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Algue
Facts: Algue, engaged in an engineering corporation, claims tax deductions in the
amount of P75,000.00 alleging that such amount are promotional fees, thus, in
accord with the provisions of the Tax Code as being ordinary and necessary
expenses. The CIR disallowed the deductions.
Issue: WON the CIR was correct in disallowing the tax deductions.
Held: Negative.
The claimed deduction by the private respondent was permitted under the Internal
Revenue Code and should therefore not have been disallowed by the CIR.
It is said that taxes are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power to activate and
operate it. The government for its part, is expected to respond in the form of
tangible and intangible benefits intended to improve the lives of the people and
enhance their moral and material values. This symbiotic relationship is the rationale
of taxation and should dispel the erroneous notion that it is an arbitrary method of
exaction by those in the seat of power.
But even as we concede the inevitability and indispensability of taxation, it is a
requirement in all democratic regimes that it be exercised reasonably and in
accordance with the prescribed procedure. If it is not, then the taxpayer has a right
to complain and the courts will then come to his succor. For all the awesome power
of the tax collector, he may still be stopped in his tracks if the taxpayer can
demonstrate, as it has here, that the law has not been observed.
PBCom vs. CA
Facts: PBCom in 1985 were issued tax debits in the total amount of P5,016,954. In
1986 it reported a net loss of P14,129,602, thus, declared no tax for that year.
During these two years, however, PBCOm withheld and remitted to the
BIR withholding creditable taxes of P282,795.50 in 1985 and P234,077.69 in 1986.
On 1987, PBCom requested CIR to grant them a tax credit in the amount of
P5,016,954 representing the overpayment in 1986. On 1988, it filed a claim for
refund for property rentals (P282,795.50 in 1985 and P234,077.69). The CIR,
affiermed by the CA, denied the claim for refund of P5,016,954 on the ground that it
was filed beyond the reglementary period and also the claim for P234,077.69 on the
ground that PBCom has opted and in all likelihood automatically credited the same
to the succeeding year.
Issue: WON PBCom is entitled to tax refund.
Held: Negative.
Basic is the principle that taxes are the lifeblood of the nation. The primary
purpose is to generate funds for the State to finance the needs of the citizenry and
to advance the common weal. Due process of law under the Constitution does not
require judicial proceedings in tax cases. This must necessarily be so because it is
upon taxation that the government chiefly relies to obtain the means to carry on its
operations and it is of utmost importance that the modes adopted to enforce the
collection of taxes levied should be summary and interfered with as little as
possible.
From the same perspective, claims for refund or tax credit should be exercised
within the time fixed by law because the BIR being an administrative body enforced
to collect taxes, its functions should not be unduly delayed or hampered by
incidental matters.The rule states that the taxpayer may file a claim for refund or
credit with the Commissioner of Internal Revenue, within two (2) years after
payment of tax, before any suit in CTA is commenced. The two-year prescriptive
period provided, should be computed from the time of filing the Adjustment Return
and final payment of the tax for the year.
The non-retroactivity of rulings by the Commissioner of Internal Revenue is not
applicable in this case because the nullity of RMC No. 7-85 was declared by
respondent courts and not by the Commissioner of Internal Revenue. Lastly, it must
be noted that, as repeatedly held by this Court, a claim for refund is in the nature of
a claim for exemption and should be construed in strictissimi juris against the
taxpayer.
2. A logical corollary to the doctrine of separation of powers is the principle of nondelegation of powers, as expressed in the Latin maxim potestas delegata non
delegari potest (what has been delegated cannot be delegated).
All that is required for the valid exercise of this power of subordinate legislation is
that the regulation be germane to the objects and purposes of the law and that the
regulation be not in contradiction to, but in conformity with, the standards
prescribed by the law. These requirements are denominated as the completeness
test and the sufficient standard test.
The Court finds that the EPIRA, read and appreciated in its entirety, in relation to
Sec. 34 thereof, is complete in all its essential terms and conditions, and that it
contains sufficient standards.
Roxas et al vs CTA
Facts: Roxas Y Cia is a partnership managing agricultural lands with a total land area
of 19,000 ha (Known as the Nasugbu farmlands). The tenants therein wanted to
acquire the land they till, thus the government persuaded Roxas Y Cia to sell to it
some of its lands. Roxas Y Cia agreed but it turned out that the govt does not have
sufficient funds to pay for such lands, hence, Roxas Y Cia took the burden of selling
the lands directly to the tenants on installment basis. Because of Roxas Y Cias act
of making profits from the purchase and sale of securities, the Commissioner of
Internal Revenue demanded from it fixed tax of dealers securities, hence, 100% of
the profits made therefrom was taxed.
Issue: WON the assessment made by the CIR is correct (of taxing 100% of the
profits made from the sale of the lands to the tenants made by Roxas).
Held: Negative.
It should be borne in mind that the sale of the Nasugbu farm lands to the very
farmers who tilled them for generations was not only in consonance with, but more
in obedience to the request and pursuant to the policy of our Government to
allocate lands to the landless.
The power of taxation is sometimes called also the power to destroy. Therefore it
should be exercised with caution to minimize injury to the proprietary rights of a
taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector kill
the hen that lays the golden egg. And, in order to maintain the general publics
trust and confidence in the Government this power must be used justly and not
treacherously. It does not conform with Our sense of justice in the instant case for
the Government to persuade the taxpayer to lend it a helping hand and later on to
penalize him for duly answering the urgent call.
In fine, Roxas y Cia. cannot be considered a real estate dealer for the sale in
question. Hence, pursuant to Section 34 of the Tax Code the lands sold to the
farmers are capital assets, and the gain derived from the sale thereof is capital gain,
taxable only to the extent of 50%.