CTA Case No. 190 (Decision)

tt.Ct"UI.U.IC O t� '1 tiE t'�UJ..It"t-'1/'. COUR OF TAX J.-p~� il. ANI.I...A CAL (PHILIPPI ) I ., C.T.A. et1tioner , � 190 � ver us � -- n�t. - -. --- - - --- ECI I 0 This is an appeal fro decision of t r &� pondent Co i sioner of Custo dated August 21, 1955, affir in on of t Coll ctor of Custo s for th ort of n l , d nying p ti� ---- tioner� r est for refund of c.us.toms __du!._�_ ' th ' l4 , l~ .sa by total a ount of 1 , J� 3 (r due d t ree t of t p rti ) p id during th period fro June 24, 19~ to ay 2 , 19 , of h!c OUl t , 9,947.76 (increased to 1 ,444. 82 by ugr nt of the p ti s) paid on ported p trol u pro uct co otor g olin , auto diesel, k ro n nd asph lt y p titloner itself in th con true � tion o i ts refin ry in the c palitl of auan an tan , Province of n the b 1 c of 4,957 . 77 (r due d to 6 by a ree ent of th parties) as cu to duty p id on similar import d p - troleu product hich ere sold by petit on r to , nd used by its contr ctors in th construction of ita 1 at ngas refinery. For th a e of revity e shall not quot er - under in full the stipulat on of f cts of the p rti s ., 509 S3o

D CISlO � C. T. A. CASE 00. 1 aa appearing on pages 23, 24, 57 and 58 of the re� cord, but will make ention only of those facts which e believe are pertinent and n cessary !n the final dete !nation of th ca � � n June 20, 1953, the cretary of Agricul- t ure and Natural esour cea , acting upon t he f avor� able reco endation of the ureau of ines , the Office of Econo ic Coord� n tion and other offices of the hllippine overn ent, granted o the peti- tioner herein upon proper application t er efor , Petroleu Refinin Cone� s!on, Annex A (pp. 26 to 32 rec.) under authority nd pursuant to the provi� slon of epublic Act o. 387, otherwi e knom as the Petroleu Act, ith the �non� exclu ive ri ht to e t - blish and operate petroleum refinery at th unici� pa itie o uan nd B t ngas, rovince of Batang s . I diately after obtaining th aid conce &ion which s gr nted for period of 25 y a~s, r ne a le or another 25 years , the p titi ner in co pliance with the ter nd conditions of it grant, constructed a p - trole refinery in the unic!palities of auan and at ngaa , Province of atangas t a tot 1 cost of , 786, 517.97. The refinery was co �plated nd started to operate o time in Octo er, 1 , usin aa ba&i aterial cr d oil port fro a road. rec~ puted in n exes A nd (pp. 59� 62 r c.) of the stipulation of facts , uring t e period fro June 24, 1953 to ay 29, 1954, the petitio er imported 510

�1 � .. � .. � � 1 � � 511

ECISIO � C. T. A. CASE NO. 190 May 11, July 28, and epte ber 11, 1954, respectively, the petit ioner, through its Finance and Accounting Manager, filed with the Collector of Custo s of anila three cl s for refund, Annex A ( pp. �36 r c.) of the customs duties pad in th total a ount of 14, 905.33 (should � 14, 188.88) on the ground that th portat ons in stion w re x pt fro pa ent o t s e un er Article 103 of � blic ct o. 7, wh ch r e ts for refund were enied by sal off"cial in etter, nnex C (pp. 37�3a rec. ) dated April 25, 1955. vn y 7, 955, petition r �s counsel in co � pl nee w t t rov!si.ons o ec t on 1 0 t e ev s A J.n str tive 0 � re uest that t e rul ng of oll ctor of nila oenyin p ti- ti ner� claim refu y the re pon- nt C &ion r of usto s . Th 1 tter , after iving th ppe 1 ue c ur e, r n ere ec i �on on rev�e � nn xD (p � 9�48 rec.) ate u ust "'l, 1955, ffir - in ling of t o11ector of Custo s 0 an11a. this c ision, an app al w int rposed to this Court within the re 1 entary ~riod of thirty days as required under Secti on 11 o epubl c ct o. 1125. After going over the record of this case in� eluding the exhaustive me oranda su itted by the parties, we find that the a!n issue involved could well be, s arized and narrowed down to the fo1lowinga 512 5:J

