Commissioner of Lnternal Revenue vs. Cebu Portlandcement Company 156 Scra 535, December 15, 1987

Commissioner of lnternal Revenue vs.
Cebu PortlandCement
Company 156 SCRA 535 , December 15, 1987
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. CEBU

PORTLAND CEMENT COMPANY and COURT OF TAX APPEALS, respondents.Case
Nature : PETITION to review the resolution of the Court of Tax Appeals.
Syllabi Class : Taxation|National Internal Revenue Code|Prescription
Syllabi:
1. Taxation; National Internal Revenue Code; Nature of cement as

a manufactured product rather than a mineral product is well settled;
Ruling in the case of Cebu Portland Cement Co. v. Collector of lnternal
Revenue, overruled.-
"The nature of cement as a 'manufactured product' (rather than a

'mineral product') is well-settled. The issue has repeatedly presented
itself as a threshold question for determining the basis for computing
the ad valorem mining tax to be paid by cement companies. No
pronouncement was made in these cases that as a 'manufactured
product' cement is subject to sales tax because this was not at issue.
The decision sought to be reconsidered here referred to the legislative
history of Republic Act No. 1299 which introduced a definition of the
terms 'mineral' and 'mineral products' in Sec. 246 of the Tax Code.
Given the legislative intent, the holding in the CEPOC case (G.R. No. L-
20563) that cement was subject to sales tax prior to the effectivity of
Republic Act No. 1299 cannot be construed to mean that, after the law
took effect, cement ceased to be so subject to the tax. To erase any
and all misconceptions that may have been spawned by reliance on the
case of Cebu Portland Cement Co. v. Collector of Internal Revenue, L-
20563, October 29, 1968 (28 SCRA 789) penned by Justice Eugenio
Angeles, the Court has expressly overruled it insofar as it may conflict
with the decision of August 10, 1983, now subject of these motions for
reconsideration."
2. Taxation; National Internal Revenue Code; Prescription; Filing

of income tax return cannot be considered as substantial compliance
with the requirement of filing sales tax return; assessment made by the
Commission in 1968 not barred by the five-year prescriptive period.-
"We agree with the Commissioner. It has been held in Butuan Sawmill,
Inc. v. CTA, supra, that the filing of an income tax return cannot be
considered as substantial compliance with the requirement of filing
sales tax returns, in the same way that an income tax return cannot be
considered as a return for compensating tax for the purpose of
computing the period of prescription under Sec. 331. (Citing Bisaya
Land Transportation Co., Inc. v. Collector of Internal Revenue, G.R.
Nos. L-12100 and L-11812, May 29, 1959). There being no sales tax
returns filed by CEPOC, the statute of limitations in Sec. 331 did not
begin to run against the government. The assessment made by the
Commissioner in 1968 on CEPOC's cement sales during the period from
July 1, 1959 to December 31, 1960 is not barred by the five-year
prescriptive period. Absent a return, or when the return is false or
fraudulent, the applicable period is ten (10) days from the discovery of
the fraud, falsity or omission. The question in this case is: When was
CEPOC's omission to file the return deemed discovered by the
government, so as to start the running of said period?"
Municipality of Makati vs. Court of Appeals 190 SCRA 206 , October

01, 1990
Case Title : MUNICIPALITY OF MAKATI, petitioner, vs. THE HONORABLE COURT OF

APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge RTC of Makati, Branch
CXLII, ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO
R. PASTRANA, respondents.Case Nature : PETITION for review of the decision of
the Court of Appeals.
Syllabi Class : Civil Procedure|Political Law|Attachment|Execution|Administrative

Law|Public Funds|Mandamus|Eminent Domain|Just Compensation
Syllabi:
1. Civil Procedure; Attachment; Execution; Administrative

Law;Public Funds; Properties of a municipality, whether real or
personal, which are necessary for public use cannot be attached and
sold at execution sale to satisfy a money judgment against the
municipality. Public funds are not subject to levy and execution.-
The funds deposited in the second PNB Account No. S/A 263-530850-
7 are public funds of the municipal government. In this jurisdiction,
well-settled is the rule that public funds are not subject to levy and
execution, unless otherwise provided for by statute [Republic v. Palacio,
supra.; The Commissioner of Public Highways v. San Diego, G.R. No. L-
30098, February 18, 1970, 31 SCRA 616]. More particularly, the
properties of a municipality, whether real or personal, which are
necessary for public use cannot be attached and sold at execution sale
to satisfy a money judgment against the municipality. Municipal
revenues derived from taxes, licenses and market fees, and which are
intended primarily and exclusively for the purpose of financing the
governmen-tal activities and functions of the Municipality, are exempt
from execution [See Viuda De Tan Toco v. The Municipal Council of
Iloilo, 49 Phil. 52 (1926); The Municipality of Paoay, Ilocos Norte v.
Manaois, 86 Phil. 629 (1950); Municipality of San Miguel, Bulacan v.
Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. The
foregoing rule finds application in the case at bar. Absent a showing
that the municipal council of Makati has passed an ordinance
appropriating from its public funds an amount corresponding to the
balance due under the RTC decision dated June 4, 1987, less the sum
of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy
under execution may be validly effected on the public funds of
petitioner deposited in Account No. S/A 263-530850-7.
2. Civil Procedure; Mandamus; Where a municipality fails without

justifiable cause to pay a final money judgment against it, the claimant
may avail of mandamus to compel the enactment and approval of the
necessary appropriation ordinance and the corresponding disbursement
of municipal funds therefor.-
Nevertheless, this is not to say that private respondent and PSB are left
with no legal recourse. Where a municipality fails or refuses, without
justifiable reason, to effect payment of a final money judgment
rendered against it, the claimant may avail of the remedy of mandamus
in order to compel the enactment and approval of the necessary
appropriation ordinance, and the corresponding disbursement of
municipal funds therefor [See Viuda De Tan Toco v. The Municipal
Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960);
Yuviengco v. Gonzales, 108 Phil. 247 (1960)].
3. Political Law; Eminent Domain; Just Compensation; Just

compensation means not only the correct determination of the amount
to be paid to the owner of the land expropriated, but also prompt
payment thereof.-
In the case at bar, the validity of the RTC decision dated June 4, 1987
is not disputed by petitioner. No appeal was taken therefrom. For three
years now, petitioner has enjoyed possession and use of the subject
property notwithstanding its inexcusable failure to comply with its legal
obligation to pay just compensation. Petitioner has benefited from its
possession of the property since the same has been the site of Makati
West High School since the school year 19861987. This Court will not
condone petitioner's blatant refusal to settle its legal obligation arising
from expropriation proceedings it had in fact initiated. It cannot be
over-emphasized that, within the context of the State's inherent power
of eminent domain,. . . [j]ust compensation means not only the correct
determination of the amount to be paid to the owner of the land but
also the payment of the land within a reasonable time from its taking.
Without prompt payment, compensation cannot be considered "just" for
the property owner is made to suffer the consequence of being
immediately deprived of his land while being made to wait for a decade
or more before actually receiving the amount necessary to cope with
his loss [Cosculluela v. The Honorable Court of Appeals, G.R. No.
77765, August 15, 1988, 164 SCRA 393,400. See also Provincial
Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037, August
27, 1987, 153 SCRA 291.] The State's power of eminent domain should
be exercised within the bounds of fair play and justice. In the case at
bar, considering that valuable property has been taken, the
compensation to be paid fixed and the municipality is in full possession
and utilizing the property for public purpose, for three (3) years, the
Court finds that the municipality has had more than reasonable time to
pay full compensation.
Commissioner of lnternal Revenue vs. Algue, Inc. 158 SCRA 9 ,

February 17, 1988
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. ALGUE, INC.,

and THE COURT OF TAX APPEALS, respondents.Case Nature : APPEAL from the
decision of the Court of Tax Appeals.
Syllabi Class : Taxation|Nature of taxes|Purpose of taxation|Appeal|Warrant of

distraint and levy|Income Tax|Payments in promotional fees|not fictitious
Syllabi:
1. Taxation; Nature of taxes; Purpose of taxation; Collection of

taxes should be made in accordance with law.-
Taxes are the lifeblood of the government and so should be collected

without unnecessary hindrance. On the other hand, such collection
should be made in accordance with law as any arbitrariness will negate
the very reason for government itself. It is therefore necessary to
reconcile the apparently conflicting interests of the authorities and the
taxpayers so that the real purpose of taxation, which is the promotion
of the common good, may be achieved.
2. Taxation; Appeal; Appeal from a decision of the Commissioner of

Internal Revenue with the Court of Tax Appeals is 30 days from receipt
thereof.-
The above chronology shows that the petition was filed seasonably.
According to Rep. Act No. 1125, the appeal may be made within thirty
days after receipt of the decision or ruling challenged.
3. Taxation; Warrant of distraint and levy; Rule that the warrant of

distraint and levy is proof of the finality of the assessment; Exception is
where there is a letter of protest after receipt of notice of assessment.-
It is true that as a rule the warrant of distraint and levy is "proof of the
finality of the assessment" and "renders hopeless a request for
reconsideration," being "tantamount to an outright denial thereof and
makes the said request deemed rejected." But there is a special
circumstance in the case at bar that prevents application of this
accepted doctrine. The proven fact is that four days after the private
respondent received the petitioner's notice of assessment, it filed its
letter of protest. This was apparently not taken into account before the
warrant of distraint and levy was issued; indeed, such protest could not
be located in the office of the petitioner. It was only after Atty. Guevara
gave the BIR a copy of the protest that it was, if at all, considered by
the tax authorities. During the intervening period, the warrant was
premature and could therefore not be served.
4. Taxation; Warrant of distraint and levy; Protest filed, not pro

forma, and was based on strong legal considerations; Case at bar.-
As the Court of Tax Appeals correctly noted, the protest filed by private
respondent was not pro forma and was based on strong legal
considerations. It thus had the effect of suspending on January 18,
1965, when it was filed, the reglementary period which started on the
date the assessment was received, viz., January 14, 1965. The period
started running again only on April 7, 1965, when the private
respondent was definitely informed of the implied rejection of the said
protest and the warrant was finally served on it. Hence, when the
appeal was filed on April 23, 1965, only 20 days of the reglementary
period had been consumed.
5. Taxation; Income Tax; Payments in promotional fees, not

fictitious; Claimed deduction of P75,000 proper; Strict business
procedures not applied in a family corporation.-
We find that these suspicions were adequately met by the private

respondent when its President, Alberto Guevara, and the accountant,
Cecilia V. de Jesus, testified that the payments were not made in one
lump sum but periodically and in different amounts as each payee's
need arose. It should be remembered that this was a family corporation
where strict business procedures were not applied and immediate
issuance of receipts was not required. Even so, at the end of the year,
when the books were to be closed, each payee made an accounting of
all of the fees received by him or her, to make up the total of
P75,000.00. Admittedly, everything seemed to be informal. This
arrangement was understandable, however, in view of the close
relationship among the persons in the family corporation.

fictitious; Amount of promotional fees, not excessive.-
We agree with the respondent court that the amount of the promotional
fees was not excessive. The total commission paid by the Philippine
Sugar Estate Development Co. to the private respondent was P1
25,000.00. After deducting the said fees, Algue still had a balance of
P50,000.00 as clear profit from the transaction. The amount of
P75,000.00 was 60% of the total commission. This was a reasonable
proportion, considering that it was the payees who did practically
everything, from the formation of the Vegetable Oil Investment
Corporation to the actual purchase by it of the Sugar Estate properties.

fictitious; Burden on taxpayer to prove validity of the claimed
deduction, successfully discharged; Payment of the fees was necessary
and reasonable.-
The Solicitor General is correct when he says that the burden is on the
taxpayer to prove the validity of the claimed deduction. In the present
case, however, we find that the onus has been discharged
satisfactorily. The private respondent has proved that the payment of
the fees was necessary and reasonable in the light of the efforts
exerted by the payees in inducing investors and prominent
businessmen to venture in an experimental enterprise and involve
themselves in a new business requiring millions of pesos. This was no
mean feat and should be, as it was, sufficiently recompensed.
8. Taxation; Income Tax; Rationale of taxation.-
It is said that taxes are what we pay for civilized society. Without taxes,
the government would be paralyzed for lack of the motive power to
activate and operate it. Hence, despite the natural reluctance to
surrender part of one's hard-earned income to the taxing authorities,
every person who is able to must contribute his share in the running of
the government. 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.
BPI-Family Savings Bank, Inc. vs. Court of Appeals 330 SCRA 507 ,
April 12, 2000
Case Title : BPI-FAMILY SAVINGS BANK, INC., petitioner, vs. COURT OF APPEALS,
COURT OF TAX APPEALS and the COMMISSIONER OF INTERNAL REVENUE,
respondents.Case Nature : PETITION for review on certiorari of a decision of the
Court of Appeals.
Syllabi Class : Appeals|Taxation|Court of Tax Appeals|Pleadings and

