G.R. No. L-24405. August 27, 1968
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. DINGALAN FOREST PRODUCTS CORPORATION, AND THE COURT OF TAX APPEALS, RESPONDENTS.
CONCEPCION, C.J.,:
Petition of the Commissioner of Internal Revenue to review a
decision of the Court of Tax Appeals, the last two paragraphs of which read:
“In view of the ruling of this Court in the case above-quoted,
and it appearing from the evidence of record that of the P48,767.73 sought to
be refunded, the sum of P27.92 was not assigned to the petitioner, and the
amount of P3,065.86 represents sales taxes on hand-sawn lumber, the sale of
which manufactured products was properly treated as original sale effected by
the petitioner, we hold that the petitioner is entitled to the refund of the
sum of P45,673.95.
“WHEREFORE, the respondent is hereby ordered to refund to the
petitioner the sum of P45,673.95, without any pronouncement as to costs.”
The case had been submitted to said Court for decision upon a
stipulation with the Dingalan Forest Products
Corporation – hereinafter referred to as the petitioner – to the effect:
“1. That the
petitioner is a corporation duly organized and existing under and by virtue of
the laws of the Philippines, with offices at the ground floor, Ledesma Bldg., Intramuros,
Manila; while respondent is the Commissioner of Internal Revenue, duly
appointed and acting as such, with offices at the Finance Building, Manila;
“2. That
petitioner has, since October 30, 1957, to date, been the holder of forest
concession located in the Municipality of Dingalan, Gabaldon, and Baler, of the province of Nueva Ecija and Quezon, respectively;
“3. That during
the period from January of 1960 to January 19, 1962, the petitioner cut and
removed forest products from its aforesaid concession and paid the
corresponding forest charges thereon to the Government pursuant to the
applicable provisions of the National Internal Revenue Code;
“4. That
petitioner sold the said forest products to its various customers who were
billed in the sale invoices the corresponding sales tax but the latter assigned
to the former, as shown by the attached annexes ‘A-l’ to ‘A-50’ whatever refund
may be due them by reason of the payment thereof to the respondent, except the
amount of P27.92 representing the sales tax billed by its customers who did
not make the necessary arrangement;
“5. That out of
the sum of P48,767.73 representing sales taxes paid and involved in this case,
the amount of P3,065.86 represents taxes billed to petitioner’s customers on
its sales of hand-sawn lumber;
“6. That in the
sale of said forest products by the petitioner, the latter paid the sum of
P48,767.73 to the respondent in the concept of percentage or sales taxes for
the period from April, 1960 to January 20, 1962, per Annex ‘B’ hereto attached
and incorporated herein as part of this Stipulation of Facts;
“7. That
petitioner requested a refund of this said percentage or sales taxes but the
respondent denied the same;
“8. That the
parties confine the issue of this case on the question of whether or not the
petitioner is entitled to the refund of the said amount of P48,767.73.”
In due course, the tax court rendered its appealed decision decreeing
the refund to petitioner herein of the sum of P45,673.95, upon the ground that
the sales taxes prescribed in the National Internal Revenue Code are imposed
only upon “original sales;” that the forest charges collected by the
Government from the petitioner were “payments for timber taken from public
forests,” in the language of this Court in Collector of Internal Revenue v. Pio Barretto and Sons;[1]
that the “original sales” of the timber to which said sum of
P45,673.95 refers were, therefore, those made by the Government to the
petitioner; and that the sales of said timber, made by the latter to its
customers, are not “original sales,” and, hence, not subject to sales
tax.
The doctrine laid down in the Barretto
case was, however, revoked in Cordero v. Conda,[2]
in which we held that “forest charges are internal revenue taxes, whether
one labels them taxes on property or excise taxes, i.e., taxes upon the
privilege of cutting and carting away timber and forest products,”
which, accordingly, are not sold by the Government to the forest
concessionaire.
In support of the theory adhered to in the decision appealed
from, the Court of Tax Appeals cited its own view in the case of Antonio
Guerrero v. Collector of Internal Revenue (C.T.A. Case 286), then on appeal
before the Supreme Court. Again, said
view of the Tax Court was, on January
31, 1967, rejected and reversed by us in Commissioner of Internal
Revenue v. Guerrero and Guerrero v. Commissioner of Internal Revenue.[3]
We quote from our decision therein:
“As regards the second item of P1,192.51, representing fixed
and percentage taxes and surcharges, as producer of the logs involved in the
reassessment, the Court of Tax Appeals held that Guerrero is not liable therefor, upon the theory that said 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; and
that, accordingly, Guerrero is not liable for the payment of the corresponding
fixed and percentage taxes thereon. This
theory is based upon the premise that, whereas in Collector of Internal Revenue
vs. M. R. Lacson, G.R. No. L-12945 (April 29, 1960),
we held that forest charges are internal revenue taxes, this ruling was reversed
in Collector of Internal Revenue vs. Pio Barretto Sons, G.R. No. L-11805 (May 31, 1960).
