NAPOCOR v.

Province of Quezon

Ruling:

G.R. No. 171586 [25 January 2010] Special Second Division,

Brion, J.;

No. Legal interest is defined as interest in property or a

Facts:

claim cognizable at law, equivalent to that of a legal owner

who has legal title to the property. NAPOCOR is clearly not

Napocor entered into a Build-Operate-Transfer Agreement with

vested

Mirant.

Pagbilao

assessment, as it is not an entity having the legal title

Corporation for unpaid real property taxes in the amount of

over the machineries. It has absolutely no solid claim of

P1.5 Billion for the machineries located in its power plant

ownership or even of use and possession of the machineries.

in

The

Province

Pagbilao,

before

the

Quezon.
Local

of

Quezon

assessed

Petitioner

Board

of

Mirant

protested

Assessment

the

with

the

requisite

interest

to

protest

the

tax

assessment

Appeals,

claiming

By

the

parties

BOT

entitlement to the tax exemptions provided under Section 234

complete

ownership

of the Local Government Code, which states:

project,

including

agreement
both

the

legal

express
and

machineries

terms,

beneficial
and

BPPC

has

the

equipment

of

used,

subject only to the transfer of these properties without cost

(c) All machineries and equipment that are actually,

to NAPOCOR after the lapse of the period agreed upon. BPPC

directly, and exclusively used by local water districts

the owner-manager-operator of the project is the actual

and

corporations

user of its machineries and equipment. BPPCs ownership and

engaged in the supply and distribution of water and/or

use of the machineries and equipment are actual, direct, and

generation and transmission of electric power;

immediate, while NAPOCORs is contingent and, at this stage

government-owned

or

controlled

of the BOT Agreement, not sufficient to support its claim for

(e) Machinery and equipment used for pollution control

tax exemption.

and environmental protection.

Relating

to

LGC,

this

entity

is

party

foreign

to

the

Petitioners contractual assumption liability through the BOT

operation of real property tax laws and could not be clothed

Agreement

with any legal interest over the property apart from its

for

all

taxes

vests

it

with

sufficient

legal

interest because it is actually, directly, and materially

assumed liability for tax.

affected by the assessment.

Adjudication:
Issue:
Motion for reconsideration was denied
Whether

or

not

NAPOCOR

protest the tax assessment

has

sufficient

legal

interest

to

CIR v. Fortune Tobacco Corporation

price manipulation and also cure the unequal tax treatment

created by the skewed valuation of similar goods.

G.R. No. 180006 [28 September 2011] Special Second Division,

Uniformity in taxation requires that all subjects or objects

Brion, J.;

of taxation, similarly situated, are to be treated alike both

in privileges and liabilities. Proviso in Section 1, RR 17-99

Facts:

violated the rule of uniformity of taxation when applied in

Fortune Tobacco Corporation paid in advance excise taxes for

the year 2003 in the amount of P11.15 billion, and for the
period covering January 1 to May 31, 2004 in the amount of
P4.90

billion.

refund

with

collected

It

the

taxes

filed
CIR

in

the

an

for

administrative
erroneously

amount

of

P491

claim

and/or

for

tax

illegally

million.

Without

waiting for the CIRs action on its claim, Fortune Tobacco

filed with the CTA a judicial claim for tax refund. CTA First
Division ruled in favor of Fortune Tobacco and granted its
claim for refund. On Appeal, CTA En Banc upheld the decision.

certain cases. CIR perpetuated the unequal tax treatment of

similar goods that was supposed to be cured by the shift from
ad valorem to specific taxes.
Congress was not unaware that the "higher tax rule" is a
proviso that should ideally apply to the increase after the
transition period. The final version of the bill that became
RA 9334 contained no provision similar to the proviso in
Section 1 of RR 17-99 that imposed the tax due as of December
31, 1999 if this tax is higher than the new specific tax
rates. Thus, it appears that despite its awareness of the
need to protect the increase of excise taxes to increase
government

Issue:

revenue,

Congress

adopting the "higher tax rule.

Whether

or

not

Fortune

Tobacco

can

claim

for

refund

of

overpaid excise taxes based on "unauthorized administrative

legislation" on the part of the CIR
Ruling:
Yes. Raising government revenue is not the sole objective of
RA 8240. Since ad valorem taxes were based on the value of
the goods, the prices of the goods were often manipulated to
yield lesser taxes. The imposition of specific taxes, which
are based on the volume of goods produced, would prevent

Adjudication:
Petition was denied

ultimately

decided

against

The CITY OF ILOILO, Mr. ROMEO V. MANIKAN, in his capacity as

other holders of telecommunications franchise may be extended

the

to and availed of by SMART. Through a letter dated April 4,

Treasurer

of

Iloilo

City,

Petitioners,

vs.

2002, petitioner denied SMARTs protest. SMART objected to

SMART COMMUNICATIONS, INC. (SMART) Respondent.

the petitioners denial of its protest by instituting a case

against petitioner before the RTC of Iloilo City. The trial

G.R. No. 167260

February 27, 2009

court

ruled

in

favour

telecommunications

FACTS:

firm

of

SMART

exempt

from

and
the

declared

payment

of

the
local

franchise and business taxes.

