REPUBLIC VS IAC

FACTS: The Republic, through the BIR, commenced an action before the CFI, to collect from the Spouses Pastor
deficiency income taxes for the years 1955 to 1959. The spouses filed a motion to dismiss the complaint but the same
was denied. Consequently, they filed an answer admitting that there was an assessment against them for income tax
deficiency but denying liability therefor. They contend that they have availed the tax amnesty under PD No. 23, 213 and
370 and had paid the corresponding amnesty taxes amounting of their reported untaxed income under PD 23, and a
final payment under PD 370 as evidenced by the Government’s Official Receipt.

The trial court held that the Pastors had settled their income tax deficiency for the aforementioned years, not under PD
Nos. 23 and 370, but under PD 213.

The Republic interposed an appeal before the IAC, alleging that the private respondents were not qualified to the tax
amnesty under PD 213 for the benefits of that decree are available only to those persons who had no pending
assessment for unpaid taxes, as provided in Revenue Regulations 8-72 and 8-73. Since the Pastors did in fact have a
pending assessment against them, they were precluded from availing the said amnesty. The government further argued
that tax exemptions should be strictly construed against the tax payer.

The IAC rendered a decision dismissing the Government’s appeal and holding that the payment of deficiency income
taxes by the Pastors under PD 213, and the acceptance thereof by the government, operated to divest the latter of its
right to further recover deficiency income taxes from the Spouses pursuant to the existing deficiency assessment against
them.

ISSUE: WON the Tax amnesty payments made by the private respondents bar an action for recovery of deficient income
taxes under PD No. 23, 213, and 370. YES

RULING: The Supreme Court held that the government is estopped from collecting the difference between the
deficiency tax assessment and the amount already paid by them as amnesty tax. The finding of the appellate court that
the deficiency income taxes paid by the Pastors, and accepted by the Government, under PD 213, granting amnesty to
persons who are required by law to file income tax returns but who failed to do so, is entitled to the highest respect and
may not be disturbed except under exceptional circumstances.

The rule is that in case of doubt, tax statutes are to be strictly construed against the Government and liberally in favor of
the tax payers, being burdens, are not to be presumed beyond what the applicable statute expressly and clearly
declares.
(1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture;
(2) the inference made is manifestly mistaken;
(3) there is grave abuse of discretion;
(4) the judgment is based on misapprehension of facts;
(5) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both
the appellant and the appellee;
(6) the findings of fact of the Court of Appeals are contrary to those of the trial court;

(7) said findings of fact are conclusions without citation of specific evidence in which they are based;
(8) the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; and
(9) when the finding of fact of the Court of Appeals is premised on the absence of evidence and is contradicted by
the evidence on record.
None of which is present in this case.
CIR vs PUREGOLD

FACTS: Puregold is engaged in the sale of various consumer goods exclusively within the Clark Special Economic Zone
(CSEZ), and operates its store under the authority and jurisdiction of Clark Development" Corporation (CDC) and CSEZ.

As an enterprise located within CSEZ and registered with the CDC, Puregold had been issued Certificate of Tax
Exemption which enumerated the tax incentives granted to it, including tax and duty-free importation of goods. The
certificates were issued pursuant to EO No. 80, extending to business enterprises operating within the CSEZ all the
incentives granted to enterprises within the Subic Special Economic Zone (SSEZ) under RA 7227, otherwise known as the
"Bases Conversion and Development Act of 1992.

Notably, RA 7227 provides duty-free importations and exemptions of businesses within the SSEZ from local and national
taxes. Thus, in accordance with the tax exemption certificates granted to respondent Puregold, it filed its Annual Income
Tax Returns and paid the five percent (5%) preferential tax, in lieu of all other national and local taxes for the period of
January 1998 to May 2004.

On 2005, in Coconut Oil Refiners v. Torre, however, this Court annulled the adverted Sec. 5 of EO 80, in effect
withdrawing the preferential tax treatment heretofore enjoyed by all businesses located in the CSEZ.

