CIR vs.

British Overseas Airways Corporation (BOAC)

Facts: British Overseas Airways Corp (BOAC) is a 100% British Government-owned corporation engaged in international airline
business and is a member of the Interline Air Transport Association, and thus, it operates air transportation services and sells
transportation tickets over the routes of the other airline members.

From 1959 to 1972, BOAC had no landing rights for traffic purposes in the Philippines and thus, did not carry passengers
and/or cargo to or from the Philippines but maintained a general sales agent in the Philippines - Warner Barnes & Co. Ltd. and later,
Qantas Airways - which was responsible for selling BOAC tickets covering passengers and cargoes. The Commissioner of Internal
Revenue assessed deficiency income taxes against BOAC.

Issue: Whether the revenue derived by BOAC from ticket sales in the Philippines, constitute income of BOAC from Philippine
sources, and accordingly taxable.

Held: The source of an income is the property, activity, or service that produced the income. For the source of income to be
considered as coming from the Philippines, it is sufficient that the income is derived from activity within the Philippines. Herein, the
sale of tickets in the Philippines is the activity that produced the income. The tickets exchanged hands here and payment for fareswere
also made here in the Philippine currency.

The situs of the source of payments is the Philippines. The flow of wealth proceeded from, and occurred within Philippine territory,
enjoying the protection accorded by the Philippine government. In consideration of such protection, the flow of wealth should share
the burden of supporting the government. PD 68, in relation to PD 1355, ensures that international airlines are taxed on their income
from Philippine sources. The 2 1/2% tax on gross billings is an income tax. If it had been intended as an excise tax or percentage tax, it
would have been placed under Title V of the Tax Code covering taxes on business.

Abakada Guro Party-list et. al vs. Executive Secretary (G.R. No. 168056) - Digest

Facts:

On May 24, 2005, the President signed into law Republic Act 9337 or the VAT Reform Act. Before the law took effect on July 1, 2005,
the Court issued a TRO enjoining government from implementing the law in response to a slew of petitions for certiorari and
prohibition questioning the constitutionality of the new law.

The challenged section of R.A. No. 9337 is the common proviso in Sections 4, 5 and 6: That the President, upon the recommendation
of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to 12%, after any of the following
conditions has been satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth
percent (2 4/5%);

or (ii) National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1%)

Petitioners allege that the grant of stand-by authority to the President to increase the VAT rate is an abdication by Congress of its
exclusive power to tax because such delegation is not covered by Section 28 (2), Article VI Consti. They argue that VAT is a tax levied
on the sale or exchange of goods and services which cant be included within the purview of tariffs under the exemption delegation
since this refers to customs duties, tolls or tribute payable upon merchandise to the government and usually imposed on
imported/exported goods.

Petitioners further alleged that delegating to the President the legislative power to tax is contrary to republicanism. They insist that
accountability, responsibility and transparency should dictate the actions of Congress and they should not pass to the President the
decision to impose taxes. They also argue that the law also effectively nullified the Presidents power of control, which includes the
authority to set aside and nullify the acts of her subordinates like the Secretary of Finance, by mandating the fixing of the tax rate by
the President upon the recommendation of the Secretary of Justice.

Issue:

Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate, especially on account of the
recommendatory power granted to the Secretary of Finance, constitutes undue delegation of legislative power?

Ruling:

The powers which Congress is prohibited from delegating are those which are strictly, or inherently and exclusively, legislative.
Purely legislative power which can never be delegated is the authority to make a complete law- complete as to the time when it shall
take effect and as to whom it shall be applicable, and to determine the expediency of its enactment. It is the nature of the power and
not the liability of its use or the manner of its exercise which determines the validity of its delegation.

The exceptions are:

(a) delegation of tariff powers to President under Constitution

(b) delegation of emergency powers to President under Constitution

(c) delegation to the people at large

(d) delegation to local governments

(e) delegation to administrative bodies

For the delegation to be valid, it must be complete and it must fix a standard. A sufficient standard is one which defines legislative
policy, marks its limits, maps out its boundaries and specifies the public agency to apply it.

