CTA Case No. 3139

DECISION —

CTA CASE NO. 3129 interest for the years 1969, 1972, the details of which 1969, Gross interest income aa4 Withholding tax aO%Z Surcharge 12% annual int. from A-16-69 to 4-16-72 Tatal amount due and callectible (36%) BA. Creditor - Dillingham Intl Company:

interest income withholding tax SO” surcharge 12% annual int. from A~16-69 to 4-16-72 Total amount due and collectible Gross SoA C. Credi-or - Dil Gross 30% withholding tax 30% surcharge 12% annual int. from 4-16-69 to 4-16-72 Total amount due and collectible (267%) interest income (36%) Creditor - Dillingham Intl Capital Corp:

Gross interest income 25% withholding tax 1970, are as follows:

Creditor ~- Dillingham Overseas Fo25,961.00 12,980.50 wet hh 2G Fo58,482.00 29,241.00 P678, 220,25 oF got 7 OU 1971 and —_— _ = —_ aS

DECISION —-

CTA CASE NQ. 31239 HOA surcharge 124% annual int. from 4-16-71 to 13-71-72 14% annual int. from 1-1-7232 to 4-16-74 Tatal amount due and collectible ne 3) A. Creditor - Dillingham Intl Capital Corp:

Gross interest income Sa% withholding tax nO” surcharge 12% annual int. from A-AS-71 to L2-31-72 14% annual int. from 1-1-7323 to 4-16-74 Total amount due and collectible

AZZ A

Aa. Creditor - Dillingham intl Gross interest income 20% withholding tax 2O%Z surcharge 12% annual int.

4A-1Vb-72 to 12 14% annual int. from dei-73 to 4-16-75 Total amount due and collectible from ~R1-72 Credijor - Dillingham Over~ seas Corp:

Gross interest income n 29% withhalding tax NO” surcharge F118,688.50 77,147.

we AOIE 2 BP.

F442, FOO.9R 80,205.68 wed a BEB. 7S FO 728,746.71 F1,696,728.41 FE 593,855.00 296,927.50 50,477.68 bP Og EB A ‘neste snore wereh ees seeps games opine sneam npery seam enen enect sina Be oe 4B FE 89,367.00 44,683.50

DECISION -

CTA CASE NO. *139 fram SL-72 2% annual int.

4-Lo-72 to Ls 14% annual int.

1-1-7 Total amount due collectible from A.

interest income withholding tax NO” surcharge Gross SOA 144% annual int. from 4-14- ta 4-16-76 Tatal amount due and collectible Fe “ B. Creditor | Bs interest income withholding tax OO” surcharge 14% annual int.

Ae V6O—75 toa Tatal amount collectible Gross aioe from A-Lh-76 due arid Fetitioner preatested the ASssesaments, through its auditors, letter dated November 20, 1976 respondent's Bureau on November 22 Respondent, in a letter denied petitioner's protest, pasted oan Auqust 15, 19806 petitioner’s auditors on August 29, mn 4 Gad ~ Dillingham Over~ which sony dated which and 20 Fe 7p BOO. AC 28,671.

PA 954 460 +40

fF O84, IFR83 ,00 Oo = 2049, A68.16 F 77, BOG.08 aforementioned the SG@Y, in was filed with 1976.

June is, denial received 1°80, 1980, was by

- 5 - He nce, the instant petition for review. In his answer _t~ the petition for rev iew wherein respondent practically admitted the narration of facts as stated abov e by petitioner, res pondent alleges as special and affirmative defen s e s that:

The liability of petition e r to withhold and pay the income tax withheld at source for the years 1968,

1969 ,

1970, 1971 and 1972 from accrued interes t income on loan is a t the accrual of said payme nt and not at the time of a c tual r e mittance of payment thereof (BIR Ruling No. 7 1 - 003); Section 54 of the 19 77 Tax Code e x pres sl y provides tha t pa yment of withholding ta x-at- source s ha ll be ma de within 2 5 d ays from the cl ose of eac h calend a r qua rte r; The asse ssment again s t petitioner in tt1e total sum of P4,0 ~ 5~730.87 repres enting deficiency withholding tax - at-source~ surcharge~ interest and compromis e penalty, is in accordance with law; The 50% surcharge was imposed as petitioner refused, neglected and failed to file the required withholding tax return and pay its tax liability notwithstanding the demand thereof; and 314 ---

DECIS I ON

CTA CASE NO. 3 139 -· 6 -- All pres umptions are in favor of correctness of ta:-:

assessment ( Inte rp r o v inc i a l Autobus Co. , I nc. vs .

Co li. o f Int.

R ev.~ G.R. No.

L-6741~ Jan.

98 Phi 1 • 290; Comm .

of In t.

Rev.

vs.

A ve l i n e~ 8 SCRA 572 ) The pr·incipal issue for resolution posed by petitioner is wheth~r the duty to withhold the tax at source on an income payable to a non - resident ar·ises upon remittance or· payment of the amounts due to the foreign creditors~ or upon mere accrual ther-eof.

And the corollary issues are (1) whether or not there is basis for the imposition of the 50% sur·char-gt=:.> ~ C~. nd

(b) whether or not thf.·? def ic .iency a s ses~.:;men t ~ at least ·for . the YE"!a r- ~;;

1. 96 8~ 1969 and 1970~ is already barred by prescription. Meantime~ ~-Jhenever·· thi s case was set few hearing~ counsel for petitioner would always make a manifestation that the principal issue in volved is similar· to that of CTA Case No.

2846~ entitled "Bayer Pharmaceutical s , I n c . vs.

Commis s i oner of Internal Revenue "~ whic h was still pending at the time ' with this Court.

However~ in the hearing of t1arch 25 ~ lc 1 86~ after the ~~y_§'r case had already been decided~ counsel for petitioner without going 315

DECISION ~-

CTA CASE NO. 3129 ‘ int trial or presenting any evidence in support of even the other issues posed by him, submitted this case for decisian on the basis of the pleadings and the re and ba on the Bayer decision. Petitioner’ s submission that its liability to withhold the tax ab source on the interest cue to the foreign lenders arises anly at the time of paymant oor remittance and not at the time of aciruweal th an the decision (Bayer Pharmaceuticals, Inc. vs. Commissioner of Internal Revenue, CTA Case No. “846, March 1é, L979 rerhkiorar a denmiacd in Commissioner of Internal - a Revenue vs. Court of Tax Appeals, et. al., GM. No.