Thus, the BIR issued a Preliminary Assessment Notice regarding unpaid VAT and excise tax on wines, liquors and tobacco
products imported by Puregold from January 1998 to May 2004. In due time, Puregold protested the assessment.

Pending the resolution of Puregold's protest, Congress enacted RA 9399 which provides for the availment of the tax
amnesty relieves the qualified taxpayers of any civil, criminal and/or administrative liabilities arising from, or incident to,
nonpayment of taxes, duties and other charges.

On July 27, 2007, Puregold availed itself of the tax amnesty under RA 9399, filing for the purpose the necessary
requirements and paying the amnesty tax.

Nonetheless, Puregold received a formal letter of demand from the BIR for the payment of 2.7 Billion, supposedly
representing deficiency VAT and excise taxes on its importations of alcohol and tobacco products from January 1998 to
May 2004.

In its response-letter, Puregold, thru counsel, requested the cancellation of the assessment on the ground that it has
already availed of the tax amnesty under RA 9399. This notwithstanding, the BIR issued on June 23, 2008 a Final Decision
on Disputed Assessment stating that the availment of the tax amnesty under RA 9399 did not relieve Puregold of its
liability for deficiency VAT, excise taxes, and inspection fees under the 1997 National Internal Revenue Code.

ISSUE: WON Puregold is liable for deficiency VAT and excise tax for its importation of alcohol and tobacco products. NO.

RULING: The Supreme Court held that Puregold - a registered business enterprise operating within the CSEZ - cannot avail of
the amnesty extended by the law with regard to its liability under Section 131(A) of the 1997 NIRC simply goes against the
plain and unambiguous language... of RA 9399.

Puregold enjoyed duty free importations and exemptions from local and national taxes under EO 80, a privilege which
extended to business enterprises operating within the CSEZ all the incentives granted to enterprises within SSEZ... by RA
7227. Hence, Puregold was repeatedly issued tax exemption certificates and the BIR itself did not assess any deficiency
taxes from the time the 1997 NIRC took effect in January 1998... his Court subscribes to the doctrine of operative fact,
which recognizes that a judicial declaration of invalidity may not necessarily obliterate all the effects and consequences
of a void act prior to such declaration.

We agree with both the Court of Appeals and Court of Tax Appeals that Executive Order No. 41 is quite
explicit and requires hardly anything beyond a simple application of its provisions. It reads:
Philippine Acetylene Co. Inc v CIR (1967)

FACTS: Philippine Acetylene Co. Inc. is engaged in the manufacture and sale of oxygen and
acetylene gases. It sold its products to the National Power Corporation (Napocor), an agency of the
Philippine Government, and the Voice of America (VOA), an agency of the United States
Government.

When the commissioner assessed deficiency sales tax and surcharges against the company, the
company denied liability for the payment of tax on the ground that both Napocor and VOA are exempt
from taxes.

The NPC enjoys tax exemption by virtue of an act2 of Congress which for facilitation of the payment of its
indebtedness, the National Power Corporation shall be exempt from all taxes, except real property tax, and from all
duties, fees, imposts, charges, and restrictions of the Republic of the Philippines, its provinces, cities and
municipalities.

It is contended that the immunity thus given to the NPC would be impaired by the imposition of a tax on sales made
to it because while the tax is paid by the manufacturer or producer, the tax is ultimately shifted by the latter to the
former.

ISSUE: Is Philippine Acetylene Co. liable for tax?

RULING: Yes. Sales tax are paid by the manufacturer or producer who must make a true and complete return
of the amount of his, her or its gross monthly sales, receipts or earnings or gross value of output actually
removed from the factory or mill, warehouse and to pay the tax due thereon. The tax imposed by Section 186
of the Tax Code is a tax on the manufacturer or producer and not a tax on the purchaser except probably in a
very remote and inconsequential sense. Accordingly, its levy on the sales made to tax- exempt entities like the
Napocor is permissible.

