Court of Tax Appeals
0Lianga Bay Logging Cos, et al. vs. Commissioner of Btpreal Rev Sob
\EPUBLIC OF THE PHILIPPINES
COURT OF TAX APPEALS
QUEZON CITY
LIANGA BAY LOGGING
COs, IMCs, hs versus. CTA CASE HO, 1741
COMMISSIONER OF
BTPREAL REV SOB
- Respondent.
Rew ew eww eek :
pecistow Tis 4 an appeal from the decision of re- spondent Commissioner of Internal Revenue holding petitioner lable for the sum of 9%4,115.69, repre- senting 25% surcharge for alleged failure to provide auxiliary involees covering forest produets out and _ removed from its forest concession during the period from April, 1956 to Deceniber, 1951, plus the sum of $300 as “compromise penalty" for using commercial — .
scale table in violation of Seetion 4(j) of Regula- tions No. 85 of the Department of Finance (Revised Internal Revenue Forest Produets Regulations). Petitioner fe a domestic corporation whish was issued an ordinary timber License in 1956 by the Bureau of Forestry, which timber license was con- verted into Timber idcense Agreanent Ne, ¥9 on Maren 202 pecrsran « CTA CAST BO, 4744 ‘2 12, 1958, Eros April, 1956 to Decenber, 1961, forest products wore eut acc removed by petitioner fron its forest concession on whieh the sum of 03365462040 © vas paid as forest charges. Respondent claims that removal of said forest prodvets from the concession. was not secompanied by auxiliary involees, henge, petitioner is liable for the 25% sprenerce under -
Section 267 of the National Internal Revenue Code
“amorinting to 96hy115.60,. On the other hand, reti= - tioner eleims that as operstor Claes ¢. Sawnill, it is not required to prepare and ‘submit auxilisry ine ° voloes, pursuant to Section 2f of Regulations No. 85 of the Department of ¥inanee. Neving failed to Secure 4 reconsideration of a aes Saat petitioner has appealed. r Seetion 267 of the Revenue Code ptevtine that if “forest products shail be removed without invoice” + + « the charges shell be increased by twenty-five.
por econtum." The low does not define or describe the term "invoice" the fatiure te teeue whieh te penalized by s surcharge of 25% of the regulsr forest cherges, - The invoices and other documents which are neees sary for the proper enforeenent of the law on forest charges are deseribed in Reeulations tog 85 of the Departuent of Finance watch was isened under * 203
DECISIW «
CTA CATR NO, 497%4 .
the old Internal Revenue Law and ‘continued in foree under present: law pending tsguance of new reculations « It 4s unfortunate thet up te this Inte date, no new ‘Pegulations on forest charges have ‘been proanigated despite-the lepse of more than thirty years from the | _ date the lational Internal Revenue Code wos enaeted | nm 193% We say 1 is unfortunate because sone | provisions of said Reculetions are already obsolete giving rise to confusion in the administration and | —. Geetion 14 of Regulations Nos 69 requires a forest concessionaire who tv the holder of an ors dinary License to list the forest rroduets ent by “him from hie eonessston on blank forss of auxiliary ‘Amvotoes (8.1.8. Form fo, 1.0% in the case of tiober OF BaTei Pome Moy 1.05 tn the ease of Cireyood or other mincr forest profucts), whieh forms ere fur~ — _ nished by deputy provincial treasurers vhere the ‘ forest products are out, pon secomplishment of the auxiliary invoices, the same are presented to the deputy provincial tressurer who colleets the forest charges by Assuing the corresponding official in- - volees. No forest product may be transported fron _ the cutting area unless accompanied by an awctltary Anvotee tofether with the corresponding of fieial in : @ - 204 CASE HO, 1704 r Separate provicions on invoicing and paynent - of forest charges are made in the ease of owers or Seetion 25 of the Aeculations providess :
f fee. ss iistione, saat ie are classified into in the follewsg seations.. a Under the regulations, sewsille are classified into four (Ay By Dy and D), Class A refers to those operated by holders cf forestry Mernses for the purpose of sawing timber cut under their lfeenses, Located within the Mernsed eutting aren. These licensees are required to scconplish auxiliary in- ~ woleos and te secure official tnvoiees as provided in Seetion 11 of the Regulations in the same mgttner as ordinary licensees, (Bee Seas 26, Mogviations Bo. 35.) |
DECISION =
CTA CAST NO, 41744 .
