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    CIR V CA, CTA, ADMU

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    Val Peralta-Naval
    This case involves a tax assessment imposed by the Commissioner of Internal Revenue (CIR) on Ateneo de Manila University for alleged deficiency contractor's tax and income tax for the fiscal year ending March 31, 1978. Ateneo argued it was exempt from tax as a non-profit educational institution. The Supreme Court agreed, finding that Ateneo's Institute of Philippine Culture, which conducted research projects, was not an independent contractor selling services for a fee. Rather, it conducted research pursuant to Ateneo's educational and public service commitments. As the institute operated at a loss, its motive was education, not profit. The Court therefore denied the CIR's petition and affirmed the lower courts' rulings canceling the tax assessments

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    CIR V CA, CTA, ADMU

    Uploaded by

    Val Peralta-Naval
    1K views2 pages
    This case involves a tax assessment imposed by the Commissioner of Internal Revenue (CIR) on Ateneo de Manila University for alleged deficiency contractor's tax and income tax for the fiscal year ending March 31, 1978. Ateneo argued it was exempt from tax as a non-profit educational institution. The Supreme Court agreed, finding that Ateneo's Institute of Philippine Culture, which conducted research projects, was not an independent contractor selling services for a fee. Rather, it conducted research pursuant to Ateneo's educational and public service commitments. As the institute operated at a loss, its motive was education, not profit. The Court therefore denied the CIR's petition and affirmed the lower courts' rulings canceling the tax assessments

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    CIR v CA, CTA, ADMU

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    This case involves a tax assessment imposed by the Commissioner of Internal Revenue (CIR) on Ateneo de Manila University for alleged deficiency contractor's tax and income tax for the fiscal year ending March 31, 1978. Ateneo argued it was exempt from tax as a non-profit educational institution. The Supreme Court agreed, finding that Ateneo's Institute of Philippine Culture, which conducted research projects, was not an independent contractor selling services for a fee. Rather, it conducted research pursuant to Ateneo's educational and public service commitments. As the institute operated at a loss, its motive was education, not profit. The Court therefore denied the CIR's petition and affirmed the lower courts' rulings canceling the tax assessments

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    1K views2 pages

    CIR V CA, CTA, ADMU

    Uploaded by

    Val Peralta-Naval
    This case involves a tax assessment imposed by the Commissioner of Internal Revenue (CIR) on Ateneo de Manila University for alleged deficiency contractor's tax and income tax for the fiscal year ending March 31, 1978. Ateneo argued it was exempt from tax as a non-profit educational institution. The Supreme Court agreed, finding that Ateneo's Institute of Philippine Culture, which conducted research projects, was not an independent contractor selling services for a fee. Rather, it conducted research pursuant to Ateneo's educational and public service commitments. As the institute operated at a loss, its motive was education, not profit. The Court therefore denied the CIR's petition and affirmed the lower courts' rulings canceling the tax assessments

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    CIR v.

    CA, CTA, Ateneo De Manila University

    Facts: Ateneo de Manila University, is a non-stock, non-profit educational institution with


    auxiliary units and branches all over the Philippines. One auxiliary unit is the Institute of
    Philippine Culture (IPC), which has no legal personality separate and distinct from that of
    private respondent. The IPC is a Philippine unit engaged in social science studies of
    Philippine society and culture. Occasionally, it accepts sponsorships for its research activities
    from international organizations, private foundations and government agencies. On 8 July
    1983, private respondent received from Commissioner of Internal Revenue (CIR) a demand
    letter dated 3 June 1983, assessing private respondent the sum of P174,043.97 for alleged
    deficiency contractor’s tax, and an assessment dated 27 June 1983 in the sum of P1,141,837
    for alleged deficiency income tax, both for the fiscal year ended 31 March 1978. Denying
    said tax liabilities, private respondent sent petitioner a letter-protest and subsequently filed
    with the latter a memorandum contesting the validity of the assessments. On 17 March
    1988, petitioner rendered a letter-decision cancelling the assessment for deficiency income
    tax but modifying the assessment for deficiency contractor’s tax by increasing the amount
    due to P193,475.55. Unsatisfied, private respondent requested for a reconsideration or
    reinvestigation of the modified assessment.

    At the same time, it filed in the respondent court a petition for review of the said letter-
    decision of the petitioner. While the petition was pending before the respondent court,
    petitioner issued a final decision dated 3 August 1988 reducing the assessment for
    deficiency contractor’s tax from P193,475.55 to P46,516.41, exclusive of surcharge and
    interest. On 12 July 1993, the respondent court set aside respondent’s decision, and
    cancelling the deficiency contractor’s tax assessment in the amount of P46,516.41 exclusive
    of surcharge and interest for the fiscal year ended 31 March 1978. No pronouncement as to
    cost. On 27 April 1994, Court of Appeals, in CA-GR SP 31790, affirmed the decision of the
    Court of Tax Appeals. Not in accord with said decision, petitioner came to Supreme Court via
    a petition for review.

    Issue:

    Whether the private respondent is taxable as an independent contractor.

    Held: The Commissioner erred in applying the principles of tax exemption without first
    applying the well-settled doctrine of strict interpretation in the imposition of taxes. It is
    obviously both illogical and impractical to determine who are exempted without first
    determining who are covered by the aforesaid provision. The Commissioner should have
    determined first if private respondent was covered by Section 205, applying the rule of strict
    interpretation of laws imposing taxes and other burdens on the populace, before asking
    Ateneo to prove its exemption therefrom, following the rule of construction where “the tax
    exemptions are to be strictly construed against the taxpayer”.

    The doctrine in the interpretation of tax laws is that a statute will not be construed as
    imposing a tax unless it does so clearly, expressly, and unambiguously. Tax cannot be
    imposed without clear and express words for that purpose. Accordingly, the general rule of
    requiring adherence to the letter in construing statutes applies with peculiar strictness to tax
    laws and the provisions of a taxing act are not to be extended by implication.” In case of
    doubt, such statutes are to be construed most strongly against the government and in favor
    of the subjects or citizens because burdens are not to be imposed nor presumed to be
    imposed beyond what statutes expressly and clearly import. In the present case, Ateneo’s
    Institute of Philippine Culture never sold its services for a fee to anyone or was ever engaged
    in a business apart from and independently of the academic purposes of the university.
    Funds received by the Ateneo de Manila University are technically not a fee. They may
    however fall as gifts or donations which are “tax-exempt” as shown by private respondent’s
    compliance with the requirement of Section 123 of the National Internal Revenue Code
    providing for the exemption of such gifts to an educational institution.

    The Supreme Court denied the petition and affirmed the assailed Decision of the Court of
    Appeals. The Court ruled that the private respondent is not a contractor selling its services
    for a fee but an academic institution conducting these researches pursuant to its
    commitments to education and, ultimately, to public service. For the institute to have
    tenaciously continued operating for so long despite its accumulation of significant losses, we
    can only agree with both the Court of Tax Appeals and the Court of Appeals that “education
    and not profit is motive for undertaking the research projects.

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