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Summer 2013-2014

Outline and Schedule

April 25 - Introduction and Review on Business Taxation April 28 - Donors / Estate Tax April 29 - Value Added Tax April 30 - Excise and Documentary Stamp Tax / Penal Provisions May 2 -Local Government Tax May 3 Final Exam May 10 Submission of Final Project ( Case Digest)

Ormoc Sugar Central vs Ormoc City Treasuer

Facts: In 1964, the Municipal Board of Ormoc City passed Ordinance 4, imposing on any and all productions of centrifuga sugar milled at the Ormoc Sugar Co. Inc. in Ormoc City a municpal tax equivalent to 1% per export sale to the United States and other foreign countries. The company paid the said tax under protest. It subsequently filed a case seeking to invalidate the ordinance for being unconstitutional. Issue: Whether the ordinance violates the equal protection clause. Held: The Ordinance taxes only centrifugal sugar produced and exported by the Ormoc Sugar Co. Inc. and none other. At the time of the taxing ordinances enacted, the company was the only sugar central in Ormoc City. The classification, to be reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central, of the same class as the present company, from the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance expressly points only to the company as the entity to be levied upon.

Commissioner of Internal Revenue vs. Algue Inc. GR No. L-28896 | Feb. 17, 1988




Facts: Algue Inc. is a domestic corp engaged in engineering, construction and other allied activities On Jan. 14, 1965, the corp received a letter from the CIR regarding its delinquency income taxes from 1958-1959, amtg to P83,183.85 A letter of protest or reconsideration was filed by Algue Inc on Jan 18 CIR contentions: the claimed deduction of P75,000.00 promotional fees was properly disallowed because it was not an ordinary reasonable or necessary business expense payments are fictitious because most of the payees are members of the same family in control of Algue and that there is not enough substantiation of such payments

Commissioner of Internal Revenue vs. Algue Inc. GR No. L-28896 | Feb. 17, 1988

Issue: Should an uncommon business expense be disallowed as a proper deduction in computation of income taxes, corollary to the doctrine that taxes are the lifeblood of the government?

Commissioner of Internal Revenue vs. Algue Inc. GR No. L-28896 | Feb. 17, 1988
Held/Ruling: It is well-settled that taxes are the lifeblood of the government and so should be collected without unnecessary hindrance On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. In this case, Algue Inc. has proved that the payment of the fees was necessary and reasonable in the light of the efforts exerted by the payees in inducing investors and prominent businessmen to venture in an experimental enterprise and involve themselves in a new business requiring millions of pesos.