QUEZON CITY and THE CITY TREASURER OF QUEZON CITY, Petitioners

vs.
ABS-CBN BROADCASTING CORPORATION, Respondent.

REYES, R.T., J.:

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 Quezon City.
Petitioner City Treasurer of Quezon City is primarily responsible for the imposition and collection of taxes
within the territorial jurisdiction of Quezon City.
Under Section 31, Article 13 of the Quezon City Revenue Code of 1993, a franchise tax was
imposed on businesses operating within its jurisdiction.
On May 3, 1995, ABS-CBN was granted the franchise to install and operate radio and television
broadcasting stations in the Philippines under R.A. No. 7966. Section 8 of R.A. No. 7966 provides the tax
liabilities of ABS-CBN which provided that it shall pay a franchise tax equivalent to three percent (3%) of
all gross receipts of the radio/television business transacted under this franchise by the grantee, its
successors or assigns, and the said percentage tax shall be in lieu of all taxes on this franchise or earnings
thereof.
ABS-CBN had been paying local franchise tax imposed by Quezon City. However, in view of the
above 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.
Consequently, ABS-CBN paid under protest the local franchise tax imposed by Quezon City.
On January 29, 1997, ABS-CBN filed a written claim for refund for local franchise tax paid to
Quezon City for 1996 and for the first quarter of 1997 in the total amount of Fourteen Million Two Hundred
Thirty-Three Thousand Five Hundred Eighty-Two and 29/100 centavos (P14,233,582.29).
On June 25, 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. It likewise prayed
for the refund of local franchise tax in the amount of Nineteen Million Nine Hundred Forty-Four Thousand
Six Hundred Seventy-Two and 66/100 centavos (P19,944,672.66).
Quezon City argued that the in lieu of all taxes provision in R.A. No. 9766 could not have been
intended to prevail over a constitutional mandate which ensures the viability and self-sufficiency of local
government units. Further, that taxes collectible by and payable to the local government were distinct from
taxes collectible by and payable to the national government, considering that the Constitution specifically
declared that the taxes imposed by local government units shall accrue exclusively to the local governments.
Lastly, the City contended that the exemption claimed by ABS-CBN under R.A. No. 7966 was withdrawn
by Congress when the Local Government Code (LGC) was passed.
ISSUE:
Whether or not the phrase in lieu of all taxes indicated in the franchise of the respondent appellee
(Section 8 of RA 7966) serves to exempt it from the payment of the local franchise tax imposed by the
petitioners-appellants.
RULING:
The Supreme Court ruled in the negative. It held that the Philippine Congress enacted R.A. No.
7966 on March 30, 1995, subsequent to the effectivity of the LGC on January 1, 1992. Under it, ABS-CBN
was granted the franchise to install and operate radio and television broadcasting stations in the Philippines.
Likewise, Section 8 imposed on ABS-CBN the duty of paying 3% franchise tax. It bears stressing, however,
that payment of the percentage franchise tax shall be in lieu of all taxes on the said franchise. Moreover,
Congress has the inherent power to tax, which includes the power to grant tax exemptions. On the other
hand, the power of Quezon City to tax is prescribed by Section 151 in relation to Section 137 of the LGC
which expressly provides that notwithstanding any exemption granted by any law or other special law, the
City may impose a franchise tax. It must be noted that Section 137 of the LGC does not prohibit grant of
future exemptions.
Furthermore, taxes are what civilized people pay for civilized society. They are the lifeblood of the
nation. Thus, statutes granting tax exemptions are construed stricissimi juris against the taxpayer and
liberally in favor of the taxing authority. A claim of tax exemption must be clearly shown and based on
language in law too plain to be mistaken. Otherwise stated, taxation is the rule, exemption is the exception.
The burden of proof rests upon the party claiming the exemption to prove that it is in fact covered by the
exemption so claimed.
The basis for the rule on strict construction to statutory provisions granting tax exemptions or
deductions is to minimize differential treatment and foster impartiality, fairness and equality of treatment
among taxpayers. He who claims an exemption from his share of common burden must justify his claim
that the legislature intended to exempt him by unmistakable terms. For exemptions from taxation are not
favored in law, nor are they presumed. They must be expressed in the clearest and most unambiguous
language and not left to mere implications. It has been held that exemptions are never presumed, the burden
is on the claimant to establish clearly his right to exemption and cannot be made out of inference or
implications but must be laid beyond reasonable doubt. In other words, since taxation is the rule and
exemption the exception, the intention to make an exemption ought to be expressed in clear and
unambiguous terms.
Section 8 of R.A. No. 7966 imposes on ABS-CBN a franchise tax equivalent to three (3) percent
of all gross receipts of the radio/television business transacted under the franchise and the franchise tax
shall be in lieu of all taxes on the franchise or earnings thereof.
The in lieu of all taxes provision in the franchise of ABS-CBN does not expressly provide what
kind of taxes ABS-CBN is exempted from. It is not clear whether the exemption would include both local,
whether municipal, city or provincial, and national tax. What is clear is that ABS-CBN shall be liable to
pay three (3) percent franchise tax and income taxes under Title II of the NIRC. But whether the in lieu of
all taxes provision would include exemption from local tax is not unequivocal.
As adverted to earlier, the right to exemption from local franchise tax must be clearly established
and cannot be made out of inference or implications but must be laid beyond reasonable doubt. Verily, the
uncertainty in the in lieu of all taxes provision should be construed against ABS-CBN. ABS-CBN has the
burden to prove that it is in fact covered by the exemption so claimed. ABS-CBN miserably failed in this
regard.
Lastly, the clause has become functus officio because as the law now stands, ABS-CBN is no longer
subject to a franchise tax. It is now liable for VAT.
 COMMISSIONER OF INTERNAL REVENUE, PETITIONER,
vs.
ST. LUKE'S MEDICAL CENTER, INC., RESPONDENT.