Practice|Procedural Rules|Tax Refunds|Judicial Notice|Judgments|Rules of
Procedure and Technicalities
Syllabi:
1. Appeals; As a rule, the factual findings of the appellate court are

binding on the Supreme Court; Exceptions.-
We disagree with the Court of Appeals. As a rule, the factual findings of

the appellate court are binding on this Court. This rule, however, does
not apply where, inter alia, the judgment is premised on a
misapprehension of facts, or when the appellate court failed to notice
certain relevant facts which if considered would justify a different
conclusion. This case is one such exception.
2. Taxation; Court of Tax Appeals; Pleadings and

Practice;Procedural Rules; Strict procedural rules generally frown
upon the submission of the Tax Return after the trial, but the law
creating the Court of Tax Appeals specifically provides that proceedings
before it shall not be governed strictly by the technical rules of
evidencethe paramount consideration remains the ascertainment of
truth.-
Strict procedural rules generally frown upon the submission of the

Return after the trial. The law creating the Court of Tax Appeals,
however, specifically provides that proceedings before it shall not be
governed strictly by the technical rules of evidence. The paramount
consideration remains the ascertainment of truth. Verily, the quest for
orderly presentation of issues is not an absolute. It should not bar
courts from considering undisputed facts to arrive at a just
determination of a controversy. In the present case, the Return
attached to the Motion for Reconsideration clearly showed that
petitioner suffered a net loss in 1990. Contrary to the holding of the CA
and the CTA, petitioner could not have applied the amount as a tax
credit. In failing to consider the said Return, as well as the other
documentary evidence presented during the trial, the appellate court
committed a reversible error.
3. Taxation; Tax Refunds; If a taxpayer suffered a net loss in a

subsequent year, incurring no tax liability to which a previous years tax
credit could be applied, there is no reason for the Bureau of Internal
Revenue to withhold the tax refund which rightfully belongs to the
taxpayer.-
It should be stressed that the rationale of the rules of procedure is to

secure a just determination of every action. They are tools designed to
facilitate the attainment of justice. But there can be no just
determination of the present action if we ignore, on grounds of strict
technicality, the Return submitted before the CTA and even before this
Court. To repeat, the undisputed fact is that petitioner suffered a net
loss in 1990; accordingly, it incurred no tax liability to which the tax
credit could be applied. Consequently, there is no reason for the BIR
and this Court to withhold the tax refund which rightfully belongs to the
petitioner.
4. Taxation; Judicial Notice; Judgments; Courts are not authorized

to take judicial notice of the contents of the records of other cases,
even when such cases have been tried or are pending in the same
court, and notwithstanding the fact that both cases may have been
heard or are actually pending before the same judge.-
As a rule, courts are not authorized to take judicial notice of the

contents of the records of other cases, even when such cases have
been tried or are pending in the same court, and notwithstanding the
fact that both cases may have been heard or are actually pending
before the same judge. Be that as it may, Section 2, Rule 129 provides
that courts may take judicial notice of matters ought to be known to
judges because of their judicial functions. In this case, the Court notes
that a copy of the Decision in CTA Case No. 4897 was attached to the
Petition for Review filed before this Court. Significantly, respondents do
not claim at all that the said Decision was fraudulent or nonexistent.
Indeed, they do not even dispute the contents of the said Decision,
claiming merely that the Court cannot take judicial notice thereof.
5. Taxation; Tax Refunds; Rules of Procedure and

Technicalities;Technicalities and legalisms, however exalted, should
not be misused by the government to keep money not belonging to it
and thereby enrich itself at the expense of its law-abiding citizensif
the State expects its taxpayers to observe fairness and honesty in
paying their taxes, so must it apply the same standard against itself in
refunding excess payments of such taxes.-
Respondents argue that tax refunds are in the nature of tax exemptions
and are to be construed strictissimi juris against the claimant. Under
the facts of this case, we hold that petitioner has established its claim.
Petitioner may have failed to strictly comply with the rules of
procedure; it may have even been negligent. These circumstances,
however, should not compel the Court to disregard this cold,
undisputed fact: that petitioner suffered a net loss in 1990, and that it
could not have applied the amount claimed as tax credits. Substantial
justice, equity and fair play are on the side of petitioner. Technicalities
and legalisms, however exalted, should not be misused by the
government to keep money not belonging to it and thereby enrich itself
at the expense of its law-abiding citizens. If the State expects its
taxpayers to observe fairness and honesty in paying their taxes, so
must it apply the same standard against itself in refunding excess
payments of such taxes. Indeed, the State must lead by its own
example of honor, dignity and uprightness.
Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd. 244

SCRA 332 , May 26, 1995
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. TOKYO

SHIPPING CO., LTD., represented by SORIAMONT STEAMSHIP AGENCIES, INC.,
and COURT OF TAX AP-PEALS, respondents.Case Nature : PETITION for review on
certiorari of a decision of the Court of Tax Appeals.
Syllabi Class : Taxation|
Syllabi:
1. Taxation; A claim for refund is in the nature of a claim for

exemption and should be construed in strictissimi juris against the
taxpayer.-
We agree with petitioner that a claim for refund is in the nature of a

claim for exemption and should be construed in strictissimi juris against
the taxpayer. Likewise, there can be no disagreement with petitioners
stance that private respondent has the burden of proof to establish the
factual basis of its claim for tax refund.
Commissioner of Internal Revenue vs. Mitsubishi Metal Corp. 181
SCRA 214 , January 22, 1990
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MITSUBISHI

METAL CORPORATION, ATLAS CONSOLIDATED MINING AND DEVELOPMENT
CORPORATION and the COURT OF TAX APPEALS, respondents.Case Nature :
PETITION to review the decisions of the Court of Tax Appeals.
Syllabi Class : Civil Procedure|Taxation|Evidence|Admissions
Syllabi:
1. Civil Procedure; Evidence; Admissions; Respondent erred in

hold-ing in CTA Case No. 2801 that petitioner should be deemed to
have admitted the allegations of the private respondents when it
submitted the case on the basis of the pleadings and records of the
bureau.-
Prefatorily, it must be noted that respondent court erred in holding in

CTA Case No. 2801 that petitioner should be deemed to have admitted
the allegations of the private respondents when it submitted the case
on the basis of the pleadings and records of the bureau. There is
nothing to indicate such admission on the part of petitioner nor can we
accept respondent courts pronouncement that petitioner did not offer
to prove the truth of its allegations. The records of the Bureau of
Internal Revenue relevant to the case were duly submitted and
admitted as petitioners supporting evidence. Additionally, a hearing
was conducted, with presentation of evidence, and the findings of
respondent court were based not only on the pleadings but on the
evidence adduced by the parties. There could, therefore, not have been
a judgment on the pleadings, with the theorized admissions imputed to
petitioner, as mistakenly held by respondent court.
2. Civil Procedure; Evidence; Findings of fact of the Court of Tax

Appeals are entitled to the highest respect and can only be disturbed on
appeal if they are not supported by substantial evidence or if there is a
showing of gross error or abuse on the part of the tax court.-
Time and again, we have ruled that findings of fact of the Court of Tax
Appeals are entitled to the highest respect and can only be disturbed on
appeal if they are not supported by substantial evidence or if there is a
showing of gross error or abuse on the part of the tax court. Thus,
ordinarily, we could give due consideration to the holding of respondent
court that Mitsu-bishi is a mere agent of Eximbank. Compelling
circumstances obtaining and proven in these cases, however, warrant a
departure from said general rule, since we are convinced that there is a
misapprehension of facts on the part of the tax court to the extent that
its conclusions are speculative in nature.
3. Civil Procedure; Evidence; The agreement is strictly between

Mitsubishi as creditor in the contract of loan and Atlas as the seller of
the copper concentrates; Mitsubishi was not a mere agent in said
transaction.-
The loan and sales contract between Mitsubishi and Atlas does not
contain any direct or inferential reference to Eximbank whatsoever. The
agreement is strictly between Mitsubishi as creditor in the contract of
loan and Atlas as the seller of the copper concentrates. From the
categorical language used in the document, one prestation was in
consideration of the other. The specific terms and the reciprocal nature
of their obligations make it implausible, if not vacuous, to give credit to
the cavalier assertion that Mitsubishi was a mere agent in said
transaction.
4. Taxation; Rule is settled that laws granting exemption from tax are
construed strictissimi juris against the taxpayer and liberally in favor of
the taxing power.-
It is too settled a rule in this jurisdiction, as to dispense with the need

for citations, that laws granting exemption from tax are construed
strictissimi juris against the taxpayer and liberally in favor of the taxing
power. Taxation is the rule and exemption is the exception. The burden
of proof rests upon the party claiming exemption to prove that it is in
fact covered by the exemption so claimed, which onus petitioners have
failed to discharge. Significantly, private respondents are not even
among the entities which, under Section 29 (b) (7) (A) of the tax code,
are entitled to exemption and which should indispensably be the party
in interest in this case.
Philippine Bank of Communications vs. Commissioner of Internal

Revenue 302 SCRA 241 , January 28, 1999
Case Title : PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs.

COMMISSIONER OF INTERNAL REVENUE, COURT OF TAX APPEALS and COURT OF
APPEALS, respondents.Case Nature : PETITION for review on certiorari of a
decision of the Court of Appeals.
Syllabi Class : Taxation|Due Process|Tax Refunds|Actions|Administrative

Law|Statutory Construction|Judicial Review|Estoppel
Syllabi:
1. Taxation; Due Process; Due process of law under the Constitution

does not require judicial proceedings in tax casesit 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.-
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.
2. Taxation; Tax Refunds; Prescription.-
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.
3. Taxation; Tax Refunds; Actions; 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 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.
4. Taxation; Tax Refunds; Administrative Law; Statutory

Construction; Revenue Memorandum Circular (RMC) 7-85, changing
the prescriptive period of two years to ten years on claims of excess
quarterly income tax payments, created a clear inconsistency with the
provision of Sec. 230 of 1977 NIRC.-
When the Acting Commissioner of Internal Revenue issued RMC 7-85,

changing the prescriptive period of two years to ten years on claims of
excess quarterly income tax payments, such circular created a clear
inconsistency with the provision of Sec. 230 of 1977 NIRC. In so doing,
the BIR did not simply interpret the law; rather it legislated guidelines
contrary to the statute passed by Congress.
5. Taxation; Tax Refunds; Administrative Law; Statutory
Construction; Judicial Review; Courts will not countenance
administrative issuances overriding, instead of remaining consistent and
in harmony with, the law they seek to apply and implement.-
It bears repeating that Revenue memorandum-circulars are considered

administrative rulings (in the sense of more specific and less general
interpretations of tax laws) which are issued from time to time by the
Commissioner of Internal Revenue. It is widely accepted that the
interpretation placed upon a statute by the executive officers, whose
duty is to enforce it, is entitled to great respect by the courts.
Nevertheless, such interpretation is not conclusive and will be ignored if
judicially found to be erroneous. Thus, courts will not countenance
administrative issuances that override, instead of remaining consistent
and in harmony with, the law they seek to apply and implement.
6. Taxation; Tax Refunds; Administrative

Law; Estoppel;Fundamental is the rule that the State cannot be put in
estoppel by the mistakes or errors of its officials or agents.-
Further, fundamental is the rule that the State cannot be put in

estoppel by the mistakes or errors of its officials or agents. As pointed
out by the respondent courts, the nullification of RMC No. 7-85 issued
by the Acting Commissioner of Internal Revenue is an administrative
interpretation which is not in harmony with Sec. 230 of 1977 NIRC, for
being contrary to the express provision of a statute. Hence, his
interpretation could not be given weight for to do so would, in effect,
amend the statute.
7. Taxation; Tax Refunds; Administrative

