tax+2 percentage+tax+cases

8/13/2019 Tax+2 Percentage+Tax+Cases

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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-60126 September 25, 1985

CAGAAN ELECTR!C PO"ER # L!G$T CO., !NC., petitioner,vs.

COMM!SS!ONER O% !NTERNAL RE&ENUE '() COURT O% APPEALS, respondents.

Quasha, De Guzman Makalintal & Barot for petitioner.

A*U!NO, J.:

his is about the liabilit! of petitioner Ca"a!an Electric Po#er $ %i"ht Co., Inc. for inco&e ta' a&ountin" to P(),*+.(- for the &orethan seven&onth period of the !ear */ in addition to franchise tax.

he petitioner is the holder of a le"islative franchise, Republic 0ct No. -1+(, under #hich its pa!&ent of -2 ta' on its "ross earnin"sfro& the sale of electric current is 3in lieu of all ta'es and assess&ents of #hatever authorit! upon privile"es, earnin"s, inco&e,franchise, and poles, #ires, transfor&ers, and insulators of the "rantee, fro& #hich ta'es and assess&ents the "rantee is hereb!e'pressl! e'e&pted3 4Sec. -5.

On 6une 1(, */7, Republic 0ct No. )+-* a&ended section 1+ of the a' Code b! &a8in" liable for inco&e ta' all corporate taxpayersnot specificall! e'e&pt under para"raph 4c5 4*5 of said section and section 1( of the a' Code not#ithstandin" the 3provisions ofe'istin" special or "eneral la#s to the contrar!3. hus, franchise co&panies #ere sub9ected to income tax in addition to franchise tax.

:o#ever, in petitioner;s case, its franchise #as a&ended b! Republic 0ct No. /


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It is relevant to note that franchise co&panies, li8e the Philippine %on" Distance elephone Co&pan!, have been pa!in" inco&e ta' inaddition to the franchise ta'.

:o#ever, it cannot be denied that the said */ assess&ent appears to be hi"hl! controversial. he Co&&issioner at the outset #asnot certain as to petitioner;s inco&e ta' liabilit!. It had reason not to pa! inco&e ta' because of the ta' e'e&ption in its franchise.

?or this reason, it should be liable onl! for tax properand should not be held liable for the surchar"e and interest. 40dvertisin"0ssociates, Inc. vs. Co&&issioner of Internal Revenue and Court of a' 0ppeals, B. R. No. )()7, Dece&ber 1/, *7+,*-- SCR0(/)A I&us Electric Co., Inc. vs. Co&&issioner of Internal Revenue, *1) Phil. *


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Manila

%!RST +!&!S!ON

G.R. No. 1509 / 15, 200

COMM!SS!ONER O% !NTERNAL RE&ENUE, petitioner,vs.

M!C$EL . L$U!LL!ER PA"NS$OP, !NC., respondent.

+A&!+E, R., C.J.3

0re pa#nshops included in the ter& lendin" investors for the purpose of i&posin" the )2 percenta"e ta' under then Section **/ of theNational Internal Revenue Code 4NIRC5 of *((, as a&ended b! E'ecutive Order No. 1(-

Petitioner Co&&issioner of Internal Revenue 4CIR5 filed the instant petition for revie# to set aside the decision*of 1< Nove&ber 1IR Rulin" NoJ. /IR ?or& No. 1)10ureau of Internal Revenue 4>IR5 issued 0ssess&ent Notice No. 7*P*-

+(**7 a"ainst %huillier de&andin" pa!&ent of deficienc! percenta"e ta' in the su& of P-,-/


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Its protest havin" been unacted upon, %huillier, in a letter dated - March *7, elevated the &atter to the CIR. Still, the protest #as notacted upon b! the CIR. hus, on ** Nove&ber *7, %huillier filed a 3Notice and Me&orandu& on 0ppeal3 #ith the Court of a'

0ppeals invo8in" Section 117 of Republic 0ct No. 7+1+, other#ise 8no#n as the a' Refor& 0ct of *(, #hich providesF

Section 117. Protestin" of 0ssess&ent. L

If the protest is denied in #hole or in part, or is not acted upon #ithin one hundred ei"ht! 4*7ill and the subse@uent >ica&eral Co&&ittee version, #hich eventuall! beca&e the EV0 %a#,did not incorporate such proposed a&end&ent.


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%astl!, %huillier ar"ues that follo#in" the &a'i& in statutor! construction 3e'pressio unius est e'clusio alterius,3 it #as not the intentionof the %e"islature to i&pose percenta"e ta'es on pa#nshops because if it #ere so, pa#nshops #ould have been included as a&on"the businesses sub9ect to the said ta'. Inas&uch as revenue la#s i&pose special burdens upon ta'pa!ers, the enforce&ent of suchla#s should not be e'tended b! i&plication be!ond the clear i&port of the lan"ua"e used.

e are therefore called upon to resolve the issue of #hether pa#nshops are sub9ect to the )2 lendin" investorHs ta'. Corollar! to thisissue are the follo#in" @uestionsF 4*5 0re RMO No. *)* and RMC No. +-* valid 415 ere the! issued to i&ple&ent Section **/ ofthe NIRC of *((, as a&ended 4-5 0re pa#nshops considered 3lendin" investors3 for the purpose of the i&position of the lendin"investorHs ta' 4+5 Is publication necessar! for the validit! of RMO No. *)* and RMC No. +-*.

RMO No. *)* and RMC No. +-* #ere issued in accordance #ith the po#er of the CIR to &a8e rulin"s and opinions in connection#ith the i&ple&entation of internal revenue la#s, #hich #as besto#ed b! then Section 1+) of the NIRC of *((, as a&ended b! E.O.No. 1(-./Such po#er of the CIR cannot be controverted. :o#ever, the CIR cannot, in the e'ercise of such po#er, issue ad&inistrativerulin"s or circulars not consistent #ith the la# sou"ht to be applied. Indeed, ad&inistrative issuances &ust not override, supplant or&odif! the la#, but &ust re&ain consistent #ith the la# the! intend to carr! out. Onl! Con"ress can repeal or a&end the la#.(

he CIR ar"ues that both issuances are &ere rules and re"ulations i&ple&entin" then Section **/ of the NIRC, as a&ended, #hichprovidedF

SEC. **/. Percenta"e ta' on dealers in securitiesA lendin" investors. Dealers in securities and lendin" investors shall pa! ata' e@uivalent to si' 4/5 per centu& of their "ross inco&e. %endin" investors shall pa! a ta' e@uivalent to five 4)25 percent oftheir "ross inco&e.

