CTA Case No. 943 (Decision)

. UBLIC 01' Trm PHIUT'PL l lB C\.. ~. \ r 0 F. 'l \~ ~~..b; K.:...i....:� ,-At\! .I. LA ORDEN DE PP. BENEDICT!NOS DE lAS ISlAS FILIPINAS, , Petitioner, - versus - C.T.A. CASE NO. 943 COMMISSIONER OF INTER}~L REVENUE, Respondent. X- ~ - � - - - - - � � - � X DEC I S I 0 N Petitioner seeks to recover the amount of ? 1,608.00, alleged to have been illegally and erroneously collected by respondent as compensating tax on twenty (20) Under- wood Standard Typewriter s and t wo (2) cases of tape re- cording parts and accessories. The facts of this case are stipulated by the parties and are as follows: "1. That petitioner is a religious insti- tution duly incorporated as a corporation sole for religious and charitable purposes sometime in or about 1907 , and it was organized and ex - i sting under and by virtue of the laws of the Philippines , with principal office at Mendiola Street, Manila, Philippines, as evidenced by its Articles of Incorporation, a photostatic copy of which is hereto attached as Annex ' A' and made an integral part hereof; and that respon- dent is the officer duly appointed and autho - rized by law to enforce the internal revenue tax laws of the Phili ppines , with office address at the Department of Finance Building, Manila . 11 2. That petitioner received from the Reve- rend Father Genadius Diez , o.s .B. , a resident of Newark , New Jersey , United States of America, by way of gratuitous donation , twenty (20) Under- wood standard typewriters (11 - inch-carriage) and two , (2) cases of tape recording parts and acces- sories, said articles having arrived in Manila, Philippines, in or about January 1960, consigned to herein petitioner, as evidenced by the photos- J -7J

DECISION - C. I.A. CASE NO. 943 - 2- tatic copies of the consular invoice of merchandise, bill of lading, notice of arrival, affidavits of the said Rev. Fr. Diez, the consignor, and Reverend Fr. Ori- genes of the petitioner, all hereto at- tached as ' nnexes 1 B', 'C', 'D', !E', and ' F', respectively, and made integral parts hereof; "3. That the Department of Finance issued Department Order No. 18, dated Oct- ober 20, 1950, implementing Republic Act No. 1916, which ct authorizes the free en- try of importations donated to interna- tional civic organizations, religious or charitable societies or institutions; "4. That in pnrsuance of Republic ~ct No. 1916, petitioner applied for exemption from all taxes and duties as evidenced by its letter dated January 19, 1960 and Feb- ruary 17, 1960, copies of which letters are hereto attached as Annex 'G' and 'H', res- . pectively, and made integral parts hereof; "5. That r espondent denied said peti- tion for exemption on the ground that said articles are classified as office supplies and equipment in accordance with Department Order No. 18, as embodied in his letter dated February 8, 1960, a copy of which is attached to the petition for review as An- nex 'B' and found on page 10 of the BIR re- cords; "6. That petitioner in the meantime paid the compensating taxes for said arti- cles in the amounts of P660.00 and P948.00, or a total of ~1,608.00, as evidenced by Of- ficial Receipts Nos. 09743 and 14560, photos- tatic copies of which receipts are hereto attached as nnexes 'I' and 'J', respectively, and made integral parts hereof; "7. That in a letter dated May 30, 1960, petitioner requested the refund of the amounts of P660.00 and P948.00 as compensating taxes, or a total of Pl,608.00, on the articles in question, a copy of which is hereto attached as Annex 'K' and made an integral part hereof; "8. That respondent in his decision dated July 19, 1960 denied petitioner's request for refund for the reason that the alleged articles are, for purposes of Department Order No. 18

DECISION - C.T.A. CASE NO. 943 - 3- classified as office equipment and, there- fore, are not embraced within the exempting provision of Republic Act No. 1916, copy of said decision is found on page 21 of the BIR records; "9. That the only issue involved in this case is the resolution of a legal ques- tion, i.e., whether or not the classifica- tion made by Department Order No. 18 of the articles to be exempt ed under Republic Act _No. 1916 is valid and binding and in conso- nance with the intent and purpose of said Republic Act No. 1916." The only issue, as heretofore mentioned, is whether or not the classification made by the Department of Finance Order No. 18 of the articles to be exempted from tax under Republic Act No. 1916 is valid. Respondent justifies the collection of compensating tax on the articles in question upon Section 2(b) of De- partment Order No. 18 (October 20, 1958), which excludes office supplies and equipment from the tax exemption pro- visions of Republic Act No. 1916. On the other hand, pe- titioner assails the validity of the order for making dis- tinctions contrary to the clear t erms of the tax-exempting statute. Section 2 (b), of Department Order No. 18, in so far as it excludes from the benefits of the tax-exemption provision of Republic Act No. 1916 "x x x office supplies and equipment x x x" is invalid for it restricts the scope and applicability of the law. The following pertinent clauses in Section 1, Republic ct No. 1916, "all dona- tions in anv form and all articles imported into the Phil- ippines, x x x shall be exempt from the payment of all tgxes and duties upon proof x x x that such donations in

DECISION - C.T.A. CASE NO. 943 -4- any form and articles so imported are donations for its use or for free distribution and not for barter, sale, or hire: x x x," (Underlining supplied) manifestly in- dicate the expansive intention of Congress. Note that the adjective ALL has been used repeatedly in the said provision to modify the collective nouns DONATIONS and ARTICLES. The lexical meaning of the term "all" is "the whole of; x x x and referring to amount, quantity, extent, duration, quality or degree; as �ll the wheat, all the year; (2) the whole number or sum of; x x x" (Webster's New International Dictionary, 2nd Ed., p. 67). The law, therefore, embraces "all articles" and 11 all donations" consigned to the organizations, societies or institutions specified in Republic Act No. 1916, of which petitioner is unquestionably one, provided that the goods have been donated for their use or for free distribution and not for barter, sale or hire. (Commissioner of Internal Revenue vs. Church of Jesus Christ "New Jerusalem", G.R. No. L-15772, October 31, 1961.) s the Supreme Court held, the conditions for tax exemption under the provisions of Republic Act No. 1916 are: (a) that the imported articles must have been donated; (b) that the donee consignee must be "a duly incorporated or established international civic organization, religious or charitable society, or institution for civic, religious or charitable purposes"; and that (c) the articles so im- ported must have been donated for the use of said organiza- tion, society or institution, "or for free distribution and

DECISION - C.I.A. CASE NO. 943 -5- not for barter, sale, or hire" (Commissioner vs . Church of Jesus Christ "New Jerusalem" supra ). The importa- tion at bar satisfies all these three conditions because the imported articles in question were donated (Annex E, Stifacts) to petitioner, a duly incorporated religious organization (Annex A, Stifacts), for the religious training and education of its student-priests, and not for barter, sale or transfer t o any other person or entity (Annexes F & G, Stifacts). Consequently, Department Order No. 18 is invalid in so far as it is unduly restrictive of the tax exemption benefits of Republic Act No. 1916. WHEREFORE, the decision appealed from is hereby re- versed, and respondent Commissioner is ordered to refund to petitioner the sum of P1,608.00, without interest. No costs. SO ORDERED. ,. Manila, Philippines, January 17, 1962. ~-.(..~ MARIANO BL% Presiding Judge We concur: ROMAN M. UMALI ssociate Judge