Law; Estoppel; Statutory Construction; A memorandum circular of a
bureau head could not operate to vest a taxpayer with a shield against
judicial action, for there are no vested rights to speak of respecting a
wrong construction of the law by the administrative officials and such
wrong interpretation could not place the Government in estoppel to
correct or overrule the same; The non-retroactivity of rulings by the
Commissioner of Internal Revenue is not applicable where the nullity of
a Revenue Memorandum Circular was declared by courts and not by the
Commissioner of Internal Revenue.-
Article 8 of the Civil Code recognizes judicial decisions, applying or

interpreting statutes as part of the legal system of the country. But
administrative decisions do not enjoy that level of recognition. A
memorandum-circular of a bureau head could not operate to vest a
taxpayer with a shield against judicial action. For there are no vested
rights to speak of respecting a wrong construction of the law by the
administrative officials and such wrong interpretation could not place
the Government in estoppel to correct or overrule the same. Moreover,
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.
8. Taxation; Tax Refunds; The corporation must signify in its annual

corporate adjustment return (by marking the option box provided in the
BIR form) its intention, whether to request for a refund or claim for an
automatic tax credit for the succeeding taxable year.-
Sec. 69 of the 1977 NIRC, (now Sec. 76 of the 1997 NIRC) provides
that any excess of the total quarterly payments over the actual income
tax computed in the adjustment or final corporate income tax return,
shall either (a) be refunded to the corporation, or (b) may be credited
against the estimated quarterly income tax liabilities for the quarters of
the succeeding taxable year. The corporation must signify in its annual
corporate adjustment return (by marking the option box provided in the
BIR form) its intention, whether to request for a refund or claim for an
automatic tax credit for the succeeding taxable year. To ease the
administration of tax collection, these remedies are in the alternative,
and the choice of one precludes the other.
Sison, Jr. vs. Ancheta 130 SCRA 654 , July 25, 1984
Case Title : ANTERO M. SISON, JR., petitioner, vs. RUBEN B. ANCHETA, Acting
Commissioner, Bureau of Internal Revenue; ROMULO VILLA, Deputy Commissioner,
Bureau of Internal Revenue; TOMAS TOLEDO, Deputy Commissioner, Bureau of
Internal Revenue; MANUEL ALBA, Minister of Budget, FRANCISCO TANTUICO,
Chairman, Commissioner on Audit, and CESAR E. A. VIRATA, Minister of Finance,
respondents.Case Nature : PETITION to review the decision of the Acting
Commissioner of Internal Revenue.
Syllabi Class : Taxation|Constitutional Law
Syllabi:
1. Taxation; Constitutional Law; The Constitution sets forth the

restrictions to the power to tax.-
The power to tax moreover, to borrow from Justice Malcolm, is an
attribute of sovereignty. It is the strongest of all the powers of
government. It is, of course, to be admitted that for all its plenitude,
the power to tax is not unconfined. There are restrictions. The
Constitution sets forth such limits. Adversely affecting as it does
property rights, both the due process and equal protection clauses may
properly be invoked, as petitioner does, to invalidate in appropriate
cases a revenue measure. If it were otherwise, there would be truth to
the 1803 dictum of Chief Justice Marshall that the power to tax
involves the power to destroy. In a separate opinion in Graves v. New
York, Justice Frankfurter, after referring to it as an unfortunate
remark, characterized it as a flourish of rhetoric [attributable to] the
intellectual fashion of the times [allowing] a free use of absolutes. This
is merely to emphasize that it is not and there cannot be such a
constitutional mandate. Justice Frankfurter could rightfully conclude:
The web of unreality spun from Marshalls famous dictum was brushed
away by one stroke of Mr. Justice Holmess pen: The power to tax is
not the power to destroy while this Court sits. So it is in the
Philippines.
2. Taxation; Constitutional Law; A bare allegation that Batas 135,

which sets different income tax schedules for fixed income earners and
business or professional income earners, is arbitrary does not suffice to
invalidate said tax statute.-
The difficulty confronting petitioner is thus apparent. He alleges

arbitrariness. A mere allegation, as here, does not suffice. There must
be a factual foundation of such unconstitutional taint. Considering that
petitioner here would condemn such a provision as void on its face, he
has not made out a case. This is merely to adhere to the authoritative
doctrine that where the due process and equal protection clauses are
invoked, considering that they are not fixed rules but rather broad
standards, there is a need for proof of such persuasive character as
would lead to such a conclusion. Absent such a showing, the
presumption of validity must prevail.
3. Taxation; Constitutional Law; Due process clause may be invoked

where a tax statute is so arbitrary as to find no support in
Constitution.-
It is undoubted that the due process clause may be invoked where a

taxing statute is so arbitrary that it finds no support in the Constitution.
An obvious example is where it can be shown to amount to the
confiscation of property. That would be a clear abuse of power. It then
becomes the duty of this Court to say that such an arbitrary act
amounted to the exercise of an authority not conferred. That properly
calls for the application of the Holmes dictum. It has also been held
that where the assailed tax measure is beyond the jurisdiction of the
state, or is not for a public purpose, or, in case of a retroactive statute
is so harsh and unreasonable, it is subject to attack on due process
grounds.
4. Taxation; Constitutional Law; The State is free to select the

subjects of taxation and inequalities consequent to its exercise infringe
no constitutional limitation.-
The equal protection clause is, of course, inspired by the noble concept
of approximating the ideal of the lawss benefits being available to all
and the affairs of men being governed by that serene and impartial
uniformity, which is of the very essence of the idea of law. There is,
however, wisdom, as well as realism, in these words of Justice
Frankfurter: The equality at which the equal protection clause aims is
not a disembodied equality. The Fourteenth Amendment enjoins the
equal protection of the laws, and laws are not abstract propositions.
They do not relate to abstract units A, B and C, but are expressions of
policy arising out of specific difficulties, addressed to the attainment of
specific ends by the use of specific remedies. The Constitution does not
require things which are different in fact or opinion to be treated in law
as though they were the same. Hence the constant reiteration of the
view that classification if rational in character is allowable. As a matter
of fact, in a leading case of Lutz V. Araneta, this Court, through Justice
J.B.L. Reyes, went so far as to hold 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 repeatedly held that inequalities which result from a
singling out of one particular class for taxation, or exemption infringe
no constitutional limitation.
5. Taxation; Constitutional Law; Uniformity in taxation quite similar

to the standard of equal protection.-
Petitioner likewise invoked the kindred concept of uniformity. According

to the Constitution: The rule of taxation shall be uniform and
equitable. This requirement is met according to Justice Laurel in
Philippine Trust Company v. Yatco, decided in 1940, when the tax
operates with the same force and effect in every place where the
subject may be found. He likewise added: The rule of uniformity does
not call for perfect uniformity or perfect equality, because this is hardly
attainable. The problem of classification did not present itself in that
case. It did not arise until nine years later, when the Supreme Court
held: Equality and uniformity in taxation means that all taxable articles
or kinds of property of the same class shall be taxed at the same rate.
The taxing power has the authority to make reasonable and natural
classifications for purposes of taxation, * * *. As clarified by Justice
Tuason, where the differentiation complained of conforms to the
practical dictates of justice and equity it is not discriminatory within
the meaning of this clause and is therefore uniform. There is quite a
similarity then to the standard of equal protection for all that is required
is that the tax applies equally to all persons, firms and corporations
placed in similar situation.
6. Taxation; Constitutional Law; Taxpayers may be classified into

different categories where it rests on real differences.-
Apparently, what misled petitioner is his failure to take into

consideration the distinction between a tax rate and a tax base. There
is no legal objection to a broader tax base or taxable income by
eliminating all deductible items and at the same time reducing the
applicable tax rate. Taxpayers may be classified into different
categories. To repeat, it is enough that the classification must rest upon
substantial distinctions that make real differences. In the case of the
gross income taxation embodied in Batas Pambansa Blg. 135, the
discernible basis of classification is the susceptibility of the income to
the application of generalized rules removing all deductible items for all
taxpayers within the class and fixing a set of reduced tax rates to be
applied to all of them. Taxpayers who are recipients of compensation
income are set apart as a class. As there is practically no overhead
expense, these taxpayers are not entitled to make deductions for
income tax purposes because they are in the same situation more or
less. On the other hand, in the case of professionals in the practice of
their calling and businessmen, there is no uniformity in the costs or
expenses necessary to produce their income. It would not be just then
to disregard the disparities by giving all of them zero deduction and
indiscriminately impose on all alike the same tax rates on the basis of
gross income. There is ample justification then for the Batasang
Pambansa to adopt the gross system of income taxation to
compensation income, while continuing the system of net income
taxation as regards professional and business income.
Tolentino vs. Secretary of Finance 235 SCRA 630 , August 25, 1994
Case Title : ARTURO M. TOLENTINO, petitioner, vs. THE SECRETARY OF FINANCE

and THE COMMISSIONER OF INTERNAL REVENUE, respondents., JUAN T. DAVID,
petitioner, vs. TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE
OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO, as Commissioner
of Internal Revenue; and their AUTHORIZED AGENTS OR REPRESENTATIVES,
respondents., RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES,
petitioners, vs. THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE
COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND BUREAU OF
CUSTOMS, respondents., PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING
CO., INC.; KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE JOURNALISTS,
INC.; JOSE L. PAVIA; and OFELIA L. DIMALANTA, petitioners, vs. HON. LIWAYWAY
V. CHATO, in her capacity as Commissioner of Internal Revenue; HON. TEOFISTO
T. GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B.
DE OCAMPO, in his capacity as Secretary of Finance, respondents., CHAMBER OF
REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner, vs. THE
COMMISSIONER OF INTERNAL REVENUE, respondent., KILOSBAYAN, INC., JOVITO
R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T.
APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE
TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE
CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. (MABINI), FREEDOM FROM
DEBT COALITION, INC., PHILIPPINE BIBLE SOCIETY, INC., and WIGBERTO
TAADA, petitioners, vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF
FINANCE, THE COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER
OF CUSTOMS, respondents., PHILIPPINE AIRLINES, INC. petitioner, vs. THE
SECRETARY OF FINANCE, and COMMISSIONER OF INTERNAL REVENUE,
respondents., COOPERATIVE UNION OF THE PHILIPPINES, petitioners, vs. HON.
LIWAYWAY V. CHATO, in her capacity as the Commissioner of Internal Revenue,
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, and
HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of Finance,
respondents., PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC., and
ASSOCIATION OF PHILIPPINE BOOKSELLERS, petitioners, vs. HON. ROBERTO B. DE
OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO, as the
Commissioner of Internal Revenue and HON. GUILLERMO PARAYNO, JR., in his
capacity as the Commissioner of Customs, respondents.Case Nature : ORIGINAL
ACTIONS in the Supreme Court. Certiorari and prohibition.
Syllabi Class : Constitutional Law|Statutes|Taxation|Origin of revenue bills|Judicial

Review|Bicameral Conference Committee|Separation of Powers|Bill-
Drafting|Enrolled Bill Doctrine|Titles of Bills|Public Utilities|Franchises|Expanded
Value Added Tax Law|Bill of Rights|Freedom of Expression|Equal Protection
Clause|Freedom of Religion|Due Process|Hierarchy of Values|Contract
Clause|Contracts|Origin of Revenue Bills|Supreme Court|Enrolled Bill
Doctrine|Expanded VAT Law|Presidential Certification of Bills|Doctrine of
Ratification|Statutory Construction|Ex Post Veto Power
Syllabi:
1. Constitutional Law; Statutes; Taxation; Origin of revenue

bills; A bill originating in the House of Representatives may undergo
such extensive changes in the Senate that the result may be a rewriting
of the whole; As a result of the Senate action, a distinct bill may be
produced and to insist that a revenue statute must substantially be the
same as the House bill would be to deny the Senates power not only to
concur with amendments but also to propose amendments.-
Petitioners contention is that Republic Act No. 7716 did not originate
exclusively in the House of Representatives as required by Art. VI,
24 of the Constitution, because it is in fact the result of the
consolidation of two distinct bills, H. No. 11197 and S. No. 1630. In this
connection, petitioners point out that although Art. VI, 24 was
adopted from the American Federal Constitution, it is notable in two
respects: the verb shall originate is qualified in the Philippine
Constitution by the word exclusively and the phrase as on other bills
in the American version is omitted. This means, according to them, that
to be considered as having originated in the House, Republic Act No.
7716 must retain the essence of H. No. 11197. This argument will not
bear analysis. To begin with, it is not the lawbut the revenue bill
which is required by the Constitution to originate exclusively in the
House of Representatives. It is important to emphasize this, because a
bill originating in the House may undergo such extensive changes in the
Senate that the result may be a rewriting of the whole. The possibility
of a third version by the conference committee will be discussed later.
At this point, what is important to note is that, as a result of the Senate
action, a distinct bill may be produced. To insist that a revenue
statuteand not only the bill which initiated the legislative process
culminating in the enactment of the lawmust substantially be the
same as the House bill would be to deny the Senates power not only to
concur with amendments but also to propose amendments. It would
be to violate the coequality of legislative power of the two houses of
Congress and in fact make the House superior to the Senate.

bills;Legislative power is vested in the Congress of the Philippines,
consisting of a Senate and a House of Representatives, not in any
particular chamber.-
The contention that the constitutional design is to limit the Senates

power in respect of revenue bills in order to compensate for the grant
to the Senate of the treaty-ratifying power and thereby equalize its
powers and those of the House overlooks the fact that the powers being
compared are different. We are dealing here with the legislative power
which under the Constitution is vested not in any particular chamber
but in the Congress of the Philippines, consisting of a Senate and a
House of Represen-tatives. The exercise of the treaty-ratifying power
is not the exercise of legislative power. It is the exercise of a check on
the executive power. There is, therefore, no justification for comparing
the legislative powers of the House and of the Senate on the basis of
the possession of such nonlegislative power by the Senate. The
possession of a similar power by the U.S. Senate has never been
thought of as giving it more legislative powers than the House of
Representatives.

