Court of Tax Appeals
0R.F./, et al. vs. Acting Commissioner of Internal Revenue
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MAN:u..a
MANILA PENCIL OOMPANY,
INC. ,
Petitioner,
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ACTING COMMISSIONER OF
INTERNAL REVENUE ,
Respondent.
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D E C I S I 0 N
C. I . A.
CASE NO . 619
This is an appeal from the decision of the res -
pondent holding the petitioner liable for the payment
of the sum of P4, 491.49 , computed as follows s
Total volume of logs
purchased from
1951 to November ,
1954 ------------- -----
Regular forest
charges on 1,448.84
cu. m. of timber - -----
300% surcharge for cut-
ting without license --
50% surcharge for trans -
porting vithout invoice
& discharging without
permit ----- -----------
Reforestation Fund (Rep,
Act No. 115)
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Total
- - - --- ------------
1 ,448. 84 cu. m.
869. 32
2, 607. 96
434.66
::-:-...;;:5:--::7 9. 55
M-,491:-n;
Petitioner has elevated the case to this Court , con-
tending that it is not liable for said amount.
The fa cts of the case are not disputed.
It ap-
pears th?t petitioner acquired from certain persons
from 1951 to November , 1954, 1 ,448. 84 cu. m. of timber
{fourth group) which it utilized in the manufacture
of pencils for sale , the corresponding forest charges
on which have apparently not been paid as petitioner
t>ECISION -
C. T. A. CASE NO. 619
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cannot show any invoice or document evidencing pay-
ment.
Accordingly , respondent assessed against peti-
tioner the forest charges and surcharges itemized above ,
including reforestation fees (designated in respond-
ent's decision as reforestation fund).
Petitioner con~
tends that it is not liable for the said forest charges
and surcharges on the ground that the persons from whom
the forest products were purchased are the ones liable
therefor and not petitioner , the latter being merely
a purchaser in good faith .
On the question whether or not a person who buys
timber from another may be held liable for the corre-
sponding forest charges and surcharges , if he cannot
show any invoice or other document evidencing payment
of forest charges, the Supreme Court held:
•A person who buys or purchases
timber without the official documents
••• is not a buyer in good faith; he
should know that under the Regulations
in force since 1934 timber cut in pub-
lic forests should be accompanied by
the documents required.
In no case is
the rule of caveat emptor be more ap-
plicable than in the present , where prod-
ucts from the patrimony of the people
have apparently been taken away illegal-
ly.
The purchaser thereof cannot be
said to be a purchaser in good faith un-
less he can show the official documents,
the receipts for payment of the charges
and the discharge permit covering the
timber , because he ought to know the law
and regulat~ons regarding the
payment
of forest charges and the invoicing ,
transporting and discharg. ing of forest
products." (Coll. of Int. Rev. v. Pio
Barretto Sons \ Inc. , G. R. No. L-11005 ,
May 31 , 1960 .. J
The doctrine laid down in the Barretto case is
that no person may be considered a buyer in good faith
' .
DECISION -
C. I . A. CASE NO . 619 - 3 - of forest products if he cannot produce any evidence of payment of the forest charges; in such case , he is deemed to have acquired the forest products in bad faith , so that he becomes personally liable for the forest charges.
In line with the Barretto decision , the material facts of which are similar to the instant case , petitioner is liable for the forest charges and surcharges in question.
It is , however, argued that petitioner has been granted tax exemption as a new and necessary industry in connection with its business of manufacturing pen- cils.
Therefore , it is alleged that it is exempt from the payment of forest charges on timber used by it in the manufacture of pencils .
The exemption granted to petitioner under Republic Act No. 901 refers to all taxes directly payable by it in connection with the operation of the new and necessary industry.
Since
forest charges are not taxes (Coll. of Int. Rev. v. Pio Barretto Sons , Inc., supra) , petitioner cannot claim exemption therefrom.
It is true that forest charges had been considered , for quite a long time , as internal revenue taxes (See Op. Atty. Gen., Oct. 27 , 1922; Hongkong & Shanghai Banking Corp. v. Rafferty , 39 Phil. 145; Coll. of Int. Rev. v. Mariano R. Lacson , G, R. No . L- 12945 , April 29 , 1960) , but that doctrine has already been overruled in the more recent case of Coll. of Int. Rev. v. Pio Barretto Sons , Inc., supra , promulgated on May 31 , 1960. 1 We are constrained to 1 Motion for reconsideration denied by resolution dated Aug. 31 , 1960.
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- 4 - apply the more recent decision.
Respondent seeks to collect from petitioner the sum of lo;-579. 55 as reforestation fees imposed by Repub- lic Act No. 115.
The collection of reforestation fees under said Republic Act comes under the jurisdiction of the Bureau of Forestry.
There is no law authorizing t he Commi ssioner of Inte·rnal Revenue or his agents to collect said fees even as deputies of the Director of Forestry.
Therefore , the attempt of herein respondent to collect reforestation f ees from petitioner is il- legal.
It is true that petitioner has not raised any question in r egard to the legality of t he collection of reforestation fees by respondent. But as the mat- ter involves the question of the juri s di"C~tion of this Court , we may take cognizance of the same ~prop rio. Under Section 7 of Republic Act No. 1125 , the juris - diction of this Court in matters i nvdlving internal revenue taxes is limited to appeals from decisions of the Commissioner of Internal Revenue •involving dis- puted assessments , refunds of internal revenue taxes , fees or other charges , penalties imposed in relation thereto , or other matters arising under the National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue.• The collection of reforestation fees under Republic Act No. 115 is not a matter arising under the National In- ternal Revenue Code or other law or part of law ad- ministered by the Bur~au of Internal Revenue.
Repub-
j DECISION ..
C. T .. A. CASE NO. 619 - 5 - lie Act 115 is a law administered oy the Bureau of FOREGOING CONSIDERATIONS , the decision appealed from is hereby modified and petitioner is ordered to pay the sum of f3 ,911. 94 as forest charges and surcharges on 1,448. 84 cu. m. of fonrth group timber , exclusive of the reforestation fees , within thirty days from the date this decisiyfn becomes final, Without pronouncement as t o costs . ~
SO ORDERED.
Manila , May 31 , 1961.
I CONCURs
~,
ANO MABLE
Presiding Judge
IDMAN M. UMALI
Associate Judge
Associate Judge AUGUSTO M. LUCIANO did not take part. -