CTA Case No. 3810 (Decision)

'I __ , _ .. # RKPUBL C OF TH K PfliLI P PIMI S COURT OF TAX APPEALS QUEZOM CI TY SA CARLOS MILLING CO., I NC . , F'et .i. tioner, - versus - C.T . A. CASE � 3810 iI THE ACTI NG COMMISSIONER OF I INTERNAL REVENUE, Responden~. X----------- X - 1- DE C I I0 This is a petition �f' or� review involv in g a c 1 c:d.m for refund/tax credit of pe... titidn er San Ca rlo s M.illinq Co., Inc. in the amdunt of P204,649.00 representing 5% compensating taM paid by pet.i t ioner for� the i.mpor� t.21.tion of sug~r mi 11 machinery and spa re parts in 1982 . � Petitjon er is a domestic corp or ~ tion, a sugar eng~qed in manuf actu ring~ milling, For us~ i n its f . sug M ' mi. 11 ing operations, pet i t.ion er 1mported one ' . I J'�! ( 1 ) St:? t 1.200 KW Ni.i.gat.a St.aJ' j.onary Dies~ l Gt?n~r;- ' t~ r . I . l ' ';' and one (1 ) set additiona l arts cov~red by ~ve~~tt Orient Line Bi ll of Lad.i,ng No. Y 3 5-M dat~d December 2 4 , 1982 I Nos. 0222021-2 o f (Exh. "A"), Commerd ial :l n:v&i.~e� " Niigata Engineer' ng Co. , L td . dated December 241 1982 f E x h s. "B" and 'f B -1">~ a n d �. I �'

'� DECISION - CTA CASE NO. 3810 - 2- CB Release Certi 1 icate No � 122677 (�xh. .nc" J. . :r imported machinery and ad~ itional p rts arriv d at the port of Manila on January 4~ 19a 3. A �� of the importation, petitioner p id the ount of P~07,539.00 evidenced by ; custom Of-fici 1 eceipt. No. 122677 � (Exh. "F"J of wnich represented customs duty and I compensating tax (�xh, ,"F'!..1"). I Through its letter o1 �June o~ the petition ~or r~vi~H), r c iv Commissioner of Internal Revenue on June 28, 1983, petitioner filed a claim -for re-fund/tax credit o1 the amount of P204,649.00 on the ground that it is allegedly exempt from payment of th compensating tax until June 30, 198~ by virtue of P.O . No. 791 as amended on Augu$t 13, 1980 by P.O. No . 1710. Petitioner add that on Janu ry 22, 1983 then President Ferdinand E. M rcos, in a marginal ~ n o te on the Januar~ 11, 1983 1 t ter o1 Manuel H. Nieto, Jr., Pres~dent o~ Bukidnon Mi,ll i ng .) Co., Inc. (�xh. "t'~ J , � apprdved proposition to interpr�t P.D. No. 11 0 r nti""iJ t full exemption until Jurle 30, 1985'; import tax, cuwtome and tarif1 t duties nd compensating tax to all impo~tations ot plant 39

DECISION CTA CASE NO. 3810 - 3 _, machinery, spare parts and equip nt directly d j actually needed and to be used exclu$ively in th manufacture, milling, pro~ s ing or r�~ining of sugar. Conscious of the ruie on t.he pr script.ive period of two yeans for j~dici 1 taM \ ' alleged to have been e~roneously lly collected as provided in ~ctions 292 �and 295 (no N Sees. 204 and 230) of the tional Intern 1 v nue I' I Code, petitioner filed thi p titian on July 18, ' 1984. The dominant issue inlvol ved in"" this ' c:a whether petitioner is e xempt fr om p yment o'f 5X compensating tax on the tlasis of P.b. No. 1710 t which purports to amend P.D L No. 791. I o. 791 , It is not disputed that P.D~ effective September 3, 197~, gr nted eMemption to sugar mills from compensating tax, among ot ers, in ~ res pect to importation of pl ant mac:b~n ry,. spar parts, and other equipment. As stated i i t decree, the exeMption is Il 'until Section 1 of the decree reads: "SEC. 1. Any person, company or corporation who engaged or shall engage � in of manufacturing, milling, refining of sugar shall' b ~0