ISION � � 190 C� � A. 1. hether or not th etroleu efining Conces s ion grant d to the petit oner by the cretary of !culture and atural Resources on June 20, 1953 f or a period of t nty�five \25) � y ars under authority of, and r - suant to the provis ons of epublic Act o. 397, entitles the pet tioner to exe ption fro custo s duty under Artic le 103 of s id ct on the por� tations ade by i t of petroleum pro� ducts during the perlod fro Jun 24, 1953 to ay 29 , 1954 , for its o n use in the construc t on of its atangas refinery; and -.,-, _..-. 2. het e or not t ex ption ro custo s duty provid d i~ Article 1 3 of t e aforesai Act 1 o cove~s t port - tions d y petit oner during the per4od fro July 28 ~ 1953 to y 29 , 1954, of s lar petroleu products whieh ere sub equently old to, nd use by, the ndep nd nt contr ctors who undertook the construction of pe- titioner' s refinery. Before roc din to consid r these two sues hich go into th erit of th cas , � find it ne� cessary in the f irst inst nee to re olve juri dic� tional question whic h was raised by couns 1 for the respondent at the eleventh hour and for th fir t ti in his "Rejoinder To Petition r ' ply ~e or ndu , � espondent� s couns 1 contends that th peti- tioner herein has fa led to file a season ble nd proper protest with the Coll ctor of Cust s of n"la , as required under ections 1370 and 1372 of th evised Administrative Code, so as to confer upon the respon- dent Comais�ioner of Custo. s and this Court jurisdic- tion to review t his case on appeal. ( Under Section 1372 of th e~ised Administr tive Code, a �protest� should point out th particular d - 513

OE.CISIO � C. T. A. CN3 NO. 190 cision or ruling of the Collector to which xception is taken or objection made , and should indicate with reasonable precision the particular ground or grounds upon which th protesting party bases his claim for relief. Th two objects intend d to b acco pl!shed by the required protest are to apprise the Collector of Customs of the o ject!ona entertained by the im- porter s r gards his importation so that the error or errors co 1tted, if any, could be rectified and also to hold the importer to the objections first made . (Behn, Meyer &Co. v. Collector of Custo s , 11 Phil. 388, "03) . owever , this is a formal require ent which, s was held in the case just cited �ts not required to be m&cle with t chnical precision , but is suffici nt if it shows fairly that the objection afterwards mad at the trial as in the in of the party and w ~ brought to the knowledge of the Collector so as to ecure to the overn ent the pr ctical ad- vantage which the statute was designed to s cur . � (Citing 170 u.s . 621� &27.) ) It app ars in the present case that petitioner' s letters of ay ll, 19541 July 28 , 1954 and epte r 11, 1954, respectively (Annex , pp. 33� 36 rec . ) al� t hough entitled "Custo s Duty Refund Products Used y efinery� , su atantially confor with the �protest� required under~ ctions 137 and 1372 of the evia- d A 1nistrat1ve Code. They all refer to custo s duty paid by petitioner uring th period fro June 24 , 1953 to ay 29, 195 , from the paym nt of 1hich p ti� 511

DECISIO - C. T. A. CASE � 100 - 7- tioner claims exe ption under Article 103 of Re- public Act o. 387 , and the etroleu efining Conces� sion granted to it on June 20, 1 53 under authority of said Act. These letters serve the purpose of a �protest� 1n that they infor ed and pinpointed to the Collector of usto s an the respondent o is- sioner of Custo s , the a ount sought to be refunded and the ground or round relied upon, to enable the l atter official to ren er n intell1gent and just decision on the matter. Enough e said1 that the respondent Co issioner of Customs ell as the Collector of Customs of Manila gave due course to petitioner' s letters of ay 11, July 28, and epte r 11, 19 4 , respectively, by considering them as seasonable and proper protests and by entertaining petitioner's appeal accordin ly. e take 1t that the action of these two cus� to a officials on the atter , w ich carry with t the presu ption of regularity, stron ly indicate that any and all technical or for al objections to the protest de h d be n set aside inas ch as they had een both adequately appr! ed of the importers objections to t heir actions or rulings . ur conclusion is further buttressed by the fact that the decision of the res- pondent Co 1ssioner of Custo a (Annex D, pp. 39-48 rec . ) fro which the instant appeal waa taken , is entitled as followsa 515

