1. CIR v. BPI G.R. No.

134062, April 17, 2007 521 SCRA 373

FACTS: Sometime in 1988 the CIR sent two notices of assessment to the respondent
of their deficiency percentage and documentary stamp taxes for the year 1986 in
the total amount of P129,488,656.63. In response, respondent alleged that they
were not properly informed of the deficiency in tax assessment made against them
by the CIR which violated the rule set forth in NIRC. Whereas in the said law the
taxpayer shall be informed in writing of the law and the facts on which the
assessment is made otherwise, the assessment shall be void.
ISSUE: Whether or not respondent was properly informed of the assessment made
by the CIR?
HELD: Accordingly, the only requirement in the former Section 270 was for the CIR
to notify or inform the taxpayer of his findings. Nothing in the old law required a
written statement to the taxpayer of the law and facts on which the assessments
were based. The court cannot read into the law what obviously was not intended by
Congress. That would be judicial legislation, nothing less. Jurisprudence, on the
other hand, simply required that the assessments contain a computation of tax
liabilities, the amount the taxpayer was to pay and a demand for payment within a
prescribed period. From all the foregoing discussions, We can now conclude that
[BPI] was indeed aware of the nature and basis of the assessments, and was given
all the opportunity to contest the same but ignored it despite the notice
conspicuously written on the assessments which states that "this ASSESSMENT
becomes final and unappealable if not protested within 30 days after receipt.
2. CIR v. PINEDA GR No. L-22734, September 15, 1967 21 SCRA 105
FACTS: Atanasio Pineda died, survived by his wife, Felicisima Bagtas, and 15
children, the eldest of whom is Atty. Manuel Pineda. Estate proceedings were had in
Court so that the estate was divided among and awarded to the heirs. Atty Pineda's
share amounted to about P2,500.00. After the estate proceedings were closed, the
BIR investigated the income tax liability of the estate for the years 1945, 1946,
1947 and 1948 and it found that the corresponding income tax returns were not
filed. Thereupon, the representative of the Collector of Internal Revenue filed said
returns for the estate issued an assessment and charged the full amount to the
inheritance due to Atty. Pineda who argued that he is liable only to extent of his
proportional share in the inheritance.
ISSUE: Can BIR collect the full amount of estate taxes from an heir's inheritance.
HELD: Yes. The Government can require Atty. Pineda to pay the full amount of the
taxes assessed. The reason is that the Government has a lien on the P2,500.00
received by him from the estate as his share in the inheritance, for unpaid income
taxes for which said estate is liable. By virtue of such lien, the Government has the
right to subject the property in Pineda's possession to satisfy the income tax

assessment. After such payment, Pineda will have a right of contribution from his
co-heirs, to achieve an adjustment of the proper share of each heir in the
distributable estate. All told, the Government has two ways of collecting the tax in
question. One, by going after all the heirs and collecting from each one of them the
amount of the tax proportionate to the inheritance received; and second, is by
subjecting said property of the estate which is in the hands of an heir or transferee
to the payment of the tax due. This second remedy is the very avenue the
Government took in this case to collect the tax. The Bureau of Internal Revenue
should be given, in instances like the case at bar, the necessary discretion to avail
itself of the most expeditious way to collect the tax as may be envisioned in the
particular provision of the Tax Code above quoted, because taxes are the lifeblood
of government and their prompt and certain availability is an imperious need.
3. VERA v. FERNANDEZ GR No. L-31364 March 30, 1979 89 SCRA 199
FACTS: The BIR filed on July 29, 1969 a motion for allowance of claim and for
payment of taxes representing the estate's tax deficiencies in 1963 to 1964 in the
intestate proceedings of Luis Tongoy. The administrator opposed arguing that the
claim was already barred by the statute of limitation, Section 2 and Section 5 of
Rule 86 of the Rules of Court which provides that all claims for money against the
decedent, arising from contracts, express or implied, whether the same be due, not
due, or contingent, all claims for funeral expenses and expenses for the last
sickness of the decedent, and judgment for money against the decedent, must be
filed within the time limited in the notice; otherwise they are barred forever.
5 ISSUE: Does the statute of non-claims of the Rules of Court bar the claim of the
government for unpaid taxes?
HELD: No. The reason for the more liberal treatment of claims for taxes against a
decedent's estate in the form of exception from the application of the statute of
non-claims, is not hard to find. Taxes are the lifeblood of the Government and their
prompt and certain availability are imperious need. (CIR vs. Pineda, 21 SCRA 105).
Upon taxation depends the Government ability to serve the people for whose
benefit taxes are collected. To safeguard such interest, neglect or omission of
government officials entrusted with the collection of taxes should not be allowed to
bring harm or detriment to the people, in the same manner as private persons may
be made to suffer individually on account of his own negligence, the presumption
being that they take good care of their personal affairs. This should not hold true to
government officials with respect to matters not of their own personal concern. This
is the philosophy behind the government's exception, as a general rule, from the
operation of the principle of estoppel.
4. CIR v. CA, CITY TRUST BANKING CORP. GR No. 86785, November 21,
1991 234 SCRA 348

