CTA Case No. 3725 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUE -ZON C I TV NIPPON PAINTS (PHILIPPINES) INC., Petitioner, - ver�sus C.T.A. CASE NO. 3725 THE COMMISSIONER OF INTERNAL REVENUE, Respondent. ____ - - - - - - :{ ~_, DE C s 0N This involves an appeal brought by petitioner Nippon Paints (Phi 1 ippines) Inc. from the dec ision of respondent Commissioner of Internal Revenue . d a ted November 9, 1983, as sessing against and demanding from petitioner the sum of P75, 451.55, �for a 11 eged deficiency ithholding ta:�: at source for the four quarters of 1975, inclusive of interest, surcharges and compromise penalties. The basis of the deficiency assessment is the failure of Nippon Paints (Phil.) Inc., to deduct, withhold and pay the corresponding withholding ta~: on the

r DECif:3ION -� CTA CASE NO. 3 725 2- a mo unt o�f r-oyal tie s due to a non -r esident for.. eign CO Y"PCWi3.t.ion, Petitioner Nippon Paints (Philippines) Inc. is a dome stic cor-poration engaged in the business of ma nufacturing paint duly organized and existing under the laws of the Phil i ppin es. manu f ac tu re r- , Petitioner, as s uch paint e nten::>d into licensing agr-eemt=mt with several foreign based c orporatio n s , under which petitioner Ni pp cm Paint s (Phi 1 . ) In c. was ob 1 iga ted to pay r-�oyal tie s to the said for ei gn corpor�at.ions. In a letter dated September� 28, 1979, respondent asse~-:;se d a gain s t a nd demanded fr�om petitioner the tota l s um o f P75,43 1.55, represe nting deficiency w.i.thholdinq ta:�: for.. thE~ four (4) quarters of 1975 as �f o Llow s: F\oyal t.y � � � � � � � � � � P132,:::86.07 46,335.00 Ta:: due th':.:?l' �eon ( 35%) � � . 1.1 ' ~-.s.3. 75 (-yjd: 25% s urcharge for late P----��:-:-a---,. .3f:?3..�5?. .�~. e~1x:)1 p iS\'y'tnerl t . ,� _.......%!1 .~~-! .~X) 14% interest fr. 4/26/75 p 12,213. 19 to 5/:31/75 . .��. Total ta:�: due en late payment . Less: withholding ta:�: paid en 5/31/75 � � Balance � . � � �

DECISION CTA CASE NO. 3725 �"�T�' �- Add: 14/. inte1���est fr. 6/1/75 to 5,1:29.54 9 /'28/79 . � . . . . . � � Cornpranise late paymerit .--��--�-�. ��-:;::.~z~_.!'-~~~~ Total arro..Jnt dqe and c ollectible ~:;�...;~:~~::~ ::hd Quarter Royalty � . � � . � � � � � � . P141, 249.40 Ta:�: due therec:n (35/.) 49,475.26 Add: 25/. s ur-charge �for late 12!'359.32 pa' '(Jl:.'f'1t � II II II II II II II II - "�-�-���..�����~---~L ;:."~ "_.;;~..~..6.."6_ .tt.J.:.. :i.nter-est �fn~n 4/26/75 F' 62,4:::!'0. 27 to 5/31/75 Tot;:~. l ta:�: due on late payrrent � _,___4_9.. ,. .:157..! .~~=~ Less: withholding ta:�: paid p 12,99:3.27 C:M'l 5/31/75 � . . . � � � &'::\lance . . . � � . . . . . � . Add: 14/. .interes t. �fr-. 6/1/75 to 9/'2!.)/79 " � � � � � Cornpr-anise for late payment & filing ����...� Total 2\ITX.'JUnt. due I!~ c ollectible. Royal t.y � � . � � � . P147, 2:::!'~). 50 Ta:�: due t.her-eal (35/.) 51, 5.?:Xl.67 {)-jd: 251. s ur-c harge for- late 12,882.60 paYmE'fl t. � � � � � � " � .14/. i.nt.er�est .1/25/76 to --� ... -.....?.+..9._!_7� 4/1.9/76 � � . � . . . . Total ta:-: due a1 late of payment p 65,133.11 Less: withholding ta:�: paid on __..,_..!2),_,_ 9_~2!~!<) 4�/ 19/76 � � � � . � � � 13,603.H Palar1ce � . . � � � .. � � � � . Add: 1.4/. .interest fr. 12 /3/75 5,713.31 to 9/28/79 . � . . C'..c~pranise for late filing ,'::\nd payment � � � . . . � Total amo..Ult due I!~ collectible. 4th !l1ar�ter� Royalty ...� Pl:::!-' 6,371. 52 Ta:�: due ther�eal (35/.) � 4 7 ' 7::::~) � 03

DECISION CTA CASE NO. 3 725 ... 4 - Add: 251. s ur-char-ge for�� late 11~932.51 payrr~<:nt � . � � � � � � � 14/. inter-est fr�. 1/26/76 --���--J,. !l._~;:4._.!.Tl.. t o 4-/19/76 . � � . � � � � .......1Z!\.Z~l-~..Q9 Total amcx..lflt due en date of p 13~466.31 pa ynBJt � � � � � � � � � � LE~s : withholding ta~: paid on :3"~)(1.00 4/19/76 � . � � . � ~--- ~~-~--422.16 Balance � � � � � � � � � � Add: 15/. inter-est 4/20/76 to 9/28/79 . � . . . . C.'om pn::~nise for- 1ate filing and nayfTE'I"1t � � � � � � � Total amc:x..nt due 8~ collectible 1976 deficiency f~ tate dealer-s �fi.:-:ed ta:-: in the arrount of Pi ~670.00 as follows: Real Estate dealer� fi:-:ed ta:-: � � P 1 ,Cl(IO.OO 250.00 Add: 25/. ..::--.Lw�c har-ge � � � � � � 14/. inte r-est for~ J./31/76 8~ 9/28/79 . �. �. . . Total amount due 8~ collectible � Nippon Paint s (Phil.) In c . pr�otested s aid c:\ SS e s smen t in a 1 e t ter- dated De t.ober� 29 ~ 1979 and Novemb e r� 14� ~ 1979, c laiming that its duty to withhold and pay the withholding tax at s ource depend s em a c tu,:\ 1 r-enli 1: tance or- payrnen t ther�eof. ( pp. 146 ~ 168-- 174 BIR r-ec.) In a letter- decision dated November- 9, 1983~ r-e s pondent denied the pr�ote s t (pp. 173 - 174~ BIR r-ecs.) r-eiterating that the ob 1 iga tion of petitioner- to wi thho 1d and pay the tax ar-ises at the time of accrual of the royalties and not at the time of actual payment or- r- e mittance thereof. C ~8

