G.R. No. L-19074 & L-19089 January 31, 1967
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. ANTONIO G. GUERRERO, and the COURT OF TAX APPEALS, respondents. (L-19074)

ANTONIO G. GUERRERO, petitioner, vs. THE COMMISSIONER OF INTERNAL REVENUE, respondent. (L-19089)

FACTS

Antonio G. Guerrero was a dealer in logs during 1949 and 1950, selling them to Aparri Lumber Company. On April 2, 1954, the Collector of Internal Revenue assessed Guerrero P4,014.91 for fixed and percentage taxes, forest charges, surcharges, and penalties related to these transactions. Upon Guerrero’s request, the Conference Staff of the Bureau of Internal Revenue reviewed the matter and, on January 11, 1956, recommended an increased assessment of P5,139.17, plus compromise penalties of P120.00 for violations of the National Internal Revenue Code and P50.00 for violation of bookkeeping regulations. The Collector approved this reassessment. When Guerrero requested a rehearing, the Internal Revenue Regional Director instead issued a warrant of distraint and levy on April 20, 1956. Guerrero then filed a petition for review with the Court of Tax Appeals on June 8, 1956. The Court of Tax Appeals modified the assessment, ordering Guerrero to pay only P3,775.66. Both the Commissioner of Internal Revenue and Guerrero appealed this decision.

ISSUE

The issues on appeal were whether Guerrero is liable for: (1) P3,775.66 in forest charges and surcharges; (2) P1,192.51 in fixed and percentage taxes and surcharges as a producer of logs; (3) P668.36 in additional forest charges and sales taxes; and (4) P120.00 and P50.00 as compromise penalties for violations of the tax code and bookkeeping regulations.

RULING

The Supreme Court modified the decision of the Court of Tax Appeals.
1. Guerrero is liable for the P3,775.66 in forest charges and surcharges. The Court found that the logs were obtained from illegal sources, as the auxiliary invoices Guerrero presented were either spurious or pertained to other logs. Forest charges are liens on the products collectible from the possessor unless they can show the required official documents, which Guerrero failed to do.
2. Guerrero is liable for the P1,192.51 in fixed and percentage taxes and surcharges. The Court rejected the Tax Court’s theory that the original sale was made by the government, not the concessionaire. It held that forest charges are not internal revenue taxes but amounts payable for the right to cut and remove timber from public forests. The sale of the cut logs by the concessionaire to a dealer like Guerrero is a taxable transaction, making him liable as a producer subject to the fixed and percentage taxes.
3. The Court upheld the Tax Court’s decision not to award the additional P668.36 for other logs. The jurisdiction of the Court of Tax Appeals is purely appellate, and since these logs were not included in the contested assessments, the Tax Court correctly declined to rule on them for lack of jurisdiction.
4. Guerrero is liable for the compromise penalties of P120.00 and P50.00. The record showed Guerrero had expressed willingness to pay any compromise penalty the court might impose.
The dispositive portion of the Supreme Court’s decision ordered Guerrero to pay, in addition to the P3,775.66 awarded by the Court of Tax Appeals, the sums of P1,192.51, P120.00, and P50.00. The decision was affirmed in all other respects.