CTA Case No. 3891 (Decision)

Ef'UBUC OF r~ PHIU.Pf'lru'� ~OURT OF TAX APPEAL..CJ Q'U�~ON C1TY CHEMPHIL MANUFACTURING CORPORATION, Petitioner, - versus - C.T.A. CASE NO . 3891 COMMISSIONEn OF INTERNAL REVENUE and COL LECTOR OF . CUSTO MS , Respondents. X- - - - - - - - - - - X DECI S I 0 N The case at bar, involving an action for refund of alleged excess customs duti es and advance sales tax on imported goods, poses a jurisdictional ques- tion prejudicial to the issue on the merits . The question stems from the very facts alleged in the petiti on for review of petitioner, thus: 1. Petitioner is a corporation duly organized and existing und er Philippine laws, with principal office at Chemphil Building , 851 Pasay Rbad , Legaspi Village , Makati, Metro Manila . Respondent Commis- sioner of Internal Revenue is the govern- ment official in charge of the adminis- tration and enforcement of all national internal revenue tax laws and of the rules and regul~tions re l ative ther e to, with off ice address at the Bureau of Internal Reven ue, Diliman , Quezon City , Philippines, where h e may be served with summons a nd other processess in connection 27 7

DECISION - CTA CASE NO. 3891 - 2- with this case. Respondent Collector of Customs is the government official in charge of the administration and enforce- ment of tariff and customs laws with office address at the Bureau of Customs , Port Area, Manila. Both respondents may likewise be served with summons through the Solicit6r General, 134 Amorsolo Street, Legaspi Village, Makati, Metro Manila. 2 . On January 21, 1983, petitioner imported 411.3MT of Glacial Acetic Acid. 3. Upon arrival of the importation in. the Philippines, the Bureau of Internal Revenue compelled petitioner to declare said importation in the import entry for duty and tax assessment pur - poses on the basis of the pub}ished home consumption value which was higher than the true and correct value of the import- ation as indicated in the commercial invoice and Japanese economic journals certified as correct by the Philippine Ambassador to Japan, notwithstanding the absence of any reasonable doubt as to the correctness of said documents. 4. As a result of the action of the Bureau of Customs, petitioner was compelled to pay, under protest, excess duties and taxes on the importation in the total amount of 8847,150 paid under Official Receipt No. 1018142 dated January 31, 1983. 5. Petitioner filed within the regle- mentary pe~iod provided under the Tariff and Customs Code, a formal protest with the Bureau of Customs for the refund or credit of the excess taxes and duties paid. The trial of the protest, docketed as Manila Protest No. 795, was terminated and the case has been submitted for decision . 278

DECISION - CTA CASE NO. 38 9 1 - 3- 6. It i s probable th a t t he deci s ion will not be rendered within the two - year prescriptiv e period provid e d for und e r t he National In t ernal Revenue Cod e whi c h will e xpir e on J a nuar y 21, 1985. XXX XX X XX X In assail i ng the juri s diction o f th is Court i n their motion t o di s mi ss , r e spondent s s tr ess t h at: (l) the Commi ss ioner of Cu s tom s , who s houl d be the pr oper party in a suit involving ref u nd of c u s to ms dut i es, has not ye t r e nder e d a de c is ion whi c h ca n be the subje c t of review by th e Cour t pu rsua nt to Section 7(2 ) of Republic Act No. 1125 , thu s : " The 1 a w p r e s u p p o ~3 e s a .E!.:..~~_l-_o u_:~9..~ c i s i o n render e d by the Commi s sioner of Cust om s b e - fore th e Court of Tax Appe a l s ca n exe rci se a ppellat e jurisdic tion over a port ic ul a r c ase . In the ca s e at bar, how e ver, th e re i s as yet no decision to speak of sinc e th e cor r es pond- ing fo r mal protest i s s t i ll pe nding wi th the Collector of Cust o ms whose dec i s i o n in turn is further reviewable by th e Co mmi ss i on er of Customs. And it i s only a fte r t h e Co mm i ssi on e r of Custom s s hall have rev ie we d th e decis ion of the Collector may p e titi o ne r go u p by wa y of a petition for re v iew t o th is Hn nor a bl e Court." (2) petitioner ha s "in ex pli c a bly f a i le d t o ex h aust the ad minis t r a t i ve r erne di es 11 availa b l e u r1de r t h e 1 a '1'1 ; a nd ( 3 ) 11 t h e b1 o- y e a r p r e s c r i p t i v e p e r i o d r e 1 i e d u po n b y petitioner within which to file t h e correspo ndin g c l ai m f o r refund to the CTA doe s no t a pp ly in case s i nvo lv i n g 27 9

