Lucena D. Demaala vs. Commission on Audit, G.R. No.

199752, February 17, 2015

Facts:

The petitioner, Lucena D. Demaala, contested the Commission on Audit’s decisions that held her liable for the deficiency in
special education fund collections.

The controversy arose from the collection of the special education fund at a reduced rate of 0.5% instead of the statutory 1%.

Issues:

Was the petitioner personally liable for the deficiency in special education fund collections?

Could the local government enact an ordinance providing for a lower rate than the statutory 1%?

Ruling of the Supreme Court:

The Supreme Court ruled in favor of the petitioner.

It emphasized the importance of local fiscal autonomy and the power of local government units to create their own revenue
sources.

The Court held that the rate of 1% in the statute was a maximum rate, and it was within the power of the local government to
enact an ordinance providing for a lower rate.

Therefore, the petitioner was not personally liable for the deficiency in collections.

______

Tridharma Marketing Corp. v. Court of Tax Appeals, GR 215950, June 20, 2016

Facts:

The petitioner, Tridharma Marketing Corporation, received a Preliminary Assessment Notice (PAN) from the Bureau of Internal
Revenue (BIR) assessing it with various deficiency taxes, including income tax (IT), value-added tax (VAT), withholding tax on
compensation (WTC), expanded withholding tax (EWT), and documentary stamp tax (DST)1.

A significant portion of the deficiency income tax and VAT arose from the complete disallowance by the BIR of the petitioner’s
purchases from Etheria Trading in 2010, amounting to ₱4,942,937,053.822.

Issues:

Was the petitioner personally liable for the deficiency taxes assessed against it?

Could the Court of Tax Appeals (CTA) require the petitioner to post a surety bond despite the supposedly patent illegality of the
assessment that exceeded the petitioner’s net worth?3

Ruling of the Supreme Court:

The Court held that the CTA gravely abused its discretion by fixing the bond amount without conducting a preliminary hearing.

The CTA may suspend tax collection if the taxpayer either deposits the amount claimed or files a surety bond for not more than
double the amount4.

The case was remanded to the CTA to determine whether the bond required under Section 11 of Republic Act No. 1125 may be
dispensed with or reduced to restrain the collection of the deficiency taxes assessed against the petitioner.

______

Sison, Jr. v. Ancheta, GR L-59431. July 25, 1984

Facts of the case:

Antero Sison Jr., a taxpayer, filed a suit against the government of the Philippines.

He argued that Batas Pambansa Blg. 135, which amended Section 21 of the National Internal Revenue Code of 1977, was
unconstitutional because it imposed higher rates of tax on his income arising from the exercise of his profession than on fixed
income or salaried individual taxpayers.

He argued that the provision violated the equal protection and due process clauses of the Constitution, as well as the rule
requiring uniformity in taxation.

Issues of the case:

Petitioner argues that the law is arbitrary and violates due process, equal protection, and the rule of uniformity in taxation.

Respondents argue that the law is a valid exercise of the state's power to tax.

Ruling of the Court:

The Court dismissed the petition, finding that Batas Pambansa Blg. 135, Section I, which amends Section 21 of the National
Internal Revenue Code of 1977, is not unconstitutional.

The Court reasoned that the petitioner failed to show that the provision is arbitrary and that the challenged classification
between compensation and taxable net income of professionals and businessman is reasonable.

_____

Commissioner of lnternal Revenue v. Algue, Inc., GR L-28896. Feb. 17, 1988

Facts:

Algue Inc., a corporation engaged in engineering, construction and other allied activities, received a letter from the
Commissioner of Internal Revenue assessing it in the total amount of P83,183.85 as delinquency income taxes for the years 1958
and 1959.

Algue Inc. filed a letter of protest, but the Commissioner of Internal Revenue issued a warrant of distraint and levy.

Algue Inc. then filed a petition for review with the Court of Tax Appeals.

The Court of Tax Appeals found that the P75,000.00 deduction claimed by Algue Inc. was an ordinary and necessary business
expense.

Issues:

Whether the appeal of Algue Inc. from the decision of the Commissioner of Internal Revenue was filed on time and in
accordance with law; and

Whether the P75,000.00 deduction claimed by Algue Inc. was properly disallowed.

Ruling of the Court:

The Court held that the appeal was filed on time and that the deduction was properly allowed.

_____

La Suerte Cigar & Cigareje Factory v. CA, GR 165499, Nov. 11, 2014

Facts:

The case involves the taxability of stemmed leaf tobacco imported and locally purchased by cigarette manufacturers for use as
raw material in the manufacture of cigarettes.

Several petitions for review were consolidated involving three cigarette manufacturers (La Suerte, Fortune, and Sterling) and the
Commissioner of Internal Revenue.

The cases revolve around the interpretation of tax provisions under the National Internal Revenue Code of 1997 related to the
specific tax on tobacco products, particularly stemmed leaf tobacco.

The transactions of the cigarette manufacturers include local purchases, importations, and sales of stemmed leaf tobacco during
specific periods.

The examination by the Bureau of Internal Revenue led to assessments of deficiency excise tax on the importation and local
purchase of stemmed leaf tobacco by La Suerte, which were contested by the company.

The Court of Tax Appeals initially ruled in favor of La Suerte, canceling the tax assessment, but the Court of Appeals reversed this
decision, ordering La Suerte to pay the deficiency specific tax.

