January 31, 1967
Ponente: Concepcion, C.J.
Topic: Exemptions from Taxation
SUMMARY:
Guerrero refused to pay the tax assessment made by the CIR pertaining to his log dealership business for the years 1949 and 1950. He argued that apart from being a mere seller of logs on a commission basis, thereby exempting him from the payment of forest charges and surcharges, he was also contending that fixed and percentage taxes and surcharges were not taxes but fees. The SC ruled that Guerrero was not exempt from paying the CIR's tax assessment, holding that: (a) circumstances would show that he had obtained the logs illegally; and (b) the collection of taxes in Sec. 315 of the NIRC pertains to both taxes and fees.
FACTS:
Antonio Guerrero sold logs to Aparri Lumber Company from 1949 to 1950. In 1954, the then Collector of Internal Revenue made an assessment and demand requiring Guerrero to pay the sum of P4,014.91, representing fixed and percentage taxes and forest charges, as well as surcharges and penalties, for his log dealership business.
Following a review at the instance of Guerrero, the CIR recommended that the assessment be increased to P5,139.17, representing forest charges and surcharges on the logs sold to Aparri Lumber, fixed and percentage taxes and surcharges as producer of said logs, and additional forest charges and sales taxes, as well as surcharges.
The reassessment was approved by the CIR. Guerrero sought for a rehearing, but instead the Internal Revenue Regional Director of the CIR issued a warrant of distraint and levy against the properties of Guerrero. This prompted Guerrero to file an appeal before the Court of Tax Appeals, which modified the CIR's reassessment by reducing it to P3,775.66, representing forest charges and surcharges only.
Both the CIR and Guerrero filed petitions before the SC to question the CTA' ruling.
RULING:
Guerrero should pay P5,138.17, representing forest charges and surcharges on the logs sold to Aparri Lumber, fixed and percentage taxes and surcharges as producer of said logs, and additional forest charges and sales taxes, as well as surcharges.
Whether Guerrero is liable for the paymentof P3,775.66 by way of forest charges and surcharges. – YES.
Guerrero: He should not be liable therefor because he bought the logs in question as an agent of Aparri Lumber and with money belonging thereto.
CIR: During the Conference Staff of the then Bureau of Internal Revenue, Guerero had claimed that he financed his business with his own money and sold the logs to Aparri Lumber on a commission basis. Moreover, he admitted having sold some lumber to other enterprises in Manila, although he had previously asserted that he dealt exclusively with the Aparri Lumber.
SC: The auxiliary invoices presented by Guerrero before the BIR were either spurious, or referred to logs other than those involved in the disputed reassessment. This, along with the circumstances cited by the CIR, clearly indicate that the logs involved in said reassessment were obtained from illegal sources, and that the forest charges due thereon had not been paid. Since these charges "are liens on the products and collectible from whomsoever is in possession" thereof, it follows that Guerrero is bound to pay forest charges and surcharges in the sum of P3,775.66.
Whether Guerrero is liable for the payment of P1,192.51 by way of fixed and percentage taxes and surcharges as producer of logs. – YES.
Guerrero: As per the CTA ruling, Guerrero is not liable for the payment of fixed and percentage taxes because the subject logs were sold by the Government to the one who had cut and removed the products from the forest; that the original sale of said logs was, therefore, made by the Government, not by the concessionaire or cutter of the forest products. This theory is based upon the premise that forest charges are NOT internal revenue taxes (Collector of Internal Revenue vs. Pio Barretto Sons).
SC: Taxes, as used in Sec. 315 of the NIRC, should not be used in its limited sense (i.e., burdens imposed upon persons and/or properties, by way of contributions to the support of the Government, in consideration of general benefits derived from its operation), but should be interpreted in its broad sense to include license fees (charged in the exercise of the regulatory authority of the state under its police power) and other charges (for specific things or special or particular benefits received from the Government).
During the pendency of the instant case before the SC, certain documents were discovered, tending to show that Guerrero had evaded the payment of forest charges on certain logs. These documents were not included in the invoices covering logs sold to Guerrero, thus showing that the said invoices were spurious; that the logs therein described must have been obtained by Guerrero from illegal sources; and that the forest charges and the sale and percentage taxes thereon have not been paid.
The SC also clarified that the Government does not sell forest products, but merely collects charges on the privilege granted by it for the exploitation of forest concessions.
As a consequence, the original sale, as contemplated in Section 186 of the NIRC, is made by the concessionaire or whoever cuts or removes forest products from public forests or forest reserves — in the case at bar, Guerrero, who is accordingly, bound to pay said sum of P1,192.51.
DOCTRINE:
No exemption shall be allowed against the internal revenue taxes in any case. On this end, one of the civil remedies for the collection of internal revenue taxes, fees, or charges, and any increment thereto resulting from delinquency is by distraint of goods, chattels, or effects, and other personal property of whatever character.
