sic itur ad astra

  Taxation  |  Purposes of Taxation Facts:   Seagate Technology is registered with the Philippine Export Zone Authority (PEZA) under Presidential Decree No. 66, as amended, to engage in the manufacture of recording components primarily used in computers for export.  Also a VAT-registered entity, it filed VAT returns for the period 1 April 1998 to 30 June 1999.  On 4 October 1999, it filed an administrative claim for refund of VAT input taxes in the amount of P28,369,226.38 representing the value of the taxes of the capital goods and services it had purchased.  Commissioner of Internal Revenue (CIR) :  Failed to act upon the claim. Court of Tax Appeals (CTA): Granted the claim for refund. Court of Appeals:  Affirmed the grant of refund in the reduced amount. Issue:  Whether  respondent is entitled to the refund or issuance of Tax Credit Certificate in the amount of P12,122,922.66 representing alleged unutilized input VAT paid on c...

Taxation  |  Purposes of Taxation Facts:   The Oil Price Stabilization Fund (OPSF) was created to reimburse oil companies for cost increases due to exchange rate adjustments and world market price increases. Caltex Philippines, Inc. (CPI) . claimed reimbursements from the OPSF. The Commission on Audit (COA)  directed Caltex to remit its collection to the OPSF. Pending such remittance, all of its claims for reimbursement from the OPSF shall be held in abeyance.  The grant total of its unremitted collections of the above tax is P1,287,668,820. COA prohibited Caltex from further offsetting remittances and reimbursements for the current and ensuing years.  Issues:  Whether the amounts due from Caltex to the OPSF may be offset against Caltex’s outstanding claims from said funds.  NO Whether the OPSF contributions are not for a public purpose because they go to a special fund of the government.  NO Held: V. The last issue to be resolved in this cas...

Taxation  |  Purposes of Taxation Facts:   Philippine Airlines, Inc.   is a Philippine corporation engaged in the air transportation business with a franchise exempting it from "all taxes of any kind" except a 2% gross revenue tax. Since 1956 , PAL has not been paying motor vehicle registration fees. In 1971 ,   Land Transportation Commissioner Romeo F. Elevate, pursuant to Section 8, Republic Act No. 4136, otherwise known as the Land Transportation and Traffic Code, issued a regulation requiring all tax exempt entities, among them PAL to pay motor vehicle registration fees. Despite PAL's protestations, the appellee refused to register the appellant's motor vehicles unless the amounts impose were paid.  PAL paid, under protest, the amount of P19,529.75 as registration fees of its motor vehicles. After paying, PAL through counsel, wrote a letter dated May 19,1971, to Commissioner Romeo F. Edu demanding a refund of the amounts paid, invoking the rulin...

Taxation  |  Purposes of Taxation Facts:   Manila Race Horses Trainers Association, Inc. filed for declaratory relief alleging that their rights as owners of boarding stables for race horses were affected by Ordinance No. 3065 of the City of Manila approved on July 1, 1947 . SECTION 1. License. — No person shall own, keep, maintain, or conduct any boarding stable, or place where race horse are kept, fed, or boarded for others, for compensation or hire, and/or for race horse stable privately owned not for hire, without first having obtained a permit from the Mayor and license therefor from the City Treasurer They made the Mayor of Manila, Manuel de la Fuente , defendant and prayed that said ordinance be declared invalid as violative of the Philippine Constitution. Issue:  Whether  Ordinance No. 3065 of the City of Manila, which imposes a license fee on boarding stables for race horses, in question is unconstitutional. NO Held: We do not share plaintiff's ...

Taxation  |  Purposes of Taxation ,  Constitutional Limitation: Equal Protection of the Laws Facts:   Valentine Tio , doing business under the name and style of OMI Enterprises, filed a petition assailing the constitutionality of Presidential Decree No. 1987 establishing the Videogram Regulatory Board (VRB) to regulate and supervise the videogram industry. The decree imposed a 30% tax on the sale, lease, or disposition of videograms. Issues:  Whether the tax imposed is harsh, confiscatory, oppressive and/or in unlawful restraint of trade in violation of the due process clause of the Constitution.  NO Whether there is over regulation of the video industry as if it were a nuisance, which it is not. NO Held: 1. Petitioner also submits that the thirty percent (30%) tax imposed is harsh and oppressive, confiscatory, and in restraint of trade. However, it is beyond serious question that a tax does not cease to be valid merely because it regulates, discourage...

