* private respondent do not form part of its gross receipts
COMMISSIONER OF INTERNAL REVENUE, within the definition of the Tax Code. The said receipts petitioner,vs.TOURSSPECIALISTS,INC.,andTHE never belonged to the private respondent. The private COURTOFTAXAPPEALS,respondents. respondentneverbenefitedfromtheirpaymenttothelocal hotels. As stated earlier, this arrangement was only to Taxation;Court of Tax Appeals;Rule that factual accommodatetheforeigntravelagencies. findingsoftheCourtofTaxAppeals(CTA)arebindingon Same;Same;P.D. 31;Contractors Tax;P.D. 31 theSupremeCourtandcanonlybedisturbedonappealif determines whether or not hotel room charges of foreign not supported by substantial evidence.The wellsettled touristsinlocalhotelsaresubjecttothe3%contractorstax. doctrine is that the findings of facts of the Court of Tax Accordingly, the significance of P.D. 31 is clearly Appeals are binding on this Court and absent strong established in determining whether or not hotel room reasonsforthisCourttodelveintofacts,onlyquestionsof chargesofforeigntouristsinlocalhotelsaresubjecttothe lawareopenfordetermination.(Nilsenv.Commissionerof 3%contractorstax.Astherespondentcourtaptlystated:x Customs,89SCRA43[1979];Balbasv.Domingo,21SCRA xxIfthehotelroomchargesentrustedtopetitionerwillbe 444[1967];Raymundov.DeJoya,101SCRA495[1980]).In subjectedto3%contractorstaxaswhatrespondentwould therecentcaseofSyPov.CourtofAppeals,(164SCRA524 wanttodointhiscase,thatwouldineffectdoindirectly [1988]),weruledthatthefactualfindingsoftheCourtof whatP.D.31wouldnotlikehotelroomchargesofforeign TaxAppealsarebindinguponthiscourtandcanonlybe tourists to be subjected to hotel room tax. Although, disturbed on appeal if not supported by substantial respondent may claim that the 3% contractors tax is evidence. imposeduponadifferentincidence,i.e.thegrossreceiptsof Same;Gross receipts;The room charges entrusted by petitioner tourist agency which he asserts includes the theforeigntravelagenciestoprivaterespondentdonotform hotelroomchargesentrustedtoit,theeffectwouldbeto imposeatax,andthoughdifferent,itnonethelessimposesa part of its gross receipts under the Tax Code.As tax actually on room charges. One way or the other, it demonstratedintheabovementionedcase, gross receipts would not have the effect of promoting tourism in the subjecttotaxundertheTaxCodedonotincludemoniesor Philippinesasthatwouldincreasethecostsorexpensesby receiptsentrustedtothetaxpayerwhichdonotbelongto theadditionofahotelroomtaxintheoverallexpensesof themanddonotredoundtothetaxpayersbenefit;anditis saidtourists.(Rollo,pp.5152) notnecessarythattheremustbealaworregulationwhich wouldexemptsuchmoniesorreceiptswithinthemeaning PETITIONforcertioraritoreviewthedecisionofthe ofgrossreceiptsundertheTaxCode.Parenthetically,the CourtofTaxAppeals. roomchargesentrustedbytheforeigntravelagenciestothe ThefactsarestatedintheopinionoftheCourt. touristagenciesabroadhaveagreedtoofferapackagefee GadiomaLawOfficesforprivaterespondent. forthetourists.Althoughthefeetobepaidbysaidtourists isquotedbythepetitioner,thepaymentsofthehotelroom GUTIERREZ,JR.,J.: accommodations,foodandotherpersonalexpensesofsaid tourists, as a rule, are paid directly either by tourists Thisisapetitiontoreviewoncertiorarithedecisionof themselves,orbytheirforeigntravelagenciestothelocal theCourtofTaxAppealswhichruledthatthemoney hotels(Pp.77,t.s.n.,Feb.2,1981;Exhs.O&O1,p.29, CTArec.;pp.2425,t.s.n.,ibid)andrestaurantsorshops,as entrustedtoprivaterespondentToursSpecialists,Inc., thecasemaybe. earmarkedandpaidforhotelroomchargesoftourists, It is also the case that some tour agencies abroad travelersand/orforeigntravelagenciesdoesnotform