COURT OF TAX APPEALS

CIR v CTA (1994)

GR No 106611, July 21, 1994

FACTS:
Citytrust filed a petition with the Court of Tax Appeals claiming the refund of its income tax overpayments
for the years 1983, 1984 and 1985 in the total amount of P19,971,745. The CIR could not present any
evidence due to the repeated failure of the tax credit/refund division of the BIR to transmit the records of
the case and the investigation report to the Solicitor General. The case was decided in favor of City Trust.
Upon motion of reconsideration, petitioner alleged that through an inter-office memorandum of the Tax
Credit/Refund Division, dated August 8, 1991, he came to know only that Citytrust had outstanding tax
liabilities for 1984 in the amount of P56,588,740.91 representing deficiency income and business taxes.

ISSUES:
1. Whether the BIR was denied its day in court
2. Whether the CTA erred in denying petitioner’s supplemental motion for reconsideration alleging
bringing to said court’s attention the existence of deficiency income and business taxes

RULING:
1. Yes, the BIR is denied its day in court. When it was petitioner’s turn to present evident evidence,
several postponements were sought by its counsel, the Solicitor General, due to the unavailability of the
necessary records which were not transmitted by the Refund Audit Division of the BIR to said counsel. It
was under such predicament and in deference to the tax court that the counsel was constrained to submit
the case for decision without presenting any evidence. It is a long and firmly settled rule of law that the
Government is not bound by the errors committed by its agents.
2. Yes. The fact of such deficiency assessment is intimately related and inextricably intertwined with the
right of the bank. The private respondent cannot be entitled to refund and at the same time be liable for a
deficiency tax assessment for the same year.

CIR vs Philam Life Insurance – 244 SCRA 446

FACTS:
The Philippine American Life Insurance Co. (Philamlife) as a corporation has been paying quarterly
income taxes. In 1983, it paid the following:
a) Quarter 1 (May 30, 1983) – P3.2 million
b) Quarter 2 (August 29, 1983) – P396k
c) Quarter 3 – no payment as it was entitled to a tax credit
d) Quarter 4 – no payment as it incurred losses
Philamlife, due to its losses in said year, determined that it actually had no income at the end of the year
hence it is not liable for income tax. It then filed for a tax refund but it only filed the same in December
1985. The Commissioner of Internal Revenue (CIR) denied the claim on the ground that it has been filed
beyond the two-year prescriptive period to file such refund claim. The CIR contends that the 2-year
prescriptive period should be reckoned from the date of the quarterly payment. Hence, Philamlife’s
refund claim for the quarterly payments it paid in 1983 had prescribed in May 1985 and August 1985,
respectively.

ISSUE:
Whether or not the CIR’s argument are correct.

HELD:
No. It is true that the counting of the two-year prescriptive period shall begin to run from the date of
payment. But in the case of corporations which are paying quarterly taxes, there is a qualification to be
made. The prescriptive period for taxpayers paying quarterly shall commence from the time the refund is
ascertained or from the time a final adjustment return has been accomplished. The rationale behind this is
that, a taxpayer paying quarterly, like Philamlife, at the time it paid the quarterly taxes is not expected to
ascertain if a tax refund is feasible. It could not have known in May and August 1983 that at the end of
the year it will be incurring losses.
In the case at bar, the final adjustment return is deemed accomplished on April 16, 1984 – this is the date
upon which the prescriptive period shall commence running. Hence, the refund claim filed in December
10, 1985 is well within the two year prescriptive period.

Filipinas Investment & Finance Corporation vs. Commissioner of Internal Revenue

(GR L-23501, 16, May 1967)

FACTS:
The Commissioner of Internal Revenue, through the Director of Regional District 3, issued a letter dated
18 April 1961, to Filipinas Investment & Finance Corporation, assessing against the latter the sum of
P5,007.00 as advance sales tax on an automobile which it purchased from a tax-exempt individual, plus
P300.00 as compromise penalty, or a total of P5,307.00. Believing itself not liable therefor, the Company,
through counsel, disputed the above assessment in a letter dated 15 May 1961, and requested that the
same be cancelled and/or withdrawn.
Meanwhile, BIR Assistant Regional Director Toledo followed up said assessment with a demand letter
dated 21 June 1961, to which the Company replied, calling the former’s attention to its letter of 15 May
1961 which contested the assessment and has not yet been acted upon. The Commissioner denied the
company’s request for cancellation and/or withdrawal of the assessment in a letter dated 17 August 1962,
which was sent to the Company. The record does not, however, show when the Company received this
letter of denial; but, in a letter dated 28 September 1962, which the Commissioner received on 1 October
1962, the Company reiterated its request that the said assessment be cancelled and/or withdrawn.
In the meantime, the BIR record of the Company was transmitted, on 24 September 1962 to its Collection
Branch for collection by summary remedies; and pursuant thereto, Regional Director Tagle sent directly to
the Company (not to its counsel) another demand letter dated 25 September 1962, enclosing therewith a
copy of the letter of denial of 17 August 17, 1962. On 18 October 1962, the Compnay answered the letter,
and on 23 January 1963, the Company, through its counsel, further moved to reconsider the denial of its
original request for cancellation and/or withdrawal of the assessment. On 22 July 1963, the
Commissioner again denied the Company’s requests (of 28 September 1961 and 23 January 1963) for
reconsideration of the assessment; which letter of denial, the Company received on 12 August 1963.

