CIR V. TOURS SPECIALISTS AND CTA (TAX)

The well-settled doctrine is that the findings of facts of the CTA are binding on this Court and absent strong reasons for this Court to delve into facts, only questions of law are open for determination. The factual findings of the CTA are binding upon this Court and can only be disturbed on appeal if not supported by substantial evidence.

In the instant case, we find no reason to disregard and deviate from the findings of facts of the CTA.

In context, DIRECT TAXES are those that are demanded from the very person who, it is intended or desired, should pay them; while INDIRECT TAXES are those that are demanded in the first instance from one person in the expectation and intention that he can shift the burden to someone else.

Accordingly, the significance of PD 31 is clearly established in determining whether or not hotel room charges of foreign tourists in local hotels are subject to the 3% contractor's tax. As CTA aptly stated:

...If the hotel room charges entrusted to petitioner will be subjected to 3% contractor's tax as what respondent would want to do in this case, that would be in effect do indirectly what PD 31 would not like hotel room charges of foreign tourists to be subjected to hotel room tax. Although respondent may claim that the 3% contractor's tax is imposed upon a different incidence, i.e., the gross receipts of petitioner tourist agency which he asserts includes the hotel room charges entrusted to it, the effect would be to impose a tax, and though different, it nonetheless imposes a tax actually on room charges. One way or the other, it would not have the effect of promoting tourism in the Philippines as that would increase the costs or expenses by the addition of a hotel room tax in the overall expenses of said tourists.

The Court finds to exclude from gross receipts money entrusted by foreign tour operators to Tours Specialists to pay the hotel accommodation of tourists booked in various local hotels. The Court declared that Tours Specialists did not own such entrusted funds and thus, the funds were not subject to the 3% contractor's tax payable by Tours Specialists.