Tuozo, Lourdes Clouie D.

No CASE TITLE DOCTRINE

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1 Hilado v CIR Damage war claim is not a business asset within the meaning of
Rehabilitation Act of 1946, hence it is not deductible as a loss in
income tax return for the collection of a damage war claim is not
enforceable as a matter of right, but is dependent on the generosity of
the US government. Losses of property sustained are allowable as
deduction only within the corresponding taxable year.

2 Sison v The power to tax is an attribute of sovereignty, and its limits are set
Ancheta forth in the constitution.

A bare allegation that Batas 135, which sets different income tax
schedules for fixed income earners and business or professional
income earners, is arbitrary does not suffice to invalidate said tax
statute. There is a need for proof of such persuasive character as
would lead to such a conclusion. Absent such a showing, the
presumption of validity must prevail.

3 CIR v Pineda An heir is liable for the assessment as an heir and as a holder-
transferee of property belonging to the estate/taxpayer. As an heir, he
is individually answerable for the part of the tax proportionate to the
share he received from the inheritance. His liability, however, cannot
exceed the amount of his share. As a holder of the property belonging
to the estate, he is liable for the tax up to the amount of the property
in his possession. The reason is that the Government has a lien on
such property. But after payment of such amount, he will have a right
to contribution from his co-heirs. The Government has two ways of
collecting the taxes in question. One, by going after all the heirs and
collecting from each one of them the amount of the tax proportionate
to the inheritance received.

4 Phil. Guaranty v Reinsurance premiums on local risks ceded by domestic insurers to

CIR foreign reinsurers not doing business in the Philippines are subject to
withholding tax. Where the reinsurance contracts show that the
activities that constituted the undertaking to reinsure a domestic
insurer against losses arising from the original insurances in the
Philippines were performed in the Philippines, the reinsurance
premiums are considered as coming from sources within the
Philippines and are subject to
Philippine Income Tax.

5 Collector v Taxes being the chief source of revenue for the Government to keep
 Yuseco it running must be paid immediately and without delay. A taxpayer
who feels aggrieved by the decision or ruling handed down by a
revenue officer and appeals from his decision or ruling to the Court of
Tax Appeals must pay the tax assessed except that, if in the opinion
of the Court the collection would jeopardize the interest of the
Government and/or the taxpayer, it could suspend the collection and
requires the taxpayer either to deposit the amount claimed or to file a
surety bond for not more than double the amount of the tax assessed.

6 CIR v Algue Taxes are the 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.

8 NPC v. The power to tax is no longer vested exclusively on Congress.—In

Cabanatuan recent years, the increasing social challenges of the times expanded
the scope of state activity, and taxation has become a tool to realize
social justice and the equitable distribution of wealth, economic
progress and the protection of local industries as well as public
welfare and similar objectives. Taxation assumes even greater
significance with the ratification of the 1987 Constitution. Thenceforth,
the power to tax is no longer vested exclusively on Congress; local
legislative bodies are now given direct authority to levy taxes, fees
and other charges pursuant to Article X, section 5 of the 1987
Constitution.

Although as a general rule, LGUs cannot impose taxes, fees or

charges of any kind on the National Government, its agencies and
instrumentalities, this rule now admits an exception, i.e., when
specific provisions of the LGC authorize the LGUs to impose taxes,
fees or charges on the aforementioned entities.

9 Lorenzo v. The accrual of the inheritance tax is distinct from the obligation to pay
Posadas the same. If death is the generating source from which the power of
the state to impose Inheritance taxes takes its being and if, upon the
death of the decedent, succession takes place and the right of the
state to tax vests instantly, the tax should be measured by the value
of the estate as it stood at the time of the decedent's death,
regardless of any subsequent contingency affecting value or any
subsequent increase or decrease in value.

10 PAL v. Edu The nature of an exaction is to be determined by the purpose for

which it is being exacted e.g. if the purpose is primarily revenue, or if
 revenue is at least one of the substantial purposes, then the exaction
is properly called a tax. Motor vehicle registration fees as at present
exacted pursuant to the Land Transportation and Traffic Code are
actually taxes intended for additional revenues of government even if
one fifth or less of the amount collected is set aside for the operating
expenses of the agency administering the program. The purpose
behind the law requiring owners of vehicles to pay their registration is
mainly to raise revenue for the construction and maintenance of
highways.

11 Tolentino v. The Constitution simply means that the initiative for filing revenue,
Secretary of tariff, or tax bills, bills authorizing an increase of the public debt,
Finance private bills and bills of local application must come from the House of
Representatives and that it does not prohibit the filing in the Senate of
a substitute bill in anticipation of its receipt of the bill from the House.

12 Osmena v. Money named as a tax but actually collected in the exercise of police
Orbos power may be placed in a special trust account. Hence, it seems
clear that while the funds collected may be referred to as taxes, they
are exacted in the exercise of the police power of the State.

