Topic Case Title Facts Issues SC Ruling

Scope and Mandanas, et al. v. The petitioners in these consolidated cases challenge the Whether Section 284 of the Section 284 has effectively deprived the LGUs
Limitations of Executive Secretary, et way the just share in the national taxes of the local LGC is unconstitutional for from deriving their just share from other national
Taxation al., GR Nos. 199802 and government units (LGUs) has been computed being repugnant to Section taxes, like the customs duties.
208488, 3 July 2018; MR: 6, Article X of the 1987
10 April 2019 that certain collections of NIRTs by the Bureau of Customs Constitution to the effect That the exclusion of other national taxes like
(BOC) - specifically: excise taxes, value added taxes that the LGUs shall have a customs duties from the base for determining the
(VATs) and documentary stamp taxes (DSTs) - have not just share in the national just share of the LGUs contravened the express
been included in the base amounts for the computation of taxes. constitutional edict in Section 6, Article X the 1987
the IRA; that the basis to compute the just share of the Constitution.
LGU shall be of ALL NATIONAL TAXES. Congress cannot disobey the express mandate of
Section 6, Article X of the 1987 Constitution for
Insertion of the word INTERNAL REVENUE found in Sec the just share of the LGUs to be derived from the
284 of the LGC caused the diminution of just share of the national taxes.
LGU and should be declared unconstitutional.
Therefore, the SC DECLARES the phrase
"internal revenue" appearing in Section 284 of
Republic Act No. 7160 (Local Government Code)
UNCONSTITUTIONAL, and DELETES the
phrase from Section 284.
Basis of the Just Share
1. National tax
2. Imposed by the national gov
3.

Tax vs. Other Chevron Philippines, Inc. Petitioner assailed the validity of the issued policy Whether the imposition of The subject royalty fee as imposed primarily for
Forms of vs. BCDA, G.R. No. guidelines by the Clark Development Corporation imposing royalty fee is an exercise of regulatory purposes and not for generation of
Exactions 173863, 15 September royalty fee on the movement of petroleum fuel to and from police power or a power of income on profits on the ground that it vitally
2010 the Clark Special Economic Zone. The petitioner argued taxation? affects the general welfare ( there was a reasonable
that the CDC has no power to impose the royalty fee on relation between the high volume of fuel brought into the
the basis purely income generating functions and such zone and the greater extent of supervision and inspection
imposition is a form of revenue generating purposes which needed to monitor the fuel.). As cited in the case of Gerochi
amounts to imposition of tax. vs Department of energy the Supreme Court stated:
The conservative and pivotal distinction between
these two (2) powers rests in the purpose for
which the charge is made. If generation of
 revenue is the primary purpose and regulation is
merely incidental, the imposition is a tax; but if
regulation is the primary purpose, the fact that
revenue is incidentally raised does not make the
imposition a tax.

Angeles University Petitioner is an educational institution converted into a non- (1) whether petitioner is While it is true that the petitioner is among of
Foundation vs. Angeles stock, nonprofit educational foundation under RA 6095. exempt from the payment those enumerated that is exempted from payment
City, G.R. No. 189999, of building permit and of all taxes imposed by the government on all
27 June 2012 Petitioner protested the imposition of building permit and related fees imposed under income derive from real property, exclusively
other fees in relation to its application of permit for the the National Building Code; used for educational activities, however, they
construction of 11 storey building for its main campus. and (2) whether the parcel cannot claim exemption from imposition of A
of land owned by petitioner BUILDING PERMIT FEE as these are not taxes
Petitioner claimed that it is exempted from the payment which has been assessed but a REGULATORY FEES imposed by a city for
granted to them pursuant to RA 6055, which exempts NS- for real property tax is... building or repairing a structure. This is imposed
NP from payment of tax. likewise exempt. to see if the applicant satisfies and conforms with
the approved standard required by the LGU. Such
charges on property are not impositions from
which the petitioner is exempted. (The test is the
purpose: If the purpose is merely for regulation
and revenue is only incidental , it is not a tax)

While on the issue that the real property is also

exempted from payment of tax, the petitioner
failed to prove that it is actually, directly and
exclusively used for educational purposes.
Construction and CIR vs. Puregold Duty Puregold is an enterprise engaged in the sale of various Whether or not Puregold Puregold Duty Free, Inc. (Puregold) is entitled to,
Interpretation Free, Inc. G.R. No. consumer goods located within Clark Special Economic Duty Free is liable for and properly availed of, the tax amnesty under
202789, June 22, 2015 Zone (CSEZ), and registered with Clark Development" deficiency taxes. Republic Act No. (RA) 9399[1] and so is no longer
Corporation (CDC) entitled to incentives granted by law. liable for deficiency value-added tax (VAT) and
excise tax for its importation of distilled spirits,
CIR issued an assessment notice regarding deficiency wines, and cigarettes from January 1998 to May
taxes by PG. 2004.

Puregold requested for the cancellation of the assessment The government, through the enactment of RA
issued by CIR on the ground that it availed of the tax 9399, has expressed its intention to waive its right
amnesty pursuant to RA 9399 which relieves them from tax to collect taxes.
liability arising from non-payment of taxes.
Applying the principle of expressio unio est
expulsio alterius which means that the express
 mention of one person, thing, act, or
consequence excludes all others, Puregold Duty
Free is entitled and has properly availed of the tax
amnesty.

