Professional Documents
Culture Documents
Facts:Petitioner GSIS owns or used to own two parcels of lands, one at Katigbak 25 th
St., Bonifacio Drive, Manila and the other at Concepcion cor. Arroceros Sts., Manila.
The latter was transferred in favor of the Court, while the Katigbak property was under
lease. On September 13, 2002, City Treasurer of Manila assessed GSIS of unpaid
real property taxes due on the said properties for years 1992 to 2002, threatening
seizure and sale in case of failure to pay. After writing herein respondents
emphasizing the GSIS exemption from all kinds of taxes under RA 8291, GSIS filed a
petition for certiorari and prohibition before the RTC, which denied the petition. GSIS
sought but was denied reconsideration per the assailed Order dated January 7, 2009.
Thus, the instant petition for review on pure question of law.
Issues:
1. Whether GSIS under its charter is exempt from real property taxation;
2. Whether GSIS is liable for real property taxes for its properties leased to
a taxable entity
Held: 1. Yes, GSIS under its charter is exempt from real property taxation. Pursuant to
Sec. 33 of PD 1146, GSIS enjoyed tax exemption from real estate taxes, among other
tax burdens, until January 1, 1992 when the LGC took effect and withdrew exemptions
from payment of real estate taxes privileges granted under PD 1146; (2) RA 8291
restored in 1997 the tax exempt status of GSIS by reenacting under its Sec. 39 what
was once Sec. 33 of P.D. 1146; and (3) If any real estate tax is due to the City of
Manila, it is, following City of Davao, only for the interim period, or from 1992 to 1996,
to be precise. Moreover, Section 39 of RA 8291 contains a condoning proviso which,
for all intents and purposes, considered as paid any assessment against the GSIS as
of the approval of this Act. Also, GSIS is not a GOCC as its capital is not divided into
unit shares. Being an instrumentality of the government, it is outside the purview of
local government taxation.
Held: 2. Yes, GSIS is liable for real estate tax on properties leased to a taxable entity.
A close reading of Section 234 (a) and Section 133 of RA 7160 shows that the
provisions allow the Republic to grant the beneficial use of its property to an agency or
instrumentality of the national government. Such grant does not necessarily result in
the loss of the tax exemption. The tax exemption the property of the Republic or its
instrumentality carries ceases only if, as stated in Sec. 234(a) of the LGC of 1991,
beneficial use thereof has been granted, for a consideration or otherwise, to a taxable
person. GSIS, as a government instrumentality, is not a taxable juridical person under
Sec. 133(o) of the LGC. GSIS, however, lost in a sense that status with respect to the
Katigbak property when it contracted its beneficial use to MHC, doubtless a taxable
person. Thus, the real estate tax assessment of PhP 54,826,599.37 covering 1992 to
2002 over the subject Katigbak property is valid insofar as said tax delinquency is
concerned as assessed over said property. However, the taxable person who has
actual or beneficial use and possession of such taxable property shall be the one
liable for RPT.
Facts: Subject property of this controversy was sold to petitioners Francisco and
Joaquin Wong, who were never able to register the property in their name. Due to
delinquency in RPT payment, the subject property was sold in a public auction to
Melanie Uy, the highest bidder. Such sale was contested by petitioners Wong in a
complaint for annulment of sale against City Government of Iloilo and Uy. They
asserted that said tax sale was void for failure of City Treasurer to inform them. RTC
ruled in favor of herein respondents and upheld the validity of the sale, which was
overturned after a motion for reconsideration was filed by herein petitioners. Upon
appeal to CA, the latter ruled that the tax sale was valid, saying petitioners failed to
pay the required payment of amount of tax sale, which is a jurisdictional requirement.
Hence this petition to hold that CA erred in upholding the validity of the sale.
Issue: Whether or not tax sale was valid for failure of petitioners to deposit the
amount for which the property was sold.
Held: Yes, the tax sale was valid. First, Section 83 of PD 464 states that the RTC shall
not entertain any complaint assailing the validity of a tax sale of real property unless
the complainant deposits with the court the amount for which the said property was
sold plus interest equivalent to 20% per annum from the date of sale until the
institution of the complaint. This provision was adopted in Section 267 of the Local
Government Code, albeit the increase in the prescribed rate of interest to 2% per
month. Also, the case of National Housing Authority v. Iloilo City holds that the deposit
required under Section 267 of the Local Government Code is a jurisdictional
requirement, the nonpayment of which warrants the dismissal of the action. Because
petitioners in this case did not make such deposit, the RTC never acquired jurisdiction
over the complaints.
