CTA Case No. 1862 (Decision)

I R F. P Un U r. O F 'Ill ;.: Pt lll .JT'PI N E!J COURT OF TAX APPEALS QUEZON C I TY ESSO STANDARD FERTILIZ ER & AGRI- CULTURAL CHEMICAL CO., INC. (PHILIPPINES)'� Pe titioner, - ,versus - C.T.A. CASE NO. 1862 COMM ISSIONER OF IN TERNAL REVENUE, Respondent. X- - - -X ESSO STANDARD FERTILIZER & AGRI- CULTURAL CHEMICAL CO., INC. ( P H I L I P P I N ES ) '� Petitione r, ( - versus - CASE NO. 1879 COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - X ESSO STANDARD FERTILIZER & AGRI- CULTURAL CHEMICAL CO., INC. (PHILIPPINES) '� Petitioner, - ,versus - C.T.A. CAS E NO. 1888 COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - -X ESSO STANDARD FERTILIZER & AGRI- CULTURAL CHEMICAL CO., INC. (PHILIPPINES) '� Petitioner, - versus - C.T.A o CASE NO. 1893 COMMISSIONER OF INTERNAL REVENUE, Respond ent. X- - - - - - - - - - - - - - - X '1 l 1-1 ':�_ '

DECI S ION - . CTA CASES NOS. 1862, 1879 1888, 1893 & 1896 - 2- ESSO STANDARD FERTILIZER & AGRI- CULTURAL CHEMICAL CO., INC. (PHILIPPINES)'� Petitioner , - versus - C.T.A. CASE NO. 1896 CO~~ISSIONER OF INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - X DE C I S I 0 N Esso Standard Fertilizer & Agricultural Chemical Company, Inc. (Philippines)~ petitioner in these five (5) .cases, poses the question of whether it is exempt from payment of the compensating tax on various machine parts allegedly imported by it for the construction of its fertilizer plant or factory. Petitioner, of course, answers the q uery in the affirmat ive, while respond ent Commissioner of Internal Revenue, in as king that the claims for refund involved in these appeals in the total amount of P39,293.00, as follows: C.T.A. Case No. 1862 Pl0,954.00 C.T.A. Case No. 1879 17,017.00 C.T . A. Case No. 1888 4,329.00 C.T.Ao Case No. 1893 5,437.00 C.T.A. Case No. 1896 1.! 5_56 �.9.C!. T0 TAL P32 r 293. O.Q. paid as compensating tax allegedly on p e titioner'~ importations of machine parts covering the period from February 17, 1965 to November 26, 1965 be denied, asserts 1 � ~ 0'-' 1

DECISION - . CTA CASES NOS. 1862, 1879 1888, 1893 & 1896 -3 - the contrary. After the issues were joined with the filing of respondent's answers to the petitions for review, the above-~ntitl ed cases were jointly set for hearing for the reception of evidence. For no less than ten times , however, the hearings were always cancelled or post- poned on the ground that the parties were thm supposedly trying to enter into a compromise agreement for possible amicable or administrative settlement of their contro- versy. IDu ring the hea r ing on October 4, 1979, after the Court had warned the litigants that it would not anymore allow further postponement of the trial, counsel for petitioner, without presenting proof as to the truth of its own allegations in its petitions for review, submitted these cases for decision on the basis of the pleadings and the records of the Bureau of Inter- nal Revenue bearing on these proceedings despite , or inspite of, the specific denial by respondent in his answers of all the averments of facts in the ~itions for review, to wit: 1. Petitioner is a corporation duly organized and existing under the laws of the Philippines, with principal office at Leviste Building, 215 Buendia Avenue, Makati, Rizal; X X X X X X X X X 2. Petitioner is engaged in the manu- facture of ferti lizer and was a grantee of tax exemption privileges under Republic Act No. 3050, as evidenced by the letter of the

