CTA Case No. 1343 (Decision)

Repeblic of the Philippines COURT OF YAX APPENZS Manila

1964

MANILA ELECTRIC COANY Potitioner.

3

- versus - G.T.A. CASE XO. 1343

CUSTOMS. ACTING COMMISIONER CE Rospondent.

X

DECISION

This is an appeal from the decision of the zoo- pondent Conmisoioner of Custens holding the petitioner

lia lo for tho payment of the tpecial import tex cn shipmant of l05 druas and 4 pailo of insulating cil.

inpertad sometime in 1937. for uso in potitioner'

oil circuit hreakers. and denying the retund of the cus f.995.00 s speeiai jpot tx paid thereon. pur suant to Hepubiic Aet Mo. 1394.

In this mppenl, petitioner cloims that it is

exempt fron the special import tax not only hy.virtuo cf Section 6 ef Republic act Mo. 1394,which exeapts fron soi tax squipment and spero parts for uso in

induotrios. but alao undor Paragrsph 9, Part Two.

ot its franchise. which expreasly exempts its insalntors

from oll texes ef whatover kind and nnture.

Paragraph 9.Part Tw, of petitioner's franchise. prevides:

ransformars. and insulatere.machinery to pay tha same taxeo upon its real estatu. buiidings..plant (not including poles,wiros, and perscnal property as other persons are or may ta herasfter requirad by law to pay. ronsideration of Part Twe of the fron- Par. 9.The grentee shall be Iiable

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DEGI3ION C..A. CASE W. 1343

to tuild and maintain ia the city of Manila and ita suburos a plant fer tha one-haif per.centum of tho Jross oam- to Ealahen shall bo paid to the Frovince aftea an eudit, like that provided inl paragraph *wenty of Part.Cne hereof. and sheli be in lieu,cf ell taxeo end asaoss- ments of whatsoovar nature, snd hy what- scever euthority upon tho privilenes. earnings.income, franchiso. and poles wires. transiornats. ani insulaters of the chise harein grante. conveying and fumishing of olectric shnll pay te the city ot anila twe and ings receivod frea tha husiness under this franchise in tho city and its suburbss Providod That twe o onac half por contun cf the gross oernings recoived from the busineas of the line and payabio et the times btated in pare- graph nineteen of Part One hereof, and grantee. from which taxes and assessment the grantee is hensby exprossly exeapted. current for light, heat. and powor, and to charge far th aam. the grantee of maal. Said percontage ahall ha due to wit. the right

The abcve-quoted previsien ef petiticner's franchiae

exempts it from all taxes cf whatever nature, and by

whatever autherity. with raspect to its ineulotoro in

consiceratien ior tho paysent af the porcentage tox on

ito grcss earninge. Doos the insvlating oil in ques-

tion come within the meaning of the term *insuiaterw?

An insuletor is uefinai s a Qonconducting sub-

Stanco oz body. (ehstor' International Dictionery.)

The nature nd purgosos of imulating oils are des-

Cribad as tollowat

high di-eiectrica otrongth and high flash 2aratusAn oil th lash peintf 20s a minimum di-lectric strength of 72.00 volta. but the presenca of as low as O.o1 drasticaliy. rater will reduce the dielactric strength peint orplcyad in circuit breakers.gwit- chas,.transtormers and other olectric ap- ssfo.A.clean,well-refined oil will heve F and fire point of 31oe i consitered Inaulating otls are minerol oila of The insulating oils, there-

215

DECISIOM- C.T.A.CASEO.1343

and they sheuld not gum. fore, cannot he ctored tor long periods Since insulating oils are usar for coeling ahould he lew onough fer free circulation, because of the danger of ahserbing meis- slso detrect fron the atrongth of the oil. os well *s for insulating, the viscooity book hy George J. rany. Sth Edition 1956. Pp. tufe. 421-423 Impurities such as acids or glkalies (Materials Mand-

Vooorizes C smnl amount oi the gurrounding ume is roquiret to maintein insulation bet- Encyeicpodia Britannica. l95e Edition; under- enclosing tank. desiyable to interrupt the current instantan- Sie Pxassura in he anclosing structure surround aohility is to restricted thet. when thel ero. otart again. Othgx types ef circuit breakers, moro coamon in Burope than in the waon the cootacts inside the tank and the tank itself. er ic made ot insulating aaterisi enclosed in a porcelain housing. so that - snoiler vel- scoring suppliod . echieve their taat Operation by rapid ngchan- ical separetion of contact's under oil in an alectric orc.i drawm htwoen thea. which im the contacto which uan thy prasuro to drive guantiles cf unvaporized oil into the which a the main olemonts of the electric currant in tha arc. hecome attached to the particlss ef gaa (vaporized cill, and their current passes through zero. start egain. United Statos, utilizea compressed air or circuit breakers, the oil is contained in umo of oil is necessary. of nespendent,dated Feb: 4. 1963.) aously. nrc path. avon stoana large Th vanorizing of the oil Droducos high "The common types of circuit breakers motal tanks,and * substontial vol- Anthe ccntacts ars.sonarnted.on In the precess meving olectrons. In tho mom common U.s. Oil othar types of circuit broak- In ethor designs, the contoin- It is neither pessible nor (see pp.3-4Decisien (P.2.Vol. it dees nct

There is ne question that insulating oilo of the

type imported by petitioner are *used for cooling as

well as fcr inaulating. and when usad in oil circuit

bmokers, they are *requitod to maintain insulation

betwoen the ccntacto inaide the tank and the tank it-

solf." It follows that the oaid inoulating oils are

insulators which are exempt from all taxes pursuant to

C.T.A.CASNO.1343 DECISYUN

petiticner*s franchiso. which amouption includes im-

munity frcm tho paynent of the spacial inpert tex levied by virtue of Rapublic Act Ho. 1394.]

Having roachod tha cenclusion that petitionor

is exempt unter its fxanchise from the spacial import

tax on its importation of insulating oll. wa find it

unnecsosary to pass upon tho iseue mhother or net in-

sulating otl is "equipnent" or *spare parts* uithin

tM aoning el 3ection 6 of Republtc Act No. I394.

The daeisivn appoaled irau not being in accord- anco with laho e e heveby reverged.Reepcnd

ont is orderad to zafund to petitoner the sun of 995c0

within thixty days from the tato this decinion bocomes

finel. without pnoncucemont as to costs

S0 RDD.

Mantla. August 24, Y9e4.

eOmal RONAN M. ULI Aesociete Judge

WECOCUR

Presieimg Juge MARTNO NATTT

Associnte Jutge K L 1Ag

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