DECISION CTA CASE NO. 3910 - 4 .- the payment of sp~cial import t K, !j compensating tax and customs nd a �ri f f ' l� duties in respect to import tion of plant machinery, spare parts nd other equipment effective upon appro al of thits Decree until June 30, 1990." Respondent contends, however ; hat importation was made in 1~82 outside th ori~irial I period of the tax-free t iMportaticr' priv11 ge I granted under P.O. 791. \ And while P�titioner argues that P.D. 1710, promulgat on Augu t . 1.3 , 1980, which amended P.D. i791, restored the taM- exemption privilege accorded to importations of sugar mills machinery, spare parts nd e uipment, respondent insists that reliance upon P.D. 1710 is � misplaced. Respondent poihts out th t !lt.l.,4 qu nt to P.O. No � .791, P.D. No. 1352 w s prcMDU g t d on 1 April 21, 1978 imposing� 5% customs t:futy and ~;. internal revenue I a~l~l --~i~m~~_r ,t tions taxes . on exemRt~~f~r~o~m~~c~u~~o~m~s~~d~~~-- and/pr first paragraph of sectio~ 1 of ' pertinent. To quote: I I "Sec. 1 All importation presently eMempt from customs ' du and/or internal revenue t x s under provisions of any general or i1 shall be subject to a 5Y. custOM duty 57. internal revenue takes subject to 41

'' .. DECISION - CTA CASE NO. 3810 - 5- same limitation~ and condition prescribed under such law, if any. The duty and tax imposed her in shall computed in acco~d ance with t applicable provisions of Tariff an Customs Code, as ' mend d, ;jnd t t .�; Nationa 1 Inte rnal Revenue Code bf 1f;''17, , � respectively." Through the languabe of the abovebit. paragraph, the decr&e app r to mal<! I . I coverage for its tax impdsi tions 1 by ':! I all importations which are presl!fltly�!, l( the provisions of any g neral or Still, We believe that � P.D. No. 1352 include P.D. No. 791 as among thos..e. to which it shall not apply nor among those considered r p aled or amended by it. We refer to the oth r provisions in section 1 and section 2 of P.D. No. 1332: "xxx XXX ' )()()( "The customs du ty nd interna l reven ue taxes imposed under th i~ ' sect i on sh 11 not apply to the following importations: , "1. Those which are exempt in pursuance of , or in compliance . with international treatieus or co i tHnts such as the ADB- RP Ag~ ement ( 19&6.lt, lt tw ' 1947 Convention o~ Priv~leg�* nd Immunities of the United Nations �net ti t�� specialized agencies, the United St ttts Agency for lnternati6nal Dev 'lo t,.....AP Agreement; the 1947 Military .B Agreement; and o t her ~imilar tre tie commitmentst

DECISION CTA CASE NO. 3810 - 6- "2. Those which re Section 17 of Presidential D "3. Those which r exempt un er Section 12 of Preside~ti 1 _ere (). a7 I .) "4. Those which ar xemcprt. .un Section 12 of Pr sittent� I 215J "5. Those whichl r eM Section 1 of Presiden~ial Deer I "6. THose which' re e Section 1 of Presidan~i 1 Deer I "7. Those which1 are exempt Section 15 of Presid nti 1 Deer 572; "8. Those which. are exempt und r Section 15 of Presidential Decree No. 604; I ... "9. Those which � are exempt nder Section 1~ of President! 1 D cr No. 666J I "10. Those which ' are xempt und r Section 76 of President ! 1 D cree Ho. ,� I 768; "11. Those which are Kemp �und � Section 76 of Presidential Dect-ee � 783; I I "12. Those 'which are Section 76 of Presidential 972; "13. Those which .are tncafltp Section 18 of Republic Act No. ~623 I usEe. 2. The pertinent pro- Vi!l'iona: of Presidential Deer e No. , 218, Presidential Decree� No. 26<?, President! 1� . Decree No. 348, President! 1 Deel"' No. 413, . Presidential becree No~' 440, , Presidential Decree No. :535, Presid t1 1 Decree No. 538, Presidential cree ' � � 634, Presidential Decree No. 6$1; 43