DECISION - CTA CASE NO. 3891 - 4- customs duties but only to tax collections of the BIR under the National Internal Re venue Code . '' (Se e Respondent~' Motion To Dismiss, pp. 30-34, CTA rec .) Moreover, respondent Commi ss ioner's counsel argued in open court that no claim for refund of the alleged excess advance sales tax was filed with th e Bureau of Internal Revenue pursuant to Section 292 of the National Internal Revenue Code. However, petitioner contends that a final deci- sian is not always neces s ary for this Court to exercise jurisdiction in claims for refund or credit of er ron e ously paid taxes, citing the case of Gi bb s vs. Collector of Internal Revenue, 107 Phil . 232; that th e two-year pr~scriptive period applies in thi s case (Manifest- ation & Opposition to Motion to Dismi ss dated Jun e 10 , 1985, pp. 42-46, CTA rec . ); and that und e r Section 1708 of the Tariff and Customs Cod e , there is no need to file a claim for refund with the Bureau of In ternal Revenue pursuant to Section 292 of the Revenue Code as regards t he internal r eve nue tax collected by the Bureau of Cu s toms . (Opposition to Motion to Dismiss dated November 28, 1985 , pp . 68-74, CTA rec.) 280

DECISIO N - CTA CASE NO . 3891 - 5- We sustain res po nd e nts' vie w. It is clea r from the facts that peti ti oner's appea l s uf fers from fat al jur is dictio nal def ec ts. As re g ard s t he cu stoms duty , no dec i sion h as as yet b e en rende r e d by the Commissioner of Customs pursuant to Section 2313 of the Tariff and Custom s Code. Under Section 2402 of t he same code a nd, � most importa nt ly, Se ctions 7( 2) and 11 of Republic Act No . 1125, which define the juri sdiction of this Court in customs cases, onl y decisions or rulings of th e Commi ss i one r of Customs are ap p eala ble to this Cou rt. Withou t the decision of the Commissioner of Customs, the ap peal wo uld be premat ure and ca nn ot be t aken cognizance of b y t he Court. (See 1\m e r ica n Int e rn at ional Dairy Co ., Inc . vs . Vera & Geotina 1 CTA Case No . 19 7 5 , Jun e 30 , 1972; Procter fx Gamble PMC vs . Commissioner of Customs, CTA Case No . 2155 (Re solution) Ap ri l 1 5 , 1971, ci t ing So u thwes t Agri- cultural Marketing Corporation vs. The Secretar y of Finance, et a l., G. R. No . L- 24797, October 8 , 1968 & Negros Navi gat ion Co. , Inc. vs . Commissioner of Cu s toms, G. R. No . L-18629, May 31 , 1963; Cinema Audio, Inc . vs . Acting Comm i ssioner of Customs , ClA 281

DECISION - CTA CASE NO. 3891 - 6- Case No . 2806, January 16, 1978; Allied Brokerage Corporation vs . Commissioner of Customs and Court bf Tax Appeals, G.R. L-27641, August 31, 1971, 40 SCRA 555.) Moreover, the ab s ence of a decision by the Collector of Customs on the protest as required in Section 2312 of the Tariff and Customs Code and, consequently, of an appeal to the Commissioner cf Customs un der Section 2313 of the sa me cod e , further underscores the failure to exhau s t administrative remedies and evinces lack o f cause of action . As regards the advance sales tax, which is an internal revenue tax , no claim for refund has been filed with the Commissioner of Interna l Revenue as req~ired by Section 292 1 of the Nation a l Internal Revenue Code ( the law pertinent to this case) . Consequently, this Court t1a s lik e wise no jurisdiction to pass upon the petition for refund in r egard to said tax. (See Wise & Company vs . Commi ss ioner of Customs, CTA Cas~ No. 2717, December 29, 1977; see also resolution dated January 15, 1979, certiorari 1 Formerly Section 306; now Section 243 of the (1986) National Internal Revenue Code . 282

