Case Digest : Philippine Acetylene v. CIR, 17 August 1967

 PHILIPPINE ACETYLENE Co., INC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS, respondents.

Facts:

1. Philippine Acetylene Co., Inc. (the petitioner) is a corporation engaged in the manu­facture and sale of oxygen and acetylene gases.

2. PAC caters to two customers: (1) National Power Corpora­tion, an agency of the Philippine Government, and to the (2) Voice of America, an agency of the United States Government

3. Commissioner of Internal Revenue assessed against, and demanded from, the petitioner the payment of deficiency sales tax and surcharge.

4. Philippine Acetylene Co., Inc. denied liability for the payment of the tax on the ground that both the NPC and the VOA are exempt from taxation.

Issue:

Were sales by PAC to exempt entities tax exempt? 

Ruling:

No, PACS is still liable to sales tax. The shifting of the tax burden is merely economics. Its levy on the sales made to tax-exempt entities like the NPC is permissible.