On the other hand, there is nothing in the language of the Military Bases Agreement to warrant the general
exemption granted by General Circular V-41 (1947). Thus, the expansive construction of the tax exemption is
void; and the sales to the VOA are subject to the payment of percentage taxes under Section 186 of the Tax
Code. Therefore, tax exemption is strictly construed and exemption will not be held to conferred unless the
terms under which it is granted clearly and distinctly show that such was the intention.
CIR VS GOTAMCO

FACTS: The World Health Organization (WHO), an international organization, entered into a Host Agreement with the
Republic of the Philippines on July 22, 1951. In the agreement, WHO’S assets, income and other properties shall be
exempt from all direct and indirect taxes. WHO decided to construct a building to house its own offices, as well as the
other United Nations offices stationed in Manila. In inviting bids for the construction of the building, WHO informed the
bidders that the building to be constructed belonged to an international organization with diplomatic status and thus
exempt from the payment of all fees, licenses, and taxes, and that therefore their bids “must take this into account and
should not include items for such taxes, licenses and other payments to Government agencies.” The construction
contract was awarded to respondent John Gotamco & Sons, Inc. on February 10, 1958.

On June 3, 1958, the Commissioner of Internal Revenue stated that “as the 3% contractor’s tax is not a direct nor an
indirect tax on the WHO, but a tax that is primarily due from the contractor, the same is not covered by . . . the Host
Agreement.”

On January 2, 1960, the WHO issued a certification that the bid of Gotamco should be exempted from any taxes in
connection with the construction of the WHO office building because taxes or fees in connection with the construction
of the building is an indirect tax to WHO.

On January 17, 1961, the Commissioner of Internal Revenue sent a letter of demand to Gotamco demanding payment of
P 16,970.40, representing the 3% contractor’s tax plus surcharges on the gross receipts it received from the WHO in the
construction of the latter’s building.

Respondent Gotamco appealed the Commissioner’s decision to the Court of Tax Appeals, which after trial rendered a
decision, in favor of Gotamco and reversed the Commissioner’s decision.

ISSUE: Whether respondent John Gotamco & Sons, Inc. should pay the 3% contractor’s tax under Section 191 of the
National Internal Revenue Code on the gross receipts it realized from the construction of the World Health Organization
office building in Manila.

RULING: The Petitioner’s position is that the contractor’s tax “is in the nature of an excise tax which is a charge imposed
upon the performance of an act, the enjoyment of a privilege or the engaging in an occupation. . . It is a tax due
primarily and directly on the contractor, not on the owner of the building. Since this tax has no bearing upon the WHO, it
cannot be deemed an indirect taxation upon it.”

The Court agreed with the Court of Tax Appeals in rejecting this contention of the petitioner. The CA stated: The
contractor’s tax is of course payable by the contractor but in the last analysis it is the owner of the building that
shoulders the burden of the tax because the same is shifted by the contractor to the owner as a matter of self-
preservation. Thus, it is an indirect tax. And it is an indirect tax on the WHO because, although it is payable by the
petitioner, the latter can shift its burden on the WHO. In the last analysis it is the WHO that will pay the tax indirectly
through the contractor and it certainly cannot be said that ‘this tax has no bearing upon the World Health Organization.

The Host Agreement, in specifically exempting the WHO from “indirect taxes,” contemplates taxes which, although not
imposed upon or paid by the Organization directly, form part of the price paid or to be paid by it. The 3% contractor’s
tax would be within this category and should be viewed as a form of an “indirect tax” On the Organization, as the
payment thereof or its inclusion in the bid price would have meant an increase in the construction cost of the building
MACEDA VS MACARAIG

FACTS: Commonwealth Act 120 created NAPOCOR as a public corporation to undertake the development of hydraulic
power and the production of power from other sources. RA 358 granted NAPOCOR tax and duty exemption privileges.
RA 6395 revised the charter of the NAPOCOR, tasking it to carry out the policy of the national electrification and
provided in detail NAPOCOR’s tax exceptions. PD 380 specified that NAPOCOR’s exemption includes all taxes, etc.
imposed “directly or indirectly.” PD 938 dated May 27, 1976 further amended the aforesaid provision by integrating the
tax exemption in general terms under one paragraph.

