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CIR v. Juliane Baier-Nickel - SUBA

The Supreme Court ruled that a non-resident German citizen's sales commission income earned from a Philippine corporation was taxable in the Philippines. The Court held that the source of income from personal services is the place where the services were actually rendered. While the respondent claimed to have performed income-producing activities in Germany, she did not provide evidence that her instructions and orders to the Philippine corporation resulted in sales being concluded in Germany. Therefore, the Philippines had jurisdiction to tax the commission income.

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233 views2 pages

CIR v. Juliane Baier-Nickel - SUBA

The Supreme Court ruled that a non-resident German citizen's sales commission income earned from a Philippine corporation was taxable in the Philippines. The Court held that the source of income from personal services is the place where the services were actually rendered. While the respondent claimed to have performed income-producing activities in Germany, she did not provide evidence that her instructions and orders to the Philippine corporation resulted in sales being concluded in Germany. Therefore, the Philippines had jurisdiction to tax the commission income.

Uploaded by

Paul Joshua Torda Suba
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CIR v. Juliane Baier-Nickel. GR No. 153793, 29 Aug.

2006
YNARES-SANTIAGO, J.:
DOCTRINE: The source of income of personal services is the place where the services
were actually rendered. This resulting income is taxable by the country with jurisdiction.
FACTS: Respondent Juliane Baier-Nickel, a non-resident German citizen, is the
President of JUBANITEX, Inc. Through JUBANITEX's General Manager, Marina Q.
Guzman, the corporation appointed and engaged the services of respondent as
commission agent. It was agreed that respondent will receive 10% sales commission on
all sales actually concluded and collected through her efforts.
In 1995, respondent received the amount of P1,707,772.64, representing her
sales commission income from which JUBANITEX withheld the corresponding 10%
withholding tax amounting to P170,777.26, and remitted the same to the Bureau of
Internal Revenue (BIR). On October 17, 1997, respondent filed her 1995 income tax
return reporting a taxable income of P1,707,772.64 and a tax due of P170,777.26.
On April 14, 1998, respondent filed a claim to refund the amount of P170,777.26
alleged to have been mistakenly withheld and remitted by JUBANITEX to the BIR.
Respondent contended that her sales commission income is not taxable in the
Philippines because the same was a compensation for her services rendered in
Germany.
ISSUE: Whether or not respondent's sales commission income is taxable in the
Philippines.
HELD: Yes. Much confusion will be avoided by regarding the term "source" in this
fundamental light. It is not a place, it is an activity or property. As such, it has a situs or
location, and if that situs or location is within the United States the resulting income is
taxable to nonresident aliens and foreign corporations.
The important factor therefore which determines the source of income of
personal services is not the residence of the payor, or the place where the contract for
service is entered into, or the place of payment, but the place where the services were
actually rendered. In the instant case, the appointment letter of respondent as agent of
JUBANITEX stipulated that the activity or the service which would entitle her to 10%
commission income, are "sales actually concluded and collected through [her] efforts."
What she presented as evidence to prove that she performed income producing
activities abroad, were copies of documents she allegedly faxed to JUBANITEX and
bearing instructions as to the sizes of, or designs and fabrics to be used in the finished
products as well as samples of sales orders purportedly relayed to her by clients.
However, these documents do not show whether the instructions or orders faxed
ripened into concluded or collected sales in Germany. At the very least, these pieces of
evidence show that while respondent was in Germany, she sent instructions/orders to
JUBANITEX. As to whether these instructions/orders gave rise to consummated sales
and whether these sales were truly concluded in Germany, respondent presented no
such evidence.

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