EN BANC
[G.R. No. L-15470. March 31, 1964.]
CONNELL BROS. CO. (PHIL.), Petitioner, v. COLLECTOR OF INTERNAL REVENUE, Respondent.
Angel S. Gamboa and Arturo S. Monzon for Petitioner.
Solicitor General and Prisilla R. Gonzales for Respondent.
R E S O L U T I O N *
MAKALINTAL, J.:
Respondent-appellee moves for reconsideration of our decision of December 26, 1963, and prays that the same be modified by declaring that petitioner-appellant is liable for the 25% surcharge for late payment of its deficiency sales tax for the period from January 18, 1948 to January 31, 1949.
In support of his stand, respondent-appellee cites Section 183(a) of the Tax Code and the cases of Lim Co Chui v. Posadas, 47 Phil. 460; Jamora v. Meer, 71 Phil. 22; Koppel (Philippines), Inc. v. Collector of Internal Revenue, 87 Phil. 348; Republic of the Philippines v. Luzon Industrial Corporation, L-7992, October 30, 1957; Lim Chai Seng v. Trinidad, 41 Phil. 541; Insular Lumber Co. v. Collector of Internal Revenue L-7190, April 28, 1958; Yutivo Sons Hardware Co. v. Court of Tax Appeals and Collector of Internal Revenue, L-13203, January 28, 1961; Liddell and Co., Inc. v. Collector of Internal Revenue, L-9687, June 30, 1961.
We do not think Section 183 (a) of the National Internal Revenue Code is applicable. The same imposes the penalty of 25% when the percentage tax is not paid on time, and contemplates a case where the liability for the tax is undisputed or indisputable. In the present case the taxes were paid, the delay being with reference to the deficiency owing to a controversy as to the proper interpretation of Circulars Nos. 431 and 440 of the office of respondent-appellee. The controversy was generated in good faith, since that office itself appears to have formerly taken the view that the inclusion of the words "tax included" on invoices issued by the taxpayer was sufficient compliance with the requirements of said circulars. (See BIR Ruling 105.2, Aug. 3, 1953; BIR Quarterly Bulletin Vol. 7, Sept. 30 and Dec. 31, 1953; In re Fred Wilson Tax Appeal No. 63.)
The cases cited in the motion for reconsideration are likewise inapplicable. In every one of those cases the liability for the tax was not disputed, the only question being whether or not the delay in the payment thereof was justified under the particular circumstances relied upon by the taxpayer. Here the question is whether or not the deficiency sales tax in question was due at all. This question does not involve the power of respondent-appellee to condone the penalty, but rather the justifiability of its imposition in the first place. And where respondent-appellee apparently had himself originally adopted an incorrect interpretation of its own circulars, it would not be just to penalize appellant for falling into the same error.
WHEREFORE, the motion for reconsideration is denied.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and Regala, JJ., concur.
Padilla, J., took no part.
In support of his stand, respondent-appellee cites Section 183(a) of the Tax Code and the cases of Lim Co Chui v. Posadas, 47 Phil. 460; Jamora v. Meer, 71 Phil. 22; Koppel (Philippines), Inc. v. Collector of Internal Revenue, 87 Phil. 348; Republic of the Philippines v. Luzon Industrial Corporation, L-7992, October 30, 1957; Lim Chai Seng v. Trinidad, 41 Phil. 541; Insular Lumber Co. v. Collector of Internal Revenue L-7190, April 28, 1958; Yutivo Sons Hardware Co. v. Court of Tax Appeals and Collector of Internal Revenue, L-13203, January 28, 1961; Liddell and Co., Inc. v. Collector of Internal Revenue, L-9687, June 30, 1961.
We do not think Section 183 (a) of the National Internal Revenue Code is applicable. The same imposes the penalty of 25% when the percentage tax is not paid on time, and contemplates a case where the liability for the tax is undisputed or indisputable. In the present case the taxes were paid, the delay being with reference to the deficiency owing to a controversy as to the proper interpretation of Circulars Nos. 431 and 440 of the office of respondent-appellee. The controversy was generated in good faith, since that office itself appears to have formerly taken the view that the inclusion of the words "tax included" on invoices issued by the taxpayer was sufficient compliance with the requirements of said circulars. (See BIR Ruling 105.2, Aug. 3, 1953; BIR Quarterly Bulletin Vol. 7, Sept. 30 and Dec. 31, 1953; In re Fred Wilson Tax Appeal No. 63.)
The cases cited in the motion for reconsideration are likewise inapplicable. In every one of those cases the liability for the tax was not disputed, the only question being whether or not the delay in the payment thereof was justified under the particular circumstances relied upon by the taxpayer. Here the question is whether or not the deficiency sales tax in question was due at all. This question does not involve the power of respondent-appellee to condone the penalty, but rather the justifiability of its imposition in the first place. And where respondent-appellee apparently had himself originally adopted an incorrect interpretation of its own circulars, it would not be just to penalize appellant for falling into the same error.
WHEREFORE, the motion for reconsideration is denied.
Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Dizon and Regala, JJ., concur.
Padilla, J., took no part.
Endnotes:
* Editor’s Note: See main decision in 9 SCRA 735.
