Professional Documents
Culture Documents
1. Petitioner claimed in his 1951 income tax return the deduction ISSUE #1: Whether or not claim for losses of property during the war
of the sum of P12,837.65 as a loss consisting in a portion of his period for the year 1950 may be deducted from the income tax of the
war damage claim which had been duly approved by the petitioner for 1951 as declared in the circular issued by the Secretary of
Philippine War Damage Commission under the Philippine Finance
Rehabilitation Act of 1946 but which was not paid and never HELD. NO.
been paid pursuant to a notice served upon him by said
Commission that said part of his claim will not be paid until the A. First, assuming that said amount represents a portion of the 75%
United States Congress should make further appropriation. He of his war damage claim which was not paid, the same would
claims that said amount of P12,837.65 represents a “business not be deductible as a loss in 1951 because the last installment
asset” within the meaning of said Act which he is entitled to he received from the War Damage Commission, together with
deduct as a loss in his return for 1951. the notice that no further payment would be made on his claim,
was in 1950. In the circumstance, said amount would at most be
2. March 31, 1952- Petitioner filed his income tax return for 1951 a proper deduction from his 1950 gross income.
with the treasurer of Bacolod City wherein he claimed the
amount of P12,837.65 as a deductible item from his gross B. Said amount cannot be considered as a “business asset” which
income pursuant to General Circular No. V-123 issued by the can be deducted as a loss in contemplation of law because its
Collector of Internal Revenue. This circular was issued pursuant collection is not enforceable as a matter of right, but is
to certain rules laid down by the Secretary of Finance dependent merely upon the generosity and magnanimity of the
U. S. government. There was absolutely no law under which
3. An assessment notice demanding the payment of P9,419 was Petitioner could claim compensation for the destruction of his
sent to Petitioner, who paid the tax in monthly installments, the properties during the battle for the liberation of the Philippines.
last payment having been made on January 2, 1953 The payments of claims by the War Damage Commission
4. August 30, 1952- the Secretary of Finance, through the Collector merely depended upon its discretion to be exercised in the
of Internal Revenue, issued General Circular No. V-139, which manner it may see fit, but the non-payment of which cannot give
not only revoked and declared void his general Circular No. V- rise to any enforceable right,
123 but laid down the rule that losses of property which a. The Philippine Rehabilitation Act which authorized the
occurred during the period of World War II from fires, storms, payment by the United States Government of war losses
shipwreck or other casualty, or from robbery, theft, or suffered by property owners in the Philippines was
embezzlement are deductible in the year of actual loss or passed only on August 30, 1946, long after the losses
destruction of said property. were sustained. It cannot be said therefore, that the
5. The amount of P12,837.65 was disallowed as a deduction from property owners had any conclusive assurance during
the gross income of Petitioner for 1951 and the Collector of the years said losses were sustained, that the
compensation was to be paid therefor. As diligent
property owners, they should adopt the safest alternative invoked by a taxpayer. The reason is obvious; a vested right cannot
by considering such losses deductible during the year spring from a wrong interpretation. This is too clear to require
when they were sustained elaboration.
C. Petitioner’s contention that during the last war and as a Wherefore, the decision appealed from is affirmed Without
consequence of enemy occupation in the Philippines “there was pronouncement as to costs.
no taxable year” within the meaning of our internal revenue laws
because during that period they were unenforceable, is without
merit. It is well known that our internal revenue laws are not ANTERO M. SISON, JR., petitioner, vs. RUBEN B. ANCHETA,
political in nature and as such were continued in force Acting Commissioner, Bureau of Internal Revenue
during the period of enemy occupation and in effect were
actually enforced by the occupation government. As a matter Facts:
of fact, income tax returns were filed during that period and
income tax payment were effected and considered valid and • Petitioners challenged the constitutionality of Section 1 of
legal. Such tax laws are deemed to be the laws of the Batas Pambansa Blg. 135. It amended Section 21 of
occupied territory and not of the occupying enemy. the National Internal Revenue Code of 1977.
