Saura Import & Export Co. v. Meer
REITERATIONFacts
The Antecedents: Plaintiff-appellant, Saura Import and Export Co. Inc., purchased jeeps, weapons carriers, and trucks from the Foreign Liquidation Commission, a United States Government agency, in February and March 1946. These vehicles were located in United States Army depots in the Philippines at the time of purchase. Plaintiff took delivery of these goods and subsequently sold them or turned them over to third persons within the Philippines. Procedural History: The Collector of Internal Revenue assessed a percentage tax on these motor vehicles under Sections 185 and 186 of Commonwealth Act No. 466, holding that the plaintiff was an importer and its sales were original sales. The tax amounted to P22,593.62. The action was filed to recover this tax paid under protest. The Petition: The plaintiff-appellant questioned whether it was an importer and whether its sales were original sales within the meaning of the National Internal Revenue Law.
Issue(s)
Whether Saura Import and Export Co., Inc. is considered an 'importer' under the National Internal Revenue Law. Whether the sales made by Saura Import to third persons constitute 'original sales' taxable under Sections 185 and 186 of Commonwealth Act No. 466.
Ruling
The appealed decision is affirmed with costs against the appellant.
Ratio Decidendi
On Issue 1: The Court ruled that the plaintiff is an importer based on the precedent set in Go Cheng Tee v. Meer (G.R. No. L-2825). It reasoned that the U.S. Army was not engaged in commerce and had no obligation to pay taxes on equipment brought into the Philippines for military supply. These goods only became articles of commerce when Saura Import purchased them for its business. Legally, U.S. military bases in the Philippines at that time were treated as foreign soil due to the political relationship and military agreements between the two nations. Therefore, when the plaintiff acquired title and moved the goods from those bases to the local market, the act constituted 'importation' in the ordinary and legal sense under Section 1248 of the Revised Administrative Code. The Court further noted that the United States military was in the status of a belligerent occupant of these installations, further reinforcing their jurisdictional separation from ordinary Philippine commercial territory. On Issue 2: The Court held that the sales made by Saura Import to the public were 'original sales' within the meaning of Sections 185 and 186 of Commonwealth Act No. 466. Because the first transaction between the Foreign Liquidation Commission and Saura Import was not a taxable commercial sale (as the seller was a tax-exempt foreign government agency), the law identifies the first sale to the local market as the taxable event. Applying the logic that Saura Import was the importer, it follows as a necessary corollary that its subsequent disposal of the goods to customers was the original commercial sale. The percentage tax is imposed on the act of selling to the public, not on the act of purchasing from the surplus agency. Consequently, Saura Import was legally obligated to pay the percentage tax as assessed by the Collector of Internal Revenue.
Main Doctrine
Vehicles purchased from the Foreign Liquidation Commission by a private entity, located within U.S. Army depots in the Philippines at the time of purchase, are considered imported goods when brought outside these bases, making their subsequent sale in the Philippines subject to percentage tax as original sales.