Philippine Health Care Providers v CIR G.R. No. 167330 June 12, 200 !a"ts# $he petitioner, a prepaid health%"are or&ani'ation o((erin& )ene(its to its *e*)ers. $he CIR (ound that the or&ani'ation had a de(i"ien"+ in the pa+*ent o( the -$ under -e"tion 1 o( the 1//7 $a Code hi"h stipulated its i*ple*entation# n all poli"ies o( insuran"e or )onds or o)li&ations o( the nature o( inde*nit+ (or loss, da*a&e, or lia)ilit+ *ade or reneed )+ an+ person, asso"iation or "o*pan+ or "orporation transa"tin& the )usiness o( a""ident, (idelit+, (idelit+, e*plo+er4s lia)ilit+, plate, &lass, stea* )oiler, )ur&lar, elevator, auto*ati" sprin5ler, or other )ran"h o( insuran"e e"ept li(e, *arine, inland, and (ire insuran"e8 $he CIR sent a de*and de*and (or the pa+*ent o( de(i"ien"+ de(i"ien"+ taes, in"ludin& in"ludin& sur"har&es and interest, (or 1//6%1//7 in the total a*ount o( P229,702,691.1. $he petitioner protested to the CIR, )ut it didn:t a"t on the appeal. Hen"e, the "o*pan+ had to &o to the C$;. $he latter de"lared
N a health "are a&ree*ent in the nature o( an insuran"e "ontra"t and there(ore su)
o( P1.En as loan % Bnder the arran&e*ent, Roas + Cia. alloed the (ar*ers to )u+ the lands (or the sa*e pri"e )ut )+ install*ent, and "ontra"ted ith the R!C to pa+ its loan (ro* the pro"eeds o( the +earl+ a*orti'ations paid )+ the (ar*ers % In 1/3 and 1/, Roas + Cia. derived (ro* said install*ent pa+*ents a net &ain o( P92,90.3 and P2/,00.71. 0 o( said net &ain as reported (or in"o*e ta purposes as &ain on the sale o( "apital asset held (or *ore than one +ear pursuant to -e". 39 o( the $a Code ). %
Residential house and lot at >ri&ht -t., Ealate, Eanila ;(ter the *arria&e o( ;ntonio and duardo, Jose lived in the house here he paid rentals o( F+ear to Roas + Cia
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-hares o( sto"5s in di((erent "orporations
$o *ana&e the properties, ;ntonio Roas, duardo Roas and Jose Roas, the "hildren, (or*ed a partnership "alled Roas + Co*pania n 1/, CIR de*anded (ro* Roas + Cia the pa+*ent o( real estate dealer4s ta (or 1/2 a*t& to P10.00 plus P10.00 "o*pro*ise penalt+ (or late pa+*ent, and P10.00 ta (or dealers o( se"urities plus P10.00 "o*pro*ise penalt+ (or late pa+*ent. % @asis# house rentals re"eived (ro* Jose, pursuant to ;rt. 1/9 o( the $a Code statin& that an oner o( a real estate ho derives a +earl+ rental in"o*e there(ro* in the a*ount o( P3,000.00 or *ore is "onsidered a real estate dealer and is lia)le to pa+ the "orrespondin& (ied ta $he Co**issioner (urther assessed de(i"ien"+ in"o*e taes a&ainst the )rothers (or 1/3 and 1/, resultin& (ro* the in"lusion as in"o*e o( Roas + Cia o( the unreported 0 o( the net pro(its derived (ro* the sale o( the Nasu&)u (ar* lands to the tenants, and the disalloan"e o( dedu"tions (ro* &ross in"o*e o( various )usiness epenses and "ontri)utions "lai*ed )+ Roas + Cia and the Roas )rothers $he )rothers protested the assess*ent )ut as denied, thus appealin& to the C$; C$; de"ision# sustained the assess*ent e"ept the de*and (or the pa+*ent o( the (ied ta on dealer o( se"urities and the disalloan"e o( the dedu"tions (or "ontri)utions to the Philippine ;ir !or"e Chapel and Hi