Taxation  |  Purposes of Taxation Facts:   In 1996 , Central Luzon Drug Corporation , operated six drugstores under the name "Mercury Drug" In compliance with Republic Act No. 7432, respondent granted a 20% sales discount to qualified senior citizens on their medicine purchases totaling ₱904,769.00. Respondent filed its Annual Income Tax Return for 1996, declaring net losses. Respondent filed a claim for tax refund/credit for the amount granted as sales discount to senior citizens. Commissioner of Internal Revenue:  Dismissed respondent’s Petition for lack of merit.  Court of Tax Appeals (CTA):  Initially dismissed the petition but later granted respondent's motion for reconsideration, ordering petitioner to issue a Tax Credit Certificate. Court of Appeals:  Affirmed in toto the Resolution of the CTA. Issue:  Whethe r respondent, despite incurring a net loss, may still claim the 20 percent sales discount as a tax credit.   YES Held: The 20 p...

Taxation  | Basis of Taxation Constitutional Limitation: Due Process of Law   Facts:   Antero M. Sison, Jr. ,  a taxpayer, challenges Batas Pambansa Blg. 135, which imposes higher income tax rates on individuals deriving income from businesses or professions ("taxable net income") compared to those earning fixed income or salaries ("taxable compensation income"). The assailed provision further amends Section 21 of the National Internal Revenue Code of 1977, which provides for rates of tax on citizens or residents on: taxable compensation income, taxable net income royalties, prizes, and other winnings interest from bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements dividends and share of individual partner in the net profits of taxable partnership  adjusted gross income. Issue:  Whether the above section is arbitrary amounting to class legislation, oppressive and capricious in ch...

Taxation  | Basis of Taxation Facts:   Commissioner of Internal Revenue sent Philippine Health Care Providers, Inc. a formal demand letter and the corresponding assessment notices demanding the payment of deficiency taxes, including surcharges and interest, for the taxable years 1996 and 1997 in the total amount of ₱224,702,641.18. The deficiency [documentary stamp tax (DST)] assessment was imposed on petitioner’s health care agreement with the members of its health care program pursuant to Section 185 of the 1997 Tax Code . Petitioner filed a petition for review in the Court of Tax Appeals (CTA) seeking the cancellation of the deficiency VAT and DST assessments. Petitioner claims that the assessed DST to date which amounts to ₱376 million is way beyond its net worth of ₱259 million. Court of Tax Appeals (CTA):  Cancelled the DST assessment, ruling PHCPI's agreements are not insurance contracts. Court of Appeals (CA):  Reversed the CTA decision, holding PHC...

Taxation  |  Aspects, Processes, Phases of Taxation Facts:   Commonwealth Act No. 567 (Sugar Adjustment Act) was promulgated in 1940 , due to the threat to industry by the imminent imposition of export taxes upon sugar as provided in the Tydings-McDuffie Act , and the “eventual loss of its preferential position in the United States market.”  Walter Lutz , in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jaym Ledesma , seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the estate as taxes, under section 3 of the Commonwealth Act No. 567, for the crop years 1948–1949 . He alleges that such tax is unconstitutional and void, being levied for the aid and support of the sugar industry exclusively, which in plaintiff’s opinion is not a public purpose for which a tax may be constitutionally levied. Issue:  Whether the Commonwealth Act No. 567 is unconstitutional. NO Held: The basic defect in the plaintiff's ...

Taxation  | Basis of Taxation Facts:   Republic of the Philippines , alleged that the Pedro B. Patanao  failed to file accurate income tax returns for the years 1951-1955, resulting in a deficiency in income taxes and additional residence taxes amounting to P79,892.75. Despite demands, Patanao refused to pay the assessed taxes, which were deemed final, executory, and demandable. Patanao filed a motion to dismiss the complaint citing that: the action was barred by prior judgment due to his acquittal in criminal cases related to non-filing and non-payment of income taxes for 1953 and 1954; and that the action has prescribed. CFI-Agusan:  Dismissed the complaint regarding taxes for years 1951, 1953, and 1954, but allowed for further proceedings regarding taxes for 1955 and residence taxes for 1953-1955. Issue: Whether the present action is barred by prior judgment.  Held: In applying the principle underlying the civil liability of an offender under the Penal...

Taxation  | Basis of Taxation Facts:   On October 4, 1932 ,  Pablo Lorenzo , as trustee of Thomas Hanley 's estate, filed an action against Juan Posadas, Jr. , the Collector of Internal Revenue. On May 27, 1922 , Thomas Hanley died leaving a will that directed the management and eventual disposition of his estate, primarily for the benefit of his nephew, Matthew Hanley. The Court of First Instance of Zamboanga appointed a trustee, Moore, to administer the real properties destined for Matthew Hanley. On February 29, 1932, Moore resigned, and Lorenzo replaced him as trustee. During Lorenzo's tenure, the Collector of Internal Revenue assessed an inheritance tax of P2,052.74 on Hanley's estate, which Lorenzo paid under protest on September 15, 1932. Lorenzo sought a refund of P2,052.74, along with 6% interest from September 15, 1932. Posadas, Jr. countered with a claim for P1,191.27  interest on the tax, not included in the original assessment. Court of First I...