13 Caltex v. COA, Tax exemptions as a general rule are construed strictly against the
grantee and liberally in favor of the taxing authority. The burden of
proof rests upon the party claiming exemption to prove that it is in fact
covered by the exemption so claimed. The party claiming exemption
must therefore be expressly mentioned in the exempting law or at
least be within its purview by clear legislative intent.

It is settled that a taxpayer may not offset taxes due from the claims
that he may have against the government. Taxes cannot be the
subject of compensation because the government and taxpayer are
not mutually creditors and debtors of each other and a claim for taxes
is not such a debt, demand, contract or judgment as is allowed to be
set-off.

14 Chavez v Fiscal adequacy, which is one of the characteristics of a sound tax

Ongpin system, requires that sources of revenues must be adequate to meet
government expenditures and their variations.
15 Taganito Mining Tax refund cases partake of the nature of an exemption, and as such,
Corp. v. CIR tax exemption cannot be allowed unless granted in the most explicit
and categorical language. If tax is paid on installments or only in part,
the period for claiming refund is counted from the date of the last or
final payment until the whole or entire tax liability is fully paid.

16 Roxas v. Court The power of taxation is sometimes called also the power to destroy.
of Tax Appeals Therefore, it should be exercised with caution to minimize injury to the
proprietary rights of a taxpayer. It must be exercised fairly, equally
and uniformly, lest the tax collector kill the “hen that lays the golden
egg”.

17 Tanada v. While the Constitution allows Congress to authorize the President to

Angara fix tariff rates, import and export quotas, tonnage and wharfage dues,
and other duties or imposts, such authority is subject to “specified
limits and x x x such limitations and restrictions” as Congress may
provide, as in fact it did under Sec. 401 of the Tariff and Customs
Code.

18 LTO v. City of Police power and taxation, along with eminent domain, are inherent
Butuan powers of sovereignty which the State might share with local
government units by delegation given under a constitutional or a
statutory fiat. All these inherent powers are for a public purpose and
legislative in nature but the similarities just about end there. The basic
aim of police power is public good and welfare. Taxation, in its case,
focuses on the power of government to raise revenue in order to
support its existence and carry out its legitimate objectives. Although
correlative to each other in many respects, the grant of one does not
necessarily carry with it the grant of the other. The two powers are, by
tradition and jurisprudence, separate and distinct powers, varying in
their respective concepts, character, scopes and limitations. To
construe the tax provisions of Section 133(1) indistinctively would
result in the repeal to that extent of LTO’s regulatory power which
evidently has not been intended.  
19 Phil. Match Co. The taxing power of cities, municipalities and municipal districts may
v. City of Cebu be used (1) “upon any person engaged in any occupation or
business, or exercising any privilege” therein; (2) for services
rendered by those political subdivisions or rendered in connection
with any business, profession or occupation being conducted therein,
and (3) to levy, for public purposes, just and uniform taxes, licenses
or fees.

The prohibition against the imposition of percentage taxes (formerly

provided for in section 1 of Commonwealth Act No. 472) refers to
municipalities and municipal districts but not to chartered cities.

20 Matalin v. Mun. Under Sec. 6 of Rule 64, the action for declaratory relief may be
Council of converted into an ordinary action and the parties allowed to file such
Malabang pleadings as may be necessary or proper, if before the final
termination of the case “a breach or violation of an . . . ordinance,
should take place.” In the present case, no breach or violation of the
ordinance occurred. The petitioner decided to pay “under protest” the
fees imposed by the ordinance. Such payment did not affect the case;
the declaratory relief action was still proper because the applicability
of the ordinance to future transactions still remained to be resolved,
although the matter could also be threshed out in an ordinary suit for
the recovery of taxes paid (Shell Co. of the Philippines, Ltd. vs.
Municipality of Sipocot, L-12680, March 20, 1959). In its petition for
declaratory relief, petitioner-appellee alleged that by reason of the
enforcement of the municipal ordinance by respondents it was forced
to pay under protest the fees imposed pursuant to the said ordinance,
and accordingly, one of the reliefs prayed for by the petitioner was
that the respondents be ordered to refund all the amounts it paid to
respondent Municipal Treasurer during the pendency of the case. The
inclusion of said allegation and prayer in the petitioner was not
objected to by the respondents in their answer. During the trial,
evidence of the payments made by the petitioner was introduced.
Respondents were thus fully aware of the petitioner’s claim for refund
and of what would happen if the ordinance were to be declared
invalid by the court.
21 Lutz v. Araneta As the protection and promotion of the sugar industry as a matter of
public concern, the Legislature may determine within reasonable
bounds what is necessary for its protection and expedient for its
promotion. Here, the legislative discretion must be allowed full play,
subject only to the test of reasonableness; and it is not contended
that the means provided in section 6 of Commonwealth Act No. 567
bear no relation to the objective pursued or are oppressive in
character. If objective and methods are alike constitutionally valid, no
reason is seen why the state may not levy taxes to raise funds for
their prosecution and attainment. Taxation may be made the
implement of the state’s police power.

