1. LASCONA LAND CO. INC. VS.

CIR
G.R. No. 171251/March 5, 2912/J. Peralta (3rd Division)
Doctrine:
LIFEBLOOD DOCTRINE -- Taxes are 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. Thus, even
as we concede the inevitability and indispensability of taxation,
it is a requirement in all democratic regimes that it be exercised
reasonably and in accordance with the prescribed procedure.
Facts:
CIR issued Assessment Notice No. 0000047-93-407 against
Lascona Land for its alleged deficiency income tax in the amount
of P753,266,56, to which the latter filed a letter protest but was
denied by the CIR on ground that it cannot give due course to
petitioners request to cancel or set aside the assessment notice
for the reason that the case was not elevated to the CTA as
mandated by the provisions of the last paragraph of Sec. 228 of
the Tax Code.
Issue:
Whether the subject assessment has become final, executory
and demandable due to the failure of petitioner to file an appeal
before the CTA within 30 days from the lapse of the 180-day
period pursuant to Sec. 228 of the NIRC.
Ruling:

The petition is granted.

Held:
In arguing that the assessment became final and executory by
the sole reason that petitioner failed to appeal the inaction of the
Commisisoner within 30 days after the 180-day reglementary
period, respondent, in effect, limited the remedy of Lascona, as a
taxpayer, under Sec. 228 of the NIRC to just one, that is to
appeal the inaction of the Commissioner on its protested
assessment after the lapse of the 180-day period. This is
incorrect.
In Sec. 228, when the law provided for the remedy to appeal the
inaction of the CIR, it did not intend to limit it to a single remedy
of filing an appeal after the lapse of the 18-day prescribed
period. Precisely, when a taxpayer protested an assessment, he
naturally expects the CIR to decide either positively or
negatively. A taxpayer cannot be prejudiced if he chooses to
wait for the final decision of the CIR on the protested
assessment. More so, because the law and jurisprudence have
always contemplated a scenario where the CIR will decide on the
protested assessment.
It must be emphasized, however, that in case of the inaction of
the CIR on the protested assessment, while we reiterate the
taxpayer has two options, either: (1) file a petition for review
with the CTA within 30 days after the expiration of the 180-day
period; or (2) await the final decision of the Commissioner on the
disputed assessment and appeal such final decision to the CTA
within 30 days after the receipt of a copy of such decision, these
options are mutually exclusive and resort to one bars the
application of the other.
2. RENATO DIAZ VS. SEC. OF FINANCE & CIR

G.R. NO. 193007/July 19, 2011/J. Abad (En Banc)

Doctrine:
TOLL FEES VS. TAX -- Fees paid by the public to tollway operators
for use of the tollways, are not taxes in any sense. A tax is
imposed under the taxing power of the government principally
for the purpose of raising revenues to fund public expenditures.
Toll fees, on the other hand, are collected by private tollway
operators as reimbursement for the costs and expenses incurred
in the construction, maintenance and operation of the tollways,
as well as to assure them a reasonable margin of income.
Although toll fees are charged for the use of public facilities,
therefore, they are not governed exactions that can be properly
treated as a tax. Taxes may be imposed only by the government
under its sovereign authority, toll fees may be demanded by
either the government or private individuals or entities, as an
attribute of ownership.
Facts:
Petitioners filed this petition for declaratory relief assailing the
validity of the impending imposition of value-added tax by the
BIR on the collection of tollway operators. Petitioners hold the
view that the enactment of the NIRC was not intended to include
toll fees within the meaning of sale of services that are subject to
VAT; that a toll fee is a users tax, not a sale of service; that to
impose VAT on toll fees would amount to a tax on public service;
and that, since VAT was never factored into the formula for
computing toll fees, its imposition would violate the nonimpairment clause of the Constitution.
Issues:

1. Whether the government is unlawfully expanding VAT

coverage by including tollway operators and tollway
operations in the terms franchise grantees and sale of
services under Sec. 108 of the Code.
2. Whether the imposition of VAT on tollway operators (a)
amounts to a tax on tax and not a tax on services; (b) will
impair the tollway operators right to a reasonable return of
investment under their TOAs; and (c) is not administratively
feasible and cannot be implemented.
Ruling:
The petition is dismissed for lack of merit.
Held:
1. The CIR did not usurp legislative prerogative or expand the
VAT laws coverage when she sought to impose VAT on tollway
operations. Sec. 108(A) of the Code clearly states that
services of all other franchise grantees are subject to VAT,
except as may be provided under Sec. 119 of the Code.
Tollway operators are not among the franchise grantees
subject to franchise tax under the latter provision. Neither are
their services among the VAT exempt transactions under Sec.
109 of the Code.
2. Parenthetically, VAT on tollway operations cannot be deemed
a tax on tax due to the nature of VAT as an indirect tax. In
indirect taxation, a distinction is made between the liability for
the tax and burden of the tax. The seller who is liable for the
VAT may shift or pass on the amount of VAT it paid on goods,
properties, or services to the buyer. In such a case, what is
transferred is not the sellers liability but merely the burden of
the VAT.