In this case, it is not a delegation of legislative power BUT a delegation of ascertainment of facts upon which enforcement and
administration of the increased rate under the law is contingent. The legislature has made the operation of the 12% rate effective
January 1, 2006, contingent upon a specified fact or condition. It leaves the entire operation or non-operation of the 12% rate upon
factual matters outside of the control of the executive. No discretion would be exercised by the President. Highlighting the absence of
discretion is the fact that the word SHALL is used in the common proviso. The use of the word SHALL connotes a mandatory order.
Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion.

Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the conditions
specified by Congress. This is a duty, which cannot be evaded by the President. It is a clear directive to impose the 12% VAT rate
when the specified conditions are present.

Congress just granted the Secretary of Finance the authority to ascertain the existence of a fact--- whether by December 31, 2005, the
VAT collection as a percentage of GDP of the previous year exceeds 2 4/5 % or the national government deficit as a percentage of
GDP of the previous year exceeds one and 1%. If either of these two instances has occurred, the Secretary of Finance, by legislative
mandate, must submit such information to the President.

In making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting
as the alter ego of the President or even her subordinate. He is acting as the agent of the legislative department, to determine and
declare the event upon which its expressed will is to take effect. The Secretary of Finance becomes the means or tool by which
legislative policy is determined and implemented, considering that he possesses all the facilities to gather data and information and has
a much broader perspective to properly evaluate them. His function is to gather and collate statistical data and other pertinent
information and verify if any of the two conditions laid out by Congress is present.

Congress does not abdicate its functions or unduly delegate power when it describes what job must be done, who must do it, and what
is the scope of his authority; in our complex economy that is frequently the only way in which the legislative process can go forward.

There is no undue delegation of legislative power but only of the discretion as to the execution of a law. This is constitutionally
permissible. Congress did not delegate the power to tax but the mere implementation of the law.

BOARD OF ASSESSMENT APPEALS OF LAGUNA vs. CTA, NWSA

8 SCRA 224
GR No. L-18125, May 31, 1963

"A tax on property of the Government, whether national or local, would merely have the effect of taking money from one pocket to
put it in another pocket."

FACTS: National Waterworks and Sewerage Authority (NWSA), a public corporation owned by the Government of the Philippines as
well as all property comprising waterworks and sewerage systems placed under it, took over the Cabuyao-Sta. Rosa-Bian
Waterworks System in 1956. It was assessed by the Provincial Assessor of Laguna, for purposes of real estate taxes, on the real
properties owned by Cabuyao Waterworks. The respondent protested claiming it is exempted from the payment of real estate taxes in
view of the nature and kind of said property and functions and activities of petitioner. The petitioner denied the protest arguing that
such real properties are subject to real estate tax because although said properties belong to the Republic of the Philippines, the same
holds it, not in its governmental, political or sovereign capacity, but in a private, proprietary or patrimonial character, which, allegedly,
is not covered by the exemption contained in section 3(a) of Republic Act No. 470.

ISSUE: Are the real properties owned by the respondent public corporation subject to real estate tax?

HELD: No. Republic Act No. 470 makes no distinction between property held in a sovereign, governmental or political capacity and
those possessed in a private, proprietary or patrimonial character. And where the law does not distinguish neither may we, unless there
are facts and circumstances clearly showing that the lawmaker intended the contrary, but no such facts and circumstances have been
brought to our attention. Indeed, the noun "property" and the verb "owned" used in said section 3(a) strongly suggest that the object of
exemption is considered more from the view point of dominion, than from that of domain.
Moreover, taxes are financial burdens imposed for the purpose of raising revenues with which to defray the cost of the operation of
the Government, and a tax on property of the Government, whether national or local, would merely have the effect of taking money
from one pocket to put it in another pocket. Hence, it would not serve, in the final analysis, the main purpose of taxation. What is
more, it would tend to defeat it, on account of the paper work, time and consequently, expenses it would entail.