Metobear 10, 1986) LS positively without Tr the CASE . the incame (royalties) could mat be remitted to the nan-residant foreign carporation due to Central Bank restrictions, while in the present cage there is no shawing of any restriction on the remittance of the interesk inceame ta the foreiaqn lenders. In the dispositive portion of the Court clearly stahed:

. 4 7 era

-- 8 -·- "~·J e , acc:on.iingl y , r·ul e tha t si nce the royalties in ques tion could not be pai d or remitted in 1972 by petitioner BayeJ·-· F'harmaceu tiE: a 1 s ~ In c .

to non -·- resident foreign corpora tion Baye r Aktiengese ll sc halft, Leverkusen Bayermerk due to Central Bank restrictions, pe ti tion r·,, r was und e r no obligation to I.'Ji t.hho 1 d ind pay income ta:·:·--a t -sou.rce on sai d royalties and~ th e refor e ~ it. is not J. i.ab l e for the def ic ienc:y t.-Ji thho l ding t a:-:- a t-source assess ment.

of respondent Commissioner of Inte rn a l Revenue in the amount of F' 36 ~8 :3 4 .T~r. for- the year 1972. "

In a l a ter- case , that o f Western Palawan Lumber Corporation vs.

Commissioner of Internal Revenue , CTA Case No.

35 4-4 ~ Jun e 5 ~ 1 987 ~ this Court e lucidating the n .tl e 1 aid doi,\Jn in the ~-~.Y.§'L case sai d further :

"This Court unequivocally ruled that ~~ .. ~ .~1 .. <;:-~ .. :t. h ~.-. .J.'~.Q.'t.:.9.1 . .tJ:-~2-.. _.<;Q.!::Ll.f.J .. __ r.J.9 . .t_ .. __ Q.~ .. -... r.: .~ .f!l .J.J ·t.~~ .c::l- .t_g_ .. _ ... t.b-~ .. --D-9!J..:::_r._~_2._.t_g~_o .. .t. ___ ._t .Q.C<?. . .:!: .. QlJ._ .... __ <;_q.r.::.D..9..r.-ac.t.,! . Q!l 9.~~~'LJ:._q ... _G_5'D .. !:.r.: .s._LJ~!.s.nJs._ .. r~.s>-? . .tr._:i.: . <;J;J.Q.O.?._ ~

t. he time o f payment of the royalties is the maturation point.

of the wi thholding duty. It. bears e mph asis ~ therefore~ that if the income payable to a non - resident f o reign co rporation can be pa id or r e mit ted because there ~r~ no restrictions agai nst its pay me nt or remittance thereof~ the liab i l i ty to withhold and pay the tax thereon attaches at the time of accr ual~ not. at.

the time of ac t.ua l rend. t t.ance."

In the instant c ase~ there is nothing in the i ndi cates that petitioner Dillingham (Philippin es )~ Inc., was r estri c t e d by the Central Bank from remitting in 1968, 1969, 1970~ 1971 a nd 317 DECISTON

30 die oon ite leans fram foreign fore dan loans oof petitioner, the liability to wWithhole and pay the tax thereon attaches at the hime of acerual, not at the time of artual payment by pebitioner and ite foreign creditors (op. GO°-9R, coaneiderakian of the loans petitioner Dallangham Philippines, Tot., Agreed bo orepey the foredygn < beginning March SL, i969 thrangh December 21, L973 thie learn agrreemant. The tach that petitioner hu Develoapoeit Carporation whieh allegedly was in eapended aneration, as aptly stated by respondent, 18 af na mament, the same heing a woilateral ack oof petitioner, sans participation whatsoever, of the foreign creditors.

And the hermns and canditions of the agreement mae, wid

- 10 - contention that it "practically acted onl y as<'-" conduit between the ·foreign lenders a nd Cebu Development Corporation~ ~Ji th the understanding interests that petitioner would pay the foreign l enders would be the amounts of interest that it cou ld collect from Cebu Development At any rate~ suc h bare stateme nt of peti tione1··· ~ unaccompanied - ~ by adequate evidence has no we.i.qht t-.Ji th petitioner having submitted this cas e for deci s ion on the pleadings and r·ecords without presenting to this effect.

As to t he coroll ary issue of the proprie ty of the i mposition of the 50% surcharge~ r·esponden t petitioner i~ li ab l e thereto as it refused~ neglected and failed to f i le the required ~>-Ji thholding t..::1:-: r·eturn a nd pay its ta:·: 1 iabi 1 i ty notwithstanding the d e ma nd thereof.

In case of willful nc>glect to file the return or li s t within the time prescribed by 1 <::IW ~ the Commissioner of Internal Revenue~ pursuant to Section 72 of the t hen applicable National Intern a l Revenue Code s ha 11 add to the ta :·: or· to the defici e ncy ta x a surc harg e of ::_;o% of the-:? amount of suc h ta:·:

or 313

1.1.

defici<ency ta ::.

Petitioner has not introduced a n y evidence or testimony that its failure to tile the required withholding ta:-: r·etur·n within time prescribe d by law was due to a reasonable cause. As a matt<:?r- o"f "fac:t~ this question of the impos ition of the 50% surcharge has n ot been raised in the ad ministrati ve l eve l~ and petitioner is now apparently estopped fr··om r·ais.ing the same for the f i.r-st time in this appeal.

(Aguinaldo Industries Corp. vs. Commissioner of Intern a 1 Revenue~ Lo..:fr.._c:\_•) Tn.le, peti. t.icmer in its protes t. of November 20~ 197 6 ~s t. a. ted that. it reserved the right to qu e stion at t. h c~ p t'"·o pP r·· impor:; .i. t..ion of the 50% ..

this Cour-t.

is not the proper pl ace to ,~ '"' i ~3 <·?

t.h i~;

is~:;ue ·f it'·s t time.

Then~ petitioner mere l y s ubmitted thi s case for judgment on the bas i s o"f thP pleadings without offering pt'·oof a ~:;

to the tn.l th o f its all e gat.icm in the p r~ ti tion fot'- r· evif.~ W that the i rnpos .i. t..ion of 50% ~; u r-·c: ha r-·g e h<3.S no in l.:n~ and in f ac t.

Petitioner mus t therefore be understood to have c\dmi t-i:ed the truth of the allegation of respondent t hat: peti tionr-~r- refused~ negl ec ted and failed to file the required withholding ta x retu r n a nd pay 320

-- 12 -··· liability notwithstanding demand ther-eof.

(Bauer-mann vs.

Casas~ 10 Phil. 386 ; Evangelista vs. DelaRosa~ et. al. 70 Phil. 115.) Er-r-or- or- mistake of l aw may not constitute fr-aud but vJillful neglect~ which is the basis o·f the imposition of the 50% sur-c har-ge in this case~ is not equivalent Coming to the question of pr-escr-iption of the r-ight of the gover-nmE?ht to assess the ta:·: ~ it wi 11 be noted, as ar-gued by r-espondent~ that it is also by pt--?ti tionpr- for- the this Cour·t.

It vJas never- r-aised at the administrative leve l. To allovJ a l.i.. tigan t to assume a different posture when he comes before the court a nd cha llenge the position he had accepted at the administrative 1 F.?Ve J.

