April 21, 1989
172 SCRA 653
FACTS
Sampaguita Pictures incurred obligations for percentage, withholding, and amusement taxes in the amount of P10,268.41.
To settle said amount, Sampaguita Pictures tendered and delivered to the Office of Municipal Treasurer of Bocaue, Bulacan, a total of 16 back pay negotiable certificates of indebtedness in the sum of P16,763.60.
The BIR did not accept the certificates as valid payment and demanded that the payment of tax liabilities be made in cash. Sampaguita Pictures did not respond to the demands of BIR.
As a result, OSG filed the present case, arguing that the payment was void since Sampaguita Pictures was not the original holder of the certificates and that under the law, only original holders of back pay certificates are allowed to use the same in payment of their own taxes.
RULING
The Court ruled in favor of Sampaguita Pictures.
Sampaguita Pictures, as assignee of the certificates of indebtedness, had succeeded to the original rights of the holders thereof and was therefore authorized to demand payment by the Republic of the indebtedness thereby represented.
Given the present circumstances, Sampaguita Pictures was indeed entitled to judgment upon its counterclaim for the payment by the Republic of its indebtedness by virtue of the back pay certificates in question, with the ultimate result that the claim and counterclaim of the Government and Sampaguita Pictures respectively will offset each other.
Friday, July 27, 2018
Monday, July 23, 2018
[CASE DIGEST] NTC v. CA (311 SCRA 508)
FACTS
In 1988, pursuant to Sec. 40 of the Public Service Act, the National Telecommunications Commission (NTC) served on the Philippine Long Distance Telephone Company (PLDT) the assessment notices and demands for supervision and regulation fee and permit fees. PLDT challenged the assessments, arguing that these were being made to raise revenues and not as mere reimbursements for actual regulatory expenses, and that the assessments should only have been on the basis of the par values of PLDT’s outstanding capital stock.
The NTC denied the protest. Subsequently, the CA modified the NTC's order and ordered it to recompute its assessments and demands for payment from PLDT.
RULING
NTC and CA rulings set aside.
The law in point is clear and categorical: the fee in question is based on the capital stock subscribed or paid, nothing less nothing more. As such, the SC ordered the NTC to make a recomputation of the fee to be imposed on PLDT on the basis of the latter’s capital stock subscribed or paid.
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 taxwould not be of any moment when Congress itself exercises the power. All that is to be done would be to apply and enforce the law when sufficiently definitive and not constitutionally infirm.
In 1988, pursuant to Sec. 40 of the Public Service Act, the National Telecommunications Commission (NTC) served on the Philippine Long Distance Telephone Company (PLDT) the assessment notices and demands for supervision and regulation fee and permit fees. PLDT challenged the assessments, arguing that these were being made to raise revenues and not as mere reimbursements for actual regulatory expenses, and that the assessments should only have been on the basis of the par values of PLDT’s outstanding capital stock.
The NTC denied the protest. Subsequently, the CA modified the NTC's order and ordered it to recompute its assessments and demands for payment from PLDT.
RULING
NTC and CA rulings set aside.
The law in point is clear and categorical: the fee in question is based on the capital stock subscribed or paid, nothing less nothing more. As such, the SC ordered the NTC to make a recomputation of the fee to be imposed on PLDT on the basis of the latter’s capital stock subscribed or paid.
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 taxwould not be of any moment when Congress itself exercises the power. All that is to be done would be to apply and enforce the law when sufficiently definitive and not constitutionally infirm.
Friday, July 20, 2018
[CASE DIGEST] CALTEX v. COA (208 SCRA 726)
FACTS
The Commission on Audit (COA) ordered Caltex Philippines to remit to the OPSF its collection of additional tax on petroleum products as authorized under P.D. 1956. Pending such remittance, all CPI’s claims for reimbursement would be held in abeyance, too, and Caltex should desist from further offsetting the taxes it collected against its own outstanding claims for reimbursement.
Caltex argued that it should be allowed to offset its claims from the OPSF against its contributions to the fund as this had been allowed in the past. But COA insisted that there can be no offsetting of taxes against the claims that a taxpayer may have against the government, as taxes do not arise from contracts or depend upon the will of the taxpayer, but are imposed by law.
RULING
The Supreme Court ruled in favor of COA.
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 mutual 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. Too, Caltex's position that the OPSF contributions are not for public purpose is untenable.
The SC said that axation is no longer envisioned as a measure merely to raise revenue to support the existence of the government; taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry, which is affected with public interest as to be within the police power of the state.
The Commission on Audit (COA) ordered Caltex Philippines to remit to the OPSF its collection of additional tax on petroleum products as authorized under P.D. 1956. Pending such remittance, all CPI’s claims for reimbursement would be held in abeyance, too, and Caltex should desist from further offsetting the taxes it collected against its own outstanding claims for reimbursement.