It is clear fro& the afore@uoted provision that pa#nshops are not specificall! included. hus, the @uestion is #hether pa#nshops areconsidered lendin" investors for the purpose of i&posin" percenta"e ta'.

e rule in the ne"ative.

Incidentall!, #e observe that both parties, as #ell as the Court of a' 0ppeals and the Court of 0ppeals, refer to the National InternalRevenue Code as the a' Code. he! did not specif! #hether the provisions the! cited #ere ta8en fro& the NIRC of *((, asa&ended, or the NIRC of *7/, as a&ended. ?or clarit!, it &ust be pointed out that the NIRC of *(( as renu&bered and rearran"edb! E.O. No. 1(- is a later la# than the NIRC of *7/, as a&ended b! P.D. Nos. **, *+, 1


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4ff5 Pa#nshops, one thousand pesos 4underscorin" ours5

Second. Con"ress never intended pa#nshops to be treated in the sa&e #a! as lendin" investors. Section **/ of the NIRC of *((, asrenu&bered and rearran"ed b! E.O. No. 1(-, #as basicall! lifted fro& Section *()7of the NIRC of *7/, #hich treated both ta'sub9ects differentl!. Section *() of the latter Code read as follo#sF

Sec. *(). Percenta"e ta' on dealers in securities, lendin" investors. Dealers in securities shall pa! a ta' e@uivalent to si'4/25 percent of their "ross inco&e. %endin" investors shall pa! a ta' e@uivalent to five 4)25 percent of their "ross inco&e. 40sa&ended b! P.D. No. *(-, P.D. No. *) and P.D. No. *+5.

e note that the definition of lendin" investors found in Section *)( 4u5 of the NIRC of *7/ is not found in the NIRC of *((, asa&ended b! E.O. No. 1(-, #here Section **/ invo8ed b! the CIR is found. :o#ever, as e&phasi=ed earlier, both the NIRC of *7/and the NIRC of *(( dealt #ith pa#nshops and lendin" investors differentl!. Veril! then, it #as the intent of Con"ress to deal #ith bothsub9ects differentl!. :ence, #e &ust li8e#ise interpret the statute to confor& #ith such le"islative intent.

hird. Section **/ of the NIRC of *((, as a&ended b! E.O. No. 1(-, sub9ects to percenta"e ta' dealers in securities and lendin"investors onl!. here is no &ention of pa#nshops. Gnder the &a'i& e'pressio unius est e'clusio alterius, the &ention of one thin"i&plies the e'clusion of another thin" not &entioned. hus, if a statute enu&erates the thin"s upon #hich it is to operate, ever!thin"else &ust necessaril! and b! i&plication be e'cluded fro& its operation and effect.his rule, as a "uide to probable le"islative intent,is based upon the rules of lo"ic and natural #or8in"s of the hu&an &ind.*IR had ruled several ti&es prior to the issuance of RMO No. *)* and RMC +-* that pa#nshops #ere not sub9ect tothe )2 percenta"e ta' i&posed b! Section **/ of the NIRC of *((, as a&ended b! E.O. No. 1(-. his #as even ad&itted b! the CIR

in RMO No. *)* itself. Considerin" that Section **/ of the NIRC of *((, as a&ended, #as practicall! lifted fro& Section *() of theNIRC of *7/, as a&ended, and there bein" no chan"e in the la#, the interpretation thereof should not have been altered.

It &a! not be a&iss to state that, as pointed out b! the respondent, pa#nshops #as sou"ht to be included as a&on" those sub9ect to)2 percenta"e ta' b! :ouse >ill No. ***( in *+. Section *- thereof readsF

Section *-. Section **/ of the National Internal Revenue Code, as a&ended, is hereb! further a&ended to read as follo#sF

3SEC. **/. Percenta"e ta' on dealers in securitiesA lendin" investorsA ONERS O? P0NS:OPSA ?OREIBNCGRRENC DE0%ERS 0NDKOR MONE C:0NBERS. Dealers in securities shall pa! a ta' e@uivalent to Si' 4/25per centu& of their "ross inco&e. %endin" investors, ONERS O? P0NS:OPS 0ND ?OREIBN CGRRENCDE0%ERS 0NDKOR MONE C:0NBERS shall pa! a ta' e@uivalent to ?ive 4)25 percent of their "ross inco&e.3

If pa#nshops #ere covered #ithin the ter& lendin" investor, there #ould have been no need to introduce such a&end&ent to includeo#ners of pa#nshops. 0t an! rate, such proposed a&end&ent #as not adopted. Instead, the approved bill #hich beca&e R.0. No.((*/**repealed Section **/ of NIRC of *((, as a&ended, #hich #as the basis of RMO No. *)* and RMC No. +-*A thusF

SEC. 1


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L In the sa&e #a! that la#s &ust have the benefit of public hearin", it is "enerall! re@uired that before a le"islative rule isadopted there &ust be hearin". In this connection, the 0d&inistrative Code of *7( providesF

Public Participation. If not other#ise re@uired b! la#, an a"enc! shall, as far as practicable, publish or circulate notices ofproposed rules and afford interested parties the opportunit! to sub&it their vie#s prior to the adoption of an! rule.

415 In the fi'in" of rates, no rule or final order shall be valid unless the proposed rates shall have been published in ane#spaper of "eneral circulation at least t#o #ee8s before the first hearin" thereon.

4-5 In case of opposition, the rules on contested cases shall be observed.

