Construction in Tax Laws

Chester Cabalza recommends his visitors to please read the original & full texts of the cases cited. Xie xie!

Reviewer by Chester Cabalza

Chapter VI: Interpretation of Specific Types of Statutes

TAX LAWS

How are tax refunds construed?
1. La Carlota Sugar Central v. Jimenez

When the issue is whether or not the exemption from a tax imposed by law is applicable, the rule is that the exempting provision is to be construed liberally in favor of the taxing authority and strictly against exemption from tax liability, the result being that statutory provisions for the refund of taxes are strictly construed in favor of the State and against the taxpayer. Exempting from the 17% tax all fertilizers imported by planters or farmers through any agent other than their cooperatives, this would be rendering useless the only exception expressly established in the case of fertilizers imported by planters or farmers through their cooperatives.

Who has the burden of proof?

1. CIR v. CA – Ateneo case

The Commissioner erred in applying the principles of tax exemption without first applying the well-settled doctrine of strict interpretation in the imposition of taxes. he Court ruled that the private respondent is not a contractor selling its services for a fee but an academic institution conducting these researches pursuant to its commitments to education and, ultimately, to public service. For the institute to have tenaciously continued operating for so long despite its accumulation of significant losses, we can only agree with both the Court of Tax Appeals and the Court of Appeals that “education and not profit is motive for undertaking the research projects.

2. Mactan Cebu v. Marcos

Mactan Cebu International Airport Authority (MCIAA) is a “taxable person” under its Charter (RA 6958), and was only exempted from the payment of real property taxes. The grant of the privilege only in respect of this tax is conclusive proof of the legislative intent to make it a taxable person subject to all taxes, except real property tax. Therefore, MCIAA has to pay the assessed realty tax of its properties effective after January 1, 1992 until the present.

Tax sales construed?

1. Serefino v. CA

The Court assailed decision of the appellate court declares that the prescribed procedure in auction sales of property for tax delinquency being in derogation of property rights should be followed punctiliously. Strict adherence to the statutes governing tax sales is imperative not only for the protection of the tax payers, but also to allay any possible suspicion of collusion between the buyer and the public officials called upon to enforce such laws. Notice of sale to the delinquent land owners and to the public in general is an essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale. The inability of the Register of Deeds to notify the actual owner or Lopez Sugar Central of the scheduled public auction sale was partly due to the failure of Lopez Sugar Central to declare the land in its name for a number of years and to pay the complete taxes thereon.