WELLS FARGO v COLLECTOR

Petitioner: Wells Fargo Bank & Union Trust Company

Respondent: Collector of Internal Revenue
Citation: G.R. No. L-46720
Date of Promulgation: June 28, 1940
Ponente: Moran, J.

FACTS:
 Birdie Lillian Eye died in Los Angeles, California, USA which was also her place of domicile.
 She left various properties.
o some intangibles consisting of 70,000 shares in the Benguet Consolidated Mining Company, a
corporation organized and existing under Philippine laws.
 The Collector of Internal Revenue sought to assess and collect estate tax on the said shares.
 Wells Fargo Banks & Union Trust Company, the trustee of the estate of the decedent Eye, objected to said
assessment.
 Wells Fargo averred that said shares were already subjected to inheritance tax in California and hence
cannot be taxed again in the Philippines.

ISSUE:
Whether or not the shares are subject to estate tax in the Philippines.

RULING:
Originally, the settled law in the United States is that intangibles have only one situs for the purpose of
inheritance tax, and that such situs is in the domicile of the decedent at the time of his death. But this rule has, of
late, been relaxed. The maxim mobilia sequuntur personam, upon which the rule rests, has been described as a mere
"fiction of law having its origin in consideration of general convenience and public policy, and cannot be applied to
limit or control the right of the state to tax property within its jurisdiction" (State Board of Assessors vs. Comptoir
National D'Escompte, 191 U. S., 388, 403, 404), and must "yield to established fact of legal ownership, actual
presence and control elsewhere, and cannot be applied if to do so result in inescapable and patent injustice." (Safe
Deposit & Trust Co. vs. Virginia, 280 U. S., 83, 91-92) There is thus a marked shift from artificial postulates of law,
formulated for reasons of convenience, to the actualities of each case.

An examination of the adjudged cases will disclose that the relaxation of the original rule rests on either of two
fundamental considerations: (1) upon the recognition of the inherent power of each government to tax persons,
properties and rights within its jurisdiction and enjoying, thus, the protection of its laws; and (2) upon the principle
that as o intangibles, a single location in space is hardly possible, considering the multiple, distinct relationships
which may be entered into with respect thereto. It is on the basis of the first consideration that the case of Burnet
vs. Brooks, supra, was decided by the Federal Supreme Court, sustaining the power of the Government to impose
an inheritance tax upon transmission, by death of a non-resident, of shares of stock in a domestic (America)
corporation, regardless of the situs of their corresponding certificates; and on the basis of the second consideration,
the case of Cury vs. McCanless, supra.

In Burnet vs. Brooks, the court, in disposing of the argument that the imposition of the federal estate tax is precluded
by the due-process clause of the Fifth Amendment, held:

The point, being solely one of jurisdiction to tax, involves none of the other consideration raised by confiscatory or
arbitrary legislation inconsistent with the fundamental conceptions of justice which are embodied in the due-process
clause for the protection of life, liberty, and property of all persons — citizens and friendly aliens alike.. If in the
instant case the Federal Government had jurisdiction to impose the tax, there is manifestly no ground for assailing
it.
And, in sustaining the power of the Federal Government to tax properties within its borders, wherever its owner
may have been domiciled at the time of his death, the court ruled:

. . . There does not appear, a priori, to be anything contrary to the principles of international law, or hurtful to the
polity of nations, in a State's taxing property physically situated within its borders, wherever its owner may have
been domiciled at the time of his death. . . .

As jurisdiction may exist in more than one government, that is, jurisdiction based on distinct grounds — the
citizenship of the owner, his domicile, the source of income, the situs of the property — efforts have been made
to preclude multiple taxation through the negotiation of appropriate international conventions. These endeavors,
however, have proceeded upon express or implied recognition, and not in denial, of the sovereign taxing power
as exerted by governments in the exercise of jurisdiction upon any one of these grounds. . . . (See pages 396-397;
399.)