In addition, such rule &ust be published.

hen an ad&inistrative rule is &erel! interpretative in nature, its applicabilit! needs nothin" further than its bare issuance, for it "ivesno real conse@uence &ore than #hat the la# itself has alread! prescribed. hen, on the other hand, the ad&inistrative rule "oesbe!ond &erel! providin" for the &eans that can facilitate or render least cu&berso&e the i&ple&entation of the la# but substantiall!increases the burden of those "overned, it behooves the a"enc! to accord at least to those directl! affected a chance to be heard, andthereafter to be dul! infor&ed, before that ne# issuance is "iven the force and effect of la#.*)

RMO No. *)* and RMC No. +-* cannot be vie#ed si&pl! as i&ple&entin" rules or corrective &easures revo8in" in the processthe previous rulin"s of past Co&&issioners. Specificall!, the! #ould have been a&endator! provisions applicable to pa#nshops.ithout these disputed CIR issuances, pa#nshops #ould not be liable to pa! the )2 percenta"e ta', considerin" that the! #ere notspecificall! included in Section **/ of the NIRC of *((, as a&ended. In so doin", the CIR did not si&pl! interpret the la#. he due

observance of the re@uire&ents of notice, hearin", and publication should not have been i"nored.

here is no need for us to discuss the rulin" in C0B.R. SP No. )171 entitled Co&&issioner of Internal Revenue v. 0"encia E'@uisiteof >ohol Inc., #hich upheld the validit! of RMO No. *)* and RMC No. +-*. Suffice it to sa! that the 9ud"&ent in that case cannot bebindin" upon the Supre&e Court because it is onl! a decision of the Court of 0ppeals. he Supre&e Court, b! tradition and in ours!ste& of 9udicial ad&inistration, has the last #ord on #hat the la# isA it is the final arbiter of an! 9ustifiable controvers!. here is onl!one Supre&e Court fro& #hose decisions all other courts should ta8e their bearin"s.*/

In vie# of the fore"oin", RMO No. *)* and RMC No. +-* are hereb! declared null and void. Conse@uentl!, %huillier is not liable topa! the )2 lendin" investorHs ta'.

"$ERE%ORE, the petition is hereb! DISMISSED for lac8 of &erit. he decision of the Court of 0ppeals of 1< Nove&ber 1ase and Enhance its 0d&inistration, 0&endin" forhese Purposes Sections L **/ of itle V L of the National Internal Revenue Code, as 0&ended.

/No# Sections 1++ and 1+) of R.0. No. 7+1+, other#ise 8no#n as the a' Refor& 0ct of *(.

(Co&&issioner of Internal Revenue v. Court of 0ppeals, B.R. No. *uenaventura, Sa!oc $ De los 0n"eles v. :o&e Develop&ent Mutual ?und, B.R. No. *-*


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Section 1


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Manila

%!RST +!&!S!ON

G.R. No. 11658 M'r 18, 2005

COMM!SS!ONER O% !NTERNAL RE&ENUE,petitioner,vs.

T$E P$!L!PP!NE AMER!CAN ACC!+ENT !NSURANCE COMPAN, !NC., T$E P$!L!PP!NE AMER!CAN ASSURANCE COMPAN,!NC., '() T$E P$!L!PP!NE AMER!CAN GENERAL !NSURANCE CO., !NC.,respondents.

+ E C ! S ! O N

CARP!O, J.3

Te C'4e

>efore the Court is a petition for revie#*assailin" the Decision1of ( 6anuar! 1


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3?or &a8in" invest&ents on salar! loans, ban8s #ill not be re@uired to pa! the &one! lenderHs ta' i&posed b! thissubsection, for the reason that &one! lendin" is considered a &ere incident of the ban8in" business. See Rulin" No+-, 4October 7, *1/5 1) Off. Ba=. *-1/53 4he Internal Revenue %a#, 0nnotated, id.5

he ter& 3&one! lenders3 #as later chan"ed to 3lendin" investors3 but the definition of the ter& re&ains the sa&e. Sec.*+/+4'5, Rev. 0d&. Code, as finall! a&ended b! Co&. 0ct No. 1*), and Sec. *+/)4v5 of the sa&e Code, as finall! a&endedb! 0ct No. -/-J he sa&e la# is e&bodied in the present National Internal Revenue Code 4Co&. 0ct No. +//5 #ithoutchan"e, e'cept in the a&ount of the ta'. See Secs. *71405 4-5 4dd5 and *+4u5, National Internal Revenue Code.J

It is a #ellsettled rule that an ad&inistrative interpretation of a la# #hich has been follo#ed and applied for a lon" ti&e, andthereafter the la# is reenacted #ithout substantial chan"e, such ad&inistrative interpretation is dee&ed to have receivedle"islative approval. In short, the ad&inistrative interpretation beco&es part of the la# as it is presu&ed to carr! out thele"islative purpose.)

he C0 held that the practice of lendin" &one! at interest is part of the insurance business. C0 +// alread! ta'es the insurancebusiness. he C0 pointed out that the la# reco"ni=es and even re"ulates this practice of lendin" &one! b! insurance co&panies.

he C0 observed that C0 +// also treated differentl! insurance co&panies fro& lendin" investors in re"ard to fi'ed ta'es. GnderSection *714054-54""5, insurance co&panies #ere sub9ect to the sa&e fi'ed ta' as ban8s and finance co&panies. he C0 reasonedthat insurance co&panies #ere "rouped #ith ban8s and finance co&panies because the latterHs lendin" activities #ere also inte"ral totheir business. In contrast, lendin" investors #ere ta'ed at a different fi'ed ta' under Section *714054-54dd5 of C0 +//. he C0 statedthat 3insurance co&panies ''' had never been re@uired b! respondent CIRJ to pa! the fi'ed ta' i&posed on lendin" investors '''.3/

he dispositive portion of the Decision of ) 6anuar! *) of the Court of a' 0ppeals 43C0 Decision35 readsF

:ERE?ORE, pre&ises considered, petitioners Philippine 0&erican 0ccident Insurance Co., Philippine 0&erican 0ssuranceCo., and Philippine 0&erican Beneral Insurance Co., Inc. are not ta'able on their lendin" transactions independentl! of theirinsurance business. 0ccordin"l!, respondent is hereb! ordered to refund to petitionersJ the su& of P(,7).1), P(,6EC O :E -2 PERCEN0BE 0 0S %ENDINBINVESORS GNDER SECIONS *714054-54DD5 0ND *)0, RESPECIVE% IN RE%0ION O SECION *+4G5, 0%% O?:E NIRC.*t

Gndaunted, petitioner found its #a! to this Court via the present petition, contendin" thatF

3*. Respondent Court of 0ppeals erred in holdin" that the 9urisdiction to collect a&use&ent ta'es of P>0 "a&es is vested inthe national "overn&ent to the e'clusion of the local "overn&ents.