SMART received a letter of assessment dated February

12, 2002 from petitioner requiring it to pay deficiency local

ISSUE:

franchise and business taxes (in the amount of P764,545.29,

plus interests and surcharges) which it incurred for the

Whether or not SMART is exempt from the payment of

local franchise and business taxes.

years 1997 to 2001. SMART protested the assessment by sending

a letter dated February 15, 2002 to the City Treasurer. It
claimed

exemption

business
franchise

taxes

from

based

under

payment
on

Republic

of

Section
Act

local
9

(R.A.)

of
No.

franchise
its

RULING:

and
No. The right of taxation is inherent in the State. It

legislative

7294

(SMARTs

is

prerogative

essential

to

the

perpetuity

of

the

franchise). Under SMARTs franchise, it was required to pay a

government; and he who claims an exemption from the common

franchise tax equivalent to 3% of all gross receipts, which

burden,

amount shall be in lieu of all taxes. . SMART contends that

organic or statute law. When exemption is claimed, it must be

the "in lieu of all taxes" clause covers local franchise and

shown indubitably to exist. At the outset, every presumption

business taxes.

is against it. A well-founded doubt is fatal to the claim; it

must

justify

his

claim

by

the

clearest

grant

of

is only when the terms of the concession are too explicit to

SMART similarly invoked R.A. No. 7925 or the Public
Telecommunications

whose

can be supported. The burden therefore is on SMART to prove

Section 23 declares that any existing privilege, incentive,

that, based on its franchise and the Public Telecoms Act, it

advantage,

is

shall

ipso

or

Policy

exemption
facto

Act

(Public

granted

become

part

Telecoms

Act)

admit fairly of any other construction that the proposition

under

existing

of

previously

franchises
granted-

telecommunications franchise. SMART contends that by virtue

of Section 23, tax exemptions granted by the legislature to

entitled

to

exemption

from

the

local

franchise

business taxes being collected by the petitioner.

and

Republic Act No. 7294 does not expressly provide what

to grant tax exemption cannot therefore be discerned from the

kind of taxes SMART is exempted from. It is not clear whether

law;

the "in lieu of all taxes" provision in the franchise of

exemption and runs counter to the requirement that the grant

SMART

of tax exemption should be stated in clear and unequivocal

would

include

exemption

from

local

or

national

taxation. What is clear is that SMART shall pay franchise tax

the

term

"exemption"

is

too

general

to

include

tax

language too plain to be beyond doubt or mistake.

equivalent to three percent (3%) of all gross receipts of the

business

transacted

franchise

tax

under

exemption

its

franchise.

would

But

include

the

Hence, SMART cannot validly claim any tax exemption

from

based either on Section 9 of its franchise or Section 23 of

whether

exemption

exactions by both the local and the national government is

not

unequivocal.

The

uncertainty

in

the

"in

lieu

of

all

taxes" clause in R.A. No. 7294 on whether SMART is exempted

from both local and national franchise tax must be construed
strictly against SMART which claims the exemption. SMARTs
claim for exemption from local business and franchise taxes
based on Section 9 of its franchise is therefore unfounded.
Whether Section 23 of the Public Telecoms Act extends
tax exemptions granted by Congress to new franchise holders
to existing ones has been answered in the negative in the
case

of

PLDT

v.

City

of

Davao.

The

term

"exemption"

in

Section 23 of the Public Telecoms Act does not mean tax

exemption;

rather,

it

refers

to

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, and thus to level the
playing

field

in

the

telecommunications

industry.

The

language of Section 23 and the proceedings of both Houses of

Congress are bereft of anything that would signify the grant
of tax exemptions to all telecommunications entities. Intent

the Public Telecoms Act.

PILIPINAS

SHELL

PETROLEUM

CORPORATION,

Petitioner,

finding

was

made

regarding

Shells

participation

in

the

vs.

fraud. In view of the cancellation, the Center required Shell

COMMISSIONER OF CUSTOMS, Respondent.

to pay the BIR and BOC the amounts corresponding to the TCCs
Shell had used to settle its liabilities. Shell objected to

G.R. No. 176380

June 18, 2009

the cancellation of the TCCs claiming that it had been denied

due process. Shell submitted its reply letter dated December

FACTS:

23,
In 1997 and 1998, Shell settled its liabilities for

customs duties and internal revenue taxes using tax credit

certificates (TCCs) that were transferred to it for value by
several Board of Investment (BOI)-registered companies. The
transfers

of

the

TCCs

to

transferors-BOI-registered

Shell

were

companies

processed

and

were

by

the

eventually

approved by the One Stop Shop Inter-Agency Tax Credit and

Duty Drawback Center (the Center). The Center is composed of
the following government agencies: the Department of Finance
(DOF), the Bureau of Internal Revenue (BIR), the Bureau of
Customs (BOC), and the BOI. On the belief the TCCs were
actually good and valid, both the BIR and the BOC accepted
and allowed Shell to use them to pay and settle its tax
liabilities.

the

Center,

through

the

Secretary

of

the

DOF,

informed Shell that it was cancelling the TCCs transferred to

and used as payment by the oil company, pursuant to its EXCOM
Resolution

No.

03-05-99.