a. ‘Law once established continues until changed by
some competent legislative power. It is not changed • Petitioner as taxpayer alleged that "he would be unduly
merely by change of sovereignty. ‘There can be no discriminated against by the imposition of higher rates of tax
break or interregnun in law. From the time the law upon his income arising from the exercise of his profession vis-
comes into existence with the first-felt corporateness of a-vis those which are imposed upon fixed income or
a primitive people it must last until the final salaried individual taxpayers." He characterizes the above
disappearance of human society. Once created, it section as arbitrary amounting to class legislation, oppressive
persists until a change takes place, and when changed it and capricious in character.
continues in such changed condition until the next
change and so forever. Conquest or colonization is • For petitioner, therefore, there is a transgression of both
impotent to bring law to an end; inspite of change of the equal protection and due process clauses of the
constitution, the law continues unchanged until the new Constitution as well as of the rule requiring uniformity in
sovereign by legislative act creates a change.’“ taxation.
b. “Conquest or colonization is impotent to bring law to
an end; in spite of changes of constitution, the law • The OSG prayed for dismissal of the petition due to lack of
continues unchanged until the new sovereign by merit.
legislative act creates a change”
Issue: WON the assailed provision violates the equal
protection and due process clause of the Constitution while also
ISSUE #2: Whether or not General Circular No. V-139 cannot be given violating the rule that taxes must be uniform and equitable.
retroactive effect because that would affect and obliterate the vested
right acquired by Petitioner under the previous circular Held: Negative. The petition is without merit.
• The SC ruled against Sison.
HELD: NO. General Circular No. V-123, having been issued on a wrong • The power to tax, an inherent prerogative, has to be availed of to
construction of the law, cannot give rise to a vested right that can be assure the performance of vital state functions. It is the source of
the bulk of public funds. To paraphrase a recent decision, taxes Facts:
being the lifeblood of the government, their prompt and certain
availability is of the essence.
• On due process: it is undoubted that it may be invoked where a Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and
taxing statute is so arbitrary that it finds no support in the 15 children, the eldest of whom is Manuel B. Pineda, a lawyer.
Constitution. An obvious example is where it can be shown to The estate was divided among the heirs and Manuel B. Pineda's
amount to the confiscation of property from abuse of power. share amounted to about P2,500.00. After the estate proceedings
Petitioner alleges arbitrariness but his mere allegation does not were closed, the BIR investigated the income tax liability of the
suffice and there must be a factual foundation of such estate for the years 1945, 1946, 1947 and 1948 and it found that
unconstitutional taint. the corresponding income tax returns were not filed. The
• On equal protection: it is suffices that the laws operate equally representative of the Collector of Internal Revenue filed said
and uniformly on all persons under similar circumstances, both returns for the estate and issued an assessment. Manuel B.
in the privileges conferred and the liabilities imposed. Pineda, who received the assessment, contested the same. He
• On the matter that the rule of taxation shall be uniform and appealed to the Court of Tax Appeals alleging that he was
equitable- this requirement is met when the tax operates with appealing "only that proportionate part or portion pertaining to
the same force and effect in every place where the subject him as one of the heirs." The Court of Tax Appeals rendered
may be found. judgment holding Manuel B. Pineda liable for the payment
• “Also, the rule of uniformity does not call for perfect uniformity corresponding to his share of the taxes. The Commissioner of
or perfect equality, because this is hardly attainable.” Internal Revenue has appealed to the SC and has proposed to
• "Equality and uniformity in taxation means that all taxable hold Manuel B. Pineda liable for the payment of all the taxes
articles or kinds of property of the same class shall be taxed at found by the Tax Court to be due from the estate instead of only
the same rate. The taxing power has the authority to make for the amount of taxes corresponding to his share in the estate.
reasonable and natural classifications for purposes of taxation.” Manuel B. Pineda opposes the proposition on the ground that as
• The taxing power has the authority to make reasonable and an heir he is liable for unpaid income tax due the estate only up
natural classifications for purposes of taxation. Where “the to the extent of and in proportion to any share he received.
differentiation” complained of “conforms to the practical
dictates of justice and equity” it “is not discriminatory within the
meaning of this clause and is therefore uniform.” There is quite a Issue: Can BIR collect the full amount of estate taxes from an heir's
similarity then to the standard of equal protection for all that is inheritance
required is that the tax “applies equally to all persons, firms and
corporations placed in similar situation.