requestthelocaltouragencies,suchasthepetitionerinthe partofitsgrossreceiptssubjecttothe3%independent case,thatthehotelroomcharges,insomespecificcases,be contractorstaxundertheNationalInternalRevenue paid through them. (Exh. Q, Q1, p. 29 CTA rec., p. 25, Codeof1977. T.s.n.,ibid.,pp.56,1718,t.s.n.,Aug.20,1981.;Seealso We adopt the findings of facts of the Court of Tax Exh.U,pp.2223,t.s.n.,Oct.9,1981,pp.34,11.,t.s.n., Appealsasfollows: Aug. 10, 1982). By this arrangement, the foreign tour Fortheyears1974to1976,petitioner(ToursSpecialists, agencyentruststothepetitionerToursSpecialists,Inc.,the Inc.) had derived income from its activities as a travel fundforhotelroomaccommodation,whichinturnispaid agency by servicing the needs of foreign tourists and bypetitionertouragencytothelocalhotelwhenbilled.The travelers and Filipino Balikbayans during their stay in procedureobservedisthatthebillinghotelsendsthebillto thiscountry.Someoftheservicesextendedtothetourists the petitioner. The local hotel identifies the individual consistofbookingsaidtouristsandtravelersinlocalhotels tourist,ortheparticulargroupsoftouristsbycodenameor for their lodging and board needs; transporting these group designation and also the duration of their stay for foreigntouristsfromtheairporttotheirrespectivehotels, purposesofpayment.Uponreceiptofthebill,thepetitioner andfromthelattertotheairportupontheirdeparturefrom thenpaysthelocalhotelwiththefundsentrustedtoitby the Philippines, transporting them from their hotels to theforeigntourcorrespondentagency. various embarkation points for local tours, visits and Despite this arrangement, respondent Commissioner of Internal excursions; securing permits for them to visit places of Revenue assessed petitioner for deficiency 3% contractors tax as interest; and arranging their cultural entertainment, independent contractor by including the entrusted hotel room shoppingandrecreationalactivities. charges in its gross receipts from services for the years 1974 to In order to ably supply these services to the foreign 1976. Consequently, on December 6, 1979, petitioner received from tourists, petitioner and its correspondent counterpart respondent the 3% deficiency independent contractors tax assessment in the amount of P122,946.93 for the years 1974 to 14% interest computed by 1976, inclusive, computed as follows: quarters 1974 deficiency percentage up to 12-28- tax 79 . . . . . . . . . . . . . . . . . . 28,910.97 P96,756.50 per investigation . . . . . . . . . Total amount due P122,946.93 ...... P3,995.63 In addition to the deficiency contractors tax of P122,946.93,petitionerwasassessedtopayacompromise 15% surcharge for late 998.91 penaltyofP500.00. payment . . . . . . . . . Subsequently, on December 11, 1979, petitioner P4,994.54 formallyprotestedtheassessmentmadebyrespondenton 14% interest computed by thegroundthatthemoneyreceivedandentrustedtoitby quarters thetourists,earmarkedtopayhotelroomcharges,werenot up to 12-28- 3,953.18 . . consideredandhaveneverbeenconsideredbyitaspartof 79 . . . . . . . . . . . . . . . . . . . . P8,847.72 its taxable gross receipts for purposes of computing and 1975 deficiency percentage payingitscontractorstax. tax During one of the hearings in this case, a witness, per investigation . . . . . . . . . SerafinaSazon,CertifiedPublicAccountantandincharge ....... P8,427.39 oftheAccountingDepartmentofpetitioner,hadtestified, her credibility not having been destroyed on cross 25% surcharge for late 2,106.85 examination, categorically stated that the amounts payment . . . . . . . . entrustedtoitbytheforeigntouristagenciesintendedfor P10,534.24 payment ofhotelroomcharges,werepaidentirely tothe 14% interest computed by hotelconcerned,withoutanyportionthereofbeingdiverted quarters up to 12-28- toitsownfunds.