cD.ETC.AIS.I � � 190 .- - CASE �In the matter of protest filed by Caltex (Phil.) Inc. re r fund of 1~ , 90~. 33 as custom~duty on petroleum used in the construction of refinery fro 3une ~ . 1953 to June 30, 1954 - Manila Unnumbered Protest. � espondent' s counsel also claims that peti- tioner ' s letter� of May ll, July 28 and September ll, 19~ , respectively, were not filed within the thirty� day period pretcribed by Section 1370 of th ev�sed Adminitt rat ive Code. It it indeed quite unfortunate that this ques- tion was raised by respondent ' s counsel at the last minute after he had rest d his case without presenting ;'ny evidence whatsoever to support his contention. (It should be noted that pursu nt to Customs dminis�_l tratlve order o. 362, th date of the final liquid \ tion of the entry as poate y the custo s cashier, and not the date on which th deposit of the estimated duties is ade , is the date of payment for the purpose of determining the thirty- day period within which a protest ay be filed~ Ina much as it s within the disposition and power of the re pondent to show, by the recorda in his office, hen th posting or pu li� cation of the final liquidations s ffected, his failure to present such aterial evidence constrains ua to presume that petitioner's protest , as contained in its three letters , was filed within the statutory period of thirty (30) days fro such posting or publi� cation . In the ~gsence of proof to the cont�ary, the 5J6

0 I IQ - .T.A. C E O. 190 - 9 .. presumpt ion is that the law has en obeyed ( ule 123� ection 69 (ee ) , ules of ourt ) .~ ~ onsequently, we elleve and so hold that this C urt as jurisdicti on to dec de the alo�e-entitled case on its erits as now pr pose to do hereunder. As previously adverted to, on June 20, 1953, the petitioner herein was granted a troleu efining Conc ession for a perio of twenty-five ( 25) years, renewable for another t nty� five ( 25) years, by the Secretary of Agriculture and atural esources under authority of,and in accordance with, th prov sion of epublic Act o. 387, otherwise known as the e- troleu Act. etitioner bases its claim for refund of the ount of 14,188. 88 on the ground that a a petroleu concessionaire under epublic Ac t o. 387� it is n� titled to exemption fro customs duty on its por- ations of petroleu products ade within five years f ol o in th grant under express aut ority of Article 1 3 of said ct which provides as follo as 517 SL.

o�ciSIOO .. C.T.A. CAv~ � 190 - 10 - spondent �s denial of petitioner' s claim for exe ption and refund of the a ount in question is predicated principally on t he theory that the x p� tion provided in the afore� oted provi ion of e - public Act o. 387� applies only to xploitation nd exploration conce sionaires and c nc essionaire& refining crudo petroleum produc ed in the Philiopi e& and not to petroleu concessionair s like the herein petitioner ho simply refin crud oil imp~rted fro abroad. It is ~gued that !though th petitioner herein was grant d a Petrol um efining Concess�on by t h Gov rnment under epublic Act o, 387 , it is not actually contributing to the develop ent of the petrole re ourc:e& of the hilippines s s the pur� ind the n c:tment of the foresa d epubl c Ac:t b c us the crude oil it ref nes is produced in umatr � the M~ddle Ea6t nd other fore gn countries and not in th Ph . lippinesA anrl~ tter for~ ~t should not be given the ben fit of exempt on prov d d said Act. It is suggested that by xempting the p - titioner here n from the impost now n quest on~ e would not only undermine the development of th pe- troleum resources of th Phil ppi.nee and defeat the very purpose of epublic Act o. A 7� ut would lso deprive t he ov rn1 nt of this uch- needed rev~nu to which it is 1 wfully entitled. espond nt � s counsel in hi e oran u haa taken p ins to en~m rate in de- tail the different kinds of troleu concessions 51

DECISION - C. T.A. CASE O. 190 - 11 - that ay be granted und r Art cle 10 of Republic Act No. 387, namely, Non-Exclus ive Exploration Permit, Exploration Conc ession , Exploitat on Cone ssion, ef ining Concession and Pipe Lin Concession and from these , counsel would want us to dr w lin of d s- tinct!on by grant ing the benef~t of exemption from customs duty only to explor ation and exploitation con- c essionaires nd concessionaires who refine locally produced crude oil on the theory that these alone are in a position to develop directly our petroleum re- sources. As a last and desp rate recourse in order to depriv the petitioner of tho benefit of exemption froiR payment of tho impost in question, respondent ' s couns 1 would want us ev n to go as far as to consider peti- tioner's concession as a worthless scrap of paper and for the Government to disregard entirely its sole,m commitments c ontained therein. Counsel avers that "Without the concession, petit oncr concedes that it is subject to the payment of customs duties. fiavtng demonstrated that it is in fact no conce nde& tht petrol urn law, petitioner is not ont tlad to any refund�( p. 10 Memorandum for the espondent., It is likewise suggested by respondent's counsel that the Petroleum efining Conces sion ~hich was granted to the petitioner by the Secretary of Agric ulture and atural esources on June 20. 1953, after mature deli- beration and upon recorn endation of the Bureau of !nes. th~ Office of Economic Coordination and other offices of 519