In Curry vs. McCanless, supra, the court, in deciding the question of whether the States of Alabama and Tennessee
may each constitutionally impose death taxes upon the transfer of an interest in intangibles held in trust by an
Alabama trustee but passing under the will of a beneficiary decedent domiciles in Tennessee, sustained the power
of each State to impose the tax. In arriving at this conclusion, the court made the following observations:

In cases where the owner of intangibles confines his activity to the place of his domicile it has been found
convenient to substitute a rule for a reason, by saying that his intangibles are taxed at their situs and not
elsewhere, or perhaps less artificially, by invoking the maxim mobilia sequuntur personam, which means only that
it is the identify owner at his domicile which gives jurisdiction to tax. But when the taxpayer extends his activities
with respect to his intangibles, so as to avail himself of the protection and benefit of the laws of another state, in
such a way as to bring his person or properly within the reach of the tax gatherer there, the reason for a single
place of taxation no longer obtains, and the rule even workable substitute for the reasons may exist in any
particular case to support the constitutional power of each state concerned to tax. Whether we regard the right of
a state to tax as founded on power over the object taxed, as declared by Chief Justice Marshall in McCulloch vs.
Maryland, 4 Wheat., 316; 4 Law. ed., 579, supra, through dominion over tangibles or over persons whose
relationships are source of intangibles rights, or on the benefit and protection conferred by the taxing sovereignty,
or both, it is undeniable that the state of domicile is not deprived, by the taxpayer's activities elsewhere, of its
constitutional jurisdiction to tax, and consequently that there are many circumstances in which more than one state
may have jurisdiction to impose a tax and measure it by some or all of the taxpayer's intangibles. Shares or corporate
stock be taxed at the domicile of the shareholder and also at that of the corporation which the taxing state has
created and controls; and income may be taxed both by the state where it is earned and by the state of the recipient's
domicile. protection, benefit, and power over the subject matter are not confined to either state. . . .(p. 1347-1349.)

. . . We find it impossible to say that taxation of intangibles can be reduced in every case to the mere mechanical
operation of locating at a single place, and there taxing, every legal interest growing out of all the complex legal
relationships which may be entered into between persons. This is the case because in point of actuality those
interests may be too diverse in their relationships to various taxing jurisdictions to admit of unitary treatment
without discarding modes of taxation long accepted and applied before the Fourteen Amendment was adopted, and
still recognized by this Court as valid. (P. 1351.)

We need not belabor the doctrines of the foregoing cases. We believe, and so hold, that the issue here involved is
controlled by those doctrines. In the instant case, the actual situs of the shares of stock is in the Philippines, the
corporation being domiciled therein. And besides, the certificates of stock have remained in this country up to the
time when the deceased died in California, and they were in possession of one Syrena McKee, secretary of the
Benguet Consolidated Mining Company, to whom they have been delivered and indorsed in blank. This
indorsement gave Syrena McKee the right to vote the certificates at the general meetings of the stockholders, to
collect dividends, and dispose of the shares in the manner she may deem fit, without prejudice to her liability to
the owner for violation of instructions. For all practical purposes, then, Syrena McKee had the legal title to the
certificates of stock held in trust for the true owner thereof. In other words, the owner residing in California has
extended here her activities with respect to her intangibles so as to avail herself of the protection and benefit of
the Philippine laws. Accordingly, the jurisdiction of the Philippine Government to tax must be upheld.

Judgment is affirmed, with costs against petitioner-appellant.

Note : : As a rule, intangibles follow the person (mobilia sequuntur personam). Hence, intangibles are taxable in
the place where their owner may be domiciled. However, Section 104 of the NIRC provides that if the shares have
attained business situs here in the Philippines, then said shares are taxable here even if the owner of said shares
are domiciled abroad.

COMMISSIONER v BRITISH
Petitioner: Commissioner of Internal Revenue
Respondent: BRITISH OVERSEAS AIRWAYS CORPORATION and COURT OF TAX APPEALS
Citation: G.R. No. L-65773-74
Date of Promulgation: April 30, 1987
Ponente:Melencio -Herrera, J.