(t.s.n.,Feb.2,1981,pp.7,25;t.s.n.,Aug. 79 . . . . . . . . . . . . . 6,808.47 P17,342.71 20,1981,pp.59,1718).ThetestimonyofSerafinaSazon 1976 deficiency percentage was corroborated by Gerardo Isada, General Manager of tax per investigation . . . . . . petitioner, declaring to the effect that payments of hotel ...... P54,276.42 accommodation are made through petitioner without any 25% surcharge for late 13,569.11 increaseintheroomcharged(t.s.n.,Oct.9,1981,pp.2125) andthatthereasonwhytouristspaytheirroomcharge,or payment . . . . . . . . throughtheirforeigntouristsagencies,isthefactthatthe P67,845.53 roomchargeisexemptfromhotelroomtaxunderP.D.31. (t.s.n., Ibid., pp. 2529.) Witness Isada stated, on cross receivedaspartofthepackagefeeand,therefore,formpart examination, that if their payment is made, thru ofgrossreceiptsasdefinedbylaw. petitionerstouragency,thehotelcostorchargesisonlyan Secondly,thereisnoshowingandisnotestablishedby actofaccommodationonour(its)partorthattheagent the evidence, that the amounts received and earmarked abroad instead of sending several telexes and saving on areactuallywhathadbeenpaidoutashotelroomcharges. bankchargestheytaketheoptiontosendmoneytoustobe Themerepossibilitythattheamountsactuallypaidcould heldintrusttobeendorsedtothehotel.(pp.34,t.s.n.Aug. belessthantheamountsreceivedissufficienttodestroy 10,1982.) thevalidityoftheruling.(Rollo,pp.2627)
Nevertheless, on June 2, 1980, respondent, without Ineffect,thepetitionersloneissueisbasedonalleged
deciding the petitioners written protest, caused the errorinthefindingsoffactsoftherespondentcourt. issuanceofawarrantofdistraintandlevy.(p.51,BIRRec.) Thewellsettleddoctrineisthatthefindingsoffacts And later, respondent had petitioners bank deposits oftheCourtofTaxAppealsarebindingonthisCourt garnished.(pp.4950,BIRRec.) andabsentstrongreasonsforthisCourttodelveinto Taking this action of respondent as the adverse and facts,onlyquestionsoflawareopenfordetermination. final decision on the disputed assessment, petitioner appealedtothisCourt.(Rollo,pp.4045) (Nilsen v. Commissioner of Customs,89 SCRA 43[1979];Balbas v. Domingo,21 SCRA Thepetitionerraisestheloneissueinthispetitionas 444[1967];Raymundo v. De Joya,101 SCRA follows: 495[1980]). In the recent case ofSy Po v. Court of WHETHER AMOUNTS RECEIVED BY A LOCAL Appeals, (164 SCRA 524[1988]), we ruled that the TOURIST AND TRAVEL AGENCY INCLUDED IN A factual findings of the Court of Tax Appeals are PACKAGE FEEFROMTOURISTSORFOREIGNTOUR bindinguponthiscourtandcanonlybedisturbedon AGENCIES,INTENDEDOREARMARKEDFORHOTEL appealifnotsupportedbysubstantialevidence. ACCOMMODATIONS FORM PART OF GROSS RECEIPTS SUBJECT TO 3% CONTRACTORS TAX. Intheinstantcase,wefindnoreasontodisregard (Rollo,p.23) anddeviatefromthefindingsoffactsoftheCourtof TaxAppeals. The petitioner premises the issue raised on the As quoted earlier, the Court of Tax Appeals followingassumptions: sufficiently explained the services of a local travel Firstly, the ruling overlooks the fact that the amounts agency,likethehereinprivaterespondent,renderedto received, intended for hotel room accommodations, were foreign customers. The respondent differentiated between the package feeoffered by both the local travel agency and its correspondent counterpart effect that the amounts entrusted to the private tourist agencies abroad and the requests made by respondentwereexclusivelyforpaymentofhotelroom some tour agencies abroad to local tour agencies charges of foreign tourists entrusted to it by foreign