Facts: SMART received a letter of assessment dated February 12, 2002 from
petitioner requiring it to pay deficiency local franchise and business taxes (in the
amount of P764,545.29, plus interests and surcharges) which it incurred for the years
1997 to 2001. SMART protested the assessment by sending a letter dated February
15, 2002 to the City Treasurer. It claimed exemption from payment of local franchise
and business taxes based on Section 9 of its legislative franchise under Republic Act
(R.A.) No. 7294 (SMARTs franchise). Under SMARTs franchise, it was required to pay
a franchise tax equivalent to 3% of all gross receipts, which amount shall be in lieu of
all taxes. SMART contends that the in lieu of all taxes clause covers local franchise
and business taxes. SMART similarly invoked R.A. No. 7925 or the Public
Telecommunications Policy Act (Public Telecoms Act) whose Section 23 declares that
any existing privilege, incentive, advantage, or exemption granted under existing
franchises shall ipso facto become part of previously granted-telecommunications
franchise. SMART contends that by virtue of Section 23, tax exemptions granted by
the legislature to other holders of telecommunications franchise may be extended to
and availed of by SMART.
Issue: Whether or not SMART is exempt from local franchise tax based on
Section 9 of SMARTs franchise and Section 23 of RA 7925.
Held: No, SMART is not exempt. Section 193 of LGC which withdraws the tax
exemption privileges enjoyed or granted to all persons, including GOCCs applies only
to tax exemptions already existing during its time of effectivity. Tax exemption granted
after such time remain in force. Since SMARTs franchise was only enacted on March
27, 1992, more than two months since LGCs effectivity on January 1, 1992. Such taxexempt status has not been revoked. However, a close scrutiny of Section 9 of
SMARTs franchise revealed that such exemption applies only to national taxes and
not to local taxes. SMARTs claim for exemption from local business and franchise
taxes based on Section 9 of its franchise is therefore unfounded. Also, Section 23 of
RA 7925 does not grant tax-exemption, but rather exemption from certain regulatory
or reporting requirements imposed by government agencies such as the National
Telecommunications Commission. The thrust of the Public Telecoms Act is to promote
the gradual deregulation of entry, pricing, and operations of all public
telecommunications entities,
telecommunications industry.
and
thus
to
level
the
playing
field
in
the
Issue:1. Whether or not the restoration of the petitioners tax and duty
exemption retroacts to the date of effectivity of PD 1955.
2. Whether or not assessment of petitioners real properties are proper.
Held: 1. No, the restoration of such exemption does not retroact to the date of
effectivity of PD 1955. A cursory reading of the resolution, quoted above, bares no
indicia of retroactivity of its application. FIRB Resolution No. 24-87 is crystal clear in
stating that the tax and duty exemption privileges of electric cooperatives granted
under the terms and conditions of Presidential Decree No. 269 . . . are restored
effective July 1, 1987. There is no other way to construe it. The language of the law is
plain and unambiguous. When the language of the law is clear and unequivocal, the
law must be taken to mean exactly what it says.
Held: 2. Yes, assessment of the petitioners real properties are proper. Petitioner
does not deny having duly received the two Notices of Assessment dated October 8,
1985 on October 10, 1985. It also admits that it did not file a protest before the Board
of Assessment Appeals to question the assessment. Petitioner failed to exhaust its
administrative remedies, and the consequence for such failure is clear the tax
assessment, as computed and issued by the Office of the Provincial Assessor,
became final. Petitioner is deemed to have admitted the correctness of the
assessment of its properties. In addition, Section 64 of PD No. 464 requires that the
taxpayer must first pay under protest the tax assessed against him before he could
seek recourse from the courts to assail its validity.
Issue: Whether or not the petitioner's appeal to the Court of Tax Appeals should
be based letter dated April 29, 1963 of the Commissioner.
