TAX14.7 Misamis Oriental Association of Coco Traders v.

Department of Finance Secretary

FACTS: Misamis is engaged in the buying and selling of copra in Misamis Oriental. The petitioner alleges that prior to the issuance
of RMC 47-91, which implemented VAT Ruling 190-90, copra was classified as agricultural food product NIRC and, therefore,
exempt from VAT at all stages of production or distribution.

CIR issued the circular in question, classifying copra as an agricultural non-food product and declaring it exempt from VAT only
if the sale is made by the primary producer pursuant to the Tax Code.

The reclassification had the effect of denying to the petitioner the exemption it previously enjoyed when copra was classified as an
agricultural food product. Petitioner challenges RMC No. 47-91 on various grounds, which will be presently discussed although
not in the order raised in the petition for prohibition.

ISSUE: whether the petitioner complains that it was denied due process because it was not heard before the ruling was made.

RULING: No. There is a distinction in administrative law between legislative rules and interpretative rules. There would be force
in petitioner's argument if the circular in question were in the nature of a legislative rule. But it is not. It is a mere interpretative
rule.

TAX1.8 Commissioner of Customs v. Hypermix Feeds Corp.

TAX2.8 CIR v. Leal

FACTS: The CIR issued an (RMO) imposing 5% lending investors tax on pawnshops based on their gross income and an (RMC)
subjecting the pawn ticket to the documentary stamp tax as prescribed in Title VII of the Tax Code.

Josefina Leal, owner and operator of a pawnshop, being adversely affected, asked for a reconsideration of both but the same was
denied with finality by CIR in its BIR Ruling. So, she filed with the RTC a petition for prohibition. CIR opposed contending that
the case falls within the exclusive appellate jurisdiction of the Court of Tax Appeals.

ISSUE: WON a BIR Ruling made by the CIR adversely affecting a taxpayer is appealable to the CTA.

RULING: Yes. The questioned RMO and 43-91 are actually rulings or opinions of the Commissioner implementing the Tax Code
on the taxability of pawnshops. Such rulings of the Commissioner of Internal Revenue are appealable to the CTA as provided for
by RA 1125 (An Act Creating the Court of Tax Appeals).

TAX3.8 British American Tobacco Corp. v. Comacho

TAX4.8 United Cadiz Sugar Farmers Association Multi-Purpose Cooperative v. Commissioner

Facts: The BIR’s response to UCSFA-MPC's query was that the latter was exempted from payment of VAT. As a result, RD
Galanto no longer required the advance payment of VAT from UCSFA-MPC and began issuing Authorization Allowing Release
of Refined Sugar (AARRS) in its favor, thereby allowing the cooperative to withdraw its refined sugar from the refinery. But the
administrative legal opinion notwithstanding, RD Galanto again demanded the payment of advance VAT from UCSFA-MPC.
Unable to withdraw its refined sugar from the refinery/mill for its operations, UCSFA-MPC was forced to pay advance VAT under
protest.

UCSFA-MPC filed an administrative claim for refund with the BIR, asserting that it had been granted tax exemption. It likewise
filed a judicial claim for refund before the CTA division five days later.

Issue: Whether the claimant complied with provisions of the NIRC which states that: within two years from the date of payment
of tax, the claimant must first file an administrative claim with the CIR before filing its judicial claim with the courts of law.

Ruling: Yes. UCSFA-MPC’s claim for refund must be filed within two years from the date of payment of tax, the claimant must
first file an administrative claim with the CIR before filing its judicial claim with the courts of law. Both claims must be filed
within a two-year reglementary period. Timeliness of the filing of the claim is mandatory and jurisdictional. The court cannot take
cognizance of a judicial claim for refund filed either prematurely or out of time.

In the present case, the court a quo found that while the judicial claim was filed merely five days after filing the administrative
claim, both claims were filed within the two-year reglementary period. Thus, the CTA correctly exercised jurisdiction over the
judicial claim filed by UCSFA-MPC
TAX5.8 Smart Communications v. NTC

FACTS: Pursuant to its rule-making and regulatory powers, the NTC issued a Memorandum Circulars promulgating rules and
regulations on the billing of telecommunications services and the validity of all prepaid cards sold on 07 October 2000 and beyond
to be valid for at least two (2) years from date of first use.

Petitioners filed against NTC and its officials an action for declaration of nullity of NTC Memoranda alleging that the NTC has no
jurisdiction to regulate the sale of consumer goods such as the prepaid call cards since such jurisdiction belongs to the DTI under
the Consumer Act of the Philippines; and that the requirements of identification of prepaid card buyers and call balance
announcement are unreasonable.

ISSUE: Whether regular courts have jurisdiction on the validity or constitutionality of a regulation issued by the
administrative agency in the performance of its quasi-legislative function

RULING: Yes. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes
the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial
review or the power to declare a law, treaty, international or executive agreement, presidential decree, order, instruction,
ordinance, or regulation in the courts, including the regional trial courts.

TAX6.8 Roxas v. CTA

FACTS: Spouses Roxas transmitted to their grandchildren by hereditary succession several properties.