. � 190 - 12 - the overnaent, and after the petitioner had spent over ~ . f or the eonatruction of its a- tangaa r e finery in eompliance with the terms and condi tions thereof , e revi e or c c 11 d on th ground that the aut orit i e a eoncerne cted without authority and ere 111- adv se (p. a, eapon nt �a ejoinder to Peti tioner' s Repl y e oranclu ) � i e ed f ro all anglea , it r o t he l egal , � practical or moral s t n point , t e poa i on t y ver ent counsel i s eak and untena l e ith re pect to t e c ollection and refusal to refund by respo ent of the ou t of 1 , 444. 2 r epre entin cuato s uty paid by petitio er on its rtations of petroleu products for ita own use 1n the c nstru tion of t at ngas r efinery. Fro t h legal t dpoint. � will note in Article 103 of � lie Act o. 387, th t the exe ption f ro euato a duty prov d d therein is only for a perio of fiyt ye!Ja followi ng t he ranting of the conces ion. n this scor , t h r � no disput between tl parties that ort at!o s now i n eation r a e , and tht usto a duty subj ect of t h s appe 1 accrued, . t hin .::..:::~....-...-::::-.... p r o escri d in th ex pting statut e . ( Under Artie! 10 of epubli c Act o. 3 7� th r e are five differ ent k nds of troleu c one s alons that ay be gr&nted by the S cret~y of r c ul tur nd t a- tural po~r� depend ng on th respective obj ects of t h ap� plicant , naaely, (a ) Non xcluaive Exploratio Per t , 520 519

C. T.A. CASE O. 190 - 13 - (b) �xploration Concess ~on , (c) ixploltation Conces- sion, ( d) ( ) Pipe Line Con- ees ion . On June 10, 1953, the ecretary of Agricul- ture nd Natural esources , in the ex rei e of such discretionary pow r and upon reco end tion of th ureau of Mines, the Office of Econo ic Coordination and other ag ncies of the Phil pp!ne Government, gr nted to th petitioner h r in u on prop r ppl!c a- tion therefor a Petroleum ning Concession for a pe.r!od of twenty- ! ve (25) year , renewable for another twenty- fiv y ars . The exe pting statute stat s cate� gor!cally th t �During the first fiv y ars following the granting of- any cone ssion (obviously under � � public Act o. 387) the concessionaire y import free ll equ nt , chinery, material, nd accessories. he us of the all inclus ive t rm "any� fore the word �cone ssion" c n hav no oth r connot tion but th t th ex ptin tatut inclu es an has ntended to inc lude w"thin .its urvl in rtiele 10 of public Act o. 3811 provid the oth r r sites for pting are lso pre ent. It a p rin th t the tr leu fining Conce sion ra ted to the petttioner herein is � cl ded y express provi ion !thin th goner 1 ter m Conce sion , � w ee o valid and justifi le roa on for arbitrarily~ an discri lnat ly excluding it fro. t e benefits of the exe pting st tute s r pondent' counsel would ant u& to do . �uui l x non di�tingu�t , n c nos 521 Sip

1:.Cl �x - .r. A. CASE NO. 190 - 14 - 1stlnguere de s . � The t r � y is synonymous with �either" and 1 i v n the full force of �av ry� or "all" it ~ out di cr !nation, 1 1tation or rea- - trict!ons. (pp. ~-55 Vol. 3� G lords and Phrases .) ) ... ith respect to th thir and 1 st re !site for ex ption, it will no d 1n Art tc le 103 of - public ct o. 71 that th e � ption fro c to duty covers only importatio of "all 1 nt, chinery, material, instru an acces� eori � e hold t hat th of petroleu producti ade by the p t on r f or its o n th construct on of ts n as ref ry could 11 fall under th cl ss f!cati o o a ol e and o 1 f � rs in a construct! n jo h v en held to f 11 tnder t e cate ory of �a pplies� . ( est vs. Detro 1 678, !18 eb. ~ it 0 � ords Cl hrases. ) � an opi 1 n re der d o June � 19 y t e ecretary of Justice for cr tary of 1� !ned t at t e s e peti tioner erein, as a etrole reflnin concession ite under epub ic ct o. 387, ia exe pt un er rt!cle 103 of s Act fro t e pa n o cust ty o ts portatio s of crude oils ref ne in it petrol u refinery to asoline, ch crude oils can be cons! ered � � " a erials" within t � purview of t he exe pting statute. 522 S/7

