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1. PBCOM V CIR
FACTS:
Petitioner, Philippine Bank of Communications (PBCom), a
commercial banking corporation duly organized under Philippine
laws, filed its quarterly income tax returns for the first and second
quarters of 1985, reported profits, and paid the total income tax of
P5,016,954.00 by applying PBCom's tax credit memos for
P3,401,701.00 and P1,615,253.00, respectively. Subsequently,
however, PBCom suffered net loss of P25,317,228.00, thereby
showing no income tax liability in its Annual Income Tax Returns for
the year-ended December 31, 1985. For the succeeding year,
ending December 31, 1986, the petitioner likewise reported a net
loss of P14,129,602.00, and thus declared no tax payable for the
year.
But during these two years, PBCom earned rental income from
leased properties. The lessees withheld and remitted to the BIR
withholding creditable taxes of P282,795.50 in 1985 and
P234,077.69 in 1986. On August 7, 1987, petitioner requested the
Commissioner of Internal Revenue, among others, for a tax credit of
P5,016,954.00 representing the overpayment of taxes in the first
and second quarters of 1985.
Thereafter, on July 25, 1988, petitioner filed a claim for refund of
creditable taxes withheld by their lessees from property rentals in
1985 for P282,795.50 and in 1986 for P234,077.69.
Pending the investigation of the respondent Commissioner of
Internal Revenue, petitioner instituted a Petition for Review on
November 18, 1988 before the Court of Tax Appeals (CTA). The
petition was docketed as CTA Case No. 4309 entitled: "Philippine
Bank of Communications vs. Commissioner of Internal Revenue."
The CTA decided in favor of the BIR on the ground that the Petition
was filed out of time as the same was filed beyond the two-year
reglementary period. A motion for Reconsideration was denied and
the appeal to Court of Appeals was likewise denied. Thus, this
appeal to Supreme Court.
Issues:

a) Whether or not Revenue Regulations No. 7-85 which alters the

reglementary period from two (2) years to ten (10) years is valid.
b) Whether or not the petition for tax refund had already
prescribed.
Ruling:
RR 7-85 altering the 2-year prescriptive period imposed by law to
10-year prescriptive period is invalid.
Administrative issuances are merely interpretations and not
expansions of the provisions of law, thus, in case of inconsistency,
the law prevails over them. Administrative agencies have no
legislative power.
When the Acting Commissioner of Internal Revenue issued RMC 785,
changing the prescriptive period of two years to ten years on
claims of excess quarterly income tax payments, such circular
created a clear inconsistency with the provision of Sec. 230 of 1977
NIRC. In so doing, the BIR did not simply interpret the law; rather it
legislated guidelines contrary to the statute passed by Congress.
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. It is widely
accepted that the interpretation placed upon a statute by the
executive officers, whose duty is to enforce it, is entitled to great
respect by the courts. Nevertheless, such interpretation is not
conclusive and will be ignored if judicially found to be erroneous.
Thus, courts will not countenance administrative issuances that
override, instead of remaining consistent and in harmony with, the
law they seek to apply and implement.
Further, fundamental is the rule that the State cannot be put in
estoppel by the mistakes or errors of its officials or agents. As
pointed out by the respondent courts, the nullification of RMC No.
7-85 issued by the Acting Commissioner of Internal Revenue is an
administrative interpretation which is not in harmony with Sec. 230