On 11 September 1963, the Company filed its petition for review in the Tax Court, (CTA Case 1450)
disputing the legality of the imposition of advance sales tax on the purchase and subsequent sale of the
said automobile. The Commissioner moved to dismiss on ground that the petition was filed beyond the
30-day period fixed in Section 11 of Republic Act 1125. On 8 August 1964, the Tax Court, after finding
that petitioner consumed 33 days in filing its petition for review from the date of receipt of the
Commissioner’s ruling on the disputed assessment, issued its resolution, sustaining the Commissioner’s
motion to dismiss. Not satisfied, the Company appealed to the Supreme Court. The Supreme Court
affirmed the appealed resolution; with costs against the Company.
1. Nature of the letters
 The Commissioner’s letter-assessment of 18 April 1961 became a “disputed” assessment when
the Company requested for the cancellation and/or withdrawal of the same in its letter of 15 May
1961 (St. Stephen’s Association vs. Collector of Internal Revenue, 104 Phil., 314). The
Commissioner’s letter of 17 August 1962, denying the Company’s request for cancellation
constitutes the decision on the “disputed” assessment, which is appealable to the Tax Court as
contemplated under Sections 7 and 11 of Republic Act 1125. The Company’s letter of 28
September 1962 which the Commissioner received on 1 October 1962 is a mere pro-forma
request for reconsideration of the letter-decision of 17 August 1962 and did not adduce new facts
or arguments. The Commissioner’s letter of 22 July 1963 which the Company received on 12
August 1963 is the resolution on the said request for reconsideration (North Camarines Lumber
Co., Inc. vs. Collector of Internal Revenue, GR L-12353, 30 September 1960).
2. Letter-decision of 17 August 1962 touched upon allegation of 15 May 1961 letter
The contention, that the letter-decision of 17 August 1962 did not touch on its allegation in its
preceding letter (of 15 May 1961) that the automobile had passed through three previous non- tax
exempt owners before reaching the Company’s hands, is not tenable. The Commissioner’s letter
expressly declared that, “According to the findings of our examiners, your client is the first non-tax
exempt entity to acquire ownership over the car in question”; and these words directly
contradicted and overruled the Company’s pretense.
3. Petition properly dismissed; Period of appeal jurisdictional and non-extendible Considering that
the period to appeal from a decision of the Commissioner of Internal Revenue to the Tax Court
under Republic Act 1125 is jurisdictional and non-extendible, and that a taxpayer may not delay
indefinitely a tax assessment by reiterating his original defenses over and over again, without
substantial variation, the Tax Court correctly dismissed the petition for review filed by the
Company

Union Shipping vs CIR – 185 SCRA 47

FACTS:

In a letter dated December 27, 1974 petitioner assessed against Yee Fong Hong, Ltd. and/or herein
private respondent Union Shipping Corporation for deficiency income taxes due for the years 1971 and
1972. Private respondent protested the assessment.

Petitioner, without ruling on the protest, issued a Warrant of Distraint and Levy. In a letter, private
respondent reiterated its request for reinvestigation. Petitioner, again, without acting on the request for
reinvestigation and reconsideration of the Warrant of Distraint and Levy, filed a collection suit against
private respondent.

In 1979, private respondent filed with respondent court a Petition for Review. The CTA ruled in favor of
private respondent. Hence, this is a petition for review on certiorari

ISSUE:
Whether or not the issuance of a warrant of distraint and levy is proof of the finality of an assessment and
is tantamount to an outright denial of a motion for reconsideration of an assessment.
HELD: The Supreme Court had already laid down the dictum that the Commissioner should always
indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the
disputed assessment.

