compensation,
therefore, takes place by operation of law, in accordance with
Article 1279 and 1290 of the Civil Code, and both debts are
extinguished to the concurrent amount.

DAVAO GULF LUMBER CORP v. CIR

GR No. 117359, July 23, 1998
293 SCRA 77
FACTS: Republic Act No. 1435 entitles miners and forest
concessioners to the refund of 25% of the specific taxes paid by
the oil companies, which were eventually passed on to the user-the petitioner in this case--in the purchase price of the oil
products. Petitioner filed before respondent Commissioner of
Internal Revenue (CIR) a claim for refund in the amount
representing 25% of the specific taxes actually paid on the abovementioned fuels and oils that were used by petitioner in its
operations. However petitioner asserts that equity and justice
demands that the refund should be based on the increased rates of
specific taxes which it actually paid, as prescribed in Sections 153
and 156 of the NIRC. Public respondent, on the other hand,
contends that it should be based on specific taxes deemed paid
under Sections 1 and 2 of RA 1435.
ISSUE: Should the petitioner be entitled under Republic Act No.
1435 to the refund of 25% of the amount of specific taxes it
actually paid on various refined and manufactured mineral oils
and other oil products, and not on the taxes deemed paid and
passed on to them, as end-users, by the oil companies?
HELD: No. According to an eminent authority on taxation, "there
is no tax exemption solely on the ground of equity." Thus, the tax
refund should be based on the taxes deemed paid. Because taxes
are the lifeblood of the nation, statutes that allow exemptions are
construed strictly against the grantee and liberally in favor of the
government. Otherwise stated, any exemption from the payment
of a tax must be clearly stated in the language of the law; it
cannot be merely implied therefrom.