Case Digest (G.R. No. 119903) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Commissioner of Internal Revenue v. Court of Appeals, Court of Tax Appeals and Ateneo de Manila University (G.R. No. 115349, April 18, 1997), the petitioner, Commissioner of Internal Revenue (CIR), issued on July 8, 1983 a demand letter assessing respondent Ateneo de Manila University—a non-stock, non-profit educational institution—P174,043.97 as deficiency contractor’s tax and P1,141,837 as deficiency income tax for its fiscal year ending March 31, 1978. The CIR’s assessment was based on research activities conducted by Ateneo’s Institute of Philippine Culture (IPC), an auxiliary unit without separate legal personality. IPC occasionally accepted sponsorships from international organizations, private foundations, and government agencies under conditions that research topics must align with Ateneo’s academic agenda, that IPC retained ownership and publication rights over the results, and that no proprietary or commercial research be undertaken. Ateneo protested both assessment Case Digest (G.R. No. 119903) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Institutional Background
- Ateneo de Manila University (ADMU) is a non-stock, non-profit educational institution.
- Its Institute of Philippine Culture (IPC) is an auxiliary unit without separate legal personality.
- Research Activities and Funding
- IPC conducts social science studies on Philippine society and culture pursuant to ADMU’s academic mandate.
- To fund research, IPC occasionally accepts sponsorships or grants from international organizations, private foundations, and government agencies, subject to ADMU’s academic agenda and ownership of research results.
- Tax Assessments and Administrative Proceedings
- On June 3 and June 27, 1983, the Commissioner of Internal Revenue (CIR) assessed ADMU for:
- P174,043.97 deficiency contractor’s tax for fiscal year ending March 31, 1978; and
- P1,141,837 deficiency income tax for the same period.
- ADMU protested, filed a letter-decision appeal, and on March 17, 1988, the CIR canceled the income tax assessment but increased the contractor’s tax to P193,475.55.
- ADMU sought reconsideration; on August 3, 1988, the CIR reduced the contractor’s tax assessment to P46,516.41 (exclusive of surcharge and interest).
- Judicial Proceedings
- ADMU filed a petition for review with the Court of Tax Appeals (CTA) in CTA Case No. 4280.
- On July 12, 1993, the CTA canceled the P46,516.41 contractor’s tax assessment.
- The Court of Appeals (CA) in CA-G.R. SP No. 31790 (April 27, 1994) affirmed the CTA decision.
- The CIR elevated the case to the Supreme Court via petition for review on the questions:
- Whether ADMU/IPC falls within the definition of “independent contractor” under Section 205 of the National Internal Revenue Code; and
- Whether ADMU/IPC is subject to the 3% contractor’s tax imposed by that provision.
Issues:
- Primary Issue
- Does the Institute of Philippine Culture, as an auxiliary unit of ADMU, perform the work of an “independent contractor” within the meaning of Section 205 of the National Internal Revenue Code?
- If so, is it liable for the three percent contractor’s tax on its gross receipts?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)