Doctrines in CIR vs. Solidbank Petitioner claims that although the 20% FWT on Whether or not the 20% Yes. The amount of interest income withheld in
Taxation Corporation, GR No. respondent’s interest income was not actually received by final withholding tax on [a] payment of the 20% FWT forms part of the gross
148191, 25 Nov. 2003; respondent because it was remitted directly to the bank’s interest income receipts in computing for GRT on banks. Although
government, the fact that the amount redounded to the forms part of the taxable the 20% FWT on respondent’s interest was not
bank’s benefit makes it part of the taxable gross receipts in gross receipts in computing actually received by respondent because it was
computing the 5% GRT. the 5% gross receipts tax. remitted directly to the government, the fact that
the amount redounded to the bank’s benefit
makes it part of the taxable gross receipts in
computing the 5% GRT. There can be no double
taxation as the 2 taxes are different, the one
being a business tax not subject to WHT while the
other is an income tax subject to WHT.
Swedish Match This is a case filed by the petitioner for Refund of Taxes. In Whether or not both RULING:
Philippines, Inc. vs. its letter to the City of Manila Treasurer, the petitioner sections of the Manila
Manila, GR NO. 181277, claimed double taxation when it paid business taxes under Revenue Code constitute Yes, there is double taxation.
3 July 2013 Sections 14 and 21 of Ordinance No. 7794 which is the double taxation
Manila Revenue Code.  The respondent contends that both The ELEMENTS OF DOUBLE TAXATION ARE:
sections refer to two distinct objects of tax, hence they are
not the same in character and kind that will result in double The taxes are imposed on
taxation. The RTC, CTA division and CTA en banc denied 1. The same subject matter
the petition for a tax refund filed by the petitioner. 2. For the same purpose
3. By the same taxing authority
4. Within the same taxing jurisdiction
5. For the same taxing period
6. The same kind of character

While the petitioner is liable for the payment of

business taxes to the City of Manila, the fact that
it already paid under section 14 of the Manila
Revenue Code, it is already precluded from
paying the tax imposed under section 21 of the
same code.

As has been noted by the court, both sections are

imposed for the following:
 1. for the same subject matter, which is for doing
business in the City of Manila
2. for the same purpose, which his to contribute to
the city revenues
3. By the same taxing authority, which is the City
of Manila
4. Within the same taxing jurisdiction, which is the
territory of City of Manila
5. For the same taxing period, which is the same
calendar year when both taxes were paid
6. For the same kind of character, which is a local
business tax

Considering these nature of taxes paid by the

petitioner under both sections of the Code, the
court held that the petitioner is entitled to a tax
refund for the tax it paid under Section
Nursery Care
Corporation et al vs.
Acevedo, G.R. No.
180651, July 30, 2014
CIR v. S.C. Johnson and
Son, Inc., GR No.
127105, 25 June 2009
CBK Power Company
Limited vs. CIR, G.R.
Nos. 193383-84, January
14, 2015;
CIR vs. CBK Power
Company Limited, G.R.
Nos. 193407-08
CIR vs. Estate of Toda,
GR No. 147188, 14 Sept
2004)
Domingo vs. Carlitos (8
SCRA 443)
South African Airways vs.
CIR, GR No. 180356, 16
February 2010).
Air Canada vs. CIR, Air Canada is an offline air carrier  selling passage tickets in As an offline international No, because the 2.5% tax on Gross Philippine
January 11, 2016, G.R. the Philippines, through a general sales agent, Aerotel. As carrier selling passage Billings applies only to carriers maintaining flights
No. 169507 an off-line carrier, [Air Canada] does not have flights documents, is Air Canada to and from the Philippines. Air Canada's
originating from or coming to the Philippines [and does not] subject to 2.5% tax on appointment of a general sales agent, Aerotel,
operate any airplane [in] the Philippines[.] Gross Philippine Billings or here is only for the purpose of selling passage
to the regular 32% tax? documents. However, this is not the complete
Air Canada filed a claim for refund for more than 5 million answer since the treaty is the latter law that
pesos. It claims that there was overpayment, saying that prevails in this case.
the applicable tax rate against it is 2.5% under the law on
tax on Resident Foreign Corporations (RFCs) for Is Air Canada entitled to
international carriers. It argues that, as an  international the tax refund claimed at No, Air Canada is not entitled to refund. The
carrier doing business in the Philippines, it is not subject to more than 5 million pesos? P5,185,676.77 Gross Philippine Billings tax paid
tax at the regular rate of 32%. by petitioner was computed at the rate of 1 ½% of
its gross revenues amounting to
Air Canada also claims that it is not taxable because its P345,711,806.08149 from the third quarter of
income is taxable only in Canada because of the 2000 to the second quarter of 2002. It is quite
Philippines-Canada Treaty (treaty). According to it, even if apparent that the tax imposable under Section
taxable, the rate should not exceed 1.5% as stated in said 28(A)(l) of the 1997 National Internal Revenue
treaty. Code [32% of taxable income, that is, gross
income less deductions] will exceed the maximum
However, the CTA ruled that  Air Canada was engaged in ceiling of 1 ½% of gross revenues as decreed in
business in the Philippines through a local agent that sells Article VIII of the Republic of the Philippines-
airline tickets on its behalf. As such, it should be taxed as a Canada Tax Treaty. Hence, no refund is
resident foreign corporation at the regular rate of 32%. forthcoming.

