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During pendency of said case, respondent denied PHILAMLIFEs The Management Services Agreement falls under the expanded
claim for refund of Php643,125.00 as withholding tax at source meaning of royalties as it provides for the supply of a non-
for 1980. Respondent also cancelled the tax credit memo in the resident foreign corporation of technical and commercial
amount of Php643,125.00 previously issued to PHILAMLIFE on information, knowledge, advice, assistance or services in
November 18, 1980 and requested the latter to pay the amount connection with technical management or administration of an
of Php643,125.00 as deficiency withholding tax at source for insurance business a commercial undertaking. Therefore, the
1979 plus increments. income derived for the services performed by AIGI for
PHILAMLIFE under the said agreement contract shall be
Without protesting the assessment, petitioners filed a petition considered as income from services within the Philippines. AIGI,
with CTA on June 14, 1985, docketed as CTA Case No. 3943, being a non-resident foreign corporation not engage in trade
seeking the annulment of said assessment. and business in the Philippines shall pay tax equal to 35% of the
gross income received during each taxable year from all sources
After trial on the merits, respondent tax court rendered the within the Philippines as interest, dividends, rents, royalties
decision dated March 10, 1993 denying both petitions for (including remuneration for technical services), salaries,
review and subsequent motions for reconsiderations. premiums, annuities, emoluments, or other fixed or
determinable annual, periodical or casual gains, profits and
income.
In like manner, CIRs failure to raise before the CTA the issue
relating to the real party in interest to claim the refund cannot,
and should not, prejudice the government. It is axiomatic that
the government can never be in estoppel, particularly in
matters involving taxes. The errors or omissions of certain
administrative officers should never be allowed to jeopardize
the governments financial position.