bills;There is really no difference between the Senate preserving the
House Bill up to the enacting clause and then writing its own version
following the enacting clause and, on the other hand, separately
presenting a bill of its own on the same subject matter.-
It is insisted, however, that S. No. 1630 was passed not in substitution

of H. No. 11197 but of another Senate bill (S. No. 1129) earlier filed
and that what the Senate did was merely to take [H. No. 11197] into
consideration in enacting S. No. 1630. There is really no difference
between the Senate preserving H. No. 11197 up to the enacting clause
and then writing its own version following the enacting clause (which, it
would seem, petitioners admit is an amendment by substitution), and,
on the other hand, separately presenting a bill of its own on the same
subject matter. In either case the result are two bills on the same
subject.

bills;The Constitution simply means that the initiative for filing
revenue, tariff, or tax bills, bills authorizing an increase of the public
debt, private bills and bills of local application must come from the
House of Representatives and that it does not prohibit the filing in the
Senate of a substitute bill in anticipation of its receipt of the bill from
the House.-
Indeed, what the Constitution simply means is that the initiative for
filing revenue, tariff, or tax bills, bills authorizing an increase of the
public debt, private bills and bills of local application must come from
the House of Representatives on the theory that, elected as they are
from the districts, the members of the House can be expected to be
more sensitive to the local needs and problems. On the other hand, the
senators, who are elected at large, are expected to approach the same
problems from the national perspective. Both views are thereby made
to bear on the enactment of such laws. Nor does the Constitution
prohibit the filing in the Senate of a substitute bill in anticipation of its
receipt of the bill from the House, so long as action by the Senate as a
body is withheld pending receipt of the House bill.
5. Constitutional Law; Statutes; Presidential certification on urgency
of a bill dispenses with the requirement not only of printing but also
that of reading the bill on separate days.-
The presidential certification dispensed with the requirement not only of

printing but also that of reading the bill on separate days. The phrase
except when the President certifies to the necessity of its immediate
enactment, etc. in Art. VI, 26(2) qualifies the two stated conditions
before a bill can become a law: (i) the bill has passed three readings on
separate days and (ii) it has been printed in its final form and
distributed three days before it is finally approved. In other words, the
unless clause must be read in relation to the except clause, because
the two are really coordinate clauses of the same sentence. To construe
the except clause as simply dispensing with the second requirement
in the unless clause (i.e., printing and distribution three days before
final approval) would not only violate the rules of grammar. It would
also negate the very premise of the except clause: the necessity of
securing the immediate enactment of a bill which is certified in order to
meet a public calamity or emergency. For if it is only the printing that is
dispensed with by presidential certification, the time saved would be so
negligible as to be of any use in insuring immediate enactment. It may
well be doubted whether doing away with the necessity of printing and
distributing copies of the bill three days before the third reading would
insure speedy enactment of a law in the face of an emergency requiring
the calling of a special election for President and Vice-President. Under
the Constitution such a law is required to be made within seven days of
the convening of Congress in emergency session.
6. Constitutional Law; Statutes; Judicial Review; While the

sufficiency of the factual basis of the suspension of the writ of habeas
corpus or declaration of martial law is subject to judicial review because
basic rights of individuals may be at hazard, the factual basis of
presidential certification of bills, which involves doing away with
procedural requirements designed to insure that bills are duly
considered by members of Congress, certainly should elicit a different
standard of review.+
7. Constitutional Law; Statutes; Bicameral Conference

Committee;A third version of the bill may result from the conference
committee, which is considered an amendment in the nature of a
substitute, the only requirement being that the third version be
germane to the subject of the House and Senate bills.+

Committee;The report of the conference committee needs the
approval of both houses of Congress to become valid as an act of the
legislative department.+

Committee;Separation of Powers; It is common place in Congress
that conference committee reports include new matters which, though
germane, have not been committed to the committee, and if a change
is desired in the practice, it must be sought in Congress since this
question is not covered by any constitutional provision but is only an
internal rule of each house.+

Committee;Separation of Powers; Bill-Drafting; The use of
brackets and capital letters to indicate changes is a standard practice in
bill-drafting; The Supreme Courts concern is with the procedural
requirements of the Constitution for the enactment of laws, not the
enforcement of internal Rules of Congress since parliamentary rules
are merely procedural and with their observance the courts have no
concern.+

Committee;Separation of Powers; The three-reading requirement
refers only to bills introduced for the first time in either house of
Congress, not to the conference committee report.+

Committee;Separation of Powers; Enrolled Bill Doctrine; An
enrolled copy of a bill is conclusive not only of its provisions but also of
its due enactment.+

Committee;Separation of Powers; Enrolled Bill Doctrine; While
the enrolled bill rule is not absolute, the Supreme Court should
decline the invitation to go behind the enrolled copy of the bill where
allegations that the constitutional procedures for the passage of bills
have not been observed have no more basis than another allegation
that the Conference Committee surreptitiously inserted provisions into
a bill which it had prepared.+
14. Constitutional Law; Statutes; Titles of Bills; The constitutional

requirement that every bill passed by Congress shall embrace only one
subject which shall be expressed in its title is intended to prevent
surprise upon the members of Congress and to inform the people of
pending legislation so that, if they wish to, they can be heard regarding
it.+
15. Constitutional Law; Statutes; Titles of Bills; The trend is to
construe the constitutional requirement in such a manner that courts do
not unduly interfere with the enactment of necessary legislation.+
16. Constitutional Law; Statutes; Public Utilities; Franchises; The

grant of a franchise for the operation of a public utility is subject to
amendment, alteration or repeal by Congress when the common good
so requires.+
17. Constitutional Law; Taxation; Expanded Value Added Tax

Law;Bill of Rights; Freedom of Expression; Even with due
recognition of its high estate and its importance in a democratic society,
the press is not immune from general regulation by the State.-
To be sure, we are not dealing here with a statute that on its face
operates in the area of press freedom. The PPIs claim is simply that, as
applied to newspapers, the law abridges press freedom. Even with due
recognition of its high estate and its importance in a democratic
society, however, the press is not immune from general regulation by
the State.

Law;Bill of Rights; Freedom of Expression; Equal Protection
Clause; The VAT law would perhaps be open to the charge of
discriminatory treatment if the only privilege withdrawn had been that
granted to the press.-
What it contends is that by withdrawing the exemption previously

granted to print media transactions involving printing, publication,
importation or sale of newspapers, Republic Act No. 7716 has singled
out the press for discriminatory treatment and that within the class of
mass media the law discriminates against print media by giving
broadcast media favored treatment. We have carefully examined this
argument, but we are unable to find a differential treatment of the
press by the law, much less any censorial motivation for its enactment.
If the press is now required to pay a value-added tax on its
transactions, it is not because it is being singled out, much less
targeted, for special treatment but only because of the removal of the
exemption previously granted to it by law. The withdrawal of exemption
is all that is involved in these cases. Other transactions, likewise
previously granted exemption, have been delisted as part of the
scheme to expand the base and the scope of the VAT system. The law
would perhaps be open to the charge of discriminatory treatment if the
only privilege withdrawn had been that granted to the press. But that is
not the case.
Law;Bill of Rights; Freedom of Expression; Equal Protection
Clause;There is a reasonable basis for the classification and different
treatment between print media and broadcast media.-
Nor is impermissible motive shown by the fact that print media and
broadcast media are treated differently. The press is taxed on its
transactions involving printing and publication, which are different from
the transactions of broadcast media. There is thus a reasonable basis
for the classification.

Law;Bill of Rights; Freedom of Religion; The Free Exercise of
Religion Clause does not prohibit imposing a generally applicable sales
and use tax on the sale of religious materials by a religious
organization.-
What has been said above also disposes of the allegations of the PBS
that the removal of the exemption of printing, publication or
importation of books and religious articles, as well as their printing and
publication, likewise violates freedom of thought and of conscience. For
as the U.S. Supreme Court unanimously held in Jimmy Swaggart
Ministries v. Board of Equalization, the Free Exercise of Religion Clause
does not prohibit imposing a generally applicable sales and use tax on
the sale of religious materials by a religious organization.

Law;Bill of Rights; The VAT registration fee is a mere administrative
fee, one not imposed on the exercise of a privilege, much less a
constitutional right.-
In this case, the fee in 107, although a fixed amount (P1,000), is not
imposed for the exercise of a privilege but only for the purpose of
defraying part of the cost of registration. The registration requirement
is a central feature of the VAT system. It is designed to provide a
record of tax credits because any person who is subject to the payment
of the VAT pays an input tax, even as he collects an output tax on sales
made or services rendered. The registration fee is thus a mere
administrative fee, one not imposed on the exercise of a privilege,
much less a constitutional right.

Law;Bill of Rights; Due Process; Hierarchy of Values; When
freedom of the mind is imperiled by law, it is freedom that commands a
momentum of respect and when property is imperiled, it is the
lawmakers judgment that commands respect.-
There is basis for passing upon claims that on its face the statute
violates the guarantees of freedom of speech, press and religion. The
possible chilling effect which it may have on the essential freedom of
the mind and conscience and the need to assure that the channels of
communication are open and operating importunately demand the
exercise of this Courts power of review. There is, however, no
justification for passing upon the claims that the law also violates the
rule that taxation must be progressive and that it denies petitioners
right to due process and the equal protection of the laws. The reason
for this different treatment has been cogently stated by an eminent
authority on constitutional law thus: [W]hen freedom of the mind is
imperiled by law, it is freedom that commands a momentum of respect;
when property is imperiled it is the lawmakers judgment that
commands respect. This dual standard may not precisely reverse the
presumption of constitutionality in civil liberties cases, but obviously it
does set up a hierarchy of values within the due process clause.

Law;The legislature is not required to adhere to a policy of all or none
in choosing the subject of taxation.-
On the other hand, the CUPs contention that Congress withdrawal of

exemption of producers cooperatives, marketing cooperatives, and
service cooperatives, while maintaining that granted to electric
cooperatives, not only goes against the constitutional policy to promote
cooperatives as instruments of social justice (Art. XII, 15) but also
denies such cooperatives the equal protection of the law is actually a
policy argument. The legislature is not required to adhere to a policy of
all or none in choosing the subject of taxation.

Law;Regressivity is not a negative standard for courts to enforce since
what Congress is required by the Constitution to do is to evolve a
progressive system of taxation.-
Indeed, regressivity is not a negative standard for courts to enforce.

What Congress is required by the Constitution to do is to evolve a
progressive system of taxation. This is a directive to Congress, just
like the directive to it to give priority to the enactment of laws for the
enhancement of human dignity and the reduction of social, economic
and political inequalities (Art. XIII, 1), or for the promotion of the
right to quality education (Art. XIV, 1). These provisions are put in
the Constitution as moral incentives to legislation, not as judicially
enforceable rights.
Law;Contract Clause; Contracts; Not only are existing laws read into
contracts in order to fix obligations as between parties, but the
reservation of essential attributes of sovereign power is also read into
contracts as a basic postulate of the legal order.+

Law;Contract Clause; Contracts; Contract Clause is not a limitation
on the power of taxation save only where a tax exemption was granted
for a valid consideration.-
In truth, the Contract Clause has never been thought as a limitation on

the exercise of the States power of taxation save only where a tax
exemption has been granted for a valid consideration. Such is not the
case of PAL in G.R. No. 115852, and we do not understand it to make
this claim. Rather, its position, as discussed above, is that the removal
of its tax exemption cannot be made by a general, but only by a
specific, law.
27. Constitutional Law; Judicial Review; Public actions by non-

Hohfeldian or ideological plaintiffs are now cognizable provided they
meet the standing requirement of the Constitution; There must be
before the Court a fully developed factual record that alone can impart
to its adjudication the impact of actuality to insure that decision-making
is informed and well-grounded.+
28. Constitutional Law; Judicial Review; The duty of the Court to

exercise its power of judicial review must still be performed in the
context of a concrete case or controversy; That the other departments
of the government may have committed a grave abuse of discretion is
not an independent ground for exercising the Courts power.+
29. Constitutional Law; Statutes; Origin of Revenue

Bills;Origination should have no reference to time of conception but to
the affirmative act which effectively puts the bicameral legislative
procedure in motion, i.e., the transmission by one chamber to the other
of a bill for its adoption, and it may be that in the Senate, revenue or
tax measures are discussed, even drafted, before a similar activity
takes place in the House.+
30. Constitutional Law; Statutes; Judicial Review; Supreme

Court;Petitioners may not, by raising what are concededly novel and
weighty constitutional questions, compel the Supreme Court to assume
the role of a trier of facts.+
31. Constitutional Law; Statutes; Enrolled Bill
Doctrine;Separation of Powers; There is no proof worthy of the
name of any facts to justify the reexamination and, possibly, disregard,
of the enrolled bill theory.+

Committee;Both chambers of Congress entrust the function of
reconciling the bills to their delegates at a conference committee with
full awareness, and tacit consent, that new provisions may be included
even if not within the disagreeing provisions.+

Committee;It is an unacceptable theorization that when the BCC
report and its proposed bill were submitted to the Senate and the
House, and the members thereof did not bother to read, or what is
worse, having read did not understand, what was before them.+
34. Constitutional Law; Judicial Review; Where a specific procedure

is fixed by the Constitution itself, it should not suffice for Congress to
simply say that the rules have been observed and flatly consider the
matter closed.+
35. Constitutional Law; Expanded VAT Law; Bicameral

Conference Committee; The resultant enrolled bill did not originate
exclusively in the House of Representatives.-
The two bills were separately introduced in their respective Chambers.