The CTA also said that Air Canada cannot avail of the
lower tax rate under the treaty because it has a "permanent
establishment" in the Philippines. Hence, Air Canada
cannot avail of the tax exemption under the treaty.
CIR v. Toledo Power In 2003, TPC filed with the BIR a claim for refund for its 1. Whether the TPC’s administrative and the judicial claims
Company, G.R. No. utilized input vat for taxable year 2002 for sale of electricity administrative and were timely and validly filed.
196451, 2 December to the National Power Corporation (NPC), Cebu Electric the judicial claims
2015 Cooperative III (CEBECO), Atlas Consolidated Mining and for tax refund or Pursuant to the NIRC, a taxpayer has two (2)
Development Corporation (ACMDC), and Atlas Fertilizer credit were timely years from the close of the taxable quarter when
Corporation (AFC). and validly filed. the zero-rated sales were made within which to
file with the CIR an administrative claim for refund
In 2004, due to the inaction of the CIR, TPC filed with the 2. Whether the TPC or credit of unutilized input VAT attributable to
CTA a Petition for Review to the CTA. is entitled to the full such sales.
amount of its claim
The CIR argued that TPC is not entitled to a tax refund or for tax refund or Likewise, the CIR has 120 days from receipt of
credit on the ground that it failed to prove that it is a credit of its the complete documents within which to act on
generation company under EPIRA LAW. the administrative claim. Upon receipt of the
unutilized input decision, a taxpayer has 30 days within which to
VAT attributable to appeal the decision to the CTA. However, if the
INPUT VAT – the vat added to the price you pay for goods its sales of 120-day period expires without any decision from
or services (your purchases) electricity to the CIR, the taxpayer may appeal the inaction to
CEBECO, the CTA within 30 days from the expiration of the
OUTPUT VAT – the vat you charged to the consumers. ACMDC, and AFC. 120-day period. Compliance with the 120+30-day
(the vat you add) period is mandatory and jurisdictional.

To compute VAT DUE: In this case, TPC applied for a claim for refund or
credit of its unutilized input VAT for the taxable
OUTPUT VAT – INPUT VAT = TAX DUE year 2002 on December 22, 2003. Since the CIR
did not act on its application within the 120-day
SALES INVOICE – goods period, TPC appealed the inaction on April 22,
OFFICIAL RECEIPT – services 2004. Clearly, both the administrative and the
judicial claims were filed within the prescribed
ZERO-RATED GOOD – the government doesn’t tax its period provided in Section 112 of the NIRC.
sale but allows credit for the VAT paid on inputs.
Now, as to the validity of TPC's claim, there is no
VAT EXEMPT – the government doesn’t tax of the sale but question that TPC is entitled to a refund or credit
producers cannot claim credit for the VAT they pay on of its unutilized input VAT attributable to its zero-
inputs to produce it. rated sales of electricity to NPC for the taxable
year 2002 pursuant the NIRC.

2. TPC is not entitled to a refund or credit of

unutilized input VAT attributable to its sales of
electricity to CEBECO, ACMDC, and AFC.

To be entitled to a refund or credit of unutilized

input VAT attributable to the sale of electricity
under the EPIRA, a taxpayer must establish:

(1) that it is a generation company, and

(2) that it derived sales from power generation.

Under the EPIRA, all new generation companies

and existing generation facilities are required to
obtain a COC from the ERC. New generation
companies must show that they have complied
 with the requirements, standards, and guidelines
of the ERC before they can operate.

TPCs application for COC did not automatically

make them a generation company.There must be
a certification from ERC granting such application.

Petitions are hereby DENIED. Decisionof the CTA

En banc are AFFIRMED.