Consequently, VAT on tollway operations is not really a tax on

the tollway user, but on the tollway operator. Under Sec. 105
of the Code, VAT is imposed on any person who, in the course
of trade or business, sells or renders services for a fee. In
other words, the seller of services, who in this case is the
tollway operator, is the person liable for VAT. The latter
merely shifts the burden of VAT to the tollway user as part of
the toll fees.
For this reason, VAT on tollway operations cannot be a tax on
tax even if toll fees were deemed as a users tax. VAT is
assessed against the tollway operators gross receipts and not
necessarily on the toll fees. Although the tollway operator
may shift the VAT burden to the tollway user, it will not make
the latter directly liable for the VAT. The shifted VAT burden
simply becomes part of the toll fees that one has to pay in
order to use the tollways.
Administrative feasibility is one of the canons of a sound tax
system. It simply means that the tax system should be
capable of being effectively administered and enforced with
the least inconvenience in the taxpayer. Non-observance of
the canon, however, will not render a tax imposition invalid
except to the extent that specific constitutional or statutory
limitations are impaired. Thus, even if the imposition of VAT
on tollway operations may seem burdensome to implement, it
is not necessarily invalid unless some aspect of it is shown to
violation any law or the Constitution.

3. SMART COMMUNICATIONS, INC. VS. MUNICIPALITY OF

MALVAR
G.R. No. 204428/February 18, 2014/J. Carpio/En Banc
Doctrine:
PRESUMPTION OF VALIDITY OF ORDINANCES An ordinance
carries with it the presumption of validity. The question of
reasonableness though it open to judicial inquiry. Much should
be left thus to the discretion of municipal authorities. Courts will
go slow in writing off an ordinance as unreasonable unless the
amount is so excessive as to be prohibitive, arbitrary,
unreasonable, oppressive, or confiscatory. A rule which has
gained acceptance is that factors relevant to such an inquiry are
the municipal conditions as a whole and the nature of the
business made subject to imposition.
Facts:
In the course of its business, Smart constructed a
telecommunications tower within the territorial jurisdiction of the
Municipality of Malvar, Batangas for the purpose of receiving and
transmitting cellular communications within the covered area.
On July 30, 2003, the municipality passed Ordinance No. 18
regulating the establishment of special projects, wherein in
connection thereto, Smart received from the Permit and
Licensing Division of the municipality an assessment letter for
the total amount of P389,950.00 for its telecommunications
tower, as well as closure notice. Smart filed a protest claiming
lack of due process in the issuance of the assessment and
closure notice, likewise challenging the validity of Ordinance No.
18 for which the assessment was based. Upon denial of the
letter protest by the municipality, Smart filed with the RTC of
Tanauan City, an appeal/petition assailing the validity of
Ordinance No. 18. However, the trial court rendered a decision

partly granting the petition, confined its resolution to the validity

of the assessment and did not rule on the legality of Ordinance
No. 18. On appeal to the CTA, the CTA denied the petition for
review as well as the motion for reconsideration.
Issue:
1. Whether the imposition of the fees in Ordinance No. 18 is ultra
vires considering that the municipality exceeded its power to
impose taxes and fees as provided in Sec. 143 of the Local
Government Code.
2. Whether Ordinance No. 18 is valid and constitutional since the
fees imposed therein are unjust, excessive, oppressive and
confiscatory.
Ruling:
The Petition is dismissed by the SC.
Held:
1. As discussed by the Court, the fees in the Ordinance No. 18
are not taxes. Logically, the imposition does not appear in the
enumeration of taxes under Sec. 143 of the Local Government
Code. Moreover, even if the fees do not appear in Sec. 143 or
any other provision in the LGC, the municipality is empowered
to impose taxes, fees, and charges, not specifically
enumerated in the LGC or taxed under the Tax Code or other
applicable law.
2. Settled is the rule that every law, in this case an ordinance, is
presumed valid. To strike down a law as unconstitutional,
Smart has the burden to prove a clear and unequivocal breach
of the Constitution, which Smart miserably failed to do.

To justify the nullification of the law or its implementation,

there must be a clear and unequivocal, not a doubtful, breach
of the Constitution. X x x This presumption of constitutionality
can be overcome only by the clearest showing that there was
indeed an infraction of the Constitution, and only when such a
conclusion is reached by the required majority may the Court
pronounce, in the discharge of the duty it cannot escape, that
the challenged act must be struck down.
4. JOSE FERRER VS. CITY MAYOR HERBERT BAUTISTA
G.R. NO. 210551/June 30, 2015/J. Peralta/En Banc
Doctrine:
TAXING POWER OF THE LGUs -- A municipal tax ordinance
empowers a local government unit to impose taxes. The power
to tax is the most effective instrument to raise needed revenues
to finance and support the myriad activities of local government
units for the delivery of basic services essential to the promotion
of the general welfare and enhancement of peace, progress, and
prosperity of the people.
Consequently, any delay in
implementing tax measures would be to the detriment of the
public. It is for this reason that protests over tax ordinances are
required to be done with certain time frames.
Facts:
Petitioner, a QC property owner, assails the constitutionality of
two Ordinances issued by the QC municipal government, the
Socialized Housing Tax (SP-2095, S-2011) and the Garbage
Collection Fees (SP-2235, S-2013), and seeks to declare them
unconstitutional and illegal. Petitioner claims that the imposition
of the SHT and garbage fee cannot be justified by the QC
government as an exercise of its power to create sources of
income under the Constitution. According to petitioner, the

constitutional provision is not a carte blanche (full discretionary

power) for the LGUs to tax everything under its territorial and
political jurisdiction as the provision itself admits of guidelines
and limitations. Petitioner further avers that the collection of the
fees is tantamount to a penalty imposed on real property owners,
and that the fees are oppressive and confiscatory in nature,
likewise it violates the right of property owners to equal
protection of the laws and the rule on double taxation.