FACTS:
 British Overseas Airways Corp (BOAC)
o 100% British Government-owned corporation engaged in international airline
o it operates air transportation services and sells transportation tickets over the routes of the other
airline members.
 From 1959 to 1972, BOAC had no landing rights for traffic purposes in the Philippines and thus:
o did not carry passengers and/or cargo to or from the Philippines
o but maintained a general sales agent in the Philippines - Warner Barnes & Co. Ltd. and later,
Qantas Airways - which was responsible for selling BOAC tickets covering passengers and cargoes.
 The Commissioner of Internal Revenue assessed deficiency income taxes against BOAC
 The CTA sided with BOAC citing that the proceeds of sales of BOAC tickets do not constitute BOAC income
from Philippine sources since no service of carriage of passengers or freight was performed by BOAC within
the Philippines and, therefore, said income is not subject to Philippine income tax. The CTA position was
that income from transportation is income from services so that the place where services are rendered
determines the source.

ISSUE:
Whether the revenue derived by BOAC from ticket sales in the Philippines, constitute income of BOAC from
Philippine sources, and accordingly taxable.

RULING:
Under Section 20 of the 1977 Tax Code:

(h) the term resident foreign corporation engaged in trade or business within the Philippines or having an office
or place of business therein.

(i) The term "non-resident foreign corporation" applies to a foreign corporation not engaged in trade or
business within the Philippines and not having any office or place of business therein

It is our considered opinion that BOAC is a resident foreign corporation. There is no specific criterion as to what
constitutes "doing" or "engaging in" or "transacting" business. Each case must be judged in the light of its
peculiar environmental circumstances. The term implies a continuity of commercial dealings and arrangements,
and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions
normally incident to, and in progressive prosecution of commercial gain or for the purpose and object of the
business organization. 2 "In order that a foreign corporation may be regarded as doing business within a State,
there must be continuity of conduct and intention to establish a continuous business, such as the appointment
of a local agent, and not one of a temporary character. 3

BOAC, during the periods covered by the subject - assessments, maintained a general sales agent in the
Philippines, That general sales agent, from 1959 to 1971, "was engaged in (1) selling and issuing tickets; (2)
breaking down the whole trip into series of trips — each trip in the series corresponding to a different airline
company; (3) receiving the fare from the whole trip; and (4) consequently allocating to the various airline
companies on the basis of their participation in the services rendered through the mode of interline settlement
as prescribed by Article VI of the Resolution No. 850 of the IATA Agreement." 4 Those activities were in exercise
of the functions which are normally incident to, and are in progressive pursuit of, the purpose and object of its
organization as an international air carrier. In fact, the regular sale of tickets, its main activity, is the very
lifeblood of the airline business, the generation of sales being the paramount objective. There should be no
doubt then that BOAC was "engaged in" business in the Philippines through a local agent during the period
covered by the assessments. Accordingly, it is a resident foreign corporation subject to tax upon its total net
income received in the preceding taxable year from all sources within the Philippines. 5

Sec. 24. Rates of tax on corporations. — ...

(b) Tax on foreign corporations. — ...

(2) Resident corporations. — A corporation organized, authorized, or existing under the laws of any foreign
country, except a foreign fife insurance company, engaged in trade or business within the Philippines, shall be
taxable as provided in subsection (a) of this section upon the total net income received in the preceding taxable
year from all sources within the Philippines. (Emphasis supplied)

Next, we address ourselves to the issue of whether or not the revenue from sales of tickets by BOAC in the
Philippines constitutes income from Philippine sources and, accordingly, taxable under our income tax laws.