Issues:

1. Whether the sale of stemmed leaf tobacco between cigarette manufacturers is subject to excise tax.

2. Interpretation of relevant tax provisions governing the taxability of stemmed leaf tobacco.

3. Application of specific tax laws and regulations to transactions involving stemmed leaf tobacco by cigarette manufacturers.
4. Compliance with tax regulations and exemptions related to the sale and transfer of stemmed leaf tobacco.

Ruling:

The Court of Appeals ruled against La Suerte, finding that the transfer of stemmed leaf tobacco between cigarette manufacturers
is subject to excise tax. The Court held that Revenue Regulations No. V-39 limits the tax exemption on transfers of stemmed leaf
tobacco to transfers between specific permit holders. La Suerte's motion for reconsideration was denied, leading to the filing of a
petition for review seeking to reverse the Court of Appeals' decision and cancel the tax assessment by the Commissioner. La
Suerte contested the interpretation of tax provisions and regulations governing the taxability of stemmed leaf tobacco in their
transactions.

____

Purisima v. Lazatin, GR 210588. Nov. 29, 2016

Facts:

The case involves the validity of Revenue Regulation (RR) No. 2-2012, which requires the payment of value-added tax (VAT) and
excise tax on the importation of petroleum and petroleum products into Freeport and economic zones (FEZs).

Representative Carmelo F. Lazatin filed a petition to annul and set aside RR 2-2012, arguing that it contravenes Republic Act No.
9400 (RA 9400), which treats the Clark Special Economic Zone and Clark Freeport Zone (Clark FEZ) as a separate customs territory
with tax and duty-free importations.

Ecozone Plastic Enterprises Corporation (EPEC), a Clark FEZ locator, also intervened in the proceedings, claiming that RR 2-2012
adversely affects its tax-exempt status.

Issues:

Whether respondents Lazatin and EPEC have legal standing to bring the action of declaratory relief.

Whether RR 2-2012 is valid and constitutional.

Ruling:

The Supreme Court held that both Lazatin and EPEC have legal standing to challenge the validity of RR 2-2012.

RR 2-2012 was declared unconstitutional because it illegally imposed taxes on FEZ enterprises, which, by law, enjoy tax-exempt
status. It also effectively amended the law (RA 7227, as amended by RA 9400) and encroached upon the legislative authority
reserved exclusively for Congress.

______

Gulf Air Company, Philippine Branch (GF) v. Commissioner of Internal Revenue, GR 182045. Sep. 19, 2012

Facts:

Gulf Air Company Philippine Branch (GF) availed the Voluntary Assessment Program of the Bureau of Internal Revenue (BIR) for
its 1999 and 2000 taxes.

GF made a claim for refund of percentage taxes but was issued a Preliminary Assessment Notice for deficiency tax.

Despite protests and petitions, the BIR demanded payment of the deficiency tax assessment.

The Court of Tax Appeals (CTA) upheld the BIR's decision based on Revenue Regulations No. 6-66.

GF elevated the case to the CTA En Banc, which affirmed the decision.

GF questioned the interpretation of "gross receipts" under Section 118(A) of the National Internal Revenue Code (NIRC).

Issue:

The main issue was whether the definition of "gross receipts" for computing the 3% Percentage Tax under Section 118(A) of the
NIRC should include special commissions on passengers and cargo based on rates approved by the Civil Aeronautics Board (CAB).

Ruling:

The Supreme Court denied GF's petition, upholding Revenue Regulations No. 6-66 as the applicable rule during the taxable
period.

The Court emphasized that tax refunds are construed strictly against taxpayers and liberally in favor of the State.
The Court affirmed the decision of the CTA, noting its expertise in tax matters and respecting its findings unless there is a grave
abuse of discretion.

In conclusion, the petition was denied, and the decisions of the Court of Tax Appeals were affirmed.

____

City of Manila v. Colet, GR 124855, Dec. 10, 2014

Facts:

1. The case involves the constitutionality and validity of Section 21(B) of the Manila Revenue Code of the City of Manila, as
amended by Ordinance No. 7807.

2. The Manila Revenue Code was enacted in 1993, imposing a business tax on various businesses, including transportation
contractors and common carriers.

3. Several corporations challenged the imposition of this tax and filed petitions before the Regional Trial Court (RTC) of Manila.

4. The RTC issued decisions in favor of some petitioners, declaring Section 21(B) invalid or null and void.

5. The City of Manila, Mayor Lim, and City Treasurer Acevedo appealed these decisions to the Supreme Court.

Issues:

1. The main issue is the constitutionality and validity of Section 21(B) of the Manila Revenue Code.

2. Specific issues include whether the tax imposed is reasonable, just, fair, oppressive, confiscatory, or contrary to the
Constitution or statute.

3. The petitioners also questioned whether the City of Manila had the inherent power of taxation and whether the ordinance
exceeded its taxing power.

Ruling:

1. The Regional Trial Court upheld the power of the City of Manila to levy the business tax under Section 21(B) of the Manila
Revenue Code.

2. The Supreme Court received multiple petitions from various corporations challenging the RTC's decisions.

3. The Supreme Court dismissed some petitions due to non-compliance with legal fees but considered others.

4. The Supreme Court was asked to determine if the ordinance was valid and constitutional, with various corporations arguing
against its legality.

5. The case involves a significant legal debate over the scope of local government taxation powers and the constitutionality of the
tax imposed under Section 21(B) of the Manila Revenue Code.