Clearly, the SHT charged by the QC government is a tax which

is within its power to impose.
Aside from the specific
authority vested by Sec. 43 of the UDHA, cities are allowed to
exercise such other powers and discharge such other
functions and responsibilities as are necessary, appropriate, or
incidental to efficient and effective provision of the basic
services and facilities which include, among others, programs
and projects for low-cost housing and other mass dwellings.

Issues:
1. Whether the ordinances is within the QC government to
impose.
2. Whether the ordinance on SHT violates the rule on equal
protection of the law.
3. Whether the ordinance on Garbage Fee violates the rule on
double taxation.

2. An ordinance based on reasonable classification does not

violate the constitutional guaranty of the equal protection of
the law. x x x Notably, the public purpose of a tax may legally
exist even if the motive which impelled the legislature to
impose the tax was to favor one over another. It is inherent in
the power to tax that a State is free to select the subjects of
taxation. Inequities which result from a singling out of one
particular class for taxation or exemption infringe no
constitutional limitation. x x x Further the reasonableness of
Ordinance No. SP-2095 cannot be disputed as it is not
confiscatory or oppressive since the tax being imposed
therein is below what the UDHA actually allows.

Ruling:
The petition is partially granted.
The constitutionality and
legality of SHT is sustained for being consistent with Sec. 43 of
RA 7279. On the other hand, the ordinance on Garbage Fee is
declared unconstitutional and illegal.
Held:
1. Subject to the provisions of the Local Government Code and
consistent with the basic policy of local autonomy, every LGU
is now empowered and authorized to create its own sources of
revenue and to levy taxes, fees, and charges which shall
accrue exclusively to the local government unit as well as to
apply its resources and assets for productive, developmental,
or welfare purposes, in the exercise or furtherance of their
governmental or proprietary powers and functions.

3. The ordinance on garbage is invalid, although it does not

violate the rule on double taxation, it nonetheless violate the
rule on equality. For the purpose of garbage collection, there
is, in fact, no substantial distinction between an occupant of a
lot, on one hand, and an occupant of a unit in a condominium,
socialized housing project or apartment, on the other hand.
Most likely, garbage output produced by these types of
occupants is uniform and does not vary to a large degree;
thus, a similar schedule of fee is both just and equitable. x x x

Indeed, the classifications under Ordinance No. S-2235 are not

germane to its declared purpose of promoting shared
responsibility with the residents to attack their common
mindless attitude in over-consuming the present resources
and in generating wastes.
5. COMMISSIONER OF CUSTOMS VS. HYPERMIX FEEDS
CORP.
G.R. NO. 179579/February 1, 2012/J. Sereno/2nd Division
Doctrine:
APPLICATION
OF
ADMINISTRATIVE
RULE

When
an
administrative rule is merely interpretative in nature, its
applicability needs nothing further that its bare issuance, for it
gives no real consequence more than what the law itself has
already prescribed. When, on the other hand, the administrative
rules goes beyond merely providing for the means that can
facilitate or render lease cumbersome the implementation of the
law but substantially increases the burden of those governed, it
behoves the agency to accord at least to those directly affected
a chance to be heard, and thereafter to be duly informed, before
the new issuance is given the force and effect of law.
Facts:
Petitioner issued CMO-27-2003 which classified wheat, for tariff
purposes, according to the following: (1) importer or consignee;
(2) country of origin; and (3) port of discharge. Depending on
these factors, wheat would be classified either as food grade,
with a tariff rate of 3%; and/or feed grade, with a tariff rate of
7%. The memorandum also provided for the proper procedure
for protest of valuation and classification review committee cases
wherein the release of the articles subject of protest requires the
importer to post a cash bond to cover the tariff differential. In

anticipating the implementation of the regulation on its imported

and perishable Chinese milling wheat in transit to China,
respondent filed a petition for declaratory relief with the RTC of
Las Pinas City contending that the memorandum was issued
without following the mandate of the Revised Administrative
Code on public participation, prior notice and publication or
registration with the UP Law Center. Respondent also alleged
that the equal protection clause of the Constitution was violated
when the regulation treated non-flour millers differently from
flour millers for no reason at all. Lastly, respondent asserted that
the retroactive application of the regulation was confiscatory in
nature. The trial court ruled in favor of respondent granting the
petition and declaring the subject memorandum invalid and of no
force and effect on ground that it did not follow the basic
requirements of hearing and publication in the issuance of the
said memorandum.
Issues:
1. Whether the memorandum is invalid for failure to observe the
requirements under the Revised Administrative Code.
2. Whether the memorandum is unconstitutional for being
violative of the equal protection clause of the Constitution.
3. Whether the Commissioner of Customs went beyond his
powers of delegated authority of examining and assessing the
articles.
Ruling:
The petition is denied.
Held:
1. Considering that the questioned regulation would affect the
substantive rights of respondent, it therefore follows that

