CTA Case No. 155 (Decision)

fU I LUI I OP' I 1< IIILIPPI~P.I CUUH.l OF 1 \. ~~&l...::i M.Al\llL4 I~LIG Petit�ion r� �, - versus � c.r.A. � � 15~ C iL T n�t. x- � - - - � - - - � - - � � - � �X Th r espondent aa..ssed agalnst t e tttloner the su� of 182, 34~.00. it ize �� f llo �~ 1. Def!.clency sales tax l . ~~. 175,681. n sales of logs to buyers in .Japan 3~. 13�.2� f June 14, 19~1 to June 19, 19~3, �!th an a~gregate selling price of 2,810,900. ; ----- surcharge ------ 2. eflc1ency sales tax ~ . 330.96 on sales of lwaber to buyer� 1n ManU� 1 . 332�74 __6il(,.j..6._6..,.3�,.,...,7_ and Ce.bu fr� the first quarter of 1951 te tne lat arter of 19~ --�- ~ ~ au.rcharge ------ TOTAL ----- The aaMI nt !a baaed on ;.;,ection 186 o! the - tional Internal venue Code, as a ended y �public Acta os, 588 and ~. ~sing a rcentage tax of on original sales of foreat products, and ect1 n � which t.poses a surcharge of said tax, Contending that t e asaesa nt is co trary to law, petitioner has appealed fro the ee a on of 55

cD.ErC.lAS.I c � � 1~~ - 2- respondent. e shall ftrat t ka up the aaaaa� ent in eon� ne~tlon tth t ht ~hip nt$ of loga to Japan . The tssua is heth�r or not t ales of log' to uyers in Japan w.ra ef! c tad 1n th ~hilipptn s so as to taxable hera , or in Japan an � th refore , non-taxable. fro the stipulation f cts sub itted Uy the putiea a~the nidonce adduced during t he 811ring o the case, t a~p ars thGt th cont:nc s of s 1 era negotiated y pet itioner's a nt in J p1n; that the eon- tracts of aala we~� conf!r ed y ald agent oy ~ ans of purchase notea sent to the aallara and sellar's note to the buyttrSJ th t th logs era shipped either under ter � F. � � 1111 � urigao. or c. I ., isll � ri- IOJ thilt by the ta:r s of the ill of lad n the logs era "~onsigned to the ord r of the s ller (nottfy r es� pe~tive buyers)�, t a all freight eharg s were paid y the yar J th t in ship nta un er t ~ s P.o.a. 1al1g, th logs re insured y th� bu ers; th t in sht ants under tar 1 c. ~ I . oillig. t � logs era insure by the seller, pet itioner hareinJ and that the billa of lain � insuran~e p l"cie t ken n tht n of the seller, and ot rcial n �hipping docu� nts . .re indorsed in blank and p~ en~ed to the b nk 1n antla for collection throu h ho the fore gn buyers opened letter of credit .~ � � rae wit resp ndent that , in the c ircu � stances stated above . title to the logs shlpp d abroad passed fro the teller to the foreign buytrs in the 559 ..

�~c~- � l 5 -- 11 pin � � t �f rc - tic � 1�� 0 v c �� t � � c fc 1 1n ~ eller ot f � is to r ta 1 vll � vi a � � � 1 ly f r yer o ti � instant ease. ave o lp the lo s passe 1n � 11 p ln r 560

� 15 -- eelle:t to t n buyer use fntvht char t� nta re y � bu se cases ere - en by t eller t � re - of t � ta if � � is :re f pin~ oc le letter� o er - � f re t. . . 561 5~4

c1 � 155 c ��� -~ - 1 !>5,' here �t as helds t Aff y the upre Cour in G. � o. L�l 131� r 30. 19~7. . 562

E o. 1~5 - 6- � A p ntl of t on h t lie c o. c 1n h ff ct of cl ory t t c ct only � r 1 tin to ut y1 icle n � r t n ct! n 1 1~ f y$ d li �n ct on 1 6 1c pu c c up ( }t t per c- j t o lB eont n - ct o. 1612. J 1r on . c. 9, th n t n � ft r t n nt o ct on 1 y p ct � 1612. 11 p ro d of t cl n r ct n 1 - 18 of the nu Cod ct r r or pr - cer. rr sp ct of ny pping r n ch y influ nc n th tr ns r o p 0 t- xported, r X :pt fro ta � t is that action f Co

en thel' - 56 1 S~l

- 8 .. � a o taxatt n any nt reeet by a tax� pa r fro the �r nts of t il p 1n � or of the or ! ng th le t 565

.TJ.AS.l CA-SE � 1~~ - .. did n h v the power to tax �th !nstru ntaltt!�� of t v�ry o 1: nt whic:h ught f.t lnt.o xi&t�ne � n1at zu 1 ' lon tr v~ltd after ~ 1nde nd nee. tion ho tax t o 0 t=� t lllpp!.n � 0 priv te in v 1 wit u. ~ tn�tr ental1ty f t nt � I Y8J.' t fl~ �� tion n r expr st prov1si n of la 'Or ra y t- er. t.he two eo " trf. �� .. e ere not a are of any 1 t 1 � � tr s ct! � with t u. S .. �� � y x utive treaty, the .illppina uov r nt 8 a 1 ited tax ex yti ' o th l1 :tted nt nd tt avy tn t h u ap xecutiv A t en . ' ,, ses Agr 566 557

