sic itur ad astra

Taxation  | Basis of Taxation Facts:   The Commissioner of Internal Revenue (CIR ) assessed Bank of the Philippine Islands (BPI)  deficiency percentage and documentary stamp taxes for the year 1986 in the total amount of ₱129,488,656.63 . Initial notices ( October 28, 1988 ) lacked details about the basis for the assessments. BPI contested the assessments, arguing the notices were invalid. On June 27, 1991 , BPI received a letter from CIR dated May 8, 1991 stating the basis of assessments and constituting the final decision. BPI filed a petition for review in the Court of Tax Appeals. CTA:  Ruled that BPI failed to protest on time BPI appealed to the Court of Appeals. CA: Ruled that the October 28, 1988 notices were not valid assessments because they did not inform the taxpayer of the legal and factual bases therefor. Issue:  Whether the BPI was liable for the said taxes.  YES Held: The former Section 270 (now renumbered as Section 228) of ...

  Taxation  | Basis of Taxation Facts:   Philippine Guaranty Co., Inc. entered into reinsurance contracts with foreign insurance companies not doing business in the Philippines. The contracts stipulated that a portion of the premiums on insurance underwritten by Philippine Guaranty Co., Inc. would be ceded to the foreign reinsurers, in consideration for the assumption of liability on an equivalent portion of the risks insured. Reinsurance contracts were signed in Manila by Philippine Guaranty Co., Inc. and by the foreign reinsurers outside the Philippines , except for the contract with Swiss Reinsurance Company, which was signed in Switzerland . The foreign reinsurers agreed to compensate Philippine Guaranty Co., Inc. with 5% of the reinsurance premiums for managing their affairs in the Philippines. C ommissioner of Internal Revenue:  Assessed against Philippine Guaranty Co., Inc. withholding tax on the ceded reinsurance premiums for the years 1953 a...

Taxation |  Basis of Taxation Facts:   On January 14, 1965 , a domestic corporation, Algue Inc, , received a letter assessing delinquency income taxes totaling P83,183.85 for the years 1958 and 1959 . Algue claimed a deduction of ₱75,000 for "promotional fees" paid to individuals involved in creating a new corporation, Vegetable Oil Investment Corporation (VOIC) , and its subsequent purchase of the properties of the Philippine Sugar Estate Development Company. Collector of Internal Revenue (CIR): Disallowed the P75,000.00 deduction claimed by Algue. Court of Tax Appeals:   Held that the said amount had been legitimately paid by the private respondent for actual services rendered in the form of promotional fee. Issue: Whether the Collector of Internal Revenue correctly disallowed the P75,000.00 deduction claimed by private respondent Algue as legitimate business expenses in its income tax returns.  NO Held: Parenthetically, it may be observed that the peti...

  Commercial Law  | Escalation Clause Facts:   Spouses Alfredo M. Castillo and Elizabeth Capati-Castillo owned a lot, while Spouses Romeo B. Capati and Aquilina M. Lobo owned another lot, both in Tondo, Manila. On May 7, 1997 , respondents obtained a loan of ₱2,500,000.00 from Philippine Savings Bank  secured by real estate mortgage on their properties as evidenced by a promissory note with a face value of ₱2,500,000.00. The loan carried an interest rate of 17% per annum, subject to  review and/or adjustment every ninety days , with penalty charges  equivalent to 3% of the amount due for every month or fraction of a month’s delay. The rate of interest and/or bank charges herein stipulated, during the terms of this promissory note, its extensions, renewals or other modifications, may be increased, decreased or otherwise changed from time to time within the rate of interest and charges allowed under present or future law(s) and/or government re...

Commercial Law  | Escalation Clause Facts:   Spouses Eduardo and Lydia Silos operated a department store and engaged in buying and selling ready-to-wear apparel for about two decades. In 1987 , they obtained a one-year revolving credit line of ₱150,000.00 from Philippine National Bank (PNB), secured by a Real Estate Mortgage over a 370-square meter lot in Aklan. In July 1988 , the credit line was later increased to  ₱1.8 million , and the mortgage was correspondingly increased to P1.8 million. In July 1989 , the credit line was later increased to ₱2.5 million , with additional security provided in the form of a 134-square meter lot. Petitioners issued eight Promissory Notes  and signed a Credit Agreement.  The Credit Agreement provided that the loan shall be subject to interest at the rate of 19.5% per annum and allowed PNB to modify interest rates based on its policies in the future. The Promissory Notes granted PNB the right to increase or reduc...