CIR v. Magsaysay Lines, Inc.
(Short title)
G.R. No. 146984 | July 28, 2006
Petitioner: COMMISSIONER OF INTERNAL REVENUE
Respondents: MAGSAYSAY LINES, INC., BALIWAG NAVIGATION, INC., FIM
LIMITED OF THE MARDENGROUP (HK) and NATIONAL DEVELOPMENT
COMPANY,
DOCTRINE
FACTS
- Pursuant to a government program of privatization, The NDC decided to sell
its National Marine Corporation (NMC) shares and 5 of its ships.
- The NMC shares and vessels were offered for public bidding. The terms and
conditions were that the winning bidder will pay a VAT of 10% on the value of
the vessels.
- Magsaysay Lines offered to buy the shares and vessels for P168M. The bid
made by Magsaysay Lines was for the new company to be formed by it
together with Baliwag Navigation and FIM Limited.
o The auction was awarded to Magsaysay Lines.
- The Contract of Sale was executed. Paragraph 11.02 of the contract stipulated
that VAT, if any, shall be for the account of the PURCHASER.
- As per agreement, the Letter of Credit previously issued by Magsaysay as
bidder’s bond will be considered as a security for the payment of VAT, if any.
- Magsaysay Lines, filed a formal request to rule W/N the sale of vessels was
subject to VAT.
BIR: -Held that the sale of the vessels was subject to the 10% VAT.
- NDC was a VAT-registered enterprise, and thus its transactions incident to its
normal VAT registered activity of leasing out personal property including sale
of its own assets that are movable, tangible objects which are appropriable or
transferable are subject to the 10% [VAT].
- NDC drew on the Letter of Credit to pay VAT.
- Magsaysay Lines filed a MR. DENIED. Thus, filed an appeal to CTA.
- Magsaysa Lines prayed for the reversal of the ruling and a refund.
- CIR opposed the petition, argued that:
o VAT is imposed on any sale or transactions deemed sale of taxable
goods including capital goods.
o The sale of the vessels were among those transactions deemed sale.
CTA: -The sale of a vessel was an isolated transaction, not done in the ordinary
course of NDCs business, and was thus not subject to VAT
-The sale of the vessels could not be deemed sale, as the transaction did
not fall under the enumeration of transactions deemed sale.
CA: -REVERSED. While agreed that the sale was an isolated transaction, not
made in the course of NDCs regular trade or business, it nonetheless found
that the transaction fell within the classification of those deemed sale.
ISSUE/S
1. W/N PEDCo has right over the article “The True Story of Mrs. Rizal”.
RULING & RATIO
1.
- YES
- Sec. 5 of Act 3134 provides that:
o Lines, passages, or paragraphs in a book or other copyrighted works
may be quoted or cited or reproduced for comment, dissertation, or
criticism.
o News items, editorial paragraphs, and articles in periodicals may also
be reproduced unless they contain a notice that their publication is
reserved or a notice of copyright, but the source of the reproduction
or original reproduced shall be cited.
- It is very apparent that the 1st paragraph is limited to a book or other
copyrighted works, and, hence, that it does not apply to the publication of the
article now in question.
- However, the exception of the 2nd paragraph can be applied.
o PEDCo notified Alindada "that we reserve all rights and you infringe
on them at your peril," and that after receipt of the notice, Alindada
published the article, without giving "the source of the reproduction."
- Thus, articles mays be reproduced UNLESS:
o They contain that heir publication is reserved; or
o They contain a notice of copyright
- In the instant case, the PEDCo did not give notice of its copyright, bacause
that it did not have a copyright, but it did notify Alindada that in the publication
of the article "we reserved all rights," which was legally equivalent to a notice
"that their publication is reserved."
DISPOSITION
All things considered, we are clearly of the opinion that the judgment of the lower court
should be affirmed, with costs. So ordered.
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