containing entries relating to the business of

the person liable for tax.

1. CIR vs. HANTEX TRADING CO., INC.
G.R. No. 136975; March 31, 2005 3. PAGCOR v. CIR, GR No. 172087, 2011-03-15

FACTS: Hantex Trading Co is a company Facts: Petitioner further seeks to prohibit the
organized under the Philippines. It is engaged in implementation of Bureau of Internal Revenue
the sale of plastic products, it imports synthetic (BIR) Revenue Regulations No. 16-2005 for
resin and other chemicals for the manufacture being contrary to law. With the enactment of
of its products. The CA ruled that the income R.A. No. 9337[10] on May 24, 2005, certain
and sales tax deficiency assessments issued by sections of the National Internal Revenue Code
the petitioner were unlawful and baseless since of 1997 were amended. According to the
the copies of the import entries relied upon in OSG,... public respondent BIR exceeded its
computing the deficiency tax of the respondent statutory authority when it enacted RR No. 16-
were not duly authenticated by the public 2005, because the latter's provisions are
officer charged with their custody, nor verified contrary to the mandates of P.D. No. 1869 in
under oath by the EIIB and the BIR relation to R.A. No. 9337.
investigators.
Issues: Whether or not PAGCOR is still exempt...
Issue: Whether or not the final assessment of hether or not PAGCOR is still exempt fromVAT
the petitioner against the respondent is based with the enactment of R.A. No. 9337.
on competent evidence and the law.
Ruling:
Held: Central to the second issue is Section 16
Anent the validity of RR No. 16-2005, the Court
of the NIRC of 1977, as amended which
holds that the provision subjecting PAGCOR to
provides that the Commissioner of Internal
10% VAT is invalid for being contrary to R.A. No.
Revenue has the power to make assessments
9337. Nowhere in R.A. No. 9337 is it provided
and prescribe additional requirements for tax
that petitioner can be subjected to VAT. R.A.
administration and enforcement.
No. 9337 is clear only as to... the removal of
2. Fitness by Design v. CIR petitioner's exemption from the payment of
G.R. No. 177982 October 17, 2008 corporate income tax, which was already
addressed above by this Court.
FACTS: March 17, 2004: CIR assessed Fitness by
Design Inc. for deficiency Income Taxes for the 4. PAGCOR vs. BIR
year of 1995 for P 10,647, 529.69. February 1,
5. General Electric vs. Collector 19 SCRA 790
2005: CIR issued a warrant of distraint and levy
against petitioner which prompted petitioner to 6. Hilado vs. Collector of Internal Revenue
file a Petition for Review before the CTA where GR L-9408, October 31,1956
he alleged his defense of prescription based on
Sec. 203 of the Tax Code. Petitioner then Facts: Emilio Hilado filed his income tax return
requested a subpoena ad testificandum for for 1951 with the treasurer of Bacolod City,
Sablan who failed to appear. CTA: Denied the claiming a deductible item of P12,837.65 from
motion for issuance of subpoena and his gross income pursuant to General Circular V-
disallowed the submission of written 123 issued by the Collector of Internal Revenue.
interrogatories to Sablan who is NOT a party to The Secretary of Finance, through the Collector,
the case nor was his testimony relevant. issued General Circular V-139 which revoked
and declared void Circular V-123; and laid down
ISSUE: W/N BIR can use the information without the rule[s] that losses of property which
petitioner's consent occurred in World War II from fires, storms,
shipwreck or other casualty, or from robbery,
HELD: YES. Sec. 5 of the tax code provides that theft, or embezzlement are deductible in the
the BIR is authorized to obtain from any person year of actual loss or destruction of said
other than the person whose internal revenue property. The deductions were disallowed.
tax liability is subject to audit or investigation
and can even summon any person having
possession, custody or care of the books of
accountants and other accounting records
Issue: Whether Internal Revenue Laws were Rhino suffered injuries, but only Carmela
enforced during the war and whether Hilado required hospitalization.
can claim compensation for destruction of his
property during the war.
Issue: THE COURT OF APPEALS DISREGARDED
Held: Philippines Internal Revenue Laws are not THE DOCTRINE LAID DOWN IN VILLA REY
political in nature and as such were continued TRANSIT, INC. v. COURT OF APPEALS, WHEN IT
in force during the period of enemy occupation ARBITRARILY PEGGED THE MONTHLY LIVING
and in effect were actually enforced by the EXPENSES AT 50% OF GROSS EARNINGS.
occupation government. Such tax laws are
deemed to be laws of the occupied territory Held: No. Petitioners, in the Supreme Court
and not of the occupying enemy. view, misread the Villa Rey Transit case. In
considering the earning capacity of the victim as
7. Republic vs. Hernandez an element of damages, the net earnings, which
is computed by deducting necessary expenses
GR No. 117209, February 9, 1996 from the gross earnings, and not the gross
Facts: The RTC granted the petition for earnings, is to be utilized in the computation.
adoption of Kevin Earl Bartolome Moran and 9. La Perla Cigar vs. Capapas
also the prayer for the change of the first name G.R. Nos. L-27948 & L-28001 – 11, July 31, 1969
of said adoptee to Aaron Joseph to complement
the surname Munson y Andrade which he 10. Vera vs. Cuevas,
acquired consequent to his adoption. 90 SCRA 379

