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    Facts: Petitioners: Conwi, Et - Al. vs. CTA and CIR

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    Burn-Cindy Abad
    This case involves employees of Procter and Gamble who were assigned to foreign subsidiaries in 1970-1971 and paid in US dollars. They filed income tax returns using different conversion rates from dollars to pesos, resulting in alleged overpayments. The Court of Tax Appeals held that the proper conversion rates under Revenue Memorandum Circulars Nos. 7-71 and 41-71 should be used. The Supreme Court affirmed, finding that the petitioners' dollar earnings were income subject to Philippine taxes using the rates prescribed by the Secretary of Finance, not market rates.

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    Facts: Petitioners: Conwi, Et - Al. vs. CTA and CIR

    Uploaded by

    Burn-Cindy Abad
    61 views3 pages
    This case involves employees of Procter and Gamble who were assigned to foreign subsidiaries in 1970-1971 and paid in US dollars. They filed income tax returns using different conversion rates from dollars to pesos, resulting in alleged overpayments. The Court of Tax Appeals held that the proper conversion rates under Revenue Memorandum Circulars Nos. 7-71 and 41-71 should be used. The Supreme Court affirmed, finding that the petitioners' dollar earnings were income subject to Philippine taxes using the rates prescribed by the Secretary of Finance, not market rates.

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    Tax

    Original Title

    Conwi

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    This case involves employees of Procter and Gamble who were assigned to foreign subsidiaries in 1970-1971 and paid in US dollars. They filed income tax returns using different conversion rates from dollars to pesos, resulting in alleged overpayments. The Court of Tax Appeals held that the proper conversion rates under Revenue Memorandum Circulars Nos. 7-71 and 41-71 should be used. The Supreme Court affirmed, finding that the petitioners' dollar earnings were income subject to Philippine taxes using the rates prescribed by the Secretary of Finance, not market rates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    61 views3 pages

    Facts: Petitioners: Conwi, Et - Al. vs. CTA and CIR

    Uploaded by

    Burn-Cindy Abad
    This case involves employees of Procter and Gamble who were assigned to foreign subsidiaries in 1970-1971 and paid in US dollars. They filed income tax returns using different conversion rates from dollars to pesos, resulting in alleged overpayments. The Court of Tax Appeals held that the proper conversion rates under Revenue Memorandum Circulars Nos. 7-71 and 41-71 should be used. The Supreme Court affirmed, finding that the petitioners' dollar earnings were income subject to Philippine taxes using the rates prescribed by the Secretary of Finance, not market rates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Conwi, et.al. vs.

    CTA and CIR




    Facts: Petitioners are employees of Procter
    and Gamble (Philippine Manufacturing Corporation,
    subsidiary of Procter & Gamble, a foreign
    corporation).During the years 1970 and 1971, petitioners
    were assigned to other subsidiaries of Procter
    & Gamble outside the Philippines, for which petitioners
    were paid US dollars as compensation.

    Petitioners filed their ITRs for 1970 and 1971, computing
    tax due by applying the dollar-to-peso conversion based
    on the floating rate under BIR Ruling No. 70-027. In 1973,
    petitioners filed amened ITRs for 1970 and 1971, this time
    using the par value of the peso as basis. This resulted in
    the alleged overpayments, refund and/or tax credit, for
    which claims for refund were filed.

    CTA held that the proper conversion rate for the purpose
    of reporting and paying the Philippine income tax on the
    dollar earnings of petitioners are the rates prescribed
    under Revenue MemorandumCirculars Nos. 7-71 and 41-
    71. The refund claims were denied.

    Issues:
    (1) Whether or not petitioners' dollar earnings are receipts
    derived from foreign exchange transactions; NO.

    (2) Whether or not the proper rate of conversion of
    petitioners' dollar earnings for tax purposes in the
    prevailing free market rate of exchange and not the par
    value of the peso; YES.

    Held: For the proper resolution of income tax cases,
    income may be defined as an amount of money coming to
    a person or corporation within a specified time, whether as
    payment for services, interest or profit from investment.
    Unless otherwise specified, it means cash or its
    equivalent. Income can also be though of as flow of the
    fruits of one's labor.

    Petitioners are correct as to their claim that their dollar
    earnings are not receipts derived from foreign exchange
    transactions. For a foreign exchange transaction is simply
    that a transaction in foreign exchange, foreign
    exchange being "the conversion of an amount of money or
    currency of one country into an equivalent amount of
    money or currency of another." When petitioners were
    assigned to the foreign subsidiaries of Procter & Gamble,
    they were earning in their assigned nation's currency and
    were ALSO spending in said currency. There was no
    conversion, therefore, from one currency to another.

    The dollar earnings of petitioners are the fruits of their
    labors in the foreign subsidiaries of Procter & Gamble. It
    was a definite amount of money which came to them
    within a specified period of time of two years as payment
    for their services.

    And in the implementation for the proper enforcement of
    the National Internal Revenue Code, Section 338 thereof
    empowers the Secretary of Finance to "promulgate all
    needful rules and regulations" to effectively enforce its
    provisions pursuant to this authority, Revenue
    Memorandum Circular Nos. 7-71 and 41-71 were issued
    to prescribed a uniform rate of exchange from US dollars
    to Philippine pesos for INTERNAL REVENUE TAX
    PURPOSES for the years 1970 and 1971, respectively.
    Said revenue circulars were a valid exercise of the
    authority given to the Secretary of Finance by the
    Legislature which enacted the Internal Revenue Code.
    And these are presumed to be a valid interpretation of said
    code until revoked by the Secretary of Finance himself.

    Petitioners are citizens of the Philippines, and their
    income, within or without, and in these cases wholly
    without, are subject to income tax. Sec. 21, NIRC, as
    amended, does not brook any exemption.

    DENIED FOR LACK OF MERIT.

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