DECISION - CTA CASES NOS . 1862, 1879 1888 , 1893 & 1896 - 4- Se cretary of Finance dated December 13, 1963. Under this grant of exemption, petitioner was exempted f rom the payment of the special import tax, margin fe e on fo r e ign exchange, sales and compensating taxes and customs duties di rectly payable by the petitioner on its impor tations of capital goods, equipment, spare par ts, raw materials, supplies, con- tainers and fuel, until December 31, 1965. 3. Pursuant t the af resaid grant f tax exemption under Republic Act No. 3 5 , petitioner imp rted vari us mach ine parts which were necessary f r the censtructi n o f its fertilizer plant r factory . 4 . On the said importation of machin e parts , the Collector of Customs , for and in behalf of th e respondent Commi ssio n er of Inter nal Reve nue, demanded from the peti- tioner the payment of the compensating tax allegedly due thereon, and in order to facilitate the release of the imporation of the ma chine parts a nd not de l ay the c omp l etion of the const r uction of the ferti- lizer plant, the petitioner was compelled to pay the s aid compensating tax. 5. The payments of the compensating tax for the said importations were made by the petitioner covering the period from February 17, 1 9 65 through Jul y 30,~ 1965, in th e agg r ega te amount of ~10,954.0~ These payments were ma de und e r informal entries as follows: CTA Case No . 1 8 6 2 Informal Entry Date Compensating No. Tax Paid 1233673 Feb. 17, 1965 ~ 169.00 1280317 June 14, 1965 1 56.00 *CTA Case No . 1862-Feb. 17, 196 5 to Jul. 30 , 1965, in th e total amount of ~10,954.00. CTA Case No. 1879-Aug . l, 1965 to Sept. 30, 1965, in the total amoun t o f ~17,01 7 .00. CTA Case No . 1888-0ct. 1, 1965 t o Oct. 29 , 1965, in the total amount of ~4,239.00. CTA Ca se No. 1893-Nov. 2, 1965 to Nov. 26, 1965, in the total amount of ~5,437.00. CTA Case No . 1896-Dec. 1, 1965 to Dec. 10, 1965, in the total amount of ~1 ,556 .00.

�, DECISION - CTA CASES NOS. 1862, 1879, 1888, 18 93 & 1896 - 5- 1280318 June 14, 1965 237.00 1281461 1281459 June 22, 1965 492.00 1281477 1281471 June 22, 1965 206.00 1281883 1281873 June 23, 1965 248.00 12 81884 128189 3 June 23, 1965 164.00 1280889 1287735 June 28, 1965 182.00 1287736 1291147 June 28, 1965 416.00 1292076 1292073 June 28, 1965 502.00 1292089 1292092 - June 29, 1965 194.00 129 20 91 1292327 July 2, 1965 435.00 1292329 1290207 Jul y 8, 1965 190.00 1289312 July 8, 1965 854.00 12 89314 1289336 July 13, 1965 364.00 July 15, 1965 232.00 July 15, 1965 113.00 July 16, 1965 148.00 July 16, 1965 794.00 July 16, 1965 644.00 July 21, 1965 262.00 July 21, 1965 1,139.00 July 23, 1965 477.00 July 28, 1965 587.00 July 28, 1965 1,238.00 July 30, 1965 ----~5~1~1~�~0~0 To t a 1 ~10,954.00 CTA Case No. 1879 Informal Entry Date Compen s ating No. Tax Paid 1289927 August 1, 1965 ~ 500.00 129 87 75 4356935 August 6, 1965 785.00 1299180 1299196 August 9, 1965 2,880.00 1299708 129 98 05 August 11, 1965 493.00 1301621 1301620 August 1 2 , 1965 356.00 1301618 1301619 August 13, 1965 196.00 1301633 1 '70 855 1 August 16, 1965 936.00 1308552 August 27, 1965 230.00 1308598 1309583 August 27, 1965 298.00 13o9584 1309582 August 27, 1965 685.00 August 27, 1965 354.00 August 30, 1965 277 .00 September 6, 1965 149.00 Septembe r 6, 1965 139.00 September 8, 1965 358.00 September 13, 1965 230.00 September 13, 1965 608.00 September 13 , 1965 174.00 -lr- � ~ ..) i