Mactan Cebu International Airport Authority v. Marcos 261 SCRA 667 (1996)

Facts:
Petitioner Mactan Cebu International Airport Authority was created by virtue of R.A. 6958, mandated to principally undertake the
economical, efficient, and effective control, management, and supervision of the Mactan International Airport and Lahug Airport, and
such other airports as may be established in Cebu.

Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with
Section 14 of its charter. However, on October 11, 1994, Mr. Eustaquio B. Cesa, Officer in Charge, Office of the Treasurer of the City
of Cebu, demanded payment from realty taxes in the total amount of P2229078.79. Petitioner objected to such demand for payment as
baseless and unjustified claiming in its favor the afore cited Section 14 of R.A. 6958. It was also asserted that it is an instrumentality
of the government performing governmental functions, citing Section 133 of the Local Government Code of 1991.
Section 133. Common limitations on the Taxing Powers of Local Government Units.

The exercise of the taxing powers of the provinces, cities, barangays, municipalities shall not extend to the levi of the following:

xxx Taxes, fees or charges of any kind in the National Government, its agencies and instrumentalities, and LGUs. xxx

Respondent City refused to cancel and set aside petitioners realty tax account, insisting that the MCIAA is a government-controlled
corporation whose tax exemption privilege has been withdrawn by virtue of Sections 193 and 234 of Labor Code that took effect on
January 1, 1992.

Issue:
Whether or not the petitioner is a taxable person

Rulings:

Taxation is the rule and exemption is the exception. MCIAAs exemption from payment of taxes is withdrawn by virtue of Sections
193 and 234 of Labor Code. Statutes granting tax exemptions shall be strictly construed against the taxpayer and liberally construed in
favor of the taxing authority.

The petitioner cannot claim that it was never a taxable person under its Charter. It was only exempted from the payment of realty
taxes. The grant of the privilege only in respect of this tax is conclusive proof of the legislative intent to make it a taxable person
subject to all taxes, except real property tax.

Arturo Tolentino vs Secretary of Finance

235 SCRA 630 (1994) 249 SCRA 635 (1995) Political Law Origination of Revenue Bills EVAT Amendment by Substitution

Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the Expanded Value Added Tax (EVAT)
Law. Tolentino averred that this revenue bill did not exclusively originate from the House of Representatives as required by Section
24, Article 6 of the Constitution. Even though RA 7716 originated as HB 11197 and that it passed the 3 readings in the HoR, the same
did not complete the 3 readings in Senate for after the 1 st reading it was referred to the Senate Ways & Means Committee thereafter
Senate passed its own version known as Senate Bill 1630. Tolentino averred that what Senate could have done is amend HB 11197 by
striking out its text and substituting it with the text of SB 1630 in that way the bill remains a House Bill and the Senate version just
becomes the text (only the text) of the HB. (Its ironic however to note that Tolentino and co-petitioner Raul Roco even signed the
said Senate Bill.)

ISSUE: Whether or not the EVAT law is procedurally infirm.

HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was consistent with the power of
the Senate to propose or concur with amendments to the version originated in the HoR. What the Constitution simply means,
according to the 9 justices, is that the initiative must come from the HoR. Note also that there were several instances before where
Senate passed its own version rather than having the HoR version as far as revenue and other such bills are concerned. This practice of
amendment by substitution has always been accepted. The proposition of Tolentino concerns a mere matter of form. There is no
showing that it would make a significant difference if Senate were to adopt his over what has been done.

Wells Fargo Banks & Union Trust Company vs Collector of Internal Revenue

70 Phil. 325 Mercantile Law Corporation Code Shares of Stock Situs of Shares of Stock

In September 1932, Birdie Lillian Eye died in Los Angeles, California, USA which was also her place of domicile. She left various
properties. Among those properties include some intangibles consisting of 70,000 shares in the Benguet Consolidated Mining
Company, a corporation organized and existing under Philippine laws.

