Case Digest (G.R. No. L-11891)
Facts:
- The case "Collector of Internal Revenue v. Eternit Corporation" was decided by the Supreme Court of the Philippines on April 29, 1959.
- The petitioner, Collector of Internal Revenue, challenged the tax obligations of Eternit Corporation, a manufacturer of asbestos cement products.
- Eternit Corporation was granted a tax exemption under Republic Act Nos. 35 and 901, recognized as an essential industry.
- The Secretary of Finance extended the tax exemption until December 31, 1958.
- A dispute arose when a 3% contractor's tax was imposed on Eternit Corporation's gross receipts of P1,021,600.44 from January 1951 to June 1955.
- These gross receipts included sales of asbestos products, accessories, labor, and delivery charges.
- Eternit Corporation contested the tax assessment in the Court of Tax Appeals, asserting that their gross receipts were exempt from taxation.
- The Court of Tax Appeals ruled that while sales of asbestos products were exempt, the contractor's tax applied to the labor component, totaling P149,044.63, leading to a tax assessment of P5,639.17.
- Both parties appealed the ruling to the Supreme Court.
Issue:
- (Unlock)
Ruling:
- The Supreme Court upheld the ruling of the Court of Tax Appeals.
- Eternit Corporation is not exempt from the contractor's tax concerning the installation costs of asbestos sheets.
- Payments for installation services are subject to contr...(Unlock)
Ratio:
- The Supreme Court interpreted the tax exemption statutes, noting that the legislation does not explicitly include installation services.
- Following the principle of strict construction, the exemption could not be extended to ...continue reading
Case Digest (G.R. No. L-11891)
Facts:
The case involves the Collector of Internal Revenue as the petitioner and Eternit Corporation as the respondent. The events leading to the case began with the assessment of a tax amounting to P5,639.17 on the gross receipts of Eternit Corporation, which totaled P1,021,600.44 from January 1951 to June 1955. The breakdown of these gross receipts included P772,244.88 for asbestos products, P98,970.63 for accessories, P149,044.63 for labor, and P1,340.30 for delivery charges. Eternit Corporation is engaged in the manufacture of asbestos cement products, particularly asbestos corrugated sheets used for roofing. The company had previously been granted a tax exemption due to its classification as an essential industry under Republic Act Nos. 35 and 901. This exemption was extended until December 31, 1958, as per a letter from the Secretary of Finance dated July 1, 1954. However, the Collector of Internal Revenue assessed a 3% contractor's tax on the total gross receipts, arguing that the installation of the asbestos roofing was not necessary for the sale of the products and that if another contractor performed the installation, that contractor would be liable for the tax. Eternit Corporation contested this assessment, claiming that the installation was integral to the sale of their products, especially for customers who could not afford professional installatio...