DECISION - . CTA CASES NOS. 1862, 1879, 1888, 1893 & 1896 - 6- 1309581 September 13, 1965 3,986.00 1310140 September 16, 1965 261.00 1311255 September 21, 1965 536.00 1311254 September 21, 1965 958.00 1309585 September 23, 1965 1,083.00 1311487 September 24 , 1965 177.00 1312459 September 29, 1965 368.00 T o t a 1 Pl 7, 017.00 CTA Case No . 1888 Infor mal Entry Date Compensating No. Tax Paid 1312 337 Oct. 1, 1965 p 130.00 1312797 Oct. 4, 1965 247.00 1325459 Oct. 5, 1965 173.00 1326288 Oct. 7, 1965 366.00 1326256 Oct. 7 , 1965 377.00 1327410 Oct. 15, 1965 207.00 1327082 Oct. 15, 1965 194.00 1327097 Oc t . 18, 1965 149.00 1327439 Oct. 18 , 1965 448.00 1327098 Oct. 18, 1965 416.00 1329576 Oct. 27, 1'96 5 356.00 1329588 Oct. 28, 1965 594.00 1181897 Oct. 29, 1965 375.00 1181894 Oct. 29, 1965 207.00 To t a l p 4,239.00 CTA Case No. 1893 Infor mal Entry Date Compensating No. Tax Paid 1330090 Nov. 2, 1965 p 230.00 1337180 Nov. 4, 1965 772.00 1337193 Nov. 5, 1965 1338261 Nov. 10, 1965 77.00 1338262 Nov . 10, 1965 284 .00 1338 26 5 Nov. 10, 1965 235.00 1338354 Nov . 10, 1965 330.00 1338371 Nov. 11, 1965 153.00 1338297 Nov . 12, 1965 294.00 1330103 Nov. 15, 1965 272.00 1338938 Nov. 16, 1965 802.00 1339207 Nov. 17, 1965 1339247 Nov. 22, 1965 81.00 264.00 426.00

DECISION - CTA CASES NOS . 186 2, 18 79, 1888, 1893 & 1896 - .7 - 1339711 Nov . 22 , 1965 474.00 1339 725 Nov . 22, 1965 640.00 1339744 Nov . 26, 1965 103 .00 To t a l 125f437.00 CTA Case No. 1896 Informal Entry Date Compe nsating No. Tax Paid 1341589 Dec . 1, 1965 12 130.00 1341598 Dec. 2, 1965 288.00 134 7196 Dec . 3, 1965 98.00 1348819 Dec . 10, 1965 951.00 1349161 Dec . 10, 1965 89.00 T0 t a 1 121,556.00 6. On various dates , as her e inafter indicated, the Department of F i nance autho- ri zed t he release of the said imported machine parts from the Customs ' custody without pre- paymen t of the customs duties , compensating tax and special import tax: CTA Case No. 1 862 Informal Entry Au thority to Re l ease No . Imported Goods No . Date 1233673 1016 December 27, 1965 1280317 1103 Janua r y 11, 1965 1280318 10 97 January 4, 1966 1281461 1088 January 4, 1966 1281459 1104 Januar y 11, 1966 1281477 1076 Januar y 10, 1966 1281471 1069 J anuary 11, 1966 128188 3 101 0 December 29 , 1965 1281873 1021 December 27, 1965 128188 4 1012 December 28 , 1965 128 1893 1068 January 10, 1966 1 28 088 9 January 4, 1966 1287735 1 098 Januar y 4, 1966 1287736 1100 December 28 , 1965 12911 4 7 1035 Janua r y 4, 19 66 1292 076 10 67 January 7, 1966 1 292073 1090 December 28, 1965 1292089 1025 January 11, 1966 1292092 110 2 Janu ary 1 J. , 1966 1079