There appears to be no dispute that petitioner did not rule on private respondent's motion for
reconsideration but contrary to the above ruling of this Court, left private respondent in the dark as to
which action of the Commissioner is the decision appealable to the Court of Tax Appeals. Had he
categorically stated that he denies private respondent's motion for reconsideration and that his action
constitutes his final determination on the disputed assessment, private respondent without needless
difficulty would have been able to determine when his right to appeal accrues and the resulting confusion
would have been avoided.

Yabes vs Flojo – 115 SCRA 278

FACTS:
In May 1962, Doroteo Yabes received an assessment notice from the Commissioner of Internal Revenue
(CIR) demanding him to pay P15k in taxes. Doroteo filed a protest within the prescribed period. The
protest was initially denied in September 1962 however, a few days after the denial, the CIR advised
Doroteo to execute a waiver of the statute of limitations (SOL) and to allow the CIR to hold in abeyance
the ruling of his case until a similar case (Cirilo Constantino Case) which involves exactly the same issue
would be decided by the Court of Tax Appeals (CTA). Doroteo complied but while waiting for the CTA to
decide that case, Doroteo died. The CTA finally decided the Constantino Case but the same was
appealed to the Supreme Court (SC). And so the CIR asked the successors-in-interest of Doroteo, Elpidio
and Severino Yabes, to execute another waiver while waiting for the SC decision. The waiver was duly
executed and it extended the period of prescription within which the CIR may collect the assessed tax to
December 31, 1970.
The Constantino Case was decided by the SC in February 1970. On December 4, 1970, before the lapse
of the extended period (12/31/70), the CIR filed a tax collection suit against the estate of Doroteo Yabes
with the Court of First Instance (CFI) of Cagayan. Elpidio et al received the summons on January 20,
1971. Elpidio et al then filed an appeal with the CTA on February 12, 1971. At the same time, Elpidio et al
filed a motion to dismiss (MTD) the collection suit with CFI Cagayan on the ground that the filing of the
collection suit is a denial by the CIR of the protest; that such denial is appealable to the CTA; that CFI
Cagayan therefore has no jurisdiction over the case. However, Judge Napoleon Flojo of CFI Cagayan
denied the MTD.

ISSUE:
Whether or not CFI Cagayan has jurisdiction over the case.

HELD:
No. The CTA acquired exclusive jurisdiction over the case when Elpidio et al appealed.
But is the appeal filed on time?
Yes. The formal assessment notice (FAN) is considered to have been formally made when the tax
collection suit was filed on December 4, 1970. The FAN is considered received by Elpidio et al when they
received the summons on January 20, 1971. From there, they have 30 days to file an appeal with the
CTA. They filed their appeal on February 12, 1971 – well within the 30 day period to appeal.
Instead of dismissing, is it okay for CFI Cagayan to hold in abeyance the tax collection suit while the CTA
decide on the appeal?
No, because it has no jurisdiction. It cannot wait for the CTA to decide, it must dismiss the case.
So what will happen to the collection suit?
In this case, the Supreme Court ordered that the complaint of the CIR in the collection suit be transferred
to the CTA as a counterclaim to the appeal filed by Elpidio et al.

Yaokasin vs CIR – 180 SCRA 591

FACTS:

The Philippine Coast Guard seized 9000 sacks of refined sugar owned by petitioner Yaokasin, which
were then being unloaded from the M/V Tacloban, and turned them over to the custody of the Bureau of
Customs. On June 7, 1988, the District Collector of Customs ordered the release of the cargo to the
petitioner but this order was subsequently reversed on June 15, 1988. The reversal was by virtue
ofCustoms Memorandum Order (CMO) 20-87 in implementation of the Integrated Reorganization Plan
under P.D. 1, which provides that in protest and seizure cases where the decision is adverse to the
government, the Commissioner of Customs has the power of automatic review.
Petitioner objected to the enforcement of Sec. 12 of the Plan and CMO 20-87 contending that these were
not published in the Official Gazette. The Plan which was part of P.D. 1 was however published in
the Official Gazette.

ISSUE:
W/n circular orders such as CMO 20-87 need to be published in the OG to take effect.

HELD:

NO.
Article 2 of the Civil Code does not apply to circulars like CMO 20-87 which is an administrative order of
the Commissioner of Customs addressed to his subordinates, the custom collectors. Said issuance
requiring collectors of customs to comply strictly with Section 12 of he Plan, is addressed only to
particular persons or a class of persons (the customs collectors), hence no general applicability. As held
in Tanada v. Tuvera, “It need not be published, on the assumption that it has been circularized to all
concerned.”

Moreover, Commonwealth Act. 638 provides an enumeration of what shall be published in the Official
Gazette. It provides that besides legislative acts, resolutions of public nature of Congress, executive,
administrative orders and proclamations shall be published except when these have no general
applicability.