The Collector of Internal Revenue sought to assess and collect estate tax on the said shares. Wells Fargo Banks & Union Trust
Company, the trustee of the estate of the decedent Eye, objected to said assessment. Wells Fargo averred that said shares were already
subjected to inheritance tax in California and hence cannot be taxed again in the Philippines (note at that time the Philippines was
still under the Commonwealth and were not yet totally independent from the US).

ISSUE: Whether or not the shares are subject to estate tax in the Philippines.

HELD: Yes. The Supreme Court ruled that even though the Philippines was considered a US territory at that time, it is still a separate
jurisdiction from the US in several aspects particularly taxation. Hence, the Philippines has the power to tax said shares. The situs of
taxation is here in the Philippines because the situs of the shares of stock concerned is here in the Philippines because of the fact that
the said shares were issued here by a corporation organized and existing under the laws of the Philippines which is also domiciled
here. Further, (and this is the deeper reason), when Eye was alive, she actually delivered the title to said shares to the resident secretary
of the corporation here in the Philippines hence the shares never left the Philippines.
Note: As a rule, intangibles follow the person (mobilia sequuntur personam). Hence, intangibles are taxable in the place where their
owner may be domiciled. However, Section 104 of the NIRC provides that if the shares have attained business situs here in the
Philippines, then said shares are taxable here even if the owner of said shares are domiciled abroad.

Abra vs Hernando (1981)

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107 SCRA 104 Political Law Exemption From Taxes The Church

The Province of Abra sought to tax the properties of the Roman Catholic Bishop, Inc. of Bangued. Judge Harold Hernando dismissed
the petition of Abra without hearing its side. Hernando ruled that there is no question that the real properties sought to be taxed by
the Province of Abra are properties of the respondent Roman Catholic Bishop of Bangued, Inc. Likewise, there is no dispute that the
properties including their produce are actually, directly and exclusively used by the Roman Catholic Bishop of Bangued, Inc. for
religious or charitable purposes.

ISSUE: Whether or not the properties of the church (in this case) is exempt from taxes.

HELD: No, they are not tax exempt. It is true that the Constitution provides that charitable institutions, mosques, and non-profit
cemeteries are required that for the exemption of lands, buildings, and improvements, they should not only be exclusively but
also actually and directly used for religious or charitable purposes. The exemption from taxation is not favored and is never
presumed, so that if granted it must be strictly construed against the taxpayer. However, in this case, there is no showing that the said
properties are actually and directly used for religious or charitable uses.

Abra Valley College vs Aquino (G.R. No. L-39086)

FACTS: Petitioner, an educational corporation and institution of higher learning duly incorporated with the Securities and Exchange
Commission in 1948, filed a complaint to annul and declare void the Notice of Seizure and the Notice of Sale of its lot and
building located at Bangued, Abra, for non-payment of real estate taxes and penalties amounting to P5,140.31. Said Notice of
Seizure by respondents Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the said
taxes thereon.

The parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned decision. The trial court ruled
for the government, holding that the second floor of the building is being used by the director for residential purposes and that the
ground floor used and rented by Northern Marketing Corporation, a commercial establishment, and thus the property is not being used
exclusively for educational purposes. Instead of perfecting an appeal, petitioner availed of the instant petition for review on certiorari
with prayer for preliminary injunction before the Supreme Court, by filing said petition on 17 August 1974.

ISSUE: Whether or not the lot and building are used exclusively for educational purposes.

HELD: Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, expressly grants exemption from realty taxes for
cemeteries, churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for
religious, charitable or educational purposes. Reasonable emphasis has always been made that the exemption extends to facilities
which are incidental to and reasonably necessary for the accomplishment of the main purposes. The use of the school building or lot
for commercial purposes is neither contemplated by law, nor by jurisprudence. In the case at bar, the lease of the first floor of the
building to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of
education. The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution.

The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the assessed tax be returned to the
petitioner. The modification is derived from the fact that the ground floor is being used for commercial purposes (leased) and the
second floor being used as incidental to education (residence of the director).

