FACTS
Veronica Sanchez was the owner of a 2-storey, four-door “accessoria” building in Pasay City which she constructed in 1947. She lived in one of the apartments and rented out the rest to others. In 1949, she derived an income therefrom of P7,540.
Aside from being a landlady, she also ran a small dry goods store in the Pasay market, from which she derived an annual income of about P1,300. In 1951, CIR made demand upon Sanchez for the payment of P163.51 as income tax for the year 1950, and P637 as real estate dealer's tax for the year 1946 to 1950, plus the sum of P50 as compromise.
Sanchez paid the taxes demanded under protest, and on October 16, 1951 filed an action in the CFI against the CIR for the refund of the taxes paid, claiming that she was not a real estate dealer. The CFI ruled that she was in fact a dealer as defined by the NIRC, and that the taxes in question were legal.
IN-ARTICLE AD (square)
RULING
The Court ruled in favor of CIR.
As per Sec. 194(s) of the NIRC, “real estate dealers” includes all persons who for their own account are engaged in the sale of lands, buildings or interests therein or in leasing real estate. Sanchez falls withing this description.
The nature of the building constructed by her — a four-door “accessoria” — shows that it was from the beginning intended for lease as a source of income or profit to the owner. Granted, the SC held there was no double taxation contrary to Veronica’s assertion.
License tax may be levied upon a business or occupation although the land or property used therein is subject to property tax, and that the state may collect an ad valorem tax on property used in a calling, and at the same time impose a license tax on the pursuit of that calling, the imposition of the latter kind of tax being in no sense a double tax.
Saturday, June 27, 2020
Wednesday, June 24, 2020
[CASE DIGEST] CORONA v. UNITED HARBOR PILOTS ASSOCIATION OF THE PHILIPPINES (G.R. No. 111953)
October 12, 1998
Ponente: Per Curiam
Plaintiff-Appellee: People of the Philippines
Accused-Appellant: Benedicto Ramos
FACTS
On July 15, 1992, Phil. Ports Authority General Manager Rogelio Dayan issued PPA-AO No. 04-92, which put a one-year cap on all appointments to all harbor pilot positions in all pilotage districts. This meant that all pilots shall be subject to an annual performance review to determine whether or not their employment will be renewed.
On August 31, 1992, the PPA issued Memorandum Order No. 08-92, which specified the criteria to be used in the annual performance reviews.
Prior to the issuance of the AO and MO, all duly licensed pilots had security of tenure until they reach the mandatory age of retirement (70), unless at any point they have been found to be physically or mentally unfit.
UHPAP and MPA assailed the validity of these issuances. In their complaint before the DOTC, they were told the matter was within the jurisdiction of PPA and not DOTC.
Herein respondents filed a complaint before the Office of the President. Corona held the implementation of the issuances in abbeyance pending review, but he subsequently lifted such an abbeyance and held that these were valid on the ground that PPA is mandated to "control, regulate and supervise pilotage and conduct of pilots in any port district."
Herein respondents filed before the RTC of Manila a petition for certiorari, prohibition, and injunction with prayer for the issuance of a TRO. RTC ruled in favor of UHPAP and MPA, hence this petition by herein petitioners.
ISSUE
Whether or not respondents were denied due process.—YES.
RULING
Ponente: Per Curiam
Plaintiff-Appellee: People of the Philippines
Accused-Appellant: Benedicto Ramos
FACTS
On July 15, 1992, Phil. Ports Authority General Manager Rogelio Dayan issued PPA-AO No. 04-92, which put a one-year cap on all appointments to all harbor pilot positions in all pilotage districts. This meant that all pilots shall be subject to an annual performance review to determine whether or not their employment will be renewed.
On August 31, 1992, the PPA issued Memorandum Order No. 08-92, which specified the criteria to be used in the annual performance reviews.
Prior to the issuance of the AO and MO, all duly licensed pilots had security of tenure until they reach the mandatory age of retirement (70), unless at any point they have been found to be physically or mentally unfit.
UHPAP and MPA assailed the validity of these issuances. In their complaint before the DOTC, they were told the matter was within the jurisdiction of PPA and not DOTC.
