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    G.R. No. 169507 Air Canada Vs Cir Facts

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    Lizzette Dela Pena
    1) Air Canada, a Canadian airline company, engaged Aerotel Ltd. as its general sales agent in the Philippines to sell airline tickets. 2) For tax years 2000-2002, Air Canada paid Philippine income taxes on gross revenues from ticket sales of ₱5,185,676.77. 3) Air Canada filed a tax refund claim, arguing that as a Canadian corporation, the Philippines-Canada tax treaty limits its tax rate to 1.5% of gross revenues. The Court of Tax Appeals denied the claim.

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    G.R. No. 169507 Air Canada Vs Cir Facts

    Uploaded by

    Lizzette Dela Pena
    100 views2 pages
    1) Air Canada, a Canadian airline company, engaged Aerotel Ltd. as its general sales agent in the Philippines to sell airline tickets. 2) For tax years 2000-2002, Air Canada paid Philippine income taxes on gross revenues from ticket sales of ₱5,185,676.77. 3) Air Canada filed a tax refund claim, arguing that as a Canadian corporation, the Philippines-Canada tax treaty limits its tax rate to 1.5% of gross revenues. The Court of Tax Appeals denied the claim.

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    international law

    Original Title

    SIIL-NO.-18

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    1) Air Canada, a Canadian airline company, engaged Aerotel Ltd. as its general sales agent in the Philippines to sell airline tickets. 2) For tax years 2000-2002, Air Canada paid Philippine income taxes on gross revenues from ticket sales of ₱5,185,676.77. 3) Air Canada filed a tax refund claim, arguing that as a Canadian corporation, the Philippines-Canada tax treaty limits its tax rate to 1.5% of gross revenues. The Court of Tax Appeals denied the claim.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    100 views2 pages

    G.R. No. 169507 Air Canada Vs Cir Facts

    Uploaded by

    Lizzette Dela Pena
    1) Air Canada, a Canadian airline company, engaged Aerotel Ltd. as its general sales agent in the Philippines to sell airline tickets. 2) For tax years 2000-2002, Air Canada paid Philippine income taxes on gross revenues from ticket sales of ₱5,185,676.77. 3) Air Canada filed a tax refund claim, arguing that as a Canadian corporation, the Philippines-Canada tax treaty limits its tax rate to 1.5% of gross revenues. The Court of Tax Appeals denied the claim.

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    of 2

    18. G.R. No.

    169507
    AIR CANADA vs CIR

    Facts:
    Air Canada is a "foreign corporation organized and existing under the laws of
    Canada. On April 24, 2000, it was granted an authority to operate as an offline carrier
    by the Civil Aeronautics Board, subject to certain conditions, which authority would
    expire on April 24, 2005
    On July 1, 1999, Air Canada engaged the services of Aerotel Ltd., Corp. (Aerotel)
    as its general sales agent in the Philippines. Aerotel "sells [Air Canadas] passage
    documents in the Philippines."
    For the period ranging from the third quarter of 2000 to the second quarter of
    2002, Air Canada, through Aerotel, filed quarterly and annual income tax returns and
    paid the income tax on Gross Philippine Billings in the total amount of 5,185,676.77
    On November 28, 2002, Air Canada filed a written claim for refund of alleged
    erroneously paid income taxes amounting to 5,185,676.77. It found basis from the
    revised definition of Gross Philippine Billings under Section 28(A)(3)(a) of the 1997
    National Internal Revenue Code
    To prevent the running of the prescriptive period, Air Canada filed a Petition for
    Review before the Court of Tax Appeals.
    The CTA denied the petition. It found out that Air Canada was engaged
    business in the Phils. through a legal agent that sells airline tickets on its behalf. As
    such, it held that while Air Canada was not liable for tax on its Gross Phil Billings, it
    was nevertheless liable to pay the 32% corporate income tax in income derived from
    the sales of airline tickets within the Phil. On appeal, the CTA En Banc AFFIRMED the
    ruling of the CTA.

    Issue:
    WON RP-CANADA tax treaty is enforceable

    Held:
    YES. While petitioner is taxable as a resident foreign corporation under Section
    28(A)(1) of the 1997 National Internal Revenue Code on its taxable income from sale of
    airline tickets in the Philippines, it could only be taxed at a maximum of 1 1/2% of
    gross revenues, pursuant to Article VIII of the Republic of the Philippines-Canada Tax
    Treaty that applies to petitioner as a foreign corporation organized and existing under
    the laws of Canada[.]
    Tax treaties form part of the law of the land, and jurisprudence has applied the
    statutory construction principle that specific laws prevail over general ones. The
    Republic of the Philippines-Canada Tax Treaty was ratified on December 21, 1977 and
    became valid and effective on that date. On the other hand, the applicable provisions
    relating to the taxability of resident foreign corporations and the rate of such tax found
    in the National Internal Revenue Code became effective on January 1, 1998.
    Ordinarily, the later provision governs over the earlier one. In this case, however, the
    provisions of the Republic of the Philippines-Canada Tax Treaty are more specific than
    the provisions found in the National Internal Revenue Code.

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