Ruling:
• WHEREFORE, the petition is dismissed. Costs against
petitioner.
Yes. The Government can require Atty. Pineda to pay the full
amount of the taxes assessed. Pineda is liable for the assessment
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. as an heir and as a holder-transferee of property belonging to the
MANUEL B. PINEDA, as one of the heirs of deceased estate/taxpayer. As an heir he is individually answerable for the
ATANASIO PINEDA, respondent. part of the tax proportionate to the share he received from the
inheritance. His liability, however, cannot exceed the amount of
G.R. No. L-22734 September 15, 1967; BENGZON, J.P., J his share. As a holder of property belonging to the estate,
Pineda is liable for he tax up to the amount of the property in his
possession. The reason is that the Government has a lien on the
P2,500.00 received by him from the estate as his share in the tax returns for 1953 and 1951. Furthermore, it did not withhold
inheritance, for unpaid income taxes a for which said estate is or pay tax on them. Consequently, the Commissioner of Internal
liable. Revenue assessed Philippine Guaranty Co., Inc. against
withholding tax on the ceded reinsurance premiums. Philippine
Guaranty Co., Inc. protested the assessment on the ground that
All told, the Government has two ways of collecting the tax in the premiums are not subject to tax for the premiums did not
question. One, by going after all the heirs and collecting from constitute income from sources within the Philippines because
each one of them the amount of the tax proportionate to the the foreign reinsurers did not engage in business in the
inheritance received. Another remedy, is by subjecting said Philippines,and CIR's previous rulings did not require insurance
property of the estate which is in the hands of an heir or companies to withhold income tax due from foreign companies.
transferee to the payment of the tax due, the estate. This second
remedy is the very avenue the Government took in this case to
collect the tax. The Bureau of Internal Revenue should be given, ISSUE: Are insurance companies required to withhold tax on
in instances like the case at bar, the necessary discretion to avail reinsurance premiums ceded to foreign insurance companies?
itself of the most expeditious way to collect the tax as may be
envisioned in the particular provision of the Tax Code above
quoted, because taxes are the lifeblood of government and their Ruling:
prompt and certain availability is an imperious need. And as
afore-stated in this case the suit seeks to achieve only one
objective: payment of the tax. The adjustment of the respective Yes. The reinsurance contracts however show that the transactions or
shares due to the heirs from the inheritance, as lessened by the activities that constituted the undertaking to reinsure Philippine
tax, is left to await the suit for contribution by the heir from Guaranty Co., Inc. against losses arising from the original
whom the Government recovered said tax. insurances in the Philippines were performed in the Philippines.
The reinsurance premiums were income created from the
undertaking of the foreign reinsurance companies to reinsure
THE PHILIPPINE GUARANTY CO., INC., PETITIONER, VS. Philippine Guaranty Co., Inc. against liability for loss under
THE COMMISSIONER OF INTERNAL REVENUE AND original insurances. Such undertaking, as explained above, took
THE COURT OF TAX APPEALS, RESPONDENTS; place in the Philippines. These insurance premiums therefore
came from sources within the Philippines and, hence, are subject
G.R. No. L-22074, April 30, 1965; REYES, J.B.L., J to corporate income tax.
HELD:
Acording to article 657 of the Civil Code, “the rights to the
succession of a person are transmitted from the moment of his death.”
“In other words”, said Arellano, C. J., “. . . the heirs succeed
Yes. It was delinquent because according to Sec. 1544 (b) of the immediately to all of the property of the deceased ancestor. The
Revised Administrative Code, payment of the inheritance tax shall be property belongs to the heirs at the moment of the death of the
made before delivering to each beneficiary his share. it does not ancestor as completely as if the ancestor had executed and delivered
follow that the obligation to pay the tax arose as of the date. This to them a deed for the same before his death.”
payment should have been made before March 10, 1924, the date
when P.J.M. Moore formally assumed the function of trustee.