DECISION - CTA CASES NOS. 1862, 1879, 1888, 1893 & 1896 - 8- 1292091 1093 January 4' 1966 1292327 1006 December 29, 1965 1292329 1005 December 29 , 1965 1290207 1101 January 11, 1966 1289312 1026 December 27, 1965 1289 314 000908 De cember 16, 1965 1289336 000930 December 17, 1965 CTA Case No . 1879 Informal Entry Authority to Release No. Imported Goods No . Date 12 89927 000905 December 20, 1965 1298775 000901 December 16, 1965 OR4356935 J a nuary 11, 1 966 12991 8 0 1070 Dece mber 28, 1965 1299196 001031 December 23, 1965 1299708 December 20, 1965 12998 05 937 December 20, 1965 1301621 0009 50 December 23, 1965 1301620 000902 December 17, 1965 1301618 000939 Decembe r 21, 1965 1301619 0009 26 De c embe r 16, 1965 1301633 000916 Dece mber 20, 1965 13085 51 000900 December 23, 1965 130 8552 000949 December 23, 1965 1308598 December 20, 1965 1309 58 3 943 December 29, 1965 1309584 942 December 21, 1965 1309582 000 948 December 20, 1965 1309581 000911 December 23, 1965 1310140 000931 January 4, 1966 1311255 000912 J anuary 4, 1966 1311254 000938 January 4, 1966 1309585 1089 December 21, 1965 1311487 1071 De cember 20, 1965 1 31 2459 1065 000933 January 13, 1966 000906 000899 CTA Case No . 1888 Informal Entry Authorit y to Re le ase No. Imported Goo ds No . Dat e 1312 337 000947 Dec . 17, 19 65 1312797 000898 De c. 16, 19 6 5 1325459 000940 Dec . 23, 1965 1326288 000927 Dec . 17, 1965 1326256 000945 Dec. 17, 1965 1327410 000928 Dec. 17, 1965 1327082 000929 Dec . 17, 1965

DECISION - CTA CASES NOS . 1862, 1879 , 1888 , 1893 & 1896 -9 - 1 327097 000904 Dec. 20, 1965 132743 9 000910 Dec. 29 , 1 965 1 327098 1023 Dec. 28 , 1965 1 3295 76 1084 Jan. 4 , 1966 l 329588 1086 Jan. 4 , 196 6 118189 7 1033 Dec . 28, 19 6 5 1 1 81894 1032 Dec . 28, 1965 C'l'A Case No � 1. 8 9 3 Informal Entry Authority to Re l ease No. I ~o ort e d Go o ds No . Date 1330 090 000 924 De c. 17, 19 6 5 1 3 37180 000925 Dec . 17 , 1 965 1 3 37193 000914 Dec. 21 , 1965 1338261 000915 Dec. 21, 1965 1338262 000909 De c . 21, 1 9 65 1 3382 65 000907 De c. 20, 1965 133 8 354 000936 Dec. 21 , 19 65 1 3 38371 Jan. 4, 196 6 1338297 1064 ,Jan . 3 , 196 6 1 3401 03 10 60 13389 38 10 91 J a n . 5 , 1 96 6 1339207 1072 Jan. 4, 1966 1339247 1059 J a n. 11, 1966 133 J 7l l 1062 Jan. 3 , 1966 1339725 1061 Jan . 3, 1966 1339744 1105 Jan . 11, 1966 11 07 Jan . 11 , 1966 CTA Case No . 1896 In fo rma l Entry Authority to Re l ease No. ~~_�ted~?od s J:.To . Da t e 1341589 1111 ,Jan . 7, 1966 1341598 1073 Ja n.- 4 , 1966 1 3471.96 1110 Jan . 7, 196 6 1348 8 19 107 4 Jan. 10 , 1966 13 4 9161 1066 Jan. 4 , 1966 7. On Ap ril 27, 1966, petitioner fil ed with the Collector of Customs , South Harbor, Manila , twenty-six (2 6 )~ separ a te l et t er s, all dated * CTA Cas e No. 1862 - twen t y-six (26) separate l ette rs . CTA Cas e No. 1879 - twenty-fi ve (25) sepa rate letters . CTA Case No. 1 8 88 - fourteen (14) s eparate letters . CTA Case � NO . 189 3 - sixte e n (16) sepa rate lette rs. CTA Case No . 1 896 - fiv e ( 5) s e parate letters .

