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AFISCO V CA, GR No. 112675, January 25, 1999
AFISCO V CA, GR No. 112675, January 25, 1999
AFISCO V CA, GR No. 112675, January 25, 1999
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G.R. No. 112675. January 25, 1999.
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* THIRD DIVISION.
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not have received their premiums. The ceding companies share „in
the business ceded to the pool‰ and in the „expenses‰ according to a
„Rules of Distribution‰ annexed to the Pool Agreement. Profit
motive or business is, therefore, the primordial reason for the poolÊs
formation.
Same; Same; Same; Same; Double Taxation; Words and
Phrases; Double taxation means taxing the same property twice
when it should be taxed only once, i.e., „taxing the same person twice
by the same jurisdiction for the same thing‰; The pool is a taxable
entity distinct from the individual corporate entities of the ceding
companies.·Petitioners are clutching at straws. Double taxation
means taxing the same property twice when it should be taxed only
once. That is, „x x x taxing the same person twice by the same
jurisdiction for the same thing.‰ In the instant case, the pool is a
taxable entity distinct from the individual corporate entities of the
ceding companies. The tax on its income is obviously different from
the tax on the dividends received by the said companies. Clearly,
there is no double taxation here.
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the Court takes judicial notice that it took effect only later, on
December 14, 1984.
Same; Prescription; Whether the governmentÊs right to collect
and assess the tax has prescribed involves facts which were ruled
upon by the lower courts, and in the absence of a clear showing of
palpable error or grave abuse of discretion, the Supreme Court must
not overturn such factual findings of the Court of Appeals and the
Court of Tax Appeals.·The CA and the CTA categorically found
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that the prescriptive period was tolled under then Section 333 of the
NIRC, because „the taxpayer cannot be located at the address given
in the information return filed and for which reason there was delay
in sending the assessment.‰ Indeed, whether the governmentÊs right
to collect and assess the tax has prescribed involves facts which
have been ruled upon by the lower courts. It is axiomatic that in the
absence of a clear showing of palpable error or grave abuse of
discretion, as in this case, this Court must not overturn the factual
findings of the CA and the CTA.
PANGANIBAN, J.:
The Case
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Review on Certiorari
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before us, assailing 2 the October 11,
1993 Decision of the Court of Appeals in CA-GR SP
29502, which dismissed
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petitionersÊ appeal of the 4October
19, 1992 Decision of the Court of Tax Appeals (CTA)
which had previously sustained petitionersÊ liability for
deficiency income tax, interest and withholding tax. The
Court of Appeals ruled:
The Facts
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The antecedent facts, as found by the Court of Appeals,
are as follows:
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The Issues
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First Issue:
Pool Taxable as a Corporation
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business of reinsurance
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from which it could have derived
income for itself.‰
The Court is not persuaded. The opinion or ruling of the
Commission of Internal Revenue, the agency tasked with
the
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„[I]t has been the long standing policy and practice of this Court to
respect the conclusions of quasi-judicial agencies, such as the Court
of Tax Appeals which, by the nature of its functions, is dedicated
exclusively to the study and consideration of tax problems and has
necessarily developed an expertise on the subject, unless there has
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been an abuse or improvident exercise of its authority.‰
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Thus, the
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Court in Evangelista v. Collector of Internal
Revenue held that Section 24 covered these unregistered
partnerships and even associations or joint accounts, which
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had no legal
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personalities apart from their individual
members. 24The Court of Appeals astutely applied
Evangelista:
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insurance businesses
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covered under their quota-share
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reinsurance treaty and surplus reinsurance treaty with
Munich. The following unmistakably indicates a
partnership or an association covered by Section 24 of the
NIRC:
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„x x x The fact that the pool does not retain any profit or income
does not obliterate an antecedent fact, that of the pool being used in
the transaction of business for profit. It is apparent, and petitioners
admit, that their association or coaction was indispensable [to] the
transaction of the business. x x x If together they have conducted
business, profit must have been the object as, indeed, profit was
earned. Though the profit was apportioned among the members,
this is only a matter of consequence, as it implies that profit
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actually resulted.‰
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The petitionersÊ reliance on Pascual v. Commissioner is
misplaced, because the facts obtaining therein are not on
all fours with the present case. In Pascual, there was no
unregistered partnership, but merely a co-ownership
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which
took up only two isolated transactions. The Court of
Appeals did not err in applying Evangelista, which involved
a partnership that engaged in a series of transactions
spanning more than ten years, as in the case before us.
Second Issue:
PoolÊs Remittances Are Taxable
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49 Rollo, p. 73.
„The ÂCeding CompaniesÊ undertake to cede to the ÂMunichÊ fixed quota
share of 40% of all insurances mentioned in Article 2 and the ÂMunichÊ
shall be obliged to accept all insurances so ceded.‰
50 Ibid., p. 76.
„The MunichÊs proportion of any loss shall be settled by debiting it in
account, and a monthly list comprising all losses paid shall be rendered
to the ÂMunichÊ x x x.‰
51Ibid., p. 102.
„The ÂCeding CompaniesÊ bind themselves to cede to the ÂMunichÊ the
entire 15 line surplus of the insurances specified in Article 2 hereof.
The surplus shall consist of all sums insured remaining after
deduction of the Quota Share and of the proportion combined net
retention of the ÂPool.Ê
The Munich undertakes to accept the amounts so ceded up to fifteen
times the ÂCeding CompanyÊsÊ proportionate retention.‰
52Ibid., p. 105.
„The ÂMunichÊsÊ proportion of any loss shall be settled by debiting it in
account. A monthly list comprising all losses paid shall be rendered to
the ÂMunichÊ on forms to be agreed. x x x.‰
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Third Issue:
Prescription
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