~ WDU J d be to sanction a procedure wher-eby the Cour-t - which is su pposed to review administrative deter-minations - would not r-eview, bu t deter-mine and dec idF.~ for- the fir-st time, a question not r-aised at the administrative forum. Thus , it is well settled that under- the same under· I y inc] pr-inciple e:-: ha u s t.i on of admini s tr-ative r-emedies~ on the judicL~l level, i SSLIE:·~<;;, not.

l'·aised in the administr-ative leve l 321

- 13 - cahnot be raised for fhe first ti me o n appeal.

(Aguinaldo Industries Corporation vs. Commissioner of Internal Revenue , L-29790 , Feb. 25 , 1982,

11 2 SCRA

136; Commissioner of Internal Revenue vs. Wander Philippines~ Inc.~ and Court of Tax Appeals , G.R. No .

68375, April 15, 1988 ; Commissioner of Internal Revenue vs. Procter & Gamble Philippine Manufac turing Corporation and Court of Tax Appea l s, G.R. No. 608 38, April 15, 1988.) Even more, n o evi dence whats oever was presente d by petitioner to the effect that the right of res pondent to assess and/or to col l ect the tax in volved herei n has presc ribed. The defense of pres cription i s an a ffirmative a lleg ati on and the burden of proof i s upon t he pa rt y lay ing claim to it.

(Bo llozos vs.

Court of Tax Appeal s~ L- 16441, March 31, 1965, 13 SCRA 469.) Prescription being a matter of defen se , the burd e n is on the petitioner to prove that the full period of limitation has ex pired, s o that they s hould positi ve ly establ ish the date when t he period s tarted to run and whe n it ended.

(Querol vs.

Collector of Internal Revenue , L- 16705, Octo ber 20, 1962, 6 SCRA 304.)

DECISION CTA CASE NO. 3 13 9 ·--

1. lJ. ··-· In a n y e v ent~ si n ce there was failure on the part. of pet.i ticmer- to file the return~ res pondent has the right to assess the ta :-: within ten (10) years from di scovery of s uch omission.

Section 319(a) of the a pplicable N~tional Internal Revenue Code pr-ovides that in case of failure to file a r-e t.ur·n ~ the ta x may be assessed or a proceeding in cour-t.

fo1~ the co ll ection of such t ax may be begun without assessment~ at. any time ~AJi thin ten year··s after the discovery of the omission.

It appear-s that the omission to file the required returns in thi s caS(?

~-'Ia s di sc ove n:?d , as st;:;~.ted in the on October 23 , 1.972.

( pp. 62·-

64) BIR

l '"· econ:l~-;. )

Since the assessment herein was .i s.sued on Se pt. F.·? mb E~ r· 22 ~ 1.9 76 ~ the same was well - within the prescriptive period of ten (10) years . Accordingly, petitioner Dillingham (Philippines), Inc., is ordered to pay to respondent Commissioner of Internal Revenue the amount of P4,035,730.87 as deficiency withholding tax-at-source from 1968 to 1972, plus surcharges and interest incident to delinquency pursuant to

- 1 ~5 - the provisions of Section 51(e)(2)(3) of the applicable National Internal Revenue Code, as amended.

WHEREFORE~ the ~ Court hereby denies the petition for review for lack of merit and affirms the decision appealed from at petitioner's costs.

I CONCUR:

z~ A"""' ciate Judge (Di ssents .in se par-·ate opinion) CONSTANTE C. ROAQUIN Assoc iate .Jud(.Je F'r-es.idi g ,Judge - 16 - C ~ R I ! F I c B I I Q ~ I hereby certify that this decision was reached after due consultation among the me mbers o f the Cour t of Tax Appeals in accordance with Sec tion 13~ Article VIII of the Constitut ion. 325 Pres idi g Judge Court of Ta x Appeals :

REPUBLI C OF THE 'PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

DI LL INGHAM ( PHILIPPINES ), INC .~ Petitioner, - versus C.T.A. CASE NO . 3 13 9

THE ACTING COMMI SS IONER OF

INTERNAL REVENUE~ Respond ent.

X -

- - - - - - - - X

DI SSENTING OPINION

Thi s case involves a n a ssessment of P4,035,730.87 against peti t ioner f or deficiency with holding t ax-a t -source on a~c ru e d in t e rest i.ncome f or the yea r s 1968 to 1972 due to Di llingha m Int e rn ation a l Capital Corporation, Dillingham Overseas Cor por a tion a nd Dillingha m Internati on a l Corpora t ion, its . forei gn creditors, i n c lusive of 50% s urc harge and i nterest. On November 17, 1976, petiti oner rece i ved from respondent a l e tte r o f dema nd d a t e d Se pte mber 22, 1976, assessin g i t for de f i ciency withholding ta x- at-sou rce i nc lus i ve o f 50% s urcharge a nd d eficiency

DISSENTING OFINION ~

CTA CASE NO, 3129 interest for the years 1968, 1969, 19770, 1971) and debaila of which are as follows:

Gross anterest income 20% Withholding tax aA Sure harqe 12% annual int.

976,50 from 4heLae GS to 4eLo6é-72 (26%) é Loamount due and ompany :

oss int lncane 29% withholding tax SO suuce barge 124% anntue Total 1loank. from Fo to 4-16-72 (36%) amount due and ctible C withholding tax surcharge 2% annual int. from Ae Ven GS to aed “wr paps m CEG) amount due and bible POR, 774. 8 Gross inte 29% withholding tax fyse * rs Rs tw a

DISSENTING OFINION ~

CTA CASE NO. 3129 rye SSL CL Pea ye i oy, annual aot. from AeVbee FO bo Lee w1- 72 14% annual int. from 1 to Ae DLbo~7% Total amount cue and collectible a) Lan LAMA, firom 1e-Ei- 72 un on Prootial mollectik ask income SVvA withholding tax Sueo Pare eA annual aint. from be Ld FR ta Lee are 144 annual int. from dete’ ho Ae Lée 75 Totai amount cue and collerctible eos Tn here OG. Cred* tor = Di SSA withholding tax HO” surcharge Vad wie Fl18,4680. 30 77,147. SE ve OPE AG 195,867.50 BO, 3508.68 PL, 626 728.41 FE B92, 855.00 29h O27. SO a s477 68 57,00 AA, 663.50

DISSENTING OF INION ~-

CTA CASE NO. 3139 rye L2% annual .int. fram BWelLo- 72 to ie -S1-72 F* 7,596,290 L144 annual aint. from Total amount due ane PLR. G61 5 Loteres withhoalding Surcharge annual aint. from “Le FE to 4-16-76 amount cue and VOoLllemtible

1 P54 S654 60

Grose interestk :

oat Withhalding tax mx # LA Ag aug’ harge wy Oe. OO : int. from to 4146-76 Total amount due ane calleckible F 77,806.08 Paki tie oer prakested the aforamentionad aASR EB ED amentks, through its auditors, the SGV, inoa letter dated November 20, 1976 which was filed with respondent’ s Bureau on November 22, 1976.