The Tax Code defines "gross income" thus:

"Gross income" includes gains, profits, and income derived from salaries, wages or compensation for personal
service of whatever kind and in whatever form paid, or from profession, vocations, trades, business,
commerce, sales, or dealings in property, whether real or personal, growing out of the ownership or use of
or interest in such property; also from interests, rents, dividends, securities, or the transactions of any
business carried on for gain or profile, or gains, profits, and income derived from any source whatever (Sec.
29[3]; Emphasis supplied)

The definition is broad and comprehensive to include proceeds from sales of transport documents. "The
words 'income from any source whatever' disclose a legislative policy to include all income not expressly
exempted within the class of taxable income under our laws." Income means "cash received or its
equivalent"; it is the amount of money coming to a person within a specific time ...; it means something
distinct from principal or capital. For, while capital is a fund, income is a flow. As used in our income tax law,
"income" refers to the flow of wealth. 6

The records show that the Philippine gross income of BOAC for the fiscal years 1968-69 to 1970-71 amounted
to P10,428,368 .00. 7

Did such "flow of wealth" come from "sources within the Philippines",

The source of an income is the property, activity or service that produced the income. For the source of
income to be considered as coming from the Philippines, it is sufficient that the income is derived from activity
within the Philippines. In BOAC's case, the sale of tickets in the Philippines is the activity that produces the
income. The tickets exchanged hands here and payments for fares were also made here in Philippine currency.
The site of the source of payments is the Philippines. The flow of wealth proceeded from, and occurred within,
Philippine territory, enjoying the protection accorded by the Philippine government. In consideration of such
protection, the flow of wealth should share the burden of supporting the government.

A transportation ticket is not a mere piece of paper. When issued by a common carrier, it constitutes the
contract between the ticket-holder and the carrier. It gives rise to the obligation of the purchaser of the ticket
to pay the fare and the corresponding obligation of the carrier to transport the passenger upon the terms and
conditions set forth thereon. The ordinary ticket issued to members of the traveling public in general embraces
within its terms all the elements to constitute it a valid contract, binding upon the parties entering into the
relationship.

True, Section 37(a) of the Tax Code, which enumerates items of gross income from sources within the
Philippines, namely: (1) interest, (21) dividends, (3) service, (4) rentals and royalties, (5) sale of real property,
and (6) sale of personal property, does not mention income from the sale of tickets for international
transportation. However, that does not render it less an income from sources within the Philippines. Section 37,
by its language, does not intend the enumeration to be exclusive. It merely directs that the types of income
listed therein be treated as income from sources within the Philippines. A cursory reading of the section will
show that it does not state that it is an all-inclusive enumeration, and that no other kind of income may be so
considered. "

BOAC, however, would impress upon this Court that income derived from transportation is income for
services, with the result that the place where the services are rendered determines the source; and since
BOAC's service of transportation is performed outside the Philippines, the income derived is from sources
without the Philippines and, therefore, not taxable under our income tax laws. The Tax Court upholds that
stand in the joint Decision under review.

The absence of flight operations to and from the Philippines is not determinative of the source of income or the
site of income taxation. Admittedly, BOAC was an off-line international airline at the time pertinent to this case.
The test of taxability is the "source"; and the source of an income is that activity ... which produced the income.
11 Unquestionably, the passage documentations in these cases were sold in the Philippines and the revenue
therefrom was derived from a activity regularly pursued within the Philippines. business a And even if the BOAC
tickets sold covered the "transport of passengers and cargo to and from foreign cities", 12 it cannot alter the
fact that income from the sale of tickets was derived from the Philippines. The word "source" conveys one
essential idea, that of origin, and the origin of the income herein is the Philippines. 13

It should be pointed out, however, that the assessments upheld herein apply only to the fiscal years covered by
the questioned deficiency income tax assessments in these cases, or, from 1959 to 1967, 1968-69 to 1970-71.
For, pursuant to Presidential Decree No. 69, promulgated on 24 November, 1972, international carriers are now
taxed as follows:

... Provided, however, That international carriers shall pay a tax of 2-½ per cent on their cross Philippine billings.
(Sec. 24[b] [21, Tax Code).

