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CIR VS BPI FACTS: In two notices dated October 28, 1988, petitioner Commissioner of Internal Revenue (CIR) assessed respondent Bank of the Philippine Islands (BPIs) deficiency percentage and documentary stamp taxes for the year 1986 in the total amount of P129,488,656.63. BPI contended that the assessment was not valid because it did not contain the factual and legal basis as required by the new law (Section 228, RA 8424 - Tax Reform Act of 1997). The CTA decided in favor of CIR holding that under the old law (Section 270 prior to its amendment}, the same was not required, thus, the assessment order became final since it was not protested or appealed within the reglementary period of 10 days. ISSUE: was the interpretation of the law by the CTA correct? DECISION: Yes. This Court recognizes that the [CTA], which by the very nature of its function is dedicated exclusively to the consideration of tax problems, has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there has been an abuse or improvident exercise of authority. Tax assessments by tax examiners are presumed correct and made in good faith. The taxpayer has the duty to prove otherwise. In the absence of proof of any irregularities in the performance of duties, an assessment duly made by a Bureau of Internal Revenue examiner and approved by his superior officers will not be disturbed. All presumptions are in favor of the correctness of tax assessments. Taxes are the lifeblood of the government, for without taxes, the government can neither exist nor endure. 1. CIR VS PINEDA FACTS: On May 23, 1945 Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15 children, the eldest of whom is Manuel B. Pineda, a lawyer. Bureau of Internal Revenue investigated the income tax liability of the estate for the years 1945, 1946, 1947 and 1948 and it found that the corresponding income tax returns were not filed. CTA held that Manuel Pineda is liable only up to the extent of his share in the inheritance. The Commissioner of Internal Revenue has appealed to Us and has proposed to hold Manuel B. Pineda liable for the payment of all the taxes found by the Tax Court to be due from the estate in the total amount of P760.28 instead of only for the amount of taxes corresponding to his share in the estate ISSUE: Whether Pineda can be held liable for the entire amount of the income tax of the estate. DECISION: We hold that the Government can require Manuel B. Pineda to pay the full amount of the taxes assessed. All told, the Government has two ways of collecting the tax in question. One, by going after all the heirs and collecting from each one of them the amount of the tax proportionate to the inheritance received. Another remedy, pursuant to the lien created by Section 315 of the Tax Code upon all property and rights to property belonging to the taxpayer for unpaid income tax, is by subjecting said property of the estate which is in the hands of an heir or transferee to the payment of the tax due, the estate. This second remedy is the very avenue the Government took in this case to collect the tax. The Bureau of Internal Revenue should be given, in instances like the case at bar, the necessary discretion to avail itself of the most expeditious way to collect the tax as may be envisioned in the particular provision of the Tax Code above quoted, because taxes are the lifeblood of government and their prompt and certain availability is an imperious need. 2. VERA VS FERNANDEZ FACTS: The BIR filed on July 29, 1969 a motion for allowance of claim and for payment of taxes representing the estate's tax deficiencies in 1963 to 1964 in the intestate proceedings of Luis Tongoy. The administrator opposed arguing that the claim was already barred by the statute of limitation, Section 2 and Section 5 of Rule 86 of the Rules of Court which provides that all claims for