CS Garment, Inc., vs. Petitioner which is a domestic corporation registered with Whether the petitioner is Yes. Amnesty taxpayers may immediately enjoy
CIR, G.R. No. 182399. PEZA was required to pay its alleged deficiency vat, immune from paying the the privileges and immunities under the amnesty
March 12, 2014 income, DST and WT filed a Manifestation and Motion deficiency taxes upon filing law as soon as they fulfill the suspensive
stating that it had availed of the government tax amnesty of the application. condition imposed therein. Petitioner has
program entitling it to all the immunities and privileges complied with all the requirement set forth by law
under the law. therefore no further assessment by the BIR is
necessary. There is no rule which imposes a
The OSG however asserted that the filing of an application waiting period of one year before the applicant
for tax amnesty does not itself entitle petitioner to the can enjoy the benefits in the tax amnesty law. The
benefits of the law. The BIR must still assess whether the one year periof referred to in the law is the
applicant is eligible for these benefits and all the conditions prescriptive period within which third parties can
for the availment must be satisfied. question the SALN not the period which the BIR
can prevent taxpayers from enjoying the
immunities and privileges under the law.
TAXPAYER’S Remulla vs Maliksi, G.R. Petitioner Remulla, in his personal capacity as taxpayer whether or not the CA Remulla filed his petition for annulment of
SUIT No. 171633, Sept. 18, and as then Vice-Governor and, hence, Presiding Officer of properly denied Remulla’s judgment in two capacities: first, in his personal
2013 the Sangguniang Panlalawigan of the Province of petition for annulment of capacity as a taxpayer; and, second , in his
Cavite,24  filed a petition for annulment of judgment, arguing judgment due to his lack of official capacity as then presiding officer of the
that the subject compromise entered into by and between legal standing. Sangguniang Panlalawigan of the Province of
MALIKSI and TRECE MARTIREZ MAYOR which was Cavite.
approveed by RTC is grossly disadvantageous to the
government because: a taxpayer may be allowed to sue where there is
a claim that public funds are illegally disbursed or
(a) the agreed price for the subject property was excessive that public money is being deflected to any
as compared to its value at the time of taking in 1981; 26  improper purpose, or that public funds are wasted
through the enforcement of an invalid or
(b) the government stands to lose prime lots;27  and unconstitutional law or ordinance.

(c) it nullifies/amends the 1957 deed of donation. 28  In this case, public funds of the Province of Cavite
stand to be expended to enforce the compromise
judgment. As such, Remulla – being a resident-
taxpayer of the Province of Cavite – has the legal
standing to file the petition for annulment of
judgment and, therefore, the same should not
have been dismissed on said ground.

Notably, the fact that there lies no proof that

public funds have already been disbursed should
not preclude Remulla from assailing the validity of
the compromise judgment. Lest it be
misunderstood, the concept of legal standing is
ultimately a procedural technicality which may be
relaxed by the Court if the circumstances so
warrant. As observed in Mamba v. Lara, 35  the
Court did not hesitate to give standing to
taxpayers in cases36  where serious legal issues
were raised or where public expenditures of
millions of pesos were involved. Likewise, it has
also been ruled that a taxpayer need not be a
party to the contract in order to challenge its
validity,37 or to seek the annulment of the same
on the ground of extrinsic fraud. 38 Indeed, for as
long as taxes are involved, the people have a
right to question contracts entered into by the
government,39 as in this case.1âwphi1

Remulla equally lodged the petition for annulment

of judgment in his official capacity as then Vice-
Governor and Presiding Officer of the
Sangguniang Panlalawigan of the Province of
Cavite. As such, he represents the interests of the
province itself which is, undoubtedly, a real party
in interest since it stands to be either benefited or
injured40  by the execution of the compromise
 judgment.1âwphi1

For these reasons, the CA should not have

dismissed the petition for annulment of judgment
on account of Remulla’s lack of legal standing.
Consequently, the case should be remanded to
the said court for further proceedings.

Therefore, the petition is GRANTED.Ordering the

decision of the CA to be REVERSED and SET
ASIDE. The case is REINSTATED and
REMANDED to the Court of Appeals for further
proceedings.

SOF, et al vs. Lazatin The petition seeks the reversal of the decision declaring Whether respondents have Lazatin has legal standing as
Revenue Regulation issued by SOF without force and legal standing to file a legislator. According to Lazatin, a member of
effect based on the grounds that respondents have no petition for declaratory Congress has standing to challenge the validity of
legal standing when it filed a petition for prohibition and relief. an executive issuance if it tends to impair his
injunction to annul and set aside RR. prerogatives as a legislator.
Whether RR 2-2012 is valid
and constitutional. In  Biraogo v. The Philippine Truth
Commission,47  we ruled that legislators have the
legal standing to ensure that the prerogatives,
powers, and privileges vested by the Constitution
in their office remain inviolate. To this end,
members of Congress are allowed to question the
validity of any official action that infringes on their
prerogatives as legislators.48

Thus, members of Congress possess the legal

standing to question acts that amount to a
usurpation of the legislative power of
Congress.49 Legislative power is exclusively
vested in the Legislature. When the implementing
rules and regulations issued by the Executive
contradict or add to what Congress has provided
 by legislation, the issuance of these rules
amounts to an undue exercise of legislative power
and an encroachment of Congress' prerogatives.

EPEC has legal standing as a

Clark FEZ locator.

EPEC as a Clark FEZ locator, it will be directly

affected by the implementation of RR.

RR 2-2012 is invalid and unconstitutional.

On the merits of the case, we rule that RR 2-2012

is invalid and unconstitutional because: a) it
illegally imposes taxes upon FEZ enterprises,
which, by law, enjoy tax-exempt status, and b) it
effectively amends the law (i.e., RA 7227, as
amended by RA 9400) and thereby encroaches
upon the legislative authority reserved exclusively
by the Constitution for Congress.
ING bank vs CIR Petitioner filed a petition for review questioning the Whether the petitioner may Petitioner is qualified to avail of the tax amnesty.
decision of CTA Division saying that the petitioner is liable validly avail itself of the tax
for deficiency taxes. amnesty. Qualified taxpayers with pending tax cases may
still avail themselves of the tax amnesty program
The petitioner likewise filed a manifestation and motion under Tax Amnesty Act. The provision in BIR
while the case was pending before the court stating that it Revenue Memorandum excepting "[i]ssues and
availed of the tax amnesty program with respect to its cases which were ruled by any court (even
deficiency taxes. without finality) in favor of the BIR prior to
amnesty availment of the taxpayer" from the
benefits of the law is illegal, invalid, and null and
void.2  The duty to withhold the tax on
compensation arises upon its accrual.

