G.R. No. L-1151, May 30, 1960
THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. ALFONSO FAVIS, ET AL., respondents.

FACTS

The Collector of Internal Revenue assessed a sales tax of P2,511 against the Favis Car Exchange. The assessment was based on information from the U.S. Navy that Lt. H.N. Maragidas sold a 1950 Chevrolet to the Favis Car Exchange. The Collector issued a demand for payment. Arturo Favis, the proprietor, protested. After reinvestigation, the Bureau of Internal Revenue concluded the Favis Car Exchange was the purchaser and recommended tax collection. Alfonso Favis (Arturo’s brother) requested reconsideration. A rehearing found that a claim—that Alfonso loaned P4,500 to Jose Crisologo, who then bought the car—was a device to circumvent the tax. The Collector issued a warrant of distraint and levy. Alfonso Favis petitioned the Court of Tax Appeals, which reversed the Collector’s decision.

ISSUE

Whether the Favis Car Exchange was the real purchaser of the car from Lt. Maragidas, making it liable for the sales tax, or whether Jose Crisologo was the real purchaser.

RULING

The Court affirmed the decision of the Court of Tax Appeals, holding that the Favis Car Exchange was not the real purchaser. The evidence showed: (1) The Deed of Sale named Jose Crisologo as the vendee. (2) The loan for the purchase was made by Alfonso Favis, who was not the owner of the car exchange. (3) An alleged admission by Crisologo to a revenue agent that the real buyer was the car exchange was unreliable, as Crisologo was not presented in court for cross-examination. (4) After purchase, Crisologo sold the car to Luneta Motors Company without the car exchange’s intervention. Citing Enriquez vs. Olaguer, the Court ruled that a purchase in one’s own name with another’s money generally gives title to the person named in the deed. Therefore, Crisologo was the real purchaser, and the Favis Car Exchange was not liable for the sales tax.