DECISION CTA CASE NO. 3810 -7 Presidential Decree No. 690, Pr sidenti 1 Decree No. 926, Presidential, D c:ree 990, Presidential Decree No. ! Presidential Decree No. 11~9, � Act. No. 720, Republic Act. o. Republic Act. No. 4156, Republic Act . No. 5186, Republic Act. No . 6135, Rep blit Act. No. 1161, Republic Act. No. 1370, Republic Act. No . 2640, Republic Act No . 3054, Republic Act. ~o . 4690, Aepui:J~ic Act. No. 4850, Repub*ic Act. No,. 4 71, Republic Act. No. 6012 ar 1 her by repealed or amended ac ordingly.'" I I On May 31; 1978, P.1D. No. 1395, a d ree I amending P.D. No. 1352, took ffect. � Shortly 1 thereafter, P.O. No. 1522 'amending P.O. No. 1352, followed on June 11, 1978. No m ntion of P . O. No. 791 can be traced in these decrees in their I enumerations of repealed ot- amended acts or� those j to which they would not apply. The resolution of the ma in i~sue hinges . !' . therefore on whether re.ponde nt i s correct when he asserts that the promulgation of P .D . No. 1352 as . amended caused the repeal of P.O. No . 7 91. If this is s o, then P.O. No. 1710 cannot extend P.D. � No. 791; quite opposed �to the 'reason and pol ic y which I I the for~er states in its pr~~mble. We disagree with the ~Ctssertion o'f respondent I I that P.O. No. 1352 repealed jP.D. No. 79i1.. To our mind, P.O. No. I 791 is a :spec'ial its restrictive character furthe r e nhanced by

DECISION CTA CASE NO . -slO - 8- limitation that the exemption t o be enjoyed by sugar mills shall apply onl~ to t he importation of plant machinery, spare parts and other equipment directly and actually needed and to be used in the ! development and operation o'f the sugar mill. .Thf:! wf expansive interpre tation tel eff ct repea l .. 0. No. 791 s ought by respondeN to be accorded' to the ~heA � ~he general provision� found in 1P.D. No. 13 2 II said decree subjects to tax all lmpor~at~ons 1 prese ntly exempt from customs internal revenue ta xes Under the p~ovision� of an~ general or special law cannot be suppbrted by this Court. Nor has it bee n favored in l aw. It has been the constant holding in law that repeals by implication are not favored � unless a manifest indication of t~is leg is lat i ve � pur~ose is unequivoca lly expressed or a c tua lly contemplated (Ville gas v. Subido .� L-31711 .� September .30 1 1971, f 4 1 SCRA 174). Recently, th� Supreme Court reminded I that implied repeals are not C..JSUally to be a ssumed I i ' (Larga v. Ranada, G.R. No. ~9576, Augu:t t �J, ! 19 8). It has always been streised that . ~ n ~a�� of a mbiguity of the st~tute, ~~~islati~e i ~t n \ is the source of the comp~omisa. _, to This Court' s � duty is t.'o endeavorI reconQile I

-- DECISION CTA CASE NO. 3810 - 9- th~ provisions to give sen sible eff ct t o both provisions (Larga v. Ranada , supra). We se i t then that the comprehensive 1angu g of P. O. No. 1352 as amended referririg to all impbrt tions part ia 11 y or tot a 11 y tax exemp t under any g ner.a.l .) or special law was dic~ated by the n d to encompass the many subjects which w ) ., lin l Nowh re II:'was in the succeeding sections. I t 791 indicated among thos~ repealed or a ended. ,. P.O. No. 791 relates to the specific subject matter ' of importation of machinery and equipment by sugar mi 11 s for their operation and deve"iopment. The lack of allusion to P.O. No. 791 in the repea ling clause of P.O. No. 1352 as amended r veals the intent to save the decree from repea l. , ( i th Be11 4 Co. v. lfun. of Za�boenga, 55 Phil. 466 , 1930J. The fact that there was enumerated repeal of certain sections of several acts evinces an in tent 1 no t to repeal by implication prior ,special. laws. I (Sutherland, Statut.ory Con �struction .~ Vol. 1A PP� 245- 247 citing Barry v. Knight , 296 11,1. p HE 2d 999, 1938.) Upon the other hand, We deem th t the ab of P.O. No. 791 among those mentioned as to hich P.O. No. 1352 as amended shall not pply wa due to