Presidential Decree No. 1355, promulgated on 21 April, 1978, provided a statutory definition of the term "gross
Philippine billings," thus:

... "Gross Philippine billings" includes gross revenue realized from uplifts anywhere in the world by any
international carrier doing business in the Philippines of passage documents sold therein, whether for
passenger, excess baggage or mail provided the cargo or mail originates from the Philippines. ...
 The foregoing provision ensures that international airlines are taxed on their income from Philippine sources.
The 2-½ % tax on gross Philippine billings is an income tax. If it had been intended as an excise or percentage
tax it would have been place under Title V of the Tax Code covering Taxes on Business.

Lastly, we find as untenable the BOAC argument that the dismissal for lack of merit by this Court of the appeal
in JAL vs. Commissioner of Internal Revenue (G.R. No. L-30041) on February 3, 1969, is res judicata to the present
case. The ruling by the Tax Court in that case was to the effect that the mere sale of tickets, unaccompanied by
the physical act of carriage of transportation, does not render the taxpayer therein subject to the common
carrier's tax. As elucidated by the Tax Court, however, the common carrier's tax is an excise tax, being a tax on
the activity of transporting, conveying or removing passengers and cargo from one place to another. It purports
to tax the business of transportation. 14 Being an excise tax, the same can be levied by the State only when the
acts, privileges or businesses are done or performed within the jurisdiction of the Philippines. The subject matter
of the case under consideration is income tax, a direct tax on the income of persons and other entities "of
whatever kind and in whatever form derived from any source." Since the two cases treat of a different subject
matter, the decision in one cannot be res judicata to the other.

WHEREFORE, the appealed joint Decision of the Court of Tax Appeals is hereby SET ASIDE. Private respondent,
the British Overseas Airways Corporation (BOAC), is hereby ordered to pay the amount of P534,132.08 as
deficiency income tax for the fiscal years 1968-69 to 1970-71 plus 5% surcharge, and 1% monthly interest from
April 16, 1972 for a period not to exceed three (3) years in accordance with the Tax Code. The BOAC claim for
refund in the amount of P858,307.79 is hereby denied. Without costs.

SO ORDERED.

COMMISSIONER v MARUBENI
Petitioner: MARUBENI CORPORATION (formerly Marubeni — Iida, Co., Ltd.)
Respondent: COMMISSIONER OF INTERNAL REVENUE AND COURT OF TAX APPEALS,
Citation: G.R. No. 76573
Date of Promulgation: September 18, 1949
Ponente: FERNAN, C.J.

FACTS:
 Marubeni Corporation is a Japanese corporation licensed to engage in business in the Philippines.
 When the profits on Marubeni’s investments in Atlantic Gulf and Pacific Co. of Manila were declared
o 10% final dividend tax was withheld from it
o and another15% profit remittance tax based on the remittable amount after the final 10%
withholding tax were paid to the Bureau of Internal Revenue.
 Marubeni Corp. now claims for a refund or tax credit for the amount which it has allegedly overpaid the
BIR.
 The CIR and the CTA denied such claim, stating that, while it was not subject to the 15% profit remittance
tax and the 10% intercorporate tax, it was subject to the 25% tax according to the tax treaty between Japan
and the Philippines.

ISSUE:
Whether or not Marubeni is entitled to a refund

RULING:
Yes. It is the argument of petitioner corporation that following the principal-agent relationship theory,
Marubeni Japan is likewise a resident foreign corporation subject only to the 10 % intercorporate final tax on
dividends received from a domestic corporation in accordance with Section 24(c) (1) of the Tax Code of 1977 which
states:

Dividends received by a domestic or resident foreign corporation liable to tax under this Code — (1) Shall be subject
to a final tax of 10% on the total amount thereof, which shall be collected and paid as provided in Sections 53 and
54 of this Code ....