DECISION CTA CASE NCl. 3725 �- 5 -- H e nce~ this appeal. The i ssues posed o n this appeal are: 1. Whether or not the obligation to withhold and pay income ta:�:-a t - source on the r-�oyal ties is upon the accrual of the royalties or upon the actual remittance or payment thereof; �and 2. Whether- or not petitioner- is liable for d e ficiency real estate dealers tax for 1976 in the a mo unt of F'.1,670.00 inclusive of interest~ s urcharges and c ompromise penalties. P t'? ti tioner-� maintain s that there was no o b 1 ir:Ja t..i.on to deduct.~ withh o ld and pay the withholding ta:: in .1975 . The royalties c ould not be remitted by petitioner due to Central Bank r-�~?s t 1,.. .i. c: t. .i. ons. The issues in thi s cas e is not one o�f fir -s t� impr� r~~;s i.cJn. This c ourt in the case of Baye r Pharmac eutical, Inc. vs. Commiss ioner of In terna l Revenue , CTA Ca se No. 2846, March 16~ 19 79 ~ and affirmed by th e Supr~~e Court in G.R. No. 72054 e ntitled Commissioner of Internal Revenue vs. CTA et. a l. , September-� 29, .1986, this Court held and we quote: The lone ques tion tendered for l~ eso 1 u tion is whether� or not the obligation .:. o l'-li th ho l d and pay inco me taH- a t. �- s ourc e o n the royalties is upon the 7( 0

DECISION �-� CTA CASE NO. J 725 ��-� 6 - ac crual of the royalties or upon the actual remittance or payment thereof. F'E?ti tioner maintains that there \'las no obligation to deduct, withhold, and pay the withholding tax in 1972 since the royalties could not be remitted due to Central Bank restrictions. In submitting, however, that the liability to withhold and pay the income tax withheld at source from royalty payments to a non-resident foreign corporation, like Bayer Aktiengesellschaft, Leverkusen Bayermerk, is at the time of the accrual of said royalties and not at the time of the ac tua 1 r-�emi t tance or payment ther-eof, respondent relies mainly on Bureau of Internal Revenue Ruling No. 71. - 003, dated Febr-uar-y 26, .1971, the pertinent portions of which are quoted as follows: "This refet- s to your letter dated Febr-uary 16, 1971 requesting a ruling as to the basis of the withholding ta:-: due on film r-entals or royaltie s payable by you to non - resident foreign film corporations. II "In your-� letter, you c ontended that the 35% withholding tax should be based only on actually remittable amount under Central Bank regulations and not on the entire amount due and payable to the non - resident foreign corporation. This contention has no legal basis. Withholding tax is not dependent on remittance of the income payable -to the non - rE?sic:lent foreign corpor-�ation but on accrual ther-eo �f. Such being the case, although a portion of the amount clue to the non- resident foreign corporation 701

DECISION ��� CTA CASE NO. 3725 ... 7 �- cannot be remitted on account of Central Bdnk restriction, the tax due on said portion should be deducted and withheld as if there is no restriction. � B�'.2 .t.r.::J_c; _t.~.c:!.._.._.....f~.~r:!g_�.� - In connection with the restriction on the transfer of funds from U.S. to persons in Norway, Denmark, the Netherlands, Belgium, Lu:�:embour�g and France, the tax should be withheld in the same manner as if no r�estriction e:dsted. In custodian accounts, the name of the foreign bank or� other foreign person ~; hou J. d be en t.e red on the owners hip certificate, and an am e nded owner�shi p c:er�ti �fir.:,"\te �filt=?d as s oon as the actual owner i s disc:lo S �?d.' (CCH, .1969, Vdl. 5, par. 4875. 4�05) In view thereof, this Office bel .t eves and so holds that the 35% withholding tax should be deducted and wi thhe 1d on the enti1~e amount of film r�entals or royalties payable to the non - resident foreign film corporations including that portion which, on account of Central Bank restrictions, cannot ~:\s ret be remitted abroad." As e:�:pr�essly stated therein, the Bureau of Internal Revenue ruled that withholding ta:�: is not dependent on renl.i t tanc:e of the income payab 1e to the non - resident foreign corporation but on accr� ual ther�eo �f. And as such, although 7 C2

DEC I S ION CTA CA S E NO. 3 7 25 -- B - t h e i n ccJ, e ca nnot be r�e mi t t e d on acc ount o 'f Ce ntr-a l Ba nk res tt-� i ctio n s ~ th e t a :-: du e the reo n s hould be de duc t e d a nd withheld a s i'f the r e is no res tri c tion. The s t a tute involve d i s Se c tion 53 (b)( 2 ) o'f th e Nat ional Int e rn i:\l Revenu e C od e ~ th (-~ c ontr-olling provi s ions of which read as 'follows : "Se c . 5 3 (b) ( 2 ) I:'IC?D.::-..r.::.E;;'_!_?.J .s:!.g_Q__t L9Cif.Li..9..CL .J;.Q..r.:p g _r.:_f:\_:t.,t_p_n_�_� I n the case of foreign c orpora tions s ubj e ct to ta :-: und e r� this Title~ not engaged in trade or business within th e Phil i ppin es ~ there s ha ll be deduc ted a nd withheld at t h e s our ce in th e sa me manner and up o n th e sa me i te ms a s i s pr-o v i ded in Subsec ti o n (b) ( 1) of t h is sec ti o n~ x x x ~ a ta x equal to 3 5 per cent the r e o �f. Thi s s ha ll be return e d a nd paid the sa me ma nn e r a nd s ubj ec t to the s a me c ondition s a s pro vi ded in S�-~c t .ion 54� . ~{ ~�~ :�~ " An d S e c t ion 53 (b)(1) of t he s ame Code per tine ntly pro v i des : < b > ~9..r:..1..-.-::..r.::~?..:i..9. ~r.!_t____~_l_.:l~n?........ S\..r:u:t f..g_r_~_;j,_g.r.L..�PL .P.9.!.':.f:\...t :i.:.9D..2. ( 1) N..Q!J..::. !.':'..�~_E.?.J_g__�'_oj::_.._____E.\..l. J: _~..IJ.?.. � Eve r y ind i vidual, corpor�ation, partner- s h i p, o r asso cia tion, in wh a tever ca p aci ty a c t i ng~ in c luding a l ess e e or mor t gagor o f real or pers on a 1 pr-op ert y, tru s tee a c ting in a ny tru s t c ap ac ity, executor~ administrator~ re c e i ver, c on s er- vator~ fiduciary, e mployer, and e v e ry o �ff icer or employee of the Government of the Republic of the Philippines ha ving the c ontrol, r ecei pt, c u s tody~ dispo s al, or pa yment o'f interes t dividends, r e nts , roya lties , salaries , wa ge s , premiums, annuities, 7CJ