Herein respondents filed a complaint before the Office of the President. Corona held the implementation of the issuances in abbeyance pending review, but he subsequently lifted such an abbeyance and held that these were valid on the ground that PPA is mandated to "control, regulate and supervise pilotage and conduct of pilots in any port district."
Herein respondents filed before the RTC of Manila a petition for certiorari, prohibition, and injunction with prayer for the issuance of a TRO. RTC ruled in favor of UHPAP and MPA, hence this petition by herein petitioners.
ISSUE
Whether or not respondents were denied due process.—YES.
RULING
Sunday, June 21, 2020
[CASE DIGEST] REPUBLIC v. MAMBULAO LUMBER COMPANY (4 SCRA 622)
FACTS
For the period between 1947 and 1956, Mambulao Lumber Company paid the Government a total of P 9,127.50 as reforestation charges. The company, however, was claiming that the sum of 9,127.50, not having been used in the reforestation of the area covered by its license, the same is refundable to it or may be applied in compensation of P 4,802.37 due from it as forest charges.
RULING
The Supreme Court ruled in favor of the Government.
Mambulao Lumber Company and the Republic are not mutually creditors and debtors of each other because the Government does not owe anything to the company.
Consequently, the law on compensation is inapplicable. The amount paid by a licensee as reforestation charges is in the nature of a tax which forms a part of the Reforestation Fund, payable by him irrespective of whether the area covered by his license is reforested or not.
The SC held that no set-off is admissible against demands for taxes levied for general or local governmental purposes.
For the period between 1947 and 1956, Mambulao Lumber Company paid the Government a total of P 9,127.50 as reforestation charges. The company, however, was claiming that the sum of 9,127.50, not having been used in the reforestation of the area covered by its license, the same is refundable to it or may be applied in compensation of P 4,802.37 due from it as forest charges.
RULING
The Supreme Court ruled in favor of the Government.
Mambulao Lumber Company and the Republic are not mutually creditors and debtors of each other because the Government does not owe anything to the company.
Consequently, the law on compensation is inapplicable. The amount paid by a licensee as reforestation charges is in the nature of a tax which forms a part of the Reforestation Fund, payable by him irrespective of whether the area covered by his license is reforested or not.
The SC held that no set-off is admissible against demands for taxes levied for general or local governmental purposes.
Thursday, June 18, 2020
[CASE DIGEST] PROCTER & GAMBLE, CO. v. MUNICIPALITY OF JAGNA (94 SCRA 894)
FACTS
In 1957, the Municipality of Jagna enacted Ordinance No. 4, which imposed storage fees on all exportable copra deposited in the bodega within the jurisdiction of the Municipality of Jagna in Bohol. Procter & Gamble – a manufacturer of soap, edible oil, margarine, and other similar products, and for this purpose maintained a “bodega” in the municipality where it stored copra purchased in the municipality and therefrom shipped the same for its manufacturing and other operations – challenged the validity of the Ordinance.
Paying under protest from 1958 to 1963, P&G alleged that the exaction constituted double taxation and was ultra vires for being beyond the power of the municipality to enact.
In its ruling, the CFI upheld the municipality’s power based on general welfare clause (Sec. 2238) of the old Administrative Code and said that P&G’s cause of action had already prescribed.
RULING
The Court ruled in favor of the Municipality of Jagna.
By P&G’s own admission, it is a consolidated corporation with its trading company, which means it will be hard to segregate the copra it uses for trading from that it utilizes for manufacturing.
For double taxation to exist, the same property must be taxed twice, when it should be taxed but once.
Double taxation has also been defined as taxing the same person twice by the same jurisdiction for the same thing. Surely, a tax on P&G’s products is different from a tax on the privilege of storing copra in a bodega situated within the territorial boundary of the municipality.
In 1957, the Municipality of Jagna enacted Ordinance No. 4, which imposed storage fees on all exportable copra deposited in the bodega within the jurisdiction of the Municipality of Jagna in Bohol. Procter & Gamble – a manufacturer of soap, edible oil, margarine, and other similar products, and for this purpose maintained a “bodega” in the municipality where it stored copra purchased in the municipality and therefrom shipped the same for its manufacturing and other operations – challenged the validity of the Ordinance.