Public respondents, however, are of the contrary view that Marubeni, Japan, being a non-resident foreign
corporation and not engaged in trade or business in the Philippines, is subject to tax on income earned from
Philippine sources at the rate of 35 % of its gross income under Section 24 (b) (1) of the same Code which reads:

(b) Tax on foreign corporations — (1) Non-resident corporations. — A foreign corporation not engaged in trade
or business in the Philippines shall pay a tax equal to thirty-five per cent of the gross income received during each
taxable year from all sources within the Philippines as ... dividends ....

but expressly made subject to the special rate of 25% under Article 10(2) (b) of the Tax Treaty of 1980 concluded
between the Philippines and Japan. 11 Thus:

Article 10 (1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other Contracting State.

(2) However, such dividends may also be taxed in the Contracting State of which the company paying the
dividends is a resident, and according to the laws of that Contracting State, but if the recipient is the beneficial owner
of the dividends the tax so charged shall not exceed;

(a) ...

(b) 25 per cent of the gross amount of the dividends in all other cases.

Central to the issue of Marubeni Japan's tax liability on its dividend income from Philippine sources is therefore the
determination of whether it is a resident or a non-resident foreign corporation under Philippine laws.

Under the Tax Code, a resident foreign corporation is one that is "engaged in trade or business" within the
Philippines. Petitioner contends that precisely because it is engaged in business in the Philippines through its
Philippine branch that it must be considered as a resident foreign corporation. Petitioner reasons that since the
Philippine branch and the Tokyo head office are one and the same entity, whoever made the investment in AG&P,
Manila does not matter at all. A single corporate entity cannot be both a resident and a non-resident corporation
depending on the nature of the particular transaction involved. Accordingly, whether the dividends are paid directly
to the head office or coursed through its local branch is of no moment for after all, the head office and the office
branch constitute but one corporate entity, the Marubeni Corporation, which, under both Philippine tax and
corporate laws, is a resident foreign corporation because it is transacting business in the Philippines.

The Solicitor General has adequately refuted petitioner's arguments in this wise:

The general rule that a foreign corporation is the same juridical entity as its branch office in the Philippines cannot
apply here. This rule is based on the premise that the business of the foreign corporation is conducted through its
branch office, following the principal agent relationship theory. It is understood that the branch becomes its agent
here. So that when the foreign corporation transacts business in the Philippines independently of its branch, the
principal-agent relationship is set aside. The transaction becomes one of the foreign corporation, not of the branch.
Consequently, the taxpayer is the foreign corporation, not the branch or the resident foreign corporation.

Corollarily, if the business transaction is conducted through the branch office, the latter becomes the taxpayer, and
not the foreign corporation.
In other words, the alleged overpaid taxes were incurred for the remittance of dividend income to the head office
in Japan which is a separate and distinct income taxpayer from the branch in the Philippines. There can be no other
logical conclusion considering the undisputed fact that the investment (totalling 283.260 shares including that of
nominee) was made for purposes peculiarly germane to the conduct of the corporate affairs of Marubeni Japan, but
certainly not of the branch in the Philippines. It is thus clear that petitioner, having made this independent
investment attributable only to the head office, cannot now claim the increments as ordinary consequences of its
trade or business in the Philippines and avail itself of the lower tax rate of 10 %.

But while public respondents correctly concluded that the dividends in dispute were neither subject to the 15 %
profit remittance tax nor to the 10 % intercorporate dividend tax, the recipient being a non-resident stockholder,
they grossly erred in holding that no refund was forthcoming to the petitioner because the taxes thus withheld
totalled the 25 % rate imposed by the Philippine-Japan Tax Convention pursuant to Article 10 (2) (b).

To simply add the two taxes to arrive at the 25 % tax rate is to disregard a basic rule in taxation that each tax has a
different tax basis. While the tax on dividends is directly levied on the dividends received, "the tax base upon which
the 15 % branch profit remittance tax is imposed is the profit actually remitted abroad." 13

Public respondents likewise erred in automatically imposing the 25 % rate under Article 10 (2) (b) of the Tax Treaty
as if this were a flat rate. A closer look at the Treaty reveals that the tax rates fixed by Article 10 are the maximum
rates as reflected in the phrase "shall not exceed." This means that any tax imposable by the contracting state
concerned should not exceed the 25 % limitation and that said rate would apply only if the tax imposed by our laws
exceeds the same. In other words, by reason of our bilateral negotiations with Japan, we have agreed to have our
right to tax limited to a certain extent to attain the goals set forth in the Treaty.