Held: Yes, the appeal should be based on the letter dated April 29, 1963 of the CIR. A
close reading of the numerous letters exchanged between the petitioner and the
Commissioner clearly discloses that the letter of demand issued by the Commissioner
on April 29, 1963 and received by the petitioner on May 8, 1963 constitutes the
definite determination of the petitioner's deficiency franchise tax liability or the decision
on the disputed assessment and, therefore, the decision appealable to the tax court.
Moreover, the letter of demand dated April 29, 1963 unquestionably constitutes
the final action taken by the Commissioner on the petitioner's several requests for
reconsideration and recomputation. In this letter, the Commissioner not only in effect
demanded that the petitioner pay the amount of P11,533.53 but also gave warning
that in the event it failed to pay, the said Commissioner would be constrained to
enforce the collection thereof by means of the remedies provided by law. The tenor of
the letter, specifically, the statement regarding the resort to legal remedies,
unmistakably indicates the final nature of the determination made by the
Commissioner of the petitioner's deficiency franchise tax liability. The revised
assessment embodied in the Commissioner's letter dated April 29, 1963 being, in
legal contemplation, the final ruling reviewable by the tax court, the thirty-day appeal
period should be counted from May 8, 1963 (the day the petitioner received a copy of
the said letter). From May 8, 1963 to June 7, 1963 (the day the petitioner, by
registered mail, sent to the Commissioner its letter of June 6, 1963 requesting for
further recomputation of the amount demanded from it) saw the lapse of thirty days.
The June 6, 1963 request for further recomputation, partaking of a motion for
reconsideration, tolled the running of the thirty-day period from June 7, 1963 (the day
the petitioner sent its letter by registered mail) to July 16, 1963 (the day the petitioner
received the letter of the Commissioner dated June 28, 1963 turning down its
request). The prescriptive period commenced to run again on July 16, 1963. The
petitioner filed its petition for review with the tax court on August 1, 1963 after the
lapse of an additional sixteen days. The petition for review having been filed beyond
the thirty-day period, we rule that the Court of Tax Appeals correctly dismissed the
same.
Issue: Whether or not petitioner is the proper party to ask for refund.
Held: No, Silkair is not the proper party to seek refund. In Contex Corporation v.
Commissioner of Internal Revenue, we held that while it is true that petitioner
corporation should not have been liable for the VAT inadvertently passed on to it by its
supplier since their transaction is a zero-rated sale on the part of the supplier, the
petitioner is not the proper party to claim such VAT refund. Rather, it is the petitioners
suppliers who are the proper parties to claim the tax credit and accordingly refund the
petitioner of the VAT erroneously passed on to the latter. The proper party to question,
or seek a refund of, an indirect tax is the statutory taxpayer, the person on whom the
tax is imposed by law and who paid the same even if he shifts the burden thereof to
another. Section 130 (A) (2) of the NIRC provides that [u]nless otherwise specifically
allowed, the return shall be filed and the excise tax paid by the manufacturer or
producer
before
removal
of
domestic
products
from
place
of
production. Thus, Petron Corporation, not Silkair, is the statutory taxpayer which
is entitled to claim a refund based on Section 135 of the NIRC of 1997 and
Article 4(2) of the Air Transport Agreement between RP and Singapore. Even if
Petron Corporation passed on to Silkair the burden of the tax, the additional amount
billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a
purchaser.
ISSUE: Whether or not the BIR Warrant of Distraint prevails over the writ of
execution issued by an RTC.
HELD: BIR Warrant of Distraint prevails. It is well settled that the claim of the
government prevails on a tax lien superior to the claim of a private litigant predicated
on a judgment. The tax lien attached not only from the service of warrant of distraint
but from the time the tax became due and payable.
In the case, the Distraint was made by the Commissioner long before the writ of
execution was issued by the RTC. There is no question that at the time of the writ of
execution, the 2 barges were no longer properties of Maritime. The power of the court
in execution of judgments extends only to properties unquestionable belonging to the
judgment debtor. Execution sale affect the rights of the judgment debtor only, and the
purchaser in an auction sale acquires only such right as the judgment debtor had at
the time of sale. There is no further need for petitioner to establish his rights over the 2
barges as evidence clearly proves that the barges are under distraint and in fact
seized by the Commisssioner.