Air Canada vs. CIR Air Canada is an offline air carrier  selling passage tickets in Can Air Canada validly No, it cannot. Even if Air Canada succeeds in
the Philippines, through a general sales agent, Aerotel. As refuse to pay its tax claiming tax refund, the general rule prevails that
an off-line carrier, [Air Canada] does not have flights deficiency on the ground there can be not setting off of taxes since the
originating from or coming to the Philippines [and does not] that there is a pending tax Government and the taxpayer are not creditors
 operate any airplane [in] the Philippines[.] credit proceeding it has and debtors of each other.
filed?
Air Canada filed a claim for refund for more than 5 million
pesos. It claims that there was overpayment, saying that
the applicable tax rate against it is 2.5% under the law on
tax on Resident Foreign Corporations (RFCs) for
international carriers. It argues that, as an  international Can Air Canada
carrier doing business in the Philippines, it is not subject to benefit from the
tax at the regular rate of 32%.
treaty's elimination
of double taxation in Air Canada cannot avail of the
Air Canada also claims that it is not taxable because its
income is taxable only in Canada because of the favor of Canada or elimination of double taxation in favor
Philippines-Canada Treaty (treaty). According to it, even if the preferential rate of Canada since the treaty expressly
taxable, the rate should not exceed 1.5% as stated in said
of 1.5%? excludes Canadian carriers with
treaty.
"permanent establishment." Through
However, the CTA ruled that  Air Canada was engaged in the appointment of Aerotel as its local
business in the Philippines through a local agent that sells sales agent, petitioner is deemed to
airline tickets on its behalf. As such, it should be taxed as a have created a "permanent
resident foreign corporation at the regular rate of 32%.
establishment" in the Philippines as
The CTA also said that Air Canada cannot avail of the defined under the Republic of the
lower tax rate under the treaty because it has a "permanent Philippines-Canada Tax Treaty.
establishment" in the Philippines. Hence, Air Canada
cannot avail of the tax exemption under the treaty.

Income Taxation BIR vs. First E-Bank First E-Bank filed a petition for declaratory relief seeking to Is RMC No. 65-2012 valid? RMC No. 65-2012 is invalid
Tower Condominium declare as invalid RMC No. 65-2012 imposing 12% VAT a) Is a condominium
Corporation and 32% income tax on association dues/membership fees corporation engaged in Collected purely for the benefit of condominium
and other charges collected by condominium corporation trade or business? b) Are owners for the maintenance of unit and its
from its members and tenants. associat10n dues, premises.
membership fees, and
First-ebank alleged that it was a NS-NF condominium other assessments/charges RMC No. 65-2012 is invalid for ordaining that
corporation that owned and possessed through its subject to income tax, "gross receipts of condominium corporations
members a condominium office. That the RMC burdened value-added tax, and including association dues, membership fees, and
the owners of the condominium units with income tax and withholding tax? other assessments/charges are subject to VAT,
VAT on their own money which they exclusively used for income tax and income payments made to it are
the maintenance and preservation of tf the building and its subject to applicable withholding taxes." A law will
premises, thus the RMC was oppressive and confiscatory not be construed as imposing a tax unless it does
because it required owners to produce additional amounts so clearly and expressly. In case of doubt, tax
to pay VAT and Income tax. laws must be construed strictly against the
government and in favor of the taxpayer. 63
Taxes, as burdens that must be endured by the
taxpayer, should not be presumed to go beyond
what the law expressly and clearly declares.

A Condominium corporation is no engaged in

trade or business.

none of these stated corporate purposes are

geared towards maintaining a livelihood or the
obtention of profit. Even though the Corporation is
empowered to levy assessments or dues from the
unit owners, these amounts collected are not
intended for the incurrence of profit by the
Corporation or its members, but to shoulder the
multitude of necessary expenses that arise from
the maintenance of the Condominium Project.

The contention of the BIR that the collection of

fees and dues are with end view of getting full
appreciative living values for the condominium
units and as a result, profit is obtained once these
units are sold at a highest prices, the court said
that any profit obtained by the sale of the units
accrues to the unit owner and not to the exercise
of the power of taxation constitutes a deprivation
of property under the due process clause, and the
taxpayer's right to due process is violated when
arbitrary or oppressive methods are used in
assessing and collecting taxes.

The fact that the Corporation did not fall within the
enumerated classes of taxable businesses under
either the Local Government Code or the Makati
Revenue Code already forewarns that a clear
demonstration is essential on the part of the City
Treasurer on why the Corporation should be
 taxed anyway. "Full appreciative living values" is
nothing but blather in search of meaning, and to
impose a tax hinged on that standard is both
arbitrary and oppressive. he corporation.

membership fees, assessment dues, and other

fees of similar nature only constitute contributions
to and/or replenishment of the funds for the
maintenance and operations of the facilities
offered by recreational clubs to their exclusive
members. They represent funds "held in trust" by
these clubs to defray their operating and general
costs and hence, only constitute infusion of
capital.