Petitioner, being a non-resident foreign corporation with respect to the transaction in question, the applicable
provision of the Tax Code is Section 24 (b) (1) (iii) in conjunction with the Philippine-Japan Treaty of 1980. Said
section provides:

(b) Tax on foreign corporations. — (1) Non-resident corporations — ... (iii) On dividends received from a
domestic corporation liable to tax under this Chapter, the tax shall be 15% of the dividends received, which shall
be collected and paid as provided in Section 53 (d) of this Code, subject to the condition that the country in which
the non-resident foreign corporation is domiciled shall allow a credit against the tax due from the non-resident
foreign corporation, taxes deemed to have been paid in the Philippines equivalent to 20 % which represents the
difference between the regular tax (35 %) on corporations and the tax (15 %) on dividends as provided in this
Section; ....

Proceeding to apply the above section to the case at bar, petitioner, being a non-resident foreign corporation, as a
general rule, is taxed 35 % of its gross income from all sources within the Philippines. [Section 24 (b) (1)].

However, a discounted rate of 15% is given to petitioner on dividends received from a domestic corporation
(AG&P) on the condition that its domicile state (Japan) extends in favor of petitioner, a tax credit of not less than
20 % of the dividends received. This 20 % represents the difference between the regular tax of 35 % on non-
resident foreign corporations which petitioner would have ordinarily paid, and the 15 % special rate on dividends
received from a domestic corporation.

Consequently, petitioner is entitled to a refund on the transaction in question to be computed as follows:

Total cash dividend paid ................P1,699,440.00

less 15% under Sec. 24
(b) (1) (iii ) .........................................254,916.00
------------------
Cash dividend net of 15 % tax
due petitioner ...............................P1,444.524.00
less net amount
actually remitted .............................1,300,071.60
-------------------

Amount to be refunded to petitioner

representing overpayment of
taxes on dividends remitted ..............P 144 452.40
===========

It is readily apparent that the 15 % tax rate imposed on the dividends received by a foreign non-resident stockholder
from a domestic corporation under Section 24 (b) (1) (iii) is easily within the maximum ceiling of 25 % of the gross
amount of the dividends as decreed in Article 10 (2) (b) of the Tax Treaty.

There is one final point that must be settled. Respondent Commissioner of Internal Revenue is laboring under the
impression that the Court of Tax Appeals is covered by Batas Pambansa Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980. He alleges that the instant petition for review was not perfected in accordance with
Batas Pambansa Blg. 129 which provides that "the period of appeal from final orders, resolutions, awards,
judgments, or decisions of any court in all cases shall be fifteen (15) days counted from the notice of the final order,
resolution, award, judgment or decision appealed from ....

This is completely untenable. The cited BP Blg. 129 does not include the Court of Tax Appeals which has been created
by virtue of a special law, Republic Act No. 1125. Respondent court is not among those courts specifically mentioned
in Section 2 of BP Blg. 129 as falling within its scope.

Thus, under Section 18 of Republic Act No. 1125, a party adversely affected by an order, ruling or decision of the
Court of Tax Appeals is given thirty (30) days from notice to appeal therefrom. Otherwise, said order, ruling, or
decision shall become final.

Records show that petitioner received notice of the Court of Tax Appeals's decision denying its claim for refund on
April 15, 1986. On the 30th day, or on May 15, 1986 (the last day for appeal), petitioner filed a motion for
reconsideration which respondent court subsequently denied on November 17, 1986, and notice of which was
received by petitioner on November 26, 1986. Two days later, or on November 28, 1986, petitioner simultaneously
filed a notice of appeal with the Court of Tax Appeals and a petition for review with the Supreme Court. 14 From the
foregoing, it is evident that the instant appeal was perfected well within the 30-day period provided under R.A. No.
1125, the whole 30-day period to appeal having begun to run again from notice of the denial of petitioner's motion
for reconsideration.

