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    Conwi Et Al Vs CTA

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    001noone
    Petitioners were employees of Procter and Gamble who were assigned to work in subsidiaries outside the Philippines from 1970 to 1971. They were paid in US dollars for their work. When filing their income tax returns (ITRs) for those years, Petitioners used different exchange rates to convert their dollar earnings to pesos, resulting in alleged overpayments. The Court of Tax Appeals (CTA) denied Petitioners' claims for refunds. The issue was whether Petitioners' dollar earnings constituted receipts from foreign exchange transactions. The Supreme Court ruled that they did not, as Petitioners earned and spent in the same foreign currency without any conversion between currencies. Therefore, Petitioners' dollar earnings were taxable income rather than foreign

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    Conwi Et Al Vs CTA

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    001noone
    132 views1 page
    Petitioners were employees of Procter and Gamble who were assigned to work in subsidiaries outside the Philippines from 1970 to 1971. They were paid in US dollars for their work. When filing their income tax returns (ITRs) for those years, Petitioners used different exchange rates to convert their dollar earnings to pesos, resulting in alleged overpayments. The Court of Tax Appeals (CTA) denied Petitioners' claims for refunds. The issue was whether Petitioners' dollar earnings constituted receipts from foreign exchange transactions. The Supreme Court ruled that they did not, as Petitioners earned and spent in the same foreign currency without any conversion between currencies. Therefore, Petitioners' dollar earnings were taxable income rather than foreign

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    Conwi et al vs CTA

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    Petitioners were employees of Procter and Gamble who were assigned to work in subsidiaries outside the Philippines from 1970 to 1971. They were paid in US dollars for their work. When filing their income tax returns (ITRs) for those years, Petitioners used different exchange rates to convert their dollar earnings to pesos, resulting in alleged overpayments. The Court of Tax Appeals (CTA) denied Petitioners' claims for refunds. The issue was whether Petitioners' dollar earnings constituted receipts from foreign exchange transactions. The Supreme Court ruled that they did not, as Petitioners earned and spent in the same foreign currency without any conversion between currencies. Therefore, Petitioners' dollar earnings were taxable income rather than foreign

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    132 views1 page

    Conwi Et Al Vs CTA

    Uploaded by

    001noone
    Petitioners were employees of Procter and Gamble who were assigned to work in subsidiaries outside the Philippines from 1970 to 1971. They were paid in US dollars for their work. When filing their income tax returns (ITRs) for those years, Petitioners used different exchange rates to convert their dollar earnings to pesos, resulting in alleged overpayments. The Court of Tax Appeals (CTA) denied Petitioners' claims for refunds. The issue was whether Petitioners' dollar earnings constituted receipts from foreign exchange transactions. The Supreme Court ruled that they did not, as Petitioners earned and spent in the same foreign currency without any conversion between currencies. Therefore, Petitioners' dollar earnings were taxable income rather than foreign

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    © All Rights Reserved
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    of 1

    Conwi et al.

    vs CTA 213 SCRA 83

    Income Tax is an amount of money coming to a person or corporation within or 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 thought of as a flow of the fruits of one’s labor. Earning and spending in the same foreign currency does not
    involve conversion hence it does not constitute foreign exchange transaction.

    Foreign exchange is defined as the conversion of an amount of money or currency of one country into an equivalent
    amount of money or currency of another.

    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 Memorandum Circulars Nos. 7-71 and 41-71.
    The refund claims were denied.

    Issue: Whether or not petitioners' dollar earnings are receipts derived from foreign exchange transactions

    Ruling: NO. 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 thought 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.

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