Both retained their independent existence until they reached the
bicameral conference committee where they were consolidated. It was
this consolidated measure that was finally passed by Congress and
submitted to the President of the Philippines for his approval. House Bill
No. 11197 originated in the House of Representatives but this was not
the bill that eventually became R.A. No. 7716. The measure that was
signed into law by President Ramos was the consolidation of that bill
and another bill, viz., Senate Bill No. 1630, which was introduced in the
Senate. The resultant enrolled bill thus did not originate exclusively in
the House of Representatives. The enrolled bill itself says that part of it
(and it does not matter to what extent) originated in the Senate.

Conference Committee; The participation of the Senate was not in
proposing or concurring with amendments but in originating its own
Senate bill which was not embodied in but merged with the House bill.-
It would have been different if the only participation of the Senate was
in the amendment of the measure that was originally proposed in the
House of Representatives. But this was not the case. The participation
of the Senate was not in proposing or concurring with amendments that
would have been incorporated in House Bill No. 11197. Its participation
was in originating its own Senate Bill No. 1630, which was not
embodied in but merged with House Bill No. 11197. Senate Bill No.
1630 was not even an amendment by substitution, assuming this was
permissible. To substitute means to take the place of; to put or use
in place of another. Senate Bill No. 1630 did not, upon its approval,
replace (and thus eliminate) House Bill No. 11197. Both bills retained
their separate identities until they were joined or united into what
became the enrolled bill and ultimately R.A. No. 7716.
37. Constitutional Law; Statutes; Origin of Revenue Bills; The

approval by the Senate of Senate Bill No. 1630, after it had considered
House Bill No. 11197, may be taken as an amendment by substitution
by the Senate not only of Senate Bill No. 1129 but of House Bill No.
11197 as well.+
38. Constitutional Law; Statutes; Separation of

Powers;Presidential Certification of Bills; A becoming respect for a
co-equal and coordinate department of government points that weight
and credibility be given to such Presidential judgment.+
39. Constitutional Law; Bill of Rights; Freedom of

Expression; R.A. 7716 in imposing a value-added tax on circulation
income of newspapers and similar publications and on income derived
from publishing advertisements in newspapers violates Sec. 4, Art III of
the Constitution.+
40. Constitutional Law; Bill of Rights; Freedom of Religion; The

imposition of the VAT on the sale and distribution of religious articles
must be struck down for being contrary to Sec. 5, Art. III of the
Constitution.+
41. Constitutional Law; Bill of Rights; Taxation; The inherent

power of the State to tax, which is vested in the legislature, includes
the power to determine whom or what to tax, as well as how much to
tax.-
CREBA which specifically assails the 10% value-added tax on the gross
selling price of real properties, fails to distinguish between a sale of real
properties primarily held for sale to customers or held for lease in the
ordinary course of trade or business and isolated sales by individual
real property owners (Sec. 103[s]). That those engaged in the business
of real estate development realize great profits is of common
knowledge and need not be discussed at length here. The qualification
in the law that the 10% VAT covers only sales of real property primarily
held for sale to customers, i.e. for trade or business thus takes into
consideration a taxpayers capacity to pay. There is no showing that the
consequent distinction in real estate sales is arbitrary and in violation of
the equal protection clause of the Constitution. The inherent power to
tax of the State, which is vested in the legislature, includes the power
to determine whom or what to tax, as well as how much to tax. In the
absence of a clear showing that the tax violates the due process and
equal protection clauses of the Constitution, this Court, in keeping with
the doctrine of separation of powers, has to defer to the discretion and
judgment of Congress on this point.
42. Constitutional Law; Judicial Review; Separation of Powers; It

is not believed that judicial tyranny is envisioned, let alone
institutionalized, by the people in the 1987 Constitution.+
43. Constitutional Law; Expanded VAT Law; The Senate clearly and
deliberately violated the requirements of the Constitution not only in
the origination of the bill but in the very enactment of R.A. 7716.-
This writer consequently agrees with the clearly tenable proposition of

petitioners that when the Senate passed and approved S.B. No. 1630,
had it certified by the Chief Executive, and thereafter caused its
consideration by the bicameral conference committee in total
substitution of H.B. No. 11197, it clearly and deliberately violated the
requirements of the Constitution not only in the origination of the bill
but in the very enactment of Republic Act No. 7716. Contrarily, the
shifting sands of inconsistency in the arguments adduced for
respondents betray such lack of intellectual rectitude as to give the
impression of being mere rhetorics in defense of the indefensible.
44. Constitutional Law; Expanded VAT Law; R.A. 7716 did not
originate exclusively in the House.-
Since R.A. No. 7716 is a revenue measure, it must originate exclusively

in the Housenot in the Senate. As correctly asserted by petitioner
Tolentino, on the face of the enrolled copy of R.A. No. 7716, it is a
CONSOLIDATION OF HOUSE BILL NO. 11197 AND SENATE BILL NO.
1630. In short, it is an illicit marriage of a bill which originated in the
House and a bill which originated in the Senate. Therefore, R.A. No.
7716 did not originate exclusively in the House.
45. Constitutional Law; Expanded VAT Law; Origin of Revenue

Bills;The Senate cannot amend by substitution with an entirely new bill
of its own any bill covered by Section 24 of Article VI which the House
transmitted to it because such substitution would indirectly violate
Section 24.-
Since the origination is not exclusively vested in the House of

Representatives of the United States, the Senates authority to propose
or concur with amendments is necessarily broader. That broader
authority is further confirmed by the phrase as on other Bills, i.e., its
power to propose or concur with amendments thereon is the same as in
ordinary bills. The absence of this phrase in our Constitution was clearly
intended to restrict or limit the Philippine Senates power to propose or
concur with amendments. In the light of the exclusivity of origination
and the absence of the phrase as on other Bills, the Philippine Senate
cannot amend by substitution with an entirely new bill of its own any
bill covered by Section 24 of Article VI which the House of
Representatives transmitted to it because such substitution would
indirectly violate Section 24.
46. Constitutional Law; Expanded VAT Law; Origin of Revenue

Bills;Presidential Certification of Bills; The only revenue bill which
could be properly certified on permissible constitutional grounds is the
bill that was introduced in the House.-
I submit, however, that the Presidential certification is void ab initio not

necessarily for the reason adduced by petitioner Kilosbayan, Inc., but
because it was addressed to the Senate for a bill which is prohibited
from originating therein. The only bill which could be properly certified
on permissible constitutional grounds even if it had already been
transmitted to the Senate is HB No. 11197. As earlier observed, this
was not so certified, although HB No. 9210 (one of those consolidated
into HB No. 11197) was certified on 1 June 1993. Also, the certification
of SB No. 1630 cannot, by any stretch of the imagination, be extended
to HB No. 11197 because SB No. 1630 did not substitute HB No. 11197
but SB No. 1129. Considering that the certification of SB No. 1630 is
void, its approval on second and third readings in one day violated
Section 26(2), Article VI of the Constitution.

Committee;The duty of the BCC is limited to the reconciliation of
disagreeing provisions or the resolution of differences or inconsistencies
of the bills from both Houses of Congress.+

Committee;Doctrine of Ratification; The doctrine of ratification may
apply to minor procedural flaws or tolerable breaches of the parameters
of the bicameral conference committees limited powers but never to
violations of the Constitution+
49. Constitutional Law; Statutes; Enrolled Bill
Doctrine;Invocation of the enrolled bill doctrine is misplaced.+

Conference Committee; A bicameral conference committee is a
creature, not of the Constitution, but of the legislative body under its
power to determine rules of its proceeding.-
As a conference committee has been defined: . . . unlike the joint

committee is two committees, one appointed by each house. It is
normally appointed for a specific bill and its function is to gain accord
between the two houses either by the recession of one house from its
bill or its amendments or by the further amendment of the existing
legislation or by the substitution of an entirely new bill. Obviously the
conference committee is always a special committee and normally
includes the member who introduced the bill and the chairman of the
committee which considered it together with such other representatives
of the house as seem expedient. (Horack, Cases and Materials on
Legislation [1940] 220. See also Zinn, Conference Procedure in
Congress, 38 ABAJ 864 [1952]; Steiner, The Congressional Conference
Committee [U of Ill. Press, 1951]). From the foregoing definition, it is
clear that a bicameral conference committee is a creature, not of the
Constitution, but of the legislative body under its power to determine
rules of its proceedings under Article VI, Sec. 16 (3) of the Constitution.
Thus, it draws its life and vitality from the rules governing its creation.

Conference Committee; The Bicameral Conference Committee
exceeded the power and authority granted in the Rules of its creation.-
Even a cursory perusal of the above outline will convince one that,
indeed, the Bicameral Conference Committee (henceforth to be referred
to as BICAM) exceeded the power and authority granted in the Rules of
its creation. Both Senate and House Rules limit the task of the
Conference Committee in almost identical language to the settlement of
differences in the provisions or amendments to any bill or joint
resolution. If it means anything at all, it is that there are provisions in
subject bill, to start with, which differ and, therefore, need
reconciliation. Nowhere in the Rules is it authorized to initiate or
propose completely new matter. Although under certain rules on
legislative procedure, like those in Jeffersons Manual, a conference
committee may introduce germane matters in a particular bill, such
matters should be circumsribed by the committees sole authority and
function to reconcile differences.
Conference Committee; Insertion of new matter on the part of the
Bicameral Conference Committee is an ultra vires act which makes the
same void.-
Parenthetically, in the Senate and in the House, a matter is germane

to a particular bill if there is a common tie between said matter and the
provisions which tend to promote the object and purpose of the bill it
seeks to amend. If it introduces a new subject matter not within the
purview of the bill, then it is not germane to the bill. The test is
whether or not the change represented an amendment or extension of
the basic purpose of the original, or the introduction of an entirely new
and different subject matter. In the BICAM, however, the germane
subject matter must be within the ambit of the disagreement between
the two Houses. If the germane subject is not covered by the
disagreement but it is reflected in the final version of the bill as
reported by the Conference Committee or, if what appears to be a
germane matter in the sense that it is relevant or closely allied with
the purpose of the bill, was not the subject of a disagreement between
the Senate and the House, it should be deemed an extraneous matter
or even a rider which should never be considered legally passed for
not having undergone the three-day reading requirement. Insertion of
new matter on the part of the BICAM is, therefore, an ulta vires act
which makes the same void.
53. Constitutional Law; Origin of Revenue Bills; Statutory

Construction; The provision in the Constitution requiring that all
revenue bills shall originate exclusively from the Lower House is
mandatory.+
54. Constitutional Law; Origin of Revenue Bills; Statutory

Construction; It is the general rule to regard constitutional provisions
as mandatory, and not to leave any discretion to the will of the
legislature to obey or disregard them.+
55. Constitutional Law; Origin of Revenue Bills; A Senate

amendment by substitution simply means that the bill did not in effect
originate from the lower chamber but from the upper chamber,
disguising itself as a mere amendment of the House version.+
56. Constitutional Law; Judicial Review; Courts will not decline the
exercise of jurisdiction upon the suggestion that action might be taken
by political agencies in disregard of the judgment of the judicial
tribunals.+
57. Constitutional Law; Bicameral Conference Committee; Ex
Post Veto Power; There is absolutely no legal warrant for the bold
submission that a Bicameral Conference Committee possesses the
power to add or delete provisions in bills already approved on third
reading by both Houses or an ex post veto power.+
58. Constitutional Law; Bicameral Conference Committee; Ex