Petitioner argues that a petition for adoption Facts:

and a petition for change of name are two Private respondents herein, are engaged in the
manufacture, sale and distribution of filled milk
special proceedings which, in substance and
products throughout the Philippines. The CFI
purpose, are different from and are not related Manila ordered the CIR to perpetually restrain
to each other, being respectively governed by from requiring the respondents to print on the
distinct sets of law and rules. labels of their product the words "This milk is
not suitable for nourishment for infants
Issue: WON respondent judge erred in granting less than one year of age. It ordered the Fair
prayer for the change of the given or proper Trade Board to perpetually restrain from
name if the adoptee in a petition for adoption. investigating the respondents related to the
manufacture/sale of their filled milk products.
HELD: No. The law allows the adoptee, as a
matter of right and obligation, to bear the Issue:
surname of the adopter, upon issuance of the Whether or not skimmed milk is included in the
scope of Section 169 of the Tax Code.
decree of adoption. It is the change of the
adoptee’s surname to follow that of the Held:
adopter which is the natural and necessary No, Section 169 of the Tax Code is not
consequence of a grant of adoption and must applicable to filled milk. The use of specific and
specifically be contained in the order of the qualifying terms "skimmed milk" in the
court, in fact, even if not prayed for by headnote and "condensed skimmed milk" in the
petitioner. text of the cited section, would restrict the
scope of the general clause "all milk, in
8. Philippine Rabbit Bus Lines, Inc. (PRBL) vs. whatever form, from which the fatty pat has
been removed totally or in part."
People, 427 SCRA 526 (2004)

Facts: In May 16, 1995, PRBL Bus, driven by

11. MERALCO vs. Savellano, 117 SCRA 804
petitioner Pleyto, was traveling along
MacArthur Highway in Gerona, Tarlac bound for Facts: The late Juan G. Maniago (substituted in
Vigan, Ilocos Sur. It was drizzling that morning these proceedings by his wife and children)
and the macadam road was wet. Right in front submitted to petitioner Commissioner of
of the bus, headed north, was the tricycle Internal Revenue confidential denunciation
owned and driven by one Rodolfo Esguerra. against the Meralco Securities Corporation for
PRBL Bus smashed head-on the car, killing tax evasion for having paid income tax only on
Arnulfo and Ricardo instantly. Carmela and 25 % of the dividends it received from the
Manila Electric Co, thereby allegedly
shortchanging the government of income tax are actually rulings or opinions of the CIR on the
due from 75% of the said dividends. The tax treatment of motor vehicles sold at public
respondent judge rendered a decision granting auction within the SSEZ to implement Section
the writ prayed for and ordering the 12 of R.A. No. 7227
Commissioner to assess and collect from the
Meralco Securities Corporation the sum of 13. PBCom v CIR
P51,840,612.00 as deficiency corporate income GR No 112024, January 28, 1999
tax plus interests and surcharges due thereon
and to pay 25% to Maniago as informer's FACTS:
reward. PBCom filed its quarterly income tax returns for
the first and second quarters of 1985, reported
Issue: Whether or not mandamus is proper in profits and paid the total income tax of
this case P5,016,954. But, PBCom suffered net losses at
the end of the year 1985 in the amount of
Held: No. It is furthermore a well-recognized P25,317,288 and P14,129,602 at the end of
rule that mandamus only lies to enforce the 1986. But during these two years, PBCom
performance of a ministerial act or duty and not
earned rental income from leased properties.
to control the performance of a discretionary The lessees withheld and remitted to the BIR
power. Purely administrative and discretionary withholding creditable taxes in 1985 and 1986.
functions may not be interfered with by the On August 7, 1987, petitioner requested the CIR
courts. for a tax credit of P5,016,954 representing
12. Asia International Auctioneers vs. Parayno, overpayment of taxes. Thereafter, petitioner
50 SCRA 536 filed claim for refund of creditable taxes.