Marubeni vs CIR

Facts:

CIR assails the CA decision which affirmed CTA, ordering CIR to desist from collecting the 1985
deficiency income, branch profit remittance and contractor’s taxes from Marubeni Corp after finding the
latter to have properly availed of the tax amnesty under EO 41 & 64, as amended.

Marubeni, a Japanese corporation, engaged in general import and export trading, financing and
construction, is duly registered in the Philippines with Manila branch office. CIR examined the Manila
branch’s books of accounts for fiscal year ending March 1985, and found that respondent had undeclared
income from contracts with NDC and Philphos for construction of a wharf/port complex and ammonia
storage complex respectively.
On August 27, 1986, Marubeni received a letter from CIR assessing it for several deficiency taxes. CIR
claims that the income respondent derived were income from Philippine sources, hence subject to
internal revenue taxes. On Sept 1986, respondent filed 2 petitions for review with CTA: the first,
questioned the deficiency income, branch profit remittance and contractor’s tax assessments and second
questioned the deficiency commercial broker’s assessment.

On Aug 2, 1986, EO 41 declared a tax amnesty for unpaid income taxes for 1981-85, and that taxpayers
who wished to avail this should on or before Oct 31, 1986. Marubeni filed its tax amnesty return on Oct
30, 1986.
On Nov 17, 1986, EO 64 expanded EO 41’s scope to include estate and donor’s taxes under Title 3 and
business tax under Chap 2, Title 5 of NIRC, extended the period of availment to Dec 15, 1986 and stated
those who already availed amnesty under EO 41 should file an amended return to avail of the new
benefits. Marubeni filed a supplemental tax amnesty return on Dec 15, 1986.
CTA found that Marubeni properly availed of the tax amnesty and deemed cancelled the deficiency taxes.
CA affirmed on appeal.

Issue:
W/N Marubeni is exempted from paying tax

Held:
Yes.
1. On date of effectivity
CIR claims Marubeni is disqualified from the tax amnesty because it falls under the exception in Sec 4b of
EO 41:

“Sec. 4. Exceptions.—The following taxpayers may not avail themselves of the amnesty herein granted:
xxx b) Those with income tax cases already filed in Court as of the effectivity hereof;”
Petitioner argues that at the time respondent filed for income tax amnesty on Oct 30, 1986, a case had
already been filed and was pending before the CTA and Marubeni therefore fell under the exception.
However, the point of reference is the date of effectivity of EO 41 and that the filing of income tax cases
must have been made before and as of its effectivity.

EO 41 took effect on Aug 22, 1986. The case questioning the 1985 deficiency was filed with CTA on Sept
26, 1986. When EO 41 became effective, the case had not yet been filed. Marubeni does not fall in the
exception and is thus, not disqualified from availing of the amnesty under EO 41 for taxes on income and
branch profit remittance.

The difficulty herein is with respect to the contractor’s tax assessment (business tax) and respondent’s
availment of the amnesty under EO 64, which expanded EO 41’s coverage. When EO 64 took effect on
Nov 17, 1986, it did not provide for exceptions to the coverage of the amnesty for business, estate and
donor’s taxes. Instead, Section 8 said EO provided that:

“Section 8. The provisions of Executive Orders Nos. 41 and 54 which are not contrary to or inconsistent
with this amendatory Executive Order shall remain in full force and effect.”
Due to the EO 64 amendment, Sec 4b cannot be construed to refer to EO 41 and its date of effectivity.
The general rule is that an amendatory act operates prospectively. It may not be given a retroactive effect
unless it is so provided expressly or by necessary implication and no vested right or obligations of
contract are thereby impaired.

2. On situs of taxation
Marubeni contends that assuming it did not validly avail of the amnesty, it is still not liable for the
deficiency tax because the income from the projects came from the “Offshore Portion” as opposed to
“Onshore Portion”. It claims all materials and equipment in the contract under the “Offshore Portion” were
manufactured and completed in Japan, not in the Philippines, and are therefore not subject to Philippine
taxes.
(BG: Marubeni won in the public bidding for projects with government corporations NDC and Philphos. In
the contracts, the prices were broken down into a Japanese Yen Portion (I and II) and Philippine Pesos
Portion and financed either by OECF or by supplier’s credit. The Japanese Yen Portion I corresponds to
the Foreign Offshore Portion, while Japanese Yen Portion II and the Philippine Pesos Portion correspond
to the Philippine Onshore Portion. Marubeni has already paid the Onshore Portion, a fact that CIR does
not deny.)