DECISION - CTA CASES NOS. 1862, 1879, l8S8, 1893 & 1896 - 10 - April 19, 1966, covering each one of the above- mentioned importations, for the refund of the taxes paid thereon on the ground that it is exempted from the payment of the suid taxes pursuant to the provisions of Republic Act No. 3050. 8. Respondent has not yet acted upon the said claims for refund . It seems already well-3:'ttled that in an action for recovery of taxes alleged to have been erroneously or illegally assessed or collected, the taxpayer or peti- tioner has the burden of proof to show that it is entitled to the refund of the amount claimed because taxes are presumed to have been assessed or collected in accordance with law. As a matter of fact , the burden ot proof is on the taxpayer contesting the validity or correctness of an assessment to~ove not only that the Commissioner of Internal Revenue or the Commissioner of Customs is wrong but that he (taxpayer ) _is right. (Lino Gutierrez vs . Collector of Internal Revenue , CTA Case No . 504, January 28, 1962; See al s o Tan Guan vs . Court of Tax Appea l s , L-23676, April 27 , 1967, 19 SCRA 903 .) And if the t axpayer fails to appear and present evidence or proof in support of his allegations in his petition for review , conformably to the doctrine of the presumption in favor of the correctness of tax assessment (Inter-provincial Auto-bus Co ., Inc . vs . Collector of Internal Revenue, L-6741, January 31 , 1956, 98 Phil . 290; Collector of Internal Revenue vs. Bohol .1 ,) u ~-� J ...

DECISION - CTA CASES NOS. 1862, 1879, 1888, 1893 & 1896 - 11 - Land Transportation Co., L-13099 and L-13462, April 29, 1960, 107 Phil. 965) ~ the Court of Tax Appeals will merely sustain the assessment against the taxpayer. And more so in these cases when petitioner has already paid the alleged compensating tax assessed against it, and these proceedings are suits for refund of such com- pensating tax based on petitioner's claim that it is exempt therefrom under a supposed letter of Secretary of Fin ance Rodrigo Perez, Jr., dated December 13, 1963. (pp. 37-38, BIR records of CTA Case Nc o 1879) ~ (Or moc Electric Company, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 2185, October 15, 1979; Bataan Refining Corporation vs. Commissioner of Customs , CTA Case No . 1962, November 19, 1979.) It bea rs emphasis that he who claims to be exempt from the payment of a particular tax must do so under clear and unmistakable terms found in the statute. Tax exemptions are strictly construed against the taxpayer, they being highly disfavored and may almost be said ''to be odious to the law." �He who claims an exemption must be able to point to some positive provision of law creating the right; it cannot be allowed to exist upen a mere vague implication or inference. (Asiatic Petroleum vs. Llanes, 49 Phil. 466, 471; Un ion Garment Co., Inc. vs. Court of Tax Appeals, L-16809, January 31, 1962,

DECISION - . CTA CASES NOSo 1862, 1879 , 1888, 1893 & 1896 - 12 - 4 SCRA 304; Philipp i ne Acetylene Co. , Inc. vs. Commis- sioner of Internal Revenue, L-19707, Au gu st 17, 1967, 20 SCRA 1056; Republ i c Flour Mills , Inc. vs. Commissioner of Internal Revenue, L-25602, Feb ruary 18, 1970, 31 SCRA 520; Commissioner of Customs vs. Phi lippine Acetylene Co . & Court of Tax Appeals, L-22443 , May 29, 1971, 39 SCRA 71; Davao Light and Powe r Coo , Inc. vs. Commissioner of Customs, L-28902, March 29 , 1972, 44 SCRA 122.) Th e righ t of t axation will not be held to have been surren- dered unl ess the intention to surrender is ma nifested by words too plain to be mi s taken (Ohio Life Insurance & Trust Co. v s . Debolt, 60 Howard , 416) ~ for the state cannot strip itse l f of the most essent i al power of taxation by doubtful words; it cannot, by ambiguous language , be deprived of this highe st a ttr ibute of sovereignty. (Erie Railway Co . v s . Commonwe alth of Pennsylvania, 21 Wallace, 492, 499) ~ So , when exempt ion i s claimed , it mu st be shown indubitably to exi st, fr every presumption is against it , and a well-founded doubt is fatal to the claim (Far rington vs . Tennessee & County of Shelby, 95 u.s . 679, 686 ) ~ (Asiatic Petro- l eum Co. vs. Ll a n e s, 49 Ph il. 466 , 471; Ma nila Electric Company vs . Commissioner of Inte rnal Revenue, L-29987 & L-23844, October 22, 1975, 67 SCRA 351.} This Court could not, therefore, l ook with approval on petitio ner~ claim f or exemption from compensa t ing tax