LUNG CENTER OF THE PHILIPPINES VS QUEZON CITY

G.R. No. 144104, June 29, 2004 [Constitutional Law - Article VI: Legislative Department; Taxation ]

FACTS:
Petitioner is a non-stock, non-profit entity established by virtue of PD No. 1823, seeks exemption from real property taxes when the
City Assessor issued Tax Declarations for the land and the hospital building. Petitioner predicted on its claim that it is a charitable
institution. The request was denied, and a petition hereafter filed before the Local Board of Assessment Appeals of Quezon City (QC-
LBAA) for reversal of the resolution of the City Assessor. Petitioner alleged that as a charitable institution, is exempted from real
property taxes under Sec 28(3) Art VI of the Constitution. QC-LBAA dismissed the petition and the decision was likewise affirmed on
appeal by the Central Board of Assessment Appeals of Quezon City. The Court of Appeals affirmed the judgment of the CBAA.

ISSUE:
1. Whether or not petitioner is a charitable institution within the context of PD 1823 and the 1973 and 1987 Constitution and Section
234(b) of RA 7160.

2. Whether or not petitioner is exempted from real property taxes.

RULING:
1. Yes. The Court hold that the petitioner is a charitable institution within the context of the 1973 and 1987 Constitution. Under PD
1823, the petitioner is a non-profit and non-stock corporation which, subject to the provisions of the decree, is to be administered by
the Office of the President with the Ministry of Health and the Ministry of Human Settlements. The purpose for which it was created
was to render medical services to the public in general including those who are poor and also the rich, and become a subject of charity.
Under PD 1823, petitioner is entitled to receive donations, even if the gift or donation is in the form of subsidies granted by the
government.

2. Partly No. Under PD 1823, the lung center does not enjoy any property tax exemption privileges for its real properties as well as the
building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of the Constitution of the property taxes only. This provision was implanted by
Sec.243 (b) of RA 7160.which provides that in order to be entitled to the exemption, the lung center must be able to prove that: it is a
charitable institution and; its real properties are actually, directly and exclusively used for charitable purpose. Accordingly, the
portions occupied by the hospital used for its patients are exempt from real property taxes while those leased to private entities are not
exempt from such taxes

Estate of Benigno Toda Jr.

G.R. No. 147188. September 14, 2004
DAVIDE, JR., C.J.

Lessons Applicable: Tax evasion v. Tax avoidance

Laws Applicable:

FACTS:

March 2, 1989: Cibeles Insurance Corp. (CIC) authorized Benigno P. Toda Jr., President and Owner of 99.991% of
outstanding capital stock, to sell the Cibeles Building and 2 parcels of land which he sold to Rafael A. Altonaga on August 30,
1987 for P 100M who then sold it on the same day to Royal Match Inc. for P 200M.
CIC included gains from sale of real property of P 75,728.021 in its annual income tax return while Altonaga paid a 5%
capital gains tax of P 10M
July 12, 1990: Toda sold his shares to Le Hun T. Choa for P 12.5M evidenced by a deed of ale of shares of stock which
provides that the buyer is free from all income tax liabilities for 1987, 1988 and 1989.
Toda Jr. died 3 years later.
March 29, 1994: BIR sent an assessment notice and demand letter to CIC for deficiency of income tax of P 79,099, 999.22
January 27, 1995: BIR sent the same to the estate of Toda Jr.
Estate filed a protest which was dismissed - fraudulent sale to evade the 35% corporate income tax for the additional gain of
P 100M and that there is in fact only 1 sale.
Since it is falsity or fraud, the prescription period is 10 years from the discovery of the falsity or fraud as prescribed
under Sec. 223 (a) of the NIRC
CTA: No proof of fraudulent transaction so the applicable period is 3 years after the last day prescribed by law for filing the
return
CA: affirmed
CIR appealed
ISSUE: W/N there is falsity or fraud resulting to tax evasion rather than tax avoidance so the period for assessment has not prescribed.