CIR argues that since the two agreements are turn-key, they call for the supply of both materials and
services to the client, they are contracts for a piece of work and are indivisible. The situs of the two
projects is in the Philippines, and the materials provided and services rendered were all done and
completed within the territorial jurisdiction of the Philippines. Accordingly, respondent’s entire receipts
from the contracts, including its receipts from the Offshore Portion, constitute income from Philippine
sources. The total gross receipts covering both labor and materials should be subjected to contractor’s
tax (a tax on the exercise of a privilege of selling services or labor rather than a sale on products).
Marubeni, however, was able to sufficiently prove in trial that not all its work was performed in the
Philippines because some of them were completed in Japan (and in fact subcontracted) in accordance
with the provisions of the contracts. All services for the design, fabrication, engineering and manufacture
of the materials and equipment under Japanese Yen Portion I were made and completed in Japan. These
services were rendered outside Philippines’ taxing jurisdiction and are therefore not subject to
contractor’s tax.Petition denied.

BPI vs CIR – 363 SCRA 840

Facts:

From 28 February 1986 to 8 October 1986, petitioner Bank of the Philippine Islands (BPI) sold to the
Central Bank of the Philippines (now Bangko Sentral ng Pilipinas) U.S. dollars for P 1,608,541,900.00.
BPI instructed, by cable, its correspondent bank in New York to transfer U.S. dollars deposited in BPI’s
account therein to the Federal Reserve Bank in New York for credit to the Central Bank’s account therein.
Thereafter, the Federal Reserve Bank sent to the Central Bank confirmation that such funds had been
credited to its account and the Central Bank promptly transferred to the petitioner’s account in the
Philippines the corresponding amount in Philippine pesos. In 1988, respondent CIR ordered an
investigation to be made on BPI’s sale of foreign currency. As a result thereof, the CIR issued a pre-
assessment notice informing BPI that in accordance with Section 195 (now Section 182) of the NIRC, BPI
was liable for documentary stamp tax at the rate of P 0.30 per P Total tax liability was assessed at P
200.00 on all foreign exchange sold to the Central Bank. 3,016,316.06, which consists of a documentary
stamp tax liability of P2,412,812.85, a 25% surcharge of P 603,203.21, and a compromise penalty of P
300.00.

Issue: Whether or not the transactions covered is a bill of exchange liable for DST.

Held: Yes. A definition of a “bill of exchange” is provided by Section 39 of Regulations No. 26, the rules
governing documentary taxes promulgated by the Bureau of Internal Revenue (BIR) in 1924:

Sec. 39. Definition of “bill of exchange”. The term bill of exchange denotes checks, drafts, and all other
kinds of orders for the payment of money, payable at sight, or on demand or after a specific period after
sight or from a stated date.

Section 126 of The Negotiable Instruments Law (Act No. 2031) reiterates that it is an “order for the
payment of money” and specifies the particular requisites that make it negotiable.
Sec. 126. Bill of exchange defined. – A bill of exchange is an unconditional order in writing addressed by
one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay
on demand or at fixed or determinable future time a sum certain in money to order or to bearer.

Section 129 of the same law classifies bills of exchange as inland and foreign, the distinction is laid down
by where the bills are drawn and paid. Thus, a “foreign bill of exchange” may be drawn outside the
Philippines, payable outside the Philippines, or both drawn and payable outside of the Philippines.

Sec. 129. Inland and foreign bills of exchange. — An inland bill of exchange is a bill which is, or on its
face purports to be, both drawn and payable within the Philippines. Any other bill is a foreign bill.

A bill of exchange and a letter of credit may differ as to their negotiability, and as to who owns the funds
used for the payment at the time payment is made. However, in both bills of exchange and letters of
credit, a person orders another to pay money to a third person.

Section 195 (now Section 182) of the NIRC covers foreign bills of exchange, letters of credit, and orders
of payment for money, drawn in Philippines, but payable outside the Philippines. From this enumeration,
two common elements need to be present: (1) drawing the instrument or ordering a drawee, within the
Philippines; and (2) ordering that drawee to pay another person a specified amount of money outside the
Philippines. What is being taxed is the facility that allows a party to draw the draft or make the order to
pay within the Philippines and have the payment made in another country.

Afgha Inc Vs CTA

FACTS:

Petitioner owns a shipment of bales of text grey cloth which arrived at Manila. It was processed for forfeiture when it
allegedly violated the tarrif and customs code. The issue was held in favor of petitioner.

The CTA issued a writ of execution directing CIR to effect immediate release of shipment to petitioner. The writ was not
implmented as the shipment was lost.