ISSUE: Whether or not NPC has ceased to enjoy indirect tax and duty exemption with the enactment of PD 938 on May
27, 1976 which amended PD 380 issued on January 11, 1974

RULING: No, The Supreme Court held that it is still exempt. NAPOCOR is a non-profit public corporation created for the
general good and welfare, and wholly owned by the government of the Republic of the Philippines. From the very
beginning of the corporation’s existence, NAPOCOR enjoyed preferential tax treatment “to enable the corporation to
pay the indebtedness and obligation” and effective implementation of the policy enunciated in Section 1 of RA 6395.

From the preamble of PD 938, it is evident that the provisions of PD 938 were not intended to be interpreted liberally so
as to enhance the tax exempt status of NAPOCOR.

It is recognized that the rule on strict interpretation does not apply in the case of exemptions in favor of government
political subdivision or instrumentality. In the case of property owned by the state or a city or other public corporations,
the express exception should not be construed with the same degree of strictness that applies to exemptions contrary to
the policy of the state, since as to such property “exception is the rule and taxation the exception.”
SILKAIR vs CIR

FACTS: Petitioner Silkair, a foreign corp. which has a Philippine representative office, is an outline international air
carrier. On Dec 19, 2001: Silkair filed with the BIR a written application for the refund of excise tax it paid on its
purchases or jet fuels from Petron Corp. from Jan - June 2000.
Meanwhile on Dec 26, 2001: not having been acted upon by the BIR, it filed a petition for review before the CTA. The
petition was denied on the ground that the excise tax is imposed on Petron are manufacturer however, when the
burden is shifted to Silkair, it is no longer a tax but added cost of goods purchased

ISSUE: W/N Silkair can claim a refund for indirect excise tax

HELD: NO. The Supreme Court held that Section 130 (A) (2) of the NIRC provides that "[u]nless otherwise specifically
allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic
products from place of production." Thus, Petron Corporation, not Silkair, is the statutory taxpayer which is entitled to
claim a refund based on Section 135 of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP
and Singapore.

Even if Petron Corporation passed on to Silkair the burden of the tax, the additional amount billed to Silkair for jet fuel is
not a tax but part of the price which Silkair had to pay as a purchaser

Unlike in Maceda v. Macaraig Jr. where it expressly includes indirect taxes. Rule that tax exemptions are construed in
strictissimi juris against taxpayer applies.
PAL vs CIR

CASE: Caltex import jet fuel and sells the same to PAL. Caltex charged PAL for the gas as well as the corresponding excise
tax. PAL attempted to get a tax refund for the excise tax from the BIR but the CIR refused to do so saying that the only
person who is qualified to request for a tax refund is the statutory tax payer or the one who is legally required by law to
pay the taxes directly to the government. Since Caltex is the recognised statutory taxpayer and only shifted the economic
burden of tax to PAL, it is only Caltex who may ask for a tax refund. The CTA sided with the BIR.

The SC held that while it is true that only the statutory taxpayer can ask for a tax refund, the rule does not apply when the
law clearly grants the party to which the economic burden of the tax is shifted an exemption from both direct and indirect
taxes. In which case, the latter must be allowed to claim a tax refund even if it is not the statutory taxpayer. Since PAL’s
charter allows it to be exempted from both direct and indirect taxes, PAL has the legal personality to claim the refund.

DOCTRINE: Even if the purchaser effectively pays the value of the tax, the owner or importer is still regarded as the
statutory taxpayers under the law. The statutory taxpayer who is entitled to claim a tax refund based thereon and not the
party who merely bears its economic burden. HOWEVER, the rule does not apply to instances where the law clearly grants
the party to which the economic burden of the tax is shifted an exemption from both direct and indirect taxes. In which
case, the latter must be allowed to claim a tax refund even if it is not the statutory taxpayer.

FACTS:

July 24 – 28, 2004  Caltex sold imported Jet A-1 fuel to PAL for the latter’s domestic operations.

July 26 – 29, 2004  Caltex electronically filed with the BIR its Excise Tax Returns for Petroleum Products.