Post Veto Power; The thesis that a Bicameral Conference Committee
can wield ex post veto power wages war against our settled ideals of
representative democracy.+
59. Constitutional Law; Enrolled Bill Doctrine; The enrolled bill

theory is a historical relic that should not continuously rule us from the
fossilized past.+
60. Constitutional Law; Enrolled Bill Doctrine; The previous

rulings of the Supreme Court on the conclusiveness of an enrolled bill
are no longer good law.+
Abakada Guro Party List vs. Ermita 469 SCRA 1 , September 01, 2005
Case Title : ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON
S. ALCANTARA and ED VINCENT S. ALBANO, petitioners, vs. THE HONORABLE
EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE SECRETARY OF THE
DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE COMMISSIONER OF
INTERNAL REVENUE GUILLERMO PARAYNO, JR., respondents., FRANCIS JOSEPH G.
ESCUDERO, VINCENT CRISOLOGO, EMMANUEL JOEL J. VILLANUEVA, RODOLFO G.
PLAZA, DARLENE ANTONINO-CUSTODIO, OSCAR G. MALAPITAN, BENJAMIN C.
AGARAO, JR. JUAN EDGARDO M. ANGARA, JUSTIN MARC SB. CHIPECO, FLORENCIO
G. NOEL, MUJIV S. HATAMAN, RENATO B. MAGTUBO, JOSEPH A. SANTIAGO,
TEOFISTO DL. GUINGONA III, RUY ELIAS C. LOPEZ, RODOLFO Q. AGBAYANI and
TEODORO A. CASIO, petitioners, vs. CESAR V. PURISIMA, in his capacity as
Secretary of Finance, GUILLERMO L. PARAYNO, JR., in his capacity as Commissioner
of Internal Revenue, and EDUARDO R. ERMITA, in his capacity as Executive
Secretary, respondents., BATAAN GOVERNOR ENRIQUE T. GARCIA, JR., petitioner,
vs. HON. EDUARDO R. ERMITA, in his capacity as the Executive Secretary; HON.
MARGARITO TEVES, in his capacity as Secretary of Finance; HON. JOSE MARIO
BUNAG, in his capacity as the OIC Commissioner of the Bureau of Internal
Revenue; and HON. ALEXANDER AREVALO, in his capacity as the OIC
Commissioner of the Bureau of Customs, respondents.Case Nature : SPECIAL
CIVIL ACTION in the Supreme Court. Contempt.
Syllabi Class : Courts|Contempt|Separation of Powers

Syllabi:
1. Courts; Contempt; Separation of Powers; If it were true that

former Finance Secretary Purisima felt that the media misconstrued his
actions, then he should have immediately rectified it and not waited
until the Supreme Court required him to explain before he denied
having made such statements which impressed upon the publics mind
that the issuance of the TRO was the product of the machinations on
the Court by the executive branch.-
At the time the reports came out, Purisima did not controvert the truth
or falsity of the statements attributed to him. It was only after the
Court issued the show-cause order that Purisima saw it fit to deny
having uttered these statements. By then, it was already impressed
upon the publics mind that the issuance of the TRO was the product of
machinations on the Court by the executive branch. If it were true that
Purisima felt that the media misconstrued his actions, then he should
have immediately rectified it. He should not have waited until the Court
required him to explain before he denied having made such statements.
And even then, his denials were made as a result of the Courts show-
cause order and not by any voluntary act on his part that will show
utter regret for having been misquoted. Purisima should know that
these press releases placed the Court into dis-honor, disrespect, and
public contempt, diminished public confidence, promoted distrust in the
Court, and assailed the integrity of its Members. The Court already took
a beating before Purisima made any disclaimer. The damage has been
done, so to speak.
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1.
Procter & Gamble Philippine Manufacturing Corp. vs. Municipality of

Jagna 94 SCRA 894 , December 28, 1979
Case Title : PROCTER & GAMBLE PHILIPPINE MANUFACTURING CORPORATION,

plaintiff-appellant, vs. THE MUNICIPALITY OF JAGNA, PROVINCE OF BOHOL,
defendant-appellee.Case Nature : APPEAL from the judgment of the Court of First
Instance of Manila. Cloribel, J.
Syllabi Class : Taxation|License fees|Municipal corporations|Storage fees|License
tax|Police power|General welfare clause|Ordinance|Civil Law|Prescription of
actions
Syllabi:
1. Taxation; License fees; Municipal corporations; 3 kinds of

licenses a municipality is authorized to impose.-
A municipality is authorized to impose three kinds of licenses: (1) a

license for regulation of useful occupation or enterprises; (2) license for
restriction or regulation of non-useful occupations or enterprises; and
(3) license for revenue.
2. Taxation; License fees; Municipal corporations; Municipality of

Jagna, Bohol authorized to impose a license fee and to tax for revenue
purposes.-
It is thus unnecessary, as plaintiff would have us do, to determine

whether the subject storage fee is a tax for revenue purposes or a
license fee to reimburse defendant Municipality for service of
supervision because defendant Municipality is authorized not only to
impose a license fee but also to tax for revenue purposes.
3. Taxation; License fees; Storage fees; License tax; Storage fees

imposed by a municipality is actually a municipal license tax or fee on
persons, firms or corporations storing copra in a bodega in the
municipality; License tax, meaning of.-
The storage fee imposed under the questioned Ordinance is actually a

municipal license tax or fee on persons, firms and corporations, like
plaintiff, exercising the privilege of storing copra in a bodega within
the Municipalitys territorial jurisdiction. For the term license tax has
not acquired a fixed meaning. It is often used indiscriminately to
designate impositions exacted for the exercise of various privileges. In
many instances, it refers to revenue-raising exactions on privileges or
activities.
4. Taxation; License fees; Storage fees; Imposition by a

municipality of storage fees authorized by the general grant of authority
under Commonwealth Act No. 472.-
Not only is the imposition of the storage fee authorized by the general
grant of authority under section 1 of CA No. 472. Neither is the storage
fee in question prohibited nor beyond the power of the municipal
councils and municipal district councils to impose, as listed in section 3
of said CA No. 472.
5. Taxation; License fees; Police power; General welfare

clause;Buying and selling and storing copra is properly the subject of
regulation within the police power granted to municipalities under the
general welfare clause.-
Moreover, the business of buying and selling and storing copra is

properly the subject of regulation within the police power granted to
municipalities under section 2238 of the Revised Administrative Code or
the general welfare clause.
6. Taxation; License fees; Police power; Municipal

corporations;Ordinance; Municipal corporations allowed wide
discretion in determining the rates of imposable license fees including
police power measures: Voiding of ordinance by courts taken only when
the rates imposed, which is allegedly oppressive, excessive and
prohibited, is sufficiently proved.-
Municipal corporations are allowed wide discretion in determining the

rates of imposable license fees even in cases of urely police power
measures. In the absence of proof as to municipal conditions and the
nature of the business being taxed as well as other factors relevant to
the issue of arbitrariness or unreasonableness of the questioned rates,
Courts will go slow in writing off an Ordinance. In the case at bar,
appellant has not sufficiently shown that the rate imposed by the
questioned Ordinance is oppressive, excessive and prohibitive.
7. Taxation; Storage fee, concept of.-
The question of whether appellant is engaged in that business or not is

irrelevant because the storage fee, as previously mentioned, is an
imposition on the privilege of storing copra in a bodega within
defendant municipality by persons, firms or corporations. Section 1 of
the Ordinance in question does not state that said persons, firms or
corporations should be engaged in the business or occupation of buying
or selling copra.
8. Taxation; Ordinance; Double taxation not a case of; Concept and

nature of double taxation; Tax imposed by a municipality on soap and
other similar products of petitioner company different from the tax
imposed on privilege of storing copra in a bodega within the
municipality.-
Thus, it can be said that plaintiffs payment of storage fees imposed by
the Ordinance in question does not amount to double taxation. For
double taxation to exist, the same property must be taxed twice, when
it should be taxed but once. Double taxation has also been defined as
taxing the same person twice by the same jurisdiction for the same
thing. Surely, a tax on plaintiffs products is different from a tax on the
privilege of storing copra in a bodega situated within the territorial
boundary of defendant municipality.
9. Taxation; Ordinance; Storage fee imposed by the municipality not

a tax on export where fee is imposed not only upon copra to be
exported but also upon copra sold and to be used for domestic
purposes.-
We have held that only where there is a clear showing that what is
being taxed is an export to any foreign country would the prohibition
come into play. When the Ordinance itself speaks of exportable copra,
the meaning conveyed is not exclusively export to a foreign country but
shipment out of the municipality. The storage fee impugned is not a tax
on export because it is imposed not only upon copra to be exported but
also copra sold and to be used for domestic purposes if stored in any
warehouse in the Municipality and the weight thereof is 100 kilos or
more.
10. Taxation; Ordinance; Civil Law; Prescription of actions; Action

to recover municipal license taxes under Art. 1145(2) of the Civil Code
is 6 years.-
However, we find merit in plaintiffs contention that the lower Court

erred in ruling that its action has prescribed under Article 1149 of the
Civil Code, which provides for a period of five years for all actions
whose periods are not fixed in that Code. The case of Municipality of
Opon vs. Caltex Phil., is authority for the view that the period for
prescription of actions to recover municipal license taxes is six years
under Article 1145(2) of the Civil Code. Thus, plaintiffs action brought
within six years from the time the right of action first accured in 1958
has not yet prescribed.
Hydro Resources Contractors Corp. vs. Court of Tax Appeals 192

SCRA 604 , December 21, 1990
Case Title : HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner, vs.
THE COURT OF TAX APPEALS and THE HON. DEPUTY MINISTER OF FINANCE,
ALFREDO PIO DE RODA, respondents.Case Nature : SPECIAL CIVIL ACTION of
certiorari to review the decisions of the of the Court of Tax Appeals.
Syllabi Class : Taxation|Import Duties|Ad Valorem Tax
Syllabi:
1. Taxation; Import Duties; Ad Valorem Tax; The importation in

question which arrived in 1977 and 1978 are not subject to the 3%
additional ad valorem duty, the same being imposed only on those
whose letter of credit were opened after the effectivity of Executive
Order 860.-
It is a cardinal rule that laws shall have no retroactive effect, unless the
contrary is provided. (Art. 4, Civil Code) Except for a statement
providing for its immediate execution, Executive Order No. 860 does
not provide for its retroactivity. Moreover, the Deputy Minister of
Finance in his 1st Indorsement to the Central Bank dated March 26,
1983 which was reproduced by the Central Bank Governor in a circular
letter to all authorized agent banks, clarified that letters of credit
opened prior to the effectivity of E.O. 860 are not subject to the
provisions thereof. Consequently, the importations in question which
arrived in 1977 and 1978 are not subject to the 3% additional ad
valorem duty, the same being imposed only on those whose letter of
credit were opened after the promulgation of Executive Order 860.
Commissioner of Internal Revenue vs. Benguet Corporation 463

SCRA 28 , July 08, 2005
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. BENGUET

CORPORATION, respondent.Case Nature : PETITION for review on certiorari of a
decision of the Court of Appeals.
Syllabi Class : Taxation|Appeals|Value Added Tax (VAT)|Words and Phrases|Tax

Refunds|Estoppel
Syllabi:
1. Taxation; Rulings, circulars, rules and regulations promulgated by

the Commissioner of Internal Revenue would have no retroactive
application if to so apply them would be prejudicial to the taxpayers.-
In a long line of cases, this Court has affirmed that the rulings, circular,
rules and regulations promulgated by the Commissioner of Internal
Revenue would have no retroactive application if to so apply them
would be prejudicial to the taxpayers. In fact, both petitioner and
respondent agree that the retroactive application of VAT Ruling No.
008-92 is valid only if such application would not be prejudicial to the
respondentpursuant to the explicit mandate under Sec. 246 of the
NIRC, thus: Sec. 246. Non-retroactivity of rulings.Any revocation,
modification or reversal of any of the rules and regulations promulgated
in accordance with the preceding Section or any of the rulings or
circulars promulgated by the Commissioner shall not be given
retroactive application if the revocation, modification or reversal will be
prejudicial to the taxpayers except in the following cases: (a) where the
taxpayer deliberately misstates or omits material facts from his return
on any document required of him by the Bureau of Internal Revenue;
(b) where the facts subsequently gathered by the Bureau of Internal
Revenue are materially different form the facts on which the ruling is
based; or (c) where the taxpayer acted in bad faith.
2. Taxation; Appeals; The determination of whether a taxpayer had

suffered prejudice is a factual issue.-
To begin with, the determination of whether respondent had suffered

prejudice is a factual issue. It is an established rule that in the exercise
of its power of review, the Supreme Court is not a trier of facts.
Moreover, in the exercise of the Supreme Courts power of review, the
findings of facts of the Court of Appeals are conclusive and binding on
the Supreme Court. An exception to this rule is when the findings of
fact a quo are conflicting, as is in this case.
3. Taxation; Value Added Tax (VAT); Words and Phrases; VAT is a

percentage tax imposed at every stage of the distribution process on
the sale, barter, exchange or lease of goods or properties and rendition
of services in the course of trade or business, or the importation of
goodsit is an indirect tax which may be shifted to the buyer,
transferee, or lessee of the goods, properties, or services but the party
directly liable for the payment of the tax is the seller; Transactions
which are taxed at zero-rate do not result in any output tax; Input VAT
attributable to zero-rated sales could be refunded or credited against
other internal revenue taxes at the option of the taxpayer.-
VAT is a percentage tax imposed at every stage of the distribution