Respondent, in ai letter dated dune 12, 1980, denied petitioner’ s ty which denial was posted oon Augusk 1S, L980 and received by pebitioner’s auditors an August BY, L7s8oO., ne wee

DISSENTING OPINION

.... 5 -- for- wi 'l:hho 1 ding ta:·:-·-a '!:- sour-ce i s pre mised on res pond e nt' s Ruling (BIR Ruling No. 7 1 ·····0 03 d.:O\t t-~ d Februa ry 26, 1971) to the effect that 9..h.t.r.::..?.. • ) (.')ccol-·d inq 1 y, res pondent contends that.

petitioner shou ld ~l.::tve wi thhE;.>ld - ·~ and paid i:l1e 35% withho lding t .:·J.:-~ favor- of c ol·-por-a t ion ~;, although u.n r- f~ mi t: t.E~ d. Petitioner ' s li a bility fD I"' to its fo1 ··e.iqn f1··om loan s f r·om said c r e ditors , the procee d s o f which, in turn, ha d been lent to Ce bu Deve lopment ~orpora'l:.i.o n , a Philippine c o r porat i on in a s t a te of s u s pended opera tion; thus it.~:; .ina b.i l .i. 'l:y t o pay interests on the loan s . Such be ing the case , pe titioner has not been able to C:Dllf.~ C t (:':l.CC: rU F~d .i. n t.!·:-? r·r,?~; t s from Cebu Development c:ol·-· pol···.,?! t .i. on • Hence, petitioner has not been able to remit and, in fact~ has not. yet remitted any

i. ts ·fon:;.oi.gn Thi s hc:\s not be en d e nied by respondent. 33G

DISSENT I NG OPINION

-- 6 ....

On September 8~ 1980, peti tion(er· pE~t. i t.:i.un ·for .. I'"PV lPV.J.

RE~ ~:. ponclen t, on filed h<:':1.nd, ·f .i l e d '·· J .. s i:':1.n S \-'Jer on aanu.':':\t"Y :21, .1.. 981.

The i ssues for reso lution are as follows: (.l) Whether or not the duty to withhold the t ax-a t -source on income paya ble to a non - resident for e ign corporation arises upon remittance or payment of the amounts due to the foreign c: t"l':.'d .i. tor .. s or· t:. hen:'!o ·f;

upc:m ac:c r·ua 1 (2) Whet her or not ther e i s va lidity for the imposition of 50% surcharge; and ( 3 ) Whether or not the d e ficiency assessment, a t l east for the years 1968, 1969 a nd 1970 is a lread y barred h y pt"f.:~sc r .. i pt. .ion. its Regarding the fir s t issue, pe titioner contend s that its li a bility to wi thhold the tax - at-source on the interests du e to on l y a t the time of their pa y ment or r e mi tt a nce and - ·.:.

not at t.he t:. .i. HlP 0 ·f c:\CC:Y"Ual t h~?. t··eo f .

On

t. hE~ otherha nd, respondent's basis for the assessment i s BIR Ruling No . 71-003, datPd F e bruary 26 ~ .1,Cf7j, I· Jhic h dec 1 at"·es-.

that ''withholding ta:·:

is not depr.:mdPn t. em the remittance of the income paya ble to t.Ge non - resident foreign corporation but upon §l<;.~ ...

r.::~::'B.1 the r·pof" rr Tht> sa id BIR ruling has already dt>c l a red Prroneous b y thi s Cot.1rt in its

DISSENTING OFINION -

, decision in the case of Bayer Fharmaceuticals, Inc., vS. Commissioner of Internal Revenue, CTA Clase No. 2846, promulgated oan March 16, 1979. (Certiorari Denied ain G.R. No. L-72O054, Sept. 29, 1986, ) In eaid case, it was ruled that the duty ta withhold and pay the tax an incame due toe nan r Sidents i696 unon payment ar remittance and nat upon mere acarual. In said Bayer decision, this Mourk took note af the fact that in i - ~~ ling Ruling Ne, F1-OO%8 5 the Bureau oof Internal Revenue had erroneously relied upon aioeruling of the U.S, Internal Revenue Service which had heen declared te by the U.S. Internal Revenue Service in its Fevenue Ruling No. 7Or295 dated dJume 9, 1970, Tt as, therefore, clear that the duty ta withhold tax oan the due to foreign lenders arises only at the time of their payment aor r and neato at the time they were accrued in the boaks of petitioner.

Moreover 4 there can be na hasis for the withholding tax not only because there was no remittance but mainly because there was nothing ta remit in the first Ed The peculiar circumstances of the foreign loans were such that ne Mon

DI SSENTING OP I NION

··- f3 . -- p e titioner herein h ,':\d only a s a conduit

t. hE~ ·for-eiqn and the CPbU De v elopment Corporation, 1!-J.i.th t h!:?

'· .1.n d ~;.~ r-s t. ~3. n din q t . h ,:-,1. t.

t~ h r:-~ pet.itionr-?r ..

\r· . 'oulcl pay the for e ign lenders would be the amounts of interest that it could collect from the Cebu De v elopment Cor- pot·- ;,:~t. :i.on. Since petition e r c annot collect from t he:• CE' b1 . .1 [)(;:~\' E·:~ l o pmPn t:. Cor-po r-at. ion ~ it.

c r.:1nnot:.~ in t.o thE~ foreign c r e ditors the interes t s due and accrued in its book s in favor of t~ h!·::> l i::~t.ter- .

There h a ving been no collection s and remittan c e s made~ i s nothir1q t.o rem i t t.o foreign creditor s ~ p e titioner ha s incurred no li i:Olb .il.ity to withhold and pay to the go v ernme nt a n y withholding ta x-at-s ource for the y e ar s 1968 to 197 :;,;~" We held in the ca s e of Bayer~ thu s The lone question tendered re s olution i s whether or not obligation tQ withhold and pay in c ome at-source on the royalties is upon accrual of the royalties or upon actual remittance or payment thereof. Petition~r~maintains that there no obligation to deduct~ withhold, and the withholding tax in 1972 s ince royalties could not be re mitted due fot·- t.he ta:-: .. - the the P<':\y th~;?

to Ce ntr a l Bank restriction s . In submitting~ howe v er, that t:.hP liability to withhold and pay the income tax withheld at s ource from roya l ty payments to a non - resident

DISSENTING OP IN ION

9 ...

fo~eign co~po~ation~ like Ba y e~ Aktiengesellschaft~ Le ve ~ku se n B aye ~me~k~ is at the time of the acc ~ual of said ~oyalties and not at the time of the actual ~emittance o~ payment the~eof, ~e s pondent ~elie s mainl y on Bu~eau of Int e~ nal Revenue Ruling No.