Paying under protest from 1958 to 1963, P&G alleged that the exaction constituted double taxation and was ultra vires for being beyond the power of the municipality to enact.
In its ruling, the CFI upheld the municipality’s power based on general welfare clause (Sec. 2238) of the old Administrative Code and said that P&G’s cause of action had already prescribed.
RULING
The Court ruled in favor of the Municipality of Jagna.
By P&G’s own admission, it is a consolidated corporation with its trading company, which means it will be hard to segregate the copra it uses for trading from that it utilizes for manufacturing.
For double taxation to exist, the same property must be taxed twice, when it should be taxed but once.
Double taxation has also been defined as taxing the same person twice by the same jurisdiction for the same thing. Surely, a tax on P&G’s products is different from a tax on the privilege of storing copra in a bodega situated within the territorial boundary of the municipality.
Saturday, June 13, 2020
[CASE DIGEST] PUNSALAN v. MUNICIPAL BOARD OF MANILA (95 Phil. 46)
FACTS
In 1950, acting pursuant to the Revised Charter of the City of Manila empowering it to impose a municipal occupation tax on persons engaged in various professions, the Municipal Board of Manila approved Ordinance No. 3398, which imposed a municipal occupation tax on persons exercising various professions (e.g., lawyers, doctors, dentists, etc.) in the city and penalized non-compliance thereof.
A number of professionals, among them Punsalan, who had already paid their occupation tax under the National Internal Revenue Code, paid the additional tax prescribed in the ordinance under protest. They then filed an action to annul the ordinance and the provision of the Manila charter authorizing said exaction and to collect the refund on the taxes paid under protest.
The CFI of Manila upheld the validity of the provision of City Charter authorizing the enactment of the ordinance but declared the ordinance itself illegal and void on the ground that the penalty therein was not legally authorized.
RULING
For the City of Manila.
The Revised Charter of Manila in express terms empowers the Municipal Board “to fix penalties for the violation of ordinances which shall not exceed two hundred pesos fine or six months’ imprisonment, or both such fine and imprisonment, for a single offense.”
The ordinance imposes the tax upon every person “exercising” or “pursuing”— in the City of Manila naturally — any one of the occupations named, but does not say that such person must have his office in Manila. What constitutes exercise or pursuit of a profession in the city is a matter of judicial determination.
The SC also added that the argument against double taxation may not be invoked where one tax is imposed by the state and the other is imposed by the city, it being widely recognized that there is nothing inherently obnoxious in the requirement that license fees or taxes be exacted with respect to the same occupation, calling or activity by both the state and the political subdivisions thereof.
In 1950, acting pursuant to the Revised Charter of the City of Manila empowering it to impose a municipal occupation tax on persons engaged in various professions, the Municipal Board of Manila approved Ordinance No. 3398, which imposed a municipal occupation tax on persons exercising various professions (e.g., lawyers, doctors, dentists, etc.) in the city and penalized non-compliance thereof.
A number of professionals, among them Punsalan, who had already paid their occupation tax under the National Internal Revenue Code, paid the additional tax prescribed in the ordinance under protest. They then filed an action to annul the ordinance and the provision of the Manila charter authorizing said exaction and to collect the refund on the taxes paid under protest.
The CFI of Manila upheld the validity of the provision of City Charter authorizing the enactment of the ordinance but declared the ordinance itself illegal and void on the ground that the penalty therein was not legally authorized.
RULING
For the City of Manila.
The Revised Charter of Manila in express terms empowers the Municipal Board “to fix penalties for the violation of ordinances which shall not exceed two hundred pesos fine or six months’ imprisonment, or both such fine and imprisonment, for a single offense.”
The ordinance imposes the tax upon every person “exercising” or “pursuing”— in the City of Manila naturally — any one of the occupations named, but does not say that such person must have his office in Manila. What constitutes exercise or pursuit of a profession in the city is a matter of judicial determination.
The SC also added that the argument against double taxation may not be invoked where one tax is imposed by the state and the other is imposed by the city, it being widely recognized that there is nothing inherently obnoxious in the requirement that license fees or taxes be exacted with respect to the same occupation, calling or activity by both the state and the political subdivisions thereof.
