CTA Case No. 74 (Decision)

� UIMIS � � T. � J. IO A, ri:~ ollectox of Intunal evenue , \ espondent. ~'~t\ x- - - - - � - � � - - � -a 1I his � an appeal fr the ecls1on of reapon� t Collector of Int~al ev ue dated January 27, 195!> ( nnex �o� , p. 77. rec..) ass asing the uaount of 37 . ~. as alleged de k1~y sales tax, surchar e d ~o~rOaise p alty, due fro the unre lstered part- nershlp ~011posed f petitioner d nando f. de Villa- llle doing slness W\dR e naae of the !latter alone. be parties su 1tted the case foz ecls!on on the sis of a stlpulat1 of acts tlfacta� for s ort) lc incorporated by way of aMexes certain portions f record. f the eau of Internal eveoue. These acts are he.r..lth s A a public b!c:kU.ag conducted y the urplua o- puty !salon � ernando Ula- rille ��� the suc~essful bidder for the purchase of all va le goocla located a"t - 3 uar aval ae, iuan, .-ar, fo� the of 94 , ~. 00 excluding t e foll in a �20 tons of n heeta . ' 580

� 74 .. 2. 11 oad llers ~Trucks , argo an t en t� au of ort� lcati 0 r eelpta. � (Annex � � , � ud �� ly pprovecl y t � ve......llaant nte.rprtse ( ex ). t��� ontrol C i n in -Invoice o. 1770, dat � cceasful dd nder anager ' s eck o. 13040 (Ph111pp ne 1nk. of C eree} to cover :the re tre<l deposit of ~ of t r- c as r ce, for ece t o. 7 ted r 1 22, l ( nnex " � , P� � tl acta), 1s sauec:l. inca � 11 dld no ave t e necessary fun � to cover pa,.ent of t � purchase ~lee, the ~ c ensat ng t x, �� well as t e ie r an ta- r! le for reco dttion g the goods for use or sale, e lnv!t p tit oner to prov de the ece���ry capital re- � � ired. cce te and on ay 28, ~~ . pe- ffer tloner � Vlll - !lle extcu 4td an agre nt ( nnex � ltlonJ ex �t� rJ par. 10, ti- eta) � dying t � te 1 and co lt ns t e f the � pertinent port ons � quote hereu er' 58 1

E � 74 - 3- ) y 52

cLn.;"r""�J.O�)I E o. 1 -- to re� co- t 11zin N12. t 11 �� ny und t h t ' s; 6 ,, 53

~L - .T.A. C O. 74 Upon h at t for oing nt , � F rn ndo 1111- rille a d to the ur lus ssto h ln!ng bal 0 th ch of the good th cl 1 of th co.p O$ t t x of � th r g vid c d by ff c1 1 cp � 194 ( nn x ' par. � f th ecor - Ii r c. � n ly nn x p. par. o, ti ct ) s n th n of t ic: d r to ~ov r t � & 1 0� .V111 - rille ol portion o t � oo to - ato o. , n 1 9, n th r ll � �u y 28 , 1952 ( r. 3, n e ti ion , .._. 2 , pu o p r .. ap r6i u� 1 ~ 111pp.bl y ll - ~ill� ci ru cc.;ount th 0 in lhe n f ern&nd � Aorille uu/or Jose oju n d/ r e t.rl o- juan c � y ir � of �h ic ncy t x nt .� 58 1

�4 - 6- a�ter 0 nti ned. t ount of 7 . !)31.. ��t on J n 7, 195 fro d cc ount of the f t rn 1 ev n ct t f 1 c ion n h! ..) n. p. 7 � 79 1, ro p -Invo1c X ) y ~ ... � I. 1, ltt d en 1 r port ( � � a, s), h t .) ry 27, ~ ( � � 77 � t �� �) . t 7, 1. 11 1� ���� ������� 1 . 77 � 2 --------------------- :AL � � � � � � � � � � � 3. v ' 585

