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    Collector vs. Univ of Visayas

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    TaJheng Barde
    The University of Visayas claimed tax exemption but the Commissioner of Internal Revenue disputed this. The Court rejected the University's claim finding that it functioned as a conduit for its controlling stockholders, funneling most income to them. The Court emphasized the distinction between organizations where income benefits individuals versus the organization.

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    Collector vs. Univ of Visayas

    Uploaded by

    TaJheng Barde
    22 views1 page
    The University of Visayas claimed tax exemption but the Commissioner of Internal Revenue disputed this. The Court rejected the University's claim finding that it functioned as a conduit for its controlling stockholders, funneling most income to them. The Court emphasized the distinction between organizations where income benefits individuals versus the organization.

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    The University of Visayas claimed tax exemption but the Commissioner of Internal Revenue disputed this. The Court rejected the University's claim finding that it functioned as a conduit for its controlling stockholders, funneling most income to them. The Court emphasized the distinction between organizations where income benefits individuals versus the organization.

    Copyright:

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

    Collector vs. Univ of Visayas

    Uploaded by

    TaJheng Barde
    The University of Visayas claimed tax exemption but the Commissioner of Internal Revenue disputed this. The Court rejected the University's claim finding that it functioned as a conduit for its controlling stockholders, funneling most income to them. The Court emphasized the distinction between organizations where income benefits individuals versus the organization.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Collector vs.

    University of Visayas, 1 SCRA 669

    FACTS:

    The University of Visayas asserted its entitlement to tax exemption under Section 27(e) of the
    Internal Revenue Code for the period of 1946 to 1950. The Court of Tax Appeals granted the
    University’s claim, ordering the refund of taxes previously collected.

    The Commissioner of Internal Revenue filed a motion for reconsideration, contending that the
    University does not qualify for tax exemption because it functions as a business conduit for its
    controlling stockholders.

    ISSUE: Whether the University of Visayas is entitled to tax exemption.

    RULING:

    NO.
    The Court rejected the University of Visayas' claim for tax exemption, deeming it inappropriate
    to uphold the separation of the university from its controlling stockholders. Instead, the Court
    regarded the university as essentially an alter ego or conduit for the interests of its majority
    stockholders.

    In this case, the majority of the university's net income, with only a minor portion reserved for
    operational expenses, was funneled into permanent assets registered under the name of the
    university president and his spouse. The Court justified its decision to disregard the legal
    distinction of the university as a separate entity based on the significant control exercised by the
    president and his immediate family, who collectively own 85% of the university's capital stock.
    Therefore, the Court emphasized the distinction between the old law and its subsequent
    amendment, clarifying that tax exemption does not extend to organizations or corporations
    where the income ultimately benefits individual stockholders or entities.

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