CTA Case No. 1266 (Decision)

j REPUALIO OP THE HILIPPIRES U TAX AFFNS Quegon Catey

8 46d

0O.O HILIPTNE PANG

b

Petitierwppelo

Leae

-veraua.-- C..C66

INTEAZ RVGNUE ACTIG COOIU Hes ponddent.

X---- ---..

DEGIGION

Augrt 20,1962 the rpondont ad againet

he petonm th m f 9786.5 n meoi beoker

peroontege x for the perlod frn 1957 to 196l, which out

include he delinqueny surcharge af 25 nd the 5 fr

Fenalty. he wek thercartor,or on Augurt 7,1962ano hor nsont e mcde against petitioner in the a of

3525329 r the e t and aohrges covering the

perled ron 1954to 1950.Petinethrough 1a onnol

soucht a uinvetigetion of the cane to enshle it to roont

evidence At the same tie lt roquestod that collootion

of the ounta asncsood bo decerrd for which ie cffere to

Hile the necesaary bond. As no ely wn reoeived fr ro

pondet and having baen iuored thet ollcction f the aforeaid amounts would be enforcod by dintraint and lew petitioner filed ite petitio for revieu with thia Gourt on

Augut 23, 1962 with motion for the iange cf an orde

apondng the eollootion of the oaid tux and cnjoining

rojondet and hia repreoentetivs hom euforalng te aoo.

Artor hering. this Court ranted the moton Yor the

isounee of an order suspending the aalleation of the t

--.. 35 8

DBTBG GC G6

-2-

upon the 111ing and aprovdl or a urety bond for 300,000.00 to soc pt f tho m of 9786.5 ad 384253.29 ovored by the twe osanente Sco Reoclutlon af aug 3l 1962 motion Por reoonsideration denied by Reoolution dated Kov.1l1962. Upon the f1ing and approvol of the aret bond fr 300000.00n crdor was sued on August 3119 enjoining the reaponlent from enforeing collection of the tat

in quention ponding final decision on the aype l

Before tha one oold bo hord cn the merito another - eonomt w mnde gutnm petitionr the om of 710924

repreenting comorlal brokers peroontago ta and pennltieg for the yeara 1951 to 1959. For thda reanony petitioner iled n ended petition for roview to inolve this last aosesanent

and or ih another muety bond for 28090.00 wes 3lod to socure itm pynont pending finl doteraintion of the cae

After trial, the case wos muhmtttod for deeilon by the

Torties aolely on tho insue whether cr ot petiter ding he eriod 1951 to 196w cooroial bror in ite

relation with the Minalbagn-Iabela Fugr Cogay Ino. here-

inrter rotered to as BGo fron tch it rooelved conpon-

etion fr ite orviees a allogod nnger ar the bunines

aft'atro ot said cupany.

The ovidoneo shos that peti tioner entered into a con- raot f managont with nsc under wdeh petitloner an mana- er wma ontrute ith the genercl enegenent ond condot or the bas incaz affatre f sco In conidratim of the ervioon f petiticner undertoole to pey a opensatian of lr lg ll ite o nolsh es and other reccipta md ateturgeronto. The clronetanco

35 9

CTA.C.16 90791

3

ding to the apolntnt of petion a mnger ol nisc

snd tho zenans therofor ne stated tn the and of coun-

ael for petstloner and not being dipted, are guotodl belo

for gorventmoes

y gando LopcSr rnsto Gypr Jone Sostus osnc rh 91951 a goup of ptora hooled 080 Tusaye 10000 and oparaton of the bt Curlog leviiis anl others FOW nt hevin

ISE0U Tglency in he faooy

COT eperationnt

A Laters Annt 1957

Booatibe UTS C 2GIC

ahe

E C0a

TS oporawonEn

a Pee eho W mtmo0lino E doyee and Lboreea traveling 2010r1030 corennea hea be bone ersonnolg afii

foo ippdno Pnt Invatn CoIno honld be ig of all the gro neoney alce nt h forh 9195 of both owporattorm agroed that the mnagoomt onneopmhanon a other regepte md da Agust17195tho od f o

bngnnIaabele So Nontin eivil sotion otod TA sUG G Iontrlis. 10 00as an stckholde or the tnelleyanIaaboln Pu A nory grou a stogholdes or the Dinn filol in ths Court ef Firat Inatenoe of om boef 4n bchee of och FCO LE T eo join heveim, od e An

OP IO MF T NA UV0 WEEDOTO IvEsn co. 100 Bd

DE WMGMAANOASTEVC e Ho ond. Dmer Chv C0331 It is olmel in

0 E OGE Hat ths hlltyrne ontora Iveatment G.Inc. egtorn d 2thet ot noocoy ound thnt i both ocrroratiumn heve inter buatn aalra ot tho a thetwem nntrnot is 1lto Lntrd