DECISION CTA CASE NO. 3810 - 10 - the fac:t that the former Wa Self-lim,iti Q I ith a period of effect only until J e 30, 19SO�. :r legislature is presumed to h v knoWn of th existence of prior statutes and where t!..h '� Jiater ! general statute does not pres nt n ~r~e cil~ble tonflict the prior sp ' cial �tatute 'will ~ be I ! ,, � f~ construed as remaining ln 1 ~11 ct a q4 .r3 to the general � 1~u� (U.s. ~I- Palacio, I 2(>8, . ,I 1916). Neverthe1ess , even if the irreconcilable, it has been th@ rul that the special law control!> the 1general law. specialibus non derogan t. I, This rule-. i!$ truet ev n if the terms of the general law m y b b~oad eMough to include the matter in th ~pecial law. I (Villegas v. Subido, supra). ,) In this light, it' is there fore Justified to infer that P.O. No. 1710 should be ,construed to have dispelled all doubts as to the continued � ex i stence of P.O. No: 791 ~espite tha ' eria~t nt of P.O. No. 1352 as amended. ! This is as ; it should b for the legislature is presumed , to intenq � tb I ' [. I ' � achieve a consistent body of law (U.S. v. I' l cio, af~irmed : exi~t supra)~ P.O. No. 1710 the ce of I P.O. No. 791 by reciting the grant pf eK ption I embodied in the latter, in ' the proc �� stating I 41

,. I DECISION CTA CASE NO. 3810 - 11 - I I reason or occasion for the .amendment, nd that is, to extend the effects of P.O . No. 791 until June 30, 1985. As c learly and plainly xpressed in the preamble or e x planatory no.te (WHEREAS cla\.1 ) of P.O. 1710, the purpose or mbtive of the dec r ee w ~ "to ex tend the e><emption 1er iod for anot r five years". P .D. 1710 w 9 mot vated ther IlIfor I state policy to ! give imp'r t us to the I I I' growth a nd d eve lopment o the suga~ ~ridu i Unquestionably, i f the languI age P.O. 1710' is t.o be followed and its intention fulfilled , P.O. 791 wag no t repealed by P.O. 1332 so that ~etition rjs d~r importation involved in this cage �1 � exempt u �1 P.O. 791 as extended by P.O . 1710. to hOld otherwise is to incur sel f-.c:ontr ad i c:tion. And i as i f this is not enough, .the then Pr id nt of tHe Phi 1 ippines through a marginal note in the 1~83 letter of Manuel H. Nieto Jr., i n ef fect affirmed , , t he inten t of P.O. No~ 1710 to gr nt t~x e~~mptidn to particular importations of sug ~ mills by � I a pproving of the request fo~ exemption "' of $ukid tJn .I Sugar Milling Co., Inc. whi~h invoked Pt.O. No. as amended by P.O. No. 1710. , Although We agree with ; re�pondent that Manuel H. Nieto Jr.'s letter watt !only �pe�king 1'or and t .)

�� I DECISION CTA CASE NO. 3810 - 12 - describi ng the circumstance s of his co pany , it is clear to Us that in said letter the b sis of his request was the interpreta tion of the int nt of P.D. Nos. 791 and 1710 such th t. th cent nt of the letter has important relevance in the inst nt c ee. Therefore, confirmation of his propos! ti.on by th Phili~I p ines then President of the can I be t Wen onlY .) I to mean that these decr-ee would h {,e nt:> interpretation. I Being thus illuminat d, the . I argument on retroactivity I by r pond nt is nQt I appro priate in this case. What is apropo here and shou ld finally seal thi9 controv r Y is the certifica tion by the then Ministry of Finance that petit ioner is tax exempt from the p yment of the 5% compensati ng ta x imposed under P.O. No . 1352 as amen ded (�xh. "J"). � This opinion rests on Memorandum No. 10-83 dated January 28 , 198~ by the Presidential Executive Assistant, Office of the Presi dent (Exh, "H"),' the latter i t el, f a rightful comprehension of ~he essence of the af oresaid let ter and margin�l note. Surely� thi� i.~ ~~ th � ~ I instance where the opinion of an offici al government charged with the duty of ad~~tini and enforcing the law deserves great w ight 'l rT ~. Wun. o~ Pagbilao, Qu�zon, L-14264, April 30~ 1 6 , 7 SCRA 887).

1� " DECISION - CTA CASE NO. 3810 - 13 ... petitioner S n Carlos Hilling Co., Inc. .1 � hli by or-anted. SO ORDERED. Quezon City, Metro M hila, January 30~ 19~. W~~ �� CONCUR� / -_ CONST~ ROAOUIN As~bciate Judge I ~�~ �� . . .' ...~ .- z. s Judge C JB: R T X P X CAT�:a: OW I I hereby certify thI at . I I t. reached due after consultation among the the tourt of Tax Appe~ls l Section 13, Article VIII ot the Constitutl~� 1 I; �I I l