31. Respondent Court of 0ppeals erred in holdin" that Section *- of the %ocal a' Code of *(- li&its local "overn&ent unitsto theaters, cine&ato"raphs, concert halls, circuses and other places of a&use&ent in the collection of the a&use&ent ta'.

3-. Respondent Court of 0ppeals erred in holdin" that Revenue Re"ulations No. 777 dated ?ebruar! *, *77 is anerroneous interpretation of la#.

3+. Respondent Court of 0ppeals erred in "ivin" retroactive effect to the revocation of Revenue Re"ulations 777.

3). Respondent Court of 0ppeals erred #hen it failed to consider the provisions of P.D. 7)* the franchise of Petitioner, Section7 of #hich provides that a&use&ent ta' on ad&ission receipts of Petitioner is )2.

3/. Respondent Court of 0ppeals erred in holdin" that the cession of advertisin" and strea&er spaces in the venue to a thirdperson is sub9ect to a&use&ent ta'es.

3(. Respondent Court of 0ppeals erred in holdin" that the cession of advertisin" and strea&er spaces inside the venue ise&braced #ithin the ter& ;"ross receipts; as defined in Section *1- 4/5 of the a' Code.

37. Respondent Court of 0ppeals erred in holdin" that the a&use&ent ta' liabilit! of Petitioner is sub9ect to a ()2 surchar"e.3

he issues for resolution in this case &a! be si&plified as follo#sF

*. Is the a&use&ent ta' on ad&ission tic8ets to P>0 "a&es a national or local ta' Other#ise put, #ho bet#een the national"overn&ent and local "overn&ent should petitioner pa! a&use&ent ta'es

1. Is the cession of advertisin" and strea&er spaces to Vinta"e Enterprises, Inc. 4VEI5 sub9ect to the pa!&ent of a&use&ent ta'

-. If ever petitioner is liable for the pa!&ent of deficienc! a&use&ent ta', is it liable to pa! a sevent!five percent 4()25 surchar"e onthe deficienc! a&ount due

Petitioner contends that PD 1-*, other#ise 8no#n as the %ocal a' Code of *(-, transferred the po#er and authorit! to lev! andcollect a&use&ent ta'es fro& the sale of ad&ission tic8ets to places of a&use&ent fro& the national "overn&ent to the local"overn&ents. Petitioner cited >IR Me&orandu& Circular No. +(- providin" that the po#er to lev! and collect a&use&ent ta' onad&ission tic8ets #as transferred to the local "overn&ents b! virtue of the %ocal a' CodeA and >IR Rulin" No. 1-*7/ #hich held that3the 9urisdiction to lev! a&use&ent ta' on "ross receipts fro& ad&ission tic8ets to places of a&use&ent #as transferred to local"overn&ents under P.D. No. 1-*, as a&ended.37?urther, petitioner opined that even assu&in" ar"uendo that respondentCo&&issioner revo8ed >IR Rulin" No. 1-*7/, the reversal, &odification or revocation cannot be "iven retroactive effect since even aslate as *77 4>IR Me&orandu& Circular No. 7775, respondent Co&&issioner still reco"ni=ed the 9urisdiction of local "overn&ents tocollect a&use&ent ta'es.

he Court is not persuaded b! petitioner;s asseverations.

he la#s on the &atter are succinct and clear and need no elaborate dis@uisition. Section *- of the %ocal a' Code providesF

3SECION *-.Amusement tax on admission. he province shall i&pose a ta' on ad&ission to be collected fro& theproprietors, lessees, or operators of theaters, cine&ato"raphs, concert halls, circuses and other places of a&use&ent . . .3

he fore"oin" provision of la# in point indicates that the province can onl! i&pose a ta' on ad&ission fro& the proprietors, lessees, oroperators of theaters, cinematographs, concert halls, circusesand other places of a&use&ent. he authorit! to ta' professionalbas8etball "a&es is not therein included, as the sa&e is e'pressl! e&braced in PD *), #hich a&ended PD *+)/ thusF

3SECION ++. Section 1/7 of this Code, as a&ended, is hereb! further a&ended to read as follo#sF


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;Sec. 1/7.Amusement taxes. here shall be collected fro& the proprietor, lessee or operator of coc8pits, cabaretsni"ht or da! clubs, bo'in" e'hibitions,professional asketall games, 6ai0lai, race trac8s and bo#lin" alle!s, a ta'e@uivalent toF

;*. Ei"hteenper centumin the case of coc8pitsA

;1. Ei"hteenper centumin the case of cabarets, ni"ht or da! clubsA

;-. ?ifteenper centumin the case of bo'in" e'hibitionsA

;+. 2ifteen per centum in the case of professional asketall games as en/isioned in 4residential Decree ?o. $!.4ro/ided, ho)e/er. ;hat the tax herein shall e in lieu of all other percentage taxes of )hate/er nature anddescriptionA

;). hirt!per centumin the case of 6ai0lai and race trac8sA and

;/. ?ifteenper centumin the case of bo#lin" alle!s of their "ross receipts, irrespective of #hether or not an! a&ountis char"ed or paid for ad&ission. ?or the purpose of the a&use&ent ta', the ter& "ross receipts; e&braces all thereceipts of the proprietor, lessee or operator of the a&use&ent place. Said "ross receipts also include inco&e fro&television, radio and &otion picture ri"hts, if an!. 40 person or entit! or association conductin" an! activit! sub9ect tothe ta' herein i&posed shall be si&ilarl! liable for said ta' #ith respect to such portion of the receipts derived b! hi&or it.5

;he ta'es i&posed herein shall be pa!able at the end of each @uarter and it shall be the dut! of the proprietor,lessee, or operator concerned, as #ell as an! part! liable, #ithin t#ent! da!s after the end of each @uarter, to &a8e atrue and co&plete return of the a&ount of the "ross receipts derived durin" the precedin" @uarter and pa! the ta'due thereon. If the ta' is not paid #ithin the ti&e prescribed above, the a&ount of the ta' shall be increased yt)enty%fi/e per centum, the incre&ent to be part of the ta'.