360

.SE BCSION

aint as diasod in a declacn reniered y he Cour c irt Instance cn aroh 31 1954 but should be nnnaged ly th foer Piantirs at4 not appel rou sald dooiaton ibtt D). The oa

began Iseboln Suger Co c.and te lhilipdne lntera Invtont CoIng connted ncther mengent ott datod Jnuy 151953 the t nareaf heroune rorodocd Mtle the aatd caac yms ponding the Mnel- ash

AGRIE CORAOT

1953y nd beton City or niln hilippinesthin 15th ar of Jan- T mode nd eoted in the

eorrorution ddy rgied and ting uer and w virt of the l o the iline t Hingipal ofrioe wt the Chromiole Bdg. herein reprunontal ly ito Preaidont,dir. angento Lopes duiy uthrid W it Bord Dirootord to rereoont it in thin tronoaotion od horoln- ft to be om the BNGIAL ThO BINIAGANSAELA SUVU CO IN Ni

Wth peingpal ocNco t the Chrontcle Lutlding a gorporbion liowa duly orgnnisod and eciting wer und iy vitue of the im o the iilippnoo Nnlla herein ropresented i its Froeident Dr Joge Soriano uy thd ita Bod of ndre tors to ropreront it an thig tronnotion, and here nar to be knnm a the 0 The iXPP FAN VSTI CO. IN

MTTlesSSEaH That

optod oution Jary 131993eqt onraot wi th Cho Mhtiiprine Plamore Inveeteent LS Tc he HinoIAL for the roann thereln tated agcee to sn aondeont cf the wording of ite S5o IC. ASho Bod rg t NA he Bod of Mrootor af tha Tht1iptne s oiodied in the rolution of Fabrucry

OF Crtnon vantera nve OENE Wtnet co 0 nabel Sger OoInd vo S Mes tho tran d renl intention thet the ihtlipplie Ponters I continuo the mnagerent n lifying aid con

QOw colleet r DG UE ie the coepen

aortnet ieont0 FP FE atod uly 181951s od n Aguot 7 Mnalbgnn iscbeln gr CoIno. it ia entitled umler its amnguoot

H Iy ot hich reeoltion in hereto atoched aa Arner

an imtegral prt thi greont

361

C.A.CISB NO.1266 DECISION -

5

managenent of the buinoas cffaira of the INCIFAL mder the tems and conditiom ayeoiiod in a reso- Lution optod on Janery 14, 1953 iy tho Board af lution in hereto atteched as Annez p and mede m intogral per* or thta aroenent; ofored the luG to continue with the generel Direotors of the RINciPaly a copy of wich reoo- WAS,y y f coe the C

miae offer of the mIINTFAL referred to in the prxt yreooding puagraph haroof wisthe G has nccepted the eoro

the forogoing rrandnen and cc tho covennnts hero- in contained, the IRINOIPAL and tha MANACnt do horO- Iy aros and stipulate thet: NM fr and n considration

on August 7i951,betwoen nid prtien well incral in a resolution dopted on Fobruary ct oside nd aupersedod ly thia ne manngemet con- 1952 by its Bonrd or Diroetora, whatover interre hereby forever disgherge and release one anot hm of any and ell clai nd denandn aria ng from cr conneoted with, direotly c indircotly the manage ment contraotderted July 18,1951, nondod the resolrtion of Februsry 6, 1952 of the Doard of Dreotora oc the Mavhiah w accepted ly Mation may Le given to the agroenent enbodied in saia reoolution Said menagenent contrnot of July 18 1951 onded, and d groeent unr the aforeaaa resoltons of Yebrury 6,1952 ad Feb- ruury 7 1952, ahall hencof rth be oonaidered n treots .Both the ungrAlnd the t d the

mnagenont of the tueinesa aalrs or the RICIP under the falioing terns and copdi tions 2The NAGa in horoby given the gonarel

Toot a rch 91951 MIAGER shall be for a period of VIVE 5years ef aTho mnngement of the RIICIPAL by the

and hatue aonneatol with the beiness ol the N- logns gontraetod y the INcIrAL fron banking insti- for its orvioe Ten l For Centum the grosn inoe or the PIIGirAL during the tera of this agroe ent contrt. y grosa inooeis eant all re- ceipta of the busincss prai ita fron gales of and deal inpn in roperty, intereat, ront, dividendn on stock ela or omed by the liiral gain rutits and hcon derived from any aource of vhatever kind CIPALnogeipts of tho buatnean shell exludo loang to the HBINCIPAL tulione and ontitien and eyorto wy plentera of crop b The R ha roooive an copencon

