CASE DIGEST: United Airlines vs. Commissioner of Internal Revenue (Gross Philippine Billings)

G.R. No. 178788

United Airlines vs. Commissioner of Internal Revenue

September 29, 2010

Facts:

International airline, petitioner United Airlines, filed a claim for income tax refund. Petitioner sought to be refunded the erroneously collected income tax from in the amount of P5,028,813.23 on passenger revenue from tickets sold in the Philippines, the uplifts of which did not originate in the Philippines, arguing that it cannot be considered as income from sources within the philipppines. The airlines ceased operation originating form the Philippines since February 21, 1998.

Court of tAx appeals ruled the petitioner is not entitled to a refund because under the NIRC, income tax on GPB also includes gross revenue from carriage of cargoes from the Philippines. And upon assessment by the CTA, it was found out that petitioner deducted items from its cargo revenues which should have entitled the government to an amount of P 31.43 million, which is obviously higher than the amount the petitioner prayed to be refunded.

Petitioner argued that the petitioner’s supposed underpayment cannot offset his claim to a refund as established by well-settled jurisprudence.

Issue:

Whether or not petitioner is entitled to a refund for its erroneously paid GPB  tax.

HELD:

IS PETITIONER SUBJECT TO GPB?

No, not anymore inasmuch as it ceased operations originating from the Philippines since 1998. 

If an international air carrier maintains flights to and from the Philippines, it shall be taxed at the rate of 2% of its GPB, while international air carriers that do not have flights to and from the Philippines but nonetheless earn income from other activities in the country will be taxed at the rate of 32% of such income.

IS PETITIONER ENTITLED TO REFUND?

NO.

Petitioner was correct in averring that offsetting his claim of refund with his alleged tax deficiency is unavailing in Article 1279 of the Civil Code. However, in citing Sec 72, Chapter XI of the NIRC (as was applied in the case of CIR vs CTA, it was Sec 82 then in the 1977 Tax Code), the grant of refund is founded on the assumption that the return is valid, that is, the facts stated therein are true and correct.

"The finding of the CTA that petitioner, although not liable under Sec. 28(A)(3)(a) of the 1997 NIRC, is liable under Sec. 28(A)(1), the correctness of the return filed by petitioner is now put in doubt. " It's a basic principle in taxation that tax refunds, like tax exemptions, are construed strictly against the taxpayer and liberally in favor of the taxing authority. Having underpaid the GPB tax due, petitioner is not entitled to a refund.

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Case Digest : National Power Corporation vs. Benjamin Ong Co

G.R. No. 166973

National Power Corporation vs. Benjamin Ong Co

February 10, 2009

Facts:

Petitioner expropriated respondent’s property for its Lahar Project, a project for public use

Petitioner established its claim on RA 6395, allowing it to exercise the right to eminent domain.

Complaint was filed at the RTC on June 27, 2001. On 25 March 2002, petitioner obtained a writ of possession and on 15 April 2002 it took possession of the property.

RTC ordered the compensation of the full market value of the land valued at P1,179,000.00, with interest at 6% per annum beginning 15 April 2002, the date of actual taking, until full payment. RA 8974 sets forth the payment of land’s full market value as distinguished to RA 6395 which entitles the land owner to only 10% of market value.

Petitioner argues that compensation should only be an easement fee and not the total value and that computation of compensation should be determined as of the date of the filing of the complaint (Rule 67).

Issues:

Whether or not compensation will be governed by provisions on RA 6395 or RA 8974? Who will determine?

Whether or not value of the property should be reckoned as of the filing of the complaint or actual taking of the land?

Held:

Court held that with regard to compensation, provisions on RA 8974 should govern. Rules and Regulations of R.A. No. 8974 explicitly include power generation, transmission and distribution projects among the national government projects covered by the law. R.A. No. 8974 should govern the expropriation of respondent's property since the Lahar Project is a national government project.

The Court also held that the function for determining just compensation remains judicial in character. It held that the courts have the power to determine cases relative to the violations on the guarantees provided by the Bill of Rights.

As to the amount to be given to respondent as compensation, the court agreed with petitioner that compensation should be computed as of the filing of complaint (2001) win compliance with Rule 67.

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