;In case of #illful ne"lect to file the return #ithin the period prescribed herein, or in case a false or fraudulent return is#illfull! &ade, there shall be added to the ta' or to the deficienc! ta', in case an! pa!&ent has been &ade on thebasis of the return before the discover! of the falsit! or fraud, a surchar"e of fifty per centumof its a&ount. hea&ount so added to an! ta' shall be collected at the sa&e ti&e and in the sa&e &anner and as part of the ta' unlessthe ta' has been paid before the discover! of the falsit! or fraud, in #hich case, the a&ount so assessed shall becollected in the sa&e &anner as the ta'.3 4e&phasis ours5

?ro& the fore"oin" it is clear that the 3proprietor, lessee or operator of . . . professional bas8etball "a&es3 is re@uired to pa! ana&use&ent ta' e@uivalent to fifteen per centu& 4*)25 of their "ross receipts to the >ureau of Internal Revenue, #hich pa!&ent is anational ta'. he said pa!&ent of a&use&ent ta' is in lieu of all other percenta"e ta'es of #hatever nature and description.

hile Section *- of the %ocal a' Code &entions 3other places of a&use&ent3, professional bas8etball "a&es are definitel! not #ithinits scope. Gnder the principle of e@usdem generis, #here "eneral #ords follo# an enu&eration of persons or thin"s, b! #ords of aparticular and specific &eanin", such "eneral #ords are not to be construed in their #idest e'tent, but are to be held as appl!in" onl! topersons or thin"s of the sa&e 8ind or class as those specificall! &entioned.hus, in deter&inin" the &eanin" of the phrase 3otherplaces of a&use&ent3, one &ust refer to the prior enu&eration of theaters, cine&ato"raphs, concert halls and circuses #ith artistice'pression as their co&&on characteristic. Professional bas8etball "a&es do not fall under the sa&e cate"or! as theaters,cine&ato"raphs, concert halls and circuses as the latter basicall! belon" to artistic for&s of entertain&ent #hile the for&er caters tosports and "a&in".

0 historical anal!sis of pertinent la#s does reveal the le"islative intent to place professional bas8etball "a&es #ithin the a&bit of anational ta'. he %ocal a' Code, #hich beca&e effective on 6une 17, *(-, allo#ed the province to collect a ta' on ad&ission fro&the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. On 6anuar!/, *(/, the operation of petitioner #as placed under the supervision and re"ulation of the Ba&es and 0&use&ent >oard b! virtue ofPD 7(*, #ith the proviso 4Section 75 that 3. . . all professional bas8etball "a&es conducted b! the Philippine >as8etball 0ssociationshall onl! be sub9ect to a&use&ent ta' of five per cent of the "ross receipts fro& the sale of ad&ission tic8ets.3 hen, on 6une **,*(7, PD *+)/ ca&e into effect, increasin" the a&use&ent ta' to ten per cent, #ith a cate"orical referral to PD 7(*, to #it, 3tJen percentu& in the case of professional bas8etball "a&es as envisioned in Presidential Decree No. 7(* . . .3 %ater in *7+, PD *)increased the rate of a&use&ent ta' to fifteen percent b! &a8in" reference also to PD 7(*. ith the reference to PD 7(* b! PD *+)/and PD *), there is a reco"nition under the la#s of this countr! that the a&use&ent ta' on professional bas8etball "a&es is anational, and not a local, ta'. Even up to the present, the cate"or! of a&use&ent ta'es on professional bas8etball "a&es as a nationalta' re&ains the sa&e. his is so provided under Section *1)*


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%i8e#ise erroneous is the stance of petitioner that respondent Co&&issioner;s issuance of >IR Rulin" No. 1-*7/*1and >IR RevenueMe&orandu& Circular No. 777*- both upholdin" the authorit! of the local "overn&ent to collect a&use&ent ta'es should bind the"overn&ent or that, if there is an! revocation or &odification of said rule, the sa&e should operate prospectivel!.

It bears stressin" that the "overn&ent can never be in estoppel, particularl! in &atters involvin" ta'es. It is a #ell8no#n rule thaterroneous application and enforce&ent of the la# b! public officers do not preclude subse@uent correct application of the statute, andthat the Bovern&ent is never estopped b! &ista8e or error on the part of its a"ents.*+

Gntenable is the contention that inco&e fro& the cession of strea&er and advertisin" spaces to VEI is not sub9ect to a&use&ent ta'.

he @uestioned proviso &a! be found in Section * of PD *+)/ #hich statesF

3SECION *. Section 1/7 of the National Internal Revenue Code of *((, as a&ended, is hereb! further a&ended to read asfollo#sF

;Sec. 1/7.Amusement taxes. here shall be collected fro& the proprietor, lessee or operator of coc8pits, cabaretsni"ht or da! clubs, bo'in" e'hibitions, professional bas8etball "a&es, 6ai0lai, race trac8s and bo#lin" alle!s, a ta'e@uivalent toF