- C. T. A. CASE � 190 - 1~ - � hold, therefore, that � en by just inter� prtting in i t s strict literal sense w thout in t e least stretching the ean!ng and scope of the axe pt� ing provision of epubllc Act o. 387, the petitioner l herein is � � � pt fro the pa nt of custo s uty in the ount of 1'1 , -44A. 82 on ita portationa o p - . trole products destined for its own uat in the con- atruction of ita Batangas refinery uring the perio fro June 24 , 19~3 to ay 29 , 1954. fro the practic al standpoint. eapondent' counsel aintains that although the petitioner herein was granted a Petroleu eflnlng Conctsaion by t vernment under epublic ct o. 7 1 it is ot ctually contributing to t e evelo ant of the pe- troltu resources of the Philippines, as is the purpos ehind the enact tnt oft e aforesai Ac~beca se the crude oil it refines is pro uce in foreign countries nd not locally. Consequently, follo ing the inten� tion of Congress in enacting the Petroleu ct, res� pondent' a counsel argues that t � petitioner her in ould not e given the benefit of exe ption fro cus- to � duty. eapondent�s counael further a!ntains that by exe pting the petitioner ertin fr the impost now in question , � would oot only unde;mine tht deyelop- ment of the petroleum resources of th� Philippines and defeat the ytry purpose of Republic Act No. 387, but uld also deprive the Government ' f ch-needed re� venue to whic h it is lawfully entitled. 523

0C I - C.T. A. C , � 190 - 16 - e could cone de that as cone ss�ona1re , the petit ioner here !a not contri� buting dir ctly to the explor t o nd exploitation of our petroleu resources. c annot a it , how ver , that as such concessionaire, Indirectly, the p titioner is con~r buting Lmmea- ura ly to th explor t on of our hia en nd nd ve� lope oil resources. or one thing , t st blis 1 nt of a petroleun refinery in the hilipp e � like the one op rate y p tit oner, has given the nece aary incent v to t 0 alr ady eng ged or w 0 In ena to engage in dr llin oil lls in t ilippin a �~ he ilippine Oil evelo nt Co. n y oth ra. il ino c p!talists w ar Y n ture co serv tive an OIJ �� co ra to inveO�t n k p 0 ve tin t 1r apital th venture with th a sur nee that s uld h y finally str� ke oil o co - re i 1 v lu , y ou h ve re Y a th 1r i po al a ll�est blish a , loctal y� o rated refinery co ting .ooo. ov r oo. nn by xperts. or th ir con- v nience, th re llill be no n for to refine their crud oil abro d nor provid or the selv s a refinery th t tould an in of c pi nl nd several years to const~uct . y ay o{ an logy, the Philippine Charity 1eepst � Office i definitely not en a d n r d �n hor � Ho~evcr , it c not e denied th t 1t creation has iv n uch encour ge� ent to loc al hor f ncier~ , rae hora o ers and 521 51$'

DECIS I ON � C. T. A. CASE NO. 190 - 17 - horse t r aders to breed good stock., what wit h t he tempt- ing prizes that r baing offer _d to winners in Sweep~ t ak� s r c s and the exorbitant price t at a pot ent ial Swe pstake winn r �ould co. and n the hcrse market . or eover , it would bo most unr asonable as respon� dent ' s counsel sa ms to expect , for petitioner to re� f ine locally p~oduced crud oil before grant ing t th benefit of exe pt i~n from custo s dut y ��hen, ery- body knows , ~e h~ve not y t discovered cru e oi~of co erc ial valu in this cour.try. The Director of ..tines \1ho is authorized under Republic Act o. 387, to administer and enforce aid law, in his letter of May 9 , 1~53, Exhib t D, to the �cret r y of Agr culture and Notur al esourc s reco � nd1ng the approval of pet�tio er's appl cation for a Petroleum efining Concesston , made tte following obaervationss "Tl c st )1-:s nt o a petrol Ut refiner y in t he Philippines will undoub- tedly contr ute uch to the econocic welfare o{ the na ion s it i l e an addit' nal source of taxes for th 'ov- ern ent, a ford raore opportunities for e nployl..t _1t of our p oplo , and mny ro - uce the cost of p troleu products wh e n re sic needs and the.rofo... esaenti l in t e pro r asivo industriali- z tton of our economy. Th ~ aration 525 Sit/.