� - - �--- � - � - - � �- _ ......_,_ _ _ _ _ _ _.,_ ....... ..-.. ..............- -~.u;w.~,o _ .., _~ .. --- �-----~� -� DECISION - CTA CASE NO. 3891 .. 7 -- denied in G.R. No. L-5.l2L~2, Mar c h 7, 1980; NC H Corpo- rat ion (Phi1s.) vs. Commis si on er of Cu st oms, CTA Cas e No � 259 9 , Fe b r u a r y 28 , 1 9 7 8 , ~~~e e a 1 s o r e s o J. u t i o n dated J u 1 y 9 , 19 7.'!....7; Nation a 1 Denta l Su p p 1 y, Inc � vs. Commissioner of Customs , CT A Case No. 2757 , May 1 6 , 19 79 & CTA Cas e No. 2826, June 30r 1980 ; Campos Rued a Corporation ~s. Commissioner of Customs , CTA Case No . 2829, July 28, 1980; Olympia Business Machines Co. (Phil . ) , Inc . v s . Co mmissioner of Customs , CTA Case No . ~ 756 , Augu s t 25, 1980; J ardine Davies, Inc. vs . Commi ssio n er of Customs, CTA Case No. 26 34, Octob er 16, 1980; Procter & Gamble Philippine Manu- factur i ng Corporati o n vs. Commi ss ion e r of Customs, CTA Ca se No. 2788, February 27 , 198 1 ; Norber ta J. Quis8mbing vs . Co mmissi on e r of Cus tom s , CTA Ca se No . 2843, December 23, 1981; Camp os Rueda Corporati o n vs. Ho n. Commissioner of Customs, CTA Case No, 282 8, August 15, 19 84 , certiorari denied in G.R . L-6 8995 , Febr~ a ry 11, 198 5 ; Campos ~u e d a Co rp oratio n vs . Commis sioner of Customs, CTA Case No. 2830, March 19, 1985; Lovsted & Co., Inc . vs. Com mis sio ne r of Cu rd: oms , CTA Cases Nos . 3177 & 3178, July 30, 1985.) As rul ed 283

DECISION -�� CTA CASE NO. 3891 - 8- We not e however that with reg ard to the claims for refund of the amounts of e37.00 and e93 .00 in CTA Case No. 3177 a nd CTA Case No. 3178, respectively, as additional advance sales tax paid by peti- tioner on the apprai sa l of the ' subject s hipments, the same can not be pa sse d upon by the Court in view of the fact that nothing in the records show that petitione r had filed its written claims for refund thereof with the Commissione r of Int er nal Revenue within two years from dates of paym~nt and that the latter was made a party to these ca se s. Fu r ther, the action for recovery must be insti - tuted in co urt al s o within two years after payment. Wi thout satisfying th ese jurisdictional requirements provided in Section 306 (now Section 292) of the Nati on al Internal Reve nue Code, wh ic h in the instant cases are lacking, the same is fat al to the claims of petitioner for the re fund of the overpaid adva nc e sales tax on the importations in question. Such rule on the necessity of filing a claim for re(und with respect to internal revenue taxes (advance sales tax and comp e nsating ta x) c o llected by the Bureau of Customs on import ed goods ha s been consis- tently maintained in said cited cases notwith s tanding the enactment of Section 1708 of the Tariff and Customs Code. (or as st ated by this Court in NCR Corporation (Phil.) vs. Commissioner of Cuttoms , CTA Case No. 2599, (Resolution), July 9 , 1979: The Court is cognizant of the provi- sions o f Section 1708 of the Tariff and 284

I DECISION �� CTA CASE NO . 3891 - 9- Customs Code , as amended by P. D. No. 34 . It is clear therein that wh e n, as a result of the refund of the custom s duti es on the importation, there wo uld ~~~2..E)ly result a corresponding refund of internal revenue taxes on the same importation, the Collector shall likewise certify the same to the Commission e r of Customs who shall cause the said excess taxes to be paid, refunded or credited in f avor of the importer , with advice only to the Commi s - sioner of Internal Revenu e . How eve r, the wordings of said law is not clear to ju s - tify the interpretation that the Commis- sioner of Internal Revenue has no more pQwer to determine the l ega lity of a claim for refund of internal r e venue taxes, such as the advance sales tax and/or com- pensating tax collectible on imported articles, and thus claims for. refund of such taxes, which should be filed with his office as r equired under Section 306 and 309 of t he Internal Revenue Code, are no longer necessary. For one thing , said Section 1708 of the Tariff and Customs Code does not even state that the refund of internal r e venue taxes by the Bureau of Customs whi ch necessarily result from the refund of customs duties is f i nal and binding, th us obviating and neg at ing any possibility on the part of the Commissioner of Interna l Revenue to question or re- e xamine such refund of the reve nu e tax. And another, which is mo s t import a nt, said Section 1708 does not provide for the procedure to be followed in a situ- ation where th e claim for refund involving customs dut1es and internal re ve nue taxes is denied by the Commissioner of Custom s and the importer/taxpayer would want to dispute the denial by appeal to the Court of Tax Appeals. XXX X XX XXX XXX XXX XXX 285