money against the decedent, arising from contracts, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and expenses for the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise they are barred forever. ISSUE: Does the statute of non-claims of the Rules of Court bar the claim of the government for unpaid taxes? DECISION: No. The reason for the more liberal treatment of claims for taxes against a decedent's estate in the form of exception from the application of the statute of non-claims, is not hard to find. Taxes are the lifeblood of the Government and their prompt and certain availability are imperious need. Upon taxation depends the Government ability to serve the people for whose benefit taxes are collected. To safeguard such interest, neglect or omission of government officials entrusted with the collection of taxes should not be allowed to bring harm or detriment to the people, in the same manner as private persons may be made to suffer individually on account of his own negligence, the presumption being that they take good care of their personal affairs. This should not hold true to government officials with respect to matters not of their own personal concern. This is the philosophy behind the government's exception, as a general rule, from the operation of the principle of estoppel. 3. CIR VS CA, CITYTRUST BANKING CORP. AND CTA FACTS: Respondent Citytrust filed a petition with the CTA claiming the refund of its income tax overpayments for the years 1983, 1984 and 1985 in the total amount of P19,971,745.00. During the course of the trial in the said case, the Solicitor General (counsel for petitioner) asked for several postponements due to the unavailability of the necessary records which were not transmitted by the Refund Audit Division of the BIR to said counsel, as well as the investigation report made by the Banks/Financing and Insurance Division of the said bureau/ despite repeated requests. For such reason, the CTA rendered a decision in favor of private respondent. Petitioner appealed to CA which affirmed the CTA decision, hence, this petition to the Supreme Court. ISSUE: Whether or not the petitioner is estopped by the act of its employees. DECISION: It is the sense of this Court that the BIR, represented herein by petitioner Commissioner of Internal Revenue, was denied its day in court by reason of the mistakes and/or negligence of its officials and employees. Although the Government may generally be estopped through the affirmative acts of public officers acting within their authority, their neglect or omission of public duties as exemplified in this case will not and should not produce that effect. The errors of certain administrative officers should never be allowed to jeopardize the Government's financial position. 4. COMMISSIONER VS ALGUE FACTS: The record shows that on January 14, 1965, the private respondent, a domestic corporation engaged in engineering, construction and other allied activities, received a letter from the petitioner assessing it in the total amount of P83,183.85 as delinquency income taxes for the years 1958 and 1959. Petitioner filed a protest. It claimed deduction of P75,000.00. Said amount had been legitimately paid by the private respondent for actual services rendered. The payment was in the form of promotional fees. These were collected by the Payees for their work in the creation of the Vegetable Oil Investment Corporation of the Philippines and its subsequent purchase of the properties of the Philippine Sugar Estate Development Company. The CIR denied the claim and issued a warrant of distraint and levy even before they receive the protest. Petitioner averred that there was a procedural as well as substancial defect in the imposition of tax.

ISSUE: Was the disallowance and the subsequent warrant of distraint and levy valid? DECISION: No. 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. As to the procedural process, it is true that as a rule the warrant of distraint and levy is "proof of the finality of the assessment" 8 and renders hopeless a request for reconsideration," 9 being "tantamount to an outright denial thereof and makes the said request deemed rejected. But the protest and request for reconsideration was 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. The claimed deduction is valid. Furthermore, the collection of said tax was not in accordance with the law. 5. CIR VS YMCA FACTS: The facts are undisputed. 4 Private Respondent YMCA is a non-stock, non-profit institution. It derived income from the leasing of a portion of its premises to small shop owners, like restaurants and canteen operators, and from parking fees collected from nonmembers. The CIR assessed taxes on these incomes. YMCA contended that such incomes are reasonably incidental to and reasonably necessary for the accomplishment of its objectives, and that according to the Constitution they are exempted from taxes. CTA held a decision in favor of YMCA. It was affirmed by the CA, hence, this petition. ISSUE: Are the aforementioned income exempted from taxes? DECISION: Because taxes are the lifeblood of the nation, the Court has always applied the doctrine of strict in interpretation in construing tax exemptions. Furthermore, a claim of statutory exemption from taxation should be manifest. and unmistakable from the language of the law on which it is based. Hence, for the YMCA to be granted the exemption it claims under the aforecited provision, it must prove with substantial evidence that (1) it falls under the classification non-stock, non-profit educational institution; and (2) the income it seeks to be exempted from taxation is used actually, directly, and exclusively for educational purposes. The YMCA has not given any proof that it is an educational institution, or that part of its rent income is actually, directly and exclusively used for educational purposes. Indeed, some of the members of the Court may even believe in the wisdom and prudence of granting more tax exemptions to private respondent. But such belief, however wellmeaning and sincere, cannot bestow upon the Court the power to change or amend the law. 6. DAVAO GULF LUMBER CORP VS CIR FACTS: Republic Act No. 1435 entitles miners and forest concessioners to the refund of 25% of the specific taxes paid by the oil companies, which were eventually passed on to the user--the petitioner in this case--in the purchase price of the oil products. Petitioner filed before respondent Commissioner of Internal Revenue (CIR) a claim for refund in the amount representing 25% of the specific taxes actually paid on the above-mentioned fuels and oils that were used by petitioner in its operations. However petitioner asserts that the refund should be based on the increased rates of specific taxes which it actually paid, as prescribed in Sections 153 and 156 of the NIRC. Public respondent, on the other hand, contends that it should be based on specific taxes deemed paid under Sections 1 and 2 of RA 1435. ISSUE: What is the proper rate to be applied in computing the tax refund of the petitioner, having this principle in mind: Because taxes