Gross Income Courage vs. CIR The petitioners in the present case assail the validity of Whether or not Sec. III of Yes. The assailed provisions of the RMO are valid
the provisions of RMO No. 23-2014, specifically the RMO is valid. and constitutional.
Secs. III and IV, for subjecting to withholding taxes
non-taxable allowances, bonuses and benefits received Under the NIRC of 1997, every form of
by government employees. The respondent, on the compensation for services, whether paid in
other hand, argues that RMO No. 23-2014 that cash or in kind, is generally subject to income
allowance, bonuses or benefits listed under Sec. III of tax and consequently to withholding tax. Sec
the assailed RMO are not fringe benefits within the 2.78 of RR No. 2-98 provides that
purview of the Tax Code, hence, it may not be withholding tax on compensation applies to
subjected to withholding tax. The Court issued a all employed individuals whether citizens or
Resolution directing the Fiscal Management and aliens, deriving income from compensation
Budget Office of the Court to maintain the status quo for services rendered in the Philippines. The
by the non-withholding of taxes from the benefits employer is constituted as the withholding
authorized to be granted to judiciary officials and agent. It further provides that the term
personnel until such time that a decision is rendered in employee covers all employees, including
the instant consolidated cases. Hence, the present officers and employees, whether elected or
petition. appointed, of the Government of the
Philippines, or any political subdivision
thereof or any agency or instrumentality while
 an employer embraces not only an individual
1. and an organization engaged in trade or
business, but also includes an organization
exempt from income tax, such as charitable
and religious organizations, clubs, social
organizations and societies, as well as the
Government of the Philippines, including its
agencies, instrumentalities, and political
subdivisions. The law is therefore clear that
withholding tax on compensation applies to
the Government of the Philippines, including
its agencies, instrumentalities, and political
subdivisions. The Government, as an
employer, is constituted as the withholding
agent, mandated to deduct, withhold and
remit the corresponding tax on compensation
income paid to all its employees.

However, not all income payments to

employees are subject to withholding tax.
These are the allowance, bonuses or benefits,
excluded by the NIRC. While Section III
enumerates certain allowances which may be
subject to withholding tax, it does not exclude
the possibility that these allowances may fall
under the exemptions identified under Section
IV, thus, the phrase, "subject to the
exemptions enumerated herein." In other
words, Sections III and IV articulate in a
general and broad language the provisions of
the NIRC on the forms of compensation
income deemed subject to withholding tax
and the allowances, bonuses and benefits
 exempted therefrom. Thus, Sections III and
IV cannot be said to have been issued
contrary with the provisions of the NIRC of
1997, as amended, and its implementing rules.

PLDT vs. CIR, GR No. PLDT is claiming for a tax credit or refund for the payment
157264, 31 January 2008 of separation pay to its employees in compliance to the
labor requirement. PLDT invoked, that as employer and
withholding agent, it deducted from the separation pay
withholding taxes which was remitted to the BIR. According
to the petitioner, the remitted amount was excluded from
gross income pursuant to sec 28 of the NIRC.
Jaime N. Soriano, et al On 17 June 2008, R.A. 9504 entitled “An Act 1) Whether or not the 1) Yes. R.A. 9504 as a piece of social
vs. SOF and CIR, GR Amending Sections 22, 24, 34, 35, 51, and 79 of increased personal and legislation clearly intended to afford
No. 184450, 24 January
2017
Republic Act No. 8424, as Amended, Otherwise additional exemptions immediate tax relief to individual taxpayers,
Known as the National Internal Revenue Code of provided by R.A. 9504 particularly low-income compensation
1997,” was approved and signed into law by President should be applied to the earners. Indeed, if R.A. 9504 was to take
Arroyo. On 24 September 2008, the Bureau of Internal entire taxable year 2008 effect beginning taxable year 2009 or half of
Revenue (BIR) issued RR 10-2008, dated 08 July the year 2008 only, then the intent of
2008, implementing the provisions of R.A. 9504. 2)Whether or not Congress to address the increase in the cost of
Sections 1 and 3 of RR living in 2008 would have been negated. In
Petitioners assail the subject RR as an unauthorized 10-2008 are consistent one case, the test is whether the new set of
departure from the legislative intent of R.A. 9504. The with the law in providing personal and additional exemptions was
regulation allegedly restricts the implementation of the that an MWE who available at the time of the filing of the
minimum wage earners’ (MWE) income tax receives other benefits in income tax return. In other words, while the
exemption only to the period starting from 6 July excess of the statutory status of the individual taxpayers is
2008, instead of applying the exemption to the entire limit of P30,00019 is no determined at the close of the taxable year,
year 2008. They further challenge the BIR’s adoption longer entitled to the their personal and additional exemptions –
of the prorated application of the new set of personal exemption provided by and consequently the computation of their
and additional exemptions for taxable year 2008. They R.A. 9504 taxable income – are reckoned when the tax
also contest the validity of the RR’s alleged becomes due, and not while the income is
imposition of a condition for the availment by MWEs being earned or received.
of the exemption provided by R.A. 9504. Supposedly,
in the event they receive other benefits in excess of In the present case, the increased exemptions
P30,000, they can no longer avail themselves of that were already available much earlier than the
exemption. Petitioners contend that the law provides required time of filing of the return on 15
for the unconditional exemption of MWEs from April 2009. R.A. 9504 came into law on 6
income tax and, thus, pray that the RR be nullified. July 2008, more than nine months before the
deadline for the filing of the income tax return
for taxable year 2008. Hence, individual
taxpayers were entitled to claim the increased
amounts for the entire year 2008. This was
true despite the fact that incomes were already
earned or received prior to the law’s
effectivity on 6 July 2008.