DECISION - CTA CASES NOS . 1862, 1879, 1888, 1893 & 1896 - 13 - alle gedly paid on its importations of machine parts for the cons t ruction of its fertilizer plant covering the per iod from February 17, 1965 to Nov e mber 2~, 1965, and related ac tions fo r re fu nd, when it did not even present evidence or proof in support of its allega tions o t facts in its petitions for r eview upon which it base d its alleged exemption, which have al l been spec i fically denied by respondent in his answers ; a nd justified its exemp ti o n by wor ds too plain to be mi staken and too ca tego rical to be mi s inte r preted. (Reagan vs. Commis- sioner of Interna l Revenu e , L-26379, Dec ember 27, 1969, 30 SCRA 968 ; Comm is s i one r o f Internal Reve nue vs. P .J. Ki ene r Company, Ltd ., L-24754, July 1 8 , 1975, 65 SCRA 142 ; Ormoc El ect ric Compan y , Inc. v s . Commi ss ion e r of Int e rnal 'Reven u e , _�U p r a ; Ba taan Refini ng Corporation v s . Commissioner of Customs, supr a.) And as aptly averred by respondent in his a nswers as special and a ffi rmative defe nse s : 4 . That petitioner has no cause of acti on inasmuch as it has not fi l ed a claim for ref und of the taxes in question with the Du r eau of Int e rn a l Re venu e ; 5. - Tha t granting, without admit ting, that the petitioner i mpor t ed mach ine parts and t hat compensating taxes were paid the re- on, the collection of the said t axes is in accordance with law and , therefore, the taxes in q uestion are not ref undable ; 6. That the petitioner's right , if any , to recove r compensa ting taxes paid prior t o

DECISION - CTA CASES NOS. 1862, 1879, 1888, 1893 & 1896 - 14 -- October 2, 1965*, has already prescribed pursuant to Section 306 of the Tax Code (P . J. Kiener Co. Ltd. vs. David , G.R . No . L-5163 , April 22, 1953~ College of Oral and Denta l Surgery vs. Court of Tax Appeals and Collector of Internal Revenue , G. R. No. L-10446, January 28, 1958) ~ Since petitioner prayed for judgment on the pleadings without offering proof as to the truth of its own alle- gations, and without giving respondent an opportunity to introduce evidence, petitioner must te unders tood t o have admitted the truth of all the material and relevant alle- gat ions of respondent, and to have rested its motion for judgment on these allegations taken together with such of its own which are all specifically denied by respondent . / (Bauermann vs. Casas , 10 Phil. 386; Evangelista v s. De la Ro sa , et al. , 76 Phil. 11 5 .) Nonethele.:;s , on the ~~~Iflption that petitioner was qualified to enjoy the privilege of tax exemption granted by Repub lic Act No . 3050, the letter of Secretary of Finance Rodrigo Pe re z , Jr. dated December 13, 1963, upon which petitioner anchors its alleged exemption , assuming that it does exis t as su ch and in all respects genuine ~ nd true because it was not even presented and identified , explicitly states that "x X X X x you r application is hereby approved in respect to the manufacture of the following fertilizers: *CTA Cas-e No. 1862-'l'wo (2) p r ior to June 20 , 1967. CTA Case No. 1879-Two (2) _prior to August 9 , 1967. CTA Case No. 1 888-prior to Oct. 2, 1965. CTA Cases Nos . 1893 & 1896-no similar allegation with respect to prescription.

DEC ISION - CTA CASES NOS. 18 62 , 1879, 1888, 1893 & 1896 - 15 - "Complete fertili zers - 12-24-12 " " 14-14-1.4 " " 10-25-25 " " 18-46-0 "Complex fertilizers - 16-20-0 " " 5-10-16 " " 15-15-6-4 MgO and 6-10-4 "Urea and Ammonia fertilizers" "x X X X X you are entitled to exemption from the payment of the x X X X x compensa ting taxe s x X X X x directly payable by you on your importations of capital good s, equipment , spare parts , raw materials, supplies, containers and fuel , wh ic h this Offi ce may authorize upon proper applicat i on, un til December 31, 19 65, unless sooner terminated for failure to comply with the r equir emen ts of the law and existing regulationso "x X X X x. Attention , in this c onnection, is i nvited to the provisions of Republic Act No. 3050 , particularly Sections 2, 3, 4 and 5 the reof , and t o Department Orders Nos. 105 and 105-A of this Depar t- me nt , copies enclosed, providing the rules and r eg u- l ations to impl ement the provisions of t he said Act and which establish the requisites for the con tinued enjoyment of the tax exempt i on privileges herein granted . "x X X X X X X X X X x" Consider i ng that no evidence or proof whatsoever was presented regarding the natur e of the fertilizers