a. P90 ti"5ets to a )anDuet &iven in honor o( -er&io s*ena and P2 -an Ei&uel )eer &iven as &i(ts to various persons representation epenses Representation epenses# dedu"ti)le (ro* &ross in"o*e as ependitures in"urred in "arr+in& on a trade or )usiness In this "ase, the eviden"e does not sho su"h lin5 )eteen the epenses and the )usiness o( Roas + Cia ). Contri)utions to the Pasa+ poli"e and (ire depart*ent and other poli"e depart*ents as Christ*as (unds Contri)utions to the Christ*as (unds are not dedu"ti)le (or the reason that the Christ*as (unds ere not spent (or pu)li" purposes )ut as Christ*as &i(ts to the (a*ilies o( the *e*)ers o( said entities Bnder -e"tion 3/h, a "ontri)ution to a &overn*ent entit+ is dedu"ti)le hen used e"lusivel+ (or pu)li" purposes ;s to the "ontri)ution to the Eanila Poli"e trust (und, su"h is an alloa)le dedu"tion (or said trust (und )elon&s to the Eanila Poli"e, a &overn*ent entit+, intended to )e used e"lusivel+ (or its pu)li" (un"tions. ". Contri)utions to the Philippines Herald4s (und (or Eanila4s neediest (a*ilies $he "ontri)utions ere not *ade to the Philippines Herald )ut to a &roup o( "ivi" spirited "iti'ens or&ani'ed )+ the Philippines Herald solel+ (or "harita)le purposes $here is no Duestion that the *e*)ers o( this &roup o( "iti'ens do not re"eive pro(its, (or all the (unds the+ raised ere (or Eanila4s neediest (a*ilies. -u"h a &roup o( "iti'ens *a+ )e "lassi(ied as an asso"iation or&ani'ed e"lusivel+ (or "harita)le purposes *entioned in -e"tion 30h o( the $a Code d. Contri)ution to ur Kad+ o( !ati*a "hapel at the !B Bniversit+ &ives dividends to its sto"5holders Ko"ated ithin the pre*ises o( the universit+, the "hapel in Duestion has not )een shon to )elon& to the Catholi" Chur"h or an+ reli&ious or&ani'ation $he "ontri)utions )elon&s to the !ar astern Bniversit+, "ontri)utions to hi"h are not dedu"ti)le under -e"tion 30h o( the $a Code (or the reason that the net in"o*e o( said universit+ in
No de(i"ien"+ in"o*e ta is due (or 1/3 (ro* ;ntonio Roas, duardo Roas and Jose Roas. !or 1/ the+ are lia)le to pa+ de(i"ien"+ in"o*e ta in the su* o( P10/.00, P/1.00 and P9/.00, respe"tivel+ CIR vs. TOKYO SHIPPING !a"ts# Private respondent is a (orei&n "orporation represented in the Philippines )+ -oria*ont -tea*ship ;&en"ies, In". It ons and operates tra*per vessel E= Gardenia. In e"e*)er 1/0, N;-B$R; "hartered E= Gardenia to load 16,00 *etri" tons o( ra su&ar in the Philippines. n e"e*)er 23, 1/0 Er. dil)erto Kisin&, the operations supervisor o( -oria*ont ;&en"+, paid the reDuired in"o*e and "o**on "arrier:s taes in the su* total o( P107,192.7 )ased on the epe"ted &ross re"eipts o( the vessel. Bpon arrivin&, hoever, at Gui*aras Port o( Iloilo, the vessel (ound no su&ar (or loadin&. n Januar+ 10, 1/1, N;-B$R; and private respondent:s a&ent *utuall+ a&reed to have the vessel sail (or Japan ithout an+ "ar&o. Clai*in& the pre%pa+*ent o( in"o*e and "o**on "arrier:s taes as erroneous sin"e no re"eipt as reali'ed (ro* the "harter a&ree*ent private respondent instituted a "lai* (or ta "redit or re(und o( the su* o( P107,192,7 )e(ore petitioner "o**issioner o( Internal Revenue on Ear"h 23, 1/1. Petitioner (ailed to a"t pro*ptl+ on the "lai*, hen"e, on Ea+ 19, 1/1, private respondent (iled a petition (or revie )e(ore pu)li" respondent C$;. Petitioner "ontested the petition. ;s spe"ial and a((ir*ative de(enses, it alle&ed the (olloin&# that taes are presu*ed to have )een "olle"ted in a""ordan"e ith laL that in an a"tion (or re(und, the )urden o( proo( is upon the tapa+er to sho that taes are erroneousl+ or ille&all+ "olle"ted and the tapa+er:s (ailure to sustain said )urden is (atal to the a"tion (or re(undL and that "lai*s (or re(und are "onstrued stri"tl+ a&ainst ta "lai*ants. ;(ter trial, respondent ta "ourt de"ided in (avor o( the private respondent. Issue# >hether or not ta "lai*ants has the )urden o( proo( to support its "lai* o( re(und. Held# ; "lai* (or re(und is in the nature o( a "lai* (or ee*ption and should )e "onstrued in stri"tissi*i