HELD: YES. Estate shall be liable since NOT yet prescribed.

Tax avoidance and tax evasion are the two most common ways used by taxpayers in escaping from taxation. ax avoidance is
the tax saving device within the means sanctioned by law. This method should be used by the taxpayer in good faith and at arms
length. Tax evasion, on the other hand, is a scheme used outside of those lawful means and when availed of, it usually subjects the
taxpayer to further or additional civil or criminal liabilities.
Tax evasion connotes the integration of three factors:
(1) the end to be achieved, i.e., the payment of less than that known by the taxpayer to be legally due, or the non-
payment of tax when it is shown that a tax is due
(2) an accompanying state of mind which is described as being evil, in bad faith, willfull,or deliberate and not
accidental; and
(3) a course of action or failure of action which is unlawful.
All are present in this case. The trial balance showed that RMI debited P 40M as "other-inv. Cibeles Building" that
indicates RMI Paid CIC (NOT Altonaga)
Fraud in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal or equitable duty, trust or confidence justly reposed, resulting in the damage to another,
or by which an undue and unconscionable advantage is taken of another.
Here, it is obvious that the objective of the sale to Altonaga was to reduce the amount of tax to be paid especially
that the transfer from him to RMI would then subject the income to only 5% individual capital gains tax, and not the 35%
corporate income tax.
Generally, a sale of or exchange of assets will have an income tax incidence only when it is consummated but such
tax incidence depends upon the substance of the transaction rather them mere formalities.

Commissioner of Internal Revenue vs. Central Luzon Drug Corporation GR No. 159647, April 15, 2005
Facts:
Respondent is a domestic corporation engaged in the retailing of medicines and other pharmaceutical products. In 1996 it operated six (6) drugstores under the
business name and style Mercury Drug. From January to December 1996 respondent granted
20% sales discount to qualified senior citizens on their purchases of medicines pursuant to RA 7432. For said period respondent granted a total of
904,769.On April 15, 1997, respondent filed its annual ITR for taxable year 1996 declaring therein net losses. On Jan. 16, 1998 respondent filed with petitioner a
claim for tax refund/credit of 904,769.00 alledgedly arising from the 20% sales discount. Unable to obtain affirmative response from
petitioner, respondent elevated its claim to the CTAvia Petition for Review. CTAdismissed the same but on MR, CTAreversed its earlier ruling and ordered
petitioner to issue a Tax Credit Certificate in favor of respondent citing CAGR SP No. 60057 (May 31, 2001, Central Luzon Drug Corp. vs. CIR) citing that Sec.229
of RA 7432 deals exclusively with illegally collected or erroneously paid taxes but that there are other situations which may warrant a tax credit/refund.CA affirmed
CTAdecision reasoning that RA 7432 required neither a tax liability nor a payment of taxes by private establishments prior to the availment of a tax credit. Moreover,
such credit is not tantamount to an unintended benefit from the law, but rather a just compensation for the taking of private property for public use.

ISSUE:
W/N respondent, despite incurring a net loss, may still claim the 20% sales discount as a tax credit.

RULING:
Yes, it is clear that Sec. 4a of RA 7432 grants to senior citizens the privilege of obtaining a 20% discount on their purchase of medicine from any private
establishment in the country. The latter may then claim the cost of the discount as a tax credit . Such credit can be claimed even if the establishment operates at a
loss. A tax credit generally refers to an amount that is subtracted directly from ones total tax liability. It is an allowance against the
tax itself or a deduction from what is owed by a taxpayer to the government. A tax credit should be understood in relation to other tax
concepts. One of these is tax deduction
which is subtraction from income for tax purposes, or an amount that is allowed by law to reduce income prior to the application
of the tax rate to compute the amount of tax which is due. In other words, whereas a tax credit reduces the tax due, tax deduction reduces the
income subject to tax in order to arrive at the taxable income.