CARPIO, J.:

FACTS:

In this case, the Supreme Court consolidated G.R. Nos. 195909 and 195960.

St. Luke's Medical Center, Inc. (St. Luke's) is a hospital organized as a non-stock and non-profit
corporation. On 16 December 2002, the Bureau of Internal Revenue (BIR) assessed St. Luke's deficiency
taxes amounting to ₱76,063,116.06 for 1998, comprised of deficiency income tax, value-added tax,
withholding tax on compensation and expanded withholding tax. The BIR reduced the amount to
₱63,935,351.57 during trial in the First Division of the CTA.

On 14 January 2003, St. Luke's filed an administrative protest with the BIR against the deficiency
tax assessments. The BIR did not act on the protest within the 180-day period under Section 228 of the
NIRC. Thus, St. Luke's appealed to the CTA. The BIR argued before the CTA that Section 27(B) of the
NIRC, which imposes a 10% preferential tax rate on the income of proprietary non-profit hospitals, should
be applicable to St. Luke's. According to the BIR, Section 27(B), introduced in 1997, "is a new provision
intended to amend the exemption on non-profit hospitals that were previously categorized as non-stock,
non-profit corporations under Section 26 of the 1997 Tax Code x x x." It is a specific provision which
prevails over the general exemption on income tax granted under Section 30(E) and (G) for non-stock, non-
profit charitable institutions and civic organizations promoting social welfare.

The BIR claimed that St. Luke's was actually operating for profit in 1998 because only 13% of its
revenues came from charitable purposes. Moreover, the hospital's board of trustees, officers and employees
directly benefit from its profits and assets. St. Luke's had total revenues of ₱1,730,367,965 or approximately
₱1.73 billion from patient services in 1998.

St. Luke's contended that the BIR should not consider its total revenues, because its free services
to patients was ₱218,187,498 or 65.20% of its 1998 operating income (i.e., total revenues less operating
expenses) of ₱334,642,615. St. Luke's also claimed that its income does not inure to the benefit of any
individual.

ISSUE:

Whether or not the enactment of Section 27(B) takes proprietary non-profit hospitals out of the
income tax exemption under Section 30 of the NIRC and instead, imposes a preferential rate of 10% on
their taxable income.