process on the sale, barter, exchange or lease of goods or properties
and rendition of services in the course of trade or business, or the
importation of goods. It is an indirect tax, which may be shifted to the
buyer, transferee, or lessee of the goods, properties, or services.
However, the party directly liable for the payment of the tax is the
seller. In transactions taxed at a 10% rate, when at the end of any
given taxable quarter the output VAT exceeds the input VAT, the excess
shall be paid to the government; when the input VAT exceeds the
output VAT, the excess would be carried over to VAT liabilities for the
succeeding quarter or quarters. On the other hand, transactions which
are taxed at zero-rate do not result in any output tax. Input VAT
attributable to zero-rated sales could be refunded or credited against
other internal revenue taxes at the option of the taxpayer.
4. Taxation; Value Added Tax (VAT); In the instant case, the

retroactive application of VAT Ruling No. 008-92 unilaterally forfeited or
withdrew the option of the seller to pass on its VAT costs to the Central
Bank, with the adverse effect that said seller became the unexpected
and unwilling debtor to the BIR of the amount equivalent to the total
VAT cost of its product, a liability it previously could have recovered
from the BIR in a zero-rated scenario or at least passed on to the
Central Bank had it known it would have been taxed at a 10% rate.-
There appears to be no upfront economic difference in changing the

sale of gold to the Central Bank from a 0% to 10% VAT rate provided
that respondent would be allowed the choice to pass on its VAT costs to
the Central Bank. In the instant case, the retroactive application of VAT
Ruling No. 008-92 unilaterally forfeited or withdrew this option of
respondent. The adverse effect is that respondent became the
unexpected and unwilling debtor to the BIR of the amount equivalent to
the total VAT cost of its product, a liability it previously could have
recovered from the BIR in a zero-rated scenario or at least passed on to
the Central Bank had it known it would have been taxed at a 10% rate.
Thus, it is clear that respondent suffered economic prejudice when its
consummated sales of gold to the Central Bank were taken out of the
zero-rated category. The change in the VAT rating of respondents
transactions with the Central Bank resulted in the twin loss of its
exemption from payment of output VAT and its opportunity to recover
input VAT, and at the same time subjected it to the 10% VAT sans the
option to pass on this cost to the Central Bank, with the total prejudice
in money terms being equivalent to the 10% VAT levied on its sales of
gold to the Central Bank.
5. Taxation; Value Added Tax (VAT); The prejudice experienced by

the seller lies in the fact that the tax refunds/credits that it expected to
receive had effectively disappeared by virtue of its newfound output
VAT liability against which the Commissioner of Internal Revenue had
offset the expected refund/credit; What use would a credit be where
there is nothing to set it off against?-
On petitioners first suggested recoupment modality, respondent
counters that its other sales subject to 10% VAT are so minimal that
this mode is of little value. Indeed, what use would a credit be where
there is nothing to set it off against? Moreover, respondent points out
that after having been imposed with 10% VAT sans the opportunity to
pass on the same to the Central Bank, it was issued a deficiency tax
assessment because its input VAT tax credits were not enough to offset
the retroactive 10% output VAT. The prejudice then experienced by
respondent lies in the fact that the tax refunds/credits that it expected
to receive had effectively disappeared by virtue of its newfound output
VAT liability against which petitioner had offset the expected
refund/credit. Additionally, the prejudice to respondent would not
simply disappear, as petitioner claims, when a liability (which liability
was not there to begin with) is imposed concurrently with an
opportunity to reduce, not totally eradicate, the newfound liability. In
sum, contrary to petitioners suggestion, respondents net income still
decreased corresponding to the amount it expected as its refunds/
credits and the deficiency assessments against it, which when summed
up would be the total cost of the 10% retroactive VAT levied on
respondent.
6. Taxation; Value Added Tax (VAT); Tax Refunds; The burden of

having to go through an unnecessary and cumbersome refund process
is prejudice enough.-
This leads us to the second recourse that petitioner has suggested to

offset any resulting prejudice to respondent as a consequence of giving
retroactive effect to BIR VAT Ruling No. 008-92. Petitioner submits that
granting that respondent has no other sale subject to 10% VAT against
which its input taxes may be used in payment, then respondent is
constituted as the final entity against which the costs of the tax passes-
on shall legally stop; hence, the input taxes may be converted as costs
available as deduction for income tax purposes. Even assuming that the
right to recover respondents excess payment of income tax has not yet
prescribed, this relief would only address respondents overpayment of
income tax but not the other burdens discussed above. Verily, this
remedy is not a feasible option for respondent because the very reason
why it was issued a deficiency tax assessment is that its input VAT was
not enough to offset its retroactive output VAT. Indeed, the burden of
having to go through an unnecessary and cumbersome refund process
is prejudice enough. Moreover, there is in fact nothing left to claim as a
deduction from income taxes. From the foregoing it is clear that
petitioners suggested options by which prejudice would be eliminated
from a retroactive application of VAT Ruling No. 008-92 are either
simply inadequate or grossly unrealistic.
7. Taxation; Value Added Tax (VAT); Estoppel; While it is true that
government is not estopped from collecting taxes which remain unpaid
on account of the errors or mistakes of its agents and/or officials and
there could be no vested right arising from an erroneous interpretation
of law, these principles must give way to exceptions based on and in
keeping with the interest of justice and fairplay.-
At the time when the subject transactions were consummated, the

prevailing BIR regulations relied upon by respondent ordained that gold
sales to the Central Bank were zero-rated. The BIR interpreted Sec.
100 of the NIRC in relation to Sec. 2 of E.O. No. 581 s. 1980 which
prescribed that gold sold to the Central Bank shall be considered export
and therefore shall be subject to the export and premium duties. In
coming out with this interpretation, the BIR also considered Sec. 169 of
Central Bank Circular No. 960 which states that all sales of gold to the
Central Bank are considered constructive exports. Respondent should
not be faulted for relying on the BIRs interpretation of the said laws
and regulations. While it is true, as petitioner alleges, that government
is not estopped from collecting taxes which remain unpaid on account
of the errors or mistakes of its agents and/or officials and there could
be no vested right arising from an erroneous interpretation of law,
these principles must give way to exceptions based on and in keeping
with the interest of justice and fairplay, as has been done in the instant
matter. For, it is primordial that every person must, in the exercise of
his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.
8. Taxation; Value Added Tax (VAT); The taxpayer in this case has
been put on the receiving end of a grossly unfair deal, the sort of unjust
treatment which the law in Sec. 249 of the National Internal Revenue
Code abhors and forbids.-
Respondent, in this case, has similarly been put on the receiving end of
a grossly unfair deal. Before respondent was entitled to tax refunds or
credits based on petitioners own issuances. Then suddenly, it found
itself instead being made to pay deficiency taxes with petitioners
retroactive change in the VAT categorization of respondents
transactions with the Central Bank. This is the sort of unjust treatment
of a taxpayer which the law in Sec. 246 of the NIRC abhors and forbids.
Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of

Tanauan, Leyte 69 SCRA 460 , February 27, 1976
Case Title : PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-
appellant, vs. MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL.,
defendants-appellees.Case Nature : APPEAL from a decision of the Court of First
Instance of Leyte. Garlitos, J.
Syllabi Class : Taxation|Delegation of Powers|Due process|Delegation of

powers|Licenses
Syllabi:
1. Taxation; Delegation of Powers; Power of taxation may be

delegated to local governments on matters of local concern.-
The power of taxation x x x may be delegated to local governments in

respect of matters of local concern. This is sanctioned by immoral
practice. By necessary implication, the legislative power to create
political corporations for purposes of local self-government carries with
it the power to confer on such local governmental agencies the power
to tax. x x x The plenary nature of the taxing power thus delegated,
contrary to plaintiff-appellants pretense, would not suffice to invalidate
the said law as confiscatory and oppressive. In delegating the
authority, the State is not limited to the exact meassure of that which
is exercised by itself. When it is said that the taxing power may be
delegated to municipalities and the like, it is meant taxes there may be
delegated such measure of power to impose and collect taxes as the
legislature may deem expedient. Thus, municipalities may be permitted
to tax subjects which for reasons of public policy the State has not
deemed wise to tax for more general purposes.
2. Taxation; Due process; Taking of property without due process of

law may not be passed over under the guise of taxing power, except
when the latter is exercised lawfully.-
This is not to say though that the constitutional injunction against

deprivation of property without due process of law may be passed over
under the guise of the taxing power, except when the taking of the
property is in the lawful exercise of the taxing power, as when (1) the
tax is for a public purpose; (2) the rule on uniformity of taxation is
observed; (3) either the person or property taxed is within the
jurisdiction of the government levying the tax; and (4) in the
assessment and collection of certain kinds of taxes notice and
opportunity for hearing are provided.
3. Taxation; Due process; Delegation of powers; Delegation of

taxing power to local governments may not be assailed on the ground
of double taxation.-
There is no validity to the assertion that the delegated authority can be
declared unconstitutional on the theory of double taxation. It must be
observed that the delegating authority specifies the limitations and
enumerates the taxes over which local taxation may not be exercised. x
x x Moreover, double taxation, in general, is not forbidden by our
fundamental law, since We have not adopted as part thereof the
injunction against double taxation found in the Constitution of the
United States and some states of the Union. Double taxation becomes
obnoxious only where the taxpayer is taxed twice for the benefit of the
same governmental entity or by the same jurisdiction for the same
purpose, but not in a case where one tax is imposed by the State and
the other by the city of municipality.
4. Taxation; A municipal ordinance which imposes a tax of P0.01 for

every gallon of soft drinks produced in the municipality does not
partake of a percentage tax.-
The imposition of a tax of one centavo (P0.01) on each gallon (128

flued ounces, U.S.) of volume capacity on all soft drinks produced or
manufactured under Ordinance No. 27 does not partake of the nature
of a percentage tax on sales, or other taxes in any form based thereon.
The tax is levied on the produce (whether sold or not) and not on the
sales. The volume capacity of the taxpayers production of soft drinks is
considered solely for purposes of determining the tax rate on the
products, but there is no set ratio between the volume of sales and the
amount of the tax.
5. Taxation; A municipal tax on soft drinks is not a specific tax.-
Nor can the tax levied be treated as a specific tax. Specific taxes are
those imposed on specified articles, such as distilled spirits, wines, x x
x cigars and cigarettes, matches, x x x bunker fuel oil, diesel fuel oil,
cinematographic films, playing cards, saccharine, opium and other
habit-forming drugs. Soft drinks is not one of those specified.
6. Taxation; A municipal tax of P0.01 on each gallon of soft drinks

produced is not unfair or oppressive.-
The tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.)
of volume capacity on all soft drinks, produced or manufactured, or an
equivalent of 1 centavos per case, cannot be considered unjust and
unfair. An increase in the tax alone would not support the claim that
the tax is oppressive, unjust and confiscatory. Municipal corporations
are allowed much discretion in determining the rates of imposable
taxes. This is in line with the constitutional policy of according the
widest possible autonomy to local governments in matters of local
taxation, an aspect that is given expression in the Local Tax Code (PD
No. 231, July 1, 1973). Unless the amount is so excessive as to be
prohibitive, courts will go slow in writing off an ordinance as
unreasonable.
7. Taxation; Licenses; Municipalities are empowered to impose not

only municipal license but just and uniform taxes for public purposes.-
The municipal license tax of P1,000.00 per corking machine with five
but not more than ten crowners x x x imposed on manufacturers,
producers, importers and dealers of soft drinks and/or mineral waters x
x x appears not to affect the resolution of the validity of Ordinance No.
27. Municipalities are empowered to impose, not only municipal license
taxes upon persons engaged in any business or occupation but also to
levy for public purposes, just and uniform taxes. The ordinance in
question (Ordinance No. 27) comes within the second power of a
municipality.
Delpher Trades Corp. vs. Intermediate Appellate Court 157 SCRA