''' ''' '''

of their "ross receipts, irrespective of #hether or not an! a&ount is char"ed or paid for ad&ission. 2or the purpose of the amusement tax, the termgross receipts* emraces all the receipts of the proprietor, lessee or operator of the amusement place. Said "ross receipts also include inco&e fro&television, radio and &otion picture ri"hts, if an!. 40 person, or entit! or association conductin" an! activit! sub9ect to the ta' herein i&posed shall be

si&ilarl! liable for said ta' #ith respect to such portion of the receipts derived b! hi& or it.53 4e&phasis ours5

he fore"oin" definition of "ross receipts is broad enou"h to e&brace the cession of advertisin" and strea&er spaces as the sa&e e&braces all thereceipts of the proprietor, lessee or operator of the a&use&ent place. he la# bein" clear, there is no need for an e'tended interpretation.*)

he last issue for resolution concerns the liabilit! of petitioner for the pa!&ent of surchar"e and interest on the deficienc! a&ount due. Petitionercontends that it is not liable, as it acted in "ood faith, havin" relied upon the issuances of the respondent Co&&issioner. his issue &ust necessaril! failas the sa&e has never been posed as an issue before the respondent court. Issues not raised in the court a @uo cannot be raised for the first ti&e onappeal.*/

0ll thin"s studiedl! considered, the Court rules that the petitioner is liable to pa! a&use&ent ta' to the national "overn&ent, and not to the local"overn&ent, in accordance #ith the rates prescribed b! PD *).

:ERE?ORE, the Petition is DENIED, and the Decisions of the Court of 0ppeals and Court of a' 0ppeals dated Nove&ber 1*, *+ and Dece&ber1+, *-, respectivel! 0??IRMED. No pronounce&ent as to costs.!=)phi!.n>t

SO ORDERED.

Pan"aniban and Bon=a"aRe!es, 66 ., concur.

Melo and Vitu", 66 ., concur in the result.

%oot(ote43

*Penned b! 0ssociate 6ustice Pedro 0. Ra&ire= and concurred b! 0ssociate 6ustices uirino D. 0bad Santos, 6r. and Eu"enio S. %abitoria.

19ollo, pp. ++/1.

-C0 Decision penned b! 0ssociate 6ud"e Ra&on O. de Ve!ra and concurred b! Presidin" 6ud"e Ernesto D. 0costa and 0ssociate 6ud"eManuel Q. BrubaA 9ollo, pp. (


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4?3+ -hipping and ;ransport +orporation /s. +ourt of Appeals, 1( SCR0 +


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Manila

:IRD DIVISION

G.R. No. 1159 M' 5, 1999

MAN!LA ELECTR!C COMPAN, petitioner,vs.

PRO&!NCE O% LAGUNA '() enito R. >ala=o in his capacit! as the Provincial reasurer of %a"una. 0side fro& the a&ount of P*,)1


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*. Orderin" the dis&issal of the Co&plaintA and

1. Declarin" %a"una Provincial a' Ordinance No.


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operate, the ta' shall be based on the "ross receipts for the precedin" calendar !ear, or an! fraction thereof, asprovided herein. 4Gnderscorin" supplied for e&phasis5

Indicative of the le"islative intent to carr! out the Constitutional &andate of vestin" broad ta' po#ers to local "overn&ent units, the%ocal Bovern&ent Code has effectivel! #ithdra#n under Section *- thereof, ta' e'e&ptions or incentives theretofore en9o!ed b!certain entities. his la# statesF

Sec. *-. ithdra)al of ;ax xemption 4ri/ileges nless other)ise pro/ided in this +ode, tax exemptions orincenti/es granted to, or presently en@oyed y all persons, )hether natural or @uridical, includin" "overn&ento#ned

or controlled corporations, e'cept local #ater districts, cooperatives dul! re"istered under R.0. No. /-7, nonstoc8and nonprofit hospitals and educational institutions, are herey )ithdra)n upon the effecti/ity of this +ode.4Gnderscorin" supplied for e&phasis5

he Code, in addition, contains a "eneral repealin" clause in its Section )-+A thusF

Sec. )-+. Repealin" Clause. . . .

4f5All general and special la)s, acts, cit! charters, decrees, e'ecutive orders, procla&ations and ad&inistrativere"ulations, or part or parts thereof #hich are inconsistent #ith an! of the provisions of this Code are hereb! repealedor &odified accordin"l!. 4Gnderscorin" supplied for e&phasis5 8

o e'e&plif!, in Mactan +eu :nternational Airport Authority /s. Marcos, 9the Court upheld the #ithdra#al of the real estate ta'e'e&ption previousl! en9o!ed b! Mactan Cebu International 0irport 0uthorit!. he Court ratiocinatedF

. . . hese polic! considerations are consistent #ith the State polic! to ensure autono&! to local "overn&ents and theob9ective of the %BC that the! en9o! "enuine and &eanin"ful local autono&! to enable the& to attain their fullestdevelop&ent as selfreliant co&&unities and &a8e the& effective partners in the attain&ent of national "oals. hepo#er to ta' is the &ost effective instru&ent to raise needed revenues to finance and support &!riad activities if local"overn&ent units for the deliver! of basic services essential to the pro&otion of the "eneral #elfare and theenhance&ent of peace, pro"ress, and prosperit! of the people. It &a! also be relevant to recall that the ori"inalreasons for the #ithdra#al of ta' e'e&ption privile"es "ranted to "overn&ento#ned and controlled corporations andall other units of "overn&ent #ere that such privile"e resulted in serious ta' base erosion and distortions in the ta'treat&ent of si&ilarit! situated enterprises, and there #as a need for these entities to share in the re@uire&ents ofdevelop&ent, fiscal or other#ise, b! pa!in" the ta'es and other char"es due fro& the&. 10

Petitioner in its co&plaint before the Re"ional rial Court cited the rulin" of this Court in 4ro/ince of Misamis 3rientalvs. +agayanlectric 4o)er and


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Manila

:IRD DIVISION

G.R. No. 15 /(e 26, 2006

COMM!SS!ONER O% !NTERNAL RE&ENUE, Petitioner,vs.


