This appeal  is taken from  a decision of  the  Court of First  Instance  of  Manila denying recovery of  P1,267.75 paid as compensating tax on the value of business machines imported into the Philippines by the appellant International Business Machines  Corporation  from  July 1, 1939 up to, and including March 31, 1941, and then rented (not sold) to its  customers.

The facts, as stipulated, are:

"During the period  from July 1, 1939 up to and including March 31,  1941, the  period embraced in  the complaint, the plaintiff-appellant had engaged in  the business  of selling  machine  cards  and leasing  business  machines. The machine  cards  were  sold  and the  business machine  leased' to the customers of plaintiff-appellant. The  sales tax  of 3½ percent, which was the rate  in  force during  the period in  question, was paid on the sales of machine cards.  Defendant-appellee demanded and collected from plaintiff-appellant, and the latter paid, the amount of Pl,267.75 representing the  alleged compensating1 tax on  the  business machines brought by plaintiff-appellant into  the Philippines and used as above  stated.

Of the sum of Pl.267.75,  the  amount of P828.10 was the compensating tax on machines  imported  by plaintiff  from July 1, 1959 to  October  15,  1940, inclusive,  and the balance  of  P469.4E was the  compensating tax on the machines imported by plaintiff- appellant during the  period  from October 16, 1940 up  to  March 31,  1941.

Appellant filed a claim with the appellee in the total amount of P1,267.75 within the period of 2 years from the date of  payment thereof,  and the latter denied said claim."  (Brief for Appellant, pp.  2-3.)

The gist of appellant's position  is that the compensating taxes  collected  during  the   Commonwealth  under   the original sec. 190 of the  National  Internal Revenue Code, before  the  same was approved by  the President of  the United States, were in  fact a tax on imports,  and could not become law without the Presidential approval, provided in  section  2(a),  paragraph  9,  of  the  Philippine Independence Act   (Act  of  Congress  of  March 24 1934), reproduced  in section 1(a) of the Ordinance appended to the  Commonwealth  Constitution.

The text of section 190 aforesaid,  before its amendment by Commonwealth Act  No. .503, is as follows:

"Sec.  190.  Compensating  tax. All persons purchasing or receiving from without the Philippines  any commodities, goods, .wares, or  merchandise,  excepting  those subject  to specific taxes  under Title IV of this  Code, shall pay on the total value thereof at  the time they are received by such persons, including  freight, postage, insurance, commission, and all similar charges,  a  compensating tax equivalent to the percentage  tax  imposed under  this  Title on original  transactions effected  by merchants, importers,  or manufacturers, such  tax to be  paid upon  the withdrawal or removal of said commodities, goods, wares, or merchandise from the  customhouse or  the  post office:  Provided, however,  That merchants, importers, and manufacturers,  who are subject to tax under sections 184, 185, 186,  187  and 189  of this  Title  shall  not  be required to  pay .the  tax herein  Imposed where the articles purchased or received  by  them from  without the Philippines are to  be resold, bartered, or exchanged, or used in connection with their business." (National Internal Revenue Code)   (Brief for.  Appellant, pp.  3-4.)

We  agree with the  decision of the Court below  that the compensating  tax thus imposed is not  a tax on the importation of goods.   This is evident  from the proviso that imported merchandise which is to be  disposed or in transactions subject to  sales tax  under sections  184,  185, 186, 187 and  189  of the  Internal  Revenue  Code, is  expressly  exempted from  the compensating tax.  This feature  shows that it is not  the act of  importation that is taxed under section 190, but the use of imported goods not subjected to a  sale  tax; otherwise the,compensating tax would  have been  levied on all  imported goods regardless  of  any  subsequent tax  that  might  accrue. Moreover,  the compensating tax  accrues  whether or not the imported  goods are subject to pay customs duties.

 That  the compensating tax was  expressly  designed  as a  substitute to make up  or  compensate for the revenue lost to  the government .through the  avoidance of sales  taxes by means of direct  purchases abroad  is  shown  by  the report of the Tax  Commission that prepared the Internal Revenue Code.

"3.  Compensating tax  imposed. Avoidance of  sales tax is to be prevented- by imposing  a  compensating  tax of  1½ per cent on all  persons other  than merchants, manufacturers etc., who receive goods directly from abroad.

It is proposed to levy upon all  persons who purchase or receive directly from abroad commodities goods,  wares and merchandise; except those  subject to  specific taxes  urider the  propose plan, a tax equivalent  to  the percentage tax imposed  on  original sales, barters, or  exchanges of  similar articles  effected  by merchants, importers, or manufacturers.  The tax will  be based on the total value of  the  articles at  the  time they are  received,  including freight, postage, insurance,  commission and  all other charges, and it  will be paid  before the articles are actually  removed from the customhouse  or  post-office.  . However,  merchants, importers, and manufacturers will  not  be required  to  pay  this tax  where the articles purchased or received by them from without  the Philippines are intended for  resale, barter, or exchange, or for use in corinection1 with their business and  are  actually disposed  of so used.  Furthermore, the tax will  not  be  assessed or collected on any. single shipment consigned to  any one person when the total value of  the  shipment does not exceed. P100.

 The  purpose  of this. proposal  is to place persons purchasing goods from dealers doing  business in the  Philippines  in  equal footing, for tax purposes, with those who purchase goods directly from without the  Philippines.  Under the present law,  the former bear the burden of the local sales  tax because,' it is shift them as part of the selling' price  demanded by the local merchant while the latter do not.  The proposed tax will  do  away with this inequility and render  justice to merchants and  firms of  all  nationalities "who arc in legitimate business here, paying taxes  and giving employment  to a large number of people."  (Report of the Tax Commission  of the  Philippines,  Vol. I, pp.  74-75.)   (Brief  for Appellee, pp. 4-6.)

It  is  argued for  appellant that the compensating tax is imposed on imported merchandise  irrespective of uses to which it is to  be subsequently devoted, and that such feature  makes  it  an import tax.   The premise  is  incorrect: for, as previously observed, if the. goods are actually sold within the Philippines,. they  are exempt from the compensating tax.   The latter thus becomes  arax on use of goods other  than the sale thereof.

Calling it an  import tax will not make  it one.   As noted by the U. S. Supreme Court in Henneford vs. Silas Mason Co.,  300 U. S.  577,  81 L.  Ed., 814, on pages  820-821, a propos  of a similar  tax imposed by the state of Washington-

"Catchwords and labels, such as the words 'protective tariff'  are subject to the dangers that  lurk in metaphors and symbols, and must be watched with circumspection lest they put us of,  our guard. A tariff,  whether protective or for revenue, burdens the .very  act of importation, and  if  laid  by a state  upon  its  commerce with another is equally unlawful whether protection or  revenue is  the motive back  ol it.   But a tax upon  use,  or,  what is  equivalent for present'  purposes,  a tax  upon  property after  importation  is over, 'is  not  a clog  upon the  process of importation at all, any more than a tax upon the income or profits of a business."

Not being an  import  tax,  we  hold the  compensating tax under  section 190  of the Internal Revenue Code to have  been  validly imposed  by the  Commonwealth  without the previous approval of the President of  the United States.

The decision  appealed from is affirmed.  Costs against appellant.   So ordered.

Parás, C. J., Padilla, Montemayor, Reyes, A., Jugo, Bautista  Angelo, Labrador,  Concepcion,  and Endeiicia, JJ., concur.