DECISION - CTA CASE NO. 3891 - 10 - The interpr eta tion an d argument of petitioner that there is no need to file a final claim for refund with the Commis- sioner of Internal Revenue or to implead the latter as party defendant would certainly sanction an implied partial repeal or amendment. of Sections 306 and 309 of the National Internal Rev e nue Code and will also affect the procedural aspect of Republic Act No. 1125 . This s hould not be the proper interpretation because, as we have said, Section 1708 of the Tariff and Cu~toms Code i s not c lear and unambiguou s in this re s pect. Re pe al by implication is not favored unless it is manifested that the le gisla t ure so in- tend ed a repeal. (Comm. of Customs vs. Esso Standard Eastern, Inc., 66 SCR A 113 . ) Statutes must be so constru e d to harmonize all apparent conflicts and giNe effect to all the provisions of the law s whe~ever possib le . (Lechoco vs . Civil Aeronautics Boards, 43 SCRA 261.) And si nc e all sta - tutes relating to the same s ubj e ct matter are to be construed with r efe rence to each other, so that effect may be given to all the provisions of each (Madrigal vs. Rafferty, visions (2nd paragraph) of Section 1708 of the Tariff and Customs Cod e , as amended by P.O. 34, should be interpreted and harmoni zed with Section 306 (now Section 292) of the National Internal Revenue Code. Ind e ed, petitioner's po s tulation that its petition for review was filed to comply with the statutory requirement of filing a suit or proceeding for reco- very of erroneously paid tax within the two-year prescriptive period and that, as held in Gibbs vs. Colle ct or, et al., 107 Phil. 232, it is not necessary 286

DECISION - CTA CASE NO . 3891 - 11 - to wait for the decision of the Coll e ctor, would have been te na bl e as far as t he advan c e sales ta x here is conc erne d had there been a written claim for refund , wh ich is a mandatory requirement, 2 filed with the Comm issi oner of Internal Revenue pursuant to Sectio n 292 (for merly 306) of the National Internal Revenue Code. Fo r precisely , said rule advan ce d b y petition e r is appli cable only to internal revenue taxe s and not to customs duties and charges which are gov e rned by the Tariff and Customs Code. This Court ' s p ronounce- ment in Pro cter & Gam ble PMC vs . Commi s sio ne r of Customs (ClA Case No. 2155 /Resolution_7, April 15 , 1971 ) c lear ly states : Section 7 of Republic Act 1125 pro vi des that the Cou rt o f Ta x Ap peals s al l exerc i se exclusive jurisdiction to r evie w by appeal deci sions of the Commissioner of Custom s . Section 11 of the same law provides that any 2A wr itte n claim for ref und filed with the Co mmis- s ion e r of Internal Revenue within two years from the date of paym e nt �is mandatory and a con d ition precedent to the prosecution of a suit or pro ceeding for the re co ve ry of erroneously or illegally paid t axe s . Non - complian ce t he r ew i th bars the actio 11 and subjec t s the claim to dismissal for lack of cause of action . (Republic vs . Limaco & De Guzman Commercial Co ., Inc. , L-13081, August 31 , 1962, 5 SCRA 990 ; Gonz a les vs. Cour t of Tax Appeals, L-14 533, May 26 , 1965, 14 SCRA 79. 28 7

