PHILIPPINE ACETYLENE CO., INC. vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS
G.R. No. L19707 August 17, 1967
Facts:
1. The petitioner made various sales of its products to the National Power Corporation, an agency of the Philippine Government, and to the Voice of America an agency of the United States Government.
2. The sales to the NPC amounted to P145,866.70, while those to the VOA amounted to P1,683, on account of which the respondent assessed against, and demanded from, the petitioner the payment of P12,910.60 as deficiency sales tax and surcharge.
3. The petitioner denied liability for the payment of the tax on the ground that both the NPC and the VOA are exempt from taxation.
Issue:
Whether or not petitioner is liable to pay the tax
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Ruling:
NPC
The Code states that the sales tax "shall be paid by the manufacturer or producer," who must "make a true and complete return of the amount of his, her or its gross monthly sales, receipts or earnings or gross value of output actually removed from the factory or mill warehouse and within twenty days after the end of each month, pay the tax due thereon."
"The phrase 'passed the tax on' is inaccurate, as obviously the tax is laid and remains on the manufacturer and on him alone. The purchaser does not really pay the tax. He pays or may pay the seller more for the goods because of the seller's obligation, but that is all. The price is the sum total paid for the goods. The amount added because of the tax is paid to get the goods and for nothing else. Therefore it is part of the price ".
It may indeed be that the incidence of the tax ultimately settles on the purchaser, but it is not for that reason alone that one may validly argue that it is a tax on the purchaser.
It may indeed be that the economic burden of the tax finally falls on the purchaser; when it does the tax becomes a part of the price which the purchaser must pay. It does not matter that an additional amount is billed as tax to the purchaser. The method of listing the price and the tax separately and defining taxable gross receipts as the amount received less the amount of the tax added, merely avoids payment by the seller of a tax on the amount of the tax. The effect is still the same, namely, that the purchaser does not pay the tax. He pays or may pay the seller more for the goods because of the seller's obligation, but that is all and the amount added because of the tax is paid to get the goods and for nothing else.
We therefore hold that the tax imposed by section 186 of the National Internal Revenue Code is a tax on the manufacturer or producer and not a tax on the purchaser except probably in a very remote and inconsequential sense. Accordingly its levy on the sales made to tax exempt entities like the NPC is permissible.
VOA
It appears that the petitioner and the respondent are in agreement that the VOA is an agency of the US Government and as such, all goods purchased locally by it directly from manufacturers or producers are exempt from the payment of the sales tax.
However it issued purportedly to implement the Agreement between the Philippines and the US Concerning Military Bases, but we find nothing in the language of the Agreement to warrant the general exemption granted by that circular.
Thus only sales made "for exclusive use in the construction, maintenance, operation or defense of the bases," in a word, only sales to the quartermaster, are exempt under article V from taxation. Sales of goods to any other party even if it be an agency of the United States, such as the VOA, or even to the quartermaster but for a different purpose, are not free from the payment of the tax.
On the other hand, article XVIII exempts from the payment of the tax sales made within the base by (not sales to) commissaries and the like in recognition of the principle that a sales tax is a tax on the seller and not on the purchaser.You can support our page by clicking any of the following links:
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