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of 1977 NIRC, for being contrary to the express provision of a
statute. Hence, his interpretation could not be given weight for to
do so would, in effect, amend the statute.
By implication of the above, claim for refund had already
prescribed.
Since the petition had been filed beyond the prescriptive period,
the same has already prescribed. The fact that the final adjusted
return show an excess tax credit does not automatically entitle
taxpayer claim for refund without any express intent.
WHEREFORE, the petition is hereby DENIED. The decision of the
Court of Appeals appealed from is AFFIRMED, with COSTS against
the petitioner.
2. CIR V REYES
Taxation Contents of a Formal Assessment Notice
In 1993, Maria Tancino died leaving behind an estate worth P32
million. In 1997, a tax audit was conducted on the estate.
Meanwhile, the National Internal Revenue Code (NIRC) of 1997 was
passed. Eventually in 1998, the estate was issued a final
assessment notice (FAN) demanding the estate to pay P14.9
million in taxes inclusive of surcharge and interest; the estates
liability was based on Section 229 of the [old] Tax Code. Azucena
Reyes, one of the heirs, protested the FAN. The Commissioner of
Internal Revenue (CIR) nevertheless issued a warrant of distraint
and/or levy. Reyes again protested the warrant but in March 1999,
she offered a compromise and was willing to pay P1 million in
taxes. Her offer was denied. She continued to work on another
compromise but was eventually denied. The case reached the Court
of Tax Appeals where Reyes was also denied. In the Court of
Appeals, Reyes received a favorable judgment.
ISSUE: Whether or not the formal assessment notice is valid.
HELD: No. The NIRC of 1997 was already in effect when the FAN
was issued. Under Section 228 of the NIRC, taxpayers shall be
informed in writing of the law and the facts on which the
assessment is made: otherwise, the assessment shall be void. In

the case at bar, the FAN merely stated the amount of liability to be
shouldered by the estate and the law upon which such liability is
based. However, the estate was not informed in writing of the facts
on which the assessment of estate taxes had been made. The
estate was merely informed of the findings of the CIR. Section 228
of the NIRC being remedial in nature can be applied retroactively
even though the tax investigation was conducted prior to the laws
passage. Consequently, the invalid FAN cannot be a basis of a
compromise, any proceeding emanating from the invalid FAN is
void including the issuance of the warrant of distraint and/or levy.
3. CITY OF MANILA V COCA COLA
FACTS:
Respondent paid the local business tax only as a manufacturers as
it was expressly exempted from the business tax under a different
section and which applied to businesses subject to excise, VAT or
percentage tax under the Tax Code. The City of Manila
subsequently amended the ordinance by deleting the provision
exempting businesses under the latter section if they have already
paid taxes under a different section in the ordinance. This
amending ordinance was later declared by the Supreme Court null
and void. Respondent then filed a protest on the ground of double
taxation. RTC decided in favor of Respondent and the decision was
received by Petitioner on April 20, 2007. On May 4, 2007, Petitioner
filed with the CTA a Motion for Extension of Time to File Petition for
Review asking for a 15-day extension or until May 20, 2007 within
which to file its Petition. A second Motion for Extension was filed on
May 18, 2007, this time asking for a 10-day extension to file the
Petition. Petitioner finally filed the Petition on May 30, 2007 even if
the CTA had earlier issued a resolution dismissing the case for
failure to timely file the Petition.
ISSUES:
(1) Has Petitioners the right to appeal with the CTA lapsed?
(2) Does the enforcement of the latter section of the tax ordinance
constitute double taxation?
HELD:

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(1) NO. Petitioner complied with the reglementary period for filing
the petition. From April 20, 2007, Petitioner had 30 days, or until
May 20, 2007, within which to file their Petition for Review with the
CTA. The Motion for Extension filed by the petitioners on May 18,
2007, prior to the lapse of the 30-day period on 20 May 2007, in
which they prayed for another extended period of 10 days, or until
30 May 2007, to file their Petition for Review was, in reality, only
the first Motion for Extension of petitioners. Thus, when Petitioner
filed their Petition via registered mail their Petition for Review on 30
May 2007, they were able to comply with the period for filing such
a petition.
(2) YES. There is indeed double taxation if respondent is subjected
to the taxes under both Sections 14 and 21 of the tax ordinance
since these are being imposed: (1) on the same subject matter
the privilege of doing business in the City of Manila; (2) for the
same purpose to make persons conducting business within the
City of Manila contribute to city revenues; (3) by the same taxing
authority petitioner City of Manila; (4) within the same taxing
jurisdiction within the territorial jurisdiction of the City of Manila;
(5) for the same taxing periods per calendar year; and (6) of the
same kind or character a local business tax imposed on gross
sales or receipts of the business.
4. VILLANUEVA V ILOILO
Facts: On September 30, 1946 the municipal board of Iloilo City
enacted Ordinance 86. The Supreme Court, however, declared the
ordinance ultra vires. On January 15, 1960 the municipal board of
Iloilo City, believing that with the passage of Republic Act 2264,
otherwise known as the Local Autonomy Act, it had acquired the
authority or power to enact an ordinance similar to that previously
declared by the Supreme Court as ultra vires, enacted Ordinance
11 (eleven), series of 1960, imposing municipal license tax on
persons engaged in the business of operating tenement houses.
In Iloilo City, the appellees Eusebio Villanueva and Remedios S.
Villanueva are owners of five tenement houses, aggregately
containing 43 apartments, while the other appellees and the same
Remedios S. Villanueva are owners of ten apartments. By virtue of
the ordinance in question, the appellant City collected from