CTA found the CC liable for loss of shipment and ordered to pay. After reconsideration of the parties, the CTA modified its
resolution and ordered that the taxes and duties on the shipment be deducted from the amount recoverable by petitioner.

Petitioner filed a motion for partial reconsideration which was denied by the CTA and then filed before the SC.

Meanwhile, CC filed with the CTA en banc a petition for review regarding the order of payment to petitioner.

Petitioner, instead of filing its comment, filed a motion to dismiss, arguing that the petition for review is not proper remedy to
challenge interlocutory orders and/or orders for execution. The CTA denied the motion. Petitioner filed a petition for
certiorari, thus the other case contending that the CTA should have not entertained the CC’s appeal over an order of
execution.

ISSUE:

W/N the contentions of petitioner are valid

HELD:
No. The resolution of CTA, ordering the CC to pay, is not an interlocutory order since it left nothing to be done by the CTA
with respect to the merits of the case. It is a final judgement which fully disposed the issue appurtenant to respondents
liability to petitioner on account of loss of shipment.

Sec 18 of RA 1125 provides that a party adversely affected by the resolution of a Division of the CTA on a motion for
reconsideration or new trial may file for a petition for review with the CTA en banc. Likewise, Rule 8 Section 4 paragraph
(b) of the Revised Rules of the CTA provides that “appeal from a decision of resolution of the Court in Division on a motion
for reconsideration or new trial shall be taken to the court by petition for review as provided in Rule 43 of Rules of Court.
The Court En Banc shall act on appeal.

LOCAL GOVERNMENT TAXATION CASES

Everett Shipping vs Municipality of Medina – 16 SCRA 978

Private respondent imported 3 crates of bus spare parts marked as MARCO C/No.
12,MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading
Company,Ltd. (Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan. The
cratesw e r e s h i p p e d f r o m N a g o ya , J a p a n t o M a n i l a
o n b o a r d " A D E L F A E V E R E T T E , " a v e s s e l owned by petitioner's principal, Everett Orient Lines.
Upon arrival at the port of
Manila,i t w a s d i s c o v e r e d t h a t t h e c r a t e m a r k e d M A R C O C / N o . 1 4 w a s m i s s i n g .

P r i v a t e respondent claim upon petitioner for the value of the lost cargo amounting
to OneMillion Five Hundred Fifty T wo T housand Five Hundred (Y1,
552,500.00) Yen, thea m o u n t s h o w n i n a n I n v o i c e N o . M T M -
9 4 1 , d a t e d N o v e m b e r 1 4 , 1 9 9 1 . H o w e v e r , petitioner offered to pay only One Hundred
Thousand (Y100,000.00) Yen, the maximumamount stipulated under Clause 18 of the covering bill of
lading which limits the liabilityof petitioner. Private respondent rejected the offer and thereafter
instituted a suit forcollection. The trial court rendered a decision in favour of the private
respondents andthis was affirmed by the Court of Appeals. Thus, this instant petition.

ISSUES:
1.Is the petitioner liable for the actual value and not the maximum val
u e recoverable under the bill of lading?
2. Is private respondent, as consignee, who is not a signatory to the bill of lading bound by the
stipulations thereof?

ARGUMENTS:
1.The Petitioner is only liable for the maximum value recoverable under the bill
of lading.Clause 18 of the covering bill of lading:1 8 . A l l c l a i m s f o r w h i c h t h e c a r r i e r m a y b e
liable shall be adjusted andsettled on the basis of the shipper's net invoice
c o s t p l u s f r e i g h t a n d insurance premiums, if paid, and in no event shall the carrier be liable forany
loss of possible profits or any consequential loss. The carrier shall not be liable for any loss of or
any damage to or in anyconnection with, goods in an amount exceeding One Hundred
thousand Y e n i n J a p a n e s e C u r r e n c y ( Y 1 0 0 , 0 0 0 . 0 0 ) o r i t s e q u i v a l e n t i n a n y
o t h e r currency per package or customary freight unit (whichever is least)
unlessthe value of the goods higher than this amount is dec lared in writing by the shipper
before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is paid
as required
. (Emphasis supplied)Pertinent provisions that is applicable as to this case:Art. 1749. A stipulation
that the common carrier's liability is limited to the value of thegoods appearing in the bill of
lading, unless the shipper or owner declares a greater value, is binding.Art. 1750. A contract fixing
the sum that may be recovered by the owner or shipper forthe loss, destruction, or deterioration of
the goods is valid, if it is reasonable and just under the circumstances, and has been freely and
fairly agreed upon.Pursuant to the afore-quoted provisions of law, it is required that the stipulation
limitingt h e c o m m o n c a r r i e r ' s l i a b i l i t y f o r l o s s m u s t b e " r e a s o n a b l e a n d j u s t u n
d e r t h e circumstances, and has been freely and fairly agreed upon." The above stipulations are
reasonable and just. In the bill of lading, the carrier made itclear that its liability would only be up to
One Hundred Thousand (Y100,000.00) Yen.

