taxation case digests 2

8/12/2019 Taxation Case Digests 2

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TAXATION

Commissioner vs. Algue

158 SCRA 9

Facts:

The Philippine Sugar Estate Development Company (PSEDC). Appointed Algue Inc.as its agent. Algue received a commission of 125,000.00 and it was from their commission thatit paid organizers of VOICP 75,000.00 in proportional fees. He received an assessment fromthe CIR. He filed a letter of protest or reconsideration. The CIR contends that the claimeddeduction was properly disallowed because it was not an ordinary, reasonable or necessaryexpense.

Issue: Is the CIR correct?

Ruling:

No. taxes are the lifeblood of the government and should be collected withoutunnecessary hindrance. Every person who is able to pay must contribute his share in the runningof the government. The government for its part is expected to respond in the form of tangibleand intangible benefits intended to improve the lives of the people and enhance their moral andmaterial values. This symbiotic relationship is the rationale of taxation and should dispel theerroneous notion that is an arbitrary method of exaction by those in the seat of power.

On the other hand, such collection should be made in accordance with law as anyarbitrariness will negate the very reason for government itself.

Sison vs. Ancheta

GR L- 59431 June 25, 1984

Facts:

BP 135 was enacted. Sison, as a taxpayer alleged that Sison is thereof undulydiscriminated against him by the imposition of higher rate upon his income as a professional, thatit amounts to class legislation, and that it transgresses against the equal protection and due


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process clauses of the 1987 Constitution as well as the rule requiring the uniformity in taxation.

Issue: is the contention meritorious?

Ruling:

No. it is manifest that the field of state activity has assumed a much wider scope. Thereason was clearly set forth by justice Makalintal, thus: the areas which need to be left with

private enterprise and initiative and which the government was called upon to enter optionally,and only because it was better equipped to administer for the public welfare than any individualor groups and individual continue to lose their well-defined boundaries and to be absorbed withinthe activities that the government must undertake in the sovereign capacity if it is to meet theincreasing social challenges of the times. Hence, there is a need for more revenues. The power totax, on inherent prerogative, has to be reconciled to assure the performance of vital state

functions. It is the source of public funds. Taxes, being the lifeblood of the government, their prompt and certain availability is of the essence.

Marcos II vs. CA

273 SCRA 47 1997

Facts:

Ferdinand Marcos II assailed the decision of the CA declaring the deficiency incometax assessments upon the estate and the properties of his late father final despite the pendency ofthe probate proceedings of the will of the late president. On the other hand, the BIR argued thatthe state authority to collect taxes is paramount.

Issue: is the approval of the court mandatory requirement in the collection of taxes?

Ruling:

No. the enforcement of tax laws and collection of taxes are of paramount importancefor the sustenance of government. Taxes are the lifeblood of the government and should becollected without unnecessary hindrance. However, such collection should be made inaccordance with law as any arbitrariness will negate the very reason for government itself. It istherefore necessary to reconcile the apparently conflicting interest of the authorities and thetaxpayers so that the real purpose of taxation, which is the promotion of the common good, may

be achieved.


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to the questioned assessment, which bears a trace of falsity. Indeed, the petitioner's attack on theassessment bears mainly on the alleged improbable and unconscionable amount of the taxescharged. But mere rhetoric cannot supply the basis for the charge of impropriety of the assessmentsmade. )

Lorenzo vs. Posadas

64 Phil 353

Facts:

Thomas Hanley died in Zamboanga, leaving a will which provided among others thatthe property given to Matthew Henley will belong to him only after 10 years after Thomas death.Consequently, the CIR assessed inheritance tax against the estate. Lorenzo, the trustee of theestate paid the assessments on protest. He contended that the inheritance tax should have beenafter 10 years.

Issue: is the contention meritorious?

Ruling:

No. the only benefit on which the taxpayer is entitled is that derived from theenjoyment of the privileges of living in an organized society established and safeguarded by the

devotion of taxes to the public purpose. The government promised nothing to the person taxed beyond what maybe anticipated from administration of the laws for the general good.

Taxes are essential for the existence of the government. The obligation to pay taxesrest not upon the privileges enjoyed by or the protection afforded to the citizen by thegovernment, but upon the necessity of money fort the support of the estate. For this reason, noone is allowed to object or resist payment of taxes solely because no personal benefit to him can

be pointed out as arising from the tax.

Philex Mining vs. CIR

GR 125704, August 28, 1998

Facts:

Philex Mining Corporation assails the decision of the court of appeals which affirmedthe decision of the court of tax appeals ordering philex to pay its excise tax liability philex


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refused to pay and contended it has pending claims for vat input credit or refund against thegovernment which should be made compensate or set-off its tax liability.

Issue: can tax be subject for set-off?

Ruling:

No. tax cannot be the subject for compensation for simple reason that the governmentand the tax payer are not mutual creditors and debtors of each other. Debts are due in thegovernment in its corporate capacity while taxes are due to the government in its sovereigncapacity. A tax payer cannot refuse to pay his taxes when they fall due simply because he has aclaim against the government that the collection of the tax is contingent on the result of the lawsuit it filed against the government.

Francia vs. IAC

162 SCRA 753

FACTS:

Francia was the registered owner of a house and lot in Pasay City. A portion of said property was expropriated by the republic. It appeared that Francia did not pay his real estatetaxes from 1963 to 1977. He contended that his tax delinquency had been extinguished by legalcompensation since the government owed him 4,116 when a portion of his land was

expropriated.

ISSUE: can there be off-setting of debts and taxes?

RULING:

No. there can be no off-setting of taxes original the claims against the claims that thetaxpayer may have against the government. Taxes cannot be the subject of compensation. Thegovernment and the taxpayer are not mutually creditor and debtors of each other and a claim foreach other and a claim for taxes is not such a debt demand, contract or judgement as is allowedto be set-off. Furthermore, the tax was due to the city government. While the expropriationeffected by the national government. In fact, the expropriation payment was already depositedwith the PNB long before the sale at public auction of his property was conducted.

taxation case digests 2

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