3 6 2

C

E0.126 DISI0

a r thts agraent. 195 as anded all he ad funted and erodited to the Mid s reymont cn account of ito cun- ponstlon wor Fragrarh 2, ooetien ped to thg an mnnngomnt foes ruranant to the fer manngeent ontract f July l8 cwhatever ncnt y heve alroady boon (b)

conded for notho ivo yo up to 19 h f 1951956 bit and hes been frther ectened to nther Mive ytn pire in 1966cthitl This menageont cortraot cwering a Period

vore not in good ter with mngmont of cad m lnines ffalr.iigu nt la bong losgos and the plentere in the Ninlhagan ciatriet then its Gonoral nnger it surfered treondou corporetca hen tha BSC n the one nnging i

of endn the followng pyoro hildt PPege 3 In the deeioion cf the Court Firet Inetance

25 of crique Jontla w p The regoada c the one shor that dnlng pointed goual manger c the corereticn hoev 0T0 Cirst modtately af tor the orgmnisation d loon statent f te porlod yes of IS0i rod ho losoe in the amont of otel weverno. for the perlod Jry 31 1947oonbr31 T nI3CoN*s 19

10 S C 103

0 tncrxo0

1c ONE e otal 1nditadns o 8 Le NUo innabagu traero 0 1949 9,953

on ma,27,645. tereot at the rate or per annn. 137oig of 11964 51.50h.. CcH.to tho lelnhtlweticn inonao Corora 50 Thtlipine 6 dat0. Hnticral Saost Bot aocount bre n Hene waa inlobtedness to 3942 As of WM

pdton 40000-gho tho M Coupany d the angenent of ta ine atfr Cougery i that the Intitor la the njerity tockhold scoN vhioh cmtituton 99.or ho cutatanding in the handn cr the hiippdne Zlantora Inveatnont eolthoAoe. Another renan vhy tho inalbngn Inbala Sog Ioms 399410rfthe

363

C.. D-

7-

thet She Thilippino Lantors Invootment Gompany rand.a for Jetitioner. interest of the Ihiipdno Flanters Invootment will crt all efforte to mce the husiess o tho sc very uocossful the rest of 590 chren re cmel by individ peraors hthttI..141-145,horing f 964 Cunpay in the BISC the lntter had erpeoted Becaisg of thln proprietar P69

Respondent clalns, mier the eirontanoes matiend

ahove, that petitnner ia a corcinl Ioer anda ch

it is aubjoot te the peroentnge tex on the grosp compensation

it renelved fr 1sc zarant to Sootion 195 of tho Hation- al Internal Bevome Gode es ended Ch the other hand pe titioner contends thet it had never aeted s a Irckor in ite

relation with Bsuo but only a nnge of ita baineon ef-

fairs a grovided in the oontract ot monngeent

Seon 195 cf the over Code mose peote ta

of the rooa gopenoetion c cumerelal hrolers. Tho orm gnrai broki dofined n oticn 19as ol

TCA of freight oied iy vosele or other mo of ensporteion. the thn importe mnnt ta oduors r bon do ployecswhoor cgensation or grot nell r bring bout nales or p ch f ranise for other Feron or negotiate irolgut or other busineoa for omera of vocel o othor enn of prtation r Por the pipprs ar coneignora c conoignoee bring opoed byers and aolla togothor or a.cn serehut Coal broeAne ll poon The term ipolle ooartg- I

Q inor e eyed by s0o a nger to

nnge cr conuch its huinen fels cn oer or operator

of a mugnr contral and its releted cetivltieo It ws not

hired to ell the sugr of Bo n omer or oportor of

ugor ceral c u and i onggod in the poduetlon

o contrifagal an white sur out of mu cene of the

3 6 4

C

CTA.CA MO.3266 DEGISIOM -

-$- plarters adhevod to it and aiso the manfuotre of by-Teoducto

It lonia money to augur plntera ab intereot. ft maintainm a hogydtal for ita euployeee and the reoidento of the milling dintriat. It ous a distillery which is looood to another

for the meme'ecture of algohol. It alno owns auger Lande end

ronidential lota lessed to cthari. It oporaten n gacline

atation and a motor pool ta servo sugar plantera All those etivitier of BIscoi are hvled and condneted by petitioner

cu anager undor it miunaganet cntriot wth the faru. The

snle cf scou' sugar alod is henlled uy Ameriou brdkers reaiding in the Untted States whone oonnisaicnn an such bro

k ro peid by GO There is therefore no genso in the

ployment of potitioner by B0o if the sole ryone w

to egotiute the Soles of ite augr ahroed Por nll these

services peforad by petition for BIScoMit cen hrdly

be considered a cereial roker as defined in Section 194t

ar the levonte Gode

The cosea f A.Soriann y ClaV.Collof Int.Reome G.o.L6May221957 nd JTnonCoInov Coll.of t.evo0..o.L-11530,June 30,196059

.6952 are clted in aupport of tho view that petitioner

herein mcy be oonaidered a owmercial broker. We have atudied

the tao canos very oareflly and ve think thrt the faota of

the anld cascs tre totally different fron thoie of the case

at bar to jurtiry the application of tho dootrine therein

emmolated to the latter.