whereinthehotelroomchargesinsomespecificcases, travelagencies. wouldbepaidtothelocalhotelsthroughthem.Inthe Asregardsthepetitionerssecondassumption,the lattercase,thecorrespondentcourtfoundasafactxx respondentcourtstated: x that the foreign tour agency entrusts to the x x x [C]ontrary to the contention of respondent, the records show, petitioner Tours Specialists, Inc. the fund for hotel firstly, in the Examiners Worksheet (Exh. T, p. 22, BIR Rec.), that room accommodation, which in turn is paid by from July to December 1976 alone, the following sums made up the hotel room accommodations: petitionertouragencytothelocalhotelwhenbilled. (Rollo,p.42)Thefollowingprocedureisfollowed:The July 1976 P102,702.97 billinghotelsendsthebilltotherespondent;thelocal Aug. 1976 121,167.19 hotel then identifies the individual tourist, or the Sept. 1976 53,209.61 particular group of tourists by code name or group P282,079.77 designation plus the duration of their stay for Oct. 1976 P 71,134.80 purposes of payment; upon receipt of the bill the Nov. 1976 409,019.17 privaterespondentpaysthelocalhotelwiththefunds Dec. 1976 142,761.55 entrusted to it by the foreign tour correspondent 622,915.51 agency. Grand Total P904,995.29 Itisnottrue,therefore,asstatedbyrespondent,that Moreover, evidence presented by the private there is no evidence proving the amounts earmarked for respondentshowsthattheamountsentrustedtoitby hotelroomcharges.SincetheBIRexaminerscouldnothave theforeigntouristagenciestopaytheroomchargesof manufacturedtheabovefiguresrepresentingadvancesfor foreigntouristsinlocalhotelswerenotdivertedtoits hotel room accommodations, these payments must have funds; this arrangement was only an act of certainlybeentakenfromtherecordsofpetitioner,suchas accommodationonthepartoftheprivaterespondent. theinvoices,hotelbills,officialreceiptsandotherpertinent Thisevidencewasnotrefuted. documents.(Rollo,pp.4849) Inessence,thepetitionersassertionthatthehotel The factual findings of the respondent court are roomchargesentrustedtotheprivaterespondentwere supportedbysubstantialevidence,hencebindingupon partofthepackagefeepaidbyforeigntouriststothe thisCourt. respondentisnotcorrect.Theevidenceiscleartothe Withtheseclarifications,theissuetobethreshed roomchargesareincludedintheprivaterespondents outisasstatedbytherespondentcourt,towit: grossreceiptsforpurposesofthe3%contractorstax. xxx[W]hetherornotthehotelroomchargesheldintrust InthecaseofCommissionerofInternalRevenuev. for foreign tourists and travelers and/or correspondent Manila JockeyClub,Inc.(supra ), theCommissioner foreigntravelagenciesandpaidtolocalhost hotels form part of the taxable gross receipts for purposes of the 3% appealed two decisions of the Court of Tax Appeals contractorstax.(Rollo,p.45) disapproving his levy of amusement taxes upon the Manila Jockey Club, a duly constituted corporation Thepetitioneropinesthatthegrossreceiptswhichare authorizedtoholdhorseracesinManila.Thefactsof subjecttothe3%contractorstaxpursuanttoSection the case show that the monies sought to be taxed 191 (Section 205 of the National Internal Revenue neverreallybelongedtotheclub.Thedecisionshows Codeof1977)oftheTaxCodeincludetheentiregross that during the period November 1946 to 1950, the receipts ofa taxpayer undiminishedby any amount. Manila Jockey Club paid amusement tax on its According to the petitioner, this interpretation is in commission but without including the 51/2% which consonance with B.I.R. Ruling No. 68027, dated 23 pursuanttoExecutiveOrder320andRepublicAct309 October, 1968 (implementing Section 191 of the Tax wenttotheBoardofRaces,theownerofhorsesand Code) which states that