Facts: On June 3, 2003, then CIR Guillermo L. ISSUES:

Parayno, Jr. issued Revenue Memorandum 1. Whether PBCom is entitled to the tax refund
Circular (RMC) No. 31-2003 setting the
"Uniform Guidelines on the Taxation of RULING:
Imported Motor Vehicles through the Subic No. The corporation must signify in its annual
Free Port Zone and Other Freeport Zones that corporate adjustment return its intention
are Sold at Public Auction. Petitioners Asia whether to request for a refund or claim for an
International Auctioneers, Inc. (AIAI) and Subic automatic tax credit for the succeeding taxable
Bay Motors Corporation... corporations year. That the petitioner opted for an automatic
Philippine... with principal place of business tax credit, his choice precludes the other.
within the SSEZ. They argue that in the instant
case, there is no decision of the respondent 14. BIR vs. Filinvest, 654 SCRA 56
CIR... on any disputed assessment to speak of as 15. ABS-CBN vs. CTA, 108 SCRA 142
what is being questioned is purely the authority
of the CIR to impose and collect value-added FACTS: The ABS-CBN Broadcasting Corporation
and excise taxes. Having declared the court a was engaged in the business of telecasting local
quo without jurisdiction over the subject matter as well as foreign films acquired from foreign
of the instant case, any further disquisition corporations not engaged in trade or business
would be obiter dictum. with the Philippines. Under Section 24 (b) of the
National Revenue Code, a withholding tax of
Issues: [W]hich Court- the regular courts of 30% (RA 2343). It was implemented through
justice established under Batas Pambansa Blg. Circular No. V-334. Pursuant to the foregoing,
129 or the Court of Tax Appeals - is the proper ABS-CBN dutifully withheld and turned over to
court of jurisdiction to hear a case to declare the BIR the amount of 30% of one-half of the
Revenue Memorandum Circulars film rentals paid by it to foreign corporations
unconstitutional... does the trial court have not engaged in trade or business within the
jurisdiction over the subject matter of this case? Philippines. The last year that ABS-CBN withheld
Ruling: There is thus no reason to preclude the taxes pursuant to the foregoing Circular was in
CA from ruling on this issue even if allegedly, 1968. RA 5431 amended Section 24 (b) of the
the same has not yet been resolved by the trial Tax Code increasing the tax rate from 30 % to
court. In the case at bar, the assailed revenue 35 % and revising the tax basis from “such
regulations and revenue memorandum circulars amount” referring to rents, etc. to “gross
income.” The following was implemented by assessment. The CIR then filed an appeal with
Circular No. 4-71. the CA which was denied.

