Riggs National Corporation & Subsidiaries (f.k.a. Riggs National Bank and Subsidiaries) - Page 80

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          the distinction it drew between a net loan and a gross loan in              
          order to distinguish the previous holding reached in the Parana I--         
          1st Panel decision.37  Although the Parana II decision cited and            
          discussed  the  provision  in  Decree-law  401  that  deems  the            
          borrower/remitter to be the contribuente where imported goods are           
          purchased on an installment basis, that discussion was in rebuttal          
          of the losing party's argument that the actual beneficiary of the           
          interest was the foreign lender, not the State of Parana.                   
          Moreover, if the 1975 Parana II decision was incorrectly decided,           
          as petitioner's experts claim, we then find it puzzling that, over          
          the years, no successful challenge to its holding has been made,            
          and that the Brazilian Supreme Court has continued to utilize and           

          36(...continued)                                                            
                    A.  Except for the  *  *  *  [Parana I--1st Panel                 
               and Parana I--Full Bench decisions], I do disagree.                    
                    Q.  You disagree with all the ones that held the                  
               borrower was immune?                                                   
                    A.  These are the ones.  They are not different                   
               ones.                                                                  

          37        Da Silva indicated in his testimony that he believed              
          the Parana I--1st Panel decision involved a gross loan, whereas             
          the Parana II decision involved a net loan.  Pedreira testified             
          that the Parana II decision definitely involved a net loan.                 
          Guerra maintained that the Parana I--1st Panel decision possibly            
          did not involve a gross loan.  He claimed that if the case                  
          involved a gross loan, there then would be no reason for the                
          State Highway Department to litigate and dispute payment of the             
          withholding tax, as a victory would not benefit the Highway                 
          Department but only the foreign lender.  However, Guerra did                
          agree that the Parana II and Santo Andre I decisions involved net           
          loans.  We note that both the Parana II and Santo Andre I                   
          decisions utilized a net-loan-versus-gross-loan rationale to                
          distinguish the Parana I--1st Panel holding.                                



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