71-003~ dated Feb~ua~y 26, 1971, the pertinent po~tions of which a~e quoted as follows: ''Thi s r ·· p"fet··~::;

to your· l P t.tcr-· dated Feb~uary 16, 1971 r··F!q u. P~:::. t .i. n q '"' r··u 1 in q i::""l<.;

t.o thE?

basis of the withholding tax due o1·1 ·f :i. 1m ,.··r:'n t:a 1 s;

o I"" r-·ny E1 J. t .i. r~o:::. paya ble by you to non - re s ident "foreign film cn~pn~ations. II ''In y ou1'· J. E~t t.E-~ r·· , you ccntended that the 35% w: t hholrling t ax should be based onl y nn actua ll y ~em.i.ttable i:"Hnot.nlt undF~ t·· CE-?ntr·· r.\1 Bc:Hik r ·· f.?CJUl i:~. t: inn ~:;

r,,1n d not. on t.I1E' E'ntil'e amount due and payable to the non - ~es.i.dent fo~eign co~po~atinn. This contention has no leg a l basis .

Withholding tax 1s not d e p e ndent on ~ e mitt a nce o"f the income pa ya ble to the non - ~e s ident foreign co~pn~ation but on i:".C:C:I'"" I ... tal th!:"!r ··f'~Of.

Such b(·?.i.ng the case, although a po~tion of the amount due to the non- ~esident fo~eign co~po~ation cannot be ~emitted on account of Central Bank ~e s t~ictions, the tax due on said po~tion should be deducted and withheld as if the~e is no ~est~iction.

DISSENTING OPINION

CTA CASE NO. 3 139 .... 10 ....

snun i::\<:; t.hE! act.ui:\ 1 i ""· eli :::,c 1 o~:;ec:l . ' .1.969 ~ \/o 1 .

IJ.[-37 ;:, • 40 5) In v iew thereof~ this Office hr:~ l i !'·? VF' ~.;; ;:\n d so hold ::;

t. h .:" t:. t t lf:?

35% withholding t ax s hould be deducted a nd withheld on the e ntire amnunt of film rentals or royalties payable to the n un- resident foreign film corporations including that portion which~ on account of Central Bank restrictions, cannot a•:;:. yPt bf.':' r·emittecl c:~ br .. oacl.'' As express l y stated therei n , the Bureau of Internal Revenue ruled that withholdi ng t ax is not dependent on remittance of the income payable to the non-resident foreign corporation but on accr .. ual t he r .. eo ·f.' {)n d 0':\~; suc h, alt hough the income cannot be remitted on account of Centra l Bank restrictions~ t he t ax due t hereon s ho ul d be d e ducted and withheld as it ther ~ i s nn res triction.

DISSENTING OF INION --

CTA CASE NO. 3159 ’ invalyvec ® Nabkional Tnbe mtralling paroavis fool Lees 3 eubi ie nat enqacqg wi khan ear tan Pra li ppanes y Laer the peor detect bhi ke Le ehradld dor r . rid thie STE TAP ee ee ane subject ke te Pvee ¥ ames cored Loh Ler gieeay tebe un whiny eb, wow ox Mod Sec hian : me Coca bey purreny ache o perkinent grabber, preu fryer pe rMchakion, in whatever ACC ATVCE ime buching a or mnortaqagqar af real cue ee acline emp dons ar employ ’ ct Republic af every of fice Gaverngenrk af fb Phd lippines havi ace lp , cus hooey , af inter reyal ties, | PEM TL LUNE y AVUTILLD . ation. remurrer ath Lene imluments , ar oother faixech oor verminable annual, ‘Ladical, Or casual CHALLIS 4 arrived , oy # ars BD

DISSENTING OFINION - +

CTA CASE NO. 2129 income, and capital qains, of ident alien mot brade ar business Fhilippines, shall Ce Cases proviced wo uk: chien (acl of this Sectiren) clerchuac t and owithhold from othe annual, periladical, oar « :

prafits, and ince 1 tax equal ta Pe Pravislans, by the way, were imported and copied almost verhatim from similar withholding tax provisions af hive Urea beac! thes Revenue Cocde Shion V(b). cordingly. in cansanarce ettled rul at etatutoary " interpret arm they have @ffeebt ooin the proper cangehruction ard interpretatian of our law, mere ds pekitioner ane which biloy rey tech by mat digputed hy i In arriving at BIR Rulang Ma. ?i- fehuruary 2S, LO. cue a United States Internal 2 rudang which aie found at “, 47S, 4 of CCH, 1969, Volume &., Tt ape that the id U.S. ruling is Actually Mimeoqraph Furling Neo. SO75, which Was Lsesiuec hy the Of fice af the Cammissiloner of Internal Files eri Lies , Washington D.C. , om duly @, 19490 and can a found at the Cumulative Bulletin 1940- 2, at page 141.

cx Eas ee The said Mimeagraph Ruling No. SO7 5 has heen declared by the United Ghat Internal ne Service itself in its Revenue Fulin g Ne. 7O-Ro.

oe FN EN wus

DISSENTING OPINION

( 1...1 • S ..

I n t E:' l''n :':'. l ::?~~; ~· d a t.f:~c:l a un p evid(·?n·l~. that in -- .l :: ~;

....

Rev enue Bulletin No. 1970- B~ 1970) It is thus issuing its BIR Rul ing No. 71 - 003 on February 26, 1971, our own Bureau of Intern a l Re v e nue has relied on a United State~ ~Intern al Revenue Service ru ling t hat has already been overru l ed~ the same having bee n declared obsolete as of ,June~ .1.970.

3.

Following the decision of the 1...1 n .i.. t: e d f3 t. '"· t (? £.;

D .i.. s t . , ... i c t. Co u , .. t·. i n t,.

~· .P ..

~ .... Gs,.!,•,},J:; .. (~:..f:? . ·~ .• . Y.~~-~- llni ·~:£~d . .. f3"\". a. l:.~ .s . , 116 F.

~!ttpp. ErY.'i, rendered on Nove mber 19, .1.953, to the e ff ect that corporation which held licenses under patents owned by non- resident a li e n s who as result of blocking proc l amation were forbidden right to recei v e or dispose of royalties was not boun d to withhold t6x before pa yment of roya lt i.e s , the rule that i s now observed in the United States is that the ob ligation to withhold and pay the t ax is upon payment or remi ttance of the income to a non - res ident alien . In the I,,,· ..

~. P . ~ .. G<':~~!J.J:~. Lq.. c <"- !'"~e, ~·,• hE:.> r· r::~

t. h~? factual s e t ti ng, l aw involve d and i ssue litigated are practically on al l fours wit h the case at bar, plaintiff, a Delaware corporation , he ld li cen s e s under patents owned b ~ two non - resident aliens, Robert Doge anc:l Emma nuel de Trey.