Tuesday, June 9, 2020
[CASE DIGEST] HEIRS OF RAYMUNDO CASTRO v. BUSTOS (G.R. No. L-25913)
February 29, 1969
Heirs of Raymundo Castro, petitioner
Apolonio Bustos, respondent
FACTS
On October 26, 1962, Bustos, a public school teacher, was charged with murder for the killing of another teacher, Raymundo Castro. Bustos was subsequently found guilty of homicide and was credited with the two mitigating circumstances of passion or obfuscation and voluntary surrender. He was sentenced to suffer imprisonment plus payment of civil indemnity amounting to P6,000.
Upon promulgation of the decision, both parties appealed. The CA modified the ruling and held that apart from the P6,000 for indemnity, Bustos was also supposed to pay moral damages amounting to P6,000 and P13,380 for lost income. But upon the respondent's motion, the CA modified its earlier ruling and removed both the moral damages and lost income.
The heirs of Raymundo Castro filed this instant petition praying for CA's modified decision to be reversed and for CA's original ruling to be upheld.
ISSUES
1. Whether or not the CA erred in modifying its earlier ruling.
2. Whether or not petitioners can demand an increase in the civil indemnity from P6,000 to P12,000.
RULING
Heirs of Raymundo Castro, petitioner
Apolonio Bustos, respondent
FACTS
On October 26, 1962, Bustos, a public school teacher, was charged with murder for the killing of another teacher, Raymundo Castro. Bustos was subsequently found guilty of homicide and was credited with the two mitigating circumstances of passion or obfuscation and voluntary surrender. He was sentenced to suffer imprisonment plus payment of civil indemnity amounting to P6,000.
Upon promulgation of the decision, both parties appealed. The CA modified the ruling and held that apart from the P6,000 for indemnity, Bustos was also supposed to pay moral damages amounting to P6,000 and P13,380 for lost income. But upon the respondent's motion, the CA modified its earlier ruling and removed both the moral damages and lost income.
The heirs of Raymundo Castro filed this instant petition praying for CA's modified decision to be reversed and for CA's original ruling to be upheld.
ISSUES
1. Whether or not the CA erred in modifying its earlier ruling.
2. Whether or not petitioners can demand an increase in the civil indemnity from P6,000 to P12,000.
RULING
Friday, June 5, 2020
[CASE DIGEST] MITSUBISHI CORP. v. CIR (CTA Case No. 6139)
FACTS
The Philippines and Japan agreed that a loan will be given to the former to contruct the Calaca II project under the condition that the Philippines will assume all fiscal levies or taxes imposed in the Philippines on Japanese firms and nationals working or dealing with said project.
The project was implemented by the Overseas Economic Cooperation Fund (OECF). Pursuant to Calaca II, NPC entered into a contract with Mitsubishi Corporation.
Mitsubishi filed and paid its ITR. However, claiming that the income tax for the OECF-funded portion of the Calaca II project should not have been paid, Mitsubishi sought for a refund.
The CTA held that Mitsubishi erroneously paid its income and branch profit remittance taxes and was entitled to a proper claim for refund under the Tax Code. The CIR disagreed.
RULING
The Court ruled in favor of Mitsubishi.
There was an erroneous payment of the subject taxes by Mitsubishi for the reason that said taxes are to be assumed by the Government of the Philippines through its executing agency, the NPC. Granted, Judge Castaneda, in his dissenting opinion, noted that international comity should not be used as a reason to evade tax laws.
The exchange of notes is not a grant of tax exemption. Be that as it may, Mitsubishi may still recover from NPC based on the loan agreement and Contract, but not from the CIR. There are constitutional provisions that prohibit the grant of tax exemption under such Exchange of Notes and only treaties can grant tax exemption.
The Philippines and Japan agreed that a loan will be given to the former to contruct the Calaca II project under the condition that the Philippines will assume all fiscal levies or taxes imposed in the Philippines on Japanese firms and nationals working or dealing with said project.
The project was implemented by the Overseas Economic Cooperation Fund (OECF). Pursuant to Calaca II, NPC entered into a contract with Mitsubishi Corporation.
Mitsubishi filed and paid its ITR. However, claiming that the income tax for the OECF-funded portion of the Calaca II project should not have been paid, Mitsubishi sought for a refund.