DECISION - CTA CASES NOS . 1 862, 1879 , 1888, 189 3 & 1896 - 16 - manufactured by petitioner to show if they were of the kind or classification specified above~ whether the importations of the variou s machine parts the compensating tax of which has been allegedly paid had all been authorized by the Department of Finane~ and whether thera. wa s compliance with the provisions of Republic Act No. 3050 and Department Orders Nos. 10 5 and 105-A , which was a prerequisite to the enjoy~ent of the alleged tax exemption granted therein, this Court cannot ~sumed that all of these conditions and requirements have been duly complied with by petitioner. As s t r e ssed by the Su p reme Court in Acting Com- missioner of Customs vs . Manila Electric Company and Court of Tax Appeals, L-236 3 2, June 30, 1977 , 77 SCRA 469, the said Court is committed to the principle that an exemption from t a xation must be justified by words too clear to be misread . As set forth in Commissione r of Internal Revenue vs . Guerr e ro , L-20 812, September 22 , 1967, 21 SCRA 180: " From Nl6, in Catholic Church v . Hastings to 1966, in Esse Standard Eastern , Inc . v. Acting Commissioner of Customs, it has been the constant and uniform holding tha t exemption from taxation is not favor ed and is never presumed, so that if granted it must be stric tly construed against the taxpaye r. Affir- matively put, the law frowns on exemption from taxation ,

DECISION - CTA CASES NOS . 1862, 1879, 1888, 1893 & 1896 - 17 - hence, an exempt ing provision should be construed strictissimi juris." (Catholic Church vs. Hastings , 5 Phil . 701; Esso Standard Eastern , Inc. vs. Acting Comm i ssioner of Customs, L-21841, October 28, 1966 , 18 SCRA 488. The opinion also cited Government vs. Monte de Piedad, 35 Phil. 42; Asiatic Petroleum Co. vs. Llanes, 49 Phil . 466; House vs. Posadas, 53 Phil . 338; Phil. Te l. and Tel. Co. vs. Collector, 58 Phil . 639; Greenfield vs. Meer , 77 Phil . 394; Collector of Internal Reve nue vs. Manila Jockey Club, 98 Ph il . 670; Phil . Guaranty Co., Inc . vs. Commissioner, L-22074, September 6, 1965, 15 SC RA l; Aba d vs . Court of Tax Appeals , L-20834, October 19, 1966 , 18 SCRA 374.) In t112 i2s tant cases , petitioner has not even shown, as alleged in paragraph 3 in all its petitions for review but denied by respon- dent in his answers, that t l1e impated various machine parts were necessary for the construction of its fertilizer plant 0 1 factory. Eve n more , the fac t of p a yment of the compensating tax being asserted by petitioner as refundable to it has not be en duly established. As proof that the c ompensating tax was paid by it on its alleged import- ations of machi ne parts and, hence , the basis of its related actions for refund, petitioner merely made mention in its memor a ndum of various carbon copies , most of the entries therein being undecipherable, of