The

Center

claimed

that

after

conducting a post-audit investigation, it discovered that the

TCCs had been fraudulently secured by the original grantees
who

improper

Shell
since

maintained

this

was

that

done

the

cancellation

without

was

affording

the

corporation its right to due process. Three years later,

through letters dated February 15, February 20, and April 12,
2002

(respondents

collection

letters),

the

respondent,

through Atty. Gil Valera (Atty. Valera), demanded from Shell

payment of the amounts corresponding to the listed TCCs that
the Center had previously cancelled. Shell replied to the
respondents February 15 and 20, 2002 collection letters via
letters dated February 27 and March 4, 2002. Before it could
reply to the respondents April 12, 2002 collection letter,
Shell received on April 23, 2002 the summons in one of the
three

collection

cases

filed

by

respondent

against

Shell

before the Regional Trial Court (RTC) of Manila.

On May 23, 2002, Shell filed with the CTA a Petition

In a letter dated November 3, 1999 (Centers November 3

letter),

1999.

thereafter

transferred

them

to

Shell;

no

categorical

for Review. The respondent filed a motion to dismiss Shells

petition

for

review

on

the

ground

of

prescription.

The

respondent claimed that Shells petition was filed beyond the

30-day period provided by law for appeals of decisions of the
Commissioner

of

Customs

to

the

CTA.

The

CTA

found

the

respondents contentions unmeritorious, and thus denied his

motion to dismiss. The appellate court annulled and set aside
the CTA rulings. Hence, this petition.

merely reissued the original assessments that were previously

settled
ISSUE:

by

Shell

with

the

use

of

the

TCCs.

However,

on

account of the cancellation of the TCCs, the tax liabilities

Whether or not the present case does not involve a tax

protest case within the jurisdiction of the CTA.

of

Shell

under

the

original

assessments

were

considered

unpaid; hence, the letters and the actions for collection.

When Shell went to the CTA, the issues it raised in its
petition were all related to the fact and efficacy of the

RULING:

payments made, specifically the genuineness of the TCCs; the

Yes. A tax protest case, under the TCCP, involves a

absence of due process in the enforcement of the decision to

protest of the liquidation of import entries. A liquidation

cancel

is the final computation and ascertainment by the collector

originally

of the duties on imported merchandise, based on official

estoppel. These are payment and collection issues, not tax

reports as to the quantity, character, and value thereof, and

protest issues within the CTAs jurisdiction to rule upon.

the collectors own finding as to the applicable rate of

duty; it is akin to an assessment of internal revenue taxes
under

the

National

Internal

Revenue

Code where

the

tax

liability of the taxpayer is definitely determined.

In
received

the

present

three

sets

case,
of

the

facts

letters.

None

reveal
of

that

these

Shell

letters,

however, can be considered as a liquidation or an assessment

of Shells import tax liabilities that can be the subject of
an

administrative

tax

protest

proceeding

before

the

respondent whose decision is appealable to the CTA. Shells

import tax liabilities had long been computed and ascertained
in the original assessments, and Shell paid these liabilities
using the TCCs transferred to it as payment. It is even an
error to consider the letters as a "reassessment" because
they

refer

to

the

same

tax

liabilities

on

the

same

importations covered by the original assessments. The letters

the

TCCs;
securing

the
the

facts
TCCs;

surrounding
and

the

the

fraud

in

application

of

PHILIPPINE

BASKETBALL

ASSOCIATION

vs.

HONORABLE

MANUEL

B.

GAITE

The VVSIs failure to pay the fees affected the PBAs

own ability to remit the 3% of gross receipts and income

G.R. No.

170312

June 26, 2009

required by Section 8 of PD No. 871.

the PBA, by law, was obligated to remit 3% of its income from

FACTS:

television, radio, and motion pictures, regardless of whether

On January 6, 1976, then President Ferdinand E.

Marcos

enacted

Presidential

Decree

(PD)

No.

871

placing

professional basketball and other professional games under

the control and supervision of the Games and Amusement Board
(GAB), a respondent in this case. Under this PD, the GAB was
mandated, among others, to issue permits for the conduct of
games and licenses to persons, entities, and associations
performing

duties

connected

with

professional

basketball

games or with other professional games. The law also mandated

the PBA and other professional game associations to remit 3%
of their gross receipts and income from television, radio,
and motion pictures, if any, which shall be used to defray
expenses of the GAB. On December 29, 1999, the PBA and Viva
Vintage Sports, Inc. (VVSI) forged a Memorandum of Agreement
granting the VVSI exclusive rights to broadcast the PBA games
on television and radio for the 2000 to 2002 PBA seasons.
Initially, VVSI paid the franchise fees to the PBA, and from
these,

the

latter

remitted

the

required

3%

to

the

GAB.

Starting November 2001, the VVSI began to default in the

payment of the franchise fees; it took some time before it
could comply with its contractual obligations.

At some point

in 2002, it again failed to pay the franchise fees.

January

The GAB maintained that

7,

2004,

the

PBA

payment of the unpaid fees.

wrote

VVSI

letter

On

demanding

these gross receipts were actually received by the PBA. It

therefore

assessed

the

PBA

the

amount

of

P3,452,233.32

representing its 3% share in the PBAs gross receipts and

income from the television/radio broadcast of PBA games for
the

year

2002.

when

they

failed

to

agree

on

the

interpretation of Section 8 of PD No. 871, the PBA and the

GAB submitted their dispute to the Office of the President
(OP) for adjudication. In a letter dated August 17, 2004, the
OP, through respondent Manuel B. Gaite (then Deputy Secretary
for Legal Affairs), ruled in favor of the GAB on the grounds
that PD No. 871 intended the operating association, the PBA,
to pay GAB the equivalent of 3% of its gross revenue and
income from television and/or radio broadcast once earned. On
September 15, 2004, the PBA wrote the OP a letter seeking the
reconsideration

of

Gaites

ruling

on

the

grounds

of

injustice, unjust enrichment, and gross misinterpretation of

Section 8 of PD No. 871. The OP, through Gaite, denied the
request for reconsideration in a letter dated October 18,
2004.