ECISI~ � ,T.A. E N � 74 - 7- 'l 0 ~-~~--~~---~--~-~~------- r tal tax Tax till Due -~-------~~-~-~~-----~~---- 29 . 7 5. 1 n of 1 t1on ~~-~~-~----- T :AL � � � � � � � � � � � � � � � � � � t � �� of tn r f ct th ss s follo 1n t 11 c 1 ly t t (1 ( 2) t flr t u � oner cont n t t r1g1n 1 1 11 subj ct to t n r ctlon 1 X Co i t tr n r h for 1 0 y 1 � at ov .rn to rpl Pr p rty &1 � et1t n r r u s th t h 1 t r i corpc ency joct to t un r h .r vi 1 publlc ct o. � ich provi t t . I 11 C r r - 1��� tiona, a em: or in tru nt 1 t! o.r con� troll� the t 11 p y s c �� tax � f���� � ther c r es up n ct on. si- �� n �� � !ncius ry. sal� r inco ll:'e 0 y1 586 sg~

cD . � 74 - 8- upon !vidual& , a soc tiona, or corporati ns n a � 1n any ta ble 51nes � in u try, act v t , exc pt on goo a dit � ort d or rch sed n old or diatr t y ined by t Prest t f th !lipp� � � vn 1f th tran er fro n d t te& ~ rn n to the urplu a ratuitou � th la neve su ct 0 t 1� r r tax cl sho ld treat t or! inl 1 � nt- 1ng th t t cqui 1t1 fro h nit t vernmant not h l: 1n 1 1 p t1t1 r rt r the co ten tb t 1 t h t 0& r r "" rplu& 1 op rty 0 1 sion to F rn n o 'ill - 1 t or 1 sale or t t 1 t tio houl tr t tz-ans ctlon t n t. att n ll. o. � fin t first co,ent1o 11 - nt le. n th ir&t l c � te rplu& 0 110 s not t xa 1 in titutl � h:l& ere t d by x cutiv �2� r � ur uant to th provi tons of c i n 2 pu c c o. , and a by � x cut1 o. 1, te un � 20, 1 47, euat 'i n or in trator of th surplus 00 a ~c � ~d y th lie of hilippin from the United S at~e f r c � e a erely n agency f e over t for t e e eepln ~d/or disposal of pr rtles tranaferr Th r - � fore en the surplus go re sold or !a e 0 � it 57 sB

I� C.T.A. C a tO. 74 - 9- waa th Ph111pp1ne Gover ent th t � � 1n f et th van or th r f . 'ons1d r 9 that it oul flou� for t � govern..nt to tax it&tlf, lt beco a apparent th t said s le o th rplu& ds is not the "or!g nal aal Q taxa~l� 1thtn purvie of � - t1 n "' lB6 oft Tax c de J o equently, following t4t juris ru ence �- r, 41 o�. pp. o. x ort o. v. er, � � o. L�2927� ruuy 2 � 19 lJ avigation Co. v. tar, � � o. of t said aurplua in the pa~nt o t e corraspon 1n sales t x provided in ection l of tht tax e, i Farnan o � de Villa- brill�, t first pu ha r he eo � t ee �&5 � ourt held that t UDpo:- tion asa not �0 plated tth the elivery y the �e!gn Li !dation Co. is ion of the rplus go plaintiff ( h ng Tee). the impo.rta le d o ly after the corre n- ing dUties or a ea upon s id oods has en paid. this v1 as a e o th t eory that !le the �r oda were un er � control f the A can forces for military purpoats, 'he 9 00 s hould not p y ny tax s o th� Govern nt f Philippines. Ace rd!ngly, the taxes acczutd n tht surplus goo a he~� n qu t on, nly upon tht transfer of the o Go Ch n 1' a for c rctal purposes. ol low!ng thta doctrine f ernando P. d Vill - 588

ai- l! � 74 - 10 - A ~ille is the porte= of t ~urp s 9 o herein as c te lat d oy oction 186 of th T x Co � It follo o o:ol at on pay th ~ l s t x ars s in h ca F rnando V l lle y t .urplu � ll no oc d o h n x to et u o t ti 1 1 for f cie y n nd nt , nd f � what s t� 11 ill "'� h r aolut u st � 0t volv - on t (1} h t t n t r of th r 1 ti n 0 t 0 tit �on for vl n p t!t! n r n � �n d (2) f th1 r l ti n tn rr. ip r ci t on , h t a r of th oner' r n. n 1n th t r ln tion, it 1 n 1nd th t t 1 n re !or 0 �9 ppl 0 c hr 0 t h f ct h t t c apir lor �c � f t rov s o nd � of th - fo ot ti 1 gr nt nt r nto y and n F rn n o Vill - n pt �t ( �� p ttt1 n or v t � es nt e f (jo1nt ccount) d y r 1cJ. ive of the C de of C c:e. t cl� 2 t r o �� pz-ov! �� �� foll 1t80 �I 5 '9