RULING:

The Supreme Court ruled in the negative. However, it held that Section 27(B) of the NIRC does
not remove the income tax exemption of proprietary non-profit hospitals under Section 30(E) and (G).
Section 27(B) on one hand, and Section 30(E) and (G) on the other hand, can be construed together without
the removal of such tax exemption. The effect of the introduction of Section 27(B) is to subject the taxable
income of two specific institutions, namely, proprietary non-profit educational institutions and proprietary
non-profit hospitals, among the institutions covered by Section 30, to the 10% preferential rate under
Section 27(B) instead of the ordinary 30% corporate rate under the last paragraph of Section 30 in relation
to Section 27(A)(1).

Moreover, a charitable institution does not lose its character as such and its exemption from taxes
simply because it derives income from paying patients, whether out-patient, or confined in the hospital, or
receives subsidies from the government, so long as the money received is devoted or used altogether to the
charitable object which it is intended to achieve; and no money inures to the private benefit of the persons
managing or operating the institution.

Thus, even if the charitable institution must be "organized and operated exclusively" for charitable
purposes, it is nevertheless allowed to engage in "activities conducted for profit" without losing its tax
exempt status for its not-for-profit activities. The only consequence is that the "income of whatever kind
and character" of a charitable institution "from any of its activities conducted for profit, regardless of the
disposition made of such income, shall be subject to tax." Prior to the introduction of Section 27(B), the tax
rate on such income from for-profit activities was the ordinary corporate rate under Section 27(A). With
the introduction of Section 27(B), the tax rate is now 10%.

Lastly, a tax exemption is effectively a social subsidy granted by the State because an exempt
institution is spared from sharing in the expenses of government and yet benefits from them. Tax
exemptions for charitable institutions should therefore be limited to institutions beneficial to the public and
those which improve social welfare. A profit-making entity should not be allowed to exploit this subsidy
to the detriment of the government and other taxpayer.

St. Luke's fails to meet the requirements under Section 30(E) and (G) of the NIRC to be completely
tax exempt from all its income. However, it remains a proprietary non-profit hospital under Section 27(B)
of the NIRC as long as it does not distribute any of its profits to its members and such profits are reinvested
pursuant to its corporate purposes. St. Luke's, as a proprietary non-profit hospital, is entitled to the
preferential tax rate of 10% on its net income from its for-profit activities.

St. Luke's is therefore liable for deficiency income tax in 1998 under Section 27(B) of the NIRC.
Therefore, St. Luke's Medical Center, Inc. is held to be liable for the deficiency income tax in 1998 based
on the 10% preferential income tax rate under Section 27(B) of the National Internal Revenue Code.
However, it is not liable for surcharges and interest on such deficiency income tax under Sections 248 and
249 of the National Internal Revenue Code.
 ABAKADA GURO PARTY LIST (Formerly AASJAS) OFFICERS SAMSON S. ALCANTARA
and ED VINCENT S. ALBANO, Petitioners,
vs.
THE HONORABLE EXECUTIVE SECRETARY EDUARDO ERMITA; HONORABLE
SECRETARY OF THE DEPARTMENT OF FINANCE CESAR PURISIMA; and HONORABLE
COMMISSIONER OF INTERNAL REVENUE GUILLERMO PARAYNO, JR., Respondents.

AUSTRIA-MARTINEZ, J.:

FACTS:

Petitioners ABAKADA GURO Party List challenged the constitutionality of R.A. No. 9337
particularly Sections 4, 5 and 6, amending Sections 106, 107 and 108, respectively, of the National Internal
Revenue Code (NIRC). These questioned provisions contain a uniform proviso authorizing the President,
upon recommendation of the Secretary of Finance, to raise the VAT rate to 12%, effective January 1, 2006,
after any of the following conditions have been satisfied, to wit:

. . . That the President, upon the recommendation of the Secretary of Finance, shall, effective
January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the following
conditions has been satisfied:

(i) Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the
previous year exceeds two and four-fifth percent (2 4/5%); or

(ii) National government deficit as a percentage of GDP of the previous year exceeds one
and one-half percent (1 ½%).