The

appellate

court

ruled

that

the

PBAs

Rule

65

petition for certiorari was not the appropriate remedy to

challenge the OP decision. Hence, this petition.
ISSUE:
Whether or not the court of appeals erred in dismissing
the petition for being improper remedy.
RULING:

NO.

The court

ruled

that the

Court of

Appeals correctly

dismissed the petition. Under these clear and unambiguous

terms, the PBA should have appealed the ruling of respondent
Gaite of the OP to the CA within 15 day from notice, and its

Napocor v. Quezon
GR No. 171586

failure to comply with the prescribed process is ground for

the dismissal of the petition. Rule 65- the legal basis for
the present petition-itself bars its use as a mode of reviews
when

appeal

jurisprudence

or

any

is

(ECA) with Mirant on November 9, 1991. The ECA provided for a

wrongly

build-operate-transfer (BOT) arrangement between Mirant and

filing a Rule 65 petition must show a clear entitlement to

the NPC. Mirant will build and finance a coal-fired thermal

the

These

power plant on the lots owned by the NPC in Pagbilao, Quezon

exceptions are: when public welfare and the advancement of

for the purpose of converting fuel into electricity, and

public policy dictates; when the interests of substantial

thereafter, operate and maintain the power plant for a period

justice so require; and when the questioned order amounts to

of 25 years. The NPC, in turn, will supply the necessary fuel

an

authority.

to be converted by Mirant into electric power, take the power

Unfortunately, the PBA failed to show that its case falls

generated, and use it to supply the electric power needs of

under any of the exceptions.

the country. At the end of the 25-year term, Mirant will

liberally

applied.

In

must

other

be

words,

jurisprudentially-recognized

oppressive

exercise

of

to

this

Facts:

While
than

other

exception

available.

The NPC entered into an Energy Conversion Agreement

any

recognized

remedy

the

exception-like

has

other

strictly,
a

rule,

rather

petitioner

exceptions.

judicial

transfer the power plant to the NPC without compensation.

According

to

the

NPC,

the

power

plant

is

currently

operational and is one of the largest sources of electric

power in the country. Among the obligations undertaken by the
NPC under the ECA was the payment of all taxes that the
government may impose on Mirant. In a letter dated March 2,
2000, the Municipality of Pagbilao assessed Mirants real
property taxes on the power plant and its machineries in the
total amount of P1,538,076,000.00 for the period of 1997 to
2000. The Municipality of Pagbilao furnished the NPC a copy
of the assessment letter.

To protect its interests, the NPC filed a petition

reconsideration, prompting the NPC to institute an appeal

before the Local Board of Assessment Appeals (LBAA) entitled

before the Court of Tax Appeals (CTA).

"In Re: Petition to Declare Exempt from Payment of Property

NPC claimed it was procedurally erroneous for the CBAA to

Tax on Machineries and Equipment Used for Generation and

exercise jurisdiction over its appeal because the LBAA issued

Transmission of Power, under Section 234(c) of RA 7160 [LGC],

a sin perjuicio7 decision, that is, the LBAA pronounced a

located at Pagbilao, Quezon xxx"5 on April 14, 2000. The NPC

judgment without any finding of fact. It argued that the CBAA

objected to the assessment against Mirant on the claim that

should have remanded the case to the LBAA. On substantive

it (the NPC) is entitled to the tax exemptions provided in

issues, the NPC asserted the same grounds it relied upon to

Section 234, paragraphs (c) and (e) of the LGC. Assuming that

support its claimed tax exemptions.

it cannot claim the exemptions stated in these provisions,

to dismiss the NPCs petition on February 21, 2006. From this

the NPC alternatively asserted that it is entitled to:

ruling,

the

NPC

filed

the

Before the CTA, the

The CTA en banc resolved

present

petition

seeking

the

reversal of the CTA en bancs decision.

a. the lower assessment level of 10% under Section
218(d) of the LGC for government-owned and controlled
corporations engaged in the generation and transmission

Issue:

of electric power, instead of the 80% assessment level

WON NPC is entitled to tax exemption.

for commercial properties as imposed in the assessment

letter; and
b.

an

Ruling:

allowance

for

depreciation

of

the

subject

machineries under Section 225 of the LGC.

No. The liability for taxes generally rests on the

owner of the real property at the time the tax accrues. This
is a necessary consequence that proceeds from the fact of

The

the

ownership. However, personal liability for realty taxes may

Municipality of Pagbilaos motion, through a one-page Order

also expressly rest on the entity with the beneficial use of

dated November 13, 2000.

