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    PHILAMLIFE Vs CA GR SP 31283, April 25,1995

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    Francise Mae Montilla Mordeno
    The document discusses a tax case involving Philippine American Life Insurance Company (PHILAMLIFE) and its agreement with American International Reinsurance Company (AIRCO), and later its successor American International Group (AIGI). The Court of Tax Appeals ruled that the compensation paid to AIGI for advisory services rendered outside the Philippines constitutes "royalties" under Section 37 of the Tax Code and is subject to 35% withholding tax. The court found that the management services outlined in the agreement, such as providing technical/commercial information and advice, fall under the expanded definition of royalties. Therefore, the income derived for AIGI is considered income from services within the Philippines and is taxable.

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    PHILAMLIFE Vs CA GR SP 31283, April 25,1995

    Uploaded by

    Francise Mae Montilla Mordeno
    404 views1 page
    The document discusses a tax case involving Philippine American Life Insurance Company (PHILAMLIFE) and its agreement with American International Reinsurance Company (AIRCO), and later its successor American International Group (AIGI). The Court of Tax Appeals ruled that the compensation paid to AIGI for advisory services rendered outside the Philippines constitutes "royalties" under Section 37 of the Tax Code and is subject to 35% withholding tax. The court found that the management services outlined in the agreement, such as providing technical/commercial information and advice, fall under the expanded definition of royalties. Therefore, the income derived for AIGI is considered income from services within the Philippines and is taxable.

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    Original Title

    4. PHILAMLIFE vs CA GR SP 31283, April 25,1995

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    The document discusses a tax case involving Philippine American Life Insurance Company (PHILAMLIFE) and its agreement with American International Reinsurance Company (AIRCO), and later its successor American International Group (AIGI). The Court of Tax Appeals ruled that the compensation paid to AIGI for advisory services rendered outside the Philippines constitutes "royalties" under Section 37 of the Tax Code and is subject to 35% withholding tax. The court found that the management services outlined in the agreement, such as providing technical/commercial information and advice, fall under the expanded definition of royalties. Therefore, the income derived for AIGI is considered income from services within the Philippines and is taxable.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    404 views1 page

    PHILAMLIFE Vs CA GR SP 31283, April 25,1995

    Uploaded by

    Francise Mae Montilla Mordeno
    The document discusses a tax case involving Philippine American Life Insurance Company (PHILAMLIFE) and its agreement with American International Reinsurance Company (AIRCO), and later its successor American International Group (AIGI). The Court of Tax Appeals ruled that the compensation paid to AIGI for advisory services rendered outside the Philippines constitutes "royalties" under Section 37 of the Tax Code and is subject to 35% withholding tax. The court found that the management services outlined in the agreement, such as providing technical/commercial information and advice, fall under the expanded definition of royalties. Therefore, the income derived for AIGI is considered income from services within the Philippines and is taxable.

    Copyright:

    © All Rights Reserved
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    4.

    PHILAMLIFE vs CA GR SP 31283, April 25,1995 RULING:

    we agree with respondent court's ruling


    PHILIPPINE AMERICAN LIFE INSURANCE COMPANY,
    INC., ET AL., petitioner, vs. HON. COURT OF TAX Section 37. Income from Services within the
    APPEALS, AND THE COMMISSIONER OF INTERNAL Philippines,
    REVENUE, respondent.
    FACTS: A. Gross income from sources within the Philippines — the
    following items of gross income shall be treated as gross
    Petitioner Philippine American Life Insurance Co., Inc. income from source within the Philippines.
    (PHILAMLIFE) a domestic corporation entered into a (1) . . .
    Management Services Agreement with American (2) . . .
    International Reinsurance Co., Inc. (AIRCO), a non-resident (3) . . .
    foreign corporation with principal place of business in
    (4) Rentals and royalties — Rentals and royalties
    Pembroke, Bermuda, whereby, effective January 1, 1972,
    from properties located in the Philippines or from
    for a fee of not exceeding $250,000.00 per annum, any interest in such property, including rentals or
    ‘where AIRCO shall supply technical and commercial royalties for —
    information, knowledge, advice, assistance o services in (a) . . .
    (b) . . .
    connection with technical management or administration
    (c) The supply of scientific, technical,
    of an insurance business.
    industrial or commercial knowledge or
    AIRCO subsequently merged with Amereican International informations;
    Group inc (AIGI) with AIGI as the ssuccessor-in-interes in (d) The supply of any assistance that is
    auxiliary and subsidiary to, and is
    AIRCOs Management Services Agreement with Philamlife.
    furnished as a means of enabling the
    Respondent CIR issued in favor of Philamlife a tax credit application or enjoyment of, any property,
    memo in the amount o p643,125 representing erroneous or right as is mentioned in paragraph (a),
    payment of withholding tax at source on remittances to any such equipment as is mentioned in
    paragraph (b) or any such knowledge or
    AIGI for services rendered abroad.
    information as is mentioned in paragraph
    Hence Philamlife sought for a refund. (c); or
    (e) . . .
    Without waiting for respondent to resolve the claim for (f) Technical advice, assistance or services
    refund, petitioners filed a petition with the CTA seeking rendered in connection with the technical
    for refund. management and administration of any
    scientific, industrial or commercial
    During the pendency of the case, respondent derived undertaking, venture, project of scheme;
    Philamlifes claim for refund and cancelled the tax Credit and
    Memo issued to Philamlife and requested the latter to pay (g) . . .
    the amount pf P613 125 as deficiency withholding tax.

    Petitioners filed before the CTA seeking annulment of such A reading of the various management services enumerated
    assessment. in the said Management Services Agreement will show that
    they can easily fall under any of the aforequoted expanded
    CTA ruled in facor of CIR. meaning of royalties.

    petitioners insist that there is no legal nor factual bias for Basically, from the heading 'Investments' to 'Personnel',
    the respondent court to conclude that the compensation the services call for the supply by the non-resident foreign
    paid for advisory services rendered outside the Philippines corporation of technical and commercial information,
    to petitioner AIGI, a non-resident foreign corporation not knowledge, advice, assistance or services in connection
    engaged in trade or business in the Philippines, is with technical management or administration of an
    considered "rentals and royalties from properties located insurance business — a commercial undertaking.
    in the Philippines" pursuant to Section 37 (a) (4) of the Therefore, the income derived for the services performed
    National Internal Revenue Code.. by AIGI for PHILAMLIFE under the said management
    contract shall be considered as income from services
    Petitioners contend that petitioner AIGI is not covered by within the Philippines.
    the above provision of the Tax Code considering that it has
    no properties located in the Philippines from which rentals AIGI being a non-resident foreign corporation not engaged
    and royalties can be derived. in trade or business in the Philippines 'shall pay a tax equal
    to thirty-five (35%) percent of the gross income received
    ISSUE: The definition of royalty will be touched in during each taxable year from all sources within the
    deciding the issue of WON compensation paid for advisory Philippines as interest, dividends, rents, royalties
    services rendered outside the Philippines to petitioner (including remuneration for technical services), salaries,
    AIGI, a non-resident foreign corporation not engaged in premiums, annuities, emoluments or other fixed or
    trade or business in the Philippines, is considered "rentals determinable annual, periodical or casual gains, profits
    and royalties from properties located in the Philippines" and income and capital gains: . . . (Section 12(6) (I) of the
    National Internal Revenue Code. (Underscoring for
    emphasis).

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