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?or the four 4+5 @uarters of the !ear */, >PI co&puted its )2 "ross receipts ta' pa!&ents b! includin" in its ta' base the 1PI #rote the >IR a letter dated *) 6ul! *7 citin" the C0 Decision inAsian Bankand re@uestin" a refund of alle"ed overpa!&ent ofta'es representin" )2 "ross receipts ta'es paid on the 1an8in" Corporation v.Court of 0ppeals, the Court defined the ter& in this #iseF

0s co&&onl! understood, the ter& 3"ross receipts3 &eans the entire receipts #ithout an! deduction. Deductin" an! a&ount fro& the"ross receipts chan"es the result, and the &eanin", to net receipts. 0n! deduction fro& "ross receipts is inconsistent #ith a la# that&andates a ta' on "ross receipts, unless the la# itself &a8es an e'ception. 0s e'plained b! the -upreme +ourt of 4ennsyl/ania in+ommon)ealth of 4ennsyl/ania /. Eoppers +ompany, :nc.,
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:i"hl! refined and technical ta' concepts have been developed b! the accountant and le"al technician pri&aril! because of the i&pactof federal inco&e ta' le"islation. :o#ever, this in no #a! should affect or control the nor&al usa"e of #ords in the construction of ourstatutesA and #e see nothin" that #ould re@uire us not to include the proceeds here in @uestion in the "ross receipts allocation unlessstatutoril! such inclusion is prohibited. nder the ordinary asic methods of handling accounts, the term gross receipts, in the asenceof any statutory definition of the term, must e taken to include the )hole total gross receipts )ithout any deductions, x x x. Citationso&ittedJ 4E&phasis supplied53

%i8e#ise, in PI has failed to present a clear statutor! basis for its clai& to ta8e a#a! the interest inco&e#ithheld fro& the purvie# of the lev! on "ross ta' receipts.
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>ereft of a clear statutor! basis on #hich to hin"e its clai&, >PIHs vie#, as adopted b! the Court of 0ppeals, is that Section +4e5 ofRevenue Re"ulations No. *17< establishes the e'clusion of the 1PIHs asserted ri"ht under Section +4e5 of Revenue Re"ulations No. *17< presents a&isconstruction of the provision. hile, indeed, the provision states that 3tJhe rates of ta'es to be i&posed on the "ross receipts ofsuch financial institutions shall be b'4e) o( ' 7tem4 o 7(ome 't/' ree7;e),3 it "oes on to distin"uish actual receipt fro&accrual, i.e., that 3Dmere 'r/' 4' (ot be o(47)ere), b/t o(e p'me(t 74 ree7;e) o( 4/ 'r/' or 7( '4e oprep'me(t, te( te 'mo/(t 't/' ree7;e) 4' be 7(/)e) 7( te t': b'4e of such financial institutions ' ' '.3

Section +4e5 reco"ni=es that inco&e could be reco"ni=ed b! the ta'pa!er either at the ti&e of its actual receipt or its accrual,

1+

dependin" on the accountin" &ethod used b! the ta'pa!er,1)but establishes the rule that, for purposes of "ross receipts ta', interestinco&e is ta'able upon actual receipt of the inco&e, as opposed to the ti&e of its accrual. Section +4e5 does not e'clude accruedinterest inco&e fro& "ross receipts but &erel! postpones its inclusion until actual pa!&ent of the interest to the lendin" ban8, thus&andatin" that 3mHere accrual shall not e considered, ut once payment is recei/ed on such accrual or in case of prepayment, thenthe amount actually recei/ed shall e included in the tax ase of such financial institutions x x x.31/

Even if Section +4e5 had been properl! construed, it still cannot be the basis for deductin" the inco&e ta' #ithheld since Section +4e5has been superseded b! Section ( of Revenue Re"ulations No. *(7+, #hich states, thusF

SECION (. Nature and reat&ent of Interest on Deposits and ield on Deposit Substitutes.

4a5 Te 7(tere4t e'r(e) o( P77pp7(e C/rre( b'(? )epo47t4 '() 7e) rom )epo47t 4/b4t7t/te4 4/bFete) to te=7to)7( t':e4 7( 'or)'(e =7t te4e re/'t7o(4 (ee) (ot be 7(/)e) 7( te ro44 7(ome 7( omp/t7( te

)epo47tor4H7(;e4tor4 7(ome t': 7'b77t in accordance #ith the provision of Section 14b5, 4c5 and 4d5 of the NationalInternal Revenue Code, as a&ended.

4b5 Onl! interest paid or accrued on ban8 deposits, or !ield fro& deposit substitutes declared for purposes of i&posin" the#ithholdin" ta'es in accordance #ith these re"ulations shall be allo#ed as interest e'pense deductible for purposes ofco&putin" ta'able net inco&e of the pa!or.

4c5 ! te re7p7e(t o te 'bo;e-me(t7o(e) 7tem4 o 7(ome 're 7('(7' 7(4t7t/t7o(4, te 4'me 4' be 7(/)e) '4p'rt o te t': b'4e /po( =7 te ro44 ree7pt t': 74 7mpo4e). 4E&phasis supplied.5

he provision cate"oricall! provides that 7 te re7p7e(t o 7(tere4t 4/bFete) to =7to)7( t':e4 74 ' 7('(7' 7(4t7t/t7o(, te7(tere4t 4' be 7(/)e) '4 p'rt o te t': b'4e /po( =7 te ro44 ree7pt4 t': 74 7mpo4e).

he i&plied repeal of Section +4e5 is undeniable. Section +4e5 i&poses the "ross receipts ta' onl! on all ite&s of inco&e actuall!received, as opposed to their &ere accrual, #hile Section ( of Revenue Re"ulations No. *(7+ includes all interest inco&e 4#hetheractual or accrued5 in co&putin" the "ross receipts ta'.1(Section +4e5 of Revenue Re"ulations No. *17< #as superseded b! the laterrule, because Section +4e5 thereof is not restated in Revenue Re"ulations No. *(7+.17Clearl!, then, te /rre(t re;e(/e re/'t7o(4reI/7re4 7(tere4t 7(ome, =eter 't/' ree7;e) or mere 'r/e), to orm p'rt o te b'(?J4 t':'be ro44 ree7pt4.1

he Co&&issioner correctl! controverts the conclusion &ade b! the Court of 0ppeals that it #ould be 3un9ust and confiscator! toinclude the #ithheld 1! analo"!, #e appl! to the receipt of inco&e the rules on actual and constructive possession provided in 0rticles )-* and )-1 of our

Civil Code.