the 3% contractors tax jockeys. Section 260 of the Internal Revenue Code prescribedbySection191oftheTaxCodeisimposed providesthattheamusementtaxwaspayablebythe onthegrossreceiptsofthecontractor,nodeduction operator on its gross receipts. The Manila Jockey whatever being allowed by said law. The petitioner Club,however, did not consideras partofits gross contendsthattheonlyexceptiontothisruleiswhen receiptssubjecttoamusementtaxtheamountswhich thereisalaworregulationwhichwouldexemptsuch it had to deliver to the Board on Races, the horse gross receipts from being subjected to the 3% ownersandthejockeys.Thisviewwasfullysustained contractors tax citing the case ofCommissioner of bythreeopinionsoftheSecretaryofJustice,towit: InternalRevenuev.ManilaJockeyClub,Inc.(108Phil. There is no question that the Manila Jockey, Inc., owns 821[1960]). Thus, the petitioner argues that since only71/2%ofthetotalbetsregisteredbytheTotalizer. there is no law or regulation that money entrusted, Thisportionrepresentsitsshareorcommissioninthetotal amountofmoneyithandlesandgoestothefundsthereof earmarkedandpaidforhotelroomchargesshouldnot as its own property which it may legally disburse for its form part of the gross receipts, then the said hotel own purposes. The 5% does not belong to the club. It is merelyheldintrustfordistributionasprizestotheowners ofwinninghorses.Itisdestinedfornootherobjectthanthe admittedly5%.Itistruethatthelawsaysthatoutofthe payment of prizes and the club cannot otherwise total wager funds 121/2% shall be set aside as the appropriate this portion without incurring liabilityto the commission of the race track owner, but the law itself owners of winning horses. It cannot be considered as an takes official notice, and actually approves or directs itemofexpensebecausethesumusedforthepaymentof payment of the portion that goes to owners of horses as prizesisnottakenfromthefundsoftheclubbutfroma prizesandbonusesofjockeys,whichportionisadmittedly certain portion of the total bets especially earmarked for 5%outofthat121/2%commission.Asitdidnotatthat thatpurpose. timecontemplatetheapplicationofgrossreceiptsrevenue Inviewofalltheforegoing,Iamoftheopinionthatin principle, the law in making a distribution of the total thesubmissionofthereturnsfortheamusementtaxof10% wagerfunds,tooknotroubleofseparatingoneitemfrom (nowitis20%ofthegrossreceipts,providedforinSection theother;andforconvenience,groupedthreeitemsunder 260oftheNationalInternalRevenueCode),the5%ofthe onecommondenomination. totalbetsthatissetasideforprizestoownersofwinning Needlesstosay,grossreceiptsoftheproprietorofthe horsesshouldnotbeincludedbytheManilaJockeyClub, amusement place should not include any money which Inc. although delivered to the amusement place has been TheCollectoroftheInternalRevenue,howeverhada especiallyearmarkedbylaworregulationforsomeperson different opinion on the matter and demanded otherthantheproprietor.(Thesituationthusdiffersfrom payment of amusement taxes. The Court of Tax one in which the owner of the amusement place, by a AppealsreversedtheCollector. privatecontract,withitsemployeesorpartners,agreesto reserve for them a portion of the proceeds of the We affirmed the decision of the Court of Tax establishment.(SeeWong&Leev.Coll.104Phil.469;55 Appealsandstated: Off.Gaz.