Facts: Pedro Roxas and Carmen Ayala transmitted to their grandchildren agricultural
lands in Nasugbu, a residential house in Malate, and shares of stocks in different
corporations. To manage such properties, the heirs forms a partnership called Rozas y
Compania. The agricultural lands, later on, was subjected to land redistribution to the
farmers, as a consequence of which the land was bought by the government. House
rentals were also received by the petitioner thru the rental payments paid by Jose
Roxas. On June 17, 1958, CIR assessed petitioner, among other, income tax for sale
of the Nasugbu farms, which the brothers protested but was denied. Thus, they
instituted an appeal to the CTA on January 9, 1961.
Issue: Is the gain derived from the sale of the Nasugbu farm lands an ordinary
gain, hence 100% taxable?
Held: Yes, it is 100% taxable. The Commissioner of Internal Revenue contends that
Roxas y Cia could be considered a real estate dealer because it engaged in the
business of selling real estate. The business activity alluded to was the act of
subdividing the Nasugbu farm lands and selling them to the farmers-occupants on
installment.
The proposition of the Commissioner of Internal Revenue cannot be favorably
accepted by us in this isolated transaction with its peculiar circumstances in spite of
the fact that there were hundreds of vendees. Although they paid for their respective
holdings in installment for a period of ten years, it would nevertheless not make the
vendor Roxas y Cia. a real estate dealer during the ten-year amortization period.
In fine, Roxas y Cia cannot be considered a real estate dealer for the sale in question.
Hence, pursuant to Section 34 of the Tax Code the lands sold to the farmers are
capital assets, and the gain derived from the sale thereof is capital gain, taxable only
to the extent of 50%.
Without acting on Reyes protest and offer, CIR proceeded with auction sale.
Consequently, Reyes filed a Petition for Review with the CTA.
On July 17, 2000, Reyes filed a Motion for the Issuance of a Writ of Preliminary
Injunction or Status Quo Order, which was granted by the CTA. CTA ordered the
CIR to desist and refrain from proceeding with the auction sale of the subject
property.
During the pendency of the Petition for Review with the CTA, however, the
BIR issued Revenue Regulation (or RR) No. 6-2000 and Revenue
Memorandum Order (or RMO) No. 42-2000 offering certain taxpayers with
delinquent accounts and disputed assessments an opportunity to
compromise their tax liability.
On November 25, 2000, Reyes filed an application with the BIR for the
compromise settlement of the assessment against the estate Reyes filed
an Ex-Parte Motion for Postponement of the hearing before the CTA
scheduled on January 9, 2001, citing her pending application for
compromise with the BIR. The motion was granted and the hearing was
reset to February 6, 2001.
On June 14, 2001, Reyes filed a Motion for Judgment on the Pleadings; the
motion was granted on July 11, 2001. After submission of memoranda, the case
was submitted for decision.
On June 19, 2002, the CTA rendered a decision, which denied its petition. In
arriving at its decision, the CTA ratiocinated that there can only be a perfected
and consummated compromise of the estates tax liability, if the NEB has
approved Reyes application for compromise.
Anent the validity of the assessment notice and letter of demand against the
estate, the CTA stated that at the time the questioned assessment notice and
letter of demand were issued, the heirs knew very well the law and the facts on
which the same were based. It also observed that the petition was not filed
within the 30-day reglementary period provided under Sec. 11 of Rep. Act No.
1125 and Sec. 228 of the Tax Code.
Held: 1. No, the assessment against the estate is not valid. In the present case,
Reyes was not informed in writing of the law and the facts on which the assessment of
estate taxes had been made. She was merely notified of the findings by the CIR, who
had simply relied upon the provisions of former Section 229 prior to its amendment by
Republic Act (RA) No. 8424, otherwise known as the Tax Reform Act of 1997.
The second paragraph of Section 228 of the Tax Code is clear and mandatory. It
provides as follows:
Sec. 228. Protesting of Assessment. -xxxxxxxxx
The taxpayers shall be informed in writing of the law and the facts on
which the assessment is made: otherwise, the assessment shall be void.