are the lifeblood of the nation, statutes that allow exemptions are construed strictly against the grantee and liberally in favor of the government. DECISION: Since the partial refund authorized under Section 5, RA 21 1435, is in the nature of a tax exemption, it must be construed strictissimi Juris against the grantee. Hence, petitioner's claim of refund on the basis of the specific taxes it actually paid must expressly be granted in a statute stated in a language too clear to be mistaken. We have carefully scrutinized RA 1435 and the subsequent pertinent statutes and found no expression of a legislative will authorizing a refund based on the higher rates claimed by petitioner. Finally, petitioner asserts that "equity and justice demand that the computation of the tax refunds be based on 28 actual amounts paid under Sections 153 and 156 of the NIRC." We disagree. According to an eminent authority on taxation, "there is no tax exemption solely on the, ground of equity." 7. MARCOS II VS CA FACTS: petitioner Ferdinand R. Marcos II questions the assessment and collection through the summary remedy of Levy on Real Properties, estate and income tax delinquencies upon the estate and properties of his father, despite the pendency of the proceedings on probate of the will of the late president. They contended that following the rules on claims, the judge should first give his approval before the BIR can assess and collect taxes upon the estate. ISSUE: Can the BIR collect taxes due on the property even if there was a pending settlement of the estate in the probate proceeding? DECISION: Yes. On the contrary, under Section 87 of the NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial administrator of the decedent's estate to deliver any distributive share to any party interested in the estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes have been paid. The petitioner now contests the validity and the correctness of the assessments. This objections to the assessments should have been raised, considering the ample remedies afforded the taxpayer by the Tax Code, with the Bureau of Internal Revenue and the Court of Tax Appeals, as described earlier, and cannot be raised now via Petition for Certiorari, under the pretext of grave abuse of discretion. Certiorari may not be used as a substitute for a lost appeal or remedy. Taxes are the lifeblood of the government and should be collected without unnecessary hindrance. 8. REYES VS ALMANZOR FACTS: Petitioners Jose and Edmundo Reyes were owners of parcels of land situated in Tondo and Sta. Cruz, Manila. Such lands were leased as dwelling sites. PD 20 was enacted limiting the price of rent by prohibiting the increase of monthly rentals below P300. The Petitioners were among those affected by the Decree. In 1973, respondent City Assessor of Manila re-classified and reassessed the value of the subject properties based on Comparable Sales Approach". Respondents averred that the reassessments made were "excessive, unwarranted, inequitable, confiscatory and unconstitutional" considering that the taxes imposed upon them greatly exceeded the annual income derived from their properties. ISSUE: Were the reassessment valid? DECISION: The assessors, in finding the value of the property, have to consider all the circumstances and elements of value and must exercise a prudent discretion in reaching conclusions. Petitioners who are burdened by the government by its Rental Freezing Laws