2) Yes. To be exempt, one must be an MWE,

a term that is clearly defined. Section 22(HH)
of Republic Act No. 8424 says he/she must be
one who is paid the statutory minimum wage
if he/she works in the private sector, or not
more than the statutory minimum wage in the
non-agricultural sector where he/she is
assigned, if he/she is a government employee.
R.A. 9504 is explicit as to the coverage of the
exemption: the wages that are not in excess of
the minimum wage as determined by the
wage boards, including the corresponding
holiday, overtime, night differential and
hazard pays. In other words, the law exempts
from income taxation the most basic
compensation an employee receives – the
amount afforded to the lowest paid employees
by the mandate of law. In a way, the
legislature grants to these lowest paid
employees additional income by no longer
demanding from them a contribution for the
operations of government.

An administrative agency may not enlarge,

alter or restrict a provision of law. The Court
is not persuaded that RR 10-2008 merely
clarifies the law. The treatment of bonuses
and other benefits that an employee receives
from the employer in excess of the P30,000
ceiling cannot but be the same as the
prevailing treatment prior to R.A. 9504 –
anything in excess of P30,000 is taxable; no
more, no less.

The treatment of this excess cannot operate to

disenfranchise the MWE from enjoying the
exemption explicitly granted by R.A. 9504.
Moreover, RR 10-2008 does not withdraw the
MWE exemption from those who are earning
other income outside of their employer
employee relationship. Section 2.78.1 (B) of
RR 10-2008 provides that: MWEs receiving
other income, such as income from the
conduct of trade, business, or practice of
profession, except income subject to final tax,
in addition to compensation income are not
exempted from income tax on their entire
income earned during the taxable year. This
rule, notwithstanding, the SMW, Holiday pay,
overtime pay, night shift differential pay and
hazard pay shall still be exempt from
 withholding tax.

In sum, the proper interpretation of R.A. 9504

is that it imposes taxes only on the taxable
income received in excess of the minimum
wage, but the MWEs will not lose their
exemption as such. Workers who receive the
statutory minimum wage their basic pay
remain MWEs. The receipt of any other
income during the year does not disqualify
them as MWEs. They remain MWEs, entitled
to exemption as such, but the taxable income
they receive other than as MWEs may be
subjected to appropriate taxes.

Republic vs. Bunsay, Who is liable to pay for It is the expropriating agency as part of the just
G.R. No. 205473, 10 CGT in case of compensation.
December 2019 expropriation?
CIR vs. Jerry Ocier, GR The taxpayer is liable to pay CGT for the sale,
No. 192023, 21 barter, exchange, or other disposition of shares of
November 2018 stock in a domestic corporation except if the sale
or disposition is through the stock exchange. For
this purpose, the term disposition includes any act
of disposing transferring or parting with, or
alienation of, or giving up of property to another
(loan).
Deductions from CIR vs. General Foods Respondent corporation General Foods (Phils), which is W/N the subject media No. Tax exemptions must be construed in
Gross Income (Phils.), Inc., G.R. No. engaged in the manufacture of beverages such as “Tang”, advertising expense for stricissimi juris against the taxpayer and
143672, April 24 “Calumet” and “Kool-Aid”, filed its income tax return for “Tang” was ordinary and liberally in favor of the taxing authority, and he
the fiscal year ending February 1985 and claimed as necessary expense fully who claims an exemption must be able to justify
deduction, among other business expenses, P9,461,246 deductible under the his claim by the clearest grant of organic or
for media advertising for “Tang”. NIRC statute law. Deductions for income taxes
partake of the nature of tax exemptions; hence,
The Commissioner disallowed 50% of the deduction if tax exemptions are strictly construed, then
claimed and assessed deficiency income taxes of deductions must also be strictly construed.
P2,635,141.42 against General Foods, prompting the To be deductible from gross income, the subject
latter to file an MR which was denied. advertising expense must comply with the
following requisites: (a) the expense must be
General Foods later on filed a petition for review at CA, ordinary and necessary; (b) it must have been
which reversed and set aside an earlier decision by CTA paid or incurred during the taxable year; (c) it
dismissing the company’s appeal. must have been paid or incurred in carrying on
the trade or business of the taxpayer; and (d) it
must be supported by receipts, records or other
pertinent papers.

While the subject advertising expense was paid

or incurred within the corresponding taxable
year and was incurred in carrying on a trade or
business, hence necessary, the parties’  views
conflict as to whether or not it was ordinary. To
be deductible, an advertising expense should
not only be necessary but also ordinary.