Petitioners argue that the law is unconstitutional, as it constitutes abandonment by Congress of its
exclusive authority to fix the rate of taxes under Article VI, Section 28(2) of the 1987 Philippine
Constitution. They further argue that VAT is a tax levied on the sale or exchange of goods and services and
cannot be included within the purview of tariffs under the exemption delegation since this refers to customs
duties, tolls or tribute payable upon merchandise to the government and usually imposed on
imported/exported goods. They also said that the President has powers to cause, influence or create the
conditions provided by law to bring about the conditions precedent. Moreover, they allege that no guiding
standards are made by law as to how the Secretary of Finance will make the recommendation. They claim,
nonetheless, that any recommendation of the Secretary of Finance can easily be brushed aside by the
President since the former is a mere alter ego of the latter, such that, ultimately, it is the President who
decides whether to impose the increased tax rate or not.

ISSUES:

Whether or not R.A. No. 9337 has violated the provisions in Article VI, Section 24, and Article VI,
Section 26 (2) of the Constitution.

Whether or not there was an undue delegation of legislative power.

Whether or not there was a violation of the due process and equal protection.
RULING:

The Supreme Court, on the first issue, in the negative. It held that, Article VI, Section 24 provides
that it is not the law, but the revenue bill which is required by the Constitution to “originate exclusively” in
the House of Representatives, but Senate has the power not only to propose amendments, but also to propose
its own version even with respect to bills which are required by the Constitution to originate in the House.
the Constitution simply means is that the initiative for filing revenue, tariff or tax bills, bills authorizing an
increase of the public debt, private bills and bills of local application must come from the House of
Representatives on the theory that, elected as they are from the districts, the members of the House can be
expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are
elected at large, are expected to approach the same problems from the national perspective. Both views are
thereby made to bear on the enactment of such laws.

In this case, R.A. No. 9337 has not violated the provisions. The revenue bill exclusively originated
in the House of Representatives, the Senate was acting within its constitutional power to introduce
amendments to the House bill when it included provisions in Senate Bill No. 1950 amending corporate
income taxes, percentage, excise and franchise taxes. Verily, Article VI, Section 24 of the Constitution does
not contain any prohibition or limitation on the extent of the amendments that may be introduced by the
Senate to the House revenue bill.

With regards to the second issue, the Court held that testing whether a statute constitutes an undue
delegation of legislative power or not, it is usual to inquire whether the statute was complete in all its terms
and provisions when it left the hands of the legislature so that nothing was left to the judgment of any other
appointee or delegate of the legislature.

There is no undue delegation of legislative power but only of the discretion as to the execution
of a law. This is constitutionally permissible. Congress does not abdicate its functions or unduly delegate
power when it describes what job must be done, who must do it, and what is the scope of his authority; in
our complex economy that is frequently the only way in which the legislative process can go forward.

On the third issue, the equal protection clause under the Constitution means that “no person or class
of persons shall be deprived of the same protection of laws which is enjoyed by other persons or other
classes in the same place and in like circumstances.

The Supreme Court held no decision on this matter. The power of the State to make reasonable and
natural classifications for the purposes of taxation has long been established. Whether it relates to the
subject of taxation, the kind of property, the rates to be levied, or the amounts to be raised, the methods of
assessment, valuation and collection, the State’s power is entitled to presumption of validity. As a rule, the
judiciary will not interfere with such power absent a clear showing of unreasonableness, discrimination, or
arbitrariness.
 YUTIVO SONS HARDWARE COMPANY, petitioner,
vs.
COURT OF TAX APPEALS and COLLECTOR OF INTERNAL REVENUE, respondents.

GUTIERREZ DAVID, J.:

FACTS:

Yutivo Sons Hardware Co. (Yutivo)is a domestic corporation, organized under the laws of the
Philippines, with principal office at 404 Dasmariñas St., Manila. Incorporated in 1916, it was engaged, prior
to the last world war, in the importation and sale of hardware supplies and equipment. After the liberation,
it resumed its business and until June of 1946 bought a number of cars and trucks from General Motors
Overseas Corporation (GM), an American corporation licensed to do business in the Philippines. As
importer, GM paid sales tax prescribed by sections 184, 185 and 186 of the Tax Code on the basis of its
selling price to Yutivo. Said tax being collected only once on original sales, Yutivo paid no further sales
tax on its sales to the public.

On June 13, 1946, the Southern Motors, Inc. (SM) was organized to engage in the business of
selling cars, trucks and spare parts. Its original authorized capital stock was P1,000,000 divided into 10,000
shares with a par value of P100 each.