spouses Eusebio Villanueva and Remedios S. Villanueva, for the

years 1960-1964, the sum of P5,824.30, and from the appellees Pio
Sian Melliza, Teresita S. Topacio, and Remedios S. Villanueva, for
the years 1960-1964, the sum of P1,317.00.
On July 11, 1962 and April 24, 1964, the plaintiffs-appellees filed a
complaint, and an amended complaint, respectively, against the
City of Iloilo, praying that Ordinance 11, series of 1960, be declared
"invalid for being beyond the powers of the Municipal Council of the
City of Iloilo to enact, and unconstitutional for being violative of the
rule as to uniformity of taxation and for depriving said plaintiffs of
the equal protection clause of the Constitution," and that the City
be ordered to refund the amounts collected from them under the
said ordinance. The lower court rendered judgment declaring the
ordinance illegal.
Issues:
(1) Whether or not the City of Iloilo is empowered by the Local
Autonomy Act to impose tenement taxes.
(2) Whether or not Ordinance 11, series of 1960, does violate the
rule of uniformity of taxation.
Held:
(1) Yes. The lower court has interchangeably denominated the tax
in question as a tenement tax or an apartment tax. Called by either
name, it is not among the exceptions listed in Section 2 of the Local
Autonomy Act. The imposition by the ordinance of a license tax on
persons engaged in the business of operating tenement houses
finds authority in Section 2 of the Local Autonomy Act which
provides that chartered cities have the authority to impose
municipal license taxes or fees upon persons engaged in any
occupation or business, or exercising privileges within their
respective territories, and "otherwise to levy for public purposes,
just and uniform taxes, licenses, or fees."
(2) No. The ordinance is not violative of the rule of uniformity in
taxation. The Supreme Court has already ruled that tenement
houses constitute a distinct class of property. It has likewise ruled
that "taxes are uniform and equal when imposed upon all property
of the same class or character within the taxing authority." The
fact, therefore, that the owners of other classes of buildings in the

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City of Iloilo do not pay the taxes imposed by the ordinance in
question is no argument at all against uniformity and equality of
the tax imposition. Neither is the rule of equality and uniformity
violated by the fact that tenement taxes are not imposed in other
cities, for the same rule does not require that taxes for the same
purpose should be imposed in different territorial subdivisions at
the same time. So long as the burden of the tax falls equally and
impartially on all owners or operators of tenement houses similarly
classified or situated, equality and uniformity of taxation is
accomplished.
Hence, the judgment of the lower court is reversed. The ordinance
in question is valid.
5. COMPANIA GENERAL V CITY OF MANILA
Facts:
Compania General de Tabacos de Filipinas (Tabacalera) paid the
City of Manila the fixed license feesprescribed by Ordinance 3358
for the years 1954 to 1957. In 1954, City Ordinance 3634 and 3816
werepassed; where the term general merchandise found therein
included all articles in Sections 123 to 148 of theTax Code (thus,
also liquor under Sedctions 133 to 135). The Tabacalera paid its
wholesalers and retailerstaxes. In 1954, the City Treasurer
addressed a letter to an accounting firm, expressing the view that
liquordealers paying the annual wholesale and retail fixed tax under
Ordinance 3358 are not subject to thewholesale aand retail
deaklers taxes prescribed by City Ordinances 3634, 3301, and
3816. The Tabacalera,upon learning of said stopped including
quarterly sworn declaratons required by the latter ordinances, and
in1957, demanded refunde of the alleged overpayment. The claim
was disallowed.
Issue:
Whether there is a distinction between Ordinance 3358 and
Ordinances 3634, 3301 and 3816, toprevent refund to the
company.
Held:

Generally, the term tax applies to all kinds of exactions which

become public funds. Legally,however, a license fee is a legal
concept quite distinct from tax: the former is imposed in the
exercise ofpolice power for purposes of regulation, while the latter
is imposed under the taxing power for the purpose ofraising
revenues. Ordinance 3358 prescribes municipal license fees for the
privilege to engage in the businessof selling liquor or alcohol
beverages; considering that the sale of intoxicating liquor is
(potentially) harmfulto public health and morals, and must be
subject to supervision or regulation by the State and by cities
andmunicipalities authorized to act in the premises. On the other
hand, Ordinances 3634 , 3301 and 3816imposed taxes on the sales
of general merchandise, wholesale or retail, and are revenue
measures enacted bythe Municipal Board of Manila.Both a license
fee and a tax may be imposed on the same business or occupation,
or for selling the samearticle, without it being in violation of the
rule against double taxation. The contrary view of the Treasurer
inits letter is of no consequence as the government is not bound by
the errors or mistakes committed by itsofficers, specially on
matters of law.The company, thus, is not entitled to refund.
6. COMMI V SC JOHNSON
Facts: Respondent is a domestic corporation organized and
operating under the Philippine Laws, entered into a licensed
agreement with the SC Johnson and Son, USA, a non-resident
foreign corporation based in the USA pursuant to which the
respondent was granted the right to use the trademark, patents
and technology owned by the later including the right to
manufacture, package and distribute the products covered by the
Agreement and secure assistance in management, marketing and
production from SC Johnson and Son USA.
For the use of trademark or technology, respondent was obliged to
pay SC Johnson and Son, USA royalties based on a percentage of
net sales and subjected the same to 25% withholding tax on royalty
payments which respondent paid for the period covering July 1992
to May 1993 in the total amount of P1,603,443.00.
On October 29, 1993, respondent filed with the International Tax
Affairs Division (ITAD) of the BIR a claim for refund of overpaid

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withholding tax on royalties arguing that, the antecedent facts
attending respondents case fall squarely within the same
circumstances under which said MacGeorge and Gillette rulings
were issued. Since the agreement was approved by the Technology
Transfer Board, the preferential tax rate of 10% should apply to the
respondent. So, royalties paid by the respondent to SC Johnson and
Son, USA is only subject to 10% withholding tax.
The Commissioner did not act on said claim for refund. Private
respondent SC Johnson & Son, Inc. then filed a petition for review
before the CTA, to claim a refund of the overpaid withholding tax on
royalty payments from July 1992 to May 1993.
On May 7, 1996, the CTA rendered its decision in favor of SC
Johnson and ordered the CIR to issue a tax credit certificate in the
amount of P163,266.00 representing overpaid withholding tax on
royalty payments beginning July 1992 to May 1993.
The CIR thus filed a petition for review with the CA which rendered
the decision subject of this appeal on November 7, 1996 finding no
merit in the petition and affirming in toto the CTA ruling.
Issue: Whether or not tax refunds are considered as tax
exemptions.
Held: It bears stress that tax refunds are in the nature of tax
exemptions. As such they are registered as in derogation of
sovereign authority and to be construed strictissimi juris against
the person or entity claiming the exemption. The burden of proof is
upon him who claims the exemption in his favor and he must be
able to justify his claim by the clearest grant of organic or statute
law. Private respondent is claiming for a refund of the alleged
overpayment of tax on royalties; however there is nothing on
record to support a claim that the tax on royalties under the RP-US
Treaty is paid under similar circumstances as the tax on royalties
under the RP-West Germany Tax Treaty.

