FACTS:
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al.,
filed a petition for prohibition on May 27, 2005 questioning the
constitutionality of Sections 4, 5 and 6 of R.A. No. 9337, amending Sections
106, 107 and 108, respectively, of the National Internal Revenue Code (NIRC).
Section 4 imposes a 10% VAT on sale of goods and properties, Section 5
imposes a 10% VAT on importation of goods, and Section 6 imposes a 10%
VAT on sale of services and use or lease of properties. These questioned
provisions contain a uniformp ro v is o authorizing the President, upon
recommendation of the Secretary of Finance, to raise the VAT rate to 12%,
effective January 1, 2006, after specified conditions have been satisfied.
Petitioners argue that the law is unconstitutional.
ISSUES:
3. Whether or not there is a violation of the due process and equal protection
under Article III Sec. 1 of the Constitution.
RULING:
1. Since there is no question that the revenue bill exclusively originated in the
House of Representatives, the Senate was acting within its constitutional
power to introduce amendments to the House bill when it included provisions
in Senate Bill No. 1950 amending corporate income taxes, percentage, and
excise and franchise taxes.
3. The power of the State to make reasonable and natural classifications for
the purposes of taxation has long been established. Whether it relates to the
subject of taxation, the kind of property, the rates to be levied, or the
amounts to be raised, the methods of assessment, valuation and collection,
the States power is entitled to presumption of validity. As a rule, the judiciary
will not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness.
Facts:
Issue:
Is the contention meritorious?
Ruling:
Facts:
Petitioner seeks declaration of unconstitutionality of RA7496 (also known as
Simplified Net Income Taxation) due to violation of the following constitutional
provision:
Article VI, Section 26(1) Every bill passed by the Congress shall embrace
only one subject which shall be expressed in the title thereof.
Article VI, Section 28(1) The rule of taxation shall be uniform and
equitable. The Congress shall evolve a progressive system of taxation.
The petitioner stressed that it violates the equal protection clause as it only
imposed taxes upon one who practice his profession and not to those who are
engaged to single proprietorship.
Article III, Section 1 No person shall be deprived of . . . property without
due process of law, nor shall any person be denied the equal protection of the
laws.
Issue:
Whether or not RA 7496 violates the aforestated provision of the constitution
Held:
The SC ruled in the negative. The said law is not arbitrary; it is germane to
the purpose of the law and; applies to all things of equal conditions and of
same class.
It is neither violative of equal protection clause due to the existence of
substantial difference between one who practice his profession alone and one
who is engaged to proprietorship. Further, the SC said that RA 7496 is just an
amendatory provision of the code of taxpayers where it classifies taxpayers
in to four main groups: Individuals, Corporations, Estate under Judicial
Settlement and Irrevocable Trust. The court would have appreciated the
contention of the petitioner if RA 7496 was an independent law. But since it is
attached to a law that has already classified taxpayers, there is no violation
of equal protection clause.
CALTEX PHILIPPINES VS CA
G.R. 925585 MAY 8, 1992
FACTS:
In 1989, COA sent a letter to Caltex directing it to remit to OPSF its collection
of the additional tax on petroleum authorized under PD 1956 and pending
such remittance, all of its claims from the OPSF shall be held in abeyance.
ISSUE:
Whether or not petitioner can avail of the right to offset any amount that it
may be required under the law to remit to the OPSF against any amount that
it may receive by way of reimbursement.
RULING:
It is a settled rule 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
debtors and creditors of each other and a claim for taxes is not such a debt,
demand, contract or judgment as is allowed to be set-off.
The oil companies merely acted as agents for the government in the latters
collection since taxes are passed unto the end-users, the consuming public.
FACTS:
The petitioner contends that the claimed deduction of P75, 000.00 was
properly disallowed because it was not an ordinary reasonable or necessary
business expense. The Court of Tax Appeals had seen it differently. Agreeing
with Algue, it held that the said amount had been legitimately paid by the
private respondent for actual services rendered. The payment was in the
form of promotional fees.
ISSUE:
Whether or not the Collector of Internal Revenue correctly disallowed the P75,
000.00 deduction claimed by private respondent Algue as legitimate business
expenses in its income tax returns.
RULING:
The Supreme Court agrees with the respondent court that the amount of the
promotional fees was not excessive. The amount of P75,000.00 was 60% of
the total commission. This was a reasonable proportion, considering that it
was the payees who did practically everything, from the formation of the
Vegetable Oil Investment Corporation to the actual purchase by it of the
Sugar Estate properties.
It is said that taxes are what we pay for civilization society. Without taxes, the
government would be paralyzed for lack of the motive power to activate and
operate it. Hence, despite the natural reluctance to surrender part of one's
hard earned income to the taxing authorities, every person who is able to
must contribute his share in the running of the government.
The appellate court reasoned that respondent had availed itself only of the
fiscal incentives under Executive Order No. (EO) 226 (otherwise known as the
Omnibus Investment Code of 1987), not of those under both Presidential
Decree No. (PD) 66, as amended, and Section 24 of RA 7916. Respondent
was, therefore, considered exempt only from the payment of income tax
when it opted for the income tax holiday in lieu of the 5 percent preferential
tax on gross income earned. As a VAT-registered entity, though, it was still
subject to the payment of other national internal revenue taxes, like the VAT.
Moreover, the CA held that neither Section 109 of the Tax Code nor Sections
4.106-1 and 4.103-1 of RR 7-95 were applicable. Having paid the input VAT
on the capital goods it purchased, respondent correctly filed the
administrative and judicial claims for its refund within the two-year
prescriptive period. Such payments were -- to the extent of the refundable
value -- duly supported by VAT invoices or official receipts, and were not yet
offset against any output VAT liability.
Hence this Petition.
Sole Issue
Petitioner submits this sole issue for our consideration:
Whether or not 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 capital goods purchased for the period April 1, 1998 to June
30, 1999.
The Courts Ruling
The Petition is unmeritorious.