At the time of its incorporation 2,500 shares worth P250,000 appear to have been subscribed into
equal proportions by Yu Khe Thai, Yu Khe Siong, Hu Kho Jin, Yu Eng Poh, and Washington Sycip. The
first three named subscribers are brothers, being sons of Yu Tiong Yee, one of Yutivo's founders. The latter
two are respectively sons of Yu Tiong Sin and Albino Sycip, who are among the founders of Yutivo.

After the incorporation of SM and until the withdrawal of GM from the Philippines in the middle
of 1947, the cars and tracks purchased by Yutivo from GM were sold by Yutivo to SM which, in turn, sold
them to the public in the Visayas and Mindanao.

When GM decided to withdraw from the Philippines in the middle of 1947, the U.S. manufacturer
of GM cars and trucks appointed Yutivo as importer for the Visayas and Mindanao, and Yutivo continued
its previous arrangement of selling exclusively to SM. In the same way that GM used to pay sales taxes
based on its sales to Yutivo, the latter, as importer, paid sales tax prescribed on the basis of its selling price
to SM, and since such sales tax, as already stated, is collected only once on original sales, SM paid no sales
tax on its sales to the public.

ISSUE:

Whether or not Yutivo and SM are two separate entities.

RULING:

The Supreme Court ruled in the negative. It held that it is an elementary and fundamental principle
of corporation law that a corporation is an entity separate and distinct from its stockholders and from other
corporation petitions to which it may be connected. However, "when the notion of legal entity is used to
defeat public convenience, justify wrong, protect fraud, or defend crime," the law will regard the
corporation as an association of persons, or in the case of two corporations merge them into one. Another
rule is that, when the corporation is the "mere alter ego or business conduit of a person, it may be
disregarded.

However, the Court here held that they are inclined to rule that the Court of Tax Appeals was not
justified in finding that SM was organized for no other purpose than to defraud the Government of its lawful
revenues. In the first place, this corporation was organized in June 1946 when it could not have caused
Yutivo any tax savings. From that date up to June 30, 1947, or a period of more than one year, GM was the
importer of the cars and trucks sold to Yutivo, which, in turn resold them to SM. During that period, it is
not disputed that GM as importer, was the one solely liable for sales taxes. Neither Yutivo or SM was
subject to the sales taxes on their sales of cars and trucks. The sales tax liability of Yutivo did not arise until
July 1, 1947 when it became the importer and simply continued its practice of selling to SM. The decision,
therefore, of the Tax Court that SM was organized purposely as a tax evasion device runs counter to the
fact that there was no tax to evade.

It should be stated that the intention to minimize taxes, when used in the context of fraud, must be
proved to exist by clear and convincing evidence amounting to more than mere preponderance, and cannot
be justified by a mere speculation. This is because fraud is never lightly to be presumed. Fraud is never
imputed and the courts never sustain findings of fraud upon circumstances which, at the most, create only
suspicion.

Lastly, tax evasion" is a term that connotes fraud thru the use of pretenses and forbidden devices to
lessen or defeat taxes. The transactions between Yutivo and SM, however, have always been in the open,
embodied in private and public documents, constantly subject to inspection by the tax authorities. But the
attempt to avoid tax does not necessarily establish fraud. It is a settled principle that a taxpayer may diminish
his liability by any means which the law permits .

Southern Motors being but a mere instrumentality, or adjunct of Yutivo, the Court of Tax Appeals
correctly disregarded the technical defense of separate corporate entity in order to arrive at the true tax
liability of Yutivo. But there is no basis for the imposition of the 50% fraud surcharge.
 COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.

GARCIA, J.:

FACTS:

Philippine Long Distance Company (PLDT) is a grantee of a franchise under Republic Act (R.A.)
No. 7082 to install, operate and maintain a telecom system throughout the Philippines. It imports various
equipment, machineries and spare parts for its business on different occasion from 1992 to 1994.

PLDT paid the BIR the amount of P164, 510,953.00, broken down as follows: (a) compensating
tax of P126,713,037.00; advance sales tax of P12,460,219.00 and other internal revenue taxes of
P25,337,697.00. For similar importations made between March to May 1994, PLDT paid P116, 041,333.00
value-added tax (VAT).

