Philippine Acetylene Co. Inc.

v CIR
GR No L-19707, August 17, 1967

FACTS:
Philippine Acetylene Co. Inc. is engaged in the manufacture and sale of
oxygen and acetylene gases. It sold its products to the National Power
Corporation (Napocor), an agency of the Philippine Government, and the
Voice of America (VOA), an agency of the United States Government. When
the commissioner assessed deficiency sales tax and surcharges against the
company, the company denied liability for the payment of tax on the ground
that both Napocor and VOA are exempt from taxes.

ISSUE:
Is Philippine Acetylene Co. liable for tax?

RULING:
Yes. Sales tax are paid by the manufacturer or producer who must make a
true and complete return of the amount of his, her or its gross monthly
sales, receipts or earnings or gross value of output actually removed from
the factory or mill, warehouse and to pay the tax due thereon. The tax
imposed by Section 186 of the Tax Code is a tax on the manufacturer or
producer and not a tax on the purchaser except probably in a very remote
and inconsequential sense. Accordingly, its levy on the sales made to tax-
exempt entities like the Napocor is permissible.