Caltex argued that it should be allowed to offset its claims from the OPSF against its contributions to the fund as this had been allowed in the past. But COA insisted that there can be no offsetting of taxes against the claims that a taxpayer may have against the government, as taxes do not arise from contracts or depend upon the will of the taxpayer, but are imposed by law.
RULING
The Supreme Court ruled in favor of COA.
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 mutual 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. Too, Caltex's position that the OPSF contributions are not for public purpose is untenable.
The SC said that axation is no longer envisioned as a measure merely to raise revenue to support the existence of the government; taxes may be levied with a regulatory purpose to provide means for the rehabilitation and stabilization of a threatened industry, which is affected with public interest as to be within the police power of the state.
Wednesday, July 18, 2018
[CASE DIGEST] Republic v. Sandiganbayan (G.R. No. 129406)
March 6, 2006 | G.R. No. 129406
Republic of the Philippines as represented by the Presidential Commission on Good Governance (PCGG), petitioner
Sandiganbayan and Roberto Benedicto, respondents
FACTS:
One of the key mandates of the PCGG is to sequester business enterprises, entities, and other properties believed to be ill-gotten wealth. One of such sequestrations were the 227 shares of the Negros Occidental Golf and Country Club, Inc. (NOGCCI), which shares were supposed to be owned by Roberto Benedicto. Following the sequestration of such shares, PCGG representarives sat as members of the Board of Directors of NOGCCI, which subsequently approved the imposition of monthly membership due to share owners amounting to P150 per share. This was later changed to P250 per share.
Instead of opposing such impositions, the PCGG representatives sitting as members of the Board of Directors approved the same. Due to either sheer incompetence or collusion with other share owners, PCGG representatives virtually neglected the shares between 1987 until 1989, at which point PCGG's failure to pay the monthly membership dues now amounting to P2,959,471.00 led to the auction sale of the delinquent shares.
On November 3, 1990, in Civil Case No. 0034, the PCGG entered into a Compromise Agreement with Benedicto. This agreement stated that PCGG was lifting the sequestration on the 227 NOGCCI shares, implying that said shares were not ill-gotten wealth after all and that it was well within Benedicto's capacity to purchase said shares using his own money.
From the time this Compromise Agreement was made, both the PCGG and Benedicto had been turning to Sandiganbayan in trying to carry out the terms of the agreement. Because PCGG did not seem intent to return the shares to him as agreed upon, Benedicto instituted actions against the Commission. In all instances, the Sandiganbayan ruled in favor of Benedicto.
Subsequently the PCGG filed the instant petition before the SC, contending that: (a) Sandiganbayan's directive on March 28, 1995 compelling PCGG to bring before the Clerk of Court the 227 shares registered in the name of Benedicto or in default thereof pay P150,000 per share using public money, and its ruling on March 13, 1997 denying PCGG's Manifestation with Motion for Reconsideration, constituted grave abuse of discretion; and (b) that PCGG is immune from any lawsuit following the principle of the non-suability of the State.
ISSUES:
1. Whether or not Sandiganbayan committed grave abuse of discretion in ruling in favor of Benedicto.
2. Whether or not PCGG is immune from any lawsuit.
Saturday, July 14, 2018
[CASE DIGEST] PBCOM v. CIR (302 SCRA 241)
FACTS
The NIRC provides that a suit to recover tax erroneously collected must be filed within two years from the date of payment of the tax. However, the BIR issued a Revenue Memorandum Circular (RMC) that extended to ten years the period in which one may file a suit to recover tax erroneously collected—contrary to the provisions of the NIRC.
Relying upon an RMC inconsistent with the provisions of the NIRC, PBCOM filed a suit to recover tax erroneously collected beyond the two-year prescriptive period set by law. Relying upon an RMC inconsistent with the provisions of the NIRC, PBCOM filed a suit with the CTA to recover tax erroneously collected beyond the two-year prescriptive period set by law.
The CTA denied the petition and the MR on the ground that it was filed beyond the prescriptive period set by the NIRC. PBCOM appealed the decision of the CTA to the SC, arguing that it relied in good faith upon the BIR’s RMC, which extended the period to file a suit to recover erroneously collected tax to ten years.
RULING
The Supreme Court ruled in favor of the CTA.
The SC held that the RMC is invalid as it is inconsistent with the NIRC provisions; a wrong construction of law by administration officials cannot estop the Government from correcting or overruling the same. The non-retroactivity of CIR rulings is not applicable in this case, too, because the nullity of the RMC was declared by respondent courts and not by the Commissioner of Internal Revenue.