Although the property was only to be given after 10 years from the Whatever may be the time when actual transmission of the inheritance
death of Hanley, the court considered that delivery to the trustee is takes place, succession takes place in any event at the moment of the
delivery to cestui que trust, the beneficiary within the meaning of Sec. decedent’s death. The time when the heirs legally succeed to the
1544 (b). inheritance may differ from the time when the heirs actually receive
such inheritance. ” Thomas Hanley having died on May 27, 1922, the
inheritance tax accrued as of the date. The accrual of the inheritance
tax is distinct from the obligation to pay the same.
· NCC 657: “the rights to the succession of a person are PHILIPPINE AIRLINES, INC. v. EDU
transmitted from the moment of his death.” “In other words... the
heirs succeed immediately to all of the property of the deceased G.R. No. L- 41383, August 15, 1988
ancestor. The property belongs to the heirs at the moment of the death
of the ancestor as completely as if the ancestor had executed and
delivered to them a deed for the same before his death.”
FACTS:
· Whatever may be the time when actual transmission of the
inheritance takes place, succession takes place in any event at the The Philippine Airlines (PAL) is a corporation engaged in the air
moment of the decedent’s death. The time when the heirs legally transportation business under a legislative franchise, Act No. 42739.
succeed to the inheritance may differ from the time when the heirs Under its franchise, PAL is exempt from the payment of taxes.
actually receive such inheritance. ” Thomas Hanley having died on Sometime in 1971, however, Land Transportation Commissioner
May 27, 1922, the inheritance tax accrued as of the date Romeo F. Elevate (Elevate) issued a regulation pursuant to Section 8,
From the fact, however, that Thomas Hanley died on May 27, 1922, it Republic Act 4136, otherwise known as the Land and Transportation
does not follow that the obligation to pay the tax arose as of the date. and Traffic Code, requiring all tax exempt entities, among them PAL
The time for the payment on inheritance tax is clearly fixed by section to pay motor vehicle registration fees.
1544 of the Revised Administrative Code as amended by Act No. Despite PAL's protestations, Elevate refused to register PAL's motor
3031, in relation to section 1543 of the same Code. vehicles unless the amounts imposed under Republic Act 4136 were
paid. PAL thus paid, under protest, registration fees of its motor
vehicles. After paying under protest, PAL through counsel, wrote a
RATIONALE: letter dated May 19,1971, to Land Transportation Commissioner
Romeo Edu (Edu) demanding a refund of the amounts paid, invoking
Calalang vs.Lorenzo where it was held that motor vehicle registration
fees are in reality taxes from thepayment of which PAL is exempt by
Taxes are essential to the very existence of the government. The virtue of its legislative franchise. Edu denied the request for refund.
obligation to pay taxes rests upon the privileges enjoyed by, or the Hence, PAL filed a complaint against Edu and National Treasurer
protection afforded to, a citizen by the government but upon the Ubaldo Carbonell (Carbonell).
necessity o money for the support of the state. For this reason, none is
allowed to object to or resist the payment of the taxes solely because
no personal benefits to him can be pointed out.
ISSUE: Whether or not motor vehicle registration fees are
That taxes should be collected promptly is a policy deeply intrenched considered as taxes
in our tax system. Thus no court is allowed to grant injunction (to
restrain the collection of taxes).
In this case, the collection of inherent tax/tax should not be left to the SC ruled that motor vehicles registration fees are TAXES.
will of private individual, because result would be disastrous. )e.g Fees may be regarded as taxes even though they also serve as
testators may provide that their estates not to be delivered years after, instruments of regulation. It is possible for an exaction to be both a
in which this case, is 10 years after.) tax and a regulation. License fees and charges, looked to as a source
of revenue as well as a means of regulation. The money collected
under the motor vehicle law is not intended for the expenditures of
the motor vehicle office but accrue to the funds for the construction press freedom having removed them from the exemption to pay
and maintenance of the public roads, streets, and bridges. As the fees VAT.
are not collected for regulatory purpose as an incident to the
enforcement of regulational governing operation of motor vehicles on • PBS (Philippine Bible Society), petitioner, also claims that R.A.
public highways, but to provide revenue with which the government violates their religious liberty, having removed them from the
is to construct and maintain public highways for everyone’s use, they exemption to pay VAT.
are taxes, not merely fees. If the purpose is primarily revenue, or if
revenue is, at least, one of the real and substantial purposes, then the • CREBA (Chamber of Real Estate and Builders Association),
exaction is properly called a tax. Such is the case of motor vehicle petitioner, contends that R.A. (1) impairs the obligation of
registration fees. The motor vehicle registration fees are actually taxes contracts [because the application of the extended tax to existing
intended for additional revenues of the government and where the contracts would result to substantial increase in the monthly
amount collected eventually finds its way into the treasuryof the amortization to be paid, that the buyer did not anticipate at the
branch of the government. time he entered into the contract.]