[51]10539;SyChuicov.Coll.,107Phil.,428;59 The Secretarys opinion was correct. The Government Off.Gaz.,[6]896). couldnothavemeanttotaxasgrossreceiptoftheManila JockeyClubthe1/2%whichitdirectssameClubtoturn Inthesecondcase,thefactsofthecaseare: overtotheBoardonRaces.ThelatterbeingaGovernment The Manila Jockey Club holds once a year a so called institution,therewouldbedoubletaxation,whichshouldbe special Novato race, wherein only novato horses, (i.e. avoided unless the statute admits of no other horseswhicharerunningforthefirsttimeinanofficial[of interpretation.Inthesamemanner,theGovernmentcould theclub]race),maytakepart.Ownersofthesehorsesmust nothaveintendedtoconsiderasgrossreceipttheportionof pay to the Club an inscription fee of P1.00, and a thefundswhichitdirectedtheClubtogive,orknewthe declarationfeeofP1.00perhorse.Inaddition,eachofthem Club would give, to winning horses and jockeys mustcontributetoacommonfund(P10.00perhorse).The Club contributes an equal amount (P10.00 per horse) to horseownersastaxablereceiptoftheClub,sincethelatter, suchcommonfund,thetotalamountofwhichisaddedto atthesamemomentitreceivedthecontributionnecessarily the 5% participation of horse owners already described losttenpesostoo. hereinaboveinthefirstcase. Sincetheinstitutionofthisyearlyspecialnovatorace As demonstrated in the abovementioned case, gross in1950,theManilaJockeyClubneverpaidamusementtax receipts subject to tax under the Tax Code do not on the moneys thus contributed by horse owners (P10.00 include monies orreceipts entrusted tothetaxpayer each)becauseitentertainedthebeliefthatinaccordance whichdonotbelongtothemanddonotredoundtothe withthethreeopinionsoftheSecretaryofJusticeherein taxpayersbenefit;anditisnotnecessarythatthere abovedescribed,suchcontributionsneverformedpartofits mustbealaworregulationwhichwouldexemptsuch grossreceipts.OntheinscriptionfeeoftheP1.00perhorse, monies and receipts within the meaning of gross itpaidthetax.ItdidnotonthedeclarationfeeofP1.00 receiptsundertheTaxCode. because it was imposed by the Municipal Ordinance of Parenthetically,theroomchargesentrustedbythe ManilaandwasturnedovertotheCityofficers. foreign travel agencies to the private respondent do TheCollectorofInternalRevenuerequiredtheManila notformpartofitsgrossreceiptswithinthedefinition Jockey Club to pay amusement tax on such contributed fundP10.00perhorseinthespecialnovatorace,holding oftheTaxCode.Thesaidreceiptsneverbelongedto theywerepartofitsgrossreceipts.TheManilaJockeyClub theprivaterespondent.Theprivaterespondentnever protestedandresortedtotheCourtofTaxAppeals,where benefited from their payment to the local hotels. As it obtained favorable judgment on the same grounds stated earlier, this arrangement was only to sustainedbysaidCourtinconnectionwiththe5%ofthe accommodatetheforeigntravelagencies. totalwagerfundsinthehereinmentionedfirstcase;they Anotherobjectionraisedbythepetitioneristothe werenotreceiptsoftheClub. respondent courts application of Presidential Decree Weresolvedtheissueinthefollowingmanner: 31 which exempts foreign tourists from payment of We think the reasons for upholding the Tax Courts hotelroomtax.Section1thereofprovides: decision in the first case apply to this one. The tenpeso Sec. 1.Foreign tourists and travelers shall be exempt contributionneverbelongedtotheClub.Itwasheldbyitas frompaymentofanyandallhotelroomtaxfortheentire atrustfund.Andthen,afterall,whenitreceivedtheten periodoftheirstayinthecountry. pesocontribution,itatthesametimecontributedtenpesos The petitioner now alleges that P.D. 31 has no out of its own pocket, and thereafter distributed both relevancetothecase.Hecontendsthatthetaxunder amounts as prizes to horse owners. It would seem Section 191 of the Tax Code is in the nature of an unreasonable to regard the tenpeso contribution of the excise tax; that it is a tax on the exercise of the analysisitistheWHOthatwillpaythetaxindirectlythrough privilege to engage in business as a contractor and thecontractoranditcertainlycannotbesaidthatthistaxhasno