Case Digest (G.R. No. 178788) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
United Airlines, Inc., a foreign corporation organized under the laws of Delaware, USA, engaged in international passenger and cargo air transport, ceased its passenger flights to and from the Philippines on February 21, 1998, and continued cargo operations until January 31, 2001. Thereafter, it appointed Aerotel Ltd. Corp. as its sales agent in the Philippines. On April 12, 2002, petitioner filed with the Commissioner of Internal Revenue a claim for refund of ₱15,916,680.69, covering income taxes paid on its gross passenger and cargo revenues for taxable years 1999 to 2001, including ₱5,028,813.23 for 1999 passenger revenues derived from ticket sales in the Philippines but flown outside Philippine territory. Invoking Section 28(A)(3)(a) of the 1997 National Internal Revenue Code (NIRC) and Article 4(7) of the RP-US Tax Treaty, petitioner argued that passenger revenues from off-line flights were not Philippine-sourced income and thus should not have been taxed. With the two-year Case Digest (G.R. No. 178788) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- United Airlines, Inc. (“petitioner”) is a Delaware-incorporated foreign corporation engaged in international passenger and cargo air transport.
- Petitioner ceased passenger flights to/from the Philippines on February 21, 1998, but continued cargo flights until January 31, 2001.
- Tax Refund Claim and Administrative Proceedings
- On April 12, 2002, petitioner filed with the Commissioner of Internal Revenue a refund claim of ₱15,916,680.69 under Section 28(A)(3)(a) of the 1997 NIRC and Article 4(7) of the RP-US Tax Treaty, including ₱5,028,813.23 representing 1999 passenger revenue taxes.
- With the two-year prescriptive period for refund claims expiring on April 15, 2002, petitioner petitioned the Court of Tax Appeals (CTA).
- The CTA First Division (May 18, 2006) denied the refund, finding petitioner underpaid GPB tax on cargo revenues by ₱31.43 million due to erroneous deductions. The CTA En Banc (July 5, 2007) affirmed. Petitioner elevated the case to the Supreme Court under Rule 45.
Issues:
- Main Issue
- Is petitioner entitled to a refund of ₱5,028,813.23 paid as income tax on 1999 passenger revenues?
- Subsidiary Issues
- Did the CTA err by offsetting petitioner’s refund claim against an alleged unassessed cargo-GPB deficiency?
- Were petitioner’s due process rights violated by denial in the absence of a formal deficiency assessment?
- Did the CTA act beyond its jurisdiction when it determined a tax deficiency without a BIR assessment?
- Is any purported deficiency assessment barred by prescription?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)