the private respondents prayer arguing that:

o Tax exemptions are not presumed and even when granted, are strictly construed
against the grantee
o An increase in business expense is not the injury contemplated by law
o The drawback mechanism established in the law clearly negates the possibility of
the feared injury
o Taxes are the lifeblood of the government and their prompt and certain
availability is an imperious need. Greater injury would be inflicted on the public
should the writ be granted.
On May 11, 2005 Caguioa granted private respondents application for issuance of writ
of preliminary injunction.
Petitioners seek via petition for certiorari and prohibition to annul the May 4, 2005
Order issued by public respondent Caguioa of the RTC granting private respondents
application for issuance of writ of preliminary injunction.

Issue:

Whether or not, Caguioa erred in the issuance of the writ of preliminary injunction
Whether or not, RA 9334 is unconstitutional because it violates the constitutional
provision on the The appellate court itself acknowledges that petitioner had
complied with the requirements to sustain a claim for tax refund or credit. In the
light of RA 1125, as amended, the law creating the CTA, provides that proceedings
therein shall not be governed strictly by technical rules of evidence. Moreover, this
Court has held time and again that technicalities should not be used to defeat
substantive rights, especially those that have been established as a matter of fact.

The CA, likewise, erred in relying on CTA decisions as jurisprudential basis for its decision. By
tradition and in our system of judicial administration this Court has the last word on what the
law is, and that its decisions applying or interpreting the laws or the Constitution form part of
the legal system of the country, all other courts should take their bearings from the decisions
of this Court, ever mindful of what this Court said fifty-seven years ago in People vs. Vera that
a becoming modesty of inferior courts demands conscious realization of the position that
they occupy in the interrelation and operation of the integrated judicial system of the nation.
The principle of stare decisis et non quieta movere, enjoins adherence to judicial precedents.
It requires our courts to follow a rule already established in a final decision of the Supreme
Court. That decision becomes a judicial precedent to be followed in subsequent cases by all
courts in the land.

Manila Railroad Company v. Insular Collector of Customs [GR 30264, 12 March

1929]
En Banc, Malcolm (p): 6 concur
Facts: Paragraph 141 of the Tariff Law of 1909 provides that the manufactures of wool, not
otherwise provided for are subject to 40% ad valorem tax, while paragraph 197 provides that
vehicles for use on railways, and detached parts thereof, are subject to 10% ad valorem. Dust
shield are manufactured of mixed wool and hair, and are used in railroad cabins of the Manila
Railroad Company. The Insular Collector of Customs decided that dust shields should be
classified as manufactures of wool, not otherwise provided for.
Judge del Rosario overruled the decision of the Collector of Customs and held that dust shields
should be classified as detached parts of vehicles for use on railways.
The Supreme Court held that the trial judge was correct in classifying dust shields under
paragraph 197 of section 8 of the Tariff Law of 1909, and in refusing to classify them under

paragraph 141 of the same section of the law. It thus affirmed the appealed judgment in its
entirety, without special taxation of costs in either instance.
1. Nature of dust shields
Dust shields are manufactured of wool and hair mixed. The component material of chief value
is the wool. The purpose of the dust shield is to cover the axle box in order to protect from
dust the oil deposited therein which serves to lubricate the bearings of the wheel. Dust
guard, which is the same as dust shield, is defined in the work Car Builders Cyclopedia of
American Practice, 10th ed., 1922, p. 41, as follows: A thin piece of wood, leather, felt,
asbestos or other material inserted in the dust guard chamber at the back of a journal box,
and fitting closely around the dust guard bearing of the axle. Its purpose is to exclude dust
and to prevent the escape of oil and waste. Sometimes called axle packing or box packing.
2. Burden of proof on the validity of a legal collection of duties upon who
questions it
The burden is upon the importer to overcome the presumption of a legal collection of duties
by proof that their exaction was unlawful. The question to be decided is not whether the
Collector was wrong but whether the importer was right.
3. Interpretation of statutes levying taxes do not extend their provisions; in case
of doubt
It is the general rule in the interpretation of statutes levying taxes or duties not to extend
their provisions beyond the clear import of the language used. In every case of doubt, such
statutes are construed most strongly against the Government and in favor of the citizen,
because burdens are not to be imposed, nor presumed to be imposed, beyond what the
statutes expressly and clearly import. In the case at bar, taking account the purpose of the
article, it is acknowledged that in reality, it is used as a detached part of railway vehicles.
4. Particular enactment must be operative over the general one in the same
statute
Paragraph 141 is a general provision while paragraph 197 is a special provision. Where there
is in the same statute a particular enactment and also a general one which in its most
comprehensive sense would include what is embraced in the former, the particular enactment
must be operative, and the general language are not within the provisions of the particular
enactment.