August 3, 2004  PAL received from Caltex an Aviation Billing Invoice for the purchased aviation fuel in the amount of
US$313,949, reflecting the amount of US$52,669 as the related excise taxes on the transaction. This was confirmed by
Caltex in a Certification stating:

 It paid excise taxes on the imported petroleum products

October 29, 2004  PAL sent a letter to the CIR, seeking to refund the excise taxes passed on by Caltex. It claimed a refund
based on its operating franchise, PD 1590, which conferred to it certain tax exemption privileges on its purchase and/or
importation of aviation gas, fuel and oil, including those which are passed on to it by the seller and/or importer thereof.
Further, PAL asserted that it had the legal personality to file the aforesaid tax refund claim.

The CTA Second Division denied PAL’s claim stating that only the statutory taxpayer (Caltex) may seek a refund of the
excise tax paid EVEN IF the tax burden was shifted to PAL, who still is not deemed the statutory taxpayer. The CTA En Banc
affirmed the Second Division’s Ruling.

HELD:

Whether or not PAL has the legal personality to file a claim for refund of the passed on excise taxes  YES. PAL is
endowed with the legal standing to file the subject tax refund claim.

Section 129 of the NIRC imposes excise taxes on 2 things: a) goods manufactured or produced in the Philippines for
domestic sales or consumption or for any other disposition; and b) things imported. Section 131 states that on things
imported, the owner or importer is obligated to file the return and pay the excise taxes due thereon UNLESS the articles
are exempt from excise taxes and the person found to be in possession of the same is other than those legally entitled to
such tax exemption. While the owner or importer is required to pay the excise taxes directly to the government, they can
shift the economic burden to someone else (indirect tax).
Even if the purchaser effectively pays the value of the tax, the owner or importer is still regarded as the statutory taxpayers
under the law. Section 204(c) states that it is the statutory taxpayer which has the legal personality to file a claim for
refund. Under Section 135, it is the statutory taxpayer who is entitled to claim a tax refund based thereon and not the
party who merely bears its economic burden.

HOWEVER, the abovementioned rule does not apply to instances where the law clearly grants the party to which the
economic burden of the tax is shifted an exemption from both direct and indirect taxes. In which case, the latter must be
allowed to claim a tax refund even if it is not the statutory taxpayer.

MACEDA v. MACARAIG, JR.: Because the NPC has been exempted from both direct and indirect taxation, the NPC must be
held exempted from absorbing the economic burden of indirect taxation. NPC is entitled to be reimbursed by the BIR for
that part of the buying price of NPC which verifiably represents the tax already paid by the oil company-vendor to the BIR.
An exemption from "all taxes" excludes indirect taxes, unless the exempting statute, like NPC’s charter, is so couched as
to include indirect tax from the exemption.

If the law confers an exemption from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only bears
the economic burden of the applicable tax.

 PAL’s franchise grants it an exemption from both direct and indirect taxes on its purchase of petroleum products.
Section 13 states “The tax paid by the grantee under either of the above alternatives shall be in lieu of all other
taxes… including but not limited to: xxx All taxes.. directly due from or imposable upon the purchaser or the seller
of said petroleum products but are billed or passed on the grantee either as part of the price or cost thereof or by
mutual agreement or other arrangement.”
 PAL’s payment of either the basic corporate income tax or franchise tax, whichever is lower, shall be in lieu of all
other taxes, except only real property tax.
Hilado vs. CIR

Facts: Emilio Hilado filed his income tax return for 1951 with the treasurer of Bacolod City, claiming a deductible item of
P12,837.65 from his gross income pursuant to General Circular V-123 issued by the Collector of Internal Revenue. The
Secretary of Finance, through the Collector, issued General Circular V-139 which revoked and declared void Circular V-
123; and laid down the rule[s] that losses of property which occurred in World War II from fires, storms, shipwreck or
other casualty, or from robbery, theft, or embezzlement are deductible in the year of actual loss or destruction of said
property. The deductions were disallowed.

