Mp Hi Ge I Cs a a, et al. vs. Commissioner of Internal Go Ae Revenue If!

DECISION

On Hovember 16, 1959, Pleridel M. Mingoa and Smilie C, Montoya, BIR examiners, submitted a memorandum to the Ohief of the Investigation Division of the Bureau of internal Peverme, a portion of which readsas follows:

v "Investigation aa ogg by 10, 1959 disclosed that Macairog ée Guia of 2123 Sto. Vile, Pan- Gagan, “enila represented himself i 88 local sentative of the following firms:

"1. Panda “Williams & Co, 201 Locust St., Gan Francisco, Cail fornia "2. Western Celifer 5t., San Praneiseo, California "3. Simon Distributing Co, . 2631 West Pieo Dlva., Los Angeles 6, Celifornis "%, wWrentham D Distributing Ce, oy California St., San Fran- cisco, Californie 7 W aid > =» tee oe 7 —— a Lh he. COC CULL lhl > as » *-_ « - Y 2.

‘ — DRCISION . h CTA CASE WO, 1220 "S, OSfeking Dietributing Co.

Angeles 6, california He solicited business for these firms, and through his intermedietion the following firms ond individuals ispor- , P| ted goods te this country: )

"1. Ace Drughouse, Inc., Sam- "2. Vroncisea lierrera, Liber- tad, Pasay “3. Virginis Quiambeo, 1%1% “%,. Virginis Topacio, Pasig,

Rizsel

"S. Remedios Little Market "6. Gonzales Trading, Lagway, Gan Juan, Rizal "7. Urbana Sebastian, Hagonoy,

Bulacan

Seaeng Ge xoee 2977 ont 1998 See said “. de was sble to negotiate = | end consummate purchese orders (let- ters of credit) from the above-named individvels and firms the total F1,122,410.8% ond #39065 167.40. These acts, it is submitted make him oe gommercial broker « le failed to prowide hinse th the necessary privilege tax receipt as commercial broker, failed to file monthly returns of his commissions bg ag end led to 6 tax due sec and pens lized under sections 208 ent ate” all of the Tax Code. According m4) yy a taxes and compromises shown below:" (pp. 13-14%, BIR ree.)

On the beses of the aforesaid nemorandus, the Acting Commissioner of Internal Nevere, on March 8, 1962, issued an csseasnent against petitioner Meeairog de Guia for #14,220.11 computed as followss 239 | 8 a sila il as SS eS ae ee ee eee |. er Lees

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DECISION -

CTA CASE 5. 1220 3 age osF te 1958" sales, 96,628,578. *_* © @ @ , ’ a 2s seambaehan thereon . . 132, 571.56 68 tex oe: on coamission *e ¢ so @# * #7 595% .29 ree for willful eee © file monthly *“eeereee#e oad yecvines ll for late paysent 1» . ror sh ovat bUR

p. 38, HIF rec.) a5 The nll assessnent is now on appeal before this Court.

The evidence of the respondent consist of the testimony of Plaridel Mingoa, a supervising special investigator of the Bureau of Internal Revenve, and documents Exhibit 1, the witness' memorandum of Noveaber 16, 1959 for the Investi- gation Division of the same offices Nxhibit 2, « letter dated Februsry 5, 1960 requesting peti- tioner to appear before the Bureau of Internal Revenue and explain his tax liebilities; and Uxhibit 3p an assessment for #14,220.11 against petitioner es 6 commercial broker dated “arch 8, 1962, The testimony of Mingos is to the effect that petitioner end ene Suporters were investigated by the PCAPE for dollar salting; that in view thereof, witness “ingoa was instructed to investi- gete the tax Liabilities of petitioners that fron information that he hed gathered, “ingoa found that petitioner presented hiuself to the Ace Drug- 240 a es. ©” isa - . |.” T= a re FP ae Paar ree ~s7) ’ ‘ ’ .

. ' . ’ y ey - s ~ ' a.

; by | house, Ines, Franciseo Nerrera, Virginia jwiembao, BY Vir Topaeio, Remedios little Merket, Gonzales a and Urbana Sebastian, all Pilipino import- ert, as an agent of Famele Williams and Company, Western Drugs, Simon Distributing Co., “renthay Drug Distributing Company, and Sicking Distributing Company, which are foreign firms, that the records of the Central Henk showed that the aforesaid Pil- ipino importers obtained letters of credit; ¢hat “iogos later learned from the importers that said letters of credit were obtained through petitioner's intervention and were used to import drug from the | United States; that the value of the imported drugs 2 were subsequently discovered te be mmeh less than | the letters of credit sent abroad to cover the importations; that neither the letters of credit | nor the importations were recorded in tie books of the imperters and petitioner for hie part kept no books; that having no information as to the per- centage of commission that petitioner received in the transactions in question, Mingoa canvassed the usual commission of indentors and he found that the ordinary rate was 2%, which he made the basie of the assessment now on appesl.