PHIL. HEALTH CARE PROVIDERS, INC vs. COMMISSIONER OF INTERNAL REVENUE

July 2, 2014 Leave a comment
GR. NO. 1677330 September 18, 2009, SPECIAL FIRST DIVISION (CORONA, J.)
FACTS:
Petitioner is a
DST?

Held: No. Mfr granted. CIR must desist from collecting tax.

Ratio:
Section 185 of the NIRC . Stamp tax on fidelity bonds and other insurance policies. On all policies of insurance or bonds or
obligations of the nature of indemnity for loss, damage, or liability made or renewed by any person, association or company or
corporation transacting the business of accident, fidelity, employers liability, plate, glass, steam boiler, burglar, elevator,
automatic sprinkler, or other branch of insurance (except life, marine, inland, and fire insurance).
Two requisites must concur before the DST can apply, namely: (1) the document must be a policy of insurance or an obligation in
the nature of indemnity and (2) the maker should be transacting the business of accident, fidelity, employers liability, plate, glass,
steam boiler, burglar, elevator, automatic sprinkler, or other branch of insurance (except life, marine, inland, and fire insurance).
Under RA 7875, an HMO is "an entity that provides, offers or arranges for coverage of designated health services needed by plan
members for a fixed prepaid premium."
Various courts in the United States have determined that HMOs are not in the insurance business. One test that they have applied
is whether the assumption of risk and indemnification of loss are the principal object and purpose of the organization or whether
they are merely incidental to its business. If these are the principal objectives, the business is that of insurance. But if such is
incidental and service is the principal purpose, then the business is not insurance.
Applying the "principal object and purpose test," there is significant American case law supporting the argument that a
corporation, whose main object is to provide the members of a group with health services, is not engaged in the insurance
business.
For the purpose of determining what "doing an insurance business" means, we have to scrutinize the operations of the business as
a whole. This is of course only prudent and appropriate, taking into account laws applicable to those in the insurance business.
Petitioner, as an HMO, is not part of the insurance industry. This is evident from the fact that it is not supervised by the Insurance
Commission but by the Department of Health. In fact, in a letter dated September 3, 2000, the Insurance Commissioner confirmed
that petitioner is not engaged in the insurance business.
As to whether the business is covered by the DST, we can see that while the contract did contains all the elements of an insurance
contract, as stated in Sec 2., Par 1 of the Insurance Code, the primary purpose of the company is to render service. The primary
purpose of the parties in making the contract may negate the existence of an insurance contract.
Also, there is no loss, damage or liability on the part of the member that should be indemnified by petitioner as an HMO. Under
the agreement, the member pays petitioner a predetermined consideration in exchange for the hospital, medical and professional
services rendered by the petitioners physician or affiliated physician to him.
In other words, there is nothing in petitioner's agreements that gives rise to a monetary liability on the part of the member to any
third party-provider of medical services which might in turn necessitate indemnification from petitioner. The terms "indemnify" or
"indemnity" presume that a liability or claim has already been incurred. There is no indemnity precisely because the member
merely avails of medical services to be paid or already paid in advance at a pre-agreed price under the agreements.
Also, a member can take advantage of the bulk of the benefits anytime, e.g. laboratory services, x-ray, routine annual physical
examination and consultations, vaccine administration as well as family planning counseling, even in the absence of any peril, loss
or damage on his or her part.
Petitioner is obliged to reimburse the member who receives care from a non-participating physician or hospital. However, this is
only a very minor part of the list of services available. The assumption of the expense by petitioner is not confined to the
happening of a contingency but includes incidents even in the absence of illness or injury.
Consequently, there is a need to distinguish prepaid service contracts (like those of petitioner) from the usual insurance contracts.

However, assuming that petitioners commitment to provide medical services to its members can be construed as an acceptance of
the risk that it will shell out more than the prepaid fees, it still will not qualify as an insurance contract because petitioners
objective is to provide medical services at reduced cost, not to distribute risk like an insurer.
If it had been the intent of the legislature to impose DST on health care agreements, it could have done so in clear and categorical
terms. It had many opportunities to do so. But it did not. The fact that the NIRC contained no specific provision on the DST
liability of health care agreements of HMOs at a time they were already known as such, belies any legislative intent to impose it
on them. As a matter of fact, petitioner was assessed its DST liability only on January 27, 2000, after more than a decade in the
business as an HMO.
In view of petitioners availment of the benefits of [RA 9840], and without conceding the merits of this case as discussed above,
respondent concedes that such tax amnesty extinguishes the