ATLAS CONSOLIDATED MINING DEVT CORP vs. CIR

524 SCRA 73, 103
GR Nos. 141104 & 148763, June 8, 2007

"The taxpayer must justify his claim for tax exemption or refund by the clearest grant of organic or statute law and should not be
permitted to stand on vague implications."

"Export processing zones (EPZA) are effectively considered as foreign territory for tax purposes."

FACTS: Petitioner corporation, a VAT-registered taxpayer engaged in mining, production, and sale of various mineral products, filed
claims with the BIR for refund/credit of input VAT on its purchases of capital goods and on its zero-rated sales in the taxable quarters
of the years 1990 and 1992. BIR did not immediately act on the matter prompting the petitioner to file a petition for review before the
CTA. The latter denied the claims on the grounds that for zero-rating to apply, 70% of the company's sales must consists of exports,
that the same were not filed within the 2-year prescriptive period (the claim for 1992 quarterly returns were judicially filed only on
April 20, 1994), and that petitioner failed to submit substantial evidence to support its claim for refund/credit.
The petitioner, on the other hand, contends that CTA failed to consider the following: sales to PASAR and PHILPOS within the
EPZA as zero-rated export sales; the 2-year prescriptive period should be counted from the date of filing of the last adjustment return
which was April 15, 1993, and not on every end of the applicable quarters; and that the certification of the independent CPA attesting
to the correctness of the contents of the summary of suppliers invoices or receipts examined, evaluated and audited by said CPA
should substantiate its claims.

ISSUE: Did the petitioner corporation sufficiently establish the factual bases for its applications for refund/credit of input VAT?

HELD: No. Although the Court agreed with the petitioner corporation that the two-year prescriptive period for the filing of claims for
refund/credit of input VAT must be counted from the date of filing of the quarterly VAT return, and that sales to PASAR and PHILPOS
inside the EPZA are taxed as exports because these export processing zones are to be managed as a separate customs territory from the
rest of the Philippines, and thus, for tax purposes, are effectively considered as foreign territory, it still denies the claims of petitioner
corporation for refund of its input VAT on its purchases of capital goods and effectively zero-rated sales during the period claimed for
not being established and substantiated by appropriate and sufficient evidence.
Tax refunds are in the nature of tax exemptions. It is regarded as in derogation of the sovereign authority, and should be construed in
strictissimi juris against the person or entity claiming the exemption. The taxpayer who claims for exemption must justify his claim
by the clearest grant of organic or statute law and should not be permitted to stand on vague implications.

American Bible Society v City of Manila GR No. L-9637, April 30, 1957

FACTS:
In the course of its ministry, the Philippine agency of American Bible Society (a foreign, non-stock, non-profit, religious,
missionary corporation) has been distributing and selling bibles and/or gospel portions thereof throughout the Philippines. The acting
City Treasurer of Manila informed plaintiff that it was conducting the business of general merchandise since November 1945, without
providing itself with the necessary Mayors permit and municipal license, in violation of Ordinance No. 3000, as amended, and
Ordinances Nos. 2529, 3028 and 3364. The society paid such under protest and filed suit questioning the legality of the ordinances
under which the fees are being collected.

ISSUES:
 1. Whether or not the ordinances of the City of Manila are constitutional and valid

2. Whether the provisions of said ordinances are applicable or not to the case at bar

RULING:
1. Yes, they are constitutional. The ordinances do not deprive defendant of his constitutional right of the free exercise and enjoyment
of religious profession and worship, even though it prohibits him from introducing and carrying out a scheme or purpose which he
sees fit to claim as part of his religious system. It seems clear, therefore, that Ordinance No. 3000 cannot be considered
unconstitutional, even if applied to plaintiff society.

2. The ordinance is inapplicable to said business, trade or occupation of the plaintiff. Even if religious groups and the press are not
altogether free from the burdens of the government, the act of distributing and selling bibles is purely religious and does not fall under
Section 27e of the Tax Code (CA 466). The fact that the price of bibles, etc. are a little higher than actual cost of the same does not
necessarily mean it is already engaged in business for profit. Thus, the Ordinances are not applicable to the Society