Petitioner requested for a reconsideration and ISSUES: Whether Philhealth is subject to VAT.
withdrawal of the assessment.
RULING: YES. Section 103 of the NIRC exempts
ISSUE/S: Whether or not respondent can apply taxpayers engaged in the performance of
General Circular No. 4-71 retroactively and medical, dental, hospital, and veterinary
issue a deficiency assessment against services from VAT. But, in Philhealth's letter
petitioner. requesting of its VAT-exempt status, it was held
that it showed Philhealth provides medical
HELD/DECISION: Any rulings or circulars
service only between their members and their
promulgated by the CIR have no retroactive accredited hospitals.
application when it would be prejudicial to
taxpayers. The retroactive application of 19. CIR vs CA, 240 SCRA 368
Memorandum Circular No. 4-71 prejudices ABS-
CBN since the assessment and demand on FACTS:
petitioner to pay deficiency withholding income Petitioner, seeks a reversal of the Decision of
tax was also made three years after 1968 for a respondent CA, dated Aug. 27, 1990, in CA-G.R.
period of time commencing in 1965. SP No. 20426, which affirmed the Decision of
16. CIR vs. CA, 267 SCRA 557 the latter Court, dated 15 December 1986, in
Case No. 3888, ordering a refund, in the sum of
17. Roman Catholic Archbishop of Manila vs. P11,302.19, to the GCL Retirement Plan
CA, G.R. No. 111324, July 5, 1996 representing the withholding tax on income
from money market placements and purchase
FACTS: RIETA FILED NULLIFICATION OF DEED OF of treasury bills, imposed pursuant to
DONATION, RECISSION OF CONTRACT AND
Presidential Decree No. 1959.
RECONVEYANCE OF REAL PROPERTY WITH
DAMAGES against Ignao and ROMAN CATHOLIC ISSUE: Are school’s retained earnings tax-
BISHOP OF IMUS, CAVITE/MANILA. Was ruled exempt?
that the complaint for cause of action has
RULING: Yes. GCL Plan was qualified as exempt
already prescribed. APPEALED TO CA then CA
held that action not prescribed. from income tax by the CIR in accordance with
Rep. Act. 4917. The tax-exemption privilege of
ISSUE: Has the cause of action already employees’ trusts, as distinguished from any
prescribed? other kind of property held in trust, springs
from Section 56(b) (now 53[b]) of the Tax Code,
HELD: NO. Judgment SET ASIDE and another “The tax imposed by this Title shall not apply to
judgment DISMISSED. DEED HAS AUTOMATIC employee’s trust which forms part of a pension,
REVERSION EXPRESSED, JUDICIAL DECLARATION stock bonus or profit-sharing plan of an
NOT NECESSARY HENCE and UNDUE employer for the benefit of some or all of his
RESTRICTION ON RIGHTS OF OWNERSHIP, employees . . .”
CONTRARY TO PUBLIC POLICY.
20. Alexander Howden vs. CIR, 13 SCRA 601
18. CIR vs. Phil. Health Providence, 522 SCRA
131

FACTS: On 1987, CIR issued VAT Ruling No. 231-

88 stating that Philhealth, as a provider of
medical services, is exempt from the VAT
coverage. When RA 8424 or the new Tax Code
was implemented it adopted the provisions of
VAT and E-VAT. On 1999, the BIR sent
Philhealth an assessment notice for deficiency
VAT and documentary stamp taxes for taxable
years 1996 and 1997. After CIR did not act on it,
Philhealth filed a petition for review with the
CTA. The CTA withdrew the VAT
21. CIR vs SOLIDBANK, 416 SCRA 2003 23. MIS. OR. ASSOC. OF COCO TRADERS VS BIR,
GR.NO. 108524, NOV. 10, 1994
FACTS:
FACTS:
In 1995, Solidbank filed its Quarterly Percentage
Tax Returns (QPTR) reflecting gross receipts of Petitioner is engaged in the buying and selling
more than 1.4 billion pesos. Hence, it wanted to of copra in Misamis Oriental. The petitioner
pay gross receipts tax at more than 73 million questions Revenue Memorandum Circular 47-
pesos. Without waiting for an action from the 91 issued by the respondent, in which copra
CIR, Solidbank filed a petition for review with was classified as agricultural non-food product
the CTA to toll the 2-year prescriptive period for effectively removing copra as one of the
judicial refund claims for overpaid internal exemptions under Section 103 of the NIRC. The
revenue tax. reclassification had the effect of denying to the
CTA ordered CIR to refund. Appeal to CA was petitioner this exemption when copra was
unsuccessful. classified as an agricultural food product.

ISSUE: Is the 20% FWT a part of the taxable ISSUE: Whether the Circular is valid.
gross receipts?
RULING: Yes. The Court first stated that the CIR
RULING: Yes, the amount of interest income gave the circular a strict construction consistent
withheld in payment of the 20% FWT forms part with the rule that tax exemptions must be
of gross receipts in computing for the GRT on strictly construed against the taxpayer and
banks. Under the Tax Code, the earnings of liberally in favor of the state.
banks from passive income are subject to a
twenty percent final withholding tax (20% 24. CIR VS FORTUNE TOBACCO, GR. NO.
FWT). 119761