Both patentees were Swiss. Under the licen s ing agreeme nts , plaintiff ob li gated its elf to pay ro~alties to Doge a nd d e Trey.. In its t.r··e c:!t.mE·. t. of t.he impact o ·f r·Dy ,':\1 tiE~s on its operations, plaintiff, ad hering to the acc rua l met hod of accoun ting, entered net roya lties a nd wit hheld taxes as accrued l iabilities of 1941 and 1942, the periods involved in the case. Thus, 194.1. a nd 1 9 4 2 roy a lt j.es a nd taxes were set up as accounts payable on p l ain tiff' s books and as part of its cost o f doing business for those yea r s.

No withholding r eturn s for non-res i d e nt aliens Doge a nd c:le Trey were ,.., ,.., .

·( . ') tJ u · ..

DISSENTING OF INION -

CTA CASE NO. S139 prepared for Ll?41 ar 194R. While the copadhkdice $F i when the returns : s attrihutable ff during the ve ales

5 A9AL

Tofrom "when to "wher, af at all, to withhold the tax mo a ko doom the ary meat the point of » aS resulh of due for made by pl ard Leas, the return cue as plaintiff fram the oS tryt the inquiry ahah tt Jal ti. " The "when" af the ma “whol oar the "what" “oand inquiry be iq proclamation, maner ident aliens were forbidden right ta receive oar dispose af royalties due them under coantract with carpoaration which held licenses under aliens’ patents. (LD. TPA le Ce, WE a United States, Li6kF. Ss, B40.) Stated QOtherw~iee, the queehion ag ota when ta withhold the tax fram the 1941 and 1942 rayalties arose Dec ALse y although the royalties ware accrued in the plaintiff's hoaoke in i?44 and 1942 as liability to the naneresident licensars, the same could not be paid oar remitted toa the latter az a result af a blacking proclamation.

The that wh mt j forbidden ri royalties cue Federal Court ruled of bleckirg 3 Ada 3 receive oor dicen under oo hele lic euch alder GANS g prafits ard in internal revenue ebtahute pereans having cantrol, re WEE ge crf with Yes under oh had one me" within quiring ald sipht, custady, diepoaal cor" payment aft fixed ar determinable annual oor periodical gains, prafits, and income af any nan-resident alien ta withhold tax and, therefore, no necessity of failing withholding tax return devolved an sarporatian while corporation retained blacked rayalties. The net reanlt is that the obligation to withhold and pay the tax ais upan payment oar

NX ON

eo

DISSENTING OF INION —

¢ derived reyes recipient.

a of dts strong persuasive force, if ontroalling effects, on khe present 2, We will quote at length fram the Jecisien., "The anus af the withhalcding Precuirenean t ar plaintiff LS lmposec by S 2450), T.R.O. & "All — persarns. in whra heyver Capacity acting, * # ® having the eanmtrol, re ipta cue kt disposal, or payment af fired ar Jeherminable annual ar perioacdicéel = qains, prafrits » and aneome * * kK af any noavier alien * x R shall deduet and withhold fren such annual oor periodical qaings, praksa : arid incame a tan ke," On the whole, this pravisgien does nok cancernm Lhself with "when" the bob thkialding ehoauled uke place i ifies "wha" However, this : The Ldentk “Ladical Sy prafat Shien dire Withhoaleaing fran such sums identifiable as "CLA Lrres y ame) income! of the alien. Ohyvieusly, if there are LLC A "gains, profits, and ane", the duty to withhold is nanexietent., On the other hard. are euch sums available, ratutory lanquaqge is jncanclueive ino deciding "when" the withholding duty arose.

Lnecaneal, The se T do mat qround my decision On ary . aby of canetr Iaok oT da advert, in royalties “CLALITS 4

DISSENTING OF INION —

4 and income" Lo the 2 Dege and de Trey while inti ff retained them under Io othink mot listic of Iie hlackang prac ion plucked every clamenk af cookeol over the flues from the alo oan’ s theoretical bundle oof Cue coy * This of LEPVey ey matter.

locking freeze applied a). dekbtors af Gui Served Gs agen é royaltie cece cha othe aliens under the conmbrack, thie crazy predicament faced thems they had theoretical raghh coablect the royalti buk owere forbidden right be e them ar diape of Jthem. wag theirs.

right’ dea not 7 ane fa k zy Mea ecanomic advent ory SSuicchy aa hia] Ten bby cf icdent to coneshitie » ane tnecumen” EE ct Of incame eneaugh to Cf. Fleer Ve Bre Gira, 84 Tree the were prafat, Or aincame mean an actual, nakoa fictitious gain or profit kK x," Cartainily, : Were nak "anecame" and, if "oe Sy OK Prarit’ . were unreal ize arc aliens here had ono Mower tea command payment to themselves or othere, unlike the danor af the interest coupons im Helvering v.

PLE Ye LL Lass mo RG Ura on

DISSENTING OFINION —

CTA CASE NQ. 2139 wer The the it."

are hearicy prota or incame’ af ak lea during the hime plaintiff retained their blocked royalties, no withholding duty devolved an plaintiff and ma Alties are praper,”

CHIT :

Mm, ther, mov 'epe the aliens backdroan, the situation while the royalty in the 9,00 Calbthough was sek up coauld mot he remitted to Rayer central Bank reetrictioans at that hime, would mok create "Qain®, prafite ar Lneecmes? to nan re here prese amount af tm the bene hic te tt ability ident foreign carpe rabion Bayer. Noo ercanamic benafitse were derivecl by &F Yer gy Pearicre? hhere wag ne to withholding af tax-at- LU Ce Accardingly, petitianer had na duty tea withherlecP and pay the tax.

income subi e far the ; Court 2 the ary oof & Slonm LAS (hb oof Cade, fram which & tional Internal Fe SPU oiLecd., are hant : iach Pronauncemen ts of the United State Bureau af Tnternal Reverie amc Ceourhe, whieh di Jorue that duty of withhalding 4 of Bas i" cf Lye Lary clue prac from the publis ynen to We quote fram ant 6 ° L432 (mh), T.R Cas byene to the Aet of aa Lc ee Paragraphs D Pothak Ack are pertinent.

"X H #£ all the canmtral, Lon or payment of arm inable anritve is traced Oe tober ane) FF ep OF aaa 1 earner, ENTING

OF INTON -

periodical CALMS « income of arrath person deduct and wit fram the payment oan amounk equivalent to the normal inceme tax # FY E af the same Ack cifierds: "11 pe haviaine ard COPD ss canthreol , receipt. Ya pevnent of * KF or Lrencnnes of aur :

ading #3 ,000 for any year x * x who are re eck ta make ate render a return im behalf af anather rein, © € # are he iged and required ta deduct wi tibadd fram such arnrnaied and income such auf ficient to pay we ¥£ * *F and they are liable for guch ta Parag MY oa explicit an charg withholding fram the "payment" whi le Comprar ie auth the d ere] o cbt khe normal he oral dy shian ane thes Lim preas: es wi thhedle to thie cm the) Pcs th and w cf the incame and = p: full ta cthe Government. ¥ By this methad the amount of due aor hoa became die up fixed ocr cle Wi every erminable aria) inceame is owihthheld and paid ta

NISSENTING OFINION ~

CTA CASE NO. 31359 Sovyernment hefore the income taxpayer". Neanr as well Aas citizens subject toa this withholding sayatem.