To be simply informed in writing of the investigation being conducted and of the
recommendation for the assessment of the estate taxes due is nothing but a
perfunctory discharge of the tax function of correctly assessing a taxpayer. The act
cannot be taken to mean that Reyes already knew the law and the facts on which the
assessment was based. It does not at all conform to the compulsory requirement
under Section 228. Moreover, the Letter of Authority received by respondent
on March 14, 1997 was for the sheer purpose of investigation and was not even the
requisite notice under the law.
Held: 2. The compromise is invalid. It would be premature for this Court to declare
that the compromise on the estate tax liability has been perfected and consummated,
considering the earlier determination that the assessment against the estate was
void. Nothing has been settled or finalized. Under Section 204(A) of the Tax Code,
where the basic tax involved exceeds one million pesos or the settlement offered is
less than the prescribed minimum rates, the compromise shall be subject to the
approval of the NEB composed of the petitioner and four deputy commissioners.
Finally, as correctly held by the appellate court, this provision applies to all
compromises, whether government-initiated or not.
Issue: Whether or not it is denied due process after it failed to move for
reconsideration due to negligence of its counsel.
Held: No, RCBC was not denied due process. It is basic that as long as a party is
given the opportunity to defend his interests in due course, he would have no reason
to complain, for it is this opportunity to be heard that makes up the essence of due
process. After the CTA Second Division dismissed the petition for relief from judgment
in a Resolution dated May 3, 2004, petitioner filed a motion for reconsideration and
the court further required both parties to file their respective memorandum. Indeed,
petitioner was not denied its day in court considering the opportunities given to argue
its claim. Relief cannot be granted on the flimsy excuse that the failure to appeal was
due to the neglect of petitioners counsel. Otherwise, all that a losing party would do to
salvage his case would be to invoke neglect or mistake of his counsel as a ground for
reversing or setting aside the adverse judgment, thereby putting no end to litigation.
Issue: Whether or not respondent company may be required to pay again the
documentary stamps it has actually purchased, affixed and cancelled.
Held: No, the respondent company is no longer required to pay again. As correctly
pointed out by respondent Court of Tax Appeals, Sections 221, 237, and 239 of NIRC,
documentary tax is deemed paid by: (a) the purchase of documentary stamps; (b)
Issue: Whether or not the right of plaintiff (respondent herein) to file a judicial
action for the collection of the amount of P15,443.55 as forest charges and
surcharges due from the petitioner Mambulao Lumber Company for the year
1949 has already prescribed.
Held: No, the action has not yet prescribed. The letter of demand of the Acting
Commissioner of Internal Revenue dated August 29, 1958 was the basis of
respondent's complaint filed in this case and not the demand letter of the Bureau of
Forestry dated January 15, 1949. This must be so because forest charges are internal
revenue taxes 6 and the sole power and duty to collect the same is lodged with the
Bureau of Internal Revenue 7 and not with the Bureau of Forestry. The computation
and/or assessment of forest charges made by the Bureau of Forestry may or may not
be adopted by the Commissioner of Internal Revenue and such computation made by
the Bureau of Forestry is not appealable to the Court of Tax Appeals. 8Therefore, for
the purpose of computing the five-year period within which to file a complaint for
collection, the demand or even the assessment made by the Bureau of Forestry is
immaterial.
In the case at bar, the commencement of the five-year period should be counted from
August 29, 1958, the date of the letter of demand of the Acting Commissioner of
Internal Revenue 9 to petitioner Mambulao Lumber Company. It is this demand or
assessment that is appealable to the Court of Tax Appeals. The complaint for
collection was filed in the Court of First Instance of Manila on August 25, 1961, very
much within the five-year period prescribed by Section 332 (c) of the Tax Code.
Consequently, the right of the Commissioner of Internal Revenue to collect the forest
charges and surcharges in the amount of P15,443.55 has not prescribed.
Furthermore, it is not disputed that on October 18, 1958, petitioner requested for a
reinvestigation of its tax liability. In reply thereto, respondent in a letter dated July 8,
1959, gave petitioner a period of twenty (20) days from receipt thereof to submit the
results of its verification of payments and failure to comply therewith would be
construed as abandonment of the request for reinvestigation. Petitioner failed to
comply with this requirement. Neither did it appeal to the Court of Tax Appeals within
thirty (30) days from receipt of the letter dated July 8, 1959, as prescribed under
Section 11 of Republic Act No. 1125, thus making the assessment final and executory.