Issue: Whether Internal Revenue Laws were enforced during the war and whether Hilado can claim compensation for
destruction of his property during the war.

Held: Philippines Internal Revenue Laws are not political in nature and as such were continued in force during the period
of enemy occupation and in effect were actually enforced by the occupation government. Such tax laws are deemed to
be laws of the occupied territory and not of the occupying enemy. As of the end of 1945, there was no law which Hilado
could claim for the destruction of his properties during the battle for the liberation of the Philippines. Under the Philippine
Rehabilitation Act of 1948, the payment of claims by the War Damage Commission depended upon its discretions non-
payment of which does not give rise to any enforceable right. Assuming that the loss (deductible item) represents a portion
of the 75% of his war damage claim, the amount would be at most a proper deduction of his 1950 gross income (not on
his 1951 gross income) as the last installment and notice of discontinuation of payment by the War Damage.

ABS-CBN VS CTA

FACTS: The ABS-CBN Broadcasting Corporation (herein shall be called the “Company”) was engaged in the business of
telecasting local as well as foreign films acquired from foreign corporations not engaged in trade or business with the
Philippines. Under Section 24 (b) of the National Revenue Code, a withholding tax of 30% (RA 2343). It was implemented
through Circular No. V-334. Pursuant to the foregoing, ABS-CBN dutifully withheld and turned over to the BIR the
amount of 30% of one-half of the film rentals paid by it to foreign corporations not engaged in trade or business within
the Philippines. The last year that ABS-CBN withheld taxes pursuant to the foregoing Circular was in 1968. RA 5431
amended Section 24 (b) of the Tax Code increasing the tax rate from 30 % to 35 % and revising the tax basis from “such
amount” referring to rents, etc. to “gross income.” The following was implemented by Circular No. 4-71.

Petitioner requested for a reconsideration and withdrawal of the assessment.

ISSUE/S: Whether or not respondent can apply General Circular No. 4-71 retroactively and issue a deficiency assessment
against petitioner.

HELD/DECISION: Any rulings or circulars promulgated by the CIR have no retroactive application when it would be
prejudicial to taxpayers. The retroactive application of Memorandum Circular No. 4-71 prejudices ABS-CBN since:

1. The assessment and demand on petitioner to pay deficiency withholding income tax was also made three years after
1968 for a period of time commencing in 1965.

2. ABS-CBN was no longer in a position to withhold taxes due from foreign corporations because it had already remitted
all film rentals and no longer had any control over them when the new Circular was issued.
PBCOM vs CIR

FACTS: Petitioner PBCom filed its first and second quarter income tax returns, reported profits, and paid income
taxes amounting to P5.2M in 1985. However, at the end of the year PBCom suffered losses so that when it filed
its Annual Income Tax Returns for the year-ended December 31, 1986, the petitioner likewise reported a net
loss of P14.1 M, and thus declared no tax payable for the year. In 1988, the bank requested from CIR for a tax
credit and tax refunds representing overpayment of taxes. Pending investigation of the respondent CIR,
petitioner instituted a Petition for Review before the Court of Tax Appeals (CTA). CTA denied its petition for tax
credit and refund for failing to file within the prescriptive period to which the petitioner belies arguing the
Revenue Circular No.7-85 issued by the CIR itself states that claim for overpaid taxes are not covered by the
two-year prescriptive period mandated under the Tax Code.

ISSUE: Is the contention of the petitioner correct? Is the revenue circular a valid exemption to the NIRC?

HELD: No. The relaxation of revenue regulations by RMC 7-85 is not warranted as it disregards the two-year
prescriptive period set by law.

Basic is the principle that "taxes are the lifeblood of the nation." The primary purpose is to generate funds for
the State to finance the needs of the citizenry and to advance the common weal. Due process of law under the
Constitution does not require judicial proceedings in tax cases. This must necessarily be so because it is upon
taxation that the government chiefly relies to obtain the means to carry on its operations and it is of utmost
importance that the modes adopted to enforce the collection of taxes levied should be summary and interfered
with as little as possible.