petitioners should have applied the pertinent provisions of the

Revised Administrative Code.
It is well-settled that rules and regulations, which are the
product of a delegated power to create new and additional
legal provisions that have the effect of law, should be within
the scope of the statutory authority granted by the legislative
to the administrative agency. It is required that the regulation
be germane to the objects and purposes of the law; and that it
be not in contradiction to, but in conformity with, the
standards prescribed by law.
Petitioners violated respondents right to due process in the
issuance of the memorandum when they failed to observe the
requirements under the Revised Administrative Code, thus,
the assailed regulation must be struck down.
2. The equal protection clause means that no person or class of
persons shall be deprived of the same protection of laws
enjoyed by other persons or classes in the same place in like
circumstances. Thus, the guarantee of the equal protection of
laws is not violated if there is reasonable classification. For a
classification to be reasonable, it must be shown that: 1) it
rests on substantial distinction; 2) it is germane to the
purpose of the law; 3) it is not limited to existing conditions
only; and 4) it applies equally to all members of the same
class.
Unfortunately, CMO 27-2003 does not meet all these
requirements. We do not see how the quality of wheat is
affected by who imports it, where it is discharged, or which
country it came from.

Petitioners likewise violated respondents right to equal

protection of laws when they provided for an unreasonable
classification in the application of the regulation.
3. The provision mandates that the customs officer must first
assess and determine the classification of the imported article
before tariff may be imposed. Unfortunately, CMO 23-2007
has already classified the article even before the customs
officer had the chance to examine it. In effect, petitioner
diminished the powers granted by the Tariff Customs Code
with regard to wheat importation when it no longer required
the customs officer prior examination and assessment of the
proper classification of the wheat.
Thus, petitioner went beyond his powers of delegated
authority when the regulation limited the powers of the
customs officer to examine and assess imported articles.
6. LA SUERTE CIGAR VS. CA
G.R. NO. 125346/November 11, 2014/J. Leonen/En Banc
Doctrine:
POWER OF TAXATION INHERENTLY LEGISLATIVE The power of
taxation is inherently legislative and may be imposed or revoked
only by the legislature. Moreover, this plenary power of taxation
cannot be delegated by Congress to any other branch of
government or private persons, unless its delegation is
authorized by the Constitution itself. Hence, the discretion to
ascertain the following (a) basis, amount, or rate of tax; (b)
person or property that is subject to tax; (c) exemptions and
exclusions from tax; and (d) manner of collecting the tax may
not be delegated away by Congress.
Facts:

These cases involve the taxability of stemmed leaf tobacco

imported and locally purchased by cigarette manufacturers for
use as raw materials in the manufacture of their cigarettes.
Under the 1997 NIRC, before it was amended on December 19,
2012 through RA 10351 (Sin Tax Law), stemmed leaf tobacco is
subject to an excise tax of P0.75 for each kilogram thereof. The
1997 NIRC further provides that stemmed leaf tobacco leaf
tobacco which has had the stem or midrib removed may be
sold in bulk as raw material by one manufacturer directly to
another without payment of the tax, under such conditions as
may be prescribed in the rules and regulations prescribed by the
Secretary of Finance.
Petitioner received a letter from then Comm. Jose Ong
demanding payment of P34,934,827.67 as deficiency excise tax
on its entire importation and local purchase of stemmed leaf
tobacco for the period covering January 1, 1986 to June 30, 1989.
La Suerte protested the excise tax deficiency assessment
stressing that the BIR assessment was based solely on Sec. 141
(b) of the Tax Code without, however, applying Sec. 137 thereof,
the more specific provision, which expressly allows the sale of
stemmed leaf tobacco as raw material by one manufacturer
directly to another without payment of the excise tax.
Respondent insists that stemmed leaf tobacco is subject to
excise tax, unless there is an express grant of exemption from
the payment of tax. To this, La Suerte filed with the CTA a
petition for review seeking the annulment of the assessment.
The CTA ruled in favor of La Suerte cancelling the assessment for
lack of merit. On appeal, the CA reversed and set aside the
decision of the CTA.
Issues:

Whether cigarette manufacturers are doubly taxed because they

are paying the specific tax on the raw material and on the
finished product in which the raw material was a part.
Ruling:
The petition is denied.
Held:
For double taxation in the objectionable or prohibited sense to
exist, the same property must be taxed twice, when it should be
taxed but once. Both taxes must be imposed on the same
property or subject-matter, for the same purpose, by the same
taxing authority, within the same jurisdiction or taxing district,
during the same taxing period, and they must be the same kind
or character of tax.
At all events, there is no constitutional prohibition against double
taxation in the Philippines. There is no validity to the assertion
that the delegated authority can be declared unconstitutional on
the theory of double taxation. X x x Moreover, double taxation, in
general, is not forbidden by our fundamental law. x x x 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 or
municipality.
7. SILKAIR (SINGAPORE) PTE. LTD. VS. CIR
G.R. NO. 166482/January 25, 2012/J. Villarama, 1 st
Division
Doctrine:

EXCISE TAX BASICALLY AN INDIRECT TAX Excise taxes, which

apply to articles manufactured or produced in the Philippines for
domestic sale or consumption or for any other disposition and to
things imported in the Philippines, is basically an indirect tax.
While the tax is directly levied upon the manufacturer/importer
upon removal of the taxable goods from its place of production
or from the customs custody, the tax, in reality, is actually
passed on to the end consumer as part of the transfer value or
selling price of the goods, sold, bartered, or exchanged.
Facts:
Petitioner filed an administrative claim for refund in the amount
of P5,007,043.39 representing excise tax on the purchase of jet
fuel from Petron, which it alleged to have been erroneously paid,
based on Sec. 135 (a) and (b) of the 1997 Tax Code.
Issue:
Whether petitioner has the legal personality to file an
administrative claim for refund of excise taxes alleged to have
been erroneously paid to its supplier of aviation fuel in the
Philippines.

manufacturer/importer upon removal of the taxable goods from

its place of production or from the customs custody, the tax, in
reality, is actually passed on to the end consumer as part of the
transfer value or selling price of the goods, sold, bartered, or
exchanged. In early cases, we have ruled that for indirect taxes
(such as VAT), the proper party to question or seek a refund of
the tax is the statutory taxpayer, the person on whom the tax is
imposed by law and who paid the same even when he shifts the
burden thereof to another.
In the third Silkair case decided last year, the Court called the
attention to the consistent rulings in the previous two Silkair
cases that petitioner as the purchaser and end-consumer of the
aviation fuel is not the proper party to claim for refund of excise
taxes paid thereon.
The situation clearly called for the
application of the doctrine, stare decisis et non quieta movere.
Follow past precedents and do not disturb what has been settled.
Once a case has been decided one way, any other case involving
exactly the same point in issue, as in the case at bar, should be
decided in the same manner. The Court thus finds no cogent
reason to deviate from those previous rulings on the same issues
herein raised.

Ruling:
Petition is denied.

Held:
Excise tax, which apply to articles manufactured or produced in
the Philippines for domestic sale or consumption or for any other
disposition and to things imported into the Philippines, is
basically an indirect tax. While the tax is directly levied upon the

8. NIPPON EXPRESS VS. CIR

G.R. NO. 185666/February 4, 2015/J. Perez, 1st Division
Doctrine:

NECESSITY OF VAT INVOICE TO CLAIM TAX CREDIT -- Under the

law, a VAT invoice is necessary for every sale, barter or exchange
of goods or properties while a VAT official receipt properly
pertains to ever; lease of goods or properties, and every sale,
barter or exchange of services. In other words, the VAT invoice
is the sellers best proof of the sale of the goods or services to
the buyer while the VAT receipt is the buyers best evidence of
the payment of goods or services received from the seller. Thus,
the High Court concluded that VAT invoice and VAT receipt
should not be confused as referring to one and the same thing.
Certainly, neither does the law intend the two to be used
interchangeably.
Facts:
For the calendar year of 2000, petitioners gross receipts were
primarily derived from rendering its services to PEZA-registered
clients. It incurred total sales of P1,063,357,008.74. And also for
the same year, petitioner paid input taxes amounting to
P1,846,253.57 and apportioning this amount with its total sales
in accordance with Sec. 112 of the 1997 Tax Code, as amended.
The amount of total sales attributable to zero-rated sales would
be P24,826,667.61.
Upon the premise that it is entitled to a refund of the amount of
P24,826,667.61, petitioner filed four separate applications for tax
credit/refund with the One-Stop Shop Inter-Agency Tax Credit and
Duty Drawback Center of the DOF on September 24, 2001.
However, no resolution was received from the said government
office, hence, the petitioner filed a petition for review to the CTA
pursuant to Sec. 112 in relation to Sec. 229 of the 1997 Tax
Code, as amended. The CTA denied due course and accordingly
dismissed petitioners claim for the issuance of tax credit on the
ground of its failure to comply with the substantiation

requirements provided for under Sections 106, 108 and 113 of

the NIRC of 1997, as amended, considering that petitioners sales
are sales of services which should only be supported by official
receipts.
Consequently, without the VAT official receipts
evidencing its zero-rated revenues, the input VAT payment
alleged to be directly attributable thereto cannot be refunded or
a tax receipt cannot be issued in its favor.
Issue:
Whether or not petition is entitled to a tax credit P24,826,667.61
allegedly representing its excess and unutilized input VAT for the
taxable year 2000, in accordance with the provisions of the NIRC
of 1997, as amended, other pertinent laws, and applicable
jurisprudential proclamations.
Ruling:
The petition is dismissed.
prescription, barred.

The claim for refund is, by

Held:
Sec. 112 (D) of the NIRC of 1997 categorically states that in case
of failure on the part of the respondent to act on the application
within the 120-day period prescribed by law, petitioner only has
30 days after the expiration of the 120-day period to appeal the
unacted claim with the CTA. Since petitioners judicial claim for
the aforementioned quarters for taxable year 2000 was filed
before the CTA only on 24 April 2002, which was way beyond the
mandatory 120+30 days to seek judicial recourse, such
noncompliance with the mandatory period of 30 days is fatal to
its refund claim on the ground of prescription. Consequently, the
CTA had no jurisdiction over the instant claim of petitioner as the
petition was belatedly filed.