The CTA held that Mitsubishi erroneously paid its income and branch profit remittance taxes and was entitled to a proper claim for refund under the Tax Code. The CIR disagreed.
RULING
The Court ruled in favor of Mitsubishi.
There was an erroneous payment of the subject taxes by Mitsubishi for the reason that said taxes are to be assumed by the Government of the Philippines through its executing agency, the NPC. Granted, Judge Castaneda, in his dissenting opinion, noted that international comity should not be used as a reason to evade tax laws.
The exchange of notes is not a grant of tax exemption. Be that as it may, Mitsubishi may still recover from NPC based on the loan agreement and Contract, but not from the CIR. There are constitutional provisions that prohibit the grant of tax exemption under such Exchange of Notes and only treaties can grant tax exemption.
Tuesday, June 2, 2020
[CASE DIGEST] HILADO v. COMMISSION ON INTERNAL REVENUE (100 Phil. 288)
FACTS
Pursuant to General Circular No. V-123 issued by the Collector of Internal Revenue, petitioner Hilado claimed P12,837.65 as a deductible item from his gross income upon filing his income tax return for the year 1951.
This circular, however, was revoked by the Secretary of Finance who considered it as a wrong interpretation of the National Internal Revenue Code.
As a consequence, Hilado's deductible claim was disallowed and he was ordered to pay the sum of P3,546 as deficiency income tax. Hilado argued that the Secretary of Finance acted beyond his authority in revoking the aforesaid circular for two reasons: (a) first, only the courts can declare an existing interpretative statute as invalid; and (b) the new circular overturning General Circular No. V-123 was prejudicial to Hilado, who had already acquired a vested right under the old one. In addition, Hilado argued that he cannot be made to pay income tax during the war years because internal revenue laws were unenforceable at the time.
RULING
For the CIR and CTA.
The Secretary of Finance is vested with authority to revoke, repeal or abrogate the acts or previous rulings of his predecessor in office because the construction of a statute by those administering it is not binding on their successors if thereafter the latter become satisfied that a different construction should be given.
Granted, General Circular No. V-123, having been issued on a wrong construction of the law, cannot give rise to a vested right that can be invoked by a taxpayer because a vested right cannot spring from a wrong interpretation.
More importantly, it cannot be said that tax laws were unenforceable during the war years. This is because our internal revenue laws are not political in nature and as such were continued in force during the period of enemy occupation and in effect were actually enforced by the occupation government. Such tax laws are deemed to be the laws of the occupied territory and not of the occupying enemy. Law, once established, continues until changed by some competent legislative power, not merely by change of sovereignty.
Pursuant to General Circular No. V-123 issued by the Collector of Internal Revenue, petitioner Hilado claimed P12,837.65 as a deductible item from his gross income upon filing his income tax return for the year 1951.
This circular, however, was revoked by the Secretary of Finance who considered it as a wrong interpretation of the National Internal Revenue Code.
As a consequence, Hilado's deductible claim was disallowed and he was ordered to pay the sum of P3,546 as deficiency income tax. Hilado argued that the Secretary of Finance acted beyond his authority in revoking the aforesaid circular for two reasons: (a) first, only the courts can declare an existing interpretative statute as invalid; and (b) the new circular overturning General Circular No. V-123 was prejudicial to Hilado, who had already acquired a vested right under the old one. In addition, Hilado argued that he cannot be made to pay income tax during the war years because internal revenue laws were unenforceable at the time.
RULING
For the CIR and CTA.
The Secretary of Finance is vested with authority to revoke, repeal or abrogate the acts or previous rulings of his predecessor in office because the construction of a statute by those administering it is not binding on their successors if thereafter the latter become satisfied that a different construction should be given.
Granted, General Circular No. V-123, having been issued on a wrong construction of the law, cannot give rise to a vested right that can be invoked by a taxpayer because a vested right cannot spring from a wrong interpretation.
More importantly, it cannot be said that tax laws were unenforceable during the war years. This is because our internal revenue laws are not political in nature and as such were continued in force during the period of enemy occupation and in effect were actually enforced by the occupation government. Such tax laws are deemed to be the laws of the occupied territory and not of the occupying enemy. Law, once established, continues until changed by some competent legislative power, not merely by change of sovereignty.
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