349 , January 26, 1988
Case Title : DELPHER TRADES CORPORATION and DELPHIN PACHECO, petitioners,

vs. INTERMEDIATE APPELLATE COURT and HYDRO PIPES PHILIPPINES, INC.,
respondents.Case Nature : PETITION for certiorari to review the decision of the
Intermediate Appellate Court.
Syllabi Class : Corporation|Taxation|Tax Avoidance|Contracts
Syllabi:
1. Corporation; After incorporation, one becomes a stockholder of a

corporation by subscription or by purchasing stock directly from the
corporation or from individual owners thereof.-
After incorporation, one becomes a stockholder of a corporation by

subscription or by purchasing stock directly from the corporation or
from individual owners thereof (Salmon, Dexter Co. v. Unson, 47 Phil.
649, citing Bole v. Fulton [1912], 233 Pa., 609). In the case at bar, in
exchange for their properties, the Pachecos acquired 2,500 original
unissued no par value shares of stocks of the Delpher Trades
Corporation. Consequently, the Pachecos became stockholders of the
corporation by subscription. The essence of the stock subscription is
an agreement to take and pay for original unissued shares of a
corporation, formed or to be formed. (Rohrlich 243, cited in Agbayani,
Commentaries and Jurisprudence on the Commercial Laws of the
Philippines, Vol. III, 1980 Edition, p. 430) It is significant that the
Pachecos took no par value shares in exchange for their properties.
2. Corporation; Taxation; Tax Avoidance; The legal right of a

taxpayer to decrease the amount of what otherwise could be his taxes
or altogether avoid them, by means which the law permits, cannot be
doubted.-
The records do not point to anything wrong or objectionable about this

estate planning scheme resorted to by the Pachecos. The legal right
of a taxpayer to decrease the amount of what otherwise could be his
taxes or altogether avoid them, by means which the law permits,
cannot be doubted. (Liddell Co., Inc. v. The Collector of Internal
Revenue, 2 SCRA 632 citing Gregory v. Halvering, 293 U.S. 465, 7 L.
ed. 596)
3. Corporation; Contracts; Deed of Exchange between the Pachecos

and Delpher Trades Corporation cannot be considered a contract of sale
because there was not transfer of actual ownership to third party.-
The Deed of Exchange of property between the Pachecos and Delpher

Trades Corporation cannot be considered a contract of sale. There was
no transfer of actual ownership interests by the Pachecos to a third
party. The Pacheco family merely changed their ownership from one
form to another. The ownership remained in the same hands. Hence,
the private respondent has no basis for its claim of a right of first
refusal under the lease contract.
Commissioner of Internal Revenue vs. Estate of Benigno P. Toda,

Jr.438 SCRA 290 , September 14, 2004
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE ESTATE

OF BENIGNO P. TODA, JR., represented by Special Co-administrators Lorna
Kapunan and Mario Luza Bautista, respondents.Case Nature : PETITION for review
on certiorari of a decision of the Court of Appeals.
Syllabi Class : Taxation||Fraud|Prescriptions
Syllabi:
1. Taxation; Tax Avoidance Distinguished from Tax Evasion.-
Tax avoidance and tax evasion are the two most common ways used by
taxpayers in escaping from taxation. Tax avoidance is the tax saving
device within the means sanctioned by law. This method should be
used by the taxpayer in good faith and at arms length. Tax evasion, on
the other hand, is a scheme used outside of those lawful means and
when availed of, it usually subjects the taxpayer to further or additional
civil or criminal liabilities.
2. Taxation; Factors to Determine Tax Evasion.-
Tax evasion connotes the integration of three factors: (1) the end to be
achieved, i.e., the payment of less than that known by the taxpayer to
be legally due, or the non-payment of tax when it is shown that a tax is
due; (2) an accompanying state of mind which is described as being
evil, in bad faith, willfull, or deliberate and not accidental; and
(3) a course of action or failure of action which is unlawful.
3. Taxation; Fraud; Meaning of.-
Fraud in its general sense, is deemed to comprise anything calculated

to deceive, including all acts, omissions, and concealment involving a
breach of legal or equitable duty, trust or confidence justly reposed,
resulting in the damage to another, or by which an undue and
unconscionable advantage is taken of another.
4. Taxation; Fraud; The intermediary transaction in this case

constitutes one of tax evasion.-
In a nutshell, the intermediary transaction, i.e., the sale of Altonaga,

which was prompted more on the mitigation of tax liabilities than for
legitimate business purposes constitutes one of tax evasion.
5. Taxation; Prescriptions; The period within which to assess tax in

cases of fraudulent returns, false returns and failure to file a return is
ten years from discovery of the fraud, falsification or omission.-
Put differently, in cases of (1) fraudulent returns; (2) false returns with
intent to evade tax; and (3) failure to file a return, the period within
which to assess tax is ten years from discovery of the fraud,
falsification or omission, as the case may be.
6. Taxation; Prescriptions; The issuance of the correct assessment

for deficiency income tax was well within the prescriptive period.-
As stated above, the prescriptive period to assess the correct taxes in

case of false returns is ten years from the discovery of the falsity. The
false return was filed on 15 April 1990, and the falsity thereof was
claimed to have been discovered only on 8 March 1991. The
assessment for the 1989 deficiency income tax of CIC was issued on 9
January 1995. Clearly, the issuance of the correct assessment for
deficiency income tax was well within the prescriptive period.
Commissioner of Internal Revenue vs. Pascor Realtyand

Development Corporation 309 SCRA 402 , June 29, 1999
Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PASCOR

REALTY AND DEVELOPMENT CORPORATION, ROGELIO A. DIO and VIRGINIA S.
DIO, respondents.Case Nature : PETITION for review on certiorari of a decision of
the Court of Appeals.
Syllabi Class : Courts|Taxation|National Internal Revenue Code
Syllabi:
1. Courts; Taxation; National Internal Revenue Code; Section 203

of the NIRC provides that internal revenue taxes must be assessed
within three years from the last day within which to file the return.-
The issuance of an assessment is vital in determining the period of

limitation regarding its proper issuance and the period within which to
protest it. Section 203 of the NIRC provides that internal revenue taxes
must be assessed within three years from the last day within which to
file the return. Section 222, on the other hand, specifies a period of ten
years in case a fraudulent return with intent to evade was submitted or
in case of failure to file a return. Also, Section 228 of the same law
states that said assessment may be protested only within thirty days
from receipt thereof. Necessarily, the taxpayer must be certain that a
specific document constitutes an assessment. Otherwise, confusion
would arise regarding the period within which to make an assessment
or to protest the same, or whether interest and penalty may accrue
thereon.
2. Courts; Taxation; National Internal Revenue Code; Assessment

is deemed made only when the collector of internal revenue releases,
mails or sends such notice to the taxpayer.-
It should also be stressed that the said document is a notice duly sent
to the taxpayer. Indeed, an assessment is deemed made only when the
collector of internal revenue releases, mails or sends such notice to the
taxpayer. In the present case, the revenue officers Affidavit merely
contained a computation of respondents tax liability. It did not state a
demand or a period for payment. Worse, it was addressed to the justice
secretary, not to the taxpayers.

of the NIRC specifically states that in cases of failure to file a return,
proceedings in court may be commenced without an assessment.-
Private respondents maintain that the filing of a criminal complaint

must be preceded by an assessment. This is incorrect, because Section
222 of the NIRC specifically states that in cases where a false or
fraudulent return is submitted or in cases of failure to file a return such
as this case, proceedings in court may be commenced without an
assessment. Furthermore, Section 205 of the same Code clearly
mandates that the civil and criminal aspects of the case may be
pursued simultaneously. In Ungab v. Cusi, petitioner therein sought the
dismissal of the criminal Complaints for being premature, since his
protest to the CTA had not yet been resolved. The Court held that such
protests could not stop or suspend the criminal action which was
independent of the resolution of the protest in the CTA. This was
because the commissioner of internal revenue had, in such tax evasion
cases, discretion on whether to issue an assessment or to file a criminal
case against the taxpayer or to do both.

states that an assessment is not necessary before a criminal charge can
be filed.-
Private respondents insist that Section 222 should be read in relation to

Section 255 of the NIRC, which penalizes failure to file a return. They
add that a tax assessment should precede a criminal indictment. We
disagree. To reiterate, said Section 222 states that an assessment is
not necessary before a criminal charge can be filed. This is the general
rule. Private respondents failed to show that they are entitled to an
exception. Moreover, the criminal charge need only be supported by a
prima facie showing of failure to file a required return. This fact need
not be proven by an assessment.
5. Courts; Taxation; National Internal Revenue Code; A criminal

complaint is instituted not to demand payment, but to penalize the
taxpayer for violation of the Tax Code.-
The issuance of an assessment must be distinguished from the filing of

a complaint. Before an assessment is issued, there is, by practice, a
pre-assessment notice sent to the taxpayer. The taxpayer is then given
a chance to submit position papers and documents to prove that the
assessment is unwarranted. If the commissioner is unsatisfied, an
assessment signed by him or her is then sent to the taxpayer informing
the latter specifically and clearly that an assessment has been made
against him or her. In contrast, the criminal charge need not go
through all these. The criminal charge is filed directly with the DOJ.
Thereafter, the taxpayer is notified that a criminal case had been filed
against him, not that the commissioner has issued an assessment. It
must be stressed that a criminal complaint is instituted not to demand
payment, but to penalize the taxpayer for violation of the Tax Code.

Commissioner of Lnternal Revenue vs. Cebu Portlandcement Company 156 Scra 535, December 15, 1987

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Commissioner of Lnternal Revenue vs. Cebu Portlandcement Company 156 Scra 535, December 15, 1987

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Commissioner of lnternal Revenue vs.

Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. CEBU

Syllabi Class : Taxation|National Internal Revenue Code|Prescription

1. Taxation; National Internal Revenue Code; Nature of cement as

"The nature of cement as a 'manufactured product' (rather than a

2. Taxation; National Internal Revenue Code; Prescription; Filing

Municipality of Makati vs. Court of Appeals 190 SCRA 206 , October

Case Title : MUNICIPALITY OF MAKATI, petitioner, vs. THE HONORABLE COURT OF

Syllabi Class : Civil Procedure|Political Law|Attachment|Execution|Administrative

1. Civil Procedure; Attachment; Execution; Administrative

2. Civil Procedure; Mandamus; Where a municipality fails without

3. Political Law; Eminent Domain; Just Compensation; Just

Commissioner of lnternal Revenue vs. Algue, Inc. 158 SCRA 9 ,

Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. ALGUE, INC.,

Syllabi Class : Taxation|Nature of taxes|Purpose of taxation|Appeal|Warrant of

1. Taxation; Nature of taxes; Purpose of taxation; Collection of

Taxes are the lifeblood of the government and so should be collected

2. Taxation; Appeal; Appeal from a decision of the Commissioner of

3. Taxation; Warrant of distraint and levy; Rule that the warrant of

4. Taxation; Warrant of distraint and levy; Protest filed, not pro

5. Taxation; Income Tax; Payments in promotional fees, not

We find that these suspicions were adequately met by the private

6. Taxation; Income Tax; Payments in promotional fees, not

7. Taxation; Income Tax; Payments in promotional fees, not

8. Taxation; Income Tax; Rationale of taxation.-

Syllabi Class : Appeals|Taxation|Court of Tax Appeals|Pleadings and

1. Appeals; As a rule, the factual findings of the appellate court are

We disagree with the Court of Appeals. As a rule, the factual findings of

2. Taxation; Court of Tax Appeals; Pleadings and

Strict procedural rules generally frown upon the submission of the

3. Taxation; Tax Refunds; If a taxpayer suffered a net loss in a

It should be stressed that the rationale of the rules of procedure is to

4. Taxation; Judicial Notice; Judgments; Courts are not authorized

As a rule, courts are not authorized to take judicial notice of the

5. Taxation; Tax Refunds; Rules of Procedure and

Commissioner of Internal Revenue vs. Tokyo Shipping Co., Ltd. 244

Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. TOKYO

Syllabi Class : Taxation|

1. Taxation; A claim for refund is in the nature of a claim for

We agree with petitioner that a claim for refund is in the nature of a

Case Title : COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MITSUBISHI

Syllabi Class : Civil Procedure|Taxation|Evidence|Admissions

1. Civil Procedure; Evidence; Admissions; Respondent erred in

Prefatorily, it must be noted that respondent court erred in holding in

2. Civil Procedure; Evidence; Findings of fact of the Court of Tax

3. Civil Procedure; Evidence; The agreement is strictly between

It is too settled a rule in this jurisdiction, as to dispense with the need

Philippine Bank of Communications vs. Commissioner of Internal

Case Title : PHILIPPINE BANK OF COMMUNICATIONS, petitioner, vs.

Syllabi Class : Taxation|Due Process|Tax Refunds|Actions|Administrative

1. Taxation; Due Process; Due process of law under the Constitution

2. Taxation; Tax Refunds; Prescription.-

4. Taxation; Tax Refunds; Administrative Law; Statutory

When the Acting Commissioner of Internal Revenue issued RMC 7-85,

It bears repeating that Revenue memorandum-circulars are considered

6. Taxation; Tax Refunds; Administrative

Further, fundamental is the rule that the State cannot be put in

7. Taxation; Tax Refunds; Administrative

Article 8 of the Civil Code recognizes judicial decisions, applying or

8. Taxation; Tax Refunds; The corporation must signify in its annual

Syllabi Class : Taxation|Constitutional Law

1. Taxation; Constitutional Law; The Constitution sets forth the

2. Taxation; Constitutional Law; A bare allegation that Batas 135,