Republic of the Philippine: Yp Court of Tax Appeals NN y?! the Meirs of Ase Ma, et al. vs. C.F.A. Case No, et al.

DECISION

CoT.A. CASE NO, 563 fe De la cosecha 1952/53 el las!

*(¢) B1 pago de ls renta © ale quiler anual en azucar se a Amucarera de Tarlac vaya expediendo peeas oe a” = ~ yg gibie ente arrie a perc per @1 APRENDADOR ¢e percionalmente de ia sponeeesen ry les terrencos, en azucares de expor= tasion y consumo lecal.* "3. The respendent, at a letter dated ts 3, 1957, demanded from the it foner peynent of the amount of °14,732.07 as ar adjustment tex for the erep year 1952+ i3 3 under Section 3 of Commonwealth Act No. 667, as amended by Kepublic Act No, 1583, computed as fellowes Total rental value (1c) participetion *0,7K.47 Adds Land tax paid by Hde. Ludsita hee Tetal rental *72,@04.0T Less: 2h of the eesessed value ef the land of £289, 360.00 ~1s872.00 Amount due and collectible £14,732,07 "4. The amount of ©69,710.47 referred to in the preceding par ries aph hereof was computed by the respondent on the basis of the gross selling price from market quotetions in the United States for sugar fer e at £17. 2317 per picul, and on the @¢ selling price from market quotations in the Philippines fer su sold locally at #14.61@ per picul, The said amount of #0 a" fa arrived at by the res- pendent as fo.

Sale of 326,61 piculs ef sugar fer local con- cuapahen at 214,610 #£# 4,773.73 Sale of 3,722.94 piculs of eugar exported to America at #17, 2317 64,152.58 Value of ae ied molasses et #08 per galion, leee @ tax 7H.71

DECISION -

C.T.A. CASE %, 563 — i Value ef 2,06,05 wavans of pelay at #10, (paid by lessee) | ae PX} Total £94730.47 "S. In fixing the amount of '69,710.47 as the money value of the rental or conside- © ration collected by the petitioner from the leseee under the centract of lease mentioned in paregraph ? hereof, the respondent did not consider the following expenses and charges incurred by the iessee in connec- tion with the sale of sugar abroad:

Fixed and extra charges ons 326,61 piculs of su fer lecal con fon ® D701 sugar for export 4,933,04 Expenses incurred in un- leading the 376,61 piculs of su sold in Manila the con- mission of Chwe Yu 26. 27 Expenses incurred on 32722.94 piculs of sugar exported to Amer ica:

Expenses in

America +8 066, 66

Expenses in

Commissions _ 641,09 _39.199,18 Tetal expenses and cherses bdtaT21a 2 "6, The principsl Lesue raised in this case is the determinstion of whet constitutes the *meney value of the rental or considera- tion cellected' for purposes of the tax ime pesed by Section 3 of Commonwealth Act Ne, 567, as eee or See Act Ne, 1983, under the contr of lease mentioned in paragraph 2 hereof, According te the res- pendent, the *money velue® ef suger repre- senting the los participetion of the peti- tioner from Haciende Luisite should be based on the gross selling price in the United

DECISION «=

GeTksA. CASE NO, 563 o 4a States and in the Philippines of sugar for expert and for local consumption, — reepectively, #s shown in agar 4 other hand, hereof, On the tioner meintein thet in fixing « said s value of the rental’, eupenees and ¢ 6 mentioned in paragraph 5 hereof sheuld be deducted from said oto selling price, and/or that the value of the rental shall be detengunnad the time of the issuance of pursuant to the provisions of paragraph 4 Bh TF ox wy i contract ef lease above- not on the basis of the po selling, prise quoted in the United States.* In computing the suger adjustment tex authorized by Commonwealth Act No. 567, as amended by Aepublic Act No. 1583, the respondent proceeded on the theory that the money value of the rental or consideration collected by the petitioner amounted to.the gross sell~ ing price of the sugar, undiminished by the expenses ineurred tn the sale, plus the amount paid by the Ha- Giends Luisite as real estete tax on the leased suger land. The petitioner, however, disputes this theory, contending thet such expenses should be deducted from the selling price of the suger, and to the resulting. balance should be added the amount of real estate taxes paid on the land.

The contreriant claims of the parties hinge upon the iesue of what is the besis for determining the sugar adjustment tax, And this issue turns upon the proper interpretation of Section 3 of Commonwealth Ast No. 567, as amended by Section 1 of Republic Act No. 1563, which reads:

>» 488

DECISION «

GeTeA. CASE NO, 5463 = & = “GEC. J. When any land devoted to the cultivation of sugar cane is ceaed te others by the owner ct by the person in centrol thereof, for a consideration, under a contract of leasa or otherwise, euch owner or the person in control theree of shall pay a tax equivalent tc the dir- ference between the money value cf the rental or consideration collected and the ie seuseeed value of out tae Under the afore-oucted stetutery provision, the Sugar aujustment tax authorised therein shall be aui- valent to the difference between the money value of the rental or consideration geiigeted and the awount representing Za of the assessed value cf the leased land. The tax is on what was actually collected and received by the lessor, iess the amount representing the Kw (fermerly 144) of the egesessed value of the sugar land. And if the rental or consideration is in Kine, the meney value of what was actunily colisctad should be determined for purposas of the tax, _ In the detexnination of the money value in the Case at bar, the expenses involving such rental (xz Consideration should be disceunted, for the sume were net _sctually collected by the leseor. said expenses did not form part of the rental or consideration re- ceived by the petitioner herein, This veing the case, the sum of 14,721.90 representing the tetal expenses ineurred in the sale cf the gugar in question should be deducted from the gross prita of #69,7TK.47, thereby vt | 189 — ee —i—w GeTeAs CAGE NO, 563 = & leaving a valance of #54,959.17, And as correctly conceded by the petitioner, the real estate tax amounting to 2,899.60 pate by. the Hactenda Luisita on the land in question should be added to this bal- ance, thereby resulting in the aggregete amount of | 157,852.77 as the money value of the rental or consi- Geration collected by the petitioner, This is se be- cause the real estate tax was paid in the name and for the benefit of the lessor, And inesauch as the money value ef the rental er consideration collected by the petitioner is less than the amount of #57,872.00, which is equal to 2% of the assessed value of the land, petitioner is not liable for the payment of the sugar adjustment tax provided for in Section 3 cf Commorwealth Act Nie, 567, ag amended by Section 1 of Aepublic Act N@e 1583,

WHEREFORE, in view of the foregeing consider se tions, the decision appealed from should be, as it is hereby reversed, without pronouncement eas to costs.

© OMMERED, ‘Mange, June 2, 190.

Presiding Judge

I concur in the result, ye

Assectate Judge

190