G.R. No. L-13186. January 28, 1961
BISLIG BAY LUMBER COMPANY, INC., PETITIONER VS. COLLECTOR OF INTERNAL REVENUE, RESPONDENT.
PADILLA, J.:
Bay Lumber Company, Inc. seeks a review under section 18, Republic Act
No. 1125, of that part of a judgment rendered by the Court of Tax
Appeals on 9 October 1957, ordering it to pay the Government the sum of
P175,681.30, as deficiency sales tax and surcharge on shipments of logs
to buyers in Japan from 14 June 1951 to 19 June 1953 (C.T.A. case No.
155; Annex C).
On 27 September 1954 the respondent assessed
the petitioner pursuant to section 186 of the National Revenue Code, as
amended by Republic Acts Nos. 588 and 594, as follows:
1.
sales tax on sales of logs to buyers in Japan from June 14, 1951 to
June 19, 1953, with an aggregate selling price of P2,810,900.0025% surcharge 2. 25% surcharge
On
29 October 1954 the petitioner requested the respondent to reconsider
the assessment on the ground that with respect to the first item, title
to the logs passed from the petitioner to the foreign buyers outside of
the Philippines, hence such sales of logs were not subject to tax, and,
with respect to the second item, the assessment should be based on the
final invoices covering the actual selling price and not on the
shipping tallies or mill invoices covering the estimated selling price
of lumber. On 16 June 1955 the petitioner received a letter from the
respondent dated 3 June 1955 denying his request for reconsideration.
On 13 July 1955 the petitioner filed in the Court of Tax Appeals a
petition for review of the respondent’s assessment (Annex A). On 24
August 1955 the respondent filed his answer to the petition for review
(Annex B). After hearing, on 9 October 1957 the Court rendered judgment
modifying the decision of the respondent and ordering the petitioner—
* * * to pay (the Government) the sum of P175,681.30, representing
deficiency sales tax and surcharge on shipments of logs to buyers in
Japan under terms F.O.B. and C. & I., Bislig, covering the period
from June 14, 1951 to June 19, 1953. The deficiency assessment on
domestic sales of logs and lumber amounting to P6,626.65 is set aside.
With costs against petitioner. (Annex C)
copy of which the petitioner received on 2 November 1957. On 2 December
1957 the petitioner filed this petition for review in this Court.
The petitioner’s appeal is only from the assessment of deficiency sales
tax on sales of logs to buyers in Japan from 14 June 1951 to 19 June
1953 amounting to P104,545.04 and 25% surcharge amounting to
P35,136.26, or a total of P175,681.30. The findings of the Court of Tax
Appeals with respect thereto are:
From the
stipulation of facts submitted by the parties and the evidence adduced
during the hearing of the case, it appears that the contracts of sale
were negotiated by petitioner’s agent in Japan; that the contracts of
sale were confirmed by said agent by means of purchase notes sent to
the sellers and seller’s notes to the buyers; that the logs were
shipped either under terms F.O.B. Bislig, Surigao, or C. & I.,
Bislig, Surigao; that by the terms of the bills of lading the logs were
“consigned to the order of the seller (notify respective buyers)”; that
all freight charges were paid by the buyers; that in shipments under
terms F.O.B. Bislig, the logs were insured by the buyers; that in
shipments under terms C. & I., Bislig, the logs were insured by the
seller, petitioner herein; and that the bills of lading, insurance
policies taken in the name of the seller, and other commercial and
shipping documents were indorsed in blank and presented to the bank in
Manila for collection through whom the foreign buyers opened letters of
credit. (Annex C.)
In Misamis Lumber Co., Inc. vs.
Collector of Internal Revenue, 102 Phil., 116; 56 Off. Gaz., 517, where
the petitioner shipped for export on board foreign merchant vessels,
lumber and logs purchased by foreign buyers established abroad, F.O.B.
(free on board) Misamis City port, the petitioner defraying all
expenses incurred from the sawmills to the loading on board the
vessels, the buyers paying in Manila all freight and insurance charges,
and the price; and in Western Mindanao Lumber Development Co., Inc.,
G.R. No. L-11710, 30 June 1958, where the facts are similar to the
first case, except that the loading was made in Basilan or Cotabato,
and while the price was paid in Manila too, payment was made upon
presentation of the corresponding invoices and bills of lading to the
local banks where the buyers had opened letters of credit, after the
various shipments had been made[1]
this Court upheld the legality of the assessments for sales tax under
the provisions of section 186 of the National Internal Revenue Code, as
amended by Republic Acts Nos. 588 and 594, made by the Collector of
Internal Revenue. The facts in the case at bar are not different from
those of the two cited cases and nothing would warrant a departure from
the ruling laid down therein.
The fact that, as pointed out
by the petitioner, it has a legal representative in Japan whereas the
buyers have none in the Philippines to whom the logs could be
delivered; that all the shipping documents such as export sales
invoices, export entry, export license, exchange control license,
certificate of inspection by the Bureau of Forestry, and certificate of
origin together with the bills of lading, were all issued in the name
of the petitioner as exporter and not of the Japanese buyers; that the
logs were consigned to the petitioner or its order; and that in all the
bills of lading made by the petitioner covering shipments of logs to
Japan there were drafts attached to the bills of lading and the amounts
in the drafts represent the selling price of the logs shipped to Japan,
do not necessarily prove that title to the logs passed unto the buyers
in Japan and not in the Philippines, thereby exempting it from the
payment of sales tax. They are mere schemes to ensure the performance
by the buyers of their obligations under their contracts.[2]
As the Court of Tax Appeals held,” * * * ownership in the logs passed
in the Philippines from the seller to the foreign buyers because the
freight charges were paid by the buyers; the shipments were insured by
the buyers (and in those cases where insurance was taken by the seller
the policies were indorsed in blank and delivered to the agent in
Manila of the foreign buyers, which has the same effect as if the
insurance was taken by the buyers); and, what is more important, the
bills of lading and other shipping documents were indorsed in blank by
the seller and presented for collection to a local bank with whom the
foreign buyers opened irrevocable letters of credit. Therefore, neither
the fact that the bills of lading in this case provided that the logs
were deliverable to the seller or its order, or that a draft was
invariably attached to each bill of lading, is of legal consequence.”
The judgment under review is affirmed, with costs against the petitioner.
Paras, C. J., Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera, Gutierrez David, Paredes, and Dizon, JJ., concur.
[1]
In these two cases the shipments were made before the enactment into
law of Republic Act No. 894 on 20 June 1953, providing “That with
respect to goods or products shipped or exported abroad, no percentage
tax shall be levied thereon irrespective of any shipping arrangement
that may be agreed upon which may influence or determine the transfer
of ownership of the goods or products exported.”
[2] Article 1503, new Civil Code.