It is inherent in the power to tax that a state be free to select the

subjects of taxation, and it has been repeatedly held that “inequalities
which result from a singling out of one particular class for taxation or
exemption infringe 110 constitutional limitation.

22 NTC v. CA Since Congress has the power to exercise the State’s inherent
powers of Police Power, Eminent Domain and Taxation, the
distinction between police power and the power to tax, which could be
significant if the exercising authority were mere political subdivisions
(since delegation by it to such political subdivisions of one power
does not necessarily include the other), would not be of any moment
when Congress itself exercises the power.

23 Tan v. Del Uniformity of taxation, like the kindred concept of equal protection,
Rosario merely requires that all subjects or objects of taxation, similarly
situated, are to be treated alike both in privileges and liabilities (Juan
Luna Subdivision vs. Sarmiento, 91 Phil. 371). Uniformity does not
forfend classification as long as: (1) the standards that are used
therefor are substantial and not arbitrary, (2) the categorization is
germane to achieve the legislative purpose, (3) the law applies, all
things being equal, to both present and future conditions, and (4) the
classification applies equally well to all those belonging to the same
class

24 CIR v. Santos It is inherent in the power to tax that the State be free to select the
subjects of taxation, and it has been repeatedly held that “inequalities
which result from a singling out of one particular class for taxation, or
exemption, infringe no constitutional limitation.
2 Francia vs. IAC Internal Revenue Taxes cannot be subject of setoff or
5 compensation.

2 Republic vs. Ericta Only original holders of back pay certificates are allowed to
6 use the same in payment of their own taxes.

2 Republic vs. Mambulao Internal Revenue Taxes, such as forest charges, cannot be
7 Lumber Company the subject of set-off or compensation. It is because taxes are
not in the nature of contracts between the parties but grow
out of a duty to, and are positive acts of, the Government, to
the making and enforcing of which, the personal consent of
the individual taxpayer is not required.

2 Philex Mining Taxes cannot be subject to compensation for the simple

8 Corporation vs. reason that the government and the taxpayer are not
Commissioner of Internal creditors and debtors of each other; Debts are due to the
Revenue Government in its corporate capacity, while taxes are due to
the Government in its sovereign capacity.

2 Domingo vs. Garlitos The ordinary procedure by which to settle claims or

9 indebtedness against the estate of a deceased person, as an
inheritance tax, is for the claimant to present a claim before
the probate court sa that said court may order the
administrator to pay the amount hereof.

3 Progressive The imposition is a tax, if its primary purpose is to generate

0 Development revenue, and regulation is merely incidental; but if regulation
Corporation vs. Quezon is the primary purpose, the fact that incidentally revenue is
City also obtained does not make the imposition a tax

3 Ferrer, Jr. vs. Bautista Subject to the provisions of the Local Government Code
1 (LGC) and consistent with the basic policy of local autonomy,
every Local Government Unit (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
LGU 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 Philippine Airlines, Inc. The nature of an exaction is to be determined by the purpose
2 vs. Edu for which it is being exacted e.g. if the purpose is primarily
revenue, or if revenue is at least one of the substantial
purposes, then the exaction is properly called a tax.
- Motor vehicle registration fees as at present exacted
pursuant to the Land Transportation and Traffic Code are
actually taxes intended for additional revenue of government

3 Esso Standard Eastern, Margin fee is not a tax but an exaction designed to curb the
3 Inc. vs. Comm'r. of excessive demands upon international reserves.
Internal Revenue

3 Apostolic Prefect etc. vs. SPANISH TEXT

4 El Tesorero etc

3 National Development NDC as withholding agent of the government is responsible

5 Company vs. to withold tax due on the interest earned by the Japanese
Commissioner of Internal shipbuilders. The imposition of the deficiency taxes on the
Revenue NDC is a penalty for its failure to withhold the same from the
Japanese shipbuilders.

3 Republic vs. Gonzales Failure to declare true income for two consecutive years is
6 evidence of fraud.

3 Delpher Trades Corp. vs. “The legal right of a taxpayer to decrease the amount of what
7 Intermediate Appellate otherwise could be his taxes or altogether avoid them, by
Court means which the law permits, cannot be doubted.”

3 Commissioner of Internal While tax avoidance schemes and arrangements are not
8 Revenue vs. Lincoln prohibited, tax laws cannot be circumvented in order to evade
Philippine Life Insurance the payment of just taxes.
Company, Inc.

3 Asturias Sugar Central, Exemption from taxation are not favored, and tax statutes are
9 Inc. vs. Commissioner of to be construed in strictissimi juris against the taxpayer and
Customs liberally in favor of the taxing authority

4 Commissioner of Internal Tax refunds are in the nature of tax exemptions.

0 Revenue vs. Seagate
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