FACTS: Respondent corporation Citytrust filed a refund of overpaid taxes with the
BIR by which the latter denied on the ground of prescription. Citytrust filed a
petition for review before the CTA. The case was submitted for decision based solely
on the pleadings and evidence submitted by the respondent because the CIR could
not present any evidence by reason of the repeated failure of the Tax Credit/Refud
Division of the BIR to transmit the records of the case, as well as the investigation
report thereon, to the Solicitor General. CTA rendered the decision ordering BIR to
grant the respondent's request for tax refund amounting to P 13.3 million.
ISSUE: Failure of the CIR to present evidence to support the case of the government,
should the respondent's claim be granted?
HELD: Not yet. It is a long and firmly settled rule of law that the Government is not
bound by the errors committed by its agents. In the performance of its
governmental functions, the State cannot be estopped by the neglect of its agent
and officers. Although the Government may generally be estopped through the
affirmative acts of public officers acting within their authority, their neglect or
omission of public duties as exemplified in this case will not and should not produce
that effect. Nowhere is the afore stated rule more true than in the field of taxation.
It is axiomatic that the Government cannot and must not be estopped particularly in
matters involving taxes. Taxes are the lifeblood of the nation through which the
government agencies continue to operate and with which the State effects its
functions for the welfare of its constituents. The errors of certain administrative
officers should never be allowed to jeopardize the Government's financial position,
especially in the case at bar where the amount involves millions of pesos the
collection whereof, if justified, stands to be prejudiced just because of bureaucratic
lethargy. Thus, it is proper that the case be remanded back to the CTA for further
proceedings and reception of evidence.
5. COMMISSIONER v. ALGUE, INC. GR No. L-28896, February 17, 1988 158
SCRA 9
FACTS: 6 Private respondent corporation Algue, Inc. filed its income tax returns for
1958 and 1959 showing deductions, for promotional fees paid, from their gross
income, thus lowering their taxable income. The BIR assessed Algue based on such
deductions contending that the claimed deduction is disallowed because it was not
an ordinary, reasonable and necessary expense.
ISSUE: Should an uncommon business expense be disallowed as a proper deduction
in computation of income taxes, corollary to the doctrine that taxes are the lifeblood
of the government?
HELD: No. Private respondent has proved that the payment of the fees was
necessary and reasonable in the light of the efforts exerted by the payees in
inducing investors and prominent businessmen to venture in an experimental
enterprise and involve themselves in a new business requiring millions of pesos.

This was no mean feat and should be, as it was, sufficiently recompensed. It is wellsettled that taxes are the lifeblood of the government and so should be collected
without unnecessary hindrance On the other hand, such collection should be made
in accordance with law as any arbitrariness will negate the very reason for
government itself. It is therefore necessary to reconcile the apparently conflicting
interests of the authorities and the taxpayers so that the real purpose of taxation,
which is the promotion of the common good, may be achieved. But even as we
concede the inevitability and indispensability of taxation, it is a requirement in all
democratic regimes that it be exercised reasonably and in accordance with the
prescribed procedure. If it is not, then the taxpayer has a right to complain and the
courts will then come to his succor. For all the awesome power of the tax collector,
he may still be stopped in his tracks if the taxpayer can demonstrate, as it has here,
that the law has not been observed.
6. CIR v. YMCA GR No. 124043, October 14, 1998 298 SCRA 83
FACTS: Private Respondent YMCA--a non-stock, non-profit institution, which
conducts various programs beneficial to the public pursuant to its religious,
educational and charitable objectives--leases out a portion of its premises to small
shop owners, like restaurants and canteen operators, deriving substantial income
for such. Seeing this, the commissioner of internal revenue (CIR) issued an
assessment to private respondent for deficiency income tax, deficiency expanded
withholding taxes on rentals and professional fees and deficiency withholding tax on
wages. YMCA opposed arguing that its rental income is not subject to tax, mainly
because of the provisions of Section 27 of NIRC which provides that civic league or
organizations not organized for profit but operate exclusively for promotion of social
welfare and those organized exclusively for pleasure, recreation and other nonprofitble businesses shall not be taxed.
ISSUE: Is the contention of YMCA tenable?
HELD: No. Because taxes are the lifeblood of the nation, the Court has always
applied the doctrine of strict in interpretation in construing tax exemptions.
Furthermore, a claim of statutory exemption from taxation should be manifest and
unmistakable from the language of the law on which it is based. Thus, the claimed
exemption "must expressly be granted in a statute stated in a language too clear to
be mistaken." 7
7. DAVAO GULF LUMBER CORP v. CIR GR No. 117359, July 23, 1998 293
SCRA 77
FACTS: Republic Act No. 1435 entitles miners and forest concessioners to the refund
of 25% of the specific taxes paid by the oil companies, which were eventually
passed on to the user--the petitioner in this case--in the purchase price of the oil
products. Petitioner filed before respondent Commissioner of Internal Revenue (CIR)
a claim for refund in the amount representing 25% of the specific taxes actually