WHEREFORE, the questioned decision of respondent Court of Tax Appeals dated February 12, 1986 which affirmed
the denial by respondent Commissioner of Internal Revenue of petitioner Marubeni Corporation's claim for refund
is hereby REVERSED. The Commissioner of Internal Revenue is ordered to refund or grant as tax credit in favor of
petitioner the amount of P144,452.40 representing overpayment of taxes on dividends received. No costs.

So ordered.
ALLIED THREAD v CITY OF MANILA
Petitioner: ALLIED THREAD CO., INC., and KER & COMPANY, LTD.
Respondent: HON. CITY MAYOR OF MANILA, HON. CITY TREASURER OF MANILA, HON. LORENZO RELOVA, In His
Capacity As Presiding Judge, Branch II, CFI Of Manila
Citation: G.R. No. L-40296
Date of Promulgation: November 2, 1984
Ponente: ABAD SANTOS, J

FACTS:
 Allied Thread Co. Inc. is engaged in the business of manufacturing sewing thread and yarn, operates its
factory and maintains an office in Pasig, Rizal.
 In order to sell its products in Manila and in other parts of,the Philippines, it engaged the services of a sales
broker, Ker & Co. Ltd., the latter deriving commissions from every sale made for its principal.
 The City of Manila enacted Ordinance 7516 imposing business taxes based on gross sales on a graduated
basis on manufacturers, importers or producers doing business in Manila.
 Allied Thread and Ker & Co. alleged that said ordinance is invalid for being contrary to Section 54 of PD
 426.

ISSUE:
Whether or not Aliied Tax is properly taxed in Manila.

RULING:
YES. We are persuaded that there was substantial compliance of the law on publication. Section 43 of the
Local Tax Code provides two modes of apprising the public of a new ordinance, either, (a) by means of publication
in a newspaper of general circulation or, (b) by means of posting of copies thereof in the local legislative hall or
premises and two other conspicuous places within the territorial jurisdiction of the local government. Respondents,
having complied with the second mode of notice, We are of the opinion that there is no legal infirmity to the validity
of Ordinance No. 7516 as amended.

Finally, petitioner Allied Thread Co., Inc. claims exclusion from Ordinance No. 7515 as amended on the ground that
it does not maintain an office or branch office in the City of Manila, where the subject Ordinance only applies. This
contention is devoid of merit. Allied Thread Co., Inc. admits that it does business in the City of Manila through a
broker or agent, Ker & Company, Ltd. Doing business in the City of Manila is all that is required to fall within the
coverage of the Ordinance.

It should be noted that Ordinance No. 7516 as amended imposes a business tax on manufacturers, importers or
producers doing business in the City of Manila. The tax imposition here is upon the performance of an act,
enjoyment of a privilege, or the engaging in an occupation, and hence is in the nature of an excise tax.

The power to levy an excise upon the performance of an act or the engaging in an occupation does not depend
upon the domicile of the person subject to the excise nor upon the physical location of the property and in
connection with the act or occupation taxed, but depends upon the place in which the act is performed or
occupation engaged in.

Thus, the gauge for taxability under the said Ordinance No. 7516 as amended does not depend on the location of
the office, but attaches upon the place where the respective sale transaction(s) is perfected and consummated. (See
Koppel (Phil.) vs. Yatco, 77 Phil. 496 [1946]) Since Allied Thread Co., Inc. sells its products in the City of Manila through
its broker, Ker & Company, Ltd., it cannot escape the tax liability imposed by Ordinance No. 7516 as amended.

WHEREFORE, the petition is hereby dismissed for lack of merit. Costs against the petitioners.

SO ORDERED.