as the proper party to file it. On matters relating to the validity of the regulation, the court held that the
regulation is invalid because the basic requirements of hearing and publication were not complied
with. The petitioners then appealed to Court of Appeals but it was, however, dismissed. Hence, this
petition for review on certiorari under Rule 45 assailing the decision of the Court of Appeals.
Issue: Was the issuance of CMO 27-2003 within the powers of the Commissioner of Customs?
Held: The provision mandates that the customs officer must first assess and determine the classification
of the imported article before tariff may be imposed. Unfortunately, CMO 23-2007 has already
classified the article even before the customs officer had the chance to examine it. In effect,
petitioner Commissioner of Customs diminished the powers granted by the Tariff and Customs Code
with regard to wheat importation when it no longer required the customs officers prior examination
and assessment of the proper classification of the wheat.
It is well-settled that rules and regulations, which are the product of a delegated power to create
new and additional legal provisions that have the effect of law, should be within the scope of the
statutory authority granted by the legislature to the administrative agency. It is required that the
regulation be germane to the objects and purposes of the law; and that it be not in contradiction to,
but in conformity with, the standards prescribed by law.

(Commissioner of Customs and the District Collector of the Port of Subic vs Hypermix Feeds Corporation,
G.R. No 179579, February 1, 2012)

Meralco vs. Vera (1975) (Taxation Law)

Facts: Meralco is the holder of a franchise to construct, maintain, and operate an electric light, heat, and power system in the City
of Manila and its suburbs. In 1962 and 1963, Meralco imported and received from abroad copper wires, transformers, and
insulators for use in the operation of its business. The Collector of Customs, as deputy of the Commissioner of Internal Revenue,
levied and collected a compensating tax. Meralco claimed for refund for the said years, but such claims were either not acted
upon or denied by the Commissioner.

Issue: Whether or not Meralco is exempt from payment of a compensating tax on poles, wires, transformers and insulators
imported by it for use in the operation of its electric light, heat, and power system.

Held: Meralco is not exempt from paying the compensation tax provided for in Section 190 of the Tax Code, the purpose of which
is to place casual importers, who are not merchants on equal footing with established merchants who pay sales tax on articles

imported by them. Meralcos claim for exemption from payment of the compensating tax is not clear or expressed, contrary to
the rule that exemptions from taxation are highly disfavored in law, and he who claims exemption must be able to justify his
claim by the clearest grant of organic or statute law. Tax exemption are strictly construed against the taxpayer, they being highly
disfavored and may almost be said to be odious to the law. When exemption is claimed, it must be shown indubitably to exist,
for every presumption is against it, and a well-founded doubt is fatal to the claim.

QUEZON CITY vs. ABS-CBN G.R. No. 166408, October 6, 2008)

Facts: Petitioner City Government of Quezon City is a local government unit duly organized
and existing by virtue of Republic Act (R.A.) No.537, otherwise known as the Revised Charter
of QuezonCity. Petitioner City Treasurer of Quezon City is primarily responsible for the
imposition and collection of taxes within the territorial jurisdiction of Quezon City. ABS-CBN
was granted the franchise to install and operate radio and television broadcasting stations in
the Philippines under R.A. No.7966. ABS-CBN had been paying local franchise tax imposed
by Quezon City. However, in view of the provision in R.A. No. 9766 that it shall pay a
franchise tax x x x in lieu of all taxes, the corporation developed the opinion that it is not
liable to pay the local franchise tax imposed by Quezon City. ABS-CBN filed a written claim for
refund for local franchise tax paid to Quezon City for 1996and for the first quarter of 1997. For
failure to obtain any response from the Quezon City Treasurer, ABS-CBN filed a complaint
before the RTC in Quezon City seeking the declaration of nullity of the imposition of local
franchise tax by the City Government of Quezon City for being unconstitutional. The RTC
rendered judgment declaring as invalid the imposition on and collection from ABS-CBN of local
franchise tax and ordered the refund of all payments made. The City of Quezon and its
Treasurer filed a motion for reconsideration which was subsequently denied by the RTC. Thus,
appeal was made to the CA. The CA dismissed the petition of Quezon City and its Treasurer.
According to the appellate court, the issues raised were purely legal questions cognizable only
by the Supreme Court.

Issue: Whether or not the petitioners-appellants raised factual and legal issues before the
Honorable Court of Appeals

Ruling: Obviously, these are purely legal questions, cognizable by the Supreme Court, to the
exclusion of all other courts. There is a question of law when the doubt or difference arises as
to what the law is pertaining to a certain state of facts. Section 2, Rule 50 of the Rules of
Court provides that an appeal taken to the CA under Rule 41 raising only questions of law is
erroneous and shall be dismissed, issues of pure law not being within its jurisdiction.
Consequently, the dismissal by the CA of petitioners appeal was in order. However, to serve
the demands of substantial justice and equity, the Court opts to relax procedural rules and
rule upon on the merits of the case

1. Why are tax laws construed strictly against the State and liberally in favor of the State ?
SUGGESTED ANSWER: In case of doubt, tax laws must be construed strictly against the State
and liberally in favor of the
(Quezon City,supraciting Agpalo, R.E., Statutory Construction, 2003 ed., p. 302)