As told, the CTA has no jurisdiction over petitioners judicial

appeal considering that its Petition for Review was filed beyond
the mandatory 30-day period pursuant to Sec. 112 (d) of the
NIRC of 1997, as amended, and consistent with the ruling in the
San Roque case. Consequently, petitioners instant claim for
refund must be denied.
9. VISAYAS GEOTHERMAL POWER CO. VS. CIR
G.R. NO. 1975252/JUNE 4, 2014/J. Mendoza/3rd Division
Doctrine:
DOCTRINE OF ESTOPPEL -- It is well-settled rule that the
government cannot be estopped by the mistakes, errors or
omissions of its agents. It has been specifically held that
estoppel does not apply to the government, especially on
matters of taxation. Taxes are the nations lifeblood through
which government agencies continue to operate and with which
the State discharges its functions for the welfare of its
constituents. Thus, the government cannot be estopped from
collecting taxes by the mistake, negligence, or omission of its
agents. Upon taxation depends the ability of the government 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.
Facts:
On December 6, 2008, petitioner filed an administrative claim for
refund in the amount of P14,160,807.95 with the BIR on the
ground that it was entitled to recover excess and unutilized input
VAT payments for the four quarters of taxable year 2005,

pursuant to RA No. 9136, which treated sales of generated power

subjects to VAT to a zero percent rate starting June 26, 2001.
Nearly one month later, while its administrative claim was
pending, petitioner filed a judicial claim via a petition for review
with the CTA praying for a refund or the issuance of tax credit
certificate in the amount of P14,160,807.95 covering the four
quarters of taxable year 2005. The CTA partially granted the
petition holding that only the amount of P7,699,366.37 was duly
substantiated by the required evidence.
Issue:
Whether the petitioners
prematurely filed.

judicial

claim

for

refund

was

Ruling:
Petition is partially granted.
Held:
For clarity and guidance, this Court deems it proper to outline the
rules laid down in San Roque with regard to claims for refund or
tax credit of unutilized creditable input VAT. They are as follows:
1. When to file an administrative claim with the CIR:
a. General rule Sec. 112(A) and Mirant within 2 years from
the close of the taxable quarter when the sales were made.
b. Exception Atlas
Within 2 years from the date of payment of the output VAT, if
the administrative claim was filed from June 8, 2007
(promulgation of Atlas) to September 12, 2008 (promulgation
of Mirant).
2. When to file a judicial claim with the CTA:
a. General rule Sec. 112[D]; not Sec. 229

1. Within 30 days from the full or partial denial of the

administrative claim by the CIR; or
2. Within 30 days from the expiration of the 120 day period
provided to the CIR to decide on the claim. This is
mandatory and jurisdictional beginning January 1, 1998
(effectivity of 1997 NIRC).
b. Exception: BIR Ruling No. DA-489-03
The judicial claim need not await the expiration of the 120day period, if such was filed from December 10, 2003
(issuance of BIR Ruling No. DA-489-03-) to October 8, 2010
(promulgation of Aichi).
10. GUALBERTO DELA LLANA VS. COA
G.R. NO. 180989/February 7, 2012/J. Sereno/En Banc
Doctrine:
CONSTITUTIONAL DUTY OF COA The 1987 Constitution has
made the COA the guardian of public funds, vesting it with broad
powers over all accounts pertaining to government revenues and
expenditures and the use of public funds and property, including
the exclusive authority to define the scope of its audit and
examination; to establish the techniques and methods for the
review; and to promulgate accounting and auditing rules and
regulations. Its exercise of its general audit power is among the
constitutional mechanisms that give life to the check and
balance system inherent in our form of government.
Facts:
Petitioner, as taxpayer, wrote to the Commission on Audit
regarding the recommendation of the Senate Committee on
Agriculture and Food that the Dept. of Agriculture set up an
internal pre-audit service. The COA replied informing him of the

prior issuance of Circular No. 89-299 which provides that

whenever the circumstances permits it, the COA may reinstitute
pre-audit or adopt such other control measures as necessary and
appropriate to protect the funds and property of an agency. The
petitioner filed the petition for certiorari alleging that the preaudit is a constitutional mandate enshrined in Sec. 2 Art. IX-D of
the Constitution. He further claimed that the lack of pre-audit by
COA, serious irregularities in government transactions have been
committed.
Respondents filed their comment on the petition and argued that
the same must be dismissed because it is not proper for a
petition for certiorari since there is no allegation showing that
COA exercised judicial or quasi-judicial functions when it
promulgated Circular No. 89-299; and there is no convincing
explanation showing that the promulgation of the circular was
done with grave abuse of discretion. Respondents claim that the
circular is valid, as COA has the power under the 1987
Constitution.
Issues:
1. Whether petitioner is entitled to the extraordinary writ of
execution.
2. Whether it is the constitutional duty of COA to conduct a preaudit before the consummation of government transaction.
Ruling:
The petition is dismissed.
Held:
1. Petitioner is correct in that decisions and orders of the COA
are reviewable by the court via a petition for certiorari.
However, these refer to decisions and orders which were

rendered by the COA in its quasi-judicial capacity. Circular No.