DECISION - CT A CASE NO. 3891 - 12 - I pers on , association or corporation adversely affected by a dec isi on or ruling of the Commissioner of Customs may file an appeal to the Cour t of Tax Appeal s . It is clear from these provisions that only decisions of the Commissioner of Customs can be appealed to the Court of Tax Appeals and since no decision has as yet been r e ndered by the Commissioner of Customs on peti- tioner's request for refund, thi s pe tition is premature and should be dismissed (South- west Agricultural Marketing Corporation v. The Secretary. of Finance et al., G.R. No. L-24797, October B, 1968; Negros Navigation Co., Inc. v. Comm. of Customs, G.R. No. L-18629, May 31, 1963.) There is no merit in petitioner's pre- tension that its appeal sho uld be enterta ined by us because it is filed to comply with the two-year peri od provided by law within which to file an action for "recovery of duties and surcharges illegally or erroneously col- I e c ted � 11 The 1 a w referred to by petitioner is obviou s ly Section 306 of the National Internal Revenue Code which provide s as follows: SEC. 306. Recov ery of tax erroneously or ille_gallY. collected. - No suit or proceeding shall be main- tained in any court for the reco- very of any national internal-revenue tax hereaft e r alleged to hav e been erroneou sly or illegally assessed or collected, or of a ny penalty claimed to have been collected with - out au~hority, or of any sum al leged II to have been excessive or in any manner wrongfully collected, until a claim for r e fund or credit has been duly fil ed with the Commi ssio ner of Internal Revenue; but such s uit or proceeding may be maintained, whether or not such tax, penalty, 288

! I. DECISION ... CTA CASE NO . 3891 - 13 - or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment o f the tax or penalty. But this provision ~pplies only to n ational internal revenue taxes as specifically stated therein , an d not to customs duties and surcharges which are governed by the Tariff and Customs Code, not by the National Internal Revenue Code. Thus, says the � Supr eme Court on this point: � � � That there is no deci- sion or rur~ng by the Colleclor of Customs or Commissioner of Cu st oms on the reque sts of appel- lant for refund, is abundantly clear from the very alligotions in the petition. Pursuant, there- fore, to the above ruling of this Court, th e presentation of the Petition for Re view with the CTA was pr emature , for as things stood then, there was nothing to review. We cannot, by mere analogy , apply the int erpretation giv e n to Sec. 306 of the Int e rnal Rev. Code to Sec . 7, par . 2 of Republic Act 11 25. Not only was the petition directed against the Customs offi- cials, but it also appears that Sec . 306 h as no count e rpart in the Tariff and Customs Code. There is no �statutory grant for importers claimi ng refund of duties to go directly to the CTA, wi thout wait- ing the decision of the Collector of Customs or Commissioner of Customs. For one thing, the Col- II lector or Commissioner may order the refund of the taxes in question, 28 9

DECISION - CTA CASE NO. 3891 in which event a review would not be necessary . (Ace Public- ations , Inc. v. The Commissioner of Customs and the Collector of Customs, G.R. No. L-18808, !vlay 29 , 1964.) Needless to sa~ this Court hns no jurisdiction to entertain the present peti- tibh . Having reached this conclusion we find it unnecessary to dwell on the other issue posed by the motion to dismiss. In fine, the interpretation laid down in this case ia that, to satisfy the jurisdictional require- ments of law, the procedure prescrib e d by the Tariff and Customs Code on protests (Sectjo ns 2308 - 2314 & 2402) in relation to Sections 7(2) & 11 of Republic Act No . 1125 should be fol lo wed as regards the customs duty; while the procedure prescribed by the National Internal nevenue Code For recovery of erro neou sly paid t. ax ( section 2. 9 2 /__nov1 2 l~ 3_7) s h o u 1 d be complied with as regards the advance sales tax or compe nsating tax as the case may be. The procedure app licable to one cannot be applied to the other or both in the absence of a cl0ar statutory provision or legal II authority to the contrary . Non-compliance with the mandatory procedural requirements, as in the case at bar, would render fatally defective the appeal and would thereby r esult to its dismis s al . 29 0

i' �-: DECISION-- I CIA CASE NO . 3891 I - 15 - 1'. �� WHEREFORE 7 petiti o ner's peti t ion for review is I hereby dismissed f o r lack of jurisdiction and cause I o f action . With o ut costs. t- SO ORDERED . Quezon City , Metro Manila, Nov e mber 27, 1986 . ~I E CONCUR: / Y..e.t~~t,:t "- c ( .:i T A N l T RO/\QUIN /1, Associate Judge . _e c~c~~-) r~t~-f / (;; ']!-... \ ----- c-v"z� / / ~/I.l_l,_-, � R-L- v~- .2~ , I .� Associate Ju ge 29 1