The Roxas brothers formed a partnership called Roxas y Compania to manage the properties. The tenants who have all been tilling
the lands for generations wanted to purchase from Roxas the parcels which they actually occupied. For its part, the Government
persuaded the Roxas brothers to part with their landholdings. However the Government did not have funds to cover the purchase
price, and so, a special arrangement was made for the Rehabilitation Finance Corporation to advance to Roxas.

Roxas allowed the farmers to buy the lands for the same price but by installment, and contracted with the Rehabilitation Finance
Corporation to pay its loan from the proceeds of the yearly amortizations paid by the farmers. Fifty percent of net gain was reported
for income tax purposes as gain on the sale of capital asset held for more than one year.

The CIR assessed and demanded from Roxas the payment deficiency income taxes resulted from the inclusion as income of Roxas
of the unreported 50% of the net profits derived from the sale of the farm lands to the tenants. The Roxas brothers protested the
assessment but was denied.

ISSUE: Is the gain derived from the sale of the Nasugbu farm lands an ordinary gain, hence 100% taxable?

RULING: No the sale of the Nasugbu farmlands to the very farmers in consonance with the policy of our Government to allocate
lands to the landless. However, the Government could not comply with its duty for lack of funds. Obligingly, Roxas shouldered
the Government's burden, sold lands directly to the farmers. For this magnanimous act, the municipal council of Nasugbu passed a
resolution expressing the people's gratitude.

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 does not conform to our sense of justice in the instant case for the Government to
persuade the taxpayer to lend it a helping hand and later on to penalize him for duly answering the urgent call.

TAX8.8 Collector v. Benipayo

TAX9.8 CIR v. Filinvest Development Corporation

FACTS: Filinvest extended advances in favor of its affiliates and supported the same with instructional letters and cash and journal
vouchers. The BIR assessed Filinvest for deficiency income tax by imputing an “arm’s length” interest rate on its advances to
affiliates. Filinvest disputed this by saying that the CIR lacks the authority to impute theoretical interest and that the rule is that
interests cannot be demanded in the absence of a stipulation to the effect.

ISSUE: Whether the CIR can impute theoretical interest on the advances made by Filinvest to its affiliates

RULING: No. The power of the CIR does not include the power to impute theoretical interests even with regard to controlled
taxpayers’ transactions. The term in the definition of gross income that even those income “from whatever source derived” is
covered still requires that there must be actual or at least probable receipt or realization of the item of gross income sought to be
apportioned, distributed, or allocated. In this case, there is no evidence of actual or possible showing that the advances taxpayer
extended to its affiliates had resulted to interests subsequently assessed by the CIR. Finally, the rule under the Civil Code that “no
interest shall be due unless expressly stipulated in writing” was also applied in this case.

TAX11.8 Director of Forestry v. Munoz

TAX12.8 Calalang v. Williams

FACTS: Commonwealth Act 548 mandates the Director of Public Works, with the approval of the Secretary of PW&C, shall
promulgate the necessary rules and regulations to regulate and control the use of and traffic on roads and streets. Pursuant thereto,
the Director of Public Works adopted the resolution of the National Traffic Commission, prohibiting the passing of animal drawn
vehicles in certain streets in Manila which was approved by the Secretary. The Mayor of Manila enforced the rules and regulations
thus adopted.

Maximo Calalang, in his capacity as a taxpayer of Manila, brought before the Supreme court the petition for a writ of prohibition
against the public officials.

ISSUE: W/N the grant of the rule making power of admin agencies is a relaxation of the principle of separation of powers.

RULING: No, it is an exception to the non-delegation of legislative power. See book.

TAX13.8 Del March v. Philippine Veterans Administration

RULING: The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as
it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace matters not
covered by the statute. Rules that subvert the statute cannot be sanctioned.

TAX14.8 Commissioner v. Bishop of the Missionary District of the Phil. Islands

FACTS: Missionary District in the Philippines received from the Missionary Society in the United States various shipments of
materials, supplies, equipment and other articles intended for use in the construction and operation of various hospitals (St. Lukes
and Brent).
On these shipments, the CIR levied and collected compensating tax.
The Bishop of the Missionary District filed claims for refund of the amount he had paid on the ground that under the law,
the materials and articles received by him were exempt from the payment of compensating tax.
CIR denied respondent's claim for refund on the ground that St. Luke's Hospital was not a charitable institution and,
therefore, was not exempt under the law. The Secretary of Finance states in his Dept. Order No. 18 that hospitals admitting pay
patients and charity patients are not charitable institutions.

ISSUE: WN CIR should refund the taxes paid by the Missionary District.

RULING: Yes. The Secretary of Finance cannot limit or otherwise qualify the enjoyment of this exemption granted under RA No.
1916 in implementing the law. If, as in the case of St. Luke's Hospital, its funds are devoted exclusively to the Maintenance of the
institution, the admission of pay patients does not detract from the charitable character of a hospital.

MAMALATEO: It is a settled law that regulations promulgated by authority of law and not in conflict with the statute are binding
upon everyone falling under any of their provisions.