DECISI � C. t.A. C E � 190 - 18 - dence of th confidence of for ign in- vestars in the soundness of the Philip- pine peso and the existence locally of a favorable cl � ate for f oreign invest- ant. � (Underlining our . } rom th oral standpoint. It appears from the letter , � xhibit I - 1 , of the !rector of ines to the ational Economic Coordinator , dated ay 8 , 1952, as well as the letter , Exhibit I. dated l ay 27 , 19~2, of the ctin Administrator o! Econo. ic Coor- dination to the petitioner , that it was actually the vernment through th se t wo officials , that prodded the petitioner to apply for a Petroleum Refining Con� cession under epublic Act o. 387, when the initial negotiation& were ing held b tw en tho represen t a- tives of petitioner corporation and the authorities concerned for the establish ent of a petroleu r - finery in atangas. The petitioner in good fait followed the suggestion and after co~plying w th all the requisites of the law, w s ranted the re ired concession by the Secret ry of Agriculture and Natural esources on Jun 20 , 1 53. ft r o taining the sa e, the petitioner, in compliance with the t rms nd con� ditlona th reof. diately undertook the construe- tion of its Bat ngas ref inery which took over y ar to finish at a cost of ov r 50,ooo.ooo.oo. Th re is not the least pretense on th part of the Govornment that th petitioner had at anytim violated the terms and condition o its concession. Th validit y of the concession and the economic advantages that the '!I 526

CI I - C. T.A. CASE � 190 - 19 - country would deriv from th grant as well as the good faith of petitioner in appl ying for the s m were never questioned by any office or agency of the Philippine vern ent uch less by private parties. On the contrary, in an opinion rendered by the ecre� tary of Justice on Jun 28, 1954, the validity of the concession was taken for grant ed hen s aid offi� cial ruled that the petitioner is entitled to exemption under Article 103 of Republic ct o. 3 7, fro cus- toms duty during a period of five (5) years o ita portations of crude oils refine 1n its trole refinery into gasoline, kerosene, diesel , an fuel oils. The Depart ent of finance has 11 e ise recog- nized the validity of the concession when I t dia,p� roved n ordin nee enacted y the unicipal Counc il of auan, atangas, imposing unicipal Licens Tax s on oil refineries s ilar to the one operated by p - titioner within the said municipality, on th ground that the petitioner herein. as a etroleu efining Concessionaire under epublic Act o. 387, is entitled to exe ption under Article 102 of said ct fro any provinc ial, unic ipal and other local tax s o levies (see Annex o, p. 94, c.r.A. rec . ). h ecretary of griculture and tural esources_, after ature deli� beration and upon r co endati on of the ureau of ines and the Off.ice of Economic Coordination, approved the application of petitioner or a etroleu efining Con- cession on June , 19~3, without entertaining any Q . 527 Sf2.

DECISION - C . T. A. CASE NO. 190 ~ 20 - doubts as to �ts legal basis and econo 1c advantages to the country. The Director of �ines in his letter , Exhibit I - 1, dated y 8 , 19~2 , to the 6tlonal Eco- nomic Coordinator , has expressly recognized th r ght of petitioner t o exempt on fro custo s duty under Ar ticle 103 of epublic ct No. 387 during the f�rst f i ve years following the granting of its refinery conc essi on on its import t ons of nt � achin r ies , mat erial , in trum nts, auppl"e Rnd cc 5sor1es. Petitioner ' s counsel in his orandum h s c ll d our at tention to the f ct that th C binet in its ting held on J uly 31, 1957, pprov d resolution authoriz- ing the Standard V ccum 0 1 Co p ny (ST AC) to esta- blish end op rate in the Provine of t.o n p troleum refinery s ilar to th on ng oper ted by eti- tioner in th P.rov ce of t ng s under th s ter s an condit i ons and on th b s s of the s e f cts a exi t with rea ct to tion r �s cone sslon. nder th c c at nee , fte th d ffer nt offices nd ag nc a of th Gov r nt nclud!ng the highe t ex c t ve adv sory o y of th Pres d nt; hav un n!. ously pl c d the st of approv 1 on th matter , it cert nly does not sit 11 on th 1 p of vernment couns 1 to sugge5t, as in f ct it has be n 5ug eate , t at for the purpos of r isin r - venue , legit ate or other lae, e should consid r pet tion r 1s conce slon as worthless crap of paper and ith st roke of the pen , cancel or revise it. 528