FACTS:
22. PLDT VS. CIR, GR. NO. L-3222. JAN 21, 1952
Fortune Tobacco Corporation is engaged in the
FACTS:
manufacture of different brands of cigarettes.
Petitioner PLDT claiming that it terminated in On various dates, the Philippine Patent Office
1995 the employment of several rank and file, issued to the corporation separate certificates
supervisory and executive employees dues to
of trademark registration over "Champion,"
redundancy. CTA denied PLDT claim on the
"Hope," and "More" cigarettes. Fortune filed a
ground that it failed to sufficiently prove that the
terminated employees received separation pay petition with the CTA which was granted finding
and that taxes were withheld therefrom or the RMC as defective. The CIR filed a motion for
remitted to the BIR. reconsideration with the CTA which was denied,
then to the CA, an appeal, which was also
ISSUE: WON the withholding taxes, which
denied.
petitioner remitted to the BIR, should be
refunded for having been erroneously withheld ISSUE: Whether the RMC was valid.
and paid to the later?
RULING: NO. The RMC was made to place the
RULING: PLDT failed to establish that the three brands as locally made cigarettes bearing
redundant employees actually received foreign brands and to thereby have them
separation ay and it withheld taxes therefrom covered by RA 7654. The Court is convinced
and remitted the same to the BIR. that the hastily promulgated RMC 37-93 has
fallen short of a valid and effective
A taxpayer must do two (2) things to be able to administrative issuance.
be able to successfully make a claim for the tax
refund:
1. Declare the income payment it received as
part of its gross income.
2. Establish the fact of withholding.
25. MADRIGAL VS. RAFFERTY, GR. NO. 12287, 28. NESTLE VS CA, 203 SCRA 337
NOV. 10, 1994
FACTS:
FACTS:
Respondent CFC Corporation filed an
Vicente Madrigal and Susana Paterno were application for the registration of the trademark
legally married and have conjugal partnership. FLAVOR MASTER for instant coffee. Petitioners,
The burden of the complaint was that if the a Swiss company and a domestic corporation
income tax for the year 1914 had been correctly licensee of Societe, opposed on the ground that
and lawfully computed there would have been it is confusingly similar to its trademark for
due payable by each of the plaintiff the sum of coffee and coffee extracts: MASTER ROAST and
P2,921.09, which taken together amount of MASTER BLEND. Petitioners contend that the
P5842.18 instead of P9,668.21. dominant word MASTER is present in the 3
trademarks. Respondent CFC argued that the
ISSUE: WON the additional income tax should word MASTER cannot be exclusively
be divided into equal parts because of the
appropriated being a descriptive or generic
conjugal partnership existing between them? term. BPTTT denied CFC’s application. CA held
RULING: NO. Paterno has an inchoate right in otherwise.
the property of her husband Madrigal during ISSUE: Whether or not the word MASTER is
the lifetime of the conjugal property. She has descriptive or generic term incapable of
an interest in the ultimate ownership of exclusive appropriation.
property acquired as income of the conjugal
partnership. RULING: NO.

The word “MASTER” is neither a generic nor a

descriptive term. As such, said term cannot be
26. PHILAM LIFE VS. DEPT. OF FINANCE, 741 invalidated as a trademark and, therefore, may
SCRA 578 be legally protected.
FACTS: 29. CIR VS. CTA, 204 SCRA 182
Philam Life sold its shares in Philam Care Health FACTS:
Systems to STI Investments Inc., the highest
bidder. After the sale was completed, Philam Citytrust filed a petition with the Court of Tax
life applied for a tax clearance and was Appeals claiming the refund of its income tax
informed by BIR that there is a need to secure a overpayments for the years 1983, 1984 and
BIR Ruling due to a potential donor’s tax liability 1985 in the total amount of P19,971,745. Upon
on the sold shares. motion of reconsideration, petitioner alleged
that through an inter-office memorandum of
ISSUE: W/N the sales of shares sold for less the Tax Credit/Refund Division, dated August 8,
than an adequate consideration be subject to 1991, he came to know only that Citytrust had
donor’s tax? outstanding tax liabilities for 1984 representing
RULING: The price difference is subject to deficiency income and business taxes.
donor’s tax. Petitioner’s substantive arguments ISSUE: Whether the CTA erred in denying
are unavailing. The absence of donative intent, petitioner’s supplemental motion for
if that be the case, does not exempt the sales of
reconsideration
stock transaction from donor’s tax.
RULING: Yes. The fact of such deficiency
27. BANCO DE ORO VS. REPUBLIC, 745 SCRA assessment is intimately related and
578 inextricably intertwined with the right of the
bank. The private respondent cannot be
entitled to refund and at the same time be
liable for a deficiency tax assessment for the
same year.
30. CIR VS. PROCTER AND GAMBLE, 160 SCRA and not on the total branch profit out of which
560 the remittance is to be made.