In thes P16 Act, quoted paragtragh D é seated AG thian Eich} under the igqnificant heading "Returna’. raqragh EF, cpa tercd . WAS ach aA 9(h) under the eacdine Fagament and Administration", By the Fevenue Act af Fi’, paragraph &(cth) of the 19146 Act (par. D of the 912 Act) Was repea Lec BO) as ba reander WIN eC e aryoany "withhealdaing at eouree of the tax due oan ar incames af reaidernt " Information at WAS substituted.

the Hau Report.

change we maacl es "a me tive administrat of the law" and the saving ANTI OY ary and exper the tLaxpaye arict withhaled (3 ", By the same Ach, pa hh 68 (hy oof the 1916 Mek Car. af the (915 Aetl) was amercded he Limit withholding at the esaueece to nonresident aliens. The Aet further included interest from tax-free covenant bands ag a subject of withholding, uny ma The Revenue Act of L918 made ma change an the Her hinent language af the amended S G(b) but did increase the withhalding rate and renumbered the sections ede However . the Repart of the Ways and Means Committee of the House aids search an its commente oan "Colleatioan at. the DISSENTING

CTA CASE WN

OPINION —

QO. 3139- SOL Cea s “The proposed bill, as under existing law, requires anly the withholding of income in the case of payments hy individuals, corporakions, and partnerships of fired and determinable annual or periadical CLALTIES o profits. ane income ba rreneye ident Alien individuals cr NOM es corporations Thais cornment 1e Carrey WEES AS ex pir paragraph D of the 1913 rt and continued in S Fb) af the LoL? Act when the farmer previ sion west repoalec. Ney change wa intended when the withholed ine pravieions were delimited bo apply anly ko nonresident aliens. The time of payment was time when the withholding duty aroge.

ident

WAR SS

The Revenue Act of 192i made noe amendments to the Section pertinent toa inquiry, nor did the Ack of 194, However, both the House Report and the Sanate FRenortoanm the 1924 Act have this co ments "Section cele Stubdai- fa) of this section af the law provides for thie of tax, an faxed ar income paid ( A Pane andavaidual, ar ap : doin whole or an part crf raryy aliens," Rath al refer obo “requiring the withholding of tax from payments" to a partnership.

k hhole determin a) Fates oof withholding were increased by the Revenue Ack of 1926, and the Conference Report ef the Camnmittees of the House and Senate refers to the eftfe af the Nidce an rates “This Nore wu ‘sod

DISSENTING OPINION

9j1iiiU4 amRndment requires the withhold- ing of a tax of 12 1/2 per cent :i.n r·es. p E:>c t of a.l 1 P <3.ym!·?rl t ~;

of income made before the enactment of this Act to foreign corpo- , .. t,,t:iol·l<:> <:">pE•c.i.·f :.i.e d br:~lnvl.

* * * Because the persons making payments * * * h ad no notice that the corporation income tax would be increased, the withholding rate is not increased with res- pect to payments mad e before the cn<=''.ct.rnent of thi•s (~ct:; * * *".

(.~11 t:. hou.c1h r .. r.-~f~::-~r"F'nc::e .i..~-::;

t.o "for .. r~ictn corporations, the withholding on P <'='· yrm:>n t .<:'; t.o

t. h!·.''·~m :i. <, hut "' P •'H .. t oi' the same system embracing ind:.i.v :i. du c:\1"-.; . .> In the Revenue Act of 19?8 a wholesale departure wa s made from the arrangement of prior Act s .

~=; :.?:?J..

h r:~c;:unr~ f:3 J..IJ.![.

In comment ·-· i.ng on part (a) of t he Section, b o th the Hou s e Report a nd the Hi-:-:'n ;,,,_ tF~ F:;:r:·:· po r .. t·. <;:; t..:·,, t.er:l : 11 T hF:· p r-·e .....

sent law pro v ides for the withholding a t the source, in the case of bonds, of a tax of 5 per cent of the interest when paid to f'l()l'lt'"E~<:;i cl(7? rlt c":\ liens. * * *- 11 the f~c::t 1932, the sec tion was renumb e red .ll]. :::!;

,,.,, n d '1':. t l P !•'" i':l t E~ ~c' ~,,,f.:' I'" E·~ :.i. n C: f" E~ i:\ ~;:; P d without af fecting the aspect of the prov i s ion under consider- <:~ t. ion.

nn changes bearing 1...1 pon Cl'..l. r· inquiry, but agai n in Report a nd in Senate thP f .. lousr::~ F\r? po r-· t.

of ta:-:

references to withholding on interes t obligations couched in t e rm s of payment. I,>) PI'" (?.

DISSENTING OQFINION —

CTA CASE

NO. 2139 did nok the hbves 3 in the Larvcderr hooan be oa payer 5 Mme to af pay fone", The Hen ” Serrate achat (EVEN Ack of Ln, LS equivocal uw aking with referer he a chanqe ain § Blitads "There will be wa thihe let from the amounts reese 2 oan eivable by a nonresident alien taxed under the mew provisions he amount} required ko he withheld under gection 142 of the preeant law", “"Receaivahle', of coenip se, 26 cdeecripkive of minute divisions of hime fram the first manent of aceriual] koa the last sceamd lefore rece i of payment.

Thes Hevtut Jeri fet cf firm thee the Py tions eve coe] mo oif thea LOR7 Resp a clayiation.

neernt divicene the Committee oan Ways and Mees reper ted: "Tn case any share~ heoleclar : mnesent As oa : to the provisions BE 142 ¢b) and hian 144, re ta othe dacuctian anc withholding of bax at the action Ba(dyS requires cangent filec by the Aoaits return shall sf LEU aX SOUP Ce that coe por

DISSENTING OFINION —

fara scompanierd by cash ¥ * x equal oto othe ameaunt which the corporat ian woth ed have heen to cdecdueth and chian 14:

peci fied a paid rer rec by such the amount semk had by arehalder, an the t corporation, an ce dividend," The lo ames lancuage in to S&S L4=2t(by,.

