BIR Ruling No. 354-61

September 11, 1961 BIR RULING NO. 354-61 Mendoza and Mendoza Law Offices Samanillo Building Escolta, Manila Gentlemen : You have requested a ruling on the query you presented as follows: prll "My clients are sugar planters whose cane sugar are all sent to and milled by a sugar central who retains a part thereof as its share in accordance with a milling agreement. My clients pay the 2% excise tax under Section 199 of the National Internal Revenue Code. All the time the 2% tax are withheld by the sugar central from the planters' share and thereafter paid to the government. By virtue of the provisions of C.A. 567, which among other things, was enacted "to raise revenue . . . by increasing the tax on the manufacture of sugar" (evidently, the tax on the manufacture of sugar provided under Section 189 of the Tax Code), the government again collects the two (2) centavos basic tax on every picul of sugar milled, such tax being, likewise, paid by the proprietor or operator of the sugar mill. In the implementation of C.A. 567, particularly in the payment and collection of the basic tax on sugar milled, my clients are at a loss as to whether or not the sugar central should follow the same procedure authorized under Section 189 of the aforestated Code, wherein the basic tax may also be collected on the on planters' share under the aforesaid milling agreement by requiring the operator or proprietor of the sugar central withheld the basic tax from the planters' share and pay the same to the government". The basic tax on sugar is the exclusive and personal liability of the proprietor or operator of the sugar mill and "any agreement under which the burden of the tax is directly or indirectly shifted to the planters is declared unlawful". It is imposed on the total marketable sugar manufactured by the proprietor or operator of the mill which includes both the share of the mill and planters or owners of the sugar cane milled. (Section 2, C.A. No. 567, as amended by R.A. 1583; see also: Section 2, Revenue Regulations No. 4, Sugar Adjustment Tax Regulations.) cdta Accordingly, the proprietor or operator of the sugar Central cane tenant should not withhold from the planters' share the taxes imposed by Commonwealth Act No. 567. He (the proprietor or operator of the sugar central) must pay the aforesaid taxes not only on the milled sugar corresponding to his share but also that of the planter. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner on Internal Revenue