FACTS: 32. MEDICARD PHILS VS. CIR, G.R. 222743,

APRIL 05, 2017
Procter and Gamble Philippines declared
dividends payable to its parent company and FACTS:
sole stockholder, P&G USA. Such dividends
amounted to Php 24.1M. P&G Phil paid a 35% MEDICARD was ordered by the CTA to pay CIR
dividend withholding tax to the BIR which VAT deficiency at 220 million pesos plus 20%
amounted to Php 8.3M It subsequently filed a interest per annum from January 25, 2007. The
CIR, on the other hand, posits that the LN is
claim with the Commissioner of Internal
Revenue for a refund or tax credit, claiming that enough compliance with the LOA requirement,
pursuant to Section 24(b)(1) of the National arguing that the use of computers to detect
Internal Revenue Code, as amended by discrepancies dispenses with the requirement
of LOA.
Presidential Decree No. 369, the applicable rate
of withholding tax on the dividends remitted
was only 15%. Furthermore, the CIR argued that the amounts
earmarked and eventually paid by MEDICARD to
ISSUE: Whether or not P&G Philippines is medical service providers form part of gross
entitled to the refund or tax credit receipts for VAT purposes. The CTA EB sided
with the CIR.
RULING: YES. P&G Philippines is entitled. Sec 24
(b) (1) of the NIRC states that an ordinary 35% ISSUE: Can the LN replace the LOA
tax rate will be applied to dividend remittances requirement? What is the status of the
to non-resident corporate stockholders of a assessment?
Philippine corporation.
RULING: No, the LN cannot replace the LOA
requirement. A LOA is the authority given to the
appropriate revenue officer assigned to
31. CIR VS. BURROUGHS, GR NO. 81446, perform assessment functions. In the absence
AUG.18, 1988 of such an authority, the assessment or
FACTS: examination is a nullity.