� T. � " � 74 -11 .. r ot nt ~o ta...p atas cantil tr c io of F rn ndo t � ucc saful i r of urplu p i- t1 t:r eca e in rest d n nd y v � t f ich la t contri f 7l. 67. hich con 1- utet 65} of t. c pi l r quir d y th fo r to finane is purch se of he ood in esti n. h � t f the c pit 1 ( ~ th reef) or � 82.50 t d by f rn n o 0 ty nc pre o ds to ho � ch al 0 r ,. t. h nt 11 r th C<.' f.J J.l\ l proport!o � 0 - sily �r p to f r- nt. 9 tr n ! � d lnt n ~ 0 u r hi n i idu 1 r pons� 1 1 1 . od of rce). hO$ c ntractin it � V!ll - ill h v a :1 ht of ction nly. d not 1nst p - 1t1on r � o mi cr ly .tnt r d in th tr act! n nd 11 p tit 'ton r .ould v o ri l t of ction a inst t tb~d perso contr<lct 590

c.r�. E � 74 - 12 - 111 - 11 nlesa th latt r for lly ced d his rights to th � ( rticle 2 2, ode of Co Z'C . ) It y h v r e e that the an � by reapon � t ga1nst p i 1 n r pr nt x lia i- lit! for t 1 P9� 1 r le of oo nd o not arise fro t fr a statute. r, o lig tlo s er!v d fro la e not epr &U ly those ex r sa.ly th or 1 la s e of fore n hl ea vt nc eho a hat the goods e.re reb y ill lo his� n� also ol of 1n t a only erch 17 -179 , X ). 11 naactl ~ ff � id hn � ntlty, f.nt r t., n C!p on titio iacl � ln o r or t titi r nly � cr t partner lle ern lll th p rent r ostens1 le � tn � cu nt tie1p lo �� n � tl � -to p y t al u rn n - 11 11 d apose f $t i ern i l la not titioner 1 � 1r � 1n sales tax, �it u lc t o h for er have again t h 1 t r y virtu 0 a �� nts. 1 1 111 y exists, the asses ant t r of a ul n 1r ct 591

� 74 -- a a . at ernando de Villa r lle the o tensible er- e ant f.n . oae n the tra � ti s have ma e . Th ct a t nt. a st et1t1on r re l ul. l ho t �Y pe ~p ru t a re - nt 1~ t provi overn nt 60 f � l ful r venues y c r. in n of ( c� 1n t 1 r co t � t) , rt r 1 0 :vi it us t o fr as r esort 0 s to e a f ing cor in ly. $1U t p rtner 1 a � t oul n !ly folio ille 1 rr tl ntly ~h tr t 1nl ale� !t � It ul t le y uc partn r- � � ul nt r ct n X Co � nt , (c t p ti- t 1 r ns ct1 Af ct on- si ered ala p rtn r hip, 11 � � na;in p tn � or th p the 11 , h uld fir t su � fro f � t i ion r is not th proper p rty to a as � n l 1111 1 592

II - � 74 � � A. C - 14 - for t xe 1n es ion~.\ It o vio ly foll that tit1 � er c nnot el lta lc fo t � c ro is& penalty. t any r t~ . 1n view of th esse e of a co !%'0 d it n n t b vin r a th r t , he ea � lia ny o~~ 1 pen lty. lD e1s1on ollector of nternal ..ran- uary 27 , 1 ~5 . h in p ti � ner ia le r I d fi� eiency sale a hu it i I r y e sed, ith ut pron nt 0 � � � tla, hllippin o r , l 57. ociat Ju u L:I dtd no 593