DECISION ��� CTA CASE NO. 3 725 - 9 -� compensation, remunerations , emoluments, or other fixed or determinable annual, periodical, or casua 1 gains, pr�of its, and income, and capital gains, of any non - resident alien not engaged in trade or� business within the Phi 1 i ppines, sha 11 ( e:�:cept in the c a s e s provided in sub-section (a)(1) of this Section) deduct and withhold from the annual, periodical, or casual gains, profits, and income, and capita 1 gains, a tax equal to 30% thereof. Thes e provisions, by the way, were merely imported and copied almost verbatim from similar withholding tax provisions of the United States Revenue Code [Section .14�3(b)]. Accordingly, in consonance with s ettled rule s of statutory constr� uction, th e in teq1t- eta tion they have received in the United State s have authoritative e ff e c t i n the proper cons truction and i nterpreta tion of our law. Thu ~; , as c orre ctly noted by pe t i t icm f:: tr� and which .i: s not disputed by n 2s ponde n t: .l. In arriving at Bin Ruling No. 71 - 003, dat e d February 26, 1971, our� Bureau of Inte rnal Revenue quoted as authority the e:�:cer� pt of a United Sta tc~ s In tern a J. Revenue Service ruling which is found at par. 48nL 4�05 of CCH, 1969, Vo 1 ume 5. It appears that the said U.S. ruling is actually Mimeograph Ruling No. 5075, which was i ssued by the Office of the Commiss ioner of Internal Revenue, WashirlfJtcm D.C., on July 8, 1940 and can be found at the CumulatiVE? Bulletin 1940-� 2, <:It page 141. 7 ('

DECISION CTA CASE NO. 3725 �- 10 �- 2. The said 1"1irneogr�a ph Ruling No. 5075 h a s b E-?e n d E~c 1 ar�� e d gJ~.?.c.!J.~ .t~. by the United Sta t es Inte rnal Revenue Service i t s e lf i n i t s F\ even u e Ruling No . 70-� 29 ~3. (U .S. In h~r n a l Re ve nu e Bulletin No . .19 70- 23 ~ dated ,June 8 ~ 1.970) It is thus evide n t that in issuing i t s BIR Ruling No . 7.1 - 003 o n February 26 ~ 1971., o ur own Bureau of Internal Revenue has relied on a Un ite d States Intern a l Revenue Service ruling that has already been overruled, t h e sa me h avi ng b ee n dec 1an?d obso 1ete as o�f Jun e, 1970 . 3. Following the decision of the Uni ted States Di s t ric t Cour�t in '==-~-.P..~..... ..G..9_t,IJJ.:;. h:..9. !......Y.2 _._...W.IJJ.:t.~.9.....9.t..8 .tg.2_.!J.. 11 6 F � Sup p . 8 3 5 ~ rendered on November 19~ 1953~ to the ef fe ct tha t corpora tion which he ld li cen ses under patents owned by non - resi d e nt aliens whpo as a result of blocking proclamation were forbidden right to receive or di s pose of royalties was not bound to withhold ta:-: befor�e paym e ndt of r�oyaltif?S , the rule that is no w obser�ve d in the Unite d States is that the obligation to wit hho ld a n d pay the ta x is upon p c"":l.y rn e n t or- n -::? mi t tanct? of the income to a non - resident alien. In t .h e ~'"�-~-P .�......G.~uJ.t......~~-9. � case , l"ih e r� e the factual sett ing, law involved a nd issue lit i g a t e d are practi cal ly on all four s with the case at bar, plaintiff, a De 1 awa r-e cor poration~ h e 1 d 1 icenses under patents o wned by t~~o non -resi dent a 1 ien s, Rob e r��t Do g e and Emmanue 1 de Trey. Both patentees were Swiss. Under the l icensing ,'":\gr�eements, plaintiff obligated itself to pay r� oya 1 ties to Doge and de Trey. In i t s treatmr:mt of the impact of royal ties on its operations , plaintiff, adhering to the ace: r�ua 1 method of accounting, entered net royalties and withheld taxes as accrued l.i. a bi 1 i ties of 1941 and 1942, the period s invo l ved in the c:ase. Thus, 194.1 and 1942 r�oya l ties a nd ta:-:es were set up as ~J.cco un t s payab 1 e on p 1 a�.ln tiff� s book s and 7 C'

DECISION -- CTA CASE NO. 3725 - .11 as part of its cost of doing business for those years. No ~-.Ji thho 1 ding r�etut- ns for non - resident aliens Doge and de Trey were prepared for 1941 or 1942. While the cr-�itic:al issue is when the~ r-�etun1s were due for royalties attributable to sales made by� ,:> 1 ;,:\in t.i. �f �f during the years 1941. and 1. 942, the inquiry shifted from "when t"'a s th e:! retur-r1 due" to "t-.Jhen, if at all, v~a s plaintiff r� equin,:d to t>.Jithhold on the r�oyalt.ie s . The "~-.Jhen" o �f the matter, not thE? "who" or the "what" v~as the point of dispute and inquiry because, as result of blocking proclamation, nan - resident aliens were forbidden right to receive or dispose of royalties due them under contract with c: cwpora t.ion which he 1d 1 icenses under alif.m s ' patents. (L.D. Caulk Ca. vs. United States, 116F. 835, 840.) Stated othe rwi s e, the question as to when to w.i thha 1 d the ta:�: �from the 1941 and 1942 raya 1 ties arose becaLis e, although the r�aya l ties were ace r.. ued in the p J. a inti f f' s books in 1.941 and 1942 as liability to the n o n - r es ident li c en s ors , the same could nat be paid or-� t- emitb-::! d to tilE? latter-� as a result of a blocking proclamation. The United States Federal Court ruled that where, a s res ult of blocking pi'�� oc 1 a ma tian, non -- resident a 1 iens wer��e forb.iddf.m r-�ight to receive or dispose of royalties due them under contract with cor-poration which h&~ld licenses under aliens' patents , such aliens had no "gains, profits and income" within internal revenue statute requiring all persons having con tral, rece.i pt, custody, disposal or payment of �fi:�:ed or deter-�minab 1e annua 1 or per iad ica 1 gains, profits, and income of any non-resident al i.en to t-.Ji thhold ta:�: and, therefore, no necessity of filing withholding tax return devolved an corporation while corporation n=~tained blacked r� oyal. ties. The net res ult i.s that the obligation to withhold a nd pay the tax is upon payment or remittance of the United States derived 7 0t)