Ruling:

The decision of the CA was reversed and set aside.

Northern Philippine Tobacco vs Municipality of Agoo – 31 Scra 304

FACTS:

The Municipal Council of Agoo, La Union, enacted Ordinance No. 11 which provides that all redrying plants within the
municipality shall pay license tax.

Petitioner, an owner of a redrying plant and directly affected by the ordinance, petitioned for the nullity of the ordinance with
the CFI to no avail. On appeal, petitioner claim that that the ordinance was enacted by the municipal council ultra vires; that
the increase of 300% is unjust and excessive; that the ordinance is discriminatory against it.

ISSUE: Whether the ordinance is valid.

RULING:

YES. What is being taxed is not rendering by petitioner of redrying services to its customers, but the enjoyment of the
privilege to operate and maintain the tobacco redrying business in the municipality. The ordinance is a levy on the
enjoyment of the privilege to engage in the business of redrying tobacco, not on the operator's making of sales or its
receipt of income from the business. It is a tax on the occupation, on the conducting of business itself, an impost that is
perfectly within the authority of a municipal council to create.

Republic Act No. 2264 provides that subject to specified exceptions, "all chartered cities, municipalities and municipal
districts shall have authority to impose municipal license taxes or fees, upon persons engaged in any occupation or
business".

The SC also held that the 300% increase was not oppressive. Petitioner failed to present proof of the existing municipal
conditions and the nature of its business, as well as other factors that would have been relevant to the issue of the
arbitrariness or unreasonableness of the questioned rates. An increase in the rate of tax alone would not support the claim
that it is oppressive, unjust and confiscatory as municipal corporations are allowed much discretion in determining the
rates of imposable license fees, even in cases of purely police power-measures.

Ormoc Sugar Corp vs Municipal Board of Ormoc – 20 SCRA 739

Facts:

The Municipal Board of Ormoc City passed a municipal tax ordinance imposing on any and all productions of centrifugal
sugar milled at the Ormoc Sugar Company Inc. one (1%) percent per export sale to the US and other foreign countries.

In lieu, Ormoc Sugar filed before the CFI of Leyte a complaint against the City of Ormoc, its Treasurer, Municipal Board
and Mayor, alleging said ordinance is violative of the equal protection clause and the rule of uniformity of taxation, among
other things. Ormoc Sugar Company Inc. was the only sugar central in Ormoc City at the time.
Issue:

WON the ordinance is violative of the constitutional provision on equal protection?

Ruling:

The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central, of
the same class as the present company, from the coverage of the tax. As it is now, even if later a similar company is set
up, it cannot be subject to the tax because the ordinance expressly points only to the company as the entity to be levied
upon.

EPC applies only to persons or things identically situated and doesn’t bar a reasonable classification of the subject of
legislation.

A classification is reasonable where: 1) it is based on substantial distinctions which make real differences; (2) these are
germane to the purpose of the law; (3) the classification applies not only to present conditions but also to future conditions
which are substantially identical to those of the present; (4) the classification applies only to those who belong to the same
class.

Progressive Development vs Quezon City

Facts:

Progressive Development Corporation, owner and operator of a public market known as the "Farmers Market &
Shopping Center" filed a Petition for Prohibition with Preliminary Injunction against respondent... on the ground that the
supervision fee or license tax imposed by the above-mentioned ordinances is in reality a tax on income which respondent
may not impose, the same being expressly prohibited by Republic Act No. 2264, as amended

Petitioner, however, insists that the "supervision fee" collected from rentals, being a return from capital invested in the
construction of the Farmers Market, practically operates as a tax on income, one of those expressly excepted from
respondent's taxing authority, and... thus beyond the latter's competence.

Issues:

The only issue to be resolved here is whether the tax imposed by respondent on gross receipts of stall rentals is properly
characterized as partaking of the nature of an income tax or, alternatively, of a license fee.

