Professional Documents
Culture Documents
Jimenez
GR L-12436, 31 May 1961 (2 SCRA 295)
Facts: Sometime in September, 1955 La Carlota Sugar Central, which was under the administration of Elizalde, imported 500
short tons of ammonium sulphate and 350 short tons of ammonium phosphate. When the fertilizers arrived in the Philippines,
the Central Bank imposed 17% exchange tax from the Central in accordance with the provisions of Republic Act 601. On 18
November 1955 the Central filed, through the Hongkong & Shanghai Banking Corporation, a petition for the refund of the
P20,872.09paid (the 17% tax), claiming that it had imported the fertilizers mentioned heretofore upon request and for the
exclusive use of 5 haciendas owned and managed by Elizalde, and therefore the importation was exempt from the 17%
exchange tax in accordance with Section 2, RA 601, as amended by RA 1375.On 2 July 1956, the Auditor of the Central Bank
denied the petition. The Central requested the Auditor to reconsider his ruling, but after a re-examination of all pertinent
papers the reconsideration was denied. The Central then appealed to the Auditor General of the Philippines. On 18 January
1957, the Auditor General affirmed the ruling of the Auditor of the Central Bank upon the ground that the importation of the
fertilizers does not fall within the scope of the exempting provisions of Section 2 of RA 601, as amended by RA 1375; and thus
affirming the decision of the Auditor, Central Bank of the Philippines. The Central and Elizalde filed the petition for review in
the Supreme Court.
Issue: Whether upon the importation of the fertilizers are covered by the exemption (provided by Section 1 and 2 of Republic
Act No. 601, as amended by Republic Acts 1175, 1197 and 1375).
Held: The law is, therefore, clear that imported fertilizers are exempt from the payment of the 17%tax only if the same
were imported by planters or farmers directly or through their cooperatives. The exemption covers exclusively fertilizers
imported by planters or farmers directly or through their cooperatives. The word directly has been interpreted to mean
without anything intervening. Consequently, an importation of fertilizers made by a farmer or planter through an
agent, other than his cooperative, is not imported directly as required by the exemption. When the issue is whether or not the
exemption from a tax imposed by law is applicable, the rule is that the exempting provision is to be construed liberally in favor
of the taxing authority and strictly against exemption from tax liability, the result being that statutory provisions for the refund
of taxes are strictly construed in favor of the State and against the taxpayer. Exempting from the 17% tax all fertilizers
imported by planters or farmers through any agent other than their cooperatives, this would be rendering useless the only
exception expressly established in the case of fertilizers imported by planters or farmers through their cooperatives
COMMISSIONER OF INTERNAL REVENUE vs. COURT OF APPEALS
G.R. No. 115349 April 18, 1997
Facts:
ADMU Institute of Philippine Culture is engaged in social science studies of Philippine society and culture. Occasionally, it
accepts sponsorships for its research activities from international organizations, private foundations and government agencies.
On July 1983, CIR sent a demand letter assessing the sum of P174,043.97 for alleged deficiency contractors tax. Accdg to CIR,
ADMU falls under the purview of independent contractor pursuant to Sec 205 of Tax Code and is also subject to 3%
contractors tax under Sec 205 of the same code. (Independent Contractor means any person whose activity consists
essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the
exercise or use of the physical or mental faculties of such contractors or their employees.)
Issue:
according to petitioner, Ateneo has the burden of proof to show its exemption from the coverage of the law.
We disagree. Petitioner Commissioner of Internal Revenue erred in applying the principles of tax exemption without first
applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is obviously both illogical and impractical
to determine who are exempted without first determining who are covered by the aforesaid provision. The Commissioner
should have determined first if private respondent was covered by Section 205, applying the rule of strict interpretation of
laws imposing taxes and other burdens on the populace, before asking Ateneo to prove its exemption therefrom. The Court
takes this occasion to reiterate the hornbook doctrine in the interpretation of tax laws that (a) statute will not be construed as
imposing a tax unless it does so clearly, expressly, and unambiguously. x x x (A) tax cannot be imposed without clear and
express words for that purpose. Accordingly, the general rule of requiring adherence to the letter in construing statutes
applies with peculiar strictness to tax laws and the provisions of a taxing act are not to be extended by
implication.[8] Parenthetically, in answering the question of who is subject to tax statutes, it is basic that in case of doubt,
such statutes are to be construed most strongly against the government and in favor of the subjects or citizens because
burdens are not to be imposed nor presumed to be imposed beyond what statutes expressly and clearly import. [9]
To fall under its coverage, Section 205 of the National Internal Revenue Code requires that the independent contractor be
engaged in the business of selling its services. Hence, to impose the three percent contractors tax on Ateneos Institute of
Philippine Culture, it should be sufficiently proven that the private respondent is indeed selling its services for a fee in pursuit
of an independent business. And it is only after private respondent has been found clearly to be subject to the provisions of
Sec. 205 that the question of exemption therefrom would arise. Only after such coverage is shown does the rule of
construction -- that tax exemptions are to be strictly construed against the taxpayer -- come into play, contrary to petitioners
position. This is the main line of reasoning of the Court of Tax Appeals in its decision, [10] which was affirmed by the CA.
to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale. In
the present case, Lopez Sugar Central was not entirely negligent in its payment of land taxes. The record shows that taxes
were paid for the years 1950 to 1953 and a receipt therefor was obtained in its name. The sale therefore by the Province of
Negros Occidental of the land in dispute to the spouses Serfinos was void since the Province of Negros Occidental was not the
real owner of the property thus sold. In turn, the spouses Serfinos title which has been derived from that of the Province of
Negros Occidental is likewise void. However, the fact that the public auction sale of the disputed property was not valid cannot
in any way be attributed to the mortgagees fault. The inability of the Register of Deeds to notify the actual owner or Lopez
Sugar Central of the scheduled public auction sale was partly due to the failure of Lopez Sugar Central to declare the land in
its name for a number of years and to pay the complete taxes thereon. PNB is therefore entitled to the payment of the
mortgage loan as ruled by the trial court and exempted from the payment of costs. The Supreme Court affirmed the assailed
decision, with modification that PNB mortgage credit must be paid by Lopez Sugar Central.