The NPC appealed the denial of its

the real property, such as the tax on property owned by the

petition with the Central Board of Assessment Appeals (CBAA).

government but leased to private persons or entities, or when

Although it noted the incompleteness of the LBAA decision for

the tax assessment is made on the basis of the actual use of

failing to state the factual basis of its ruling, the CBAA

the property. In either case, the unpaid realty tax attaches

nevertheless affirmed, in its decision of August 18, 2003,

to

the

taxable

denial

likewise

LBAA

of

dismissed

the

denied

NPCs
the

the

claim
NPCs

NPCs

for

petition

exemption.

subsequent

on

The

CBAA

motion

for

the

property
person

but
who

is
has

directly
actual

chargeable
and

against

beneficial

use

the
and

possession of the property regardless of whether or not that

person is the owner. In this case, the NPC, contrary to its

claims, is neither the owner nor the possessor/user of the
subject

machineries.

The

ECAs

terms

regarding

the

power

plants machineries clearly vest their ownership with Mirant.

the NPCs ownership of the plant will happen only after the
lapse of the 25-year period; until such time arrives, the
NPC's

claim

of

ownership

is

merely

contingent,

i.e.,

dependent on whether the plant and its machineries exist at

that time. Prior to this event, the NPCs real interest is
only

in

the

continued

operation

of

the

plant

for

the

generation of electricity. This interest has not been shown

Secretary of Finance v. Oro Maura Shipping

to be adversely affected by the realty taxes imposed and is

G.R. No. 156946

an

interest

that

NPC

can

protect,

not

by

claiming

an

exemption that is not due to Mirant, but by paying the taxes

Facts:

it (NPC) has assumed for Mirant under the ECA. Second, The

On November 24, 1992, the Maritime Industry Authority

test of exemption is the nature of the use, not ownership, of

(MARINA) authorized the importation of one (1) unit vessel

the subject machineries. the government-owned or controlled

M/V HARUNA; ex: Shin Shu Maru No. 8, under a Bareboat

corporation claiming exemption must be the entity actually,

Charter, for a period of five (5) years from its actual

directly, and exclusively using the real properties, and the

delivery

to

use must be devoted to the generation and transmission of

bareboat

charter

electric power. Neither the NPC nor Mirant satisfies both

represented by Mr. Yoji Morinaga of Panama, and Mr. Guerrero

requirements. Although the plants machineries are devoted to

G. Dajao, proprietor and manager of Glory Shipping Lines, the

the generation of electric power, by the NPCs own admission

charterer.

On December 29, 1992, the Department of Finance

and as previously pointed out, Mirant a private corporation

(DOF),

its

the

registration of the M/V HARUNA and its tax and duty-free

machineries solely in compliance with the will of the NPC

release to Glory Shipping Lines, subject to the conditions

only

actually,

imposed by MARINA. The Bureau of Customs (BOC) also required

directly, and exclusively use them. The machineries must be

Glory Shipping Lines to post a bond in the amount equal to

actually, directly, and exclusively used by the government-

150%

owned

importation, conditioned on the re-exportation of the vessel

uses

and

operates

underscores

or

the

controlled

them.
fact

That

that

corporation

Section 234(c) to apply..

NPC

for

Mirant
does

the

operates
not

exemption

under

of

in

the

the

charterer.
agreement

1st

duties,

The

original

were

Indorsement,

taxes

and

Haruna

allowed

other

parties
Maritime

the

charges

to

the

S.A.,

temporary

due

on

the

upon termination of the charter period, but in no case to

extend

beyond

the

year

1999.

On

March

16,

1993,

Glory

vessel with MARINA on October 21, 1994, pegging the proposed

Shipping Lines posted Ordinary Re-Export Bond No. C(9) 121818

acquisition

for P1,952,000.00, conditioned on the re-export of the vessel

granted this request through a letter dated December 5, 1994,

within a period of one (1) year from March 22, 1993, or, in

after

case of default, to pay customs duty, tax and other charges

vessel

on

depreciation due to wear and tear.

the

importation

of

the

vessel

in

the

amount

of

P1,296,710.00. On March 22, 1993, the M/V HARUNA arrived at

cost

finding

of

that

reasonable,

the
the

vessel

at

proposed

taking

into

P1,100,000.00.

acquisition

consideration

cost
the

MARINA
of

the

vessels

On December 2, 1994, Haruna Maritime S.A. and Glory

the Port of Mactan. Its Import Entry No. 120-93 indicated the

Shipping

Lines

sold

the

M/V

HARUNA

to

the

respondent

vessels dutiable value to be P6,171,092.00 and its estimated

without informing or notifying the Collector of the Port of

customs duty to be P1,296,710.00.

Mactan.

On March 22, 1994, Glory Shipping Lines re-export bond

On December 13, 1994, Kariton and Company (Kariton),

expired. Almost two (2) months after, or on May 10, 1994,

representing the respondent, inquired with the DOF if it

Glory

the

could pay the duties and taxes due on the vessel, with the

Collector guaranteeing to renew the Re-Export Bond on vessel

information that the vessel was acquired by Glory Shipping

M/V HARUNA on or before May 20, 1994; otherwise, it would

Lines

pay the duties and taxes on said vessel. Glory Shipping Lines

authorized by the DOF to be released under a re-export bond.

never complied with its Letter of Guarantee; neither did it

The DOF referred Karitons

pay the duties and taxes and other charges due on the vessel

Customs for appropriate action, per a 1st Indorsement dated

despite repeated demands made by the Collector of the Port of

December 13, 1994.