DEC I S IO N CTA CA SE NO. 3 7 25 -� 1 2 �-� i n co me to the non - r es id e nt. r ec ipi e nt.. Beca u se o f i t s s tr o ng pers u as iv e for ce ~ if n ot con tr-o 11 i ng e f fee t s , on the present case !I we wi 11 quote at 1eng th f r-�om the d ec i s ion. "Th e onu s of th e 1-.1 i t. hholding n::~q u i r e men t em p 1a i nt i f f is imp ose d by S 1.43 (b) ~ I .F~ . c .: p ers on s ~ * * * "All in wh a t. e v e r- c::a p ac i. ty a c ting~ ha v .i.ng the re ce ipt~ c ustody, * * * c ontrol, di ~ p o sal~ or p a ym e n t of f .i. ;. .., d or- d et e t- minab 1 e a nnu a 1 o r p E~ r. .1. o di c '"' 1 g ai n s ~ pr-o f i. t s , a nd o �f a n y n o n --r.. es id e nt * * * i n cn m(~ s h a ll d ed u c t. a nd * * * a l i e n 1"i. thh o 1 d f r-�o m s u e h <:'\ nnu a 1 o r- * * *." P f.�? F" i. o d .i. e '"' J. g a in s ~p r-o fit s , a nd On the in co me a t a :�: who l e , th is provi sion d oes n ot c o n ce n1 i t. se l �f 1" i th "wh e n" t h E? wi thho lding s h o uld t ak e pl ace . Rathe r , i t s imply s p e ci fi es 11 1'-lho" s h <:l 11 d o "1"h a t " . 1-l o ~"eve r, th i s muc h l .i.g ht: .i. t: d o e ~; s h e d . The du t .y t o wi t hh o 1 d pr�e s upp oses th e e:-: .i. s t: e n ce of 11 a nnu a l or� p E:�r.. .i. o d ic:a l g ai n s , pr-o fit s , a nd i n co me " . Th E:� s ec t.io n dir-ec t s th e wit hho ld i ng f rom s u c h s ums as ar e .i d f?. n t.i. �fi a bl e as "g ai n s , pr-of its , a nd in c ome " o f the nonres id e nt: a l .i. e n. Obvi o u s ly, if th e re ar-�e n o s u e: h "gain s , pr o f i t s, a nd i n co m e "~ the duty to wi. t:hho 1 d i ~,; n o n e :�: i s t e nt. On th e othe1~ h a nd ~ if there a r e s u c h s ums a v a ilabl e , the sta tutory l a nguage is inconc 1 usi ve in deciding "~r.;hen" the withholding duty arose. I do not ground my d e ci s ion o n any s ubtlety of c on s truction~ but I do adv e rt, in fa c t~ to i t . !?J e r e the 1�- oy c:\l ti e s "gain s~ pr o fit s ~ a nd in c om e " to the a l ie n s Do ge a nd d e Tre y wh i l e

DECI <.:) IDN CTA CASE ND. 3 725 �-� .1. :3 -- pl a i n t i f f ~ e t a in e d th e m und e r these circ ums tances? I think not upon a reali s tic v iew of the m a tt e ~. The bloc king procla- mation pluc ked e very el e ment of c on t.r�� o l over-� the �fund s f r-� am the <�:\ li e n 's theor-e tic a 1 bund 1e of CH\l rH~ r-s hip r- i g h t s . This l oss of essen c e of private owners hip o cc urred whil e the� royalti e s we re ~> till in pl..3intif �f ' s po s session~ <::_; .inc: E~ th e b 1o c king fr �� ec~ z e app 1 ied to individual debtors of Swi s s n .3 tiona 1 s. As soon a s royal tie s a ce r�� ued to the a 1 iens under the c ontr-� ac:t~ thi s:; cr� azy predicament �fa c ed th e m: they had thE~oretica 1 ri~ht to collect the royalties bu were forbidd e n right to r T~c~::~ .i.v e them or- di s po ~; e of them. No e c o nomic ad v antag e was theirs. S u e h <:'\ ho 1 l CH'I " r�� i g h t " does not ha VE' the cor-e of benef i. t. s uffi c ient to c on st itute "gain s ~ pr��o f it s-.~ a nd in c om e II. Even thE'? ub i quitous doctrine o f cons- t r u ct .i. v ~ rece ipt of i n c om e ha s no t~ n t a c l e lang e nough to reach l:I1 E~SE~ r-oyalti f2S . Cf. Reg. 103, S .1 <7 �--4 2-�� 2. As s aid with refer-� enc~? to S 22- ( b ) ( 2 ) ~ I � F~ � C. , .in Industrial Trust Co. v. BnJder�ick, 1. Cir�., 94 F. 2d 927, at page 930, 11 Thr-oughout the F~c-:! venue La~>~s the words gain~ p~ofit, or income me an an actual, * * *." not fictitious gain or profit Certain 1 y ~ the s e ~\ler� e not "income" and~ if "gains, or p r�o f i t " , were unr�~alized and highly ar-tificial. Further, the a liens here had no power to command payrnen t to thernse 1 ves or- others~ unlike thf? donor- of the interest coupons in He 1ver ing v. Hor s t, 311 U.S. 112, at page 118~ 6.1 s.ct. 144, 147~ 85 L.Ed. 75, where i t is said: "The power� to 7C8

