CTA Case No. 1680 (Decision)

ANMM

AKPUBLIC OI THE PHILIPPINE OOURT OF TAX APPEAR QUEAON CITY :

BISLIG INDUSTHIES, INC.), CF THE PIUILIPPINES (POROERLY PAFER INDUSTRIRS CORPORATION Fetitioner

ver sus CTA CAE O.1680

COMMISSIONER OY INTHRNAL REVENUE, Respondent. Xm

DECISION

This is an appeal from an assessment of rc-

spondent imposing on the petitioner a surcharge or

#225.61,repreaenting 25% penalty for late payment of forest charges.

The faets of thia case are not controverted.

Petitioner is a domestic corporation engaged in the husiness of cutting and selling logs and forest produets from its concession. For the acnth of July 1961 respondent's foresters submitted their menthly seale

report ahowing the amount of 1,349.99 ms forest

charges due from petitioner, eame ta be paid on cr before October 4, 1961. Petitioner paid this amount in

fuil cn #eptember 7, 1961 or over = month before the

expiration of the period granted it. About a Vear

later, that is, on June 18, 1962, the Acting Regionn1

Director of Distriet No. 3, sent a prelimtnnry 5-day

letter to petitioner enclosing a B.I.R. agent's recom- mendation that petitioner pay a defieiency forest charges of P902.45 plus P225.61 as 255 sureharge The

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DECISION - CTA CAGE HO. 1680

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error appears to have been due to a new elassificatiou

of trees in Porestry Administrative Crder Ro. 32 which took effect on July 5,1961 and which was overlooked b

the torosters. On July 12, 1962 petitioner informed the Regional Director aforesaid in a letter that it

was willing to pay the deficiency but not the aur-

chsrre. On July 16, 1962 the Regional Director sent petitioner a re-assessment calling for payment ef #902,+5 as deficiency forest charges with no mention

whatever of the surcharge ef P225.61 for late payment.

On July 23, 1962 petitioner psid the deficiency of

902.45. In the meantime, a demand letter dated July

10, 1962 called for payment of both the deficiency assessment for p902+5 plus 225.61 as 25% srcharge which letter was received by petitioner on September 1, 1962.

The only question posed before this Court is the validity cf the 25% surcharge imposed by reapondent on petitioner. This question brings to mind Regulatior

No. 85 of the Depertment of Wnance that, among other things, regulates the manner of paying forest charges, the pertinent provision of vhich being Section 28

thereof, which reads as follows!

in the Bureau of Torestry, the forest heen instructed by the Director of For- eatry to forwerd the original of the Monthly Seale Report (B.F.Torm No. without the necesaity of waiting for officers stationed at the sawmill have the result of the revision to be made 2+.33) to the deputy provineial b At the end of each month and creasurer

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DHCISIOM - CTA CASE BG+ 1680

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cate of the Monthly Seal. Report to the which the amount due thereon and indi- cated in the scale repert may be paid without surcharge, which date shail not concerned for collection. Operator or mnnager of the sawaill who treasurer cn or before the laat dato on day of the month in which the timber was est officer shall delivar shall present it to the deputy provineial be later than the +5th day from the last scaled by the forest offieor and pay the forest charges without awaiting any deuand for the payment thereof. if upon the revisien made in the Lureau or Forestry, or overcharges, the necessary adjustment there ahould be found any short charges shall be made on the Monthly Scaie Report B.. Form No. i-s for the subsequent month, the tripli Satd for

It will be noted from the feregoing regulation

thnt petitioner's ferest charges are required to be paid

nfter receipt of the monthiy scale report of the

forest cfricer or forester, on which the amount payahie

is based. Payments are even subject to correeticn for if upon revision made in the Bureau of Torestry, there shoula te found any short chargem or overcharges, the

neeeasnry adjustments are mnde on the monthly scale

report for the subsequent month which is the baois ef

the next peyment. From this very manner of payment it woula seem that aurcharges are not contemplated in

ease of ahort chnrges because in that event the necessary correction i made in the next monthly scale report as the regulation itself provides. Of course

1 Now 75 days,purmant to 5ee.267 Net.Int.Rov. Feb.21959. Code in'relation to Sec.28b, Regs. No.85 of the bept.cf 1inancej .i.R. uiing No. 121,

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CTA CAAE NO. 1680 DECIBION -

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sureharges are due when the taxpayer feils to pay on

tine the forest charges collectible on the baais of the

monthly acele weport of the forest ofrieers.

In the present case, it is not controverted that

petitioner paid on time the ferest charges for the

month of July,1961 colleetible under the monthly acalo report of the forest officers. If the correct tax war not paid it was because the scale report dia not

reflect the new ro-classification, the forest officers

heving overlooked same, If petitioner did not pay

the shortage enrlier than the preliminary 5-day letter

of June 18, 1962, it was obviously because the neces-

sary adjustment vaa not made hy the Burenu of Forestry

in the monthly scale report of the suceeeding month as provided hy the regulation. Under these circum- stances ve cannot find jugtification for penalizing petitioner solely for the errors of the forestry

officers acting as deputies of respondenti. Feti-

tioner had no part in the making of the scale reports

and ell it did was to pay the forest charges on the

basis of the scale reports. Sate this Court in the cane of Fhilippine Power and Development Co., Inc. vs. Coumisstoner of Internal Revenue (C.TA. Case No. 1152, 0et. 31, 1965)

to pay the 5 franchise tax was due to contenda that he is not iiable for the sum charge, for the reason that the of P28,293.88, representing the 25% sur- "cn the third issue, petitioner faiiure

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DECISION CTA CABE NO.1680

and July 13,1955 of pereentage tax due was only 2, and in respondents.letteri datedJune.15,.1955 conaeguenco of Mhich it Mas granted a tax betveen the 55 prescribed in Sec. 259 of led him to believe that the correct rate crea1t of 39,830.76, or the difference the Tax.Code and the.2% provided in its franchise. respectively wnich

Having aeted in'good feith and having been misled by the responient, it would not C.7.A.Casc Ho. be fair and equltable to impose upon the petitioner the 25% surcharge. of Ilagan Electric a Iee Pinnt, Inc. vs. The Commiamioner of Internal Revemue, Ceurt held: *This contention is well teken. 1178,May 18,196,thi In the case

respondent s depnty regaraing the rate of tax applicable to nell ros.Co.hii.7vs Collector of internal Aevenue G.No.170,Dec.26,1963. deputy that the former vas chise tax. utable to the misteken view of in peying 2x franchise tax petitioner wam scting in good wonld not be just to penaiizo which it has been led by re- petitioner paid the 27 fran- chise tex in accordance with the view of .respondent' liable only Tor the 2% fran- be said that the failure to pay the correct smount of tax is clearly and direetiy attrib- petitioner's petitioner with 25surcharge for failing into the error to spondent's demuty. faith. iIt is undisputed,that Naving thus acted it it may, therefore, gross receipts. See Con-

WnREvoRl, the Court finds petitioner not liable

for the 25% surcharge, equivalent to 225.61 imposed by the Commiasioner of Internal Revenue and hereby

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CTA CAaB NO.1680 DECISION

reverses the latter'a decision.

SO ORDHRED.

Quezon City July 22, 1966

W RAMON L.AVANCSRA Asaocinte Judge

WR CONCUR

Presiding BChAn m. nAo TMAET Juage

ETIANISLAO R.ALVAT Baus&a)( Associato Judge/ CLNA dC

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