From the same perspective, claims for refund or tax credit should be exercised within the time fixed by law
because the BIR being an administrative body enforced to collect taxes, its functions should not be unduly
delayed or hampered by incidental matters.

CIR VS TOKYO SHIPPING

FACTS: Tokyo Shipping filed a claim for refund from the BIR for erroneous prepayment of income and
common carrier’s taxes amounting to P107,142.75 since no receipt was realized from its charter agreement.
BIR failed to act promptly on the claim and thus it was elevated to the Court of Tax Appeals which decided in
favor of the refund. Hence, this petition for review on certiorari.

ISSUE: Whether Tokyo Shipping is entitled to a refund or tax credit for the prepayment of taxes

RULING: Yes. The power of taxation is sometimes called also the power to destroy. Therefore, it should be
exercised with caution to minimize injury to the proprietary rights of a taxpayer. It must be exercised fairly,
equally and uniformly, lest the tax collector kill the “hen that lays the golden egg”. Fair deal is expected by
taxpayers from the BIR and the duty demands that BIR should refund without unreasonable delay the
erroneous collection.
REYES v. ALMANZOR

FACTS: Petitioners JBL Reyes et al. owned a parcel of land in Tondo which are leased and occupied as dwelling
units by tenants who were paying monthly rentals of not exceeding P300. Sometimes in 1971 the Rental
Freezing Law was passed prohibiting for one year from its effectivity, an increase in monthly rentals of dwelling
units where rentals do not exceed three hundred pesos (P300.00), so that the Reyeses were precluded from
raising the rents and from ejecting the tenants. In 1973, respondent City Assessor of Manila re-classified and
reassessed the value of the subject properties based on the schedule of market values, which entailed an
increase in the corresponding tax rates prompting petitioners to file a Memorandum of Disagreement averring
that the reassessments made were "excessive, unwarranted, inequitable, confiscatory and unconstitutional"
considering that the taxes imposed upon them greatly exceeded the annual income derived from their
properties. They argued that the income approach should have been used in determining the land values instead
of the comparable sales approach which the City Assessor adopted.

ISSUE: Is the approach on tax assessment used by the City Assessor reasonable?

HELD: No. The taxing power has the authority to make a reasonable and natural classification for purposes of
taxation but the government's act must not be prompted by a spirit of hostility, or at the very least discrimination
that finds no support in reason. It suffices then that the laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the same manner, the conditions not being different
both in the privileges conferred and the liabilities imposed.
Consequently, it stands to reason that petitioners who are burdened by the government by its Rental Freezing
Laws (then R.A. No. 6359 and P.D. 20) under the principle of social justice should not now be penalized by the
same government by the imposition of excessive taxes petitioners can ill afford and eventually result in the
forfeiture of their properties.
TRIDHARMA VS CTA

FACTS: BIR assessed T with various tax deficiencies amounting to more than 4.640 billion pesos. Protest was filed. T paid
5.8 million pesos for its assessment on WTC, DST and EWT and reiterated its interest to compromise alleged IT and VAT
deficiencies. FDDA was issued at 4.473 billion pesos.

T appealed the CIR's decision to the CTA 2D and moved for the suspension of tax collection against it. However, the CTA
2D required T to post bond equivalent to 150% of the assessment within 15 days from notice. Hence, T was ordered to
post 6.701 billion pesos as bond.

T petitioned for certiorari.

ISSUES: Was the bond requirement properly issued considering T's allegation of illegal collection?

HELD: The bond requirement was not properly issued. Section 11 of R.A. 1125, as amended, indicates that the
requirement of the bond as a condition precedent to suspension of the collection applies only in cases where the
processes by which the collection sought to be made by means thereof are carried out in consonance with the law, not
when the processes are in plain violation of the law that they have to be suspended for jeopardizing the interests of the
taxpayer.

The Court is not in the position to rule on the correctness of the deficiency assessment, which is a matter still pending in
the CTA. The determination of whether the methods, employed by the CIR in its assessment, jeopardized the interests of
a taxpayer for being patently in violation of the law is a question of fact that calls for the reception of evidence.