DEC I !3 I Clt'l CTA CASE NO. 3725 ��- 14 --- dispose of in c ome is the equivalent of m>.Jners hip of it." It waul d seem, then, ther�e being no "gains, pr�� ofits, or� income" of the aliens at least during the time plaintiff retained their blocked royalties, no withholding duty devolved on plaintiff and no penal ties ar�e pr� oper� ." Ag a inst this bac kdr� op, the s ituation hE~n?. pn:,~s en ted, ~>.Jhi 1 e the r� oya l ty in th E) a mount of P69,529.00 (although was set up in the books of petitioner as a liability to Baye1"� ) cou 1 d not be n=.~ mi t ted to Bayer due to Centr� al Bank re st r-i c tion s at that time, wou l c:l not c r� r::>a te "gains, profits or� income" to non --n?sident foreign corpo- r�,:d : ion Ba yer... No economic benefits were deri ved by Bayer; hence, there was no income s ubj ect: to withholding of ta:-:-- a t - s ource. Accordingly, petitioner had no duty to withhold and pay the tax. Even more, a dopte d basis for the decision of the United States Court is the l c-? gislative hi s tor�y of Section 143( b) of Unite d States Ta x Code, from which Section 53(b) of our Na tional Internal Revenue Code was practi ca lly co pied, and hints d<:: r i VE' d f nJm the pub l i s hE~ d pr�� onouncemen t s o f th e United States Bur�eau of Internal Revenue and Courts, which disclose that duty of withholding arises at .tJ.r.!:!~-- -- - -P.f. P~Y_fi! g iJj:._ . l-<Je quote fr�om '=---~-. R .!..... G.S\_l,,tL: "PresentS 143(b), I.FLC., is traced back to the Act of October� 3, 19.13. F'ar� agr� aphs D and E of that Act al�- e pertinent. * "* * Pat-agraph D provid.ed: * * * persons all having the control, r- E~ce.i pt, d i s posa 1, Ol". payment of fixed or determinable annual or per� iod ica 1 gain s , pr-ofits, and income of another pers on subject. to ta:-: , shall in behalf o�f such person deduct and withhold from 7 ('-

r DECISION CTA CASE NO. 3725 the p ay ment a n a mou nt equi v,':\ 1 e n t. to the nor�ma 1 income ta:-: * * *." P .:.H 1 gr� ~:\ ph E of th e sa me Act in * * par� t. specified:* "All p e r-so n s hav ing the c ontrol, * * * n:-?c~:::ipt, custody, di s po s al, or� p i::\y me n t o f other- �f i :-:ed a t- determinable annual gains , p rof its , and income of another * * * p er-�scm, e:-:ceed ing $3,000 for� a ny taxable year who are required to ma ke and render a * * * n??t.un1 in b e ha l �f of another, as provid e d here in, a re here by au thorized a nd required to deduct a nd withhold from s u c h annua l gains, profits, and income such * * * s um as will b e su�fficient to p ay the normal tax a nd they are ea c h h ere b y made per so n a lly li a bl e fen'"� suc h ta:-: ." F'a.r�a graph D is ex plicit in d irecti ng withholding �fr-r.Jm the "p ay me nt" whil e its compan ion sect ion aut horizes t h e deduction a nd irnpo ~;ec:.; p erso n a 1 1 iabi l i. ty on the withholding agent. In its Report. to the Hous e o f RepresentativPs on the Bill, the Co mm ittee o n l�Ja ys and 1'1 ea n s ~;aid, "F'r-obab 1 y t~o..Jo -- t. hi r� d s of t h e i n c o rne t.a :-: pr�� oposed as to ind ivid u a l s would be d e duc ted and withhe ld at the * * * so ur�� c:e of the income and paid in full to the Government. By thi s method the amount of ta:-: du e or- to bec:orn~:-: due upon every fixed or determinable annual income i s withheld and paid to the Gover�nrnen t before the income r�� eac hes th e ta:-:p a yer" . Nonresi - � d e nt alien s as ~<~ell as citizens wer-e subject to thi s withholding sy~; tem. In the 1.9.16 Act, quoted p ar�� agr� aph D ~o..Jas n ?. pea ted as sect ion 8(d) under the Mio ( j. -.

DEC I ~3 I ON CTA CA S E NO. 3 7 2 5 -- 16 �- s .i.gnific c:mt he a ding "R e tur-�n s " . Para graph E , a s quoted, was r e peated as section 9(b) und e r the ~�l e<::\ d ing "A s~:;e ss m e n t a nd Admini ~:; tr� ation" . By the Revenue A c t of .19 .17, p a ragra ph 8(d) of the 1916 Ac t (pa r. D of the 191 3 Act) wa s r.. �::: p eCI. l ed so i:\S to render u v~ ece ss at- y any 11 ~-.Ji thholding at t.h t? sou1'� ce of t h e t.a:�: due on p ro fit s or in c omes of r es id e nt t a:�: abl E�~ p e r� so n s ". Inf o r� ma tion at. the source was s ubs tituted. Acc ording to the House Re port, thi s ch a nge ~-.Ja s ma de for� "a mot- e e ff e cti v e a dmini s tration of the 1.::1.1"1" and th e s a v ing o �f a nnoyan cE! .::md e :-: p e nse to the ta:�: p a yer� s a nd withholding agents " . By the same Ac t, p a r� a gr� a ph 9(b) of the 1916 Ac t (par. E of the 1913 Act) was a me nd e d to limit withholding a t the s ource t o nonresi d e nt a liens . The Ac t further in c lud e d interes t fr o m t ax - fr ee coven a nt bonds a s a s ubj ec t of withholding. The Revenue Act of 1 9 18 mad e no c ha ng e in the pertine nt l a ngu a g e of the a me nded S 9(b) but did in c t�� easr::? the-? withholding r c"?.te and r e numbered the section s a~:; 2 2 .1. However, the Report of th e Wc':\ys and f'1eans Committee o �f the House aids s earch in its c omments on "Coll ec tion at the Source": "The pr-oposed bi 11, as under e x isting law, requires only the withholding of income in the cas e of payments by ind i v idua 1s, c orporations, and partnerships of f i :-:ed and deter-�minab 1 e annual or per iodica 1 gains, profits, and in c ome to nonresident alien individuals or nonresident c tH"por� ations". This comment is 71