Class DB sawmills are those crerated by holders of forestry LMesnses, in or near the forest, wi the out a forest officer being stationed therein, and for the cperation of which @ bond is filed with the ° Collector (now Commissioner) of Internal Revenue to evarantee the payment of all forest eharges ave fron the concessionaires, Operators of Class 5 sawmills are required to keep and accomplish, in lieu of the auxiifary invotees, the Log Seale Record (B.1.R. Fors Nos 1%.95)4 Daily Trimmer Tally (B.I.8, Porm Moe Thott); Sawmill Involee (B.16h. Form Noe tet3)s and Monthly Abstract of Sawmill Invoice (B.J.R, Porn Bo» 14.1%), Unlike in the case of ordinary licensees’ and operators of Class A sawmills who are required te accomplish auxiliary invoiees and to pay forest | charges for every shirment of forest produets removed | from the cutting area, “perators of Class B sawnilis are required to secoplish the records mentioned above and to pay the forest charges due from them at the end of each month, What is required to be pre- sented to the deputy provineial treasurer in effecting “payment of forest charges is the Log Seale Keeord which de made the basis for the computation of the amount of forest charges, (See See. 275 Regs. Nos
P54)
CTA CASE 10, 1781 7 | re Class € sawnills ere those operated by holders of forestry licenses, at which forest officers are percanently stationed for the purpose of sealing all Lege felled, and for the operation of waich a bond ts filed with the Conissioner of Internal Revenue to guarantee péyment of forest charges due from the concessionaires, As in the oase of operators of Clase B sawmilie, operators of Class © sawntlis are . hot required te sceomplish ouxilisry invoices, but in leu thereof, the copy of the monthly seale report furnished operators of Class C saweills by forest officers is the one wich they are required to pre-— sent to the deputy provincial treasurer for the pure pete of paying the forest charges due fren then. | Gee See. 28, Regs. No. 85.)
‘Clase D samitlie are those operated by holders of forestry licenses who ore pernitted to measure ‘ their timber after being sawn. Por this privilege, they are required to pay ¥10,00 for each 1,009 board feet of first and second grovp timber and 65,09 for other groups. Yor the purpose of paying the forest charges on forest products cut and removed from thefr — concessions, operators of Class D sawnills are required - to accomplish a monthly summary of lumber sawn (BsIsRe Form Nos 14.12). They are also required to keep
DTCISION «
GTA CAST BO, 1741 9 | and use the reeords and forms prescribed for Class B or C stiwnills according as to vnether or not a 4 - forest officer is stationed at the mill. (See Sea.
# + careful examination of Regulations so. os implementing the lay on forest charges will show that not all shipments of forest prodvets require that they © be accompanied by avxilary involoes. These ouxtliery invotees are required genereliy to be accomp)i shed only by holders of ordinary forestry Meenses and by ‘operators of Clase 4 Cawillis, Operators of Clase By © and P sewmilie are required to accomplish doce uments or records other than auxiliary {nvotees in eonsonanee with the natore of their forestry opera- “tone, the primary purpose being to insure that forest produete are cut only fron Licensed areas . authorized by the Bureau of Yorestry end that the . correct ancunt of forest charges are paid hy forestry ‘ecneessionaires.
Geetion 267 of the Nevenve Code imposes the penalty of 25% surcharge of the regular forest Gharges if forest products are removed fron a forest concession “without invoice." Obviously, the word *invoige"” mentioned in the law is not Lintted te auxiliary invoices, In fact, Seetion 41 of Regule~ _ tions No, 85 has internreted the word “invoice” to —
DECISION ~ |
CTA CAST NO, 17% .
E
.vefer to “officiel invoice" or “goamereiel invoice."
Gection 41(f) of eaid as follovss if anyg 2 « + Negulations reads, in part,
(f) Forest prodvets transported thout official invoi Petitioner, operator of s Class © sawmill, has not been shown to have documents required of The presumpticn is the failed to keep or issue the it by Regulations Uo. 85.
t it has.complied with the re- quirements regard@ing the weeping and use of the re~ eords nnd docusents required of Class C sawnllis, - anong whieh are the Dolly Trinser Tally and coomer- ofall invot ces." Consequently, we find no merit in the charge that petiti of 25% of the regular nets removed from its oner is liable for the surcharge forest charges on forest prod= ~ concession for transporting the same “without invoice” since said forest products were doly covered by commercial Invelees. ~/ sees 282{4) of Be gt. Yo. 85 reads: “(&) Operators lls shall the Daily Trine een, ae pan les
DICISION «
CTA Case 50, 17" 9 The Director of Forestry, in s nemorandun addressed to Yarestry Negional Pireetors, District Foresters and Officers An Charge, dated September 6,. 1954, @lso expressed the view thet eperators of Clase © eawrille are not required to seconplish uxt lary invoices, The pertinent portions of vata weverandon "are quoted belows | | when the logs are sealed ty the of Torestry in the outting area of a ‘Class C taweil? (a timber Licensee vith a tawmill) and the non 2 Tet wien ; - While the duties incident to seesurement of forest produets and the collection of forest charges are . vested in the Svreau of Internal feveone, the “tities | ihetdent to the measuring and invoicing. of forest produets* were, during the portod In question, authoriged to be performed by exployees of the Bureau of Yorestry, Thie ts show by the fact that under Aeguiations lo. Sf, the neasuresent of forest produets of cperators of sawaills wat performed by forest officers whe prepared the eorrespending month« a + 210
DECISION =
CTA CASE NO, 17 40 ly seale reports.
. In conneetion with the sum of #300 which is. sought to be Seposed upon retitioner as “conproni se penslty" for violation of Section 4(j) of Reguie= tione Bo, @5, it te encugh to etate that the imposition of the tame without the eorformity of the texveyer fs illegal end vnertherized. (Colles vs UsS.T., 1% Phil, 10623 Phil. Int. Pair ve Colley Get, Nos. La2928 & (a f2992, “arch D1, 1962.)
IN ViTw OF THE FORPOOING, the decision sppealed | _ from te hereby reversed.
SO ORDER DP.
qQuesen City, Cetober 36, 1971.
RO Ye
wr =
Ness
SIAO Re
“ Associate Judge