Ruling:

The "Farmers' Market and Shopping Center" being a public market in the sense of a market open to and inviting the,
patronage of the general public, even though privately owned, petitioner's operation thereof required a license issued by
the respondent City, the issuance... of which, applying the standards set forth above, was done principally in the exercise
of the respondent's police power

The operation of a privately owned market is, as correctly noted by the Solicitor General,... equivalent to or quite the same
as the operation of a government-owned market;

We believe and so hold that the five percent (5%) tax imposed in Ordinance No. 9236 constitutes, not a tax on income,
not a city income tax... but rather a license tax or fee for the regulation of the business in which the petitioner is engaged.
Iloilo Bottlers vs City of Iloilo - 164 SCRA 607

Facts:
Ilo-ilo Bottlers was already paying a business tax on manufacturing under §143(A) to the city
government by virtue of a tax ordinance. Later on, they are obliged to pay by virtue of another tax
ordinance imposing business tax on wholesaling. Naturally, Ilo-ilo Bottlers argued, “how could it be, if
you manufacture, it necessary follows that you sell the commodity so, with the payment of the business
tax onmanufacturing, it carries with it the business of wholesaling”.

Held:

NO, you have to determine the marketing system of the company. If wholesaling is also being done in
the place of manufacture, the business tax on wholesaling should no longer be paid it should only be the
business tax on manufacturing. But if the marketing system of the company provides that wholesaling
shall be done in a separate place (maybe several kilometers away), the manufacturer must still pay the
business tax on wholesale because now it could be argued that they have the separate business of
wholesaling.

Municipality of San Fernando vs Sta Romana – 149 SCRA 27

FACTS:

In 1968, the Municipality of San Fernando, La Union undertook road constructions. It sent its trucks to
the nearby Municipality of Luna, La Union to gather sand and gravel. But then the agents of the Luna, La
Union imposed fees on each truck. Mayor Lorenzo Dacanay of San Fernando then filed for injunction
against the mayor of Luna (Timoteo Sta. Romana), its treasurer and their agents to enjoin them from
collecting said fees. Sta. Romana, in their defense, averred that the collection of said fees is pursuant to
an ordinance duly approved by the Municipal Council of Luna in consonance with its power to tax, and
that the fees collected are reasonable, fair and legal.

ISSUE:

Whether or not the Municipality of Luna is validly exacting the assailed fees on the hauling of gravel and
sand.

HELD:

No. Pursuant to the then Local Tax Code, a municipality like Luna is not authorized to exact fees for the
hauling of gravel and sand within it. Such power is lodged only in the province, in this case, the province
of La Union. Only La Union has the authority to exact taxes for sand and gravel extracted within its
jurisdiction. The tax ordinance of Luna providing for such power to the municipality is therefore void.
Corollarily, San Fernando cannot extract sand and gravel from the Municipality of Luna without paying
the corresponding taxes or fees that may be imposed by the province of La Union.
Ty vs Trampe – 250 SCAR 500

The petitioner in Ty v. Trampe questioned before the trial court the increased real estate taxes imposed
by and being collected in Pasig City effective from the year 1994, premised on the legal question of
whether or not Presidential Decree No. 921 (PD 921) was repealed by the LGC. PD 921 required that the
schedule of values of real properties in the Metropolitan Manila area shall be prepared jointly by the
city assessors in the districts created therein; while Section 212 of the LGC stated that the schedule shall
be prepared by the provincial, city or municipal assessors of the municipalities within the Metropolitan
Manila Area for the different classes of real property situated in their respective local government units
for enactment by ordinance of the Sanggunian concerned. The private respondents assailed Ty’s act of
filing a prohibition petition before the trial court contending that Ty should have availed first the
administrative remedies provided in the LGC, particularly Sections 252 (on payment under protest
before the local treasurer) and 226 (on appeals to the LBAA).

The Court, through former Chief Justice Artemio Panganiban, declared that Ty correctly filed a petition
for prohibition before the trial court against the assailed act of the city assessor and treasurer. The
administrative protest proceedings provided in Section 252 and 226 will not apply. The protest
contemplated under Section 252 is required where there is a question as to the reasonableness or
correctness of the amount assessed. Hence, if a taxpayer disputes the reasonableness of an increase in
a real property tax assessment, he is required to "first pay the tax" under protest. Otherwise, the city or
municipal treasurer will not act on his protest. Ty however was questioning the very authority and
power of the assessor, acting solely and independently, to impose the assessment and of the treasurer
to collect the tax. These were not questions merely of amounts of the increase in the tax but attacks on
the very validity of any increase. Moreover, Ty was raising a legal question that is properly cognizable by
the trial court; no issues of fact were involved. In enumerating the power of the LBAA, Section 229
declares that “the proceedings of the Board shall be conducted solely for the purpose of ascertaining
the facts x x x.” Appeals to the LBAA (under Section 226) are therefore fruitful only where questions of
fact are involved.