EC I - C . T.A. CASE NO. 190 - 21 - vi ously, respondent's counsel has overlooked the fact that the main issue i n this case is not t he validity o the c ce sion ranted to the pet i tioner, which i s pl i , but hether or not pet itioner is entitle to exemption fro customs duty on its importat on& of petroleum produc ts under th prov - sf.ons of the la upon vh ch the cone ssion a r nted. Undoubtedly, it is !thin h prerogative and sound iscretion of respondent ' s counsel to ustain t h correctness of respon ent ' s d ci ion ith 11 th in- genu ity at his c o and n eo 11- found ground or groun a, l e al and/or factual, but certainly not to t~~ extent of putt ng on th pot three Dep rtc nt � ds, the C net an th opubl c of t1 1 p� pin s itself, ith such n un oly propo ition. The hould th first one to et good X 1 by living up to it ol mn co it nt Jith z� v t par t ~ es v;hic h n the 1 s tant c ase odi d in tl De d ( troleu f ning Cone ss on) x cuted on June , 19 , by and b t n t 5 cr t ry o 0 th lippin s , and t etit on r corpor tion through its v�c - i nt and n g1ng Dir tor d Cic 1 pre ntative. t pr su ptuous and unfair on t part of spo d nt�s c uns 1, w. 8 ly to gain his object!v , to ake th ng and unfound d nsinuation th t 11 th other off c a an ag nc i s of t ver nt 0 h d ething to do ith th gr nting o~ p tltioner ' s cone on had . . 529 SIO

D CIS � C. T. A. t;~E � 190 - 22 - exceeded the scope of their authority nd were 111- adv sed and mistaken. The general rule , under the pr inciples of Ad; intstrat!ve L w in force in this jurisdiction, is that decisions of administrative officers are entitled to uch weight and respect , except hen th for er have cted w thout or �n e x~ ess of their jurisdiction, or with rave abuse of discretion. (Commissioner of Customs vs. Ro eo Valencia, � � o. L-74J , Octob r 31, 1956.) In para raph 2 of r spond nt ' s ans er, he in- terpDsed the sp cial def ns th t under ection 1 of epubl;c Act o. 9 1, the petitioner not ex pt fro payment of th questione 1m ost bee use it is expr ssly provided therein that � ny company or per- son n aged in th proc ssing of oil, gasol n , lubri� cants nd oth r s ilar fuels nd y- products x x x shall not be x mpted from all taxes under the s d ct � s accorded to "new and necess ry ndustr es. " Apparently, r spondent ' s couns 1 has r liz d the futility of p ssing th! p rticular d fense b c u e it was left untouc d in his orandum. the oth r hand, on p g 11 of petitioner's or ndl ~th s rti� cular d fen e was aptly di cussed and shown to be de- void of erit. inca this p rticular question s rai s d in issue and as partly relied upon as th basis of th dec�sion ppealed fro , consider �t s no l ess of time to resolve it for the nef t of the parties . 530 S09

J DICISI � C. T. A. CASE . 190 - 23 - � fully agree with petitioner ' s contention \ that Section 1 of epubl!c Act No. 901, has not in ) anyway repealed by implic ation the exempting provi� aions of epublic Act o. 87. The exemptions provided under public Act o. 901 , c over !!! taxes including customs duties. which benefit , 4y e enj oye only by persons , part- nerships or corporations whose business qualify uneer the ter "new and neces ry indu trie " � s defined in aaid~ public Ac t . th oth r hand, the exe ption provided under Article 1~ of epublic Act o. 3811 refer olely to petroleum concessionaire nd on cuato s duties alone . Consequently, following the generally accepted rule of statutory construction, e c uld consider epublic ct o. 1 a eneral law and epu lie ct o. 87 as a sp cial law, and as such, t e latter should d to prev il over the for r. (Philippine ilway Co. v � Coll ctor of Intern evenue, . R. o. L- 3859, rch 25, 1952; In the atter of the Est te of Petronila Ba vs. Philippine ation l an � G�� o. L-9695, epte r 10, 19~6.) reover , f nd no co pat bil!ty nor incon- siatency b t een the two laws . or ere on the one hand, epubl!c Act o. 9 1 prohi its the gr nt of total ex ptlon fro a taxes to petroleum refineries or processors, on the other, Article 103 of epublic Act o. 387, erely grants to petroleu concessionaires a partial or limited ex ption covering customs duties . . 531 soz