7. COMMI V ESTATE OF TODA

.FACTS:
Cibeles Insurance Corporation (CIC) authorized Benigno P. Toda, Jr.,
President and owner of 99.991% of its issued andoutstanding
capital stock, to sell the Cibeles Building and the two parcels of
land on which the building stands for an amount of not lessthan
P90 million. Toda purportedly sold the property to Rafael A.
Altonaga, who, in turn, sold the same property on the same day
toRoyal Match Inc. (RMI). For the sale of the property to RMI,
Altonaga paid capital gains tax in the amount of P10 million.CIC
filed itscorporate annual income tax return for the year 1989,
declaring, among other things, its gain from the sale of real
property in theamount of P75,728.021. Toda then sold his entire
shares of stocks in CIC to Le Hun T. Choa, as evidenced by a Deed
of Sale of Shares of Stocks. Three and a half years later Toda
died.The Bureau of Internal Revenue (BIR) sent an assessment
notice and demand letter to the CIC for deficiency income tax for
theyear 1989.The new CIC asked for a reconsideration, asserting
that the assessment should be directed against the old CIC, and not
againstthe new CIC, which is owned by an entirely different set of
stockholders; moreover, Toda had undertaken to hold the buyer of
hisstockholdings and the CIC free from all tax liabilities for the fiscal
years 1987-1989. The Estate of Benigno P. Toda, Jr., represented
byspecial co-administrators Lorna Kapunan and Mario Luza
Bautista, received a Notice of Assessment from the Commissioner
of InternalRevenue for deficiency income tax for the year 1989.The
Estate thereafter filed a letter of protest. The Commissioner
dismissed the protest, stating that a fraudulent scheme
wasdeliberately perpetuated by the CIC wholly owned and
controlled by Toda by covering up the additional gain of P100
million, whichresulted in the change in the income structure of the
proceeds of the sale of the two parcels of land and the building
thereon to anindividual capital gains, thus evading the higher
corporate income tax rate of 35%.The Estate filed a petition for
review with the CTA alleging that the Commissioner erred in holding
the Estate liable for income taxdeficiency.In its decision, the CTA
held that the Commissioner failed to prove that CIC committed
fraud to deprive the government of thetaxes due it. It ruled that
even assuming that a pre-conceived scheme was adopted by CIC,
the same constituted mere tax avoidance,and not tax evasion.

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Hence, the CTA declared that the Estate is not liable for deficiency
income tax and, accordingly, cancelled and setaside the
assessment issued by the Commissioner. Court of Appeals affirmed
the decision of the CTA.

himself personally liable therefor. Respondent estate

cannot,therefore, deny liability for CICs deficiency income tax for
the year 1989 by invoking the separate corporate personality of
CIC, since itsobligation arose from Todas contractual undertaking,
as contained in the

ISSUE:
WON respondent Estate is liable for the 1989 deficiency income tax
of Cibeles Insurance Corporation.

Deed of Sale of Shares of Stock.

HELD: Yes. A corporation has a juridical personality distinct and

separate from the persons owning or composing it. Thus, the
owners or stockholders of a corporation may not generally be made
to answer for the liabilities of a corporation and vice versa. There
are,however, certain instances in which personal liability may arise.
It has been held in a number of cases that personal liability of
acorporate director, trustee, or officer along, albeit not necessarily,
with the corporation may validly attach when:1. He assents to the
(a) patently unlawful act of the corporation, (b) bad faith or gross
negligence in directing its affairs, or (c) conflict of interest, resulting
in damages to the corporation, its stockholders, or other persons;2.
He consents to the issuance of watered down stocks or, having
knowledge thereof, does not forthwith file with thecorporate
secretary his written objection thereto;3. He agrees to hold himself
personally and solidarily liable with the corporation; or 4. He is
made, by specific provision of law, to personally answer for his
corporate action.
[] It is worth noting that when the late Toda sold his shares of
stock to Le Hun T. Choa, he knowingly and voluntarily held himself
personally liable for all the tax liabilities of CIC and the buyer for
the years 1987, 1988, and 1989. Paragraph g of the Deed of Sale of
Shares of Stocks specifically provides:xxx
SELLER undertakes and agrees to hold the BUYER and Cibeles free
from any and all income tax liabilities of Cibeles for the fiscal years
1987, 1988 and 1989.
When the late Toda undertook and agreed to hold the BUYER and
Cibeles free from any all income tax liabilities of Cibeles for the
fiscal years 1987, 1988, and 1989, he thereby voluntarily held