In the Sriano oe A.Sriano y Ci was played

by the Phtlippine Iron Mne Ind. an a dning conltart and to negotinte sales of iron oron in Japan A a ining conul

36 5

C Ga 21266 TC -

-9- tut A.Scriano y Cl was puid a flrod monthly coupenaation of 200.00, and for negotiating salem of iron ores in Japen it was puld n ooasion of 2 or the gross saloe. There

can therefore bo no quertion that Soriano y Ciawan

coereinl irker with reepect to aalen by it of iron oros for &ts inoipel, This is not ao in the prenont case where

etitaoner wa eployed not to seli augor but to annage lrscofs

sugar cntral and ita relatod aotavities uch s the loe

af cugar and reaidertlal lots and a distillery; lending money

at interoot to sngar planterg the operetion and menagenont of

a hospital and the making of prchases and dlaburaonents for

Purpouet essertial in ourrying out the vorlous notivities of

HO

In the Tungon case the orvices af J. Tueson e Co

Ine. wora enployed y Vorsity lis, Inc. to suidivide and ell

ive purcela of residential lend in ueson City. J, Tunoon

Co.Ing.as not hird to manage Vroity ills Inc. it wne

hirod to ooll residential lanas Acoordingly, d.M.Tunnon

Co Ine an rightly held to hve ooted an roal cotate bro ker. Thure im, thereforo, no rmrity bethean thet oase and the

Gsge of hiredn petitioner.

Nention hns boon mnde of he faet that fron 1952 t 1961 potitioner pea the fixd anmel t conorenl troker

The eonelunion has beon dream that it held cut iteelf eo con- merofal broker It i therafore a qonmeroial brotrer when it intervened in the males of ug of BIScohis faot han beon

planed by petitioner Lnger Roberto Villamev s Fol- Tous

Joo 36 6

cTstU - 0.058301266 C

-10-

with ita.poliay of helydng the pluntern or the a mervice that would fsolittate their salling of worth the expenditure of the l50.00y w tho tors of the anrngenent contrnot wan Finallcod. milling districto to provide those plantoru with no traneaotion wne ever ertered into invulvin ting rokeaboud the need r iso for that renon, the iicanse oont inued tc be gei heong of Ang.301962. At that ti, it wes the Sntention of hilipplne pugar at bet ter pioen d for that rrpoue the Loense a negligile cc noiml -50 yeurly onlyt was felt that. from 1953'up to the ment Plentera Imvostnent Gonpeny Inoorporatod in iine the.purchaso aboke unt of he lonee 1voved w The en or ths goea bno 1953 whan placing tho capay in the position of cornemcial beacer wus the ale o plentor augo t ing In subsoquent yeers, becse the T.n..201 I you md gat ney. Vas Hovover

A poran cannot be held a conercial broker for paying the fiod anmnl tex t he hd not intorvonod n any bwokerege

trnsnetlon. The evidone doo not dinclcoe thot pettionar

hd intervened in ary trnotion cs a corercil boker he

oonpensxticn thnt it rocoivel for.nnngtng ani huxllfng the

beincan allalra of anothor ccparation cannot Ie huid aubject

to th aatoralnl broiortg perountage tax simply beonue

Held oe eelf roy nd lling to engnpo in busineua a

comralal raker bt wm wnhie to do so for lac of elionta

Nenpopionta ruling as regarvla the tambiity of mnnging

corporations mllitates guint the position taken by ht in

tht In ullng dated augt 12,3909,i w hel4 hnt

mnnaging dporations sre not iniepmdont contractora vithin the pvie Seetion 19l tho eve Codeuchcgr ations era onlz mubiect to the inorme yex mnd rendono ter

on vhaher inaoo ig recuivedlnm uchemlogisnt_contanat B5ng o355Aug.121960

Nnng the tee aseemnts for coerail brakor

percontogo t againt petitimer not in ardar the e r

36

G66 ncrsIon-

-1-

hereb et ide Aocordingly the siroty bonda filod I

potionor to aocure payment the x in queution we or-

devod canealled.

SO CRINRED

Cucson cit, Deonnbar 29, 196+

7D SUl Aagt duge

I gonour.

BeaangJudge +g1*

368

C