Petitioner for hie part took the witness stend ond presented records of the Court of First In- 2a ae eee Pee oe ee i I th tt i ct 241 . re a is ———

DRCIBION «

CTA CASE NO, 1220 5 stance of Manila showing thet he has been charged for dollar salting with Virginia Topecio, Virginia Quiambeo end other persons. On the stand he testified that he never hed eny relation with the foreign firms hereinabove mentioned but that he knew the Filipino importer mentioned further above, He went on to say that he came to know » certain Mr. Setlitz; that through him the importers here- inabove mentioned came to know Schlitz; that Sehlitz used to give said importers noney through peti- tioner, which money was used by the importers when~ ever they seeded letters of credit for importing goods; that for every letter of credit obtained by the importers petitioner received 100,00 and all told he must have in this manner facilitated sone 60 letters of credit; that the letters of eredit involved in this case were not obtained by him but by the importers themselves.

There is hardly anything in the testimony of Mingoe or in the documentary evidence edduced by the respondent that can be considered reliable evidence to prove that petitioner acted as rep- resentative of the foreign firms hereinabove men- tioned. On this point the said testimony is pure hearsey «nd so are the ate submitted by re- spondent. According to Mingos he gathered the :

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DECISION

CTA CASE NO. 1220 6 informetion in cennection therewith from the record of the PCAPE and the imperters; the import- ers told him thet petitioner represented hizself - as an agent of said foreign companies. ‘owever, neither the records of the PCAPE nor the i=port- ers were made availsble te this Court. And what 4s significant is that ‘ingoa admits that there ie nothing in the various letters of credit or the beoks of the importer to show that petitioner intervened in the transactions involved herein. Indeed, “Mingoa further admits that the said trans- actions were not recorded in the books of the importers because they were anomalous transec- tions, There is really nothing to show petitioner's relation to the foreign firms aforesaid.

Squally significant is the admission of Min- goa that compared to the amount stated in the letters of credit involved in this case, the goods imported were negligible and the excess in dollars were kept ebroad and petitioner and the importers were later charged in the courts of Manila for Goller salting. The d@iserepaney in the value of the letters of credit and the actual importation 4s best illustreted in Criminal Case So, 53442 — ef the Court of First Instanee of Manila, entitled People of the Philippines v. Virginia Quiambao, Macairog de Guia and “etividad Cruz for falsifi~ 243 es es ae See eS, he eee”. SS ee ee a ee . Fe eee eee an oe é 5 4 4 . . fn why DECISION - a 7 salting filed aginst petitioner, where the letter of credit was for $36,917.50 but the goods imported were found to be vorth only $1689.14 (Sxh. 4). The ealting operation is best described in the following portion of the decision in thet case: “On October 27, 1950 the eccused Virginie Quiembac applied for a for surgiosl Plain Gauze and surgical eatguts desertbed in the letter of cation, one of the sore or less 60 ouses of dollar ° | OO OEE oe CTA CASE HO, 1220 Corporation to liquidate the letter of credit. The three accused went te said bank and paid the amount of the letter of credit. They received the shipping documents which were necessary in order that the goods which were imported under the nase of ne Quiambao may be received by hem.

“Actually, the aecused did not have any intention of taking the eods imported by them. s is use the purchase thea of the U. 8. dollars ostensi te purchase hospital su es was only a means of remitting dollars abroad and keeping it there, which at that tine not be done freely.

"An examination ef the goods whieh arrived and were covered by and paid out ef the letter of eredit opened by the accused showed that the same consisted of absorbent wadding and low grade gevuse valued at U. 5.

$158.14 thereby enabli the accused to salt awey U. 5. 530,7%9.36 to the udice ef the Government of the.

lic ef the Philippines. Although they paid the Republie ef the Philip- nag gy Re nt of the 0, S, 30,927.50 in Philippine currency, the amount paid was on the basis of Two (72,00) for every U. &. Dollar (UT. S, 61,00)." (pp. 75-76 CTA ree.)

From the evidence of the parties {t would appear that the letters of credit upon which the assessment in question ta based were obtained not te cover an importation in good faith but to salt awey dollars abroad and it would aise seen that petitioner 414 not aet as representative ar agent of the foreign firms mentioned further above in the said importations.

Petitioner's admission that he acted as some sort of middleman between a certain Schlitz 245

DECISION «

CTA CASE NO. 1220 9 and the importers, that is, whenever a letter of credit was opened by the importers it was he who brought the money of Sehlits te the import- ers, is of no consequence. In the first place his testimony on this point dees not deserve credence; even counsel for respondent questions its veracity. In the second place, even assuming arenendo the truth ef said testimony, same is not an admission that petitioner acted as agent or representative of the foreign firms herein in- volved, a pretension which is on the other hand denied categorically by petitioner on the stand.

WHEREFOR?, the decision of the Commissioner ef Internal Revenne under review is hereby reversed, without pronouncement as te costs.

Associate Judge

we CONCUR:

Cl Hikes

Presiding Judge

ge Lee “BGTARISLAG R. Caan

Associate Judge