Burroughs Limited is a foreign corporation 33. SY PO VS. CTA, GR. NO. 81446, AUG. 18,
authorized to engage in trade or business in the 1988
Philippines through a branch office located at
FACTS:
De la Rosa corner Esteban Streets, Legaspi
Village, Makati, Metro Manila. Claiming that the Po Bien Sing, the sole proprietor of Silver Cup
15% profit remittance tax should have been Wine Factory (SCWF), engaged in the business
computed on the basis of the amount actually of manufacture and sale of compounded
remitted (P6,499,999.30) and not on the liquors. On the basis of a denunciation against
amount before profit remittance tax SCWF allegedly "for tax evasion amounting to
(P7,647,058.00), private respondent filed on millions of pesos, Secretary of Finance directed
December 24, 1980, a written claim for the the Finance-BIR--NBI team to investigate.
refund or tax credit of the amount of Petitioner protested the deficiency
P172,058.90 representing alleged overpaid assessments. The BIR recommended the
branch profit remittance tax. reiteration of the assessments in view of the
taxpayer's persistent failure to present the
ISSUE: Whether or not Burroughs is entitled to books of accounts for examination.
any tax credit.
ISSUE: WON the assessments have valid and
RULING: Yes. Respondent concedes at least that legal basis.
in his ruling dated January 21, 1980 he held that
under Section 24 (b) (2) of the Tax Code the RULING: he law is specific and clear. The rule on
15% branch profit remittance tax shall be “The Best Evidence Obtainable” applies when a
imposed on the profit actually remitted abroad tax report required by law for the purpose of
assessment is not available or when tax report 36. BASILAN ESTATES VS. CIR, 2 SCRA 17
is incomplete or fraudulent.
FACTS:
34. CIR VS. KUDOS METAL, 620 SCRA 232
Basilan Estates, Inc. claimed deductions for the
FACTS: depreciation of its assets on the basis of their
acquisition cost. As of January 1, 1950 it
The CTA En Banc ruled for canceling the changed the depreciable value of said assets by
assessment notices issued against respondent increasing it to conform with the increase in
for having been issued beyond the prescriptive cost for their replacement. CIR disallowed the
period. Respondent may no longer repudiate deductions claimed by petitioner, consequently
the validity of the waivers and raise the issue of
assessing the latter of deficiency income taxes.
prescription. Respondent maintains that
prescription had set in due to the invalidity of ISSUE: Whether or not the depreciation shall
the waivers executed by Pasco, who executed be determined on the acquisition cost rather
the same without any written authority from it, than the reappraised value of the assets.
in clear violation of RDAO No. 5-01.
RULING: Yes. The following tax law provision
ISSUE: Whether the belated assessment of the allows a deduction from gross income for
CIR is still valid and effective on the ground depreciation but limits the recovery to the
that respondent is already in estoppel. capital invested in the asset being depreciated.
Depreciation is the gradual diminution in the
RULING: NO. Section 203 of the National useful value of tangible property resulting from
Internal Revenue Code of 1997 (NIRC)
wear and tear and normal obsolescense.
mandates the government to assess internal
revenue taxes within three years from the last 37. BASILAN ESTATES VS. CIR, 2 SCRA 17
day prescribed by law for the filing of the tax
return or the actual date of filing of such return, FACTS:
whichever comes later. Basilan Estates, Inc. claimed deductions for the
35. MEDINA VS. CIR, 110 PHIL 912 depreciation of its assets on the basis of their
acquisition cost. As of January 1, 1950 it
FACTS: changed the depreciable value of said assets by
increasing it to conform with the increase in
Subsequent to marriage, petitioners engaged in cost for their replacement. CIR disallowed the
concessions with the government, while his deductions claimed by petitioner, consequently
wife started to engage in business as a lumber assessing the latter of deficiency income taxes.
dealer. From 1949 to 1952, petitioner sold logs
to his wife. On the thesis that the sales are null ISSUE: Whether or not the depreciation shall
and void, CIR considered the sales by Mrs. be determined on the acquisition cost rather
Medina as the petitioner’s original sales taxable than the reappraised value of the assets.
under the NIRC. Petitioner filed a petition for
reconsideration, revealing for the first time the RULING: Yes. The following tax law provision
allows a deduction from gross income for
alleged premarital agreement of complete
separation of property. depreciation but limits the recovery to the
capital invested in the asset being depreciated.
ISSUE: Whether or not the sales made by the Depreciation is the gradual diminution in the
petitioner to his wife could be considered as useful value of tangible property resulting from
his original taxable sales wear and tear and normal obsolescense.

RULING: It appears that at the time of the

marriage between petitioner and his wife, they
neither had any property nor business of their
own, as to have really urged them to enter into
the supposed property agreement.
38. ARCHES VS. BELLOSILLO, 20 SCRA 34

39. CIR VS. SONY PHILS., 635 SCRA 234

FACTS:

Sony Philippines was ordered examined for “the

period 1997 and unverified prior years” as
indicated in the Letter of Authority. The audit
yielded assessments against Sony Philippines
for deficiency VAT and FWT, viz: (1) late
remittance of Final Withholding Tax on royalties
for the period January to March 1998 and (2)
deficiency VAT on reimbursable received by
Sony Philippines from its offshore affiliate, Sony
International Singapore (SIS).

ISSUE: Is Petitioner liable for deficiency Value

Added Tax?

RULING: ) NO. Sony Philippines did in fact incur

expenses supported by valid VAT invoices when
it paid for certain advertising costs. This is
sufficient to accord it the benefit of input VAT
credits and where the money came from to
satisfy said advertising billings is another matter
but does not alter the VAT effect.

40. REPUBLIC BANK VS. CTA & CIR, GR. NO.

62554-55, SEPT. 29, 1992

FACTS:

Sony Philippines was ordered examined for “the

period 1997 and unverified prior years” as
indicated in the Letter of Authority. The audit
yielded assessments against Sony Philippines
for deficiency VAT and FWT, viz: (1) late
remittance of Final Withholding Tax on royalties
for the period January to March 1998 and (2)
deficiency VAT on reimbursable received by
Sony Philippines from its offshore affiliate, Sony
International Singapore (SIS).

ISSUE: Is Petitioner liable for deficiency Value

Added Tax?

RULING: ) NO. Sony Philippines did in fact incur

expenses supported by valid VAT invoices when
it paid for certain advertising costs. This is
sufficient to accord it the benefit of input VAT
credits and where the money came from to
satisfy said advertising billings is another matter
but does not alter the VAT effect.