The Commissioner maintains that the subject

advertising expense was not ordinary on the
ground that it failed the two conditions set by
U.S. jurisprudence: first, “reasonableness” of
the amount incurred and second, the amount
incurred must not be a capital outlay to create
“goodwill” for the product and/or private
respondent’s business. Otherwise, the expense
must be considered a capital expenditure to be
spread out over a reasonable time.

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There is yet to be a clear-cut criteria or fixed

test for determining the reasonableness of an
advertising expense. There being no hard and
fast rule on the matter, the right to a deduction
depends on a number of factors such as but not
limited to: the type and size of business in
which the taxpayer is engaged; the volume and
amount of its net earnings; the nature of the
expenditure itself; the intention of the taxpayer
 and the general economic conditions. It is the
interplay of these, among other factors and
properly weighed, that will yield a proper
evaluation.

The Court finds the subject expense for the

advertisement of a single product to be
inordinately large. Therefore, even if it is
necessary, it cannot be considered an ordinary
expense deductible under then Section 29 (a)
(1) (A) of the NIRC.

Advertising is generally of two kinds: (1)

advertising to stimulate the current sale of
merchandise or use of services and (2)
advertising designed to stimulate the future sale
of merchandise or use of services. The second
type involves expenditures incurred, in whole or
in part, to create or maintain some form of
goodwill for the taxpayer’s trade or business or
for the industry or profession of which the
taxpayer is a member. If the expenditures are
for the advertising of the first kind, then, except
as to the question of the reasonableness of
amount, there is no doubt such expenditures
are deductible as business expenses. If,
however, the expenditures are for advertising of
the second kind, then normally they should be
spread out over a reasonable period of time.
The company’s media advertising expense for
the promotion of a single product is doubtlessly
unreasonable considering it comprises almost
one-half of the company’s entire claim for
marketing expenses for that year under
review. Petition granted, judgment
reversed and set aside.
C. M. Hoskins & Co., Inc. Petitioner questions CTA’s findings which disallowed Whether the supervision The SC denied the petition and affirmed the
vs. CIR, G.R. No. L-24059, supervision fees paid to Hoskins the founder Mr. C. M. fee received by Hoskins decision of the CTA.
Hoskins as deductible ordinary and necessary expense can be treated as
November 28, 1969 and said that it should be treated as profit of the taxpayer. deductible expenses?
The Supreme court held that it is NOT
Petitioner as founder Mr. C. M. Hoskins and Chairman of deductible. 
the board of directors of the corporation, receives 50%
share of the sales commissions he earned , besides his General rule, bonuses to employees made in
monthly salary of P3,750.00 amounting to an annual good faith and as additional compensation for
compensation of P45,000.00 and an annual salary bonus services actually rendered by the employees are
of P40,000.00, plus free use of the company car and deductible, provided such payments, when added
receipt of other similar allowances and benefits, claims that to the salaries do not exceed the compensation
it should be treated as deductible expenses. for services rendered.

The CTA said that the payment by the company to Hoskins AND In order for additional compensation be
was inordinately large and could not be accorded the considered as deductible, it must pass the test of
treatment of ordinary and necessary expenses allowed as reasonableness which is has the following
deductible items within the purview of Section 30 (a) (i) of conditions:
the Tax Code.
         Payment of bonuses is in fact compensation
         Must be for personal services rendered
         Bonuses when added to salaries are reasonable
when measured by the amount and quality of
services performed with relation to the business
of the particular taxpayer.

While there is no fixed test for determining the

reasonableness of a given bonus as
compensation. This depends upon many factors.

In the case, Hoskins fails to pass the test, thus

SC held that CTA was correct in holding that the
payment of the company to Mr. Hoskins 50%
share of supervision fees received by the
company was inordinately large and could not be
treated as an ordinary and necessary expenses
allowed for deduction.

CIR Vs. Isabela Cultural

Corporation, G.R. No.
 172231. February 12,
2007
Income Tax on Air Canada vs. CIR,
Corporations January 11, 2016, G.R.
No. 169507
CIR vs. St. Luke’s Medical
Center, Inc., G.R. No.
195909, September 26,
2012;
CIR vs. St. Luke’s Medical
Center, Inc., G.R. No
203514, February 13,
2017
PAGCOR v. BIR, et al. G.R.
No. 215427, 10
December 2014
Bloombery Resort vs. BIR,
GR No, 212530, 10 Aug
2016
CIR vs. BCDA, G.R. No.
217898, 15 January 2020
Cyanamid Philippines,
Inc. vs. CA, et al., G.R. No.
108067, January 20, 2000
Manila Bankers’ Life
Insurance Corp. vs. CIR,
GR Nos. 199729-30, 27
Feb 2019
CIR VS. Philippine
Airlines, Inc., G.R. No.
179259, September 25,
2013
CIR vs. Interpublic Group
of companies, Inc., GR
 No. 207039, 14 August
2019
Income Tax on Afisco Insurance Corp., et
Partnerships, al. vs. CA et al., G.R. No.
Estates and Trusts 112675,January 25, 1999