EI I � C.T.A. C NO. 1&5 - 10 - A ~ aory ading of paragraph 4 of rt1cle lV of t � Execut!v gree e t will reveal that the ex- � ptton fro any proc�ssin; or intern 1 tax f the Govern t of the Un ted St tes , or any d part~ nt or gency th r of. ppl to rt cles 1 porte into the h l!pptne and intended for us by such Gove nt . or by ny depart ent or ncy th�r f. r � exe !on do � not p ly t tiel & s 1 in the Philippine t the � � v rn nt for of the s true with r & ct to th exe t on provided in Art cle V of the a&et Agr e� ent. T � t1cle& nicb are authorized to exe t un er s A~ en re those hlch are con ign o, or deetin for, the Unlted S t a uthor t1 f r x- cl &tv n th construct on , ten nc � o r - tion or d f ns of th hr t.e 1 pp!n � d crib� rt cl I . C rt inly, the Ph 1 p in ot nter nto a tr aty agr n conn ction !t th t n of er c n s n fore 9 c untri �� It f lo & t t t t lo n th hil ppin y p t t oner to th u. � r y for th of ~h 1 tt r 1n J n not nt tl d o xompt on fro t t x. T � s c d te cont te y p t1t1 n r 1 t s to the f!ciency ales tax n sales f lu r to .v. � in anila and fro th first qu ~t r o 19 1 to t r of 195 in t � su of ,s .9 , pl � 2 unting o 1, S2.74, or a tot 1 of 6, 663.7 � ;. . 56 7

c �C�IS�! o. 155 - ll - ring the h ring of th c � ~ounsel for r spon� d nt itted th t there �a n error n th co U� t ation 0 the def c ency sal tax an urch r � in c onn ct!on th do. stic les. pond nt , t&t defie ney 1 ' t x . nd - tt d yr n 6. 626. 65, t d of 6.66 . 70. rc; Ev nee p.r sented by t!ti n r to t hat of lo s n r to yers. t off c in 1 9 r ly lo t 0 an. 1 .1" nd sued th eorre pond n pr vi ion 1 inv c ndi~ t ng th r n st t of t pro- s llin c� t in tnt pro 1n 0 c - in h 0 1n l1 .r u d in f lin t r turns f r 1 s t r o � Th 1 ctu lly y th n l ff c f r 1 ed th ctu 1 11 t fin 1 oic s. In t llin pric in c t d tl vi lon 1 vie n XC 5 t ct 1 lling r e f n1 e:. In t � ctu 1 11 - nts c of h in t v It r that t d:l.ff r nc t h 0 1 n 1 v c nd t al lnvo c � r rror f. ric in in sur ~ nts f t lo n !u r. ur nt1r r o fro the 1st qu rter of 1 51 arter of 19~. the exc ~ of the ount ho ., 56 8

� 1~ - 12 - t � provisional inv tees over t � nt1 sho as the actual selling prices a oun ed to 1 6,026.3 , to collec fr peti� tioner the of 6, 626. 6 as f ci cy lea tax aod rcharve. evi ne e & pre aente~ by r 1 ndent to eon� trad!ct the ev nee pr 1 n d by t i t i ner . Upon t evidence of r ec rd, t x le r 1 selling prices of the 1 a n r o t o i la and Cebu yers r� thos in t 1 1nvotc�� n n t t � 0 1n th 1 onal vo ce � Pet � tlon�~ di ot, t fo the eces ary djust t in ts ok n recorda an4 ln ts sale t r turn o a to fl c c r- rect gross sell pric s of lt. l of 1 lu r. It ae rror for r n nt to cons! r h u of 1 part of the 0 111n prices of the logs r sold by p t ion � th ����� nt th f c y le t X n said a nt c ot. � In t 1r """"'"'"... �c for r pon nt v asked. the at o 1 Ccurt to pay t � su f 10,000.00 � � co � u rt of hich they alleg da �(d) at tit n p t f th a dit on 1 �� penalty 1n extrajud c it� viol ti n of sect1 na the Tax Cod � �� nal of the s Code. on t lnt. � 569 55b

DC I � 1:)5 C.T.A. - 13- e have ex tined the reco s of the c d te~ 1ne ether or not there h d en a co o tse val! ly entered tnto bet n t � p ies in r� rd to the suppose vi la .1 n y tf.tio er of the pr i ion of ect!ona 183 a d 186, nallz n .t'o:t tion �� of t � venue Co � h v fou d � In his d - titioner; �xh. c:Laton of epte %' 27, t te p 3, espon nt),. this ia bat re po bo 1 you desire to extraju tcial y aettlt th anal 11 1l tie 1 ing ro your afore aid violat on � you ay pay t e penaltr of 1 � � � failure to p y the sa es tax &i x x x . � e do not ere fin nt n re- oartl to th of 10, ich is ap 1 1 to tbla Court. Th t port! l�tt r of re a ove, as ffer o.r a ug $t1on mad to tltl n r o c r ise the latter'� all d n 1 li bilitt � II It o a not . f all under t � c ~ gory of a cision of respo d rt within the an!ng of ct!on 7 of publ c o. 1125 11hlch y appe to th1 Court. { Ang 1 araos v. au of lnt n 1 evenue , � � � � 229, arch ~ . 19~6J U iverslty of t v. ol' c o -� ~onal ration, epte ber 1 , 1956.) h r fo titionv was rt t n not lu in t .. is at �.r in t appeal �� it canno by offer co which 1a not accept � to it . 570 sss

c0 .�r\,.A!S.I - 14 - F , th dec1�1on nd petit tone �ppealed r ia r� y h re y o.r erad to pay t of 17 , 1.30, repre- tentitl 1c1 ncy &ales ax n surcharg n ehip- nts of 1 gs o yer Jep n er ter ��� une and c. I 1 11 , cover!n t 1~01 to Jun� 19 , ~3. Th nn <1 tt1e ��l � 1 n to 6. 626. 6 11 et aa �� 1th c:oe tit ()l �� nil , 571 u ��~ ss4