GR L 15716; (March, 1962) (Digest)
G.R. No. L-15716; March 31, 1962
TALIGAMAN LUMBER CO., INC., petitioner, vs. THE COLLECTOR OF INTERNAL REVENUE, respondent.
FACTS
Taligaman Lumber Co., Inc., a domestic corporation and licensed forest concessionaire, was assessed deficiency sales taxes and surcharges totaling P85,790.91 by the Collector of Internal Revenue for its Caloocan and Butuan branches covering the years 1948 to 1953. The Caloocan branch assessment stemmed from local lumber sales. The Butuan branch assessment primarily involved sales of logs to Japanese buyers, invoiced as “F.O.B. Agusan,” where the government contended the sales were consummated domestically and thus subject to tax. The company protested, arguing prescription for the 1948 and 1949 assessments and that the Butuan export sales were consummated abroad. The Court of Tax Appeals upheld the assessments, prompting this appeal.
ISSUE
The core issues are: (1) whether the right to collect deficiency sales taxes for 1948 and 1949 had prescribed; and (2) whether the export sales from the Butuan branch to Japanese buyers were consummated in the Philippines, making them subject to domestic sales tax.
RULING
The Supreme Court affirmed the Tax Court’s decision. On prescription, the Court ruled the five-year limitation under Section 331 of the National Internal Revenue Code did not apply. The government’s action was based on Section 332, which allows assessment “at any time” in case of a failure to file a return. The Court found that for the years 1948 and 1949, the petitioner filed “no return whatsoever” for its Caloocan branch sales. This constituted a failure to file, not merely an inaccurate or late filing, thus removing the case from the ordinary prescriptive period.
On the taxability of the Butuan export sales, the Court held they were consummated in the Philippines and thus subject to sales tax. While petitioner’s president testified the intent was for title to pass in Japan, the company did not present the actual sales contracts. The “F.O.B. Agusan” term created a prima facie presumption that title passed upon delivery of the logs onto the vessels in Agusan. This presumption was bolstered by several factual circumstances: the Japanese buyers opened irrevocable letters of credit in petitioner’s favor; they chartered the ships and paid freight; they insured the shipments; petitioner collected payment by surrendering shipping documents to banks in Manila; and defects were handled via price adjustments rather than goods rejection. Following precedents like Bislig Lumber Co., these indicia established that the sales were perfected domestically. Therefore, the assessments were valid and enforceable.