“It is true that the dispositive
portion of our decision in the first case expressly sustained the concurring
and dissenting opinion of a member of the Court of Tax Appeals in the appealed
decision thereof and that the writer of the opinion maintained that forest
charges are internal revenue taxes. A
careful perusal of the text of the decision of the Supreme Court therein shows,
however, that said dissenting opinion is not the ratio decidendi
of the aforementioned decision. It
should be noted that the Collector of Internal Revenue contested the
jurisdiction of the Court of Tax Appeals to entertain the appeal taken by Lacson from the assessment made by said officer involving
forest charges, and that the Supreme Court upheld the authority of the tax
court to hear and decide said appeal, because the issue therein was the validity
of said assessment. From the
viewpoint of the Supreme Court, this issue was decisive on the question of
jurisdiction of the Court of Tax Appeals, regardless of whether forest
charges were taxes or not.
“At this juncture, it may not be amiss to advert to a problem of
semantics arising from the operation of Section 1588 of the Revised
Administrative Code, the counterpart of which is now Section 315 of the
National Internal Revenue Code, pursuant to which:
‘Every internal revenue tax on property or on any business or
occupation, and every tax on resources and receipts, and any increment to any
of them incident to delinquency, shall constitute a lien superior to all other
charges or liens not only on the property itself upon which such tax may be
imposed but also upon the property used in any business or occupation upon
which the tax is imposed and upon all property rights therein.’
x x x x
“The enforcement of this lien by the
Commissioner (formerly Collector) of Internal Revenue, has often induced the
parties adversely affected thereby to raise the question whether a given charge
is a tax or not, on the theory that there would be no lien if said question
were decided in the negative. In connection
therewith, said parties had tended to distinguish between taxes, on the one
hand – as 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 – and 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 – on the other hand.
“It is high time to stress that the term ‘tax’, as it appears
in said Section 1588 of the Revised Administrative Code and Section 315 of the
National Internal Revenue Code, is used in these provisions, not in the
limited sense adverted to above, but, in a broad sense encompassing
all Government revenues collectible by the Commissioner of Internal Revenue
under said Code, whether involving taxes, in the strict technical sense
thereof, or not. Thus, under the
heading ‘injunction not available to restrain collection of tax’,
Section 305 of said Code – which is the first provision of Title IX (entitled
‘General Administrative Provisions’), Chapter I (entitled ‘Remedies in
General) thereof -provides:
‘No court shall have authority to grant an injunction to restrain
the collection of any national internal-revenue tax, fee, or charge imposed by
this Code.’
“Similarly, under the heading ‘Civil remedies for the collection
of delinquent taxes,’ Section 316 of the same Code ordains:
‘The civil remedies for the collection of internal revenue taxes, fees,
or charges, and any increment thereto resulting from delinquency shall
be (a) by distraint of goods, chattels, or effects,
and other personal property of whatever character, including stocks and other
securities, debts, credits, bank accounts, and interest in and rights to
personal property, and by levy upon real property and interest in or rights to
real property; and (b) by judicial action.
Either of these remedies or both simultaneously may be pursued in the
discretion of the authorities charged with the collection of such taxes.
No exemption shall be allowed against the internal revenue taxes
in any case.’ (Underscoring supplied.)
“In other words, the National Internal Revenue Code makes a
distinction between taxes, on the one hand, and fees or charges,
on the other; but as used in Title IX of said Code, the term ‘tax’ includes
‘any national internal revenue tax, fee or charge imposed by’ the
Code. And it is in this sense only
that we sustained the view taken in the aforementioned concurring-dissenting
opinion in Collector of Internal Revenue vs. Lacson (supra). Hence, in the Barretto
case, it was held that the Government does not sell forest products, but
merely collects charges on the privilege granted by it ‘for the exploitation
of forest concessions, i.e., charges for the right to exercise the
privilege granted by the Government to the licensee of cutting timber from a
public forest or wrest reserve’. In line
with this view, we stressed in Cordero vs. Conda, G.R.
No. L-22369 (October 15, 1966), the declaration made in Cebu
Portland Cement Co. vs. Commissioner of Internal Revenue, G.R. No. L-18649
(February 27, 1965), that a forest charge ‘is a tax not on the minerals,
but upon the privilege of severing or extracting the same from the
earth,’ although strictly a fee for something received is not a
tax. As a consequence, the original
sale, as contemplated in Section 189 of the Internal Revenue Code, 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.”
We find no plausible reason to depart from this ruling.
WHEREFORE, the decision appealed from is hereby reversed
and another one shall be entered dismissing this case, with costs against
petitioner Dingalan Forest Products Corporation.
IT IS SO ORDERED.
Reyes, Dizon, Makalintal,
Zaldivar, Sanchez, Castro, Angeles, and Fernando, JJ., concur.
[1] G.R.
No. L-11805, May 31, 1960. See Resolution of August 31, 1960.
[2] G.R.
No. L-22369, October 15, 1966.
[3]
G.R. Nos. L-19074 and 19089.