• CREBA also questions the constitutionality of the R.A.
contending that it violates the rule that taxes should be (2)
Tolentino vs. Secretary of Finance uniform and equitable and that the (3) VAT is regressive which is
against the constitutional provision that the Congress shall
“evolve a progressive system of taxation”.
GR 115455 Oct. 30 1995
ISSUE: Whether the following contentions are meritorious.
FACTS:
Arturo Tolentino et al (petitioners) are questioning the HELD:
constitutionality of RA 7716 otherwise known as the Expanded Value
Added Tax (EVAT) Law. RA 7716 seeks to widen the tax base of the No.
existing VAT system and enhance its administration by amending the
National Internal Revenue Code (NIRC). Herein, various petitioners
seek to declare RA 7166 as unconstitutional.
• PAL: Court held that it is unnecessary to include such thing in the
• PAL contends that the amendment by the RA 7716 of its franchise title since it is already in the title that the law seeks to amend the
by the withdrawal of the exemption from the VAT is not expressed provisions of the NIRC (including PAL’s exemption provision:
in the title of the law. NOTE: This case was filed by PAL because section 103) in order to widen the base of the VAT. And that a
before the EVAT Law, they were exempt from taxes. After the sufficient notice had been give of the pendency of these bills in
passage of EVAT, they were already included. Congress before they were enacted into a law.
• PPI (Philippine Press Institute) contends that by removing the • PPI & PBS: Court held that since the law granted the press a
exemption of the press from the VAT while maintaining those privilege, the law could take back the privilege anytime without
granted to others, the law discriminates against the press. offense to the Constitution. The reason is simple: by granting
Referring to license tax. Petitioner claims that R.A. violates their exemptions, the State does not forever waive the exercise of its
sovereign prerogative.
• In withdrawing the exemption, the law merely subjects the press • Those which are subject to VAT are those goods and services
to the same tax burden to which other businesses have long ago which are availed mainly by the higher income groups (example:
been subject. It is thus different from the tax invoked by the PPI. real properties, patent, copyright, etc.)
• License tax is discriminatory in some cases, if license tax is
what’s imposed to the press and religious groups, it is
unconstitutional because it lays a prior restraint on the exercise of
their right. Unlike ordinary tax, license tax is mainly for
regulation, a tax on the exercise of their privilege.
• License tax is, however, different from VAT. It’s not a tax on the
exercise of their right nor a constitutional right. VAT is imposed
on the sale, barter, lease, exchange of goods, or properties or the
sale, barter, lease, or exchange of goods or properties or the sale
of exchange of services and the lease of properties purely for
revenue purposes.
• CREBA #1: Court held that even though taxation may affect
particular contracts, as it may increase the debt of one person and
lessen the security of another, or may impose additional burdens
upon one class and release the burdens of another, still the tax
must be paid unless prohibited by the Constitution.
• Contracts must also be understood as having been made in
reference to the possible exercise of the rightful authority of the
government and no obligation of contract can extend to the defeat
of that authority.
• CREBA #2: Equality and uniformity of taxation means that all
taxable articles and kinds of property of the same class be taxed at
the same rate. And the VAT was already provided years ago, R.A.
merely expands the base of the tax.
• CREBA #3: The court held that the Constitution that does not
really prohibit the imposition of indirect taxes, like VAT, which
are regressive. What it simply provides is that Congress shall
“evolve a progressive system of taxation” which has been
interpreted that “direct taxes are to be preferred, indirect taxes
should be minimized”, but not avoided entirely.
• The law minimizes the regressive effects of the VAT by imposing
zero rate for certain transactions and granting exemptions to other
transactions.