(then R.A. No. 6359 and P.D. 20) under the principle of social justice should not now be penalized by the same government by the imposition of excessive taxes petitioners can ill afford and eventually result in the forfeiture of their properties. The respondent Board of Assessment Appeals of Manila and the City Assessor of Manila are ordered to make a new assessment by the income approach method to guarantee a fairer and more realistic basis of computation. 9. PB COM VS CIR FACTS: Respondent denied the claim for refund by the petitioner for taxes erroneously paid by the latter for the year 1985 and 1986. As to the former year, the reason was that the claim was filed beyond the reglementary period of 4 years, as to the latter, the petitioner had already availed of the remedy of tax credit for the succeeding year. Petitioners contended that they relied on RMC (Revenue Memorandum Circular) No. 7-85, which changed the prescriptive period of two years to ten years. ISSUE: Whether or not petitioner was correct in relying in the said Circular DECISION: No. Said circular is contrary to law. Interpretations by Administrative bodies are given great weight, but they cannot amend the law. Further, fundamental is the rule that the State cannot be put in estoppel by the mistakes or errors of its officials or agents. 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. A claim for refund is in the nature of a claim for exemption and should be construed in strictissimi juris against the taxpayer. 10. THE PHILIPPINE GUARANTY CO., INC. VS CIR FACTS: The petitioner Philippine Guaranty Co., Inc., a domestic insurance company, entered into reinsurance contracts with foreign insurance companies not doing business in the country, thereby ceding to foreign reinsurers a portion of the premiums on insurance it has originally underwritten in the Philippines. The premiums paid by such companies were excluded by the petitioner from its gross income when it file its income tax returns for 1953 and 1954. Furthermore, it did not withhold or pay tax on them. Consequently, the CIR assessed against the petitioner withholding taxes on the ceded reinsurance premiums to which the latter protested the assessment on the ground that the premiums are not subject to tax for the premiums did not constitute income from sources within the Philippines because the foreign reinsurers did not engage in business in the Philippines, and CIR's previous rulings did not require insurance companies to withhold income tax due from foreign companies. ISSUE: are insurance companies not required to withhold tax on reinsurance premiums ceded to foreign insurance companies, which deprives the government from collecting the tax due from them? DECISION: No. Considering that the reinsurance premiums in question were afforded protection by the government and the recipient foreign reinsurers exercised rights and privileges guaranteed by our laws, such reinsurance premiums and reinsurers should share the burden of maintaining the state. The petitioner's defense of reliance of good faith on rulings of the CIR requiring no withholding of tax due on reinsurance premiums may free the taxpayer from the payment of surcharges or penalties imposed for failure to pay the corresponding withholding tax, but it certainly would not exculpate it from liability to pay such

withholding tax. The Government is not estopped from collecting taxes by the mistakes or errors of its agents. 11. PHILEX MINING CORP. v. CIR GR No. 125704, August 28, 1998 294 SCRA 687 FACTS: Petitioner Philex Mining Corp. assails the decision of the Court of Appeals affirming the Court of Tax Appeals decision ordering it to pay the amount of P110.7 M as excise tax liability for the period from the 2nd quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from 1994 until fully paid pursuant to Sections 248 and 249 of the Tax Code of 1977. Philex protested the demand for payment of the tax liabilities stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in the amount of P120 M plus interest. Therefore these claims for tax credit/refund should be applied against the tax liabilities. ISSUE: Can there be an off-setting between the tax liabilities vis-a-vis claims of tax refund of the petitioner? HELD: No. Philex's claim is an outright disregard of the basic principle in tax law that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. Evidently, to countenance Philex's whimsical reason would render ineffective our tax collection system. Too simplistic, it finds no support in law or in jurisprudence. To be sure, Philex cannot be allowed to refuse the payment of its tax liabilities on the ground that it has a pending tax claim for refund or credit against the government which has not yet been granted.Taxes cannot be subject to compensation for the simple reason that the government and the taxpayer are not creditors and debtors of each other. There is a material distinction between a tax and debt. Debts are due to the Government in its corporate capacity, while taxes are due to the Government in its sovereign capacity. xxx There can be no off-setting of taxes against the claims that the taxpayer may have against the government. A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected. The collection of a tax cannot await the results of a lawsuit against the government.