The decision of the Court of Appeals is reversed and respondent

Estate of Benigno P. Toda Jr. was ordered topay P79,099,999.22 as
deficiency income tax of Cibeles Insurance Corporation for the year
1989
8. REP V GONZALES
Facts
:Defendant-appellant, Blas Gonzales is a private concessionaire in
the US military Base at Clark Field,Angeles City, who is engaged in
the manufacture of furniture and, per agreement with base
authorities, suppliedthem with his manufactured articles.The BIR
discovered that for the years 1946-47, appellant have undeclared
income for the two yearscausing deficiency in its tax dues. Despite
the demand of the BIR to pay its tax due, appellant failed to do so.
Indefense, appellant claim that as a concessionaire in an American
Air Base, he is not subject to Philippine Tax lawspursuant to the USPhil. Military Bases Agreement.
Issue: Is appellant is exempt from taxes?
Ruling:
No. A Filipino concessionaire in an American Air Base is subject to
Philippine Income Tax laws under theUS-Phil Military Bases
Agreement. Non in the provisions of the agreement shields a
concessionaire, like theappellant, from the payment of the income
tax. For one thing, even the exemption in favor of members of the
US armed forces and nationals of the US does not include income
derived from Philippine sources.
9. PEREZ V CTA
10.COLLECTOR V UST

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11.P V JUDGE CASTANEDA
12.RP V MARTIN
13.COMMI V FIREMANS FUND
Facts:
From January, 1952 to 1958, private respondent Fireman's Fund
Insurance Co. entered into variousinsurance contracts involving
casualty, fire and marine risks, for which the corresponding
insurance policies were issued. From January, 1952 to 1956,
documentary stamps were bought and affixed to themonthly
statements of policies issues; and from 1957 to 1958 documentary
stamps were bought andaffixed to the corresponding pages of the
policy register, instead of on the insurance policies issued.In 1959,
respondent company discovered that its monthly statements of
business and policy register werelost and reported such to the NBI
and the CIR. The CIR through its examiner, after conducting
aninvestigation of said loss, ascertained that respondent company
failed to affix the required documentarystamps to the insurance
policies issued by it and failed to preserve its accounting records
within the time prescribed by Sec. of the Revenue Code by using
loose leaf forms as registers of documentary stampswithout written
authority from the CIR. As a consequence of these findings,
petitioner assessed anddemanded from petitioner the payment of
documentary stamp taxes for the years 1952 to 1958 in the

totalamount of P 79,806.87 and plus compromise penalties, a total

of P 81,406.87.
Issue: WON the CIR may impose and require the payment of the
subject stamp tax for the documents inquestion.
Ruling:
NO. There is no justification for the government which has already
realized the revenue which is theobject of the imposition of subject
stamp tax, to require the payment of the same tax for the
samedocuments. Enshrined in our basic legal principles is the time
honored doctrine that no person shallunjustly enrich himself at the
expense of another. It goes without saying that the government is
notexempted from the application of this doctrine.While there
appears to be no question that the purpose of imposing
documentary stamp taxes is to raiserevenue, however, the
corresponding amount has already been paid by respondent and
has actually become part of the revenue of the government. In the
same manner, evidence was shown to prove that theaffixture of the
stamps on documents not authorized by law is not attended by bad
faith as the practicewas adopted from the authority granted to one
of respondent's general agents.

14. CIR V CA