89-299 was promulgated by the COA under its quasilegislative or rule-making powers. Hence, Circular No. 89-299
is not reviewable by certiorari.
2. Petitioner anchors his second argument on Sec. 2 of Art. IX-D
of the 1987 Constitution where it is provided that government
transactions must undergo a pre-audit, which a COA duty that
cannot be lifted by a mere circular. However, petitioners
allegation find no support in the said Constitutional provision.
There is nothing in the said provision that requires the COA to
conduct a pre-audit of all government transactions and for all
government agencies. The only clear reference to a pre-audit
requirement is found in Sec. 2, par. 1, which provides that a
post-audit is mandated for certain government or private
entities with state subsidy or equity and only when the
internal control system of an audited entity is inadequate. In
such a situation, the COA may adopt measures, including a
temporary or special pre-audit, to correct the deficiencies.
Hence, the conduct of pre-audit is not a mandatory duty that
this Court may compel the COA to perform. This discretion on
its part is in line with the constitutional pronouncement that
the COA has the exclusive authority to define the scope of its
audit and examination. When the language of the law is clear
and explicit, there is no room for interpretation, only
application. Neither can the scope of the provision be unduly
enlarged by this Court.
11. RAMON A. GONZALES VS. HON. ANDRES R. NARVASA
G.R. NO. 140835/August 14, 2000/J. Gonzaga-Reyes/En
Banc
Doctrine:

NATURE AND SCOPE OF TAXPAYERS SUIT -- A taxpayer is

deemed to have the standing to raise a constitutional issue when
it is established that public funds have been disbursed in alleged
contravention of the law or the Constitution. Thus, payers action
is properly brought only when there is an exercise by Congress
of its taxing or spending power. Coming now to the instant case,
it is readily apparent that there is no exercise by Congress of its
taxing or spending power.
Facts:
In this petition for prohibition and mandamus filed Ramon A.
Gonzales, in his capacity as citizen and taxpayer, assails the
constitutionality of the creation of the Preparatory Commission
on Consultant Reform and of the positions of presidential
consultants, advisers and assistants from acting as such, and to
enjoin Exec. Sec. Zamora from enforcing their advice and
recommendations. In addition, petitioner seeks to enjoin the
Commission on Audit from passing in audit expenditures for the
PCCR and the presidential consultants, advisers and assistants.
Finally, petitioner prays for an order compelling respondent
Zamora to furnish petitioner with information on certain matters.
The PCCR was created by Pres. Estrada by virtue of EO 43 in
order to study and recommend proposed amendments and/or
revisions to the 1987 Constitution and the manner of
implementing the same. Petitioner disputes the constitutionality
of the PCCR on two grounds: 1) that it is a public office which
only the legislature can create by way of law; and 2) by creating
such a body the President is intervening in a process from which
he is totally excluded by the Constitution the amendment of the
fundamental charter. It is alleged by respondents that, with
respect to the PCCR, this case has become moot and academic.

Issue:
Whether petitioner, as a taxpayer, have the legal standing to file
the instant petition.
Ruling:
The petition is dismissed.
Held:
A taxpayer is deemed to have the standing to raise a
constitutional issue when it is established that public funds have
been disbursed in alleged contravention of the law or the
Constitution. Thus, payers action is properly brought only when
there is an exercise by Congress of its taxing or spending power.
Coming now to the instant case, it is readily apparent that there
is no exercise by Congress of its taxing or spending power.
12. CHAMBER OF REAL ESTATE & BUILDERS, INC. VS.
THE HON. EXEC. SEC. ALBERTO ROMULO, ET AL.
G.R. NO. 160756/March 9, 2010/J. Corona/En Banc
Doctrine:
LIFEBLOOD DOCTRINE Taxes are lifeblood of the government.
Without taxes, the government can neither exist nor endure.
The exercise of taxing power derives its source from the very
existence of the State whose social contract with its citizens
obliges it to promote public interest and the common good.
TAXATION INHERENT ATTRIBUTE OF SOVEREIGNTY and PURELY
LEGISLATIVE Taxation is an inherent attribute of sovereignty. It
is a power that is purely legislative. Essentially, this means that
in the legislature primarily lies the discretion to determine the
nature (kind), object (purpose), extent (rate) for a particular
public purpose on persons or things within its jurisdiction. In

other words, the legislature wields the power to define what tax
shall be imposed, why it should be imposed, how much tax shall
be imposed, against whom (or what) it shall be imposed and
where it shall be imposed.
POWER TO TAX IS PLENARY AND UNLIMITED IN RANGE As a
general rule, the power to tax is plenary and unlimited in its
range, acknowledging in its very nature no limits, so that the
principal check against its abuse is to be found only in the
responsibility of the legislature (which imposes the tax) to its
constituency who are to pay it. Nevertheless, it is circumscribed
by constitutional limitations. At the same time, like any other
statute, tax legislation carries a presumption of constitutionality.
Facts:
Petitioner CREBA assails the validity of the imposition of the
minimum corporate income tax (MCIT) for being violative of the
due process clause as it levies income tax even if there is no
realized gain. They also question the creditable withholding tax
(CWT) on sales of real properties classified as ordinary assets
stating that: (1) they ignore the different treatment of ordinary
assets and capital assets; (2) the use of gross selling price or fair
market value as basis for the CWT and the collection of tax on a
per transaction basis (and not on the net income at the end of
the year) are inconsistent with the tax on ordinary real
properties; (3) the government collects income tax even when
the net income has not yet been determined; and (4) the CWT is
being levied upon real estate enterprises but not on other
enterprises, more particularly those in the manufacturing sector.
Issue:

Whether the imposition of the MCIT (minimum corporate income

tax) on domestic corporations and the CWT on income from sales
of real properties classified as ordinary assets is unconstitutional.
Ruling:
The petition is dismissed.
Held:
The SC ruled that MCIT is not violative of due process and this is
not unconstitutional. MCIT was devised as a relatively simple
and effective revenue-raising instrument compared to the normal
income tax which is more difficult to control and enforce. It is a
means to ensure that everyone will make some minimum
contribution to the support of the public sector.
The contention of CREBA that pegging the tax base of the MCIT
to a corporations gross income is tantamount to a confiscation
of capital because gross income, unlike net income, is not
realized gain is untenable. MCIT is not a tax on capital. The
MCIT is imposed on gross income which is arrived at by
deducting the capital spent by a corporation in the sale of its
goods, i.e., the cost of goods and other direct expenses from
gross sales. Clearly, the capital is not being taxed. Furthermore,
the MCIT is not an additional tax imposition. It is imposed in lieu
of the normal net income tax, and only if the normal income tax
is suspiciously low. The MCIT merely approximates the amount
of net income tax due from a corporation, pegging the rate at a
very much reduced 2% and uses as the base the corporations
gross income. Besides, 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. Absent
any other valid objection, the assignment of gross income,
instead of net income, as the base of the MCIT, taken with the
reduction of the tax rate from 32% to 2%, is not constitutional

objectionable.
Moreover, CREBA does not cite any actual,
specific, and concrete negative experiences of its members nor
does it present empirical data to show that the implementation
of the MCIT resulted in the confiscation of their property.
In sum, CREBA failed to support, by any factual or legal basis, its
allegation that the MCIT is arbitrary and confiscatory. The Court
cannot strike down a law as unconstitutional simply because of
its yokes. Taxation is necessarily burdensome because, by its
nature, it adversely affects property rights. The party alleging
the laws unconstitutionality has the burden to demonstrate the
supposed violations in understandable terms.
As to the issue on the validity of the imposition of CWT on
income from sales of real properties classified as ordinary assets,
the SC rules that it is not unconstitutional.
The contention that the assailed revenue regulations ignore the
different treatment by RA 8424 of ordinary assets and capital
assets is unmeritorious. Final Withholding Tax (FWT) is imposed
on the sale of capital assets. On the other hand, CWT is imposed
on the sale of ordinary assets. The inherent and substantial
differences between FWT and CWT disprove CREBAs contention
that ordinary assets are being lumped together with, and treated
similarly as, capital assets in contravention of the pertinent
provisions of RA 8424. The fact that the tax is withheld at source
does not automatically mean that it is treated exactly the same
way as capital gains. As aforementioned, the mechanics of the
FWT are distinct from those of the CWT.
The withholding
agent/buyers act of collecting the tax at the time of the
transaction by withholding the tax due from the income payable
is the essence of the withholding tax method of tax collection.

The contention that respondent Secretary of Finance has no

authority to collect CWT is likewise unmeritorious. The Secretary
has the authority to require the withholding of tax on items of
income payable to any person, national or juridical, residing in
the Philippines based on Sec. 57 (B) of RA 8424. Thus, the
questioned provisions of RR 2-98, as amended, are well within
the authority given by Sec. 57 (B) to the Secretary, i.e., the
graduated rate of 1.5% to 5% is between the 1% to 32% range;
the withholding tax is imposed on the income payable and the
tax is creditable against the income tax liability of the taxpayer
for the taxable year.
13. PAGCOR VS. BIR
G.R. NO. 172087/March 15, 2011/J. Peralta/En Banc
Facts:
Petitioner filed a petition for review on certiorari and prohibition
seeking the declaration of nullity of Sec. 1 of R.A. 9337 insofar as
it amends Sec. 27(c) of RA 8424, otherwise known as the NIRC by
excluding petitioner from the enumeration of GOCCs exempted
from liability for corporate income tax. The SC partially granted
the petition insofar as it held that the BIR Revenue Regulation
No. 16-2006 which subjects PAGOR to 10% VAT is null and void
for being contrary to the NIRC. It also held that Sec. 1 of RA
9337 is valid and constitutional.
BIR issued RMC No. 33-2013 pursuant to the decision which
clarifies the Income Tax and Franchise Tax Due from PAGCOR, its
Contractees and Licensees. It now subjects the income from
PAGCORs operations and licensing of gambling casinos, gaming
clubs and other similar recreation or amusement places, gaming

pools, and other related operations to corporate income tax

under the NIRC