CIR vs. CENTRAL LUZON DRUG Facts: Respondent is a do*esti" "orporation en&a&ed in the retailin& o( *edi"ines and other phar*a"euti"al produ"ts. In 1//6 it operated si 6 dru&stores under the )usiness na*e and st+le Eer"ur+ ru&.8 !ro* Januar+ to e"e*)er 1//6 respondent &ranted 20 sales dis"ount to Duali(ied senior "iti'ens on their pur"hases o( *edi"ines pursuant to R; 7932. !or said period respondent &ranted a total o( ₱/09,76/. n ;pril 1, 1//7, respondent (iled its annual I$R (or taa)le +ear 1//6 de"larin& therein net losses. n Jan. 16, 1// respondent (iled ith petitioner a "lai* (or ta re(und"redit o( ₱/09,76/.00 alled&edl+ arisin& (ro* the 20 sales dis"ount. Bna)le to o)tain a((ir*ative response (ro* petitioner, respondent elevated its "lai* to the C$; via Petition (or Revie. C$; dis*issed the sa*e )ut on ER, C$; reversed its earlier rulin& and ordered petitioner to issue a $a Credit Certi(i"ate in (avor o( respondent "itin& C; GR -P No. 6007 Ea+ 31, 2001, Central Ku'on ru& Corp. vs. CIR "itin& that -e". 22/ o( R; 7932 deals e"lusivel+ ith ille&all+ "olle"ted or erroneousl+ paid taes )ut that there are other situations hi"h *a+ arrant a ta "reditre(und. C; a((ir*ed C$; de"ision reasonin& that R; 7932 reDuired neither a ta lia)ilit+ nor a pa+*ent o( taes )+ private esta)lish*ents prior to the avail*ent o( a ta "redit. Eoreover, su"h "redit is not tanta*ount to an unintended )ene(it (ro* the la, )ut rather a N respondent, despite in"urrin& a net loss, *a+ still "lai* the 20 sales dis"ount as a ta "redit. RULING: ?es, it is "lear that -e". 9a o( R; 7932 &rants to senior "iti'ens the privile&e o( o)tainin& a 20 dis"ount on their pur"hase o( *edi"ine (ro* an+ private esta)lish*ent in the "ountr+. $he latter *a+ then "lai* the "ost o( the dis"ount as a tax credit . -u"h "redit "an )e "lai*ed even i( the esta)lish*ent operates at a loss. ; tax credit &enerall+ re(ers to an a*ount that is su)tra"ted dire"tl+ (ro* one:s total ta lia)ilit+.8 It is an alloan"e a&ainst the ta itsel(8 or a dedu"tion (ro* hat is oed8 )+ a tapa+er to the &overn*ent. ; ta "redit should )e understood in relation to other ta "on"epts. ne o( these is tax deduction – hi"h is su)tra"tion (ro* in"o*e (or ta purposes,8 or an a*ount that is alloed )+ la to redu"e in"o*e prior to the appli"ation o( the ta rate to "o*pute the a*ount o( ta hi"h is due.8 In other ords, hereas a ta "redit redu"es the ta due, ta dedu"tion redu"es the in"o*e su)ithout that lia)ilit+, an+ tax "redit appli"ation ill )e useless. $here ill )e no reason (or dedu"tin& the latter hen there is, to )e&in ith, no eistin& o)li&ation to the &overn*ent. Hoever, as ill )e presented shortl+, the existence o( a ta "redit or its grant )+ la is not the sa*e as the availment or use o( su"h "redit. >hile the &rant is *andator+, the avail*ent or use is not. I( a net loss is reported )+, and no other taes are "urrentl+ due (ro*, a )usiness esta)lish*ent, there ill o)viousl+ )e no ta lia)ilit+ a&ainst hi"h an+ tax credit "an )e applied. !or the esta)lish*ent to "hoose the i**ediate avail*ent o( a tax credit ill )e pre*ature and i*pra"ti"a)le. Nevertheless, the irre(uta)le (a"t re*ains that, under R; 7932, Con&ress has &ranted ithout "onditions a tax credit )ene(it to all "overed esta)lish*ents. Hoever, (or the losin& esta)lish*ent to i**ediatel+ appl+ su"h "redit, here no ta is due, ill )e an i*provident usan"e. In addition, hile a ta lia)ilit+ is essential to the availment or use o( an+ tax credit , prior ta pa+*ents are not. n the "ontrar+, (or the existence or grant solel+ o( su"h "redit, neither a ta lia)ilit+ nor a prior ta pa+*ent is needed. $he $a Code is in (a"t replete ith provisions &rantin& or alloin& tax credits, even thou&h no taes have )een previousl+ paid. Pet"t"o# "s $e#"e$. CALTE% vs. COA FACTS:
In 1//, C; sent a letter to Calte dire"tin& it to re*it to P-! its "olle"tion o( the additional ta on petroleu* authori'ed under P 1/6 and pendin& su"h re*ittan"e, all o( its "lai*s (ro* the P-! shall )e held in a)e+an"e. Petitioner reDuested C; (or the earl+ release o( its rei*)urse*ent "erti(i"ates (ro* the P-! "overin& "lai*s ith the ((i"e o( ner&+ ;((airs. C; denied the sa*e. ISSUE: >hether or not petitioner "an avail o( the ri&ht to o((set an+ a*ount that it *a+ )e reDuired under the la to re*it to the P-! a&ainst an+ a*ount that it *a+ re"eive )+ a+ o( rei*)urse*ent. RULING: It is a settled rule that a tapa+er *a+ not o((set taes due (ro* the "lai*s that he *a+ have a&ainst the &overn*ent. $aes "annot )e the su)hether or not *otor vehi"le re&istration (ees are "onsidered as taes. RBKING# ?es. I( the purpose is pri*aril+ revenue, or i( revenue is, at least, one o( the real and su)stantial purposes, then the ea"tion is properl+ "alled a ta. -u"h is the "ase o( *otor vehi"le re&istration (ees. $he *otor vehi"le re&istration (ees are a"tuall+ taes intended (or additional revenues o( the &overn*ent even i( one (i(th or less o( the a*ount "olle"ted is set aside (or the operatin& epenses o( the a&en"+ ad*inisterin& the pro&ra*. Ka&at"!a# vs. Ta# !a"ts# $hese (our 9 petitions see5 to nulli(+ e"utive rder No. 273 issued )+ the President o( the Philippines, and hi"h a*ended "ertain se"tions o( the National Internal Revenue Code and adopted the value%added ta, (or )ein& un"onstitutional in that its ena"t*ent is not alle&edl+ ithin the poers o( the PresidentL that the =;$ is oppressive, dis"ri*inator+, re&ressive, and violates the due pro"ess and eDual prote"tion "lauses and other provisions o( the 1/7 Constitution. $he =;$ is a ta levied on a ide ran&e o( &oods and servi"es. It is a ta on the value, added )+ ever+ seller, ith a&&re&ate &ross annual sales o( arti"les andor s ervi"es, e"eedin& P200,00.00, to his pur"hase o( &oods and servi"es, unless ee*pt. =;$ is "o*puted at the rate o( 0 or 10 o( the &ross sellin& pri"e o( &oods or &ross re"eipts reali'ed (ro* the sale o( servi"es. $he =;$ is said to have eli*inated privile&e taes, *ultiple rated sales ta on *anu(a"turers and produ"ers, advan"e sales ta, and "o*pensatin& ta on i*portations. $he (ra*ers o( 273 that it is prin"ipall+ ai*ed to rationali'e the s+ste* o(
tain& &oods and servi"esL si*pli(+ ta ad*inistrationL and *a5e the ta s+ste* *ore eDuita)le, to ena)le the "ountr+ to attain e"ono*i" re"over+. $he =;$ is not entirel+ ne. It as alread+ in (or"e, in a *odi(ied (or*, )e(ore 273 as issued. ;s pointed out )+ the -oli"itor General, the Philippine sales ta s+ste*, prior to the issuan"e o( 273, as essentiall+ a sin&le sta&e value added ta s+ste* "o*puted under the A"ost su)tra"tion *ethodA or A"ost dedu"tion *ethodA and as i*posed onl+ on ori&inal sale, )arter or e"han&e o( arti"les )+ *anu(a"turers, produ"ers, or i*porters. -u)seDuent sales o( su"h arti"les ere not su)hether or not 273 is un"onstitutional Held# No. Petitioners have (ailed to sho that 273 as issued "apri"iousl+ and hi*si"all+ or in an ar)itrar+ or despoti" *anner )+ reason o( passion or personal hostilit+. It appears that a "o*prehensive stud+ o( the =;$ had )een etensivel+ dis"ussed )+ this (ra*ers and other &overn*ent a&en"ies involved in its i*ple*entation, even under the past ad*inistration. ;s the -oli"itor General "orre"tl+ sated. A$he si&nin& o( .. 273 as *erel+ the last sta&e in the eer"ise o( her le&islative poers. $he le&islative pro"ess started lon& )e(ore the si&nin& hen the data ere &athered, proposals ere ei&hed and the (inal ordin&s o( the *easure ere dra(ted, revised and (inali'ed. Certainl+, it "annot )e said that the President *ade a