DEC IS I !JN �-� CTA CASE N!J. 3725 - 1 7 �- an indication the intent. of Ccmgr�es s ~-.~ as as e:-~ pr- esse d in p<':\r�ag r-aph D of the .1. 913 Act and 1t~as ccm tinued in S 9 (b) of the .1.917 Act when the for-mer� provision wa s repea led. No c h a ng e wa s intended ~-Jhen th e withholding pr-ovision s wer-e delimi ted to apply only to n o nn-?s ident aliens. The time of p ay me nd wa s the time when the withholding duty arose. The Revenue Ac t of 1921 made n o a me ndm e nts to th e Secticm pertinent to inqu ir-y~ nor did the (let of 1924 . How eve t�� ~ bo:th th e House Repor-t and the Senate Re por� t. on th e 19 2 4 A c t. have this co mm e nt: Section 22 .1: Su bdi - v ision ( a ) of this section of the pr�� e~:; e nt l a ~-.~ p r�o v i d e s for- the with h o ld ing of a t a x ~ o n fi xed or determinable income paid to a PnrH�esident a l ie n i ndi vi du a l~ or� a p artn ers h ip composed in who l e or in part of nonresi d ent a l ien r::.; . " Both a l s o r �e f er- to "r�-r.0qui r i ng t h e 1-J.it.hholding o f L::\:-~ f r� o m pay me n t.s " to a partner- s hip. Rates of withholding wer-e i.nc:n:?ased by the F\eve nu e Act of 1926~ and the Conferen ce Report of the Committees of the House <-i: nd Se nat e r-efE~rs to the effect of the hike in rat�?.s: "Thi s <�:11m~ ndmen t r.. equi r�"es th E? 1-.1i thho 1 d - ing of a ta:�( of 12 1/2 per� cent in r-espect of all payment of income made befor-e the enactment * * * of this Ac:t to foreign cor-po- r-ations specified below. the per- so ns making * * * Because had no notice that payment s t ilE' c:o r �por� ation in co me ta:~ would b . incr�eased ~ thE::> 1-.1i thholding r- a te is not incn::>a�;ed 1-.1ith r� e s�-�

DECISION CT A CASE 1\10 . 3725 -�- 18 - * * *" . pf2 C t to p ay me nts made b e �fo r e the E! n ac::t me nt. of thi ~. A ct ; Although refer�� ence is to for-ei gn CD I"� por��a tions ~ the wi thho 1 ding on pa y ments to them i s but as part o �f the Si'.\ mP sys t e m e mbr aci ng individual ~'�� In the Revenue Ac t of 1928 a wh o l esa le departure wa s made from the arrangement of prior Acts . S 22 .1. b eca me S 1.44. In co mm e nt -- ing on p art ( a ) crf ti1P. Sec ti o n~ both the Ho u se Report and the BPn r.~te Re por�� t statc;?d: ''The pr-e --� sen t l aw provides for the \'~.ithhold.i.ng '"'t so ur ce ~ in the case of bonds, of � a tax o f 5 per * * *." c ent of the i nterest when p ai d to norwesi d en t a li e n s. Und er the Revenue Act of 193:~, the sect ion w,::\s r"'e numb e r.. e d .1.43 a nd t h e r- ,:d: ~~s v~c-~r.. c-? incr� pa~:;e d without af f e c ting t h e a s pect of t.l ~ f,~ pr.. ov is ion un dE~ r�� co n si der--- C:l. t �~ o n . The Revenue Act of 1 93 4 made no cha ng e s beari ng upon O LI r- i. r 1q u i r. y , b u t a g a i n i n t h e HoUS P Report and i n Sen ate Repm- t I' c-:>fer�en ces to l'li t. hho 1 ding of ta:-: on interest obligations couc he d i n terms of payment. The .19 36 A ct d .id not c hangE! the-:> term s of S .14 3 as they affect the�? pn::>blem under- investigation. How e ver- , a c: ommen t i. n the Senate Report confirms the prior sta teme nts: "Section :32 of the exis ting law provides that the t a:{ wi thhe 1 d at the so urce under� se,~ct. ion 143 fr.. om payments to an i nd i vidual t ax p a y er s hall be a credit against s uch taxpayer 's taH". Refere n ce i s a 1s o made a

DECl S IOhl CT A CASE NO . 3725 .�. .1 ry ����� "~Ji . l:. hh o lci .i.nq i n t l�l e CF\ S P o �f p ;:,\y �-� me n t.s to f or� r:~iq n co r� p cwa t: ion s 11 � Th E� Hnu s r? F\ e por�t., vo~ hi. c h th e Sr~ 1 , b :.? a dnp t e d, o n the F\evenue A c t: of .1. 937 i s r:~quivuc.;;\l i.n s l:,�� t. inq wi t l1 r� e f P-r �c n ce t.D a e ll ; �qe i n S ::~ 1.1 ( '"' ): "Thet'" E'! t�d . ll h r~ tt~ .i. l:.h h e ld f r��o m l. I l C' a mc,u n t: s r-F~ ( : t :} .i. V ,';\ h 1 0. l:J y '" n onr P S.i .d e 11 t. ,::\ l icn t <0\ : : c:~ d 1..111 d E' r� Lh c~ rt E't" pr �ovisinn s t h r' i'\mr:,un t s r e quir�e d to be l'J.i Lllh e l d Ulld P. r � sect ion 11 3 o f t h e pr r~ :o, p rd:. l av" 11 � "Hf?c:eivable 11 , of c: n 1 1r-<:; r? , i s d E' ,; c r��i p t .i. v e o f m i n u t e d .i.v isin n s of ti m E~ fr.. n m tl� 1 r~ f .ir� �::;t fTI L �mtc r1 t o �f io\ C c: r� u,::\ 1 to t l1 e la s t s econd b e f ore rece ipt o f p a yment. Th e l � l oU!"i f~ n c.~ pnr �� t 0 11 t.he t r\r:~ \' l.:'fl Uf' (l c: U f 1. 9 ~':.8 c:\ pfH? ,::\ r s to l" t:~ ;,:d f i nn t h e e.::\ l"� l .i.c,~ t.. .i.nter� pr e t: ���� :::d ions c v o. n i f t. h r? .1.9 :37 F\epor � t:. h P v .i. r? t�~ c~d c:\S '" d E�vi.:\tio n. In r �e f e t�- ,�- .i nq i-. o cnr l Sf-?nt d.i. v iderld ~-:;, t.hr~ Cnrn rn i t t e e n n li! A y ~; ;:Hv.i 1�1e <:u1 s r -r' pnr�� tf:'d : 11 In c: <" <; e �'H�1y s l1 ;:u � e .... ht') 1 d c r�� me:\1 :: .in ~J <~. c: on se 11 t. i s <:\ pr?r� c; o n o:;; u hj ec t t .o t h r.~ r~ ... ov .i. s ion <:; o f ~; r-~r: t�. .i. nn l '1 ~':. ( h) <~IHl s ect .ion .1 11 IJ. ~ n ::- l. '"' t-..i n q to t .l1 e:~ d c d 1.1 c t .in 11 �::\ ild 1-Jit hhulcl inq C.' f t ,;~ :: a t t. t1 c~ s ource , sec t ion 28(d) 5 req uires U1 .,~t. s u c h CO fl f.; e n t: f i l e d by the * * * (:: or.. por-e:\ t .i.on t"'i t h its r �e tur�n s ha 11 he accompn ni e d by cas h e ~u ~ l to th e a mount which t he r::nr�pc:H.. a tion t�~oul d h i:\V�::> been ro. qu.ired tn d e duct an d withhold by suc h sec tion 143 (b) or 144 if t h e~ amount s p ec ified in s uch con sent ha d been pairl to s u c h ~:; h ;;~reholder.. , on the l a s t day of t he ta xable year of the c:o r.. p ora tion, in c:as h a.s a ta :�:ab l e d .i. v idend." Th e Sen a te Repor�� t. u se d sa me lanqu aqe in referring to S l43 (b). 71