bearingupontheWorldHealthOrganization. thatitisimposedon,andcollectiblefromtheperson exercising the privilege. He sums his arguments by Petitioner claims that under the authority of the statingthatwhiletheburdenmaybeshiftedtothe Philippine Acetylene Company versus Commissioner of person for whom the services are rendered by the InternalRevenue,etal.,(127Phil.461)the3%contractors contractor,thelatterisnotrelievedfrompaymentof taxfallsdirectlyonGotamcoandcannotbeshiftedtothe WHO. The Court of Tax Appeals, however, heldthat the thetax.(Rollo,p.28) said case is not controlling in this case, since the Host The same arguments were submitted by the Agreement specifically exempts the WHO from indirect Commissioner of Internal Revenue in the case taxes.Weagree.ThePhilippineAcetylenecaseinvolveda ofCommissionerofInternalRevenuev.JohnGotamco taxonsalesofgoodswhichunderthelawhadtobepaidby & Son., Inc.(148 SCRA 36[1987]), to justify his the manufacturer or producer; the fact that the impositionofthe3%contractorstaxunderSection191 manufacturerorproducermighthaveaddedtheamountof of the National Internal Revenue Code on the gross thetaxtothepriceofthegoodsdidnotmakethesalestax receiptsJohnGotamco&Sons,Inc.,realizedfromthe ataxonthepurchaser.TheCourtheldthatthesalestax constructionoftheWorldHealthOrganization(WHO) mustbepaidbythemanufacturerorproducerevenifthe officebuildinginManila.Werejectedthepetitioners saleismadetotaxexemptentitiesliketheNationalPower argumentsandruled: Corporation,anagencyofthePhilippineGovernment,and WeagreewiththeCourtofTaxAppealsinrejectingthis to the Voice of America, an agency of the United States contentionofthepetitioner.Saidtherespondentcourt: Government. Incontext,directtaxesarethosethataredemandedfromthe The Host Agreement, in specifically exempting the verypersonwho,itisintendedordesired,shouldpaythem;while WHO from indirect taxes, contemplates taxes which, indirecttaxesarethosethataredemandedinthefirstinstance although not imposed upon or paid by the Organization fromonepersonintheexpectationandintentionthathecanshift theburdentosomeoneelse.(Pollockv.Farmers,L&TCo.,1957 directly,formpartofthepricepaidortobepaidbyit. US429,15S.Ct.673,39Law.ed.759).Thecontractorstaxisof Accordingly, the significance of P.D. 31 is clearly coursepayablebythecontractorbutinthelastanalysisitisthe owner of the building that shoulders the burden of the tax establishedindeterminingwhetherornothotelroom becausethesameisshiftedbythecontractortotheownerasa chargesofforeigntouristsinlocalhotelsaresubjectto matterofselfpreservation.Thus,itisanindirecttax.Anditisan the3%contractorstax.Astherespondentcourtaptly indirecttaxontheWHObecause,althoughitispayablebythe stated: petitioner,thelattercanshiftitsburdenontheWHO.Inthelast xxxIfthehotelroomchargesentrustedtopetitionerwill be subjected to 3% contractors tax as what respondent would want to do in this case, that would in effect do indirectlywhatP.D.31wouldnotlikehotelroomchargesof foreigntouriststobesubjectedtohotelroomtax.Although, respondent may claim that the 3% contractors tax is imposeduponadifferentincidence,i.e.thegrossreceiptsof petitioner tourist agency which he asserts includes the hotelroomchargesentrustedtoit,theeffectwouldbeto imposeatax,andthoughdifferent,itnonethelessimposesa tax actually on room charges. One way or the other, it would not have the effect of promoting tourism in the Philippinesasthatwouldincreasethecostsorexpensesby theadditionofahotelroomtaxintheoverallexpensesof saidtourists.(Rollo,pp.5152)
WHEREFORE,the instant petition is DENIED. The
decisionof the Court ofTaxAppeals is AFFIRMED. Nopronouncementastocosts. SOORDERED.