Lo aaah le Ney pertinent commer we found ano khe Commit the other Peveniue Le4. and 1°42, the Jian. However, One re cerence Le omacles to comm. t ke an a 4 Me “toon the PF any referring ta ai pr ee "ThA S S stake also proavide Tepe cstukye bhatt ooany withhold (lp) er 144 af be such such day of tes 2 Repeeks an daw tea years in fuse these report reflec tine rLuerrk obhinkined. The 2 Heyer Perk of pear recquirecd boa decuet and withhold a hax umederr Shien 4s or L44 x # oon the payment of oa dividend deduct Freacy Thies Comm res ferrerre rndicaking Se withhea gqulatior Loner canta ke 5 cert ¥ kK of fixed ar. cle annual or too a noanre x ¥ x”.

oe, AA aferenc hhe recuir ine indivicuedl not he required ta wWitbhold a tax under gechion upon such payment".

promulgated ly abundant a tan of doin “minable Ime paid of S with upon

DISSENTING OFINION ~

CTA CASE NO. 31239 payment, such as "The tax must bre Withheld at the source fram the qyoss amount oof any distribukian me by a carporahioan” (129 , 1 ee Lie "# # Xo an annual return ke kK ¥ ehoawiane bhe Amaury t aft bax required bo he withheld fram each nonreaident alien ¥O¥ F te which creme ober than interest was padd during the previnus taxable year’! (29, 142-7) 3 "say Withheld at the source upan & * F incame patd Ldent alien fiichac (29,1439) « Lan oof mired waikhibadleda on the qu Fretted bye i Paitin were at the time the Uni tect ime payment ain quate from the "(Clr the oa we omf oh vob bhhodding should be at t i ffech oak the AB ce ooaak othe rat aymente were actually made, ; ruled othe Lime Lhe rece.

T.T.

bk domes p TURAL paymer kt Vé’? , “JT, .E, 1 (EK, " ai ne. in : : dently broad he @ncompagss the problem was employed an GLC... 2467, 7 (1. B. 18BE Cmadified an other grounds in GO. 2M, BAS 4. O-1 (BR, " kK withholding ig ooanly yoeec wher x ee income is peid toa a none Ldenmt alien and At the rate at the time af payment."

DISSENTING C INION —

Above, sa Goanmthern (lO. Va a 4 Te An PO held withheadebina we ive oon Se In thrak * LOMy Levey company con tencdact aa Tully for et res to the ane tierra sought 4 Sc rimery tt. Boric anterr t Clue caric payable ecurdncg LSide Tel?

white ef achiie stilt cemtbel oo rrak then hres paid ta 2 Oy war Fant, » after the acl mata wer. 1 beer a shade aAriqie apoly hier chives:

Liable at Liens Fe i.

shies Gate of t mer g arycl mn orb hive re bey thie the cuty seared oof Tay merced pion) ches of withhaldir

AY LPC)

aunyed Ses g "Thre pebihiemeres cac mek cane ower rah pen ahouitid Tees, ane the noanresident aliens did mot anid from all that coud nok reced ve eo Linke 5 kart Ehyeary ¥ Xx, ‘Wher hhe intere 6 atchually paid ta by the boncholde Ineome Xded ugar he ay dies Livtess at the Le Aric the petiti were under the duty of payir much thereat 3 he : in effect @® precudlireed he withhald anc pay." Oh) iepuie auugpoe bk Le ha adaptian of the kime of payment the maturatian i they wet heb iver woh oan or DIS

TING OP INTON ~-

CTA CASE NO. S139 af oad ance ane al ater chariey bo fves Pr ey pyey ee amoiryt coablerntaian of oy qh ote, Whack op ble qeauned can there be fer “ Lloiomer thes rub are a) tree oer hey cf thve Trevi tect 9 SLI A, Perr whieh Hay foro) Coup hb ar | Tow 1s edma Lar Tlie shly aes are Logic a4 sd treated a Pandy createed bay wibyieds closely af nek eS Dat.

amply breiveherh oa rodadne of cue ow Terr Dobhorne] Feveruwe whieh merely coker sudhord by lhe exycerok oof a Uri bined She sede: ben tober) Peveriive puldime burt whtety exe Foose Reser, chen] arcesct od tier She Tnoterrnya!

hry Lhe eames Gpyipe GSiepoy pres as TELM CyE5 fanel ro TM mich clerin ides ove eta Ehac | qoreperph ory) valic eocpye, dove en ached an depar b from weMilk apo acay oct ther trai tev above (Ceoonie b hove dd re hives Plyesp ca AES euge} dies Pougie opyeay tor men ty bie paramo irre. We eae k 0 epee Lhe se ere b Tee} cr aries gd ples of mere hruc bicr Vfaead: er Ube es ULES Arereme hoa deaw prachie idly copied fram blak oof thee f thie in roeec else et iis bhi Uri bert Shaheen sees tosh errs it atthhior i baktwve af feo! An ts proper clon and application of our law. i bhe efooaure withholding ae oe) provide lor exmlcich a esc an qf aur National Internal which, SOWN ahoave q Aamported ane Led almost verhat : the United States coms tor ctr ar iovalved ino the a a Accarchine ly « the by the Unit Fiaverniie Servi

DISSENTING OFINION ~-

thea maturation point withholding duty - should COVERT praceechirnd.

rfalhies is cuppcderrik 9 of the Keto omuch meed be said on re abion that, based an the renpar rigqating examiner, nothing 4 7 Sibdaner oakheamptect ke remit hs Fy :

ton, if as explicitly royalties amar of Fee AE Thies km a CUAL ne ly clues Clermtre!

thy, TR fochy, OTF the Cayer OO, BIR reemecde } Sree coded mot be emai htect i a) mitral Bank re “otions , spepred cry a himself wn

PL PAPE

“bec Pres sure Ly « I ;

ate af forte , albert umlewfid , Lhe same Arecl on pes :

eouree Lo oahowdel rat ems preae pe hit iore be remit Spoarctean t that hac treme md un thes Loomer the rear withhealadane later, af the ao a he 1c ay thid moh amount tea “qair : Ancrnes @ ani the of Frayer anid, Lhere fore, ed PRA e royalthie ae wn withhoale bas devolved cri pebtibiomer.

aceardinghy.« rule that an aruba rok wm cre hk ; a aCe Vilna ta nen rescichen t Bayer @Akhiengesell~ Sayermerk che ta petihioaner was withhold ane pay omy Said rovalties nok liable for the foredqn thealft, mertral aryl under me Lee cene aed, bbress on ae Ours

DISSENTING OFINION ~

CTA CASE NO. S312 deficiency withholdina hax-at-saurce assesaront of respandent Cammissioner of Interna, Revenue xxx," Having thus hele, the second and third issue whether or nok petitioner ais subieck to Sax surcharge, anc whether oor mat the deficiency assessment for the years 1968, 1969 and 1979 is barred by prescription, is deamed mont and aACademic o For these reasons, I vigorously interpose this dissenting apinion.

Quezon City, Metra Manila, May 18, 1988.

CONSTANTE F Steuatite Assaciate Judge