... DC I � 19 ~ - f44 - ~t alone . is evident that the prohib "t i on from t he grant ing of total exemption from all taxes by the first law ( epublic Act o . 901) do s not preclude the gra 1ting of a partial or limit ed e xe ption by the econd ( e ubl c Act o. 7). Th � we do not s e ~ny c lear cepugnance between th two sc tutes to arrant the pl cation that th 1 tor in ti re� peale t he other , for repeals .by imp! cation are not favored, and one ct will not h ld to r p 1 cno- t her if t he two act ar uscepti 1 to r concili - tion . (Pos adas vs . ational City ank of v York , 296 U. ~ . 497; a\ila ailroad Co . vs . Rafferty , 40 k) Phil. 225- 2 � (' e f nd that part of the cision of respondent th r sp ct to hi ass ssreent nd r fusal to r fun the a o nt of 3. 74 . 06 p id custo s duty on port d p trol u products which r ubs qu ntly s old to , n used by, th ind nd t contr~ctors ho n ertoo t. construct on of p tit �on r ' r - f n ry, t o correct nd �n accor nc with r - gr ph 2, Art"cle 103 of � public o . 7 � 1h "ch prov ! s hat �~--~~~--~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~~ his p r~on 1 u~ or t h t of anv ot ...,.,..= n r for r - -..;;;.;;;;;......o;;.,;;;.;;:___ ex ort x x x. In th u n . pp. 61-62 ��A. r c. ) , of t he nu. ber o al l ons of otor a& lin , di 1 oil a. keros ne turn d ov r to the in pende c on� ? � 532

D lSI - C. T.A. CASE � 190 - 2~ - tr ctors who undertook the construction of peti- tioner' s refinery in Batangas during the period fr July 28, 1953 to ay 29, 1954 , � J. J. olahan, Manager- Finance and Accounting Offic er of tit!oner c rporation ho prepared said stat ent , expressly a its therein that thee ~ported p troleu pro- dueta were !2ls! to the contractors of his co pany. Petitioner ' s counsel himself admits on pages 11 and 12 of hi r n um, that the tr nsactions in ques- tion partook of the nature of purchase nd sa � or all legal intents and pur s s, the contractor� ho und rtook to construct the refinery acted ind p n- ntly of the petition� , s o ner, an ith r t agents nor e ploy ea ( rt!cle 1727- 1728, !vii Cod of the Philippines; Frease! v � ari Uy h co on& Co., 34 Phil. 122) . In short, they eou d e co aider d a third part or the public , !ring y purchase the imported p troleu products of peti� tioner. T e nature of the contr ct s one o purch nd sale und r rticle 14~8 of the c�vil Cod in o way altered y the m re f ct that th contr ctor ~e given ecial di count by petitioler on h - troleu pro uets which they ought or th tr own us 1n the construction job or t t the purch s pric fo~ the goods bought w not ctu lly paid by th c n� tractors to the tit!one c u by th proc of bookkeeping entries and co penaation (par. 5 , rt cle 1231 Civil Co e) the nt was deduct d fro th rice of the construction contract or that even thou h the 533

DECISIOt .. \ C. T. A. CASE NO. 190 - 26- customs duty in quest ion was billed out to the c on- trac tors , i t was in turn billed back to them. ) ith respec t to the a ount of P3,744.061 we hold, therefore, that the petitioner is not entitled to it refund under the provision of Paragraph 2, Arti� cle 1 3 of epublic ct o. 387, and in thi re ct w effir the d c1s1on appe aled from. , the decis!o of the respond nt Comm s- stoner of ~a sto of August 21, 1 55, appealed from, should � � as it is her by, 1 odif!ed. espondent is hereby ordered to refund to the petitioner, C lt x (Philippines) Inc . the amount of 10,444. 82, re ~esent ing cu toms duty on the petroleu products ! ported by it dur ng th period from June 24, 1953 to ay 29, 1954, for ts own u&e in the con truc- tion of its atan as refinery, th collection and re� fusal to refund the a being in contravention of Art� icle 1 3 of epublic Act o. 387, without s ec al pro� nouncement a& to costs� � anila, hilippin s, September , 1957. m. CON:;UR: ~~ Presid�tng Judge ., 53 'l . sos