Shipping

Lines

sent

Letter

of

Guarantee

to

Mactan.

a 2

Since the re-export bond was not renewed, the Collector

of the Port of Mactan assessed it customs duties and other
charges amounting to P1,952,000.00; thereafter, it sent Glory

nd

through

bareboat

charter

and

was

previously

letter to the Commissioner of

In turn, the Commissioner of Customs, in

Indorsement dated December 14, 1994, referred the DOFs

1st Indorsement to the Collector of Customs of the Port of

Manila.
On

the

basis

of

these

indorsements

and

the

MARINA

Shipping Lines several demand letters dated April 22, 1996,

appraisal, Kariton filed Import Entry No. 179260 at the Port

June

Glory

of Manila on behalf of the respondent. The Collector of the

Shipping Lines failed to pay the assessed duties despite

Port of Manila accepted the declared value of the vessel at

receipt of these demand letters.

P1,100,000.00

21,

1996,

and

March

10,

1997,

respectively.

and

assessed

duties

and

taxes

amounting

to

Unknown to the Collector of the Port of Mactan, Glory

P149,989.00, which the respondent duly paid on January 4,

Shipping Lines had already offered to sell the vessel M/V

1995, as evidenced by Bureau of Customs Official Receipt No.

HARUNA to the respondent in October 1994.

50245666.

In fact, the

respondent already applied for an Authority to Import the

On November 5, 1997, after discovering that the vessel

government

which

can

be

discharged

only

by

M/V HARUNA had been sold to the respondent, the Collector

payment in full of all duties, taxes, fees and

of the Port of Mactan sent the respondent a demand letter for

other

the

constitutes

unpaid

customs

duties

and

charges

of

Glory

Shipping

charges
a

legally
lien

upon

accruing.
the

articles

It

also

imported

Lines. When the respondent failed to pay, the Collector of

which may be enforced while such articles are in

the Port of Mactan instituted seizure proceedings against the

custody

vessel M/V HARUNA for violation of Section 2530, par. 1,

government.

or

subject

to

the

control

of

the

subpar. (1) to (5) of the Tariff and Customs Code of the

Philippines (TCCP).

As defined by Blacks Law Dictionary, a lien is a claim

In his September 1998 Decision, the Collector of the

or charge on property for payment of some debt, obligation or

Port of Mactan ordered the forfeiture of the vessel in favor

duty. In this particular instance, the obligation is a tax

of the Government, after finding that both Glory Shipping

lien

Lines

ownership.

and

the

respondent

acted

fraudulently

in

the

transaction.

that

attaches

Consequently,

Issue:

to

when

imported
the

goods,

respondent

regardless

bought

the

of

vessel

from Glory Shipping Lines on December 2, 1994, the obligation

WON

petitioner

can

order

the

re-assessment

of

the

to pay the BOC P1,296,710.00 as customs duties had already

vessel M/V HARUNA.

attached to the vessel and the non-renewal of the re-export

Ruling:

bond made this liability due and demandable. The subsequent

Yes. When May 20, 1994 came and went without the

renewal of the vessels re-export bond, the obligation to pay

transfer of ownership of the vessel from Glory Shipping Lines

to the respondent did not extinguish this liability.

customs duties, taxes and other charges on the importation in

the

amount

the

already paid the customs duties assessed by the Collector of

Glory

the Port of Manila, this payment did not have the effect of

Shipping Lines, thus it continued to exist even after the

extinguishing the lien given the tax lien that had attached

vessel was sold to the respondent.

to the vessel and the fact that what had been paid was

vessel.

of

P1,296,710.00

Undoubtedly,

this

arose

lien

and

was

attached

never

paid

to

Therefore, while it is true that the respondent had

by

Section 1204 of the TCCP

in this regard states:

different from what was owed.

Section 1204.

From the point of amount

Liability of Importer for

alone, the customs duties paid to the Collector at the Port

Duties. Unless relieved by laws or regulations,

of Manila only amounted to P149,989.00, while the lien which

the liability for duties, taxes, fees and other

had attached to the vessel based on the unpaid assessment by

charges attaching on importation constitutes a

the

personal

P1,296,710.00.

debt

due

from

the

importer

to

the

Collector

of

the

Port

of

Mactan

amounted

to

Taxes are the lifeblood of the nation. Tariff

and

customs

duties

are

taxes

constituting

significant

NATIONAL POWER CORPORATION V. CENTRAL BOARD OF ASSESSMENT

portion of the public revenue which enables the government to

APPEALS (CBAA), LOCAL BOARD OF ASSESSMENT APPEALS (LBAA) OF

carry out the functions it has been ordained to perform for

LA UNION,

the welfare of its constituents. Hence, their prompt and

ASSESSOR OFBAUANG, LA UNION

PROVINCIAL

TREASURER,

LA UNION and

MUNICIPAL

certain availability is an imperative need and they must be

collected without unnecessary hindrance.
In keeping with this and other cited rulings, the Court

G.R. No. 171470[January 30, 2009] Second Division; Brion,

J.;

finds in favor of the petitioner and uphold his order for the
re-assessment of the value of the vessel based on the entered

FACTS:

value, which in this case should follow the unpaid assessment

made by the Collector of Customs of the Port of Mactan.

On January
Corporation

(FPPC)

11,

entered

1993,

into

First

Private

Power

Build-Operate-Transfer

(BOT) agreement with NAPOCOR for the construction of the 215

Megawatt Bauang Diesel Power Plant in Payocpoc, Bauang, La
Union.

The

BOT

Agreement

provided, via an

Accession

Undertaking, for the creation of the Bauang Private Power

Corporation (BPPC) that will own, manage andoperate the power
plant/station,
under

the

and

BOT

assume

and

agreement.

