CTA Case No. 277

DECISION -

C.T.A. CASE MO, 277 a warded immediately to the Business Tax Diviston for the prompt assessment of the same smount against Alfred A, Boulle, Inc." {Exh. “W", pp. 152-150 BIA rec.) However, the respondent Collector of Internal Revenue disapproved the recommendation of the Con- ference Staff, and now insists on the collection of the assessed specific tax and penalty against the petitfoner herefn. Hence, the petfttoner filed the instant appezl with this Court on June ?, 1956, Under the facts, as agreed by the parties and established by documentary evidence, which ere stated above, is petitioner United Artists Corporetion liable for the payment of the specific tax which the Collector of Internal Hevenue seeks to collect? Thet is the only question to be decided tn the present ease.

Section 125 of the Natfonal Internal Aevenue Code, which governs the case at ber, reeds as follows;

"Sec. 125. poe Boe net tax oe »~ specific taxes on imported es Shall be pafd by the owner or to the customs officers, coniormaaly r) reguletions of the Department of Finance and before the release of such articles from the customhouse." (iinderscortng supplied, ) /[ ( Under the above-quoted provision of the Tax Code, it {s very clear that 2s regards ‘mported articles, the

(1) owner or (2) Importer {s the one liable for the pay- ment of the specific tex due thereon. If the United Artists Corporation is the owner or importer of the cinematographic films on whfch the specific tax was assessed, then it should pav the tax demanded, On the ether hand, ‘f said corporation does net fall within 75 542

LDECTS TON -

G.T.A. CASE NO, 277 - 5 any of those two categories, {.¢., gwner or importer, then the respondent Collector of Internal Revenue should extend its collecting arm to these who are legally liable for the payment of the iapest in ques- tion which from all indications should be Alfred A, Boulle, Inc, and not the petitioner United Artists Corporation. | Now ~ is the petitioner herein the gwneg of the Cinematoyraphic films received from the United States Army? The “Stipuletion of Facts" dated March 16, 1957, which was submitted by the parties gives us @ positive and conclusive answer. The cinematographic “films were all produced and owned by the said Eagle Lion Films, Inc." (par, 2,Stipulation of Facts.) Petitioner United Artists Corporation, a domestic corporation which was erganized and existing under the laws of the Philippines, is entirely separate, distinct and different froa the Eagle Lion Films, Inc,, which is a foreign corporation created under the laws of the United States. As certi- fied to by the Assistant Treasurer of the petitioner cor- poration, the latter fn no way contréls nor is the abse-~ lute owner of the Eagle Lion Films, Inc. (Exh. "Z-1) Pe 25 CIA rec.)

Let us now proceed to consider whether or not the petitioner is the importer of the six (6) cinematographic films in controversy. It is en established and well- settled rule in this jurisdiction that for purposes of Collecting specific taxes on imported erticles, the 576 57!

DECISION -

C.T.A,. CASE NO, 277 we United States Army bases end installations tn the Philippines are considered foreign territory. (Go Cheng Tee vs. Meer, 47 ©. G, 269, Supplement; No. 12, Dec., 1951; Saura Import & Export Co., Inc. vs. Meer, G. A. No. L-2927, Jan, 26, 1951.) Hence, when goeds are removed from, and brought outside of a United _ States Army base or installetion, there is {mporta- tion in the eyes of the law, and the person causing such removal and transfer fs considered the importer. In the present case, {t is adnitted by both parties that it was Alfred A, Boulle, Inc., and aot the peti- tioner herein who recefved the six (6) cinematographic films in question from the United States Army, and caused the removal of the same froma the jurisdiction of the latter. Hence, Alfred A. Soullée, Inc. is the importer, and as such, it should be required to pay the corresponding specific tax due thereon, and not the petitioner herein. )

And as regards the arguaent of the respondent that the petitioner should be held liable for the pay- ment ef the specific tax on the cinematographic films inasmuch as {t succeeded to the possession of the said films, we quote with approval the opinion of Atty. Ubalde Tabing, then Acting Chief, Law Division, Bureau of Internal Kevenue, as appearing in his memorandum for the Collector of Internal Revenue dated October 8, 1955;

577 S40

DECI IGN -

GeTeA. CASE NO, 277 on 7 a2 "Likewise, the fact that the United Artists Corporation succeeded to the pos- session and distribution of the films in question did not render it liable for the of the specific tax due thereon, the aforesaid section 125 of the Tax Code, only importers or owners of imported articles are subject to specific tax. Cen- sequently, the mere possession and distri- bution of the same, without be the ine Seesinchiny dor tae payiuns of Oho anceatie pons or nt o spec tax due ¢hivoen.* (Exh. "y"s pp. 188-189 rec. — RP ee it is only as regards domestic products, when a person having possession of the same may be held iiable for the specific tax due thereon, Gection 124, National Internal Revenue Code, ) There is therefore no law nor legal authority that can be cited to support the specific tax assess- ment of the Collector of Internal Heverme against the petitioner. However, it seems that the respondent would still like to collect the specific tax in ques~ tion from the petitioner for the simple reason that Alfred A. Houlle, Inc., has gone out of business. (See Pe 162, BIA rec.) On this point, we fully agree with the unanimous opinion ef the Conference Staff, as embodied in {ts memorandum for the Collector of Internal Revenue, dated August 7, 1954, (Exh. "#", pp. 152-158 BIA rec.) wherein it was held that:

"As regards the nt that the spe- cific tex due on the ontien picture films removed by Alfred A. Boulle, Inc., from the ses ef the U. 5S. should be col- ted from the United ists Corperation because Alfred A, Boulle, Inc., is already out of business,

Pi * ‘ | Ao"

a7

DECISION -

fo coun~ tanta- practice would be mount to taking property without due pro- cess of law." (Exh. "W", pp, 152-158; underscoring supplied, )

WHEREFORE, in view of the foregoing considera- tions, the decision of the respondent Collector of In- ternal Hevenue is hereby reversed, and the petittoner United Artists Corporation is hereby declared free from OT SD ee payment of the specific tax and compromise penalty in the total amount of #3,150.80 subject of the present appeal, on the six (6) cinematographic films received by Alfred A. Boulle, Inc. from the United States poo in 1949, without pronounceswent as to costs.

‘30 GWERED, manila, Philippines, October 16, 1957.

Pe an _ NADLE

Presiding Judge

In the result.

Assoctate Judge