Gnder 0rticle )-*F

3Possession is ac@uired b! the &aterial occupation of a thin" or the e'ercise of a ri"ht, or b! the fact that it is sub9ect to the action ofour #ill, or b! the proper acts and le"al for&alities established for ac@uirin" such ri"ht.3

0rticle )-1 statesF

3Possession &a! be ac@uired b! the sa&e person #ho is to en9o! it, b! his le"al representative, b! his a"ent, or b! an! person #ithoutan! po#er #hateverA but in the last case, the possession shall not be considered as ac@uired until the person in #hose na&e the act ofpossession #as e'ecuted has ratified the sa&e, #ithout pre9udice to the 9uridical conse@uences of ne"otioru& "estio in a proper case.3
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he last &eans of ac@uirin" possession under 0rticle )-* refers to 9uridical actsthe ac@uisition of possession b! sufficient titleto#hich the la# "ives the force of acts of possession. Respondent ar"ues that onl! ite&s of inco&e actuall! received should be includedin its "ross receipts. It clai&s that since the a&ount had alread! been #ithheld at source, it did not have actual receipt thereof.

e clarif!. 0rticle )-* of the Civil Code clearl! provides that the ac@uisition of the ri"ht of possession is throu"h the proper acts andle"al for&alities established therefor. he #ithholdin" process is one such act. here &a! not be actual receipt of the inco&e #ithheldAho#ever, as provided for in 0rticle )-1, possession b! an! person #ithout an! po#er #hatsoever shall be considered as ac@uired #henratified b! the person in #hose na&e the act of possession is e'ecuted.

!( o/r =7to)7( t': 44tem, po44e447o( 74 'I/7re) b te p'or '4 te =7to)7( 'e(t o te o;er(me(t, be'/4e tet':p'er r't77e4 te ;er 't o po44e447o( or te o;er(me(t. Tere 74 t/4 o(4tr/t7;e ree7pt. Te proe44e4 oboo??eep7( '() 'o/(t7( or 7(tere4t o( )epo47t4 '() 7e) o( )epo47t 4/b4t7t/te4 t't 're 4/bFete) to %"T 're 7()ee)or e' p/rpo4e4t'(t'mo/(t to )e7;er, ree7pt or rem7tt'(e.-*4E&phasis supplied.5

hus, >PI constructivel! received inco&e b! virtue of its ac@uiescence to the e'tin"uish&ent of its 1PI, +ommissioner of :nternal 9e/enue /. ;ours -pecialists, :nc.-1and +ommissioner of :nternal 9e/enue /. Manila'ockey +lu, :nc.,--in #hich this Court held that 3"ross receipts sub9ect to ta' under the a' Code do not include &onies or receiptsentrusted to the ta'pa!er #hich do not belon" to the& and do not redound to the ta'pa!er;s benefit,3-+onl! further substantiate the factthat >PI be(e7te) fro& the #ithheld a&ounts.

In ;ours -pecialists and Manila 'ockey +lu,the ta'able entities held the sub9ect &onies not as inco&e earned but as &ere trustees.0s such, the! held the &one! entrusted to the& but #hich neither belon"ed to the& nor redounded to their benefit. On the other hand,>PI cannot be considered as a &ere trusteeA it is the actual o#ner of the funds. 0s o#ner thereof, it #as >PIHs ta' obli"ation to the"overn&ent that #as e'tin"uished upon the #ithholdin" a"entHs re&ittance of the 1CHs contention but rather the Co&&issionerHs proposition. he Court ruled in Manila 'ockey+lu that receipts not o#ned b! the Manila 6oc8e! Club but &erel! held b! it in trust did not for& part of Manila 6oc8e! ClubHs "rossreceipts. Conversel!, receipts o#ned b! the Manila 6oc8e! Club #ould for& part of its "ross receipts.

!( te 7(4t'(t '4e, C


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(Dated 17 ?ebruar! 1


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paid or disbursed, have alread! incurred b! the ta'pa!er. 46ustice 6ose C. Vitu" and 6ud"e Ernesto D. 0costa, a' %a# and 6urisprudence, c.1


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Manila

:IRD DIVISION

G.R. No. 19800

REPUefore this Court is a Petition for Revie# on Certiorari,*under Rule +) of the Revised Rules of Court, see8in" to set aside the 0u"ust ,1


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he Second Division reasoned that since respondent P0% chose to pa! the basic corporate inco&e ta' for 6anuar! to Dece&ber 1anc

he C0 En >anc upheld the Decision of the C0 Second Division and pointed out that since respondent P0% chose the first option,even if it incurred ne"ative ta'able inco&e and conse@uentl! did not pa! an! inco&e ta', it could still avail itself of the e'e&ption, andcould not be held liable for the *anc Decision dated 0u"ust , 1anc Decision #as based.
http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt12http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt13http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt14http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt14http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt15http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt16http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt16http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt17http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt12http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt13http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt14http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt15http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt16http://www.lawphil.net/judjuris/juri2010/feb2010/gr_179800_2010.html#fnt17


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In said case, therein respondent P0% also sou"ht the refund of the a&ount of P1,1+*,)1(.11, #hich represented the total a&ount of1


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%oot(ote4

Desi"nated to sit as an additional &e&ber in lieu of 0ssociate 6ustice 6ose C. Mendo=a per Special Order No. 7*7 dated 6anuar! *7, 1et#een the Philippines and Other Countries, enacted on 6une **, *(7.

)C0 En >anc Decision, p. 1A rollo, p. -/.

/30s reflected in its inco&e ta' returns for fiscal !ears 1

tax+2 percentage+tax+cases

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