For

perform
a

FPPCs

fee, BPPC

obligations

will

convert

NAPOCORs supplied diesel fuel into electricity and deliver

the product to NAPOCOR.
The

Officer-in-Charge

of

the

Municipal

Assessors

Office of Bauang, La Union initially issued Declaration of

Real Property Nos. 25016 and 25022 to 25029 declaring BPPCs
machineries and equipment as tax-exempt.

On the initiative

of the Bauang Vice Mayor, the municipality questioned before

the

Regional

Director

of

the

Bureau

of

Local

Government

Finance (BLGF) the declared tax exemption; later, the issue

was elevated to the Deputy Executive Director and Officer-inCharge of the BLGF, Department of Finance, who ruled that
BPPCs

machineries

and

equipments

are

subject

to

real

property

tax

and

directed

the

Assessors

Office

to

take

appropriate action.
The

LBAA

Section 234(c) of the LGC, according to the CTA, is

clear. The exemption under the law does not apply because

denied

NAPOCORs

petition

for

exemption

likewise the CBAA and CTA.

BPPC is not a GOCC it is an independent power corporation

currently operating and maintaining the power plant pursuant
to the BOT Agreement.

ISSUE:

The BOT agreement cannot likewise be

the basis for the claimed exemption; tax exemption cannot be

Whether the machineries and equipments are actually,

agreed upon by mere contract between the parties (BPPC and

directly, and exclusively used by NAPOCOR in the generation

NAPOCOR),

as

it

must

be

expressly

granted

by

the

and transmission of electric power, and are therefore not

Constitution, statute, or franchise.

subject to tax

when granted, is also not transferrable, as it is a personal

A tax exemption, if and

privilege and it must be strictly construed, the CTA said in

RULING:

closing.

NO. In terms of the definitions under Sec. 199

(b) and that offered by Respondents-Appelless (supra),
the

machineries

and

equipment

predominantly utilized by BPPC.

are

principally

or

In terms of the Velez

vs. Locsin case (supra), BPPC employs the machineries

and

equipment

power

to

to

be

sold

attain
to

its

purpose

NAPOCOR

and

of

generating

collect

payment

therefrom to compensate for its investment. The BOT

Agreement is not a contract for nothing.
The following definitions are given by Blacks
Law Dictionary, Third Edition:
Actually is
feignedly,

opposed
as

to

actually

seemingly,
engaged

in

pretendedly,
farming

or

means

really, truly in fact.

Directly.

In

direct

way

without

anything

intervening; not by secondary, but by direct means.

Exclusively.

Apart from all others; without admission of

others to participation; in a manner to exclude.

PHILACOR

CREDIT

CORPORATION

V.

COMMISSIONER

OF

INTERNAL

REVENUE

ISSUE:
Whether Philacor is liable for the Documentary Stamp

G.R. No. 169899 [February 6, 2013] Second Division; Brion,

Tax (DST) on the issuance of the promissory notes

J.;
RULING:
FACTS:

NO.

Philacor

did

not

make,

sign,

issue,

accept

or

On March 4, 1998, Philacor protested the PANs, with a

transfer the promissory notes. The acts of making, signing,

request for reconsideration and reinvestigation. It alleged

issuing and transferring are unambiguous. The buyers of the

that

erroneously

appliances made, signed and issued the documents subject to

computed when it failed to take into account the reversing

tax, while the appliance dealer transferred these documents

entries of the revenue accounts and income adjustments, such

to

as repossessions, write-offs and legal accounts. Similarly,

accepted them. Acceptance, however, is an act that is not

the Bureau of Internal Revenue (BIR) failed to take into

even applicable to

account

promissory notes, but only to bills of exchange.22 Under

the

assessed

the

deficiencyincome

reversing

entries

of

tax

was

repossessions,

legal

Philacor

which

thus, the total income reported, that the BIR arrived at, was

provides

for

not

acceptance refers solely to bills of exchange. Its object is

the

actual

receipts

of

payment

from

the

acceptance

should

Instruments
be

made),

Law

or

13223

to

Negotiable

received

Section

how

the

indisputably

accounts, and write-offs when it computed the percentage tax;

equal

of

likewise

the

(which
act

of

customers. As for the deficiency DST, Philacor claims that

to

the accredited appliance dealers were required by law to

bind the drawee of a bill and make him an actual and bound

affix

party to the instrument.

the

purchased

documentary
until

the

stamps

enactment

on
of

all

promissory

Republic

Act

No.

notes
7660,

otherwise known as An Act Rationalizing Further the Structure

and Administration of the Documentary Stamp Tax,9 which took
effect on January 15, 1994. In addition, Philacor filed, on
the following day, a supplemental protest, arguing that the
assessments

were

void

for

failure

to

state

the

law

and

thefacts on which they were based.

CTA concluded that Philacor failed to declare part of
its income, making it liable for deficiency income tax and
percentage tax.