A memorandum-circular of a bureau head could not operate to vest a taxpayer with a shield against judicial action. It bears repeating that Revenue memorandum-circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue.
The NIRC provides that a suit to recover tax erroneously collected must be filed within two years from the date of payment of the tax. However, the BIR issued a Revenue Memorandum Circular (RMC) that extended to ten years the period in which one may file a suit to recover tax erroneously collected—contrary to the provisions of the NIRC.
Relying upon an RMC inconsistent with the provisions of the NIRC, PBCOM filed a suit to recover tax erroneously collected beyond the two-year prescriptive period set by law. Relying upon an RMC inconsistent with the provisions of the NIRC, PBCOM filed a suit with the CTA to recover tax erroneously collected beyond the two-year prescriptive period set by law.
The CTA denied the petition and the MR on the ground that it was filed beyond the prescriptive period set by the NIRC. PBCOM appealed the decision of the CTA to the SC, arguing that it relied in good faith upon the BIR’s RMC, which extended the period to file a suit to recover erroneously collected tax to ten years.
RULING
The Supreme Court ruled in favor of the CTA.
The SC held that the RMC is invalid as it is inconsistent with the NIRC provisions; a wrong construction of law by administration officials cannot estop the Government from correcting or overruling the same. The non-retroactivity of CIR rulings is not applicable in this case, too, because the nullity of the RMC was declared by respondent courts and not by the Commissioner of Internal Revenue.
A memorandum-circular of a bureau head could not operate to vest a taxpayer with a shield against judicial action. It bears repeating that Revenue memorandum-circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue.
Wednesday, July 11, 2018
[CASE DIGEST] HAGONOY MARKET VENDOR v. MUNICIPALITY OF HAGONOY (G.R. No. 137621)
FACTS
The Sangguniang Bayan of Hagonoy, Bulacan enacted Kautusan Blg. 28, which increased the stall rentals of the market vendors in Hagonoy. The Hagonoy Market Vendors Assocition filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance. SoJ dismissed the appeal on the ground of prescription.
RULING
The Supreme Court ruled in favor of the Sangguniang Bayan of Hagonoy.
HMVA’s petition with the SoJ is already time-barred, following the provision of the Local Government Code regarding the procedure for approval and effectivity of tax ordinances and revenue measures.
It is essential that the validity of revenue measures is not left uncertain for a considerable length of time. This is the reason why the law provided a time limit for an aggrieved party to assail the legality of revenue measures and tax ordinances.
The Sangguniang Bayan of Hagonoy, Bulacan enacted Kautusan Blg. 28, which increased the stall rentals of the market vendors in Hagonoy. The Hagonoy Market Vendors Assocition filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance. SoJ dismissed the appeal on the ground of prescription.
RULING
The Supreme Court ruled in favor of the Sangguniang Bayan of Hagonoy.
HMVA’s petition with the SoJ is already time-barred, following the provision of the Local Government Code regarding the procedure for approval and effectivity of tax ordinances and revenue measures.
It is essential that the validity of revenue measures is not left uncertain for a considerable length of time. This is the reason why the law provided a time limit for an aggrieved party to assail the legality of revenue measures and tax ordinances.
Saturday, July 7, 2018
[CASE DIGEST] DEUTSCHE BANK AG MANILA BRANCH v. CIR (G.R. No. 188550)
FACTS
Deutsche Bank remitted to the CIR an amount representing 15% of its branch profit remittance tax for 2002 and prior taxable years. Believing it made an overpayment, it filed an administrative claim for refund and requested a confirmation of its entitlement to a preferential tax rate of 10% under the RP-Germany Tax Treaty.
The CTA denied this claim based on RMO No. 1-2000 saying that Deutsche Bank violated the 15-day rule for tax treaty relief application. It also cited Mirant which stated that before the benefits of the tax treaty may be extended to a foreign corporation wishing to avail itself thereof, the latter should first invoke the provisions of the tax treaty and prove that they indeed apply to the corporation.
RULING
The Supreme Court ruled in favor of Deustche Bank.
Laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto. The BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. More so, when the RP-Germany Tax Treaty does not provide for any pre-requisite for the availment of the benefits under said agreement.
The time-honored international principle of pacta sunt servanda demands the performance in good faith of treaty obligations on the part of the states that enter into the agreement. Every treaty in force is binding upon the parties, and obligations under the treaty must be performed by them in good faith. More importantly, treaties have the force and effect of law in this jurisdiction.
Laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto.
Deutsche Bank remitted to the CIR an amount representing 15% of its branch profit remittance tax for 2002 and prior taxable years. Believing it made an overpayment, it filed an administrative claim for refund and requested a confirmation of its entitlement to a preferential tax rate of 10% under the RP-Germany Tax Treaty.
