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Conwi v. Court of Tax Appeals | Nocon In the years 1970 and 1971, Conwi et al., since they
G.R. Nos. 48532 & 48533, August 31, 1992 | 213 SCRA 83 were earning in U.S. currency, in order to pay their
Keywords: Procter & Gamble, Filipino citizens temporarily income tax liabilities in Philippine peso, used the
working abroad earning in dollars, taxable income prevailing free market rate of conversion prescribed
under a Bureau of Internal Revenue ruling and two
NOTE Revenue Memorandum Circulars. However, in 1973,
This digest was adjusted to meet our needs for the June 29 Conwi et al. filed with the Commissioner of Internal
class. Revenue (CIR) amended income tax returns for the said
years, this time using the par value of the peso as
RATIO DECIDENDI conversion rate. The adjustment caused a disparity
Income of Filipino citizens temporarily residing in a foreign between what was initially paid and what they were
country, even if totally derived from outside the Philippines, is now claiming to be their actual tax liabilities.
subject to tax by virtue of Sec. 21, NIRC, viz: A tax is hereby Consequently, they asked for a refund of the
imposed upon the taxable net income received x x x from all overpayment.
sources by every individual, whether a citizen of the Even before the CIR could rule on the matter, Conwi et
Philippines residing therein or abroad x x x (italics mine) al. filed a petition for review before the Court of Tax
Appeals (CTA), which eventually denied their claim for
FACTS tax refund and/or tax credit.
Hernando Conwi et al. (Conwi et al.) are employees of Aggrieved, Conwi et al., via a petition for review,
Procter & Gamble Philippine Manufacturing elevated the matter to the Supreme Court.
Corporation, a local subsidiary of U.S.-based
Procter & Gamble. ISSUES & ARGUMENTS
Conwi et al. were temporarily assigned to W/N the ruling and circulars above apply to Conwi et al.
subsidiaries of Procter & Gamble outside of the
Philippines, where they were paid in U.S. dollars. (Note: Conti et al. argue that since there were no remittances
It is claimed that they earned and spent their money and acceptances of their salaries and wages in U.S. dollars into
exclusively abroad, and that they did not remit the Philippines, they are exempt from the coverage of such
money back into the Philippines during the time they ruling and circulars.)
were outside of the country earning in dollars.
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Conwi v. Court of Tax Appeals
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