FELICIANO vs. GISON

HELD:

G.R. No. 165641

August 25, 2010

NO. LWDs are not private corporations because they are not

FACTS:

created under the Corporation Code. LWDs are not registered

with the Securities and Exchange Commission. Section 14 of

LMWD filed with the Department of Finance (DOF) a petition

the Corporation Code states that "all corporations organized

requesting that certain water supply equipment and a motor

under this code shall file with the Securities and Exchange

vehicle,

be

Commission articles of incorporation." LWDs have no articles

exempted from tax. The DOF granted the tax exemption on the

of incorporation, no incorporators and no stockholders or

water supply equipment but assessed the corresponding tax and

members. There are no stockholders or members to elect the

duty

to

board directors of LWDs as in the case of all corporations

the

registered with the Securities and Exchange Commission. The

Undersecretary

local mayor or the provincial governor appoints the directors

Cornelio C. Gison, denied LMWDs request for reconsideration

of LWDs for a fixed term of office. LWDs are not created

because the tax exemption privileges of government agencies

under the Corporation Code, it is clear that what has been

and government owned and controlled corporations had already

excluded from the coverage of the CSC are those corporations

been withdrawn by Executive Order No. 93. The CTA found LMWD

created

to be a GOCC with an original charter and dismiss LMWDs

petitioners are not created under the said code, but on the

appeal for lack of jurisdiction to take cognizance of the

contrary, they were created pursuant to a special law and are

case. LMWD filed a petition for review with the CA raising

governed primarily by its provision.

on

particularly

the

reconsider
subject

Toyota

the

Toyota

Hi-Lux

disallowance

vehicle.

The

DOF,

Hi-Lux

pick-up

pick-up

truck.

of

tax

the

through

LMWD

truck,

moved

exemption

then

on

the issues of whether the CTA decided the case in accord with
the evidence presented and the applicable law, and whether
the LMWD is a GOCC with original charter. The CA found the
petition to be unmeritorious and affirmed the CTAs ruling
that the LMWD is a GOCC with original charter, and not a
private corporation or entity as LMWD argued.
ISSUE:
WON water districts are private corporations and not GOCCs
with original charter.

pursuant

to

the

Corporation

Code.

Significantly,

CIR vs. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC.,

Easterns claim for tax refund considering that the matter

G.R. No. 163835

was raised by the CIR only when he sought reconsideration of

July 7, 2010

FACTS: Eastern is a domestic corporation granted by Congress

the CTA ruling.

with a telecommunications franchise under Republic Act (RA)

HELD:

No. 7617 wherein Eastern is allowed to install, operate, and

NO. Even without the CIR raising the applicability of Section

maintain

the

104(A), the CTA should have considered it since all four of

Philippines. Eastern purchased various imported equipment,

Easterns VAT returns corresponding to each taxable quarter

machineries, and spare parts necessary in carrying out its

of 1996 clearly stated that it earned income from exempt

business activities. The importations were subjected to a 10%

sales, i.e., non-VAT taxable sales. Easterns quarterly VAT

value-added tax (VAT) by the Bureau of Customs, which was

returns are matters of record. In fact, Eastern included them

duly paid by Eastern. Eastern filed with the CIR a written

in its formal offer of evidence before the CTA "to prove that

application for refund or credit of unapplied input taxes it

[it is] engaged in VAT taxable, VAT exempt, and VAT zero-

paid on the imported equipment during the taxable years 1995

rated sales." By declaring income from exempt sales, Eastern

and 1996 amounting to P22,013,134.00. In claiming for the tax

effectively

admitted

refund, Eastern principally relied on Sec. 10 of RA No. 7617,

subject

VAT.

which allows Eastern to pay 3% of its gross receipts in lieu

shall not bill any output tax on his sales to his customers

of all taxes on this franchise or earnings thereof. In the

and, corollarily, is not allowed any credit or refund of the

alternative, Eastern cited Section 106(B) of the National

input taxes he paid on his purchases. This non-crediting of

Internal Revenue Code of 1977(Tax Code) which authorizes a

input taxes in exempt transactions is the underlying reason

VAT-registered taxpayer to claim for the issuance of a tax

why the Tax Code adopted the rule on apportionment of tax

credit certificate or a tax refund of input taxes paid on

credits

capital goods imported or purchased locally to the extent

taxpayer engages in both VAT taxable and non-VAT taxable

that

sales.

such

telecommunications

input

taxes

have

system

not

been

throughout

applied

against

its

to

under

In

that

it

engaged

VAT-exempt

Section

104(A)

in

sales,

transactions

the

whenever

not

taxpayer/seller

VAT-registered

In addition, Eastern cannot validly claim to have

output taxes. Eastern filed an appeal with the CTA without

been

waiting for the CIRs decision on its application for refund.

relevance of Section 104(A) of the Tax Code, considering that

The

the

the arguments were based on the reported exempt sales in the

refund/credit of the unapplied input taxes, not on the basis

VAT returns that Eastern itself prepared and formally offered

of the "in lieu of all taxes" provision of its legislative

as evidence. Even if we were to consider the CIRs act as a

franchise, but rather, on Section 106(B) of the Tax Code.

lapse in the observance of procedural rules, such lapse does

ISSUE: WON the rule in Section 104(A) of the Tax Code on the

not

apportionment of tax credits can be applied in appreciating

established

CTA

found

that

Eastern

has

valid

claim

for

taken

work

to

by

surprise

entitle
and

by

Eastern

uncontested

the

to
facts

CIRs

tax
have

arguments

refund
shown

on

when

the

the

otherwise.

Lapses in the literal observance of a rule of procedure may

and especially when they are more consistent with upholding

be overlooked when they have not prejudiced the adverse party

settled principles in taxation.