paid on the above-mentioned fuels and oils that were used by petitioner in its
operations. However petitioner asserts that equity and justice demands that the
refund should be based on the increased rates of specific taxes which it actually
paid, as prescribed in Sections 153 and 156 of the NIRC. Public respondent, on the
other hand, contends that it should be based on specific taxes deemed paid under
Sections 1 and 2 of RA 1435.
ISSUE: Should the petitioner be entitled under Republic Act No. 1435 to the refund
of 25% of the amount of specific taxes it actually paid on various refined and
manufactured mineral oils and other oil products, and not on the taxes deemed paid
and passed on to them, as end-users, by the oil companies?
HELD: No. According to an eminent authority on taxation, "there is no tax exemption
solely on the ground of equity." Thus, the tax refund should be based on the taxes
deemed paid. Because taxes are the lifeblood of the nation, statutes that allow
exemptions are construed strictly against the grantee and liberally in favor of the
government. Otherwise stated, any exemption from the payment of a tax must be
clearly stated in the language of the law; it cannot be merely implied therefrom.
8. MARCOS II v. CA GR No. 120880, June 5, 1997 293 SCRA 77
FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of
Appeals to grant CIR's petition to levy the properties of the late Pres. Marcos to
cover the payment of his tax delinquencies during the period of his exile in the US.
The Marcos family was assessed by the BIR, and notices were constructively served
to the Marcoses, however the assessment were not protested administratively by
Mrs. Marcos and the heirs of the late president so that they became final and
unappealable after the period for filing of opposition has prescribed. Marcos
contends that the properties could not be levied to cover the tax dues because they
are still pending probate with the court, and settlement of tax deficiencies could not
be had, unless there is an order by the probate court or until the probate
proceedings are terminated. ISSUE: Is the contention of Bongbong Marcos correct?
HELD: No. The deficiency income tax assessments and estate tax assessment are
already final and unappealable -andthe subsequent levy of real properties is a tax
remedy resorted to by the government, sanctioned by Section 213 and 218 of the
National Internal Revenue Code. This summary tax remedy is distinct and separate
from the other tax remedies (such as Judicial Civil actions and Criminal actions), and
is not affected or precluded by the pendency of any other tax remedies instituted by
the government. The approval of the court, sitting in probate, or as a settlement
tribunal over the deceased is not a mandatory requirement in the collection of
estate taxes. It cannot therefore be argued that the Tax Bureau erred in proceeding
with the levying and sale of the properties allegedly owned by the late President, on
the ground 8 that it was required to seek first the probate court's sanction. There is
nothing in the Tax Code, and in the pertinent remedial laws that implies the

necessity of the probate or estate settlement court's approval of the state's claim
for estate taxes, before the same can be enforced and collected. On the contrary,
under Section 87 of the NIRC, it is the probate or settlement court which is bidden
not to authorize the executor or judicial administrator of the decedent's estate to
deliver any distributive share to any party interested in the estate, unless it is
shown a Certification by the Commissioner of Internal Revenue that the estate taxes
have been paid. This provision disproves the petitioner's contention that it is the
probate court which approves the assessment and collection of the estate tax.
9. REYES v. ALMANZOR GR Nos. L-49839-46, April 26, 1991 196 SCRA 322
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.
10. PHIL. BANK OF COMMUNICATIONS v. CIR GR No. 112024, January 28,
1999 302 SCRA 250
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 9
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.

REYES VS. ALMANZOR GR 43839-46 April 26, 1991 196 SCRA 322 Paras, J.:
FACTS: Petitioner are owners of parcels of land leased to tenants. RA 6359 was
enacted prohibiting for one year an increase in monthly rentals of dwelling units and
said Act also disallowed ejectment of lessees upon the expiration of the usual period
of lease. City assessor of Manila
assessed the value of petitioners property based on the schedule of market values
duly
reviewed by the Secretary of Finance. The revision entailed an increase to the tax
rates and petitioners averred that the reassessment imposed upon them greatly
exceeded the annual income derived from their properties.
ISSUE: Whether or not income approach is the method to be used in the tax
assessment and not the comparable sales approach.
RULING: By no stretch of the imagination can the market value of properties
covered by PD 20 be equated with the market value of properties not so covered. In
the case at bar, not even factors determinant of the assessed value of subject
properties under the comparable sales approach were presented by respondent
namely:

1. That the sale must represent a bonafide arms length transaction between a
willing seller
and a willing buyer
2. The property must be comparable property. As a general rule, there were no
takers so that there can be no reasonable basis for the conclusion that these
properties are comparable. Taxes are lifeblood of government, however, such
collection should be made in accordance with the law and therefore necessary to
reconcile conflicting interests of the authorities so that the real purpose of taxation,
promotion of the welfare of common good can be achieved.