r DECISION -- CTA CASE NO. 3725 -� 20 _, No pet- tinent comment wa s fou ~ d in the Committee Reports on the other Revenue Acts down to 1941 and 194�2, the ta:�: years in question. However, one further reference is made to a later committee report ref lecting cur-r-ent thinking. The House Report on the Revenue Act of 1950 in referring to a proposed S 13.11.(a) states: "This subsection alsu provides that any person required to deduct and withhold a * * * tax under section 143 or 144 on the payment of a dividend s hall not be required to deduct. and withhold a ta:�: under.. this section upon such payment". Regu 1ations pr�omul gated by the Commissioner contain abundant references to payment as indicating the crystallization of the wi thho J. ding duty. Treasury RE:"? gulations 111, S 29 . .143�-1 (a) * s t.ab:"?s: "Withholding of a ta:�: of 30 per cent * * is required in the case of fixed or dterminable annual or periodic:alo income paid * * to a nonresident alien individual *". The subsections of S 29.143 are replete with references to withholding upon payment, suc h as "The ta:�: must be 1-'Ji thhe 1d at the source from the gnJss amount of any c:listr�ibution "* * * * * * made by a corporation" ( 29. 143- 1); an annual retLtr� n s howing the amount. of tax * required to be withheld from each nont��esi dent alien * * to which income other than interest was pai d during the previous taxable * * * year" (29.143-7 ); "Ta:�: ~>.~ithheld at the source upon income 7 1v.

DECISION - CTA CASE NO. 3725 - 21. - paid to nonresi dent alien fiduciaries***" (29.143-�9). And even on the quest ion of whether withholding should be at the rate in ef feet at the time paym~;m t.s ~<Jere ~-"'-~-~ or at. the rate in effect at the time payments were actually made. the United States Court r uled that the time paymens is m~~g govern s the rate. We again quote from the G_9..!JJJ.:; d e c i s .i on ; "Dn the .issue of whether withholding should be at the rate .in effect at the time payments were due or at the rate when payments wer-e ac tua ll y made~ the Bureau has ruled the time of t p ~3 ym e n govern s the rate. 0. D. 1.67~ 1 C.B. 192; I.T. 1521~ I - 2 C.B . .197; I.T. 3020, XV - 2~ C.B. 106; I.T. 3291, 1939 - 1.~ C.B . .140, Cf. I.T. 3535, 1942 -� .1~ C.B . .129; I . T. 3~) 4 2 ~ 1. 940 -- 1 ~ C. B. 58. In fact~ l a nguage s ufficiently br-oad to e n co mpass the pr-�ob 1. e m was em ploy e d .in G.C.M. 2467~ 7 - 2 C.B. 188 (modified on other grounds .in G . C.M. 8594, 9 - 1. C.B. 354): * * "* w.i.thhold.i.ng .is only * * required when ~ .income is pc3.id to a nonresid e nt. a lien and at the rate in force at the time o�f payment." As in the above~ s o Southern Pacific Railroad Co. v. C.I.R., 21 B.T.A. 990~ held rate of withholding was that which was efi ":'ctive on the date of actual payf'len t.. In that case~ the petitioning company contended unseuccessfully for a result similar to the one here sought by Bo~d interest the Government. due and payable Cturing 1914-1917 could not then be paid to nonresident aliens because of war

DECISION -�� CTA CASE NO. 3725 �- 22 -� r��es tr-i c tion s . It was~ in fact, paid in 1921 and 1923. after the withholding rates had been increas ed. The company argued the former, lower rates shbuld apply because the interest was the n due; sufficient fund s were a v .:1i lable at all times for- its pa yment; and the date of cons tructive receipt by the bondho lders gave ri s e to the duty of ~o.Jit.hholding. The Boc>rd of Ta :-: Appea ls rejected these arguments , s aying, 21 B.T.A; � at pages 995 <:1 nd 996: "The petitioners did not a nd wel'-e not c alled upon to P �" Y t.hr~ int:en�-:!s t until 1923~ and the nonres ide nt ali e n s did not a nd for all that appea rs could * * *. not. r ece ive the intere st until the n When the inter-e s t ~�J a~ ac tua 11 y paid to and received b y ':. he bondholder s they r-eceived in c o me t a :-:abl e at the r-ate th e n e ff pc ti ve , c'.\nd th e pet i tioner s ~'' E'n;? under- th e duty of paying s o mu c h the r e of a s by th e s tatute the n in effect they we re required to ~�-Ji thhold a nd pa y." Oblique s upport i s thus give n to adoption o f the time of payment as the ma turation po i nt of the withholding duty, payment being both an eas ily recognizable act of obj ec ti ve s ignificance and a s t a ndard s afeguarding the co 11 ec tion o �f the proper� amount of t<3.:�:." What possible ground can there be for us not to app 1y to pet.i tioner the ru 1ing of the United States Feder-al Court in !::,_!!>_~- C..?..\,\.lt., supra~ for which Bayer Pharmaceuticals, Inc.. is similarly situated? A decision buttressed by the law~ which is closely if not exactly s imilar to our law, reason and logic is not. to be simply brushed aside to