12. NORTH CAMARINES LUMBER CO., INC. v. CIR GR No. L-12353, September 30, 1960 109 PHIL 511 FACTS: The petitioner sold more than 2M boardfeet of logs to General Lumber Co. with the agreement that the latter would pay the sales taxes. The CIR, upon consultation officially advised the parties that the bureau interposes no objection so long as the tax due shall be covered by a surety. General Lumber complied, but later failed, with the surety, to pay the tax liabilities, and so the respondent collector required the petitioner to pay thru a letter dated August 30, 1955. Twice did the petitioner filed a request for reconsideration before finally submitting the denied request for appeal before the Court of Tax Appeals. The CTA dismissed the appeal as it was clearly filed out of time. The petitioner had consumed thirty-three days from the receipt of the demand, before filing the appeal. Petitioner argued that in computing the 30-day period in perfecting the appeal the letter of the respondent Collector dated January 30, 1956, denying the second request for reconsideration, should be considered as the final decision

contemplated in Section 7, and not the letter of demand dated August 30, 1955. ISSUE: Is the contention of the petitioner tenable? HELD: No. This contention is untenable. We cannot countenance that theory that would make the commencement of the statutory 30-day period solely dependent on the will of the taxpayer and place the latter in a position to put off indefinitely and at his convenience the finality of a tax assessment. Such an absurd procedure would be detrimental to the interest of the Government, for "taxes are the lifeblood of the government, and their prompt and certain availability is an imperious need."

ISSUE: Is the Anti-TB Stamp Law unconstitutional, for being allegedly violative of the equal protection clause? HELD: No. It is settled that the legislature has the inherent power to select the subjects of taxation and to grant exemptions. This power has aptly been described as "of wide range and flexibility." Indeed, it is said that in the field of taxation, more than in other areas, the legislature possesses the greatest freedom in classification. The reason for this is that traditionally, classification has been a device for fitting tax programs to local needs and usages in order to achieve an equitable distribution of the tax burden. The classification of mail users is based on the ability to pay, the enjoyment of a privilege and on administrative convenience. Tax exemptions have never been thought of as raising revenues under the equal protection clause.

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

15. PUNSALAN v. MUN. BOARD OF CITY OF MANILA GR No. L-23645, October 29, 1968 95 PHIL 46 FACTS: The plaintiffs--two lawyers, medical practitioner, a dental surgeon, a CPA, and a pharmacist--sought the annulment of Ordinance No.3398 of the City of Manila which imposes a municipal occupation tax on persons exercising various professions in the city and penalizes non-payment of the tax, contending in substance that this ordinance and the law authorizing it constitute class legislation, are unjust and oppressive, and authorize what amounts to double taxation. The burden of plaintiffs' complaint is not that the professions to which they respectively belong have been singled out for the imposition of this municipal occupation tax, but that while the law has authorized the City of Manila to impose the said tax, it has withheld that authority from other chartered cities, not to mention municipalities. ISSUE: Does the law constitute a class legislation? Is it for the Court to determine which political unit should impose taxes and which should not? HELD: No. It is not for the courts to judge what particular cities or municipalities should be empowered to impose occupation taxes in addition to those imposed by the National Government. That matter is peculiarly within the domain of the political departments and the courts would do well not to encroach upon it. Moreover, as the seat of the National Government and with a population and volume of trade many times that of any other Philippine city or municipality, Manila, no doubt, offers a more lucrative field for the practice of the professions, so that it is but fair that the professionals in Manila be made to pay a higher occupation tax than their brethren in the provinces.

14. GOMEZ v. PALOMAR GR No. L-23645, October 29, 1968 25 SCRA 827 FACTS: Petitioner Benjamin Gomez mailed a letter at the post office in San Fernando, Pampanga. It did not bear the special anti-TB stamp required by the RA 1635. It was returned to the petitioner. Petitioner now assails the constitutionality of the statute claiming that RA 1635 otherwise known as the Anti-TB Stamp law is violative of the equal protection clause because it constitutes mail users into a class for the purpose of the tax while leaving untaxed the rest of the population and that even among postal patrons the statute discriminatorily grants exemptions. The law in question requires an additional 5 centavo stamp for every mail being posted, and no mail shall be delivered unless bearing the said stamp.