Issue# Is the rental in"o*e o( the ?EC; taa)leM Held# ?es. $he ee*ption "lai*ed )+ the ?EC; is epressl+ disalloed )+ the ver+ ordin& o( the last para&raph o( then -e". 27 o( the NIRCL "ourt is dut+%)ound to a)ide stri"tl+ )+ its literal *eanin& and to re(rain (ro* resortin& to an+ "onvoluted atte*pt at "onstru"tion. $he said provision *andates that the in"o*e o( ee*pt or&ani'ations su"h as ?EC; (ro* an+ o( their properties, real or personal, )e su)
$he en(or"e*ent o( ta las and the "olle"tion o( taes are o( para*ount i*portan"e (or the sustenan"e o( &overn*ent. $aes are the li(e)lood o( &overn*ent and should )e "olle"ted ithout unne"essar+ hindran"e. Hoever, su"h "olle"tion should )e *ade in a""ordan"e ith la as an+ ar)itrariness ill ne&ate the eisten"e o( &overn*ent itsel(. It is not the epart*ent o( Justi"e hi"h is the &overn*ent a&en"+ tas5ed to deter*ine the a*ount o( taes due upon the su)hether N;PCR is lia)le to pa+ annual (ran"hise ta to the Cit+ o( Ca)anatuan Held# ?es. $he poer to ta is no lon&er vested e"lusivel+ on Con&ressL lo"al le&islative )odies are no &iven dire"t authorit+ to lev+ taes, (ees and other "har&es. ;lthou&h as a &eneral rule, KGBs "annot i*pose taes, (ees or "har&es o( an+ 5ind on the National Govern*ent, its a&en"ies and instru*entalities, this rule no ad*its o( an e"eption, i.e., hen spe"i(i" provisions o( the KGC authori'e the KGBs to i*pose taes, (ees or "har&es on the a(ore*entioned entities. Nothin& prevents Con&ress (ro* de"reein& that even instru*entalities or a&en"ies o( the &overn*ent per(or*in& &overn*ental
(un"tions *a+ )e su)hether or not the petitioner is a taa)le person8 Rulin&s# $aation is the rule and ee*ption is the e"eption. ECI;;:s ee*ption (ro* pa+*ent o( taes is ithdran )+ virtue o( -e"tions 1/3 and 239 o( Ka)or Code. -tatutes &rantin& ta ee*ptions shall )e stri"tl+ "onstrued a&ainst the tapa+er and li)erall+ "onstrued in (avor o( the tain& authorit+. $he petitioner "annot "lai* that it as never a taa)le person8 under its Charter. It as onl+ ee*pted (ro* the pa+*ent o( realt+ taes. $he &rant o( the privile&e onl+ in respe"t o( this ta is "on"lusive proo( o( the le&islative intent to *a5e it a taa)le person su)
"orollar+ to the do"trine that taes are the li(e)lood o( the &overn*entM HK# No. Private respondent has proved that the pa+*ent o( the (ees as ne"essar+ and reasona)le in the li&ht o( the e((orts eerted )+ the pa+ees in indu"in& investors and pro*inent )usiness*en to venture in an peri*ental enterprise and involve the*selves in a ne )usiness reDuirin& *illions o( pesos. $his as no *ean (eat and should )e, as it as, su((i"ientl+ re"o*pensed. It is ell%settled that taes are the li(e)lood o( the &overn*ent and so should )e "olle"ted ithout unne"essar+ hindran"e n the other hand, su"h "olle"tion should )e *ade in a""ordan"e ith la as an+ ar)itrariness ill ne&ate the ver+ reason (or &overn*ent itsel(. It is there(ore ne"essar+ to re"on"ile the apparentl+ "on(li"tin& interests o( the authorities and the tapa+ers so that the real purpose o( taation, hi"h is the pro*otion o( the "o**on &ood, *a+ )e a"hieved. @ut even as e "on"ede the inevita)ilit+ and indispensa)ilit+ o( taation, it is a reDuire*ent in all de*o"rati" re&i*es that it )e eer"ised reasona)l+ and in a""ordan"e ith the pres"ri)ed pro"edure. I( it is not, then the tapa+er has a ri&ht to "o*plain and the "ourts ill then "o*e to his su""or. !or all the aeso*e poer o( the ta "olle"tor, he *a+ still )e stopped in his tra"5s i( the tapa+er "an de*onstrate, as it has here, that the la has not )een o)served.