On March 15, 1994, PLDT addressed a letter to the BIR seeking a confirmatory ruling on its tax
exemption privilege under Section 12 of R.A. 7082, with a provision that:

“the grantee, shall pay a franchise tax equivalent to three percent (3%) of all gross receipts
of the telephone or other telecommunications businesses transacted under this franchise by the
grantee, its successors or assigns, and the said percentage shall be in lieu of all taxes on this
franchise or earnings thereof.”

When its claim was not acted upon by the BIR, PLDT went to the CTA. The CTA ruled in favor
of PLDT, but punctuated by a dissenting opinion of Associate Judge Saga who maintained that the phrase
in lieu of all taxes found in Section 12 of R.A. No. 7082, supra, refers to exemption from direct taxes only
and does not cover indirect taxes, such as VAT, compensating tax and advance sales tax.

The CIR appealed to the CA. The CA affirmed the CTA’s decision. Hence, the SC addressed the
main issue tendered herein.

ISSUE:

Whether or not the 3% franchise tax exempts the PLDT from paying all other taxes, including
indirect taxes.

RULING:

The Supreme Court ruled in the negative. However, it held that PLDT is entitled to a refund. It held
that direct taxes are those exacted from the very person who, it is intended or desired, should pay them.
They are impositions for which a taxpayer is directly liable on the transaction or business he is engaged in.
while indirect taxes are taxes wherein the liability for the payment of the tax falls on one person but the
burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods
before reaching the consumer who ultimately pays for it.

The NIRC classifies VAT as “an indirect tax … the amount of which may be shifted or passed on
to the buyer, transferee or lessee of the goods”. The 10% VAT on importation of goods is in the nature of
an excise tax levied on the privilege of importing articles. It is imposed on all taxpayers who import goods.
It is not a tax on the franchise of a business enterprise or on its earnings, as stated in Section 2 of RA 7082.

Advance sales tax has the attributes of an indirect tax because the tax-paying importer of goods for
sale or of raw materials to be processed into merchandise can shift the tax or lay the “economic burden of
the tax” on the purchaser by subsequently adding the tax to the selling price of the imported article or
finished product. Compensating tax also partakes of the nature of an excise tax payable by all persons who
import articles, whether in the course of business or not.

The liability for the payment of the indirect taxes lies with the seller of the goods or services, not
in the buyer thereof. Thus, one cannot invoke one’s exemption privilege to avoid the passing on or the
shifting of the VAT to him by the manufacturers/suppliers of the goods he purchased. Hence, it is important
to determine if the tax exemption granted to a taxpayer specifically includes the indirect tax which is shifted
to him as part of the purchase price, otherwise it is presumed that the tax exemption embraces only those
taxes for which the buyer is directly liable. Since RA 7082 did not specifically include indirect taxes in the
exemption granted to PLDT, the latter cannot claim exemption from VAT, advance sales tax and
compensating tax.

The clause “in lieu of all taxes” in Section 12 of RA 7082 is immediately followed by the qualifying
clause “on this franchise or earnings thereof”, suggesting that the exemption is limited to taxes imposed
directly on PLDT since taxes pertaining to PLDT’s franchise or earnings are its direct liability. Accordingly,
indirect taxes, not being taxes on PLDT’s franchise or earnings, are not included in the exemption provision.

PLDT’s allegation that the Bureau of Customs assessed the company for advance sales tax and
compensating tax for importations entered between October 1, 1992 and May 31, 1994 when the value-
added tax system already replaced, if not totally eliminated, advance sales and compensating taxes, is with
merit. Pursuant to Executive Order No. 273, a multi-stage value-added tax was put into place to replace the
tax on original and subsequent sales tax. Therefore, compensating tax and advance sales tax were no longer
collectible internal revenue taxes under the NIRC when the Bureau of Customs made the assessments in
question and collected the corresponding tax. Stated a bit differently, PLDT was no longer under legal
obligation to pay compensating tax and advance sales tax on its importation from 1992 to 1994. A refund
of the amounts paid as such taxes is thus proper.