DECISION - . CTA CASE S NOS . 1862, 1879, 1888 , 1893 & 1896 - 18 - "Statement and Receipts of Duties Col l ected on Informal Entry" issued by the Bureau of Customs , which are found in some , but not all, o f the records of the Bureau of Internal Revenue bearing on each of these cases . Aside from the fact that these statements and receipts of duties were not duly presented and properly identified, specially the illegible initials and signa- tures, the entries therein relative to the supposed amounts of duties and taxes , including the compensating tax allegedly due on the shipments, have not been supported and substantiated by any available documentary evidence or official receipts. But more importantly , the importer mentioned and named in these statements and receipts of duties collected on informal entries , except in ver y few instances , is not petitioner Esso Standard Fertilizer & Agricultural Chemical Co ., Inc . ( Philippines) ~ but Braun Transworld . And much more , the aforesaid statements and receipts could not be used to establish the precise amount of compensating tax being claimed by petitione r as refundable to it in the se cases because they are incomplete and in disarray , checking the amounts of compensating tax stated therein as purportedly paid and matching them with the total amount of compensating tax being sought to be refunded be ing an impossibility. It is thus self-evident that petitioner is not the importer of most, if not all , of

DECISION - CTA CASES NOS. 1862, 1879, 1888, 18 93 & 1896 - 19 - the machine parts involved in these proceedings and the compensating tax shown in the statements and receipts was not paid by it but by Braun Transworld . Of considerable importance in this connection is C.T.A. Case No . 2661, entitled ''C.F. Braun & Co ., and Braun Transworld Corporation", decided by this Court on April 30, 1979. Braun Transworld Corporation, one of the petitioners in C.T.Aa Case No. 2661, is a corpo- ration organized and existing under the laws of the Republic of Liberia but licensed by our Securities & Exchange Commission on December 24, 1963 to engage in business in the Philippines a On September 20, 1963, Braun Transwor ld entered into a contract with Esso Standard Fertilizer & Chemical Co., Inc.(Philippines) ~ whereby for a consideration of P9 ,381,400.00 it under- took to perform the construction and erection of the fertilizer plant of Esso Standard Fertilizer & Chemical Co . , Inc. at Bataan, Philippines. Under Article I of the contract, Braun Transworld, who was deemed an 1ndependent contractor, furnished not only competent supervision and labor but also construction equipment , tocls, Philippine supplies and materials, including their transportation and attendant temporary str uctures and faci lities. (p. 5, Decision, CTA Cas e No. 2661.) Under this scenario, it would not there for e be surprising to state, as shown by the aforesaid statements 1C5

DECISION - CTA CASES NOS . 1862, 1879 , 1888 , 1893 & 1896 - 20 - and receipts of duties collected on informal entry , that Braun Transworld was the importer of the various machine parts involved in all these five cases whic h were necessary for the construction and erection of t he fertilizer plant or factory of petitioner as contracted by it, and of course, as such importer, the one who pa id the compensating tax due thereon. While it is t rue that in very rare instances petitioner sometimes appears in certain statements and receipts of duties collected on informal entry to be the importer, it could hardly be said that the articles covered therein , whic h were no t identified , were imported by it for the construction of its fertilizer plant because Braun Transworld, under the teLms of the contract, furnished the equipment , tools , supplies and materials necessary thereto . Consequently , there can be no basis in the assertion that petitioner is entitled , as importer who paid the compensating tax in question, to the refund thereof , assuming arguendo that it is exempt from payment of compensating tax on imported machine parts which were necessary for the construction of its fertilizer plant, in accordance wllh an alleged l etter of Secretary of Finance Rodrigo Perez,Jr . dated December 13 , 1963. Petitioner Esso Standard Fertilizer & Agricultural Chemical Co., Inc . (Philippine s)'� having failed to es t ablish and j ustify in plain and unambiguous terms �1 r�~3 1\.".")

DECISION - CTA CASES NOS. 1862, 1879 , 1888, 1893 & 1896 - 21 - its claim for exemption of compensating tax on various machine parts allegedly imported by it for the cons t ruction of its fertilizer plant or factory , and on the assu mp t ion that its tax exemption does exist as such , it is e n titl ed to the refund thereof for being the importer who paid the compensating tax on such imported machine parts , its claims for refund o f alleged compensating tax in the total amount of ~39 , 293.00 , involved in these cases must , accordingly , be denied. WHEREFORE , finding no merit in the Petitions for Review filed in the above-entit l ed five ( 5 ) ~ases, the same are hereby dismissed, with costs against petitioner in all instances . SO ORDERED . Quezon City , Metro Manila , May 30, 1980 . I CONCUR : C:;~~QUIN / 'ssociate Judge (."-' ~""". 1 '(.;; i