DE C I!:3 ION CTA CASE NO. 3725 acc ommodate a ruling of our own Bureau of Internal Re venue which merely quoted as a uthority the e:.:c:er-�pt of a United States Int.er-r1al Revenue r� ul ing but which e:�:cerpt h as bee::~n dc~c lan~d 9.P?PJ~J:..~. by the same United States Inter� nal Revenue Service as <":1. n=~sul t of the k .-.JL!....... t;:;~t,.tJ.J:::. deci s ion. As we v iew this legal problem~ we find no coge nt and valid reason to modify~ much less depart fromt he conclusion reached in l,., .~n. ~ ...G .~. \.,t.LL ~ as e:�: pr-�es se d in the above -� quoted opinion of the United States Court th ere ~ and the same should re s olve the identical iss ue now brought befor.. e us in this proceeding. We cannot ignore the welJ. .. �set t.led principle of c onstruction that si n ce or_w income ta:�: law wa s prac ti ca lly copied from"that of the United States~ the interpretations it has received in the United States have a uthoritative effect in the proper c:cm s t r uction and applic<:\tion t'J'f our la!.'J. t1 cH"e so in the c~::\se of our� l.'Ji thholding tax-at-source prov ision embodied in Sec tion 53(b) of our Nati onal Internal Revenue Code wh.i.c h ~ a~; s hown a bove~ ~t-Jas men=:.� 1 y .i )Or ted a nd c:opiec:l a 1 mo s t ver-�ba tim fr. o m Section l43 (b) o�f the United States Ta :< Code dur� ing the�? year� involved in the L . ~J?...~........G..~t,!J..L. d f'~C i ~;.io n . Ac: cor d .i. n g l y ~ the c GJn c:: 1 u ~:; ion r.. eac h e d .in L,..d?.. ~... . .G.�.L.-~. J. b.~ \.'1 hi c h is followe d by the United States Internal Revenue Service - that the time of payment o f the royal ties is the matur-�a tion point of th e wi thho J. ding duty should govern t h i s pt..� oc~:~eding. Not much need be sa id on respondent's assertion that~ based on the report of the investigating e:�:aminer~ nothing is stated that petitioner attempted to remit the r�oya 1 tic~s to Bayer, By respo n dent� s own deci s ion, i t is e:�:plicitly declar�ed "that the royalties in the amount of P69,529.00 ~-.J e l~ e not rem.i. t ted by BPI (petitioner here in) to Bayer due to Central Bank ,~es tric:tions." (E:<h. "5," E:�:h. "E - 1"," p. 30~ BIR records) Since the royalties ~ 18 !-.

DEC IS I Dl\1 CTA CASE ND . 3725 - 24 - cou ld not be remitted to Bayer due to Central Bank restriction s , as stated by res pondent himself in hi s decision appealed from, surely, respondent's coun se l s hould not expect petitioner to make efforts, a lbeit unlawful, to remit the sa m�;>. And on r�esponclent � s point that s ince the royal ties had b een ace: rue d in peti tic>nf? r- � s book s the income thereon became s ubject to withholding even if n c:> mit.t a nc e wa s effected lat e r� , suffice i t to say t.ha t the ac:c r-�ua l of the r�c>ya 1 ti es in p e t i t io n er's book s, as held in the k~P� ~.f:1,_L..\.1J:_ , cl icl not amount to 11 gain s, profit s <:l. ncl in co me 11 on th e par-�t o'f non - -r--es ident B ~::\ye r� a nd, thE:?refo,~ e , no nc..~, cess i ty to withhold tax devolved on petitioner. t.J P, i::"\c:cor-clingly, n .1le that s ince the r-�oyal ties in qu estio n c ould f.}.9...t.. be paid or-� r��emi t ted in 1. 972 by p E:>t i tic.me1~ Bayer F'h ar-�mac:E! uti c:a l s, In c., to non -- r-esi dent for eig n cor poration Bayer Aktiengese ll - sc: h a lft , Leve rkusen Bayermerk clue to CP.nt.r--al Bank r-�estric:tio n s, p etiti on er� vias undr~,.- no obli.gatiion to withhold ,:\nd p ay i n co me tax - at - so ur ce on Si:t.i.cl roy a 1 ties c:ll"lfi, t 1�1(�? r��e f orE', i t is not 1 iab.l e for� the d e fi cien cy wit hh o ld i ng ta:-:-� a t - so ur�ce ;,:\ sf"> ('?s sm�~ n t o f r�e s ponden t Commissioner of I.n t<=.-~ r� n a 1 Rc;>ven u e :-: :-: :-: . " In view of the above rule that since the roya lti e s in q u estion c ould not be paid or remitted i n 1975 b y pe titioner Nippon Paints (Philippines ), In c: . to non -�� n '�?sident: for-e ign c: or�por-�ations due to Central Bank restrictions, petitioner was under no ob lig a tion to withhold and pay income tax - at-source on said ,�-oy;::\1 ti(;?S and, therro:?fore, i t is not 1 iable � fo,~� thE�~ d e ficien cy ~~~.i. thho 1 ding ta:-: - a t �-�� source

DECISION -- CTA CA SE NO . 3725 ,::\ sse ss me n t of r es pondent Comm.i s~~.io ner of In ter�na 1 Re ve nu e .in t h e s um of P75~431.55 for the year 1975. Anent t h e .issue of the alleged deficien cy real es t a t e dealers tax for 1976 in the amount of F'.1,650.00 inc lu sive of .interest~ pur s u a nt to Sec. 19:3 o f T a :-: Code of 1977~ p e t i t i o n er s ubmitt e d to thi s court its eviden ce p ay me n ts the conf.i.r-rnatio n ,.�-ecP.i.pts (E:�: h. C) in the a mount of P 2, 997 . 12 d ated Apt�� i l 4, 1985 (p. 76, CTA rec:.), Or.. det�.. of Payment ( E:�: h . D, p. T7 , CTA n:ec. ) ~ a nd con fi rma tion of the co ll ection agent, BIF\, Quezon City (E x h s . E ~ E- 1, & E- 2 , p. 72, CTA rec. ) . l'JHEREFOF- E , t hr= cl ec: is ion '" p p ea 1. e d from s h o uld be , as it is h ereby, re versed. No costs. SO OF\D EFi:E D . 6u ez on ~ity, Metro Manil a, Dece mb er 1, 1988. L I ) ' t ,_

DEC IS I 01\1 -.. CTA CASE NO. 3725 -- 26 ..... ~JE CfJf\.ICLm: AMANTE ILLER F'r�es iding ,JudgE:? () s~.:; oc.ia.te .Judge CERT I F I CAT I 0 N I that this decision was reached after due consultation among the members of the Cnur� t of Ta:�~ Appea 1 ~-; .in accordance with Section 13~ Articl e VIII of the Constitution. AMANTE F'n::.?s.i.d ing cJudge Court of Tax Appeals �. 7 :_1