The CTA denied this claim based on RMO No. 1-2000 saying that Deutsche Bank violated the 15-day rule for tax treaty relief application. It also cited Mirant which stated that before the benefits of the tax treaty may be extended to a foreign corporation wishing to avail itself thereof, the latter should first invoke the provisions of the tax treaty and prove that they indeed apply to the corporation.
RULING
The Supreme Court ruled in favor of Deustche Bank.
Laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto. The BIR must not impose additional requirements that would negate the availment of the reliefs provided for under international agreements. More so, when the RP-Germany Tax Treaty does not provide for any pre-requisite for the availment of the benefits under said agreement.
The time-honored international principle of pacta sunt servanda demands the performance in good faith of treaty obligations on the part of the states that enter into the agreement. Every treaty in force is binding upon the parties, and obligations under the treaty must be performed by them in good faith. More importantly, treaties have the force and effect of law in this jurisdiction.
Laws and issuances must ensure that the reliefs granted under tax treaties are accorded to the parties entitled thereto.
Tuesday, July 3, 2018
[CASE DIGEST] IDEALS v. PSALM (G.R. No. 192088)
October 9, 2012 | G.R. No. 192088
Initiatives for Dialogue and Empowerment through Alternative Legal Services, Inc. (IDEAL, Inc.), et al., petitioners
Power Sector Assets and Liabilities Management Corp., et al. (PSALM), respondents
FACTS:
PSALM is a GOCC mandated by RA 9136 (Electric Power Industry Reform Act of 2001 or the EPIRA Law) to manage the orderly sale, disposition, and privatization of the assets of the National Power Corp. (NPC) over a 25-year period. In the discharge of its said duties, PSALM held a public bidding for the sale of AHEPP, a 246-MW hydroelectric power plant. After evaluating the submitted bids, PSALM awarded the sale to K-Water, a Korean company.
But even before K-Water was given the Notice of Award, IDEALS had been sending letters to PSALM to request for copies of documents pertaining to the sale. The first letter requested for copies of the Terms of Reference and proposed bids submitted by the bidders. There was no response because at the time no bids have been submitted yet. Besides, updates about the ongoing bidding were posted on the PSALM website anyway. The second letter requested for information regarding the winning bidder, such as company profile, contact person, office address, and Philippine registration. Despite press releases announcing K-Water as the winning bidder, PSALM failed to sufficiently provide the petitioners with the information they were asking for, almost as if PSALM officials were trying to hide something.
ISSUES:
1. Whether or not petitioners have locus standi to file this petition before the Court.
2. Whether or not PSALM violated the Constitution in withholding documents of public interest.
3. Whether or not a foreign company can own a hydroelectric power facility.
Sunday, July 1, 2018
[CASE DIGEST] PASCUAL v. SEC. OF PUBLIC WORKS (110 Phil. 331)
FACTS
Wenceslao Pascual, Provincial Governor of Rizal, filed an action for declaratory relief with injunction on the ground that RA 920 (An Act Appropriating Funds for Public Works) contained in Section 1-C (a) an item of P85,000 “for the construction, reconstruction, repair, extension and improvement” of Pasig feeder road terminals privately owned by respondent Zulueta. The latter filed a motion to dismiss on the ground that Pascual had no legal capacity to sue, and that the petition did not state a cause of action. The lower court granted the said motion.
RULING
The Supreme Court ruled in favor of Pascual.
As a taxpayer, Pascual had legal standing. The SC also ruled that the subject appropriation was illegal because it appropriated public funds for the improvement of private property. The right of the legislature to appropriate funds is correlative with its right to tax, and under constitutional provisions against taxation except for public purposes. Taxing power must be exercised for public purposes only.
The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interest, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals might incidentally serve the public.
Wenceslao Pascual, Provincial Governor of Rizal, filed an action for declaratory relief with injunction on the ground that RA 920 (An Act Appropriating Funds for Public Works) contained in Section 1-C (a) an item of P85,000 “for the construction, reconstruction, repair, extension and improvement” of Pasig feeder road terminals privately owned by respondent Zulueta. The latter filed a motion to dismiss on the ground that Pascual had no legal capacity to sue, and that the petition did not state a cause of action. The lower court granted the said motion.
RULING
The Supreme Court ruled in favor of Pascual.
As a taxpayer, Pascual had legal standing. The SC also ruled that the subject appropriation was illegal because it appropriated public funds for the improvement of private property. The right of the legislature to appropriate funds is correlative with its right to tax, and under constitutional provisions against taxation except for public purposes. Taxing power must be exercised for public purposes only.
The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interest, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals might incidentally serve the public.
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